(a) Short title.—This title may be cited as the “Tax Cuts and Jobs Act”.

(b) Amendment of 1986 code.—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.

(a) In general.—Section 1 is amended by adding at the end the following new subsection:

“(j) Modifications for taxable years 2018 through 2025.—

“(1) IN GENERAL.—In the case of a taxable year beginning after December 31, 2017, and before January 1, 2026—

“(A) subsection (i) shall not apply, and

“(B) this section (other than subsection (i)) shall be applied as provided in paragraphs (2) through (7).

“(2) RATE TABLES.—

“(A) MARRIED INDIVIDUALS FILING JOINT RETURNS AND SURVIVING SPOUSES.—The following table shall be applied in lieu of the table contained in subsection (a):

“(B) HEADS OF HOUSEHOLDS.—The following table shall be applied in lieu of the table contained in subsection (b):

“(C) UNMARRIED INDIVIDUALS OTHER THAN SURVIVING SPOUSES AND HEADS OF HOUSEHOLDS.—The following table shall be applied in lieu of the table contained in subsection (c):

“(D) MARRIED INDIVIDUALS FILING SEPARATE RETURNS.—The following table shall be applied in lieu of the table contained in subsection (d):

“(E) ESTATES AND TRUSTS.—The following table shall be applied in lieu of the table contained in subsection (e):

“(F) REFERENCES TO RATE TABLES.—Any reference in this title to a rate of tax under subsection (c) shall be treated as a reference to the corresponding rate bracket under subparagraph (C) of this paragraph, except that the reference in section 3402(q)(1) to the third lowest rate of tax applicable under subsection (c) shall be treated as a reference to the fourth lowest rate of tax under subparagraph (C).

“(3) ADJUSTMENTS, ELIMINATION OF MARRIAGE PENALTY; ETC.—

“(A) NO ADJUSTMENT IN 2018.—The tables contained in paragraph (2) shall apply without adjustment for taxable years beginning after December 31, 2017, and before January 1, 2019.

“(B) SUBSEQUENT YEARS.—For taxable years beginning after December 31, 2018, the Secretary shall prescribe tables which shall apply in lieu of the tables contained in paragraph (2) in the same manner as under paragraphs (1) and (2) of subsection (f), except that in prescribing such tables—

“(i) subsection (f)(3) shall be applied by substituting ‘calendar year 2017’ for ‘calendar year 2016’ in subparagraph (A)(ii) thereof, and

“(ii) subsection (f)(7) shall not apply and—

“(I) the maximum taxable income in each of the rate brackets in the table contained in paragraph (2)(A) (and the minimum taxable income in the next higher taxable income bracket with respect to each such bracket in such table) shall be 200 percent of the maximum taxable income in the corresponding rate bracket in the table contained in paragraph (2)(C) (after any other adjustment under paragraph (3)), and

“(II) the comparable taxable income amounts in the table contained in paragraph (2)(D) shall be ½ of the amounts determined under subparagraph (A).

“(4) SPECIAL RULES FOR CERTAIN CHILDREN WITH UNEARNED INCOME.—

“(A) IN GENERAL.—In the case of a child to whom subsection (g) applies for the taxable year, the rules of subparagraphs (B) and (C) shall apply in lieu of the rule under subsection (g)(1).

“(B) MODIFICATIONS TO APPLICABLE RATE BRACKETS.—In determining the amount of tax imposed by this section for the taxable year on a child described in subparagraph (A), the income tax table otherwise applicable under this subsection to the child shall be applied with the following modifications:

“(i) 24-PERCENT BRACKET.—The maximum taxable income which is taxed at a rate below 24 percent shall not be more than the earned taxable income of such child.

“(ii) 35-PERCENT BRACKET.—The maximum taxable income which is taxed at a rate below 35 percent shall not be more than the sum of—

“(I) the earned taxable income of such child, plus

“(II) the minimum taxable income for the 35-percent bracket in the table under paragraph (2)(E) (as adjusted under paragraph (3)) for the taxable year.

“(iii) 38.5-PERCENT BRACKET.—The maximum taxable income which is taxed at a rate below 38.5 percent shall not be more than the sum of—

“(I) the earned taxable income of such child, plus

“(II) the minimum taxable income for the 38.5-percent bracket in the table under paragraph (2)(E) (as adjusted under paragraph (3)) for the taxable year.

“(C) COORDINATION WITH CAPITAL GAINS RATES.—For purposes of applying section 1(h) (after the modifications under paragraph (5))—

“(i) the maximum zero rate amount shall not be more than the sum of—

“(I) the earned taxable income of such child, plus

“(II) the amount in effect under paragraph (5)(B)(i)(IV) for the taxable year, and

“(ii) the maximum 15-percent rate amount shall not be more than the sum of—

“(I) the earned taxable income of such child, plus

“(II) the amount in effect under paragraph (5)(B)(ii)(IV) for the taxable year.

“(D) EARNED TAXABLE INCOME.—For purposes of this paragraph, the term ‘earned taxable income’ means, with respect to any child for any taxable year, the taxable income of such child reduced (but not below zero) by the net unearned income (as defined in subsection (g)(4)) of such child.

“(5) APPLICATION OF CURRENT INCOME TAX BRACKETS TO CAPITAL GAINS BRACKETS.—

“(A) IN GENERAL.—Section 1(h)(1) shall be applied—

“(i) by substituting ‘below the maximum zero rate amount’ for ‘which would (without regard to this paragraph) be taxed at a rate below 25 percent’ in subparagraph (B)(i), and

“(ii) by substituting ‘below the maximum 15-percent rate amount’ for ‘which would (without regard to this paragraph) be taxed at a rate below 39.6 percent’ in subparagraph (C)(ii)(I).

“(B) MAXIMUM AMOUNTS DEFINED.—For purposes of applying section 1(h) with the modifications described in subparagraph (A)—

“(i) MAXIMUM ZERO RATE AMOUNT.—The maximum zero rate amount shall be—

“(I) in the case of a joint return or surviving spouse, $77,200 (½ such amount in the case of a married individual filing a separate return),

“(II) in the case of an individual who is a head of household (as defined in section 2(b)), $51,700,

“(III) in the case of any other individual (other than an estate or trust), an amount equal to ½ of the amount in effect for the taxable year under clause (i), and

“(IV) in the case of an estate or trust, $2,600.

“(ii) MAXIMUM 15-PERCENT RATE AMOUNT.—The maximum 15-percent rate amount shall be—

“(I) in the case of a joint return or surviving spouse, $479,000 (½ such amount in the case of a married individual filing a separate return),

“(II) in the case of an individual who is the head of a household (as defined in section 2(b)), $452,400,

“(III) in the case of any other individual (other than an estate or trust), $425,800, and

“(IV) in the case of an estate or trust, $12,700.

“(C) INFLATION ADJUSTMENT.—In the case of any taxable year beginning after 2018, each of the dollar amounts in clauses (i) and (ii) of subparagraph (B) shall be increased by an amount equal to—

“(i) such dollar amount, multiplied by

“(ii) the cost-of-living adjustment determined under subsection (f)(3) for the calendar year in which the taxable year begins, determined by substituting ‘calendar year 2017’ for ‘calendar year 2016’ in subparagraph (A)(ii) thereof.

“(6) SECTION 15 NOT TO APPLY.—Section 15 shall not apply to any change in a rate of tax by reason of this subsection.”.

(b) Due diligence tax preparer requirement with respect to head of household filing status.—Subsection (g) of section 6695 is amended to read as follows:

“(g) Failure to be diligent in determining eligibility for certain tax benefits.—Any person who is a tax return preparer with respect to any return or claim for refund who fails to comply with due diligence requirements imposed by the Secretary by regulations with respect to determining—

“(1) eligibility to file as a head of household (as defined in section 2(b)) on the return, or

“(2) eligibility for, or the amount of, the credit allowable by section 24, 25A(a)(1), or 32,

shall pay a penalty of $500 for each such failure.”.

(c) Effective date.—The amendments made by this section shall apply to taxable years beginning after December 31, 2017.

(a) In general.—Subsection (f) of section 1 is amended by striking paragraph (3) and by inserting after paragraph (2) the following new paragraph:

“(3) COST-OF-LIVING ADJUSTMENT.—For purposes of this subsection—

“(A) IN GENERAL.—The cost-of-living adjustment for any calendar year is the percentage (if any) by which—

“(i) the C-CPI-U for the preceding calendar year, exceeds

“(ii) the CPI for calendar year 2016, multiplied by the amount determined under subparagraph (B).

“(B) AMOUNT DETERMINED.—The amount determined under this clause is the amount obtained by dividing—

“(i) the C-CPI-U for calendar year 2016, by

“(ii) the CPI for calendar year 2016.

“(C) SPECIAL RULE FOR ADJUSTMENTS WITH A BASE YEAR AFTER 2016.—For purposes of any provision of this title which provides for the substitution of a year after 2016 for ‘2016’ in subparagraph (A)(ii), subparagraph (A) shall be applied by substituting ‘the C-CPI-U for calendar year 2016’ for ‘the CPI for calendar year 2016’ and all that follows in clause (ii) thereof.”.

(b) C-CPI-U.—Subsection (f) of section 1 is amended by striking paragraph (7), by redesignating paragraph (6) as paragraph (7), and by inserting after paragraph (5) the following new paragraph:

“(6) C-CPI-U.—For purposes of this subsection—

“(A) IN GENERAL.—The term ‘C-CPI-U’ means the Chained Consumer Price Index for All Urban Consumers (as published by the Bureau of Labor Statistics of the Department of Labor). The values of the Chained Consumer Price Index for All Urban Consumers taken into account for purposes of determining the cost-of-living adjustment for any calendar year under this subsection shall be the latest values so published as of the date on which such Bureau publishes the initial value of the Chained Consumer Price Index for All Urban Consumers for the month of August for the preceding calendar year.

“(B) DETERMINATION FOR CALENDAR YEAR.—The C-CPI-U for any calendar year is the average of the C-CPI-U as of the close of the 12-month period ending on August 31 of such calendar year.”.

(c) Application to permanent tax tables.—Section 1(f)(2)(A) is amended by inserting “, determined by substituting ‘1992’ for ‘2016’ in paragraph (3)(A)(ii)”.

(d) Application to other Internal Revenue Code of 1986 provisions.—

(1) The following sections are each amended by striking “for ‘calendar year 1992’ in subparagraph (B)” and inserting “for ‘calendar year 2016’ in subparagraph (A)(ii)”:

(A) Section 23(h)(2).

(B) Paragraphs (1)(A)(ii) and (2)(A)(ii) of section 25A(h).

(C) Section 25B(b)(3)(B).

(D) Subsection (b)(2)(B)(ii)(II), and clauses (i) and (ii) of subsection (j)(1)(B), of section 32.

(E) Section 36B(f)(2)(B)(ii)(II).

(F) Section 41(e)(5)(C)(i).

(G) Subsections (e)(3)(D)(ii) and (h)(3)(H)(i)(II) of section 42.

(H) Section 45R(d)(3)(B)(ii).

(I) Section 62(d)(3)(B).

(J) Section 125(i)(2)(B).

(K) Section 135(b)(2)(B)(ii).

(L) Section 137(f)(2).

(M) Section 146(d)(2)(B).

(N) Section 147(c)(2)(H)(ii).

(O) Section 179(b)(6)(A)(ii).

(P) Subsections (b)(5)(C)(i)(II) and (g)(8)(B) of section 219.

(Q) Section 220(g)(2).

(R) Section 221(f)(1)(B).

(S) Section 223(g)(1)(B).

(T) Section 408A(c)(3)(D)(ii).

(U) Section 430(c)(7)(D)(vii)(II).

(V) Section 512(d)(2)(B).

(W) Section 513(h)(2)(C)(ii).

(X) Section 831(b)(2)(D)(ii).

(Y) Section 877A(a)(3)(B)(i)(II).

(Z) Section 2010(c)(3)(B)(ii).

(AA) Section 2032A(a)(3)(B).

(BB) Section 2503(b)(2)(B).

(CC) Section 4261(e)(4)(A)(ii).

(DD) Section 5000A(c)(3)(D)(ii).

(EE) Section 6323(i)(4)(B).

(FF) Section 6334(g)(1)(B).

(GG) Section 6601(j)(3)(B).

(HH) Section 6651(i)(1).

(II) Section 6652(c)(7)(A).

(JJ) Section 6695(h)(1).

(KK) Section 6698(e)(1).

(LL) Section 6699(e)(1).

(MM) Section 6721(f)(1).

(NN) Section 6722(f)(1).

(OO) Section 7345(f)(2).

(PP) Section 7430(c)(1).

(QQ) Section 9831(d)(2)(D)(ii)(II).

(2) Section 41(e)(5)(C)(ii) is amended—

(A) by striking “1(f)(3)(B)” and inserting “1(f)(3)(A)(ii)”, and

(B) by striking “1992” and inserting “2016”.

(3) Section 42(h)(6)(G) is amended—

(A) by striking “for ‘calendar year 1987’” in clause (i)(II) and inserting “for ‘calendar year 2016’ in subparagraph (A)(ii) thereof”, and

(B) by striking “if the CPI for any calendar year” and all that follows in clause (ii) and inserting “if the C-CPI-U for any calendar year (as defined in section 1(f)(6)) exceeds the C-CPI-U for the preceding calendar year by more than 5 percent, the C-CPI-U for the base calendar year shall be increased such that such excess shall never be taken into account under clause (i). In the case of a base calendar year before 2017, the C-CPI-U for such year shall be determined by multiplying the CPI for such year by the amount determined under section 1(f)(3)(B).”.

(4) Section 132(f)(6)(A)(ii) is amended by striking “for ‘calendar year 1992’” and inserting “for ‘calendar year 2016’ in subparagraph (A)(ii) thereof”.

(5) Section 162(o)(3) is amended by striking “adjusted for changes in the Consumer Price Index (as defined in section 1(f)(5)) since 1991” and inserting “adjusted by increasing any such amount under the 1991 agreement by an amount equal to—

“(A) such amount, multiplied by

“(B) the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which the taxable year begins, by substituting ‘calendar year 1990’ for ‘calendar year 2016’ in subparagraph (A)(ii) thereof”.

(6) So much of clause (ii) of section 213(d)(10)(B) as precedes the last sentence is amended to read as follows:

“(ii) MEDICAL CARE COST ADJUSTMENT.—For purposes of clause (i), the medical care cost adjustment for any calendar year is the percentage (if any) by which—

“(I) the medical care component of the C-CPI-U (as defined in section 1(f)(6)) for August of the preceding calendar year, exceeds

“(II) such component of the CPI (as defined in section 1(f)(4)) for August of 1996, multiplied by the amount determined under section 1(f)(3)(B).”.

(7) Section 877(a)(2) is amended by striking “for ‘1992’ in subparagraph (B)” and inserting “for ‘2016’ in subparagraph (A)(ii)”.

(8) Section 911(b)(2)(D)(ii)(II) is amended by striking “for ‘1992’ in subparagraph (B)” and inserting “for ‘2016’ in subparagraph (A)(ii)”.

