I

107TH CONGRESS

1ST SESSION H. R. 1308

To amend the Internal Revenue Code of 1986 to allow tax-free expenditures

from education individual retirement accounts for elementary and secondary school expenses, to increase the maximum annual amount of

contributions to such accounts, and for other purposes.

IN THE HOUSE OF REPRESENTATIVES

MARCH 29, 2001

Mr. HULSHOF (for himself and Mr. BISHOP) 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 allow taxfree expenditures from education individual retirement

accounts for elementary and secondary school expenses,

to increase the maximum annual amount of contributions

to such accounts, 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; ETC.

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

5 ‘‘Education Savings and School Excellence Act of 2001’’.

6 (b) AMENDMENT OF 1986 CODE.—Except as other7 wise expressly provided, whenever in this Act an amend-
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1 ment or repeal is expressed in terms of an amendment

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

3 shall be considered to be made to a section or other provi4 sion of the Internal Revenue Code of 1986.

5 SEC. 2. MODIFICATIONS TO EDUCATION INDIVIDUAL RE6 TIREMENT ACCOUNTS.

7 (a) MAXIMUM ANNUAL CONTRIBUTIONS.—

8 (1) IN GENERAL.—Section 530(b)(1)(A)(iii)

9 (defining education individual retirement account) is

10 amended by striking ‘‘$500’’ and inserting

11 ‘‘$2,000’’.

12 (2) CONFORMING AMENDMENT.—Section

13 4973(e)(1)(A) is amended by striking ‘‘$500’’ and

14 inserting ‘‘$2,000’’.

15 (b) TAX-FREE EXPENDITURES FOR ELEMENTARY

16 AND SECONDARY SCHOOL EXPENSES.—

17 (1) IN GENERAL.—Section 530(b)(2) (defining

18 qualified higher education expenses) is amended to

19 read as follows:

20 ‘‘(2) QUALIFIED EDUCATION EXPENSES.—

21 ‘‘(A) IN GENERAL.—The term ‘qualified

22 education expenses’ means—

23 ‘‘(i) qualified higher education ex24 penses (as defined in section 529(e)(3)),

25 and
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1 ‘‘(ii) qualified elementary and sec2 ondary education expenses (as defined in

3 paragraph (4)).

4 ‘‘(B) QUALIFIED STATE TUITION PRO5 GRAMS.—Such term shall include any contribu6 tion to a qualified State tuition program (as de7 fined in section 529(b)) on behalf of the des8 ignated beneficiary (as defined in section

9 529(e)(1)); but there shall be no increase in the

10 investment in the contract for purposes of ap11 plying section 72 by reason of any portion of

12 such contribution which is not includible in

13 gross income by reason of subsection (d)(2).’’.

14 (2) QUALIFIED ELEMENTARY AND SECONDARY

15 EDUCATION EXPENSES.—Section 530(b) (relating to

16 definitions and special rules) is amended by adding

17 at the end the following new paragraph:

18 ‘‘(4) QUALIFIED ELEMENTARY AND SECONDARY

19 EDUCATION EXPENSES.—

20 ‘‘(A) IN GENERAL.—The term ‘qualified el21 ementary and secondary education expenses’

22 means—

23 ‘‘(i) expenses for tuition, fees, aca24 demic tutoring, special needs services,

25 books, supplies, computer equipment (in-
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1 cluding related software and services), and

2 other equipment which are incurred in con3 nection with the enrollment or attendance

4 of the designated beneficiary of the trust

5 as an elementary or secondary school stu6 dent at a public, private, or religious

7 school, and

8 ‘‘(ii) expenses for room and board,

9 uniforms, transportation, and supple10 mentary items and services (including ex11 tended day programs) which are required

12 or provided by a public, private, or reli13 gious school in connection with such enroll14 ment or attendance.

15 ‘‘(B) SPECIAL RULE FOR

16 HOMESCHOOLING.—Such term shall include ex17 penses described in subparagraph (A)(i) in con18 nection with education provided by

19 homeschooling if the requirements of any appli20 cable State or local law are met with respect to

21 such education.

