I

105TH CONGRESS

2D SESSION H. R. 4738

To amend the Internal Revenue Code of 1986 to extend certain expiring

provisions, provide tax relief for farmers and small businesses, and for

other purposes.

IN THE HOUSE OF REPRESENTATIVES

OCTOBER 8, 1998

Mr. ARCHER 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 extend

certain expiring provisions, provide tax relief for farmers

and small businesses, 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. AMENDMENT OF 1986 CODE; TABLE OF CON4 TENTS.

5 (a) AMENDMENT OF 1986 CODE.—Except as other6 wise expressly provided, whenever in this Act an amend7 ment or repeal is expressed in terms of an amendment

8 to, or repeal of, a section or other provision, the reference
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1 shall be considered to be made to a section or other provi2 sion of the Internal Revenue Code of 1986.

3 (b) TABLE OF CONTENTS.—

Sec. 1. Amendment of 1986 Code; table of contents.

TITLE I—EXTENSION AND MODIFICATION OF CERTAIN EXPIRING

PROVISIONS

Subtitle A—Tax Provisions

Sec. 101. Research credit.

Sec. 102. Work opportunity credit.

Sec. 103. Income averaging for farmers made permanent.

Sec. 104. Contributions of stock to private foundations; expanded public inspection of private foundations’ annual returns.

Sec. 105. Subpart F exemption for active financing income.

Sec. 106. Disclosure of return information on income contingent student loans.

Subtitle B—Generalized System of Preferences

Sec. 111. Extension of Generalized System of Preferences.

TITLE II—OTHER PROVISIONS

Sec. 201. Depreciation study.

Sec. 202. Production flexibility contract payments.

Sec. 203. 100 percent deduction for health insurance costs of self-employed individuals.

Sec. 204. Increase in volume cap on private activity bonds.

Sec. 205. Modification of estimated tax safe harbors.

TITLE III—REVENUE OFFSETS

Sec. 301. Treatment of certain deductible liquidating distributions of regulated

investment companies and real estate investment trusts.

Sec. 302. Inclusion of rotavirus gastroenteritis as a taxable vaccine.

Sec. 303. Clarification and expansion of mathematical error assessment procedures.

Sec. 304. Clarification of definition of specified liability loss.

TITLE IV—TECHNICAL CORRECTIONS

Sec. 401. Definitions; coordination with other titles.

Sec. 402. Amendments related to Internal Revenue Service Restructuring and

Reform Act of 1998.

Sec. 403. Amendments related to Taxpayer Relief Act of 1997.

Sec. 404. Amendments related to Tax Reform Act of 1984.

Sec. 405. Other amendments.
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1 TITLE I—EXTENSION AND MODI2 FICATION OF CERTAIN EXPIR3 ING PROVISIONS

4 Subtitle A—Tax Provisions

5 SEC. 101. RESEARCH CREDIT.

6 (a) TEMPORARY EXTENSION.—Paragraph (1) of sec7 tion 41(h) (relating to termination) is amended—

8 (1) by striking ‘‘June 30, 1998’’ and inserting

9 ‘‘December 31, 1999’’;

10 (2) by striking ‘‘24-month’’ and inserting ‘‘42-

11 month’’; and

12 (3) by striking ‘‘24 months’’ and inserting ‘‘42

13 months’’.

14 (b) TECHNICAL AMENDMENT.—Subparagraph (D) of

15 section 45C(b)(1) is amended by striking ‘‘June 30, 1998’’

16 and inserting ‘‘December 31, 1999’’.

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

18 this section shall apply to amounts paid or incurred after

19 June 30, 1998.

20 SEC. 102. WORK OPPORTUNITY CREDIT.

21 (a) TEMPORARY EXTENSION.—Subparagraph (B) of

22 section 51(c)(4) (relating to termination) is amended by

23 striking ‘‘June 30, 1998’’ and inserting ‘‘December 31,

24 1999’’.
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1 (b) EFFECTIVE DATE.—The amendment made by

2 this section shall apply to individuals who begin work for

3 the employer after June 30, 1998.

4 SEC. 103. INCOME AVERAGING FOR FARMERS MADE PER5 MANENT.

6 Subsection (c) of section 933 of the Taxpayer Relief

7 Act of 1997 is amended by striking ‘‘, and before January

8 1, 2001’’.

9 SEC. 104. CONTRIBUTIONS OF STOCK TO PRIVATE FOUNDA10 TIONS; EXPANDED PUBLIC INSPECTION OF

11 PRIVATE FOUNDATIONS’ ANNUAL RETURNS.

12 (a) SPECIAL RULE FOR CONTRIBUTIONS OF STOCK

13 MADE PERMANENT.—

14 (1) IN GENERAL.—Paragraph (5) of section

15 170(e) is amended by striking subparagraph (D)

16 (relating to termination).

17 (2) EFFECTIVE DATE.—The amendment made

18 by paragraph (1) shall apply to contributions made

19 after June 30, 1998.

20 (b) EXPANDED PUBLIC INSPECTION OF PRIVATE

21 FOUNDATIONS’ ANNUAL RETURNS, ETC.—

22 (1) IN GENERAL.—Section 6104 (relating to

23 publicity of information required from certain ex24 empt organizations and certain trusts) is amended
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1 by striking subsections (d) and (e) and inserting

2 after subsection (c) the following new subsection:

3 ‘‘(d) PUBLIC INSPECTION OF CERTAIN ANNUAL RE4 TURNS AND APPLICATIONS FOR EXEMPTION.—

5 ‘‘(1) IN GENERAL.—In the case of an organiza6 tion described in subsection (c) or (d) of section 501

7 and exempt from taxation under section 501(a)—

8 ‘‘(A) a copy of—

9 ‘‘(i) the annual return filed under sec10 tion 6033 (relating to returns by exempt

11 organizations) by such organization; and

12 ‘‘(ii) if the organization filed an appli13 cation for recognition of exemption under

14 section 501, the exempt status application

15 materials of such organization,

16 shall be made available by such organization for

17 inspection during regular business hours by any

18 individual at the principal office of such organi19 zation and, if such organization regularly main20 tains 1 or more regional or district offices hav21 ing 3 or more employees, at each such regional

22 or district office; and

23 ‘‘(B) upon request of an individual made

24 at such principal office or such a regional or

25 district office, a copy of such annual return and
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1 exempt status application materials shall be

2 provided to such individual without charge

3 other than a reasonable fee for any reproduc4 tion and mailing costs.

5 The request described in subparagraph (B) must be

6 made in person or in writing. If such request is

7 made in person, such copy shall be provided imme8 diately and, if made in writing, shall be provided

9 within 30 days.

10 ‘‘(2) 3-YEAR LIMITATION ON INSPECTION OF

11 RETURNS.—Paragraph (1) shall apply to an annual

12 return filed under section 6033 only during the 3-

13 year period beginning on the last day prescribed for

14 filing such return (determined with regard to any

15 extension of time for filing).

16 ‘‘(3) EXCEPTIONS FROM DISCLOSURE REQUIRE17 MENT.—

18 ‘‘(A) NONDISCLOSURE OF CONTRIBUTORS,

19 ETC.—Paragraph (1) shall not require the dis20 closure of the name or address of any contribu21 tor to the organization. In the case of an orga22 nization described in section 501(d), subpara23 graph (A) shall not require the disclosure of the

24 copies referred to in section 6031(b) with re25 spect to such organization.
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1 ‘‘(B) NONDISCLOSURE OF CERTAIN OTHER

2 INFORMATION.—Paragraph (1) shall not re3 quire the disclosure of any information if the

4 Secretary withheld such information from pub5 lic inspection under subsection (a)(1)(D).

6 ‘‘(4) LIMITATION ON PROVIDING COPIES.—

7 Paragraph (1)(B) shall not apply to any request if,

8 in accordance with regulations promulgated by the

9 Secretary, the organization has made the requested

10 documents widely available, or the Secretary deter11 mines, upon application by an organization, that

12 such request is part of a harassment campaign and

13 that compliance with such request is not in the pub14 lic interest.

15 ‘‘(5) EXEMPT STATUS APPLICATION MATE16 RIALS.—For purposes of paragraph (1), the term

17 ‘exempt status applicable materials’ means the appli18 cation for recognition of exemption under section

19 501 and any papers submitted in support of such

20 application and any letter or other document issued

21 by the Internal Revenue Service with respect to such

22 application.’’.

23 (2) CONFORMING AMENDMENTS.—

24 (A) Subsection (c) of section 6033 is

25 amended by adding ‘‘and’’ at the end of para-
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1 graph (1), by striking paragraph (2), and by re2 designating paragraph (3) as paragraph (2).

3 (B) Subparagraph (C) of section

4 6652(c)(1) is amended by striking ‘‘subsection

5 (d) or (e)(1) of section 6104 (relating to public

6 inspection of annual returns)’’ and inserting

7 ‘‘section 6104(d) with respect to any annual re8 turn’’.

