1047
section 13478(f)(8)(B)(iii)(II) of this title, two ems to the
left.
(4) 
Section 
1881(b)(1)(C) 
(42 
U.S.C.
1395rr(b)(1)(C)) is amended by striking ‘‘1861(s)(2)(Q)’’
and inserting ‘‘1861(s)(2)(P)’’.
(5) Section 4201(d)(2) of OBRA–1990 is amended
by striking ‘‘(B) by striking’’, ‘‘(C) by striking’’, and ‘‘(3)
by adding’’ and inserting ‘‘(i) by striking’’, ‘‘(ii) by strik-
ing’’, and ‘‘(B) by adding’’, respectively.
(6)(A) Section 4207(a)(1) of OBRA–1990 is amend-
ed by adding closing quotation marks and a period after
‘‘such review.’’.
(B) Section 4207(a)(4) of OBRA–1990 is amended
by striking ‘‘this subsection’’ and inserting ‘‘paragraphs
(2) and (3)’’.
(C) Section 4207(b)(1) of OBRA–1990 is amended
by striking ‘‘section 3(7)’’ and inserting ‘‘section
601(a)(1)’’.
(d) EFFECTIVE DATE.—The amendments made by
this section shall take effect as if included in the enact-
ment of OBRA–1990.
1048
CHAPTER 4—MEDICARE SUPPLEMENTAL
INSURANCE POLICIES
SEC. 13571. STANDARDS FOR MEDICARE SUPPLEMENTAL
INSURANCE POLICIES.
(a) SIMPLIFICATION OF MEDICARE SUPPLEMENTAL
POLICIES.—
(1) Section 4351 of OBRA–1990 is amended by
striking ‘‘(a) IN GENERAL.—’’.
(2) Section 1882(p) (42 U.S.C. 1395ss(p)) is
amended—
(A) in paragraph (1)(A)—
(i) by striking ‘‘promulgates’’ and in-
serting ‘‘changes the revised NAIC Model
Regulation (described in subsection (m)) to
incorporate’’,
(ii) by striking ‘‘(such limitations, lan-
guage, definitions, format, and standards
referred to collectively in this subsection as
‘NAIC standards’),’, and
(iii) by striking ‘‘included a reference
to the NAIC standards’’ and inserting
‘‘were a reference to the revised NAIC
Model Regulation as changed under this
subparagraph (such changed regulation re-
1049
ferred to in this section as the ‘1991 NAIC
Model Regulation’)’’;
(B) in paragraph (1)(B)—
(i) by striking ‘‘promulgate NAIC
standards’’ 
and 
inserting 
‘‘make 
the
changes in the revised NAIC Model Regu-
lation’’,
(ii) by striking ‘‘limitations, language,
definitions, format, and standards de-
scribed in clauses (i) through (iv) of such
subparagraph (in this subsection referred
to collectively as ‘Federal standards’)’’ and
inserting ‘‘a regulation’’, and
(iii) by striking ‘‘included a reference
to the Federal standards’’ and inserting
‘‘were a reference to the revised NAIC
Model Regulation as changed by the Sec-
retary under this subparagraph (such
changed regulation referred to in this sec-
tion as the ‘1991 Federal Regulation’)’’;
(C) in paragraph (1)(C)(i), by striking
‘‘NAIC standards or the Federal standards’’
and inserting ‘‘1991 NAIC Model Regulation or
1991 Federal Regulation’’;
1050
(D) in paragraphs (1)(C)(ii)(I), (1)(E),
(2), and (9)(B), by striking ‘‘NAIC or Federal
standards’’ and inserting ‘‘1991 NAIC Model
Regulation or 1991 Federal Regulation’’;
(E) in paragraph (2)(C), by striking
‘‘(5)(B)’’ and inserting ‘‘(4)(B)’’;
(F) in paragraph (4)(A)(i), by inserting
‘‘or paragraph (6)’’ after ‘‘(B)’’;
(G) in paragraph (4), by striking ‘‘applica-
ble standards’’ each place it appears and insert-
ing ‘‘applicable 1991 NAIC Model Regulation
or 1991 Federal Regulation’’;
(H) in paragraph (6), by striking ‘‘in re-
gard to the limitation of benefits described in
paragraph (4)’’ and inserting ‘‘described in
clauses (i) through (iii) of paragraph (1)(A)’’;
(I) in paragraph (7), by striking ‘‘policy-
holder’’ and inserting ‘‘policyholders’’;
(J) in paragraph (8), by striking ‘‘after the
effective date of the NAIC or Federal standards
with respect to the policy, in violation of the
previous requirements of this subsection’’ and
inserting ‘‘on and after the effective date speci-
fied in paragraph (1)(C) (but subject to para-
graph (10)), in violation of the applicable 1991
1051
NAIC Model Regulation or 1991 Federal Regu-
lation insofar as such regulation relates to the
requirements of subsection (o) or (q) or clause
(i), (ii), or (iii) of paragraph (1)(A)’’;
(K) in paragraph (9), by adding at the end
the following new subparagraph:
‘‘(D) Subject to paragraph (10), this paragraph shall
apply to sales of policies occurring on or after the effective
date specified in paragraph (1)(C).’’; and
(L) in paragraph (10), by striking ‘‘this
subsection’’ 
and 
inserting 
‘‘paragraph
(1)(A)(i)’’.
(b) GUARANTEED RENEWABILITY.—Section 1882(q)
(42 U.S.C. 1395ss(q)) is amended—
(1) in paragraph (2), by striking ‘‘paragraph
(2)’’ and inserting ‘‘paragraph (4)’’, and
(2) in paragraph (4), by striking ‘‘the succeed-
ing issuer’’ and inserting ‘‘issuer of the replacement
policy’’.
(c) ENFORCEMENT OF STANDARDS.—
(1) 
Section 
1882(a)(2) 
(42 
U.S.C.
1395ss(a)(2)) is amended—
(A) in subparagraph (A), by striking
‘‘NAIC standards or the Federal standards’’
1052
and inserting ‘‘1991 NAIC Model Regulation or
1991 Federal Regulation’’, and
(B) by striking ‘‘after the effective date of
the NAIC or Federal standards with respect to
the policy’’ and inserting ‘‘on and after the ef-
fective date specified in subsection (p)(1)(C)’’.
(2) The sentence in section 1882(b)(1) added
by section 4353(c)(5) of OBRA–1990 is amended—
(A) by striking ‘‘The report’’ and inserting
‘‘Each report’’,
(B) by inserting ‘‘and requirements’’ after
‘‘standards’’,
(C) by striking ‘‘and’’ after ‘‘compliance,’’,
and
(D) by striking the comma after ‘‘Commis-
sioners’’.
(3) 
Section 
1882(g)(2)(B) 
(42 
U.S.C.
1395ss(g)(2)(B)) is amended by striking ‘‘Panel’’
and inserting ‘‘Secretary’’.
(4) 
Section 
1882(b)(1) 
(42 
U.S.C.
1395ss(b)(1)) is amended by striking ‘‘the the Sec-
retary’’ and inserting ‘‘the Secretary’’.
(d) PREVENTING DUPLICATION.—
(1) 
Section 
1882(d)(3)(A) 
(42 
U.S.C.
1395ss(d)(3)(A)) is amended—
1053
(A) by amending the first sentence to read
as follows:
‘‘(i) It is unlawful for a person to sell or issue to an
individual entitled to benefits under part A or enrolled
under part B of this title—
‘‘(I) a health insurance policy with knowledge
that the policy duplicates health benefits to which
the individual is otherwise entitled under this title or
title XIX,
‘‘(II) a medicare supplemental policy with
knowledge that the individual is entitled to benefits
under another medicare supplemental policy, or
‘‘(III) a health insurance policy (other than a
medicare supplemental policy) with knowledge that
the policy duplicates health benefits to which the in-
dividual is otherwise entitled, other than benefits to
which the individual is entitled under a requirement
of State or Federal law.’’;
(B) by designating the second sentence as
clause (ii) and, in such clause, by striking ‘‘the
previous sentence’’ and inserting ‘‘clause (i)’’;
(C) by designating the third sentence as
clause (iii) and, in such clause—
(i) by striking ‘‘the previous sentence’’
and inserting ‘‘clause (i) with respect to
1054
the sale of a medicare supplemental pol-
icy’’, and
(ii) by striking ‘‘and the statement’’
and all that follows up to the period at the
end; and
(D) by striking the last sentence.
(2) 
Section 
1882(d)(3)(B) 
(42 
U.S.C.
1395ss(d)(3)(B)) is amended—
(A) in clause (ii)(II), by striking ‘‘65 years
of age or older’’,
(B) in clause (iii)(I), by striking ‘‘another
medicare’’ and inserting ‘‘a medicare’’,
(C) in clause (iii)(I), by striking ‘‘such a
policy’’ and inserting ‘‘a medicare supplemental
policy’’,
(D) in clause (iii)(II), by striking ‘‘another
policy’’ and inserting ‘‘a medicare supplemental
policy’’, and
(E) by amending subclause (III) of clause
(iii) to read as follows:
‘‘(III) If the statement required by clause (i) is ob-
tained and indicates that the individual is entitled to any
medical assistance under title XIX, the sale of the policy
is not in violation of clause (i) (insofar as such clause re-
lates to such medical assistance), if a State medicaid plan
1055
under such title pays the premiums for the policy, or, in
the case of a qualified medicare beneficiary described in
section 1905(p)(1), if the State pays less than the full
amount of medicare cost-sharing as described in subpara-
graphs (B), (C), and (D) of section 1905(p)(3) for such
individual.’’.
(3)(A) 
Section 
1882(d)(3)(C) 
(42 
U.S.C.
1395ss(d)(3)(C)) is amended—
(i) by striking ‘‘the selling’’ and inserting
‘‘(i) the sale or issuance’’, and
(ii) by inserting before the period at the
end the following: ‘‘, (ii) the sale or issuance of
a policy or plan described in subparagraph
(A)(i)(I) (other than a medicare supplemental
policy to an individual entitled to any medical
assistance under title XIX) under which all the
benefits are fully payable directly to or on be-
half of the individual without regard to other
health benefit coverage of the individual but
only if (for policies sold or issued more than 60
days after the date the statements are pub-
lished or promulgated under subparagraph (D))
there is disclosed in a prominent manner as
part of (or together with) the application the
applicable statement (specified under subpara-
1056
graph (D)) of the extent to which benefits pay-
able under the policy or plan duplicate benefits
under this title, or (iii) the sale or issuance of
a policy or plan described in subparagraph
(A)(i)(III) under which all the benefits are fully
payable directly to or on behalf of the individual
without regard to other health benefit coverage
of the individual’’.
(B) 
Section 
1882(d)(3) 
(42 
U.S.C.
1395ss(d)(3)) is amended by adding at the end the
following:
‘‘(D)(i) If—
‘‘(I) within the 90-day period beginning on the
date of the enactment of this subparagraph, the Na-
tional Association of Insurance Commissioners devel-
ops (after consultation with consumer and insurance
industry representatives) and submits to the Sec-
retary a statement for each of the types of health in-
surance policies (other than medicare supplemental
policies and including, as separate types of policies,
policies paying directly to the beneficiary fixed, cash
benefits) which are sold to persons entitled to health
benefits under this title, of the extent to which bene-
fits payable under the policy or plan duplicate bene-
fits under this title, and
1057
‘‘(II) the Secretary approves all the statements
submitted as meeting the requirements of subclause
(I),
each such statement shall be (for purposes of subpara-
graph (C)) the statement specified under this subpara-
graph for the type of policy involved. The Secretary shall
review and approve (or disapprove) all the statements sub-
mitted under subclause (I) within 30 days after the date
of their submittal. Upon approval of such statements, the
Secretary shall publish such statements.
‘‘(ii) If the Secretary does not approve the statements
under clause (i) or the statements are not submitted with-
in the 90-day period specified in such clause, the Secretary
shall promulgate (after consultation with consumer and
insurance industry representatives and not later than 90
days after the date of disapproval or the end of such 90-
day period (as the case may be)) a statement for each
of the types of health insurance policies (other than medi-
care supplemental policies and including, as separate types
of policies, policies paying directly to the beneficiary fixed,
cash benefits) which are sold to persons entitled to health
benefits under this title, of the extent to which benefits
payable under the policy or plan duplicate benefits under
this title, and each such statement shall be (for purposes
1058
of subparagraph (C)) the statement specified under this
subparagraph for the type of policy involved.’’.
(C) The requirement of a disclosure under sec-
tion 1882(d)(3)(C)(ii) of the Social Security Act
shall not apply to an application made for a policy
or plan before 60 days after the date of the Sec-
retary of Health and Human Services publishes or
promulgates all the statements under section
1882(d)(3)(D) of such Act.
