H. R. 2488—76 
‘‘(i) which has an eligible oil and gas loss (as 
defined in subsection ( j)) for a taxable year, and 
‘‘(ii) which is not an integrated oil company (as 
defined in section 291(b)(4)), 
such eligible oil and gas loss shall be a net operating 
loss carryback to each of the 5 taxable years preceding 
the taxable year of such loss.’’. 
(b) ELIGIBLE OIL AND GAS LOSS.—Section 172 is amended by 
redesignating subsection ( j) as subsection (k) and by inserting after 
subsection (i) the following new subsection: 
‘‘( j) ELIGIBLE OIL AND GAS LOSS.—For purposes of this section— 
‘‘(1) IN GENERAL.—The term ‘eligible oil and gas loss’ means 
the lesser of— 
‘‘(A) the amount which would be the net operating 
loss for the taxable year if only income and deductions 
attributable to operating mineral interests (as defined in 
section 614(d)) in oil and gas wells are taken into account, 
or 
‘‘(B) the amount of the net operating loss for such 
taxable year. 
‘‘(2) COORDINATION WITH SUBSECTION (b)(2).—For purposes 
of applying subsection (b)(2), an eligible oil and gas loss for 
any taxable year shall be treated in a manner similar to the 
manner in which a specified liability loss is treated. 
‘‘(3) ELECTION.—Any taxpayer entitled to a 5-year 
carryback under subsection (b)(1)(H) from any loss year may 
elect to have the carryback period with respect to such loss 
year determined without regard to subsection (b)(1)(H).’’. 
(c) EFFECTIVE DATE.—The amendments made by this section 
shall apply to net operating losses for taxable years beginning 
after December 31, 1998. 
SEC. 722. DEDUCTION FOR DELAY RENTAL PAYMENTS. 
(a) IN GENERAL.—Section 263 (relating to capital expenditures) 
is amended by adding after subsection (i) the following new sub-
section: 
‘‘( j) DELAY RENTAL PAYMENTS
FOR DOMESTIC OIL
AND GAS 
WELLS.— 
‘‘(1) IN GENERAL.—Notwithstanding subsection (a), a tax-
payer may elect to treat delay rental payments incurred in 
connection with the development of oil or gas within the United 
States (as defined in section 638) as payments which are not 
chargeable to capital account. Any payments so treated shall 
be allowed as a deduction in the taxable year in which paid 
or incurred. 
‘‘(2) DELAY RENTAL PAYMENTS.—For purposes of paragraph 
(1), the term ‘delay rental payment’ means an amount paid 
for the privilege of deferring development of an oil or gas 
well.’’. 
(b) CONFORMING AMENDMENT.—Section 263A(c)(3) is amended 
by inserting ‘‘263( j),’’ after ‘‘263(i),’’. 
(c) EFFECTIVE DATE.—The amendments made by this section 
shall apply to amounts paid or incurred in taxable years beginning 
after December 31, 1999. 
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H. R. 2488—77 
SEC. 723. ELECTION TO EXPENSE GEOLOGICAL AND GEOPHYSICAL 
EXPENDITURES. 
(a) IN GENERAL.—Section 263 (relating to capital expenditures) 
is amended by adding after subsection ( j) the following new sub-
section: 
‘‘(k) 
GEOLOGICAL
AND
GEOPHYSICAL
EXPENDITURES
FOR 
DOMESTIC OIL AND GAS WELLS.—Notwithstanding subsection (a), 
a taxpayer may elect to treat geological and geophysical expenses 
incurred in connection with the exploration for, or development 
of, oil or gas within the United States (as defined in section 638) 
as expenses which are not chargeable to capital account. Any 
expenses so treated shall be allowed as a deduction in the taxable 
year in which paid or incurred.’’. 
(b) CONFORMING AMENDMENT.—Section 263A(c)(3) is amended 
by inserting ‘‘263(k),’’ after ‘‘263( j),’’. 
(c) EFFECTIVE DATE.—The amendments made by this section 
shall apply to costs paid or incurred in taxable years beginning 
after December 31, 1999. 
