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[Congressional Bills 104th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1215 Introduced in House (IH)]

104th CONGRESS
  1st Session
                                H. R. 1215

 To amend the Internal Revenue Code of 1986 to strengthen the American 
                        family and create jobs.

_______________________________________________________________________

                    IN THE HOUSE OF REPRESENTATIVES

                             March 13, 1995

  Mr. Archer introduced the following bill; which was referred to the 
                      Committee on Ways and Means

_______________________________________________________________________

                                 A BILL

 
 To amend the Internal Revenue Code of 1986 to strengthen the American 
                        family and create jobs.

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

SECTION 1. SHORT TITLE; AMENDMENT OF 1986 CODE.

    (a) Short Title.--This Act may be cited as the ``Contract With 
America Tax Relief Act of 1995''.
    (b) Amendment of 1986 Code.--Except as otherwise expressly 
provided, whenever in this Act an amendment or repeal is expressed in 
terms of an amendment to, or repeal of, a section or other provision, 
the reference shall be considered to be made to a section or other 
provision of the Internal Revenue Code of 1986.
    (c) Table of Contents.--

Sec. 1. Short title; amendment of 1986 Code.
                  TITLE I--AMERICAN DREAM RESTORATION

Sec. 101. Family tax credit.
Sec. 102. Credit to reduce marriage penalty.
Sec. 103. Establishment of American dream savings accounts.
Sec. 104. Spousal IRA computed on basis of compensation of both 
                            spouses.
                   TITLE II--SENIOR CITIZENS' EQUITY

   Subtitle A--Repeal of Increase in Tax on Social Security Benefits

Sec. 201. Repeal of increase in tax on Social Security benefits.
     Subtitle B--Treatment of Long-term Care Insurance and Services

Sec. 211. Treatment of long-term care insurance.
Sec. 212. Qualified long-term care services treated as medical care.
Sec. 213. Certain exchanges of life insurance contracts for long-term 
                            care insurance contracts not taxable.
Sec. 214. Exclusion from gross income for amounts withdrawn from 
                            certain retirement plans for long-term care 
                            insurance.
          Subtitle C--Treatment of Accelerated Death Benefits

Sec. 221. Treatment of accelerated death benefits by recipient.
Sec. 222. Tax treatment of companies issuing qualified accelerated 
                            death benefit riders.
Subtitle D--Inclusion in Gross Income of Excess Long-term Care Benefits

Sec. 231. Inclusion in income of excess long-term care benefits.
Sec. 232. Reporting requirements.
              TITLE III--JOB CREATION AND WAGE ENHANCEMENT

                    Subtitle A--Capital Gains Reform

 Part I--Capital Gains Reduction for Taxpayers Other Than Corporations

Sec. 301. Capital gains deduction.
Sec. 302. Indexing of certain assets acquired after December 31, 1994, 
                            for purposes of determining gain.
           Part II--Capital Gains Reduction for Corporations

Sec. 311. Reduction of alternative capital gain tax for corporations.
   Part III--Capital Loss Deduction Allowed With Respect to Sale or 
                    Exchange of Principal Residence

Sec. 316. Capital loss deduction allowed with respect to sale or 
                            exchange of principal residence.
                  Subtitle B--Cost Recovery Provisions

Sec. 321. Depreciation adjustment for certain property placed in 
                            service after December 31, 1994.
Sec. 322. Treatment of abandonment of lessor improvements at 
                            termination of lease.
               Subtitle C--Alternative Minimum Tax Relief

Sec. 331. Phaseout of application of alternative minimum tax to 
                            corporations.
       Subtitle D--Public Debt Reduction Checkoff and Trust Fund

Sec. 341. Designation of amounts for reduction of public debt.
Sec. 342. Public Debt Reduction Trust Fund.
                 Subtitle E--Small Business Incentives

Sec. 351. Cost-of-living adjustments relating to estate and gift tax 
                            provisions.
Sec. 352. Increase in expense treatment for small businesses.
Sec. 353. Clarification of treatment of home office use for 
                            administrative and management activities.
Sec. 354. Treatment of storage of product samples.
                     TITLE IV--FAMILY REINFORCEMENT

Sec. 401. Credit for adoption expenses.
Sec. 402. Credit for taxpayers with certain persons requiring custodial 
                            care in their households.
                 TITLE V--SOCIAL SECURITY EARNINGS TEST

Sec. 501. Adjustments in monthly exempt amount for purposes of the 
                            Social Security earnings test.
                    TITLE VI--TECHNICAL CORRECTIONS

Sec. 601. Coordination with other titles.
Sec. 602. Amendments related to Revenue Reconciliation Act of 1990.
Sec. 603. Amendments related to Revenue Reconciliation Act of 1993.
Sec. 604. Miscellaneous provisions.

                  TITLE I--AMERICAN DREAM RESTORATION

SEC. 101. FAMILY TAX CREDIT.

    (a) In General.--Subpart A of part IV of subchapter A of chapter 1 
is amended by inserting after section 22 the following new section:

``SEC. 23. FAMILY TAX CREDIT.

    ``(a) Allowance of Credit.--There shall be allowed as a credit 
against the tax imposed by this chapter for the taxable year an amount 
equal to $500 multiplied by the number of qualifying children of the 
taxpayer.
    ``(b) Limitation.--The amount of credit which would (but for this 
subsection) be allowed by subsection (a) shall be reduced (but not 
below zero) by an amount which bears the same ratio to such amount of 
credit as--
            ``(1) the excess (if any) of the taxpayer's adjusted gross 
        income (determined without regard to sections 911, 931, and 
        933) over $200,000, bears to
            ``(2) an amount equal to 100 times the dollar amount in 
        effect under subsection (a) for the taxable year.
    ``(c) Qualifying Child.--For purposes of this section--
            ``(1) In general.--The term `qualifying child' means any 
        individual if--
                    ``(A) the taxpayer is allowed a deduction under 
                section 151 with respect to such individual for such 
                taxable year,
                    ``(B) such individual has not attained the age of 
                18 as of the close of the calendar year in which the 
                taxable year of the taxpayer begins, and
                    ``(C) such individual bears a relationship to the 
                taxpayer described in section 32(c)(3)(B) (determined 
                without regard to clause (ii) thereof).
            ``(2) Exception for certain noncitizens.--The term 
        `qualifying child' shall not include any individual who would 
        not be a dependent if the first sentence of section 152(b)(3) 
        were applied without regard to all that follows `resident of 
        the United States'.
    ``(d) Inflation Adjustments.--
            ``(1) In general.--In the case of a taxable year beginning 
        in a calendar year after 1996, the $500 and $200,000 amounts 
        contained in subsections (a) and (b) shall each be increased by 
        an amount equal to--
                    ``(A) such dollar amount, multiplied by
                    ``(B) the cost-of-living adjustment determined 
                under section 1(f)(3) for the calendar year in which 
                the taxable year begins, determined by substituting 
                `calendar year 1995' for `calendar year 1992' in 
                subparagraph (B) thereof.
            ``(2) Rounding.--If any amount as adjusted under paragraph 
        (1) is not a multiple of $50, such amount shall be rounded to 
        the nearest multiple of $50.
    ``(e) Certain Other Rules Apply.--Rules similar to the rules of 
subsections (d) and (e) of section 32 shall apply for purposes of this 
section.''
    (b) Conforming Amendment.--The table of sections for subpart A of 
part IV of subchapter A of chapter 1 is amended by inserting after the 
item relating to section 22 the following new item:

                              ``Sec. 23. Family tax credit.''
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 1995.

SEC. 102. CREDIT TO REDUCE MARRIAGE PENALTY.

    (a) In General.--Subpart A of part IV of subchapter A of chapter 1 
is amended by inserting after section 23 the following new section:

``SEC. 24. CREDIT TO REDUCE MARRIAGE PENALTY.

    ``(a) Allowance of Credit.--In the case of a joint return for the 
taxable year, there shall be allowed as a credit against the tax 
imposed by this chapter for such taxable year an amount equal to the 
marriage penalty reduction credit.
    ``(b) Limitations.--
            ``(1) Dollar limitation.--The amount of credit allowed by 
        subsection (a) for the taxable year shall not exceed $145.
            ``(2) Credit disallowed for individuals claiming section 
        911, etc.--No credit shall be allowed under this section for 
        any taxable year if either spouse claims the benefits of 
        section 911, 931, or 933 for such taxable year.
    ``(c) Marriage Penalty Reduction Credit.--For purposes of this 
section--
            ``(1) In general.--The marriage penalty reduction credit is 
        an amount equal to the excess (if any) of--
                    ``(A) the joint tax amount of the taxpayer, over
                    ``(B) the sum of the unmarried tax amounts for each 
                spouse.
            ``(2) Unmarried tax amount.--For purposes of paragraph (1), 
        the unmarried tax amount, with respect to an individual, is the 
        amount of tax which would be imposed by section 1(c) if such 
        individual's taxable income were equal to the excess (if any) 
        of--
                    ``(A) such individual's qualified earned income for 
                the taxable year, over
                    ``(B) the sum of--
                            ``(i) an amount equal to the basic standard 
                        deduction under section 63(c)(2)(C) for the 
                        taxable year, plus
                            ``(ii) the exemption amount (as defined in 
                        section 151(d)) for such taxable year.
            ``(3) Joint tax amount.--For purposes of paragraph (1), the 
        joint tax amount is the amount of tax which would be imposed by 
        section 1(a) if the taxpayer's taxable income were equal to the 
        excess (if any) of--
                    ``(A) the taxpayer's qualified earned income for 
                the taxable year, over
                    ``(B) the sum of--
                            ``(i) an amount equal to the basic standard 
                        deduction under section 63(c)(2)(A) for the 
                        taxable year, plus
                            ``(ii) an amount equal to twice the 
                        exemption amount (as so defined) for such 
                        taxable year.
    ``(d) Qualified Earned Income.--For purposes of this section--
            ``(1) In general.--The term `qualified earned income' means 
        an amount equal to the excess (if any) of--
                    ``(A) the earned income for the taxable year, over
                    ``(B) an amount equal to the sum of the deductions 
                described in paragraphs (1), (2), (6), (7), and (12) of 
                section 62(a) to the extent that such deductions are 
                properly allocable to or chargeable against earned 
                income for such taxable year.
        The amount of qualified earned income shall be determined 
        without regard to any community property laws.
            ``(2) Earned income.--For purposes of paragraph (1)--
                    ``(A) In general.--The term `earned income' means 
                income which is earned income within the meaning of 
                section 401(c)(2)(C) or 911(d)(2) (determined without 
                regard to the phrase `not in excess of 30 percent of 
                his share of the net profits of such trade or business' 
                in subparagraph (B) thereof).
                    ``(B) Exception.--Such term shall not include any 
                amount--
                            ``(i) not includible in gross income,
                            ``(ii) received as a pension or annuity,
                            ``(iii) paid or distributed out of an 
                        individual retirement plan (within the meaning 
                        of section 7701(a)(37)),
                            ``(iv) received as deferred compensation, 
                        or
                            ``(v) received for services performed by an 
                        individual in the employ of the spouse (within 
                        the meaning of section 3121(b)(3)(A)).
    ``(e) Amount of Credit To Be Determined Under Tables.--
            ``(1) In general.--The amount of the credit allowed by this 
        section shall be determined under tables prescribed by the 
        Secretary.
            ``(2) Requirements for tables.--The tables prescribed under 
        paragraph (1) shall reflect the provisions of subsection (c) 
        and shall round to the nearest $25 any amount of credit which 
        is less than the maximum credit under subsection (b)(1).''
    (b) Clerical Amendment.--The table of sections for subpart A of 
part IV of subchapter A of chapter 1 is amended by inserting after the 
item relating to section 23 the following new item:

                              ``Sec. 24. Credit to reduce marriage 
                                        penalty.''
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 1995.

SEC. 103. ESTABLISHMENT OF AMERICAN DREAM SAVINGS ACCOUNTS.

    (a) In General.--Subpart A of part I of subchapter D of chapter 1 
(relating to pension, profit-sharing, stock bonus plans, etc.) is 
amended by inserting after section 408 the following new section:

``SEC. 408A. AMERICAN DREAM SAVINGS ACCOUNTS.

    ``(a) General Rule.--Except as provided in this section, an 
American Dream Savings Account shall be treated for purposes of this 
title in the same manner as an individual retirement plan.
    ``(b) American Dream Savings Account.--For purposes of this title, 
the term `American Dream Savings Account' or `ADS account' means an 
individual retirement plan which is designated at the time of the 
establishment of the plan as an American Dream Savings Account. Such 
designation shall be made in such manner as the Secretary may 
prescribe.
    ``(c) Contribution Rules.--
            ``(1) No deduction allowed.--No deduction shall be allowed 
        under section 219 for a contribution to an ADS account.
            ``(2) Contribution limit.--
                    ``(A) In general.--The aggregate amount of 
                contributions (other than rollover contributions) for 
                any taxable year to all ADS accounts maintained for the 
                benefit of an individual shall not exceed the lesser 
                of--
                            ``(i) $2,000, or
                            ``(ii) an amount equal to the compensation 
                        includible in the individual's gross income for 
                        such taxable year.
                    ``(B) $4,000 limitation for certain additional 
                married individuals.--
                            ``(i) In general.--In the case of an 
                        individual to whom this subparagraph applies 
                        for the taxable year, the limitation of 
                        subparagraph (A)(ii) shall be equal to the sum 
                        of--
                                    ``(I) the compensation includible 
                                in such individual's gross income for 
                                the taxable year, plus
                                    ``(II) the compensation includible 
                                in the gross income of such 
                                individual's spouse for the taxable 
                                year reduced by the amount of the 
                                limitation under subparagraph (A) 
                                applicable to such spouse for such 
                                taxable year.
                            ``(ii) Individuals to whom clause (i) 
                        applies.--Clause (i) shall apply to any 
                        individual if--
                                    ``(I) such individual files a joint 
                                return for the taxable year, and
                                    ``(II) the amount of compensation 
                                (if any) includible in such 
                                individual's gross income for the 
                                taxable year is less than the 
                                compensation includible in the gross 
                                income of such individual's spouse for 
                                the taxable year.
                    ``(C) Adjustment for inflation.--
                            ``(i) In general.--In the case of a taxable 
                        year beginning in a calendar year after 1996, 
                        the $2,000 amount contained in subparagraph (A) 
                        shall be increased by an amount equal to--
                                    ``(I) such dollar amount, 
                                multiplied by
                                    ``(II) the cost-of-living 
                                adjustment under section 1(f)(3) for 
                                the calendar year in which the taxable 
                                year begins, determined by substituting 
                                `calendar year 1995' for `calendar year 
                                1992' in subparagraph (B) thereof.
                            ``(ii) Rounding.--If any amount as adjusted 
                        under clause (i) is not a multiple of $50, such 
                        amount shall be rounded to the nearest multiple 
                        of $50.
                    ``(D) Tax on excess contributions.--Section 4973 
                shall be applied separately with respect to individual 
                retirement plans which are ADS accounts and individual 
                retirement plans which are not ADS accounts; except 
                that, for purposes of applying such section with 
                respect to individual retirement plans which are ADS 
                accounts, excess contributions shall be considered to 
                be any amounts in excess of the limitation under 
                subsection (c)(2)(A).
            ``(3) Contributions permitted after age 70\1/2\.--
        Contributions to an ADS account may be made even after the 
        individual for whom the account is maintained has attained age 
        70\1/2\.
            ``(4) Mandatory distribution rules not to apply, etc.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), subsections (a)(6) and (b)(3) of 
                section 408 (relating to required distributions) and 
                section 4974 (relating to excise tax on certain 
                accumulations in qualified retirement plans) shall not 
                apply to any ADS account.
                    ``(B) Post-death distributions.--Rules similar to 
                the rules of section 401(a)(9) (other than subparagraph 
                (A) thereof) shall apply for purposes of this section.
            ``(5) Limitations on rollover contributions.--No rollover 
        contribution may be made to an ADS account unless--
                    ``(A) such contribution is from another ADS 
                account, or
                    ``(B) such contribution is from an individual 
                retirement plan (other than an ADS account) and is made 
                before January 1, 1998.
    ``(d) Distribution Rules.--For purposes of this title--
            ``(1) General rules.--
                    ``(A) Exclusion from gross income.--No portion of a 
                qualified distribution from an ADS account shall be 
                includible in gross income.
                    ``(B) Exception from penalty tax.--Section 72(t) 
                shall not apply to--
                            ``(i) any qualified distribution from an 
                        ADS account, and
                            ``(ii) any qualified special purpose 
                        distribution (whether or not a qualified 
                        distribution) from an ADS account.
            ``(2) Qualified distribution.--For purposes of this 
        subsection--
                    ``(A) In general.--The term `qualified 
                distribution' means any payment or distribution--
                            ``(i) made on or after the date on which 
                        the individual attains age 59\1/2\,
                            ``(ii) made to a beneficiary (or to the 
                        estate of the individual) on or after the death 
                        of the individual,
                            ``(iii) attributable to the individual's 
                        being disabled (within the meaning of section 
                        72(m)(7)), or
                            ``(iv) which is a qualified special purpose 
                        distribution.
                    ``(B) Distributions within 5 years.--No payment or 
                distribution shall be treated as a qualified 
                distribution if--
                            ``(i) it is made within the 5-taxable year 
                        period beginning with the 1st taxable year for 
                        which the individual made a contribution to an 
                        ADS account (or such individual's spouse made a 
                        contribution to an ADS account) established for 
                        such individual, or
                            ``(ii) in the case of a payment or 
                        distribution properly allocable to a rollover 
                        contribution (or income allocable thereto), it 
                        is made within 5 years after the date on which 
                        such rollover contribution was made, as 
                        determined under regulations prescribed by the 
                        Secretary.
                Clause (ii) shall not apply to a rollover contribution 
                from an ADS account.
            ``(3) Income inclusion for rollovers from non-ads 
        accounts.--In the case of any amount paid or distributed out of 
        an individual retirement plan (other than an ADS account) which 
        is paid into an ADS account (established for the benefit of the 
        payee or distributee, as the case may be) before the close of 
        the 60th day after the day on which the payment or distribution 
        is received--
                    ``(A) sections 72(t) and 408(d)(3) shall not apply, 
                and
                    ``(B) any amount required to be included in gross 
                income by reason of this paragraph shall be so included 
                ratably over the 4-taxable year period beginning with 
                the taxable year in which the payment or distribution 
                is made.
    ``(e) Qualified Special Purpose Distribution.--
            ``(1) In general.--For purposes of this section, the term 
        `qualified special purpose distribution' means any payments or 
        distributions from an ADS account to the individual for whose 
        benefit such account is established--
                    ``(A) if such payments or distributions are 
                qualified first-time homebuyer distributions, or
                    ``(B) to the extent such payments or distributions 
                do not exceed--
                            ``(i) the qualified higher education 
                        expenses of the taxpayer for the taxable year 
                        in which received, and
                            ``(ii) the qualified medical expenses of 
                        the taxpayer for the taxable year in which 
                        received.
            ``(2) Qualified first-time homebuyer distributions.--
                    ``(A) In general.--For purposes of this subsection, 
                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 for such individual as 
                a first-time homebuyer.
                    ``(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 a binding contract 
                                to construct or reconstruct such a 
                                principal residence is entered into.
                    ``(D) Special rule where delay in acquisition.--If 
                any payment or distribution out of an ADS account fails 
                to meet the requirements of subparagraph (A) solely by 
                reason of a delay or cancellation of the purchase, 
                construction, or reconstruction of the residence, the 
                amount of the payment or distribution may be 
                contributed to an ADS account as provided in subsection 
                (d)(3)(A)(i) of section 408 (determined by substituting 
                `120th day' for `60th day' in such subsection), except 
                that--
                            ``(i) subsection (d)(3)(B) of such section 
                        shall not be applied to such contribution, and
                            ``(ii) such amount shall not be taken into 
                        account in determining whether subsection 
                        (d)(3)(A)(i) of such section applies to any 
                        other amount.
            ``(3) Qualified higher education expenses.--For purposes of 
        this subsection--
                    ``(A) In general.--The term `qualified higher 
                education expenses' means tuition, fees, books, 
                supplies, and equipment required for the enrollment or 
                attendance of--
                            ``(i) the taxpayer,
                            ``(ii) the taxpayer's spouse, or
                            ``(iii) the taxpayer's child (as defined in 
                        section 151(c)(3)) or grandchild,
                at an eligible educational institution (as defined in 
                section 135(c)(3)).
                    ``(B) Coordination with savings bond provisions.--
                The amount of qualified higher education expenses for 
                any taxable year shall be reduced by any amount 
                excludable from gross income under section 135.
            ``(4) Qualified medical expenses.--
                    ``(A) In general.--For purposes of this subsection, 
                the term `qualified medical expenses' means any amounts 
                paid during the taxable year, not compensated for by 
                insurance or otherwise, for medical care (as defined in 
                section 213(d)) of the taxpayer, his spouse, or a 
                dependent (as defined in section 152).
                    ``(B) Long-term care insurance premiums treated as 
                medical expenses.--For purposes of subparagraph (A), 
                section 213(d)(1)(C) shall not apply but the term 
                `qualified medical expenses' shall include premiums for 
                long-term care insurance (as defined in section 
                7702B(b)) for coverage of the taxpayer or his spouse.
    ``(f) Other Definitions.--For purposes of this section--
            ``(1) Rollover contributions.--The term `rollover 
        contributions' means contributions described in sections 
        402(c), 403(a)(4), 403(b)(8), or 408(d)(3).
            ``(2) Compensation.--The term `compensation' has the 
        meaning given such term by section 219(f).''
    (b) Termination of Nondeductible IRA Contributions.--
            (1) Section 408(o) is amended by adding at the end the 
        following new paragraph:
            ``(5) Termination.--This subsection shall not apply to any 
        designated nondeductible contribution for any taxable year 
        beginning after December 31, 1995.''
            (2) Section 219(f) of is amended by striking paragraph (7).
    (c) Excess Distributions Tax Not To Apply.--Subparagraph (B) of 
section 4980A(e)(1) is amended by inserting ``other than an ADS account 
(as defined in section 408A(b))'' after ``retirement plan''.
    (d) Clerical Amendment.--The table of sections for subpart A of 
part I of subchapter D of chapter 1 is amended by inserting after the 
item relating to section 408 the following new item:

                              ``Sec. 408A. American Dream Savings 
                                        Accounts.''
    (e) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 1995.

