198
(14) Subparagraph (B) of section 117(d)(2) is
amended by striking ‘‘section 132(f)’’ and inserting
‘‘section 132(h)’’.
(n) 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 OMNIBUS 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 provi-
sion, 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)
Clause
(iii)
of
section
149(g)(3)(B)
is
amended to read as follows:
‘‘(iii) AMOUNTS HELD PENDING REIN-
VESTMENT
OR
REDEMPTION.—Amounts
held for not more than 30 days pending re-
investment or bond redemption shall be
199
treated as invested in bonds described in
clause (i).’’.
(2) The amendment made by paragraph (1)
shall take effect as if included in the amendments
made by section 7651 of the Omnibus Budget Rec-
onciliation 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 sentence: ‘‘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 corpora-
tion.’’.
(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 SEC-
TION 469.—
(1) IN GENERAL.—Subparagraph (B) of section
469(c)(3) is amended by adding at the end thereof
the following new sentence: ‘‘If the preceding sen-
tence applies to the net income from any property
200
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 begin-
ning 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 real-
ized on such disposition is recognized, the ex-
cess of—
‘‘(i) any loss from such activity for
such taxable year (determined after the ap-
plication of subsection (b)), over
‘‘(ii) any net income or gain for such
taxable year from all other passive activi-
ties (determined after the application of
subsection (b)),
201
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 begin-
ning after December 31, 1986.
(f) MISCELLANEOUS AMENDMENTS
TO FOREIGN
PROVISIONS.—
(1) COORDINATION OF UNIFIED ESTATE TAX
CREDIT WITH TREATIES.—Subparagraph (A) of sec-
tion 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 following: ‘‘(and clause (ii) of
paragraph (2)(A) shall not apply for purposes
of applying this subsection to the amount so
treated)’’.
202
(B) Subsection (j) of section 163 is amend-
ed by redesignating paragraph (7) as paragraph
(8) and by inserting after paragraph (6) the
following new paragraph:
‘‘(7)
COORDINATION
WITH
PASSIVE
LOSS
RULES, ETC.—This subsection shall be applied be-
fore sections 465 and 469.’’.
(C) The amendments made by this para-
graph shall apply as if included in the amend-
ments 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 ‘‘reason-
ably expected’’ and all that follows down
through the period at the end thereof and
203
inserting ‘‘reasonably expected to be alloca-
ble 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 allocable to income which is ef-
fectively connected (or treated as effectively con-
nected) 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 amendments made by section
1241(a) of the Tax Reform Act of 1986.
(4) CLARIFICATION OF SOURCE RULE.—
(A) IN GENERAL.—Paragraph (2) of sec-
tion 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 sub-
204
paragraph (E) and inserting a period, and by
striking subparagraph (F).
(B) Subsection (b) of section 6038A is
amended by adding ‘‘and’’ at the end of para-
graph (2), by striking ‘‘, and’’ at the end of
paragraph (3) and inserting a period, and by
striking paragraph (4).
(g) TREATMENT OF ASSIGNMENT OF INTEREST IN
CERTAIN BOND-FINANCED FACILITIES.—
(1) IN GENERAL.—Subparagraph (A) of section
1317(3) of the Tax Reform Act of 1986 is amended
by adding at the end thereof the following new sen-
tence: ‘‘A facility shall not fail to be treated as de-
scribed in this subparagraph by reason of an assign-
ment (or an agreement to an assignment) by the
governmental unit on whose behalf the bonds are is-
sued of any part of its interest in the property fi-
nanced by such bonds to another governmental
unit.’’.
(2) EFFECTIVE DATE.—The amendment made
by paragraph (1) shall take effect as if included in
such section 1317 on the date of the enactment of
the Tax Reform Act of 1986.
(h) CLARIFICATION OF TREATMENT OF MEDICARE
ENTITLEMENT UNDER COBRA PROVISIONS.—
205
(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 de-
scribed in paragraph (3)(B) that oc-
curs less than 18 months after the
date the covered employee became en-
titled 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 be-
ginning on the date the covered em-
ployee 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
FOL-
LOWED
BY
QUALIFYING
EVENT.—In the
case of a qualifying event described in sec-
tion
603(2)
that
occurs
less
than
206
months after the date the covered em-
ployee 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 subpara-
graph before the close of the 36-month pe-
riod beginning on the date the covered em-
ployee 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 FOL-
LOWED
BY
QUALIFYING
EVENT.—In the
case of a qualifying event described in sec-
tion 2203(2) that occurs less than 18
months after the date the covered em-
ployee 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 subpara-
graph before the close of the 36-month pe-
riod beginning on the date the covered em-
ployee became so entitled.’’.
