# Pub. L. 109-135: changes to the Internal Revenue Code 2005-12-21, 119 Stat. 2636. Source: . ## Legislative history - Bill: [H.R. 4440](https://www.congress.gov/bill/109th-congress/house-bill/4440) - Bluebook: [JCT general explanation (2007)](https://www.govinfo.gov/app/details/CPRT-110JPRT31502) ## § 2: Definitions and special rules - § 2(b)(2)(C): Pub. L. 109–135 substituted “subparagraph (B)” for “subparagraph (C)”. ## § 21: Expenses for household and dependent care services necessary for gainful employment - § 21(b)(1)(B): Pub. L. 109–135 inserted “(as defined in section 152, determined without regard to subsections (b)(1), (b)(2), and (d)(1)(B))” after “dependent of the taxpayer”. ## § 23: Adoption expenses - § 23(b): Pub. L. 109–135, § 402(i)(3)(A)(i), substituted “In the case of a taxable year to which section 26(a)(2) does not apply, the credit” for “The credit” in introductory provisions. - § 23(c): Pub. L. 109–135, § 402(i)(3)(A)(ii), reenacted heading without change and amended text generally. Prior to amendment, text read as follows: “If the credit allowable under subsection (a) for any taxable year exceeds the limitation imposed by subsection (b)(4) for such taxable year, such excess shall be carried to the succeeding taxable year and added to the credit allowable under subsection (a) for such taxable year. No credit may be carried forward under this subsection to any taxable year following the fifth taxable year after the taxable year in which the credit arose. For purposes of the preceding sentence, credits shall be treated as used on a first-in first-out basis.” ## § 24: Child tax credit - § 24(b): Pub. L. 109–135, § 402(i)(3)(B)(i), substituted “In the case of a taxable year to which section 26(a)(2) does not apply, the credit” for “The credit” in introductory provisions. - § 24(d)(1): Pub. L. 109–135, § 402(i)(3)(B)(ii), reenacted heading without change and amended text generally. Prior to amendment, text read as follows: “The aggregate credits allowed to a taxpayer under subpart C shall be increased by the lesser of— ## § 25: Interest on certain home mortgages - § 25(e)(1)(C): Pub. L. 109–135, § 402(i)(3)(C), reenacted heading without change and amended text generally. Prior to amendment, text read as follows: “For purposes of this paragraph, the term ‘applicable tax limit’ means the limitation imposed by section 26(a) for the taxable year reduced by the sum of the credits allowable under this subpart (other than this section and sections 23, 24, 25B, and 1400C).” ## § 25B: Elective deferrals and IRA contributions by certain individuals - § 25B: Pub. L. 109–135 substituted “In the case of a taxable year to which section 26(a)(2) does not apply, the credit” for “The credit” in introductory provisions. ## § 25C: Energy efficient home improvement credit - § 25C(b)(2): Pub. L. 109–135 substituted “subsection (c)(2)(B)” for “subsection (c)(3)(B)”. ## § 25D: Residential clean energy credit - § 25D(b)(1): Pub. L. 109–135, § 402(i)(1), inserted “(determined without regard to subsection (c))” after “subsection (a)” in introductory provisions. - § 25D(c): Pub. L. 109–135, § 402(i)(3)(E), reenacted heading without change and amended text generally. Prior to amendment, text read as follows: “If the credit allowable under subsection (a) exceeds the limitation imposed by section 26(a) for such taxable year reduced by the sum of the credits allowable under this subpart (other than this section), such excess shall be carried to the succeeding taxable year and added to the credit allowable under subsection (a) for such succeeding taxable year.” - § 25D(e)(4)(A), § 25D(e)(4)(B): Pub. L. 109–135, § 402(i)(2), amended subpars. (A) and (B) generally. Prior to amendment, subpars. (A) and (B) read as follows: ## § 26: Limitation based on tax liability; definition of tax liability - § 26(b)(2)(E): Pub. L. 109–135, § 412(c), substituted “section 530(d)(4)” for “section 530(d)(3)”. - § 26(b)(2)(T): Pub. L. 109–135, § 403(hh)(1), added subpar. (T). ## § 30B: Alternative motor vehicle credit - § 30B(g)(2): Pub. L. 109–135, § 412(d), substituted “regular tax liability (as defined in section 26(b))” for “regular tax”. - § 30B(h)(6): Pub. L. 109–135, § 402(j), inserted at end “For purposes of subsection (g), property to which this paragraph applies shall be treated as of a character subject to an allowance for depreciation.” ## § 30C: Alternative fuel vehicle refueling property credit - § 30C(d)(2)(A): Pub. L. 109–135, § 412(d), substituted “regular tax liability (as defined in section 26(b))” for “regular tax”. - § 30C(e)(2): Pub. L. 109–135, § 402(k), inserted at end “For purposes of subsection (d), property to which this paragraph applies shall be treated as of a character subject to an allowance for depreciation.” ## § 32: Earned income - § 32(c)(2)(B)(vi): Pub. L. 109–135 substituted “2007” for “2006”. ## § 38: General business credit - § 38(b)(27): Pub. L. 109–135, § 103(b)(1), added par. (27). - § 38(b)(28), § 38(b)(29), § 38(b)(30): Pub. L. 109–135, § 201(b)(1), added pars. (28) to (30). - § 38(c)(2)(A)(ii)(II): Pub. L. 109–135, § 412(f)(1), substituted “, the New York Liberty Zone business employee credit, and the specified credits” for “or the New York Liberty Zone business employee credit or the specified credits”. - § 38(c)(3): Pub. L. 109–135, § 412(f)(2), substituted “and the specified credits” for “or the specified credits”. - § 38(c)(4)(B): Pub. L. 109–135, § 412(f)(3), substituted “means” for “includes” in introductory provisions and inserted “and” at end of cl. (i). ## § 39: Carryback and carryforward of unused credits - § 39(a)(1)(A): Pub. L. 109–135, § 412(g)(1), substituted “the taxable year” for “each of the 1 taxable years”. - § 39(a)(3)(B): Pub. L. 109–135, § 412(g)(2), amended subpar. (B) generally. Prior to amendment, subpar. (B) read as follows: “paragraph (1) shall be applied by substituting ‘5 