Bipartisan Budget Act of 2018 (P.L. 115-123)

One Hundred Fifteenth Congress
of the
United States of America

AT THE SECOND SESSION

Begun and held at the City of Washington on Wednesday,
the third day of January, two thousand and eighteen

H.R. 1892

An Act

To amend title 4, United States Code, to provide for the flying of the flag at half-staff in the event of the death of a first responder in the line of duty.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

This Act may be cited as the "Bipartisan Budget Act of 2018".

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SUBDIVISION 2 — TAX RELIEF AND MEDICAID CHANGES RELATING TO CERTAIN DISASTERS

TITLE I — CALIFORNIA FIRES

SEC. 20101. DEFINITIONS.

For purposes of this title —

(1) CALIFORNIA WILDFIRE DISASTER ZONE. — The term "California wildfire disaster zone" means that portion of the California wildfire disaster area determined by the President to warrant individual or individual and public assistance from the Federal Government under the Robert T. Stafford Disaster Relief and Emergency Assistance Act by reason of wildfires in California.

(2) CALIFORNIA WILDFIRE DISASTER AREA. — The term "California wildfire disaster area" means an area with respect to which between January 1, 2017 through January 18, 2018 a major disaster has been declared by the President under section 401 of such Act by reason of wildfires in California.

SEC. 20102. SPECIAL DISASTER-RELATED RULES FOR USE OF RETIREMENT FUNDS.

(a) TAX-FAVORED WITHDRAWALS FROM RETIREMENT PLANS. —

(1) IN GENERAL. — Section 72(t) of the Internal Revenue Code of 1986 shall not apply to any qualified wildfire distribution.

(2) AGGREGATE DOLLAR LIMITATION. —

(A) IN GENERAL. — For purposes of this subsection, the aggregate amount of distributions received by an individual which may be treated as qualified wildfire distributions for any taxable year shall not exceed the excess (if any) of —

(i) $100,000, over

(ii) the aggregate amounts treated as qualified wildfire distributions received by such individual for all prior taxable years.

(B) TREATMENT OF PLAN DISTRIBUTIONS. — If a distribution to an individual would (without regard to subparagraph (A)) be a qualified wildfire distribution, a plan shall not be treated as violating any requirement of the Internal Revenue Code of 1986 merely because the plan treats such distribution as a qualified wildfire distribution, unless the aggregate amount of such distributions from all plans maintained by the employer (and any member of any controlled group which includes the employer) to such individual exceeds $100,000.

(C) CONTROLLED GROUP. — For purposes of subparagraph (B), the term "controlled group" means any group treated as a single employer under subsection (b), (c), (m), or (o) of section 414 of the Internal Revenue Code of 1986.

(3) AMOUNT DISTRIBUTED MAY BE REPAID. —

(A) IN GENERAL. — Any individual who receives a qualified wildfire distribution may, at any time during the 3-year period beginning on the day after the date on which such distribution was received, make one or more contributions in an aggregate amount not to exceed the amount of such distribution to an eligible retirement plan of which such individual is a beneficiary and to which a rollover contribution of such distribution could be made under section 402(c), 403(a)(4), 403(b)(8), 408(d)(3), or 457(e)(16), of the Internal Revenue Code of 1986, as the case may be.

(B) TREATMENT OF REPAYMENTS OF DISTRIBUTIONS FROM ELIGIBLE RETIREMENT PLANS OTHER THAN IRAS. — For purposes of the Internal Revenue Code of 1986, if a contribution is made pursuant to subparagraph (A) with respect to a qualified wildfire distribution from an eligible retirement plan other than an individual retirement plan, then the taxpayer shall, to the extent of the amount of the contribution, be treated as having received the qualified wildfire distribution in an eligible rollover distribution (as defined in section 402(c)(4) of such Code) and as having transferred the amount to the eligible retirement plan in a direct trustee to trustee transfer within 60 days of the distribution.

(C) TREATMENT OF REPAYMENTS FOR DISTRIBUTIONS FROM IRAS. — For purposes of the Internal Revenue Code of 1986, if a contribution is made pursuant to subparagraph (A) with respect to a qualified wildfire distribution from an individual retirement plan (as defined by section 7701(a)(37) of such Code), then, to the extent of the amount of the contribution, the qualified wildfire distribution shall be treated as a distribution described in section 408(d)(3) of such Code and as having been transferred to the eligible retirement plan in a direct trustee to trustee transfer within 60 days of the distribution.

(4) DEFINITIONS. — For purposes of this subsection —

(A) QUALIFIED WILDFIRE DISTRIBUTION. — Except as provided in paragraph (2), the term "qualified wildfire distribution" means any distribution from an eligible retirement plan made on or after October 8, 2017, and before January 1, 2019, to an individual whose principal place of abode during any portion of the period from October 8, 2017, to December 31, 2017, is located in the California wildfire disaster area and who has sustained an economic loss by reason of the wildfires to which the declaration of such area relates.

(B) ELIGIBLE RETIREMENT PLAN. — The term "eligible retirement plan" shall have the meaning given such term by section 402(c)(8)(B) of the Internal Revenue Code of 1986.

(5) INCOME INCLUSION SPREAD OVER 3-YEAR PERIOD. —

(A) IN GENERAL. — In the case of any qualified wildfire distribution, unless the taxpayer elects not to have this paragraph apply for any taxable year, any amount required to be included in gross income for such taxable year shall be so included ratably over the 3-taxable-year period beginning with such taxable year.

(B) SPECIAL RULE. — For purposes of subparagraph (A), rules similar to the rules of subparagraph (E) of section 408A(d)(3) of the Internal Revenue Code of 1986 shall apply.

(6) SPECIAL RULES. —

(A) EXEMPTION OF DISTRIBUTIONS FROM TRUSTEE TO TRUSTEE TRANSFER AND WITHHOLDING RULES. — For purposes of sections 401(a)(31), 402(f), and 3405 of the Internal Revenue Code of 1986, qualified wildfire distributions shall not be treated as eligible rollover distributions.

(B) QUALIFIED WILDFIRE DISTRIBUTIONS TREATED AS MEETING PLAN DISTRIBUTION REQUIREMENTS. — For purposes the Internal Revenue Code of 1986, a qualified wildfire distribution shall be treated as meeting the requirements of sections 401(k)(2)(B)(i), 403(b)(7)(A)(ii), 403(b)(11), and 457(d)(1)(A) of such Code.

(b) RECONTRIBUTIONS OF WITHDRAWALS FOR HOME PURCHASES. —

(1) RECONTRIBUTIONS. —

(A) IN GENERAL. — Any individual who received a qualified distribution may, during the period beginning on October 8, 2017, and ending on June 30, 2018, make one or more contributions in an aggregate amount not to exceed the amount of such qualified distribution to an eligible retirement plan (as defined in section 402(c)(8)(B) of the Internal Revenue Code of 1986) of which such individual is a beneficiary and to which a rollover contribution of such distribution could be made under section 402(c), 403(a)(4), 403(b)(8), or 408(d)(3), of such Code, as the case may be.

(B) TREATMENT OF REPAYMENTS. — Rules similar to the rules of subparagraphs (B) and (C) of subsection (a)(3) shall apply for purposes of this subsection.

(2) QUALIFIED DISTRIBUTION. — For purposes of this subsection, the term "qualified distribution" means any distribution —

(A) described in section 401(k)(2)(B)(i)(IV), 403(b)(7)(A)(ii) (but only to the extent such distribution relates to financial hardship),403(b)(11)(B), or 72(t)(2)(F), of the Internal Revenue Code of 1986,

(B) received after March 31, 2017, and before January 15, 2018, and

(C) which was to be used to purchase or construct a principal residence in the California wildfire disaster area but which was not so purchased or constructed on account of the wildfires to which the declaration of such area relates.

(c) LOANS FROM QUALIFIED PLANS. —

(1) INCREASE IN LIMIT ON LOANS NOT TREATED AS DISTRIBUTIONS. — In the case of any loan from a qualified employer plan (as defined under section 72(p)(4) of the Internal Revenue Code of 1986) to a qualified individual made during the period beginning on the date of the enactment of this Act and ending on December 31, 2018 —

(A) clause (i) of section 72(p)(2)(A) of such Code shall be applied by substituting "$100,000" for "$50,000", and

(B) clause (ii) of such section shall be applied by substituting "the present value of the nonforfeitable accrued benefit of the employee under the plan" for "one-half of the present value of the nonforfeitable accrued benefit of the employee under the plan".

(2) DELAY OF REPAYMENT. — In the case of a qualified individual with an outstanding loan on or after October 8, 2017, from a qualified employer plan (as defined in section 72(p)(4) of the Internal Revenue Code of 1986) —

(A) if the due date pursuant to subparagraph (B) or (C) of section 72(p)(2) of such Code for any repayment with respect to such loan occurs during the period beginning on October 8, 2017, and ending on December 31, 2018, such due date shall be delayed for 1 year,

(B) any subsequent repayments with respect to any such loan shall be appropriately adjusted to reflect the delay in the due date under paragraph (1) and any interest accruing during such delay, and

(C) in determining the 5-year period and the term of a loan under subparagraph (B) or (C) of section 72(p)(2) of such Code, the period described in subparagraph (A) shall be disregarded.

(3) QUALIFIED INDIVIDUAL. — For purposes of this subsection, the term "qualified individual" means any individual whose principal place of abode during any portion of the period from October 8, 2017, to December 31, 2017, is located in the California wildfire disaster area and who has sustained an economic loss by reason of wildfires to which the declaration of such area relates.

(d) PROVISIONS RELATING TO PLAN AMENDMENTS. —

(1) IN GENERAL. — If this subsection applies to any amendment to any plan or annuity contract, such plan or contract shall be treated as being operated in accordance with the terms of the plan during the period described in paragraph (2)(B)(i).

(2) AMENDMENTS TO WHICH SUBSECTION APPLIES. —

(A) IN GENERAL. — This subsection shall apply to any amendment to any plan or annuity contract which is made —

(i) pursuant to any provision of this section, or pursuant to any regulation issued by the Secretary or the Secretary of Labor under any provision of this section, and

(ii) on or before the last day of the first plan year beginning on or after January 1, 2019, or such later date as the Secretary may prescribe.

In the case of a governmental plan (as defined in section 414(d) of the Internal Revenue Code of 1986), clause (ii) shall be applied by substituting the date which is 2 years after the date otherwise applied under clause (ii).

(B) CONDITIONS. — This subsection shall not apply to any amendment unless —

(i) during the period —

(I) beginning on the date that this section or the regulation described in subparagraph (A)(i) takes effect (or in the case of a plan or contract amendment not required by this section or such regulation, the effective date specified by the plan), and

(II) ending on the date described in subparagraph (A)(ii) (or, if earlier, the date the plan or contract amendment is adopted),

the plan or contract is operated as if such plan or contract amendment were in effect, and

(ii) such plan or contract amendment applies retroactively for such period.

