425
(b) CLARIFICATION
OF FIRST YEAR
OF EMPLOY-
MENT.—Paragraph (2) of section 51(i) is amended by strik-
ing ‘‘during which he was not a member of a targeted
group’’.
(c) ELECTRONIC FILING
OF CERTIFICATION.—Not
later than July 1, 2001, the Secretary of the Treasury or
the Secretary’s delegate shall provide an electronic format
by which employers may submit requests to designated local
agencies (as defined in section 51(d)(11) of the Internal
Revenue Code of 1986) for certifications that individuals
are members of targeted groups for purposes of section 51
of such Code.
(d) EFFECTIVE DATE.—The amendments made by this
section shall apply to individuals who begin work for the
employer after June 30, 1999.
TITLE XV—REVENUE OFFSETS
SEC. 1501. RETURNS RELATING TO CANCELLATIONS OF IN-
DEBTEDNESS BY ORGANIZATIONS LENDING
MONEY.
(a) IN GENERAL.—Paragraph (2) of section 6050P(c)
(relating to definitions and special rules) is amended by
striking ‘‘and’’ at the end of subparagraph (B), by striking
the period at the end of subparagraph (C) and inserting
‘‘, and’’, and by inserting after subparagraph (C) the fol-
lowing new subparagraph:
426
‘‘(D) any organization a significant trade
or business of which is the lending of money.’’
(b) EFFECTIVE DATE.—The amendment made by sub-
section (a) shall apply to discharges of indebtedness after
December 31, 1999.
SEC. 1502. EXTENSION OF INTERNAL REVENUE SERVICE
USER FEES.
(a) IN GENERAL.—Chapter 77 (relating to miscella-
neous provisions) is amended by adding at the end the fol-
lowing new section:
‘‘SEC. 7527. INTERNAL REVENUE SERVICE USER FEES.
‘‘(a) GENERAL RULE.—The Secretary shall establish
a program requiring the payment of user fees for—
‘‘(1) requests to the Internal Revenue Service for
ruling letters, opinion letters, and determination let-
ters, and
‘‘(2) other similar requests.
‘‘(b) PROGRAM CRITERIA.—
‘‘(1) IN GENERAL.—The fees charged under the
program required by subsection (a)—
‘‘(A) shall vary according to categories (or
subcategories) established by the Secretary,
‘‘(B) shall be determined after taking into
account the average time for (and difficulty of)
427
complying with requests in each category (and
subcategory), and
‘‘(C) shall be payable in advance.
‘‘(2) EXEMPTIONS, ETC.—The Secretary shall
provide for such exemptions (and reduced fees) under
such program as the Secretary determines to be ap-
propriate.
‘‘(3) AVERAGE FEE REQUIREMENT.—The average
fee charged under the program required by subsection
(a) shall not be less than the amount determined
under the following table:
‘‘Category
Average Fee
Employee plan ruling and opinion ..............................................
$250
Exempt organization ruling .........................................................
$350
Employee plan determination ......................................................
$300
Exempt organization determination ............................................
$275
Chief counsel ruling .......................................................................
$200.
‘‘(c) TERMINATION.—No fee shall be imposed under
this section with respect to requests made after September
30, 2009.’’
(b) CONFORMING AMENDMENTS.—
(1) The table of sections for chapter 77 is amend-
ed by adding at the end the following new item:
‘‘Sec. 7527. Internal Revenue Service user fees.’’
(2) Section 10511 of the Revenue Act of 1987 is
repealed.
428
(c) EFFECTIVE DATE.—The amendments made by this
section shall apply to requests made after the date of the
enactment of this Act.
SEC. 1503. LIMITATIONS ON WELFARE BENEFIT FUNDS OF
10 OR MORE EMPLOYER PLANS.
(a) BENEFITS TO WHICH EXCEPTION APPLIES.—Sec-
tion 419A(f)(6)(A) (relating to exception for 10 or more em-
ployer plans) is amended to read as follows:
‘‘(A) IN GENERAL.—This subpart shall not
apply to a welfare benefit fund which is part of
a 10 or more employer plan if the only benefits
provided through the fund are 1 or more of the
following:
‘‘(i) Medical benefits.
‘‘(ii) Disability benefits.
‘‘(iii) Group term life insurance bene-
fits which do not provide for any cash sur-
render value or other money that can be
paid, assigned, borrowed, or pledged for col-
lateral for a loan.
The preceding sentence shall not apply to any
plan which maintains experience-rating arrange-
ments with respect to individual employers.’’
