I

107TH CONGRESS

1ST SESSION H. R. 2111

To amend the Internal Revenue Code of 1986 to provide tax benefits for

small businesses, to amend the Fair Labor Standards Act of 1938

to increase the minimum wage, and for other purposes.

IN THE HOUSE OF REPRESENTATIVES

JUNE 7, 2001

Mr. QUINN introduced the following bill; which was referred to the Committee

on Ways and Means, and in addition to the Committee on Education and

the Workforce, 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 committee concerned

A BILL

To amend the Internal Revenue Code of 1986 to provide

tax benefits for small businesses, to amend the Fair

Labor Standards Act of 1938 to increase the minimum

wage, 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; REFERENCES; TABLE OF CON4 TENTS.

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

6 ‘‘Small Business Tax Fairness Act of 2001’’.
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1 (b) AMENDMENT OF 1986 CODE.—Except as other2 wise expressly provided, whenever in this Act an amend3 ment or repeal is expressed in terms of an amendment

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

5 shall be considered to be made to a section or other provi6 sion of the Internal Revenue Code of 1986.

7 (c) TABLE OF CONTENTS.—The table of contents of

8 this Act is as follows:

Sec. 1. Short title; references; table of contents.

TITLE I—SMALL BUSINESS PROVISIONS

Sec. 101. Deduction for 100 percent of health insurance costs of self-employed

individuals.

Sec. 102. Increase in expense treatment for small businesses.

Sec. 103. Increased deduction for meal expenses.

Sec. 104. Increased deductibility of business meal expenses for individuals subject to Federal limitations on hours of service.

Sec. 105. Income averaging for farmers and fishermen not to increase alternative minimum tax liability.

Sec. 106. Repeal of occupational taxes relating to distilled spirits, wine, and

beer.

TITLE II—REAL ESTATE PROVISIONS

Subtitle A—Private Activity Bond Volume Cap

Sec. 201. Acceleration of phase-in of increase in volume cap on private activity

bonds.

Subtitle B—Exclusion From Gross Income for Certain Forgiven Mortgage

Obligations

Sec. 202. Exclusion from gross income for certain forgiven mortgage obligations.

TITLE III—AMENDMENTS TO THE FAIR LABOR STANDARDS ACT

OF 1938

Sec. 301. Short title.

Sec. 302. Minimum Wage.
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1 TITLE I—SMALL BUSINESS

2 PROVISIONS

3 SEC. 101. DEDUCTION FOR 100 PERCENT OF HEALTH IN4 SURANCE COSTS OF SELF-EMPLOYED INDI5 VIDUALS.

6 (a) IN GENERAL.—Paragraph (1) of section 162(l)

7 is amended to read as follows:

8 ‘‘(1) ALLOWANCE OF DEDUCTION.—In the case

9 of an individual who is an employee within the

10 meaning of section 401(c)(1), there shall be allowed

11 as a deduction under this section an amount equal

12 to 100 percent of the amount paid during the tax13 able year for insurance which constitutes medical

14 care for the taxpayer and the taxpayer’s spouse and

15 dependents.’’.

16 (b) CLARIFICATION OF LIMITATIONS ON OTHER COV17 ERAGE.—The first sentence of section 162(l)(2)(B) is

18 amended to read as follows: ‘‘Paragraph (1) shall not

19 apply to any taxpayer for any calendar month for which

20 the taxpayer participates in any subsidized health plan

21 maintained by any employer (other than an employer de22 scribed in section 401(c)(4)) of the taxpayer or the spouse

23 of the taxpayer.’’.
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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, 2000.

4 SEC. 102. INCREASE IN EXPENSE TREATMENT FOR SMALL

5 BUSINESSES.

6 (a) IN GENERAL.—Paragraph (1) of section 179(b)

7 (relating to dollar limitation) is amended to read as fol8 lows:

9 ‘‘(1) DOLLAR LIMITATION.—The aggregate cost

10 which may be taken into account under subsection

11 (a) for any taxable year shall not exceed $30,000.’’.

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

13 this section shall apply to taxable years beginning after

14 December 31, 2000.

15 SEC. 103. INCREASED DEDUCTION FOR MEAL EXPENSES.

16 (a) IN GENERAL.—Paragraph (1) of section 274(n)

17 (relating to only 50 percent of meal and entertainment

18 expenses allowed as deduction) is amended by striking ‘‘50

19 percent’’ in the text and inserting ‘‘the allowable percent20 age’’.