(9) Paragraph (2) of section 1274A(d) is amended to read as follows:

“(2) ADJUSTMENT FOR INFLATION.—In the case of any debt instrument arising out of a sale or exchange during any calendar year after 1989, each dollar amount contained in the preceding provisions of this section shall be increased by an amount equal to—

“(A) such amount, multiplied by

“(B) the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which the taxable year begins, by substituting ‘calendar year 1988’ for ‘calendar year 2016’ in subparagraph (A)(ii) thereof.

Any increase under the preceding sentence shall be rounded to the nearest multiple of $100 (or, if such increase is a multiple of $50, such increase shall be increased to the nearest multiple of $100).”.

(10) Section 4161(b)(2)(C)(i)(II) is amended by striking “for ‘1992’ in subparagraph (B)” and inserting “for ‘2016’ in subparagraph (A)(ii)”.

(11) Section 4980I(b)(3)(C)(v)(II) is amended by striking “for ‘1992’ in subparagraph (B)” and inserting “for ‘2016’ in subparagraph (A)(ii)”.

(12) Section 6039F(d) is amended by striking “subparagraph (B) thereof shall be applied by substituting ‘1995’ for ‘1992’” and inserting “subparagraph (A)(ii) thereof shall be applied by substituting ‘1995’ for ‘2016’”.

(13) Section 7872(g)(5) is amended to read as follows:

“(5) ADJUSTMENT OF LIMIT FOR INFLATION.—In the case of any loan made during any calendar year after 1986, the dollar amount in paragraph (2) shall be increased by an amount equal to—

“(A) such amount, multiplied by

“(B) the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which the taxable year begins, by substituting ‘calendar year 1985’ for ‘calendar year 2016’ in subparagraph (A)(ii) thereof.

Any increase under the preceding sentence shall be rounded to the nearest multiple of $100 (or, if such increase is a multiple of $50, such increase shall be increased to the nearest multiple of $100).”.

(e) Effective date.—The amendments made by this section shall apply to taxable years beginning after December 31, 2017.

(a) In general.—Part VI of subchapter B of chapter 1 is amended by adding at the end the following new section:

(b) Accuracy-related penalty on determination of applicable percentage.—Section 6662(d)(1) is amended by inserting at the end the following new subparagraph:

“(C) SPECIAL RULE FOR TAXPAYERS CLAIMING SECTION 199A DEDUCTION.—In the case of any taxpayer who claims the deduction allowed under section 199A for the taxable year, subparagraph (A) shall be applied by substituting ‘5 percent’ for ‘10 percent’.”.

(c) Conforming amendments.—

(1) Section 170(b)(2)(D) is amended by striking “, and” at the end of clause (iv), by redesignating clause (v) as clause (vi), and by inserting after clause (iv) the following new clause:

“(v) section 199A, and”.

(2) Section 172(d) is amended by adding at the end the following new paragraph:

“(8) QUALIFIED BUSINESS INCOME DEDUCTION.—The deduction under section 199A shall not be allowed.”.

(3) Section 246(b)(1) is amended by inserting “199A,” before “243(a)(1)”.

(4) Section 613(a) is amended by inserting “and without the deduction under section 199A” after “and without the deduction under section 199”.

(5) Section 613A(d)(1) is amended by redesignating subparagraphs (C), (D), and (E) as subparagraphs (D), (E), and (F), respectively, and by inserting after subparagraph (B), the following new subparagraph:

“(C) any deduction allowable under section 199A,”.

(6) The table of sections for part VI of subchapter B of chapter 1 is amended by inserting at the end the following new item:

“Sec. 199A. Qualified business income.”.

(d) Effective date.—The amendments made by this section shall apply to taxable years beginning after December 31, 2017.

(a) In general.—Section 461 is amended by adding at the end the following new subsection:

“(l) Limitation on excess business losses of noncorporate taxpayers.—

“(1) LIMITATION.—In the case of taxable year of a taxpayer other than a corporation beginning after December 31, 2017, and before January 1, 2026—

“(A) subsection (j) (relating to limitation on excess farm losses of certain taxpayers) shall not apply, and

“(B) any excess business loss of the taxpayer for the taxable year shall not be allowed.

“(2) DISALLOWED LOSS CARRYOVER.—Any loss which is disallowed under paragraph (1) shall be treated as a net operating loss carryover to the following taxable year under section 172.

“(3) EXCESS BUSINESS LOSS.—For purposes of this subsection—

“(A) IN GENERAL.—The term ‘excess business loss’ means the excess (if any) of—

“(i) the aggregate deductions of the taxpayer for the taxable year which are attributable to trades or businesses of such taxpayer (determined without regard to whether or not such deductions are disallowed for such taxable year under paragraph (1)), over

“(ii) the sum of—

“(I) the aggregate gross income or gain of such taxpayer for the taxable year which is attributable to such trades or businesses, plus

“(II) $250,000 (200 percent of such amount in the case of a joint return).

“(B) ADJUSTMENT FOR INFLATION.—In the case of any taxable year beginning after December 31, 2018, the $250,000 amount in subparagraph (A)(ii)(II) shall be increased by an amount equal to—

“(i) such dollar amount, multiplied by

“(ii) the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which the taxable year begins.

If any amount as increased under the preceding sentence is not a multiple of $1,000, such amount shall be rounded to the nearest multiple of $1,000.

“(4) APPLICATION OF SUBSECTION IN CASE OF PARTNERSHIPS AND S CORPORATIONS.—In the case of a partnership or S corporation—

“(A) this subsection shall be applied at the partner or shareholder level, and

“(B) each partner's or shareholder's allocable share of the items of income, gain, deduction, or loss of the partnership or S corporation for any taxable year from trades or businesses attributable to the partnership or S corporation shall be taken into account by the partner or shareholder in applying this subsection to the taxable year of such partner or shareholder with or within which the taxable year of the partnership or S corporation ends.

For purposes of this paragraph, in the case of an S corporation, an allocable share shall be the shareholder’s pro rata share of an item.

“(5) ADDITIONAL REPORTING.—The Secretary shall prescribe such additional reporting requirements as the Secretary determines appropriate to carry out the purposes of this subsection.

“(6) COORDINATION WITH SECTION 469.—This subsection shall be applied after the application of section 469.”.

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

(a) In general.—Subsection (c) of section 63 is amended by adding at the end the following new paragraph:

“(7) SPECIAL RULES FOR TAXABLE YEARS 2018 THROUGH 2025.—In the case of a taxable year beginning after December 31, 2017, and before January 1, 2026—

“(A) INCREASE IN STANDARD DEDUCTION.—Paragraph (2) shall be applied—

“(i) by substituting ‘$18,000’ for ‘$4,400’ in subparagraph (B), and

“(ii) by substituting ‘$12,000’ for ‘$3,000’ in subparagraph (C).

“(B) ADJUSTMENT FOR INFLATION.—

“(i) IN GENERAL.—Paragraph (4) shall not apply to the dollar amounts contained in paragraphs (2)(B) and (2)(C).

“(ii) ADJUSTMENT OF INCREASED AMOUNTS.—In the case of a taxable year beginning after 2018, the $18,000 and $12,000 amounts in subparagraph (A) shall each be increased by an amount equal to—

“(I) such dollar amount, multiplied by

“(II) the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which the taxable year begins, determined by substituting ‘2017’ for ‘2016’ in subparagraph (A)(ii) thereof.”.

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

(a) In general.—Section 24 is amended by adding at the end the following new subsection:

“(h) Special rules for taxable years 2018 through 2025.—

“(1) IN GENERAL.—In the case of a taxable year beginning after December 31, 2017, and before January 1, 2026, this section shall be applied as provided in paragraphs (2) through (8).

“(2) CREDIT AMOUNT.—Subsection (a) shall be applied by substituting ‘$2,000’ for ‘$1,000’.

“(3) LIMITATION.—In lieu of the amount determined under subsection (b)(2), the threshold amount shall be $500,000.

“(4) DEFINITION OF QUALIFYING CHILD.—Paragraph (1) of subsection (c) shall be applied by substituting ‘18’ for ‘17’.

“(5) PARTIAL CREDIT ALLOWED FOR CERTAIN OTHER DEPENDENTS.—

“(A) IN GENERAL.—The credit determined under subsection (a) (after the application of paragraph (2)) shall be increased by $500 for each dependent of the taxpayer (as defined in section 152) other than a qualifying child described in subsection (c) (after the application of paragraph (4)).

“(B) EXCEPTION FOR CERTAIN NONCITIZENS.—Subparagraph (A) shall not apply with respect to any individual who would not be a dependent if subparagraph (A) of section 152(b)(3) were applied without regard to all that follows ‘resident of the United States’.

“(6) MAXIMUM AMOUNT OF REFUNDABLE CREDIT.—

“(A) IN GENERAL.—Subsection (d)(1)(A) shall be applied without regard to paragraphs (2) and (5) of this subsection.

“(B) ADJUSTMENT FOR INFLATION.—In the case of a taxable year beginning after 2017, subsection (d)(1)(A) shall be applied as if the $1,000 amount in subsection (a) were increased (but not to exceed the amount under paragraph (2) of this subsection) by an amount equal to—

“(i) such dollar amount, multiplied by

“(ii) the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which the taxable year begins.

Any increase determined under the preceding sentence shall be rounded to the next highest multiple of $100.

“(7) EARNED INCOME THRESHOLD FOR REFUNDABLE CREDIT.—Subsection (d)(1)(B)(i) shall be applied by substituting ‘$2,500’ for ‘$3,000’.

“(8) SOCIAL SECURITY NUMBER REQUIRED.—No credit shall be allowed under subsection (d) to a taxpayer with respect to any qualifying child unless the taxpayer includes the social security number of such child on the return of tax for the taxable year. For purposes of the preceding sentence, the term ‘social security number’ means a social security number issued to an individual by the Social Security Administration, but only if the social security number is issued to a citizen of the United States or is issued pursuant to subclause (I) (or that portion of subclause (III) that relates to subclause (I)) of section 205(c)(2)(B)(i) of the Social Security Act.”.

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

(a) In general.—Section 170(b)(1) is amended by redesignating subparagraph (G) as subparagraph (H) and by inserting after subparagraph (F) the following new subparagraph:

“(G) INCREASED LIMITATION FOR CASH CONTRIBUTIONS.—

“(i) IN GENERAL.—In the case of any contribution of cash to an organization described in subparagraph (A), the total amount of such contributions which may be taken into account under subsection (a) for any taxable year beginning after December 31, 2017, and before January 1, 2026, shall not exceed 60 percent of the taxpayer’s contribution base for such year.

“(ii) CARRYOVER.—If the aggregate amount of contributions described in clause (i) exceeds the applicable limitation under clause (i) for any taxable year described in such clause, such excess shall be treated (in a manner consistent with the rules of subsection (d)(1)) as a charitable contribution to which clause (i) applies in each of the 5 succeeding years in order of time.

“(iii) COORDINATION WITH SUBPARAGRAPHS (A) AND (B).—

“(I) IN GENERAL.—Contributions taken into account under this subparagraph shall not be taken into account under subparagraph (A).

“(II) LIMITATION REDUCTION.—Subparagraphs (A) and (B) shall be applied for each taxable year described in clause (i), and each taxable year to which any contribution under this subparagraph is carried over under clause (ii), by reducing (but not below zero) the aggregate contribution limitation allowed for the taxable year under each such subparagraph by the aggregate contributions allowed under this subparagraph for such taxable year.”.

(b) Effective date.—The amendment made by this section shall apply to contributions in taxable years beginning after December 31, 2017.

(a) Increase in limitation for contributions from compensation of individuals with disabilities.—

(1) IN GENERAL.—Section 529A(b)(2)(B) is amended to read as follows:

“(B) except in the case of contributions under subsection (c)(1)(C), if such contribution to an ABLE account would result in aggregate contributions from all contributors to the ABLE account for the taxable year exceeding the sum of—

“(i) the amount in effect under section 2503(b) for the calendar year in which the taxable year begins, plus

“(ii) in the case of any contribution by a designated beneficiary described in paragraph (7) before January 1, 2026, the lesser of—

“(I) compensation (as defined by section 219(f)(1)) includible in the designated beneficiary's gross income for the preceding taxable year, or

“(II) an amount equal to the poverty line for a one-person household, as determined for the calendar year preceding the calendar year in which the taxable year begins.”.

(2) ELIGIBLE DESIGNATED BENEFICIARY.—Section 529A(b) is amended by adding at the end the following:

“(7) SPECIAL RULES RELATED TO CONTRIBUTION LIMIT.—For purposes of paragraph (2)(B)(ii)—

“(A) DESIGNATED BENEFICIARY.—A designated beneficiary described in this paragraph is an employee (including an employee within the meaning of section 401(c)) with respect to whom—

“(i) no contribution is made for the taxable year to a defined contribution plan (within the meaning of section 414(i)) with respect to which the requirements of section 401(a) or 403(a) are met,

“(ii) no contribution is made for the taxable year to an annuity contract described in section 403(b), and

“(iii) no contribution is made for the taxable year to an eligible deferred compensation plan described in section 457(b).

“(B) POVERTY LINE.—The term ‘poverty line’ has the meaning given such term by section 673 of the Community Services Block Grant Act (42 U.S.C. 9902).”.

(b) Allowance of saver’s credit for ABLE contributions by account holder.—Section 25B(d)(1) is amended by striking “and” at the end of subparagraph (B)(ii), by striking the period at the end of subparagraph (C) and inserting “, and”, and by inserting at the end the following:

“(D) the amount of contributions made before January 1, 2026, by such individual to the ABLE account (within the meaning of section 529A) of which such individual is the designated beneficiary.”.

(c) Effective date.—The amendments made by this section shall apply to taxable years beginning after the date of the enactment of this Act.

(a) In general.—Clause (i) of section 529(c)(3)(C) is amended by striking “or” at the end of subclause (I), by striking the period at the end of subclause (II) and inserting “, or”, and by adding at the end the following:

“(III) before January 1, 2026, to an ABLE account (as defined in section 529A(e)(6)) of the designated beneficiary or a member of the family of the designated beneficiary.

Subclause (III) shall not apply to so much of a distribution which, when added to all other contributions made to the ABLE account for the taxable year, exceeds the limitation under section 529A(b)(2)(B).”.

(b) Effective date.—The amendments made by this section shall apply to distributions after the date of the enactment of this Act.

(a) In general.—For purposes of the following provisions of the Internal Revenue Code of 1986, with respect to the applicable period, a qualified hazardous duty area shall be treated in the same manner as if it were a combat zone (as determined under section 112 of such Code):

(1) Section 2(a)(3) (relating to special rule where deceased spouse was in missing status).

(2) Section 112 (relating to the exclusion of certain combat pay of members of the Armed Forces).

(3) Section 692 (relating to income taxes of members of Armed Forces on death).

(4) Section 2201 (relating to members of the Armed Forces dying in combat zone or by reason of combat-zone-incurred wounds, etc.).

(5) Section 3401(a)(1) (defining wages relating to combat pay for members of the Armed Forces).

(6) Section 4253(d) (relating to the taxation of phone service originating from a combat zone from members of the Armed Forces).

