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for disbursement and which the Secretary
designates by published notice.’’.
(b) CONFORMING AMENDMENTS.—
(1) Section 6301(p) is amended—
(A) in paragraph (3)(A), by striking ‘‘(2),
or (6)’’ and inserting ‘‘(2), (6), or (8), and
(B) 
in 
paragraph 
(4), 
by 
inserting
‘‘(k)(8),’’ after ‘‘(j) (1) or (2),’’ each place it
appears.
(2) Section 552a(a)(8)(B) of title 5, United
States Code, is amended by striking ‘‘or’’ at the end
of clause (v), by adding ‘‘or’’ at the end of clause
(vi), and by adding at the end the following new
clause:
‘‘(vii) matches performed incident to a
levy described in section 6103(k)(8) of the
Internal Revenue Code of 1986;’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to levies issued after the date of
the enactment of this Act.
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SEC. 1037. RETURNS OF BENEFICIARIES OF ESTATES AND
TRUSTS REQUIRED TO FILE RETURNS CON-
SISTENT WITH ESTATE OR TRUST RETURN
OR TO NOTIFY SECRETARY OF INCONSIST-
ENCY.
(a) DOMESTIC
ESTATES
AND
TRUSTS.—Section
6034A (relating to information to beneficiaries of estates
and trusts) is amended by adding at the end the following
new subsection:
‘‘(c) BENEFICIARY’S RETURN MUST BE CONSISTENT
WITH ESTATE OR TRUST RETURN OR SECRETARY NOTI-
FIED OF INCONSISTENCY.—
‘‘(1) IN GENERAL.—A beneficiary of any estate
or trust to which subsection (a) applies shall, on
such beneficiary’s return, treat any reported item in
a manner which is consistent with the treatment of
such item on the applicable entity’s return.
‘‘(2) NOTIFICATION OF INCONSISTENT TREAT-
MENT.—
‘‘(A) IN GENERAL.—In the case of any re-
ported item, if—
‘‘(i)(I) the applicable entity has filed a
return but the beneficiary’s treatment on
such beneficiary’s return is (or may be) in-
consistent with the treatment of the item
on the applicable entity’s return, or
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‘‘(II) the applicable entity has not
filed a return, and
‘‘(ii) the beneficiary files with the Sec-
retary a statement identifying the incon-
sistency,
paragraph (1) shall not apply to such item.
‘‘(B) BENEFICIARY RECEIVING INCORRECT
INFORMATION.—A beneficiary shall be treated
as having complied with clause (ii) of subpara-
graph (A) with respect to a reported item if the
beneficiary—
‘‘(i) demonstrates to the satisfaction
of the Secretary that the treatment of the
reported item on the beneficiary’s return is
consistent with the treatment of the item
on the statement furnished under sub-
section (a) to the beneficiary by the appli-
cable entity, and
‘‘(ii) elects to have this paragraph
apply with respect to that item.
‘‘(3) EFFECT OF FAILURE TO NOTIFY.—In any
case—
‘‘(A) described in subparagraph (A)(i)(I)
of paragraph (2), and
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‘‘(B) in which the beneficiary does not
comply with subparagraph (A)(ii) of paragraph
(2),
any adjustment required to make the treatment of
the items by such beneficiary consistent with the
treatment of the items on the applicable entity’s re-
turn shall be treated as arising out of mathematical
or clerical errors and assessed according to section
6213(b)(1). Paragraph (2) of section 6213(b) shall
not apply to any assessment referred to in the pre-
ceding sentence.
‘‘(4) DEFINITIONS.—For purposes of this sub-
section—
‘‘(A) REPORTED
ITEM.—The term ‘re-
ported item’ means any item for which informa-
tion is required to be furnished under sub-
section (a).
‘‘(B) APPLICABLE ENTITY.—The term ‘ap-
plicable entity’ means the estate or trust of
which the taxpayer is the beneficiary.
‘‘(5) ADDITION TO TAX FOR FAILURE TO COM-
PLY WITH SECTION.—For addition to tax in the case
of a beneficiary’s negligence in connection with, or
disregard of, the requirements of this section, see
part II of subchapter A of chapter 68.’’.
