SECTION 1. AMENDMENT OF 1986 CODE; TABLE OF CON-
TENTS.
(a) AMENDMENT OF 1986 CODE.—Except as other-
wise expressly provided, whenever in this Act an amend-
ment 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 provi-
sion of the Internal Revenue Code of 1986.
(b) TABLE OF CONTENTS.—
Sec. 1. Amendment of 1986 Code; table of contents.
TITLE I—EXTENSION AND MODIFICATION OF CERTAIN EXPIRING
PROVISIONS
Subtitle A—Tax Provisions
Sec. 101. Research credit.
Sec. 102. Work opportunity credit.
Sec. 103. Income averaging for farmers made permanent.
Sec. 104. Contributions of stock to private foundations; expanded public inspec-
tion of private foundations’ annual returns.
Sec. 105. Subpart F exemption for active financing income.
Sec. 106. Disclosure of return information on income contingent student loans.
Subtitle B—Generalized System of Preferences
Sec. 111. Extension of Generalized System of Preferences.
TITLE II—OTHER PROVISIONS
Sec. 201. Depreciation study.
Sec. 202. Production flexibility contract payments.
Sec. 203. 100 percent deduction for health insurance costs of self-employed in-
dividuals.
Sec. 204. Increase in volume cap on private activity bonds.
Sec. 205. Modification of estimated tax safe harbors.
Sec. 206. Exemption for students employed by State schools, colleges, or uni-
versities.
TITLE III—REVENUE OFFSETS
Sec. 301. Treatment of certain deductible liquidating distributions of regulated
investment companies and real estate investment trusts.
Sec. 302. Inclusion of rotavirus gastroenteritis as a taxable vaccine.
Sec. 303. Clarification and expansion of mathematical error assessment proce-
dures.
Sec. 304. Clarification of definition of specified liability loss.
TITLE IV—TECHNICAL CORRECTIONS
Sec. 401. Definitions; coordination with other titles.
Sec. 402. Amendments related to Internal Revenue Service Restructuring and
Reform Act of 1998.
Sec. 403. Amendments related to Taxpayer Relief Act of 1997.
Sec. 404. Amendments related to Tax Reform Act of 1984.
Sec. 405. Other amendments.
TITLE I—EXTENSION AND MODI-
FICATION OF CERTAIN EXPIR-
ING PROVISIONS
Subtitle A—Tax Provisions
SEC. 101. RESEARCH CREDIT.
(a) TEMPORARY EXTENSION.—Paragraph (1) of sec-
tion 41(h) (relating to termination) is amended—
(1) by striking ‘‘June 30, 1998’’ and inserting
‘‘December 31, 1999’’;
(2) by striking ‘‘24-month’’ and inserting ‘‘42-
month’’; and
(3) by striking ‘‘24 months’’ and inserting ‘‘42
months’’.
(b) TECHNICAL AMENDMENT.—Subparagraph (D) of
section 45C(b)(1) is amended by striking ‘‘June 30, 1998’’
and inserting ‘‘December 31, 1999’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to amounts paid or incurred after
June 30, 1998.
SEC. 102. WORK OPPORTUNITY CREDIT.
(a) TEMPORARY EXTENSION.—Subparagraph (B) of
section 51(c)(4) (relating to termination) is amended by
striking ‘‘June 30, 1998’’ and inserting ‘‘December 31,
1999’’.
(b) EFFECTIVE DATE.—The amendment made by
this section shall apply to individuals who begin work for
the employer after June 30, 1998.
SEC. 103. INCOME AVERAGING FOR FARMERS MADE PER-
MANENT.
Subsection (c) of section 933 of the Taxpayer Relief
Act of 1997 is amended by striking ‘‘, and before January
1, 2001’’.
SEC. 104. CONTRIBUTIONS OF STOCK TO PRIVATE FOUNDA-
TIONS; EXPANDED PUBLIC INSPECTION OF
PRIVATE FOUNDATIONS’ ANNUAL RETURNS.
(a) SPECIAL RULE FOR CONTRIBUTIONS OF STOCK
MADE PERMANENT.—
(1) IN
GENERAL.—Paragraph (5) of section
170(e) is amended by striking subparagraph (D)
(relating to termination).
(2) EFFECTIVE DATE.—The amendment made
by paragraph (1) shall apply to contributions made
after June 30, 1998.
(b) EXPANDED PUBLIC INSPECTION
OF PRIVATE
FOUNDATIONS’ ANNUAL RETURNS, ETC.—
(1) IN
GENERAL.—Section 6104 (relating to
publicity of information required from certain ex-
empt organizations and certain trusts) is amended
by striking subsections (d) and (e) and inserting
after subsection (c) the following new subsection:
‘‘(d) PUBLIC INSPECTION OF CERTAIN ANNUAL RE-
TURNS AND APPLICATIONS FOR EXEMPTION.—
‘‘(1) IN GENERAL.—In the case of an organiza-
tion described in subsection (c) or (d) of section 501
and exempt from taxation under section 501(a)—
‘‘(A) a copy of—
‘‘(i) the annual return filed under sec-
tion 6033 (relating to returns by exempt
organizations) by such organization; and
‘‘(ii) if the organization filed an appli-
cation for recognition of exemption under
section 501, the exempt status application
materials of such organization,
shall be made available by such organization for
inspection during regular business hours by any
individual at the principal office of such organi-
zation and, if such organization regularly main-
tains 1 or more regional or district offices hav-
ing 3 or more employees, at each such regional
or district office; and
‘‘(B) upon request of an individual made
at such principal office or such a regional or
district office, a copy of such annual return and
exempt status application materials shall be
provided to such individual without charge
other than a reasonable fee for any reproduc-
tion and mailing costs.
The request described in subparagraph (B) must be
made in person or in writing. If such request is
made in person, such copy shall be provided imme-
diately and, if made in writing, shall be provided
within 30 days.
‘‘(2) 3-YEAR
LIMITATION
ON
INSPECTION
OF
RETURNS.—Paragraph (1) shall apply to an annual
return filed under section 6033 only during the 3-
year period beginning on the last day prescribed for
filing such return (determined with regard to any
extension of time for filing).
‘‘(3) EXCEPTIONS FROM DISCLOSURE REQUIRE-
MENT.—
‘‘(A) NONDISCLOSURE OF CONTRIBUTORS,
ETC.—Paragraph (1) shall not require the dis-
closure of the name or address of any contribu-
tor to the organization. In the case of an orga-
nization described in section 501(d), paragraph
(1) shall not require the disclosure of the copies
referred to in section 6031(b) with respect to
such organization.
‘‘(B) NONDISCLOSURE OF CERTAIN OTHER
INFORMATION.—Paragraph (1) shall not re-
quire the disclosure of any information if the
Secretary withheld such information from pub-
lic inspection under subsection (a)(1)(D).
‘‘(4) LIMITATION
ON
PROVIDING
COPIES.—
Paragraph (1)(B) shall not apply to any request if,
in accordance with regulations promulgated by the
Secretary, the organization has made the requested
documents widely available, or the Secretary deter-
mines, upon application by an organization, that
such request is part of a harassment campaign and
that compliance with such request is not in the pub-
lic interest.
‘‘(5) EXEMPT
STATUS
APPLICATION
MATE-
RIALS.—For purposes of paragraph (1), the term
‘exempt status applicable materials’ means the appli-
cation for recognition of exemption under section
501 and any papers submitted in support of such
application and any letter or other document issued
by the Internal Revenue Service with respect to such
application.’’.
(2) CONFORMING AMENDMENTS.—
(A) Subsection (c) of section 6033 is
amended by adding ‘‘and’’ at the end of para-
graph (1), by striking paragraph (2), and by re-
designating paragraph (3) as paragraph (2).
(B) 
Subparagraph 
(C) 
of 
section
6652(c)(1) is amended by striking ‘‘subsection
(d) or (e)(1) of section 6104 (relating to public
inspection of annual returns)’’ and inserting
‘‘section 6104(d) with respect to any annual re-
turn’’.
