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104TH CONGRESS

2D SESSION H. R. 3999 To ensure that the States have sufficient funds to assure the effectiveness of the work requirements of the program of block grants for temporary assistance for needy families, to provide such funds through tax reforms, and for other purposes.

IN THE HOUSE OF REPRESENTATIVES AUGUST 2, 1996 Mr. OBEY introduced the following bill; which was referred to the Committee on Ways and Means and in addition to the Committee on Science, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the Com- mittee concerned

A BILL To ensure that the States have sufficient funds to assure

the effectiveness of the work requirements of the program of block grants for temporary assistance for needy

families, to provide such funds through tax reforms, 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 This Act may be cited as the ‘‘Making Work Require5 ments Work Act of 1996’’.
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1 TITLE I—GRANTS TO STATES

2 FOR OPERATION OF WORK

3 PROGRAMS

4 SEC. 101. GRANTS TO STATES FOR OPERATION OF WORK

5 PROGRAMS.

6 (a) IN GENERAL.—Section 403(a) of the Social Secu7 rity Act, as amended by the Personal Responsibility and

8 Work Opportunity Reconciliation Act of 1996, is amended

9 by adding at the end the following:

10 ‘‘(5) SUPPLEMENTAL GRANT FOR OPERATION

11 OF WORK PROGRAM.—

12 ‘‘(A) GRANTS.—Each eligible State shall

13 be entitled to receive from the Secretary for

14 each of fiscal years 1997 through 2002 a grant

15 for the purpose of enabling the State to comply

16 with section 407.

17 ‘‘(B) AMOUNT OF GRANT.—The amount of

18 the grant to be made to a State for any fiscal

19 year under subparagraph (A) shall be the

20 amount that bears the same ratio to the

21 amount specified in subparagraph (C) for the

22 fiscal year as the number of families that the

23 Secretary estimates will be eligible to receive as24 sistance during the fiscal year under the State

25 program funded under this part that include an
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1 adult or a minor child head of household who

2 may be required to engage in work pursuant to

3 section 407 bears to the number of such fami4 lies that the Secretary estimates will be eligible

5 to receive assistance during the fiscal year

6 under all State programs funded under this

7 part.

8 ‘‘(C) APPROPRIATIONS.—

9 ‘‘(i) IN GENERAL.—Out of any money

10 in the Treasury of the United States not

11 otherwise appropriated, there are appro12 priated for grants under this paragraph—

13 ‘‘(I) $178,000,000 for fiscal year

14 1997;

15 ‘‘(II) $283,000,000 for fiscal

16 year 1998;

17 ‘‘(III) $898,000,000 for fiscal

18 year 1999;

19 ‘‘(IV) $1,260,000,000 for fiscal

20 year 2000;

21 ‘‘(V) $1,622,000,000 for fiscal

22 year 2001; and

23 ‘‘(VI) $2,033,000,000 for fiscal

24 year 2002.
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1 ‘‘(ii) AVAILABILITY.—Amounts appro2 priated pursuant to clause (i) shall remain

3 available until expended.’’.

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

5 subsection (a) of this section shall take effect as if in6 cluded in section 103(a)(1) of the Personal Responsibility

7 and Work Opportunity Reconciliation Act of 1996 on the

8 date of the enactment of such Act.

9 TITLE II—REVENUE OFFSETS

10 SEC. 200. AMENDMENT OF 1986 CODE; TABLE OF CON11 TENTS.

12 (a) AMENDMENT OF 1986 CODE.—Except as other13 wise expressly provided, whenever in this title an amend14 ment or repeal is expressed in terms of an amendment

15 to, or repeal of, a section or other provision, the reference

16 shall be considered to be made to a section or other provi17 sion of the Internal Revenue Code of 1986.

18 (b) TABLE OF CONTENTS.—

TITLE II—REVENUE OFFSETS

Sec. 200. Amendment of 1986 Code; table of contents.

Subtitle A—Corporate Reforms Sec. 201. Repeal of percentage depletion for certain nonfuel minerals mined on Federal lands.

