IB
Union Calendar No. 459
105TH CONGRESS
2D SESSION
H. R. 4738
[Report No. 105–817]
To amend the Internal Revenue Code of 1986 to extend certain expiring
provisions, provide tax relief for farmers and small businesses, and for
other purposes.
IN THE HOUSE OF REPRESENTATIVES
OCTOBER 8, 1998
Mr. ARCHER introduced the following bill; which was referred to the
Committee on Ways and Means
OCTOBER 12, 1998
Reported with an amendment, committed to the Committee of the Whole
House on the State of the Union, and ordered to be printed
[Strike out all after the enacting clause and insert the part printed in italic]
[For text of introduced bill, see copy of bill as introduced on October 8, 1998]
A BILL
To amend the Internal Revenue Code of 1986 to extend
certain expiring provisions, provide tax relief for farmers
and small businesses, and for other purposes.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. AMENDMENT OF 1986 CODE; TABLE OF CON-
TENTS.
(a) AMENDMENT OF 1986 CODE.—Except as otherwise
expressly provided, whenever in this Act an amendment or
repeal is expressed in terms of an amendment to, or repeal
of, a section or other provision, the reference shall be consid-
ered to be made to a section or other provision of the Inter-
nal Revenue Code of 1986.
(b) TABLE OF CONTENTS.—
Sec. 1. Amendment of 1986 Code; table of contents.
TITLE I—EXTENSION AND MODIFICATION OF CERTAIN EXPIRING
PROVISIONS
Subtitle A—Tax Provisions
Sec. 101. Research credit.
Sec. 102. Work opportunity credit.
Sec. 103. Income averaging for farmers made permanent.
Sec. 104. Contributions of stock to private foundations; expanded public inspec-
tion of private foundations’ annual returns.
Sec. 105. Subpart F exemption for active financing income.
Sec. 106. Disclosure of return information on income contingent student loans.
Subtitle B—Generalized System of Preferences
Sec. 111. Extension of Generalized System of Preferences.
TITLE II—OTHER PROVISIONS
Sec. 201. Depreciation study.
Sec. 202. Production flexibility contract payments.
Sec. 203. 100 percent deduction for health insurance costs of self-employed indi-
viduals.
Sec. 204. Increase in volume cap on private activity bonds.
Sec. 205. Modification of estimated tax safe harbors.
Sec. 206. Exemption for students employed by State schools, colleges, or univer-
sities.
TITLE III—REVENUE OFFSETS
Sec. 301. Treatment of certain deductible liquidating distributions of regulated
investment companies and real estate investment trusts.
Sec. 302. Inclusion of rotavirus gastroenteritis as a taxable vaccine.
Sec. 303. Clarification and expansion of mathematical error assessment proce-
dures.
Sec. 304. Clarification of definition of specified liability loss.
TITLE IV—TECHNICAL CORRECTIONS
Sec. 401. Definitions; coordination with other titles.
Sec. 402. Amendments related to Internal Revenue Service Restructuring and Re-
form Act of 1998.
Sec. 403. Amendments related to Taxpayer Relief Act of 1997.
Sec. 404. Amendments related to Tax Reform Act of 1984.
Sec. 405. Other amendments.
TITLE I—EXTENSION AND MODI-
FICATION OF CERTAIN EXPIR-
ING PROVISIONS
Subtitle A—Tax Provisions
SEC. 101. RESEARCH CREDIT.
(a) TEMPORARY EXTENSION.—Paragraph (1) of sec-
tion 41(h) (relating to termination) is amended—
(1) by striking ‘‘June 30, 1998’’ and inserting
‘‘December 31, 1999’’;
(2) by striking ‘‘24-month’’ and inserting ‘‘42-
month’’; and
(3) by striking ‘‘24 months’’ and inserting ‘‘42
months’’.
(b) TECHNICAL AMENDMENT.—Subparagraph (D) of
section 45C(b)(1) is amended by striking ‘‘June 30, 1998’’
and inserting ‘‘December 31, 1999’’.
(c) EFFECTIVE DATE.—The amendments made by this
section shall apply to amounts paid or incurred after June
30, 1998.
SEC. 102. WORK OPPORTUNITY CREDIT.
(a) TEMPORARY EXTENSION.—Subparagraph (B) of
section 51(c)(4) (relating to termination) is amended by
striking ‘‘June 30, 1998’’ and inserting ‘‘December 31,
1999’’.
(b) EFFECTIVE DATE.—The amendment made by this
section shall apply to individuals who begin work for the
employer after June 30, 1998.
SEC. 103. INCOME AVERAGING FOR FARMERS MADE PERMA-
NENT.
Subsection (c) of section 933 of the Taxpayer Relief
Act of 1997 is amended by striking ‘‘, and before January
1, 2001’’.
SEC. 104. CONTRIBUTIONS OF STOCK TO PRIVATE FOUNDA-
TIONS; EXPANDED PUBLIC INSPECTION OF
PRIVATE FOUNDATIONS’ ANNUAL RETURNS.
(a) SPECIAL RULE FOR CONTRIBUTIONS OF STOCK
MADE PERMANENT.—
(1) IN
GENERAL.—Paragraph (5) of section
170(e) is amended by striking subparagraph (D) (re-
lating to termination).
(2) EFFECTIVE DATE.—The amendment made by
paragraph (1) shall apply to contributions made after
June 30, 1998.
(b) EXPANDED
PUBLIC
INSPECTION
OF
PRIVATE
FOUNDATIONS’ ANNUAL RETURNS, ETC.—
(1) IN GENERAL.—Section 6104 (relating to pub-
licity of information required from certain exempt or-
ganizations and certain trusts) is amended by strik-
ing subsections (d) and (e) and inserting after sub-
section (c) the following new subsection:
‘‘(d) PUBLIC INSPECTION OF CERTAIN ANNUAL RE-
TURNS AND APPLICATIONS FOR EXEMPTION.—
‘‘(1) IN GENERAL.—In the case of an organiza-
tion described in subsection (c) or (d) of section 501
and exempt from taxation under section 501(a)—
‘‘(A) a copy of—
‘‘(i) the annual return filed under sec-
tion 6033 (relating to returns by exempt or-
ganizations) by such organization; and
‘‘(ii) if the organization filed an appli-
cation for recognition of exemption under
section 501, the exempt status application
materials of such organization,
shall be made available by such organization for
inspection during regular business hours by any
individual at the principal office of such organi-
zation and, if such organization regularly main-
tains 1 or more regional or district offices hav-
ing 3 or more employees, at each such regional
or district office; and
‘‘(B) upon request of an individual made at
such principal office or such a regional or dis-
trict office, a copy of such annual return and ex-
empt status application materials shall be pro-
vided to such individual without charge other
than a reasonable fee for any reproduction and
mailing costs.
The request described in subparagraph (B) must be
made in person or in writing. If such request is made
in person, such copy shall be provided immediately
and, if made in writing, shall be provided within 30
days.
‘‘(2) 3-YEAR LIMITATION ON INSPECTION OF RE-
TURNS.—Paragraph (1) shall apply to an annual re-
turn filed under section 6033 only during the 3-year
period beginning on the last day prescribed for filing
such return (determined with regard to any extension
of time for filing).
‘‘(3) EXCEPTIONS FROM DISCLOSURE REQUIRE-
MENT.—
‘‘(A) NONDISCLOSURE
OF
CONTRIBUTORS,
ETC.—Paragraph (1) shall not require the disclo-
sure of the name or address of any contributor
to the organization. In the case of an organiza-
tion described in section 501(d), paragraph (1)
shall not require the disclosure of the copies re-
ferred to in section 6031(b) with respect to such
organization.
‘‘(B) NONDISCLOSURE OF CERTAIN OTHER
INFORMATION.—Paragraph (1) shall not require
the disclosure of any information if the Secretary
withheld such information from public inspec-
tion under subsection (a)(1)(D).