22 ‘‘(C) SCHOOL.—The term ‘school’ means

23 any school which provides elementary education

24 or secondary education (kindergarten through

25 grade 12), as determined under State law.’’.
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1 (3) CONFORMING AMENDMENTS.—Section 530

2 is amended—

3 (A) by striking ‘‘higher’’ each place it ap4 pears in subsections (b)(1) and (d)(2), and

5 (B) by striking ‘‘HIGHER’’ in the heading

6 for subsection (d)(2).

7 (c) WAIVER OF AGE LIMITATIONS FOR CHILDREN

8 WITH SPECIAL NEEDS.—Section 530(b)(1) (defining edu9 cation individual retirement account) is amended by add10 ing at the end the following flush sentence:

11 ‘‘The age limitations in subparagraphs (A)(ii) and

12 (E) and paragraphs (5) and (6) of subsection (d)

13 shall not apply to any designated beneficiary with

14 special needs (as determined under regulations pre15 scribed by the Secretary).’’.

16 (d) ENTITIES PERMITTED TO CONTRIBUTE TO AC17 COUNTS.—Section 530(c)(1) (relating to reduction in per18 mitted contributions based on adjusted gross income) is

19 amended by striking ‘‘The maximum amount which a con20 tributor’’ and inserting ‘‘In the case of a contributor who

21 is an individual, the maximum amount the contributor’’.

22 (e) TIME WHEN CONTRIBUTIONS DEEMED MADE.—

23 (1) IN GENERAL.—Section 530(b) (relating to

24 definitions and special rules), as amended by sub-
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1 section (b)(2), is amended by adding at the end the

2 following new paragraph:

3 ‘‘(5) TIME WHEN CONTRIBUTIONS DEEMED

4 MADE.—An individual shall be deemed to have made

5 a contribution to an education individual retirement

6 account on the last day of the preceding taxable year

7 if the contribution is made on account of such tax8 able year and is made not later than the time pre9 scribed by law for filing the return for such taxable

10 year (not including extensions thereof).’’.

11 (2) EXTENSION OF TIME TO RETURN EXCESS

12 CONTRIBUTIONS.—Subparagraph (C) of section

13 530(d)(4) (relating to additional tax for distribu14 tions not used for educational expenses) is

15 amended—

16 (A) by striking clause (i) and inserting the

17 following new clause:

18 ‘‘(i) such distribution is made before

19 the first day of the sixth month of the tax20 able year following the taxable year, and’’,

21 and

22 (B) by striking ‘‘DUE DATE OF RETURN’’

23 in the heading and inserting ‘‘CERTAIN DATE’’.
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1 (f ) COORDINATION WITH HOPE AND LIFETIME

2 LEARNING CREDITS AND QUALIFIED TUITION PRO3 GRAMS.—

4 (1) IN GENERAL.—Section 530(d)(2)(C) is

5 amended to read as follows:

6 ‘‘(C) COORDINATION WITH HOPE AND

7 LIFETIME LEARNING CREDITS AND QUALIFIED

8 TUITION PROGRAMS.—For purposes of subpara9 graph (A)—

10 ‘‘(i) CREDIT COORDINATION.—The

11 total amount of qualified higher education

12 expenses with respect to an individual for

13 the taxable year shall be reduced—

14 ‘‘(I) as provided in section

15 25A(g)(2), and

16 ‘‘(II) by the amount of such ex17 penses which were taken into account

18 in determining the credit allowed to

19 the taxpayer or any other person

20 under section 25A.

21 ‘‘(ii) COORDINATION WITH QUALIFIED

22 TUITION PROGRAMS.—If, with respect to

23 an individual for any taxable year—

24 ‘‘(I) the aggregate distributions

25 during such year to which subpara-
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1 graph (A) and section 529(c)(3)(B)

2 apply, exceed

3 ‘‘(II) the total amount of quali4 fied education expenses (after the ap5 plication of clause (i)) for such year,

6 the taxpayer shall allocate such expenses

7 among such distributions for purposes of

8 determining the amount of the exclusion

9 under subparagraph (A) and section

10 529(c)(3)(B).’’.

11 (2) CONFORMING AMENDMENTS.—

12 (A) Subsection (e) of section 25A is

13 amended to read as follows:

14 ‘‘(e) ELECTION NOT TO HAVE SECTION APPLY.—A

15 taxpayer may elect not to have this section apply with re16 spect to the qualified tuition and related expenses of an

17 individual for any taxable year.’’.