Subtitle B—Foreign Provisions Sec. 202. Definition of foreign personal holding company income. Sec. 203. Modification to foreign tax credit carryback and carryover periods. Sec. 204. Modifications of foreign tax credit rules applicable to dual capacity

taxpayers. Sec. 205. Rules relating to foreign oil and gas income.
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Subtitle C—Accounting Provisions Sec. 206. Termination of suspense accounts for family corporations required to use accrual method of accounting.

1 Subtitle A—Corporate Reforms

2 SEC. 201. REPEAL OF PERCENTAGE DEPLETION FOR CER3 TAIN NONFUEL MINERALS MINED ON FED4 ERAL LANDS.

5 (a) IN GENERAL.—Section 613 (relating to percent6 age depletion) is amended by adding at the end the follow7 ing new subsection:

8 ‘‘(f) DENIAL OF PERCENTAGE DEPLETION FOR CER9 TAIN NONFUEL MINERALS MINED ON FEDERAL

10 LANDS.—

11 ‘‘(1) IN GENERAL.—In the case of any applica12 ble nonfuel mineral, the allowance for depletion shall

13 be computed without reference to this section.

14 ‘‘(2) APPLICABLE NONFUEL MINERAL.—For

15 purposes of this subsection, the term ‘applicable

16 nonfuel mineral’ means any mineral which—

17 ‘‘(A) is subject to a mining claim under

18 chapter six of title XXXII of the Revised Stat19 utes (commonly referred to as the ‘General

20 Mining Law of 1872’, 30 U.S.C. 21 et seq.), or

21 ‘‘(B) was originally acquired (whether or

22 not by the taxpayer) pursuant to a patent

23 granted under such chapter.’’
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1 (b) AGGREGATION OF MINERAL INTERESTS.—Para2 graph (1) of section 614(c) (relating to election to aggre3 gate separate interests) is amended by adding at the end

4 the following new sentence: ‘‘A taxpayer may not elect to

5 aggregate a separate operating mineral interest in any ap6 plicable nonfuel mineral (as defined in section 613(f)(2))

7 with an interest in a mineral other than such an applicable

8 nonfuel mineral.’’

9 (c) EFFECTIVE DATES.—

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

11 this section shall apply to taxable years beginning

12 after the date of the enactment of this Act.

13 (2) SPECIAL RULE FOR AGGREGATED MINERAL

14 INTERESTS.—

15 (A) IN GENERAL.—If, on or before March

16 19, 1996, a taxpayer aggregated separate oper17 ating mineral interests in applicable nonfuel

18 minerals (as defined in section 613(f)(2) of the

19 Internal Revenue Code of 1986) and in min20 erals other than such applicable nonfuel min21 erals, the amendments made by this section

22 shall not apply to such property, except that the

23 allowance for depletion under section 613 of

24 such Code for taxable years beginning after the

25 date of the enactment of this Act, with respect
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1 to such property shall be equal to the amount

2 which bears the same ratio to such allowance

3 computed without regard to this paragraph as

4 the—

5 (i) number of acres in such property

6 with respect to interests in minerals other

7 than applicable nonfuel minerals (as so de8 fined), bears to

9 (ii) the total number of acres in such

10 property.

11 (B) ELECTION TO TERMINATE AGGREGA12 TION.—Subparagraph (A) shall not apply if a

13 taxpayer elects, at such time and in such man14 ner as the Secretary of the Treasury may pre15 scribe, to terminate the election under section

16 614(c) of such Code with respect to the prop17 erty described in subparagraph (A) for all tax18 able years beginning after the date of the enact19 ment of this Act. In making such election, the

20 taxpayer may elect to aggregate interests in ap21 plicable nonfuel minerals and other minerals

22 separately.
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1 Subtitle B—Foreign Provisions

2 SEC. 202. DEFINITION OF FOREIGN PERSONAL HOLDING

3 COMPANY INCOME.

4 (a) INCOME FROM NOTIONAL PRINCIPAL CON5 TRACTS.—

6 (1) IN GENERAL.—Paragraph (1) of section

7 954(c) (defining foreign personal holding company

8 income) is amended by adding at the end the follow9 ing new subparagraph:

10 ‘‘(F) INCOME FROM NOTIONAL PRINCIPAL

11 CONTRACTS.—Net income from notional prin12 cipal contracts. Any item of income, gain, de13 duction, or loss from a notional principal con14 tract entered into for purposes of hedging any

15 item described in any preceding subparagraph

16 shall not be taken into account for purposes of

17 this subparagraph but shall be taken into ac18 count under such other subparagraph.’’

