AMENDMENTS RELATING TO PROTECTING AMERICANS FROM TAX HIKES ACT OF 2015.

SEC. 101. AMENDMENTS RELATING TO PROTECTING AMERICANS FROM TAX HIKES ACT OF 2015. (a) Amendment Relating to Section 103.— (1) [26 U.S.C. 32] Section 32(b)(2)is amended— (A) by striking clauses (ii) and (iii) of subparagraph (B), and (B) by striking so much of subparagraph (B) as precedes “In the case of a joint return” and inserting the following: “(B) Joint returns.— ” . (2) Section 32(j)(1) is amended— (A) in the matter preceding subparagraph (A) by striking “after 1996” and inserting “after 2015”, (B) in subparagraph (B) by inserting “by substituting in subparagraph (A)(ii) thereof” after “, determined” , (C) in subparagraph (B)(i) by striking “by substituting” and “in subparagraph (A)(ii) thereof”, (D) in subparagraph (B)(ii)— (i) by striking “by substituting” and “in subparagraph (A)(ii) of such section 1”, (ii) by striking “$3,000” and inserting “$5,000”, (iii) by striking “(b)(2)(B)(iii)” and inserting “(b)(2)(B)”, and (iv) by striking “2007” and inserting “2008”. (b) Amendment Relating to Section 105.—Section 132(f)(6)(A) is amended by striking the second sentence. (c) Amendments Relating to Section 121.—Section 41(c) is amended— (1) by striking paragraph (4), (2) by redesignating paragraphs (5), (6), and (7) as paragraphs (4), (5), and (6), respectively, and (3) by striking the last sentence of paragraph (4)(C) (as so redesignated). (d) Amendments Relating to Section 143.— (1) Section 168(k)(2)(B)(i)(III) is amended by inserting “binding” before “contract”. (2) Section 168(k)(5)(B)(ii) is amended— (A) by inserting “crop or” after “more than one”, and (B) by inserting “a marketable crop or yield of” after “begins bearing”. (3) [26 U.S.C. 168 note] For purposes of applying section 168(k) of the Internal Revenue Code of 1986, as in effect on the day before the date of the enactment of Public Law 115-97, with respect to property acquired before September 28, 2017, paragraph (6) thereof shall be treated as reading as follows (and as having been included in section 143 of the Protecting Americans from Tax Hikes Act of 2015): “(6) Phase-down.—In the case of qualified property placed in service by the taxpayer after December 31, 2017 (December 31, 2018, in the case of property described in subparagraph (B) or (C) of paragraph (2)), paragraph (1)(A) shall be applied by substituting for ‘50 percent’— “(A) ‘40 percent’ in the case of— “(i) property placed in service in 2018 (other than property described in subparagraph (B) or (C) of paragraph (2)), and “(ii) property described in subparagraph (B) or (C) of paragraph (2) which is placed in service in 2019, and “(B) ‘30 percent’ in the case of— “(i) property placed in service in 2019 (other than property described in subparagraph (B) or (C) of paragraph (2)), and “(ii) property described in subparagraph (B) or (C) of paragraph (2) which is placed in service in 2020.” . (4) [26 U.S.C. 168 note] Section 168(k)(7) of the Internal Revenue Code of 1986, as in effect on the day before the date of the enactment of Public Law 115-97, shall be applied— (A) by substituting “paragraphs (1), (2)(F), and (4)” for “paragraphs (1) and (2)(F)”, and (B) as if the application of such substitution had been included in section 143 of the Protecting Americans from Tax Hikes Act of 2015. (e) Amendments Relating to Section 167.— (1) [26 U.S.C. 168] Section 168(j)(3)is amended by striking “property to which paragraph (1) applies” and inserting “qualified Indian reservation property”. (2) Section 168(j)(8) is amended by striking “this subsection” and inserting “paragraph (1)”. (f) Amendments Relating to Section 202.— (1) Section 6722(c)(3)(A) is amended— (A) by striking “any information return” in clause (iii) and inserting “the payee statement”, and (B) by striking “filed” in the flush matter at the end and inserting “furnished”. (2) Section 6721(c)(3)(A) is amended by striking “any information return” and inserting “the information return”. (3) [26 U.S.C. 6045 note] Section 202(e) of the Protecting Americans from Tax Hikes Act of 2015is amended by striking “provided” and inserting “furnished”. (g) Amendments Relating to Section 203.— (1) Section 6109(i)(1)(A)(i) is amended by striking “community-based certified acceptance agent” and inserting “community-based certifying acceptance agent”. (2) Section 6109(i)(1)(B) is amended by striking “Internal Revenue Service” and inserting “Internal Revenue Service, a community-based certifying acceptance agent approved by the Secretary,”. (3) Section 6109(i)(3) is amended— (A) in subparagraph (A)— (i) by inserting “ending after the issuance of such number” before the period at the end of the first sentence, and (ii) by striking “on the last day of such third consecutive taxable year” and inserting “on the day after the due date for the return of tax for such third consecutive taxable year”, and (B) by striking subparagraph (B)(ii) and inserting the following: “(ii) if