(4) Subparagraphs (A) and (B) of section
1882(q)(5) are amended by striking ‘‘of the Social
Security Act’’.
(e) LOSS RATIOS AND REFUNDS OF PREMIUMS.—
(1) Section 1882(r) (42 U.S.C. 1395ss(r)) is
amended—
(A) in paragraph (1), by striking ‘‘or sold’’
and inserting ‘‘or renewed (or otherwise provide
coverage after the date described in subsection
(p)(1)(C))’’;
(B) in paragraph (1)(A), by inserting ‘‘for
periods after the effective date of these provi-
sions’’ after ‘‘the policy can be expected’’;
(C) in paragraph (1)(A), by striking
‘‘Commissioners,’’ 
and 
inserting 
‘‘Commis-
sioners)’’;
1059
(D) in paragraph (1)(B), by inserting be-
fore the period at the end the following: ‘‘,
treating policies of the same type as a single
policy for each standard package’’;
(E) by adding at the end of paragraph (1)
the following: ‘‘For the purpose of calculating
the refund or credit required under paragraph
(1)(B) for a policy issued before the date speci-
fied in subsection (p)(1)(C), the refund or cred-
it calculation shall be based on the aggregate
benefits provided and premiums collected under
all such policies issued by an insurer in a State
(separated as to individual and group policies)
and shall be based only on aggregate benefits
provided and premiums collected under such
policies after the date specified in section
13571(m)(4) of the Omnibus Budget Reconcili-
ation Act of 1993.’’;
(F) in the first sentence of paragraph
(2)(A), by striking ‘‘by policy number’’ and in-
serting ‘‘by standard package’’;
(G) by striking the second sentence of
paragraph (2)(A) and inserting the following:
‘‘Paragraph (1)(B) shall not apply to a policy
until 12 months following issue.’’;
1060
(H) in the last sentence of paragraph
(2)(A), by striking ‘‘in order’’ and all that fol-
lows through ‘‘are effective’’;
(I) by adding at the end of paragraph
(2)(A), the following new sentence: ‘‘In the case
of a policy issued before the date specified in
subsection (p)(1)(C), paragraph (1)(B) shall
not apply until 1 year after the date specified
in section 13571(m)(4) of the Omnibus Budget
Reconciliation Act of 1993.’’;
(J) in paragraph (2), by striking ‘‘policy
year’’ each place it appears and inserting ‘‘cal-
endar year’’;
(K) in paragraph (4), by striking ‘‘Feb-
ruary’’, ‘‘disllowance’’, ‘‘loss-ratios’’ each place
it appears, and ‘‘loss-ratio’’ and inserting ‘‘Oc-
tober’’, ‘‘disallowance’’, ‘‘loss ratios’’, and ‘‘loss
ratio’’, respectively;
(L) in paragraph (6)(A), by striking ‘‘is-
sues a policy in violation of the loss ratio re-
quirements of this subsection’’ and ‘‘such viola-
tion’’ and inserting ‘‘fails to provide refunds or
credits as required in paragraph (1)(B)’’ and
‘‘policy issued for which such failure occurred’’,
respectively; and
1061
(M) in paragraph (6)(B), by striking ‘‘to
policyholders’’ and inserting ‘‘to the policy-
holder or, in the case of a group policy, to the
certificate holder’’.
(2) 
Section 
1882(b)(1) 
(42 
U.S.C.
1395ss(b)(1)) is amended, in the matter after sub-
paragraph (H), by striking ‘‘subsection (F)’’ and in-
serting ‘‘subparagraph (F)’’.
(3) Section 4355(d) of OBRA–1990 is amended
by striking ‘‘sold or issued’’ and all that follows and
inserting ‘‘issued or renewed (or otherwise providing
coverage after the date described in section
1882(p)(1)(C) of the Social Security Act) on or after
the date specified in section 1882(p)(1)(C) of such
Act.’’.
(f) TREATMENT OF HMO’S.—
(1) 
Section 
1882(g)(1) 
(42 
U.S.C.
1395ss(g)(1)) is amended by striking ‘‘a health
maintenance organization or other direct service or-
ganization’’ and all that follows through ‘‘1833’’ and
inserting ‘‘an eligible organization (as defined in sec-
tion 1876(b)) if the policy or plan provides benefits
pursuant to a contract under section 1876 or an ap-
proved demonstration project described in section
603(c) of the Social Security Amendments of 1983,
1062
section 2355 of the Deficit Reduction Act of 1984,
or section 9412(b) of the Omnibus Budget Reconcili-
ation Act of 1986 or, during the period beginning on
the date specified in subsection (p)(1)(C) and ending
on December 31, 1994, a policy or plan of an orga-
nization if the policy or plan provides benefits pursu-
ant to an agreement under section 1833(a)(1)(A)’’.
(2) Section 4356(b) of OBRA–1990 is amended
by striking ‘‘on the date of the enactment of this
Act’’ and inserting ‘‘on the date specified in section
1882(p)(1)(C) of the Social Security Act’’.
(g) PRE-EXISTING CONDITION LIMITATIONS.—Sec-
tion 1882(s) (42 U.S.C. 1395ss(s)) is amended—
(1) in paragraph (2)(A), by striking ‘‘for which
an application is submitted’’ and inserting ‘‘in the
case of an individual for whom an application is sub-
mitted prior to or’’,
(2) in paragraph (2)(A), by striking ‘‘in which
the individual (who is 65 years of age or older) first
is enrolled for benefits under part B’’ and inserting
‘‘as of the first day on which the individual is 65
years of age or older and is enrolled for benefits
under part B’’, and
(3) in paragraph (2)(B), by striking ‘‘before it’’
and inserting ‘‘before the policy’’.
1063
(h) MEDICARE SELECT POLICIES.—
(1) Section 1882(t) (42 U.S.C. 1395ss(t)) is
amended—
(A) in paragraph (1), by inserting ‘‘medi-
care supplemental’’ after ‘‘If a’’,
(B) in paragraph (1), by striking ‘‘NAIC
Model Standards’’ and inserting ‘‘1991 NAIC
Model Regulation or 1991 Federal Regulation’’,
(C) in paragraph (1)(A), by inserting ‘‘or
agreements’’ after ‘‘contracts’’,
(D) in subparagraphs (E)(i) and (F) of
paragraph (1), by striking ‘‘NAIC standards’’
and inserting ‘‘standards in the 1991 NAIC
Model Regulation or 1991 Federal Regulation’’,
and
(E) in paragraph (2), by inserting ‘‘the is-
suer’’ before ‘‘is subject to a civil money pen-
alty’’.
(2) Section 1154(a)(4)(B) (42 U.S.C. 1320c–
3(a)(4)(B)) is amended—
(A) by inserting ‘‘that is’’ after ‘‘(or’’, and
(B) by striking ‘‘1882(t)’’ and inserting
‘‘1882(t)(3)’’.
(i) HEALTH
INSURANCE
COUNSELING.—Section
4360 of OBRA–1990 is amended—
1064
(1) in subsection (b)(2)(A)(ii), by striking
‘‘Act’’ and inserting ‘‘Act)’’;
(2) in subsection (b)(2)(D), by striking ‘‘serv-
ices’’ and inserting ‘‘counseling’’;
(3) in subsection (b)(2)(I), by striking ‘‘assist-
ance’’ and inserting ‘‘referrals’’;
(4) in subsection (c)(1), by striking ‘‘and that
such activities will continue to be maintained at such
level’’;
(5) in subsection (d)(3), by striking ‘‘to the
rural areas’’ and inserting ‘‘eligible individuals resid-
ing in rural areas’’;
(6) in subsection (e)—
(A) by striking ‘‘subsection (c) or (d)’’ and
inserting ‘‘this section’’,
(B) by striking ‘‘and annually thereafter,
issue an annual report’’ and inserting ‘‘and an-
nually thereafter during the period of the grant,
issue a report’’, and
(C) in paragraph (1), by striking ‘‘State-
wide’’;
(7) in subsection (f), by striking paragraph (2)
and by redesignating paragraphs (3) through (5) as
paragraphs (2) through (4), respectively; and
1065
(8) by redesignating the second subsection (f)
(relating to authorization of appropriations for
grants) as subsection (g).
(j) TELEPHONE INFORMATION SYSTEM.—
(1) Section 1804 (42 U.S.C. 1395b–2) is
amended—
(A) by adding at the end of the heading
the following: ‘‘; MEDICARE AND MEDIGAP IN-
FORMATION’’,
(B) by inserting ‘‘(a)’’ after ‘‘1804.’’, and
(C) by adding at the end the following new
subsection:
‘‘(b) The Secretary shall provide information via a
toll-free telephone number on the programs under this
title.’’.
(2) Section 1882(f) (42 U.S.C. 1395ss(f)) is
amended by adding at the end the following new
paragraph:
‘‘(3) The Secretary shall provide information via a
toll-free telephone number on medicare supplemental poli-
cies (including the relationship of State programs under
title XIX to such policies).’’.
(3) Section 1889 is repealed.
(k) MAILING OF POLICIES.—Section 1882(d)(4) (42
U.S.C. 1395ss(d)(4)) is amended—
1066
(1) in subparagraph (D), by striking ‘‘, if such
policy’’ and all that follows up to the period at the
end, and
(2) by adding at the end the following new sub-
paragraph:
‘‘(E) Subparagraph (A) shall not apply in the case
of an issuer who mails or causes to be mailed a policy,
certificate, or other matter solely to comply with the re-
quirements of subsection (q).’’.
(l) EFFECTIVE DATE.—The amendments made by
this section shall be effective as if included in the enact-
ment of OBRA–1990; except that—
(1) the amendments made by subsection (d)(1)
shall take effect on the date of the enactment of this
Act, but no penalty shall be imposed under section
1882(d)(3)(A) of the Social Security Act (for an ac-
tion occurring after the effective date of the amend-
ments made by section 4354 of OBRA–1990 and be-
fore the date of the enactment of this Act) with re-
spect to the sale or issuance of a policy which is not
unlawful under section 1882(d)(3)(A)(i)(II) of the
Social Security Act (as amended by this section);
(2) the amendments made by subsection
(d)(2)(A) and by subparagraphs (A), (B), and (E)
1067
of subsection (e)(1) shall be effective on the date
specified in subsection (m)(4); and
(3) the amendment made by subsection (g)(2)
shall take effect on January 1, 1994, and shall apply
to individuals who attain 65 years of age or older on
or after the effective date of section 1882(s)(2) of
the Social Security Act (and, in the case of individ-
uals who attained 65 years of age after such effec-
tive date and before January 1, 1994, and who were
not covered under such section before January 1,
1994, the 6-month period specified in that section
shall begin January 1, 1994).
(m) TRANSITION PROVISIONS.—
(1) IN GENERAL.—If the Secretary of Health
and Human Services identifies a State as requiring
a change to its statutes or regulations to conform its
regulatory program to the changes made by this sec-
tion, the State regulatory program shall not be con-
sidered to be out of compliance with the require-
ments of section 1882 of the Social Security Act due
solely to failure to make such change until the date
specified in paragraph (4).
(2) NAIC STANDARDS.—If, within 6 months
after the date of the enactment of this Act, the Na-
tional Association of Insurance Commissioners (in
1068
this subsection referred to as the ‘‘NAIC’’) modifies
its 1991 NAIC Model Regulation (adopted in July
1991) to conform to the amendments made by this
section and to delete from section 15C the exception
which begins with ‘‘unless’’, such modifications shall
be considered to be part of that Regulation for the
purposes of section 1882 of the Social Security Act.
(3) SECRETARY
STANDARDS.—If the NAIC
does not make the modifications described in para-
graph (2) within the period specified in such para-
graph, the Secretary of Health and Human Services
shall make the modifications described in such para-
graph and such modifications shall be considered to
be part of that Regulation for the purposes of sec-
tion 1882 of the Social Security Act.
(4) DATE SPECIFIED.—
(A) IN
GENERAL.—Subject to subpara-
graph (B), the date specified in this paragraph
for a State is the earlier of—
(i) the date the State changes its stat-
utes or regulations to conform its regu-
latory program to the changes made by
this section, or
1069
(ii) 1 year after the date the NAIC or
the Secretary first makes the modifications
under paragraph (2) or (3), respectively.
(B) ADDITIONAL LEGISLATIVE ACTION RE-
QUIRED.—In the case of a State which the Sec-
retary identifies as—
(i) requiring State legislation (other
than legislation appropriating funds) to
conform its regulatory program to the
changes made in this section, but
(ii) having a legislature which is not
scheduled to meet in 1994 in a legislative
session in which such legislation may be
considered,
the date specified in this paragraph is the first
day of the first calendar quarter beginning after
the close of the first legislative session of the
State legislature that begins on or after Janu-
ary 1, 1994. For purposes of the previous sen-
tence, in the case of a State that has a 2-year
legislative session, each year of such session
shall be deemed to be a separate regular session
of the State legislature.
