I

106TH CONGRESS

1ST SESSION H. R. 2020

To amend the Internal Revenue Code of 1986 to provide marriage penalty

relief, incentives to encourage health coverage, and increased child care

assistance, to extend certain expiring tax provisions, and for other purposes.

IN THE HOUSE OF REPRESENTATIVES

JUNE 7, 1999

Mrs. JOHNSON of Connecticut (for herself, Mr. HOUGHTON, Mr. CAMP, Mr.

ENGLISH, Mr. FOLEY, Mr. UPTON, Mr. LAZIO, Mr. BOEHLERT, Mr.

GREENWOOD, Mr. LEACH, Mr. SHAYS, Mr. EHLERS, Mr. LOBIONDO, Mr.

GILCHREST, Mr. BASS, Mr. HORN, Mr. BILBRAY, Mr. KOLBE, Mr.

QUINN, Ms. PRYCE of Ohio, Mr. FRELINGHUYSEN, Mr. MANZULLO, Mr.

OSE, Mr. SMITH of Michigan, Mr. HOEKSTRA, Mr. DREIER, Mrs. KELLY,

and Mrs. ROUKEMA) introduced the following bill; which was referred to

the Committee on Ways and Means

A BILL

To amend the Internal Revenue Code of 1986 to provide

marriage penalty relief, incentives to encourage health

coverage, and increased child care assistance, to extend

certain expiring tax provisions, and for other purposes.

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

3 SECTION 1. SHORT TITLE.

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

5 ‘‘Tax Relief for Working Americans Act of 1999’’.
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1 (b) TABLE OF CONTENTS.—

Sec. 1. Short title.

TITLE I—MARRIAGE PENALTY RELIEF

Sec. 101. Basic standard deduction for married individuals to be twice the deduction for unmarried individuals.

TITLE II—ADJUSTMENT OF SOCIAL SECURITY EARNING LIMIT

Sec. 201. Adjustment in monthly exempt amount for purposes of the social security earnings test.

TITLE III—INCENTIVES FOR HEALTH AND LONG-TERM CARE

COVERAGE

Sec. 301. Credit for health insurance costs of previously uninsured individuals

and individuals with COBRA coverage.

Sec. 302. Deduction for health insurance costs of employees and self-employed

individuals.

Sec. 303. Credit for taxpayers with long-term care needs.

TITLE IV—EXPANSION OF DEPENDENT CARE TAX CREDIT

Sec. 401. Expansion of dependent care tax credit.

TITLE V—ALTERNATIVE MINIMUM TAX RELIEF

Sec. 501. Nonrefundable personal credits allowed against alternative minimum

tax.

Sec. 502. Income averaging for farmers not to increase alternative minimum

tax liability.

TITLE VI—ELIMINATION OF 60-MONTH LIMIT ON STUDENT LOAN

INTEREST DEDUCTION

Sec. 601. Elimination of 60-month limit on student loan interest deduction.

TITLE VII—INCREASE IN LOW-INCOME HOUSING CREDIT STATE

CEILING

Sec. 701. Increase in State ceiling on low-income housing credit.

TITLE VIII—FARM AND RANCH RISK MANAGEMENT ACCOUNTS

Sec. 801. Farm and ranch risk management accounts.

TITLE IX—INCENTIVES FOR URBAN REVITALIZATION AND OPEN

SPACE

Sec. 901. Expensing of environmental remediation costs expanded to contaminated sites outside of targeted areas.

Sec. 902. Modifications to encourage contributions of capital gain real property

made for conservation purposes and of qualified conservation

contributions.

TITLE X—EXTENSION OF CERTAIN EXPIRING PROVISIONS

Sec. 1001. Research credit.
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Sec. 1002. Work opportunity credit.

Sec. 1003. Permanent subpart F exemption for active financing income.

Sec. 1004. Credit for electricity produced from renewable resources.

1 TITLE I—MARRIAGE PENALTY

2 RELIEF

3 SEC. 101. BASIC STANDARD DEDUCTION FOR MARRIED IN4 DIVIDUALS TO BE TWICE THE DEDUCTION

5 FOR UNMARRIED INDIVIDUALS.

6 (a) IN GENERAL.—Paragraph (2) of section 63(c) of

7 the Internal Revenue Code of 1986 (relating to standard

8 deduction) is amended—

9 (1) by striking ‘‘$5,000’’ in subparagraph (A)

10 and inserting ‘‘twice the dollar amount in effect

11 under subparagraph (C) for the taxable year’’,

12 (2) by adding ‘‘or’’ at the end of subparagraph

13 (B),

14 (3) by striking ‘‘in the case of’’ and all that fol15 lows in subparagraph (C) and inserting ‘‘in any

16 other case.’’, and

17 (4) by striking subparagraph (D).

18 (b) TECHNICAL AMENDMENT.—Subparagraph (B) of

19 section 1(f)(6) of such Code is amended by striking

20 ‘‘(other than with’’ and all that follows through ‘‘shall be

21 applied’’ and inserting ‘‘(other than sections 63(c)(4) and

22 151(d)(4)(A)) shall be applied’’.
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1 (c) EFFECTIVE DATE.—The amendments made by

2 this section shall apply to taxable years beginning after

3 December 31, 1999.

4 TITLE II—ADJUSTMENT OF SO5 CIAL SECURITY EARNING

6 LIMIT

7 SEC. 201. ADJUSTMENT IN MONTHLY EXEMPT AMOUNT FOR

8 PURPOSES OF THE SOCIAL SECURITY EARN9 INGS TEST.

10 (a) INCREASE IN MONTHLY EXEMPT AMOUNT FOR

11 INDIVIDUALS WHO HAVE ATTAINED RETIREMENT

12 AGE.—Section 203(f)(8)(D) of the Social Security Act (42

13 U.S.C. 403(f)(8)(D)) is amended—

14 (1) in clause (iii), by inserting ‘‘and’’ at the

15 end; and

16 (2) by striking clauses (iv) through (vii) and in17 serting the following new clause:

18 ‘‘(iv) for each month of any taxable

19 year ending after 1999 and before 2001,

20 $2,500.’’.

21 (b) CONFORMING AMENDMENTS.—

22 (1) Section 203(f)(8)(B)(ii) of such Act (42

23 U.S.C. 403(f)(8)(B)(ii)) is amended—
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1 (A) by striking ‘‘after 2001 and before

2 2003’’ and inserting ‘‘after 1999 and before

3 2001’’; and

4 (B) in subclause (II), by striking ‘‘2001’’

5 and inserting ‘‘1998’’.

6 (2) The second sentence of section 223(d)(4)(A)

7 of such Act (42 U.S.C. 423(d)(4)(A)) is amended by

8 inserting ‘‘and section 201 of the Tax Relief for

9 Working Americans Act of 1999’’ after ‘‘1996’’.

10 (c) EFFECTIVE DATE.—The amendments made by

11 this section shall apply with respect to taxable years begin12 ning after 1999.

13 TITLE III—INCENTIVES FOR

14 HEALTH AND LONG-TERM

15 CARE COVERAGE

16 SEC. 301. CREDIT FOR HEALTH INSURANCE COSTS OF PRE17 VIOUSLY UNINSURED INDIVIDUALS AND IN18 DIVIDUALS WITH COBRA COVERAGE.

19 (a) IN GENERAL.—Subpart A of part IV of sub20 chapter A of chapter 1 of the Internal Revenue Code of

21 1986 (relating to nonrefundable personal credits) is

22 amended by inserting after section 25A the following new

23 section:
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1 ‘‘SEC. 25B. HEALTH INSURANCE COSTS OF PREVIOUSLY UN2 INSURED INDIVIDUALS AND INDIVIDUALS

3 WITH COBRA COVERAGE.

4 ‘‘(a) IN GENERAL.—In the case of an individual,

5 there shall be allowed as a credit against the tax imposed

6 by this chapter for the taxable year an amount equal to

7 60 percent of the amount paid during the taxable year

8 for coverage for the taxpayer, his spouse, and dependents

9 under qualified health insurance.

10 ‘‘(b) DOLLAR LIMITATION.—

11 ‘‘(1) IN GENERAL.—The amount allowed as a

12 credit under subsection (a) to the taxpayer for the

13 taxable year shall not exceed the sum of the monthly

14 limitations for eligible months during such taxable

15 year.

