Division Q — Protecting Americans from Tax Hikes Act of 2015

“(J) a qualified long-term unemployment recipient.”

“(15) Qualified long-term unemployment recipient.—The term ‘qualified long-term unemployment recipient’ means any individual who is certified by the designated local agency as being in a period of unemployment which—

“(A) is not less than 27 consecutive weeks, and

“(B) includes a period in which the individual was receiving unemployment compensation under State or Federal law.”

“(2) Qualified property.—For purposes of this subsection—

“(A) In general.—The term ‘qualified property’ means property—

“(i)

(I) to which this section applies which has a recovery period of 20 years or less,

“(II) which is computer software (as defined in section 167(f)(1)(B)) for which a deduction is allowable under section 167(a) without regard to this subsection,

“(III) which is water utility property, or

“(IV) which is qualified improvement property,

“(ii) the original use of which commences with the taxpayer, and

“(iii) which is placed in service by the taxpayer before January 1, 2020.

“(B) Certain property having longer production periods treated as qualified property.—

“(i) In general.—The term ‘qualified property’ includes any property if such property—

“(I) meets the requirements of clauses (i) and (ii) of subparagraph (A),

“(II) is placed in service by the taxpayer before January 1, 2021,

“(III) is acquired by the taxpayer (or acquired pursuant to a written contract entered into) before January 1, 2020,

“(IV) has a recovery period of at least 10 years or is transportation property,

“(V) is subject to section 263A, and

“(VI) meets the requirements of clause (iii) of section 263A(f)(1)(B) (determined as if such clause also applies to property which has a long useful life (within the meaning of section 263A(f))).

“(ii) Only pre-january 1, 2020 basis eligible for additional allowance.—In the case of property which is qualified property solely by reason of clause (i), paragraph (1) shall apply only to the extent of the adjusted basis thereof attributable to manufacture, construction, or production before January 1, 2020.

“(iii) Transportation property.—For purposes of this subparagraph, the term ‘transportation property’ means tangible personal property used in the trade or business of transporting persons or property.

“(iv) Application of subparagraph.—This subparagraph shall not apply to any property which is described in subparagraph (C).

“(C) Certain aircraft.—The term ‘qualified property’ includes property—

“(i) which meets the requirements of subparagraph (A)(ii) and subclauses (II) and (III) of subparagraph (B)(i),

“(ii) which is an aircraft which is not a transportation property (as defined in subparagraph (B)(iii)) other than for agricultural or firefighting purposes,

“(iii) which is purchased and on which such purchaser, at the time of the contract for purchase, has made a nonrefundable deposit of the lesser of—

“(I) 10 percent of the cost, or

“(II) $100,000, and

“(iv) which has—

“(I) an estimated production period exceeding 4 months, and

“(II) a cost exceeding $200,000.

“(D) Exception for alternative depreciation property.—The term ‘qualified property’ shall not include any property to which the alternative depreciation system under subsection (g) applies, determined—

“(i) without regard to paragraph (7) of subsection (g) (relating to election to have system apply), and

“(ii) after application of section 280F(b) (relating to listed property with limited business use).

“(E) Special rules.—

“(i) Self-constructed property.—In the case of a taxpayer manufacturing, constructing, or producing property for the taxpayer’s own use, the requirements of subclause (III) of subparagraph (B)(i) shall be treated as met if the taxpayer begins manufacturing, constructing, or producing the property before January 1, 2020.

“(ii) Sale-leasebacks.—For purposes of clause (iii) and subparagraph (A)(ii), if property is—

“(I) originally placed in service by a person, and

“(II) sold and leased back by such person within 3 months after the date such property was originally placed in service,

“(iii) Syndication.—For purposes of subparagraph (A)(ii), if—

“(I) property is originally placed in service by the lessor of such property,

“(II) such property is sold by such lessor or any subsequent purchaser within 3 months after the date such property was originally placed in service (or, in the case of multiple units of property subject to the same lease, within 3 months after the date the final unit is placed in service, so long as the period between the time the first unit is placed in service and the time the last unit is placed in service does not exceed 12 months), and

“(III) the user of such property after the last sale during such 3-month period remains the same as when such property was originally placed in service,

“(F) Coordination with section 280f.—For purposes of section 280F—

“(i) Automobiles.—In the case of a passenger automobile (as defined in section 280F(d)(5)) which is qualified property, the Secretary shall increase the limitation under section 280F(a)(1)(A)(i) by $8,000.

