Union Calendar No. 296

106TH CONGRESS

2D SESSION H. R. 7

[Report No. 106–546]

A BILL

To amend the Internal Revenue Code of 1986 to

allow tax-free expenditures from education individual retirement accounts for elementary andsecondary school expenses, to increase the maximum annual amount of contributions to such accounts, and for other purposes.

MARCH 24, 2000

Reported with an amendment, committed to the Committee of the Whole House on the State of the Union,

and ordered to be printed
IB

Union Calendar No. 296

106TH CONGRESS

2D SESSION H. R. 7

[Report No. 106–546]

To amend the Internal Revenue Code of 1986 to allow tax-free expenditures

from education individual retirement accounts for elementary and secondary school expenses, to increase the maximum annual amount of

contributions to such accounts, and for other purposes.

IN THE HOUSE OF REPRESENTATIVES

MARCH 1, 1999

Mr. HULSHOF (for himself and Mr. LIPINSKI) introduced the following bill;

which was referred to the Committee on Ways and Means

MARCH 24, 2000

Additional sponsors: Mrs. EMERSON, Mr. PAUL, Mr. KNOLLENBERG, Mr.

WATKINS, Mr. GREEN of Wisconsin, Mr. PITTS, Mr. TANCREDO, Mr.

SESSIONS, Mr. PETERSON of Pennsylvania, Mr. SAM JOHNSON of Texas,

Mr. DEAL of Georgia, Mr. MCKEON, Mr. POMBO, Mr. ADERHOLT, Mr.

SALMON, Mr. RYAN of Wisconsin, Mr. WELDON of Florida, Mr. CRANE,

Mr. FOLEY, Mr. HOSTETTLER, Mr. GARY MILLER of California, Mr.

SUNUNU, Mr. FORBES, Mr. BACHUS, Mr. CALVERT, Ms. GRANGER, Mr.

KOLBE, Mr. BAKER, Mr. BALLENGER, Ms. PRYCE of Ohio, Mr. CAMP,

Mr. NETHERCUTT, Mr. SCHAFFER, Mrs. BIGGERT, Mr. ROHRABACHER,

Mr. MILLER of Florida, Mr. HERGER, Mr. EHRLICH, Mr. METCALF, Mr.

SHIMKUS, Mr. THOMAS, Mr. ROGAN, Mr. TERRY, Mr. SMITH of New Jersey, and Mr. DEMINT

MARCH 24, 2000

Reported with an amendment, committed to the Committee of the Whole

House on the State of the Union, and ordered to be printed
2

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[Strike out all after the enacting clause and insert the part printed in italic]

[For text of introduced bill, see copy of bill as introduced on March 1, 1999]

A BILL

To amend the Internal Revenue Code of 1986 to allow taxfree expenditures from education individual retirement

accounts for elementary and secondary school expenses,

to increase the maximum annual amount of contributions

to such accounts, and for other purposes.

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

3 SECTION 1. SHORT TITLE; ETC.

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

5 ‘‘Education Savings and School Excellence Act of 2000’’.

6 (b) AMENDMENT OF 1986 CODE.—Except as otherwise

7 expressly provided, whenever in this Act an amendment or

8 repeal is expressed in terms of an amendment to, or repeal

9 of, a section or other provision, the reference shall be consid10 ered to be made to a section or other provision of the Inter11 nal Revenue Code of 1986.

12 SEC. 2. MODIFICATIONS TO EDUCATION INDIVIDUAL RE13 TIREMENT ACCOUNTS.

14 (a) MAXIMUM ANNUAL CONTRIBUTIONS.—

15 (1) IN GENERAL.—Section 530(b)(1)(A)(iii) (de16 fining education individual retirement account) is

17 amended by striking ‘‘$500’’ and inserting ‘‘$2,000’’.
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1 (2) CONFORMING AMENDMENT.—Section

2 4973(e)(1)(A) is amended by striking ‘‘$500’’ and in3 serting ‘‘$2,000’’.