SEC. 104. SPOUSAL IRA COMPUTED ON BASIS OF COMPENSATION OF BOTH 
              SPOUSES.

    (a) In General.--Subsection (c) of section 219 (relating to special 
rules for certain married individuals) is amended to read as follows:
    ``(c) Special Rules for Certain Married Individuals.--
            ``(1) In general.--In the case of an individual to whom 
        this paragraph applies for the taxable year, the limitation of 
        subsection (b)(1) shall be equal to the lesser of--
                    ``(A) $2,000, or
                    ``(B) the sum of--
                            ``(i) the compensation includible in such 
                        individual's gross income for the taxable year, 
                        plus
                            ``(ii) the compensation includible in the 
                        gross income of such individual's spouse for 
                        the taxable year reduced by the amount 
                        allowable as a deduction under subsection (a) 
                        to such spouse for such taxable year.
            ``(2) Individuals to whom paragraph (1) applies.--Paragraph 
        (1) shall apply to any individual if--
                    ``(A) such individual files a joint return for the 
                taxable year, and
                    ``(B) the amount of compensation (if any) 
                includible in such individual's gross income for the 
                taxable year is less than the compensation includible 
                in the gross income of such individual's spouse for the 
                taxable year.''
    (b) Technical Amendment.--Paragraph (2) of section 219(f) (relating 
to other definitions and special rules) is amended by striking 
``subsections (b) and (c)'' and inserting ``subsection (b)''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 1995.

                   TITLE II--SENIOR CITIZENS' EQUITY

   Subtitle A--Repeal of Increase in Tax on Social Security Benefits

SEC. 201. REPEAL OF INCREASE IN TAX ON SOCIAL SECURITY BENEFITS.

    (a) In General.--Subsection (a) of section 86 (relating to social 
security and tier 1 railroad retirement benefits) is amended by adding 
at the end the following new paragraph:
            ``(3) Phaseout of additional amount.--In the case of any 
        taxable year beginning in a calendar year after 1995 and before 
        2000, paragraph (2) shall be applied by substituting the 
        percentage determined under the following table for `85 
        percent' each place it appears:

        ``In the case of a taxable year
                                                                       
          beginning in calendar year:
                                                     The percentage is:
                1996.................................      75 percent  
                1997.................................      65 percent  
                1998.................................      60 percent  
                1999.................................   55 percent.''  
    (b) Termination of Additional Amount.--Paragraph (2) of section 
86(a) is amended by adding at the end the following new flush sentence:
        ``This paragraph shall not apply to any taxable year beginning 
        after December 31, 1999.''
    (c) Conforming Amendments.--
            (1) Subparagraph (A) of section 871(a)(3) is amended--
                    (A) by striking ``85 percent'' and inserting ``50 
                percent'', and
                    (B) by inserting before the last sentence the 
                following new flush sentence:
        ``In the case of any taxable year beginning in a calendar year 
        after 1995 and before 2000, subparagraph (A) shall be applied 
        by substituting the percentage determined for such calendar 
        year under section 86(a)(3) for `50 percent'.''
            (2)(A) Subparagraph (A) of section 121(e)(1) of the Social 
        Security Amendments of 1983 (Public Law 98-21) is amended--
                    (i) by striking ``(A) There'' and inserting 
                ``There'';
                    (ii) by striking ``(i)'' immediately following 
                ``amounts equivalent to''; and
                    (iii) by striking ``, less (ii)'' and all that 
                follows and inserting a period.
            (B) Paragraph (1) of section 121(e) of such Act is amended 
        by striking subparagraph (B).
            (C) Paragraph (3) of section 121(e) of such Act is amended 
        by striking subparagraph (B) and by redesignating subparagraph 
        (C) as subparagraph (B).
            (D) Paragraph (2) of section 121(e) of such Act is amended 
        in the first sentence by striking ``paragraph (1)(A)'' and 
        inserting ``paragraph (1)''.
    (d) Effective Date.--
            (1) In general.--Except as provided in paragraph (2), the 
        amendments made by this section shall apply to taxable years 
        beginning after December 31, 1995.
            (2) Subsection (c)(2).--The amendments made by subsection 
        (c)(2) shall apply to tax liabilities for taxable years 
        beginning after December 31, 1995.

     Subtitle B--Treatment of Long-term Care Insurance and Services

SEC. 211. TREATMENT OF LONG-TERM CARE INSURANCE.

    (a) General Rule.--Chapter 79 (relating to definitions) is amended 
by inserting after section 7702A the following new section:

``SEC. 7702B. TREATMENT OF LONG-TERM CARE INSURANCE.

    ``(a) In General.--For purposes of this title--
            ``(1) a long-term care insurance contract shall be treated 
        as an accident and health insurance contract,
            ``(2) amounts (other than policyholder dividends, as 
        defined in section 808, or premium refunds) received under a 
        long-term care insurance contract shall be treated as amounts 
        received for personal injuries and sickness and shall be 
        treated as reimbursement for expenses actually incurred for 
        medical care (as defined in section 213(d)),
            ``(3) any plan of an employer providing coverage under a 
        long-term care insurance contract shall be treated as an 
        accident and health plan with respect to such coverage,
            ``(4) except as provided in subsection (d)(3), amounts paid 
        for a long-term care insurance contract providing the benefits 
        described in subsection (b)(2)(A) shall be treated as payments 
        made for insurance for purposes of section 213(d)(1)(D), and
            ``(5) a long-term care insurance contract shall be treated 
        as a guaranteed renewable contract subject to the rules of 
        section 816(e).
    ``(b) Long-Term Care Insurance Contract.--For purposes of this 
title--
            ``(1) In general.--The term `long-term care insurance 
        contract' means any insurance contract if--
                    ``(A) the only insurance protection provided under 
                such contract is coverage of qualified long-term care 
                services,
                    ``(B) such contract does not pay or reimburse 
                expenses incurred for services or items to the extent 
                that such expenses are reimbursable under title XVIII 
                of the Social Security Act or would be so reimbursable 
                but for the application of a deductible or coinsurance 
                amount,
                    ``(C) such contract is guaranteed renewable,
                    ``(D) such contract does not provide for a cash 
                surrender value or other money that can be--
                            ``(i) paid, assigned, or pledged as 
                        collateral for a loan, or
                            ``(ii) borrowed,
                other than as provided in subparagraph (E) or paragraph 
                (2)(C), and
                    ``(E) all refunds of premiums, and all policyholder 
                dividends or similar amounts, under such contract are 
                to be applied as a reduction in future premiums or to 
                increase future benefits.
            ``(2) Special rules.--
                    ``(A) Per diem, etc. payments permitted.--A 
                contract shall not fail to be described in subparagraph 
                (A) or (B) of paragraph (1) by reason of payments being 
                made on a per diem or other periodic basis without 
                regard to the expenses incurred during the period to 
                which the payments relate.
                    ``(B) Special rules relating to medicare.--
                            ``(i) Paragraph (1)(B) shall not apply to 
                        expenses which are reimbursable under title 
                        XVIII of the Social Security Act only as a 
                        secondary payor.
                            ``(ii) No provision of law shall be 
                        construed or applied so as to prohibit the 
                        offering of a long-term care insurance contract 
                        on the basis that the contract coordinates its 
                        benefits with those provided under such title.
                    ``(C) Refunds of premiums.--Paragraph (1)(E) shall 
                not apply to any refund on the death of the insured, or 
                on a complete surrender or cancellation of the 
                contract, which cannot exceed the aggregate premiums 
                paid under the contract. Any refund on a complete 
                surrender or cancellation of the contract shall be 
                includible in gross income to the extent that any 
                deduction or exclusion was allowable with respect to 
                the premiums.
    ``(c) Qualified Long-Term Care Services.--For purposes of this 
section--
            ``(1) In general.--The term `qualified long-term care 
        services' means necessary diagnostic, preventive, therapeutic, 
        curing, treating, mitigating, and rehabilitative services, and 
maintenance or personal care services, which--
                    ``(A) are required by a chronically ill individual, 
                and
                    ``(B) are provided pursuant to a plan of care 
                prescribed by a licensed health care practitioner.
            ``(2) Chronically ill individual.--
                    ``(A) In general.--The term `chronically ill 
                individual' means any individual who has been certified 
                by a licensed health care practitioner as--
                            ``(i) being unable to perform (without 
                        substantial assistance from another individual) 
                        at least 2 activities of daily living for a 
                        period of at least 90 days due to a loss of 
                        functional capacity or to cognitive impairment, 
                        or
                            ``(ii) having a level of disability similar 
                        (as determined by the Secretary in consultation 
                        with the Secretary of Health and Human 
                        Services) to the level of disability described 
                        in clause (i).
                Such term shall not include any individual otherwise 
                meeting the requirements of the preceding sentence 
                unless within the preceding 12-month period a licensed 
                health care practitioner has certified that such 
                individual meets such requirements.
                    ``(B) Activities of daily living.--For purposes of 
                subparagraph (A), each of the following is an activity 
                of daily living:
                            ``(i) Eating.
                            ``(ii) Toileting.
                            ``(iii) Transferring.
                            ``(iv) Bathing.
                            ``(v) Dressing.
                            ``(vi) Continence.
                Nothing in this section shall be construed to require a 
                contract to take into account all of the preceding 
                activities of daily living.
            ``(3) Maintenance or personal care services.--The term 
        `maintenance or personal care services' means any care the 
        primary purpose of which is the provision of needed assistance 
        with any of the disabilities as a result of which the 
        individual is a chronically ill individual (including the 
        protection from threats to health and safety due to severe 
        cognitive impairment).
            ``(4) Licensed health care practitioner.--The term 
        `licensed health care practitioner' means any physician (as 
        defined in section 1861(r)(1) of the Social Security Act) and 
        any registered professional nurse, licensed social worker, or 
        other individual who meets such requirements as may be 
        prescribed by the Secretary.
    ``(d) Treatment of Coverage Provided as Part of a Life Insurance 
Contract.--Except as otherwise provided in regulations prescribed by 
the Secretary, in the case of any long-term care insurance coverage 
(whether or not qualified) provided by a rider on a life insurance 
contract--
            ``(1) In general.--This section shall apply as if the 
        portion of the contract providing such coverage is a separate 
        contract.
            ``(2) Application of 7702.--Section 7702(c)(2) (relating to 
        the guideline premium limitation) shall be applied by 
        increasing the guideline premium limitation with respect to a 
        life insurance contract, as of any date--
                    ``(A) by the sum of any charges (but not premium 
                payments) against the life insurance contract's cash 
                surrender value (within the meaning of section 
                7702(f)(2)(A)) for such coverage made to that date 
                under the contract, less
                    ``(B) any such charges the imposition of which 
                reduces the premiums paid for the contract (within the 
                meaning of section 7702(f)(1)).
            ``(3) Application of section 213.--No deduction shall be 
        allowed under section 213(a) for charges against the life 
        insurance contract's cash surrender value described in 
        paragraph (2), unless such charges are includible in income as 
        a result of the application of section 72(e)(10) and the rider 
        is a long-term care insurance contract under subsection (b).
            ``(4) Portion defined.--For purposes of this subsection, 
        the term `portion' means only the terms and benefits under a 
        life insurance contract that are in addition to the terms and 
        benefits under the contract without regard to the coverage 
        under a long-term care insurance contract.''
    (b) Reserve Method.--Clause (iii) of section 807(d)(3)(A) is 
amended by inserting ``(other than a long-term care insurance contract, 
as defined in section 7702B(b))'' after ``insurance contract''.
    (c) Long-Term Care Insurance Not Permitted Under Cafeteria Plans or 
Flexible Spending Arrangements.--
            (1) Cafeteria plans.--Section 125(f) is amended by adding 
        at the end the following new sentence: ``Such term shall not 
        include any long-term care insurance contract (as defined in 
        section 7702B(b)).''
            (2) Flexible spending arrangements.--The text of section 
        106 (relating to contributions by employer to accident and 
        health plans) is amended to read as follows:
    ``(a) General Rule.--Except as provided in subsection (b), gross 
income of an employee does not include employer-provided coverage under 
an accident or health plan.
    ``(b) Inclusion of Long-Term Care Benefits Provided Through 
Flexible Spending Arrangements.--
            ``(1) In general.--Effective on and after January 1, 1996, 
        gross income of an employee shall include employer-provided 
        coverage for qualified long-term care services (as defined in 
        section 7702B(c)) to the extent that such coverage is provided 
        through a flexible spending or similar arrangement.
            ``(2) Flexible spending arrangement.--For purposes of this 
        subsection, a flexible spending arrangement is a benefit 
        program which provides employees with coverage under which--
                    ``(A) specified incurred expenses may be reimbursed 
                (subject to reimbursement maximums and other reasonable 
                conditions), and
                    ``(B) the maximum amount of reimbursement which is 
                reasonably available to a participant for such coverage 
                is less than 500 percent of the value of such coverage.
        In the case of an insured plan, the maximum amount reasonably 
        available shall be determined on the basis of the underlying 
        coverage.''
    (d) Continuation Coverage Excise Tax Not To Apply.--Subsection (f) 
of section 4980B is amended by adding at the end the following new 
paragraph:
            ``(9) Continuation of long-term care coverage not 
        required.--A group health plan shall not be treated as failing 
        to meet the requirements of this subsection solely by reason of 
        failing to provide coverage under any long-term care insurance 
        contract (as defined in section 7702B(b)).''
    (e) Amounts Paid to Relatives Treated as Not Paid for Medical 
Care.--Section 213(d) is amended by adding at the end the following new 
paragraph:
            ``(10) Certain payments to relatives treated as not paid 
        for medical care.--An amount paid for a qualified long-term 
        care service (as defined in section 7702B(c)) provided to an 
        individual shall be treated as not paid for medical care if 
        such service is provided--
                    ``(A) by a relative (directly or through a 
                partnership, corporation, or other entity) unless the 
                relative is a licensed professional with respect to 
                such services, or
                    ``(B) by a corporation or partnership which is 
                related (within the meaning of section 267(b) or 
                707(b)) to the individual.
        For purposes of this paragraph, the term `relative' means an 
        individual bearing a relationship to the individual which is 
        described in any of paragraphs (1) through (8) of section 
        152(a). This paragraph shall not apply for purposes of section 
        105(b) with respect to reimbursements through insurance.''
    (f) Clerical Amendment.--The table of sections for chapter 79 is 
amended by inserting after the item relating to section 7702A the 
following new item:

                              ``Sec. 7702B. Treatment of long-term care 
                                        insurance.''.
    (g) Effective Date.--
            (1) In general.--The amendments made by this section shall 
        apply to contracts issued after December 31, 1995.
            (2) Continuation of existing policies.--In the case of any 
        contract issued before January 1, 1996, which met the long-term 
        care insurance requirements of the State in which the contract 
        was sitused at the time the contract was issued--
                    (A) such contract shall be treated for purposes of 
                the Internal Revenue Code of 1986 as a long-term care 
                insurance contract (as defined in section 7702B(b) of 
                such Code), and
                    (B) services provided under, or reimbursed by, such 
                contract shall be treated for such purposes as 
                qualified long-term care services (as defined in 
                section 7702B(c) of such Code).
            (3) Exchanges of existing policies.--If, after the date of 
        enactment of this Act and before January 1, 1996, a contract 
        providing for long-term care insurance coverage is exchanged 
        solely for a long-term care insurance contract (as defined in 
        section 7702B(b) of such Code), no gain or loss shall be 
        recognized on the exchange. If, in addition to a long-term care 
        insurance contract, money or other property is received in the 
exchange, then any gain shall be recognized to the extent of the sum of 
the money and the fair market value of the other property received. For 
purposes of this paragraph, the cancellation of a contract providing 
for long-term care insurance coverage and reinvestment of the 
cancellation proceeds in a long-term care insurance contract within 60 
days thereafter shall be treated as an exchange.
            (4) Issuance of certain riders permitted.--For purposes of 
        applying sections 101(f), 7702, and 7702A of the Internal 
        Revenue Code of 1986 to any contract--
                    (A) the issuance of a rider which is treated as a 
                long-term care insurance contract under section 7702B, 
                and
                    (B) the addition of any provision required to 
                conform any other long-term care rider to be so 
                treated,
        shall not be treated as a modification or material change of 
        such contract.

SEC. 212. QUALIFIED LONG-TERM CARE SERVICES TREATED AS MEDICAL CARE.

    (a) General Rule.--Paragraph (1) of section 213(d) (defining 
medical care) is amended by striking ``or'' at the end of subparagraph 
(B), by redesignating subparagraph (C) as subparagraph (D), and by 
inserting after subparagraph (B) the following new subparagraph:
                    ``(C) for qualified long-term care services (as 
                defined in section 7702B(c)), or''.
    (b) Technical Amendments.--
            (1) Subparagraph (D) of section 213(d)(1) (as redesignated 
        by subsection (a)) is amended by striking ``subparagraphs (A) 
        and (B)'' and inserting ``subparagraphs (A), (B), and (C)''.
            (2)(A) Paragraph (1) of section 213(d) is amended by adding 
        at the end the following new flush sentence:
        ``In the case of a long-term care insurance contract (as 
        defined in section 7702B(b)), only eligible long-term care 
        premiums (as defined in paragraph (11)) shall be taken into 
        account under subparagraph (D).''
            (B) Subsection (d) of section 213 is amended by adding at 
        the end the following new paragraph:
            ``(11) Eligible long-term care premiums.--
                    ``(A) In general.--For purposes of this section, 
                the term `eligible long-term care premiums' means the 
                amount paid during a taxable year for any long-term 
                care insurance contract (as defined in section 
                7702B(b)) covering an individual, to the extent such 
                amount does not exceed the limitation determined under 
                the following table:

            ``In the case of an individual
                                                                       
                    with an attained age before the
                                                         The limitation
                    close of the taxable year of:
                                                              is:      
                            40 or less...............            $200  
                            More than 40 but not more             375  
                            than 50.
                            More than 50 but not more             750  
                            than 60.
                            More than 60 but not more           2,000  
                            than 70.
                            More than 70.............          2,500.  
                    ``(B) Indexing.--
                            ``(i) In general.--In the case of any 
                        taxable year beginning in a calendar year after 
                        1996, each dollar amount contained in 
                        subparagraph (A) shall be increased by the 
                        medical care cost adjustment of such amount for 
                        such calendar year. If any increase determined 
                        under the preceding sentence is not a multiple 
                        of $10, such increase shall be rounded to the 
                        nearest multiple of $10.
                            ``(ii) Medical care cost adjustment.--For 
                        purposes of clause (i), the medical care cost 
                        adjustment for any calendar year is the 
                        percentage (if any) by which--
                                    ``(I) the medical care component of 
                                the Consumer Price Index (as defined in 
                                section 1(f)(5)) for August of the 
                                preceding calendar year, exceeds
                                    ``(II) such component for August of 
                                1995.
                        The Secretary shall, in consultation with the 
                        Secretary of Health and Human Services, 
                        prescribe an adjustment which the Secretary 
                        determines is more appropriate for purposes of 
                        this paragraph than the adjustment described in 
                        the preceding sentence, and the adjustment so 
                        prescribed shall apply in lieu of the 
                        adjustment described in the preceding 
                        sentence.''
            (3) Paragraph (6) of section 213(d) is amended--
                    (A) by striking ``subparagraphs (A) and (B)'' and 
                inserting ``subparagraphs (A), (B), and (C)'', and
                    (B) by striking ``paragraph (1)(C)'' in 
                subparagraph (A) and inserting ``paragraph (1)(D)''.
            (4) Paragraph (7) of section 213(d) is amended by striking 
        ``subparagraphs (A) and (B)'' and inserting ``subparagraphs 
        (A), (B), and (C)''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 1995.

SEC. 213. CERTAIN EXCHANGES OF LIFE INSURANCE CONTRACTS FOR LONG-TERM 
              CARE INSURANCE CONTRACTS NOT TAXABLE.

    (a) In General.--Subsection (a) of section 1035 (relating to 
certain exchanges of insurance contracts) is amended by striking the 
period at the end of paragraph (3) and inserting ``; or'', and by 
adding at the end the following new paragraph:
            ``(4) a contract of life insurance or an endowment or 
        annuity contract for a long-term care insurance contract (as 
        defined in section 7702B(b)).''
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after December 31, 1995.

SEC. 214. EXCLUSION FROM GROSS INCOME FOR AMOUNTS WITHDRAWN FROM 
              CERTAIN RETIREMENT PLANS FOR LONG-TERM CARE INSURANCE.

    (a) In General.--Part III of subchapter B of chapter 1 (relating to 
items specifically excluded from gross income) is amended by 
redesignating section 137 as section 138 and by inserting after section 
136 the following new section:

``SEC. 137. DISTRIBUTIONS FROM CERTAIN RETIREMENT PLANS FOR LONG-TERM 
              CARE INSURANCE.

    ``(a) General Rule.--The amount which would (but for this section) 
be includible in the gross income of an individual for the taxable year 
by reason of eligible distributions during the taxable year shall be 
reduced (but not below zero) by the aggregate premiums paid by such 
individual during such taxable year for any long-term care insurance 
contract (as defined in section 7702B(b)) for coverage of such 
individual or the spouse of such individual.
    ``(b) Eligible Distribution.--For purposes of this section, the 
term `eligible distribution' means any distribution or payment to an 
individual from--
            ``(1) an individual retirement plan of such individual,
            ``(2) amounts attributable to employer contributions made 
        pursuant to elective deferrals described in subparagraph (A) or 
        (C) of section 402(g)(3) or section 501(c)(18)(D)(iii), or
            ``(3) amounts deferred under section 457(a).''
    (b) Conforming Amendments.--
            (1) Section 401(k)(2)(B)(i) is amended by striking ``or'' 
        at the end of subclause (III), by striking ``and'' at the end 
        of subclause (IV) and inserting ``or'', and by inserting after 
        subclause (IV) the following new subclause:
                                    ``(V) the date distributions for 
                                premiums for a long-term care insurance 
                                contract (as defined in section 
                                7702B(b)) for coverage of such 
                                individual or the spouse of such 
                                individual are made, and''.
            (2) Section 403(b)(11) is amended by striking ``or'' at the 
        end of subparagraph (A), by striking the period at the end of 
        subparagraph (B) and inserting ``, or'', and by inserting after 
        subparagraph (B) the following new subparagraph:
                    ``(C) for the payment of premiums for a long-term 
                care insurance contract (as defined in section 
                7702B(b)) for coverage of the employee or the spouse of 
                the employee.''
            (3) Subparagraph (A) of section 457(d)(1) is amended by 
        striking ``or'' at the end of clause (ii), by striking ``and'' 
        at the end of clause (iii) and inserting ``or'', and by 
        inserting after clause (iii) the following new clause:
                            ``(iv) the date distributions for premiums 
                        for a long-term care insurance contract (as 
                        defined in section 7702B(b)) for coverage of 
                        such individual or the spouse of such 
                        individual are made, and''.
            (4) The table of sections for part III of subchapter B of 
        chapter 1 is amended by striking the last item and inserting 
        the following new items:

                              ``Sec. 137. Distributions from certain 
                                        retirement plans for long-term 
                                        care insurance.
                              ``Sec. 138. Cross references to other 
                                        Acts.''
    (c) Effective Date.--The amendments made by this section shall 
apply to payments and distributions after December 31, 1995.

