Union Calendar No. 459

105TH CONGRESS

2D SESSION H. R. 4738

[Report No. 105–817]

A BILL

To amend the Internal Revenue Code of 1986 to

other purposes.lief for farmers and small businesses, and forextend certain expiring provisions, provide tax reOCTOBER 12, 1998

Reported with an amendment, committed to the Commitordered to be printed tee of the Whole House on the State of the Union, and
IB

Union Calendar No. 459

105TH CONGRESS

2D SESSION H. R. 4738

[Report No. 105–817]

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

OCTOBER 12, 1998

Reported with an amendment, committed to the Committee of the Whole

House on the State of the Union, and ordered to be printed

[Strike out all after the enacting clause and insert the part printed in italic]

[For text of introduced bill, see copy of bill as introduced on October 8, 1998]

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,
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1 SECTION 1. AMENDMENT OF 1986 CODE; TABLE OF CON2 TENTS.

3 (a) AMENDMENT OF 1986 CODE.—Except as otherwise

4 expressly provided, whenever in this Act an amendment or

5 repeal is expressed in terms of an amendment to, or repeal

6 of, a section or other provision, the reference shall be consid7 ered to be made to a section or other provision of the Inter8 nal Revenue Code of 1986.

9 (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.

Sec. 206. Exemption for students employed by State schools, colleges, or universities.

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.
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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.

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 this

18 section shall apply to amounts paid or incurred after June

19 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
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1 striking ‘‘June 30, 1998’’ and inserting ‘‘December 31,

2 1999’’.

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

4 section shall apply to individuals who begin work for the

5 employer after June 30, 1998.

6 SEC. 103. INCOME AVERAGING FOR FARMERS MADE PERMA7 NENT.

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

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

10 1, 2001’’.

11 SEC. 104. CONTRIBUTIONS OF STOCK TO PRIVATE FOUNDA12 TIONS; EXPANDED PUBLIC INSPECTION OF

13 PRIVATE FOUNDATIONS’ ANNUAL RETURNS.

14 (a) SPECIAL RULE FOR CONTRIBUTIONS OF STOCK

15 MADE PERMANENT.—

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

17 170(e) is amended by striking subparagraph (D) (re18 lating to termination).

19 (2) EFFECTIVE DATE.—The amendment made by

20 paragraph (1) shall apply to contributions made after

21 June 30, 1998.

22 (b) EXPANDED PUBLIC INSPECTION OF PRIVATE

23 FOUNDATIONS’ ANNUAL RETURNS, ETC.—

24 (1) IN GENERAL.—Section 6104 (relating to pub25 licity of information required from certain exempt or-
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1 ganizations and certain trusts) is amended by strik2 ing subsections (d) and (e) and inserting after sub3 section (c) the following new subsection:

4 ‘‘(d) PUBLIC INSPECTION OF CERTAIN ANNUAL RE5 TURNS AND APPLICATIONS FOR EXEMPTION.—

6 ‘‘(1) IN GENERAL.—In the case of an organiza7 tion described in subsection (c) or (d) of section 501

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

9 ‘‘(A) a copy of—

10 ‘‘(i) the annual return filed under sec11 tion 6033 (relating to returns by exempt or12 ganizations) by such organization; and

13 ‘‘(ii) if the organization filed an appli14 cation for recognition of exemption under

15 section 501, the exempt status application

16 materials of such organization,

17 shall be made available by such organization for

18 inspection during regular business hours by any

19 individual at the principal office of such organi20 zation and, if such organization regularly main21 tains 1 or more regional or district offices hav22 ing 3 or more employees, at each such regional

23 or district office; and

24 ‘‘(B) upon request of an individual made at

25 such principal office or such a regional or dis-
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1 trict office, a copy of such annual return and ex2 empt status application materials shall be pro3 vided to such individual without charge other

4 than a reasonable fee for any reproduction and

5 mailing costs.

6 The request described in subparagraph (B) must be

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

8 in person, such copy shall be provided immediately

9 and, if made in writing, shall be provided within 30

10 days.

11 ‘‘(2) 3-YEAR LIMITATION ON INSPECTION OF RE12 TURNS.—Paragraph (1) shall apply to an annual re13 turn filed under section 6033 only during the 3-year

14 period beginning on the last day prescribed for filing

15 such return (determined with regard to any extension

16 of time for filing).

17 ‘‘(3) EXCEPTIONS FROM DISCLOSURE REQUIRE18 MENT.—

19 ‘‘(A) NONDISCLOSURE OF CONTRIBUTORS,

20 ETC.—Paragraph (1) shall not require the disclo21 sure of the name or address of any contributor

22 to the organization. In the case of an organiza23 tion described in section 501(d), paragraph (1)

24 shall not require the disclosure of the copies re-
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1 ferred to in section 6031(b) with respect to such

2 organization.

3 ‘‘(B) NONDISCLOSURE OF CERTAIN OTHER

4 INFORMATION.—Paragraph (1) shall not require

5 the disclosure of any information if the Secretary

6 withheld such information from public inspec7 tion under subsection (a)(1)(D).

8 ‘‘(4) LIMITATION ON PROVIDING COPIES.—Para9 graph (1)(B) shall not apply to any request if, in ac10 cordance with regulations promulgated by the Sec11 retary, the organization has made the requested docu12 ments widely available, or the Secretary determines,

13 upon application by an organization, that such re14 quest is part of a harassment campaign and that

15 compliance with such request is not in the public in16 terest.

17 ‘‘(5) EXEMPT STATUS APPLICATION MATE18 RIALS.—For purposes of paragraph (1), the term ‘ex19 empt status applicable materials’ means the applica20 tion for recognition of exemption under section 501

21 and any papers submitted in support of such applica22 tion and any letter or other document issued by the

23 Internal Revenue Service with respect to such appli24 cation.’’.

25 (2) CONFORMING AMENDMENTS.—
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1 (A) Subsection (c) of section 6033 is amend2 ed by adding ‘‘and’’ at the end of paragraph (1),

3 by striking paragraph (2), and by redesignating

4 paragraph (3) as paragraph (2).

5 (B) Subparagraph (C) of section 6652(c)(1)

6 is amended by striking ‘‘subsection (d) or (e)(1)

7 of section 6104 (relating to public inspection of

8 annual returns)’’ and inserting ‘‘section 6104(d)

9 with respect to any annual return’’.

10 (C) Subparagraph (D) of section 6652(c)(1)

11 is amended by striking ‘‘section 6104(e)(2) (re12 lating to public inspection of applications for ex13 emption)’’ and inserting ‘‘section 6104(d) with

14 respect to any exempt status application mate15 rials (as defined in such section)’’.

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 this

23 subsection shall apply to requests made after the

24 later of December 31, 1998, or the 60th day after

25 the Secretary of the Treasury first issues the reg-
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1 ulations referred to in such section 6104(d)(4) of

2 the Internal Revenue Code of 1986, as amended

3 by this section.

4 (B) PUBLICATION OF ANNUAL RETURNS.—

5 Section 6104(d) of such Code, as in effect before

6 the amendments made by this subsection, shall

7 not apply to any return the due date for which

8 is after the date such amendments take effect

9 under subparagraph (A).

10 SEC. 105. SUBPART F EXEMPTION FOR ACTIVE FINANCING

11 INCOME.

12 (a) INCOME DERIVED FROM BANKING, FINANCING, OR

13 SIMILAR BUSINESSES.—Section 954(h) (relating to income

14 derived in the active conduct of banking, financing, or simi15 lar businesses) is amended to read as follows:

16 ‘‘(h) SPECIAL RULE FOR INCOME DERIVED IN THE AC17 TIVE CONDUCT OF BANKING, FINANCING, OR SIMILAR BUSI18 NESSES.—

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

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

21 not include qualified banking or financing income of

22 an eligible controlled foreign corporation.