“(ii) Listed property.—The deduction allowable under paragraph (1) shall be taken into account in computing any recapture amount under section 280F(b)(2).

“(iii) Phase down.—In the case of a passenger automobile placed in service by the taxpayer after December 31, 2017, clause (i) shall be applied by substituting for ‘$8,000’—

“(I) in the case of an automobile placed in service during 2018, $6,400, and

“(II) in the case of an automobile placed in service during 2019, $4,800.

“(G) Deduction allowed in computing minimum tax.—For purposes of determining alternative minimum taxable income under section 55, the deduction under section 167 for qualified property shall be determined without regard to any adjustment under section 56.”

“(3) Qualified improvement property.—For purposes of this subsection—

“(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.”

“(4) Election to accelerate amt credits in lieu of bonus depreciation.—

“(A) In general.—If a corporation elects to have this paragraph apply for any taxable year—

“(i) paragraphs (1) and (2)(F) shall not apply to any qualified property placed in service during such taxable year,

“(ii) the applicable depreciation method used under this section with respect to such property shall be the straight line method, and

“(iii) the limitation imposed by section 53(c) for such taxable year shall be increased by the bonus depreciation amount which is determined for such taxable year under subparagraph (B).

“(B) Bonus depreciation amount.—For purposes of this paragraph—

“(i) In general.—The bonus depreciation amount for any taxable year is an amount equal to 20 percent of the excess (if any) of—

“(I) the aggregate amount of depreciation which would be allowed under this section for qualified property placed in service by the taxpayer during such taxable year if paragraph (1) applied to all such property (and, in the case of any such property which is a passenger automobile (as defined in section 280F(d)(5)), if paragraph (2)(F) applied to such automobile), over

“(II) the aggregate amount of depreciation which would be allowed under this section for qualified property placed in service by the taxpayer during such taxable year if paragraphs (1) and (2)(F) did not apply to any such property.

“(ii) Limitation.—The bonus depreciation amount for any taxable year shall not exceed the lesser of—

“(I) 50 percent of the minimum tax credit under section 53(b) for the first taxable year ending after December 31, 2015, or

“(II) the minimum tax credit under section 53(b) for such taxable year determined by taking into account only the adjusted net minimum tax for taxable years ending before January 1, 2016 (determined by treating credits as allowed on a first-in, first-out basis).

“(iii) Aggregation rule.—All corporations which are treated as a single employer under section 52(a) shall be treated—

“(I) as 1 taxpayer for purposes of this paragraph, and

“(II) as having elected the application of this paragraph if any such corporation so elects.

“(C) Credit refundable.—For purposes of section 6401(b), the aggregate increase in the credits allowable under part IV of subchapter A for any taxable year resulting from the application of this paragraph shall be treated as allowed under subpart C of such part (and not any other subpart).

“(D) Other rules.—

“(i) Election.—Any election under this paragraph may be revoked only with the consent of the Secretary.

“(ii) Partnerships with electing partners.—In the case of a corporation which is a partner in a partnership and which makes an election under subparagraph (A) for the taxable year, for purposes of determining such corporation’s distributive share of partnership items under section 702 for such taxable year—

“(I) paragraphs (1) and (2)(F) shall not apply to any qualified property placed in service during such taxable year, and

“(II) the applicable depreciation method used under this section with respect to such property shall be the straight line method.

“(iii) Certain partnerships.—In the case of a partnership in which more than 50 percent of the capital and profits interests are owned (directly or indirectly) at all times during the taxable year by 1 corporation (or by corporations treated as 1 taxpayer under subparagraph (B)(iii)), each partner shall compute its bonus depreciation amount under clause (i) of subparagraph (B) by taking into account its distributive share of the amounts determined by the partnership under subclauses (I) and (II) of such clause for the taxable year of the partnership ending with or within the taxable year of the partner.”