          Subtitle C--Treatment of Accelerated Death Benefits

SEC. 221. TREATMENT OF ACCELERATED DEATH BENEFITS BY RECIPIENT.

    (a) In General.--Section 101 (relating to certain death benefits) 
is amended by adding at the end the following new subsection:
    ``(g) Treatment of Certain Accelerated Death Benefits.--
            ``(1) In general.--For purposes of this section, the 
        following amounts shall be treated as an amount paid by reason 
        of the death of an insured:
                    ``(A) Any amount received under a life insurance 
                contract on the life of an insured who is a terminally 
                ill individual.
                    ``(B) Any amount received under a life insurance 
                contract on the life of an insured who is a chronically 
                ill individual (as defined in section 7702B(c)(2)) but 
                only if such amount is received under a rider or other 
                provision of such contract which is treated as a long-
                term care insurance contract under section 7702B.
            ``(2) Treatment of viatical settlements.--
                    ``(A) In general.--In the case of a life insurance 
                contract on the life of an insured described in 
                paragraph (1), if--
                            ``(i) any portion of such contract is sold 
                        to any viatical settlement provider, or
                            ``(ii) any portion of the death benefit is 
                        assigned to such a provider,
                the amount paid for such sale or assignment shall be 
                treated as an amount paid under the life insurance 
                contract by reason of the death of such insured.
                    ``(B) Viatical settlement provider.--The term 
                `viatical settlement provider' means any person 
                regularly engaged in the trade or business of 
                purchasing, or taking assignments of, life insurance 
                contracts on the lives of insureds described in 
                paragraph (1) if--
                            ``(i) such person is licensed for such 
                        purposes in the State in which the insured 
                        resides, or
                            ``(ii) in the case of an insured who 
                        resides in a State not requiring the licensing 
                        of such persons for such purposes, such person 
                        meets the requirements of sections 8 and 9 of 
                        the Viatical Settlements Model Act of the 
                        National Association of Insurance 
                        Commissioners.
            ``(3) Definitions.--For purposes of this subsection--
                    ``(A) Terminally ill individual.--The term 
                `terminally ill individual' means an individual who has 
                been certified by a physician as having an illness or 
                physical condition which can reasonably be expected to 
                result in death in 24 months or less after the date of 
                the certification.
                    ``(B) Physician.--The term `physician' has the 
                meaning given to such term by section 1861(r)(1) of the 
                Social Security Act (42 U.S.C. 1395x(r)(1)).
            ``(4) Exception for business-related policies.--This 
        subsection shall not apply in the case of any amount paid to 
        any taxpayer other than the insured if such taxpayer has an 
        insurable interest with respect to the life of the insured by 
        reason of the insured being a director, officer, or employee of 
        the taxpayer or by reason of the insured being financially 
        interested in any trade or business carried on by the taxpayer.
            ``(5) Cross reference.--

                                ``For inclusion in gross income of 
excess benefits, see section 91.''
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to amounts received after December 31, 1995.

SEC. 222. TAX TREATMENT OF COMPANIES ISSUING QUALIFIED ACCELERATED 
              DEATH BENEFIT RIDERS.

    (a) Qualified Accelerated Death Benefit Riders Treated as Life 
Insurance.--Section 818 (relating to other definitions and special 
rules) is amended by adding at the end the following new subsection:
    ``(g) Qualified Accelerated Death Benefit Riders Treated as Life 
Insurance.--For purposes of this part--
            ``(1) In general.--Any reference to a life insurance 
        contract shall be treated as including a reference to a 
        qualified accelerated death benefit rider on such contract.
            ``(2) Qualified accelerated death benefit riders.--For 
        purposes of this subsection, the term `qualified accelerated 
        death benefit rider' means any rider on a life insurance 
        contract if the only payments under the rider are payments 
        meeting the requirements of section 101(g).
            ``(3) Exception for long-term care riders.--Paragraph (1) 
        shall not apply to any rider which is treated as a long-term 
        care insurance contract under section 7702B.''
    (b) Effective Date.--
            (1) In general.--The amendment made by this section shall 
        take effect on January 1, 1996.
            (2) Issuance of rider not treated as material change.--For 
        purposes of applying sections 101(f), 7702, and 7702A of the 
        Internal Revenue Code of 1986 to any contract--
                    (A) the issuance of a qualified accelerated death 
                benefit rider (as defined in section 818(g) of such 
                Code (as added by this Act)), and
                    (B) the addition of any provision required to 
                conform an accelerated death benefit rider to the 
                requirements of such section 818(g),
        shall not be treated as a modification or material change of 
        such contract.

Subtitle D--Inclusion in Gross Income of Excess Long-term Care Benefits

SEC. 231. INCLUSION IN INCOME OF EXCESS LONG-TERM CARE BENEFITS.

    (a) In General.--Part II of subchapter B of chapter 1 (relating to 
items specifically included in gross income) is amended by adding at 
the end the following new section:

``SEC. 91. EXCESS LONG-TERM CARE BENEFITS.

    ``(a) General Rule.--Notwithstanding any other provision of this 
title, gross income shall include the amount of excess long-term care 
benefits received by the taxpayer during the taxable year.
    ``(b) Exception for Terminally Ill Individuals.--Subsection (a) 
shall not apply to any long-term care benefit paid by reason of an 
insured who is a terminally ill individual (as defined in section 
101(g)) as of the date the benefit is received.
    ``(c) Excess Long-Term Care Benefits.--For purposes of this 
section--
            ``(1) In general.--The term `excess long-term care 
        benefits' means the excess (if any) of--
                    ``(A) the value of the long-term care benefits 
                received by the taxpayer during the taxable year, over
                    ``(B) the exclusion amount applicable to such 
                benefits.
            ``(2) Long-term care benefits.--The term `long-term care 
        benefits' means--
                    ``(A) payments and other benefits under long-term 
                care insurance contracts (as defined in section 
                7702B(b)) to the extent excludable from gross income by 
                reason of section 7702B(a)(2), and
                    ``(B) payments which are excludable from gross 
                income by reason of section 101(g).
            ``(3) Exclusion amount.--
                    ``(A) In general.--In the case of long-term care 
                benefits received by the taxpayer during the taxable 
                year by reason of the taxpayer being a chronically ill 
                individual, the term `exclusion amount' means the 
                aggregate of $200 for each day during such year on 
                which the individual is a chronically ill individual. 
                In the case of individuals who are married to each 
                other and who are both chronically ill individuals, the 
                preceding sentence shall be applied separately with 
                respect to each spouse.
                    ``(B) Other taxpayers.--In the case of long-term 
                care benefits received during the taxable year by a 
                taxpayer by reason of another individual being a 
                chronically ill individual, the term `exclusion amount' 
                means so much of such other individual's exclusion 
                amount (for such other individual's taxable year which 
                begins in the calendar year in which the taxpayer's 
                taxable year begins) as is allocated by such other 
                individual to the taxpayer. Such an allocation shall be 
                made at the time and in the manner prescribed by the 
                Secretary; and once made, shall be irrevocable.
    ``(d) Chronically Ill Individual.--For purposes of this section, 
the term `chronically ill individual' has the meaning given to such 
term by section 7702B(c)(2).
    ``(e) Inflation Adjustment of $200 Benefit Limit.--In the case of a 
calendar year after 1996, the $200 amount contained in subsection 
(c)(3)(A) shall be increased at the same time and in the same manner as 
amounts are increased pursuant to section 213(d)(11).''
    (b) Clerical Amendment.--The table of sections for such part II is 
amended by adding at the end the following new item:

                              ``Sec. 91. Excess long-term care 
                                        benefits.''
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 1995.

SEC. 232. REPORTING REQUIREMENTS.

    (a) In General.--Subpart B of part III of subchapter A of chapter 
61 is amended by adding at the end the following new section:

``SEC. 6050Q. CERTAIN LONG-TERM CARE BENEFITS.

    ``(a) Requirement of Reporting.--Any person who pays long-term care 
benefits shall make a return, according to the forms or regulations 
prescribed by the Secretary, setting forth--
            ``(1) the aggregate amount of such benefits paid by such 
        person to any individual during any calendar year, and
            ``(2) the name, address, and TIN of such individual.
    ``(b) Statements To Be Furnished to Persons With Respect to Whom 
Information Is Required.-- Every person required to make a return under 
subsection (a) shall furnish to each individual whose name is required 
to be set forth in such return a written statement showing--
            ``(1) the name of the person making the payments, and
            ``(2) the aggregate amount of long-term care benefits paid 
        to the individual which are required to be shown on such 
        return.
The written statement required under the preceding sentence shall be 
furnished to the individual on or before January 31 of the year 
following the calendar year for which the return under subsection (a) 
was required to be made.
    ``(c) Long-Term Care Benefits.--For purposes of this section, the 
term `long-term care benefit' has the meaning given such term by 
section 91(c).''
    (b) Penalties.--
            (1) Subparagraph (B) of section 6724(d)(1) is amended by 
        redesignating clauses (ix) through (xiv) as clauses (x) through 
        (xv), respectively, and by inserting after clause (viii) the 
        following new clause:
                            ``(ix) section 6050Q (relating to certain 
                        long-term care benefits),''.
            (2) Paragraph (2) of section 6724(d) is amended by 
        redesignating subparagraphs (Q) through (T) as subparagraphs 
        (R) through (U), respectively, and by inserting after 
        subparagraph (P) the following new subparagraph:
                    ``(Q) section 6050Q(b) (relating to certain long-
                term care benefits),''.
    (c) Clerical Amendment.--The table of sections for subpart B of 
part III of subchapter A of chapter 61 is amended by adding at the end 
the following new item:

                              ``Sec. 6050Q. Certain long-term care 
                                        benefits.''
    (d) Effective Date.--The amendments made by this section shall 
apply to benefits paid after December 31, 1995.

              TITLE III--JOB CREATION AND WAGE ENHANCEMENT

                    Subtitle A--Capital Gains Reform

 PART I--CAPITAL GAINS REDUCTION FOR TAXPAYERS OTHER THAN CORPORATIONS

SEC. 301. CAPITAL GAINS DEDUCTION.

    (a) In General.--Part I of subchapter P of chapter 1 (relating to 
treatment of capital gains), as amended by subsection (d)(1), is 
amended by inserting after section 1201 the following new section:

``SEC. 1202. CAPITAL GAINS DEDUCTION.

    ``(a) General Rule.--If for any taxable year a taxpayer other than 
a corporation has a net capital gain, 50 percent of such gain shall be 
a deduction from gross income.
    ``(b) Estates and Trusts.--In the case of an estate or trust, the 
deduction shall be computed by excluding the portion (if any) of the 
gains for the taxable year from sales or exchanges of capital assets 
which, under sections 652 and 662 (relating to inclusions of amounts in 
gross income of beneficiaries of trusts), is includible by the income 
beneficiaries as gain derived from the sale or exchange of capital 
assets.
    ``(c) Coordination With Treatment of Capital Gain Under Limitation 
on Investment Interest.--For purposes of this section, the net capital 
gain for any taxable year shall be reduced (but not below zero) by the 
amount which the taxpayer takes into account as investment income under 
section 163(d)(4)(B)(iii).
    ``(d) Special Rule For Collectibles.--
            ``(1) In general.--At the election of the taxpayer, the 
        rate of tax imposed by section 1 shall not exceed 28 percent on 
        the excess of--
                    ``(A) the amount which would be the net capital 
                gain for the taxable year without regard to the 
                application of section 1222(12) to collectibles 
                specified in such election, over
                    ``(B) the net capital gain for such year.
            ``(2) Election.--Any election under this subsection, and 
        any specification therein, once made, shall be irrevocable.
            ``(3) Coordination with indexing.--Any collectible 
        specified in such an election shall be treated as not being an 
        indexed asset for purposes of section 1022.
    ``(e) Transitional Rule.--
            ``(1) In general.--In the case of a taxable year which 
        includes January 1, 1995--
                    ``(A) the amount taken into account as the net 
                capital gain under subsection (a) shall not exceed the 
                net capital gain determined by only taking into account 
                gains and losses properly taken into account for the 
                portion of the taxable year on or after January 1, 
                1995, and
                    ``(B) if the net capital gain for such year exceeds 
                the amount taken into account under subsection (a), the 
                rate of tax imposed by section 1 on such excess shall 
                not exceed 28 percent.
            ``(2) Special rules for pass-thru entities.--
                    ``(A) In general.--In applying paragraph (1) with 
                respect to any pass-thru entity, the determination of 
                when gains and losses are properly taken into account 
                shall be made at the entity level.
                    ``(B) Pass-thru entity defined.--For purposes of 
                subparagraph (A), the term `pass-thru entity' means--
                            ``(i) a regulated investment company,
                            ``(ii) a real estate investment trust,
                            ``(iii) an S corporation,
                            ``(iv) a partnership,
                            ``(v) an estate or trust, and
                            ``(vi) a common trust fund.''
    (b) Deduction Allowable in Computing Adjusted Gross Income.--
Subsection (a) of section 62 is amended by inserting after paragraph 
(15) the following new paragraph:
            ``(16) Long-term capital gains.--The deduction allowed by 
        section 1202.''
    (c) Treatment of Collectibles.--
            (1) In general.--Section 1222 is amended by inserting after 
        paragraph (11) the following new paragraph:
            ``(12) Special rule for collectibles.--
                    ``(A) In general.--Any gain or loss from the sale 
                or exchange of a collectible shall be treated as a 
short-term capital gain or loss (as the case may be), without regard to 
the period such asset was held. The preceding sentence shall apply only 
to the extent the gain or loss is taken into account in computing 
taxable income.
                    ``(B) Treatment of certain sales of interest in 
                partnership, etc.--For purposes of subparagraph (A), 
                any gain from the sale or exchange of an interest in a 
                partnership, S corporation, or trust which is 
                attributable to unrealized appreciation in the value of 
                collectibles held by such entity shall be treated as 
                gain from the sale or exchange of a collectible. Rules 
                similar to the rules of section 751(f) shall apply for 
                purposes of the preceding sentence.
                    ``(C) Collectible.--For purposes of this paragraph, 
                the term `collectible' means any capital asset which is 
                a collectible (as defined in section 408(m) without 
                regard to paragraph (3) thereof).''
            (2) Charitable deduction not affected.--
                    (A) Paragraph (1) of section 170(e) is amended by 
                adding at the end the following new sentence: ``For 
                purposes of this paragraph, section 1222 shall be 
                applied without regard to paragraph (12) thereof 
                (relating to special rule for collectibles).''
                    (B) Clause (iv) of section 170(b)(1)(C) is amended 
                by inserting before the period at the end the 
                following: ``and section 1222 shall be applied without 
                regard to paragraph (12) thereof (relating to special 
                rule for collectibles)''.
    (d) Technical and Conforming Changes.--
            (1)(A) Section 13113 of the Revenue Reconciliation Act of 
        1993 (relating to 50-percent exclusion for gain from certain 
        small business stock), and the amendments made by such section, 
        are hereby repealed; and the Internal Revenue Code of 1986 
        shall be applied as if such section (and amendments) had never 
        been enacted.
            (B) At the election of a taxpayer who holds qualified small 
        business stock (as defined in section 1202 of such Code, as in 
        effect on the day before the date of the enactment of this Act) 
        as of such date of enactment--
                    (i) the provisions repealed by subparagraph (A) 
                shall continue to apply to any disposition by such 
                taxpayer of such stock held on such date, and
                    (ii) the amendments made by this section and 
                section 1002 shall not apply to such stock; except that 
                losses from the sale or exchange of such stock shall be 
                taken into account as provided in the amendments made 
                by paragraph (13) of this subsection.
        Such an election may be made only during the 1-year period 
        beginning on the date of the enactment of this Act and, once 
        made, shall be irrevocable.
            (2) Section 1 is amended by striking subsection (h).
            (3) Paragraph (1) of section 170(e) is amended by striking 
        ``the amount of gain'' in the material following subparagraph 
        (B)(ii) and inserting ``50 percent (\25/35\ in the case of a 
        corporation) of the amount of gain''.
            (4)(A) Paragraph (2) of section 172(d) is amended to read 
        as follows:
            ``(2) Capital gains and losses.--
                    ``(A) Losses of taxpayers other than 
                corporations.--In the case of a taxpayer other than a 
                corporation, the amount deductible on account of losses 
                from sales or exchanges of capital assets shall not 
                exceed the amount includible on account of gains from 
                sales or exchanges of capital assets.
                    ``(B) Deduction under section 1202.--The deduction 
                under section 1202 shall not be allowed.''
            (B) Subparagraph (B) of section 172(d)(4) is amended by 
        striking ``paragraphs (1) and (3)'' and inserting ``paragraphs 
        (1), (2)(B), and (3)''.
            (5) The last sentence of section 453A(c)(3) is amended by 
        striking all that follows ``long-term capital gain,'' and 
        inserting ``the maximum rate on net capital gain under section 
        1201 or the deduction under section 1202 (whichever is 
        appropriate) shall be taken into account.''
            (6) Paragraph (4) of section 642(c) is amended to read as 
        follows:
            ``(4) Adjustments.--To the extent that the amount otherwise 
        allowable as a deduction under this subsection consists of gain 
        from the sale or exchange of capital assets held for more than 
        1 year, proper adjustment shall be made for any deduction 
        allowable to the estate or trust under section 1202 (relating 
        to deduction for excess of capital gains over capital losses). 
        In the case of a trust, the deduction allowed by this 
subsection shall be subject to section 681 (relating to unrelated 
business income).''
            (7) Paragraph (3) of section 643(a) is amended by adding at 
        the end thereof the following new sentence: ``The deduction 
        under section 1202 (relating to deduction of excess of capital 
        gains over capital losses) shall not be taken into account.''
            (8) Subparagraph (C) of section 643(a)(6) is amended by 
        inserting ``(i)'' before ``there shall'' and by inserting 
        before the period ``, and (ii) the deduction under section 1202 
        (relating to capital gains deduction) shall not be taken into 
        account''.
            (9) Paragraph (4) of section 691(c) is amended by striking 
        ``sections 1(h), 1201, and 1211'' and inserting ``sections 
        1201, 1202, and 1211''.
            (10) The second sentence of section 871(a)(2) is amended by 
        inserting ``such gains and losses shall be determined without 
        regard to section 1202 (relating to deduction for capital 
        gains) and'' after ``except that''.
            (11)(A) Paragraph (2) of section 904(b) is amended by 
        striking subparagraph (A), by redesignating subparagraph (B) as 
        subparagraph (A), and by inserting after subparagraph (A) (as 
        so redesignated) the following new subparagraph:
                    ``(B) Other taxpayers.--In the case of a taxpayer 
                other than a corporation, taxable income from sources 
                outside the United States shall include gain from the 
                sale or exchange of capital assets only to the extent 
                of foreign source capital gain net income.''
            (B) Subparagraph (A) of section 904(b)(2), as so 
        redesignated, is amended--
                    (i) by striking all that precedes clause (i) and 
                inserting the following:
                    ``(A) Corporations.--In the case of a corporation--
                '', and
                    (ii) by striking in clause (i) ``in lieu of 
                applying subparagraph (A),''.
            (C) Paragraph (3) of section 904(b) is amended by striking 
        subparagraphs (D) and (E) and inserting the following new 
        subparagraph:
                    ``(D) Rate differential portion.--The rate 
                differential portion of foreign source net capital 
                gain, net capital gain, or the excess of net capital 
                gain from sources within the United States over net 
                capital gain, as the case may be, is the same 
                proportion of such amount as the excess of the highest 
                rate of tax specified in section 11(b) over the 
                alternative rate of tax under section 1201(a) bears to 
                the alternative rate of tax under section 1201(a).''
            (12) Subsection (d) of section 1044 is amended by striking 
        the last sentence.
            (13)(A) Paragraph (2) of section 1211(b) is amended to read 
        as follows:
            ``(2) the sum of--
                    ``(A) the excess of the net short-term capital loss 
                over the net long-term capital gain, and
                    ``(B) one-half of the excess of the net long-term 
                capital loss over the net short-term capital gain.''
            (B) So much of paragraph (2) of section 1212(b) as precedes 
        subparagraph (B) thereof is amended to read as follows:
            ``(2) Special rules.--
                    ``(A) Adjustments.--
                            ``(i) For purposes of determining the 
                        excess referred to in paragraph (1)(A), there 
                        shall be treated as short-term capital gain in 
                        the taxable year an amount equal to the lesser 
                        of--
                                    ``(I) the amount allowed for the 
                                taxable year under paragraph (1) or (2) 
                                of section 1211(b), or
                                    ``(II) the adjusted taxable income 
                                for such taxable year.
                            ``(ii) For purposes of determining the 
                        excess referred to in paragraph (1)(B), there 
                        shall be treated as short-term capital gain in 
                        the taxable year an amount equal to the sum 
                        of--
                                    ``(I) the amount allowed for the 
                                taxable year under paragraph (1) or (2) 
                                of section 1211(b) or the adjusted 
                                taxable income for such taxable year, 
                                whichever is the least, plus
                                    ``(II) the excess of the amount 
                                described in subclause (I) over the net 
                                short-term capital loss (determined 
                                without regard to this subsection) for 
                                such year.''
                    (C) Subsection (b) of section 1212 is amended by 
                adding at the end the following new paragraph:
            ``(3) Transitional rule.--In the case of any amount which, 
        under paragraph (1) and section 1211(b) (as in effect for 
        taxable years beginning before January 1, 1996), is treated as 
        a capital loss in the first taxable year beginning after 
        December 31, 1995, paragraph (1) and section 1211(b) (as so in 
effect) shall apply (and paragraph (1) and section 1211(b) as in effect 
for taxable years beginning after December 31, 1995, shall not apply) 
to the extent such amount exceeds the total of any net capital gains 
(determined without regard to this subsection) of taxable years 
beginning after December 31, 1995.''
            (14) Paragraph (1) of section 1402(i) is amended by 
        inserting ``, and the deduction provided by section 1202 shall 
        not apply'' before the period at the end thereof.
            (15) Subsection (e) of section 1445 is amended--
                    (A) in paragraph (1) by striking ``35 percent (or, 
                to the extent provided in regulations, 28 percent)'' 
                and inserting ``25 percent (or, to the extent provided 
                in regulations, 19.8 percent)'', and
                    (B) in paragraph (2) by striking ``35 percent'' and 
                inserting ``25 percent''.
            (16)(A) The second sentence of section 7518(g)(6)(A) is 
        amended--
                    (i) by striking ``during a taxable year to which 
                section 1(h) or 1201(a) applies'', and
                    (ii) by striking ``28 percent (34 percent'' and 
                inserting ``19.8 percent (25 percent''.
            (B) The second sentence of section 607(h)(6)(A) of the 
        Merchant Marine Act, 1936 is amended--
                    (i) by striking ``during a taxable year to which 
                section 1(h) or 1201(a) of such Code applies'', and
                    (ii) by striking ``28 percent (34 percent'' and 
                inserting ``19.8 percent (25 percent''.
    (e) Clerical Amendment.--The table of sections for part I of 
subchapter P of chapter 1 is amended by inserting after the item 
relating to section 1201 the following new item:

                              ``Sec. 1202. Capital gains deduction.''
    (f) Effective Date.--
            (1) In general.--Except as otherwise provided in this 
        subsection, the amendments made by this section shall apply to 
        taxable years ending after December 31, 1994.
            (2) Contributions.--The amendment made by subsection (d)(3) 
        shall apply to contributions on or after January 1, 1995.
            (3) Use of long-term losses.--The amendments made by 
        subsection (d)(13) shall apply to taxable years beginning after 
        December 31, 1995.
            (4) Withholding.--The amendment made by subsection (d)(15) 
        shall apply only to amounts paid after the date of the 
        enactment of this Act.