4 (b) TAX-FREE EXPENDITURES FOR ELEMENTARY AND

5 SECONDARY SCHOOL EXPENSES.—

6 (1) IN GENERAL.—Section 530(b)(2) (defining

7 qualified higher education expenses) is amended to

8 read as follows:

9 ‘‘(2) QUALIFIED EDUCATION EXPENSES.—

10 ‘‘(A) IN GENERAL.—The term ‘qualified

11 education expenses’ means—

12 ‘‘(i) qualified higher education ex13 penses (as defined in section 529(e)(3)), and

14 ‘‘(ii) qualified elementary and sec15 ondary education expenses (as defined in

16 paragraph (4)).

17 ‘‘(B) QUALIFIED STATE TUITION PRO18 GRAMS.—Such term shall include any contribu19 tion to a qualified State tuition program (as de20 fined in section 529(b)) on behalf of the des21 ignated beneficiary (as defined in section

22 529(e)(1)); but there shall be no increase in the

23 investment in the contract for purposes of apply24 ing section 72 by reason of any portion of such
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1 contribution which is not includible in gross in2 come by reason of subsection (d)(2).’’.

3 (2) QUALIFIED ELEMENTARY AND SECONDARY

4 EDUCATION EXPENSES.—Section 530(b) (relating to

5 definitions and special rules) is amended by adding

6 at the end the following new paragraph:

7 ‘‘(4) QUALIFIED ELEMENTARY AND SECONDARY

8 EDUCATION EXPENSES.—

9 ‘‘(A) IN GENERAL.—The term ‘qualified ele10 mentary and secondary education expenses’

11 means—

12 ‘‘(i) expenses for tuition, fees, academic

13 tutoring, special needs services, books, sup14 plies, computer equipment (including re15 lated software and services), and other

16 equipment which are incurred in connection

17 with the enrollment or attendance of the

18 designated beneficiary of the trust as an ele19 mentary or secondary school student at a

20 public, private, or religious school, and

21 ‘‘(ii) expenses for room and board, uni22 forms, transportation, and supplementary

23 items and services (including extended day

24 programs) which are required or provided

25 by a public, private, or religious school in
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1 connection with such enrollment or attend2 ance.

3 ‘‘(B) SPECIAL RULE FOR

4 HOMESCHOOLING.—Such term shall include ex5 penses described in subparagraph (A)(i) in con6 nection with education provided by

7 homeschooling if the requirements of any appli8 cable State or local law are met with respect to

9 such education.

10 ‘‘(C) SCHOOL.—The term ‘school’ means

11 any school which provides elementary education

12 or secondary education (kindergarten through

13 grade 12), as determined under State law.’’.

14 (3) CONFORMING AMENDMENTS.—Section 530 is

15 amended—

16 (A) by striking ‘‘higher’’ each place it ap17 pears in subsections (b)(1) and (d)(2), and

18 (B) by striking ‘‘HIGHER’’ in the heading

19 for subsection (d)(2).

20 (c) WAIVER OF AGE LIMITATIONS FOR CHILDREN

21 WITH SPECIAL NEEDS.—Section 530(b)(1) (defining edu22 cation individual retirement account) is amended by add23 ing at the end the following flush sentence:

24 ‘‘The age limitations in subparagraphs (A)(ii) and

25 (E) and paragraphs (5) and (6) of subsection (d)
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1 shall not apply to any designated beneficiary with

2 special needs (as determined under regulations pre3 scribed by the Secretary).’’.

4 (d) ENTITIES PERMITTED TO CONTRIBUTE TO AC5 COUNTS.—Section 530(c)(1) (relating to reduction in per6 mitted contributions based on adjusted gross income) is

7 amended by striking ‘‘The maximum amount which a

8 contributor’’ and inserting ‘‘In the case of a contributor

9 who is an individual, the maximum amount the

10 contributor’’.

11 (e) TIME WHEN CONTRIBUTIONS DEEMED MADE.—

12 (1) IN GENERAL.—Section 530(b) (relating to

13 definitions and special rules), as amended by sub14 section (b)(2), is amended by adding at the end the

15 following new paragraph:

16 ‘‘(5) TIME WHEN CONTRIBUTIONS DEEMED

17 MADE.—An individual shall be deemed to have made

18 a contribution to an education individual retirement

19 account on the last day of the preceding taxable year

20 if the contribution is made on account of such taxable

21 year and is made not later than the time prescribed

22 by law for filing the return for such taxable year (not

23 including extensions thereof).’’.