(C) 
Subparagraph 
(D) 
of 
section
6652(c)(1) is amended by striking ‘‘section
6104(e)(2) (relating to public inspection of ap-
plications for exemption)’’ and inserting ‘‘sec-
tion 6104(d) with respect to any exempt status
application materials (as defined in such sec-
tion)’’.
(D) Section 6685 is amended by striking
‘‘or (e)’’.
(E) Section 7207 is amended by striking
‘‘or (e)’’.
(3) EFFECTIVE DATE.—
(A) IN GENERAL.—Except as provided in
subparagraph (B), the amendments made by
this subsection shall apply to requests made
after the later of December 31, 1998, or the
60th day after the Secretary of the Treasury
first issues the regulations referred to in such
section 6104(d)(4) of the Internal Revenue
Code of 1986, as amended by this section.
(B) PUBLICATION OF ANNUAL RETURNS.—
Section 6104(d) of such Code, as in effect be-
fore the amendments made by this subsection,
shall not apply to any return the due date for
which is after the date such amendments take
effect under subparagraph (A).
SEC. 105. SUBPART F EXEMPTION FOR ACTIVE FINANCING
INCOME.
(a) INCOME DERIVED FROM BANKING, FINANCING,
OR SIMILAR BUSINESSES.—Section 954(h) (relating to in-
come derived in the active conduct of banking, financing,
or similar businesses) is amended to read as follows:
‘‘(h) SPECIAL RULE FOR INCOME DERIVED IN THE
ACTIVE CONDUCT OF BANKING, FINANCING, OR SIMILAR
BUSINESSES.—
‘‘(1) IN GENERAL.—For purposes of subsection
(c)(1), foreign personal holding company income
shall not include qualified banking or financing in-
come of an eligible controlled foreign corporation.
‘‘(2) ELIGIBLE
CONTROLLED
FOREIGN
COR-
PORATION.—For purposes of this subsection—
‘‘(A) IN GENERAL.—The term ‘eligible con-
trolled foreign corporation’ means a controlled
foreign corporation which—
‘‘(i) is predominantly engaged in the
active conduct of a banking, financing, or
similar business, and
‘‘(ii) conducts substantial activity with
respect to such business.
‘‘(B) PREDOMINANTLY ENGAGED.—A con-
trolled foreign corporation shall be treated as
predominantly engaged in the active conduct of
a banking, financing, or similar business if—
‘‘(i) more than 70 percent of the gross
income of the controlled foreign corpora-
tion is derived directly from the active and
regular conduct of a lending or finance
business from transactions with customers
which are not related persons,
‘‘(ii) it is engaged in the active con-
duct of a banking business and is an insti-
tution licensed to do business as a bank in
the United States (or is any other corpora-
tion not so licensed which is specified by
the Secretary in regulations), or
‘‘(iii) it is engaged in the active con-
duct of a securities business and is reg-
istered as a securities broker or dealer
under section 15(a) of the Securities Ex-
change Act of 1934 or is registered as a
Government securities broker or dealer
under section 15C(a) of such Act (or is
any other corporation not so registered
which is specified by the Secretary in regu-
lations).
‘‘(3) QUALIFIED BANKING OR FINANCING IN-
COME.—For purposes of this subsection—
‘‘(A) IN
GENERAL.—The term ‘qualified
banking or financing income’ means income of
an 
eligible 
controlled 
foreign 
corporation
which—
‘‘(i) is derived in the active conduct of
a banking, financing, or similar business
by—
‘‘(I) such eligible controlled for-
eign corporation, or
‘‘(II) a qualified business unit of
such eligible controlled foreign cor-
poration,
‘‘(ii) is derived from one or more
transactions—
‘‘(I) with customers located in a
country other than the United States,
and
‘‘(II) substantially all of the ac-
tivities in connection with which are
conducted directly by the corporation
or unit in its home country, and
‘‘(iii) is treated as earned by such cor-
poration or unit in its home country for
purposes of such country’s tax laws.
‘‘(B) LIMITATION
ON
NONBANKING
AND
NONSECURITIES
BUSINESSES.—No income of
an eligible controlled foreign corporation not de-
scribed in clause (ii) or (iii) of paragraph
(2)(B) (or of a qualified business unit of such
corporation) shall be treated as qualified bank-
ing or financing income unless more than 30
percent of such corporation’s or unit’s gross in-
come is derived directly from the active and
regular conduct of a lending or finance business
from transactions with customers which are not
related persons and which are located within
such corporation’s or unit’s home country.
‘‘(C) SUBSTANTIAL
ACTIVITY
REQUIRE-
MENT FOR CROSS BORDER INCOME.—The term
‘qualified banking or financing income’ shall
not include income derived from 1 or more
transactions with customers located in a coun-
try other than the home country of the eligible
controlled foreign corporation or a qualified
business unit of such corporation unless such
corporation or unit conducts substantial activity
with respect to a banking, financing, or similar
business in its home country.
‘‘(D) 
DETERMINATIONS
MADE
SEPA-
RATELY.—For purposes of this paragraph, the
qualified banking or financing income of an eli-
gible controlled foreign corporation and each
qualified business unit of such corporation shall
be determined separately for such corporation
and each such unit by taking into account—
‘‘(i) in the case of the eligible con-
trolled foreign corporation, only items of
income, deduction, gain, or loss and activi-
ties of such corporation not properly allo-
cable or attributable to any qualified busi-
ness unit of such corporation, and
‘‘(ii) in the case of a qualified busi-
ness unit, only items of income, deduction,
gain, or loss and activities properly alloca-
ble or attributable to such unit.
‘‘(4) LENDING
OR
FINANCE
BUSINESS.—For
purposes of this subsection, the term ‘lending or fi-
nance business’ means the business of—
‘‘(A) making loans,
‘‘(B) purchasing or discounting accounts
receivable, notes, or installment obligations,
‘‘(C) engaging in leasing (including enter-
ing into leases and purchasing, servicing, and
disposing of leases and leased assets),
‘‘(D) issuing letters of credit or providing
guarantees,
‘‘(E) providing charge and credit card
services, or
‘‘(F) rendering services or making facilities
available in connection with activities described
in subparagraphs (A) through (E) carried on
by—
‘‘(i) the corporation (or qualified busi-
ness unit) rendering services or making fa-
cilities available, or
‘‘(ii) another corporation (or qualified
business unit of a corporation) which is a
member of the same affiliated group (as
defined in section 1504, but determined
without regard to section 1504(b)(3)).
‘‘(5) OTHER
DEFINITIONS.—For purposes of
this subsection—
‘‘(A) CUSTOMER.—The term ‘customer’
means, with respect to any controlled foreign
corporation or qualified business unit, any per-
son which has a customer relationship with
such corporation or unit and which is acting in
its capacity as such.
‘‘(B) HOME
COUNTRY.—Except as pro-
vided in regulations—
‘‘(i) CONTROLLED FOREIGN CORPORA-
TION.—The term ‘home country’ means,
with respect to any controlled foreign cor-
poration, the country under the laws of
which the corporation was created or orga-
nized.
‘‘(ii) QUALIFIED
BUSINESS
UNIT.—
The term ‘home country’ means, with re-
spect to any qualified business unit, the
country in which such unit maintains its
principal office.
‘‘(C) LOCATED.—The determination of
where a customer is located shall be made
under rules prescribed by the Secretary.
‘‘(D) QUALIFIED
BUSINESS
UNIT.—The
term ‘qualified business unit’ has the meaning
given such term by section 989(a).
‘‘(E) RELATED PERSON.—The term ‘relat-
ed person’ has the meaning given such term by
subsection (d)(3).
‘‘(6) COORDINATION
WITH
EXCEPTION
FOR
DEALERS.—Paragraph (1) shall not apply to income
described in subsection (c)(2)(C)(ii) of a dealer in
securities (within the meaning of section 475) which
is an eligible controlled foreign corporation described
in paragraph (2)(B)(iii).