(7) Section 6013(f)(1) (relating to joint return where individual is in missing status).

(8) Section 7508 (relating to time for performing certain acts postponed by reason of service in combat zone).

(b) Qualified hazardous duty area.—For purposes of this section, the term “qualified hazardous duty area” means the Sinai Peninsula of Egypt, if as of the date of the enactment of this section any member of the Armed Forces of the United States is entitled to special pay under section 310 of title 37, United States Code (relating to special pay; duty subject to hostile fire or imminent danger), for services performed in such location. Such term includes such location only during the period such entitlement is in effect.

(c) Applicable period.—

(1) IN GENERAL.—Except as provided in paragraph (2), the applicable period is—

(A) the portion of the first taxable year ending after June 9, 2015, which begins on such date, and

(B) any subsequent taxable year beginning before January 1, 2026.

(2) WITHHOLDING.—In the case of subsection (a)(5), the applicable period is—

(A) the portion of the first taxable year ending after the date of the enactment of this Act which begins on such date, and

(B) any subsequent taxable year beginning before January 1, 2026.

(d) Effective date.—

(1) IN GENERAL.—Except as provided in paragraph (2), the provisions of this section shall take effect on June 9, 2015.

(2) WITHHOLDING.—Subsection (a)(5) shall apply to remuneration paid after the date of the enactment of this Act.

(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 “2-year”.

(b) Effective date.—The amendments made by this section shall take effect on the date of the enactment of this Act.

(a) In general.—Section 529(e) is amended by adding at the end the following new paragraph:

“(6) TREATMENT OF UNBORN CHILDREN.—

“(A) IN GENERAL.—Nothing shall prevent an unborn child from being treated as a designated beneficiary or an individual under this section.

“(B) UNBORN CHILD.—For purposes of this paragraph—

“(i) IN GENERAL.—The term ‘unborn child’ means a child in utero.

“(ii) CHILD IN UTERO.—The term ‘child in utero’ means a member of the species homo sapiens, at any stage of development, who is carried in the womb.”.

(b) Effective date.—The amendment made by this section shall apply to contributions made after December 31, 2017.

(a) In general.—For purposes of this section, the term “Mississippi River Delta flood disaster area” means any area—

(1) with respect to which a major disaster has been declared by the President under section 401 of the Robert T. Stafford Disaster Relief and Emergency Assistance Act before September 3, 2016, by reason of severe storms and flooding occurring in Louisiana during August of 2016, or

(2) with respect to which a major disaster has been declared by the President under section 401 of the Robert T. Stafford Disaster Relief and Emergency Assistance Act before March 31, 2016, by reason of severe storms and flooding occurring in Louisiana, Texas, and Mississippi during March of 2016.

(b) Special rules for use of retirement funds with respect to Mississippi Delta areas damaged by 2016 flooding.—

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

(A) IN GENERAL.—Section 72(t) of the Internal Revenue Code of 1986 shall not apply to any qualified Mississippi River Delta flooding distribution.

(B) AGGREGATE DOLLAR LIMITATION.—

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

(I) $100,000, over

(II) the aggregate amounts treated as qualified Mississippi River Delta flooding distributions received by such individual for all prior taxable years.

(ii) TREATMENT OF PLAN DISTRIBUTIONS.—If a distribution to an individual would (without regard to clause (i)) be a qualified Mississippi River Delta flooding distribution, a plan shall not be treated as violating any requirement of this title merely because the plan treats such distribution as a qualified Mississippi River Delta flooding 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.

(iii) CONTROLLED GROUP.—For purposes of clause (ii), 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.

(C) AMOUNT DISTRIBUTED MAY BE REPAID.—

(i) IN GENERAL.—Any individual who receives a qualified Mississippi River Delta flooding 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.

(ii) TREATMENT OF REPAYMENTS OF DISTRIBUTIONS FROM ELIGIBLE RETIREMENT PLANS OTHER THAN IRAS.—For purposes of this title, if a contribution is made pursuant to clause (i) with respect to a qualified Mississippi River Delta flooding 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 Mississippi River Delta flooding distribution in an eligible rollover distribution (as defined in section 402(c)(4) of the Internal Revenue Code of 1986) and as having transferred the amount to the eligible retirement plan in a direct trustee to trustee transfer within 60 days of the distribution.

(iii) TREATMENT OF REPAYMENTS FOR DISTRIBUTIONS FROM IRAS.—For purposes of the Internal Revenue Code of 1986, if a contribution is made pursuant to clause (i) with respect to a qualified Mississippi River Delta flooding distribution from an individual retirement plan (as defined by section 7701(a)(37) of the Internal Revenue Code of 1986), then, to the extent of the amount of the contribution, the qualified Mississippi River Delta flooding 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.

(D) DEFINITIONS.—For purposes of this paragraph—

(i) QUALIFIED MISSISSIPPI RIVER DELTA FLOODING DISTRIBUTION.—Except as provided in subparagraph (B), the term “qualified Mississippi River Delta flooding distribution” means—

(I) any distribution from an eligible retirement plan made on or after August 11, 2016, and before January 1, 2018, to an individual whose principal place of abode on August 11, 2016, was located in the portion of Mississippi River Delta disaster area described in subsection (a)(1) and who has sustained an economic loss by reason of the severe storms and flooding giving rise to the Presidential declaration described in subsection (a)(1), or

(II) any distribution from an eligible retirement plan made on or after March 1, 2016, and before January 1, 2018, to an individual whose principal place of abode on March 1, 2016, was located in the portion of Mississippi River Delta disaster area described in subsection (a)(2) and who has sustained an economic loss by reason of the severe storms and flooding giving rise to the Presidential declaration described in subsection (a)(2).

(ii) 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.

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

(i) IN GENERAL.—In the case of any qualified Mississippi River Delta flooding distribution, unless the taxpayer elects not to have this subparagraph 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.

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

(F) SPECIAL RULES.—

(i) 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 Mississippi River Delta flooding distributions shall not be treated as eligible rollover distributions.

(ii) QUALIFIED MISSISSIPPI RIVER DELTA FLOODING DISTRIBUTIONS TREATED AS MEETING PLAN DISTRIBUTION REQUIREMENTS.—For purposes of the Internal Revenue Code of 1986, a qualified Mississippi River Delta flooding 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 the Internal Revenue Code of 1986.

(2) PROVISIONS RELATING TO PLAN AMENDMENTS.—

(A) IN GENERAL.—If this paragraph 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 subparagraph (B)(ii)(I).

(B) AMENDMENTS TO WHICH SUBSECTION APPLIES.—

(i) IN GENERAL.—This paragraph 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 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, 2018, or such later date as the Secretary prescribes.

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

(ii) CONDITIONS.—This paragraph shall not apply to any amendment unless—

(I) during the period—

(aa) beginning on the date that this section or the regulation described in clause (i)(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

(bb) ending on the date described in clause (i)(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.

(c) Special rules for personal casualty losses related to Louisiana severe storms and flooding.—

(1) IN GENERAL.—If an individual has a net disaster loss for any taxable year beginning after December 31, 2017, and before January 1, 2026—

(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 paragraph, 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—

(A) in the portion of the Mississippi River Delta flood disaster area described in subsection (a)(1) on or after August 11, 2016, and which are attributable to the severe storms and flooding giving rise to the Presidential declaration described in subsection (a)(1), or

(B) in the portion of the Mississippi River Delta flood disaster area described in subsection (a)(2) on or after March 1, 2016, and which are attributable to the severe storms and flooding giving rise to the Presidential declaration described in subsection (a)(2).

(a) In general.—Section 108(f) is amended by adding at the end the following new paragraph:

“(5) DISCHARGES ON ACCOUNT OF DEATH OR DISABILITY.—

“(A) IN GENERAL.—In the case of an individual, gross income for any taxable year beginning after December 31, 2017, and before January 1, 2026, does not include any amount which (but for this subsection) would be includible in gross income for such taxable year by reasons of the discharge (in whole or in part) of any loan described in subparagraph (B) if such discharge was—

“(i) pursuant to subsection (a) or (d) of section 437 of the Higher Education Act of 1965 or the parallel benefit under part D of title IV of such Act (relating to the repayment of loan liability),

“(ii) pursuant to section 464(c)(1)(F) of such Act, or

“(iii) otherwise discharged on account of the death or total and permanent disability of the student.

“(B) LOANS DESCRIBED.—A loan is described in this subparagraph if such loan is—

“(i) a student loan (as defined in paragraph (2)), or

“(ii) a private education loan (as defined in section 140(7) of the Consumer Credit Protection Act (15 U.S.C. 1650(7))).”.

(b) Effective date.—The amendment made by this section shall apply to discharges of indebtedness after December 31, 2017.

(a) In general.—Subparagraph (D) of section 62(a)(2) is amended by striking “$250” and inserting “$250 ($500 in the case of taxable years beginning after December 31, 2017, and before January 1, 2026)”.

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

(a) In general.—Subsection (d) of section 151 is amended—

(1) by striking “In the case of” in paragraph (4) and inserting “Except as provided in paragraph (5), in the case of”, and

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

“(5) SPECIAL RULES FOR TAXABLE YEARS 2018 THROUGH 2025.—In the case of a taxable year beginning after December 31, 2017, and before January 1, 2026—

“(A) EXEMPTION AMOUNT.—The term ‘exemption amount’ means zero.

“(B) REFERENCES.—For purposes of any other provision of this title, the reduction of the exemption amount to zero under subparagraph (A) shall not be taken into account in determining whether a deduction is allowed or allowable, or whether a taxpayer is entitled to a deduction, under this section.”.

(b) Application to estates and trusts.—Section 642(b)(2)(C) is amended by adding at the end the following new clause:

“(iii) YEARS WHEN PERSONAL EXEMPTION AMOUNT IS ZERO.—

“(I) IN GENERAL.—In the case of any taxable year in which the exemption amount under section 151(d) is zero, clause (i) shall be applied by substituting ‘$4,150’ for ‘the exemption amount under section 151(d)’.

“(II) INFLATION ADJUSTMENT.—In the case of any calendar year beginning after 2018, the $4,150 amount in subparagraph (A) shall be increased by an amount equal to—

“(aa) such dollar amount, multiplied by

“(bb) the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which the taxable year begins, determined by substituting ‘2017’ for ‘2016’ in subparagraph (A)(ii) thereof.

If any increase determined under the preceding sentence is not a multiple of $100, such increase shall be rounded to the next lowest multiple of $100.”.

(c) Exception for wage withholding rules.—Section 3402(a) is amended by adding at the end the following new paragraph:

“(3) YEARS WHEN PERSONAL EXEMPTION AMOUNT IS ZERO.—

“(A) IN GENERAL.—In the case of any taxable year in which the exemption amount under section 151(d) is zero, paragraph (2) shall be applied by substituting ‘$4,150’ for ‘the amount of one personal exemption provided in section 151(b)’.

“(B) INFLATION ADJUSTMENT.—In the case of any calendar year beginning after 2018, the $4,150 amount in subparagraph (A) shall be increased by an amount equal to—

“(i) such dollar amount, multiplied by

“(ii) the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which the taxable year begins, determined by substituting ‘2017’ for ‘2016’ in subparagraph (A)(ii) thereof.

If any increase determined under the preceding sentence is not a multiple of $100, such increase shall be rounded to the next lowest multiple of $100.”.

(d) Exception for determining property exempt from levy.—Section 6334(d) is amended by adding at the end the following new paragraph:

“(4) YEARS WHEN PERSONAL EXEMPTION AMOUNT IS ZERO.—

“(A) IN GENERAL.—In the case of any taxable year in which the exemption amount under section 151(d) is zero, paragraph (2) shall not apply and for purposes of paragraph (1) the term ‘exempt amount’ means an amount equal to—

“(i) the sum of the amount determined under subparagraph (B) and the standard deduction, divided by

“(ii) 52.

“(B) AMOUNT DETERMINED.—For purposes of subparagraph (A), the amount determined under this subparagraph is $4,150 multiplied by the number of the taxpayer’s dependents for the taxable year in which the levy occurs.

“(C) INFLATION ADJUSTMENT.—In the case of any taxable year beginning after 2018, the $4,150 amount in subparagraph (B) shall be increased by an amount equal to—

“(i) such dollar amount, multiplied by

“(ii) the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which the taxable year begins, determined by substituting ‘2017’ for ‘2016’ in subparagraph (A)(ii) thereof.

If any increase determined under the preceding sentence is not a multiple of $100, such increase shall be rounded to the next lowest multiple of $100.

“(D) VERIFIED STATEMENT.—Unless the taxpayer submits to the Secretary a written and properly verified statement specifying the facts necessary to determine the proper amount under subparagraph (A), subparagraph (A) shall be applied as if the taxpayer were a married individual filing a separate return with no dependents.”.

(e) Persons required to make returns of income.—Section 6012 is amended by adding at the end the following new subsection:

“(f) Special rule for taxable years 2018 through 2025.—In the case of a taxable year beginning after December 31, 2017, and before January 1, 2026, subsection (a)(1) shall not apply, and every individual who has gross income for the taxable year shall be required to make returns with respect to income taxes under subtitle A, except that a return shall not be required of—

“(1) an individual who is not married (determined by applying section 7703) and who has gross income for the taxable year which does not exceed the standard deduction applicable to such individual for such taxable year under section 63, or

“(2) an individual entitled to make a joint return if—

“(A) the gross income of such individual, when combined with the gross income of such individual’s spouse, for the taxable year does not exceed the standard deduction which would be applicable to the taxpayer for such taxable year under section 63 if such individual and such individual’s spouse made a joint return,

“(B) such individual and such individual’s spouse have the same household as their home at the close of the taxable year,

“(C) such individual’s spouse does not make a separate return, and

“(D) neither such individual nor such individual’s spouse is an individual described in section 63(c)(5) who has income (other than earned income) in excess of the amount in effect under section 63(c)(5)(A).

The amount specified in paragraph (1) or (2)(A) shall be increased by the amount of 1 additional standard deduction (within the meaning of section 63(c)(3)) in the case of an individual entitled to such deduction by reason of section 63(f)(1)(A) (relating to individuals age 65 or more), and by the amount of each additional standard deduction to which the individual or the individual's spouse is entitled by reason of section 63(f)(1).”.

(f) Effective date.—The amendments made by this section shall apply to taxable years beginning after December 31, 2017.

(a) In general.—Subsection (b) of section 164 is amended by adding at the end the following new paragraph:

“(6) SUSPENSION OF INDIVIDUAL DEDUCTIONS FOR TAXABLE YEARS 2018 THROUGH 2025.—In the case of an individual and a taxable year beginning after December 31, 2017, and before January 1, 2026—

“(A) paragraphs (1) and (2) of subsection (a) shall not apply to any real property or personal property taxes, other than taxes which are paid or accrued in carrying on a trade or business or an activity described in section 212, and

“(B) subsection (a)(3) shall not apply to any State or local taxes.”.

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

(a) In general.—Section 163(h)(3)(A)(ii) is amended by inserting “in the case of taxable years beginning before January 1, 2018, or after December 31, 2025,” before “home equity indebtedness”.