16 ‘‘(2) MONTHLY LIMITATION.—The monthly lim17 itation for any eligible month is the amount equal to

1 18 ⁄12 of—

19 ‘‘(A) $1,200 if, as of the first day of such

20 month, the taxpayer has self-only coverage

21 under qualified health insurance, and

22 ‘‘(B) $2,400 if, as of the first day of such

23 month, the taxpayer has family coverage under

24 qualified health insurance.

25 ‘‘(3) ELIGIBLE MONTH.—For purposes of this

26 subsection—
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1 ‘‘(A) IN GENERAL.—The term ‘eligible

2 month’ means any month which begins at least

3 1 year after the most recent month that the

4 individual—

5 ‘‘(i) was eligible to participate in any

6 group health plan of an employer which

7 provided qualified health insurance (deter8 mined without regard to subsection

9 (d)(2)), or

10 ‘‘(ii) participated in any group health

11 plan of any other entity which provided

12 such insurance.

13 ‘‘(B) JOINT RETURNS.—In the case of a

14 joint return, a month shall be treated as an eli15 gible month only if it is an eligible month of

16 each spouse, determined by applying this para17 graph separately to each spouse.

18 ‘‘(4) CERTAIN OTHER COVERAGE.—Amounts

19 paid for coverage of an individual for any month

20 shall not be taken into account under subsection (a)

21 if, as of the first day of such month, such individual

22 is covered under any medical care program described

23 in—

24 ‘‘(A) title XVIII, XIX, or XXI of the So25 cial Security Act,
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1 ‘‘(B) chapter 55 of title 10, United States

2 Code,

3 ‘‘(C) chapter 17 of title 38, United States

4 Code,

5 ‘‘(D) chapter 89 of title 5, United States

6 Code, or

7 ‘‘(E) the Indian Health Care Improvement

8 Act.

9 ‘‘(5) SPECIAL RULE FOR MARRIED INDIVID10 UALS.—In the case of an individual—

11 ‘‘(A) who is married (within the meaning

12 of section 7703) as of the close of the taxable

13 year but does not file a joint return for such

14 year, and

15 ‘‘(B) who does not live apart from such in16 dividual’s spouse at all times during the taxable

17 year,

18 the limitation under paragraph (2)(A) (and not the

19 limitation under paragraph (2)(B)) shall apply to

20 such individual.

21 ‘‘(c) LIMITATION BASED ON ADJUSTED GROSS IN22 COME.—

23 ‘‘(1) IN GENERAL.—The aggregate amount

24 which would (but for this subsection) be allowed as

25 a credit under this section shall be reduced (but not
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1 below zero) by the amount determined under para2 graph (2).

3 ‘‘(2) AMOUNT OF REDUCTION.—

4 ‘‘(A) IN GENERAL.—The amount deter5 mined under this paragraph shall be the

6 amount which bears the same ratio to such ag7 gregate amount as—

8 ‘‘(i) the excess of—

9 ‘‘(I) the taxpayer’s modified ad10 justed gross income for such taxable

11 year, over

12 ‘‘(II) the applicable dollar

13 amount, bears to

14 ‘‘(ii) $10,000.

15 ‘‘(B) MODIFIED ADJUSTED GROSS IN16 COME.—For purposes of this paragraph, the

17 term ‘modified adjusted gross income’ means

18 adjusted gross income increased by any amount

19 excluded from gross income under section 911,

20 931, or 933.

21 ‘‘(C) ROUNDING.—Any amount determined

22 under subparagraph (A) which is not a multiple

23 of $10 shall be rounded to the next lowest $10.
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1 ‘‘(3) APPLICABLE DOLLAR AMOUNT.—For pur2 poses of paragraph (2), the term ‘applicable dollar

3 amount’ means—

4 ‘‘(A) $60,000 in the case of a taxpayer

5 whose qualified health insurance coverage cov6 ers more than 1 individual referred to in sub7 section (a), and

8 ‘‘(B) $30,000—

9 ‘‘(i) in any case not described in sub10 paragraph (A), and

11 ‘‘(ii) in the case of a married indi12 vidual filing a separate return.

13 For purposes of this paragraph, marital status shall

14 be determined under section 7703.

15 ‘‘(d) QUALIFIED HEALTH INSURANCE.—For pur16 poses of this section—

17 ‘‘(1) IN GENERAL.—Except as otherwise pro18 vided in this paragraph, the term ‘qualified health

19 insurance’ means insurance which constitutes med20 ical care, as defined in section 213(d) without regard

21 to—

22 ‘‘(A) paragraph (1)(C) thereof, and

23 ‘‘(B) so much of paragraph (1)(D) thereof

24 as relates to qualified long-term care insurance

25 contracts.
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1 ‘‘(2) EXCLUSION OF COVERAGE PROVIDED

2 UNDER GROUP HEALTH PLANS, ETC.—Such term

3 shall not include insurance provided through any

4 group health plan of an employer or any other enti5 ty.

6 ‘‘(3) EXCLUSION OF CERTAIN OTHER CON7 TRACTS.—Such term shall not include insurance if a

8 substantial portion of its benefits are excepted bene9 fits (as defined in section 9832(c)).

10 ‘‘(e) INDIVIDUALS WITH COBRA CONVERGE.—In

11 the case of continuation coverage under a group health

12 plan which is required to be provided by Federal law for

13 an individual during the period specified in section

14 4980B(f)(2)(B), notwithstanding subsection (d)—

15 ‘‘(1) such coverage shall be treated as qualified

16 health insurance, and

17 ‘‘(2) the term ‘eligible month’ includes months

18 of such coverage.

19 ‘‘(f) SPECIAL RULES.—

20 ‘‘(1) COORDINATION WITH OTHER DEDUC21 TIONS.—No credit shall be allowed under this sec22 tion for the taxable year if any amount paid for

23 qualified health insurance is taken into account in

24 determining the deduction allowed for such year

25 under section 213 or 222.
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1 ‘‘(2) DENIAL OF CREDIT TO DEPENDENTS.—No

2 credit shall be allowed under this section to any indi3 vidual with respect to whom a deduction under sec4 tion 151 is allowable to another taxpayer for a tax5 able year beginning in the calendar year in which

6 such individual’s taxable year begins.

7 ‘‘(3) INFLATION ADJUSTMENT.—

8 ‘‘(A) IN GENERAL.—In the case of a tax9 able year beginning after 2000, each dollar

10 amount in subsection (c)(3) shall be increased

11 by an amount equal to—

12 ‘‘(i) such dollar amount, multiplied by

13 ‘‘(ii) the cost-of-living adjustment de14 termined under section 1(f)(3) for the cal15 endar year in which the taxable year be16 gins, determined by substituting ‘calendar

17 year 1999’ for ‘calendar year 1992’ in sub18 paragraph (B) thereof.

19 ‘‘(B) ROUNDING.—If any amount as ad20 justed under subparagraph (A) is not a multiple

21 of $100, such amount shall be rounded to the

22 next lowest multiple of $100.’’

23 (b) CLERICAL AMENDMENT.—The table of sections

24 for subpart A part IV of subchapter A of chapter 1 of
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1 such Code is amended by inserting after the item relating

2 to section 25A the following new item:

‘‘Sec. 25B. Health insurance costs of previously uninsured individuals and individuals with COBRA coverage.’’

3 (c) EFFECTIVE DATE.—The amendments made by

4 this section shall apply to taxable years beginning after

5 December 31, 1999.

6 SEC. 302. DEDUCTION FOR HEALTH INSURANCE COSTS OF

7 EMPLOYEES AND SELF-EMPLOYED INDIVID8 UALS.

9 (a) IN GENERAL.—Part VII of subchapter B of chap10 ter 1 of the Internal Revenue Code of 1986 (relating to

11 additional itemized deductions) is amended by redesig12 nating section 222 as section 223 and by inserting after

13 section 221 the following new section:

14 ‘‘SEC. 222. COSTS OF HEALTH INSURANCE AND LONG-TERM

15 CARE INSURANCE.

16 ‘‘(a) IN GENERAL.—In the case of an individual,

17 there shall be allowed as a deduction an amount equal to

18 the sum of—

19 ‘‘(1) the applicable health care percentage of

20 the amount paid during the taxable year for cov21 erage for the taxpayer, his spouse, and dependents

22 under qualified health insurance, and

23 ‘‘(2) the applicable long-term care percentage of

24 the amount of eligible long-term care premiums (as
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1 defined in section 213(d)(10)) paid during the tax2 able year for coverage for the taxpayer, his spouse,

3 and dependents under a qualified long-term care in4 surance contract (as defined in section 7702B(b)).

