[Congressional Bills 111th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1586 Enrolled Bill (ENR)]
H.R.1586
One Hundred Eleventh Congress
of the
United States of America
AT THE SECOND SESSION
Begun and held at the City of Washington on Tuesday,
the fifth day of January, two thousand and ten
An Act
To modernize the air traffic control system, improve the safety,
reliability, and availability of transportation by air in the United
States, provide for modernization of the air traffic control system,
reauthorize the Federal Aviation Administration, and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
short title

2722368e0ae33a035941dbc3e9340dcec7275497af48f720c9907581d9344ad5

TITLE I
EDUCATION JOBS FUND
education jobs funds

008cfcab7bd1d8e460c200bff0a4c87ee85a1fe1f687f739fd8ba55b2e2cab0f

appropriated out of any money in the Treasury not otherwise obligated
for necessary expenses for an Education Jobs Fund, $10,000,000,000:
Provided, That the amount under this heading shall be administered
under the terms and conditions of sections 14001 through 14013 and
title XV of division A of the American Recovery and Reinvestment Act of
2009 (Public Law 111-5) except as follows:
(1) Allocation of funds.--
(A) Funds appropriated under this heading shall be
available only for allocation by the Secretary of Education (in
this heading referred to as the Secretary) in accordance with
subsections (a), (b), (d), (e), and (f) of section 14001 of
division A of Public Law 111-5 and subparagraph (B) of this
paragraph, except that the amount reserved under such
subsection (b) shall not exceed $1,000,000 and such subsection
(f) shall be applied by substituting one year for two years.
(B) Prior to allocating funds to States under section
14001(d) of division A of Public Law 111-5, the Secretary shall
allocate 0.5 percent to the Secretary of the Interior for
schools operated or funded by the Bureau of Indian Affairs on
the basis of the schools' respective needs for activities
consistent with this heading under such terms and conditions as
the Secretary of the Interior may determine.
(2) Reservation.--A State that receives an allocation of funds
appropriated under this heading may reserve not more than 2 percent
for the administrative costs of carrying out its responsibilities
with respect to those funds.
(3) Awards to local educational agencies.--
(A) Except as specified in paragraph (2), an allocation of
funds to a State shall be used only for awards to local
educational agencies for the support of elementary and
secondary education in accordance with paragraph (5) for the
2010-2011 school year (or, in the case of reallocations made
under section 14001(f) of division A of Public Law 111-5, for
the 2010-2011 or the 2011-2012 school year).
(B) Funds used to support elementary and secondary
education shall be distributed through a State's primary
elementary and secondary funding formulae or based on local
educational agencies' relative shares of funds under part A of
title I of the Elementary and Secondary Education Act of 1965
(20 U.S.C. 6311 et seq.) for the most recent fiscal year for
which data are available.
(C) Subsections (a) and (b) of section 14002 of division A
of Public Law 111-5 shall not apply to funds appropriated under
this heading.
(4) Compliance with education reform assurances.--For purposes
of awarding funds appropriated under this heading, any State that
has an approved application for Phase II of the State Fiscal
Stabilization Fund that was submitted in accordance with the
application notice published in the Federal Register on November
17, 2009 (74 Fed. Reg. 59142) shall be deemed to be in compliance
with subsection (b) and paragraphs (2) through (5) of subsection
(d) of section 14005 of division A of Public Law 111-5.
(5) Requirement to use funds to retain or create education
jobs.--Notwithstanding section 14003(a) of division A of Public Law
111-5, funds awarded to local educational agencies under paragraph
(3)--
(A) may be used only for compensation and benefits and
other expenses, such as support services, necessary to retain
existing employees, to recall or rehire former employees, and
to hire new employees, in order to provide early childhood,
elementary, or secondary educational and related services; and
(B) may not be used for general administrative expenses or
for other support services expenditures as those terms were
defined by the National Center for Education Statistics in its
Common Core of Data as of the date of enactment of this Act.
(6) Prohibition on use of funds for rainy-day funds or debt
retirement.--A State that receives an allocation may not use such
funds, directly or indirectly, to--
(A) establish, restore, or supplement a rainy-day fund;
(B) supplant State funds in a manner that has the effect of
establishing, restoring, or supplementing a rainy-day fund;
(C) reduce or retire debt obligations incurred by the
State; or
(D) supplant State funds in a manner that has the effect of
reducing or retiring debt obligations incurred by the State.
(7) Deadline for award.--The Secretary shall award funds
appropriated under this heading not later than 45 days after the
date of the enactment of this Act to States that have submitted
applications meeting the requirements applicable to funds under
this heading. The Secretary shall not require information in
applications beyond what is necessary to determine compliance with
applicable provisions of law.
(8) Alternate distribution of funds.--If, within 30 days after
the date of the enactment of this Act, a Governor has not submitted
an approvable application, the Secretary shall provide for funds
allocated to that State to be distributed to another entity or
other entities in the State (notwithstanding section 14001(e) of
division A of Public Law 111-5) for support of elementary and
secondary education, under such terms and conditions as the
Secretary may establish, provided that all terms and conditions
that apply to funds appropriated under this heading shall apply to
such funds distributed to such entity or entities. No distribution
shall be made to a State under this paragraph, however, unless the
Secretary has determined (on the basis of such information as may
be available) that the requirements of clauses (i), (ii), or (iii)
of paragraph 10(A) are likely to be met, notwithstanding the lack
of an application from the Governor of that State.
(9) Local educational agency application.--Section 442 of the
General Education Provisions Act shall not apply to a local
educational agency that has previously submitted an application to
the State under title XIV of division A of Public Law 111-5. The
assurances provided under that application shall continue to apply
to funds awarded under this heading.
(10) Maintenance of effort.--
(A) Except as provided in paragraph (8), the Secretary
shall not allocate funds to a State under paragraph (1) unless
the Governor of the State provides an assurance to the
Secretary that--
(i) for State fiscal year 2011, the State will maintain
State support for elementary and secondary education (in
the aggregate or on the basis of expenditures per pupil)
and for public institutions of higher education (not
including support for capital projects or for research and
development or tuition and fees paid by students) at not
less than the level of such support for each of the two
categories, respectively, for State fiscal year 2009;
(ii) for State fiscal year 2011, the State will
maintain State support for elementary and secondary
education and for public institutions of higher education
(not including support for capital projects or for research
and development or tuition and fees paid by students) at a
percentage of the total revenues available to the State
that is equal to or greater than the percentage provided
for each of the two categories, respectively, for State
fiscal year 2010; or
(iii) in the case of a State in which State tax
collections for calendar year 2009 were less than State tax
collections for calendar year 2006, for State fiscal year
2011 the State will maintain State support for elementary
and secondary education (in the aggregate) and for public
institutions of higher education (not including support for
capital projects or for research and development or tuition
and fees paid by students)--
(I) at not less than the level of such support for
each of the two categories, respectively, for State
fiscal year 2006; or
(II) at a percentage of the total revenues
available to the State that is equal to or greater than
the percentage provided for each of the two categories,
respectively, for State fiscal year 2006.
(B) Section 14005(d)(1) and subsections (a) through (c) of
section 14012 of division A of Public Law 111-5 shall not apply
to funds appropriated under this heading.
(11) Additional requirements for the state of texas.--The
following requirements shall apply to the State of Texas:
(A) Notwithstanding paragraph (3)(B), funds used to support
elementary and secondary education shall be distributed based
on local educational agencies' relative shares of funds under
part A of title I of the Elementary and Secondary Education Act
of 1965 (20 U.S.C. 6311 et seq.) for the most recent fiscal
year which data are available. Funds distributed pursuant to
this paragraph shall be used to supplement and not supplant
State formula funding that is distributed on a similar basis to
part A of title I of the Elementary and Secondary Education Act
of 1965 (20 U.S.C. 6311 et seq.).
(B) The Secretary shall not allocate funds to the State of
Texas under paragraph (1) unless the Governor of the State
provides an assurance to the Secretary that the State will for
fiscal years 2011, 2012, and 2013 maintain State support for
elementary and secondary education at a percentage of the total
revenues available to the State that is equal to or greater
than the percentage provided for such purpose for fiscal year
2011 prior to the enactment of this Act.
(C) Notwithstanding paragraph (8), no distribution shall be
made to the State of Texas or local education agencies therein
unless the Governor of Texas makes an assurance to the
Secretary that the requirements in paragraphs (11)(A) and
(11)(B) will be met, notwithstanding the lack of an application
from the Governor of Texas.
TITLE II
STATE FISCAL RELIEF AND OTHER PROVISIONS; REVENUE OFFSETS
Subtitle A--State Fiscal Relief and Other Provisions
extension of arra increase in fmap