the individual does not file a return of tax (or is not included as a dependent on the return of tax of another taxpayer) for 3 consecutive taxable years at least one of which ends after December 18, 2015, the due date for the return of tax for such third consecutive taxable year.” . (4) [26 U.S.C. 6109 note] Section 203(c) of the Protecting Americans from Tax Hikes Act of 2015is amended— (A) by striking “section 6109(i)(1)(A)(i)” and inserting “section 6109(i)(1)”, (B) by striking “community-based certified acceptance agents” and inserting “community-based certifying acceptance agents”, and (C) by striking “Certified” in the heading thereof and inserting “Certifying”. (5) Section 203(f) of the Protecting Americans from Tax Hikes Act of 2015 is amended by striking “The amendments” and inserting “Except to the extent provided in section 6109(i)(3) of the Internal Revenue Code of 1986, the amendments”. (h) [26 U.S.C. 32 note] Amendments Relating to Section 204.—Section 204(b) of the Protecting Americans from Tax Hikes Act of 2015is amended— (1) by striking paragraph (2), and (2) by striking so much as precedes “amendment made by this section” and inserting the following: “(b) Effective Date.—The”. (i) Amendments Relating to Section 205.— (1) [26 U.S.C. 24] Section 24(e)(2)is amended by striking “identifying number” and inserting “taxpayer identification number”. (2) [26 U.S.C. 24 note] Section 205(c) of the Protecting Americans from Tax Hikes Act of 2015is amended— (A) by striking paragraph (2), and (B) by striking so much as precedes “shall apply to any return of tax” and inserting the following: “(c) Effective Date.—The amendments made by this section”. (j) [26 U.S.C. 25A note] Amendments Relating to Section 206.—Section 206(b) of the Protecting Americans from Tax Hikes Act of 2015is amended— (1) by striking “Except as provided in paragraph (2), the amendment” in paragraph (1) and inserting “The amendment”, and (2) by striking paragraph (2) and redesignating paragraph (3) as paragraph (2). (k) [26 U.S.C. 6676 note] Amendment Relating to Section 209.—Section 209(d)(2) of the Protecting Americans from Tax Hikes Act of 2015is amended by striking “amendment made by subsection (b)” and inserting “amendments made by subsections (b) and (c)”. (l) Amendments Related to Sections 102, 206, 207, 208, and 211.— (1) Section 25A(b)(1) is amended— (A) in subparagraph (A) by striking “$1,000” and inserting “$2,000”, and (B) in subparagraph (B)— (i) by striking “50 percent” and inserting “25 percent”, (ii) by striking “$1,000” and inserting “$2,000”, and (iii) by striking “the applicable limit” and inserting “$4,000”. (2) [26 U.S.C. 25A] Subparagraphs (A) and (C) of section 25A(b)(2) are amended by striking “2” in the heading and text of each subparagraph and inserting “4”. (3) Section 25A(b)(4) is amended to read as follows: “(4) Restrictions on taxpayers who improperly claimed american opportunity tax credit in prior years.— “(A) Taxpayers making prior fraudulent or reckless claims.— “(i) In general.—No American Opportunity Tax Credit shall be allowed under this section for any taxable year in the disallowance period. “(ii) Disallowance period.—For purposes of subparagraph (A), the disallowance period is— “(I) the period of 10 taxable years after the most recent taxable year for which there was a final determination that the taxpayer’s claim of the American Opportunity Tax Credit under this section was due to fraud, and “(II) the period of 2 taxable years after the most recent taxable year for which there was a final determination that the taxpayer’s claim of the American Opportunity Tax Credit under this section was due to reckless or intentional disregard of rules and regulations (but not due to fraud). “(B) Taxpayers making improper prior claims.—In the case of a taxpayer who is denied the American Opportunity Tax Credit under this section for any taxable year as a result of the deficiency procedures under subchapter B of chapter 63, no American Opportunity Tax Credit shall be allowed under this section for any subsequent taxable year unless the taxpayer provides such information as the Secretary may require to demonstrate eligibility for such credit.” . (4) Section 25A(d) is amended to read as follows: “(d) Limitations Based on Modified Adjusted Gross Income.— “(1) American opportunity tax credit.—The American Opportunity Tax Credit (determined without regard to this paragraph) shall be reduced (but not below zero) by the amount which bears the same ratio to such credit (as so determined) as— “(A) the excess of— “(i) the taxpayer’s modified adjusted gross income for such taxable year, over “(ii) $80,000 ($160,000 in the case of a joint return), bears to “(B) $10,000 ($20,000 in the case of a joint return). “(2) Lifetime learning credit.