‘‘(4) LIMITATION ON PROVIDING COPIES.—Para-
graph (1)(B) shall not apply to any request if, in ac-
cordance with regulations promulgated by the Sec-
retary, the organization has made the requested docu-
ments widely available, or the Secretary determines,
upon application by an organization, that such re-
quest is part of a harassment campaign and that
compliance with such request is not in the public in-
terest.
‘‘(5) 
EXEMPT
STATUS
APPLICATION
MATE-
RIALS.—For purposes of paragraph (1), the term ‘ex-
empt status applicable materials’ means the applica-
tion for recognition of exemption under section 501
and any papers submitted in support of such applica-
tion and any letter or other document issued by the
Internal Revenue Service with respect to such appli-
cation.’’.
(2) CONFORMING AMENDMENTS.—
(A) Subsection (c) of section 6033 is amend-
ed by adding ‘‘and’’ at the end of paragraph (1),
by striking paragraph (2), and by redesignating
paragraph (3) as paragraph (2).
(B) Subparagraph (C) of section 6652(c)(1)
is amended by striking ‘‘subsection (d) or (e)(1)
of section 6104 (relating to public inspection of
annual returns)’’ and inserting ‘‘section 6104(d)
with respect to any annual return’’.
(C) Subparagraph (D) of section 6652(c)(1)
is amended by striking ‘‘section 6104(e)(2) (re-
lating to public inspection of applications for ex-
emption)’’ and inserting ‘‘section 6104(d) with
respect to any exempt status application mate-
rials (as defined in such section)’’.
(D) Section 6685 is amended by striking
‘‘or (e)’’.
(E) Section 7207 is amended by striking
‘‘or (e)’’.
(3) EFFECTIVE DATE.—
(A) IN GENERAL.—Except as provided in
subparagraph (B), the amendments made by this
subsection shall apply to requests made after the
later of December 31, 1998, or the 60th day after
the Secretary of the Treasury first issues the reg-
ulations referred to in such section 6104(d)(4) of
the Internal Revenue Code of 1986, as amended
by this section.
(B) PUBLICATION OF ANNUAL RETURNS.—
Section 6104(d) of such Code, as in effect before
the amendments made by this subsection, shall
not apply to any return the due date for which
is after the date such amendments take effect
under subparagraph (A).
SEC. 105. SUBPART F EXEMPTION FOR ACTIVE FINANCING
INCOME.
(a) INCOME DERIVED FROM BANKING, FINANCING, OR
SIMILAR BUSINESSES.—Section 954(h) (relating to income
derived in the active conduct of banking, financing, or simi-
lar businesses) is amended to read as follows:
‘‘(h) SPECIAL RULE FOR INCOME DERIVED IN THE AC-
TIVE CONDUCT OF BANKING, FINANCING, OR SIMILAR BUSI-
NESSES.—
‘‘(1) IN GENERAL.—For purposes of subsection
(c)(1), foreign personal holding company income shall
not include qualified banking or financing income of
an eligible controlled foreign corporation.
‘‘(2) ELIGIBLE CONTROLLED FOREIGN CORPORA-
TION.—For purposes of this subsection—
‘‘(A) IN GENERAL.—The term ‘eligible con-
trolled foreign corporation’ means a controlled
foreign corporation which—
‘‘(i) is predominantly engaged in the
active conduct of a banking, financing, or
similar business, and
‘‘(ii) conducts substantial activity with
respect to such business.
‘‘(B) PREDOMINANTLY
ENGAGED.—A con-
trolled foreign corporation shall be treated as
predominantly engaged in the active conduct of
a banking, financing, or similar business if—
‘‘(i) more than 70 percent of the gross
income of the controlled foreign corporation
is derived directly from the active and regu-
lar conduct of a lending or finance business
from transactions with customers which are
not related persons,
‘‘(ii) it is engaged in the active con-
duct of a banking business and is an insti-
tution licensed to do business as a bank in
the United States (or is any other corpora-
tion not so licensed which is specified by the
Secretary in regulations), or
‘‘(iii) it is engaged in the active con-
duct of a securities business and is reg-
istered as a securities broker or dealer under
section 15(a) of the Securities Exchange Act
of 1934 or is registered as a Government se-
curities broker or dealer under section
15C(a) of such Act (or is any other corpora-
tion not so registered which is specified by
the Secretary in regulations).
‘‘(3) QUALIFIED
BANKING
OR
FINANCING
IN-
COME.—For purposes of this subsection—
‘‘(A) IN
GENERAL.—The term ‘qualified
banking or financing income’ means income of
an 
eligible 
controlled 
foreign 
corporation
which—
‘‘(i) is derived in the active conduct of
a banking, financing, or similar business
by—
‘‘(I) such eligible controlled for-
eign corporation, or
‘‘(II) a qualified business unit of
such eligible controlled foreign corpora-
tion;
‘‘(ii) is derived from one or more
transactions—
‘‘(I) with customers located in a
country other than the United States,
and
‘‘(II) substantially all of the ac-
tivities in connection with which are
conducted directly by the corporation
or unit in its home country; and
‘‘(iii) is treated as earned by such cor-
poration or unit in its home country for
purposes of such country’s tax laws.
‘‘(B) LIMITATION ON NONBANKING AND NON-
SECURITIES BUSINESSES.—No income of an eli-
gible controlled foreign corporation not described
in clause (ii) or (iii) of paragraph (2)(B) (or of
a qualified business unit of such corporation)
shall be treated as qualified banking or financing
income unless more than 30 percent of such cor-
poration’s or unit’s gross income is derived di-
rectly from the active and regular conduct of a
lending or finance business from transactions
with customers which are not related persons
and which are located within such corporation’s
or unit’s home country.
‘‘(C) SUBSTANTIAL ACTIVITY REQUIREMENT
FOR CROSS BORDER INCOME.—The term ‘quali-
fied banking or financing income’ shall not in-
clude income derived from 1 or more trans-
actions with customers located in a country other
than the home country of the eligible controlled
foreign corporation or a qualified business unit
of such corporation unless such corporation or
unit conducts substantial activity with respect to
a banking, financing, or similar business in its
home country.
‘‘(D) 
DETERMINATIONS
MADE
SEPA-
RATELY.—For purposes of this paragraph, the
qualified banking or financing income of an eli-
gible controlled foreign corporation and each
qualified business unit of such corporation shall
be determined separately for such corporation
and each such unit by taking into account—
‘‘(i) in the case of the eligible controlled
foreign corporation, only items of income,
deduction, gain, or loss and activities of
such corporation not properly allocable or
attributable to any qualified business unit
of such corporation; and
‘‘(ii) in the case of a qualified business
unit, only items of income, deduction, gain,
or loss and activities properly allocable or
attributable to such unit.
‘‘(4) LENDING OR FINANCE BUSINESS.—For pur-
poses of this subsection, the term ‘lending or finance
business’ means the business of—
‘‘(A) making loans;
‘‘(B) purchasing or discounting accounts re-
ceivable, notes, or installment obligations;
‘‘(C) engaging in leasing (including enter-
ing into leases and purchasing, servicing, and
disposing of leases and leased assets);
‘‘(D) issuing letters of credit or providing
guarantees;
‘‘(E) providing charge and credit card serv-
ices; or
‘‘(F) rendering services or making facilities
available in connection with activities described
in subparagraphs (A) through (E) carried on
by—
‘‘(i) the corporation (or qualified busi-
ness unit) rendering services or making fa-
cilities available; or
‘‘(ii) another corporation (or qualified
business unit of a corporation) which is a
member of the same affiliated group (as de-
fined in section 1504, but determined with-
out regard to section 1504(b)(3)).
‘‘(5) OTHER DEFINITIONS.—For purposes of this
subsection—
‘‘(A) 
CUSTOMER.—The 
term 
‘customer’
means, with respect to any controlled foreign
corporation or qualified business unit, any per-
son which has a customer relationship with such
corporation or unit and which is acting in its
capacity as such.
‘‘(B) HOME COUNTRY.—Except as provided
in regulations—
‘‘(i) CONTROLLED FOREIGN CORPORA-
TION.—The term ‘home country’ means,
with respect to any controlled foreign cor-
poration, the country under the laws of
which the corporation was created or orga-
nized.