207
(2) EFFECTIVE DATE.—The amendments made
by this subsection shall apply to plan years begin-
ning after December 31, 1989.
(i) 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 determined without regard to
this subsection,
‘‘(B) the alternative minimum taxable in-
come 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 tax-
able year, and
‘‘(C) any excess inclusion shall be dis-
regarded for purposes of computing the alter-
native tax net operating loss deduction.
The preceding sentence shall not apply to any orga-
nization to which section 593 applies, except to the
208
extent provided in regulations prescribed by the Sec-
retary 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 Re-
form Act of 1986 unless the taxpayer elects to apply
such amendment only to taxable years beginning
after the date of the enactment of this Act.
(j) EXEMPTION FROM HARBOR MAINTENANCE TAX
FOR CERTAIN PASSENGERS.—
(1) IN GENERAL.—Subparagraph (D) of section
4462(b)(1) (relating to special rule for Alaska, Ha-
waii, and possessions) is amended by inserting be-
fore the period the following: ‘‘, or passengers trans-
ported on United States flag vessels operating solely
within the State waters of Alaska or Hawaii and ad-
jacent 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.
(k) AMENDMENTS RELATED TO REVENUE PROVI-
SIONS OF ENERGY POLICY ACT OF 1992.—
(1) Effective with respect to taxable years be-
ginning after December 31, 1990, subclause (II) of
209
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 redesig-
nated as subsection (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 amend-
ed—
(i) by inserting ‘‘(determined without re-
gard to subsection (b)(3))’’ before the period at
the end of paragraph (1) thereof, and
(ii) by adding at the end thereof the follow-
ing 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.’’.
211
‘‘(ii) For purposes of the Internal Revenue Code of
1986—
‘‘(I) clause (i) shall apply, and
‘‘(II) a qualified football coaches plan shall be
treated as a multiemployer collectively bargained
plan.’’.
(2) EFFECTIVE DATE.—The amendment made
by paragraph (1) shall apply to years beginning
after December 22, 1987.
(m) DETERMINATION
OF UNRECOVERED INVEST-
MENT IN ANNUITY CONTRACT.—
(1) IN GENERAL.—Subparagraph (A) of section
72(b)(4) is amended by inserting ‘‘(determined with-
out regard to subsection (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.
(n) 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:
212
‘‘(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 para-
graph (4)(A)(ii)(I)’’, and
(B) by amending subclause (II) of clause
(ii) to read as follows:
‘‘(II) for each such child, 15 per-
cent of the lesser of the amount de-
scribed 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 sec-
tion 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 subsection shall apply to taxable years begin-
ning after December 31, 1995.
213
(o) TREATMENT
OF CERTAIN VETERANS’ REEM-
PLOYMENT RIGHTS.—
(1) IN GENERAL.—Section 414 is amended by
adding at the end the following new subsection:
‘‘(u) SPECIAL RULES RELATING TO VETERANS’ RE-
EMPLOYMENT RIGHTS UNDER USERRA.—
‘‘(1) TREATMENT OF CERTAIN CONTRIBUTIONS
MADE
PURSUANT
TO
VETERANS’
REEMPLOYMENT
RIGHTS.—If any contribution is made by an em-
ployer 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
contributions, 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 otherwise 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 contribution is made,
214
‘‘(B) such contribution shall be subject to
the limitations referred to in subparagraph (A)
with respect to the year to which the contribu-
tion relates (in accordance with rules prescribed
by the Secretary), and
‘‘(C) such plan shall not be treated as fail-
ing
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 con-
tribution.
For purposes of the preceding sentence, any elective
deferral or employee contribution made under para-
graph (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.—
‘‘(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 em-
ployer sponsoring the plan shall be treated as
meeting the requirements of such chapter 43
215
with respect to such elective deferrals only if
such employer—
‘‘(i) permits such employee to make
additional elective deferrals under such
plan (in the amount determined under sub-
paragraph (B) or such lesser amount as is
elected by the employee) during the period
which begins on the date of the reemploy-
ment of such employee with such employer
and has the same length as the lesser of—
‘‘(I) the product of 3 and the pe-
riod 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 de-
ferral made pursuant to clause (i) which
would have been required had such defer-
ral actually been made during the period of
such qualified military service.
