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alcohol mixture none of the alcohol in which consists
of ethanol).
‘‘(6) TERMINATION.—Paragraph (1) shall not
apply to any removal or sale after September 30,
2000.
‘‘(d) TERMINATION.—
‘‘(1) HIGHWAY TRUST FUND FINANCING RATE.—
On and after October 1, 1999, the Highway Trust
Fund financing rate under subsection (a)(2) shall not
apply.
‘‘(2) LEAKING
UNDERGROUND
STORAGE
TANK
TRUST FUND FINANCING RATE.—The Leaking Under-
ground Storage Tank Trust Fund financing rate
under subsection (a)(2) shall not apply after Decem-
ber 31, 1995.
‘‘(e) REFUNDS IN CERTAIN CASES.—Under regulations
prescribed by the Secretary, if any person who paid the tax
imposed by this section with respect to any taxable fuel es-
tablishes to the satisfaction of the Secretary that a prior
tax was paid (and not credited or refunded) with respect
to such taxable fuel, then an amount equal to the tax paid
by such person shall be allowed as a refund (without inter-
est) to such person in the same manner as if it were an
overpayment of tax imposed by this section.
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‘‘SEC. 4082. EXEMPTIONS FOR DIESEL FUEL.
‘‘(a) IN GENERAL.—Except as provided in subsection
(d), the tax imposed by section 4081 shall not apply to die-
sel fuel—
‘‘(1) which the Secretary determines is destined
for a nontaxable use, and
‘‘(2) which is indelibly dyed in accordance with
regulations which the Secretary shall prescribe.
Such regulations shall allow an individual choice of dye
color approved by the Secretary or chosen from any list of
approved dye colors that the Secretary may publish.
‘‘(b) NONTAXABLE USE.—For purposes of this section,
the term ‘nontaxable use’ means—
‘‘(1) any use which is exempt from the tax im-
posed by section 4041(a)(1) other than by reason of
the imposition of tax on any sale thereof,
‘‘(2) any use in a train, and
‘‘(3) any use described in section 6427(b)(1).
‘‘(c) REGULATIONS.—The Secretary shall prescribe
such regulations as may be necessary to carry out this sec-
tion, including regulations requiring the conspicuous label-
ing of retail diesel fuel pumps and other delivery facilities
to assure that persons are aware of which fuel is available
only for nontaxable uses.
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‘‘(d) CROSS REFERENCE.—
‘‘For tax on train, motorboat, and certain bus uses
of fuel purchased tax-free, see section 4041(a)(1).
‘‘SEC. 4083. DEFINITIONS AND SPECIAL RULE.
‘‘(a) TAXABLE FUEL.—For purposes of this subpart—
‘‘(1) IN
GENERAL.—The term ‘taxable fuel’
means—
‘‘(A) gasoline, and
‘‘(B) diesel fuel.
‘‘(2) GASOLINE.—The term ‘gasoline’ includes, to
the extent prescribed in regulations—
‘‘(A) gasoline blend stocks, and
‘‘(B) products commonly used as additives
in gasoline.
For purposes of subparagraph (A), the term ‘gasoline
blend stock’ means any petroleum product component
of gasoline.
‘‘(3) DIESEL
FUEL.—The term ‘diesel fuel’
means any liquid (other than gasoline) which is suit-
able for use as a fuel in a diesel-powered highway ve-
hicle, a diesel-powered train, or a diesel-powered boat.
‘‘(b) CERTAIN USES DEFINED AS REMOVAL.—If any
person uses taxable fuel (other than in the production of
gasoline, diesel fuel, or special fuels referred to in section
4041), such use shall for the purposes of this chapter be con-
sidered a removal.
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‘‘SEC. 4084. CROSS REFERENCES.
‘‘(1) For provisions to relieve farmers from excise
tax in the case of gasoline used on the farm for farm-
ing purposes, see section 6420.
‘‘(2) For provisions to relieve purchasers of gaso-
line from excise tax in the case of gasoline used for
certain nonhighway purposes, used by local transit
systems, or sold for certain exempt purposes, see sec-
tion 6421.
‘‘(3) For provisions to relieve purchasers from ex-
cise tax in the case of taxable fuel not used for tax-
able purposes, see section 6427.
‘‘Subpart B—Aviation Fuel
‘‘Sec. 4091. Imposition of tax.
‘‘Sec. 4092. Exemptions.
‘‘Sec. 4093. Definitions.
‘‘SEC. 4091. IMPOSITION OF TAX.
‘‘(a) TAX ON SALE.—
‘‘(1) IN GENERAL.—There is hereby imposed a
tax on the sale of aviation fuel by the producer or the
importer thereof or by any producer of aviation fuel.
‘‘(2) USE TREATED AS SALE.—For purposes of
paragraph (1), if any producer uses aviation fuel
(other than for a nontaxable use as defined in section
6427(l)(2)(B)) on which no tax has been imposed
under such paragraph, then such use shall be consid-
ered a sale.
‘‘(b) RATE OF TAX.—
‘‘(1) IN GENERAL.—The rate of the tax imposed
by subsection (a) shall be the sum of—
‘‘(A) the Airport and Airway Trust Fund
financing rate,
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‘‘(B) the Leaking Underground Storage
Tank Trust Fund financing rate.
‘‘(2) AIRPORT AND AIRWAY TRUST FUND FINANC-
ING RATE.—For purposes of paragraph (1), the Air-
port and Airway Trust Fund financing rate is 17.5
cents per gallon.
‘‘(3) LEAKING
UNDERGROUND
STORAGE
TANK
TRUST
FUND
FINANCING
RATE.—For purposes of
paragraph (1), the Leaking Underground Storage
Tank Trust Fund financing rate is 0.1 cent per
gallon.
‘‘(4) DEFICIT REDUCTION RATE.—For purposes
of paragraph (1), the deficit reduction rate is 4.3
cents per gallon.
‘‘(5) TERMINATION OF RATES.—
‘‘(A) The Airport and Airway Trust Fund
financing rate shall not apply on and after Jan-
uary 1, 1996.
‘‘(B) The Leaking Underground Storage
Tank Fund financing rate shall not apply dur-
ing any period during which the Leaking Under-
ground Storage Tank Trust Fund financing rate
under section 4081 does not apply.
‘‘(c) REDUCED RATE OF TAX FOR AVIATION FUEL IN
ALCOHOL MIXTURE, ETC.—
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‘‘(1) IN
GENERAL.—The Airport and Airway
Trust Fund financing rate shall be—
‘‘(A) 4.1 cents per gallon in the case of the
sale of any mixture of aviation fuel if—
‘‘(i) at least 10 percent of such mixture
consists of alcohol (as defined in section
4081(c)(3)), and
‘‘(ii) the aviation fuel in such mixture
was not taxed under subparagraph (B), and
‘‘(B) 4.56 cents per gallon in the case of the
sale of aviation fuel for use (at the time of such
sale) in producing a mixture described in sub-
paragraph (A).
In the case of a sale described in subparagraph (B),
the Leaking Underground Storage Tank Trust Fund
financing rate shall be 1⁄9 cent per gallon and the def-
icit reduction rate shall be 10⁄9 of such rate.
‘‘(2) LATER SEPARATION.—If any person sepa-
rates the aviation fuel from a mixture of the aviation
fuel and alcohol on which tax was imposed under sub-
section (a) at the Airport and Airway Trust Fund fi-
nancing rate equivalent to 4.1 cents per gallon by
reason of this subsection (or with respect to which a
credit or payment was allowed or made by reason of
section 6427(f)(1)), such person shall be treated as the
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producer of such aviation fuel. The amount of tax im-
posed on any sale of such aviation fuel by such person
shall be reduced by the amount of tax imposed (and
not credited or refunded) on any prior sale of such
fuel.
‘‘(3) TERMINATION.—Paragraph (1) shall not
apply to any sale after September 30, 2000.
‘‘(d) LOWER RATES OF TAX ON ALCOHOL MIXTURES
NOT MADE FROM ETHANOL.—In the case of a mixture de-
scribed in subsection (c)(1)(A)(i) none of the alcohol in
which is ethanol—
‘‘(1) subsections (c)(1)(A) and (c)(2) shall each
be applied by substituting rates which are 0.6 cents
less than the rates contained therein, and
‘‘(2) subsection (c)(1)(B) shall be applied by sub-
stituting rates which are 10⁄9 of the rates determined
under paragraph (1).
‘‘SEC. 4092. EXEMPTIONS.
‘‘(a) NONTAXABLE USES.—The Airport and Airway
Trust Fund financing rate under section 4091 shall not
apply to aviation fuel sold by a producer or importer for
use by the purchaser in a nontaxable use (as defined in
section 6427(l)(2)(B)).