21 (b) ALLOWABLE PERCENTAGES.—Subsection (n) of

22 section 274 is amended by redesignating paragraphs (2)

23 and (3) as paragraphs (3) and (4), respectively, and by

24 inserting after paragraph (1) the following new paragraph:
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1 ‘‘(2) ALLOWABLE PERCENTAGE.—For purposes

2 of paragraph (1), the allowable percentage is—

3 ‘‘(A) in the case of amounts for items de4 scribed in paragraph (1)(B), 50 percent, and

5 ‘‘(B) in the case of expenses for food or

6 beverages, 60 percent (55 percent for taxable

7 years beginning during 2001).’’.

8 (c) CONFORMING AMENDMENT.—The heading for

9 subsection (n) of section 274 is amended by striking ‘‘50

10 PERCENT’’ and inserting ‘‘LIMITED PERCENTAGES’’.

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

12 this section shall apply to taxable years beginning after

13 December 31, 2000.

14 SEC. 104. INCREASED DEDUCTIBILITY OF BUSINESS MEAL

15 EXPENSES FOR INDIVIDUALS SUBJECT TO

16 FEDERAL LIMITATIONS ON HOURS OF SERV17 ICE.

18 (a) IN GENERAL.—Paragraph (4) of section 274(n)

19 (relating to limited percentages of meal and entertainment

20 expenses allowed as deduction), as redesignated by section

21 103, is amended to read as follows:

22 ‘‘(4) SPECIAL RULE FOR INDIVIDUALS SUBJECT

23 TO FEDERAL HOURS OF SERVICE.—In the case of

24 any expenses for food or beverages consumed while

25 away from home (within the meaning of section
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1 162(a)(2)) by an individual during, or incident to,

2 the period of duty subject to the hours of service

3 limitations of the Department of Transportation,

4 paragraph (2)(B) shall be applied by substituting

5 ‘80 percent’ for the percentage otherwise applicable

6 under paragraph (2)(B).’’.

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

8 subsection (a) shall apply to taxable years beginning after

9 December 31, 2000.

10 SEC. 105. INCOME AVERAGING FOR FARMERS AND FISHER11 MEN NOT TO INCREASE ALTERNATIVE MIN12 IMUM TAX LIABILITY.

13 (a) IN GENERAL.—Section 55(c) (defining regular

14 tax) is amended by redesignating paragraph (2) as para15 graph (3) and by inserting after paragraph (1) the fol16 lowing:

17 ‘‘(2) COORDINATION WITH INCOME AVERAGING

18 FOR FARMERS AND FISHERMEN.—Solely for pur19 poses of this section, section 1301 (relating to aver20 aging of farm and fishing income) shall not apply in

21 computing the regular tax.’’.

22 (b) ALLOWING INCOME AVERAGING FOR FISHER23 MEN.—
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1 (1) IN GENERAL.—Section 1301(a) is amended

2 by striking ‘‘farming business’’ and inserting ‘‘farm3 ing business or fishing business,’’.

4 (2) DEFINITION OF ELECTED FARM INCOME.—

5 (A) IN GENERAL.—Clause (i) of section

6 1301(b)(1)(A) is amended by inserting ‘‘or fish7 ing business’’ before the semicolon.

8 (B) CONFORMING AMENDMENT.—Subpara9 graph (B) of section 1301(b)(1) is amended by

10 inserting ‘‘or fishing business’’ after ‘‘farming

11 business’’ both places it occurs.

12 (3) DEFINITION OF FISHING BUSINESS.—Sec13 tion 1301(b) is amended by adding at the end the

14 following new paragraph:

15 ‘‘(4) FISHING BUSINESS.—The term ‘fishing

16 business’ means the conduct of commercial fishing

17 as defined in section 3 of the Magnuson-Stevens

18 Fishery Conservation and Management Act (16

19 U.S.C. 1802).’’.

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

21 this section shall apply to taxable years beginning after

22 December 31, 2000.

23 SEC. 106. REPEAL OF OCCUPATIONAL TAXES RELATING TO

24 DISTILLED SPIRITS, WINE, AND BEER.

25 (a) REPEAL OF OCCUPATIONAL TAXES.—
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1 (1) IN GENERAL.—The following provisions of

2 part II of subchapter A of chapter 51 of the Internal

3 Revenue Code of 1986 (relating to occupational

4 taxes) are hereby repealed:

5 (A) Subpart A (relating to proprietors of

6 distilled spirits plants, bonded wine cellars,

7 etc.).