24 (2) EXTENSION OF TIME TO RETURN EXCESS

25 CONTRIBUTIONS.—Subparagraph (C) of section
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1 530(d)(4) (relating to additional tax for distributions

2 not used for educational expenses) is amended—

3 (A) by striking clause (i) and inserting the

4 following new clause:

5 ‘‘(i) such distribution is made before

6 the first day of the sixth month of the tax7 able year following the taxable year, and’’,

8 and

9 (B) by striking ‘‘DUE DATE OF RETURN’’ in

10 the heading and inserting ‘‘CERTAIN DATE’’.

11 (f ) COORDINATION WITH HOPE AND LIFETIME

12 LEARNING CREDITS AND QUALIFIED TUITION PRO13 GRAMS.—

14 (1) IN GENERAL.—Section 530(d)(2)(C) is

15 amended to read as follows:

16 ‘‘(C) COORDINATION WITH HOPE AND LIFE17 TIME LEARNING CREDITS AND QUALIFIED TUI18 TION PROGRAMS.—For purposes of subparagraph

19 (A)—

20 ‘‘(i) CREDIT COORDINATION.—The

21 total amount of qualified higher education

22 expenses with respect to an individual for

23 the taxable year shall be reduced—

24 ‘‘(I) as provided in section

25 25A(g)(2), and
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1 ‘‘(II) by the amount of such ex2 penses which were taken into account

3 in determining the credit allowed to

4 the taxpayer or any other person under

5 section 25A.

6 ‘‘(ii) COORDINATION WITH QUALIFIED

7 TUITION PROGRAMS.—If, with respect to an

8 individual for any taxable year—

9 ‘‘(I) the aggregate distributions

10 during such year to which subpara11 graph (A) and section 529(c)(3)(B)

12 apply, exceed

13 ‘‘(II) the total amount of qualified

14 education expenses (after the applica15 tion of clause (i)) for such year,

16 the taxpayer shall allocate such expenses

17 among such distributions for purposes of de18 termining the amount of the exclusion

19 under subparagraph (A) and section

20 529(c)(3)(B).’’.

21 (2) CONFORMING AMENDMENTS.—

22 (A) Subsection (e) of section 25A is amend23 ed to read as follows:

24 ‘‘(e) ELECTION NOT TO HAVE SECTION APPLY.—A

25 taxpayer may elect not to have this section apply with re-
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1 spect to the qualified tuition and related expenses of an in2 dividual for any taxable year.’’.

3 (B) Section 135(d)(2)(A) is amended by

4 striking ‘‘allowable’’ and inserting ‘‘allowed’’.

5 (C) Section 530(d)(2)(D) is amended—

6 (i) by striking ‘‘or credit’’, and

7 (ii) by striking ‘‘CREDIT OR’’ in the

8 heading.

9 (D) Section 4973(e)(1) is amended by add10 ing ‘‘and’’ at the end of subparagraph (A), by

11 striking subparagraph (B), and by redesignating

12 subparagraph (C) as subparagraph (B).

13 (g) RENAMING EDUCATION INDIVIDUAL RETIREMENT

14 ACCOUNTS AS EDUCATION SAVINGS ACCOUNTS.—

15 (1) IN GENERAL.—

16 (A) Section 530 (as amended by the pre17 ceding provisions of this section) is amended by

18 striking ‘‘education individual retirement ac19 count’’ each place it appears and inserting ‘‘edu20 cation savings account’’.

21 (B) The heading for paragraph (1) of sec22 tion 530(b) is amended by striking ‘‘EDUCATION

23 INDIVIDUAL RETIREMENT ACCOUNT’’ and insert24 ing ‘‘EDUCATION SAVINGS ACCOUNT’’.
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1 (C) The heading for section 530 is amended

2 to read as follows:

3 ‘‘SEC. 530. EDUCATION SAVINGS ACCOUNTS.’’.

