**SUMMARY OF EXPIRING TAX AND TRADE PROVISIONSAND OTHER REVENUE PROVISIONSCONTAINED IN THE CONFERENCE AGREEMENT ONH.R. 4328, THE OMNIBUS CONSOLIDATED ANDEMERGENCY SUPPLEMENTAL APPROPRIATIONS ACT,1999**

**Prepared by the Staff**

**of the**

**Joint Committee on Taxation**

**October 20, 1998**

**JCX-74-98**

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**INTRODUCTION**

	This document(1), prepared by the staff of the Joint Committee on Taxation, contains asummary of revenue and certain other provisions of the conference agreement on H.R. 4328, theOmnibus Consolidated and Emergency Supplemental Appropriations Act, 1999.  Included in thisdocument is a summary of (1) emergency tax relief for farmers, (2) expiring tax and tradeprovisions, (3) other revenue provisions, (4) revenue offset provisions, (5) tax technicalcorrection provisions, and (6) a revenue offset for the Medicare home health care provisions.  Aseparate document (JCX-73-98) provides estimated budget effects of the revenue and tradeprovisions of H.R. 4328.

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**SUMMARY OF EXPIRING TAX AND TRADE PROVISIONS AND OTHER REVENUE PROVISIONS OF H.R. 4328**

**A.  Emergency Tax Relief for Farmers
**Income averaging for farmers**

	The bill permanently extends the income averaging provision available to farmers,effective for taxable years beginning after December 31, 2000.

**Farm production flexibility contract payments**

	The time a production flexibility contract payment under the Federal AgricultureImprovement and Reform Act of 1996 ("FAIR Act") is properly includible in income isdetermined without regard to the options granted by section 112(d)(2) (allowing receipt of one-half of the annual payment on either December 15 or January 15 of the fiscal year) or section112(d)(3) (allowing the acceleration of all payments for fiscal year 1999) of the FAIR Act.  Theprovision is effective for taxable years ending after December 31, 1995.

**Net operating loss carrybacks**

	The bill provides a special five-year carryback period for net operating losses attributableto a farming business.  The provision is effective for net operating losses arising in taxable yearsbeginning after December 31, 1997.

**B.  Extension of Expiring Tax and Trade Provisions**

	The bill extends the following tax and trade provisions, retroactive to the existingexpiration date:

	(1)	Research and experimentation tax credit (through June 30, 1999);

	(2)	Work opportunity tax credit (through June 30, 1999);

	(3)	Welfare-to-work tax credit (through June 30, 1999);

	(4)	Permanent extension of the deduction for contributions of appreciated stock to privatefoundations, along with public inspection of private foundation annual returns;

	(5)	Exceptions under subpart F for certain active financing income, with modifications,applicable only for taxable years beginning in 1999;

	(6)	Disclosure of return information to the Department of Education for incomecontingent student loans (through September 30, 2003); 

	(7)	Reauthorization of the generalized system of preferences ("GSP") (which grantsauthority to the President to provide duty-free treatment on imports of certain articlesfrom beneficiary developing countries subject to certain conditions and limitations,under Title V of the Trade Act of 1974, as amended), effective for duties paid on orafter July 1, 1998, and before June 30, 1999; and 

	(8)	Reauthorization of three trade adjustment assistance ("TAA") programs under Title IIof the Trade Act of 1974 (as amended) to provide assistance to individual workersand firms affected adversely by the reduction of barriers to foreign trade, effective onthe date of enactment (through June 30, 1999).

**C.  Other Revenue Provisions**

**Personal credits fully allowed against regular tax liability during 1998**

	The bill allows the nonrefundable personal credits to offset the regular tax in full (withoutregard to the tentative minimum tax) for taxable years beginning during 1998.

**Increase deduction for health insurance expenses of self-employed individuals**

	The bill increases the deduction for health insurance of self-employed individuals to 60percent for taxable years beginning in 1999 through 2001, to 70 percent for taxable yearsbeginning in 2002, and to 100 percent for taxable years beginning in 2003 and thereafter.