bc7faf6ae394c9bc03ce495815ba7e20a900c9af66ae0e8fe4ffa8ceea0d97ea

Act of 2009 (Public Law 111-5) is amended--
(1) in subsection (a)(3), by striking ``first calendar
quarter'' and inserting ``first 3 calendar quarters'';
(2) in subsection (b)--
(A) in paragraph (1), by striking ``paragraph (2)'' and
inserting ``paragraphs (2) and (3)''; and
(B) by adding at the end the following:
``(3) Phase-down of general increase.--
``(A) Second quarter of fiscal year 2011.--For each State,
for the second quarter of fiscal year 2011, the FMAP percentage
increase for the State under paragraph (1) or (2) (as
applicable) shall be 3.2 percentage points.
``(B) Third quarter of fiscal year 2011.--For each State,
for the third quarter of fiscal year 2011, the FMAP percentage
increase for the State under paragraph (1) or (2) (as
applicable) shall be 1.2 percentage points.'';
(3) in subsection (c)--
(A) in paragraph (2)(B), by striking ``July 1, 2010'' and
inserting ``January 1, 2011'';
(B) in paragraph (3)(B)(i), by striking ``July 1, 2010''
and inserting ``January 1, 2011'' each place it appears; and
(C) in paragraph (4)(C)(ii), by striking ``the 3-
consecutive-month period beginning with January 2010'' and
inserting ``any 3-consecutive-month period that begins after
December 2009 and ends before January 2011'';
(4) in subsection (e), by adding at the end the following:
``Notwithstanding paragraph (5), effective for payments made on or
after January 1, 2010, the increases in the FMAP for a State under this
section shall apply to payments under title XIX of such Act that are
attributable to expenditures for medical assistance provided to
nonpregnant childless adults made eligible under a State plan under
such title (including under any waiver under such title or under
section 1115 of such Act (42 U.S.C. 1315)) who would have been eligible
for child health assistance or other health benefits under eligibility
standards in effect as of December 31, 2009, of a waiver of the State
child health plan under the title XXI of such Act.'';
(5) in subsection (g)--
(A) in paragraph (1), by striking ``September 30, 2011''
and inserting ``March 31, 2012'';
(B) in paragraph (2), by inserting ``of such Act'' after
``1923''; and
(C) by adding at the end the following:
``(3) Certification by chief executive officer.--No additional
Federal funds shall be paid to a State as a result of this section
with respect to a calendar quarter occurring during the period
beginning on January 1, 2011, and ending on June 30, 2011, unless,
not later than 45 days after the date of enactment of this
paragraph, the chief executive officer of the State certifies that
the State will request and use such additional Federal funds.'';
and
(6) in subsection (h)(3), by striking ``December 31, 2010'' and
inserting ``June 30, 2011''.
treatment of certain drugs for computation of medicaid amp

8b55f316501cb30afb19a7815fcf48a5f608c4c87ac652361cff78fdae9f4565

111-148, section 1927(k)(1)(B)(i)(IV) of the Social Security Act (42
U.S.C. 1396r-8(k)(1)(B)(i)(IV)), as amended by section 2503(a)(2)(B) of
Public Law 111-148 and section 1101(c)(2) of Public Law 111-152, is
amended by adding at the end the following: ``, unless the drug is an
inhalation, infusion, instilled, implanted, or injectable drug that is
not generally dispensed through a retail community pharmacy; and''.
sunset of temporary increase in benefits under the supplemental
nutrition assistance program