taxable years’ for ‘1 taxable years’ in subparagraph (A) thereof, and”. ## § 40A: Biodiesel and renewable diesel used as fuel - § 40A(b): Pub. L. 109–135 struck out “(determined without regard to the last sentence of subsection (d)(2))” after “any agri-biodiesel” in introductory provisions. ## § 41: Credit for increasing research activities - § 41(b)(3)(C)(ii): Pub. L. 109–135, § 402(l)(2), struck out “(other than an energy research consortium)” after “organization” in introductory provisions. - § 41(f)(6)(C), § 41(f)(6)(D): Pub. L. 109–135, § 402(l)(1), added subpars. (C) and (D). ## § 43: Enhanced oil recovery credit - § 43(c)(5): Pub. L. 109–135 reenacted heading without change and amended text generally. Prior to amendment, text read as follows: “For purposes of paragraph (1)(D)— ## § 45: Electricity produced from certain renewable resources, etc. - § 45(c)(3)(A)(ii): Pub. L. 109–135, § 402(b), substituted “lignin material” for “nonhazardous lignin waste material”. - § 45(c)(7)(A)(i): Pub. L. 109–135, § 403(t), struck out “synthetic” after “solid”. - § 45(d)(8): Pub. L. 109–135, § 412(j)(1), substituted “In the case of a facility that produces refined coal, the term” for “The term”. - § 45(d)(10): Pub. L. 109–135, § 412(j)(2), substituted “In the case of a facility that produces Indian coal, the term” for “The term”. ## § 45G: Railroad track maintenance credit - § 45G(b): Pub. L. 109–135, § 403(f)(1), reenacted heading without change and amended text generally. Prior to amendment, text read as follows: “The credit allowed under subsection (a) for any taxable year shall not exceed the product of— - § 45G(c)(2): Pub. L. 109–135, § 403(f)(2), amended par. (2) generally. Prior to amendment, par. (2) read as follows: “any person who transports property using the rail facilities of a person described in paragraph (1) or who furnishes railroad-related property or services to such a person.” ## § 45I: Credit for producing oil and gas from marginal wells - § 45I(a)(2): Pub. L. 109–135 substituted “qualified crude oil production” for “qualified credit oil production”. ## § 45J: Credit for production from advanced nuclear power facilities - § 45J(c)(2): Pub. L. 109–135, § 402(d)(1), amended heading and text of par. (2) generally. Prior to amendment, text read as follows: “Rules similar to the rules of section 45(b)(1) shall apply for purposes of this section.” - § 45J(e): Pub. L. 109–135, § 402(d)(2), struck out “(2),” after “(1),”. ## § 45K: Credit for producing fuel from a nonconventional source - § 45K(a): Pub. L. 109–135, § 402(g), struck out “if the taxpayer elects to have this section apply,” after “For purposes of section 38,” in introductory provisions. - § 45K(g): Pub. L. 109–135, § 412(l)(1), substituted “subsection (e)” for “subsection (f)” in introductory provisions. - § 45K(g)(2)(C): Pub. L. 109–135, § 412(l)(2), substituted “subsection (f)” for “subsection (g)”. ## § 48: Energy credit - § 48(a)(1): Pub. L. 109–135, § 412(m), substituted “paragraphs (1)(B) and (2)(B) of subsection (c)” for “paragraph (1)(B) or (2)(B) of subsection (d)”. - § 48(a)(3)(A)(ii): Pub. L. 109–135, § 412(n)(2), struck out “or” at end. - § 48(a)(3)(A)(iv): Pub. L. 109–135, § 412(n)(1), redesignated cl. (iii), relating to qualified fuel cell property or qualified microturbine property, as (iv). ## § 50: Other special rules - § 50(a)(2)(E): Pub. L. 109–135 substituted “section 48(b)” for “section 48(a)(5)”. ## § 55: Alternative minimum tax imposed - § 55(c)(2): Pub. L. 109–135, § 403(h), substituted “regular tax liability” for “regular tax”. - § 55(c)(3): Pub. L. 109–135, § 412(p)(1), inserted “30B(g)(2), 30C(d)(2),” after “30(b)(3),”. ## § 56: Adjustments in computing alternative minimum taxable income - § 56(b)(1)(A)(ii): Pub. L. 109–135, § 403(r)(2), inserted “or clause (ii) of section 164(b)(5)(A)” before period at end. - § 56(d)(1)(A)(i)(II), § 56(d)(1)(A)(ii)(II): Pub. L. 109–135, § 403(a)(14), substituted “such deduction and the deduction under section 199” for “such deduction”. ## § 62: Adjusted gross income defined - § 62(a)(19), § 62(a)(20): Pub. L. 109–135, § 412(q)(1), redesignated par. (19) relating to costs involving discrimination suits, etc., as par. (20) and moved to follow par. (19) relating to health savings accounts. - § 62(e): Pub. L. 109–135, § 412(q)(2), substituted “subsection (a)(20)” for “subsection (a)(19)” in introductory provisions. ## § 121: Exclusion of gain from sale of principal residence - § 121(d)(10): Pub. L. 109–135, § 403(ee)(2), amended heading and text of par. (10) relating to property acquired in like-kind exchange generally. Prior to amendment, text read as follows: “If a taxpayer acquired property in an exchange to which section 1031 applied, subsection (a) shall not apply to the sale or exchange of such property if it occurs during the 5-year period beginning with the date of the acquisition of such property.” - § 121(d)(11): Pub. L. 109–135, § 403(ee)(1), redesignated par. (10), formerly par. (9), as added by Pub. L. 107–16, as (11). See Codification notes above and 2001 and 2003 Amendment notes and Effective Date of 2001 Amendment note below. - § 121(g): Pub. L. 109–135, § 402(a)(3), substituted “section 1223(6)” for “section 1223(7)”. ## § 152: Dependent defined - § 152(e): Pub. L. 109–135 amended heading and text of subsec. (e) generally. Prior to amendment, text consisted of pars. (1) to (4) relating to special rule for divorced parents, requirements for divorced parents, definitions of custodial and noncustodial parent, and exception for multiple-support agreements. ## § 163: Interest - § 163(j)(6): Pub. L. 109–135 added subcl. (III) and redesignated former subcl. (III) as (IV). ## § 164: Taxes - § 164(b)(5)(A): Pub. L. 109–135 reenacted heading without change and amended text generally. Prior to amendment, text read as follows: ## § 167: Depreciation - § 167(f)(3): Pub. L. 109–135 