18 (B) Section 135(d)(2)(A) is amended by

19 striking ‘‘allowable’’ and inserting ‘‘allowed’’.

20 (C) Section 530(d)(2)(D) is amended—

21 (i) by striking ‘‘or credit’’, and

22 (ii) by striking ‘‘CREDIT OR’’ in the

23 heading.

24 (D) Section 4973(e)(1) is amended by add25 ing ‘‘and’’ at the end of subparagraph (A), by
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1 striking subparagraph (B), and by redesig2 nating subparagraph (C) as subparagraph (B).

3 (g) RENAMING EDUCATION INDIVIDUAL RETIRE4 MENT ACCOUNTS AS PAUL COVERDELL EDUCATION SAV5 INGS ACCOUNTS.—

6 (1) IN GENERAL.—

7 (A) Section 530 (as amended by the pre8 ceding provisions of this section) is amended by

9 striking ‘‘education individual retirement ac10 count’’ each place it appears and inserting

11 ‘‘Paul Coverdell education savings account’’.

12 (B) The heading for paragraph (1) of sec13 tion 530(b) is amended by striking ‘‘EDU14 CATION INDIVIDUAL RETIREMENT ACCOUNT’’

15 and inserting ‘‘PAUL COVERDELL EDUCATION

16 SAVINGS ACCOUNT’’.

17 (C) The heading for section 530 is amend18 ed to read as follows:

19 ‘‘SEC. 530. PAUL COVERDELL EDUCATION SAVINGS AC20 COUNTS.’’.

21 (D) The item in the table of contents for

22 part VII of subchapter F of chapter 1 relating

23 to section 530 is amended to read as follows:

‘‘Sec. 530. Paul Coverdell Education savings accounts.’’.

24 (2) CONFORMING AMENDMENTS.—
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1 (A) The following provisions are each

2 amended by striking ‘‘education individual re3 tirement’’ each place it appears and inserting

4 ‘‘Paul Coverdell education savings’’:

5 (i) Section 25A(e)(2).

6 (ii) Section 26(b)(2)(E).

7 (iii) Section 72(e)(9).

8 (iv) Section 135(c)(2)(C).

9 (v) Subsections (a) and (e) of section

10 4973.

11 (vi) Subsections (c) and (e) of section

12 4975.

13 (vii) Section 6693(a)(2)(D).

14 (B) The headings for each of the following

15 provisions are amended by striking ‘‘EDU16 CATION INDIVIDUAL RETIREMENT ACCOUNTS’’

17 each place it appears and inserting ‘‘PAUL

18 COVERDELL EDUCATION SAVINGS ACCOUNTS’’.

19 (i) Section 72(e)(9).

20 (ii) Section 135(c)(2)(C).

21 (iii) Section 4973(e).

22 (iv) Section 4975(c)(5).

23 (h) EFFECTIVE DATES.—

24 (1) IN GENERAL.—Except as provided in para25 graph (2), the amendments made by this section
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1 shall apply to taxable years beginning after the date

2 of the enactment of this Act.

3 (2) SUBSECTION (g).—The amendments made

4 by subsection (g) shall take effect on the date of the

5 enactment of this Act.

6 SEC. 3. MODIFICATIONS TO QUALIFIED TUITION PRO7 GRAMS.

8 (a) SHORT TITLE.—This section may be cited as the

9 ‘‘Collegiate Learning and Student Savings (CLASS) Act’’.

10 (b) ELIGIBLE EDUCATIONAL INSTITUTIONS PER11 MITTED TO MAINTAIN QUALIFIED TUITION PROGRAMS.—

12 (1) IN GENERAL.—Section 529(b)(1) (defining

13 qualified State tuition program) is amended by in14 serting ‘‘or by one or more eligible educational insti15 tutions’’ after ‘‘maintained by a State or agency or

16 instrumentality thereof ’’.

17 (2) PRIVATE QUALIFIED TUITION PROGRAMS

18 LIMITED TO BENEFIT PLANS.—Clause (ii) of section

19 529(b)(1)(A) is amended by inserting ‘‘in the case of

20 a program established and maintained by a State or

21 agency or instrumentality thereof,’’ before ‘‘may

22 make’’.