SEC. 302. INDEXING OF CERTAIN ASSETS ACQUIRED AFTER DECEMBER 31, 1994, 
              FOR PURPOSES OF DETERMINING GAIN.

    (a) In General.--Part II of subchapter O of chapter 1 (relating to 
basis rules of general application) is amended by inserting after 
section 1021 the following new section:

``SEC. 1022. INDEXING OF CERTAIN ASSETS ACQUIRED AFTER DECEMBER 31, 
              1994, FOR PURPOSES OF DETERMINING GAIN.

    ``(a) General Rule.--
            ``(1) Indexed basis substituted for adjusted basis.--Solely 
        for purposes of determining gain on the sale or other 
        disposition by a taxpayer (other than a corporation) of an 
        indexed asset which has been held for more than 3 years, the 
        indexed basis of the asset shall be substituted for its 
        adjusted basis.
            ``(2) Exception for depreciation, etc.--The deductions for 
        depreciation, depletion, and amortization shall be determined 
        without regard to the application of paragraph (1) to the 
        taxpayer or any other person.
    ``(b) Indexed Asset.--
            ``(1) In general.--For purposes of this section, the term 
        `indexed asset' means--
                    ``(A) common stock in a C corporation (other than a 
                foreign corporation), and
                    ``(B) tangible property,
        which is a capital asset or property used in the trade or 
        business (as defined in section 1231(b)).
            ``(2) Stock in certain foreign corporations included.--For 
        purposes of this section--
                    ``(A) In general.--The term `indexed asset' 
                includes common stock in a foreign corporation which is 
                regularly traded on an established securities market.
                    ``(B) Exception.--Subparagraph (A) shall not apply 
                to--
                            ``(i) stock of a foreign investment company 
                        (within the meaning of section 1246(b)),
                            ``(ii) stock in a passive foreign 
                        investment company (as defined in section 
                        1296),
                            ``(iii) stock in a foreign corporation held 
                        by a United States person who meets the 
                        requirements of section 1248(a)(2), and
                            ``(iv) stock in a foreign personal holding 
                        company (as defined in section 552).
                    ``(C) Treatment of american depository receipts.--
                An American depository receipt for common stock in a 
                foreign corporation shall be treated as common stock in 
                such corporation.
    ``(c) Indexed Basis.--For purposes of this section--
            ``(1) General rule.--The indexed basis for any asset is--
                    ``(A) the adjusted basis of the asset, increased by
                    ``(B) the applicable inflation adjustment.
            ``(2) Applicable inflation adjustment.--The applicable 
        inflation adjustment for any asset is an amount equal to--
                    ``(A) the adjusted basis of the asset, multiplied 
                by
                    ``(B) the percentage (if any) by which--
                            ``(i) the gross domestic product deflator 
                        for the last calendar quarter ending before the 
                        asset is disposed of, exceeds
                            ``(ii) the gross domestic product deflator 
                        for the last calendar quarter ending before the 
                        asset was acquired by the taxpayer.
        The percentage under subparagraph (B) shall be rounded to the 
        nearest \1/10\ of 1 percentage point.
            ``(3) Gross domestic product deflator.--The gross domestic 
        product deflator for any calendar quarter is the implicit price 
        deflator for the gross domestic product for such quarter (as 
        shown in the last revision thereof released by the Secretary of 
        Commerce before the close of the following calendar quarter).
    ``(d) Suspension of Holding Period Where Diminished Risk of Loss; 
Treatment of Short Sales.--
            ``(1) In general.--If the taxpayer (or a related person) 
        enters into any transaction which substantially reduces the 
        risk of loss from holding any asset, such asset shall not be 
        treated as an indexed asset for the period of such reduced 
        risk.
            ``(2) Short sales.--
                    ``(A) In general.--In the case of a short sale of 
                an indexed asset with a short sale period in excess of 
                3 years, for purposes of this title, the amount 
                realized shall be an amount equal to the amount 
                realized (determined without regard to this paragraph) 
                increased by the applicable inflation adjustment. In 
                applying subsection (c)(2) for purposes of the 
                preceding sentence, the date on which the property is 
                sold short shall be treated as the date of acquisition 
                and the closing date for the sale shall be treated as 
                the date of disposition.
                    ``(B) Short sale period.--For purposes of 
                subparagraph (A), the short sale period begins on the 
                day that the property is sold and ends on the closing 
                date for the sale.
    ``(e) Treatment of Regulated Investment Companies and Real Estate 
Investment Trusts.--
            ``(1) Adjustments at entity level.--
                    ``(A) In general.--Except as otherwise provided in 
                this paragraph, the adjustment under subsection (a) 
                shall be allowed to any qualified investment entity 
                (including for purposes of determining the earnings and 
                profits of such entity).
                    ``(B) Exception for corporate shareholders.--Under 
                regulations--
                            ``(i) in the case of a distribution by a 
                        qualified investment entity (directly or 
                        indirectly) to a corporation--
                                    ``(I) the determination of whether 
                                such distribution is a dividend shall 
                                be made without regard to this section, 
                                and
                                    ``(II) the amount treated as gain 
                                by reason of the receipt of any capital 
                                gain dividend shall be increased by the 
                                percentage by which the entity's net 
                                capital gain for the taxable year 
                                (determined without regard to this 
                                section) exceeds the entity's net 
                                capital gain for such year determined 
                                with regard to this section, and
                            ``(ii) there shall be other appropriate 
                        adjustments (including deemed distributions) so 
                        as to ensure that the benefits of this section 
                        are not allowed (directly or indirectly) to 
                        corporate shareholders of qualified investment 
                        entities.
                For purposes of the preceding sentence, any amount 
                includible in gross income under section 852(b)(3)(D) 
                shall be treated as a capital gain dividend and an S 
                corporation shall not be treated as a corporation.
                    ``(C) Exception for qualification purposes.--This 
                section shall not apply for purposes of sections 851(b) 
                and 856(c).
                    ``(D) Exception for certain taxes imposed at entity 
                level.--
                            ``(i) Tax on failure to distribute entire 
                        gain.--If any amount is subject to tax under 
                        section 852(b)(3)(A) for any taxable year, the 
                        amount on which tax is imposed under such 
                        section shall be increased by the percentage 
                        determined under subparagraph (B)(i)(II). A 
                        similar rule shall apply in the case of any 
                        amount subject to tax under paragraph (2) or 
                        (3) of section 857(b) to the extent 
                        attributable to the excess of the net capital 
                        gain over the deduction for dividends paid 
                        determined with reference to capital gain 
                        dividends only. The first sentence of this 
                        clause shall not apply to so much of the amount 
                        subject to tax under section 852(b)(3)(A) as is 
                        designated by the company under section 
                        852(b)(3)(D).
                            ``(ii) Other taxes.--This section shall not 
                        apply for purposes of determining the amount of 
                        any tax imposed by paragraph (4), (5), or (6) 
                        of section 857(b).
            ``(2) Adjustments to interests held in entity.--
                    ``(A) Regulated investment companies.--Stock in a 
                regulated investment company (within the meaning of 
                section 851) shall be an indexed asset for any calendar 
                quarter in the same ratio as--
                            ``(i) the average of the fair market values 
                        of the indexed assets held by such company at 
                        the close of each month during such quarter, 
                        bears to
                            ``(ii) the average of the fair market 
                        values of all assets held by such company at 
                        the close of each such month.
                    ``(B) Real estate investment trusts.--Stock in a 
                real estate investment trust (within the meaning of 
                section 856) shall be an indexed asset for any calendar 
                quarter in the same ratio as--
                            ``(i) the fair market value of the indexed 
                        assets held by such trust at the close of such 
                        quarter, bears to
                            ``(ii) the fair market value of all assets 
                        held by such trust at the close of such 
                        quarter.
                    ``(C) Ratio of 80 percent or more.--If the ratio 
                for any calendar quarter determined under subparagraph 
                (A) or (B) would (but for this subparagraph) be 80 
                percent or more, such ratio for such quarter shall be 
                100 percent.
                    ``(D) Ratio of 20 percent or less.--If the ratio 
                for any calendar quarter determined under subparagraph 
                (A) or (B) would (but for this subparagraph) be 20 
                percent or less, such ratio for such quarter shall be 
                zero.
                    ``(E) Look-thru of partnerships.--For purposes of 
                this paragraph, a qualified investment entity which 
                holds a partnership interest shall be treated (in lieu 
                of holding a partnership interest) as holding its 
                proportionate share of the assets held by the 
                partnership.
            ``(3) Treatment of return of capital distributions.--Except 
        as otherwise provided by the Secretary, a distribution with 
        respect to stock in a qualified investment entity which is not 
        a dividend and which results in a reduction in the adjusted 
        basis of such stock shall be treated as allocable to stock 
        acquired by the taxpayer in the order in which such stock was 
        acquired.
            ``(4) Qualified investment entity.--For purposes of this 
        subsection, the term `qualified investment entity' means--
                    ``(A) a regulated investment company (within the 
                meaning of section 851), and
                    ``(B) a real estate investment trust (within the 
                meaning of section 856).
    ``(f) Other Pass-Thru Entities.--
            ``(1) Partnerships.--
                    ``(A) In general.--In the case of a partnership, 
                the adjustment made under subsection (a) at the 
                partnership level shall be passed through to the 
                partners.
                    ``(B) Special rule in the case of section 754 
                elections.--In the case of a transfer of an interest in 
                a partnership with respect to which the election 
                provided in section 754 is in effect--
                            ``(i) the adjustment under section 
                        743(b)(1) shall, with respect to the transferor 
                        partner, be treated as a sale of the 
                        partnership assets for purposes of applying 
                        this section, and
                            ``(ii) with respect to the transferee 
                        partner, the partnership's holding period for 
                        purposes of this section in such assets shall 
                        be treated as beginning on the date of such 
                        adjustment.
            ``(2) S corporations.--In the case of an S corporation, the 
        adjustment made under subsection (a) at the corporate level 
        shall be passed through to the shareholders. This section shall 
        not apply for purposes of determining the amount of any tax 
        imposed by section 1374 or 1375.
            ``(3) Common trust funds.--In the case of a common trust 
        fund, the adjustment made under subsection (a) at the trust 
        level shall be passed through to the participants.
            ``(4) Indexing adjustment disregarded in determining loss 
        on sale of interest in entity.--Notwithstanding the preceding 
        provisions of this subsection, for purposes of determining the 
        amount of any loss on a sale or exchange of an interest in a 
        partnership, S corporation, or common trust fund, the 
        adjustment made under subsection (a) shall not be taken into 
        account in determining the adjusted basis of such interest.
    ``(g) Dispositions Between Related Persons.--
            ``(1) In general.--This section shall not apply to any sale 
        or other disposition of property between related persons except 
        to the extent that the basis of such property in the hands of 
        the transferee is a substituted basis.
            ``(2) Related persons defined.--For purposes of this 
        section, the term `related persons' means--
                    ``(A) persons bearing a relationship set forth in 
                section 267(b), and
                    ``(B) persons treated as single employer under 
                subsection (b) or (c) of section 414.
    ``(h) Transfers To Increase Indexing Adjustment.--If any person 
transfers cash, debt, or any other property to another person and the 
principal purpose of such transfer is to secure or increase an 
adjustment under subsection (a), the Secretary may disallow part or all 
of such adjustment or increase.
    ``(i) Special Rules.--For purposes of this section--
            ``(1) Treatment of improvements, etc.--If there is an 
        addition to the adjusted basis of any tangible property or of 
        any stock in a corporation during the taxable year by reason of 
        an improvement to such property or a contribution to capital of 
        such corporation--
                    ``(A) such addition shall never be taken into 
                account under subsection (c)(1)(A) if the aggregate 
                amount thereof during the taxable year with respect to 
                such property or stock is less than $1,000, and
                    ``(B) such addition shall be treated as a separate 
                asset acquired at the close of such taxable year if the 
                aggregate amount thereof during the taxable year with 
                respect to such property or stock is $1,000 or more.
        A rule similar to the rule of the preceding sentence shall 
        apply to any other portion of an asset to the extent that 
        separate treatment of such portion is appropriate to carry out 
        the purposes of this section.
            ``(2) Assets which are not indexed assets throughout 
        holding period.--The applicable inflation ratio shall be 
        appropriately reduced for periods during which the asset was 
        not an indexed asset.
            ``(3) Treatment of certain distributions.--A distribution 
        with respect to stock in a corporation which is not a dividend 
        shall be treated as a disposition.
            ``(4) Acquisition date where there has been prior 
        application of subsection (a)(1) with respect to the 
        taxpayer.--If there has been a prior application of subsection 
        (a)(1) to an asset while such asset was held by the taxpayer, 
        the date of acquisition of such asset by the taxpayer shall be 
        treated as not earlier than the date of the most recent such 
        prior application.
            ``(5) Collapsible corporations.--The application of section 
        341(a) (relating to collapsible corporations) shall be 
        determined without regard to this section.
    ``(j) Regulations.--The Secretary shall prescribe such regulations 
as may be necessary or appropriate to carry out the purposes of this 
section.''
    (b) Clerical Amendment.--The table of sections for part II of 
subchapter O of chapter 1 is amended by inserting after the item 
relating to section 1021 the following new item:

                              ``Sec. 1022. Indexing of certain assets 
                                        acquired after December 31, 
                                        1994, for purposes of 
                                        determining gain.''
    (c) Effective Date.--
            (1) In general.--The amendments made by this section shall 
        apply to the disposition of any property the holding period of 
        which begins after December 31, 1994.
            (2) Certain transactions between related persons.--The 
        amendments made by this section shall not apply to the 
        disposition of any property acquired after December 31, 1994, 
        from a related person (as defined in section 1022(g)(2) of the 
        Internal Revenue Code of 1986, as added by this section) if--
                    (A) such property was so acquired for a price less 
                than the property's fair market value, and
                    (B) the amendments made by this section did not 
                apply to such property in the hands of such related 
                person.
    (d) Election To Recognize Gain on Assets Held on January 1, 1995.--
For purposes of the Internal Revenue Code of 1986--
            (1) In general.--A taxpayer other than a corporation may 
        elect to treat--
                    (A) any readily tradable stock (which is an indexed 
                asset) held by such taxpayer on January 1, 1995, and 
                not sold before the next business day after such date, 
                as having been sold on such next business day for an 
                amount equal to its closing market price on such next 
                business day (and as having been reacquired on such 
                next business day for an amount equal to such closing 
                market price), and
                    (B) any other indexed asset held by the taxpayer on 
                January 1, 1995, as having been sold on such date for 
                an amount equal to its fair market value on such date 
                (and as having been reacquired on such date for an 
                amount equal to such fair market value).
            (2) Treatment of gain or loss.--
                    (A) Any gain resulting from an election under 
                paragraph (1) shall be treated as received or accrued 
                on the date the asset is treated as sold under 
                paragraph (1) and shall be recognized notwithstanding 
                any provision of the Internal Revenue Code of 1986.
                    (B) Any loss resulting from an election under 
                paragraph (1) shall not be allowed for any taxable 
                year.
            (3) Election.--An election under paragraph (1) shall be 
        made in such manner as the Secretary may prescribe and shall 
        specify the assets for which such election is made. Such an 
        election, once made with respect to any asset, shall be 
        irrevocable.
            (4) Readily tradable stock.--For purposes of this 
        subsection, the term ``readily tradable stock'' means any stock 
        which, as of January 1, 1995, is readily tradable on an 
        established securities market or otherwise.
    (e) Treatment of Principal Residences.--Property held and used by 
the taxpayer on January 1, 1995, as his principal residence (within the 
meaning of section 1034 of the Internal Revenue Code of 1986) shall be 
treated--
            (1) for purposes of subsection (c)(1) of this section, as 
        having a holding period which begins after December 31, 1994, 
        and
            (2) for purposes of section 1022(c)(2)(B)(ii) of such Code, 
        as having been acquired on January 1, 1995.
Subsection (d) shall not apply to property to which this subsection 
applies.

           PART II--CAPITAL GAINS REDUCTION FOR CORPORATIONS

SEC. 311. REDUCTION OF ALTERNATIVE CAPITAL GAIN TAX FOR CORPORATIONS.

    (a) In General.--Section 1201 is amended to read as follows:

``SEC. 1201. ALTERNATIVE TAX FOR CORPORATIONS.

    ``(a) General Rule.--If for any taxable year a corporation has a 
net capital gain, then, in lieu of the tax imposed by sections 11, 511, 
and 831 (a) and (b) (whichever is applicable), there is hereby imposed 
a tax (if such tax is less than the tax imposed by such sections) which 
shall consist of the sum of--
            ``(1) a tax computed on the taxable income reduced by the 
        amount of the net capital gain, at the rates and in the manner 
        as if this subsection had not been enacted, plus
            ``(2) a tax of 25 percent of the net capital gain.
    ``(b) Transitional Rule.--
            ``(1) In general.--In the case of any taxable year ending 
        after December 31, 1994, and beginning before January 1, 1996, 
        subsection (a)(2) shall be applied as if it read as follows:
            `` `(2)(A) a tax of 25 percent of the lesser of--
                    `` `(i) the net capital gain for the taxable year, 
                or
                    `` `(ii) the net capital gain taking into account 
                only gain or loss properly taken into account for the 
                portion of the taxable year after December 31, 1994, 
                plus
            `` `(B) a tax of 35 percent of the excess (if any) of--
                    `` `(i) the net capital gain for the taxable year, 
                over
                    `` `(ii) the amount of net capital gain taken into 
                account under subparagraph (A).'
            ``(2) Special rule for pass-thru entities.--Section 
        1202(e)(2) shall apply for purposes of paragraph (1).
    ``(c) Cross References.--

                                ``For computation of the alternative 
tax--
                                  ``(1) in the case of life insurance 
companies, see section 801(a)(2),
                                  ``(2) in the case of regulated 
investment companies and their shareholders, see section 852(b)(3)(A) 
and (D), and
                                  ``(3) in the case of real estate 
investment trusts, see section 857(b)(3)(A).''
    (b) Technical Amendment.--Clause (iii) of section 852(b)(3)(D) is 
amended by striking ``65 percent'' and inserting ``75 percent''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years ending after December 31, 1994.

   PART III--CAPITAL LOSS DEDUCTION ALLOWED WITH RESPECT TO SALE OR 
                    EXCHANGE OF PRINCIPAL RESIDENCE

SEC. 316. CAPITAL LOSS DEDUCTION ALLOWED WITH RESPECT TO SALE OR 
              EXCHANGE OF PRINCIPAL RESIDENCE.

    (a) In General.--Subsection (c) of section 165 (relating to 
limitation on losses of individuals) is amended by striking ``and'' at 
the end of paragraph (2), by striking the period at the end of 
paragraph (3) and inserting ``; and'', and by adding at the end the 
following new paragraph:
            ``(4) losses arising from the sale or exchange of the 
        principal residence (within the meaning of section 1034) of the 
        taxpayer.''
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to sales and exchanges after December 31, 1994, in taxable years 
ending after such date.

                  Subtitle B--Cost Recovery Provisions

SEC. 321. DEPRECIATION ADJUSTMENT FOR CERTAIN PROPERTY PLACED IN 
              SERVICE AFTER DECEMBER 31, 1994.