substituted “section 197(e)(6)” for “section 197(e)(7)”. ## § 168: Accelerated cost recovery system - § 168(e)(3)(B)(vi)(I): Pub. L. 109–135, § 410(a), substituted “if ‘solar or wind energy’ were substituted for ‘solar energy’ in clause (i) thereof” for “if ‘solar and wind’ were substituted for ‘solar’ in clause (i) thereof”. - § 168(i)(15)(D): Pub. L. 109–135, § 412(s), substituted “Such term shall not include” for “This paragraph shall not apply to”. - § 168(k)(2)(A): Pub. L. 109–135, § 403(j)(1), substituted “subparagraph (B) or (C)” for “subparagraphs (B) and (C)”. - § 168(k)(4): Pub. L. 109–135, § 405(a)(1), amended cl. (ii) generally. Prior to amendment, cl. (ii) read as follows: “which is acquired by the taxpayer after May 5, 2003, and before January 1, 2005, but only if no written binding contract for the acquisition was in effect before May 6, 2003, and”. - § 168(k)(4): Pub. L. 109–135, § 403(j)(2), substituted “or paragraph (2)(C) (as so modified)” for “and paragraph (2)(C)”. ## § 169: Amortization of pollution control facilities - § 169(d)(5)(B): Pub. L. 109–135 inserted “in the case of facility placed in service in connection with a plant or other property placed in operation after December 31, 1975,” before “this section”. ## § 170: Charitable, etc., contributions and gifts - § 170(b)(2)(C), § 170(b)(2)(D), § 170(b)(2): Pub. L. 109–135, § 403(a)(16), added subpar. (C) and redesignated former subpars. (C) and (D) as (D) and (E), respectively. - § 170(f)(12)(B)(v), § 170(f)(12)(B)(vi): Pub. L. 109–135, § 403(gg), added cls. (v) and (vi). ## § 172: Net operating loss deduction - § 172(b)(1): Pub. L. 109–135, § 402(f)(1), reenacted heading without change and amended text generally. Prior to amendment, text read as follows: “At the election of the taxpayer in any taxable year ending after December 31, 2005, and before January 1, 2009, in the case of a net operating loss in a taxable year ending after December 31, 2002, and before January 1, 2006, there shall be a net operating loss carryback to each of the 5 years preceding the taxable year of such loss to the extent that such loss does not exceed 20 percent of the sum of electric transmission property capital expenditures and pollution control facility capital expenditures of the taxpayer for the taxable year preceding the taxable year in which such election is made.” - § 172(b)(1): Pub. L. 109–135, § 402(f)(2), substituted “for a taxable year” for “in a taxable year”. - § 172(b)(1): Pub. L. 109–135, § 402(f)(3), added cl. (iv), redesignated cl. (vi) as (v), and struck out former cls. (iv) and (v) which read as follows: - § 172(d)(7): Pub. L. 109–135, § 403(a)(17), added par. (7). ## § 181: Treatment of certain qualified productions - § 181(d)(2): Pub. L. 109–135 struck out “For purposes of a television series, only the first 44 episodes of such series may be taken into account.” at end of subpar. (A), added subpar. (B), and redesignated former subpar. (B) as (C). ## § 194: Treatment of reforestation expenditures - § 194(b)(1)(B): Pub. L. 109–135, § 403(i)(1)(A), reenacted heading without change and amended text generally. Prior to amendment, text read as follows: “The aggregate amount of reforestation expenditures which may be taken into account under subparagraph (A) with respect to each qualified timber property for any taxable year shall not exceed $10,000 ($5,000 in the case of a separate return by a married individual (as defined in section 7703)).” - § 194(c)(4): Pub. L. 109–135, § 403(i)(1)(B), reenacted heading without change and amended text generally. Prior to amendment, text read as follows: ## § 221: Interest on education loans - § 221(d)(2): Pub. L. 109–135 substituted “the Taxpayer Relief Act of 1997” for “this Act”. ## § 223: Health savings accounts - § 223(d)(2)(A): Pub. L. 109–135 inserted “, determined without regard to subsections (b)(1), (b)(2), and (d)(1)(B) thereof” after “section 152”. ## § 246: Rules applying to deductions for dividends received - § 246(c)(3)(B): Pub. L. 109–135 substituted “paragraph (3) of section 1223” for “paragraph (4) of section 1223”. ## § 274: Disallowance of certain entertainment, etc., expenses - § 274(e)(2)(B)(ii): Pub. L. 109–135, § 403(mm)(1), (2), inserted “or a related party to the taxpayer” after “with respect to the taxpayer” in subcl. (I), “(or such related party)” after “the taxpayer” in subcl. (II), and “For purposes of this clause, a person is a related party with respect to another person if such person bears a relationship to such other person described in section 267(b) or 707(b).” at end. ## § 280C: Certain expenses for which credits are allowable - § 280C(a): Pub. L. 109–135, § 201(b)(2), substituted “1400P(b), and 1400R” for “and 1400P(b)”. - § 280C(a): Pub. L. 109–135, § 103(b)(2), substituted “1396(a), and 1400P(b)” for “and 1396(a)”. ## § 318: Constructive ownership of stock - § 318(b)(8): Pub. L. 109–135 substituted “section 6038(e)(2)” for “section 6038(d)(2)”. ## § 332: Complete liquidations of subsidiaries - § 332(d)(1)(B): Pub. L. 109–135 substituted “distribution of property to which section 301 applies” for “distribution to which section 301 applies”. ## § 334: Basis of property received in liquidations - § 334(b)(1): Pub. L. 109–135 substituted “except that, in the hands of such distributee—” for “except that the basis of such property in the hands of such distributee shall be the fair market value of the property at the time of the distribution—” in introductory provisions, added subpars. (A) and (B), and struck out former subpars. (A) and (B) which read as follows: ## § 351: Transfer to corporation controlled by transferor - § 351(g)(3)(A): Pub. L. 109–135 inserted at end “If there is not a real and meaningful likelihood that dividends beyond any limitation or preference will actually be paid, the possibility of such payments will be disregarded in determining whether stock is