‘‘(B) AMOUNT OF MAKEUP REQUIRED.—
The amount determined under this subpara-
graph with respect to any plan is the maximum
amount of the elective deferrals that the indi-
vidual would have been permitted to make
216
under the plan in accordance with the limita-
tions referred to in paragraph (1)(A) during the
period of qualified military service if the indi-
vidual had continued to be employed by the em-
ployer during such period and received com-
pensation as determined under paragraph (7).
Proper adjustment shall be made to the amount
determined under the preceding sentence for
any elective deferrals actually made during the
period of such qualified military service.
‘‘(C) ELECTIVE DEFERRAL.—For purposes
of this paragraph, 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 sec-
tion 457(b)).
‘‘(D) AFTER-TAX
EMPLOYEE
CONTRIBU-
TIONS.—References in subparagraphs (A) and
(B) to elective deferrals shall be treated as in-
cluding references to employee contributions.
‘‘(3)
CERTAIN
RETROACTIVE
ADJUSTMENTS
NOT REQUIRED.—For purposes of this subchapter
and subchapter E, no provision of chapter 43 of title
217
38, United States Code, shall be construed as re-
quiring—
‘‘(A) any crediting of earnings to an em-
ployee with respect to any contribution before
such contribution is actually made, or
‘‘(B) any allocation of any forfeiture with
respect to the period of qualified military serv-
ice.
‘‘(4)
LOAN
REPAYMENT
SUSPENSIONS
PER-
MITTED.—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 em-
ployee is performing service in the uniformed serv-
ices (as defined in chapter 43 of title 38, United
States Code), whether or not qualified military serv-
ice, such suspension shall not be taken into account
for purposes of section 72(p), 401(a), or 4975(d)(1).
‘‘(5) QUALIFIED MILITARY SERVICE.—For pur-
poses of this subsection, the term ‘qualified military
service’ means any service in the uniformed services
(as defined in chapter 43 of title 38, United States
Code) by any individual if such individual is entitled
to reemployment rights under such chapter with re-
spect to such service.
218
‘‘(6) INDIVIDUAL
ACCOUNT
PLAN.—For pur-
poses of this subsection, 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 com-
pensation 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 em-
ployee were not in qualified military service, de-
termined 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 com-
pensation from the employer during the 12-
month period immediately preceding the quali-
219
fied 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 sub-
chapter and section 457, an employer sponsoring a
retirement plan shall be treated as meeting the re-
quirements 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 reem-
ployment under such chapter, deemed with re-
spect to such plan to constitute service with the
employer maintaining the plan for the purpose
of determining the nonforfeitability of the indi-
vidual’s accrued benefits under such plan and
for the purpose of determining the accrual of
benefits under such plan.
220
‘‘(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 elective deferrals only
to the extent the individual makes payment to
the plan with respect to such contributions or
deferrals. No such payment may exceed the
amount the individual would have been per-
mitted or required to contribute had the indi-
vidual remained continuously employed by the
employer throughout the period of qualified
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 sec-
tion, any reference to chapter 43 of title 38, United
States Code, shall be treated as a reference to such
chapter as in effect on December 12, 1994 (without
regard to any subsequent amendment).’’.
221
(2) EFFECTIVE DATE.—The amendment made
by this subsection shall be effective as of December
12, 1994.
(p) 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 para-
graph 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 perform-
ing services in the case of a real estate trans-
action.’’.
(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 Mis-
cellaneous Revenue Act of 1988.
(q) 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
222
stock or of the stock of any related person (as de-
fined in section 465(b)(3)(C))’’.
(2) CERTAIN DEDUCTIONS PERMITTED.—Sub-
paragraph (A) of section 162(k)(2) is amended by
striking ‘‘or’’ at the end of clause (i), by redesignat-
ing 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 am-
ortized over the term of such indebtedness,
or’’.
(3) CLERICAL
AMENDMENT.—The subsection
heading for subsection (k) of section 162 is amended
by striking ‘‘REDEMPTION’’ and inserting ‘‘REAC-
QUISITION’’.
(4) EFFECTIVE DATE.—
(A) IN GENERAL.—Except as provided in
subparagraph (B), the amendments made by
this subsection shall apply to amounts paid or
incurred after September 13, 1995, in taxable
years ending after such date.
(B)
PARAGRAPH
(2).—The
amendment
made by paragraph (2) shall take effect as if
included in the amendment made by section
613 of the Tax Reform Act of 1986.
223
(r) 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.
(s) PASSIVE INCOME NOT TO INCLUDE FSC IN-
COME, 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 in-
serting after subparagraph (C) the following new
subparagraph:
‘‘(D) which is foreign trade income of a
FSC or export trade income of an export trade
corporation (as defined in section 971).’’.
