Pub.L. 107-017 To extend for 4 additional months the period for which chapter 12 of title 11 of the United States Code is reenacted. <> ...

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                sections 24 and 1400C''.
                    (F) Subparagraph (C) of section 25(e)(1) is amended 
                by inserting ``, 24,'' after ``sections 23''.
                    (G) Section 904(h) is amended by inserting ``(other 
                than section 24)'' after ``chapter''.
                    (H) Subsection (d) of section 1400C is amended by 
                inserting ``and section 24'' after ``this section''.

    (c) Refundable Child Credit.--
            (1) In general.--So much of section 24(d) (relating to 
        additional credit for families with 3 or more children) as 
        precedes paragraph (2) is amended to read as follows:

    ``(d) Portion of Credit Refundable.--
            ``(1) In general.--The aggregate credits allowed to a 
        taxpayer under subpart C shall be increased by the lesser of--
                    ``(A) the credit which would be allowed under this 
                section without regard to this subsection and the 
                limitation under section 26(a), or
                    ``(B) the amount by which the amount of credit 
                allowed by this section (determined without regard to 
                this subsection) would increase if the limitation 
                imposed by section 26(a) were increased by the greater 
                of--
                          ``(i) 15 percent (10 percent in the case of 
                      taxable years beginning before January 1, 2005) of 
                      so much of the taxpayer's earned income (within 
                      the meaning of section 32) which is taken into 
                      account in computing taxable income for the 
                      taxable year as exceeds $10,000, or
                          ``(ii) in the case of a taxpayer with 3 or 
                      more qualifying children, the excess (if any) of--
                                    ``(I) the taxpayer's social security 
                                taxes for the taxable year, over
                                    ``(II) the credit allowed under 
                                section 32 for the taxable year.
        The amount of the credit allowed under this subsection shall not 
        be treated as a credit allowed under this subpart and shall 
        reduce the amount of credit otherwise allowable under subsection 
        (a) without regard to section 26(a).''.
            (2) Inflation adjustment.--Subsection (d) of section 24 is 
        amended by adding at the end the following new paragraph:
            ``(4) Inflation adjustment.--In the case of any taxable year 
        beginning in a calendar year after 2001, the $10,000 amount 
        contained in paragraph (1)(B) shall 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 1992' in 
                subparagraph (B) thereof.
        Any increase determined under the preceding sentence shall be 
        rounded to the nearest multiple of $50.''.

[[Page 115 STAT. 47]]

            (3) Conforming amendment.--Section 32 <<NOTE: 26 USC 32.>>  
        is amended by striking subsection (n).

    (d) Elimination of Reduction of Credit to Taxpayer Subject to 
Alternative Minimum Tax Provision.--Section 24(d) is amended--
            (1) by striking paragraph (2), and
            (2) by redesignating paragraphs (3) and (4) as paragraphs 
        (2) and (3), respectively.

    (e) Effective Dates.-- <<NOTE: Applicability. 26 USC 24 note.>> 
            (1) In general.--Except as provided in paragraph (2), the 
        amendments made by this section shall apply to taxable years 
        beginning after December 31, 2000.
            (2) Subsection (b).--The amendments made by subsection (b) 
        shall apply to taxable years beginning after December 31, 2001.

SEC. 202. EXPANSION OF ADOPTION CREDIT AND ADOPTION ASSISTANCE PROGRAMS.

    (a) In General.--
            (1) Adoption credit.--Section 23(a)(1) (relating to 
        allowance of credit) is amended to read as follows:
            ``(1) In general.--In the case of an individual, there shall 
        be allowed as a credit against the tax imposed by this chapter--
                    ``(A) in the case of an adoption of a child other 
                than a child with special needs, the amount of the 
                qualified adoption expenses paid or incurred by the 
                taxpayer, and
                    ``(B) in the case of an adoption of a child with 
                special needs, $10,000.''.
            (2) Adoption assistance programs.--Section 137(a) (relating 
        to adoption assistance programs) is amended to read as follows:

    ``(a) In General.--Gross income of an employee does not include 
amounts paid or expenses incurred by the employer for adoption expenses 
in connection with the adoption of a child by an employee if such 
amounts are furnished pursuant to an adoption assistance program. The 
amount of the exclusion shall be--
            ``(1) in the case of an adoption of a child other than a 
        child with special needs, the amount of the qualified adoption 
        expenses paid or incurred by the taxpayer, and
            ``(2) in the case of an adoption of a child with special 
        needs, $10,000.''.