limited and preferred as to dividends.” ## § 357: Assumption of liability - § 357(d)(1): Pub. L. 109–135 inserted “section 361(b)(3),” after “section 358(h),”. ## § 361: Nonrecognition of gain or loss to corporations; treatment of distributions - § 361(b)(3): Pub. L. 109–135 inserted before period at end “(reduced by the amount of the liabilities assumed (within the meaning of section 357(c)))”. ## § 362: Basis to corporations - § 362(e)(2)(C)(ii): Pub. L. 109–135 reenacted heading without change and amended text generally. Prior to amendment, text read as follows: “An election under clause (i) shall be included with the return of tax for the taxable year in which the transaction occurred, shall be in such form and manner as the Secretary may prescribe, and, once made, shall be irrevocable.” ## § 402: Taxability of beneficiary of employees’ trust - § 402(g)(1)(A): Pub. L. 109–135, § 407(a)(2), inserted “to” after “shall not apply”. - § 402(g)(7)(A)(ii): Pub. L. 109–135, § 407(a)(1), amended cl. (ii) generally. Prior to amendment, cl. (ii) read as follows: “$15,000 reduced by amounts not included in gross income for prior taxable years by reason of this paragraph, or”. ## § 403: Taxation of employee annuities - § 403(b)(9)(B): Pub. L. 109–135 inserted “or” before “a convention”. ## § 409A: Inclusion in gross income of deferred compensation under nonqualified deferred compensation plans - § 409A(a)(4)(C)(ii): Pub. L. 109–135 struck out “first” after “requires that the”. ## § 412: Minimum funding standards - § 412: Pub. L. 109–135 substituted “subsection (d)” for “subsection (c)”. ## § 415: Limitations on benefits and contribution under qualified plans - § 415(c)(7)(C): Pub. L. 109–135, § 407(b), substituted “$3,000. This subparagraph shall not apply with respect to any taxable year to any individual whose adjusted gross income for such taxable year (determined separately and without regard to community property laws) exceeds $17,000” for “the greater of $3,000 or the employee’s includible compensation determined under section 403(b)(3)”. - § 415(l)(1): Pub. L. 109–135, § 412(y), substituted “individual medical benefit account” for “individual medical account”. - § 415(n)(3)(C): Pub. L. 109–135, § 412(z), substituted “clause” for “clauses” in concluding provisions. ## § 461: General rule for taxable year of deduction - § 461(i)(3)(C): Pub. L. 109–135 substituted “section 6662(d)(2)(C)(ii)” for “section 6662(d)(2)(C)(iii)”. ## § 501: Exemption from tax on corporations, certain trusts, etc. - § 501(c)(12)(F): Pub. L. 109–135, § 412(bb)(1), substituted “subparagraph (C)(iv)” for “subparagraph (C)(iii)”. - § 501(c)(12)(G): Pub. L. 109–135, § 412(bb)(2), substituted “subparagraph (C)(v)” for “subparagraph (C)(iv)”. - § 501(c)(22)(B)(ii): Pub. L. 109–135, § 412(cc), substituted “clause (ii) of paragraph (21)(D)” for “clause (ii) of paragraph (21)(B)”. ## § 512: Unrelated business taxable income - § 512(b)(1): Pub. L. 109–135, § 412(dd), substituted “subsection (a)(5)” for “section 512(a)(5)”. - § 512(b)(18), § 512(b)(19): Pub. L. 109–135, § 412(ee)(1), redesignated par. (18), relating to treatment of gain or loss on sale or exchange of certain brownfield sites, as (19). ## § 514: Unrelated debt-financed income - § 514(b)(1)(E): Pub. L. 109–135 substituted “section 512(b)(19)” for “section 512(b)(18)”. ## § 529: Qualified tuition programs - § 529(c)(6): Pub. L. 109–135 substituted “Coverdell education savings account” for “education individual retirement account”. ## § 530: Coverdell education savings accounts - § 530(b)(2)(A)(ii): Pub. L. 109–135, § 412(ff)(2), substituted “paragraph (3)” for “paragraph (4)”. - § 530(b)(3), § 530(b)(4), § 530(b): Pub. L. 109–135, § 412(ff)(1), redesignated pars. (4) and (5) as (3) and (4), respectively, and struck out former par. (3) which read as follows: “The term ‘eligible educational institution’ has the meaning given such term by section 529(e)(5).” ## § 532: Corporations subject to accumulated earnings tax - § 532(b)(2), § 532(b)(3), § 532(b): Pub. L. 109–135 redesignated pars. (3) and (4) as (2) and (3), respectively, and struck out former par. (2) which read as follow: “a foreign personal holding company (as defined in section 552),”. ## § 535: Accumulated taxable income - § 535(b)(10): Pub. L. 109–135 added par. (10). ## § 613: Percentage depletion - § 613(c)(4)(H): Pub. L. 109–135 inserted “(including in situ retorting)” after “and retorting”. ## § 613A: Limitations on percentage depletion in case of oil and gas wells - § 613A(d)(1)(B), § 613A(d)(1)(C), § 613A(d)(1)(D), § 613A(d)(1)(E): Pub. L. 109–135 added subpar. (B) and redesignated former subpars. (B) to (D) as (C) to (E), respectively. ## § 709: Treatment of organization and syndication fees - § 709(b)(1): Pub. L. 109–135 substituted “partnership” for “taxpayer” in introductory provisions and before “shall be allowed” in subpar. (A). ## § 734: Adjustment to basis of undistributed partnership property where section 754 election or substantial basis reduction - § 734(a): Pub. L. 109–135, § 403(bb)(1), inserted “with respect to such distribution” before period at end. - § 734(b): Pub. L. 109–135, § 403(bb)(2), reenacted heading without change and amended introductory provisions generally. Prior to amendment, introductory provisions read as follows: “In the case of a distribution of property to a partner, a partnership, with respect to which the election provided in section 754 is in effect or unless there is a substantial basis reduction, shall—”. ## § 853: Foreign tax credit allowed to shareholders - § 853(e): Pub. L. 109–135 amended heading and text of subsec. (e) generally. Prior to amendment, text read as follows: “This section shall not apply to any tax with respect to which the regulated investment company is not allowed a credit under section 901 by reason of section 901(k).” ## § 856: Definition of real estate investment