48a0c128668bcd5824c68ef6be4a5a056c2c92999472b047e637f10bac9bce92

111-5 (123 Stat. 120), as amended by section 4262 of this Act, is
amended by striking paragraph (2) and inserting the following:
``(2) Termination.--The authority provided by this subsection
shall terminate after March 31, 2014.''.
Subtitle B--Revenue Offsets
rules to prevent splitting foreign tax credits from the income to
which they relate

3e71801b7172ab4689dc7176e83577c92b31a077dd72047b24c178aa73c3d175

of chapter 1 of the Internal Revenue Code of 1986 is amended by adding
at the end the following new section:
``SEC. 909. SUSPENSION OF TAXES AND CREDITS UNTIL RELATED INCOME
TAKEN INTO ACCOUNT.
``(a) In General.--If there is a foreign tax credit splitting event
with respect to a foreign income tax paid or accrued by the taxpayer,
such tax shall not be taken into account for purposes of this title
before the taxable year in which the related income is taken into
account under this chapter by the taxpayer.
``(b) Special Rules With Respect to Section 902 Corporations.--If
there is a foreign tax credit splitting event with respect to a foreign
income tax paid or accrued by a section 902 corporation, such tax shall
not be taken into account--
``(1) for purposes of section 902 or 960, or
``(2) for purposes of determining earnings and profits under
section 964(a),
before the taxable year in which the related income is taken into
account under this chapter by such section 902 corporation or a
domestic corporation which meets the ownership requirements of
subsection (a) or (b) of section 902 with respect to such section 902
corporation.
``(c) Special Rules.--For purposes of this section--
``(1) Application to partnerships, etc.--In the case of a
partnership, subsections (a) and (b) shall be applied at the
partner level. Except as otherwise provided by the Secretary, a
rule similar to the rule of the preceding sentence shall apply in
the case of any S corporation or trust.
``(2) Treatment of foreign taxes after suspension.--In the case
of any foreign income tax not taken into account by reason of
subsection (a) or (b), except as otherwise provided by the
Secretary, such tax shall be so taken into account in the taxable
year referred to in such subsection (other than for purposes of
section 986(a)) as a foreign income tax paid or accrued in such
taxable year.
``(d) Definitions.--For purposes of this section--
``(1) Foreign tax credit splitting event.--There is a foreign
tax credit splitting event with respect to a foreign income tax if
the related income is (or will be) taken into account under this
chapter by a covered person.
``(2) Foreign income tax.--The term `foreign income tax' means
any income, war profits, or excess profits tax paid or accrued to
any foreign country or to any possession of the United States.
``(3) Related income.--The term `related income' means, with
respect to any portion of any foreign income tax, the income (or,
as appropriate, earnings and profits) to which such portion of
foreign income tax relates.
``(4) Covered person.--The term `covered person' means, with
respect to any person who pays or accrues a foreign income tax
(hereafter in this paragraph referred to as the `payor')--
``(A) any entity in which the payor holds, directly or
indirectly, at least a 10 percent ownership interest
(determined by vote or value),
``(B) any person which holds, directly or indirectly, at
least a 10 percent ownership interest (determined by vote or
value) in the payor,
``(C) any person which bears a relationship to the payor
described in section 267(b) or 707(b), and
``(D) any other person specified by the Secretary for
purposes of this paragraph.
``(5) Section 902 corporation.--The term `section 902
corporation' means any foreign corporation with respect to which
one or more domestic corporations meets the ownership requirements
of subsection (a) or (b) of section 902.
``(e) Regulations.--The Secretary may issue such regulations or
other guidance as is necessary or appropriate to carry out the purposes
of this section, including regulations or other guidance which
provides--
``(1) appropriate exceptions from the provisions of this
section, and
``(2) for the proper application of this section with respect
to hybrid instruments.''.
(b) Clerical Amendment.--The table of sections for subpart A of
part III of subchapter N of chapter 1 of the Internal Revenue Code of
1986 is amended by adding at the end the following new item:
``Sec. 909. Suspension of taxes and credits until related income taken
into account.''.
(c) Effective Date.--The amendments made by this section shall
apply to--
(1) foreign income taxes (as defined in section 909(d) of the
Internal Revenue Code of 1986, as added by this section) paid or
accrued in taxable years beginning after December 31, 2010; and
(2) foreign income taxes (as so defined) paid or accrued by a
section 902 corporation (as so defined) in taxable years beginning
on or before such date (and not deemed paid under section 902(a) or
960 of such Code on or before such date), but only for purposes of
applying sections 902 and 960 with respect to periods after such
date.
Section 909(b)(2) of the Internal Revenue Code of 1986, as added by
this section, shall not apply to foreign income taxes described in
paragraph (2).
denial of foreign tax credit with respect to foreign income not
subject to united states taxation by reason of covered asset
acquisitions