(b) Effective date.—The amendments made by this section shall apply to taxable years ending after December 31, 2017.

(a) In general.—Subsection (h) of section 165 is amended by adding at the end the following new paragraph:

“(5) LIMITATION FOR TAXABLE YEARS 2018 THROUGH 2025.—In the case of any loss of an individual described in subsection (c)(3) which (but for this paragraph) would be deductible in a taxable year beginning after December 31, 2017, and before January 1, 2026 (without regard to any election under subsection (i), such loss shall be allowed only to the extent it is attributable to a Federally declared disaster (as defined in subsection (i)(5)). The preceding sentence shall not apply to any deduction under section 172 which is carried to such a taxable year from a taxable year beginning before January 1, 2018.”.

(b) Effective date.—The amendment made by this section shall apply to losses incurred in taxable years beginning after December 31, 2017.

(a) In general.—Section 67 is amended by adding at the end the following new subsection:

“(g) Suspension for taxable years 2018 through 2025.—Notwithstanding subsection (a), no miscellaneous itemized deduction shall be allowed for any taxable year beginning after December 31, 2017, and before January 1, 2026.”.

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

(a) In general.—Section 68 is amended by adding at the end the following new subsection:

“(f) Section not to apply.—This section shall not apply to any taxable year beginning after December 31, 2017, and before January 1, 2026.”.

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

(a) In general.—Section 121 is amended by adding at the end the following new subsection:

“(h) Special rules for sales or exchanges in taxable years 2018 through 2025.—

“(1) IN GENERAL.—In applying this section with respect to sales or exchanges after December 31, 2017, and before January 1, 2026—

“(A) ‘8-year’ shall be substituted for ‘5-year’ each place it appears in subsections (a), (b)(5)(C)(ii)(I), and (c)(1)(B)(i)(I) and paragraphs (7), (9), (10), and (12) of subsection (d),

“(B) ‘5 years’ shall be substituted for ‘2 years’ each place it appears in subsections (a), (b)(3), (b)(4), (b)(5)(C)(ii)(III), and (c)(1)(B)(ii), and

“(C) ‘5-year’ shall be substituted for ‘2-year’ in subsection (b)(3).

“(2) EXCEPTION FOR BINDING CONTRACTS.—Paragraph (1) shall not apply to any sale or exchange with respect to which there was a written binding contract in effect before January 1, 2018, and at all times thereafter before the sale or exchange.”.

(b) Effective date.—The amendment made by this section shall apply to sales and exchanges after December 31, 2017.

(a) In general.—Section 132(f) is amended by adding at the end the following new paragraph:

“(8) SUSPENSION OF QUALIFIED BICYCLE COMMUTING REIMBURSEMENT EXCLUSION.—Paragraph (1)(D) shall not apply to any taxable year beginning after December 31, 2017, and before January 1, 2026.”.

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

(a) In general.—Section 132(g) is amended—

(1) by striking “For purposes of this section, the term” and inserting “For purposes of this section—

“(1) IN GENERAL.—The term”, and

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

“(2) SUSPENSION FOR TAXABLE YEARS 2018 THROUGH 2025.—Except in the case of a member of the Armed Forces of the United States on active duty who moves pursuant to a military order and incident to a permanent change of station, subsection (a)(6) shall not apply to any taxable year beginning after December 31, 2017, and before January 1, 2026.”.

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

(a) In general.—Section 217 is amended by adding at the end the following new subsection:

“(k) Suspension of deduction for taxable years 2018 through 2025.—Except in the case of an individual to whom subsection (g) applies, this section shall not apply to any taxable year beginning after December 31, 2017, and before January 1, 2026.”.

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

(a) In general.—Section 165(d) is amended by adding at the end the following: “For purposes of the preceding sentence, in the case of taxable years beginning after December 31, 2017, and before January 1, 2026, the term ‘losses from wagering transactions’ includes any deduction otherwise allowable under this chapter incurred in carrying on any wagering transaction.”.

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

(a) In general.—Section 2010(c)(3) is amended by adding at the end the following new subparagraph:

“(C) INCREASE IN BASIC EXCLUSION AMOUNT.—In the case of estates of decedents dying or gifts made after December 31, 2017, and before January 1, 2026, subparagraph (A) shall be applied by substituting ‘$10,000,000’ for ‘$5,000,000’.”.

(b) Conforming amendment.—Subsection (g) of section 2001 is amended to read as follows:

“(g) Modifications to tax payable.—

“(1) MODIFICATIONS TO GIFT TAX PAYABLE TO REFLECT DIFFERENT TAX RATES.—For purposes of applying subsection (b)(2) with respect to 1 or more gifts, the rates of tax under subsection (c) in effect at the decedent's death shall, in lieu of the rates of tax in effect at the time of such gifts, be used both to compute—

“(A) the tax imposed by chapter 12 with respect to such gifts, and

“(B) the credit allowed against such tax under section 2505, including in computing—

“(i) the applicable credit amount under section 2505(a)(1), and

“(ii) the sum of the amounts allowed as a credit for all preceding periods under section 2505(a)(2).

“(2) MODIFICATIONS TO ESTATE TAX PAYABLE TO REFLECT DIFFERENT BASIC EXCLUSION AMOUNTS.—The Secretary shall prescribe such regulations as may be necessary or appropriate to carry out this section with respect to any difference between—

“(A) the basic exclusion amount under section 2010(c)(3) applicable at the time of the decedent's death, and

“(B) the basic exclusion amount under such section applicable with respect to any gifts made by the decedent.”.

(c) Effective date.—The amendments made by this section shall apply to estates of decedents dying and gifts made after December 31, 2017.

(a) Extension of Time for Return of Property Subject to Levy.—Subsection (b) of section 6343 is amended by striking “9 months” and inserting “2 years”.

(b) Period of Limitation on Suits.—Subsection (c) of section 6532 is amended—

(1) by striking “9 months” in paragraph (1) and inserting “2 years”, and

(2) by striking “9-month” in paragraph (2) and inserting “2-year”.

(c) Effective Date.—The amendments made by this section shall apply to—

(1) levies made after the date of the enactment of this Act, and

(2) levies made on or before such date if the 9-month period has not expired under section 6343(b) of the Internal Revenue Code of 1986 (without regard to this section) as of such date.

(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.

(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.

(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 and ending before January 1, 2026.

It is the sense of the Senate that politically motivated budget cuts—

(a) In general.—Chapter 77 is amended by inserting after section 7526 the following new section:

(b) Clerical amendment.—The table of sections for chapter 77 is amended by inserting after the item relating to section 7526 the following new item:

“7526A. Return preparation programs for low-income taxpayers.”.

(a) The Secretary of the Treasury, or the Secretary’s delegate, shall continue to operate the IRS Free File Program as established by the Internal Revenue Service and published in the Federal Register on November 4, 2002 (67 Fed. Reg. 67247), including any subsequent agreements and governing rules established pursuant thereto.

(b) The IRS Free File Program shall continue to provide free commercial-type online individual income tax preparation and electronic filing services to the lowest 70 percent of taxpayers by income. The number of taxpayers eligible to receive such services each year shall be calculated by the Internal Revenue Service annually based on prior year aggregate taxpayer adjusted gross income data.

(c) In addition to the services described in subsection (b), and in the same manner, the IRS Free File Program shall continue to make available to all taxpayers (without regard to income) a basic, online electronic fillable forms utility.

(d) The IRS Free File Program shall continue to work cooperatively with the private sector to provide the free individual income tax preparation and the electronic filing services described in subsections (b) and (c).

(e) The IRS Free File Program shall work cooperatively with State government agencies to enhance and expand the use of the program to provide needed benefits to the taxpayer while reducing the cost of processing returns.

(f) Nothing in this section is intended to impact the continuity of services provided under Taxpayer Assistance Centers, Tax Counseling for the Elderly, and Volunteer Income Tax Assistance programs.

(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, and before January 1, 2026, any action brought under—

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

“(II) a State law relating to false or fraudulent claims that meets the requirements described in section 1909(b) of the Social Security Act (42 U.S.C. 1396h(b)), 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.

(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.

(a) In general.—Section 5000A(c) is amended—

(1) in paragraph (2)(B)(iii), by striking “2.5 percent” and inserting “Zero percent”, and

(2) in paragraph (3)—

(A) by striking “$695” in subparagraph (A) and inserting “$0”, and

(B) by striking subparagraph (D).

(b) Effective date.—The amendment made by this section shall apply to months beginning after December 31, 2018.

(a) In general.—Section 55(a) is amended by striking “There” and inserting “In the case of a taxpayer other than a corporation, there”.

(b) Conforming amendments.—

(1) Section 38(c)(6) is amended by adding at the end the following new subparagraph:

“(E) CORPORATIONS.—In the case of a corporation, this subsection shall be applied by treating the corporation as having a tentative minimum tax of zero.”.

(2) (A) Section 55(b)(1) is amended to read as follows:

“(1) AMOUNT OF TENTATIVE TAX.—

“(A) IN GENERAL.—The tentative minimum tax for the taxable year is the sum of—

“(i) 26 percent of so much of the taxable excess as does not exceed $175,000, plus

“(ii) 28 percent of so much of the taxable excess as exceeds $175,000.

The amount determined under the preceding sentence shall be reduced by the alternative minimum tax foreign tax credit for the taxable year.

“(B) TAXABLE EXCESS.—For purposes of this subsection, the term ‘taxable excess’ means so much of the alternative minimum taxable income for the taxable year as exceeds the exemption amount.

“(C) MARRIED INDIVIDUAL FILING SEPARATE RETURN.—In the case of a married individual filing a separate return, subparagraph (A) shall be applied by substituting 50 percent of the dollar amount otherwise applicable under clause (i) and cause (ii) thereof. For purposes of the preceding sentence, marital status shall be determined under section 7703.”.

(B) Section 59(a) is amended—

(i) by striking “subparagraph (A)(i) or (B)(i) of section 55(b)(1) (whichever applies) in lieu of the highest rate of tax specified in section 1 or 11 (whichever applies)” in paragraph (1)(C) and inserting “section 55(b)(1) in lieu of the highest rate of tax specified in section 1”, and

(ii) in paragraph (2), by striking “means” and all that follows and inserting “means the amount determined under the first sentence of section 55(b)(1).”.

(C) Section 897(a)(2)(A) is amended by striking “section 55(b)(1)(A)” and inserting “section 55(b)(1)”.

(D) Section 911(f) is amended—

(i) in paragraph (1)(B)—

(I) by striking “section 55(b)(1)(A)(ii)” and inserting “section 55(b)(1)(B)”, and

(II) by striking “section 55(b)(1)(A)(i)” and inserting “section 55(b)(1)(A)”, and

(ii) in paragraph (2)(B), by striking “section 55(b)(1)(A)(ii)” each place it appears and inserting “section 55(b)(1)(B)”.

(3) Section 55(c)(1) is amended by striking “, the section 936 credit allowable under section 27(b), and the Puerto Rico economic activity credit under section 30A”.

(4) Section 55(d) is amended—

(A) by striking paragraph (2) and redesignating paragraphs (3) and (4) as paragraphs (2) and (3), respectively,

(B) in paragraph (2) (as so redesignated), by inserting “and” at the end of subparagraph (B), by striking “, and” at the end of subparagraph (C) and inserting a period, and by striking subparagraph (D), and

(C) in paragraph (3) (as so redesignated)—

(i) by striking “(b)(1)(A)(i)” in subparagraph (B)(i) and inserting “(b)(1)(A)”, and

(ii) by striking “paragraph (3)” in subparagraph (B)(iii) and inserting “paragraph (2)”.

(5) Section 55 is amended by striking subsection (e).

(6) (A) Section 56 is amended by striking subsections (c) and (g).

(B) Section 847 is amended by striking the last sentence of paragraph (9).

(C) Section 848 is amended by striking subsection (i).

(7) Section 58(a) is amended by striking paragraph (3) and redesignating paragraph (4) as paragraph (3).

(8) Section 59 is amended by striking subsections (b) and (f).

(9) Section 11(d) is amended by striking “the taxes imposed by subsection (a) and section 55” and inserting “the tax imposed by subsection (a)”.

(10) Section 12 is amended by striking paragraph (7).

(11) Section 168(k) is amended by striking paragraph (4).

(12) Section 882(a)(1) is amended by striking “, 55,”.

(13) Section 962(a)(1) is amended by striking “sections 11 and 55” and inserting “section 11”.

(14) Section 1561(a) is amended—

(A) by inserting “and” at the end of paragraph (1), by striking “, and” at the end of paragraph (2) and inserting a period, and by striking paragraph (3), and

(B) by striking the last sentence.

(15) Section 6425(c)(1)(A) is amended to read as follows:

“(A) the tax imposed by section 11 or 1201(a), or subchapter L of chapter 1, whichever is applicable, over”.

(16) Section 6655(e)(2) is amended by striking “and alternative minimum taxable income” each place it appears in subparagraphs (A) and (B)(i).

(17) Section 6655(g)(1)(A) is amended by inserting “plus” at the end of clause (i), by striking clause (ii), and by redesignating clause (iii) as clause (ii).

(c) Effective date.—The amendments made by this section shall apply to taxable years beginning after December 31, 2017.

(a) In general.—Section 55(a) is amended by adding at the end the following new flush sentence:

“No tax shall be imposed by this section for any taxable year beginning after December 31, 2017, and before January 1, 2026, and the tentative minimum tax of any taxpayer for any such taxable year shall be zero for purposes of this title.”.

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

(a) Credits treated as refundable.—Section 53 is amended by adding at the end the following new subsection:

“(e) Portion of credit treated as refundable.—

“(1) IN GENERAL.—In the case of any taxable year beginning in 2018, 2019, 2020, or 2021, the limitation under subsection (c) shall be increased by the AMT refundable credit amount for such year.

“(2) AMT REFUNDABLE CREDIT AMOUNT.—For purposes of paragraph (1), the AMT refundable credit amount is an amount equal to 50 percent (100 percent in the case of a taxable year beginning in 2021) of the excess (if any) of—

“(A) the minimum tax credit determined under subsection (b) for the taxable year, over

“(B) the minimum tax credit allowed under subsection (a) for such year (before the application of this subsection for such year).

“(3) CREDIT REFUNDABLE.—For purposes of this title (other than this section), the credit allowed by reason of this subsection shall be treated as a credit allowed under subpart C (and not this subpart).

“(4) SHORT TAXABLE YEARS.—In the case of any taxable year of less than 365 days, the AMT refundable credit amount determined under paragraph (2) with respect to such taxable year shall be the amount which bears the same ratio to such amount determined without regard to this paragraph as the number of days in such taxable year bears to 365.”.

(b) Treatment of references.—Section 53(d) is amended by adding at the end the following new paragraph:

“(3) AMT TERM REFERENCES.—In the case of a corporation, any references in this subsection to section 55, 56, or 57 shall be treated as a reference to such section as in effect before the amendments made by Tax Cuts and Jobs Act”..”.

(c) Conforming amendment.—Section 1374(b)(3)(B) is amended by striking the last sentence thereof.

