II 

109TH CONGRESS 

2D SESSION S. 4107 

To amend the Internal Revenue Code of 1986 to replace the Hope and 

Lifetime Learning credits with a partially refundable college opportunity 

credit. 

IN THE SENATE OF THE UNITED STATES 

DECEMBER 7, 2006 

Mr. KERRY introduced the following bill; which was read twice and referred 

to the Committee on Finance 

A BILL 

To amend the Internal Revenue Code of 1986 to replace 

the Hope and Lifetime Learning credits with a partially 

refundable college opportunity credit. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘College Opportunity 

5 Tax Credit Act of 2006’’. 

6 SEC. 2. COLLEGE OPPORTUNITY TAX CREDIT. 

7 (a) IN GENERAL.— 


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1 (1) ALLOWANCE OF CREDIT.—Section 25A(a) 

2 of the Internal Revenue Code of 1986 (relating to 

3 allowance of credit) is amended— 

4 (A) in paragraph (1), by striking ‘‘the 

5 Hope Scholarship Credit’’ and inserting ‘‘the el6 igible student credit amount determined under 

7 subsection (b)’’, and 

8 (B) in paragraph (2), by striking ‘‘the 

9 Lifetime Learning Credit’’ and inserting ‘‘the 

10 part-time, graduate, and other student credit 

11 amount determined under subsection (c)’’. 

12 (2) NAME OF CREDIT.—The heading for section 

13 25A of such Code is amended to read as follows: 

14 ‘‘SEC. 25A. COLLEGE OPPORTUNITY CREDIT.’’. 

15 (3) CLERICAL AMENDMENT.—The table of sec16 tions for subpart A of part IV of subchapter A of 

17 chapter 1 of such Code is amended by striking the 

18 item relating to section 25A and inserting the fol19 lowing: 

‘‘Sec. 25A. College opportunity credit.’’. 

20 (b) ELIGIBLE STUDENTS.— 

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

22 25A(b) of the Internal Revenue Code of 1986 is 

23 amended— 

24 (A) by striking ‘‘the Hope Scholarship 

25 Credit’’ and inserting ‘‘the eligible student credVerDate Aug 31 2005 21:38 Dec 14, 2006 Jkt 059200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S4107.IS S4107

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1 it amount determined under this subsection’’, 

2 and 

3 (B) by striking ‘‘PER STUDENT CREDIT’’ 

4 in the heading and inserting ‘‘IN GENERAL’’. 

5 (2) AMOUNT OF CREDIT.—Paragraph (4) of 

6 section 25A(b) of such Code (relating to applicable 

7 limit) is amended by striking ‘‘2’’ and inserting ‘‘3’’. 

8 (3) CREDIT REFUNDABLE.— 

9 (A) IN GENERAL.—Section 25A of such 

10 Code is amended by redesignating subsection (i) 

11 as subsection (j) and by inserting after sub12 section (h) the following new subsection: 

13 ‘‘(i) PORTION OF CREDIT REFUNDABLE.— 

14 ‘‘(1) IN GENERAL.—The aggregate credits al15 lowed under subpart C shall be increased by the 

16 amount of the credit which would be allowed under 

17 this section— 

18 ‘‘(A) by reason of subsection (b), and 

19 ‘‘(B) without regard to this subsection and 

20 the limitation under section 26(a) or subsection 

21 (j), as the case may be. 

22 ‘‘(2) TREATMENT OF CREDIT.—The amount of 

23 the credit allowed under this subsection shall not be 

24 treated as a credit allowed under this subpart and 

25 shall reduce the amount of credit otherwise allowable 


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1 under subsection (a) without regard to section 26(a) 

2 or subsection (j), as the case may be.’’. 

3 (B) TECHNICAL AMENDMENT.—Section 

4 1324(b) of title 31, United States Code, is 

5 amended by inserting ‘‘, or enacted by the Col6 lege Opportunity Tax Credit Act of 2006’’ be7 fore the period at the end. 

8 (4) LIMITATIONS.— 

9 (A) CREDIT ALLOWED FOR 4 YEARS.— 

10 Subparagraph (A) of section 25A(b)(2) of such 

11 Code is amended— 

12 (i) by striking ‘‘2’’ in the text and in 

13 the heading and inserting ‘‘4’’, and 

14 (ii) by striking ‘‘the Hope Scholarship 

15 Credit’’ and inserting ‘‘the credit allow16 able’’. 

17 (B) ELIMINATION OF LIMITATION ON

18 FIRST 2 YEARS OF POSTSECONDARY EDU19 CATION.—Section 25A(b)(2) of such Code is 

20 amended by striking subparagraph (C) and by 

21 redesignating subparagraph (D) as subpara22 graph (C). 

23 (5) CONFORMING AMENDMENTS.— 


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1 (A) The heading of subsection (b) of sec2 tion 25A of such Code is amended to read as 

3 follows: 

4 ‘‘(b) ELIGIBLE STUDENTS.—’’. 