8 (B) Subpart B (relating to brewer).

9 (C) Subpart D (relating to wholesale deal10 ers) (other than sections 5114 and 5116).

11 (D) Subpart E (relating to retail dealers)

12 (other than section 5124).

13 (E) Subpart G (relating to general provi14 sions) (other than sections 5142, 5143, 5145,

15 and 5146).

16 (2) NONBEVERAGE DOMESTIC DRAWBACK.—

17 Section 5131 is amended by striking ‘‘, on payment

18 of a special tax per annum,’’.

19 (3) INDUSTRIAL USE OF DISTILLED SPIRITS.—

20 Section 5276 is hereby repealed.

21 (b) CONFORMING AMENDMENTS.—

22 (1)(A) The heading for part II of subchapter A

23 of chapter 51 and the table of subparts for such

24 part are amended to read as follows:
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1 ‘‘PART II—MISCELLANEOUS PROVISIONS

‘‘Subpart A. Manufacturers of stills.

‘‘Subpart B. Nonbeverage domestic drawback claimants.

‘‘Subpart C. Recordkeeping by dealers.

‘‘Subpart D. Other provisions.’’.

2 (B) The table of parts for such subchapter A

3 is amended by striking the item relating to part II

4 and inserting the following new item:

‘‘Part II. Miscellaneous provisions.’’.

5 (2) Subpart C of part II of such subchapter

6 (relating to manufacturers of stills) is redesignated

7 as subpart A.

8 (3)(A) Subpart F of such part II (relating to

9 nonbeverage domestic drawback claimants) is redes10 ignated as subpart B and sections 5131 through

11 5134 are redesignated as sections 5111 through

12 5114, respectively.

13 (B) The table of sections for such subpart B,

14 as so redesignated, is amended—

15 (i) by redesignating the items relating to

16 sections 5131 through 5134 as relating to sec17 tions 5111 through 5114, respectively; and

18 (ii) by striking ‘‘and rate of tax’’ in the

19 item relating to section 5111, as so redesig20 nated.

21 (C) Section 5111, as redesignated by subpara22 graph (A), is amended—
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1 (i) by striking ‘‘AND RATE OF TAX’’ in

2 the section heading;

3 (ii) by striking ‘‘(a) ELIGIBILITY FOR

4 DRAWBACK.—’’; and

5 (iii) by striking subsection (b).

6 (4) Part II of subchapter A of chapter 51 is

7 amended by adding after subpart B, as redesignated

8 by paragraph (3), the following new subpart:

9 ‘‘Subpart C—Recordkeeping by Dealers

‘‘Sec. 5121. Recordkeeping by wholesale dealers.

‘‘Sec. 5122. Recordkeeping by retail dealers.

‘‘Sec. 5123. Preservation and inspection of records, and entry of

premises for inspection.’’.

10 (5)(A) Section 5114 (relating to records) is

11 moved to subpart C of such part II and inserted

12 after the table of sections for such subpart.

13 (B) Section 5114 is amended—

14 (i) by striking the section heading and in15 serting the following new heading:

16 ‘‘SEC. 5121. RECORDKEEPING BY WHOLESALE DEALERS.’’;

17 and

18 (ii) by redesignating subsection (c) as sub19 section (d) and by inserting after subsection (b)

20 the following new subsection:

21 ‘‘(c) WHOLESALE DEALERS.—For purposes of this

22 part—
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1 ‘‘(1) WHOLESALE DEALER IN LIQUORS.—The

2 term ‘wholesale dealer in liquors’ means any dealer

3 (other than a wholesale dealer in beer) who sells, or

4 offers for sale, distilled spirits, wines, or beer, to an5 other dealer.

6 ‘‘(2) WHOLESALE DEALER IN BEER.—The term

7 ‘wholesale dealer in beer’ means any dealer who

8 sells, or offers for sale, beer, but not distilled spirits

9 or wines, to another dealer.

10 ‘‘(3) DEALER.—The term ‘dealer’ means any

11 person who sells, or offers for sale, any distilled spir12 its, wines, or beer.