SEC. 20103. EMPLOYEE RETENTION CREDIT FOR EMPLOYERS AFFECTED BY CALIFORNIA WILDFIRES.

(a) IN GENERAL. — For purposes of section 38 of the Internal Revenue Code of 1986, in the case of an eligible employer, the California wildfire employee retention credit shall be treated as a credit listed in subsection (b) of such section. For purposes of this subsection, the California wildfire employee retention credit for any taxable year is an amount equal to 40 percent of the qualified wages with respect to each eligible employee of such employer for such taxable year. For purposes of the preceding sentence, the amount of qualified wages which may be taken into account with respect to any individual shall not exceed $6,000.

(b) DEFINITIONS. — For purposes of this section —

(1) ELIGIBLE EMPLOYER. — The term "eligible employer" means any employer —

(A) which conducted an active trade or business on October 8, 2017, in the California wildfire disaster zone, and

(B) with respect to whom the trade or business described in subparagraph (A) is inoperable on any day after October 8, 2017, and before January 1, 2018, as a result of damage sustained by reason of the wildfires to which such declaration of such area relates.

(2) ELIGIBLE EMPLOYEE. — The term "eligible employee" means with respect to an eligible employer an employee whose principal place of employment on October 8, 2017, with such eligible employer was in the California wildfire disaster zone.

(3) QUALIFIED WAGES. — The term "qualified wages" means wages (as defined in section 51(c)(1) of the Internal Revenue Code of 1986, but without regard to section 3306(b)(2)(B) of such Code) paid or incurred by an eligible employer with respect to an eligible employee on any day after October 8, 2017, and before January 1, 2018, which occurs during the period —

(A) beginning on the date on which the trade or business described in paragraph (1) first became inoperable at the principal place of employment of the employee immediately before the wildfires to which the declaration of the California wildfire disaster area relates, and

(B) ending on the date on which such trade or business has resumed significant operations at such principal place of employment.

Such term shall include wages paid without regard to whether the employee performs no services, performs services at a different place of employment than such principal place of employment, or performs services at such principal place of employment before significant operations have resumed.

(c) CERTAIN RULES TO APPLY. — For purposes of this section, rules similar to the rules of sections 51(i)(1), 52, and 280C(a) of the Internal Revenue Code of 1986, shall apply.

(d) EMPLOYEE NOT TAKEN INTO ACCOUNT MORE THAN ONCE. — An employee shall not be treated as an eligible employee for purposes of this section for any period with respect to any employer if such employer is allowed a credit under section 51 of the Internal Revenue Code of 1986 with respect to such employee for such period.

SEC. 20104. ADDITIONAL DISASTER-RELATED TAX RELIEF PROVISIONS.

(a) TEMPORARY SUSPENSION OF LIMITATIONS ON CHARITABLE CONTRIBUTIONS. —

(1) IN GENERAL. — Except as otherwise provided in paragraph (2), subsection (b) of section 170 of the Internal Revenue Code of 1986 shall not apply to qualified contributions and such contributions shall not be taken into account for purposes of applying subsections (b) and (d) of such section to other contributions.

(2) TREATMENT OF EXCESS CONTRIBUTIONS. — For purposes of section 170 of the Internal Revenue Code of 1986 —

(A) INDIVIDUALS. — In the case of an individual —

(i) LIMITATION. — Any qualified contribution shall be allowed only to the extent that the aggregate of such contributions does not exceed the excess of the taxpayer's contribution base (as defined in subparagraph (H) of section 170(b)(1) of such Code) over the amount of all other charitable contributions allowed under section 170(b)(1) of such Code.

(ii) CARRYOVER. — If the aggregate amount of qualified contributions made in the contribution year (within the meaning of section 170(d)(1) of such Code) exceeds the limitation of clause (i), such excess shall be added to the excess described in the portion of subparagraph (A) of such section which precedes clause (i) thereof for purposes of applying such section.

(B) CORPORATIONS. — In the case of a corporation —

(i) LIMITATION. — Any qualified contribution shall be allowed only to the extent that the aggregate of such contributions does not exceed the excess of the taxpayer's taxable income (as determined under paragraph (2) of section 170(b) of such Code) over the amount of all other charitable contributions allowed under such paragraph.

(ii) CARRYOVER. — Rules similar to the rules of subparagraph (A)(ii) shall apply for purposes of this subparagraph.

(3) EXCEPTION TO OVERALL LIMITATION ON ITEMIZED DEDUCTIONS. — So much of any deduction allowed under section 170 of the Internal Revenue Code of 1986 as does not exceed the qualified contributions paid during the taxable year shall not be treated as an itemized deduction for purposes of section 68 of such Code.

(4) QUALIFIED CONTRIBUTIONS. —

(A) IN GENERAL. — For purposes of this subsection, the term "qualified contribution" means any charitable contribution (as defined in section 170(c) of the Internal Revenue Code of 1986) if —

(i) such contribution —

(I) is paid during the period beginning on October 8, 2017, and ending on December 31, 2018, in cash to an organization described in section 170(b)(1)(A) of such Code, and

(II) is made for relief efforts in the California wildfire disaster area,

(ii) the taxpayer obtains from such organization contemporaneous written acknowledgment (within the meaning of section 170(f)(8) of such Code) that such contribution was used (or is to be used) for relief efforts described in clause (i)(II), and

(iii) the taxpayer has elected the application of this subsection with respect to such contribution.

(B) EXCEPTION. — Such term shall not include a contribution by a donor if the contribution is —

(i) to an organization described in section 509(a)(3) of the Internal Revenue Code of 1986, or

(ii) for the establishment of a new, or maintenance of an existing, donor advised fund (as defined in section 4966(d)(2) of such Code).

(C) APPLICATION OF ELECTION TO PARTNERSHIPS AND S CORPORATIONS. — In the case of a partnership or S corporation, the election under subparagraph (A)(iii) shall be made separately by each partner or shareholder.

(b) SPECIAL RULES FOR QUALIFIED DISASTER-RELATED PERSONAL CASUALTY LOSSES. —

(1) IN GENERAL. — If an individual has a net disaster loss for any taxable year —

(A) the amount determined under section 165(h)(2)(A)(ii) of the Internal Revenue Code of 1986 shall be equal to the sum of —

(i) such net disaster loss, and

(ii) so much of the excess referred to in the matter preceding clause (i) of section 165(h)(2)(A) of such Code (reduced by the amount in clause (i) of this subparagraph) as exceeds 10 percent of the adjusted gross income of the individual,

(B) section 165(h)(1) of such Code shall be applied by substituting "$500" for "$500 ($100 for taxable years beginning after December 31, 2009)",

(C) the standard deduction determined under section 63(c) of such Code shall be increased by the net disaster loss, and

(D) section 56(b)(1)(E) of such Code shall not apply to so much of the standard deduction as is attributable to the increase under subparagraph (C) of this paragraph.

(2) NET DISASTER LOSS. — For purposes of this subsection, the term "net disaster loss" means the excess of qualified disaster-related personal casualty losses over personal casualty gains (as defined in section 165(h)(3)(A) of the Internal Revenue Code of 1986).

(3) QUALIFIED DISASTER-RELATED PERSONAL CASUALTY LOSSES. — For purposes of this subsection, the term "qualified disaster-related personal casualty losses" means losses described in section 165(c)(3) of the Internal Revenue Code of 1986 which arise in the California wildfire disaster area on or after October 8, 2017, and which are attributable to the wildfires to which the declaration of such area relates.

(c) SPECIAL RULE FOR DETERMINING EARNED INCOME. —

(1) IN GENERAL. — In the case of a qualified individual, if the earned income of the taxpayer for the taxable year which includes any portion of the period from October 8, 2017, to December 31, 2017, is less than the earned income of the taxpayer for the preceding taxable year, the credits allowed under sections 24(d) and 32 of the Internal Revenue Code of 1986 may, at the election of the taxpayer, be determined by substituting —

(A) such earned income for the preceding taxable year, for

(B) such earned income for the taxable year which includes any portion of the period from October 8, 2017, to December 31, 2017.

(2) QUALIFIED INDIVIDUAL. — For purposes of this subsection, the term "qualified individual" means any individual whose principal place of abode during any portion of the period from October 8, 2017, to December 31, 2017, was located —

(A) in the California wildfire disaster zone, or

(B) in the California wildfire disaster area (but outside the California wildfire disaster zone) and such individual was displaced from such principal place of abode by reason of the wildfires to which the declaration of such area relates.

(3) EARNED INCOME. — For purposes of this subsection, the term "earned income" has the meaning given such term under section 32(c) of the Internal Revenue Code of 1986.

(4) SPECIAL RULES. —

(A) APPLICATION TO JOINT RETURNS. — For purposes of paragraph (1), in the case of a joint return for a taxable year which includes any portion of the period from October 8, 2017, to December 31, 2017 —

(i) such paragraph shall apply if either spouse is a qualified individual, and

(ii) the earned income of the taxpayer for the preceding taxable year shall be the sum of the earned income of each spouse for such preceding taxable year.

(B) UNIFORM APPLICATION OF ELECTION. — Any election made under paragraph (1) shall apply with respect to both sections 24(d) and 32, of the Internal Revenue Code of 1986.

(C) ERRORS TREATED AS MATHEMATICAL ERROR. — For purposes of section 6213 of the Internal Revenue Code of 1986, an incorrect use on a return of earned income pursuant to paragraph (1) shall be treated as a mathematical or clerical error.

(D) NO EFFECT ON DETERMINATION OF GROSS INCOME, ETC. — Except as otherwise provided in this subsection, the Internal Revenue Code of 1986 shall be applied without regard to any substitution under paragraph (1).

TITLE II — TAX RELIEF FOR HURRICANES HARVEY, IRMA, AND MARIA

SEC. 20201. TAX RELIEF FOR HURRICANES HARVEY, IRMA, AND MARIA.

(a) MODIFICATION OF HURRICANES HARVEY AND IRMA DISASTER AREAS. — Subsections (a)(2) and (b)(2) of section 501 of the Disaster Tax Relief and Airport and Airway Extension Act of 2017 (Public Law 115-63; 131 Stat. 1173) are both amended by striking "September 21, 2017" and inserting "October 17, 2017".

(b) EMPLOYEE RETENTION CREDIT. — Subsections (a)(3), (b)(3), and (c)(3) of section 503 of the Disaster Tax Relief and Airport and Airway Extension Act of 2017 (Public Law 115-63; 131 Stat. 1181) are each amended by striking "sections 51(i)(1) and 52" and inserting "sections 51(i)(1), 52, and 280C(a)".