5 ‘‘(b) APPLICABLE PERCENTAGES.—For purposes of

6 subsection (a)—

7 ‘‘(1) APPLICABLE HEALTH CARE PERCENT8 AGE.—

9 ‘‘(A) IN GENERAL.—Except as provided in

10 subparagraph (B), the applicable health care

11 percentage shall be determined in accordance

12 with the following table:

‘‘For taxable years beginning The applicable health

in calendar year— care percentage is—

2000 ............................................................................. 60

2001 ............................................................................. 70

2002 ............................................................................. 80

2003 ............................................................................. 90

2004 and thereafter ..................................................... 100.

13 ‘‘(B) SPECIAL RULE.—In the case of an

14 individual who is an employee within the mean15 ing of section 401(c)(1) and whose qualified

16 health insurance is not provided through a

17 group health plan of an employer, subparagraph

18 (A) shall be applied by substituting ‘100’ for

19 ‘90’ but only with respect to the lesser of the

20 taxpayer’s earned income (within the meaning

21 of section 401(c)) or the payments referred to

22 in subsection (a)(1).
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1 ‘‘(2) APPLICABLE LONG-TERM CARE PERCENT2 AGE.—

3 ‘‘(A) IN GENERAL.—Except as otherwise

4 provided in this paragraph, the applicable long5 term care percentage shall be determined in ac6 cordance with the following table based on the

7 number of years of continuous coverage (as of

8 the close of the taxable year) of the individual

9 under a qualified long-term care insurance con10 tract (as defined in section 7702B(b)):

‘‘If the number of years of The applicable long-term

continuous coverage is— care percentage is—

Less than 1 .................................................................. 50

At least 1 but less than 2 ............................................. 60

At least 2 but less than 3 ............................................. 70

At least 3 but less than 4 ............................................. 80

At least 4 but less than 5 ............................................. 90

At least 5 ...................................................................... 100.

11 ‘‘(B) SPECIAL RULES FOR INDIVIDUALS

12 WHO HAVE ATTAINED AGE 60.—In the case of

13 an individual who has attained age 60 as of the

14 close of the taxable year, the following table

15 shall be substituted for the table in subpara16 graph (A).

‘‘If the number of years of The applicable long-term

continuous coverage is— care percentage is—

Less than 1 .................................................................. 60

At least 1 but less than 2 ............................................. 70

At least 2 but less than 3 ............................................. 85

At least 3 ...................................................................... 100.

17 ‘‘(C) ONLY COVERAGE AFTER 1999 TAKEN

18 INTO ACCOUNT.—Only coverage for periods
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1 after December 31, 1999, shall be taken into

2 account under this paragraph.

3 ‘‘(D) CONTINUOUS COVERAGE.—An indi4 vidual shall not fail to be treated as having con5 tinuous coverage if the aggregate breaks in cov6 erage during any 1-year period are less than 60

7 days.

8 ‘‘(E) SELF-EMPLOYED INDIVIDUALS.—In

9 the case of an individual who is an employee

10 within the meaning of section 401(c)(1) and

11 whose qualified long-term care insurance con12 tract (as defined in section 7702B(b)) is not

13 provided through a group health plan of an em14 ployer, the applicable long-term care percentage

15 shall be—

16 ‘‘(i) 100 percent with respect to the

17 lesser of—

18 ‘‘(I) the eligible long-term care

19 premiums (as defined in section

20 213(d)(10)) referred to in subsection

21 (a)(2), or

22 ‘‘(II) the excess of the taxpayer’s

23 earned income (within the meaning of

24 section 401(c)) for the taxable year
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1 over the payments referred to in sub2 section (a)(1), and

3 ‘‘(ii) the percentage determined under

4 the other provisions of this paragraph with

5 respect to the remainder of such premiums

6 (determined by treating the premiums

7 taken into account under clause (i) as

8 being attributable to individuals in the

9 order of their ages, beginning with the old10 est).

11 ‘‘(c) EXCLUSION OF SUBSIDIZED COVERAGE.—Sub12 section (a) shall not apply to any taxpayer for any cal13 endar month for which the taxpayer participates in any

14 group health plan of an employer or any other entity if

15 less than 50 percent of the cost of the taxpayer’s coverage

16 under such plan is borne by the taxpayer. The preceding

17 sentence shall be applied separately with respect to para18 graphs (1) and (2) of subsection (a).

19 ‘‘(d) QUALIFIED HEALTH INSURANCE.—For pur20 poses of this section—

21 ‘‘(1) IN GENERAL.—The term ‘qualified health

22 insurance’ has the meaning given such term by sec23 tion 25B(d) determined without regard to paragraph

24 (2) thereof.

25 ‘‘(2) SPECIAL RULE.—
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1 ‘‘(A) IN GENERAL.—In the case of an indi2 vidual who is an employee within the meaning

3 of section 401(c)(1) and whose qualified health

4 insurance (without regard to this paragraph) is

5 not provided through a group health plan of an

6 employer, paragraph (3) of section 25B(d) shall

7 not apply for purposes of this section.

8 ‘‘(B) LIMITATION.—The amount taken

9 into account under subsection (a)(1) by reason

10 of subparagraph (A) shall not exceed the excess

11 of—

12 ‘‘(i) the taxpayer’s earned income

13 (within the meaning of section 401(c)),

14 over

15 ‘‘(ii) the amount which would (without

16 regard to this paragraph) be taken into ac17 count under subsection (a)(1).

18 ‘‘(e) SPECIAL RULES.—

19 ‘‘(1) COORDINATION WITH MEDICAL DEDUC20 TION, ETC.—Any amount paid by a taxpayer for in21 surance to which subsection (a) applies shall not be

22 taken into account in computing the amount allow23 able to the taxpayer as a deduction under section

24 213(a).
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1 ‘‘(2) DEDUCTION NOT ALLOWED FOR SELF-EM2 PLOYMENT TAX PURPOSES.—The deduction allow3 able by reason of this section shall not be taken into

4 account in determining an individual’s net earnings

5 from self-employment (within the meaning of section

6 1402(a)) for purposes of chapter 2.’’

7 (b) CONFORMING AMENDMENTS.—

8 (1) Subsection (l) of section 162 of such Code

9 is hereby repealed.

10 (2) Subsection (a) of section 62 of such Code

11 is amended by inserting after paragraph (17) the

12 following new item:

13 ‘‘(18) COSTS OF HEALTH INSURANCE AND

14 LONG-TERM CARE INSURANCE.—The deduction al15 lowed by section 222.’’

16 (3) The table of sections for part VII of sub17 chapter B of chapter 1 of such Code is amended by

18 striking the last item and inserting the following

19 new items:

‘‘Sec. 222. Costs of health insurance and long-term care insurance.

‘‘Sec. 223. Cross reference.’’

20 (c) EFFECTIVE DATE.—The amendments made by

21 this section shall apply to taxable years beginning after

22 December 31, 1999.
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1 SEC. 303. CREDIT FOR TAXPAYERS WITH LONG-TERM CARE

2 NEEDS.

3 (a) ALLOWANCE OF CREDIT.—

4 (1) IN GENERAL.—Section 24(a) of the Internal

5 Revenue Code of 1986 (relating to allowance of child

6 tax credit) is amended to read as follows:

7 ‘‘(a) ALLOWANCE OF CREDIT.—There shall be al8 lowed as a credit against the tax imposed by this chapter

9 for the taxable year an amount equal to the sum of—

10 ‘‘(1) $500 multiplied by the number of quali11 fying children of the taxpayer, plus

12 ‘‘(2) $1,000 multiplied by the number of appli13 cable individuals with respect to whom the taxpayer

14 is an eligible caregiver for the taxable year.