1070
Subtitle D—Customs and Trade
Provisions
SEC. 13601. CUSTOMS AND TRADE AGENCY AUTHORIZA-
TIONS FOR FISCAL YEARS 1994 AND 1995.
(a) UNITED STATES INTERNATIONAL TRADE COM-
MISSION.—Section 330(e)(2) of the Tariff Act of 1930 (19
U.S.C. 1330(e)(2)) is amended to read as follows:
‘‘(2)(A) There are authorized to be appropriated to
the Commission for necessary expenses (including the
rental of conference rooms in the District of Columbia and
elsewhere) not to exceed the following:
‘‘(i) $45,416,000 for fiscal year 1994.
‘‘(ii) $45,974,000 for fiscal year 1995.
‘‘(B) Not to exceed $2,500 of the amount authorized
to be appropriated for any fiscal year under subparagraph
(A) may
be
used,
subject
to
the
approval
of
the
Chairman of the Commission, for reception and entertain-
ment expenses.
‘‘(C) No part of any sum that is appropriated under
the authority of subparagraph (A) may be used by the
Commission in the making of any special study, investiga-
tion, or report that is requested by any agency of the exec-
utive branch unless that agency reimburses the Commis-
sion for the cost thereof.’’.
1071
(b) UNITED STATES CUSTOMS SERVICE.—Section
301(b) of the Customs Procedural Reform and Simplifica-
tion Act of 1978 (19 U.S.C. 2075(b)) is amended to read
as follows:
‘‘(b) AUTHORIZATION OF APPROPRIATIONS.—
‘‘(1) FOR
NONCOMMERCIAL
OPERATIONS.—
There are authorized to be appropriated for the sala-
ries and expenses of the Customs Service that are
incurred in noncommercial operations not to exceed
the following:
‘‘(A) $540,783,000 for fiscal year 1994.
‘‘(B) $527,000,000 for fiscal year 1995.
‘‘(2) 
FOR
COMMERCIAL
OPERATIONS.—(A)
There are authorized to be appropriated for the sala-
ries and expenses of the Customs Service that are
incurred in commercial operations not less than the
following:
‘‘(i) $771,036,000 for fiscal year 1994.
‘‘(ii) $748,000,000 for fiscal year 1995.
‘‘(B) The monies authorized to be appropriated
under subparagraph (A) for any fiscal year, except
for such sums as may be necessary for the salaries
and expenses of the Customs Service that are in-
curred in connection with the processing of merchan-
dise that is exempt from the fees imposed under sec-
1072
tion 13031(a) (9) and (10) of the Consolidated Om-
nibus Budget Reconciliation Act of 1985, shall be
appropriated from the Customs User Fee Account.
‘‘(3) FOR AIR AND MARINE INTERDICTION.—
There are authorized to be appropriated for the op-
eration (including salaries and expenses) and main-
tenance of the air and marine interdiction programs
of the Customs Service not to exceed the following:
‘‘(A) $95,156,000 for fiscal year 1994.
‘‘(B) $128,000,000 for fiscal year 1995.’’.
(c) OFFICE OF THE UNITED STATES TRADE REP-
RESENTATIVE.—Section 141(g)(1) of the Trade Act of
1974 (19 U.S.C. 2171(g)(1)) is amended to read as
follows:
‘‘(g)(1)(A) There are authorized to be appropriated
to the Office for the purposes of carrying out its functions
not to exceed the following:
‘‘(i) $20,143,000 for fiscal year 1994.
‘‘(ii) $20,419,000 for fiscal year 1995.
‘‘(B) Of the amounts authorized to be appropriated
under subparagraph (A) for any fiscal year—
‘‘(i) not to exceed $98,000 may be used for en-
tertainment and representation expenses of the Of-
fice; and
1073
‘‘(ii) not to exceed $2,500,000 shall remain
available until expended.’’.
SEC. 13602. EXTENSION OF AUTHORITY TO LEVY CUSTOMS
USER FEES.
Section 13031(j)(3) of the Consolidated Omnibus
Budget Reconciliation Act of 1985 (19 U.S.C. 58c(j)(3))
is amended by striking out ‘‘1995’’ and inserting ‘‘1998’’.
SEC. 13603. GENERALIZED SYSTEM OF PREFERENCES.
(a) TREATMENT OF COUNTRIES FORMERLY WITHIN
THE UNION
OF SOVIET SOCIALIST REPUBLICS.—The
table in section 502(b) of the Trade Act of 1974 (19
U.S.C. 2462(b)) is amended by striking out ‘‘Union of So-
viet Socialist Republics’’.
(b) EXTENSION OF DUTY-FREE TREATMENT UNDER
SYSTEM.—
(1) IN GENERAL.—Section 505(a) of the Trade
Act of 1974 (19 U.S.C. 2465(a)) is amended by
striking out ‘‘July 4, 1993’’ and inserting ‘‘Septem-
ber 30, 1994’’.
(2) RETROACTIVE APPLICATION FOR CERTAIN
LIQUIDATIONS
AND
RELIQUIDATIONS.—Notwith-
standing section 514 of the Tariff Act of 1930 or
any other provision of law, upon proper request filed
with the appropriate customs officer within 180 days
1074
after the date of the enactment of this Act, the
entry—
(A) of any article to which duty-free treat-
ment under title V of the Trade Act of 1974
would have applied if the entry had been made
on July 4, 1993, and
(B) that was made after July 4, 1993, and
before such date of enactment,
shall be liquidated or reliquidated as free of duty,
and the Secretary of the Treasury shall refund any
duty paid with respect to such entry. As used in this
paragraph, the term ‘‘entry’’ includes a withdrawal
from warehouse for consumption.
SEC. 13604. EXTENSION OF, AND AUTHORIZATION OF AP-
PROPRIATIONS FOR, THE WORKER TRADE
ADJUSTMENT ASSISTANCE PROGRAM.
(a) EXTENSION.—Section 285 of the Trade Act of
1974 (19 U.S.C. note preceding 2271) is amended—
(1) by striking out ‘‘No’’ and all that follows
thereafter down through ‘‘chapter 2, no’’ in sub-
section (b) and inserting ‘‘No’’; and
(2) by adding at the end the following new sub-
section:
1075
‘‘(c) No assistance, vouchers, allowances, or other
payments may be provided under chapter 2 after Septem-
ber 30, 1996.’’.
(b) AUTHORIZATION OF APPROPRIATIONS.—Section
245 of the Trade Act of 1974 (19 U.S.C. 2317) is amend-
ed by striking out ‘‘and 1993,’’ and inserting ‘‘1993,
1994, 1995, and 1996,’’.
SEC. 13605. EXTENSION OF URUGUAY ROUND TRADE
AGREEMENT NEGOTIATING AND PROCLAMA-
TION AUTHORITY AND OF ‘‘FAST TRACK’’ PRO-
CEDURES TO IMPLEMENTING LEGISLATION.
Section 1102 of the Omnibus Trade and Competitive-
ness Act of 1988 (19 U.S.C. 2902) is amended by insert-
ing at the end the following new subsection:
‘‘(e) SPECIAL PROVISIONS REGARDING URUGUAY
ROUND TRADE NEGOTIATIONS.—
‘‘(1) IN GENERAL.—Notwithstanding the time
limitations in subsections (a) and (b), if the Uru-
guay Round of multilateral trade negotiations under
the auspices of the General Agreement on Tariffs
and Trade has not resulted in trade agreements by
May 31, 1993, the President may, during the period
after May 31, 1993, and before April 16, 1994,
enter into, under subsections (a) and (b), trade
agreements resulting from such negotiations.
1076
‘‘(2) APPLICATION OF TARIFF PROCLAMATION
AUTHORITY.—No proclamation under subsection (a)
to carry out the provisions regarding tariff barriers
of a trade agreement that is entered into pursuant
to paragraph (1) may take effect before the effective
date of a bill that implements the provisions regard-
ing nontariff barriers of a trade agreement that is
entered into under such paragraph.
‘‘(3) APPLICATION
OF
IMPLEMENTING
AND
‘FAST TRACK’ PROCEDURES.—Section 1103 applies
to any trade agreement negotiated under subsection
(b) pursuant to paragraph (1), except that—
‘‘(A) in applying subsection (a)(1)(A) of
section 1103 to any such agreement, the phrase
‘at least 120 calendar days before the day on
which he enters into the trade agreement (but
not later than December 15, 1993),’ shall be
substituted for the phrase ‘at least 90 calendar
days before the day on which he enters into the
trade agreement; and
‘‘(B) no provision of subsection (b) of sec-
tion 1103 other than paragraph (1)(A) applies
to any such agreement and in applying such
paragraph, ‘April 16, 1994;’ shall be sub-
stituted for ‘June 1, 1991;’.
1077
‘‘(4) ADVISORY COMMITTEE REPORTS.—The re-
port required under section 135(e)(1) of the Trade
Act of 1974 regarding any trade agreement provided
for under paragraph (1) shall be provided to the
President, the Congress, and the United States
Trade Representative not later than 30 days after
the date on which the President notifies the Con-
gress under section 1103(a)(1)(A) of his intention to
enter into the agreement (but before January 15,
1994).’’.
SEC. 13606. REPEAL OF EAST-WEST TRADE STATISTICS
MONITORING SYSTEM.
(a) REPEAL.—Section 410 of the Trade Act of 1974
(19 U.S.C. 2440) is repealed.
(b) CONFORMING AMENDMENT.—The table of con-
tents for such Act of 1974 is amended by striking out the
following:
‘‘Sec. 410. East-West Trade Statistics Monitoring System.’’.
Subtitle E—Customs Officer Pay
Reform
SEC. 13701. OVERTIME AND PREMIUM PAY FOR CUSTOMS
OFFICERS.
(a) IN GENERAL.—Section 5 of the Act of February
13, 1911 (19 U.S.C. 261 and 267) is amended to read
as follows:
1078
‘‘SEC. 5. OVERTIME AND PREMIUM PAY FOR CUSTOMS OF-
FICERS.
‘‘(a) OVERTIME PAY.—
‘‘(1) IN GENERAL.—Subject to paragraph (2)
and subsection (c), a customs officer who is officially
assigned to perform work in excess of 40 hours in
the administrative workweek of the officer or in ex-
cess of 8 hours in a day shall be compensated for
that work at an hourly rate of pay that is equal to
2 times the hourly rate of the basic pay of the offi-
cer. For purposes of this paragraph, the hourly rate
of basic pay for a customs officer does not include
any premium pay provided for under subsection (b).
‘‘(2) SPECIAL PROVISIONS RELATING TO OVER-
TIME WORK ON CALLBACK BASIS.—
‘‘(A) MINIMUM DURATION.—Any work for
which compensation is authorized under para-
graph (1) and for which the customs officer is
required to return to the officer’s place of work
shall be treated as being not less than 2 hours
in duration; but only if such work begins at
least 1 hour after the end of any previous regu-
larly scheduled work assignment and ends at
least 1 hour before the beginning of the follow-
ing regularly scheduled work assignment.
1079
‘‘(B) COMPENSATION
FOR
COMMUTING
TIME.—
‘‘(i) IN
GENERAL.—Except as pro-
vided in clause (ii), in addition to the com-
pensation authorized under paragraph (1)
for work to which subparagraph (A) ap-
plies, the customs officer is entitled to be
paid, as compensation for commuting time,
an amount equal to 3 times the hourly rate
of basic pay of the officer.
‘‘(ii) EXCEPTION.—Compensation for
commuting time is not payable under
clause (i) if the work for which compensa-
tion is authorized under paragraph (1)—
‘‘(I) does not commence within
16 hours of the customs officer’s last
regularly scheduled work assignment,
or
‘‘(II) commences within 2 hours
of the next regularly scheduled work
assignment of the customs officer.
‘‘(b) PREMIUM PAY FOR CUSTOMS OFFICERS.—
‘‘(1) NIGHT WORK DIFFERENTIAL.—
‘‘(A) 3 P.M. TO MIDNIGHT SHIFTWORK.—If
the majority of the hours of regularly scheduled
1080
work of a customs officer occur during the pe-
riod beginning at 3 p.m. and ending at 12 a.m.,
the officer is entitled to pay for work during
such period (except for work to which para-
graph (2) or (3) applies) at the officer’s hourly
rate of basic pay plus premium pay amounting
to 15 percent of that basic rate.
