Tax Increase Prevention and Reconciliation Act of 2005

(This measure has not been amended since the Conference Report was filed in the House on May 9, 2006. The summary of that version is repeated here.) Tax Increase Prevention and Reconciliation Act of 2005 - Title I: Extension and Modification of Certain Provisions - (Sec. 101) Amends the Internal Revenue Code to extend through 2009: (1) the increased expensing allowance (from $25,000 to $100,000) for depreciable business property; (2) the increased threshold amount ($400,000) for determining reductions to the expensing allowance; (3) the period during which a taxpayer may revoke an election to expense depreciable business property; and (4) the eligibility of certain computer software for the increased expensing allowance. (Sec. 102) Extends through 2010 reductions in capital gains and dividends tax rates enacted by the Jobs and Growth Tax Relief Reconciliation Act of 2003. (Sec. 103) Extends through 2008 exemptions from classification as subpart F income (income of controlled foreign corporations) for: (1) income that is derived in the active conduct of a banking, financing, or similar business or in the conduct of an insurance business; and (2) dividends, interest, rents, and royalties received by a controlled foreign corporation from a related controlled foreign corporation to the extent such items are attributable or properly allocable to non-subpart F income of the payor. Title II: Other Provisions - (Sec. 201) Exempts from taxation certain settlement funds established to pay claims under the Comprehensive Environmental Response, Compensation, and Liability Act of 1980. Terminates this exemption after 2010. (Sec. 202) Allows all members of a corporation's affiliated group to be treated as one corporation for purposes of evaluating active business requirements for tax-free corporate reorganizations. Applies such provisions to corporate distributions in a reorganization on or before December 31, 2010. (Sec. 203) Redefines "qualified veteran" for veterans in Alaska, Oregon, and Wisconsin for purposes of the tax exemption for veterans' mortgage bonds. Eliminates, for such veterans, the eligibility requirement of active service prior to 1977. Establishes volume limits for veterans' mortgage bonds for Alaska, Oregon, and Wisconsin, effective through 2010. (Sec. 204) Allows taxpayers to elect to treat self-created musical compositions or copyrights in such compositions sold or exchanged before January 1, 2011, as the sale or exchange of a capital asset. (Sec. 205) Revises the definition of qualifying vessels for purposes of the alternative tax on qualifying shipping activities to reduce the tonnage requirement for such vessels from 10,000 to 6,000 deadweight tons for 2006 through 2010. (Sec. 206) Extends until August 31, 2009, special arbitrage rules enacted by the Deficit Reduction Act of 1984 governing certain securities or obligations held in a fund subject to state law restrictions continuously in effect since October 9, 1969. (Sec. 207) Allows five-year amortization of expenses for creating or acquiring musical compositions or related copyrights. (Sec. 208) Accelerates from September 30, 2009, to December 31, 2006, the effective date for increased issuance authority for qualified small issue bonds. (Sec. 209) Modifies until December 31, 2010, provisions allowing certain continuing care facilities a tax exemption for interest imputed to below-market rate interest loans by: (1) decreasing from 65 to 62 the qualifying age for lenders to continuing care facilities; (2) eliminating the $90,000 limitation on loans to such facilities; (3) modifying continuing care contract requirements; and (4) revising the definition of continuing care facility to include an independent living unit, plus an assisted living or nursing facility, or both. Title III: Alternative Minimum Tax Relief - (Sec. 301) Increases the alternative minimum tax exemption amount for individual taxpayers (to $42,500 for single taxpayers and $62,550 for married taxpayers) and extends such increased exemption amount through 2006. (Sec. 302) Extends through 2006 special provisions allowing certain nonrefundable personal tax credits to the full extent of regular and alternative minimum tax liability. Title IV: Corporate Estimated Tax Provisions - Increases estimated tax payments for corporations with assets of at least $1 billion for the third quarters of 2006, 2012 and 2013. Delays the payment date of certain corporate estimated taxes in September 2010 and 2011. Title V: Revenue Offset Provisions - (Sec. 501) Authorizes the issuance of final Treasury regulations applying earning stripping rules to corporations which own a direct or indirect interest in a partnership. (Sec. 502) Repeals the exemption from tax reporting requirements for interest on tax-exempt bonds. (Sec. 503) Requires five-year amortization of geological and geophysical expenditures for major integrated oil companies. Defines "major integrated oil company" as a producer of crude oil that has an average daily worldwide production of at least 500,000 barrels, gross receipts in excess of $1 billion in 2005, and an ownership interest in a crude oil refinery of 15% or more. (Sec. 504) Revises the definition of "regulated investment company" for purposes of restrictions on foreign investors in U.S. real property interests. (Sec. 505) Imposes additional tax and withholding requirements on certain distributions by a qualified investment entity to foreign individuals or corporations. (Sec. 506) Sets forth a special rule to prevent foreign investors from avoiding the payment of tax on the sale of U.S. property interests through wash sale transactions (i.e., structured sale and repurchase transactions occurring within a 60-day period). (Sec. 507) Disallows tax exemptions for corporate reorganizations involving disqualified investment corporations. Defines a "disqualified investment corporation" as a distributing or controlled corporation if the fair market value of the investment assets of such corporation exceeds a certain percentage of the fair market value of all assets of the corporation. (Sec. 508) Imposes certain loan and redemption requirements on tax-exempt pooled financing bonds. Requires: (1) issuers of pooled financing bonds to reasonably expect that at least 30% of the net proceeds of a bond issue will be lent to borrowers within one year of issuance; (2) a written loan commitment of at least 30% of the net proceeds of a bond issue; and (3) the redemption of outstanding bonds within a specified loan origination period. (Sec. 509) Revises rules for offers-in-compromise of tax liability to require taxpayers to: (1) include a downpayment of 20% of the amount of any lump sum offer-in-compromise when submitting such offer; and (2) pay all scheduled installments due under a proposed offer-in-compromise while such offer is being evaluated by the Internal Revenue Service (IRS) for approval. Requires the IRS to approve offers-in-compromise within two years of submission (otherwise, such an offer is deemed approved). (Sec. 510) Provides that minor children under age 18 (currently, under age 14) shall be taxed on passive income at their parents' marginal income tax rate. (Sec. 511) Requires federal, state, and local governments to withhold 3% of payments for goods and services made to such governments after December 31, 2010. (Sec. 512) Repeals the adjusted gross income limitation for the conversion of an individual retirement account (IRA) to a Roth IRA. Allows taxpayers who convert to a Roth IRA in 2010 to spread conversion income over a two-year period for income tax purposes. (Sec. 513) Amends the FSC Repeal and Extraterritorial Income Exclusion Act of 2000 to repeal the binding contract exemption from the repeal of foreign sales corporation rules. Amends the American Jobs Creation Act of 2004 to repeal the binding contract exemption from the repeal of the tax exclusion for extraterritorial income. (Sec. 514) Modifies the definition of "W-2 wages" for purposes of the tax deduction for domestic manufacturing income to allow only such wages that are properly allocable to domestic production gross receipts. (Sec. 515) Accelerates from 2008 to 2006 the inflation adjustment to the exclusion amount for foreign earned income. Revises the formula for calculating the housing cost amount for purposes of the tax exclusion of foreign housing income. (Sec. 516) Imposes an excise tax penalty on certain tax-exempt entities (and entity managers) for participation in prohibited tax shelter activities.

