150
for the taxable year shall be disallowed under
paragraph (1) unless there is a disallowed non-
NCR loss for such year.
‘‘(B) PROPORTIONATE DISALLOWANCE.—
‘‘(i) IN GENERAL.—If there is a dis-
allowed non-NCR loss for the taxable year,
only the disallowed portion of the addi-
tional deduction allowable by reason of sec-
tion 168(k) shall not be allowed under
paragraph (1).
‘‘(ii) 
DISALLOWED
PORTION.—For
purposes of clause (i), the disallowed por-
tion is the percentage which the disallowed
non-NCR loss’s allocable share of non-
NCR depreciation is of total non-NCR de-
preciation.
‘‘(iii) ALLOCABLE SHARE.—For pur-
poses of clause (ii), a disallowed non-NCR
loss’s allocable share of non-NCR deprecia-
tion is the amount which bears the same
ratio to the amount of the loss as the
amount of non-NCR depreciation for the
taxable year bears to the total amount of
deductions for such taxable year.
151
‘‘(C) DEFINITIONS.—For purposes of this
paragraph—
‘‘(i) DISALLOWED
NON-NCR
LOSS.—
The 
term 
‘disallowed 
non-NCR 
loss’
means, for any taxable year, the amount of
the loss from the activity which would be
disallowed under paragraph (1) if such loss
were determined without regard to the ad-
ditional deduction allowable by reason of
section 168(k).
‘‘(ii) NON-NCR
DEPRECIATION.—The
term ‘non-NCR depreciation’ means the
amount allowable as a deduction under
section 168 without regard to subsection
(k) thereof.’’
(4) Subparagraph (A) of section 1503(e)(1) is
amended by inserting before the comma ‘‘and shall
be determined without regard to section 168(k)’’.
(d) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years ending after De-
cember 31, 1994.
SEC. 6322. TREATMENT OF ABANDONMENT OF LESSOR IM-
PROVEMENTS AT TERMINATION OF LEASE.
(a) IN GENERAL.—Paragraph (8) of section 168(i)
is amended to read as follows:
152
‘‘(8) TREATMENT
OF
LEASEHOLD
IMPROVE-
MENTS.—
‘‘(A) IN
GENERAL.—In the case of any
building erected (or improvements made) on
leased property, if such building or improve-
ment is property to which this section applies,
the depreciation deduction shall be determined
under the provisions of this section.
‘‘(B) TREATMENT
OF
LESSOR
IMPROVE-
MENTS
WHICH
ARE
ABANDONED
AT
TERMI-
NATION OF LEASE.—An improvement—
‘‘(i) which is made by the lessor of
leased property for the lessee of such prop-
erty, and
‘‘(ii) which is irrevocably disposed of
or abandoned by the lessor at the termi-
nation of the lease by such lessee,
shall be treated for purposes of determining
gain or loss under this title as disposed of by
the lessor when so disposed of or abandoned.’’
(b) EFFECTIVE DATE.—Subparagraph (B) of section
168(i)(8) of the Internal Revenue Code of 1986, as added
by the amendment made by subsection (a), shall apply to
improvements disposed of or abandoned after March 13,
1995.
153
PART III—ALTERNATIVE MINIMUM TAX RELIEF
SEC. 6331. PHASEOUT OF APPLICATION OF ALTERNATIVE
MINIMUM TAX TO CORPORATIONS.
(a) TERMINATION.—Subsection (a) of section 55 is
amended by adding at the end the following new flush
sentence:
‘‘In the case of a corporation, the tentative minimum tax
for any taxable year beginning after December 31, 2000,
shall be zero.’’
(b) EARLIER TERMINATION OF CERTAIN ADJUST-
MENTS FOR ALL TAXPAYERS.—
(1) DEPRECIATION.—Clause (i) of section
56(a)(1)(A) is amended by inserting ‘‘and before
March 14, 1995,’’ after ‘‘December 31, 1986,’’.
(2) MINING EXPLORATION AND DEVELOPMENT
COSTS.—Paragraph (2) of section 56(a) is amended
by inserting ‘‘and before January 1, 1996,’’ after
‘‘December 31, 1986,’’.
