II
105TH CONGRESS
1ST SESSION
H. R. 2014
IN THE SENATE OF THE UNITED STATES
JUNE 26, 1997
Received
AN ACT
To provide for reconciliation pursuant to subsections (b)(2)
and (d) of section 105 of the concurrent resolution on
the budget for fiscal year 1998.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
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SECTION 1. SHORT TITLE; AMENDMENT OF 1986 CODE.
(a) SHORT TITLE.—This Act may be cited as the
‘‘Taxpayer Relief Act of 1997’’.
(b) AMENDMENT OF 1986 CODE.—Except as other-
wise expressly provided, whenever in this Act an amend-
ment or repeal is expressed in terms of an amendment
to, or repeal of, a section or other provision, the reference
shall be considered to be made to a section or other provi-
sion of the Internal Revenue Code of 1986.
(c) TABLE OF CONTENTS.—The table of contents for
this Act is as follows:
Sec. 1. Short title; amendment of 1986 Code.
TITLE I—CHILD TAX CREDIT; TAX INCENTIVES FOR DEPENDENT
CARE AND HEALTH CARE FOR CHILDREN
Sec. 101. Child tax credit.
Sec. 102. Inflation adjustment of limits and other modifications of dependent
care credit.
TITLE II—EDUCATION INCENTIVES
Subtitle A—Tax Benefits Relating to Education Expenses
Sec. 201. Hope credit for higher education tuition and related expenses.
Sec. 202. Deduction for qualified higher education expenses.
Sec. 203. Penalty-free withdrawals from individual retirement plans for higher
education expenses.
Sec. 204. Expenses for education which supplements elementary and secondary
education.
Subtitle B—Expanded Education Investment Savings Opportunities
Sec. 211. Eligible educational institutions permitted to maintain qualified tui-
tion programs; other modifications of qualified State tuition
programs.
Sec. 212. Education investment accounts.
Subtitle C—Other Education Initiatives
Sec. 221. Extension of exclusion for employer-provided educational assistance.
Sec. 222. Increase in limitation on qualified 501(c)(3) bonds other than hos-
pital bonds.
Sec. 223. Contributions of computer technology and equipment for elementary
or secondary school purposes.
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Sec. 224. Treatment of cancellation of certain student loans.
TITLE III—SAVINGS AND INVESTMENT INCENTIVES
Subtitle A—Retirement Savings
Sec. 301. Establishment of American Dream IRA.
Subtitle B—Capital Gains
PART I—INDIVIDUAL CAPITAL GAINS
Sec. 311. 20 percent maximum capital gains rate for individuals.
Sec. 312. Indexing of certain assets acquired after December 31, 2000, for pur-
poses of determining gain.
Sec. 313. Exemption from tax for gain on sale of principal residence.
PART II—CORPORATE CAPITAL GAINS
Sec. 321. Reduction of alternative capital gain tax for corporations.
TITLE IV—ALTERNATIVE MINIMUM TAX REFORM
Sec. 401. Adjustment of exemption amounts for taxpayers other than corpora-
tions.
Sec. 402. Exemption from alternative minimum tax for small corporations.
Sec. 403. Repeal of adjustment for depreciation.
Sec. 404. Minimum tax not to apply to farmers’ installment sales.
TITLE V—ESTATE, GIFT, AND GENERATION-SKIPPING TAX
PROVISIONS
Subtitle A—Estate and Gift Tax Provisions
Sec. 501. Cost-of-living adjustments relating to estate and gift tax provisions.
Sec. 502. 20-year installment payment where estate consists largely of interest
in closely held business.
Sec. 503. No interest on certain portion of estate tax extended under section
6166, reduced interest on remaining portion, and no deduction
for such reduced interest.
Sec. 504. Extension of treatment of certain rents under section 2032A to lineal
descendants.
Sec. 505. Clarification of judicial review of eligibility for extension of time for
payment of estate tax.
Sec. 506. Gifts may not be revalued for estate tax purposes after expiration of
statute of limitations.
Sec. 507. Termination of throwback rules for domestic trusts.
Sec. 508. Unified credit of decedent increased by unified credit of spouse used
on split gift included in decedent’s gross estate.
Sec. 509. Reformation of defective bequests, etc., to spouse of decedent.
Subtitle B—Generation-Skipping Tax Provisions
Sec. 511. Severing of trusts holding property having an inclusion ratio of great-
er than zero.
Sec. 512. Expansion of exception from generation-skipping transfer tax for
transfers to individuals with deceased parents.
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TITLE VI—EXTENSION AND MODIFICATION OF CERTAIN
EXPIRING PROVISIONS
Sec. 601. Research tax credit.
Sec. 602. Contributions of stock to private foundations.
Sec. 603. Work opportunity tax credit.
