H. R. 2264—78
‘‘(4) CONTENTS
OF
REGULATIONS.—In prescribing regula-
tions pursuant to paragraph (3), the Commission shall—
‘‘(A) consider alternative payment schedules and meth-
ods of calculation, including lump sums or guaranteed
installment payments, with or without royalty payments,
or other schedules or methods that promote the objectives
described in paragraph (3)(B), and combinations of such
schedules and methods;
‘‘(B) include performance requirements, such as appro-
priate deadlines and penalties for performance failures,
to ensure prompt delivery of service to rural areas, to
prevent stockpiling or warehousing of spectrum by licensees
or permittees, and to promote investment in and rapid
deployment of new technologies and services;
‘‘(C) consistent with the public interest, convenience,
and necessity, the purposes of this Act, and the characteris-
tics of the proposed service, prescribe area designations
and bandwidth assignments that promote (i) an equitable
distribution of licenses and services among geographic
areas, (ii) economic opportunity for a wide variety of
applicants, including small businesses, rural telephone
companies, and businesses owned by members of minority
groups and women, and (iii) investment in and rapid
deployment of new technologies and services;
‘‘(D) ensure that small businesses, rural telephone
companies, and businesses owned by members of minority
groups and women are given the opportunity to participate
in the provision of spectrum-based services, and, for such
purposes, consider the use of tax certificates, bidding pref-
erences, and other procedures; and
‘‘(E) 
require 
such 
transfer 
disclosures 
and
antitrafficking restrictions and payment schedules as may
be necessary to prevent unjust enrichment as a result
of the methods employed to issue licenses and permits.
‘‘(5) BIDDER AND LICENSEE QUALIFICATION.—No person shall
be permitted to participate in a system of competitive bidding
pursuant to this subsection unless such bidder submits such
information and assurances as the Commission may require
to demonstrate that such bidder’s application is acceptable for
filing. No license shall be granted to an applicant selected
pursuant to this subsection unless the Commission determines
that the applicant is qualified pursuant to subsection (a) and
sections 308(b) and 310. Consistent with the objectives
described in paragraph (3), the Commission shall, by regulation,
prescribe expedited procedures consistent with the procedures
authorized by subsection (i)(2) for the resolution of any substan-
tial and material issues of fact concerning qualifications.
‘‘(6) RULES OF CONSTRUCTION.—Nothing in this subsection,
or in the use of competitive bidding, shall—
‘‘(A) alter spectrum allocation criteria and procedures
established by the other provisions of this Act;
‘‘(B) limit or otherwise affect the requirements of sub-
section (h) of this section, section 301, 304, 307, 310, or
706, or any other provision of this Act (other than sub-
sections (d)(2) and (e) of this section);
H. R. 2264—79
‘‘(C) diminish the authority of the Commission under
the other provisions of this Act to regulate or reclaim
spectrum licenses;
‘‘(D) be construed to convey any rights, including any
expectation of renewal of a license, that differ from the
rights that apply to other licenses within the same service
that were not issued pursuant to this subsection;
‘‘(E) be construed to relieve the Commission of the
obligation in the public interest to continue to use engineer-
ing solutions, negotiation, threshold qualifications, service
regulations, and other means in order to avoid mutual
exclusivity in application and licensing proceedings;
‘‘(F) be construed to prohibit the Commission from
issuing nationwide, regional, or local licenses or permits;
‘‘(G) be construed to prevent the Commission from
awarding licenses to those persons who make significant
contributions to the development of a new telecommuni-
cations service or technology; or
‘‘(H) be construed to relieve any applicant for a license
or permit of the obligation to pay charges imposed pursuant
to section 8 of this Act.
‘‘(7) CONSIDERATION
OF
REVENUES
IN
PUBLIC
INTEREST
DETERMINATIONS.—
‘‘(A) CONSIDERATION PROHIBITED.—In making a deci-
sion pursuant to section 303(c) to assign a band of fre-
quencies to a use for which licenses or permits will be
issued pursuant to this subsection, and in prescribing regu-
lations pursuant to paragraph (4)(C) of this subsection,
the Commission may not base a finding of public interest,
convenience, and necessity on the expectation of Federal
revenues from the use of a system of competitive bidding
under this subsection.
‘‘(B) CONSIDERATION LIMITED.—In prescribing regula-
tions pursuant to paragraph (4)(A) of this subsection, the
Commission may not base a finding of public interest,
convenience, and necessity solely or predominantly on the
expectation of Federal revenues from the use of a system
of competitive bidding under this subsection.
‘‘(C) CONSIDERATION OF DEMAND FOR SPECTRUM NOT
AFFECTED.—Nothing in this paragraph shall be construed
to prevent the Commission from continuing to consider
consumer demand for spectrum-based services.
‘‘(8) TREATMENT OF REVENUES.—
‘‘(A) GENERAL RULE.—Except as provided in subpara-
graph (B), all proceeds from the use of a competitive bidding
system under this subsection shall be deposited in the
Treasury in accordance with chapter 33 of title 31, United
States Code.
‘‘(B) 
RETENTION
OF
REVENUES.—Notwithstanding
subparagraph (A), the salaries and expenses account of
the Commission shall retain as an offsetting collection such
sums as may be necessary from such proceeds for the
costs of developing and implementing the program required
by this subsection. Such offsetting collections shall be avail-
able for obligation subject to the terms and conditions
of the receiving appropriations account, and shall be depos-
ited in such accounts on a quarterly basis. Any funds
H. R. 2264—80
appropriated to the Commission for fiscal years 1994
through 1998 for the purpose of assigning licenses using
random selection under subsection (i) shall be used by
the Commission to implement this subsection.
