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Thursday, October 2, 2008, 3:01 AM H.R. 1424: Bailout Bill, Part 17
13 FIED DISASTER PROPERTY.
14 (a) IN GENERAL.--Section 168, as amended by this
15 Act, is amended by adding at the end the following new
16 subsection:
17 ``(n) SPECIAL ALLOWANCE FOR QUALIFIED DIS-
18 ASTER ASSISTANCE PROPERTY.--
19 ``(1) IN GENERAL.--In the case of any qualified
20 disaster assistance property--
21 ``(A) the depreciation deduction provided
22 by section 167(a) for the taxable year in which
23 such property is placed in service shall include
24 an allowance equal to 50 percent of the ad-
434
1 justed basis of the qualified disaster assistance
2 property, and
3 ``(B) the adjusted basis of the qualified
4 disaster assistance property shall be reduced by
5 the amount of such deduction before computing
6 the amount otherwise allowable as a deprecia-
7 tion deduction under this chapter for such tax-
8 able year and any subsequent taxable year.
9 ``(2) QUALIFIED DISASTER ASSISTANCE PROP-
10 ERTY.--For purposes of this subsection--
11 ``(A) IN GENERAL.--The term `qualified
12 disaster assistance property' means any prop-
13 erty--
14 ``(i)(I) which is described in sub-
15 section (k)(2)(A)(i), or
16 ``(II) which is nonresidential real
17 property or residential rental property,
18 ``(ii) substantially all of the use of
19 which is--
20 ``(I) in a disaster area with re-
21 spect to a federally declared disaster
22 occurring before January 1, 2010,
23 and
435
1 ``(II) in the active conduct of a
2 trade or business by the taxpayer in
3 such disaster area,
4 ``(iii) which--
5 ``(I) rehabilitates property dam-
6 aged, or replaces property destroyed
7 or condemned, as a result of such fed-
8 erally declared disaster, except that,
9 for purposes of this clause, property
10 shall be treated as replacing property
11 destroyed or condemned if, as part of
12 an integrated plan, such property re-
13 places property which is included in a
14 continuous area which includes real
15 property destroyed or condemned, and
16 ``(II) is similar in nature to, and
17 located in the same county as, the
18 property being rehabilitated or re-
19 placed,
20 ``(iv) the original use of which in such
21 disaster area commences with an eligible
22 taxpayer on or after the applicable disaster
23 date,
24 ``(v) which is acquired by such eligible
25 taxpayer by purchase (as defined in section
436
1 179(d)) on or after the applicable disaster
2 date, but only if no written binding con-
3 tract for the acquisition was in effect be-
4 fore such date, and
5 ``(vi) which is placed in service by
6 such eligible taxpayer on or before the date
7 which is the last day of the third calendar
8 year following the applicable disaster date
9 (the fourth calendar year in the case of
10 nonresidential real property and residential
11 rental property).
12 ``(B) EXCEPTIONS.--
13 ``(i) OTHER BONUS DEPRECIATION
14 PROPERTY.--The term `qualified disaster
15 assistance property' shall not include--
16 ``(I) any property to which sub-
17 section (k) (determined without re-
18 gard to paragraph (4)), (l), or (m) ap-
19 plies,
20 ``(II) any property to which sec-
21 tion 1400N(d) applies, and
22 ``(III) any property described in
23 section 1400N(p)(3).
24 ``(ii) ALTERNATIVE DEPRECIATION
25 PROPERTY.--The term `qualified disaster
437
1 assistance property' shall not include any
2 property to which the alternative deprecia-
3 tion system under subsection (g) applies,
4 determined without regard to paragraph
5 (7) of subsection (g) (relating to election to
6 have system apply).
7 ``(iii) TAX-EXEMPT BOND FINANCED
8 PROPERTY.--Such term shall not include
9 any property any portion of which is fi-
10 nanced with the proceeds of any obligation
11 the interest on which is exempt from tax
12 under section 103.
13 ``(iv) QUALIFIED REVITALIZATION
14 BUILDINGS.--Such term shall not include
15 any qualified revitalization building with
16 respect to which the taxpayer has elected
17 the application of paragraph (1) or (2) of
18 section 1400I(a).
19 ``(v) ELECTION OUT.--If a taxpayer
20 makes an election under this clause with
21 respect to any class of property for any
22 taxable year, this subsection shall not
23 apply to all property in such class placed
24 in service during such taxable year.
438
1 ``(C) SPECIAL RULES.--For purposes of
2 this subsection, rules similar to the rules of
3 subparagraph (E) of subsection (k)(2) shall
4 apply, except that such subparagraph shall be
5 applied--
6 ``(i) by substituting `the applicable
7 disaster date' for `December 31, 2007'
8 each place it appears therein,
9 ``(ii) without regard to `and before
10 January 1, 2009' in clause (i) thereof, and
11 ``(iii) by substituting `qualified dis-
12 aster assistance property' for `qualified
13 property' in clause (iv) thereof.