(3) LONG-TERM CONTRACTS.—Paragraph (3) of
section 56(a) is amended by inserting ‘‘and before
January 1, 1996,’’ after ‘‘March 1, 1986,’’.
(4) POLLUTION
CONTROL
FACILITIES.—Para-
graph (5) of section 56(a) is amended by inserting
‘‘and before January 1, 1996,’’ after ‘‘December 31,
1986,’’.
154
(5) INSTALLMENT
SALES.—Paragraph (6) of
section 56(a) is amended by inserting ‘‘and before
January 1, 1996,’’ after ‘‘March 1, 1986,’’.
(c) EARLIER TERMINATION OF CIRCULATION AND
RESEARCH AND EXPERIMENTAL EXPENDITURE ADJUST-
MENT FOR INDIVIDUALS.—Subparagraph (A) of section
56(b)(2) is amended by inserting ‘‘and before January 1,
1996,’’ after ‘‘December 31, 1986,’’.
(d) EARLIER TERMINATION OF CERTAIN ADJUST-
MENTS FOR CORPORATIONS.—
(1) MERCHANT
MARINE
CAPITAL
CONSTRUC-
TION
FUNDS.—Paragraph (2) of section 56(c) is
amended—
(A) by inserting ‘‘and before January 1,
1996,’’ after ‘‘December 31, 1986,’’ each place
it appears, and
(B) by striking the last sentence and in-
serting the following new flush sentence:
‘‘For purposes of this paragraph, any withdrawal of
deposit or earnings from the fund shall be treated as
allocable to deposits made, and earnings received or
accrued, in the order in which made, received, or
accrued.’’
(2) SECTION
833(b)
DEDUCTION.—Paragraph
(3) of section 56(c) is amended by adding at the end
155
the following new sentence: ‘‘This paragraph shall
not apply to any taxable year beginning after De-
cember 31, 1995.’’
(3) CERTAIN EARNINGS AND PROFITS ITEMS.—
(A) Subparagraph (B) of section 56(g)(4)
is amended by adding at the end the following
new clause:
‘‘(iii) TERMINATION.—This subpara-
graph shall not apply to any taxable year
beginning after December 31, 1995.’’
(B) Subparagraph (C) of section 56(g)(4)
is amended by adding at the end the following
new clause:
‘‘(vi) TERMINATION.—This subpara-
graph shall not apply to any taxable year
beginning after December 31, 1995.’’
(4) INTANGIBLE DRILLING COSTS.—Clause (i)
of section 56(g)(4)(D) is amended by adding at the
end the following new sentence: ‘‘This clause shall
not apply to any taxable year beginning after De-
cember 31, 1995.’’
(5) CERTAIN
AMORTIZATION
PROVISIONS.—
Clause (ii) of section 56(g)(4)(D) is amended by
adding at the end the following new sentence: ‘‘This
156
clause shall not apply to any expenditure paid or in-
curred after December 31, 1995.’’
(6) LIFO INVENTORY ADJUSTMENTS.—Clause
(iii) of section 56(g)(4)(D) is amended by adding at
the end the following new sentence: ‘‘This clause
shall not apply to any adjustment arising in a tax-
able year beginning after December 31, 1995.’’
(7) INSTALLMENT SALES.—Clause (iv) of sec-
tion 56(g)(4)(D) is amended by adding at the end
the following new sentence: ‘‘This clause shall not
apply to any disposition after December 31, 1995.’’
(8) DEBT POOLS.—Subparagraph (E) of section
56(g)(4) is amended by adding at the end the follow-
ing new sentence: ‘‘This subparagraph shall not
apply to any exchange after December 31, 1995.’’
(9) DEPLETION.—Subparagraph (F) of section
56(g)(4) is amended by adding at the end the follow-
ing new clause:
‘‘(iii) TERMINATION.—This subpara-
graph shall not apply to any deduction for
depletion for any taxable year beginning
after December 31, 1995.’’
(10) 
OWNERSHIP
CHANGES.—Subparagraph
(G) of section 56(g)(4) is amended by adding at the
end the following new sentence: ‘‘This subparagraph
157
shall not apply to any ownership change after De-
cember 31, 1995.’’