‘‘(b) SALES TO PRODUCER.—Under regulations pre-
scribed by the Secretary, the tax imposed by section 4091
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shall not apply to aviation fuel sold to a producer of such
fuel.
‘‘(c) SUPPLIES FOR VESSELS AND AIRCRAFT.—The
Leaking Underground Storage Tank Trust Fund financing
rate and the deficit reduction rate under section 4091 shall
not apply to aviation fuel sold for use or used as supplies
for vessels or aircraft (within the meaning of section
4221(d)(3)).
‘‘SEC. 4093. DEFINITIONS.
‘‘(a) AVIATION FUEL.—For purposes of this subpart,
the term ‘aviation fuel’ means any liquid (other than any
product taxable under section 4081) which is suitable for
use as a fuel in an aircraft.
‘‘(b) PRODUCER.—For purposes of this subpart—
‘‘(1) CERTAIN PERSONS TREATED AS PRODUC-
ERS.—
‘‘(A) IN GENERAL.—The term ‘producer’ in-
cludes any person described in subparagraph (B)
and registered under section 4101 with respect to
the tax imposed by section 4091.
‘‘(B) PERSONS
DESCRIBED.—A person is
described in this subparagraph if such person
is—
‘‘(i) a refiner, blender, or wholesale dis-
tributor of aviation fuel, or
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‘‘(ii) a dealer selling aviation fuel ex-
clusively to producers of aviation fuel.
‘‘(C) REDUCED RATE PURCHASERS TREAT-
ED AS PRODUCERS.—Any person to whom avia-
tion fuel is sold at a reduced rate under this sub-
part shall be treated as the producer of such fuel.
‘‘(2) WHOLESALE DISTRIBUTOR.—For purposes
of paragraph (1), the term ‘wholesale distributor’ in-
cludes any person who sells aviation fuel to producers,
retailers, or to users who purchase in bulk quantities
and deliver into bulk storage tanks. Such term does
not include any person who (excluding the term
‘wholesale distributor’ from paragraph (1)) is a pro-
ducer or importer.’’
(b) CIVIL PENALTY FOR USING REDUCED-RATE FUEL
FOR TAXABLE USE.—
(1) IN
GENERAL.—Part I of subchapter B of
chapter 68 (relating to assessable penalties) is amend-
ed by adding at the end thereof the following new sec-
tion:
‘‘SEC. 6714. DYED FUEL SOLD FOR USE OR USED IN TAX-
ABLE USE.
‘‘(a) IMPOSITION OF PENALTY.—If any dyed fuel—
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‘‘(1) is sold or held for sale by any person for
any use which such person knows or has reason to
know is not a reduced-tax use of such fuel, or
‘‘(2) is used by any person for a use other than
a reduced-tax use and such person knew, or had rea-
son to know, that such fuel was so dyed,
then, in addition to the tax, such person shall pay a penalty
on such sale or use.
‘‘(b) AMOUNT OF PENALTY.—The amount of the pen-
alty under subsection (a) on any sale or use shall be the
greater of—
‘‘(1) $1,000, or
‘‘(2) an amount equal to twice the excess of the
aggregate taxes which should have been imposed
under section 4081 on the fuel so sold or used over the
prior taxes (if any) imposed on such fuel under such
section which have not been credited or refunded.
‘‘(c) DEFINITIONS.—For purposes of this section—
‘‘(1) DYED FUEL.—The term ‘dyed fuel’ means
diesel fuel dyed in accordance with section 4082.
‘‘(2) REDUCED-TAX USE.—The term ‘reduced-tax
use’ means, with respect to any fuel, the use for which
such fuel was dyed.’’
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(2) CLERICAL AMENDMENT.—The table of sec-
tions for such part I is amended by adding at the end
thereof the following new item:
‘‘Sec. 6714. Dyed fuel sold for use or used in taxable use.’’
(c) REGISTERED VENDORS TO ADMINISTER CLAIMS
FOR REFUND OF DIESEL FUEL.—Section 6427(l) (relating
to nontaxable uses of diesel fuel and aviation fuel) is
amended by adding at the end the following new paragraph:
‘‘(5) REGISTERED
VENDORS
TO
ADMINISTER
CLAIMS
FOR
REFUND
OF
DIESEL
FUEL
SOLD
TO
FARMERS AND STATE AND LOCAL GOVERNMENTS.—
‘‘(A) IN
GENERAL.—Paragraph (1) shall
not apply to the ultimate purchaser of undyed
diesel fuel used on a farm for farming purposes
(within the meaning of section 6420(c)) or for
the exclusive use of a State or local government.
‘‘(B) PAYMENT TO ULTIMATE, REGISTERED
VENDOR.—The amount which would have other-
wise been paid under paragraph (1) (without re-
gard to subparagraph (A)) shall be paid to the
ultimate vendor of such fuel, if such vendor—
‘‘(i) is registered under section 4101,
and
‘‘(ii) meets the requirements of section
6416(a).’’
(d) TECHNICAL AND CONFORMING AMENDMENTS.—
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(1) Subsection (c) of section 40 is amended by
striking ‘‘, section 4081(c), or section 4091(c)’’ and
inserting ‘‘or section 4081(c)’’.
(2) Subsection (a) of section 4101 is amended by
striking ‘‘4081’’ and inserting ‘‘4041(a)(1), 4081,’’.
(3) Section 4102 is amended by striking ‘‘gaso-
line’’ and inserting ‘‘any taxable fuel (as defined in
section 4083)’’.
(4) Paragraph (1) of section 4041(a), as amend-
ed by subtitle A, is amended to read as follows:
‘‘(1) TAX ON DIESEL FUEL IN CERTAIN CASES.—
‘‘(A) IN
GENERAL.—There is hereby im-
posed a tax on any liquid other than gasoline (as
defined in section 4083)—
‘‘(i) sold by any person to an owner,
lessee, or other operator of a diesel-powered
highway vehicle, a diesel-powered train, or
a diesel-powered boat for use as a fuel in
such vehicle, train, or boat, or
‘‘(ii) used by any person as a fuel in
a diesel-powered highway vehicle, a diesel-
powered train, or a diesel-powered boat un-
less there was a taxable sale of such fuel
under clause (i).
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‘‘(B) EXEMPTION FOR PREVIOUSLY TAXED
FUEL.—No tax shall be imposed by this para-
graph on the sale or use of diesel fuel if there was
a taxable removal of such fuel under section 4081
and the tax thereon was not credited or refunded.
‘‘(C) RATE OF TAX.—
‘‘(i) IN GENERAL.—Except as otherwise
provided in this subparagraph, the rate of
the tax imposed by this paragraph shall be
the sum of the Highway Trust Fund financ-
ing rate on diesel fuel and the deficit reduc-
tion rate in effect under section 4081 at the
time of such sale or use.
‘‘(ii) CERTAIN RATES NOT TO APPLY TO
TRAINS.—
‘‘(I) HIGHWAY
TRUST
FUND
FI-
NANCING RATE.—The Highway Trust
Fund financing rate shall not apply to
any sale for use, or use, of fuel in a
train.
‘‘(II) 
DEFICIT
REDUCTION
RATE.—The deficit reduction rate shall
not apply to any sale for use, or use,
of fuel in a train if such fuel is used
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by a State or any political subdivision
thereof
‘‘(iii) CERTAIN BUS USES.—If the lim-
itation in section 6427(b)(2)(A) applies to
fuel sold for use or used in an automobile
bus, the Highway Trust Fund financing
rate shall be 3 cents per gallon and so much
of the deficit reduction rate as exceeds 4.3
cents per gallon shall not apply.’’
(5) Paragraph (2) of section 4041(a), as amend-
ed by subtitle A, is amended by striking ‘‘or para-
graph (1) of this subsection’’ and by inserting ‘‘on
gasoline’’ after ‘‘Highway Trust Fund financing
rate’’.
(6) Paragraph (1) of section 4041(c), as amend-
ed by subpart A, is amended by striking ‘‘the aviation
fuel deficit reduction rate’’ and inserting ‘‘the deficit
reduction rate imposed under section 4091 on’’.
(7) Paragraph (2) of section 4041(c) is amended
by striking ‘‘any product taxable under section 4081’’
and inserting ‘‘gasoline (as defined in section 4083)’’.
(8) Paragraph (2) of section 4041(d) is amend-
ed—
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(A) by striking ‘‘(other than a product tax-
able under section 4081)’’ and inserting ‘‘(other
than gasoline (as defined in section 4083))’’, and
(B) by striking ‘‘section 4091’’ and insert-
ing ‘‘section 4081’’.