‘‘(B) 11 P.M. TO 8 A.M. SHIFTWORK.—If
the majority of the hours of regularly scheduled
work of a customs officer occur during the pe-
riod beginning at 11 p.m. and ending at 8 a.m.,
the officer is entitled to pay for work during
such period (except for work to which para-
graph (2) or (3) applies) at the officer’s hourly
rate of basic pay plus premium pay amounting
to 20 percent of that basic rate.
‘‘(C) 7:30 P.M. TO 3:30 A.M. SHIFTWORK.—
If the regularly scheduled work assignment of a
customs officer is 7:30 p.m. to 3:30 a.m., the
officer is entitled to pay for work during such
period (except for work to which paragraph (2)
or (3) applies) at the officer’s hourly rate of
basic pay plus premium pay amounting to 15
percent of that basic rate for the period from
7:30 p.m. to 11:30 p.m. and at the officer’s
1081
hourly rate of basic pay plus premium pay
amounting to 20 percent of that basic rate for
the period from 11:30 p.m. to 3:30 a.m.
‘‘(2) SUNDAY DIFFERENTIAL.—A customs offi-
cer who performs any regularly scheduled work on a
Sunday that is not a holiday is entitled to pay for
that work at the officer’s hourly rate of basic pay
plus premium pay amounting to 50 percent of that
basic rate.
‘‘(3) HOLIDAY DIFFERENTIAL.—A customs offi-
cer who performs any regularly scheduled work on a
holiday is entitled to pay for that work at the offi-
cer’s hourly rate of basic pay plus premium pay
amounting to 100 percent of that basic rate.
‘‘(4) TREATMENT OF PREMIUM PAY.—Premium
pay provided for under this subsection may not be
treated as being overtime pay or compensation for
any purpose.
‘‘(c) LIMITATIONS.—
‘‘(1) FISCAL
YEAR
CAP.—The aggregate of
overtime pay under subsection (a) (including com-
muting compensation under subsection (a)(2)(B))
and premium pay under subsection (b) that a cus-
toms officer may be paid in any fiscal year may not
exceed $25,000; except that the Commissioner of
1082
Customs or his designee may waive this limitation in
individual cases in order to prevent excessive costs
or to meet emergency requirements of the Customs
Service.
‘‘(2) EXCLUSIVITY OF PAY UNDER THIS SEC-
TION.—A customs officer who receives overtime pay
under subsection (a) or premium pay under sub-
section (b) for time worked may not receive pay or
other compensation for that work under any other
provision of law.
‘‘(d) REGULATIONS.—The Secretary of the Treasury
shall prescribe such regulations as are necessary or appro-
priate to carry out this section, including regulations—
‘‘(1) to ensure that callback work assignments
are commensurate with the overtime pay authorized
for such work; and
‘‘(2) to prevent the disproportionate assignment
of overtime work to customs officers who are near
to retirement.
‘‘(e) DEFINITIONS.—As used in this section:
‘‘(1) The term ‘customs officer’ means an indi-
vidual performing those functions specified by regu-
lation by the Secretary of the Treasury for a cus-
toms inspector or canine enforcement officer. Such
functions shall be consistent with such applicable
1083
standards as may be promulgated by the Office of
Personnel Management.
‘‘(2) The term ‘holiday’ means any day des-
ignated as a holiday under a Federal statute or Ex-
ecutive order.’’.
(b) CONFORMING AMENDMENTS.—
(1) Section 2 of the Act of June 3, 1944 (19
U.S.C. 1451a), is repealed.
(2) Section 450 of the Tariff Act of 1930 (19
U.S.C. 1450) is amended—
(A) by striking out ‘‘at night’’ in the sec-
tion heading and inserting ‘‘during overtime
hours’’;
(B) by striking out ‘‘at night’’ and insert-
ing ‘‘during overtime hours’’; and
(C) by inserting ‘‘aircraft,’’ immediately
before ‘‘vessel’’.
(c) EFFECTIVE DATE.—The amendments made by
subsections (a) and (b) apply to customs inspectional serv-
ices provided on or after October 1, 1993.
SEC. 13702. FOREIGN LANGUAGE PROFICIENCY AWARDS
FOR CUSTOMS OFFICERS.
Cash awards for foreign language proficiency may,
under regulations prescribed by the Secretary of the
Treasury, be paid to customs officers (as referred to in
1084
section 5(e)(1) of the Act of February 13, 1911) to the
same extent and in the same manner as would be allowable
under subchapter III of chapter 45 of title 5, United
States Code, with respect to law enforcement officers (as
defined by section 4521 of such title).
SEC. 13703. APPROPRIATIONS REIMBURSEMENTS FROM
THE CUSTOMS USER FEE ACCOUNT.
Section 13031(f)(3) of the Consolidated Omnibus
Budget Reconciliation Act of 1985 (19 U.S.C. 58c(f)(3))
is amended—
(1) by amending clause (i) of subparagraph (A)
to read as follows: ‘‘(i) in—
‘‘(I) paying overtime compensation under
section 5(a) of the Act of February 13, 1911,
‘‘(II) paying premium pay under section
5(b) of the Act of February 13, 1911, but the
amount for which reimbursement may be made
under this subclause may not, for any fiscal
year, exceed the difference between the cost of
the premium pay for that year calculated under
such section 5(b) as amended by section 13701
of the Omnibus Budget Reconciliation Act of
1993 and the cost of such pay calculated under
subchapter V of chapter 55 of title 5, United
States Code,
1085
‘‘(III) paying agency contributions to the
Civil Service Retirement and Disability Fund to
match deductions from the overtime compensa-
tion paid under subclause (I), and
‘‘(IV) providing all preclearance services
for which the recipients of such services are not
required to reimburse the Secretary of the
Treasury, and’’;
(2) by inserting before the flush sentence ap-
pearing after clause (ii) of subparagraph (A) the fol-
lowing sentence: ‘‘The transfer of funds required
under subparagraph (C)(iii) has priority over reim-
bursements under this subparagraph to carry out
subclauses (II), (III), and (IV) of clause (i).’’;
(3) by striking out ‘‘except for costs described
in subparagraph (A)(i) (I) and (II),’’ in subpara-
graph (B)(i); and
(4) by amending subparagraph (C)—
(A) by striking out ‘‘to fully reimburse
inspectional overtime and preclearance costs’’ in
clause (i) and inserting ‘‘to reimburse costs de-
scribed in subparagraph (A)(i)’’; and
(B) by inserting after clause (ii) of sub-
paragraph (C) the following:
1086
‘‘(iii) For each fiscal year, the Secretary of the
Treasury shall calculate the difference between—
‘‘(I) the estimated cost for overtime com-
pensation that would have been incurred during
that fiscal year for inspectional services if sec-
tion 5 of the Act of February 13, 1911 (19
U.S.C. 261 and 267), as in effect before the en-
actment of section 13701 of the Omnibus
Budget Reconciliation Act of 1993, had gov-
erned such costs, and
‘‘(II) the actual cost for overtime com-
pensation, premium pay, and agency retirement
contributions that is incurred during that fiscal
year in regard to such services under section 5
of the Act of February 13, 1991, as amended
by section 13701 of the Omnibus Budget Rec-
onciliation Act of 1993, and under section
8331(3) of title 5, United States Code, as
amended by section 13704 of such Act of 1993,
and shall transfer from the Customs User Fee Ac-
count to the General Fund of the Treasury an
amount equal to the difference calculated under this
clause, or $18,000,000, whichever amount is less.
Transfers shall be made under this clause at least
quarterly and on the basis of estimates to the same
1087
extent as are reimbursements under subparagraph
(B)(iii).’’.
SEC. 13704. TREATMENT OF CERTAIN PAY OF CUSTOMS OF-
FICERS FOR RETIREMENT PURPOSES.
(a) IN GENERAL.—Section 8331(3) of title 5, United
States Code, is amended—
(1) by striking out ‘‘and’’ at the end of sub-
paragraph (C);
(2) by striking out the semicolon at the end of
subparagraph (D) and inserting ‘‘; and’’;
(3) by adding after subparagraph (D) the fol-
lowing:
‘‘(E) with respect to a customs officer (re-
ferred to in subsection (e)(1) of section 5 of the
Act of February 13, 1911), compensation for
overtime inspectional services provided for
under subsection (a) of such section 5, but not
to exceed 50 percent of any statutory maximum
in overtime pay for customs officers which is in
effect for the year involved;’’; and
(4) by striking out ‘‘subparagraphs (B), (C),
and (D) of this paragraph,’’ and inserting ‘‘subpara-
graphs (B), (C), (D), and (E) of this paragraph’’.
(b) EFFECTIVE DATE.—The amendments made by
subsection (a) take effect on the date of the enactment
1088
of this Act and apply only with respect to service per-
formed on or after such date.
SEC. 13705. REPORTS.
(a) CUSTOMS USER FEE ACCOUNT REPORTS.—Sub-
paragraph (D) of section 13031(f)(3) of the Consolidated
Omnibus Budget Reconciliation Act of 1985 (19 U.S.C.
58c(f)(3)(D)) is amended to read as follows:
‘‘(D) At the close of each fiscal year, the
Secretary of the Treasury shall submit a report
to the Committee on Finance of the Senate and
the Committee on Ways and Means of the
House of Representatives—
‘‘(i) containing a detailed accounting
of all expenditures from the Customs User
Fee Account during such year, including a
summary of the expenditures, on a port-by-
port basis, for which reimbursement has
been provided under subparagraph (A)(ii);
‘‘(ii) containing a listing of all call-
back assignments of customs officers for
which overtime compensation was paid
under section 5(a) of the Act of February
13, 1911, and that were less than 1 hour
in duration; and
1089
‘‘(iii) containing a listing of all cus-
toms officers who were paid $25,000 or
more under subsections 5(a) and 5(b) of
the Act of February 13, 1911, including a
listing of the total compensation paid to
each of those customs officers under all
other statutory authority.’’.
(b) OTHER REPORTS.—
(1) GAO REPORT.—The Comptroller General of
the United States shall undertake—
(A) an evaluation of the appropriateness
and efficiency of the customs user fee laws for
financing the provision of customs inspectional
services; and
(B) a study to determine whether cost sav-
ings in the provision of overtime inspectional
services could be realized by the United States
Customs Service through the use of additional
inspectors as opposed to continuing the current
practice of relying on overtime pay.
The Comptroller General shall submit a report on
the evaluation and study required under this sub-
section to the Committees by no later than the 1st
anniversary of the date of the enactment of this Act.
1090
(2) TREASURY RECOMMENDATION.—On the day
that the President submits the budget for the Unit-
ed States Government for fiscal year 1995 to the
Congress under section 1105(a) of title 31, United
States Code, the Secretary of the Treasury shall
submit to the Committees recommended legislative
proposals for improving the operation of customs
user fee laws in financing the provision of customs
inspectional services.
(3) DEFINITION
OF
COMMITTEES.—For pur-
poses of this subsection, the term ‘‘Committees’’
means the Committee on Ways and Means of the
House of Representatives and the Committee on Fi-
nance of the Senate.
TITLE XIV—REVENUE
PROVISIONS
SEC. 14001. SHORT TITLE; ETC.
(a) SHORT TITLE.—This title may be cited as the
‘‘Revenue Reconciliation Act of 1993’’.
(b) AMENDMENT TO 1986 CODE.—Except as other-
wise expressly provided, whenever in this title 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.
1091
(c) SECTION 15 NOT TO APPLY.—Except in the case
of the amendments made by section 14221 (relating to
corporate rate increase), no amendment made by this title
shall be treated as a change in a rate of tax for purposes
of section 15 of the Internal Revenue Code of 1986.
(d) WAIVER OF ESTIMATED TAX PENALTIES.—No
addition to tax shall be made under section 6654 or 6655
of the Internal Revenue Code of 1986 for any period be-
fore April 16, 1994 (March 16, 1994, in the case of a
corporation), with respect to any underpayment to the ex-
tent such underpayment was created or increased by any
provision of this title.
(e) TABLE OF CONTENTS.—
TITLE XIV—REVENUE PROVISIONS
Sec. 14001. Short title; etc.
Subtitle A—Training and Investment Incentives
PART I—PROVISIONS RELATING TO EDUCATION AND TRAINING
Sec. 14101. Employer-provided educational assistance.
Sec. 14102. Targeted jobs credit.
PART II—INVESTMENT INCENTIVES
SUBPART A—RESEARCH CREDIT
Sec. 14111. Permanent extension of research credit.
Sec. 14112. Modification of fixed base percentage for startup companies.
SUBPART B—CAPITAL GAIN PROVISIONS
Sec. 14113. 50-percent exclusion for gain from certain small business stock.
Sec. 14114. Rollover of gain from sale of publicly traded securities into special-
ized small business investment companies.