19 (2) EXCEPTION FOR DEALERS.—Paragraph (2)

20 of section 954(c) is amended by adding at the end

21 the following new subparagraph:

22 ‘‘(C) EXCEPTION FOR DEALERS.—Except

23 as provided in subparagraph (A), (E), or (F) of

24 paragraph (1) or by regulations, in the case of

25 a regular dealer in property, forward contracts,
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1 option contracts, or similar financial instru2 ments (including notional principal contracts),

3 there shall not be taken into account in comput4 ing foreign personal holding income any item of

5 income, gain, deduction, or loss from any trans6 action (including hedging transactions) entered

7 into in the ordinary course of such dealer’s

8 trade or business as such a dealer.’’

9 (3) CONFORMING AMENDMENT.—Subparagraph

10 (B) of section 954(c)(1) is amended—

11 (A) by striking the second sentence, and

12 (B) by striking ‘‘also’’ in the last sentence.

13 (b) PAYMENTS IN LIEU OF DIVIDENDS.—Paragraph

14 (1) of section 954(c), as amended by subsection (a), is

15 amended by adding at the end the following new subpara16 graph:

17 ‘‘(G) PAYMENTS IN LIEU OF DIVIDENDS.—

18 Payments in lieu of dividends which are made

19 pursuant to an agreement to which section

20 1058 applies.’’

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

22 this section shall apply to taxable years beginning after

23 the date of the enactment of this Act.
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1 SEC. 203. MODIFICATION TO FOREIGN TAX CREDIT

2 CARRYBACK AND CARRYOVER PERIODS.

3 (a) IN GENERAL.—Subsection (c) of section 904 (re4 lating to limitation on credit) is amended—

5 (1) by striking ‘‘in the second preceding taxable

6 year,’’, and

7 (2) by striking ‘‘or fifth’’ and inserting ‘‘fifth,

8 sixth, or seventh’’.

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

10 subsection (a) shall apply to credits arising in taxable

11 years beginning after December 31, 1996.

12 SEC. 204. MODIFICATIONS OF FOREIGN TAX CREDIT RULES

13 APPLICABLE TO DUAL CAPACITY TAXPAYERS.

14 (a) IN GENERAL.—Section 901 (relating to credit for

15 taxes of foreign countries and of possessions of the United

16 States) is amended by redesignating subsection (k) as sub17 section (l) and by inserting after subsection (j) the follow18 ing new subsection:

19 ‘‘(k) SPECIAL RULES RELATING TO DUAL CAPACITY

20 TAXPAYERS.—

21 ‘‘(1) GENERAL RULE.—Notwithstanding any

22 other provision of this chapter, any amount paid or

23 accrued by a dual capacity taxpayer to a foreign

24 country or possession of the United States for any

25 period shall not be considered a tax—
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1 ‘‘(A) if, for such period, the foreign coun2 try or possession does not impose a generally

3 applicable income tax, or

4 ‘‘(B) to the extent such amount exceeds

5 the amount (determined in accordance with reg6 ulations) which—

7 ‘‘(i) is paid by such dual capacity tax8 payer pursuant to the generally applicable

9 income tax imposed by the country or pos10 session, or

11 ‘‘(ii) would be paid if the generally ap12 plicable income tax imposed by the country

13 or possession were applicable to such dual

14 capacity taxpayer.

15 Nothing in this paragraph shall be construed to

16 imply the proper treatment of any such amount

17 not in excess of the amount determined under

18 subparagraph (B).

19 ‘‘(2) DUAL CAPACITY TAXPAYER.—For pur20 poses of this subsection, the term ‘dual capacity tax21 payer’ means, with respect to any foreign country or

22 possession of the United States, a person who—

23 ‘‘(A) is subject to a levy of such country or

24 possession, and
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1 ‘‘(B) receives (or will receive) directly or

2 indirectly a specific economic benefit (as deter3 mined in accordance with regulations) from

4 such country or possession.