13 ‘‘(4) PRESUMPTION IN CASE OF SALE OF 20

14 WINE GALLONS OR MORE.—The sale, or offer for

15 sale, of distilled spirits, wines, or beer, in quantities

16 of 20 wine gallons or more to the same person at

17 the same time, shall be presumptive evidence that

18 the person making such sale, or offer for sale, is en19 gaged in or carrying on the business of a wholesale

20 dealer in liquors or a wholesale dealer in beer, as the

21 case may be. Such presumption may be overcome by

22 evidence satisfactorily showing that such sale, or

23 offer for sale, was made to a person other than a

24 dealer.’’.
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1 (C) Paragraph (3) of section 5121(d), as so re2 designated, is amended by striking ‘‘section 5146’’

3 and inserting ‘‘section 5123’’.

4 (6)(A) Section 5124 (relating to records) is

5 moved to subpart C of part II of subchapter A of

6 chapter 51 and inserted after section 5121.

7 (B) Section 5124 is amended—

8 (i) by striking the section heading and in9 serting the following new heading:

10 ‘‘SEC. 5122. RECORDKEEPING BY RETAIL DEALERS.’’;

11 (ii) by striking ‘‘section 5146’’ in sub12 section (c) and inserting ‘‘section 5123’’; and

13 (iii) by redesignating subsection (c) as sub14 section (d) and inserting after subsection (b)

15 the following new subsection:

16 ‘‘(c) RETAIL DEALERS.—For purposes of this

17 section—

18 ‘‘(1) RETAIL DEALER IN LIQUORS.—The term

19 ‘retail dealer in liquors’ means any dealer (other

20 than a retail dealer in beer) who sells, or offers for

21 sale, distilled spirits, wines, or beer, to any person

22 other than a dealer.

23 ‘‘(2) RETAIL DEALER IN BEER.—The term ‘re24 tail dealer in beer’ means any dealer who sells, or of-
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1 fers for sale, beer, but not distilled spirits or wines,

2 to any person other than a dealer.

3 ‘‘(3) DEALER.—The term ‘dealer’ has the

4 meaning given such term by section 5121(c)(3).’’.

5 (7) Section 5146 is moved to subpart C of part

6 II of subchapter A of chapter 51, inserted after sec7 tion 5122, and redesignated as section 5123.

8 (8) Part II of subchapter A of chapter 51 is

9 amended by inserting after subpart C the following

10 new subpart:

11 ‘‘Subpart D—Other Provisions

‘‘Sec. 5131. Packaging distilled spirits for industrial uses.

‘‘Sec. 5132. Prohibited purchases by dealers.’’.

12 (9) Section 5116 is moved to subpart D of part

13 II of subchapter A of chapter 51, inserted after the

14 table of sections, redesignated as section 5131, and

15 amended by inserting ‘‘(as defined in section

16 5121(c))’’ after ‘‘dealer’’ in subsection (a).

17 (10) Subpart D of part II of subchapter A of

18 chapter 51 is amended by adding at the end thereof

19 the following new section:

20 ‘‘SEC. 5132. PROHIBITED PURCHASES BY DEALERS.

21 ‘‘(a) IN GENERAL.—Except as provided in regula22 tions prescribed by the Secretary, it shall be unlawful for

23 a dealer to purchase distilled spirits from any person other
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1 than a wholesale dealer in liquors who is required to keep

2 the records prescribed by section 5121.

3 ‘‘(b) PENALTY AND FORFEITURE.—

‘‘For penalty and forfeiture provisions applicable

to violations of subsection (a), see sections 5687 and

7302.’’.

4 (11) Subsection (b) of section 5002 is

5 amended—

6 (A) by striking ‘‘section 5112(a)’’ and in7 serting ‘‘section 5121(c)(3)’’;

8 (B) by striking ‘‘section 5112’’ and insert9 ing ‘‘section 5121(c)’’; and

10 (C) by striking ‘‘section 5122’’ and insert11 ing ‘‘section 5122(c)’’.

12 (12) Subparagraph (A) of section 5010(c)(2) is

13 amended by striking ‘‘section 5134’’ and inserting

14 ‘‘section 5114’’.