SUBPART C—MODIFICATIONS TO MINIMUM TAX DEPRECIATION RULES
Sec. 14115. Modification to minimum tax depreciation rules.
SUBPART D—INCREASE IN EXPENSE TREATMENT FOR SMALL BUSINESSES
Sec. 14116. Increase in expense treatment for small businesses.
1092
PART III—TAX-EXEMPT BOND PROVISIONS
Sec. 14121. High-speed intercity rail facility bonds exempt from State volume
cap.
Sec. 14122. Permanent extension of qualified small issue bonds.
PART IV—EXPANSION AND SIMPLIFICATION OF EARNED INCOME TAX
CREDIT
Sec. 14131. Expansion and simplification of earned income tax credit.
PART V—INCENTIVES FOR INVESTMENT IN REAL ESTATE
SUBPART A—EXTENSION OF QUALIFIED MORTGAGE BONDS AND LOW-INCOME
HOUSING CREDIT
Sec. 14141. Permanent extension of qualified mortgage bonds.
Sec. 14142. Permanent extension of low-income housing credit.
SUBPART B—MODIFICATION OF PASSIVE LOSS RULES
Sec. 14143. Application of passive loss rules to rental real estate activities.
SUBPART C—PROVISIONS RELATING TO REAL ESTATE INVESTMENTS BY
PENSION FUNDS
Sec. 14144. Real estate property acquired by a qualified organization.
Sec. 14145. Repeal of special treatment of publicly traded partnerships.
Sec. 14146. Title-holding companies permitted to receive small amounts of un-
related business taxable income.
Sec. 14147. Exclusion from unrelated business tax of gains from certain prop-
erty.
Sec. 14148. Exclusion from unrelated business tax of certain fees and option
premiums.
Sec. 14149. Treatment of pension fund investments in real estate investment
trusts.
SUBPART D—DISCHARGE OF INDEBTEDNESS
Sec. 14150. Exclusion from gross income for income from discharge of qualified
real property business indebtedness.
SUBPART E—INCREASE IN RECOVERY PERIOD FOR NONRESIDENTIAL REAL
PROPERTY
Sec. 14151. Increase in recovery period for nonresidential real property.
PART VI—LUXURY TAX
Sec. 14161. Repeal of luxury excise taxes other than on passenger vehicles.
Sec. 14162. Exemption from luxury excise tax for certain equipment installed
on passenger vehicles for use by disabled individuals.
Sec. 14163. Tax on diesel fuel used in noncommercial boats.
PART VII—OTHER CHANGES
Sec. 14171. Alternative minimum tax treatment of contributions of appreciated
property.
Sec. 14172. Certain transfers to railroad retirement account made permanent.
1093
Sec. 14173. Temporary extension of deduction for health insurance costs of
self-employed individuals.
Subtitle B—Revenue Increases
PART I—PROVISIONS AFFECTING INDIVIDUALS
SUBPART A—RATE INCREASES
Sec. 14201. Increase in top marginal rate under section 1.
Sec. 14202. Surtax on high-income taxpayers.
Sec. 14203. Modifications to alternative minimum tax rates and exemption
amounts.
Sec. 14204. Overall limitation on itemized deductions for high-income taxpayers
made permanent.
Sec. 14205. Phaseout of personal exemption of high-income taxpayers made
permanent.
Sec. 14206. Provisions to prevent conversion of ordinary income to capital gain.
SUBPART B—OTHER PROVISIONS
Sec. 14207. Repeal of limitation on amount of wages subject to health insur-
ance employment tax.
Sec. 14208. Top estate and gift tax rates made permanent.
Sec. 14209. Reduction in deductible portion of business meals and entertain-
ment.
Sec. 14210. Elimination of deduction for club membership fees.
Sec. 14211. Disallowance of deduction for certain employee remuneration in ex-
cess of $1,000,000.
Sec. 14212. Reduction in compensation taken into account in determining con-
tributions and benefits under qualified retirement plans.
Sec. 14213. Modification to deduction for certain moving expenses.
Sec. 14214. Simplification of individual estimated tax safe harbor based on last
year’s tax.
Sec. 14215. Social security and tier 1 railroad retirement benefits.
PART II—PROVISIONS AFFECTING BUSINESSES
Sec. 14221. Increase in top marginal rate under section 11.
Sec. 14222. Denial of deduction for lobbying expenses.
Sec. 14223. Mark to market accounting method for securities dealers.
Sec. 14224. Clarification of treatment of certain FSLIC financial assistance.
Sec. 14225. Modification of corporate estimated tax rules.
Sec. 14226. Limitation on section 936 credit.
Sec. 14227. Modification to limitation on deduction for certain interest.
PART III—FOREIGN TAX PROVISIONS
SUBPART A—CURRENT TAXATION OF CERTAIN EARNINGS OF CONTROLLED
FOREIGN CORPORATIONS
Sec. 14231. Earnings invested in excess passive assets.
Sec. 14232. Modification to taxation of investment in United States property.
Sec. 14233. Other modifications to subpart F.
SUBPART B—ALLOCATION OF RESEARCH AND EXPERIMENTAL EXPENDITURES
Sec. 14234. Allocation of research and experimental expenditures.
1094
SUBPART C—OTHER PROVISIONS
Sec. 14235. Repeal of certain exceptions for working capital.
Sec. 14236. Modifications of accuracy-related penalty.
Sec. 14237. Denial of portfolio interest exemption for contingent interest.
Sec. 14238. Regulations dealing with conduit arrangements.
PART IV—ENERGY TAX PROVISIONS
SUBPART A—ENERGY TAX BASED ON BTU CONTENT
Sec. 14241. Imposition of energy tax based on Btu content.
SUBPART B—MODIFICATIONS TO TAX ON DIESEL FUEL
Sec. 14242. Modifications to tax on diesel fuel.
Sec. 14243. Floor stocks tax.
SUBPART C—EXTENSION OF MOTOR FUEL TAX RATES; INCREASED DEPOSITS
INTO HIGHWAY TRUST FUND
Sec. 14244. Extension of motor fuel tax rates; increased deposits into highway
trust fund.
PART V—COMPLIANCE PROVISIONS
Sec. 14251. Reporting required for certain payments to corporations.
Sec. 14252. Modifications to substantial understatement and return-preparer
penalties.
Sec. 14253. Returns relating to the cancellation of indebtedness by certain fi-
nancial entities.
PART VI—TREATMENT OF INTANGIBLES
Sec. 14261. Amortization of goodwill and certain other intangibles.
Sec. 14262. Treatment of certain payments to retired or deceased partner.
PART VII—MISCELLANEOUS PROVISIONS
Sec. 14271. Substantiation requirement for deduction of certain charitable con-
tributions.
Sec. 14272. Disclosure related to quid pro quo contributions.
Sec. 14273. Disallowance of interest on certain overpayments of tax.
Sec. 14274. Denial of deduction relating to travel expenses.
Sec. 14275. Increase in withholding from supplemental wage payments.
Subtitle C—Empowerment Zones and Enterprise Communities, Etc.
PART I—EMPOWERMENT ZONES AND ENTERPRISE COMMUNITIES
Sec. 14301. Designation and treatment of empowerment zones and enterprise
communities.
Sec. 14302. Expansion of targeted jobs credit.
Sec. 14303. Technical and conforming amendments.
Sec. 14304. Effective date.
PART II—CREDIT FOR CONTRIBUTIONS TO CERTAIN COMMUNITY
DEVELOPMENT CORPORATIONS
1095
Sec. 14311. Credit for contributions to certain community development cor-
porations.
Subtitle D—Other Provisions
PART I—DISCLOSURE PROVISIONS
Sec. 14401. Disclosure of return information for administration of certain vet-
erans programs.
Sec. 14402. Disclosure of return information to carry out income contingent re-
payment of student loans.
Sec. 14403. Use of return information for income verification under certain
housing assistance programs.
PART II—USER FEE PROVISIONS
Sec. 14411. Fees for applications for alcohol labeling and formula reviews.
Sec. 14412. Use of Harbor Maintenance Trust Fund amounts for administra-
tive expenses.
Sec. 14413. Increase in tax on fuel used in commercial transportation on inland
waterways.
PART III—PUBLIC DEBT LIMIT
Sec. 14421. Increase in public debt limit.
PART IV—VACCINE PROVISIONS
Sec. 14431. Excise tax on certain vaccines made permanent.
Sec. 14432. Continuation coverage under group health plans of costs of pedi-
atric vaccines.
Sec. 14433. Childhood Immunization Trust Fund.
Subtitle A—Training and
Investment Incentives
PART I—PROVISIONS RELATING TO EDUCATION
AND TRAINING
SEC. 14101. EMPLOYER-PROVIDED EDUCATIONAL ASSIST-
ANCE.
(a) PERMANENT EXTENSION OF EXCLUSION.—
(1) IN GENERAL.—Section 127 (relating to edu-
cational assistance programs) is amended by striking
subsection (d) and by redesignating subsection (e) as
subsection (d).
1096
(2) CONFORMING AMENDMENT.—Paragraph (2)
of section 103(a) of the Tax Extension Act of 1991
is hereby repealed.
(b) COORDINATION WITH SECTION 132.—Paragraph
(8) of section 132(i) is amended to read as follows:
‘‘(8) APPLICATION OF SECTION TO OTHERWISE
TAXABLE EDUCATIONAL OR TRAINING BENEFITS.—
Amounts paid or expenses incurred by the employer
for education or training provided to the employee
which are not excludable from gross income under
section 127 shall be excluded from gross income
under this section if (and only if) such amounts or
expenses are a working condition fringe.’’
(c) EFFECTIVE DATES.—
(1) SUBSECTION (a).—The amendments made
by subsection (a) shall apply to taxable years ending
after June 30, 1992.
(2) SUBSECTION (b).—The amendment made
by subsection (b) shall apply to taxable years begin-
ning after December 31, 1988.
(d) TRANSITION RULES.—
(1) WAIVER OF INTEREST AND PENALTIES.—
No interest, penalty, or addition to tax shall be im-
posed or required to be paid solely by reason of a
failure, before the date of the enactment of this Act,
1097
to treat educational assistance in a manner consist-
ent with the provisions of section 103(a) of the Tax
Extension Act of 1991 (as in effect before the
amendments made by subsection (a)).
(2) SPECIAL RULES FOR 1992.—
(A) EMPLOYMENT TAXES.—If—
(i) an employer provided an employee
with educational assistance during the pe-
riod beginning on July 1, 1992, and end-
ing on December 31, 1992,
(ii) consistent with the provisions of
section 103(a) of the Tax Extension Act of
1991 (as so in effect), such employer treat-
ed such assistance as taxable for purposes
of any employment tax and as a result of
such treatment there was an increase in
taxable wages for purposes of such tax,
(iii) on or after the date of the enact-
ment of this Act and before January 1,
1994, such employer pays such employee
amounts which are taxable wages for pur-
poses of such tax and which equal or ex-
ceed the increase referred to in clause (ii),
and
1098
(iv) such employee did not treat such
assistance for purposes of such employ-
ment tax (or for purposes of chapter 1 of
the Internal Revenue Code of 1986 in the
case of employment tax imposed by chap-
ter 24 of such Code) in a manner incon-
sistent with the employer’s treatment of
such assistance,
the amendments made by subsection (a) shall
not apply to such educational assistance for
purposes of such employment tax, but, for pur-
poses of applying such employment tax (and for
purposes of the reporting requirements imposed
by chapter 61 of such Code), the taxable wages
of the employee referred to in clause (iii) shall
be reduced by the amount of the increase re-
ferred to in clause (ii). For purposes of clause
(iv), an employer may assume that the em-
ployee treated the assistance in a manner con-
sistent with the employer’s treatment unless
such employer has actual knowledge to the con-
trary.
(B) REPORTING REQUIREMENT.—An em-
ployer shall separately report the amounts of
any reduction under subparagraph (A) as non-
1099
taxable income on any returns or receipts re-
quired under chapter 61 of such Code for cal-
endar year 1993.
(C) DEFINITIONS.—For purposes of this
paragraph—
(i) EMPLOYMENT
TAX.—The term
‘‘employment tax’’ means any tax imposed
by subtitle C of such Code.
(ii) 
TAXABLE
WAGES.—The 
term
‘‘taxable wages’’means—
(I) wages (as defined in section
3121(a) of such Code) in the case of
the taxes imposed by chapter 21 of
such Code,
(II) compensation (as defined in
section 3231(e) of such Code) in the
case of the taxes imposed by chapter
22 of such Code,
(III) wages (as defined in section
3306(b) of such Code) in the case of
the taxes imposed by chapter 23 of
such Code, and
(IV) wages (as defined in section
3401(a) of such Code) in the case of
1100
the taxes imposed by chapter 24 of
such Code.