6d90ff1fb2b91af3edf0a99281c53c87df34c9a21e49198c59fe39b1ef4b1332

Code of 1986 is amended by redesignating subsection (m) as subsection
(n) and by inserting after subsection (l) the following new subsection:
``(m) Denial of Foreign Tax Credit With Respect to Foreign Income
Not Subject to United States Taxation by Reason of Covered Asset
Acquisitions.--
``(1) In general.--In the case of a covered asset acquisition,
the disqualified portion of any foreign income tax determined with
respect to the income or gain attributable to the relevant foreign
assets--
``(A) shall not be taken into account in determining the
credit allowed under subsection (a), and
``(B) in the case of a foreign income tax paid by a section
902 corporation (as defined in section 909(d)(5)), shall not be
taken into account for purposes of section 902 or 960.
``(2) Covered asset acquisition.--For purposes of this section,
the term `covered asset acquisition' means--
``(A) a qualified stock purchase (as defined in section
338(d)(3)) to which section 338(a) applies,
``(B) any transaction which--
``(i) is treated as an acquisition of assets for
purposes of this chapter, and
``(ii) is treated as the acquisition of stock of a
corporation (or is disregarded) for purposes of the foreign
income taxes of the relevant jurisdiction,
``(C) any acquisition of an interest in a partnership which
has an election in effect under section 754, and
``(D) to the extent provided by the Secretary, any other
similar transaction.
``(3) Disqualified portion.--For purposes of this section--
``(A) In general.--The term `disqualified portion' means,
with respect to any covered asset acquisition, for any taxable
year, the ratio (expressed as a percentage) of--
``(i) the aggregate basis differences (but not below
zero) allocable to such taxable year under subparagraph (B)
with respect to all relevant foreign assets, divided by
``(ii) the income on which the foreign income tax
referred to in paragraph (1) is determined (or, if the
taxpayer fails to substantiate such income to the
satisfaction of the Secretary, such income shall be
determined by dividing the amount of such foreign income
tax by the highest marginal tax rate applicable to such
income in the relevant jurisdiction).
``(B) Allocation of basis difference.--For purposes of
subparagraph (A)(i)--
``(i) In general.--The basis difference with respect to
any relevant foreign asset shall be allocated to taxable
years using the applicable cost recovery method under this
chapter.
``(ii) Special rule for disposition of assets.--Except
as otherwise provided by the Secretary, in the case of the
disposition of any relevant foreign asset--
``(I) the basis difference allocated to the taxable
year which includes the date of such disposition shall
be the excess of the basis difference with respect to
such asset over the aggregate basis difference with
respect to such asset which has been allocated under
clause (i) to all prior taxable years, and
``(II) no basis difference with respect to such
asset shall be allocated under clause (i) to any
taxable year thereafter.
``(C) Basis difference.--
``(i) In general.--The term `basis difference' means,
with respect to any relevant foreign asset, the excess of--
``(I) the adjusted basis of such asset immediately
after the covered asset acquisition, over
``(II) the adjusted basis of such asset immediately
before the covered asset acquisition.
``(ii) Built-in loss assets.--In the case of a relevant
foreign asset with respect to which the amount described in
clause (i)(II) exceeds the amount described in clause
(i)(I), such excess shall be taken into account under this
subsection as a basis difference of a negative amount.
``(iii) Special rule for section 338 elections.--In the
case of a covered asset acquisition described in paragraph
(2)(A), the covered asset acquisition shall be treated for
purposes of this subparagraph as occurring at the close of
the acquisition date (as defined in section 338(h)(2)).
``(4) Relevant foreign assets.--For purposes of this section,
the term `relevant foreign asset' means, with respect to any
covered asset acquisition, any asset (including any goodwill, going
concern value, or other intangible) with respect to such
acquisition if income, deduction, gain, or loss attributable to
such asset is taken into account in determining the foreign income
tax referred to in paragraph (1).
``(5) Foreign income tax.--For purposes of this section, the
term `foreign income tax' means any income, war profits, or excess
profits tax paid or accrued to any foreign country or to any
possession of the United States.
``(6) Taxes allowed as a deduction, etc.--Sections 275 and 78
shall not apply to any tax which is not allowable as a credit under
subsection (a) by reason of this subsection.
``(7) Regulations.--The Secretary may issue such regulations or
other guidance as is necessary or appropriate to carry out the
purposes of this subsection, including to exempt from the
application of this subsection certain covered asset acquisitions,
and relevant foreign assets with respect to which the basis
difference is de minimis.''.
(b) Effective Date.--
(1) In general.--Except as provided in paragraph (2), the
amendments made by this section shall apply to covered asset
acquisitions (as defined in section 901(m)(2) of the Internal
Revenue Code of 1986, as added by this section) after December 31,
2010.
(2) Transition rule.--The amendments made by this section shall
not apply to any covered asset acquisition (as so defined) with
respect to which the transferor and the transferee are not related
if such acquisition is--
(A) made pursuant to a written agreement which was binding
on January 1, 2011, and at all times thereafter,
(B) described in a ruling request submitted to the Internal
Revenue Service on or before July 29, 2010, or
(C) described on or before January 1, 2011, in a public
announcement or in a filing with the Securities and Exchange
Commission.
(3) Related persons.--For purposes of this subsection, a person
shall be treated as related to another person if the relationship
between such persons is described in section 267 or 707(b) of the
Internal Revenue Code of 1986.
separate application of foreign tax credit limitation, etc., to items
resourced under treaties

12d740896eb73063d25384205757b5d0f46d430b0960022cc71833629b79448c

Internal Revenue Code of 1986 is amended by redesignating paragraph (6)
as paragraph (7) and by inserting after paragraph (5) the following new
paragraph:
``(6) Separate application to items resourced under treaties.--
``(A) In general.--If--
``(i) without regard to any treaty obligation of the
United States, any item of income would be treated as
derived from sources within the United States,
``(ii) under a treaty obligation of the United States,
such item would be treated as arising from sources outside
the United States, and
``(iii) the taxpayer chooses the benefits of such
treaty obligation,
subsections (a), (b), and (c) of this section and sections 902,
907, and 960 shall be applied separately with respect to each
such item.
``(B) Coordination with other provisions.--This paragraph
shall not apply to any item of income to which subsection
(h)(10) or section 865(h) applies.
``(C) Regulations.--The Secretary may issue such
regulations or other guidance as is necessary or appropriate to
carry out the purposes of this paragraph, including regulations
or other guidance which provides that related items of income
may be aggregated for purposes of this paragraph.''.
(b) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after the date of the enactment of
this Act.
limitation on the amount of foreign taxes deemed paid with respect to
section 956 inclusions