    (a) In General.--Section 168 (relating to accelerated cost recovery 
system) is amended by adding at the end thereof the following new 
subsection:
    ``(k) Deduction Adjustment To Allow Equivalent of Expensing For 
Certain Property Placed in Service After December 31, 1994.--
            ``(1) In general.--In the case of tangible property placed 
        in service after December 31, 1994, the deduction under this 
        section with respect to such property--
                    ``(A) shall be determined by substituting `150 
                percent' for `200 percent' in subsection (b)(1) in the 
                case of property to which the 200 percent declining 
                balance method would otherwise apply, and
                    ``(B) for any taxable year after the taxable year 
                during which the property is placed in service shall 
                be--
                            ``(i) the amount determined under this 
                        section for such taxable year without regard to 
                        this subparagraph, multiplied by
                            ``(ii) the applicable neutral cost recovery 
                        ratio for such taxable year.
            ``(2) Applicable neutral cost recovery ratio.--For purposes 
        of paragraph (1)--
                    ``(A) In general.--The applicable neutral cost 
                recovery ratio for the property for any taxable year is 
                the number determined by--
                            ``(i) dividing--
                                    ``(I) the gross domestic product 
                                deflator for the calendar quarter which 
                                includes the mid-point of the taxable 
                                year, by
                                    ``(II) the gross domestic product 
                                deflator for the calendar quarter which 
                                includes the mid-point of the taxable 
                                year in which the property was placed 
                                in service by the taxpayer, and
                            ``(ii) then multiplying the number 
                        determined under clause (i) by the number equal 
                        to 1.035 to the nth power where `n' is the 
                        number of full years (as of the close of the 
                        taxable year referred to in clause (i)(I)) 
                        after the date such property was placed in 
                        service.
                The applicable neutral cost recovery ratio shall never 
                be less than 1. The applicable neutral cost recovery 
                ratio shall be rounded to the nearest \1/1000\.
                    ``(B) Special rule for certain property.--In the 
                case of property described in paragraph (2) or (3) of 
                subsection (b) or in subsection (g), the applicable 
                neutral cost recovery ratio shall be determined without 
                regard to subparagraph (A)(ii).
            ``(3) Gross domestic product deflator.--For purposes of 
        paragraph (2), the gross domestic product deflator for any 
        calendar quarter is the implicit price deflator for the gross 
        domestic product for such quarter (as shown in the last 
        revision thereof released by the Secretary of Commerce before 
        the close of the following calendar quarter).
            ``(4) Coordination with indexing of basis for purposes of 
        determining gain.--Section 1022 shall not apply to any property 
        to which this subsection applies.
            ``(5) Election not to have subsection apply.--This 
        subsection shall not apply to any property if the taxpayer 
        elects not to have this subsection apply to such property. Such 
        an election, once made, shall be irrevocable.
            ``(6) Churning transactions.--This subsection shall not 
        apply to any property if this section would not apply to such 
        property were--
                    ``(A) subsection (f)(5)(A)(ii) applied by 
                substituting `1995' for `1987' and `1994' for `1986', 
                and
                    ``(B) subsection (f)(5)(B) not applied.
            ``(7) Additional deduction not to affect basis or 
        recapture.--The additional amount determined under this section 
        by reason of this subsection shall not be taken into account in 
        determining the adjusted basis of any property or of any 
        interest in a pass-thru entity (as defined in section 
        1202(e)(2)) which holds such property and shall not be treated 
        as a deduction for depreciation for purposes of sections 1245 
        and 1250.''
    (b) Minimum Tax Treatment.--
            (1) Paragraph (1) of section 56(a) is amended by adding at 
        the end thereof the following new subparagraph:
                    ``(E) Use of neutral cost recovery ratio.--This 
                paragraph shall not apply to property to which section 
                168(k) applies.''
            (2) Clause (i) of section 56(g)(4)(A) is amended by 
        striking ``(a)(1)(A)'' and inserting ``(a)(1)''.
            (3) Subparagraph (C) of section 56(g)(4) is amended by 
        adding at the end the following new clause:
                            ``(v) Neutral cost recovery deduction.--
                        Clause (i) shall not apply to the additional 
                        deduction allowable by reason of section 
                        168(k).''
    (c) Technical Amendments.--
            (1) Clause (i) of section 280F(a)(1)(B) is amended by 
        adding at the end the following new sentence: ``For purposes of 
        this clause, the unrecovered basis of any passenger automobile 
        shall be treated as including the additional amount determined 
        under section 168 by reason of subsection (k) thereof to the 
        extent not allowed as a deduction by reason of this paragraph 
        for any taxable year in the recovery period.''
            (2) Subparagraph (B) of section 382(h)(2) is amended by 
        adding at the end the following new sentence: ``The amount of 
        the net unrealized built-in loss shall be increased by the 
        amount of the additional deduction allowable by reason of 
        section 168(k) which is treated under the preceding sentence as 
        a recognized built-in loss.''
            (3) Subsection (a) of section 465 is amended by adding at 
        the end the following new paragraph:
            ``(4) Treatment of neutral cost recovery deduction.--
                    ``(A) In general.--None of the additional deduction 
                allowable by reason of section 168(k) for the taxable 
year shall be disallowed under paragraph (1) unless there is a 
disallowed non-NCR loss for such year.
                    ``(B) Proportionate disallowance.--
                            ``(i) In general.--If there is a disallowed 
                        non-NCR loss for the taxable year, only the 
                        disallowed portion of the additional deduction 
                        allowable by reason of section 168(k) shall be 
                        not allowed under paragraph (1).
                            ``(ii) Disallowed portion.--For purposes of 
                        clause (i), the disallowed portion is the 
                        percentage which the disallowed non-NCR loss's 
                        allocable share of non-NCR depreciation is of 
                        total non-NCR depreciation.
                            ``(iii) Allocable share.--For purposes of 
                        clause (ii), a disallowed non-NCR loss's 
                        allocable share of non-NCR depreciation is the 
                        amount which bears the same ratio to the amount 
                        of the loss as the amount of non-NCR 
                        depreciation for the taxable year bears to the 
                        total amount of deductions for such taxable 
                        year.
                    ``(C) Definitions.--For purposes of this 
                paragraph--
                            ``(i) Disallowed non-ncr loss.--The term 
                        `disallowed non-NCR loss' means, for any 
                        taxable year, the amount of the loss from the 
                        activity which would be disallowed under 
                        paragraph (1) if such loss were determined 
                        without regard to the additional deduction 
                        allowable by reason of section 168(k).
                            ``(ii) Non-ncr depreciation.--The term 
                        `non-NCR depreciation' means the amount 
                        allowable as a deduction under section 168 
                        without regard to subsection (k) thereof.''
            (4) Subparagraph (A) of section 1503(e)(1) is amended by 
        inserting before the comma ``and shall be determined without 
        regard to section 168(k)''.
    (d) Effective Date.--The amendments made by this section shall 
apply to taxable years ending after December 31, 1994.

SEC. 322. TREATMENT OF ABANDONMENT OF LESSOR IMPROVEMENTS AT 
              TERMINATION OF LEASE.

    (a) In General.--Paragraph (8) of section 168(i) is amended to read 
as follows:
            ``(8) Treatment of leasehold improvements.--
                    ``(A) In general.--In the case of any building 
                erected (or improvements made) on leased property, if 
                such building or improvement is property to which this 
                section applies, the depreciation deduction shall be 
                determined under the provisions of this section.
                    ``(B) Treatment of lessor improvements which are 
                abandoned at termination of lease.--An improvement--
                            ``(i) which is made by the lessor of leased 
                        property for the lessee of such property, and
                            ``(ii) which is irrevocably disposed of or 
                        abandoned by the lessor at the termination of 
                        the lease by such lessee,
                shall be treated for purposes of determining gain or 
                loss under this title as disposed of by the lessor when 
                so disposed of or abandoned.''
    (b) Effective Date.--Subparagraph (B) of section 168(i)(8) of the 
Internal Revenue Code of 1986, as added by the amendment made by 
subsection (a), shall apply to improvements disposed of or abandoned 
after March 13, 1995.

               Subtitle C--Alternative Minimum Tax Relief

SEC. 331. PHASEOUT OF APPLICATION OF ALTERNATIVE MINIMUM TAX TO 
              CORPORATIONS.

    (a) Termination.--Subsection (a) of section 55 is amended by adding 
at the end the following new flush sentence:
``In the case of a corporation, the tentative minimum tax for any 
taxable year beginning after December 31, 2000, shall be zero.''
    (b) Earlier Termination of Certain Adjustments for All Taxpayers.--
            (1) Depreciation.--Paragraph (1) of section 56(a) is 
        amended by inserting ``and before March 14, 1995,'' after 
        ``December 31, 1986,''.
            (2) Mining exploration and development costs.--Paragraph 
        (2) of section 56(a) is amended by inserting ``and before 
        January 1, 1996,'' after ``December 31, 1986,''.
            (3) Long-term contracts.--Paragraph (3) of section 56(a) is 
        amended by inserting ``and before January 1, 1996,'' after 
        ``March 1, 1986,''.
            (4) Pollution control facilities.--Paragraph (5) of section 
        56(a) is amended by inserting ``and before January 1, 1996,'' 
after ``December 31, 1986,''.
            (5) Installment sales.--Paragraph (6) of section 56(a) is 
        amended by inserting ``and before January 1, 1996,'' after 
        ``March 1, 1986,''.
    (c) Earlier Termination of Circulation and Research and 
Experimental Expenditure Adjustment for Individuals.--Subparagraph (A) 
of section 56(b)(2) is amended by inserting ``and before January 1, 
1996,'' after ``December 31, 1986,''.
    (d) Earlier Termination of Certain Adjustments for Corporations.--
            (1) Merchant marine capital construction funds.--Paragraph 
        (2) of section 56(c) is amended--
                    (A) by inserting ``and before January 1, 1996,'' 
                after ``December 31, 1986,'' each place it appears, and
                    (B) by striking the last sentence and inserting the 
                following new flush sentence:
        ``For purposes of this paragraph, any withdrawal of deposit or 
        earnings from the fund shall be treated as allocable to 
        deposits made, and earnings received or accrued, in the order 
        in which made, received, or accrued.''
            (2) Section 833(b) deduction.--Paragraph (3) of section 
        56(c) is amended by adding at the end the following new 
        sentence: ``This paragraph shall not apply to any taxable year 
        beginning after December 31, 1995.''
            (3) Certain earnings and profits items.--
                    (A) Subparagraph (B) of section 56(g)(4) is amended 
                by adding at the end the following new clause:
                            ``(iii) Termination.--This subparagraph 
                        shall not apply to any taxable year beginning 
                        after December 31, 1995.''
                    (B) Subparagraph (C) of section 56(g)(4) is amended 
                by adding at the end the following new clause:
                            ``(v) Termination.--This subparagraph shall 
                        not apply to any taxable year beginning after 
                        December 31, 1995.''
            (4) Intangible drilling costs.--Clause (i) of section 
        56(g)(4)(D) is amended by adding at the end the following new 
        sentence: ``This clause shall not apply to any taxable year 
        beginning after December 31, 1995.''
            (5) Certain amortization provisions.--Clause (ii) of 
        section 56(g)(4)(D) is amended by adding at the end the 
        following new sentence: ``This clause shall not apply to any 
        expenditure paid or incurred after December 31, 1995.''
            (6) LIFO inventory adjustments.--Clause (iii) of section 
        56(g)(4)(D) is amended by adding at the end the following new 
        sentence: ``This clause shall not apply to any adjustment 
        arising in a taxable year beginning after December 31, 1995.''
            (7) Installment sales.--Clause (iv) of section 56(g)(4)(D) 
        is amended by adding at the end the following new sentence: 
        ``This clause shall not apply to any disposition after December 
        31, 1995.''
            (8) Debt pools.--Subparagraph (E) of section 56(g)(4) is 
        amended by adding at the end the following new sentence: ``This 
        subparagraph shall not apply to any exchange after December 31, 
        1995.''
            (9) Depletion.--Subparagraph (F) of section 56(g)(4) is 
        amended by adding at the end the following new clause:
                            ``(iii) Termination.--This subparagraph 
                        shall not apply to any deduction for depletion 
                        for any taxable year beginning after December 
                        31, 1995.''
            (10) Ownership changes.--Subparagraph (G) of section 
        56(g)(4) is amended by adding at the end the following new 
        sentence: ``This subparagraph shall not apply to any ownership 
        change after December 31, 1995.''
    (e) Earlier Termination of Items of Tax Preference.--
            (1) Depletion.--Paragraph (1) of section 57(a) is amended 
        by adding at the end the following new sentence: ``This 
        paragraph shall not apply to any taxable year beginning after 
        December 31, 1995.''
            (2) Intangible drilling costs.--Paragraph (2) of section 
        57(a) is amended by adding at the end the following new 
        subparagraph:
                    ``(F) Termination.--This paragraph shall not apply 
                to any taxable year beginning after December 31, 
                1995.''
            (3) Reserves for losses on bad debts.--Paragraph (4) of 
        section 57(a) is amended by adding at the end the following new 
        sentence: ``This paragraph shall not apply to any taxable year 
        beginning after December 31, 1995.''
            (4) Tax-exempt interest.--Paragraph (5) of section 57(a) is 
        amended by adding at the end the following new subparagraph:
                    ``(D) Termination for corporations.--In the case of 
                a corporation (other than a corporation referred to in 
                section 56(g)(6)), this paragraph shall not apply to 
                interest accruing for periods after December 31, 
                1995.''
    (f) Net Operating Loss Deduction.--Paragraph (1) of section 56(d) 
is amended by inserting ``(100 percent in the case of taxable years 
beginning after December 31, 1995)'' after ``90 percent'' each place it 
appears.
    (g) Losses.--
            (1) Section 58 is amended by adding at the end the 
        following new subsection:
    ``(d) Termination.--This section shall not apply to any loss 
incurred for any taxable year beginning after December 31, 1995.''
            (2) Subsection (h) of section 59 is amended by inserting 
        ``469,'' after ``465,''.
    (h) Foreign tax credit.--Paragraph (2) of section 59(a) is amended 
by adding at the end the following new subparagraph:
                    ``(D) Termination.--This paragraph shall not apply 
                to any taxable year beginning after December 31, 
                1995.''
    (i) Limitation on Use of Credit for Prior Year Minimum Tax 
Liability.--
            (1) In general.--Subsection (c) of section 53 is amended to 
        read as follows:
    ``(c) Limitation.--The credit allowable under subsection (a) for 
any taxable year shall not exceed the lesser of--
            ``(1) the excess (if any) of--
                    ``(A) the regular tax liability of the taxpayer for 
                such taxable year reduced by the sum of the credits 
                allowable under subparts A, B, D, E, and F of this 
                part, over
                    ``(B) the tentative minimum tax for the taxable 
                year, or
            ``(2) 90 percent of the amount determined under paragraph 
        (1)(A).''
            (2) Effective date.--The amendment made by paragraph (1) 
        shall apply to taxable years beginning after December 31, 1995.

       Subtitle D--Public Debt Reduction Checkoff and Trust Fund

SEC. 341. DESIGNATION OF AMOUNTS FOR REDUCTION OF PUBLIC DEBT.

    (a) In General.--Subchapter A of chapter 61 of the Internal Revenue 
Code of 1986 (relating to returns and records) is amended by adding at 
the end the following new part:

          ``PART IX--DESIGNATION FOR REDUCTION OF PUBLIC DEBT

                              ``Sec. 6097. Designation.

``SEC. 6097. DESIGNATION.

    ``(a) In General.--Every individual with adjusted income tax 
liability for any taxable year may designate that a portion of such 
liability (not to exceed 10 percent thereof) shall be used to reduce 
the public debt.
    ``(b) Manner and Time of Designation.--A designation under 
subsection (a) may be made with respect to any taxable year only at the 
time of filing the return of tax imposed by chapter 1 for the taxable 
year. The designation shall be made on the first page of the return or 
on the page bearing the taxpayer's signature.
    ``(c) Adjusted Income Tax Liability.--For purposes of this section, 
the term `adjusted income tax liability' means income tax liability (as 
defined in section 6096(b)) reduced by any amount designated under 
section 6096 (relating to designation of income tax payments to 
Presidential Election Campaign Fund).''
    (b) Clerical Amendment.--The table of parts for such subchapter A 
is amended by adding at the end the following new item:

                              ``Part IX. Designation for reduction of 
                                        public debt.''
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years ending after the date of the enactment of this 
Act.

SEC. 342. PUBLIC DEBT REDUCTION TRUST FUND.

    (a) In General.--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. PUBLIC DEBT REDUCTION 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 `Public Debt 
Reduction Trust Fund', consisting of any amount appropriated or 
credited to the Trust Fund as provided in this section or section 
9602(b).
    ``(b) Transfers to Trust Fund.--There are hereby appropriated to 
the Public Debt Reduction Trust Fund amounts equivalent to the amounts 
designated under section 6097 (relating to designation for public debt 
reduction).
    ``(c) Expenditures.--Amounts in the Public Debt Reduction Trust 
Fund shall be used by the Secretary of the Treasury for purposes of 
paying at maturity, or to redeem or buy before maturity, any obligation 
of the Federal Government included in the public debt (other than an 
obligation held by the Federal Old-Age and Survivors Insurance Trust 
Fund, the Civil Service Retirement and Disability Fund, or the 
Department of Defense Military Retirement Fund). Any obligation which 
is paid, redeemed, or bought with amounts from the Public Debt 
Reduction Trust Fund shall be canceled and retired and may not be 
reissued.''
    (b) Clerical Amendment.--The table of sections for such subchapter 
is amended by adding at the end the following new item:

                              ``Sec. 9512. Public Debt Reduction Trust 
                                        Fund.''
    (c) Effective Date.--The amendments made by this section shall 
apply to amounts received after the date of the enactment of this Act.

                 Subtitle E--Small Business Incentives

SEC. 351. COST-OF-LIVING ADJUSTMENTS RELATING TO ESTATE AND GIFT TAX 
              PROVISIONS.

    (a) Increase in Unified Estate and Gift Tax Credit.--
            (1) Estate Tax Credit.--
                    (A) Subsection (a) of section 2010 (relating to 
                unified credit against estate tax) is amended by 
                striking ``$192,800'' and inserting ``the applicable 
                credit amount''.
                    (B) Section 2010 is amended by redesignating 
                subsection (c) as subsection (d) and by inserting after 
                subsection (b) the following new subsection:
    ``(c) Applicable Credit Amount.--For purposes of this section--
            ``(1) In general.--The applicable credit amount is the 
        amount of the tentative tax which would be determined under the 
        rate schedule set forth in section 2001(c) if the amount with 
        respect to which such tentative tax is to be computed were the 
        applicable exclusion amount determined in accordance with the 
        following table:

        ``In the case of estates of decedents
                                                         The applicable
          dying, and gifts made, during:
                                                   exclusion amount is:
                  1996...............................         $700,000 
                  1997...............................         $725,000 
                  1998 or thereafter.................         $750,000.
            ``(2) Cost-of-living adjustments.--In the case of any 
        decedent dying, and gift made, in a calendar year after 1998, 
        the $750,000 amount set forth in paragraph (1) shall be 
        increased by an amount equal to--
                    ``(A) $750,000, multiplied by
                    ``(B) the cost-of-living adjustment determined 
                under section 1(f)(3) for such calendar year by 
                substituting `calendar year 1997' for `calendar year 
                1992' in subparagraph (B) thereof.
        If any amount as adjusted under the preceding sentence is not a 
        multiple of $10,000, such amount shall be rounded to the 
        nearest multiple of $10,000.''
                    (C) Paragraph (1) of section 6018(a) is amended by 
                striking ``$600,000'' and inserting ``the applicable 
                exclusion amount in effect under section 2010(c) (as 
                adjusted under paragraph (2) thereof) for the calendar 
                year which includes the date of death''.
                    (D) Paragraph (2) of section 2001(c) is amended by 
                striking ``$21,040,000'' and inserting ``the amount at 
                which the average tax rate under this section is 55 
                percent''.
                    (E) Subparagraph (A) of section 2102(c)(3) is 
                amended by striking ``$192,800'' and inserting ``the 
                applicable credit amount in effect under section 
                2010(c) for the calendar year which includes the date 
                of death''.
            (2) Unified gift tax credit.--Paragraph (1) of section 
        2505(a) is amended by striking ``$192,800'' and inserting ``the 
        applicable credit amount in effect under section 2010(c) for 
        such calendar year''.
            (3) Effective date.--The amendments made by this subsection 
        shall apply to the estates of decedents dying, and gifts made, 
        after December 31, 1995.
    (b) Alternate Valuation of Certain Farm, Etc., Real Property.--
Subsection (a) of section 2032A is amended by adding at the end the 
following new paragraph:
            ``(3) Inflation adjustment.--In the case of estates of 
        decedents dying in a calendar year after 1998, the $750,000 
        amount contained in paragraph (2) shall be increased by an 
        amount equal to--
                    ``(A) $750,000, multiplied by
                    ``(B) the cost-of-living adjustment determined 
                under section 1(f)(3) for such calendar year by 
                substituting `calendar year 1997' for `calendar year 
                1992' in subparagraph (B) thereof.
        If any amount as adjusted under the preceding sentence is not a 
        multiple of $10,000, such amount shall be rounded to the 
        nearest multiple of $10,000.''
    (c) Annual Gift Tax Exclusion.--Subsection (b) of section 2503 is 
amended--
            (1) by striking the subsection heading and inserting the 
        following:
    ``(b) Exclusions From Gifts.--
            ``(1) In general.--'',
            (2) by moving the text 2 ems to the right, and
            (3) by adding at the end the following new paragraph:
            ``(2) Inflation adjustment.--In the case of gifts made in a 
        calendar year after 1998, the $10,000 amount contained in 
        paragraph (1) shall be increased by an amount equal to--
                    ``(A) $10,000, multiplied by
                    ``(B) the cost-of-living adjustment determined 
                under section 1(f)(3) for such calendar year by 
                substituting `calendar year 1997' for `calendar year 
                1992' in subparagraph (B) thereof.
        If any amount as adjusted under the preceding sentence is not a 
        multiple of $1,000, such amount shall be rounded to the nearest 
        multiple of $1,000.''
    (d) Exemption From Generation-Skipping Tax.--Section 2631 (relating 
to GST exemption) is amended by adding at the end the following new 
subsection:
    ``(c) Inflation Adjustment.--In the case of an individual who dies 
in any calendar year after 1998, the $1,000,000 amount contained in 
subsection (a) shall be increased by an amount equal to--
            ``(1) $1,000,000, multiplied by
            ``(2) the cost-of-living adjustment determined under 
        section 1(f)(3) for such calendar year by substituting 
        `calendar year 1997' for `calendar year 1992' in subparagraph 
        (B) thereof.
If any amount as adjusted under the preceding sentence is not a 
multiple of $10,000, such amount shall be rounded to the nearest 
multiple of $10,000.''
    (e) Amount of Tax Eligible For 4 Percent Interest Rate on Extension 
of Time for Payment of Estate Tax on Closely Held Business.--
            (1) Subparagraph (A) of section 6601(j)(2) is amended by 
        striking ``$345,800'' and inserting ``the applicable limitation 
        amount''.
            (2) Subsection (j) of section 6601 is amended by 
        redesignating paragraph (3) as paragraph (4) and by inserting 
        after paragraph (2) the following new paragraph:
            ``(3) Applicable limitation amount.--
                    ``(A) In general.--For purposes of paragraph (2), 
                the applicable limitation amount is the amount of the 
                tentative tax which would be determined under the rate 
                schedule set forth in section 2001(c) if the amount 
                with respect to which such tentative tax is to be 
                computed were $1,000,000.
                    ``(B) Inflation adjustment.--In the case of estates 
                of decedents dying in a calendar year after 1998, the 
                $1,000,000 amount contained in subparagraph (A) shall 
                be increased by an amount equal to--
                            ``(i) $1,000,000, multiplied by
                            ``(ii) the cost-of-living adjustment 
                        determined under section 1(f)(3) for such 
                        calendar year by substituting `calendar year 
                        1997' for `calendar year 1992' in subparagraph 
                        (B) thereof.
                If any amount as adjusted under the preceding sentence 
                is not a multiple of $10,000, such amount shall be 
                rounded to the nearest multiple of $10,000.''

