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CONFERENCE REPORT ON H.R. 2614, CERTIFIED DEVELOPMENT COMPANY PROGRAM IMPROVEMENTS ACT OF 2000
(House of Representatives - October 25, 2000)

Text of this article available as: TXT PDF [Pages H10909-H11087] CONFERENCE REPORT ON H.R. 2614, CERTIFIED DEVELOPMENT COMPANY PROGRAM IMPROVEMENTS ACT OF 2000 Mr. ARMEY submitted the following conference report and statement on the bill (H.R. 2614) to amend the Small Business Investment Act to make improvements to the certified development company program, and for other purposes: Conference Report (H. Rept. 106-1004) The committee of conference on the disagreeing votes of the two Houses on the amendment of the Senate to the bill (H.R. 2614) to amend the Small Business Investment Act to make improvements to the certified development company program, and for other purposes, having met, after full and free conference, have agreed to recommend and do recommend to their respective Houses as follows: That the House recede from its disagreement to the amendment of the Senate and agree to the same with an amendment as follows: In lieu of the matter proposed to be inserted by the Senate amendment, insert the following: SECTION 1. ENACTMENT OF OTHER PROVISIONS OF LAW. The provisions of the following bills of the 106th Congress are hereby enacted into law: (1) H.R. 5538, as introduced on October 25, 2000 (the Minimum Wage Act of 2000). (2) H.R. 5542, as introduced on October 25, 2000 (the Taxpayer Relief Act of 2000). (3) H.R. 5543, as introduced on October 25, 2000 (the Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000). (4) H.R. 5544, as introduced on October 25, 2000 (the Pain Relief Promotion Act of 2000). (5) H.R. 5545, as introduced on October 25, 2000 (the Small Business Reauthorization Act of 2000). SEC. 2. PUBLICATION OF ACT. In publishing this Act in slip form and in the United States Statutes at Large pursuant to section 112 of title 1, United States Code, the Archivist of the United States shall include after the date of approval appendixes setting forth the texts of the bills referred to in section 1. And the Senate agree to the same. Jim Talent, Dick Armey, Managers on the Part of the House. Christopher Bond, Conrad Burns, Managers on the Part of the Senate. ---------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------- NOTICE--OCTOBER 23, 2000 A final issue of the Congressional Record for the 106th Congress, 2d Session, will be published on November 29, 2000, in order to permit Members to revise and extend their remarks. All material for insertion must be signed by the Member and delivered to the respective offices of the Official Reporters of Debates (Room HT-60 or S-123 of the Capitol), Monday through Friday, between the hours of 10:00 a.m. and 3:00 p.m. through November 28. The final issue will be dated November 29, 2000, and will be delivered on Friday, December 1, 2000. None of the material printed in the final issue of the Congressional Record may contain subject matter, or relate to any event that occurred after the sine die date. Senators' statements should also be submitted electronically, either on a disk to accompany the signed statement, or by e-mail to the Official Reporters of Debates at ``Records@Reporters''. Members of the House of Representatives' statements may also be submitted electronically by e-mail, to accompany the signed statement, and formatted according to the instructions for the Extensions of Remarks template at https://clerkhouse.house.gov. The Official Reporters will transmit to GPO the template formatted electronic file only after receipt of, and authentication with, the hard copy, signed manuscript. Deliver statements to the Official Reporters in Room HT-60. Members of Congress desiring to purchase reprints of material submitted for inclusion in the Congressional Record may do so by contacting the Congressional Printing Management Division, at the Government Printing Office, on 512-0224, between the hours of 8:00 a.m. and 4:00 p.m. daily. By order of the Joint Committee on Printing. WILLIAM M. THOMAS, Chairman. ---------------------------------------------------------------------------------------------------------------- [[Page H10910]] JOINT EXPLANATORY STATEMENT OF THE COMMITTEE OF CONFERENCE The managers on the part of the House and the Senate at the conference on the disagreeing votes of the two Houses on the amendment of the Senate to the bill (H.R. 2614) to amend the Small Business Investment Act to make improvements to the certified development company program, and for other purposes, submit the following joint statement to the House and the Senate in explanation of the effect of the action agreed upon by the managers and recommended in the accompanying conference report: The Senate amendment struck all of the House bill after the enacting clause and inserted a substitute text. The House recedes from its disagreement to the amendment of the Senate with an amendment that is a substitute for the House bill and the Senate amendment. The conference agreement would enact by reference the provisions of five bills introduced on October 25, 2000. Those bills are the following: (1) H.R. 5538, the Minimum Wage Act of 2000. (2) H.R. 5542, the Taxpayer Relief Act of 2000. (3) H.R. 5543, the Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000. (4) H.R. 5544, the Pain Relief Promotion Act of 2000. (5) H.R. 5545, the Small Business Reauthorization Act of 2000. This joint statement sets out for convenience the text of each bill that would be enacted in the conference report by reference. minimum wage act of 2000 The conference agreement would enact the provisions of H.R. 5538, as introduced on October 25, 2000. The text of that bill follows: SECTION 1. SHORT TITLE. This Act may be cited as the ``Minimum Wage Act of 2000''. SEC. 2. MINIMUM WAGE INCREASE. Paragraph (1) of section 6(a) of the Fair Labor Standards Act of 1938 (29 U.S.C. 206(a)) is amended to read as follows: ``(1) except as otherwise provided in this section. Not less than $5.15 an hour during the period ending June 30, 2000, not less than $5.65 an hour during the year beginning January 1, 2001, and not less than $6.15 an hour beginning January 1, 2002;''. taxpayer relief act of 2000 The conference agreement would enact the provisions of H.R. 5542, as introduced on October 25, 2000. The text of that bill follows: SECTION 1. SHORT TITLE; AMENDMENT OF 1986 CODE. (a) Short Title.--This Act may be cited as the ``Taxpayer Relief Act of 2000''. (b) Amendment of 1986 Code.--Except as otherwise expressly provided, whenever in this Act an amendment or repeal is expressed in terms of an amendment to, or repeal of, a section or other provision, the reference shall be considered to be made to a section or other provision of the Internal Revenue Code of 1986. (c) Table of Contents.-- Sec. 1. Short title; amendment of 1986 Code. TITLE I--FSC REPEAL AND EXTRATERRITORIAL INCOME EXCLUSION Sec. 101. Repeal of foreign sales corporation rules. Sec. 102. Treatment of extraterritorial income. Sec. 103. Technical and conforming amendments. Sec. 104. Effective date. TITLE II--SMALL BUSINESS TAX RELIEF Sec. 201. Extension of work opportunity tax credit. Sec. 202. Increase in amortizable reforestation expenditures, etc. Sec. 203. Increase in expense treatment for small businesses. Sec. 204. Increased deduction for meal expenses. Sec. 205. Increased deductibility of business meal expenses for individuals subject to Federal limitations on hours of service. Sec. 206. Repeal of modification of installment method. Sec. 207. Income averaging not to increase alternative minimum tax liability; income averaging for fishermen. Sec. 208. Repeal of occupational taxes relating to distilled spirits, wine, and beer. Sec. 209. Exclusion from gross income for certain forgiven mortgage obligations. Sec. 210. Clarification of cash accounting rules for small business. Sec. 211. Amendments relating to demand deposit accounts at depository institutions. TITLE III--HEALTH INSURANCE AND LONG-TERM CARE INSURANCE PROVISIONS Sec. 301. Deduction for 100 percent of health insurance costs of self- employed individuals. Sec. 302. Deduction for health and long-term care insurance costs of individuals not participating in employer-subsidized health plans. Sec. 303. 2-year extension of availability of medical savings accounts. Sec. 304. Additional consumer protections for long-term care insurance. Sec. 305. Deduction for providing long-term care in the home to household members. TITLE IV--PENSION AND INDIVIDUAL RETIREMENT ARRANGEMENT PROVISIONS Sec. 400. Short title. Subtitle A--Individual Retirement Accounts Sec. 401. Modification of IRA contribution limits. Sec. 402. Deemed IRAs under employer plans. Sec. 403. Tax-free distributions from individual retirement accounts for charitable purposes. Sec. 404. Modification of AGI limits for Roth IRAs. Subtitle B--Expanding Coverage Sec. 411. Increase in benefit and contribution limits. Sec. 412. Plan loans for subchapter S owners, partners, and sole proprietors. Sec. 413. Modification of top-heavy rules. Sec. 414. Elective deferrals not taken into account for purposes of deduction limits. Sec. 415. Repeal of coordination requirements for deferred compensation plans of State and local governments and tax-exempt organizations. Sec. 416. Elimination of user fee for requests to IRS regarding pension plans. Sec. 417. Deduction limits. Sec. 418. Option to treat elective deferrals as after-tax Roth contributions. Subtitle C--Enhancing Fairness for Women Sec. 421. Catch-up contributions for individuals age 50 or over. Sec. 422. Equitable treatment for contributions of employees to defined contribution plans. Sec. 423. Faster vesting of certain employer matching contributions. Sec. 424. Simplify and update the minimum distribution rules. Sec. 425. Clarification of tax treatment of division of section 457 plan benefits upon divorce. Sec. 426. Provisions relating to hardship distributions. Sec. 427. Waiver of tax on nondeductible contributions for domestic or similar workers. Subtitle D--Increasing Portability for Participants Sec. 431. Rollovers allowed among various types of plans. Sec. 432. Rollovers of IRAs into workplace retirement plans. Sec. 433. Rollovers of after-tax contributions. Sec. 434. Hardship exception to 60-day rule. Sec. 435. Treatment of forms of distribution. Sec. 436. Rationalization of restrictions on distributions. Sec. 437. Purchase of service credit in governmental defined benefit plans. Sec. 438. Employers may disregard rollovers for purposes of cash-out amounts. Sec. 439. Minimum distribution and inclusion requirements for section 457 plans. Subtitle E--Strengthening Pension Security and Enforcement Sec. 441. Repeal of 155 percent of current liability funding limit. Sec. 442. Maximum contribution deduction rules modified and applied to all defined benefit plans. Sec. 443. Excise tax relief for sound pension funding. Sec. 444. Excise tax on failure to provide notice by defined benefit plans significantly reducing future benefit accruals. Sec. 445. Treatment of multiemployer plans under section 415. Sec. 446. Protection of investment of employee contributions to 401(k) plans. Sec. 447. Periodic pension benefits statements. Sec. 448. Prohibited allocations of stock in S corporation ESOP. Subtitle F--Reducing Regulatory Burdens Sec. 451. Modification of timing of plan valuations. Sec. 452. ESOP dividends may be reinvested without loss of dividend deduction. Sec. 453. Repeal of transition rule relating to certain highly compensated employees. Sec. 454. Employees of tax-exempt entities. Sec. 455. Clarification of treatment of employer-provided retirement advice. Sec. 456. Reporting simplification. Sec. 457. Improvement of employee plans compliance resolution system. Sec. 458. Repeal of the multiple use test. Sec. 459. Flexibility in nondiscrimination, coverage, and line of business rules. Sec. 460. Extension to all governmental plans of moratorium on application of certain nondiscrimination rules applicable to State and local plans. Sec. 461. Notice and consent period regarding distributions. Sec. 462. Annual report dissemination. Sec. 463. Technical corrections to SAVER Act. Sec. 464. Study of pension coverage. Subtitle G--Other ERISA Provisions Sec. 471. Missing participants. Sec. 472. Reduced PBGC premium for new plans of small employers. Sec. 473. Reduction of additional PBGC premium for new and small plans. Sec. 474. Authorization for PBGC to pay interest on premium overpayment refunds. Sec. 475. Substantial owner benefits in terminated plans. Sec. 476. Multiemployer plan benefits guarantee. Sec. 477. Civil penalties for breach of fiduciary responsibility. Sec. 478. Benefit suspension notice. Subtitle H--Plan Amendments Sec. 481. Provisions relating to plan amendments. [[Page H10911]] TITLE V--SCHOOL CONSTRUCTION PROVISIONS Sec. 501. Additional increase in arbitrage rebate exception for governmental bonds used to finance educational facilities. Sec. 502. Modification of arbitrage rebate rules applicable to public school construction bonds. Sec. 503. Modification of special arbitrage rule for certain funds. Sec. 504. Treatment of qualified public educational facility bonds as exempt facility bonds. Sec. 505. Expansion of qualified zone academy bond program. TITLE VI--COMMUNITY REVITALIZATION Subtitle A--Tax Incentives for Renewal Communities Sec. 601. Designation of and tax incentives for renewal communities. Sec. 602. Work opportunity credit for hiring youth residing in renewal communities. Subtitle B--Extension and Expansion of Empowerment Zone Incentives Sec. 611. Authority to designate 9 additional empowerment zones. Sec. 612. Extension of empowerment zone treatment through 2009. Sec. 613. 20 percent employment credit for all empowerment zones Sec. 614. Increased expensing under section 179. Sec. 615. Higher limits on tax-exempt empowerment zone facility bonds. Sec. 616. Nonrecognition of gain on rollover of empowerment zone investments. Sec. 617. Increased exclusion of gain on sale of empowerment zone stock. Subtitle C--New Markets Tax Credit Sec. 621. New markets tax credit. Subtitle D--Improvements in Low-Income Housing Credit Sec. 631. Modification of State ceiling on low-income housing credit. Sec. 632. Modification of criteria for allocating housing credits among projects. Sec. 633. Additional responsibilities of housing credit agencies. Sec. 634. Modifications to rules relating to basis of building which is eligible for credit. Sec. 635. Other modifications. Sec. 636. Carryforward rules. Sec. 637. Effective date. Subtitle E--Other Community Renewal and New Markets Assistance Sec. 641. Transfer of unoccupied and substandard HUD-held housing to local governments and community development corporations. Sec. 642. Transfer of HUD assets in revitalization areas. Sec. 643. Risk-sharing demonstration. Sec. 644. Prevention and treatment of substance abuse; services provided through religious organizations. Subtitle F--Other Provisions Sec. 651. Acceleration of phase-in of increase in volume cap on private activity bonds. Sec. 652. Modifications to expensing of environmental remediation costs. Sec. 653. Extension of DC homebuyer tax credit. TITLE VII--ADMINISTRATIVE, MISCELLANEOUS, AND TECHNICAL PROVISIONS Subtitle A--Administrative Provisions Sec. 701. Exemption of certain reporting requirements. Sec. 702. Extension of deadlines for IRS compliance with certain notice requirements. Sec. 703. Extension of authority for undercover operations. Sec. 704. Confidentiality of certain documents relating to closing and similar agreements and to agreements with foreign governments. Sec. 705. Increase in threshold for Joint Committee reports on refunds and credits. Sec. 706. Treatment of missing children with respect to certain tax benefits. Sec. 707. Amendments to statutes referencing yield on 52-week Treasury bills. Sec. 708. Adjustments for Consumer Price Index error. Sec. 709. Prevention of duplication of loss through assumption of liabilities giving rise to a deduction. Subtitle B--Miscellaneous Provisions Sec. 710. Repeal of 4.3-cent motor fuel excise taxes on railroads and inland waterway transportation which remain in general fund. Sec. 711. Repeal of reduction of deductions for mutual life insurance companies. Sec. 712. Repeal of policyholders surplus account provisions. Sec. 713. Credit to holders of qualified Amtrak bonds. Sec. 714. Farm, fishing, and ranch risk management accounts. Sec. 715. Extension of enhanced deduction for corporate donations of computer technology. Sec. 716. Relief from Federal tax liability arising with respect to certain claims against the Department of Agriculture for discrimination in farm credit and benefit programs. Sec. 717. Expansion of credit for adoption expenses. Sec. 718. Study concerning United States insurance companies with certain offshore reinsurance affiliates. Sec. 719. Treatment of Indian tribal governments under Federal Unemployment Tax Act. Subtitle C--Technical Corrections Sec. 721. Amendments related to Ticket to Work and Work Incentives Improvement Act of 1999. Sec. 722. Amendments related to Tax and Trade Relief Extension Act of 1998. Sec. 723. Amendments related to Internal Revenue Service Restructuring and Reform Act of 1998. Sec. 724. Amendments related to Taxpayer Relief Act of 1997. Sec. 725. Amendments related to Balanced Budget Act of 1997. Sec. 726. Amendments related to Small Business Job Protection Act of 1996. Sec. 727. Amendment related to Revenue Reconciliation Act of 1990. Sec. 728. Other technical corrections. Sec. 729. Clerical changes. Subtitle D--Pay-Go Adjustments Sec. 731. Avoidance of a Pay-Go sequestration for fiscal year 2001. TITLE I--FSC REPEAL AND EXTRATERRITORIAL INCOME EXCLUSION SEC. 101. REPEAL OF FOREIGN SALES CORPORATION RULES. Subpart C of part III of subchapter N of chapter 1 (relating to taxation of foreign sales corporations) is hereby repealed. SEC. 102. TREATMENT OF EXTRATERRITORIAL INCOME. (a) In General.--Part III of subchapter B of chapter 1 (relating to items specifically excluded from gross income) is amended by inserting before section 115 the following new section: ``SEC. 114. EXTRATERRITORIAL INCOME. ``(a) Exclusion.--Gross income does not include extraterritorial income. ``(b) Exception.--Subsection (a) shall not apply to extraterritorial income which is not qualifying foreign trade income as determined under subpart E of part III of subchapter N. ``(c) Disallowance of Deductions.-- ``(1) In general.--Any deduction of a taxpayer allocated under paragraph (2) to extraterritorial income of the taxpayer excluded from gross income under subsection (a) shall not be allowed. ``(2) Allocation.--Any deduction of the taxpayer properly apportioned and allocated to the extraterritorial income derived by the taxpayer from any transaction shall be allocated on a proportionate basis between-- ``(A) the extraterritorial income derived from such transaction which is excluded from gross income under subsection (a), and ``(B) the extraterritorial income derived from such transaction which is not so excluded. ``(d) Denial of Credits for Certain Foreign Taxes.-- Notwithstanding any other provision of this chapter, no credit shall be allowed under this chapter for any income, war profits, and excess profits taxes paid or accrued to any foreign country or possession of the United States with respect to extraterritorial income which is excluded from gross income under subsection (a). ``(e) Extraterritorial Income.--For purposes of this section, the term `extraterritorial income' means the gross income of the taxpayer attributable to foreign trading gross receipts (as defined in section 942) of the taxpayer.''. (b) Qualifying Foreign Trade Income.--Part III of subchapter N of chapter 1 is amended by inserting after subpart D the following new subpart: ``Subpart E--Qualifying Foreign Trade Income ``Sec. 941. Qualifying foreign trade income. ``Sec. 942. Foreign trading gross receipts. ``Sec. 943. Other definitions and special rules. ``SEC. 941. QUALIFYING FOREIGN TRADE INCOME. ``(a) Qualifying Foreign Trade Income.--For purposes of this subpart and section 114-- ``(1) In general.--The term `qualifying foreign trade income' means, with respect to any transaction, the amount of gross income which, if excluded, will result in a reduction of the taxable income of the taxpayer from such transaction equal to the greatest of-- ``(A) 30 percent of the foreign sale and leasing income derived by the taxpayer from such transaction, ``(B) 1.2 percent of the foreign trading gross receipts derived by the taxpayer from the transaction, or ``(C) 15 percent of the foreign trade income derived by the taxpayer from the transaction. In no event shall the amount determined under subparagraph (B) exceed 200 percent of the amount determined under subparagraph (C). ``(2) Alternative computation.--A taxpayer may compute its qualifying foreign trade income under a subparagraph of paragraph (1) other than the subparagraph which results in the greatest amount of such income. ``(3) Limitation on use of foreign trading gross receipts method.--If any person computes its qualifying foreign trade income from any transaction with respect to any property under paragraph (1)(B), the qualifying foreign trade income of such person (or any related person) with respect to any other transaction involving such property shall be zero. ``(4) Rules for marginal costing.--The Secretary shall prescribe regulations setting forth rules for the allocation of expenditures in computing foreign trade income under paragraph (1)(C) in those cases where a taxpayer is seeking to establish or maintain a market for qualifying foreign trade property. ``(5) Participation in international boycotts, etc.--Under regulations prescribed by the Secretary, the qualifying foreign trade income of a taxpayer for any taxable year shall be reduced (but not below zero) by the sum of-- [[Page H10912]] ``(A) an amount equal to such income multiplied by the international boycott factor determined under section 999, and ``(B) any illegal bribe, kickback, or other payment (within the meaning of section 162(c)) paid by or on behalf of the taxpayer directly or indirectly to an official, employee, or agent in fact of a government. ``(b) Foreign Trade Income.--For purposes of this subpart-- ``(1) In general.--The term `foreign trade income' means the taxable income of the taxpayer attributable to foreign trading gross receipts of the taxpayer. ``(2) Special rule for cooperatives.--In any case in which an organization to which part I of subchapter T applies which is engaged in the marketing of agricultural or horticultural products sells qualifying foreign trade property, in computing the taxable income of such cooperative, there shall not be taken into account any deduction allowable under subsection (b) or (c) of section 1382 (relating to patronage dividends, per-unit retain allocations, and nonpatronage distributions). ``(c) Foreign Sale and Leasing Income.--For purposes of this section-- ``(1) In general.--The term `foreign sale and leasing income' means, with respect to any transaction-- ``(A) foreign trade income properly allocable to activities which-- ``(i) are described in paragraph (2)(A)(i) or (3) of section 942(b), and ``(ii) are performed by the taxpayer (or any person acting under a contract with such taxpayer) outside the United States, or ``(B) foreign trade income derived by the taxpayer in connection with the lease or rental of qualifying foreign trade property for use by the lessee outside the United States. ``(2) Special rules for leased property.-- ``(A) Sales income.--The term `foreign sale and leasing income' includes any foreign trade income derived by the taxpayer from the sale of property described in paragraph (1)(B). ``(B) Limitation in certain cases.--Except as provided in regulations, in the case of property which-- ``(i) was manufactured, produced, grown, or extracted by the taxpayer, or ``(ii) was acquired by the taxpayer from a related person for a price which was not determined in accordance with the rules of section 482, the amount of foreign trade income which may be treated as foreign sale and leasing income under paragraph (1)(B) or subparagraph (A) of this paragraph with respect to any transaction involving such property shall not exceed the amount which would have been determined if the taxpayer had acquired such property for the price determined in accordance with the rules of section 482. ``(3) Special rules.-- ``(A) Excluded property.--Foreign sale and leasing income shall not include any income properly allocable to excluded property described in subparagraph (B) of section 943(a)(3) (relating to intangibles). ``(B) Only direct expenses taken into account.--For purposes of this subsection, any expense other than a directly allocable expense shall not be taken into account in computing foreign trade income. ``SEC. 942. FOREIGN TRADING GROSS RECEIPTS. ``(a) Foreign Trading Gross Receipts.-- ``(1) In general.--Except as otherwise provided in this section, for purposes of this subpart, the term `foreign trading gross receipts' means the gross receipts of the taxpayer which are-- ``(A) from the sale, exchange, or other disposition of qualifying foreign trade property, ``(B) from the lease or rental of qualifying foreign trade property for use by the lessee outside the United States, ``(C) for services which are related and subsidiary to-- ``(i) any sale, exchange, or other disposition of qualifying foreign trade property by such taxpayer, or ``(ii) any lease or rental of qualifying foreign trade property described in subparagraph (B) by such taxpayer, ``(D) for engineering or architectural services for construction projects located (or proposed for location) outside the United States, or ``(E) for the performance of managerial services for a person other than a related person in furtherance of the production of foreign trading gross receipts described in subparagraph (A), (B), or (C). Subparagraph (E) shall not apply to a taxpayer for any taxable year unless at least 50 percent of its foreign trading gross receipts (determined without regard to this sentence) for such taxable year is derived from activities described in subparagraph (A), (B), or (C). ``(2) Certain receipts excluded on basis of use; subsidized receipts excluded.--The term `foreign trading gross receipts' shall not include receipts of a taxpayer from a transaction if-- ``(A) the qualifying foreign trade property or services-- ``(i) are for ultimate use in the United States, or ``(ii) are for use by the United States or any instrumentality thereof and such use of qualifying foreign trade property or services is required by law or regulation, or ``(B) such transaction is accomplished by a subsidy granted by the government (or any instrumentality thereof) of the country or possession in which the property is manufactured, produced, grown, or extracted. ``(3) Election to exclude certain receipts.--The term `foreign trading gross receipts' shall not include gross receipts of a taxpayer from a transaction if the taxpayer elects not to have such receipts taken into account for purposes of this subpart. ``(b) Foreign Economic Process Requirements.-- ``(1) In general.--Except as provided in subsection (c), a taxpayer shall be treated as having foreign trading gross receipts from any transaction only if economic processes with respect to such transaction take place outside the United States as required by paragraph (2). ``(2) Requirement.-- ``(A) In general.