HOUSE OF REPRESENTATIVES

537

1995 T56.12

Hastings (WA)

Hayes

Hayworth

Hefley

Hefner

Heineman

Herger

Hilleary

Hilliard

Hinchey

Hobson

Hoekstra

Hoke

Holden

Horn

Hostettler

Houghton

Hoyer

Hunter

Hutchinson

Hyde

Inglis

Istook

Jackson-Lee

Jacobs

Jefferson

Johnson (CT)

Johnson (SD)

Johnson, E. B.

Johnson, Sam

Johnston

Jones

Kanjorski

Kaptur

Kasich

Kelly

Kennedy (MA)

Kennedy (RI)

Kennelly

Kildee

Kim

King

Kingston

Klink

Klug

Knollenberg

Kolbe

LaFalce

LaHood

Lantos

Largent

Latham

LaTourette

Laughlin

Lazio

Leach

Levin

Lewis (CA)

Lewis (GA)

Lewis (KY)

Lightfoot

Lincoln

Linder

Lipinski

Livingston

LoBiondo

Lofgren

Longley

Lowey

Lucas

Luther

Maloney

Manton

Manzullo

Markey

Martinez

Martini

Mascara

Matsui

McCarthy

McCollum

McCrery

McDade

McDermott

McHale

McHugh

McInnis

McIntosh

McKeon

McKinney

McNulty

Meehan

Meek

Menendez

Metcalf

Meyers

Mfume

Mica

Miller (CA)

Miller (FL)

Mineta

Minge

Mink

Moakley

Molinari

Mollohan

Montgomery

Moorhead

Moran

Morella

Murtha

Myers

Myrick

Nadler

Neal

Nethercutt

Neumann

Ney

Norwood

Nussle

Oberstar

Obey

Olver

Ortiz

Owens

Packard

Pallone

Parker

Paxon

Payne (NJ)

Payne (VA)

Peterson (FL)

Peterson (MN)

Petri

Pickett

Pombo

Pomeroy

Porter

Portman

Poshard

Pryce

Quillen

Quinn

Radanovich

Rahall

Ramstad

Rangel

Reed

Regula

Richardson

Rivers

Roberts

Roemer

Rogers

Rohrabacher

Ros-Lehtinen

Rose

Roth

Roukema

Roybal-Allard

Royce

Rush

Sabo

Salmon

Sanders

Sanford

Sawyer

Saxton

Scarborough

Schaefer

Schiff

Schroeder

Schumer

Scott

Sensenbrenner

Serrano

Shadegg

Shaw

Shays

Shuster

Sisisky

Skaggs

Skeen

Skelton

Slaughter

Smith (MI)

Smith (NJ)

Smith (TX)

Smith (WA)

Solomon

Souder

Spence

Spratt

Stearns

Stenholm

Stockman

Stokes

Studds

Stump

Stupak

Talent

Tanner

Tate

Tauzin

Taylor (MS)

Taylor (NC)

Tejeda

Thomas

Thompson

Thornberry

Thornton

Thurman

Tiahrt

Torkildsen

Torres

Torricelli

Towns

Traficant

Tucker

Upton

Velazquez

Vento

Visclosky

Volkmer

Vucanovich

Waldholtz

Walker

Walsh

Wamp

Ward

Waters

Watt (NC)

Watts (OK)

Weldon (FL)

Weldon (PA)

Weller

White

Whitfield

Wicker

Williams

Wilson

Wise

Wolf

Woolsey

Wyden

Wynn

Yates

Young (AK)

Young (FL)

Zeliff

Zimmer

Thereupon, Mr. BOEHNER, Chairman, announced that 416 Members had

been recorded, a quorum.

The Committee resumed its business.

After some further time,

T56.12 RECORDED VOTE

A recorded vote by electronic device

was ordered in the Committee of the

Whole on the following amendment in

the nature of a substitute submitted by

Mr. GEPHARDT:

Strike all after the enacting clause and insert the following:

SECTION 1. SHORT TITLE; TABLE CONTENTS.

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

the ‘‘School Act of 1995’’.

(b) TABLE OF CONTENTS.—

Sec. 1. Short title; table of contents.

TITLE I—INCENTIVES FOR INVESTMENT

IN HIGHER EDUCATION

Sec. 101. Deduction for higher education expenses.

Sec. 102. Deduction for interest on loans for

higher education.

Sec. 103. Expansion of education saving bond

program.

Sec. 104. Deduction for IRA contributions

available to all middle-income

taxpayers.

Sec. 105. Distributions from individual retirement plans may be used

without penalty to pay higher

education expenses.

Sec. 106. Spousal IRA computed on basis of

compensation of both spouses.

TITLE II—NONDEDUCTIBLE TAX-FREE

INDIVIDUAL RETIREMENT ACCOUNTS

Sec. 201. Establishment of nondeductible

tax-free individual retirement

accounts.

TITLE III—TAX BENEFITS CONTINGENT

ON FEDERAL BUDGET

Sec. 301. Effective dates of tax benefits delayed until Federal budget projected to be in balance.

Sec. 302. Termination of tax benefits if Federal budget deficit reduction

targets are not met.

TITLE IV—REVISIONS TO DISCRETIONARY SPENDING LIMITS AND

BUDGET PROCESS

Sec. 401. Short title.

Sec. 402. Discretionary spending limits.

Sec. 403. General statement and definitions.

Sec. 404. Enforcing discretionary spending

limits.

Sec. 405. Enforcing pay-as-you-go.

Sec. 406. Reports and orders.

Sec. 407. Technical correction.

Sec. 408. Effective date.

Sec. 409. Savings from provisions of this

title reducing discretionary

spending to be added to pay-asyou-go scorecard.

Sec. 410. Clarification of order in which adjustments to discretionary

spending limits are to be made.

TITLE V—PROVISIONS RELATING TO

INTERNATIONAL TAXATION

Sec. 501. Revision of tax rules on expatriation.

Sec. 502. Improved information reporting on

foreign trusts.

Sec. 503. Modification of rules relating to

foreign trusts having one or

more United States beneficiaries.

Sec. 504. Foreign persons not to be treated

as owners under grantor trust

rules.

Sec. 505. Gratuitous transfers by partnerships and foreign corporations.

Sec. 506. Information reporting regarding

large foreign gifts.

Sec. 507. Modification of rules relating to

foreign trusts which are not

grantor trusts.

Sec. 508. Residence of estates and trusts.

TITLE VI—EXTENSION OF AUTHORITY

OF FEDERAL COMMUNICATIONS COMMISSION TO USE COMPETITIVE BIDDING

Sec. 601. Extension of authority.

TITLE VII—PRIVATIZATION OF THE

UNITED STATES ENRICHMENT CORPORATION

Sec. 701. Short title and reference.

Sec. 702. Production facility.

Sec. 703. Definitions.

Sec. 704. Employees of the corporation.

Sec. 705. Marketing and contracting authority.

Sec. 706. Privatization of the corporation.

Sec. 707. Periodic certification of compliance.

Sec. 708. Licensing of other technologies.

Sec. 709. Conforming amendments.

TITLE I—INCENTIVES FOR INVESTMENT

IN HIGHER EDUCATION

SEC. 101. DEDUCTION FOR HIGHER EDUCATION

EXPENSES.

(a) DEDUCTION ALLOWED.— Part VII of subchapter B of chapter 1 of the Internal Revenue Code of 1986 (relating to additional

itemized deductions for individuals) is

amended by redesignating section 220 as section 221 and by inserting after section 219 the

following new section:

‘‘SEC. 220. HIGHER EDUCATION TUITION AND

FEES.

‘‘(a) ALLOWANCE OF DEDUCTION.—In the

case of an individual, there shall be allowed

as a deduction the amount of qualified higher education expenses paid by the taxpayer

during the taxable year.

‘‘(b) LIMITATIONS.—

‘‘(1) DOLLAR LIMITATION.—

‘‘(A) IN GENERAL.—The amount allowed as

a deduction under subsection (a) for any taxable year shall not exceed $10,000.

‘‘(B) PHASE-IN.—In the case of taxable

years beginning in 1996, 1997, or 1998, ‘$5,000’

shall be substituted for ‘$10,000’ in subparagraph (A).

‘‘(2) LIMITATION BASED ON MODIFIED ADJUSTED GROSS INCOME.—

‘‘(A) IN GENERAL.—The amount which

would (but for this paragraph) be taken into

account under paragraph (1) shall be reduced

(but not below zero) by the amount determined under subparagraph (B).

‘‘(B) AMOUNT OF REDUCTION.—The amount

determined under this subparagraph equals

the amount which bears the same ratio to

the amount which would be so taken into account as—

‘‘(i) the excess of—

‘‘(I) the taxpayer’s modified adjusted gross

income for such taxable year, over

‘‘(II) $50,000 ($75,000 in the case of a joint

return), bears to

‘‘(ii) $10,000.

‘‘(C) MODIFIED ADJUSTED GROSS INCOME.—

The term ‘modified adjusted gross income’

means the adjusted gross income of the taxpayer for the taxable year determined—

‘‘(i) without regard to this section and sections 911, 931, and 933, and

‘‘(ii) after the application of sections 86,

135, 219 and 469.

For purposes of sections 86, 135, 219, and 469,

adjusted gross income shall be determined

without regard to the deduction allowed

under this section.

‘‘(c) QUALIFIED HIGHER EDUCATION EXPENSES.—For purposes of this section—

‘‘(1) QUALIFIED HIGHER EDUCATION EXPENSES.—

‘‘(A) IN GENERAL.—The term ‘qualified

higher education expenses’ means tuition

and fees charged by an educational institution and required for the enrollment or attendance of—

‘‘(i) the taxpayer,

‘‘(ii) the taxpayer’s spouse, or

‘‘(iii) any dependent of the taxpayer with

respect to whom the taxpayer is allowed a

deduction under section 151,

as an eligible student at an institution of

higher education.

‘‘(B) EXCEPTION FOR EDUCATION INVOLVING

SPORTS, ETC.—Such term does not include expenses with respect to any course or other

education involving sports, games, or hobbies, unless such expenses—
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538

T56.12 APRIL 5

‘‘(i) are part of a degree program, or

‘‘(ii) are deductible under this chapter

without regard to this section.

‘‘(C) EXCEPTION FOR NONACADEMIC FEES.—

Such term does not include any student activity fees, athletic fees, insurance expenses,

or other expenses unrelated to a student’s

academic course of instruction.

‘‘(D) ELIGIBLE STUDENT.—For purposes of

subparagraph (A), the term ‘eligible student’

means a student who—

‘‘(i) meets the requirements of section

484(a)(1) of the Higher Education Act of 1965

(20 U.S.C. 1091(a)(1)), as in effect on the date

of the enactment of this section, and

‘‘(ii)(I) is carrying at least one-half the

normal full-time work load for the course of

study the student is pursuing, as determined

by the institution of higher education, or

‘‘(II) is enrolled in a course which enables

the student to improve the student’s job

skills or to acquire new job skills.

‘‘(E) IDENTIFICATION REQUIREMENT.—No deduction shall be allowed under subsection (a)

to a taxpayer with respect to an eligible student unless the taxpayer includes the name,

age, and taxpayer identification number of

such eligible student on the return of tax for

the taxable year.

‘‘(2) INSTITUTION OF HIGHER EDUCATION.—

The term ‘institution of higher education’

means an institution which—

‘‘(A) is described in section 481 of the Higher Education Act of 1965 (20 U.S.C. 1088), as in

effect on the date of the enactment of this

section, and

‘‘(B) is eligible to participate in programs

under title IV of such Act.

‘‘(d) SPECIAL RULES.—

‘‘(1) NO DOUBLE BENEFIT.—

‘‘(A) IN GENERAL.—No deduction shall be

allowed under subsection (a) for qualified

higher education expenses with respect to

which a deduction is allowable to the taxpayer under any other provision of this chapter unless the taxpayer irrevocably waives

his right to the deduction of such expenses

under such other provision.

‘‘(B) DEPENDENTS.—No deduction shall be

allowed under subsection (a) to any individual with respect to whom a deduction

under section 151 is allowable to another taxpayer for a taxable year beginning in the calendar year in which such individual’s taxable

year begins.

‘‘(C) SAVINGS BOND EXCLUSION.—A deduction shall be allowed under subsection (a) for

qualified higher education expenses only to

the extent the amount of such expenses exceeds the amount excludable under section

135 for the taxable year.

‘‘(2) LIMITATION ON TAXABLE YEAR OF DEDUCTION.—

‘‘(A) IN GENERAL.—A deduction shall be allowed under subsection (a) for any taxable

year only to the extent the qualified higher

education expenses are in connection with

enrollment at an institution of higher education during the taxable year.

‘‘(B) CERTAIN PREPAYMENTS ALLOWED.—

Subparagraph (A) shall not apply to qualified

higher education expenses paid during a taxable year if such expenses are in connection

with an academic term beginning during

such taxable year or during the 1st 3 months

of the next taxable year.

‘‘(3) ADJUSTMENT FOR CERTAIN SCHOLARSHIPS AND VETERANS BENEFITS.—The amount

of qualified higher education expenses otherwise taken into account under subsection (a)

with respect to the education of an individual shall be reduced (before the application of subsection (b)) by the sum of the

amounts received with respect to such individual for the taxable year as—

‘‘(A) a qualified scholarship which under

section 117 is not includable in gross income,

‘‘(B) an educational assistance allowance

under chapter 30, 31, 32, 34, or 35 of title 38,

United States Code, or

‘‘(C) a payment (other than a gift, bequest,

devise, or inheritance within the meaning of

section 102(a)) for educational expenses, or

attributable to enrollment at an eligible

educational institution, which is exempt

from income taxation by any law of the

United States.