(2) EFFECTIVE DATE.—The amendment made
by paragraph (1) shall take effect as if included in
the amendments made by section 1235 of the Tax
Reform Act of 1986.
(t) MISCELLANEOUS CLERICAL AMENDMENTS.—
224
(1) Subclause (II) of section 56(g)(4)(C)(ii) is
amended by striking ‘‘of the subclause’’ and insert-
ing ‘‘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 subparagraph (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 ‘‘COM-
BAT 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 amend-
ed by striking ‘‘combat pay’’ and inserting ‘‘combat
zone compensation’’.
(5) Clause (i) of section 172(h)(3)(B) is amend-
ed by striking the comma at the end thereof and in-
serting a period.
(6)
Clause
(ii)
of
section
543(a)(2)(B)
is
amended by striking ‘‘section 563(c)’’ and inserting
‘‘section 563(d)’’.
225
(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 ‘‘sec-
tion 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’’.
(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 striking ‘‘section 85(c)’’ and inserting
‘‘section 85(b)’’.
(15) Subsection (k) of section 6166 is amended
by striking paragraph (6).
226
(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 sub-
chapter A of chapter 61 is amended by striking the
semicolon and inserting a comma.
(19) The table of sections for part I of sub-
chapter 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 sub-
chapter A of chapter 75 is amended by striking ‘‘lu-
bricating oil,’’ in the item relating to section 7232.
(21) Paragraph (1) of section 6701(a) of the
Omnibus Budget Reconciliation Act of 1989 is
227
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 ‘‘subsection (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 ap-
pears’’ before ‘‘and inserting’’.
(28) Paragraph (1) of section 460(b) is amend-
ed by striking ‘‘the look-back method of paragraph
(3)’’ and inserting ‘‘the look-back method of para-
graph (2)’’.
228
(29) Subparagraph (C) of section 50(a)(2) is
amended by striking ‘‘subsection (c)(4)’’ and insert-
ing ‘‘subsection (d)(5)’’.
(30) Subparagraph (B) of section 172(h)(4) is
amended by striking the material following the head-
ing and preceding clause (i) and inserting ‘‘For pur-
poses 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 amend-
ed by striking ‘‘section 172(i)’’ and inserting ‘‘sec-
tion 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 amend-
ed 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)’’.
229
(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 subsection relating to cross references as sub-
section (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 redesig-
nated as subsection (g).
(43) Subsection (b) of section 7454 is amended
by striking ‘‘section 4955(e)(2)’’ and inserting ‘‘sec-
tion 4955(f)(2)’’.
230
(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 ‘‘paragraph’’ appeared instead of ‘‘subpara-
graph’’ in the material proposed to be stricken.
(46) Subsection (f) of section 11701 of the Rev-
enue Reconciliation Act of 1990 is amended by in-
serting ‘‘(relating to definitions)’’ after ‘‘section
6038(e)’’.
(47) Subsection (i) of section 11701 of the Rev-
enue Reconciliation Act of 1990 shall be applied as
if ‘‘subsection’’ 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)’’.
(49) Subparagraph (C) of section 11801(c)(8)
of the Revenue Reconciliation Act of 1990 shall be
applied as if ‘‘reorganizations’’ appeared instead of
231
‘‘reorganization’’ in the material proposed 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 in-
stead 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 ‘‘chapters 21’’ appeared instead of
‘‘chapter 21’’ in the material proposed to be strick-
en.
(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
232
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 redesig-
nated by section 11801,’’ appeared instead of ‘‘Para-
graph (21) of section 1016(a)’’.
(57) Paragraph (5) section 8002(a) of the Sur-
face Transportation 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 in-
serting ‘‘forgone’’, and
(B) by striking ‘‘FOREGONE’’ in the head-
ing for subsection (e) and the heading for para-
graph (2) of subsection (e) and inserting ‘‘FOR-
GONE’’.
(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’’.
233
(61) Clause (ii) of section 807(d)(3)(B) is
amended by striking ‘‘Commissoners’ ’’ and insert-
ing ‘‘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 ‘‘Subpara-
graph’’.
(64) The last sentence of paragraph (2) of sec-
tion 42(c) is amended by striking ‘‘of 1988’’.
(65)
Paragraph
(1)
of
section
9707(d)
is
amended by striking ‘‘diligence,’’ and inserting ‘‘dili-
gence’’.
(66) Subsection (c) of section 4977 is amended
by striking ‘‘section 132(i)(2)’’ and inserting ‘‘sec-
tion 132(h)’’.