(b) LIMITATION ON USE OF AMOUNTS FOR OTHER
PURPOSES.—Section 4976(b) (defining disqualified benefit)
429
is amended by adding at the end the following new para-
graph:
‘‘(5) SPECIAL RULE FOR 10 OR MORE EMPLOYER
PLANS EXEMPTED FROM PREFUNDING LIMITS.—For
purposes of paragraph (1)(C), if—
‘‘(A) subpart D of part I of subchapter D
of chapter 1 does not apply by reason of section
419A(f)(6) to contributions to provide 1 or more
welfare benefits through a welfare benefit fund
under a 10 or more employer plan, and
‘‘(B) any portion of the welfare benefit fund
attributable to such contributions is used for a
purpose other than that for which the contribu-
tions were made,
then such portion shall be treated as reverting to the
benefit of the employers maintaining the fund.’’
(c) EFFECTIVE DATE.—The amendments made by this
section shall apply to contributions paid or accrued after
June 9, 1999, in taxable years ending after such date.
SEC. 1504. INCREASE IN ELECTIVE WITHHOLDING RATE
FOR NONPERIODIC DISTRIBUTIONS FROM
DEFERRED COMPENSATION PLANS.
(a) IN GENERAL.—Section 3405(b)(1) (relating to
withholding) is amended by striking ‘10 percent’ and in-
serting ‘15 percent’.
430
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall apply to distributions after December
31, 1999.
SEC. 1505. CONTROLLED ENTITIES INELIGIBLE FOR REIT
STATUS.
(a) IN GENERAL.—Subsection (a) of section 856 (relat-
ing to definition of real estate investment trust) is amended
by striking ‘‘and’’ at the end of paragraph (6), by redesig-
nating paragraph (7) as paragraph (8), and by inserting
after paragraph (6) the following new paragraph:
‘‘(7) which is not a controlled entity (as defined
in subsection (l)); and’’.
(b) CONTROLLED ENTITY.—Section 856 is amended by
adding at the end the following new subsection:
‘‘(l) CONTROLLED ENTITY.—
‘‘(1) IN GENERAL.—For purposes of subsection
(a)(7), an entity is a controlled entity if, at any time
during the taxable year, one person (other than a
qualified entity)—
‘‘(A) in the case of a corporation, owns
stock—
‘‘(i) possessing at least 50 percent of
the total voting power of the stock of such
corporation, or
431
‘‘(ii) having a value equal to at least
50 percent of the total value of the stock of
such corporation, or
‘‘(B) in the case of a trust, owns beneficial
interests in the trust which would meet the re-
quirements of subparagraph (A) if such interests
were stock.
‘‘(2) QUALIFIED ENTITY.—For purposes of para-
graph (1), the term ‘qualified entity’ means—
‘‘(A) any real estate investment trust, and
‘‘(B) any partnership in which one real es-
tate investment trust owns at least 50 percent of
the capital and profits interests in the partner-
ship.
‘‘(3) ATTRIBUTION RULES.—For purposes of this
paragraphs (1) and (2)—
‘‘(A) IN
GENERAL.—Rules similar to the
rules of subsections (d)(5) and (h)(3) shall apply.
‘‘(B) STAPLED ENTITIES.—A group of enti-
ties which are stapled entities (as defined in sec-
tion 269B(c)(2)) shall be treated as 1 person.
‘‘(4) EXCEPTION FOR CERTAIN NEW REITS.—
‘‘(A) IN GENERAL.—The term ‘controlled en-
tity’ shall not include an incubator REIT.
432
‘‘(B) 
INCUBATOR
REIT.—A 
corporation
shall be treated as an incubator REIT for any
taxable year during the eligibility period if it
meets all the following requirements for such
year:
‘‘(i) The corporation elects to be treated
as an incubator REIT.
‘‘(ii) The corporation has only voting
common stock outstanding.
‘‘(iii) Not more than 50 percent of the
corporation’s real estate assets consist of
mortgages.
‘‘(iv) From not later than the begin-
ning of the last half of the second taxable
year, at least 10 percent of the corporation’s
capital is provided by lenders or equity in-
vestors who are unrelated to the corpora-
tion’s largest shareholder.
‘‘(v) The directors of the corporation
adopt a resolution setting forth an intent to
engage in a going public transaction.
No election may be made with respect to any
REIT if an election under this subsection was in
effect for any predecessor of such REIT.
