II

106TH CONGRESS

1ST SESSION S. 1160

To amend the Internal Revenue Code of 1986 to provide marriage penalty

relief, incentives to encourage health coverage, and increased child care

assistance, to extend certain expiring tax provisions, and for other purposes.

IN THE SENATE OF THE UNITED STATES

MAY 27, 1999

Mr. GRASSLEY (for himself and Mrs. FEINSTEIN) introduced the following bill;

which was read twice and referred to the Committee on Finance

A BILL

To amend the Internal Revenue Code of 1986 to provide

marriage penalty relief, incentives to encourage health

coverage, and increased child care assistance, to extend

certain expiring tax provisions, and for other purposes.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE.

4 (a) SHORT TITLE.—This Act may be cited as the

5 ‘‘Tax Relief for Working Americans Act of 1999’’.

6 (b) TABLE OF CONTENTS.—

Sec. 1. Short title.

TITLE I—MARRIAGE PENALTY RELIEF
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Sec. 101. Basic standard deduction for married individuals to be twice the deduction for unmarried individuals.

TITLE II—ADJUSTMENT OF SOCIAL SECURITY EARNING LIMIT

Sec. 201. Adjustment in monthly exempt amount for purposes of the social security earnings test.

TITLE III—INCENTIVES FOR HEALTH AND LONG-TERM CARE

COVERAGE

Sec. 301. Credit for health insurance costs of previously uninsured individuals

and individuals with COBRA coverage.

Sec. 302. Deduction for health insurance costs of employees and self-employed

individuals.

Sec. 303. Credit for taxpayers with long-term care needs.

TITLE IV—EXPANSION OF DEPENDENT CARE TAX CREDIT

Sec. 401. Expansion of dependent care tax credit.

TITLE V—ALTERNATIVE MINIMUM TAX RELIEF

Sec. 501. Nonrefundable personal credits allowed against alternative minimum

tax.

Sec. 502. Income averaging for farmers not to increase alternative minimum

tax liability.

TITLE VI—ELIMINATION OF 60-MONTH LIMIT ON STUDENT LOAN

INTEREST DEDUCTION

Sec. 601. Elimination of 60-month limit on student loan interest deduction.

TITLE VII—INCREASE IN LOW-INCOME HOUSING CREDIT STATE

CEILING

Sec. 701. Increase in State ceiling on low-income housing credit.

TITLE VIII—FARM AND RANCH RISK MANAGEMENT ACCOUNTS

Sec. 801. Farm and ranch risk management accounts.

TITLE IX—INCENTIVES FOR URBAN REVITALIZATION AND OPEN

SPACE

Sec. 901. Expensing of environmental remediation costs expanded to contaminated sites outside of targeted areas.

Sec. 902. Modifications to encourage contributions of capital gain real property

made for conservation purposes and of qualified conservation

contributions.

TITLE X—EXTENSION OF CERTAIN EXPIRING PROVISIONS

Sec. 1001. Research credit.

Sec. 1002. Work opportunity credit.

Sec. 1003. Permanent subpart F exemption for active financing income.

Sec. 1004. Credit for electricity produced from renewable resources.
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1 TITLE I—MARRIAGE PENALTY

2 RELIEF

3 SEC. 101. BASIC STANDARD DEDUCTION FOR MARRIED IN4 DIVIDUALS TO BE TWICE THE DEDUCTION

5 FOR UNMARRIED INDIVIDUALS.

6 (a) IN GENERAL.—Paragraph (2) of section 63(c) of

7 the Internal Revenue Code of 1986 (relating to standard

8 deduction) is amended—

9 (1) by striking ‘‘$5,000’’ in subparagraph (A)

10 and inserting ‘‘twice the dollar amount in effect

11 under subparagraph (C) for the taxable year’’,

12 (2) by adding ‘‘or’’ at the end of subparagraph

13 (B),

14 (3) by striking ‘‘in the case of’’ and all that fol15 lows in subparagraph (C) and inserting ‘‘in any

16 other case.’’, and

17 (4) by striking subparagraph (D).

18 (b) TECHNICAL AMENDMENT.—Subparagraph (B) of

19 section 1(f)(6) of such Code is amended by striking

20 ‘‘(other than with’’ and all that follows through ‘‘shall be

21 applied’’ and inserting ‘‘(other than sections 63(c)(4) and

22 151(d)(4)(A)) shall be applied’’.

23 (c) EFFECTIVE DATE.—The amendments made by

24 this section shall apply to taxable years beginning after

25 December 31, 1999.
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1 TITLE II—ADJUSTMENT OF SO2 CIAL SECURITY EARNING

3 LIMIT

4 SEC. 201. ADJUSTMENT IN MONTHLY EXEMPT AMOUNT FOR

5 PURPOSES OF THE SOCIAL SECURITY EARN6 INGS TEST.

7 (a) INCREASE IN MONTHLY EXEMPT AMOUNT FOR

8 INDIVIDUALS WHO HAVE ATTAINED RETIREMENT

9 AGE.—Section 203(f)(8)(D) of the Social Security Act (42

10 U.S.C. 403(f)(8)(D)) is amended—

11 (1) in clause (iii), by inserting ‘‘and’’ at the

12 end; and

13 (2) by striking clauses (iv) through (vii) and in14 serting the following new clause:

15 ‘‘(iv) for each month of any taxable

16 year ending after 1999 and before 2001,

17 $2,500.’’.

18 (b) CONFORMING AMENDMENTS.—

19 (1) Section 203(f)(8)(B)(ii) of such Act (42

20 U.S.C. 403(f)(8)(B)(ii)) is amended—

21 (A) by striking ‘‘after 2001 and before

22 2003’’ and inserting ‘‘after 1999 and before

23 2001’’; and

24 (B) in subclause (II), by striking ‘‘2001’’

25 and inserting ‘‘1998’’.
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1 (2) The second sentence of section 223(d)(4)(A)

2 of such Act (42 U.S.C. 423(d)(4)(A)) is amended by

3 inserting ‘‘and section 201 of the Tax Relief for

4 Working Americans Act of 1999’’ after ‘‘1996’’.

5 (c) EFFECTIVE DATE.—The amendments made by

6 this section shall apply with respect to taxable years begin7 ning after 1999.

8 TITLE III—INCENTIVES FOR

9 HEALTH AND LONG-TERM

10 CARE COVERAGE

11 SEC. 301. CREDIT FOR HEALTH INSURANCE COSTS OF PRE12 VIOUSLY UNINSURED INDIVIDUALS AND IN13 DIVIDUALS WITH COBRA COVERAGE.

14 (a) IN GENERAL.—Subpart A of part IV of sub15 chapter A of chapter 1 of the Internal Revenue Code of

16 1986 (relating to nonrefundable personal credits) is

17 amended by inserting after section 25A the following new

18 section:

19 ‘‘SEC. 25B. HEALTH INSURANCE COSTS OF PREVIOUSLY UN20 INSURED INDIVIDUALS AND INDIVIDUALS

21 WITH COBRA COVERAGE.

22 ‘‘(a) IN GENERAL.—In the case of an individual,

23 there shall be allowed as a credit against the tax imposed

24 by this chapter for the taxable year an amount equal to

25 60 percent of the amount paid during the taxable year
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1 for coverage for the taxpayer, his spouse, and dependents

2 under qualified health insurance.

3 ‘‘(b) DOLLAR LIMITATION.—

4 ‘‘(1) IN GENERAL.—The amount allowed as a

5 credit under subsection (a) to the taxpayer for the

6 taxable year shall not exceed the sum of the monthly

7 limitations for eligible months during such taxable

8 year.

9 ‘‘(2) MONTHLY LIMITATION.—The monthly lim10 itation for any eligible month is the amount equal to

1 11 ⁄12 of—

12 ‘‘(A) $1,200 if, as of the first day of such

13 month, the taxpayer has self-only coverage

14 under qualified health insurance, and

15 ‘‘(B) $2,400 if, as of the first day of such

16 month, the taxpayer has family coverage under

17 qualified health insurance.

