AMENDMENTS RELATED TO TITLE IX OF THE REFORM ACT.

SEC. 1009. AMENDMENTS RELATED TO TITLE IX OF THE REFORM ACT. (a) Amendments Related to Section 901 of the Reform Act.— (1) Subparagraph (O of section 46(e)(4) of the 1986 Code is amended by adding at the end thereof the following new sentences: “Notwithstanding the preceding provisions of this subparagraph, any such election shall terminate effective with respect to the 1st taxable year of the organization making such election which begins after 1986 and during which such organization (or any successor organization) was not at any time the lessee under any lease of regular investment tax credit property. For purposes of the preceding sentence, the term regular investment tax credit property’ means any section 38 property if the regular percentage applied to such property and the amount of qualified investment with respect to such property would have been reduced under paragraph (1) but for an election under this subparagraph.” (2) (A) Paragraph (5) of section 585(c) of the 1986 Code is amended by adding at the end thereof the following new subparagraph: “(C) Election made by each member.—In the case of a parent-subsidiary controlled group, any election under this section shall be made separately by each member of such group.” (B) Subclause (I) of section 585(c)(3)(A)(iii) of the 1986 Code is amended by striking out “or such greater amount as the tax-payer may designate” and inserting in lieu thereof “or such higher percentage of such net amount as the taxpayer may elect.” (C) Clause (ii) of section 585(c)(3)(B) of the 1986 Code is amended by striking out “designates an amount” and inserting in lieu thereof “elects a higher percentage”. (D) Paragraph (4) of section 585(c) of the 1986 Code is amended by adding at the end thereof the following new sentence: “If the amount of the reserve referred to in subparagraph (B) as of the close of any taxable year exceeds the outstanding balance (as of such time) of the loans referred to in subparagraph (B), such excess shall be included in gross income for such taxable year.” (b) Amendments Related to Section 902 of the Reform Act.— (1) Paragraph (3) of section 902(f) of the Reform Act is amended— (A) in subparagraph (F), by striking out “distribution company” and inserting in lieu thereof “distribution facility”, (B) in subparagraph (L), by striking out “waterfront project” and inserting in lieu thereof “2 Festival Market 102 STAT. 3446Place projects at Union Pier Terminal and 1 project at the Remount Road Container Yard, State Pier No. 15 at North Charleston Terminal”, (C) in subparagraph (M), by striking out “Pontabla” and inserting in lieu thereof “Pontalba”, (D) in subparagraph (P), by striking out “Birmingham, Alabama,” and inserting in lieu thereof “Homewood, Alabama, the”, and (E) by adding at the end thereof the following new subparagraphs: “(T) Bellows Falls, Vermont—building project. “(U) East Broadway Project, Louisville, Kentucky. “(V) O.K. Industries, Oklahoma.” (2) Paragraph (4) of section 902(f) of the Reform Act is amended by striking out “subparagraph” and inserting in lieu thereof “paragraph”. (3) (A) Paragraph (3) of section 265(b) of the 1986 Code is amended to read as follows: “(3) Exception for certain tax-exempt obligations.— “(A) In general.—Any qualified tax-exempt obligation acquired after August 7, 1986, shall be treated for purposes of paragraph (2) and section 291(e)(1)(B) as if it were acquired on August 7, 1986. “(B) Qualified tax-exempt obligation.— “(i) In general.— For purposes of subparagraph (A), the term ‘qualified tax-exempt obligation’ means a tax-exempt obligation— “(I) which is issued after August 7, 1986, by a qualified small issuer, “(II) which is not a private activity bond (as defined in section 141), and “(III) which is designated by the issuer for purposes of this paragraph. “(ii) Certain bonds not treated as private activity bonds.—For purposes of clause (i)(II), there shall not be treated as a private activity bond— “(I) any qualified 501(c)(3) bond (as defined in section 145), or “(II) any obligation issued to refund (or which is part of a series of obligations issued to refund) an obligation issued before August 8, 1986, which was not an industrial development bond (as defined in section 103(b)(2) as in effect on the day before the date of the enactment of the Tax Reform Act of 1986) or a private loan bond (as defined in section 103(o)(2)(A), as so in effect, but without regard to any exemption from such definition other than section 103(o)(2)(A)). “(C) Qualified small issuer.— “(i) In general.—For purposes of subparagraph (B), the term ‘qualified small issuer’ means, with respect to obligations issued during any calendar year, any issuer if the reasonably anticipated amount of tax-exempt obligations (other than obligations described in clause (ii)) which will be issued by such issuer during such calendar year does not exceed $10,000,000. 102 STAT. 3447 “(ii) Obligations not taken into account in deter mining status as qualified small issuer.