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Code of 1986 is amended by adding at the end the following new
subsection:
``(c) Limitation With Respect to Section 956 Inclusions.--
``(1) In general.--If there is included under section
951(a)(1)(B) in the gross income of a domestic corporation any
amount attributable to the earnings and profits of a foreign
corporation which is a member of a qualified group (as defined in
section 902(b)) with respect to the domestic corporation, the
amount of any foreign income taxes deemed to have been paid during
the taxable year by such domestic corporation under section 902 by
reason of subsection (a) with respect to such inclusion in gross
income shall not exceed the amount of the foreign income taxes
which would have been deemed to have been paid during the taxable
year by such domestic corporation if cash in an amount equal to the
amount of such inclusion in gross income were distributed as a
series of distributions (determined without regard to any foreign
taxes which would be imposed on an actual distribution) through the
chain of ownership which begins with such foreign corporation and
ends with such domestic corporation.
``(2) Authority to prevent abuse.--The Secretary shall issue
such regulations or other guidance as is necessary or appropriate
to carry out the purposes of this subsection, including regulations
or other guidance which prevent the inappropriate use of the
foreign corporation's foreign income taxes not deemed paid by
reason of paragraph (1).''.
(b) Effective Date.--The amendment made by this section shall apply
to acquisitions of United States property (as defined in section 956(c)
of the Internal Revenue Code of 1986) after December 31, 2010.
special rule with respect to certain redemptions by foreign
subsidiaries

2aecf3f91ead8b075cc1ea7ba4e2de2a505ab590b7d0366b931c6dba3e3b8df6

Internal Revenue Code of 1986 is amended by redesignating subparagraph
(B) as subparagraph (C) and by inserting after subparagraph (A) the
following new subparagraph:
``(B) Special rule in case of foreign acquiring
corporation.--In the case of any acquisition to which
subsection (a) applies in which the acquiring corporation is a
foreign corporation, no earnings and profits shall be taken
into account under paragraph (2)(A) (and subparagraph (A) shall
not apply) if more than 50 percent of the dividends arising
from such acquisition (determined without regard to this
subparagraph) would neither--
``(i) be subject to tax under this chapter for the
taxable year in which the dividends arise, nor
``(ii) be includible in the earnings and profits of a
controlled foreign corporation (as defined in section 957
and without regard to section 953(c)).''.
(b) Effective Date.--The amendments made by this section shall
apply to acquisitions after the date of the enactment of this Act.
modification of affiliation rules for purposes of rules allocating
interest expense

ca67227f53bcbb37fba7baad4a1ecdcb251f541de8dabbc1cf793067ae9a15a7

of the Internal Revenue Code of 1986 is amended by adding at the end
the following: ``Notwithstanding the preceding sentence, a foreign
corporation shall be treated as a member of the affiliated group if--
``(i) more than 50 percent of the gross income of such
foreign corporation for the taxable year is effectively
connected with the conduct of a trade or business within
the United States, and
``(ii) at least 80 percent of either the vote or value
of all outstanding stock of such foreign corporation is
owned directly or indirectly by members of the affiliated
group (determined with regard to this sentence).''.
(b) Effective Date.--The amendment made by this section shall apply
to taxable years beginning after the date of the enactment of this Act.
termination of special rules for interest and dividends received from
persons meeting the 80-percent foreign business requirements