(9) Paragraph (3) of section 4041(d) is amended
by striking ‘‘(other than any product taxable under
section 4081)’’ and inserting ‘‘(other than gasoline (as
defined in section 4083))’’.
(10) Subparagraph (A) of section 4041(k)(1) is
amended by striking ‘‘sections 4081(c) and 4091(c),
as the case may be’’ and inserting ‘‘section 4081(c)’’.
(11) Subparagraph (B) of section 4041(m)(1) is
amended by striking ‘‘section 4091(d)(1)’’ and insert-
ing ‘‘section 4091(c)(1)’’.
(12) Section 6206 is amended by striking ‘‘4041
or 4091’’ and inserting ‘‘4041, 4081, or 4091’’.
(13) The heading for subsection (f) of section
6302 is amended by inserting ‘‘AND DIESEL FUEL’’
after ‘‘GASOLINE’’.
(14) Paragraph (1) of section 6412(a) is amend-
ed by striking ‘‘gasoline’’ each place it appears (in-
cluding the heading) and inserting ‘‘taxable fuel’’.
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(15)(A) Subparagraph (A) of section 6416(a)(4)
is amended by striking ‘‘product’’ each place it ap-
pears and inserting ‘‘gasoline’’.
(B) Subparagraph (B) of section 6416(a)(4) is
amended by striking all that follows ‘‘substituting’’
and inserting ‘‘ ‘any gasoline taxable under section
4081’ for ‘aviation fuel’ therein).’’
(16) The third sentence of section 6416(b)(2) is
amended by inserting ‘‘any tax imposed under section
4081 on diesel fuel and’’ after ‘‘in the case of’’.
(17) Sections 6420(c)(5) and 6421(e)(1) are each
amended by striking ‘‘section 4082(b)’’ and inserting
‘‘section 4083(a)’’.
(18) Section 6421(e)(2)(B)(iv), as added in sub-
title A, is amended
(A) by striking ‘‘4091’’ both places it ap-
pears and inserting ‘‘4081’’, and
(B) by striking ‘‘diesel fuel deficit’’ in
subclause (I) and inserting ‘‘deficit’’.
(19) Subsection (b) of section 6427 is amended—
(A) by striking ‘‘if any fuel’’ in paragraph
(1) and inserting ‘‘if any fuel other than gaso-
line (as defined in section 4083(a))’’, and
(B) by striking ‘‘4091’’ each place it ap-
pears and inserting ‘‘4081’’.
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(20)(A) Paragraph (1) of section 6427(f) is
amended 
by 
striking 
‘‘, 
4091(c)(1)(A), 
or
4091(d)(1)(A)’’ and inserting ‘‘or 4091(c)(1)(A)’’.
(B) Paragraph (2) of section 6427(f) is amended
to read as follows:
‘‘(2) DEFINITIONS.—For purposes of paragraph
(1)—
‘‘(A) REGULAR TAX RATE.—The term ‘regu-
lar tax rate’ means—
‘‘(i) in the case of gasoline or diesel
fuel, the aggregate rate of tax imposed by
section 4081 determined without regard to
subsection (c) thereof, and
‘‘(ii) in the case of aviation fuel, the
aggregate rate of tax imposed by section
4091 determined without regard to sub-
section (c) thereof.
‘‘(B) INCENTIVE TAX RATE.—The term ‘in-
centive tax rate’ means—
‘‘(i) in the case of gasoline or diesel
fuel, the aggregate rate of tax imposed by
section 4081 with respect to fuel described
in subsection (c)(1) thereof, and
‘‘(ii) in the case of aviation fuel, the
aggregate rate of tax imposed by section
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4091 with respect to fuel described in sub-
section (c)(1)(B) thereof.’’
(21) Subsection (h) of section 6427 is amended
by striking ‘‘section 4082(b)’’ and inserting ‘‘section
4083(a)(2)’’.
(22) Paragraph (3) of section 6427(i) is amend-
ed—
(A) by striking ‘‘GASOHOL’’ in the heading
and inserting ‘‘ALCOHOL MIXTURE’’, and
(B) by striking ‘‘gasoline used to produce
gasohol (as defined in section 4081(c)(1))’’ in
subparagraph (A) and inserting ‘‘gasoline or die-
sel fuel used to produce a qualified alcohol mix-
ture (as defined in section 4081(c)(3))’’.
(23) The heading of paragraph (4) of section
6427(i) is amended by inserting ‘‘4081 OR’’ before
‘‘4091’’.
(24) Subsection (l) of section 6427, as amended
by subpart A, is amended to read as follows:
‘‘(l) NONTAXABLE USES OF DIESEL FUEL AND AVIA-
TION FUEL.—
‘‘(1) IN GENERAL.—Except as provided in sub-
section (k) and in paragraphs (3) and (4) of this sub-
section, if—
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‘‘(A) any diesel fuel on which tax has been
imposed by section 4081, or
‘‘(B) any aviation fuel on which tax has
been imposed by section 4091,
is used by any person in a nontaxable use, the Sec-
retary shall pay (without interest) to the ultimate
purchaser of such fuel an amount equal to the aggre-
gate amount of tax imposed on such fuel under sec-
tion 4081 or 4091, as the case may be.
‘‘(2) NONTAXABLE USE.—For purposes of this
subsection, the term ‘nontaxable use’ means—
‘‘(A) in the case of diesel fuel, any use
which is exempt from the tax imposed by section
4041(a)(1) other than by reason of the imposi-
tion of tax on any sale thereof, and
‘‘(B) in the case of aviation fuel, any use
which is exempt from the tax imposed by section
4041(c)(1) other than by reason of the imposition
of tax on any sale thereof.
‘‘(3) NO REFUND OF CERTAIN TAXES ON FUEL
USED IN DIESEL-POWERED TRAINS.—Fuel used in a
diesel-powered train shall be treated as a nontaxable
use for purposes of this section, except that paragraph
(1) shall not apply to so much of the tax imposed by
section 4081 as is attributable to the Leaking Under-
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ground Storage Tank Trust Fund financing rate and
the deficit reduction rate imposed by such section, un-
less such fuel was used by a State or any political
subdivision thereof.
‘‘(4) NO REFUND OF CERTAIN TAXES ON FUELS
USED IN AIRCRAFT.—In the case of fuel used in any
aircraft (other than as supplies for vessels or aircraft,
within the meaning of section 4221(d)(3)), paragraph
(1) also shall not apply to so much of the tax imposed
by section 4091 as is attributable to the Leaking Un-
derground Storage Tank Trust Fund financing rate
and the deficit reduction rate imposed by such sec-
tion. The preceding sentence shall not apply if such
fuel was used by a State or any political subdivision
thereof.’’
(25) Paragraph (1) of section 9503(b) is amend-
ed—
(A) by striking ‘‘gasoline),’’ in subpara-
graph (E) and inserting ‘‘gasoline and diesel
fuel), and’’,
(B) by striking subparagraph (F), and
(C) by redesignating subparagraph (G) as
subparagraph (F).
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(26)(A) Subparagraph (B) of section 9503(b)(4)
is amended by striking ‘‘, 4081, and 4091’’ and in-
serting ‘‘and 4081’’.
(B) Subparagraph (C) of section 9503(b)(4), as
amended by subtitle A, is amended by striking
‘‘4091’’ and inserting ‘‘4081’’.
(27) Subparagraph (D) of section 9503(c)(6) is
amended by striking ‘‘, 4081, and 4091’’ and insert-
ing ‘‘and 4081’’.
(28) Paragraph (2) of section 9503(e) is amend-
ed—
(A) by striking ‘‘, 4081, and 4091’’ and in-
serting ‘‘and 4081’’, and
(B) by striking ‘‘, 4081, or 4091’’ and in-
serting ‘‘or 4081’’.
(29) Subsection (b) of section 9508 is amended—
(A) by inserting ‘‘and diesel fuel’’ after
‘‘gasoline’’ in paragraph (2),
(B) by striking ‘‘diesel fuel and’’ in para-
graph (3), and
(C) by striking ‘‘4091’’ in the last sentence,
as added by subtitle A, and inserting ‘‘4081’’.
(30) The table of subparts for part III of sub-
chapter A of chapter 32 is amended by striking the
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items relating to subparts A and B and inserting the
following new items:
‘‘Subpart A. Gasoline and diesel fuel.
‘‘Subpart B. Aviation fuel.’’
(e) EFFECTIVE DATE.—The amendments made by this
section shall take effect on January 1, 1994.
SEC. 8243. FLOOR STOCKS TAX.