9 (C) Subparagraph (D) of section

10 6652(c)(1) is amended by striking ‘‘section

11 6104(e)(2) (relating to public inspection of ap12 plications for exemption)’’ and inserting ‘‘sec13 tion 6104(d) with respect to any exempt status

14 application materials (as defined in such sec15 tion)’’.

16 (D) Section 6685 is amended by striking

17 ‘‘or (e)’’.

18 (E) Section 7207 is amended by striking

19 ‘‘or (e)’’.

20 (3) EFFECTIVE DATE.—

21 (A) IN GENERAL.—Except as provided in

22 subparagraph (B), the amendments made by

23 this subsection shall apply to requests made

24 after the later of December 31, 1998, or the

25 60th day after the Secretary of the Treasury
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1 first issues the regulations referred to such sec2 tion 6104(d)(4) of the Internal Revenue Code

3 of 1986, as amended by this section.

4 (B) PUBLICATION OF ANNUAL RETURNS.—

5 Section 6104(d) of such Code, as in effect be6 fore the amendments made by this subsection,

7 shall not apply to any return the due date for

8 which is after the date such amendments take

9 effect under subparagraph (A).

10 SEC. 105. SUBPART F EXEMPTION FOR ACTIVE FINANCING

11 INCOME.

12 (a) INCOME DERIVED FROM BANKING, FINANCING,

13 OR SIMILAR BUSINESSES.—Section 954(h) (relating to in14 come derived in the active conduct of banking, financing,

15 or similar businesses) is amended to read as follows:

16 ‘‘(h) SPECIAL RULE FOR INCOME DERIVED IN THE

17 ACTIVE CONDUCT OF BANKING, FINANCING, OR SIMILAR

18 BUSINESSES.—

19 ‘‘(1) IN GENERAL.—For purposes of subsection

20 (c)(1), foreign personal holding company income

21 shall not include qualified banking or financing in22 come of an eligible controlled foreign corporation.

23 ‘‘(2) ELIGIBLE CONTROLLED FOREIGN COR24 PORATION.—For purposes of this subsection—
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1 ‘‘(A) IN GENERAL.—The term ‘eligible con2 trolled foreign corporation’ means a controlled

3 foreign corporation which—

4 ‘‘(i) is predominantly engaged in the

5 active conduct of a banking, financing, or

6 similar business, and

7 ‘‘(ii) conducts substantial activity with

8 respect to such business.

9 ‘‘(B) PREDOMINANTLY ENGAGED.—A con10 trolled foreign corporation shall be treated as

11 predominantly engaged in the active conduct of

12 a banking, financing, or similar business if—

13 ‘‘(i) more than 70 percent of the gross

14 income of the controlled foreign corpora15 tion is derived directly from the active and

16 regular conduct of a lending or finance

17 business from transactions with customers

18 which are not related persons,

19 ‘‘(ii) it is engaged in the active con20 duct of a banking business and is an insti21 tution licensed to do business as a bank in

22 the United States (or is any other corpora23 tion not so licensed which is specified by

24 the Secretary in regulations), or
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1 ‘‘(iii) it is engaged in the active con2 duct of a securities business and is reg3 istered as a securities broker or dealer

4 under section 15(a) of the Securities Ex5 change Act of 1934 or is registered as a

6 Government securities broker or dealer

7 under section 15C(a) of such Act (or is

8 any other corporation not so registered

9 which is specified by the Secretary in regu10 lations).

11 ‘‘(3) QUALIFIED BANKING OR FINANCING IN12 COME.—For purposes of this subsection—

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

14 banking or financing income’ means income of

15 an eligible controlled foreign corporation

16 which—

17 ‘‘(i) is derived in the active conduct of

18 a banking, financing, or similar business

19 by—

20 ‘‘(I) such eligible controlled for21 eign corporation, or

22 ‘‘(II) a qualified business unit of

23 such eligible controlled foreign cor24 poration;
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1 ‘‘(ii) is derived from one or more

2 transactions—

3 ‘‘(I) with customers located in a

4 country other than the United States,

5 and

6 ‘‘(II) substantially all of the ac7 tivities in connection with which are

8 conducted directly by the corporation

9 or unit in its home country; and

10 ‘‘(iii) is treated as earned by such cor11 poration or unit in its home country for

12 purposes of such country’s tax laws.

13 ‘‘(B) LIMITATION ON NONBANKING AND

14 NONSECURITIES BUSINESSES.—No income of

15 an eligible controlled foreign corporation not de16 scribed in clause (ii) or (iii) of paragraph

17 (2)(B) (or of a qualified business unit of such

18 corporation) shall be treated as qualified bank19 ing or financing income unless more than 30

20 percent of such corporation’s or unit’s gross in21 come is derived directly from the active and

22 regular conduct of a lending or finance business

23 from transactions with customers which are not

24 related persons and which are located within

25 such corporation’s or unit’s home country.
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1 ‘‘(C) SUBSTANTIAL ACTIVITY REQUIRE2 MENT FOR CROSS BORDER INCOME.—The term

3 ‘qualified banking or financing income’ shall

4 not include income derived from 1 or more

5 transactions with customers located in a coun6 try other than the home country of the eligible

7 controlled foreign corporation or a qualified

8 business unit of such corporation unless such

9 corporation or unit conducts substantial activity

10 with respect to a banking, financing, or similar

11 business in its home country.

12 ‘‘(D) DETERMINATIONS MADE SEPA13 RATELY.—For purposes of this paragraph, the

14 qualified banking or financing income of an eli15 gible controlled foreign corporation and each

16 qualified business unit of such corporation shall

17 be determined separately for such corporation

18 and each such unit by taking into account—

19 ‘‘(i) in the case of the eligible con20 trolled foreign corporation, only items of

21 income, deduction, gain, or loss and activi22 ties of such corporation not properly allo23 cable or attributable to any qualified busi24 ness unit of such corporation; and
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1 ‘‘(ii) in the case of a qualified busi2 ness unit, only items of income, deduction,

3 gain, or loss and activities properly alloca4 ble or attributable to such unit.

5 ‘‘(4) LENDING OR FINANCE BUSINESS.—For

6 purposes of this subsection, the term ‘lending or fi7 nance business’ means the business of—

8 ‘‘(A) making loans;

9 ‘‘(B) purchasing or discounting accounts

10 receivable, notes, or installment obligations;

11 ‘‘(C) engaging in leasing (including enter12 ing into leases and purchasing, servicing, and

13 disposing of leases and leased assets);

14 ‘‘(D) issuing letters of credit or providing

15 guarantees;

16 ‘‘(E) providing charge and credit card

17 services; or

18 ‘‘(F) rendering services or making facilities

19 available in connection with activities described

20 in subparagraphs (A) through (E) carried on

21 by—

22 ‘‘(i) the corporation (or qualified busi23 ness unit) rendering services or making fa24 cilities available; or
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1 ‘‘(ii) another corporation (or qualified

2 business unit of a corporation) which is a

3 member of the same affiliated group (as

4 defined in section 1504, but determined

5 without regard to section 1504(b)(3)).

6 ‘‘(5) OTHER DEFINITIONS.—For purposes of

7 this subsection—

8 ‘‘(A) CUSTOMER.—The term ‘customer’

9 means, with respect to any controlled foreign

10 corporation or qualified business unit, any per11 son which has a customer relationship with

12 such corporation or unit and which is acting in

13 its capacity as such.

14 ‘‘(B) HOME COUNTRY.—Except as pro15 vided in regulations—

16 ‘‘(i) CONTROLLED FOREIGN CORPORA17 TION.—The term ‘home country’ means,

18 with respect to any controlled foreign cor19 poration, the country under the laws of

20 which the corporation was created or orga21 nized.

22 ‘‘(ii) QUALIFIED BUSINESS UNIT.—

23 The term ‘home country’ means, with re24 spect to any qualified business unit, the
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1 country in which such unit maintains its

2 principal office.

3 ‘‘(C) LOCATED.—The determination of

4 where a customer is located shall be made

5 under rules prescribed by the Secretary.

6 ‘‘(D) QUALIFIED BUSINESS UNIT.—The

7 term ‘qualified business unit’ has the meaning

8 given such term by section 989(a).

9 ‘‘(E) RELATED PERSON.—The term ‘relat10 ed person’ has the meaning given such term by

11 subsection (d)(3).

12 ‘‘(6) COORDINATION WITH EXCEPTION FOR

13 DEALERS.—Paragraph (1) shall not apply to income

14 described in subsection (c)(2)(C)(ii) of a dealer in

15 securities (within the meaning of section 475) which

16 is an eligible controlled foreign corporation described

17 in paragraph (2)(B)(iii).