18 ‘‘(3) ELIGIBLE MONTH.—For purposes of this

19 subsection—

20 ‘‘(A) IN GENERAL.—The term ‘eligible

21 month’ means any month which begins at least

22 1 year after the most recent month that the

23 individual—

24 ‘‘(i) was eligible to participate in any

25 group health plan of an employer which
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1 provided qualified health insurance (deter2 mined without regard to subsection

3 (d)(2)), or

4 ‘‘(ii) participated in any group health

5 plan of any other entity which provided

6 such insurance.

7 ‘‘(B) JOINT RETURNS.—In the case of a

8 joint return, a month shall be treated as an eli9 gible month only if it is an eligible month of

10 each spouse, determined by applying this para11 graph separately to each spouse.

12 ‘‘(4) CERTAIN OTHER COVERAGE.—Amounts

13 paid for coverage of an individual for any month

14 shall not be taken into account under subsection (a)

15 if, as of the first day of such month, such individual

16 is covered under any medical care program described

17 in—

18 ‘‘(A) title XVIII, XIX, or XXI of the So19 cial Security Act,

20 ‘‘(B) chapter 55 of title 10, United States

21 Code,

22 ‘‘(C) chapter 17 of title 38, United States

23 Code,

24 ‘‘(D) chapter 89 of title 5, United States

25 Code, or
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1 ‘‘(E) the Indian Health Care Improvement

2 Act.

3 ‘‘(5) SPECIAL RULE FOR MARRIED INDIVID4 UALS.—In the case of an individual—

5 ‘‘(A) who is married (within the meaning

6 of section 7703) as of the close of the taxable

7 year but does not file a joint return for such

8 year, and

9 ‘‘(B) who does not live apart from such in10 dividual’s spouse at all times during the taxable

11 year,

12 the limitation under paragraph (2)(A) (and not the

13 limitation under paragraph (2)(B)) shall apply to

14 such individual.

15 ‘‘(c) LIMITATION BASED ON ADJUSTED GROSS IN16 COME.—

17 ‘‘(1) IN GENERAL.—The aggregate amount

18 which would (but for this subsection) be allowed as

19 a credit under this section shall be reduced (but not

20 below zero) by the amount determined under para21 graph (2).

22 ‘‘(2) AMOUNT OF REDUCTION.—

23 ‘‘(A) IN GENERAL.—The amount deter24 mined under this paragraph shall be the
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1 amount which bears the same ratio to such ag2 gregate amount as—

3 ‘‘(i) the excess of—

4 ‘‘(I) the taxpayer’s modified ad5 justed gross income for such taxable

6 year, over

7 ‘‘(II) the applicable dollar

8 amount, bears to

9 ‘‘(ii) $10,000.

10 ‘‘(B) MODIFIED ADJUSTED GROSS IN11 COME.—For purposes of this paragraph, the

12 term ‘modified adjusted gross income’ means

13 adjusted gross income increased by any amount

14 excluded from gross income under section 911,

15 931, or 933.

16 ‘‘(C) ROUNDING.—Any amount determined

17 under subparagraph (A) which is not a multiple

18 of $10 shall be rounded to the next lowest $10.

19 ‘‘(3) APPLICABLE DOLLAR AMOUNT.—For pur20 poses of paragraph (2), the term ‘applicable dollar

21 amount’ means—

22 ‘‘(A) $60,000 in the case of a taxpayer

23 whose qualified health insurance coverage cov24 ers more than 1 individual referred to in sub25 section (a), and
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1 ‘‘(B) $30,000—

2 ‘‘(i) in any case not described in sub3 paragraph (A), and

4 ‘‘(ii) in the case of a married indi5 vidual filing a separate return.

6 For purposes of this paragraph, marital status shall

7 be determined under section 7703.

8 ‘‘(d) QUALIFIED HEALTH INSURANCE.—For pur9 poses of this section—

10 ‘‘(1) IN GENERAL.—Except as otherwise pro11 vided in this paragraph, the term ‘qualified health

12 insurance’ means insurance which constitutes med13 ical care, as defined in section 213(d) without regard

14 to—

15 ‘‘(A) paragraph (1)(C) thereof, and

16 ‘‘(B) so much of paragraph (1)(D) thereof

17 as relates to qualified long-term care insurance

18 contracts.

19 ‘‘(2) EXCLUSION OF COVERAGE PROVIDED

20 UNDER GROUP HEALTH PLANS, ETC.—Such term

21 shall not include insurance provided through any

22 group health plan of an employer or any other enti23 ty.

24 ‘‘(3) EXCLUSION OF CERTAIN OTHER CON25 TRACTS.—Such term shall not include insurance if a
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1 substantial portion of its benefits are excepted bene2 fits (as defined in section 9832(c)).

3 ‘‘(e) INDIVIDUALS WITH COBRA COVERAGE.—In

4 the case of continuation coverage under a group health

5 plan which is required to be provided by Federal law for

6 an individual during the period specified in section

7 4980B(f)(2)(B), notwithstanding subsection (d)—

8 ‘‘(1) such coverage shall be treated as qualified

9 health insurance, and

10 ‘‘(2) the term ‘eligible month’ includes months

11 of such coverage.

12 ‘‘(f) SPECIAL RULES.—

13 ‘‘(1) COORDINATION WITH OTHER DEDUC14 TIONS.—No credit shall be allowed under this sec15 tion for the taxable year if any amount paid for

16 qualified health insurance is taken into account in

17 determining the deduction allowed for such year

18 under section 213 or 222.

19 ‘‘(2) DENIAL OF CREDIT TO DEPENDENTS.—No

20 credit shall be allowed under this section to any indi21 vidual with respect to whom a deduction under sec22 tion 151 is allowable to another taxpayer for a tax23 able year beginning in the calendar year in which

24 such individual’s taxable year begins.

25 ‘‘(3) INFLATION ADJUSTMENT.—
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1 ‘‘(A) IN GENERAL.—In the case of a tax2 able year beginning after 2000, each dollar

3 amount in subsection (c)(3) shall be increased

4 by an amount equal to—

5 ‘‘(i) such dollar amount, multiplied by

6 ‘‘(ii) the cost-of-living adjustment de7 termined under section 1(f)(3) for the cal8 endar year in which the taxable year be9 gins, determined by substituting ‘calendar

10 year 1999’ for ‘calendar year 1992’ in sub11 paragraph (B) thereof.

12 ‘‘(B) ROUNDING.—If any amount as ad13 justed under subparagraph (A) is not a multiple

14 of $100, such amount shall be rounded to the

15 next lowest multiple of $100.’’

16 (b) CLERICAL AMENDMENT.—The table of sections

17 for subpart A part IV of subchapter A of chapter 1 of

18 such Code is amended by inserting after the item relating

19 to section 25A the following new item:

‘‘Sec. 25B. Health insurance costs of previously uninsured individuals and individuals with COBRA coverage.’’

20 (c) EFFECTIVE DATE.—The amendments made by

21 this section shall apply to taxable years beginning after

22 December 31, 1999.
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1 SEC. 302. DEDUCTION FOR HEALTH INSURANCE COSTS OF

2 EMPLOYEES AND SELF-EMPLOYED INDIVID3 UALS.

4 (a) IN GENERAL.—Part VII of subchapter B of chap5 ter 1 of the Internal Revenue Code of 1986 (relating to

6 additional itemized deductions) is amended by redesig7 nating section 222 as section 223 and by inserting after

8 section 221 the following new section:

9 ‘‘SEC. 222. COSTS OF HEALTH INSURANCE AND LONG-TERM

10 CARE INSURANCE.

11 ‘‘(a) IN GENERAL.—In the case of an individual,

12 there shall be allowed as a deduction an amount equal to

13 the sum of—

14 ‘‘(1) the applicable health care percentage of

15 the amount paid during the taxable year for cov16 erage for the taxpayer, his spouse, and dependents

17 under qualified health insurance, and

18 ‘‘(2) the applicable long-term care percentage of

19 the amount of eligible long-term care premiums (as

20 defined in section 213(d)(10)) paid during the tax21 able year for coverage for the taxpayer, his spouse,

22 and dependents under a qualified long-term care in23 surance contract (as defined in section 7702B(b)).