(e) EARLIER TERMINATION OF ITEMS OF TAX PREF-
ERENCE.—
(1) DEPLETION.—Paragraph (1) of section
57(a) is amended by adding at the end the following
new sentence: ‘‘This paragraph shall not apply to
any taxable year beginning after December 31,
1995.’’
(2) INTANGIBLE DRILLING COSTS.—Paragraph
(2) of section 57(a) is amended by adding at the end
the following new subparagraph:
‘‘(F) TERMINATION.—This paragraph shall
not apply to any taxable year beginning after
December 31, 1995.’’
(3) RESERVES FOR LOSSES ON BAD DEBTS.—
Paragraph (4) of section 57(a) is amended by add-
ing at the end the following new sentence: ‘‘This
paragraph shall not apply to any taxable year begin-
ning after December 31, 1995.’’
(4) TAX-EXEMPT INTEREST.—Paragraph (5) of
section 57(a) is amended by adding at the end the
following new subparagraph:
‘‘(D) TERMINATION FOR CORPORATIONS.—
In the case of a corporation (other than a cor-
158
poration referred to in section 56(g)(6)), this
paragraph shall not apply to interest accruing
for periods after December 31, 1995.’’
(f) NET OPERATING LOSS DEDUCTION.—Paragraph
(1) of section 56(d) is amended by inserting ‘‘(100 percent
in the case of taxable years beginning after December 31,
1995)’’ after ‘‘90 percent’’ each place it appears.
(g) LOSSES.—
(1) Section 58 is amended by adding at the end
the following new subsection:
‘‘(d) TERMINATION.—This section shall not apply to
any loss incurred for any taxable year beginning after De-
cember 31, 1995.’’
(2) Subsection (h) of section 59 is amended by
inserting ‘‘469,’’ after ‘‘465,’’.
(h) FOREIGN TAX CREDIT.—Paragraph (2) of section
59(a) is amended by adding at the end the following new
subparagraph:
‘‘(D) 
TERMINATION.—This 
paragraph
shall not apply to any taxable year beginning
after December 31, 1995.’’
(i) LIMITATION ON USE OF CREDIT FOR PRIOR YEAR
MINIMUM TAX LIABILITY.—
(1) IN GENERAL.—Subsection (c) of section 53
is amended to read as follows:
159
‘‘(c) LIMITATION.—The credit allowable under sub-
section (a) for any taxable year shall not exceed the lesser
of—
‘‘(1) the excess (if any) of—
‘‘(A) the regular tax liability of the tax-
payer for such taxable year reduced by the sum
of the credits allowable under subparts A, B, D,
E, and F of this part, over
‘‘(B) the tentative minimum tax for the
taxable year, or
‘‘(2) 90 percent of the amount determined
under paragraph (1)(A).’’
(2) EFFECTIVE DATE.—The amendment made
by paragraph (1) shall apply to taxable years begin-
ning after December 31, 1995.
PART IV—TAXPAYER DEBT BUY-DOWN
SEC. 6341. DESIGNATION OF AMOUNTS FOR REDUCTION OF
PUBLIC DEBT.
(a) IN GENERAL.—Subchapter A of chapter 61 of the
Internal Revenue Code of 1986 (relating to returns and
records) is amended by adding at the end the following
new part:
‘‘PART IX—DESIGNATION FOR REDUCTION OF
PUBLIC DEBT
‘‘Sec. 6097. Designation.
160
‘‘SEC. 6097. DESIGNATION.
‘‘(a) IN GENERAL.—Every individual with adjusted
income tax liability for any taxable year may designate
that a portion of such liability (not to exceed 10 percent
thereof) shall be used to reduce the public debt.
‘‘(b) MANNER AND TIME OF DESIGNATION.—A des-
ignation under subsection (a) may be made with respect
to any taxable year only at the time of filing the return
of tax imposed by chapter 1 for the taxable year. The des-
ignation shall be made on the first page of the return or
on the page bearing the taxpayer’s signature.