(a) IN GENERAL.—There is hereby imposed a floor
stocks tax on diesel fuel held by any person on January
1, 1994, if—
(1) no tax was imposed on such fuel under sec-
tion 4041(a) or 4091 of the Internal Revenue Code of
1986 as in effect on the day before the date of the en-
actment of this Act, and
(2) tax would have been imposed by section 4081
of such Code, as amended by this Act, on any prior
removal, entry, or sale of such fuel had such section
4081 applied to such fuel for periods before such date
of enactment.
(b) RATE OF TAX.—The rate of the tax imposed by
subsection (a) shall be the amount of tax which would be
imposed under section 4081 of the Internal Revenue Code
of 1986 if there were a taxable sale of such fuel on such
date.
(c) LIABILITY AND PAYMENT OF TAX.—
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(1) LIABILITY FOR TAX.—A person holding the
diesel fuel on January 1, 1994, to which the tax im-
posed by this section applies shall be liable for such
tax.
(2) METHOD OF PAYMENT.—The tax imposed by
this section shall be paid in such manner as the Sec-
retary shall prescribe.
(3) TIME FOR PAYMENT.—The tax imposed by
this section shall be paid on or before July 31, 1994.
(d) DEFINITIONS.—For purposes of this section—
(1) DIESEL FUEL.—The term ‘‘diesel fuel’’ has
the meaning given such term by section 4083(a) of
such Code.
(2) SECRETARY.—The term ‘‘Secretary’’ means
the Secretary of the Treasury or his delegate.
(e) EXCEPTIONS.—
(1) PERSONS
ENTITLED
TO
CREDIT
OR
RE-
FUND.—The tax imposed by this section shall not
apply to fuel held by any person exclusively for any
use to the extent a credit or refund of the tax imposed
by section 4081 is allowable for such use.
(2) COMPLIANCE
WITH
DYEING
REQUIRED.—
Paragraph (1) shall not apply to the holder of any
fuel if the holder of such fuel fails to comply with any
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requirement imposed by the Secretary with respect to
dyeing.
(f) OTHER LAWS APPLICABLE.—All provisions of law,
including penalties, applicable with respect to the taxes im-
posed by section 4081 of such Code shall, insofar as applica-
ble and not inconsistent with the provisions of this section,
apply with respect to the floor stock taxes imposed by this
section to the same extent as if such taxes were imposed
by such section 4081.
Subpart C—Extension of Motor Fuel Tax Rates;
Increased Deposits Into Highway Trust Fund
SEC. 8244. EXTENSION OF MOTOR FUEL TAX RATES; IN-
CREASED DEPOSITS INTO HIGHWAY TRUST
FUND.
(a) IN GENERAL.—Clause (i) of section 4081(a)(2)(B),
as amended by subpart B, is amended—
(1) by striking ‘‘11.5 cents’’ and inserting ‘‘14
cents’’, and
(2) by striking ‘‘17.5 cents’’ and inserting ‘‘20
cents’’.
(b) CONFORMING AMENDMENTS.—
(1) Subparagraph (A) of section 4081(c)(4), as
so amended, is amended to read as follows:
‘‘(A) IN GENERAL.—In the case of the High-
way Trust Fund financing rate, the otherwise
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applicable rate for gasoline in a qualified alcohol
mixture is—
‘‘(i) 8.6 cents a gallon for 10 percent
gasohol,
‘‘(ii) 9.842 cents a gallon for 7.7 per-
cent gasohol, and
‘‘(iii) 10.922 cents a gallon for 5.7 per-
cent gasohol.
In the case of a mixture none of the alcohol in which
consists of ethanol, clauses (i), (ii), and (iii) shall be
applied by substituting ‘8.0 cents’ for ‘8.6 cents’, ‘9.38
cents’ for ‘9.842 cents’, and ‘10.58 cents’ for ‘10.922’.’’
(2) Paragraph (5) of section 4081(c), as so
amended, is amended—
(A) by striking ‘‘12.1 cents’’ and inserting
‘‘14.6 cents’’, and
(B) by striking ‘‘11.5 cents’’ and inserting
‘‘14.0’’.
(3) Subparagraph (A) of section 4041(m)(1), as
amended by subpart A, is amended to read as follows:
‘‘(A) under subsection (a)(2) the Highway
Trust Fund financing shall be 7 cents per gallon
and the deficit reduction rate shall be 4.3 cents
per gallon, and’’.
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(4) Clause (ii) of section 4041(a)(1)(C), as so
amended, is amended—
(A) by striking ‘‘The Highway Trust Fund
financing rate’’ and inserting ‘‘So much of the
Highway Trust Fund financing rate as exceeds
2.5 cents per gallon’’, and
(B) by striking ‘‘HIGHWAY RATE’’ in the
heading and inserting ‘‘PORTION OF HIGHWAY
RATE’’.
(5) Paragraph (4) of section 6427(l), as amended
by subpart B, is amended—
(A) by inserting ‘‘2.5 cents per gallon of the
Highway Trust Fund financing rate and’’ after
‘‘attributable to’’, and
(B) by striking ‘‘DEFICIT REDUCTION TAX’’
in the heading and inserting ‘‘PORTION OF TAX’’.
(6) Subsection (b) of section 9503 is amended by
adding at the end thereof the following new para-
graph:
‘‘(6) RETENTION OF CERTAIN TAXES IN GENERAL
FUND.—
‘‘(A) IN
GENERAL.—There shall not be
taken into account under paragraphs (1) and
(2)—
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‘‘(i) the tax imposed by section 4081
on diesel fuel used in any train, and
‘‘(ii) so much of the nonhighway rec-
reational fuel taxes (as defined in subsection
(c)(6)(D)) as are attributable to 2.5 cents of
the Highway Trust Fund financing rate.
‘‘(B) TRANSFERS
FROM
HIGHWAY
TRUST
FUND.—For purposes of determining the amount
paid from the Highway Trust Fund under sub-
section (c)(6), the Highway Trust Fund financ-
ing rate shall be treated as being 2.5 cents less
than the otherwise applicable rate.’’
(c) INCREASE IN DEPOSITS IN MASS TRANSIT AC-
COUNT.—Paragraph (2) of section 9503(e) is amended by
striking ‘‘1.5 cents’’ and inserting ‘‘2 cents’’.
(d) EFFECTIVE DATE.—The amendments made by this
section shall take effect October 1, 1995, but the amendment
made by subsection (c) shall apply only to amounts attrib-
utable to taxes imposed on or after such date.
PART V—COMPLIANCE PROVISIONS
SEC. 8251. MODIFICATIONS TO SUBSTANTIAL UNDERSTATE-
MENT AND RETURN-PREPARER PENALTIES.
(a) REASONABLE BASIS REQUIRED.—
(1) SUBSTANTIAL UNDERSTATEMENT PENALTY.—
Clause (ii) of section 6662(d)(2)(B) (relating to re-
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duction for understatement due to position of tax-
payer or disclosed item) is amended to read as fol-
lows:
‘‘(ii) any item if—
‘‘(I) the relevant facts affecting the
item’s tax treatment are adequately
disclosed in the return or in a state-
ment attached to the return, and
‘‘(II) there is a reasonable basis
for the tax treatment of such item by
the taxpayer.’’
(b) EFFECTIVE DATE.—The amendments made by this
section shall apply to returns the due dates for which (deter-
mined without regard to extensions) are after December 31,
1993.
SEC. 8252. RETURNS RELATING TO THE CANCELLATION OF
INDEBTEDNESS BY CERTAIN FINANCIAL EN-
TITIES.
(a) IN GENERAL.—Subpart B of part III of subchapter
A of chapter 61 (relating to information concerning trans-
actions with other persons) is amended by adding at the
end thereof the following new section:
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‘‘SEC. 6050P. RETURNS RELATING TO THE CANCELLATION
OF INDEBTEDNESS BY CERTAIN FINANCIAL
ENTITIES.
‘‘(a) IN GENERAL.—Any applicable financial entity
which discharges (in whole or in part) the indebtedness of
any person during any calendar year shall make a return
(at such time and in such form as the Secretary may by
regulations prescribe) setting forth—
‘‘(1) the name, address, and TIN of each person
whose indebtedness was discharged during such cal-
endar year,
‘‘(2) the date of the discharge and the amount of
the indebtedness discharged, and
‘‘(3) such other information as the Secretary
may prescribe.
‘‘(b) EXCEPTION.—Subsection (a) shall not apply to
any discharge of less than $600.