(d) Effective date.—

(1) IN GENERAL.—The amendments made by this section shall apply to taxable years beginning after December 31, 2017.

(2) CONFORMING AMENDMENT.—The amendment made by subsection (c) shall apply to taxable years beginning after December 31, 2021.

(a) In general.—Subsection (b) of section 11 is amended to read as follows:

“(b) Amount of tax.—The amount of the tax imposed by subsection (a) shall be 20 percent of taxable income.”.

(b) Conforming amendments.—

(1) The following sections are each amended by striking “section 11(b)(1)” and inserting “section 11(b)”:

(A) Section 280C(c)(3)(B)(ii)(II).

(B) Paragraphs (2)(B) and (6)(A)(ii) of section 860E(e).

(C) Section 7874(e)(1)(B)

(2) (A) Part I of subchapter P of chapter 1 is amended by striking section 1201 (and by striking the item relating to such section in the table of sections for such part).

(B) Section 12 is amended by striking paragraphs (4) and (6), and by redesignating paragraph (5) as paragraph (4).

(C) Section 453A(c)(3) is amended by striking “or 1201 (whichever is appropriate)”.

(D) Section 527(b) is amended—

(i) by striking paragraph (2), and

(ii) by striking all that precedes “is hereby imposed” and inserting:

“(b) Tax imposed.—A tax”.

(E) Sections 594(a) is amended by striking “taxes imposed by section 11 or 1201(a)” and inserting “tax imposed by section 11”.

(F) Section 691(c)(4) is amended by striking “1201,”.

(G) Section 801(a) is amended—

(i) by striking paragraph (2), and

(ii) by striking all that precedes “is hereby imposed” and inserting:

“(a) Tax imposed.—A tax”.

(H) Section 831(e) is amended by striking paragraph (1) and by redesignating paragraphs (2) and (3) as paragraphs (1) and (2), respectively.

(I) Sections 832(c)(5) and 834(b)(1)(D) are each amended by striking “sec. 1201 and following,”.

(J) Section 852(b)(3)(A) is amended by striking “section 1201(a)” and inserting “section 11(b)”.

(K) Section 857(b)(3) is amended—

(i) by striking subparagraph (A) and redesignating subparagraphs (B) through (F) as subparagraphs (A) through (E), respectively,

(ii) in subparagraph (C), as so redesignated—

(I) by striking “subparagraph (A)(ii)” in clause (i) thereof and inserting “paragraph (1)”,

(II) by striking “the tax imposed by subparagraph (A)(ii)” in clauses (ii) and (iv) thereof and inserting “the tax imposed by paragraph (1) on undistributed capital gain”,

(iii) in subparagraph (E), as so redesignated, by striking “subparagraph (B) or (D)” and inserting “subparagraph (A) or (C)”, and

(iv) by adding at the end the following new subparagraph:

“(F) UNDISTRIBUTED CAPITAL GAIN.—For purposes of this paragraph, the term ‘undistributed capital gain’ means the excess of the net capital gain over the deduction for dividends paid (as defined in section 561) determined with reference to capital gain dividends only.”.

(L) Section 882(a)(1), as amended by section 12001, is amended by striking “or 1201(a)”.

(M) Section 904(b) is amended—

(i) by striking “or 1201(a)” in paragraph (2)(C),

(ii) by striking paragraph (3)(D) and inserting the following:

“(D) CAPITAL GAIN RATE DIFFERENTIAL.—There is a capital gain rate differential for any year if subsection (h) of section 1 applies to such taxable year.”, and

(iii) by striking paragraph (3)(E) and inserting the following:

“(E) RATE DIFFERENTIAL PORTION.—The rate differential portion of foreign source net capital gain, net capital gain, or the excess of net capital gain from sources within the United States over net capital gain, as the case may be, is the same proportion of such amount as—

“(i) the excess of—

“(I) the highest rate of tax set forth in subsection (a), (b), (c), (d), or (e) of section 1 (whichever applies), over

“(II) the alternative rate of tax determined under section 1(h), bears to

“(ii) that rate referred to in subclause (I).”.

(N) Section 1374(b) is amended by striking paragraph (4).

(O) Section 1381(b) is amended by striking “taxes imposed by section 11 or 1201” and inserting “tax imposed by section 11”.

(P) Sections 6425(c)(1)(A), as amended by section 12001, and 6655(g)(1)(A)(i) are each amended by striking “or 1201(a),”.

(Q) Section 7518(g)(6)(A) is amended by striking “or 1201(a)”.

(3) (A) Section 1445(e)(1) is amended—

(i) by striking “35 percent” and inserting “the highest rate of tax in effect for the taxable year under section 11(b)”, and

(ii) by striking “of the gain” and inserting “multiplied by the gain”.

(B) Section 1445(e)(2) is amended by striking “35 percent of the amount” and inserting “the highest rate of tax in effect for the taxable year under section 11(b) multiplied by the amount”.

(C) Section 1445(e)(6) is amended—

(i) by striking “35 percent” and inserting “the highest rate of tax in effect for the taxable year under section 11(b)”, and

(ii) by striking “of the amount” and inserting “multiplied by the amount”.

(D) Section 1446(b)(2)(B) is amended by striking “section 11(b)(1)” and inserting “section 11(b)”.

(4) Section 852(b)(1) is amended by striking the last sentence.

(5) (A) Part I of subchapter B of chapter 5 is amended by striking section 1551 (and by striking the item relating to such section in the table of sections for such part).

(B) Section 535(c)(5) is amended to read as follows:

“(5) CROSS REFERENCE.—For limitation on credit provided in paragraph (2) or (3) in the case of certain controlled corporations, see section 1561.”.

(6) (A) Section 1561, as amended by section 12001, is amended to read as follows:

(B) The table of sections for part II of subchapter B of chapter 5 is amended by striking the item relating to section 1561 and inserting the following new item:

“Sec. 1561. Limitation on accumulated earnings credit in the case of certain controlled corporations.”.

(7) Section 7518(g)(6)(A) is amended—

(A) by striking “With respect to the portion” and inserting “In the case of a taxpayer other than a corporation, with respect to the portion”, and

(B) by striking “(34 percent in the case of a corporation)”.

(c) Effective date.—

(1) IN GENERAL.—Except as otherwise provided in this subsection, the amendments made by this section shall apply to taxable years beginning after December 31, 2018.

(2) WITHHOLDING.—The amendments made by subsection (b)(3) shall apply to distributions made after December 31, 2018.

(3) CERTAIN TRANSFERS.—The amendments made by subsection (b)(6) shall apply to transfers made after December 31, 2018.

(d) Normalization requirements.—

(1) IN GENERAL.—A normalization method of accounting shall not be treated as being used with respect to any public utility property for purposes of section 167 or 168 of the Internal Revenue Code of 1986 if the taxpayer, in computing its cost of service for ratemaking purposes and reflecting operating results in its regulated books of account, reduces the excess tax reserve more rapidly or to a greater extent than such reserve would be reduced under the average rate assumption method.

(2) ALTERNATIVE METHOD FOR CERTAIN TAXPAYERS.—If, as of the first day of the taxable year that includes the date of enactment of this Act—

(A) the taxpayer was required by a regulatory agency to compute depreciation for public utility property on the basis of an average life or composite rate method, and

(B) the taxpayer’s books and underlying records did not contain the vintage account data necessary to apply the average rate assumption method,

the taxpayer will be treated as using a normalization method of accounting if, with respect to such jurisdiction, the taxpayer uses the alternative method for public utility property that is subject to the regulatory authority of that jurisdiction.

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

(A) EXCESS TAX RESERVE.—The term “excess tax reserve” means the excess of—

(i) the reserve for deferred taxes (as described in section 168(i)(9)(A)(ii) of the Internal Revenue Code of 1986) as determined under the Internal Revenue Code of 1986 as in effect on the day before the date of the enactment of this Act, over

(ii) the amount which would be the balance in such reserve if the amount of such reserve were determined by assuming that the corporate rate reductions provided in this Act were in effect for all prior periods.

(B) AVERAGE RATE ASSUMPTION METHOD.—The average rate assumption method is the method under which the excess in the reserve for deferred taxes is reduced over the remaining lives of the property as used in its regulated books of account which gave rise to the reserve for deferred taxes. Under such method, if timing differences for the property reverse, the amount of the adjustment to the reserve for the deferred taxes is calculated by multiplying—

(i) the ratio of the aggregate deferred taxes for the property to the aggregate timing differences for the property as of the beginning of the period in question, by

(ii) the amount of the timing differences which reverse during such period.

(C) ALTERNATIVE METHOD.—The “alternative method” is the method in which the taxpayer—

(i) computes the excess tax reserve on all public utility property included in the plant account on the basis of the weighted average life or composite rate used to compute depreciation for regulatory purposes, and

(ii) reduces the excess tax reserve ratably over the remaining regulatory life of the property.

(4) TAX INCREASED FOR NORMALIZATION VIOLATION.—If, for any taxable year ending after the date of the enactment of this Act, the taxpayer does not use a normalization method of accounting, the taxpayer’s tax for the taxable year shall be increased by the amount by which it reduces its excess tax reserve more rapidly than permitted under a normalization method of accounting.

(a) Dividends received by corporations.—

(1) IN GENERAL.—Section 243(a)(1) is amended by striking “70 percent” and inserting “50 percent”.

(2) DIVIDENDS FROM 20-PERCENT OWNED CORPORATIONS.—Section 243(c)(1) is amended—

(A) by striking “80 percent” and inserting “65 percent”, and

(B) by striking “70 percent” and inserting “50 percent”.

(3) CONFORMING AMENDMENT.—The heading for section 243(c) is amended by striking “Retention of 80-percent dividend received deduction” and inserting “Increased percentage”.

(b) Dividends received from FSC.—Section 245(c)(1)(B) is amended—

(1) by striking “70 percent” and inserting “50 percent”, and

(2) by striking “80 percent” and inserting “65 percent”.

(c) Limitation on aggregate amount of deductions.—Section 246(b)(3) is amended—

(1) by striking “80 percent” in subparagraph (A) and inserting “65 percent”, and

(2) by striking “70 percent” in subparagraph (B) and inserting “50 percent”.

(d) Reduction in deduction where portfolio stock is debt-financed.—Section 246A(a)(1) is amended—

(1) by striking “70 percent” and inserting “50 percent”, and

(2) by striking “80 percent” and inserting “65 percent”.

(e) Income from sources within the United States.—Section 861(a)(2) is amended—

(1) by striking “100/70th” and inserting “100/50th” in subparagraph (B), and

(2) in the flush sentence at the end—

(A) by striking “100/80th” and inserting “100/65th”, and

(B) by striking “100/70th” and inserting “100/50th”.

(f) Effective date.—

(1) IN GENERAL.—The amendments made by this section (other than subsection (c) thereof) shall apply to dividends received by a corporation after December 31, 2018, in taxable years ending after such date.

(2) LIMITATION.—The amendments made by section 102(c) shall apply to taxable years beginning after December 31, 2018.

(a) General rule.—Part VIII of subchapter B of chapter 1 is amended by inserting after section 241 the following:

“Sec. 242. Dividends paid deduction.

(b) Penalty for failure to report.—Section 6652, as amended by subtitle E of this Act, is amended by adding at the end the following new subsection:

“(r) Failure to file returns by corporations eligible for dividends paid deduction.—

“(1) PENALTY FOR FAILURE TO FILE RETURN.—In the case of a failure to make a return required under section 242(d) containing the information required by such section by the due date for the return, the eligible corporation shall pay (on notice and demand by the Secretary and in the same manner as tax) a penalty of $1,000 per day for each day such failure continues unless it is shown that such failure is due to reasonable cause. The maximum amount of the penalty under this paragraph with respect to any failure for a taxable year shall not exceed $250,000.

“(2) ELIGIBLE CORPORATION.—For purposes of this subsection, the term ‘eligible corporation’ has the meaning given such term by section 242(c).”.

(c) Dividends paid deduction allowable only in taxable year of dividend payment.—

(1) IN GENERAL.—Subsection (d) of section 172, as amended by section 11011, is amended by adding at the end the following new paragraph:

“(9) DIVIDENDS PAID DEDUCTION.—The deduction under section 242 shall not be allowed.”.

(2) TREATMENT OF CARRYBACKS AND CARRYOVERS.—Subparagraph (A) of section 172(b)(2), as amended by section 13302, is amended by striking “and (5)” and inserting “(5), and (8)”.

(d) Other conforming amendments.—Part VIII of subchapter B of chapter 1 is amended—

(1) by striking the table of sections and inserting the following:

“Sec. 241. Allowance of special deductions. ”,

(2) by inserting the following before section 243:

“Sec. 243. Dividends received by corporations.
“Sec. 245. Dividends received from certain foreign corporations.
“Sec. 245A. Deduction for foreign-source portion of dividends received by domestic corporations from specified 10-percent owned foreign corporations.
“Sec. 246. Rules applying to deductions for dividends received.
“Sec. 246A. Dividends received deduction reduced where portfolio stock is debt financed.”, and

(3) by inserting the following before section 248:

“Sec. 248. Organizational expenditures.
“Sec. 249. Limitation of deduction of bond premium on repurchase.
“Sec. 250. Foreign-derived intangible income and global intangible low-taxed income.”.

(e) Effective date.—The amendments made by this section shall apply to dividends paid in taxable years of the payor beginning after December 31, 2018.

(a) Dividends paid deduction.—Paragraph (1) of section 882(c) is amended by adding at the end the following new subparagraph:

“(C) SPECIAL RULE FOR DIVIDENDS PAID DEDUCTION.—For purposes of subparagraph (A)—

“(i) the deduction under section 242 shall not be allowed for any taxable year, and

“(ii) there shall be allowed, in lieu of such deduction, a deduction in an amount equal to zero percent of the dividend equivalent amount (as defined in section 884(b)) of the foreign corporation for the taxable year.”.

(b) Effective date.—The amendment made by this section shall apply to taxable years beginning after December 31, 2018.

(a) In general.—Paragraph (6) of section 864(e) is amended to read as follows:

“(6) ALLOCATION AND APPORTIONMENT OF OTHER EXPENSES.—

“(A) IN GENERAL.—Except as provided in subparagraph (B), expenses other than interest which are not directly allocable or apportioned to any specific income producing activity shall be allocated and apportioned as if all members of the affiliated group were a single corporation.

“(B) DIVIDEND EXPENSE.—The dividend expense of any domestic corporation which is a member of an affiliated group shall be allocated and apportioned to income from sources without the United States in the same proportion which—

“(i) the aggregate amount of income treated as from sources without the United States by all domestic corporations which are members of such group (determined without regard to such dividend expense), bears to

“(ii) the aggregate income of all such domestic corporations from sources within and without the United States (as so determined).”.

(b) Effective date.—The amendment made by this section shall apply to taxable years beginning after December 31, 2018.

(a) Increase in limitation.—

(1) DOLLAR LIMITATION.—Section 179(b)(1) is amended by striking “$500,000” and inserting “$1,000,000”.

(2) REDUCTION IN LIMITATION.—Section 179(b)(2) is amended by striking “$2,000,000” and inserting “$2,500,000”.

