A bill to amend the Internal Revenue Code of 1986 to repeal the alternative minimum tax on individuals.

Summary: Amends the Internal Revenue Code to repeal the alternative minimum tax on individuals.

SECTION 1. REPEAL OF ALTERNATIVE MINIMUM TAX ON INDIVIDUALS.

    (a) In General.--Subsection (a) of section 55 of the Internal 
Revenue Code of 1986 (relating to alternative minimum tax imposed) is 
amended by adding at the end the following new flush sentence:
``Except in the case of a corporation, no tax shall be imposed by this 
section for any taxable year beginning after December 31, 2001, and the 
tentative minimum tax of any taxpayer other than a corporation shall be 
zero for purposes of this title.''.
    (b) Conforming Amendments.--
            (1) Subparagraph (B) of section 1(g)(7) of the Internal 
        Revenue Code of 1986 is amended by adding ``and'' at the end of 
        clause (i), by striking ``, and'' at the end of clause (ii) and 
        inserting a period, and by striking clause (iii).
            (2) Section 2(d) of such Code is amended by striking 
        ``sections 1 and 55'' and inserting ``section 1''.
            (3) Section 5(a) of such Code is amended by striking 
        paragraph (4).
            (4) Subsection (c) of section 26 of such Code is amended by 
        inserting before the period ``; except that such amount shall 
        be treated as being zero in the case of a taxpayer other than a 
        corporation.''
            (5) Paragraph (6) of section 29(b) of such Code is amended 
        to read as follows:
            ``(6) Application with other credits.--The credit allowed 
        by subsection (a) for any taxable year shall not exceed the 
        regular tax for the taxable year reduced by the sum of the 
        credits allowable under subpart A and section 27. In the case 
        of a corporation, the limitation under the preceding sentence 
        shall be reduced (but not below zero) by the tentative minimum 
        tax for the taxable year.''.
            (6) Paragraph (3) of section 30(b) of such Code is amended 
        to read as follows:
            ``(3) Application with other credits.--The credit allowed 
        by subsection (a) for any taxable year shall not exceed the 
        regular tax for the taxable year reduced by the sum of the 
        credits allowable under subpart A and sections 27 and 29. In 
        the case of a corporation, the limitation under the preceding 
        sentence shall be reduced (but not below zero) by the tentative 
        minimum tax for the taxable year.''.
            (7) Section 32 of such Code is amended by striking 
        subsection (h).
            (8) Subsection (d) of section 53 of such Code is amended to 
        read as follows:
    ``(d) Definitions.--For purposes of this section--
            ``(1) Net minimum tax.--The term `net minimum tax' means 
        the tax imposed by section 55 increased by the amount of the 
        credit not allowed under section 29 (relating to credit for 
        producing fuel from a nonconventional source) solely by reason 
        of the application of the last sentence of section 29(b)(6), or 
        not allowed under section 30 solely by reason of the 
        application of the last sentence of section 30(b)(3).
            ``(2) Tentative minimum tax.--The term `tentative minimum 
        tax' has the meaning given to such term by section 55(b); 
        except that such tax shall be treated as being zero in the case 
        of a taxpayer other than a corporation.''.
            (9)(A) Subsection (b) of section 55 of such Code (relating 
        to alternative minimum tax imposed) is amended to read as 
        follows:
    ``(b) Tentative Minimum Tax.--For purposes of this part--
            ``(1) Amount of tentative tax.--The tentative minimum tax 
        for the taxable year is--
                    ``(A) 20 percent of so much of the alternative 
                minimum taxable income for the taxable year as exceeds 
                the exemption amount, reduced by
                    ``(B) the alternative minimum tax foreign tax 
                credit for the taxable year.
            ``(2) Alternative minimum taxable income.--The term 
        `alternative minimum taxable income' means the taxable income 
        of the taxpayer for the taxable year--
                    ``(A) determined with the adjustments provided in 
                section 56, and
                    ``(B) increased by the amount of the items of tax 
                preference described in section 57.
        If a taxpayer is subject to the regular tax, such taxpayer 
        shall be subject to the tax imposed by this section (and, if 
        the regular tax is determined by reference to an amount other 
        than taxable income, such amount shall be treated as the 
        taxable income of such taxpayer for purposes of the preceding 
        sentence).''.
            (B) Subsection (d) of section 55 of such Code is amended to 
        read as follows:
    ``(d) Exemption Amount.--For purposes of this section--
            ``(1) In general.--The term `exemption amount' means 
