H. R. 3448—78
‘‘(2) section 531 (relating to the tax on accumulated
earnings),
‘‘(3) section 541 (relating to personal holding company
tax), or
‘‘(4) section 1351 (relating to recoveries of foreign expropria-
tion losses).
‘‘(d) LIMITATIONS ON CREDIT FOR ACTIVE BUSINESS INCOME.—
The amount of the credit determined under subsection (a) for any
taxable year shall not exceed the sum of the following amounts:
‘‘(1) 60 percent of the sum of—
‘‘(A) the aggregate amount of the qualified domestic
corporation’s qualified possession wages for such taxable
year, plus
‘‘(B) the allocable employee fringe benefit expenses of
the qualified domestic corporation for such taxable year.
‘‘(2) The sum of—
‘‘(A) 15 percent of the depreciation allowances for the
taxable year with respect to short-life qualified tangible
property,
‘‘(B) 40 percent of the depreciation allowances for the
taxable year with respect to medium-life qualified tangible
property, and
‘‘(C) 65 percent of the depreciation allowances for the
taxable year with respect to long-life qualified tangible
property.
‘‘(3) If the qualified domestic corporation does not have
an 
election 
to 
use 
the 
method 
described 
in 
section
936(h)(5)(C)(ii) (relating to profit split) in effect for the taxable
year, the amount of the qualified possession income taxes for
the taxable year allocable to nonsheltered income.
‘‘(e) ADMINISTRATIVE PROVISIONS.—For purposes of this title—
‘‘(1) the provisions of section 936 (including any applicable
election thereunder) shall apply in the same manner as if
the credit under this section were a credit under section
936(a)(1)(A) for a domestic corporation to which section
936(a)(4)(A) applies,
‘‘(2) the credit under this section shall be treated in the
same manner as the credit under section 936, and
‘‘(3) a corporation to which this section applies shall be
treated in the same manner as if it were a corporation electing
the application of section 936.
‘‘(f) DEFINITIONS.—For purposes of this section, any term used
in this section which is also used in section 936 shall have the
same meaning given such term by section 936.
‘‘(g) APPLICATION OF SECTION.—This section shall apply to tax-
able years beginning after December 31, 1995, and before January
1, 2006.’’.
(2) CONFORMING AMENDMENTS.—
(A) Paragraph (1) of section 55(c) is amended by strik-
ing ‘‘and the section 936 credit allowable under section
27(b)’’ and inserting ‘‘, the section 936 credit allowable
under section 27(b), and the Puerto Rican economic activity
credit under section 30A’’.
(B) Subclause (I) of section 56(g)(4)(C)(ii) is amended—
(i) by inserting ‘‘30A,’’ before ‘‘936’’, and
(ii) by striking ‘‘and (i)’’ and inserting ‘‘, (i),
and (j)’’.
H. R. 3448—79
(C) Clause (iii) of section 56(g)(4)(C) is amended by
adding at the end the following new subclause:
‘‘(VI) APPLICATION TO SECTION 30A CORPORA-
TIONS.—References in this clause to section 936
shall be treated as including references to section
30A.’’.
(D) Subsection (b) of section 59 is amended by striking
‘‘section 936,’’ and all that follows and inserting ‘‘section
30A or 936, alternative minimum taxable income shall
not include any income with respect to which a credit
is determined under section 30A or 936.’’.
(E) The table of sections for subpart B of part IV
of subchapter A of chapter 1 is amended by adding at
the end the following new item:
‘‘Sec. 30A. Puerto Rican economic activity credit.’’.
(F)(i) The heading for subpart B of part IV of sub-
chapter A of chapter 1 is amended to read as follows:
‘‘Subpart B—Other Credits’’.
(ii) The table of subparts for part IV of subchapter
A of chapter 1 is amended by striking the item relating
to subpart B and inserting the following new item:
‘‘Subpart B. Other credits.’’.
(c) EFFECTIVE DATE.—
(1) IN GENERAL.—Except as provided in paragraph (2), the
amendments made by this section shall apply to taxable years
beginning after December 31, 1995.
(2) SPECIAL
RULE
FOR
QUALIFIED
POSSESSION
SOURCE
INVESTMENT INCOME.—The amendments made by this section
shall not apply to qualified possession source investment income
received or accrued before July 1, 1996, without regard to
the taxable year in which received or accrued.
(3) SPECIAL TRANSITION RULE FOR PAYMENT OF ESTIMATED
TAX INSTALLMENT.—In determining the amount of any install-
ment due under section 6655 of the Internal Revenue Code
of 1986 after the date of the enactment of this Act and before
October 1, 1996, only 1⁄2 of any increase in tax (for the taxable
year for which such installment is made) by reason of the
amendments made by subsections (a) and (b) shall be taken
into account. Any reduction in such installment by reason of
the preceding sentence shall be recaptured by increasing the
next required installment for such year by the amount of such
reduction.
SEC. 1602. REPEAL OF EXCLUSION FOR INTEREST ON LOANS USED
TO ACQUIRE EMPLOYER SECURITIES.
(a) IN GENERAL.—Section 133 (relating to interest on certain
loans used to acquire employer securities) is hereby repealed.
(b) CONFORMING AMENDMENTS.—
(1) Subparagraph (B) of section 291(e)(1) is amended
by striking clause (iv) and by redesignating clause (v) as clause
(iv).
(2) Section 812 is amended by striking subsection (g).
(3) Paragraph (5) of section 852(b) is amended by striking
subparagraph (C).
H. R. 3448—80
(4) Paragraph (2) of section 4978(b) is amended by striking
subparagraph (A) and all that follows and inserting the
following:
‘‘(A) first from qualified securities to which section
1042 applied acquired during the 3-year period ending
on the date of the disposition, beginning with the securities
first so acquired, and
‘‘(B) then from any other employer securities.
If subsection (d) applies to a disposition, the disposition shall
be treated as made from employer securities in the opposite
order of the preceding sentence.’’.
(5)(A) Section 4978B (relating to tax on disposition of
employer securities to which section 133 applied) is hereby
repealed.
(B) The table of sections for chapter 43 is amended by
striking the item relating to section 4978B.
(6) Subsection (e) of section 6047 is amended by striking
paragraphs (1), (2), and (3) and inserting the following new
paragraphs:
‘‘(1) any employer maintaining, or the plan administrator
(within the meaning of section 414(g)) of, an employee stock
ownership plan which holds stock with respect to which section
404(k) applies to dividends paid on such stock, or
‘‘(2) both such employer or plan administrator,’’.
(7) Subsection (f) of section 7872 is amended by striking
paragraph (12).
(8) The table of sections for part III of subchapter B of
chapter 1 is amended by striking the item relating to section
133.
(c) EFFECTIVE DATE.—
(1) IN GENERAL.—The amendments made by this section
shall apply to loans made after the date of the enactment
of this Act.
(2) REFINANCINGS.—The amendments made by this section
shall not apply to loans made after the date of the enactment
of this Act to refinance securities acquisition loans (determined
without regard to section 133(b)(1)(B) of the Internal Revenue
Code of 1986, as in effect on the day before the date of the
enactment of this Act) made on or before such date or to
refinance loans described in this paragraph if—
(A) the refinancing loans meet the requirements of
section 133 of such Code (as so in effect),
(B) immediately after the refinancing the principal
amount of the loan resulting from the refinancing does
not exceed the principal amount of the refinanced loan
(immediately before the refinancing), and
(C) the term of such refinancing loan does not extend
beyond the last day of the term of the original securities
acquisition loan.
For purposes of this paragraph, the term ‘‘securities acquisition
loan’’ includes a loan from a corporation to an employee stock
ownership plan described in section 133(b)(3) of such Code
(as so in effect).
(3) EXCEPTION.—Any loan made pursuant to a binding
written contract in effect before June 10, 1996, and at all
times thereafter before such loan is made, shall be treated
H. R. 3448—81
for purposes of paragraphs (1) and (2) as a loan made on
or before the date of the enactment of this Act.
SEC. 1603. CERTAIN AMOUNTS DERIVED FROM FOREIGN CORPORA-
TIONS TREATED AS UNRELATED BUSINESS TAXABLE
INCOME.
(a) GENERAL RULE.—Subsection (b) of section 512 (relating
to modifications) is amended by adding at the end the following
new paragraph:
‘‘(17) TREATMENT
OF
CERTAIN
AMOUNTS
DERIVED
FROM
FOREIGN CORPORATIONS.—
‘‘(A) IN GENERAL.—Notwithstanding paragraph (1), any
amount included in gross income under section 951(a)(1)(A)
shall be included as an item of gross income derived from
an unrelated trade or business to the extent the amount
so included is attributable to insurance income (as defined
in section 953) which, if derived directly by the organiza-
tion, would be treated as gross income from an unrelated
trade or business. There shall be allowed all deductions
directly connected with amounts included in gross income
under the preceding sentence.
‘‘(B) EXCEPTION.—
‘‘(i) IN
GENERAL.—Subparagraph (A) shall not
apply to income attributable to a policy of insurance
or reinsurance with respect to which the person
(directly or indirectly) insured is—
‘‘(I) such organization,
‘‘(II) an affiliate of such organization which
is exempt from tax under section 501(a), or
‘‘(III) a director or officer of, or an individual
who (directly or indirectly) performs services for,
such organization or affiliate but only if the insur-
ance covers primarily risks associated with the
performance of services in connection with such
organization or affiliate.
‘‘(ii) AFFILIATE.—For purposes of this subpara-
graph—
‘‘(I) IN
GENERAL.—The determination as to
whether an entity is an affiliate of an organization
shall be made under rules similar to the rules
of section 168(h)(4)(B).
‘‘(II) SPECIAL RULE.—Two or more organiza-
tions (and any affiliates of such organizations)
shall be treated as affiliates if such organizations
are colleges or universities described in section
170(b)(1)(A)(ii) or organizations described in sec-
tion 170(b)(1)(A)(iii) and participate in an insur-
ance arrangement that provides for any profits
from such arrangement to be returned to the
policyholders in their capacity as such.
‘‘(C) REGULATIONS.—The Secretary shall prescribe such
regulations as may be necessary or appropriate to carry
out the purposes of this paragraph, including regulations
for the application of this paragraph in the case of income
paid through 1 or more entities or between 2 or more
chains of entities.’’.
H. R. 3448—82
(b) EFFECTIVE DATE.—The amendment made by this section
shall apply to amounts included in gross income in any taxable
year beginning after December 31, 1995.
SEC. 1604. DEPRECIATION UNDER INCOME FORECAST METHOD.
(a) GENERAL RULE.—Section 167 (relating to depreciation) is
amended by redesignating subsection (g) as subsection (h) and
by inserting after subsection (f) the following new subsection:
‘‘(g) DEPRECIATION UNDER INCOME FORECAST METHOD.—
‘‘(1) IN GENERAL.—If the depreciation deduction allowable
under this section to any taxpayer with respect to any property
is determined under the income forecast method or any similar
method—
‘‘(A) the income from the property to be taken into
account in determining the depreciation deduction under
such method shall be equal to the amount of income earned
in connection with the property before the close of the
10th taxable year following the taxable year in which the
property was placed in service,
‘‘(B) the adjusted basis of the property shall only
include amounts with respect to which the requirements
of section 461(h) are satisfied,
‘‘(C) the depreciation deduction under such method
for the 10th taxable year beginning after the taxable year
in which the property was placed in service shall be equal
to the adjusted basis of such property as of the beginning
of such 10th taxable year, and
‘‘(D) such taxpayer shall pay (or be entitled to receive)
interest computed under the look-back method of paragraph
(2) for any recomputation year.
‘‘(2) LOOK-BACK
METHOD.—The interest computed under
the look-back method of this paragraph for any recomputation
year shall be determined by—
‘‘(A) first determining the depreciation deductions
under this section with respect to such property which
would have been allowable for prior taxable years if the
determination of the amounts so allowable had been made
on the basis of the sum of the following (instead of the
estimated income from such property)—
‘‘(i) the actual income earned in connection with
such property for periods before the close of the recom-
putation year, and
‘‘(ii) an estimate of the future income to be earned
in connection with such property for periods after the
recomputation year and before the close of the 10th
taxable year following the taxable year in which the
property was placed in service,
‘‘(B) second, determining (solely for purposes of comput-
ing such interest) the overpayment or underpayment of
tax for each such prior taxable year which would result
solely from the application of subparagraph (A), and
‘‘(C) then using the adjusted overpayment rate (as
defined in section 460(b)(7)), compounded daily, on the
overpayment or underpayment determined under subpara-
graph (B).
For purposes of the preceding sentence, any cost incurred after
the property is placed in service (which is not treated as a
H. R. 3448—83
separate property under paragraph (5)) shall be taken into
account by discounting (using the Federal mid-term rate deter-
mined under section 1274(d) as of the time such cost is incurred)
such cost to its value as of the date the property is placed
in service. The taxpayer may elect with respect to any property
to have the preceding sentence not apply to such property.
‘‘(3) EXCEPTION
FROM
LOOK-BACK
METHOD.—Paragraph
(1)(D) shall not apply with respect to any property which had
a cost basis of $100,000 or less.
‘‘(4) RECOMPUTATION
YEAR.—For purposes of this sub-
section, except as provided in regulations, the term ‘recomputa-
tion year’ means, with respect to any property, the 3d and
the 10th taxable years beginning after the taxable year in
which the property was placed in service, unless the actual
income earned in connection with the property for the period
before the close of such 3d or 10th taxable year is within
10 percent of the income earned in connection with the property
for such period which was taken into account under paragraph
(1)(A).
‘‘(5) SPECIAL RULES.—
‘‘(A) CERTAIN COSTS TREATED AS SEPARATE PROPERTY.—
For purposes of this subsection, the following costs shall
be treated as separate properties:
‘‘(i) Any costs incurred with respect to any property
after the 10th taxable year beginning after the taxable
year in which the property was placed in service.
‘‘(ii) Any costs incurred after the property is placed
in service and before the close of such 10th taxable
year if such costs are significant and give rise to a
significant increase in the income from the property
which was not included in the estimated income from
the property.
‘‘(B) SYNDICATION INCOME FROM TELEVISION SERIES.—
In the case of property which is 1 or more episodes in
a television series, income from syndicating such series
shall not be required to be taken into account under this
subsection before the earlier of—
‘‘(i) the 4th taxable year beginning after the date
the first episode in such series is placed in service,
or
‘‘(ii) the earliest taxable year in which the taxpayer
has an arrangement relating to the future syndication
of such series.
‘‘(C) SPECIAL RULES FOR FINANCIAL EXPLOITATION OF
CHARACTERS, ETC.—For purposes of this subsection, in the
case of television and motion picture films, the income
from the property shall include income from the exploi-
tation of characters, designs, scripts, scores, and other inci-
dental income associated with such films, but only to the
extent that such income is earned in connection with the
ultimate use of such items by, or the ultimate sale of
merchandise to, persons who are not related persons
(within the meaning of section 267(b)) to the taxpayer.
‘‘(D) COLLECTION OF INTEREST.—For purposes of sub-
title F (other than sections 6654 and 6655), any interest
required to be paid by the taxpayer under paragraph (1)
H. R. 3448—84
for any recomputation year shall be treated as an increase
in the tax imposed by this chapter for such year.
‘‘(E) DETERMINATIONS.—For purposes of paragraph (2),
determinations of the amount of income earned in connec-
tion with any property shall be made in the same manner
as for purposes of applying the income forecast method;
except that any income from the disposition of such prop-
erty shall be taken into account.
‘‘(F) TREATMENT OF PASS-THRU ENTITIES.—Rules simi-
lar to the rules of section 460(b)(4) shall apply for purposes
of this subsection.’’
(b) EFFECTIVE DATE.—
(1) IN GENERAL.—The amendment made by subsection (a)
shall apply to property placed in service after September 13,
1995.
(2) BINDING CONTRACTS.—The amendment made by sub-
section (a) shall not apply to any property produced or acquired
by the taxpayer pursuant to a written contract which was
binding on September 13, 1995, and at all times thereafter
before such production or acquisition.
(3) UNDERPAYMENTS OF INCOME TAX.—No addition to tax
shall be made under section 6662 of such Code as a result
of the application of subsection (d) of that section (relating
to substantial understatements of income tax) with respect
to any underpayment of income tax for any taxable year ending
before such date of enactment, to the extent such underpayment
was created or increased by the amendments made by sub-
section (a).
SEC. 1605. REPEAL OF EXCLUSION FOR PUNITIVE DAMAGES AND FOR
DAMAGES NOT ATTRIBUTABLE TO PHYSICAL INJURIES
OR SICKNESS.
(a) IN GENERAL.—Paragraph (2) of section 104(a) (relating to
compensation for injuries or sickness) is amended to read as follows:
‘‘(2) the amount of any damages (other than punitive dam-
ages) received (whether by suit or agreement and whether
as lump sums or as periodic payments) on account of personal
physical injuries or physical sickness;’’.
(b) EMOTIONAL DISTRESS AS SUCH TREATED AS NOT PHYSICAL
INJURY OR PHYSICAL SICKNESS.—Section 104(a) is amended by strik-
ing the last sentence and inserting the following new sentence:
‘‘For purposes of paragraph (2), emotional distress shall not be
treated as a physical injury or physical sickness. The preceding
sentence shall not apply to an amount of damages not in excess
of the amount paid for medical care (described in subparagraph
(A) or (B) of section 213(d)(1)) attributable to emotional distress.’’.
(c) APPLICATION OF PRIOR LAW FOR STATES IN WHICH ONLY
PUNITIVE
DAMAGES
MAY
BE
AWARDED
IN
WRONGFUL
DEATH
ACTIONS.—Section 104 is amended by redesignating subsection (c)
as subsection (d) and by inserting after subsection (b) the following
new subsection:
‘‘(c) APPLICATION OF PRIOR LAW IN CERTAIN CASES.—The phrase
‘(other than punitive damages)’ shall not apply to punitive damages
awarded in a civil action—
‘‘(1) which is a wrongful death action, and
‘‘(2) with respect to which applicable State law (as in effect
on September 13, 1995 and without regard to any modification
H. R. 3448—85
after such date) provides, or has been construed to provide
by a court of competent jurisdiction pursuant to a decision
issued on or before September 13, 1995, that only punitive
damages may be awarded in such an action.
This subsection shall cease to apply to any civil action filed on
or after the first date on which the applicable State law ceases
to provide (or is no longer construed to provide) the treatment
described in paragraph (2).’’.
(d) EFFECTIVE DATE.—
(1) IN GENERAL.—Except as provided in paragraph (2), the
amendments made by this section shall apply to amounts
received after the date of the enactment of this Act, in taxable
years ending after such date.
(2) EXCEPTION.—The amendments made by this section
shall not apply to any amount received under a written binding
agreement, court decree, or mediation award in effect on (or
issued on or before) September 13, 1995.
SEC. 1606. REPEAL OF DIESEL FUEL TAX REBATE TO PURCHASERS
OF DIESEL-POWERED AUTOMOBILES AND LIGHT TRUCKS.
(a) IN GENERAL.—Section 6427 (relating to fuels not used for
taxable purposes) is amended by striking subsection (g).
(b) CONFORMING AMENDMENTS.—
(1) Paragraph (3) of section 34(a) is amended to read as
follows:
‘‘(3) under section 6427 with respect to fuels used for non-
taxable purposes or resold during the taxable year (determined
without regard to section 6427(k)).’’.
(2) Paragraphs (1) and (2)(A) of section 6427(i) are each
amended—
(A) by striking ‘‘(g),’’, and
(B) by striking ‘‘(or a qualified diesel powered highway
vehicle purchased)’’ each place it appears.
(c) EFFECTIVE DATE.—The amendments made by this section
shall apply to vehicles purchased after the date of the enactment
of this Act.
SEC. 1607. EXTENSION AND PHASEDOWN OF LUXURY PASSENGER
AUTOMOBILE TAX.
(a) EXTENSION.—Subsection (f) of section 4001 is amended by
striking ‘‘1999’’ and inserting ‘‘2002’’.
(b) PHASEDOWN.—Section 4001 is amended by redesignating
subsection (f) (as amended by subsection (a) of this section) as
subsection (g) and by inserting after subsection (e) the following
new subsection:
‘‘(f) PHASEDOWN.—For sales occurring in calendar years after
1995 and before 2003, subsection (a) shall be applied by substituting
for ‘10 percent’ the percentage determined in accordance with the
following table:
‘‘If the calendar year is:
The percentage is:
1996 ..................................................................................................... 9 percent
1997 ..................................................................................................... 8 percent
1998 ..................................................................................................... 7 percent
1999 ..................................................................................................... 6 percent
2000 ..................................................................................................... 5 percent
2001 ..................................................................................................... 4 percent
2002 ..................................................................................................... 3 percent
.’’.
H. R. 3448—86
(c) EFFECTIVE DATE.—The amendments made by this section
shall apply with respect to sales occurring after the date which
is 7 days after the date of the enactment of this Act.
SEC. 1608. TERMINATION OF FUTURE TAX-EXEMPT BOND FINANCING
FOR LOCAL FURNISHERS OF ELECTRICITY AND GAS.
(a) IN GENERAL.—Section 142(f) (relating to local furnishing
of electric energy or gas) is amended by adding at the end the
following new paragraphs:
‘‘(3) TERMINATION
OF
FUTURE
FINANCING.—For purposes
of this section, no bond may be issued as part of an issue
described in subsection (a)(8) with respect to a facility for
the local furnishing of electric energy or gas on or after the
date of the enactment of this paragraph unless—
‘‘(A) the facility will—
‘‘(i) be used by a person who is engaged in the
local furnishing of that energy source on January 1,
1997, and
‘‘(ii) be used to provide service within the area
served by such person on January 1, 1997, (or within
a county or city any portion of which is within such
area), or
‘‘(B) the facility will be used by a successor in interest
to such person for the same use and within the same
service area as described in subparagraph (A).
‘‘(4) ELECTION TO TERMINATE TAX-EXEMPT BOND FINANCING
BY CERTAIN FURNISHERS.—
‘‘(A) IN GENERAL.—In the case of a facility financed
with bonds issued before the date of the enactment of
this paragraph which would cease to be tax-exempt by
reason of the failure to meet the local furnishing require-
ment of subsection (a)(8) as a result of a service area
expansion, such bonds shall not cease to be tax-exempt
bonds (and section 150(b)(4) shall not apply) if the person
engaged in such local furnishing by such facility makes
an election described in subparagraph (B).
‘‘(B) ELECTION.—An election is described in this
subparagraph if it is an election made in such manner
as the Secretary prescribes, and such person (or its prede-
cessor in interest) agrees that—
‘‘(i) such election is made with respect to all facili-
ties for the local furnishing of electric energy or gas,
or both, by such person,
‘‘(ii) no bond exempt from tax under section 103
and described in subsection (a)(8) may be issued on
or after the date of the enactment of this paragraph
with respect to all such facilities of such person,
‘‘(iii) any expansion of the service area—
‘‘(I) is not financed with the proceeds of any
exempt facility bond described in subsection (a)(8),
and
‘‘(II) is not treated as a nonqualifying use
under the rules of paragraph (2), and
‘‘(iv) all outstanding bonds used to finance the
facilities for such person are redeemed not later than
6 months after the later of—
H. R. 3448—87
‘‘(I) the earliest date on which such bonds
may be redeemed, or
‘‘(II) the date of the election.
‘‘(C) RELATED
PERSONS.—For purposes of this para-
graph, the term ‘person’ includes a group of related persons
(within the meaning of section 144(a)(3)) which includes
such person.’’.
(b) NO INFERENCE WITH RESPECT TO OUTSTANDING BONDS.—
The use of the term ‘‘person’’ in section 142(f)(3) of the Internal
Revenue Code of 1986, as added by subsection (a), shall not be
construed to affect the tax-exempt status of interest on any bonds
issued before the date of the enactment of this Act.
SEC. 1609. EXTENSION OF AIRPORT AND AIRWAY TRUST FUND EXCISE
TAXES.
(a) FUEL TAX.—
(1) Subparagraph (A) of section 4091(b)(3) is amended to
read as follows:
‘‘(A) The rate of tax specified in paragraph (1) shall
be 4.3 cents per gallon—
‘‘(i) after December 31, 1995, and before the date
which is 7 calendar days after the date of the enact-
ment of the Small Business Job Protection Act of 1996,
and
‘‘(ii) after December 31, 1996.’’.
(2) Section 4081(d) is amended—
(A) by adding at the end the following new paragraph:
‘‘(3) AVIATION
GASOLINE.—After December 31, 1996, the
rate of tax specified in subsection (a)(2)(A)(i) on aviation gaso-
line shall be 4.3 cents per gallon.’’, and
(B) by inserting ‘‘(other than the tax on aviation gaso-
line)’’ after ‘‘subsection (a)(2)(A)’’.
(3) Section 4041(c)(5) is amended by inserting ‘‘, and during
the period beginning on the date which is 7 calendar days
after the date of the enactment of the Small Business Job
Protection Act of 1996 and ending on December 31, 1996’’
after ‘‘December 31, 1995’’.