--The requirements of this paragraph are met with respect to the gross receipts of a taxpayer derived from any transaction if-- ``(i) such taxpayer (or any person acting under a contract with such taxpayer) has participated outside the United States in the solicitation (other than advertising), the negotiation, or the making of the contract relating to such transaction, and ``(ii) the foreign direct costs incurred by the taxpayer attributable to the transaction equal or exceed 50 percent of the total direct costs attributable to the transaction. ``(B) Alternative 85-percent test.--A taxpayer shall be treated as satisfying the requirements of subparagraph (A)(ii) with respect to any transaction if, with respect to each of at least 2 subparagraphs of paragraph (3), the foreign direct costs incurred by such taxpayer attributable to activities described in such subparagraph equal or exceed 85 percent of the total direct costs attributable to activities described in such subparagraph. ``(C) Definitions.--For purposes of this paragraph-- ``(i) Total direct costs.--The term `total direct costs' means, with respect to any transaction, the total direct costs incurred by the taxpayer attributable to activities described in paragraph (3) performed at any location by the taxpayer or any person acting under a contract with such taxpayer. ``(ii) Foreign direct costs.--The term `foreign direct costs' means, with respect to any transaction, the portion of the total direct costs which are attributable to activities performed outside the United States. ``(3) Activities relating to qualifying foreign trade property.--The activities described in this paragraph are any of the following with respect to qualifying foreign trade property-- ``(A) advertising and sales promotion, ``(B) the processing of customer orders and the arranging for delivery, ``(C) transportation outside the United States in connection with delivery to the customer, ``(D) the determination and transmittal of a final invoice or statement of account or the receipt of payment, and ``(E) the assumption of credit risk. ``(4) Economic processes performed by related persons.--A taxpayer shall be treated as meeting the requirements of this subsection with respect to any sales transaction involving any property if any related person has met such requirements in such transaction or any other sales transaction involving such property. ``(c) Exception From Foreign Economic Process Requirement.-- ``(1) In general.--The requirements of subsection (b) shall be treated as met for any taxable year if the foreign trading gross receipts of the taxpayer for such year do not exceed $5,000,000. ``(2) Receipts of related persons aggregated.--All related persons shall be treated as one person for purposes of paragraph (1), and the limitation under paragraph (1) shall be allocated among such persons in a manner provided in regulations prescribed by the Secretary. ``(3) Special rule for pass-thru entities.--In the case of a partnership, S corporation, or other pass-thru entity, the limitation under paragraph (1) shall apply with respect to the partnership, S corporation, or entity and with respect to each partner, shareholder, or other owner. ``SEC. 943. OTHER DEFINITIONS AND SPECIAL RULES. ``(a) Qualifying Foreign Trade Property.--For purposes of this subpart-- ``(1) In general.--The term `qualifying foreign trade property' means property-- ``(A) manufactured, produced, grown, or extracted within or outside the United States, ``(B) held primarily for sale, lease, or rental, in the ordinary course of trade or business for direct use, consumption, or disposition outside the United States, and ``(C) not more than 50 percent of the fair market value of which is attributable to-- ``(i) articles manufactured, produced, grown, or extracted outside the United States, and ``(ii) direct costs for labor (determined under the principles of section 263A) performed outside the United States. For purposes of subparagraph (C), the fair market value of any article imported into the United States shall be its appraised value, as determined by the Secretary under section 402 of the Tariff Act of 1930 (19 U.S.C. 1401a) in connection with its importation, and the direct costs for labor under clause (ii) do not include costs that would be treated under the principles of section 263A as direct labor costs attributable to articles described in clause (i). ``(2) U.S. taxation to ensure consistent treatment.-- Property which (without regard to this paragraph) is qualifying foreign trade property and which is manufactured, produced, grown, or extracted outside the United States shall be treated as qualifying foreign trade property only if it is manufactured, produced, grown, or extracted by-- ``(A) a domestic corporation, ``(B) an individual who is a citizen or resident of the United States, ``(C) a foreign corporation with respect to which an election under subsection (e) (relating to foreign corporations electing to be subject to United States taxation) is in effect, or [[Page H10913]] ``(D) a partnership or other pass-thru entity all of the partners or owners of which are described in subparagraph (A), (B), or (C). Except as otherwise provided by the Secretary, tiered partnerships or pass-thru entities shall be treated as described in subparagraph (D) if each of the partnerships or entities is directly or indirectly wholly owned by persons described in subparagraph (A), (B), or (C). ``(3) Excluded property.--The term `qualifying foreign trade property' shall not include-- ``(A) property leased or rented by the taxpayer for use by any related person, ``(B) patents, inventions, models, designs, formulas, or processes whether or not patented, copyrights (other than films, tapes, records, or similar reproductions, and other than computer software (whether or not patented), for commercial or home use), goodwill, trademarks, trade brands, franchises, or other like property, ``(C) oil or gas (or any primary product thereof), ``(D) products the transfer of which is prohibited or curtailed to effectuate the policy set forth in paragraph (2)(C) of section 3 of Public Law 96-72, or ``(E) any unprocessed timber which is a softwood. For purposes of subparagraph (E), the term `unprocessed timber' means any log, cant, or similar form of timber. ``(4) Property in short supply.--If the President determines that the supply of any property described in paragraph (1) is insufficient to meet the requirements of the domestic economy, the President may by Executive order designate the property as in short supply. Any property so designated shall not be treated as qualifying foreign trade property during the period beginning with the date specified in the Executive order and ending with the date specified in an Executive order setting forth the President's determination that the property is no longer in short supply. ``(b) Other Definitions and Rules.--For purposes of this subpart-- ``(1) Transaction.-- ``(A) In general.--The term `transaction' means-- ``(i) any sale, exchange, or other disposition, ``(ii) any lease or rental, and ``(iii) any furnishing of services. ``(B) Grouping of transactions.--To the extent provided in regulations, any provision of this subpart which, but for this subparagraph, would be applied on a transaction-by- transaction basis may be applied by the taxpayer on the basis of groups of transactions based on product lines or recognized industry or trade usage. Such regulations may permit different groupings for different purposes. ``(2) United states defined.--The term `United States' includes the Commonwealth of Puerto Rico. The preceding sentence shall not apply for purposes of determining whether a corporation is a domestic corporation. ``(3) Related person.--A person shall be related to another person if such persons are treated as a single employer under subsection (a) or (b) of section 52 or subsection (m) or (o) of section 414, except that determinations under subsections (a) and (b) of section 52 shall be made without regard to section 1563(b). ``(4) Gross and taxable income.--Section 114 shall not be taken into account in determining the amount of gross income or foreign trade income from any transaction. ``(c) Source Rule.--Under regulations, in the case of qualifying foreign trade property manufactured, produced, grown, or extracted within the United States, the amount of income of a taxpayer from any sales transaction with respect to such property which is treated as from sources without the United States shall not exceed-- ``(1) in the case of a taxpayer computing its qualifying foreign trade income under section 941(a)(1)(B), the amount of the taxpayer's foreign trade income which would (but for this subsection) be treated as from sources without the United States if the foreign trade income were reduced by an amount equal to 4 percent of the foreign trading gross receipts with respect to the transaction, and ``(2) in the case of a taxpayer computing its qualifying foreign trade income under section 941(a)(1)(C), 50 percent of the amount of the taxpayer's foreign trade income which would (but for this subsection) be treated as from sources without the United States. ``(d) Treatment of Withholding Taxes.-- ``(1) In general.--For purposes of section 114(d), any withholding tax shall not be treated as paid or accrued with respect to extraterritorial income which is excluded from gross income under section 114(a). For purposes of this paragraph, the term `withholding tax' means any tax which is imposed on a basis other than residence and for which credit is allowable under section 901 or 903. ``(2) Exception.--Paragraph (1) shall not apply to any taxpayer with respect to extraterritorial income from any transaction if the taxpayer computes its qualifying foreign trade income with respect to the transaction under section 941(a)(1)(A). ``(e) Election To Be Treated as Domestic Corporation.-- ``(1) In general.--An applicable foreign corporation may elect to be treated as a domestic corporation for all purposes of this title if such corporation waives all benefits to such corporation granted by the United States under any treaty. No election under section 1362(a) may be made with respect to such corporation. ``(2) Applicable foreign corporation.--For purposes of paragraph (1), the term `applicable foreign corporation' means any foreign corporation if-- ``(A) such corporation manufactures, produces, grows, or extracts property in the ordinary course of such corporation's trade or business, or ``(B) substantially all of the gross receipts of such corporation are foreign trading gross receipts. ``(3) Period of election.-- ``(A) In general.--Except as otherwise provided in this paragraph, an election under paragraph (1) shall apply to the taxable year for which made and all subsequent taxable years unless revoked by the taxpayer. Any revocation of such election shall apply to taxable years beginning after such revocation. ``(B) Termination.--If a corporation which made an election under paragraph (1) for any taxable year fails to meet the requirements of subparagraph (A) or (B) of paragraph (2) for any subsequent taxable year, such election shall not apply to any taxable year beginning after such subsequent taxable year. ``(C) Effect of revocation or termination.--If a corporation which made an election under paragraph (1) revokes such election or such election is terminated under subparagraph (B), such corporation (and any successor corporation) may not make such election for any of the 5 taxable years beginning with the first taxable year for which such election is not in effect as a result of such revocation or termination. ``(4) Special rules.-- ``(A) Requirements.--This subsection shall not apply to an applicable foreign corporation if such corporation fails to meet the requirements (if any) which the Secretary may prescribe to ensure that the taxes imposed by this chapter on such corporation are paid. ``(B) Effect of election, revocation, and termination.-- ``(i) Election.--For purposes of section 367, a foreign corporation making an election under this subsection shall be treated as transferring (as of the first day of the first taxable year to which the election applies) all of its assets to a domestic corporation in connection with an exchange to which section 354 applies. ``(ii) Revocation and termination.--For purposes of section 367, if-- ``(I) an election is made by a corporation under paragraph (1) for any taxable year, and ``(II) such election ceases to apply for any subsequent taxable year, such corporation shall be treated as a domestic corporation transferring (as of the 1st day of the first such subsequent taxable year to which such election ceases to apply) all of its property to a foreign corporation in connection with an exchange to which section 354 applies. ``(C) Eligibility for election.--The Secretary may by regulation designate one or more classes of corporations which may not make the election under this subsection. ``(f) Rules Relating to Allocations of Qualifying Foreign Trade Income From Shared Partnerships.-- ``(1) In general.--If-- ``(A) a partnership maintains a separate account for transactions (to which this subpart applies) with each partner, ``(B) distributions to each partner with respect to such transactions are based on the amounts in the separate account maintained with respect to such partner, and ``(C) such partnership meets such other requirements as the Secretary may by regulations prescribe, then such partnership shall allocate to each partner items of income, gain, loss, and deduction (including qualifying foreign trade income) from any transaction to which this subpart applies on the basis of such separate account. ``(2) Special rules.--For purposes of this subpart, in the case of a partnership to which paragraph (1) applies-- ``(A) any partner's interest in the partnership shall not be taken into account in determining whether such partner is a related person with respect to any other partner, and ``(B) the election under section 942(a)(3) shall be made separately by each partner with respect to any transaction for which the partnership maintains separate accounts for each partner. ``(g) Exclusion for Patrons of Agricultural and Horticultural Cooperatives.--Any amount described in paragraph (1) or (3) of section 1385(a)-- ``(1) which is received by a person from an organization to which part I of subchapter T applies which is engaged in the marketing of agricultural or horticultural products, and ``(2) which is allocable to qualifying foreign trade income and designated as such by the organization in a written notice mailed to its patrons during the payment period described in section 1382(d), shall be treated as qualifying foreign trade income of such person for purposes of section 114. The taxable income of the organization shall not be reduced under section 1382 by reason of any amount to which the preceding sentence applies. ``(h) Special Rule for DISCs.--Section 114 shall not apply to any taxpayer for any taxable year if, at any time during the taxable year, the taxpayer is a member of any controlled group of corporations (as defined in section 927(d)(4), as in effect before the date of the enactment of this subsection) of which a DISC is a member.'' SEC. 103. TECHNICAL AND CONFORMING AMENDMENTS. (1) The second sentence of section 56(g)(4)(B)(i) is amended by inserting before the period ``or under section 114''. (2) Section 275(a) is amended-- (A) by striking ``or'' at the end of paragraph (4)(A), by striking the period at the end of paragraph (4)(B) and inserting ``, or'', and by adding at the end of paragraph (4) the following new subparagraph: ``(C) such taxes are paid or accrued with respect to qualifying foreign trade income (as defined in section 941).''; and [[Page H10914]] (B) by adding at the end the following the following new sentence: ``A rule similar to the rule of section 943(d) shall apply for purposes of paragraph (4)(C).''. (3) Paragraph (3) of section 864(e) is amended-- (A) by striking ``For purposes of'' and inserting: ``(A) In general.--For purposes of''; and (B) by adding at the end the following new subparagraph: ``(B) Assets producing exempt extraterritorial income.--For purposes of allocating and apportioning any interest expense, there shall not be taken into account any qualifying foreign trade property (as defined in section 943(a)) which is held by the taxpayer for lease or rental in the ordinary course of trade or business for use by the lessee outside the United States (as defined in section 943(b)(2)).''. (4) Section 903 is amended by striking ``164(a)'' and inserting ``114, 164(a),''. (5) Section 999(c)(1) is amended by inserting ``941(a)(5),'' after ``908(a),''. (6) The table of sections for part III of subchapter B of chapter 1 is amended by inserting before the item relating to section 115 the following new item: ``Sec. 114. Extraterritorial income.''. (7) The table of subparts for part III of subchapter N of chapter 1 is amended by striking the item relating to subpart E and inserting the following new item: ``Subpart E. Qualifying foreign trade income.''. (8) The table of subparts for part III of subchapter N of chapter 1 is amended by striking the item relating to subpart C. SEC. 104. EFFECTIVE DATE. (a) In General.--The amendments made by this title shall apply to transactions after September 30, 2000. (b) No New FSCs; Termination of Inactive FSCs.-- (1) No new fscs.--No corporation may elect after September 30, 2000, to be a FSC (as defined in section 922 of the Internal Revenue Code of 1986, as in effect before the amendments made by this Act). (2) Termination of inactive fscs.--If a FSC has no foreign trade income (as defined in section 923(b) of such Code, as so in effect) for any period of 5 consecutive taxable years beginning after December 31, 2001, such FSC shall cease to be treated as a FSC for purposes of such Code for any taxable year beginning after such period. (c) Transition Period for Existing Foreign Sales Corporations.-- (1) In general.--In the case of a FSC (as so defined) in existence on September 30, 2000, and at all times thereafter, the amendments made by this Act shall not apply to any transaction in the ordinary course of trade or business involving a FSC which occurs-- (A) before January 1, 2002; or (B) after December 31, 2001, pursuant to a binding contract-- (i) which is between the FSC (or any related person) and any person which is not a related person; and (ii) which is in effect on September 30, 2000, and at all times thereafter. For purposes of this paragraph, a binding contract shall include a purchase option, renewal option, or replacement option which is included in such contract and which is enforceable against the seller or lessor. (2) Election to have amendments apply earlier.--A taxpayer may elect to have the amendments made by this Act apply to any transaction by a FSC or any related person to which such amendments would apply but for the application of paragraph (1). Such election shall be effective for the taxable year for which made and all subsequent taxable years, and, once made, may be revoked only with the consent of the Secretary of the Treasury. (3) Exception for old earnings and profits of certain corporations.-- (A) In general.--In the case of a foreign corporation to which this paragraph applies-- (i) earnings and profits of such corporation accumulated in taxable years ending before October 1, 2000, shall not be included in the gross income of the persons holding stock in such corporation by reason of section 943(e)(4)(B)(i), and (ii) rules similar to the rules of clauses (ii), (iii), and (iv) of section 953(d)(4)(B) shall apply with respect to such earnings and profits. The preceding sentence shall not apply to earnings and profits acquired in a transaction after September 30, 2000, to which section 381 applies unless the distributor or transferor corporation was immediately before the transaction a foreign corporation to which this paragraph applies. (B) Existing fscs.--This paragraph shall apply to any controlled foreign corporation (as defined in section 957) if-- (i) such corporation is a FSC (as so defined) in existence on September 30, 2000, (ii) such corporation is eligible to make the election under section 943(e) by reason of being described in paragraph (2)(B) of such section, and (iii) such corporation makes such election not later than for its first taxable year beginning after December 31, 2001. (C) Other corporations.--This paragraph shall apply to any controlled foreign corporation (as defined in section 957), and such corporation shall (notwithstanding any provision of section 943(e)) be treated as an applicable foreign corporation for purposes of section 943(e), if-- (i) such corporation is in existence on September 30, 2000, (ii) as of such date, such corporation is wholly owned (directly or indirectly) by a domestic corporation (determined without regard to any election under section 943(e)), (iii) for each of the 3 taxable years preceding the first taxable year to which the election under section 943(e) by such controlled foreign corporation applies-- (I) all of the gross income of such corporation is subpart F income (as defined in section 952), including by reason of section 954(b)(3)(B), and (II) in the ordinary course of such corporation's trade or business, such corporation regularly sold (or paid commissions) to a FSC which on September 30, 2000, was a related person to such corporation, (iv) such corporation has never made an election under section 922(a)(2) (as in effect before the date of the enactment of this paragraph) to be treated as a FSC, and (v) such corporation makes the election under section 943(e) not later than for its first taxable year beginning after December 31, 2001. The preceding sentence shall cease to apply as of the date that the domestic corporation referred to in clause (ii) ceases to wholly own (directly or indirectly) such controlled foreign corporation. (4) Related person.--For purposes of this subsection, the term ``related person'' has the meaning given to such term by section 943(b)(3). (5) Section references.--Except as otherwise expressly provided, any reference in this subsection to a section or other provision shall be considered to be a reference to a section or other provision of the Internal Revenue Code of 1986, as amended by this title. (d) Special Rules Relating to Leasing Transactions.-- (1) Sales income.--If foreign trade income in connection with the lease or rental of property described in section 927(a)(1)(B) of such Code (as in effect before the amendments made by this Act) is treated as exempt foreign trade income for purposes of section 921(a) of such Code (as so in effect), such property shall be treated as property described in section 941(c)(1)(B) of such Code (as added by this Act) for purposes of applying section 941(c)(2) of such Code (as so added) to any subsequent transaction involving such property to which the amendments made by this Act apply. (2) Limitation on use of gross receipts method.--If any person computed its foreign trade income from any transaction with respect to any property on the basis of a transfer price determined under the method described in section 925(a)(1) of such Code (as in effect before the amendments made by this Act), then the qualifying foreign trade income (as defined in section 941(a) of such Code, as in effect after such amendment) of such person (or any related person) with respect to any other transaction involving such property (and to which the amendments made by this Act apply) shall be zero. TITLE II--SMALL BUSINESS TAX RELIEF SEC. 201. EXTENSION OF WORK OPPORTUNITY TAX CREDIT. (a) In General.--Section 51(c)(4)(B) is amended by striking ``December 31, 2001'' and inserting ``June 30, 2004''. (b) Effective Date.--The amendment made by this section shall apply to individuals who begin work for the employer after December 31, 2001. SEC. 202. INCREASE IN AMORTIZABLE REFORESTATION EXPENDITURES, ETC. (a) Increase in Dollar Limitation.--Paragraph (1) of section 194(b) (relating to amortization of reforestation expenditures) is amended by striking ``$10,000 ($5,000'' and inserting ``$25,000 ($12,500''. (b) Temporary Suspension of Increased Dollar Limitation.-- (1) In general.--Subsection (b) of section 194 (relating to amortization of reforestation expenditures) is amended by adding at the end the following new paragraph: ``(5) Suspension of dollar limitation.--Paragraph (1) shall not apply to taxable years beginning after December 31, 2000, and before January 1, 2004.''. (2) Conforming amendment.--Paragraph (1) of section 48(b) is amended by striking ``section 194(b)(1)'' and inserting ``section 194(b)(1) and without regard to section 194(b)(5)''. (c) Capital Gain Treatment Under Section 631(b) To Apply to Outright Sales by Land Owner.-- (1) In general.--The first sentence of section 631(b) (relating to disposal of timber with a retained economic interest) is amended by striking ``retains an economic interest in such timber'' and inserting ``either retains an economic interest in such timber or makes an outright sale of such timber''. (2) Conforming amendment.--The third sentence of section 631(b) is amended by striking ``The date of disposal'' and inserting ``In the case of disposal of timber with a retained economic interest, the date of disposal''. (d) Effective Dates.-- (1) Subsections (a) and (b).--The amendments made by subsections (a) and (b) shall apply to taxable years beginning after December 31, 2000. (2) Subsection (c).--The amendment made by subsection (c) shall apply to sales after the date of the enactment of this Act. SEC. 203. INCREASE IN EXPENSE TREATMENT FOR SMALL BUSINESSES. (a) In General.--Paragraph (1) of section 179(b) (relating to dollar limitation) is amended to read as follows: ``(1) Dollar limitation.--The aggregate cost which may be taken into account under subsection (a) for any taxable year shall not exceed $35,000.''. (b) Effective Date.--The amendment made by this section shall apply to taxable years beginning after December 31, 2000. SEC. 204. INCREASED DEDUCTION FOR MEAL EXPENSES. (a) In General.--Paragraph (1) of section 274(n) (relating to only 50 percent of meal and [[Page H10915]] entertainment expenses allowed as deduction) is amended by striking ``50 percent'' in the text and inserting ``the allowable percentage''. (b) Allowable Percentage.--Subsection (n) of section 274 is amended by redesignating paragraphs (2) and (3) as paragraphs (3) and (4), respectively, and by inserting after paragraph (1) the following new paragraph: ``(2) Allowable percentage.--For purposes of paragraph (1), the allowable percentage is-- ``(A) in the case of amounts for items described in paragraph (1)(B), 50 percent, and ``(B) in the case of expenses for food or beverages, 70 percent.''. (c) Conforming Amendment.--The heading for subsection (n) of section 274 is amended by striking ``50 Percent'' and inserting ``Limited Percentages''. (d) Effective Date.--The amendments made by this section shall apply to taxable years beginning after December 31, 2000. SEC. 205. INCREASED DEDUCTIBILITY OF BUSINESS MEAL EXPENSES FOR INDIVIDUALS SUBJECT TO FEDERAL LIMITATIONS ON HOURS OF SERVICE. (a) In General.--Paragraph (4) of section 274(n) (relating to limited percentages of meal and entertainment expenses allowed as deduction), as redesignated by section 204, is amended to read as follows: ``(4) Special rule for individuals subject to federal hours of