SEC. 724. TEMPORARY SUSPENSION OF LIMITATION BASED ON 65 PER-
CENT OF TAXABLE INCOME. 
(a) IN GENERAL.—Subsection (d) of section 613A (relating to 
limitation on percentage depletion in case of oil and gas wells) 
is amended by adding at the end the following new paragraph: 
‘‘(6) TEMPORARY SUSPENSION OF TAXABLE INCOME LIMIT.— 
Paragraph (1) shall not apply to taxable years beginning after 
December 31, 1998, and before January 1, 2005, including 
with respect to amounts carried under the second sentence 
of paragraph (1) to such taxable years.’’. 
(b) EFFECTIVE DATE.—The amendment made by this section 
shall apply to taxable years beginning after December 31, 1998. 
SEC. 725. DETERMINATION OF SMALL REFINER EXCEPTION TO OIL 
DEPLETION DEDUCTION. 
(a) IN GENERAL.—Paragraph (4) of section 613A(d) (relating 
to certain refiners excluded) is amended to read as follows: 
‘‘(4) CERTAIN REFINERS EXCLUDED.—If the taxpayer or a 
related person engages in the refining of crude oil, subsection 
(c) shall not apply to the taxpayer for a taxable year if the 
average daily refinery runs of the taxpayer and the related 
person for the taxable year exceed 50,000 barrels. For purposes 
of this paragraph, the average daily refinery runs for any 
taxable year shall be determined by dividing the aggregate 
refinery runs for the taxable year by the number of days in 
the taxable year.’’. 
(b) EFFECTIVE DATE.—The amendment made by this section 
shall apply to taxable years beginning after December 31, 1999. 
Subtitle D—Timber Incentives 
SEC. 731. TEMPORARY SUSPENSION OF MAXIMUM AMOUNT OF 
AMORTIZABLE REFORESTATION EXPENDITURES. 
(a) INCREASE IN DOLLAR LIMITATION.—Paragraph (1) of section 
194(b) (relating to amortization of reforestation expenditures) is 
amended by striking ‘‘$10,000 ($5,000’’ and inserting ‘‘$25,000 
($12,500’’. 
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H. R. 2488—78 
(b) TEMPORARY SUSPENSION
OF INCREASED DOLLAR LIMITA-
TION.—Subsection (b) of section 194(b) (relating to amortization 
of reforestation expenditures) is amended by adding at the end 
the following new paragraph: 
‘‘(5) SUSPENSION
OF
DOLLAR
LIMITATION.—Paragraph (1) 
shall not apply to taxable years beginning after December 
31, 1999, and before January 1, 2004. 
(c) CONFORMING AMENDMENT.—Paragraph (1) of section 48(b) 
is amended by striking ‘‘section 194(b)(1)’’ and inserting ‘‘section 
194(b)(1) and without regard to section 194(b)(5)’’. 
(d) EFFECTIVE DATE.—The amendments made by this section 
shall apply to taxable years beginning after December 31, 1999. 
SEC. 732. CAPITAL GAIN TREATMENT UNDER SECTION 631(b) TO APPLY 
TO OUTRIGHT SALES BY LAND OWNER. 
(a) IN GENERAL.—Subsection (b) of section 631 (relating to 
disposal of timber with a retained economic interest) is amended— 
(1) by inserting ‘‘AND OUTRIGHT SALES OF TIMBER’’ after 
ECONOMIC INTEREST’’ in the subsection heading, and 
(2) by adding before the last sentence the following new 
sentence: ‘‘The requirement in the first sentence of this sub-
section to retain an economic interest in timber shall not apply 
to an outright sale of such timber by the owner thereof if 
such owner owned the land (at the time of such sale) from 
which the timber is cut.’’. 
(b) EFFECTIVE DATE.—The amendment made by this section 
shall apply to sales after the date of the enactment of this Act. 
TITLE VIII—RELIEF FOR SMALL 
BUSINESSES 
SEC. 801. DEDUCTION FOR 100 PERCENT OF HEALTH INSURANCE 
COSTS OF SELF-EMPLOYED INDIVIDUALS. 