18 ‘‘(7) ANTI-ABUSE RULES.—For purposes of ap19 plying this subsection and subsection (c)(2)(C)(ii)—

20 ‘‘(A) there shall be disregarded any item of

21 income, gain, loss, or deduction with respect to

22 any transaction or series of transactions one of

23 the principal purposes of which is qualifying in24 come or gain for the exclusion under this sec25 tion, including any transaction or series of
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1 transactions a principal purpose of which is the

2 acceleration or deferral of any item in order to

3 claim the benefits of such exclusion through the

4 application of this subsection;

5 ‘‘(B) there shall be disregarded any item of

6 income, gain, loss, or deduction of an entity

7 which is not engaged in regular and continuous

8 transactions with customers which are not re9 lated persons;

10 ‘‘(C) there shall be disregarded any item of

11 income, gain, loss, or deduction with respect to

12 any transaction or series of transactions utiliz13 ing, or doing business with—

14 ‘‘(i) one or more entities in order to

15 satisfy any home country requirement

16 under this subsection, or

17 ‘‘(ii) a special purpose entity or ar18 rangement, including a securitization, fi19 nancing, or similar entity or arrangement,

20 if one of the principal purposes of such trans21 action or series of transactions is qualifying in22 come or gain for the exclusion under this sub23 section; and

24 ‘‘(D) a related person, an officer, a direc25 tor, or an employee with respect to any con-
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1 trolled foreign corporation (or qualified business

2 unit) which would otherwise be treated as a

3 customer of such corporation or unit with re4 spect to any transaction shall not be so treated

5 if a principal purpose of such transaction is to

6 satisfy any requirement of this subsection.

7 ‘‘(8) REGULATIONS.—The Secretary shall pre8 scribe such regulations as may be necessary or ap9 propriate to carry out the purposes of this sub10 section, subsection (c)(1)(B)(i), subsection

11 (c)(2)(C)(ii), and the last sentence of subsection

12 (e)(2).

13 ‘‘(9) APPLICATION.—This subsection, sub14 section (c)(2)(C)(ii), and the last sentence of sub15 section (e)(2) shall apply only to the first taxable

16 year of a foreign corporation beginning after Decem17 ber 31, 1998, and before January 1, 2000, and to

18 taxable years of United States shareholders with or

19 within which such taxable year of such foreign cor20 poration ends.’’.

21 (b) INCOME DERIVED FROM INSURANCE BUSI22 NESS.—

23 (1) INCOME ATTRIBUTABLE TO ISSUANCE OR

24 REINSURANCE.—
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1 (A) IN GENERAL.—Section 953(a) (defin2 ing insurance income) is amended to read as

3 follows:

4 ‘‘(a) INSURANCE INCOME.—

5 ‘‘(1) IN GENERAL.—For purposes of section

6 952(a)(1), the term ‘insurance income’ means any

7 income which—

8 ‘‘(A) is attributable to the issuing (or rein9 suring) of an insurance or annuity contract;

10 and

11 ‘‘(B) would (subject to the modifications

12 provided by subsection (b)) be taxed under sub13 chapter L of this chapter if such income were

14 the income of a domestic insurance company.

15 ‘‘(2) EXCEPTION.—Such term shall not include

16 any exempt insurance income (as defined in sub17 section (e)).’’.

18 (B) EXEMPT INSURANCE INCOME.—Sec19 tion 953 (relating to insurance income) is

20 amended by adding at the end the following

21 new subsection:

22 ‘‘(e) EXEMPT INSURANCE INCOME.—For purposes of

23 this section—

24 ‘‘(1) EXEMPT INSURANCE INCOME DEFINED.—
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1 ‘‘(A) IN GENERAL.—The term ‘exempt in2 surance income’ means income derived by a

3 qualifying insurance company which—

4 ‘‘(i) is attributable to the issuing (or

5 reinsuring) of an exempt contract by such

6 company or a qualifying insurance com7 pany branch of such company; and

8 ‘‘(ii) is treated as earned by such com9 pany or branch in its home country for

10 purposes of such country’s tax laws.

11 ‘‘(B) EXCEPTION FOR CERTAIN ARRANGE12 MENTS.—Such term shall not include income

13 attributable to the issuing (or reinsuring) of an

14 exempt contract as the result of any arrange15 ment whereby another corporation receives a

16 substantially equal amount of premiums or

17 other consideration in respect of issuing (or re18 insuring) a contract which is not an exempt

19 contract.

20 ‘‘(C) DETERMINATIONS MADE SEPA21 RATELY.—For purposes of this subsection and

22 section 954(i), the exempt insurance income

23 and exempt contracts of a qualifying insurance

24 company or any qualifying insurance company

25 branch of such company shall be determined
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1 separately for such company and each such

2 branch by taking into account—

3 ‘‘(i) in the case of the qualifying in4 surance company, only items of income, de5 duction, gain, or loss, and activities of such

6 company not properly allocable or attrib7 utable to any qualifying insurance com8 pany branch of such company; and

9 ‘‘(ii) in the case of a qualifying insur10 ance company branch, only items of in11 come, deduction, gain, or loss and activities

12 properly allocable or attributable to such

13 unit.

14 ‘‘(2) EXEMPT CONTRACT.—

15 ‘‘(A) IN GENERAL.—The term ‘exempt

16 contract’ means an insurance or annuity con17 tract issued or reinsured by a qualifying insur18 ance company or qualifying insurance company

19 branch in connection with property in, liability

20 arising out of activity in, or the lives or health

21 of residents of, a country other than the United

22 States.

23 ‘‘(B) MINIMUM HOME COUNTRY INCOME

24 REQUIRED.—
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1 ‘‘(i) IN GENERAL.—No contract of a

2 qualifying insurance company or of a

3 qualifying insurance company branch shall

4 be treated as an exempt contract unless

5 such company or branch derives more than

6 30 percent of its net written premiums

7 from exempt contracts (determined without

8 regard to this subparagraph)—

9 ‘‘(I) which cover applicable home

10 country risks; and

11 ‘‘(II) with respect to which no

12 policyholder, insured, annuitant, or

13 beneficiary is a related person (as de14 fined in section 954(d)(3)).

15 ‘‘(ii) APPLICABLE HOME COUNTRY

16 RISKS.—The term ‘applicable home coun17 try risks’ means risks in connection with

18 property in, liability arising out of activity

19 in, or the lives or health of residents of,

20 the home country of the qualifying insur21 ance company or qualifying insurance com22 pany branch, as the case may be, issuing

23 or reinsuring the contract covering the

24 risks.
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1 ‘‘(C) SUBSTANTIAL ACTIVITY REQUIRE2 MENTS FOR CROSS BORDER RISKS.—A contract

3 issued by a qualifying insurance company or

4 qualifying insurance company branch which

5 covers risks other than applicable home country

6 risks (as defined in subparagraph (B)(ii)) shall

7 not be treated as an exempt contract unless

8 such company or branch, as the case may be—

9 ‘‘(i) conducts substantial activity with

10 respect to an insurance business in its

11 home country; and

12 ‘‘(ii) performs in its home country

13 substantially all of the activities necessary

14 to give rise to the income generated by

15 such contract.

16 ‘‘(3) QUALIFYING INSURANCE COMPANY.—The

17 term ‘qualifying insurance company’ means any con18 trolled foreign corporation which—

19 ‘‘(A) is subject to regulation as an insur20 ance (or reinsurance) company by its home

21 country, and is licensed, authorized, or regu22 lated by the applicable insurance regulatory

23 body for its home country to sell insurance, re24 insurance, or annuity contracts to persons other
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1 than related persons (within the meaning of

2 section 954(d)(3)) in such home country;

3 ‘‘(B) derives more than 50 percent of its

4 aggregate net written premiums from the

5 issuance or reinsurance by such controlled for6 eign corporation and each of its qualifying in7 surance company branches of contracts—

8 ‘‘(i) covering applicable home country

9 risks (as defined in paragraph (2)) of such

10 corporation or branch, as the case may be;

11 and

12 ‘‘(ii) with respect to which no policy13 holder, insured, annuitant, or beneficiary is

14 a related person (as defined in section

15 954(d)(3));

16 except that in the case of a branch, such pre17 miums shall only be taken into account to the

18 extent such premiums are treated as earned by

19 such branch in its home country for purposes of

20 such country’s tax laws; and

21 ‘‘(C) is engaged in the insurance business

22 and would be subject to tax under subchapter

23 L if it were a domestic corporation.

24 ‘‘(4) QUALIFYING INSURANCE COMPANY

25 BRANCH.—The term ‘qualifying insurance company
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1 branch’ means a qualified business unit (within the

2 meaning of section 989(a)) of a controlled foreign

3 corporation if—

4 ‘‘(A) such unit is licensed, authorized, or

5 regulated by the applicable insurance regulatory

6 body for its home country to sell insurance, re7 insurance, or annuity contracts to persons other

8 than related persons (within the meaning of

9 section 954(d)(3)) in such home country; and

10 ‘‘(B) such controlled foreign corporation is

11 a qualifying insurance company, determined

12 under paragraph (3) as if such unit were a

13 qualifying insurance company branch.