15 In any case in which the applicable individual and the eli16 gible caregiver are the same individual, the credit allowed

17 by paragraph (2) with respect to such individual shall not

18 exceed the aggregate amount paid by the taxpayer during

19 the taxable year (not compensated for by insurance or oth20 erwise) for qualified long-term care services (as defined

21 in section 7702B(c)) for such individual.’’

22 (2) ADDITIONAL CREDIT FOR TAXPAYER WITH

23 3 OR MORE SEPARATE CREDIT AMOUNTS.—So much

24 of section 24(d) of such Code as precedes paragraph

25 (1)(A) thereof is amended to read as follows:
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1 ‘‘(d) ADDITIONAL CREDIT FOR TAXPAYERS WITH 3

2 OR MORE SEPARATE CREDIT AMOUNTS.—

3 ‘‘(1) IN GENERAL.—If the sum of the number

4 of qualifying children of the taxpayer and the num5 ber of applicable individuals with respect to which

6 the taxpayer is an eligible caregiver is 3 or more for

7 any taxable year, the aggregate credits allowed

8 under subpart C shall be increased by the lesser

9 of—’’.

10 (3) CONFORMING AMENDMENTS.—

11 (A) The heading for section 32(n) of such

12 Code is amended by striking ‘‘CHILD’’ and in13 serting ‘‘FAMILY CARE’’.

14 (B) The heading for section 24 is amended

15 to read as follows:

16 ‘‘SEC. 24. FAMILY CARE CREDIT.’’

17 (C) The table of sections for subpart A of

18 part IV of subchapter A of chapter 1 of such

19 Code is amended by striking the item relating

20 to section 24 and inserting the following new

21 item:

‘‘Sec. 24. Family care credit.’’.

22 (b) DEFINITIONS.—Section 24(c) of such Code (de23 fining qualifying child) is amended to read as follows:

24 ‘‘(c) DEFINITIONS.—For purposes of this section—

25 ‘‘(1) QUALIFYING CHILD.—
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1 ‘‘(A) IN GENERAL.—The term ‘qualifying

2 child’ means any individual if—

3 ‘‘(i) the taxpayer is allowed a deduc4 tion under section 151 with respect to such

5 individual for the taxable year,

6 ‘‘(ii) such individual has not attained

7 the age of 17 as of the close of the cal8 endar year in which the taxable year of the

9 taxpayer begins, and

10 ‘‘(iii) such individual bears a relation11 ship to the taxpayer described in section

12 32(c)(3)(B).

13 ‘‘(B) EXCEPTION FOR CERTAIN NONCITI14 ZENS.—The term ‘qualifying child’ shall not in15 clude any individual who would not be a de16 pendent if the first sentence of section

17 152(b)(3) were applied without regard to all

18 that follows ‘resident of the United States’.

19 ‘‘(2) APPLICABLE INDIVIDUAL.—

20 ‘‘(A) IN GENERAL.—The term ‘applicable

21 individual’ means, with respect to any taxable

22 year, any individual who has been certified, be23 fore the due date for filing the return of tax for

24 the taxable year (without extensions), by a phy25 sician (as defined in section 1861(r)(1) of the
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1 Social Security Act) as being an individual with

2 long-term care needs described in subparagraph

3 (B) for a period—

4 ‘‘(i) which is at least 180 consecutive

5 days, and

6 ‘‘(ii) a portion of which occurs within

7 the taxable year.

8 Such term shall not include any individual oth9 erwise meeting the requirements of the preceding sentence unless within the 391 10 ⁄2 month

11 period ending on such due date (or such other

12 period as the Secretary prescribes) a physician

13 (as so defined) has certified that such indi14 vidual meets such requirements.

15 ‘‘(B) INDIVIDUALS WITH LONG-TERM CARE

16 NEEDS.—An individual is described in this sub17 paragraph if the individual meets any of the fol18 lowing requirements:

19 ‘‘(i) The individual is at least 6 years

20 of age and—

21 ‘‘(I) is unable to perform (with22 out substantial assistance from an23 other individual) at least 3 activities

24 of daily living (as defined in section
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1 7702B(c)(2)(B)) due to a loss of

2 functional capacity, or

3 ‘‘(II) requires substantial super4 vision to protect such individual from

5 threats to health and safety due to se6 vere cognitive impairment and is un7 able to preform, without reminding or

8 cuing assistance, at least 1 activity of

9 at least 1 activity of daily living (as so

10 defined) or to the extent provided in

11 regulations prescribed by the Sec12 retary (in consultation with the Sec13 retary of Health and Human Serv14 ices), is unable to engage in age ap15 propriate activities.

16 ‘‘(ii) The individual is at least 2 but

17 not 6 years of age and is unable due to a

18 loss of functional capacity to perform

19 (without substantial assistance from an20 other individual) at least 2 of the following

21 activities: eating, transferring, or mobility.

22 ‘‘(iii) The individual is under 2 years

23 of age and requires specific durable med24 ical equipment by reason of a severe health

25 condition or requires a skilled practitioner
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1 trained to address the individual’s condi2 tion to be available if the individual’s par3 ents or guardians are absent.

4 ‘‘(3) ELIGIBLE CAREGIVER.—

5 ‘‘(A) IN GENERAL.—A taxpayer shall be

6 treated as an eligible caregiver for any taxable

7 year with respect to the following individuals:

8 ‘‘(i) The taxpayer.

9 ‘‘(ii) The taxpayer’s spouse.

10 ‘‘(iii) An individual with respect to

11 whom the taxpayer is allowed a deduction

12 under section 151 for the taxable year.

13 ‘‘(iv) An individual who would be de14 scribed in clause (iii) for the taxable year

15 if section 151(c)(1)(A) were applied by

16 substituting for the exemption amount an

17 amount equal to the sum of the exemption

18 amount, the standard deduction under sec19 tion 63(c)(2)(C), and any additional stand20 ard deduction under section 63(c)(3) which

21 would be applicable to the individual if

22 clause (iii) applied.

23 ‘‘(v) An individual who would be de24 scribed in clause (iii) for the taxable year

25 if—
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1 ‘‘(I) the requirements of clause

2 (iv) are met with respect to the indi3 vidual, and

4 ‘‘(II) the requirements of sub5 paragraph (B) are met with respect to

6 the individual in lieu of the support

7 test of section 152(a).

8 ‘‘(B) RESIDENCY TEST.—The require9 ments of this subparagraph are met if an indi10 vidual has as his principal place of abode the

11 home of the taxpayer and—

12 ‘‘(i) in the case of an individual who

13 is an ancestor or descendant of the tax14 payer or the taxpayer’s spouse, is a mem15 ber of the taxpayer’s household for over

16 half the taxable year, or

17 ‘‘(ii) in the case of any other indi18 vidual, is a member of the taxpayer’s

19 household for the entire taxable year.

20 ‘‘(C) SPECIAL RULES WHERE MORE THAN

21 1 ELIGIBLE CAREGIVER.—

22 ‘‘(i) IN GENERAL.—If more than 1 in23 dividual is an eligible caregiver with re24 spect to the same applicable individual for

25 taxable years ending with or within the
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1 same calendar year, a taxpayer shall be

2 treated as the eligible caregiver if each

3 such individual (other than the taxpayer)

4 files a written declaration (in such form

5 and manner as the Secretary may pre6 scribe) that such individual will not claim

7 such applicable individual for the credit

8 under this section.

9 ‘‘(ii) NO AGREEMENT.—If each indi10 vidual required under clause (i) to file a

11 written declaration under clause (i) does

12 not do so, the individual with the highest

13 modified adjusted gross income (as defined

14 in section 32(c)(5)) shall be treated as the

15 eligible caregiver.

16 ‘‘(iii) MARRIED INDIVIDUALS FILING

17 SEPARATELY.—In the case of married indi18 viduals filing separately, the determination

19 under this subparagraph as to whether the

20 husband or wife is the eligible caregiver

21 shall be made under the rules of clause (ii)

22 (whether or not one of them has filed a

23 written declaration under clause (i)).’’.

24 (c) IDENTIFICATION REQUIREMENTS.—
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1 (1) IN GENERAL.—Section 24(e) of such Code

2 is amended by adding at the end the following new

3 sentence: ‘‘No credit shall be allowed under this sec4 tion to a taxpayer with respect to any applicable in5 dividual unless the taxpayer includes the name and

6 taxpayer identification number of such individual,

7 and the identification number of the physician certi8 fying such individual, on the return of tax for the

9 taxable year.’’.

