AMENDMENTS RELATED TO JOBS AND GROWTH TAX RELIEF RECONCILIATION ACT OF 2003.

SEC. 402. AMENDMENTS RELATED TO JOBS AND GROWTH TAX RELIEF RECONCILIATION ACT OF 2003.(a) Amendments Related to Section 302 of the Act.—(1) Clause (i) of section 1(h)(1)(D) is amended by inserting “(determined without regard to paragraph (11))” after “net capital gain”.(2) Subclause (I) of section 1(h)(11)(B)(iii) is amended—(A) by striking “section 246(c)(1)” and inserting “section 246(c)”,(B) by striking “120-day period” and inserting “121-day period”, and(C) by striking “90-day period” and inserting “91-day period”.(3) Clause (ii) of section 1(h)(11)(D) is amended by striking “an individual” and inserting “a taxpayer to whom this section applies”.(4) Paragraph (4) of section 691(c) is amended by striking “of any gain”.(5)(A) Subparagraph (B) of section 854(b)(1) is amended—(i) by striking clauses (iii) and (iv), and (ii) by amending clause (i) to read as follows:“(i) In general.—In any case in which—“(I) a dividend is received from a regulated investment company (other than a dividend to which subsection (a) applies),“(II) such investment company meets the requirements of section 852(a) for the taxable year during which it paid such dividend, and“(III) the qualified dividend income of such investment company for such taxable year is less than 95 percent of its gross income,then, in computing qualified dividend income, there shall be taken into account only that portion of such dividend designated by the regulated investment company.”.(B) Subparagraph (C) of section 854(b)(1) is amended to read as follows:“(C) Limitations.—“(i) Subparagraph (a).—The aggregate amount which may be designated as dividends under subparagraph (A) shall not exceed the aggregate dividends received by the company for the taxable year.“(ii) Subparagraph (b).—The aggregate amount which may be designated as qualified dividend income under subparagraph (B) shall not exceed the sum of—“(I) the qualified dividend income of the company for the taxable year, and“(II) the amount of any earnings and profits which were distributed by the company for such taxable year and accumulated in a taxable year with respect to which this part did not apply.”.(C) Paragraph (2) of section 854(b) is amended by striking “as a dividend for purposes of the maximum rate under section 1(h)(11) and” and inserting “as qualified dividend income for purposes of section 1(h)(11) and as dividends for purposes of”.(D) Paragraph (5) of section 854(b) is amended to read as follows:118 STAT. 1185 “(5) Qualified dividend income.—For purposes of this subsection, the term ‘qualified dividend income’ has the meaning given such term by section 1(h)(11)(B).”.(E) Paragraph (2) of section 857(c) is amended to read as follows:“(2) Section (1)(h)(11).—“(A) In general.—In any case in which—“(i) a dividend is received from a real estate investment trust (other than a capital gain dividend), and“(ii) such trust meets the requirements of section 856(a) for the taxable year during which it paid such dividend,then, in computing qualified dividend income, there shall be taken into account only that portion of such dividend designated by the real estate investment trust.“(B) Limitation.—The aggregate amount which may be designated as qualified dividend income under subparagraph (A) shall not exceed the sum of—“(i) the qualified dividend income of the trust for the taxable year,“(ii) the excess of—“(I) the sum of the real estate investment trust taxable income computed under section 857(b)(2) for the preceding taxable year and the income subject to tax by reason of the application of the regulations under section 337(d) for such preceding taxable year, over“(II) the sum of the taxes imposed on the trust for such preceding taxable year under section 857(b)(1) and by reason of the application of such regulations, and“(iii) the amount of any earnings and profits which were distributed by the trust for such taxable year and accumulated in a taxable year with respect to which this part did not apply. “(C) Notice to shareholders.—The amount of any distribution by a real estate investment trust which may be taken into account as qualified dividend income shall not exceed the amount so designated by the trust in a written notice to its shareholders mailed not later than 60 days after the close of its taxable year.“(D) Qualified dividend income.—For purposes of this paragraph, the term ‘qualified dividend income’ has the meaning given such term by section 1(h)(11)(B).”.(F) With respect to any taxable year of a regulated investment company or real estate investment trust ending on or before November 30, 2003, the period for providing notice of the qualified dividend amount to shareholders under sections 854(b)(2) and 857(c)(2)(C) of the Internal Revenue Code of 1986, as amended by this section, shall not expire before the date on which the statement under section 6042(c) of such Code is required to be furnished with respect to the last calendar year beginning in such taxable year.(6) Paragraph (2) of section 302(f) of the Jobs and Growth Tax Relief Reconciliation Act of 2003 is amended to read as follows:118 STAT. 1186 “(2) Pass-thru entities.—In the case of a pass-thru entity described in subparagraph (A), (B), (C), (D), (E), or (F) of section 1(h)(10) of the Internal Revenue Code of 1986, as amended by this Act, the amendments made by this section shall apply to taxable years ending after December 31, 2002; except that dividends received by such an entity on or before such date shall not be treated as qualified dividend income (as defined in section 1(h)(11)(B) of such Code, as added by this Act).”.(b) Effective Date.—The amendments made by subsection (a) shall take effect as if included in section 302 of the Jobs and Growth Tax Relief Reconciliation Act of 2003.