‘‘(4) NO DEDUCTION FOR MARRIED INDIVIDUALS FILING SEPARATE RETURNS.—If the taxpayer is a married individual (within the

meaning of section 7703), this section shall

apply only if the taxpayer and the taxpayer’s

spouse file a joint return for the taxable

year. The preceeding sentence shall not

apply if the taxpayer lives apart from his

spouse at all times during the taxable year.

‘‘(5) NONRESIDENT ALIENS.—If the taxpayer

is a nonresident alien individual for any portion of the taxable year, this section shall

apply only if such individual is treated as a

resident alien of the United States for purposes of this chapter by reason of an election

under subsection (g) or (h) of section 6013.

‘‘(6) REGULATIONS.—The Secretary may

prescribe such regulations as may be necessary or appropriate to carry out this section, including regulations requiring recordkeeping and information reporting.’’

(b) DEDUCTION ALLOWED IN COMPUTING ADJUSTED GROSS INCOME.—Section 62(a) of such

Code is amended by inserting after paragraph (15) the following new paragraph:

‘‘(16) HIGHER EDUCATION TUITION AND

FEES.—The deduction allowed by section

220.’’

(c) CONFORMING AMENDMENT.—The table of

sections for part VII of subchapter B of chapter 1 of such Code is amended by striking the

item relating to section 220 and inserting:

‘‘Sec. 220. Higher education tuition and fees.

‘‘Sec. 221. Cross reference.’’

(d) EFFECTIVE DATE.—The amendments

made by this section shall apply to payments

made after December 31, 1995.

SEC. 102. DEDUCTION FOR INTEREST ON LOANS

FOR HIGHER EDUCATION.

(a) IN GENERAL.—Paragraph (2) of section

163(h) of the Internal Revenue Code of 1986

(defining personal interest) is amended by

striking ‘‘and’’ at the end of subparagraph

(D), by redesignating subparagraph (E) as

subparagraph (F), and by inserting after subparagraph (D) the following new subparagraph:

‘‘(E) any interest on a qualified higher education loan, and’’.

(b) QUALIFIED HIGHER EDUCATION LOAN DEFINED.—Paragraph (5) of section 163(h) of

such Code (relating to phase-in of limitations) is amended to read as follows:

‘‘(5) QUALIFIED HIGHER EDUCATION LOAN.—

For purposes of this subsection—

‘‘(A) IN GENERAL.—The term ‘qualified

higher education loan’ means any loan incurred by the taxpayer under a State or Federal student loan program to pay qualified

higher education expenses (as defined in section 220(c))—

‘‘(i) which are paid or incurred within a

reasonable period of time before or after the

indebtedness is incurred, and

‘‘(ii) which are attributable to education

furnished during a period during which the

recipient was an eligible student (as defined

in such section).

Such term includes indebtedness used to refinance indebtedness which qualifies as a

qualified higher education loan.

‘‘(B) REDUCTION OF BENEFIT FOR HIGHER INCOME TAXPAYERS.—

‘‘(i) IN GENERAL.—The amount of interest

which would (but for this subparagraph) be

taken into account under paragraph (2)(E)

for the taxable year shall be reduced (but not

below zero) by the amount which bears the

same ratio to the amount of such interest

as—

‘‘(I) the excess of the taxpayer’s modified

adjusted gross income for such taxable year

over $50,000 ($75,000 in the case of a joint return), bears to

‘‘(II) $10,000.

‘‘(ii) MODIFIED ADJUSTED GROSS INCOME.—

For purposes of clause (i), the term ‘modified

adjusted gross income’ means the adjusted

gross income of the taxpayer for the taxable

year determined—

‘‘(I) without regard to paragraph (2)(E) and

sections 911, 931, and 933, and

‘‘(II) after the application of sections 86,

135, 219, 220, and 469.

For purposes of sections 86, 135, 219, 220, and

469, adjusted gross income shall be determined without regard to the deduction allowed by reason of paragraph (2)(E).

‘‘(C) COORDINATION WITH LIMITATION ON

HOME EQUITY INDEBTEDNESS.—Any qualified

higher education loan shall not be taken into

account for purposes of applying the limitation of paragraph (3)(C)(ii).

‘‘(D) COORDINATION WITH SAVINGS BOND EXCLUSION.—The amount of qualified higher

education expenses for any taxable year otherwise taken into account under subparagraph (A) shall be reduced by any amount excludable from gross income under section 135

for such taxable year.

‘‘(E) OTHER RULES TO APPLY.—Rules similar

to the rules of subparagraphs (B) and (C) of

paragraph (1), and paragraphs (3), (4), and (5),

of section 220(d), shall apply for purposes of

this section.’’

(c) DEDUCTION ALLOWED IN COMPUTING ADJUSTED GROSS INCOME.—Section 62(a) of such

Code is amended by inserting after paragraph (16) the following new paragraph:

‘‘(17) INTEREST ON LOANS FOR HIGHER EDUCATION.—The deduction allowed by section

163 to the extent attributable to any qualified higher education loan (as defined in section 163(h)(5)).’’

(d) EFFECTIVE DATE.—The amendments

made by this section shall apply to amounts

paid or accrued after December 31, 1995.

SEC. 103. EXPANSION OF EDUCATION SAVING

BOND PROGRAM.

(a) HIGHER YIELD ON GUARANTEED EDUCATION PLAN BONDS.—Subsection (b) of section 3101 of title 31, United States Code, is

amended by adding at the end the following

new paragraph:

‘‘(3)(A) The Secretary shall issue savings

bonds which are designated as Guaranteed

Education Plan Bonds.

‘‘(B)(i) Except as provided in clause (ii) or

by the Secretary, Guaranteed Education

Plan Bonds shall have the same terms and

conditions as other savings bonds.

‘‘(ii) Guaranteed Education Plan Bonds, if

redeemed under circumstances such that the

Secretary is reasonably certain that the redemption proceeds will be used to pay the

qualified higher education expenses (as defined in section 135 of the Internal Revenue

Code of 1986) of the individual holding the

bond, shall have an investment yield which

is materially greater than the investment

yield when not so used.’’

(b) REDUCTION OF AGE LIMIT ON INDIVIDUAL

TO WHOM BOND ISSUED.—Subparagraph (B) of

section 135(b)(1) is amended by striking ‘‘age

24’’ and inserting ‘‘age 21’’.

(c) TAXPAYER NEED NOT BE PURCHASER OF

BOND.—Nothing in section 135 of the Internal

Revenue Code of 1986 shall be construed to

require that, in order for a savings bond to

be a qualified United States savings bond

under such section, the purchaser of the

bond must be the individual to whom the

bond is issued.

(d) LIMITATION ON INFLATION ADJUSTMENT.—Subparagraph (B) of section 135(b)(2)
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539

1995 T56.12

is amended by adding at the end the following new flush sentence:

‘‘In no event shall be adjustment under this

subparagraph increase the $40,000 amount to

more than $50,000 or the $60,000 amount to

more than $70,000.’’

(e) EFFECTIVE DATE.—

(1) IN GENERAL.—Except as provided in

paragraph (2), the amendments made by this

section shall apply to bonds issued after the

date of the enactment of this Act.

(2) SUBSECTION (d).—The amendment made

by subsection (d) shall apply to taxable years

beginning after December 31, 1995.

(e) AUTHORIZATION OF APPROPRIATIONS.—

There are authorized to be appropriated for

the administrative expenses of the Department of the Treasury to carry out the

amendment made by subsection (a)—

(1) $650,000 for the fiscal year beginning

after the date of the enactment of this Act,

and

(2) $11,900,000 for each following fiscal year.

SEC. 104. DEDUCTION FOR IRA CONTRIBUTIONS

AVAILABLE TO ALL MIDDLE-INCOME

TAXPAYERS.

(a) IN GENERAL.—Subparagraph (B) of section 219(g)(3) of the Internal Revenue Code of

1986 is amended—

(1) by striking ‘‘$40,000’’ in clause (i) and

inserting ‘‘$75,000’’, and

(2) by striking ‘‘$25,000’’ in clause (ii) and

inserting ‘‘$50,000’’.

(b) EFFECTIVE DATE.—The amendment

made by subsection (a) shall apply to contributions for taxable years beginning after

December 31, 1995.

SEC. 105. DISTRIBUTIONS FROM INDIVIDUAL RETIREMENT PLANS MAY BE USED

WITHOUT PENALTY TO PAY HIGHER

EDUCATION EXPENSES.

(a) IN GENERAL.—Paragraph (2) of section

72(t) of the Internal Revenue Code of 1986 (relating to exceptions to 10-percent additional

tax on early distributions from qualified retirement plans) is amended by adding at the

end thereof the following new subparagraph:

‘‘(D) DISTRIBUTIONS FROM INDIVIDUAL RETIREMENT PLANS FOR HIGHER EDUCATIONAL EXPENSES.—Distributions to an individual from

an individual retirement plan to the extent

such distributions during the taxable year do

not exceed the amount allowed as a deduction under section 220 to the taxpayer for

such taxable year.’’

(b) EFFECTIVE DATE.—The amendment

made by subsection (a) shall apply to distributions after December 31, 1995.

SEC. 106. SPOUSAL IRA COMPUTED ON BASIS OF

COMPENSATION OF BOTH SPOUSES.

(a) IN GENERAL.—Subsection (c) of section

219 of the Internal Revenue Code of 1986 (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.

‘‘(3) PHASEIN OF BENEFIT.—The amount determined under paragraph (1)(B)(ii) for any

taxable year beginning in a calendar year

shall not exceed the sum of—

‘‘(A) $250, plus

‘‘(B) the product of $250 and the number of

calendar years which such calendar year is

after 1996.’’

(b) TECHNICAL AMENDMENT.—Paragraph (2)

of section 219(f) of such Code (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 contributions for taxable years beginning after December 31, 1995.

TITLE II—NONDEDUCTIBLE TAX-FREE

INDIVIDUAL RETIREMENT ACCOUNTS

SEC. 201. ESTABLISHMENT OF NONDEDUCTIBLE

TAX-FREE INDIVIDUAL RETIREMENT

ACCOUNTS.

(a) IN GENERAL.—Subpart A of part I of

subchapter D of chapter 1 of the Internal

Revenue Code of 1986 (relating to pension,

profit-sharing, stock bonus plans, etc.) is

amended by inserting after section 408 the

following new section:

‘‘SEC. 408A. SPECIAL INDIVIDUAL RETIREMENT

ACCOUNTS.

‘‘(a) GENERAL RULE.—Except as provided in

this chapter, a special individual retirement

account shall be treated for purposes of this

title in the same manner as an individual retirement plan.

‘‘(b) SPECIAL INDIVIDUAL RETIREMENT ACCOUNT.—For purposes of this title, the term

‘special individual retirement account’

means an individual retirement plan which

is designated at the time of establishment of

the plan as a special individual retirement

account.

‘‘(c) TREATMENT OF CONTRIBUTIONS.—

‘‘(1) NO DEDUCTION ALLOWED.—No deduction

shall be allowed under section 219 for a contribution to a special individual retirement

account.

‘‘(2) CONTRIBUTION LIMIT.—The aggregate

amount of contributions for any taxable year

to all special individual retirement accounts

maintained for the benefit of an individual

shall not exceed the excess (if any) of—

‘‘(A) the maximum amount allowable as a

deduction under section 219 with respect to

such individual for such taxable year, over

‘‘(B) the amount so allowed.

‘‘(3) SPECIAL RULES FOR QUALIFIED TRANSFERS.—

‘‘(A) IN GENERAL.—No rollover contribution

may be made to a special individual retirement account unless it is a qualified transfer.

‘‘(B) LIMIT NOT TO APPLY.—The limitation

under paragraph (2) shall not apply to a

qualified transfer to a special individual retirement account.

‘‘(d) TAX TREATMENT OF DISTRIBUTIONS.—

‘‘(1) IN GENERAL.—Except as provided in

this subsection, any amount paid or distributed out of a special individual retirement

account shall not be included in the gross income of the distributee.

‘‘(2) EXCEPTION FOR EARNINGS ON CONTRIBUTIONS HELD LESS THAN 5 YEARS.—

‘‘(A) IN GENERAL.—Any amount distributed

out of a special individual retirement account which consists of earnings allocable to

contributions made to the account during

the 5-year period ending on the day before

such distribution shall be included in the

gross income of the distributee for the taxable year in which the distribution occurs.

‘‘(B) ORDERING RULE.—

‘‘(i) FIRST-IN, FIRST-OUT RULE.—Distributions from a special individual retirement

account shall be treated as having been

made—

‘‘(I) first from the earliest contribution

(and earnings allocable thereto) remaining

in the account at the time of the distribution, and

‘‘(II) then from other contributions (and

earnings allocable thereto) in the order in

which made.

‘‘(ii) ALLOCATIONS BETWEEN CONTRIBUTIONS

AND EARNINGS.—Any portion of a distribution

allocated to a contribution (and earnings allocable thereto) shall be treated as allocated

first to the earnings and then to the contribution.

‘‘(iii) ALLOCATION OF EARNINGS.—Earnings

shall be allocated to a contribution in such

manner as the Secretary may by regulations

prescribe.

‘‘(iv) CONTRIBUTIONS IN SAME YEAR.—Except

as provided in regulations, all contributions

made during the same taxable year may be

treated as 1 contribution for purposes of this

subparagraph.

‘‘(C) CROSS REFERENCE.—

‘‘For additional tax for early withdrawal,

see section 72(t).

‘‘(3) QUALIFIED TRANSFER.—

‘‘(A) IN GENERAL.—Paragraph (2) shall not

apply to any distribution which is transferred in a qualified transfer to another special individual retirement account.