14 ``(D) ALLOWANCE AGAINST ALTERNATIVE
15 MINIMUM TAX.--For purposes of this sub-
16 section, rules similar to the rules of subsection
17 (k)(2)(G) shall apply.
18 ``(3) OTHER DEFINITIONS.--For purposes of
19 this subsection--
20 ``(A) APPLICABLE DISASTER DATE.--The
21 term `applicable disaster date' means, with re-
22 spect to any federally declared disaster, the
23 date on which such federally declared disaster
24 occurs.
439
1 ``(B) FEDERALLY DECLARED DISASTER.--
2 The term `federally declared disaster' has the
3 meaning given such term under section
4 165(h)(3)(C)(i).
5 ``(C) DISASTER AREA.--The term `disaster
6 area' has the meaning given such term under
7 section 165(h)(3)(C)(ii).
8 ``(D) ELIGIBLE TAXPAYER.--The term `eli-
9 gible taxpayer' means a taxpayer who has suf-
10 fered an economic loss attributable to a feder-
11 ally declared disaster.
12 ``(4) RECAPTURE.--For purposes of this sub-
13 section, rules similar to the rules under section
14 179(d)(10) shall apply with respect to any qualified
15 disaster assistance property which ceases to be quali-
16 fied disaster assistance property.''.
17 (b) EFFECTIVE DATE.--The amendment made by
18 this section shall apply to property placed in service after
19 December 31, 2007, with respect disasters declared after
20 such date.
21 SEC. 711. INCREASED EXPENSING FOR QUALIFIED DIS-
22 ASTER ASSISTANCE PROPERTY.
23 (a) IN GENERAL.--Section 179 is amended by adding
24 at the end the following new subsection:
440
1 ``(e) SPECIAL RULES FOR QUALIFIED DISASTER AS-
2 SISTANCE PROPERTY.--
3 ``(1) IN GENERAL.--For purposes of this sec-
4 tion--
5 ``(A) the dollar amount in effect under
6 subsection (b)(1) for the taxable year shall be
7 increased by the lesser of--
8 ``(i) $100,000, or
9 ``(ii) the cost of qualified section 179
10 disaster assistance property placed in serv-
11 ice during the taxable year, and
12 ``(B) the dollar amount in effect under
13 subsection (b)(2) for the taxable year shall be
14 increased by the lesser of--
15 ``(i) $600,000, or
16 ``(ii) the cost of qualified section 179
17 disaster assistance property placed in serv-
18 ice during the taxable year.
19 ``(2) QUALIFIED SECTION 179 DISASTER ASSIST-
20 ANCE PROPERTY.--For purposes of this subsection,
21 the term `qualified section 179 disaster assistance
22 property' means section 179 property (as defined in
23 subsection (d)) which is qualified disaster assistance
24 property (as defined in section 168(n)(2)).
441
1 ``(3) COORDINATION WITH EMPOWERMENT
2 ZONES AND RENEWAL COMMUNITIES.--For purposes
3 of sections 1397A and 1400J, qualified section 179
4 disaster assistance property shall not be treated as
5 qualified zone property or qualified renewal prop-
6 erty, unless the taxpayer elects not to take such
7 qualified section 179 disaster assistance property
8 into account for purposes of this subsection.
9 ``(4) RECAPTURE.--For purposes of this sub-
10 section, rules similar to the rules under subsection
11 (d)(10) shall apply with respect to any qualified sec-
12 tion 179 disaster assistance property which ceases to
13 be qualified section 179 disaster assistance prop-
14 erty.''.
15 (b) EFFECTIVE DATE.--The amendment made by
16 this section shall apply to property placed in service after
17 December 31, 2007, with respect disasters declared after
18 such date.
19 SEC. 712. COORDINATION WITH HEARTLAND DISASTER RE-
20 LIEF.
21 The amendments made by this subtitle, other than
22 the amendments made by sections 706(a)(2), 710, and
23 711, shall not apply to any disaster described in section
24 702(c)(1)(A), or to any expenditure or loss resulting from
25 such disaster.
442
1 TITLE VIII--SPENDING REDUC-
2 TIONS AND APPROPRIATE
3 REVENUE RAISERS FOR NEW
4 TAX RELIEF POLICY
5 SEC. 801. NONQUALIFIED DEFERRED COMPENSATION
6 FROM CERTAIN TAX INDIFFERENT PARTIES.
7 (a) IN GENERAL.--Subpart B of part II of sub-
8 chapter E of chapter 1 is amended by inserting after sec-
9 tion 457 the following new section:
10 ``SEC. 457A. NONQUALIFIED DEFERRED COMPENSATION
11 FROM CERTAIN TAX INDIFFERENT PARTIES.
12 ``(a) IN GENERAL.--Any compensation which is de-
13 ferred under a nonqualified deferred compensation plan of
14 a nonqualified entity shall be includible in gross income
15 when there is no substantial risk of forfeiture of the rights
16 to such compensation.