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(b) FOREIGN TRUSTS.—Subsection (d) of section
6048 (relating to information with respect to certain for-
eign trusts) is amended by adding at the end the following
new paragraph:
‘‘(5) UNITED STATES PERSON’S RETURN MUST
BE
CONSISTENT
WITH
TRUST
RETURN
OR
SEC-
RETARY NOTIFIED OF INCONSISTENCY.—Rules simi-
lar to the rules of section 6034A(c) shall apply to
items reported by a trust under subsection (b)(1)(B)
and to United States persons referred to in such
subsection.’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to returns of beneficiaries and own-
ers filed after the date of the enactment of this Act.
Subtitle E—Excise Tax Provisions
SEC. 1041. EXTENSION AND MODIFICATION OF AIRPORT
AND AIRWAY TRUST FUND TAXES.
(a) FUEL TAXES.—
(1) AVIATION
FUEL.—Clause (ii) of section
4091(b)(3)(A) is amended by striking ‘‘September
30, 1997’’ and inserting ‘‘September 30, 2007’’.
(2) AVIATION GASOLINE.—Subparagraph (B) of
section 4081(d)(2) is amended by striking ‘‘Septem-
ber 30, 1997’’ and inserting ‘‘September 30, 2007’’.
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(3) 
NONCOMMERCIAL
AVIATION.—Subpara-
graph (B) of section 4041(c)(3) is amended by strik-
ing ‘‘September 30, 1997’’ and inserting ‘‘September
30, 2007’’.
(b) TICKET TAXES.—
(1) 
PERSONS.—Clause 
(ii) 
of 
section
4261(g)(1)(A) is amended by striking ‘‘September
30, 1997’’ and inserting ‘‘September 30, 2007’’.
(2) 
PROPERTY.—Clause 
(ii) 
of 
section
4271(d)(1)(A) is amended by striking ‘‘September
30, 1997’’ and inserting ‘‘September 30, 2007’’.
(c) MODIFICATIONS TO TAX ON TRANSPORTATION OF
PERSONS BY AIR.—
(1) IN
GENERAL.—Section 4261 (relating to
imposition of tax) is amended by striking sub-
sections (a), (b), and (c) and inserting the following
new subsections:
‘‘(a) IN GENERAL.—There is hereby imposed on the
amount paid for taxable transportation of any person a
tax equal to 7.5 percent of the amount so paid.
‘‘(b) DOMESTIC SEGMENTS OF TAXABLE TRANSPOR-
TATION.—
‘‘(1) IN GENERAL.—There is hereby imposed on
the amount paid for each domestic segment of tax-
able transportation by air a tax in the amount deter-
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mined in accordance with the following table for the
calendar year in which the segment begins:
In the case of segments
beginning during:
The tax is:
1997 or 1998 .........................................................
$2.00
1999 .......................................................................
$2.25
2000 .......................................................................
$2.50
2001 .......................................................................
$2.75
2002 or thereafter .................................................
$3.00.
‘‘(2) DOMESTIC
SEGMENT.—For purposes of
this section, the term ‘domestic segment’ means any
segment which is taxable transportation described in
section 4262(a)(1).
‘‘(3) CHANGES IN SEGMENTS BY REASON OF
REROUTING.—If—
‘‘(A) a ticket is purchased for transpor-
tation between 2 locations on specified flights,
and
‘‘(B) at the initiation of the air carrier
after such purchase, there is a change in the
route taken which changes the number of do-
mestic segments, but there is no change in the
amount charged for such transportation,
the tax imposed by paragraph (1) shall be deter-
mined without regard to such change in route.
‘‘(c) USE OF INTERNATIONAL TRAVEL FACILITIES.—
‘‘(1) IN GENERAL.—There is hereby imposed a
tax of $15.50 on any amount paid (whether within
or without the United States) for any transportation
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of any person by air, if such transportation begins
or ends in the United States.
‘‘(2) EXCEPTION
FOR
TRANSPORTATION
EN-
TIRELY
TAXABLE
UNDER
SUBSECTION
(a).—This
subsection shall not apply to any transportation all
of which is taxable under subsection (a) (determined
without regard to sections 4281 and 4282).
‘‘(3) SPECIAL
RULE
FOR
ALASKA
AND
HA-
WAII.—In any case in which the tax imposed by
paragraph (1) applies to a domestic segment, such
tax shall apply only on departure.’’.