‘‘(9) 
USE
OF
FORMER
GOVERNMENT
SPECTRUM.—The
Commission shall, not later than 5 years after the date of
enactment of this subsection, issue licenses and permits pursu-
ant to this subsection for the use of bands of frequencies that—
‘‘(A) in the aggregate span not less than 10 megahertz;
and
‘‘(B) have been reassigned from Government use pursu-
ant to part B of the National Telecommunications and
Information Administration Organization Act.
‘‘(10) AUTHORITY CONTINGENT ON AVAILABILITY OF ADDI-
TIONAL SPECTRUM.—
‘‘(A) INITIAL CONDITIONS.—The Commission’s authority
to issue licenses or permits under this subsection shall
not take effect unless—
‘‘(i) the Secretary of Commerce has submitted to
the Commission the report required by section
113(d)(1) of the National Telecommunications and
Information Administration Organization Act;
‘‘(ii) such report recommends for immediate
reallocation bands of frequencies that, in the aggregate,
span not less than 50 megahertz;
‘‘(iii) such bands of frequencies meet the criteria
required by section 113(a) of such Act; and
‘‘(iv) the Commission has completed the rule-
making required by section 332(c)(1)(D) of this Act.
‘‘(B) SUBSEQUENT
CONDITIONS.—The Commission’s
authority to issue licenses or permits under this subsection
on and after 2 years after the date of the enactment of
this subsection shall cease to be effective if—
‘‘(i) the Secretary of Commerce has failed to submit
the report required by section 113(a) of the National
Telecommunications and Information Administration
Organization Act;
‘‘(ii) the President has failed to withdraw and limit
assignments of frequencies as required by paragraphs
(1) and (2) of section 114(a) of such Act;
‘‘(iii) the Commission has failed to issue the regula-
tions required by section 115(a) of such Act;
‘‘(iv) the Commission has failed to complete and
submit to Congress, not later than 18 months after
the date of enactment of this subsection, a study of
current and future spectrum needs of State and local
government public safety agencies through the year
2010, and a specific plan to ensure that adequate fre-
quencies are made available to public safety licensees;
or
‘‘(v) the Commission has failed under section
332(c)(3) to grant or deny within the time required
by such section any petition that a State has filed
within 90 days after the date of enactment of this
subsection;
until such failure has been corrected.
H. R. 2264—81
‘‘(11) TERMINATION.—The authority of the Commission to
grant a license or permit under this subsection shall expire
September 30, 1998.
‘‘(12) EVALUATION.—Not later than September 30, 1997,
the Commission shall conduct a public inquiry and submit
to the Congress a report—
‘‘(A) containing a statement of the revenues obtained,
and a projection of the future revenues, from the use of
competitive bidding systems under this subsection;
‘‘(B) describing the methodologies established by the
Commission pursuant to paragraphs (3) and (4);
‘‘(C) comparing the relative advantages and disadvan-
tages of such methodologies in terms of attaining the objec-
tives described in such paragraphs;
‘‘(D) evaluating whether and to what extent—
‘‘(i) competitive bidding significantly improved the
efficiency and effectiveness of the process for granting
radio spectrum licenses;
‘‘(ii) competitive bidding facilitated the introduction
of new spectrum-based technologies and the entry of
new companies into the telecommunications market;
‘‘(iii) competitive bidding methodologies have
secured prompt delivery of service to rural areas and
have adequately addressed the needs of rural spectrum
users; and
‘‘(iv) small businesses, rural telephone companies,
and businesses owned by members of minority groups
and women were able to participate successfully in
the competitive bidding process; and
‘‘(E) recommending any statutory changes that are
needed to improve the competitive bidding process.’’.
(b) CONFORMING AMENDMENTS.—
(1) LIMITATIONS ON LOTTERIES.—Section 309 of the Commu-
nications Act of 1934 (47 U.S.C. 309) is further amended—
(A) by striking subsection (i)(1) and inserting the fol-
lowing:
‘‘(i) RANDOM SELECTION.—
‘‘(1) GENERAL AUTHORITY.—If—
‘‘(A) there is more than one application for any initial
license or construction permit which will involve a use
of the electromagnetic spectrum; and
‘‘(B) the Commission has determined that the use is
not described in subsection (j)(2)(A);
then the Commission shall have the authority to grant such
license or permit to a qualified applicant through the use of
a system of random selection.’’; and
(B) in paragraph (4), by adding at the end the following
new subparagraph:
‘‘(C) Not later than 180 days after the date of enactment of
this subparagraph, the Commission shall prescribe such transfer
disclosures and antitrafficking restrictions and payment schedules
as are necessary to prevent the unjust enrichment of recipients
of licenses or permits as a result of the methods employed to
issue licenses under this subsection.’’.
(2) REGULATORY TREATMENT TO ENHANCE AUCTION VALUE
OF SPECTRUM LICENSES.—
H. R. 2264—82
(A) AMENDMENT.—Section 332 of the Communications
Act of 1934 (47 U.S.C. 332) is amended—
(i) by striking ‘‘PRIVATE LAND’’ from the heading
of the section;
(ii) by striking ‘‘land’’ each place it appears in
subsections (a) and (b); and
(iii) by striking subsection (c) and inserting the
following:
‘‘(c) REGULATORY TREATMENT OF MOBILE SERVICES.—
‘‘(1) COMMON CARRIER TREATMENT OF COMMERCIAL MOBILE
SERVICES.—(A) A person engaged in the provision of a service
that is a commercial mobile service shall, insofar as such person
is so engaged, be treated as a common carrier for purposes
of this Act, except for such provisions of title II as the Commis-
sion may specify by regulation as inapplicable to that service
or person. In prescribing or amending any such regulation,
the Commission may not specify any provision of section 201,
202, or 208, and may specify any other provision only if the
Commission determines that—
‘‘(i) enforcement of such provision is not necessary in
order to ensure that the charges, practices, classifications,
or regulations for or in connection with that service are
just and reasonable and are not unjustly or unreasonably
discriminatory;
‘‘(ii) enforcement of such provision is not necessary
for the protection of consumers; and
‘‘(iii) specifying such provision is consistent with the
public interest.