SEC. 352. INCREASE IN EXPENSE TREATMENT FOR SMALL BUSINESSES.

    (a) General Rule.--Paragraph (1) of section 179(b) (relating to 
dollar limitation) is amended to read as follows:
            ``(1) Dollar limitation.--The aggregate cost which may be 
        taken into account under subsection (a) for any taxable year 
        shall not exceed the following applicable amount:

        ``If the taxable year
                                                         The applicable
          begins in:
                                                             amount is:
                  1996...............................           $22,500
                  1997...............................            27,500
                  1998...............................            32,500
                  1999 or thereafter.................         35,000.''
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to taxable years beginning after December 31, 1995.

SEC. 353. CLARIFICATION OF TREATMENT OF HOME OFFICE USE FOR 
              ADMINISTRATIVE AND MANAGEMENT ACTIVITIES.

    (a) In General.--Paragraph (1) of section 280A(c) is amended by 
adding at the end the following new sentence:
        ``For purposes of subparagraph (A), the term `principal place 
        of business' includes a place of business which is used by the 
        taxpayer for the administrative or management activities of any 
        trade or business of the taxpayer if there is no other fixed 
        location of such trade or business where the taxpayer conducts 
        substantial administrative or management activities of such 
        trade or business.''
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to taxable years beginning after December 31, 1995.

SEC. 354. TREATMENT OF STORAGE OF PRODUCT SAMPLES.

    (a) In General.--Paragraph (2) of section 280A(c) is amended by 
striking ``inventory'' and inserting ``inventory or product samples''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to taxable years beginning after December 31, 1995.

                     TITLE IV--FAMILY REINFORCEMENT

SEC. 401. CREDIT FOR ADOPTION EXPENSES.

    (a) In General.--Subpart A of part IV of subchapter A of chapter 1 
is amended by inserting after section 25 the following new section:

``SEC. 25A. ADOPTION EXPENSES.

    ``(a) Allowance of Credit.--In the case of an individual, there 
shall be allowed as a credit against the tax imposed by this chapter 
for the taxable year the amount of the qualified adoption expenses paid 
or incurred by the taxpayer during such taxable year.
    ``(b) Limitations.--
            ``(1) Dollar limitation.--The aggregate amount of qualified 
        adoption expenses which may be taken into account under 
        subsection (a) with respect to the adoption of a child shall 
        not exceed $5,000.
            ``(2) Income limitation.--The amount allowable as a credit 
        under subsection (a) for any taxable year shall be reduced (but 
        not below zero) by an amount which bears the same ratio to the 
        amount so allowable (determined without regard to this 
        paragraph but with regard to paragraph (1)) as--
                    ``(A) the amount (if any) by which the taxpayer's 
                adjusted gross income (determined without regard to 
                sections 911, 931, and 933) exceeds $60,000, bears to
                    ``(B) $40,000.
            ``(3) Denial of double benefit.--
                    ``(A) In general.--No credit shall be allowed under 
                subsection (a) for any expense for which a deduction or 
                credit is allowable under any other provision of this 
                chapter.
                    ``(B) Grants.--No credit shall be allowed under 
                subsection (a) for any expense to the extent that funds 
                for such expense are received under any Federal, State, 
                or local program. The preceding sentence shall not 
                apply to expenses for the adoption of a child with 
                special needs.
    ``(c) Definitions.--For purposes of this section--
            ``(1) Qualified adoption expenses.--
                    ``(A) In general.--The term `qualified adoption 
                expenses' means reasonable and necessary adoption fees, 
                court costs, attorney fees, and other expenses--
                            ``(i) which are directly related to, and 
                        the principal purpose of which is for, the 
                        legal adoption of an eligible child by the 
                        taxpayer, and
                            ``(ii) which are not incurred in violation 
                        of State or Federal law or in carrying out any 
                        surrogate parenting arrangement.
                    ``(B) Expenses for adoption of spouse's child not 
                eligible.--The term `qualified adoption expenses' shall 
                not include any expenses in connection with the 
                adoption by an individual of a child who is the child 
                of such individual's spouse.
            ``(2) Eligible child.--The term `eligible child' means any 
        individual--
                    ``(A) who has not attained age 18 as of the time of 
                the adoption, or
                    ``(B) who is physically or mentally incapable of 
                caring for himself.
            ``(3) Child with special needs.--The term `child with 
        special needs' means any child if--
                    ``(A) a State has determined that the child cannot 
                or should not be returned to the home of his parents, 
                and
                    ``(B) such State has determined that there exists 
                with respect to the child a specific factor or 
                condition (such as his ethnic background, age, or 
                membership in a minority or sibling group, or the 
                presence of factors such as medical conditions or 
                physical, mental, or emotional handicaps) because of 
                which it is reasonable to conclude that such child 
                cannot be placed with adoptive parents without 
                providing adoption assistance.
    ``(d) Married Couples Must File Joint Returns, Etc.--Rules similar 
to the rules of paragraphs (2), (3), and (4) of section 21(e) shall 
apply for purposes of this section.''
    (b) Conforming Amendment.--The table of sections for subpart A of 
part IV of subchapter A of chapter 1 is amended by inserting after the 
item relating to section 25 the following new item:

                              ``Sec. 25A. Adoption expenses.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 1995.

SEC. 402. CREDIT FOR TAXPAYERS WITH CERTAIN PERSONS REQUIRING CUSTODIAL 
              CARE IN THEIR HOUSEHOLDS.

    (a) In General.--Subpart A of part IV of subchapter A of chapter 1 
is amended by inserting after section 25A the following new section:

``SEC. 25B. CREDIT FOR TAXPAYERS WITH CERTAIN PERSONS REQUIRING 
              CUSTODIAL CARE IN THEIR HOUSEHOLDS.

    ``(a) Allowance of Credit.--In the case of an individual who 
maintains a household which includes as a member one or more qualified 
persons, there shall be allowed as a credit against the tax imposed by 
this chapter for the taxable year an amount equal to $500 for each such 
person.
    ``(b) Qualified Person.--For purposes of this section, the term 
`qualified person' means any individual--
            ``(1) who is a father or mother of the taxpayer, his 
        spouse, or his former spouse or who is an ancestor of such a 
        father or mother,
            ``(2) who is physically or mentally incapable of caring for 
        himself,
            ``(3) who has as his principal place of abode for more than 
        half of the taxable year the home of the taxpayer, and
            ``(4) whose name and TIN are included on the taxpayer's 
        return for the taxable year.
For purposes of paragraph (1), a stepfather or stepmother shall be 
treated as a father or mother.
    ``(c) Special Rules.--For purposes of this section, rules similar 
to the rules of paragraphs (1), (2), (3), and (4) of section 21(e) 
shall apply.''
    (b) Clerical Amendment.--The table of sections for subpart A of 
part IV of subchapter A of chapter 1 is amended by inserting after the 
item relating to section 25A the following new item:

                              ``Sec. 25B. Credit for taxpayers with 
                                        certain persons requiring 
                                        custodial care in their 
                                        households.''
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 1995.

                 TITLE V--SOCIAL SECURITY EARNINGS TEST

SEC. 501. ADJUSTMENTS IN MONTHLY EXEMPT AMOUNT FOR PURPOSES OF THE 
              SOCIAL SECURITY EARNINGS TEST.

    (a) Increase in Monthly Exempt Amount for Individuals Who Have 
Attained Retirement Age.--Section 203(f)(8)(D) of the Social Security 
Act (42 U.S.C. 403(f)(8)(D)) is amended to read as follows:
            ``(D)(i) Notwithstanding any other provision of this 
        subsection, the exempt amount which is applicable to an 
        individual who has attained retirement age (as defined in 
        section 216(1)) before the close of the taxable year involved 
        shall be--
                    ``(I) for the taxable year beginning after 1995 and 
                before 1997, $1,250.00,
                    ``(II) for the taxable year beginning after 1996 
                and before 1998, $1,583.33\1/3\,
                    ``(III) for the taxable year beginning after 1997 
                and before 1999, $1,916.66\2/3\,
                    ``(IV) for the taxable year beginning after 1998 
                and before 2000, $2,250.00, and
                    ``(V) for the taxable year beginning after 1999 and 
                before 2001, $2,500.00.
            ``(ii) For purposes of subparagraph (B)(ii)(II), the 
        increase in the exempt amount provided under clause (i)(V) 
        shall be deemed to have resulted from a determination which 
        shall be deemed to have been made under subparagraph (A) in 
        1999.''.
    (b) Conforming Amendment.--The second sentence of section 223(d)(4) 
of such Act (42 U.S.C. 423(d)(4)) is amended by striking ``the exempt 
amount under section 203(f)(8) which is applicable to individuals 
described in subparagraph (D) thereof'' and inserting the following: 
``an amount equal to the exempt amount which would have been applicable 
under section 203(f)(8), to individuals described in subparagraph (D) 
thereof, if section 501 of the Contract With America Tax Relief Act of 
1995 had not been enacted''.
    (c) Effective Date.--The amendments made by this section shall 
apply with respect to taxable years beginning after 1995.

                    TITLE VI--TECHNICAL CORRECTIONS

SEC. 601. COORDINATION WITH OTHER TITLES.

    For purposes of applying the amendments made by any title of this 
Act other than this title, the provisions of this title shall be 
treated as having been enacted immediately before the provisions of 
such other titles.

SEC. 602. AMENDMENTS RELATED TO REVENUE RECONCILIATION ACT OF 1990.

    (a) Amendments Related to Subtitle A.--
            (1) Subparagraph (B) of section 59(j)(3) is amended by 
        striking ``section 1(i)(3)(B)'' and inserting ``section 
        1(g)(3)(B)''.
            (2) Clause (i) of section 151(d)(3)(C) is amended by 
        striking ``joint of a return'' and inserting ``joint return''.
    (b) Amendments Related to Subtitle B.--
            (1) Paragraph (1) of section 11212(e) of the Revenue 
        Reconciliation Act of 1990 is amended by striking ``Paragraph 
        (1) of section 6724(d)'' and inserting ``Subparagraph (B) of 
        section 6724(d)(1)''.
            (2)(A) Subparagraph (B) of section 4093(c)(2), as in effect 
        before the amendments made by the Revenue Reconciliation Act of 
        1993, is amended by inserting before the period ``unless such 
        fuel is sold for exclusive use by a State or any political 
        subdivision thereof''.
            (B) Paragraph (4) of section 6427(l), as in effect before 
        the amendments made by the Revenue Reconciliation Act of 1993, 
        is amended by inserting before the period ``unless such fuel 
        was used by a State or any political subdivision thereof''.
            (3) Paragraph (1) of section 6416(b) is amended by striking 
        ``chapter 32 or by section 4051'' and inserting ``chapter 31 or 
        32''.
            (4) Section 7012 is amended--
                    (A) by striking ``production or importation of 
                gasoline'' in paragraph (3) and inserting ``taxes on 
                gasoline and diesel fuel'', and
                    (B) by striking paragraph (4) and redesignating 
                paragraphs (5) and (6) as paragraphs (4) and (5), 
                respectively.
            (5) Subsection (c) of section 5041 is amended by striking 
        paragraph (6) and by inserting the following new paragraphs:
            ``(6) Credit for transferee in bond.--If--
                    ``(A) wine produced by any person would be eligible 
                for any credit under paragraph (1) if removed by such 
                person during the calendar year,
                    ``(B) wine produced by such person is removed 
                during such calendar year by any other person 
                (hereafter in this paragraph referred to as the 
                `transferee') to whom such wine was transferred in bond 
                and who is liable for the tax imposed by this section 
                with respect to such wine, and
                    ``(C) such producer holds title to such wine at the 
                time of its removal and provides to the transferee such 
                information as is necessary to properly determine the 
                transferee's credit under this paragraph,
        then, the transferee (and not the producer) shall be allowed 
        the credit under paragraph (1) which would be allowed to the 
        producer if the wine removed by the transferee had been removed 
        by the producer on that date.
            ``(7) Regulations.--The Secretary may prescribe such 
        regulations as may be necessary to carry out the purposes of 
        this subsection, including regulations--
                    ``(A) to prevent the credit provided in this 
                subsection from benefiting any person who produces more 
                than 250,000 wine gallons during a calendar year, and
                    ``(B) to assure proper reduction of such credit for 
                persons producing more than 150,000 wine gallons of 
                wine during a calendar year.''
            (6) Paragraph (3) of section 5061(b) is amended to read as 
        follows:
            ``(3) section 5041(f),''.
            (7) Section 5354 is amended by inserting ``(taking into 
        account the appropriate amount of credit with respect to such 
        wine under section 5041(c))'' after ``any one time''.
    (c) Amendments Related to Subtitle C.--
            (1) Paragraph (4) of section 56(g) is amended by 
        redesignating subparagraphs (I) and (J) as subparagraphs (H) 
        and (I), respectively.
            (2) Subparagraph (B) of section 6724(d)(1) is amended--
                    (A) by striking ``or'' at the end of clause (xii), 
                and
                    (B) by striking the period at the end of clause 
                (xiii) and inserting ``, or''.
            (3) Subsection (g) of section 6302 is amended by inserting 
        ``, 22,'' after ``chapters 21''.
            (4) The earnings and profits of any insurance company to 
        which section 11305(c)(3) of the Revenue Reconciliation Act of 
        1990 applies shall be determined without regard to any 
        deduction allowed under such section; except that, for purposes 
        of applying sections 56 and 902, and subpart F of part III of 
        subchapter N of chapter 1 of the Internal Revenue Code of 1986, 
        such deduction shall be taken into account.
            (5) Subparagraph (D) of section 6038A(e)(4) is amended--
                    (A) by striking ``any transaction to which the 
                summons relates'' and inserting ``any affected taxable 
                year'', and
                    (B) by adding at the end thereof the following new 
                sentence: ``For purposes of this subparagraph, the term 
                `affected taxable year' means any taxable year if the 
                determination of the amount of tax imposed for such 
                taxable year is affected by the treatment of the 
                transaction to which the summons relates.''.
            (6) Subparagraph (A) of section 6621(c)(2) is amended by 
        adding at the end thereof the following new flush sentence:
                ``The preceding sentence shall be applied without 
                regard to any such letter or notice which is withdrawn 
                by the Secretary.''.
            (7) Clause (i) of section 6621(c)(2)(B) is amended by 
        striking ``this subtitle'' and inserting ``this title''.
    (d) Amendments Related to Subtitle D.--
            (1) Notwithstanding section 11402(c) of the Revenue 
        Reconciliation Act of 1990, the amendment made by section 
        11402(b)(1) of such Act shall apply to taxable years ending 
        after December 31, 1989.
            (2) Clause (ii) of section 143(m)(4)(C) is amended--
                    (A) by striking ``any month of the 10-year period'' 
                and inserting ``any year of the 4-year period'',
                    (B) by striking ``succeeding months'' and inserting 
                ``succeeding years'', and
                    (C) by striking ``over the remainder of such period 
                (or, if lesser, 5 years)'' and inserting ``to zero over 
                the succeeding 5 years''.
    (e) Amendments Related to Subtitle E.--
            (1)(A) Clause (ii) of section 56(d)(1)(B) is amended to 
        read as follows:
                            ``(ii) appropriate adjustments in the 
                        application of section 172(b)(2) shall be made 
                        to take into account the limitation of 
                        subparagraph (A).''
            (B) For purposes of applying sections 56(g)(1) and 56(g)(3) 
        of the Internal Revenue Code of 1986 with respect to taxable 
        years beginning in 1991 and 1992, the reference in such 
        sections to the alternative tax net operating loss deduction 
        shall be treated as including a reference to the deduction 
        under section 56(h) of such Code as in effect before the 
        amendments made by section 1915 of the Energy Policy Act of 
        1992.
            (2) Clause (i) of section 613A(c)(3)(A) is amended by 
        striking ``the table contained in''.
            (3) Section 6501 is amended--
                    (A) by striking subsection (m) (relating to 
                deficiency attributable to election under section 44B) 
                and by redesignating subsections (n) and (o) as 
                subsections (m) and (n), respectively, and
                    (B) by striking ``section 40(f) or 51(j)'' in 
                subsection (m) (as redesignated by subparagraph (A)) 
                and inserting ``section 40(f), 43, or 51(j)''.
            (4) Subparagraph (C) of section 38(c)(2) (as in effect on 
        the day before the date of the enactment of the Revenue 
        Reconciliation Act of 1990) is amended by inserting before the 
        period at the end of the first sentence the following: ``and 
        without regard to the deduction under section 56(h)''.
            (5) The amendment made by section 1913(b)(2)(C)(i) of the 
        Energy Policy Act of 1992 shall apply to taxable years 
        beginning after December 31, 1990.
    (f) Amendments Related to Subtitle F.--
            (1)(A) Section 2701(a)(3) is amended by adding at the end 
        thereof the following new subparagraph:
                    ``(C) Valuation of qualified payments where no 
                liquidation, etc. rights.--In the case of an applicable 
                retained interest which is described in subparagraph 
                (B)(i) but not subparagraph (B)(ii), the value of the 
                distribution right shall be determined without regard 
                to this section.''
            (B) Section 2701(a)(3)(B) is amended by inserting 
        ``certain'' before ``qualified'' in the heading thereof.
            (C) Sections 2701 (d)(1) and (d)(4) are each amended by 
        striking ``subsection (a)(3)(B)'' and inserting ``subsection 
        (a)(3) (B) or (C)''.
            (2) Clause (i) of section 2701(a)(4)(B) is amended by 
        inserting ``(or, to the extent provided in regulations, the 
        rights as to either income or capital)'' after ``income and 
        capital''.
            (3)(A) Section 2701(b)(2) is amended by adding at the end 
        thereof the following new subparagraph:
                    ``(C) Applicable family member.--For purposes of 
                this subsection, the term `applicable family member' 
includes any lineal descendant of any parent of the transferor or the 
transferor's spouse.''
            (B) Section 2701(e)(3) is amended--
                    (i) by striking subparagraph (B), and
                    (ii) by striking so much of paragraph (3) as 
                precedes ``shall be treated as holding'' and inserting:
            ``(3) Attribution of indirect holdings and transfers.--An 
        individual''.
            (C) Section 2704(c)(3) is amended by striking ``section 
        2701(e)(3)(A)'' and inserting ``section 2701(e)(3)''.
            (4) Clause (i) of section 2701(c)(1)(B) is amended to read 
        as follows:
                            ``(i) a right to distributions with respect 
                        to any interest which is junior to the rights 
                        of the transferred interest,''.
            (5)(A) Clause (i) of section 2701(c)(3)(C) is amended to 
        read as follows:
                            ``(i) In general.--Payments under any 
                        interest held by a transferor which (without 
                        regard to this subparagraph) are qualified 
                        payments shall be treated as qualified payments 
                        unless the transferor elects not to treat such 
                        payments as qualified payments. Payments 
                        described in the preceding sentence which are 
                        held by an applicable family member shall be 
                        treated as qualified payments only if such 
                        member elects to treat such payments as 
                        qualified payments.''
            (B) The first sentence of section 2701(c)(3)(C)(ii) is 
        amended to read as follows: ``A transferor or applicable family 
        member holding any distribution right which (without regard to 
        this subparagraph) is not a qualified payment may elect to 
        treat such right as a qualified payment, to be paid in the 
        amounts and at the times specified in such election.''.
            (C) The time for making an election under the second 
        sentence of section 2701(c)(3)(C)(i) of the Internal Revenue 
        Code of 1986 (as amended by subparagraph (A)) shall not expire 
        before the due date (including extensions) for filing the 
        transferor's return of the tax imposed by section 2501 of such 
        Code for the first calendar year ending after the date of 
        enactment.
            (6) Section 2701(d)(3)(A)(iii) is amended by striking ``the 
        period ending on the date of''.
            (7) Subclause (I) of section 2701(d)(3)(B)(ii) is amended 
        by inserting ``or the exclusion under section 2503(b),'' after 
        ``section 2523,''.
            (8) Section 2701(e)(5) is amended--
                    (A) by striking ``such contribution to capital or 
                such redemption, recapitalization, or other change'' in 
                subparagraph (A) and inserting ``such transaction'', 
                and
                    (B) by striking ``the transfer'' in subparagraph 
                (B) and inserting ``such transaction''.
            (9) Section 2701(d)(4) is amended by adding at the end 
        thereof the following new subparagraph:
                    ``(C) Transfer to transferors.--In the case of a 
                taxable event described in paragraph (3)(A)(ii) 
                involving a transfer of an applicable retained interest 
                from an applicable family member to a transferor, this 
                subsection shall continue to apply to the transferor 
                during any period the transferor holds such interest.''
            (10) Section 2701(e)(6) is amended by inserting ``or to 
        reflect the application of subsection (d)'' before the period 
        at the end thereof.
            (11)(A) Section 2702(a)(3)(A) is amended--
                    (i) by striking ``to the extent'' and inserting 
                ``if'' in clause (i),
                    (ii) by striking ``or'' at the end of clause (i),
                    (iii) by striking the period at the end of clause 
                (ii) and inserting ``, or'', and
                    (iv) by adding at the end thereof the following new 
                clause:
                            ``(iii) to the extent that regulations 
                        provide that such transfer is not inconsistent 
                        with the purposes of this section.''
            (B)(i) Section 2702(a)(3) is amended by striking 
        ``incomplete transfer'' each place it appears and inserting 
        ``incomplete gift''.
            (ii) The heading for section 2702(a)(3)(B) is amended by 
        striking ``Incomplete transfer'' and inserting ``Incomplete 
        gift''.
    (g) Amendments Related to Subtitle G.--
            (1)(A) Subsection (a) of section 1248 is amended--
                    (i) by striking ``, or if a United States person 
                receives a distribution from a foreign corporation 
                which, under section 302 or 331, is treated as an 
                exchange of stock'' in paragraph (1), and
                    (ii) by adding at the end thereof the following new 
                sentence: ``For purposes of this section, a United 
States person shall be treated as having sold or exchanged any stock 
if, under any provision of this subtitle, such person is treated as 
realizing gain from the sale or exchange of such stock.''.
            (B) Paragraph (1) of section 1248(e) is amended by striking 
        ``, or receives a distribution from a domestic corporation 
        which, under section 302 or 331, is treated as an exchange of 
        stock''.
            (C) Subparagraph (B) of section 1248(f)(1) is amended by 
        striking ``or 361(c)(1)'' and inserting ``355(c)(1), or 
        361(c)(1)''.
            (D) Paragraph (1) of section 1248(i) is amended to read as 
        follows:
            ``(1) In general.--If any shareholder of a 10-percent 
        corporate shareholder of a foreign corporation exchanges stock 
        of the 10-percent corporate shareholder for stock of the 
        foreign corporation, such 10-percent corporate shareholder 
        shall recognize gain in the same manner as if the stock of the 
        foreign corporation received in such exchange had been--
                    ``(A) issued to the 10-percent corporate 
                shareholder, and
                    ``(B) then distributed by the 10-percent corporate 
                shareholder to such shareholder in redemption or 
                liquidation (whichever is appropriate).
        The amount of gain recognized by such 10-percent corporate 
        shareholder under the preceding sentence shall not exceed the 
        amount treated as a dividend under this section.''
            (2) Section 897 is amended by striking subsection (f).
            (3) Paragraph (13) of section 4975(d) is amended by 
        striking ``section 408(b)'' and inserting ``section 
        408(b)(12)''.
            (4) Clause (iii) of section 56(g)(4)(D) is amended by 
        inserting ``, but only with respect to taxable years beginning 
        after December 31, 1989'' before the period at the end thereof.
            (5)(A) Paragraph (11) of section 11701(a) of the Revenue 
        Reconciliation Act of 1990 (and the amendment made by such 
        paragraph) are hereby repealed, and section 7108(r)(2) of the 
        Revenue Reconciliation Act of 1989 shall be applied as if such 
        paragraph (and amendment) had never been enacted.
            (B) Subparagraph (A) shall not apply to any building if the 
        owner of such building establishes to the satisfaction of the 
        Secretary of the Treasury or his delegate that such owner 
        reasonably relied on the amendment made by such paragraph (11).
    (h) Amendments Related to Subtitle H.--
            (1)(A) Clause (vi) of section 168(e)(3)(B) is amended by 
        striking ``or'' at the end of subclause (I), by striking the 
        period at the end of subclause (II) and inserting ``, or'', and 
        by adding at the end thereof the following new subclause:
                                    ``(III) is described in section 
                                48(l)(3)(A)(ix) (as in effect on the 
                                day before the date of the enactment of 
                                the Revenue Reconciliation Act of 
                                1990).''
            (B) Subparagraph (K) of section 168(g)(4) is amended by 
        striking ``section 48(a)(3)(A)(iii)'' and inserting ``section 
        48(l)(3)(A)(ix) (as in effect on the day before the date of the 
        enactment of the Revenue Reconciliation Act of 1990)''.
            (2) Clause (ii) of section 172(b)(1)(E) is amended by 
        striking ``subsection (m)'' and inserting ``subsection (h)''.
            (3) Sections 805(a)(4)(E), 832(b)(5)(C)(ii)(II), and 
        832(b)(5)(D)(ii)(II) are each amended by striking ``243(b)(5)'' 
        and inserting ``243(b)(2)''.
            (4) Subparagraph (A) of section 243(b)(3) is amended by 
        inserting ``of'' after ``In the case''.
            (5) The subsection heading for subsection (a) of section 
        280F is amended by striking ``Investment Tax Credit and''.
            (6) Clause (i) of section 1504(c)(2)(B) is amended by 
        inserting ``section'' before ``243(b)(2)''.
            (7) Paragraph (3) of section 341(f) is amended by striking 
        ``351, 361, 371(a), or 374(a)'' and inserting ``351, or 361''.
            (8) Paragraph (2) of section 243(b) is amended to read as 
        follows:
            ``(2) Affiliated group.--For purposes of this subsection:
                    ``(A) In general.--The term `affiliated group' has 
                the meaning given such term by section 1504(b), except 
                that for such purposes sections 1504(b)(2), 1504(b)(4), 
                and 1504(c) shall not apply.
                    ``(B) Group must be consistent in foreign tax 
                treatment.--The requirements of paragraph (1)(A) shall 
                not be treated as being met with respect to any 
dividend received by a corporation if, for any taxable year which 
includes the day on which such dividend is received--
                            ``(i) 1 or more members of the affiliated 
                        group referred to in paragraph (1)(A) choose to 
                        any extent to take the benefits of section 901, 
                        and
                            ``(ii) 1 or more other members of such 
                        group claim to any extent a deduction for taxes 
                        otherwise creditable under section 901.''
            (9) The amendment made by section 11813(b)(17) of the 
        Revenue Reconciliation Act of 1990 shall be applied as if the 
        material stricken by such amendment included the closing 
        parenthesis after ``section 48(a)(5)''.
            (10) Paragraph (1) of section 179(d) is amended--
                    (A) by striking ``in a trade or business'' and 
                inserting ``a trade or business'', and
                    (B) by adding at the end thereof the following new 
                sentence: ``Such term shall not include any property 
                described in section 50(b) and shall not include air 
                conditioning or heating units and horses.''
            (11) Subparagraph (E) of section 50(a)(2) is amended by 
        striking ``section 48(a)(5)(A)'' and inserting ``section 
        48(a)(5)''.
            (12) The amendment made by section 11801(c)(9)(G)(ii) of 
        the Revenue Reconciliation Act of 1990 shall be applied as if 
        it struck ``Section 422A(c)(2)'' and inserted ``Section 
        422(c)(2)''.
            (13) Subparagraph (B) of section 424(c)(3) is amended by 
        striking ``a qualified stock option, an incentive stock option, 
        an option granted under an employee stock purchase plan, or a 
        restricted stock option'' and inserting ``an incentive stock 
        option or an option granted under an employee stock purchase 
        plan''.
            (14) Subparagraph (E) of section 1367(a)(2) is amended by 
        striking ``section 613A(c)(13)(B)'' and inserting ``section 
        613A(c)(11)(B)''.
            (15) Subparagraph (B) of section 460(e)(6) is amended by 
        striking ``section 167(k)'' and inserting ``section 
        168(e)(2)(A)(ii)''.
            (16) Subparagraph (C) of section 172(h)(4) is amended by 
        striking ``subsection (b)(1)(M)'' and inserting ``subsection 
        (b)(1)(E)''.
            (17) Section 6503 is amended--
                    (A) by redesignating the subsection relating to 
                extension in case of certain summonses as subsection 
                (j), and
                    (B) by redesignating the subsection relating to 
                cross references as subsection (k).
            (18) Paragraph (4) of section 1250(e) is hereby repealed.
    (i) Effective Date.--Except as otherwise expressly provided--
            (1) the amendments made by this section shall be treated as 
        amendments to the Internal Revenue Code of 1986 as amended by 
        the Revenue Reconciliation Act of 1993; and
            (2) any amendment made by this section shall apply to 
        periods before the date of the enactment of this section in the 
        same manner as if it had been included in the provision of the 
        Revenue Reconciliation Act of 1990 to which such amendment 
        relates.