(b) TICKET TAXES.—Sections 4261(g) and 4271(d) are each
amended by striking ‘‘January 1, 1996’’ and inserting ‘‘January
1, 1996, and to transportation beginning on or after the date which
is 7 calendar days after the date of the enactment of the Small
Business Job Protection Act of 1996 and before January 1, 1997’’.
(c) TRANSFERS TO AIRPORT AND AIRWAY TRUST FUND.—
(1) Subsection (b) of section 9502 is amended by striking
‘‘January 1, 1996’’ each place it appears and inserting ‘‘January
1, 1997’’.
(2) Paragraph (3) of section 9502(f) is amended to read
as follows:
‘‘(3) TERMINATION.—Notwithstanding the preceding provi-
sions of this subsection, the Airport and Airway Trust Fund
financing rate shall be zero with respect to—
‘‘(A) taxes imposed after December 31, 1995, and before
the date which is 7 calendar days after the date of the
enactment of the Small Business Job Protection Act of
1996, and
‘‘(B) taxes imposed after December 31, 1996.’’.
H. R. 3448—88
(3) Subsection (d) of section 9502 is amended by adding
at the end the following new paragraph:
‘‘(5) TRANSFERS FROM AIRPORT AND AIRWAY TRUST FUND
ON ACCOUNT OF REFUNDS OF TAXES ON TRANSPORTATION BY
AIR.—The Secretary of the Treasury shall pay from time to
time from the Airport and Airway Trust Fund into the general
fund of the Treasury amounts equivalent to the amounts paid
after December 31, 1995, under section 6402 (relating to author-
ity to make credits or refunds) or section 6415 (relating to
credits or refunds to persons who collected certain taxes) in
respect of taxes under sections 4261 and 4271.’’.
(d) EXCISE TAX EXEMPTION FOR CERTAIN EMERGENCY MEDICAL
TRANSPORTATION
BY AIR AMBULANCE.—Subsection (f) of section
4261 (relating to imposition of tax on transportation by air) is
amended to read as follows:
‘‘(f) EXEMPTION
FOR AIR AMBULANCES PROVIDING CERTAIN
EMERGENCY MEDICAL TRANSPORTATION.—No tax shall be imposed
under this section or section 4271 on any air transportation for
the purpose of providing emergency medical services—
‘‘(1) by helicopter, or
‘‘(2) by a fixed-wing aircraft equipped for and exclusively
dedicated to acute care emergency medical services.’’.
(e) EXEMPTION
FOR CERTAIN HELICOPTER USES.—Subsection
(e) of section 4261 is amended by adding at the end the following
new sentence: ‘‘In the case of helicopter transportation described
in paragraph (1), this subsection shall be applied by treating each
flight segment as a distinct flight.’’.
(f) FLIGHT-BY-FLIGHT DETERMINATION
OF AVAILABILITY
FOR
HIRE
FOR
AFFILIATED
GROUPS.—Section 4282 is amended by
redesignating subsection (b) as subsection (c) and by inserting after
subsection (a) the following new subsection:
‘‘(b) AVAILABILITY FOR HIRE.—For purposes of subsection (a),
the determination of whether an aircraft is available for hire by
persons who are not members of an affiliated group shall be made
on a flight-by-flight basis.’’
(g) CONSOLIDATION OF TAXES ON AVIATION GASOLINE.—
(1) IN GENERAL.—Subparagraph (A) of section 4081(a)(2)
(relating to imposition of tax on gasoline and diesel fuel) is
amended by redesignating clause (ii) as clause (iii) and by
striking clause (i) and inserting the following:
‘‘(i) in the case of gasoline other than aviation
gasoline, 18.3 cents per gallon,
‘‘(ii) in the case of aviation gasoline, 19.3 cents
per gallon, and’’.
(2) TERMINATION.—Subsection (d) of section 4081 is
amended by redesignating paragraph (2) as paragraph (3) and
by inserting after paragraph (1) the following new paragraph:
‘‘(2) AVIATION GASOLINE.—On and after January 1, 1997,
the rate specified in subsection (a)(2)(A)(ii) shall be 4.3 cents
per gallon.’’
(3) REPEAL OF RETAIL LEVEL TAX.—
(A) Subsection (c) of section 4041 is amended by strik-
ing paragraphs (2) and (3) and by redesignating paragraphs
(4) and (5) as paragraphs (2) and (3), respectively.
H. R. 3448—89
(B) Paragraph (3) of section 4041(c), as redesignated
by paragraph (1), is amended by striking ‘‘paragraphs (1)
and (2)’’ and inserting ‘‘paragraph (1)’’.
(4) CONFORMING AMENDMENTS.—
(A) Paragraph (1) of section 4041(k) is amended by
adding ‘‘and’’ at the end of subparagraph (A), by striking
‘‘, and’’ at the end of subparagraph (B) and inserting a
period, and by striking subparagraph (C).
(B) Paragraph (1) of section 4081(d) is amended by
striking ‘‘each rate of tax specified in subsection (a)(2)(A)’’
and inserting ‘‘the rates of tax specified in clauses (i) and
(iii) of subsection (a)(2)(A)’’.
(C) Sections 6421(f)(2)(A) and 9502(f)(1)(A) are each
amended by striking ‘‘section 4041(c)(4)’’ and inserting ‘‘sec-
tion 4041(c)(2)’’.
(D) Paragraph (2) of section 9502(b) is amended by
striking ‘‘14 cents’’ and inserting ‘‘15 cents’’.
(h) FLOOR STOCKS TAXES ON AVIATION FUEL.—
(1) IMPOSITION OF TAX.—In the case of aviation fuel on
which tax was imposed under section 4091 of the Internal
Revenue Code of 1986 before the tax-increase date described
in paragraph (3)(A)(i) and which is held on such date by any
person, there is hereby imposed a floor stocks tax of 17.5
cents per gallon.
(2) LIABILITY FOR TAX AND METHOD OF PAYMENT.—
(A) LIABILITY FOR TAX.—A person holding aviation fuel
on a tax-increase date to which the tax imposed by para-
graph (1) applies shall be liable for such tax.
(B) METHOD OF PAYMENT.—The tax imposed by para-
graph (1) shall be paid in such manner as the Secretary
shall prescribe.
(C) TIME FOR PAYMENT.—The tax imposed by para-
graph (1) with respect to any tax-increase date shall be
paid on or before the first day of the 7th month beginning
after such tax-increase date.
(3) DEFINITIONS.—For purposes of this subsection—
(A) TAX INCREASE DATE.—The term ‘‘tax-increase date’’
means the date which is 7 calendar days after the date
of the enactment of this Act.
(B) AVIATION FUEL.—The term ‘‘aviation fuel’’ has the
meaning given such term by section 4093 of such Code.
(C) HELD BY A PERSON.—Aviation fuel shall be consid-
ered as ‘‘held by a person’’ if title thereto has passed
to such person (whether or not delivery to the person
has been made).
(D) SECRETARY.—The term ‘‘Secretary’’ means the Sec-
retary of the Treasury or his delegate.
(4) EXCEPTION
FOR
EXEMPT
USES.—The tax imposed by
paragraph (1) shall not apply to aviation fuel held by any
person on any tax-increase date exclusively for any use for
which a credit or refund of the entire tax imposed by section
4091 of such Code is allowable for aviation fuel purchased
on or after such tax-increase date for such use.
(5) EXCEPTION FOR CERTAIN AMOUNTS OF FUEL.—
(A) IN GENERAL.—No tax shall be imposed by para-
graph (1) on aviation fuel held on any tax-increase date
by any person if the aggregate amount of aviation fuel
H. R. 3448—90
held by such person on such date does not exceed 2,000
gallons. The preceding sentence shall apply only if such
person submits to the Secretary (at the time and in the
manner required by the Secretary) such information as
the Secretary shall require for purposes of this paragraph.
(B) EXEMPT FUEL.—For purposes of subparagraph (A),
there shall not be taken into account fuel held by any
person which is exempt from the tax imposed by paragraph
(1) by reason of paragraph (4).
(C) CONTROLLED GROUPS.—For purposes of this para-
graph—
(i) CORPORATIONS.—
(I) IN GENERAL.—All persons treated as a con-
trolled group shall be treated as 1 person.
(II) CONTROLLED
GROUP.—The term ‘‘con-
trolled group’’ has the meaning given to such term
by subsection (a) of section 1563 of such Code;
except that for such purposes the phrase ‘‘more
than 50 percent’’ shall be substituted for the
phrase ‘‘at least 80 percent’’ each place it appears
in such subsection.
(ii) NONINCORPORATED
PERSONS
UNDER
COMMON
CONTROL.—Under regulations prescribed by the Sec-
retary, principles similar to the principles of clause
(i) shall apply to a group of persons under common
control where 1 or more of such persons is not a
corporation.
(6) OTHER LAW APPLICABLE.—All provisions of law, includ-
ing penalties, applicable with respect to the taxes imposed
by section 4091 of such Code shall, insofar as applicable and
not inconsistent with the provisions of this subsection, apply
with respect to the floor stock taxes imposed by paragraph
(1) to the same extent as if such taxes were imposed by such
section 4091.
(i) EFFECTIVE DATE.—The amendments made by this section
shall take effect on the 7th calendar day after the date of the
enactment of this Act, except that the amendments made by sub-
section (b) shall not apply to any amount paid before such date.
SEC. 1610. BASIS ADJUSTMENT TO PROPERTY HELD BY CORPORA-
TION WHERE STOCK IN CORPORATION IS REPLACEMENT
PROPERTY UNDER INVOLUNTARY CONVERSION RULES.
(a) IN GENERAL.—Subsection (b) of section 1033 is amended
to read as follows:
‘‘(b) BASIS
OF PROPERTY ACQUIRED THROUGH INVOLUNTARY
CONVERSION.—
‘‘(1) CONVERSIONS DESCRIBED IN SUBSECTION (a)(1).—If the
property was acquired as the result of a compulsory or involun-
tary conversion described in subsection (a)(1), the basis shall
be the same as in the case of the property so converted—
‘‘(A) decreased in the amount of any money received
by the taxpayer which was not expended in accordance
with the provisions of law (applicable to the year in which
such conversion was made) determining the taxable status
of the gain or loss upon such conversion, and
‘‘(B) increased in the amount of gain or decreased
in the amount of loss to the taxpayer recognized upon
H. R. 3448—91
such conversion under the law applicable to the year in
which such conversion was made.
‘‘(2) CONVERSIONS DESCRIBED IN SUBSECTION (a)(2).—In the
case of property purchased by the taxpayer in a transaction
described in subsection (a)(2) which resulted in the nonrecogni-
tion of any part of the gain realized as the result of a compul-
sory or involuntary conversion, the basis shall be the cost
of such property decreased in the amount of the gain not
so recognized; and if the property purchased consists of more
than 1 piece of property, the basis determined under this sen-
tence shall be allocated to the purchased properties in propor-
tion to their respective costs.
‘‘(3) PROPERTY HELD BY CORPORATION THE STOCK OF WHICH
IS REPLACEMENT PROPERTY.—
‘‘(A) IN GENERAL.—If the basis of stock in a corporation
is decreased under paragraph (2), an amount equal to
such decrease shall also be applied to reduce the basis
of property held by the corporation at the time the taxpayer
acquired control (as defined in subsection (a)(2)(E)) of such
corporation.
‘‘(B) LIMITATION.—Subparagraph (A) shall not apply
to the extent that it would (but for this subparagraph)
require a reduction in the aggregate adjusted bases of
the property of the corporation below the taxpayer’s
adjusted basis of the stock in the corporation (determined
immediately after such basis is decreased under paragraph
(2)).
‘‘(C) ALLOCATION OF BASIS REDUCTION.—The decrease
required under subparagraph (A) shall be allocated—
‘‘(i) first to property which is similar or related
in service or use to the converted property,
‘‘(ii) second to depreciable property (as defined in
section 1017(b)(3)(B)) not described in clause (i), and
‘‘(iii) then to other property.
‘‘(D) SPECIAL RULES.—
‘‘(i) REDUCTION NOT TO EXCEED ADJUSTED BASIS
OF PROPERTY.—No reduction in the basis of any prop-
erty under this paragraph shall exceed the adjusted
basis of such property (determined without regard to
such reduction).
‘‘(ii) ALLOCATION
OF
REDUCTION
AMONG
PROP-
ERTIES.—If more than 1 property is described in a
clause of subparagraph (C), the reduction under this
paragraph shall be allocated among such property in
proportion to the adjusted bases of such property (as
so determined).’’.
(b) EFFECTIVE DATE.—The amendment made by this section
shall apply to involuntary conversions occurring after the date
of the enactment of this Act.
SEC. 1611. TREATMENT OF CERTAIN INSURANCE CONTRACTS ON
RETIRED LIVES.
(a) GENERAL RULE.—
(1) Paragraph (2) of section 817(d) (defining variable con-
tract) is amended by striking ‘‘or’’ at the end of subparagraph
(A), by striking ‘‘and’’ at the end of subparagraph (B) and
H. R. 3448—92
inserting ‘‘or’’, and by inserting after subparagraph (B) the
following new subparagraph:
‘‘(C) provides for funding of insurance on retired lives
as described in section 807(c)(6), and’’.
(2) Paragraph (3) of section 817(d) is amended by striking
‘‘or’’ at the end of subparagraph (A), by striking the period
at the end of subparagraph (B) and inserting ‘‘, or’’, and by
inserting after subparagraph (B) the following new subpara-
graph:
‘‘(C) in the case of funds held under a contract described
in paragraph (2)(C), the amounts paid in, or the amounts
paid out, reflect the investment return and the market
value of the segregated asset account.’’.
(b) EFFECTIVE DATE.—The amendments made by this section
shall apply to taxable years beginning after December 31, 1995.
SEC. 1612. TREATMENT OF MODIFIED GUARANTEED CONTRACTS.
(a) GENERAL RULE.—Subpart E of part I of subchapter L of
chapter 1 (relating to definitions and special rules) is amended
by inserting after section 817 the following new section:
‘‘SEC. 817A. SPECIAL RULES FOR MODIFIED GUARANTEED CONTRACTS.
‘‘(a) COMPUTATION OF RESERVES.—In the case of a modified
guaranteed contract, clause (ii) of section 807(e)(1)(A) shall not
apply.
‘‘(b) SEGREGATED ASSETS UNDER MODIFIED GUARANTEED CON-
TRACTS MARKED TO MARKET.—
‘‘(1) IN GENERAL.—In the case of any life insurance com-
pany, for purposes of this subtitle—
‘‘(A) Any gain or loss with respect to a segregated
asset shall be treated as ordinary income or loss, as the
case may be.
‘‘(B) If any segregated asset is held by such company
as of the close of any taxable year—
‘‘(i) such company shall recognize gain or loss as
if such asset were sold for its fair market value on
the last business day of such taxable year, and
‘‘(ii) any such gain or loss shall be taken into
account for such taxable year.
Proper adjustment shall be made in the amount of any
gain or loss subsequently realized for gain or loss taken
into account under the preceding sentence. The Secretary
may provide by regulations for the application of this
subparagraph at times other than the times provided in
this subparagraph.
‘‘(2) SEGREGATED ASSET.—For purposes of paragraph (1),
the term ‘segregated asset’ means any asset held as part of
a segregated account referred to in subsection (d)(1) under
a modified guaranteed contract.
‘‘(c) SPECIAL RULE IN COMPUTING LIFE INSURANCE RESERVES.—
For purposes of applying section 816(b)(1)(A) to any modified
guaranteed contract, an assumed rate of interest shall include a
rate of interest determined, from time to time, with reference to
a market rate of interest.
‘‘(d) MODIFIED GUARANTEED CONTRACT DEFINED.—For purposes
of this section, the term ‘modified guaranteed contract’ means a
contract not described in section 817—
H. R. 3448—93
‘‘(1) all or part of the amounts received under which are
allocated to an account which, pursuant to State law or regula-
tion, is segregated from the general asset accounts of the com-
pany and is valued from time to time with reference to market
values,
‘‘(2) which—
‘‘(A) provides for the payment of annuities,
‘‘(B) is a life insurance contract, or
‘‘(C) is a pension plan contract which is not a life,
accident, or health, property, casualty, or liability contract,
‘‘(3) for which reserves are valued at market for annual
statement purposes, and
‘‘(4) which provides for a net surrender value or a policy-
holder’s fund (as defined in section 807(e)(1)).
If only a portion of a contract is not described in section 817,
such portion shall be treated for purposes of this section as a
separate contract.
‘‘(e) REGULATIONS.—The Secretary may prescribe regulations—
‘‘(1) to provide for the treatment of market value adjust-
ments under sections 72, 7702, 7702A, and 807(e)(1)(B),
‘‘(2) to determine the interest rates applicable under sec-
tions 807(c)(3), 807(d)(2)(B), and 812 with respect to a modified
guaranteed contract annually, in a manner appropriate for
modified guaranteed contracts and, to the extent appropriate
for such a contract, to modify or waive the applicability of
section 811(d),
‘‘(3) to provide rules to limit ordinary gain or loss treatment
to assets constituting reserves for modified guaranteed con-
tracts (and not other assets) of the company,
‘‘(4) to provide appropriate treatment of transfers of assets
to and from the segregated account, and
‘‘(5) as may be necessary or appropriate to carry out the
purposes of this section.’’.
(b) CLERICAL AMENDMENT.—The table of sections for subpart
E of part I of subchapter L of chapter 1 is amended by inserting
after the item relating to section 817 the following new item:
‘‘Sec. 817A. Special rules for modified guaranteed contracts.’’.
(c) EFFECTIVE DATE.—
(1) IN GENERAL.—The amendments made by this section
shall apply to taxable years beginning after December 31, 1995.
(2) TREATMENT OF NET ADJUSTMENTS.—Except as provided
in paragraph (3), in the case of any taxpayer required by
the amendments made by this section to change its calculation
of reserves to take into account market value adjustments
and to mark segregated assets to market for any taxable year—
(A) such changes shall be treated as a change in
method of accounting initiated by the taxpayer,
(B) such changes shall be treated as made with the
consent of the Secretary, and
(C) the adjustments required by reason of section 481
of the Internal Revenue Code of 1986, shall be taken into
account as ordinary income by the taxpayer for the tax-
payer’s first taxable year beginning after December 31,
1995.
(3) LIMITATION ON LOSS RECOGNITION AND ON DEDUCTION
FOR RESERVE INCREASES.—
(A) LIMITATION ON LOSS RECOGNITION.—
H. R. 3448—94
(i) IN GENERAL.—The aggregate loss recognized by
reason of the application of section 481 of the Internal
Revenue Code of 1986 with respect to section 817A(b)
of such Code (as added by this section) for the first
taxable year of the taxpayer beginning after December
31, 1995, shall not exceed the amount included in
the taxpayer’s gross income for such year by reason
of the excess (if any) of—
(I) the amount of life insurance reserves as
of the close of the prior taxable year, over
(II) the amount of such reserves as of the
beginning of such first taxable year,
to the extent such excess is attributable to subsection
(a) of such section 817A. Notwithstanding the preced-
ing sentence, the adjusted basis of each segregated
asset shall be determined as if all such losses were
recognized.
(ii) DISALLOWED LOSS ALLOWED OVER PERIOD.—The
amount of the loss which is not allowed under clause
(i) shall be allowed ratably over the period of 7 taxable
years beginning with the taxpayer’s first taxable year
beginning after December 31, 1995.
(B) LIMITATION
ON
DEDUCTION
FOR
INCREASE
IN
RESERVES.—
(i) IN
GENERAL.—The deduction allowed for the
first taxable year of the taxpayer beginning after
December 31, 1995, by reason of the application of
section 481 of such Code with respect to section 817A(a)
of such Code (as added by this section) shall not exceed
the aggregate built-in gain recognized by reason of
the application of such section 481 with respect to
section 817A(b) of such Code (as added by this section)
for such first taxable year.
(ii) 
DISALLOWED
DEDUCTION
ALLOWED
OVER
PERIOD.—The amount of the deduction which is dis-
allowed under clause (i) shall be allowed ratably over
the period of 7 taxable years beginning with the tax-
payer’s first taxable year beginning after December
31, 1995.
(iii) BUILT-IN GAIN.—For purposes of this subpara-
graph, the built-in gain on an asset is the amount
equal to the excess of—
(I) the fair market value of the asset as of
the beginning of the first taxable year of the tax-
payer beginning after December 31, 1995, over
(II) the adjusted basis of such asset as of
such time.
SEC. 1613. TREATMENT OF CONTRIBUTIONS IN AID OF CONSTRUCTION.
(a) TREATMENT OF CONTRIBUTIONS IN AID OF CONSTRUCTION.—
(1) IN GENERAL.—Section 118 (relating to contributions to
the capital of a corporation) is amended—
(A) by redesignating subsection (c) as subsection (e),
and
(B) by inserting after subsection (b) the following new
subsections:
H. R. 3448—95
‘‘(c) SPECIAL RULES
FOR WATER
AND SEWERAGE DISPOSAL
UTILITIES.—
‘‘(1) GENERAL RULE.—For purposes of this section, the term
‘contribution to the capital of the taxpayer’ includes any amount
of money or other property received from any person (whether
or not a shareholder) by a regulated public utility which pro-
vides water or sewerage disposal services if—
‘‘(A) such amount is a contribution in aid of con-
struction,
‘‘(B) in the case of contribution of property other than
water or sewerage disposal facilities, such amount meets
the requirements of the expenditure rule of paragraph (2),
and
‘‘(C) such amount (or any property acquired or con-
structed with such amount) is not included in the taxpayer’s
rate base for ratemaking purposes.
‘‘(2) EXPENDITURE RULE.—An amount meets the require-
ments of this paragraph if—
‘‘(A) an amount equal to such amount is expended
for the acquisition or construction of tangible property
described in section 1231(b)—
‘‘(i) which is the property for which the contribu-
tion was made or is of the same type as such property,
and
‘‘(ii) which is used predominantly in the trade or
business of furnishing water or sewerage disposal
services,
‘‘(B) the expenditure referred to in subparagraph (A)
occurs before the end of the second taxable year after
the year in which such amount was received, and
‘‘(C) accurate records are kept of the amounts contrib-
uted and expenditures made, the expenditures to which
contributions are allocated, and the year in which the
contributions and expenditures are received and made.
‘‘(3) DEFINITIONS.—For purposes of this subsection—
‘‘(A) CONTRIBUTION
IN
AID
OF
CONSTRUCTION.—The
term ‘contribution in aid of construction’ shall be defined
by regulations prescribed by the Secretary, except that
such term shall not include amounts paid as service charges
for starting or stopping services.
‘‘(B) 
PREDOMINANTLY.—The 
term 
‘predominantly’
means 80 percent or more.
‘‘(C) REGULATED PUBLIC UTILITY.—The term ‘regulated
public utility’ has the meaning given such term by section
7701(a)(33), except that such term shall not include any
utility which is not required to provide water or sewerage
disposal services to members of the general public in its
service area.
‘‘(4) DISALLOWANCE OF DEDUCTIONS AND CREDITS; ADJUSTED
BASIS.—Notwithstanding any other provision of this subtitle,
no deduction or credit shall be allowed for, or by reason of,
any expenditure which constitutes a contribution in aid of
construction to which this subsection applies. The adjusted
basis of any property acquired with contributions in aid of
construction to which this subsection applies shall be zero.
H. R. 3448—96
‘‘(d) STATUTE OF LIMITATIONS.—If the taxpayer for any taxable
year treats an amount as a contribution to the capital of the
taxpayer described in subsection (c), then—
‘‘(1) the statutory period for the assessment of any defi-
ciency attributable to any part of such amount shall not expire
before the expiration of 3 years from the date the Secretary
is notified by the taxpayer (in such manner as the Secretary
may prescribe) of—
‘‘(A) the amount of the expenditure referred to in
subparagraph (A) of subsection (c)(2),
‘‘(B) the taxpayer’s intention not to make the expendi-
tures referred to in such subparagraph, or
‘‘(C) a failure to make such expenditure within the
period described in subparagraph (B) of subsection (c)(2),
and
‘‘(2) such deficiency may be assessed before the expiration
of such 3-year period notwithstanding the provisions of any
other law or rule of law which would otherwise prevent such
assessment.’’.
(2) CONFORMING AMENDMENT.—Section 118(b) is amended
by inserting ‘‘except as provided in subsection (c),’’ before ‘‘the
term’’.
(3) EFFECTIVE DATE.—The amendments made by this sub-
section shall apply to amounts received after June 12, 1996.
(b) RECOVERY
METHOD
AND
PERIOD
FOR
WATER
UTILITY
PROPERTY.—
(1) REQUIREMENT TO USE STRAIGHT LINE METHOD.—Section
168(b)(3) is amended by adding at the end the following new
subparagraph:
‘‘(F) Water utility property described in subsection
(e)(5).’’.