4 (D) The item in the table of contents for

5 part VII of subchapter F of chapter 1 relating to

6 section 530 is amended to read as follows:

‘‘Sec. 530. Education savings accounts.’’.

7 (2) CONFORMING AMENDMENTS.—

8 (A) The following provisions are each

9 amended by striking ‘‘education individual re10 tirement’’ each place it appears and inserting

11 ‘‘education savings’’:

12 (i) Section 25A(e)(2).

13 (ii) Section 26(b)(2)(E).

14 (iii) Section 72(e)(9).

15 (iv) Section 135(c)(2)(C).

16 (v) Subsections (a) and (e) of section

17 4973.

18 (vi) Subsections (c) and (e) of section

19 4975.

20 (vii) Section 6693(a)(2)(D).

21 (B) The headings for each of the following

22 provisions are amended by striking ‘‘EDUCATION

23 INDIVIDUAL RETIREMENT ACCOUNTS’’ each place

24 it appears and inserting ‘‘EDUCATION SAVINGS

25 ACCOUNTS’’.
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1 (i) Section 72(e)(9).

2 (ii) Section 135(c)(2)(C).

3 (iii) Section 4973(e).

4 (iv) Section 4975(c)(5).

5 (h) EFFECTIVE DATES.—

6 (1) IN GENERAL.—Except as provided in para7 graph (2), the amendments made by this section shall

8 apply to taxable years beginning after December 31,

9 2000.

10 (2) SUBSECTION (g).—The amendments made by

11 subsection (g) shall take effect on the date of the en12 actment of this Act.

13 SEC. 3. MODIFICATIONS TO QUALIFIED TUITION PRO14 GRAMS.

15 (a) SHORT TITLE.—This section may be cited as the

16 ‘‘Collegiate Learning and Student Savings (CLASS) Act’’.

17 (b) ELIGIBLE EDUCATIONAL INSTITUTIONS PER18 MITTED TO MAINTAIN QUALIFIED TUITION PROGRAMS.—

19 (1) IN GENERAL.—Section 529(b)(1) (defining

20 qualified State tuition program) is amended by in21 serting ‘‘or by one or more eligible educational insti22 tutions’’ after ‘‘maintained by a State or agency or

23 instrumentality thereof ’’.

24 (2) PRIVATE QUALIFIED TUITION PROGRAMS LIM25 ITED TO BENEFIT PLANS.—Clause (ii) of section
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1 529(b)(1)(A) is amended by inserting ‘‘in the case of

2 a program established and maintained by a State or

3 agency or instrumentality thereof,’’ before ‘‘may

4 make’’.

5 (3) CONFORMING AMENDMENTS.—

6 (A) Sections 72(e)(9), 135(c)(2)(C),

7 135(d)(1)(D), 529, 530(b)(2)(B), 4973(e), and

8 6693(a)(2)(C) are each amended by striking

9 ‘‘qualified State tuition’’ each place it appears

10 and inserting ‘‘qualified tuition’’.

11 (B) The headings for sections 72(e)(9) and

12 135(c)(2)(C) are each amended by striking

13 ‘‘QUALIFIED STATE TUITION’’ and inserting

14 ‘‘QUALIFIED TUITION’’.

15 (C) The headings for sections 529(b) and

16 530(b)(2)(B) are each amended by striking

17 ‘‘QUALIFIED STATE TUITION’’ and inserting

18 ‘‘QUALIFIED TUITION’’.

19 (D) The heading for section 529 is amended

20 by striking ‘‘STATE’’.

21 (E) The item relating to section 529 in the

22 table of sections for part VIII of subchapter F of

23 chapter 1 is amended by striking ‘‘State’’.

24 (c) EXCLUSION FROM GROSS INCOME OF EDUCATION

25 DISTRIBUTIONS FROM QUALIFIED TUITION PROGRAMS.—
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1 (1) IN GENERAL.—Section 529(c)(3)(B) (relating

2 to distributions) is amended to read as follows:

3 ‘‘(B) DISTRIBUTIONS FOR QUALIFIED HIGH4 ER EDUCATION EXPENSES.—For purposes of this

5 paragraph—

6 ‘‘(i) IN-KIND DISTRIBUTIONS.—No

7 amount shall be includible in gross income

8 under subparagraph (A) by reason of a dis9 tribution which consists of providing a ben10 efit to the distributee which, if paid for by

11 the distributee, would constitute payment of

12 a qualified higher education expense.