SEC. 603. AMENDMENTS RELATED TO REVENUE RECONCILIATION ACT OF 1993.

    (a) Amendment Related to Section 13114.--Paragraph (2) of section 
1044(c) is amended to read as follows:
            ``(2) Purchase.--The taxpayer shall be considered to have 
        purchased any property if, but for subsection (d), the 
        unadjusted basis of such property would be its cost within the 
        meaning of section 1012.''
    (b) Amendments Related to Section 13142.--
            (1) Subparagraph (B) of section 13142(b)(6) of the Revenue 
        Reconciliation Act of 1993 is amended to read as follows:
                    ``(B) Full-time students, waiver authority, and 
                prohibited discrimination.--The amendments made by 
                paragraphs (2), (3), and (4) shall take effect on the 
                date of the enactment of this Act.''
            (2) Subparagraph (C) of section 13142(b)(6) of such Act is 
        amended by striking ``paragraph (2)'' and inserting ``paragraph 
        (5)''.
    (c) Amendment Related to Section 13161.--
            (1) In general.--Subsection (e) of section 4001 (relating 
        to inflation adjustment) is amended to read as follows:
    ``(e) Inflation Adjustment.--
            ``(1) In general.--The $30,000 amount in subsection (a) and 
        section 4003(a) shall be increased by an amount equal to--
                    ``(A) $30,000, multiplied by
                    ``(B) the cost-of-living adjustment under section 
                1(f)(3) for the calendar year in which the vehicle is 
                sold, determined by substituting `calendar year 1990' 
                for `calendar year 1992' in subparagraph (B) thereof.
            ``(2) Rounding.--If any amount as adjusted under paragraph 
        (1) is not a multiple of $2,000, such amount shall be rounded 
        to the next lowest multiple of $2,000.''
            (2) Effective date.--The amendment made by paragraph (1) 
        shall take effect on the date of the enactment of this Act.
    (d) Amendment Related to Section 13201.--Clause (ii) of section 
135(b)(2)(B) is amended by inserting before the period at the end 
thereof the following: ``, determined by substituting `calendar year 
1989' for `calendar year 1992' in subparagraph (B) thereof''.
    (e) Amendments Related to Section 13203.--Subsection (a) of section 
59 is amended--
            (1) by striking ``the amount determined under section 
        55(b)(1)(A)'' in paragraph (1)(A) and (2)(A)(i) and inserting 
        ``the pre-credit tentative minimum tax'',
            (2) by striking ``specified in section 55(b)(1)(A)'' in 
        paragraph (1)(C) and inserting ``specified in subparagraph 
        (A)(i) or (B)(i) of section 55(b)(1) (whichever applies)'',
            (3) by striking ``which would be determined under section 
        55(b)(1)(A)'' in paragraph (2)(A)(ii) and inserting ``which 
        would be the pre-credit tentative minimum tax'', and
            (4) by adding at the end thereof the following new 
        paragraph:
            ``(3) Pre-credit tentative minimum tax.--For purposes of 
        this subsection, the term `pre-credit tentative minimum tax' 
        means--
                    ``(A) in the case of a taxpayer other than a 
                corporation, the amount determined under the first 
                sentence of section 55(b)(1)(A)(i), or
                    ``(B) in the case of a corporation, the amount 
                determined under section 55(b)(1)(B)(i).''
    (f) Amendment Related to Section 13221.--Sections 1201(a) and 
1561(a) are each amended by striking ``last sentence'' each place it 
appears and inserting ``last 2 sentences''.
    (g) Amendments Related to Section 13222.--
            (1) Subparagraph (B) of section 6033(e)(1) is amended by 
        adding at the end thereof the following new clause:
                            ``(iii) Coordination with section 527(f).--
                        This subsection shall not apply to any amount 
                        on which tax is imposed by reason of section 
                        527(f).''.
            (2) Clause (i) of section 6033(e)(1)(B) is amended by 
        striking ``this subtitle'' and inserting ``section 501''.
    (h) Amendment Related to Section 13225.--Paragraph (3) of section 
6655(g) is amended by striking all that follows ```3rd month''' in the 
sentence following subparagraph (C) and inserting ``, subsection 
(e)(2)(A) shall be applied by substituting `2 months' for `3 months' in 
clause (i)(I), the election under clause (i) of subsection (e)(2)(C) 
may be made separately for each installment, and clause (ii) of 
subsection (e)(2)(C) shall not apply.''.
    (i) Amendments Related to Section 13231.--
            (1) Subparagraph (G) of section 904(d)(3) is amended by 
        striking ``section 951(a)(1)(B)'' and inserting ``subparagraph 
        (B) or (C) of section 951(a)(1)''.
            (2) Paragraph (1) of section 956A(b) is amended to read as 
        follows:
            ``(1) the amount (not including a deficit) referred to in 
        section 316(a)(1) to the extent such amount was accumulated in 
        prior taxable years beginning after September 30, 1993, and''.
            (3) Subsection (f) of section 956A is amended by inserting 
        before the period at the end thereof: ``and regulations 
        coordinating the provisions of subsections (c)(3)(A) and (d)''.
            (4) Subsection (b) of section 958 is amended by striking 
        ``956(b)(2)'' each place it appears and inserting 
        ``956(c)(2)''.
            (5)(A) Subparagraph (A) of section 1297(d)(2) is amended by 
        striking ``The adjusted basis of any asset'' and inserting 
        ``The amount taken into account under section 1296(a)(2) with 
        respect to any asset''.
            (B) The paragraph heading of paragraph (2) of section 
        1297(d) is amended to read as follows:
            ``(2) Amount taken into account.--''.
            (6) Subsection (e) of section 1297 is amended by inserting 
        ``For purposes of this part--'' after the subsection heading.
    (j) Amendment Related to Section 13241.--Subparagraph (B) of 
section 40(e)(1) is amended to read as follows:
                    ``(B) for any period before January 1, 2001, during 
                which the rates of tax under section 4081(a)(2)(A) are 
                4.3 cents per gallon.''
    (k) Amendment Related to Section 13261.--Clause (iii) of section 
13261(g)(2)(A) of the Revenue Reconciliation Act of 1993 is amended by 
striking ``by the taxpayer'' and inserting ``by the taxpayer or a 
related person''.
    (l) Amendment Related to Section 13301.--Subparagraph (B) of 
section 1397B(d)(5) is amended by striking ``preceding''.
    (m) Clerical Amendments.--
            (1) Subsection (d) of section 39 is amended--
                    (A) by striking ``45'' in the heading of paragraph 
                (5) and inserting ``45A'', and
                    (B) by striking ``45'' in the heading of paragraph 
                (6) and inserting ``45B''.
            (2) Subparagraph (A) of section 108(d)(9) is amended by 
        striking ``paragraph (3)(B)'' and inserting ``paragraph 
        (3)(C)''.
            (3) Subparagraph (C) of section 143(d)(2) is amended by 
        striking the period at the end thereof and inserting a comma.
            (4) Clause (ii) of section 163(j)(6)(E) is amended by 
        striking ``which is a'' and inserting ``which is''.
            (5) Subparagraph (A) of section 1017(b)(4) is amended by 
        striking ``subsection (b)(2)(D)'' and inserting ``subsection 
        (b)(2)(E)''.
            (6) So much of section 1245(a)(3) as precedes subparagraph 
        (A) thereof is amended to read as follows:
            ``(3) Section 1245 property.--For purposes of this section, 
        the term `section 1245 property' means any property which is or 
        has been property of a character subject to the allowance for 
        depreciation provided in section 167 and is either--''.
            (7) Paragraph (2) of section 1394(e) is amended--
                    (A) by striking ``(i)'' and inserting ``(A)'', and
                    (B) by striking ``(ii)'' and inserting ``(B)''.
            (8) Subsection (m) of section 6501 (as redesignated by 
        section 602) is amended by striking ``or 51(j)'' and inserting 
        ``45B, or 51(j)''.
            (9)(A) The section 6714 added by section 13242(b)(1) of the 
        Revenue Reconciliation Act of 1993 is hereby redesignated as 
        section 6715.
            (B) The table of sections for part I of subchapter B of 
        chapter 68 is amended by striking ``6714'' in the item added by 
        such section 13242(b)(2) of such Act and inserting ``6715''.
            (10) Paragraph (2) of section 9502(b) is amended by 
        inserting ``and before'' after ``1982,''.
            (11) Subsection (a)(3) of section 13206 of the Revenue 
        Reconciliation Act of 1993 are each amended by striking ``this 
        section'' and inserting ``this subsection''.
            (12) Paragraph (1) of section 13215(c) of the Revenue 
        Reconciliation Act of 1993 is amended by striking ``Public Law 
        92-21'' and inserting ``Public Law 98-21''.
            (13) Paragraph (2) of section 13311(e) of the Revenue 
        Reconciliation Act of 1993 is amended by striking ``section 
        1393(a)(3)'' and inserting ``section 1393(a)(2)''.
            (14) Subparagraph (B) of section 117(d)(2) is amended by 
        striking ``section 132(f)'' and inserting ``section 132(h)''.
    (n) Effective Date.--Any amendment made by this section shall take 
effect as if included in the provision of the Revenue Reconciliation 
Act of 1993 to which such amendment relates.

SEC. 604. MISCELLANEOUS PROVISIONS.