— For purposes of clause (i), an obligation is described in this clause if such obligation is— “(I) a private activity bond (other than a qualified 501(c)(3) bond, as defined in section 145), “(II) an obligation to which section 141(a) does not apply by reason of section 1312, 1313, 1316(g), or 1317 of the Tax Reform Act of 1986 and which would (if issued on August 15, 1986) have been an industrial development bond (as defined in section 103(b)(2) as in effect on the day before the date of the enactment of such Act) or a private loan bond (as defined in section 103(o)(2)(A), as so in effect, but without regard to any exception from such definition other than section 103(o)(2)(A)), or “(III) an obligation issued to refund (other than to advance refund within the meaning of section 149(d)(5)) any obligation to the extent the amount of the refunding obligation does not exceed the outstanding amount of the refunded obligation, “(iii) Allocation of amount of issue in certain cases.— In the case of an issue under which more than 1 governmental entity receives benefits, if— “(I) all governmental entities receiving benefits from such issue irrevocably agree (before the date of issuance of the issue) on an allocation of the amount of such issue for purposes of this subparagraph, and “(II) such allocation bears a reasonable relation-ship to the respective benefits received by such entities, then the amount of such issue so allocated to an entity (and only such amount with respect to such issue) shall be taken into account under clause (i) with respect to such entity. “(D) Limitation on amount of obligations which may be designated.— “(i) In general.—Not more than $10,000,000 of obligations issued by an issuer during any calendar year may be designated by such issuer for purposes of this paragraph. “(ii) Certain refundings of designated obligations deemed designated.—Except as provided in clause (iii), in the case of a refunding (or series of refundings) of a qualified tax-exempt obligation, the refunding obligation shall be treated as a qualified tax-exempt obligation (and shall not be taken into account under clause (i))if— “(I) the refunding obligation was not taken into account under subparagraph (C) by reason of clause (ii)(ni) thereof, “(II) the average maturity date of the refunding obligations issued as part of the issue of which such refunding obligation is a part is not later than the average maturity date of the obligations to be re-funded by such issue, and 102 STAT. 3448 “(III) the refunding obligation has a maturity date which is not later than the date which is 30 years after the date the original qualified tax-exempt obligation was issued. Subclause (II) shall not apply if the average maturity of the issue of which the original qualified tax-exempt obligation was a part (and of the issue of which the obligations to be refunded are a part) is 3 years or less. For purposes of this clause, average maturity shall be determined in accordance with section 147(b)(2)(A). “(iii) Certain obligations may not be designated or deemed designated.— No obligation issued as part of an issue may be designated under this paragraph (or may be treated as designated under clause (ii)) if— “(I) any obligation issued as part of such issue is issued to refund another obligation, and “(II) the aggregate face amount of such issue exceeds $10,000,000. “(E) Aggregation of issuers.—For purposes of subparagraphs (O and (D)— “(i) an issuer and all entities which issue obligations on behalf of such issuer shall be treated as 1 issuer, “(ii) all obligations issued by a subordinate entity shall, for purposes of applying subparagraphs (C) and (D) to each other entity to which such entity is subordinate, be treated as issued by such other entity, and “(iii) an entity formed (or, to the extent provided by the Secretary, availed of) to avoid the purposes of subparagraph (O or (D) and all entities benefiting thereby shall be treated as 1 issuer. “(F) Treatment of composite issues.— In the case of an obligation which is issued as part of a direct or indirect composite issue, such obligation shall not be treated as a qualified tax-exempt obligation unless— “(i) the requirements of this paragraph are met with respect to such composite issue (determined by treating such composite issue as a single issue), and “(ii) the requirements of this paragraph are met with respect to each separate lot of obligations which are part of the issue (determined by treating each such separate lot as a separate issue).” (B) In the case of any obligation issued after August 7, 1986, and before January 1, 1987, the time for making a designation with respect to such obligation under section 265(b)(3)(B)(iii) of the 1986 Code shall not expire before January 1, 1989. (C) lf— (i) an obligation is issued on or after January 1, 1986, and on or before August 7, 1986, (ii) when such obligation was issued, the issuer made a designation that it intended to qualify under section 802(e)(3) of H.R. 3838 of the 99th Congress as passed by the House of Representatives, and (iii) the issuer makes an election under this subparagraph with respect to such obligation, for purposes of section 265(b)(3) of the 1986 Code, such obligation shall be treated as issued on August 8, 1986. 