may be) with an award under section 2313 in an
amount equal to or greater than the amount speci-
fied in section 2317(a)(2), the Secretary shall, from
such amounts as are made available under sub-
section (a), make such awards on a discretionary
basis.
(2) RULE OF CONSTRUCTION.—For purposes of
paragraph (1), awards under section 2313 are made
on a discretionary basis if the Secretary determines
which States (or entities designated by States pursu-
ant to such section, as the case may be) are to re-
ceive such awards, subject to meeting the require-
ments of this chapter for such an award, and the
Secretary determines the amount of such awards.
Title III—AMENDMENTS OF IN-
TERNAL REVENUE CODE OF
1986
Subtitle A—Reduction in Employee
Payroll Taxes; Credit for First-
Time Homebuyers
SEC. 3001. CREDIT FOR PORTION OF SOCIAL SECURITY
TAXES.
(a) GENERAL RULE.—Subpart C of part IV of sub-
chapter A of chapter 1 of the Internal Revenue Code of
1986 (relating to refundable credits) is amended by redes-
ignating section 35 as section 36 and by inserting after
section 34 the following new section:
‘‘SEC. 35. CREDIT FOR PORTION OF SOCIAL SECURITY
TAXES.
‘‘(a) ALLOWANCE OF CREDIT.—In the case of an in-
dividual, there shall be allowed as a credit against the tax
imposed by this subtitle for the taxable year an amount
equal to 20 percent of the taxpayer’s social security taxes
for the taxable year.
‘‘(b) LIMITATION.—The amount of the credit allow-
able under subsection (a) to any taxpayer for any taxable
year shall not exceed $200 ($400 in the case of a joint
return).
‘‘(c) SOCIAL SECURITY TAXES.—For purposes of this
section—
‘‘(1) IN GENERAL.—The term ‘social security
taxes’ means, with respect to any taxpayer for any
taxable year—
‘‘(A) the amount of the taxes imposed by
subsections (a) and (b) of section 3101 on
amounts received by the taxpayer during the
calendar year in which the taxable year begins,
‘‘(B) the amount of the taxes imposed by
section 3201(a) on amounts received by the tax-
payer during the calendar year in which the
taxable year begins,
‘‘(C) 50 percent of the taxes imposed by
subsections (a) and (b) of section 1401 on the
self-employment income of the taxpayer for the
taxable year, and
‘‘(D) 50 percent of the taxes imposed by
section 3211(a)(1) on amounts received by the
taxpayer during the calendar year in which the
taxable year begins.
‘‘(2) COORDINATION WITH SPECIAL REFUND OF
SOCIAL SECURITY TAXES.—The term ‘social security
taxes’ shall not include any taxes to the extent the
taxpayer is entitled to a special refund of such taxes
under section 6413(c).
‘‘(3) SPECIAL RULE.—Any amounts paid pursu-
ant to an agreement under section 3121(l) (relating
to agreements entered into by American employers
with respect to foreign affiliates) which are equiva-
lent to the taxes referred to in paragraph (1)(A)
shall be treated as taxes referred to in such para-
graph.
‘‘(d) YEARS
TO WHICH SECTION APPLIES.—This
section shall only apply to taxable years beginning after
December 31, 1994, and before January 1, 1997.’’
(b) CLERICAL AMENDMENT.—The table of sections
for subpart C of part IV of subchapter A of chapter 1
is amended by striking the item relating to section 35 and
inserting the following:
‘‘Sec. 35. Credit for portion of social security taxes.
‘‘Sec. 36. Overpayments of tax.’’
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
December 31, 1994.
SEC. 3002. CREDIT FOR PURCHASE OF PRINCIPAL RESI-
DENCE BY FIRST-TIME HOMEBUYER.
(a) IN GENERAL.—Subpart A of part IV of sub-
chapter A of chapter 1 (relating to nonrefundable personal
credits) is amended by inserting after section 22 the fol-
lowing new section:
‘‘SEC. 23. PURCHASE OF PRINCIPAL RESIDENCE BY FIRST-
TIME HOMEBUYER.
‘‘(a) ALLOWANCE OF CREDIT.—In the case of a first-
time homebuyer, there shall be allowed as a credit against
the tax imposed by this chapter an amount equal to 10
percent of the purchase price of the first principal resi-
dence purchased by the taxpayer during the eligibility pe-
riod. Except as otherwise provided in this section, such
credit shall be allowed for the taxable year in which such
residence is purchased.
‘‘(b) LIMITATIONS.—
‘‘(1) MAXIMUM OVERALL CREDIT.—The credit
allowed by subsection (a) to the taxpayer shall not
exceed $6,000.
‘‘(2) PHASEOUT
OF
CREDIT
BASED
ON
AD-
JUSTED GROSS INCOME.—If the adjusted gross in-
come of the taxpayer for the taxable year in which
the residence is purchased exceeds $50,000, the
$6,000 amount in paragraph (1) shall be reduced
(but not below zero) by $100 for each $200 of such
excess.
‘‘(c) FIRST-TIME HOMEBUYER.—For purposes of
this section—
‘‘(1) IN GENERAL.—The term ‘first-time home-
buyer’ means any individual unless such individual
or such individual’s spouse had a present ownership
interest in any residence at any time during the 3-
year period ending on the date of the purchase of
the residence referred to in subsection (a).
‘‘(2) UNMARRIED JOINT OWNERS.—An individ-
ual shall not be treated as a first-time homebuyer
with respect to any residence unless all the individ-
uals purchasing such residence with such individual
are first-time homebuyers.
