‘‘(3) QUALIFIED BUYER.—The term ‘qualified
buyer’ means—
‘‘(A) with respect to qualified property de-
scribed in paragraph (4)(A)—
‘‘(i) a qualified beginning farmer or
rancher (as defined in section 343(a)(11)
of the Consolidated Farm and Rural De-
velopment Act (7 U.S.C. 1991(a)(11)), or
‘‘(ii) a lineal descendant of the tax-
payer who, at the time of the sale or ex-
change referred to in subsection (a), meets
the 
requirements 
of 
section
343(a)(11)(D)(ii)(I) of such Act, or
‘‘(B) with respect to qualified property de-
scribed in paragraph (4)(B), a lineal descendant
of the taxpayer.
‘‘(4) QUALIFIED PROPERTY.—The term ‘quali-
fied property’ means—
‘‘(A) land, including improvements on such
land, used in the trade or business of farming
(within the meaning of section 2032A(e)(4) or
(5)), or
‘‘(B) any interest in a closely held business
(as defined in section 6166(b)(1)).
‘‘(f) SPECIAL RULES.—For purposes of this section—
‘‘(1) ACTIVELY ENGAGED IN TRADE OR BUSI-
NESS OF FARMING.—An individual shall be treated
as actively engaged in the trade or business of farm-
ing (within the meaning of section 2032A(e)(4) or
(5)) if such individual would not be treated as a lim-
ited partner or limited entrepreneur under subpara-
graphs (A) through (D) of section 464(c)(2).
‘‘(2) ADDITIONAL RULES.—Rules similar to the
rules of paragraphs (1), (2), (4), (6), (7), and (8)
of section 121(d) (relating to one-time exclusion of
gain from sale of principal residence by individual
who has attained age 55) shall apply.’’
(b) CLERICAL AMENDMENT.—The table of sections
for such part III is amended by inserting after the item
relating to section 121 the following new item:
‘‘Sec. 121A. One-time exclusion of gain from sale or exchange of
land used in trade or business of farming or sale
or exchange of closely held business.’’
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to sales and exchanges occurring
after the date of the enactment of this Act in taxable years
ending after such date.
SEC. 3. 100 PERCENT DEDUCTION FOR HEALTH INSURANCE
COSTS OF SELF-EMPLOYED INDIVIDUALS.
(a) INCREASE IN AMOUNT OF DEDUCTION.—Para-
graph (1) of section 162(l) of the Internal Revenue Code
of 1986 is amended by striking ‘‘30 percent of’’.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall apply to taxable years beginning after
December 31, 1994.
SEC. 4. CARRYOVER OF UNUSED STANDARD DEDUCTION
AND PERSONAL EXEMPTION FOR FARMERS.
(a) IN GENERAL.—Subsection (d) of section 172 of
the Internal Revenue Code of 1986 is amended by adding
at the end the following new paragraph:
‘‘(7) FARMERS ALLOWED CARRYOVER OF UN-
USED PERSONAL EXEMPTION AND STANDARD DE-
DUCTION.—
‘‘(A) IN GENERAL.—In the case of a quali-
fied farmer, paragraphs (3) and (4) shall not
apply with respect to any personal exemption
allowed under section 151 or any standard de-
duction (as defined in section 63(c)).
‘‘(B) QUALIFIED FARMER.—For purposes
of this paragraph—
‘‘(i) IN GENERAL.—The term ‘quali-
fied farmer’ means an individual—
‘‘(I) who is actively engaged in
the trade or business of farming
(within 
the 
meaning 
of 
section
2032A(e) (4) or (5)), and
‘‘(II) 50 percent or more of the
average annual gross income of whom
for the 3 preceding taxable years is
attributable to such trade or business.
‘‘(ii) ACTIVELY
ENGAGED.—A tax-
payer shall be treated as actively engaged
in the trade or business of farming only if
the taxpayer is involved in the operation of
such trade or business on a regular, con-
tinuous, and substantial basis.’’
(b) EFFECTIVE DATE.—The amendment made by
this section shall apply to deductions allowable under sec-
tions 63 and 151 for taxable years ending after the date
of the enactment of this Act.
SEC. 5. POSSESSIONS TAX CREDIT
(a) IN GENERAL.—Section 936 of the Internal Reve-
nue Code of 1986 (relating to Puerto Rico and possession
tax credit) is hereby repealed.
(b) CLERICAL AMENDMENT.—The table of sections
for subpart D of part III of subchapter N of chapter 1
of such Code is amended by striking the item relating to
section 936.