‘‘(B) CONTRIBUTION PERIOD.—For purposes

of paragraph (2), the special individual retirement account to which any contributions

are transferred shall be treated as having

held such contributions during any period

such contributions were held (or are treated

as held under this subparagraph) by the special individual retirement account from

which transferred.

‘‘(4) SPECIAL RULES RELATING TO CERTAIN

TRANSFERS.—

‘‘(A) IN GENERAL.—Notwithstanding any

other provision of law, in the case of a qualified transfer to a special individual retirement account from an individual retirement

plan which is not a special individual retirement account—

‘‘(i) there shall be included in gross income

any amount which, but for the qualified

transfer, would be includible in gross income, but

‘‘(ii) section 72(t) shall not apply to such

amount.

‘‘(B) TIME FOR INCLUSION.—In the case of

any qualified transfer which occurs before

January 1, 1997, any amount includible in

gross income under subparagraph (A) with

respect to such contribution shall be includible ratably over the 4-taxable year period

beginning in the taxable year in which the

amount was paid or distributed out of the individual retirement plan.

‘‘(e) QUALIFIED TRANSFER.—For purposes of

this section—

‘‘(1) IN GENERAL.—The term ‘qualified

transfer’ means a transfer to a special individual retirement account from another such

account or from an individual retirement

plan but only if such transfer meets the requirements of section 408(d)(3).

‘‘(2) LIMITATION.—A transfer otherwise described in paragraph (1) shall not be treated

as a qualified transfer if the taxpayer’s adjusted gross income for the taxable year of

the transfer exceeds the sum of—

‘‘(A) the applicable dollar amount, plus

‘‘(B) the dollar amount applicable for the

taxable year under section 219(g)(2)(A)(ii).

This paragraph shall not apply to a transfer

from a special individual retirement account

to another special individual retirement account.

‘‘(3) DEFINITIONS.—For purposes of this subsection, the terms ‘adjusted gross income’

and ‘applicable dollar amount’ have the

meanings given such terms by section

219(g)(3), except subparagraph (A)(ii) thereof

shall be applied without regard to the phrase
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T56.12 APRIL 5

‘or the deduction allowable under this section’.’’

(b) EARLY WITHDRAWAL PENALTY.—Section

72(t) of such Code is amended by adding at

the end the following new paragraph:

‘‘(6) RULES RELATING TO SPECIAL INDIVIDUAL

RETIREMENT ACCOUNTS.—In the case of a special individual retirement account under section 408A—

‘‘(A) this subsection shall only apply to

distributions out of such account which consist of earnings allocable to contributions

made to the account during the 5-year period

ending on the day before such distribution,

and

‘‘(B) paragraph (2)(A)(i) shall not apply to

any distribution described in subparagraph

(A).’’

(c) EXCESS CONTRIBUTIONS.—Section 4973(b)

of such Code is amended by adding at the end

the following new sentence: ‘‘For purposes of

paragraphs (1)(B) and (2)(C), the amount allowable as a deduction under section 219

shall be computed without regard to section

408A.’’

(d) CONFORMING AMENDMENT.—The table of

sections for subpart A of part I of subchapter

D of chapter 1 of such Code is amended by inserting after the item relating to section 408

the following new item:

‘‘Sec. 408A. Special individual retirement accounts.’’

(e) EFFECTIVE DATE.—The amendments

made by this section shall apply to taxable

years beginning after December 31, 1995.

TITLE III—TAX BENEFITS CONTINGENT

ON FEDERAL BUDGET

SEC. 301. EFFECTIVE DATES OF TAX BENEFITS

DELAYED UNTIL FEDERAL BUDGET

PROJECTED TO BE IN BALANCE.

(a) IN GENERAL.—Notwithstanding any provision of title I or II of this Act and any

amendment made by such titles, except as

otherwise provided in this section—

(1) any reference in this such titles (or in

any amendment made by such titles) to 1995

shall be treated as a reference to the calendar year ending in the first successful deficit reduction year, and

(2) any reference in such titles (or in any

amendment made by such titles) to any later

calendar year shall be treated as a reference

to the calendar year which is the same number of years after such first calendar year as

such later year is after 1995.

(b) FIRST SUCCESSFUL DEFICIT REDUCTION

YEAR.—For purposes of this section and section 302—

(1) IN GENERAL.—The term ‘‘first successful

deficit reduction year’’ means the first fiscal

year beginning after the date of the enactment of this Act with respect to which there

is an OMB certification before the beginning

of such fiscal year that the budget of the

United States will be in balance by fiscal

year 2002 based upon estimates of enacted

legislation, including the amendments made

by this Act.

(2) OMB CERTIFICATION.—The term ‘‘OMB

certification’’ means a written certification

by the Director of the Office of Management

and Budget to the President and the Congress.

(c) CERTIFICATION DURING 1995.—Subsection

(a) shall not apply if there is an OMB certification made during 1995 that the budget of

the United States will be in balance by fiscal

year 2002 based upon estimates of enacted

legislation, including the amendments made

by this Act.

SEC. 302. TERMINATION OF TAX BENEFITS IF

FEDERAL BUDGET DEFICIT REDUCTION TARGETS ARE NOT MET.

(a) NO CREDITS, DEDUCTIONS, EXCLUSIONS,

PREFERENTIAL RATE OF TAX, ETC.—No tax

benefit provided by any provision of the Internal Revenue Code of 1986 added by title I

or II of this Act shall apply to any taxable

year beginning after the calendar year in

which the first failed deficit reduction year

ends.

(b) FIRST FAILED DEFICIT REDUCTION

YEAR.—For purposes of this section, the

term ‘‘first failed deficit reduction year’’

means the first fiscal year (beginning after

the earliest date on which any amendment

made by title I or II takes effect) with respect to which there is an OMB certification

during the 3-month period after the close of

such fiscal year that the actual deficit in the

budget of the United States for such fiscal

year was greater than the deficit target for

such fiscal year specified in the following

table:

The deficit target

‘‘In the case of fiscal year: (in billions) is:

1996 .................................................. $150

1997 .................................................. 125

1998 .................................................. 100

1999 .................................................. 75

2000 .................................................. 50

2001 .................................................. 25

2002 or thereafter ............................ 0.

TITLE IV—REVISIONS TO DISCRETIONARY

SPENDING LIMITS AND BUDGET PROCESS

SEC. 401. SHORT TITLE.

This title may be cited as the ‘‘Discretionary Spending Reduction and Control Act

of 1995’’.

SEC. 402. DISCRETIONARY SPENDING LIMITS.

(a) LIMITS.—Section 601(a)(2) of the Congressional Budget Act of 1974 is amended by

striking subparagraphs (A), (B), (C), (D), and

(F), by redesignating subparagraph (E) as

subparagraph (A) and by striking ‘‘and’’ at

the end of that subparagraph, and by inserting after subparagraph (A) the following new

subparagraphs:

‘‘(B) with respect to fiscal year 1996, for the

discretionary category: $516,478,000,000 in new

budget authority and $549,054,000,000 in outlays;

‘‘(C) with respect to fiscal year 1997, for the

discretionary category: $522,894,000,000 in new

budget authority and $544,051,000,000 in outlays;

‘‘(D) with respect to fiscal year 1998, for

the discretionary category: $528,810,000,000 in

new budget authority and $545,548,000,000 in

outlays;

‘‘(E) with respect to fiscal year 1999, for the

discretionary category: $527,753,000,000 in new

budget authority and $544,402,000,000 in outlays; and

‘‘(F) with respect to fiscal year 2000, for the

discretionary category: $527,040,000,000 in new

budget authority and $543,357,000,000 in outlays;’’.

(b) COMMITTEE ALLOCATIONS AND ENFORCEMENT.—Section 602 of the Congressional

Budget Act of 1974 is amended—

(1) in subsection (c), by striking ‘‘1995’’ and

inserting ‘‘2000’’ and by striking its last sentence; and

(2) in subsection (d), by striking ‘‘1992 TO

1995’’ in the side heading and inserting ‘‘1995

TO 2000’’ and by striking ‘‘1992 through 1995’’

and inserting ‘‘1995 through 2000’’.

(c) FIVE-YEAR BUDGET RESOLUTIONS.—Section 606 of the Congressional Budget Act of

1974 is amended—

(1) in subsection (a), by striking ‘‘1992, 1993,

1994, or 1995’’ and inserting ‘‘1995, 1996, 1997,

1998, 1999, or 2000’’; and

(2) in subsection (d)(1), by striking ‘‘1992,

1993, 1994, and 1995’’ and inserting ‘‘1995, 1996,

1997, 1998, 1999, and 2000’’, and by striking ‘‘(i)

and (ii)’’.

(d) EFFECTIVE DATE.—Section 607 of the

Congressional Budget Act of 1974 is amended

by striking ‘‘1991 to 1998’’ and inserting ‘‘1995

to 2000’’.

(e) SEQUESTRATION REGARDING CRIME

TRUST FUND.—Section 251A(b)(1) of the Balanced Budget and Emergency Deficit Control

Act of 1985 is amended by striking its last

sentence and inserting the following:

‘‘(E) For fiscal year 1999, $5,639,000,000.

‘‘(F) For fiscal year 2000, $6,225,000,000.

SEC. 403. GENERAL STATEMENT AND DEFINITIONS.

(a) GENERAL STATEMENT.—Section 250(b) of

the Balanced Budget and Emergency Deficit

Control Act of 1985 is amended by striking

the first sentence and inserting the following: ‘‘This part provides for the enforcement of deficit reduction through discretionary spending limits and pay-as-you-go

requirements for fiscal years 1995 through

2000.’’.

(b) DEFINITIONS.—Section 250(c) of the Balanced Budget and Emergency Deficit Control

Act of 1985 is amended—

(1) by striking paragraph (4) and inserting

the following:

‘‘(4) The term ‘category’ means all discretionary appropriations.’’;

(2) by striking paragraph (6) and inserting

the following:

‘‘(6) The term ‘budgetary resources’ means

new budget authority, unobligated balances,

direct spending authority, and obligation

limitations.’’;

(3) in paragraph (9), by striking ‘‘1992’’ and

inserting ‘‘1995’’;

(4) in paragraph (14), by striking ‘‘1995’’ and

inserting ‘‘2000’’; and

(5) by striking paragraph (17) and by redesignating paragraphs (18) through (21) as paragraphs (17) through (20), respectively.

SEC. 404. ENFORCING DISCRETIONARY SPENDING LIMITS.

Section 251 of the Balanced Budget and

Emergency Deficit Control Act of 1985 is

amended—

(1) in the side heading of subsection (a), by

striking ‘‘1991–1998’’ and inserting ‘‘1995–

2000’’;

(2) in the first sentence of subsection (b)(1),

by striking ‘‘1992, 1993, 1994, 1995, 1996, 1997 or

1998’’ and inserting ‘‘1995, 1996, 1997, 1998, 1999,

or 2000’’ and by striking ‘‘through 1998’’ and

inserting ‘‘through 2000’’;

(3) in subsection (b)(1), by striking subparagraphs (B) and (C) and by striking ‘‘the

following:’’ and all that follows through

‘‘The adjustments’’ and inserting ‘‘the following: the adjustments’’;

(4) in subsection (b)(2), by striking ‘‘1991,

1992, 1993, 1994, 1995, 1996, 1997, or 1998’’ and

inserting ‘‘1995, 1996, 1997, 1998, 1999, or 2000’’

and by striking ‘‘through 1998’’ and inserting

‘‘through 2000’’;

(5) by striking subparagraphs (A), (B), and

(C) of subsection (b)(2);

(6) in subsection (b)(2)(E), by striking

clauses (i), (ii), and (iii) and by striking ‘‘(iv)

if, for fiscal years 1994, 1995, 1996, 1997, and

1998’’ and inserting ‘‘If, for fiscal years 1995,

1996, 1997, 1998, 1999, and 2000’’; and

(7) in subsection (b)(2)(F), strike everything after ‘‘the adjustment in outlays’’ and

insert ‘‘for a category for a fiscal year shall

not exceed 0.5 percent of the adjusted discretionary spending limit on outlays for that

fiscal year in fiscal year 1996, 1997, 1998, 1999,

or 2000.’’.

SEC. 405. ENFORCING PAY-AS-YOU-GO.

Section 252 of the Balanced Budget and

Emergency Deficit Control Act of 1985 is

amended—

(1) in the side heading of subsection (a), by

striking ‘‘1992–1998’’ and inserting ‘‘1995–

2000’’;

(2) in subsection (d), by striking ‘‘1998’’

each place it appears and inserting ‘‘2000’’;

and

(3) in subsection (e), by striking ‘‘1991

through 1998’’ and inserting ‘‘1995 through

2000’’ and by striking ‘‘through 1995’’ and inserting ‘‘through 2000’’.
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1995 T56.12

SEC. 406. REPORTS AND ORDERS.

Section 254 of the Balanced Budget and

Emergency Deficit Control Act of 1985 is

amended—

(1) in subsection (d)(2), by striking ‘‘1998’’

and inserting ‘‘2000’’; and

(2) in subsection (g), by striking ‘‘1998’’

each place it appears and inserting ‘‘2000’’.

SEC. 407. TECHNICAL CORRECTION.

Section 258 of the Balanced Budget and

Emergency Deficit Control Act of 1985, entitled ‘‘Modification of Presidential Order’’, is

repealed.

SEC. 408. EFFECTIVE DATE.

(a) EXPIRATION.—Section 275(b) of the Balanced Budget and Emergency Deficit Control

Act of 1985 is amended by striking ‘‘1995’’ and

inserting ‘‘2000’’.