23 (3) CONFORMING AMENDMENTS.—

24 (A) Sections 72(e)(9), 135(c)(2)(C),

25 135(d)(1)(D), 529, 530(b)(2)(B), 4973(e), and
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1 6693(a)(2)(C) are each amended by striking

2 ‘‘qualified State tuition’’ each place it appears

3 and inserting ‘‘qualified tuition’’.

4 (B) The headings for sections 72(e)(9),

5 135(c)(2)(C), and 530(b)(2)(B) are each

6 amended by striking ‘‘QUALIFIED STATE TUI7 TION’’ and inserting ‘‘QUALIFIED TUITION’’.

8 (C) The heading for sections 529(b) is

9 amended by striking ‘‘QUALIFIED STATE TUI10 TION’’ and inserting ‘‘QUALIFIED TUITION’’.

11 (D) The heading for section 529 is amend12 ed by striking ‘‘STATE’’.

13 (E) The item relating to section 529 in the

14 table of sections for part VIII of subchapter F

15 of chapter 1 is amended by striking ‘‘State’’.

16 (c) EXCLUSION FROM GROSS INCOME OF EDU17 CATION DISTRIBUTIONS FROM QUALIFIED TUITION PRO18 GRAMS.—

19 (1) IN GENERAL.—Section 529(c)(3)(B) (relat20 ing to distributions) is amended to read as follows:

21 ‘‘(B) DISTRIBUTIONS FOR QUALIFIED

22 HIGHER EDUCATION EXPENSES.—For purposes

23 of this paragraph—

24 ‘‘(i) IN-KIND DISTRIBUTIONS.—No

25 amount shall be includible in gross income
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1 under subparagraph (A) by reason of a

2 distribution which consists of providing a

3 benefit to the distributee which, if paid for

4 by the distributee, would constitute pay5 ment of a qualified higher education ex6 pense.

7 ‘‘(ii) CASH DISTRIBUTIONS.—In the

8 case of distributions not described in

9 clause (i), if—

10 ‘‘(I) such distributions do not ex11 ceed the qualified higher education ex12 penses (reduced by expenses described

13 in clause (i)), no amount shall be in14 cludible in gross income, and

15 ‘‘(II) in any other case, the

16 amount otherwise includible in gross

17 income shall be reduced by an amount

18 which bears the same ratio to such

19 amount as such expenses bear to such

20 distributions.

21 ‘‘(iii) TREATMENT AS DISTRIBU22 TIONS.—Any benefit furnished to a des23 ignated beneficiary under a qualified tui24 tion program shall be treated as a distribu-
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1 tion to the beneficiary for purposes of this

2 paragraph.

3 ‘‘(iv) COORDINATION WITH HOPE AND

4 LIFETIME LEARNING CREDITS.—The total

5 amount of qualified higher education ex6 penses with respect to an individual for the

7 taxable year shall be reduced—

8 ‘‘(I) as provided in section

9 25A(g)(2), and

10 ‘‘(II) by the amount of such ex11 penses which were taken into account

12 in determining the credit allowed to

13 the taxpayer or any other person

14 under section 25A.

15 ‘‘(v) COORDINATION WITH EDUCATION

16 INDIVIDUAL RETIREMENT ACCOUNTS.—If,

17 with respect to an individual for any tax18 able year—

19 ‘‘(I) the aggregate distributions

20 to which clauses (i) and (ii) and sec21 tion 530(d)(2)(A) apply, exceed

22 ‘‘(II) the total amount of quali23 fied higher education expenses other24 wise taken into account under clauses
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1 (i) and (ii) (after the application of

2 clause (iv)) for such year,

3 the taxpayer shall allocate such expenses

4 among such distributions for purposes of

5 determining the amount of the exclusion

6 under clauses (i) and (ii) and section

7 530(d)(2)(A).’’.

8 (2) CONFORMING AMENDMENTS.—

9 (A) Section 135(d)(2)(B) is amended by

10 striking ‘‘the exclusion under section

11 530(d)(2)’’ and inserting ‘‘the exclusions under

12 sections 529(c)(3)(B)(i) and 530(d)(2)’’.

