tions Commission for the effectuation of section
1071 of the Internal Revenue Code of 1986 (as in
effect on the day before the date of the enactment
of this Act).
SEC. 3. NONRECOGNITION ON INVOLUNTARY CONVER-
SIONS NOT TO APPLY IF REPLACEMENT
PROPERTY ACQUIRED FROM RELATED PER-
SON.
(a) IN GENERAL.—Section 1033 of the Internal Rev-
enue Code of 1986 (relating to involuntary conversions)
is amended by redesignating subsection (i) as subsection
(j) and by inserting after subsection (h) the following new
subsection:
‘‘(i) NONRECOGNITION NOT TO APPLY IF REPLACE-
MENT PROPERTY ACQUIRED FROM RELATED PERSON.—
Subsection (a) shall not apply if the replacement property
or stock acquired is acquired from a related person. For
purposes of the preceding sentence, a person is related to
another person if the relationship between such persons
would result in a disallowance of losses under section 267
or 707(b).’’
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall apply to replacement property or stock
acquired on or after February 6, 1995.
SEC. 4. DENIAL OF EARNED INCOME CREDIT FOR INDIVID-
UALS HAVING MORE THAN $2,500 OF INTER-
EST AND DIVIDEND INCOME.
(a) IN GENERAL.—Paragraph (1) of section 32(c) of
the Internal Revenue Code of 1986 (defining eligible indi-
vidual) is amended by adding at the end the following new
subparagraph:
‘‘(F) DENIAL OF CREDIT FOR INDIVIDUALS
HAVING MORE THAN $2,500 OF INTEREST AND
DIVIDEND INCOME.—The term ‘eligible individ-
ual’ shall not include any individual if the ag-
gregate interest and dividend income of the tax-
payer for the taxable year exceeds $2,500.’’
(b) INFLATION ADJUSTMENT.—Subsection (i) of sec-
tion 32 of such Code (relating to inflation adjustments)
is amended by striking paragraph (2) and by inserting the
following new paragraphs:
‘‘(2) INTEREST AND DIVIDEND INCOME LIMITA-
TION.—In the case of a taxable year beginning in a
calendar year after 1996, the dollar amount con-
tained in subsection (c)(1)(F) shall be increased by
an amount equal to—
‘‘(A) such dollar amount, multiplied by
‘‘(B) the cost-of-living adjustment deter-
mined under section 1(f)(3) for the calendar
year in which the taxable year begins, deter-
mined by substituting ‘calendar year 1995’ for
‘calendar
year
1992’
in
subparagraph
(B)
thereof.
‘‘(3) ROUNDING.—If any amount as adjusted
under paragraph (1) or (2) is not a multiple of $10,
such dollar amount shall be rounded to the nearest
multiple of $10.’’
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
December 31, 1995.
SEC. 4. PHASEOUT OF EARNED INCOME CREDIT FOR INDI-
VIDUALS HAVING MORE THAN $2,500 OF TAX-
ABLE INTEREST AND DIVIDENDS.
(a) IN GENERAL.—Section 32 of the Internal Revenue
Code of 1986 is amended by redesignating subsections (i)
and (j) as subsections (j) and (k), respectively, and by in-
serting after subsection (h) the following new subsection:
‘‘(i) PHASEOUT OF CREDIT FOR INDIVIDUALS HAVING
MORE THAN $2,500 OF TAXABLE INTEREST AND DIVI-
DENDS.—If the aggregate amount of interest and dividends
includible in the gross income of the taxpayer for the taxable
year exceeds $2,500, the amount of the credit which would
(but for this subsection) be allowed under this section for
such taxable year shall be reduced (but not below zero) by
an amount which bears the same ratio to such amount of
credit as such excess bears to $650.’’
(b) INFLATION ADJUSTMENT.—Subsection (j) of sec-
tion 32 of such Code (relating to inflation adjustments), as
redesignated by subsection (a), is amended by striking
paragraph (2) and by inserting the following new para-
graphs:
‘‘(2) INTEREST AND DIVIDEND INCOME LIMITA-
TION.—In the case of a taxable year beginning in a
calendar year after 1996, each dollar amount con-
tained in subsection (i) shall be increased by an
amount equal to—
‘‘(A) such dollar amount, multiplied by
‘‘(B) the cost-of-living adjustment deter-
mined under section 1(f)(3) for the calendar year
in which the taxable year begins, determined by
substituting ‘calendar year 1995’ for ‘calendar
year 1992’ in subparagraph (B) thereof.
‘‘(3) ROUNDING.—If any amount as adjusted
under paragraph (1) or (2) is not a multiple of $10,
such dollar amount shall be rounded to the nearest
multiple of $10.’’
(c) EFFECTIVE DATE.—The amendments made by this
section shall apply to taxable years beginning after Decem-
ber 31, 1995.