‘‘(7) ANTI-ABUSE RULES.—For purposes of ap-
plying this subsection and subsection (c)(2)(C)(ii)—
‘‘(A) there shall be disregarded any item of
income, gain, loss, or deduction with respect to
any transaction or series of transactions one of
the principal purposes of which is qualifying in-
come or gain for the exclusion under this sec-
tion, including any transaction or series of
transactions a principal purpose of which is the
acceleration or deferral of any item in order to
claim the benefits of such exclusion through the
application of this subsection,
‘‘(B) there shall be disregarded any item of
income, gain, loss, or deduction of an entity
which is not engaged in regular and continuous
transactions with customers which are not re-
lated persons,
‘‘(C) there shall be disregarded any item of
income, gain, loss, or deduction with respect to
any transaction or series of transactions utiliz-
ing, or doing business with—
‘‘(i) one or more entities in order to
satisfy any home country requirement
under this subsection, or
‘‘(ii) a special purpose entity or ar-
rangement, including a securitization, fi-
nancing, or similar entity or arrangement,
if one of the principal purposes of such trans-
action or series of transactions is qualifying in-
come or gain for the exclusion under this sub-
section, and
‘‘(D) a related person, an officer, a direc-
tor, or an employee with respect to any con-
trolled foreign corporation (or qualified business
unit) which would otherwise be treated as a
customer of such corporation or unit with re-
spect to any transaction shall not be so treated
if a principal purpose of such transaction is to
satisfy any requirement of this subsection.
‘‘(8) REGULATIONS.—The Secretary shall pre-
scribe such regulations as may be necessary or ap-
propriate to carry out the purposes of this sub-
section, 
subsection 
(c)(1)(B)(i), 
subsection
(c)(2)(C)(ii), and the last sentence of subsection
(e)(2).
‘‘(9) 
APPLICATION.—This 
subsection, 
sub-
section (c)(2)(C)(ii), and the last sentence of sub-
section (e)(2) shall apply only to the first taxable
year of a foreign corporation beginning after Decem-
ber 31, 1998, and before January 1, 2000, and to
taxable years of United States shareholders with or
within which such taxable year of such foreign cor-
poration ends.’’.
(b) INCOME
DERIVED
FROM
INSURANCE
BUSI-
NESS.—
(1) INCOME ATTRIBUTABLE TO ISSUANCE OR
REINSURANCE.—
(A) IN GENERAL.—Section 953(a) (defin-
ing insurance income) is amended to read as
follows:
‘‘(a) INSURANCE INCOME.—
‘‘(1) IN
GENERAL.—For purposes of section
952(a)(1), the term ‘insurance income’ means any
income which—
‘‘(A) is attributable to the issuing (or rein-
suring) of an insurance or annuity contract,
and
‘‘(B) would (subject to the modifications
provided by subsection (b)) be taxed under sub-
chapter L of this chapter if such income were
the income of a domestic insurance company.
‘‘(2) EXCEPTION.—Such term shall not include
any exempt insurance income (as defined in sub-
section (e)).’’.
(B) EXEMPT
INSURANCE
INCOME.—Sec-
tion 953 (relating to insurance income) is
amended by adding at the end the following
new subsection:
‘‘(e) EXEMPT INSURANCE INCOME.—For purposes of
this section—
‘‘(1) EXEMPT INSURANCE INCOME DEFINED.—
‘‘(A) IN GENERAL.—The term ‘exempt in-
surance income’ means income derived by a
qualifying insurance company which—
‘‘(i) is attributable to the issuing (or
reinsuring) of an exempt contract by such
company or a qualifying insurance com-
pany branch of such company, and
‘‘(ii) is treated as earned by such com-
pany or branch in its home country for
purposes of such country’s tax laws.
‘‘(B) EXCEPTION FOR CERTAIN ARRANGE-
MENTS.—Such term shall not include income
attributable to the issuing (or reinsuring) of an
exempt contract as the result of any arrange-
ment whereby another corporation receives a
substantially equal amount of premiums or
other consideration in respect of issuing (or re-
insuring) a contract which is not an exempt
contract.
‘‘(C) 
DETERMINATIONS
MADE
SEPA-
RATELY.—For purposes of this subsection and
section 954(i), the exempt insurance income
and exempt contracts of a qualifying insurance
company or any qualifying insurance company
branch of such company shall be determined
separately for such company and each such
branch by taking into account—
‘‘(i) in the case of the qualifying in-
surance company, only items of income, de-
duction, gain, or loss, and activities of such
company not properly allocable or attrib-
utable to any qualifying insurance com-
pany branch of such company, and
‘‘(ii) in the case of a qualifying insur-
ance company branch, only items of in-
come, deduction, gain, or loss and activities
properly allocable or attributable to such
branch.
‘‘(2) EXEMPT CONTRACT.—
‘‘(A) IN
GENERAL.—The term ‘exempt
contract’ means an insurance or annuity con-
tract issued or reinsured by a qualifying insur-
ance company or qualifying insurance company
branch in connection with property in, liability
arising out of activity in, or the lives or health
of residents of, a country other than the United
States.
‘‘(B) MINIMUM
HOME
COUNTRY
INCOME
REQUIRED.—
‘‘(i) IN GENERAL.—No contract of a
qualifying insurance company or of a
qualifying insurance company branch shall
be treated as an exempt contract unless
such company or branch derives more than
30 percent of its net written premiums
from exempt contracts (determined without
regard to this subparagraph)—
‘‘(I) which cover applicable home
country risks, and
‘‘(II) with respect to which no
policyholder, insured, annuitant, or
beneficiary is a related person (as de-
fined in section 954(d)(3)).
‘‘(ii) APPLICABLE
HOME
COUNTRY
RISKS.—The term ‘applicable home coun-
try risks’ means risks in connection with
property in, liability arising out of activity
in, or the lives or health of residents of,
the home country of the qualifying insur-
ance company or qualifying insurance com-
pany branch, as the case may be, issuing
or reinsuring the contract covering the
risks.
‘‘(C) SUBSTANTIAL
ACTIVITY
REQUIRE-
MENTS FOR CROSS BORDER RISKS.—A contract
issued by a qualifying insurance company or
qualifying insurance company branch which
covers risks other than applicable home country
risks (as defined in subparagraph (B)(ii)) shall
not be treated as an exempt contract unless
such company or branch, as the case may be—
‘‘(i) conducts substantial activity with
respect to an insurance business in its
home country, and
‘‘(ii) performs in its home country
substantially all of the activities necessary
to give rise to the income generated by
such contract.
‘‘(3) QUALIFYING INSURANCE COMPANY.—The
term ‘qualifying insurance company’ means any con-
trolled foreign corporation which—
‘‘(A) is subject to regulation as an insur-
ance (or reinsurance) company by its home
country, and is licensed, authorized, or regu-
lated by the applicable insurance regulatory
body for its home country to sell insurance, re-
insurance, or annuity contracts to persons other
than related persons (within the meaning of
section 954(d)(3)) in such home country,
‘‘(B) derives more than 50 percent of its
aggregate net written premiums from the
issuance or reinsurance by such controlled for-
eign corporation and each of its qualifying in-
surance company branches of contracts—
‘‘(i) covering applicable home country
risks (as defined in paragraph (2)) of such
corporation or branch, as the case may be,
and
‘‘(ii) with respect to which no policy-
holder, insured, annuitant, or beneficiary is
a related person (as defined in section
954(d)(3)),
except that in the case of a branch, such pre-
miums shall only be taken into account to the
extent such premiums are treated as earned by
such branch in its home country for purposes of
such country’s tax laws, and
‘‘(C) is engaged in the insurance business
and would be subject to tax under subchapter
L if it were a domestic corporation.