(c) EFFECTIVE DATE. — The amendments made by this section shall take effect as if included in the provisions of title V of the Disaster Tax Relief and Airport and Airway Extension Act of 2017 to which such amendments relate.

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DIVISION D — REVENUE MEASURES

SECTION 40001. TABLE OF CONTENTS.

The table of contents for this division is as follows:

DIVISION D — REVENUE MEASURES

Sec. 40001. Table of contents.

TITLE I — EXTENSION OF EXPIRING PROVISIONS

Sec. 40101. Amendment of Internal Revenue Code of 1986.

Subtitle A — Tax Relief for Families and Individuals

Sec. 40201. Extension of exclusion from gross income of discharge of qualified principal residence indebtedness.

Sec. 40202. Extension of mortgage insurance premiums treated as qualified residence interest.

Sec. 40203. Extension of above-the-line deduction for qualified tuition and related expenses.

Subtitle B — Incentives for Growth, Jobs, Investment, and Innovation

Sec. 40301. Extension of Indian employment tax credit.

Sec. 40302. Extension of railroad track maintenance credit.

Sec. 40303. Extension of mine rescue team training credit.

Sec. 40304. Extension of classification of certain race horses as 3-year property.

Sec. 40305. Extension of 7-year recovery period for motorsports entertainment complexes.

Sec. 40306. Extension of accelerated depreciation for business property on an Indian reservation.

Sec. 40307. Extension of election to expense mine safety equipment.

Sec. 40308. Extension of special expensing rules for certain productions.

Sec. 40309. Extension of deduction allowable with respect to income attributable to domestic production activities in Puerto Rico.

Sec. 40310. Extension of special rule relating to qualified timber gain.

Sec. 40311. Extension of empowerment zone tax incentives.

Sec. 40312. Extension of American Samoa economic development credit.

Subtitle C — Incentives for Energy Production and Conservation

Sec. 40401. Extension of credit for nonbusiness energy property.

Sec. 40402. Extension and modification of credit for residential energy property.

Sec. 40403. Extension of credit for new qualified fuel cell motor vehicles.

Sec. 40404. Extension of credit for alternative fuel vehicle refueling property.

Sec. 40405. Extension of credit for 2-wheeled plug-in electric vehicles.

Sec. 40406. Extension of second generation biofuel producer credit.

Sec. 40407. Extension of biodiesel and renewable diesel incentives.

Sec. 40408. Extension of production credit for Indian coal facilities.

Sec. 40409. Extension of credits with respect to facilities producing energy from certain renewable resources.

Sec. 40410. Extension of credit for energy-efficient new homes.

Sec. 40411. Extension and phaseout of energy credit.

Sec. 40412. Extension of special allowance for second generation biofuel plant property.

Sec. 40413. Extension of energy efficient commercial buildings deduction.

Sec. 40414. Extension of special rule for sales or dispositions to implement FERC or State electric restructuring policy for qualified electric utilities.

Sec. 40415. Extension of excise tax credits relating to alternative fuels.

Sec. 40416. Extension of Oil Spill Liability Trust Fund financing rate.

Subtitle D — Modifications of Energy Incentives

Sec. 40501. Modifications of credit for production from advanced nuclear power facilities.

TITLE II — MISCELLANEOUS PROVISIONS

Sec. 41101. Amendment of Internal Revenue Code of 1986.

Sec. 41102. Modifications to rum cover over.

Sec. 41103. Extension of waiver of limitations with respect to excluding from gross income amounts received by wrongfully incarcerated individuals.

Sec. 41104. Individuals held harmless on improper levy on retirement plans.

Sec. 41105. Modification of user fee requirements for installment agreements.

Sec. 41106. Form 1040SR for seniors.

Sec. 41107. Attorneys fees relating to awards to whistleblowers.

Sec. 41108. Clarification of whistleblower awards.

Sec. 41109. Clarification regarding excise tax based on investment income of private colleges and universities.

Sec. 41110. Exception from private foundation excess business holding tax for independently-operated philanthropic business holdings.

Sec. 41111. Rule of construction for Craft Beverage Modernization and Tax Reform.

Sec. 41112. Simplification of rules regarding records, statements, and returns.

Sec. 41113. Modification of rules governing hardship distributions.

Sec. 41114. Modification of rules relating to hardship withdrawals from cash or deferred arrangements.

Sec. 41115. Opportunity Zones rule for Puerto Rico.

Sec. 41116. Tax home of certain citizens or residents of the United States living abroad.

Sec. 41117. Treatment of foreign persons for returns relating to payments made in settlement of payment card and third party network transactions.

Sec. 41118. Repeal of shift in time of payment of corporate estimated taxes.

Sec. 41119. Enhancement of carbon dioxide sequestration credit.

TITLE I — EXTENSION OF EXPIRING PROVISIONS

SEC. 40101. AMENDMENT OF INTERNAL REVENUE CODE OF 1986.

Except as otherwise expressly provided, whenever in this title an amendment or repeal is expressed in terms of an amendment to, or repeal of, a section or other provision, the reference shall be considered to be made to a section or other provision of the Internal Revenue Code of 1986.

Subtitle A — Tax Relief for Families and Individuals

SEC. 40201. EXTENSION OF EXCLUSION FROM GROSS INCOME OF DISCHARGE OF QUALIFIED PRINCIPAL RESIDENCE INDEBTEDNESS.

(a) IN GENERAL. — Section 108(a)(1)(E) is amended by striking "January 1, 2017" each place it appears and inserting "January 1, 2018".

(b) EFFECTIVE DATE. — The amendments made by this section shall apply to discharges of indebtedness after December 31, 2016.

SEC. 40202. EXTENSION OF MORTGAGE INSURANCE PREMIUMS TREATED AS QUALIFIED RESIDENCE INTEREST.

(a) IN GENERAL. — Subclause (I) of section 163(h)(3)(E)(iv) is amended by striking "December 31, 2016" and inserting "December 31, 2017".

(b) EFFECTIVE DATE. — The amendment made by this section shall apply to amounts paid or accrued after December 31, 2016.

SEC. 40203. EXTENSION OF ABOVE-THE-LINE DEDUCTION FOR QUALIFIED TUITION AND RELATED EXPENSES.

(a) IN GENERAL. — Section 222(e) is amended by striking "December 31, 2016" and inserting "December 31, 2017".

(b) EFFECTIVE DATE. — The amendment made by this section shall apply to taxable years beginning after December 31, 2016.

Subtitle B — Incentives for Growth, Jobs, Investment, and Innovation

SEC. 40301. EXTENSION OF INDIAN EMPLOYMENT TAX CREDIT.

(a) IN GENERAL. — Section 45A(f) is amended by striking "December 31, 2016" and inserting "December 31, 2017".

(b) EFFECTIVE DATE. — The amendment made by this section shall apply to taxable years beginning after December 31, 2016.

SEC. 40302. EXTENSION OF RAILROAD TRACK MAINTENANCE CREDIT.

(a) IN GENERAL. — Section 45G(f) is amended by striking "January 1, 2017" and inserting "January 1, 2018".

(b) EFFECTIVE DATE. —

(1) IN GENERAL. — The amendment made by this section shall apply to expenditures paid or incurred in taxable years beginning after December 31, 2016.

(2) SAFE HARBOR ASSIGNMENTS. — Assignments, including related expenditures paid or incurred, under paragraph (2) of section 45G(b) of the Internal Revenue Code of 1986 for taxable years ending after January 1, 2017, and before January 1, 2018, shall be treated as effective as of the close of such taxable year if made pursuant to a written agreement entered into no later than 90 days following the date of the enactment of this Act.

SEC. 40303. EXTENSION OF MINE RESCUE TEAM TRAINING CREDIT.

(a) IN GENERAL. — Section 45N(e) is amended by striking "December 31, 2016" and inserting "December 31, 2017".

(b) EFFECTIVE DATE. — The amendment made by this section shall apply to taxable years beginning after December 31, 2016.

SEC.40304. EXTENSION OF CLASSIFICATION OF CERTAIN RACE HORSES AS 3-YEAR PROPERTY.

(a) IN GENERAL. — Section 168(e)(3)(A)(i) is amended —

(1) by striking "January 1, 2017" in subclause (I) and inserting "January 1, 2018", and

(2) by striking "December 31, 2016" in subclause (II) and inserting "December 31, 2017".

(b) EFFECTIVE DATE. — The amendments made by this section shall apply to property placed in service after December 31, 2016.

SEC. 40305. EXTENSION OF 7-YEAR RECOVERY PERIOD FOR MOTORSPORTS ENTERTAINMENT COMPLEXES.

(a) IN GENERAL. — Section 168(i)(15)(D) is amended by striking "December 31, 2016" and inserting "December 31, 2017".

(b) EFFECTIVE DATE. — The amendment made by this section shall apply to property placed in service after December 31, 2016.

SEC. 40306. EXTENSION OF ACCELERATED DEPRECIATION FOR BUSINESS PROPERTY ON AN INDIAN RESERVATION.

(a) IN GENERAL. — Section 168(j)(9) is amended by striking "December 31, 2016" and inserting "December 31, 2017".

(b) EFFECTIVE DATE. — The amendment made by this section shall apply to property placed in service after December 31, 2016.

SEC. 40307. EXTENSION OF ELECTION TO EXPENSE MINE SAFETY EQUIPMENT.

(a) IN GENERAL. — Section 179E(g) is amended by striking "December 31, 2016" and inserting "December 31, 2017".

(b) EFFECTIVE DATE. — The amendment made by this section shall apply to property placed in service after December 31, 2016.

SEC. 40308. EXTENSION OF SPECIAL EXPENSING RULES FOR CERTAIN PRODUCTIONS.

(a) IN GENERAL. — Section 181(g) is amended by striking "December 31, 2016" and inserting "December 31, 2017".

(b) EFFECTIVE DATE. — The amendment made by this section shall apply to productions commencing after December 31, 2016.

SEC. 40309. EXTENSION OF DEDUCTION ALLOWABLE WITH RESPECT TO INCOME ATTRIBUTABLE TO DOMESTIC PRODUCTION ACTIVITIES IN PUERTO RICO.

For purposes of applying section 199(d)(8)(C) of the Internal Revenue Code of 1986 with respect to taxable years beginning during 2017, such section shall be applied —

(1) by substituting "first 12 taxable years" for "first 11 taxable years", and

(2) by substituting "January 1, 2018" for "January 1, 2017".

SEC. 40310. EXTENSION OF SPECIAL RULE RELATING TO QUALIFIED TIMBER GAIN.

For purposes of applying section 1201(b) of the Internal Revenue Code of 1986 with respect to taxable years beginning during 2017, such section shall be applied by substituting "2016 or 2017" for "2016".

SEC. 40311. EXTENSION OF EMPOWERMENT ZONE TAX INCENTIVES.