23 ‘‘(2) ELIGIBLE CONTROLLED FOREIGN CORPORA24 TION.—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 corporation

15 is derived directly from the active and regu16 lar conduct of a lending or finance business

17 from transactions with customers which are

18 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 the

24 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 under

4 section 15(a) of the Securities Exchange Act

5 of 1934 or is registered as a Government se6 curities broker or dealer under section

7 15C(a) of such Act (or is any other corpora8 tion not so registered which is specified by

9 the Secretary in regulations).

10 ‘‘(3) QUALIFIED BANKING OR FINANCING IN11 COME.—For purposes of this subsection—

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

13 banking or financing income’ means income of

14 an eligible controlled foreign corporation

15 which—

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

17 a banking, financing, or similar business

18 by—

19 ‘‘(I) such eligible controlled for20 eign corporation, or

21 ‘‘(II) a qualified business unit of

22 such eligible controlled foreign corpora23 tion;

24 ‘‘(ii) is derived from one or more

25 transactions—
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1 ‘‘(I) with customers located in a

2 country other than the United States,

3 and

4 ‘‘(II) substantially all of the ac5 tivities in connection with which are

6 conducted directly by the corporation

7 or unit in its home country; and

8 ‘‘(iii) is treated as earned by such cor9 poration or unit in its home country for

10 purposes of such country’s tax laws.

11 ‘‘(B) LIMITATION ON NONBANKING AND NON12 SECURITIES BUSINESSES.—No income of an eli13 gible controlled foreign corporation not described

14 in clause (ii) or (iii) of paragraph (2)(B) (or of

15 a qualified business unit of such corporation)

16 shall be treated as qualified banking or financing

17 income unless more than 30 percent of such cor18 poration’s or unit’s gross income is derived di19 rectly from the active and regular conduct of a

20 lending or finance business from transactions

21 with customers which are not related persons

22 and which are located within such corporation’s

23 or unit’s home country.

24 ‘‘(C) SUBSTANTIAL ACTIVITY REQUIREMENT

25 FOR CROSS BORDER INCOME.—The term ‘quali-
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1 fied banking or financing income’ shall not in2 clude income derived from 1 or more trans3 actions with customers located in a country other

4 than the home country of the eligible controlled

5 foreign corporation or a qualified business unit

6 of such corporation unless such corporation or

7 unit conducts substantial activity with respect to

8 a banking, financing, or similar business in its

9 home country.

10 ‘‘(D) DETERMINATIONS MADE SEPA11 RATELY.—For purposes of this paragraph, the

12 qualified banking or financing income of an eli13 gible controlled foreign corporation and each

14 qualified business unit of such corporation shall

15 be determined separately for such corporation

16 and each such unit by taking into account—

17 ‘‘(i) in the case of the eligible controlled

18 foreign corporation, only items of income,

19 deduction, gain, or loss and activities of

20 such corporation not properly allocable or

21 attributable to any qualified business unit

22 of such corporation; and

23 ‘‘(ii) in the case of a qualified business

24 unit, only items of income, deduction, gain,
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1 or loss and activities properly allocable or

2 attributable to such unit.

3 ‘‘(4) LENDING OR FINANCE BUSINESS.—For pur4 poses of this subsection, the term ‘lending or finance

5 business’ means the business of—

6 ‘‘(A) making loans;

7 ‘‘(B) purchasing or discounting accounts re8 ceivable, notes, or installment obligations;

9 ‘‘(C) engaging in leasing (including enter10 ing into leases and purchasing, servicing, and

11 disposing of leases and leased assets);

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

13 guarantees;

14 ‘‘(E) providing charge and credit card serv15 ices; or

16 ‘‘(F) rendering services or making facilities

17 available in connection with activities described

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

19 by—

20 ‘‘(i) the corporation (or qualified busi21 ness unit) rendering services or making fa22 cilities available; or

23 ‘‘(ii) another corporation (or qualified

24 business unit of a corporation) which is a

25 member of the same affiliated group (as de-
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1 fined in section 1504, but determined with2 out regard to section 1504(b)(3)).

3 ‘‘(5) OTHER DEFINITIONS.—For purposes of this

4 subsection—

5 ‘‘(A) CUSTOMER.—The term ‘customer’

6 means, with respect to any controlled foreign

7 corporation or qualified business unit, any per8 son which has a customer relationship with such

9 corporation or unit and which is acting in its

10 capacity as such.

11 ‘‘(B) HOME COUNTRY.—Except as provided

12 in regulations—

13 ‘‘(i) CONTROLLED FOREIGN CORPORA14 TION.—The term ‘home country’ means,

15 with respect to any controlled foreign cor16 poration, the country under the laws of

17 which the corporation was created or orga18 nized.

19 ‘‘(ii) QUALIFIED BUSINESS UNIT.—The

20 term ‘home country’ means, with respect to

21 any qualified business unit, the country in

22 which such unit maintains its principal of23 fice.
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1 ‘‘(C) LOCATED.—The determination of

2 where a customer is located shall be made under

3 rules prescribed by the Secretary.

4 ‘‘(D) QUALIFIED BUSINESS UNIT.—The

5 term ‘qualified business unit’ has the meaning

6 given such term by section 989(a).

7 ‘‘(E) RELATED PERSON.—The term ‘related

8 person’ has the meaning given such term by sub9 section (d)(3).

10 ‘‘(6) COORDINATION WITH EXCEPTION FOR DEAL11 ERS.—Paragraph (1) shall not apply to income de12 scribed in subsection (c)(2)(C)(ii) of a dealer in secu13 rities (within the meaning of section 475) which is an

14 eligible controlled foreign corporation described in

15 paragraph (2)(B)(iii).

16 ‘‘(7) ANTI-ABUSE RULES.—For purposes of ap17 plying this subsection and subsection (c)(2)(C)(ii)—

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

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

20 any transaction or series of transactions one of

21 the principal purposes of which is qualifying in22 come or gain for the exclusion under this section,

23 including any transaction or series of trans24 actions a principal purpose of which is the accel25 eration or deferral of any item in order to claim
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1 the benefits of such exclusion through the appli2 cation of this subsection;

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

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

5 which is not engaged in regular and continuous

6 transactions with customers which are not relat7 ed persons;

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

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

10 any transaction or series of transactions utiliz11 ing, or doing business with—

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

13 satisfy any home country requirement

14 under this subsection, or

15 ‘‘(ii) a special purpose entity or ar16 rangement, including a securitization, fi17 nancing, or similar entity or arrangement,

18 if one of the principal purposes of such trans19 action or series of transactions is qualifying in20 come or gain for the exclusion under this sub21 section; and

22 ‘‘(D) a related person, an officer, a director,

23 or an employee with respect to any controlled

24 foreign corporation (or qualified business unit)

25 which would otherwise be treated as a customer
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1 of such corporation or unit with respect to any

2 transaction shall not be so treated if a principal

3 purpose of such transaction is to satisfy any re4 quirement of this subsection.

5 ‘‘(8) REGULATIONS.—The Secretary shall pre6 scribe such regulations as may be necessary or appro7 priate to carry out the purposes of this subsection,

8 subsection (c)(1)(B)(i), subsection (c)(2)(C)(ii), and

9 the last sentence of subsection (e)(2).

10 ‘‘(9) APPLICATION.—This subsection, subsection

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

12 shall apply only to the first taxable year of a foreign

13 corporation beginning after December 31, 1998, and

14 before January 1, 2000, and to taxable years of

15 United States shareholders with or within which such

16 taxable year of such foreign corporation ends.’’.