5 (B) Section 25A(b)(2) of such Code is 

6 amended— 

7 (i) in subparagraph (B), by striking 

8 ‘‘the Hope Scholarship Credit’’ and insert9 ing ‘‘the credit allowable’’, and 

10 (ii) in subparagraph (C), as redesig11 nated by paragraph (4)(B), by striking 

12 ‘‘the Hope Scholarship Credit’’ and insert13 ing ‘‘the credit allowable’’. 

14 (c) PART-TIME, GRADUATE, AND OTHER STU15 DENTS.— 

16 (1) IN GENERAL.—Subsection (c) of section 

17 25A of the Internal Revenue Code of 1986 is 

18 amended to read as follows: 

19 ‘‘(c) PART-TIME, GRADUATE, AND OTHER STU20 DENTS.— 

21 ‘‘(1) IN GENERAL.—In the case of any student 

22 for whom an election is in effect under this section 

23 for any taxable year, the part-time, graduate, and 

24 other student credit amount determined under this 


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1 subsection for any taxable year is an amount equal 

2 to the sum of— 

3 ‘‘(A) 40 percent of so much of the quali4 fied tuition and related expenses paid by the 

5 taxpayer during the taxable year (for education 

6 furnished to the student during any academic 

7 period beginning in such taxable year) as does 

8 not exceed $1,000, plus 

9 ‘‘(B) 20 percent of such expenses so paid 

10 as exceeds $1,000 but does not exceed the ap11 plicable limit. 

12 ‘‘(2) APPLICABLE LIMIT.—For purposes of 

13 paragraph (1)(B), the applicable limit for any tax14 able year is an amount equal to 3 times the dollar 

15 amount in effect under paragraph (1)(A) for such 

16 taxable year. 

17 ‘‘(3) SPECIAL RULES FOR DETERMINING EX18 PENSES.— 

19 ‘‘(A) COORDINATION WITH CREDIT FOR

20 ELIGIBLE STUDENTS.—The qualified tuition 

21 and related expenses with respect to a student 

22 who is an eligible student for whom a credit is 

23 allowed under subsection (a)(1) for the taxable 

24 year shall not be taken into account under this 

25 subsection. 


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1 ‘‘(B) EXPENSES FOR JOB SKILLS COURSES

2 ALLOWED.—For purposes of paragraph (1), 

3 qualified tuition and related expenses shall in4 clude expenses described in subsection (f)(1) 

5 with respect to any course of instruction at an 

6 eligible educational institution to acquire or im7 prove job skills of the student.’’. 

8 (2) INFLATION ADJUSTMENT.— 

9 (A) IN GENERAL.—Subsection (h) of sec10 tion 25A of such Code (relating to inflation ad11 justments) is amended by adding at the end the 

12 following new paragraph: 

13 ‘‘(3) DOLLAR LIMITATION ON AMOUNT OF

14 CREDIT UNDER SUBSECTION (a)(2).— 

15 ‘‘(A) IN GENERAL.—In the case of a tax16 able year beginning after 2007, each of the 

17 $1,000 amounts under subsection (c)(1) shall 

18 be increased by an amount equal to— 

19 ‘‘(i) such dollar amount, multiplied by 

20 ‘‘(ii) the cost-of-living adjustment de21 termined under section 1(f)(3) for the cal22 endar year in which the taxable year be23 gins, determined by substituting ‘calendar 

24 year 2006’ for ‘calendar year 1992’ in sub25 paragraph (B) thereof. 


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1 ‘‘(B) ROUNDING.—If any amount as ad2 justed under subparagraph (A) is not a multiple 

3 of $100, such amount shall be rounded to the 

4 next lowest multiple of $100.’’. 

5 (B) CONFORMING AMENDMENT.—The 

6 heading for paragraph (1) of section 25A(h) of 

7 such code is amended by inserting ‘‘UNDER

8 SUBSECTION (a)(1)’’ after ‘‘CREDIT’’. 

9 (d) CREDIT ALLOWED AGAINST ALTERNATIVE MIN10 IMUM TAX.— 

11 (1) IN GENERAL.—Section 25A of the Internal 

12 Revenue Code of 1986, as amended by subsection 

13 (b)(3), is amended by redesignating subsection (j) as 

14 subsection (k) and by inserting after subsection (h) 

15 the following new subsection: 

16 ‘‘(j) LIMITATION BASED ON AMOUNT OF TAX.—In 

17 the case of a taxable year to which section 26(a)(2) does 

18 not apply, the credit allowed under subsection (a) for the 

19 taxable year shall not exceed the excess of— 

20 ‘‘(1) the sum of the regular tax liability (as de21 fined in section 26(b)) plus the tax imposed by sec22 tion 55, over 

23 ‘‘(2) the sum of the credits allowed under this 

24 subpart (other than this section and sections 23, 24, 

25 and 25B) and section 27 for the taxable year.’’. 


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1 (2) CONFORMING AMENDMENT.—Section 

2 25(a)(1) of such Code is amended by inserting 

3 ‘‘25A,’’ after ‘‘24,’’. 

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

5 this section shall apply to taxable years beginning after 

6 December 31, 2006. 

Æ 


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