(a) IN GENERAL. —

(1) EXTENSION. — Section 1391(d)(1)(A)(i) is amended by striking "December 31, 2016" and inserting "December 31, 2017".

(2) TREATMENT OF CERTAIN TERMINATION DATES SPECIFIED IN NOMINATIONS. — In the case of a designation of an empowerment zone the nomination for which included a termination date which is contemporaneous with the date specified in subparagraph (A)(i) of section 1391(d)(1) of the Internal Revenue Code of 1986 (as in effect before the enactment of this Act), subparagraph (B) of such section shall not apply with respect to such designation if, after the date of the enactment of this section, the entity which made such nomination amends the nomination to provide for a new termination date in such manner as the Secretary of the Treasury (or the Secretary's designee) may provide.

(b) EFFECTIVE DATE. — The amendment made by subsection (a)(1) shall apply to taxable years beginning after December 31, 2016.

SEC. 40312. EXTENSION OF AMERICAN SAMOA ECONOMIC DEVELOPMENT CREDIT.

(a) IN GENERAL. — Section 119 of division A of the Tax Relief and Health Care Act of 2006 is amended —

(1) in subsection (d) —

(A) by striking "January 1, 2017" each place it appears and inserting "January 1, 2018",

(B) by striking "first 11 taxable years" in paragraph (1) and inserting "first 12 taxable years", and

(C) by striking "first 5 taxable years" in paragraph (2) and inserting "first 6 taxable years", and

(2) in subsection (e), by adding at the end the following:

"References in this subsection to section 199 of the Internal Revenue Code of 1986 shall be treated as references to such section as in effect before its repeal.".

(b) EFFECTIVE DATE. — The amendments made by this section shall apply to taxable years beginning after December 31, 2016.

Subtitle C — Incentives for Energy Production and Conservation

SEC. 40401. EXTENSION OF CREDIT FOR NONBUSINESS ENERGY PROPERTY.

(a) IN GENERAL. — Section 25C(g)(2) is amended by striking "December 31, 2016" and inserting "December 31, 2017".

(b) EFFECTIVE DATE. — The amendment made by this section shall apply to property placed in service after December 31, 2016.

SEC. 40402. EXTENSION AND MODIFICATION OF CREDIT FOR RESIDENTIAL ENERGY PROPERTY.

(a) IN GENERAL. — Section 25D(h) is amended by striking "December 31, 2016" and all that follows and inserting "December 31, 2021.".

(b) PHASEOUT. —

(1) IN GENERAL. — Section 25D(a) is amended by striking "the sum of — " and all that follows and inserting "the sum of the applicable percentages of —

"(1) the qualified solar electric property expenditures,

"(2) the qualified solar water heating property expenditures,

"(3) the qualified fuel cell property expenditures,

"(4) the qualified small wind energy property expenditures, and

"(5) the qualified geothermal heat pump property expenditures,

made by the taxpayer during such year.".

(2) CONFORMING AMENDMENT. — Section 25D(g) is amended by striking "paragraphs (1) and (2) of".

(c) EFFECTIVE DATE. — The amendment made by this section shall apply to property placed in service after December 31, 2016.

SEC. 40403. EXTENSION OF CREDIT FOR NEW QUALIFIED FUEL CELL MOTOR VEHICLES.

(a) IN GENERAL. — Section 30B(k)(1) is amended by striking "December 31, 2016" and inserting "December 31, 2017".

(b) EFFECTIVE DATE. — The amendment made by this section shall apply to property purchased after December 31, 2016.

SEC. 40404. EXTENSION OF CREDIT FOR ALTERNATIVE FUEL VEHICLE REFUELING PROPERTY.

(a) IN GENERAL. — Section 30C(g) is amended by striking "December 31, 2016" and inserting "December 31, 2017".

(b) EFFECTIVE DATE. — The amendment made by this section shall apply to property placed in service after December 31, 2016.

SEC. 40405. EXTENSION OF CREDIT FOR 2-WHEELED PLUG-IN ELECTRIC VEHICLES.

(a) IN GENERAL. — Section 30D(g)(3)(E)(ii) is amended by striking "January 1, 2017" and inserting "January 1, 2018".

(b) EFFECTIVE DATE. — The amendment made by this section shall apply to vehicles acquired after December 31, 2016.

SEC. 40406. EXTENSION OF SECOND GENERATION BIOFUEL PRODUCER CREDIT.

(a) IN GENERAL. — Section 40(b)(6)(J)(i) is amended by striking "January 1, 2017" and inserting "January 1, 2018".

(b) EFFECTIVE DATE. — The amendment made by this section shall apply to qualified second generation biofuel production after December 31, 2016.

SEC. 40407. EXTENSION OF BIODIESEL AND RENEWABLE DIESEL INCENTIVES.

(a) INCOME TAX CREDIT. —

(1) IN GENERAL. — Subsection (g) of section 40A is amended by striking "December 31, 2016" and inserting "December 31, 2017".

(2) EFFECTIVE DATE. — The amendment made by this subsection shall apply to fuel sold or used after December 31, 2016.

(b) EXCISE TAX INCENTIVES. —

(1) IN GENERAL. — Section 6426(c)(6) is amended by striking "December 31, 2016" and inserting "December 31, 2017".

(2) PAYMENTS. — Section 6427(e)(6)(B) is amended by striking "December 31, 2016" and inserting "December 31, 2017".

(3) EFFECTIVE DATE. — The amendments made by this subsection shall apply to fuel sold or used after December 31, 2016.

(4) SPECIAL RULE FOR 2017. — Notwithstanding any other provision of law, in the case of any biodiesel mixture credit properly determined under section 6426(c) of the Internal Revenue Code of 1986 for the period beginning on January 1, 2017, and ending on December 31, 2017, such credit shall be allowed, and any refund or payment attributable to such credit (including any payment under section 6427(e) of such Code) shall be made, only in such manner as the Secretary of the Treasury (or the Secretary's delegate) shall provide. Such Secretary shall issue guidance within 30 days after the date of the enactment of this Act providing for a one-time submission of claims covering periods described in the preceding sentence. Such guidance shall provide for a 180-day period for the submission of such claims (in such manner as prescribed by such Secretary) to begin not later than 30 days after such guidance is issued. Such claims shall be paid by such Secretary not later than 60 days after receipt. If such Secretary has not paid pursuant to a claim filed under this subsection within 60 days after the date of the filing of such claim, the claim shall be paid with interest from such date determined by using the overpayment rate and method under section 6621 of such Code.

SEC. 40408. EXTENSION OF PRODUCTION CREDIT FOR INDIAN COAL FACILITIES.

(a) IN GENERAL. — Section 45(e)(10)(A) is amended by striking "11-year period" each place it appears and inserting "12-year period".

(b) EFFECTIVE DATE. — The amendment made by this section shall apply to coal produced after December 31, 2016.

SEC. 40409. EXTENSION OF CREDITS WITH RESPECT TO FACILITIES PRODUCING ENERGY FROM CERTAIN RENEWABLE RESOURCES.

(a) IN GENERAL. — The following provisions of section 45(d) are each amended by striking "January 1, 2017" each place it appears and inserting "January 1, 2018":

(1) Paragraph (2)(A).

(2) Paragraph (3)(A).

(3) Paragraph (4)(B).

(4) Paragraph (6).

(5) Paragraph (7).

(6) Paragraph (9).

(7) Paragraph (11)(B).

(b) EXTENSION OF ELECTION TO TREAT QUALIFIED FACILITIES AS ENERGY PROPERTY. — Section 48(a)(5)(C)(ii) is amended by striking "January 1, 2017" and inserting "January 1, 2018".

(c) EFFECTIVE DATE. — The amendments made by this section shall take effect on January 1, 2017.

SEC. 40410. EXTENSION OF CREDIT FOR ENERGY-EFFICIENT NEW HOMES.

(a) IN GENERAL. — Section 45L(g) is amended by striking "December 31, 2016" and inserting "December 31, 2017".

(b) EFFECTIVE DATE. — The amendment made by this section shall apply to homes acquired after December 31, 2016.

SEC. 40411. EXTENSION AND PHASEOUT OF ENERGY CREDIT.

(a) EXTENSION OF SOLAR AND THERMAL ENERGY PROPERTY. —

(1) by striking "periods ending before January 1, 2017" in clause (ii) and inserting "property the construction of which begins before January 1, 2022", and

(2) by striking "periods ending before January 1, 2017" in clause (vii) and inserting "property the construction of which begins before January 1, 2022".

(b) PHASEOUT OF 30-PERCENT CREDIT RATE FOR FIBER-OPTIC SOLAR, QUALIFIED FUEL CELL, AND QUALIFIED SMALL WIND ENERGY

(1) IN GENERAL. — Section 48(a) is amended by adding at the end the following new paragraph:

"(7) PHASEOUT FOR FIBER-OPTIC SOLAR, QUALIFIED FUEL CELL, AND QUALIFIED SMALL WIND ENERGY PROPERTY. —

"(A) IN GENERAL. — Subject to subparagraph (B), in the case of any qualified fuel cell property, qualified small wind property, or energy property described in paragraph (3)(A)(ii), the energy percentage determined under paragraph (2) shall be equal to —

"(i) in the case of any property the construction of which begins after December 31, 2019, and before January 1, 2021, 26 percent, and

"(ii) in the case of any property the construction of which begins after December 31, 2020, and before January 1, 2022, 22 percent.

"(B) PLACED IN SERVICE DEADLINE. — In the case of any energy property described in subparagraph (A) which is not placed in service before January 1, 2024, the energy percentage determined under paragraph (2) shall be equal to 0 percent.".

(2) CONFORMING AMENDMENT. — Section 48(a)(2)(A) is amended by striking "paragraph (6)" and inserting "paragraphs (6) and (7)".

(3) CLARIFICATION RELATING TO PHASEOUT FOR WIND FACILITIES. — Section 48(a)(5)(E) is amended by inserting "which is treated as energy property by reason of this paragraph" after "using wind to produce electricity".

(c) EXTENSION OF QUALIFIED FUEL CELL PROPERTY. — Section 48(c)(1)(D) is amended by striking "for any period after December 31, 2016" and inserting "the construction of which does not begin before January 1, 2022".

(d) EXTENSION OF QUALIFIED MICROTURBINE PROPERTY. — Section 48(c)(2)(D) is amended by striking "for any period after December 31, 2016" and inserting "the construction of which does not begin before January 1, 2022".

(e) EXTENSION OF COMBINED HEAT AND POWER SYSTEM PROPERTY. — Section 48(c)(3)(A)(iv) is amended by striking "which is placed in service before January 1, 2017" and inserting "the construction of which begins before January 1, 2022".

(f) EXTENSION OF QUALIFIED SMALL WIND ENERGY PROPERTY. — Section 48(c)(4)(C) is amended by striking "for any period after December 31, 2016" and inserting "the construction of which does not begin before January 1, 2022".