(2) 25-YEAR RECOVERY PERIOD.—The table contained in sec-
tion 168(c)(1) is amended by inserting the following item after
the item relating to 20-year property:
‘‘Water utility property ....................................................................
25 years’’.
(3) WATER UTILITY PROPERTY.—
(A) IN GENERAL.—Section 168(e) is amended by adding
at the end the following new paragraph:
‘‘(5) WATER
UTILITY
PROPERTY.—The term ‘water utility
property’ means property—
‘‘(A) which is an integral part of the gathering, treat-
ment, or commercial distribution of water, and which, with-
out regard to this paragraph, would be 20-year property,
and
‘‘(B) any municipal sewer.’’.
(B) 
CONFORMING
AMENDMENTS.—Section 
168 
is
amended—
(i) by striking subparagraph (F) of subsection
(e)(3), and
(ii) by striking the item relating to subparagraph
(F) in the table in subsection (g)(3).
(4) 
ALTERNATIVE
SYSTEM.—Clause 
(iv) 
of 
section
168(g)(2)(C) is amended by inserting ‘‘or water utility property’’
after ‘‘tunnel bore’’.
(5) EFFECTIVE DATE.—The amendments made by this sub-
section shall apply to property placed in service after June
12, 1996, other than property placed in service pursuant to
H. R. 3448—97
a binding contract in effect before June 10, 1996, and at all
times thereafter before the property is placed in service.
SEC. 1614. ELECTION TO CEASE STATUS AS QUALIFIED SCHOLARSHIP
FUNDING CORPORATION.
(a) IN GENERAL.—Subsection (d) of section 150 (relating to
definitions and special rules) is amended by adding at the end
the following new paragraph:
‘‘(3) ELECTION TO CEASE STATUS AS QUALIFIED SCHOLARSHIP
FUNDING CORPORATION.—
‘‘(A) IN GENERAL.—Any qualified scholarship funding
bond, and qualified student loan bond, outstanding on the
date of the issuer’s election under this paragraph (and
any bond (or series of bonds) issued to refund such a
bond) shall not fail to be a tax-exempt bond solely because
the issuer ceases to be described in subparagraphs (A)
and (B) of paragraph (2) if the issuer meets the require-
ments of subparagraphs (B) and (C) of this paragraph.
‘‘(B) ASSETS AND LIABILITIES OF ISSUER TRANSFERRED
TO
TAXABLE
SUBSIDIARY.—The 
requirements 
of 
this
subparagraph are met by an issuer if—
‘‘(i) all of the student loan notes of the issuer
and other assets pledged to secure the repayment of
qualified scholarship funding bond indebtedness of the
issuer are transferred to another corporation within
a reasonable period after the election is made under
this paragraph;
‘‘(ii) such transferee corporation assumes or other-
wise provides for the payment of all of the qualified
scholarship funding bond indebtedness of the issuer
within a reasonable period after the election is made
under this paragraph;
‘‘(iii) to the extent permitted by law, such trans-
feree corporation assumes all of the responsibilities,
and succeeds to all of the rights, of the issuer under
the issuer’s agreements with the Secretary of Edu-
cation in respect of student loans;
‘‘(iv) immediately after such transfer, the issuer,
together with any other issuer which has made an
election under this paragraph in respect of such trans-
feree, hold all of the senior stock in such transferee
corporation; and
‘‘(v) such transferee corporation is not exempt from
tax under this chapter.
‘‘(C) ISSUER TO OPERATE AS INDEPENDENT ORGANIZA-
TION
DESCRIBED
IN
SECTION
501(C)(3).—The requirements
of this subparagraph are met by an issuer if, within a
reasonable period after the transfer referred to in subpara-
graph (B)—
‘‘(i) the issuer is described in section 501(c)(3) and
exempt from tax under section 501(a);
‘‘(ii) the issuer no longer is described in subpara-
graphs (A) and (B) of paragraph (2); and
‘‘(iii) at least 80 percent of the members of the
board of directors of the issuer are independent mem-
bers.
H. R. 3448—98
‘‘(D) SENIOR STOCK.—For purposes of this paragraph,
the term ‘senior stock’ means stock—
‘‘(i) which participates pro rata and fully in the
equity value of the corporation with all other common
stock of the corporation but which has the right to
payment of liquidation proceeds prior to payment of
liquidation proceeds in respect of other common stock
of the corporation;
‘‘(ii) which has a fixed right upon liquidation and
upon 
redemption 
to 
an 
amount 
equal 
to 
the
greater of—
‘‘(I) the fair market value of such stock on
the date of liquidation or redemption (whichever
is applicable); or
‘‘(II) the fair market value of all assets trans-
ferred in exchange for such stock and reduced
by the amount of all liabilities of the corporation
which has made an election under this paragraph
assumed by the transferee corporation in such
transfer;
‘‘(iii) the holder of which has the right to require
the transferee corporation to redeem on a date that
is not later than 10 years after the date on which
an election under this paragraph was made and pursu-
ant to such election such stock was issued; and
‘‘(iv) in respect of which, during the time such
stock is outstanding, there is not outstanding any
equity interest in the corporation having any liquida-
tion, redemption or dividend rights in the corporation
which are superior to those of such stock.
‘‘(E) INDEPENDENT
MEMBER.—The term ‘independent
member’ means a member of the board of directors of
the issuer who (except for services as a member of such
board) receives no compensation directly or indirectly—
‘‘(i) for services performed in connection with such
transferee corporation, or
‘‘(ii) for services as a member of the board of direc-
tors or as an officer of such transferee corporation.
For purposes of clause (ii), the term ‘officer’ includes any
individual having powers or responsibilities similar to those
of officers.
‘‘(F) COORDINATION WITH CERTAIN PRIVATE FOUNDATION
TAXES.—For purposes of sections 4942 (relating to the
excise tax on a failure to distribute income) and 4943
(relating to the excise tax on excess business holdings),
the transferee corporation referred to in subparagraph (B)
shall be treated as a functionally related business (within
the meaning of section 4942(j)(4)) with respect to the issuer
during the period commencing with the date on which
an election is made under this paragraph and ending on
the date that is the earlier of—
‘‘(i) the last day of the last taxable year for which
more than 50 percent of the gross income of such
transferee corporation is derived from, or more than
50 percent of the assets (by value) of such transferee
corporation consists of, student loan notes incurred
under the Higher Education Act of 1965; or
H. R. 3448—99
‘‘(ii) the last day of the taxable year of the issuer
during which occurs the date which is 10 years after
the date on which the election under this paragraph
is made.
‘‘(G) ELECTION.—An election under this paragraph may
be revoked only with the consent of the Secretary.’’.
(b) EFFECTIVE DATE.—The amendment made by this section
shall take effect on the date of the enactment of this Act.
SEC. 1615. CERTAIN TAX BENEFITS DENIED TO INDIVIDUALS FAILING
TO PROVIDE TAXPAYER IDENTIFICATION NUMBERS.
(a) PERSONAL EXEMPTION.—
(1) IN
GENERAL.—Section 151 (relating to allowance of
deductions for personal exemptions) is amended by adding at
the end the following new subsection:
‘‘(e) IDENTIFYING INFORMATION REQUIRED.—No exemption shall
be allowed under this section with respect to any individual unless
the TIN of such individual is included on the return claiming
the exemption.’’.
(2) CONFORMING AMENDMENTS.—
(A) Subsection (e) of section 6109 is repealed.
(B) Section 6724(d)(3) is amended by adding ‘‘and’’
at the end of subparagraph (C), by striking subparagraph
(D), and by redesignating subparagraph (E) as subpara-
graph (D).
(b) DEPENDENT CARE CREDIT.—Subsection (e) of section 21
(relating to expenses for household and dependent care services
necessary for gainful employment) is amended by adding at the
end the following new paragraph:
‘‘(10) IDENTIFYING INFORMATION REQUIRED WITH RESPECT
TO QUALIFYING INDIVIDUALS.—No credit shall be allowed under
this section with respect to any qualifying individual unless
the TIN of such individual is included on the return claiming
the credit.’’.
(c) EXTENSION OF PROCEDURES APPLICABLE TO MATHEMATICAL
OR CLERICAL ERRORS.—Section 6213(g)(2) (relating to the definition
of mathematical or clerical errors), as amended by the Personal
Responsibility and Work Opportunity Reconciliation Act of 1996,
is amended by striking ‘‘and’’ at the end of subparagraph (F),
by striking the period at the end of subparagraph (G) and inserting
‘‘, and’’, and by inserting at the end the following new subparagraph:
‘‘(H) an omission of a correct TIN required under sec-
tion 21 (relating to expenses for household and dependent
care services necessary for gainful employment) or section
151 (relating to allowance of deductions for personal exemp-
tions).’’.
(d) EFFECTIVE DATE.—
(1) IN GENERAL.—The amendments made by this section
shall apply with respect to returns the due date for which
(without regard to extensions) is on or after the 30th day
after the date of the enactment of this Act.
(2) SPECIAL RULE FOR 1995 AND 1996.—In the case of returns
for taxable years beginning in 1995 or 1996, a taxpayer shall
not be required by the amendments made by this section to
provide a taxpayer identification number for a child who is
born after October 31, 1995, in the case of a taxable year
H. R. 3448—100
beginning in 1995 or November 30, 1996, in the case of a
taxable year beginning in 1996.
SEC. 1616. REPEAL OF BAD DEBT RESERVE METHOD FOR THRIFT SAV-
INGS ASSOCIATIONS.
(a) IN GENERAL.—Section 593 (relating to reserves for losses
on loans) is amended by adding at the end the following new
subsections:
‘‘(f) TERMINATION OF RESERVE METHOD.—Subsections (a), (b),
(c), and (d) shall not apply to any taxable year beginning after
December 31, 1995.
‘‘(g) 6-YEAR SPREAD OF ADJUSTMENTS.—
‘‘(1) IN
GENERAL.—In the case of any taxpayer who is
required by reason of subsection (f) to change its method of
computing reserves for bad debts—
‘‘(A) such change shall be treated as a change in a
method of accounting,
‘‘(B) such change shall be treated as initiated by the
taxpayer and as having been made with the consent of
the Secretary, and
‘‘(C) the net amount of the adjustments required to
be taken into account by the taxpayer under section
481(a)—
‘‘(i) shall be determined by taking into account
only applicable excess reserves, and
‘‘(ii) as so determined, shall be taken into account
ratably over the 6-taxable year period beginning with
the first taxable year beginning after December 31,
1995.
‘‘(2) APPLICABLE EXCESS RESERVES.—
‘‘(A) IN GENERAL.—For purposes of paragraph (1), the
term ‘applicable excess reserves’ means the excess (if any)
of—
‘‘(i) the balance of the reserves described in sub-
section (c)(1) (other than the supplemental reserve)
as of the close of the taxpayer’s last taxable year begin-
ning before January 1, 1996, over
‘‘(ii) the lesser of—
‘‘(I) the balance of such reserves as of the
close of the taxpayer’s last taxable year beginning
before January 1, 1988, or
‘‘(II) the balance of the reserves described in
subclause (I), reduced in the same manner as
under section 585(b)(2)(B)(ii) on the basis of the
taxable years described in clause (i) and this
clause.
‘‘(B) SPECIAL RULE FOR THRIFTS WHICH BECOME SMALL
BANKS.—In the case of a bank (as defined in section 581)
which was not a large bank (as defined in section 585(c)(2))
for its first taxable year beginning after December 31,
1995—
‘‘(i) the balance taken into account under subpara-
graph (A)(ii) shall not be less than the amount which
would be the balance of such reserves as of the close
of its last taxable year beginning before such date
if the additions to such reserves for all taxable years
had been determined under section 585(b)(2)(A), and
H. R. 3448—101
‘‘(ii) the opening balance of the reserve for bad
debts as of the beginning of such first taxable year
shall be the balance taken into account under subpara-
graph (A)(ii) (determined after the application of clause
(i) of this subparagraph).
The preceding sentence shall not apply for purposes of
paragraphs (5) and (6) or subsection (e)(1).
‘‘(3) RECAPTURE OF PRE-1988 RESERVES WHERE TAXPAYER
CEASES TO BE BANK.—If, during any taxable year beginning
after December 31, 1995, a taxpayer to which paragraph (1)
applied is not a bank (as defined in section 581), paragraph
(1) shall apply to the reserves described in paragraph (2)(A)(ii)
and the supplemental reserve; except that such reserves shall
be taken into account ratably over the 6-taxable year period
beginning with such taxable year.
‘‘(4) SUSPENSION
OF
RECAPTURE
IF
RESIDENTIAL
LOAN
REQUIREMENT MET.—
‘‘(A) IN GENERAL.—In the case of a bank which meets
the residential loan requirement of subparagraph (B) for
the first taxable year beginning after December 31, 1995,
or for the following taxable year—
‘‘(i) no adjustment shall be taken into account
under paragraph (1) for such taxable year, and
‘‘(ii) such taxable year shall be disregarded in
determining—
‘‘(I) whether any other taxable year is a tax-
able year for which an adjustment is required to
be taken into account under paragraph (1), and
‘‘(II) the amount of such adjustment.
‘‘(B) RESIDENTIAL
LOAN
REQUIREMENT.—A taxpayer
meets the residential loan requirement of this subpara-
graph for any taxable year if the principal amount of the
residential loans made by the taxpayer during such year
is not less than the base amount for such year.
‘‘(C) RESIDENTIAL LOAN.—For purposes of this para-
graph, the term ‘residential loan’ means any loan described
in clause (v) of section 7701(a)(19)(C) but only if such
loan is incurred in acquiring, constructing, or improving
the property described in such clause.
‘‘(D) BASE AMOUNT.—For purposes of subparagraph (B),
the base amount is the average of the principal amounts
of the residential loans made by the taxpayer during the
6 most recent taxable years beginning on or before Decem-
ber 31, 1995. At the election of the taxpayer who made
such loans during each of such 6 taxable years, the preced-
ing sentence shall be applied without regard to the taxable
year in which such principal amount was the highest and
the taxable year in such principal amount was the lowest.
Such an election may be made only for the first taxable
year beginning after such date, and, if made for such
taxable year, shall apply to the succeeding taxable year
unless revoked with the consent of the Secretary.
‘‘(E) CONTROLLED GROUPS.—In the case of a taxpayer
which is a member of any controlled group of corporations
described in section 1563(a)(1), subparagraph (B) shall be
applied with respect to such group.
H. R. 3448—102
‘‘(5) CONTINUED APPLICATION OF FRESH START UNDER SEC-
TION 585 TRANSITIONAL RULES.—In the case of a taxpayer to
which paragraph (1) applied and which was not a large bank
(as defined in section 585(c)(2)) for its first taxable year begin-
ning after December 31, 1995:
‘‘(A) IN
GENERAL.—For purposes of determining the
net amount of adjustments referred to in section
585(c)(3)(A)(iii), there shall be taken into account only the
excess (if any) of the reserve for bad debts as of the close
of the last taxable year before the disqualification year
over the balance taken into account by such taxpayer under
paragraph (2)(A)(ii) of this subsection.
‘‘(B) TREATMENT UNDER ELECTIVE CUT-OFF METHOD.—
For purposes of applying section 585(c)(4)—
‘‘(i) the balance of the reserve taken into account
under subparagraph (B) thereof shall be reduced by
the balance taken into account by such taxpayer under
paragraph (2)(A)(ii) of this subsection, and
‘‘(ii) no amount shall be includible in gross income
by reason of such reduction.
‘‘(6) SUSPENDED
RESERVE
INCLUDED
AS
SECTION
381(c)
ITEMS.—The balance taken into account by a taxpayer under
paragraph (2)(A)(ii) of this subsection and the supplemental
reserve shall be treated as items described in section 381(c).
‘‘(7) CONVERSIONS TO CREDIT UNIONS.—In the case of a
taxpayer to which paragraph (1) applied which becomes a credit
union described in section 501(c) and exempt from taxation
under section 501(a)—
‘‘(A) any amount required to be included in the gross
income of the credit union by reason of this subsection
shall be treated as derived from an unrelated trade or
business (as defined in section 513), and
‘‘(B) for purposes of paragraph (3), the credit union
shall not be treated as if it were a bank.
‘‘(8) REGULATIONS.—The Secretary shall prescribe such
regulations as may be necessary to carry out this subsection
and subsection (e), including regulations providing for the
application of such subsections in the case of acquisitions,
mergers, spin-offs, and other reorganizations.’’.
(b) CONFORMING AMENDMENTS.—
(1) Subsection (d) of section 50 is amended by adding
at the end the following new sentence:
‘‘Paragraphs (1)(A), (2)(A), and (4) of the section 46(e) referred
to in paragraph (1) of this subsection shall not apply to any taxable
year beginning after December 31, 1995.’’
(2) Subsection (e) of section 52 is amended by striking
paragraph (1) and by redesignating paragraphs (2) and (3)
as paragraphs (1) and (2), respectively.
(3) Subsection (a) of section 57 is amended by striking
paragraph (4).
(4) Section 246 is amended by striking subsection (f).
(5) Clause (i) of section 291(e)(1)(B) is amended by striking
‘‘or to which section 593 applies’’.
(6) Subparagraph (A) of section 585(a)(2) is amended by
striking ‘‘other than an organization to which section 593
applies’’.
H. R. 3448—103
(7)(A) The material preceding subparagraph (A) of section
593(e)(1) is amended by striking ‘‘by a domestic building and
loan association or an institution that is treated as a mutual
savings bank under section 591(b)’’ and inserting ‘‘by a taxpayer
having a balance described in subsection (g)(2)(A)(ii)’’.
(B) Subparagraph (B) of section 593(e)(1) is amended to
read as follows:
‘‘(B) then out of the balance taken into account under
subsection (g)(2)(A)(ii) (properly adjusted for amounts
charged against such reserves for taxable years beginning
after December 31, 1987),’’.
(C) The second sentence of section 593(e)(1) is amended
by striking ‘‘the association or an institution that is treated
as a mutual savings bank under section 591(b)’’ and inserting
‘‘a taxpayer having a balance described in subsection
(g)(2)(A)(ii)’’.
(D) The third sentence of section 593(e)(1) is amended
by striking ‘‘an association’’ and inserting ‘‘a taxpayer having
a balance described in subsection (g)(2)(A)(ii)’’.
(E) Paragraph (1) of section 593(e) is amended by adding
at the end the following new sentence: ‘‘This paragraph shall
not apply to any distribution of all of the stock of a bank
(as defined in section 581) to another corporation if, imme-
diately after the distribution, such bank and such other corpora-
tion are members of the same affiliated group (as defined
in section 1504) and the provisions of section 5(e) of the Federal
Deposit Insurance Act (as in effect on December 31, 1995)
or similar provisions are in effect.’’.
(8) Section 595 is hereby repealed.
(9) Section 596 is hereby repealed.
(10) Subsection (a) of section 860E is amended—
(A) by striking ‘‘Except as provided in paragraph (2),
the’’ in paragraph (1) and inserting ‘‘The’’,
(B) by striking paragraphs (2) and (4) and redesignat-
ing paragraphs (3), (5), and (6) as paragraphs (2), (3),
and (4), respectively,
(C) by striking in paragraph (2) (as so redesignated)
all that follows ‘‘subsection’’ and inserting a period, and
(D) by striking the last sentence of paragraph (4) (as
so redesignated).
(11) Paragraph (3) of section 992(d) is amended by striking
‘‘or 593’’.
(12) Section 1038 is amended by striking subsection (f).
(13) Clause (ii) of section 1042(c)(4)(B) is amended by
striking ‘‘or 593’’.
(14) Subsection (c) of section 1277 is amended by striking
‘‘or to which section 593 applies’’.
(15) Subparagraph (B) of section 1361(b)(2) is amended
by striking ‘‘or to which section 593 applies’’.
(16) The table of sections for part II of subchapter H
of chapter 1 is amended by striking the items relating to
sections 595 and 596.
(c) EFFECTIVE DATES.—
(1) IN GENERAL.—Except as otherwise provided in this sub-
section, the amendments made by this section shall apply to
taxable years beginning after December 31, 1995.
H. R. 3448—104
(2) SUBSECTION (b)(7)(B).—The amendments made by sub-
section (b)(7)(B) shall not apply to any distribution with respect
to preferred stock if—
(A) such stock is outstanding at all times after October
31, 1995, and before the distribution, and
(B) such distribution is made before the date which
is 1 year after the date of the enactment of this Act (or,
in the case of stock which may be redeemed, if later,
the date which is 30 days after the earliest date that
such stock may be redeemed).
(3) SUBSECTION (b)(8).—The amendment made by sub-
section (b)(8) shall apply to property acquired in taxable years
beginning after December 31, 1995.
(4) SUBSECTION (b)(10).—The amendments made by sub-
section (b)(10) shall not apply to any residual interest held
by a taxpayer if such interest has been held by such taxpayer
at all times after October 31, 1995.
SEC. 1617. EXCLUSION FOR ENERGY CONSERVATION SUBSIDIES LIM-
ITED TO SUBSIDIES WITH RESPECT TO DWELLING UNITS.
(a) IN GENERAL.—Paragraph (1) of section 136(c) (defining
energy conservation measure) is amended by striking ‘‘energy
demand—’’ and all that follows and inserting ‘‘energy demand with
respect to a dwelling unit.’’.
(b) CONFORMING AMENDMENTS.—
(1) Subsection (a) of section 136 is amended to read as
follows:
‘‘(a) EXCLUSION.—Gross income shall not include the value of
any subsidy provided (directly or indirectly) by a public utility
to a customer for the purchase or installation of any energy con-
servation measure.’’.
(2) Paragraph (2) of section 136(c) is amended—
(A) by striking subparagraph (A) and by redesignating
subparagraphs (B) and (C) as subparagraphs (A) and (B),
respectively, and
(B) by striking ‘‘AND SPECIAL RULES’’ in the paragraph
heading.
(c) EFFECTIVE DATE.—The amendments made by this section
shall apply to amounts received after December 31, 1996, unless
received pursuant to a written binding contract in effect on Septem-
ber 13, 1995, and at all times thereafter.
PART II—FINANCIAL ASSET SECURITIZATION
INVESTMENTS
SEC. 1621. FINANCIAL ASSET SECURITIZATION INVESTMENT TRUSTS.
(a) IN GENERAL.—Subchapter M of chapter 1 is amended by
adding at the end the following new part:
‘‘PART V—FINANCIAL ASSET SECURITIZATION
INVESTMENT TRUSTS
‘‘Sec. 860H. Taxation of a FASIT; other general rules.
‘‘Sec. 860I. Gain recognition on contributions to a FASIT and in other
cases.
‘‘Sec. 860J. Non-FASIT losses not to offset certain FASIT inclusions.
H. R. 3448—105
‘‘Sec. 860K. Treatment of transfers of high-yield interests to disqualified
holders.
‘‘Sec. 860L. Definitions and other special rules.
‘‘SEC. 860H. TAXATION OF A FASIT; OTHER GENERAL RULES.
‘‘(a) TAXATION OF FASIT.—A FASIT as such shall not be subject
to taxation under this subtitle (and shall not be treated as a
trust, partnership, corporation, or taxable mortgage pool).
‘‘(b) TAXATION OF HOLDER OF OWNERSHIP INTEREST.—In deter-
mining the taxable income of the holder of the ownership interest
in a FASIT—
‘‘(1) all assets, liabilities, and items of income, gain, deduc-
tion, loss, and credit of a FASIT shall be treated as assets,
liabilities, and such items (as the case may be) of such holder,
‘‘(2) the constant yield method (including the rules of sec-
tion 1272(a)(6)) shall be applied under an accrual method of
accounting in determining all interest, acquisition discount,
original issue discount, and market discount and all premium
deductions or adjustments with respect to each debt instrument
of the FASIT,
‘‘(3) there shall not be taken into account any item of
income, gain, or deduction allocable to a prohibited transaction,
and
‘‘(4) interest accrued by the FASIT which is exempt from
tax imposed by this subtitle shall, when taken into account
by such holder, be treated as ordinary income.
‘‘(c) TREATMENT OF REGULAR INTERESTS.—For purposes of this
title—
‘‘(1) a regular interest in a FASIT, if not otherwise a
debt instrument, shall be treated as a debt instrument,
‘‘(2) section 163(e)(5) shall not apply to such an interest,
and
‘‘(3) amounts includible in gross income with respect to
such an interest shall be determined under an accrual method
of accounting.
‘‘SEC. 860I. GAIN RECOGNITION ON CONTRIBUTIONS TO A FASIT AND
IN OTHER CASES.
‘‘(a) TREATMENT OF PROPERTY ACQUIRED BY FASIT.—
‘‘(1) PROPERTY
ACQUIRED
FROM
HOLDER
OF
OWNERSHIP
INTEREST OR RELATED PERSON.—If property is sold or contrib-
uted to a FASIT by the holder of the ownership interest in
such FASIT (or by a related person) gain (if any) shall be
recognized to such holder (or person) in an amount equal to
the excess (if any) of such property’s value under subsection
(d) on the date of such sale or contribution over its adjusted
basis on such date.
