Career Transition Assistance Act of 1997

Summary: Career Transition Assistance Act of 1997 - Amends the Internal Revenue Code to:  (1) exclude from gross income a limited amount of qualified severance pay; and (2) permit a limited credit for qualified job training expenses for certain individuals over the age of 50 who have been laid off.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Career Transition Assistance Act of 
1997''.

SEC. 2. EXCLUSION FROM INCOME OF SEVERANCE PAYMENT AMOUNTS.

    (a) In General.--Part III of subchapter B of chapter 1 of the 
Internal Revenue Code of 1986 (relating to items specifically excluded 
from gross income) is amended by redesignating section 139 as section 
140 and by inserting after section 138 the following new section:

``SEC. 139. SEVERANCE PAYMENTS.

    ``(a) In General.--In the case of an individual, gross income shall 
not include any qualified severance payment.
    ``(b) Limitations.--
            ``(1) Amount.--The amount to which the exclusion under 
        subsection (a) applies shall not exceed--
                    ``(A) $15,000, with respect to any separation from 
                employment, reduced by
                    ``(B) the aggregate amount excluded from gross 
                income under subsection (a) in prior taxable years on 
                account of such separation.
            ``(2) Years To Which Exclusion Applies.--No qualified 
        severance payment shall be excluded from gross income under 
        subsection (a) unless such payment is received in the taxable 
        year in which separation from employment occurs or in one of 
        the two succeeding taxable years.
    ``(c) Qualified Severance Payment.--For purposes of this section, 
the term `qualified severance payment' means any payment received by an 
individual if--
            ``(1) such payment was paid by such individual's employer 
        on account of such individual's separation from employment, and
            ``(2) such separation was in connection with a reduction in 
        the work force of the employer.''
    (b) Clerical Amendment.--The table of sections for part III of 
subchapter B of chapter 1 of such Code is amended by striking the item 
relating to section 139 and inserting the following new items:

                              ``Sec. 139. Severance payments.
                              ``Sec. 140. Cross references to other 
                                        Acts.''
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 1996.

SEC. 3. REFUNDABLE CREDIT FOR RETRAINING EXPENSES FOR CERTAIN OLDER 
              LONG-TIME EMPLOYEES WHO ARE LAID OFF.

    (a) In General.--Subpart C of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986 (relating to refundable credits) 
is amended by redesignating section 35 as section 36 and by inserting 
after section 34 the following new section:

``SEC. 35. RETRAINING EXPENSES FOR CERTAIN OLDER LONG-TIME EMPLOYEES 
              WHO ARE LAID OFF.

    ``(a) Allowance of Credit.--In the case of an eligible individual, 
there shall be allowed as a credit against the tax imposed by this 
subtitle an amount equal to the qualified job training expenses which 
are paid or incurred during the taxable year.
    ``(b) Maximum Credit.--The amount of qualified job training 
expenses of an individual which may be taken into account under 
subsection (a) with respect to a reduction in a work force for the 
taxable year shall not exceed $2,000, reduced by the amount of such 
expenses which were taken into account under subsection (a) (or would 
have been so taken into account but for subsection (c)) with respect to 
such reduction for all prior taxable years.
    ``(c) Limitation Based on Adjusted Gross Income.--
            ``(1) In general.--The dollar amount contained in 
        subsection (b) shall be reduced (but not below zero) by an 
        amount which bears the same ratio to such limitation as--
                    ``(A) the excess of--
                            ``(i) the taxpayer's adjusted gross income 
                        for such taxable year, over
                            ``(ii) the applicable dollar amount, bears 
                        to
                    ``(B) $20,000.
            ``(2) Rounding.--Any amount determined under paragraph (1) 
        which is not a multiple of $10 shall be rounded to the next 
        lowest $10.
            ``(3) Applicable dollar amount.--For purposes of this 
        subsection, the term `applicable dollar amount' means--
                    ``(A) in the case of a taxpayer filing a joint 
                return, $100,000,
                    ``(B) in the case of any other taxpayer (other than 
                a married individual filing a separate return), 
                $75,000, and
                    ``(C) in the case of a married individual filing a 
                separate return, $50,000.
        A rule similar to the rule of section 219(g)(4) shall apply for 
        purposes of this paragraph.
    ``(d) Definitions.--For purposes of this section--
            ``(1) Eligible individual.--The term `eligible individual' 
        means any individual if--
                    ``(A) during the taxable year or the preceding 
                taxable year, such individual separated from employment 
                in connection with a reduction in the work force of his 
                employer (other than a seasonal reduction), and
                    ``(B) as of the date of such separation--
                            ``(i) such individual had attained age 50, 
                        and
                            ``(ii) during the 30-year period ending on 
                        the date of such separation, such individual 
                        had been employed by such employer (or any 
                        predecessor of such employer) as a full-time 
                        employee for periods aggregating 20 years or 
                        more.
            ``(2) Qualified job training expenses.--
                    ``(A) In general.--The term `qualified job training 
                expenses' means--
                            ``(i) tuition and fees required for the 
                        enrollment or attendance of the eligible 
                        individual--
                                    ``(I) at an eligible educational 
                                institution, or
                                    ``(II) in an applicable training 
                                program,
                            ``(ii) fees, books, supplies, and equipment 
                        required for an eligible individual for--
                                    ``(I) courses of instruction at an 
                                eligible educational institution, or
                                    ``(II) an applicable training 
                                program, and
                            ``(iii) a reasonable allowance for meals 
                        and lodging while attending an eligible 
                        educational institution or an applicable 
                        training program.
                    ``(B) Eligible educational institution.--The term 
                `eligible educational institution' means--
                            ``(i) an institution of higher education, 
                        or
                            ``(ii) a vocational school.
                    ``(C) Institution of higher education.--The term 
                `institution of higher education' means the 
                institutions described in section 1201(a) or 481(a) of 
                the Higher Education Act of 1965.
                    ``(D) Vocational school.--The term `vocational 
                school' means an area vocational education school as 
                defined in subparagraph (C) or (D) of section 521(4) of 
                the Carl D. Perkins Vocational and Applied Technology 
                Education Act to the extent such school is located 
                within any State (as defined in such section).
                    ``(E) Applicable training program.--The term 
                `applicable training program' means--
                            ``(i) any applicable program (as defined in 
                        section 314(g) of the Job Training Partnership 
                        Act), and
                            ``(ii) any training program approved under 
                        section 236 of the Trade Act of 1974.''
    (b) Technical Amendments.--
            (1) Paragraph (2) of section 1324(b) of title 31, United 
        States Code, is amended by inserting ``from section 35 of such 
        Code, or'' after ``1978,''.
            (2) The table of sections for subpart C of part IV of 
        subchapter A of chapter 1 of such Code is amended by striking 
        the last item and inserting the following new items:

                              ``Sec. 35. Retraining expenses for 
                                        certain older long-time 
                                        employees who are laid off.
                              ``Sec. 36. Overpayments of tax.''
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 1996.