‘‘(3) ALLOCATION OF LIMITS.—All individuals
purchasing a residence shall be treated as 1 individ-
ual for purposes of determining the maximum credit
under subsection (a); and such maximum credit, and
the $50,000 amount in subsection (b)(2), shall be al-
located among such individuals under regulations
prescribed by the Secretary.
‘‘(4) CERTAIN INDIVIDUALS INELIGIBLE.—The
term ‘first-time homebuyer’ shall not include any in-
dividual if, on the date of the purchase of the resi-
dence, the period of time specified in section 1034(a)
is suspended under subsection (h) or (k) of section
1034 with respect to such individual.
‘‘(5) 
CERTAIN
INDIRECT
INTERESTS
NOT
TAKEN INTO ACCOUNT.—Except as provided in regu-
lations prescribed by the Secretary, an individual
shall not be treated as holding an interest in a resi-
dence by reason of holding an interest in a partner-
ship, S corporation, or trust.
‘‘(d) OTHER DEFINITIONS.—For purposes of this
section—
‘‘(1) ELIGIBILITY PERIOD.—
‘‘(A) IN GENERAL.—The term ‘eligibility
period’ means the period beginning after De-
cember 31, 1994, and ending before January 1,
1997.
‘‘(B) BINDING
CONTRACTS.—A residence
shall be treated as purchased during the eligi-
bility period if—
‘‘(i) during the eligibility period, the
purchaser enters into a binding contract to
purchase the residence, and
‘‘(ii) the purchaser purchases and oc-
cupies the residence before July 1, 1997.
For purposes of clause (i), a contract shall not
fail to be treated as binding merely because it
is contingent on financing or on the condition
of the residence.
‘‘(2) PURCHASE.—The term ‘purchase’ means
any acquisition of property, but only if—
‘‘(A) the property is not acquired from a
person whose relationship to the person acquir-
ing it would result in the disallowance of losses
under section 267 or 707(b), and
‘‘(B) the basis of the property in the hands
of the person acquiring it is not determined—
‘‘(i) in whole or in part by reference
to the adjusted basis of such property in
the hands of the person from whom ac-
quired, or
‘‘(ii) under section 1014(a) (relating
to property acquired from a decedent).
‘‘(3) PRINCIPAL RESIDENCE.—The term ‘prin-
cipal residence’ has the same meaning as when used
in section 1034.
‘‘(4) PURCHASE
PRICE.—The term ‘purchase
price’ means the adjusted basis of the residence on
the date of its acquisition.
‘‘(e) CARRYOVER OF UNUSED CREDIT.—
‘‘(1) IN GENERAL.—If—
‘‘(A) the credit allowable under subsection
(a) after the application of subsection (b) ex-
ceeds
‘‘(B) the limitation imposed by section
26(a) reduced by the sum of the credits allow-
able under sections 21 and 22,
such excess shall be carried to the succeeding tax-
able year and shall be allowable under subsection (a)
for such succeeding taxable year.
‘‘(2) 5-YEAR
LIMIT
ON
CARRYFORWARD.—No
amount may be carried under paragraph (1) to any
taxable year after the 5th taxable year after the tax-
able year in which the residence is purchased.
‘‘(f) RECAPTURE OF CREDIT FOR CERTAIN DISPOSI-
TIONS.—
‘‘(1) IN GENERAL.—Except as provided in para-
graphs (2) and (3), if the taxpayer disposes of prop-
erty with respect to the purchase of which a credit
was allowed under subsection (a) and such disposi-
tion occurs at any time within 36 months after the
date the taxpayer acquired the property as his prin-
cipal residence, then the tax imposed under this
chapter for the taxable year in which the disposition
occurs is increased by an amount equal to the
amount allowed as a credit for the purchase of such
property.
‘‘(2) ACQUISITION OF NEW RESIDENCE.—If, in
connection with a disposition described in paragraph
(1) and within the applicable period prescribed in
section 1034, the taxpayer purchases a new principal
residence, then paragraph (1) shall not apply and
the tax imposed by this chapter for the taxable year
in which the new principal residence is purchased is
increased to the extent the amount of the credit that
could be claimed under this section on the purchase
of the new residence (were such residence purchased
during the eligibility period) is less than the amount
of credit claimed by the taxpayer under this section.
‘‘(3) DEATH OF OWNER; CASUALTY LOSS; IN-
VOLUNTARY
CONVERSION; 
ETC.—Paragraph (1)
shall not apply to—
‘‘(A) a disposition of a residence made on
account of the death of any individual having a
legal or equitable interest therein occurring dur-
ing the 36-month period referred to in para-
graph (1),
‘‘(B) a disposition of the old residence if it
is substantially or completely destroyed by a
casualty described in section 165(c)(3) or
compulsorily or involuntarily converted (within
the meaning of section 1033(a)), or
‘‘(C) a disposition pursuant to a settlement
in a divorce or legal separation proceeding
where the residence is sold or the other spouse
retains the residence as a principal residence.
‘‘(g) BASIS ADJUSTMENT.—For purposes of this sub-
title, if a credit is allowed under this section with respect
to the purchase of any residence, the basis of such resi-
dence shall be reduced by the amount of the credit so al-
lowed.’’.
(b) CONFORMING AMENDMENTS.—
(1) Subsection (a) of section 1016 is amended
by striking ‘‘and’’ at the end of paragraph (24), by