‘‘(c) DEFINITIONS AND SPECIAL RULES.—For pur-
poses of this section—
‘‘(1) APPLICABLE FINANCIAL ENTITY.—The term
‘applicable financial entity’ means—
‘‘(A) any financial institution described in
section 581 or 591(a) and any credit union,
‘‘(B) the Federal Deposit Insurance Cor-
poration, the Resolution Trust Corporation, the
National Credit Union Administration, and any
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other Federal executive agency (as defined in sec-
tion 6050M), and any successor or subunit of
any of the foregoing, and
‘‘(C) any other corporation which is a di-
rect or indirect subsidiary of an entity referred
to in subparagraph (A) but only if, by virtue of
being affiliated with such entity, such other cor-
poration is subject to supervision and examina-
tion by a Federal or State agency which regu-
lates entities referred to in subparagraph (A).
‘‘(2) GOVERNMENTAL UNITS.—In the case of an
entity described in paragraph (1)(B), any return
under this section shall be made by the officer or em-
ployee appropriately designated for the purpose of
making such return.
‘‘(d) STATEMENTS TO BE FURNISHED TO PERSONS
WITH RESPECT TO WHOM INFORMATION IS REQUIRED TO
BE FURNISHED.—Every applicable financial entity re-
quired to make a return under subsection (a) shall furnish
to each person whose name is required to be set forth in
such return a written statement showing—
‘‘(1) the name and address of the entity required
to make such return, and
‘‘(2) the information required to be shown on the
return with respect to such person.
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The written statement required under the preceding sen-
tence shall be furnished to the person on or before January
31 of the year following the calendar year for which the
return under subsection (a) was made.’’
(b) PENALTIES.—
(1) RETURNS.—Subparagraph (B) of section
6724(d)(1) is amended by redesignating clauses (viii)
through (xv) as clauses (ix) through (xvi), respec-
tively, and by inserting after clause (vii) the following
new clause:
‘‘(viii) section 6050P (relating to re-
turns relating to the cancellation of indebt-
edness by certain financial entities),’’.
(2) STATEMENTS.—Paragraph (2) of section
6724(d) is amended by redesignating subparagraphs
(P) through (S) as subparagraphs (Q) through (T),
respectively, and by inserting after subparagraph (O)
the following new subparagraph:
‘‘(P) section 6050P(d) (relating to returns
relating to the cancellation of indebtedness by
certain financial entities),’’.
(c) CLERICAL AMENDMENT.—The table of sections for
subpart B of part III of subchapter A of chapter 61 is
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amended by adding at the end thereof the following new
item:
‘‘Sec. 6050P. Returns relating to the cancellation of indebtedness by
certain financial entities.’’
(d) EFFECTIVE DATE.—The amendments made by this
section shall apply to discharges of indebtedness after the
date of the enactment of this Act.
PART VI—TREATMENT OF INTANGIBLES
SEC. 8261. AMORTIZATION OF GOODWILL AND CERTAIN
OTHER INTANGIBLES.
(a) GENERAL RULE.—Part VI of subchapter B of
chapter 1 (relating to itemized deductions for individuals
and corporations) is amended by adding at the end thereof
the following new section:
‘‘SEC. 197. AMORTIZATION OF GOODWILL AND CERTAIN
OTHER INTANGIBLES.
‘‘(a) GENERAL RULE.—A taxpayer shall be entitled to
an amortization deduction with respect to any amortizable
section 197 intangible. The amount of such deduction shall
be determined by amortizing 75 percent of the adjusted
basis (for purposes of determining gain) of such intangible
ratably over the 14-year period beginning with the month
in which such intangible was acquired.
‘‘(b) NO OTHER DEPRECIATION OR AMORTIZATION
DEDUCTION ALLOWABLE.—Except as provided in sub-
section (a), no depreciation or amortization deduction shall
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be allowable with respect to any amortizable section 197
intangible.
‘‘(c) AMORTIZABLE SECTION 197 INTANGIBLE.—For
purposes of this section—
‘‘(1) IN GENERAL.—Except as otherwise provided
in this section, the term ‘amortizable section 197 in-
tangible’ means any section 197 intangible—
‘‘(A) which is acquired by the taxpayer
after the date of the enactment of this section,
and
‘‘(B) which is held in connection with the
conduct of a trade or business or an activity de-
scribed in section 212.
‘‘(2) EXCLUSION
OF
SELF-CREATED
INTANGI-
BLES, ETC.—The term ‘amortizable section 197 intan-
gible’ shall not include any section 197 intangible—
‘‘(A) which is not described in subpara-
graph (D), (E), or (F) of subsection (d)(1), and
‘‘(B) which is created by the taxpayer.
This paragraph shall not apply if the intangible is
created in connection with a transaction (or series of
related transactions) involving the acquisition of as-
sets constituting a trade or business or substantial
portion thereof.
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‘‘(3) ANTI-CHURNING RULES.—
‘‘For exclusion of intangibles acquired in certain
transactions, see subsection (f)(9).
‘‘(d) SECTION 197 INTANGIBLE.—For purposes of this
section—
‘‘(1) IN GENERAL.—Except as otherwise provided
in this section, the term ‘section 197 intangible’
means—
‘‘(A) goodwill,
‘‘(B) going concern value,
‘‘(C) any of the following intangible items:
‘‘(i) workforce in place including its
composition and terms and conditions (con-
tractual or otherwise) of its employment,
‘‘(ii) business books and records, oper-
ating systems, or any other information
base (including lists or other information
with respect to current or prospective cus-
tomers),
‘‘(iii) any patent, copyright, formula,
process, design, pattern, knowhow, format,
or other similar item,
‘‘(iv) any customer-based intangible,
‘‘(v) any supplier-based intangible,
and
‘‘(vi) any other similar item,
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‘‘(D) any license, permit, or other right
granted by a governmental unit or an agency or
instrumentality thereof,
‘‘(E) any covenant not to compete (or other
arrangement to the extent such arrangement has
substantially the same effect as a covenant not to
compete) entered into in connection with an ac-
quisition (directly or indirectly) of an interest in
a trade or business or substantial portion there-
of, and
‘‘(F) any franchise, trademark, or trade
name.
‘‘(2) CUSTOMER-BASED INTANGIBLE.—
‘‘(A) IN
GENERAL.—The term ‘customer-
based intangible’ means—
‘‘(i) composition of market,
‘‘(ii) market share, and
‘‘(iii) any other value resulting from
future provision of goods or services pursu-
ant to relationships (contractual or other-
wise) in the ordinary course of business
with customers.
‘‘(B) SPECIAL RULE FOR FINANCIAL INSTI-
TUTIONS.—In the case of a financial institution,
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the term ‘customer-based intangible’ includes de-
posit base and similar items.
‘‘(3) SUPPLIER-BASED
INTANGIBLE.—The term
‘supplier-based intangible’ means any value resulting
from future acquisitions of goods or services pursuant
to relationships (contractual or otherwise) in the ordi-
nary course of business with suppliers of goods or
services to be used or sold by the taxpayer.
‘‘(e) EXCEPTIONS.—For purposes of this section, the
term ‘section 197 intangible’ shall not include any of the
following:
‘‘(1) FINANCIAL INTERESTS.—Any interest—
‘‘(A) in a corporation, partnership, trust, or
estate, or
‘‘(B) under an existing futures contract, for-
eign currency contract, notional principal con-
tract, or other similar financial contract.
‘‘(2) LAND.—Any interest in land.
‘‘(3) COMPUTER SOFTWARE.—
‘‘(A) IN GENERAL.—Any—
‘‘(i) computer software which is read-
ily available for purchase by the general
public, is subject to a nonexclusive license,
and has not been substantially modified,
and
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‘‘(ii) other computer software which is
not acquired in a transaction (or series of
related transactions) involving the acquisi-
tion of assets constituting a trade or busi-
ness or substantial portion thereof.
‘‘(B) COMPUTER SOFTWARE DEFINED.—For
purposes of subparagraph (A), the term ‘com-
puter software’ means any program designed to
cause a computer to perform a desired function.
Such term shall not include any data base or
similar item unless the data base or item is in
the public domain and is incidental to the oper-
ation of otherwise qualifying computer software.
‘‘(4) CERTAIN INTERESTS OR RIGHTS ACQUIRED
SEPARATELY.—Any of the following not acquired in
a transaction (or series of related transactions) in-
volving the acquisition of assets constituting a trade
business or substantial portion thereof:
‘‘(A) Any interest in a film, sound record-
ing, video tape, book, or similar property.
‘‘(B) Any right to receive tangible property
or services under a contract or granted by a gov-
ernmental unit or agency or instrumentality
thereof.
‘‘(C) Any interest in a patent or copyright.