17 (b) INCOME DERIVED FROM INSURANCE BUSINESS.—

18 (1) INCOME ATTRIBUTABLE TO ISSUANCE OR RE19 INSURANCE.—

20 (A) IN GENERAL.—Section 953(a) (defining

21 insurance income) is amended to read as follows:

22 ‘‘(a) INSURANCE INCOME.—

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

24 952(a)(1), the term ‘insurance income’ means any in25 come which—
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1 ‘‘(A) is attributable to the issuing (or rein2 suring) of an insurance or annuity contract; and

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

4 provided by subsection (b)) be taxed under sub5 chapter L of this chapter if such income were the

6 income of a domestic insurance company.

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

8 any exempt insurance income (as defined in sub9 section (e)).’’.

10 (B) EXEMPT INSURANCE INCOME.—Section

11 953 (relating to insurance income) is amended

12 by adding at the end the following new sub13 section:

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

15 this section—

16 ‘‘(1) EXEMPT INSURANCE INCOME DEFINED.—

17 ‘‘(A) IN GENERAL.—The term ‘exempt in18 surance income’ means income derived by a

19 qualifying insurance company which—

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

21 reinsuring) of an exempt contract by such

22 company or a qualifying insurance com23 pany branch of such company; and
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1 ‘‘(ii) is treated as earned by such com2 pany or branch in its home country for

3 purposes of such country’s tax laws.

4 ‘‘(B) EXCEPTION FOR CERTAIN ARRANGE5 MENTS.—Such term shall not include income at6 tributable to the issuing (or reinsuring) of an ex7 empt contract as the result of any arrangement

8 whereby another corporation receives a substan9 tially equal amount of premiums or other con10 sideration in respect of issuing (or reinsuring) a

11 contract which is not an exempt contract.

12 ‘‘(C) DETERMINATIONS MADE SEPA13 RATELY.—For purposes of this subsection and

14 section 954(i), the exempt insurance income and

15 exempt contracts of a qualifying insurance com16 pany or any qualifying insurance company

17 branch of such company shall be determined sep18 arately for such company and each such branch

19 by taking into account—

20 ‘‘(i) in the case of the qualifying insur21 ance company, only items of income, deduc22 tion, gain, or loss, and activities of such

23 company not properly allocable or attrib24 utable to any qualifying insurance com25 pany branch of such company; and
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1 ‘‘(ii) in the case of a qualifying insur2 ance company branch, only items of income,

3 deduction, gain, or loss and activities prop4 erly allocable or attributable to such unit.

5 ‘‘(2) EXEMPT CONTRACT.—

6 ‘‘(A) IN GENERAL.—The term ‘exempt con7 tract’ means an insurance or annuity contract

8 issued or reinsured by a qualifying insurance

9 company or qualifying insurance company

10 branch in connection with property in, liability

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

12 of residents of, a country other than the United

13 States.

14 ‘‘(B) MINIMUM HOME COUNTRY INCOME RE15 QUIRED.—

16 ‘‘(i) IN GENERAL.—No contract of a

17 qualifying insurance company or of a

18 qualifying insurance company branch shall

19 be treated as an exempt contract unless such

20 company or branch derives more than 30

21 percent of its net written premiums from

22 exempt contracts (determined without re23 gard to this subparagraph)—

24 ‘‘(I) which cover applicable home

25 country risks; and
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1 ‘‘(II) with respect to which no

2 policyholder, insured, annuitant, or

3 beneficiary is a related person (as de4 fined in section 954(d)(3)).

5 ‘‘(ii) APPLICABLE HOME COUNTRY

6 RISKS.—The term ‘applicable home country

7 risks’ means risks in connection with prop8 erty in, liability arising out of activity in,

9 or the lives or health of residents of, the

10 home country of the qualifying insurance

11 company or qualifying insurance company

12 branch, as the case may be, issuing or rein13 suring the contract covering the risks.

14 ‘‘(C) SUBSTANTIAL ACTIVITY REQUIRE15 MENTS FOR CROSS BORDER RISKS.—A contract

16 issued by a qualifying insurance company or

17 qualifying insurance company branch which cov18 ers risks other than applicable home country

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

20 not be treated as an exempt contract unless such

21 company or branch, as the case may be—

22 ‘‘(i) conducts substantial activity with

23 respect to an insurance business in its home

24 country; and
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1 ‘‘(ii) performs in its home country sub2 stantially all of the activities necessary to

3 give rise to the income generated by such

4 contract.

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

6 term ‘qualifying insurance company’ means any con7 trolled foreign corporation which—

8 ‘‘(A) is subject to regulation as an insur9 ance (or reinsurance) company by its home

10 country, and is licensed, authorized, or regulated

11 by the applicable insurance regulatory body for

12 its home country to sell insurance, reinsurance,

13 or annuity contracts to persons other than relat14 ed persons (within the meaning of section

15 954(d)(3)) in such home country;

16 ‘‘(B) derives more than 50 percent of its ag17 gregate net written premiums from the issuance

18 or reinsurance by such controlled foreign cor19 poration and each of its qualifying insurance

20 company branches of contracts—

21 ‘‘(i) covering applicable home country

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

23 corporation or branch, as the case may be;

24 and
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1 ‘‘(ii) with respect to which no policy2 holder, insured, annuitant, or beneficiary is

3 a related person (as defined in section

4 954(d)(3));

5 except that in the case of a branch, such pre6 miums shall only be taken into account to the ex7 tent such premiums are treated as earned by

8 such branch in its home country for purposes of

9 such country’s tax laws; and

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

11 and would be subject to tax under subchapter L

12 if it were a domestic corporation.

13 ‘‘(4) QUALIFYING INSURANCE COMPANY

14 BRANCH.—The term ‘qualifying insurance company

15 branch’ means a qualified business unit (within the

16 meaning of section 989(a)) of a controlled foreign cor17 poration if—

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

19 regulated by the applicable insurance regulatory

20 body for its home country to sell insurance, rein21 surance, or annuity contracts to persons other

22 than related persons (within the meaning of sec23 tion 954(d)(3)) in such home country; and

24 ‘‘(B) such controlled foreign corporation is

25 a qualifying insurance company, determined
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1 under paragraph (3) as if such unit were a

2 qualifying insurance company branch.

3 ‘‘(5) LIFE INSURANCE OR ANNUITY CONTRACT.—

4 For purposes of this section and section 954, the de5 termination of whether a contract issued by a con6 trolled foreign corporation or a qualified business

7 unit (within the meaning of section 989(a)) is a life

8 insurance contract or an annuity contract shall be

9 made without regard to sections 72(s), 101(f), 817(h),

10 and 7702 if—

11 ‘‘(A) such contract is regulated as a life in12 surance or annuity contract by the corporation’s

13 or unit’s home country; and

14 ‘‘(B) no policyholder, insured, annuitant, or

15 beneficiary with respect to the contract is a

16 United States person.

17 ‘‘(6) HOME COUNTRY.—For purposes of this sub18 section, except as provided in regulations—

19 ‘‘(A) CONTROLLED FOREIGN CORPORA20 TION.—The term ‘home country’ means, with re21 spect to a controlled foreign corporation, the

22 country in which such corporation is created or

23 organized.

24 ‘‘(B) QUALIFIED BUSINESS UNIT.—The

25 term ‘home country’ means, with respect to a
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1 qualified business unit (as defined in section

2 989(a)), the country in which the principal office

3 of such unit is located and in which such unit

4 is licensed, authorized, or regulated by the appli5 cable insurance regulatory body to sell insurance,

6 reinsurance, or annuity contracts to persons

7 other than related persons (as defined in section

8 954(d)(3)) in such country.