(2) SPECIAL RULES.—Section 4261 is amended
by redesignating subsections (e), (f), and (g), as sub-
sections (f), (g), and (h), respectively, and by insert-
ing after subsection (d) the following new sub-
section:
‘‘(e) SPECIAL RULES.—
‘‘(1) AMOUNTS
PAID
OUTSIDE
THE
UNITED
STATES.—In the case of amounts paid outside the
United States for taxable transportation, the taxes
imposed by subsections (a) and (b) shall apply only
to segments of such transportation which begin and
end in the United States.
‘‘(2) AMOUNTS
PAID
FOR
RIGHT
TO
AWARD
FREE OR REDUCED RATE AIR TRANSPORTATION.—
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Any amount paid (and the value of any other benefit
provided) to an air carrier (or any related person)
for the right to provide mileage awards for (or other
reductions in the cost of) any transportation of per-
sons by air shall be treated for purposes of sub-
section (a) as an amount paid for taxable transpor-
tation, and such amount shall be taxable under sub-
section (a) without regard to any other provision of
this subchapter. The Secretary shall prescribe rules
which reallocate items of income, deduction, credit,
exclusion, or other allowance to the extent necessary
to prevent the avoidance of tax imposed by reason
of this paragraph.
‘‘(3) INFLATION
ADJUSTMENT
OF
DOLLAR
RATES OF TAX.—
‘‘(A) IN GENERAL.—In the case of taxable
events in a calendar year after the last non-
indexed year, the dollar amount contained in
subsection (b) and the dollar amount contained
in subsection (c) shall each be increased by an
amount equal to—
‘‘(i) such dollar amount, multiplied by
‘‘(ii) the cost-of-living adjustment de-
termined under section 1(f)(3) for such
calendar year by substituting the year be-
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fore the last nonindexed year for ‘calendar
year 1992’ in subparagraph (B) thereof.
If any increase determined under the preceding
sentence is not a multiple of 10 cents, such in-
crease shall be rounded to the nearest multiple
of 10 cents.
‘‘(B) LAST NONINDEXED YEAR.—For pur-
poses of subparagraph (A), the last nonindexed
year is—
‘‘(i) 2002 in the case of a dollar
amount contained in subsection (b), and
‘‘(ii) 1998 in the case of a dollar
amount contained in subsection (c).
‘‘(C) TAXABLE EVENT.—For purposes of
subparagraph (A), in the case of the tax im-
posed subsection (b), the beginning of the do-
mestic segment shall be treated as the taxable
event.’’.
(3) SECONDARY
LIABILITY
OF
CARRIER
FOR
UNPAID
TAX.—Subsection (c) of section 4263 is
amended by striking ‘‘subchapter—’’ and all that
follows and inserting ‘‘, such tax shall be paid by the
carrier providing the initial segment of such trans-
portation which begins or ends in the United
States.’’.
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(d) MODIFICATION OF RULES ON AIRLINE FARE AD-
VERTISING.—Subsection (b) of section 7275 (relating to
advertising) is amended by striking ‘‘shall—’’ and all that
follows and inserting ‘‘shall—
‘‘(1) separately state—
‘‘(A) the amount to be paid for such trans-
portation, and
‘‘(B) the amount of the taxes imposed by
subsections (a), (b), and (c) of section 4261 at
a location proximate to (and in a type size not
less than half the type size of) the statement of
the amount described in subparagraph (A), and
‘‘(2) describe such taxes substantially as: ‘user
taxes to pay for airport construction and airway
safety and operations’.’’.
(e) INCREASED AIRPORT AND AIRWAY TRUST FUND
DEPOSITS.—
(1) Paragraph (1) of section 9502(b) is amend-
ed—
(A) by striking ‘‘(to the extent that the
rate of the tax on such gasoline exceeds 4.3
cents per gallon)’’ in subparagraph (C), and
(B) by striking ‘‘to the extent attributable
to the Airport and Airway Trust Fund financ-
ing rate’’ in subparagraph (C).
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(2) Section 9502 is amended by striking sub-
section (f).
(f) EFFECTIVE DATES.—
(1) FUEL TAXES.—The amendments made by
subsection (a) shall apply take effect on October 1,
1997.
(2) TICKET TAXES.—
(A) IN
GENERAL.—Except as otherwise
provided in this paragraph, the amendments
made by subsections (b) and (c) shall apply to
transportation beginning on or after October 1,
1997.