(g) EFFECTIVE DATE. —

(1) IN GENERAL. — Except as otherwise provided in this subsection, the amendments made by this section shall apply to periods after December 31, 2016, under rules similar to the rules of section 48(m) of the Internal Revenue Code of 1986 (as in effect on the day before the date of the enactment of the Revenue Reconciliation Act of 1990).

(2) EXTENSION OF COMBINED HEAT AND POWER SYSTEM PROPERTY. — The amendment made by subsection (e) shall apply to property placed in service after December 31, 2016.

(3) PHASEOUTS AND TERMINATIONS. — The amendments made by subsection (b) shall take effect on the date of the enactment of this Act.

SEC. 40412. EXTENSION OF SPECIAL ALLOWANCE FOR SECOND GENERATION BIOFUEL PLANT PROPERTY.

(a) IN GENERAL. — Section 168(l)(2)(D) is amended by striking "January 1, 2017" and inserting "January 1, 2018".

(b) EFFECTIVE DATE. — The amendment made by this section shall apply to property placed in service after December 31, 2016.

SEC. 40413. EXTENSION OF ENERGY EFFICIENT COMMERCIAL BUILDINGS DEDUCTION.

(a) IN GENERAL. — Section 179D(h) is amended by striking "December 31, 2016" and inserting "December 31, 2017".

(b) EFFECTIVE DATE. — The amendment made by this section shall apply to property placed in service after December 31, 2016.

SEC. 40414. EXTENSION OF SPECIAL RULE FOR SALES OR DISPOSITIONS TO IMPLEMENT FERC OR STATE ELECTRIC RESTRUCTURING POLICY FOR QUALIFIED ELECTRIC UTILITIES.

(a) IN GENERAL. — Section 451(k)(3), as amended by section 13221 of Public Law 115-97, is amended by striking "January 1, 2017" and inserting "January 1, 2018".

(b) EFFECTIVE DATE. — The amendment made by this section shall apply to dispositions after December 31, 2016.

SEC. 40415. EXTENSION OF EXCISE TAX CREDITS RELATING TO ALTERNATIVE FUELS.

(a) EXTENSION OF ALTERNATIVE FUELS EXCISE TAX CREDITS. —

(1) IN GENERAL. — Sections 6426(d)(5) and 6426(e)(3) are each amended by striking "December 31, 2016" and inserting "December 31, 2017".

(2) OUTLAY PAYMENTS FOR ALTERNATIVE FUELS. — Section 6427(e)(6)(C) is amended by striking "December 31, 2016" and inserting "December 31, 2017".

(3) EFFECTIVE DATE. — The amendments made by this subsection shall apply to fuel sold or used after December 31, 2016.

(b) SPECIAL RULE FOR 2017. — Notwithstanding any other provision of law, in the case of any alternative fuel credit properly determined under section 6426(d) of the Internal Revenue Code of 1986 for the period beginning on January 1, 2017, and ending on December 31, 2017, such credit shall be allowed, and any refund or payment attributable to such credit (including any payment under section 6427(e) of such Code) shall be made, only in such manner as the Secretary of the Treasury (or the Secretary's delegate) shall provide. Such Secretary shall issue guidance within 30 days after the date of the enactment of this Act providing for a one-time submission of claims covering periods described in the preceding sentence. Such guidance shall provide for a 180-day period for the submission of such claims (in such manner as prescribed by such Secretary) to begin not later than 30 days after such guidance is issued. Such claims shall be paid by such Secretary not later than 60 days after receipt. If such Secretary has not paid pursuant to a claim filed under this subsection within 60 days after the date of the filing of such claim, the claim shall be paid with interest from such date determined by using the overpayment rate and method under section 6621 of such Code.

SEC. 40416. EXTENSION OF OIL SPILL LIABILITY TRUST FUND FINANCING RATE.

(a) IN GENERAL. — Section 4611(f)(2) is amended by striking "December 31, 2017" and inserting "December 31, 2018".

(b) EFFECTIVE DATE. — The amendment made by this section shall apply on and after the first day of the first calendar month beginning after the date of the enactment of this Act.

Subtitle D — Modifications of Energy Incentives

SEC. 40501. MODIFICATIONS OF CREDIT FOR PRODUCTION FROM ADVANCED NUCLEAR POWER FACILITIES.

(a) TREATMENT OF UNUTILIZED LIMITATION AMOUNTS. — Section 45J(b) is amended —

(1) by inserting "or any amendment to" after "enactment of" in paragraph (4), and

(2) by adding at the end the following new paragraph:

"(5) ALLOCATION OF UNUTILIZED LIMITATION. —

"(A) IN GENERAL. — Any unutilized national megawatt capacity limitation shall be allocated by the Secretary under paragraph (3) as rapidly as is practicable after December 31, 2020 —

"(i) first to facilities placed in service on or before such date to the extent that such facilities did not receive an allocation equal to their full nameplate capacity, and

"(ii) then to facilities placed in service after such date in the order in which such facilities are placed in service.

"(B) UNUTILIZED NATIONAL MEGAWATT CAPACITY LIMITATION. — The term 'unutilized national megawatt capacity limitation' means the excess (if any) of —

"(i) 6,000 megawatts, over

"(ii) the aggregate amount of national megawatt capacity limitation allocated by the Secretary before January 1, 2021, reduced by any amount of such limitation which was allocated to a facility which was not placed in service before such date.

"(C) COORDINATION WITH OTHER PROVISIONS. — In the case of any unutilized national megawatt capacity limitation allocated by the Secretary pursuant to this paragraph —

"(i) such allocation shall be treated for purposes of this section in the same manner as an allocation of national megawatt capacity limitation, and

"(ii) subsection (d)(1)(B) shall not apply to any facility which receives such allocation.".

(b) TRANSFER OF CREDIT BY CERTAIN PUBLIC ENTITIES. —

(1) IN GENERAL. — Section 45J is amended —

(A) by redesignating subsection (e) as subsection (f), and

(B) by inserting after subsection (d) the following new subsection:

"(e) TRANSFER OF CREDIT BY CERTAIN PUBLIC ENTITIES. —

"(1) IN GENERAL. — If, with respect to a credit under subsection (a) for any taxable year —

"(A) a qualified public entity would be the taxpayer (but for this paragraph), and

"(B) such entity elects the application of this paragraph for such taxable year with respect to all (or any portion specified in such election) of such credit,

the eligible project partner specified in such election, and not the qualified public entity, shall be treated as the taxpayer for purposes of this title with respect to such credit (or such portion thereof).

"(2) DEFINITIONS. — For purposes of this subsection —

"(A) QUALIFIED PUBLIC ENTITY. — The term 'qualified public entity' means —

"(i) a Federal, State, or local government entity, or any political subdivision, agency, or instrumentality thereof,

"(ii) a mutual or cooperative electric company described in section 501(c)(12) or 1381(a)(2), or

"(iii) a not-for-profit electric utility which had or has received a loan or loan guarantee under the Rural Electrification Act of 1936.

"(B) ELIGIBLE PROJECT PARTNER. — The term 'eligible project partner' means any person who —

"(i) is responsible for, or participates in, the design or construction of the advanced nuclear power facility to which the credit under subsection (a) relates,

"(ii) participates in the provision of the nuclear steam supply system to such facility,

"(iii) participates in the provision of nuclear fuel to such facility,

"(iv) is a financial institution providing financing for the construction or operation of such facility, or

"(v) has an ownership interest in such facility.

"(3) SPECIAL RULES. —

"(A) APPLICATION TO PARTNERSHIPS. — In the case of a credit under subsection (a) which is determined at the partnership level —

"(i) for purposes of paragraph (1)(A), a qualified public entity shall be treated as the taxpayer with respect to such entity's distributive share of such credit, and

"(ii) the term 'eligible project partner' shall include any partner of the partnership.

"(B) TAXABLE YEAR IN WHICH CREDIT TAKEN INTO ACCOUNT. — In the case of any credit (or portion thereof) with respect to which an election is made under paragraph (1), such credit shall be taken into account in the first taxable year of the eligible project partner ending with, or after, the qualified public entity's taxable year with respect to which the credit was determined.

"(C) TREATMENT OF TRANSFER UNDER PRIVATE USE RULES. — For purposes of section 141(b)(1), any benefit derived by an eligible project partner in connection with an election under this subsection shall not be taken into account as a private business use.".

(2) SPECIAL RULE FOR PROCEEDS OF TRANSFERS FOR MUTUAL OR COOPERATIVE ELECTRIC COMPANIES. — Section 501(c)(12) is amended by adding at the end the following new subparagraph:

"(I) In the case of a mutual or cooperative electric company described in this paragraph or an organization described in section 1381(a)(2), income received or accrued in connection with an election under section 45J(e)(1) shall be treated as an amount collected from members for the sole purpose of meeting losses and expenses.".

(c) EFFECTIVE DATES. —

(1) TREATMENT OF UNUTILIZED LIMITATION AMOUNTS. — The amendment made by subsection (a) shall take effect on the date of the enactment of this Act.

(2) TRANSFER OF CREDIT BY CERTAIN PUBLIC ENTITIES. — The amendments made by subsection (b) shall apply to taxable years beginning after the date of the enactment of this Act.

TITLE II — MISCELLANEOUS PROVISIONS

SEC. 41101. AMENDMENT OF INTERNAL REVENUE CODE OF 1986.

Except as otherwise expressly provided, whenever in this title an amendment or repeal is expressed in terms of an amendment to, or repeal of, a section or other provision, the reference shall be considered to be made to a section or other provision of the Internal Revenue Code of 1986.

SEC. 41102. MODIFICATIONS TO RUM COVER OVER.

(a) EXTENSION. —

(1) IN GENERAL. — Section 7652(f)(1) is amended by striking "January 1, 2017" and inserting "January 1, 2022".

(2) EFFECTIVE DATE. — The amendment made by this subsection shall apply to distilled spirits brought into the United States after December 31, 2016.

(b) DETERMINATION OF TAXES ON RUM. —

(3) IN GENERAL. — Section 7652(e) is amended by adding at the end the following new paragraph:

"(5) DETERMINATION OF AMOUNT OF TAXES COLLECTED. — For purposes of this subsection, the amount of taxes collected under section 5001(a)(1) shall be determined without regard to section 5001(c).".

(2) EFFECTIVE DATE. — The amendment made by this subsection shall apply to distilled spirits brought into the United States after December 31, 2017.

SEC. 41103. EXTENSION OF WAIVER OF LIMITATIONS WITH RESPECT TO EXCLUDING FROM GROSS INCOME AMOUNTS RECEIVED BY WRONGFULLY INCARCERATED INDIVIDUALS.

