I
105TH CONGRESS
2D SESSION
H. R. 4579
To provide tax relief for individuals, families, and farming and other small
businesses, to provide tax incentives for education, to extend certain
expiring provisions, and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
SEPTEMBER 16, 1998
Mr. ARCHER introduced the following bill; which was referred to the
Committee on Ways and Means
A BILL
To provide tax relief for individuals, families, and farming
and other small businesses, to provide tax incentives
for education, to extend certain expiring provisions, 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, ETC.
(a) SHORT TITLE.—This Act may be cited as the
‘‘Taxpayer Relief Act of 1998’’.
(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.—
Sec. 1. Short title, etc.
TITLE I—PROVISIONS PRIMARILY AFFECTING INDIVIDUALS AND
FAMILIES
Subtitle A—General Provisions
Sec. 101. Elimination of marriage penalty in standard deduction.
Sec. 102. Exemption of certain interest and dividend income from tax.
Sec. 103. Nonrefundable personal credits allowed against alternative minimum
tax.
Sec. 104. 100 percent deduction for health insurance costs of self-employed in-
dividuals.
Sec. 105. Special rule for members of uniformed services and Foreign Service
in determining exclusion of gain from sale of principal resi-
dence.
Sec. 106. $1,000,000 exemption from estate and gift taxes.
Subtitle B—Provisions Relating to Education
Sec. 111. Eligible educational institutions permitted to maintain qualified tui-
tion programs.
Sec. 112. Modification of arbitrage rebate rules applicable to public school con-
struction bonds.
Subtitle C—Provisions Relating to Social Security
Sec. 121. Increases in the social security earnings limit for individuals who
have attained retirement age.
Sec. 122. Recomputation of benefits after normal retirement age.
TITLE II—PROVISIONS PRIMARILY AFFECTING FARMING AND
OTHER BUSINESSES
Subtitle A—Increase in Expense Treatment for Small Businesses
Sec. 201. Increase in expense treatment for small businesses.
Subtitle B—Provisions Relating to Farmers
Sec. 211. Income averaging for farmers made permanent.
Sec. 212. 5-year net operating loss carryback for farming losses.
Sec. 213. Production flexibility contract payments.
Subtitle C—Increase in Volume Cap on Private Activity Bonds
Sec. 221. Increase in volume cap on private activity bonds.
TITLE III—EXTENSION AND MODIFICATION OF CERTAIN
EXPIRING PROVISIONS
Subtitle A—Tax Provisions
Sec. 301. Research credit.
Sec. 302. Work opportunity credit.
Sec. 303. Welfare-to-work credit.
Sec. 304. Contributions of stock to private foundations; expanded public inspec-
tion of private foundations’ annual returns.
Sec. 305. Subpart F exemption for active financing income.
Subtitle B—Generalized System of Preferences
Sec. 311. Extension of Generalized System of Preferences.
TITLE IV—REVENUE OFFSET
Sec. 401. Treatment of certain deductible liquidating distributions of regulated
investment companies and real estate investment trusts.
TITLE V—TECHNICAL CORRECTIONS
Sec. 501. Definitions; coordination with other titles.
Sec. 502. Amendments related to Internal Revenue Service Restructuring and
Reform Act of 1998.
Sec. 503. Amendments related to Taxpayer Relief Act of 1997.
Sec. 504. Amendments related to Tax Reform Act of 1984.
Sec. 505. Other amendments.
TITLE VI—AMERICAN COMMUNITY RENEWAL ACT OF 1998
Sec. 601. Short title.
Sec. 602. Findings and purpose.
Subtitle A—Designation and Evaluation of Renewal Communities
Sec. 611. Short title.
Sec. 612. Statement of purpose.
Sec. 613. Designation of renewal communities.
Sec. 614. Evaluation and reporting requirements.
Sec. 615. Interaction with other Federal programs.
Subtitle B—Tax Incentives for Renewal Communities
Sec. 621. Tax treatment of renewal communities.
Sec. 622. Extension of work opportunity tax credit for renewal communities.
Sec. 623. Conforming and clerical amendments.
