II

106TH CONGRESS

2D SESSION S. 3047

To amend the Internal Revenue Code of 1986 to expand the Lifetime Learning credit and provide an optional deduction for qualified tuition and

related expenses.

IN THE SENATE OF THE UNITED STATES

SEPTEMBER 14, 2000

Mr. BIDEN introduced the following bill; which was read twice and referred

to the Committee on Finance

A BILL

To amend the Internal Revenue Code of 1986 to expand

the Lifetime Learning credit and provide an optional

deduction for qualified tuition and related expenses.

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

3 SECTION 1. MODIFICATION OF LIFETIME LEARNING CRED4 IT AND OPTIONAL DEDUCTION FOR TUITION

5 EXPENSES.

6 (a) MODIFICATION OF LIFETIME LEARNING CRED7 IT.—

8 (1) INCREASE IN PERCENTAGE.—Section

9 25A(c)(1) of the Internal Revenue Code of 1986 (re-
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1 lating to per taxpayer credit) is amended by striking

2 ‘‘20 percent’’ and inserting ‘‘28 percent’’.

3 (2) LIMITATION BASED ON MODIFIED AD4 JUSTED GROSS INCOME.—

5 (A) IN GENERAL.—Section 25A(d)(2) of

6 the Internal Revenue Code of 1986 (relating to

7 amount of reduction) is amended to read as fol8 lows:

9 ‘‘(2) AMOUNT OF REDUCTION.—

10 ‘‘(A) HOPE SCHOLARSHIP.—In the case of

11 the Hope Scholarship credit, the amount deter12 mined under this paragraph is the amount

13 which bears the same ratio to the amount which

14 would be so taken into account as—

15 ‘‘(i) the excess of—

16 ‘‘(I) the taxpayer’s modified ad17 justed gross income for such taxable

18 year, over

19 ‘‘(II) $40,000 ($80,000 in the

20 case of a joint return), bears to

21 ‘‘(ii) $10,000 ($20,000 in the case of

22 a joint return).

23 ‘‘(B) LIFETIME LEARNING.—In the case of

24 the Lifetime Learning credit, the amount deter25 mined under subparagraph (A) shall be deter-
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1 mined by substituting ‘$50,000 ($100,000 in

2 the case of a joint return)’ for ‘$40,000

3 ($80,000 in the case of a joint return)’ in

4 clause (i)(II) of such subparagraph.’’.

5 (B) CONFORMING AMENDMENT.—Section

6 25A(h)(2)(A) of the Internal Revenue Code of

7 1986 is amended by striking ‘‘the $40,000 and

8 $80,000 amounts’’ and inserting ‘‘each dollar

9 amount’’.

10 (b) DEDUCTION FOR QUALIFIED TUITION AND RE11 LATED EXPENSES IN LIEU OF LIFETIME LEARNING

12 CREDIT.—

13 (1) IN GENERAL.—Part VII of subchapter B of

14 chapter 1 of the Internal Revenue Code of 1986 is

15 amended by redesignating section 222 as section

16 223 and inserting after section 221 the following

17 new section:

18 ‘‘SEC. 222. QUALIFIED TUITION EXPENSES.

19 ‘‘(a) ALLOWANCE OF DEDUCTION.—In the case of an

20 individual, there shall be allowed as a deduction for the

21 taxable year an amount equal to the lesser of—

22 ‘‘(1) the qualified tuition and related expenses

23 (within the meaning of section 25A(c)) paid by the

24 taxpayer for the taxable year, or
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1 ‘‘(2) $10,000 ($5,000 in the case of taxable

2 years beginning in 2001 or 2002).

3 ‘‘(b) SPECIAL RULES.—

4 ‘‘(1) IN GENERAL.—Rules similar to the rules

5 of section 25A(g) shall apply for purposes of this

6 section.

7 ‘‘(2) RULES FOR DETERMINING EXPENSES.—

8 Rules similar to the rules of section 25A(c)(2) shall

9 apply for purposes of determining the qualified tui10 tion and related expenses to be taken into account

11 under subsection (a).

12 ‘‘(c) LIMITATION BASED ON MODIFIED ADJUSTED

13 GROSS INCOME.—The amount which would (but for this

14 subsection) be taken into account under subsection (a) for

15 the taxable year shall be reduced (but not below zero) by

16 the amount determined under section 25A(d)(2)(B) by ap17 plying the modified adjusted gross income as defined in

18 section 25A(d)(3) and determined without regard to the

19 deduction under this section.

20 ‘‘(d) COORDINATION WITH CERTAIN CREDITS.—No

21 deduction shall be allowed under this section with respect

22 to the qualified tuition and related expenses of any indi23 vidual unless a taxpayer elects not to have section 25A

24 apply for the taxable year with respect to—
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1 ‘‘(1) such individual, in the case of the Hope

2 Scholarship credit, and

3 ‘‘(2) the taxpayer, in the case of the Lifetime

4 Learning credit.

5 ‘‘(e) COORDINATION WITH EXCLUSIONS.—No deduc6 tion shall be allowed under this section with respect to

7 an individual for any taxable year if any portion of any

8 distribution during such taxable year from an education

9 individual retirement account is excluded from gross in10 come under section 530(d)(2).’’.

11 (2) DEDUCTION ALLOWED WHETHER OR NOT

12 TAXPAYER ITEMIZES OTHER DEDUCTIONS.—Section

13 62(a) of the Internal Revenue Code of 1986 (defin14 ing adjusted gross income) is amended by inserting

15 after paragraph (17) the following new paragraph:

16 ‘‘(18) QUALIFIED TUITION AND RELATED EX17 PENSES.—The deduction allowed by section 222.’’.

18 (3) CONFORMING AMENDMENT.—The table of

19 sections for part VII of subchapter B of chapter 1

20 of the Internal Revenue Code of 1986 is amended by

21 striking the last item and inserting the following

22 new items:

‘‘Sec. 222. Qualified tuition and related expenses.

‘‘Sec. 223. Cross reference.’’
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1 (c) EFFECTIVE DATE.—The amendments made by

2 this section shall apply to expenses paid in taxable years

3 beginning after December 31, 2000.

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