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CONFERENCE REPORT ON H.R. 2614, CERTIFIED DEVELOPMENT COMPANY PROGRAM IMPROVEMENTS ACT OF 2000
(House of Representatives - October 25, 2000)

Text of this article available as: TXT PDF [Pages H10909-H11087] CONFERENCE REPORT ON H.R. 2614, CERTIFIED DEVELOPMENT COMPANY PROGRAM IMPROVEMENTS ACT OF 2000 Mr. ARMEY submitted the following conference report and statement on the bill (H.R. 2614) to amend the Small Business Investment Act to make improvements to the certified development company program, and for other purposes: Conference Report (H. Rept. 106-1004) The committee of conference on the disagreeing votes of the two Houses on the amendment of the Senate to the bill (H.R. 2614) to amend the Small Business Investment Act to make improvements to the certified development company program, and for other purposes, having met, after full and free conference, have agreed to recommend and do recommend to their respective Houses as follows: That the House recede from its disagreement to the amendment of the Senate and agree to the same with an amendment as follows: In lieu of the matter proposed to be inserted by the Senate amendment, insert the following: SECTION 1. ENACTMENT OF OTHER PROVISIONS OF LAW. The provisions of the following bills of the 106th Congress are hereby enacted into law: (1) H.R. 5538, as introduced on October 25, 2000 (the Minimum Wage Act of 2000). (2) H.R. 5542, as introduced on October 25, 2000 (the Taxpayer Relief Act of 2000). (3) H.R. 5543, as introduced on October 25, 2000 (the Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000). (4) H.R. 5544, as introduced on October 25, 2000 (the Pain Relief Promotion Act of 2000). (5) H.R. 5545, as introduced on October 25, 2000 (the Small Business Reauthorization Act of 2000). SEC. 2. PUBLICATION OF ACT. In publishing this Act in slip form and in the United States Statutes at Large pursuant to section 112 of title 1, United States Code, the Archivist of the United States shall include after the date of approval appendixes setting forth the texts of the bills referred to in section 1. And the Senate agree to the same. Jim Talent, Dick Armey, Managers on the Part of the House. Christopher Bond, Conrad Burns, Managers on the Part of the Senate. ---------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------- NOTICE--OCTOBER 23, 2000 A final issue of the Congressional Record for the 106th Congress, 2d Session, will be published on November 29, 2000, in order to permit Members to revise and extend their remarks. All material for insertion must be signed by the Member and delivered to the respective offices of the Official Reporters of Debates (Room HT-60 or S-123 of the Capitol), Monday through Friday, between the hours of 10:00 a.m. and 3:00 p.m. through November 28. The final issue will be dated November 29, 2000, and will be delivered on Friday, December 1, 2000. None of the material printed in the final issue of the Congressional Record may contain subject matter, or relate to any event that occurred after the sine die date. Senators' statements should also be submitted electronically, either on a disk to accompany the signed statement, or by e-mail to the Official Reporters of Debates at ``Records@Reporters''. Members of the House of Representatives' statements may also be submitted electronically by e-mail, to accompany the signed statement, and formatted according to the instructions for the Extensions of Remarks template at https://clerkhouse.house.gov. The Official Reporters will transmit to GPO the template formatted electronic file only after receipt of, and authentication with, the hard copy, signed manuscript. Deliver statements to the Official Reporters in Room HT-60. Members of Congress desiring to purchase reprints of material submitted for inclusion in the Congressional Record may do so by contacting the Congressional Printing Management Division, at the Government Printing Office, on 512-0224, between the hours of 8:00 a.m. and 4:00 p.m. daily. By order of the Joint Committee on Printing. WILLIAM M. THOMAS, Chairman. ---------------------------------------------------------------------------------------------------------------- [[Page H10910]] JOINT EXPLANATORY STATEMENT OF THE COMMITTEE OF CONFERENCE The managers on the part of the House and the Senate at the conference on the disagreeing votes of the two Houses on the amendment of the Senate to the bill (H.R. 2614) to amend the Small Business Investment Act to make improvements to the certified development company program, and for other purposes, submit the following joint statement to the House and the Senate in explanation of the effect of the action agreed upon by the managers and recommended in the accompanying conference report: The Senate amendment struck all of the House bill after the enacting clause and inserted a substitute text. The House recedes from its disagreement to the amendment of the Senate with an amendment that is a substitute for the House bill and the Senate amendment. The conference agreement would enact by reference the provisions of five bills introduced on October 25, 2000. Those bills are the following: (1) H.R. 5538, the Minimum Wage Act of 2000. (2) H.R. 5542, the Taxpayer Relief Act of 2000. (3) H.R. 5543, the Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000. (4) H.R. 5544, the Pain Relief Promotion Act of 2000. (5) H.R. 5545, the Small Business Reauthorization Act of 2000. This joint statement sets out for convenience the text of each bill that would be enacted in the conference report by reference. minimum wage act of 2000 The conference agreement would enact the provisions of H.R. 5538, as introduced on October 25, 2000. The text of that bill follows: SECTION 1. SHORT TITLE. This Act may be cited as the ``Minimum Wage Act of 2000''. SEC. 2. MINIMUM WAGE INCREASE. Paragraph (1) of section 6(a) of the Fair Labor Standards Act of 1938 (29 U.S.C. 206(a)) is amended to read as follows: ``(1) except as otherwise provided in this section. Not less than $5.15 an hour during the period ending June 30, 2000, not less than $5.65 an hour during the year beginning January 1, 2001, and not less than $6.15 an hour beginning January 1, 2002;''. taxpayer relief act of 2000 The conference agreement would enact the provisions of H.R. 5542, as introduced on October 25, 2000. The text of that bill follows: SECTION 1. SHORT TITLE; AMENDMENT OF 1986 CODE. (a) Short Title.--This Act may be cited as the ``Taxpayer Relief Act of 2000''. (b) Amendment of 1986 Code.--Except as otherwise expressly provided, whenever in this Act an amendment or repeal is expressed in terms of an amendment to, or repeal of, a section or other provision, the reference shall be considered to be made to a section or other provision of the Internal Revenue Code of 1986. (c) Table of Contents.-- Sec. 1. Short title; amendment of 1986 Code. TITLE I--FSC REPEAL AND EXTRATERRITORIAL INCOME EXCLUSION Sec. 101. Repeal of foreign sales corporation rules. Sec. 102. Treatment of extraterritorial income. Sec. 103. Technical and conforming amendments. Sec. 104. Effective date. TITLE II--SMALL BUSINESS TAX RELIEF Sec. 201. Extension of work opportunity tax credit. Sec. 202. Increase in amortizable reforestation expenditures, etc. Sec. 203. Increase in expense treatment for small businesses. Sec. 204. Increased deduction for meal expenses. Sec. 205. Increased deductibility of business meal expenses for individuals subject to Federal limitations on hours of service. Sec. 206. Repeal of modification of installment method. Sec. 207. Income averaging not to increase alternative minimum tax liability; income averaging for fishermen. Sec. 208. Repeal of occupational taxes relating to distilled spirits, wine, and beer. Sec. 209. Exclusion from gross income for certain forgiven mortgage obligations. Sec. 210. Clarification of cash accounting rules for small business. Sec. 211. Amendments relating to demand deposit accounts at depository institutions. TITLE III--HEALTH INSURANCE AND LONG-TERM CARE INSURANCE PROVISIONS Sec. 301. Deduction for 100 percent of health insurance costs of self- employed individuals. Sec. 302. Deduction for health and long-term care insurance costs of individuals not participating in employer-subsidized health plans. Sec. 303. 2-year extension of availability of medical savings accounts. Sec. 304. Additional consumer protections for long-term care insurance. Sec. 305. Deduction for providing long-term care in the home to household members. TITLE IV--PENSION AND INDIVIDUAL RETIREMENT ARRANGEMENT PROVISIONS Sec. 400. Short title. Subtitle A--Individual Retirement Accounts Sec. 401. Modification of IRA contribution limits. Sec. 402. Deemed IRAs under employer plans. Sec. 403. Tax-free distributions from individual retirement accounts for charitable purposes. Sec. 404. Modification of AGI limits for Roth IRAs. Subtitle B--Expanding Coverage Sec. 411. Increase in benefit and contribution limits. Sec. 412. Plan loans for subchapter S owners, partners, and sole proprietors. Sec. 413. Modification of top-heavy rules. Sec. 414. Elective deferrals not taken into account for purposes of deduction limits. Sec. 415. Repeal of coordination requirements for deferred compensation plans of State and local governments and tax-exempt organizations. Sec. 416. Elimination of user fee for requests to IRS regarding pension plans. Sec. 417. Deduction limits. Sec. 418. Option to treat elective deferrals as after-tax Roth contributions. Subtitle C--Enhancing Fairness for Women Sec. 421. Catch-up contributions for individuals age 50 or over. Sec. 422. Equitable treatment for contributions of employees to defined contribution plans. Sec. 423. Faster vesting of certain employer matching contributions. Sec. 424. Simplify and update the minimum distribution rules. Sec. 425. Clarification of tax treatment of division of section 457 plan benefits upon divorce. Sec. 426. Provisions relating to hardship distributions. Sec. 427. Waiver of tax on nondeductible contributions for domestic or similar workers. Subtitle D--Increasing Portability for Participants Sec. 431. Rollovers allowed among various types of plans. Sec. 432. Rollovers of IRAs into workplace retirement plans. Sec. 433. Rollovers of after-tax contributions. Sec. 434. Hardship exception to 60-day rule. Sec. 435. Treatment of forms of distribution. Sec. 436. Rationalization of restrictions on distributions. Sec. 437. Purchase of service credit in governmental defined benefit plans. Sec. 438. Employers may disregard rollovers for purposes of cash-out amounts. Sec. 439. Minimum distribution and inclusion requirements for section 457 plans. Subtitle E--Strengthening Pension Security and Enforcement Sec. 441. Repeal of 155 percent of current liability funding limit. Sec. 442. Maximum contribution deduction rules modified and applied to all defined benefit plans. Sec. 443. Excise tax relief for sound pension funding. Sec. 444. Excise tax on failure to provide notice by defined benefit plans significantly reducing future benefit accruals. Sec. 445. Treatment of multiemployer plans under section 415. Sec. 446. Protection of investment of employee contributions to 401(k) plans. Sec. 447. Periodic pension benefits statements. Sec. 448. Prohibited allocations of stock in S corporation ESOP. Subtitle F--Reducing Regulatory Burdens Sec. 451. Modification of timing of plan valuations. Sec. 452. ESOP dividends may be reinvested without loss of dividend deduction. Sec. 453. Repeal of transition rule relating to certain highly compensated employees. Sec. 454. Employees of tax-exempt entities. Sec. 455. Clarification of treatment of employer-provided retirement advice. Sec. 456. Reporting simplification. Sec. 457. Improvement of employee plans compliance resolution system. Sec. 458. Repeal of the multiple use test. Sec. 459. Flexibility in nondiscrimination, coverage, and line of business rules. Sec. 460. Extension to all governmental plans of moratorium on application of certain nondiscrimination rules applicable to State and local plans. Sec. 461. Notice and consent period regarding distributions. Sec. 462. Annual report dissemination. Sec. 463. Technical corrections to SAVER Act. Sec. 464. Study of pension coverage. Subtitle G--Other ERISA Provisions Sec. 471. Missing participants. Sec. 472. Reduced PBGC premium for new plans of small employers. Sec. 473. Reduction of additional PBGC premium for new and small plans. Sec. 474. Authorization for PBGC to pay interest on premium overpayment refunds. Sec. 475. Substantial owner benefits in terminated plans. Sec. 476. Multiemployer plan benefits guarantee. Sec. 477. Civil penalties for breach of fiduciary responsibility. Sec. 478. Benefit suspension notice. Subtitle H--Plan Amendments Sec. 481. Provisions relating to plan amendments. [[Page H10911]] TITLE V--SCHOOL CONSTRUCTION PROVISIONS Sec. 501. Additional increase in arbitrage rebate exception for governmental bonds used to finance educational facilities. Sec. 502. Modification of arbitrage rebate rules applicable to public school construction bonds. Sec. 503. Modification of special arbitrage rule for certain funds. Sec. 504. Treatment of qualified public educational facility bonds as exempt facility bonds. Sec. 505. Expansion of qualified zone academy bond program. TITLE VI--COMMUNITY REVITALIZATION Subtitle A--Tax Incentives for Renewal Communities Sec. 601. Designation of and tax incentives for renewal communities. Sec. 602. Work opportunity credit for hiring youth residing in renewal communities. Subtitle B--Extension and Expansion of Empowerment Zone Incentives Sec. 611. Authority to designate 9 additional empowerment zones. Sec. 612. Extension of empowerment zone treatment through 2009. Sec. 613. 20 percent employment credit for all empowerment zones Sec. 614. Increased expensing under section 179. Sec. 615. Higher limits on tax-exempt empowerment zone facility bonds. Sec. 616. Nonrecognition of gain on rollover of empowerment zone investments. Sec. 617. Increased exclusion of gain on sale of empowerment zone stock. Subtitle C--New Markets Tax Credit Sec. 621. New markets tax credit. Subtitle D--Improvements in Low-Income Housing Credit Sec. 631. Modification of State ceiling on low-income housing credit. Sec. 632. Modification of criteria for allocating housing credits among projects. Sec. 633. Additional responsibilities of housing credit agencies. Sec. 634. Modifications to rules relating to basis of building which is eligible for credit. Sec. 635. Other modifications. Sec. 636. Carryforward rules. Sec. 637. Effective date. Subtitle E--Other Community Renewal and New Markets Assistance Sec. 641. Transfer of unoccupied and substandard HUD-held housing to local governments and community development corporations. Sec. 642. Transfer of HUD assets in revitalization areas. Sec. 643. Risk-sharing demonstration. Sec. 644. Prevention and treatment of substance abuse; services provided through religious organizations. Subtitle F--Other Provisions Sec. 651. Acceleration of phase-in of increase in volume cap on private activity bonds. Sec. 652. Modifications to expensing of environmental remediation costs. Sec. 653. Extension of DC homebuyer tax credit. TITLE VII--ADMINISTRATIVE, MISCELLANEOUS, AND TECHNICAL PROVISIONS Subtitle A--Administrative Provisions Sec. 701. Exemption of certain reporting requirements. Sec. 702. Extension of deadlines for IRS compliance with certain notice requirements. Sec. 703. Extension of authority for undercover operations. Sec. 704. Confidentiality of certain documents relating to closing and similar agreements and to agreements with foreign governments. Sec. 705. Increase in threshold for Joint Committee reports on refunds and credits. Sec. 706. Treatment of missing children with respect to certain tax benefits. Sec. 707. Amendments to statutes referencing yield on 52-week Treasury bills. Sec. 708. Adjustments for Consumer Price Index error. Sec. 709. Prevention of duplication of loss through assumption of liabilities giving rise to a deduction. Subtitle B--Miscellaneous Provisions Sec. 710. Repeal of 4.3-cent motor fuel excise taxes on railroads and inland waterway transportation which remain in general fund. Sec. 711. Repeal of reduction of deductions for mutual life insurance companies. Sec. 712. Repeal of policyholders surplus account provisions. Sec. 713. Credit to holders of qualified Amtrak bonds. Sec. 714. Farm, fishing, and ranch risk management accounts. Sec. 715. Extension of enhanced deduction for corporate donations of computer technology. Sec. 716. Relief from Federal tax liability arising with respect to certain claims against the Department of Agriculture for discrimination in farm credit and benefit programs. Sec. 717. Expansion of credit for adoption expenses. Sec. 718. Study concerning United States insurance companies with certain offshore reinsurance affiliates. Sec. 719. Treatment of Indian tribal governments under Federal Unemployment Tax Act. Subtitle C--Technical Corrections Sec. 721. Amendments related to Ticket to Work and Work Incentives Improvement Act of 1999. Sec. 722. Amendments related to Tax and Trade Relief Extension Act of 1998. Sec. 723. Amendments related to Internal Revenue Service Restructuring and Reform Act of 1998. Sec. 724. Amendments related to Taxpayer Relief Act of 1997. Sec. 725. Amendments related to Balanced Budget Act of 1997. Sec. 726. Amendments related to Small Business Job Protection Act of 1996. Sec. 727. Amendment related to Revenue Reconciliation Act of 1990. Sec. 728. Other technical corrections. Sec. 729. Clerical changes. Subtitle D--Pay-Go Adjustments Sec. 731. Avoidance of a Pay-Go sequestration for fiscal year 2001. TITLE I--FSC REPEAL AND EXTRATERRITORIAL INCOME EXCLUSION SEC. 101. REPEAL OF FOREIGN SALES CORPORATION RULES. Subpart C of part III of subchapter N of chapter 1 (relating to taxation of foreign sales corporations) is hereby repealed. SEC. 102. TREATMENT OF EXTRATERRITORIAL INCOME. (a) In General.--Part III of subchapter B of chapter 1 (relating to items specifically excluded from gross income) is amended by inserting before section 115 the following new section: ``SEC. 114. EXTRATERRITORIAL INCOME. ``(a) Exclusion.--Gross income does not include extraterritorial income. ``(b) Exception.--Subsection (a) shall not apply to extraterritorial income which is not qualifying foreign trade income as determined under subpart E of part III of subchapter N. ``(c) Disallowance of Deductions.-- ``(1) In general.--Any deduction of a taxpayer allocated under paragraph (2) to extraterritorial income of the taxpayer excluded from gross income under subsection (a) shall not be allowed. ``(2) Allocation.--Any deduction of the taxpayer properly apportioned and allocated to the extraterritorial income derived by the taxpayer from any transaction shall be allocated on a proportionate basis between-- ``(A) the extraterritorial income derived from such transaction which is excluded from gross income under subsection (a), and ``(B) the extraterritorial income derived from such transaction which is not so excluded. ``(d) Denial of Credits for Certain Foreign Taxes.-- Notwithstanding any other provision of this chapter, no credit shall be allowed under this chapter for any income, war profits, and excess profits taxes paid or accrued to any foreign country or possession of the United States with respect to extraterritorial income which is excluded from gross income under subsection (a). ``(e) Extraterritorial Income.--For purposes of this section, the term `extraterritorial income' means the gross income of the taxpayer attributable to foreign trading gross receipts (as defined in section 942) of the taxpayer.''. (b) Qualifying Foreign Trade Income.--Part III of subchapter N of chapter 1 is amended by inserting after subpart D the following new subpart: ``Subpart E--Qualifying Foreign Trade Income ``Sec. 941. Qualifying foreign trade income. ``Sec. 942. Foreign trading gross receipts. ``Sec. 943. Other definitions and special rules. ``SEC. 941. QUALIFYING FOREIGN TRADE INCOME. ``(a) Qualifying Foreign Trade Income.--For purposes of this subpart and section 114-- ``(1) In general.--The term `qualifying foreign trade income' means, with respect to any transaction, the amount of gross income which, if excluded, will result in a reduction of the taxable income of the taxpayer from such transaction equal to the greatest of-- ``(A) 30 percent of the foreign sale and leasing income derived by the taxpayer from such transaction, ``(B) 1.2 percent of the foreign trading gross receipts derived by the taxpayer from the transaction, or ``(C) 15 percent of the foreign trade income derived by the taxpayer from the transaction. In no event shall the amount determined under subparagraph (B) exceed 200 percent of the amount determined under subparagraph (C). ``(2) Alternative computation.--A taxpayer may compute its qualifying foreign trade income under a subparagraph of paragraph (1) other than the subparagraph which results in the greatest amount of such income. ``(3) Limitation on use of foreign trading gross receipts method.--If any person computes its qualifying foreign trade income from any transaction with respect to any property under paragraph (1)(B), the qualifying foreign trade income of such person (or any related person) with respect to any other transaction involving such property shall be zero. ``(4) Rules for marginal costing.--The Secretary shall prescribe regulations setting forth rules for the allocation of expenditures in computing foreign trade income under paragraph (1)(C) in those cases where a taxpayer is seeking to establish or maintain a market for qualifying foreign trade property. ``(5) Participation in international boycotts, etc.--Under regulations prescribed by the Secretary, the qualifying foreign trade income of a taxpayer for any taxable year shall be reduced (but not below zero) by the sum of-- [[Page H10912]] ``(A) an amount equal to such income multiplied by the international boycott factor determined under section 999, and ``(B) any illegal bribe, kickback, or other payment (within the meaning of section 162(c)) paid by or on behalf of the taxpayer directly or indirectly to an official, employee, or agent in fact of a government. ``(b) Foreign Trade Income.--For purposes of this subpart-- ``(1) In general.--The term `foreign trade income' means the taxable income of the taxpayer attributable to foreign trading gross receipts of the taxpayer. ``(2) Special rule for cooperatives.--In any case in which an organization to which part I of subchapter T applies which is engaged in the marketing of agricultural or horticultural products sells qualifying foreign trade property, in computing the taxable income of such cooperative, there shall not be taken into account any deduction allowable under subsection (b) or (c) of section 1382 (relating to patronage dividends, per-unit retain allocations, and nonpatronage distributions). ``(c) Foreign Sale and Leasing Income.--For purposes of this section-- ``(1) In general.--The term `foreign sale and leasing income' means, with respect to any transaction-- ``(A) foreign trade income properly allocable to activities which-- ``(i) are described in paragraph (2)(A)(i) or (3) of section 942(b), and ``(ii) are performed by the taxpayer (or any person acting under a contract with such taxpayer) outside the United States, or ``(B) foreign trade income derived by the taxpayer in connection with the lease or rental of qualifying foreign trade property for use by the lessee outside the United States. ``(2) Special rules for leased property.-- ``(A) Sales income.--The term `foreign sale and leasing income' includes any foreign trade income derived by the taxpayer from the sale of property described in paragraph (1)(B). ``(B) Limitation in certain cases.--Except as provided in regulations, in the case of property which-- ``(i) was manufactured, produced, grown, or extracted by the taxpayer, or ``(ii) was acquired by the taxpayer from a related person for a price which was not determined in accordance with the rules of section 482, the amount of foreign trade income which may be treated as foreign sale and leasing income under paragraph (1)(B) or subparagraph (A) of this paragraph with respect to any transaction involving such property shall not exceed the amount which would have been determined if the taxpayer had acquired such property for the price determined in accordance with the rules of section 482. ``(3) Special rules.-- ``(A) Excluded property.--Foreign sale and leasing income shall not include any income properly allocable to excluded property described in subparagraph (B) of section 943(a)(3) (relating to intangibles). ``(B) Only direct expenses taken into account.--For purposes of this subsection, any expense other than a directly allocable expense shall not be taken into account in computing foreign trade income. ``SEC. 942. FOREIGN TRADING GROSS RECEIPTS. ``(a) Foreign Trading Gross Receipts.-- ``(1) In general.--Except as otherwise provided in this section, for purposes of this subpart, the term `foreign trading gross receipts' means the gross receipts of the taxpayer which are-- ``(A) from the sale, exchange, or other disposition of qualifying foreign trade property, ``(B) from the lease or rental of qualifying foreign trade property for use by the lessee outside the United States, ``(C) for services which are related and subsidiary to-- ``(i) any sale, exchange, or other disposition of qualifying foreign trade property by such taxpayer, or ``(ii) any lease or rental of qualifying foreign trade property described in subparagraph (B) by such taxpayer, ``(D) for engineering or architectural services for construction projects located (or proposed for location) outside the United States, or ``(E) for the performance of managerial services for a person other than a related person in furtherance of the production of foreign trading gross receipts described in subparagraph (A), (B), or (C). Subparagraph (E) shall not apply to a taxpayer for any taxable year unless at least 50 percent of its foreign trading gross receipts (determined without regard to this sentence) for such taxable year is derived from activities described in subparagraph (A), (B), or (C). ``(2) Certain receipts excluded on basis of use; subsidized receipts excluded.--The term `foreign trading gross receipts' shall not include receipts of a taxpayer from a transaction if-- ``(A) the qualifying foreign trade property or services-- ``(i) are for ultimate use in the United States, or ``(ii) are for use by the United States or any instrumentality thereof and such use of qualifying foreign trade property or services is required by law or regulation, or ``(B) such transaction is accomplished by a subsidy granted by the government (or any instrumentality thereof) of the country or possession in which the property is manufactured, produced, grown, or extracted. ``(3) Election to exclude certain receipts.--The term `foreign trading gross receipts' shall not include gross receipts of a taxpayer from a transaction if the taxpayer elects not to have such receipts taken into account for purposes of this subpart. ``(b) Foreign Economic Process Requirements.-- ``(1) In general.--Except as provided in subsection (c), a taxpayer shall be treated as having foreign trading gross receipts from any transaction only if economic processes with respect to such transaction take place outside the United States as required by paragraph (2). ``(2) Requirement.-- ``(A) In general.