“(6) Phase down.—In the case of qualified property placed in service by the taxpayer after December 31, 2017, paragraph (1)(A) shall be applied by substituting for ‘50 percent’—

“(A) in the case of property placed in service in 2018 (or in the case of property placed in service in 2019 and described in paragraph (2)(B) or (C) (determined by substituting ‘2019’ for ‘2020’ in paragraphs (2)(B)(i)(III) and (ii) and paragraph (2)(E)(i)), ‘40 percent’,

“(B) in the case of property placed in service in 2019 (or in the case of property placed in service in 2020 and described in paragraph (2)(B) or (C), ‘30 percent’.”

“(iii) expenses for the purchase of computer or peripheral equipment (as defined in section 168(i)(2)(B)), computer software (as defined in section 197(e)(3)(B)), or Internet access and related services, if such equipment, software, or services are to be used primarily by the beneficiary during any of the years the beneficiary is enrolled at an eligible educational institution.”

“(D) Special rule for contributions of refunded amounts.—In the case of a beneficiary who receives a refund of any qualified higher education expenses from an eligible educational institution, subparagraph (A) shall not apply to that portion of any distribution for the taxable year which is recontributed to a qualified tuition program of which such individual is a beneficiary, but only to the extent such recontribution is made not later than 60 days after the date of such refund and does not exceed the refunded amount.”

“(G) 3-year average adjusted bases percentage.—The term ‘3-year average adjusted bases percentage’ means, with respect to any taxable year, the ratio (expressed as a percentage) of—

“(i) the aggregate adjusted bases (as determined for purposes of computing earnings and profits) of property (other than sales of foreclosure property or sales to which section 1033 applies) sold during the 3 taxable year period ending with such taxable year, divided by

“(ii) the sum of the aggregate adjusted bases (as so determined) of all of the assets of the trust as of the beginning of each of the 3 taxable years which are part of the period referred to in clause (i).

“(H) 3-year average fair market value percentage.—The term ‘3-year average fair market value percentage’ means, with respect to any taxable year, the ratio (expressed as a percentage) of—

“(i) the fair market value of property (other than sales of foreclosure property or sales to which section 1033 applies) sold during the 3 taxable year period ending with such taxable year, divided by

“(ii) the sum of the fair market value of all of the assets of the trust as of the beginning of each of the 3 taxable years which are part of the period referred to in clause (i).”

“(IV) the trust satisfies the requirements of subclause (II) applied by substituting ‘20 percent’ for ‘10 percent’ and the 3-year average adjusted bases percentage for the taxable year (as defined in subparagraph (G)) does not exceed 10 percent, or

“(V) the trust satisfies the requirements of subclause (III) applied by substituting ‘20 percent’ for ‘10 percent’ and the 3-year average fair market value percentage for the taxable year (as defined in subparagraph (H)) does not exceed 10 percent,”

“(F) No inference with respect to treatment as inventory property.—The determination of whether property is described in section 1221(a)(1) shall be made without regard to this paragraph.”

“(iii) not more than 25 percent of the value of its total assets is represented by nonqualified publicly offered REIT debt instruments, and”

“(L) Definitions related to debt instruments of publicly offered reits.—

“(i) Publicly offered reit.—The term ‘publicly offered REIT’ has the meaning given such term by section 562(c)(2).

“(ii) Nonqualified publicly offered reit debt instrument.—The term ‘nonqualified publicly offered REIT debt instrument’ means any real estate asset which would cease to be a real estate asset if subparagraph (B) were applied without regard to the reference to ‘debt instruments issued by publicly offered REITs’.”

“(iv) clauses (i), (ii), and (iii) shall not apply with respect to any transaction unless such transaction satisfies the identification requirement described in section 1221(a)(7) (determined after taking into account any curative provisions provided under the regulations referred to therein).”