13 ‘‘(ii) CASH DISTRIBUTIONS.—In the

14 case of distributions not described in clause

15 (i), if—

16 ‘‘(I) such distributions do not ex17 ceed the qualified higher education ex18 penses (reduced by expenses described

19 in clause (i)), no amount shall be in20 cludible in gross income, and

21 ‘‘(II) in any other case, the

22 amount otherwise includible in gross

23 income shall be reduced by an amount

24 which bears the same ratio to such
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1 amount as such expenses bear to such

2 distributions.

3 ‘‘(iii) TREATMENT AS DISTRIBU4 TIONS.—Any benefit furnished to a des5 ignated beneficiary under a qualified tui6 tion program shall be treated as a distribu7 tion to the beneficiary for purposes of this

8 paragraph.

9 ‘‘(iv) COORDINATION WITH HOPE AND

10 LIFETIME LEARNING CREDITS.—The total

11 amount of qualified higher education ex12 penses with respect to an individual for the

13 taxable year shall be reduced—

14 ‘‘(I) as provided in section

15 25A(g)(2), and

16 ‘‘(II) by the amount of such ex17 penses which were taken into account

18 in determining the credit allowed to

19 the taxpayer or any other person under

20 section 25A.

21 ‘‘(v) COORDINATION WITH EDUCATION

22 INDIVIDUAL RETIREMENT ACCOUNTS.—If,

23 with respect to an individual for any tax24 able year—
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1 ‘‘(I) the aggregate distributions to

2 which clauses (i) and (ii) and section

3 530(d)(2)(A) apply, exceed

4 ‘‘(II) the total amount of qualified

5 higher education expenses otherwise

6 taken into account under clauses (i)

7 and (ii) (after the application of clause

8 (iv)) for such year,

9 the taxpayer shall allocate such expenses

10 among such distributions for purposes of de11 termining the amount of the exclusion

12 under clauses (i) and (ii) and section

13 530(d)(2)(A).’’.

14 (2) CONFORMING AMENDMENTS.—

15 (A) Section 135(d)(2)(B) is amended by

16 striking ‘‘the exclusion under section 530(d)(2)’’

17 and inserting ‘‘the exclusions under sections

18 529(c)(3)(B)(i) and 530(d)(2)’’.

19 (B) Section 221(e)(2)(A) is amended by in20 serting ‘‘529,’’ after ‘‘135,’’.

21 (d) ROLLOVER TO DIFFERENT PROGRAM FOR BENEFIT

22 OF SAME DESIGNATED BENEFICIARY.—Section

23 529(c)(3)(C) (relating to change in beneficiaries) is

24 amended—
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1 (1) by striking ‘‘transferred to the credit’’ in

2 clause (i) and inserting ‘‘transferred—

3 ‘‘(I) to another qualified tuition

4 program for the benefit of the des5 ignated beneficiary, or

6 ‘‘(II) to the credit’’,

7 (2) by adding at the end the following new

8 clause:

9 ‘‘(iii) LIMITATION ON CERTAIN ROLL10 OVERS.—Clause (i)(I) shall not apply to

11 any amount transferred with respect to a

12 designated beneficiary if, at any time dur13 ing the 1-year period ending on the day of

14 such transfer, any other amount was trans15 ferred with respect to such beneficiary

16 which was not includible in gross income by

17 reason of clause (i)(I).’’, and

18 (3) by inserting ‘‘OR PROGRAMS’’ after ‘‘BENE19 FICIARIES’’ in the heading.

20 (e) MEMBER OF FAMILY INCLUDES FIRST COUSIN.—

21 Section 529(e)(2) (defining member of family) is amended

22 by striking ‘‘and’’ at the end of subparagraph (B), by strik23 ing the period at the end of subparagraph (C) and by in24 serting ‘‘; and’’, and by adding at the end the following

25 new subparagraph:
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1 ‘‘(D) any first cousin of such beneficiary.’’.