‘‘(2) PROPERTY ACQUIRED OTHER THAN FROM HOLDER OF
OWNERSHIP INTEREST OR RELATED PERSON.—Property which is
acquired by a FASIT other than in a transaction to which
paragraph (1) applies shall be treated—
‘‘(A) as having been acquired by the holder of the
ownership interest in the FASIT for an amount equal to
the FASIT’s cost of acquiring such property, and
‘‘(B) as having been sold by such holder to the FASIT
at its value under subsection (d) on such date.
‘‘(b) GAIN RECOGNITION ON PROPERTY OUTSIDE FASIT WHICH
SUPPORTS REGULAR INTERESTS.—If property held by the holder
H. R. 3448—106
of the ownership interest in a FASIT (or by any person related
to such holder) supports any regular interest in such FASIT—
‘‘(1) gain shall be recognized to such holder (or person)
in the same manner as if such holder (or person) had sold
such property at its value under subsection (d) on the earliest
date such property supports such an interest, and
‘‘(2) such property shall be treated as held by such FASIT
for purposes of this part.
‘‘(c) DEFERRAL OF GAIN RECOGNITION.—The Secretary may pre-
scribe regulations which—
‘‘(1) provide that gain otherwise recognized under sub-
section (a) or (b) shall not be recognized before the earliest
date on which such property supports any regular interest
in such FASIT or any indebtedness of the holder of the owner-
ship interest (or of any person related to such holder), and
‘‘(2) provide such adjustments to the other provisions of
this part to the extent appropriate in the context of the treat-
ment provided under paragraph (1).
‘‘(d) VALUATION.—For purposes of this section—
‘‘(1) IN GENERAL.—The value of any property under this
subsection shall be—
‘‘(A) in the case of a debt instrument which is not
traded on an established securities market, the sum of
the present values of the reasonably expected payments
under such instrument determined (in the manner provided
by regulations prescribed by the Secretary)—
‘‘(i) as of the date of the event resulting in the
gain recognition under this section, and
‘‘(ii) by using a discount rate equal to 120 percent
of the applicable Federal rate (as defined in section
1274(d)), or such other discount rate specified in such
regulations, compounded semiannually, and
‘‘(B) in the case of any other property, its fair market
value.
‘‘(2) SPECIAL RULE FOR REVOLVING LOAN ACCOUNTS.—For
purposes of paragraph (1)—
‘‘(A) each extension of credit (other than the accrual
of interest) on a revolving loan account shall be treated
as a separate debt instrument, and
‘‘(B) payments on such extensions of credit having
substantially the same terms shall be applied to such exten-
sions beginning with the earliest such extension.
‘‘(e) SPECIAL RULES.—
‘‘(1) NONRECOGNITION RULES NOT TO APPLY.—Gain required
to be recognized under this section shall be recognized notwith-
standing any other provision of this subtitle.
‘‘(2) BASIS ADJUSTMENTS.—The basis of any property on
which gain is recognized under this section shall be increased
by the amount of gain so recognized.
‘‘SEC. 860J. NON-FASIT LOSSES NOT TO OFFSET CERTAIN FASIT
INCLUSIONS.
‘‘(a) IN GENERAL.—The taxable income of the holder of the
ownership interest or any high-yield interest in a FASIT for any
taxable year shall in no event be less than the sum of—
H. R. 3448—107
‘‘(1) such holder’s taxable income determined solely with
respect to such interests (including gains and losses from sales
and exchanges of such interests), and
‘‘(2) the excess inclusion (if any) under section 860E(a)(1)
for such taxable year.
‘‘(b) COORDINATION WITH SECTION 172.—Any increase in the
taxable income of any holder of the ownership interest or a high-
yield interest in a FASIT for any taxable year by reason of sub-
section (a) shall be disregarded—
‘‘(1) in determining under section 172 the amount of any
net operating loss for such taxable year, and
‘‘(2) in determining taxable income for such taxable year
for purposes of the second sentence of section 172(b)(2).
‘‘(c) COORDINATION WITH MINIMUM TAX.—For purposes of part
VI of subchapter A of this chapter—
‘‘(1) the reference in section 55(b)(2) to taxable income
shall be treated as a reference to taxable income determined
without regard to this section,
‘‘(2) the alternative minimum taxable income of any holder
of the ownership interest or a high-yield interest in a FASIT
for any taxable year shall in no event be less than such holder’s
taxable income determined solely with respect to such interests,
and
‘‘(3) any increase in taxable income under this section shall
be disregarded for purposes of computing the alternative tax
net operating loss deduction.
‘‘(d) AFFILIATED GROUPS.—All members of an affiliated group
filing a consolidated return shall be treated as one taxpayer for
purposes of this section.
‘‘SEC. 860K. TREATMENT OF TRANSFERS OF HIGH-YIELD INTERESTS
TO DISQUALIFIED HOLDERS.
‘‘(a) GENERAL RULE.—In the case of any high-yield interest
which is held by a disqualified holder—
‘‘(1) the gross income of such holder shall not include any
income (other than gain) attributable to such interest, and
‘‘(2) amounts not includible in the gross income of such
holder by reason of paragraph (1) shall be included (at the
time otherwise includible under paragraph (1)) in the gross
income of the most recent holder of such interest which is
not a disqualified holder.
‘‘(b) EXCEPTIONS.—Rules similar to the rules of paragraphs
(4) and (7) of section 860E(e) shall apply to the tax imposed by
reason of the inclusion in gross income under subsection (a).
‘‘(c) DISQUALIFIED HOLDER.—For purposes of this section, the
term ‘disqualified holder’ means any holder other than—
‘‘(1) an eligible corporation (as defined in section
860L(a)(2)), or
‘‘(2) a FASIT.
‘‘(d) TREATMENT OF INTERESTS HELD BY SECURITIES DEALERS.—
‘‘(1) IN GENERAL.—Subsection (a) shall not apply to any
high-yield interest held by a disqualified holder if such holder
is a dealer in securities who acquired such interest exclusively
for sale to customers in the ordinary course of business (and
not for investment).
‘‘(2) CHANGE IN DEALER STATUS.—
H. R. 3448—108
‘‘(A) IN GENERAL.—In the case of a dealer in securities
which is not an eligible corporation (as defined in section
860L(a)(2)), if—
‘‘(i) such dealer ceases to be a dealer in
securities, or
‘‘(ii) such dealer commences holding the high-yield
interest for investment,
there is hereby imposed (in addition to other taxes) an
excise tax equal to the product of the highest rate of tax
specified in section 11(b)(1) and the income of such dealer
attributable to such interest for periods after the date
of such cessation or commencement.
‘‘(B) HOLDING
FOR
DAYS
OR
LESS.—For purposes
of subparagraph (A)(ii), a dealer shall not be treated as
holding an interest for investment before the thirty-second
day after the date such dealer acquired such interest unless
such interest is so held as part of a plan to avoid the
purposes of this paragraph.
‘‘(C) 
ADMINISTRATIVE
PROVISIONS.—The 
deficiency
procedures of subtitle F shall apply to the tax imposed
by this paragraph.
‘‘(e) TREATMENT
OF
HIGH-YIELD
INTERESTS
IN
PASS-THRU
ENTITIES.—
‘‘(1) IN GENERAL.—If a pass-thru entity (as defined in sec-
tion 860E(e)(6)) issues a debt or equity interest—
‘‘(A) which is supported by any regular interest in
a FASIT, and
‘‘(B) which has an original yield to maturity which
is greater than each of—
‘‘(i) the sum determined under clauses (i) and (ii)
of section 163(i)(1)(B) with respect to such debt or
equity interest, and
‘‘(ii) the yield to maturity to such entity on such
regular interest (determined as of the date such entity
acquired such interest),
there is hereby imposed on the pass-thru entity a tax (in
addition to other taxes) equal to the product of the highest
rate of tax specified in section 11(b)(1) and the income of
the holder of such debt or equity interest which is properly
attributable to such regular interest. For purposes of the preced-
ing sentence, the yield to maturity of any equity interest shall
be determined under regulations prescribed by the Secretary.
‘‘(2) EXCEPTION.—Paragraph (1) shall not apply to arrange-
ments not having as a principal purpose the avoidance of the
purposes of this subsection.
‘‘SEC. 860L. DEFINITIONS AND OTHER SPECIAL RULES.
‘‘(a) FASIT.—
‘‘(1) IN
GENERAL.—For purposes of this title, the terms
‘financial asset securitization investment trust’ and ‘FASIT’
mean any entity—
‘‘(A) for which an election to be treated as a FASIT
applies for the taxable year,
‘‘(B) all of the interests in which are regular interests
or the ownership interest,
H. R. 3448—109
‘‘(C) which has only one ownership interest and such
ownership interest is held directly by an eligible corpora-
tion,
‘‘(D) as of the close of the third month beginning after
the day of its formation and at all times thereafter, substan-
tially all of the assets of which (including assets treated
as held by the entity under section 860I(b)(2)) consist of
permitted assets, and
‘‘(E) which is not described in section 851(a).
A rule similar to the rule of the last sentence of section 860D(a)
shall apply for purposes of this paragraph.
‘‘(2) ELIGIBLE CORPORATION.—For purposes of paragraph
(1)(C), the term ‘eligible corporation’ means any domestic C
corporation other than—
‘‘(A) a corporation which is exempt from, or is not
subject to, tax under this chapter,
‘‘(B) an entity described in section 851(a) or 856(a),
‘‘(C) a REMIC, and
‘‘(D) an organization to which part I of subchapter
T applies.
‘‘(3) ELECTION.—An entity (otherwise meeting the require-
ments of paragraph (1)) may elect to be treated as a FASIT.
Except as provided in paragraph (5), such an election shall
apply to the taxable year for which made and all subsequent
taxable years unless revoked with the consent of the Secretary.
‘‘(4) TERMINATION.—If any entity ceases to be a FASIT
at any time during the taxable year, such entity shall not
be treated as a FASIT after the date of such cessation.
‘‘(5) INADVERTENT
TERMINATIONS, ETC.—Rules similar to
the rules of section 860D(b)(2)(B) shall apply to inadvertent
failures to qualify or remain qualified as a FASIT.
‘‘(6) PERMITTED
ASSETS
NOT
TREATED
AS
INTEREST
IN
FASIT.—Except as provided in regulations prescribed by the
Secretary, any asset which is a permitted asset at the time
acquired by a FASIT shall not be treated at any time as
an interest in such FASIT.
‘‘(b) INTERESTS IN FASIT.—For purposes of this part—
‘‘(1) REGULAR INTEREST.—
‘‘(A) IN GENERAL.—The term ‘regular interest’ means
any interest which is issued by a FASIT after the startup
date with fixed terms and which is designated as a regular
interest if—
‘‘(i) such interest unconditionally entitles the
holder to receive a specified principal amount (or other
similar amount),
‘‘(ii) interest payments (or other similar amounts),
if any, with respect to such interest are determined
based on a fixed rate, or, except as otherwise provided
by the Secretary, at a variable rate permitted under
section 860G(a)(1)(B)(i),
‘‘(iii) such interest does not have a stated maturity
(including options to renew) greater than 30 years
(or such longer period as may be permitted by regula-
tions),
‘‘(iv) the issue price of such interest does not exceed
125 percent of its stated principal amount, and
H. R. 3448—110
‘‘(v) the yield to maturity on such interest is less
than the sum determined under section 163(i)(1)(B)
with respect to such interest.
An interest shall not fail to meet the requirements of
clause (i) merely because the timing (but not the amount)
of the principal payments (or other similar amounts) may
be contingent on the extent that payments on debt
instruments held by the FASIT are made in advance of
anticipated payments and on the amount of income from
permitted assets.
‘‘(B) HIGH-YIELD INTERESTS.—
‘‘(i) IN
GENERAL.—The term ‘regular interest’
includes any high-yield interest.
‘‘(ii) HIGH-YIELD INTEREST.—The term ‘high-yield
interest’ means any interest which would be described
in subparagraph (A) but for—
‘‘(I) failing to meet the requirements of one
or more of clauses (i), (iv), or (v) thereof, or
‘‘(II) failing to meet the requirement of clause
(ii) thereof but only if interest payments (or other
similar amounts), if any, with respect to such
interest consist of a specified portion of the interest
payments on permitted assets and such portion
does not vary during the period such interest is
outstanding.
‘‘(2) OWNERSHIP INTEREST.—The term ‘ownership interest’
means the interest issued by a FASIT after the startup day
which is designated as an ownership interest and which is
not a regular interest.
‘‘(c) PERMITTED ASSETS.—For purposes of this part—
‘‘(1) IN GENERAL.—The term ‘permitted asset’ means—
‘‘(A) cash or cash equivalents,
‘‘(B) any debt instrument (as defined in section
1275(a)(1)) under which interest payments (or other similar
amounts), if any, at or before maturity meet the require-
ments applicable under clause (i) or (ii) of section
860G(a)(1)(B),
‘‘(C) foreclosure property,
‘‘(D) any asset—
‘‘(i) which is an interest rate or foreign currency
notional principal contract, letter of credit, insurance,
guarantee against payment defaults, or other similar
instrument permitted by the Secretary, and
‘‘(ii) which is reasonably required to guarantee or
hedge against the FASIT’s risks associated with being
the obligor on interests issued by the FASIT,
‘‘(E) contract rights to acquire debt instruments
described in subparagraph (B) or assets described in
subparagraph (D),
‘‘(F) any regular interest in another FASIT, and
‘‘(G) any regular interest in a REMIC.
‘‘(2) DEBT ISSUED BY HOLDER OF OWNERSHIP INTEREST NOT
PERMITTED ASSET.—The term ‘permitted asset’ shall not include
any debt instrument issued by the holder of the ownership
interest in the FASIT or by any person related to such holder
or any direct or indirect interest in such a debt instrument.
The preceding sentence shall not apply to cash equivalents
H. R. 3448—111
and to any other investment specified in regulations prescribed
by the Secretary.
‘‘(3) FORECLOSURE PROPERTY.—
‘‘(A) IN
GENERAL.—The term ‘foreclosure property’
means property—
‘‘(i) which would be foreclosure property under sec-
tion 856(e) (determined without regard to paragraph
(5) thereof) if such property were real property acquired
by a real estate investment trust, and
‘‘(ii) which is acquired in connection with the
default or imminent default of a debt instrument held
by the FASIT unless the security interest in such prop-
erty was created for the principal purpose of permitting
the FASIT to invest in such property.
Solely for purposes of subsection (a)(1), the determination
of whether any property is foreclosure property shall be
made without regard to section 856(e)(4).
‘‘(B) AUTHORITY TO REDUCE GRACE PERIOD.—In the case
of property other than real property and other than per-
sonal property incident to real property, the Secretary may
by regulation reduce for purposes of subparagraph (A) the
periods otherwise applicable under paragraphs (2) and (3)
of section 856(e).
‘‘(d) STARTUP DAY.—For purposes of this part—
‘‘(1) IN GENERAL.—The term ‘startup day’ means the date
designated in the election under subsection (a)(3) as the startup
day of the FASIT. Such day shall be the beginning of the
first taxable year of the FASIT.
‘‘(2) TREATMENT
OF
PROPERTY
HELD
ON
STARTUP
DAY.—
All property held (or treated as held under section 860I(c)(2))
by an entity as of the startup day shall be treated as contributed
to such entity on such day by the holder of the ownership
interest in such entity.
‘‘(e) TAX ON PROHIBITED TRANSACTIONS.—
‘‘(1) IN GENERAL.—There is hereby imposed for each taxable
year of a FASIT a tax equal to 100 percent of the net income
derived from prohibited transactions. Such tax shall be paid
by the holder of the ownership interest in the FASIT.
‘‘(2) PROHIBITED TRANSACTIONS.—For purposes of this part,
the term ‘prohibited transaction’ means—
‘‘(A) the receipt of any income derived from any asset
that is not a permitted asset,
‘‘(B) except as provided in paragraph (3), the disposition
of any permitted asset,
‘‘(C) the receipt of any income derived from any loan
originated by the FASIT, and
‘‘(D) the receipt of any income representing a fee or
other compensation for services (other than any fee received
as compensation for a waiver, amendment, or consent under
permitted assets (other than foreclosure property) held by
the FASIT).
‘‘(3) EXCEPTION FOR INCOME FROM CERTAIN DISPOSITIONS.—
‘‘(A) IN GENERAL.—Paragraph (2)(B) shall not apply
to a disposition which would not be a prohibited transaction
(as defined in section 860F(a)(2)) by reason of—
‘‘(i) clause (ii), (iii), or (iv) of section 860F(a)(2)(A),
or
H. R. 3448—112
‘‘(ii) section 860F(a)(5), if the FASIT were treated
as a REMIC and debt instruments described in sub-
section (c)(1)(B) were treated as qualified mortgages.
‘‘(B) SUBSTITUTION OF DEBT INSTRUMENTS; REDUCTION
OF OVER-COLLATERALIZATION.—Paragraph (2)(B) shall not
apply to—
‘‘(i) the substitution of a debt instrument described
in subsection (c)(1)(B) for another debt instrument
which is a permitted asset, or
‘‘(ii) the distribution of a debt instrument con-
tributed by the holder of the ownership interest to
such holder in order to reduce over-collateralization
of the FASIT,
but only if a principal purpose of acquiring the debt
instrument which is disposed of was not the recognition
of gain (or the reduction of a loss) as a result of an increase
in the market value of the debt instrument after its acquisi-
tion by the FASIT.
‘‘(C) LIQUIDATION OF CLASS OF REGULAR INTERESTS.—
Paragraph (2)(B) shall not apply to the complete liquidation
of any class of regular interests.
‘‘(4) NET
INCOME.—For purposes of this subsection, net
income shall be determined in accordance with section
860F(a)(3).
‘‘(f) COORDINATION WITH OTHER PROVISIONS.—
‘‘(1) WASH
SALES
RULES.—Rules similar to the rules of
section 860F(d) shall apply to the ownership interest in a
FASIT.
‘‘(2) SECTION
475.—Except as provided by the Secretary
by regulations, if any security which is sold or contributed
to a FASIT by the holder of the ownership interest in such
FASIT was required to be marked-to-market under section
475 by such holder, section 475 shall continue to apply to
such security; except that in applying section 475 while such
security is held by the FASIT, the fair market value of such
security for purposes of section 475 shall not be less than
its value under section 860I(d).
‘‘(g) RELATED PERSON.—For purposes of this part, a person
(hereinafter in this subsection referred to as the ‘related person’)
is related to any person if—
‘‘(1) the related person bears a relationship to such person
specified in section 267(b) or section 707(b)(1), or
‘‘(2) the related person and such person are engaged in
trades or businesses under common control (within the meaning
of subsections (a) and (b) of section 52).
For purposes of paragraph (1), in applying section 267(b) or
707(b)(1), ‘20 percent’ shall be substituted for ‘50 percent’.
‘‘(h) REGULATIONS.—The Secretary shall prescribe such regula-
tions as may be necessary or appropriate to carry out the purposes
of this part, including regulations to prevent the abuse of the
purposes of this part through transactions which are not primarily
related to securitization of debt instruments by a FASIT.’’.
(b) TECHNICAL AMENDMENTS.—
(1) Paragraph (2) of section 26(b) is amended by striking
‘‘and’’ at the end of subparagraph (M), by striking the period
at the end of subparagraph (N) and inserting ‘‘, and’’, and
by adding at the end the following new subparagraph:
H. R. 3448—113
‘‘(O) section 860K (relating to treatment of transfers
of high-yield interests to disqualified holders).’’.
(2) Paragraph (6) of section 56(g) is amended by striking
‘‘or REMIC’’ and inserting ‘‘REMIC, or FASIT’’.
(3) Clause (ii) of section 382(l)(4)(B) is amended by striking
‘‘or a REMIC to which part IV of subchapter M applies’’ and
inserting ‘‘a REMIC to which part IV of subchapter M applies,
or a FASIT to which part V of subchapter M applies’’.
(4) Paragraph (1) of section 582(c) is amended by inserting
‘‘, and any regular interest in a FASIT,’’ after ‘‘REMIC’’.
(5) Subparagraph (E) of section 856(c)(6) is amended by
adding at the end the following new sentence: ‘‘The principles
of the preceding provisions of this subparagraph shall apply
to regular interests in a FASIT.’’.
(6) Paragraph (3) of section 860G(a) is amended by striking
‘‘and’’ at the end of subparagraph (B), by striking the period
at the end of subparagraph (C) and inserting ‘‘, and’’, and
by inserting after subparagraph (C) the following new subpara-
graph:
‘‘(D) any regular interest in a FASIT which is trans-
ferred to, or purchased by, the REMIC as described in
clauses (i) and (ii) of subparagraph (A) but only if 95
percent or more of the value of the assets of such FASIT
is at all times attributable to obligations described in
subparagraph (A) (without regard to such clauses).’’.
(7) Subparagraph (C) of section 1202(e)(4) is amended by
striking ‘‘or REMIC’’ and inserting ‘‘REMIC, or FASIT’’.
(8) Clause (xi) of section 7701(a)(19)(C) is amended to read
as follows:
‘‘(xi) any regular or residual interest in a REMIC,
and any regular interest in a FASIT, but only in the
proportion which the assets of such REMIC or FASIT
consist of property described in any of the preceding
clauses of this subparagraph; except that if 95 percent
or more of the assets of such REMIC or FASIT are
assets described in clauses (i) through (x), the entire
interest in the REMIC or FASIT shall qualify.’’.
(9) Subparagraph (A) of section 7701(i)(2) is amended by
inserting ‘‘or a FASIT’’ after ‘‘a REMIC’’.
(c) CLERICAL AMENDMENT.—The table of parts for subchapter
M of chapter 1 is amended by adding at the end the following
new item:
‘‘Part V. Financial asset securitization investment trusts.’’.
(d) EFFECTIVE DATE.—The amendments made by this section
shall take effect on September 1, 1997.
(e) TREATMENT OF EXISTING SECURITIZATION ENTITIES.—
(1) IN GENERAL.—In the case of the holder of the ownership
interest in a pre-effective date FASIT—
(A) gain shall not be recognized under section
860L(d)(2) of the Internal Revenue Code of 1986 on prop-
erty deemed contributed to the FASIT, and
(B) gain shall not be recognized under section 860I
of such Code on property contributed to such FASIT,
until such property (or portion thereof) ceases to be properly
allocable to a pre-FASIT interest.
(2) ALLOCATION OF PROPERTY TO PRE-FASIT INTEREST.—For
purposes of paragraph (1), property shall be allocated to a
H. R. 3448—114
pre-FASIT interest in such manner as the Secretary of the
Treasury may prescribe, except that all property in a FASIT
shall be treated as properly allocable to pre-FASIT interests
if the fair market value of all such property does not exceed
107 percent of the aggregate principal amount of all outstanding
pre-FASIT interests.
(3) DEFINITIONS.—For purposes of this subsection—
(A) PRE-EFFECTIVE DATE FASIT.—The term ‘‘pre-effec-
tive date FASIT’’ means any FASIT if the entity (with
respect to which the election under section 860L(a)(3) of
such Code was made) is in existence on August 31, 1997.
(B) 
PRE-FASIT
INTEREST.—The 
term 
‘‘pre-FASIT
interest’’ means any interest in the entity referred to in
subparagraph (A) which was issued before the startup day
(other than any interest held by the holder of the ownership
interest in the FASIT).
Subtitle G—Technical Corrections
SEC. 1701. COORDINATION WITH OTHER SUBTITLES.
For purposes of applying the amendments made by any subtitle
of this title other than this subtitle, the provisions of this subtitle
shall be treated as having been enacted immediately before the
provisions of such other subtitles.
SEC. 1702. AMENDMENTS RELATED TO REVENUE RECONCILIATION
ACT OF 1990.
(a) AMENDMENTS RELATED TO SUBTITLE A.—
(1) Subparagraph (B) of section 59(j)(3) is amended by
striking ‘‘section 1(i)(3)(B)’’ and inserting ‘‘section 1(g)(3)(B)’’.
(2) Clause (i) of section 151(d)(3)(C) is amended by striking
‘‘joint of a return’’ and inserting ‘‘joint return’’.
(b) AMENDMENTS RELATED TO SUBTITLE B.—
(1) Paragraph (1) of section 11212(e) of the Revenue
Reconciliation Act of 1990 is amended by striking ‘‘Paragraph
(1) of section 6724(d)’’ and inserting ‘‘Subparagraph (B) of sec-
tion 6724(d)(1)’’.
(2)(A) Subparagraph (B) of section 4093(c)(2), as in effect
before the amendments made by the Revenue Reconciliation
Act of 1993, is amended by inserting before the period ‘‘unless
such fuel is sold for exclusive use by a State or any political
subdivision thereof’’.
(B) Paragraph (4) of section 6427(l), as in effect before
the amendments made by the Revenue Reconciliation Act of
1993, is amended by inserting before the period ‘‘unless such
fuel was used by a State or any political subdivision thereof’’.