(3) INCOME TAX TREATMENT.—If—
(A) subparagraph (A) of paragraph (2) ap-
plies to any educational assistance referred to
in such paragraph provided to any employee,
and
(B) such employee included such assistance
in his taxable income for purposes of the tax
imposed by chapter 1 of such Code,
the amendments made by subsection (a) shall not
apply to such assistance for purposes of such chap-
ter 1, but the amount included in the gross income
of such employee by reason of wages received from
the employer referred to in subparagraph (A) of
paragraph (2) during 1993 shall be reduced in the
manner provided in such subparagraph (A).
SEC. 14102. TARGETED JOBS CREDIT.
(a) PERMANENT EXTENSION OF CREDIT.—
(1) IN GENERAL.—Subsection (c) of section 51
(relating to amount of targeted jobs credit) is
amended by striking paragraph (4).
(2) EFFECTIVE DATE.—The amendment made
by paragraph (1) shall apply to individuals who
begin work for the employer after June 30, 1992.
1101
(b) CREDIT
FOR
PARTICIPANTS
IN
APPROVED
SCHOOL-TO-WORK PROGRAMS.—
(1) IN GENERAL.—Subparagraph (I) of section
51(d)(1) (defining members of targeted group) is
amended to read as follows:
‘‘(I) a qualified participant in an
approved school-to-work program, or’’.
(2) QUALIFIED PARTICIPANT IN AN APPROVED
SCHOOL-TO-WORK
PROGRAM.—Paragraph (10) of
section 51(d) is amended to read as follows:
‘‘(10) QUALIFIED
PARTICIPANT
IN
AN
AP-
PROVED SCHOOL-TO-WORK PROGRAM DEFINED.—
‘‘(A) IN GENERAL.—Except as otherwise
provided in this paragraph, the term ‘qualified
participant in an approved school-to-work pro-
gram’ means any individual who is certified
under an approved school-to-work program as—
‘‘(i) having attained age 16 but not
having attained age 21, and
‘‘(ii) being enrolled in and making
satisfactory progress in completing such
approved school-to-work program.
‘‘(B) LIMITATION ON NUMBER OF PARTICI-
PANTS.—
1102
‘‘(i) IN
GENERAL.—Any individual
who begins work for the employer during
any calendar year shall not be treated as
a qualified participant in an approved
school-to-work program unless the individ-
ual is certified under such program as an
eligible participant with respect to such
calendar year.
‘‘(ii) 
LIMITATION
ON
CERTIFI-
CATIONS.—The aggregate number of indi-
viduals certified under an approved school-
to-work program as eligible participants
with respect to any calendar year shall not
exceed the portion of the national school-
to-work program limitation for such cal-
endar year allocated under subsection (l)
to such program.
‘‘(C) APPROVED
SCHOOL-TO-WORK
PRO-
GRAM.—The term ‘approved school-to-work pro-
gram’ means any program which—
‘‘(i) is a planned program of struc-
tured job training designed to integrate
academic instruction provided by an edu-
cational institution and work-based learn-
ing provided by an employer, and
1103
‘‘(ii) is approved by the Secretaries of
Labor and Education.
‘‘(D) LIMITATION ON AMOUNT OF WAGES
TAKEN INTO ACCOUNT.—For purposes of apply-
ing this subpart to wages paid or incurred to
any qualified participant in an approved school-
to-work program, subsection (b)(3) shall be ap-
plied by substituting ‘$3,000’ for ‘$6,000’.
‘‘(E) WAGES.—In the case of remunera-
tion attributable to services performed while the
individual meets the requirements of subpara-
graph (A), wages, and unemployment insurance
wages, shall be determined without regard to
section 3306(c)(10)(C).’’
(3) OVERALL
LIMITATIONS.—Section 51 is
amended by adding at the end thereof the following
new subsection:
‘‘(l) OVERALL LIMITATION ON APPROVED SCHOOL-
TO-WORK PROGRAM PARTICIPANTS.—
‘‘(1) IN GENERAL.—For purposes of subsection
(d)(10), 
the 
national 
school-to-work 
program
limitation—
‘‘(A) for calendar year 1994 is 125,000,
‘‘(B) for calendar year 1995 is 140,000,
‘‘(C) for calendar year 1996 is 160,000,
1104
‘‘(D) for calendar year 1997 is 180,000,
and
‘‘(E) for calendar year 1998 and any sub-
sequent calendar year is 200,000.
‘‘(2) ALLOCATION
TO
STATES.—The national
school-to-work program limitation for any calendar
year shall be allocated among the States in propor-
tion to the number of their eligible participants that
are estimated to be served in approved school-to-
work programs for that year. Such estimates shall
be published by the Secretaries of Labor and Edu-
cation before the beginning of the calendar year to
which the allocation applies.
‘‘(3) ALLOCATION
TO
APPROVED
SCHOOL-TO-
WORK
PROGRAMS.—The portion of the national
school-to-work program limitation for any calendar
year which is allocated to any State shall be allo-
cated among the approved school-to-work programs
in such State in such manner as the Secretaries of
Labor and Education shall prescribe.’’
(4) EFFECTIVE DATE.—The amendments made
by this subsection shall apply in the case of individ-
uals who begin work for the employer after Decem-
ber 31, 1993.
1105
PART II—INVESTMENT INCENTIVES
Subpart A—Research Credit
SEC. 14111. PERMANENT EXTENSION OF RESEARCH CRED-
IT.
(a) IN GENERAL.—Section 41 (relating to credit for
increasing research activities) is amended by striking sub-
section (h).
(b) CONFORMING AMENDMENT.—Paragraph (1) of
section 28(b) is amended by striking subparagraph (D).
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years ending after June
30, 1992.
SEC. 14112. MODIFICATION OF FIXED BASE PERCENTAGE
FOR STARTUP COMPANIES.
(a) 
GENERAL
RULE.—Clause 
(ii) 
of 
section
41(c)(3)(B) is amended to read as follows:
‘‘(ii) FIXED-BASE PERCENTAGE.—In a
case to which this subparagraph applies,
the fixed-base percentage is—
‘‘(I) 3 percent for each of the
taxpayer’s 1st 5 taxable years begin-
ning after December 31, 1993, for
which the taxpayer has qualified re-
search expenses,
‘‘(II) in the case of the tax-
payer’s 6th such taxable year, 1/6 of
1106
the percentage which the aggregate
qualified research expenses of the tax-
payer for the 4th and 5th such tax-
able years is of the aggregate gross
receipts of the taxpayer for such
years,
‘‘(III) in the case of the tax-
payer’s 7th such taxable year, 1/3 of
the percentage which the aggregate
qualified research expenses of the tax-
payer for the 5th and 6th such tax-
able years is of the aggregate gross
receipts of the taxpayer for such
years,
‘‘(IV) in the case of the tax-
payer’s 8th such taxable year, 1/2 of
the percentage which the aggregate
qualified research expenses of the tax-
payer for the 5th, 6th, and 7th such
taxable years is of the aggregate gross
receipts of the taxpayer for such
years,
‘‘(V) in the case of the taxpayer’s
9th such taxable year, 2/3 of the per-
centage which the aggregate qualified
1107
research expenses of the taxpayer for
the 5th, 6th, 7th, and 8th such tax-
able years is of the aggregate gross
receipts of the taxpayer for such
years,
‘‘(VI) in the case of the tax-
payer’s 10th such taxable year, 5/6 of
the percentage which the aggregate
qualified research expenses of the tax-
payer for the 5th, 6th, 7th, 8th, and
9th such taxable years is of the aggre-
gate gross receipts of the taxpayer for
such years, and
‘‘(VII) for taxable years there-
after, the percentage which the aggre-
gate qualified research expenses for
any 5 taxable years selected by the
taxpayer from among the 5th through
the 10th such taxable years is of the
aggregate gross receipts of the tax-
payer for such selected years.’’.
(b) CONFORMING AMENDMENTS.—
(1) Clause (iii) of section 41(c)(3)(B) is amend-
ed by striking ‘‘clause (i)’’ and inserting ‘‘clauses (i)
and (ii)’’.
1108
(2) Subparagraph (D) of section 41(c)(3) is
amended by striking ‘‘subparagraph (A)’’ and insert-
ing ‘‘subparagraphs (A) and (B)(ii)’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
December 31, 1993.
Subpart B—Capital Gain Provisions
SEC. 14113. 50-PERCENT EXCLUSION FOR GAIN FROM CER-
TAIN SMALL BUSINESS STOCK.
(a) GENERAL RULE.—Part I of subchapter P of
chapter 1 (relating to capital gains and losses) is amended
by adding at the end thereof the following new section:
‘‘SEC. 1202. 50-PERCENT EXCLUSION FOR GAIN FROM CER-
TAIN SMALL BUSINESS STOCK.
‘‘(a) 50-PERCENT EXCLUSION.—In the case of a tax-
payer other than a corporation, gross income shall not in-
clude 50 percent of any gain from the sale or exchange
of qualified small business stock held for more than 5
years.
‘‘(b) PER-ISSUER LIMITATION ON TAXPAYER’S ELI-
GIBLE GAIN.—
‘‘(1) IN GENERAL.—If the taxpayer has eligible
gain for the taxable year from 1 or more dispositions
of stock issued by any corporation, the aggregate
amount of such gain from dispositions of stock is-
1109
sued by such corporation which may be taken into
account under subsection (a) for the taxable year
shall not exceed the greater of—
‘‘(A) $10,000,000 reduced by the aggre-
gate amount of eligible gain taken into account
under subsection (a) for prior taxable years and
attributable to dispositions of stock issued by
such corporation, or
‘‘(B) 10 times the aggregate adjusted
bases of qualified small business stock issued by
such corporation and disposed of by the tax-
payer during the taxable year.
For purposes of subparagraph (B), the adjusted
basis of any stock shall be determined without re-
gard to any addition to basis after the date on which
such stock was originally issued.
‘‘(2) ELIGIBLE
GAIN.—For purposes of this
subsection, the term ‘eligible gain’ means any gain
from the sale or exchange of qualified small business
stock held for more than 5 years.
‘‘(3) TREATMENT OF MARRIED INDIVIDUALS.—
‘‘(A) SEPARATE RETURNS.—In the case of
a separate return by a married individual, para-
graph (1)(A) shall be applied by substituting
‘$5,000,000’ for ‘$10,000,000’.
1110
‘‘(B) ALLOCATION OF EXCLUSION.—In the
case of any joint return, the amount of gain
taken into account under subsection (a) shall be
allocated equally between the spouses for pur-
poses of applying this subsection to subsequent
taxable years.
‘‘(C) MARITAL STATUS.—For purposes of
this subsection, marital status shall be deter-
mined under section 7703.
‘‘(c) QUALIFIED SMALL BUSINESS STOCK.—For pur-
poses of this section—
‘‘(1) IN GENERAL.—Except as otherwise pro-
vided in this section, the term ‘qualified small busi-
ness stock’ means any stock in a C corporation
which is originally issued after December 31, 1992,
if—
‘‘(A) as of the date of issuance, such cor-
poration is a qualified small business, and
‘‘(B) except as provided in subsections (f)
and (h), such stock is acquired by the taxpayer
at its original issue (directly or through an un-
derwriter)—
‘‘(i) in exchange for money or other
property (not including stock), or
1111
‘‘(ii) as compensation for services pro-
vided to such corporation (other than serv-
ices performed as an underwriter of such
stock).
‘‘(2) ACTIVE BUSINESS REQUIREMENT; ETC.—
‘‘(A) IN GENERAL.—Stock in a corporation
shall not be treated as qualified small business
stock unless, during substantially all of the tax-
payer’s holding period for such stock, such cor-
poration meets the active business requirements
of subsection (e) and such corporation is a C
corporation.
‘‘(B) SPECIAL RULE FOR CERTAIN SMALL
BUSINESS INVESTMENT COMPANIES.—
‘‘(i) WAIVER OF ACTIVE BUSINESS RE-
QUIREMENT.—Notwithstanding any provi-
sion of subsection (e), a corporation shall
be treated as meeting the active business
requirements of such subsection for any
period during which such corporation
qualifies as a specialized small business in-
vestment company.
‘‘(ii) SPECIALIZED
SMALL
BUSINESS
INVESTMENT COMPANY.—For purposes of
clause (i), the term ‘specialized small busi-
1112
ness investment company’ means any eligi-
ble corporation (as defined in subsection
(e)(4)) which is licensed to operate under
section 301(d) of the Small Business In-
vestment Act of 1958 (as in effect on May
13, 1993).