24 ‘‘(b) APPLICABLE PERCENTAGES.—For purposes of

25 subsection (a)—
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1 ‘‘(1) APPLICABLE HEALTH CARE PERCENT2 AGE.—

3 ‘‘(A) IN GENERAL.—Except as provided in

4 subparagraph (B), the applicable health care

5 percentage shall be determined in accordance

6 with the following table:

‘‘For taxable years beginning The applicable health

in calendar year— care percentage is—

2000 ............................................................................. 60

2001 ............................................................................. 70

2002 ............................................................................. 80

2003 ............................................................................. 90

2004 and thereafter ..................................................... 100.

7 ‘‘(B) SPECIAL RULE.—In the case of an

8 individual who is an employee within the mean9 ing of section 401(c)(1) and whose qualified

10 health insurance is not provided through a

11 group health plan of an employer, subparagraph

12 (A) shall be applied by substituting ‘100’ for

13 ‘90’ but only with respect to the lesser of the

14 taxpayer’s earned income (within the meaning

15 of section 401(c)) or the payments referred to

16 in subsection (a)(1).

17 ‘‘(2) APPLICABLE LONG-TERM CARE PERCENT18 AGE.—

19 ‘‘(A) IN GENERAL.—Except as otherwise

20 provided in this paragraph, the applicable long21 term care percentage shall be determined in ac22 cordance with the following table based on the
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1 number of years of continuous coverage (as of

2 the close of the taxable year) of the individual

3 under a qualified long-term care insurance con4 tract (as defined in section 7702B(b)):

‘‘If the number of years of The applicable long-term

continuous coverage is— care percentage is—

Less than 1 .................................................................. 50

At least 1 but less than 2 ............................................. 60

At least 2 but less than 3 ............................................. 70

At least 3 but less than 4 ............................................. 80

At least 4 but less than 5 ............................................. 90

At least 5 ...................................................................... 100.

5 ‘‘(B) SPECIAL RULES FOR INDIVIDUALS

6 WHO HAVE ATTAINED AGE 60.—In the case of

7 an individual who has attained age 60 as of the

8 close of the taxable year, the following table

9 shall be substituted for the table in subpara10 graph (A).

‘‘If the number of years of The applicable long-term

continuous coverage is— care percentage is—

Less than 1 .................................................................. 60

At least 1 but less than 2 ............................................. 70

At least 2 but less than 3 ............................................. 85

At least 3 ...................................................................... 100.

11 ‘‘(C) ONLY COVERAGE AFTER 1999 TAKEN

12 INTO ACCOUNT.—Only coverage for periods

13 after December 31, 1999, shall be taken into

14 account under this paragraph.

15 ‘‘(D) CONTINUOUS COVERAGE.—An indi16 vidual shall not fail to be treated as having con17 tinuous coverage if the aggregate breaks in cov-
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1 erage during any 1-year period are less than 60

2 days.

3 ‘‘(E) SELF-EMPLOYED INDIVIDUALS.—In

4 the case of an individual who is an employee

5 within the meaning of section 401(c)(1) and

6 whose qualified long-term care insurance con7 tract (as defined in section 7702B(b)) is not

8 provided through a group health plan of an em9 ployer, the applicable long-term care percentage

10 shall be—

11 ‘‘(i) 100 percent with respect to the

12 lesser of—

13 ‘‘(I) the eligible long-term care

14 premiums (as defined in section

15 213(d)(10)) referred to in subsection

16 (a)(2), or

17 ‘‘(II) the excess of the taxpayer’s

18 earned income (within the meaning of

19 section 401(c)) for the taxable year

20 over the payments referred to in sub21 section (a)(1), and

22 ‘‘(ii) the percentage determined under

23 the other provisions of this paragraph with

24 respect to the remainder of such premiums

25 (determined by treating the premiums
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1 taken into account under clause (i) as

2 being attributable to individuals in the

3 order of their ages, beginning with the old4 est).

5 ‘‘(c) EXCLUSION OF SUBSIDIZED COVERAGE.—Sub6 section (a) shall not apply to any taxpayer for any cal7 endar month for which the taxpayer participates in any

8 group health plan of an employer or any other entity if

9 less than 50 percent of the cost of the taxpayer’s coverage

10 under such plan is borne by the taxpayer. The preceding

11 sentence shall be applied separately with respect to para12 graphs (1) and (2) of subsection (a).

13 ‘‘(d) QUALIFIED HEALTH INSURANCE.—For pur14 poses of this section—

15 ‘‘(1) IN GENERAL.—The term ‘qualified health

16 insurance’ has the meaning given such term by sec17 tion 25B(d) determined without regard to paragraph

18 (2) thereof.

19 ‘‘(2) SPECIAL RULE.—

20 ‘‘(A) IN GENERAL.—In the case of an indi21 vidual who is an employee within the meaning

22 of section 401(c)(1) and whose qualified health

23 insurance (without regard to this paragraph) is

24 not provided through a group health plan of an
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1 employer, paragraph (3) of section 25B(d) shall

2 not apply for purposes of this section.

3 ‘‘(B) LIMITATION.—The amount taken

4 into account under subsection (a)(1) by reason

5 of subparagraph (A) shall not exceed the excess

6 of—

7 ‘‘(i) the taxpayer’s earned income

8 (within the meaning of section 401(c)),

9 over

10 ‘‘(ii) the amount which would (without

11 regard to this paragraph) be taken into ac12 count under subsection (a)(1).

13 ‘‘(e) SPECIAL RULES.—

14 ‘‘(1) COORDINATION WITH MEDICAL DEDUC15 TION, ETC.—Any amount paid by a taxpayer for in16 surance to which subsection (a) applies shall not be

17 taken into account in computing the amount allow18 able to the taxpayer as a deduction under section

19 213(a).

20 ‘‘(2) DEDUCTION NOT ALLOWED FOR SELF-EM21 PLOYMENT TAX PURPOSES.—The deduction allow22 able by reason of this section shall not be taken into

23 account in determining an individual’s net earnings

24 from self-employment (within the meaning of section

25 1402(a)) for purposes of chapter 2.’’
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1 (b) CONFORMING AMENDMENTS.—

2 (1) Subsection (l) of section 162 of such Code

3 is hereby repealed.

4 (2) Subsection (a) of section 62 of such Code

5 is amended by inserting after paragraph (17) the

6 following new item:

7 ‘‘(18) COSTS OF HEALTH INSURANCE AND

8 LONG-TERM CARE INSURANCE.—The deduction al9 lowed by section 222.’’

10 (3) The table of sections for part VII of sub11 chapter B of chapter 1 of such Code is amended by

12 striking the last item and inserting the following

13 new items:

‘‘Sec. 222. Costs of health insurance and long-term care insurance.

‘‘Sec. 223. Cross reference.’’

14 (c) EFFECTIVE DATE.—The amendments made by

15 this section shall apply to taxable years beginning after

16 December 31, 1999.

17 SEC. 303. CREDIT FOR TAXPAYERS WITH LONG-TERM CARE

18 NEEDS.

19 (a) ALLOWANCE OF CREDIT.—

20 (1) IN GENERAL.—Section 24(a) of the Internal

21 Revenue Code of 1986 (relating to allowance of child

22 tax credit) is amended to read as follows:
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1 ‘‘(a) ALLOWANCE OF CREDIT.—There shall be al2 lowed as a credit against the tax imposed by this chapter

3 for the taxable year an amount equal to the sum of—

4 ‘‘(1) $500 multiplied by the number of quali5 fying children of the taxpayer, plus

6 ‘‘(2) $1,000 multiplied by the number of appli7 cable individuals with respect to whom the taxpayer

8 is an eligible caregiver for the taxable year.

9 In any case in which the applicable individual and the eli10 gible caregiver are the same individual, the credit allowed

11 by paragraph (2) with respect to such individual shall not

12 exceed the aggregate amount paid by the taxpayer during

13 the taxable year (not compensated for by insurance or oth14 erwise) for qualified long-term care services (as defined

15 in section 7702B(c)) for such individual.’’

16 (2) ADDITIONAL CREDIT FOR TAXPAYER WITH

17 3 OR MORE SEPARATE CREDIT AMOUNTS.—So much

18 of section 24(d) of such Code as precedes paragraph

19 (1)(A) thereof is amended to read as follows:

20 ‘‘(d) ADDITIONAL CREDIT FOR TAXPAYERS WITH 3

21 OR MORE SEPARATE CREDIT AMOUNTS.—

22 ‘‘(1) IN GENERAL.—If the sum of the number

23 of qualifying children of the taxpayer and the num24 ber of applicable individuals with respect to which

25 the taxpayer is an eligible caregiver is 3 or more for
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1 any taxable year, the aggregate credits allowed

2 under subpart C shall be increased by the lesser

3 of—’’.