—The Lifetime Learning Credit (determined without regard to this paragraph) shall be reduced (but not below zero) by the amount which bears the same ratio to such credit (as so determined) as— “(A) the excess of— “(i) the taxpayer’s modified adjusted gross income for such taxable year, over “(ii) $40,000 ($80,000 in the case of a joint return), bears to “(B) $10,000 ($20,000 in the case of a joint return). “(3) Modified adjusted gross income.—For purposes of this subsection, the term ‘modified adjusted gross income’ means the adjusted gross income of the taxpayer for the taxable year increased by any amount excluded from gross income under section 911, 931, or 933.” . (5) [26 U.S.C. 25A] Section 25A(f)(1)is amended by adding at the end the following new subparagraph: “(D) Required course materials taken into account for american opportunity tax credit.—For purposes of determining the American Opportunity Tax Credit, subparagraph (A) shall be applied by substituting ‘tuition, fees, and course materials’ for ‘tuition and fees’.” . (6) Section 25A(g)(1) is amended— (A) by striking “No credit” and inserting the following: “(A) In general.—No credit” , and (B) by adding at the end the following new subparagraph: “(B) Additional identification requirements with respect to american opportunity tax credit.— “(i) Student.—The requirements of subparagraph (A) shall not be treated as met with respect to the American Opportunity Tax Credit unless the individual’s taxpayer identification number was issued on or before the due date for filing the return of tax for the taxable year. “(ii) Taxpayer.—No American Opportunity Tax Credit shall be allowed under this section if the taxpayer identification number of the taxpayer was issued after the due date for filing the return for the taxable year. “(iii) Institution.—No American Opportunity Tax Credit shall be allowed under this section unless the taxpayer includes the employer identification number of any institution to which qualified tuition and related expenses were paid with respect to the individual.” . (7) Section 25A(h) is amended to read as follows: “(h) Inflation Adjustment.— “(1) In general.—In the case of a taxable year beginning after 2001, the $40,000 and $80,000 amounts in subsection (d)(2) shall each be increased by an amount equal to— “(A) such dollar 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, determined by substituting ‘calendar year 2000’ for ‘calendar year 2016’ in subparagraph (A)(ii) thereof. “(2) Rounding.—If any amount as adjusted under paragraph (1) is not a multiple of $1,000, such amount shall be rounded to the next lowest multiple of $1,000.” . (8) Section 25A(i) is amended to read as follows: “(i) Portion of American Opportunity Tax Credit Made Refundable.—Forty percent of so much of the credit allowed under subsection (a) as is attributable to the American Opportunity Tax Credit (determined after application of subsection (d) and without regard to this paragraph and section 26(a)) shall be treated as a credit allowable under subpart C (and not allowed under subsection (a)). The preceding sentence shall not apply to any taxpayer for any taxable year if such taxpayer is a child to whom subsection (g) of section 1 applies for such taxable year.” . (9) [26 U.S.C. 25A] The heading of section 25Ais amended by striking “hope” and inserting “american opportunity”. (10) [26 U.S.C. 21] The item relating to section 25A in the table of contents for subpart A of part IV of subchapter A of chapter 1is amended to read as follows: “Sec. 25A. American Opportunity and Lifetime Learning credits.” . (11) The heading of section 25A(b) is amended by striking “Hope Scholarship Credit” and inserting “American Opportunity Tax Credit”. (12) The heading of section 25A(b)(2) is amended by striking “hope scholarship credit” and inserting “american opportunity tax credit”. (13) The heading of section 25A(c)(2)(A) is amended by striking “hope scholarship” and inserting “american opportunity tax credit”. (14) Section 25A, as amended by the preceding provisions of this Act, is amended by striking “Hope Scholarship Credit” each place it appears in the text and inserting “American Opportunity Tax Credit”. (15) The heading of section 529(c)(3)(B)(v) is amended by striking “hope” and inserting “american opportunity”. (16) The heading of section 530(d)(2)(C) is amended by striking “hope” and inserting “american opportunity”. (17) Section 6211(b)(4)(A), as amended by this Act, is amended by striking “subsection (i)(5)” and inserting “subsection (i)”. (18) Section 6213(g)(2)(Q) is amended to read as follows: “(Q) an omission of information required by section 25A(b)(4)(B) or an entry on the return claiming the American Opportunity Tax Credit for a taxable year for which such credit is disallowed under section 25A(b)(4)(A).” . (19) Section 207(b)(1) of the Protecting Americans from Tax Hikes Act of 2015is amended by striking “the American opportunity tax credit under section 25A(i) of such Code” and inserting “the American Opportunity Tax Credit under section 25A of such Code”. (m) Amendment Relating to Section 311.