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(7) The table of sections for part I of sub-
chapter P of chapter 1 is amended by adding at the 
end the following new item:
‘‘Sec. 1203. Deduction for qualified timber gain.’’.
(g) EFFECTIVE DATE.—
(1) IN GENERAL.—The amendments made by 
this section shall apply to taxable years ending after 
the date of the enactment of this Act. 
(2) TAXABLE YEARS WHICH INCLUDE DATE OF 
ENACTMENT.—In the case of any taxable year which 
includes the date of the enactment of this Act, for 
purposes of the Internal Revenue Code of 1986, the 
taxpayer’s qualified timber gain shall not exceed the 
excess that would be described in section 1203(b) of 
such Code, as added by this section, if only disposi-
tions of timber after such date were taken into ac-
count. 
SEC. 253. CREDIT TO HOLDERS OF RURAL RENAISSANCE 
BONDS. 
(a) IN GENERAL.—Subpart H of part IV of sub-
chapter A of chapter 1 (relating to credits against tax) 
is amended by adding at the end the following new section: 
‘‘SEC. 54A. CREDIT TO HOLDERS OF RURAL RENAISSANCE 
BONDS. 
‘‘(a) ALLOWANCE OF CREDIT.—In the case of a tax-
payer who holds a rural renaissance bond on a credit al-
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lowance date of such bond, which occurs during the tax-
able year, there shall be allowed as a credit against the 
tax imposed by this chapter for such taxable year an 
amount equal to the sum of the credits determined under 
subsection (b) with respect to credit allowance dates dur-
ing such year on which the taxpayer holds such bond. 
‘‘(b) AMOUNT OF CREDIT.—
‘‘(1) IN GENERAL.—The amount of the credit 
determined under this subsection with respect to any 
credit allowance date for a rural renaissance bond is 
25 percent of the annual credit determined with re-
spect to such bond. 
‘‘(2) ANNUAL CREDIT.—The annual credit de-
termined with respect to any rural renaissance bond 
is the product of—
‘‘(A) the credit rate determined by the Sec-
retary under paragraph (3) for the day on 
which such bond was sold, multiplied by 
‘‘(B) the outstanding face amount of the 
bond. 
‘‘(3) DETERMINATION.—For purposes of para-
graph (2), with respect to any rural renaissance 
bond, the Secretary shall determine daily or caused 
to be determined daily a credit rate which shall 
apply to the first day on which there is a binding,
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written contract for the sale or exchange of the 
bond. The credit rate for any day is the credit rate 
which the Secretary or the Secretary’s designee esti-
mates will permit the issuance of rural renaissance 
bonds with a specified maturity or redemption date 
without discount and without interest cost to the 
qualified issuer. 
‘‘(4) CREDIT ALLOWANCE DATE.—For purposes 
of this section, the term ‘credit allowance date’ 
means—
‘‘(A) March 15, 
‘‘(B) June 15, 
‘‘(C) September 15, and 
‘‘(D) December 15. 
Such term also includes the last day on which the 
bond is outstanding. 
‘‘(5) SPECIAL RULE FOR ISSUANCE AND RE-
DEMPTION.—In the case of a bond which is issued 
during the 3-month period ending on a credit allow-
ance date, the amount of the credit determined 
under this subsection with respect to such credit al-
lowance date shall be a ratable portion of the credit 
otherwise determined based on the portion of the 3-
month period during which the bond is outstanding.