Tax Increase Prevention and Reconciliation Act of 2005 - Title I: Extension and Modification of Certain Provisions - (Sec. 101) Amends the Internal Revenue Code to extend through 2009: (1) the increased expensing allowance (from $25,000 to $100,000) for depreciable business property; (2) the increased threshold amount ($400,000) for determining reductions to the expensing allowance; (3) the period during which a taxpayer may revoke an election to expense depreciable business property; and (4) the eligibility of certain computer software for the increased expensing allowance. (Sec. 102) Extends through 2010 reductions in capital gains and dividends tax rates enacted by the Jobs and Growth Tax Relief Reconciliation Act of 2003. (Sec. 103) Extends through 2008 exemptions from classification as subpart F income (income of controlled foreign corporations) for: (1) income that is derived in the active conduct of a banking, financing, or similar business or in the conduct of an insurance business; and (2) dividends, interest, rents, and royalties received by a controlled foreign corporation from a related controlled foreign corporation to the extent such items are attributable or properly allocable to non-subpart F income of the payor. Title II: Other Provisions - (Sec. 201) Exempts from taxation certain settlement funds established to pay claims under the Comprehensive Environmental Response, Compensation, and Liability Act of 1980. Terminates this exemption after 2010. (Sec. 202) Allows all members of a corporation's affiliated group to be treated as one corporation for purposes of evaluating active business requirements for tax-free corporate reorganizations. Applies such provisions to corporate distributions in a reorganization on or before December 31, 2010. (Sec. 203) Redefines "qualified veteran" for veterans in Alaska, Oregon, and Wisconsin for purposes of the tax exemption for veterans' mortgage bonds. Eliminates, for such veterans, the eligibility requirement of active service prior to 1977. Establishes volume limits for veterans' mortgage bonds for Alaska, Oregon, and Wisconsin, effective through 2010. (Sec. 204) Allows taxpayers to elect to treat self-created musical compositions or copyrights in such compositions sold or exchanged before January 1, 2011, as the sale or exchange of a capital asset. (Sec. 205) Revises the definition of qualifying vessels for purposes of the alternative tax on qualifying shipping activities to reduce the tonnage requirement for such vessels from 10,000 to 6,000 deadweight tons for 2006 through 2010. (Sec. 206) Extends until August 31, 2009, special arbitrage rules enacted by the Deficit Reduction Act of 1984 governing certain securities or obligations held in a fund subject to state law restrictions continuously in effect since October 9, 1969. (Sec. 207) Allows five-year amortization of expenses for creating or acquiring musical compositions or related copyrights. (Sec. 208) Accelerates from September 30, 2009, to December 31, 2006, the effective date for increased issuance authority for qualified small issue bonds. (Sec. 209) Modifies until December 31, 2010, provisions allowing certain continuing care facilities a tax exemption for interest imputed to below-market rate interest loans by: (1) decreasing from 65 to 62 the qualifying age for lenders to continuing care facilities; (2) eliminating the $90,000 limitation on loans to such facilities; (3) modifying continuing care contract requirements; and (4) revising the definition of continuing care facility to include an independent living unit, plus an assisted living or nursing facility, or both. Title III: Alternative Minimum Tax Relief - (Sec. 301) Increases the alternative minimum tax exemption amount for individual taxpayers (to $42,500 for single taxpayers and $62,550 for married taxpayers) and extends such increased exemption amount through 2006. (Sec. 302) Extends through 2006 special provisions allowing certain nonrefundable personal tax credits to the full extent of regular and alternative minimum tax liability. Title IV: Corporate Estimated Tax Provisions - Increases estimated tax payments for corporations with assets of at least $1 billion for the third quarters of 2006, 2012 and 2013. Delays the payment date of certain corporate estimated taxes in September 2010 and 2011. Title V: Revenue Offset Provisions - (Sec. 501) Authorizes the issuance of final Treasury regulations applying earning stripping rules to corporations which own a direct or indirect interest in a partnership. (Sec. 502) Repeals the exemption from tax reporting requirements for interest on tax-exempt bonds. (Sec. 503) Requires five-year amortization of geological and geophysical expenditures for major integrated oil companies. Defines "major integrated oil company" as a producer of crude oil that has an average daily worldwide production of at least 500,000 barrels, gross receipts in excess of $1 billion in 2005, and an ownership interest in a crude oil refinery of 15% or more. (Sec. 504) Revises the definition of "regulated investment company" for purposes of restrictions on foreign investors in U.S. real property interests. (Sec. 505) Imposes additional tax and withholding requirements on certain distributions by a qualified investment entity to foreign individuals or corporations. (Sec. 506) Sets forth a special rule to prevent foreign investors from avoiding the payment of tax on the sale of U.S. property interests through wash sale transactions (i.e., structured sale and repurchase transactions occurring within a 60-day period). (Sec. 507) Disallows tax exemptions for corporate reorganizations involving disqualified investment corporations. Defines a "disqualified investment corporation" as a distributing or controlled corporation if the fair market value of the investment assets of such corporation exceeds a certain percentage of the fair market value of all assets of the corporation. (Sec. 508) Imposes certain loan and redemption requirements on tax-exempt pooled financing bonds. Requires: (1) issuers of pooled financing bonds to reasonably expect that at least 30% of the net proceeds of a bond issue will be lent to borrowers within one year of issuance; (2) a written loan commitment of at least 30% of the net proceeds of a bond issue; and (3) the redemption of outstanding bonds within a specified loan origination period. (Sec. 509) Revises rules for offers-in-compromise of tax liability to