‘‘(c) ADJUSTED INCOME TAX LIABILITY.—For pur-
poses of this section, the term ‘adjusted income tax liabil-
ity’ means income tax liability (as defined in section
6096(b)) reduced by any amount designated under section
6096 (relating to designation of income tax payments to
Presidential Election Campaign Fund).’’
(b) CLERICAL AMENDMENT.—The table of parts for
such subchapter A is amended by adding at the end the
following new item:
‘‘Part IX. Designation for reduction of public debt.’’
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years ending after the
date of the enactment of this Act.
162
duction Trust Fund shall be canceled and retired and may
not be reissued.’’
(b) CLERICAL AMENDMENT.—The table of sections
for such subchapter is amended by adding at the end the
following new item:
‘‘Sec. 9512. Public Debt Reduction Trust Fund.’’
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to amounts received after the date
of the enactment of this Act.
SEC. 6343. TAXPAYER-GENERATED SEQUESTRATION OF
FEDERAL SPENDING TO REDUCE THE PUBLIC
DEBT.
(a) SEQUESTRATION
TO
REDUCE
THE
PUBLIC
DEBT.—Part C of the Balanced Budget and Emergency
Deficit Control Act of 1985 is amended by adding after
section 253 the following new section:
‘‘SEC. 253A. SEQUESTRATION TO REDUCE THE PUBLIC
DEBT.
‘‘(a) SEQUESTRATION.—Notwithstanding sections
255 and 256, within 15 days after Congress adjourns to
end a session, and on the same day as a sequestration
(if any) under sections 251, 252, and 253, but after any
sequestration of budget-year budgetary resources required
by those sections, there shall be a sequestration equivalent
to the estimated aggregate amount designated under sec-
tion 6097 of the Internal Revenue Code of 1986 for the
163
calendar year two years before the year in which that ses-
sion of Congress started, as estimated by the Department
of the Treasury on October 1 in the year after the applica-
ble tax year and as modified by the total of (1) any
amounts by which net discretionary spending is reduced
by legislation below the discretionary spending limits en-
acted after the enactment of this section related to the
fiscal year subject to the sequestration or, in the absence
of such limits, any net reduction below discretionary out-
lays for fiscal year 1995 and (2) the net deficit change
that has resulted from all direct spending legislation en-
acted after the enactment of this section related to the
fiscal year subject to the sequestration, as estimated by
OMB. Within 5 days after the enactment of any such di-
rect spending legislation, OMB shall estimate the change
in spending resulting from that legislation for the 5-fiscal-
year period beginning with the first fiscal year for which
that legislation becomes effective and transmit a report
to the House of Representatives and the Senate containing
that estimate. Only the estimated deficit reduction in-
cluded in the 5-year estimate made at the time the legisla-
tion is enacted shall be used for purposes of determining
whether there shall be a sequestration under this sub-
section. Notwithstanding the preceding two sentences, any
estimates of direct spending made by OMB under this
164
subsection for any legislation that first takes effect in fis-
cal year 1995, 1996, or 1997 shall include estimates of
the direct spending effects through fiscal year 2002 and
those estimates shall be used for purposes of determining
whether there shall be a sequestration under this sub-
section. If the reduction in spending under paragraphs (1)
and (2) for a fiscal year is greater than the estimated ag-
gregate amount designated under section 6097 of the In-
ternal Revenue Code of 1986 respecting that fiscal year,
then there shall be no sequestration under this section.
‘‘(b) APPLICABILITY.—
‘‘(1) IN
GENERAL.—Except as provided by
paragraph (2), each account of the United States
shall be reduced by a dollar amount calculated by
multiplying the level of budgetary resources in that
account at that time by the uniform percentage nec-
essary to carry out subsection (a). All obligational
authority reduced under this section shall be done in
a manner that makes such reductions permanent.
‘‘(2) EXEMPT ACCOUNTS.—(A) No order issued
under this part may—
‘‘(i) reduce benefits payable to the old-age
and survivors insurance program established
under title II of the Social Security Act;
165
‘‘(ii) reduce payments for net interest (all
of major functional category 900); or
‘‘(iii) make any reduction in the following
accounts:
‘‘Federal Deposit Insurance Corpora-
tion, Bank Insurance Fund;
‘‘Federal Deposit Insurance Corpora-
tion, FSLIC Resolution Fund;
‘‘Federal Deposit Insurance Corpora-
tion, Savings Association Insurance Fund;
‘‘National Credit Union Administra-
tion, credit union share insurance fund; or
‘‘Resolution Trust Corporation.