(3) Paragraph (1) of section 6416(b) is amended by striking
‘‘chapter 32 or by section 4051’’ and inserting ‘‘chapter 31
or 32’’.
(4) Section 7012 is amended—
(A) by striking ‘‘production or importation of gasoline’’
in paragraph (3) and inserting ‘‘taxes on gasoline and diesel
fuel’’, and
(B) by striking paragraph (4) and redesignating para-
graphs (5) and (6) as paragraphs (4) and (5), respectively.
H. R. 3448—115
(5) Subsection (c) of section 5041 is amended by striking
paragraph (6) and by inserting the following new paragraphs:
‘‘(6) CREDIT FOR TRANSFEREE IN BOND.—If—
‘‘(A) wine produced by any person would be eligible
for any credit under paragraph (1) if removed by such
person during the calendar year,
‘‘(B) wine produced by such person is removed during
such calendar year by any other person (hereafter in this
paragraph referred to as the ‘transferee’) to whom such
wine was transferred in bond and who is liable for the
tax imposed by this section with respect to such wine,
and
‘‘(C) such producer holds title to such wine at the
time of its removal and provides to the transferee such
information as is necessary to properly determine the
transferee’s credit under this paragraph,
then, the transferee (and not the producer) shall be allowed
the credit under paragraph (1) which would be allowed to
the producer if the wine removed by the transferee had been
removed by the producer on that date.
‘‘(7) REGULATIONS.—The Secretary may prescribe such
regulations as may be necessary to carry out the purposes
of this subsection, including regulations—
‘‘(A) to prevent the credit provided in this subsection
from benefiting any person who produces more than
250,000 wine gallons of wine during a calendar year, and
‘‘(B) to assure proper reduction of such credit for per-
sons producing more than 150,000 wine gallons of wine
during a calendar year.’’.
(6) Paragraph (3) of section 5061(b) is amended to read
as follows:
‘‘(3) section 5041(f),’’.
(7) Section 5354 is amended by inserting ‘‘(taking into
account the appropriate amount of credit with respect to such
wine under section 5041(c))’’ after ‘‘any one time’’.
(c) AMENDMENTS RELATED TO SUBTITLE C.—
(1) Paragraph (4) of section 56(g) is amended by redesignat-
ing subparagraphs (I) and (J) as subparagraphs (H) and (I),
respectively.
(2) Subparagraph (B) of section 6724(d)(1) is amended—
(A) by striking ‘‘or’’ at the end of clause (xii), and
(B) by striking the period at the end of clause (xiii)
and inserting ‘‘, or’’.
(3) Subsection (g) of section 6302 is amended by in-
serting ‘‘, 22,’’ after ‘‘chapters 21’’.
(4) The earnings and profits of any insurance company
to which section 11305(c)(3) of the Revenue Reconciliation Act
of 1990 applies shall be determined without regard to any
deduction allowed under such section; except that, for pur-
poses of applying sections 56 and 902, and subpart F of part
III of subchapter N of chapter 1 of the Internal Revenue Code
of 1986, such deduction shall be taken into account.
(5) Subparagraph (D) of section 6038A(e)(4) is amended—
(A) by striking ‘‘any transaction to which the summons
relates’’ and inserting ‘‘any affected taxable year’’, and
(B) by adding at the end thereof the following new
sentence: ‘‘For purposes of this subparagraph, the term
H. R. 3448—116
‘affected taxable year’ means any taxable year if the deter-
mination of the amount of tax imposed for such taxable
year is affected by the treatment of the transaction to
which the summons relates.’’.
(6) Subparagraph (A) of section 6621(c)(2) is amended by
adding at the end thereof the following new flush sentence:
‘‘The preceding sentence shall be applied without regard
to any such letter or notice which is withdrawn by the
Secretary.’’.
(7) Clause (i) of section 6621(c)(2)(B) is amended by striking
‘‘this subtitle’’ and inserting ‘‘this title’’.
(d) AMENDMENTS RELATED TO SUBTITLE D.—
(1) Notwithstanding section 11402(c) of the Revenue
Reconciliation Act of 1990, the amendment made by section
11402(b)(1) of such Act shall apply to taxable years ending
after December 31, 1989.
(2) Clause (ii) of section 143(m)(4)(C) is amended—
(A) by striking ‘‘any month of the 10-year period’’ and
inserting ‘‘any year of the 4-year period’’,
(B) by striking ‘‘succeeding months’’ and inserting
‘‘succeeding years’’, and
(C) by striking ‘‘over the remainder of such period
(or, if lesser, 5 years)’’ and inserting ‘‘to zero over the
succeeding 5 years’’.
(e) AMENDMENTS RELATED TO SUBTITLE E.—
(1)(A) Clause (ii) of section 56(d)(1)(B) is amended to read
as follows:
‘‘(ii) appropriate adjustments in the application of
section 172(b)(2) shall be made to take into account
the limitation of subparagraph (A).’’.
(B) For purposes of applying sections 56(g)(1) and 56(g)(3)
of the Internal Revenue Code of 1986 with respect to taxable
years beginning in 1991 and 1992, the reference in such sections
to the alternative tax net operating loss deduction shall be
treated as including a reference to the deduction under section
56(h) of such Code as in effect before the amendments made
by section 1915 of the Energy Policy Act of 1992.
(2) Clause (i) of section 613A(c)(3)(A) is amended by striking
‘‘the table contained in’’.
(3) Section 6501 is amended—
(A) by striking subsection (m) (relating to deficiency
attributable to election under section 44B) and by
redesignating subsections (n) and (o) as subsections (m)
and (n), respectively, and
(B) by striking ‘‘section 40(f) or 51(j)’’ in subsection
(m) (as redesignated by subparagraph (A)) and inserting
‘‘section 40(f), 43, or 51(j)’’.
(4) Subparagraph (C) of section 38(c)(2) (as in effect on
the day before the date of the enactment of the Revenue Rec-
onciliation Act of 1990) is amended by inserting before the
period at the end of the first sentence the following: ‘‘and
without regard to the deduction under section 56(h)’’.
(5) The amendment made by section 1913(b)(2)(C)(i) of
the Energy Policy Act of 1992 shall apply to taxable years
beginning after December 31, 1990.
(f) AMENDMENTS RELATED TO SUBTITLE F.—
H. R. 3448—117
(1)(A) Section 2701(a)(3) is amended by adding at the end
thereof the following new subparagraph:
‘‘(C) VALUATION OF QUALIFIED PAYMENTS WHERE NO
LIQUIDATION, ETC. RIGHTS.—In the case of an applicable
retained interest which is described in subparagraph (B)(i)
but not subparagraph (B)(ii), the value of the distribution
right shall be determined without regard to this section.’’.
(B) Section 2701(a)(3)(B) is amended by inserting ‘‘CERTAIN’’
before ‘‘QUALIFIED’’ in the heading thereof.
(C) Sections 2701 (d)(1) and (d)(4) are each amended by
striking ‘‘subsection (a)(3)(B)’’ and inserting ‘‘subsection (a)(3)
(B) or (C)’’.
(2) Clause (i) of section 2701(a)(4)(B) is amended by insert-
ing ‘‘(or, to the extent provided in regulations, the rights as
to either income or capital)’’ after ‘‘income and capital’’.
(3)(A) Section 2701(b)(2) is amended by adding at the end
thereof the following new subparagraph:
‘‘(C) APPLICABLE FAMILY MEMBER.—For purposes of this
subsection, the term ‘applicable family member’ includes
any lineal descendant of any parent of the transferor or
the transferor’s spouse.’’.
(B) Section 2701(e)(3) is amended—
(i) by striking subparagraph (B), and
(ii) by striking so much of paragraph (3) as precedes
‘‘shall be treated as holding’’ and inserting:
‘‘(3) ATTRIBUTION OF INDIRECT HOLDINGS AND TRANSFERS.—
An individual’’.
(C) Section 2704(c)(3) is amended by striking ‘‘section
2701(e)(3)(A)’’ and inserting ‘‘section 2701(e)(3)’’.
(4) Clause (i) of section 2701(c)(1)(B) is amended to read
as follows:
‘‘(i) a right to distributions with respect to
any interest which is junior to the rights of the trans-
ferred interest,’’.
(5)(A) Clause (i) of section 2701(c)(3)(C) is amended to
read as follows:
‘‘(i) IN
GENERAL.—Payments under any interest
held by a transferor which (without regard to this
subparagraph) are qualified payments shall be treated
as qualified payments unless the transferor elects not
to treat such payments as qualified payments. Pay-
ments described in the preceding sentence which are
held by an applicable family member shall be treated
as qualified payments only if such member elects to
treat such payments as qualified payments.’’.
(B) The first sentence of section 2701(c)(3)(C)(ii) is amended
to read as follows: ‘‘A transferor or applicable family member
holding any distribution right which (without regard to this
subparagraph) is not a qualified payment may elect to treat
such right as a qualified payment, to be paid in the amounts
and at the times specified in such election.’’.
(C) The time for making an election under the second
sentence of section 2701(c)(3)(C)(i) of the Internal Revenue Code
of 1986 (as amended by subparagraph (A)) shall not expire
before the due date (including extensions) for filing the transfer-
or’s return of the tax imposed by section 2501 of such Code
for the first calendar year ending after the date of enactment.
H. R. 3448—118
(6) Section 2701(d)(3)(A)(iii) is amended by striking ‘‘the
period ending on the date of’’.
(7) Subclause (I) of section 2701(d)(3)(B)(ii) is amended
by inserting ‘‘or the exclusion under section 2503(b),’’ after
‘‘section 2523,’’.
(8) Section 2701(e)(5) is amended—
(A) by striking ‘‘such contribution to capital or such
redemption, recapitalization, or other change’’ in subpara-
graph (A) and inserting ‘‘such transaction’’, and
(B) by striking ‘‘the transfer’’ in subparagraph (B) and
inserting ‘‘such transaction’’.
(9) Section 2701(d)(4) is amended by adding at the end
thereof the following new subparagraph:
‘‘(C) TRANSFER TO TRANSFERORS.—In the case of a tax-
able event described in paragraph (3)(A)(ii) involving a
transfer of an applicable retained interest from an
applicable family member to a transferor, this subsection
shall continue to apply to the transferor during any period
the transferor holds such interest.’’.
(10) Section 2701(e)(6) is amended by inserting ‘‘or to reflect
the application of subsection (d)’’ before the period at the end
thereof.
(11)(A) Section 2702(a)(3)(A) is amended—
(i) by striking ‘‘to the extent’’ and inserting ‘‘if’’ in
clause (i),
(ii) by striking ‘‘or’’ at the end of clause (i),
(iii) by striking the period at the end of clause (ii)
and inserting ‘‘, or’’, and
(iv) by adding at the end thereof the following new
clause:
‘‘(iii) to the extent that regulations provide that
such transfer is not inconsistent with the purposes
of this section.’’.
(B)(i) Section 2702(a)(3) is amended by striking ‘‘incomplete
transfer’’ each place it appears and inserting ‘‘incomplete gift’’.
(ii) The heading for section 2702(a)(3)(B) is amended by
striking ‘‘INCOMPLETE TRANSFER’’ and inserting ‘‘INCOMPLETE
GIFT’’.
(g) AMENDMENTS RELATED TO SUBTITLE G.—
(1)(A) Subsection (a) of section 1248 is amended—
(i) by striking ‘‘, or if a United States person receives
a distribution from a foreign corporation which, under sec-
tion 302 or 331, is treated as an exchange of stock’’ in
paragraph (1), and
(ii) by adding at the end thereof the following new
sentence: ‘‘For purposes of this section, a United States
person shall be treated as having sold or exchanged any
stock if, under any provision of this subtitle, such person
is treated as realizing gain from the sale or exchange
of such stock.’’.
(B) Paragraph (1) of section 1248(e) is amended by
striking ‘‘, or receives a distribution from a domestic corporation
which, under section 302 or 331, is treated as an exchange
of stock’’.
(C) Subparagraph (B) of section 1248(f)(1) is amended by
striking ‘‘or 361(c)(1)’’ and inserting ‘‘355(c)(1), or 361(c)(1)’’.
H. R. 3448—119
(D) Paragraph (1) of section 1248(i) is amended to read
as follows:
‘‘(1) IN GENERAL.—If any shareholder of a 10-percent cor-
porate shareholder of a foreign corporation exchanges stock
of the 10-percent corporate shareholder for stock of the foreign
corporation, such 10-percent corporate shareholder shall recog-
nize gain in the same manner as if the stock of the foreign
corporation received in such exchange had been—
‘‘(A) 
issued 
to 
the 
10-percent 
corporate 
share-
holder, and
‘‘(B) then distributed by the 10-percent corporate share-
holder to such shareholder in redemption or liquidation
(whichever is appropriate).
The amount of gain recognized by such 10-percent corporate
shareholder under the preceding sentence shall not exceed the
amount treated as a dividend under this section.’’.
(2) Section 897 is amended by striking subsection (f).
(3) Paragraph (13) of section 4975(d) is amended by striking
‘‘section 408(b)’’ and inserting ‘‘section 408(b)(12)’’.
(4) Clause (iii) of section 56(g)(4)(D) is amended by
inserting ‘‘, but only with respect to taxable years beginning
after December 31, 1989’’ before the period at the end thereof.
(5)(A) Paragraph (11) of section 11701(a) of the Revenue
Reconciliation Act of 1990 (and the amendment made by such
paragraph) are hereby repealed, and section 7108(r)(2) of the
Revenue Reconciliation Act of 1989 shall be applied as if such
paragraph (and amendment) had never been enacted.
(B) Subparagraph (A) shall not apply to any building if
the owner of such building establishes to the satisfaction of
the Secretary of the Treasury or his delegate that such owner
reasonably relied on the amendment made by such paragraph
(11).
(h) AMENDMENTS RELATED TO SUBTITLE H.—
(1)(A) Clause (vi) of section 168(e)(3)(B) is amended by
striking ‘‘or’’ at the end of subclause (I), by striking the period
at the end of subclause (II) and inserting ‘‘, or’’, and by adding
at the end thereof the following new subclause:
‘‘(III) is described in section 48(l)(3)(A)(ix) (as
in effect on the day before the date of the enact-
ment of the Revenue Reconciliation Act of 1990).’’.
(B) Subparagraph (B) of section 168(e)(3) (relating to
5-year property) is amended by adding at the end the following
flush sentence:
‘‘Nothing in any provision of law shall be construed to
treat property as not being described in clause (vi)(I) (or
the corresponding provisions of prior law) by reason of
being public utility property (within the meaning of section
48(a)(3)).’’.
(C) Subparagraph (K) of section 168(g)(4) is amended by
striking 
‘‘section 
48(a)(3)(A)(iii)’’ 
and 
inserting 
‘‘section
48(l)(3)(A)(ix) (as in effect on the day before the date of the
enactment of the Revenue Reconciliation Act of 1990)’’.
(2) Clause (ii) of section 172(b)(1)(E) is amended by striking
‘‘subsection (m)’’ and inserting ‘‘subsection (h)’’.
(3) 
Sections 
805(a)(4)(E), 
832(b)(5)(C)(ii)(II), 
and
832(b)(5)(D)(ii)(II) are each amended by striking ‘‘243(b)(5)’’ and
inserting ‘‘243(b)(2)’’.
H. R. 3448—120
(4) Subparagraph (A) of section 243(b)(3) is amended by
inserting ‘‘of’’ after ‘‘In the case’’.
(5) The subsection heading for subsection (a) of section
280F is amended by striking ‘‘INVESTMENT TAX CREDIT AND’’.
(6) Clause (i) of section 1504(c)(2)(B) is amended by insert-
ing ‘‘section’’ before ‘‘243(b)(2)’’.
(7) Paragraph (3) of section 341(f) is amended by striking
‘‘351, 361, 371(a), or 374(a)’’ and inserting ‘‘351, or 361’’.
(8) Paragraph (2) of section 243(b) is amended to read
as follows:
‘‘(2) AFFILIATED GROUP.—For purposes of this subsection:
‘‘(A) IN GENERAL.—The term ‘affiliated group’ has the
meaning given such term by section 1504(a), except that
for such purposes sections 1504(b)(2), 1504(b)(4), and
1504(c) shall not apply.
‘‘(B) GROUP
MUST
BE
CONSISTENT
IN
FOREIGN
TAX
TREATMENT.—The requirements of paragraph (1)(A) shall
not be treated as being met with respect to any dividend
received by a corporation if, for any taxable year which
includes the day on which such dividend is received—
‘‘(i) 1 or more members of the affiliated group
referred to in paragraph (1)(A) choose to any extent
to take the benefits of section 901, and
‘‘(ii) 1 or more other members of such group claim
to any extent a deduction for taxes otherwise creditable
under section 901.’’.
(9) The amendment made by section 11813(b)(17) of the
Revenue Reconciliation Act of 1990 shall be applied as if the
material stricken by such amendment included the closing
parenthesis after ‘‘section 48(a)(5)’’.
(10) Paragraph (1) of section 179(d) is amended by striking
‘‘in a trade or business’’ and inserting ‘‘a trade or business’’.
(11) Subparagraph (E) of section 50(a)(2) is amended by
striking ‘‘section 48(a)(5)(A)’’ and inserting ‘‘section 48(a)(5)’’.
(12) The amendment made by section 11801(c)(9)(G)(ii) of
the Revenue Reconciliation Act of 1990 shall be applied as
if it struck ‘‘Section 422A(c)(2)’’ and inserted ‘‘Section 422(c)(2)’’.
(13) Subparagraph (B) of section 424(c)(3) is amended by
striking ‘‘a qualified stock option, an incentive stock option,
an option granted under an employee stock purchase plan,
or a restricted stock option’’ and inserting ‘‘an incentive stock
option or an option granted under an employee stock purchase
plan’’.
(14) Subparagraph (E) of section 1367(a)(2) is amended
by striking ‘‘section 613A(c)(13)(B)’’ and inserting ‘‘section
613A(c)(11)(B)’’.
(15) Subparagraph (B) of section 460(e)(6) is amended by
striking ‘‘section 167(k)’’ and inserting ‘‘section 168(e)(2)(A)(ii)’’.
(16) Subparagraph (C) of section 172(h)(4) is amended by
striking ‘‘subsection (b)(1)(M)’’ and inserting ‘‘subsection
(b)(1)(E)’’.
(17) Section 6503 is amended—
(A) by redesignating the subsection relating to exten-
sion in case of certain summonses as subsection (j), and
(B) by redesignating the subsection relating to cross
references as subsection (k).
(18) Paragraph (4) of section 1250(e) is hereby repealed.
H. R. 3448—121
(19) Paragraph (1) of section 179(d) is amended by adding
at the end the following new sentence: ‘‘Such term shall not
include any property described in section 50(b) and shall not
include air conditioning or heating units.’’.
‘‘(i) EFFECTIVE DATE.—Except as otherwise expressly provided,
any amendment made by this section shall take effect as if included
in the provision of the Revenue Reconciliation Act of 1990 to which
such amendment relates.’’.
SEC. 1703. AMENDMENTS RELATED TO REVENUE RECONCILIATION
ACT OF 1993.
(a) AMENDMENT RELATED TO SECTION 13114.—Paragraph (2)
of section 1044(c) is amended to read as follows:
‘‘(2) PURCHASE.—The taxpayer shall be considered to have
purchased any property if, but for subsection (d), the unadjusted
basis of such property would be its cost within the meaning
of section 1012.’’.
(b) AMENDMENTS RELATED TO SECTION 13142.—
(1) Subparagraph (B) of section 13142(b)(6) of the Revenue
Reconciliation Act of 1993 is amended to read as follows:
‘‘(B) FULL-TIME
STUDENTS, WAIVER
AUTHORITY, AND
PROHIBITED DISCRIMINATION.—The amendments made by
paragraphs (2), (3), and (4) shall take effect on the date
of the enactment of this Act.’’.
(2) Subparagraph (C) of section 13142(b)(6) of such Act
is amended by striking ‘‘paragraph (2)’’ and inserting ‘‘para-
graph (5)’’.
(c) AMENDMENT RELATED TO SECTION 13161.—
(1) IN GENERAL.—Subsection (e) of section 4001 (relating
to inflation adjustment) is amended to read as follows:
‘‘(e) INFLATION ADJUSTMENT.—
‘‘(1) IN GENERAL.—The $30,000 amount in subsection (a)
and section 4003(a) shall be increased by an amount equal
to—
‘‘(A) $30,000, multiplied by
‘‘(B) the cost-of-living adjustment under section 1(f)(3)
for the calendar year in which the vehicle is sold, deter-
mined by substituting ‘calendar year 1990’ for ‘calendar
year 1992’ in subparagraph (B) thereof.
‘‘(2) ROUNDING.—If any amount as adjusted under para-
graph (1) is not a multiple of $2,000, such amount shall be
rounded to the next lowest multiple of $2,000.’’.
(2) EFFECTIVE DATE.—The amendment made by paragraph
(1) shall take effect on the date of the enactment of this Act.
(d) AMENDMENT RELATED TO SECTION 13201.—Clause (ii) of
section 135(b)(2)(B) is amended by inserting before the period at
the end thereof the following: ‘‘, determined by substituting ‘cal-
endar year 1989’ for ‘calendar year 1992’ in subparagraph (B)
thereof’’.
(e) AMENDMENTS RELATED TO SECTION 13203.—Subsection (a)
of section 59 is amended—
(1) by striking ‘‘the amount determined under section
55(b)(1)(A)’’ in paragraph (1)(A) and (2)(A)(i) and inserting ‘‘the
pre-credit tentative minimum tax’’,
(2) by striking ‘‘specified in section 55(b)(1)(A)’’ in para-
graph (1)(C) and inserting ‘‘specified in subparagraph (A)(i)
or (B)(i) of section 55(b)(1) (whichever applies)’’,
H. R. 3448—122
(3) by striking ‘‘which would be determined under section
55(b)(1)(A)’’ in paragraph (2)(A)(ii) and inserting ‘‘which would
be the pre-credit tentative minimum tax’’, and
(4) by adding at the end thereof the following new para-
graph:
‘‘(3) PRE-CREDIT TENTATIVE MINIMUM TAX.—For purposes
of this subsection, the term ‘pre-credit tentative minimum tax’
means—
‘‘(A) in the case of a taxpayer other than a corporation,
the amount determined under the first sentence of section
55(b)(1)(A)(i), or
‘‘(B) in the case of a corporation, the amount deter-
mined under section 55(b)(1)(B)(i).’’.
(f) AMENDMENT RELATED TO SECTION 13221.—Sections 1201(a)
and 1561(a) are each amended by striking ‘‘last sentence’’ each
place it appears and inserting ‘‘last 2 sentences’’.
(g) AMENDMENTS RELATED TO SECTION 13222.—
(1) Subparagraph (B) of section 6033(e)(1) is amended by
adding at the end thereof the following new clause:
‘‘(iii) COORDINATION
WITH
SECTION
527(f).—This
subsection shall not apply to any amount on which
tax is imposed by reason of section 527(f).’’.
(2) Clause (i) of section 6033(e)(1)(B) is amended by striking
‘‘this subtitle’’ and inserting ‘‘section 501’’.
(h) AMENDMENT RELATED TO SECTION 13225.—Paragraph (3)
of section 6655(g) is amended by striking all that follows ‘‘ ‘3rd
month’ ’’ in the sentence following subparagraph (C) and inserting
‘‘, subsection (e)(2)(A) shall be applied by substituting ‘2 months’
for ‘3 months’ in clause (i)(I), the election under clause (i) of sub-
section (e)(2)(C) may be made separately for each installment, and
clause (ii) of subsection (e)(2)(C) shall not apply.’’.
(i) AMENDMENTS RELATED TO SECTION 13231.—
(1) Subparagraph (G) of section 904(d)(3) is amended by
striking ‘‘section 951(a)(1)(B)’’ and inserting ‘‘subparagraph (B)
or (C) of section 951(a)(1)’’.
(2) Paragraph (1) of section 956A(b) is amended to read
as follows:
‘‘(1) the amount (not including a deficit) referred to in
section 316(a)(1) to the extent such amount was accumulated
in prior taxable years beginning after September 30, 1993,
and’’.
(3) Subsection (f) of section 956A is amended by inserting
before the period at the end thereof: ‘‘and regulations coordinat-
ing the provisions of subsections (c)(3)(A) and (d)’’.
(4) Subsection (b) of section 958 is amended by striking
‘‘956(b)(2)’’ each place it appears and inserting ‘‘956(c)(2)’’.
(5)(A) Subparagraph (A) of section 1297(d)(2) is amended
by striking ‘‘The adjusted basis of any asset’’ and inserting
‘‘The amount taken into account under section 1296(a)(2) with
respect to any asset’’.
(B) The paragraph heading of paragraph (2) of section
1297(d) is amended to read as follows:
‘‘(2) AMOUNT TAKEN INTO ACCOUNT.—’’.
(6) Subsection (e) of section 1297 is amended by inserting
‘‘For purposes of this part—’’ after the subsection heading.