TITLE 
I—PROVISIONS 
PRI-
MARILY AFFECTING INDIVID-
UALS AND FAMILIES
Subtitle A—General Provisions
SEC. 101. ELIMINATION OF MARRIAGE PENALTY IN STAND-
ARD DEDUCTION.
(a) IN GENERAL.—Paragraph (2) of section 63(c)
(relating to standard deduction) is amended—
(1) by striking ‘‘$5,000’’ in subparagraph (A)
and inserting ‘‘twice the dollar amount in effect
under subparagraph (C) for the taxable year’’,
(2) by adding ‘‘or’’ at the end of subparagraph
(B),
(3) by striking ‘‘in the case of’’ and all that fol-
lows in subparagraph (C) and inserting ‘‘in any
other case.’’, and
(4) by striking subparagraph (D).
(b) ADDITIONAL STANDARD DEDUCTION FOR AGED
AND BLIND TO BE THE SAME FOR MARRIED AND UN-
MARRIED INDIVIDUALS.—
(1) Paragraphs (1) and (2) of section 63(f) are
each amended by striking ‘‘$600’’ and inserting
‘‘$750’’.
(2) Subsection (f) of section 63 is amended by
striking paragraph (3) and by redesignating para-
graph (4) as paragraph (3).
(c) TECHNICAL AMENDMENT.—Subparagraph (B) of
section 1(f)(6) is amended by striking ‘‘(other than with’’
and all that follows through ‘‘shall be applied’’ and insert-
ing ‘‘(other than with respect to sections 63(c)(4) and
151(d)(4)(A)) shall be applied’’.
(d) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
December 31, 1998.
SEC. 102. EXEMPTION OF CERTAIN INTEREST AND DIVI-
DEND INCOME FROM TAX.
(a) IN GENERAL.—Part III of subchapter B of chap-
ter 1 (relating to amounts specifically excluded from gross
income) is amended by inserting after section 115 the fol-
lowing new section:
‘‘SEC. 116. PARTIAL EXCLUSION OF DIVIDENDS AND INTER-
EST RECEIVED BY INDIVIDUALS.
‘‘(a) EXCLUSION FROM GROSS INCOME.—Gross in-
come does not include dividends and interest received dur-
ing the taxable year by an individual.
‘‘(b) LIMITATIONS.—
‘‘(1) 
MAXIMUM
AMOUNT.—The 
aggregate
amount excluded under subsection (a) for any tax-
able year shall not exceed $200 ($400 in the case of
a joint return).
‘‘(2) CERTAIN
DIVIDENDS
EXCLUDED.—Sub-
section (a) shall not apply to any dividend from a
corporation which, for the taxable year of the cor-
poration in which the distribution is made, or for the
next preceding taxable year of the corporation, is a
corporation exempt from tax under section 501 (re-
lating to certain charitable, etc., organization) or
section 521 (relating to farmers’ cooperative associa-
tions).
‘‘(c) SPECIAL RULES.—For purposes of this sec-
tion—
‘‘(1) DISTRIBUTIONS
FROM
REGULATED
IN-
VESTMENT COMPANIES AND REAL ESTATE INVEST-
MENT TRUSTS.—Subsection (a) shall apply with re-
spect to distributions by—
‘‘(A) regulated investment companies sub-
ject to the limitations provided in section
854(b), and
‘‘(B) real estate investment trusts subject
to the limitations provided in section 857(c).
‘‘(2) DISTRIBUTIONS BY A TRUST.—For pur-
poses of subsection (a), the amount of dividends and
interest properly allocable to a beneficiary under sec-
tion 652 or 662 shall be deemed to have been re-
ceived by the beneficiary ratably on the same date
that the dividends and interest were received by the
estate or trust.
‘‘(3) CERTAIN
NONRESIDENT
ALIENS
INELI-
GIBLE
FOR
EXCLUSION.—In the case of a non-
resident alien individual, subsection (a) shall apply
only—
‘‘(A) in determining the tax imposed for
the taxable year pursuant to section 871(b)(1)
and only in respect of dividends and interest
which are effectively connected with the conduct
of a trade or business within the United States,
or
‘‘(B) in determining the tax imposed for
the taxable year pursuant to section 877(b).