(a) IN GENERAL. — Section 304(d) of the Protecting Americans from Tax Hikes Act of 2015 (26 U.S.C. 139F note) is amended by striking "1-year" and inserting "3-year".

(b) EFFECTIVE DATE. — The amendment made by this section shall take effect on the date of the enactment of this Act.

SEC. 41104. INDIVIDUALS HELD HARMLESS ON IMPROPER LEVY ON RETIREMENT PLANS.

(a) IN GENERAL. — Section 6343 is amended by adding at the end the following new subsection:

"(f) INDIVIDUALS HELD HARMLESS ON WRONGFUL LEVY, ETC. ON RETIREMENT PLAN. —

"(1) IN GENERAL. — If the Secretary determines that an individual's account or benefit under an eligible retirement plan (as defined in section 402(c)(8)(B)) has been levied upon in a case to which subsection (b) or (d)(2)(A) applies and property or an amount of money is returned to the individual —

"(A) the individual may contribute such property or an amount equal to the sum of —

"(i) the amount of money so returned by the Secretary, and

"(ii) interest paid under subsection (c) on such amount of money,

into such eligible retirement plan if such contribution is permitted by the plan, or into an individual retirement plan (other than an endowment contract) to which a rollover contribution of a distribution from such eligible retirement plan is permitted, but only if such contribution is made not later than the due date (not including extensions) for filing the return of tax for the taxable year in which such property or amount of money is returned, and

"(B) the Secretary shall, at the time such property or amount of money is returned, notify such individual that a contribution described in subparagraph (A) may be made.

"(2) TREATMENT AS ROLLOVER. — The distribution on account of the levy and any contribution under paragraph (1) with respect to the return of such distribution shall be treated for purposes of this title as if such distribution and contribution were described in section 402(c), 402A(c)(3), 403(a)(4), 403(b)(8), 408(d)(3), 408A(d)(3), or 457(e)(16), whichever is applicable; except that —

"(A) the contribution shall be treated as having been made for the taxable year in which the distribution on account of the levy occurred, and the interest paid under subsection (c) shall be treated as earnings within the plan after the contribution and shall not be included in gross income, and

"(B) such contribution shall not be taken into account under section 408(d)(3)(B).

"(3) REFUND, ETC., OF INCOME TAX ON LEVY. —

"(A) IN GENERAL. — If any amount is includible in gross income for a taxable year by reason of a distribution on account of a levy referred to in paragraph (1) and any portion of such amount is treated as a rollover contribution under paragraph (2), any tax imposed by chapter 1 on such portion shall not be assessed, and if assessed shall be abated, and if collected shall be credited or refunded as an overpayment made on the due date for filing the return of tax for such taxable year.

"(B) EXCEPTION. — Subparagraph (A) shall not apply to a rollover contribution under this subsection which is made from an eligible retirement plan which is not a Roth IRA or a designated Roth account (within the meaning of section 402A) to a Roth IRA or a designated Roth account under an eligible retirement plan.

"(4) INTEREST. — Notwithstanding subsection (d), interest shall be allowed under subsection (c) in a case in which the Secretary makes a determination described in subsection (d)(2)(A) with respect to a levy upon an individual retirement plan.

"(5) TREATMENT OF INHERITED ACCOUNTS. — For purposes of paragraph (1)(A), section 408(d)(3)(C) shall be disregarded in determining whether an individual retirement plan is a plan to which a rollover contribution of a distribution from the plan levied upon is permitted.".

(b) EFFECTIVE DATE. — The amendment made by this section shall apply to amounts paid under subsections (b), (c), and (d)(2)(A) of section 6343 of the Internal Revenue Code of 1986 in taxable years beginning after December 31, 2017.

SEC. 41105. MODIFICATION OF USER FEE REQUIREMENTS FOR INSTALLMENT AGREEMENTS.

(a) IN GENERAL. — Section 6159 is amended by redesignating subsection (f) as subsection (g) and by inserting after subsection (e) the following new subsection:

"(f) INSTALLMENT AGREEMENT FEES. —

"(1) LIMITATION ON FEE AMOUNT. — The amount of any fee imposed on an installment agreement under this section may not exceed the amount of such fee as in effect on the date of the enactment of this subsection.

"(2) WAIVER OR REIMBURSEMENT. — In the case of any taxpayer with an adjusted gross income, as determined for the most recent year for which such information is available, which does not exceed 250 percent of the applicable poverty level (as determined by the Secretary) —

"(A) if the taxpayer has agreed to make payments under the installment agreement by electronic payment through a debit instrument, no fee shall be imposed on an installment agreement under this section, and

"(B) if the taxpayer is unable to make payments under the installment agreement by electronic payment through a debit instrument, the Secretary shall, upon completion of the installment agreement, pay the taxpayer an amount equal to any such fees imposed.".

(b) EFFECTIVE DATE. — The amendments made by this section shall apply to agreements entered into on or after the date which is 60 days after the date of the enactment of this Act.

SEC. 41106. FORM 1040SR FOR SENIORS.

(a) IN GENERAL. — The Secretary of the Treasury (or the Secretary's delegate) shall make available a form, to be known as "Form 1040SR", for use by individuals to file the return of tax imposed by chapter 1 of the Internal Revenue Code of 1986. Such form shall be as similar as practicable to Form 1040EZ, except that —

(1) the form shall be available only to individuals who have attained age 65 as of the close of the taxable year,

(2) the form may be used even if income for the taxable year includes —

(A) social security benefits (as defined in section 86(d) of the Internal Revenue Code of 1986),

(B) distributions from qualified retirement plans (as defined in section 4974(c) of such Code), annuities or other such deferred payment arrangements,

(C) interest and dividends, or

(D) capital gains and losses taken into account in determining adjusted net capital gain (as defined in section 1(h)(3) of such Code), and

(3) the form shall be available without regard to the amount of any item of taxable income or the total amount of taxable income for the taxable year.

(b) EFFECTIVE DATE. — The form required by subsection (a) shall be made available for taxable years beginning after the date of the enactment of this Act.

SEC. 41107. ATTORNEYS FEES RELATING TO AWARDS TO WHISTLEBLOWERS.

(a) IN GENERAL. — Paragraph (21) of section 62(a) is amended to read as follows:

"(21) ATTORNEYS' FEES RELATING TO AWARDS TO WHISTLEBLOWERS. —

"(A) IN GENERAL. — Any deduction allowable under this chapter for attorney fees and court costs paid by, or on behalf of, the taxpayer in connection with any award under —

"(i) section 7623(b), or

"(ii) in the case of taxable years beginning after December 31, 2017, any action brought under —

"(I) section 21F of the Securities Exchange Act of 1934 (15 U.S.C. 78u-6),

"(II) a State false claims act, including a State false claims act with qui tam provisions, or

"(III) section 23 of the Commodity Exchange Act (7 U.S.C. 26).

"(B) MAY NOT EXCEED AWARD. — Subparagraph (A) shall not apply to any deduction in excess of the amount includible in the taxpayer's gross income for the taxable year on account of such award.".

(b) EFFECTIVE DATE. — The amendment made by this section shall apply to taxable years beginning after December 31, 2017.

SEC. 41108. CLARIFICATION OF WHISTLEBLOWER AWARDS.

(a) DEFINITION OF PROCEEDS. —

(1) IN GENERAL. — Section 7623 is amended by adding at the end the following new subsection:

"(c) PROCEEDS. — For purposes of this section, the term 'proceeds' includes —

"(1) penalties, interest, additions to tax, and additional amounts provided under the internal revenue laws, and

"(2) any proceeds arising from laws for which the Internal Revenue Service is authorized to administer, enforce, or investigate, including —

"(A) criminal fines and civil forfeitures, and

"(B) violations of reporting requirements.".

(2) CONFORMING AMENDMENTS. — Paragraphs (1) and (2)(A) of section 7623(b) are each amended by striking "collected proceeds (including penalties, interest, additions to tax, and additional amounts) resulting from the action" and inserting "proceeds collected as a result of the action".

(b) AMOUNT OF PROCEEDS DETERMINED WITHOUT REGARD TO AVAILABILITY. — Paragraphs (1) and (2)(A) of section 7623(b) are each amended by inserting "(determined without regard to whether such proceeds are available to the Secretary)" after "in response to such action".

(c) DISPUTED AMOUNT THRESHOLD. — Section 7623(b)(5)(B) is amended by striking "tax, penalties, interest, additions to tax, and additional amounts" and inserting "proceeds".

(d) EFFECTIVE DATE. — The amendments made by this section shall apply to information provided before, on, or after the date of the enactment of this Act with respect to which a final determination for an award has not been made before such date of enactment.

SEC. 41109. CLARIFICATION REGARDING EXCISE TAX BASED ON INVESTMENT INCOME OF PRIVATE COLLEGES AND UNIVERSITIES.

(a) IN GENERAL. — Subsection (b)(1) of section 4968, as added by section 13701(a) of Public Law 115-97, is amended —

(1) by inserting "tuition-paying" after "500" in subparagraph (A), and

(2) by inserting "tuition-paying" after "50 percent of the" in subparagraph (B).

(b) EFFECTIVE DATE. — The amendments made by this section shall apply to taxable years beginning after December 31, 2017.

SEC. 41110. EXCEPTION FROM PRIVATE FOUNDATION EXCESS BUSINESS HOLDING TAX FOR INDEPENDENTLY-OPERATED PHILANTHROPIC BUSINESS HOLDINGS.

(a) IN GENERAL. — Section 4943 is amended by adding at the end the following new subsection:

"(g) EXCEPTION FOR CERTAIN HOLDINGS LIMITED TO INDEPENDENTLY-OPERATED PHILANTHROPIC BUSINESS. —

"(1) IN GENERAL. — Subsection (a) shall not apply with respect to the holdings of a private foundation in any business enterprise which meets the requirements of paragraphs (2), (3), and (4) for the taxable year.

"(2) OWNERSHIP. — The requirements of this paragraph are met if —

"(A) 100 percent of the voting stock in the business enterprise is held by the private foundation at all times during the taxable year, and

"(B) all the private foundation's ownership interests in the business enterprise were acquired by means other than by purchase.

"(3) ALL PROFITS TO CHARITY. —

"(A) IN GENERAL. — The requirements of this paragraph are met if the business enterprise, not later than 120 days after the close of the taxable year, distributes an amount equal to its net operating income for such taxable year to the private foundation.

"(B) NET OPERATING INCOME. — For purposes of this paragraph, the net operating income of any business enterprise for any taxable year is an amount equal to the gross income of the business enterprise for the taxable year, reduced by the sum of —

"(i) the deductions allowed by chapter 1 for the taxable year which are directly connected with the production of such income,

"(ii) the tax imposed by chapter 1 on the business enterprise for the taxable year, and

"(iii) an amount for a reasonable reserve for working capital and other business needs of the business enterprise.