17 ``(b) NONQUALIFIED ENTITY.--For purposes of this
18 section, the term `nonqualified entity' means--
19 ``(1) any foreign corporation unless substan-
20 tially all of its income is--
21 ``(A) effectively connected with the conduct
22 of a trade or business in the United States, or
23 ``(B) subject to a comprehensive foreign in-
24 come tax, and
443
1 ``(2) any partnership unless substantially all of
2 its income is allocated to persons other than--
3 ``(A) foreign persons with respect to whom
4 such income is not subject to a comprehensive
5 foreign income tax, and
6 ``(B) organizations which are exempt from
7 tax under this title.
8 ``(c) DETERMINABILITY OF AMOUNTS OF COMPENSA-
9 TION.--
10 ``(1) IN GENERAL.--If the amount of any com-
11 pensation is not determinable at the time that such
12 compensation is otherwise includible in gross income
13 under subsection (a)--
14 ``(A) such amount shall be so includible in
15 gross income when determinable, and
16 ``(B) the tax imposed under this chapter
17 for the taxable year in which such compensation
18 is includible in gross income shall be increased
19 by the sum of--
20 ``(i) the amount of interest determined
21 under paragraph (2), and
22 ``(ii) an amount equal to 20 percent of
23 the amount of such compensation.
24 ``(2) INTEREST.--For purposes of paragraph
25 (1)(B)(i), the interest determined under this para-
444
1 graph for any taxable year is the amount of interest
2 at the underpayment rate under section 6621 plus
3 1 percentage point on the underpayments that would
4 have occurred had the deferred compensation been
5 includible in gross income for the taxable year in
6 which first deferred or, if later, the first taxable year
7 in which such deferred compensation is not subject
8 to a substantial risk of forfeiture.
9 ``(d) OTHER DEFINITIONS AND SPECIAL RULES.--
10 For purposes of this section--
11 ``(1) SUBSTANTIAL RISK OF FORFEITURE.--
12 ``(A) IN GENERAL.--The rights of a person
13 to compensation shall be treated as subject to
14 a substantial risk of forfeiture only if such per-
15 son's rights to such compensation are condi-
16 tioned upon the future performance of substan-
17 tial services by any individual.
18 ``(B) EXCEPTION FOR COMPENSATION
19 BASED ON GAIN RECOGNIZED ON AN INVEST-
20 MENT ASSET.--
21 ``(i) IN GENERAL.--To the extent pro-
22 vided in regulations prescribed by the Sec-
23 retary, if compensation is determined solely
24 by reference to the amount of gain recog-
25 nized on the disposition of an investment
445
1 asset, such compensation shall be treated
2 as subject to a substantial risk of for-
3 feiture until the date of such disposition.
4 ``(ii) INVESTMENT ASSET.--For pur-
5 poses of clause (i), the term `investment
6 asset' means any single asset (other than
7 an investment fund or similar entity)--
8 ``(I) acquired directly by an in-
9 vestment fund or similar entity,
10 ``(II) with respect to which such
11 entity does not (nor does any person
12 related to such entity) participate in
13 the active management of such asset
14 (or if such asset is an interest in an
15 entity, in the active management of
16 the activities of such entity), and
17 ``(III) substantially all of any
18 gain on the disposition of which (other
19 than such deferred compensation) is
20 allocated to investors in such entity.
21 ``(iii) COORDINATION WITH SPECIAL
22 RULE.--Paragraph (3)(B) shall not apply
23 to any compensation to which clause (i)
24 applies.
446
1 ``(2) COMPREHENSIVE FOREIGN INCOME TAX.--
2 The term `comprehensive foreign income tax' means,
3 with respect to any foreign person, the income tax
4 of a foreign country if--
5 ``(A) such person is eligible for the benefits
6 of a comprehensive income tax treaty between
7 such foreign country and the United States, or
8 ``(B) such person demonstrates to the sat-
9 isfaction of the Secretary that such foreign
10 country has a comprehensive income tax.
11 ``(3) NONQUALIFIED DEFERRED COMPENSA-
12 TION PLAN.--
13 ``(A) IN GENERAL.--The term `non-
14 qualified deferred compensation plan' has the
15 meaning given such term under section
16 409A(d), except that such term shall include
17 any plan that provides a right to compensation
18 based on the appreciation in value of a specified
19 number of equity units of the service recipient.