require taxpayers to: (1) include a downpayment of 20% of the amount of any lump sum offer-in-compromise when submitting such offer; and (2) pay all scheduled installments due under a proposed offer-in-compromise while such offer is being evaluated by the Internal Revenue Service (IRS) for approval. Requires the IRS to approve offers-in-compromise within two years of submission (otherwise, such an offer is deemed approved). (Sec. 510) Provides that minor children under age 18 (currently, under age 14) shall be taxed on passive income at their parents' marginal income tax rate. (Sec. 511) Requires federal, state, and local governments to withhold 3% of payments for goods and services made to such governments after December 31, 2010. (Sec. 512) Repeals the adjusted gross income limitation for the conversion of an individual retirement account (IRA) to a Roth IRA. Allows taxpayers who convert to a Roth IRA in 2010 to spread conversion income over a two-year period for income tax purposes. (Sec. 513) Amends the FSC Repeal and Extraterritorial Income Exclusion Act of 2000 to repeal the binding contract exemption from the repeal of foreign sales corporation rules. Amends the American Jobs Creation Act of 2004 to repeal the binding contract exemption from the repeal of the tax exclusion for extraterritorial income. (Sec. 514) Modifies the definition of "W-2 wages" for purposes of the tax deduction for domestic manufacturing income to allow only such wages that are properly allocable to domestic production gross receipts. (Sec. 515) Accelerates from 2008 to 2006 the inflation adjustment to the exclusion amount for foreign earned income. Revises the formula for calculating the housing cost amount for purposes of the tax exclusion of foreign housing income. (Sec. 516) Imposes an excise tax penalty on certain tax-exempt entities (and entity managers) for participation in prohibited tax shelter activities.

Tax Relief Act of 2005 - Title I: Extension Of Expiring Provisions - Amends the Internal Revenue Code to extend: (1) the increased expensing allowance (currently, $100,000) for depreciable business property until 2010; (2) the tax credit for retirement savings contributions (saver's credit) through 2009; (3) the tax deduction for higher education expenses through 2009; (4) the new markets tax credit limitation through 2008; (5) the election to deduct state and local general sales taxes in lieu of state and local income taxes until 2008; (6) the allowance of nonrefundable personal tax credits against the alternative minimum tax through 2007; (7) the tax deduction for charitable contributions of computer technology and equipment by corporations for educational purposes through 2007; (8) the tax deduction for certain expenses of elementary and secondary school teachers through 2007; (9) the expensing allowance for environmental remediation expenditures through 2007 (includes petroleum products as hazardous substances for purposes of such allowance); (10) certain tax incentives for investment in the District of Columbia; (11) the Indian employment tax credit and accelerated depreciation allowances for business property on Indian reservations through 2007; (12) accelerated depreciation allowances for qualified leasehold and restaurant improvements until 2008; and (13) the tax credit for qualified electric vehicles through 2007 (eliminates the 75% phaseout of such tax credit for vehicles placed in service after December 31, 2005). Requires the Secretary of the Treasury to issue regulations under the new markets tax credit which ensure that non-metropolitan counties receive a proportional allocation of qualified equity investments. (Sec. 106) Increases the exemption from the alternative minimum tax for individuals and extends such exemption through 2006. (Sec. 108) Extends the tax credit for increasing research activities through 2007. Increases the rate of the alternative incremental tax credit. Allows an election to take an alternative tax credit for 12% of certain research expenses. Includes research consortia expenses as eligible tax credit expenses. (Sec. 109) Modifies the work opportunity and welfare-to-work tax credits to: (1) consolidate such credits into one tax credit; (2) allow ex-felons to qualify for the consolidated credit without regard to family income; (3) increase the maximum age for eligibility of food stamp recipients under the credit from 25 to 40; (4) increase the maximum eligibility age under the credit for designated community residents to 40; and (5) increase the credit amount for the employment of certain long-term family assistance recipients. (Sec. 110) Extends the authority for issuance of qualified zone academy bonds through 2007. Sets forth special rules for such bonds relating to amortization, expenditure requirements, arbitrage, and reporting. (Sec. 119) Applies to this title the general termination date (i.e., December 31, 2010) of the Economic Growth and Tax Relief Reconciliation Act of 2001. Title II: Provisions Relating To Charitable Donations - Subtitle A: Charitable Giving Incentives - (Sec. 201) Allows taxpayers who do not itemize a limited tax deduction for charitable cash contributions made after December 31, 2005, and before January 1, 2008. Allows a deduction to the extent that the taxpayer's charitable contributions exceed $210 ($420 in the case of a joint return). (Sec. 202) Excludes from gross income certain distributions from individual retirement accounts made for charitable purposes. (Sec. 203) Modifies the tax deduction for charitable contributions of food inventory to allow taxpayers other than C corporations to make contributions and to require only contributions of "apparently wholesome food," as defined by the Bill Emerson Good Samaritan Food Donation Act. (Sec. 204) Sets forth a rule for the reduction of shareholder basis in S corporation stock resulting from charitable contributions made by such corporations. (Sec. 205) Sets forth a special rule for the tax deduction for charitable contributions of book inventory by corporations to schools and libraries. (Sec. 206) Sets forth a rule limiting the taxation of unrelated business income received by a subsidiary of a tax-exempt organization. (Sec. 207) Allows an increased tax deduction (50% of taxpayer contribution base) for qualified conservation contributions (real property donated to a charitable organized exclusively for conservation purposes). Increases such tax deduction to 100% for