102 STAT. 3449 (D) (i) Except as provided in clause (ii), the following provisions of section 265(b)(3) of the 1986 Code (as amended by this subparagraph (A)) shall apply to obligations issued after June 30, 1987: (I) subparagraph (C)(ii)(III), (II) clauses (ii) and (iii) of subparagraph (D), and (III) subparagraphs (E) and (F). (ii) At the election of an issuer (made at such time and in such manner as the Secretary of the Treasury or his delegate may prescribe), the provisions referred to in clause (i) shall apply to such issuer as if included in the amendments made by section 902(a) of the Tax Reform Act of 1986. (4) Subparagraph (B) of section 291(e)(1) of the 1986 Code is amended by redesignating the clause (iv) added by section 902(c)(2) of the Reform Act as clause (v). (5) Clause (i) of section 291(e)(1)(B) of the 1986 Code is amended by striking out “section 582(a)(2)” and inserting in lieu thereof “section 585(a)(2)”. (6) Paragraph (1) of section 902(e) of the Reform Act is amended by striking out “Section 163(h)(12)” and inserting in lieu thereof “Section 163(1)(2) (as redesignated by section 511(b) of this Act)”. (7) Paragraph (4) of section 902(f) of the Reform Act is amended— (A) by inserting “and qualified 501(c)(3) bonds designated by such Governor for purposes of this paragraph,” after “1987),”, and (B) by striking out “subparagraph” in the last sentence and inserting in lieu thereof “paragraph”. (c) Amendments Related to Section 903 of the Reform Act.— (1) Paragraph (1) of section 172(b) of the 1986 Code is amended by redesignating subparagraphs (L) and (M) as subparagraphs (K) and (L), respectively. (2) Subparagraph (A) of section 172(b)(1) of the 1986 Code is amended by striking out “Except” and all that follows down through “a net operating loss” and inserting in lieu thereof “Except as otherwise provided in this paragraph, a net operating loss”. (3) Subparagraph (B) of section 172(b)(1) of the 1986 Gode is amended to read as follows: “(B) Except as otherwise provided in this paragraph, a net operating loss for any taxable year ending after December 31, 1975, shall be a net operating loss carryover to each of the 15 taxable years following the taxable year of the loss.” (d) Amendments Related to Section 905 of the Reform Act.— (1) Subsection (1) of section 165 of the 1986 Code is amended by redesignating paragraph (6) as paragraph (7) and by striking out paragraph (5) and inserting in lieu thereof the following: (5) Election to treat as ordinary loss.— “(A) In general.—In lieu of any election under paragraph (1), the taxpayer may elect to treat the amount referred to in paragraph (1) for the taxable year as an ordinary loss described in subsection (c)(2) incurred during the taxable year. “(B) Limitations.— 102 STAT. 3450 “(i) Deposit may not be federally insured.—No election may be made under subparagraph (A) with respect to any loss on a deposit in a qualified financial institution if part or all of such deposit is insured under Federal law. “(ii) Dollar limitation.—With respect to each financial institution, the aggregate amount of losses attributable to deposits in such financial institution to which an election under subparagraph (A) may be made by the taxpayer for any taxable year shall not exceed $20,000 ($10,000 in the case of a separate return by a married individual). The limitation of the preceding sentence shall be reduced by the amount of any insurance proceeds under any State law which can reason-ably be expected to be received with respect to losses on deposits in such institution. “(6) Election.— Any election by the taxpayer under this subsection for any taxable year— “(A) shall apply to all losses for such taxable year of the taxpayer on deposits in the institution with respect to which such election was made, and “(B) may be revoked only with the consent of the Secretary.” (2) Paragraph (1) of section 905(c) of the Reform Act is amended to read as follows: “(1) In general.—The amendment made by subsection (a) shall apply to taxable years beginning after December 31, 1981, and, except as provided in paragraph (2), the amendment made by subsection (b) shall apply to taxable years beginning after December 31, 1982.” (3) The subsection (f) of section 451 of the 1986 Code which was added by section 905(b) of the 1986 Reform Act is redesignated as subsection (g). (4) If on the date of the enactment of this Act (or at any time before the date 1 year after such date of enactment) credit or refund of any overpayment of tax attributable to amendments made by section 905 of the Reform Act or by this subsection (or the assessment of any underpayment of tax so attributable) is barred by any law or rule of law— (A) credit or refund of any such overpayment may nevertheless be made if claim therefore is filed before the date 1 year after such date of enactment, and (B) assessment of any such underpayment may nevertheless be made if made before the date 1 year after such date of enactment.