433
‘‘(C) ELIGIBILITY PERIOD.—The eligibility
period (for which an incubator REIT election
can be made) begins with the REIT’s second tax-
able year and ends at the close of the REIT’s
third taxable year, but, subject to the following
rules, it may be extended for an additional 2
taxable years if the REIT so elects:
‘‘(i) A REIT cannot elect to extend the
eligibility period unless it agrees that, if it
does not engage in a going public trans-
action by the end of the extended eligibility
period, it shall pay Federal income taxes
for the 2 years of the extended eligibility pe-
riod as if it had not made an incubator
REIT election and had ceased to qualify as
a REIT for those 2 taxable years.
‘‘(ii) In the event the corporation
ceases to be treated as a REIT by operation
of clause (i), the corporation shall file any
appropriate amended returns reflecting the
change in status within 3 months of the
close of the extended eligibility period. In-
terest would be payable but, unless there
was a finding under subparagraph (D), no
substantial underpayment penalties shall be
434
imposed. The corporation shall, at the same
time, also notify its shareholders and any
other persons whose tax position is, or may
reasonably be expected to be, affected by the
change in status so they also may file any
appropriate amended returns to conform
their tax treatment consistent with the cor-
poration’s loss of REIT status. The Sec-
retary shall provide appropriate regulations
setting forth transferee liability and other
provisions to ensure collection of tax and
the proper administration of this provision.
‘‘(iii) Clause (i) and (ii) shall not
apply if the corporation allows its incu-
bator REIT status to lapse at the end of the
initial 2-year eligibility period without en-
gaging in a going public transaction, pro-
vided the corporation satisfies the require-
ments of the closely-held test commencing
with its fourth taxable year. In such a case,
the corporation’s directors may still be lia-
ble for the penalties described in subpara-
graph (D) during the eligibility period.
‘‘(D) SPECIAL PENALTIES.—If the Secretary
determines that an incubator REIT election was
435
filed for a principal purpose other than as part
of a reasonable plan to undertake a going public
transaction, an excise tax of $20,000 would be
imposed on each of the corporation’s directors for
each taxable year for which an election was in
effect.
‘‘(E) GOING
PUBLIC
TRANSACTION.—For
purposes of this paragraph, a going public trans-
action means—
‘‘(i) a public offering of shares of the
stock of the incubator REIT;
‘‘(ii) a transaction, or series of trans-
actions, that results in the stock of the incu-
bator REIT being regularly traded on an
established securities market and that re-
sults in at least 50 percent of such stock
being held by shareholders who are unre-
lated to persons who held such stock before
it began to be so regularly traded; or
‘‘(iii) any transaction resulting in
ownership of the REIT by 200 or more per-
sons (excluding the largest single share-
holder) who in the aggregate own at least 50
percent of the stock of the REIT.
436
For the purposes of this subparagraph, the rules
of paragraph (3) shall apply in determining the
ownership of stock.
‘‘(F) DEFINITIONS.—The term ‘established
securities market’ shall have the meaning set
forth in the regulations under section 897.’’
(c) CONFORMING AMENDMENT.—Paragraph (2) of sec-
tion 856(h) is amended by striking ‘‘and (6)’’ each place
it appears and inserting ‘‘, (6), and (7)’’.
(d) EFFECTIVE DATE.—
(1) IN
GENERAL.—The amendments made by
this section shall apply to taxable years ending after
July 12, 1999.
(2) EXCEPTION FOR EXISTING CONTROLLED EN-
TITIES.—The amendments made by this section shall
not apply to any entity which is a controlled entity
(as defined in section 856(l) of the Internal Revenue
Code of 1986, as added by this section) as of July 12,
1999, which is a real estate investment trust for the
taxable year which includes such date, and which has
significant business assets or activities as of such
date.
437
SEC. 1506. TREATMENT OF GAIN FROM CONSTRUCTIVE
OWNERSHIP TRANSACTIONS.
(a) IN GENERAL.—Part IV of subchapter P of chapter
1 (relating to special rules for determining capital gains
and losses) is amended by inserting after section 1259 the
following new section:
‘‘SEC. 1260. GAINS FROM CONSTRUCTIVE OWNERSHIP
TRANSACTIONS.
‘‘(a) IN GENERAL.—If the taxpayer has gain from a
constructive ownership transaction with respect to any fi-
nancial asset and such gain would (without regard to this
section) be treated as a long-term capital gain—
‘‘(1) such gain shall be treated as ordinary in-
come to the extent that such gain exceeds the net un-
derlying long-term capital gain, and
‘‘(2) to the extent such gain is treated as a long-
term capital gain after the application of paragraph
(1), the determination of the capital gain rate (or
rates) applicable to such gain under section 1(h) shall
be determined on the basis of the respective rate (or
rates) that would have been applicable to the net un-
derlying long-term capital gain.