(3) INFLATION ADJUSTMENTS.—

(A) IN GENERAL.—Subparagraph (A) of section 179(b)(6) is amended—

(i) by striking “2015” and inserting “2018”, and

(ii) in clause (ii), by striking “calendar year 2014” and inserting “calendar year 2017”.

(B) SPORT UTILITY VEHICLES.—Section 179(b)(6) is amended—

(i) in subparagraph (A), by striking “paragraphs (1) and (2)” and inserting “paragraphs (1), (2), and (5)(A)”, and

(ii) in subparagraph (B), by inserting “($100 in the case of any increase in the amount under paragraph (5)(A))” after “$10,000”.

(b) Section 179 property to include qualified real property.—

(1) IN GENERAL.—Subparagraph (B) of section 179(d)(1) is amended to read as follows:

“(B) which is—

“(i) section 1245 property (as defined in section 1245(a)(3)), or

“(ii) qualified real property (as defined in subsection (f)), and”.

(2) QUALIFIED REAL PROPERTY DEFINED.—Subsection (f) of section 179 is amended to read as follows:

“(f) Qualified real property.—For purposes of this subsection, the term ‘qualified real property’ means—

“(1) any qualified improvement property described in section 168(e)(6), and

“(2) any of the following improvements to nonresidential real property placed in service after the date such property was first placed in service:

“(A) Roofs.

“(B) Heating, ventilation, and air-conditioning property.

“(C) Fire protection and alarm systems.

“(D) Security systems.”.

(c) Repeal of exclusion for certain property.—The last sentence of section 179(d)(1) is amended by inserting “(other than paragraph (2) thereof)” after “section 50(b)”.

(d) Effective date.—The amendments made by this section shall apply to property placed in service in taxable years beginning after December 31, 2017.

(a) Modifications of gross receipts test.—

(1) IN GENERAL.—So much of section 448(c) as precedes paragraph (2) is amended to read as follows:

“(c) Gross receipts test.—

“(1) IN GENERAL.—A corporation or partnership meets the gross receipts test of this subsection for any taxable year if the average annual gross receipts of such entity for the 3-taxable-year period ending with the taxable year which precedes such taxable year does not exceed the applicable dollar limit.”.

(2) APPLICABLE DOLLAR LIMIT.—Subsection (c) of section 448 is amended by adding at the end the following new paragraph:

“(4) APPLICABLE DOLLAR LIMIT.—

“(A) IN GENERAL.—The applicable dollar limit is $15,000,000.

“(B) ADJUSTMENT FOR INFLATION.—In the case of any taxable year beginning after December 31, 2018, the $15,000,000 amount under subparagraph (A) shall be increased by an amount equal to—

“(i) such dollar amount, multiplied by

“(ii) the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which the taxable year begins, by substituting ‘calendar year 2017’ for ‘calendar year 2016’ in subparagraph (A)(ii) thereof.

If any amount as increased under the preceding sentence is not a multiple of $1,000, such amount shall be rounded to the next lowest multiple of $1,000.”.

(3) CHANGE IN METHOD OF ACCOUNTING.—Paragraph (7) of section 448(d) is amended—

(A) by striking “In the case of” and all that follows up to subparagraph (A) and inserting: “If a taxpayer changes its method of accounting because the taxpayer is prohibited from using the cash receipts and disbursement method of accounting by reason of subsection (a) or is no longer prohibited from using such method by reason of such subsection—”, and

(B) by inserting “and” at the end of subparagraph (A), by striking “, and” at the end of subparagraph (B) and inserting a period, and by striking subparagraph (C).

(4) CONFORMING AMENDMENT.—Paragraph (3) of section 448(b) is amended to read as follows:

“(3) ENTITIES SATISFYING GROSS RECEIPTS TEST.—Paragraphs (1) and (2) of subsection (a) shall not apply to any corporation or partnership for any taxable year if such entity meets the gross receipts test of subsection (c) for the taxable year.”.

(b) Application of modifications to farming corporations.—

(1) IN GENERAL.—Paragraph (1) of section 447(d) is amended to read as follows:

“(1) IN GENERAL.—A corporation meets the requirements of this subsection for any taxable year with respect to its gross receipts if the corporation meets the gross receipts test of section 448(c) for the taxable year.”.

(2) FAMILY CORPORATIONS.—Paragraph (2) of section 447(d) is amended—

(A) by striking subparagraph (A) and inserting the following:

“(A) IN GENERAL.—In the case of a family corporation, in applying section 448(c) for purposes of paragraph (1)—

“(i) paragraph (1) of section 448(c) shall be applied by substituting the applicable family corporation limit for the applicable dollar limit, and

“(ii) the rules of subparagraph (B) shall apply in computing gross receipts.”,

(B) Clause (i) of section 447(d)(2)(B) is amended by striking “the last sentence of paragraph (1)” and inserting “paragraph (2) of section 448(c)”, and

(C) by adding at the end the following new subparagraph:

“(D) APPLICABLE FAMILY CORPORATION LIMIT.—

“(i) IN GENERAL.—The applicable family corporation limit is $25,000,000.

“(ii) ADJUSTMENT FOR INFLATION.—In the case of any taxable year beginning after December 31, 2018, the $25,000,000 amount under clause (i) shall be increased by an amount equal to—

“(I) such dollar amount, multiplied by

“(II) the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which the taxable year begins, by substituting ‘calendar year 2017’ for ‘calendar year 2016’ in subparagraph (A)(ii) thereof.

If any amount as increased under the preceding sentence is not a multiple of $1,000, such amount shall be rounded to the next lowest multiple of $1,000.”.

(3) EXCEPTION FOR CERTAIN CORPORATIONS.—Subsection (c) of section 447 is amended by inserting “for any taxable year” after “not being a corporation”.

(4) CHANGE IN METHOD OF ACCOUNTING.—Section 447(f) is amended—

(A) by striking “In the case of” and all that follows up to paragraph (1) and inserting the following: “If a taxpayer changes its method of accounting because the taxpayer is required to use an accrual method of accounting by reason of subsection (a) or is no longer required to use such method by reason of such subsection—”, and

(B) by striking paragraph (2) and inserting the following:

“(2) such change shall be treated as initiated by the taxpayer, and”.

(c) Effective date.—The amendments made by this section shall apply to taxable years beginning after December 31, 2017.

(a) Clarification of inventory rules.—

(1) IN GENERAL.—Section 471 is amended by redesignating subsection (c) as subsection (d) and by inserting after subsection (b) the following new subsection:

“(c) Small business taxpayers not required to use inventories.—

“(1) IN GENERAL.—A qualified taxpayer shall not be required to use inventories under this section for a taxable year.

“(2) TREATMENT OF TAXPAYERS NOT USING INVENTORIES.—A qualified taxpayer who is not required under this subsection to use inventories with respect to any property for a taxable year beginning after December 31, 2017, may treat such property—

“(A) as a non-incidental material or supply, or

“(B) in a manner which conforms to the taxpayer's method for accounting for such property in—

“(i) an applicable financial statement (as defined in section 451(b)(1)), or

“(ii) in the case of a taxpayer that does not have an applicable financial statement, their books and records used for purposes of determining tax imposed by this title.

“(3) QUALIFIED TAXPAYER.—For purposes of this subsection, the term ‘qualified taxpayer’ means, with respect to any taxable year, a taxpayer who meets the gross receipts test of section 448(c) for the taxable year (or, in the case of a sole proprietorship, who would meet such test if such proprietorship were a corporation). Such term shall not include a tax shelter prohibited from using the cash receipts and disbursements method of accounting under section 448(a)(3).

“(4) COORDINATION WITH SECTION 481.—If a taxpayer changes its method of accounting because the taxpayer is not required to use inventories by reason of paragraph (1) or is required to use inventories because such paragraph no longer applies to the taxpayer—

“(A) such change shall be treated as initiated by the taxpayer, and

“(B) such change shall be treated as made with the consent of the Secretary.”.

(2) CONFORMING AMENDMENT.—Subsection (c) of section 263A is amended by adding at the end the following new paragraph:

“(8) EXCLUSION FROM INVENTORY RULES.—Nothing in this section shall require the use of inventories for any taxable year by a qualified taxpayer (within the meaning of section 471(c)(3)) who is not required to use inventories under section 471 for such taxable year.”.

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

(a) In general.—Section 263A(b) is amended by striking all that follows paragraph (1) and inserting the following new paragraphs:

“(2) PROPERTY ACQUIRED FOR RESALE.—Real or personal property described in section 1221(a)(1) which is acquired by the taxpayer for resale.

“(3) EXCEPTION FOR SMALL BUSINESSES.—This section shall not apply to any taxpayer who meets the gross receipts test under section 448(c) for the taxable year (or, in the case of a sole proprietorship, who would meet such test if such proprietorship were a corporation), other than a tax shelter prohibited from using the cash receipts and disbursements method of accounting under section 448(a)(3).

“(4) FILMS, SOUND RECORDINGS, BOOKS, ETC.—For purposes of this subsection, the term ‘tangible personal property’ shall include a film, sound recording, video tape, book, or similar property.

“(5) COORDINATION WITH SECTION 481.—If a taxpayer changes its method of accounting because this section does not apply to the taxpayer by reason of the exception under paragraph (3) or this section applies to the taxpayer because such exception no longer applies to the taxpayer—

“(A) such change shall be treated as initiated by the taxpayer, and

“(B) such change shall be treated as made with the consent of the Secretary.”.

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

(a) Increase.—

(1) IN GENERAL.—Section 460(e)(1)(B) is amended—

(A) in the matter preceding clause (i), by inserting “(other than a tax shelter prohibited from using the cash receipts and disbursements method of accounting under section 448(a)(3))” after “taxpayer”, and

(B) by striking clause (ii) and inserting the following:

“(ii) who meets the gross receipts test of section 448(c) for the taxable year in which such contract is entered into (or, in the case of a sole proprietorship, who would meet such test if such proprietorship were a corporation).”.

(2) CONFORMING AMENDMENTS.—

(A) Section 460(e) is amended by striking paragraphs (2) and (3) and by redesignating paragraphs (4) through (6) as paragraphs (2) through (4), respectively.

(B) The last sentence of section 56(a)(3) is amended by striking “section 460(e)(6)” and inserting “section 460(e)(4)”.

(b) Coordination with section 481.—Section 460(e), as amended by subsection (a), is amended by adding at the end the following:

“(5) COORDINATION WITH SECTION 481.—If a taxpayer changes its method of accounting because subsections (a), (b), (c)(1), and (c)(2) do not apply by reason of the exception under paragraph (1)(B) or such subsections apply to the taxpayer because such exception no longer applies to the taxpayer—

“(A) such change shall be treated as initiated by the taxpayer,

“(B) such change shall be treated as made with the consent of the Secretary, and

“(C) such change shall be permitted only on a cut-off basis for all similarly classified contracts entered into on or after the year of change and no adjustments under section 481(a) shall be made.”.

(c) Effective date.—The amendment made by this section shall apply to contracts entered into after December 31, 2017, in taxable years ending after such date.

(a) In general.—

(1) 100 PERCENT EXPENSING.—Section 168(k) is amended—

(A) in paragraph (1)(A), by striking “50 percent” and inserting “100 percent”, and

(B) in paragraph (5)(A)(i), by striking “50 percent” and inserting “100 percent”.

(2) EXTENSION THROUGH 2022.—Section 168(k) is amended—

(A) in the heading, by striking “December 31, 2007, and before January 1, 2020” and inserting “September 27, 2017, and before January 1, 2023”,

(B) in paragraph (2)—

(i) in subparagraph (A)(iii), clauses (i)(III) and (ii) of subparagraph (B), and subparagraph (E)(i), by striking “January 1, 2020” each place it appears and inserting “January 1, 2023”, and

(ii) in subparagraph (B)—

(I) in clause (i)(II), by striking “January 1, 2021” and inserting “January 1, 2024”, and

(II) in the heading of clause (ii), by striking “pre-January 1, 2020” and inserting “pre-January 1, 2023”, and

(C) in paragraph (5)(A), by striking “January 1, 2020” and inserting “January 1, 2023”.

(3) EXCEPTION FOR PUBLIC UTILITIES.—Paragraph (6) of section 168(k) is amended to read as follows:

“(6) EXCEPTION FOR CERTAIN PUBLIC UTILITY PROPERTY.—The term ‘qualified property’ shall not include any property which is primarily used in a trade or business described in clause (iv) of section 163(j)(7)(A).”.

(4) SPECIAL RULE.—Section 168(k) is amended by adding at the end the following new paragraph:

“(8) SPECIAL RULE FOR PROPERTY PLACED IN SERVICE DURING CERTAIN PERIODS.—

“(A) IN GENERAL.—In the case of qualified property placed in service by the taxpayer during the first taxable year ending after September 27, 2017, if the taxpayer elects to have this paragraph apply for such taxable year, paragraphs (1)(A) and (5)(A)(i) shall be applied by substituting ‘50 percent’ for ‘100 percent’.

“(B) FORM OF ELECTION.—Any election under this paragraph shall be made at such time and in such form and manner as the Secretary may prescribe.”.

(5) COORDINATION WITH SECTION 280F.—Section 168(k)(2)(F) is amended by striking clause (iii).

(6) QUALIFIED FILM AND TELEVISION AND LIVE THEATRICAL PRODUCTIONS.—

(A) IN GENERAL.—Clause (i) of section 168(k)(2)(A), as amended by section 13204, is amended—

(i) in subclause (II), by striking “or”,

(ii) in subclause (III), by adding “or” after the comma, and

(iii) by adding at the end the following:

“(IV) which is a qualified film or television production (as defined in subsection (d) of section 181) for which a deduction would have been allowable under section 181 without regard to subsections (a)(2) and (g) of such section or this subsection, or

“(V) which is a qualified live theatrical production (as defined in subsection (e) of section 181) for which a deduction would have been allowable under section 181 without regard to subsections (a)(2) and (g) of such section or this subsection,”.

(B) PRODUCTION PLACED IN SERVICE.—Paragraph (2) of section 168(k) is amended by adding at the end the following:

“(H) PRODUCTION PLACED IN SERVICE.—For purposes of subparagraph (A)—

“(i) a qualified film or television production shall be considered to be placed in service at the time of initial release or broadcast, and

“(ii) a qualified live theatrical production shall be considered to be placed in service at the time of the initial live staged performance.”.

(7) CONFORMING AMENDMENTS.—

(A) Paragraph (5) of section 168(k) is amended by striking subparagraph (F).

(B) Clause (ii) of section 460(c)(6)(B) is amended by striking “January 1, 2020 (January 1, 2021” and inserting “January 1, 2023 (January 1, 2024”.

(b) Effective dates.—

(1) IN GENERAL.—Except as provided in paragraph (2), the amendments made by subsection (a) shall apply to property placed in service after September 27, 2017, in taxable years ending after such date.

(2) CERTAIN PLANTS.—The amendments made by paragraphs (1)(B) and (2)(C) of subsection (a) shall apply to specified plants planted or grafted after September 27, 2017, in taxable years ending after such date.