‘‘(3) CERTAIN PURCHASES BY CORPORATION OF
ITS OWN STOCK.—
‘‘(A) REDEMPTIONS FROM TAXPAYER OR
RELATED PERSON.—Stock acquired by the tax-
payer shall not be treated as qualified small
business stock if, at any time during the 4–year
period beginning on the date 2 years before the
issuance of such stock, the corporation issuing
such stock purchased (directly or indirectly) any
of its stock from the taxpayer or from a person
related (within the meaning of section 267(b) or
707(b)) to the taxpayer.
‘‘(B) SIGNIFICANT REDEMPTIONS.—Stock
issued by a corporation shall not be treated as
qualified business stock if, during the 2–year
period beginning on the date 1 year before the
issuance of such stock, such corporation made
1 or more purchases of its stock with an aggre-
gate value (as of the time of the respective pur-
1113
chases) exceeding 5 percent of the aggregate
value of all of its stock as of the beginning of
such 2–year period.
‘‘(C) ACQUISITIONS
BY
RELATED
PER-
SONS.—For purposes of this paragraph, the
purchase by any person related (within the
meaning of section 267(b) or 707(b)) to the is-
suing corporation of any stock in the issuing
corporation shall be treated as a purchase by
the issuing corporation.
‘‘(d) QUALIFIED SMALL BUSINESS.—For purposes of
this section—
‘‘(1) IN GENERAL.—The term ‘qualified small
business’ means any domestic corporation which is a
C corporation if—
‘‘(A) the aggregate capitalization of such
corporation (or any predecessor thereof) at all
times on or after January 1, 1993, and before
the issuance did not exceed $50,000,000,
‘‘(B) the aggregate capitalization of such
corporation immediately after the issuance (de-
termined by taking into account amounts re-
ceived in the issuance) does not exceed
$50,000,000, and
1114
‘‘(C) such corporation agrees to submit
such reports to the Secretary and to sharehold-
ers as the Secretary may require to carry out
the purposes of this section.
‘‘(2) AGGREGATE
CAPITALIZATION.—For pur-
poses of paragraph (1), the term ‘aggregate capital-
ization’ means the excess of—
‘‘(A) the amount of cash and the aggregate
adjusted bases of other property held by the
corporation, over
‘‘(B) the aggregate amount of the short-
term indebtedness of the corporation.
For purposes of the preceding sentence, the term
‘short-term indebtedness’ means any indebtedness
which, when incurred, did not have a term in excess
of 1 year.
‘‘(3) LOOK-THRU IN CASE OF SUBSIDIARIES.—
In determining whether a corporation meets the re-
quirements of this subsection—
‘‘(A) stock and debt of any subsidiary (as
defined in subsection (e)(5)(C)) held by such
corporation shall be disregarded, and
‘‘(B) such corporation shall be treated as
holding its ratable share of the assets of such
1115
subsidiary and as being liable for its ratable
share of the indebtedness of such subsidiary.
‘‘(e) ACTIVE BUSINESS REQUIREMENT.—
‘‘(1) IN GENERAL.—For purposes of subsection
(c)(2), the requirements of this subsection are met
by a corporation for any period if during such
period—
‘‘(A) at least 80 percent (by value) of the
assets of such corporation are used by such cor-
poration in the active conduct of a qualified
trade or business, and
‘‘(B) such corporation is an eligible cor-
poration.
‘‘(2) SPECIAL
RULE
FOR
CERTAIN
ACTIVI-
TIES.—For purposes of paragraph (1), if, in connec-
tion with any future qualified trade or business, a
corporation is engaged in—
‘‘(A) start-up activities described in section
195(c)(1)(A),
‘‘(B) activities resulting in the payment or
incurring of expenditures which may be treated
as research and experimental expenditures
under section 174, or
‘‘(C) activities with respect to in-house re-
search expenses described in section 41(b)(4),
1116
assets used in such activities shall be treated as used
in the active conduct of a qualified trade or busi-
ness. Any determination under this paragraph shall
be made without regard to whether a corporation
has any gross income from such activities at the
time of the determination.
‘‘(3) QUALIFIED
TRADE
OR
BUSINESS.—For
purposes of this subsection, the term ‘qualified trade
or business’ means any trade or business other
than—
‘‘(A) any trade or business involving the
performance of services in the fields of health,
law, engineering, architecture, accounting, actu-
arial science, performing arts, consulting, ath-
letics, financial services, brokerage services, or
any other trade or business where the principal
asset of such trade or business is the reputation
or skill of 1 or more of its employees,
‘‘(B) any banking, insurance, financing,
leasing, investing, or similar business,
‘‘(C) any farming business (including the
business of raising or harvesting trees),
‘‘(D) any business involving the production
or extraction of products of a character with re-
1117
spect to which a deduction is allowable under
section 613 or 613A, and
‘‘(E) any business of operating a hotel,
motel, restaurant, or similar business.
‘‘(4) ELIGIBLE
CORPORATION.—For purposes
of this subsection, the term ‘eligible corporation’
means any domestic corporation; except that such
term shall not include—
‘‘(A) a DISC or former DISC,
‘‘(B) a corporation with respect to which
an election under section 936 is in effect,
‘‘(C) a regulated investment company, real
estate investment trust, or REMIC, and
‘‘(D) a cooperative.
‘‘(5) STOCK IN OTHER CORPORATIONS.—
‘‘(A) LOOK-THRU
IN
CASE
OF
SUBSIDI-
ARIES.—For purposes of this subsection, stock
and debt in any subsidiary corporation shall be
disregarded and the parent corporation shall be
deemed to own its ratable share of the subsidi-
ary’s assets, and to conduct its ratable share of
the subsidiary’s activities.
‘‘(B) PORTFOLIO STOCK OR SECURITIES.—
A corporation shall be treated as failing to meet
the requirements of paragraph (1) for any pe-
1118
riod during which more than 10 percent of the
value of its assets (in excess of liabilities) con-
sists of stock or securities in other corporations
which are not subsidiaries of such corporation
(other than assets described in paragraph (6)).
‘‘(C) SUBSIDIARY.—For purposes of this
paragraph, a corporation shall be considered a
subsidiary if the parent owns more than 50 per-
cent of the combined voting power of all classes
of stock entitled to vote, or more than 50 per-
cent in value of all outstanding stock, of such
corporation.
‘‘(6) WORKING
CAPITAL.—For purposes of
paragraph (1)(A), any assets which—
‘‘(A) are held as a part of the reasonably
required working capital needs of a qualified
trade or business of the corporation, or
‘‘(B) are held for investment and are rea-
sonably expected to be used within 2 years to
finance future research and experimentation in
a qualified trade or business or increases in
working capital needs of a qualified trade or
business,
shall be treated as used in the active conduct of a
qualified trade or business. For periods after the
1119
corporation has been in existence for at least 2
years, in no event may more than 50 percent of the
assets of the corporation qualify as used in the ac-
tive conduct of a qualified trade or business by rea-
son of this paragraph.
‘‘(7) MAXIMUM
REAL
ESTATE
HOLDINGS.—A
corporation shall not be treated as meeting the re-
quirements of paragraph (1) for any period during
which more than 10 percent of the total value of its
assets consists of real property which is not used in
the active conduct of a qualified trade or business.
For purposes of the preceding sentence, the owner-
ship of, dealing in, or renting of real property shall
not be treated as the active conduct of a qualified
trade or business.
‘‘(8) COMPUTER
SOFTWARE
ROYALTIES.—For
purposes of paragraph (1), rights to computer soft-
ware which produces active business computer soft-
ware royalties (within the meaning of section
543(d)(1)) shall be treated as an asset used in the
active conduct of a trade or business.
‘‘(f) STOCK ACQUIRED ON CONVERSION OF PRE-
FERRED STOCK.—If any stock in a corporation is acquired
solely through the conversion of other stock in such cor-
1120
poration which is qualified small business stock in the
hands of the taxpayer—
‘‘(1) the stock so acquired shall be treated as
qualified small business stock in the hands of the
taxpayer, and
‘‘(2) the stock so acquired shall be treated as
having been held during the period during which the
converted stock was held.
‘‘(g) TREATMENT OF PASS-THRU ENTITIES.—
‘‘(1) IN GENERAL.—If any amount included in
gross income by reason of holding an interest in a
pass-thru entity meets the requirements of para-
graph (2)—
‘‘(A) such amount shall be treated as gain
described in subsection (a), and
‘‘(B) for purposes of applying subsection
(b), such amount shall be treated as gain from
a disposition of stock in the corporation issuing
the stock disposed of by the pass-thru entity
and the taxpayer’s proportionate share of the
adjusted basis of the pass-thru entity in such
stock shall be taken into account.
‘‘(2) REQUIREMENTS.—An amount meets the
requirements of this paragraph if—
1121
‘‘(A) such amount is attributable to gain
on the sale or exchange by the pass-thru entity
of stock which is qualified small business stock
in the hands of such entity (determined by
treating such entity as an individual) and which
was held by such entity for more than 5 years,
and
‘‘(B) such amount is includible in the gross
income of the taxpayer by reason of the holding
of an interest in such entity which was held by
the taxpayer on the date on which such pass-
thru entity acquired such stock and at all times
thereafter before the disposition of such stock
by such pass-thru entity.
‘‘(3) LIMITATION BASED ON INTEREST ORIGI-
NALLY HELD BY TAXPAYER.—Paragraph (1) shall
not apply to any amount to the extent such amount
exceeds the amount to which paragraph (1) would
have applied if such amount were determined by ref-
erence to the interest the taxpayer held in the pass-
thru entity on the date the qualified small business
stock was acquired.
‘‘(4) PASS-THRU ENTITY.—For purposes of this
subsection, the term ‘pass-thru entity’ means—
‘‘(A) any partnership,
1122
‘‘(B) any S corporation,
‘‘(C) any regulated investment company,
and
‘‘(D) any common trust fund.
‘‘(h) CERTAIN
TAX-FREE
AND
OTHER
TRANS-
FERS.—For purposes of this section—
‘‘(1) IN GENERAL.—In the case of a transfer
described in paragraph (2), the transferee shall be
treated as—
‘‘(A) having acquired such stock in the
same manner as the transferor, and
‘‘(B) having held such stock during any
continuous period immediately preceding the
transfer during which it was held (or treated as
held under this subsection) by the transferor.
‘‘(2) DESCRIPTION OF TRANSFERS.—A transfer
is described in this subsection if such transfer is—
‘‘(A) by gift,
‘‘(B) at death, or
‘‘(C) from a partnership to a partner of
stock with respect to which requirements simi-
lar to the requirements of subsection (g) are
met at the time of the transfer (without regard
to the 5-year holding period requirement).
1123
‘‘(3) CERTAIN
RULES
MADE
APPLICABLE.—
Rules similar to the rules of section 1244(d)(2) shall
apply for purposes of this section.
‘‘(4) INCORPORATIONS AND REORGANIZATIONS
INVOLVING NONQUALIFIED STOCK.—
‘‘(A) IN GENERAL.—In the case of a trans-
action described in section 351 or a reorganiza-
tion described in section 368, if qualified small
business stock is exchanged for other stock
which would not qualify as qualified small busi-
ness stock but for this subparagraph, such
other stock shall be treated as qualified small
business stock acquired on the date on which
the exchanged stock was acquired.
‘‘(B) 
LIMITATION.—This 
section 
shall
apply to gain from the sale or exchange of stock
treated as qualified small business stock by rea-
son of subparagraph (A) only to the extent of
the gain which would have been recognized at
the time of the transfer described in subpara-
graph (A) if section 351 or 368 had not applied
at such time.
‘‘(C) SUCCESSIVE APPLICATION.—For pur-
poses of this paragraph, stock treated as quali-
fied small business stock under subparagraph
1125
‘‘(2) TREATMENT OF CONTRIBUTIONS TO CAP-
ITAL.—If the adjusted basis of any qualified small
business stock is adjusted by reason of any contribu-
tion to capital after the date on which such stock
was originally issued, in determining the amount of
the adjustment by reason of such contribution, the
basis of the contributed property shall in no event be
treated as less than its fair market value on the date
of the contribution.
‘‘(j) TREATMENT OF CERTAIN SHORT POSITIONS.—
‘‘(1) IN GENERAL.—If the taxpayer has an off-
setting short position with respect to any qualified
small business stock, subsection (a) shall not apply
to any gain from the sale or exchange of such stock
unless—
‘‘(A) such stock was held by the taxpayer
for more than 5 years as of the first day on
which there was such a short position, and
‘‘(B) the taxpayer elects to recognize gain
as if such stock were sold on such first day for
its fair market value.