2 (f ) DEFINITION OF QUALIFIED HIGHER EDUCATION

3 EXPENSES.—

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

5 529(e)(3) (relating to definition of qualified higher

6 education expenses) is amended to read as follows:

7 ‘‘(A) IN GENERAL.—The term ‘qualified

8 higher education expenses’ means—

9 ‘‘(i) tuition and fees required for the

10 enrollment or attendance of a designated

11 beneficiary at an eligible educational insti12 tution for courses of instruction of such ben13 eficiary at such institution, and

14 ‘‘(ii) expenses for books, supplies, and

15 equipment which are incurred in connection

16 with such enrollment or attendance, but not

17 to exceed the allowance for books and sup18 plies included in the cost of attendance (as

19 defined in section 472 of the Higher Edu20 cation Act of 1965 (20 U.S.C. 1087ll), as in

21 effect on the date of the enactment of the

22 Education Savings and School Excellence

23 Act of 2000 as determined by the eligible

24 educational institution.’’.
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1 (2) EXCEPTION FOR EDUCATION INVOLVING

2 SPORTS, ETC.—Paragraph (3) of section 529(e) (relat3 ing to qualified higher education expenses) is amend4 ed by adding at the end the following new subpara5 graph:

6 ‘‘(C) EXCEPTION FOR EDUCATION INVOLV7 ING SPORTS, ETC.—The term ‘qualified higher

8 education expenses’ shall not include expenses

9 with respect to any course or other education in10 volving sports, games, or hobbies unless such

11 course or other education is part of the bene12 ficiary’s degree program or is taken to acquire or

13 improve job skills of the beneficiary.’’.

14 (g) EFFECTIVE DATES.—

15 (1) IN GENERAL.—The amendments made by

16 this section shall apply to taxable years beginning

17 after December 31, 2000.

18 (2) QUALIFIED HIGHER EDUCATION EX19 PENSES.—The amendments made by subsection (f )

20 shall apply to amounts paid for courses beginning

21 after December 31, 2000.
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1 SEC. 4. EXCLUSION OF CERTAIN AMOUNTS RECEIVED

2 UNDER THE NATIONAL HEALTH SERVICE

3 CORPS SCHOLARSHIP PROGRAM, THE F. ED4 WARD HEBERT ARMED FORCES HEALTH PRO5 FESSIONS SCHOLARSHIP AND FINANCIAL AS6 SISTANCE PROGRAM, AND CERTAIN OTHER

7 PROGRAMS.

8 (a) IN GENERAL.—Section 117(c) (relating to the ex9 clusion from gross income amounts received as a qualified

10 scholarship) is amended—

11 (1) by striking ‘‘Subsections (a)’’ and inserting

12 the following:

13 ‘‘(1) IN GENERAL.—Except as provided in para14 graph (2), subsections (a)’’, and

15 (2) by adding at the end the following new para16 graph:

17 ‘‘(2) EXCEPTIONS.—Paragraph (1) shall not

18 apply to any amount received by an individual

19 under—

20 ‘‘(A) the National Health Service Corps

21 Scholarship program under section

22 338A(g)(1)(A) of the Public Health Service Act,

23 ‘‘(B) the Armed Forces Health Professions

24 Scholarship and Financial Assistance program

25 under subchapter I of chapter 105 of title 10,

26 United States Code,
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1 ‘‘(C) the National Institutes of Health Un2 dergraduate Scholarship program under section

3 487D of the Public Health Service Act, or

4 ‘‘(D) any State program determined by the

5 Secretary to have substantially similar objectives

6 as such programs.’’.

7 (b) EFFECTIVE DATES.—

8 (1) IN GENERAL.—Except as provided in para9 graph (2), the amendments made by subsection (a)

10 shall apply to amounts received in taxable years be11 ginning after December 31, 1993.

12 (2) STATE PROGRAMS.—Section 117(c)(2)(D) of

13 the Internal Revenue Code of 1986 (as added by the

14 amendments made by subsection (a)) shall apply to

15 amounts received in taxable years beginning after De16 cember 31, 1999.