contributions by certain farmers or ranchers. Allows a 15-year carryforward of unused tax deduction amounts. (Sec. 208) Allows taxpayers who create literary, musical, artistic, or scholarly compositions or similar property (or the copyright thereon) a fair market value tax deduction for contributions of such works if they are properly appraised and are donated no sooner than 18 months after their creation. (Sec. 209) Allows an exclusion from the gross income of charitable volunteers for reimbursements of automobile expenses incurred by such volunteers for the benefit of a charitable organization. Terminates such exclusion after 2007. (Sec. 210) Increases the tax deduction allowed corporations (10 to 15% of a corporation's contribution base) for charitable contributions to the mathematics and science partnership programs established under the Elementary and Secondary Education Act of 1965. Subtitle B: Reforming Charitable Organizations - Part I: General Reforms - (Sec. 211) Imposes a penalty on certain tax-exempt organizations for participation in prohibited tax shelter transactions. Requires such organizations to make certain disclosures to the Internal Revenue Service (IRS) concerning such transactions. (Sec. 212) Imposes an excise tax on certain tax-exempt organizations which acquire a direct or indirect interest in any life insurance, annuity, or endowment contract for 100% of the acquisition costs of such interest. Allows an exemption from such tax for individuals with insurable interests, named beneficiaries, and trust beneficiaries. Requires such organizations to file information returns with the IRS relating to the acquisition of such interests. (Sec. 213) Increases penalties on charitable organizations, including private foundations, for: (1) self-dealing and excess benefit transactions; (2) failure to distribute income; (3) excess business holdings; (4) investments which jeopardize charitable purposes; and (5) taxable expenditures (e.g., political activities). (Sex. 214) Modifies requirements for the tax deduction for charitable contributions of easements on buildings in registered historic districts to require such easements to preserve the entire exterior of the building and to prohibit any change that is inconsistent with the historical character of such exterior. Imposes additional reporting, appraisal, and filing fee requirements. (Sec. 215) Sets forth substantiation requirements for tax deductions of charitable contributions of taxidermy property (a mounted work of art which contains any part of a dead animal). (Sec. 216) Sets forth rules for the recapture of tax benefits for charitable contributions of tax-exempt use property which is not used for charitable purposes. Imposes a $10,000 penalty for the fraudulent identification of exempt use property. (Sec. 217) Sets forth rules for the valuation of clothing and household items for purposes of the charitable tax deduction allowed for such items. (Sec. 218) Modifies recordkeeping requirements for certain charitable contributions to require canceled checks for such contributions or confirmation letters from donee organizations. (Sec. 219) Requires a tax-exempt organization which receives a donation of a fractional interest in an item of tangible property to take actual possession of such item for the portion of a year corresponding to the organization's percentage interest in the item. (Sec. 220) Revises penalties for substantial and gross overstatements of valuations of charitable donation property. Imposes a penalty for intentional misstatements of appraisal values. Sets forth definitions relating to appraisers and appraisals. (Sec. 221) Establishes standards and requirements for tax-exempt credit counseling organizations. (Sec. 222) Revises the definitions of private foundation gross investment income and capital gain net income for purposes of the excise tax on such income. (Sec. 223) Defines "convention or association of churches" to include individuals (with or without voting rights) as well as churches. (Sec. 224) Imposes certain reporting requirements on exempt organizations not currently required to file informational returns (e.g., organizations with gross receipts of less than $25,000). (Sec. 225) Authorizes the Secretary of the Treasury to notify state officials of adverse actions taken by the IRS against certain charitable organizations. Part II: Improved Accountability Of Donor Advised Funds - (Sec. 231) Imposes excise taxes and other penalties on sponsoring organizations of donor advised funds for failure to make required distributions. Defines "sponsoring organization" as a charitable organization which maintains one or more donor advised funds. Defines "donor advised fund" as a separately-identified fund which is owned and controlled by a sponsoring organization and which permits a donor to have advisory privileges with respect to the distribution or investment of fund assets. (Sec. 232) Applies private foundation prohibited transaction rules to supporting organizations. (Sec. 233) Sets forth rules for the tax deduction for charitable contributions to donor advised funds by individuals and estates and for gifts to donor advised funds. (Sec. 234) Requires a supporting organization to report for its taxable years: (1) its total number of donor advised funds; (2) the aggregate value of assets held in such funds; and (3) the aggregate contributions to, and grants made from, such funds. Part III: Improved Accountability Of Supporting Organizations - (Sec. 241) Sets forth certain requirements for private foundation supporting organizations. (Sec. 242) Imposes an excise tax on supporting organizations that fail to distribute a certain percentage of their income. (Sec. 243) Imposes penalties on supporting organizations for excess benefit transactions. (Sec. 244) Applies private foundation excess business holding restrictions to supporting organizations. Allows the Secretary of the Treasury to exempt a supporting organization from such restrictions if its business holdings are consistent with its exempt purpose. (Sec. 245) Revises the tax treatment of distributions and taxable expenditures by nonoperating private foundations to supporting organizations. (Sec. 246) Sets forth reporting requirements for supporting organizations. Title III: Miscellaneous Provisions - (Sec. 301) Revises provisions relating to New York Liberty Zone tax incentives. (Sec. 302) Modifies S corporation rules relating to