‘‘(B) The following budget accounts, activities
within accounts, or income shall be exempt from se-
questration—
‘‘(i) all payments to trust funds from ex-
cise taxes or other receipts or collections prop-
erly creditable to those trust funds;
‘‘(ii) offsetting receipts and collections;
‘‘(iii) all payments from one Federal direct
spending budget account to another Federal
budget account; all intragovernmental funds in-
cluding those from which funding is derived pri-
marily from other Government accounts, except
166
to the extent that such funds are augmented
by direct appropriations for the fiscal year for
which the order is in effect; and those obliga-
tions of discretionary accounts or activities that
are financed by intragovernmental payments
from another discretionary account or activity;
‘‘(iv) expenses to the extent they result
from private donations, bequests, or voluntary
contributions to the Government;
‘‘(v) nonbudgetary activities, including but
not limited to—
‘‘(I) credit liquidating and financing
accounts;
‘‘(II) the Pension Benefit Guarantee
Corporation Trust Funds;
‘‘(III) the Thrift Savings Fund;
‘‘(IV) the Federal Reserve System;
and
‘‘(V) appropriations for the District of
Columbia to the extent they are appropria-
tions of locally raised funds;
‘‘(vi) payments resulting from Government
insurance, Government guarantees, or any other
form of contingent liability, to the extent those
payments result from contractual or other le-
167
gally binding commitments of the Government
at the time of any sequestration;
‘‘(vii) the following accounts, which largely
fulfill requirements of the Constitution or other-
wise make payments to which the Government
is committed—
‘‘Administration of Territories, North-
ern Mariana Islands Covenant grants (14–
0412–0–1–806);
‘‘Bureau of Indian Affairs, miscellane-
ous payments to Indians (14–2303–0–1–
452);
‘‘Bureau of Indian Affairs, miscellane-
ous trust funds, tribal trust funds (14–
9973–0–7–999);
‘‘Claims, defense;
‘‘Claims, judgments, and relief act
(20–1895–0–1–806);
‘‘Compact of Free Association, eco-
nomic assistance pursuant to Public Law
99–658 (14–0415–0–1–806);
‘‘Compensation of the President (11–
0001–0–1–802);
168
‘‘Customs Service, miscellaneous per-
manent 
appropriations 
(20–9992–0–2–
852);
‘‘Eastern Indian land claims settle-
ment fund (14–2202–0–1–806);
‘‘Farm Credit System Financial As-
sistance Corporation, interest payments
(20–1850–0–1–351);
‘‘Internal Revenue collections of Puer-
to Rico (20–5737–0–2–852);
‘‘Panama Canal Commission, operat-
ing expenses and capital outlay (95–5190–
0–2–403);
‘‘Payments of Vietnam and USS
Pueblo prisoner-of-war claims (15–0104–
0–1–153);
‘‘Payments to copyright owners (03–
5175–0–2–376);
‘‘Payments to the United States terri-
tories, fiscal assistance (14–0418–0–1–
801);
‘‘Salaries of Article III judges;
‘‘Soldier’s and Airmen’s Home, pay-
ment of claims (84–8930–0–7–705);
171
made by the Federal Government under or in
connection with that program, project, activity,
or account are subject to that reduction or se-
questration; except that Federal payments
made to a State as reimbursement of adminis-
trative costs incurred by that State under or in
connection with the unemployment compensa-
tion programs specified in paragraph (2)(ix)
shall be subject to reduction or sequestration
under this part notwithstanding the exemption
otherwise granted to such programs under that
paragraph.’’.