9 ‘‘(7) ANTI-ABUSE RULES.—For purposes of ap10 plying this subsection and section 954(i)—

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

12 than subparagraph (B) thereof) shall apply;

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

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

15 from, an entity which is not engaged in regular

16 and continuous transactions with persons which

17 are not related persons;

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

19 in the method of computing reserves a principal

20 purpose of which is the acceleration or deferral

21 of any item in order to claim the benefits of this

22 subsection or section 954(i);

23 ‘‘(D) a contract of insurance or reinsurance

24 shall not be treated as an exempt contract (and

25 premiums from such contract shall not be taken
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1 into account for purposes of paragraph (2)(B) or

2 (3)) if—

3 ‘‘(i) any policyholder, insured, annu4 itant, or beneficiary is a resident of the

5 United States and such contract was mar6 keted to such resident and was written to

7 cover a risk outside the United States; or

8 ‘‘(ii) the contract covers risks located

9 within and without the United States and

10 the qualifying insurance company or quali11 fying insurance company branch does not

12 maintain such contemporaneous records,

13 and file such reports, with respect to such

14 contract as the Secretary may require;

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

16 the allocation of contracts (and income from con17 tracts) among 2 or more qualifying insurance

18 company branches of a qualifying insurance

19 company in order to clearly reflect the income of

20 such branches; and

21 ‘‘(F) premiums from a contract shall not be

22 taken into account for purposes of paragraph

23 (2)(B) or (3) if such contract reinsures a con24 tract issued or reinsured by a related person (as

25 defined in section 954(d)(3)).
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1 For purposes of subparagraph (D), the determination

2 of where risks are located shall be made under the

3 principles of section 953.

4 ‘‘(8) COORDINATION WITH SUBSECTION (c).—In

5 determining insurance income for purposes of sub6 section (c), exempt insurance income shall not include

7 income derived from exempt contracts which cover

8 risks other than applicable home country risks.

9 ‘‘(9) REGULATIONS.—The Secretary shall pre10 scribe such regulations as may be necessary or appro11 priate to carry out the purposes of this subsection and

12 section 954(i).

13 ‘‘(10) APPLICATION.—This subsection and sec14 tion 954(i) shall apply only to the first taxable year

15 of a foreign corporation beginning after December 31,

16 1998, and before January 1, 2000, and to taxable

17 years of United States shareholders with or within

18 which such taxable year of such foreign corporation

19 ends.

20 ‘‘(11) CROSS REFERENCE.—

‘‘For income exempt from foreign personal holding

company income, see section 954(i).’’.

21 (2) EXEMPTION FROM FOREIGN PERSONAL HOLD22 ING COMPANY INCOME.—Section 954 (defining foreign

23 base company income) is amended by adding at the

24 end the following new subsection:
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1 ‘‘(i) SPECIAL RULE FOR INCOME DERIVED IN THE AC2 TIVE CONDUCT OF INSURANCE BUSINESS.—

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

4 (c)(1), foreign personal holding company income shall

5 not include qualified insurance income of a qualify6 ing insurance company.

7 ‘‘(2) QUALIFIED INSURANCE INCOME.—The term

8 ‘qualified insurance income’ means income of a quali9 fying insurance company which is—

10 ‘‘(A) received from a person other than a re11 lated person (within the meaning of subsection

12 (d)(3)) and derived from the investments made

13 by a qualifying insurance company or a qualify14 ing insurance company branch of its reserves al15 locable to exempt contracts or of 80 percent of its

16 unearned premiums from exempt contracts (as

17 both are determined in the manner prescribed

18 under paragraph (4)), or

19 ‘‘(B) received from a person other than a re20 lated person (within the meaning of subsection

21 (d)(3)) and derived from investments made by a

22 qualifying insurance company or a qualifying

23 insurance company branch of an amount of its

24 assets allocable to exempt contracts equal to—
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1 ‘‘(i) in the case of property, casualty,

2 or health insurance contracts, one-third of

3 its premiums earned on such insurance con4 tracts during the taxable year (as defined in

5 section 832(b)(4)), and

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

7 annuity contracts, 10 percent of the reserves

8 described in subparagraph (A) for such con9 tracts.

10 ‘‘(3) PRINCIPLES FOR DETERMINING INSURANCE

11 INCOME.—Except as provided by the Secretary, for

12 purposes of subparagraphs (A) and (B) of paragraph

13 (2)—

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

15 separate account-type contract (including any

16 variable contract not meeting the requirements of

17 section 817), income credited under such contract

18 shall be allocable only to such contract, and

19 ‘‘(B) income not allocable under subpara20 graph (A) shall be allocated ratably among con21 tracts not described in subparagraph (A).

22 ‘‘(4) METHODS FOR DETERMINING UNEARNED

23 PREMIUMS AND RESERVES.—For purposes of para24 graph (2)(A)—
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1 ‘‘(A) PROPERTY AND CASUALTY CON2 TRACTS.—The unearned premiums and reserves

3 of a qualifying insurance company or a qualify4 ing insurance company branch with respect to

5 property, casualty, or health insurance contracts

6 shall be determined using the same methods and

7 interest rates which would be used if such com8 pany or branch were subject to tax under sub9 chapter L, except that—

10 ‘‘(i) the interest rate determined for the

11 functional currency of the company or

12 branch, and which, except as provided by

13 the Secretary, is calculated in the same

14 manner as the Federal mid-term rate under

15 section 1274(d), shall be substituted for the

16 applicable Federal interest rate, and

17 ‘‘(ii) such company or branch shall use

18 the appropriate foreign loss payment pat19 tern.

20 ‘‘(B) LIFE INSURANCE AND ANNUITY CON21 TRACTS.—The amount of the reserve of a qualify22 ing insurance company or qualifying insurance

23 company branch for any life insurance or annu24 ity contract shall be equal to the greater of—
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1 ‘‘(i) the net surrender value of such

2 contract (as defined in section

3 807(e)(1)(A)), or

4 ‘‘(ii) the reserve determined under

5 paragraph (5).

6 ‘‘(C) LIMITATION ON RESERVES.—In no

7 event shall the reserve determined under this

8 paragraph for any contract as of any time ex9 ceed the amount which would be taken into ac10 count with respect to such contract as of such

11 time in determining foreign statement reserves

12 (less any catastrophe, deficiency, equalization, or

13 similar reserves).

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

15 reserve determined under this paragraph with respect

16 to any contract shall be determined in the same man17 ner as it would be determined if the qualifying insur18 ance company or qualifying insurance company

19 branch were subject to tax under subchapter L, except

20 that in applying such subchapter—

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

22 functional currency of the company or branch,

23 and which, except as provided by the Secretary,

24 is calculated in the same manner as the Federal

25 mid-term rate under section 1274(d), shall be
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1 substituted for the applicable Federal interest

2 rate;

3 ‘‘(B) the highest assumed interest rate per4 mitted to be used in determining foreign state5 ment reserves shall be substituted for the prevail6 ing State assumed interest rate; and

7 ‘‘(C) tables for mortality and morbidity

8 which reasonably reflect the current mortality

9 and morbidity risks in the company’s or

10 branch’s home country shall be substituted for

11 the mortality and morbidity tables otherwise

12 used for such subchapter.

13 The Secretary may provide that the interest rate and

14 mortality and morbidity tables of a qualifying insur15 ance company may be used for 1 or more of its quali16 fying insurance company branches when appropriate.

