American Dream Assistance Act of 1992

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``American Dream Assistance Act of 
1992''.

SEC. 2. PENALTY-FREE WITHDRAWALS FOR FIRST-TIME HOMEBUYERS.

    (a) In General.--Paragraph (2) of section 72(t) of the Internal 
Revenue Code of 1986 (relating to exceptions to 10-percent additional 
tax on early distributions from qualified retirement plans) is amended 
by adding at the end thereof the following new subparagraph:
                    ``(D) Distributions from individual retirement 
                plans for first home purchases.--Distributions to an 
                individual from an individual retirement plan which are 
                qualified first-time homebuyer distributions (as 
                defined in paragraph (6)).''
    (b) First-Time Homebuyer Distributions.--Section 72(t) of such Code 
is amended by adding at the end thereof the following new paragraph:
            ``(6) Qualified first-time homebuyer distributions.--For 
        purposes of paragraph (2)(D)--
                    ``(A) In general.--The term `qualified first-time 
                homebuyer distribution' means any payment or 
                distribution received by an individual to the extent 
                such payment or distribution is used by the individual 
                before the close of the 60th day after the day on which 
                such payment or distribution is received to pay 
                qualified acquisition costs with respect to a principal 
                residence of a first-time homebuyer who is such 
                individual or the child of such individual.
                    ``(B) Qualified acquisition costs.--For purposes of 
                this paragraph, the term `qualified acquisition costs' 
                means the costs of acquiring, constructing, or 
                reconstructing a residence. Such term includes any 
                usual or reasonable settlement, financing, or other 
                closing costs.
                    ``(C) First-time homebuyer; other definitions.--For 
                purposes of this paragraph--
                            ``(i) First-time homebuyer.--The term 
                        `first-time homebuyer' means any individual if 
                        such individual (and if married, such 
                        individual's spouse) had no present ownership 
                        interest in a principal residence during the 3-
                        year period ending on the date of acquisition 
                        of the principal residence to which this 
                        paragraph applies.
                            ``(ii) Principal residence.--The term 
                        `principal residence' has the same meaning as 
                        when used in section 1034.
                            ``(iii) Date of acquisition.--The term 
                        `date of acquisition' means the date--
                                    ``(I) on which a binding contract 
                                to acquire the principal residence to 
                                which subparagraph (A) applies is 
                                entered into, or
                                    ``(II) on which construction or 
                                reconstruction of such a principal 
                                residence is commenced.
                    ``(D) Special rule where delay in acquisition.--
                If--
                            ``(i) any amount is paid or distributed 
                        from an individual retirement plan to an 
                        individual for purposes of being used as 
                        provided in subparagraph (A), and
                            ``(ii) by reason of a delay in the 
                        acquisition of the residence, the requirements 
                        of subparagraph (A) cannot be met,
                the amount so paid or distributed may be paid into an 
                individual retirement plan as provided in section 
                408(d)(3)(A)(i) without regard to section 408(d)(3)(B), 
                and, if so paid into such other plan, such amount shall 
                not be taken into account in determining whether 
                section 408(d)(3)(A)(i) applies to any other amount.''
    (c) Effective Date.--The amendments made by this section shall 
apply to payments and distributions after the date of the enactment of 
this Act.

SEC. 3. PARENT'S GUARANTEE OF CHILD'S LOAN NOT GIFT FOR GIFT TAX 
              PURPOSES.

    (a) In General.--Section 2503 of the Internal Revenue Code of 1986 
(defining taxable gifts) is amended by adding at the end thereof the 
following new subsection:
    ``(h) Exclusion for Guarantee By Parent of Loan to Child or Child's 
Business, Etc.--
            ``(1) In general.--The mere making of a qualified guarantee 
        shall not be treated as a transfer of property by gift for 
        purposes of this chapter.
            ``(2) Qualified guarantee.--For purposes of this 
        subsection, the term `qualified guarantee' means any guarantee 
        by an individual of a loan to--
                    ``(A) any lineal descendent of such individual or 
                any spouse of such a lineal descendent, or
                    ``(B) any business enterprise all of the interests 
                in which (other than any interest as a creditor) are 
                owned by individuals described in subparagraph (A).''
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to guarantees made before, on, or after the date of the enactment 
of this Act.

Summary: American Dream Assistance Act of 1992 - Amends the Internal Revenue Code to allow an individual to make penalty-free withdrawals from an individual retirement account for the acquisition by such individual or the individual's child of a principal residence which is a first home. Provides that a parent's guarantee of a loan to a child or the child's spouse or to the child's business is not a gift for gift tax purposes.