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‘‘(D) To the extent provided in regulations,
any right under a contract (or granted by a gov-
ernmental unit or an agency or instrumentality
thereof) if such right—
‘‘(i) has a fixed duration of less than
14 years, or
‘‘(ii) is fixed as to amount and, with-
out regard to this section, would be recover-
able under a method similar to the unit-of-
production method.
‘‘(5) INTERESTS UNDER LEASES AND DEBT IN-
STRUMENTS.—Any interest under—
‘‘(A) an existing lease of tangible property,
or
‘‘(B) except as provided in subsection
(d)(2)(B), any existing indebtedness.
‘‘(6) TREATMENT
OF
SPORTS
FRANCHISES.—A
franchise to engage in professional football, basketball,
baseball, or other professional sport, and any item ac-
quired in connection with such a franchise.
‘‘(7) MORTGAGE SERVICING.—Any right to serv-
ice indebtedness which is secured by residential real
property unless such right is acquired in a trans-
action (or series of related transactions) involving the
acquisition of assets (other than rights described in
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this paragraph) constituting a trade or business or
substantial portion thereof.
‘‘(8) CERTAIN
TRANSACTION
COSTS.—Any fees
for professional services, and any transaction costs,
incurred by parties to a transaction with respect to
which any portion of the gain or loss is not recog-
nized under part III of subchapter C.
‘‘(f) SPECIAL RULES.—
‘‘(1) TREATMENT
OF
CERTAIN
DISPOSITIONS,
ETC.—If there is a disposition of any amortizable sec-
tion 197 intangible acquired in a transaction or se-
ries of related transactions (or any such intangible
becomes worthless) and one or more other amortizable
section 197 intangibles acquired in such transaction
or series of related transactions are retained—
‘‘(A) no loss shall be recognized by reason of
such disposition (or such worthlessness), and
‘‘(B) appropriate adjustments to the ad-
justed bases of such retained intangibles shall be
made for any loss not recognized under subpara-
graph (A).
All persons treated as a single taxpayer under section
41(f)(1) shall be so treated for purposes of the preced-
ing sentence.
‘‘(2) TREATMENT OF CERTAIN TRANSFERS.—
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‘‘(A) IN GENERAL.—In the case of any sec-
tion 197 intangible transferred in a transaction
described in subparagraph (B), the transferee
shall be treated as the transferor for purposes of
applying this section with respect to so much of
the adjusted basis in the hands of the transferee
as does not exceed the adjusted basis in the hands
of the transferor.
‘‘(B) TRANSACTIONS COVERED.—The trans-
actions described in this subparagraph are—
‘‘(i) any transaction described in sec-
tion 332, 351, 361, 721, 731, 1031, or 1033,
and
‘‘(ii) any transaction between members
of the same affiliated group during any tax-
able year for which a consolidated return is
made by such group.
‘‘(3) TREATMENT OF AMOUNTS PAID PURSUANT
TO COVENANTS NOT TO COMPETE, ETC.—Any amount
paid or incurred pursuant to a covenant or arrange-
ment referred to in subsection (d)(1)(E) shall be treat-
ed as an amount chargeable to capital account.
‘‘(4) TREATMENT OF FRANCHISES, ETC.—
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‘‘(A) FRANCHISE.—The term ‘franchise’ has
the meaning given to such term by section
1253(b)(1).
‘‘(B) TREATMENT OF RENEWALS.—Any re-
newal of a franchise, trademark, or trade name
(or of a license, a permit, or other right referred
to in subsection (d)(1)(D)) shall be treated as an
acquisition. The preceding sentence shall only
apply with respect to costs incurred in connec-
tion with such renewal.
‘‘(C) CERTAIN AMOUNTS NOT TAKEN INTO
ACCOUNT.—Any 
amount 
to 
which 
section
1253(d)(1) applies shall not be taken into ac-
count under this section.
‘‘(5) TREATMENT
OF
CERTAIN
REINSURANCE
TRANSACTIONS.—In the case of any amortizable sec-
tion 197 intangible resulting from an assumption re-
insurance transaction, the amount taken into account
as the adjusted basis of such intangible under this sec-
tion shall be the excess of—
‘‘(A) the amount paid or incurred by the
acquirer under the assumption reinsurance
transaction, over
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‘‘(B) the amount required to be capitalized
under section 848 in connection with such trans-
action.
Subsection (b) shall not apply to any amount re-
quired to be capitalized under section 848.
‘‘(6) TREATMENT OF CERTAIN SUBLEASES.—For
purposes of this section, a sublease shall be treated in
the same manner as a lease of the underlying prop-
erty involved.
‘‘(7) TREATMENT AS DEPRECIABLE.—For pur-
poses of this chapter, any amortizable section 197 in-
tangible shall be treated as property which is of a
character subject to the allowance for depreciation
provided in section 167.
‘‘(8) TREATMENT OF CERTAIN INCREMENTS IN
VALUE.—This section shall not apply to any incre-
ment in value if, without regard to this section, such
increment is properly taken into account in determin-
ing the cost of property which is not a section 197 in-
tangible.
‘‘(9) ANTI-CHURNING RULES.—For purposes of
this section—
‘‘(A) IN GENERAL.—The term ‘amortizable
section 197 intangible’ shall not include any sec-
tion 197 intangible which is described in sub-
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paragraph (A) or (B) of subsection (d)(1) (or for
which depreciation or amortization would not
have been allowable but for this section) and
which is acquired by the taxpayer after the date
of the enactment of this section, if—
‘‘(i) the intangible was held or used at
any time on or after July 25, 1991, and on
or before such date of enactment by the tax-
payer or a related person,
‘‘(ii) the intangible was acquired from
a person who held such intangible at any
time on or after July 25, 1991, and on or
before such date of enactment, and, as part
of the transaction, the user of such intangi-
ble does not change, or
‘‘(iii) the taxpayer grants the right to
use such intangible to a person (or a person
related to such person) who held or used
such intangible at any time on or after
July 25, 1991, and on or before such date
of enactment.
For purposes of this subparagraph, the deter-
mination of whether the user of property changes
as part of a transaction shall be determined in
accordance with regulations prescribed by the
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Secretary. For purposes of this subparagraph,
deductions allowable under section 1253(d) shall
be treated as deductions allowable for amortiza-
tion.
‘‘(B) EXCEPTION
WHERE
GAIN
RECOG-
NIZED.—If—
‘‘(i) subparagraph (A) would not
apply to an intangible acquired by the tax-
payer but for the last sentence of subpara-
graph (C)(i), and
‘‘(ii) the person from whom the tax-
payer acquired the intangible elects, not-
withstanding any other provision of this
title—
‘‘(I) to recognize gain on the dis-
position of the intangible, and
‘‘(II) to pay a tax on such gain
which, when added to any other in-
come tax on such gain under this title,
equals such gain multiplied by the
highest rate of income tax applicable to
such person under this title,
then subparagraph (A) shall apply to the
intangible only to the extent that the tax-
payer’s adjusted basis in the intangible ex-
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ceeds the gain recognized under clause
(ii)(I).
‘‘(C) RELATED
PERSON
DEFINED.—For
purposes of this paragraph—
‘‘(i) RELATED
PERSON.—A person
(hereinafter in this paragraph referred to as
the ‘related person’) is related to any person
if—
‘‘(I) the related person bears a re-
lationship to such person specified in
section 267(b) or section 707(b)(1), or
‘‘(II) the related person and such
person are engaged in trades or busi-
nesses under common control (within
the meaning of subparagraphs (A) and
(B) of section 41(f)(1)).
For purposes of subclause (I), in applying
section 267(b) or 707(b)(1), ‘20 percent’
shall be substituted for ‘50 percent’.
‘‘(ii) TIME FOR MAKING DETERMINA-
TION.—A person shall be treated as related
to another person if such relationship exists
immediately before or immediately after the
acquisition of the intangible involved.
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‘‘(D) 
ACQUISITIONS
BY
REASON
OF
DEATH.—Subparagraph (A) shall not apply to
the acquisition of any property by the taxpayer
if the basis of the property in the hands of the
taxpayer is determined under section 1014(a).
‘‘(E) SPECIAL RULE FOR PARTNERSHIPS.—
With respect to any increase in the basis of part-
nership property under section 732, 734, or 743,
determinations under this paragraph shall be
made at the partner level and each partner shall
be treated as having owned and used such part-
ner’s proportionate share of the partnership as-
sets.
‘‘(F) ANTI-ABUSE RULES.—The term ‘amor-
tizable section 197 intangible’ does not include
any section 197 intangible acquired in a trans-
action, one of the principal purposes of which is
to avoid the requirement of subsection (c)(1) that
the intangible be acquired after the date of the
enactment of this section or to avoid the provi-
sions of subparagraph (A).