15 (13) Subsection (d) of section 5052 is amended

16 to read as follows:

17 ‘‘(d) BREWER.—For purposes of this chapter, the

18 term ‘brewer’ means any person who brews beer or pro19 duces beer for sale. Such term shall not include any person

20 who produces only beer exempt from tax under section

21 5053(e).’’.
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1 (14) The text of section 5182 is amended to

2 read as follows:

‘‘For provisions requiring recordkeeping by

wholesale liquor dealers, see section 5112, and by

retail liquor dealers, see section 5122.’’.

3 (15) Subsection (b) of section 5402 is amended

4 by striking ‘‘section 5092’’ and inserting ‘‘section

5 5052(d)’’.

6 (16) Section 5671 is amended by striking ‘‘or

7 5091’’.

8 (17)(A) Part V of subchapter J of chapter 51

9 is hereby repealed.

10 (B) The table of parts for such subchapter J is

11 amended by striking the item relating to part V.

12 (18)(A) Sections 5142, 5143, and 5145 are

13 moved to subchapter D of chapter 52, inserted after

14 section 5731, redesignated as sections 5732, 5733,

15 and 5734, respectively, and amended—

16 (i) by striking ‘‘this part’’ each place it ap17 pears and inserting ‘‘this subchapter’’; and

18 (ii) by striking ‘‘this subpart’’ in section

19 5732(c)(2) (as so redesignated) and inserting

20 ‘‘this subchapter’’.

21 (B) Section 5732, as redesignated by subpara22 graph (A), is amended by striking ‘‘(except the tax

23 imposed by section 5131)’’ each place it appears.
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1 (C) Subsection (c) of section 5733, as redesig2 nated by subparagraph (A), is amended by striking

3 paragraph (2) and by redesignating paragraph (3)

4 as paragraph (2).

5 (D) The table of sections for subchapter D of

6 chapter 52 is amended by adding at the end thereof

7 the following:

‘‘Sec. 5732. Payment of tax.

‘‘Sec. 5733. Provisions relating to liability for occupational taxes.

‘‘Sec. 5734. Application of State laws.’’.

8 (E) Section 5731 is amended by striking sub9 section (c) and by redesignating subsection (d) as

10 subsection (c).

11 (19) Subsection (c) of section 6071 is amended

12 by striking ‘‘section 5142’’ and inserting ‘‘section

13 5732’’.

14 (20) Paragraph (1) of section 7652(g) is

15 amended—

16 (A) by striking ‘‘subpart F’’ and inserting

17 ‘‘subpart B’’; and

18 (B) by striking ‘‘section 5131(a)’’ and in19 serting ‘‘section 5111(a)’’.

20 (21) The table of sections for subchapter D of

21 chapter 51 is amended by striking the item relating

22 to section 5276.
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1 (c) EFFECTIVE DATE.—The amendments made by

2 this section shall take effect on July 1, 2001, but shall

3 not apply to taxes imposed for periods before such date.

4 TITLE II—REAL ESTATE

5 PROVISIONS

6 Subtitle A—Private Activity Bond

7 Volume Cap

8 SEC. 201. ACCELERATION OF PHASE-IN OF INCREASE IN

9 VOLUME CAP ON PRIVATE ACTIVITY BONDS.

10 (a) IN GENERAL.—The table contained in section

11 146(d)(2) (relating to per capita limit; aggregate limit) is

12 amended to read as follows:

‘‘Calendar Year Per Capita

Limit

Aggregate

Limit

2001 .................................................................................... $55.00 $165,000,000

2002 .................................................................................... 60.00 180,000,000

2003 .................................................................................... 65.00 195,000,000

2004, 2005, and 2006......................................................... 70.00 210,000,000

2007 and thereafter ............................................................ 75.00 225,000,000.’’.

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

14 this section shall apply to calendar years beginning after

15 2000.

16 Subtitle B—Exclusion From Gross

17 Income for Certain Forgiven

18 Mortgage Obligations

19 SEC. 202. EXCLUSION FROM GROSS INCOME FOR CERTAIN

20 FORGIVEN MORTGAGE OBLIGATIONS.

21 (a) IN GENERAL.—Paragraph (1) of section 108(a)

22 (relating to exclusion from gross income) is amended by
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1 striking ‘‘or’’ at the end of both subparagraphs (A) and

2 (C), by striking the period at the end of subparagraph (D)

3 and inserting ‘‘, or’’, and by inserting after subparagraph

4 (D) the following new subparagraph:

5 ‘‘(E) in the case of an individual, the in6 debtedness discharged is qualified residential in7 debtedness.’’.