17 ‘‘(6) DEFINITIONS.—For purposes of this sub18 section, any term used in this subsection which is also

19 used in section 953(e) shall have the meaning given

20 such term by section 953.’’.

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

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

23 inserting after paragraph (2) the following new para24 graph:
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1 ‘‘(3) Reserves for any insurance or annuity con2 tract shall be determined in the same manner as

3 under section 954(i).’’.

4 (c) SPECIAL RULES FOR DEALERS.—Section

5 954(c)(2)(C) is amended to read as follows:

6 ‘‘(C) EXCEPTION FOR DEALERS.—Except as

7 provided by regulations, in the case of a regular

8 dealer in property which is property described in

9 paragraph (1)(B), forward contracts, option con10 tracts, or similar financial instruments (includ11 ing notional principal contracts and all instru12 ments referenced to commodities), there shall not

13 be taken into account in computing foreign per14 sonal holding company income—

15 ‘‘(i) any item of income, gain, deduc16 tion, or loss (other than any item described

17 in subparagraph (A), (E), or (G) of para18 graph (1)) from any transaction (including

19 hedging transactions) entered into in the or20 dinary course of such dealer’s trade or busi21 ness as such a dealer; and

22 ‘‘(ii) if such dealer is a dealer in secu23 rities (within the meaning of section 475),

24 any interest or dividend or equivalent

25 amount described in subparagraph (E) or
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1 (G) of paragraph (1) from any transaction

2 (including any hedging transaction or

3 transaction described in section

4 956(c)(2)(J)) entered into in the ordinary

5 course of such dealer’s trade or business as

6 such a dealer in securities, but only if the

7 income from the transaction is attributable

8 to activities of the dealer in the country

9 under the laws of which the dealer is created

10 or organized (or in the case of a qualified

11 business unit described in section 989(a), is

12 attributable to activities of the unit in the

13 country in which the unit both maintains

14 its principal office and conducts substantial

15 business activity).’’.

16 (d) EXEMPTION FROM FOREIGN BASE COMPANY SERV17 ICES INCOME.—Paragraph (2) of section 954(e) is amended

18 by inserting ‘‘or’’ at the end of subparagraph (A), by strik19 ing ‘‘, or’’ at the end of subparagraph (B) and inserting

20 a period, by striking subparagraph (C), and by adding at

21 the end the following new flush sentence:

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

23 is exempt insurance income (as defined in section

24 953(e)) or which is not treated as foreign personal
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1 holding income by reason of subsection (c)(2)(C)(ii),

2 (h), or (i).’’.

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

4 (relating to net gains from certain property transactions)

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

6 rise to income not treated as foreign personal holding com7 pany income by reason of subsection (h) or (i) for the tax8 able year’’ before the comma at the end.

9 SEC. 106. DISCLOSURE OF RETURN INFORMATION ON IN10 COME CONTINGENT STUDENT LOANS.

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

12 disclosure of return information to carry out income contin13 gent repayment of student loans) is amended by striking

14 ‘‘September 30, 1998’’ and inserting ‘‘September 30, 2003’’.

15 Subtitle B—Generalized System of

16 Preferences

17 SEC. 111. EXTENSION OF GENERALIZED SYSTEM OF PREF18 ERENCES.

19 (a) EXTENSION OF DUTY-FREE TREATMENT UNDER

20 SYSTEM.—Section 505 of the Trade Act of 1974 (29 U.S.C.

21 2465) is amended by striking ‘‘June 30, 1998’’ and insert22 ing ‘‘December 31, 1999’’.

23 (b) RETROACTIVE APPLICATION FOR CERTAIN LIQ24 UIDATIONS AND RELIQUIDATIONS.—
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1 (1) IN GENERAL.—Notwithstanding section 514

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

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

4 (A) of an article to which duty-free treat5 ment under title V of the Trade Act of 1974

6 would have applied if such title had been in ef7 fect during the period beginning on July 1,

8 1998, and ending on the day before the date of

9 the enactment of this Act; and

10 (B) that was made after June 30, 1998, and

11 before the date of the enactment of this Act,

12 shall be liquidated or reliquidated as free of duty, and

13 the Secretary of the Treasury shall refund any duty

14 paid with respect to such entry. As used in this sub15 section, the term ‘‘entry’’ includes a withdrawal from

16 warehouse for consumption.

17 (2) REQUESTS.—Liquidation or reliquidation

18 may be made under paragraph (1) with respect to an

19 entry only if a request therefor is filed with the Cus20 toms Service, within 180 days after the date of the en21 actment of this Act, that contains sufficient informa22 tion to enable the Customs Service—

23 (A) to locate the entry; or

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

25 located.
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1 TITLE II—OTHER PROVISIONS

2 SEC. 201. DEPRECIATION STUDY.

3 The Secretary of the Treasury (or the Secretary’s dele4 gate)—

5 (1) shall conduct a comprehensive study of the

6 recovery periods and depreciation methods under sec7 tion 168 of the Internal Revenue Code of 1986, and

8 (2) not later than March 31, 2000, shall submit

9 the results of such study, together with recommenda10 tions for determining such periods and methods in a

11 more rational manner, to the Committee on Ways

12 and Means of the House of Representatives and the

13 Committee on Finance of the Senate.

14 SEC. 202. PRODUCTION FLEXIBILITY CONTRACT PAYMENTS.

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

16 and (3) of section 112(d) of the Federal Agriculture Im17 provement and Reform Act of 1996 (7 U.S.C. 7212(d) (2)

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

19 Act, shall be disregarded in determining the taxable year

20 for which any payment under a production flexibility con21 tract under subtitle B of title I of such Act (as so in effect)

22 is properly includible in gross income for purposes of the

23 Internal Revenue Code of 1986.

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

25 taxable years ending after December 31, 1995.
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1 SEC. 203. 100 PERCENT DEDUCTION FOR HEALTH INSUR2 ANCE COSTS OF SELF-EMPLOYED INDIVID3 UALS.

4 (a) IN GENERAL.—The table contained in subpara5 graph (B) of section 162(l)(1) (relating to special rules for

6 health insurance costs of self-employed individuals) is

7 amended by striking the last 4 items and inserting the fol8 lowing new items:

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

2003 and thereafter ...................................................................... 100.’’

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

10 section shall apply to taxable years beginning after Decem11 ber 31, 1998.

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

13 BONDS.

14 (a) IN GENERAL.—Subsection (d) of section 146 (relat15 ing to volume cap) is amended by striking paragraphs (1)

16 and (2) and inserting the following new paragraphs:

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

18 to any State for any calendar year shall be the great19 er of—

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

21 limit for such year multiplied by the State popu22 lation, or

23 ‘‘(B) the aggregate limit for such year.
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1 Subparagraph (B) shall not apply to any possession

2 of the United States.

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

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

5 and the aggregate limit, for any calendar year shall

6 be determined in accordance with the following table:

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.’’

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

8 section shall apply to calendar years after 1998.

9 SEC. 205. MODIFICATION OF ESTIMATED TAX SAFE HAR10 BORS.

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

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

13 preceding year’s tax) is amended by striking the item relat14 ing to 1998, 1999, or 2000 and inserting the following new

15 items:

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

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

16 (b) EFFECTIVE DATE.—The amendment made by this

17 section shall apply with respect to any installment payment

18 for taxable years beginning after December 31, 1999.
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1 SEC. 206. EXEMPTION FOR STUDENTS EMPLOYED BY STATE

2 SCHOOLS, COLLEGES, OR UNIVERSITIES.

3 (a) IN GENERAL.—Notwithstanding section 218 of the

4 Social Security Act, any agreement with a State (or any

5 modification thereof) entered into pursuant to such section

6 may, at the option of such State, be modified at any time

7 on or after January 1, 1999, and on or before March 31,

8 1999, so as to exclude service performed in the employ of

9 a school, college, or university if such service is performed

10 by a student who is enrolled and is regularly attending

11 classes at such school, college, or university.