13 (B) Section 221(e)(2)(A) is amended by

14 inserting ‘‘529,’’ after ‘‘135,’’.

15 (d) ROLLOVER TO DIFFERENT PROGRAM FOR BEN16 EFIT OF SAME DESIGNATED BENEFICIARY.—Section

17 529(c)(3)(C) (relating to change in beneficiaries) is

18 amended—

19 (1) by striking ‘‘transferred to the credit’’ in

20 clause (i) and inserting ‘‘transferred—

21 ‘‘(I) to another qualified tuition

22 program for the benefit of the des23 ignated beneficiary, or

24 ‘‘(II) to the credit’’,
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1 (2) by adding at the end the following new

2 clause:

3 ‘‘(iii) LIMITATION ON CERTAIN ROLL4 OVERS.—Clause (i)(I) shall not apply to

5 any amount transferred with respect to a

6 designated beneficiary if, at any time dur7 ing the 1-year period ending on the day of

8 such transfer, any other amount was

9 transferred with respect to such beneficiary

10 which was not includible in gross income

11 by reason of clause (i)(I).’’, and

12 (3) by inserting ‘‘OR PROGRAMS’’ after ‘‘BENE13 FICIARIES’’ in the heading.

14 (e) MEMBER OF FAMILY INCLUDES FIRST COUS15 IN.—Section 529(e)(2) (defining member of family) is

16 amended by striking ‘‘and’’ at the end of subparagraph

17 (B), by striking the period at the end of subparagraph

18 (C) and inserting ‘‘; and’’, and by adding at the end the

19 following new subparagraph:

20 ‘‘(D) any first cousin of such beneficiary.’’.

21 (f ) DEFINITION OF QUALIFIED HIGHER EDUCATION

22 EXPENSES.—

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

24 529(e)(3) (relating to definition of qualified higher

25 education expenses) is amended to read as follows:
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1 ‘‘(A) IN GENERAL.—The term ‘qualified

2 higher education expenses’ means—

3 ‘‘(i) tuition and fees required for the

4 enrollment or attendance of a designated

5 beneficiary at an eligible educational insti6 tution for courses of instruction of such

7 beneficiary at such institution, and

8 ‘‘(ii) expenses for books, supplies, and

9 equipment which are incurred in connec10 tion with such enrollment or attendance,

11 but not to exceed the allowance for books

12 and supplies included in the cost of attend13 ance (as defined in section 472 of the

14 Higher Education Act of 1965 (20 U.S.C.

15 1087ll), as in effect on the date of the en16 actment of the Education Savings and

17 School Excellence Act of 2001, as deter18 mined by the eligible educational institu19 tion.’’.

20 (2) EXCEPTION FOR EDUCATION INVOLVING

21 SPORTS, ETC.—Paragraph (3) of section 529(e) (re22 lating to qualified higher education expenses) is

23 amended by adding at the end the following new

24 subparagraph:
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1 ‘‘(C) EXCEPTION FOR EDUCATION INVOLV2 ING SPORTS, ETC.—The term ‘qualified higher

3 education expenses’ shall not include expenses

4 with respect to any course or other education

5 involving sports, games, or hobbies unless such

6 course or other education is part of the bene7 ficiary’s degree program or is taken to acquire

8 or improve job skills of the beneficiary.’’.

9 (g) 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) QUALIFIED HIGHER EDUCATION EX14 PENSES.—The amendments made by subsection (f )

15 shall apply to amounts paid for courses beginning in

16 taxable years beginning after the date of the enact17 ment of this Act.

18 SEC. 4. EMPLOYER-PROVIDED EDUCATIONAL ASSISTANCE

19 MADE PERMANENT.

20 (a) PERMANENT EXTENSION.—Section 127 (relating

21 to exclusion for educational assistance programs) is

22 amended by striking subsection (d) and by redesignating

23 subsection (e) as subsection (d).

24 (b) RESTORATION OF EXCLUSION FOR GRADUATE

25 EDUCATION.—The last sentence of paragraph (1) of sec-
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1 tion 127(c) (defining educational assistance) is amended

2 by striking ‘‘, and such term also does not include any

3 payment for, or the provision of any benefits with respect

4 to, any graduate level course of a kind normally taken by

5 an individual pursuing a program leading to a law, busi6 ness, medical, or other advanced academic or professional

7 degree’’.