‘‘(4) DIVIDENDS FROM EMPLOYEE STOCK OWN-
ERSHIP PLANS.—Subsection (a) shall not apply to
any dividend described in section 404(k).’’
(b) CONFORMING AMENDMENTS.—
(1) Paragraph (2) of section 265(a) is amended
by inserting before the period ‘‘, or to purchase or
carry obligations or shares, or to make deposits, to
the extent the interest thereon is excludable from
gross income under section 116’’.
(2) Subsection (c) of section 584 is amended by
adding at the end thereof the following new flush
sentence:
‘‘The proportionate share of each participant in the
amount of dividends or interest received by the common
trust fund and to which section 116 applies shall be con-
sidered for purposes of such section as having been re-
ceived by such participant.’’
(3) Subsection (a) of section 643 is amended by
redesignating paragraph (7) as paragraph (8) and
by inserting after paragraph (6) the following new
paragraph:
‘‘(7) DIVIDENDS OR INTEREST.—There shall be
included the amount of any dividends or interest ex-
cluded from gross income pursuant to section 116.’’
(4) Section 854 is amended to read as follows:
‘‘SEC. 854. LIMITATIONS APPLICABLE TO DIVIDENDS RE-
CEIVED 
FROM 
REGULATED 
INVESTMENT
COMPANY.
‘‘(a) CAPITAL GAIN DIVIDEND.—For purposes of sec-
tion 116 (relating to partial exclusion of dividends and in-
terest received by individuals) and section 243 (relating
to deductions for dividends received by corporations), a
capital gain dividend (as defined in section 852(b)(3)) re-
ceived from a regulated investment company shall not be
considered as a dividend.
‘‘(b) OTHER DIVIDENDS.—
‘‘(1) AMOUNT TREATED AS DIVIDEND.—
‘‘(A) DEDUCTION UNDER SECTION 243.—
In any case in which—
‘‘(i) a dividend is received from a reg-
ulated investment company (other than a
dividend to which subsection (a) applies),
and
‘‘(ii) such investment company meets
the requirements of section 852(a) for the
taxable year during which it paid such div-
idend,
then, in computing any deduction under section
243, there shall be taken into account only that
portion of such dividend designated under this
subparagraph by the regulated investment com-
pany and such dividend shall be treated as re-
ceived from a corporation which is not a 20-per-
cent owned corporation.
‘‘(B) EXCLUSION UNDER SECTION 116.—If
the aggregate dividends and interest received by
a regulated investment company during any
taxable year are less than 95 percent of its
gross income, then in computing the exclusion
under section 116, rules similar to the rules of
subparagraph (A) shall apply.
‘‘(C) LIMITATIONS.—
‘‘(i) SECTION
243.—The aggregate
amount which may be designated as divi-
dends under subparagraph (A) shall not
exceed the aggregate dividends received by
the company for the taxable year.
‘‘(ii) SECTION
116.—The aggregate
amount which may be designated as divi-
dends under subparagraph (B) shall not
exceed the sum of the aggregate dividends
and aggregate interest received by the
company for the taxable year.
‘‘(2) NOTICE TO SHAREHOLDERS.—The amount
of any distribution by a regulated investment com-
pany which may be taken into account as a dividend
for purposes of the exclusion under section 116 and
the deduction under section 243 shall not exceed the
amount so designated by the company in a written
notice to its shareholders mailed not later than 60
days after the close of its taxable year.
‘‘(3) DEFINITIONS.—For purposes of this sub-
section—
‘‘(A) GROSS INCOME.—In the case of 1 or
more sales or other dispositions of stock or se-
curities, the term ‘gross income’ includes only
the excess of—
‘‘(i) the net short-term capital gain
from such sales or dispositions, over
‘‘(ii) the net long-term capital loss
from such sales or dispositions.
‘‘(B) AGGREGATE DIVIDENDS.—
‘‘(i) IN GENERAL.—The term ‘aggre-
gate dividends’ does not include dividends
described in section 116(b)(2) (relating to
dividends excluded from income).