‘‘(g) SPECIAL RULES FOR ACQUISITION OF CERTAIN
COMPUTER SOFTWARE BUSINESSES.—
‘‘(1) IN GENERAL.—In the case of any section
197 intangible acquired in a transaction to which
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this subsection applies, subsection (a) shall be applied
with respect to one-half of the 75 percent of its ad-
justed basis which is amortizable under subsection (a)
by substituting ‘5-year period’ for ‘14-year period’.
‘‘(2) TRANSACTIONS TO WHICH SUBSECTION AP-
PLIES.—
‘‘(A) IN
GENERAL.—This subsection shall
apply to a transaction (or series of related trans-
actions) involving the acquisition of assets con-
stituting a trade or business or substantial por-
tion thereof if—
‘‘(i) the principal business activity of
the trade or business (or portion) is com-
puter software development, computer sales,
licensing, or leasing, the provision of com-
puter software services, or a combination
thereof, and
‘‘(ii) during the testing period, the ag-
gregate computer software development costs
of such trade or business (or portion) are
not less than 17 percent of the greater of—
‘‘(I) the aggregate gross receipts of
such trade or business (or portion), or
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‘‘(II) the aggregate gross expendi-
tures of such trade or business (or por-
tion).
‘‘(B) COMPUTER SOFTWARE DEVELOPMENT
COSTS.—For purposes of subparagraph (A), the
term ‘computer software development costs’
means the sum of—
‘‘(i) the computer software development
costs which qualify as research and experi-
mentation expenditures under section 174,
plus
‘‘(ii) the amortization deductions of the
trade or business with respect to computer
software not acquired in a transaction (or
series of related transactions) involving the
acquisition of assets constituting a trade or
business or substantial portion thereof.
‘‘(C) TESTING
PERIOD.—For purposes of
subparagraph (A), the term ‘testing period’
means the 5-year period ending on the date of
the last transaction described in subparagraph
(A) pursuant to which the section 197 intangible
was acquired (or, if shorter, the entire period of
existence of the trade or business (or portion) be-
fore such date).
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‘‘(h) REGULATIONS.—The Secretary shall prescribe
such regulations as may be appropriate to carry out the
purposes of this section, including such regulations as may
be appropriate to prevent avoidance of the purposes of this
section through related persons or otherwise.’’
(b) MODIFICATIONS TO DEPRECIATION RULES.—
(1) TREATMENT
OF
CERTAIN
PROPERTY
EX-
CLUDED FROM SECTION 197.—Section 167 (relating to
depreciation deduction) is amended by redesignating
subsection (f) as subsection (g) and by inserting after
subsection (e) the following new subsection:
‘‘(f) TREATMENT OF CERTAIN PROPERTY EXCLUDED
FROM SECTION 197.—
‘‘(1) COMPUTER SOFTWARE.—
‘‘(A) IN GENERAL.—If a depreciation de-
duction is allowable under subsection (a) with
respect to any computer software, such deduction
shall be computed by using the straight line
method and a useful life of 36 months.
‘‘(B) COMPUTER SOFTWARE.—For purposes
of this section, the term ‘computer software’ has
the meaning given to such term by section
197(e)(3)(B); except that such term shall not in-
clude any such software which is an amortizable
section 197 intangible.
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‘‘(2) CERTAIN INTERESTS OR RIGHTS ACQUIRED
SEPARATELY.—If a depreciation deduction is allow-
able under subsection (a) with respect to any property
described in subparagraph (B), (C), or (D) of section
197(e)(4), such deduction shall be computed in ac-
cordance with regulations prescribed by the Secretary.
‘‘(3) MORTGAGE SERVICING RIGHTS.—If a depre-
ciation deduction is allowable under subsection (a)
with respect to any right described in section
197(e)(7), such deduction shall be computed by using
the straight line method and a useful life of 108
months.’’
(2) ALLOCATION OF BASIS IN CASE OF LEASED
PROPERTY.—Subsection (c) of section 167 is amended
to read as follows:
‘‘(c) BASIS FOR DEPRECIATION.—
‘‘(1) IN GENERAL.—The basis on which exhaus-
tion, wear and tear, and obsolescence are to be al-
lowed in respect of any property shall be the adjusted
basis provided in section 1011, for the purpose of de-
termining the gain on the sale or other disposition of
such property.
‘‘(2) SPECIAL RULE FOR PROPERTY SUBJECT TO
LEASE.—If any property is acquired subject to a
lease—
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‘‘(A) no portion of the adjusted basis shall
be allocated to the leasehold interest, and
‘‘(B) the entire adjusted basis shall be taken
into account in determining the depreciation de-
duction (if any) with respect to the property sub-
ject to the lease.’’
(c) AMENDMENTS TO SECTION 1253.—Subsection (d)
of section 1253 is amended by striking paragraphs (2), (3),
(4), and (5) and inserting the following:
‘‘(2) OTHER PAYMENTS.—Any amount paid or
incurred on account of a transfer, sale, or other dis-
position of a franchise, trademark, or trade name to
which paragraph (1) does not apply shall be treated
as an amount chargeable to capital account.
‘‘(3) RENEWALS, ETC.—For purposes of deter-
mining the term of a transfer agreement under this
section, there shall be taken into account all renewal
options (and any other period for which the parties
reasonably expect the agreement to be renewed).’’
(d) AMENDMENT TO SECTION 848.—Subsection (g) of
section 848 is amended by striking ‘‘this section’’ and in-
serting ‘‘this section or section 197’’.
(e) AMENDMENTS TO SECTION 1060.—
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(1) Paragraph (1) of section 1060(b) is amended
by striking ‘‘goodwill or going concern value’’ and in-
serting ‘‘section 197 intangibles’’.
(2) Paragraph (1) of section 1060(d) is amended
by striking ‘‘goodwill or going concern value (or simi-
lar items)’’ and inserting ‘‘section 197 intangibles’’.
(f) TECHNICAL AND CONFORMING AMENDMENTS.—
(1) Subsection (g) of section 167 (as redesignated
by subsection (b)) is amended to read as follows:
‘‘(g) CROSS REFERENCES.—
‘‘(1) For additional rule applicable to depreciation
of improvements in the case of mines, oil and gas
wells, other natural deposits, and timber, see section
611.
‘‘(2) For amortization of goodwill and certain other
intangibles, see section 197.’’
(2) Subsection (f) of section 642 is amended by
striking ‘‘section 169’’ and inserting ‘‘sections 169
and 197’’.
(3) Subsection (a) of section 1016 is amended by
striking paragraph (19) and by redesignating the fol-
lowing paragraphs accordingly.
(4) Subparagraph (C) of section 1245(a)(2) is
amended by striking ‘‘193, or 1253(d) (2) or (3)’’ and
inserting ‘‘or 193’’.
(5) Paragraph (3) of section 1245(a) is amended
by striking ‘‘section 185 or 1253(d) (2) or (3)’’.
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(6) The table of sections for part VI of sub-
chapter B of chapter 1 is amended by adding at the
end thereof the following new item:
‘‘Sec. 197. Amortization of goodwill and certain other intangibles.’’.
(g) EFFECTIVE DATE.—
(1) IN GENERAL.—Except as otherwise provided
in this subsection, the amendments made by this sec-
tion shall apply with respect to property acquired
after the date of the enactment of this Act.
(2) ELECTION TO HAVE AMENDMENTS APPLY TO
PROPERTY ACQUIRED AFTER JULY 25, 1991.—
(A) IN GENERAL.—If an election under this
paragraph applies to the taxpayer—
(i) the amendments made by this sec-
tion shall apply to property acquired by the
taxpayer after July 25, 1991,
(ii) subsection (c)(1)(A) of section 197
of the Internal Revenue Code of 1986 (as
added by this section) (and so much of sub-
section (f)(9)(A) of such section 197 as pre-
cedes clause (i) thereof) shall be applied
with respect to the taxpayer by treating
July 25, 1991, as the date of the enactment
of such section, and
(iii) in applying subsection (f)(9) of
such section, with respect to any property
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acquired by the taxpayer on or before the
date of the enactment of this Act, only hold-
ing or use on July 25, 1991, shall be taken
into account.
(B) ELECTION.—An election under this
paragraph shall be made at such time and in
such manner as the Secretary of the Treasury or
his delegate may prescribe. Such an election by
any taxpayer, once made—
(i) may be revoked only with the con-
sent of the Secretary, and
(ii) shall apply to the taxpayer making
such election and any other taxpayer under
common control with the taxpayer (within
the meaning of subparagraphs (A) and (B)
of section 41(f)(1) of such Code) at any time
after November 22, 1991, and on or before
the date on which such election is made.