‘‘(B) Upon reasonable request of any person providing
commercial mobile service, the Commission shall order a com-
mon carrier to establish physical connections with such service
pursuant to the provisions of section 201 of this Act. Except
to the extent that the Commission is required to respond to
such a request, this subparagraph shall not be construed as
a limitation or expansion of the Commission’s authority to
order interconnection pursuant to this Act.
‘‘(C) The Commission shall review competitive market
conditions with respect to commercial mobile services and shall
include in its annual report an analysis of those conditions.
Such analysis shall include an identification of the number
of competitors in various commercial mobile services, an analy-
sis of whether or not there is effective competition, an analysis
of whether any of such competitors have a dominant share
of the market for such services, and a statement of whether
additional providers or classes of providers in those services
would be likely to enhance competition. As a part of making
a determination with respect to the public interest under
subparagraph (A)(iii), the Commission shall consider whether
the proposed regulation (or amendment thereof) will promote
competitive market conditions, including the extent to which
such regulation (or amendment) will enhance competition
among providers of commercial mobile services. If the Commis-
sion determines that such regulation (or amendment) will
promote competition among providers of commercial mobile
services, such determination may be the basis for a Commission
finding that such regulation (or amendment) is in the public
interest.
H. R. 2264—83
‘‘(D) The Commission shall, not later than 180 days after
the date of enactment of this subparagraph, complete a rule-
making required to implement this paragraph with respect
to the licensing of personal communications services, including
making any determinations required by subparagraph (C).
‘‘(2) NON-COMMON CARRIER TREATMENT OF PRIVATE MOBILE
SERVICES.—A person engaged in the provision of a service that
is a private mobile service shall not, insofar as such person
is so engaged, be treated as a common carrier for any purpose
under this Act. A common carrier (other than a person that
was treated as a provider of a private land mobile service
prior to the enactment of the Omnibus Budget Reconciliation
Act of 1993) shall not provide any dispatch service on any
frequency allocated for common carrier service, except to the
extent such dispatch service is provided on stations licensed
in the domestic public land mobile radio service before January
1, 1982. The Commission may by regulation terminate, in whole
or in part, the prohibition contained in the preceding sentence
if the Commission determines that such termination will serve
the public interest.
‘‘(3) STATE PREEMPTION.—(A) Notwithstanding sections 2(b)
and 221(b), no State or local government shall have any author-
ity to regulate the entry of or the rates charged by any commer-
cial mobile service or any private mobile service, except that
this paragraph shall not prohibit a State from regulating the
other terms and conditions of commercial mobile services. Noth-
ing in this subparagraph shall exempt providers of commercial
mobile services (where such services are a substitute for land
line telephone exchange service for a substantial portion of
the communications within such State) from requirements
imposed by a State commission on all providers of telecommuni-
cations services necessary to ensure the universal availability
of telecommunications service at affordable rates. Notwith-
standing the first sentence of this subparagraph, a State may
petition the Commission for authority to regulate the rates
for any commercial mobile service and the Commission shall
grant such petition if such State demonstrates that—
‘‘(i) market conditions with respect to such services
fail to protect subscribers adequately from unjust and
unreasonable rates or rates that are unjustly or unreason-
ably discriminatory; or
‘‘(ii) such market conditions exist and such service
is a replacement for land line telephone exchange service
for a substantial portion of the telephone land line exchange
service within such State.
The Commission shall provide reasonable opportunity for public
comment in response to such petition, and shall, within 9
months after the date of its submission, grant or deny such
petition. If the Commission grants such petition, the Commis-
sion shall authorize the State to exercise under State law
such authority over rates, for such periods of time, as the
Commission deems necessary to ensure that such rates are
just and reasonable and not unjustly or unreasonably discrimi-
natory.
‘‘(B) If a State has in effect on June 1, 1993, any regulation
concerning the rates for any commercial mobile service offered
in such State on such date, such State may, no later than
H. R. 2264—84
1 year after the date of enactment of the Omnibus Budget
Reconciliation Act of 1993, petition the Commission requesting
that the State be authorized to continue exercising authority
over such rates. If a State files such a petition, the State’s
existing regulation shall, notwithstanding subparagraph (A),
remain in effect until the Commission completes all action
(including any reconsideration) on such petition. The Commis-
sion shall review such petition in accordance with the proce-
dures established in such subparagraph, shall complete all
action (including any reconsideration) within 12 months after
such petition is filed, and shall grant such petition if the
State satisfies the showing required under subparagraph (A)(i)
or (A)(ii). If the Commission grants such petition, the Commis-
sion shall authorize the State to exercise under State law
such authority over rates, for such period of time, as the
Commission deems necessary to ensure that such rates are
just and reasonable and not unjustly or unreasonably discrimi-
natory. After a reasonable period of time, as determined by
the Commission, has elapsed from the issuance of an order
under subparagraph (A) or this subparagraph, any interested
party may petition the Commission for an order that the exer-
cise of authority by a State pursuant to such subparagraph
is no longer necessary to ensure that the rates for commercial
mobile services are just and reasonable and not unjustly or
unreasonably discriminatory. The Commission shall provide
reasonable opportunity for public comment in response to such
petition, and shall, within 9 months after the date of its submis-
sion, grant or deny such petition in whole or in part.