14 ‘‘(5) LIFE INSURANCE OR ANNUITY CON15 TRACT.—For purposes of this section and section

16 954, the determination of whether a contract issued

17 by a controlled foreign corporation or a qualified

18 business unit (within the meaning of section 989(a))

19 is a life insurance contract or an annuity contract

20 shall be made without regard to sections 72(s),

21 101(f), 817(h), and 7702 if—

22 ‘‘(A) such contract is regulated as a life in23 surance or annuity contract by the corpora24 tion’s or unit’s home country; and
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1 ‘‘(B) no policyholder, insured, annuitant,

2 or beneficiary with respect to the contract is a

3 United States person.

4 ‘‘(6) HOME COUNTRY.—For purposes of this

5 subsection, except as provided in regulations—

6 ‘‘(A) CONTROLLED FOREIGN CORPORA7 TION.—The term ‘home country’ means, with

8 respect to a controlled foreign corporation, the

9 country in which such corporation is created or

10 organized.

11 ‘‘(B) QUALIFIED BUSINESS UNIT.—The

12 term ‘home country’ means, with respect to a

13 qualified business unit (as defined in section

14 989(a)), the country in which the principal of15 fice of such unit is located and in which such

16 unit is licensed, authorized, or regulated by the

17 applicable insurance regulatory body to sell in18 surance, reinsurance, or annuity contracts to

19 persons other than related persons (as defined

20 in section 954(d)(3)) in such country.

21 ‘‘(7) ANTI-ABUSE RULES.—For purposes of ap22 plying this subsection and section 954(i)—

23 ‘‘(A) the rules of section 954(h)(7) (other

24 than subparagraph (B) thereof) shall apply;
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1 ‘‘(B) there shall be disregarded any item of

2 income, gain, loss, or deduction of, or derived

3 from, an entity which is not engaged in regular

4 and continuous transactions with persons which

5 are not related persons;

6 ‘‘(C) there shall be disregarded any change

7 in the method of computing reserves a principal

8 purpose of which is the acceleration or deferral

9 of any item in order to claim the benefits of

10 this subsection or section 954(i);

11 ‘‘(D) a contract of insurance or reinsur12 ance shall not be treated as an exempt contract

13 (and premiums from such contract shall not be

14 taken into account for purposes of paragraph

15 (2)(B) or (3)) if—

16 ‘‘(i) any policyholder, insured, annu17 itant, or beneficiary is a resident of the

18 United States and such contract was mar19 keted to such resident and was written to

20 cover a risk outside the United States; or

21 ‘‘(ii) the contract covers risks located

22 within and without the United States and

23 the qualifying insurance company or quali24 fying insurance company branch does not

25 maintain such contemporaneous records,
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1 and file such reports, with respect to such

2 contract as the Secretary may require;

3 ‘‘(E) the Secretary may prescribe rules for

4 the allocation of contracts (and income from

5 contracts) among 2 or more qualifying insur6 ance company branches of a qualifying insur7 ance company in order to clearly reflect the in8 come of such branches; and

9 ‘‘(F) premiums from a contract shall not

10 be taken into account for purposes of para11 graph (2)(B) or (3) if such contract reinsures

12 a contract issued or reinsured by a related per13 son (as defined in section 954(d)(3)).

14 For purposes of subparagraph (D), the determina15 tion of where risks are located shall be made under

16 the principles of section 953.

17 ‘‘(8) COORDINATION WITH SUBSECTION (c).—

18 In determining insurance income for purposes of

19 subsection (c), exempt insurance income shall not in20 clude income derived from exempt contracts which

21 cover risks other than applicable home country risks.

22 ‘‘(9) REGULATIONS.—The Secretary shall pre23 scribe such regulations as may be necessary or ap24 propriate to carry out the purposes of this sub25 section and section 954(i).
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1 ‘‘(10) APPLICATION.—This subsection and sec2 tion 954(i) shall apply only to the first taxable year

3 of a foreign corporation beginning after December

4 31, 1998, and before January 1, 2000, and to tax5 able years of United States shareholders with or

6 within which such taxable year of such foreign cor7 poration ends.

8 ‘‘(11) CROSS REFERENCE.—

‘‘For income exempt from foreign personal holding company income, see section 954(i).’’.

9 (2) EXEMPTION FROM FOREIGN PERSONAL

10 HOLDING COMPANY INCOME.—Section 954 (defining

11 foreign base company income) is amended by adding

12 at the end the following new subsection:

13 ‘‘(i) SPECIAL RULE FOR INCOME DERIVED IN THE

14 ACTIVE CONDUCT OF INSURANCE BUSINESS.—

15 ‘‘(1) IN GENERAL.—For purposes of subsection

16 (c)(1), foreign personal holding company income

17 shall not include qualified insurance income of a

18 qualifying insurance company.

19 ‘‘(2) QUALIFIED INSURANCE INCOME.—The

20 term ‘qualified insurance income’ means income of a

21 qualifying insurance company which is—

22 ‘‘(A) received from a person other than a

23 related person (within the meaning of sub24 section (d)(3)) and derived from the invest-
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1 ments made by a qualifying insurance company

2 or a qualifying insurance company branch of its

3 reserves allocable to exempt contracts or of 80

4 percent of its unearned premiums from exempt

5 contracts (as both are determined in the man6 ner prescribed under paragraph (4)), or

7 ‘‘(B) received from a person other than a

8 related person (within the meaning of sub9 section (d)(3)) and derived from investments

10 made by a qualifying insurance company or a

11 qualifying insurance company branch of an

12 amount of its assets allocable to exempt con13 tracts equal to—

14 ‘‘(i) in the case of property, casualty,

15 or health insurance contracts, one-third of

16 its premiums earned on such insurance

17 contracts during the taxable year (as de18 fined in section 832(b)(4)), and

19 ‘‘(ii) in the case of life insurance or

20 annuity contracts, 10 percent of the re21 serves described in subparagraph (A) for

22 such contracts.

23 ‘‘(3) PRINCIPLES FOR DETERMINING INSUR24 ANCE INCOME.—Except as provided by the Sec-
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1 retary, for purposes of subparagraphs (A) and (B)

2 of paragraph (2)—

3 ‘‘(A) in the case of any contract which is

4 a separate account-type contract (including any

5 variable contract not meeting the requirements

6 of section 817), income credited under such

7 contract shall be allocable only to such contract,

8 and

9 ‘‘(B) income not allocable under subpara10 graph (A) shall be allocated ratably among con11 tracts not described in subparagraph (A).

12 ‘‘(4) METHODS FOR DETERMINING UNEARNED

13 PREMIUMS AND RESERVES.—For purposes of para14 graph (2)(A)—

15 ‘‘(A) PROPERTY AND CASUALTY CON16 TRACTS.—The unearned premiums and reserves

17 of a qualifying insurance company or a qualify18 ing insurance company branch with respect to

19 property, casualty, or health insurance con20 tracts shall be determined using the same meth21 ods and interest rates which would be used if

22 such company or branch were subject to tax

23 under subchapter L, except that—

24 ‘‘(i) the interest rate determined for

25 the functional currency of the company or
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1 branch, and which, except as provided by

2 the Secretary, is calculated in the same

3 manner as the Federal mid-term rate

4 under section 1274(d), shall be substituted

5 for the applicable Federal interest rate,

6 and

7 ‘‘(ii) such company or branch shall

8 use the appropriate foreign loss payment

9 pattern.

10 ‘‘(B) LIFE INSURANCE AND ANNUITY CON11 TRACTS.—The amount of the reserve of a quali12 fying insurance company or qualifying insur13 ance company branch for any life insurance or

14 annuity contract shall be equal to the greater

15 of—

16 ‘‘(i) the net surrender value of such

17 contract (as defined in section

18 807(e)(1)(A)), or

19 ‘‘(ii) the reserve determined under

20 paragraph (5).

21 ‘‘(C) LIMITATION ON RESERVES.—In no

22 event shall the reserve determined under this

23 paragraph for any contract as of any time ex24 ceed the amount which would be taken into ac25 count with respect to such contract as of such
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1 time in determining foreign statement reserves

2 (less any catastrophe, deficiency, equalization,

3 or similar reserves).

4 ‘‘(5) AMOUNT OF RESERVE.—The amount of

5 the reserve determined under this paragraph with

6 respect to any contract shall be determined in the

7 same manner as it would be determined if the quali8 fying insurance company or qualifying insurance

9 company branch were subject to tax under sub10 chapter L, except that in applying such sub11 chapter—

12 ‘‘(A) the interest rate determined for the

13 functional currency of the company or branch,

14 and which, except as provided by the Secretary,

15 is calculated in the same manner as the Federal

16 mid-term rate under section 1274(d), shall be

17 substituted for the applicable Federal interest

18 rate;

19 ‘‘(B) the highest assumed interest rate

20 permitted to be used in determining foreign

21 statement reserves shall be substituted for the

22 prevailing State assumed interest rate; and

23 ‘‘(C) tables for mortality and morbidity

24 which reasonably reflect the current mortality

25 and morbidity risks in the company’s or
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1 branch’s home country shall be substituted for

2 the mortality and morbidity tables otherwise

3 used for such subchapter.