(c) EFFECTIVE DATE.—The amendment made by
this section shall apply to taxable years beginning after
the date of the enactment of this Act.
SEC. 5. REVISION OF TAX RULES ON EXPATRIATION.
(a) IN GENERAL.—Subpart A of part II of sub-
chapter N of chapter 1 of the Internal Revenue Code of
1986 is amended by inserting after section 877 the follow-
ing new section:
‘‘SEC. 877A. TAX RESPONSIBILITIES OF EXPATRIATION.
‘‘(a) GENERAL RULE.—For purposes of this subtitle,
if any United States citizen relinquishes his citizenship
during a taxable year—
‘‘(1) except as provided in subsection (f)(2), all
property held by such citizen at the time imme-
diately before such relinquishment shall be treated
as sold at such time for its fair market value, and
‘‘(2) notwithstanding any other provision of this
title, any gain or loss shall be taken into account for
such taxable year.
Paragraph (2) shall not apply to amounts excluded from
gross income under part III of subchapter B.
‘‘(b) EXCLUSION FOR CERTAIN GAIN.—The amount
which would (but for this subsection) be includible in the
gross income of any individual by reason of subsection (a)
shall be reduced (but not below zero) by $600,000.
‘‘(c) PROPERTY TREATED AS HELD.—For purposes
of this section, except as otherwise provided by the Sec-
retary, an individual shall be treated as holding—
tion or which violate any condition for tax-
favored treatment.
‘‘(B) FOREIGN PENSION PLANS.—
‘‘(i) IN GENERAL.—Under regulations
prescribed by the Secretary, interests in
foreign pension plans or similar retirement
arrangements or programs.
‘‘(ii) LIMITATION.—The value of prop-
erty which is treated as not sold by reason
of this subparagraph shall not exceed
$500,000.
‘‘(e) RELINQUISHMENT OF CITIZENSHIP.—For pur-
poses of this section, a citizen shall be treated as relin-
quishing his United States citizenship on the earliest of—
‘‘(1) the date the individual renounces his
United States nationality before a diplomatic or con-
sular officer of the United States pursuant to para-
graph (5) of section 349(a) of the Immigration and
Nationality Act (8 U.S.C. 1481(a)(5)),
‘‘(2) the date the individual furnishes to the
United States Department of State a signed state-
ment of voluntary relinquishment of United States
nationality confirming the performance of an act of
expatriation specified in paragraph (1), (2), (3), or
(4) of section 349(a) of the Immigration and Na-
tionality Act (8 U.S.C. 1481(a)(1)–(4)),
‘‘(3) the date the United States Department of
State issues to the individual a certificate of loss of
nationality, or
‘‘(4) the date a court of the United States can-
cels a naturalized citizen’s certificate of naturaliza-
tion.
Paragraph (1) or (2) shall not apply to any individual un-
less the renunciation or voluntary relinquishment is subse-
quently approved by the issuance to the individual of a
certificate of loss of nationality by the United States De-
partment of State.
‘‘(f) SPECIAL
RULES
APPLICABLE
TO
BENE-
FICIARIES’ INTERESTS IN TRUST.—
‘‘(1) DETERMINATION OF BENEFICIARIES’ IN-
TEREST IN TRUST.—For purposes of this section—
‘‘(A) GENERAL RULE.—A beneficiary’s in-
terest in a trust shall be based upon all relevant
facts and circumstances, including the terms of
the trust instrument and any letter of wishes or
similar document, historical patterns of trust
distributions, and the existence of and functions
performed by a trust protector or any similar
advisor.
‘‘(B) SPECIAL RULE.—In the case of bene-
ficiaries whose interests in a trust cannot be de-
termined under subparagraph (A)—
‘‘(i) the beneficiary having the closest
degree of kinship to the grantor shall be
treated as holding the remaining interests
in the trust not determined under subpara-
graph (A) to be held by any other bene-
ficiary, and
‘‘(ii) if 2 or more beneficiaries have
the same degree of kinship to the grantor,
such remaining interests shall be treated
as held equally by such beneficiaries.
‘‘(C) CONSTRUCTIVE
OWNERSHIP.—If a
beneficiary of a trust is a corporation, partner-
ship, trust, or estate, the shareholders, part-
ners, or beneficiaries shall be deemed to be the
trust beneficiaries for purposes of this section.
‘‘(D) TAXPAYER
RETURN
POSITION.—A
taxpayer shall clearly indicate on its income tax
return—
‘‘(i) the methodology used to deter-
mine that taxpayer’s trust interest under
this section, and
‘‘(ii) if the taxpayer knows (or has
reason to know) that any other beneficiary
of such trust is using a different methodol-
ogy to determine such beneficiary’s trust
interest under this section.