(67) The last sentence of section 401(a)(20) is
amended by striking ‘‘section 211’’ and inserting
‘‘section 521’’.
(68) Subparagraph (A) of section 402(g)(3) is
amended by striking ‘‘subsection (a)(8)’’ and insert-
ing ‘‘subsection (e)(3)’’.
234
(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
striking
‘‘(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 ‘‘section’’ 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 ‘‘Section 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 amend-
ed by adding ‘‘or’’ at the end of subparagraph (C),
by striking subparagraphs (D) and (E), and by re-
designating subparagraph (F) as subparagraph (D).
235
(76) Paragraph (2) of section 404(a) is amend-
ed 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 not include
any plan which was (or was determined to
be) a qualified employer plan or a govern-
ment plan.’’.
(78)
Sections
461(i)(3)(C)
and
1274(b)(3)(B)(i) are each amended by striking ‘‘sec-
tion
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 genera-
tion-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 distribu-
tions.
‘‘(5) The environmental tax imposed by section
59A.’’.
(u) CERTAIN PROPERTY NOT TREATED AS SECTION
179 PROPERTY.—
236
(1) IN
GENERAL.—Paragraph (1) of section
179(d) is amended by adding at the end thereof 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
and
horses.’’.
(2) EFFECTIVE DATE.—The amendment made
by paragraph (1) shall apply to property placed in
service after May 14, 1996.
(b) TABLE OF CONTENTS.—
TITLE I—SMALL BUSINESS AND OTHER TAX PROVISIONS
Sec. 1101. Amendment of 1986 Code.
Sec. 1102. Underpayments of estimated tax.
Subtitle A—Expensing; Etc.
Sec. 1111. Increase in expense treatment for small businesses.
Sec. 1112. Treatment of employee tips.
Sec. 1113. Treatment of dues paid to agricultural or horticultural organizations.
Sec. 1114. Clarification of employment tax status of certain fishermen.
Sec. 1115. Modifications of tax-exempt bond rules for first-time farmers.
Sec. 1116. Newspaper distributors treated as direct sellers.
Sec. 1117. Application of involuntary conversion rules to presidentially declared
disasters.
Sec. 1118. Class life for gas station convenience stores and similar structures.
Sec. 1119. Treatment of abandonment of lessor improvements at termination of
lease.
Sec. 1120. Deductibility of business meal expenses for certain seafood processing
facilities.
Sec. 1121. Clarification of tax treatment of hard cider.
Sec. 1122. Special rules relating to determination whether individuals are
employees for purposes of employment taxes.
Subtitle B—Extension of Certain Expiring Provisions
Sec. 1201. Work opportunity tax credit.
Sec. 1202. Employer-provided educational assistance programs.
Sec. 1203. Research credit.
Sec. 1204. Orphan drug tax credit.
Sec. 1205. Contributions of stock to private foundations.
Sec. 1206. Extension of binding contract date for biomass and coal facilities.
Sec. 1207. Moratorium for excise tax on diesel fuel sold for use or used in diesel-
powered motorboats.
237
Subtitle C—Provisions Relating to S Corporations
Sec. 1301. S corporations permitted to have 75 shareholders.
Sec. 1302. Electing small business trusts.
Sec. 1303. Expansion of post-death qualification for certain trusts.
Sec. 1304. Financial institutions permitted to hold safe harbor debt.
Sec. 1305. Rules relating to inadvertent terminations and invalid elections.
Sec. 1306. Agreement to terminate year.
Sec. 1307. Expansion of post-termination transition period.
Sec. 1308. S corporations permitted to hold subsidiaries.
Sec. 1309. Treatment of distributions during loss years.
Sec. 1310. Treatment of S corporations under subchapter C.
Sec. 1311. Elimination of certain earnings and profits.
Sec. 1312. Carryover of disallowed losses and deductions under at-risk rules
allowed.
Sec. 1313. Adjustments to basis of inherited S stock to reflect certain items of in-
come.
Sec. 1314. S corporations eligible for rules applicable to real property subdivided
for sale by noncorporate taxpayers.
Sec. 1315. Financial institutions.
Sec. 1316. Certain exempt organizations allowed to be shareholders.
Sec. 1317. Effective date.
Subtitle D—Pension Simplification
CHAPTER 1—SIMPLIFIED DISTRIBUTION RULES
Sec. 1401. Repeal of 5-year income averaging for lump-sum distributions.
Sec. 1402. Repeal of $5,000 exclusion of employees’ death benefits.