"(4) INDEPENDENT OPERATION. — The requirements of this paragraph are met if, at all times during the taxable year —

"(A) no substantial contributor (as defined in section 4958(c)(3)(C)) to the private foundation or family member (as determined under section 4958(f)(4)) of such a contributor is a director, officer, trustee, manager, employee, or contractor of the business enterprise (or an individual having powers or responsibilities similar to any of the foregoing),

"(B) at least a majority of the board of directors of the private foundation are persons who are not —

"(i) directors or officers of the business enterprise, or

"(ii) family members (as so determined) of a substantial contributor (as so defined) to the private foundation, and

"(C) there is no loan outstanding from the business enterprise to a substantial contributor (as so defined) to the private foundation or to any family member of such a contributor (as so determined).

"(5) CERTAIN DEEMED PRIVATE FOUNDATIONS EXCLUDED. — This subsection shall not apply to —

"(A) any fund or organization treated as a private foundation for purposes of this section by reason of subsection (e) or (f),

"(B) any trust described in section 4947(a)(1) (relating to charitable trusts), and

"(C) any trust described in section 4947(a)(2) (relating to split-interest trusts).".

(b) EFFECTIVE DATE. — The amendment made by this section shall apply to taxable years beginning after December 31, 2017.

SEC. 41111. RULE OF CONSTRUCTION FOR CRAFT BEVERAGE MODERNIZATION AND TAX REFORM.

(a) IN GENERAL. — Subpart A of part IX of subtitle C of title I of Public Law 115-97 is amended by adding at the end the following new section:

"SEC. 13809. RULE OF CONSTRUCTION.

"Nothing in this subpart, the amendments made by this subpart, or any regulation promulgated under this subpart or the amendments made by this subpart, shall be construed to preempt, supersede, or otherwise limit or restrict any State, local, or tribal law that prohibits or regulates the production or sale of distilled spirits, wine, or malt beverages.".

(b) EFFECTIVE DATE. — The amendment made by this section shall take effect as if included in Public Law 115–97.

SEC. 41112. SIMPLIFICATION OF RULES REGARDING RECORDS, STATEMENTS, AND RETURNS.

(a) IN GENERAL. — Subsection (a) of section 5555 is amended by adding at the end the following: "For calendar quarters beginning after the date of the enactment of this sentence, and before January 1, 2020, the Secretary shall permit a person to employ a unified system for any records, statements, and returns required to be kept, rendered, or made under this section for any beer produced in the brewery for which the tax imposed by section 5051 has been determined, including any beer which has been removed for consumption on the premises of the brewery.".

(b) EFFECTIVE DATE. — The amendment made by this section shall apply to calendar quarters beginning after the date of the enactment of this Act.

SEC. 41113. MODIFICATION OF RULES GOVERNING HARDSHIP DISTRIBUTIONS.

(a) IN GENERAL. — Not later than 1 year after the date of the enactment of this Act, the Secretary of the Treasury shall modify Treasury Regulation section 1.401(k)-1(d)(3)(iv)(E) to —

(1) delete the 6-month prohibition on contributions imposed by paragraph (2) thereof, and

(2) make any other modifications necessary to carry out the purposes of section 401(k)(2)(B)(i)(IV) of the Internal Revenue Code of 1986.

(b) EFFECTIVE DATE. — The revised regulations under this section shall apply to plan years beginning after December 31, 2018.

SEC. 41114. MODIFICATION OF RULES RELATING TO HARDSHIP WITHDRAWALS FROM CASH OR DEFERRED ARRANGEMENTS.

(a) IN GENERAL. — Section 401(k) is amended by adding at the end the following:

"(14) SPECIAL RULES RELATING TO HARDSHIP WITHDRAWALS. — For purposes of paragraph (2)(B)(i)(IV) —

"(A) AMOUNTS WHICH MAY BE WITHDRAWN. — The following amounts may be distributed upon hardship of the employee:

"(i) Contributions to a profit-sharing or stock bonus plan to which section 402(e)(3) applies.

"(ii) Qualified nonelective contributions (as defined in subsection (m)(4)(C)).

"(iii) Qualified matching contributions described in paragraph (3)(D)(ii)(I).

"(iv) Earnings on any contributions described in clause (i), (ii), or (iii).

"(B) NO REQUIREMENT TO TAKE AVAILABLE LOAN. — A distribution shall not be treated as failing to be made upon the hardship of an employee solely because the employee does not take any available loan under the plan.".

(b) CONFORMING AMENDMENT. — Section 401(k)(2)(B)(i)(IV) is amended to read as follows:

"(IV) subject to the provisions of paragraph (14), upon hardship of the employee, or".

(c) EFFECTIVE DATE. — The amendments made by this section shall apply to plan years beginning after December 31, 2018.

SEC. 41115. OPPORTUNITY ZONES RULE FOR PUERTO RICO.

(a) IN GENERAL. — Subsection (b) of section 1400Z-1 is amended by adding at the end the following new paragraph:

"(3) SPECIAL RULE FOR PUERTO RICO. — Each population census tract in Puerto Rico that is a low- income community shall be deemed to be certified and designated as a qualified opportunity zone, effective on the date of the enactment of Public Law 115–97.".

(b) CONFORMING AMENDMENT. — Section 1400Z-1(d)(1) is amended by inserting "and subsection (b)(3)" after "paragraph (2)".

SEC. 41116. TAX HOME OF CERTAIN CITIZENS OR RESIDENTS OF THE UNITED STATES LIVING ABROAD.

(a) IN GENERAL. — Paragraph (3) of section 911(d) is amended by inserting before the period at the end of the second sentence the following: ", unless such individual is serving in an area designated by the President of the United States by Executive order as a combat zone for purposes of section 112 in support of the Armed Forces of the United States".

(b) EFFECTIVE DATE. — The amendment made by this section shall apply to taxable years beginning after December 31, 2017.

SEC. 41117. TREATMENT OF FOREIGN PERSONS FOR RETURNS RELATING TO PAYMENTS MADE IN SETTLEMENT OF PAYMENT CARD AND THIRD PARTY NETWORK TRANSACTIONS.

(a) IN GENERAL. — Section 6050W(d)(1)(B) is amended by adding at the end the following: "Notwithstanding the preceding sentence, a person with only a foreign address shall not be treated as a participating payee with respect to any payment settlement entity solely because such person receives payments from such payment settlement entity in dollars.".

(b) EFFECTIVE DATE. — The amendment made by this section shall apply to returns for calendar years beginning after December 31, 2017.

SEC. 41118. REPEAL OF SHIFT IN TIME OF PAYMENT OF CORPORATE ESTIMATED TAXES.

The Trade Preferences Extension Act of 2015 is amended by striking section 803 (relating to time for payment of corporate estimated taxes).

SEC. 41119. ENHANCEMENT OF CARBON DIOXIDE SEQUESTRATION CREDIT.

(a) IN GENERAL. — Section 45Q is amended to read as follows:

"SEC. 45Q. CREDIT FOR CARBON OXIDE SEQUESTRATION.

"(a) GENERAL RULE. — For purposes of section 38, the carbon oxide sequestration credit for any taxable year is an amount equal to the sum of —

"(1) $20 per metric ton of qualified carbon oxide which is —

"(A) captured by the taxpayer using carbon capture equipment which is originally placed in service at a qualified facility before the date of the enactment of the Bipartisan Budget Act of 2018, and

"(B) disposed of by the taxpayer in secure geological storage and not used by the taxpayer as described in paragraph (2)(B),

"(2) $10 per metric ton of qualified carbon oxide which is —

"(A) captured by the taxpayer using carbon capture equipment which is originally placed in service at a qualified facility before the date of the enactment of the Bipartisan Budget Act of 2018, and

"(B)(i) used by the taxpayer as a tertiary injectant in a qualified enhanced oil or natural gas recovery project and disposed of by the taxpayer in secure geological storage, or

"(ii) utilized by the taxpayer in a manner described in subsection (f)(5),

"(3) the applicable dollar amount (as determined under subsection (b)(1)) per metric ton of qualified carbon oxide which is —

"(A) captured by the taxpayer using carbon capture equipment which is originally placed in service at a qualified facility on or after the date of the enactment of the Bipartisan Budget Act of 2018, during the 12-year period beginning on the date the equipment was originally placed in service, and

"(B) disposed of by the taxpayer in secure geological storage and not used by the taxpayer as described in paragraph (4)(B), and

"(4) the applicable dollar amount (as determined under subsection (b)(1)) per metric ton of qualified carbon oxide which is —

"(A) captured by the taxpayer using carbon capture equipment which is originally placed in service at a qualified facility on or after the date of the enactment of the Bipartisan Budget Act of 2018, during the 12-year period beginning on the date the equipment was originally placed in service, and

"(B)(i) used by the taxpayer as a tertiary injectant in a qualified enhanced oil or natural gas recovery project and disposed of by the taxpayer in secure geological storage, or

"(ii) utilized by the taxpayer in a manner described in subsection (f)(5).

"(b) APPLICABLE DOLLAR AMOUNT; ADDITIONAL EQUIPMENT; ELECTION. —

"(1) APPLICABLE DOLLAR AMOUNT. —

"(A) IN GENERAL. — The applicable dollar amount shall be an amount equal to —

"(i) for any taxable year beginning in a calendar year after 2016 and before 2027 —

"(I) for purposes of paragraph (3) of subsection (a), the dollar amount established by linear interpolation between $22.66 and $50 for each calendar year during such period, and

"(II) for purposes of paragraph (4) of such subsection, the dollar amount established by linear interpolation between $12.83 and $35 for each calendar year during such period, and

"(ii) for any taxable year beginning in a calendar year after 2026 —

"(I) for purposes of paragraph (3) of subsection (a), an amount equal to the product of $50 and the inflation adjustment factor for such calendar year determined under section 43(b)(3)(B) for such calendar year, determined by substituting '2025' for '1990', and

"(II) for purposes of paragraph (4) of such subsection, an amount equal to the product of $35 and the inflation adjustment factor for such calendar year determined under section 43(b)(3)(B) for such calendar year, determined by substituting '2025' for '1990'.

"(B) ROUNDING. — The applicable dollar amount determined under subparagraph (A) shall be rounded to the nearest cent.

"(2) INSTALLATION OF ADDITIONAL CARBON CAPTURE EQUIPMENT ON EXISTING QUALIFIED FACILITY. — In the case of a qualified facility placed in service before the date of the enactment of the Bipartisan Budget Act of 2018, for which additional carbon capture equipment is placed in service on or after the date of the enactment of such Act, the amount of qualified carbon oxide which is captured by the taxpayer shall be equal to —

"(A) for purposes of paragraphs (1)(A) and (2)(A) of subsection (a), the lesser of —

"(i) the total amount of qualified carbon oxide captured at such facility for the taxable year, or

"(ii) the total amount of the carbon dioxide capture capacity of the carbon capture equipment in service at such facility on the day before the date of the enactment of the Bipartisan Budget Act of 2018, and

"(B) for purposes of paragraphs (3)(A) and (4)(A) of such subsection, an amount (not less than zero) equal to the excess of —

"(i) the amount described in clause (i) of subparagraph (A), over

"(ii) the amount described in clause (ii) of such subparagraph.