(j) AMENDMENT RELATED TO SECTION 13241.—Subparagraph
(B) of section 40(e)(1) is amended to read as follows:
H. R. 3448—123
‘‘(B) for any period before January 1, 2001, during
which the rates of tax under section 4081(a)(2)(A) are 4.3
cents per gallon.’’.
(k) AMENDMENT RELATED TO SECTION 13242.—Paragraph (4)
of section 6427(f) is amended by striking ‘‘1995’’ and inserting
‘‘1999’’.
(l) AMENDMENT RELATED TO SECTION 13261.—Clause (iii) of
section 13261(g)(2)(A) of the Revenue Reconciliation Act of 1993
is amended by striking ‘‘by the taxpayer’’ and inserting ‘‘by the
taxpayer or a related person’’.
(m) AMENDMENT RELATED TO SECTION 13301.—Subparagraph
(B) of section 1397B(d)(5) is amended by striking ‘‘preceding’’.
(n) CLERICAL AMENDMENTS.—
(1) Subsection (d) of section 39 is amended—
(A) by striking ‘‘45’’ in the heading of paragraph (5)
and inserting ‘‘45A’’, and
(B) by striking ‘‘45’’ in the heading of paragraph (6)
and inserting ‘‘45B’’.
(2) Subparagraph (A) of section 108(d)(9) is amended by
striking ‘‘paragraph (3)(B)’’ and inserting ‘‘paragraph (3)(C)’’.
(3) Subparagraph (C) of section 143(d)(2) is amended by
striking the period at the end thereof and inserting a comma.
(4) Clause (ii) of section 163(j)(6)(E) is amended by striking
‘‘which is a’’ and inserting ‘‘which is’’.
(5) Subparagraph (A) of section 1017(b)(4) is amended by
striking 
‘‘subsection 
(b)(2)(D)’’ 
and 
inserting 
‘‘subsection
(b)(2)(E)’’.
(6) So much of section 1245(a)(3) as precedes subparagraph
(A) thereof is amended to read as follows:
‘‘(3) SECTION 1245 PROPERTY.—For purposes of this section,
the term ‘section 1245 property’ means any property which
is or has been property of a character subject to the allowance
for depreciation provided in section 167 and is either—’’.
(7) Paragraph (2) of section 1394(e) is amended—
(A) by striking ‘‘(i)’’ and inserting ‘‘(A)’’, and
(B) by striking ‘‘(ii)’’ and inserting ‘‘(B)’’.
(8) Subsection (m) of section 6501 (as redesignated by sec-
tion 1602) is amended by striking ‘‘or 51(j)’’ and inserting
‘‘45B, or 51(j)’’.
(9)(A) The section 6714 added by section 13242(b)(1) of
the Revenue Reconciliation Act of 1993 is hereby redesignated
as section 6715.
(B) The table of sections for part I of subchapter B of
chapter 68 is amended by striking ‘‘6714’’ in the item added
by such section 13242(b)(2) of such Act and inserting ‘‘6715’’.
(10) Paragraph (2) of section 9502(b) is amended by insert-
ing ‘‘and before’’ after ‘‘1982,’’.
(11) Subsection (a)(3) of section 13206 of the Revenue
Reconciliation Act of 1993 is amended by striking ‘‘this section’’
and inserting ‘‘this subsection’’.
(12) Paragraph (1) of section 13215(c) of the Revenue
Reconciliation Act of 1993 is amended by striking ‘‘Public Law
92–21’’ and inserting ‘‘Public Law 98–21’’.
(13) Paragraph (2) of section 13311(e) of the Revenue
Reconciliation Act of 1993 is amended by striking ‘‘section
1393(a)(3)’’ and inserting ‘‘section 1393(a)(2)’’.
H. R. 3448—124
(14) Subparagraph (B) of section 117(d)(2) is amended by
striking ‘‘section 132(f)’’ and inserting ‘‘section 132(h)’’.
(o) EFFECTIVE DATE.—Any amendment made by this section
shall take effect as if included in the provision of the Revenue
Reconciliation Act of 1993 to which such amendment relates.
SEC. 1704. MISCELLANEOUS PROVISIONS.
(a) APPLICATION OF AMENDMENTS MADE BY TITLE XII OF OMNI-
BUS BUDGET RECONCILIATION ACT OF 1990.—Except as otherwise
expressly provided, whenever in title XII of the Omnibus Budget
Reconciliation Act of 1990 an amendment or repeal is expressed
in terms of an amendment to, or repeal of, a section or other
provision, the reference shall be considered to be made to a section
or other provision of the Internal Revenue Code of 1986.
(b) TREATMENT
OF CERTAIN AMOUNTS UNDER HEDGE BOND
RULES.—
(1) IN
GENERAL.—Clause (iii) of section 149(g)(3)(B) is
amended to read as follows:
‘‘(iii) AMOUNTS HELD PENDING REINVESTMENT OR
REDEMPTION.—Amounts held for not more than 30 days
pending reinvestment or bond redemption shall be
treated as invested in bonds described in clause (i).’’.
(2) EFFECTIVE DATE.—The amendment made by paragraph
(1) shall take effect as if included in the amendments made
by section 7651 of the Omnibus Budget Reconciliation Act of
1989.
(c) TREATMENT
OF CERTAIN DISTRIBUTIONS UNDER SECTION
1445.—
(1) IN
GENERAL.—Paragraph (3) of section 1445(e) is
amended by adding at the end thereof the following new sen-
tence: ‘‘Rules similar to the rules of the preceding provisions
of this paragraph shall apply in the case of any distribution
to which section 301 applies and which is not made out of
the earnings and profits of such a domestic corporation.’’.
(2) EFFECTIVE DATE.—The amendment made by paragraph
(1) shall apply to distributions after the date of the enactment
of this Act.
(d) TREATMENT OF CERTAIN CREDITS UNDER SECTION 469.—
(1) IN GENERAL.—Subparagraph (B) of section 469(c)(3) is
amended by adding at the end thereof the following new sen-
tence: ‘‘If the preceding sentence applies to the net income
from any property for any taxable year, any credits allowable
under subpart B (other than section 27(a)) or D of part IV
of subchapter A for such taxable year which are attributable
to such property shall be treated as credits not from a passive
activity to the extent the amount of such credits does not
exceed the regular tax liability of the taxpayer for the taxable
year which is allocable to such net income.’’.
(2) EFFECTIVE DATE.—The amendment made by paragraph
(1) shall apply to taxable years beginning after December 31,
1986.
(e) TREATMENT OF DISPOSITIONS UNDER PASSIVE LOSS RULES.—
(1) IN
GENERAL.—Subparagraph (A) of section 469(g)(1)
is amended to read as follows:
‘‘(A) IN GENERAL.—If all gain or loss realized on such
disposition is recognized, the excess of—
H. R. 3448—125
‘‘(i) any loss from such activity for such taxable
year (determined after the application of subsection
(b)), over
‘‘(ii) any net income or gain for such taxable year
from all other passive activities (determined after the
application of subsection (b)),
shall be treated as a loss which is not from a passive
activity.’’.
(2) EFFECTIVE DATE.—The amendment made by paragraph
(1) shall apply to taxable years beginning after December 31,
1986.
(f) MISCELLANEOUS AMENDMENTS TO FOREIGN PROVISIONS.—
(1) COORDINATION
OF
UNIFIED
ESTATE
TAX
CREDIT
WITH
TREATIES.—Subparagraph (A) of section 2102(c)(3) is amended
by adding at the end thereof the following new sentence: ‘‘For
purposes of the preceding sentence, property shall not be
treated as situated in the United States if such property is
exempt from the tax imposed by this subchapter under any
treaty obligation of the United States.’’.
(2) TREATMENT
OF
CERTAIN
INTEREST
PAID
TO
RELATED
PERSON.—
(A) Subparagraph (B) of section 163(j)(1) is amended
by inserting before the period at the end thereof the follow-
ing: ‘‘(and clause (ii) of paragraph (2)(A) shall not apply
for purposes of applying this subsection to the amount
so treated)’’.
(B) Subsection (j) of section 163 is amended by
redesignating paragraph (7) as paragraph (8) and by insert-
ing after paragraph (6) the following new paragraph:
‘‘(7) COORDINATION WITH PASSIVE LOSS RULES, ETC.—This
subsection shall be applied before sections 465 and 469.’’.
(C) The amendments made by this paragraph shall
apply as if included in the amendments made by section
7210(a) of the Revenue Reconciliation Act of 1989.
(3) TREATMENT OF INTEREST ALLOCABLE TO EFFECTIVELY
CONNECTED INCOME.—
(A) IN GENERAL.—
(i) Subparagraph (B) of section 884(f)(1) is
amended by striking ‘‘to the extent’’ and all that follows
down through ‘‘subparagraph (A)’’ and inserting ‘‘to
the extent that the allocable interest exceeds the
interest described in subparagraph (A)’’.
(ii) The second sentence of section 884(f)(1) is
amended by striking ‘‘reasonably expected’’ and all that
follows down through the period at the end thereof
and inserting ‘‘reasonably expected to be allocable
interest.’’.
(iii) Paragraph (2) of section 884(f) is amended
to read as follows:
‘‘(2) ALLOCABLE INTEREST.—For purposes of this subsection,
the term ‘allocable interest’ means any interest which is alloca-
ble to income which is effectively connected (or treated as
effectively connected) with the conduct of a trade or business
in the United States.’’.
(B) EFFECTIVE
DATE.—The amendments made by
subparagraph (A) shall take effect as if included in the
H. R. 3448—126
amendments made by section 1241(a) of the Tax Reform
Act of 1986.
(4) CLARIFICATION OF SOURCE RULE.—
(A) IN GENERAL.—Paragraph (2) of section 865(b) is
amended by striking ‘‘863(b)’’ and inserting ‘‘863’’.
(B) EFFECTIVE
DATE.—The amendment made by
subparagraph (A) shall take effect as if included in the
amendments made by section 1211 of the Tax Reform Act
of 1986.
(5) REPEAL OF OBSOLETE PROVISIONS.—
(A) Paragraph (1) of section 6038(a) is amended by
striking ‘‘, and’’ at the end of subparagraph (E) and insert-
ing a period, and by striking subparagraph (F).
(B) Subsection (b) of section 6038A is amended by
adding ‘‘and’’ at the end of paragraph (2), by striking
‘‘, and’’ at the end of paragraph (3) and inserting a period,
and by striking paragraph (4).
(g) CLARIFICATION OF TREATMENT OF MEDICARE ENTITLEMENT
UNDER COBRA PROVISIONS.—
(1) IN GENERAL.—
(A) Subclause (V) of section 4980B(f)(2)(B)(i) is
amended to read as follows:
‘‘(V) MEDICARE
ENTITLEMENT
FOLLOWED
BY
QUALIFYING EVENT.—In the case of a qualifying
event described in paragraph (3)(B) that occurs
less than 18 months after the date the covered
employee became entitled to benefits under title
XVIII of the Social Security Act, the period of
coverage for qualified beneficiaries other than the
covered employee shall not terminate under this
clause before the close of the 36-month period
beginning on the date the covered employee
became so entitled.’’.
(B) Clause (v) of section 602(2)(A) of the Employee
Retirement Income Security Act of 1974 is amended to
read as follows:
‘‘(v) 
MEDICARE
ENTITLEMENT
FOLLOWED
BY
QUALIFYING EVENT.—In the case of a qualifying event
described in section 603(2) that occurs less than 18
months after the date the covered employee became
entitled to benefits under title XVIII of the Social
Security Act, the period of coverage for qualified bene-
ficiaries other than the covered employee shall not
terminate under this subparagraph before the close
of the 36-month period beginning on the date the cov-
ered employee became so entitled.’’.
(C) Clause (iv) of section 2202(2)(A) of the Public
Health Service Act is amended to read as follows:
‘‘(iv) 
MEDICARE
ENTITLEMENT
FOLLOWED
BY
QUALIFYING EVENT.—In the case of a qualifying event
described in section 2203(2) that occurs less than 18
months after the date the covered employee became
entitled to benefits under title XVIII of the Social
Security Act, the period of coverage for qualified bene-
ficiaries other than the covered employee shall not
terminate under this subparagraph before the close
H. R. 3448—127
of the 36-month period beginning on the date the cov-
ered employee became so entitled.’’.
(2) EFFECTIVE DATE.—The amendments made by this sub-
section shall apply to plan years beginning after December
31, 1989.
(h) TREATMENT OF CERTAIN REMIC INCLUSIONS.—
(1) IN GENERAL.—Subsection (a) of section 860E is amended
by adding at the end thereof the following new paragraph:
‘‘(6) COORDINATION WITH MINIMUM TAX.—For purposes of
part VI of subchapter A of this chapter—
‘‘(A) the reference in section 55(b)(2) to taxable income
shall be treated as a reference to taxable income deter-
mined without regard to this subsection,
‘‘(B) the alternative minimum taxable income of any
holder of a residual interest in a REMIC for any taxable
year shall in no event be less than the excess inclusion
for such taxable year, and
‘‘(C) any excess inclusion shall be disregarded for pur-
poses of computing the alternative tax net operating loss
deduction.
The preceding sentence shall not apply to any organization
to which section 593 applies, except to the extent provided
in regulations prescribed by the Secretary under paragraph
(2).’’.
(2) EFFECTIVE DATE.—The amendment made by paragraph
(1) shall take effect as if included in the amendments made
by section 671 of the Tax Reform Act of 1986 unless the tax-
payer elects to apply such amendment only to taxable years
beginning after the date of the enactment of this Act.
(i) EXEMPTION FROM HARBOR MAINTENANCE TAX FOR CERTAIN
PASSENGERS.—
(1) IN GENERAL.—Subparagraph (D) of section 4462(b)(1)
(relating to special rule for Alaska, Hawaii, and possessions)
is amended by inserting before the period the following:
‘‘, or passengers transported on United States flag vessels
operating solely within the State waters of Alaska or Hawaii
and adjacent international waters’’.
(2) EFFECTIVE DATE.—The amendment made by paragraph
(1) shall take effect as if included in the amendments made
by section 1402(a) of the Harbor Maintenance Revenue Act
of 1986.
(j) AMENDMENTS RELATED TO REVENUE PROVISIONS OF ENERGY
POLICY ACT OF 1992.—
(1) Effective with respect to taxable years beginning after
December 31, 1990, subclause (II) of section 53(d)(1)(B)(iv) is
amended to read as follows:
‘‘(II) the adjusted net minimum tax for any
taxable year is the amount of the net minimum
tax for such year increased in the manner provided
in clause (iii).’’.
(2) Subsection (g) of section 179A is redesignated as sub-
section (f).
(3) Subparagraph (E) of section 6724(d)(3) is amended by
striking ‘‘section 6109(f)’’ and inserting ‘‘section 6109(h)’’.
(4)(A) Subsection (d) of section 30 is amended—
H. R. 3448—128
(i) by inserting ‘‘(determined without regard to sub-
section (b)(3))’’ before the period at the end of paragraph
(1) thereof, and
(ii) by adding at the end thereof the following new
paragraph:
‘‘(4) ELECTION TO NOT TAKE CREDIT.—No credit shall be
allowed under subsection (a) for any vehicle if the taxpayer
elects to not have this section apply to such vehicle.’’.
(B) Subsection (m) of section 6501 (as redesignated by
section 1602) is amended by striking ‘‘section 40(f)’’ and insert-
ing ‘‘sections 30(d)(4), 40(f)’’.
(5) Subclause (III) of section 501(c)(21)(D)(ii) is amended
by striking ‘‘section 101(6)’’ and inserting ‘‘section 101(7)’’
and by striking ‘‘1752(6)’’ and inserting ‘‘1752(7)’’.
(6) Paragraph (1) of section 1917(b) of the Energy Policy
Act of 1992 shall be applied as if ‘‘at a rate’’ appeared instead
of ‘‘at the rate’’ in the material proposed to be stricken.
(7) Paragraph (2) of section 1921(b) of the Energy Policy
Act of 1992 shall be applied as if a comma appeared after
‘‘(2)’’ in the material proposed to be stricken.
(8) Subsection (a) of section 1937 of the Energy Policy
Act of 1992 shall be applied as if ‘‘Subpart B’’ appeared instead
of ‘‘Subpart C’’.
(k) TREATMENT OF QUALIFIED FOOTBALL COACHES PLAN.—
(1) IN GENERAL.—For purposes of the Internal Revenue
Code of 1986, a qualified football coaches plan—
(A) shall be treated as a multiemployer collectively
bargained plan, and
(B) notwithstanding section 401(k)(4)(B) of such Code,
may include a qualified cash and deferred arrangement
under section 401(k) of such Code.
(2) QUALIFIED FOOTBALL COACHES PLAN.—For purposes of
this subsection, the term ‘‘qualified football coaches plan’’ means
any defined contribution plan which is established and main-
tained by an organization—
(A) which is described in section 501(c) of such Code,
(B) the membership of which consists entirely of
individuals who primarily coach football as full-time
employees of 4-year colleges or universities described in
section 170(b)(1)(A)(ii) of such Code, and
(C) which was in existence on September 18, 1986.
(3) EFFECTIVE DATE.—This subsection shall apply to years
beginning after December 22, 1987.
(l) DETERMINATION OF UNRECOVERED INVESTMENT IN ANNUITY
CONTRACT.—
(1) IN GENERAL.—Subparagraph (A) of section 72(b)(4) is
amended by inserting ‘‘(determined without regard to sub-
section (c)(2))’’ after ‘‘contract’’.
(2) EFFECTIVE DATE.—The amendment made by paragraph
(1) shall take effect as if included in the amendments made
by section 1122(c) of the Tax Reform Act of 1986.
(m) MODIFICATIONS TO ELECTION TO INCLUDE CHILD’S INCOME
ON PARENT’S RETURN.—
(1) ELIGIBILITY
FOR
ELECTION.—Clause (ii) of section
1(g)(7)(A) (relating to election to include certain unearned
income of child on parent’s return) is amended to read as
follows:
H. R. 3448—129
‘‘(ii) such gross income is more than the amount
described in paragraph (4)(A)(ii)(I) and less than 10
times the amount so described,’’.
(2) COMPUTATION
OF
TAX.—Subparagraph (B) of section
1(g)(7) (relating to income included on parent’s return) is
amended—
(A) by striking ‘‘$1,000’’ in clause (i) and inserting
‘‘twice the amount described in paragraph (4)(A)(ii)(I)’’, and
(B) by amending subclause (II) of clause (ii) to read
as follows:
‘‘(II) for each such child, 15 percent of the
lesser of the amount described in paragraph
(4)(A)(ii)(I) or the excess of the gross income of
such child over the amount so described, and’’.
(3) MINIMUM
TAX.—Subparagraph (B) of section 59(j)(1)
is amended by striking ‘‘$1,000’’ and inserting ‘‘twice the
amount in effect for the taxable year under section 63(c)(5)(A)’’.
(4) EFFECTIVE DATE.—The amendments made by this sub-
section shall apply to taxable years beginning after December
31, 1995.
(n) 
TREATMENT
OF
CERTAIN
VETERANS’ 
REEMPLOYMENT
RIGHTS.—
(1) IN GENERAL.—Section 414 is amended by adding at
the end the following new subsection:
‘‘(u) SPECIAL RULES RELATING TO VETERANS’ REEMPLOYMENT
RIGHTS UNDER USERRA.—
‘‘(1) TREATMENT OF CERTAIN CONTRIBUTIONS MADE PURSU-
ANT TO VETERANS’ REEMPLOYMENT RIGHTS.—If any contribution
is made by an employer or an employee under an individual
account plan with respect to an employee, or by an employee
to a defined benefit plan that provides for employee contribu-
tions, and such contribution is required by reason of such
employee’s rights under chapter 43 of title 38, United States
Code, resulting from qualified military service, then—
‘‘(A) such contribution shall not be subject to any other-
wise applicable limitation contained in section 402(g),
402(h), 403(b), 404(a), 404(h), 408, 415, or 457, and shall
not be taken into account in applying such limitations
to other contributions or benefits under such plan or any
other plan, with respect to the year in which the contribu-
tion is made,
‘‘(B) such contribution shall be subject to the limita-
tions referred to in subparagraph (A) with respect to the
year to which the contribution relates (in accordance with
rules prescribed by the Secretary), and
‘‘(C) such plan shall not be treated as failing to meet
the requirements of section 401(a)(4), 401(a)(26), 401(k)(3),
401(k)(11), 
401(k)(12), 
401(m), 
403(b)(12), 
408(k)(3),
408(k)(6), 408(p), 410(b), or 416 by reason of the making
of (or the right to make) such contribution.
For purposes of the preceding sentence, any elective deferral
or employee contribution made under paragraph (2) shall be
treated as required by reason of the employee’s rights under
such chapter 43.
‘‘(2) REEMPLOYMENT RIGHTS UNDER USERRA WITH RESPECT
TO ELECTIVE DEFERRALS.—
H. R. 3448—130
‘‘(A) IN GENERAL.—For purposes of this subchapter and
section 457, if an employee is entitled to the benefits of
chapter 43 of title 38, United States Code, with respect
to any plan which provides for elective deferrals, the
employer sponsoring the plan shall be treated as meeting
the requirements of such chapter 43 with respect to such
elective deferrals only if such employer—
‘‘(i) permits such employee to make additional elec-
tive deferrals under such plan (in the amount deter-
mined under subparagraph (B) or such lesser amount
as is elected by the employee) during the period which
begins on the date of the reemployment of such
employee with such employer and has the same length
as the lesser of—
‘‘(I) the product of 3 and the period of qualified
military service which resulted in such rights, and
‘‘(II) 5 years, and
‘‘(ii) makes a matching contribution with respect
to any additional elective deferral made pursuant to
clause (i) which would have been required had such
deferral actually been made during the period of such
qualified military service.
‘‘(B) AMOUNT
OF
MAKEUP
REQUIRED.—The amount
determined under this subparagraph with respect to any
plan is the maximum amount of the elective deferrals
that the individual would have been permitted to make
under the plan in accordance with the limitations referred
to in paragraph (1)(A) during the period of qualified mili-
tary service if the individual had continued to be employed
by the employer during such period and received compensa-
tion as determined under paragraph (7). Proper adjustment
shall be made to the amount determined under the preced-
ing sentence for any elective deferrals actually made during
the period of such qualified military service.
‘‘(C) ELECTIVE DEFERRAL.—For purposes of this para-
graph, the term ‘elective deferral’ has the meaning given
such term by section 402(g)(3); except that such term shall
include any deferral of compensation under an eligible
deferred compensation plan (as defined in section 457(b)).
‘‘(D) 
AFTER-TAX
EMPLOYEE
CONTRIBUTIONS.—Ref-
erences in subparagraphs (A) and (B) to elective deferrals
shall be treated as including references to employee con-
tributions.
‘‘(3) CERTAIN RETROACTIVE ADJUSTMENTS NOT REQUIRED.—
For purposes of this subchapter and subchapter E, no provision
of chapter 43 of title 38, United States Code, shall be construed
as requiring—
‘‘(A) any crediting of earnings to an employee with
respect to any contribution before such contribution is actu-
ally made, or
‘‘(B) any allocation of any forfeiture with respect to
the period of qualified military service.
‘‘(4) LOAN
REPAYMENT
SUSPENSIONS
PERMITTED.—If any
plan suspends the obligation to repay any loan made to an
employee from such plan for any part of any period during
which such employee is performing service in the uniformed
services (as defined in chapter 43 of title 38, United States
H. R. 3448—131
Code), whether or not qualified military service, such suspen-
sion shall not be taken into account for purposes of section
72(p), 401(a), or 4975(d)(1).
‘‘(5) QUALIFIED MILITARY SERVICE.—For purposes of this
subsection, the term ‘qualified military service’ means any serv-
ice in the uniformed services (as defined in chapter 43 of
title 38, United States Code) by any individual if such individ-
ual is entitled to reemployment rights under such chapter
with respect to such service.
‘‘(6) INDIVIDUAL ACCOUNT PLAN.—For purposes of this sub-
section, the term ‘individual account plan’ means any defined
contribution plan (including any tax-sheltered annuity plan
under section 403(b), any simplified employee pension under
section 408(k), any qualified salary reduction arrangement
under section 408(p), and any eligible deferred compensation
plan (as defined in section 457(b)).
‘‘(7) COMPENSATION.—For purposes of sections 403(b)(3),
415(c)(3), and 457(e)(5), an employee who is in qualified military
service shall be treated as receiving compensation from the
employer during such period of qualified military service
equal to—
‘‘(A) the compensation the employee would have
received during such period if the employee were not in
qualified military service, determined based on the rate
of pay the employee would have received from the employer
but for absence during the period of qualified military
service, or
‘‘(B) if the compensation the employee would have
received during such period was not reasonably certain,
the employee’s average compensation from the employer
during the 12-month period immediately preceding the
qualified military service (or, if shorter, the period of
employment immediately preceding the qualified military
service).