--The requirements of this paragraph are met with respect to the gross receipts of a taxpayer derived from any transaction if-- ``(i) such taxpayer (or any person acting under a contract with such taxpayer) has participated outside the United States in the solicitation (other than advertising), the negotiation, or the making of the contract relating to such transaction, and ``(ii) the foreign direct costs incurred by the taxpayer attributable to the transaction equal or exceed 50 percent of the total direct costs attributable to the transaction. ``(B) Alternative 85-percent test.--A taxpayer shall be treated as satisfying the requirements of subparagraph (A)(ii) with respect to any transaction if, with respect to each of at least 2 subparagraphs of paragraph (3), the foreign direct costs incurred by such taxpayer attributable to activities described in such subparagraph equal or exceed 85 percent of the total direct costs attributable to activities described in such subparagraph. ``(C) Definitions.--For purposes of this paragraph-- ``(i) Total direct costs.--The term `total direct costs' means, with respect to any transaction, the total direct costs incurred by the taxpayer attributable to activities described in paragraph (3) performed at any location by the taxpayer or any person acting under a contract with such taxpayer. ``(ii) Foreign direct costs.--The term `foreign direct costs' means, with respect to any transaction, the portion of the total direct costs which are attributable to activities performed outside the United States. ``(3) Activities relating to qualifying foreign trade property.--The activities described in this paragraph are any of the following with respect to qualifying foreign trade property-- ``(A) advertising and sales promotion, ``(B) the processing of customer orders and the arranging for delivery, ``(C) transportation outside the United States in connection with delivery to the customer, ``(D) the determination and transmittal of a final invoice or statement of account or the receipt of payment, and ``(E) the assumption of credit risk. ``(4) Economic processes performed by related persons.--A taxpayer shall be treated as meeting the requirements of this subsection with respect to any sales transaction involving any property if any related person has met such requirements in such transaction or any other sales transaction involving such property. ``(c) Exception From Foreign Economic Process Requirement.-- ``(1) In general.--The requirements of subsection (b) shall be treated as met for any taxable year if the foreign trading gross receipts of the taxpayer for such year do not exceed $5,000,000. ``(2) Receipts of related persons aggregated.--All related persons shall be treated as one person for purposes of paragraph (1), and the limitation under paragraph (1) shall be allocated among such persons in a manner provided in regulations prescribed by the Secretary. ``(3) Special rule for pass-thru entities.--In the case of a partnership, S corporation, or other pass-thru entity, the limitation under paragraph (1) shall apply with respect to the partnership, S corporation, or entity and with respect to each partner, shareholder, or other owner. ``SEC. 943. OTHER DEFINITIONS AND SPECIAL RULES. ``(a) Qualifying Foreign Trade Property.--For purposes of this subpart-- ``(1) In general.--The term `qualifying foreign trade property' means property-- ``(A) manufactured, produced, grown, or extracted within or outside the United States, ``(B) held primarily for sale, lease, or rental, in the ordinary course of trade or business for direct use, consumption, or disposition outside the United States, and ``(C) not more than 50 percent of the fair market value of which is attributable to-- ``(i) articles manufactured, produced, grown, or extracted outside the United States, and ``(ii) direct costs for labor (determined under the principles of section 263A) performed outside the United States. For purposes of subparagraph (C), the fair market value of any article imported into the United States shall be its appraised value, as determined by the Secretary under section 402 of the Tariff Act of 1930 (19 U.S.C. 1401a) in connection with its importation, and the direct costs for labor under clause (ii) do not include costs that would be treated under the principles of section 263A as direct labor costs attributable to articles described in clause (i). ``(2) U.S. taxation to ensure consistent treatment.-- Property which (without regard to this paragraph) is qualifying foreign trade property and which is manufactured, produced, grown, or extracted outside the United States shall be treated as qualifying foreign trade property only if it is manufactured, produced, grown, or extracted by-- ``(A) a domestic corporation, ``(B) an individual who is a citizen or resident of the United States, ``(C) a foreign corporation with respect to which an election under subsection (e) (relating to foreign corporations electing to be subject to United States taxation) is in effect, or [[Page H10913]] ``(D) a partnership or other pass-thru entity all of the partners or owners of which are described in subparagraph (A), (B), or (C). Except as otherwise provided by the Secretary, tiered partnerships or pass-thru entities shall be treated as described in subparagraph (D) if each of the partnerships or entities is directly or indirectly wholly owned by persons described in subparagraph (A), (B), or (C). ``(3) Excluded property.--The term `qualifying foreign trade property' shall not include-- ``(A) property leased or rented by the taxpayer for use by any related person, ``(B) patents, inventions, models, designs, formulas, or processes whether or not patented, copyrights (other than films, tapes, records, or similar reproductions, and other than computer software (whether or not patented), for commercial or home use), goodwill, trademarks, trade brands, franchises, or other like property, ``(C) oil or gas (or any primary product thereof), ``(D) products the transfer of which is prohibited or curtailed to effectuate the policy set forth in paragraph (2)(C) of section 3 of Public Law 96-72, or ``(E) any unprocessed timber which is a softwood. For purposes of subparagraph (E), the term `unprocessed timber' means any log, cant, or similar form of timber. ``(4) Property in short supply.--If the President determines that the supply of any property described in paragraph (1) is insufficient to meet the requirements of the domestic economy, the President may by Executive order designate the property as in short supply. Any property so designated shall not be treated as qualifying foreign trade property during the period beginning with the date specified in the Executive order and ending with the date specified in an Executive order setting forth the President's determination that the property is no longer in short supply. ``(b) Other Definitions and Rules.--For purposes of this subpart-- ``(1) Transaction.-- ``(A) In general.--The term `transaction' means-- ``(i) any sale, exchange, or other disposition, ``(ii) any lease or rental, and ``(iii) any furnishing of services. ``(B) Grouping of transactions.--To the extent provided in regulations, any provision of this subpart which, but for this subparagraph, would be applied on a transaction-by- transaction basis may be applied by the taxpayer on the basis of groups of transactions based on product lines or recognized industry or trade usage. Such regulations may permit different groupings for different purposes. ``(2) United states defined.--The term `United States' includes the Commonwealth of Puerto Rico. The preceding sentence shall not apply for purposes of determining whether a corporation is a domestic corporation. ``(3) Related person.--A person shall be related to another person if such persons are treated as a single employer under subsection (a) or (b) of section 52 or subsection (m) or (o) of section 414, except that determinations under subsections (a) and (b) of section 52 shall be made without regard to section 1563(b). ``(4) Gross and taxable income.--Section 114 shall not be taken into account in determining the amount of gross income or foreign trade income from any transaction. ``(c) Source Rule.--Under regulations, in the case of qualifying foreign trade property manufactured, produced, grown, or extracted within the United States, the amount of income of a taxpayer from any sales transaction with respect to such property which is treated as from sources without the United States shall not exceed-- ``(1) in the case of a taxpayer computing its qualifying foreign trade income under section 941(a)(1)(B), the amount of the taxpayer's foreign trade income which would (but for this subsection) be treated as from sources without the United States if the foreign trade income were reduced by an amount equal to 4 percent of the foreign trading gross receipts with respect to the transaction, and ``(2) in the case of a taxpayer computing its qualifying foreign trade income under section 941(a)(1)(C), 50 percent of the amount of the taxpayer's foreign trade income which would (but for this subsection) be treated as from sources without the United States. ``(d) Treatment of Withholding Taxes.-- ``(1) In general.--For purposes of section 114(d), any withholding tax shall not be treated as paid or accrued with respect to extraterritorial income which is excluded from gross income under section 114(a). For purposes of this paragraph, the term `withholding tax' means any tax which is imposed on a basis other than residence and for which credit is allowable under section 901 or 903. ``(2) Exception.--Paragraph (1) shall not apply to any taxpayer with respect to extraterritorial income from any transaction if the taxpayer computes its qualifying foreign trade income with respect to the transaction under section 941(a)(1)(A). ``(e) Election To Be Treated as Domestic Corporation.-- ``(1) In general.--An applicable foreign corporation may elect to be treated as a domestic corporation for all purposes of this title if such corporation waives all benefits to such corporation granted by the United States under any treaty. No election under section 1362(a) may be made with respect to such corporation. ``(2) Applicable foreign corporation.--For purposes of paragraph (1), the term `applicable foreign corporation' means any foreign corporation if-- ``(A) such corporation manufactures, produces, grows, or extracts property in the ordinary course of such corporation's trade or business, or ``(B) substantially all of the gross receipts of such corporation are foreign trading gross receipts. ``(3) Period of election.-- ``(A) In general.--Except as otherwise provided in this paragraph, an election under paragraph (1) shall apply to the taxable year for which made and all subsequent taxable years unless revoked by the taxpayer. Any revocation of such election shall apply to taxable years beginning after such revocation. ``(B) Termination.--If a corporation which made an election under paragraph (1) for any taxable year fails to meet the requirements of subparagraph (A) or (B) of paragraph (2) for any subsequent taxable year, such election shall not apply to any taxable year beginning after such subsequent taxable year. ``(C) Effect of revocation or termination.--If a corporation which made an election under paragraph (1) revokes such election or such election is terminated under subparagraph (B), such corporation (and any successor corporation) may not make such election for any of the 5 taxable years beginning with the first taxable year for which such election is not in effect as a result of such revocation or termination. ``(4) Special rules.-- ``(A) Requirements.--This subsection shall not apply to an applicable foreign corporation if such corporation fails to meet the requirements (if any) which the Secretary may prescribe to ensure that the taxes imposed by this chapter on such corporation are paid. ``(B) Effect of election, revocation, and termination.-- ``(i) Election.--For purposes of section 367, a foreign corporation making an election under this subsection shall be treated as transferring (as of the first day of the first taxable year to which the election applies) all of its assets to a domestic corporation in connection with an exchange to which section 354 applies. ``(ii) Revocation and termination.--For purposes of section 367, if-- ``(I) an election is made by a corporation under paragraph (1) for any taxable year, and ``(II) such election ceases to apply for any subsequent taxable year, such corporation shall be treated as a domestic corporation transferring (as of the 1st day of the first such subsequent taxable year to which such election ceases to apply) all of its property to a foreign corporation in connection with an exchange to which section 354 applies. ``(C) Eligibility for election.--The Secretary may by regulation designate one or more classes of corporations which may not make the election under this subsection. ``(f) Rules Relating to Allocations of Qualifying Foreign Trade Income From Shared Partnerships.-- ``(1) In general.--If-- ``(A) a partnership maintains a separate account for transactions (to which this subpart applies) with each partner, ``(B) distributions to each partner with respect to such transactions are based on the amounts in the separate account maintained with respect to such partner, and ``(C) such partnership meets such other requirements as the Secretary may by regulations prescribe, then such partnership shall allocate to each partner items of income, gain, loss, and deduction (including qualifying foreign trade income) from any transaction to which this subpart applies on the basis of such separate account. ``(2) Special rules.--For purposes of this subpart, in the case of a partnership to which paragraph (1) applies-- ``(A) any partner's interest in the partnership shall not be taken into account in determining whether such partner is a related person with respect to any other partner, and ``(B) the election under section 942(a)(3) shall be made separately by each partner with respect to any transaction for which the partnership maintains separate accounts for each partner. ``(g) Exclusion for Patrons of Agricultural and Horticultural Cooperatives.--Any amount described in paragraph (1) or (3) of section 1385(a)-- ``(1) which is received by a person from an organization to which part I of subchapter T applies which is engaged in the marketing of agricultural or horticultural products, and ``(2) which is allocable to qualifying foreign trade income and designated as such by the organization in a written notice mailed to its patrons during the payment period described in section 1382(d), shall be treated as qualifying foreign trade income of such person for purposes of section 114. The taxable income of the organization shall not be reduced under section 1382 by reason of any amount to which the preceding sentence applies. ``(h) Special Rule for DISCs.--Section 114 shall not apply to any taxpayer for any taxable year if, at any time during the taxable year, the taxpayer is a member of any controlled group of corporations (as defined in section 927(d)(4), as in effect before the date of the enactment of this subsection) of which a DISC is a member.'' SEC. 103. TECHNICAL AND CONFORMING AMENDMENTS. (1) The second sentence of section 56(g)(4)(B)(i) is amended by inserting before the period ``or under section 114''. (2) Section 275(a) is amended-- (A) by striking ``or'' at the end of paragraph (4)(A), by striking the period at the end of paragraph (4)(B) and inserting ``, or'', and by adding at the end of paragraph (4) the following new subparagraph: ``(C) such taxes are paid or accrued with respect to qualifying foreign trade income (as defined in section 941).''; and [[Page H10914]] (B) by adding at the end the following the following new sentence: ``A rule similar to the rule of section 943(d) shall apply for purposes of paragraph (4)(C).''. (3) Paragraph (3) of section 864(e) is amended-- (A) by striking ``For purposes of'' and inserting: ``(A) In general.--For purposes of''; and (B) by adding at the end the following new subparagraph: ``(B) Assets producing exempt extraterritorial income.--For purposes of allocating and apportioning any interest expense, there shall not be taken into account any qualifying foreign trade property (as defined in section 943(a)) which is held by the taxpayer for lease or rental in the ordinary course of trade or business for use by the lessee outside the United States (as defined in section 943(b)(2)).''. (4) Section 903 is amended by striking ``164(a)'' and inserting ``114, 164(a),''. (5) Section 999(c)(1) is amended by inserting ``941(a)(5),'' after ``908(a),''. (6) The table of sections for part III of subchapter B of chapter 1 is amended by inserting before the item relating to section 115 the following new item: ``Sec. 114. Extraterritorial income.''. (7) The table of subparts for part III of subchapter N of chapter 1 is amended by striking the item relating to subpart E and inserting the following new item: ``Subpart E. Qualifying foreign trade income.''. (8) The table of subparts for part III of subchapter N of chapter 1 is amended by striking the item relating to subpart C. SEC. 104. EFFECTIVE DATE. (a) In General.--The amendments made by this title shall apply to transactions after September 30, 2000. (b) No New FSCs; Termination of Inactive FSCs.-- (1) No new fscs.--No corporation may elect after September 30, 2000, to be a FSC (as defined in section 922 of the Internal Revenue Code of 1986, as in effect before the amendments made by this Act). (2) Termination of inactive fscs.--If a FSC has no foreign trade income (as defined in section 923(b) of such Code, as so in effect) for any period of 5 consecutive taxable years beginning after December 31, 2001, such FSC shall cease to be treated as a FSC for purposes of such Code for any taxable year beginning after such period. (c) Transition Period for Existing Foreign Sales Corporations.-- (1) In general.--In the case of a FSC (as so defined) in existence on September 30, 2000, and at all times thereafter, the amendments made by this Act shall not apply to any transaction in the ordinary course of trade or business involving a FSC which occurs-- (A) before January 1, 2002; or (B) after December 31, 2001, pursuant to a binding contract-- (i) which is between the FSC (or any related person) and any person which is not a related person; and (ii) which is in effect on September 30, 2000, and at all times thereafter. For purposes of this paragraph, a binding contract shall include a purchase option, renewal option, or replacement option which is included in such contract and which is enforceable against the seller or lessor. (2) Election to have amendments apply earlier.--A taxpayer may elect to have the amendments made by this Act apply to any transaction by a FSC or any related person to which such amendments would apply but for the application of paragraph (1). Such election shall be effective for the taxable year for which made and all subsequent taxable years, and, once made, may be revoked only with the consent of the Secretary of the Treasury. (3) Exception for old earnings and profits of certain corporations.-- (A) In general.--In the case of a foreign corporation to which this paragraph applies-- (i) earnings and profits of such corporation accumulated in taxable years ending before October 1, 2000, shall not be included in the gross income of the persons holding stock in such corporation by reason of section 943(e)(4)(B)(i), and (ii) rules similar to the rules of clauses (ii), (iii), and (iv) of section 953(d)(4)(B) shall apply with respect to such earnings and profits. The preceding sentence shall not apply to earnings and profits acquired in a transaction after September 30, 2000, to which section 381 applies unless the distributor or transferor corporation was immediately before the transaction a foreign corporation to which this paragraph applies. (B) Existing fscs.--This paragraph shall apply to any controlled foreign corporation (as defined in section 957) if-- (i) such corporation is a FSC (as so defined) in existence on September 30, 2000, (ii) such corporation is eligible to make the election under section 943(e) by reason of being described in paragraph (2)(B) of such section, and (iii) such corporation makes such election not later than for its first taxable year beginning after December 31, 2001. (C) Other corporations.--This paragraph shall apply to any controlled foreign corporation (as defined in section 957), and such corporation shall (notwithstanding any provision of section 943(e)) be treated as an applicable foreign corporation for purposes of section 943(e), if-- (i) such corporation is in existence on September 30, 2000, (ii) as of such date, such corporation is wholly owned (directly or indirectly) by a domestic corporation (determined without regard to any election under section 943(e)), (iii) for each of the 3 taxable years preceding the first taxable year to which the election under section 943(e) by such controlled foreign corporation applies-- (I) all of the gross income of such corporation is subpart F income (as defined in section 952), including by reason of section 954(b)(3)(B), and (II) in the ordinary course of such corporation's trade or business, such corporation regularly sold (or paid commissions) to a FSC which on September 30, 2000, was a related person to such corporation, (iv) such corporation has never made an election under section 922(a)(2) (as in effect before the date of the enactment of this paragraph) to be treated as a FSC, and (v) such corporation makes the election under section 943(e) not later than for its first taxable year beginning after December 31, 2001. The preceding sentence shall cease to apply as of the date that the domestic corporation referred to in clause (ii) ceases to wholly own (directly or indirectly) such controlled foreign corporation. (4) Related person.--For purposes of this subsection, the term ``related person'' has the meaning given to such term by section 943(b)(3). (5) Section references.--Except as otherwise expressly provided, any reference in this subsection to a section or other provision shall be considered to be a reference to a section or other provision of the Internal Revenue Code of 1986, as amended by this title. (d) Special Rules Relating to Leasing Transactions.-- (1) Sales income.--If foreign trade income in connection with the lease or rental of property described in section 927(a)(1)(B) of such Code (as in effect before the amendments made by this Act) is treated as exempt foreign trade income for purposes of section 921(a) of such Code (as so in effect), such property shall be treated as property described in section 941(c)(1)(B) of such Code (as added by this Act) for purposes of applying section 941(c)(2) of such Code (as so added) to any subsequent transaction involving such property to which the amendments made by this Act apply. (2) Limitation on use of gross receipts method.--If any person computed its foreign trade income from any transaction with respect to any property on the basis of a transfer price determined under the method described in section 925(a)(1) of such Code (as in effect before the amendments made by this Act), then the qualifying foreign trade income (as defined in section 941(a) of such Code, as in effect after such amendment) of such person (or any related person) with respect to any other transaction involving such property (and to which the amendments made by this Act apply) shall be zero. TITLE II--SMALL BUSINESS TAX RELIEF SEC. 201. EXTENSION OF WORK OPPORTUNITY TAX CREDIT. (a) In General.--Section 51(c)(4)(B) is amended by striking ``December 31, 2001'' and inserting ``June 30, 2004''. (b) Effective Date.--The amendment made by this section shall apply to individuals who begin work for the employer after December 31, 2001. SEC. 202. INCREASE IN AMORTIZABLE REFORESTATION EXPENDITURES, ETC. (a) Increase in Dollar Limitation.--Paragraph (1) of section 194(b) (relating to amortization of reforestation expenditures) is amended by striking ``$10,000 ($5,000'' and inserting ``$25,000 ($12,500''. (b) Temporary Suspension of Increased Dollar Limitation.-- (1) In general.--Subsection (b) of section 194 (relating to amortization of reforestation expenditures) is amended by adding at the end the following new paragraph: ``(5) Suspension of dollar limitation.--Paragraph (1) shall not apply to taxable years beginning after December 31, 2000, and before January 1, 2004.''. (2) Conforming amendment.--Paragraph (1) of section 48(b) is amended by striking ``section 194(b)(1)'' and inserting ``section 194(b)(1) and without regard to section 194(b)(5)''. (c) Capital Gain Treatment Under Section 631(b) To Apply to Outright Sales by Land Owner.-- (1) In general.--The first sentence of section 631(b) (relating to disposal of timber with a retained economic interest) is amended by striking ``retains an economic interest in such timber'' and inserting ``either retains an economic interest in such timber or makes an outright sale of such timber''. (2) Conforming amendment.--The third sentence of section 631(b) is amended by striking ``The date of disposal'' and inserting ``In the case of disposal of timber with a retained economic interest, the date of disposal''. (d) Effective Dates.-- (1) Subsections (a) and (b).--The amendments made by subsections (a) and (b) shall apply to taxable years beginning after December 31, 2000. (2) Subsection (c).--The amendment made by subsection (c) shall apply to sales after the date of the enactment of this Act. SEC. 203. INCREASE IN EXPENSE TREATMENT FOR SMALL BUSINESSES. (a) In General.--Paragraph (1) of section 179(b) (relating to dollar limitation) is amended to read as follows: ``(1) Dollar limitation.--The aggregate cost which may be taken into account under subsection (a) for any taxable year shall not exceed $35,000.''. (b) Effective Date.--The amendment made by this section shall apply to taxable years beginning after December 31, 2000. SEC. 204. INCREASED DEDUCTION FOR MEAL EXPENSES. (a) In General.--Paragraph (1) of section 274(n) (relating to only 50 percent of meal and [[Page H10915]] entertainment expenses allowed as deduction) is amended by striking ``50 percent'' in the text and inserting ``the allowable percentage''. (b) Allowable Percentage.--Subsection (n) of section 274 is amended by redesignating paragraphs (2) and (3) as paragraphs (3) and (4), respectively, and by inserting after paragraph (1) the following new paragraph: ``(2) Allowable percentage.--For purposes of paragraph (1), the allowable percentage is-- ``(A) in the case of amounts for items described in paragraph (1)(B), 50 percent, and ``(B) in the case of expenses for food or beverages, 70 percent.''. (c) Conforming Amendment.--The heading for subsection (n) of section 274 is amended by striking ``50 Percent'' and inserting ``Limited Percentages''. (d) Effective Date.--The amendments made by this section shall apply to taxable years beginning after December 31, 2000. SEC. 205. INCREASED DEDUCTIBILITY OF BUSINESS MEAL EXPENSES FOR INDIVIDUALS SUBJECT TO FEDERAL LIMITATIONS ON HOURS OF SERVICE. (a) In General.--Paragraph (4) of section 274(n) (relating to limited percentages of meal and entertainment expenses allowed as deduction), as redesignated by section 204, is amended to read as follows: ``(4) Special rule for individuals subject to federal hours of service.--In the case of any expenses for food or beverages consume