‘‘(ii) QUALIFIED BUSINESS UNIT.—The
term ‘home country’ means, with respect to
any qualified business unit, the country in
which such unit maintains its principal of-
fice.
‘‘(C) 
LOCATED.—The 
determination 
of
where a customer is located shall be made under
rules prescribed by the Secretary.
‘‘(D) QUALIFIED
BUSINESS
UNIT.—The
term ‘qualified business unit’ has the meaning
given such term by section 989(a).
‘‘(E) RELATED PERSON.—The term ‘related
person’ has the meaning given such term by sub-
section (d)(3).
‘‘(6) COORDINATION WITH EXCEPTION FOR DEAL-
ERS.—Paragraph (1) shall not apply to income de-
scribed in subsection (c)(2)(C)(ii) of a dealer in secu-
rities (within the meaning of section 475) which is an
eligible controlled foreign corporation described in
paragraph (2)(B)(iii).
‘‘(7) ANTI-ABUSE RULES.—For purposes of ap-
plying this subsection and subsection (c)(2)(C)(ii)—
‘‘(A) there shall be disregarded any item of
income, gain, loss, or deduction with respect to
any transaction or series of transactions one of
the principal purposes of which is qualifying in-
come or gain for the exclusion under this section,
including any transaction or series of trans-
actions a principal purpose of which is the accel-
eration or deferral of any item in order to claim
of such corporation or unit with respect to any
transaction shall not be so treated if a principal
purpose of such transaction is to satisfy any re-
quirement of this subsection.
‘‘(8) REGULATIONS.—The Secretary shall pre-
scribe such regulations as may be necessary or appro-
priate to carry out the purposes of this subsection,
subsection (c)(1)(B)(i), subsection (c)(2)(C)(ii), and
the last sentence of subsection (e)(2).
‘‘(9) APPLICATION.—This subsection, subsection
(c)(2)(C)(ii), and the last sentence of subsection (e)(2)
shall apply only to the first taxable year of a foreign
corporation beginning after December 31, 1998, and
before January 1, 2000, and to taxable years of
United States shareholders with or within which such
taxable year of such foreign corporation ends.’’.
(b) INCOME DERIVED FROM INSURANCE BUSINESS.—
(1) INCOME ATTRIBUTABLE TO ISSUANCE OR RE-
INSURANCE.—
(A) IN GENERAL.—Section 953(a) (defining
insurance income) is amended to read as follows:
‘‘(a) INSURANCE INCOME.—
‘‘(1) IN
GENERAL.—For purposes of section
952(a)(1), the term ‘insurance income’ means any in-
come which—
‘‘(A) is attributable to the issuing (or rein-
suring) of an insurance or annuity contract; and
‘‘(B) would (subject to the modifications
provided by subsection (b)) be taxed under sub-
chapter L of this chapter if such income were the
income of a domestic insurance company.
‘‘(2) EXCEPTION.—Such term shall not include
any exempt insurance income (as defined in sub-
section (e)).’’.
(B) EXEMPT INSURANCE INCOME.—Section
953 (relating to insurance income) is amended
by adding at the end the following new sub-
section:
‘‘(e) EXEMPT INSURANCE INCOME.—For purposes of
this section—
‘‘(1) EXEMPT INSURANCE INCOME DEFINED.—
‘‘(A) IN GENERAL.—The term ‘exempt in-
surance income’ means income derived by a
qualifying insurance company which—
‘‘(i) is attributable to the issuing (or
reinsuring) of an exempt contract by such
company or a qualifying insurance com-
pany branch of such company; and
‘‘(ii) is treated as earned by such com-
pany or branch in its home country for
purposes of such country’s tax laws.
‘‘(B) EXCEPTION
FOR
CERTAIN
ARRANGE-
MENTS.—Such term shall not include income at-
tributable to the issuing (or reinsuring) of an ex-
empt contract as the result of any arrangement
whereby another corporation receives a substan-
tially equal amount of premiums or other con-
sideration in respect of issuing (or reinsuring) a
contract which is not an exempt contract.
‘‘(C) 
DETERMINATIONS
MADE
SEPA-
RATELY.—For purposes of this subsection and
section 954(i), the exempt insurance income and
exempt contracts of a qualifying insurance com-
pany or any qualifying insurance company
branch of such company shall be determined sep-
arately for such company and each such branch
by taking into account—
‘‘(i) in the case of the qualifying insur-
ance company, only items of income, deduc-
tion, gain, or loss, and activities of such
company not properly allocable or attrib-
utable to any qualifying insurance com-
pany branch of such company; and
‘‘(ii) in the case of a qualifying insur-
ance company branch, only items of income,
deduction, gain, or loss and activities prop-
erly allocable or attributable to such unit.
‘‘(2) EXEMPT CONTRACT.—
‘‘(A) IN GENERAL.—The term ‘exempt con-
tract’ means an insurance or annuity contract
issued or reinsured by a qualifying insurance
company or qualifying insurance company
branch in connection with property in, liability
arising out of activity in, or the lives or health
of residents of, a country other than the United
States.
‘‘(B) MINIMUM HOME COUNTRY INCOME RE-
QUIRED.—
‘‘(i) IN GENERAL.—No contract of a
qualifying insurance company or of a
qualifying insurance company branch shall
be treated as an exempt contract unless such
company or branch derives more than 30
percent of its net written premiums from
exempt contracts (determined without re-
gard to this subparagraph)—
‘‘(I) which cover applicable home
country risks; and
‘‘(II) with respect to which no
policyholder, insured, annuitant, or
beneficiary is a related person (as de-
fined in section 954(d)(3)).
‘‘(ii) 
APPLICABLE
HOME
COUNTRY
RISKS.—The term ‘applicable home country
risks’ means risks in connection with prop-
erty in, liability arising out of activity in,
or the lives or health of residents of, the
home country of the qualifying insurance
company or qualifying insurance company
branch, as the case may be, issuing or rein-
suring the contract covering the risks.
‘‘(C) 
SUBSTANTIAL
ACTIVITY
REQUIRE-
MENTS FOR CROSS BORDER RISKS.—A contract
issued by a qualifying insurance company or
qualifying insurance company branch which cov-
ers risks other than applicable home country
risks (as defined in subparagraph (B)(ii)) shall
not be treated as an exempt contract unless such
company or branch, as the case may be—
‘‘(i) conducts substantial activity with
respect to an insurance business in its home
country; and
‘‘(ii) performs in its home country sub-
stantially all of the activities necessary to
give rise to the income generated by such
contract.
‘‘(3) QUALIFYING
INSURANCE
COMPANY.—The
term ‘qualifying insurance company’ means any con-
trolled foreign corporation which—
‘‘(A) is subject to regulation as an insur-
ance (or reinsurance) company by its home
country, and is licensed, authorized, or regulated
by the applicable insurance regulatory body for
its home country to sell insurance, reinsurance,
or annuity contracts to persons other than relat-
ed persons (within the meaning of section
954(d)(3)) in such home country;
‘‘(B) derives more than 50 percent of its ag-
gregate net written premiums from the issuance
or reinsurance by such controlled foreign cor-
poration and each of its qualifying insurance
company branches of contracts—
‘‘(i) covering applicable home country
risks (as defined in paragraph (2)) of such
corporation or branch, as the case may be;
and
‘‘(ii) with respect to which no policy-
holder, insured, annuitant, or beneficiary is
a related person (as defined in section
954(d)(3));
except that in the case of a branch, such pre-
miums shall only be taken into account to the ex-
tent such premiums are treated as earned by
such branch in its home country for purposes of
such country’s tax laws; and
‘‘(C) is engaged in the insurance business
and would be subject to tax under subchapter L
if it were a domestic corporation.