(b) EXPIRATION.—Section 14002(c)(3) of the

Omnibus Budget Reconciliation Act of 1993 (2

U.S.C. 900 note; 2 U.S.C. 665 note) is repealed.

SEC. 409. SAVINGS FROM PROVISIONS OF THIS

TITLE REDUCING DISCRETIONARY

SPENDING TO BE ADDED TO PAY-ASYOU-GO SCORECARD.

(a)(1) The net change in outlays for any fiscal year through fiscal year 2000 estimated

to result from provisions of this title revising or extending limits on discretionary

spending and spending from the Violent

Crime Reduction Trust Fund shall be considered a change in direct spending for purposes

of section 252 of the Balanced Budget and

Emergency Deficit Control Act of 1985.

(2) In applying paragraph (1), the change in

outlays resulting from provisions of this

title revising and extending the limits on

discretionary spending set forth in section

601(a)(2) of the Congressional Budget Act of

1974 shall be computed as follows:

(A) For fiscal years 1996 through 1998, by

comparing the outlay limit resulting from

this title for each year with the outlay limit

for that year in effect immediately prior to

enactment of this Act.

(B) For fiscal years 1999 and 2000, by comparing the outlay limit resulting from this

title for each year with the limit for fiscal

year 1998 in effect immediately prior to enactment of this Act.

(3) In applying paragraph (1), the change in

outlays resulting from provisions of this

title extending the limits on spending from

the Violent Crime Reduction Trust Fund set

forth in section 251A(b)(1) of the Balanced

Budget and Emergency Deficit Control Act

of 1985 shall be computed by comparing the

outlay limit resulting from this title for

each year with the level of outlays for that

year referred to in the last 2 sentences of

section 251A(b)(1) of such Act as in effect immediately before the enactment of this Act.

(b) Except as provided in subsection (a), no

statutory reduction in the discretionary

spending limits shall be counted in estimates

under section 252(d) of the Balanced Budget

and Emergency Deficit Control Act of 1985.

SEC. 410. CLARIFICATION OF ORDER IN WHICH

ADJUSTMENTS TO DISCRETIONARY

SPENDING LIMITS ARE TO BE MADE.

In the OMB final sequestration report for

fiscal year 1996—

(1) all adjustments required by section

251(b)(2) made after the preview report for

fiscal year 1996 shall be made to the discretionary spending limits set forth in 601(a)(2)

of the Congressional Budget Act of 1974 as

amended by section 402; and

(2) all statutory changes in the discretionary spending limits made by the Personal Responsibility Act of 1995 or by the Act

entitled ‘‘An Act making emergency supplemental appropriations for additional disaster

assistance and making rescissions for the fiscal year ending September 30, 1995, and for

other purposes’’ shall be made to those limits.

TITLE V—PROVISIONS RELATING TO

INTERNATIONAL TAXATION

SEC. 501. REVISION OF TAX RULES ON EXPATRIATION.

(a) IN GENERAL.—Subpart A of part II of

subchapter N of chapter 1 of the Internal

Revenue Code of 1986 is amended by inserting

after section 877 the following new section:

‘‘SEC. 877A. TAX RESPONSIBILITIES OF EXPATRIATION.

‘‘(a) GENERAL RULES.—For purposes of this

subtitle—

‘‘(1) CITIZENS.—If any United States citizen

relinquishes his citizenship during a taxable

year, all property held by such citizen at the

time immediately before such relinquishment shall be treated as sold at such time

for its fair market value and any gain or loss

shall be taken into account for such taxable

year.

‘‘(2) CERTAIN RESIDENTS.—If any long-term

resident of the United States ceases to be

subject to tax as a resident of the United

States for any portion of any taxable year,

all property held by such resident at the

time of such cessation shall be treated as

sold at such time for its fair market value

and any gain or loss shall be taken into account for the taxable year which includes

the date of such cessation.

‘‘(b) EXCLUSION FOR CERTAIN GAIN.—The

amount which would (but for this subsection) be includible in the gross income of

any taxpayer by reason of subsection (a)

shall be reduced (but not below zero) by

$600,000.

‘‘(c) PROPERTY TREATED AS HELD.—For purposes of this section, except as otherwise

provided by the Secretary, an individual

shall be treated as holding—

‘‘(1) all property which would be includible

in his gross estate under chapter 11 were

such individual to die at the time the property is treated as sold,

‘‘(2) any other interest in a trust which the

individual is treated as holding under the

rules of section 679(e) (determined by treating such section as applying to foreign and

domestic trusts), and

‘‘(3) any other interest in property specified by the Secretary as necessary or appropriate to carry out the purposes of this section.

‘‘(d) EXCEPTIONS.—The following property

shall not be treated as sold for purposes of

this section:

‘‘(1) UNITED STATES REAL PROPERTY INTERESTS.—Any United States real property interest (as defined in section 897(c)(1)), other

than stock of a United States real property

holding corporation which does not, on the

date the individual relinquishes his citizenship or ceases to be subject to tax as a resident, meet the requirements of section

897(c)(2).

‘‘(2) INTEREST IN CERTAIN RETIREMENT

PLANS.—

‘‘(A) IN GENERAL.—Any interest in a qualified retirement plan (as defined in section

4974(d)), other than any interest attributable

to contributions which are in excess of any

limitation or which violate any condition for

tax-favored treatment.

‘‘(B) FOREIGN PENSION PLANS.—

‘‘(i) IN GENERAL.—Under regulations prescribed by the Secretary, interests in foreign

pension plans or similar retirement arrangements or programs.

‘‘(ii) LIMITATION.—The value of property

which is treated as not sold by reason of this

subparagraph shall not exceed $500,000.

‘‘(e) DEFINITIONS.—For purposes of this

section—

‘‘(1) RELINQUISHMENT OF CITIZENSHIP.—A

citizen shall be treated as relinquishing his

United States citizenship on the date the

United States Department of State issues to

the individual a certificate of loss of nationality or on the date a court of the United

States cancels a naturalized citizen’s certificate of naturalization.

‘‘(2) LONG-TERM RESIDENT.—

‘‘(A) IN GENERAL.—The term ‘long-term

resident’ means any individual (other than a

citizen of the United States) who is a lawful

permanent resident of the United States and,

as a result of such status, has been subject to

tax as a resident in at least 10 taxable years

during the period of 15 taxable years ending

with the taxable year during which the sale

under subsection (a) is treated as occurring.

‘‘(B) SPECIAL RULE.—For purposes of subparagraph (A), there shall not be taken into

account—

‘‘(i) any taxable year during which any

prior sale is treated under subsection (a) as

occurring, or

‘‘(ii) any taxable year prior to the taxable

year referred to in clause (i).

‘‘(f) TERMINATION OF DEFERRALS, ETC.—On

the date any property held by an individual

is treated as sold under subsection (a)—

‘‘(1) any period deferring recognition of income or gain shall terminate, and

‘‘(2) any extension of time for payment of

tax shall cease to apply and the unpaid portion of such tax shall be due and payable.

‘‘(g) ELECTION BY EXPATRIATING RESIDENTS.—Solely for purposes of determining

gain under subsection (a)—

‘‘(1) IN GENERAL.—At the election of a resident not a citizen of the United States,

property—

‘‘(A) which was held by such resident on

the date the individual first became a resident of the United States during the period

of long-term residency to which the treatment under subsection (a) relates, and

‘‘(B) which is treated as sold under subsection (a),

shall be treated as having a basis on such

date of not less than the fair market value of

such property on such date.

‘‘(2) ELECTION.—Such an election shall

apply to all property described in paragraph

(1), and, once made, shall be irrevocable.

‘‘(h) DEFERRAL OF TAX ON CLOSELY HELD

BUSINESS INTERESTS.—The District Director

may enter into an agreement with any individual which permits such individual to

defer payment for not more than 5 years of

any tax imposed by subsection (a) by reason

of holding any interest in a closely held business (as defined in section 6166(b)) other than

a United States real property interest described in subsection (d)(1).

‘‘(i) REGULATIONS.—The Secretary shall

prescribe such regulations as may be necessary or appropriate to carry out the purposes of this section.

‘‘(j) CROSS REFERENCE.—

‘‘For termination of United States citizenship for tax purposes, see section

7701(a)(47).’’

(b) DEFINITION OF TERMINATION OF UNITED

STATES CITIZENSHIP.—Section 7701(a) of such

Code is amended by adding at the end the

following new paragraph:

‘‘(47) TERMINATION OF UNITED STATES CITIZENSHIP.—An individual shall not cease to be

treated as a United States citizen before the

date on which the individual’s citizenship is

treated as relinquished under section

877A(e)(1).’’

(c) CONFORMING AMENDMENTS.—

(1) Section 877 of such Code is amended by

adding at the end the following new subsection:

‘‘(f) TERMINATION.—This section shall not

apply to any individual who is subject to the

provisions of section 877A.’’

(2) Paragraph (10) of section 7701(b) of such

Code is amended by adding at the end the

following new sentence: ‘‘This paragraph

shall not apply to any individual who is subject to the provisions of section 877A.’’
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(d) CLERICAL AMENDMENT.—The table of

sections for subpart A of part II of subchapter N of chapter 1 of such Code is

amended by inserting after the item relating

to section 877 the following new item:

‘‘Sec. 877A. Tax responsibilities of expatriation.’’

(e) EFFECTIVE DATE.—The amendments

made by this section shall apply to—

(1) United States citizens who relinquish

(within the meaning of section 877A(e)(1) of

the Internal Revenue Code of 1986, as added

by this section) United States citizenship on

or after February 6, 1995, and

(2) long-term residents (as defined in such

section) who cease to be subject to tax as

residents of the United States on or after

such date.

SEC. 502. IMPROVED INFORMATION REPORTING

ON FOREIGN TRUSTS.

(a) IN GENERAL.—Section 6048 of the Internal Revenue Code of 1986 (relating to returns

as to certain foreign trusts) is amended to

read as follows:

‘‘SEC. 6048. INFORMATION WITH RESPECT TO

CERTAIN FOREIGN TRUSTS.

‘‘(a) NOTICE OF CERTAIN EVENTS.—

‘‘(1) GENERAL RULE.—On or before the 90th

day (or such later day as the Secretary may

prescribe) after any reportable event, the responsible party shall—

‘‘(A) notify each trustee of the trust of the

requirements of subsection (b), and

‘‘(B) provide written notice of such event

to the Secretary in accordance with paragraph (2).

‘‘(2) CONTENTS OF NOTICE.—The notice required by paragraph (1)(B) shall contain such

information as the Secretary may prescribe,

including—

‘‘(A) the amount of money or other property (if any) transferred to the trust in connection with the reportable event,

‘‘(B) the identity of the trust and of each

trustee and beneficiary (or class of beneficiaries) of the trust, and

‘‘(C) a statement that each trustee of the

trust has been informed of the requirements

of subsection (b).

‘‘(3) REPORTABLE EVENT.—For purposes of

this subsection, the term ‘reportable event’

means—

‘‘(A) the creation of any foreign trust by a

United States person,

‘‘(B) the transfer of any money or property

to a foreign trust by a United States person,

including a transfer by reason of death,

‘‘(C) a domestic trust becoming a foreign

trust,

‘‘(D) the death of a citizen or resident of

the United States who is a grantor of a foreign trust, and

‘‘(E) the residency starting date (within

the meaning of section 7701(b)(2)(A)) of a

grantor of a foreign trust subject to tax

under section 679(a)(3).

Subparagraphs (A) and (B) shall not apply

with respect to a trust described in section

404(a)(4) or 404A.

‘‘(4) RESPONSIBLE PARTY.—For purposes of

this subsection, the term ‘responsible party’

means—

‘‘(A) the grantor in the case of a reportable

event described in subparagraph (A) or (E) of

paragraph (3),

‘‘(B) the transferor in the case of a reportable event described in paragraph (3)(B)

other than a transfer by reason of death,

‘‘(C) the trustee of the domestic trust in

the case of a reportable event described in

paragraph (3)(C), and

‘‘(D) the executor of the decedent’s estate

in the case of a transfer by reason of death.

‘‘(b) TRUST REPORTING REQUIREMENTS.—If a

foreign trust, at any time during a taxable

year of such trust—

‘‘(1) has a grantor who is a United States

person and—

‘‘(A) such grantor is treated as the owner

of any portion of such trust under the rules

of subpart E of part I of subchapter J of

chapter 1, or

‘‘(B) any portion of such trust would be included in the gross estate of such grantor if

the grantor were to die at such time, or

‘‘(2) directly or indirectly distributes, credits, or allocates money or property to any

United States person (whether or not the

trust has a grantor described in paragraph

(1)),

then such trust shall meet the requirements

of subsection (c) (relating to trust information and agent) and subsection (d) (relating

to annual return).

‘‘(c) CONTENTS OF SECTION 6048 STATEMENT.—

‘‘(1) IN GENERAL.—The requirements of this

subsection are met if the trust files with the

Secretary a statement which contains such

information as the Secretary may prescribe

and which—

‘‘(A) identifies a United States person who

is the trust’s limited agent to provide the

Secretary with such information that reasonably should be available to the trust for

purposes of applying sections 7602, 7603, and

7604 with respect to any request by the Secretary to examine trust records or produce

testimony related to any transaction by the

trust or with respect to any summons by the

Secretary for such records or testimony, and

‘‘(B) contains an agreement to comply with

the requirements of subsection (d).

‘‘(2) SPECIAL RULE.—A foreign trust which

appoints an agent described in paragraph

(1)(A) shall not be considered to have an office or a permanent establishment in the

United States solely because of the activities

of such agent pursuant to this section. For

purposes of this section, the appearance of

persons or production of records by reason of

the creation of the agency shall not subject

such persons or records to legal process for

any purpose other than determining the correct treatment under this title of the activities and operations of the trust.