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CONFERENCE REPORT ON H.R. 2614, CERTIFIED DEVELOPMENT COMPANY PROGRAM IMPROVEMENTS ACT OF 2000
(House of Representatives - October 25, 2000)

Text of this article available as: TXT PDF [Pages H10909-H11087] CONFERENCE REPORT ON H.R. 2614, CERTIFIED DEVELOPMENT COMPANY PROGRAM IMPROVEMENTS ACT OF 2000 Mr. ARMEY submitted the following conference report and statement on the bill (H.R. 2614) to amend the Small Business Investment Act to make improvements to the certified development company program, and for other purposes: Conference Report (H. Rept. 106-1004) The committee of conference on the disagreeing votes of the two Houses on the amendment of the Senate to the bill (H.R. 2614) to amend the Small Business Investment Act to make improvements to the certified development company program, and for other purposes, having met, after full and free conference, have agreed to recommend and do recommend to their respective Houses as follows: That the House recede from its disagreement to the amendment of the Senate and agree to the same with an amendment as follows: In lieu of the matter proposed to be inserted by the Senate amendment, insert the following: SECTION 1. ENACTMENT OF OTHER PROVISIONS OF LAW. The provisions of the following bills of the 106th Congress are hereby enacted into law: (1) H.R. 5538, as introduced on October 25, 2000 (the Minimum Wage Act of 2000). (2) H.R. 5542, as introduced on October 25, 2000 (the Taxpayer Relief Act of 2000). (3) H.R. 5543, as introduced on October 25, 2000 (the Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000). (4) H.R. 5544, as introduced on October 25, 2000 (the Pain Relief Promotion Act of 2000). (5) H.R. 5545, as introduced on October 25, 2000 (the Small Business Reauthorization Act of 2000). SEC. 2. PUBLICATION OF ACT. In publishing this Act in slip form and in the United States Statutes at Large pursuant to section 112 of title 1, United States Code, the Archivist of the United States shall include after the date of approval appendixes setting forth the texts of the bills referred to in section 1. And the Senate agree to the same. Jim Talent, Dick Armey, Managers on the Part of the House. Christopher Bond, Conrad Burns, Managers on the Part of the Senate. ---------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------- NOTICE--OCTOBER 23, 2000 A final issue of the Congressional Record for the 106th Congress, 2d Session, will be published on November 29, 2000, in order to permit Members to revise and extend their remarks. All material for insertion must be signed by the Member and delivered to the respective offices of the Official Reporters of Debates (Room HT-60 or S-123 of the Capitol), Monday through Friday, between the hours of 10:00 a.m. and 3:00 p.m. through November 28. The final issue will be dated November 29, 2000, and will be delivered on Friday, December 1, 2000. None of the material printed in the final issue of the Congressional Record may contain subject matter, or relate to any event that occurred after the sine die date. Senators' statements should also be submitted electronically, either on a disk to accompany the signed statement, or by e-mail to the Official Reporters of Debates at ``Records@Reporters''. Members of the House of Representatives' statements may also be submitted electronically by e-mail, to accompany the signed statement, and formatted according to the instructions for the Extensions of Remarks template at https://clerkhouse.house.gov. The Official Reporters will transmit to GPO the template formatted electronic file only after receipt of, and authentication with, the hard copy, signed manuscript. Deliver statements to the Official Reporters in Room HT-60. Members of Congress desiring to purchase reprints of material submitted for inclusion in the Congressional Record may do so by contacting the Congressional Printing Management Division, at the Government Printing Office, on 512-0224, between the hours of 8:00 a.m. and 4:00 p.m. daily. By order of the Joint Committee on Printing. WILLIAM M. THOMAS, Chairman. ---------------------------------------------------------------------------------------------------------------- [[Page H10910]] JOINT EXPLANATORY STATEMENT OF THE COMMITTEE OF CONFERENCE The managers on the part of the House and the Senate at the conference on the disagreeing votes of the two Houses on the amendment of the Senate to the bill (H.R. 2614) to amend the Small Business Investment Act to make improvements to the certified development company program, and for other purposes, submit the following joint statement to the House and the Senate in explanation of the effect of the action agreed upon by the managers and recommended in the accompanying conference report: The Senate amendment struck all of the House bill after the enacting clause and inserted a substitute text. The House recedes from its disagreement to the amendment of the Senate with an amendment that is a substitute for the House bill and the Senate amendment. The conference agreement would enact by reference the provisions of five bills introduced on October 25, 2000. Those bills are the following: (1) H.R. 5538, the Minimum Wage Act of 2000. (2) H.R. 5542, the Taxpayer Relief Act of 2000. (3) H.R. 5543, the Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000. (4) H.R. 5544, the Pain Relief Promotion Act of 2000. (5) H.R. 5545, the Small Business Reauthorization Act of 2000. This joint statement sets out for convenience the text of each bill that would be enacted in the conference report by reference. minimum wage act of 2000 The conference agreement would enact the provisions of H.R. 5538, as introduced on October 25, 2000. The text of that bill follows: SECTION 1. SHORT TITLE. This Act may be cited as the ``Minimum Wage Act of 2000''. SEC. 2. MINIMUM WAGE INCREASE. Paragraph (1) of section 6(a) of the Fair Labor Standards Act of 1938 (29 U.S.C. 206(a)) is amended to read as follows: ``(1) except as otherwise provided in this section. Not less than $5.15 an hour during the period ending June 30, 2000, not less than $5.65 an hour during the year beginning January 1, 2001, and not less than $6.15 an hour beginning January 1, 2002;''. taxpayer relief act of 2000 The conference agreement would enact the provisions of H.R. 5542, as introduced on October 25, 2000. The text of that bill follows: SECTION 1. SHORT TITLE; AMENDMENT OF 1986 CODE. (a) Short Title.--This Act may be cited as the ``Taxpayer Relief Act of 2000''. (b) Amendment of 1986 Code.--Except as otherwise expressly provided, whenever in this Act an amendment or repeal is expressed in terms of an amendment to, or repeal of, a section or other provision, the reference shall be considered to be made to a section or other provision of the Internal Revenue Code of 1986. (c) Table of Contents.-- Sec. 1. Short title; amendment of 1986 Code. TITLE I--FSC REPEAL AND EXTRATERRITORIAL INCOME EXCLUSION Sec. 101. Repeal of foreign sales corporation rules. Sec. 102. Treatment of extraterritorial income. Sec. 103. Technical and conforming amendments. Sec. 104. Effective date. TITLE II--SMALL BUSINESS TAX RELIEF Sec. 201. Extension of work opportunity tax credit. Sec. 202. Increase in amortizable reforestation expenditures, etc. Sec. 203. Increase in expense treatment for small businesses. Sec. 204. Increased deduction for meal expenses. Sec. 205. Increased deductibility of business meal expenses for individuals subject to Federal limitations on hours of service. Sec. 206. Repeal of modification of installment method. Sec. 207. Income averaging not to increase alternative minimum tax liability; income averaging for fishermen. Sec. 208. Repeal of occupational taxes relating to distilled spirits, wine, and beer. Sec. 209. Exclusion from gross income for certain forgiven mortgage obligations. Sec. 210. Clarification of cash accounting rules for small business. Sec. 211. Amendments relating to demand deposit accounts at depository institutions. TITLE III--HEALTH INSURANCE AND LONG-TERM CARE INSURANCE PROVISIONS Sec. 301. Deduction for 100 percent of health insurance costs of self- employed individuals. Sec. 302. Deduction for health and long-term care insurance costs of individuals not participating in employer-subsidized health plans. Sec. 303. 2-year extension of availability of medical savings accounts. Sec. 304. Additional consumer protections for long-term care insurance. Sec. 305. Deduction for providing long-term care in the home to household members. TITLE IV--PENSION AND INDIVIDUAL RETIREMENT ARRANGEMENT PROVISIONS Sec. 400. Short title. Subtitle A--Individual Retirement Accounts Sec. 401. Modification of IRA contribution limits. Sec. 402. Deemed IRAs under employer plans. Sec. 403. Tax-free distributions from individual retirement accounts for charitable purposes. Sec. 404. Modification of AGI limits for Roth IRAs. Subtitle B--Expanding Coverage Sec. 411. Increase in benefit and contribution limits. Sec. 412. Plan loans for subchapter S owners, partners, and sole proprietors. Sec. 413. Modification of top-heavy rules. Sec. 414. Elective deferrals not taken into account for purposes of deduction limits. Sec. 415. Repeal of coordination requirements for deferred compensation plans of State and local governments and tax-exempt organizations. Sec. 416. Elimination of user fee for requests to IRS regarding pension plans. Sec. 417. Deduction limits. Sec. 418. Option to treat elective deferrals as after-tax Roth contributions. Subtitle C--Enhancing Fairness for Women Sec. 421. Catch-up contributions for individuals age 50 or over. Sec. 422. Equitable treatment for contributions of employees to defined contribution plans. Sec. 423. Faster vesting of certain employer matching contributions. Sec. 424. Simplify and update the minimum distribution rules. Sec. 425. Clarification of tax treatment of division of section 457 plan benefits upon divorce. Sec. 426. Provisions relating to hardship distributions. Sec. 427. Waiver of tax on nondeductible contributions for domestic or similar workers. Subtitle D--Increasing Portability for Participants Sec. 431. Rollovers allowed among various types of plans. Sec. 432. Rollovers of IRAs into workplace retirement plans. Sec. 433. Rollovers of after-tax contributions. Sec. 434. Hardship exception to 60-day rule. Sec. 435. Treatment of forms of distribution. Sec. 436. Rationalization of restrictions on distributions. Sec. 437. Purchase of service credit in governmental defined benefit plans. Sec. 438. Employers may disregard rollovers for purposes of cash-out amounts. Sec. 439. Minimum distribution and inclusion requirements for section 457 plans. Subtitle E--Strengthening Pension Security and Enforcement Sec. 441. Repeal of 155 percent of current liability funding limit. Sec. 442. Maximum contribution deduction rules modified and applied to all defined benefit plans. Sec. 443. Excise tax relief for sound pension funding. Sec. 444. Excise tax on failure to provide notice by defined benefit plans significantly reducing future benefit accruals. Sec. 445. Treatment of multiemployer plans under section 415. Sec. 446. Protection of investment of employee contributions to 401(k) plans. Sec. 447. Periodic pension benefits statements. Sec. 448. Prohibited allocations of stock in S corporation ESOP. Subtitle F--Reducing Regulatory Burdens Sec. 451. Modification of timing of plan valuations. Sec. 452. ESOP dividends may be reinvested without loss of dividend deduction. Sec. 453. Repeal of transition rule relating to certain highly compensated employees. Sec. 454. Employees of tax-exempt entities. Sec. 455. Clarification of treatment of employer-provided retirement advice. Sec. 456. Reporting simplification. Sec. 457. Improvement of employee plans compliance resolution system. Sec. 458. Repeal of the multiple use test. Sec. 459. Flexibility in nondiscrimination, coverage, and line of business rules. Sec. 460. Extension to all governmental plans of moratorium on application of certain nondiscrimination rules applicable to State and local plans. Sec. 461. Notice and consent period regarding distributions. Sec. 462. Annual report dissemination. Sec. 463. Technical corrections to SAVER Act. Sec. 464. Study of pension coverage. Subtitle G--Other ERISA Provisions Sec. 471. Missing participants. Sec. 472. Reduced PBGC premium for new plans of small employers. Sec. 473. Reduction of additional PBGC premium for new and small plans. Sec. 474. Authorization for PBGC to pay interest on premium overpayment refunds. Sec. 475. Substantial owner benefits in terminated plans. Sec. 476. Multiemployer plan benefits guarantee. Sec. 477. Civil penalties for breach of fiduciary responsibility. Sec. 478. Benefit suspension notice. Subtitle H--Plan Amendments Sec. 481. Provisions relating to plan amendments. [[Page H10911]] TITLE V--SCHOOL CONSTRUCTION PROVISIONS Sec. 501. Additional increase in arbitrage rebate exception for governmental bonds used to finance educational facilities. Sec. 502. Modification of arbitrage rebate rules applicable to public school construction bonds. Sec. 503. Modification of special arbitrage rule for certain funds. Sec. 504. Treatment of qualified public educational facility bonds as exempt facility bonds. Sec. 505. Expansion of qualified zone academy bond program. TITLE VI--COMMUNITY REVITALIZATION Subtitle A--Tax Incentives for Renewal Communities Sec. 601. Designation of and tax incentives for renewal communities. Sec. 602. Work opportunity credit for hiring youth residing in renewal communities. Subtitle B--Extension and Expansion of Empowerment Zone Incentives Sec. 611. Authority to designate 9 additional empowerment zones. Sec. 612. Extension of empowerment zone treatment through 2009. Sec. 613. 20 percent employment credit for all empowerment zones Sec. 614. Increased expensing under section 179. Sec. 615. Higher limits on tax-exempt empowerment zone facility bonds. Sec. 616. Nonrecognition of gain on rollover of empowerment zone investments. Sec. 617. Increased exclusion of gain on sale of empowerment zone stock. Subtitle C--New Markets Tax Credit Sec. 621. New markets tax credit. Subtitle D--Improvements in Low-Income Housing Credit Sec. 631. Modification of State ceiling on low-income housing credit. Sec. 632. Modification of criteria for allocating housing credits among projects. Sec. 633. Additional responsibilities of housing credit agencies. Sec. 634. Modifications to rules relating to basis of building which is eligible for credit. Sec. 635. Other modifications. Sec. 636. Carryforward rules. Sec. 637. Effective date. Subtitle E--Other Community Renewal and New Markets Assistance Sec. 641. Transfer of unoccupied and substandard HUD-held housing to local governments and community development corporations. Sec. 642. Transfer of HUD assets in revitalization areas. Sec. 643. Risk-sharing demonstration. Sec. 644. Prevention and treatment of substance abuse; services provided through religious organizations. Subtitle F--Other Provisions Sec. 651. Acceleration of phase-in of increase in volume cap on private activity bonds. Sec. 652. Modifications to expensing of environmental remediation costs. Sec. 653. Extension of DC homebuyer tax credit. TITLE VII--ADMINISTRATIVE, MISCELLANEOUS, AND TECHNICAL PROVISIONS Subtitle A--Administrative Provisions Sec. 701. Exemption of certain reporting requirements. Sec. 702. Extension of deadlines for IRS compliance with certain notice requirements. Sec. 703. Extension of authority for undercover operations. Sec. 704. Confidentiality of certain documents relating to closing and similar agreements and to agreements with foreign governments. Sec. 705. Increase in threshold for Joint Committee reports on refunds and credits. Sec. 706. Treatment of missing children with respect to certain tax benefits. Sec. 707. Amendments to statutes referencing yield on 52-week Treasury bills. Sec. 708. Adjustments for Consumer Price Index error. Sec. 709. Prevention of duplication of loss through assumption of liabilities giving rise to a deduction. Subtitle B--Miscellaneous Provisions Sec. 710. Repeal of 4.3-cent motor fuel excise taxes on railroads and inland waterway transportation which remain in general fund. Sec. 711. Repeal of reduction of deductions for mutual life insurance companies. Sec. 712. Repeal of policyholders surplus account provisions. Sec. 713. Credit to holders of qualified Amtrak bonds. Sec. 714. Farm, fishing, and ranch risk management accounts. Sec. 715. Extension of enhanced deduction for corporate donations of computer technology. Sec. 716. Relief from Federal tax liability arising with respect to certain claims against the Department of Agriculture for discrimination in farm credit and benefit programs. Sec. 717. Expansion of credit for adoption expenses. Sec. 718. Study concerning United States insurance companies with certain offshore reinsurance affiliates. Sec. 719. Treatment of Indian tribal governments under Federal Unemployment Tax Act. Subtitle C--Technical Corrections Sec. 721. Amendments related to Ticket to Work and Work Incentives Improvement Act of 1999. Sec. 722. Amendments related to Tax and Trade Relief Extension Act of 1998. Sec. 723. Amendments related to Internal Revenue Service Restructuring and Reform Act of 1998. Sec. 724. Amendments related to Taxpayer Relief Act of 1997. Sec. 725. Amendments related to Balanced Budget Act of 1997. Sec. 726. Amendments related to Small Business Job Protection Act of 1996. Sec. 727. Amendment related to Revenue Reconciliation Act of 1990. Sec. 728. Other technical corrections. Sec. 729. Clerical changes. Subtitle D--Pay-Go Adjustments Sec. 731. Avoidance of a Pay-Go sequestration for fiscal year 2001. TITLE I--FSC REPEAL AND EXTRATERRITORIAL INCOME EXCLUSION SEC. 101. REPEAL OF FOREIGN SALES CORPORATION RULES. Subpart C of part III of subchapter N of chapter 1 (relating to taxation of foreign sales corporations) is hereby repealed. SEC. 102. TREATMENT OF EXTRATERRITORIAL INCOME. (a) In General.--Part III of subchapter B of chapter 1 (relating to items specifically excluded from gross income) is amended by inserting before section 115 the following new section: ``SEC. 114. EXTRATERRITORIAL INCOME. ``(a) Exclusion.--Gross income does not include extraterritorial income. ``(b) Exception.--Subsection (a) shall not apply to extraterritorial income which is not qualifying foreign trade income as determined under subpart E of part III of subchapter N. ``(c) Disallowance of Deductions.-- ``(1) In general.--Any deduction of a taxpayer allocated under paragraph (2) to extraterritorial income of the taxpayer excluded from gross income under subsection (a) shall not be allowed. ``(2) Allocation.--Any deduction of the taxpayer properly apportioned and allocated to the extraterritorial income derived by the taxpayer from any transaction shall be allocated on a proportionate basis between-- ``(A) the extraterritorial income derived from such transaction which is excluded from gross income under subsection (a), and ``(B) the extraterritorial income derived from such transaction which is not so excluded. ``(d) Denial of Credits for Certain Foreign Taxes.-- Notwithstanding any other provision of this chapter, no credit shall be allowed under this chapter for any income, war profits, and excess profits taxes paid or accrued to any foreign country or possession of the United States with respect to extraterritorial income which is excluded from gross income under subsection (a). ``(e) Extraterritorial Income.--For purposes of this section, the term `extraterritorial income' means the gross income of the taxpayer attributable to foreign trading gross receipts (as defined in section 942) of the taxpayer.''. (b) Qualifying Foreign Trade Income.--Part III of subchapter N of chapter 1 is amended by inserting after subpart D the following new subpart: ``Subpart E--Qualifying Foreign Trade Income ``Sec. 941. Qualifying foreign trade income. ``Sec. 942. Foreign trading gross receipts. ``Sec. 943. Other definitions and special rules. ``SEC. 941. QUALIFYING FOREIGN TRADE INCOME. ``(a) Qualifying Foreign Trade Income.--For purposes of this subpart and section 114-- ``(1) In general.--The term `qualifying foreign trade income' means, with respect to any transaction, the amount of gross income which, if excluded, will result in a reduction of the taxable income of the taxpayer from such transaction equal to the greatest of-- ``(A) 30 percent of the foreign sale and leasing income derived by the taxpayer from such transaction, ``(B) 1.2 percent of the foreign trading gross receipts derived by the taxpayer from the transaction, or ``(C) 15 percent of the foreign trade income derived by the taxpayer from the transaction. In no event shall the amount determined under subparagraph (B) exceed 200 percent of the amount determined under subparagraph (C). ``(2) Alternative computation.--A taxpayer may compute its qualifying foreign trade income under a subparagraph of paragraph (1) other than the subparagraph which results in the greatest amount of such income. ``(3) Limitation on use of foreign trading gross receipts method.--If any person computes its qualifying foreign trade income from any transaction with respect to any property under paragraph (1)(B), the qualifying foreign trade income of such person (or any related person) with respect to any other transaction involving such property shall be zero. ``(4) Rules for marginal costing.--The Secretary shall prescribe regulations setting forth rules for the allocation of expenditures in computing foreign trade income under paragraph (1)(C) in those cases where a taxpayer is seeking to establish or maintain a market for qualifying foreign trade property. ``(5) Participation in international boycotts, etc.--Under regulations prescribed by the Secretary, the qualifying foreign trade income of a taxpayer for any taxable year shall be reduced (but not below zero) by the sum of-- [[Page H10912]] ``(A) an amount equal to such income multiplied by the international boycott factor determined under section 999, and ``(B) any illegal bribe, kickback, or other payment (within the meaning of section 162(c)) paid by or on behalf of the taxpayer directly or indirectly to an official, employee, or agent in fact of a government. ``(b) Foreign Trade Income.--For purposes of this subpart-- ``(1) In general.--The term `foreign trade income' means the taxable income of the taxpayer attributable to foreign trading gross receipts of the taxpayer. ``(2) Special rule for cooperatives.--In any case in which an organization to which part I of subchapter T applies which is engaged in the marketing of agricultural or horticultural products sells qualifying foreign trade property, in computing the taxable income of such cooperative, there shall not be taken into account any deduction allowable under subsection (b) or (c) of section 1382 (relating to patronage dividends, per-unit retain allocations, and nonpatronage distributions). ``(c) Foreign Sale and Leasing Income.--For purposes of this section-- ``(1) In general.--The term `foreign sale and leasing income' means, with respect to any transaction-- ``(A) foreign trade income properly allocable to activities which-- ``(i) are described in paragraph (2)(A)(i) or (3) of section 942(b), and ``(ii) are performed by the taxpayer (or any person acting under a contract with such taxpayer) outside the United States, or ``(B) foreign trade income derived by the taxpayer in connection with the lease or rental of qualifying foreign trade property for use by the lessee outside the United States. ``(2) Special rules for leased property.-- ``(A) Sales income.--The term `foreign sale and leasing income' includes any foreign trade income derived by the taxpayer from the sale of property described in paragraph (1)(B). ``(B) Limitation in certain cases.--Except as provided in regulations, in the case of property which-- ``(i) was manufactured, produced, grown, or extracted by the taxpayer, or ``(ii) was acquired by the taxpayer from a related person for a price which was not determined in accordance with the rules of section 482, the amount of foreign trade income which may be treated as foreign sale and leasing income under paragraph (1)(B) or subparagraph (A) of this paragraph with respect to any transaction involving such property shall not exceed the amount which would have been determined if the taxpayer had acquired such property for the price determined in accordance with the rules of section 482. ``(3) Special rules.-- ``(A) Excluded property.--Foreign sale and leasing income shall not include any income properly allocable to excluded property described in subparagraph (B) of section 943(a)(3) (relating to intangibles). ``(B) Only direct expenses taken into account.--For purposes of this subsection, any expense other than a directly allocable expense shall not be taken into account in computing foreign trade income. ``SEC. 942. FOREIGN TRADING GROSS RECEIPTS. ``(a) Foreign Trading Gross Receipts.-- ``(1) In general.--Except as otherwise provided in this section, for purposes of this subpart, the term `foreign trading gross receipts' means the gross receipts of the taxpayer which are-- ``(A) from the sale, exchange, or other disposition of qualifying foreign trade property, ``(B) from the lease or rental of qualifying foreign trade property for use by the lessee outside the United States, ``(C) for services which are related and subsidiary to-- ``(i) any sale, exchange, or other disposition of qualifying foreign trade property by such taxpayer, or ``(ii) any lease or rental of qualifying foreign trade property described in subparagraph (B) by such taxpayer, ``(D) for engineering or architectural services for construction projects located (or proposed for location) outside the United States, or ``(E) for the performance of managerial services for a person other than a related person in furtherance of the production of foreign trading gross receipts described in subparagraph (A), (B), or (C). Subparagraph (E) shall not apply to a taxpayer for any taxable year unless at least 50 percent of its foreign trading gross receipts (determined without regard to this sentence) for such taxable year is derived from activities described in subparagraph (A), (B), or (C). ``(2) Certain receipts excluded on basis of use; subsidized receipts excluded.--The term `foreign trading gross receipts' shall not include receipts of a taxpayer from a transaction if-- ``(A) the qualifying foreign trade property or services-- ``(i) are for ultimate use in the United States, or ``(ii) are for use by the United States or any instrumentality thereof and such use of qualifying foreign trade property or services is required by law or regulation, or ``(B) such transaction is accomplished by a subsidy granted by the government (or any instrumentality thereof) of the country or possession in which the property is manufactured, produced, grown, or extracted. ``(3) Election to exclude certain receipts.--The term `foreign trading gross receipts' shall not include gross receipts of a taxpayer from a transaction if the taxpayer elects not to have such receipts taken into account for purposes of this subpart. ``(b) Foreign Economic Process Requirements.-- ``(1) In general.--Except as provided in subsection (c), a taxpayer shall be treated as having foreign trading gross receipts from any transaction only if economic processes with respect to such transaction take place outside the United States as required by paragraph (2). ``(2) Requirement.-- ``(A) In general.