4 The Secretary may provide that the interest rate

5 and mortality and morbidity tables of a qualifying

6 insurance company may be used for 1 or more of its

7 qualifying insurance company branches when appro8 priate.

9 ‘‘(6) DEFINITIONS.—For purposes of this sub10 section, any term used in this subsection which is

11 also used in section 953(e) shall have the meaning

12 given such term by section 953.’’.

13 (3) RESERVES.—Section 953(b) is amended by

14 redesignating paragraph (3) as paragraph (4) and

15 by inserting after paragraph (2) the following new

16 paragraph:

17 ‘‘(3) Reserves for any insurance or annuity con18 tract shall be determined in the same manner as

19 under section 954(i).’’.

20 (c) SPECIAL RULES FOR DEALERS.—Section

21 954(c)(2)(C) is amended to read as follows:

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

23 as provided by regulations, in the case of a reg24 ular dealer in property which is property de25 scribed in paragraph (1)(B), forward contracts,
35

•HR 4738 IH

1 option contracts, or similar financial instru2 ments (including notional principal contracts

3 and all instruments referenced to commodities),

4 there shall not be taken into account in comput5 ing foreign personal holding company income—

6 ‘‘(i) any item of income, gain, deduc7 tion, or loss (other than any item described

8 in subparagraph (A), (E), or (G) of para9 graph (1)) from any transaction (including

10 hedging transactions) entered into in the

11 ordinary course of such dealer’s trade or

12 business as such a dealer; and

13 ‘‘(ii) if such dealer is a dealer in secu14 rities (within the meaning of section 475),

15 any interest or dividend or equivalent

16 amount described in subparagraph (E) or

17 (G) of paragraph (1) from any transaction

18 (including any hedging transaction or

19 transaction described in section

20 956(c)(2)(J)) entered into in the ordinary

21 course of such dealer’s trade or business as

22 such a dealer in securities, but only if the

23 income from the transaction is attributable

24 to activities of the dealer in the country

25 under the laws of which the dealer is cre-
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•HR 4738 IH

1 ated or organized (or in the case of a

2 qualified business unit described in section

3 989(a), is attributable to activities of the

4 unit in the country in which the unit both

5 maintains its principal office and conducts

6 substantial business activity).’’.

7 (d) EXEMPTION FROM FOREIGN BASE COMPANY

8 SERVICES INCOME.—Paragraph (2) of section 954(e) is

9 amended by inserting ‘‘or’’ at the end of subparagraph

10 (A), by striking ‘‘, or’’ at the end of subparagraph (B)

11 and inserting a period, by striking subparagraph (C), and

12 by adding at the end the following new flush sentence:

13 ‘‘Paragraph (1) shall also not apply to income which

14 is exempt insurance income (as defined in section

15 953(e)) or which is not treated as foreign personal

16 holding income by reason of subsection (c)(2)(C)(ii),

17 (h), or (i).’’.

18 (e) EXEMPTION FOR GAIN.—Section 954(c)(1)(B)(i)

19 (relating to net gains from certain property transactions)

20 is amended by inserting ‘‘other than property which gives

21 rise to income not treated as foreign personal holding com22 pany income by reason of subsection (h) or (i) for the tax23 able year’’ before the comma at the end.
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1 SEC. 106. DISCLOSURE OF RETURN INFORMATION ON IN2 COME CONTINGENT STUDENT LOANS.

3 Subparagraph (D) of section 6103(l)(13) (relating to

4 disclosure of return information to carry out income con5 tingent repayment of student loans) is amended by strik6 ing ‘‘September 30, 1998’’ and inserting ‘‘September 30,

7 2003’’.

8 Subtitle B—Generalized System of

9 Preferences

10 SEC. 111. EXTENSION OF GENERALIZED SYSTEM OF PREF11 ERENCES.

12 (a) EXTENSION OF DUTY-FREE TREATMENT UNDER

13 SYSTEM.—Section 505 of the Trade Act of 1974 (29

14 U.S.C. 2465) is amended by striking ‘‘June 30, 1998’’ and

15 inserting ‘‘December 31, 1999’’.

16 (b) RETROACTIVE APPLICATION FOR CERTAIN LIQ17 UIDATIONS AND RELIQUIDATIONS.—

18 (1) IN GENERAL.—Notwithstanding section 514

19 of the Tariff Act of 1930 or any other provision of

20 law, and subject to paragraph (2), any entry—

21 (A) of an article to which duty-free treat22 ment under title V of the Trade Act of 1974

23 would have applied if such title had been in ef24 fect during the period beginning on July 1,

25 1998, and ending on the day before the date of

26 the enactment of this Act; and
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•HR 4738 IH

1 (B) that was made after June 30, 1998,

2 and before the date of the enactment of this

3 Act,

4 shall be liquidated or reliquidated as free of duty,

5 and the Secretary of the Treasury shall refund any

6 duty paid with respect to such entry. As used in this

7 subsection, the term ‘‘entry’’ includes a withdrawal

8 from warehouse for consumption.

9 (2) REQUESTS.—Liquidation or reliquidation

10 may be made under paragraph (1) with respect to

11 an entry only if a request therefor is filed with the

12 Customs Service, within 180 days after the date of

13 the enactment of this Act, that contains sufficient

14 information to enable the Customs Service—

15 (A) to locate the entry; or

16 (B) to reconstruct the entry if it cannot be

17 located.

18 TITLE II—OTHER PROVISIONS

19 SEC. 201. DEPRECIATION STUDY.

20 The Secretary of the Treasury (or the Secretary’s

21 delegate)—

22 (1) shall conduct a comprehensive study of the

23 recovery periods and depreciation methods under

24 section 168 of the Internal Revenue Code of 1986,

25 and
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1 (2) not later than March 31, 2000, shall submit

2 the results of such study, together with rec3 ommendations for determining such periods and

4 methods in a more rational manner, to the Commit5 tee on Ways and Means of the House of Representa6 tives and the Committee on Finance of the Senate.

7 SEC. 202. PRODUCTION FLEXIBILITY CONTRACT PAY8 MENTS.

9 (a) IN GENERAL.—The options under paragraphs (2)

10 and (3) of section 112(d) of the Federal Agriculture Im11 provement and Reform Act of 1996 (7 U.S.C. 7212(d) (2)

12 and (3)), as in effect on the date of the enactment of this

13 Act, shall be disregarded in determining the taxable year

14 for which any payment under a production flexibility con15 tract under subtitle B of title I of such Act (as so in effect)

16 is properly includible in gross income for purposes of the

17 Internal Revenue Code of 1986.

18 (b) EFFECTIVE DATE.—Subsection (a) shall apply to

19 taxable years ending after December 31, 1995.

20 SEC. 203. 100 PERCENT DEDUCTION FOR HEALTH INSUR21 ANCE COSTS OF SELF-EMPLOYED INDIVID22 UALS.

23 (a) IN GENERAL.—The table contained in subpara24 graph (B) of section 162(l)(1) (relating to special rules

25 for health insurance costs of self-employed individuals) is
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•HR 4738 IH

1 amended by striking the provisions relating to calendar

2 years 2002 and thereafter and inserting the following:

‘‘2002 ....................................................................................... 75

2003 or thereafter .................................................................. 100.’’

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

4 this section shall apply to taxable years beginning after

5 December 31, 1998.

6 SEC. 204. INCREASE IN VOLUME CAP ON PRIVATE ACTIVITY

7 BONDS.

8 (a) IN GENERAL.—Subsection (d) of section 146 (re9 lating to volume cap) is amended by striking paragraphs

10 (1) and (2) and inserting the following new paragraphs:

11 ‘‘(1) IN GENERAL.—The State ceiling applicable

12 to any State for any calendar year shall be the

13 greater of—

14 ‘‘(A) an amount equal to the per capita

15 limit for such year multiplied by the State pop16 ulation, or

17 ‘‘(B) the aggregate limit for such year.

18 Subparagraph (B) shall not apply to any possession

19 of the United States.

20 ‘‘(2) PER CAPITA LIMIT; AGGREGATE LIMIT.—

21 For purposes of paragraph (1), the per capita limit,

22 and the aggregate limit, for any calendar year shall

23 be determined in accordance with the following

24 table:
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Calendar Year Per Capita

Limit

Aggregate

Limit

1999 through 2002 .................................................. $50 $150,000,000

2003 ......................................................................... 55 165,000,000

2004 ......................................................................... 60 180,000,000

2005 ......................................................................... 65 195,000,000

2006 ......................................................................... 70 210,000,000

2007 and thereafter ................................................. 75 225,000,000.’’