10 (2) ASSESSMENT.—Section 6213(g)(2)(I) of

11 such Code is amended—

12 (A) by inserting ‘‘or physician identifica13 tion’’ after ‘‘correct TIN’’, and

14 (B) by striking ‘‘child’’ and inserting

15 ‘‘family care’’.

16 (d) EFFECTIVE DATE.—The amendments made by

17 this section shall apply to taxable years beginning after

18 December 31, 1999.

19 TITLE IV—EXPANSION OF

20 DEPENDENT CARE TAX CREDIT

21 SEC. 401. EXPANSION OF DEPENDENT CARE TAX CREDIT.

22 (a) INCREASE IN PERCENTAGE OF EMPLOYMENT23 RELATED EXPENSES ALLOWED AS CREDIT.—Paragraph

24 (2) of section 21(a) of the Internal Revenue Code of 1986
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1 (defining applicable percentage) is amended to read as fol2 lows:

3 ‘‘(2) APPLICABLE PERCENTAGE DEFINED.—

4 ‘‘(A) IN GENERAL.—For purposes of para5 graph (1), the term ‘applicable percentage’

6 means 50 percent reduced (but not below 20

7 percent) by each $2,000 (or fraction thereof) by

8 which the taxpayers’s adjusted gross income for

9 the taxable year exceeds $30,000.

10 ‘‘(B) PHASEIN.—In the case of taxable

11 years beginning before January 1, 2004, the

12 percentage determined under the following table

13 shall be substituted for ‘50 percent’:

‘‘For taxable years beginning

in calendar year— The percentage is—

2000 ............................................................................. 30

2001 ............................................................................. 35

2002 ............................................................................. 40

2003 ............................................................................. 45.’’

14 (b) MINIMUM CREDIT ALLOWED FOR STAY-AT-HOME

15 PARENTS.—Subsection (e) of section 21 of such Code (re16 lating to special rules) is amended by adding at the end

17 the following:

18 ‘‘(11) MINIMUM CREDIT ALLOWED FOR STAY19 AT-HOME PARENTS.—Notwithstanding subsection

20 (d), in the case of any taxpayer with one or more

21 qualifying individuals described in subsection

22 (b)(1)(A) under the age of 1 at any time during the
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1 taxable year, such taxpayer shall be deemed to have

2 employment-related expenses with respect to such

3 qualifying individuals in an amount equal to the

4 greater of—

5 ‘‘(A) the amount of employment-related ex6 penses incurred for such qualifying individuals

7 for the taxable year (determined under this sec8 tion without regard to this paragraph), or

9 ‘‘(B) $120 for each month in such taxable

10 year during which such qualifying individual is

11 under the age of 1.’’

12 (c) EFFECTIVE DATE.—The amendments made by

13 this section apply to taxable years beginning after Decem14 ber 31, 1999.

15 TITLE V—ALTERNATIVE

16 MINIMUM TAX RELIEF

17 SEC. 501. NONREFUNDABLE PERSONAL CREDITS ALLOWED

18 AGAINST ALTERNATIVE MINIMUM TAX.

19 (a) IN GENERAL.—Subsection (a) of section 26 of the

20 Internal Revenue Code of 1986 is amended to read as fol21 lows:

22 ‘‘(a) LIMITATION BASED ON AMOUNT OF TAX.—The

23 aggregate amount of credits allowed by this subpart for

24 the taxable year shall not exceed the sum of—
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1 ‘‘(1) the taxpayer’s regular tax liability for the

2 taxable year reduced the foreign tax credit allowable

3 under section 27(a), and

4 ‘‘(2) the tax imposed for the taxable year by

5 section 55(a).’’.

6 (b) CONFORMING AMENDMENTS.—

7 (1) Subsection (d) of section 24 of such Code

8 is amended by striking paragraph (2) and by redes9 ignating paragraph (3) as paragraph (2).

10 (2) Section 904 of such Code is amended by

11 striking subsection (h) and by redesignating sub12 sections (i), (j), and (k) as subsections (h), (i), and

13 (j), respectively.

14 (c) EFFECTIVE DATE.—The amendments made by

15 this section shall apply to taxable years beginning after

16 December 31, 1999.

17 SEC. 502. INCOME AVERAGING FOR FARMERS NOT TO IN18 CREASE ALTERNATIVE MINIMUM TAX LIABIL19 ITY.

20 (a) IN GENERAL.—Section 55(c) of the Internal Rev21 enue Code of 1986 (defining regular tax) is amended by

22 redesignating paragraph (2) as paragraph (3) and by in23 serting after paragraph (1) the following new paragraph:

24 ‘‘(2) COORDINATION WITH INCOME AVERAGING

25 FOR FARMERS.—Solely for purposes of this section,
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1 section 1301 (relating to averaging of farm income)

2 shall not apply in computing the regular tax.’’

3 (b) EFFECTIVE DATE.—The amendment made by

4 this section shall apply to taxable years beginning after

5 December 31, 1998.

6 TITLE VI—ELIMINATION OF 60-

7 MONTH LIMIT ON STUDENT

8 LOAN INTEREST DEDUCTION

9 SEC. 601. ELIMINATION OF 60-MONTH LIMIT ON STUDENT

10 LOAN INTEREST DEDUCTION.

11 (a) IN GENERAL.—Section 221 of the Internal Rev12 enue Code of 1986 (relating to interest on education

13 loans) is amended by striking subsection (d) and by redes14 ignating subsections (e), (f), and (g) as subsections (d),

15 (e), and (f), respectively.

16 (b) CONFORMING AMENDMENT.—Section 6050(e) of

17 the Internal Revenue Code of 1986 is amended by striking

18 ‘‘section 221(e)(1)’’ and inserting ‘‘section 221(d)(1)’’.

19 (c) EFFECTIVE DATE.—The amendments made by

20 this section shall apply with respect to any loan interest

21 paid after December 31, 1997.
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1 TITLE VII—INCREASE IN LOW-IN2 COME HOUSING CREDIT

3 STATE CEILING

4 SEC. 701. INCREASE IN STATE CEILING ON LOW-INCOME

5 HOUSING CREDIT.

6 (a) IN GENERAL.—Clause (i) of section 42(h)(3)(C)

7 of the Internal Revenue Code of 1986 (relating to State

8 housing credit ceiling) is amended by striking ‘‘$1.25’’ and

9 inserting ‘‘$1.75’’.

10 (b) ADJUSTMENT OF STATE CEILING FOR IN11 CREASES IN COST-OF-LIVING.—Paragraph (3) of section

12 42(h) of such Code (relating to housing credit dollar

13 amount for agencies) is amended by adding at the end

14 the following new subparagraph:

15 ‘‘(H) COST-OF-LIVING ADJUSTMENT.—

16 ‘‘(i) IN GENERAL.—In the case of a

17 calendar year after 2000, the dollar

18 amount contained in subparagraph (C)(i)

19 shall be increased by an amount equal to—

20 ‘‘(I) such dollar amount, multi21 plied by

22 ‘‘(II) the cost-of-living adjust23 ment determined under section 1(f)(3)

24 for such calendar year by substituting

25 ‘calendar year 1999’ for ‘calendar
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1 year 1992’ in subparagraph (B) there2 of.

3 ‘‘(ii) ROUNDING.—If any increase

4 under clause (i) is not a multiple of 5

5 cents, such increase shall be rounded to

6 the next lowest multiple of 5 cents.’’.

7 (c) EFFECTIVE DATE.—The amendments made by

8 this section shall apply to calendar years after 1999.

9 TITLE VIII—FARM AND RANCH

10 RISK MANAGEMENT ACCOUNTS

11 SEC. 801. FARM AND RANCH RISK MANAGEMENT AC12 COUNTS.

13 (a) IN GENERAL.—Subpart C of part II of sub14 chapter E of chapter 1 of the Internal Revenue Code of

15 1986 (relating to taxable year for which deductions taken)

16 is amended by inserting after section 468B the following

17 new section:

18 ‘‘SEC. 468C. FARM AND RANCH RISK MANAGEMENT AC19 COUNTS.