trust - § 856(c)(7): Pub. L. 109–135, § 403(d)(1), reenacted heading without change and amended text generally. Prior to amendment, text consisted of subpars. (A) to (C) relating to rules of application for a corporation, trust, or association that fails to satisfy the requirements of paragraph (4) of this subsection. - § 856(g)(5)(A): Pub. L. 109–135, § 412(hh), substituted “paragraph (2), (3), or (4) of subsection (c)” for “subsection (c)(6) or (c)(7) of section 856”. - § 856(m): Pub. L. 109–135, § 403(d)(2), added par. (6). ## § 857: Taxation of real estate investment trusts and their beneficiaries - § 857(b)(2)(E): Pub. L. 109–135, § 403(d)(3), substituted “section 856(c)(7)(C), and section 856(g)(5)” for “section 856(c)(7)(B)(iii), and section 856(g)(1).” - § 857(b)(6)(E): Pub. L. 109–135, § 412(ii)(1), substituted “subparagraphs (C) and (D)” for “subparagraph (C)” in introductory provisions. - § 857(b)(6)(F): Pub. L. 109–135, § 412(ii)(2), substituted “subparagraph (C) or (D)” for “subparagraph (C) of this paragraph” and “subparagraphs (C), (D), and (E)” for “subparagraphs (C) and (D)”. ## § 860G: Other definitions and special rules - § 860G(a)(3): Pub. L. 109–135, § 403(cc)(2), inserted concluding provisions and struck out former concluding provisions which read as follows: “For purposes of subparagraph (A), any obligation secured by stock held by a person as a tenant-stockholder (as defined in section 216) in a cooperative housing corporation (as so defined) shall be treated as secured by an interest in real property, and any reverse mortgage loan (and each balance increase on such loan meeting the requirements of subparagraph (A)(iii)) shall be treated as an obligation secured by an interest in real property. For purposes of subparagraph (A), if more than 50 percent of the obligations transferred to, or purchased by, the REMIC are originated by the United States or any State (or any political subdivision, agency, or instrumentality of the United States or any State) and are principally secured by an interest in real property, then each obligation transferred to, or purchased by, the REMIC shall be treated as secured by an interest in real property.” - § 860G(a)(3)(A)(iii)(I): Pub. L. 109–135, § 403(cc)(1), substituted “a reverse mortgage loan or other obligation” for “the obligation”. ## § 877: Expatriation to avoid tax - § 877(g)(2)(C): Pub. L. 109–135 substituted “section 7701(b)(3)(D)” for “section 7701(b)(3)(D)(ii)”. ## § 881: Tax on income of foreign corporations not connected with United States business - § 881(e)(1)(C): Pub. L. 109–135 inserted “interest-related dividend received by a controlled foreign corporation” after “shall apply to any”. ## § 897: Disposition of investment in United States real property - § 897(h)(1): Pub. L. 109–135 substituted “any distribution by a real estate investment trust with respect to any class of stock” for “any distribution by a REIT with respect to any class of stock” and “the 1-year period ending on the date of the distribution” for “the taxable year”. ## § 901: Taxes of foreign countries and of possessions of United States - § 901(l)(2)(C)(i): Pub. L. 109–135 struck out “if such security were stock” after “paragraph (4) thereof”. ## § 904: Limitation on credit - § 904(d)(2)(D): Pub. L. 109–135, § 403(o), inserted “as in effect before its repeal” after “section 954(f)”. - § 904(g)(2): Pub. L. 109–135, § 403(k), amended heading and text of par. (2) generally. Prior to amendment, text read as follows: “For purposes of this subsection— - § 904(i): Pub. L. 109–135, § 402(i)(3)(G), reenacted heading without change and amended text generally. Prior to amendment, text read as follows: “In the case of an individual, for purposes of subsection (a), the tax against which the credit is taken is such tax reduced by the sum of the credits allowable under subpart A of part IV of subchapter A of this chapter (other than sections 23, 24, and 25B). This subsection shall not apply to taxable years beginning during 2000, 2001, 2002, 2003, 2004, or 2005.” ## § 952: Subpart F income defined - § 952(c)(1)(B)(ii): Pub. L. 109–135 substituted “subclause (II) or (III) of clause (iii)” for “clause (iii)(III) or (IV)” and “clause (iii)(I)” for “clause (iii)(II)” in concluding provisions. ## § 954: Foreign base company income - § 954(c)(1)(C)(i): Pub. L. 109–135, § 412(ll), substituted “paragraph (5)(A)” for “paragraph (4)(A)”. - § 954(c)(1)(F): Pub. L. 109–135, § 412(mm), struck out “Net income from notional principal contracts.” before “Any item of income”. - § 954(c)(4)(B): Pub. L. 109–135, § 403(m), inserted at end “If a controlled foreign corporation is treated as owning a capital or profits interest in a partnership under constructive ownership rules similar to the rules of section 958(b), the controlled foreign corporation shall be treated as owning such interest directly for purposes of this subparagraph.” ## § 961: Adjustments to basis of stock in controlled foreign corporations and of other property - § 961(c): Pub. L. 109–135 amended heading and text of subsec. (c) generally. Prior to amendment, text read as follows: “Under regulations prescribed by the Secretary, if a United States shareholder is treated under section 958(a)(2) as owning any stock in a controlled foreign corporation which is actually owned by another controlled foreign corporation, adjustments similar to the adjustments provided by subsections (a) and (b) shall be made to the basis of such stock in the hands of such other controlled foreign corporation, but only for the purposes of determining the amount included under section 951 in the gross income of such United States shareholder (or any other United States shareholder who acquires from any person any portion of the interest of such United States shareholder by reason of which such shareholder was treated as owning such stock, but only to the extent of