12 (b) EFFECTIVE DATE OF MODIFICATION.—Any modi13 fication of an agreement pursuant to subsection (a) shall

14 be effective with respect to services performed after June 30,

15 1999.

16 (c) IRREVOCABILITY OF MODIFICATION.—If any modi17 fication of an agreement pursuant to subsection (a) termi18 nates coverage with respect to service performed in the em19 ploy of a school, college, or university, by a student who

20 is enrolled and regularly attending classes at such school,

21 college, or university, the Commissioner of Social Security

22 and the State may not thereafter modify such agreement

23 so as to again make the agreement applicable to such service

24 performed in the employ of such school, college, or univer25 sity.
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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 INVEST5 MENT 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 ESTATE

11 INVESTMENT TRUSTS.—If a corporation receives a distribu12 tion from a regulated investment company or a real estate

13 investment trust which is considered under subsection (b)

14 as being in complete liquidation of such company or trust,

15 then, notwithstanding any other provision of this chapter,

16 such corporation shall recognize and treat as a dividend

17 from such company or trust an amount equal to the deduc18 tion for dividends paid allowable to such company or trust

19 by reason of such distribution.’’.

20 (b) CONFORMING AMENDMENTS.—

21 (1) The material preceding paragraph (1) of sec22 tion 332(b) is amended by striking ‘‘subsection (a)’’

23 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 this

5 section shall apply to distributions after May 21, 1998.

6 SEC. 302. INCLUSION OF ROTAVIRUS GASTROENTERITIS AS

7 A TAXABLE VACCINE.

8 (a) IN GENERAL.—Paragraph (1) of section 4132 (de9 fining taxable vaccine) is amended by adding at the end

10 the following new subparagraph:

11 ‘‘(K) Any vaccine against rotavirus

12 gastroenteritis.’’.

13 (b) EFFECTIVE DATE.—

14 (1) SALES.—The amendment made by this sec15 tion shall apply to sales after the date of the enact16 ment of this Act.

17 (2) DELIVERIES.—For purposes of paragraph

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

19 enactment of this Act for which delivery is made after

20 such date, the delivery date shall be considered the

21 sale date.

22 SEC. 303. CLARIFICATION AND EXPANSION OF MATHEMATI23 CAL ERROR ASSESSMENT PROCEDURES.

24 (a) TIN DEEMED INCORRECT IF INFORMATION ON RE25 TURN DIFFERS WITH AGENCY RECORDS.—Paragraph (2)
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1 of section 6213(g) (defining mathematical or clerical error)

2 is amended by adding at the end the following flush sen3 tence:

4 ‘‘A taxpayer shall be treated as having omitted a cor5 rect TIN for purposes of the preceding sentence if in6 formation provided by the taxpayer on the return

7 with respect to the individual whose TIN was pro8 vided differs from the information the Secretary ob9 tains from the person issuing the TIN.’’.

10 (b) EXPANSION OF MATHEMATICAL ERROR PROCE11 DURES TO CASES WHERE TIN ESTABLISHES INDIVIDUAL

12 NOT ELIGIBLE FOR TAX CREDIT.—Paragraph (2) of section

13 6213(g) is amended by striking ‘‘and’’ at the end of sub14 paragraph (J), by striking the period at the end of the sub15 paragraph (K) and inserting ‘‘, and’’, and by inserting

16 after subparagraph (K) the following new subparagraph:

17 ‘‘(L) the inclusion on a return of a TIN re18 quired to be included on the return under section

19 21, 24, or 32 if—

20 ‘‘(i) such TIN is of an individual

21 whose age affects the amount of the credit

22 under such section; and

23 ‘‘(ii) the computation of the credit on

24 the return reflects the treatment of such in-
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1 dividual as being of an age different from

2 the individual’s age based on such TIN.’’.

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

4 section shall apply to taxable years ending after the date

5 of the enactment of this Act.

6 SEC. 304. CLARIFICATION OF DEFINITION OF SPECIFIED LI7 ABILITY LOSS.

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

9 172(f)(1) (defining specified liability loss) is amended to

10 read as follows:

11 ‘‘(B)(i) Any amount allowable as a deduc12 tion under this chapter (other than section

13 468(a)(1) or 468A(a)) which is in satisfaction of

14 a liability under a Federal or State law requir15 ing—

16 ‘‘(I) the reclamation of land;

17 ‘‘(II) the decommissioning of a nuclear

18 power plant (or any unit thereof);

19 ‘‘(III) the dismantlement of a drilling

20 platform;

21 ‘‘(IV) the remediation of environmental

22 contamination; or

23 ‘‘(V) a payment under any workers

24 compensation act (within the meaning of

25 section 461(h)(2)(C)(i)).
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1 ‘‘(ii) A liability shall be taken into account

2 under this subparagraph only if—

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

4 rise to such liability occurs at least 3 years

5 before the beginning of the taxable year; and

6 ‘‘(II) the taxpayer used an accrual

7 method of accounting throughout the period

8 or periods during which such act (or failure

9 to act) occurred.’’.

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

11 section shall apply to net operating losses arising in taxable

12 years ending after the date of the enactment of this Act.

13 TITLE IV—TECHNICAL

14 CORRECTIONS

15 SEC. 401. DEFINITIONS; COORDINATION WITH OTHER TI16 TLES.

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

18 (1) 1986 CODE.—The term ‘‘1986 Code’’ means

19 the Internal Revenue Code of 1986.

20 (2) 1998 ACT.—The term ‘‘1998 Act’’ means the

21 Internal Revenue Service Restructuring and Reform

22 Act of 1998 (Public Law 105–206).

23 (3) 1997 ACT.—The term ‘‘1997 Act’’ means the

24 Taxpayer Relief Act of 1997 (Public Law 105–34).
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1 (b) COORDINATION WITH OTHER TITLES.—For pur2 poses of applying the amendments made by any title of this

3 Act other than this title, the provisions of this title shall

4 be treated as having been enacted immediately before the

5 provisions of such other titles.

6 SEC. 402. AMENDMENTS RELATED TO INTERNAL REVENUE

7 SERVICE RESTRUCTURING AND REFORM ACT

8 OF 1998.

9 (a) AMENDMENT RELATED TO SECTION 1101 OF 1998

10 ACT.—Paragraph (5) of section 6103(h) of the 1986 Code,

11 as added by section 1101(b) of the 1998 Act, is redesignated

12 as paragraph (6).

13 (b) AMENDMENT RELATED TO SECTION 3001 OF 1998

14 ACT.—Paragraph (2) of section 7491(a) of the 1986 Code

15 is amended by adding at the end the following flush sen16 tence:

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

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

19 respect to liability for tax for any taxable year ending

20 after the date of the decedent’s death and before the

21 applicable date (as defined in section 645(b)(2)).’’.

22 (c) AMENDMENTS RELATED TO SECTION 3201 OF 1998

23 ACT.—

24 (1) Section 7421(a) of the 1986 Code is amended

25 by striking ‘‘6015(d)’’ and inserting ‘‘6015(e)’’.
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1 (2) Subparagraph (A) of section 6015(e)(3) is

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

3 ‘‘of subsection (b) or (f)’’.

4 (d) AMENDMENT RELATED TO SECTION 3301 OF 1998

5 ACT.—Paragraph (2) of section 3301(c) of the 1998 Act is

6 amended by striking ‘‘The amendments’’ and inserting

7 ‘‘Subject to any applicable statute of limitation not having

8 expired with regard to either a tax underpayment or a tax

9 overpayment, the amendments’’.