5 ‘‘(3) GENERALLY APPLICABLE INCOME TAX.—

6 For purposes of this subsection—

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

8 applicable income tax’ means an income tax (or

9 a series of income taxes) which is generally im10 posed under the laws of a foreign country or

11 possession on income derived from the conduct

12 of a trade or business within such country or

13 possession.

14 ‘‘(B) EXCEPTIONS.—Such term shall not

15 include a tax unless it has substantial applica16 tion, by its terms and in practice, to—

17 ‘‘(i) persons who are not dual capacity

18 taxpayers, and

19 ‘‘(ii) persons who are citizens or resi20 dents of the foreign country or posses21 sion.’’

22 (b) EFFECTIVE DATE.—

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

24 this section shall apply to taxes paid or accrued in
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1 taxable years beginning after the date of the enact2 ment of this Act.

3 (2) CONTRARY TREATY OBLIGATIONS

4 UPHELD.—The amendments made by this section

5 shall not apply to the extent contrary to any treaty

6 obligation of the United States.

7 SEC. 205. RULES RELATING TO FOREIGN OIL AND GAS IN8 COME.

9 (a) SEPARATE BASKET FOR FOREIGN TAX CRED10 IT.—

11 (1) IN GENERAL.—Paragraph (1) of section

12 904(d) (relating to separate application of section

13 with respect to certain categories of income) is

14 amended by striking ‘‘and’’ at the end of subpara15 graph (H), by redesignating subparagraph (I) as

16 subparagraph (J), and by inserting after subpara17 graph (H) the following new subparagraph:

18 ‘‘(I) foreign oil and gas income, and’’.

19 (2) DEFINITION.—Paragraph (2) of section

20 904(d) is amended by redesignating subparagraphs

21 (H) and (I) as subparagraphs (I) and (J), respec22 tively, and by inserting after subparagraph (G) the

23 following new subparagraph:
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1 ‘‘(H) FOREIGN OIL AND GAS INCOME.—

2 The term ‘foreign oil and gas income’ has the

3 meaning given such term by section 954(g).’’

4 (3) CONFORMING AMENDMENTS.—

5 (A) Section 904(d)(3)(F)(i) is amended by

6 striking ‘‘or (E)’’ and inserting ‘‘(E), or (I)’’.

7 (B) Section 907(a) is hereby repealed.

8 (C) Section 907(c)(4) is hereby repealed.

9 (D) Section 907(f) is hereby repealed.

10 (4) EFFECTIVE DATES.—

11 (A) IN GENERAL.—The amendments made

12 by this section shall apply to taxable years be13 ginning after the date of the enactment of this

14 Act.

15 (B) TRANSITIONAL RULES.—

16 (i) SEPARATE BASKET TREATMENT.—

17 Any taxes paid or accrued in a taxable

18 year beginning on or before the date of the

19 enactment of this Act, with respect to in20 come which was described in subparagraph

21 (I) of section 904(d)(1) of such Code (as

22 in effect on the day before the date of the

23 enactment of this Act), shall be treated as

24 taxes paid or accrued with respect to for25 eign oil and gas income to the extent the
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1 taxpayer establishes to the satisfaction of

2 the Secretary of the Treasury that such

3 taxes were paid or accrued with respect to

4 foreign oil and gas income.

5 (ii) CARRYOVERS.—Any unused oil

6 and gas extraction taxes which under sec7 tion 907(f) of such Code (as so in effect)

8 would have been allowable as a carryover

9 to the taxpayer’s first taxable year begin10 ning after the date of the enactment of

11 this Act (without regard to the limitation

12 of paragraph (2) of such section 907(f) for

13 first taxable year) shall be allowed as

14 carryovers under section 904(c) of such

15 Code in the same manner as if such taxes

16 were unused taxes under such section

17 904(c) with respect to foreign oil and gas

18 extraction income.

19 (iii) LOSSES.—The amendment made

20 by paragraph (3)(C) shall not apply to for21 eign oil and gas extraction losses arising in

22 taxable years beginning on or before the

23 date of the enactment of this Act.