--The requirements of this paragraph are met with respect to the gross receipts of a taxpayer derived from any transaction if-- ``(i) such taxpayer (or any person acting under a contract with such taxpayer) has participated outside the United States in the solicitation (other than advertising), the negotiation, or the making of the contract relating to such transaction, and ``(ii) the foreign direct costs incurred by the taxpayer attributable to the transaction equal or exceed 50 percent of the total direct costs attributable to the transaction. ``(B) Alternative 85-percent test.--A taxpayer shall be treated as satisfying the requirements of subparagraph (A)(ii) with respect to any transaction if, with respect to each of at least 2 subparagraphs of paragraph (3), the foreign direct costs incurred by such taxpayer attributable to activities described in such subparagraph equal or exceed 85 percent of the total direct costs attributable to activities described in such subparagraph. ``(C) Definitions.--For purposes of this paragraph-- ``(i) Total direct costs.--The term `total direct costs' means, with respect to any transaction, the total direct costs incurred by the taxpayer attributable to activities described in paragraph (3) performed at any location by the taxpayer or any person acting under a contract with such taxpayer. ``(ii) Foreign direct costs.--The term `foreign direct costs' means, with respect to any transaction, the portion of the total direct costs which are attributable to activities performed outside the United States. ``(3) Activities relating to qualifying foreign trade property.--The activities described in this paragraph are any of the following with respect to qualifying foreign trade property-- ``(A) advertising and sales promotion, ``(B) the processing of customer orders and the arranging for delivery, ``(C) transportation outside the United States in connection with delivery to the customer, ``(D) the determination and transmittal of a final invoice or statement of account or the receipt of payment, and ``(E) the assumption of credit risk. ``(4) Economic processes performed by related persons.--A taxpayer shall be treated as meeting the requirements of this subsection with respect to any sales transaction involving any property if any related person has met such requirements in such transaction or any other sales transaction involving such property. ``(c) Exception From Foreign Economic Process Requirement.-- ``(1) In general.--The requirements of subsection (b) shall be treated as met for any taxable year if the foreign trading gross receipts of the taxpayer for such year do not exceed $5,000,000. ``(2) Receipts of related persons aggregated.--All related persons shall be treated as one person for purposes of paragraph (1), and the limitation under paragraph (1) shall be allocated among such persons in a manner provided in regulations prescribed by the Secretary. ``(3) Special rule for pass-thru entities.--In the case of a partnership, S corporation, or other pass-thru entity, the limitation under paragraph (1) shall apply with respect to the partnership, S corporation, or entity and with respect to each partner, shareholder, or other owner. ``SEC. 943. OTHER DEFINITIONS AND SPECIAL RULES. ``(a) Qualifying Foreign Trade Property.--For purposes of this subpart-- ``(1) In general.--The term `qualifying foreign trade property' means property-- ``(A) manufactured, produced, grown, or extracted within or outside the United States, ``(B) held primarily for sale, lease, or rental, in the ordinary course of trade or business for direct use, consumption, or disposition outside the United States, and ``(C) not more than 50 percent of the fair market value of which is attributable to-- ``(i) articles manufactured, produced, grown, or extracted outside the United States, and ``(ii) direct costs for labor (determined under the principles of section 263A) performed outside the United States. For purposes of subparagraph (C), the fair market value of any article imported into the United States shall be its appraised value, as determined by the Secretary under section 402 of the Tariff Act of 1930 (19 U.S.C. 1401a) in connection with its importation, and the direct costs for labor under clause (ii) do not include costs that would be treated under the principles of section 263A as direct labor costs attributable to articles described in clause (i). ``(2) U.S. taxation to ensure consistent treatment.-- Property which (without regard to this paragraph) is qualifying foreign trade property and which is manufactured, produced, grown, or extracted outside the United States shall be treated as qualifying foreign trade property only if it is manufactured, produced, grown, or extracted by-- ``(A) a domestic corporation, ``(B) an individual who is a citizen or resident of the United States, ``(C) a foreign corporation with respect to which an election under subsection (e) (relating to foreign corporations electing to be subject to United States taxation) is in effect, or [[Page H10913]] ``(D) a partnership or other pass-thru entity all of the partners or owners of which are described in subparagraph (A), (B), or (C). Except as otherwise provided by the Secretary, tiered partnerships or pass-thru entities shall be treated as described in subparagraph (D) if each of the partnerships or entities is directly or indirectly wholly owned by persons described in subparagraph (A), (B), or (C). ``(3) Excluded property.--The term `qualifying foreign trade property' shall not include-- ``(A) property leased or rented by the taxpayer for use by any related person, ``(B) patents, inventions, models, designs, formulas, or processes whether or not patented, copyrights (other than films, tapes, records, or similar reproductions, and other than computer software (whether or not patented), for commercial or home use), goodwill, trademarks, trade brands, franchises, or other like property, ``(C) oil or gas (or any primary product thereof), ``(D) products the transfer of which is prohibited or curtailed to effectuate the policy set forth in paragraph (2)(C) of section 3 of Public Law 96-72, or ``(E) any unprocessed timber which is a softwood. For purposes of subparagraph (E), the term `unprocessed timber' means any log, cant, or similar form of timber. ``(4) Property in short supply.--If the President determines that the supply of any property described in paragraph (1) is insufficient to meet the requirements of the domestic economy, the President may by Executive order designate the property as in short supply. Any property so designated shall not be treated as qualifying foreign trade property during the period beginning with the date specified in the Executive order and ending with the date specified in an Executive order setting forth the President's determination that the property is no longer in short supply. ``(b) Other Definitions and Rules.--For purposes of this subpart-- ``(1) Transaction.-- ``(A) In general.--The term `transaction' means-- ``(i) any sale, exchange, or other disposition, ``(ii) any lease or rental, and ``(iii) any furnishing of services. ``(B) Grouping of transactions.--To the extent provided in regulations, any provision of this subpart which, but for this subparagraph, would be applied on a transaction-by- transaction basis may be applied by the taxpayer on the basis of groups of transactions based on product lines or recognized industry or trade usage. Such regulations may permit different groupings for different purposes. ``(2) United states defined.--The term `United States' includes the Commonwealth of Puerto Rico. The preceding sentence shall not apply for purposes of determining whether a corporation is a domestic corporation. ``(3) Related person.--A person shall be related to another person if such persons are treated as a single employer under subsection (a) or (b) of section 52 or subsection (m) or (o) of section 414, except that determinations under subsections (a) and (b) of section 52 shall be made without regard to section 1563(b). ``(4) Gross and taxable income.--Section 114 shall not be taken into account in determining the amount of gross income or foreign trade income from any transaction. ``(c) Source Rule.--Under regulations, in the case of qualifying foreign trade property manufactured, produced, grown, or extracted within the United States, the amount of income of a taxpayer from any sales transaction with respect to such property which is treated as from sources without the United States shall not exceed-- ``(1) in the case of a taxpayer computing its qualifying foreign trade income under section 941(a)(1)(B), the amount of the taxpayer's foreign trade income which would (but for this subsection) be treated as from sources without the United States if the foreign trade income were reduced by an amount equal to 4 percent of the foreign trading gross receipts with respect to the transaction, and ``(2) in the case of a taxpayer computing its qualifying foreign trade income under section 941(a)(1)(C), 50 percent of the amount of the taxpayer's foreign trade income which would (but for this subsection) be treated as from sources without the United States. ``(d) Treatment of Withholding Taxes.-- ``(1) In general.--For purposes of section 114(d), any withholding tax shall not be treated as paid or accrued with respect to extraterritorial income which is excluded from gross income under section 114(a). For purposes of this paragraph, the term `withholding tax' means any tax which is imposed on a basis other than residence and for which credit is allowable under section 901 or 903. ``(2) Exception.--Paragraph (1) shall not apply to any taxpayer with respect to extraterritorial income from any transaction if the taxpayer computes its qualifying foreign trade income with respect to the transaction under section 941(a)(1)(A). ``(e) Election To Be Treated as Domestic Corporation.-- ``(1) In general.--An applicable foreign corporation may elect to be treated as a domestic corporation for all purposes of this title if such corporation waives all benefits to such corporation granted by the United States under any treaty. No election under section 1362(a) may be made with respect to such corporation. ``(2) Applicable foreign corporation.--For purposes of paragraph (1), the term `applicable foreign corporation' means any foreign corporation if-- ``(A) such corporation manufactures, produces, grows, or extracts property in the ordinary course of such corporation's trade or business, or ``(B) substantially all of the gross receipts of such corporation are foreign trading gross receipts. ``(3) Period of election.-- ``(A) In general.--Except as otherwise provided in this paragraph, an election under paragraph (1) shall apply to the taxable year for which made and all subsequent taxable years unless revoked by the taxpayer. Any revocation of such election shall apply to taxable years beginning after such revocation. ``(B) Termination.--If a corporation which made an election under paragraph (1) for any taxable year fails to meet the requirements of subparagraph (A) or (B) of paragraph (2) for any subsequent taxable year, such election shall not apply to any taxable year beginning after such subsequent taxable year. ``(C) Effect of revocation or termination.--If a corporation which made an election under paragraph (1) revokes such election or such election is terminated under subparagraph (B), such corporation (and any successor corporation) may not make such election for any of the 5 taxable years beginning with the first taxable year for which such election is not in effect as a result of such revocation or termination. ``(4) Special rules.-- ``(A) Requirements.--This subsection shall not apply to an applicable foreign corporation if such corporation fails to meet the requirements (if any) which the Secretary may prescribe to ensure that the taxes imposed by this chapter on such corporation are paid. ``(B) Effect of election, revocation, and termination.-- ``(i) Election.--For purposes of section 367, a foreign corporation making an election under this subsection shall be treated as transferring (as of the first day of the first taxable year to which the election applies) all of its assets to a domestic corporation in connection with an exchange to which section 354 applies. ``(ii) Revocation and termination.--For purposes of section 367, if-- ``(I) an election is made by a corporation under paragraph (1) for any taxable year, and ``(II) such election ceases to apply for any subsequent taxable year, such corporation shall be treated as a domestic corporation transferring (as of the 1st day of the first such subsequent taxable year to which such election ceases to apply) all of its property to a foreign corporation in connection with an exchange to which section 354 applies. ``(C) Eligibility for election.--The Secretary may by regulation designate one or more classes of corporations which may not make the election under this subsection. ``(f) Rules Relating to Allocations of Qualifying Foreign Trade Income From Shared Partnerships.-- ``(1) In general.--If-- ``(A) a partnership maintains a separate account for transactions (to which this subpart applies) with each partner, ``(B) distributions to each partner with respect to such transactions are based on the amounts in the separate account maintained with respect to such partner, and ``(C) such partnership meets such other requirements as the Secretary may by regulations prescribe, then such partnership shall allocate to each partner items of income, gain, loss, and deduction (including qualifying foreign trade income) from any transaction to which this subpart applies on the basis of such separate account. ``(2) Special rules.--For purposes of this subpart, in the case of a partnership to which paragraph (1) applies-- ``(A) any partner's interest in the partnership shall not be taken into account in determining whether such partner is a related person with respect to any other partner, and ``(B) the election under section 942(a)(3) shall be made separately by each partner with respect to any transaction for which the partnership maintains separate accounts for each partner. ``(g) Exclusion for Patrons of Agricultural and Horticultural Cooperatives.--Any amount described in paragraph (1) or (3) of section 1385(a)-- ``(1) which is received by a person from an organization to which part I of subchapter T applies which is engaged in the marketing of agricultural or horticultural products, and ``(2) which is allocable to qualifying foreign trade income and designated as such by the organization in a written notice mailed to its patrons during the payment period described in section 1382(d), shall be treated as qualifying foreign trade income of such person for purposes of section 114. The taxable income of the organization shall not be reduced under section 1382 by reason of any amount to which the preceding sentence applies. ``(h) Special Rule for DISCs.--Section 114 shall not apply to any taxpayer for any taxable year if, at any time during the taxable year, the taxpayer is a member of any controlled group of corporations (as defined in section 927(d)(4), as in effect before the date of the enactment of this subsection) of which a DISC is a member.'' SEC. 103. TECHNICAL AND CONFORMING AMENDMENTS. (1) The second sentence of section 56(g)(4)(B)(i) is amended by inserting before the period ``or under section 114''. (2) Section 275(a) is amended-- (A) by striking ``or'' at the end of paragraph (4)(A), by striking the period at the end of paragraph (4)(B) and inserting ``, or'', and by adding at the end of paragraph (4) the following new subparagraph: ``(C) such taxes are paid or accrued with respect to qualifying foreign trade income (as defined in section 941).''; and [[Page H10914]] (B) by adding at the end the following the following new sentence: ``A rule similar to the rule of section 943(d) shall apply for purposes of paragraph (4)(C).''. (3) Paragraph (3) of section 864(e) is amended-- (A) by striking ``For purposes of'' and inserting: ``(A) In general.--For purposes of''; and (B) by adding at the end the following new subparagraph: ``(B) Assets producing exempt extraterritorial income.--For purposes of allocating and apportioning any interest expense, there shall not be taken into account any qualifying foreign trade property (as defined in section 943(a)) which is held by the taxpayer for lease or rental in the ordinary course of trade or business for use by the lessee outside the United States (as defined in section 943(b)(2)).''. (4) Section 903 is amended by striking ``164(a)'' and inserting ``114, 164(a),''. (5) Section 999(c)(1) is amended by inserting ``941(a)(5),'' after ``908(a),''. (6) The table of sections for part III of subchapter B of chapter 1 is amended by inserting before the item relating to section 115 the following new item: ``Sec. 114. Extraterritorial income.''. (7) The table of subparts for part III of subchapter N of chapter 1 is amended by striking the item relating to subpart E and inserting the following new item: ``Subpart E. Qualifying foreign trade income.''. (8) The table of subparts for part III of subchapter N of chapter 1 is amended by striking the item relating to subpart C. SEC. 104. EFFECTIVE DATE. (a) In General.--The amendments made by this title shall apply to transactions after September 30, 2000. (b) No New FSCs; Termination of Inactive FSCs.-- (1) No new fscs.--No corporation may elect after September 30, 2000, to be a FSC (as defined in section 922 of the Internal Revenue Code of 1986, as in effect before the amendments made by this Act). (2) Termination of inactive fscs.--If a FSC has no foreign trade income (as defined in section 923(b) of such Code, as so in effect) for any period of 5 consecutive taxable years beginning after December 31, 2001, such FSC shall cease to be treated as a FSC for purposes of such Code for any taxable year beginning after such period. (c) Transition Period for Existing Foreign Sales Corporations.-- (1) In general.--In the case of a FSC (as so defined) in existence on September 30, 2000, and at all times thereafter, the amendments made by this Act shall not apply to any transaction in the ordinary course of trade or business involving a FSC which occurs-- (A) before January 1, 2002; or (B) after December 31, 2001, pursuant to a binding contract-- (i) which is between the FSC (or any related person) and any person which is not a related person; and (ii) which is in effect on September 30, 2000, and at all times thereafter. For purposes of this paragraph, a binding contract shall include a purchase option, renewal option, or replacement option which is included in such contract and which is enforceable against the seller or lessor. (2) Election to have amendments apply earlier.--A taxpayer may elect to have the amendments made by this Act apply to any transaction by a FSC or any related person to which such amendments would apply but for the application of paragraph (1). Such election shall be effective for the taxable year for which made and all subsequent taxable years, and, once made, may be revoked only with the consent of the Secretary of the Treasury. (3) Exception for old earnings and profits of certain corporations.-- (A) In general.--In the case of a foreign corporation to which this paragraph applies-- (i) earnings and profits of such corporation accumulated in taxable years ending before October 1, 2000, shall not be included in the gross income of the persons holding stock in such corporation by reason of section 943(e)(4)(B)(i), and (ii) rules similar to the rules of clauses (ii), (iii), and (iv) of section 953(d)(4)(B) shall apply with respect to such earnings and profits. The preceding sentence shall not apply to earnings and profits acquired in a transaction after September 30, 2000, to which section 381 applies unless the distributor or transferor corporation was immediately before the transaction a foreign corporation to which this paragraph applies. (B) Existing fscs.--This paragraph shall apply to any controlled foreign corporation (as defined in section 957) if-- (i) such corporation is a FSC (as so defined) in existence on September 30, 2000, (ii) such corporation is eligible to make the election under section 943(e) by reason of being described in paragraph (2)(B) of such section, and (iii) such corporation makes such election not later than for its first taxable year beginning after December 31, 2001. (C) Other corporations.--This paragraph shall apply to any controlled foreign corporation (as defined in section 957), and such corporation shall (notwithstanding any provision of section 943(e)) be treated as an applicable foreign corporation for purposes of section 943(e), if-- (i) such corporation is in existence on September 30, 2000, (ii) as of such date, such corporation is wholly owned (directly or indirectly) by a domestic corporation (determined without regard to any election under section 943(e)), (iii) for each of the 3 taxable years preceding the first taxable year to which the election under section 943(e) by such controlled foreign corporation applies-- (I) all of the gross income of such corporation is subpart F income (as defined in section 952), including by reason of section 954(b)(3)(B), and (II) in the ordinary course of such corporation's trade or business, such corporation regularly sold (or paid commissions) to a FSC which on September 30, 2000, was a related person to such corporation, (iv) such corporation has never made an election under section 922(a)(2) (as in effect before the date of the enactment of this paragraph) to be treated as a FSC, and (v) such corporation makes the election under section 943(e) not later than for its first taxable year beginning after December 31, 2001. The preceding sentence shall cease to apply as of the date that the domestic corporation referred to in clause (ii) ceases to wholly own (directly or indirectly) such controlled foreign corporation. (4) Related person.--For purposes of this subsection, the term ``related person'' has the meaning given to such term by section 943(b)(3). (5) Section references.--Except as otherwise expressly provided, any reference in this subsection to a section or other provision shall be considered to be a reference to a section or other provision of the Internal Revenue Code of 1986, as amended by this title. (d) Special Rules Relating to Leasing Transactions.-- (1) Sales income.--If foreign trade income in connection with the lease or rental of property described in section 927(a)(1)(B) of such Code (as in effect before the amendments made by this Act) is treated as exempt foreign trade income for purposes of section 921(a) of such Code (as so in effect), such property shall be treated as property described in section 941(c)(1)(B) of such Code (as added by this Act) for purposes of applying section 941(c)(2) of such Code (as so added) to any subsequent transaction involving such property to which the amendments made by this Act apply. (2) Limitation on use of gross receipts method.--If any person computed its foreign trade income from any transaction with respect to any property on the basis of a transfer price determined under the method described in section 925(a)(1) of such Code (as in effect before the amendments made by this Act), then the qualifying foreign trade income (as defined in section 941(a) of such Code, as in effect after such amendment) of such person (or any related person) with respect to any other transaction involving such property (and to which the amendments made by this Act apply) shall be zero. TITLE II--SMALL BUSINESS TAX RELIEF SEC. 201. EXTENSION OF WORK OPPORTUNITY TAX CREDIT. (a) In General.--Section 51(c)(4)(B) is amended by striking ``December 31, 2001'' and inserting ``June 30, 2004''. (b) Effective Date.--The amendment made by this section shall apply to individuals who begin work for the employer after December 31, 2001. SEC. 202. INCREASE IN AMORTIZABLE REFORESTATION EXPENDITURES, ETC. (a) Increase in Dollar Limitation.--Paragraph (1) of section 194(b) (relating to amortization of reforestation expenditures) is amended by striking ``$10,000 ($5,000'' and inserting ``$25,000 ($12,500''. (b) Temporary Suspension of Increased Dollar Limitation.-- (1) In general.--Subsection (b) of section 194 (relating to amortization of reforestation expenditures) is amended by adding at the end the following new paragraph: ``(5) Suspension of dollar limitation.--Paragraph (1) shall not apply to taxable years beginning after December 31, 2000, and before January 1, 2004.''. (2) Conforming amendment.--Paragraph (1) of section 48(b) is amended by striking ``section 194(b)(1)'' and inserting ``section 194(b)(1) and without regard to section 194(b)(5)''. (c) Capital Gain Treatment Under Section 631(b) To Apply to Outright Sales by Land Owner.-- (1) In general.--The first sentence of section 631(b) (relating to disposal of timber with a retained economic interest) is amended by striking ``retains an economic interest in such timber'' and inserting ``either retains an economic interest in such timber or makes an outright sale of such timber''. (2) Conforming amendment.--The third sentence of section 631(b) is amended by striking ``The date of disposal'' and inserting ``In the case of disposal of timber with a retained economic interest, the date of disposal''. (d) Effective Dates.-- (1) Subsections (a) and (b).--The amendments made by subsections (a) and (b) shall apply to taxable years beginning after December 31, 2000. (2) Subsection (c).--The amendment made by subsection (c) shall apply to sales after the date of the enactment of this Act. SEC. 203. INCREASE IN EXPENSE TREATMENT FOR SMALL BUSINESSES. (a) In General.--Paragraph (1) of section 179(b) (relating to dollar limitation) is amended to read as follows: ``(1) Dollar limitation.--The aggregate cost which may be taken into account under subsection (a) for any taxable year shall not exceed $35,000.''. (b) Effective Date.--The amendment made by this section shall apply to taxable years beginning after December 31, 2000. SEC. 204. INCREASED DEDUCTION FOR MEAL EXPENSES. (a) In General.--Paragraph (1) of section 274(n) (relating to only 50 percent of meal and [[Page H10915]] entertainment expenses allowed as deduction) is amended by striking ``50 percent'' in the text and inserting ``the allowable percentage''. (b) Allowable Percentage.--Subsection (n) of section 274 is amended by redesignating paragraphs (2) and (3) as paragraphs (3) and (4), respectively, and by inserting after paragraph (1) the following new paragraph: ``(2) Allowable percentage.--For purposes of paragraph (1), the allowable percentage is-- ``(A) in the case of amounts for items described in paragraph (1)(B), 50 percent, and ``(B) in the case of expenses for food or beverages, 70 percent.''. (c) Conforming Amendment.--The heading for subsection (n) of section 274 is amended by striking ``50 Percent'' and inserting ``Limited Percentages''. (d) Effective Date.--The amendments made by this section shall apply to taxable years beginning after December 31, 2000. SEC. 205. INCREASED DEDUCTIBILITY OF BUSINESS MEAL EXPENSES FOR INDIVIDUALS SUBJECT TO FEDERAL LIMITATIONS ON HOURS OF SERVICE. (a) In General.--Paragraph (4) of section 274(n) (relating to limited percentages of meal and entertainment expenses allowed as deduction), as redesignated by section 204, is amended to read as follows: ``(4) Special rule for individuals subject to federal hours of