(b) REPORTS.—Section 254 of the Balanced Budget
and Emergency Deficit Control Act of 1985 is amended—
(1) in subsection (a), by inserting after the item
relating to the GAO compliance report the following:
‘‘October 1 . . . Department of Treasury report to
Congress estimating amount of income tax designated
pursuant to section 6097 of the Internal Revenue Code
of 1986.’’;
(2) in subsection (d)(1), by inserting ‘‘, and se-
questration to reduce the public debt,’’;
(3) in subsection (d), by redesignating para-
graph (5) as paragraph (6) and by inserting after
paragraph (4) the following new paragraph:
172
‘‘(5) SEQUESTRATION TO REDUCE THE PUBLIC
DEBT REPORTS.—The preview reports shall set forth
for the budget year estimates for each of the follow-
ing:
‘‘(A) The aggregate amount designated
under section 6097 of the Internal Revenue
Code of 1986 for the calendar year two years
before the year in which the budget year begins.
‘‘(B) The amount of reductions required
under section 253A and the deficit remaining
after those reductions have been made.
‘‘(C) The sequestration percentage nec-
essary to achieve the required reduction in ac-
counts under section 253A(b).’’; and
(4) in subsection (g), by redesignating para-
graphs (4) and (5) as paragraphs (5) and (6), re-
spectively, and by inserting after paragraph (3) the
following new paragraph:
‘‘(4) SEQUESTRATION TO REDUCE THE PUBLIC
DEBT REPORTS.—The final reports shall contain all
of the information contained in the public debt tax-
ation designation report required on October 1.’’.
(c) EFFECTIVE
DATE.—Notwithstanding section
275(b) of the Balanced Budget and Emergency Deficit
Control Act of 1985, the expiration date set forth in that
173
section shall not apply to the amendments made by this
section. The amendments made by this section shall cease
to have any effect after the first fiscal year during which
there is no public debt.
PART V—SMALL BUSINESS INCENTIVES
SEC. 6351. COST-OF-LIVING ADJUSTMENTS RELATING TO
ESTATE AND GIFT TAX PROVISIONS.
(a) INCREASE IN UNIFIED ESTATE AND GIFT TAX
CREDIT.—
(1) ESTATE TAX CREDIT.—
(A) Subsection (a) of section 2010 (relat-
ing to unified credit against estate tax) is
amended by striking ‘‘$192,800’’ and inserting
‘‘the applicable credit amount’’.
(B) Section 2010 is amended by redesig-
nating subsection (c) as subsection (d) and by
inserting after subsection (b) the following new
subsection:
‘‘(c) APPLICABLE CREDIT AMOUNT.—For purposes
of this section—
‘‘(1) IN
GENERAL.—The applicable credit
amount is the amount of the tentative tax which
would be determined under the rate schedule set
forth in section 2001(c) if the amount with respect
to which such tentative tax is to be computed were
174
the applicable exclusion amount determined in ac-
cordance with the following table:
‘‘In the case of estates of decedents
The applicable
dying, and gifts made, during:
exclusion amount is:
1996 .......................................................................
$700,000
1997 .......................................................................
$725,000
1998 or thereafter .................................................
$750,000.
‘‘(2) COST-OF-LIVING
ADJUSTMENTS.—In the
case of any decedent dying, and gift made, in a cal-
endar year after 1998, the $750,000 amount set
forth in paragraph (1) shall be increased by an
amount equal to—
‘‘(A) $750,000, multiplied by
‘‘(B) the cost-of-living adjustment deter-
mined under section 1(f)(3) for such calendar
year by substituting ‘calendar year 1997’ for
‘calendar year 1992’ in subparagraph (B)
thereof.
If any amount as adjusted under the preceding sen-
tence is not a multiple of $10,000, such amount
shall be rounded to the nearest multiple of
$10,000.’’
(C) Paragraph (1) of section 6018(a) is
amended by striking ‘‘$600,000’’ and inserting
‘‘the applicable exclusion amount in effect
under section 2010(c) (as adjusted under para-
graph (2) thereof) for the calendar year which
includes the date of death’’.
175
(D) Paragraph (2) of section 2001(c) is
amended by striking ‘‘$21,040,000’’ and insert-
ing ‘‘the amount at which the average tax rate
under this section is 55 percent’’.
(E) 
Subparagraph 
(A) 
of 
section
2102(c)(3) is amended by striking ‘‘$192,800’’
and inserting ‘‘the applicable credit amount in
effect under section 2010(c) for the calendar
year which includes the date of death’’.