(a) Luxury automobiles.—

(1) IN GENERAL.—280F(a)(1)(A) is amended—

(A) in clause (i), by striking “$2,560” and inserting “$10,000”,

(B) in clause (ii), by striking “$4,100” and inserting “$16,000”,

(C) in clause (iii), by striking “$2,450” and inserting “$9,600”, and

(D) in clause (iv), by striking “$1,475” and inserting “$5,760”.

(2) CONFORMING AMENDMENTS.—

(A) Clause (ii) of section 280F(a)(1)(B) is amended by striking “$1,475” in the text and heading and inserting “$5,760”.

(B) Paragraph (7) of section 280F(d) is amended—

(i) in subparagraph (A), by striking “1988” and inserting “2018”, and

(ii) in subparagraph (B)(i)(II), by striking “1987” and inserting “2017”.

(b) Removal of computer equipment from listed property.—

(1) IN GENERAL.—Section 280F(d)(4)(A) is amended—

(A) by inserting “and” at the end of clause (iii),

(B) by striking clause (iv), and

(C) by redesignating clause (v) as clause (iv).

(2) CONFORMING AMENDMENT.—Section 280F(d)(4) is amended by striking subparagraph (B) and by redesignating subparagraph (C) as subparagraph (B).

(c) Effective date.—The amendments made by this section shall apply to property placed in service after December 31, 2017, in taxable years ending after such date.

(a) Treatment of certain farm property as 5-Year property.—Clause (vii) of section 168(e)(3)(B) is amended by striking “after December 31, 2008, and which is placed in service before January 1, 2010” and inserting “after December 31, 2017”.

(b) Repeal of required use of 150-Percent declining balance method.—Section 168(b)(2) is amended by striking subparagraph (B) and by redesignating subparagraphs (C) and (D) as subparagraphs (B) and (C), respectively.

(c) Effective date.—The amendments made by this section shall apply to property placed in service after December 31, 2017, in taxable years ending after such date.

(a) Residential rental property and nonresidential real property.—

(1) REDUCTION OF RECOVERY PERIOD.—The table contained in section 168(c) is amended—

(A) by striking “27.5 years” and inserting “25 years”, and

(B) by striking “39 years” and inserting “25 years”.

(2) STATUTORY RECOVERY PERIOD.—The table contained in section 467(e)(3)(A) is amended—

(A) by inserting “(other than residential rental property and nonresidential real property)” after “15-year and 20-year property”, and

(B) by striking “19 years” and inserting “25 years”.

(3) CONFORMING AMENDMENT.—Clause (ii) of section 168(e)(2)(B) is amended by striking “27.5 years” and inserting “25 years”.

(b) Improvements to real property.—

(1) CLASSIFICATION OF QUALIFIED IMPROVEMENT PROPERTY AS 10-YEAR PROPERTY.—Subparagraph (D) of section 168(e)(3) is amended—

(A) in clause (iii), by striking “and”,

(B) in clause (iv), by striking the period and inserting “, and”, and

(C) by adding at the end the following new clause:

“(v) any qualified improvement property described in subsection (e)(6).”.

(2) ELIMINATION OF QUALIFIED LEASEHOLD IMPROVEMENT, QUALIFIED RESTAURANT, AND QUALIFIED RETAIL IMPROVEMENT PROPERTY.—Subsection (e) of section 168 is amended—

(A) in subparagraph (E) of paragraph (3)—

(i) by striking clauses (iv), (v), and (ix),

(ii) in clause (vii), by inserting “and” at the end,

(iii) in clause (viii), by striking “, and” and inserting a period, and

(iv) by redesignating clauses (vi), (vii), and (viii), as so amended, as clauses (iv), (v), and (vi), respectively, and

(B) by striking paragraphs (6), (7), and (8).

(3) APPLICATION OF STRAIGHT LINE METHOD TO QUALIFIED IMPROVEMENT PROPERTY.—Paragraph (3) of section 168(b) is amended—

(A) by striking subparagraphs (G), (H), and (I), and

(B) by inserting after subparagraph (F) the following new subparagraph:

“(G) Qualified improvement property described in subsection (e)(6).”.

(4) ALTERNATIVE DEPRECIATION SYSTEM.—

(A) ELECTING REAL PROPERTY TRADE OR BUSINESS.—Subsection (g) of section 168 is amended—

(i) in paragraph (1)—

(I) in subparagraph (D), by striking “and” at the end,

(II) in subparagraph (E), by inserting “and” at the end, and

(III) by inserting after subparagraph (E) the following new subparagraph:

“(F) any property described in paragraph (8),”, and

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

“(8) ELECTING REAL PROPERTY TRADE OR BUSINESS.—The property described in this paragraph shall consist of any nonresidential real property, residential rental property, and qualified improvement property held by an electing real property trade or business (as defined in 163(j)(7)(B)).”.

(B) QUALIFIED IMPROVEMENT PROPERTY.—The table contained in subparagraph (B) of section 168(g)(3) is amended—

(i) by inserting after the item relating to subparagraph (D)(ii) the following new item:

, and

(ii) by striking the item relating to subparagraph (E)(iv) and all that follows through the item relating to subparagraph (E)(ix) and inserting the following:

(C) APPLICABLE RECOVERY PERIOD FOR RESIDENTIAL RENTAL PROPERTY.—The table contained in subparagraph (C) of section 168(g)(2) is amended by striking clauses (iii) and (iv) and inserting the following:

(5) CONFORMING AMENDMENTS.—

(A) Clause (i) of section 168(k)(2)(A) is amended—

(i) in subclause (II), by inserting “or” after the comma,

(ii) in subclause (III), by striking “or” at the end, and

(iii) by striking subclause (IV).

(B) Section 168 is amended—

(i) in subsection (e), as amended by paragraph (2)(B), by adding at the end the following:

“(6) QUALIFIED IMPROVEMENT PROPERTY.—

“(A) IN GENERAL.—The term ‘qualified improvement property’ means any improvement to an interior portion of a building which is nonresidential real property if such improvement is placed in service after the date such building was first placed in service.

“(B) CERTAIN IMPROVEMENTS NOT INCLUDED.—Such term shall not include any improvement for which the expenditure is attributable to—

“(i) the enlargement of the building,

“(ii) any elevator or escalator, or

“(iii) the internal structural framework of the building.”.

(ii) in subsection (k), by striking paragraph (3).

(c) Effective date.—

(1) APPLICATION.—The amendments made by this section shall apply to property placed in service after December 31, 2017.

(2) SHORTER RECOVERY PERIOD OR MORE ACCELERATED DEPRECIATION METHOD.—In the case of property placed in service before January 1, 2018, if the amendments made by this section result in—

(A) an applicable recovery period which is less than the applicable recovery period for such property before enactment of such amendments, or

(B) an applicable depreciation method which is more accelerated than the applicable depreciation method for such property before enactment of such amendments,

the depreciation deduction for such property shall, for any taxable year beginning after December 31, 2017, be determined as if such property were placed in service on January 1, 2018.

(a) In general.—Section 168(g)(1), as amended by section 13204, is amended by striking “and” at the end of subparagraph (E), by inserting “and” at the end of subparagraph (F), and by inserting after subparagraph (F) the following new subparagraph:

“(G) any property with a recovery period of 10 years or more which is held by an electing farming business (as defined in section 163(j)(7)(C)),”.

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

(a) In general.—Section 174 is amended to read as follows:

(b) Change in method of accounting.—The amendments made by subsection (a) shall be treated as a change in method of accounting for purposes of section 481 of the Internal Revenue Code of 1986 and—

(1) such change shall be treated as initiated by the taxpayer,

(2) such change shall be treated as made with the consent of the Secretary, and

(3) such change shall be applied only on a cut-off basis for any research or experimental expenditures paid or incurred in taxable years beginning after December 31, 2025, and no adjustments under section 481(a) shall be made.

(c) Clerical amendment.—The table of sections for part VI of subchapter B of chapter 1 is amended by striking the item relating to section 174 and inserting the following new item:

“Sec. 174. Amortization of research and experimental expenditures.”.

(d) Conforming amendments.—

(1) Section 41(d)(1)(A) is amended by striking “expenses under section 174” and inserting “specified research or experimental expenditures under section 174”.

(2) Subsection (c) of section 280C is amended—

(A) by striking paragraph (1) and inserting the following:

“(1) IN GENERAL.—If—

“(A) the amount of the credit determined for the taxable year under section 41(a)(1), exceeds

“(B) the amount allowable as a deduction for such taxable year for qualified research expenses or basic research expenses,

the amount chargeable to capital account for the taxable year for such expenses shall be reduced by the amount of such excess.”,

(B) by striking paragraph (2),

(C) by redesignating paragraphs (3) (as amended by this Act) and (4) as paragraphs (2) and (3), respectively, and

(D) in paragraph (2), as redesignated by subparagraph (C), by striking “paragraphs (1) and (2)” and inserting “paragraph (1)”.

(e) Effective date.—The amendments made by this section shall apply to amounts paid or incurred in taxable years beginning after December 31, 2025.

(a) In general.—Section 263A(d)(2) is amended by adding at the end the following new subparagraph:

“(C) SPECIAL TEMPORARY RULE FOR CITRUS PLANTS LOST BY REASON OF CASUALTY.—

“(i) IN GENERAL.—In the case of the replanting of citrus plants, subparagraph (A) shall apply to amounts paid or incurred by a person (other than the taxpayer described in subparagraph (A)) if—

“(I) the taxpayer described in subparagraph (A) has an equity interest of not less than 50 percent in the replanted citrus plants at all times during the taxable year in which such amounts were paid or incurred and such other person holds any part of the remaining equity interest, or

“(II) such other person acquired the entirety of such taxpayer’s equity interest in the land on which the lost or damaged citrus plants were located at the time of such loss or damage, and the replanting is on such land.

“(ii) TERMINATION.—Clause (i) shall not apply to any cost paid or incurred after the date which is 10 years after the date of the enactment of the Tax Cuts and Jobs Act”..”.

(b) Effective date.—The amendment made by this section shall apply to costs paid or incurred after the date of the enactment of this Act.

(a) Inclusion not later than for financial accounting purposes.—Section 451 is amended by redesignating subsections (b) through (i) as subsections (c) through (j), respectively, and by inserting after subsection (a) the following new subsection:

“(b) Inclusion not later than for financial accounting purposes.—Notwithstanding part V of subchapter P—

“(1) FINANCIAL STATEMENT.—

“(A) IN GENERAL.—In the case of a taxpayer the taxable income of which is computed under the accrual method of accounting, the amount of any portion of any item of gross income shall be included in gross income not later than the taxable year with respect to which such amount is taken into account as income in—

“(i) an applicable financial statement of the taxpayer, or

“(ii) such other financial statement as the Secretary may specify for purposes of this subsection.

“(B) EXCEPTION.—In the case of a taxpayer which does not have a financial statement described in clause (i) or (ii) of subparagraph (A) for a taxable year, such subparagraph shall not apply.

“(2) COORDINATION WITH SPECIAL RULES FOR LONG-TERM CONTRACTS.—Paragraph (1) shall not apply with respect to any item of income to which section 460 applies.

“(3) APPLICABLE FINANCIAL STATEMENT.—For purposes of this subsection, the term ‘applicable financial statement’ means—

“(A) a financial statement which is certified as being prepared in accordance with generally accepted accounting principles and which is—

“(i) a 10–K (or successor form), or annual statement to shareholders, required to be filed by the taxpayer with the United States Securities and Exchange Commission,

“(ii) an audited financial statement of the taxpayer which is used for—

“(I) credit purposes,

“(II) reporting to shareholders, partners, or other proprietors, or to beneficiaries, or

“(III) any other substantial nontax purpose,

but only if there is no statement of the taxpayer described in clause (i), or

“(iii) filed by the taxpayer with any other Federal agency for purposes other than Federal tax purposes, but only if there is no statement of the taxpayer described in clause (i) or (ii),

“(B) a financial statement which is made on the basis of international financial reporting standards and is filed by the taxpayer with an agency of a foreign government which is equivalent to the United States Securities and Exchange Commission and which has reporting standards not less stringent than the standards required by such Commission, but only if there is no statement of the taxpayer described in subparagraph (A), or

“(C) a financial statement filed by the taxpayer with any other regulatory or governmental body specified by the Secretary, but only if there is no statement of the taxpayer described in subparagraph (A) or (B).

“(4) ALLOCATION OF TRANSACTION PRICE.—For purposes of this subsection, in the case of a contract which contains multiple performance obligations, the allocation of the transaction price to each performance obligation shall be equal to the amount allocated to each performance obligation for purposes of including such item in revenue in the applicable financial statement of the taxpayer.

“(5) GROUP OF ENTITIES.—For purposes of paragraph (1), if the financial results of a taxpayer are reported on the applicable financial statement (as defined in paragraph (3)) for a group of entities, such statement may be treated as the applicable financial statement of the taxpayer.”.

(b) Treatment of advance payments.—Section 451, as amended by subsection (a), is amended by redesignating subsections (c) through (j) as subsections (d) through (k), respectively, and by inserting after subsection (b) the following new subsection:

“(c) Treatment of advance payments.—

“(1) IN GENERAL.—A taxpayer which computes taxable income under the accrual method of accounting, and receives any advance payment during the taxable year, shall—

“(A) except as provided in subparagraph (B), include such advance payment in gross income for such taxable year, or

“(B) if the taxpayer elects the application of this subparagraph with respect to the category of advance payments to which such advance payment belongs, the taxpayer shall—

“(i) to the extent that any portion of such advance payment is required under subsection (b) to be included in gross income in the taxable year in which such payment is received, so include such portion, and

“(ii) include the remaining portion of such advance payment in gross income in the taxable year following the taxable year in which such payment is received.

“(2) ELECTION.—

“(A) IN GENERAL.—Except as otherwise provided in this paragraph, the election under paragraph (1)(B) shall be made at such time, in such form and manner, and with respect to such categories of advance payments, as the Secretary may provide.

“(B) PERIOD TO WHICH ELECTION APPLIES.—An election under paragraph (1)(B) shall be effective for the taxable year with respect to which it is first made and for all subsequent taxable years, unless the taxpayer secures the consent of the Secretary to revoke such election. For purposes of this title, the computation of taxable income under an election made under paragraph (1)(B) shall be treated as a method of accounting.

“(3) TAXPAYERS CEASING TO EXIST.—Except as otherwise provided by the Secretary, the election under paragraph (1)(B) shall not apply with respect to advance payments received by the taxpayer during a taxable year if such taxpayer ceases to exist during (or with the close of) such taxable year.

“(4) ADVANCE PAYMENT.—For purposes of this subsection—

“(A) IN GENERAL.—The term ‘advance payment’ means any payment—

“(i) the full inclusion of which in the gross income of the taxpayer for the taxable year of receipt is a permissible method of accounting under this section (determined without regard to this subsection),

“(ii) any portion of which is included in revenue by the taxpayer in a financial statement described in clause (i) or (ii) of subsection (b)(1)(A) for a subsequent taxable year, and

“(iii) which is for goods, services, or such other items as may be identified by the Secretary for purposes of this clause.