17 SEC. 5. ADDITIONAL INCREASE IN ARBITRAGE REBATE EX18 CEPTION FOR GOVERNMENTAL BONDS USED

19 TO FINANCE EDUCATIONAL FACILITIES.

20 (a) IN GENERAL.—Section 148(f )(4)(D)(vii) (relating

21 to increase in exception for bonds financing public school

22 capital expenditures) is amended by striking ‘‘$5,000,000’’

23 the second place it appears and inserting ‘‘$10,000,000’’.
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1 (b) EFFECTIVE DATE.—The amendment made by sub2 section (a) shall apply to obligations issued in calendar

3 years beginning after December 31, 2000.

4 SEC. 6. MODIFICATION OF ARBITRAGE REBATE RULES AP5 PLICABLE TO PUBLIC SCHOOL CONSTRUC6 TION BONDS.

7 (a) IN GENERAL.—Subparagraph (C) of section

8 148(f )(4) is amended by adding at the end the following

9 new clause:

10 ‘‘(xviii) 4-YEAR SPENDING REQUIRE11 MENT FOR PUBLIC SCHOOL CONSTRUCTION

12 ISSUE.—

13 ‘‘(I) IN GENERAL.—In the case of

14 a public school construction issue, the

15 spending requirements of clause (ii)

16 shall be treated as met if at least 10

17 percent of the available construction

18 proceeds of the construction issue are

19 spent for the governmental purposes of

20 the issue within the 1-year period be21 ginning on the date the bonds are

22 issued, 30 percent of such proceeds are

23 spent for such purposes within the 2-

24 year period beginning on such date, 60

25 percent of such proceeds are spent for
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1 such purposes within the 3-year period

2 beginning on such date, and 100 per3 cent of such proceeds are spent for such

4 purposes within the 4-year period be5 ginning on such date.

6 ‘‘(II) PUBLIC SCHOOL CONSTRUC7 TION ISSUE.—For purposes of this

8 clause, the term ‘public school construc9 tion issue’ means any construction

10 issue if no bond which is part of such

11 issue is a private activity bond and all

12 of the available construction proceeds

13 of such issue are to be used for the con14 struction (as defined in clause (iv)) of

15 public school facilities to provide edu16 cation or training below the postsec17 ondary level or for the acquisition of

18 land that is functionally related and

19 subordinate to such facilities.

20 ‘‘(III) OTHER RULES TO APPLY.—

21 Rules similar to the rules of the pre22 ceding provisions of this subparagraph

23 which apply to clause (ii) also apply

24 to this clause.’’.
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1 (b) EFFECTIVE DATE.—The amendment made by this

2 section shall apply to obligations issued after December 31,

3 2000.

4 SEC. 7. ELIMINATION OF 60-MONTH LIMIT AND INCREASE

5 IN INCOME LIMITATION ON STUDENT LOAN

6 INTEREST DEDUCTION.

7 (a) ELIMINATION OF 60-MONTH LIMIT.—

8 (1) IN GENERAL.—Section 221 (relating to inter9 est on education loans) is amended by striking sub10 section (d) and by redesignating subsections (e), (f ),

11 and (g) as subsections (d), (e), and (f ), respectively.

12 (2) CONFORMING AMENDMENT.—Section

13 6050S(e) is amended by striking ‘‘section 221(e)(1)’’

14 and inserting ‘‘section 221(d)(1)’’.

15 (3) EFFECTIVE DATE.—The amendments made

16 by this subsection shall apply with respect to any

17 loan interest paid after December 31, 2000, in taxable

18 years ending after such date.

19 (b) INCREASE IN INCOME LIMITATION.—

20 (1) IN GENERAL.—Section 221(b)(2)(B) (relating

21 to amount of reduction) is amended by striking

22 clauses (i) and (ii) and inserting the following:

23 ‘‘(i) the excess of—
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1 ‘‘(I) the taxpayer’s modified ad2 justed gross income for such taxable

3 year, over

4 ‘‘(II) $45,000 ($90,000 in the case

5 of a joint return), bears to

6 ‘‘(ii) $15,000.’’.