20 ``(B) EXCEPTION.--Compensation shall
21 not be treated as deferred for purposes of this
22 section if the service provider receives payment
23 of such compensation not later than 12 months
24 after the end of the taxable year of the service
25 recipient during which the right to the payment
447
1 of such compensation is no longer subject to a
2 substantial risk of forfeiture.
3 ``(4) EXCEPTION FOR CERTAIN COMPENSATION
4 WITH RESPECT TO EFFECTIVELY CONNECTED IN-
5 COME.--In the case a foreign corporation with in-
6 come which is taxable under section 882, this section
7 shall not apply to compensation which, had such
8 compensation had been paid in cash on the date that
9 such compensation ceased to be subject to a sub-
10 stantial risk of forfeiture, would have been deduct-
11 ible by such foreign corporation against such income.
12 ``(5) APPLICATION OF RULES.--Rules similar to
13 the rules of paragraphs (5) and (6) of section
14 409A(d) shall apply.
15 ``(e) REGULATIONS.--The Secretary shall prescribe
16 such regulations as may be necessary or appropriate to
17 carry out the purposes of this section, including regula-
18 tions disregarding a substantial risk of forfeiture in cases
19 where necessary to carry out the purposes of this sec-
20 tion.''.
21 (b) CONFORMING AMENDMENT.--Section 26(b)(2),
22 as amended by the Housing Assistance Tax Act of 2008,
23 is amended by striking ``and'' at the end of subparagraph
24 (V), by striking the period at the end of subparagraph
448
1 (W) and inserting ``, and'', and by adding at the end the
2 following new subparagraph:
3 ``(X) section 457A(c)(1)(B) (relating to de-
4 terminability of amounts of compensation).''.
5 (c) CLERICAL AMENDMENT.--The table of sections
6 of subpart B of part II of subchapter E of chapter 1 is
7 amended by inserting after the item relating to section
8 457 the following new item:
``Sec. 457A. Nonqualified deferred compensation from certain tax indifferent
parties.''.
9 (d) EFFECTIVE DATE.--
10 (1) IN GENERAL.--Except as otherwise pro-
11 vided in this subsection, the amendments made by
12 this section shall apply to amounts deferred which
13 are attributable to services performed after Decem-
14 ber 31, 2008.
15 (2) APPLICATION TO EXISTING DEFERRALS.--
16 In the case of any amount deferred to which the
17 amendments made by this section do not apply solely
18 by reason of the fact that the amount is attributable
19 to services performed before January 1, 2009, to the
20 extent such amount is not includible in gross income
21 in a taxable year beginning before 2018, such
22 amounts shall be includible in gross income in the
23 later of--
449
1 (A) the last taxable year beginning before
2 2018, or
3 (B) the taxable year in which there is no
4 substantial risk of forfeiture of the rights to
5 such compensation (determined in the same
6 manner as determined for purposes of section
7 457A of the Internal Revenue Code of 1986, as
8 added by this section).
9 (3) ACCELERATED PAYMENTS.--No later than
10 120 days after the date of the enactment of this Act,
11 the Secretary shall issue guidance providing a lim-
12 ited period of time during which a nonqualified de-
13 ferred compensation arrangement attributable to
14 services performed on or before December 31, 2008,
15 may, without violating the requirements of section
16 409A(a) of the Internal Revenue Code of 1986, be
17 amended to conform the date of distribution to the
18 date the amounts are required to be included in in-
19 come.
20 (4) CERTAIN BACK-TO-BACK ARRANGEMENTS.--
21 If the taxpayer is also a service recipient and main-
22 tains one or more nonqualified deferred compensa-
23 tion arrangements for its service providers under
24 which any amount is attributable to services per-
25 formed on or before December 31, 2008, the guid-
450
1 ance issued under paragraph (4) shall permit such
2 arrangements to be amended to conform the dates of
3 distribution under such arrangement to the date
4 amounts are required to be included in the income
5 of such taxpayer under this subsection.
6 (5) ACCELERATED PAYMENT NOT TREATED AS
7 MATERIAL MODIFICATION.--Any amendment to a
8 nonqualified deferred compensation arrangement
9 made pursuant to paragraph (4) or (5) shall not be
10 treated as a material modification of the arrange-
11 ment for purposes of section 409A of the Internal
12 Revenue Code of 1986.
451
Amend the title so as to read: ``To provide authority
for the Federal Government to purchase and insure cer-
tain types of troubled assets for the purposes of providing
stability to and preventing disruption in the economy and
financial system and protecting taxpayers, to amend the
Internal Revenue Code of 1986 to provide incentives for
energy production and conservation, to extend certain ex-
piring provisions, to provide individual income tax relief,
and for other purposes''.
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