8 (b) QUALIFIED RESIDENTIAL INDEBTEDNESS

9 SHORTFALL.—Section 108 (relating to discharge of in10 debtedness) is amended by adding at the end the following

11 new subsection:

12 ‘‘(h) QUALIFIED RESIDENTIAL INDEBTEDNESS.—

13 ‘‘(1) LIMITATIONS.—The amount excluded

14 under subparagraph (E) of subsection (a)(1) with

15 respect to any qualified residential indebtedness

16 shall not exceed the excess (if any) of—

17 ‘‘(A) the outstanding principal amount of

18 such indebtedness (immediately before the dis19 charge), over

20 ‘‘(B) the sum of—

21 ‘‘(i) the amount realized from the sale

22 of the real property securing such indebt23 edness reduced by the cost of such sale,

24 and
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1 ‘‘(ii) the outstanding principal amount

2 of any other indebtedness secured by such

3 property.

4 ‘‘(2) QUALIFIED RESIDENTIAL INDEBTED5 NESS.—

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

7 residential indebtedness’ means indebtedness

8 which—

9 ‘‘(i) was incurred or assumed by the

10 taxpayer in connection with real property

11 used as the principal residence (within the

12 meaning of section 121) of the taxpayer

13 and is secured by such real property,

14 ‘‘(ii) is incurred or assumed to ac15 quire, construct, reconstruct, or substan16 tially improve such real property, and

17 ‘‘(iii) with respect to which such tax18 payer makes an election to have this para19 graph apply.

20 ‘‘(B) REFINANCED INDEBTEDNESS.—Such

21 term shall include indebtedness resulting from

22 the refinancing of indebtedness under subpara23 graph (A)(ii), but only to the extent the amount

24 of the indebtedness resulting from such refi-
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1 nancing does not exceed the amount of the refi2 nanced indebtedness.

3 ‘‘(C) EXCEPTIONS.—Such term shall not

4 include qualified farm indebtedness or qualified

5 real property business indebtedness.’’.

6 (c) CONFORMING AMENDMENTS.—

7 (1) Paragraph (2) of section 108(a) is

8 amended—

9 (A) in subparagraph (A) by striking ‘‘and

10 (D)’’ and inserting ‘‘(D), and (E)’’; and

11 (B) by amending subparagraph (B) to read

12 as follows:

13 ‘‘(B) INSOLVENCY EXCLUSION TAKES

14 PRECEDENCE OVER QUALIFIED FARM EXCLU15 SION; QUALIFIED REAL PROPERTY BUSINESS

16 EXCLUSION; AND QUALIFIED RESIDENTIAL

17 SHORTFALL EXCLUSION.—Subparagraphs (C),

18 (D), and (E) of paragraph (1) shall not apply

19 to a discharge to the extent the taxpayer is in20 solvent.’’.

21 (2) Paragraph (1) of section 108(b) is amended

22 by striking ‘‘or (C)’’ and inserting ‘‘(C), or (E)’’.

23 (3) Subsection (c) of section 121 of such Code

24 is amended by adding at the end the following new

25 paragraph:
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1 ‘‘(4) SPECIAL RULE RELATING TO DISCHARGE

2 OF INDEBTEDNESS.—The amount of gain which

3 (but for this paragraph) would be excluded from

4 gross income under subsection (a) with respect to a

5 principal residence shall be reduced by the amount

6 excluded from gross income under section

7 108(a)(1)(E) with respect to such residence.’’.

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

9 this section shall apply to discharges after December 31,

10 2000.

11 TITLE III—AMENDMENTS TO

12 THE FAIR LABOR STANDARDS

13 ACT OF 1938

14 SEC. 301. SHORT TITLE.

15 This title may be cited as the ‘‘Minimum Wage In16 crease Act of 2001’’.

17 SEC. 302. MINIMUM WAGE.

18 Section 6(a)(1) of the Fair Labor Standards Act of

19 1938 (29 U.S.C. 206(a)(1)) is amended to read as follows:

20 ‘‘(1) except as otherwise provided in this sec21 tion, not less than—

22 ‘‘(A) $5.15 an hour beginning September

23 1, 1997,

24 ‘‘(B) $5.65 an hour beginning September

25 1, 2001, and
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1 ‘‘(C) $6.15 an hour beginning April 1,

2 2002;’’.

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