‘‘(d) ANNUAL RETURNS AND STATEMENTS.—

The requirements of this subsection are met

if—

‘‘(1) the trust makes a return for the taxable year which sets forth a full and complete accounting of all trust activities and

operations for the taxable year, and contains

such other information as the Secretary may

prescribe; and

‘‘(2) the trust furnishes such information

as the Secretary may prescribe to each

United States person—

‘‘(A) who is treated as the owner of any

portion of such trust under the rules of subpart E of part I of subchapter J of chapter 1,

‘‘(B) to whom any item with respect to the

taxable year is credited or allocated, or

‘‘(C) who receives a distribution from such

trust with respect to the taxable year.

‘‘(e) TIME AND MANNER OF FILING INFORMATION.—Any notice, statement, or return required under this section shall be made at

such time and in such manner as the Secretary shall prescribe.

‘‘(f) MODIFICATION OF RETURN REQUIREMENTS.—The Secretary is authorized to suspend or modify any requirement of this section if the Secretary determines that the

United States has no significant tax interest

in obtaining the required information.’’

(b) PENALTIES.—Section 6677 of such Code

(relating to failure to file information returns with respect to certain foreign trusts)

is amended to read as follows:

‘‘SEC. 6677. FAILURE TO FILE INFORMATION

WITH RESPECT TO CERTAIN FOREIGN TRUSTS.

‘‘(a) FAILURE TO REPORT CERTAIN

EVENTS.—

‘‘(1) IN GENERAL.—In the case of a reportable event described in any subparagraph of

section 6048(a)(3) for which a responsible

party does not file a written notice meeting

the requirements of section 6048(a)(2) within

the time specified in section 6048(a)(1), the

responsible party shall pay a penalty of

$10,000. If any failure described in the preceding sentence continues for more than 90

days after the day on which the Secretary

mails notice of such failure to the responsible party, such party shall pay a penalty

(in addition to the $10,000 amount) of $10,000

for each 30-day period (or fraction thereof)

during which such failure continues after the

expiration of such 90-day period.

‘‘(2) 35-PERCENT PENALTY.—In the case of a

reportable event described in subparagraph

(A), (B), or (C) of section 6048(a)(3) (other

than a transfer by reason of death), the aggregate amount of the penalties under paragraph (1) shall not be less than an amount

equal to 35 percent of the gross value of the

property involved in such event (determined

as of the date of the event).

‘‘(3) RESPONSIBLE PARTY.—For purposes of

this subsection, the term ‘responsible party’

has the meaning given to such term by section 6048(a)(4).

‘‘(b) FAILURE TO MAKE CERTAIN STATEMENTS AND RETURNS.—

‘‘(1) IN GENERAL.—In the case of any failure

to meet the requirements of section 6048(b),

the appropriate tax treatment of any trust

transactions or operations shall be determined by the Secretary in the Secretary’s

sole discretion from the Secretary’s own

knowledge or from such information as the

Secretary may obtain through testimony or

otherwise.

‘‘(2) MONETARY PENALTY.—In the case of

any failure to meet the requirements of section 6048(b) with respect to a trust described

in such section by reason of paragraph (1)

thereof, the grantor described in such paragraph (1) shall pay a penalty of $10,000 for

each taxable year with respect to which the

foreign trust fails to meet such requirements. If any failure described in the preceding sentence continues for more than 90

days after the day on which the Secretary

mails notice of such failure to such grantor,

such grantor shall pay a penalty (in addition

to any other penalty) of $10,000 for each 30-

day period (or fraction thereof) during which

such failure continues after the expiration of

such 90-day period.

‘‘(c) REASONABLE CAUSE EXCEPTION.—No

penalty shall be imposed by this section on

any failure which is shown to be due to reasonable cause and not due to willful neglect.

The fact that a foreign jurisdiction would

impose a civil or criminal penalty on the

taxpayer (or any other person) for disclosing

the requested documentation is not reasonable cause.

‘‘(d) DEFICIENCY PROCEDURES NOT TO

APPLY.—Subchapter B of chapter 63 (relating

to deficiency procedures for income, estate,

gift, and certain excise taxes) shall not apply

in respect of the assessment or collection of

any penalty imposed by this section.’’

(c) CLERICAL AMENDMENTS.—

(1) The table of sections for subpart B of

part III of subchapter A of chapter 61 of such

Code is amended by striking the item relating to section 6048 and inserting the following new item:

‘‘Sec. 6048. Information with respect to certain foreign trusts.’’

(2) The table of sections for part I of subchapter B of chapter 68 of such Code is

amended by striking the item relating to

section 6677 and inserting the following new

item:

‘‘Sec. 6677. Failure to file information with

respect to certain foreign

trusts.’’

(d) EFFECTIVE DATES.—
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1995 T56.12

(1) IN GENERAL.—The amendments made by

this section shall apply—

(A) to reportable events occurring on or

after February 6, 1995, and

(B) to the extent such amendments require

reporting for any taxable year under section

6048(b) of the Internal Revenue Code of 1986

(as added by this section), to taxable years

beginning after the date of the enactment of

this Act.

(2) NOTICES.—For purposes of section

6048(a) of such Code, the 90th day referred to

therein shall in no event be treated as being

earlier than the 90th day after the date of

the enactment of this Act.

SEC. 503. MODIFICATION OF RULES RELATING TO

FOREIGN TRUSTS HAVING ONE OR

MORE UNITED STATES BENEFICIARIES.

(a) IN GENERAL.—Section 679 of the Internal Revenue Code of 1986 (relating to foreign

trusts having one or more United States

beneficiaries) is amended to read as follows:

‘‘SEC. 679. FOREIGN TRUSTS HAVING ONE OR

MORE UNITED STATES BENEFICIARIES.

‘‘(a) TRANSFEROR TREATED AS OWNER.—

‘‘(1) IN GENERAL.—A United States person

who directly or indirectly transfers property

to a foreign trust (other than a trust described in section 404(a)(4) or section 404A)

shall be treated as the owner for his taxable

year of the portion of such trust attributable

to such property if for such year there is a

United States beneficiary of such trust.

‘‘(2) EXCEPTION.—

‘‘(A) IN GENERAL.—Paragraph (1) shall not

apply to any sale or exchange of property to

a trust if—

‘‘(i) the trust pays fair market value for

such property, and

‘‘(ii) all of the gain to the transferor is recognized at the time of transfer.

‘‘(B) CERTAIN OBLIGATIONS NOT TAKEN INTO

ACCOUNT.—For purposes of subparagraph (A),

in determining whether the transferor received fair market value, there shall not be

taken into account—

‘‘(i) any obligation of—

‘‘(I) the trust,

‘‘(II) any grantor or beneficiary of the

trust, or

‘‘(III) any person who is related (within the

meaning of section 643(i)(3)) to any grantor

or beneficiary of the trust, and

‘‘(ii) except as provided in regulations, any

obligation which is guaranteed by a person

described in clause (i).

‘‘(C) TREATMENT OF DEEMED SALE ELECTION

UNDER SECTION 1057.—For purposes of subparagraph (A), a transfer with respect to which

an election under section 1057 is made shall

not be treated as a sale or exchange.

‘‘(3) SPECIAL RULES APPLICABLE TO FOREIGN

GRANTOR WHO LATER BECOMES A UNITED

STATES PERSON.—A nonresident alien individual who becomes a United States resident

within 5 years after directly or indirectly

transferring property to a foreign trust shall

be treated for purposes of this section and

section 6048 as having transferred such property, and any undistributed income (including all realized and unrealized gains) attributable thereto, to the foreign trust immediately after becoming a United States resident. For this purpose, a nonresident alien

shall be treated as becoming a resident of

the United States on the residency starting

date (within the meaning of section

7701(b)(2)(A)).

‘‘(b) BENEFICIARIES TREATED AS TRANSFERORS IN CERTAIN CASES.—For purposes of

this section and section 6048, if—

‘‘(1) a citizen or resident of the United

States who is treated as the owner of any

portion of a trust under subsection (a) dies,

‘‘(2) property is transferred to a foreign

trust by reason of the death of a citizen or

resident of the United States, or

‘‘(3) a domestic trust to which any United

States person made a transfer becomes a foreign trust,

then, except as otherwise provided in regulations, the trust beneficiaries shall be treated

as having transferred to such trust (as of the

date of the applicable event under paragraph

(1), (2), or (3)) their respective interests (as

determined under subsection (e)) in the property involved.

‘‘(c) TRUSTS ACQUIRING UNITED STATES

BENEFICIARIES.—If—

‘‘(1) subsection (a) applies to a trust for the

transferor’s taxable year, and

‘‘(2) subsection (a) would have applied to

the trust for the transferor’s immediately

preceding taxable year but for the fact that

for such preceding taxable year there was no

United States beneficiary for any portion of

the trust,

then, for purposes of this subtitle, the transferor shall be treated as having received as

an accumulation distribution taxable under

subpart D an amount equal to the undistributed net income (as determined under section 665(a) as of the close of such immediately preceding taxable year) attributable

to the portion of the trust referred to in subsection (a).

‘‘(d) TRUSTS TREATED AS HAVING A UNITED

STATES BENEFICIARY.—

‘‘(1) IN GENERAL.—For purposes of this section, a trust shall be treated as having a

United States beneficiary for the taxable

year unless—

‘‘(A) under the terms of the trust, no part

of the income or corpus of the trust may be

paid or accumulated during the taxable year

to or for the benefit of a United States person, and

‘‘(B) if the trust were terminated at any

time during the taxable year, no part of the

income or corpus of such trust could be paid

to or for the benefit of a United States person.

To the extent provided by the Secretary, for

purposes of this subsection, the term ‘United

States person’ includes any person who was a

United States person at any time during the

existence of the trust.

‘‘(2) ATTRIBUTION OF OWNERSHIP.—For purposes of paragraph (1), an amount shall be

treated as paid or accumulated to or for the

benefit of a United States person if such

amount is paid to or accumulated for a foreign corporation, foreign partnership, or foreign trust or estate, and—

‘‘(A) in the case of a foreign corporation,

more than 50 percent of the total combined

voting power of all classes of stock of such

corporation entitled to vote is owned (within

the meaning of section 958(a)) or is considered to be owned (within the meaning of section 958(b)) by United States shareholders (as

defined in section 951(b)),

‘‘(B) in the case of a foreign partnership, a

United States person is a partner of such

partnership, or

‘‘(C) in the case of a foreign trust or estate,

such trust or estate has a United States beneficiary (within the meaning of paragraph

(1)).

‘‘(e) DETERMINATION OF BENEFICIARIES’ INTERESTS IN TRUST.—

‘‘(1) GENERAL RULE.—For purposes of this

section, a beneficiary’s interest in a foreign

trust shall be based upon all relevant facts

and circumstances, including the terms of

the trust instrument and any letter of wishes

or similar document, historical patterns of

trust distributions, and the existence of and

functions performed by a trust protector or

any similar advisor.

‘‘(2) SPECIAL RULE.—In the case of beneficiaries whose interests in a trust cannot be

determined under paragraph (1)—

‘‘(A) the beneficiary having the closest degree of kinship to the grantor shall be treated as holding the remaining interests in the

trust not determined under paragraph (1) to

be held by any other beneficiary, and

‘‘(B) if 2 or more beneficiaries have the

same degree of kinship to the grantor, such

remaining interests shall be treated as held

equally by such beneficiaries.

‘‘(3) CONSTRUCTIVE OWNERSHIP.—If a beneficiary of a foreign trust is a corporation,

partnership, trust, or estate, the shareholders, partners, or beneficiaries shall be

deemed to be the trust beneficiaries for purposes of this section.

‘‘(4) TAXPAYER RETURN POSITION.—A taxpayer shall clearly indicate on its income

tax return—

‘‘(A) the methodology used to determine

that taxpayer’s trust interest under this section, and

‘‘(B) if the taxpayer knows (or has reason

to know) that any other beneficiary of such

trust is using a different methodology to determine such beneficiary’s trust interest

under this section.

‘‘(f) REGULATIONS.—The Secretary shall

prescribe such regulations as may be necessary or appropriate to carry out the purposes of this section.’’

(b) EFFECTIVE DATE.—

(1) IN GENERAL.—Except as otherwise provided in this subsection, the amendments

made by this section shall apply to taxable

years ending on or after February 6, 1995.

(2) SECTION 679(a).—Paragraphs (2) and (3) of

section 679(a) of the Internal Revenue Code

of 1986 (as added by this section) shall apply

to—

(A) any trust created on or after February

6, 1995, and

(B) the portion of any trust created before

such date which is attributable to actual

transfers of property to the trust on or after

such date.

(3) SECTION 679(b).—

(A) IN GENERAL.—Paragraphs (1) and (2) of

section 679(b) of such Code (as so added) shall

apply to—

(i) any trust created on or after the date of

the enactment of this Act, and

(ii) the portion of any trust created before

such date which is attributable to actual

transfers of property to the trust on or after

such date.

(B) SECTION 679(b)(3).—Section 679(b)(3) of

such Code (as so added) shall take effect on

February 6, 1995, without regard to when the

property was transferred to the trust.

SEC. 504. FOREIGN PERSONS NOT TO BE TREATED AS OWNERS UNDER GRANTOR

TRUST RULES.

(a) IN GENERAL.—So much of section 672(f)

of the Internal Revenue Code of 1986 (relating to special rule where grantor is foreign

person) as precedes paragraph (2) is amended

to read as follows:

‘‘(f) SUBPART NOT TO RESULT IN FOREIGN

OWNERSHIP.—

‘‘(1) IN GENERAL.—Notwithstanding any

other provision of this subpart, this subpart

shall apply only to the extent such application results in an amount being included (directly or through 1 or more entities) in the

gross income of a citizen or resident of the

United States or a domestic corporation. The

preceding sentence shall not apply to any

portion of an investment trust if such trust

is treated as a trust for purposes of this title

and the grantor of such portion is the sole

beneficiary of such portion.’’