(a) IN GENERAL.—Paragraph (1) of section 162(l) is amended 
to read as follows: 
‘‘(1) ALLOWANCE OF DEDUCTION.—In the case of an indi-
vidual who is an employee within the meaning of section 
401(c)(1), there shall be allowed as a deduction under this 
section an amount equal to 100 percent of the amount paid 
during the taxable year for insurance which constitutes medical 
care for the taxpayer and the taxpayer’s spouse and depend-
ents.’’. 
(b) CLARIFICATION OF LIMITATIONS ON OTHER COVERAGE.—The 
first sentence of section 162(l)(2)(B) is amended to read as follows: 
‘‘Paragraph (1) shall not apply to any taxpayer for any calendar 
month for which the taxpayer participates in any subsidized health 
plan maintained by any employer (other than an employer described 
in section 401(c)(4)) of the taxpayer or the spouse of the taxpayer.’’. 
(c) EFFECTIVE DATE.—The amendments made by this section 
shall apply to taxable years beginning after December 31, 1999. 
SEC. 802. INCREASE IN EXPENSE TREATMENT FOR SMALL BUSINESSES. 
(a) IN GENERAL.—Paragraph (1) of section 179(b) (relating to 
dollar limitation) is amended to read as follows: 
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H. R. 2488—79 
‘‘(1) DOLLAR LIMITATION.—The aggregate cost which may 
be taken into account under subsection (a) for any taxable 
year shall not exceed $30,000.’’. 
(b) EFFECTIVE DATE.—The amendment made by this section 
shall apply to taxable years beginning after December 31, 1999. 
SEC. 803. REPEAL OF FEDERAL UNEMPLOYMENT SURTAX. 
(a) IN GENERAL.—Section 3301 (relating to rate of Federal 
unemployment tax) is amended— 
(1) by striking ‘‘2007’’ and inserting ‘‘2004’’, and 
(2) by striking ‘‘2008’’ and inserting ‘‘2005’’. 
(b) EFFECTIVE DATE.—The amendment made by this section 
shall apply to calendar years beginning after the date of the enact-
ment of this Act. 
SEC. 804. INCREASED DEDUCTION FOR MEAL EXPENSES; INCREASED 
DEDUCTIBILITY OF BUSINESS MEAL EXPENSES FOR 
INDIVIDUALS SUBJECT TO FEDERAL LIMITATIONS ON 
HOURS OF SERVICE. 
(a) IN GENERAL.—Paragraph (1) of section 274(n) (relating to 
only 50 percent of meal and entertainment expenses allowed as 
deduction) is amended by striking ‘‘50 percent’’ in the text and 
inserting ‘‘the allowable percentage’’. 
(b) ALLOWABLE PERCENTAGES.—Subsection (n) of section 274 
is amended by redesignating paragraphs (2) and (3) as paragraphs 
(3) and (4), respectively, and by inserting after paragraph (2) the 
following new paragraph: 
‘‘(2) ALLOWABLE PERCENTAGE.—For purposes of paragraph 
(1), the allowable percentage is— 
‘‘(A) in the case of amounts for items described in 
paragraph (1)(B), 50 percent, and 
‘‘(B) in the case of expenses for food or beverages, 
the percentage determined in accordance with the following 
table: 
‘‘For taxable years beginning 
The allowable 
in calendar year— 
percentage is— 
2000 through 2005 .....................................................................
2006 .............................................................................................
2007 and thereafter ...................................................................
60.’’. 
(c) INDIVIDUALS SUBJECT TO FEDERAL LIMITATIONS ON HOURS 
OF SERVICE.—The table in section 274(n)(4)(B) (relating to special 
rule for individuals subject to Federal hours of service), as redesig-
nated by subsection (b), is amended— 
(1) by striking ‘‘or 2007’’, and 
(2) by striking ‘‘2008’’ and inserting ‘‘2007’’. 
(d) CONFORMING AMENDMENTS.— 
(1) The heading for subsection (n) of section 274 is amended 
by striking ‘‘50 PERCENT’’ and inserting ‘‘LIMITED PERCENT-
AGES’’. 