(3) ELECTIVE BINDING CONTRACT EXCEPTION.—
(A) IN GENERAL.—The amendments made
by this section shall not apply to any acquisition
of property by the taxpayer if—
(i) such acquisition is pursuant to a
written binding contract in effect on the
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date of the enactment of this Act and at all
times thereafter before such acquisition,
(ii) an election under paragraph (2)
does not apply to the taxpayer, and
(iii) the taxpayer makes an election
under this paragraph with respect to such
contract.
(B) ELECTION.—An election under this
paragraph shall be made at such time and in
such manner as the Secretary of the Treasury or
his delegate shall prescribe. Such an election,
once made—
(i) may be revoked only with the con-
sent of the Secretary, and
(ii) shall apply to all property ac-
quired pursuant to the contract with respect
to which such election was made.
SEC. 8262. TREATMENT OF CERTAIN PAYMENTS TO RE-
TIRED OR DECEASED PARTNER.
(a) SECTION 736(b) NOT TO APPLY
IN CERTAIN
CASES.—Subsection (b) of section 736 (relating to pay-
ments for interest in partnership) is amended by adding
at the end thereof the following new paragraph:
‘‘(3) LIMITATION
ON
APPLICATION
OF
PARA-
GRAPH (2).—Paragraph (2) shall apply only if—
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‘‘(A) capital is not a material income-pro-
ducing factor for the partnership, and
‘‘(B) the retiring or deceased partner was a
general partner in the partnership.’’
(b) LIMITATION ON DEFINITION OF UNREALIZED RE-
CEIVABLES.—
(1) IN GENERAL.—Subsection (c) of section 751
(defining unrealized receivables) is amended—
(A) by striking ‘‘sections 731, 736, and
741’’ each place they appear and inserting ‘‘,
sections 731 and 741 (but not for purposes of
section 736)’’, and
(B) by striking ‘‘section 731, 736, or 741’’
each place it appears and inserting ‘‘section 731
or 741’’.
(2) TECHNICAL AMENDMENTS.—
(A) Subsection (e) of section 751 is amended
by striking ‘‘sections 731, 736, and 741’’ and in-
serting ‘‘sections 731 and 741’’.
(B) Section 736 is amended by striking sub-
section (c).
(c) EFFECTIVE DATE.—
(1) IN
GENERAL.—The amendments made by
this section shall apply in the case of partners retir-
ing or dying on or after January 5, 1993.
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(2) 
BINDING
CONTRACT
EXCEPTION.—The
amendments made by this section shall not apply to
any partner retiring on or after January 5, 1993, if
a written contract to purchase such partner’s interest
in the partnership was binding on January 4, 1993,
and at all times thereafter before such purchase.
PART VII—MISCELLANEOUS PROVISIONS
SEC. 8271. DENIAL OF DEDUCTION RELATING TO TRAVEL
EXPENSES.
(a) IN GENERAL.—Section 274(m) (relating to addi-
tional limitations on travel expenses) is amended by adding
at the end thereof the following new paragraph:
‘‘(3) TRAVEL EXPENSES OF SPOUSE, DEPEND-
ENT, OR
OTHERS.—No deduction shall be allowed
under this chapter (other than section 217) for travel
expenses paid or incurred with respect to a spouse,
dependent, or other individual accompanying the tax-
payer (or an officer or employee of the taxpayer) on
business travel, unless—
‘‘(A) the spouse, dependent, or other indi-
vidual is an employee of the taxpayer,
‘‘(B) the travel of the spouse, dependent, or
other individual is for a bona fide business pur-
pose, and
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‘‘(C) such expenses would otherwise be de-
ductible by the spouse, dependent, or other indi-
vidual.’’
(b) EFFECTIVE DATE.—The amendment made by this
section shall apply to amounts paid or incurred after De-
cember 31, 1993.
SEC. 8272. INCREASE IN WITHHOLDING FROM SUPPLE-
MENTAL WAGE PAYMENTS.
If an employer elects under Treasury Regulation
31.3402(g)–1 to determine the amount to be deducted and
withheld from any supplemental wage payment by using
a flat percentage rate, the rate to be used in determining
the amount to be so deducted and withheld shall not be less
than 28 percent. The preceding sentence shall apply to pay-
ments made after December 31, 1993.
SEC. 8273. EXCISE TAX ON CERTAIN VACCINES MADE PER-
MANENT.
(a) TAX.—Subsection (c) of section 4131 (relating to
tax on certain vaccines) is amended to read as follows:
‘‘(c) APPLICATION OF SECTION.—The tax imposed by
this section shall apply—
‘‘(1) after December 31, 1987, and before Janu-
ary 1, 1993, and
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‘‘(2) during periods after the date of the enact-
ment of the Omnibus Budget Reconciliation Act of
1993.’’
(b) TRUST FUND.—Paragraph (1) of section 9510(c)
(relating to expenditures from Vaccine Injury Compensa-
tion Trust Fund) is amended by striking ‘‘and before Octo-
ber 1, 1992,’’.
(c) FLOOR STOCKS TAX.—
(1) IMPOSITION OF TAX.—On any taxable vac-
cine—
(A) which was sold by the manufacturer,
producer, or importer before the date of the en-
actment of this Act,
(B) on which no tax was imposed by section
4131 of the Internal Revenue Code of 1986 (or,
if such tax was imposed, was credited or re-
funded), and
(C) which is held on such date by any per-
son for sale or use,
there is hereby imposed a tax in the amount deter-
mined under section 4131(b) of such Code.
(2) LIABILITY FOR TAX AND METHOD OF PAY-
MENT.—
(A) LIABILITY FOR TAX.—The person hold-
ing any taxable vaccine to which the tax im-
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posed 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 by regu-
lations.
(C) TIME FOR PAYMENT.—The tax imposed
by paragraph (1) shall be paid on or before the
last day of the 6th month beginning after the
date of the enactment of this Act.
(3) DEFINITIONS.—For purposes of this sub-
section, terms used in this subsection which are also
used in section 4131 of such Code shall have the re-
spective meanings such terms have in such section.
(4) OTHER LAWS APPLICABLE.—All provisions of
law, including penalties, applicable with respect to
the taxes imposed by section 4131 of such Code shall,
insofar as applicable and not inconsistent with the
provisions of this subsection, apply to the floor stocks
taxes imposed by paragraph (1), to the same extent
as if such taxes were imposed by such section 4131.
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TITLE IX—COMMITTEE ON
FOREIGN RELATIONS
SEC. 9001. DELAY IN COST-OF-LIVING ADJUSTMENTS IN
FOREIGN SERVICE RETIREMENT BENEFITS
DURING FISCAL YEARS 1994, 1995, AND 1996.
(a) APPLICABILITY.—This section shall apply with re-
spect to any cost-of-living increase scheduled to take effect
under section 826 or 858 of the Foreign Service Act of 1980
during fiscal year 1994, 1995, or 1996.
(b) DELAY IN EFFECTIVE DATE OF ADJUSTMENTS.—
A cost-of-living increase described in subsection (a) shall
not take effect until the first day of the third calendar
month after the date such increase would take effect but for
this subsection.
(c) RULE OF CONSTRUCTION.—
(1) SIZE
OF
COST-OF-LIVING
ADJUSTMENT.—
Nothing in this section shall be considered to affect
the size of the cost-of-living adjustment under section
8340(b) or section 8462(b) of title 5, United States
Code, in the same fiscal year as a cost-of-living in-
crease described in subsection (a).
(2) DETERMINATIONS
OF
ELIGIBILITY.—The
delay in the effective date of cost-of-living adjustments
under subsection (b) shall not affect any determina-
tion relating to eligibility for an annuity increase or
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education, to ensure that the institution is complying
with program requirements and meeting program ob-
jectives;
‘‘(6) provide that the institution will not charge
any fees of any kind, however described, to student or
parent borrowers for origination activities or the pro-
vision of any information necessary for a student or
parent to receive a loan under this part, or any bene-
fits associated with such loan; and
‘‘(7) include such other provisions as the Sec-
retary determines are necessary to protect the inter-
ests of the United States and to promote the purposes
of this part.
‘‘(b) ORIGINATION.—An agreement with any institu-
tion of higher education, or consortia thereof, for the origi-
nation of loans under this part shall—
‘‘(1) supplement the agreement entered into in
accordance with subsection (a);
‘‘(2) include provisions established by the Sec-
retary that are similar to the participation agreement
provisions described in paragraphs (1)(E)(ii), (2),
(3), (4), (5), (6), and (7) of subsection (a), as modi-
fied to relate to the origination of loans by the insti-
tution or consortium;