I
104TH CONGRESS
2D SESSION
H. R. 3984
To amend the Internal Revenue Code of 1986 to provide for a child tax
credit and a deduction for taxpayers with whom a parent or grandparent
resides, and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
AUGUST 2, 1996
Mr. HUNTER 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 provide
for a child tax credit and a deduction for taxpayers
with whom a parent or grandparent resides, and for
other purposes.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘Kids, Homes, and
Grandparents Act of 1996’’.
SEC. 2. CHILD TAX CREDIT.
(a) IN GENERAL.—Subpart A of part IV of sub-
chapter A of chapter 1 of the Internal Revenue Code of
1986 (relating to nonrefundable personal credits) is
amended by inserting after section 22 the following new
section:
‘‘SEC. 23. CHILD TAX CREDIT.
‘‘(a) ALLOWANCE OF CREDIT.—There shall be al-
lowed as a credit against the tax imposed by this chapter
for the taxable year an amount equal to $500 multiplied
by the number of qualifying children of the taxpayer.
‘‘(b) QUALIFYING CHILD.—For purposes of this sec-
tion, the term ‘qualifying child’ means any individual if—
‘‘(1) the taxpayer is allowed a deduction under
section 151 with respect to such individual for the
taxable year,
‘‘(2) such individual has not attained the age of
18 as of the close of the calendar year in which the
taxable year of the taxpayer begins, and
‘‘(3) such individual bears a relationship to the
taxpayer described in section 32(c)(3)(B).’’
(b) CLERICAL AMENDMENT.—The table of sections
for subpart A of part IV of subchapter A of chapter 1
of such Code is amended by inserting after the item relat-
ing to section 22 the following new item:
‘‘Sec. 23. Child tax credit.’’
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
December 31, 1996.
SEC. 3. DEDUCTION IF PARENT OR GRANDPARENT RE-
SIDES WITH TAXPAYER.
(a) IN GENERAL.—Part VII of subchapter B of chap-
ter 1 of the Internal Revenue Code of 1986 is amended
by redesignating section 220 as section 221 and by insert-
ing after section 219 the following new section:
‘‘SEC. 220. TAXPAYERS WITH WHOM PARENT OR GRAND-
PARENT RESIDES.
‘‘(a) IN GENERAL.—In the case of an individual who
maintains a household which includes as a member one
or more parents or grandparents of such individual who
have as the principal place of their abode the home of such
individual, there shall be allowed as a deduction the prod-
uct of—
(1) $1000, and
(2) the number of such parents and grand-
parents.
‘‘(b) PARENT OR GRANDPARENT.—For purposes of
subsection (a), the term ‘parent or grandparent’ means,
with respect to any individual, any ancestor of the individ-
ual or of the individual’s spouse or former spouse. For
purposes of the preceding sentence, the term ‘ancestor’ in-
cludes a stepmother or stepfather.’’
(b) DEDUCTION ALLOWABLE WHETHER
OR NOT
TAXPAYER ITEMIZES.—Subsection (a) of section 62 of
such Code is amended by inserting after paragraph (15)
the following new paragraph:
‘‘(16) TAXPAYERS
WITH
WHOM
PARENT
OR
GRANDPARENT RESIDES.—The deduction allowed by
section 220.’’
(c) CLERICAL AMENDMENT.—The table of sections
for part VII of subchapter B of chapter 1 of such Code
is amended by striking the item relating to section 220
and inserting the following new items:
‘‘Sec. 220. Taxpayers with whom parent or grandparent resides.
‘‘Sec. 221.
Cross reference.’’
(d) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
December 31, 1996.
SEC. 4. REDUCTION OF TAX ON QUALIFIED PRINCIPAL RES-
IDENCE GAIN.
(a) IN GENERAL.—Section 1 of the Internal Revenue
Code of 1986 (relating to tax imposed on individuals) is
amended by adding at the end the following new sub-
section:
‘‘(i) REDUCTION IN CAPITAL GAINS RATE APPLIED
TO QUALIFIED PRINCIPAL RESIDENCE GAIN.—
‘‘(1) IN GENERAL.—In the case of an individ-
ual, if any taxable income of the taxpayer would be
taxed at a rate in excess of 15 percent (determined
without regard to this subsection) for any taxable
year and such taxpayer has qualified principal resi-
dence gain for such taxable year—
‘‘(A) subsection (h) shall not apply to such
taxable year, and
‘‘(B) the tax imposed by this section for
such taxable year shall not exceed the sum of—
‘‘(i) a tax computed at the rates and
in the same manner as if this subsection
had not been enacted on taxable income re-
duced by the amount of the net capital
gain,
‘‘(ii) 15 percent of qualified principal
residence gain, and
‘‘(iii) the sum of—
‘‘(I) 15 percent of the excess (if
any) of the maximum amount of in-
come subject to the 15 percent rate
bracket applicable to the taxpayer
over the amounts taken into account
under clauses (i) and (ii), and
‘‘(II) 28 percent of the excess (if
any) of taxable income over the
amounts taken into account under
subclause (I) and clauses (i) and (ii).