(b) CREDIT FOR CERTAIN TAXES.—Paragraph

(2) of section 665(d) of such Code is amended

by adding at the end the following new sentence: ‘‘Under rules or regulations prescribed

by the Secretary, in the case of any foreign

trust of which the settlor or another person

would be treated as owner of any portion of

the trust under subpart E but for section

672(f), the term ‘taxes imposed on the trust’

includes the allocable amount of any in-
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T56.12 APRIL 5

come, war profits, and excess profits taxes

imposed by any foreign country or possession of the United States on the settlor or

such other person in respect of trust income.’’

(c) DISTRIBUTIONS BY CERTAIN FOREIGN

TRUSTS THROUGH NOMINEES.—

(1) Section 643 of such Code is amended by

adding at the end the following new subsection:

‘‘(h) DISTRIBUTIONS BY CERTAIN FOREIGN

TRUSTS THROUGH NOMINEES.—For purposes of

this part, any amount paid to a United

States person which is derived directly or indirectly from a foreign trust of which the

payor is not the grantor shall be deemed in

the year of payment to have been directly

paid by the foreign trust to such United

States person.’’

(2) Section 665 of such Code is amended by

striking subsection (c).

(d) EFFECTIVE DATE.—The amendments

made by this section shall take effect on the

date of the enactment of this Act.

(e) TRANSITIONAL RULE.—If—

(1) by reason of the amendments made by

this section, any person other than a United

States person ceases to be treated as the

owner of a portion of a domestic trust, and

(2) before January 1, 1996, such trust becomes a foreign trust, or the assets of such

trust are transferred to a foreign trust,

no tax shall be imposed by section 1491 of the

Internal Revenue Code of 1986 by reason of

such trust becoming a foreign trust or the

assets of such trust being transferred to a

foreign trust.

SEC. 505. GRATUITOUS TRANSFERS BY PARTNERSHIPS AND FOREIGN CORPORATIONS.

(a) IN GENERAL.—Subchapter C of chapter

80 of the Internal Revenue Code of 1986 (relating to provisions affecting more than one

subtitle) is amended by adding at the end the

following new section:

‘‘SEC. 7874. PURPORTED GIFTS BY PARTNERSHIPS AND FOREIGN CORPORATIONS.

‘‘(a) IN GENERAL.—Any property (including

money) that is purportedly a direct or indirect gift by a partnership or a foreign corporation to a person who is not a partner of

the partnership or a shareholder of the corporation, respectively, may be recharacterized by the Secretary to prevent the

avoidance of tax. The Secretary may not recharacterize gifts made for bona fide business or charitable purposes.

‘‘(b) STATEMENTS ON RECIPIENT’S RETURN.—

A taxpayer who receives a purported gift

subject to subsection (a) shall attach a statement to his income tax return for the year of

receipt that identifies the property received

and describes fully the circumstances surrounding the purported gift.

‘‘(c) EXEMPTION.—Subsection (a) shall not

apply to purported gifts received by any person during any taxable year if the amount

thereof is less than $2,500.

‘‘(d) REGULATIONS.—The Secretary may

prescribe such rules as may be necessary or

appropriate to carry out the purposes of this

section.’’

(b) CLERICAL AMENDMENT.—The table of

sections for such subchapter C is amended by

adding at the end the following new item:

‘‘Sec. 7874. Purported gifts by partnerships

and foreign corporations.’’

(c) EFFECTIVE DATE.—The amendments

made by this section shall apply to amounts

received after the date of the enactment of

this Act.

SEC. 506. INFORMATION REPORTING REGARDING

LARGE FOREIGN GIFTS.

(a) IN GENERAL.—Subpart A of part III of

subchapter A of chapter 61 of the Internal

Revenue Code of 1986 is amended by inserting

after section 6039E the following new section:

‘‘SEC. 6039F. NOTICE OF LARGE GIFTS RECEIVED

FROM FOREIGN PERSONS.

‘‘(a) IN GENERAL.—If the value of the aggregate foreign gifts received by a United States

person (other than an organization described

in section 501(c) and exempt from tax under

section 501(a)) during any taxable year exceeds $100,000, such United States person

shall furnish (at such time and in such manner as the Secretary shall prescribe) such information as the Secretary may prescribe regarding each foreign gift received during

such year.

‘‘(b) FOREIGN GIFT.—For purposes of this

section, the term ‘foreign gift’ means any

amount received from a person other than a

United States person which the recipient

treats as a gift or bequest. Such term shall

not include any qualified transfer (within

the meaning of section 2503(e)(2)).

‘‘(c) PENALTY FOR FAILURE TO FILE INFORMATION.—

‘‘(1) IN GENERAL.—If a United States person

fails to furnish the information required by

subsection (a) with respect to any foreign

gift within the time prescribed therefor (including extensions)—

‘‘(A) the tax consequences of the receipt of

such gift shall be determined by the Secretary in the Secretary’s sole discretion

from the Secretary’s own knowledge or from

such information as the Secretary may obtain through testimony or otherwise, and

‘‘(B) such United States person shall pay

(upon notice and demand by the Secretary

and in the same manner as tax) an amount

equal to 5 percent of the amount of such foreign gift for each month for which the failure continues (not to exceed 25 percent of

such amount in the aggregate).

‘‘(2) REASONABLE CAUSE EXCEPTION.— Paragraph (1) shall not apply to any failure to report a foreign gift if the United States person shows that the failure is due to reasonable cause and not due to willful neglect.

‘‘(d) REGULATIONS.—The Secretary shall

prescribe such regulations as may be necessary to carry out the purposes of this section.’’.

(b) CLERICAL AMENDMENT.—The table of

sections for such subpart is amended by inserting after the item relating to section

6039E the following new item:

‘‘Sec. 6039F. Notice of large gifts received

from foreign persons.’’

(c) EFFECTIVE DATE.—The amendments

made by this section shall apply to amounts

received after the date of the enactment of

this Act in taxable years ending after such

date.

SEC. 507. MODIFICATION OF RULES RELATING TO

FOREIGN TRUSTS WHICH ARE NOT

GRANTOR TRUSTS.

(a) MODIFICATION OF INTEREST CHARGE ON

ACCUMULATION DISTRIBUTIONS.—Subsection

(a) of section 668 of the Internal Revenue

Code of 1986 (relating to interest charge on

accumulation distributions from foreign

trusts) is amended to read as follows:

‘‘(a) GENERAL RULE.—For purposes of the

tax determined under section 667(a)—

‘‘(1) SUM OF INTEREST CHARGES FOR EACH

THROWBACK YEAR.—The interest charge (determined under paragraph (2)) with respect

to any distribution is the sum of the interest

charges for each of the throwback years to

which such distribution is allocated under

section 666(a).

‘‘(2) INTEREST CHARGE FOR YEAR.—Except as

provided in paragraph (6), the interest charge

for any throwback year on such year’s allocable share of the partial tax computed

under section 667(b) with respect to any distribution shall be determined for the

period—

‘‘(A) beginning on the due date for the

throwback year, and

‘‘(B) ending on the due date for the taxable

year of the distribution,

by using the rates and method applicable

under section 6621 for underpayments of tax

for such period. For purposes of the preceding sentence, the term ‘due date’ means

the date prescribed by law (determined without regard to extensions) for filing the return of the tax imposed by this chapter for

the taxable year.

‘‘(3) ALLOCABLE PARTIAL TAX.—For purposes of paragraph (2), a throwback year’s allocable share of the partial tax is an amount

equal to such partial tax multiplied by the

fraction—

‘‘(A) the numerator of which is the amount

deemed by section 666(a) to be distributed on

the last day of such throwback year, and

‘‘(B) the denominator of which is the accumulation distribution taken into account

under section 666(a).

‘‘(4) THROWBACK YEAR.—For purposes of

this subsection, the term ‘throwback year’

means any taxable year to which a distribution is allocated under section 666(a).

‘‘(5) PERIODS OF NONRESIDENCE.—The period

under paragraph (2) shall not include any

portion thereof during which the beneficiary

was not a citizen or resident of the United

States.

‘‘(6) THROWBACK YEARS BEFORE 1996.—In the

case of any throwback year beginning before

1996—

‘‘(A) interest for the portion of the period

described in paragraph (2) which occurs before the first taxable year beginning after

1995 shall be determined by using an interest

rate of 6 percent and no compounding, and

‘‘(B) interest for the remaining portion of

such period shall be determined as if the partial tax computed under section 667(b) for

the throwback year were increased (as of the

beginning of such first taxable year) by the

amount of the interest determined under

subparagraph (A).’’

(b) RULE WHEN INFORMATION NOT AVAILABLE.—Subsection (d) of section 666 of such

Code is amended by adding at the end the

following: ‘‘In the case of a distribution from

a foreign trust to which section 6048(b) applies, adequate records shall not be considered to be available for purposes of the preceding sentence unless such trust meets the

requirements referred to in such section. If a

taxpayer is not able to demonstrate when a

trust was created, the Secretary may use

any reasonable approximation based on

available evidence.’’

(c) ABUSIVE TRANSACTIONS.—Section 643(a)

of such Code is amended by inserting after

paragraph (6) the following new paragraph:

‘‘(7) ABUSIVE TRANSACTIONS.—The Secretary shall prescribe such regulations as

may be necessary or appropriate to carry out

the purposes of this part, including regulations to prevent avoidance of such purposes.’’

(d) TREATMENT OF USE OF TRUST PROPERTY.—Section 643 of such Code (relating to

definitions applicable to subparts A, B, C,

and D) is amended by adding at the end the

following new subsection:

‘‘(i) USE OF FOREIGN TRUST PROPERTY.—

‘‘(1) GENERAL RULE.—For purposes of subparts B, C, and D, if, during a taxable year of

a foreign trust a trust participant of such

trust directly or indirectly uses any of the

trust’s property, the use value for such taxable year shall be treated as an amount paid

to such participant (other than from income

for the taxable year) within the meaning of

sections 661(a)(2) and section 662(a)(2).

‘‘(2) EXEMPTION.—Paragraph (1) shall not

apply to any trust participant as to whom

the aggregate use value during the taxable

year does not exceed $2,500.

‘‘(3) DEFINITIONS AND SPECIAL RULES.—For

purposes of this subsection—

‘‘(A) USE VALUE.—Except as provided in

subparagraph (B), the term ‘use value’ means

the fair market value of the use of property
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1995 T56.12

reduced by any amount paid for such use by

the trust participant or by any person who is

related to such participant.

‘‘(B) SPECIAL RULE FOR CASH AND CASH

EQUIVALENT.—A direct or indirect loan of

cash, or cash equivalent, by a foreign trust

shall be treated as a use of trust property by

the borrower and the full amount of the loan

principal shall be the use value.

‘‘(C) USE BY RELATED PARTY.—

‘‘(i) Use by a person who is related to a

trust participant shall be treated as use by

the participant.

‘‘(ii) If property is used by any person who

is a related person with respect to more than

one trust participant, then the property

shall be treated as used by the trust participant most closely related, by blood or otherwise, to such person.

‘‘(D) PROPERTY INCLUDES CASH AND CASH

EQUIVALENTS.—The term ‘property’ includes

cash and cash equivalents.

‘‘(E) TRUST PARTICIPANT.—The term ‘trust

participant’ means each grantor and beneficiary of the trust.

‘‘(F) RELATED PERSON.—A person is related

to a trust participant if the relationship between such persons would result in a disallowance of losses under section 267(b) or

707(b). In applying section 267 for purposes of

the preceding sentence—

‘‘(i) section 267(e) shall be applied as if such

person or the trust participant were a passthru entity,

‘‘(ii) section 267(b) shall be applied by substituting ‘at least 10 percent’ for ‘more than

50 percent’ each place it appears, and

‘‘(iii) in determining the family of an individual under section 267(c)(4), such section

shall be treated as including the spouse (and

former spouse) of such individual and of each

other person who is treated under such section as being a member of the family of such

individual or spouse.

‘‘(G) SUBSEQUENT TRANSACTIONS REGARDING

LOAN PRINCIPAL.—If any loan described in

subparagraph (B) is taken into account

under paragraph (1), any subsequent transaction between the trust and the original

borrower regarding the principal of the loan

(by way of complete or partial repayment,

satisfaction, cancellation, discharge, or otherwise) shall be disregarded for purposes of

this title.’’

(e) EFFECTIVE DATES.—

(1) IN GENERAL.—Except as provided in

paragraph (2), the amendments made by this

section shall apply to taxable years beginning after the date of the enactment of this

Act.

(2) INTEREST CHARGE.—The amendment

made by subsection (a) shall apply to interest for throwback years beginning before, on,

or after the date of the enactment of this

Act.

SEC. 508. RESIDENCE OF ESTATES AND TRUSTS.

(a) TREATMENT AS UNITED STATES PERSON.—Paragraph (30) of section 7701(a) of the

Internal Revenue Code of 1986 is amended by

striking subparagraph (D) and by inserting

after subparagraph (C) the following:

‘‘(D) any estate or trust if—

‘‘(i) a court within the United States is

able to exercise primary supervision over the

administration of the estate or trust, and

‘‘(ii) in the case of a trust, one or more

United States fiduciaries have the authority

to control all substantial decisions of the

trust.’’

(b) CONFORMING AMENDMENT.—Paragraph

(31) of section 7701(a) of such Code is amended to read as follows:

‘‘(31) FOREIGN ESTATE OR TRUST.—The term

‘foreign estate’ or ‘foreign trust’ means any

estate or trust other than an estate or trust

described in section 7701(a)(30)(D).’’