such portion, and subject to such proof of identity of such interest as the Secretary may prescribe by regulations).” ## § 965: Treatment of deferred foreign income upon transition to participation exemption system of taxation - § 965(a)(2): Pub. L. 109–135, § 403(q)(1), inserted “from another controlled foreign corporation in such chain of ownership” before “, but only to the extent”. - § 965(b)(2)(A): Pub. L. 109–135, § 403(q)(2), inserted “cash” before “dividends”. - § 965(b)(3): Pub. L. 109–135, § 403(q)(3), inserted at end “The Secretary may prescribe such regulations as may be necessary or appropriate to prevent the avoidance of the purposes of this paragraph, including regulations which provide that cash dividends shall not be taken into account under subsection (a) to the extent such dividends are attributable to the direct or indirect transfer (including through the use of intervening entities or capital contributions) of cash or other property from a related person (as so defined) to a controlled foreign corporation.” - § 965(c)(1): Pub. L. 109–135, § 403(q)(4), reenacted heading without change and amended text generally. Prior to amendment, text read as follows: “The term ‘applicable financial statement’ means, with respect to a United States shareholder, the most recently audited financial statement (including notes and other documents which accompany such statement) which includes such shareholder— - § 965(d)(2): Pub. L. 109–135, § 403(q)(5), substituted “directly allocable” for “properly allocated and apportioned”. - § 965(d): Pub. L. 109–135, § 403(q)(6), added par. (4). - § 965(e)(1): Pub. L. 109–135, § 403(q)(7), inserted “which are imposed by foreign countries and possessions of the United States and are” after “taxes” in concluding provisions. - § 965(f): Pub. L. 109–135, § 403(q)(8), inserted “on or” before “before the due date” in concluding provisions. ## § 1016: Adjustments to basis - § 1016(a)(23): Pub. L. 109–135 substituted “1045(b)(3)” for “1045(b)(4)”. ## § 1031: Exchange of real property held for productive use or investment - § 1031(h): Pub. L. 109–135 substituted “subparagraphs” for “subparagraph” in introductory provisions. ## § 1092: Straddles - § 1092(a)(2): Pub. L. 109–135 added subpar. (C) and struck out concluding provisions of subpar. (B) which read as follows: “The Secretary shall prescribe regulations which specify the proper methods for clearly identifying a straddle as an identified straddle (and the positions comprising such straddle), which specify the rules for the application of this section for a taxpayer which fails to properly identify the positions of an identified straddle, and which specify the ordering rules in cases where a taxpayer disposes of less than an entire position which is part of an identified straddle.” ## § 1223: Holding period of property - § 1223(3), § 1223(4), § 1223(5), § 1223(6), § 1223(7), § 1223(8), § 1223(9), § 1223(10), § 1223(11), § 1223(12), § 1223(13), § 1223(14), § 1223(15), § 1223: Pub. L. 109–135 redesignated pars. (4) to (16) as (3) to (15), respectively, and struck out former par. (3) which read as follows: “In determining the period for which the taxpayer has held stock or securities received upon a distribution where no gain was recognized to the distributee under section 1081(c) (or under section 112(g) of the Revenue Act of 1928, 45 Stat. 818, or the Revenue Act of 1932, 48 Stat. 705), there shall be included the period for which he held the stock or securities in the distributing corporation before the receipt of the stock or securities on such distribution.” ## § 1245: Gain from dispositions of certain depreciable property - § 1245(a)(2)(C): Pub. L. 109–135, § 403(e)(2), (i)(2), inserted “181,” after “179B,” and substituted “193, or 194” for “or 193”. - § 1245(b)(3): Pub. L. 109–135, § 402(a)(6)(B), substituted “paragraph (6)” for “paragraph (7)”. - § 1245(b)(5), § 1245(b)(6), § 1245(b)(7), § 1245(b)(8): Pub. L. 109–135, § 402(a)(6)(A), redesignated pars. (6) to (9) as (5) to (8), respectively, and struck out heading and text of former par. (5). Text read as follows: “Under regulations prescribed by the Secretary, rules consistent with paragraphs (3) and (4) of this subsection shall apply in the case of transactions described in section 1081 (relating to exchanges in obedience to SEC orders).” - § 1245(b): Pub. L. 109–135, § 402(a)(6)(A), redesignated par. (9) as (8). ## § 1250: Gain from dispositions of certain depreciable realty - § 1250(b)(3): Pub. L. 109–135, § 402(h), struck out “or by section 179D” after “190, or 193)”. - § 1250(d)(5), § 1250(d)(6), § 1250(d)(7), § 1250(d): Pub. L. 109–135, § 402(a)(7)(A), redesignated pars. (6) to (8) as (5) to (7), respectively, and struck out heading and text of former par. (5). Text read as follows: “Under regulations prescribed by the Secretary, rules consistent with paragraphs (3) and (4) of this subsection and with subsections (e) and (f) shall apply in the case of transactions described in section 1081 (relating to exchanges in obedience to SEC orders).” - § 1250(e)(2): Pub. L. 109–135, § 402(a)(7)(B), substituted “or (3)” for “(3), or (5)”. ## § 1256: Section 1256 contracts marked to market - § 1256(f)(1): Pub. L. 109–135 substituted “subsection (e)(2)” for “subsection (e)(2)(C)”. ## § 1353: Notional shipping income - § 1353(d): Pub. L. 109–135 substituted “ownership, charter, and operating agreement interests” for “ownership and charter interests”. ## § 1354: Alternative tax election; revocation; termination - § 1354(b): Pub. L. 109–135 inserted “on or” after “only if made” in concluding provisions. ## § 1355: Definitions and special rules - § 1355(a): Pub. L. 109–135, § 403(g)(1)(B), struck out heading and text of par. (8). Text read as follows: “The term ‘charter’ includes an operating agreement.” - § 1355(b)(1): Pub. L. 109–135, § 403(g)(1)(C), reenacted heading without change