287fef1d7e41408f1aac80c27c51b540f32b2eb2c6295cf2929435e4c23b5abe

Internal Revenue Code of 1986 is amended by striking subparagraph (A)
and by redesignating subparagraphs (B) and (C) as subparagraphs (A) and
(B), respectively.
(b) Grandfather Rule With Respect To Withholding on Interest and
Dividends Received From Persons Meeting the 80-percent Foreign Business
Requirements.--
(1) In general.--Subparagraph (B) of section 871(i)(2) of the
Internal Revenue Code of 1986 is amended to read as follows:
``(B) The active foreign business percentage of--
``(i) any dividend paid by an existing 80/20 company,
and
``(ii) any interest paid by an existing 80/20
company.''.
(2) Definitions and special rules.--Section 871 of such Code is
amended by redesignating subsections (l) and (m) as subsections (m)
and (n), respectively, and by inserting after subsection (k) the
following new subsection:
``(l) Rules Relating to Existing 80/20 Companies.--For purposes of
this subsection and subsection (i)(2)(B)--
``(1) Existing 80/20 company.--
``(A) In general.--The term `existing 80/20 company' means
any corporation if--
``(i) such corporation met the 80-percent foreign
business requirements of section 861(c)(1) (as in effect
before the date of the enactment of this subsection) for
such corporation's last taxable year beginning before
January 1, 2011,
``(ii) such corporation meets the 80-percent foreign
business requirements of subparagraph (B) with respect to
each taxable year after the taxable year referred to in
clause (i), and
``(iii) there has not been an addition of a substantial
line of business with respect to such corporation after the
date of the enactment of this subsection.
``(B) Foreign business requirements.--
``(i) In general.--Except as provided in clause (iv), a
corporation meets the 80-percent foreign business
requirements of this subparagraph if it is shown to the
satisfaction of the Secretary that at least 80 percent of
the gross income from all sources of such corporation for
the testing period is active foreign business income.
``(ii) Active foreign business income.--For purposes of
clause (i), the term `active foreign business income' means
gross income which--
``(I) is derived from sources outside the United
States (as determined under this subchapter), and
``(II) is attributable to the active conduct of a
trade or business in a foreign country or possession of
the United States.
``(iii) Testing period.--For purposes of this
subsection, the term `testing period' means the 3-year
period ending with the close of the taxable year of the
corporation preceding the payment (or such part of such
period as may be applicable). If the corporation has no
gross income for such 3-year period (or part thereof), the
testing period shall be the taxable year in which the
payment is made.
``(iv) Transition rule.--In the case of a taxable year
for which the testing period includes 1 or more taxable
years beginning before January 1, 2011--
``(I) a corporation meets the 80-percent foreign
business requirements of this subparagraph if and only
if the weighted average of--
``(aa) the percentage of the corporation's
gross income from all sources that is active
foreign business income (as defined in subparagraph
(B) of section 861(c)(1) (as in effect before the
date of the enactment of this subsection)) for the
portion of the testing period that includes taxable
years beginning before January 1, 2011, and
``(bb) the percentage of the corporation's
gross income from all sources that is active
foreign business income (as defined in clause (ii)
of this subparagraph) for the portion of the
testing period, if any, that includes taxable years
beginning on or after January 1, 2011,
is at least 80 percent, and
``(II) the active foreign business percentage for
such taxable year shall equal the weighted average
percentage determined under subclause (I).
``(2) Active foreign business percentage.--Except as provided
in paragraph (1)(B)(iv), the term `active foreign business
percentage' means, with respect to any existing 80/20 company, the
percentage which--
``(A) the active foreign business income of such company
for the testing period, is of
``(B) the gross income of such company for the testing
period from all sources.
``(3) Aggregation rules.--For purposes of applying paragraph
(1) (other than subparagraphs (A)(i) and (B)(iv) thereof) and
paragraph (2)--
``(A) In general.--The corporation referred to in paragraph
(1)(A) and all of such corporation's subsidiaries shall be
treated as one corporation.
``(B) Subsidiaries.--For purposes of subparagraph (A), the
term `subsidiary' means any corporation in which the
corporation referred to in subparagraph (A) owns (directly or
indirectly) stock meeting the requirements of section
1504(a)(2) (determined by substituting `50 percent' for `80
percent' each place it appears and without regard to section
1504(b)(3)).
``(4) Regulations.--The Secretary may issue such regulations or
other guidance as is necessary or appropriate to carry out the
purposes of this section, including regulations or other guidance
which provide for the proper application of the aggregation rules
described in paragraph (3).''.
(c) Conforming Amendments.--
(1) Section 861 of the Internal Revenue Code of 1986 is amended
by striking subsection (c) and by redesignating subsections (d),
(e), and (f) as subsections (c), (d), and (e), respectively.
(2) Paragraph (9) of section 904(h) of such Code is amended to
read as follows:
``(9) Treatment of certain domestic corporations.--In the case
of any dividend treated as not from sources within the United
States under section 861(a)(2)(A), the corporation paying such
dividend shall be treated for purposes of this subsection as a
United States-owned foreign corporation.''.
(3) Subsection (c) of section 2104 of such Code is amended in
the last sentence by striking ``or to a debt obligation of a
domestic corporation'' and all that follows and inserting a period.
(d) Effective Date.--
(1) In general.--Except as provided in paragraph (2), the
amendments made by this section shall apply to taxable years
beginning after December 31, 2010.
(2) Grandfather rule for outstanding debt obligations.--
(A) In general.--The amendments made by this section shall
not apply to payments of interest on obligations issued before
the date of the enactment of this Act.
(B) Exception for related party debt.--Subparagraph (A)
shall not apply to any interest which is payable to a related
person (determined under rules similar to the rules of section
954(d)(3)).
(C) Significant modifications treated as new issues.--For
purposes of subparagraph (A), a significant modification of the
terms of any obligation (including any extension of the term of
such obligation) shall be treated as a new issue.
limitation on extension of statute of limitations for failure to
notify secretary of certain foreign transfers

b06d44addba4b965dd035a894fa11f0a728c2331872e1ab231de5c5ef89150f7

Internal Revenue Code of 1986 is amended--
(1) by striking ``In the case of any information'' and
inserting the following:
``(A) In general.--In the case of any information''; and
(2) by adding at the end the following:
``(B) Application to failures due to reasonable cause.--If
the failure to furnish the information referred to in
subparagraph (A) is due to reasonable cause and not willful
neglect, subparagraph (A) shall apply only to the item or items
related to such failure.''.
(b) Effective Date.--The amendments made by this section shall take
effect as if included in section 513 of the Hiring Incentives to
Restore Employment Act.
elimination of advance refundability of earned income credit

379ceb8b425467ff8e8842ac8f3130cd73526641de6bf74d75ee71605835b502

Internal Revenue Code of 1986 are repealed:
(1) Section 3507.
(2) Subsection (g) of section 32.
(3) Paragraph (7) of section 6051(a).
(b) Conforming Amendments.--
(1) Section 6012(a) of the Internal Revenue Code of 1986 is
amended by striking paragraph (8) and by redesignating paragraph
(9) as paragraph (8).
(2) Section 6302 of such Code is amended by striking subsection
(i).
(3) The table of sections for chapter 25 of such Code is
amended by striking the item relating to section 3507.
(c) Effective Date.--The repeals and amendments made by this
section shall apply to taxable years beginning after December 31, 2010.
TITLE III
RESCISSIONS

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``Department of Agriculture--Rural Development'', $122,000,000, to be
derived from the unobligated balances of funds that were provided for
such accounts in prior appropriation Acts (other than Public Law 111-5)
and that were designated by the Congress in such Acts as an emergency
requirement pursuant to a concurrent resolution on the budget or the
Balanced Budget and Emergency Deficit Control Act of 1985.

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Commerce--National Telecommunications and Information Administration--
Broadband Technology Opportunities Program'' in title II of division A
of Public Law 111-5, $302,000,000 are rescinded.