passive investment income to: (1) increase from 25 to 60% the limit on S corporation passive investment income; (2) exempt gains from the sale or exchange of securities from the definition of passive investment income; (3) repeal the automatic termination of S corporation status for S corporations which hold certain levels of passive investment income for three consecutive years. (Sec. 303) Accelerates from September 30, 2009, to December 31, 2006, the effective date for increased issuance authority for certain qualified small issue bonds. (Sec. 304) Treats premiums for mortgage insurance purchased in 2007 as tax deductible residential mortgage interest. Phases out the allowable amount of such tax deduction for adjusted gross incomes over $100,000. (Sec. 305) Expresses the sense of the Senate on the use of no-bid contracting by the Federal Emergency Management Agency (FEMA). (Sec. 306) Expresses the sense of Congress that the United States should not be a signatory to any agreement or protocol with respect to the Doha Development Agenda (Doha Round) of the World Trade Organization negotiations or to any other bilateral or multilateral trade negotiations that: (1) adopts any proposal to lessen the effectiveness of domestic and international disciplines on unfair trade or safeguard provisions; and (2) would lessen the ability of the United States to enforce its trade laws. (Sec. 307) Extends until August 31, 2009, special arbitrage rules enacted by the Deficit Reduction Act of 1984 governing certain securities or obligations held in a fund subject to state law restrictions continuously in effect since October 9, 1969. (Sec. 308) Directs the Secretary of the Treasury to modify regulations governing the treatment of certain stock options under nonqualified deferred compensation rules. (Sec. 309) Expresses the sense of the Senate that revenues generated by this Act that exceed the amounts specified in reconciliation instructions should be dedicated to the low-income home energy assistance program. (Sec. 310) Revises provisions allowing a tax exemption for the interest imputed to below-market rate interest loans to certain continuing care facilities to: (1) decrease from 65 to 62 the qualifying age for lenders to continuing care facilities; (2) eliminate the $90,000 limitation on loans to such facilities; (3) modify continuing care contract requirements; and (4) revise the definition of continuing care facility to include an independent living unit, plus an assisted living or nursing facility, or both. (Sec. 311) Allows certain employees of the intelligence community to exclude from their gross incomes the gain from the sale of their principal residences without regard to otherwise applicable five-year residential use and holding requirements. (Sec. 312) Expresses the sense of the Senate that the conferees for the Tax Relief Act of 2006 should strive to permanently extend the amendments to the child tax credit enacted by the Economic Growth and Tax Relief Reconciliation Act of 2001 and the Jobs and Growth Tax Relief Reconciliation Act of 2003. (Sec. 313) Allows an election to expense 50% of the cost of any qualified advanced mine safety equipment property, including emergency communication technology, electronic identification and location devices, emergency oxygen-generating, self-rescue devices, and comprehensive atmospheric monitoring systems. (Sec. 314) Allows a business-related tax credit for mine rescue team training costs. Terminates such credit after 2008. (Sec. 315) Authorizes additional appropriations for FY2006-FY2010 for the Department of Veterans Affairs for medical services and compensation and pension benefits. Establishes in the Treasury the Veterans Hospital Improvement Fund to improve health facilities treating veterans. Provides initial funding to such Fund of $1 billion. (Sec. 316) Expresses the sense of the Senate that protecting middle class families from the alternative minimum tax should be a higher priority for Congress than extending tax cuts set to expire at the end of 2008. Title IV: Revenue Offset Provisions - Subtitle A: Provisions Designed to Curtail Tax Shelters - (Sec. 401) Revises the liability standard applicable to tax return preparers who understate taxpayer liability. Increases the penalties applicable to such tax return preparers for understatements and for willful or reckless conduct. (Sec. 402) Increases the penalty for frivolous tax submissions and expands such penalty to include submissions for collection due process, installment agreements, offers-in-compromise, and taxpayer assistance orders. Allows taxpayers to withdraw frivolous tax submissions without penalty within 30 days after receiving notice of a frivolous submission determination. (Sec. 403) Increases the penalties for: (1) promoting abusive tax shelters; and (2) aiding and abetting the understatement of tax liability. Denies a tax deduction for such penalties. Subtitle B: Economic Substance Doctrine - (Sec. 411) Sets forth definitions and rules for the application of the economic substance doctrine for evaluating transactions structured to avoid or evade taxes. (Sec. 412) Imposes a penalty for understatements of tax resulting from transactions lacking economic substance equal to 40% of the amount of such understatement. Lowers the penalty to 20% for underpayments from transactions which were adequately disclosed on a tax return. (Sec. 413) Denies a tax deduction for interest paid on tax deficiency assessments resulting from non-economic substance transactions. Subtitle C: Improvements in Efficiency and Safeguards in Internal Revenue Service Collection - (Sec. 421) Waives set-up fees for taxpayer installment agreements which provide for automated withdrawals. (Sec. 422) Adds as grounds for terminating a taxpayer installment agreement: (1) failure to make a federal tax deposit on time; and (2) failure to file a timely tax return. (Sec. 423) Revises rules for submission of offers-in-compromise to require a downpayment of 20% of the amount of such offer. Subtitle D: Penalties and Fines - (Sec. 431) Increases penalties for: (1) underpayment or overpayment of tax due to fraud; (2) attempts to evade or defeat tax; (3) willful failure to file tax returns, supply information, or pay tax; and (4) fraud and false statements. Imposes new penalties for aggravated failure to file tax returns (i.e., failure to file a return for three or more consecutive taxable years). (Sec. 432) Doubles