(B) TREATMENT OF AMOUNTS PAID FOR
TICKETS PURCHASED BEFORE DATE OF ENACT-
MENT.—The amendments made by subsection
(c) shall not apply to amounts paid for a ticket
purchased before the date of the enactment of
this Act for a specified flight beginning on or
after October 1, 1997.
(C) AMOUNTS PAID FOR RIGHT TO AWARD
MILEAGE AWARDS.—
(i) IN
GENERAL.—Paragraph (2) of
section 4261(e) of the Internal Revenue
Code of 1986 (as added by the amendment
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made by subsection (c)) shall apply to
amounts paid after September 30, 1997.
(ii) PAYMENTS WITHIN CONTROLLED
GROUP.—For purposes of clause (i), any
amount paid after June 11, 1997, and be-
fore October 1, 1997, by 1 member of a
controlled group for a right which is de-
scribed in such section 4261(e)(2) and is
furnished by another member of such
group after September 30, 1997, shall be
treated as paid after September 30, 1997.
For purposes of the preceding sentence, all
persons treated as a single employer under
subsection (a) or (b) of section 52 of such
Code shall be treated as members of a con-
trolled group.
(3) ADVERTISING.—The amendment made by
subsection (d) shall take effect on October 1, 1997.
(4) INCREASED DEPOSITS INTO AIRPORT AND
AIRWAY TRUST FUND.—The amendments made by
subsection (e) shall apply with respect to taxes re-
ceived in the Treasury on and after October 1, 1997.
(g) DELAYED DEPOSITS OF AIRLINE TICKET TAX
REVENUES.—Notwithstanding section 6302 of the Inter-
nal Revenue Code of 1986, in the case of deposits of taxes
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imposed by section 4261 of the Internal Revenue Code of
1986, the due date for any such deposit which would (but
for this subsection) be required to be made—
(1) after August 14, 1997, and before October
1, 1997, shall be October 10, 1997, or
(2) after June 30, 1998, and before October 1,
1998, shall be October 13, 1998.
SEC. 1042. KEROSENE TAXED AS DIESEL FUEL.
(a) IN GENERAL.—Subsection (a) of section 4083
(defining taxable fuel) is amended by striking ‘‘and’’ at
the end of subparagraph (A), by striking the period at
the end of subparagraph (B) and inserting ‘‘, and’’, and
by adding at the end the following new subparagraph:
‘‘(C) kerosene.’’.
(b) 
RATE
OF
TAX.—Clause 
(iii) 
of 
section
4081(a)(2)(A) is amended by inserting ‘‘or kerosene’’
after ‘‘diesel fuel’’.
(c) EXEMPTIONS FROM TAX; REFUNDS
TO VEN-
DORS.—
(1) IN GENERAL.—Section 4082 (relating to ex-
emptions for diesel fuel) is amended by striking
‘‘diesel fuel’’ each place it appears in subsections (a)
and (c) and inserting ‘‘diesel fuel and kerosene’’.
(2) CERTAIN KEROSENE EXEMPT FROM DYEING
REQUIREMENT.—Section 4082 is amended by redes-
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ignating subsections (c) and (d) as subsections (d)
and (e), respectively, and by inserting after sub-
section (b) the following new subsection:
‘‘(c) EXCEPTIONS TO DYEING REQUIREMENTS.—
‘‘(1) AVIATION-GRADE KEROSENE.—Subsection
(a)(2) shall not apply to a removal, entry, or sale of
aviation-grade kerosene (as determined under regu-
lations prescribed by the Secretary) if the person re-
ceiving the kerosene is registered under section 4101
with respect to the tax imposed by section 4091.
‘‘(2) USE
FOR
NON-FUEL
FEEDSTOCK
PUR-
POSES.—Subsection (a)(2) shall not apply to ker-
osene—
‘‘(A) received by pipeline or barge for use
by the person receiving the kerosene in the
manufacture or production of any substance
(other than gasoline, diesel fuel, or special fuels
referred to in section 4041), or
‘‘(B) to the extent provided in regulations,
removed or entered—
‘‘(i) for such a use by the person re-
moving or entering the kerosene, or
‘‘(ii) for resale by such person for
such a use by the purchaser,
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but only if the person receiving, removing, or enter-
ing the kerosene and such purchaser (if any) are
registered under section 4101 with respect to the tax
imposed by section 4081.’’.