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CONFERENCE REPORT ON H.R. 2614, CERTIFIED DEVELOPMENT COMPANY PROGRAM IMPROVEMENTS ACT OF 2000
(House of Representatives - October 25, 2000)

Text of this article available as: TXT PDF [Pages H10909-H11087] CONFERENCE REPORT ON H.R. 2614, CERTIFIED DEVELOPMENT COMPANY PROGRAM IMPROVEMENTS ACT OF 2000 Mr. ARMEY submitted the following conference report and statement on the bill (H.R. 2614) to amend the Small Business Investment Act to make improvements to the certified development company program, and for other purposes: Conference Report (H. Rept. 106-1004) The committee of conference on the disagreeing votes of the two Houses on the amendment of the Senate to the bill (H.R. 2614) to amend the Small Business Investment Act to make improvements to the certified development company program, and for other purposes, having met, after full and free conference, have agreed to recommend and do recommend to their respective Houses as follows: That the House recede from its disagreement to the amendment of the Senate and agree to the same with an amendment as follows: In lieu of the matter proposed to be inserted by the Senate amendment, insert the following: SECTION 1. ENACTMENT OF OTHER PROVISIONS OF LAW. The provisions of the following bills of the 106th Congress are hereby enacted into law: (1) H.R. 5538, as introduced on October 25, 2000 (the Minimum Wage Act of 2000). (2) H.R. 5542, as introduced on October 25, 2000 (the Taxpayer Relief Act of 2000). (3) H.R. 5543, as introduced on October 25, 2000 (the Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000). (4) H.R. 5544, as introduced on October 25, 2000 (the Pain Relief Promotion Act of 2000). (5) H.R. 5545, as introduced on October 25, 2000 (the Small Business Reauthorization Act of 2000). SEC. 2. PUBLICATION OF ACT. In publishing this Act in slip form and in the United States Statutes at Large pursuant to section 112 of title 1, United States Code, the Archivist of the United States shall include after the date of approval appendixes setting forth the texts of the bills referred to in section 1. And the Senate agree to the same. Jim Talent, Dick Armey, Managers on the Part of the House. Christopher Bond, Conrad Burns, Managers on the Part of the Senate. ---------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------- NOTICE--OCTOBER 23, 2000 A final issue of the Congressional Record for the 106th Congress, 2d Session, will be published on November 29, 2000, in order to permit Members to revise and extend their remarks. All material for insertion must be signed by the Member and delivered to the respective offices of the Official Reporters of Debates (Room HT-60 or S-123 of the Capitol), Monday through Friday, between the hours of 10:00 a.m. and 3:00 p.m. through November 28. The final issue will be dated November 29, 2000, and will be delivered on Friday, December 1, 2000. None of the material printed in the final issue of the Congressional Record may contain subject matter, or relate to any event that occurred after the sine die date. Senators' statements should also be submitted electronically, either on a disk to accompany the signed statement, or by e-mail to the Official Reporters of Debates at ``Records@Reporters''. Members of the House of Representatives' statements may also be submitted electronically by e-mail, to accompany the signed statement, and formatted according to the instructions for the Extensions of Remarks template at https://clerkhouse.house.gov. The Official Reporters will transmit to GPO the template formatted electronic file only after receipt of, and authentication with, the hard copy, signed manuscript. Deliver statements to the Official Reporters in Room HT-60. Members of Congress desiring to purchase reprints of material submitted for inclusion in the Congressional Record may do so by contacting the Congressional Printing Management Division, at the Government Printing Office, on 512-0224, between the hours of 8:00 a.m. and 4:00 p.m. daily. By order of the Joint Committee on Printing. WILLIAM M. THOMAS, Chairman. ---------------------------------------------------------------------------------------------------------------- [[Page H10910]] JOINT EXPLANATORY STATEMENT OF THE COMMITTEE OF CONFERENCE The managers on the part of the House and the Senate at the conference on the disagreeing votes of the two Houses on the amendment of the Senate to the bill (H.R. 2614) to amend the Small Business Investment Act to make improvements to the certified development company program, and for other purposes, submit the following joint statement to the House and the Senate in explanation of the effect of the action agreed upon by the managers and recommended in the accompanying conference report: The Senate amendment struck all of the House bill after the enacting clause and inserted a substitute text. The House recedes from its disagreement to the amendment of the Senate with an amendment that is a substitute for the House bill and the Senate amendment. The conference agreement would enact by reference the provisions of five bills introduced on October 25, 2000. Those bills are the following: (1) H.R. 5538, the Minimum Wage Act of 2000. (2) H.R. 5542, the Taxpayer Relief Act of 2000. (3) H.R. 5543, the Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000. (4) H.R. 5544, the Pain Relief Promotion Act of 2000. (5) H.R. 5545, the Small Business Reauthorization Act of 2000. This joint statement sets out for convenience the text of each bill that would be enacted in the conference report by reference. minimum wage act of 2000 The conference agreement would enact the provisions of H.R. 5538, as introduced on October 25, 2000. The text of that bill follows: SECTION 1. SHORT TITLE. This Act may be cited as the ``Minimum Wage Act of 2000''. SEC. 2. MINIMUM WAGE INCREASE. Paragraph (1) of section 6(a) of the Fair Labor Standards Act of 1938 (29 U.S.C. 206(a)) is amended to read as follows: ``(1) except as otherwise provided in this section. Not less than $5.15 an hour during the period ending June 30, 2000, not less than $5.65 an hour during the year beginning January 1, 2001, and not less than $6.15 an hour beginning January 1, 2002;''. taxpayer relief act of 2000 The conference agreement would enact the provisions of H.R. 5542, as introduced on October 25, 2000. The text of that bill follows: SECTION 1. SHORT TITLE; AMENDMENT OF 1986 CODE. (a) Short Title.--This Act may be cited as the ``Taxpayer Relief Act of 2000''. (b) Amendment of 1986 Code.--Except as otherwise expressly provided, whenever in this Act an amendment or repeal is expressed in terms of an amendment to, or repeal of, a section or other provision, the reference shall be considered to be made to a section or other provision of the Internal Revenue Code of 1986. (c) Table of Contents.-- Sec. 1. Short title; amendment of 1986 Code. TITLE I--FSC REPEAL AND EXTRATERRITORIAL INCOME EXCLUSION Sec. 101. Repeal of foreign sales corporation rules. Sec. 102. Treatment of extraterritorial income. Sec. 103. Technical and conforming amendments. Sec. 104. Effective date. TITLE II--SMALL BUSINESS TAX RELIEF Sec. 201. Extension of work opportunity tax credit. Sec. 202. Increase in amortizable reforestation expenditures, etc. Sec. 203. Increase in expense treatment for small businesses. Sec. 204. Increased deduction for meal expenses. Sec. 205. Increased deductibility of business meal expenses for individuals subject to Federal limitations on hours of service. Sec. 206. Repeal of modification of installment method. Sec. 207. Income averaging not to increase alternative minimum tax liability; income averaging for fishermen. Sec. 208. Repeal of occupational taxes relating to distilled spirits, wine, and beer. Sec. 209. Exclusion from gross income for certain forgiven mortgage obligations. Sec. 210. Clarification of cash accounting rules for small business. Sec. 211. Amendments relating to demand deposit accounts at depository institutions. TITLE III--HEALTH INSURANCE AND LONG-TERM CARE INSURANCE PROVISIONS Sec. 301. Deduction for 100 percent of health insurance costs of self- employed individuals. Sec. 302. Deduction for health and long-term care insurance costs of individuals not participating in employer-subsidized health plans. Sec. 303. 2-year extension of availability of medical savings accounts. Sec. 304. Additional consumer protections for long-term care insurance. Sec. 305. Deduction for providing long-term care in the home to household members. TITLE IV--PENSION AND INDIVIDUAL RETIREMENT ARRANGEMENT PROVISIONS Sec. 400. Short title. Subtitle A--Individual Retirement Accounts Sec. 401. Modification of IRA contribution limits. Sec. 402. Deemed IRAs under employer plans. Sec. 403. Tax-free distributions from individual retirement accounts for charitable purposes. Sec. 404. Modification of AGI limits for Roth IRAs. Subtitle B--Expanding Coverage Sec. 411. Increase in benefit and contribution limits. Sec. 412. Plan loans for subchapter S owners, partners, and sole proprietors. Sec. 413. Modification of top-heavy rules. Sec. 414. Elective deferrals not taken into account for purposes of deduction limits. Sec. 415. Repeal of coordination requirements for deferred compensation plans of State and local governments and tax-exempt organizations. Sec. 416. Elimination of user fee for requests to IRS regarding pension plans. Sec. 417. Deduction limits. Sec. 418. Option to treat elective deferrals as after-tax Roth contributions. Subtitle C--Enhancing Fairness for Women Sec. 421. Catch-up contributions for individuals age 50 or over. Sec. 422. Equitable treatment for contributions of employees to defined contribution plans. Sec. 423. Faster vesting of certain employer matching contributions. Sec. 424. Simplify and update the minimum distribution rules. Sec. 425. Clarification of tax treatment of division of section 457 plan benefits upon divorce. Sec. 426. Provisions relating to hardship distributions. Sec. 427. Waiver of tax on nondeductible contributions for domestic or similar workers. Subtitle D--Increasing Portability for Participants Sec. 431. Rollovers allowed among various types of plans. Sec. 432. Rollovers of IRAs into workplace retirement plans. Sec. 433. Rollovers of after-tax contributions. Sec. 434. Hardship exception to 60-day rule. Sec. 435. Treatment of forms of distribution. Sec. 436. Rationalization of restrictions on distributions. Sec. 437. Purchase of service credit in governmental defined benefit plans. Sec. 438. Employers may disregard rollovers for purposes of cash-out amounts. Sec. 439. Minimum distribution and inclusion requirements for section 457 plans. Subtitle E--Strengthening Pension Security and Enforcement Sec. 441. Repeal of 155 percent of current liability funding limit. Sec. 442. Maximum contribution deduction rules modified and applied to all defined benefit plans. Sec. 443. Excise tax relief for sound pension funding. Sec. 444. Excise tax on failure to provide notice by defined benefit plans significantly reducing future benefit accruals. Sec. 445. Treatment of multiemployer plans under section 415. Sec. 446. Protection of investment of employee contributions to 401(k) plans. Sec. 447. Periodic pension benefits statements. Sec. 448. Prohibited allocations of stock in S corporation ESOP. Subtitle F--Reducing Regulatory Burdens Sec. 451. Modification of timing of plan valuations. Sec. 452. ESOP dividends may be reinvested without loss of dividend deduction. Sec. 453. Repeal of transition rule relating to certain highly compensated employees. Sec. 454. Employees of tax-exempt entities. Sec. 455. Clarification of treatment of employer-provided retirement advice. Sec. 456. Reporting simplification. Sec. 457. Improvement of employee plans compliance resolution system. Sec. 458. Repeal of the multiple use test. Sec. 459. Flexibility in nondiscrimination, coverage, and line of business rules. Sec. 460. Extension to all governmental plans of moratorium on application of certain nondiscrimination rules applicable to State and local plans. Sec. 461. Notice and consent period regarding distributions. Sec. 462. Annual report dissemination. Sec. 463. Technical corrections to SAVER Act. Sec. 464. Study of pension coverage. Subtitle G--Other ERISA Provisions Sec. 471. Missing participants. Sec. 472. Reduced PBGC premium for new plans of small employers. Sec. 473. Reduction of additional PBGC premium for new and small plans. Sec. 474. Authorization for PBGC to pay interest on premium overpayment refunds. Sec. 475. Substantial owner benefits in terminated plans. Sec. 476. Multiemployer plan benefits guarantee. Sec. 477. Civil penalties for breach of fiduciary responsibility. Sec. 478. Benefit suspension notice. Subtitle H--Plan Amendments Sec. 481. Provisions relating to plan amendments. [[Page H10911]] TITLE V--SCHOOL CONSTRUCTION PROVISIONS Sec. 501. Additional increase in arbitrage rebate exception for governmental bonds used to finance educational facilities. Sec. 502. Modification of arbitrage rebate rules applicable to public school construction bonds. Sec. 503. Modification of special arbitrage rule for certain funds. Sec. 504. Treatment of qualified public educational facility bonds as exempt facility bonds. Sec. 505. Expansion of qualified zone academy bond program. TITLE VI--COMMUNITY REVITALIZATION Subtitle A--Tax Incentives for Renewal Communities Sec. 601. Designation of and tax incentives for renewal communities. Sec. 602. Work opportunity credit for hiring youth residing in renewal communities. Subtitle B--Extension and Expansion of Empowerment Zone Incentives Sec. 611. Authority to designate 9 additional empowerment zones. Sec. 612. Extension of empowerment zone treatment through 2009. Sec. 613. 20 percent employment credit for all empowerment zones Sec. 614. Increased expensing under section 179. Sec. 615. Higher limits on tax-exempt empowerment zone facility bonds. Sec. 616. Nonrecognition of gain on rollover of empowerment zone investments. Sec. 617. Increased exclusion of gain on sale of empowerment zone stock. Subtitle C--New Markets Tax Credit Sec. 621. New markets tax credit. Subtitle D--Improvements in Low-Income Housing Credit Sec. 631. Modification of State ceiling on low-income housing credit. Sec. 632. Modification of criteria for allocating housing credits among projects. Sec. 633. Additional responsibilities of housing credit agencies. Sec. 634. Modifications to rules relating to basis of building which is eligible for credit. Sec. 635. Other modifications. Sec. 636. Carryforward rules. Sec. 637. Effective date. Subtitle E--Other Community Renewal and New Markets Assistance Sec. 641. Transfer of unoccupied and substandard HUD-held housing to local governments and community development corporations. Sec. 642. Transfer of HUD assets in revitalization areas. Sec. 643. Risk-sharing demonstration. Sec. 644. Prevention and treatment of substance abuse; services provided through religious organizations. Subtitle F--Other Provisions Sec. 651. Acceleration of phase-in of increase in volume cap on private activity bonds. Sec. 652. Modifications to expensing of environmental remediation costs. Sec. 653. Extension of DC homebuyer tax credit. TITLE VII--ADMINISTRATIVE, MISCELLANEOUS, AND TECHNICAL PROVISIONS Subtitle A--Administrative Provisions Sec. 701. Exemption of certain reporting requirements. Sec. 702. Extension of deadlines for IRS compliance with certain notice requirements. Sec. 703. Extension of authority for undercover operations. Sec. 704. Confidentiality of certain documents relating to closing and similar agreements and to agreements with foreign governments. Sec. 705. Increase in threshold for Joint Committee reports on refunds and credits. Sec. 706. Treatment of missing children with respect to certain tax benefits. Sec. 707. Amendments to statutes referencing yield on 52-week Treasury bills. Sec. 708. Adjustments for Consumer Price Index error. Sec. 709. Prevention of duplication of loss through assumption of liabilities giving rise to a deduction. Subtitle B--Miscellaneous Provisions Sec. 710. Repeal of 4.3-cent motor fuel excise taxes on railroads and inland waterway transportation which remain in general fund. Sec. 711. Repeal of reduction of deductions for mutual life insurance companies. Sec. 712. Repeal of policyholders surplus account provisions. Sec. 713. Credit to holders of qualified Amtrak bonds. Sec. 714. Farm, fishing, and ranch risk management accounts. Sec. 715. Extension of enhanced deduction for corporate donations of computer technology. Sec. 716. Relief from Federal tax liability arising with respect to certain claims against the Department of Agriculture for discrimination in farm credit and benefit programs. Sec. 717. Expansion of credit for adoption expenses. Sec. 718. Study concerning United States insurance companies with certain offshore reinsurance affiliates. Sec. 719. Treatment of Indian tribal governments under Federal Unemployment Tax Act. Subtitle C--Technical Corrections Sec. 721. Amendments related to Ticket to Work and Work Incentives Improvement Act of 1999. Sec. 722. Amendments related to Tax and Trade Relief Extension Act of 1998. Sec. 723. Amendments related to Internal Revenue Service Restructuring and Reform Act of 1998. Sec. 724. Amendments related to Taxpayer Relief Act of 1997. Sec. 725. Amendments related to Balanced Budget Act of 1997. Sec. 726. Amendments related to Small Business Job Protection Act of 1996. Sec. 727. Amendment related to Revenue Reconciliation Act of 1990. Sec. 728. Other technical corrections. Sec. 729. Clerical changes. Subtitle D--Pay-Go Adjustments Sec. 731. Avoidance of a Pay-Go sequestration for fiscal year 2001. TITLE I--FSC REPEAL AND EXTRATERRITORIAL INCOME EXCLUSION SEC. 101. REPEAL OF FOREIGN SALES CORPORATION RULES. Subpart C of part III of subchapter N of chapter 1 (relating to taxation of foreign sales corporations) is hereby repealed. SEC. 102. TREATMENT OF EXTRATERRITORIAL INCOME. (a) In General.--Part III of subchapter B of chapter 1 (relating to items specifically excluded from gross income) is amended by inserting before section 115 the following new section: ``SEC. 114. EXTRATERRITORIAL INCOME. ``(a) Exclusion.--Gross income does not include extraterritorial income. ``(b) Exception.--Subsection (a) shall not apply to extraterritorial income which is not qualifying foreign trade income as determined under subpart E of part III of subchapter N. ``(c) Disallowance of Deductions.-- ``(1) In general.--Any deduction of a taxpayer allocated under paragraph (2) to extraterritorial income of the taxpayer excluded from gross income under subsection (a) shall not be allowed. ``(2) Allocation.--Any deduction of the taxpayer properly apportioned and allocated to the extraterritorial income derived by the taxpayer from any transaction shall be allocated on a proportionate basis between-- ``(A) the extraterritorial income derived from such transaction which is excluded from gross income under subsection (a), and ``(B) the extraterritorial income derived from such transaction which is not so excluded. ``(d) Denial of Credits for Certain Foreign Taxes.-- Notwithstanding any other provision of this chapter, no credit shall be allowed under this chapter for any income, war profits, and excess profits taxes paid or accrued to any foreign country or possession of the United States with respect to extraterritorial income which is excluded from gross income under subsection (a). ``(e) Extraterritorial Income.--For purposes of this section, the term `extraterritorial income' means the gross income of the taxpayer attributable to foreign trading gross receipts (as defined in section 942) of the taxpayer.''. (b) Qualifying Foreign Trade Income.--Part III of subchapter N of chapter 1 is amended by inserting after subpart D the following new subpart: ``Subpart E--Qualifying Foreign Trade Income ``Sec. 941. Qualifying foreign trade income. ``Sec. 942. Foreign trading gross receipts. ``Sec. 943. Other definitions and special rules. ``SEC. 941. QUALIFYING FOREIGN TRADE INCOME. ``(a) Qualifying Foreign Trade Income.--For purposes of this subpart and section 114-- ``(1) In general.--The term `qualifying foreign trade income' means, with respect to any transaction, the amount of gross income which, if excluded, will result in a reduction of the taxable income of the taxpayer from such transaction equal to the greatest of-- ``(A) 30 percent of the foreign sale and leasing income derived by the taxpayer from such transaction, ``(B) 1.2 percent of the foreign trading gross receipts derived by the taxpayer from the transaction, or ``(C) 15 percent of the foreign trade income derived by the taxpayer from the transaction. In no event shall the amount determined under subparagraph (B) exceed 200 percent of the amount determined under subparagraph (C). ``(2) Alternative computation.--A taxpayer may compute its qualifying foreign trade income under a subparagraph of paragraph (1) other than the subparagraph which results in the greatest amount of such income. ``(3) Limitation on use of foreign trading gross receipts method.--If any person computes its qualifying foreign trade income from any transaction with respect to any property under paragraph (1)(B), the qualifying foreign trade income of such person (or any related person) with respect to any other transaction involving such property shall be zero. ``(4) Rules for marginal costing.--The Secretary shall prescribe regulations setting forth rules for the allocation of expenditures in computing foreign trade income under paragraph (1)(C) in those cases where a taxpayer is seeking to establish or maintain a market for qualifying foreign trade property. ``(5) Participation in international boycotts, etc.--Under regulations prescribed by the Secretary, the qualifying foreign trade income of a taxpayer for any taxable year shall be reduced (but not below zero) by the sum of-- [[Page H10912]] ``(A) an amount equal to such income multiplied by the international boycott factor determined under section 999, and ``(B) any illegal bribe, kickback, or other payment (within the meaning of section 162(c)) paid by or on behalf of the taxpayer directly or indirectly to an official, employee, or agent in fact of a government. ``(b) Foreign Trade Income.--For purposes of this subpart-- ``(1) In general.--The term `foreign trade income' means the taxable income of the taxpayer attributable to foreign trading gross receipts of the taxpayer. ``(2) Special rule for cooperatives.--In any case in which an organization to which part I of subchapter T applies which is engaged in the marketing of agricultural or horticultural products sells qualifying foreign trade property, in computing the taxable income of such cooperative, there shall not be taken into account any deduction allowable under subsection (b) or (c) of section 1382 (relating to patronage dividends, per-unit retain allocations, and nonpatronage distributions). ``(c) Foreign Sale and Leasing Income.--For purposes of this section-- ``(1) In general.--The term `foreign sale and leasing income' means, with respect to any transaction-- ``(A) foreign trade income properly allocable to activities which-- ``(i) are described in paragraph (2)(A)(i) or (3) of section 942(b), and ``(ii) are performed by the taxpayer (or any person acting under a contract with such taxpayer) outside the United States, or ``(B) foreign trade income derived by the taxpayer in connection with the lease or rental of qualifying foreign trade property for use by the lessee outside the United States. ``(2) Special rules for leased property.-- ``(A) Sales income.--The term `foreign sale and leasing income' includes any foreign trade income derived by the taxpayer from the sale of property described in paragraph (1)(B). ``(B) Limitation in certain cases.--Except as provided in regulations, in the case of property which-- ``(i) was manufactured, produced, grown, or extracted by the taxpayer, or ``(ii) was acquired by the taxpayer from a related person for a price which was not determined in accordance with the rules of section 482, the amount of foreign trade income which may be treated as foreign sale and leasing income under paragraph (1)(B) or subparagraph (A) of this paragraph with respect to any transaction involving such property shall not exceed the amount which would have been determined if the taxpayer had acquired such property for the price determined in accordance with the rules of section 482. ``(3) Special rules.-- ``(A) Excluded property.--Foreign sale and leasing income shall not include any income properly allocable to excluded property described in subparagraph (B) of section 943(a)(3) (relating to intangibles). ``(B) Only direct expenses taken into account.--For purposes of this subsection, any expense other than a directly allocable expense shall not be taken into account in computing foreign trade income. ``SEC. 942. FOREIGN TRADING GROSS RECEIPTS. ``(a) Foreign Trading Gross Receipts.-- ``(1) In general.--Except as otherwise provided in this section, for purposes of this subpart, the term `foreign trading gross receipts' means the gross receipts of the taxpayer which are-- ``(A) from the sale, exchange, or other disposition of qualifying foreign trade property, ``(B) from the lease or rental of qualifying foreign trade property for use by the lessee outside the United States, ``(C) for services which are related and subsidiary to-- ``(i) any sale, exchange, or other disposition of qualifying foreign trade property by such taxpayer, or ``(ii) any lease or rental of qualifying foreign trade property described in subparagraph (B) by such taxpayer, ``(D) for engineering or architectural services for construction projects located (or proposed for location) outside the United States, or ``(E) for the performance of managerial services for a person other than a related person in furtherance of the production of foreign trading gross receipts described in subparagraph (A), (B), or (C). Subparagraph (E) shall not apply to a taxpayer for any taxable year unless at least 50 percent of its foreign trading gross receipts (determined without regard to this sentence) for such taxable year is derived from activities described in subparagraph (A), (B), or (C). ``(2) Certain receipts excluded on basis of use; subsidized receipts excluded.--The term `foreign trading gross receipts' shall not include receipts of a taxpayer from a transaction if-- ``(A) the qualifying foreign trade property or services-- ``(i) are for ultimate use in the United States, or ``(ii) are for use by the United States or any instrumentality thereof and such use of qualifying foreign trade property or services is required by law or regulation, or ``(B) such transaction is accomplished by a subsidy granted by the government (or any instrumentality thereof) of the country or possession in which the property is manufactured, produced, grown, or extracted. ``(3) Election to exclude certain receipts.--The term `foreign trading gross receipts' shall not include gross receipts of a taxpayer from a transaction if the taxpayer elects not to have such receipts taken into account for purposes of this subpart. ``(b) Foreign Economic Process Requirements.-- ``(1) In general.--Except as provided in subsection (c), a taxpayer shall be treated as having foreign trading gross receipts from any transaction only if economic processes with respect to such transaction take place outside the United States as required by paragraph (2). ``(2) Requirement.-- ``(A) In general.