7 (2) CONFORMING AMENDMENT.—Section

8 221(g)(1) is amended by striking ‘‘$40,000 and

9 $60,000 amounts’’ and inserting ‘‘$45,000 and

10 $90,000 amounts’’.

11 (3) EFFECTIVE DATE.—The amendments made

12 by this subsection shall apply to taxable years ending

13 after December 31, 2000.

14 SEC. 8. 2-PERCENT FLOOR ON MISCELLANEOUS ITEMIZED

15 DEDUCTIONS NOT TO APPLY TO QUALIFIED

16 PROFESSIONAL DEVELOPMENT EXPENSES OF

17 ELEMENTARY AND SECONDARY SCHOOL

18 TEACHERS.

19 (a) IN GENERAL.—Section 67(b) (defining miscella20 neous itemized deductions) is amended by striking ‘‘and’’

21 at the end of paragraph (11), by striking the period at the

22 end of paragraph (12) and inserting ‘‘, and’’, and by add23 ing at the end the following new paragraph:
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1 ‘‘(13) any deduction allowable for the qualified

2 professional development expenses of an eligible teach3 er.’’.

4 (b) DEFINITIONS.—Section 67 (relating to 2-percent

5 floor on miscellaneous itemized deductions) is amended by

6 adding at the end the following new subsection:

7 ‘‘(g) QUALIFIED PROFESSIONAL DEVELOPMENT EX8 PENSES OF ELIGIBLE TEACHERS.—For purposes of sub9 section (b)(13)—

10 ‘‘(1) QUALIFIED PROFESSIONAL DEVELOPMENT

11 EXPENSES.—

12 ‘‘(A) IN GENERAL.—The term ‘qualified

13 professional development expenses’ means ex14 penses in an amount not to exceed $1,000 for

15 any taxable year—

16 ‘‘(i) for tuition, fees, books, supplies,

17 equipment, and transportation required for

18 the enrollment or attendance of an indi19 vidual in a qualified course of instruction,

20 and

21 ‘‘(ii) with respect to which a deduction

22 is allowable under section 162 (determined

23 without regard to this section).
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1 ‘‘(B) QUALIFIED COURSE OF INSTRUC2 TION.—The term ‘qualified course of instruction’

3 means a course of instruction which—

4 ‘‘(i) is—

5 ‘‘(I) at an institution of higher

6 education (as defined in section 481 of

7 the Higher Education Act of 1965 (20

8 U.S.C. 1088), as in effect on the date

9 of the enactment of this subsection), or

10 ‘‘(II) a professional conference,

11 and

12 ‘‘(ii) is part of a program of profes13 sional development which is approved and

14 certified by the appropriate local edu15 cational agency as furthering the individ16 ual’s teaching skills.

17 ‘‘(C) LOCAL EDUCATIONAL AGENCY.—The term

18 ‘local educational agency’ has the meaning given such

19 term by section 14101 of the Elementary and Sec20 ondary Education Act of 1965, as so in effect.

21 ‘‘(2) ELIGIBLE TEACHER.—

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

23 teacher’ means an individual who is a kinder24 garten through grade 12 classroom teacher, in-
27

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1 structor, counselor, aide, or principal in an ele2 mentary or secondary school.

3 ‘‘(B) ELEMENTARY OR SECONDARY

4 SCHOOL.—The terms ‘elementary school’ and

5 ‘secondary school’ have the meanings given such

6 terms by section 14101 of the Elementary and

7 Secondary Education Act of 1965 (20 U.S.C.

8 8801), as so in effect.’’.

9 (c) EFFECTIVE DATE.—The amendments made by this

10 section shall apply to taxable years beginning after Decem11 ber 31, 2000.

12 SEC. 9. EXTENSION OF SPECIAL RULE FOR CHARITABLE

13 CONTRIBUTIONS OF COMPUTER TECH14 NOLOGY AND EQUIPMENT FOR ELEMENTARY

15 AND SECONDARY SCHOOL PURPOSES.

16 Subparagraph (F) of section 170(e)(6) (relating to ter17 mination) is amended by striking ‘‘2000’’ and inserting

18 ‘‘2001’’.