(3) REFUNDS.—
(A) Subsection (l) of section 6427 is
amended by inserting ‘‘or kerosene’’ after ‘‘die-
sel fuel’’ each place it appears in paragraphs
(1), (2), and (5) (including the heading for
paragraph (5)).
(B) Paragraph (5) of section 6427(l) is
amended by redesignating subparagraph (B) as
subparagraph (C) and by inserting after sub-
paragraph (A) the following new subparagraph:
‘‘(B) SALES OF KEROSENE NOT FOR USE
IN MOTOR FUEL.—Paragraph (1)(A) shall not
apply to kerosene sold by a vendor—
‘‘(i) for any use if such sale is from
a pump which (as determined under regu-
lations prescribed by the Secretary) is not
suitable for use in fueling any diesel-pow-
ered highway vehicle or train, or
‘‘(ii) to the extent provided by the
Secretary, for blending with heating oil to
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be used during periods of extreme or un-
seasonable cold.’’.
(C) 
Subparagraph 
(C) 
of 
section
6427(l)(5), as redesignated by subparagraph
(B) of this paragraph, is amended by striking
‘‘subparagraph (A)’’ and inserting ‘‘subpara-
graph (A) or (B)’’.
(D) The heading for subsection (l) of sec-
tion 6427 is amended by inserting ‘‘, KER-
OSENE,’’ after ‘‘DIESEL FUEL’’.
(d) CONFORMING AMENDMENTS.—
(1) Paragraph (2) of section 4041(a) is amend-
ed by striking ‘‘kerosene, gas oil, or fuel oil’’ and in-
serting ‘‘gas oil, fuel oil’’.
(2) Paragraph (1) of section 4041(c) is amend-
ed by striking ‘‘any liquid’’ and inserting ‘‘kerosene
and any other liquid’’.
(3)(A) The heading for section 4082 is amend-
ed by inserting ‘‘AND KEROSENE’’ after ‘‘DIESEL
FUEL’’.
(B) The table of sections for subpart A of part
III of subchapter A of chapter 32 is amended by in-
serting ‘‘and kerosene’’ after ‘‘diesel fuel’’ in the
item relating to section 4082.
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(4) Subsection (b) of section 4083 is amended
by striking ‘‘gasoline, diesel fuel,’’ and inserting
‘‘taxable fuels’’.
(5) Subsection (a) of section 4093 is amended
by striking ‘‘any liquid’’ and inserting ‘‘kerosene and
any other liquid’’.
(6) The material following subparagraph (F) of
section 6416(b)(2) is amended by inserting ‘‘or ker-
osene’’ after ‘‘diesel fuel’’.
(7) Paragraphs (1) and (3) of section 6427(f),
and the heading for section 6427(f), are each
amended by inserting ‘‘kerosene,’’ after ‘‘diesel
fuel,’’.
(8) Paragraph (2) of section 6427(f) is amend-
ed by striking ‘‘or diesel fuel’’ each place it appears
and inserting ‘‘, diesel fuel, or kerosene’’.
(9) Subparagraph (A) of section 6427(i)(3) is
amended by striking ‘‘or diesel fuel’’ and inserting
‘‘, diesel fuel, or kerosene’’.
(10) The heading for paragraph (4) of section
6427(i) is amended to read as follows:
‘‘(4) SPECIAL RULE FOR REFUNDS UNDER SUB-
SECTION (l).—’’
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(11) Paragraph (1) of section 6715(c) is
amended by inserting ‘‘or kerosene’’ after ‘‘diesel
fuel’’.
(12)(A) The text of section 7232 is amended by
striking ‘‘gasoline, lubricating oil, diesel fuel’’ and
inserting ‘‘any taxable fuel (as defined in section
4083)’’.
(B) The section heading for section 7232 is
amended to read as follows:
‘‘SEC. 7232. FAILURE TO REGISTER UNDER SECTION 4101,
FALSE REPRESENTATIONS OF REGISTRATION
STATUS, ETC.’’.
(C) The table of sections for part II of sub-
chapter A of chapter 75 is amended by striking the
item relating to section 7232 and inserting the fol-
lowing:
‘‘Sec. 7232. Failure to register under section 4101, false represen-
tations of registration status, etc.’’.
(13) Sections 9503(b)(1)(E) and 9508(b)(2)
are each amended by striking ‘‘and diesel fuel’’ and
inserting ‘‘, diesel fuel, and kerosene’’.