10 (e) AMENDMENT RELATED TO SECTION 3401 OF 1998

11 ACT.—Section 3401(c) of the 1998 Act is amended—

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

13 inserting ‘‘7443A(b)’’; and

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

15 inserting ‘‘7443A(c)’’.

16 (f) AMENDMENT RELATED TO SECTION 3433 OF 1998

17 ACT.—Section 7421(a) of the 1986 Code is amended by in18 serting ‘‘6331(i),’’ after ‘‘6246(b),’’.

19 (g) AMENDMENT RELATED TO SECTION 3467 OF 1998

20 ACT.—The subsection (d) of section 6159 of the 1986 Code

21 relating to cross reference is redesignated as subsection (e).

22 (h) AMENDMENT RELATED TO SECTION 3708 OF 1998

23 ACT.—Subparagraph (A) of section 6103(p)(3) of the 1986

24 Code is amended by inserting ‘‘(f)(5),’’ after ‘‘(c), (e),’’.
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1 (i) AMENDMENTS RELATED TO SECTION 5001 OF 1998

2 ACT.—

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

4 1986 Code is amended by striking ‘‘paragraph

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

6 (2)(A) Subparagraphs (A)(i)(II), (A)(ii)(II), and

7 (B)(ii) of section 1(h)(13) of the 1986 Code shall not

8 apply to any distribution after December 31, 1997, by

9 a regulated investment company or a real estate in10 vestment trust with respect to—

11 (i) gains and losses recognized directly by

12 such company or trust, and

13 (ii) amounts properly taken into account by

14 such company or trust by reason of holding (di15 rectly or indirectly) an interest in another such

16 company or trust to the extent that such sub17 paragraphs did not apply to such other company

18 or trust with respect to such amounts.

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

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

21 or 857(b)(8) of the 1986 Code as received on December

22 31, 1997.

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

24 amount which is includible in gross income of its

25 shareholders under section 852(b)(3)(D) or
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1 857(b)(3)(D) of the 1986 Code after December 31,

2 1997, shall be treated as distributed after such date.

3 (D)(i) For purposes of subparagraph (A), in the

4 case of a qualified partnership with respect to which

5 a regulated investment company meets the holding re6 quirement of clause (iii)—

7 (I) the subparagraphs referred to in sub8 paragraph (A) shall not apply to gains and

9 losses recognized directly by such partnership for

10 purposes of determining such company’s dis11 tributive share of such gains and losses, and

12 (II) such company’s distributive share of

13 such gains and losses (as so determined) shall be

14 treated as recognized directly by such company.

15 The preceding sentence shall apply only if the quali16 fied partnership provides the company with written

17 documentation of such distributive share as so deter18 mined.

19 (ii) For purposes of clause (i), the term ‘‘quali20 fied partnership’’ means, with respect to a regulated

21 investment company, any partnership if—

22 (I) the partnership is an investment com23 pany registered under the Investment Company

24 Act of 1940,
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1 (II) the regulated investment company is

2 permitted to invest in such partnership by rea3 son of section 12(d)(1)(E) of such Act or an ex4 emptive order of the Securities and Exchange

5 Commission under such section, and

6 (III) the regulated investment company and

7 the partnership have the same taxable year.

8 (iii) A regulated investment company meets the

9 holding requirement of this clause with respect to a

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

11 (I) the value of the interests of the regulated

12 investment company in such partnership is 35

13 percent or more of the value of such company’s

14 total assets, or

15 (II) the value of the interests of the regu16 lated investment company in such partnership

17 and all other qualified partnerships is 90 percent

18 or more of the value of such company’s total as19 sets.

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

21 Code is amended by adding at the end the following

22 new subparagraph:

23 ‘‘(D) CHARITABLE REMAINDER TRUSTS.—

24 Subparagraphs (A) and (B)(ii) shall not apply
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1 to any capital gain distribution made by a trust

2 described in section 664.’’

3 (j) AMENDMENT RELATED TO SECTION 7004 OF 1998

4 ACT.—Clause (i) of section 408A(c)(3)(C) of the 1986 Code,

5 as amended by section 7004 of the 1998 Act, is amended

6 by striking the period at the end of subclause (II) and in7 serting ‘‘, and’’.

8 (k) EFFECTIVE DATE.—The amendments made by this

9 section shall take effect as if included in the provisions of

10 the 1998 Act to which they relate.

11 SEC. 403. AMENDMENTS RELATED TO TAXPAYER RELIEF

12 ACT OF 1997.

13 (a) AMENDMENTS RELATED TO SECTION 202 OF 1997

14 ACT.—

15 (1) Paragraph (2) of section 163(h) of the 1986

16 Code is amended by striking ‘‘and’’ at the end of sub17 paragraph (D), by striking the period at the end of

18 subparagraph (E) and inserting ‘‘, and’’, and by add19 ing at the end the following new subparagraph:

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

21 under section 221 (relating to interest on edu22 cational loans).’’

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

24 the 1986 Code is amended—

25 (i) by striking ‘‘135, 137,’’ in clause (i),
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1 (ii) by inserting ‘‘135, 137,’’ after ‘‘sections

2 86,’’ in clause (ii), and

3 (iii) by striking the last sentence.

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

5 219(g)(3)(A)(ii) of the 1986 Code are each amended

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

7 (C) Subparagraph (A) of section 137(b)(3) of the

8 1986 Code is amended by inserting ‘‘221,’’ before

9 ‘‘911,’’.

10 (D) Clause (iii) of section 469(i)(3)(E) of the

11 1986 Code is amended to read as follows:

12 ‘‘(iii) the amounts allowable as a de13 duction under sections 219 and 221, and’’.

14 (3) The last sentence of section 221(e)(1) of the

15 1986 Code is amended by inserting before the period

16 ‘‘or to any person by reason of a loan under any

17 qualified employer plan (as defined in section

18 72(p)(4)) or under any contract referred to in section

19 72(p)(5)’’.

20 (b) PROVISION RELATED TO SECTION 311 OF 1997

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

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

23 applies with respect to amounts properly taken into account

24 by such trust during 1997, paragraphs (5)(A)(i)(I),

25 (5)(A)(ii)(I), and (13)(A) of section 1(h) of the 1986 Code
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1 (as in effect for taxable years ending on December 31, 1997)

2 shall not apply.

3 (c) AMENDMENT RELATED TO SECTION 506 OF 1997

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

5 adding at the end the following:

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

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

8 is disclosed in the return, or in a statement attached

9 to the return, in a manner adequate to apprise the

10 Secretary of the nature of such item.’’.

11 (d) AMENDMENTS RELATED TO SECTION 904 OF 1997

12 ACT.—

13 (1) Paragraph (1) of section 9510(c) of the 1986

14 Code is amended to read as follows:

15 ‘‘(1) IN GENERAL.—Amounts in the Vaccine In16 jury Compensation Trust Fund shall be available, as

17 provided in appropriation Acts, only for—

18 ‘‘(A) the payment of compensation under

19 subtitle 2 of title XXI of the Public Health Serv20 ice Act (as in effect on August 5, 1997) for vac21 cine-related injury or death with respect to any

22 vaccine—

23 ‘‘(i) which is administered after Sep24 tember 30, 1988, and
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1 ‘‘(ii) which is a taxable vaccine (as de2 fined in section 4132(a)(1)) at the time

3 compensation is paid under such subtitle 2,

4 or

5 ‘‘(B) the payment of all expenses of admin6 istration (but not in excess of $9,500,000 for any

7 fiscal year) incurred by the Federal Government

8 in administering such subtitle.’’.