‘‘(4) REGULATORY
TREATMENT
OF
COMMUNICATIONS
SAT-
ELLITE CORPORATION.—Nothing in this subsection shall be con-
strued to alter or affect the regulatory treatment required by
title IV of the Communications Satellite Act of 1962 of the
corporation authorized by title III of such Act.
‘‘(5) SPACE
SEGMENT
CAPACITY.—Nothing in this section
shall prohibit the Commission from continuing to determine
whether the provision of space segment capacity by satellite
systems to providers of commercial mobile services shall be
treated as common carriage.
‘‘(6) FOREIGN OWNERSHIP.—The Commission, upon a peti-
tion for waiver filed within 6 months after the date of enactment
of the Omnibus Budget Reconciliation Act of 1993, may waive
the application of section 310(b) to any foreign ownership that
lawfully existed before May 24, 1993, of any provider of a
private land mobile service that will be treated as a common
carrier as a result of the enactment of the Omnibus Budget
Reconciliation Act of 1993, but only upon the following condi-
tions:
‘‘(A) The extent of foreign ownership interest shall
not be increased above the extent which existed on May
24, 1993.
‘‘(B) Such waiver shall not permit the subsequent
transfer of ownership to any other person in violation of
section 310(b).
‘‘(d) DEFINITIONS.—For purposes of this section—
‘‘(1) the term ‘commercial mobile service’ means any mobile
service (as defined in section 3(n)) that is provided for profit
and makes interconnected service available (A) to the public
H. R. 2264—85
or (B) to such classes of eligible users as to be effectively
available to a substantial portion of the public, as specified
by regulation by the Commission;
‘‘(2) the term ‘interconnected service’ means service that
is interconnected with the public switched network (as such
terms are defined by regulation by the Commission) or service
for which a request for interconnection is pending pursuant
to subsection (c)(1)(B); and
‘‘(3) the term ‘private mobile service’ means any mobile
service (as defined in section 3(n)) that is not a commercial
mobile service or the functional equivalent of a commercial
mobile service, as specified by regulation by the Commission.’’.
(B) ADDITIONAL
CONFORMING
AMENDMENTS.—(i) Sec-
tion 2(b) of the Communications Act of 1934 (47 U.S.C.
152(b)) is amended by inserting ‘‘and section 332,’’ after
‘‘inclusive,’’.
(ii) Section 3 of the Communications Act of 1934 (47
U.S.C. 153) is amended—
(I) in subsection (n) by inserting ‘‘(1)’’ after ‘‘and
includes’’, and by inserting before the period at the
end the following: ‘‘, (2) a mobile service which provides
a regularly interacting group of base, mobile, portable,
and associated control and relay stations (whether
licensed on an individual, cooperative, or multiple
basis) for private one-way or two-way land mobile radio
communications by eligible users over designated areas
of operation, and (3) any service for which a license
is required in a personal communications service estab-
lished pursuant to the proceeding entitled ‘Amendment
to the Commission’s Rules to Establish New Personal
Communications Services’ (GEN Docket No. 90–314;
ET Docket No. 92–100), or any successor proceeding’’;
and
(II) by striking subsection (gg).
(c) EFFECTIVE DATES.—
(1) IN GENERAL.—Except as provided in paragraph (2), the
amendments made by this section are effective on the date
of enactment of this Act.
(2) EFFECTIVE DATES OF MOBILE SERVICE AMENDMENTS.—
The amendments made by subsection (b)(2) shall be effective
on the date of enactment of this Act, except that—
(A) section 332(c)(3)(A) of the Communications Act of
1934, as amended by such subsection, shall take effect
1 year after such date of enactment; and
(B) any private land mobile service provided by any
person before such date of enactment, and any paging
service utilizing frequencies allocated as of January 1, 1993,
for private land mobile services, shall, except for purposes
of section 332(c)(6) of such Act, be treated as a private
mobile service until 3 years after such date of enactment.
(d) DEADLINES FOR COMMISSION ACTION.—
(1) GENERAL RULEMAKING.—The Federal Communications
Commission shall prescribe regulations to implement section
309(j) of the Communications Act of 1934 (as added by this
section) within 210 days after the date of enactment of this
Act.
(2) PCS ORDERS AND LICENSING.—The Commission shall—
H. R. 2264—86
(A) within 180 days after such date of enactment,
issue a final report and order (i) in the matter entitled
‘‘Redevelopment of Spectrum to Encourage Innovation in
the Use of New Telecommunications Technologies’’ (ET
Docket No. 92–9); and (ii) in the matter entitled ‘‘Amend-
ment of the Commission’s Rules to Establish New Personal
Communications Services’’ (GEN Docket No. 90–314; ET
Docket No. 92–100); and
(B) within 270 days after such date of enactment,
commence issuing licenses and permits in the personal
communications service.
(3) TRANSITIONAL RULEMAKING FOR MOBILE SERVICE PROVID-
ERS.—Within 1 year after the date of enactment of this Act,
the Federal Communications Commission—
(A) shall issue such modifications or terminations of
the regulations applicable (before the date of enactment
of this Act) to private land mobile services as are necessary
to implement the amendments made by subsection (b)(2);
(B) in the regulations that will, after such date of
enactment, apply to a service that was a private land
mobile service and that becomes a commercial mobile serv-
ice (as a consequence of such amendments), shall make
such other modifications or terminations as may be nec-
essary and practical to assure that licensees in such service
are subjected to technical requirements that are com-
parable to the technical requirements that apply to licens-
ees that are providers of substantially similar common
carrier services;
(C) shall issue such other regulations as are necessary
to implement the amendments made by subsection (b)(2);
and
(D) shall include, in such regulations, modifications,
and terminations, such provisions as are necessary to pro-
vide for an orderly transition.