--The requirements of this paragraph are met with respect to the gross receipts of a taxpayer derived from any transaction if-- ``(i) such taxpayer (or any person acting under a contract with such taxpayer) has participated outside the United States in the solicitation (other than advertising), the negotiation, or the making of the contract relating to such transaction, and ``(ii) the foreign direct costs incurred by the taxpayer attributable to the transaction equal or exceed 50 percent of the total direct costs attributable to the transaction. ``(B) Alternative 85-percent test.--A taxpayer shall be treated as satisfying the requirements of subparagraph (A)(ii) with respect to any transaction if, with respect to each of at least 2 subparagraphs of paragraph (3), the foreign direct costs incurred by such taxpayer attributable to activities described in such subparagraph equal or exceed 85 percent of the total direct costs attributable to activities described in such subparagraph. ``(C) Definitions.--For purposes of this paragraph-- ``(i) Total direct costs.--The term `total direct costs' means, with respect to any transaction, the total direct costs incurred by the taxpayer attributable to activities described in paragraph (3) performed at any location by the taxpayer or any person acting under a contract with such taxpayer. ``(ii) Foreign direct costs.--The term `foreign direct costs' means, with respect to any transaction, the portion of the total direct costs which are attributable to activities performed outside the United States. ``(3) Activities relating to qualifying foreign trade property.--The activities described in this paragraph are any of the following with respect to qualifying foreign trade property-- ``(A) advertising and sales promotion, ``(B) the processing of customer orders and the arranging for delivery, ``(C) transportation outside the United States in connection with delivery to the customer, ``(D) the determination and transmittal of a final invoice or statement of account or the receipt of payment, and ``(E) the assumption of credit risk. ``(4) Economic processes performed by related persons.--A taxpayer shall be treated as meeting the requirements of this subsection with respect to any sales transaction involving any property if any related person has met such requirements in such transaction or any other sales transaction involving such property. ``(c) Exception From Foreign Economic Process Requirement.-- ``(1) In general.--The requirements of subsection (b) shall be treated as met for any taxable year if the foreign trading gross receipts of the taxpayer for such year do not exceed $5,000,000. ``(2) Receipts of related persons aggregated.--All related persons shall be treated as one person for purposes of paragraph (1), and the limitation under paragraph (1) shall be allocated among such persons in a manner provided in regulations prescribed by the Secretary. ``(3) Special rule for pass-thru entities.--In the case of a partnership, S corporation, or other pass-thru entity, the limitation under paragraph (1) shall apply with respect to the partnership, S corporation, or entity and with respect to each partner, shareholder, or other owner. ``SEC. 943. OTHER DEFINITIONS AND SPECIAL RULES. ``(a) Qualifying Foreign Trade Property.--For purposes of this subpart-- ``(1) In general.--The term `qualifying foreign trade property' means property-- ``(A) manufactured, produced, grown, or extracted within or outside the United States, ``(B) held primarily for sale, lease, or rental, in the ordinary course of trade or business for direct use, consumption, or disposition outside the United States, and ``(C) not more than 50 percent of the fair market value of which is attributable to-- ``(i) articles manufactured, produced, grown, or extracted outside the United States, and ``(ii) direct costs for labor (determined under the principles of section 263A) performed outside the United States. For purposes of subparagraph (C), the fair market value of any article imported into the United States shall be its appraised value, as determined by the Secretary under section 402 of the Tariff Act of 1930 (19 U.S.C. 1401a) in connection with its importation, and the direct costs for labor under clause (ii) do not include costs that would be treated under the principles of section 263A as direct labor costs attributable to articles described in clause (i). ``(2) U.S. taxation to ensure consistent treatment.-- Property which (without regard to this paragraph) is qualifying foreign trade property and which is manufactured, produced, grown, or extracted outside the United States shall be treated as qualifying foreign trade property only if it is manufactured, produced, grown, or extracted by-- ``(A) a domestic corporation, ``(B) an individual who is a citizen or resident of the United States, ``(C) a foreign corporation with respect to which an election under subsection (e) (relating to foreign corporations electing to be subject to United States taxation) is in effect, or [[Page H10913]] ``(D) a partnership or other pass-thru entity all of the partners or owners of which are described in subparagraph (A), (B), or (C). Except as otherwise provided by the Secretary, tiered partnerships or pass-thru entities shall be treated as described in subparagraph (D) if each of the partnerships or entities is directly or indirectly wholly owned by persons described in subparagraph (A), (B), or (C). ``(3) Excluded property.--The term `qualifying foreign trade property' shall not include-- ``(A) property leased or rented by the taxpayer for use by any related person, ``(B) patents, inventions, models, designs, formulas, or processes whether or not patented, copyrights (other than films, tapes, records, or similar reproductions, and other than computer software (whether or not patented), for commercial or home use), goodwill, trademarks, trade brands, franchises, or other like property, ``(C) oil or gas (or any primary product thereof), ``(D) products the transfer of which is prohibited or curtailed to effectuate the policy set forth in paragraph (2)(C) of section 3 of Public Law 96-72, or ``(E) any unprocessed timber which is a softwood. For purposes of subparagraph (E), the term `unprocessed timber' means any log, cant, or similar form of timber. ``(4) Property in short supply.--If the President determines that the supply of any property described in paragraph (1) is insufficient to meet the requirements of the domestic economy, the President may by Executive order designate the property as in short supply. Any property so designated shall not be treated as qualifying foreign trade property during the period beginning with the date specified in the Executive order and ending with the date specified in an Executive order setting forth the President's determination that the property is no longer in short supply. ``(b) Other Definitions and Rules.--For purposes of this subpart-- ``(1) Transaction.-- ``(A) In general.--The term `transaction' means-- ``(i) any sale, exchange, or other disposition, ``(ii) any lease or rental, and ``(iii) any furnishing of services. ``(B) Grouping of transactions.--To the extent provided in regulations, any provision of this subpart which, but for this subparagraph, would be applied on a transaction-by- transaction basis may be applied by the taxpayer on the basis of groups of transactions based on product lines or recognized industry or trade usage. Such regulations may permit different groupings for different purposes. ``(2) United states defined.--The term `United States' includes the Commonwealth of Puerto Rico. The preceding sentence shall not apply for purposes of determining whether a corporation is a domestic corporation. ``(3) Related person.--A person shall be related to another person if such persons are treated as a single employer under subsection (a) or (b) of section 52 or subsection (m) or (o) of section 414, except that determinations under subsections (a) and (b) of section 52 shall be made without regard to section 1563(b). ``(4) Gross and taxable income.--Section 114 shall not be taken into account in determining the amount of gross income or foreign trade income from any transaction. ``(c) Source Rule.--Under regulations, in the case of qualifying foreign trade property manufactured, produced, grown, or extracted within the United States, the amount of income of a taxpayer from any sales transaction with respect to such property which is treated as from sources without the United States shall not exceed-- ``(1) in the case of a taxpayer computing its qualifying foreign trade income under section 941(a)(1)(B), the amount of the taxpayer's foreign trade income which would (but for this subsection) be treated as from sources without the United States if the foreign trade income were reduced by an amount equal to 4 percent of the foreign trading gross receipts with respect to the transaction, and ``(2) in the case of a taxpayer computing its qualifying foreign trade income under section 941(a)(1)(C), 50 percent of the amount of the taxpayer's foreign trade income which would (but for this subsection) be treated as from sources without the United States. ``(d) Treatment of Withholding Taxes.-- ``(1) In general.--For purposes of section 114(d), any withholding tax shall not be treated as paid or accrued with respect to extraterritorial income which is excluded from gross income under section 114(a). For purposes of this paragraph, the term `withholding tax' means any tax which is imposed on a basis other than residence and for which credit is allowable under section 901 or 903. ``(2) Exception.--Paragraph (1) shall not apply to any taxpayer with respect to extraterritorial income from any transaction if the taxpayer computes its qualifying foreign trade income with respect to the transaction under section 941(a)(1)(A). ``(e) Election To Be Treated as Domestic Corporation.-- ``(1) In general.--An applicable foreign corporation may elect to be treated as a domestic corporation for all purposes of this title if such corporation waives all benefits to such corporation granted by the United States under any treaty. No election under section 1362(a) may be made with respect to such corporation. ``(2) Applicable foreign corporation.--For purposes of paragraph (1), the term `applicable foreign corporation' means any foreign corporation if-- ``(A) such corporation manufactures, produces, grows, or extracts property in the ordinary course of such corporation's trade or business, or ``(B) substantially all of the gross receipts of such corporation are foreign trading gross receipts. ``(3) Period of election.-- ``(A) In general.--Except as otherwise provided in this paragraph, an election under paragraph (1) shall apply to the taxable year for which made and all subsequent taxable years unless revoked by the taxpayer. Any revocation of such election shall apply to taxable years beginning after such revocation. ``(B) Termination.--If a corporation which made an election under paragraph (1) for any taxable year fails to meet the requirements of subparagraph (A) or (B) of paragraph (2) for any subsequent taxable year, such election shall not apply to any taxable year beginning after such subsequent taxable year. ``(C) Effect of revocation or termination.--If a corporation which made an election under paragraph (1) revokes such election or such election is terminated under subparagraph (B), such corporation (and any successor corporation) may not make such election for any of the 5 taxable years beginning with the first taxable year for which such election is not in effect as a result of such revocation or termination. ``(4) Special rules.-- ``(A) Requirements.--This subsection shall not apply to an applicable foreign corporation if such corporation fails to meet the requirements (if any) which the Secretary may prescribe to ensure that the taxes imposed by this chapter on such corporation are paid. ``(B) Effect of election, revocation, and termination.-- ``(i) Election.--For purposes of section 367, a foreign corporation making an election under this subsection shall be treated as transferring (as of the first day of the first taxable year to which the election applies) all of its assets to a domestic corporation in connection with an exchange to which section 354 applies. ``(ii) Revocation and termination.--For purposes of section 367, if-- ``(I) an election is made by a corporation under paragraph (1) for any taxable year, and ``(II) such election ceases to apply for any subsequent taxable year, such corporation shall be treated as a domestic corporation transferring (as of the 1st day of the first such subsequent taxable year to which such election ceases to apply) all of its property to a foreign corporation in connection with an exchange to which section 354 applies. ``(C) Eligibility for election.--The Secretary may by regulation designate one or more classes of corporations which may not make the election under this subsection. ``(f) Rules Relating to Allocations of Qualifying Foreign Trade Income From Shared Partnerships.-- ``(1) In general.--If-- ``(A) a partnership maintains a separate account for transactions (to which this subpart applies) with each partner, ``(B) distributions to each partner with respect to such transactions are based on the amounts in the separate account maintained with respect to such partner, and ``(C) such partnership meets such other requirements as the Secretary may by regulations prescribe, then such partnership shall allocate to each partner items of income, gain, loss, and deduction (including qualifying foreign trade income) from any transaction to which this subpart applies on the basis of such separate account. ``(2) Special rules.--For purposes of this subpart, in the case of a partnership to which paragraph (1) applies-- ``(A) any partner's interest in the partnership shall not be taken into account in determining whether such partner is a related person with respect to any other partner, and ``(B) the election under section 942(a)(3) shall be made separately by each partner with respect to any transaction for which the partnership maintains separate accounts for each partner. ``(g) Exclusion for Patrons of Agricultural and Horticultural Cooperatives.--Any amount described in paragraph (1) or (3) of section 1385(a)-- ``(1) which is received by a person from an organization to which part I of subchapter T applies which is engaged in the marketing of agricultural or horticultural products, and ``(2) which is allocable to qualifying foreign trade income and designated as such by the organization in a written notice mailed to its patrons during the payment period described in section 1382(d), shall be treated as qualifying foreign trade income of such person for purposes of section 114. The taxable income of the organization shall not be reduced under section 1382 by reason of any amount to which the preceding sentence applies. ``(h) Special Rule for DISCs.--Section 114 shall not apply to any taxpayer for any taxable year if, at any time during the taxable year, the taxpayer is a member of any controlled group of corporations (as defined in section 927(d)(4), as in effect before the date of the enactment of this subsection) of which a DISC is a member.'' SEC. 103. TECHNICAL AND CONFORMING AMENDMENTS. (1) The second sentence of section 56(g)(4)(B)(i) is amended by inserting before the period ``or under section 114''. (2) Section 275(a) is amended-- (A) by striking ``or'' at the end of paragraph (4)(A), by striking the period at the end of paragraph (4)(B) and inserting ``, or'', and by adding at the end of paragraph (4) the following new subparagraph: ``(C) such taxes are paid or accrued with respect to qualifying foreign trade income (as defined in section 941).''; and [[Page H10914]] (B) by adding at the end the following the following new sentence: ``A rule similar to the rule of section 943(d) shall apply for purposes of paragraph (4)(C).''. (3) Paragraph (3) of section 864(e) is amended-- (A) by striking ``For purposes of'' and inserting: ``(A) In general.--For purposes of''; and (B) by adding at the end the following new subparagraph: ``(B) Assets producing exempt extraterritorial income.--For purposes of allocating and apportioning any interest expense, there shall not be taken into account any qualifying foreign trade property (as defined in section 943(a)) which is held by the taxpayer for lease or rental in the ordinary course of trade or business for use by the lessee outside the United States (as defined in section 943(b)(2)).''. (4) Section 903 is amended by striking ``164(a)'' and inserting ``114, 164(a),''. (5) Section 999(c)(1) is amended by inserting ``941(a)(5),'' after ``908(a),''. (6) The table of sections for part III of subchapter B of chapter 1 is amended by inserting before the item relating to section 115 the following new item: ``Sec. 114. Extraterritorial income.''. (7) The table of subparts for part III of subchapter N of chapter 1 is amended by striking the item relating to subpart E and inserting the following new item: ``Subpart E. Qualifying foreign trade income.''. (8) The table of subparts for part III of subchapter N of chapter 1 is amended by striking the item relating to subpart C. SEC. 104. EFFECTIVE DATE. (a) In General.--The amendments made by this title shall apply to transactions after September 30, 2000. (b) No New FSCs; Termination of Inactive FSCs.-- (1) No new fscs.--No corporation may elect after September 30, 2000, to be a FSC (as defined in section 922 of the Internal Revenue Code of 1986, as in effect before the amendments made by this Act). (2) Termination of inactive fscs.--If a FSC has no foreign trade income (as defined in section 923(b) of such Code, as so in effect) for any period of 5 consecutive taxable years beginning after December 31, 2001, such FSC shall cease to be treated as a FSC for purposes of such Code for any taxable year beginning after such period. (c) Transition Period for Existing Foreign Sales Corporations.-- (1) In general.--In the case of a FSC (as so defined) in existence on September 30, 2000, and at all times thereafter, the amendments made by this Act shall not apply to any transaction in the ordinary course of trade or business involving a FSC which occurs-- (A) before January 1, 2002; or (B) after December 31, 2001, pursuant to a binding contract-- (i) which is between the FSC (or any related person) and any person which is not a related person; and (ii) which is in effect on September 30, 2000, and at all times thereafter. For purposes of this paragraph, a binding contract shall include a purchase option, renewal option, or replacement option which is included in such contract and which is enforceable against the seller or lessor. (2) Election to have amendments apply earlier.--A taxpayer may elect to have the amendments made by this Act apply to any transaction by a FSC or any related person to which such amendments would apply but for the application of paragraph (1). Such election shall be effective for the taxable year for which made and all subsequent taxable years, and, once made, may be revoked only with the consent of the Secretary of the Treasury. (3) Exception for old earnings and profits of certain corporations.-- (A) In general.--In the case of a foreign corporation to which this paragraph applies-- (i) earnings and profits of such corporation accumulated in taxable years ending before October 1, 2000, shall not be included in the gross income of the persons holding stock in such corporation by reason of section 943(e)(4)(B)(i), and (ii) rules similar to the rules of clauses (ii), (iii), and (iv) of section 953(d)(4)(B) shall apply with respect to such earnings and profits. The preceding sentence shall not apply to earnings and profits acquired in a transaction after September 30, 2000, to which section 381 applies unless the distributor or transferor corporation was immediately before the transaction a foreign corporation to which this paragraph applies. (B) Existing fscs.--This paragraph shall apply to any controlled foreign corporation (as defined in section 957) if-- (i) such corporation is a FSC (as so defined) in existence on September 30, 2000, (ii) such corporation is eligible to make the election under section 943(e) by reason of being described in paragraph (2)(B) of such section, and (iii) such corporation makes such election not later than for its first taxable year beginning after December 31, 2001. (C) Other corporations.--This paragraph shall apply to any controlled foreign corporation (as defined in section 957), and such corporation shall (notwithstanding any provision of section 943(e)) be treated as an applicable foreign corporation for purposes of section 943(e), if-- (i) such corporation is in existence on September 30, 2000, (ii) as of such date, such corporation is wholly owned (directly or indirectly) by a domestic corporation (determined without regard to any election under section 943(e)), (iii) for each of the 3 taxable years preceding the first taxable year to which the election under section 943(e) by such controlled foreign corporation applies-- (I) all of the gross income of such corporation is subpart F income (as defined in section 952), including by reason of section 954(b)(3)(B), and (II) in the ordinary course of such corporation's trade or business, such corporation regularly sold (or paid commissions) to a FSC which on September 30, 2000, was a related person to such corporation, (iv) such corporation has never made an election under section 922(a)(2) (as in effect before the date of the enactment of this paragraph) to be treated as a FSC, and (v) such corporation makes the election under section 943(e) not later than for its first taxable year beginning after December 31, 2001. The preceding sentence shall cease to apply as of the date that the domestic corporation referred to in clause (ii) ceases to wholly own (directly or indirectly) such controlled foreign corporation. (4) Related person.--For purposes of this subsection, the term ``related person'' has the meaning given to such term by section 943(b)(3). (5) Section references.--Except as otherwise expressly provided, any reference in this subsection to a section or other provision shall be considered to be a reference to a section or other provision of the Internal Revenue Code of 1986, as amended by this title. (d) Special Rules Relating to Leasing Transactions.-- (1) Sales income.--If foreign trade income in connection with the lease or rental of property described in section 927(a)(1)(B) of such Code (as in effect before the amendments made by this Act) is treated as exempt foreign trade income for purposes of section 921(a) of such Code (as so in effect), such property shall be treated as property described in section 941(c)(1)(B) of such Code (as added by this Act) for purposes of applying section 941(c)(2) of such Code (as so added) to any subsequent transaction involving such property to which the amendments made by this Act apply. (2) Limitation on use of gross receipts method.--If any person computed its foreign trade income from any transaction with respect to any property on the basis of a transfer price determined under the method described in section 925(a)(1) of such Code (as in effect before the amendments made by this Act), then the qualifying foreign trade income (as defined in section 941(a) of such Code, as in effect after such amendment) of such person (or any related person) with respect to any other transaction involving such property (and to which the amendments made by this Act apply) shall be zero. TITLE II--SMALL BUSINESS TAX RELIEF SEC. 201. EXTENSION OF WORK OPPORTUNITY TAX CREDIT. (a) In General.--Section 51(c)(4)(B) is amended by striking ``December 31, 2001'' and inserting ``June 30, 2004''. (b) Effective Date.--The amendment made by this section shall apply to individuals who begin work for the employer after December 31, 2001. SEC. 202. INCREASE IN AMORTIZABLE REFORESTATION EXPENDITURES, ETC. (a) Increase in Dollar Limitation.--Paragraph (1) of section 194(b) (relating to amortization of reforestation expenditures) is amended by striking ``$10,000 ($5,000'' and inserting ``$25,000 ($12,500''. (b) Temporary Suspension of Increased Dollar Limitation.-- (1) In general.--Subsection (b) of section 194 (relating to amortization of reforestation expenditures) is amended by adding at the end the following new paragraph: ``(5) Suspension of dollar limitation.--Paragraph (1) shall not apply to taxable years beginning after December 31, 2000, and before January 1, 2004.''. (2) Conforming amendment.--Paragraph (1) of section 48(b) is amended by striking ``section 194(b)(1)'' and inserting ``section 194(b)(1) and without regard to section 194(b)(5)''. (c) Capital Gain Treatment Under Section 631(b) To Apply to Outright Sales by Land Owner.-- (1) In general.--The first sentence of section 631(b) (relating to disposal of timber with a retained economic interest) is amended by striking ``retains an economic interest in such timber'' and inserting ``either retains an economic interest in such timber or makes an outright sale of such timber''. (2) Conforming amendment.--The third sentence of section 631(b) is amended by striking ``The date of disposal'' and inserting ``In the case of disposal of timber with a retained economic interest, the date of disposal''. (d) Effective Dates.-- (1) Subsections (a) and (b).--The amendments made by subsections (a) and (b) shall apply to taxable years beginning after December 31, 2000. (2) Subsection (c).--The amendment made by subsection (c) shall apply to sales after the date of the enactment of this Act. SEC. 203. INCREASE IN EXPENSE TREATMENT FOR SMALL BUSINESSES. (a) In General.--Paragraph (1) of section 179(b) (relating to dollar limitation) is amended to read as follows: ``(1) Dollar limitation.--The aggregate cost which may be taken into account under subsection (a) for any taxable year shall not exceed $35,000.''. (b) Effective Date.--The amendment made by this section shall apply to taxable years beginning after December 31, 2000. SEC. 204. INCREASED DEDUCTION FOR MEAL EXPENSES. (a) In General.--Paragraph (1) of section 274(n) (relating to only 50 percent of meal and [[Page H10915]] entertainment expenses allowed as deduction) is amended by striking ``50 percent'' in the text and inserting ``the allowable percentage''. (b) Allowable Percentage.--Subsection (n) of section 274 is amended by redesignating paragraphs (2) and (3) as paragraphs (3) and (4), respectively, and by inserting after paragraph (1) the following new paragraph: ``(2) Allowable percentage.--For purposes of paragraph (1), the allowable percentage is-- ``(A) in the case of amounts for items described in paragraph (1)(B), 50 percent, and ``(B) in the case of expenses for food or beverages, 70 percent.''. (c) Conforming Amendment.--The heading for subsection (n) of section 274 is amended by striking ``50 Percent'' and inserting ``Limited Percentages''. (d) Effective Date.--The amendments made by this section shall apply to taxable years beginning after December 31, 2000. SEC. 205. INCREASED DEDUCTIBILITY OF BUSINESS MEAL EXPENSES FOR INDIVIDUALS SUBJECT TO FEDERAL LIMITATIONS ON HOURS OF SERVICE. (a) In General.--Paragraph (4) of section 274(n) (relating to limited percentages of meal and entertainment expenses allowed as deduction), as redesignated by section 204, is amended to read as follows: ``(4) Special rule for individuals subject to federal hours of service.--In the case of any expenses for food or beverages consume