penalties and interest for underpayments of tax related to concealment of taxable income in offshore accounts. Authorizes the Secretary of the Treasury to waive such increased penalties if the Secretary determines that the taxpayer's use of offshore accounts is incidental to a transaction and such use is conducted in the ordinary course of the taxpayer's trade or business. (Sec. 433) Revises tax rules denying a tax deduction for fines and penalties paid to a governmental entity for the violation of any law to provide that no deduction shall be allowed for any fine or penalty paid (whether by suit, agreement, or otherwise) to, or at the direction of, a government or nongovernmental regulatory entity for violations of law or for the investigation or inquiry by such government or entity into the potential violation of any law. Allows exceptions to the general rule of nondeductibility for: (1) certain restitution payments or payments required to come into compliance with law; (2) court-ordered payments not involving a government or nongovernmental regulatory agency; and (3) amounts paid or incurred as taxes due. Requires governmental agencies involved in a settlement with a taxpayer to report to the taxpayer and the Secretary of the Treasury information about such settlement, including the amount of the settlement, the amount paid as restitution or remediation of property, and the amount paid to come into compliance with law. (Sec. 434) Disallows any tax deduction for punitive damages paid or incurred as a result of a judgment or in settlement of a claim. Requires the inclusion in gross income of any punitive damages paid by an insurer on behalf of a taxpayer. (Sec. 435) Increase the penalties for bad checks tendered in payment of taxes. Subtitle E: Provisions to Discourage Expatriation - (Sec. 441) Modifies rules enacted by the American Jobs Creation Act of 2004 for the tax treatment of expatriated entities and foreign corporations acquiring such entities through inversion transactions (corporate stock transactions structured to avoid or evade U.S. taxation). (Sec. 442) Sets forth rules for U.S. citizens and permanent resident aliens (expatriates) who terminate their citizenship or residency to avoid U.S. taxation. Subjects such expatriates to a tax on the net unrealized gain of property sold or transferred based upon the fair market value of such property as of the day before expatriation. Exempts from such tax the first $600,000 ($1.2 million for joint returns) of the value of such property. Provides for an inflation adjustment of such exemption amount. Permits expatriates to elect to continue being taxed as U.S. citizens. Allows a deferral of any tax owed resulting from such election, but requires the posting of adequate security for payment of any deferred tax. Sets forth rules for determining dates of expatriation. Sets forth rules for the tax treatment of retirement plans, interests in trusts, gifts, and inheritances of expatriates. Amends the Immigration and Nationality Act to deny expatriates who fail to comply with tax obligations reentry into the United States (currently, reentry is denied to expatriates who terminate citizenship to avoid U.S. taxation). Subtitle F: Miscellaneous Provisions - (Sec. 451) Sets forth a special rule for the valuation of contingent payment convertible debt instruments. (Sec. 452) Authorizes the Secretary of the Treasury to prescribe regulations disallowing or allocating the foreign tax credit in abuse situations involving the inappropriate separation of foreign taxes from the related income. (Sec. 453) Eliminates certain exceptions to prohibitions against leasing transactions with governmental entities (i.e., SILOs [sale in/lease out]) enacted by the American Jobs Creation Act of 2004. (Sec. 454) Extends restrictions on earnings-stripping to C corporations which are partners in a partnership. (Sec. 455) Limits the business tax deduction for certain entertainment expenses to the amount treated as compensation paid by an employer and wages earned by an employee. (Sec. 456) Increases from 14 to 18 the age at which a minor child's unearned income is included in the parents' gross income. (Sec. 457) Revises requirements for the tax-exemption of interest from pooled financing bonds. (Sec. 458) Repeals the exemption from tax reporting requirements for tax-exempt interest. (Sec. 459) Modifies the tax credit for producing fuel from a nonconventional source to: (1) use the prior year fuel price for purposes of calculating the phaseout of such credit; (2) repeal the phaseout limitation for coke and coke gas; and (3) eliminate the inflation adjustment for the credit amount in 2005, 2006, and 2007 for all fuels, except for coke and coke gas. (Sec. 460) Modifies estimated tax payment requirements for taxpayers with adjusted gross income over $150,000. (Sec. 461) Requires certain large integrated oil companies (i.e., companies with gross receipts of $1 billion and average daily crude oil production of at least 500,000 barrels) to revalue their LIFO (last-in, first-out) inventories according to a specified formula. (Sec. 462) Denies certain large integrated oil companies preferential tax treatment (i.e., two-year amortization) of geological and geophysical expenditures for U.S. oil exploration and development. (Sec. 463) Sets forth a special rule for valuation of employee personal use of noncommercial aircraft. (Sec. 464) Revises the definition of "regulated investment company" for purposes of restrictions imposed upon foreign investors investing in U.S. real property interests to include certain U.S. real property holding corporations. (Sec. 465) Revises the definition of "qualified investment entity" for purposes of restrictions imposed upon foreign investors investing in U.S. real property interests. (Sec. 466) Sets forth a special rule to prevent foreign investors from avoiding the payment of tax on the sale of U.S. real property interests through wash sale transactions (i.e., structured sale and repurchase transactions occurring within a 60-day period). (Sec. 467) Revises rules for the taxation of distributions of corporate stock and securities in tax-free reorganizations to treat all members of the distributing corporation's separate affiliated group as one corporation in evaluating active business requirements. Denies tax-free treatment for distributions by a disqualified investment corporation (i.e., a corporation having investment assets