‘‘(b) INTEREST CHARGE ON DEFERRAL OF GAIN REC-
OGNITION.—
‘‘(1) IN GENERAL.—If any gain is treated as or-
dinary income for any taxable year by reason of sub-
438
section (a)(1), the tax imposed by this chapter for
such taxable year shall be increased by the amount of
interest determined under paragraph (2) with respect
to each prior taxable year during any portion of
which the constructive ownership transaction was
open. Any amount payable under this paragraph
shall be taken into account in computing the amount
of any deduction allowable to the taxpayer for interest
paid or accrued during such taxable year.
‘‘(2) AMOUNT OF INTEREST.—The amount of in-
terest determined under this paragraph with respect
to a prior taxable year is the amount of interest
which would have been imposed under section 6601
on the underpayment of tax for such year which
would have resulted if the gain (which is treated as
ordinary income by reason of subsection (a)(1)) had
been included in gross income in the taxable years in
which it accrued (determined by treating the income
as accruing at a constant rate equal to the applicable
Federal rate as in effect on the day the transaction
closed). The period during which such interest shall
accrue shall end on the due date (without extensions)
for the return of tax imposed by this chapter for the
taxable year in which such transaction closed.
439
‘‘(3) APPLICABLE FEDERAL RATE.—For purposes
of paragraph (2), the applicable Federal rate is the
applicable Federal rate determined under 1274(d)
(compounded semiannually) which would apply to a
debt instrument with a term equal to the period the
transaction was open.
‘‘(4) NO CREDITS AGAINST INCREASE IN TAX.—
Any increase in tax under paragraph (1) shall not be
treated as tax imposed by this chapter for purposes
of determining—
‘‘(A) the amount of any credit allowable
under this chapter, or
‘‘(B) the amount of the tax imposed by sec-
tion 55.
‘‘(c) 
FINANCIAL
ASSET.—For 
purposes 
of 
this
section—
‘‘(1) IN
GENERAL.—The term ‘financial asset’
means—
‘‘(A) any equity interest in any pass-thru
entity, and
‘‘(B) to the extent provided in regulations—
‘‘(i) any debt instrument, and
‘‘(ii) any stock in a corporation which
is not a pass-thru entity.
440
‘‘(2) PASS-THRU ENTITY.—For purposes of para-
graph (1), the term ‘pass-thru entity’ means—
‘‘(A) a regulated investment company,
‘‘(B) a real estate investment trust,
‘‘(C) an S corporation,
‘‘(D) a partnership,
‘‘(E) a trust,
‘‘(F) a common trust fund,
‘‘(G) a passive foreign investment company
(as defined in section 1297),
‘‘(H) a foreign personal holding company,
and
‘‘(I) a foreign investment company (as de-
fined in section 1246(b)).
‘‘(d) CONSTRUCTIVE OWNERSHIP TRANSACTION.—For
purposes of this section—
‘‘(1) IN GENERAL.—The taxpayer shall be treated
as having entered into a constructive ownership
transaction with respect to any financial asset if the
taxpayer—
‘‘(A) holds a long position under a notional
principal contract with respect to the financial
asset,
‘‘(B) enters into a forward or futures con-
tract to acquire the financial asset,
441
‘‘(C) is the holder of a call option, and is
the grantor of a put option, with respect to the
financial asset and such options have substan-
tially equal strike prices and substantially con-
temporaneous maturity dates, or
‘‘(D) to the extent provided in regulations
prescribed by the Secretary, enters into 1 or
more other transactions (or acquires 1 or more
positions) that have substantially the same effect
as a transaction described in any of the pre-
ceding subparagraphs.
‘‘(2) EXCEPTION
FOR
POSITIONS
WHICH
ARE
MARKED TO MARKET.—This section shall not apply to
any constructive ownership transaction if all of the
positions which are part of such transaction are
marked to market under any provision of this title or
the regulations thereunder.
‘‘(3) LONG
POSITION
UNDER
NOTIONAL
PRIN-
CIPAL CONTRACT.—A person shall be treated as hold-
ing a long position under a notional principal con-
tract with respect to any financial asset if such
person—
‘‘(A) has the right to be paid (or receive
credit for) all or substantially all of the invest-
442
ment yield (including appreciation) on such fi-
nancial asset for a specified period, and
‘‘(B) is obligated to reimburse (or provide
credit for) all or substantially all of any decline
in the value of such financial asset.