“(B) EXCLUSIONS.—Except as otherwise provided by the Secretary, such term shall not include—

“(i) rent,

“(ii) insurance premiums governed by subchapter L,

“(iii) payments with respect to financial instruments,

“(iv) payments with respect to warranty or guarantee contracts under which a third party is the primary obligor,

“(v) payments subject to section 871(a), 881, 1441, or 1442,

“(vi) payments in property to which section 83 applies, and

“(vii) any other payment identified by the Secretary for purposes of this subparagraph.

“(C) RECEIPT.—For purposes of this subsection, an item of gross income is received by the taxpayer if it is actually or constructively received, or if it is due and payable to the taxpayer.

“(D) ALLOCATION OF TRANSACTION PRICE.—For purposes of this subsection, rules similar to subsection (b)(4) shall apply.”.

(c) Effective date.—The amendments made by this section shall apply to taxable years beginning after December 31, 2017.

(d) Coordination with section 481.—

(1) IN GENERAL.—In the case of any qualified change in method of accounting for the taxpayer’s first taxable year beginning after December 31, 2017—

(A) such change shall be treated as initiated by the taxpayer, and

(B) such change shall be treated as made with the consent of the Secretary of the Treasury.

(2) QUALIFIED CHANGE IN METHOD OF ACCOUNTING.—For purposes of this subsection, the term “qualified change in method of accounting” means any change in method of accounting which—

(A) is required by the amendments made by this section, or

(B) was prohibited under the Internal Revenue Code of 1986 prior to such amendments and is permitted under such Code after such amendments.

(a) In general.—Section 163(j) is amended to read as follows:

“(j) Limitation on business interest.—

“(1) IN GENERAL.—The amount allowed as a deduction under this chapter for any taxable year for business interest shall not exceed the sum of—

“(A) the business interest income of such taxpayer for such taxable year, plus

“(B) 30 percent of the adjusted taxable income of such taxpayer for such taxable year.

The amount determined under subparagraph (B) shall not be less than zero.

“(2) CARRYFORWARD OF DISALLOWED BUSINESS INTEREST.—The amount of any business interest not allowed as a deduction for any taxable year by reason of paragraph (1) shall be treated as business interest paid or accrued in the succeeding taxable year.

“(3) EXEMPTION FOR CERTAIN SMALL BUSINESSES.—In the case of any taxpayer (other than a tax shelter prohibited from using the cash receipts and disbursements method of accounting under section 448(a)(3)) which meets the gross receipts test of section 448(c) for any taxable year, paragraph (1) shall not apply to such taxpayer for such taxable year. In the case of any taxpayer which is not a corporation or a partnership, the gross receipts test of section 448(c) shall be applied in the same manner as if such taxpayer were a corporation or partnership.

“(4) APPLICATION TO PARTNERSHIPS, ETC.—

“(A) IN GENERAL.—In the case of any partnership—

“(i) this subsection shall be applied at the partnership level and any deduction for business interest shall be taken into account in determining the non-separately stated taxable income or loss of the partnership, and

“(ii) the adjusted taxable income of each partner of such partnership—

“(I) shall be determined without regard to such partner’s distributive share of the non-separately stated taxable income or loss of such partnership, and

“(II) shall be increased by such partner’s distributive share of such partnership’s excess taxable income.

For purposes of clause (ii)(II), a partner's distributive share of partnership excess taxable income shall be determined in the same manner as the partner's distributive share of nonseparately stated taxable income or loss of the partnership.

“(B) SPECIAL RULES FOR CARRYFORWARDS.—

“(i) IN GENERAL.—The amount of any business interest not allowed as a deduction to a partnership for any taxable year by reason of paragraph (1) for any taxable year—

“(I) shall not be treated under paragraph (2) as business interest paid or accrued by the partnership in the succeeding taxable year, and

“(II) shall, subject to clause (ii), be treated as excess business interest which is allocated to each partner in the same manner as the non-separately stated taxable income or loss of the partnership.

“(ii) TREATMENT OF EXCESS BUSINESS INTEREST ALLOCATED TO PARTNERS.—If a partner is allocated any excess business interest from a partnership under clause (i) for any taxable year—

“(I) such excess business interest shall be treated as business interest paid or accrued by the partner in the next succeeding taxable year in which the partner is allocated excess taxable income from such partnership, but only to the extent of such excess taxable income, and

“(II) any portion of such excess business interest remaining after the application of subclause (I) shall, subject to the limitations of subclause (I), be treated as business interest paid or accrued in succeeding taxable years.

For purposes of applying this paragraph, excess taxable income allocated to a partner from a partnership for any taxable year shall not be taken into account under paragraph (1)(A) with respect to any business interest other than excess business interest from the partnership until all such excess business interest for such taxable year and all preceding taxable years has been treated as paid or accrued under clause (ii).

“(iii) BASIS ADJUSTMENTS.—

“(I) IN GENERAL.—The adjusted basis of a partner in a partnership interest shall be reduced (but not below zero) by the amount of excess business interest allocated to the partner under clause (i)(II).

“(II) SPECIAL RULE FOR DISPOSITIONS.—If a partner disposes of a partnership interest, the adjusted basis of the partner in the partnership interest shall be increased immediately before the disposition by the amount of the excess (if any) of the amount of the basis reduction under subclause (I) over the portion of any excess business interest allocated to the partner under clause (i)(II) which has previously been treated under clause (ii) as business interest paid or accrued by the partner. The preceding sentence shall also apply to transfers of the partnership interest (including by reason of death) in a transaction in which gain is not recognized in whole or in part. No deduction shall be allowed to the transferor or transferee under this chapter for any excess business interest resulting in a basis increase under this subclause.

“(C) EXCESS TAXABLE INCOME.—The term ‘excess taxable income’ means, with respect to any partnership, the amount which bears the same ratio to the partnership’s adjusted taxable income as—

“(i) the excess (if any) of—

“(I) the amount determined for the partnership under paragraph (1)(B), over

“(II) the amount (if any) by which the business interest of the partnership exceeds the business interest income of the partnership, bears to

“(ii) the amount determined for the partnership under paragraph (1)(B).

“(D) APPLICATION TO S CORPORATIONS.—Rules similar to the rules of subparagraphs (A) and (B) shall apply with respect to any S corporation and its shareholders.

“(5) BUSINESS INTEREST.—For purposes of this subsection, the term ‘business interest’ means any interest paid or accrued on indebtedness properly allocable to a trade or business. Such term shall not include investment interest (within the meaning of subsection (d)).

“(6) BUSINESS INTEREST INCOME.—For purposes of this subsection, the term ‘business interest income’ means the amount of interest includible in the gross income of the taxpayer for the taxable year which is properly allocable to a trade or business. Such term shall not include investment income (within the meaning of subsection (d)).

“(7) TRADE OR BUSINESS.—For purposes of this subsection—

“(A) IN GENERAL.—The term ‘trade or business’ shall not include—

“(i) the trade or business of performing services as an employee,

“(ii) any electing real property trade or business,

“(iii) any electing farming business, or

“(iv) the trade or business of the furnishing or sale of—

“(I) electrical energy, water, or sewage disposal services,

“(II) gas or steam through a local distribution system, or

“(III) transportation of gas or steam by pipeline,

if the rates for such furnishing or sale, as the case may be, have been established or approved by a State or political subdivision thereof, by any agency or instrumentality of the United States, by a public service or public utility commission or other similar body of any State or political subdivision thereof, or by the governing or ratemaking body of an electric cooperative.

“(B) ELECTING REAL PROPERTY TRADE OR BUSINESS.—For purposes of this paragraph, the term ‘electing real property trade or business’ means any trade or business which is described in section 469(c)(7)(C) and which makes an election under this subparagraph. Any such election shall be made at such time and in such manner as the Secretary shall prescribe, and, once made, shall be irrevocable.

“(C) ELECTING FARMING BUSINESS.—For purposes of this paragraph, the term ‘electing farming business’ means a farming business (as defined in section 263A(e)(4)) which makes an election under this subparagraph. Any such election shall be made at such time and in such manner as the Secretary shall prescribe, and, once made, shall be irrevocable.

“(8) ADJUSTED TAXABLE INCOME.—For purposes of this subsection, the term ‘adjusted taxable income’ means the taxable income of the taxpayer—

“(A) computed without regard to—

“(i) any item of income, gain, deduction, or loss which is not properly allocable to a trade or business,

“(ii) any business interest or business interest income,

“(iii) the amount of any net operating loss deduction under section 172, and

“(iv) the amount of any deduction allowed under section 199 or 199A, and

“(B) computed with such other adjustments as provided by the Secretary.

“(9) CROSS REFERENCES.—

“(A) For requirement that an electing real property trade or business use the alternative depreciation system, see section 168(g)(1)(F).

“(B) For requirement that an electing farming business use the alternative depreciation system, see section 168(g)(1)(G).”.

(b) Treatment of carryforward of disallowed business interest in certain corporate acquisitions.—

(1) IN GENERAL.—Section 381(c) is amended by inserting after paragraph (19) the following new paragraph:

“(20) CARRYFORWARD OF DISALLOWED BUSINESS INTEREST.—The carryover of disallowed business interest described in section 163(j)(2) to taxable years ending after the date of distribution or transfer.”.

(2) APPLICATION OF LIMITATION.—Section 382(d) is amended by adding at the end the following new paragraph:

“(3) APPLICATION TO CARRYFORWARD OF DISALLOWED INTEREST.—The term ‘pre-change loss’ shall include any carryover of disallowed interest described in section 163(n) under rules similar to the rules of paragraph (1).”.

(3) CONFORMING AMENDMENT.—Section 382(k)(1) is amended by inserting after the first sentence the following: “Such term shall include any corporation entitled to use a carryforward of disallowed interest described in section 381(c)(20).”.

(c) Effective date.—The amendments made by this section shall apply to taxable years beginning after December 31, 2017.

(a) Limitation on deduction.—

(1) IN GENERAL.—Section 172(a) is amended to read as follows:

“(a) Deduction allowed.—There shall be allowed as a deduction for the taxable year an amount equal to the lesser of—

“(1) the aggregate of the net operating loss carryovers to such year, plus the net operating loss carrybacks to such year, or

“(2) 90 percent (80 percent in the case of taxable years beginning after December 31, 2022) of taxable income computed without regard to the deduction allowable under this section.

For purposes of this subtitle, the term ‘net operating loss deduction’ means the deduction allowed by this subsection.”.

(2) COORDINATION OF LIMITATION WITH CARRYBACKS AND CARRYOVERS.—Section 172(b)(2) is amended by striking “shall be computed—” and all that follows and inserting “shall—

“(A) be computed with the modifications specified in subsection (d) other than paragraphs (1), (4), and (5) thereof, and by determining the amount of the net operating loss deduction without regard to the net operating loss for the loss year or for any taxable year thereafter,

“(B) not be considered to be less than zero, and

“(C) not exceed the amount determined under subsection (a)(2) for such prior taxable year.”.

(3) CONFORMING AMENDMENT.—Section 172(d)(6) is amended by striking “and” at the end of subparagraph (A), by striking the period at the end of subparagraph (B) and inserting “; and”, and by adding at the end the following new subparagraph:

“(C) subsection (a)(2) shall be applied by substituting ‘real estate investment trust taxable income (as defined in section 857(b)(2) but without regard to the deduction for dividends paid (as defined in section 561))’ for ‘taxable income’.”.

(b) Repeal of net operating loss carryback; indefinite carryforward.—

(1) IN GENERAL.—Section 172(b)(1)(A) is amended—

(A) by striking “shall be a net operating loss carryback to each of the 2 taxable years” in clause (i) and inserting “except as otherwise provided in this paragraph, shall not be a net operating loss carryback to any taxable year”, and

(B) by striking “to each of the 20 taxable years” in clause (ii) and inserting “to each taxable year”.

(2) CONFORMING AMENDMENT.—Section 172(b)(1) is amended by striking subparagraphs (B) through (F).

(c) Treatment of farming losses.—

(1) ALLOWANCE OF CARRYBACKS.—Section 172(b)(1), as amended by subsection (b)(2), is amended by adding at the end the following new subparagraph:

“(B) FARMING LOSSES.—

“(i) IN GENERAL.—In the case of any portion of a net operating loss for the taxable year which is a farming loss with respect to the taxpayer, such loss shall be a net operating loss carryback to each of the 2 taxable years preceding the taxable year of such loss.

“(ii) FARMING LOSS.—For purposes of this section, the term ‘farming loss’ means the lesser of—

“(I) the amount which would be the net operating loss for the taxable year if only income and deductions attributable to farming businesses (as defined in section 263A(e)(4)) are taken into account, or

“(II) the amount of the net operating loss for such taxable year.

“(iii) COORDINATION WITH PARAGRAPH (2).—For purposes of applying paragraph (2), a farming loss for any taxable year shall be treated as a separate net operating loss for such taxable year to be taken into account after the remaining portion of the net operating loss for such taxable year.

“(iv) ELECTION.—Any taxpayer entitled to a 2-year carryback under clause (i) from any loss year may elect not to have such clause apply to such loss year. Such election shall be made in such manner as prescribed by the Secretary and shall be made by the due date (including extensions of time) for filing the taxpayer's return for the taxable year of the net operating loss. Such election, once made for any taxable year, shall be irrevocable for such taxable year.”.

(2) CONFORMING AMENDMENTS.—

(A) Section 172 is amended by striking subsections (f), (g), and (h), and by redesignating subsection (i) as subsection (f).

(B) Section 537(b)(4) is amended by inserting “(as in effect before the date of enactment of the Tax Cuts and Jobs Act)” after “as defined in section 172(f)”.

(d) Treatment of certain insurance losses.—

(1) TREATMENT OF CARRYFORWARDS AND CARRYBACKS.—Section 172(b)(1), as amended by subsections (b)(2) and (c)(1), is amended by adding at the end the following new subparagraph:

“(C) INSURANCE COMPANIES.—In the case of an insurance company (as defined in section 816(a)) other than a life insurance company, the net operating loss for any taxable year—

“(i) shall be a net operating loss carryback to each of the 2 taxable years preceding the taxable year of such loss, and

“(ii) shall be a net operating loss carryover to each of the 20 taxable years following the taxable year of the loss.”.

(2) EXEMPTION FROM LIMITATION.—Section 172, as amended by subsection (c)(2)(A), is amended by redesignating subsection (f) as subsection (g) and inserting after subsection (e) the following new subsection:

“(f) Special rule for insurance companies.—In the case of an insurance company (as defined in section 816(a)) other than a life insurance company—

“(1) the amount of the deduction allowed under subsection (a) shall be the aggregate of the net operating loss carryovers to such year, plus the net operating loss carrybacks to such year, and

“(2) subparagraph (C) of subsection (b)(2) shall not apply.”.

(e) Effective date.—

(1) NET OPERATING LOSS LIMITATION.—The amendments made by subsections (a) and (d)(2) shall apply to losses arising in taxable years beginning after December 31, 2017.

(2) CARRYFORWARDS AND CARRYBACKS.—The amendments made by subsections (b), (c), and (d)(1) shall apply to net operating losses arising in taxable years ending after December 31, 2017.