4 (3) CONFORMING AMENDMENTS.—

5 (A) The heading for section 32(n) of such

6 Code is amended by striking ‘‘CHILD’’ and in7 serting ‘‘FAMILY CARE’’.

8 (B) The heading for section 24 is amended

9 to read as follows:

10 ‘‘SEC. 24. FAMILY CARE CREDIT.’’

11 (C) The table of sections for subpart A of

12 part IV of subchapter A of chapter 1 of such

13 Code is amended by striking the item relating

14 to section 24 and inserting the following new

15 item:

‘‘Sec. 24. Family care credit.’’.

16 (b) DEFINITIONS.—Section 24(c) of such Code (de17 fining qualifying child) is amended to read as follows:

18 ‘‘(c) DEFINITIONS.—For purposes of this section—

19 ‘‘(1) QUALIFYING CHILD.—

20 ‘‘(A) IN GENERAL.—The term ‘qualifying

21 child’ means any individual if—

22 ‘‘(i) the taxpayer is allowed a deduc23 tion under section 151 with respect to such

24 individual for the taxable year,
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1 ‘‘(ii) such individual has not attained

2 the age of 17 as of the close of the cal3 endar year in which the taxable year of the

4 taxpayer begins, and

5 ‘‘(iii) such individual bears a relation6 ship to the taxpayer described in section

7 32(c)(3)(B).

8 ‘‘(B) EXCEPTION FOR CERTAIN NONCITI9 ZENS.—The term ‘qualifying child’ shall not in10 clude any individual who would not be a de11 pendent if the first sentence of section

12 152(b)(3) were applied without regard to all

13 that follows ‘resident of the United States’.

14 ‘‘(2) APPLICABLE INDIVIDUAL.—

15 ‘‘(A) IN GENERAL.—The term ‘applicable

16 individual’ means, with respect to any taxable

17 year, any individual who has been certified, be18 fore the due date for filing the return of tax for

19 the taxable year (without extensions), by a phy20 sician (as defined in section 1861(r)(1) of the

21 Social Security Act) as being an individual with

22 long-term care needs described in subparagraph

23 (B) for a period—

24 ‘‘(i) which is at least 180 consecutive

25 days, and
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1 ‘‘(ii) a portion of which occurs within

2 the taxable year.

3 Such term shall not include any individual oth4 erwise meeting the requirements of the preceding sentence unless within the 391 5 ⁄2 month

6 period ending on such due date (or such other

7 period as the Secretary prescribes) a physician

8 (as so defined) has certified that such indi9 vidual meets such requirements.

10 ‘‘(B) INDIVIDUALS WITH LONG-TERM CARE

11 NEEDS.—An individual is described in this sub12 paragraph if the individual meets any of the fol13 lowing requirements:

14 ‘‘(i) The individual is at least 6 years

15 of age and—

16 ‘‘(I) is unable to perform (with17 out substantial assistance from an18 other individual) at least 3 activities

19 of daily living (as defined in section

20 7702B(c)(2)(B)) due to a loss of

21 functional capacity, or

22 ‘‘(II) requires substantial super23 vision to protect such individual from

24 threats to health and safety due to se25 vere cognitive impairment and is un-
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1 able to perform, without reminding or

2 cuing assistance, at least 1 activity of

3 daily living (as so defined) or to the

4 extent provided in regulations pre5 scribed by the Secretary (in consulta6 tion with the Secretary of Health and

7 Human Services), is unable to engage

8 in age appropriate activities.

9 ‘‘(ii) The individual is at least 2 but

10 not 6 years of age and is unable due to a

11 loss of functional capacity to perform

12 (without substantial assistance from an13 other individual) at least 2 of the following

14 activities: eating, transferring, or mobility.

15 ‘‘(iii) The individual is under 2 years

16 of age and requires specific durable med17 ical equipment by reason of a severe health

18 condition or requires a skilled practitioner

19 trained to address the individual’s condi20 tion to be available if the individual’s par21 ents or guardians are absent.

22 ‘‘(3) ELIGIBLE CAREGIVER.—

23 ‘‘(A) IN GENERAL.—A taxpayer shall be

24 treated as an eligible caregiver for any taxable

25 year with respect to the following individuals:
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1 ‘‘(i) The taxpayer.

2 ‘‘(ii) The taxpayer’s spouse.

3 ‘‘(iii) An individual with respect to

4 whom the taxpayer is allowed a deduction

5 under section 151 for the taxable year.

6 ‘‘(iv) An individual who would be de7 scribed in clause (iii) for the taxable year

8 if section 151(c)(1)(A) were applied by

9 substituting for the exemption amount an

10 amount equal to the sum of the exemption

11 amount, the standard deduction under sec12 tion 63(c)(2)(C), and any additional stand13 ard deduction under section 63(c)(3) which

14 would be applicable to the individual if

15 clause (iii) applied.

16 ‘‘(v) An individual who would be de17 scribed in clause (iii) for the taxable year

18 if—

19 ‘‘(I) the requirements of clause

20 (iv) are met with respect to the indi21 vidual, and

22 ‘‘(II) the requirements of sub23 paragraph (B) are met with respect to

24 the individual in lieu of the support

25 test of section 152(a).
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1 ‘‘(B) RESIDENCY TEST.—The require2 ments of this subparagraph are met if an indi3 vidual has as his principal place of abode the

4 home of the taxpayer and—

5 ‘‘(i) in the case of an individual who

6 is an ancestor or descendant of the tax7 payer or the taxpayer’s spouse, is a mem8 ber of the taxpayer’s household for over

9 half the taxable year, or

10 ‘‘(ii) in the case of any other indi11 vidual, is a member of the taxpayer’s

12 household for the entire taxable year.

13 ‘‘(C) SPECIAL RULES WHERE MORE THAN

14 1 ELIGIBLE CAREGIVER.—

15 ‘‘(i) IN GENERAL.—If more than 1 in16 dividual is an eligible caregiver with re17 spect to the same applicable individual for

18 taxable years ending with or within the

19 same calendar year, a taxpayer shall be

20 treated as the eligible caregiver if each

21 such individual (other than the taxpayer)

22 files a written declaration (in such form

23 and manner as the Secretary may pre24 scribe) that such individual will not claim
27

•S 1160 IS

1 such applicable individual for the credit

2 under this section.

3 ‘‘(ii) NO AGREEMENT.—If each indi4 vidual required under clause (i) to file a

5 written declaration under clause (i) does

6 not do so, the individual with the highest

7 modified adjusted gross income (as defined

8 in section 32(c)(5)) shall be treated as the

9 eligible caregiver.

10 ‘‘(iii) MARRIED INDIVIDUALS FILING

11 SEPARATELY.—In the case of married indi12 viduals filing separately, the determination

13 under this subparagraph as to whether the

14 husband or wife is the eligible caregiver

15 shall be made under the rules of clause (ii)

16 (whether or not one of them has filed a

17 written declaration under clause (i)).’’.

18 (c) IDENTIFICATION REQUIREMENTS.—

19 (1) IN GENERAL.—Section 24(e) of such Code

20 is amended by adding at the end the following new

21 sentence: ‘‘No credit shall be allowed under this sec22 tion to a taxpayer with respect to any applicable in23 dividual unless the taxpayer includes the name and

24 taxpayer identification number of such individual,

25 and the identification number of the physician certi-
28

•S 1160 IS

1 fying such individual, on the return of tax for the

2 taxable year.’’.

3 (2) ASSESSMENT.—Section 6213(g)(2)(I) of

4 such Code is amended—

5 (A) by inserting ‘‘or physician identifica6 tion’’ after ‘‘correct TIN’’, and

7 (B) by striking ‘‘child’’ and inserting

8 ‘‘family care’’.