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

2 this section shall apply to calendar years after 1998.

3 SEC. 205. MODIFICATION OF ESTIMATED TAX SAFE HAR4 BORS.

5 (a) IN GENERAL.—The table contained in clause (i)

6 of section 6654(d)(1)(C) (relating to limitation on use of

7 preceding year’s tax) is amended by striking the provision

8 relating to 1998, 1999, or 2000 and inserting the follow9 ing:

‘‘1998 ....................................................................................... 105

1999 or 2000 ......................................................................... 106’’.

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

11 this section shall apply with respect to any installment

12 payment for taxable years beginning after December 31,

13 1999.
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1 TITLE III—REVENUE OFFSETS

2 SEC. 301. TREATMENT OF CERTAIN DEDUCTIBLE LIQUIDAT3 ING DISTRIBUTIONS OF REGULATED INVEST4 MENT COMPANIES AND REAL ESTATE IN5 VESTMENT TRUSTS.

6 (a) IN GENERAL.—Section 332 (relating to complete

7 liquidations of subsidiaries) is amended by adding at the

8 end the following new subsection:

9 ‘‘(c) DEDUCTIBLE LIQUIDATING DISTRIBUTIONS OF

10 REGULATED INVESTMENT COMPANIES AND REAL ES11 TATE INVESTMENT TRUSTS.—If a corporation receives a

12 distribution from a regulated investment company or a

13 real estate investment trust which is considered under sub14 section (b) as being in complete liquidation of such com15 pany or trust, then, notwithstanding any other provision

16 of this chapter, such corporation shall recognize and treat

17 as a dividend from such company or trust an amount

18 equal to the deduction for dividends paid allowable to such

19 company or trust by reason of such distribution.’’.

20 (b) CONFORMING AMENDMENTS.—

21 (1) The material preceding paragraph (1) of

22 section 332(b) is amended by striking ‘‘subsection

23 (a)’’ and inserting ‘‘this section’’.
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1 (2) Paragraph (1) of section 334(b) is amended

2 by striking ‘‘section 332(a)’’ and inserting ‘‘section

3 332’’.

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

5 this section shall apply to distributions after May 21,

6 1998.

7 SEC. 302. INCLUSION OF ROTAVIRUS GASTROENTERITIS AS

8 A TAXABLE VACCINE.

9 (a) IN GENERAL.—Paragraph (1) of section 4132

10 (defining taxable vaccine) is amended by adding at the end

11 the following new subparagraph:

12 ‘‘(K) Any vaccine against rotavirus

13 gastroenteritis.’’.

14 (b) EFFECTIVE DATE.—

15 (1) SALES.—The amendment made by this sec16 tion shall apply to sales after the date of the enact17 ment of this Act.

18 (2) DELIVERIES.—For purposes of paragraph

19 (1), in the case of sales on or before the date of the

20 enactment of this Act for which delivery is made

21 after such date, the delivery date shall be considered

22 the sale date.
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1 SEC. 303. CLARIFICATION AND EXPANSION OF MATHEMATI2 CAL ERROR ASSESSMENT PROCEDURES.

3 (a) TIN DEEMED INCORRECT IF INFORMATION ON

4 RETURN DIFFERS WITH AGENCY RECORDS.—Paragraph

5 (2) of section 6213(g) (defining mathematical or clerical

6 error) is amended by adding at the end the following flush

7 sentence:

8 ‘‘A taxpayer shall be treated as having omitted a

9 correct TIN for purposes of the preceding sentence

10 if information provided by the taxpayer on the re11 turn with respect to the individual whose TIN was

12 provided differs from the information the Secretary

13 obtains from the person issuing the TIN.’’.

14 (b) EXPANSION OF MATHEMATICAL ERROR PROCE15 DURES TO CASES WHERE TIN ESTABLISHES INDIVIDUAL

16 NOT ELIGIBLE FOR TAX CREDIT.—Paragraph (2) of sec17 tion 6213(g) is amended by striking ‘‘and’’ at the end of

18 subparagraph (J), by striking the period at the end of the

19 subparagraph (K) and inserting ‘‘, and’’, and by inserting

20 after subparagraph (K) the following new subparagraph:

21 ‘‘(L) the inclusion on a return of a TIN re22 quired to be included on the return under sec23 tion 21, 24, or 32 if—

24 ‘‘(i) such TIN is of an individual

25 whose age affects the amount of the credit

26 under such section; and
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1 ‘‘(ii) the computation of the credit on

2 the return reflects the treatment of such

3 individual as being of an age different

4 from the individual’s age based on such

5 TIN.’’.

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

7 this section shall apply to taxable years ending after the

8 date of the enactment of this Act.

9 SEC. 304. CLARIFICATION OF DEFINITION OF SPECIFIED LI10 ABILITY LOSS.

11 (a) IN GENERAL.—Subparagraph (B) of section

12 172(f)(1) (defining specified liability loss) is amended to

13 read as follows:

14 ‘‘(B)(i) Any amount allowable as a deduc15 tion under this chapter (other than section

16 468(a)(1) or 468A(a)) which is in satisfaction

17 of a liability under a Federal or State law re18 quiring—

19 ‘‘(I) the reclamation of land;

20 ‘‘(II) the decommissioning of a nu21 clear power plant (or any unit thereof);

22 ‘‘(III) the dismantlement of a drilling

23 platform;

24 ‘‘(IV) the remediation of environ25 mental contamination; or
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1 ‘‘(V) a payment under any workers

2 compensation act (within the meaning of

3 section 461(h)(2)(C)(i)).

4 ‘‘(ii) A liability shall be taken into account

5 under this subparagraph only if—

6 ‘‘(I) the act (or failure to act) giving

7 rise to such liability occurs at least 3 years

8 before the beginning of the taxable year;

9 and

10 ‘‘(II) the taxpayer used an accrual

11 method of accounting throughout the pe12 riod or periods during which such act (or

13 failure to act) occurred.’’.

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

15 this section shall apply to net operating losses arising in

16 taxable years ending after the date of the enactment of

17 this Act.

18 TITLE IV—TECHNICAL

19 CORRECTIONS

20 SEC. 401. DEFINITIONS; COORDINATION WITH OTHER TI21 TLES.

22 (a) DEFINITIONS.—For purposes of this title—

23 (1) 1986 CODE.—The term ‘‘1986 Code’’

24 means the Internal Revenue Code of 1986.
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1 (2) 1998 ACT.—The term ‘‘1998 Act’’ means

2 the Internal Revenue Service Restructuring and Re3 form Act of 1998 (Public Law 105–206).

4 (3) 1997 ACT.—The term ‘‘1997 Act’’ means

5 the Taxpayer Relief Act of 1997 (Public Law 105–

6 34).

7 (b) COORDINATION WITH OTHER TITLES.—For pur8 poses of applying the amendments made by any title of

9 this Act other than this title, the provisions of this title

10 shall be treated as having been enacted immediately before

11 the provisions of such other titles.

12 SEC. 402. AMENDMENTS RELATED TO INTERNAL REVENUE

13 SERVICE RESTRUCTURING AND REFORM ACT

14 OF 1998.

15 (a) AMENDMENT RELATED TO SECTION 1101 OF

16 1998 ACT.—Paragraph (5) of section 6103(h) of the 1986

17 Code, as added by section 1101(b) of the 1998 Act, is

18 redesignated as paragraph (6).

19 (b) AMENDMENT RELATED TO SECTION 3001 OF

20 1998 ACT.—Paragraph (2) of section 7491(a) of the 1986

21 Code is amended by adding at the end the following flush

22 sentence:

23 ‘‘Subparagraph (C) shall not apply to any qualified

24 revocable trust (as defined in section 645(b)(1)) with

25 respect to liability for tax for any taxable year end-
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1 ing after the date of the decedent’s death and before

2 the applicable date (as defined in section

3 645(b)(2)).’’.

4 (c) AMENDMENTS RELATED TO SECTION 3201 OF

5 1998 ACT.—

6 (1) Section 7421(a) of the 1986 Code is amend7 ed by striking ‘‘6015(d)’’ and inserting ‘‘6015(e)’’.

8 (2) Subparagraph (A) of section 6015(e)(3) is

9 amended by striking ‘‘of this section’’ and inserting

10 ‘‘of subsection (b) or (f)’’.

11 (d) AMENDMENT RELATED TO SECTION 3301 OF

12 1998 ACT.—Paragraph (2) of section 3301(c) of the 1998

13 Act is amended by striking ‘‘The amendments’’ and insert14 ing ‘‘Subject to any applicable statute of limitation not

15 having expired with regard to either a tax underpayment

16 or a tax overpayment, the amendments’’.