"(3) ELECTION. — For purposes of determining the carbon oxide sequestration credit under this section, a taxpayer may elect to have the dollar amounts applicable under paragraph (1) or (2) of subsection (a) apply in lieu of the dollar amounts applicable under paragraph (3) or (4) of such subsection for each metric ton of qualified carbon oxide which is captured by the taxpayer using carbon capture equipment which is originally placed in service at a qualified facility on or after the date of the enactment of the Bipartisan Budget Act of 2018.

"(c) QUALIFIED CARBON OXIDE. — For purposes of this section —

"(1) IN GENERAL. — The term 'qualified carbon oxide' means —

"(A) any carbon dioxide which —

"(i) is captured from an industrial source by carbon capture equipment which is originally placed in service before the date of the enactment of the Bipartisan Budget Act of 2018,

"(ii) would otherwise be released into the atmosphere as industrial emission of greenhouse gas or lead to such release, and

"(iii) is measured at the source of capture and verified at the point of disposal, injection, or utilization,

"(B) any carbon dioxide or other carbon oxide which —

"(i) is captured from an industrial source by carbon capture equipment which is originally placed in service on or after the date of the enactment of the Bipartisan Budget Act of 2018,

"(ii) would otherwise be released into the atmosphere as industrial emission of greenhouse gas or lead to such release, and

"(iii) is measured at the source of capture and verified at the point of disposal, injection, or utilization, or

"(C) in the case of a direct air capture facility, any carbon dioxide which —

"(i) is captured directly from the ambient air, and

"(ii) is measured at the source of capture and verified at the point of disposal, injection, or utilization.

"(2) RECYCLED CARBON OXIDE. — The term 'qualified carbon oxide' includes the initial deposit of captured carbon oxide used as a tertiary injectant. Such term does not include carbon oxide that is recaptured, recycled, and re-injected as part of the enhanced oil and natural gas recovery process.

"(d) QUALIFIED FACILITY. — For purposes of this section, the term 'qualified facility' means any industrial facility or direct air capture facility —

"(1) the construction of which begins before January 1, 2024, and —

"(A) construction of carbon capture equipment begins before such date, or

"(B) the original planning and design for such facility includes installation of carbon capture equipment, and

"(2) which captures —

"(A) in the case of a facility which emits not more than 500,000 metric tons of carbon oxide into the atmosphere during the taxable year, not less than 25,000 metric tons of qualified carbon oxide during the taxable year which is utilized in a manner described in subsection (f)(5),

"(B) in the case of an electricity generating facility which is not described in subparagraph (A), not less than 500,000 metric tons of qualified carbon oxide during the taxable year, or

"(C) in the case of a direct air capture facility or any facility not described in subparagraph (A) or (B), not less than 100,000 metric tons of qualified carbon oxide during the taxable year.

"(e) DEFINITIONS. — For purposes of this section —

"(1) DIRECT AIR CAPTURE FACILITY. —

"(A) IN GENERAL. — Subject to subparagraph (B), the term 'direct air capture facility' means any facility which uses carbon capture equipment to capture carbon dioxide directly from the ambient air.

"(B) EXCEPTION. — The term 'direct air capture facility' shall not include any facility which captures carbon dioxide —

"(i) which is deliberately released from naturally occurring subsurface springs, or

"(ii) using natural photosynthesis.

"(2) QUALIFIED ENHANCED OIL OR NATURAL GAS RECOVERY PROJECT. — The term 'qualified enhanced oil or natural gas recovery project' has the meaning given the term 'qualified enhanced oil recovery project' by section 43(c)(2), by substituting 'crude oil or natural gas' for 'crude oil' in subparagraph (A)(i) thereof.

"(3) TERTIARY INJECTANT. — The term 'tertiary injectant' has the same meaning as when used within section 193(b)(1).

"(f) SPECIAL RULES. —

"(1) ONLY QUALIFIED CARBON OXIDE CAPTURED AND DISPOSED OF OR USED WITHIN THE UNITED STATES TAKEN INTO ACCOUNT. — The credit under this section shall apply only with respect to qualified carbon oxide the capture and disposal, use, or utilization of which is within —

"(A) the United States (within the meaning of section 638(1)), or

"(B) a possession of the United States (within the meaning of section 638(2)).

"(2) SECURE GEOLOGICAL STORAGE. — The Secretary, in consultation with the Administrator of the Environmental Protection Agency, the Secretary of Energy, and the Secretary of the Interior, shall establish regulations for determining adequate security measures for the geological storage of qualified carbon oxide under subsection (a) such that the qualified carbon oxide does not escape into the atmosphere. Such term shall include storage at deep saline formations, oil and gas reservoirs, and unminable coal seams under such conditions as the Secretary may determine under such regulations.

"(3) CREDIT ATTRIBUTABLE TO TAXPAYER. —

"(A) IN GENERAL. — Except as provided in subparagraph (B) or in any regulations prescribed by the Secretary, any credit under this section shall be attributable to —

"(i) in the case of qualified carbon oxide captured using carbon capture equipment which is originally placed in service at a qualified facility before the date of the enactment of the Bipartisan Budget Act of 2018, the person that captures and physically or contractually ensures the disposal, utilization, or use as a tertiary injectant of such qualified carbon oxide, and

"(ii) in the case of qualified carbon oxide captured using carbon capture equipment which is originally placed in service at a qualified facility on or after the date of the enactment of the Bipartisan Budget Act of 2018, the person that owns the carbon capture equipment and physically or contractually ensures the capture and disposal, utilization, or use as a tertiary injectant of such qualified carbon oxide.

"(B) ELECTION. — If the person described in subparagraph (A) makes an election under this subparagraph in such time and manner as the Secretary may prescribe by regulations, the credit under this section —

"(i) shall be allowable to the person that disposes of the qualified carbon oxide, utilizes the qualified carbon oxide, or uses the qualified carbon oxide as a tertiary injectant, and

"(ii) shall not be allowable to the person described in subparagraph (A).

"(4) RECAPTURE. — The Secretary shall, by regulations, provide for recapturing the benefit of any credit allowable under subsection (a) with respect to any qualified carbon oxide which ceases to be captured, disposed of, or used as a tertiary injectant in a manner consistent with the requirements of this section.

"(5) UTILIZATION OF QUALIFIED CARBON OXIDE. —

"(A) IN GENERAL. — For purposes of this section, utilization of qualified carbon oxide means —

"(i) the fixation of such qualified carbon oxide through photosynthesis or chemosynthesis, such as through the growing of algae or bacteria,

"(ii) the chemical conversion of such qualified carbon oxide to a material or chemical compound in which such qualified carbon oxide is securely stored, or

"(iii) the use of such qualified carbon oxide for any other purpose for which a commercial market exists (with the exception of use as a tertiary injectant in a qualified enhanced oil or natural gas recovery project), as determined by the Secretary.

"(B) MEASUREMENT. —

"(i) IN GENERAL. — For purposes of determining the amount of qualified carbon oxide utilized by the taxpayer under paragraph (2)(B)(ii) or (4)(B)(ii) of subsection (a), such amount shall be equal to the metric tons of qualified carbon oxide which the taxpayer demonstrates, based upon an analysis of lifecycle greenhouse gas emissions and subject to such requirements as the Secretary, in consultation with the Secretary of Energy and the Administrator of the Environmental Protection Agency, determines appropriate, were —

"(I) captured and permanently isolated from the atmosphere, or

"(II) displaced from being emitted into the atmosphere, through use of a process described in subparagraph (A).

"(ii) LIFECYCLE GREENHOUSE GAS EMISSIONS. — For purposes of clause (i), the term 'lifecycle greenhouse gas emissions' has the same meaning given such term under subparagraph (H) of section 211(o)(1) of the Clean Air Act (42 U.S.C. 7545(o)(1)), as in effect on the date of the enactment of the Bipartisan Budget Act of 2018, except that 'product' shall be substituted for 'fuel' each place it appears in such subparagraph.

"(6) ELECTION FOR APPLICABLE FACILITIES. —

"(A) IN GENERAL. — For purposes of this section, in the case of an applicable facility, for any taxable year in which such facility captures not less than 500,000 metric tons of qualified carbon oxide during the taxable year, the person described in paragraph (3)(A)(ii) may elect to have such facility, and any carbon capture equipment placed in service at such facility, deemed as having been placed in service on the date of the enactment of the Bipartisan Budget Act of 2018.

"(B) APPLICABLE FACILITY. — For purposes of this paragraph, the term 'applicable facility' means a qualified facility —

"(i) which was placed in service before the date of the enactment of the Bipartisan Budget Act of 2018, and

"(ii) for which no taxpayer claimed a credit under this section in regards to such facility for any taxable year ending before the date of the enactment of such Act.

"(7) INFLATION ADJUSTMENT. — In the case of any taxable year beginning in a calendar year after 2009, there shall be substituted for each dollar amount contained in paragraphs (1) and (2) of subsection (a) an amount equal to the product of —

"(A) such dollar amount, multiplied by

"(B) the inflation adjustment factor for such calendar year determined under section 43(b)(3)(B) for such calendar year, determined by substituting '2008' for '1990'.

"(g) APPLICATION OF SECTION FOR CERTAIN CARBON CAPTURE EQUIPMENT. — In the case of any carbon capture equipment placed in service before the date of the enactment of the Bipartisan Budget Act of 2018, the credit under this section shall apply with respect to qualified carbon oxide captured using such equipment before the end of the calendar year in which the Secretary, in consultation with the Administrator of the Environmental Protection Agency, certifies that, during the period beginning after October 3, 2008, a total of 75,000,000 metric tons of qualified carbon oxide have been taken into account in accordance with —

"(1) subsection (a) of this section, as in effect on the day before the date of the enactment of the Bipartisan Budget Act of 2018, and

"(2) paragraphs (1) and (2) of subsection (a) of this section. 

"(h) REGULATIONS. — The Secretary may prescribe such regulations and other guidance as may be necessary or appropriate to carry out this section, including regulations or other guidance to —

"(1) ensure proper allocation under subsection (a) for qualified carbon oxide captured by a taxpayer during the taxable year ending after the date of the enactment of the Bipartisan Budget Act of 2018, and

"(2) determine whether a facility satisfies the requirements under subsection (d)(1) during such taxable year.".

(b) EFFECTIVE DATE. — The amendment made by this section shall apply to taxable years beginning after December 31, 2017.

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