Intercity Passenger Rail Trust Fund Act of 1995

Summary: Intercity Passenger Rail Trust Fund Act of 1995 - Amends the Internal Revenue Code to establish the Intercity Passenger Rail Trust Fund to finance qualified expenses of:  (1) the National Railroad Passenger Corporation; and (2) eligible States.  Makes appropriations in specified amounts for FY 1996 through FY 2000 to such Fund.  Directs the Secretary of Transportation, by October 1, 2000, to determine and retain the amount in the Intercity Passenger Rail Fund necessary to pay any outstanding qualified expenses, and to transfer any amount not so retained to the Mass Transit Fund. 
Authorizes the Secretary to transfer from time to time from the Highway Trust Fund to the Intercity Passenger Rail Trust Fund the intercity passenger rail portion of specified funds appropriated to the Highway Trust Fund. 
Prohibits a deduction for interest paid on loans with respect to any endowment or annuity insurance contracts owned by the taxpayer covering any individual.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Intercity Passenger Rail Trust Fund 
Act of 1995''.

SEC. 2. INTERCITY PASSENGER RAIL TRUST FUND.

    (a) Establishment of Trust Fund.--Subchapter A of chapter 98 of the 
Internal Revenue Code of 1986 (relating to trust fund code) is amended 
by adding at the end the following new section:

``SEC. 9512. INTERCITY PASSENGER RAIL TRUST FUND.

    ``(a) Creation of Trust Fund.--There is established in the Treasury 
of the United States a trust fund to be known as the `Intercity 
Passenger Rail Trust Fund', consisting of such amounts as may be 
transferred or credited to the Trust Fund as provided in section 
9503(c)(7) or section 9602(b).
    ``(b) Expenditures From Trust Fund.--
            ``(1) In general.--Except as provided in paragraph (2), 
        amounts in the Intercity Passenger Rail Trust Fund shall be 
        available, as provided by appropriation Acts, to finance 
        qualified expenses of--
                    ``(A) the National Railroad Passenger Corporation, 
                and
                    ``(B) each eligible State, to the extent determined 
                under paragraph (3).
            ``(2) Direct spending amounts.--The following amounts in 
        the Intercity Passenger Rail Trust Fund are hereby appropriated 
        to finance qualified expenses:
                                                                 Amount
``Fiscal year:                                               Available:
    1996..........................................        $131,000,000 
    1997..........................................         663,000,000 
    1998..........................................         667,000,000 
    1999..........................................         670,000,000 
    2000..........................................         672,000,000.
            ``(3) Maximum amount of funds to eligible states.--Each 
        eligible State shall receive under this subsection an amount 
        equal to the lesser of--
                    ``(A) the State's qualified expenses for the fiscal 
                year, or
                    ``(B) the product of--
                            ``(i) \1/12\ of 1 percent of the lesser 
                        of--
                                    ``(I) the aggregate amounts 
                                transferred and credited to the 
                                Intercity Passenger Rail Trust Fund 
                                under subsection (a) for such fiscal 
                                year, or
                                    ``(II) the aggregate amounts 
                                appropriated from the Intercity 
                                Passenger Rail Trust Fund under this 
                                subsection for such fiscal year, and
                            ``(ii) the number of months such State was 
                        an eligible State in the preceding fiscal year.
        If the amount determined under subparagraph (B) exceeds the 
        amount under subparagraph (A) for any fiscal year, the amount 
        under subparagraph (B) for the following fiscal year shall be 
        increased by the amount of such excess.
    ``(c) Definitions.--For purposes of this section--
            ``(1) Qualified expenses.--The term `qualified expenses' 
        means expenses incurred, with respect to obligations made, 
        after December 31, 1995, and before October 1, 2000--
                    ``(A) in the case of--
                            ``(i) the National Railroad Passenger 
                        Corporation, for capital improvements in 
                        intercity passenger rail service, or
                            ``(ii) an eligible State, for capital 
                        improvements in intercity rail service, and
                    ``(B) certified by the Secretary of Transportation 
                as meeting the requirements of subparagraph (A).
            ``(2) Eligible state.--The term `eligible State' means any 
        State which does not receive intercity passenger rail service 
        from the National Railroad Passenger Corporation.
    ``(d) Termination.--The Secretary shall determine and retain, not 
later than October 1, 2000, the amount in the Intercity Passenger Rail 
Trust Fund necessary to pay any outstanding qualified expenses, and 
shall transfer any amount not so retained to the Mass Transit Account 
under section 9503(e).''
    (b) Transfers From Highway Trust Fund.--Section 9503(c) of the 
Internal Revenue Code of 1986 (relating to expenditures from Highway 
Trust Fund) is amended by adding at the end the following new 
paragraph:
            ``(7) Transfers from trust fund for intercity passenger 
        rail.--
                    ``(A) In general.--The Secretary shall transfer 
                from time to time from the Highway Trust Fund to the 
                Intercity Passenger Rail Trust Fund under section 9512 
                the intercity passenger rail portion of the amounts 
                appropriated to the Highway Trust Fund under subsection 
                (b) which are attributable to taxes under sections 4041 
                and 4081 imposed after December 31, 1995, and before 
                October 1, 2000.
                    ``(B) Intercity passenger rail portion.--For 
                purposes of subparagraph (A), the term `intercity 
                passenger rail portion' means the amount--
                            ``(i) determined at the rate of 0.5 cent 
                        for each gallon with respect to which tax was 
                        imposed under section 4041 or 4081, and
                            ``(ii) reduced (but not below zero) by the 
                        amount by which--
                                    ``(I) the outlays of the Mass 
                                Transit Account for the fiscal year 
                                with respect to which such tax was 
                                imposed, as estimated by the Secretary, 
                                exceed
                                    ``(II) the available funds in the 
                                Mass Transit Account for such fiscal 
                                year (as so estimated).''
    (c) Conforming Amendments.--
            (1) Section 9503(e)(2) of the Internal Revenue Code of 1986 
        (relating to transfers to mass transit account) is amended by 
        striking ``4081.'' and inserting ``4081 (for the period 
        beginning after December 31, 1995, and ending before October 1, 
        2000, an amount determined at the rate of 1.5 cents for each 
        such gallon, increased by the amount described in subsection 
        (c)(7)(B)(ii)).''.
            (2) The table of sections for subchapter A of chapter 98 of 
        such Code (relating to trust fund code) is amended by adding at 
        the end the following new item:

                              ``Sec. 9512. Intercity Passenger Rail 
                                        Trust Fund.''
    (d) Effective Date.--The amendments made by this section shall 
apply with respect to taxes imposed after December 31, 1995.

SEC. 3. DENIAL OF DEDUCTION FOR INTEREST ON LOANS WITH RESPECT TO 
              COMPANY-OWNED INSURANCE.

    (a) In General.--Paragraph (4) of section 264(a) of the Internal 
Revenue Code of 1986 (relating to certain amounts paid in connection 
with insurance contracts) is amended--
            (1) by inserting ``, or any endowment or annuity contracts 
        owned by the taxpayer covering any individual,'' after ``the 
        life of any individual'', and
            (2) by striking all that follows ``carried on by the 
        taxpayer'' and inserting a period.
    (b) Exception for Contracts Relating to Key Persons; Permissible 
Interest Rates.--Section 264 of the Internal Revenue Code of 1986 is 
amended--
            (1) by striking ``Any'' in subsection (a)(4) and inserting 
        ``Except as provided in subsection (d), any'', and
            (2) by adding at the end the following new subsection:
    ``(d) Special Rules for Application of Subsection (a)(4).--
            ``(1) Exception for key persons.--Subsection (a)(4) shall 
        not apply to any interest paid or accrued on any indebtedness 
        with respect to policies or contracts covering an individual 
        who is a key person to the extent that the aggregate amount of 
        such indebtedness with respect to policies and contracts 
        covering such individual does not exceed $50,000.
            ``(2) Interest rate cap on key persons and pre-1986 
        contracts.--No deduction shall be allowed by reason of 
        paragraph (1) or the last sentence of subsection (a) with 
        respect to interest paid or accrued for any month to the extent 
        the amount of such interest exceeds the amount which would have 
        been determined if the rate of interest for such month were the 
        rate of interest described as Moody's Corporate Bond Yield 
        Average-Monthly Average Corporates as published by Moody's 
        Investors Service, Inc., or any successor thereto, for such 
        month.
            ``(3) Key person.--For purposes of paragraph (1), the term 
        `key person' means an officer or 20-percent owner, except that 
        the number of individuals who may be treated as key persons 
        with respect to any taxpayer shall not exceed the greater of--
                    ``(A) 5 individuals, or
                    ``(B) the lesser of 5 percent of the total officers 
                and employees of the taxpayer or 25 individuals.
            ``(4) 20-percent owner.--For purposes of this subsection, 
        the term `20-percent owner' means--
                    ``(A) if the taxpayer is a corporation, any person 
                who owns directly 20 percent or more of the outstanding 
                stock of the corporation or stock possessing 20 percent 
                or more of the total combined voting power of all stock 
                of the corporation, or
                    ``(B) if the taxpayer is not a corporation, any 
                person who owns 20 percent or more of the capital or 
                profits interest in the employer.
            ``(5) Aggregation rules.--
                    ``(A) In general.--For purposes of paragraph (4)(A) 
                and applying the $50,000 limitation in paragraph (1)--
                            ``(i) all members of a controlled group 
                        shall be treated as 1 taxpayer, and
                            ``(ii) such limitation shall be allocated 
                        among the members of such group in such manner 
                        as the Secretary may prescribe.
                    ``(B) Controlled group.--For purposes of this 
                paragraph, all persons treated as a single employer 
                under subsection (a) or (b) of section 52 or subsection 
                (m) or (o) of section 414 shall be treated as members 
                of a controlled group.''
    (c) Effective Dates.--
            (1) In general.--The amendments made by this section shall 
        apply to interest paid or accrued after December 31, 1995.
            (2) Transition rule for existing indebtedness.--
                    (A) In general.--In the case of indebtedness 
                incurred before January 1, 1996, the amendments made by 
                this section shall not apply to qualified interest paid 
                or accrued on such indebtedness after October 13, 1995, 
                and before January 1, 2001.
                    (B) Qualified interest.--For purposes of 
                subparagraph (A), the qualified interest with respect 
                to any indebtedness for any month is the amount of 
                interest which would be paid or accrued for such month 
                on such indebtedness if the lesser of the following 
                rates of interest were used for such month:
                            (i) The rate of interest specified under 
                        the terms of the indebtedness as in effect on 
                        October 13, 1995 (and without regard to 
modification of such terms after such date).
                            (ii) The applicable percentage rate of 
                        interest described as Moody's Corporate Bond 
                        Yield Average-Monthly Average Corporates as 
                        published by Moody's Investors Service, Inc., 
                        or any successor thereto, for such month.
                    (C) Applicable percentage.--For purposes of 
                subparagraph (B), the applicable percentage is as 
                follows:

        For calendar year:
                                                     The percentage is:
                1995 or 1996.........................  100 percent     
                1997.................................   95 percent     
                1998.................................   90 percent     
                1999.................................   85 percent     
                2000.................................   80 percent.    
            (3) Special rule for grandfathered contracts.--This section 
        shall not apply to any contract purchased on or before June 20, 
        1986, except that--
                    (A) paragraph (2) shall apply to interest on 
                indebtedness incurred in connection with such contract 
                which is paid or accrued after October 13, 1995, and 
                before January 1, 1996, and
                    (B) section 264(d)(2) of the Internal Revenue Code 
                of 1986 (as added by subsection (b)) shall apply to 
                such interest paid or accrued after December 31, 1995.
    (d) Spread of Income Inclusion on Surrender, Etc. of Contracts.--
            (1) In general.--If any amount is received under any life 
        insurance policy or endowment or annuity contract described in 
        paragraph (4) of section 264(a) of the Internal Revenue Code of 
        1986--
                    (A) on the complete surrender, redemption, or 
                maturity of such policy or contract during calendar 
                year 1996, 1997, 1998, 1999, 2000, or 2001, or
                    (B) in full discharge during any such calendar year 
                of the obligation under the policy or contract which is 
                in the nature of a refund of the consideration paid for 
                the policy or contract,
        then (in lieu of any other inclusion in gross income) such 
        amount shall be includible in gross income ratably over the 4-
        taxable year period beginning with the taxable year such amount 
        would (but for this paragraph) be includible. The preceding 
        sentence shall only apply to the extent the amount is 
        includible in gross income for the taxable year in which the 
        event described in subparagraph (A) or (B) occurs.
            (2) Special rules for applying section 264.--A contract 
        shall not be treated--
                    (A) as failing to meet the requirement of section 
                264(c)(1) of the Internal Revenue Code of 1986, or
                    (B) as a single premium contract under section 
                264(b)(1) of such Code,
        solely by reason of an occurrence described in subparagraph (A) 
        or (B) of paragraph (1) of this subsection or solely by reason 
        of no additional premiums being received under the contract by 
        reason of a lapse occurring after October 13, 1995.
            (3) Special rule for deferred acquisition costs.--In the 
        case of the occurrence of any event described in subparagraph 
        (A) or (B) of paragraph (1) of this subsection with respect to 
        any policy or contract--
                    (A) section 848 of the Internal Revenue Code of 
                1986 shall not apply to the unamortized balance (if 
                any) of the specified policy acquisition expenses 
                attributable to such policy or contract immediately 
                before the insurance company's taxable year in which 
                such event occurs, and
                    (B) there shall be allowed as a deduction to such 
                company for such taxable year under chapter 1 of such 
                Code an amount equal to such unamortized balance.