‘‘(ii) DISTRIBUTIONS FROM REAL ES-
TATE
INVESTMENT
TRUSTS
AND
OTHER
REGULATED INVESTMENT COMPANIES.—In
determining the amount of any dividend
for purposes of this subparagraph, the
rules of section 116(c)(1) shall apply; ex-
cept that, for purposes of applying sub-
paragraph (C)(i) of paragraph (1), aggre-
gate dividends shall not include a distribu-
tion from a real estate investment trust
which, for the taxable year of the trust in
which the dividend is paid, qualifies under
part II of subchapter M (section 856 and
following).
‘‘(C) AGGREGATE
INTEREST.—The term
‘aggregate interest’ means only interest includ-
ible in gross income. Gross income and aggre-
gate interest received shall each be reduced by
so much of the deduction allowable by section
163 for the taxable year as does not exceed ag-
gregate interest received for the taxable year.
‘‘(4) SPECIAL RULE FOR COMPUTING DEDUC-
TION UNDER SECTION 243.—For purposes of sub-
paragraph (A) of paragraph (1), an amount shall be
treated as a dividend for the purpose of paragraph
(1) only if a deduction would have been allowable
under section 243 to the regulated investment com-
pany determined—
‘‘(A) as if section 243 applied to dividends
received by a regulated investment company,
‘‘(B) after the application of section 246
(but without regard to subsection (b) thereof),
and
‘‘(C) after the application of section
246A.’’
(5) Subsection (c) of section 857 is amended to
read as follows:
‘‘(c) LIMITATIONS APPLICABLE TO DIVIDENDS RE-
CEIVED FROM REAL ESTATE INVESTMENT TRUSTS.—
‘‘(1) CAPITAL GAIN DIVIDEND.—For purposes
of section 116 (relating to partial exclusion of divi-
dends and interest received by individuals), a capital
gain dividend (as defined in subsection (b)(3)(C)) re-
ceived from a real estate investment trust which
meets the requirements of this part shall not be con-
sidered as a dividend.
‘‘(2) ONLY
PORTION
OF
DIVIDEND
EXCLUD-
ABLE UNDER SECTION 116 IN CERTAIN CASES.—
‘‘(A) IN
GENERAL.—In any case in
which—
‘‘(i) a dividend is received from a real
estate investment trust (other than a cap-
ital gain dividend, as defined in subsection
(b)(3)(C)),
‘‘(ii) such trust meets the require-
ments of this part for the taxable year dur-
ing which it paid such dividend, and
‘‘(iii) the aggregate interest received
by such trust during the taxable year is
less than 95 percent of its gross income,
then, in computing any exclusion under section
116, there shall be taken into account only that
portion of such dividend designated under this
subparagraph as interest by the real estate in-
vestment trust.
‘‘(B) LIMITATION.—The aggregate amount
which may be designated as interest under sub-
paragraph (A) shall not exceed the aggregate
interest received by the trust for the taxable
year.
‘‘(3) ADJUSTMENTS TO GROSS INCOME AND AG-
GREGATE
INTEREST
RECEIVED.—For purposes of
this subsection—
‘‘(A) gross income does not include net
capital gain,
‘‘(B) gross income and aggregate interest
received shall each be reduced by so much of
the deduction allowable by section 163 for the
taxable year (other than for interest on mort-
gages on real property owned by the real estate
investment trust) as does not exceed aggregate
interest received for the taxable year, and
‘‘(C) gross income shall be reduced by the
sum of the taxes imposed by paragraphs (4),
(5), and (6) of subsection (b).
‘‘(4) AGGREGATE INTEREST.—For purposes of
this subsection, the term ‘aggregate interest’ means
only interest includible in gross income.
‘‘(5) NOTICE TO SHAREHOLDERS.—The amount
of any distribution by a real estate investment trust
which may be taken into account as interest for pur-
poses of the exclusion under section 116 shall not
exceed the amount so designated by the trust in a
written notice to its shareholders mailed not later
than 60 days after the close of its taxable year.