‘‘(4) FORWARD CONTRACT.—The term ‘forward
contract’ means any contract to acquire in the future
(or provide or receive credit for the future value of)
any financial asset.
‘‘(e) NET UNDERLYING LONG-TERM CAPITAL GAIN.—
For purposes of this section, in the case of any constructive
ownership transaction with respect to any financial asset,
the term ‘net underlying long-term capital gain’ means the
aggregate net capital gain that the taxpayer would have
had if—
‘‘(1) the financial asset had been acquired for
fair market value on the date such transaction was
opened and sold for fair market value on the date
such transaction was closed, and
‘‘(2) only gains and losses that would have re-
sulted from the deemed ownership under paragraph
(1) were taken into account.
The amount of the net underlying long-term capital gain
with respect to any financial asset shall be treated as zero
443
unless the amount thereof is established by clear and con-
vincing evidence.
‘‘(f) SPECIAL RULE WHERE TAXPAYER TAKES DELIV-
ERY.—Except as provided in regulations prescribed by the
Secretary, if a constructive ownership transaction is closed
by reason of taking delivery, this section shall be applied
as if the taxpayer had sold all the contracts, options, or
other positions which are part of such transaction for fair
market value on the closing date. The amount of gain recog-
nized under the preceding sentence shall not exceed the
amount of gain treated as ordinary income under sub-
section (a). Proper adjustments shall be made in the
amount of any gain or loss subsequently realized for gain
recognized and treated as ordinary income under this sub-
section.
‘‘(g) REGULATIONS.—The Secretary shall prescribe
such regulations as may be necessary or appropriate to
carry out the purposes of this section, including
regulations—
‘‘(1) to permit taxpayers to mark to market con-
structive ownership transactions in lieu of applying
this section, and
‘‘(2) to exclude certain forward contracts which
do not convey substantially all of the economic return
with respect to a financial asset.’’
444
(b) CLERICAL AMENDMENT.—The table of sections for
part IV of subchapter P of chapter 1 is amended by adding
at the end the following new item:
‘‘Sec. 1260. Gains from constructive ownership transactions.’’.
(c) EFFECTIVE DATE.—The amendments made by this
section shall apply to transactions entered into after July
11, 1999.
SEC. 1507. TRANSFER OF EXCESS DEFINED BENEFIT PLAN
ASSETS FOR RETIREE HEALTH BENEFITS.
(a) EXTENSION.—Paragraph (5) of section 420(b) (re-
lating to expiration) is amended by striking ‘‘in any tax-
able year beginning after December 31, 2000’’ and inserting
‘‘made after September 30, 2009’’.
(b) APPLICATION
OF
MINIMUM
COST
REQUIRE-
MENTS.—
(1) IN
GENERAL.—Paragraph (3) of section
420(c) is amended to read as follows:
‘‘(3) MINIMUM COST REQUIREMENTS.—
‘‘(A) IN
GENERAL.—The requirements of
this paragraph are met if each group health plan
or arrangement under which applicable health
benefits are provided provides that the applicable
employer cost for each taxable year during the
cost maintenance period shall not be less than
the higher of the applicable employer costs for
445
each of the 2 taxable years immediately pre-
ceding the taxable year of the qualified transfer.
‘‘(B) APPLICABLE
EMPLOYER
COST.—For
purposes of this paragraph, the term ‘applicable
employer cost’ means, with respect to any tax-
able year, the amount determined by dividing—
‘‘(i) the qualified current retiree health
liabilities of the employer for such taxable
year determined—
‘‘(I) without regard to any reduc-
tion under subsection (e)(1)(B), and
‘‘(II) in the case of a taxable year
in which there was no qualified trans-
fer, in the same manner as if there had
been such a transfer at the end of the
taxable year, by
‘‘(ii) the number of individuals to
whom coverage for applicable health benefits
was provided during such taxable year.
‘‘(C) ELECTION TO COMPUTE COST SEPA-
RATELY.—An employer may elect to have this
paragraph applied separately with respect to in-
dividuals eligible for benefits under title XVIII of
the Social Security Act at any time during the
446
taxable year and with respect to individuals not
so eligible.
‘‘(D) COST
MAINTENANCE
PERIOD.—For
purposes of this paragraph, the term ‘cost main-
tenance period’ means the period of 5 taxable
years beginning with the taxable year in which
the qualified transfer occurs. If a taxable year is
in 2 or more overlapping cost maintenance peri-
ods, this paragraph shall be applied by taking
into account the highest applicable employer cost
required to be provided under subparagraph (A)
for such taxable year.’’