24 (b) ELIMINATION OF DEFERRAL FOR FOREIGN OIL

25 AND GAS EXTRACTION INCOME.—
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1 (1) GENERAL RULE.—Paragraph (1) of section

2 954(g) (defining foreign base company oil related in3 come) is amended to read as follows:

4 ‘‘(1) IN GENERAL.—Except as otherwise pro5 vided in this subsection, the term ‘foreign oil and

6 gas income’ means any income of a kind which

7 would be taken into account in determining the

8 amount of—

9 ‘‘(A) foreign oil and gas extraction income

10 (as defined in section 907(c)), or

11 ‘‘(B) foreign oil related income (as defined

12 in section 907(c)).’’

13 (2) CONFORMING AMENDMENTS.—

14 (A) Subsections (a)(5), (b)(5), and (b)(8)

15 of section 954 are each amended by striking

16 ‘‘base company oil related income’’ each place it

17 appears (including in the heading of subsection

18 (b)(8)) and inserting ‘‘oil and gas income’’.

19 (B) Subsection (b)(4) of section 954 is

20 amended by striking ‘‘base company oil-related

21 income’’ and inserting ‘‘oil and gas income’’.

22 (C) The subsection heading for subsection

23 (g) of section 954 is amended by striking

24 ‘‘FOREIGN BASE COMPANY OIL RELATED IN-
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1 COME’’ and inserting ‘‘FOREIGN OIL AND GAS

2 INCOME’’.

3 (D) Subparagraph (A) of section 954(g)(2)

4 is amended by striking ‘‘foreign base company

5 oil related income’’ and inserting ‘‘foreign oil

6 and gas income’’.

7 (3) EFFECTIVE DATE.—The amendments made

8 by this subsection shall apply to taxable years of for9 eign corporations beginning after the date of the en10 actment of this Act, and to taxable years of United

11 States shareholders ending with or within such tax12 able years of foreign corporations.

13 Subtitle C—Accounting Provisions

14 SEC. 206. TERMINATION OF SUSPENSE ACCOUNTS FOR

15 FAMILY CORPORATIONS REQUIRED TO USE

16 ACCRUAL METHOD OF ACCOUNTING.

17 (a) IN GENERAL.—Subsection (i) of section 447 (re18 lating to method of accounting for corporations engaged

19 in farming) is amended by adding at the end the following

20 new paragraph:

21 ‘‘(7) TERMINATION.—

22 ‘‘(A) IN GENERAL.—No suspense account

23 may be established under this subsection by any

24 corporation required by this section to change
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1 its method of accounting for any taxable year

2 ending after September 13, 1996.

3 ‘‘(B) 10-YEAR PHASEOUT OF EXISTING

4 SUSPENSE ACCOUNTS.—Each suspense account

5 under this subsection shall be reduced (but not

6 below zero) for each of the first 10 taxable

7 years beginning after September 13, 1995, by

8 an amount equal to the applicable portion of

9 such account. Any reduction in a suspense ac10 count under this paragraph shall be included in

11 gross income for the taxable year of the reduc12 tion. The amount of the reduction required

13 under this paragraph for any taxable year shall

14 be reduced (but not below zero) by the amount

15 of any reduction required for such taxable year

16 under any other provision of this subsection.

17 ‘‘(C) APPLICABLE PORTION.—For pur18 poses of subparagraph (B), the term ‘applicable

19 portion’ means, for any taxable year, the

20 amount which would ratably reduce the amount

21 in the account (after taking into account prior

22 reductions) to zero over the period consisting of

23 such taxable year and the remaining taxable

24 years in such first 10 taxable years.’’
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1 (b) EFFECTIVE DATE.—The amendments made by

2 this section shall apply to taxable years ending after Sep3 tember 13, 1996.

4 TITLE III—REPEAL OF PROTO5 TYPE DEMONSTRATION OF

6 ADVANCED NUCLEAR REAC7 TOR TECHNOLOGY

8 SEC. 301. Sections 13493, 13494, and 13495 of the

9 Energy Policy Act of 1992, Public Law 102–486, part C,

10 42 U.S.C. 13493, 13494, and 13495) are hereby repealed.

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