        $40,000.
            ``(2) Phase-out of exemption amount.--The exemption amount 
        of any taxpayer shall be reduced (but not below zero) by an 
        amount equal to 25 percent of the amount by which the 
        alternative minimum taxable income of the taxpayer exceeds 
        $150,000.''.
            (10)(A) Paragraph (6) of section 56(a) of such Code is 
        amended to read as follows:
            ``(6) Adjusted basis.--The adjusted basis of any property 
        to which paragraph (1) or (5) applies (or with respect to which 
        there are any expenditures to which paragraph (2) applies) 
        shall be determined on the basis of the treatment prescribed in 
        paragraph (1), (2), or (5), whichever applies.''.
            (B) Section 56 of such Code is amended by striking 
        subsection (b).
            (C) Subsection (c) of section 56 of such Code is amended by 
        striking so much of the subsection as precedes paragraph (1), 
        by redesignating paragraphs (1), (2), and (3) as paragraphs 
        (8), (9), and (10), respectively, and moving them to the end of 
        subsection (a).
            (D) Paragraph (8) of section 56(a) of such Code, as 
        redesignating by subparagraph (C), is amended by striking 
        ``subsection (g)'' and inserting ``subsection (c)''.
            (E) Section 56 of such Code is amended by striking 
        subsection (e) and by redesignating subsections (d) and (g) as 
        subsections (b) and (c), respectively.
            (11)(A) Section 58 of such Code is repealed.
            (B) Clause (i) of section 56(b)(2)(A) of such Code (as 
        redesignated by paragraph (10)(E), is amended by inserting ``, 
        in the case of taxable years beginning before January 1, 
        2002,'' before ``section 58''.
            (C) Subsection (h) of section 59 of such Code is amended--
                    (i) by striking ``, 465, and 1366(d)'' and 
                inserting ``and 465'', and
                    (ii) by striking ``56, 57, and 58'' and inserting 
                ``56 and 57''.
            (12)(A) Subparagraph (C) of section 59(a)(1) of such Code 
        is amended by striking ``subparagraph (A)(i) or (B)(i) of 
        section 55(b)(1) (whichever applies)'' and inserting ``section 
        55(b)(1)(A)''.
            (B) Paragraph (3) of section 59(a) of such Code is amended 
        to read as follows:
            ``(3) Pre-credit tentative minimum tax.--For purposes of 
        this subsection, the term `pre-credit tentative minimum tax' 
        means the amount determined under section 55(b)(1)(A).''.
            (C) Section 59 of such Code is amended by striking 
        subsection (c).
            (D) Section 59 of such Code is amended by striking 
        subsection (j).
            (13) Paragraph (7) of section 382(l) of such Code is 
        amended by striking ``section 56(d)'' and inserting ``section 
        56(b)''.
            (14) Paragraph (2) of section 641(c) of such Code is 
        amended by striking subparagraph (B) and by redesignating 
        subparagraphs (C) and (D) as subparagraphs (B) and (C), 
        respectively.
            (15) Subsections (b) and (c) of section 666 of such Code 
        are each amended by striking ``(other than the tax imposed by 
        section 55)''.
            (16) Subsections (c)(5) and (d)(3)(B) of section 772 of 
        such Code are each amended by striking ``56, 57, and 58'' and 
        inserting ``56 and 57''.
            (17) Sections 847 and 848(i) of such Code are each amended 
        by striking ``section 56(g)'' and inserting ``section 56(c)''.
            (18) Sections 871(b)(1) and 877(b) of such Code are each 
        amended by striking ``or 55''.
            (19) Subsection (a) of section 897 of such Code is amended 
        to read as follows:
    ``(a) General Rule.--For purposes of this title, gain or loss of a 
nonresident alien individual or a foreign corporation from the 
disposition of a United States real property interest shall be taken 
into account--
            ``(1) in the case of a nonresident alien individual, under 
        section 871(b)(1), or
            ``(2) in the case of a foreign corporation, under section 
        882(a)(1),
as if the taxpayer were engaged in a trade or business within the 
United States during the taxable year and as if such gain or loss were 
effectively connected with such trade or business.''.
            (20) Paragraph (1) of section 962(a) of such Code is 
        amended by striking ``sections 1 and 55'' and inserting 
        ``section 1''.
            (21) Paragraph (1) of section 1397E(c) of such Code is 
        amended to read as follows:
            ``(1) the regular tax liability (as defined in section 
        26(b), over''
            (22) The last sentence of section 1563(a) of such Code is 
        amended by striking ``section 55(d)(3)'' and inserting 
        ``section 55(d)(2)''.
            (23) Subparagraph (B) of section 6015(d)(2) of such Code is 
        amended by striking ``or 55''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2001.