(14) Subparagraph (B) of section 9503(b)(5) is
amended by striking ‘‘or diesel fuel’’ and inserting
‘‘, diesel fuel, or kerosene’’.
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(15) Paragraphs (1)(B) and (2) of section
9503(f) are each amended by inserting ‘‘or ker-
osene’’ after ‘‘diesel fuel’’ each place it appears.
(e) EFFECTIVE DATE.—The amendments made by
this section shall take effect on July 1, 1998.
(f) FLOOR STOCK TAXES.—
(1) IMPOSITION OF TAX.—In the case of ker-
osene which is held on July 1, 1998, by any person,
there is hereby imposed a floor stocks tax of 24.3
cents per gallon.
(2) LIABILITY FOR TAX AND METHOD OF PAY-
MENT.—
(A) LIABILITY FOR TAX.—A person hold-
ing kerosene on July 1, 1998, to which the tax
imposed by paragraph (1) applies shall be liable
for such tax.
(B) METHOD OF PAYMENT.—The tax im-
posed by paragraph (1) shall be paid in such
manner as the Secretary shall prescribe.
(C) TIME
FOR
PAYMENT.—The tax im-
posed by paragraph (1) shall be paid on or be-
fore August 31, 1998.
(3) DEFINITIONS.—For purposes of this sub-
section—
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(A) HELD BY A PERSON.—Kerosene shall
be considered as ‘‘held by a person’’ if title
thereto has passed to such person (whether or
not delivery to the person has been made).
(B) SECRETARY.—The term ‘‘Secretary’’
means the Secretary of the Treasury or his del-
egate.
(4) EXCEPTION FOR EXEMPT USES.—The tax
imposed by paragraph (1) shall not apply to ker-
osene held by any person exclusively for any use to
the extent a credit or refund of the tax imposed by
section 4081 of the Internal Revenue Code of 1986
is allowable for such use.
(5) EXCEPTION FOR FUEL HELD IN VEHICLE
TANK.—No tax shall be imposed by paragraph (1)
on kerosene held in the tank of a motor vehicle or
motorboat.
(6) EXCEPTION
FOR
CERTAIN
AMOUNTS
OF
FUEL.—
(A) IN
GENERAL.—No tax shall be im-
posed by paragraph (1) on kerosene held on
July 1, 1998, by any person if the aggregate
amount of kerosene held by such person on
such date does not exceed 2,000 gallons. The
preceding sentence shall apply only if such per-
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son submits to the Secretary (at the time and
in the manner required by the Secretary) such
information as the Secretary shall require for
purposes of this paragraph.
(B) EXEMPT FUEL.—For purposes of sub-
paragraph (A), there shall not be taken into ac-
count fuel held by any person which is exempt
from the tax imposed by paragraph (1) by rea-
son of paragraph (4) or (5).
(C) CONTROLLED GROUPS.—For purposes
of this paragraph—
(i) CORPORATIONS.—
(I) IN
GENERAL.—All persons
treated as a controlled group shall be
treated as 1 person.
(II) CONTROLLED
GROUP.—The
term ‘‘controlled group’’ has the
meaning given to such term by sub-
section (a) of section 1563 of such
Code; except that for such purposes
the phrase ‘‘more than 50 percent’’
shall be substituted for the phrase ‘‘at
least 80 percent’’ each place it ap-
pears in such subsection.
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(ii) 
NONINCORPORATED
PERSONS
UNDER COMMON CONTROL.—Under regula-
tions prescribed by the Secretary, prin-
ciples similar to the principles of clause (i)
shall apply to a group of persons under
common control where 1 or more of such
persons is not a corporation.
(7) COORDINATION
WITH
SECTION
4081.—No
tax shall be imposed by paragraph (1) on kerosene
to the extent that tax has been (or will be) imposed
on such kerosene under section 4081 or 4091 of
such Code.
(8) OTHER LAWS APPLICABLE.—All provisions
of law, including penalties, applicable with respect to
the taxes imposed by section 4081 of such Code
shall, insofar as applicable and not inconsistent with
the provisions of this subsection, apply with respect
to the floor stock taxes imposed by paragraph (1) to
the same extent as if such taxes were imposed by
such section 4081.
SEC. 1043. RESTORATION OF LEAKING UNDERGROUND
STORAGE TANK TRUST FUND TAXES.