‘‘(4) 
QUALIFYING
INSURANCE
COMPANY
BRANCH.—The term ‘qualifying insurance company
branch’ means a qualified business unit (within the
meaning of section 989(a)) of a controlled foreign
corporation if—
‘‘(A) such unit is licensed, authorized, or
regulated by the applicable insurance regulatory
body for its home country to sell insurance, re-
insurance, or annuity contracts to persons other
than related persons (within the meaning of
section 954(d)(3)) in such home country, and
‘‘(B) such controlled foreign corporation is
a qualifying insurance company, determined
under paragraph (3) as if such unit were a
qualifying insurance company branch.
‘‘(5) LIFE
INSURANCE
OR
ANNUITY
CON-
TRACT.—For purposes of this section and section
954, the determination of whether a contract issued
by a controlled foreign corporation or a qualified
business unit (within the meaning of section 989(a))
is a life insurance contract or an annuity contract
shall be made without regard to sections 72(s),
101(f), 817(h), and 7702 if—
‘‘(A) such contract is regulated as a life in-
surance or annuity contract by the corpora-
tion’s or unit’s home country, and
‘‘(B) no policyholder, insured, annuitant,
or beneficiary with respect to the contract is a
United States person.
‘‘(6) HOME
COUNTRY.—For purposes of this
subsection, except as provided in regulations—
‘‘(A) CONTROLLED
FOREIGN
CORPORA-
TION.—The term ‘home country’ means, with
respect to a controlled foreign corporation, the
country in which such corporation is created or
organized.
‘‘(B) QUALIFIED
BUSINESS
UNIT.—The
term ‘home country’ means, with respect to a
qualified business unit (as defined in section
989(a)), the country in which the principal of-
fice of such unit is located and in which such
unit is licensed, authorized, or regulated by the
applicable insurance regulatory body to sell in-
surance, reinsurance, or annuity contracts to
persons other than related persons (as defined
in section 954(d)(3)) in such country.
‘‘(7) ANTI-ABUSE RULES.—For purposes of ap-
plying this subsection and section 954(i)—
‘‘(A) the rules of section 954(h)(7) (other
than subparagraph (B) thereof) shall apply,
‘‘(B) there shall be disregarded any item of
income, gain, loss, or deduction of, or derived
from, an entity which is not engaged in regular
and continuous transactions with persons which
are not related persons,
‘‘(C) there shall be disregarded any change
in the method of computing reserves a principal
purpose of which is the acceleration or deferral
of any item in order to claim the benefits of
this subsection or section 954(i),
‘‘(D) a contract of insurance or reinsur-
ance shall not be treated as an exempt contract
(and premiums from such contract shall not be
taken into account for purposes of paragraph
(2)(B) or (3)) if—
‘‘(i) any policyholder, insured, annu-
itant, or beneficiary is a resident of the
United States and such contract was mar-
keted to such resident and was written to
cover a risk outside the United States, or
‘‘(ii) the contract covers risks located
within and without the United States and
the qualifying insurance company or quali-
fying insurance company branch does not
maintain such contemporaneous records,
and file such reports, with respect to such
contract as the Secretary may require,
‘‘(E) the Secretary may prescribe rules for
the allocation of contracts (and income from
contracts) among 2 or more qualifying insur-
ance company branches of a qualifying insur-
ance company in order to clearly reflect the in-
come of such branches, and
‘‘(F) premiums from a contract shall not
be taken into account for purposes of para-
graph (2)(B) or (3) if such contract reinsures
a contract issued or reinsured by a related per-
son (as defined in section 954(d)(3)).
For purposes of subparagraph (D), the determina-
tion of where risks are located shall be made under
the principles of section 953.
‘‘(8) COORDINATION WITH SUBSECTION (c).—
In determining insurance income for purposes of
subsection (c), exempt insurance income shall not in-
clude income derived from exempt contracts which
cover risks other than applicable home country risks.
‘‘(9) REGULATIONS.—The Secretary shall pre-
scribe such regulations as may be necessary or ap-
propriate to carry out the purposes of this sub-
section and section 954(i).
‘‘(10) APPLICATION.—This subsection and sec-
tion 954(i) shall apply only to the first taxable year
of a foreign corporation beginning after December
31, 1998, and before January 1, 2000, and to tax-
able years of United States shareholders with or
within which such taxable year of such foreign cor-
poration ends.
‘‘(11) CROSS REFERENCE.—
‘‘For income exempt from foreign personal hold-
ing company income, see section 954(i).’’.
(2) EXEMPTION
FROM
FOREIGN
PERSONAL
HOLDING COMPANY INCOME.—Section 954 (defining
foreign base company income) is amended by adding
at the end the following new subsection:
‘‘(i) SPECIAL RULE FOR INCOME DERIVED IN THE
ACTIVE CONDUCT OF INSURANCE BUSINESS.—
‘‘(1) IN GENERAL.—For purposes of subsection
(c)(1), foreign personal holding company income
shall not include qualified insurance income of a
qualifying insurance company.
‘‘(2) QUALIFIED
INSURANCE
INCOME.—The
term ‘qualified insurance income’ means income of a
qualifying insurance company which is—
‘‘(A) received from a person other than a
related person (within the meaning of sub-
section (d)(3)) and derived from the invest-
ments made by a qualifying insurance company
or a qualifying insurance company branch of its
reserves allocable to exempt contracts or of 80
percent of its unearned premiums from exempt
contracts (as both are determined in the man-
ner prescribed under paragraph (4)), or
‘‘(B) received from a person other than a
related person (within the meaning of sub-
section (d)(3)) and derived from investments
made by a qualifying insurance company or a
qualifying insurance company branch of an
amount of its assets allocable to exempt con-
tracts equal to—
‘‘(i) in the case of property, casualty,
or health insurance contracts, one-third of
its premiums earned on such insurance
contracts during the taxable year (as de-
fined in section 832(b)(4)), and
‘‘(ii) in the case of life insurance or
annuity contracts, 10 percent of the re-
serves described in subparagraph (A) for
such contracts.
‘‘(3) PRINCIPLES
FOR
DETERMINING
INSUR-
ANCE
INCOME.—Except as provided by the Sec-
retary, for purposes of subparagraphs (A) and (B)
of paragraph (2)—
‘‘(A) in the case of any contract which is
a separate account-type contract (including any
variable contract not meeting the requirements
of section 817), income credited under such
contract shall be allocable only to such contract,
and
‘‘(B) income not allocable under subpara-
graph (A) shall be allocated ratably among con-
tracts not described in subparagraph (A).
‘‘(4) METHODS FOR DETERMINING UNEARNED
PREMIUMS AND RESERVES.—For purposes of para-
graph (2)(A)—
‘‘(A) PROPERTY
AND
CASUALTY
CON-
TRACTS.—The unearned premiums and reserves
of a qualifying insurance company or a qualify-
ing insurance company branch with respect to
property, casualty, or health insurance con-
tracts shall be determined using the same meth-
ods and interest rates which would be used if
such company or branch were subject to tax
under subchapter L, except that—
‘‘(i) the interest rate determined for
the functional currency of the company or
branch, and which, except as provided by
the Secretary, is calculated in the same
manner as the Federal mid-term rate
under section 1274(d), shall be substituted
for the applicable Federal interest rate,
and
‘‘(ii) such company or branch shall
use the appropriate foreign loss payment
pattern.
‘‘(B) LIFE INSURANCE AND ANNUITY CON-
TRACTS.—The amount of the reserve of a quali-
fying insurance company or qualifying insur-
ance company branch for any life insurance or
annuity contract shall be equal to the greater
of—
‘‘(i) the net surrender value of such
contract 
(as 
defined 
in 
section
807(e)(1)(A)), or
‘‘(ii) the reserve determined under
paragraph (5).
‘‘(C) LIMITATION
ON
RESERVES.—In no
event shall the reserve determined under this
paragraph for any contract as of any time ex-
ceed the amount which would be taken into ac-
count with respect to such contract as of such
time in determining foreign statement reserves
(less any catastrophe, deficiency, equalization,
or similar reserves).