‘‘(4) 
QUALIFYING
INSURANCE
COMPANY
BRANCH.—The term ‘qualifying insurance company
branch’ means a qualified business unit (within the
meaning of section 989(a)) of a controlled foreign cor-
poration if—
‘‘(A) such unit is licensed, authorized, or
regulated by the applicable insurance regulatory
body for its home country to sell insurance, rein-
surance, or annuity contracts to persons other
than related persons (within the meaning of sec-
tion 954(d)(3)) in such home country; and
‘‘(B) such controlled foreign corporation is
a qualifying insurance company, determined
under paragraph (3) as if such unit were a
qualifying insurance company branch.
‘‘(5) LIFE INSURANCE OR ANNUITY CONTRACT.—
For purposes of this section and section 954, the de-
termination of whether a contract issued by a con-
trolled foreign corporation or a qualified business
unit (within the meaning of section 989(a)) is a life
insurance contract or an annuity contract shall be
made without regard to sections 72(s), 101(f), 817(h),
and 7702 if—
‘‘(A) such contract is regulated as a life in-
surance or annuity contract by the corporation’s
or unit’s home country; and
‘‘(B) no policyholder, insured, annuitant, or
beneficiary with respect to the contract is a
United States person.
‘‘(6) HOME COUNTRY.—For purposes of this sub-
section, except as provided in regulations—
‘‘(A) 
CONTROLLED
FOREIGN
CORPORA-
TION.—The term ‘home country’ means, with re-
spect to a controlled foreign corporation, the
country in which such corporation is created or
organized.
‘‘(B) 
QUALIFIED
BUSINESS
UNIT.—The
term ‘home country’ means, with respect to a
qualified business unit (as defined in section
989(a)), the country in which the principal office
of such unit is located and in which such unit
is licensed, authorized, or regulated by the appli-
cable insurance regulatory body to sell insurance,
reinsurance, or annuity contracts to persons
other than related persons (as defined in section
954(d)(3)) in such country.
‘‘(7) ANTI-ABUSE RULES.—For purposes of ap-
plying this subsection and section 954(i)—
‘‘(A) the rules of section 954(h)(7) (other
than subparagraph (B) thereof) shall apply;
‘‘(B) there shall be disregarded any item of
income, gain, loss, or deduction of, or derived
from, an entity which is not engaged in regular
and continuous transactions with persons which
are not related persons;
‘‘(C) there shall be disregarded any change
in the method of computing reserves a principal
purpose of which is the acceleration or deferral
of any item in order to claim the benefits of this
subsection or section 954(i);
‘‘(D) a contract of insurance or reinsurance
shall not be treated as an exempt contract (and
premiums from such contract shall not be taken
into account for purposes of paragraph (2)(B) or
(3)) if—
‘‘(i) any policyholder, insured, annu-
itant, or beneficiary is a resident of the
United States and such contract was mar-
keted to such resident and was written to
cover a risk outside the United States; or
‘‘(ii) the contract covers risks located
within and without the United States and
the qualifying insurance company or quali-
fying insurance company branch does not
maintain such contemporaneous records,
and file such reports, with respect to such
contract as the Secretary may require;
‘‘(E) the Secretary may prescribe rules for
the allocation of contracts (and income from con-
tracts) among 2 or more qualifying insurance
company branches of a qualifying insurance
company in order to clearly reflect the income of
such branches; and
‘‘(F) premiums from a contract shall not be
taken into account for purposes of paragraph
(2)(B) or (3) if such contract reinsures a con-
tract issued or reinsured by a related person (as
defined in section 954(d)(3)).
For purposes of subparagraph (D), the determination
of where risks are located shall be made under the
principles of section 953.
‘‘(8) COORDINATION WITH SUBSECTION (c).—In
determining insurance income for purposes of sub-
section (c), exempt insurance income shall not include
income derived from exempt contracts which cover
risks other than applicable home country risks.
‘‘(9) REGULATIONS.—The Secretary shall pre-
scribe such regulations as may be necessary or appro-
priate to carry out the purposes of this subsection and
section 954(i).
‘‘(10) APPLICATION.—This subsection and sec-
tion 954(i) shall apply only to the first taxable year
of a foreign corporation beginning after December 31,
1998, and before January 1, 2000, and to taxable
years of United States shareholders with or within
which such taxable year of such foreign corporation
ends.
‘‘(11) CROSS REFERENCE.—
‘‘For income exempt from foreign personal holding
company income, see section 954(i).’’.
(2) EXEMPTION FROM FOREIGN PERSONAL HOLD-
ING COMPANY INCOME.—Section 954 (defining foreign
base company income) is amended by adding at the
end the following new subsection:
‘‘(i) SPECIAL RULE FOR INCOME DERIVED IN THE AC-
TIVE CONDUCT OF INSURANCE BUSINESS.—
‘‘(1) IN GENERAL.—For purposes of subsection
(c)(1), foreign personal holding company income shall
not include qualified insurance income of a qualify-
ing insurance company.
‘‘(2) QUALIFIED INSURANCE INCOME.—The term
‘qualified insurance income’ means income of a quali-
fying insurance company which is—
‘‘(A) received from a person other than a re-
lated person (within the meaning of subsection
(d)(3)) and derived from the investments made
by a qualifying insurance company or a qualify-
ing insurance company branch of its reserves al-
locable to exempt contracts or of 80 percent of its
unearned premiums from exempt contracts (as
both are determined in the manner prescribed
under paragraph (4)), or
‘‘(B) received from a person other than a re-
lated person (within the meaning of subsection
(d)(3)) and derived from investments made by a
qualifying insurance company or a qualifying
insurance company branch of an amount of its
assets allocable to exempt contracts equal to—
‘‘(i) in the case of property, casualty,
or health insurance contracts, one-third of
its premiums earned on such insurance con-
tracts during the taxable year (as defined in
section 832(b)(4)), and
‘‘(ii) in the case of life insurance or
annuity contracts, 10 percent of the reserves
described in subparagraph (A) for such con-
tracts.
‘‘(3) PRINCIPLES FOR DETERMINING INSURANCE
INCOME.—Except as provided by the Secretary, for
purposes of subparagraphs (A) and (B) of paragraph
(2)—
‘‘(A) in the case of any contract which is a
separate account-type contract (including any
variable contract not meeting the requirements of
section 817), income credited under such contract
shall be allocable only to such contract, and
‘‘(B) income not allocable under subpara-
graph (A) shall be allocated ratably among con-
tracts not described in subparagraph (A).
‘‘(4) METHODS
FOR
DETERMINING
UNEARNED
PREMIUMS AND RESERVES.—For purposes of para-
graph (2)(A)—
‘‘(A) 
PROPERTY
AND
CASUALTY
CON-
TRACTS.—The unearned premiums and reserves
of a qualifying insurance company or a qualify-
ing insurance company branch with respect to
property, casualty, or health insurance contracts
shall be determined using the same methods and
interest rates which would be used if such com-
pany or branch were subject to tax under sub-
chapter L, except that—
‘‘(i) the interest rate determined for the
functional currency of the company or
branch, and which, except as provided by
the Secretary, is calculated in the same
manner as the Federal mid-term rate under
section 1274(d), shall be substituted for the
applicable Federal interest rate, and
‘‘(ii) such company or branch shall use
the appropriate foreign loss payment pat-
tern.
‘‘(B) LIFE INSURANCE AND ANNUITY CON-
TRACTS.—The amount of the reserve of a qualify-
ing insurance company or qualifying insurance
company branch for any life insurance or annu-
ity contract shall be equal to the greater of—
‘‘(i) the net surrender value of such
contract 
(as 
defined 
in 
section
807(e)(1)(A)), or
‘‘(ii) the reserve determined under
paragraph (5).
‘‘(C) LIMITATION
ON
RESERVES.—In no
event shall the reserve determined under this
paragraph for any contract as of any time ex-
ceed the amount which would be taken into ac-
count with respect to such contract as of such
time in determining foreign statement reserves
(less any catastrophe, deficiency, equalization, or
similar reserves).