c8762d8c593da52cafee87e623814d54ab8a85e4785ab3702c20fd4a1ba648dc

Appropriations Acts, the following funds are rescinded from the
following accounts in the specified amounts:
``Aircraft Procurement, Army, 2008/2010'', $21,000,000;
``Procurement of Weapons and Tracked Combat Vehicles, Army,
2008/2010'', $21,000,000;
``Procurement of Ammunition, Army, 2008/2010'', $17,000,000;
``Other Procurement, Army, 2008/2010'', $75,000,000;
``Weapons Procurement, Navy, 2008/2010'', $26,000,000;
``Other Procurement, Navy, 2008/2010'', $42,000,000;
``Procurement, Marine Corps, 2008/2010'', $13,000,000;
``Aircraft Procurement, Air Force, 2008/2010'', $102,000,000;
``Missile Procurement, Air Force, 2008/2010'', $28,000,000;
``Procurement of Ammunition, Air Force, 2008/2010'',
$7,000,000;
``Other Procurement, Air Force, 2008/2010'', $130,000,000;
``Procurement, Defense-Wide, 2008/2010'', $33,000,000;
``Research, Development, Test and Evaluation, Army, 2009/
2010'', $76,000,000;
``Research, Development, Test and Evaluation, Air Force, 2009/
2010'', $164,000,000;
``Research, Development, Test and Evaluation, Defense-Wide,
2009/2010'', $137,000,000;
``Operation, Test and Evaluation, Defense, 2009/2010'',
$1,000,000;
``Operation and Maintenance, Army, 2010'', $154,000,000;
``Operation and Maintenance, Navy, 2010'', $155,000,000;
``Operation and Maintenance, Marine Corps, 2010'', $25,000,000;
``Operation and Maintenance, Air Force, 2010'', $155,000,000;
``Operation and Maintenance, Defense-Wide, 2010'',
$126,000,000;
``Operation and Maintenance, Army Reserve, 2010'', $12,000,000;
``Operation and Maintenance, Navy Reserve, 2010'', $6,000,000;
``Operation and Maintenance, Marine Corps Reserve, 2010'',
$1,000,000;
``Operation and Maintenance, Air Force Reserve, 2010'',
$14,000,000;
``Operation and Maintenance, Army National Guard, 2010'',
$28,000,000; and
``Operation and Maintenance, Air National Guard, 2010'',
$27,000,000.

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and Reinvestment Act of 2009 (Public Law 111-5), the following funds
are rescinded from the following accounts in the specified amounts:
``Operation and Maintenance, Army, 2009/2010'', $113,500,000;
``Operation and Maintenance, Navy, 2009/2010'', $34,000,000;
``Operation and Maintenance, Marine Corps, 2009/2010'',
$7,000,000;
``Operation and Maintenance, Air Force, 2009/2010'',
$61,000,000;
``Operation and Maintenance, Army Reserve, 2009/2010'',
$3,500,000;
``Operation and Maintenance, Navy Reserve, 2009/2010'',
$8,000,000;
``Operation and Maintenance, Marine Corps Reserve, 2009/2010'',
$1,000,000;
``Operation and Maintenance, Air Force Reserve, 2009/2010'',
$2,000,000;
``Operation and Maintenance, Army National Guard, 2009/2010'',
$1,000,000;
``Operation and Maintenance, Air National Guard, 2009/2010'',
$2,500,000; and
``Defense Health Program, 2009/2010'', $27,000,000.
(b) Of the funds appropriated in the Supplemental Appropriations
Act, 2008 (Public Law 110-252), the following funds are rescinded from
the following account in the specified amount:
``Procurement, Marine Corps, 2009/2011'', $122,000,000.

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Weapons and Tracked Combat Vehicles, Army'' in title III of division A
of public Law 111-118, $116,000,000 are rescinded.
(b) Of the funds appropriated for ``Other Procurement, Army'' in
title III of division C of Public Law 110-329, $87,000,000 are
rescinded.

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specified accounts:
(1) $20,000,000, to be derived from unobligated balances of
funds made available in prior appropriations Acts under the heading
``Department of Energy--Nuclear Energy''.

d55fdaac55f4aa60f644d9b884cb24e3862e3a3c72df88fa17917e9eb04d13f1

heading ``Nuclear Regulatory Commission'' in prior appropriations Acts,
$18,000,000 is permanently rescinded.

478e60d93000cc96344243ece676403d89c74aca71f06507cdae03d1e5966dbb

Title 17--Innovative Technology Loan Guarantee Program'' in title III
of division A of Public Law 111-5, $1,500,000,000 are rescinded.

560ca7a8a38983f58f568d8ee44fe6d6fca290a3f9ef947f9682269be7a787f4

Administration--Real Property Activities--Federal Building Fund'',
$75,000,000 from Rental of Space and $25,000,000 from Building
Operations, to be derived from unobligated balances that were provided
in previous appropriations Acts.

d6a52bb1391fb98f869f02e8215f5e04e9c911db460a70c59d14f95c2eefa79e

Affairs--Indian Guaranteed Loan Program Account'' in title VII of
division A of Public Law 111-5, $6,820,000 are rescinded.

ae6d896e2484bfe1a847fb38fd4de91aede7e3396ff2cc1a876ecb9711073ece

Protection Agency--Hazardous Substance Superfund'' in title VII of
division A of Public Law 111-5, $2,600,000 are rescinded.

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Protection Agency--Leaking Underground Storage Tank Trust Fund
Program'' in title VII of division A of Public Law 111-5, $9,200,000
are rescinded.

5b9e93dd4abdb8c8cdc4bab771e9485f8acfb8c4ebbd4022d4cbc25dffa6b56a

division A of Public Law 111-5, ``Environmental Protection Agency--
Environmental Programs and Management'', $10,000,000 are rescinded.

c693dce07035f2c008bd3b0761e08196018d5110803a35350db072cf7ee18574

Service--Construction'' in chapter 7 of division B of Public Law 108-
324, $4,800,000 are rescinded.

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Service--Construction'' in chapter 5 of title II of Public Law 109-234,
$6,400,000 are rescinded.

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Service--Construction'' in chapter 6 of title I of division B of Public
Law 110-329, $3,000,000 are rescinded.

cb83f210c76acdb8997f094b40e0dda9dce41c8defbf55dfd6c0bdb1f07e64ed

Departments of Labor, Health and Human Services, and Education, and
Related Agencies Appropriations Act, 1995 (Public Law 103-333; 108
Stat. 2574) under the heading ``Public Health and Social Services
Emergency Fund'' is rescinded.

769994a201da9d9353fd96b2e5b4b0acabbec25f554a90a62838f66f6d4a38dc

Security under section 2201(e)(2)(B) in title II of division B of
Public Law 111-5, $47,000,000 are rescinded.