Sec. 604. Orphan drug tax credit.
Sec. 605. Budgetary treatment of expiring preferential excise tax rates which
are dedicated to trust funds.
TITLE VII—INCENTIVES FOR REVITALIZATION OF THE DISTRICT
OF COLUMBIA
Sec. 701. Tax incentives for revitalization of the District of Columbia.
Sec. 702. Incentives conditioned on other DC reform.
TITLE VIII—WELFARE-TO-WORK INCENTIVES
Sec. 801. Incentives for employing long-term family assistance recipients.
TITLE IX—MISCELLANEOUS PROVISIONS
Subtitle A—Provisions Relating to Excise Taxes
Sec. 901. Repeal of tax on diesel fuel used in recreational boats.
Sec. 902. Continued application of tax on imported recycled Halon-1211.
Sec. 903. Uniform rate of tax on vaccines.
Sec. 904. Operators of multiple gasoline retail outlets treated as wholesale dis-
tributor for refund purposes.
Sec. 905. Exemption of electric and other clean-fuel motor vehicles from luxury
automobile classification.
Subtitle B—Provisions Relating to Pensions and Fringe Benefits
Sec. 911. Section 401(k) plans for certain irrigation and drainage entities.
Sec. 912. Extension of moratorium on application of certain nondiscrimination
rules to State and local governments.
Sec. 913. Treatment of certain disability benefits received by former police offi-
cers or firefighters.
Sec. 914. Portability of permissive service credit under governmental pension
plans.
Sec. 915. Gratuitous transfers for the benefit of employees.
Sec. 916. Treatment of certain transportation on non-commercially operated
aircraft as a fringe benefit excludable from gross income.
Sec. 917. Minimum pension accrued benefit distributable without consent in-
creased to $5,000.
Sec. 918. Clarification of certain rules relating to employee stock ownership
plans of S corporations.
Subtitle C—Revisions Relating to Disasters
Sec. 921. Authority to postpone certain tax-related deadlines by reason of presi-
dentially declared disaster.
Sec. 922. Use of certain appraisals to establish amount of disaster loss.
Sec. 923. Treatment of livestock sold on account of weather-related conditions.
Sec. 924. Mortgage financing for residences located in disaster areas.
Subtitle D—Provisions Relating to Employment Taxes
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Sec. 931. Clarification of employment tax status of individuals distributing bak-
ery products.
Sec. 932. Clarification of standard to be used in determining employment tax
status of retail securities brokers.
Sec. 933. Clarification of exemption from self-employment tax for certain termi-
nation payments received by former insurance salesmen.
Sec. 934. Standards for determining whether individuals are not employees.
Subtitle E—Provisions Relating to Small Businesses
Sec. 941. Waiver of penalty through 1998 on small businesses failing to make
electronic fund transfers of taxes.
Sec. 942. Clarification of treatment of home office use for administrative and
management activities.
Subtitle F—Other Provisions
Sec. 951. Use of estimates of shrinkage for inventory accounting.
Sec. 952. Assignment of workmen’s compensation liability eligible for exclusion
relating to personal injury liability assignments.
Sec. 953. Tax-exempt status for certain State worker’s compensation act com-
panies.
Sec. 954. Election to continue exception from treatment of publicly traded part-
nerships as corporations.
Sec. 955. Exclusion from unrelated business taxable income for certain sponsor-
ship payments.
Sec. 956. Associations of holders of timeshare interests to be taxed like other
homeowners associations.
Sec. 957. Additional advance refunding of certain Virgin Island bonds.
Sec. 958. Nonrecognition of gain on sale of stock to certain farmers’ coopera-
tives.
Sec. 959. Exception from reporting of real estate transactions for sales and ex-
changes of certain principal residences.
Sec. 960. Increased deductibility of business meal expenses for individuals sub-
ject to Federal hours of service.
Sec. 961. Qualified lessee construction allowances for short-term leases.
Sec. 962. Tax treatment of consolidations of life insurance departments of mu-
tual savings banks.
Sec. 963. Offset of past-due, legally enforceable State tax obligations against
overpayments.
Sec. 964. Exemption of the incremental cost of a clean fuel vehicle from the
limits on depreciation for vehicles.
Sec. 965. Tax benefits for law enforcement officers killed in the line of duty.
Sec. 966. Temporary suspension of taxable income limit on percentage deple-
tion for marginal production.
Subtitle G—Extension of Duty-Free Treatment Under Generalized System of
Preferences; Tariff Treatment of Certain Equipment and Repair of Vessels
Sec. 971. Generalized system of preferences.
Sec. 972. Equipment and repair of vessels.
Subtitle H—United States-Caribbean Basin Trade Partnership Act
Sec. 981. Short title.
Sec. 982. Findings and policy.
Sec. 983. Definitions.