and amended text generally. Prior to amendment, text read as follows: “Except as provided in paragraph (2), a person is treated as operating any vessel during any period if such vessel is— - § 1355(c)(3): Pub. L. 109–135, § 403(g)(2), substituted “determined by treating all members of such group as 1 person.” for “determined— - § 1355(d)(3): Pub. L. 109–135, § 403(g)(1)(D), amended par. (3) generally. Prior to amendment, par. (3) read as follows: “the extent of a partner’s ownership or charter interest in any vessel owned by or chartered to the partnership shall be determined on the basis of the partner’s interest in the partnership.” ## § 1356: Qualifying shipping activities - § 1356(c)(2): Pub. L. 109–135, § 403(g)(3)(B), inserted concluding provisions. - § 1356(c): Pub. L. 109–135, § 403(g)(3)(A), struck out heading and text of par. (3). Text read as follows: ## § 1361: S corporation defined - § 1361(b)(3)(A): Pub. L. 109–135, § 413(c)(1), struck out “and in the case of information returns required under part III of subchapter A of chapter 61” after “Secretary”. - § 1361(b)(3)(E): Pub. L. 109–135, § 413(c)(2), added subpar. (E). - § 1361(c)(1): Pub. L. 109–135, § 403(b), reenacted heading without change and amended text generally. Prior to amendment, text consisted of subpars. (A) to (D) relating to treatment as 1 shareholder, family members, adoption, and election. - § 1361(c)(2)(A)(vi): Pub. L. 109–135, § 413(a)(1), inserted “or a depository institution holding company (as defined in section 3(w)(1) of the Federal Deposit Insurance Act (12 U.S.C. 1813(w)(1))” after “a bank (as defined in section 581)” and “or company” after “such bank”. ## § 1362: Election; revocation; termination - § 1362(d)(3): Pub. L. 109–135 substituted “a depository institution holding company (as defined in section 3(w)(1) of the Federal Deposit Insurance Act (12 U.S.C. 1813(w)(1))” for “a bank holding company (within the meaning of section 2(a) of the Bank Holding Company Act of 1956 (12 U.S.C. 1841(a))), or a financial holding company (within the meaning of section 2(p) of such Act)”. ## § 1363: Effect of election on corporation - § 1363(d)(5): Pub. L. 109–135 added par. (5). ## § 1375: Tax imposed when passive investment income of corporation having accumulated earnings and profits exceeds 25 percent of gross receipts - § 1375(d)(1), § 1375(d)(2): Pub. L. 109–135 substituted “accumulated” for “subchapter C”. ## § 3401: Definitions - § 3401(g), § 3401(h): Pub. L. 109–135 redesignated subsec. (h) as (g). ## § 4161: Imposition of tax - § 4161(a)(2): Pub. L. 109–135 amended heading and text of par. (2) generally. Prior to amendment, text read as follows: ## § 4261: Imposition of tax - § 4261(e)(4)(C): Pub. L. 109–135 substituted “imposed by subsection (b)” for “imposed subsection (b)”. ## § 4975: Tax on prohibited transactions - § 4975(d)(16)(A): Pub. L. 109–135, § 413(a)(2)(A), inserted “or a depository institution holding company (as defined in section 3(w)(1) of the Federal Deposit Insurance Act (12 U.S.C. 1813(w)(1))” after “a bank (as defined in section 581)”. - § 4975(d)(16)(C): Pub. L. 109–135, § 413(a)(2)(B), inserted “or company” after “such bank”. ## § 4980D: Failure to meet certain group health plan requirements - § 4980D(a): Pub. L. 109–135 substituted “plan requirements” for “plans requirements”. ## § 6038B: Notice of certain transfers to foreign persons - § 6038B(a)(1)(B): Pub. L. 109–135 inserted “or” at end. ## § 6045: Returns of brokers - § 6045(e)(5)(A): Pub. L. 109–135 adjusted the margin of the third sentence to include it in concluding provisions with the second sentence. ## § 6049: Returns regarding payments of interest - § 6049(d)(8)(A): Pub. L. 109–135 inserted “or 1400N(l)(6)” after “section 54(g)” and “or 1400N(l)(2)(D), as the case may be” after “section 54(b)(4)”. ## § 6050M: Returns relating to persons receiving contracts from Federal executive agencies - § 6050M(b)(1): Pub. L. 109–135 substituted “Government Accountability Office” for “General Accounting Office”. ## § 6103: Confidentiality and disclosure of returns and return information - § 6103(d)(5)(B): Pub. L. 109–135, § 305(a)(1), substituted “December 31, 2006” for “December 31, 2005”. - § 6103(i)(3)(C): Pub. L. 109–135, § 305(b)(1), substituted “December 31, 2006” for “December 31, 2005”. - § 6103(i)(7): Pub. L. 109–135, § 305(b)(1), substituted “December 31, 2006” for “December 31, 2005”. - § 6103(i)(8)(A), § 6103(i)(8)(B)(i), § 6103(i)(8)(B)(ii): Pub. L. 109–135, § 412(rr)(3), substituted “Government Accountability Office” for “General Accounting Office”. - § 6103(l)(13)(D): Pub. L. 109–135, § 305(c)(1), substituted “December 31, 2006” for “December 31, 2005”. - § 6103(l)(17): Pub. L. 109–135, § 406(a), substituted “subsection (f), (i)(8), or (p)” for “subsection (f), (i)(7), or (p)”. - § 6103(p)(3)(C)(i): Pub. L. 109–135, § 412(rr)(4), substituted “Government Accountability Office” for “General Accounting Office” in introductory provisions. - § 6103(p)(4): Pub. L. 109–135, § 412(yy)(3), in concluding provisions, substituted “If the Secretary determines that any such agency, body, or commission, including an agency or any other person described in subsection (l)(16), (18), (19), or (20), or the Government Accountability Office or the Congressional Budget Office, has failed to, or does not, meet the requirements of this paragraph, he may, after any proceedings for review established under paragraph (7), take such actions as are necessary to ensure such requirements are met, including refusing to disclose returns or return information to such agency, body, or commission, including an agency or any other person described in subsection (l)(16), (18), (19), or (20), or the Government Accountability Office or the Congressional Budget Office, until he determines that such requirements have been or will be met.” for “If the Secretary determines that any