‘‘(6) CROSS REFERENCE.—
‘‘For restriction on dividends received by a cor-
poration, see section 243(d)(3).’’
(6) The table of sections for part III of sub-
chapter B of chapter 1 is amended by inserting after
the item relating to section 115 the following new
item:
‘‘Sec. 116. Partial exclusion of dividends and interest received by
individuals.’’
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
December 31, 1998.
SEC. 103. NONREFUNDABLE PERSONAL CREDITS ALLOWED
AGAINST ALTERNATIVE MINIMUM TAX.
(a) IN GENERAL.—Subsection (a) of section 26 is
amended to read as follows:
‘‘(a) LIMITATION BASED ON AMOUNT OF TAX.—The
aggregate amount of credits allowed by this subpart for
the taxable year shall not exceed the sum of—
‘‘(1) the taxpayer’s regular tax liability for the
taxable year, and
‘‘(2) the tax imposed for the taxable year by
section 55(a).’’.
(b) CONFORMING AMENDMENTS.—
(1) Subsection (d) of section 24 is amended by
striking paragraph (2) and by redesignating para-
graph (3) as paragraph (2).
(2) Section 32 is amended by striking sub-
section (h).
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
December 31, 1997.
SEC. 104. 100 PERCENT DEDUCTION FOR HEALTH INSUR-
ANCE COSTS OF SELF-EMPLOYED INDIVID-
UALS.
(a) IN GENERAL.—Paragraph (1) of section 162(l)
(relating to special rules for health insurance costs of self-
employed individuals) is amended to read as follows:
‘‘(1) ALLOWANCE OF DEDUCTION.—In the case
of an individual who is an employee within the
meaning of section 401(c)(1), there shall be allowed
as a deduction under this section an amount equal
to 100 percent of the amount paid during the tax-
able year for insurance which constitutes medical
care for the taxpayer, his spouse, and dependents.’’
(b) EFFECTIVE DATE.—The amendment made by
this section shall apply to taxable years beginning after
December 31, 1998.
SEC. 105. SPECIAL RULE FOR MEMBERS OF UNIFORMED
SERVICES AND FOREIGN SERVICE IN DETER-
MINING EXCLUSION OF GAIN FROM SALE OF
PRINCIPAL RESIDENCE.
(a) IN GENERAL.—Subsection (d) of section 121 (re-
lating to exclusion of gain from sale of principal residence)
is amended by adding at the end the following new para-
graph:
‘‘(9) MEMBERS OF UNIFORMED SERVICES AND
FOREIGN SERVICE.—
‘‘(A) IN GENERAL.—The running of the 5-
year period described in subsection (a) shall be
suspended with respect to an individual during
any time that such individual or such individ-
ual’s spouse is serving on qualified official ex-
tended duty as a member of the uniformed
services or of the Foreign Service.
‘‘(B) QUALIFIED
OFFICIAL
EXTENDED
DUTY.—For purposes of subparagraph (A)—
‘‘(i) IN
GENERAL.—For purposes of
this paragraph, the term ‘qualified official
extended duty’ means any period of ex-
tended duty as a member of the uniformed
services or a member of the Foreign Serv-
ice during which the member serves at a
duty station which is at least 50 miles
from such property or is under Govern-
ment orders to reside in Government quar-
ters.
‘‘(ii) 
UNIFORMED
SERVICES.—For
purposes of clause (i), the term ‘uniformed
services’ shall have the meaning given such
term by section 101(a)(5) of title 10,
United States Code, as in effect on the
date of the enactment of this paragraph.
‘‘(iii) FOREIGN
SERVICE
OF
THE
UNITED STATES.—For purposes of clause
(i), the term ‘member of the Foreign Serv-
ice’ has the meaning given the term ‘mem-
ber of the Service’ by paragraph (1), (2),
(3), (4), or (5) of section 103 of the For-
eign Service Act of 1980, as in effect on
the date of the enactment of this para-
graph.
‘‘(iv) EXTENDED
DUTY.—The term
‘extended duty’ means any period of active
duty pursuant to a call or order to such
duty for a period in excess of 90 days or
for an indefinite period.’’.
