Page:United States Statutes at Large Volume 118.djvu/1454

 118 STAT. 1424 PUBLIC LAW 108–357—OCT. 22, 2004 (2) was acquired during a taxable year to which such election applies and before May 1, 2003, in the ordinary course of its trade or business. The Secretary of the Treasury (or such Secretary’s delegate) may prescribe such regulations as may be necessary to prevent the abuse of the purposes of this subsection. (f) BINDING CONTRACTS.—The amendments made by this section shall not apply to any transaction in the ordinary course of a trade or business which occurs pursuant to a binding contract— (1) which is between the taxpayer and a person who is not a related person (as defined in section 943(b)(3) of such Code, as in effect on the day before the date of the enactment of this Act), and (2) which is in effect on September 17, 2003, and at all times thereafter. For purposes of this subsection, a binding contract shall include a purchase option, renewal option, or replacement option which is included in such contract and which is enforceable against the seller or lessor. SEC. 102. DEDUCTION RELATING TO INCOME ATTRIBUTABLE TO DOMESTIC PRODUCTION ACTIVITIES. (a) IN GENERAL.—Part VI of subchapter B of chapter 1 (relating to itemized deductions for individuals and corporations) is amended by adding at the end the following new section: ‘‘SEC. 199. INCOME ATTRIBUTABLE TO DOMESTIC PRODUCTION ACTIVITIES. ‘‘(a) ALLOWANCE OF DEDUCTION.— ‘‘(1) IN GENERAL.—There shall be allowed as a deduction an amount equal to 9 percent of the lesser of— ‘‘(A) the qualified production activities income of the taxpayer for the taxable year, or ‘‘(B) taxable income (determined without regard to this section) for the taxable year. ‘‘(2) PHASEIN.—In the case of any taxable year beginning after 2004 and before 2010, paragraph (1) and subsections (d)(1) and (d)(6) shall be applied by substituting for the percent age contained therein the transition percentage determined under the following table: ‘‘For taxable years The transition beginning in: percentage is: 2005 or 2006 ..................................................................................... 3 2007, 2008, or 2009 .......................................................................... 6. ‘‘(b) DEDUCTION LIMITED TO WAGES PAID.— ‘‘(1) IN GENERAL.—The amount of the deduction allowable under subsection (a) for any taxable year shall not exceed 50 percent of the W–2 wages of the employer for the taxable year. ‘‘(2) W–2 WAGES.—For purposes of paragraph (1), the term ‘W–2 wages’ means the sum of the aggregate amounts the taxpayer is required to include on statements under paragraphs (3) and (8) of section 6051(a) with respect to employment of employees of the taxpayer during the calendar year ending during the taxpayer’s taxable year. ‘‘(3) ACQUISITIONS AND DISPOSITIONS.—The Secretary shall provide for the application of this subsection in cases where Applicability.

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