(c) EFFECTIVE DATE.—The amendments

made by this section shall apply—

(1) to taxable years beginning after December 31, 1996, and

(2) at the election of the trustee of a trust,

to taxable years beginning after the date of

the enactment of this Act and on or before

December 31, 1996.

Such an election, once made, shall be irrevocable.

TITLE VI—EXTENSION OF AUTHORITY OF

FEDERAL COMMUNICATIONS COMMISSION TO USE COMPETITIVE BIDDING

SEC. 601. EXTENSION OF AUTHORITY.

Section 309(j)(11) of the Communications

Act of 1934 (47 U.S.C. 309(j)(11)) is amended by

striking ‘‘September 30, 1998’’ and inserting

‘‘September 30, 2000’’.

TITLE VII—PRIVATIZATION OF THE

UNITED STATES ENRICHMENT CORPORATION

SEC. 701. SHORT TITLE AND REFERENCE.

(a) SHORT TITLE.—This title may be cited

as the ‘‘USEC Privatization Act’’.

(b) REFERENCE.—Except as otherwise expressly provided, whenever in this title 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 Atomic Energy Act of 1954 (42

U.S.C. 2011 et seq.).

SEC. 702. PRODUCTION FACILITY.

Paragraph v. of section 11 (42 U.S.C. 2014 v.)

is amended by striking ‘‘or the construction

and operation of a uranium enrichment production facility using Atomic Vapor Laser

Isotope Separation technology’’.

SEC. 703. DEFINITIONS.

Section 1201 (42 U.S.C. 2297) is amended—

(1) in paragraph (4), by inserting before the

period the following: ‘‘and any successor corporation established through privatization of

the Corporation’’;

(2) by redesignating paragraphs (10)

through (13) as paragraphs (14) through (17),

respectively, and by inserting after paragraph (9) the following new paragraphs:

‘‘(10) The term ‘low-level radioactive

waste’ has the meaning given such term in

section 102(9) of the Low-Level Radioactive

Waste Policy Amendments Act of 1985 (42

U.S.C. 2021b(9)).

‘‘(11) The term ‘mixed waste’ has the meaning given such term in section 1004(41) of the

Solid Waste Disposal Act (42 U.S.C. 6903(41)).

‘‘(12) The term ‘privatization’ means the

transfer of ownership of the Corporation to

private investors pursuant to chapter 25.

‘‘(13) The term ‘privatization date’ means

the date on which 100 percent of ownership of

the Corporation has been transferred to private investors.’’;

(3) by inserting after paragraph (17) (as redesignated) the following new paragraph:

‘‘(18) The term ‘transition date’ means

July 1, 1993.’’; and

(4) by redesignating the unredesignated

paragraph (14) as paragraph (19).

SEC. 704. EMPLOYEES OF THE CORPORATION.

(a) PARAGRAPH (2).—Paragraphs (1) and (2)

of section 1305(e) (42 U.S.C. 2297b–4(e)(1)(2))

are amended to read as follows:

‘‘(1) IN GENERAL.—It is the purpose of this

subsection to ensure that the privatization

of the Corporation shall not result in any adverse effects on the pension benefits of employees at facilities that are operated, directly or under contract, in the performance

of the functions vested in the Corporation.

‘‘(2) APPLICABILITY OF EXISTING COLLECTIVE

BARGAINING AGREEMENT.—The Corporation

shall abide by the terms of the collective

bargaining agreement in effect on the privatization date at each individual facility.’’.

(b) PARAGRAPH (4).—Paragraph (4) of section 1305(e) (42 U.S.C. 2297b–4(e)(4)) is

amended—

(1) by striking ‘‘AND DETAILEES’’ in the

heading;

(2) by striking the first sentence;

(3) in the second sentence, by inserting

‘‘from other Federal employment’’ after

‘‘transfer to the Corporation’’; and

(4) by striking the last sentence.

SEC. 705. MARKETING AND CONTRACTING AUTHORITY.

(a) MARKETING AUTHORITY.—Section 1401(a)

(42 U.S.C. 2297c(a)) is amended effective on

the privatization date (as defined in section

1201(13) of the Atomic Energy Act of 1954)—

(1) by amending the subsection heading to

read ‘‘MARKETING AUTHORITY.—’’; and

(2) by striking the first sentence.

(b) TRANSFER OF CONTRACTS.—Section

1401(b) (42 U.S.C. 2297c(b)) is amended—

(1) in paragraph (2)(B), by adding at the

end the following: ‘‘The privatization of the

Corporation shall not affect the terms of, or

the rights or obligations of the parties to,

any such power purchase contract.’’; and

(2) by adding at the end the following:

‘‘(3) EFFECT OF TRANSFER.—

‘‘(A) As a result of the transfer pursuant to

paragraph (1), all rights, privileges, and benefits under such contracts, agreements, and

leases, including the right to amend, modify,

extend, revise, or terminate any of such contracts, agreements, or leases were irrevocably assigned to the Corporation for its exclusive benefit.

‘‘(B) Notwithstanding the transfer pursuant to paragraph (1), the United States shall

remain obligated to the parties to the contracts, agreements, and leases transferred

pursuant to paragraph (1) for the performance of the obligations of the United States

thereunder during the term thereof. The Corporation shall reimburse the United States

for any amount paid by the United States in

respect of such obligations arising after the

privatization date to the extent such amount

is a legal and valid obligation of the Corporation then due.

‘‘(C) After the privatization date, upon any

material amendment, modification, extension, revision, replacement, or termination

of any contract, agreement, or lease transferred under paragraph (1), the United States

shall be released from further obligation

under such contract, agreement, or lease, except that such action shall not release the

United States from obligations arising under

such contract, agreement, or lease prior to

such time.’’.

(c) PRICING.—Section 1402 (42 U.S.C. 2297c–

1) is amended to read as follows:

‘‘SEC. 1402. PRICING.

‘‘The Corporation shall establish prices for

its products, materials, and services provided

to customers on a basis that will allow it to

attain the normal business objectives of a

profitmaking corporation.’’.

(d) LEASING OF GASEOUS DIFFUSION FACILITIES OF DEPARTMENT.—Effective on the privatization date (as defined in section 1201(13)

of the Atomic Energy Act of 1954), section

1403 (42 U.S.C. 2297c–2) is amended by adding

at the end the following:

‘‘(h) LOW-LEVEL RADIOACTIVE WASTE AND

MIXED WASTE.—

‘‘(1) RESPONSIBILITY OF THE DEPARTMENT;

COSTS.—

‘‘(A) With respect to low-level radioactive

waste and mixed waste generated by the Corporation as a result of the operation of the

facilities and related property leased by the

Corporation pursuant to subsection (a) or as

a result of treatment of such wastes at a location other than the facilities and related

property leased by the Corporation pursuant

to subsection (a) the Department, at the request of the Corporation, shall—

‘‘(i) accept for treatment or disposal of all

such wastes for which treatment or disposal

technologies and capacities exist, whether

within the Department or elsewhere; and

‘‘(ii) accept for storage (or ultimately

treatment or disposal) all such wastes for
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T56.12 APRIL 5

which treatment and disposal technologies

or capacities do not exist, pending development of such technologies or availability of

such capacities for such wastes.

‘‘(B) All low-level wastes and mixed wastes

that the Department accepts for treatment,

storage, or disposal pursuant to subparagraph (A) shall, for the purpose of any permits, licenses, authorizations, agreements,

or orders involving the Department and

other Federal agencies or State or local governments, be deemed to be generated by the

Department and the Department shall handle such wastes in accordance with any such

permits, licenses, authorizations, agreements, or orders. The Department shall obtain any additional permits, licenses, or authorizations necessary to handle such

wastes, shall amend any such agreements or

orders as necessary to handle such wastes,

and shall handle such wastes in accordance

therewith.

‘‘(C) The Corporation shall reimburse the

Department for the treatment, storage, or

disposal of low-level radioactive waste or

mixed waste pursuant to subparagraph (A) in

an amount equal to the Department’s costs

but in no event greater than an amount

equal to that which would be charged by

commercial, State, regional, or interstate

compact entities for treatment, storage, or

disposal of such waste.

‘‘(2) AGREEMENTS WITH OTHER PERSONS.—

The Corporation may also enter into agreements for the treatment, storage, or disposal

of low-level radioactive waste and mixed

waste generated by the Corporation as a result of the operation of the facilities and related property leased by the Corporation

pursuant to subsection (a) with any person

other than the Department that is authorized by applicable laws and regulations to

treat, store, or dispose of such wastes.’’.

(e) LIABILITIES.—

(1) Subsection (a) of section 1406 (42 U.S.C.

2297c–5(a)) is amended—

(A) by inserting ‘‘AND PRIVATIZATION’’ after

‘‘TRANSITION’’ in the heading; and

(B) by adding at the end the following: ‘‘As

of the privatization date, all liabilities attributable to the operation of the Corporation from the transition date to the privatization date shall be direct liabilities of the

United States.’’.

(2) Subsection (b) of section 1406 (42 U.S.C.

2297c–5(b)) is amended—

(A) by inserting ‘‘AND PRIVATIZATION’’ after

‘‘TRANSITION’’ in the heading; and

(B) by adding at the end the following: ‘‘As

of the privatization date, any judgment entered against the Corporation imposing liability arising out of the operation of the

Corporation from the transition date to the

privatization date shall be considered a judgment against the United States.’’.

(3) Subsection (d) of section 1406 (42 U.S.C.

2297c–5(d)) is amended—

(A) by inserting ‘‘AND PRIVATIZATION’’ after

‘‘TRANSITION’’ in the heading; and

(B) by striking ‘‘the transition date’’ and

inserting ‘‘the privatization date (or, in the

event the privatization date does not occur,

the transition date)’’.

(f) TRANSFER OF URANIUM.—Title II (42

U.S.C. 2297 et seq.) is amended by redesignating section 1408 as section 1409 and by inserting after section 1407 the following:

‘‘SEC. 1408. TRANSFER OF URANIUM.

‘‘The Secretary may, before the privatization date, transfer to the Corporation without charge raw uranium, low-enriched uranium, and highly enriched uranium.’’.

SEC. 706. PRIVATIZATION OF THE CORPORATION.

(a) ESTABLISHMENT OF PRIVATE CORPORATION.—Chapter 25 (42 U.S.C. 2297d et seq.) is

amended by adding at the end the following

new section:

‘‘SEC. 1503. ESTABLISHMENT OF PRIVATE CORPORATION.

‘‘(a) ESTABLISHMENT.—

‘‘(1) IN GENERAL.—In order to facilitate privatization, the Corporation may provide for

the establishment of a private corporation

organized under the laws of any of the several States. Such corporation shall have

among its purposes the following:

‘‘(A) To help maintain a reliable and economical domestic source of uranium enrichment services.

‘‘(B) To undertake any and all activities as

provided in its corporate charter.

‘‘(2) AUTHORITIES.—The corporation established pursuant to paragraph (1) shall be authorized to—

‘‘(A) enrich uranium, provide for uranium

to be enriched by others, or acquire enriched

uranium (including low-enriched uranium

derived from highly enriched uranium);

‘‘(B) conduct, or provide for conducting,

those research and development activities

related to uranium enrichment and related

processes and activities the corporation considers necessary or advisable to maintain

itself as a commercial enterprise operating

on a profitable and efficient basis;

‘‘(C) enter into transactions regarding uranium, enriched uranium, or depleted uranium with—

‘‘(i) persons licensed under section 53, 63,

103, or 104 in accordance with the licenses

held by those persons;

‘‘(ii) persons in accordance with, and within the period of, an agreement for cooperation arranged under section 123; or

‘‘(iii) persons otherwise authorized by law

to enter into such transactions;

‘‘(D) enter into contracts with persons licensed under section 53, 63, 103, or 104, for as

long as the corporation considers necessary

or desirable, to provide uranium or uranium

enrichment and related services;

‘‘(E) enter into contracts to provide uranium or uranium enrichment and related

services in accordance with, and within the

period of, an agreement for cooperation arranged under section 123 or as otherwise authorized by law; and

‘‘(F) take any and all such other actions as

are permitted by the law of the jurisdiction

of incorporation of the corporation.

‘‘(3) TRANSFER OF ASSETS.—For purposes of

implementing the privatization, the Corporation may transfer some or all of its assets and obligations to the corporation established pursuant to this section,

including—

‘‘(A) all of the Corporation’s assets, including all contracts, agreements, and leases, including all uranium enrichment contracts

and power purchase contracts;

‘‘(B) all funds in accounts of the Corporation held by the Treasury or on deposit with

any bank or other financial institution;

‘‘(C) all of the Corporation’s rights, duties,

and obligations, accruing subsequent to the

privatization date, under the power purchase

contracts covered by section 1401(b)(2)(B);

and

‘‘(D) all of the Corporation’s rights, duties,

and obligations, accruing subsequent to the

privatization date, under the lease agreement between the Department and the Corporation executed by the Department and

the Corporation pursuant to section 1403.

‘‘(4) MERGER OR CONSOLIDATION.—For purposes of implementing the privatization, the

Corporation may merge or consolidate with

the corporation established pursuant to subsection (a)(1) if such action is contemplated

by the plan for privatization approved by the

President under section 1502(b). The Board

shall have exclusive authority to approve

such merger or consolidation and to take all

further actions necessary to consummate

such merger or consolidation, and no action

by or in respect of shareholders shall be required. The merger or consolidation shall be

effected in accordance with, and have the effects of a merger or consolidation under, the

laws of the jurisdiction of incorporation of

the surviving corporation, and all rights and

benefits provided under this title to the Corporation shall apply to the surviving corporation as if it were the Corporation.