‘‘(8) USERRA REQUIREMENTS FOR QUALIFIED RETIREMENT
PLANS.—For purposes of this subchapter and section 457, an
employer sponsoring a retirement plan shall be treated as
meeting the requirements of chapter 43 of title 38, United
States Code, only if each of the following requirements is met:
‘‘(A) An individual reemployed under such chapter is
treated with respect to such plan as not having incurred
a break in service with the employer maintaining the plan
by reason of such individual’s period of qualified military
service.
‘‘(B) Each period of qualified military service served
by an individual is, upon reemployment under such chap-
ter, deemed with respect to such plan to constitute service
with the employer maintaining the plan for the purpose
of determining the nonforfeitability of the individual’s
accrued benefits under such plan and for the purpose of
determining the accrual of benefits under such plan.
‘‘(C) An individual reemployed under such chapter is
entitled to accrued benefits that are contingent on the
making of, or derived from, employee contributions or elec-
tive deferrals only to the extent the individual makes pay-
ment to the plan with respect to such contributions or
deferrals. No such payment may exceed the amount the
H. R. 3448—132
individual would have been permitted or required to
contribute had the individual remained continuously
employed by the employer throughout the period of quali-
fied military service. Any payment to such plan shall be
made during the period beginning with the date of
reemployment and whose duration is 3 times the period
of the qualified military service (but not greater than 5
years).
‘‘(9) PLANS NOT SUBJECT TO TITLE 38.—This subsection shall
not apply to any retirement plan to which chapter 43 of title
38, United States Code, does not apply.
‘‘(10) REFERENCES.—For purposes of this section, any ref-
erence to chapter 43 of title 38, United States Code, shall
be treated as a reference to such chapter as in effect on Decem-
ber 12, 1994 (without regard to any subsequent amendment).’’.
(2) AMENDMENT
TO
ERISA.—Section 408(b)(1) of the
Employee Retirement Income Security Act of 1974 (29 U.S.C.
1148(b)) is amended by adding at the end the following new
sentence: ‘‘A loan made by a plan shall not fail to meet the
requirements of the preceding sentence by reason of a loan
repayment suspension described under section 414(u)(4) of the
Internal Revenue Code of 1986.’’.
(3) EFFECTIVE DATE.—The amendments made by this sub-
section shall be effective as of December 12, 1994.
(o) REPORTING OF REAL ESTATE TRANSACTIONS.—
(1) IN GENERAL.—Paragraph (3) of section 6045(e) (relating
to prohibition of separate charge for filing return) is amended
by adding at the end the following new sentence: ‘‘Nothing
in this paragraph shall be construed to prohibit the real estate
reporting person from taking into account its cost of complying
with such requirement in establishing its charge (other than
a separate charge for complying with such requirement) to
any customer for performing services in the case of a real
estate transaction.’’.
(2) EFFECTIVE DATE.—The amendment made by paragraph
(1) shall take effect as if included in section 1015(e)(2)(A) of
the Technical and Miscellaneous Revenue Act of 1988.
(p) CLARIFICATION
OF
DENIAL
OF
DEDUCTION
FOR
STOCK
REDEMPTION EXPENSES.
(1) IN
GENERAL.—Paragraph (1) of section 162(k) is
amended by striking ‘‘the redemption of its stock’’ and inserting
‘‘the reacquisition of its stock or of the stock of any related
person (as defined in section 465(b)(3)(C))’’.
(2) CERTAIN
DEDUCTIONS
PERMITTED.—Subparagraph (A)
of section 162(k)(2) is amended by striking ‘‘or’’ at the end
of clause (i), by redesignating clause (ii) as clause (iii), and
by inserting after clause (i) the following new clause:
‘‘(ii) deduction for amounts which are properly
allocable to indebtedness and amortized over the term
of such indebtedness, or’’.
(3) CLERICAL
AMENDMENT.—The subsection heading for
subsection (k) of section 162 is amended by striking ‘‘REDEMP-
TION’’ and inserting ‘‘REACQUISITION’’.
(4) EFFECTIVE DATE.—
(A) IN GENERAL.—Except as provided in subparagraph
(B), the amendments made by this subsection shall apply
H. R. 3448—133
to amounts paid or incurred after September 13, 1995,
in taxable years ending after such date.
(B) PARAGRAPH (2).—The amendment made by para-
graph (2) shall take effect as if included in the amendment
made by section 613 of the Tax Reform Act of 1986.
(q) CLERICAL AMENDMENT TO SECTION 404.—
(1) IN GENERAL.—Paragraph (1) of section 404(j) is amended
by striking ‘‘(10)’’ and inserting ‘‘(9)’’.
(2) EFFECTIVE DATE.—The amendment made by paragraph
(1) shall take effect as if included in the amendments made
by section 713(d)(4)(A) of the Deficit Reduction Act of 1984.
(r) PASSIVE INCOME NOT TO INCLUDE FSC INCOME, ETC.—
(1) IN
GENERAL.—Paragraph (2) of section 1296(b) is
amended by striking ‘‘or’’ at the end of subparagraph (B), by
striking the period at the end of subparagraph (C) and inserting
‘‘, or’’, and by inserting after subparagraph (C) the following
new subparagraph:
‘‘(D) which is foreign trade income of an FSC or export
trade income of an export trade corporation (as defined
in section 971).’’.
(2) EFFECTIVE DATE.—The amendments made by paragraph
(1) shall take effect as if included in the amendments made
by section 1235 of the Tax Reform Act of 1986.
(s) TECHNICAL
CORRECTION
OF
INTERMEDIATE
SANCTIONS
PROVISIONS.—
(1) Subparagraph (C) of section 6652(c)(1) is amended by
striking ‘‘$10’’ and inserting ‘‘$20’’, and by striking ‘‘$5,000’’
and inserting ‘‘$10,000’’.
(2) Subparagraph (D) of section 6652(c)(1) is amended by
striking ‘‘$10’’ and inserting ‘‘$20’’.
(t) MISCELLANEOUS CLERICAL AMENDMENTS.—
(1) Subclause (II) of section 56(g)(4)(C)(ii) is amended by
striking ‘‘of the subclause’’ and inserting ‘‘of subclause’’.
(2) Paragraph (2) of section 72(m) is amended by inserting
‘‘and’’ at the end of subparagraph (A), by striking subparagraph
(B), and by redesignating subparagraph (C) as subpara-
graph (B).
(3) Paragraph (2) of section 86(b) is amended by striking
‘‘adusted’’ and inserting ‘‘adjusted’’.
(4)(A) The heading for section 112 is amended by striking
‘‘COMBAT PAY’’ and inserting ‘‘COMBAT ZONE COMPENSATION’’.
(B) The item relating to section 112 in the table of sections
for part III of subchapter B of chapter 1 is amended by striking
‘‘combat pay’’ and inserting ‘‘combat zone compensation’’.
(C) Paragraph (1) of section 3401(a) is amended by striking
‘‘combat pay’’ and inserting ‘‘combat zone compensation’’.
(5) Clause (i) of section 172(h)(3)(B) is amended by striking
the comma at the end thereof and inserting a period.
(6) Clause (ii) of section 543(a)(2)(B) is amended by striking
‘‘section 563(c)’’ and inserting ‘‘section 563(d)’’.
(7) Paragraph (1) of section 958(a) is amended by striking
‘‘sections 955(b)(1) (A) and (B), 955(c)(2)(A)(ii), and 960(a)(1)’’
and inserting ‘‘section 960(a)(1)’’.
(8) Subsection (g) of section 642 is amended by striking
‘‘under 2621(a)(2)’’ and inserting ‘‘under section 2621(a)(2)’’.
(9) Section 1463 is amended by striking ‘‘this subsection’’
and inserting ‘‘this section’’.
H. R. 3448—134
(10) Subsection (k) of section 3306 is amended by inserting
a period at the end thereof.
(11) The item relating to section 4472 in the table of
sections for subchapter B of chapter 36 is amended by striking
‘‘and special rules’’.
(12) Paragraph (3) of section 5134(c) is amended by striking
‘‘section 6662(a)’’ and inserting ‘‘section 6665(a)’’.
(13) Paragraph (2) of section 5206(f) is amended by striking
‘‘section 5(e)’’ and inserting ‘‘section 105(e)’’.
(14) Paragraph (1) of section 6050B(c) is amended by strik-
ing ‘‘section 85(c)’’ and inserting ‘‘section 85(b)’’.
(15) Subsection (k) of section 6166 is amended by striking
paragraph (6).
(16) Subsection (e) of section 6214 is amended to read
as follows:
‘‘(e) CROSS REFERENCE.—
‘‘For provision giving Tax Court jurisdiction to order a refund of
an overpayment and to award sanctions, see section 6512(b)(2).’’.
(17) The section heading for section 6043 is amended by
striking the semicolon and inserting a comma.
(18) The item relating to section 6043 in the table of
sections for subpart B of part III of subchapter A of chapter
61 is amended by striking the semicolon and inserting a comma.
(19) The table of sections for part I of subchapter A of
chapter 68 is amended by striking the item relating to section
6662.
(20)(A) Section 7232 is amended—
(i) 
by 
striking 
‘‘LUBRICATING
OIL,’’ 
in 
the
heading, and
(ii) by striking ‘‘lubricating oil,’’ in the text.
(B) The table of sections for part II of subchapter A of
chapter 75 is amended by striking ‘‘lubricating oil,’’ in the
item relating to section 7232.
(21) Paragraph (1) of section 6701(a) of the Omnibus Budget
Reconciliation Act of 1989 is amended by striking ‘‘subclause
(IV)’’ and inserting ‘‘subclause (V)’’.
(22) Clause (ii) of section 7304(a)(2)(D) of such Act is
amended by striking ‘‘subsection (c)(2)’’ and inserting ‘‘sub-
section (c)’’.
(23) Paragraph (1) of section 7646(b) of such Act is amended
by striking ‘‘section 6050H(b)(1)’’ and inserting ‘‘section
6050H(b)(2)’’.
(24) Paragraph (10) of section 7721(c) of such Act is
amended by striking ‘‘section 6662(b)(2)(C)(ii)’’ and inserting
‘‘section 6661(b)(2)(C)(ii)’’.
(25) Subparagraph (A) of section 7811(i)(3) of such Act
is amended by inserting ‘‘the first place it appears’’ before
‘‘in clause (i)’’.
(26) Paragraph (10) of section 7841(d) of such Act is
amended by striking ‘‘section 381(a)’’ and inserting ‘‘section
381(c)’’.
(27) Paragraph (2) of section 7861(c) of such Act is amended
by inserting ‘‘the second place it appears’’ before ‘‘and inserting’’.
(28) Paragraph (1) of section 460(b) is amended by striking
‘‘the look-back method of paragraph (3)’’ and inserting ‘‘the
look-back method of paragraph (2)’’.
H. R. 3448—135
(29) Subparagraph (C) of section 50(a)(2) is amended by
striking ‘‘subsection (c)(4)’’ and inserting ‘‘subsection (d)(5)’’.
(30) Subparagraph (B) of section 172(h)(4) is amended by
striking the material following the heading and preceding
clause 
(i) 
and 
inserting 
‘‘For 
purposes 
of 
subsection
(b)(2)—’’.
(31) Subparagraph (A) of section 355(d)(7) is amended by
inserting ‘‘section’’ before ‘‘267(b)’’.
(32) Subparagraph (C) of section 420(e)(1) is amended by
striking ‘‘mean’’ and inserting ‘‘means’’.
(33) Paragraph (4) of section 537(b) is amended by striking
‘‘section 172(i)’’ and inserting ‘‘section 172(f)’’.
(34) Subparagraph (B) of section 613(e)(1) is amended by
striking the comma at the end thereof and inserting a period.
(35) Paragraph (4) of section 856(a) is amended by striking
‘‘section 582(c)(5)’’ and inserting ‘‘section 582(c)(2)’’.
(36) Sections 904(f)(2)(B)(i) and 907(c)(4)(B)(iii) are each
amended by inserting ‘‘(as in effect on the day before the
date of the enactment of the Revenue Reconciliation Act of
1990)’’ after ‘‘section 172(h)’’.
(37) Subsection (b) of section 936 is amended by striking
‘‘subparagraphs (D)(ii)(I)’’ and inserting ‘‘subparagraphs (D)(ii)’’.
(38) Subsection (c) of section 2104 is amended by striking
‘‘subparagraph (A), (C), or (D) of section 861(a)(1)’’ and inserting
‘‘section 861(a)(1)(A)’’.
(39) Subparagraph (A) of section 280A(c)(1) is amended
to read as follows:
‘‘(A) as the principal place of business for any trade
or business of the taxpayer,’’.
(40) Section 6038 is amended by redesignating the sub-
section relating to cross references as subsection (f).
(41) Clause (iv) of section 6103(e)(1)(A) is amended by
striking all that follows ‘‘provisions of’’ and inserting ‘‘section
1(g) or 59(j);’’.
(42) The subsection (f) of section 6109 of the Internal
Revenue Code of 1986 which was added by section 2201(d)
of Public Law 101–624 is redesignated as subsection (g).
(43) Subsection (b) of section 7454 is amended by striking
‘‘section 4955(e)(2)’’ and inserting ‘‘section 4955(f)(2)’’.
(44) 
Subsection 
(d) 
of 
section 
11231 
of 
the
Revenue Reconciliation Act of 1990 shall be applied as if
‘‘comma’’ appeared instead of ‘‘period’’ and as if the paragraph
(9) proposed to be added ended with a comma.
(45) 
Paragraph 
(1) 
of 
section 
11303(b) 
of 
the
Revenue Reconciliation Act of 1990 shall be applied as if ‘‘para-
graph’’ appeared instead of ‘‘subparagraph’’ in the material
proposed to be stricken.
(46) 
Subsection 
(f) 
of 
section 
11701 
of 
the
Revenue Reconciliation Act of 1990 is amended by inserting
‘‘(relating to definitions)’’ after ‘‘section 6038(e)’’.
(47) 
Subsection 
(i) 
of 
section 
11701 
of 
the
Revenue Reconciliation Act of 1990 shall be applied as if ‘‘sub-
section’’ appeared instead of ‘‘section’’ in the material proposed
to be stricken.
(48) Subparagraph (B) of section 11801(c)(2) of the Revenue
Reconciliation Act of 1990 shall be applied as if ‘‘section 56(g)’’
appeared instead of
‘‘section 59(g)’’.
H. R. 3448—136
(49) Subparagraph (C) of section 11801(c)(8) of the Revenue
Reconciliation Act of 1990 shall be applied as if ‘‘reorganiza-
tions’’ appeared instead of ‘‘reorganization’’ in the material pro-
posed to be stricken.
(50) Subparagraph (H) of section 11801(c)(9) of the Revenue
Reconciliation Act of 1990 shall be applied as if ‘‘section
1042(c)(1)(B)’’ appeared instead of ‘‘section 1042(c)(2)(B)’’.
(51) Subparagraph (F) of section 11801(c)(12) of the
Revenue Reconciliation Act of 1990 shall be applied as if ‘‘and
(3)’’ appeared instead of
‘‘and (E)’’.
(52) Subparagraph (A) of section 11801(c)(22) of the
Revenue Reconciliation Act of 1990 shall be applied as if ‘‘chap-
ters 21’’ appeared instead of ‘‘chapter 21’’ in the material pro-
posed to be stricken.
(53) 
Paragraph 
(3) 
of 
section 
11812(b) 
of 
the
Revenue Reconciliation Act of 1990 shall be applied by not
executing the amendment therein to the heading of section
42(d)(5)(B).
(54) Clause (i) of section 11813(b)(9)(A) of the Revenue
Reconciliation Act of 1990 shall be applied as if a comma
appeared after ‘‘(3)(A)(ix)’’ in the material proposed to be
stricken.
(55) Subparagraph (F) of section 11813(b)(13) of the
Revenue Reconciliation Act of 1990 shall be applied as if ‘‘tax’’
appeared after ‘‘investment’’ in the material proposed to be
stricken.
(56) Paragraph (19) of section 11813(b) of the Revenue
Reconciliation Act of 1990 shall be applied as if ‘‘Paragraph
(20) of section 1016(a), as redesignated by section 11801,’’
appeared instead of
‘‘Paragraph (21) of section 1016(a)’’.
(57) Paragraph (5) section 8002(a) of the Surface Transpor-
tation Revenue Act of 1991 shall be applied as if ‘‘4481(e)’’
appeared instead of
‘‘4481(c)’’.
(58) Section 7872 is amended—
(A) by striking ‘‘foregone’’ each place it appears in
subsections (a) and (e)(2) and inserting ‘‘forgone’’, and
(B) by striking ‘‘FOREGONE’’ in the heading for sub-
section (e) and the heading for paragraph (2) of subsection
(e) and inserting ‘‘FORGONE’’.
(59) Paragraph (7) of section 7611(h) is amended by striking
‘‘approporiate’’ and inserting ‘‘appropriate’’.
(60) The heading of paragraph (3) of section 419A(c) is
amended by striking ‘‘SEVERENCE’’ and inserting ‘‘SEVERANCE’’.
(61) Clause (ii) of section 807(d)(3)(B) is amended by
striking ‘‘Commissoners’ ’’ and inserting ‘‘Commissioners’ ’’.
(62) Subparagraph (B) of section 1274A(c)(1) is amended
by striking ‘‘instument’’ and inserting ‘‘instrument’’.
(63) Subparagraph (B) of section 724(d)(3) by striking
‘‘Subparagaph’’ and inserting ‘‘Subparagraph’’.
(64) The last sentence of paragraph (2) of section 42(c)
is amended by striking ‘‘of 1988’’.
(65) Paragraph (1) of section 9707(d) is amended by striking
‘‘diligence,’’ and inserting ‘‘diligence’’.
(66) Subsection (c) of section 4977 is amended by striking
‘‘section 132(i)(2)’’ and inserting ‘‘section 132(h)’’.
(67) The last sentence of section 401(a)(20) is amended
by striking ‘‘section 211’’ and inserting ‘‘section 521’’.
H. R. 3448—137
(68) Subparagraph (A) of section 402(g)(3) is amended by
striking ‘‘subsection (a)(8)’’ and inserting ‘‘subsection (e)(3)’’.
(69) The last sentence of section 403(b)(10) is amended
by striking ‘‘an direct’’ and inserting ‘‘a direct’’.
(70) Subparagraph (A) of section 4973(b)(1) is amended
by striking ‘‘sections 402(c)’’ and inserting ‘‘section 402(c)’’.
(71) Paragraph (12) of section 3405(e) is amended by strik-
ing ‘‘(b)(3)’’ and inserting ‘‘(b)(2)’’.
(72) Paragraph (41) of section 521(b) of the Unemployment
Compensation Amendments of 1992 shall be applied as if ‘‘sec-
tion’’ appeared instead of ‘‘sections’’ in the material proposed
to be stricken.
(73) Paragraph (27) of section 521(b) of the Unemployment
Compensation Amendments of 1992 shall be applied as if ‘‘Sec-
tion 691(c)(5)’’ appeared instead of ‘‘Section 691(c)’’.
(74) Paragraph (5) of section 860F(a) is amended by striking
‘‘paragraph (1)’’ and inserting ‘‘paragraph (2)’’.
(75) Paragraph (1) of section 415(k) is amended by adding
‘‘or’’ at the end of subparagraph (C), by striking subparagraphs
(D) and (E), and by redesignating subparagraph (F) as subpara-
graph (D).
(76) Paragraph (2) of section 404(a) is amended by striking
‘‘(18),’’.
(77) Clause (ii) of section 72(p)(4)(A) is amended to read
as follows:
‘‘(ii) SPECIAL RULE.—The term ‘qualified employer
plan’ shall include any plan which was (or was deter-
mined to be) a qualified employer plan or a government
plan.’’.
(78) Sections 461(i)(3)(C) and 1274(b)(3)(B)(i) are each
amended by striking ‘‘section 6662(d)(2)(C)(ii)’’ and inserting
‘‘section 6662(d)(2)(C)(iii)’’.
(79) Subsection (a) of section 164 is amended by striking
the paragraphs relating to the generation-skipping tax
and the environmental tax imposed by section 59A and by
inserting after paragraph (3) the following new paragraphs:
‘‘(4) The GST tax imposed on income distributions.
‘‘(5) The environmental tax imposed by section 59A.’’.
(80) Subclause (I) of section 936(a)(4)(A)(ii) is amended
by striking ‘‘deprecation’’ and inserting ‘‘depreciation’’.
Subtitle H—Other Provisions
SEC. 1801. EXEMPTION FROM DIESEL FUEL DYEING REQUIREMENTS
WITH RESPECT TO CERTAIN STATES.
(a) IN GENERAL.—Section 4082 (relating to exemptions for diesel
fuel) is amended by redesignating subsections (c) and (d) as sub-
sections (d) and (e), respectively, and by inserting after subsection
(b) the following new subsection:
‘‘(c) EXCEPTION TO DYEING REQUIREMENTS.—Paragraph (2) of
subsection (a) shall not apply with respect to any diesel fuel—
‘‘(1) removed, entered, or sold in a State for ultimate sale
or use in an area of such State during the period such area
is exempted from the fuel dyeing requirements under subsection
(i) of section 211 of the Clean Air Act (as in effect on the
date of the enactment of this subsection) by the Administrator
H. R. 3448—138
of the Environmental Protection Agency under paragraph (4)
of such subsection (i) (as so in effect), and
‘‘(2) the use of which is certified pursuant to regulations
issued by the Secretary.’’.
(b) EFFECTIVE DATE.—The amendments made by this section
shall apply with respect to fuel removed, entered, or sold on or
after the first day of the first calendar quarter beginning after
the date of the enactment of this Act.
SEC. 1802. TREATMENT OF CERTAIN UNIVERSITY ACCOUNTS.
(a) IN GENERAL.—For purposes of subsection (s) of section 3121
of the Internal Revenue Code of 1986 (relating to concurrent employ-
ment by 2 or more employers)—
(1) the following entities shall be deemed to be related
corporations that concurrently employ the same individual:
(A) a State university which employs health profes-
sionals as faculty members at a medical school, and
(B) an agency account of a State university which
is described in subparagraph (A) and from which
there is distributed to such faculty members payments
forming a part of the compensation that the State, or
such State university, as the case may be, agrees to pay
to such faculty members, but only if—
(i) such agency account is authorized by State law
and receives the funds for such payments from a
faculty practice plan described in section 501(c)(3) of
such Code and exempt from tax under section 501(a)
of such Code,
(ii) such payments are distributed by such agency
account to such faculty members who render patient
care at such medical school, and
(iii) such faculty members comprise at least 30
percent of the membership of such faculty practice
plan, and
(2) remuneration which is disbursed by such agency account
to any such faculty member of the medical school described
in paragraph (1)(A) shall be deemed to have been actually
disbursed by the State, or such State university, as the case
may be, as a common paymaster and not to have been actually
disbursed by such agency account.
(b) EFFECTIVE DATE.—The provisions of subsection (a) shall
apply to remuneration paid after December 31, 1996.
SEC. 1803. MODIFICATIONS TO EXCISE TAX ON OZONE-DEPLETING
CHEMICALS.
(a) RECYCLED HALON.—
(1) IN GENERAL.—Section 4682(d)(1) (relating to recycling)
is amended by inserting ‘‘, or on any recycled halon imported
from any country which is a signatory to the Montreal Protocol
on Substances that Deplete the Ozone Layer’’ before the period
at the end.
(2) CERTIFICATION SYSTEM.—The Secretary of the Treasury,
after consultation with the Administrator of the Environmental
Protection Agency, shall develop a certification system to ensure
compliance with the recycling requirement for imported halon
under section 4682(d)(1) of the Internal Revenue Code of 1986,
as amended by paragraph (1).
H. R. 3448—139
(b) CHEMICALS
USED
AS
PROPELLANTS
IN
METERED-DOSE
INHALERS TAX-EXEMPT.—Paragraph (4) of section 4682(g) (relating
to phase-in of tax on certain substances) is amended to read as
follows:
‘‘(4) CHEMICALS USED AS PROPELLANTS IN METERED-DOSE
INHALERS.—
‘‘(A) TAX-EXEMPT.—
‘‘(i) IN GENERAL.—No tax shall be imposed by sec-
tion 4681 on—
‘‘(I) any use of any substance as a propellant
in metered-dose inhalers, or
‘‘(II) any qualified sale by the manufacturer,
producer, or importer of any substance.
‘‘(ii) QUALIFIED SALE.—For purposes of clause (i),
the term ‘qualified sale’ means any sale by the manu-
facturer, producer, or importer of any substance—
‘‘(I) for use by the purchaser as a propellant
in metered-dose inhalers, or
‘‘(II) for resale by the purchaser to a 2d pur-
chaser for such use by the 2d purchaser.
The preceding sentence shall apply only if the manufac-
turer, producer, and importer, and the 1st and 2d
purchasers (if any) meet such registration require-
ments as may be prescribed by the Secretary.