Sec. 1403. Simplified method for taxing annuity distributions under certain em-
ployer plans.
Sec. 1404. Required distributions.
CHAPTER 2—INCREASED ACCESS TO RETIREMENT PLANS
SUBCHAPTER A—SIMPLE SAVINGS PLANS
Sec. 1421. Establishment of savings incentive match plans for employees of small
employers.
Sec. 1422. Extension of simple plan to 401(k) arrangements.
SUBCHAPTER B—OTHER PROVISIONS
Sec. 1426. Tax-exempt organizations eligible under section 401(k).
Sec. 1427. Homemakers eligible for full IRA deduction.
CHAPTER 3—NONDISCRIMINATION PROVISIONS
Sec. 1431. Definition of highly compensated employees; repeal of family aggrega-
tion.
Sec. 1432. Modification of additional participation requirements.
Sec. 1433. Nondiscrimination rules for qualified cash or deferred arrangements
and matching contributions.
Sec. 1434. Definition of compensation for section 415 purposes.
CHAPTER 4—MISCELLANEOUS PROVISIONS
Sec. 1441. Plans covering self-employed individuals.
238
Sec. 1442. Elimination of special vesting rule for multiemployer plans.
Sec. 1443. Distributions under rural cooperative plans.
Sec. 1444. Treatment of governmental plans under section 415.
Sec. 1445. Uniform retirement age.
Sec. 1446. Contributions on behalf of disabled employees.
Sec. 1447. Treatment of deferred compensation plans of State and local govern-
ments and tax-exempt organizations.
Sec. 1448. Trust requirement for deferred compensation plans of State and local
governments.
Sec. 1449. Transition rule for computing maximum benefits under section 415
limitations.
Sec. 1450. Modifications of section 403(b).
Sec. 1451. Waiver of minimum period for joint and survivor annuity explanation
before annuity starting date.
Sec. 1452. Repeal of limitation in case of defined benefit plan and defined con-
tribution plan for same employee; excess distributions.
Sec. 1453. Tax on prohibited transactions.
Sec. 1454. Treatment of leased employees.
Sec. 1455. Uniform penalty provisions to apply to certain pension reporting re-
quirements.
Sec. 1456. Retirement benefits of ministers not subject to tax on net earnings
from self-employment.
Sec. 1457. Model forms for spousal consent and qualified domestic relations
forms.
Sec. 1458. Treatment of length of service awards to volunteers performing fire
fighting or prevention services, emergency medical services, or
ambulance services.
Sec. 1459. Date for adoption of plan amendments.
Subtitle E—Revenue Offsets
PART I—GENERAL PROVISIONS
Sec. 1601. Modifications of Puerto Rico and possession tax credit.
Sec. 1602. Repeal of exclusion for interest on loans used to acquire employer secu-
rities.
Sec. 1603. Repeal of exclusion for punitive damages.
Sec. 1604. Extension and phasedown of luxury passenger automobile tax.
Sec. 1605. Termination of future tax-exempt bond financing for local furnishers
of electricity and gas.
Sec. 1606. Repeal of financial institution transition rule to interest allocation
rules.
Sec. 1607. Extension of airport and airway trust fund excise taxes.
Sec. 1608. Basis adjustment to property held by corporation where stock in cor-
poration is replacement property under involuntary conversion
rules.
Sec. 1609. Extension of withholding to certain gambling winnings.
Sec. 1610. Treatment of certain insurance contracts on retired lives.
Sec. 1611. Treatment of contributions in aid of construction.
PART II—FINANCIAL ASSET SECURITIZATION INVESTMENTS
Sec. 1621. Financial asset securitization investment trusts.
PART III—TREATMENT OF INDIVIDUALS WHO EXPATRIATE
Sec. 1631. Revision of tax rules on expatriation.
239
Sec. 1632. Information on individuals expatriating.
Sec. 1633. Report on tax compliance by United States citizens and residents liv-
ing abroad.
Subtitle F—Technical Corrections
Sec. 1701. Coordination with other subtitles.
Sec. 1702. Amendments related to Revenue Reconciliation Act of 1990.
Sec. 1703. Amendments related to Revenue Reconciliation Act of 1993.
Sec. 1704. Miscellaneous provisions.
Subtitle G—Other Provisions
Sec. 1801. Exemption from diesel fuel dyeing requirements with respect to certain
States.
Sec. 1802. Treatment of certain university accounts.
Sec. 1803. Modifications to excise tax on ozone-depleting chemicals.