(2) Subparagraph (A) of section 274(n)(4), as redesignated 
by subsection (b), is amended by striking ‘‘50 percent’’ and 
inserting ‘‘the allowable percentage’’. 
(e) EFFECTIVE DATE.—The amendments made by this section 
shall apply to taxable years beginning after December 31, 1999. 
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H. R. 2488—80 
SEC. 805. INCOME AVERAGING FOR FARMERS AND FISHERMEN NOT 
TO INCREASE ALTERNATIVE MINIMUM TAX LIABILITY. 
(a) IN
GENERAL.—Section 55(c) (defining regular tax) is 
amended by redesignating paragraph (2) as paragraph (3) and 
by inserting after paragraph (1) the following: 
‘‘(2) COORDINATION WITH INCOME AVERAGING FOR FARMERS 
AND FISHERMEN.—Solely for purposes of this section, section 
1301 (relating to averaging of farm and fishing income) shall 
not apply in computing the regular tax.’’. 
(b) ALLOWING INCOME AVERAGING FOR FISHERMEN.— 
(1) IN GENERAL.—Section 1301(a) is amended by striking 
‘‘farming business’’ and inserting ‘‘farming business or fishing 
business,’’. 
(2) DEFINITION OF ELECTED FARM INCOME.— 
(A) IN GENERAL.—Clause (i) of section 1301(b)(1)(A) 
is amended by inserting ‘‘or fishing business’’ before the 
semicolon. 
(B) CONFORMING AMENDMENT.—Subparagraph (B) of 
section 1301(b)(1) is amended by inserting ‘‘or fishing busi-
ness’’ after ‘‘farming business’’ both places it occurs. 
(3) DEFINITION OF FISHING BUSINESS.—Section 1301(b) is 
amended by adding at the end the following new paragraph: 
‘‘(4) FISHING BUSINESS.—The term ‘fishing business’ means 
the conduct of commercial fishing as defined in section 3 of 
the Magnuson-Stevens Fishery Conservation and Management 
Act (16 U.S.C. 1802).’’. 
(c) EFFECTIVE DATE.—The amendments made by this section 
shall apply to taxable years beginning after December 31, 1999. 
SEC. 806. FARM, FISHING, AND RANCH RISK MANAGEMENT ACCOUNTS. 
(a) IN GENERAL.—Subpart C of part II of subchapter E of 
chapter 1 (relating to taxable year for which deductions taken) 
is amended by inserting after section 468B the following: 
‘‘SEC. 468C. FARM AND RANCH RISK MANAGEMENT ACCOUNTS. 
‘‘(a) DEDUCTION
ALLOWED.—In the case of an individual 
engaged in an eligible farming business or commercial fishing, 
there shall be allowed as a deduction for any taxable year the 
amount paid in cash by the taxpayer during the taxable year 
to a Farm, Fishing, and Ranch Risk Management Account (herein-
after referred to as the ‘FFARRM Account’). 
‘‘(b) LIMITATION.— 
‘‘(1) CONTRIBUTIONS.—The amount which a taxpayer may 
pay into the FFARRM Account for any taxable year shall not 
exceed 20 percent of so much of the taxable income of the 
taxpayer (determined without regard to this section) which 
is attributable (determined in the manner applicable under 
section 1301) to any eligible farming business or commercial 
fishing. 
‘‘(2) 
DISTRIBUTIONS.—Distributions 
from 
a 
FFARRM 
Account may not be used to purchase, lease, or finance any 
new fishing vessel, add capacity to any fishery, or otherwise 
contribute to the overcapitalization of any fishery. The Sec-
retary of Commerce shall implement regulations to enforce 
this paragraph. 
‘‘(c) ELIGIBLE BUSINESSES.—For purposes of this section— 
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H. R. 2488—81 
‘‘(1) ELIGIBLE
FARMING
BUSINESS.—The term ‘eligible 
farming business’ means any farming business (as defined in 
section 263A(e)(4)) which is not a passive activity (within the 
meaning of section 469(c)) of the taxpayer. 