(b) EFFECTIVE DATE.—The amendment made by
this section shall apply to sales and exchanges after the
date of the enactment of this Act.
SEC. 106. $1,000,000 EXEMPTION FROM ESTATE AND GIFT
TAXES.
(a) IN GENERAL.—Subsection (c) of section 2010
(relating to applicable credit amount) is amended to read
as follows:
‘‘(c) APPLICABLE CREDIT AMOUNT.—
‘‘(1) IN GENERAL.—For purposes of this sec-
tion, the applicable credit amount is $345,800.
‘‘(2) APPLICABLE
EXCLUSION
AMOUNT.—For
purposes of the provisions of this title which refer to
this subsection, the applicable exclusion amount is
$1,000,000.’’
(b) EFFECTIVE DATE.—The amendment made by
this section shall apply to estates of decedents dying, and
gifts made, after December 31, 1998.
Subtitle B—Provisions Relating to
Education
SEC. 111. ELIGIBLE EDUCATIONAL INSTITUTIONS PER-
MITTED TO MAINTAIN QUALIFIED TUITION
PROGRAMS.
(a) IN GENERAL.—Paragraph (1) of section 529(b)
(defining qualified State tuition program) is amended by
inserting ‘‘or by 1 or more eligible educational institu-
tions’’ after ‘‘maintained by a State or agency or instru-
mentality thereof’’.
(b) TECHNICAL AMENDMENTS.—
(1) The texts of sections 72(e)(9), 135(c)(2)(C),
135(d)(1)(D), 529, 530, and 4973(e)(1)(B) are each
amended by striking ‘‘qualified State tuition pro-
gram’’ each place it appears and inserting ‘‘qualified
tuition program’’.
(2) The paragraph heading for paragraph (9) of
section 72(e) and the subparagraph heading for sub-
paragraph (B) of section 530(b)(2) are each amend-
ed by striking ‘‘QUALIFIED
STATE
TUITION
PRO-
GRAMS’’ and inserting ‘‘QUALIFIED
TUITION
PRO-
GRAMS’’.
(3) The subparagraph heading for subpara-
graph (C) of section 135(c)(2) is amended by strik-
ing ‘‘QUALIFIED STATE TUITION PROGRAM’’ and in-
serting ‘‘QUALIFIED TUITION PROGRAMS’’.
(4) Sections 529(c)(3)(D)(i) and 6693(a)(2)(C)
are each amended by striking ‘‘qualified State tui-
tion programs’’ and inserting ‘‘qualified tuition pro-
grams’’.
(5)(A) The section heading of section 529 is
amended to read as follows:
‘‘SEC. 529. QUALIFIED TUITION PROGRAMS.’’.
(B) The item relating to section 529 in the
table of sections for part VIII of subchapter F of
chapter 1 is amended by striking ‘‘State’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall take effect on January 1, 1999.
SEC. 112. MODIFICATION OF ARBITRAGE REBATE RULES
APPLICABLE TO PUBLIC SCHOOL CONSTRUC-
TION BONDS.
(a) IN GENERAL.—Subparagraph (C) of section
148(f)(4) is amended by adding at the end the following
new clause:
‘‘(xviii) 4-YEAR
SPENDING
REQUIRE-
MENT FOR PUBLIC SCHOOL CONSTRUCTION
ISSUE.—
‘‘(I) IN GENERAL.—In the case
of a public school construction issue,
the spending requirements of clause
(ii) shall be treated as met if at least
10 percent of the available construc-
tion proceeds of the construction issue
are spent for the governmental pur-
poses of the issue within the 1-year
period beginning on the date the
bonds are issued, 30 percent of such
proceeds are spent for such purposes
within the 2-year period beginning on
such date, 50 percent of such pro-
ceeds are spent for such purposes
within the 3-year period beginning on
such date, and 100 percent of such
proceeds are spent for such purposes
within the 4-year period beginning on
such date.