“(E) Redetermined trs service income.—

“(i) In general.—The term ‘redetermined TRS service income’ means gross income of a taxable REIT subsidiary of a real estate investment trust attributable to services provided to, or on behalf of, such trust (less deductions properly allocable thereto) to the extent the amount of such income (less such deductions) would (but for subparagraph (F)) be increased on distribution, apportionment, or allocation under section 482.

“(ii) Coordination with redetermined rents.—Clause (i) shall not apply with respect to gross income attributable to services furnished or rendered to a tenant of the real estate investment trust (or to deductions properly allocable thereto).”

“(k) Special Rules Relating to Real Estate Investment Trusts.—

“(1) Increase in percentage ownership for exceptions for persons holding publicly traded stock.—

“(A) Dispositions.—In the case of any disposition of stock in a real estate investment trust, paragraphs (3) and (6)(C) of subsection (c) shall each be applied by substituting ‘more than 10 percent’ for ‘more than 5 percent’.

“(B) Distributions.—In the case of any distribution from a real estate investment trust, subsection (h)(1) shall be applied by substituting ‘10 percent’ for ‘5 percent’.

“(2) Stock held by qualified shareholders not treated as usrpi.—

“(A) In general.—Except as provided in subparagraph (B)—

“(i) stock of a real estate investment trust which is held directly (or indirectly through 1 or more partnerships) by a qualified shareholder shall not be treated as a United States real property interest, and

“(ii) notwithstanding subsection (h)(1), any distribution to a qualified shareholder shall not be treated as gain recognized from the sale or exchange of a United States real property interest to the extent the stock of the real estate investment trust held by such qualified shareholder is not treated as a United States real property interest under clause (i).

“(B) Exception.—In the case of a qualified shareholder with 1 or more applicable investors—

“(i) subparagraph (A)(i) shall not apply to so much of the stock of a real estate investment trust held by a qualified shareholder as bears the same ratio to the value of the interests (other than interests held solely as a creditor) held by such applicable investors in the qualified shareholder bears to value of all interests (other than interests held solely as a creditor) in the qualified shareholder, and

“(ii) a percentage equal to the ratio determined under clause (i) of the amounts realized by the qualified shareholder with respect to any disposition of stock in the real estate investment trust or with respect to any distribution from the real estate investment trust attributable to gain from sales or exchanges of a United States real property interest shall be treated as amounts realized from the disposition of United States real property interests.

“(C) Special rule for certain distributions treated as sale or exchange.—If a distribution by a real estate investment trust is treated as a sale or exchange of stock under section 301(c)(3), 302, or 331 with respect to a qualified shareholder—

“(i) in the case of an applicable investor, subparagraph (B) shall apply with respect to such distribution, and

“(ii) in the case of any other person, such distribution shall be treated under section 857(b)(3)(F) as a dividend from a real estate investment trust notwithstanding any other provision of this title.

“(D) Applicable investor.—For purposes of this paragraph, the term ‘applicable investor’ means, with respect to any qualified shareholder holding stock in a real estate investment trust, a person (other than a qualified shareholder) which—

“(i) holds an interest (other than an interest solely as a creditor) in such qualified shareholder, and

“(ii) holds more than 10 percent of the stock of such real estate investment trust (whether or not by reason of the person’s ownership interest in the qualified shareholder).

“(E) Constructive ownership rules.—For purposes of subparagraphs (B)(i) and (C) and paragraph (4), the constructive ownership rules under subsection (c)(6)(C) shall apply.

“(3) Qualified shareholder.—For purposes of this subsection—

“(A) In general.—The term ‘qualified shareholder’ means a foreign person which—

“(i)

(I) is eligible for benefits of a comprehensive income tax treaty with the United States which includes an exchange of information program and the principal class of interests of which is listed and regularly traded on 1 or more recognized stock exchanges (as defined in such comprehensive income tax treaty), or

“(II) is a foreign partnership that is created or organized under foreign law as a limited partnership in a jurisdiction that has an agreement for the exchange of information with respect to taxes with the United States and has a class of limited partnership units which is regularly traded on the New York Stock Exchange or Nasdaq Stock Market and such class of limited partnership units value is greater than 50 percent of the value of all the partnership units,

“(ii) is a qualified collective investment vehicle, and

“(iii) maintains records on the identity of each person who, at any time during the foreign person’s taxable year, holds directly 5 percent or more of the class of interest described in subclause (I) or (II) of clause (i), as the case may be.