(e) SPECIAL RULE.—The Federal Communications Commission
shall not issue any license or permit pursuant to section 309(i)
of the Communications Act of 1934 (47 U.S.C. 309(i)) after the
date of enactment of this Act unless—
(1) the Commission has made the determination required
by paragraph (1)(B) of such section (as added by this section);
or
(2) one or more applications for such license were accepted
for filing by the Commission before July 26, 1993.
SEC. 6003. ADDITIONAL COMMUNICATIONS FEES.
(a) REGULATORY FEES.—
(1) AMENDMENT.—Title I of the Communications Act of
1934 is amended by inserting after section 8 the following
new section:
‘‘SEC. 9. REGULATORY FEES.
‘‘(a) GENERAL AUTHORITY.—The Commission, in accordance
with this section, shall assess and collect regulatory fees to recover
the costs of the following regulatory activities of the Commission:
enforcement activities, policy and rulemaking activities, user
information services, and international activities.
‘‘(b) ESTABLISHMENT AND ADJUSTMENT OF REGULATORY FEES.—
H. R. 2264—87
‘‘(1) IN GENERAL.—The fees assessed under subsection (a)
shall—
‘‘(A) be derived by determining the full-time equivalent
number of employees performing the activities described
in subsection (a) within the Private Radio Bureau, Mass
Media Bureau, Common Carrier Bureau, and other offices
of the Commission, adjusted to take into account factors
that are reasonably related to the benefits provided to
the payor of the fee by the Commission’s activities, includ-
ing such factors as service area coverage, shared use versus
exclusive use, and other factors that the Commission deter-
mines are necessary in the public interest;
‘‘(B) be established at amounts that will result in collec-
tion, during each fiscal year, of an amount that can reason-
ably be expected to equal the amount appropriated for
such fiscal year for the performance of the activities
described in subsection (a); and
‘‘(C) until adjusted or amended by the Commission
pursuant to paragraph (2) or (3), be the fees established
by the Schedule of Regulatory Fees in subsection (g).
‘‘(2) MANDATORY ADJUSTMENT OF SCHEDULE.—For any fiscal
year after fiscal year 1994, the Commission shall, by rule,
revise the Schedule of Regulatory Fees by proportionate
increases or decreases to reflect, in accordance with paragraph
(1)(B), changes in the amount appropriated for the performance
of the activities described in subsection (a) for such fiscal year.
Such proportionate increases or decreases shall—
‘‘(A) be adjusted to reflect, within the overall amounts
described in appropriations Acts under the authority of
paragraph (1)(A), unexpected increases or decreases in the
number of licensees or units subject to payment of such
fees; and
‘‘(B) be established at amounts that will result in collec-
tion of an aggregate amount of fees pursuant to this section
that can reasonably be expected to equal the aggregate
amount of fees that are required to be collected by appro-
priations Acts pursuant to paragraph (1)(B).
Increases or decreases in fees made by adjustments pursuant
to this paragraph shall not be subject to judicial review. In
making adjustments pursuant to this paragraph the Commis-
sion may round such fees to the nearest $5 in the case of
fees under $1,000, or to the nearest $25 in the case of fees
of $1,000 or more.
‘‘(3) PERMITTED AMENDMENTS.—In addition to the adjust-
ments required by paragraph (2), the Commission shall, by
regulation, amend the Schedule of Regulatory Fees if the
Commission determines that the Schedule requires amendment
to comply with the requirements of paragraph (1)(A). In making
such amendments, the Commission shall add, delete, or
reclassify services in the Schedule to reflect additions, deletions,
or changes in the nature of its services as a consequence of
Commission rulemaking proceedings or changes in law.
Increases or decreases in fees made by amendments pursuant
to this paragraph shall not be subject to judicial review.
‘‘(4) NOTICE TO CONGRESS.—The Commission shall—
H. R. 2264—88
‘‘(A) transmit to the Congress notification of any adjust-
ment made pursuant to paragraph (2) immediately upon
the adoption of such adjustment; and
‘‘(B) transmit to the Congress notification of any
amendment made pursuant to paragraph (3) not later than
90 days before the effective date of such amendment.
‘‘(c) ENFORCEMENT.—
‘‘(1) PENALTIES FOR LATE PAYMENT.—The Commission shall
prescribe by regulation an additional charge which shall be
assessed as a penalty for late payment of fees required by
subsection (a) of this section. Such penalty shall be 25 percent
of the amount of the fee which was not paid in a timely
manner.
‘‘(2) 
DISMISSAL
OF
APPLICATIONS
FOR
FILINGS.—The
Commission may dismiss any application or other filing for
failure to pay in a timely manner any fee or penalty under
this section.
‘‘(3) REVOCATIONS.—In addition to or in lieu of the penalties
and dismissals authorized by paragraphs (1) and (2), the
Commission may revoke any instrument of authorization held
by any entity that has failed to make payment of a regulatory
fee assessed pursuant to this section. Such revocation action
may be taken by the Commission after notice of the Commis-
sion’s intent to take such action is sent to the licensee by
registered mail, return receipt requested, at the licensee’s last
known address. The notice will provide the licensee at least
30 days to either pay the fee or show cause why the fee
does not apply to the licensee or should otherwise be waived
or payment deferred. A hearing is not required under this
subsection unless the licensee’s response presents a substantial
and material question of fact. In any case where a hearing
is conducted pursuant to this section, the hearing shall be
based on written evidence only, and the burden of proceeding
with the introduction of evidence and the burden of proof shall
be on the licensee. Unless the licensee substantially prevails
in the hearing, the Commission may assess the licensee for
the costs of such hearing. Any Commission order adopted pursu-
ant to this subsection shall determine the amount due, if any,
and provide the licensee with at least 30 days to pay that
amount or have its authorization revoked. No order of revoca-
tion under this subsection shall become final until the licensee
has exhausted its right to judicial review of such order under
section 402(b)(5) of this title.