of 75% or more of its total assets). (Sec. 468) Allows five-year amortization of expenses for creating or acquiring musical compositions or related copyrights. (Sec. 469) Allows a tax credit for investment in rural renaissance bonds used to finance certain projects for rural economic and infrastructure development, including projects for water or waste treatment, affordable housing, distance learning or telemedicine, and expansion of broadband technology. (Sec 470) Denies a foreign tax credit to certain integrated oil companies (i.e., companies with gross receipts of over $1 billion and an average daily production of crude oil of at least 500,000 barrels) designated as dual capacity taxpayers for amounts paid to a foreign country which does not have a generally applicable income tax and from which such oil companies receive an economic benefit. (Sec. 471) Prohibits the Secretary of the Treasury from entering into any qualified tax collection contracts after April 1, 2006, until the Secretary implements a disability preference program that awards not less than 10% of contract dollars to certain employers of severely disabled veterans and social security disability recipients. Title V: Compliance With Congressional Budget Act - Terminates after FY2010 the provisions of, and amendments made by, title I, subtitle A of title II, and title III of this Act. Title VI: Strengthening America's Military - Strengthening America's Military Act - Subtitle A: Military Funding - Authorizes appropriations for FY2006-FY2010 for resetting and recapitalizing equipment being used in theaters of operations for the Army, Department of Defense, Marine Corps, and Navy.

(This measure has not been amended since it was reported to the House on November 17, 2005. The summary of that version is repeated here.) Tax Relief Extension Reconciliation Act of 2005 - Title I: Extensions Of Certain Provisions Through 2006 - (Sec. 101) Extends through 2006: (1) the allowance of certain nonrefundable tax credits against alternative minimum tax liability; (2) the Indian employment tax credit; (3) accelerated depreciation of business property on Indian reservations; (4) the work opportunity tax credit (increases from 25 to 35 the age limit for food stamp recipients eligible for such credit); (5) the welfare-to-work tax credit; (6) the tax deduction for corporate donations of computer technology and equipment for educational purposes; (7) certain eligibility provisions for Archer medical savings accounts (MSAs) (extends the filing deadline for the report of Archer MSA trustees); (8) accelerated depreciation of leasehold and restaurant improvements (15-year recovery period); and (9) the suspension of the taxable income limit on percentage depletion for oil and natural gas from marginal properties. (Sec. 110) Extends through 2006: (1) the authority to designate District of Columbia Enterprise Zones; (2) the authority for issuance of tax-exempt economic development bonds in D.C. enterprise zones; (3) the exemption of gain from the sale or exchange of enterprise zone assets; and (4) the tax credit for first-time D.C. homebuyers. (Sec. 111) Extends through 2006: (1) the possessions tax credit for American Samoa; and (2) parity requirements for the application of group health plan limits to mental health benefits. (Sec. 113) Extends through 2006 the tax credit for increasing research activities. Increases the rates of the alternative incremental credit. Allows a taxpayer election of an alternative simplified tax credit for research expenses. (Sec. 114) Extends through 2006: (1) the authority for issuance of qualified zone academy bonds; (2) the tax deduction from gross income for elementary and secondary school teacher expenses; (3) the tax deduction for higher education tuition and related expenses; and (4) the election to deduct state and local general sales taxes in lieu of state and local income taxes. Title II: Extensions Of Certain Provisions For 2 Additional Years And Other Modifications - (Sec. 201) Extends through 2007 the expensing allowance for environmental remediation costs, including remediation of sites at which petroleum products have been released or disposed of. Extends through 2008: (1) the exemption of active financial services income from Subpart F taxation; (2) the tax credit for retirement savings contributions (saver's credit); and (3) dividends, interest, rents, and royalties received or accrued from a controlled foreign corporation (CFC) from Subpart F taxation to the extent attributable or properly allocable to the non-Subpart income of the CFC. Extends through 2010: (1) the reduced tax rates for capital gains and dividend income enacted by the Jobs and Growth Tax Relief Reconciliation Act of 2003; and (2) the increased expensing allowance for depreciable business property. Title III: Other Provisions - (Sec. 301) Allows an income tax exemption for certain settlement funds established under the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 prior to December 31, 2010. (Sec. 302) Revises the active business requirement for nonrecognition of the gain from distributions of corporate property to treat all members of a corporation's separate affiliated group as one corporation. (Sec. 303) Revises eligibility requirements for veterans' mortgage bonds to provide that veterans must apply for financing within 25 years of leaving active duty (currently, such veterans must have served prior to January 1, 1977). Sets volume limits on veterans' mortgage bonds for the states of Texas, California, Oregon, Wisconsin, and Alaska, phased in through 2009. Terminates such limits after 2010. (Sec. 304) Allows a taxpayer to elect to treat musical compositions or copyrights in musical works that are created by the taxpayer's personal efforts and are sold or exchanged before January 1, 2011, as capital assets (thus eligible for lower capital gains tax rates). (Sec. 305) Revises the definition of "qualifying vessel" for purposes of the alternative tax on international shipping activities to reduce the tonnage requirement for such vessels from 10,000 to 6,000 deadweight tons for taxable years beginning after December 31, 2005, and ending before January 1, 2011. (Sec. 306) Extends until August 31, 2009, special arbitrage rules enacted by the Deficit Reduction Act of 1984 governing certain securities or obligations held in a fund subject to state law restrictions continuously in effect since October 9, 1969.