‘‘(2) DEEMED SALE IN CASE OF TRUST INTER-
EST.—If an individual who relinquishes his citizen-
ship during the taxable year is treated under para-
graph (1) as holding an interest in a trust for pur-
poses of this section—
‘‘(A) the individual shall not be treated as
having sold such interest,
‘‘(B) such interest shall be treated as a
separate share in the trust, and
‘‘(C)(i) such separate share shall be treat-
ed as a separate trust consisting of the assets
allocable to such share,
‘‘(ii) the separate trust shall be treated as
having sold its assets immediately before the re-
linquishment for their fair market value and as
having distributed all of its assets to the indi-
vidual as of such time, and
‘‘(iii) the individual shall be treated as hav-
ing recontributed the assets to the separate
trust.
Subsection (a)(2) shall apply to any income, gain, or
loss of the individual arising from a distribution de-
scribed in subparagraph (B)(ii).
‘‘(g) TERMINATION OF DEFERRALS, ETC.—On the
date any property held by an individual is treated as sold
under subsection (a), notwithstanding any other provision
of this title—
‘‘(1) any period during which recognition of in-
come or gain is deferred shall terminate, and
‘‘(2) any extension of time for payment of tax
shall cease to apply and the unpaid portion of such
tax shall be due and payable at the time and in the
manner prescribed by the Secretary.
‘‘(h) RULES RELATING TO PAYMENT OF TAX.—
‘‘(1) IMPOSITION OF TENTATIVE TAX.—
‘‘(A) IN GENERAL.—If an individual is re-
quired to include any amount in gross income
under subsection (a) for any taxable year, there
is hereby imposed, immediately before the indi-
vidual relinquishes United States citizenship, a
tax in an amount equal to the amount of tax
which would be imposed if the taxable year were
a short taxable year ending on the date of such
relinquishment.
‘‘(B) DUE DATE.—The due date for any
tax imposed by subparagraph (A) shall be the
90th day after the date the individual relin-
quishes United States citizenship.
‘‘(C) TREATMENT OF TAX.—Any tax paid
under subparagraph (A) shall be treated as a
payment of the tax imposed by this chapter for
the taxable year to which subsection (a) applies.
‘‘(2) DEFERRAL
OF
TAX.—The provisions of
section 6161 shall apply to the portion of any tax at-
tributable to amounts included in gross income
under subsection (a) in the same manner as if such
portion were a tax imposed by chapter 11.
‘‘(i) REGULATIONS.—The Secretary shall prescribe
such regulations as may be necessary or appropriate to
carry out the purposes of this section, including regula-
tions providing appropriate adjustments to basis to reflect
gain recognized by reason of subsection (a) and the exclu-
sion provided by subsection (b).
‘‘(j) CROSS REFERENCE.—
‘‘For termination of United States citizenship for
tax purposes, see section 7701(a)(47).’’
(b) DEFINITION
OF
TERMINATION
OF
UNITED
STATES CITIZENSHIP.—Section 7701(a) of the Internal
Revenue Code of 1986 is amended by adding at the end
the following new paragraph:
‘‘(47) TERMINATION OF UNITED STATES CITI-
ZENSHIP.—An individual shall not cease to be treat-
ed as a United States citizen before the date on
which the individual’s citizenship is treated as relin-
quished under section 877A(e).’’
(c) CONFORMING AMENDMENT.—Section 877 of the
Internal Revenue Code of 1986 is amended by adding at
the end the following new subsection:
‘‘(f) APPLICATION.—This section shall not apply to
any individual who relinquishes (within the meaning of
section 877A(e)) United States citizenship on and after
the date of the enactment of this subsection.’’
(d) CLERICAL AMENDMENT.—The table of sections
for subpart A of part II of subchapter N of chapter 1
of the Internal Revenue Code of 1986 is amended by in-
serting after the item relating to section 877 the following
new item:
‘‘Sec. 877A. Tax responsibilities of expatriation.’’
(e) EFFECTIVE DATE.—
(1) IN GENERAL.—The amendments made by
this section shall apply to United States citizens who
relinquish (within the meaning of section 877A(e) of
the Internal Revenue Code of 1986, as added by this
section) United States citizenship on or after the
date of the enactment of this Act.
(2) DUE DATE FOR TENTATIVE TAX.—The due
date under section 877A(h)(1)(B) of such Code shall
in no event occur before the 90th day after the date
of the enactment of this Act.
Æ
HR 1748 IH——2