‘‘(d) WAIVER, REDUCTION, AND DEFERMENT.—The Commission
may waive, reduce, or defer payment of a fee in any specific instance
for good cause shown, where such action would promote the public
interest.
‘‘(e) DEPOSIT
OF COLLECTIONS.—Moneys received from fees
established under this section shall be deposited as an offsetting
collection in, and credited to, the account providing appropriations
to carry out the functions of the Commission.
‘‘(f) REGULATIONS.—
‘‘(1) IN GENERAL.—The Commission shall prescribe appro-
priate rules and regulations to carry out the provisions of
this section. Such rules and regulations shall permit payment
by installments in the case of fees in large amounts, and
in the case of fees in small amounts, shall require the payment
H. R. 2264—89
of the fee in advance for a number of years not to exceed
the term of the license held by the payor.
‘‘(g) SCHEDULE.—Until amended by the Commission pursuant
to subsection (b), the Schedule of Regulatory Fees which the Federal
Communications Commission shall, subject to subsection (a)(2),
assess and collect shall be as follows:
‘‘SCHEDULE OF REGULATORY FEES
Bureau/Category
Annual Reg-
ulatory Fee
Private Radio Bureau
Exclusive use services (per license)
Land Mobile (above 470 MHz, Base Station and SMRS) (47
C.F.R. Part 90) .............................................................................
$16
Microwave (47 C.F.R. Part 94) .......................................................
Interactive Video Data Service (47 C.F.R. Part ) ..........................
Shared use services (per license unless otherwise noted) ................
Amateur vanity call-signs ...................................................................
Mass Media Bureau (per license)
AM radio (47 C.F.R. Part 73)
Class D Daytime ..............................................................................
250
Class A Fulltime ..............................................................................
900
Class B Fulltime ..............................................................................
500
Class C Fulltime ..............................................................................
200
Construction permits .......................................................................
100
FM radio (47 C.F.R. Part 73)
Classes C, C1, C2, B ........................................................................
900
Classes A, B1, C3 .............................................................................
600
Construction permits .......................................................................
500
TV (47 C.F.R. Part 73)
VHF Commercial
Markets 1 thru 10 ........................................................................
18,000
Markets 11 thru 25 ......................................................................
16,000
Markets 26 thru 50 ......................................................................
12,000
Markets 51 thru 100 ....................................................................
8,000
Remaining Markets .....................................................................
5,000
Construction permits ...................................................................
4,000
UHF Commercial
Markets 1 thru 10 ........................................................................
14,400
Markets 11 thru 25 ......................................................................
12,800
Markets 26 thru 50 ......................................................................
9,600
Markets 51 thru 100 ....................................................................
6,400
Remaining Markets .....................................................................
4,000
Construction permits ...................................................................
3,200
Low Power TV, TV Translator, and TV Booster (47 C.F.R. Part
74) .....................................................................................................
135
Broadcast Auxiliary (47 C.F.R. Part 74) ...........................................
International (HF) Broadcast (47 C.F.R. Part 73) ............................
200
Cable Antenna Relay Service (47 C.F.R. Part 78) ............................
220
Cable Television System (per 1,000 subscribers) (47 C.F.R. Part
76) .....................................................................................................
370
Common Carrier Bureau
Radio Facilities
Cellular Radio (per 1,000 subscribers) (47 C.F.R. Part 22) ..........
Personal Communications (per 1,000 subscribers) (47 C.F.R.) ....
Space Station (per operational station in geosynchronous orbit)
(47 C.F.R. Part 25) .......................................................................
65,000
Space Station (per system in low-earth orbit) (47 C.F.R. Part
25) ..................................................................................................
90,000
Public Mobile (per 1,000 subscribers) (47 C.F.R. Part 22) ...........
Domestic Public Fixed (per call sign) (47 C.F.R. Part 21) ...........
International Public Fixed (per call sign) (47 C.F.R. Part 23) .....
110
Earth Stations (47 C.F.R. Part 25)
VSAT and equivalent C-Band antennas (per 100 antennas) .......
Mobile satellite earth stations (per 100 antennas) .......................
Earth station antennas
Less than 9 meters (per 100 antennas) ......................................
9 Meters or more
H. R. 2264—90
‘‘SCHEDULE OF REGULATORY FEES—Continued
Bureau/Category
Annual Reg-
ulatory Fee
Transmit/Receive and Transmit Only (per meter) ................
Receive only (per meter) ..........................................................
Carriers
Inter-Exchange Carrier (per 1,000 presubscribed access lines) ......
Local Exchange Carrier (per 1,000 access lines) ..............................
Competitive access provider (per 1,000 subscribers) ........................
International circuits (per 100 active 64KB circuit or equivalent) .
220
‘‘(h) EXCEPTIONS.—The charges established under this section
shall not be applicable to (1) governmental entities or nonprofit
entities; or (2) to amateur radio operator licenses under part 97
of the Commission’s regulations (47 C.F.R. Part 97).