‘‘(2) OFFSETTING SHORT POSITION.—For pur-
poses of paragraph (1), the taxpayer shall be treated
as having an offsetting short position with respect to
any qualified small business stock if—
1126
‘‘(A) the taxpayer has made a short sale of
substantially identical property,
‘‘(B) the taxpayer has acquired an option
to sell substantially identical property at a fixed
price, or
‘‘(C) to the extent provided in regulations,
the taxpayer has entered into any other trans-
action which substantially reduces the risk of
loss from holding such qualified small business
stock.
For purposes of the preceding sentence, any ref-
erence to the taxpayer shall be treated as including
a reference to any person who is related (within the
meaning of section 267(b) or 707(b)) to the tax-
payer.
‘‘(k) REGULATIONS.—The Secretary shall prescribe
such regulations as may be appropriate to carry out the
purposes of this section, including regulations to prevent
the avoidance of the purposes of this section through split-
ups, shell corporations, partnerships, or otherwise.’’
(b) ONE-HALF OF EXCLUSION TREATED AS PREF-
ERENCE FOR MINIMUM TAX.—
(1) IN GENERAL.—Subsection (a) of section 57
(relating to items of tax preference) is amended by
1127
adding at the end thereof the following new para-
graph:
‘‘(8) EXCLUSION FOR GAINS ON SALE OF CER-
TAIN SMALL BUSINESS STOCK.—An amount equal to
one-half of the amount excluded from gross income
for the taxable year under section 1202.’’
(2) CONFORMING AMENDMENT.—Subclause (II)
of section 53(d)(1)(B)(ii) is amended by striking
‘‘and (6)’’ and inserting ‘‘(6), and (8)’’.
(c) PENALTY FOR FAILURE TO COMPLY WITH RE-
PORTING REQUIREMENTS.—Section 6652 is amended by
inserting before the last subsection thereof the following
new subsection:
‘‘(k) FAILURE
TO
MAKE
REPORTS
REQUIRED
UNDER SECTION 1202.—In the case of a failure to make
a report required under section 1202(d)(1)(C) which con-
tains the information required by such section on the date
prescribed therefor (determined with regard to any exten-
sion of time for filing), there shall be paid (on notice and
demand by the Secretary and in the same manner as tax)
by the person failing to make such report, an amount
equal to $50 for each report with respect to which there
was such a failure. In the case of any failure due to neg-
ligence or intentional disregard, the preceding sentence
shall be applied by substituting ‘$100’ for ‘$50’. In the
1128
case of a report covering periods in 2 or more years, the
penalty determined under preceding provisions of this sub-
section shall be multiplied by the number of such years.’’
(d) CONFORMING AMENDMENTS.—
(1)(A) Section 172(d)(2) (relating to modifica-
tions with respect to net operating loss deduction) is
amended to read as follows:
‘‘(2) CAPITAL
GAINS
AND
LOSSES
OF
TAX-
PAYERS OTHER THAN CORPORATIONS.—In the case
of a taxpayer other than a corporation—
‘‘(A) the amount deductible on account of
losses from sales or exchanges of capital assets
shall not exceed the amount includable on ac-
count of gains from sales or exchanges of cap-
ital assets; and
‘‘(B) the exclusion provided by section
1202 shall not be allowed.’’
(B) Subparagraph (B) of section 172(d)(4) is
amended by inserting ‘‘, (2)(B),’’ after ‘‘paragraph
(1)’’.
(2) Paragraph (4) of section 642(c) is amended
to read as follows:
‘‘(4) ADJUSTMENTS.—To the extent that the
amount otherwise allowable as a deduction under
this subsection consists of gain described in section
1129
1202(a), proper adjustment shall be made for any
exclusion allowable to the estate or trust under sec-
tion 1202. In the case of a trust, the deduction al-
lowed by this subsection shall be subject to section
681 (relating to unrelated business income).’’
(3) Paragraph (3) of section 643(a) is amended
by adding at the end thereof the following new sen-
tence: ‘‘The exclusion under section 1202 shall not
be taken into account.’’.
(4) Paragraph (4) of section 691(c) is amended
by striking ‘‘1201, and 1211’’ and inserting ‘‘1201,
1202, and 1211’’.
(5) The second sentence of paragraph (2) of
section 871(a) is amended by inserting ‘‘such gains
and losses shall be determined without regard to sec-
tion 1202 and’’ after ‘‘except that’’.
(6) The table of sections for part I of sub-
chapter P of chapter 1 is amended by adding after
the item relating to section 1201 the following new
item:
‘‘Sec. 1202. 50-percent exclusion for gain from certain small busi-
ness stock.’’
(e) EFFECTIVE DATE.—The amendments made by
this section shall apply to stock issued after December 31,
1992.
1130
SEC. 14114. ROLLOVER OF GAIN FROM SALE OF PUBLICLY
TRADED 
SECURITIES 
INTO 
SPECIALIZED
SMALL BUSINESS INVESTMENT COMPANIES.
(a) IN GENERAL.—Part III of subchapter O of chap-
ter 1 (relating to common nontaxable exchanges) is
amended by adding at the end the following new section:
‘‘SEC. 1044. ROLLOVER OF PUBLICLY TRADED SECURITIES
GAIN INTO SPECIALIZED SMALL BUSINESS
INVESTMENT COMPANIES.
‘‘(a) NONRECOGNITION OF GAIN.—In the case of the
sale of any publicly traded securities with respect to which
the taxpayer elects the application of this section, gain
from such sale shall be recognized only to the extent that
the amount realized on such sale exceeds—
‘‘(1) the cost of any common stock or partner-
ship interest in a specialized small business invest-
ment company purchased by the taxpayer during the
60-day period beginning on the date of such sale,
reduced by
‘‘(2) any portion of such cost previously taken
into account under this section.
This section shall not apply to any gain which is treated
as ordinary income for purposes of this subtitle.
‘‘(b) LIMITATIONS.—
‘‘(1) LIMITATION
ON
INDIVIDUALS.—In the
case of an individual, the amount of gain which may
1131
be excluded under subsection (a) for any taxable
year shall not exceed the lesser of—
‘‘(A) $50,000, or
‘‘(B) $500,000, reduced by the amount of
gain excluded under subsection (a) for all pre-
ceding taxable years.
‘‘(2) LIMITATION ON C CORPORATIONS.—In the
case of a C corporation, the amount of gain which
may be excluded under subsection (a) for any tax-
able year shall not exceed the lesser of—
‘‘(A) $250,000, or
‘‘(B) $1,000,000, reduced by the amount
of gain excluded under subsection (a) for all
preceding taxable years.
‘‘(3) SPECIAL RULES FOR MARRIED INDIVID-
UALS.—For purposes of this subsection—
‘‘(A) SEPARATE RETURNS.—In the case of
a separate return by a married individual, para-
graph (1) shall be applied by substituting
‘$25,000’ for ‘$50,000’ and ‘$250,000’ for
‘$500,000’.
‘‘(B) ALLOCATION OF GAIN.—In the case
of any joint return, the amount of gain ex-
cluded under subsection (a) for any taxable
year shall be allocated equally between the
1132
spouses for purposes of applying this subsection
to subsequent taxable years.
‘‘(C) MARITAL STATUS.—For purposes of
this subsection, marital status shall be deter-
mined under section 7703.
‘‘(4) SPECIAL RULES FOR C CORPORATION.—
For purposes of this subsection—
‘‘(A) all corporations which are members
of the same controlled group of corporations
(within the meaning of section 52(a)) shall be
treated as 1 taxpayer, and
‘‘(B) any gain excluded under subsection
(a) by a predecessor of any C corporation shall
be treated as having been excluded by such C
corporation.
‘‘(c) DEFINITIONS AND SPECIAL RULES.—For pur-
poses of this section—
‘‘(1) PUBLICLY
TRADED
SECURITIES.—The
term ‘publicly traded securities’ means securities
which are traded on an established securities
market.
‘‘(2) PURCHASE.—The term ‘purchase’ has the
meaning given such term by section 1043(b)(4).
‘‘(3) SPECIALIZED
SMALL
BUSINESS
INVEST-
MENT COMPANY.—The term ‘specialized small busi-
1133
ness investment company’ means any partnership or
corporation which is licensed by the Small Business
Administration under section 301(d) of the Small
Business Investment Act of 1958 (as in effect on
May 13, 1993).
‘‘(4) CERTAIN ENTITIES NOT ELIGIBLE.—This
section shall not apply to any estate, trust, partner-
ship, or S corporation.
‘‘(d) BASIS ADJUSTMENTS.—If gain from any sale is
not recognized by reason of subsection (a), such gain shall
be applied to reduce (in the order acquired) the basis for
determining gain or loss of any common stock or partner-
ship interest in any specialized small business investment
company which is purchased by the taxpayer during the
60-day period described in subsection (a). This subsection
shall not apply for purposes of section 1202.’’
(b) CONFORMING AMENDMENT.—Paragraph (24) of
section 1016(a) is amended—
(1) by striking ‘‘section 1043’’ and inserting
‘‘section 1043 or 1044’’, and
(2) by striking ‘‘section 1043(c)’’ and inserting
‘‘section 1043(c) or 1044(d), as the case may be’’.
(c) CLERICAL AMENDMENT.—The table of sections
for part III of subchapter O of chapter 1 is amended by
adding at the end the following new item:
1134
‘‘Sec. 1044. Rollover of publicly traded securities gain into spe-
cialized small business investment companies.’’
(d) EFFECTIVE DATE.—The amendments made by
this section shall apply to sales on and after the date of
the enactment of this Act, in taxable years ending on and
after such date.
Subpart C—Modifications To Minimum Tax
Depreciation Rules
SEC. 14115. MODIFICATION TO MINIMUM TAX DEPRECIA-
TION RULES.
(a) GENERAL RULE.—Paragraph (1) of section 56(a)
(relating to depreciation) is amended by redesignating
subparagraphs (B), (C), and (D) as subparagraphs (C),
(D), and (E), respectively, and by inserting after subpara-
graph (A) the following new subparagraph:
‘‘(B) TREATMENT OF CERTAIN PERSONAL
PROPERTY PLACED IN SERVICE AFTER 1993.—
‘‘(i) IN GENERAL.—In the case of any
property to which this subparagraph ap-
plies, the depreciation deduction allowable
under section 167 shall be determined as
provided in section 168(a), except that the
method of depreciation used shall be—
‘‘(I) the 120 percent declining
balance method switching to the
straight line method for the 1st tax-
1135
able year for which using the straight
line method with respect to the ad-
justed basis as of the beginning of the
year will yield a higher allowance, or
‘‘(II) the straight line method in
the case of property for which the ap-
plicable depreciation method under
section 168(a) is the straight line
method.
‘‘(ii) PROPERTY TO WHICH SUBPARA-
GRAPH APPLIES.—This subparagraph shall
apply to any tangible property placed in
service after December 31, 1993, except
that this subparagraph shall not apply
to—
‘‘(I) any residential rental prop-
erty or nonresidential real property
(within 
the 
meaning 
of 
section
168(e)), and
‘‘(II) any other property for
which the depreciation deduction pro-
vided by section 167(a) for purposes
of the regular tax is computed under
the alternative depreciation system of
section 168(g).
1190
‘‘(1) every married individual (as defined in sec-
tion 7703) who makes a single return jointly with
his spouse under section 6013, and
‘‘(2) every surviving spouse (as defined in sec-
tion 2(a)),
a tax determined in accordance with the following table:
‘‘If taxable income is:
The tax is:
Not over $36,900 ..........................
15% of taxable income.
Over 
$36,900 
but 
not 
over
$89,150.
$5,535, plus 28% of the excess over
$36,900.
Over 
$89,150 
but 
not 
over
$140,000.
$20,165, plus 31% of the excess over
$89,150.
Over $140,000 ...............................
$35,928.50, plus 36% of the excess
over $140,000.
‘‘(b) HEADS OF HOUSEHOLDS.—There is hereby im-
posed on the taxable income of every head of a household
(as defined in section 2(b)) a tax determined in accordance
with the following table:
‘‘If taxable income is:
The tax is:
Not over $29,600 ..........................
15% of taxable income.
Over 
$29,600 
but 
not 
over
$76,400.
$4,440, plus 28% of the excess over
$29,600.
Over 
$76,400 
but 
not 
over
$127,500.
$17,544, plus 31% of the excess over
$76,400.
Over $127,500 ...............................
$33,385, plus 36% of the excess over
$127,500.
‘‘(c) UNMARRIED INDIVIDUALS (OTHER THAN SUR-
VIVING SPOUSES AND HEADS OF HOUSEHOLDS).—There
is hereby imposed on the taxable income of every individ-
ual (other than a surviving spouse as defined in section
2(a) or the head of a household as defined in section 2(b))
who is not a married individual (as defined in section