‘‘(5) AMOUNT OF RESERVE.—The amount of the
reserve determined under this paragraph with respect
to any contract shall be determined in the same man-
ner as it would be determined if the qualifying insur-
ance company or qualifying insurance company
branch were subject to tax under subchapter L, except
that in applying such subchapter—
‘‘(A) the interest rate determined for the
functional currency of the company or branch,
and which, except as provided by the Secretary,
is calculated in the same manner as the Federal
mid-term rate under section 1274(d), shall be
substituted for the applicable Federal interest
rate;
‘‘(B) the highest assumed interest rate per-
mitted to be used in determining foreign state-
ment reserves shall be substituted for the prevail-
ing State assumed interest rate; and
‘‘(C) tables for mortality and morbidity
which reasonably reflect the current mortality
and morbidity risks in the company’s or
branch’s home country shall be substituted for
the mortality and morbidity tables otherwise
used for such subchapter.
The Secretary may provide that the interest rate and
mortality and morbidity tables of a qualifying insur-
ance company may be used for 1 or more of its quali-
fying insurance company branches when appropriate.
‘‘(6) DEFINITIONS.—For purposes of this sub-
section, any term used in this subsection which is also
used in section 953(e) shall have the meaning given
such term by section 953.’’.
(3) RESERVES.—Section 953(b) is amended by
redesignating paragraph (3) as paragraph (4) and by
inserting after paragraph (2) the following new para-
graph:
‘‘(3) Reserves for any insurance or annuity con-
tract shall be determined in the same manner as
under section 954(i).’’.
(c) 
SPECIAL
RULES
FOR
DEALERS.—Section
954(c)(2)(C) is amended to read as follows:
‘‘(C) EXCEPTION FOR DEALERS.—Except as
provided by regulations, in the case of a regular
dealer in property which is property described in
paragraph (1)(B), forward contracts, option con-
tracts, or similar financial instruments (includ-
ing notional principal contracts and all instru-
ments referenced to commodities), there shall not
be taken into account in computing foreign per-
sonal holding company income—
‘‘(i) any item of income, gain, deduc-
tion, or loss (other than any item described
in subparagraph (A), (E), or (G) of para-
graph (1)) from any transaction (including
hedging transactions) entered into in the or-
dinary course of such dealer’s trade or busi-
ness as such a dealer; and
‘‘(ii) if such dealer is a dealer in secu-
rities (within the meaning of section 475),
any interest or dividend or equivalent
amount described in subparagraph (E) or
(G) of paragraph (1) from any transaction
(including any hedging transaction or
transaction 
described 
in 
section
956(c)(2)(J)) entered into in the ordinary
course of such dealer’s trade or business as
such a dealer in securities, but only if the
income from the transaction is attributable
to activities of the dealer in the country
under the laws of which the dealer is created
or organized (or in the case of a qualified
business unit described in section 989(a), is
attributable to activities of the unit in the
country in which the unit both maintains
its principal office and conducts substantial
business activity).’’.
(d) EXEMPTION FROM FOREIGN BASE COMPANY SERV-
ICES INCOME.—Paragraph (2) of section 954(e) is amended
by inserting ‘‘or’’ at the end of subparagraph (A), by strik-
ing ‘‘, or’’ at the end of subparagraph (B) and inserting
a period, by striking subparagraph (C), and by adding at
the end the following new flush sentence:
‘‘Paragraph (1) shall also not apply to income which
is exempt insurance income (as defined in section
953(e)) or which is not treated as foreign personal
holding income by reason of subsection (c)(2)(C)(ii),
(h), or (i).’’.
(e) EXEMPTION FOR GAIN.—Section 954(c)(1)(B)(i)
(relating to net gains from certain property transactions)
is amended by inserting ‘‘other than property which gives
rise to income not treated as foreign personal holding com-
pany income by reason of subsection (h) or (i) for the tax-
able year’’ before the comma at the end.
SEC. 106. DISCLOSURE OF RETURN INFORMATION ON IN-
COME CONTINGENT STUDENT LOANS.
Subparagraph (D) of section 6103(l)(13) (relating to
disclosure of return information to carry out income contin-
gent repayment of student loans) is amended by striking
‘‘September 30, 1998’’ and inserting ‘‘September 30, 2003’’.
Subtitle B—Generalized System of
Preferences
SEC. 111. EXTENSION OF GENERALIZED SYSTEM OF PREF-
ERENCES.
(a) EXTENSION OF DUTY-FREE TREATMENT UNDER
SYSTEM.—Section 505 of the Trade Act of 1974 (29 U.S.C.
2465) is amended by striking ‘‘June 30, 1998’’ and insert-
ing ‘‘December 31, 1999’’.
(b) RETROACTIVE APPLICATION FOR CERTAIN LIQ-
UIDATIONS AND RELIQUIDATIONS.—
(1) IN GENERAL.—Notwithstanding section 514
of the Tariff Act of 1930 or any other provision of
law, and subject to paragraph (2), any entry—
(A) of an article to which duty-free treat-
ment under title V of the Trade Act of 1974
would have applied if such title had been in ef-
fect during the period beginning on July 1,
1998, and ending on the day before the date of
the enactment of this Act; and
(B) that was made after June 30, 1998, and
before the date of the enactment of this Act,
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 sub-
section, the term ‘‘entry’’ includes a withdrawal from
warehouse for consumption.
(2) REQUESTS.—Liquidation or reliquidation
may be made under paragraph (1) with respect to an
entry only if a request therefor is filed with the Cus-
toms Service, within 180 days after the date of the en-
actment of this Act, that contains sufficient informa-
tion to enable the Customs Service—
(A) to locate the entry; or
(B) to reconstruct the entry if it cannot be
located.
TITLE II—OTHER PROVISIONS
SEC. 201. DEPRECIATION STUDY.
The Secretary of the Treasury (or the Secretary’s dele-
gate)—
(1) shall conduct a comprehensive study of the
recovery periods and depreciation methods under sec-
tion 168 of the Internal Revenue Code of 1986, and
(2) not later than March 31, 2000, shall submit
the results of such study, together with recommenda-
tions for determining such periods and methods in a
more rational manner, to the Committee on Ways
and Means of the House of Representatives and the
Committee on Finance of the Senate.
SEC. 202. PRODUCTION FLEXIBILITY CONTRACT PAYMENTS.
(a) IN GENERAL.—The options under paragraphs (2)
and (3) of section 112(d) of the Federal Agriculture Im-
provement and Reform Act of 1996 (7 U.S.C. 7212(d) (2)
and (3)), as in effect on the date of the enactment of this
Act, shall be disregarded in determining the taxable year
for which any payment under a production flexibility con-
tract under subtitle B of title I of such Act (as so in effect)
is properly includible in gross income for purposes of the
Internal Revenue Code of 1986.
(b) EFFECTIVE DATE.—Subsection (a) shall apply to
taxable years ending after December 31, 1995.
SEC. 203. 100 PERCENT DEDUCTION FOR HEALTH INSUR-
ANCE COSTS OF SELF-EMPLOYED INDIVID-
UALS.
(a) IN GENERAL.—The table contained in subpara-
graph (B) of section 162(l)(1) (relating to special rules for
health insurance costs of self-employed individuals) is
amended by striking the last 4 items and inserting the fol-
lowing new items:
‘‘2002 ..............................................................................................
2003 and thereafter ......................................................................
100.’’
(b) EFFECTIVE DATE.—The amendment made by this
section shall apply to taxable years beginning after Decem-
ber 31, 1998.
SEC. 204. INCREASE IN VOLUME CAP ON PRIVATE ACTIVITY
BONDS.
(a) IN GENERAL.—Subsection (d) of section 146 (relat-
ing to volume cap) is amended by striking paragraphs (1)
and (2) and inserting the following new paragraphs:
‘‘(1) IN GENERAL.—The State ceiling applicable
to any State for any calendar year shall be the great-
er of—
‘‘(A) an amount equal to the per capita
limit for such year multiplied by the State popu-
lation, or
‘‘(B) the aggregate limit for such year.
Subparagraph (B) shall not apply to any possession
of the United States.
‘‘(2) PER CAPITA LIMIT; AGGREGATE LIMIT.—
For purposes of paragraph (1), the per capita limit,
and the aggregate limit, for any calendar year shall
be determined in accordance with the following table:
Calendar Year
Per Capita
Limit
Aggregate
Limit
1999 through 2002 ........................................................