Tax Relief Extension Reconciliation Act of 2005 - Title I: Extensions Of Certain Provisions Through 2006 - (Sec. 101) Extends through 2006: (1) the allowance of certain nonrefundable tax credits against alternative minimum tax liability; (2) the Indian employment tax credit; (3) accelerated depreciation of business property on Indian reservations; (4) the work opportunity tax credit (increases from 25 to 35 the age limit for food stamp recipients eligible for such credit); (5) the welfare-to-work tax credit; (6) the tax deduction for corporate donations of computer technology and equipment for educational purposes; (7) certain eligibility provisions for Archer medical savings accounts (MSAs) (extends the filing deadline for the report of Archer MSA trustees); (8) accelerated depreciation of leasehold and restaurant improvements (15-year recovery period); and (9) the suspension of the taxable income limit on percentage depletion for oil and natural gas from marginal properties. (Sec. 110) Extends through 2006: (1) the authority to designate District of Columbia Enterprise Zones; (2) the authority for issuance of tax-exempt economic development bonds in D.C. enterprise zones; (3) the exemption of gain from the sale or exchange of enterprise zone assets; and (4) the tax credit for first-time D.C. homebuyers. (Sec. 111) Extends through 2006: (1) the possessions tax credit for American Samoa; and (2) parity requirements for the application of group health plan limits to mental health benefits. (Sec. 113) Extends through 2006 the tax credit for increasing research activities. Increases the rates of the alternative incremental credit. Allows a taxpayer election of an alternative simplified tax credit for research expenses. (Sec. 114) Extends through 2006: (1) the authority for issuance of qualified zone academy bonds; (2) the tax deduction from gross income for elementary and secondary school teacher expenses; (3) the tax deduction for higher education tuition and related expenses; and (4) the election to deduct state and local general sales taxes in lieu of state and local income taxes. Title II: Extensions Of Certain Provisions For 2 Additional Years And Other Modifications - (Sec. 201) Extends through 2007 the expensing allowance for environmental remediation costs, including remediation of sites at which petroleum products have been released or disposed of. Extends through 2008: (1) the exemption of active financial services income from Subpart F taxation; (2) the tax credit for retirement savings contributions (saver's credit); and (3) dividends, interest, rents, and royalties received or accrued from a controlled foreign corporation (CFC) from Subpart F taxation to the extent attributable or properly allocable to the non-Subpart income of the CFC. Extends through 2010: (1) the reduced tax rates for capital gains and dividend income enacted by the Jobs and Growth Tax Relief Reconciliation Act of 2003; and (2) the increased expensing allowance for depreciable business property. Title III: Other Provisions - (Sec. 301) Allows an income tax exemption for certain settlement funds established under the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 prior to December 31, 2010. (Sec. 302) Revises the active business requirement for nonrecognition of the gain from distributions of corporate property to treat all members of a corporation's separate affiliated group as one corporation. (Sec. 303) Revises eligibility requirements for veterans' mortgage bonds to provide that veterans must apply for financing within 25 years of leaving active duty (currently, such veterans must have served prior to January 1, 1977). Sets volume limits on veterans' mortgage bonds for the states of Texas, California, Oregon, Wisconsin, and Alaska, phased in through 2009. Terminates such limits after 2010. (Sec. 304) Allows a taxpayer to elect to treat musical compositions or copyrights in musical works that are created by the taxpayer's personal efforts and are sold or exchanged before January 1, 2011, as capital assets (thus eligible for lower capital gains tax rates). (Sec. 305) Revises the definition of "qualifying vessel" for purposes of the alternative tax on international shipping activities to reduce the tonnage requirement for such vessels from 10,000 to 6,000 deadweight tons for taxable years beginning after December 31, 2005, and ending before January 1, 2011. (Sec. 306) Extends until August 31, 2009, special arbitrage rules enacted by the Deficit Reduction Act of 1984 governing certain securities or obligations held in a fund subject to state law restrictions continuously in effect since October 9, 1969.

Amends the Internal Revenue Code to extend through 2006 the: (1) allowance of certain nonrefundable tax credits against regular and alternative minimum tax liability; (2) election to deduct state and local sales taxes in lieu of state and local income taxes; (3) tax credit for increasing research activities; (4) tax deduction for higher education tuition and related expenses; (5) tax deduction for elementary and secondary school teacher expenses; (6) authority to issue qualified zone academy bonds; (7) Indian employment tax credit and accelerated depreciation for business property on Indian reservations; (8) tax deduction for corporate donations of computer technology and equipment for educational purposes; (9) eligibility provisions for the medical savings accounts tax deduction; (10) accelerated depreciation of leasehold and restaurant improvements; (11) suspension of the taxable income limit on percentage depletion for oil and natural gas from marginal properties; (12) certain tax benefits for investment in District of Columbia Enterprise Zones; (13) possession tax credit for American Samoa; and (14) parity requirement for the application of group health plan limits to mental health benefits; and (15) authority for certain Internal Revenue Service (IRS) undercover operations. Revises the work opportunity and welfare-to-work tax credits to: (1) consolidate such credits into a single tax credit and extend the consolidated tax credit through 2007; (2) repeal income eligibility requirements for ex-felons; and (3) increase the age limit for food stamp eligibility from 25 to 35. Extends through 2007 the expensing allowance for environmental remediation costs, including remediation of petroleum products. Extends through 2008 the exemption of active financial services income from Subpart F taxation. Extends through 2010 the: (1) tax credit for retirement savings contributions (saver's credit); (2) increased expensing allowances for depreciable business assets; and (3) reduced tax rates for capital gains and dividend income.