Paragraph (3) of section 4081(d) is amended by
striking ‘‘shall not apply after December 31, 1995’’ and
inserting ‘‘shall apply after the date of the enactment of
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the Taxpayer Relief Act of 1997 and before October 1,
2002’’.
SEC. 1044. APPLICATION OF COMMUNICATIONS TAX TO
LONG-DISTANCE 
PREPAID 
TELEPHONE
CARDS.
(a) IN GENERAL.—Subsection (b) of section 4251 is
amended—
(1) by adding at the end the following new
paragraph:
‘‘(3) LONG-DISTANCE
PREPAID
TELEPHONE
CARDS AND SIMILAR ARRANGEMENTS.—Any amount
paid (and the value of any other benefit provided) to
a provider of communications services (or any relat-
ed person) for the right to award, sell, or otherwise
make available telephone service (or reductions in
the cost of such service) other than local telephone
service through prepaid telephone cards or any simi-
lar arrangement shall be treated as an amount paid
for communications services. The Secretary shall
prescribe rules which reallocate items of income, de-
duction, credit, exclusion, or other allowance to the
extent necessary to prevent the avoidance of tax im-
posed by reason of this paragraph.’’, and
(2) by inserting ‘‘AND SPECIAL RULE’’ after
‘‘DEFINITIONS’’ in the heading.
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(b) EFFECTIVE DATE.—
(1) IN GENERAL.—The amendments made by
this section shall apply to amounts paid on or after
the date of the enactment of this Act.
(2) PAYMENTS WITHIN CONTROLLED GROUP.—
For purposes of paragraph (1), any amount paid
after June 11, 1997, and before the date of the en-
actment of this Act by 1 member of a controlled
group for a right which is described in section
4251(b)(3) of the Internal Revenue Code of 1986
(as added by this section) and is furnished by an-
other member of such group shall be treated as paid
on the date of the enactment of this Act. For pur-
poses of the preceding sentence, all persons treated
as a single employer under subsection (a) or (b) of
section 52 of such Code shall be treated as members
of a controlled group.
Subtitle F—Provisions Relating to
Tax-Exempt Entities
SEC. 1051. EXPANSION OF LOOK-THRU RULE FOR INTER-
EST, ANNUITIES, ROYALTIES, AND RENTS DE-
RIVED BY SUBSIDIARIES OF TAX-EXEMPT OR-
GANIZATIONS.
(a) IN GENERAL.—Paragraph (13) of section 512(b)
is amended to read as follows:
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‘‘(13) SPECIAL RULES FOR CERTAIN AMOUNTS
RECEIVED FROM CONTROLLED ENTITIES.—
‘‘(A) IN GENERAL.—If an organization (in
this paragraph referred to as the ‘controlling
organization’) receives (directly or indirectly) a
specified payment from another entity which it
controls (in this paragraph referred to as the
‘controlled entity’), notwithstanding paragraphs
(1), (2), and (3), the controlling organization
shall include such payment as an item of gross
income derived from an unrelated trade or busi-
ness to the extent such payment reduces the net
unrelated income of the controlled entity (or in-
creases any net unrelated loss of the controlled
entity). There shall be allowed all deductions of
the controlling organization directly connected
with amounts treated as derived from an unre-
lated trade or business under the preceding sen-
tence.
‘‘(B) 
NET
UNRELATED
INCOME
OR
LOSS.—For purposes of this paragraph—
‘‘(i) NET UNRELATED INCOME.—The
term ‘net unrelated income’ means—
‘‘(I) in the case of a controlled
entity which is not exempt from tax
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under section 501(a), the portion of
such entity’s taxable income which
would be unrelated business taxable
income if such entity were exempt
from tax under section 501(a) and
had the same exempt purposes (as de-
fined in section 513A(a)(5)(A)) as the
controlling organization, or
‘‘(II) in the case of a controlled
entity which is exempt from tax under
section 501(a), the amount of the un-
related business taxable income of the
controlled entity.
‘‘(ii) NET
UNRELATED
LOSS.—the
term ‘net unrelated loss’ means the net op-
erating loss adjusted under rules similar to
the rules of clause (i).
‘‘(C) SPECIFIED PAYMENT.—For purposes
of this paragraph, the term ‘specified payment’
means any interest, annuity, royalty, or rent.
‘‘(D) DEFINITION OF CONTROL.—For pur-
poses of this paragraph—
‘‘(i) CONTROL.—The term ‘control’
means—