— (1) The last sentence of section 355(h)(2)(B) is amended by striking “80 percent” both places it appears and inserting “at least 80 percent”. (2) Section 355(h)(2) is amended— (A) by striking “spinoffs” in the heading of such paragraph and inserting “distributions”, and (B) by striking “Spinoffs” in the headings of subparagraphs (A) and (B) and inserting “Distributions”. (n) Amendment Relating to Section 318.— (1) Section 856(c)(9)(A) is amended— (A) by striking “Personal property” and inserting the following: “(i) In general.—Personal property” , and (B) by adding at the end the following new clause: “(ii) Treatment of gain on disposition.—If— “(I) personal property is leased under, or in connection with, a lease of real property, for a period of not less than 1 year, and rents attributable to such personal property are treated as rents from real property under subsection (d)(1)(C), “(II) any portion of such personal property and any portion of such real property are sold, or otherwise disposed of, in a single disposition (or contemporaneously in separate dispositions), and “(III) the fair market value of the personal property so sold or contemporaneously disposed of (determined at the time of disposition) does not exceed 15 percent of the total fair market value of all of the personal and real property so sold or contemporaneously disposed of (determined at the time of disposition), any gain from such dispositions shall be treated for purposes of paragraphs (2)(H) and (3)(H) as gain from the disposition of a real estate asset.” . (2) [26 U.S.C. 856] Section 856(c)(9)(B)is amended to read as follows: “(B) Certain personal property mortgaged in connection with real property.— “(i) In general.—In the case of an obligation secured by a mortgage on both real property and personal property, if the fair market value of such personal property does not exceed 15 percent of the total fair market value of all such property, such obligation shall be treated— “(I) for purposes of paragraph (3)(B), as an obligation described therein, “(II) for purposes of paragraph (4)(A), as a real estate asset, and “(III) for purposes of paragraphs (2)(D) and (3)(C), as a mortgage on real property. “(ii) Determination of fair market value.— “(I) In general.—Except as provided in subclause (II), the fair market value of all such property shall be determined for purposes of clause (i) in the same manner as the fair market value of real property is determined for purposes of apportioning interest income between real property and personal property under paragraph (3)(B). “(II) Gain on disposition.—For purposes of applying clause (i)(III), fair market value shall be determined at the time of sale or other disposition.” . (o) Amendment Related to Section 302(b).—Section 529A(c)(1) is amended by striking subparagraph (D). (p) Amendments Relating to Section 322.— (1) Section 897(k)(2) is amended— (A) by striking so much of subparagraph (B) as precedes “amounts realized by the qualified shareholder” and inserting the following: “(B) Exception.—In the case of a qualified shareholder with one or more applicable investors— “(i) subparagraph (A)(i) shall not apply to the applicable percentage of the stock of the real estate investment trust held by the qualified shareholder, and “(ii) the applicable percentage of the” , and (B) by adding at the end the following new subparagraph: “(F) Applicable percentage.—For purposes of subparagraph (B), the term ‘applicable percentage’ means the percentage of the value of the interests (other than interests held solely as a creditor) in the qualified shareholder held by applicable investors.” . (2) [26 U.S.C. 897] Section 897(k)(2)(D)is amended by striking “paragraph” and inserting “subsection”. (3) Section 897(k)(2)(E) is amended by striking “and (C) and paragraph (4)” and inserting “and (D)”. (4) Section 897(k)(3)(B)(i) is amended by striking so much as precedes “for a reduced rate of withholding” and inserting the following: “(i) which— “(I) is eligible for benefits under the comprehensive income tax treaty described in subparagraph (A)(i)(I), but only if the dividends article of such treaty imposes conditions on the benefits allowable in the case of dividends paid by a real estate investment trust, and “(II) is eligible under such treaty” . (5) Section 897(k)(3)(B)(ii) is amended— (A) by adding “and” at the end of subclause (II), and (B) by striking “United States corporation” in subclause (III) and inserting “domestic corporation”. (6) [26 U.S.C. 897 note] Section 322 of the Protecting Americans from Tax Hikes Act of 2015is amended by striking subsections (b)(2) and (c)(3), and the Internal Revenue Code of 1986 shall be applied as if such subsections, and amendments made thereby, had never been enacted. (7) Section 322(c)(2) of such Act is amended by striking “take effect on” and inserting the following: “apply with respect to testing periods (as defined in section 897(h)(4)(D) of the Internal Revenue Code of 1986) ending on or after”. (q) Amendments Related to Section 323.