Sec. 1804. Tax-exempt bonds for sale of Alaska Power Administration facility.
Sec. 1805. Nonrecognition treatment for certain transfers by common trust funds
to regulated investment companies.
Sec. 1806. Qualified State tuition programs.
TITLE II—PAYMENT OF WAGES
Section 1. Short title.
Sec. 2. Proper compensation for use of employer vehicles.
Sec. 3. Effective date.
Sec. 4. Minimum wage increase.
Sec. 5. Fair Labor Standards Act Amendments.
TITLE I—SMALL BUSINESS AND
OTHER TAX PROVISIONS
SEC. 1101. AMENDMENT OF 1986 CODE.
Except as otherwise expressly provided, whenever in
this title 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.
SEC. 1102. UNDERPAYMENTS OF ESTIMATED TAX.
No addition to the tax shall be made under section
6654 or 6655 of the Internal Revenue Code of 1986 (relating
to failure to pay estimated tax) with respect to any under-
240
payment of an installment required to be paid before the
date of the enactment of this Act to the extent such under-
payment was created or increased by any provision of this
title.
Subtitle A—Expensing; Etc.
SEC. 1111. INCREASE IN EXPENSE TREATMENT FOR SMALL
BUSINESSES.
(a) GENERAL RULE.—Paragraph (1) of section 179(b)
(relating to dollar limitation) is amended to read as follows:
‘‘(1) DOLLAR LIMITATION.—The aggregate cost
which may be taken into account under subsection (a)
for any taxable year shall not exceed the following ap-
plicable amount:
‘‘If the taxable year
The applicable
begins in:
amount is:
1997 ............................................................................
18,000
1998 ............................................................................
18,500
1999 ............................................................................
19,000
2000 ............................................................................
20,000
2001 ............................................................................
24,000
2002 ............................................................................
24,000
2003 or thereafter .......................................................
25,000.’’
(b) EFFECTIVE DATE.—The amendment made by sub-
section (a) shall apply to taxable years beginning after De-
cember 31, 1996.
SEC. 1112. TREATMENT OF EMPLOYEE TIPS.
(a) EMPLOYEE CASH TIPS.—
(1) REPORTING
REQUIREMENT
NOT
CONSID-
ERED.—Subparagraph (A) of section 45B(b)(1) (re-
lating to excess employer social security tax) is
242
SEC. 1113. TREATMENT OF DUES PAID TO AGRICULTURAL
OR HORTICULTURAL ORGANIZATIONS.
(a) GENERAL RULE.—Section 512 (defining unrelated
business taxable income) is amended by adding at the end
the following new subsection:
‘‘(d) TREATMENT
OF DUES
OF AGRICULTURAL
OR
HORTICULTURAL ORGANIZATIONS.—
‘‘(1) IN GENERAL.—If—
‘‘(A) an agricultural or horticultural orga-
nization described in section 501(c)(5) requires
annual dues to be paid in order to be a member
of such organization, and
‘‘(B) the amount of such required annual
dues does not exceed $100,
in no event shall any portion of such dues be treated
as derived by such organization from an unrelated
trade or business by reason of any benefits or privi-
leges to which members of such organization are enti-
tled.
‘‘(2) INDEXATION OF $100 AMOUNT.—In the case
of any taxable year beginning in a calendar year
after 1995, the $100 amount in paragraph (1) shall
be increased by an amount equal to—
‘‘(A) $100, multiplied by
‘‘(B) the cost-of-living adjustment deter-
mined under section 1(f)(3) for the calendar year
243
in which the taxable year begins, by substituting
‘calendar year 1994’ for ‘calendar year 1992’ in
subparagraph (B) thereof.
‘‘(3) DUES.—For purposes of this subsection, the
term ‘dues’ means any payment (whether or not des-
ignated as dues) which is required to be made in
order to be recognized by the organization as a mem-
ber of the organization.’’.
(b) EFFECTIVE DATE.—The amendment made by sub-
section (a) shall apply to taxable years beginning after De-
cember 31, 1994.
SEC. 1114. CLARIFICATION OF EMPLOYMENT TAX STATUS
OF CERTAIN FISHERMEN.
(a) CLARIFICATION OF EMPLOYMENT TAX STATUS.—
(1) AMENDMENTS OF INTERNAL REVENUE CODE
OF 1986.—
(A) DETERMINATION OF SIZE OF CREW.—
Subsection (b) of section 3121 (defining employ-
ment) is amended by adding at the end the fol-
lowing new sentence:
‘‘For purposes of paragraph (20), the operating crew of a
boat shall be treated as normally made up of fewer than
10 individuals if the average size of the operating crew
on trips made during the preceding 4 calendar quarters
consisted of fewer than 10 individuals.’’.