‘‘(i) ACCOUNTING
SYSTEM.—The Commission shall develop
accounting systems necessary to making the adjustments authorized
by subsection (b)(3). In the Commission’s annual report, the
Commission shall prepare an analysis of its progress in developing
such systems and shall afford interested persons the opportunity
to submit comments concerning the allocation of the costs of
performing the functions described in subsection (a) among the
services in the Schedule.’’.
(2) CONFORMING AMENDMENTS.—Section 8 of the Commu-
nications Act of 1934 (47 U.S.C. 158) is amended—
(A) by striking the heading of such section and insert-
ing ‘‘APPLICATION FEES’’;
(B) by striking ‘‘charges’’ each place it appears and
inserting ‘‘application fees’’;
(C) by striking ‘‘charge’’ each place it appears in sub-
section (c) and inserting ‘‘application fee’’;
(D) by striking out ‘‘Schedule of Charges’’ each place
it appears and inserting ‘‘Schedule of Application Fees’’;
and
(E) in the schedule contained in subsection (g)—
(i) by striking ‘‘SCHEDULE OF CHARGES’’ and insert-
ing ‘‘SCHEDULE OF APPLICATION FEES’’;
(ii) by striking ‘‘charge’’ and ‘‘Charges’’ each place
they appear and inserting ‘‘application fee’’ and
‘‘Application fees’’, respectively; and
(iii) by striking ‘‘CHARGES’’ and inserting ‘‘APPLICA-
TION FEES’’.
(b) USE OF REGULATORY FEES.—Section 6 of the Communica-
tions Act of 1934 (47 U.S.C. 156) is amended by adding at the
end the following new subsection:
‘‘(d) Of the sum appropriated in any fiscal year under this
section, a portion, in an amount determined under section 9(b),
shall be derived from fees authorized by section 9.’’.
TITLE VII—NUCLEAR REGULATORY
COMMISSION PROVISIONS
SEC. 7001. NUCLEAR REGULATORY COMMISSION ANNUAL CHARGES.
Section 6101(a)(3) of the Omnibus Budget Reconciliation Act
of 1990 (42 U.S.C. 2214(a)(3)) is amended by striking ‘‘September
30, 1995’’ and inserting ‘‘September 30, 1998’’.
H. R. 2264—91
TITLE VIII—PATENT AND TRADEMARK
FEES
SEC. 8001. PATENT AND TRADEMARK FEES.
Section 10101 of the Omnibus Budget Reconciliation Act of
1990 (35 U.S.C. 41 note) is amended—
(1) in subsection (a) by striking ‘‘1995’’ and inserting ‘‘1998’’;
(2) in subsection (b)(2) by striking ‘‘1995’’ and inserting
‘‘1998’’; and
(3) in subsection (c)—
(A) by striking ‘‘through 1995’’ and inserting ‘‘through
1998’’; and
(B) by adding at the end the following:
‘‘(6) $111,000,000 in fiscal year 1996.
‘‘(7) $115,000,000 in fiscal year 1997.
‘‘(8) $119,000,000 in fiscal year 1998.’’.
TITLE IX—MERCHANT MARINE
PROVISIONS
SEC. 9001. EXTENSION OF VESSEL TONNAGE DUTIES.
(a) EXTENSION OF DUTIES.—Section 36 of the Act of August
5, 1909 (36 Stat. 111; 46 App. U.S.C. 121), is amended by—
(1) striking ‘‘and 1995,’’ each place it appears and inserting
‘‘1995, 1996, 1997, 1998,’’;
(2) striking ‘‘place,’’ and inserting ‘‘place;’’; and
(3) striking ‘‘port, not, however, to include vessels in dis-
tress or not engaged in trade’’ and inserting ‘‘port. However,
neither duty shall be imposed on vessels in distress or not
engaged in trade’’.
(b) CONFORMING AMENDMENT.—The Act of March 8, 1910 (36
Stat. 234; 46 App. U.S.C. 132), is amended by striking ‘‘and 1995,’’
and inserting ‘‘1995, 1996, 1997, and 1998,’’.
(c) TECHNICAL CORRECTION.—
(1) CORRECTION.—Section 10402(a) of the Omnibus Budget
Reconciliation Act of 1990 (104 Stat. 1388–398) is amended
by striking ‘‘in the second paragraph’’.
(2) EFFECTIVE DATE.—The amendment made by paragraph
(1) shall be effective on and after November 5, 1990.
TITLE X—NATURAL RESOURCE
PROVISIONS
Subtitle A—Recreation Use Fees
SEC. 10001. ADMISSION FEES.
(a) ADDITIONAL AREAS.—(1) The first sentence of section 4(a)
of the Land and Water Conservation Fund Act of 1965 (16 U.S.C.
4601–6a(a)) is amended by inserting after ‘‘National Park System’’
the phrase ‘‘or National Conservation Areas’’ and by inserting after
‘‘National Recreation Areas’’ the following ‘‘, National Monuments,
H. R. 2264—92
National Volcanic Monuments, National Scenic Areas, and no more
than 21 areas of concentrated public use’’.
(2) Section 4(a) of the Land and Water Conservation Fund
Act of 1965 (16 U.S.C. 4601–6a(a)) is amended by inserting the
following after the first sentence: ‘‘For purposes of this subsection,
the term ‘area of concentrated public use’ means an area that
is managed primarily for outdoor recreation purposes, contains at
least one major recreation attraction, where facilities and services
necessary to accommodate heavy public use are provided, and public
access to the area is provided in such a manner that admission
fees can be efficiently collected at one or more centralized locations.’’.
(b) GOLDEN AGE PASSPORT.—The second sentence of section
4(a)(4) of the Land and Water Conservation Fund Act of 1965
(16 U.S.C. 4601–6a(a)(4)) is amended by striking ‘‘without charge,’’
and inserting in lieu thereof ‘‘for a one-time charge of $10,’’.
