case of a married taxpayer (as defined in section 7703) filing a separate return, ½ of the dollar amount determined under subparagraph (B). (4) Specified net income For purposes of this section, the term specified net income means net investment income determined— (A) without regard to the phrase other than such income which is derived in the ordinary course of a trade or business not described in paragraph (2), in subsection (c)(1)(A)(i), (B) without regard to the phrase described in paragraph (2) in subsection (c)(1)(A)(ii), (C) without regard to the phrase other than property held in a trade or business not described in paragraph (2) in subsection (c)(1)(A)(iii), (D) without regard to paragraphs (2), (3), and (4) of subsection (c), and (E) by treating paragraphs (5) and (6) of section 469(c) (determined without regard to the phrase To the extent provided in regulations, in such paragraph (6)) as applying for purposes of subsection (c) of this section. . (b) Application to trusts and estates Section 1411(a)(2)(A) of such Code is amended by striking undistributed net investment income and inserting the greater of undistributed specified net income or undistributed net investment income . (c) Clarifications with respect to determination of net investment income (1) Certain exceptions Section 1411(c)(6) of such Code is amended to read as follows: (6) Special rules Net investment income shall not include— (A) any item taken into account in determining self-employment income for such taxable year on which a tax is imposed by section 1401(b), (B) wages received with respect to employment on which a tax is imposed under section 3101(b) or 3201(a) (including amounts taken into account under section 3121(v)(2)), and (C) wages received from the performance of services earned outside the United States for a foreign employer. . (2) Net operating losses not taken into account Section 1411(c)(1)(B) of such Code is amended by inserting (other than section 172) after this subtitle . (3) Inclusion of certain foreign income (A)