— (1) So much of subsection (l) of section 897 as precedes paragraph (2) thereof is amended to read as follows: “(l) Exception for Qualified Foreign Pension Funds.— “(1) In general.—For purposes of this section, a qualified foreign pension fund shall not be treated as a nonresident alien individual or a foreign corporation. For purposes of the preceding sentence, an entity all the interests of which are held by a qualified foreign pension fund shall be treated as such a fund.” . (2) Subparagraph (B) of section 897(l)(2) is amended to read as follows: “(B) which is established— “(i) by such country (or one or more political subdivisions thereof) to provide retirement or pension benefits to participants or beneficiaries that are current or former employees (including self-employed individuals) or persons designated by such employees, as a result of services rendered by such employees to their employers, or “(ii) by one or more employers to provide retirement or pension benefits to participants or beneficiaries that are current or former employees (including self-employed individuals) or persons designated by such employees in consideration for services rendered by such employees to such employers,” . (3) [26 U.S.C. 897] Section 897(l)(2)(D)is amended by striking “provides annual information reporting about its beneficiaries to the relevant tax authorities” and inserting “with respect to which annual information about its beneficiaries is provided, or is otherwise available, to the relevant tax authorities”. (4) Section 897(l)(2)(E) is amended— (A) by striking “such entity” in clause (i) and inserting “such entity or arrangement”, and (B) by striking “or such income is taxed at a reduced rate” in clause (ii) and inserting “, or such income is excluded from the gross income of such entity or arrangement or is taxed at a reduced rate”. (r) Amendments Relating to Section 333.— (1) Section 831(b)(2)(B)(i)(II) is amended by striking “specified assets” and inserting “relevant specified assets” (2) Section 831(b)(2)(B) is amended by redesignating clause (ii) as clause (iv) and by inserting after clause (i) the following new clauses: “(ii) Aggregation of certain spousal interests.—For purposes of clause (i)(II), any interest in the insurance company referred to in such clause which is held (directly or indirectly) by an individual who is a spouse of the specified holder, and who is a citizen of the United States, shall be treated as held by the specified holder. “(iii) Specified holder.—For purposes of this subparagraph, the term ‘specified holder’ means, with respect to any insurance company, any individual who holds (directly or indirectly) an interest in such insurance company and who— “(I) is a lineal descendent (including by adoption) of an individual who holds an interest (directly or indirectly) in the specified assets with respect to such insurance company or of such individual’s spouse, “(II) is a spouse of any lineal descendent described in subclause (I), or “(III) is not a citizen of the United States and is a spouse of an individual who holds an interest (directly or indirectly) in the specified assets with respect to such insurance company.” . (3) Section 831(b)(2)(B)(iv), as redesignated by paragraph (2), is amended— (A) by striking “clause (i)(II)” in the matter preceding subclause (I) and inserting “this subparagraph”, and (B) by amending subclause (I) to read as follows: “(I) Relevant specified assets.—The term ‘relevant specified assets’ means, with respect to any specified holder with respect to any insurance company, the aggregate amount of the specified assets, with respect to such insurance company, any interest in which is held (directly or indirectly) by any spouse or specified relation of such specified holder. Such term shall not include any specified asset solely by reason of an interest in such asset which was acquired by such spouse or specified relation by bequest, devise, or inheritance from a decedent during the taxable year of the insurance company or the preceding taxable year. For purposes of this subclause, the term ‘specified relation’ means any individual with respect to whom the specified holder bears a relationship described in subclause (I) or (II) of clause (iii).” . (4) [26 U.S.C. 831] Section 831(b)(2)is amended by redesignating subparagraph (D) as subparagraph (E) and by inserting after subparagraph (C) the following new subparagraph: “(D) Look-through of reinsurance and fronting arrangements.—In the case of reinsurance or any fronting, intermediary, or similar arrangement, the term ‘policyholder’ means each policyholder of the underlying direct written insurance with respect to such reinsurance or arrangement.” . (s) [26 U.S.C. 24 note] Effective Date.—The amendments made by this section shall take effect as if included in the provision of the Protecting Americans from Tax Hikes Act of 2015 to which they relate.