9 (2) Section 9510(b) of the 1986 Code is amended

10 by adding at the end the following new paragraph:

11 ‘‘(3) LIMITATION ON TRANSFERS TO VACCINE IN12 JURY COMPENSATION TRUST FUND.—No amount may

13 be appropriated to the Vaccine Injury Compensation

14 Trust Fund on and after the date of any expenditure

15 from the Trust Fund which is not permitted by this

16 section. The determination of whether an expenditure

17 is so permitted shall be made without regard to—

18 ‘‘(A) any provision of law which is not con19 tained or referenced in this title or in a revenue

20 Act, and

21 ‘‘(B) whether such provision of law is a sub22 sequently enacted provision or directly or indi23 rectly seeks to waive the application of this para24 graph.’’.
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1 (e) AMENDMENTS RELATED TO SECTION 915 OF 1997

2 ACT.—

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

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

5 1998’’ after ‘‘1997’’, and

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

7 follows:

8 ‘‘(d) EFFECTIVE DATE.—This section shall apply to

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

10 (2) Paragraph (2) of section 6404(h) of the 1986

11 Code is amended by inserting ‘‘Robert T. Stafford’’

12 before ‘‘Disaster’’.

13 (f) AMENDMENTS RELATED TO SECTION 1012 OF 1997

14 ACT.—

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

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

17 is amended by inserting ‘‘, or the fact that the cor18 poration whose stock was distributed issues additional

19 stock,’’ after ‘‘dispose of part or all of the distributed

20 stock’’.

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

22 1986 Code, as amended by section 6010(c) of the 1998

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

24 corporation whose stock was distributed issues addi-
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1 tional stock,’’ after ‘‘dispose of part or all of the dis2 tributed stock’’.

3 (g) PROVISION RELATED TO SECTION 1042 OF 1997

4 ACT.—Rules similar to the rules of section 1.1502-75(d)(5)

5 of the Treasury Regulations shall apply with respect to any

6 organization described in section 1042(b) of the 1997 Act.

7 (h) AMENDMENT RELATED TO SECTION 1082 OF 1997

8 ACT.—Subparagraph (F) of section 172(b)(1) of the 1986

9 Code is amended by adding at the end the following new

10 clause:

11 ‘‘(iv) COORDINATION WITH PARAGRAPH

12 (2).—For purposes of applying paragraph

13 (2), an eligible loss for any taxable year

14 shall be treated in a manner similar to the

15 manner in which a specified liability loss is

16 treated.’’

17 (i) AMENDMENT RELATED TO SECTION 1084 OF 1997

18 ACT.—Paragraph (3) of section 264(f) of the 1986 Code is

19 amended by adding at the end the following flush sentence:

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

21 respect to any policy or contract does not reasonably

22 approximate its actual value, the amount taken into

23 account under subparagraph (A) shall be the greater

24 of the amount of the insurance company liability or

25 the insurance company reserve with respect to such
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1 policy or contract (as determined for purposes of the

2 annual statement approved by the National Associa3 tion of Insurance Commissioners) or shall be such

4 other amount as is determined by the Secretary.’’

5 (j) AMENDMENT RELATED TO SECTION 1175 OF 1997

6 ACT.—Subparagraph (C) of section 954(e)(2) of the 1986

7 Code is amended by striking ‘‘subsection (h)(8)’’ and insert8 ing ‘‘subsection (h)(9)’’.

9 (k) AMENDMENT RELATED TO SECTION 1205 OF 1997

10 ACT.—Paragraph (2) of section 6311(d) of the 1986 Code

11 is amended by striking ‘‘under such contracts’’ in the last

12 sentence and inserting ‘‘under any such contract for the use

13 of credit, debit, or charge cards for the payment of taxes

14 imposed by subtitle A’’.

15 (l) EFFECTIVE DATE.—The amendments made by this

16 section shall take effect as if included in the provisions of

17 the 1997 Act to which they relate.

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

19 1984.

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

21 172(d)(4) of the 1986 Code is amended to read as follows:

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

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

24 section 165(c) shall be treated as attributable to

25 the trade or business; and’’.
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1 (b) CONFORMING AMENDMENTS.—

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

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

4 subsection (c)(3) or (d) of section 165’’ and inserting

5 ‘‘for casualty or theft losses described in paragraph

6 (2) or (3) of section 165(c) or for losses described in

7 section 165(d)’’.

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

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

10 subsection (c)(3) or (d) of section 165’’ and inserting

11 ‘‘for casualty or theft losses described in paragraph

12 (2) or (3) of section 165(c) or for losses described in

13 section 165(d)’’.

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

15 to read as follows:

16 ‘‘(1) LOSSES.—The deduction allowed by section

17 165 for casualty or theft losses described in paragraph

18 (2) or (3) of section 165(c), but only if the loss is of

19 property located within the United States.’’

20 (c) EFFECTIVE DATES.—

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

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

23 after December 31, 1983.
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1 (2) The amendment made by subsection (b)(1)

2 shall apply to taxable years beginning after December

3 31, 1986.

4 (3) The amendment made by subsection (b)(2)

5 shall apply to taxable years beginning after December

6 31, 1990.

7 SEC. 405. OTHER AMENDMENTS.

8 (a) AMENDMENTS RELATED TO SECTION 6103 OF 1986

9 CODE.—

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

11 Code is amended by adding at the end the following

12 new paragraph:

13 ‘‘(5) DEPARTMENT OF AGRICULTURE.—Upon re14 quest in writing by the Secretary of Agriculture, the

15 Secretary shall furnish such returns, or return infor16 mation reflected thereon, as the Secretary may pre17 scribe by regulation to officers and employees of the

18 Department of Agriculture whose official duties re19 quire access to such returns or information for the

20 purpose of, but only to the extent necessary in, struc21 turing, preparing, and conducting the census of agri22 culture pursuant to the Census of Agriculture Act of

23 1997 (Public Law 105–113).’’.

24 (2) Paragraph (4) of section 6103(p) of the 1986

25 Code is amended by striking ‘‘(j)(1) or (2)’’ in the
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1 material preceding subparagraph (A) and in sub2 paragraph (F) and inserting ‘‘(j)(1), (2), or (5)’’.

3 (3) The amendments made by this subsection

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

5 the enactment of this Act.

6 (b) AMENDMENT RELATED TO SECTION 9004 OF

7 TRANSPORTATION EQUITY ACT FOR THE 21ST CENTURY.—

8 (1) Paragraph (2) of section 9503(f) of the 1986

9 Code is amended to read as follows:

10 ‘‘(2) notwithstanding section 9602(b), obligations

11 held by such Fund after September 30, 1998, shall be

12 obligations of the United States which are not inter13 est-bearing.’’

14 (2) The amendment made by paragraph (1) shall

15 take effect on October 1, 1998.

16 (c) CLERICAL AMENDMENTS.—

17 (1) Clause (i) of section 51(d)(6)(B) of the 1986

18 Code is amended by striking ‘‘rehabilitation plan’’

19 and inserting ‘‘plan for employment’’. The reference

20 to ‘‘plan for employment’’ in such clause shall be

21 treated as including a reference to the rehabilitation

22 plan referred to in such clause as in effect before the

23 amendment made by the preceding sentence.

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

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

2 460(b)(4)’’ and inserting ‘‘section 460(b)(3)’’.

3 (3) Paragraph (10) of section 2031(c) of the

4 1986 Code is amended by striking ‘‘section

5 2033A(e)(3)’’ and inserting ‘‘section 2057(e)(3)’’.

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

7 6693(a)(2) of the 1986 Code are each amended by

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