‘‘(2) COMMERCIAL FISHING.—The term ‘commercial fishing’ 
has the meaning given such term by section (3) of the Magnu-
son-Stevens Fishery Conservation and Management Act (16 
U.S.C. 1802) but only if such fishing is not a passive activity 
(within the meaning of section 469(c)) of the taxpayer. 
‘‘(d) FFARRM ACCOUNT.—For purposes of this section— 
‘‘(1) IN GENERAL.—The term ‘FFARRM Account’ means a 
trust created or organized in the United States for the exclusive 
benefit of the taxpayer, but only if the written governing 
instrument creating the trust meets the following requirements: 
‘‘(A) No contribution will be accepted for any taxable 
year in excess of the amount allowed as a deduction under 
subsection (a) for such year. 
‘‘(B) The trustee is a bank (as defined in section 408(n)) 
or another person who demonstrates to the satisfaction 
of the Secretary that the manner in which such person 
will administer the trust will be consistent with the require-
ments of this section. 
‘‘(C) The assets of the trust consist entirely of cash 
or of obligations which have adequate stated interest (as 
defined in section 1274(c)(2)) and which pay such interest 
not less often than annually. 
‘‘(D) All income of the trust is distributed currently 
to the grantor. 
‘‘(E) The assets of the trust will not be commingled 
with other property except in a common trust fund or 
common investment fund. 
‘‘(2) ACCOUNT TAXED AS GRANTOR TRUST.—The grantor of 
a FFARRM Account shall be treated for purposes of this title 
as the owner of such Account and shall be subject to tax 
thereon in accordance with subpart E of part I of subchapter 
J of this chapter (relating to grantors and others treated as 
substantial owners). 
‘‘(e) INCLUSION OF AMOUNTS DISTRIBUTED.— 
‘‘(1) IN GENERAL.—Except as provided in paragraph (2), 
there shall be includible in the gross income of the taxpayer 
for any taxable year— 
‘‘(A) any amount distributed from a FFARRM Account 
of the taxpayer during such taxable year, and 
‘‘(B) any deemed distribution under— 
‘‘(i) subsection (f )(1) (relating to deposits not 
distributed within 5 years), 
‘‘(ii) subsection (f )(2) (relating to cessation in 
eligible farming business), and 
‘‘(iii) subparagraph (A) or (B) of subsection (f )(3) 
(relating to prohibited transactions and pledging 
account as security). 
‘‘(2) EXCEPTIONS.—Paragraph (1)(A) shall not apply to— 
‘‘(A) any distribution to the extent attributable to 
income of the Account, and 
‘‘(B) the distribution of any contribution paid during 
a taxable year to a FFARRM Account to the extent that 
such contribution exceeds the limitation applicable under 
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H. R. 2488—82 
subsection (b) if requirements similar to the requirements 
of section 408(d)(4) are met. 
For purposes of subparagraph (A), distributions shall be treated 
as first attributable to income and then to other amounts. 
‘‘(f ) SPECIAL RULES.— 
‘‘(1) TAX ON DEPOSITS IN ACCOUNT WHICH ARE NOT DISTRIB-
UTED WITHIN 5 YEARS.— 
‘‘(A) IN GENERAL.—If, at the close of any taxable year, 
there is a nonqualified balance in any FFARRM Account— 
‘‘(i) there shall be deemed distributed from such 
Account during such taxable year an amount equal 
to such balance, and 
‘‘(ii) the taxpayer’s tax imposed by this chapter 
for such taxable year shall be increased by 10 percent 
of such deemed distribution. 
The preceding sentence shall not apply if an amount equal 
to such nonqualified balance is distributed from such 
Account to the taxpayer before the due date (including 
extensions) for filing the return of tax imposed by this 
chapter for such year (or, if earlier, the date the taxpayer 
files such return for such year). 
‘‘(B) 
NONQUALIFIED
BALANCE.—For 
purposes 
of 
subparagraph (A), the term ‘nonqualified balance’ means 
any balance in the Account on the last day of the taxable 
year which is attributable to amounts deposited in such 
Account before the 4th preceding taxable year. 