20 ‘‘(a) DEDUCTION ALLOWED.—In the case of an indi21 vidual engaged in an eligible farming business, there shall

22 be allowed as a deduction for any taxable year the amount

23 paid in cash by the taxpayer during the taxable year to

24 a Farm and Ranch Risk Management Account (herein25 after referred to as the ‘FARRM Account’).
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1 ‘‘(b) LIMITATION.—The amount which a taxpayer

2 may pay into the FARRM Account for any taxable year

3 shall not exceed 20 percent of so much of the taxable in4 come of the taxpayer (determined without regard to this

5 section) which is attributable (determined in the manner

6 applicable under section 1301) to any eligible farming

7 business.

8 ‘‘(c) ELIGIBLE FARMING BUSINESS.—For purposes

9 of this section, the term ‘eligible farming business’ means

10 any farming business (as defined in section 263A(e)(4))

11 which is not a passive activity (within the meaning of sec12 tion 469(c)) of the taxpayer.

13 ‘‘(d) FARRM ACCOUNT.—For purposes of this

14 section—

15 ‘‘(1) IN GENERAL.—The term ‘FARRM Ac16 count’ means a trust created or organized in the

17 United States for the exclusive benefit of the tax18 payer, but only if the written governing instrument

19 creating the trust meets the following requirements:

20 ‘‘(A) No contribution will be accepted for

21 any taxable year in excess of the amount al22 lowed as a deduction under subsection (a) for

23 such year.

24 ‘‘(B) The trustee is a bank (as defined in

25 section 408(n)) or another person who dem-
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1 onstrates to the satisfaction of the Secretary

2 that the manner in which such person will ad3 minister the trust will be consistent with the re4 quirements of this section.

5 ‘‘(C) The assets of the trust consist en6 tirely of cash or of obligations which have ade7 quate stated interest (as defined in section

8 1274(c)(2)) and which pay such interest not

9 less often than annually.

10 ‘‘(D) All income of the trust is distributed

11 currently to the grantor.

12 ‘‘(E) The assets of the trust will not be

13 commingled with other property except in a

14 common trust fund or common investment

15 fund.

16 ‘‘(2) ACCOUNT TAXED AS GRANTOR TRUST.—

17 The grantor of a FARRM Account shall be treated

18 for purposes of this title as the owner of such Ac19 count and shall be subject to tax thereon in accord20 ance with subpart E of part I of subchapter J of

21 this chapter (relating to grantors and others treated

22 as substantial owners).

23 ‘‘(e) INCLUSION OF AMOUNTS DISTRIBUTED.—
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1 ‘‘(1) IN GENERAL.—Except as provided in para2 graph (2), there shall be includible in the gross in3 come of the taxpayer for any taxable year—

4 ‘‘(A) any amount distributed from a

5 FARRM Account of the taxpayer during such

6 taxable year, and

7 ‘‘(B) any deemed distribution under—

8 ‘‘(i) subsection (f)(1) (relating to de9 posits not distributed within 5 years),

10 ‘‘(ii) subsection (f)(2) (relating to ces11 sation in eligible farming business), and

12 ‘‘(iii) subparagraph (A) or (B) of sub13 section (f)(3) (relating to prohibited trans14 actions and pledging account as security).

15 ‘‘(2) EXCEPTIONS.—Paragraph (1)(A) shall not

16 apply to—

17 ‘‘(A) any distribution to the extent attrib18 utable to income of the Account, and

19 ‘‘(B) the distribution of any contribution

20 paid during a taxable year to a FARRM Ac21 count to the extent that such contribution ex22 ceeds the limitation applicable under subsection

23 (b) if requirements similar to the requirements

24 of section 408(d)(4) are met.
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1 For purposes of subparagraph (A), distributions

2 shall be treated as first attributable to income and

3 then to other amounts.

4 ‘‘(3) EXCLUSION FROM SELF-EMPLOYMENT

5 TAX.—Amounts included in gross income under this

6 subsection shall not be included in determining net

7 earnings from self-employment under section 1402.

8 ‘‘(f) SPECIAL RULES.—

9 ‘‘(1) TAX ON DEPOSITS IN ACCOUNT WHICH

10 ARE NOT DISTRIBUTED WITHIN 5 YEARS.—

11 ‘‘(A) IN GENERAL.—If, at the close of any

12 taxable year, there is a nonqualified balance in

13 any FARRM Account—

14 ‘‘(i) there shall be deemed distributed

15 from such Account during such taxable

16 year an amount equal to such balance, and

17 ‘‘(ii) the taxpayer’s tax imposed by

18 this chapter for such taxable year shall be

19 increased by 10 percent of such deemed

20 distribution.

21 The preceding sentence shall not apply if an

22 amount equal to such nonqualified balance is

23 distributed from such Account to the taxpayer

24 before the due date (including extensions) for

25 filing the return of tax imposed by this chapter
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1 for such year (or, if earlier, the date the tax2 payer files such return for such year).

3 ‘‘(B) NONQUALIFIED BALANCE.—For pur4 poses of subparagraph (A), the term ‘non5 qualified balance’ means any balance in the Ac6 count on the last day of the taxable year which

7 is attributable to amounts deposited in such Ac8 count before the 4th preceding taxable year.

9 ‘‘(C) ORDERING RULE.—For purposes of

10 this paragraph, distributions from a FARRM

11 Account shall be treated as made from deposits

12 in the order in which such deposits were made,

13 beginning with the earliest deposits. For pur14 poses of the preceding sentence, income of such

15 an Account shall be treated as a deposit made

16 on the date such income is received by the Ac17 count.

18 ‘‘(2) CESSATION IN ELIGIBLE FARMING BUSI19 NESS.—At the close of the first disqualification pe20 riod after a period for which the taxpayer was en21 gaged in an eligible farming business, there shall be

22 deemed distributed from the FARRM Account (if

23 any) of the taxpayer an amount equal to the balance

24 in such Account at the close of such disqualification

25 period. For purposes of the preceding sentence, the
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1 term ‘disqualification period’ means any period of 2

2 consecutive taxable years for which the taxpayer is

3 not engaged in an eligible farming business.

4 ‘‘(3) CERTAIN RULES TO APPLY.—Rules similar

5 to the following rules shall apply for purposes of this

6 section:

7 ‘‘(A) Section 408(e)(2) (relating to loss of

8 exemption of account where individual engages

9 in prohibited transaction).

10 ‘‘(B) Section 408(e)(4) (relating to effect

11 of pledging account as security).

12 ‘‘(C) Section 408(g) (relating to commu13 nity property laws).

14 ‘‘(D) Section 408(h) (relating to custodial

15 accounts).

16 ‘‘(4) TIME WHEN PAYMENTS DEEMED MADE.—

17 For purposes of this section, a taxpayer shall be

18 deemed to have made a payment to a FARRM Ac19 count on the last day of a taxable year if such pay20 ment is made on account of such taxable year and

is made within 31 21 ⁄2 months after the close of such

22 taxable year.

23 ‘‘(5) INDIVIDUAL.—For purposes of this sec24 tion, the term ‘individual’ shall not include an estate

25 or trust.
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1 ‘‘(g) REPORTS.—The trustee of a FARRM Account

2 shall make such reports regarding such Account to the

3 Secretary and to the person for whose benefit the Account

4 is maintained with respect to contributions, distributions,

5 and such other matters as the Secretary may require

6 under regulations. The reports required by this subsection

7 shall be filed at such time and in such manner and fur8 nished to such persons at such time and in such manner

9 as may be required by those regulations.’’.

10 (b) DEDUCTION ALLOWED IN COMPUTING AD11 JUSTED GROSS INCOME.—Subsection (a) of section 62 of

12 such Code (defining adjusted gross income) is amended

13 by inserting after paragraph (18) the following new para14 graph:

15 ‘‘(19) CONTRIBUTIONS TO FARM AND RANCH

16 RISK MANAGEMENT ACCOUNTS.—The deduction al17 lowed by section 468C(a).’’

18 (c) TAX ON EXCESS CONTRIBUTIONS.—

19 (1) Subsection (a) of section 4973 of such Code

20 (relating to tax on certain excess contributions) is

21 amended by striking ‘‘or’’ at the end of paragraph

22 (3), by redesignating paragraph (4) as paragraph

23 (5), and by inserting after paragraph (3) the fol24 lowing new paragraph:
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1 ‘‘(4) a FARRM Account (within the meaning of

2 section 468C(d)), or’’.