‘‘(5) AMOUNT OF RESERVE.—The amount of
the reserve determined under this paragraph with
respect to any contract shall be determined in the
same manner as it would be determined if the quali-
fying insurance company or qualifying insurance
company branch were subject to tax under sub-
chapter L, except that in applying such sub-
chapter—
‘‘(A) the interest rate determined for the
functional currency of the company or branch,
and which, except as provided by the Secretary,
is calculated in the same manner as the Federal
mid-term rate under section 1274(d), shall be
substituted for the applicable Federal interest
rate,
‘‘(B) the highest assumed interest rate
permitted to be used in determining foreign
statement reserves shall be substituted for the
prevailing State assumed interest rate, and
‘‘(C) tables for mortality and morbidity
which reasonably reflect the current mortality
and morbidity risks in the company’s or
branch’s home country shall be substituted for
the mortality and morbidity tables otherwise
used for such subchapter.
The Secretary may provide that the interest rate
and mortality and morbidity tables of a qualifying
insurance company may be used for 1 or more of its
qualifying insurance company branches when appro-
priate.
‘‘(6) DEFINITIONS.—For purposes of this sub-
section, any term used in this subsection which is
also used in section 953(e) shall have the meaning
given such term by section 953.’’.
(3) RESERVES.—Section 953(b) is amended by
redesignating paragraph (3) as paragraph (4) and
by inserting after paragraph (2) the following new
paragraph:
‘‘(3) Reserves for any insurance or annuity con-
tract shall be determined in the same manner as
under section 954(i).’’.
(c) 
SPECIAL
RULES
FOR
DEALERS.—Section
954(c)(2)(C) is amended to read as follows:
‘‘(C) EXCEPTION FOR DEALERS.—Except
as provided by regulations, in the case of a reg-
ular dealer in property which is property de-
scribed in paragraph (1)(B), forward contracts,
option contracts, or similar financial instru-
ments (including notional principal contracts
and all instruments referenced to commodities),
there shall not be taken into account in comput-
ing foreign personal holding company income—
‘‘(i) any item of income, gain, deduc-
tion, or loss (other than any item described
in subparagraph (A), (E), or (G) of para-
graph (1)) from any transaction (including
hedging transactions) entered into in the
ordinary course of such dealer’s trade or
business as such a dealer, and
‘‘(ii) if such dealer is a dealer in secu-
rities (within the meaning of section 475),
any interest or dividend or equivalent
amount described in subparagraph (E) or
(G) of paragraph (1) from any transaction
(including any hedging transaction or
transaction 
described 
in 
section
956(c)(2)(J)) entered into in the ordinary
course of such dealer’s trade or business as
such a dealer in securities, but only if the
income from the transaction is attributable
to activities of the dealer in the country
under the laws of which the dealer is cre-
ated or organized (or in the case of a
qualified business unit described in section
989(a), is attributable to activities of the
unit in the country in which the unit both
maintains its principal office and conducts
substantial business activity).’’.
(d) EXEMPTION FROM FOREIGN BASE COMPANY
SERVICES INCOME.—Paragraph (2) of section 954(e) is
amended by inserting ‘‘or’’ at the end of subparagraph
(A), by striking ‘‘, or’’ at the end of subparagraph (B)
and inserting a period, by striking subparagraph (C), and
by adding at the end the following new flush sentence:
‘‘Paragraph (1) shall also not apply to income which
is exempt insurance income (as defined in section
953(e)) or which is not treated as foreign personal
holding income by reason of subsection (c)(2)(C)(ii),
(h), or (i).’’.
(e) EXEMPTION FOR GAIN.—Section 954(c)(1)(B)(i)
(relating to net gains from certain property transactions)
is amended by inserting ‘‘other than property which gives
rise to income not treated as foreign personal holding com-
pany income by reason of subsection (h) or (i) for the tax-
able year’’ before the comma at the end.
SEC. 106. DISCLOSURE OF RETURN INFORMATION ON IN-
COME CONTINGENT STUDENT LOANS.
Subparagraph (D) of section 6103(l)(13) (relating to
disclosure of return information to carry out income con-
tingent repayment of student loans) is amended by strik-
ing ‘‘September 30, 1998’’ and inserting ‘‘September 30,
2003’’.
Subtitle B—Generalized System of
Preferences
SEC. 111. EXTENSION OF GENERALIZED SYSTEM OF PREF-
ERENCES.
(a) EXTENSION OF DUTY-FREE TREATMENT UNDER
SYSTEM.—Section 505 of the Trade Act of 1974 (29
U.S.C. 2465) is amended by striking ‘‘June 30, 1998’’ and
inserting ‘‘December 31, 1999’’.
(b) RETROACTIVE APPLICATION FOR CERTAIN LIQ-
UIDATIONS AND RELIQUIDATIONS.—
(1) IN GENERAL.—Notwithstanding section 514
of the Tariff Act of 1930 or any other provision of
law, and subject to paragraph (2), any entry—
(A) of an article to which duty-free treat-
ment under title V of the Trade Act of 1974
would have applied if such title had been in ef-
fect during the period beginning on July 1,
1998, and ending on the day before the date of
the enactment of this Act; and
(B) that was made after June 30, 1998,
and before the date of the enactment of this
Act,
shall be liquidated or reliquidated as free of duty,
and the Secretary of the Treasury shall refund any
duty paid with respect to such entry. As used in this
subsection, the term ‘‘entry’’ includes a withdrawal
from warehouse for consumption.
(2) REQUESTS.—Liquidation or reliquidation
may be made under paragraph (1) with respect to
an entry only if a request therefor is filed with the
Customs Service, within 180 days after the date of
the enactment of this Act, that contains sufficient
information to enable the Customs Service—
(A) to locate the entry; or
(B) to reconstruct the entry if it cannot be
located.
TITLE II—OTHER PROVISIONS
SEC. 201. DEPRECIATION STUDY.
The Secretary of the Treasury (or the Secretary’s
delegate)—
(1) shall conduct a comprehensive study of the
recovery periods and depreciation methods under
section 168 of the Internal Revenue Code of 1986,
and
(2) not later than March 31, 2000, shall submit
the results of such study, together with rec-
ommendations for determining such periods and
methods in a more rational manner, to the Commit-
tee on Ways and Means of the House of Representa-
tives and the Committee on Finance of the Senate.
SEC. 202. PRODUCTION FLEXIBILITY CONTRACT PAY-
MENTS.
(a) IN GENERAL.—The options under paragraphs (2)
and (3) of section 112(d) of the Federal Agriculture Im-
provement and Reform Act of 1996 (7 U.S.C. 7212(d) (2)
and (3)), as in effect on the date of the enactment of this
Act, shall be disregarded in determining the taxable year
for which any payment under a production flexibility con-
tract under subtitle B of title I of such Act (as so in effect)
is properly includible in gross income for purposes of the
Internal Revenue Code of 1986.
(b) EFFECTIVE DATE.—Subsection (a) shall apply to
taxable years ending after December 31, 1995.
SEC. 203. 100 PERCENT DEDUCTION FOR HEALTH INSUR-
ANCE COSTS OF SELF-EMPLOYED INDIVID-
UALS.
(a) IN GENERAL.—The table contained in subpara-
graph (B) of section 162(l)(1) (relating to special rules
for health insurance costs of self-employed individuals) is
amended by striking the last 3 items and inserting the
following new item:
‘‘2003 and thereafter ...............................................................
100.’’
(b) EFFECTIVE DATE.—The amendment made by
this section shall apply to taxable years beginning after
December 31, 1998.
SEC. 204. INCREASE IN VOLUME CAP ON PRIVATE ACTIVITY
BONDS.
(a) IN GENERAL.—Subsection (d) of section 146 (re-
lating to volume cap) is amended by striking paragraphs
(1) and (2) and inserting the following new paragraphs:
‘‘(1) IN GENERAL.—The State ceiling applicable
to any State for any calendar year shall be the
greater of—
‘‘(A) an amount equal to the per capita
limit for such year multiplied by the State pop-
ulation, or
‘‘(B) the aggregate limit for such year.