‘‘(B) OVERPAYMENTS.—If any substance on which tax
was paid under this subchapter is used by any person
as a propellant in metered-dose inhalers, credit or refund
without interest shall be allowed to such person in an
amount equal to the tax so paid. Amounts payable under
the preceding sentence with respect to uses during the
taxable year shall be treated as described in section 34(a)
for such year unless claim thereof has been timely filed
under this subparagraph.’’.
(c) EFFECTIVE DATES.—
(1) RECYCLED HALON.—
(A) IN GENERAL.—Except as provided in subparagraph
(B), the amendment made by subsection (a)(1) shall take
effect on January 1, 1997.
(B) HALON-1211.—In the case of Halon-1211, the
amendment made by subsection (a)(1) shall take effect
on January 1, 1998.
(2) METERED-DOSE INHALERS.—The amendment made by
subsection (b) shall take effect on the 7th day after the date
of the enactment of this Act.
SEC. 1804. TAX-EXEMPT 
BONDS 
FOR 
SALE 
OF 
ALASKA 
POWER
ADMINISTRATION FACILITY.
Sections 142(f)(3) (as added by section 1608) and 147(d) of
the Internal Revenue Code of 1986 shall not apply in determining
whether any private activity bond issued after the date of the
enactment of this Act and used to finance the acquisition of the
Snettisham hydroelectric project from the Alaska Power Administra-
tion is a qualified bond for purposes of such Code.
H. R. 3448—140
SEC. 1805. NONRECOGNITION TREATMENT FOR CERTAIN TRANSFERS
BY COMMON TRUST FUNDS TO REGULATED INVESTMENT
COMPANIES.
(a) GENERAL RULE.—Section 584 (relating to common trust
funds) is amended by redesignating subsection (h) as subsection
(i) and by inserting after subsection (g) the following new subsection:
‘‘(h) NONRECOGNITION TREATMENT FOR CERTAIN TRANSFERS TO
REGULATED INVESTMENT COMPANIES.—
‘‘(1) IN GENERAL.—If—
‘‘(A) a common trust fund transfers substantially all
of its assets to one or more regulated investment companies
in exchange solely for stock in the company or companies
to which such assets are so transferred, and
‘‘(B) such stock is distributed by such common trust
fund to participants in such common trust fund in exchange
solely for their interests in such common trust fund,
no gain or loss shall be recognized by such common trust
fund by reason of such transfer or distribution, and no gain
or loss shall be recognized by any participant in such common
trust fund by reason of such exchange.
‘‘(2) BASIS RULES.—
‘‘(A) REGULATED INVESTMENT COMPANY.—The basis of
any asset received by a regulated investment company
in a transfer referred to in paragraph (1)(A) shall be the
same as it would be in the hands of the common trust
fund.
‘‘(B) PARTICIPANTS.—The basis of the stock which is
received in an exchange referred to in paragraph (1)(B)
shall be the same as that of the property exchanged. If
stock in more than one regulated investment company is
received in such exchange, the basis determined under
the preceding sentence shall be allocated among the stock
in each such company on the basis of respective fair market
values.
‘‘(3) TREATMENT OF ASSUMPTIONS OF LIABILITY.—
‘‘(A) IN GENERAL.—In determining whether the transfer
referred to in paragraph (1)(A) is in exchange solely for
stock in one or more regulated investment companies, the
assumption by any such company of a liability of the com-
mon trust fund, and the fact that any property transferred
by the common trust fund is subject to a liability, shall
be disregarded.
‘‘(B) SPECIAL RULE WHERE ASSUMED LIABILITIES EXCEED
BASIS.—
‘‘(i) IN GENERAL.—If, in any transfer referred to
in paragraph (1)(A), the assumed liabilities exceed the
aggregate adjusted bases (in the hands of the common
trust fund) of the assets transferred to the regulated
investment company or companies—
‘‘(I) notwithstanding paragraph (1), gain shall
be recognized to the common trust fund on such
transfer in an amount equal to such excess,
‘‘(II) the basis of the assets received by the
regulated investment company or companies in
such transfer shall be increased by the amount
so recognized, and
H. R. 3448—141
‘‘(III) any adjustment to the basis of a partici-
pant’s interest in the common trust fund as a
result of the gain so recognized shall be treated
as occurring immediately before the exchange
referred to in paragraph (1)(B).
If the transfer referred to in paragraph (1)(A) is to
two or more regulated investment companies, the basis
increase under subclause (II) shall be allocated among
such companies on the basis of the respective fair
market values of the assets received by each of such
companies.
‘‘(ii) ASSUMED LIABILITIES.—For purposes of clause
(i), the term ‘assumed liabilities’ means the aggre-
gate of—
‘‘(I) any liability of the common trust fund
assumed by any regulated investment company
in connection with the transfer referred to in para-
graph (1)(A), and
‘‘(II) any liability to which property so trans-
ferred is subject.
‘‘(4) COMMON
TRUST
FUND
MUST
MEET
DIVERSIFICATION
RULES.—This subsection shall not apply to any common trust
fund which would not meet the requirements of section
368(a)(2)(F)(ii) if it were a corporation. For purposes of the
preceding sentence, Government securities shall not be treated
as securities of an issuer in applying the 25-percent and 50-
percent test and such securities shall not be excluded for pur-
poses of determining total assets under clause (iv) of section
368(a)(2)(F).’’.
(b) EFFECTIVE DATE.—The amendment made by subsection (a)
shall apply to transfers after December 31, 1995.
SEC. 1806. QUALIFIED STATE TUITION PROGRAMS.
(a) IN GENERAL.—Subchapter F of chapter 1 (relating to exempt
organizations) is amended by adding at the end the following new
part:
‘‘PART VIII—QUALIFIED STATE TUITION
PROGRAMS
‘‘Sec. 529. Qualified State tuition programs.
‘‘SEC. 529. QUALIFIED STATE TUITION PROGRAMS.
‘‘(a) GENERAL RULE.—A qualified State tuition program shall
be exempt from taxation under this subtitle. Notwithstanding the
preceding sentence, such program shall be subject to the taxes
imposed by section 511 (relating to imposition of tax on unrelated
business income of charitable organizations).
‘‘(b) QUALIFIED STATE TUITION PROGRAM.—For purposes of this
section—
‘‘(1) IN GENERAL.—The term ‘qualified State tuition pro-
gram’ means a program established and maintained by a State
or agency or instrumentality thereof—
‘‘(A) under which a person—
‘‘(i) may purchase tuition credits or certificates
on behalf of a designated beneficiary which entitle
the beneficiary to the waiver or payment of qualified
higher education expenses of the beneficiary, or
H. R. 3448—142
‘‘(ii) may make contributions to an account which
is established for the purpose of meeting the qualified
higher education expenses of the designated beneficiary
of the account, and
‘‘(B) which meets the other requirements of this
subsection.
‘‘(2) CASH CONTRIBUTIONS.—A program shall not be treated
as a qualified State tuition program unless it provides that
purchases or contributions may only be made in cash.
‘‘(3) REFUNDS.—A program shall not be treated as a quali-
fied State tuition program unless it imposes a more than de
minimis penalty on any refund of earnings from the account
which are not—
‘‘(A) used for qualified higher education expenses of
the designated beneficiary,
‘‘(B) made on account of the death or disability of
the designated beneficiary, or
‘‘(C) made on account of a scholarship (or allowance
or payment described in section 135(d)(1) (B) or (C))
received by the designated beneficiary to the extent the
amount of the refund does not exceed the amount of the
scholarship, allowance, or payment.
‘‘(4) SEPARATE
ACCOUNTING.—A program shall not be
treated as a qualified State tuition program unless it provides
separate accounting for each designated beneficiary.
‘‘(5) NO INVESTMENT DIRECTION.—A program shall not be
treated as a qualified State tuition program unless it provides
that any contributor to, or designated beneficiary under, such
program may not direct the investment of any contributions
to the program (or any earnings thereon).
‘‘(6) NO PLEDGING OF INTEREST AS SECURITY.—A program
shall not be treated as a qualified State tuition program if
it allows any interest in the program or any portion thereof
to be used as security for a loan.
‘‘(7) PROHIBITION ON EXCESS CONTRIBUTIONS.—A program
shall not be treated as a qualified State tuition program unless
it provides adequate safeguards to prevent contributions on
behalf of a designated beneficiary in excess of those necessary
to provide for the qualified higher education expenses of the
beneficiary.
‘‘(c) TAX
TREATMENT
OF
DESIGNATED
BENEFICIARIES
AND
CONTRIBUTORS.—
‘‘(1) IN GENERAL.—Except as otherwise provided in this
subsection, no amount shall be includible in gross income of—
‘‘(A) a designated beneficiary under a qualified State
tuition program, or
‘‘(B) a contributor to such program on behalf of a
designated beneficiary,
with respect to any distribution or earnings under such pro-
gram.
‘‘(2) CONTRIBUTIONS.—In no event shall a contribution
to a qualified State tuition program on behalf of a designated
beneficiary be treated as a taxable gift for purposes of chapter
12.
‘‘(3) DISTRIBUTIONS.—
‘‘(A) IN GENERAL.—Any distribution under a qualified
State tuition program shall be includible in the gross
H. R. 3448—143
income of the distributee in the manner as provided under
section 72 to the extent not excluded from gross income
under any other provision of this chapter.
‘‘(B) IN-KIND DISTRIBUTIONS.—Any benefit furnished to
a designated beneficiary under a qualified State tuition
program shall be treated as a distribution to the bene-
ficiary.
‘‘(C) CHANGE IN BENEFICIARIES.—
‘‘(i) ROLLOVERS.—Subparagraph (A) shall not apply
to that portion of any distribution which, within 60
days of such distribution, is transferred to the credit
of another designated beneficiary under a qualified
State tuition program who is a member of the family
of the designated beneficiary with respect to which
the distribution was made.
‘‘(ii) CHANGE IN DESIGNATED BENEFICIARIES.—Any
change in the designated beneficiary of an interest
in a qualified State tuition program shall not be treated
as a distribution for purposes of subparagraph (A) if
the new beneficiary is a member of the family of the
old beneficiary.
‘‘(D) OPERATING RULES.—For purposes of applying sec-
tion 72—
‘‘(i) to the extent provided by the Secretary, all
qualified State tuition programs of which an individual
is a designated beneficiary shall be treated as one
program,
‘‘(ii) all distributions during a taxable year shall
be treated as one distribution, and
‘‘(iii) the value of the contract, income on the con-
tract, and investment in the contract shall be computed
as of the close of the calendar year in which the taxable
year begins.
‘‘(4) ESTATE
TAX
INCLUSION.—The value of any interest
in any qualified State tuition program which is attributable
to contributions made by an individual to such program on
behalf of any designated beneficiary shall be includible in the
gross estate of the contributor for purposes of chapter 11.
‘‘(5) SPECIAL
RULE
FOR
APPLYING
SECTION 2503(e).—For
purposes of section 2503(e), the waiver (or payment to an
educational institution) of qualified higher education expenses
of a designated beneficiary under a qualified State tuition pro-
gram shall be treated as a qualified transfer.
‘‘(d) REPORTING REQUIREMENTS.—
‘‘(1) IN GENERAL.—If there is a distribution to any indi-
vidual with respect to an interest in a qualified State tuition
program during any calendar year, each officer or employee
having control of the qualified State tuition program or their
designee shall make such reports as the Secretary may require
regarding such distribution to the Secretary and to the des-
ignated beneficiary or the individual to whom the distribution
was made. Any such report shall include such information
as the Secretary may prescribe.
‘‘(2) TIMING OF REPORTS.—Any report required by this sub-
section—
‘‘(A) shall be filed at such time and in such matter
as the Secretary prescribes, and
H. R. 3448—144
‘‘(B) shall be furnished to individuals not later than
January 31 of the calendar year following the calendar
year to which such report relates.
‘‘(e) OTHER DEFINITIONS AND SPECIAL RULES.—For purposes
of this section—
‘‘(1) DESIGNATED BENEFICIARY.—The term ‘designated bene-
ficiary’ means—
‘‘(A) the individual designated at the commencement
of participation in the qualified State tuition program as
the beneficiary of amounts paid (or to be paid) to the
program,
‘‘(B) in the case of a change in beneficiaries described
in subsection (c)(2)(C), the individual who is the new bene-
ficiary, and
‘‘(C) in the case of an interest in a qualified State
tuition program purchased by a State or local government
or an organization described in section 501(c)(3) and exempt
from taxation under section 501(a) as part of a scholarship
program operated by such government or organization, the
individual receiving such interest as a scholarship.
‘‘(2) MEMBER OF FAMILY.—The term ‘member of the family’
has the same meaning given such term as section 2032A(e)(2).
‘‘(3) QUALIFIED HIGHER EDUCATION EXPENSES.—The term
‘qualified higher education expenses’ means tuition, fees, books,
supplies, and equipment required for the enrollment or attend-
ance of a designated beneficiary at an eligible educational
institution (as defined in section 135(c)(3)).
‘‘(4) APPLICATION OF SECTION 514.—An interest in a quali-
fied State tuition program shall not be treated as debt for
purposes of section 514.’’.
(b) CONFORMING AMENDMENTS.—
(1) Section 135(d)(1) is amended by striking ‘‘or’’ at the
end of subparagraph (B), by striking the period at the end
of subparagraph (C) and inserting ‘‘, or’’, and by adding at
the end the following new subparagraph:
‘‘(D) a payment, waiver, or reimbursement of qualified
higher education expenses under a qualified State tuition
program (within the meaning of section 529(b)).’’.
(2) The table of parts for subchapter F of chapter 1 is
amended by adding at the end the following new item:
‘‘Part VIII. Qualified State tuition programs.’’.
(c) EFFECTIVE DATES.—
(1) IN GENERAL.—The amendments made by this section
shall apply to taxable years ending after the date of the enact-
ment of this Act.
(2) TRANSITION RULE.—If—
(A) a State or agency or instrumentality thereof main-
tains, on the date of the enactment of this Act, a program
under which persons may purchase tuition credits or certifi-
cates on behalf of, or make contributions for education
expenses of, a designated beneficiary, and
(B) such program meets the requirements of a qualified
State tuition program before the later of—
(i) the date which is 1 year after such date of
enactment, or
H. R. 3448—145
(ii) the first day of the first calendar quarter after
the close of the first regular session of the State legisla-
ture that begins after such date of enactment,
the amendments made by this section shall apply to con-
tributions (and earnings allocable thereto) made before the
date such program meets the requirements of such amend-
ments without regard to whether any requirements of such
amendments are met with respect to such contributions
and earnings.
For purposes of subparagraph (B)(ii), if a State has a 2-year
legislative session, each year of such session shall be deemed
to be a separate regular session of the State legislature.
SEC. 1807. ADOPTION ASSISTANCE.
(a) IN GENERAL.—Subpart A of part IV of subchapter A of
chapter 1 (relating to nonrefundable personal credits) is amended
by inserting after section 22 the following new section:
‘‘SEC. 23. ADOPTION EXPENSES.
‘‘(a) ALLOWANCE OF CREDIT.—
‘‘(1) IN GENERAL.—In the case of an individual, there shall
be allowed as a credit against the tax imposed by this chapter
the amount of the qualified adoption expenses paid or incurred
by the taxpayer.
‘‘(2) YEAR CREDIT ALLOWED.—The credit under paragraph
(1) with respect to any expense shall be allowed—
‘‘(A) for the taxable year following the taxable year
during which such expense is paid or incurred, or
‘‘(B) in the case of an expense which is paid or incurred
during the taxable year in which the adoption becomes
final, for such taxable year.
‘‘(b) LIMITATIONS.—
‘‘(1) DOLLAR LIMITATION.—The aggregate amount of quali-
fied adoption expenses which may be taken into account under
subsection (a) for all taxable years with respect to the adoption
of a child by the taxpayer shall not exceed $5,000 ($6,000,
in the case of a child with special needs).
‘‘(2) INCOME LIMITATION.—
‘‘(A) IN GENERAL.—The amount allowable as a credit
under subsection (a) for any taxable year shall be reduced
(but not below zero) by an amount which bears the same
ratio to the amount so allowable (determined without
regard to this paragraph but with regard to para-
graph (1)) as—
‘‘(i) the amount (if any) by which the taxpayer’s
adjusted gross income exceeds $75,000, bears to
‘‘(ii) $40,000.
‘‘(B) DETERMINATION
OF
ADJUSTED
GROSS
INCOME.—
For purposes of subparagraph (A), adjusted gross income
shall be determined—
‘‘(i) without regard to sections 911, 931, and
933, and
‘‘(ii) after the application of sections 86, 135, 137,
219, and 469.
‘‘(3) DENIAL OF DOUBLE BENEFIT.—
‘‘(A) IN GENERAL.—No credit shall be allowed under
subsection (a) for any expense for which a deduction or
credit is allowed under any other provision of this chapter.
H. R. 3448—146
‘‘(B) GRANTS.—No credit shall be allowed under sub-
section (a) for any expense to the extent that funds for
such expense are received under any Federal, State, or
local program.
‘‘(c) CARRYFORWARDS OF UNUSED CREDIT.—If the credit allow-
able under subsection (a) for any taxable year exceeds the limitation
imposed by section 26(a) for such taxable year reduced by the
sum of the credits allowable under this subpart (other than this
section), such excess shall be carried to the succeeding taxable
year and added to the credit allowable under subsection (a) for
such taxable year. No credit may be carried forward under this
subsection to any taxable year following the fifth taxable year
after the taxable year in which the credit arose. For purposes
of the preceding sentence, credits shall be treated as used on a
first-in first-out basis.
‘‘(d) DEFINITIONS.—For purposes of this section—
‘‘(1) QUALIFIED ADOPTION EXPENSES.—The term ‘qualified
adoption expenses’ means reasonable and necessary adoption
fees, court costs, attorney fees, and other expenses—
‘‘(A) which are directly related to, and the principal
purpose of which is for, the legal adoption of an eligible
child by the taxpayer,
‘‘(B) which are not incurred in violation of State or
Federal law or in carrying out any surrogate parenting
arrangement,
‘‘(C) which are not expenses in connection with the
adoption by an individual of a child who is the child of
such individual’s spouse, and
‘‘(D) which are not reimbursed under an employer pro-
gram or otherwise.
‘‘(2) ELIGIBLE CHILD.—The term ‘eligible child’ means any
individual—
‘‘(A) who—
‘‘(i) has not attained age 18, or
‘‘(ii) is physically or mentally incapable of caring
for himself, and
‘‘(B) in the case of qualified adoption expenses paid
or incurred after December 31, 2001, who is a child with
special needs.
‘‘(3) CHILD
WITH
SPECIAL
NEEDS.—The term ‘child with
special needs’ means any child if—
‘‘(A) a State has determined that the child cannot
or should not be returned to the home of his parents,
‘‘(B) such State has determined that there exists with
respect to the child a specific factor or condition (such
as his ethnic background, age, or membership in a minority
or sibling group, or the presence of factors such as medical
conditions or physical, mental, or emotional handicaps)
because of which it is reasonable to conclude that such
child cannot be placed with adoptive parents without
providing adoption assistance, and
‘‘(C) such child is a citizen or resident of the United
States (as defined in section 217(h)(3)).
‘‘(e) SPECIAL RULES FOR FOREIGN ADOPTIONS.—In the case of
an adoption of a child who is not a citizen or resident of the
United States (as defined in section 217(h)(3))—
H. R. 3448—147
‘‘(1) subsection (a) shall not apply to any qualified adoption
expense with respect to such adoption unless such adoption
becomes final, and
‘‘(2) any such expense which is paid or incurred before
the taxable year in which such adoption becomes final shall
be taken into account under this section as if such expense
were paid or incurred during such year.
‘‘(f) FILING REQUIREMENTS.—
‘‘(1) MARRIED COUPLES MUST FILE JOINT RETURNS.—Rules
similar to the rules of paragraphs (2), (3), and (4) of section
21(e) shall apply for purposes of this section.
‘‘(2) TAXPAYER MUST INCLUDE TIN.—
‘‘(A) IN GENERAL.—No credit shall be allowed under
this section with respect to any eligible child unless the
taxpayer includes (if known) the name, age, and TIN of
such child on the return of tax for the taxable year.
‘‘(B) OTHER METHODS.—The Secretary may, in lieu of
the information referred to in subparagraph (A), require
other information meeting the purposes of subparagraph
(A), including identification of an agent assisting with the
adoption.
‘‘(g) BASIS ADJUSTMENTS.—For purposes of this subtitle, if a
credit is allowed under this section for any expenditure with respect
to any property, the increase in the basis of such property which
would (but for this subsection) result from such expenditure shall
be reduced by the amount of the credit so allowed.
‘‘(h) REGULATIONS.—The Secretary shall prescribe such regula-
tions as may be appropriate to carry out this section and section
137, including regulations which treat unmarried individuals who
pay or incur qualified adoption expenses with respect to the same
child as 1 taxpayer for purposes of applying the dollar limitation
in subsection (b)(1) of this section and in section 137(b)(1).’’.
(b) EXCLUSION
OF AMOUNTS RECEIVED UNDER EMPLOYER’S
ADOPTION ASSISTANCE PROGRAMS.—Part III of subchapter B of
chapter 1 (relating to items specifically excluded from gross income)
is amended by redesignating section 137 as section 138 and by
inserting after section 136 the following new section:
‘‘SEC. 137. ADOPTION ASSISTANCE PROGRAMS.
‘‘(a) IN GENERAL.—Gross income of an employee does not
include amounts paid or expenses incurred by the employer for
qualified adoption expenses in connection with the adoption of
a child by an employee if such amounts are furnished pursuant
to an adoption assistance program.
‘‘(b) LIMITATIONS.—
‘‘(1) DOLLAR LIMITATION.—The aggregate amount exclud-
able from gross income under subsection (a) for all taxable
years with respect to the adoption of a child by the taxpayer
shall not exceed $5,000 ($6,000, in the case of a child with
special needs).
‘‘(2) INCOME
LIMITATION.—The amount excludable from
gross income under subsection (a) for any taxable year
shall be reduced (but not below zero) by an amount which
bears the same ratio to the amount so excludable (determined
without regard to this paragraph but with regard to paragraph
(1)) as—
H. R. 3448—148
‘‘(A) the amount (if any) by which the taxpayer’s
adjusted gross income exceeds $75,000, bears to
‘‘(B) $40,000.
‘‘(3) DETERMINATION OF ADJUSTED GROSS INCOME.—For pur-
poses of paragraph (2), adjusted gross income shall be
determined—
‘‘(A) without regard to this section and sections 911,
931, and 933, and
‘‘(B) after the application of sections 86, 135, 219,
and 469.
‘‘(c) ADOPTION ASSISTANCE PROGRAM.—For purposes of this sec-
tion, an adoption assistance program is a separate written plan
of an employer for the exclusive benefit of such employer’s
employees—
‘‘(1) under which the employer provides such employees
with adoption assistance, and
‘‘(2) which meets requirements similar to the requirements
of paragraphs (2), (3), (5), and (6) of section 127(b).
An adoption reimbursement program operated under section 1052
of title 10, United States Code (relating to armed forces) or section
514 of title 14, United States Code (relating to members of the
Coast Guard) shall be treated as an adoption assistance program
for purposes of this section.
‘‘(d) QUALIFIED ADOPTION EXPENSES.—For purposes of this sec-
tion, the term ‘qualified adoption expenses’ has the meaning given
such term by section 23(d) (determined without regard to reimburse-
ments under this section).
‘‘(e) CERTAIN RULES TO APPLY.—Rules similar to the rules
of subsections (e), (f), and (g) of section 23 shall apply for purposes
of this section.
‘‘(f) TERMINATION.—This section shall not apply to amounts
paid or expenses incurred after December 31, 2001.’’.
(c) CONFORMING AMENDMENTS.—
(1) Subparagraph (C) of section 25(e)(1) is amended by
inserting ‘‘and section 23’’ after ‘‘this section’’.
(2) Sections 86(b)(2)(A) and 135(c)(4)(A) are each amended
by inserting ‘‘137,’’ before ‘‘911’’.
(3) Clause (i) of section 219(g)(3)(A) is amended by inserting
‘‘, 137,’’ before ‘‘and 911’’.
(4) Clause (ii) of section 469(i)(3)(E) is amended to read
as follows:
‘‘(ii) the amounts excludable from gross income
under sections 135 and 137,’’.
(5) Subsection (a) of section 1016 is amended by striking
‘‘and’’ at the end of paragraph (24), by striking the period
at the end of paragraph (25) and inserting ‘‘, and’’, and by
adding at the end the following new paragraph:
‘‘(26) to the extent provided in sections 23(g) and 137(e).’’.
(6) The table of sections for subpart A of part IV of sub-
chapter A of chapter 1 is amended by inserting after the item
relating to section 22 the following new item:
‘‘Sec. 23. Adoption expenses.’’.
(7) The table of sections for part III of subchapter B of
chapter 1 is amended by striking the item relating to section
137 and inserting the following:
‘‘Sec. 137. Adoption assistance programs.
‘‘Sec. 138. Cross reference to other Acts.’’.