70914d0f91647853d5427fe9e921708b11e9a4ef977b303ae6c7d27461c5f19c

title II of division B of Public Law 111-5, $110,000,000 are rescinded,
to be derived only from the amount provided under section 1899K(b) of
such title.

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Education--Education for the Disadvantaged'' in division D of Public
Law 111-117, $50,000,000 are rescinded, to be derived only from the
amount provided for a comprehensive literacy development and education
program under section 1502 of the Elementary and Secondary Education
Act of 1965.

a51417f0f27152ba37732d7826621260f0226c9cd4fef23a6e7abccfc88eff61

Education--Student Aid Administration'' in division D of Public Law
111-117, $82,000,000 are rescinded.

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Education--Innovation and Improvement'' in division D of Public Law
111-117, $10,700,000 are rescinded, to be derived only from the amount
provided to carry out subpart 8 of part D of title V of the Elementary
and Secondary Education Act of 1965.

8e9b4a0ffd39b31ac8adeecbffa65cde067a4931e0e9ef2a61afca56e9ac4499

of Defense, Military Construction, Army'' from prior appropriations
Acts, $340,000,000 is rescinded: Provided, That no funds may be
rescinded from amounts that were designated by the Congress as an
emergency requirement or as appropriations for overseas deployments and
other activities pursuant to a concurrent resolution on the budget or
the Balanced Budget and Emergency Deficit Control Act of 1985.

09f8213a584f0bb8e6fc2629fa03e44f28d3412e607d8316403e02db87bd2894

of Defense, Military Construction, Navy and Marine Corps'' from prior
appropriations Acts, $110,000,000 is rescinded: Provided, That no funds
may be rescinded from amounts that were designated by the Congress as
an emergency requirement or as appropriations for overseas deployments
and other activities pursuant to a concurrent resolution on the budget
or the Balanced Budget and Emergency Deficit Control Act of 1985.

baa99e1b7cdc699f6cb3e39fb3856aef3de460672e1a8d540fe343f8e714abaf

of Defense, Military Construction, Air Force'' from prior
appropriations Acts, $50,000,000 is rescinded: Provided, That no funds
may be rescinded from amounts that were designated by the Congress as
an emergency requirement or as appropriations for overseas deployments
and other activities pursuant to a concurrent resolution on the budget
or the Balanced Budget and Emergency Deficit Control Act of 1985.

6eb3d31d735629598d5eb7566271284948ef0e33986f47381594696c38c49030

Expenses account of the Department of Veterans Affairs in section
2201(e)(4)(A)(ii) of division B of Public Law 111-5 (123 Stat. 454; 26
U.S.C. 6428 note), $6,100,000 are rescinded.

66deac29271e1930d382f7ea068551f09a709fd8c3ca9634c82951683f68bbcf

by title X of division A of Public Law 111-5, the American Recovery and
Reinvestment Act of 2009, under the heading `` Departmental
Administration, Information Technology Systems'' $5,000,000 is hereby
rescinded.

06d39fb4a3f2b8c8abd694e829f93005761129214f38aee52d8d0fdc5c4491ba

balances available under the heading ``Millennium Challenge
Corporation'' in title III of division H of Public Law 111-8 and under
such heading in prior Acts making appropriations for the Department of
State, foreign operations, and related programs, $50,000,000 are
rescinded.
(b) Civilian Stabilization Initiative.--
(1) Department of state.--Of the unobligated balances available
under the heading ``Department of State--Administration of Foreign
Affairs--Civilian Stabilization Initiative'' in prior Acts making
appropriations for the Department of State, foreign operations, and
related programs, $40,000,000 are rescinded.
(2) United states agency for international development.--Of the
unobligated balances available under the heading ``United States
Agency for International Development--Funds Appropriated to the
President--Civilian Stabilization Initiative'' in prior Acts making
appropriations for the Department of State, foreign operations, and
related programs, $30,000,000 are rescinded.

3ec6f876213bd7661c6c63c2c8ce46eae4ba9fedb5a668302f5136982847a668

specified accounts:
(1) ``Department of Transportation--Federal Aviation
Administration--Facilities and Equipment'', $2,182,544, to be
derived from unobligated balances made available under this heading
in Public Law 108-324.
(2) ``Department of Transportation--Federal Aviation
Administration--Facilities and Equipment'', $5,705,750, to be
derived from unobligated balances made available under this heading
in Public Law 109-148.

2e1de36fa44f3595af6f251e11531d8f5aacc9c03178391920d5473323eca8a4

State under chapter 1 of title 23, United States Code, $2,200,000,000
are permanently rescinded: Provided, That such rescission shall be
distributed among the States in the same proportion as the funds
subject to such rescission were apportioned to the States for fiscal
year 2009: Provided further, That such rescission shall not apply to
the funds distributed in accordance with sections 130(f) and 104(b)(5)
of title 23, United States Code; sections 133(d)(1) and 163 of such
title, as in effect on the day before the date of enactment of Public
Law 109-59; and the first sentence of section 133(d)(3)(A) of such
title: Provided further, That notwithstanding section 1132 of Public
Law 110-140, in administering the rescission required under this
heading, the Secretary of Transportation shall allow each State to
determine the amount of the required rescission to be drawn from the
programs to which the rescission applies.
TITLE IV
BUDGETARY PROVISIONS
budgetary provisions

36fd95d8d8fe1a20cc551da42b0f12bfee692d10512d55dcaa30df320aec5e03

complying with the Statutory Pay-As-You-Go Act of 2010, shall be
determined by reference to the latest statement titled ``Budgetary
Effects of PAYGO Legislation'' for this Act, jointly submitted for
printing in the Congressional Record by the Chairmen of the House and
Senate Budget Committees, provided that such statement has been
submitted prior to the vote on passage in the House acting first on
this conference report or amendment between the Houses.
Speaker of the House of Representatives.
Vice President of the United States and
President of the Senate.

958d36571958aafe99159a299f19d0f32251a754275b35c233b77f5daeca682f

Education jobs and Medicaid funding bill — HR. 1586

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