$50
$150,000,000
2003 ...............................................................................
165,000,000
2004 ...............................................................................
180,000,000
2005 ...............................................................................
195,000,000
2006 ...............................................................................
210,000,000
2007 and thereafter .......................................................
225,000,000.’’
(b) EFFECTIVE DATE.—The amendment made by this
section shall apply to calendar years after 1998.
SEC. 205. MODIFICATION OF ESTIMATED TAX SAFE HAR-
BORS.
(a) IN GENERAL.—The table contained in clause (i)
of section 6654(d)(1)(C) (relating to limitation on use of
preceding year’s tax) is amended by striking the item relat-
ing to 1998, 1999, or 2000 and inserting the following new
items:
‘‘1998 ..............................................................................................
105
1999 or 2000 ................................................................................
106’’.
(b) EFFECTIVE DATE.—The amendment made by this
section shall apply with respect to any installment payment
for taxable years beginning after December 31, 1999.
SEC. 206. EXEMPTION FOR STUDENTS EMPLOYED BY STATE
SCHOOLS, COLLEGES, OR UNIVERSITIES.
(a) IN GENERAL.—Notwithstanding section 218 of the
Social Security Act, any agreement with a State (or any
modification thereof) entered into pursuant to such section
may, at the option of such State, be modified at any time
on or after January 1, 1999, and on or before March 31,
1999, so as to exclude service performed in the employ of
a school, college, or university if such service is performed
by a student who is enrolled and is regularly attending
classes at such school, college, or university.
(b) EFFECTIVE DATE OF MODIFICATION.—Any modi-
fication of an agreement pursuant to subsection (a) shall
be effective with respect to services performed after June 30,
1999.
(c) IRREVOCABILITY OF MODIFICATION.—If any modi-
fication of an agreement pursuant to subsection (a) termi-
nates coverage with respect to service performed in the em-
ploy of a school, college, or university, by a student who
is enrolled and regularly attending classes at such school,
college, or university, the Commissioner of Social Security
and the State may not thereafter modify such agreement
so as to again make the agreement applicable to such service
performed in the employ of such school, college, or univer-
sity.
TITLE III—REVENUE OFFSETS
SEC. 301. TREATMENT OF CERTAIN DEDUCTIBLE LIQUIDAT-
ING DISTRIBUTIONS OF REGULATED INVEST-
MENT COMPANIES AND REAL ESTATE INVEST-
MENT TRUSTS.
(a) IN GENERAL.—Section 332 (relating to complete
liquidations of subsidiaries) is amended by adding at the
end the following new subsection:
‘‘(c) DEDUCTIBLE LIQUIDATING DISTRIBUTIONS
OF
REGULATED INVESTMENT COMPANIES AND REAL ESTATE
INVESTMENT TRUSTS.—If a corporation receives a distribu-
tion from a regulated investment company or a real estate
investment trust which is considered under subsection (b)
as being in complete liquidation of such company or trust,
then, notwithstanding any other provision of this chapter,
such corporation shall recognize and treat as a dividend
from such company or trust an amount equal to the deduc-
tion for dividends paid allowable to such company or trust
by reason of such distribution.’’.
(b) CONFORMING AMENDMENTS.—
(1) The material preceding paragraph (1) of sec-
tion 332(b) is amended by striking ‘‘subsection (a)’’
and inserting ‘‘this section’’.
(2) Paragraph (1) of section 334(b) is amended
by striking ‘‘section 332(a)’’ and inserting ‘‘section
332’’.
(c) EFFECTIVE DATE.—The amendments made by this
section shall apply to distributions after May 21, 1998.
SEC. 302. INCLUSION OF ROTAVIRUS GASTROENTERITIS AS
A TAXABLE VACCINE.
(a) IN GENERAL.—Paragraph (1) of section 4132 (de-
fining taxable vaccine) is amended by adding at the end
the following new subparagraph:
‘‘(K) 
Any 
vaccine 
against 
rotavirus
gastroenteritis.’’.
(b) EFFECTIVE DATE.—
(1) SALES.—The amendment made by this sec-
tion shall apply to sales after the date of the enact-
ment of this Act.
(2) DELIVERIES.—For purposes of paragraph
(1), in the case of sales on or before the date of the
enactment of this Act for which delivery is made after
such date, the delivery date shall be considered the
sale date.
SEC. 303. CLARIFICATION AND EXPANSION OF MATHEMATI-
CAL ERROR ASSESSMENT PROCEDURES.
(a) TIN DEEMED INCORRECT IF INFORMATION ON RE-
TURN DIFFERS WITH AGENCY RECORDS.—Paragraph (2)
of section 6213(g) (defining mathematical or clerical error)
is amended by adding at the end the following flush sen-
tence:
‘‘A taxpayer shall be treated as having omitted a cor-
rect TIN for purposes of the preceding sentence if in-
formation provided by the taxpayer on the return
with respect to the individual whose TIN was pro-
vided differs from the information the Secretary ob-
tains from the person issuing the TIN.’’.
(b) EXPANSION OF MATHEMATICAL ERROR PROCE-
DURES TO CASES WHERE TIN ESTABLISHES INDIVIDUAL
NOT ELIGIBLE FOR TAX CREDIT.—Paragraph (2) of section
6213(g) is amended by striking ‘‘and’’ at the end of sub-
paragraph (J), by striking the period at the end of the sub-
paragraph (K) and inserting ‘‘, and’’, and by inserting
after subparagraph (K) the following new subparagraph:
‘‘(L) the inclusion on a return of a TIN re-
quired to be included on the return under section
21, 24, or 32 if—
‘‘(i) such TIN is of an individual
whose age affects the amount of the credit
under such section; and
‘‘(ii) the computation of the credit on
the return reflects the treatment of such in-
dividual as being of an age different from
the individual’s age based on such TIN.’’.
(c) EFFECTIVE DATE.—The amendments made by this
section shall apply to taxable years ending after the date
of the enactment of this Act.
SEC. 304. CLARIFICATION OF DEFINITION OF SPECIFIED LI-
ABILITY LOSS.
(a) IN
GENERAL.—Subparagraph (B) of section
172(f)(1) (defining specified liability loss) is amended to
read as follows:
‘‘(B)(i) Any amount allowable as a deduc-
tion under this chapter (other than section
468(a)(1) or 468A(a)) which is in satisfaction of
a liability under a Federal or State law requir-
ing—
‘‘(I) the reclamation of land;
‘‘(II) the decommissioning of a nuclear
power plant (or any unit thereof);
‘‘(III) the dismantlement of a drilling
platform;
‘‘(IV) the remediation of environmental
contamination; or
‘‘(V) a payment under any workers
compensation act (within the meaning of
section 461(h)(2)(C)(i)).
‘‘(ii) A liability shall be taken into account
under this subparagraph only if—
‘‘(I) the act (or failure to act) giving
rise to such liability occurs at least 3 years
before the beginning of the taxable year; and
‘‘(II) the taxpayer used an accrual
method of accounting throughout the period
or periods during which such act (or failure
to act) occurred.’’.
(b) EFFECTIVE DATE.—The amendment made by this
section shall apply to net operating losses arising in taxable
years ending after the date of the enactment of this Act.
TITLE IV—TECHNICAL
CORRECTIONS
SEC. 401. DEFINITIONS; COORDINATION WITH OTHER TI-
TLES.
(a) DEFINITIONS.—For purposes of this title—
(1) 1986 CODE.—The term ‘‘1986 Code’’ means
the Internal Revenue Code of 1986.
(2) 1998 ACT.—The term ‘‘1998 Act’’ means the
Internal Revenue Service Restructuring and Reform
Act of 1998 (Public Law 105–206).
(3) 1997 ACT.—The term ‘‘1997 Act’’ means the
Taxpayer Relief Act of 1997 (Public Law 105–34).