9 (d) EFFECTIVE DATE.—The amendments made by

10 this section shall apply to taxable years beginning after

11 December 31, 1999.

12 TITLE IV—EXPANSION OF

13 DEPENDENT CARE TAX CREDIT

14 SEC. 401. EXPANSION OF DEPENDENT CARE TAX CREDIT.

15 (a) INCREASE IN PERCENTAGE OF EMPLOYMENT16 RELATED EXPENSES ALLOWED AS CREDIT.—Paragraph

17 (2) of section 21(a) of the Internal Revenue Code of 1986

18 (defining applicable percentage) is amended to read as fol19 lows:

20 ‘‘(2) APPLICABLE PERCENTAGE DEFINED.—

21 ‘‘(A) IN GENERAL.—For purposes of para22 graph (1), the term ‘applicable percentage’

23 means 50 percent reduced (but not below 20

24 percent) by each $2,000 (or fraction thereof) by
29

•S 1160 IS

1 which the taxpayers’s adjusted gross income for

2 the taxable year exceeds $30,000.

3 ‘‘(B) PHASEIN.—In the case of taxable

4 years beginning before January 1, 2004, the

5 percentage determined under the following table

6 shall be substituted for ‘50 percent’:

‘‘For taxable years beginning

in calendar year— The percentage is—

2000 ............................................................................. 30

2001 ............................................................................. 35

2002 ............................................................................. 40

2003 ............................................................................. 45.’’

7 (b) MINIMUM CREDIT ALLOWED FOR STAY-AT-HOME

8 PARENTS.—Subsection (e) of section 21 of such Code (re9 lating to special rules) is amended by adding at the end

10 the following:

11 ‘‘(11) MINIMUM CREDIT ALLOWED FOR STAY12 AT-HOME PARENTS.—Notwithstanding subsection

13 (d), in the case of any taxpayer with one or more

14 qualifying individuals described in subsection

15 (b)(1)(A) under the age of 1 at any time during the

16 taxable year, such taxpayer shall be deemed to have

17 employment-related expenses with respect to such

18 qualifying individuals in an amount equal to the

19 greater of—

20 ‘‘(A) the amount of employment-related ex21 penses incurred for such qualifying individuals
30

•S 1160 IS

1 for the taxable year (determined under this sec2 tion without regard to this paragraph), or

3 ‘‘(B) $120 for each month in such taxable

4 year during which such qualifying individual is

5 under the age of 1.’’

6 (c) EFFECTIVE DATE.—The amendments made by

7 this section apply to taxable years beginning after Decem8 ber 31, 1999.

9 TITLE V—ALTERNATIVE

10 MINIMUM TAX RELIEF

11 SEC. 501. NONREFUNDABLE PERSONAL CREDITS ALLOWED

12 AGAINST ALTERNATIVE MINIMUM TAX.

13 (a) IN GENERAL.—Subsection (a) of section 26 of the

14 Internal Revenue Code of 1986 is amended to read as fol15 lows:

16 ‘‘(a) LIMITATION BASED ON AMOUNT OF TAX.—The

17 aggregate amount of credits allowed by this subpart for

18 the taxable year shall not exceed the sum of—

19 ‘‘(1) the taxpayer’s regular tax liability for the

20 taxable year reduced by the foreign tax credit allow21 able under section 27(a), and

22 ‘‘(2) the tax imposed for the taxable year by

23 section 55(a).’’.

24 (b) CONFORMING AMENDMENTS.—
31

•S 1160 IS

1 (1) Subsection (d) of section 24 of such Code

2 is amended by striking paragraph (2) and by redes3 ignating paragraph (3) as paragraph (2).

4 (2) Section 904 of such Code is amended by

5 striking subsection (h) and by redesignating sub6 sections (i), (j), and (k) as subsections (h), (i), and

7 (j), respectively.

8 (c) EFFECTIVE DATE.—The amendments made by

9 this section shall apply to taxable years beginning after

10 December 31, 1999.

11 SEC. 502. INCOME AVERAGING FOR FARMERS NOT TO IN12 CREASE ALTERNATIVE MINIMUM TAX LIABIL13 ITY.

14 (a) IN GENERAL.—Section 55(c) of the Internal Rev15 enue Code of 1986 (defining regular tax) is amended by

16 redesignating paragraph (2) as paragraph (3) and by in17 serting after paragraph (1) the following new paragraph:

18 ‘‘(2) COORDINATION WITH INCOME AVERAGING

19 FOR FARMERS.—Solely for purposes of this section,

20 section 1301 (relating to averaging of farm income)

21 shall not apply in computing the regular tax.’’

22 (b) EFFECTIVE DATE.—The amendment made by

23 this section shall apply to taxable years beginning after

24 December 31, 1998.
32

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1 TITLE VI—ELIMINATION OF 60-

2 MONTH LIMIT ON STUDENT

3 LOAN INTEREST DEDUCTION

4 SEC. 601. ELIMINATION OF 60-MONTH LIMIT ON STUDENT

5 LOAN INTEREST DEDUCTION.

6 (a) IN GENERAL.—Section 221 of the Internal Rev7 enue Code of 1986 (relating to interest on education

8 loans) is amended by striking subsection (d) and by redes9 ignating subsections (e), (f), and (g) as subsections (d),

10 (e), and (f), respectively.

11 (b) CONFORMING AMENDMENT.—Section 6050(e) of

12 the Internal Revenue Code of 1986 is amended by striking

13 ‘‘section 221(e)(1)’’ and inserting ‘‘section 221(d)(1)’’.

14 (c) EFFECTIVE DATE.—The amendments made by

15 this section shall apply with respect to any loan interest

16 paid after December 31, 1997.

17 TITLE VII—INCREASE IN LOW-IN18 COME HOUSING CREDIT

19 STATE CEILING

20 SEC. 701. INCREASE IN STATE CEILING ON LOW-INCOME

21 HOUSING CREDIT.

22 (a) IN GENERAL.—Clause (i) of section 42(h)(3)(C)

23 of the Internal Revenue Code of 1986 (relating to State

24 housing credit ceiling) is amended by striking ‘‘$1.25’’ and

25 inserting ‘‘$1.75’’.
33

•S 1160 IS

1 (b) ADJUSTMENT OF STATE CEILING FOR IN2 CREASES IN COST-OF-LIVING.—Paragraph (3) of section

3 42(h) of such Code (relating to housing credit dollar

4 amount for agencies) is amended by adding at the end

5 the following new subparagraph:

6 ‘‘(H) COST-OF-LIVING ADJUSTMENT.—

7 ‘‘(i) IN GENERAL.—In the case of a

8 calendar year after 2000, the dollar

9 amount contained in subparagraph (C)(i)

10 shall be increased by an amount equal to—

11 ‘‘(I) such dollar amount, multi12 plied by

13 ‘‘(II) the cost-of-living adjust14 ment determined under section 1(f)(3)

15 for such calendar year by substituting

16 ‘calendar year 1999’ for ‘calendar

17 year 1992’ in subparagraph (B) there18 of.

19 ‘‘(ii) ROUNDING.—If any increase

20 under clause (i) is not a multiple of 5

21 cents, such increase shall be rounded to

22 the next lowest multiple of 5 cents.’’.

23 (c) EFFECTIVE DATE.—The amendments made by

24 this section shall apply to calendar years after 1999.
34

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1 TITLE VIII—FARM AND RANCH

2 RISK MANAGEMENT ACCOUNTS

3 SEC. 801. FARM AND RANCH RISK MANAGEMENT AC4 COUNTS.

5 (a) IN GENERAL.—Subpart C of part II of sub6 chapter E of chapter 1 of the Internal Revenue Code of

7 1986 (relating to taxable year for which deductions taken)

8 is amended by inserting after section 468B the following

9 new section:

10 ‘‘SEC. 468C. FARM AND RANCH RISK MANAGEMENT AC11 COUNTS.

12 ‘‘(a) DEDUCTION ALLOWED.—In the case of an indi13 vidual engaged in an eligible farming business, there shall

14 be allowed as a deduction for any taxable year the amount

15 paid in cash by the taxpayer during the taxable year to

16 a Farm and Ranch Risk Management Account (herein17 after referred to as the ‘FARRM Account’).