Subparagraph (B) shall not apply to any possession
of the United States.
‘‘(2) PER CAPITA LIMIT; AGGREGATE LIMIT.—
For purposes of paragraph (1), the per capita limit,
and the aggregate limit, for any calendar year shall
be determined in accordance with the following
table:
Calendar Year
Per Capita
Limit
Aggregate
Limit
1999 through 2002 ..................................................
$50
$150,000,000
2003 .........................................................................
165,000,000
2004 .........................................................................
180,000,000
2005 .........................................................................
195,000,000
2006 .........................................................................
210,000,000
2007 and thereafter .................................................
225,000,000.’’
(b) EFFECTIVE DATE.—The amendment made by
this section shall apply to calendar years after 1998.
SEC. 205. MODIFICATION OF ESTIMATED TAX SAFE HAR-
BORS.
(a) IN GENERAL.—The table contained in clause (i)
of section 6654(d)(1)(C) (relating to limitation on use of
preceding year’s tax) is amended by striking the item re-
lating to 1998, 1999, or 2000 and inserting the following
new items:
‘‘1998 .......................................................................................
105
1999 or 2000 .........................................................................
106’’.
(b) EFFECTIVE DATE.—The amendment made by
this section shall apply with respect to any installment
payment for taxable years beginning after December 31,
1999.
SEC. 206. EXEMPTION FOR STUDENTS EMPLOYED BY STATE
SCHOOLS, COLLEGES, OR UNIVERSITIES.
(a) IN GENERAL.—Notwithstanding section 218 of
the Social Security Act, any agreement with a State (or
any modification thereof) entered into pursuant to such
section may, at the option of such State, be modified at
any time on or after January 1, 1999, and on or before
March 31, 1999, so as to exclude service performed in the
employ of a school, college, or university if such service
is performed by a student who is enrolled and is regularly
attending classes at such school, college, or university.
(b) EFFECTIVE
DATE
OF
MODIFICATION.—Any
modification of an agreement pursuant to subsection (a)
shall be effective with respect to services performed after
June 30, 2000.
(c) IRREVOCABILITY
OF
MODIFICATION.—If any
modification of an agreement pursuant to subsection (a)
terminates coverage with respect to service performed in
the employ of a school, college, or university, by a student
who is enrolled and regularly attending classes at such
school, college, or university, the Commissioner of Social
Security and the State may not thereafter modify such
agreement so as to again make the agreement applicable
to such service performed in the employ of such school,
college, or university.
TITLE III—REVENUE OFFSETS
SEC. 301. TREATMENT OF CERTAIN DEDUCTIBLE LIQUIDAT-
ING DISTRIBUTIONS OF REGULATED INVEST-
MENT COMPANIES AND REAL ESTATE IN-
VESTMENT TRUSTS.
(a) IN GENERAL.—Section 332 (relating to complete
liquidations of subsidiaries) is amended by adding at the
end the following new subsection:
‘‘(c) DEDUCTIBLE LIQUIDATING DISTRIBUTIONS OF
REGULATED INVESTMENT COMPANIES
AND REAL ES-
TATE INVESTMENT TRUSTS.—If a corporation receives a
distribution from a regulated investment company or a
real estate investment trust which is considered under sub-
section (b) as being in complete liquidation of such com-
pany or trust, then, notwithstanding any other provision
of this chapter, such corporation shall recognize and treat
as a dividend from such company or trust an amount
equal to the deduction for dividends paid allowable to such
company or trust by reason of such distribution.’’.
(b) CONFORMING AMENDMENTS.—
(1) The material preceding paragraph (1) of
section 332(b) is amended by striking ‘‘subsection
(a)’’ and inserting ‘‘this section’’.
(2) Paragraph (1) of section 334(b) is amended
by striking ‘‘section 332(a)’’ and inserting ‘‘section
332’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to distributions after May 21,
1998.
(d) ASSUMPTIONS.—In making the estimate required
for this Act by section 252(d)(2) of the Balanced Budget
and Emergency Deficit Control Act of 1985, that part of
the estimate that measures the change in receipts result-
ing from the amendments made by this section shall be
based on up-to-date economic and technical assumptions
notwithstanding section 252(d)(2)(B) of such Act. All
other parts of such estimate required by such section
252(d)(2) shall be made pursuant to the requirements of
such section 252(d)(2)(B).
SEC. 302. INCLUSION OF ROTAVIRUS GASTROENTERITIS AS
A TAXABLE VACCINE.
(a) IN GENERAL.—Paragraph (1) of section 4132
(defining taxable vaccine) is amended by adding at the end
the following new subparagraph:
‘‘(K) 
Any 
vaccine 
against 
rotavirus
gastroenteritis.’’.
(b) EFFECTIVE DATE.—
(1) SALES.—The amendment made by this sec-
tion shall apply to sales after the date of the enact-
ment of this Act.
(2) DELIVERIES.—For purposes of paragraph
(1), in the case of sales on or before the date of the
enactment of this Act for which delivery is made
after such date, the delivery date shall be considered
the sale date.
SEC. 303. CLARIFICATION AND EXPANSION OF MATHEMATI-
CAL ERROR ASSESSMENT PROCEDURES.
(a) TIN DEEMED INCORRECT IF INFORMATION ON
RETURN DIFFERS WITH AGENCY RECORDS.—Paragraph
(2) of section 6213(g) (defining mathematical or clerical
error) is amended by adding at the end the following flush
sentence:
‘‘A taxpayer shall be treated as having omitted a
correct TIN for purposes of the preceding sentence
if information provided by the taxpayer on the re-
turn with respect to the individual whose TIN was
provided differs from the information the Secretary
obtains from the person issuing the TIN.’’.
(b) EXPANSION OF MATHEMATICAL ERROR PROCE-
DURES TO CASES WHERE TIN ESTABLISHES INDIVIDUAL
NOT ELIGIBLE FOR TAX CREDIT.—Paragraph (2) of sec-
tion 6213(g) is amended by striking ‘‘and’’ at the end of
subparagraph (J), by striking the period at the end of the
subparagraph (K) and inserting ‘‘, and’’, and by inserting
after subparagraph (K) the following new subparagraph:
‘‘(L) the inclusion on a return of a TIN re-
quired to be included on the return under sec-
tion 21, 24, or 32 if—
‘‘(i) such TIN is of an individual
whose age affects the amount of the credit
under such section; and
‘‘(ii) the computation of the credit on
the return reflects the treatment of such
individual as being of an age different
from the individual’s age based on such
TIN.’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years ending after the
date of the enactment of this Act.
SEC. 304. CLARIFICATION OF DEFINITION OF SPECIFIED LI-
ABILITY LOSS.
(a) IN GENERAL.—Subparagraph (B) of section
172(f)(1) (defining specified liability loss) is amended to
read as follows:
‘‘(B)(i) Any amount allowable as a deduc-
tion under this chapter (other than section
468(a)(1) or 468A(a)) which is in satisfaction
of a liability under a Federal or State law re-
quiring—
‘‘(I) the reclamation of land;
‘‘(II) the decommissioning of a nu-
clear power plant (or any unit thereof);
‘‘(III) the dismantlement of a drilling
platform;
‘‘(IV) the remediation of environ-
mental contamination; or
‘‘(V) a payment under any workers
compensation act (within the meaning of
section 461(h)(2)(C)(i)).
‘‘(ii) A liability shall be taken into account
under this subparagraph only if—
‘‘(I) the act (or failure to act) giving
rise to such liability occurs at least 3 years
before the beginning of the taxable year;
and
‘‘(II) the taxpayer used an accrual
method of accounting throughout the pe-
riod or periods during which such act (or
failure to act) occurred.’’.
(b) EFFECTIVE DATE.—The amendment made by
this section shall apply to net operating losses arising in
taxable years ending after the date of the enactment of
this Act.