‘‘(II) 
PUBLIC
SCHOOL
CON-
STRUCTION ISSUE.—For purposes of
this clause, the term ‘public school
construction issue’ means any con-
struction issue if no bond which is
part of such issue is a private activity
bond and all of the available construc-
tion proceeds of such issue are to be
used for the construction (as defined
in clause (iv)) of public school facili-
ties to provide education or training
below the postsecondary level or for
the acquisition of land that is func-
tionally related and subordinate to
such facilities.
‘‘(III) 
OTHER
RULES
TO
APPLY.—Rules similar to the rules of
the preceding provisions of this sub-
paragraph which apply to clause (ii)
also apply to this clause.’’
(b) EFFECTIVE DATE.—The amendment made by
this section shall apply to obligations issued after Decem-
ber 31, 1998.
Subtitle C—Provisions Relating to
Social Security
SEC. 121. INCREASES IN THE SOCIAL SECURITY EARNINGS
LIMIT FOR INDIVIDUALS WHO HAVE AT-
TAINED RETIREMENT AGE.
(a) IN GENERAL.—Section 203(f)(8)(D) of the Social
Security Act (42 U.S.C. 403(f)(8)(D)) is amended by
striking clauses (iv) through (vii) and inserting the follow-
ing new clauses:
‘‘(iv) for each month of any taxable
year ending after 1998 and before 2000,
$1,416.662⁄3,
‘‘(v) for each month of any taxable
year ending after 1999 and before 2001,
$1,541.662⁄3,
‘‘(vi) for each month of any taxable
year ending after 2000 and before 2002,
$2,166.662⁄3, and
‘‘(vii) for each month of any taxable
year ending after 2001 and before 2003,
$2,500.’’.
(b) CONFORMING AMENDMENT.—The second sen-
tence of section 223(d)(4)(A) of such Act (42 U.S.C.
423(d)(4)(A)) is amended by inserting ‘‘and section 121
of the Taxpayer Relief Act of 1998’’ after ‘‘1996’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply with respect to taxable years end-
ing after 1998.
SEC. 122. RECOMPUTATION OF BENEFITS AFTER NORMAL
RETIREMENT AGE.
(a) IN GENERAL.—Section 215(f)(2)(D)(i) of the So-
cial Security Act (42 U.S.C. 415(f)(2)(D)(i)) is amended
to read as follows:
‘‘(i) in the case of an individual who did not die
in the year with respect to which the recomputation
is made, for monthly benefits beginning with bene-
fits for January of—
‘‘(I) the second year following the year
with respect to which the recomputation is
made, in any such case in which the individual
is entitled to old-age insurance benefits, the in-
dividual has attained retirement age (as defined
in section 216(l)) as of the end of the year pre-
ceding the year with respect to which the re-
computation is made, and the year with respect
to which the recomputation is made would not
be substituted in recomputation under this sub-
section for a benefit computation year in which
no wages or self-employment income have been
credited previously to such individual, or
‘‘(II) the first year following the year with
respect to which the recomputation is made, in
any other such case; or’’.
(b) CONFORMING AMENDMENTS.—
(1) Section 215(f)(7) of such Act (42 U.S.C.
415(f)(7)) is amended by inserting ‘‘, and as
amended by section 122(b)(2) of the Taxpayer Relief
Act of 1998,’’ after ‘‘This subsection as in effect in
December 1978’’.
(2) Subparagraph (A) section 215(f)(2) of the
Social Security Act as in effect in December 1978
and applied in certain cases under the provisions of
such Act as in effect after December 1978 is amend-
ed—
(A) by striking ‘‘in the case of an individ-
ual who did not die’’ and all that follows and
inserting ‘‘in the case of an individual who did
not die in the year with respect to which the re-
computation is made, for monthly benefits be-
ginning with benefits for January of—’’; and
(B) by adding at the end the following:
‘‘(i) the second year following the year with
respect to which the recomputation is made, in
any such case in which the individual is entitled
to old-age insurance benefits, the individual has
attained age 65 as of the end of the year pre-
ceding the year with respect to which the re-
computation is made, and the year with respect
to which the recomputation is made would not
be substituted in recomputation under this sub-
section for a benefit computation year in which
no wages or self-employment income have been
credited previously to such individual, or
‘‘(ii) the first year following the year with
respect to which the recomputation is made, in
any other such case; or’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply with respect to recomputations of
primary insurance amounts based on wages paid and self
employment income derived after 1997 and with respect
to benefits payable after December 31, 1998.