such agency, body, or commission, including an agency or any other person described in subsection (l)(16), (17), (19), or (20), or the Government Accountability Office or the Congressional Budget Office has failed to, or does not, meet the requirements of this paragraph, he may, after any proceedings for review established under paragraph (7), take such actions as are necessary to ensure such requirements are met, including refusing to disclose returns or return information to such agency, body, or commission, including an agency or any other person described in subsection (l)(16), (17), (19), or (20), or the Government Accountability Office or the Congressional Budget Office until he determines that such requirements have been or will be met.” after “public record thereof.” - § 6103(p)(4): Pub. L. 109–135, § 412(yy)(1), reenacted heading without change and amended introductory provisions generally. Prior to amendment, introductory provisions read as follows: “Any Federal agency described in subsection (h)(2), (h)(5), (i)(1), (2), (3), (5), or (7), (j)(1), (2), or (5), (k)(8), (l)(1), (2), (3), (5), (10), (11), (13), (14), or (17), or (o)(1), the Government Accountability Office, the Congressional Budget Office, or any agency, body, or commission described in subsection (d), (i)(3)(B)(i) or (7)(A)(ii), or (l)(6), (7), (8), (9), (12), (15), or (16) or any other person described in subsection (l)(16), (17), (19), or (20) shall, as a condition for receiving returns or return information—”. - § 6103(p)(4): Pub. L. 109–135, § 412(rr)(4), substituted “Government Accountability Office” for “General Accounting Office” wherever appearing. - § 6103(p)(4)(F)(i): Pub. L. 109–135, § 412(yy)(2), amended cl. (i) generally. Prior to amendment, cl. (i) read as follows: “in the case of an agency, body, or commission described in subsection (d), (i)(3)(B)(i), or (l)(6), (7), (8), (9), or (16), or any other person described in subsection (l)(16), (17), (19), or (20) return to the Secretary such returns or return information (along with any copies made therefrom) or make such returns or return information undisclosable in any manner and furnish a written report to the Secretary describing such manner,”. - § 6103(p)(5), § 6103(p)(6)(B)(i): Pub. L. 109–135, § 412(rr)(4), substituted “Government Accountability Office” for “General Accounting Office”. ## § 6111: Disclosure of reportable transactions - § 6111(b)(1)(A)(ii): Pub. L. 109–135 substituted “aid, assistance, or advice” for “advice or assistance”. ## § 6112: Material advisors of reportable transactions must keep lists of advisees, etc. - § 6112(b)(1): Pub. L. 109–135, in introductory provisions, inserted “(or was required to maintain a list under subsection (a) as in effect before the enactment of the American Jobs Creation Act of 2004)” after “a list under subsection (a)”. ## § 6404: Abatements - § 6404(g)(1): Pub. L. 109–135 inserted at end “If, after the return for a taxable year is filed, the taxpayer provides to the Secretary 1 or more signed written documents showing that the taxpayer owes an additional amount of tax for the taxable year, clause (i) shall be applied by substituting the date the last of the documents was provided for the date on which the return is filed.” ## § 6411: Tentative carryback and refund adjustments - § 6411(a): Pub. L. 109–135 substituted “6611(f)(4)(B)” for “6611(f)(3)(B)” in concluding provisions. ## § 6501: Limitations on assessment and collection - § 6501(c)(10)(B): Pub. L. 109–135 struck out “(as defined in section 6111)” after “material advisor”. ## § 6601: Interest on underpayment, nonpayment, or extensions of time for payment, of tax - § 6601(d)(4): Pub. L. 109–135 substituted “6611(f)(4)(A)” for “6611(f)(3)(A)”. ## § 6662: Imposition of accuracy-related penalty on underpayments - § 6662(b): Pub. L. 109–135, § 403(x)(1), inserted at end “Except as provided in paragraph (1) or (2)(B) of section 6662A(e), this section shall not apply to the portion of any underpayment which is attributable to a reportable transaction understatement on which a penalty is imposed under section 6662A.” - § 6662(d)(3): Pub. L. 109–135, § 412(aaa), struck out “the” before “1 or more”. ## § 6662A: Imposition of accuracy-related penalty on understatements with respect to reportable transactions - § 6662A(e)(2): Pub. L. 109–135 reenacted heading without change and amended text generally. Prior to amendment, text read as follows: ## § 7608: Authority of internal revenue enforcement officers - § 7608(c): Pub. L. 109–135 substituted “January 1, 2007” for “January 1, 2006” in subpar. (B) and concluding provisions. ## § 7609: Special procedures for third-party summonses - § 7609(c)(2)(D), § 7609(c)(2)(E), § 7609(c)(2): Pub. L. 109–135, § 408(a)(1), inserted “or” at end of subpar. (D), substituted period for “; or” at end of subpar. (E), and struck out subpar. (F) which read as follows: “described in subsection (f) or (g).” - § 7609(c)(3), § 7609(c)(4): Pub. L. 109–135, § 408(a)(2), added par. (3) and redesignated former par. (3) as (4). ## § 7701: Definitions - § 7701(n): Pub. L. 109–135 reenacted heading without change and amended text generally. Prior to amendment, text read as follows: “An individual who would (but for this subsection) cease to be treated as a citizen or resident of the United States shall continue to be treated as a citizen or resident of the United States, as the case may be, until such individual— ## § 7874: Rules relating to expatriated entities and their foreign parents - § 7874(a)(3): Pub. L. 109–135 reenacted heading without change and amended text generally. Prior to amendment, text read as follows: “Paragraph (1) shall not apply to any entity which is treated as a domestic corporation under subsection (b).” ## § 8021: Powers - § 8021(e): Pub. L. 109–135 substituted “Government Accountability Office” for “General Accounting Office” in two places.