17 (e) AMENDMENT RELATED TO SECTION 3401 OF

18 1998 ACT.—Section 3401(c) of the 1998 Act is amend19 ed—

20 (1) in paragraph (1), by striking ‘‘7443(b)’’

21 and inserting ‘‘7443A(b)’’; and

22 (2) in paragraph (2), by striking ‘‘7443(c)’’ and

23 inserting ‘‘7443A(c)’’.
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1 (f) AMENDMENT RELATED TO SECTION 3433 OF

2 1998 ACT.—Section 7421(a) of the 1986 Code is amended

3 by inserting ‘‘6331(i),’’ after ‘‘6246(b),’’.

4 (g) AMENDMENT RELATED TO SECTION 3467 OF

5 1998 ACT.—The subsection (d) of section 6159 of the

6 1986 Code relating to cross reference is redesignated as

7 subsection (e).

8 (h) AMENDMENT RELATED TO SECTION 3708 OF

9 1998 ACT.—Subparagraph (A) of section 6103(p)(3) of

10 the 1986 Code is amended by inserting ‘‘(f)(5),’’ after

11 ‘‘(c), (e),’’.

12 (i) AMENDMENTS RELATED TO SECTION 5001 OF

13 1998 ACT.—

14 (1) Subparagraph (B) of section 1(h)(13) of the

15 1986 Code is amended by striking ‘‘paragraph

16 (7)(A)’’ and inserting ‘‘paragraph (7)(A)(i)’’.

17 (2)(A) Subparagraphs (A)(i)(II), (A)(ii)(II),

18 and (B)(ii) of section 1(h)(13) of the 1986 Code

19 shall not apply to any distribution after December

20 31, 1997, by a regulated investment company or a

21 real estate investment trust with respect to—

22 (i) gains and losses recognized directly by

23 such company or trust, and

24 (ii) amounts properly taken into account

25 by such company or trust by reason of holding
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1 (directly or indirectly) an interest in another

2 such company or trust to the extent that such

3 subparagraphs did not apply to such other com4 pany or trust with respect to such amounts.

5 (B) Subparagraph (A) shall not apply to any

6 distribution which is treated under section 852(b)(7)

7 or 857(b)(8) of the 1986 Code as received on De8 cember 31, 1997.

9 (C) For purposes of subparagraph (A), any

10 amount which is includible in gross income of its

11 shareholders under section 852(b)(3)(D) or

12 857(b)(3)(D) of the 1986 Code after December 31,

13 1997, shall be treated as distributed after such date.

14 (D)(i) For purposes of subparagraph (A), in

15 the case of a qualified partnership with respect to

16 which a regulated investment company meets the

17 holding requirement of clause (iii)—

18 (I) the subparagraphs referred to in sub19 paragraph (A) shall not apply to gains and

20 losses recognized directly by such partnership

21 for purposes of determining such company’s

22 distributive share of such gains and losses, and

23 (II) such company’s distributive share of

24 such gains and losses (as so determined) shall
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1 be treated as recognized directly by such com2 pany.

3 The preceding sentence shall apply only if the quali4 fied partnership provides the company with written

5 documentation of such distributive share as so deter6 mined.

7 (ii) For purposes of clause (i), the term ‘‘quali8 fied partnership’’ means, with respect to a regulated

9 investment company, any partnership if—

10 (I) the partnership is an investment com11 pany registered under the Investment Company

12 Act of 1940,

13 (II) the regulated investment company is

14 permitted to invest in such partnership by rea15 son of section 12(d)(1)(E) of such Act or an ex16 emptive order of the Securities and Exchange

17 Commission under such section, and

18 (III) the regulated investment company

19 and the partnership have the same taxable year.

20 (iii) A regulated investment company meets the

21 holding requirement of this clause with respect to a

22 qualified partnership if (as of January 1, 1998)—

23 (I) the value of the interests of the regu24 lated investment company in such partnership
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1 is 35 percent or more of the value of such com2 pany’s total assets, or

3 (II) the value of the interests of the regu4 lated investment company in such partnership

5 and all other qualified partnerships is 90 per6 cent or more of the value of such company’s

7 total assets.

8 (3) Paragraph (13) of section 1(h) of the 1986

9 Code is amended by adding at the end the following

10 new subparagraph:

11 ‘‘(D) CHARITABLE REMAINDER TRUSTS.—

12 Subparagraphs (A) and (B)(ii) shall not apply

13 to any capital gain distribution made by a trust

14 described in section 664.’’

15 (j) AMENDMENT RELATED TO SECTION 7004 OF

16 1998 ACT.—Clause (i) of section 408A(c)(3)(C) of the

17 1986 Code, as amended by section 7004 of the 1998 Act,

18 is amended by striking the period at the end of subclause

19 (II) and inserting ‘‘, and’’.

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

21 this section shall take effect as if included in the provisions

22 of the 1998 Act to which they relate.
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1 SEC. 403. AMENDMENTS RELATED TO TAXPAYER RELIEF

2 ACT OF 1997.

3 (a) AMENDMENTS RELATED TO SECTION 202 OF

4 1997 ACT.—

5 (1) Paragraph (2) of section 163(h) of the

6 1986 Code is amended by striking ‘‘and’’ at the end

7 of subparagraph (D), by striking the period at the

8 end of subparagraph (E) and inserting ‘‘, and’’, and

9 by adding at the end the following new subpara10 graph:

11 ‘‘(F) any interest allowable as a deduction

12 under section 221 (relating to interest on edu13 cational loans).’’

14 (2)(A) Subparagraph (C) of section 221(b)(2)

15 of the 1986 Code is amended—

16 (i) by striking ‘‘135, 137,’’ in clause (i),

17 (ii) by inserting ‘‘135, 137,’’ after ‘‘sec18 tions 86,’’ in clause (ii), and

19 (iii) by striking the last sentence.

20 (B) Sections 86(b)(2)(A), 135(c)(4)(A), and

21 219(g)(3)(A)(ii) of the 1986 Code are each amended

22 by inserting ‘‘221,’’ after ‘‘137,’’.

23 (C) Subparagraph (A) of section 137(b)(3) of

24 the 1986 Code is amended by inserting ‘‘221,’’ be25 fore ‘‘911,’’.
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1 (D) Clause (iii) of section 469(i)(3)(E) of the

2 1986 Code is amended to read as follows:

3 ‘‘(iii) the amounts allowable as a de4 duction under sections 219 and 221, and’’.

5 (3) The last sentence of section 221(e)(1) of

6 the 1986 Code is amended by inserting before the

7 period ‘‘or to any person by reason of a loan under

8 any qualified employer plan (as defined in section

9 72(p)(4)) or under any contract referred to in sec10 tion 72(p)(5)’’.

11 (b) PROVISION RELATED TO SECTION 311 OF 1997

12 ACT.—In the case of any capital gain distribution made

13 after 1997 by a trust to which section 664 of the 1986

14 Code applies with respect to amounts properly taken into

15 account by such trust during 1997, paragraphs

16 (5)(A)(i)(I), (5)(A)(ii)(I), and (13)(A) of section 1(h) of

17 the 1986 Code (as in effect for taxable years ending on

18 December 31, 1997) shall not apply.

19 (c) AMENDMENT RELATED TO SECTION 506 OF 1997

20 ACT.—Section 2001(f)(2) of the 1986 Code is amended

21 by adding at the end the following:

22 ‘‘For purposes of subparagraph (A), the value of an

23 item shall be treated as shown on a return if the

24 item is disclosed in the return, or in a statement at-
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1 tached to the return, in a manner adequate to ap2 prise the Secretary of the nature of such item.’’.

3 (d) AMENDMENTS RELATED TO SECTION 904 OF

4 1997 ACT.—

5 (1) Paragraph (1) of section 9510(c) of the

6 1986 Code is amended to read as follows:

7 ‘‘(1) IN GENERAL.—Amounts in the Vaccine In8 jury Compensation Trust Fund shall be available, as

9 provided in appropriation Acts, only for—

10 ‘‘(A) the payment of compensation under

11 subtitle 2 of title XXI of the Public Health

12 Service Act (as in effect on August 5, 1997) for

13 vaccine-related injury or death with respect to

14 any vaccine—

15 ‘‘(i) which is administered after Sep16 tember 30, 1988, and

17 ‘‘(ii) which is a taxable vaccine (as de18 fined in section 4132(a)(1)) at the time

19 compensation is paid under such subtitle 2,

20 or

21 ‘‘(B) the payment of all expenses of admin22 istration (but not in excess of $9,500,000 for

23 any fiscal year) incurred by the Federal Gov24 ernment in administering such subtitle.’’.
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1 (2) Section 9510(b) of the 1986 Code is amend2 ed by adding at the end the following new para3 graph:

4 ‘‘(3) LIMITATION ON TRANSFERS TO VACCINE

5 INJURY COMPENSATION TRUST FUND.—No amount

6 may be appropriated to the Vaccine Injury Com7 pensation Trust Fund on and after the date of any

8 expenditure from the Trust Fund which is not per9 mitted by this section. The determination of whether

10 an expenditure is so permitted shall be made without

11 regard to—

12 ‘‘(A) any provision of law which is not con13 tained or referenced in this title or in a revenue

14 Act, and

15 ‘‘(B) whether such provision of law is a

16 subsequently enacted provision or directly or in17 directly seeks to waive the application of this

18 paragraph.’’.