(2) UNIFIED
GIFT
TAX
CREDIT.—Paragraph
(1) of section 2505(a) is amended by striking
‘‘$192,800’’ and inserting ‘‘the applicable credit
amount in effect under section 2010(c) for such cal-
endar year’’.
(3) EFFECTIVE DATE.—The amendments made
by this subsection shall apply to the estates of dece-
dents dying, and gifts made, after December 31,
1995.
(b) ALTERNATE VALUATION
OF CERTAIN FARM,
ETC., REAL PROPERTY.—Subsection (a) of section 2032A
is amended by adding at the end the following new para-
graph:
‘‘(3) INFLATION ADJUSTMENT.—In the case of
estates of decedents dying in a calendar year after
176
1998, the $750,000 amount contained in paragraph
(2) shall be increased by an amount equal to—
‘‘(A) $750,000, multiplied by
‘‘(B) the cost-of-living adjustment deter-
mined under section 1(f)(3) for such calendar
year by substituting ‘calendar year 1997’ for
‘calendar year 1992’ in subparagraph (B)
thereof.
If any amount as adjusted under the preceding sen-
tence is not a multiple of $10,000, such amount
shall be rounded to the nearest multiple of
$10,000.’’
(c) ANNUAL GIFT TAX EXCLUSION.—Subsection (b)
of section 2503 is amended—
(1) by striking the subsection heading and in-
serting the following:
‘‘(b) EXCLUSIONS FROM GIFTS.—
‘‘(1) IN GENERAL.—’’,
(2) by moving the text 2 ems to the right, and
(3) by adding at the end the following new
paragraph:
‘‘(2) INFLATION ADJUSTMENT.—In the case of
gifts made in a calendar year after 1998, the
$10,000 amount contained in paragraph (1) shall be
increased by an amount equal to—
177
‘‘(A) $10,000, multiplied by
‘‘(B) the cost-of-living adjustment deter-
mined under section 1(f)(3) for such calendar
year by substituting ‘calendar year 1997’ for
‘calendar year 1992’ in subparagraph (B)
thereof.
If any amount as adjusted under the preceding sen-
tence is not a multiple of $1,000, such amount shall
be rounded to the nearest multiple of $1,000.’’
(d) 
EXEMPTION
FROM
GENERATION-SKIPPING
TAX.—Section 2631 (relating to GST exemption) is
amended by adding at the end the following new sub-
section:
‘‘(c) INFLATION ADJUSTMENT.—In the case of an in-
dividual who dies in any calendar year after 1998, the
$1,000,000 amount contained in subsection (a) shall be
increased by an amount equal to—
‘‘(1) $1,000,000, multiplied by
‘‘(2) the cost-of-living adjustment determined
under section 1(f)(3) for such calendar year by sub-
stituting ‘calendar year 1997’ for ‘calendar year
1992’ in subparagraph (B) thereof.
If any amount as adjusted under the preceding sentence
is not a multiple of $10,000, such amount shall be round-
ed to the nearest multiple of $10,000.’’
178
(e) AMOUNT OF TAX ELIGIBLE FOR 4 PERCENT IN-
TEREST RATE ON EXTENSION OF TIME FOR PAYMENT OF
ESTATE TAX ON CLOSELY HELD BUSINESS.—
(1) Subparagraph (A) of section 6601(j)(2) is
amended by striking ‘‘$345,800’’ and inserting ‘‘the
applicable limitation amount’’.
(2) Subsection (j) of section 6601 is amended
by redesignating paragraph (3) as paragraph (4)
and by inserting after paragraph (2) the following
new paragraph:
‘‘(3) APPLICABLE LIMITATION AMOUNT.—
‘‘(A) IN GENERAL.—For purposes of para-
graph (2), the applicable limitation amount is
the amount of the tentative tax which would be
determined under the rate schedule set forth in
section 2001(c) if the amount with respect to
which such tentative tax is to be computed were
$1,000,000.