TITLE IV—TECHNICAL
CORRECTIONS
SEC. 401. DEFINITIONS; COORDINATION WITH OTHER TI-
TLES.
(a) DEFINITIONS.—For purposes of this title—
(1) 1986 
CODE.—The term ‘‘1986 Code’’
means the Internal Revenue Code of 1986.
(2) 1998 ACT.—The term ‘‘1998 Act’’ means
the Internal Revenue Service Restructuring and Re-
form Act of 1998 (Public Law 105–206).
(3) 1997 ACT.—The term ‘‘1997 Act’’ means
the Taxpayer Relief Act of 1997 (Public Law 105–
34).
(b) COORDINATION WITH OTHER TITLES.—For pur-
poses of applying the amendments made by any title of
this Act other than this title, the provisions of this title
shall be treated as having been enacted immediately before
the provisions of such other titles.
SEC. 402. AMENDMENTS RELATED TO INTERNAL REVENUE
SERVICE RESTRUCTURING AND REFORM ACT
OF 1998.
(a) AMENDMENT RELATED TO SECTION 1101 OF
1998 ACT.—Paragraph (5) of section 6103(h) of the 1986
Code, as added by section 1101(b) of the 1998 Act, is
redesignated as paragraph (6).
(b) AMENDMENT RELATED TO SECTION 3001 OF
1998 ACT.—Paragraph (2) of section 7491(a) of the 1986
Code is amended by adding at the end the following flush
sentence:
‘‘Subparagraph (C) shall not apply to any qualified
revocable trust (as defined in section 645(b)(1)) with
respect to liability for tax for any taxable year end-
ing after the date of the decedent’s death and before
the 
applicable 
date 
(as 
defined 
in 
section
645(b)(2)).’’.
(c) AMENDMENTS RELATED TO SECTION 3201 OF
1998 ACT.—
(1) Section 7421(a) of the 1986 Code is amend-
ed by striking ‘‘6015(d)’’ and inserting ‘‘6015(e)’’.
(2) Subparagraph (A) of section 6015(e)(3) is
amended by striking ‘‘of this section’’ and inserting
‘‘of subsection (b) or (f)’’.
(d) AMENDMENT RELATED TO SECTION 3301 OF
1998 ACT.—Paragraph (2) of section 3301(c) of the 1998
Act is amended by striking ‘‘The amendments’’ and insert-
ing ‘‘Subject to any applicable statute of limitation not
having expired with regard to either a tax underpayment
or a tax overpayment, the amendments’’.
(e) AMENDMENT RELATED TO SECTION 3401 OF
1998 ACT.—Section 3401(c) of the 1998 Act is amend-
ed—
(1) in paragraph (1), by striking ‘‘7443(b)’’
and inserting ‘‘7443A(b)’’; and
(2) in paragraph (2), by striking ‘‘7443(c)’’ and
inserting ‘‘7443A(c)’’.
(f) AMENDMENT RELATED TO SECTION 3433 OF
1998 ACT.—Section 7421(a) of the 1986 Code is amended
by inserting ‘‘6331(i),’’ after ‘‘6246(b),’’.
(g) AMENDMENT RELATED TO SECTION 3467 OF
1998 ACT.—The subsection (d) of section 6159 of the
1986 Code relating to cross reference is redesignated as
subsection (e).
(h) AMENDMENT RELATED TO SECTION 3708 OF
1998 ACT.—Subparagraph (A) of section 6103(p)(3) of
the 1986 Code is amended by inserting ‘‘(f)(5),’’ after
‘‘(c), (e),’’.
(i) AMENDMENTS RELATED TO SECTION 5001 OF
1998 ACT.—
(1) Subparagraph (B) of section 1(h)(13) of the
1986 Code is amended by striking ‘‘paragraph
(7)(A)’’ and inserting ‘‘paragraph (7)(A)(i)’’.
(2)(A) Subparagraphs (A)(i)(II), (A)(ii)(II),
and (B)(ii) of section 1(h)(13) of the 1986 Code
shall not apply to any distribution after December
31, 1997, by a regulated investment company or a
real estate investment trust with respect to—
(i) gains and losses recognized directly by
such company or trust, and
(ii) amounts properly taken into account
by such company or trust by reason of holding
(directly or indirectly) an interest in another
such company or trust to the extent that such
subparagraphs did not apply to such other com-
pany or trust with respect to such amounts.
(B) Subparagraph (A) shall not apply to any
distribution which is treated under section 852(b)(7)
or 857(b)(8) of the 1986 Code as received on De-
cember 31, 1997.
(C) For purposes of subparagraph (A), any
amount which is includible in gross income of its
shareholders 
under 
section 
852(b)(3)(D) 
or
857(b)(3)(D) of the 1986 Code after December 31,
1997, shall be treated as distributed after such date.
(D)(i) For purposes of subparagraph (A), in
the case of a qualified partnership with respect to
which a regulated investment company meets the
holding requirement of clause (iii)—
(I) the subparagraphs referred to in sub-
paragraph (A) shall not apply to gains and
losses recognized directly by such partnership
for purposes of determining such company’s
distributive share of such gains and losses, and
(II) such company’s distributive share of
such gains and losses (as so determined) shall
be treated as recognized directly by such com-
pany.
The preceding sentence shall apply only if the quali-
fied partnership provides the company with written
documentation of such distributive share as so deter-
mined.
(ii) For purposes of clause (i), the term ‘‘quali-
fied partnership’’ means, with respect to a regulated
investment company, any partnership if—
(I) the partnership is an investment com-
pany registered under the Investment Company
Act of 1940,
(II) the regulated investment company is
permitted to invest in such partnership by rea-
son of section 12(d)(1)(E) of such Act or an ex-
emptive order of the Securities and Exchange
Commission under such section, and
(III) the regulated investment company
and the partnership have the same taxable year.
(iii) A regulated investment company meets the
holding requirement of this clause with respect to a
qualified partnership if (as of January 1, 1998)—
(I) the value of the interests of the regu-
lated investment company in such partnership
is 35 percent or more of the value of such com-
pany’s total assets, or
(II) the value of the interests of the regu-
lated investment company in such partnership
and all other qualified partnerships is 90 per-
cent or more of the value of such company’s
total assets.
(3) Paragraph (13) of section 1(h) of the 1986
Code is amended by adding at the end the following
new subparagraph:
‘‘(D) CHARITABLE REMAINDER TRUSTS.—
Subparagraphs (A) and (B)(ii) shall not apply
to any capital gain distribution made by a trust
described in section 664.’’
(j) AMENDMENT RELATED TO SECTION 7004 OF
1998 ACT.—Clause (i) of section 408A(c)(3)(C) of the
1986 Code, as amended by section 7004 of the 1998 Act,
is amended by striking the period at the end of subclause
(II) and inserting ‘‘, and’’.
(k) EFFECTIVE DATE.—The amendments made by
this section shall take effect as if included in the provisions
of the 1998 Act to which they relate.
SEC. 403. AMENDMENTS RELATED TO TAXPAYER RELIEF
ACT OF 1997.
(a) AMENDMENTS RELATED TO SECTION 202 OF
1997 ACT.—
(1) Paragraph (2) of section 163(h) of the
1986 Code is amended by striking ‘‘and’’ at the end
of subparagraph (D), by striking the period at the
end of subparagraph (E) and inserting ‘‘, and’’, and
by adding at the end the following new subpara-
graph:
‘‘(F) any interest allowable as a deduction
under section 221 (relating to interest on edu-
cational loans).’’
(2)(A) Subparagraph (C) of section 221(b)(2)
of the 1986 Code is amended—
(i) by striking ‘‘135, 137,’’ in clause (i),
(ii) by inserting ‘‘135, 137,’’ after ‘‘sec-
tions 86,’’ in clause (ii), and
(iii) by striking the last sentence.