18 ‘‘(b) LIMITATION.—The amount which a taxpayer

19 may pay into the FARRM Account for any taxable year

20 shall not exceed 20 percent of so much of the taxable in21 come of the taxpayer (determined without regard to this

22 section) which is attributable (determined in the manner

23 applicable under section 1301) to any eligible farming

24 business.
35

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1 ‘‘(c) ELIGIBLE FARMING BUSINESS.—For purposes

2 of this section, the term ‘eligible farming business’ means

3 any farming business (as defined in section 263A(e)(4))

4 which is not a passive activity (within the meaning of sec5 tion 469(c)) of the taxpayer.

6 ‘‘(d) FARRM ACCOUNT.—For purposes of this

7 section—

8 ‘‘(1) IN GENERAL.—The term ‘FARRM Ac9 count’ means a trust created or organized in the

10 United States for the exclusive benefit of the tax11 payer, but only if the written governing instrument

12 creating the trust meets the following requirements:

13 ‘‘(A) No contribution will be accepted for

14 any taxable year in excess of the amount al15 lowed as a deduction under subsection (a) for

16 such year.

17 ‘‘(B) The trustee is a bank (as defined in

18 section 408(n)) or another person who dem19 onstrates to the satisfaction of the Secretary

20 that the manner in which such person will ad21 minister the trust will be consistent with the re22 quirements of this section.

23 ‘‘(C) The assets of the trust consist en24 tirely of cash or of obligations which have ade25 quate stated interest (as defined in section
36

•S 1160 IS

1 1274(c)(2)) and which pay such interest not

2 less often than annually.

3 ‘‘(D) All income of the trust is distributed

4 currently to the grantor.

5 ‘‘(E) The assets of the trust will not be

6 commingled with other property except in a

7 common trust fund or common investment

8 fund.

9 ‘‘(2) ACCOUNT TAXED AS GRANTOR TRUST.—

10 The grantor of a FARRM Account shall be treated

11 for purposes of this title as the owner of such Ac12 count and shall be subject to tax thereon in accord13 ance with subpart E of part I of subchapter J of

14 this chapter (relating to grantors and others treated

15 as substantial owners).

16 ‘‘(e) INCLUSION OF AMOUNTS DISTRIBUTED.—

17 ‘‘(1) IN GENERAL.—Except as provided in para18 graph (2), there shall be includible in the gross in19 come of the taxpayer for any taxable year—

20 ‘‘(A) any amount distributed from a

21 FARRM Account of the taxpayer during such

22 taxable year, and

23 ‘‘(B) any deemed distribution under—

24 ‘‘(i) subsection (f)(1) (relating to de25 posits not distributed within 5 years),
37

•S 1160 IS

1 ‘‘(ii) subsection (f)(2) (relating to ces2 sation in eligible farming business), and

3 ‘‘(iii) subparagraph (A) or (B) of sub4 section (f)(3) (relating to prohibited trans5 actions and pledging account as security).

6 ‘‘(2) EXCEPTIONS.—Paragraph (1)(A) shall not

7 apply to—

8 ‘‘(A) any distribution to the extent attrib9 utable to income of the Account, and

10 ‘‘(B) the distribution of any contribution

11 paid during a taxable year to a FARRM Ac12 count to the extent that such contribution ex13 ceeds the limitation applicable under subsection

14 (b) if requirements similar to the requirements

15 of section 408(d)(4) are met.

16 For purposes of subparagraph (A), distributions

17 shall be treated as first attributable to income and

18 then to other amounts.

19 ‘‘(3) EXCLUSION FROM SELF-EMPLOYMENT

20 TAX.—Amounts included in gross income under this

21 subsection shall not be included in determining net

22 earnings from self-employment under section 1402.

23 ‘‘(f) SPECIAL RULES.—

24 ‘‘(1) TAX ON DEPOSITS IN ACCOUNT WHICH

25 ARE NOT DISTRIBUTED WITHIN 5 YEARS.—
38

•S 1160 IS

1 ‘‘(A) IN GENERAL.—If, at the close of any

2 taxable year, there is a nonqualified balance in

3 any FARRM Account—

4 ‘‘(i) there shall be deemed distributed

5 from such Account during such taxable

6 year an amount equal to such balance, and

7 ‘‘(ii) the taxpayer’s tax imposed by

8 this chapter for such taxable year shall be

9 increased by 10 percent of such deemed

10 distribution.

11 The preceding sentence shall not apply if an

12 amount equal to such nonqualified balance is

13 distributed from such Account to the taxpayer

14 before the due date (including extensions) for

15 filing the return of tax imposed by this chapter

16 for such year (or, if earlier, the date the tax17 payer files such return for such year).

18 ‘‘(B) NONQUALIFIED BALANCE.—For pur19 poses of subparagraph (A), the term ‘non20 qualified balance’ means any balance in the Ac21 count on the last day of the taxable year which

22 is attributable to amounts deposited in such Ac23 count before the 4th preceding taxable year.

24 ‘‘(C) ORDERING RULE.—For purposes of

25 this paragraph, distributions from a FARRM
39

•S 1160 IS

1 Account shall be treated as made from deposits

2 in the order in which such deposits were made,

3 beginning with the earliest deposits. For pur4 poses of the preceding sentence, income of such

5 an Account shall be treated as a deposit made

6 on the date such income is received by the Ac7 count.

8 ‘‘(2) CESSATION IN ELIGIBLE FARMING BUSI9 NESS.—At the close of the first disqualification pe10 riod after a period for which the taxpayer was en11 gaged in an eligible farming business, there shall be

12 deemed distributed from the FARRM Account (if

13 any) of the taxpayer an amount equal to the balance

14 in such Account at the close of such disqualification

15 period. For purposes of the preceding sentence, the

16 term ‘disqualification period’ means any period of 2

17 consecutive taxable years for which the taxpayer is

18 not engaged in an eligible farming business.

19 ‘‘(3) CERTAIN RULES TO APPLY.—Rules similar

20 to the following rules shall apply for purposes of this

21 section:

22 ‘‘(A) Section 408(e)(2) (relating to loss of

23 exemption of account where individual engages

24 in prohibited transaction).
40

•S 1160 IS

1 ‘‘(B) Section 408(e)(4) (relating to effect

2 of pledging account as security).

3 ‘‘(C) Section 408(g) (relating to commu4 nity property laws).

5 ‘‘(D) Section 408(h) (relating to custodial

6 accounts).

7 ‘‘(4) TIME WHEN PAYMENTS DEEMED MADE.—

8 For purposes of this section, a taxpayer shall be

9 deemed to have made a payment to a FARRM Ac10 count on the last day of a taxable year if such pay11 ment is made on account of such taxable year and

is made within 31 12 ⁄2 months after the close of such

13 taxable year.

14 ‘‘(5) INDIVIDUAL.—For purposes of this sec15 tion, the term ‘individual’ shall not include an estate

16 or trust.

17 ‘‘(g) REPORTS.—The trustee of a FARRM Account

18 shall make such reports regarding such Account to the

19 Secretary and to the person for whose benefit the Account

20 is maintained with respect to contributions, distributions,

21 and such other matters as the Secretary may require

22 under regulations. The reports required by this subsection

23 shall be filed at such time and in such manner and fur24 nished to such persons at such time and in such manner

25 as may be required by those regulations.’’.
41

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1 (b) DEDUCTION ALLOWED IN COMPUTING AD2 JUSTED GROSS INCOME.—Subsection (a) of section 62 of

3 such Code (defining adjusted gross income) is amended

4 by inserting after paragraph (18) the following new para5 graph:

6 ‘‘(19) CONTRIBUTIONS TO FARM AND RANCH

7 RISK MANAGEMENT ACCOUNTS.—The deduction al8 lowed by section 468C(a).’’

9 (c) TAX ON EXCESS CONTRIBUTIONS.—

10 (1) Subsection (a) of section 4973 of such Code

11 (relating to tax on certain excess contributions) is

12 amended by striking ‘‘or’’ at the end of paragraph

13 (3), by redesignating paragraph (4) as paragraph

14 (5), and by inserting after paragraph (3) the fol15 lowing new paragraph:

16 ‘‘(4) a FARRM Account (within the meaning of

17 section 468C(d)), or’’.