3 (2) Section 4973 of such Code is amended by

4 adding at the end the following new subsection:

5 ‘‘(g) EXCESS CONTRIBUTIONS TO FARRM AC6 COUNTS.—For purposes of this section, in the case of a

7 FARRM Account (within the meaning of section

8 468C(d)), the term ‘excess contributions’ means the

9 amount by which the amount contributed for the taxable

10 year to the Account exceeds the amount which may be con11 tributed to the Account under section 468C(b) for such

12 taxable year. For purposes of this subsection, any con13 tribution which is distributed out of the FARRM Account

14 in a distribution to which section 468C(e)(2)(B) applies

15 shall be treated as an amount not contributed.’’.

16 (3) The section heading for section 4973 of

17 such Code is amended to read as follows:

18 ‘‘SEC. 4973. EXCESS CONTRIBUTIONS TO CERTAIN AC19 COUNTS, ANNUITIES, ETC.’’.

20 (4) The table of sections for chapter 43 of such

21 Code is amended by striking the item relating to sec22 tion 4973 and inserting the following new item:

‘‘Sec. 4973. Excess contributions to certain accounts, annuities,

etc.’’.

23 (d) TAX ON PROHIBITED TRANSACTIONS.—
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1 (1) Subsection (c) of section 4975 of such Code

2 (relating to prohibited transactions) is amended by

3 adding at the end the following new paragraph:

4 ‘‘(6) SPECIAL RULE FOR FARRM ACCOUNTS.—

5 A person for whose benefit a FARRM Account

6 (within the meaning of section 468C(d)) is estab7 lished shall be exempt from the tax imposed by this

8 section with respect to any transaction concerning

9 such Account (which would otherwise be taxable

10 under this section) if, with respect to such trans11 action, the account ceases to be a FARRM Account

12 by reason of the application of section 468C(f)(3)(A)

13 to such Account.’’.

14 (2) Paragraph (1) of section 4975(e) of such

15 Code is amended by redesignating subparagraphs

16 (E) and (F) as subparagraphs (F) and (G), respec17 tively, and by inserting after subparagraph (D) the

18 following new subparagraph:

19 ‘‘(E) a FARRM Account described in sec20 tion 468C(d),’’.

21 (e) FAILURE TO PROVIDE REPORTS ON FARRM AC22 COUNTS.—Paragraph (2) of section 6693(a) of such Code

23 (relating to failure to provide reports on certain tax-fa24 vored accounts or annuities) is amended by redesignating

25 subparagraphs (C) and (D) as subparagraphs (D) and
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1 (E), respectively, and by inserting after subparagraph (B)

2 the following new subparagraph:

3 ‘‘(C) section 468C(g) (relating to FARRM

4 Accounts).’’.

5 (f) CLERICAL AMENDMENT.—The table of sections

6 for subpart C of part II of subchapter E of chapter 1 of

7 such Code is amended by inserting after the item relating

8 to section 468B the following new item:

‘‘Sec. 468C. Farm and Ranch Risk Management Accounts.’’.

9 (g) EFFECTIVE DATE.—The amendments made by

10 this section shall apply to taxable years beginning after

11 the date of the enactment of this Act.

12 TITLE IX—INCENTIVES FOR

13 URBAN REVITALIZATION AND

14 OPEN SPACE

15 SEC. 901. EXPENSING OF ENVIRONMENTAL REMEDIATION

16 COSTS EXPANDED TO CONTAMINATED SITES

17 OUTSIDE OF TARGETED AREAS.

18 (a) IN GENERAL.—Clause (ii) of section 198(c)(1)(A)

19 of the Internal Revenue Code of 1986 (relating to quali20 fied contaminated sites) is amended to read as follows:

21 ‘‘(ii) which is within the United

22 States, and’’.

23 (b) EXPENSE TREATMENT MADE PERMANENT.—

24 Section 198 of such Code is amended by striking sub25 section (h).
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1 (c) CONFORMING AMENDMENT.—Paragraph (2) of

2 section 198(c) of such Code is amended to read as follows:

3 ‘‘(2) NATIONAL PRIORITIES LISTED SITES NOT

4 INCLUDED.—Such term shall not include any site

5 which is on, or proposed for, the national priorities

6 list under section 105(a)(8)(B) of the Comprehen7 sive Environmental Response, Compensation, and

8 Liability Act of 1980 (as in effect on the date of the

9 enactment of this section).’’

10 (d) EFFECTIVE DATE.—The amendments made by

11 this section shall apply to expenditures paid or incurred

12 after the date of the enactment of this Act in taxable years

13 ending after such date.

14 SEC. 902. MODIFICATIONS TO ENCOURAGE CONTRIBU15 TIONS OF CAPITAL GAIN REAL PROPERTY

16 MADE FOR CONSERVATION PURPOSES AND

17 OF QUALIFIED CONSERVATION CONTRIBU18 TIONS.

19 (a) CONTRIBUTIONS OF CAPITAL GAIN REAL PROP20 ERTY MADE FOR CONSERVATION PURPOSES AND OF

21 QUALIFIED CONSERVATION CONTRIBUTIONS NOT SUB22 JECT TO SPECIAL LIMITATION ON CONTRIBUTIONS OF

23 CAPITAL GAIN PROPERTY.—Subparagraph (C) of section

24 170(b)(1) of the Internal Revenue Code of 1986 (relating

25 to special limitation with respect to contributions de-
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1 scribed in subparagraph (A) of capital gain property) is

2 amended by redesignating clause (iv) as clause (v) and by

3 inserting after clause (iii) the following new clause:

4 ‘‘(iv) In the case of charitable con5 tributions described in subparagraph (A)

6 of capital gain property, clauses (i) and (ii)

7 shall not apply to—

8 ‘‘(I) any qualified conservation

9 contribution (as defined in section

10 170(h)), or

11 ‘‘(II) any other contribution of

12 capital gain property which is real

13 property if the contribution is of the

14 donor’s entire interest in such prop15 erty and is to a qualified organization

16 (as defined in section 170(h)(3))

17 which is organized for conservation

18 purposes (as defined in section

19 170(h)(4)(A)) and which provides the

20 taxpayer, at the time of such dona21 tion, a letter of intent which contains

22 an acknowledgment of the donee’s in23 tent that the property is being ac24 quired for any such conservation pur25 pose.’’.
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1 (b) UNLIMITED CARRYOVER FOR CONTRIBUTIONS OF

2 CAPITAL GAIN REAL PROPERTY FOR CONSERVATION

3 PURPOSES AND OF QUALIFIED CONSERVATION CON4 TRIBUTIONS OF CAPITAL GAIN PROPERTY.—Paragraph

5 (1) of section 170(d) of such Code in amended by adding

6 at the end the following new subparagraph:

7 ‘‘(C) UNLIMITED CARRYOVER FOR CON8 TRIBUTIONS OF CAPITAL GAIN REAL PROPERTY

9 FOR CONSERVATION PURPOSES AND OF QUALI10 FIED CONSERVATION CONTRIBUTIONS OF CAP11 ITAL GAIN PROPERTY.—The 5 taxable year lim12 itation in subparagraph (A) shall not apply to

13 any charitable contribution to which clauses (i)

14 and (ii) of subsection (b)(1)(C) do not apply by

15 reason of clause (iv) thereof. For purposes of

16 this paragraph, the excess described in the ma17 terial preceding clause (i) of subparagraph (A)

18 shall be treated as attributable to contributions

19 described in the preceding sentence of this sub20 paragraph to the extent of such contributions.’’.

21 (c) EFFECTIVE DATE.—The amendment made by

22 this section shall apply to contributions made in taxable

23 years beginning after the date of the enactment of this

24 Act.
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1 TITLE X—EXTENSION OF

2 CERTAIN EXPIRING PROVISIONS

3 SEC. 1001. RESEARCH CREDIT.

4 (a) CREDIT MADE PERMANENT.—

5 (1) IN GENERAL.—Section 41 of the Internal

6 Revenue Code of 1986 (relating to credit for increas7 ing research activities) is amended by striking sub8 section (h).

9 (2) CONFORMING AMENDMENT.—Paragraph (1)

10 section 45C(b) of such Code is amended by striking

11 subparagraph (D).