(B) Sections 86(b)(2)(A), 135(c)(4)(A), and
219(g)(3)(A)(ii) of the 1986 Code are each amended
by inserting ‘‘221,’’ after ‘‘137,’’.
(C) Subparagraph (A) of section 137(b)(3) of
the 1986 Code is amended by inserting ‘‘221,’’ be-
fore ‘‘911,’’.
(D) Clause (iii) of section 469(i)(3)(E) of the
1986 Code is amended to read as follows:
‘‘(iii) the amounts allowable as a de-
duction under sections 219 and 221, and’’.
(3) The last sentence of section 221(e)(1) of
the 1986 Code is amended by inserting before the
period ‘‘or to any person by reason of a loan under
any qualified employer plan (as defined in section
72(p)(4)) or under any contract referred to in sec-
tion 72(p)(5)’’.
(b) PROVISION RELATED TO SECTION 311 OF 1997
ACT.—In the case of any capital gain distribution made
after 1997 by a trust to which section 664 of the 1986
Code applies with respect to amounts properly taken into
account 
by 
such 
trust 
during 
1997, 
paragraphs
(5)(A)(i)(I), (5)(A)(ii)(I), and (13)(A) of section 1(h) of
the 1986 Code (as in effect for taxable years ending on
December 31, 1997) shall not apply.
(c) AMENDMENT RELATED TO SECTION 506 OF 1997
ACT.—Section 2001(f)(2) of the 1986 Code is amended
by adding at the end the following:
‘‘For purposes of subparagraph (A), the value of an
item shall be treated as shown on a return if the
item is disclosed in the return, or in a statement at-
tached to the return, in a manner adequate to ap-
prise the Secretary of the nature of such item.’’.
(d) AMENDMENTS RELATED TO SECTION 904 OF
1997 ACT.—
(1) Paragraph (1) of section 9510(c) of the
1986 Code is amended to read as follows:
‘‘(1) IN GENERAL.—Amounts in the Vaccine In-
jury Compensation Trust Fund shall be available, as
provided in appropriation Acts, only for—
‘‘(A) the payment of compensation under
subtitle 2 of title XXI of the Public Health
Service Act (as in effect on August 5, 1997) for
vaccine-related injury or death with respect to
any vaccine—
‘‘(i) which is administered after Sep-
tember 30, 1988, and
‘‘(ii) which is a taxable vaccine (as de-
fined in section 4132(a)(1)) at the time
compensation is paid under such subtitle 2,
or
‘‘(B) the payment of all expenses of admin-
istration (but not in excess of $9,500,000 for
any fiscal year) incurred by the Federal Gov-
ernment in administering such subtitle.’’.
(2) Section 9510(b) of the 1986 Code is amend-
ed by adding at the end the following new para-
graph:
‘‘(3) LIMITATION ON TRANSFERS TO VACCINE
INJURY COMPENSATION TRUST FUND.—No amount
may be appropriated to the Vaccine Injury Com-
pensation Trust Fund on and after the date of any
expenditure from the Trust Fund which is not per-
mitted by this section. The determination of whether
an expenditure is so permitted shall be made without
regard to—
‘‘(A) any provision of law which is not con-
tained or referenced in this title or in a revenue
Act, and
‘‘(B) whether such provision of law is a
subsequently enacted provision or directly or in-
directly seeks to waive the application of this
paragraph.’’.
(e) AMENDMENTS RELATED TO SECTION 915 OF
1997 ACT.—
(1) Section 915 of the 1997 Act is amended—
(A) in subsection (b), by inserting ‘‘or
1998’’ after ‘‘1997’’, and
(B) by amending subsection (d) to read as
follows:
‘‘(d) EFFECTIVE DATE.—This section shall apply to
taxable years ending with or within calendar year 1997.’’.
(2) Paragraph (2) of section 6404(h) of the
1986 Code is amended by inserting ‘‘Robert T. Staf-
ford’’ before ‘‘Disaster’’.
(f) AMENDMENTS RELATED TO SECTION 1012 OF
1997 ACT.—
(1) Paragraph (2) of section 351(c) of the 1986
Code, as amended by section 6010(c) of the 1998
Act, is amended by inserting ‘‘, or the fact that the
corporation whose stock was distributed issues addi-
tional stock,’’ after ‘‘dispose of part or all of the dis-
tributed stock’’.
(2) Clause (ii) of section 368(a)(2)(H) of the
1986 Code, as amended by section 6010(c) of the
1998 Act, is amended by inserting ‘‘, or the fact
that the corporation whose stock was distributed
issues additional stock,’’ after ‘‘dispose of part or all
of the distributed stock’’.
(g) PROVISION RELATED TO SECTION 1042 OF 1997
ACT.—Rules similar to the rules of section 1.1502-
75(d)(5) of the Treasury Regulations shall apply with re-
spect to any organization described in section 1042(b) of
the 1997 Act.
(h) AMENDMENT RELATED TO SECTION 1082 OF
1997 ACT.—Subparagraph (F) of section 172(b)(1) of the
1986 Code is amended by adding at the end the following
new clause:
‘‘(iv) COORDINATION
WITH
PARA-
GRAPH
(2).—For purposes of applying
paragraph (2), an eligible loss for any tax-
able year shall be treated in a manner
similar to the manner in which a specified
liability loss is treated.’’
(i) AMENDMENT RELATED
TO SECTION 1084 OF
1997 ACT.—Paragraph (3) of section 264(f) of the 1986
Code is amended by adding at the end the following flush
sentence:
‘‘If the amount described in subparagraph (A) with
respect to any policy or contract does not reasonably
approximate its actual value, the amount taken into
account under subparagraph (A) shall be the greater
of the amount of the insurance company liability or
the insurance company reserve with respect to such
policy or contract (as determined for purposes of the
annual statement approved by the National Associa-
tion of Insurance Commissioners) or shall be such
other amount as is determined by the Secretary.’’
(j) AMENDMENT RELATED TO SECTION 1175 OF
1997 ACT.—Subparagraph (C) of section 954(e)(2) of the
1986 Code is amended by striking ‘‘subsection (h)(8)’’ and
inserting ‘‘subsection (h)(9)’’.
(k) AMENDMENT RELATED TO SECTION 1205 OF
1997 ACT.—Paragraph (2) of section 6311(d) of the 1986
Code is amended by striking ‘‘under such contracts’’ in
the last sentence and inserting ‘‘under any such contract
for the use of credit, debit, or charge cards for the pay-
ment of taxes imposed by subtitle A’’.
(l) EFFECTIVE DATE.—The amendments made by
this section shall take effect as if included in the provisions
of the 1997 Act to which they relate.
SEC. 404. AMENDMENTS RELATED TO TAX REFORM ACT OF
1984.
(a) IN GENERAL.—Subparagraph (C) of section
172(d)(4) of the 1986 Code is amended to read as follows:
‘‘(C) any deduction for casualty or theft
losses allowable under paragraph (2) or (3) of
section 165(c) shall be treated as attributable
to the trade or business; and’’.
(b) CONFORMING AMENDMENTS.—
(1) Paragraph (3) of section 67(b) of the 1986
Code is amended by striking ‘‘for losses described in
subsection (c)(3) or (d) of section 165’’ and insert-
ing ‘‘for casualty or theft losses described in para-
graph (2) or (3) of section 165(c) or for losses de-
scribed in section 165(d)’’.
(2) Paragraph (3) of section 68(c) of the 1986
Code is amended by striking ‘‘for losses described in
subsection (c)(3) or (d) of section 165’’ and insert-
ing ‘‘for casualty or theft losses described in para-
graph (2) or (3) of section 165(c) or for losses de-
scribed in section 165(d)’’.
(3) Paragraph (1) of section 873(b) is amended
to read as follows:
‘‘(1) LOSSES.—The deduction allowed by sec-
tion 165 for casualty or theft losses described in
paragraph (2) or (3) of section 165(c), but only if
the loss is of property located within the United
States.’’
(c) EFFECTIVE DATES.—