8 (c) EFFECTIVE DATES.—

9 (1) PERMANENT EXTENSION.—The amend10 ments made by subsection (a) shall apply to taxable

11 years beginning after December 31, 2001.

12 (2) GRADUATE EDUCATION.—The amendment

13 made by subsection (b) shall apply to expenses relat14 ing to courses beginning after the date of the enact15 ment of this Act.

16 SEC. 5. EXPANSION OF DEDUCTION FOR INTEREST ON EDU17 CATION LOANS.

18 (a) REPEAL OF DOLLAR LIMITATION ON, AND IN19 CREASE IN INCOME THRESHOLD FOR PHASE OUT OF, DE20 DUCTION FOR INTEREST ON EDUCATION LOANS.—

21 (1) IN GENERAL.—Subsection (b) of section

22 221 (relating to maximum deduction) is amended to

23 read as follows:

24 ‘‘(b) LIMITATION BASED ON MODIFIED ADJUSTED

25 GROSS INCOME.—
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1 ‘‘(1) IN GENERAL.—The amount which would

2 (but for this subsection) be allowable as a deduction

3 under this section shall be reduced (but not below

4 zero) by the amount determined under paragraph

5 (2).

6 ‘‘(2) AMOUNT OF REDUCTION.—The amount

7 determined under this paragraph is the amount

8 which bears the same ratio to the amount which

9 would be so taken into account as—

10 ‘‘(A) the excess of—

11 ‘‘(i) the taxpayer’s modified adjusted

12 gross income for such taxable year, over

13 ‘‘(ii) $100,000 ($150,000 in the case

14 of a joint return), bears to

15 ‘‘(B) $15,000.

16 ‘‘(3) MODIFIED ADJUSTED GROSS INCOME.—

17 The term ‘modified adjusted gross income’ means

18 adjusted gross income determined—

19 ‘‘(A) without regard to this section and

20 sections 911, 931, and 933, and

21 ‘‘(B) after application of sections 86, 135,

22 137, 219, and 469.’’.

23 (2) EFFECTIVE DATE.—The amendment made

24 by paragraph (1) shall apply to taxable years begin25 ning after the date of the enactment of this Act.
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1 (b) REPEAL OF 60-MONTH LIMITATION ON DEDUC2 TION FOR INTEREST ON EDUCATION LOANS.—

3 (1) IN GENERAL.—Section 221 (relating to in4 terest on education loans) is amended by striking

5 subsection (d) and by redesignating subsections (e),

6 (f), and (g) as subsections (d), (e), and (f), respec7 tively.

8 (2) CONFORMING AMENDMENT.—Subsection (e)

9 of section 6050S of such Code is amended by strik10 ing ‘‘section 221(e)(1)’’ and inserting ‘‘section

11 221(d)(1)’’.

12 (3) EFFECTIVE DATE.—The amendments made

13 by this subsection shall apply to loan interest pay14 ments due and paid after the date of the enactment

15 of this Act in taxable years ending after such date.

16 SEC. 6. 2-PERCENT FLOOR ON MISCELLANEOUS ITEMIZED

17 DEDUCTIONS NOT TO APPLY TO QUALIFIED

18 PROFESSIONAL DEVELOPMENT EXPENSES OF

19 ELEMENTARY AND SECONDARY SCHOOL

20 TEACHERS.

21 (a) IN GENERAL.—Section 67(b) (defining miscella22 neous itemized deductions) is amended by striking ‘‘and’’

23 at the end of paragraph (11), by striking the period at

24 the end of paragraph (12) and inserting ‘‘, and’’, and by

25 adding at the end the following new paragraph:
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1 ‘‘(13) any deduction allowable for the qualified

2 professional development expenses of an eligible

3 teacher.’’.