“(B) Qualified collective investment vehicle.—For purposes of this subsection, the term ‘qualified collective investment vehicle’ means a foreign person—

“(i) which, under the comprehensive income tax treaty described in subparagraph (A)(i), is eligible for a reduced rate of withholding with respect to ordinary dividends paid by a real estate investment trust even if such person holds more than 10 percent of the stock of such real estate investment trust,

“(ii) which—

“(I) is a publicly traded partnership (as defined in section 7704(b)) to which subsection (a) of section 7704 does not apply,

“(II) is a withholding foreign partnership for purposes of chapters 3, 4, and 61,

“(III) if such foreign partnership were a United States corporation, would be a United States real property holding corporation (determined without regard to paragraph (1)) at any time during the 5-year period ending on the date of disposition of, or distribution with respect to, such partnership’s interests in a real estate investment trust, or

“(iii) which is designated as a qualified collective investment vehicle by the Secretary and is either—

“(I) fiscally transparent within the meaning of section 894, or

“(II) required to include dividends in its gross income, but entitled to a deduction for distributions to persons holding interests (other than interests solely as a creditor) in such foreign person.

“(4) Partnership allocations.—

“(A) In general.—For the purposes of this subsection, in the case of an applicable investor who is a nonresident alien individual or a foreign corporation and is a partner in a partnership that is a qualified shareholder, if such partner’s proportionate share of USRPI gain for the taxable year exceeds such partner’s distributive share of USRPI gain for the taxable year, then

“(i) such partner’s distributive share of the amount of gain taken into account under subsection (a)(1) by the partner for the taxable year (determined without regard to this paragraph) shall be increased by the amount of such excess, and

“(ii) such partner’s distributive share of items of income or gain for the taxable year that are not treated as gain taken into account under subsection (a)(1) (determined without regard to this paragraph) shall be decreased (but not below zero) by the amount of such excess.

“(B) USRPI gain.—For the purposes of this paragraph, the term ‘USRPI gain’ means the excess (if any) of—

“(i) the sum of—

“(I) any gain recognized from the disposition of a United States real property interest, and

“(II) any distribution by a real estate investment trust that is treated as gain recognized from the sale or exchange of a United States real property interest, over

“(ii) any loss recognized from the disposition of a United States real property interest.

“(C) Proportionate share of usrpi gain.—For purposes of this paragraph, an applicable investor’s proportionate share of USRPI gain shall be determined on the basis of such investor’s share of partnership items of income or gain (excluding gain allocated under section 704(c)), whichever results in the largest proportionate share. If the investor’s share of partnership items of income or gain (excluding gain allocated under section 704(c)) may vary during the period such investor is a partner in the partnership, such share shall be the highest share such investor may receive.”

“(d) Reporting.—Every insurance company for which an election is in effect under subsection (b) for any taxable year shall furnish to the Secretary at such time and in such manner as the Secretary shall prescribe such information for such taxable year as the Secretary shall require with respect to the requirements of subsection (b)(2)(A)(ii).”

“(D) Inflation adjustment.—In the case of any taxable year beginning in a calendar year after 2015, the dollar amount set forth in subparagraph (A)(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 such calendar year by substituting ‘calendar year 2013’ for ‘calendar year 1992’ in subparagraph (B) thereof.