244
(B) CERTAIN
CASH
REMUNERATION
PER-
MITTED.—Subparagraph 
(A) 
of 
section
3121(b)(20) is amended to read as follows:
‘‘(A) such individual does not receive any
cash remuneration other than as provided in
subparagraph (B) and other than cash remu-
neration—
‘‘(i) which does not exceed $100 per
trip;
‘‘(ii) which is contingent on a mini-
mum catch; and
‘‘(iii) which is paid solely for addi-
tional duties (such as mate, engineer, or
cook) for which additional cash remunera-
tion is traditional in the industry,’’.
(C) 
CONFORMING
AMENDMENT.—Section
6050A(a) is amended by striking ‘‘and’’ at the
end of paragraph (3), by striking the period at
the end of paragraph (4) and inserting ‘‘; and’’,
and by adding at the end the following new
paragraph:
‘‘(5) any cash remuneration described in section
3121(b)(20)(A).’’.
(2) AMENDMENT OF SOCIAL SECURITY ACT.—
245
(A) DETERMINATION OF SIZE OF CREW.—
Subsection (a) of section 210 of the Social Secu-
rity Act is amended by adding at the end the fol-
lowing new sentence:
‘‘For purposes of paragraph (20), the operating crew of a
boat shall be treated as normally made up of fewer than
10 individuals if the average size of the operating crew
on trips made during the preceding 4 calendar quarters
consisted of fewer than 10 individuals.’’.
(B) CERTAIN
CASH
REMUNERATION
PER-
MITTED.—Subparagraph 
(A) 
of 
section
210(a)(20) of such Act is amended to read as fol-
lows:
‘‘(A) such individual does not receive any
additional compensation other than as provided
in subparagraph (B) and other than cash remu-
neration—
‘‘(i) which does not exceed $100 per
trip;
‘‘(ii) which is contingent on a mini-
mum catch; and
‘‘(iii) which is paid solely for addi-
tional duties (such as mate, engineer, or
cook) for which additional cash remunera-
tion is traditional in the industry,’’.
246
(b) EFFECTIVE DATE.—The amendments made by this
section shall apply to remuneration paid after December
31, 1994.
SEC. 1115. MODIFICATIONS OF TAX-EXEMPT BOND RULES
FOR FIRST-TIME FARMERS.
(a) ACQUISITION
FROM
RELATED
PERSON
AL-
LOWED.—Section 147(c)(2) (relating to exception for first-
time farmers) is amended by adding at the end the follow-
ing new subparagraph:
‘‘(G) ACQUISITION
FROM
RELATED
PER-
SON.—For purposes of this paragraph and sec-
tion 144(a), the acquisition by a first-time farm-
er of land or personal property from a related
person (within the meaning of section 144(a)(3))
shall not be treated as an acquisition from a re-
lated person, if—
‘‘(i) the acquisition price is for the fair
market value of such land or property, and
‘‘(ii) subsequent to such acquisition,
the related person does not have a financial
interest in the farming operation with re-
spect to which the bond proceeds are to be
used.’’
(b) SUBSTANTIAL FARMLAND AMOUNT DOUBLED.—
Clause (i) of section 147(c)(2)(E) (defining substantial
247
farmland) is amended by striking ‘‘15 percent’’ and insert-
ing ‘‘30 percent’’.
(c) EFFECTIVE DATE.—The amendments made by this
section shall apply to bonds issued after the date of the en-
actment of this Act.
SEC. 1116. NEWSPAPER DISTRIBUTORS TREATED AS DIRECT
SELLERS.
(a) IN GENERAL.—Section 3508(b)(2)(A) is amended
by striking ‘‘or’’ at the end of clause (i), by inserting ‘‘or’’
at the end of clause (ii), and by inserting after clause (ii)
the following new clause:
‘‘(iii) is engaged in the trade or busi-
ness of the delivering or distribution of
newspapers or shopping news (including
any services directly related to such trade or
business),’’.
(b) EFFECTIVE DATE.—The amendments made by this
section shall apply to services performed after December 31,
1995.
SEC. 1117. APPLICATION OF INVOLUNTARY CONVERSION
RULES TO PRESIDENTIALLY DECLARED DIS-
ASTERS.
(a) IN GENERAL.—Section 1033(h) is amended by re-
designating paragraphs (2) and (3) as paragraphs (3) and