    (b) Dollar Limitations.--
            (1) Dollar amount of allowed expenses.--
                    (A) Adoption expenses.--Section 23(b)(1) (relating 
                to allowance of credit) is amended--
                          (i) by striking ``$5,000'' and inserting 
                      ``$10,000'',
                          (ii) by striking ``($6,000, in the case of a 
                      child with special needs)'', and
                          (iii) by striking ``subsection (a)'' and 
                      inserting ``subsection (a)(1)(A)''.
                    (B) Adoption assistance programs.--Section 137(b)(1) 
                (relating to dollar limitations for adoption assistance 
                programs) is amended--
                          (i) by striking ``$5,000'' and inserting 
                      ``$10,000'', and
                          (ii) by striking ``($6,000, in the case of a 
                      child with special needs)'', and

[[Page 115 STAT. 48]]

                          (iii) by striking ``subsection (a)'' and 
                      inserting ``subsection (a)(1)''.
            (2) Phase-out limitation.--
                    (A) Adoption expenses.--Clause (i) of section 
                23(b)(2)(A) (relating to income limitation) <<NOTE: 26 
                USC 23.>>  is amended by striking ``$75,000'' and 
                inserting ``$150,000''.
                    (B) Adoption assistance programs.--Section 
                137(b)(2)(A) (relating to income limitation) is amended 
                by striking ``$75,000'' and inserting ``$150,000''.

    (c) Year Credit Allowed.--Section 23(a)(2) (relating to year credit 
allowed) is amended by adding at the end the following new flush 
sentence:
        ``In the case of the adoption of a child with special needs, the 
        credit allowed under paragraph (1) shall be allowed for the 
        taxable year in which the adoption becomes final.''.

    (d) Repeal of Terminations.--
            (1) Children without special needs.--Paragraph (2) of 
        section 23(d) (relating to definition of eligible child) is 
        amended to read as follows:
            ``(2) Eligible child.--The term `eligible child' means any 
        individual who--
                    ``(A) has not attained age 18, or
                    ``(B) is physically or mentally incapable of caring 
                for himself.''.
            (2) Adoption assistance programs.--Section 137 (relating to 
        adoption assistance programs) is amended by striking subsection 
        (f ).

    (e) Adjustment of Dollar and Income Limitations for Inflation.--
            (1) Adoption credit.--Section 23 (relating to adoption 
        expenses) is amended by redesignating subsection (h) as 
        subsection (i) and by inserting after subsection (g) the 
        following new subsection:

    ``(h) Adjustments for Inflation.--In the case of a taxable year 
beginning after December 31, 2002, each of the dollar amounts in 
subsection (a)(1)(B) and paragraphs (1) and (2)(A)(i) of subsection (b) 
shall be increased by an amount equal to--
            ``(1) such dollar amount, multiplied by
            ``(2) 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 2001' for `calendar 
        year 1992' in subparagraph (B) thereof.''.
            (2) Adoption assistance programs.--Section 137 (relating to 
        adoption assistance programs), as amended by subsection (d), is 
        amended by adding at the end the following new subsection:

    ``(f ) Adjustments for Inflation.--In the case of a taxable year 
beginning after December 31, 2002, each of the dollar amounts in 
subsection (a)(2) and paragraphs (1) and (2)(A) of subsection (b) shall 
be increased by an amount equal to--
            ``(1) such dollar amount, multiplied by
            ``(2) 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 2001' for `calendar 
        year 1992' in subparagraph (B) thereof.''.

    (f ) Credit Allowed Against Alternative Minimum Tax.--

[[Page 115 STAT. 49]]

            (1) In general.--Subsection (b) of section 23 <<NOTE: 26 USC 
        23.>>  is amended by adding at the end the following new 
        paragraph:
            ``(4) Limitation based on amount of tax.--The credit allowed 
        under subsection (a) for any taxable year shall not exceed the 
        excess of--
                    ``(A) the sum of the regular tax liability (as 
                defined in section 26(b)) plus the tax imposed by 
                section 55, over
                    ``(B) the sum of the credits allowable under this 
                subpart (other than this section) and section 27 for the 
                taxable year.''.
            (2) Conforming amendments.--
                    (A) Section 23(c), as amended by section 201(b), is 
                amended--
                          (i) by striking ``section 26(a)'' and 
                      inserting ``subsection (b)(4)'', and
                          (ii) by striking ``reduced by the sum of the 
                      credits allowable under this subpart (other than 
                      this section and sections 24 and 1400C)''.
                    (B) Section 24(b)(3)(B), as added by section 201(b), 
                is amended by striking ``this section'' and inserting 
                ``this section and section 23''.
                    (C) Sections 26(a)(1), 904(h), and 1400C(d), as 
                amended by section 201(b), are each amended by striking 
                ``section 24'' and inserting ``sections 23 and 24''.