“(z) Certain Plan Transfers and Mergers.—

“(1) In general.—Under rules prescribed by the Secretary, except as provided in paragraph (2), no amount shall be includible in gross income by reason of—

“(A) a transfer of all or a portion of the accrued benefit of a participant or beneficiary, whether or not vested, from a church plan that is a plan described in section 401(a) or an annuity contract described in section 403(b) to an annuity contract described in section 403(b), if such plan and annuity contract are both maintained by the same church or convention or association of churches,

“(B) a transfer of all or a portion of the accrued benefit of a participant or beneficiary, whether or not vested, from an annuity contract described in section 403(b) to a church plan that is a plan described in section 401(a), if such plan and annuity contract are both maintained by the same church or convention or association of churches, or

“(C) a merger of a church plan that is a plan described in section 401(a), or an annuity contract described in section 403(b), with an annuity contract described in section 403(b), if such plan and annuity contract are both maintained by the same church or convention or association of churches.

“(2) Limitation.—Paragraph (1) shall not apply to a transfer or merger unless the participant’s or beneficiary’s total accrued benefit immediately after the transfer or merger is equal to or greater than the participant’s or beneficiary’s total accrued benefit immediately before the transfer or merger, and such total accrued benefit is nonforfeitable after the transfer or merger.

“(3) Qualification.—A plan or annuity contract shall not fail to be considered to be described in section 401(a) or 403(b) merely because such plan or annuity contract engages in a transfer or merger described in this subsection.

“(4) Definitions.—For purposes of this subsection—

“(A) Church or convention or association of churches.—The term ‘church or convention or association of churches’ includes an organization described in subparagraph (A) or (B)(ii) of subsection (e)(3).

“(B) Annuity contract.—The term ‘annuity contract’ includes a custodial account described in section 403(b)(7) and a retirement income account described in section 403(b)(9).

“(C) Accrued benefit.—The term ‘accrued benefit’ means—

“(i) in the case of a defined benefit plan, the employee’s accrued benefit determined under the plan, and

“(ii) in the case of a plan other than a defined benefit plan, the balance of the employee’s account under the plan.”

the assets of such plan, account, or organization (including any assets otherwise permitted to be commingled for investment purposes with the assets of such a plan, account, or organization) may be invested in a group trust otherwise described in Internal Revenue Service Revenue Ruling 81–100 (as modified by Internal Revenue Service Revenue Rulings 2004–67, 2011–1, and 2014–24), or any subsequent revenue ruling that supersedes or modifies such revenue ruling, without adversely affecting the tax status of the group trust, such plan, account, or organization, or any other plan or trust that invests in the group trust.

“(2) Standard 90.1–2007.—The term ‘Standard 90.1–2007’ means Standard 90.1–2007 of the American Society of Heating, Refrigerating, and Air Conditioning Engineers and the Illuminating Engineering Society of North America (as in effect on the day before the date of the adoption of Standard 90.1–2010 of such Societies).”

In the case of any organization to which the amendments made by this section apply by reason of the preceding sentence, such organization shall submit the notice required by section 506(a) of such Code, as added by this Act, not later than 180 days after the date of the enactment of this Act.

“(5) Certain passive losses of publicly traded partnerships.—

“(A) In general.—In the case of a publicly traded partnership (as defined in section 469(k)(2)), such procedures shall provide—

“(i) for determining the imputed underpayment without regard to the portion thereof that the partnership demonstrates is attributable to a net decrease in a specified passive activity loss which is allocable to a specified partner, and

“(ii) for the partnership to take such net decrease into account as an adjustment in the adjustment year with respect to the specified partners to which such net decrease relates.

“(B) Specified passive activity loss.—For purposes of this paragraph, the term ‘specified passive activity loss’ means, with respect to any specified partner of such publicly traded partnership, the lesser of—

“(i) the passive activity loss of such partner which is separately determined with respect to such partnership under section 469(k) with respect to such partner’s taxable year in which or with which the reviewed year of such partnership ends, or

“(ii) such passive activity loss so determined with respect to such partner’s taxable year in which or with which the adjustment year of such partnership ends.

“(C) Specified partner.—For purposes of this paragraph, the term ‘specified partner’ means any person if such person—

“(i) is a partner of the publicly traded partnership referred to in subparagraph (A),

“(ii) is described in section 469(a)(2), and

“(iii) has a specified passive activity loss with respect to such publicly traded partnership,

“(d) Judicial Review.—For the time period within which a partnership may file a petition for a readjustment, see section 6234(a).”