‘‘(5) TAX TREATMENT OF PRIVATIZATION.—

‘‘(A) TRANSFER OF ASSETS OR MERGER.—No

income, gain, or loss shall be recognized by

any person by reason of the transfer of the

Corporation’s assets to, or the Corporation’s

merger with, the corporation established

pursuant to subsection (a)(1) in connection

with the privatization.

‘‘(B) CANCELLATION OF DEBT AND COMMON

STOCK.—No income, gain, or loss shall be recognized by any person by reason of any cancellation of any obligation or common stock

of the Corporation in connection with the

privatization.

‘‘(b) OSHA REQUIREMENTS.—For purposes

of the regulation of radiological and nonradiological hazards under the Occupational

Safety and Health Act of 1970, the corporation established pursuant to subsection (a)(1)

shall be treated in the same manner as other

employers licensed by the Nuclear Regulatory Commission. Any interagency agreement entered into between the Nuclear Regulatory Commission and the Occupational

Safety and Health Administration governing

the scope of their respective regulatory authorities shall apply to the corporation as if

the corporation were a Nuclear Regulatory

Commission licensee.

‘‘(c) LEGAL STATUS OF PRIVATE CORPORATION.—

‘‘(1) NOT FEDERAL AGENCY.—The corporation established pursuant to subsection (a)(1)

shall not be an agency, instrumentality, or

establishment of the United States Government and shall not be a Government corporation or Government-controlled corporation.

‘‘(2) NO RECOURSE AGAINST UNITED STATES.—

Obligations of the corporation established

pursuant to subsection (a)(1) shall not be obligations of, or guaranteed as to principal or

interest by, the Corporation or the United

States, and the obligations shall so plainly

state.

‘‘(3) NO CLAIMS COURT JURISDICTION.—No action under section 1491 of title 28, United

States Code, shall be allowable against the

United States based on the actions of the

corporation established pursuant to subsection (a)(1).

‘‘(d) BOARD OF DIRECTOR’S ELECTION AFTER

PUBLIC OFFERING.—In the event that the privatization is implemented by means of a

public offering, an election of the members

of the board of directors of the Corporation

by the shareholders shall be conducted before the end of the 1-year period beginning

the date shares are first offered to the public

pursuant to such public offering.

‘‘(e) ADEQUATE PROCEEDS.—The Secretary

of Energy shall not allow the privatization of

the Corporation unless before the sale date

the Secretary determines that the estimated

sum of the gross proceeds from the sale of

the Corporation will be an adequate

amount.’’.

(b) OWNERSHIP LIMITATIONS.—Chapter 25 (as

amended by subsection (a)) is amended by

adding at the end the following new section:

‘‘SEC. 1504. OWNERSHIP LIMITATIONS.

‘‘(a) SECURITIES LIMITATION.—In the event

that the privatization is implemented by

means of a public offering, during a period of

3 years beginning on the privatization date,

no person, directly or indirectly, may acquire or hold securities representing more

than 10 percent of the total votes of all outstanding voting securities of the Corporation.
HOUSE OF REPRESENTATIVES

547

1995 T56.13

‘‘(b) APPLICATION.—Subsection (a) shall not

apply—

‘‘(1) to any employee stock ownership plan

of the Corporation,

‘‘(2) to underwriting syndicates holding

shares for resale, or

‘‘(3) in the case of shares beneficially held

for others, to commercial banks, brokerdealers, clearing corporations, or other

nominees.

‘‘(c) No director, officer, or employee of the

Corporation may acquire any securities, or

any right to acquire securities, of the

Corporation—

‘‘(1) in the public offering of securities of

the Corporation in the implementation of

the privatization,

‘‘(2) pursuant to any agreement, arrangement, or understanding entered into before

the privatization date, or

‘‘(3) before the election of directors of the

Corporation under section 1503(d) on any

terms more favorable than those offered to

the general public.’’.

(c) EXEMPTION FROM LIABILITY.—Chapter 25

(as amended by subsection (b)) is amended by

adding at the end the following new section:

‘‘SEC. 1505. EXEMPTION FROM LIABILITY.

‘‘(a) IN GENERAL.—No director, officer, employee, or agent of the Corporation shall be

liable, for money damages or otherwise, to

any party if, with respect to the subject matter of the action, suit, or proceeding, such

person was fulfilling a duty, in connection

with any action taken in connection with

the privatization, which such person in good

faith reasonably believed to be required by

law or vested in such person.

‘‘(b) EXCEPTION.—The privatization shall be

subject to the Securities Act of 1933 and the

Securities Exchange Act of 1934. The exemption set forth in subsection (a) shall not

apply to claims arising under such Acts or

under the Constitution or laws of any State,

territory, or possession of the United States

relating to transactions in securities, which

claims are in connection with a public offering implementing the privatization.’’.

(d) RESOLUTION OF CERTAIN ISSUES.—Chapter 25 (as amended by subsection (c)) is

amended by adding at the end the following

new section:

‘‘SEC. 1506. RESOLUTION OF CERTAIN ISSUES.

‘‘(a) CORPORATION ACTIONS.—Notwithstanding any provision of any agreement to

which the Corporation is a party, the Corporation shall not be considered to be in

breach, default, or violation of any such

agreement because of any provision of this

chapter or any action the Corporation is required to take under this chapter.

‘‘(b) RIGHT TO SUE WITHDRAWN.—The

United States hereby withdraws any stated

or implied consent for the United States, or

any agent or officer of the United States, to

be sued by any person for any legal, equitable, or other relief with respect to any

claim arising out of, or resulting from, acts

or omissions under this chapter.’’.

(e) APPLICATION OF PRIVATIZATION PROCEEDS.—Chapter 25 (as amended by subsection (d)) is amended by adding at the end

the following new section:

‘‘SEC. 1507. APPLICATION OF PRIVATIZATION

PROCEEDS.

‘‘The proceeds from the privatization shall

be included in the budget baseline required

by the Balanced Budget and Emergency Deficit Control Act of 1985 and shall be counted

as an offset to direct spending for purposes of

section 252 of such Act, notwithstanding section 257(e) of such Act.’’.

(f) CONFORMING AMENDMENT.—The table of

contents for chapter 25 is amended by inserting after the item for section 1502 the following:

‘‘Sec. 1503. Establishment of Private Corporation.

‘‘Sec. 1504. Ownership Limitations.

‘‘Sec. 1505. Exemption from Liability.

‘‘Sec. 1506. Resolution of Certain Issues.

‘‘Sec. 1507. Application of Privatization Proceeds.’’.

(g) Section 193 (42 U.S.C. 2243) is amended

by adding at the end the following:

‘‘(f) LIMITATION.—If the privatization of the

United States Enrichment Corporation results in the Corporation being—

‘‘(1) owned, controlled, or dominated by a

foreign corporation or a foreign government,

or

‘‘(2) otherwise inimical to the common defense or security of the United States,

any license held by the Corporation under

sections 53 and 63 shall be terminated.’’.

(h) PERIOD FOR CONGRESSIONAL REVIEW.—

Section 1502(d) (42 U.S.C. 2297d–1(d)) is

amended by striking ‘‘less than 60 days after

notification of the Congress’’ and inserting

‘‘less than 60 days after the date of the report to Congress by the Comptroller General

under subsection (c)’’.

SEC. 707. PERIODIC CERTIFICATION OF COMPLIANCE.

Section 1701(c)(2) (42 U.S.C. 2297f(c)(2)) is

amended by striking ‘‘ANNUAL APPLICATION

FOR CERTIFICATE OF COMPLIANCE.—The Corporation shall apply at least annually to the

Nuclear Regulatory Commission for a certificate of compliance under paragraph (1).’’

and inserting ‘‘PERIODIC APPLICATION FOR

CERTIFICATE OF COMPLIANCE.—The Corporation shall apply to the Nuclear Regulatory

Commission for a certificate of compliance

under paragraph (1) periodically, as determined by the Nuclear Regulatory Commission, but not less than every 5 years.’’.

SEC. 708. LICENSING OF OTHER TECHNOLOGIES.

Subsection (a) of section 1702 (42 U.S.C.

2297f–1(a)) is amended by striking ‘‘other

than’’ and inserting ‘‘including’’.

SEC. 709. CONFORMING AMENDMENTS.

(a) REPEALS IN ATOMIC ENERGY ACT OF 1954

AS OF THE PRIVATIZATION DATE.—

(1) REPEALS.—As of the privatization date

(as defined in section 1201(13) of the Atomic

Energy Act of 1954), the following sections

(as in effect on such privatization date) of

the Atomic Energy Act of 1954 are repealed:

(A) Section 1202.

(B) Sections 1301 through 1304.

(C) Sections 1306 through 1316.

(D) Sections 1404 and 1405.

(E) Section 1601.

(F) Sections 1603 through 1607.

(2) CONFORMING AMENDMENT.—The table of

contents of such Act is amended by repealing

the items referring to sections repealed by

paragraph (1).

(b) STATUTORY MODIFICATIONS.—As of such

privatization date, the following shall take

effect:

(1) For purposes of title I of the Atomic

Energy Act of 1954, all references in such Act

to the ‘‘United States Enrichment Corporation’’ shall be deemed to be references to the

corporation established pursuant to section

1503 of the Atomic Energy Act of 1954 (as

added by section 6(a)).

(2) Section 1018(1) of the Energy Policy Act

of 1992 (42 U.S.C. 2296b–7(1)) is amended by

striking ‘‘the United States’’ and all that

follows through the period and inserting

‘‘the corporation referred to in section

1201(4) of the Atomic Energy Act of 1954.’’.

(3) Section 9101(3) of title 31, United States

Code, is amended by striking subparagraph

(N), as added by section 902(b) of Public Law

102–486.

(c) REVISION OF SECTION 1305.—As of such

privatization date, section 1305 of the Atomic

Energy Act of 1954 (42 U.S.C 2297b–4) is

amended—

(1) by repealing subsections (a), (b), (c), and

(d), and

(2) in subsection (e)—

(A) by striking the subsection designation

and heading,

(B) by redesignating paragraphs (1) and (2)

(as added by section 4(a)) as subsections (a)

and (b) and by moving the margins 2-ems to

the left,

(C) by striking paragraph (3), and

(D) by redesignating paragraph (4) (as

amended by section 4(b)) as subsection (c),

and by moving the margins 2-ems to the left.

It was decided in the Yeas ....... 119 ! negative ....................... Nays ...... 313

T56.13 [Roll No. 292]

AYES—119

Abercrombie

Ackerman

Andrews

Baldacci

Barcia

Bevill

Bonior

Borski

Boucher

Browder

Brown (FL)

Brown (OH)

Clay

Clayton

Clement

Clyburn

Coleman

Collins (IL)

Collins (MI)

Conyers

Cramer

Danner

de la Garza

DeLauro

Dingell

Dixon

Durbin

Edwards

Engel

Eshoo

Evans

Farr

Fattah

Fazio

Filner

Flake

Foglietta

Ford

Frank (MA)

Frost

Gejdenson

Gephardt

Gonzalez

Gordon

Gutierrez

Hastings (FL)

Hefner

Hinchey

Holden

Jackson-Lee

Jefferson

Johnson (SD)

Johnson, E. B.

Johnston

Kennedy (RI)

Kennelly

Lantos

Levin

Lewis (GA)

Lofgren

Lowey

Maloney

Manton

Markey

Martinez

Mascara

Matsui

McHale

Meek

Menendez

Miller (CA)

Mineta

Mink

Moakley

Moran

Nadler

Neal

Oberstar

Obey

Olver

Owens

Pallone

Payne (NJ)

Peterson (MN)

Pomeroy

Rahall

Reed

Richardson

Rose

Rush

Sabo

Sanders

Sawyer

Schroeder

Schumer

Serrano

Slaughter

Spratt

Stokes

Studds

Stupak

Tanner

Thompson

Thornton

Torres

Torricelli

Towns

Traficant

Tucker

Velazquez

Vento

Volkmer

Ward

Waxman

Wise

Woolsey

Wyden

Wynn

Yates

NOES—313

Allard

Archer

Armey

Bachus

Baesler

Baker (CA)

Baker (LA)

Ballenger

Barr

Barrett (NE)

Barrett (WI)

Bartlett

Barton

Bass

Bateman

Becerra

Beilenson

Bentsen

Bereuter

Berman

Bilbray

Bilirakis

Bishop

Bliley

Blute

Boehlert

Boehner

Bonilla

Bono

Brewster

Brown (CA)

Brownback

Bryant (TN)

Bryant (TX)

Bunn

Bunning

Burr

Burton

Buyer

Callahan

Calvert

Camp

Canady

Cardin

Castle

Chabot

Chambliss

Chapman

Chenoweth

Christensen

Chrysler

Clinger

Coble

Coburn

Collins (GA)

Combest

Condit

Cooley

Costello

Cox

Coyne

Crane

Crapo

Cremeans

Cubin

Cunningham

Davis

Deal

DeFazio

DeLay

Dellums

Deutsch

Diaz-Balart

Dickey

Dicks

Doggett

Dooley

Doolittle

Dornan

Doyle

Dreier

Duncan

Dunn

Ehlers

Ehrlich

Emerson

English

Ensign

Everett

Ewing

Fawell

Fields (LA)

Fields (TX)

Flanagan

Foley

Forbes

Fowler

Fox

Franks (CT)

Franks (NJ)

Frelinghuysen

Frisa

Funderburk

Furse

Gallegly

Ganske

Gekas

Geren

Gibbons

Gilchrest

Gillmor

Gilman

Goodlatte

Goodling

Goss

Graham

Green