18 (2) Section 4973 of such Code is amended by

19 adding at the end the following new subsection:

20 ‘‘(g) EXCESS CONTRIBUTIONS TO FARRM AC21 COUNTS.—For purposes of this section, in the case of a

22 FARRM Account (within the meaning of section

23 468C(d)), the term ‘excess contributions’ means the

24 amount by which the amount contributed for the taxable

25 year to the Account exceeds the amount which may be con-
42

•S 1160 IS

1 tributed to the Account under section 468C(b) for such

2 taxable year. For purposes of this subsection, any con3 tribution which is distributed out of the FARRM Account

4 in a distribution to which section 468C(e)(2)(B) applies

5 shall be treated as an amount not contributed.’’.

6 (3) The section heading for section 4973 of

7 such Code is amended to read as follows:

8 ‘‘SEC. 4973. EXCESS CONTRIBUTIONS TO CERTAIN AC9 COUNTS, ANNUITIES, ETC.’’.

10 (4) The table of sections for chapter 43 of such

11 Code is amended by striking the item relating to sec12 tion 4973 and inserting the following new item:

‘‘Sec. 4973. Excess contributions to certain accounts, annuities,

etc.’’.

13 (d) TAX ON PROHIBITED TRANSACTIONS.—

14 (1) Subsection (c) of section 4975 of such Code

15 (relating to prohibited transactions) is amended by

16 adding at the end the following new paragraph:

17 ‘‘(6) SPECIAL RULE FOR FARRM ACCOUNTS.—

18 A person for whose benefit a FARRM Account

19 (within the meaning of section 468C(d)) is estab20 lished shall be exempt from the tax imposed by this

21 section with respect to any transaction concerning

22 such Account (which would otherwise be taxable

23 under this section) if, with respect to such trans24 action, the account ceases to be a FARRM Account
43

•S 1160 IS

1 by reason of the application of section 468C(f)(3)(A)

2 to such Account.’’.

3 (2) Paragraph (1) of section 4975(e) of such

4 Code is amended by redesignating subparagraphs

5 (E) and (F) as subparagraphs (F) and (G), respec6 tively, and by inserting after subparagraph (D) the

7 following new subparagraph:

8 ‘‘(E) a FARRM Account described in sec9 tion 468C(d),’’.

10 (e) FAILURE TO PROVIDE REPORTS ON FARRM AC11 COUNTS.—Paragraph (2) of section 6693(a) of such Code

12 (relating to failure to provide reports on certain tax-fa13 vored accounts or annuities) is amended by redesignating

14 subparagraphs (C) and (D) as subparagraphs (D) and

15 (E), respectively, and by inserting after subparagraph (B)

16 the following new subparagraph:

17 ‘‘(C) section 468C(g) (relating to FARRM

18 Accounts).’’.

19 (f) CLERICAL AMENDMENT.—The table of sections

20 for subpart C of part II of subchapter E of chapter 1 of

21 such Code is amended by inserting after the item relating

22 to section 468B the following new item:

‘‘Sec. 468C. Farm and Ranch Risk Management Accounts.’’.

23 (g) EFFECTIVE DATE.—The amendments made by

24 this section shall apply to taxable years beginning after

25 the date of the enactment of this Act.
44

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1 TITLE IX—INCENTIVES FOR

2 URBAN REVITALIZATION AND

3 OPEN SPACE

4 SEC. 901. EXPENSING OF ENVIRONMENTAL REMEDIATION

5 COSTS EXPANDED TO CONTAMINATED SITES

6 OUTSIDE OF TARGETED AREAS.

7 (a) IN GENERAL.—Clause (ii) of section 198(c)(1)(A)

8 of the Internal Revenue Code of 1986 (relating to quali9 fied contaminated sites) is amended to read as follows:

10 ‘‘(ii) which is within the United

11 States, and’’.

12 (b) EXPENSE TREATMENT MADE PERMANENT.—

13 Section 198 of such Code is amended by striking sub14 section (h).

15 (c) CONFORMING AMENDMENT.—Paragraph (2) of

16 section 198(c) of such Code is amended to read as follows:

17 ‘‘(2) NATIONAL PRIORITIES LISTED SITES NOT

18 INCLUDED.—Such term shall not include any site

19 which is on, or proposed for, the national priorities

20 list under section 105(a)(8)(B) of the Comprehen21 sive Environmental Response, Compensation, and

22 Liability Act of 1980 (as in effect on the date of the

23 enactment of this section).’’

24 (d) EFFECTIVE DATE.—The amendments made by

25 this section shall apply to expenditures paid or incurred
45

•S 1160 IS

1 after the date of the enactment of this Act in taxable years

2 ending after such date.

3 SEC. 902. MODIFICATIONS TO ENCOURAGE CONTRIBU4 TIONS OF CAPITAL GAIN REAL PROPERTY

5 MADE FOR CONSERVATION PURPOSES AND

6 OF QUALIFIED CONSERVATION CONTRIBU7 TIONS.

8 (a) CONTRIBUTIONS OF CAPITAL GAIN REAL PROP9 ERTY MADE FOR CONSERVATION PURPOSES AND OF

10 QUALIFIED CONSERVATION CONTRIBUTIONS NOT SUB11 JECT TO SPECIAL LIMITATION ON CONTRIBUTIONS OF

12 CAPITAL GAIN PROPERTY.—Subparagraph (C) of section

13 170(b)(1) of the Internal Revenue Code of 1986 (relating

14 to special limitation with respect to contributions de15 scribed in subparagraph (A) of capital gain property) is

16 amended by redesignating clause (iv) as clause (v) and by

17 inserting after clause (iii) the following new clause:

18 ‘‘(iv) In the case of charitable con19 tributions described in subparagraph (A)

20 of capital gain property, clauses (i) and (ii)

21 shall not apply to—

22 ‘‘(I) any qualified conservation

23 contribution (as defined in section

24 170(h)), or
46

•S 1160 IS

1 ‘‘(II) any other contribution of

2 capital gain property which is real

3 property if the contribution is of the

4 donor’s entire interest in such prop5 erty and is to a qualified organization

6 (as defined in section 170(h)(3))

7 which is organized for conservation

8 purposes (as defined in section

9 170(h)(4)(A)) and which provides the

10 taxpayer, at the time of such dona11 tion, a letter of intent which contains

12 an acknowledgment of the donee’s in13 tent that the property is being ac14 quired for any such conservation pur15 pose.’’.

16 (b) UNLIMITED CARRYOVER FOR CONTRIBUTIONS OF

17 CAPITAL GAIN REAL PROPERTY FOR CONSERVATION

18 PURPOSES AND OF QUALIFIED CONSERVATION CON19 TRIBUTIONS OF CAPITAL GAIN PROPERTY.—Paragraph

20 (1) of section 170(d) of such Code in amended by adding

21 at the end the following new subparagraph:

22 ‘‘(C) UNLIMITED CARRYOVER FOR CON23 TRIBUTIONS OF CAPITAL GAIN REAL PROPERTY

24 FOR CONSERVATION PURPOSES AND OF QUALI25 FIED CONSERVATION CONTRIBUTIONS OF CAP-
47

•S 1160 IS

1 ITAL GAIN PROPERTY.—The 5 taxable year lim2 itation in subparagraph (A) shall not apply to

3 any charitable contribution to which clauses (i)

4 and (ii) of subsection (b)(1)(C) do not apply by

5 reason of clause (iv) thereof. For purposes of

6 this paragraph, the excess described in the ma7 terial preceding clause (i) of subparagraph (A)

8 shall be treated as attributable to contributions

9 described in the preceding sentence of this sub10 paragraph to the extent of such contributions.’’.

11 (c) EFFECTIVE DATE.—The amendment made by

12 this section shall apply to contributions made in taxable

13 years beginning after the date of the enactment of this

14 Act.

15 TITLE X—EXTENSION OF

16 CERTAIN EXPIRING PROVISIONS

17 SEC. 1001. RESEARCH CREDIT.

18 (a) CREDIT MADE PERMANENT.—

19 (1) IN GENERAL.—Section 41 of the Internal

20 Revenue Code of 1986 (relating to credit for increas21 ing research activities) is amended by striking sub22 section (h).

23 (2) CONFORMING AMENDMENT.—Paragraph (1)

24 section 45C(b) of such Code is amended by striking

25 subparagraph (D).
48

•S 1160 IS

1 (3) EFFECTIVE DATE.—The amendments made

2 by this subsection shall apply to amounts paid or in3 curred after June 30, 1999.