‘‘(B) INFLATION
ADJUSTMENT.—In the
case of estates of decedents dying in a calendar
year after 1998, the $1,000,000 amount con-
tained in subparagraph (A) shall be increased
by an amount equal to—
‘‘(i) $1,000,000, multiplied by
179
‘‘(ii) the cost-of-living adjustment de-
termined under section 1(f)(3) for such
calendar year by substituting ‘calendar
year 1997’ for ‘calendar year 1992’ in sub-
paragraph (B) thereof.
If any amount as adjusted under the preceding
sentence is not a multiple of $10,000, such
amount shall be rounded to the nearest multiple
of $10,000.’’
SEC. 6352. 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 follow-
ing applicable amount:
‘‘If the taxable year
The applicable
begins in:
amount is:
1996 .......................................................................
$22,500
1997 .......................................................................
27,500
1998 .......................................................................
32,500
1999 or thereafter .................................................
35,000.’’
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall apply to taxable years beginning after
December 31, 1995.
180
SEC. 6353. CLARIFICATION OF TREATMENT OF HOME OF-
FICE USE FOR ADMINISTRATIVE AND MAN-
AGEMENT ACTIVITIES.
(a) IN GENERAL.—Paragraph (1) of section 280A(c)
is amended by adding at the end the following new sen-
tence: ‘‘For purposes of subparagraph (A), the term ‘prin-
cipal place of business’ includes a place of business which
is used by the taxpayer for the administrative or manage-
ment activities of any trade or business of the taxpayer
if there is no other fixed location of such trade or business
where the taxpayer conducts substantial administrative or
management activities of such trade or business.’’
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall apply to taxable years beginning after
December 31, 1995.
SEC. 6354. TREATMENT OF STORAGE OF PRODUCT SAM-
PLES.
(a) IN GENERAL.—Paragraph (2) of section 280A(c)
is amended by striking ‘‘inventory’’ and inserting ‘‘inven-
tory or product samples’’.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall apply to taxable years beginning after
December 31, 1995.
181
Subtitle D—Family Reinforcement
SEC. 6401. CREDIT FOR ADOPTION EXPENSES.
(a) IN GENERAL.—Subpart A of part IV of sub-
chapter A of chapter 1 is amended by inserting after sec-
tion 25 the following new section:
‘‘SEC. 25A. ADOPTION EXPENSES.
‘‘(a) ALLOWANCE OF CREDIT.—In the case of an in-
dividual, there shall be allowed as a credit against the tax
imposed by this chapter for the taxable year the amount
of the qualified adoption expenses paid or incurred by the
taxpayer during such taxable year.
‘‘(b) LIMITATIONS.—
‘‘(1) DOLLAR
LIMITATION.—The aggregate
amount of qualified adoption expenses which may be
taken into account under subsection (a) with respect
to the adoption of a child shall not exceed $5,000.
‘‘(2) INCOME LIMITATION.—The amount allow-
able as a credit under subsection (a) for any taxable
year shall be reduced (but not below zero) by an
amount which bears the same ratio to the amount
so allowable (determined without regard to this
paragraph but with regard to paragraph (1)) as—
‘‘(A) the amount (if any) by which the tax-
payer’s adjusted gross income (determined
182
without regard to sections 911, 931, and 933)
exceeds $60,000, bears to
‘‘(B) $40,000.
‘‘(3) DENIAL OF DOUBLE BENEFIT.—
‘‘(A) IN GENERAL.—No credit shall be al-
lowed under subsection (a) for any expense for
which a deduction or credit is allowable under
any other provision of this chapter.
‘‘(B) GRANTS.—No credit shall be allowed
under subsection (a) for any expense to the ex-
tent that funds for such expense are received
under any Federal, State, or local program.
The preceding sentence shall not apply to ex-
penses for the adoption of a child with special
needs.
‘‘(c) DEFINITIONS.—For purposes of this section—
‘‘(1) QUALIFIED ADOPTION EXPENSES.—
‘‘(A) IN
GENERAL.—The term ‘qualified
adoption expenses’ means reasonable and nec-
essary adoption fees, court costs, attorney fees,
and other expenses—
‘‘(i) which are directly related to, and
the principal purpose of which is for, the
legal adoption of an eligible child by the
taxpayer, and