    (g) Effective Date.-- <<NOTE: Applicability. 26 USC 23 note.>> 
            (1) In general.--Except as provided in paragraph (2), the 
        amendments made by this section shall apply to taxable years 
        beginning after December 31, 2001.
            (2) Subsection (a).--The amendments made by subsection (a) 
        shall apply to taxable years beginning after December 31, 2002.

SEC. 203. <<NOTE: 26 USC 24 note.>>  REFUNDS DISREGARDED IN THE 
            ADMINISTRATION OF FEDERAL PROGRAMS AND FEDERALLY ASSISTED 
            PROGRAMS.

    Any payment considered to have been made to any individual by reason 
of section 24 of the Internal Revenue Code of 1986, as amended by 
section 201, shall not be taken into account as income and shall not be 
taken into account as resources for the month of receipt and the 
following month, for purposes of determining the eligibility of such 
individual or any other individual for benefits or assistance, or the 
amount or extent of benefits or assistance, under any Federal program or 
under any State or local program financed in whole or in part with 
Federal funds.

SEC. 204. DEPENDENT CARE CREDIT.

    (a) Increase in Dollar Limit.--Subsection (c) of section 21 
(relating to expenses for household and dependent care services 
necessary for gainful employment) is amended--
            (1) by striking ``$2,400'' in paragraph (1) and inserting 
        ``$3,000'', and
            (2) by striking ``$4,800'' in paragraph (2) and inserting 
        ``$6,000''.

    (b) Increase in Applicable Percentage.--Section 21(a)(2) (defining 
applicable percentage) is amended--
            (1) by striking ``30 percent'' and inserting ``35 percent'', 
        and
            (2) by striking ``$10,000'' and inserting ``$15,000''.

[[Page 115 STAT. 50]]

    (c) <<NOTE: Applicability. 26 USC 21 note.>>  Effective Date.--The 
amendments made by this section shall apply to taxable years beginning 
after December 31, 2002.

SEC. 205. ALLOWANCE OF CREDIT FOR EMPLOYER EXPENSES FOR CHILD CARE 
            ASSISTANCE.

    (a) In General.--Subpart D of part IV of subchapter A of chapter 1 
(relating to business related credits), as amended by section 619, is 
further amended by adding at the end the following:

``SEC. 45F. EMPLOYER-PROVIDED CHILD CARE CREDIT.

    ``(a) In General.--For purposes of section 38, the employer-provided 
child care credit determined under this section for the taxable year is 
an amount equal to the sum of--
            ``(1) 25 percent of the qualified child care expenditures, 
        and
            ``(2) 10 percent of the qualified child care resource and 
        referral expenditures,

of the taxpayer for such taxable year.
    ``(b) Dollar Limitation.--The credit allowable under subsection (a) 
for any taxable year shall not exceed $150,000.
    ``(c) Definitions.--For purposes of this section--
            ``(1) Qualified child care expenditure.--
                    ``(A) In general.--The term `qualified child care 
                expenditure' means any amount paid or incurred--
                          ``(i) to acquire, construct, rehabilitate, or 
                      expand property--
                                    ``(I) which is to be used as part of 
                                a qualified child care facility of the 
                                taxpayer,
                                    ``(II) with respect to which a 
                                deduction for depreciation (or 
                                amortization in lieu of depreciation) is 
                                allowable, and
                                    ``(III) which does not constitute 
                                part of the principal residence (within 
                                the meaning of section 121) of the 
                                taxpayer or any employee of the 
                                taxpayer,
                          ``(ii) for the operating costs of a qualified 
                      child care facility of the taxpayer, including 
                      costs related to the training of employees, to 
                      scholarship programs, and to the providing of 
                      increased compensation to employees with higher 
                      levels of child care training, or
                          ``(iii) under a contract with a qualified 
                      child care facility to provide child care services 

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