    (a) Application of Amendments Made by Title XII of Omnibus Budget 
Reconciliation Act of 1990.--Except as otherwise expressly provided, 
whenever in title XII of the Omnibus Budget Reconciliation Act of 1990 
an amendment or repeal is expressed in terms of an amendment to, or 
repeal of, a section or other provision, the reference shall be 
considered to be made to a section or other provision of the Internal 
Revenue Code of 1986.
    (b) Treatment of Certain Amounts Under Hedge Bond Rules.--
            (1) Clause (iii) of section 149(g)(3)(B) is amended to read 
        as follows:
                            ``(iii) Amounts held pending reinvestment 
                        or redemption.--Amounts held for not more than 
                        30 days pending reinvestment or bond redemption 
                        shall be treated as invested in bonds described 
                        in clause (i).''
            (2) The amendment made by paragraph (1) shall take effect 
        as if included in the amendments made by section 7651 of the 
        Omnibus Budget Reconciliation Act of 1989.
    (c) Treatment of Certain Distributions Under Section 1445.--
            (1) In general.--Paragraph (3) of section 1445(e) is 
        amended by adding at the end thereof the following new 
        sentence: ``Rules similar to the rules of the preceding 
        provisions of this paragraph shall apply in the case of any 
        distribution to which section 301 applies and which is not made 
        out of the earnings and profits of such a domestic 
        corporation.''
            (2) Effective date.--The amendment made by paragraph (1) 
        shall apply to distributions after the date of the enactment of 
        this Act.
    (d) Treatment of Certain Credits Under Section 469.--
            (1) In general.--Subparagraph (B) of section 469(c)(3) is 
        amended by adding at the end thereof the following new 
        sentence: ``If the preceding sentence applies to the net income 
        from any property for any taxable year, any credits allowable 
        under subpart B (other than section 27(a)) or D of part IV of 
        subchapter A for such taxable year which are attributable to 
        such property shall be treated as credits not from a passive 
        activity to the extent the amount of such credits does not 
        exceed the regular tax liability of the taxpayer for the 
        taxable year which is allocable to such net income.''
            (2) Effective date.--The amendment made by paragraph (1) 
        shall apply to taxable years beginning after December 31, 1986.
    (e) Treatment of Dispositions Under Passive Loss Rules.--
            (1) In general.--Subparagraph (A) of section 469(g)(1) is 
        amended to read as follows:
                    ``(A) In general.--If all gain or loss realized on 
                such disposition is recognized, the excess of--
                            ``(i) any loss from such activity for such 
                        taxable year (determined after the application 
                        of subsection (b)), over
                            ``(ii) any net income or gain for such 
                        taxable year from all other passive activities 
                        (determined after the application of subsection 
                        (b)),
                shall be treated as a loss which is not from a passive 
                activity.''
            (2) Effective date.--The amendment made by paragraph (1) 
        shall apply to taxable years beginning after December 31, 1986.
    (f) Miscellaneous Amendments to Foreign Provisions.--
            (1) Coordination of unified estate tax credit with 
        treaties.--Subparagraph (A) of section 2102(c)(3) is amended by 
        adding at the end thereof the following new sentence: ``For 
        purposes of the preceding sentence, property shall not be 
        treated as situated in the United States if such property is 
        exempt from the tax imposed by this subchapter under any treaty 
        obligation of the United States.''
            (2) Treatment of certain interest paid to related person.--
                    (A) In general.--Subparagraph (B) of section 
                163(j)(1) is amended by inserting before the period at 
                the end thereof the following: ``(and clause (ii) of 
                paragraph (2)(A) shall not apply for purposes of 
                applying this subsection to the amount so treated)''.
                    (B) Effective date.--The amendment made by 
                subparagraph (A) shall apply as if included in the 
                amendments made by section 7210(a) of the Revenue 
                Reconciliation Act of 1989.
            (3) Treatment of interest allocable to effectively 
        connected income.--
                    (A) In general.--
                            (i) Subparagraph (B) of section 884(f)(1) 
                        is amended by striking ``to the extent'' and 
                        all that follows down through ``subparagraph 
                        (A)'' and inserting ``to the extent that the 
                        allocable interest exceeds the interest 
                        described in subparagraph (A)''.
                            (ii) The second sentence of section 
                        884(f)(1) is amended by striking ``reasonably 
                        expected'' and all that follows down through 
                        the period at the end thereof and inserting 
                        ``reasonably expected to be allocable 
                        interest.''
                            (iii) Paragraph (2) of section 884(f) is 
                        amended to read as follows:
            ``(2) Allocable interest.--For purposes of this subsection, 
        the term `allocable interest' means any interest which is 
        allocable to income which is effectively connected (or treated 
        as effectively connected) with the conduct of a trade or 
        business in the United States.''
                    (B) Effective date.--The amendments made by 
                subparagraph (A) shall take effect as if included in 
                the amendments made by section 1241(a) of the Tax 
                Reform Act of 1986.
            (4) Clarification of source rule.--
                    (A) In general.--Paragraph (2) of section 865(b) is 
                amended by striking ``863(b)'' and inserting ``863''.
                    (B) Effective date.--The amendment made by 
                subparagraph (A) shall take effect as if included in 
                the amendments made by section 1211 of the Tax Reform 
                Act of 1986.
            (5) Repeal of obsolete provisions.--
                    (A) Paragraph (1) of section 6038(a) is amended by 
                striking ``, and'' at the end of subparagraph (E) and 
                inserting a period, and by striking subparagraph (F).
                    (B) Subsection (b) of section 6038A is amended by 
                adding ``and'' at the end of paragraph (2), by striking 
                ``, and'' at the end of paragraph (3) and inserting a 
                period, and by striking paragraph (4).
    (g) Treatment of Assignment of Interest in Certain Bond-Financed 
Facilities.--
            (1) In general.--Subparagraph (A) of section 1317(3) of the 
        Tax Reform Act of 1986 is amended by adding at the end thereof 
        the following new sentence: ``A facility shall not fail to be 
        treated as described in this subparagraph by reason of an 
        assignment (or an agreement to an assignment) by the 
        governmental unit on whose behalf the bonds are issued of any 
        part of its interest in the property financed by such bonds to 
        another governmental unit.''
            (2) Effective date.--The amendment made by paragraph (1) 
        shall take effect as if included in such section 1317 on the 
        date of the enactment of the Tax Reform Act of 1986.
    (h) Clarification of Treatment of Medicare Entitlement Under COBRA 
Provisions.--
            (1) In general.--
                    (A) Subclause (V) of section 4980B(f)(2)(B)(i) is 
                amended to read as follows:
                                    ``(V) Medicare entitlement followed 
                                by qualifying event.--In the case of a 
                                qualifying event described in paragraph 
                                (3)(B) that occurs less than 18 months 
                                after the date the covered employee 
                                became entitled to benefits under title 
                                XVIII of the Social Security Act, the 
                                period of coverage for qualified 
                                beneficiaries other than the covered 
                                employee shall not terminate under this 
                                clause before the close of the 36-month 
                                period beginning on the date the 
                                covered employee became so entitled.''
                    (B) Clause (v) of section 602(2)(A) of the Employee 
                Retirement Income Security Act of 1974 is amended to 
                read as follows:
                            ``(v) Medicare entitlement followed by 
                        qualifying event.--In the case of a qualifying 
                        event described in section 603(2) that occurs 
                        less than 18 months after the date the covered 
                        employee became entitled to benefits under 
                        title XVIII of the Social Security Act, the 
                        period of coverage for qualified beneficiaries 
                        other than the covered employee shall not 
                        terminate under this subparagraph before the 
                        close of the 36-month period beginning on the 
                        date the covered employee became so entitled.''
                    (C) Clause (iv) of section 2202(2)(A) of the Public 
                Health Service Act is amended to read as follows:
                            ``(iv) Medicare entitlement followed by 
                        qualifying event.--In the case of a qualifying 
                        event described in section 2203(2) that occurs 
                        less than 18 months after the date the covered 
                        employee became entitled to benefits under 
                        title XVIII of the Social Security Act, the 
                        period of coverage for qualified beneficiaries 
                        other than the covered employee shall not 
                        terminate under this subparagraph before the 
                        close of the 36-month period beginning on the 
                        date the covered employee became so entitled.''
            (2) Effective date.--The amendments made by this subsection 
        shall apply to plan years beginning after December 31, 1989.
    (i) Treatment of Certain REMIC Inclusions.--
            (1) In general.--Subsection (a) of section 860E is amended 
        by adding at the end thereof the following new paragraph:
            ``(6) Coordination with minimum tax.--For purposes of part 
        VI of subchapter A of this chapter--
                    ``(A) the reference in section 55(b)(2) to taxable 
                income shall be treated as a reference to taxable 
                income determined without regard to this subsection,
                    ``(B) the alternative minimum taxable income of any 
                holder of a residual interest in a REMIC for any 
                taxable year shall in no event be less than the excess 
                inclusion for such taxable year, and
                    ``(C) any excess inclusion shall be disregarded for 
                purposes of computing the alternative tax net operating 
                loss deduction.
        The preceding sentence shall not apply to any organization to 
        which section 593 applies, except to the extent provided in 
        regulations prescribed by the Secretary under paragraph (2).''
            (2) Effective date.--The amendment made by paragraph (1) 
        shall take effect as if included in the amendments made by 
        section 671 of the Tax Reform Act of 1986 unless the taxpayer 
        elects to apply such amendment only to taxable years beginning 
        after the date of the enactment of this Act.
    (j) Exemption From Harbor Maintenance Tax for Certain Passengers.--
            (1) In general.--Subparagraph (D) of section 4462(b)(1) 
        (relating to special rule for Alaska, Hawaii, and possessions) 
        is amended by inserting before the period the following: ``, or 
        passengers transported on United States flag vessels operating 
        solely within the State waters of Alaska or Hawaii and adjacent 
        international waters''.
            (2) Effective date.--The amendment made by paragraph (1) 
        shall take effect as if included in the amendments made by 
        section 1402(a) of the Harbor Maintenance Revenue Act of 1986.
    (k) Amendments Related to Revenue Provisions of Energy Policy Act 
of 1992.--
            (1) Effective with respect to taxable years beginning after 
        December 31, 1990, subclause (II) of section 53(d)(1)(B)(iv) is 
        amended to read as follows:
                                    ``(II) the adjusted net minimum tax 
                                for any taxable year is the amount of 
                                the net minimum tax for such year 
                                increased in the manner provided in 
                                clause (iii).''
            (2) Subsection (g) of section 179A is redesignated as 
        subsection (f).
            (3) Subparagraph (E) of section 6724(d)(3) is amended by 
        striking ``section 6109(f)'' and inserting ``section 6109(h)''.
            (4)(A) Subsection (d) of section 30 is amended--
                    (i) by inserting ``(determined without regard to 
                subsection (b)(3))'' before the period at the end of 
                paragraph (1) thereof, and
                    (ii) by adding at the end thereof the following new 
                paragraph:
            ``(4) Election to not take credit.--No credit shall be 
        allowed under subsection (a) for any vehicle if the taxpayer 
        elects to not have this section apply to such vehicle.''
            (B) Subsection (m) of section 6501 (as redesignated by 
        section 101) is amended by striking ``section 40(f)'' and 
        inserting ``section 30(d)(4), 40(f)''.
            (5) Subclause (III) of section 501(c)(21)(D)(ii) is amended 
        by striking ``section 101(6)'' and inserting ``section 101(7)'' 
        and by striking ``1752(6)'' and inserting ``1752(7)''.
            (6) Paragraph (1) of section 1917(b) of the Energy Policy 
        Act of 1992 shall be applied as if ``at a rate'' appeared 
        instead of ``at the rate'' in the material proposed to be 
        stricken.
            (7) Paragraph (2) of section 1921(b) of the Energy Policy 
        Act of 1992 shall be applied as if a comma appeared after 
        ``(2)'' in the material proposed to be stricken.
            (8) Subsection (a) of section 1937 of the Energy Policy Act 
        of 1992 shall be applied as if ``Subpart B'' appeared instead 
        of ``Subpart C''.
    (l) Treatment of Qualified Football Coaches Plan.--
            (1) In general.--Section 1022 of title II of the Employee 
        Retirement Income Security Act of 1974 is amended by adding at 
        the end thereof the following new subsection:
    ``(l) Qualified Football Coaches Plan.--For purposes of determining 
the qualified plan status of a qualified football coaches plan, section 
3(37)(F) shall be treated as part of this title and a qualified 
football coaches plan shall be treated as a multiemployer collectively 
bargained plan for purposes of the Internal Revenue Code of 1986.''
            (2) Effective date.--The amendment made by paragraph (1) 
        shall apply to years beginning after the date of the enactment 
        of Public Law 100-202.
    (m) Determination of Unrecovered Investment in Annuity Contract.--
            (1) In general.--Subparagraph (A) of section 72(b)(4) is 
        amended by inserting ``(determined without regard to subsection 
        (c)(2))'' after ``contract''.
            (2) Effective date.--The amendment made by paragraph (1) 
        shall take effect as if included in the amendments made by 
        section 1122(c) of the Tax Reform Act of 1986.
    (n) Modifications to Election To Include Child's Income on Parent's 
Return.--
            (1) Eligibility for election.--Clause (ii) of section 
        1(g)(7)(A) (relating to election to include certain unearned 
        income of child on parent's return) is amended to read as 
        follows:
                            ``(ii) such gross income is more than the 
                        amount described in paragraph (4)(A)(ii)(I) and 
                        less than 10 times the amount so described,''.
            (2) Computation of tax.--Subparagraph (B) of section 
        1(g)(7) (relating to income included on parent's return) is 
        amended--
                    (A) by striking ``$1,000'' in clause (i) and 
                inserting ``twice the amount described in paragraph 
                (4)(A)(ii)(I)'', and
                    (B) by amending subclause (II) of clause (ii) to 
                read as follows:
                                    ``(II) for each such child, 15 
                                percent of the lesser of the amount 
                                described in paragraph (4)(A)(ii)(I) or 
                                the excess of the gross income of such 
                                child over the amount so described, 
                                and''.
            (3) Minimum tax.--Subparagraph (B) of section 59(j)(1) is 
        amended by striking ``$1,000'' and inserting ``twice the amount 
        in effect for the taxable year under section 63(c)(5)(A)''.
            (4) Effective date.--The amendments made by this subsection 
        shall apply to taxable years beginning after December 31, 1994.
    (o) Miscellaneous Clerical Amendments.--
            (1) Subclause (II) of section 56(g)(4)(C)(ii) is amended by 
        striking ``of the subclause'' and inserting ``of subclause''.
            (2) Paragraph (2) of section 72(m) is amended by inserting 
        ``and'' at the end of subparagraph (A), by striking 
        subparagraph (B), and by redesignating subparagraph (C) as 
        subparagraph (B).
            (3) Paragraph (2) of section 86(b) is amended by striking 
        ``adusted'' and inserting ``adjusted''.
            (4)(A) The heading for section 112 is amended by striking 
        ``combat pay'' and inserting ``combat zone compensation''.
            (B) The item relating to section 112 in the table of 
        sections for part III of subchapter B of chapter 1 is amended 
        by striking ``combat pay'' and inserting ``combat zone 
        compensation''.
            (C) Paragraph (1) of section 3401(a) is amended by striking 
        ``combat pay'' and inserting ``combat zone compensation''.
            (5) Clause (i) of section 172(h)(3)(B) is amended by 
        striking the comma at the end thereof and inserting a period.
            (6) Clause (ii) of section 543(a)(2)(B) is amended by 
        striking ``section 563(c)'' and inserting ``section 563(d)''.
            (7) Paragraph (1) of section 958(a) is amended by striking 
        ``sections 955(b)(1)(A) and (B), 955(c)(2)(A)(ii), and 
        960(a)(1)'' and inserting ``section 960(a)(1)''.
            (8) Subsection (g) of section 642 is amended by striking 
        ``under 2621(a)(2)'' and inserting ``under section 
        2621(a)(2)''.
            (9) Section 1463 is amended by striking ``this subsection'' 
        and inserting ``this section''.
            (10) Subsection (k) of section 3306 is amended by inserting 
        a period at the end thereof.
            (11) The item relating to section 4472 in the table of 
        sections for subchapter B of chapter 36 is amended by striking 
        ``and special rules''.
            (12) Paragraph (2) of section 4978(b) is amended by 
        striking the period at the end of subparagraph (A) and 
        inserting a comma, and by striking the period and quotation 
        marks at the end of subparagraph (B) and inserting a comma.
            (13) Paragraph (3) of section 5134(c) is amended by 
        striking ``section 6662(a)'' and inserting ``section 6665(a)''.
            (14) Paragraph (2) of section 5206(f) is amended by 
        striking ``section 5(e)'' and inserting ``section 105(e)''.
            (15) Paragraph (1) of section 6050B(c) is amended by 
        striking ``section 85(c)'' and inserting ``section 85(b)''.
            (16) Subsection (k) of section 6166 is amended by striking 
        paragraph (6).
            (17) Subsection (e) of section 6214 is amended to read as 
        follows:
    ``(e) Cross Reference.--

                                  ``For provision giving Tax Court 
jurisdiction to order a refund of an overpayment and to award 
sanctions, see section 6512(b)(2).''
            (18) The section heading for section 6043 is amended by 
        striking the semicolon and inserting a comma.
            (19) The item relating to section 6043 in the table of 
        sections for subpart B of part III of subchapter A of chapter 
        61 is amended by striking the semicolon and inserting a comma.
            (20) The table of sections for part I of subchapter A of 
        chapter 68 is amended by striking the item relating to section 
        6662.
            (21)(A) Section 7232 is amended--
                    (i) by striking ``lubricating oil,'' in the 
                heading, and
                    (ii) by striking ``lubricating oil,'' in the text.
            (B) The table of sections for part II of subchapter A of 
        chapter 75 is amended by striking ``lubricating oil,'' in the 
        item relating to section 7232.
            (22) Paragraph (1) of section 6701(a) of the Omnibus Budget 
        Reconciliation Act of 1989 is amended by striking ``subclause 
        (IV)'' and inserting ``subclause (V)''.
            (23) Clause (ii) of section 7304(a)(2)(D) of such Act is 
        amended by striking ``subsection (c)(2)'' and inserting 
        ``subsection (c)''.
            (24) Paragraph (1) of section 7646(b) of such Act is 
        amended by striking ``section 6050H(b)(1)'' and inserting 
        ``section 6050H(b)(2)''.
            (25) Paragraph (10) of section 7721(c) of such Act is 
        amended by striking ``section 6662(b)(2)(C)(ii)'' and inserting 
``section 6661(b)(2)(C)(ii)''.
            (26) Subparagraph (A) of section 7811(i)(3) of such Act is 
        amended by inserting ``the first place it appears'' before ``in 
        clause (i)''.
            (27) Paragraph (10) of section 7841(d) of such Act is 
        amended by striking ``section 381(a)'' and inserting ``section 
        381(c)''.
            (28) Paragraph (2) of section 7861(c) of such Act is 
        amended by inserting ``the second place it appears'' before 
        ``and inserting''.
            (29) Paragraph (1) of section 460(b) is amended by striking 
        ``the look-back method of paragraph (3)'' and inserting ``the 
        look-back method of paragraph (2)''.
            (30) Subparagraph (C) of section 50(a)(2) is amended by 
        striking ``subsection (c)(4)'' and inserting ``subsection 
        (d)(5)''.
            (31) Subparagraph (B) of section 172(h)(4) is amended by 
        striking the material following the heading and preceding 
        clause (i) and inserting ``For purposes of subsection (b)(2)--
        ''.
            (32) Subparagraph (A) of section 355(d)(7) is amended by 
        inserting ``section'' before ``267(b)''.
            (33) Subparagraph (C) of section 420(e)(1) is amended by 
        striking ``mean'' and inserting ``means''.
            (34) Paragraph (4) of section 537(b) is amended by striking 
        ``section 172(i)'' and inserting ``section 172(f)''.
            (35) Subparagraph (B) of section 613(e)(1) is amended by 
        striking the comma at the end thereof and inserting a period.
            (36) Paragraph (4) of section 856(a) is amended by striking 
        ``section 582(c)(5)'' and inserting ``section 582(c)(2)''.
            (37) Sections 904(f)(2)(B)(i) and 907(c)(4)(B)(iii) are 
        each amended by inserting ``(as in effect on the day before the 
        date of the enactment of the Revenue Reconciliation Act of 
        1990)'' after ``section 172(h)''.
            (38) Subsection (b) of section 936 is amended by striking 
        ``subparagraphs (D)(ii)(I)'' and inserting ``subparagraphs 
        (D)(ii)''.
            (39) Subsection (c) of section 2104 is amended by striking 
        ``subparagraph (A), (C), or (D) of section 861(a)(1)'' and 
        inserting ``section 861(a)(1)(A)''.
            (40) Subparagraph (A) of section 280A(c)(1) is amended to 
        read as follows:
                    ``(A) as the principal place of business for any 
                trade or business of the taxpayer,''.
            (41) Section 6038 is amended by redesignating the 
        subsection relating to cross references as subsection (f).
            (42) Clause (iv) of section 6103(e)(1)(A) is amended by 
        striking all that follows ``provisions of'' and inserting 
        ``section 1(g) or 59(j);''.
            (43) The subsection (f) of section 6109 of the Internal 
        Revenue Code of 1986 which was added by section 2201(d) of 
        Public Law 101-624 is redesignated as subsection (g).
            (44) Subsection (b) of section 7454 is amended by striking 
        ``section 4955(e)(2)'' and inserting ``section 4955(f)(2)''.
            (45) Subsection (d) of section 11231 of the Revenue 
        Reconciliation Act of 1990 shall be applied as if ``comma'' 
        appeared instead of ``period'' and as if the paragraph (9) 
        proposed to be added ended with a comma.
            (46) Paragraph (1) of section 11303(b) of the Revenue 
        Reconciliation Act of 1990 shall be applied as if ``paragraph'' 
        appeared instead of ``subparagraph'' in the material proposed 
        to be stricken.
            (47) Subsection (f) of section 11701 of the Revenue 
        Reconciliation Act of 1990 is amended by inserting ``(relating 
        to definitions)'' after ``section 6038(e)''.
            (48) Subsection (i) of section 11701 of the Revenue 
        Reconciliation Act of 1990 shall be applied as if 
        ``subsection'' appeared instead of ``section'' in the material 
        proposed to be stricken.
            (49) Subparagraph (B) of section 11801(c)(2) of the Revenue 
        Reconciliation Act of 1990 shall be applied as if ``section 
        56(g)'' appeared instead of ``section 59(g)''.
            (50) Subparagraph (C) of section 11801(c)(8) of the Revenue 
        Reconciliation Act of 1990 shall be applied as if 
        ``reorganizations'' appeared instead of ``reorganization'' in 
        the material proposed to be stricken.
            (51) Subparagraph (H) of section 11801(c)(9) of the Revenue 
        Reconciliation Act of 1990 shall be applied as if ``section 
        1042(c)(1)(B)'' appeared instead of ``section 1042(c)(2)(B)''.
            (52) Subparagraph (F) of section 11801(c)(12) of the 
        Revenue Reconciliation Act of 1990 shall be applied as if ``and 
        (3)'' appeared instead of ``and (E)''.
            (53) Subparagraph (A) of section 11801(c)(22) of the 
        Revenue Reconciliation Act of 1990 shall be applied as if 
        ``chapters 21'' appeared instead of ``chapter 21'' in the 
        material proposed to be stricken.
            (54) Paragraph (3) of section 11812(b) of the Revenue 
        Reconciliation Act of 1990 shall be applied by not executing 
        the amendment therein to the heading of section 42(d)(5)(B).
            (55) Clause (i) of section 11813(b)(9)(A) of the Revenue 
        Reconciliation Act of 1990 shall be applied as if a comma 
        appeared after ``(3)(A)(ix)'' in the material proposed to be 
        stricken.
            (56) Subparagraph (F) of section 11813(b)(13) of the 
        Revenue Reconciliation Act of 1990 shall be applied as if 
        ``tax'' appeared after ``investment'' in the material proposed 
        to be stricken.
            (57) Paragraph (19) of section 11813(b) of the Revenue 
        Reconciliation Act of 1990 shall be applied as if ``Paragraph 
        (20) of section 1016(a), as redesignated by section 11801,'' 
        appeared instead of ``Paragraph (21) of section 1016(a)''.
            (58) Paragraph (5) section 8002(a) of the Surface 
        Transportation Revenue Act of 1991 shall be applied as if 
        ``4481(e)'' appeared instead of ``4481(c)''.
            (59) Section 7872 is amended--
                    (A) by striking ``foregone'' each place it appears 
                in subsections (a) and (e)(2) and inserting 
                ``forgone'', and
                    (B) by striking ``Foregone'' in the heading for 
                subsection (e) and the heading for paragraph (2) of 
                subsection (e) and inserting ``Forgone''.
            (60) Paragraph (7) of section 7611(h) is amended by 
        striking ``approporiate'' and inserting ``appropriate''.
            (61) The heading of paragraph (3) of section 419A(c) is 
        amended by striking ``severence'' and inserting ``severance''.
            (62) Clause (ii) of section 807(d)(3)(B) is amended by 
        striking ``Commissoners' '' and inserting ``Commissioners' ''.
            (63) Subparagraph (B) of section 1274A(c)(1) is amended by 
        striking ``instument'' and inserting ``instrument''.
            (64) Subparagraph (B) of section 724(d)(3) by striking 
        ``Subparagaph'' and inserting ``Subparagraph''.
            (65) The last sentence of paragraph (2) of section 42(c) is 
        amended by striking ``of 1988''.
            (66) Paragraph (1) of section 9707(d) is amended by 
        striking ``diligence,'' and inserting ``diligence''.
            (67) Subsection (c) of section 4977 is amended by striking 
        ``section 132(i)(2)'' and inserting ``section 132(h)''.
            (68) The last sentence of section 401(a)(20) is amended by 
        striking ``section 211'' and inserting ``section 521''.
            (69) Subparagraph (A) of section 402(g)(3) is amended by 
        striking ``subsection (a)(8)'' and inserting ``subsection 
        (e)(3)''.
            (70) The last sentence of section 403(b)(10) is amended by 
        striking ``an direct'' and inserting ``a direct''.
            (71) Subparagraph (A) of section 4973(b)(1) is amended by 
        striking ``sections 402(c)'' and inserting ``section 402(c)''.
            (72) Paragraph (12) of section 3405(e) is amended by 
        striking ``(b)(3)'' and inserting ``(b)(2)''.
            (73) Paragraph (41) of section 521(b) of the Unemployment 
        Compensation Amendments of 1992 shall be applied as if 
        ``section'' appeared instead of ``sections'' in the material 
        proposed to be stricken.
            (74) Paragraph (27) of section 521(b) of the Unemployment 
        Compensation Amendments of 1992 shall be applied as if 
        ``Section 691(c)(5)'' appeared instead of ``Section 691(c)''.
            (75) Paragraph (5) of section 860F(a) is amended by 
        striking ``paragraph (1)'' and inserting ``paragraph (2)''.
            (76) Paragraph (1) of section 415(k) is amended by adding 
        ``or'' at the end of subparagraph (C), by striking 
        subparagraphs (D) and (E), and by redesignating subparagraph 
        (F) as subparagraph (D).
            (77) Paragraph (2) of section 404(a) is amended by striking 
        ``(18),''.
            (78) Clause (ii) of section 72(p)(4)(A) is amended to read 
        as follows:
                            ``(ii) Special rule.--The term `qualified 
                        employer plan' shall not include any plan which 
                        was (or was determined to be) a qualified 
                        employer plan or a government plan.''
            (79) Sections 461(i)(3)(C) and 1274(b)(3)(B)(i) are each 
        amended by striking ``section 6662(d)(2)(C)(ii)'' and inserting 
        ``section 6662(d)(2)(C)(iii)''.
            (80) Subsection (a) of section 164 is amended by striking 
        the paragraphs relating to the generation-skipping tax and the 
        environmental tax imposed by section 59A and by inserting after 
        paragraph (3) the following new paragraphs:
            ``(4) The GST tax imposed on income distributions.
            ``(5) The environmental tax imposed by section 59A.''
                                 <all>
```