12 (3) EFFECTIVE DATE.—The amendments made

13 by this subsection shall apply to amounts paid or in14 curred after June 30, 1999.

15 (b) INCREASE IN PERCENTAGES UNDER ALTER16 NATIVE INCREMENTAL CREDIT.—

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

18 41(c)(4) of such Code is amended—

19 (A) by striking ‘‘1.65 percent’’ and insert20 ing ‘‘2.65 percent’’,

21 (B) by striking ‘‘2.2 percent’’ and inserting

22 ‘‘3.2 percent’’, and

23 (C) by striking ‘‘2.75 percent’’ and insert24 ing ‘‘3.75 percent’’.
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1 (2) EFFECTIVE DATE.—The amendments made

2 by this subsection shall apply to taxable years begin3 ning after June 30, 1999.

4 SEC. 1002. WORK OPPORTUNITY CREDIT.

5 (a) CREDIT MADE PERMANENT.—Subsection (c) of

6 section 51 of the Internal Revenue Code of 1986 is amend7 ed by striking paragraph (4).

8 (b) EFFECTIVE DATE.—The amendment made by

9 subsection (a) shall apply to individuals who begin work

10 for the employer after June 30, 1999.

11 SEC. 1003. PERMANENT SUBPART F EXEMPTION FOR AC12 TIVE FINANCING INCOME.

13 (a) BANKING, FINANCING, OR SIMILAR BUSI14 NESSES.—Subsection (h) of section 954 of the Internal

15 Revenue Code of 1986 (relating to special rule for income

16 derived in the active conduct of banking, financing, or

17 similar businesses) is amended by striking paragraph (9).

18 (b) INSURANCE BUSINESSES.—Subsection (a) of sec19 tion 953 of such Code (defining insurance income) is

20 amended by striking paragraph (10) and by redesignating

21 paragraph (11) as paragraph (10).

22 (c) EFFECTIVE DATE.—The amendments made by

23 this section shall apply to taxable years of a foreign cor24 poration beginning after December 31, 1998, and to tax-
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1 able years of United States shareholders with or within

2 which such taxable years of such foreign corporation end.

3 SEC. 1004. CREDIT FOR ELECTRICITY PRODUCED FROM RE4 NEWABLE RESOURCES.

5 (a) EXTENSION AND MODIFICATION OF PLACED-IN6 SERVICE RULES.—Paragraph (3) of section 45(c) of the

7 Internal Revenue Code of 1986 is amended to read as fol8 lows:

9 ‘‘(3) QUALIFIED FACILITY.—

10 ‘‘(A) WIND FACILITIES.—In the case of a

11 facility using wind to produce electricity, the

12 term ‘qualified facility’ means any facility

13 owned by the taxpayer which is originally

14 placed in service after December 31, 1993, and

15 before July 1, 2004.

16 ‘‘(B) BIOMASS FACILITIES.—In the case of

17 a facility using biomass to produce electricity,

18 the term ‘qualified facility’ means, with respect

19 to any month, any facility owned by the tax20 payer which is originally placed in service before

21 July 1, 2004, if, for such month—

22 ‘‘(i) biomass comprises not less than

23 75 percent (on a Btu basis) of the average

24 monthly fuel input of the facility for the

25 taxable year which includes such month, or
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1 ‘‘(ii) in the case of a facility prin2 cipally using coal to produce electricity,

3 biomass comprises not more than 25 per4 cent (on a Btu basis) of the average

5 monthly fuel input of the facility for the

6 taxable year which includes such month.

7 ‘‘(C) SPECIAL RULES.—

8 ‘‘(i) In the case of a qualified facility

9 described in subparagraph (B)(i)—

10 ‘‘(I) the 10-year period referred

11 to in subsection (a) shall be treated as

12 beginning no earlier than the date of

13 the enactment of this paragraph, and

14 ‘‘(II) subsection (b)(3) shall not

15 apply to any such facility originally

16 placed in service before January 1,

17 1997.

18 ‘‘(ii) In the case of a qualified facility

19 described in subparagraph (B)(ii)—

20 ‘‘(I) the 10-year period referred

21 to in subsection (a) shall be treated as

22 beginning no earlier than the date of

23 the enactment of this paragraph, and

24 ‘‘(II) the amount of the credit

25 determined under subsection (a) with
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1 respect to any project for any taxable

2 year shall be adjusted by multiplying

3 such amount (determined without re4 gard to this clause) by 0.59.’’.

5 (b) CREDIT NOT TO APPLY TO ELECTRICITY SOLD

6 TO UTILITIES UNDER CERTAIN CONTRACTS.—Subsection

7 (b) of section 45 of such Code is amended by adding at

8 the end the following new paragraph:

9 ‘‘(4) CREDIT NOT TO APPLY TO ELECTRICITY

10 SOLD TO UTILITIES UNDER CERTAIN CONTRACTS.—

11 ‘‘(A) IN GENERAL.—The credit determined

12 under subsection (a) shall not apply to

13 electricity—

14 ‘‘(i) produced at a qualified facility

15 placed in service by the taxpayer after

16 June 30, 1999, and

17 ‘‘(ii) sold to a utility pursuant to a

18 contract originally entered into before Jan19 uary 1, 1987 (whether or not amended or

20 restated after that date).

21 ‘‘(B) .—Subparagraph (A) shall not apply

22 if—

23 ‘‘(i) the prices for energy and capacity

24 from such facility are established pursuant
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1 to an amendment to the contract referred

2 to in subparagraph (A)(ii);

3 ‘‘(ii) such amendment provides that

4 the prices set forth in the contract which

5 exceed avoided cost prices determined at

6 the time of delivery shall apply only to an7 nual quantities of electricity (prorated for

8 partial years) which do not exceed the

9 greater of—

10 ‘‘(I) the average annual quantity

11 of electricity sold to the utility under

12 the contract during calendar years

13 1994, 1995, 1996, 1997, and 1998,

14 or

15 ‘‘(II) the estimate of the annual

16 electricity production set forth in the

17 contract, or, if there is no such esti18 mate, the greatest annual quantity of

19 electricity sold to the utility under the

20 contract in any of the calendar years

21 1996, 1997, or 1998; and

22 ‘‘(iii) such amendment provides that

23 energy and capacity in excess of the limita24 tion in clause (ii) may be—
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1 ‘‘(I) sold to the utility only at

2 prices that do not exceed avoided cost

3 prices determined at the time of deliv4 ery, or

5 ‘‘(II) sold to a third party subject

6 to a mutually agreed upon advance

7 notice to the utility.

8 For purposes of this subparagraph, avoided cost

9 prices shall be determined as provided for in 18

10 CFR 292.304(d)(1) or any successor regula11 tion.’’.

12 (c) QUALIFIED FACILITIES INCLUDE ALL BIOMASS

13 FACILITIES.—

14 (1) IN GENERAL.—Subparagraph (B) of section

15 45(c)(1) of such Code is amended to read as follows:

16 ‘‘(B) biomass.’’

17 (2) BIOMASS DEFINED.—Paragraph (2) of sec18 tion 45(c) of such Code is amended to read as fol19 lows:

20 ‘‘(2) BIOMASS.—The term ‘biomass’ means—

21 ‘‘(A) any organic material from a plant

22 which is planted exclusively for purposes of

23 being used at a qualified facility to produce

24 electricity, and
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1 ‘‘(B) any solid, nonhazardous, cellulosic

2 waste material, which is segregated from other

3 waste materials, and which is derived from—

4 ‘‘(i) any of the following forest-related

5 resources: mill residues, precommercial

6 thinnings, slash, and brush, but not includ7 ing old-growth timber,

8 ‘‘(ii) waste pallets, crates, and

9 dunnage, manufacturing and construction

10 wood wastes (other than pressure-treated,

11 chemically-treated, or painted wood

12 wastes), and landscape or right-of-way tree

13 trimmings, but not including unsegregated

14 municipal solid waste (garbage), or

15 ‘‘(iii) agriculture sources, including or16 chard tree crops, vineyard, grain, legumes,

17 sugar, and other crop by-products or resi18 dues.’’

19 (d) EFFECTIVE DATE.—The amendments made by

20 this section shall apply to electricity produced after the

21 date of the enactment of this Act.

Æ