(b) COORDINATION WITH OTHER TITLES.—For pur-
poses of applying the amendments made by any title of this
Act other than this title, the provisions of this title shall
be treated as having been enacted immediately before the
provisions of such other titles.
SEC. 402. AMENDMENTS RELATED TO INTERNAL REVENUE
SERVICE RESTRUCTURING AND REFORM ACT
OF 1998.
(a) AMENDMENT RELATED TO SECTION 1101 OF 1998
ACT.—Paragraph (5) of section 6103(h) of the 1986 Code,
as added by section 1101(b) of the 1998 Act, is redesignated
as paragraph (6).
(b) AMENDMENT RELATED TO SECTION 3001 OF 1998
ACT.—Paragraph (2) of section 7491(a) of the 1986 Code
is amended by adding at the end the following flush sen-
tence:
‘‘Subparagraph (C) shall not apply to any qualified
revocable trust (as defined in section 645(b)(1)) with
respect to liability for tax for any taxable year ending
after the date of the decedent’s death and before the
applicable date (as defined in section 645(b)(2)).’’.
(c) AMENDMENTS RELATED TO SECTION 3201 OF 1998
ACT.—
(1) Section 7421(a) of the 1986 Code is amended
by striking ‘‘6015(d)’’ and inserting ‘‘6015(e)’’.
(2) Subparagraph (A) of section 6015(e)(3) is
amended by striking ‘‘of this section’’ and inserting
‘‘of subsection (b) or (f)’’.
(d) AMENDMENT RELATED TO SECTION 3301 OF 1998
ACT.—Paragraph (2) of section 3301(c) of the 1998 Act is
amended by striking ‘‘The amendments’’ and inserting
‘‘Subject to any applicable statute of limitation not having
expired with regard to either a tax underpayment or a tax
overpayment, the amendments’’.
(e) AMENDMENT RELATED TO SECTION 3401 OF 1998
ACT.—Section 3401(c) of the 1998 Act is amended—
(1) in paragraph (1), by striking ‘‘7443(b)’’ and
inserting ‘‘7443A(b)’’; and
(2) in paragraph (2), by striking ‘‘7443(c)’’ and
inserting ‘‘7443A(c)’’.
(f) AMENDMENT RELATED TO SECTION 3433 OF 1998
ACT.—Section 7421(a) of the 1986 Code is amended by in-
serting ‘‘6331(i),’’ after ‘‘6246(b),’’.
(g) AMENDMENT RELATED TO SECTION 3467 OF 1998
ACT.—The subsection (d) of section 6159 of the 1986 Code
relating to cross reference is redesignated as subsection (e).
(h) AMENDMENT RELATED TO SECTION 3708 OF 1998
ACT.—Subparagraph (A) of section 6103(p)(3) of the 1986
Code is amended by inserting ‘‘(f)(5),’’ after ‘‘(c), (e),’’.
(i) AMENDMENTS RELATED TO SECTION 5001 OF 1998
ACT.—
(1) Subparagraph (B) of section 1(h)(13) of the
1986 Code is amended by striking ‘‘paragraph
(7)(A)’’ and inserting ‘‘paragraph (7)(A)(i)’’.
(2)(A) Subparagraphs (A)(i)(II), (A)(ii)(II), and
(B)(ii) of section 1(h)(13) of the 1986 Code shall not
apply to any distribution after December 31, 1997, by
a regulated investment company or a real estate in-
vestment trust with respect to—
(i) gains and losses recognized directly by
such company or trust, and
(ii) amounts properly taken into account by
such company or trust by reason of holding (di-
rectly or indirectly) an interest in another such
company or trust to the extent that such sub-
paragraphs did not apply to such other company
or trust with respect to such amounts.
(B) Subparagraph (A) shall not apply to any
distribution which is treated under section 852(b)(7)
or 857(b)(8) of the 1986 Code as received on December
31, 1997.
(C) For purposes of subparagraph (A), any
amount which is includible in gross income of its
shareholders 
under 
section 
852(b)(3)(D) 
or
857(b)(3)(D) of the 1986 Code after December 31,
1997, shall be treated as distributed after such date.
(D)(i) For purposes of subparagraph (A), in the
case of a qualified partnership with respect to which
a regulated investment company meets the holding re-
quirement of clause (iii)—
(I) the subparagraphs referred to in sub-
paragraph (A) shall not apply to gains and
losses recognized directly by such partnership for
purposes of determining such company’s dis-
tributive share of such gains and losses, and
(II) such company’s distributive share of
such gains and losses (as so determined) shall be
treated as recognized directly by such company.
The preceding sentence shall apply only if the quali-
fied partnership provides the company with written
documentation of such distributive share as so deter-
mined.
(ii) For purposes of clause (i), the term ‘‘quali-
fied partnership’’ means, with respect to a regulated
investment company, any partnership if—
(I) the partnership is an investment com-
pany registered under the Investment Company
Act of 1940,
(II) the regulated investment company is
permitted to invest in such partnership by rea-
son of section 12(d)(1)(E) of such Act or an ex-
emptive order of the Securities and Exchange
Commission under such section, and
(III) the regulated investment company and
the partnership have the same taxable year.
(iii) A regulated investment company meets the
holding requirement of this clause with respect to a
qualified partnership if (as of January 1, 1998)—
(I) the value of the interests of the regulated
investment company in such partnership is 35
percent or more of the value of such company’s
total assets, or
(II) the value of the interests of the regu-
lated investment company in such partnership
and all other qualified partnerships is 90 percent
or more of the value of such company’s total as-
sets.
(3) Paragraph (13) of section 1(h) of the 1986
Code is amended by adding at the end the following
new subparagraph:
‘‘(D) CHARITABLE
REMAINDER
TRUSTS.—
Subparagraphs (A) and (B)(ii) shall not apply
to any capital gain distribution made by a trust
described in section 664.’’
(j) AMENDMENT RELATED TO SECTION 7004 OF 1998
ACT.—Clause (i) of section 408A(c)(3)(C) of the 1986 Code,
as amended by section 7004 of the 1998 Act, is amended
by striking the period at the end of subclause (II) and in-
serting ‘‘, and’’.
(k) EFFECTIVE DATE.—The amendments made by this
section shall take effect as if included in the provisions of
the 1998 Act to which they relate.
SEC. 403. AMENDMENTS RELATED TO TAXPAYER RELIEF
ACT OF 1997.
(a) AMENDMENTS RELATED TO SECTION 202 OF 1997
ACT.—
(1) Paragraph (2) of section 163(h) of the 1986
Code is amended by striking ‘‘and’’ at the end of sub-
paragraph (D), by striking the period at the end of
subparagraph (E) and inserting ‘‘, and’’, and by add-
ing at the end the following new subparagraph:
‘‘(F) any interest allowable as a deduction
under section 221 (relating to interest on edu-
cational loans).’’
(2)(A) Subparagraph (C) of section 221(b)(2) of
the 1986 Code is amended—
(i) by striking ‘‘135, 137,’’ in clause (i),
(as in effect for taxable years ending on December 31, 1997)
shall not apply.
(c) AMENDMENT RELATED TO SECTION 506 OF 1997
ACT.—Section 2001(f)(2) of the 1986 Code is amended by
adding at the end the following:
‘‘For purposes of subparagraph (A), the value of an
item shall be treated as shown on a return if the item
is disclosed in the return, or in a statement attached
to the return, in a manner adequate to apprise the
Secretary of the nature of such item.’’.
(d) AMENDMENTS RELATED TO SECTION 904 OF 1997
ACT.—
(1) Paragraph (1) of section 9510(c) of the 1986
Code is amended to read as follows:
‘‘(1) IN GENERAL.—Amounts in the Vaccine In-
jury Compensation Trust Fund shall be available, as
provided in appropriation Acts, only for—
‘‘(A) the payment of compensation under
subtitle 2 of title XXI of the Public Health Serv-
ice Act (as in effect on August 5, 1997) for vac-
cine-related injury or death with respect to any
vaccine—
‘‘(i) which is administered after Sep-
tember 30, 1988, and
‘‘(ii) which is a taxable vaccine (as de-
fined in section 4132(a)(1)) at the time
compensation is paid under such subtitle 2,
or
‘‘(B) the payment of all expenses of admin-
istration (but not in excess of $9,500,000 for any
fiscal year) incurred by the Federal Government
in administering such subtitle.’’.