4 (b) DEFINITIONS.—Section 67 (relating to 2-percent

5 floor on miscellaneous itemized deductions) is amended by

6 adding at the end the following new subsection:

7 ‘‘(g) QUALIFIED PROFESSIONAL DEVELOPMENT EX8 PENSES OF ELIGIBLE TEACHERS.—For purposes of sub9 section (b)(13)—

10 ‘‘(1) QUALIFIED PROFESSIONAL DEVELOPMENT

11 EXPENSES.—

12 ‘‘(A) IN GENERAL.—The term ‘qualified

13 professional development expenses’ means ex14 penses in an amount not to exceed $1,000 for

15 any taxable year—

16 ‘‘(i) for tuition, fees, books, supplies,

17 equipment, and transportation required for

18 the enrollment or attendance of an indi19 vidual in a qualified course of instruction,

20 and

21 ‘‘(ii) with respect to which a deduction

22 is allowable under section 162 (determined

23 without regard to this section).
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1 ‘‘(B) QUALIFIED COURSE OF INSTRUC2 TION.—The term ‘qualified course of instruc3 tion’ means a course of instruction which—

4 ‘‘(i) is—

5 ‘‘(I) at an institution of higher

6 education (as defined in section 481

7 of the Higher Education Act of 1965

8 (20 U.S.C. 1088), as in effect on the

9 date of the enactment of this sub10 section), or

11 ‘‘(II) a professional conference,

12 and

13 ‘‘(ii) is part of a program of profes14 sional development which is approved and

15 certified by the appropriate local edu16 cational agency as furthering the individ17 ual’s teaching skills.

18 ‘‘(C) LOCAL EDUCATIONAL AGENCY.—The term

19 ‘local educational agency’ has the meaning given

20 such term by section 14101 of the Elementary and

21 Secondary Education Act of 1965, as so in effect.

22 ‘‘(2) ELIGIBLE TEACHER.—

23 ‘‘(A) IN GENERAL.—The term ‘eligible

24 teacher’ means an individual who is a kinder25 garten through grade 12 classroom teacher, in-
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1 structor, counselor, aide, or principal in an ele2 mentary or secondary school.

3 ‘‘(B) ELEMENTARY OR SECONDARY

4 SCHOOL.—The terms ‘elementary school’ and

5 ‘secondary school’ have the meanings given

6 such terms by section 14101 of the Elementary

7 and Secondary Education Act of 1965 (20

8 U.S.C. 8801), as so in effect.’’.

9 (c) 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 SEC. 7. EXCLUSION OF CERTAIN AMOUNTS RECEIVED

13 UNDER THE NATIONAL HEALTH SERVICE

14 CORPS SCHOLARSHIP PROGRAM, THE F. ED15 WARD HEBERT ARMED FORCES HEALTH PRO16 FESSIONS SCHOLARSHIP AND FINANCIAL AS17 SISTANCE PROGRAM, AND CERTAIN OTHER

18 PROGRAMS.

19 (a) IN GENERAL.—Section 117(c) (relating to the ex20 clusion from gross income amounts received as a qualified

21 scholarship) is amended—

22 (1) by striking ‘‘Subsections (a)’’ and inserting

23 the following:

24 ‘‘(1) IN GENERAL.—Except as provided in para25 graph (2), subsections (a)’’, and
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1 (2) by adding at the end the following new

2 paragraph:

3 ‘‘(2) EXCEPTIONS.—Paragraph (1) shall not

4 apply to any amount received by an individual

5 under—

6 ‘‘(A) the National Health Service Corps

7 Scholarship program under section

8 338A(g)(1)(A) of the Public Health Service

9 Act,

10 ‘‘(B) the Armed Forces Health Professions

11 Scholarship and Financial Assistance program

12 under subchapter I of chapter 105 of title 10,

13 United States Code,

14 ‘‘(C) the National Institutes of Health Un15 dergraduate Scholarship program under section

16 487D of the Public Health Service Act, or

17 ‘‘(D) any State program determined by the

18 Secretary to have substantially similar objec19 tives as such programs.’’.

20 (b) EFFECTIVE DATES.—

21 (1) IN GENERAL.—Except as provided in para22 graph (2), the amendments made by subsection (a)

23 shall apply to amounts received in taxable years be24 ginning after December 31, 1993.
26

•HR 1308 IH

1 (2) STATE PROGRAMS.—Section 117(c)(2)(D)

2 of the Internal Revenue Code of 1986 (as added by

3 the amendments made by subsection (a)) shall apply

4 to amounts received in taxable years beginning after

5 the date of the enactment of this Act.

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