19 (e) AMENDMENTS RELATED TO SECTION 915 OF

20 1997 ACT.—

21 (1) Section 915 of the 1997 Act is amended—

22 (A) in subsection (b), by inserting ‘‘or

23 1998’’ after ‘‘1997’’, and

24 (B) by amending subsection (d) to read as

25 follows:
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1 ‘‘(d) EFFECTIVE DATE.—This section shall apply to

2 taxable years ending with or within calendar year 1997.’’.

3 (2) Paragraph (2) of section 6404(h) of the

4 1986 Code is amended by inserting ‘‘Robert T. Staf5 ford’’ before ‘‘Disaster’’.

6 (f) AMENDMENTS RELATED TO SECTION 1012 OF

7 1997 ACT.—

8 (1) Paragraph (2) of section 351(c) of the 1986

9 Code, as amended by section 6010(c) of the 1998

10 Act, is amended by inserting ‘‘, or the fact that the

11 corporation whose stock was distributed issues addi12 tional stock,’’ after ‘‘dispose of part or all of the dis13 tributed stock’’.

14 (2) Clause (ii) of section 368(a)(2)(H) of the

15 1986 Code, as amended by section 6010(c) of the

16 1998 Act, is amended by inserting ‘‘, or the fact

17 that the corporation whose stock was distributed

18 issues additional stock,’’ after ‘‘dispose of part or all

19 of the distributed stock’’.

20 (g) PROVISION RELATED TO SECTION 1042 OF 1997

21 ACT.—Rules similar to the rules of section 1.1502-

22 75(d)(5) of the Treasury Regulations shall apply with re23 spect to any organization described in section 1042(b) of

24 the 1997 Act.
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1 (h) AMENDMENT RELATED TO SECTION 1082 OF

2 1997 ACT.—Subparagraph (F) of section 172(b)(1) of the

3 1986 Code is amended by adding at the end the following

4 new clause:

5 ‘‘(iv) COORDINATION WITH PARA6 GRAPH (2).—For purposes of applying

7 paragraph (2), an eligible loss for any tax8 able year shall be treated in a manner

9 similar to the manner in which a specified

10 liability loss is treated.’’

11 (i) AMENDMENT RELATED TO SECTION 1084 OF

12 1997 ACT.—Paragraph (3) of section 264(f) of the 1986

13 Code is amended by adding at the end the following flush

14 sentence:

15 ‘‘If the amount described in subparagraph (A) with

16 respect to any policy or contract does not reasonably

17 approximate its actual value, the amount taken into

18 account under subparagraph (A) shall be the greater

19 of the amount of the insurance company liability or

20 the insurance company reserve with respect to such

21 policy or contract (as determined for purposes of the

22 annual statement approved by the National Associa23 tion of Insurance Commissioners) or shall be such

24 other amount as is determined by the Secretary.’’
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1 (j) AMENDMENT RELATED TO SECTION 1175 OF

2 1997 ACT.—Subparagraph (C) of section 954(e)(2) of the

3 1986 Code is amended by striking ‘‘subsection (h)(8)’’ and

4 inserting ‘‘subsection (h)(9)’’.

5 (k) AMENDMENT RELATED TO SECTION 1205 OF

6 1997 ACT.—Paragraph (2) of section 6311(d) of the 1986

7 Code is amended by striking ‘‘under such contracts’’ in

8 the last sentence and inserting ‘‘under any such contract

9 for the use of credit, debit, or charge cards for the pay10 ment of taxes imposed by subtitle A’’.

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

12 this section shall take effect as if included in the provisions

13 of the 1997 Act to which they relate.

14 SEC. 404. AMENDMENTS RELATED TO TAX REFORM ACT OF

15 1984.

16 (a) IN GENERAL.—Subparagraph (C) of section

17 172(d)(4) of the 1986 Code is amended to read as follows:

18 ‘‘(C) any deduction for casualty or theft

19 losses allowable under paragraph (2) or (3) of

20 section 165(c) shall be treated as attributable

21 to the trade or business; and’’.

22 (b) CONFORMING AMENDMENTS.—

23 (1) Paragraph (3) of section 67(b) of the 1986

24 Code is amended by striking ‘‘for losses described in

25 subsection (c)(3) or (d) of section 165’’ and insert-
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1 ing ‘‘for casualty or theft losses described in para2 graph (2) or (3) of section 165(c) or for losses de3 scribed in section 165(d)’’.

4 (2) Paragraph (3) of section 68(c) of the 1986

5 Code is amended by striking ‘‘for losses described in

6 subsection (c)(3) or (d) of section 165’’ and insert7 ing ‘‘for casualty or theft losses described in para8 graph (2) or (3) of section 165(c) or for losses de9 scribed in section 165(d)’’.

10 (3) Paragraph (1) of section 873(b) is amended

11 to read as follows:

12 ‘‘(1) LOSSES.—The deduction allowed by sec13 tion 165 for casualty or theft losses described in

14 paragraph (2) or (3) of section 165(c), but only if

15 the loss is of property located within the United

16 States.’’

17 (c) EFFECTIVE DATES.—

18 (1) The amendments made by subsections (a)

19 and (b)(3) shall apply to taxable years beginning

20 after December 31, 1983.

21 (2) The amendment made by subsection (b)(1)

22 shall apply to taxable years beginning after Decem23 ber 31, 1986.
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1 (3) The amendment made by subsection (b)(2)

2 shall apply to taxable years beginning after Decem3 ber 31, 1990.

4 SEC. 405. OTHER AMENDMENTS.

5 (a) AMENDMENTS RELATED TO SECTION 6103 OF

6 1986 CODE.—

7 (1) Subsection (j) of section 6103 of the 1986

8 Code is amended by adding at the end the following

9 new paragraph:

10 ‘‘(5) DEPARTMENT OF AGRICULTURE.—Upon

11 request in writing by the Secretary of Agriculture,

12 the Secretary shall furnish such returns, or return

13 information reflected thereon, as the Secretary may

14 prescribe by regulation to officers and employees of

15 the Department of Agriculture whose official duties

16 require access to such returns or information for the

17 purpose of, but only to the extent necessary in,

18 structuring, preparing, and conducting the census of

19 agriculture pursuant to the Census of Agriculture

20 Act of 1997 (Public Law 105–113).’’.

21 (2) Paragraph (4) of section 6103(p) of the

22 1986 Code is amended by striking ‘‘(j)(1) or (2)’’ in

23 the material preceding subparagraph (A) and in sub24 paragraph (F) and inserting ‘‘(j)(1), (2), or (5)’’.
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1 (3) The amendments made by this subsection

2 shall apply to requests made on or after the date of

3 the enactment of this Act.

4 (b) AMENDMENT RELATED TO SECTION 9004 OF

5 TRANSPORTATION EQUITY ACT FOR THE 21ST CEN6 TURY.—

7 (1) Paragraph (2) of section 9503(f) of the

8 1986 Code is amended to read as follows:

9 ‘‘(2) notwithstanding section 9602(b), obliga10 tions held by such Fund after September 30, 1998,

11 shall be obligations of the United States which are

12 not interest-bearing.’’

13 (2) The amendment made by paragraph (1)

14 shall take effect on October 1, 1998.

15 (c) CLERICAL AMENDMENTS.—

16 (1) Clause (i) of section 51(d)(6)(B) of the

17 1986 Code is amended by striking ‘‘rehabilitation

18 plan’’ and inserting ‘‘plan for employment’’. The ref19 erence to ‘‘plan for employment’’ in such clause shall

20 be treated as including a reference to the rehabilita21 tion plan referred to in such clause as in effect be22 fore the amendment made by the preceding sen23 tence.

24 (2) Paragraph (3) of section 56(a) of the 1986

25 Code is amended by striking ‘‘section 460(b)(2)’’
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1 and inserting ‘‘section 460(b)(1)’’ and by striking

2 ‘‘section 460(b)(4)’’ and inserting ‘‘section

3 460(b)(3)’’.

4 (3) Subparagraphs (C) and (D) of section

5 6693(a)(2) of the 1986 Code are each amended by

6 striking ‘‘Section’’ and inserting ‘‘section’’.

7 (4) Paragraph (10) of section 2031(c) of the

8 1986 Code is amended by striking ‘‘section

9 2033A(e)(3)’’ and inserting ‘‘section 2057(e)(3)’’.

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