(2) CONFORMING AMENDMENTS.—
(A) Clause (iii) of section 420(b)(1)(C) is
amended by striking ‘‘benefits’’ and inserting
‘‘cost’’.
(B) Subparagraph (D) of section 420(e)(1)
is amended by striking ‘‘and shall not be subject
to the minimum benefit requirements of sub-
section (c)(3)’’ and inserting ‘‘or in calculating
applicable 
employer 
cost 
under 
subsection
(c)(3)(B)’’.
(c) EFFECTIVE DATE.—The amendments made by this
section shall apply to qualified transfers occurring after the
date of the enactment of this Act.
447
SEC. 1508. MODIFICATION OF INSTALLMENT METHOD AND
REPEAL OF INSTALLMENT METHOD FOR AC-
CRUAL METHOD TAXPAYERS.
(a) REPEAL OF INSTALLMENT METHOD FOR ACCRUAL
BASIS TAXPAYERS.—
(1) IN GENERAL.—Subsection (a) of section 453
(relating to installment method) is amended to read
as follows:
‘‘(a) USE OF INSTALLMENT METHOD.—
‘‘(1) IN GENERAL.—Except as otherwise provided
in this section, income from an installment sale shall
be taken into account for purposes of this title under
the installment method.
‘‘(2) ACCRUAL METHOD TAXPAYER.—The install-
ment method shall not apply to income from an in-
stallment sale if such income would be reported under
an accrual method of accounting without regard to
this section. The preceding sentence shall not apply to
a disposition described in subparagraph (A) or (B) of
subsection (l)(2).’’
(2) 
CONFORMING
AMENDMENTS.—Sections
453(d)(1), 453(i)(1), and 453(k) are each amended by
striking ‘‘(a)’’ each place it appears and inserting
‘‘(a)(1)’’.
(b) MODIFICATION OF PLEDGE RULES.—Paragraph
(4) of section 453A(d) (relating to pledges, etc., of install-
448
ment obligations) is amended by adding at the end the fol-
lowing: ‘‘A payment shall be treated as directly secured by
an interest in an installment obligation to the extent an
arrangement allows the taxpayer to satisfy all or a portion
of the indebtedness with the installment obligation.’’
(c) EFFECTIVE DATE.—The amendments made by this
section shall apply to sales or other dispositions occurring
on or after the date of the enactment of this Act.
SEC. 1509. LIMITATION ON USE OF NONACCRUAL EXPERI-
ENCE METHOD OF ACCOUNTING.
(a) IN GENERAL.—Section 448(d)(5) (relating to spe-
cial rule for services) is amended—
(1) by inserting ‘‘in fields described in para-
graph (2)(A)’’ after ‘‘services by such person’’, and
(2) by inserting ‘‘CERTAIN
PERSONAL’’ before
‘‘SERVICES’’ in the heading.
(b) EFFECTIVE DATE.—
(1) IN
GENERAL.—The amendments made by
this section shall apply to taxable years ending after
the date of the enactment of this Act.
(2) CHANGE IN METHOD OF ACCOUNTING.—In
the case of any taxpayer required by the amendments
made by this section to change its method of account-
ing for its first taxable year ending after the date of
the enactment of this Act—
449
(A) such change shall be treated as initiated
by the taxpayer,
(B) such change shall be treated as made
with the consent of the Secretary of the Treasury,
and
(C) the net amount of the adjustments re-
quired to be taken into account by the taxpayer
under section 481 of the Internal Revenue Code
of 1986 shall be taken into account over a period
(not greater than 4 taxable years) beginning
with such first taxable year.
SEC. 1510. EXCLUSION OF LIKE-KIND EXCHANGE PROPERTY
FROM 
NONRECOGNITION 
TREATMENT 
ON
THE SALE OF A PRINCIPAL RESIDENCE.
(a) IN GENERAL.—Subsection (d) of section 121 (relat-
ing to the exclusion of gain from the sale of a principal
residence) is amended by adding at the end the following
new paragraph:
‘‘(9) LIKE-KIND
EXCHANGES.—Subsection (a)
shall not apply to any sale or exchange of a residence
if such residence was acquired by the taxpayer during
the 5-year period ending on the date of such sale or
exchange in an exchange in which any amount of
gain was not recognized under section 1031.’’
450
(b) EFFECTIVE DATE.—The amendment made by sub-
section (a) shall apply to any sale or exchange of a prin-
cipal residence after the date of the enactment of this Act.