‘‘(C) ORDERING RULE.—For purposes of this paragraph, 
distributions from a FFARRM Account (other than distribu-
tions of current income) shall be treated as made from 
deposits in the order in which such deposits were made, 
beginning with the earliest deposits. 
‘‘(2) CESSATION IN ELIGIBLE BUSINESS.—At the close of the 
first disqualification period after a period for which the taxpayer 
was engaged in an eligible farming business or commercial 
fishing, there shall be deemed distributed from the FFARRM 
Account of the taxpayer an amount equal to the balance in 
such Account (if any) at the close of such disqualification period. 
For purposes of the preceding sentence, the term ‘disqualifica-
tion period’ means any period of 2 consecutive taxable years 
for which the taxpayer is not engaged in an eligible farming 
business or commercial fishing. 
‘‘(3) CERTAIN RULES TO APPLY.—Rules similar to the fol-
lowing rules shall apply for purposes of this section: 
‘‘(A) Section 220(f )(8) (relating to treatment on death). 
‘‘(B) Section 408(e)(2) (relating to loss of exemption 
of account where individual engages in prohibited trans-
action). 
‘‘(C) Section 408(e)(4) (relating to effect of pledging 
account as security). 
‘‘(D) Section 408(g) (relating to community property 
laws). 
‘‘(E) Section 408(h) (relating to custodial accounts). 
‘‘(4) TIME WHEN PAYMENTS DEEMED MADE.—For purposes 
of this section, a taxpayer shall be deemed to have made 
a payment to a FFARRM Account on the last day of a taxable 
year if such payment is made on account of such taxable year 
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H. R. 2488—83 
and is made on or before the due date (without regard to 
extensions) for filing the return of tax for such taxable year. 
‘‘(5) INDIVIDUAL.—For purposes of this section, the term 
‘individual’ shall not include an estate or trust. 
‘‘(6) DEDUCTION
NOT
ALLOWED
FOR
SELF-EMPLOYMENT 
TAX.—The deduction allowable by reason of subsection (a) shall 
not be taken into account in determining an individual’s net 
earnings from self-employment (within the meaning of section 
1402(a)) for purposes of chapter 2. 
‘‘(g) REPORTS.—The trustee of a FFARRM Account shall make 
such reports regarding such Account to the Secretary and to the 
person for whose benefit the Account is maintained with respect 
to contributions, distributions, and such other matters as the Sec-
retary may require under regulations. The reports required by 
this subsection shall be filed at such time and in such manner 
and furnished to such persons at such time and in such manner 
as may be required by such regulations.’’. 
(b) TAX ON EXCESS CONTRIBUTIONS.— 
(1) Subsection (a) of section 4973 (relating to tax on excess 
contributions to certain tax-favored accounts and annuities) 
is amended by striking ‘‘or’’ at the end of paragraph (3), by 
redesignating paragraph (4) as paragraph (5), and by inserting 
after paragraph (3) the following: 
‘‘(4) a FFARRM Account (within the meaning of section 
468C(d)), or’’. 
(2) Section 4973 is amended by adding at the end the 
following: 
‘‘(g) EXCESS CONTRIBUTIONS TO FFARRM ACCOUNTS.—For pur-
poses of this section, in the case of a FFARRM Account (within 
the meaning of section 468C(d)), the term ‘excess contributions’ 
means the amount by which the amount contributed for the taxable 
year to the Account exceeds the amount which may be contributed 
to the Account under section 468C(b) for such taxable year. For 
purposes of this subsection, any contribution which is distributed 
out of the FFARRM Account in a distribution to which section 
468C(e)(2)(B) applies shall be treated as an amount not contrib-
uted.’’. 
(3) The section heading for section 4973 is amended to 
read as follows: 
‘‘SEC. 4973. EXCESS CONTRIBUTIONS TO CERTAIN ACCOUNTS, ANNU-
ITIES, ETC.’’. 