(2) Section 9510(b) of the 1986 Code is amended
by adding at the end the following new paragraph:
‘‘(3) LIMITATION ON TRANSFERS TO VACCINE IN-
JURY COMPENSATION TRUST FUND.—No amount may
be appropriated to the Vaccine Injury Compensation
Trust Fund on and after the date of any expenditure
from the Trust Fund which is not permitted by this
section. The determination of whether an expenditure
is so permitted shall be made without regard to—
‘‘(A) any provision of law which is not con-
tained or referenced in this title or in a revenue
Act, and
‘‘(B) whether such provision of law is a sub-
sequently enacted provision or directly or indi-
rectly seeks to waive the application of this para-
graph.’’.
(e) AMENDMENTS RELATED TO SECTION 915 OF 1997
ACT.—
(1) Section 915 of the 1997 Act is amended—
(A) in subsection (b), by inserting ‘‘or
1998’’ after ‘‘1997’’, and
(B) by amending subsection (d) to read as
follows:
‘‘(d) EFFECTIVE DATE.—This section shall apply to
taxable years ending with or within calendar year 1997.’’.
(2) Paragraph (2) of section 6404(h) of the 1986
Code is amended by inserting ‘‘Robert T. Stafford’’
before ‘‘Disaster’’.
(f) AMENDMENTS RELATED TO SECTION 1012 OF 1997
ACT.—
(1) Paragraph (2) of section 351(c) of the 1986
Code, as amended by section 6010(c) of the 1998 Act,
is amended by inserting ‘‘, or the fact that the cor-
poration whose stock was distributed issues additional
stock,’’ after ‘‘dispose of part or all of the distributed
stock’’.
(2) Clause (ii) of section 368(a)(2)(H) of the
1986 Code, as amended by section 6010(c) of the 1998
Act, is amended by inserting ‘‘, or the fact that the
corporation whose stock was distributed issues addi-
tional stock,’’ after ‘‘dispose of part or all of the dis-
tributed stock’’.
(g) PROVISION RELATED TO SECTION 1042 OF 1997
ACT.—Rules similar to the rules of section 1.1502-75(d)(5)
of the Treasury Regulations shall apply with respect to any
organization described in section 1042(b) of the 1997 Act.
(h) AMENDMENT RELATED TO SECTION 1082 OF 1997
ACT.—Subparagraph (F) of section 172(b)(1) of the 1986
Code is amended by adding at the end the following new
clause:
‘‘(iv) COORDINATION WITH PARAGRAPH
(2).—For purposes of applying paragraph
(2), an eligible loss for any taxable year
shall be treated in a manner similar to the
manner in which a specified liability loss is
treated.’’
(i) AMENDMENT RELATED TO SECTION 1084 OF 1997
ACT.—Paragraph (3) of section 264(f) of the 1986 Code is
amended by adding at the end the following flush sentence:
‘‘If the amount described in subparagraph (A) with
respect to any policy or contract does not reasonably
approximate its actual value, the amount taken into
account under subparagraph (A) shall be the greater
of the amount of the insurance company liability or
the insurance company reserve with respect to such
policy or contract (as determined for purposes of the
annual statement approved by the National Associa-
tion of Insurance Commissioners) or shall be such
other amount as is determined by the Secretary.’’
(j) AMENDMENT RELATED TO SECTION 1175 OF 1997
ACT.—Subparagraph (C) of section 954(e)(2) of the 1986
Code is amended by striking ‘‘subsection (h)(8)’’ and insert-
ing ‘‘subsection (h)(9)’’.
(k) AMENDMENT RELATED TO SECTION 1205 OF 1997
ACT.—Paragraph (2) of section 6311(d) of the 1986 Code
is amended by striking ‘‘under such contracts’’ in the last
sentence and inserting ‘‘under any such contract for the use
of credit, debit, or charge cards for the payment of taxes
imposed by subtitle A’’.
(l) EFFECTIVE DATE.—The amendments made by this
section shall take effect as if included in the provisions of
the 1997 Act to which they relate.
SEC. 404. AMENDMENTS RELATED TO TAX REFORM ACT OF
1984.
(a) IN
GENERAL.—Subparagraph (C) of section
172(d)(4) of the 1986 Code is amended to read as follows:
‘‘(C) any deduction for casualty or theft
losses allowable under paragraph (2) or (3) of
section 165(c) shall be treated as attributable to
the trade or business; and’’.
(b) CONFORMING AMENDMENTS.—
(1) Paragraph (3) of section 67(b) of the 1986
Code is amended by striking ‘‘for losses described in
subsection (c)(3) or (d) of section 165’’ and inserting
‘‘for casualty or theft losses described in paragraph
(2) or (3) of section 165(c) or for losses described in
section 165(d)’’.
(2) Paragraph (3) of section 68(c) of the 1986
Code is amended by striking ‘‘for losses described in
subsection (c)(3) or (d) of section 165’’ and inserting
‘‘for casualty or theft losses described in paragraph
(2) or (3) of section 165(c) or for losses described in
section 165(d)’’.
(3) Paragraph (1) of section 873(b) is amended
to read as follows:
‘‘(1) LOSSES.—The deduction allowed by section
165 for casualty or theft losses described in paragraph
(2) or (3) of section 165(c), but only if the loss is of
property located within the United States.’’
(c) EFFECTIVE DATES.—
(1) The amendments made by subsections (a)
and (b)(3) shall apply to taxable years beginning
after December 31, 1983.
(2) The amendment made by subsection (b)(1)
shall apply to taxable years beginning after December
31, 1986.
(3) The amendment made by subsection (b)(2)
shall apply to taxable years beginning after December
31, 1990.
SEC. 405. OTHER AMENDMENTS.
(a) AMENDMENTS RELATED TO SECTION 6103 OF 1986
CODE.—
(1) Subsection (j) of section 6103 of the 1986
Code is amended by adding at the end the following
new paragraph:
‘‘(5) DEPARTMENT OF AGRICULTURE.—Upon re-
quest in writing by the Secretary of Agriculture, the
Secretary shall furnish such returns, or return infor-
mation reflected thereon, as the Secretary may pre-
scribe by regulation to officers and employees of the
Department of Agriculture whose official duties re-
quire access to such returns or information for the
purpose of, but only to the extent necessary in, struc-
turing, preparing, and conducting the census of agri-
culture pursuant to the Census of Agriculture Act of
1997 (Public Law 105–113).’’.
(2) Paragraph (4) of section 6103(p) of the 1986
Code is amended by striking ‘‘(j)(1) or (2)’’ in the
material preceding subparagraph (A) and in sub-
paragraph (F) and inserting ‘‘(j)(1), (2), or (5)’’.
(3) The amendments made by this subsection
shall apply to requests made on or after the date of
the enactment of this Act.
(b) AMENDMENT RELATED
TO SECTION 9004 OF
TRANSPORTATION EQUITY ACT FOR THE 21ST CENTURY.—
(1) Paragraph (2) of section 9503(f) of the 1986
Code is amended to read as follows:
‘‘(2) notwithstanding section 9602(b), obligations
held by such Fund after September 30, 1998, shall be
obligations of the United States which are not inter-
est-bearing.’’
(2) The amendment made by paragraph (1) shall
take effect on October 1, 1998.
(c) CLERICAL AMENDMENTS.—
(1) Clause (i) of section 51(d)(6)(B) of the 1986
Code is amended by striking ‘‘rehabilitation plan’’
and inserting ‘‘plan for employment’’. The reference
to ‘‘plan for employment’’ in such clause shall be
treated as including a reference to the rehabilitation
plan referred to in such clause as in effect before the
amendment made by the preceding sentence.
(2) Paragraph (3) of section 56(a) of the 1986
Code is amended by striking ‘‘section 460(b)(2)’’ and