TITLE XVI—TECHNICAL
CORRECTIONS
SEC. 1601. AMENDMENTS RELATED TO TAX AND TRADE RE-
LIEF EXTENSION ACT OF 1998.
(a) AMENDMENT RELATED TO SECTION 1004(b) OF
THE ACT.—Subsection (d) of section 6104 is amended by
adding at the end the following new paragraph:
‘‘(6) APPLICATION TO NONEXEMPT CHARITABLE
TRUSTS AND NONEXEMPT PRIVATE FOUNDATIONS.—
The organizations referred to in paragraphs (1) and
(2) of section 6033(d) shall comply with the require-
ments of this subsection relating to annual returns
filed under section 6033 in the same manner as the
organizations referred to in paragraph (1).’’
(b) AMENDMENTS RELATED TO SECTION 4003 OF THE
ACT.—
(1) Subsection (b) of section 4003 of the Tax and
Trade Relief Extension Act of 1998 is amended by in-
serting ‘‘(7)(A)(i)(II),’’ after ‘‘(5)(A)(ii)(I),’’.
(2) Subparagraph (A) of section 9510(c)(1) is
amended by striking ‘‘August 5, 1997’’ and inserting
‘‘October 21, 1998’’.
451
(c) VACCINE TAX AND TRUST FUND.—Sections 1503
and 1504 of the Vaccine Injury Compensation Program
Modification Act (and the amendments made by such sec-
tions) are hereby repealed.
(d) EFFECTIVE DATE.—The amendments made by this
section shall take effect as if included in the provisions of
the Tax and Trade Relief Extension Act of 1998 to which
they relate.
SEC. 1602. AMENDMENTS RELATED TO INTERNAL REVENUE
SERVICE RESTRUCTURING AND REFORM ACT
OF 1998.
(a) AMENDMENT RELATED TO 1103 OF THE ACT.—
Paragraph (6) of section 6103(k) is amended—
(1) by inserting ‘‘and an officer or employee of
the Office of Treasury Inspector General for Tax Ad-
ministration’’ after ‘‘internal revenue officer or em-
ployee’’, and
(2) by striking ‘‘INTERNAL
REVENUE’’ in the
heading and inserting ‘‘CERTAIN’’.
(b) AMENDMENT RELATED TO SECTION 3509 OF THE
ACT.—Subparagraph (A) of section 6110(g)(5) is amended
by inserting ‘‘, any Chief Counsel advice,’’ after ‘‘technical
advice memorandum’’.
(c) EFFECTIVE DATE.—The amendments made by this
section shall take effect as if included in the provisions of
452
the Internal Revenue Service Restructuring and Reform Act
of 1998 to which they relate.
SEC. 1603. AMENDMENTS RELATED TO TAXPAYER RELIEF
ACT OF 1997.
(a) AMENDMENT RELATED TO SECTION 302 OF THE
ACT.—The last sentence of section 3405(e)(1)(B) is amend-
ed by inserting ‘‘(other than a Roth IRA)’’ after ‘‘indi-
vidual retirement plan’’.
(b) AMENDMENTS RELATED TO SECTION 1072 OF THE
ACT.—
(1) Clause (ii) of section 415(c)(3)(D) and sub-
paragraph (B) of section 403(b)(3) are each amended
by striking ‘‘section 125 or’’ and inserting ‘‘section
125, 132(f)(4), or’’.
(2) Paragraph (2) of section 414(s) is amended
by striking ‘‘section 125, 402(e)(3)’’ and inserting
‘‘section 125, 132(f)(4), 402(e)(3)’’.
(c) AMENDMENT RELATED TO SECTION 1454 OF THE
ACT.—Subsection (a) of section 7436 is amended by insert-
ing before the period at the end of the first sentence ‘‘and
the proper amount of employment tax under such deter-
mination’’.
(d) EFFECTIVE DATE.—The amendments made by this
section shall take effect as if included in the provisions of
the Taxpayer Relief of 1997 to which they relate.
453
SEC. 1604. OTHER TECHNICAL CORRECTIONS.
(a) AFFILIATED
CORPORATIONS
IN
CONTEXT
OF
WORTHLESS SECURITIES.—
(1) Subparagraph (A) of section 165(g)(3) is
amended to read as follows:
‘‘(A) the taxpayer owns directly stock in
such corporation meeting the requirements of sec-
tion 1504(a)(2), and’’.
(2) Paragraph (3) of section 165(g) is amended
by striking the last sentence.