**Modification of individual estimated tax safe harbors**

	The provision modifies the estimated tax safe harbor which is based on a taxpayer's prioryear's liability for individual taxpayers with an adjusted gross income of more than $150,000. For taxable years beginning in 2000 and 2001, 106 percent of the prior year's liability must bepaid by such taxpayers in order to satisfy the safe harbor.

**Volume limits on private activity bonds**

	The bill increases the limit on State private activity tax-exempt bonds to $75 per residentof each State or $225 million (if greater) beginning in calendar year 2007.  The increase isphased in, beginning with $55 per capita or $165 million (if greater) in calendar year 2003.

**Treasury study on depreciation**

	The Treasury Department is directed to conduct a comprehensive study of the recoveryperiods and depreciation methods under section 168 of the Internal Revenue Code, and toprovide recommendations for determining such periods and methods in a more rational manner. The results and recommendations of the study are to be submitted to the House Ways and Meansand Senate Finance Committees by March 31, 2000.

**State election to exempt student employees from Social Security**

	The bill allows a limited window of time (January 1 through March 31, 1999) for Statesto modify existing State agreements to exempt from Social Security coverage students (includinggraduate assistants) who are employed by a public school, university, or college in anonexempted State.  This provision applies to three States that did not previously elect to exemptstudent employees from Social Security coverage.  The provision is effective with respect toearnings after June 30, 2000.

**D.  Revenue Offset Provisions**

**Treatment of certain deductible liquidating distributions of regulated investmentcompanies ("RICs") and real estate investment trusts ("REITS")**

	Under the bill, any amount which a liquidating RIC or REIT may take as a deduction fordividends paid with respect to an otherwise tax-free liquidating distribution to an 80-percentcorporate owner will be includible in the income of the recipient corporation.  The provision iseffective for distributions on or after May 22, 1998, regardless of when the plan of liquidationwas adopted.

**Vaccine excise tax**

	The bill adds any vaccine against rotavirus gastroenteritis to the list of taxable vaccines. The net receipts from the tax are deposited in the Vaccine Injury Compensation Trust Fund.  Theprovision is effective beginning the day after the date of enactment.

**Mathematical error procedure**

	The bill clarifies and expands the mathematical and clerical error procedures so that acorrect taxpayer identification number ("TIN") is a TIN assigned by the Social SecurityAdministration (or Internal Revenue Service) to the individual identified on the tax return.  Theprovision is effective for taxable years ending after the date of enactment.

**Restrict NOL carryback rules for specified liability losses**

	The bill limits the definition of specified liability losses that can be carried back 10 years. The provision is effective for net operating losses arising in taxable years ending after the date ofenactment. 

**E.  Tax Technical Corrections Provisions**

	The bill makes necessary technical corrections to recent tax legislation, including theInternal Revenue Service Restructuring and Reform Act of 1998, the Taxpayer Relief Act of1997, and other tax legislation.

**F.  Revenue Offset for Medicare Home Health Provisions**

**Treatment of certain prizes**

	A prize winner who is provided the option to choose either cash or an annuity within 60days after becoming entitled to the prize is not required to include amounts in gross incomemerely by reason of having the option.  The provision is effective for prizes to which thetaxpayer first becomes entitled after the date of enactment.  In addition, the provision applies to aprize to which the taxpayer became entitled before the date of enactment, if the taxpayer has theoption to receive a single cash payment during the 18-month period beginning on July 1, 1999.

1.   This document may be cited as follows: Joint Committee on Taxation, *Summary ofExpiring Tax and Trade Provisions And Other Revenue Provisions Contained in the ConferenceAgreement on H.R. 4328, the Omnibus Consolidated and Emergency SupplementalAppropriations Act, 1999*(JCX-74-98), October 20, 1998.**