(4) The table of sections for chapter 43 is amended by 
striking the item relating to section 4973 and inserting the 
following: 
‘‘Sec. 4973. Excess contributions to certain accounts, annuities, etc.’’. 
(c) TAX ON PROHIBITED TRANSACTIONS.— 
(1) Subsection (c) of section 4975 (relating to tax on prohib-
ited transactions) is amended by adding at the end the fol-
lowing: 
‘‘(6) SPECIAL RULE FOR FFARRM ACCOUNTS.—A person for 
whose benefit a FFARRM Account (within the meaning of sec-
tion 468C(d)) is established shall be exempt from the tax 
imposed by this section with respect to any transaction con-
cerning such account (which would otherwise be taxable under 
this section) if, with respect to such transaction, the account 
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H. R. 2488—84 
ceases to be a FFARRM Account by reason of the application 
of section 468C(f )(3)(A) to such account.’’. 
(2) Paragraph (1) of section 4975(e) is amended by redesig-
nating subparagraphs (E) and (F) as subparagraphs (F) and 
(G), respectively, and by inserting after subparagraph (D) the 
following: 
‘‘(E) a FFARRM Account described in section 468C(d),’’. 
(d) FAILURE TO PROVIDE REPORTS ON FFARRM ACCOUNTS.— 
Paragraph (2) of section 6693(a) (relating to failure to provide 
reports on certain tax-favored accounts or annuities) is amended 
by redesignating subparagraphs (C) and (D) as subparagraphs (D) 
and (E), respectively, and by inserting after subparagraph (B) the 
following: 
‘‘(C) section 468C(g) (relating to FFARRM Accounts),’’. 
(e) CLERICAL AMENDMENT.—The table of sections for subpart 
C of part II of subchapter E of chapter 1 is amended by inserting 
after the item relating to section 468B the following: 
‘‘Sec. 468C. Farm, Fishing and Ranch Risk Management Accounts.’’. 
(f ) EFFECTIVE DATE.—The amendments made by this section 
shall apply to taxable years beginning after December 31, 2000. 
SEC. 807. EXCLUSION OF INVESTMENT SECURITIES INCOME FROM PAS-
SIVE INCOME TEST FOR BANK S CORPORATIONS. 
(a) IN GENERAL.—Section 1362(d)(3)(C) (defining passive invest-
ment income) is amended by adding at the end the following: 
‘‘(v) EXCEPTION FOR BANKS; ETC.—In the case of 
a bank (as defined in section 581), a bank holding 
company (as defined in section 246A(c)(3)(B)(ii)), or 
a qualified subchapter S subsidiary bank, the term 
‘passive investment income’ shall not include— 
‘‘(I) interest income earned by such bank, bank 
holding company, or qualified subchapter S sub-
sidiary bank, or 
‘‘(II) dividends on assets required to be held 
by such bank, bank holding company, or qualified 
subchapter S subsidiary bank to conduct a banking 
business, including stock in the Federal Reserve 
Bank, the Federal Home Loan Bank, or the Fed-
eral Agricultural Mortgage Bank or participation 
certificates issued by a Federal Intermediate 
Credit Bank.’’. 
(b) EFFECTIVE DATE.—The amendment made by this section 
shall apply to taxable years beginning after December 31, 1999. 
SEC. 808. TREATMENT OF QUALIFYING DIRECTOR SHARES. 
(a) IN GENERAL.—Section 1361 is amended by adding at the 
end the following: 
‘‘(f ) TREATMENT OF QUALIFYING DIRECTOR SHARES.— 
‘‘(1) IN GENERAL.—For purposes of this subchapter— 
‘‘(A) qualifying director shares shall not be treated 
as a second class of stock, and 
‘‘(B) no person shall be treated as a shareholder of 
the corporation by reason of holding qualifying director 
shares. 
‘‘(2) QUALIFYING DIRECTOR SHARES DEFINED.—For purposes 
of this subsection, the term ‘qualifying director shares’ means 
any shares of stock in a bank (as defined in section 581) 
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E:\PICKUP\H2488.ENR
H2488
erjones on PROD1PC71 with BILLS