4 (b) INCREASE IN PERCENTAGES UNDER ALTER5 NATIVE INCREMENTAL CREDIT.—

6 (1) IN GENERAL.—Subparagraph (A) of section

7 41(c)(4) of such Code is amended—

8 (A) by striking ‘‘1.65 percent’’ and insert9 ing ‘‘2.65 percent’’,

10 (B) by striking ‘‘2.2 percent’’ and inserting

11 ‘‘3.2 percent’’, and

12 (C) by striking ‘‘2.75 percent’’ and insert13 ing ‘‘3.75 percent’’.

14 (2) EFFECTIVE DATE.—The amendments made

15 by this subsection shall apply to taxable years begin16 ning after June 30, 1999.

17 SEC. 1002. WORK OPPORTUNITY CREDIT.

18 (a) CREDIT MADE PERMANENT.—Subsection (c) of

19 section 51 of the Internal Revenue Code of 1986 is amend20 ed by striking paragraph (4).

21 (b) EFFECTIVE DATE.—The amendment made by

22 subsection (a) shall apply to individuals who begin work

23 for the employer after June 30, 1999.
49

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1 SEC. 1003. PERMANENT SUBPART F EXEMPTION FOR AC2 TIVE FINANCING INCOME.

3 (a) BANKING, FINANCING, OR SIMILAR BUSI4 NESSES.—Subsection (h) of section 954 of the Internal

5 Revenue Code of 1986 (relating to special rule for income

6 derived in the active conduct of banking, financing, or

7 similar businesses) is amended by striking paragraph (9).

8 (b) INSURANCE BUSINESSES.—Subsection (a) of sec9 tion 953 of such Code (defining insurance income) is

10 amended by striking paragraph (10) and by redesignating

11 paragraph (11) as paragraph (10).

12 (c) EFFECTIVE DATE.—The amendments made by

13 this section shall apply to taxable years of a foreign cor14 poration beginning after December 31, 1998, and to tax15 able years of United States shareholders with or within

16 which such taxable years of such foreign corporation end.

17 SEC. 1004. CREDIT FOR ELECTRICITY PRODUCED FROM RE18 NEWABLE RESOURCES.

19 (a) EXTENSION AND MODIFICATION OF PLACED-IN20 SERVICE RULES.—Paragraph (3) of section 45(c) of the

21 Internal Revenue Code of 1986 is amended to read as fol22 lows:

23 ‘‘(3) QUALIFIED FACILITY.—

24 ‘‘(A) WIND FACILITIES.—In the case of a

25 facility using wind to produce electricity, the

26 term ‘qualified facility’ means any facility
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1 owned by the taxpayer which is originally

2 placed in service after December 31, 1993, and

3 before July 1, 2004.

4 ‘‘(B) BIOMASS FACILITIES.—In the case of

5 a facility using biomass to produce electricity,

6 the term ‘qualified facility’ means, with respect

7 to any month, any facility owned by the tax8 payer which is originally placed in service before

9 July 1, 2004, if, for such month—

10 ‘‘(i) biomass comprises not less than

11 75 percent (on a Btu basis) of the average

12 monthly fuel input of the facility for the

13 taxable year which includes such month, or

14 ‘‘(ii) in the case of a facility prin15 cipally using coal to produce electricity,

16 biomass comprises not more than 25 per17 cent (on a Btu basis) of the average

18 monthly fuel input of the facility for the

19 taxable year which includes such month.

20 ‘‘(C) SPECIAL RULES.—

21 ‘‘(i) In the case of a qualified facility

22 described in subparagraph (B)(i)—

23 ‘‘(I) the 10-year period referred

24 to in subsection (a) shall be treated as
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1 beginning no earlier than the date of

2 the enactment of this paragraph, and

3 ‘‘(II) subsection (b)(3) shall not

4 apply to any such facility originally

5 placed in service before January 1,

6 1997.

7 ‘‘(ii) In the case of a qualified facility

8 described in subparagraph (B)(ii)—

9 ‘‘(I) the 10-year period referred

10 to in subsection (a) shall be treated as

11 beginning no earlier than the date of

12 the enactment of this paragraph, and

13 ‘‘(II) the amount of the credit

14 determined under subsection (a) with

15 respect to any project for any taxable

16 year shall be adjusted by multiplying

17 such amount (determined without re18 gard to this clause) by 0.59.’’.

19 (b) CREDIT NOT TO APPLY TO ELECTRICITY SOLD

20 TO UTILITIES UNDER CERTAIN CONTRACTS.—Subsection

21 (b) of section 45 of such Code is amended by adding at

22 the end the following new paragraph:

23 ‘‘(4) CREDIT NOT TO APPLY TO ELECTRICITY

24 SOLD TO UTILITIES UNDER CERTAIN CONTRACTS.—
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1 ‘‘(A) IN GENERAL.—The credit determined

2 under subsection (a) shall not apply to

3 electricity—

4 ‘‘(i) produced at a qualified facility

5 placed in service by the taxpayer after

6 June 30, 1999, and

7 ‘‘(ii) sold to a utility pursuant to a

8 contract originally entered into before Jan9 uary 1, 1987 (whether or not amended or

10 restated after that date).

11 ‘‘(B) .—Subparagraph (A) shall not apply

12 if—

13 ‘‘(i) the prices for energy and capacity

14 from such facility are established pursuant

15 to an amendment to the contract referred

16 to in subparagraph (A)(ii);

17 ‘‘(ii) such amendment provides that

18 the prices set forth in the contract which

19 exceed avoided cost prices determined at

20 the time of delivery shall apply only to an21 nual quantities of electricity (prorated for

22 partial years) which do not exceed the

23 greater of—

24 ‘‘(I) the average annual quantity

25 of electricity sold to the utility under
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1 the contract during calendar years

2 1994, 1995, 1996, 1997, and 1998,

3 or

4 ‘‘(II) the estimate of the annual

5 electricity production set forth in the

6 contract, or, if there is no such esti7 mate, the greatest annual quantity of

8 electricity sold to the utility under the

9 contract in any of the calendar years

10 1996, 1997, or 1998; and

11 ‘‘(iii) such amendment provides that

12 energy and capacity in excess of the limita13 tion in clause (ii) may be—

14 ‘‘(I) sold to the utility only at

15 prices that do not exceed avoided cost

16 prices determined at the time of deliv17 ery, or

18 ‘‘(II) sold to a third party subject

19 to a mutually agreed upon advance

20 notice to the utility.

21 For purposes of this subparagraph, avoided cost

22 prices shall be determined as provided for in 18

23 CFR 292.304(d)(1) or any successor regula24 tion.’’.
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1 (c) QUALIFIED FACILITIES INCLUDE ALL BIOMASS

2 FACILITIES.—

3 (1) IN GENERAL.—Subparagraph (B) of section

4 45(c)(1) of such Code is amended to read as follows:

5 ‘‘(B) biomass.’’

6 (2) BIOMASS DEFINED.—Paragraph (2) of sec7 tion 45(c) of such Code is amended to read as fol8 lows:

9 ‘‘(2) BIOMASS.—The term ‘biomass’ means—

10 ‘‘(A) any organic material from a plant

11 which is planted exclusively for purposes of

12 being used at a qualified facility to produce

13 electricity, and

14 ‘‘(B) any solid, nonhazardous, cellulosic

15 waste material, which is segregated from other

16 waste materials, and which is derived from—

17 ‘‘(i) any of the following forest-related

18 resources: mill residues, precommercial

19 thinnings, slash, and brush, but not includ20 ing old-growth timber,

21 ‘‘(ii) waste pallets, crates, and

22 dunnage, manufacturing and construction

23 wood wastes (other than pressure-treated,

24 chemically-treated, or painted wood

25 wastes), and landscape or right-of-way tree
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1 trimmings, but not including unsegregated

2 municipal solid waste (garbage), or

3 ‘‘(iii) agriculture sources, including or4 chard tree crops, vineyard, grain, legumes,

5 sugar, and other crop by-products or resi6 dues.’’

7 (d) EFFECTIVE DATE.—The amendments made by

8 this section shall apply to electricity produced after the

9 date of the enactment of this Act.

Æ