(3) The amendments made by this subsection
shall apply to taxable years beginning after December
31, 1984.
(b) REFERENCE TO CERTAIN STATE PLANS.—
(1) Subparagraph (B) of section 51(d)(2) is
amended—
(A) by striking ‘‘plan approved’’ and insert-
ing ‘‘program funded’’, and
(B) by striking ‘‘(relating to assistance for
needy families with minor children)’’.
(2) The amendment made by paragraph (1) shall
take effect as if included in the amendments made by
section 1201 of the Small Business Job Protection Act
of 1996.
(c) AMOUNT OF IRA CONTRIBUTION OF LESSER EARN-
ING SPOUSE.—
454
(1) Clause (ii) of section 219(c)(1)(B) is amend-
ed by striking ‘‘and’’ at the end of subclause (I), by
redesignating subclause (II) as subclause (III), and
by inserting after subclause (I) the following new sub-
clause:
‘‘(II) the amount of any des-
ignated nondeductible contribution (as
defined in section 408(o)) on behalf of
such spouse for such taxable year,
and’’.
(2) The amendment made by paragraph (1) shall
take effect as if included in section 1427 of the Small
Business Job Protection Act of 1996.
(d) MODIFIED ENDOWMENT CONTRACTS.—
(1) Paragraph (2) of section 7702A(a) is amend-
ed by inserting ‘‘or this paragraph’’ before the period.
(2) Clause (ii) of section 7702A(c)(3)(A) is
amended by striking ‘‘under the contract’’ and insert-
ing ‘‘under the old contract’’.
(3) The amendments made by this subsection
shall take effect as if included in the amendments
made by section 5012 of the Technical and Miscella-
neous Revenue Act of 1988.
(e) LUMP-SUM DISTRIBUTIONS.—
455
(1) Clause (ii) of section 401(k)(10)(B) is
amended by adding at the end the following new sen-
tence: ‘‘Such term includes a distribution of an annu-
ity contract from—
‘‘(I) a trust which forms a part of
a plan described in section 401(a) and
which is exempt from tax under section
501(a), or
‘‘(II) an annuity plan described
in section 403(a).’’
(2) The amendment made by paragraph (1) shall
take effect as if included in section 1401 of the Small
Business Job Protection Act of 1996.
(f) TENTATIVE CARRYBACK ADJUSTMENTS OF LOSSES
FROM SECTION 1256 CONTRACTS.—
(1) Subsection (a) of section 6411 is amended by
striking ‘‘section 1212(a)(1)’’ and inserting ‘‘sub-
section (a)(1) or (c) of section 1212’’.
(2) The amendment made by paragraph (1) shall
take effect as if included in the amendments made by
section 504 of the Economic Recovery Tax Act of
1981.
456
SEC. 1605. CLERICAL CHANGES.
(1) Subsection (f) of section 67 is amended by
striking ‘‘the last sentence’’ and inserting ‘‘the second
sentence’’.
(2) The heading for paragraph (5) of section
408(d) is amended to read as follows:
‘‘(5) DISTRIBUTIONS OF EXCESS CONTRIBUTIONS
AFTER DUE DATE FOR TAXABLE YEAR AND CERTAIN
EXCESS ROLLOVER CONTRIBUTIONS.—’’.
(3) The heading for subparagraph (B) of section
529(e)(3) is amended by striking ‘‘UNDER GUARAN-
TEED PLANS’’.
(4)(A) Subsection (e) of section 678 is amended
by striking ‘‘an electing small business corporation’’
and inserting ‘‘an S corporation’’.
(B) Clause (v) of section 6103(e)(1)(D) is
amended to read as follows:
‘‘(v) if the corporation was an S cor-
poration, any person who was a shareholder
during any part of the period covered by
such return during which an election under
section 1362(a) was in effect, or’’.
(5) Subparagraph (B) of section 995(b)(3) is
amended by striking ‘‘the Military Security Act of
1954 (22 U.S.C. 1934)’’ and inserting ‘‘section 38 of
457
the International Security Assistance and Arms Ex-
port Control Act of 1976 (22 U.S.C. 2778)’’.
(6) Subparagraph (B) of section 4946(c)(3) is
amended by striking ‘‘the lowest rate of compensation
prescribed for GS-16 of the General Schedule under
section 5332’’ and inserting ‘‘the lowest rate of basic
pay for the Senior Executive Service under section
5382’’.
Amend the title so as to read: ‘‘A bill to provide for
reconciliation pursuant to sections 105 and 211 of the
concurrent resolution on the budget for fiscal year
2000.’’.