TITLE 
II—PROVISIONS 
PRI-
MARILY AFFECTING FARMING
AND OTHER BUSINESSES
Subtitle A—Increase in Expense
Treatment for Small Businesses
SEC. 201. INCREASE IN EXPENSE TREATMENT FOR SMALL
BUSINESSES.
(a) GENERAL RULE.—Paragraph (1) of section
179(b) (relating to dollar limitation) is amended to read
as follows:
‘‘(1) DOLLAR LIMITATION.—The aggregate cost
which may be taken into account under subsection
(a) for any taxable year shall not exceed $25,000.’’
(b) EFFECTIVE DATE.—The amendment made by
this section shall apply to taxable years beginning after
December 31, 1998.
Subtitle B—Provisions Relating to
Farmers
SEC. 211. INCOME AVERAGING FOR FARMERS MADE PER-
MANENT.
Subsection (c) of section 933 of the Taxpayer Relief
Act of 1997 is amended by striking ‘‘, and before January
1, 2001’’.
SEC. 212. 5-YEAR NET OPERATING LOSS CARRYBACK FOR
FARMING LOSSES.
(a) IN GENERAL.—Paragraph (1) of section 172(b)
(relating to net operating loss deduction) is amended by
adding at the end the following new subparagraph:
‘‘(G) FARMING LOSSES.—In the case of a
taxpayer which has a farming loss (as defined
in subsection (i)) for a taxable year, such farm-
ing loss shall be a net operating loss carryback
to each of the 5 taxable years preceding the
taxable year of such loss.’’
(b) FARMING LOSS.—Section 172 is amended by re-
designating subsection (i) as subsection (j) and by insert-
ing after subsection (h) the following new subsection:
‘‘(i) RULES RELATING TO FARMING LOSSES.—For
purposes of this section—
‘‘(1) IN
GENERAL.—The term ‘farming loss’
means the lesser of—
‘‘(A) the amount which would be the net
operating loss for the taxable year if only in-
come and deductions attributable to farming
businesses (as defined in section 263A(e)(4))
are taken into account, or
‘‘(B) the amount of the net operating loss
for such taxable year.
‘‘(2) 
COORDINATION
WITH
SUBSECTION
(b)(2).—For purposes of applying subsection (b)(2),
a farming loss for any taxable year shall be treated
in a manner similar to the manner in which a speci-
fied liability loss is treated.
‘‘(3) ELECTION.—Any taxpayer entitled to a 5-
year carryback under subsection (b)(1)(G) from any
loss year may elect to have the carryback period
with respect to such loss year determined without re-
gard to subsection (b)(1)(G). Such election shall be
made in such manner as may be prescribed by the
Secretary and shall be made by the due date (includ-
ing extensions of time) for filing the taxpayer’s re-
turn for the taxable year of the net operating loss.
tached to the return, in a manner adequate to ap-
prise the Secretary of the nature of such item.’’.
(2) Paragraph (9) of section 6501(c) of the
1986 Code is amended by striking the last sentence.
(d) AMENDMENTS RELATED TO SECTION 904 OF
1997 ACT.—
(1) Paragraph (1) of section 9510(c) of the
1986 Code is amended to read as follows:
‘‘(1) IN GENERAL.—Amounts in the Vaccine In-
jury Compensation Trust Fund shall be available, as
provided in appropriation Acts, only for—
‘‘(A) the payment of compensation under
subtitle 2 of title XXI of the Public Health
Service Act (as in effect on August 5, 1997) for
vaccine-related injury or death with respect to
any vaccine—
‘‘(i) which is administered after Sep-
tember 30, 1988, and
‘‘(ii) which is a taxable vaccine (as de-
fined in section 4132(a)(1)) at the time
compensation is paid under such subtitle 2,
or
‘‘(B) the payment of all expenses of admin-
istration (but not in excess of $6,000,000 for