SEC. 10002. RECREATION USER FEES.
(a) IN GENERAL.—(1) The first sentence of section 4(b) of the
Land and Water Conservation Fund Act of 1965 (16 U.S.C. 4601–
6a(b)) is amended by striking out ‘‘toilet facilities, picnic tables,
or boat ramps’’ and all that follows down through the end of the
sentence and inserting in lieu thereof: ‘‘or toilet facilities, nor shall
there be any such charge solely for the use of picnic tables: Provided,
That in no event shall there be a charge for the use of any camp-
ground not having a majority of the following: tent or trailer spaces,
picnic tables, drinking water, access road, refuse containers, toilet
facilities, personal collection of the fee by an employee or agent
of the Federal agency operating the facility, reasonable visitor
protection, and simple devices for containing a campfire (where
campfires are permitted). For the purposes of this subsection, the
term ‘specialized outdoor recreation sites’ includes, but is not limited
to, campgrounds, swimming sites, boat launch facilities, and man-
aged parking lots.’’.
(2) Section 4(b) of the Land and Water Conservation Fund
Act of 1965 (16 U.S.C. 4601–6a(b)) is amended by striking the
second sentence.
(b) COSTS OF COLLECTION.—Section 4(i)(1) of the Land and
Water Conservation Fund Act of 1965 (16 U.S.C. 4601–6a(i)) is
amended by inserting ‘‘(A)’’ after ‘‘(1)’’ and by adding the following
at the end of paragraph (1):
‘‘(B) Notwithstanding subparagraph (A), in any fiscal year, the
Secretary of Agriculture and the Secretary of the Interior may
withhold from the special account established under subparagraph
(A) such portion of all receipts collected from fees imposed under
this section in such fiscal year as the Secretary of Agriculture
or the Secretary of the Interior, as appropriate, determines to
be equal to the fee collection costs for that fiscal year: Provided,
That such costs shall not exceed 15 percent of all receipts collected
from fees imposed under this section in that fiscal year. The
amounts so withheld shall be retained by the Secretary of Agri-
culture or the Secretary of the Interior, as appropriate, and shall
be available, without further appropriation, for expenditure by the
Secretary concerned to cover fee collection costs in that fiscal year.
The Secretary concerned shall deposit into the special account estab-
lished pursuant to subparagraph (A) any amounts so retained which
remain unexpended and unobligated at the end of the fiscal year.
For the purposes of this subparagraph, for any fiscal year, the
H. R. 2264—93
term ‘fee collection costs’ means those costs for personnel and infra-
structure directly associated with the collection of fees imposed
under this section.’’.
(c) COMMERCIAL TOUR USE FEES.—Section 4 of the Land and
Water Conservation Fund Act of 1965 (16 U.S.C. 4601–6a) is
amended by adding the following new subsection at the end thereof:
‘‘(n)(1) In the case of each unit of the National Park System
for which an admission fee is charged under this section, the Sec-
retary of the Interior shall establish, by October 1, 1993, a commer-
cial tour use fee to be imposed on each vehicle entering the unit
for the purpose of providing commercial tour services within the
unit. Fee revenue derived from such commercial tour use fees
shall be deposited into the special account established under sub-
section (i).
‘‘(2) The Secretary shall establish the amount of fee per entry
as follows:
‘‘(A) $25 per vehicle with a passenger capacity of 25 persons
or less, and
‘‘(B) $50 per vehicle with a passenger capacity of more
than 25 persons.
‘‘(3) The Secretary may periodically make reasonable adjust-
ments to the commercial tour use fee imposed under this subsection.
‘‘(4) The commercial tour use fee imposed under this subsection
shall not apply to either of the following:
‘‘(A) Any vehicle transporting organized school groups or
outings conducted for educational purposes by schools or other
bona fide educational institutions.
‘‘(B) Any vehicle entering a park system unit pursuant
to a contract issued under the Act of October 9, 1965 (16
U.S.C. 20–20g) entitled ‘An Act relating to the establishment
of concession policies in the areas administered by the National
Park Service and for other purposes.’.
‘‘(5)(A) The provisions of this subsection shall apply to aircraft
entering the airspace of units of the National Park System identified
in section 2(b) and section 3 of Public Law 100–91 for the specific
purpose of providing commercial tour services within the airspace
of such units.
‘‘(B) The provisions of this subsection shall also apply to aircraft
entering the airspace of other units of the National Park System
for the specific purpose of providing commercial tour services if
the Secretary determines that the level of such services is equal
to or greater than the level at those units of the National Park
System specified in subparagraph (A).’’.
(d) NON-FEDERAL GOLDEN EAGLE PASSPORT SALES.—Section
4(a)(1)(A) of the Land and Water Conservation Fund Act of 1965
(16 U.S.C. 4601–6a(a)(1)(A)) is amended by inserting ‘‘(i)’’ after
‘‘(A)’’ and by adding at the end thereof the following new clause:
‘‘(ii) The Secretary of the Interior and the Secretary of Agri-
culture may authorize businesses, nonprofit entities, and other
organizations to sell and collect fees for the Golden Eagle Passport
subject to such terms and conditions as the Secretaries may jointly
prescribe. The Secretaries shall develop detailed guidelines for pro-
motional advertising of non-Federal Golden Eagle Passport sales
and shall monitor compliance with such guidelines. The Secretaries
may authorize the sellers to withhold amounts up to, but not
exceeding 8 percent of the gross fees collected from the sale of
such passports as reimbursement for actual expenses of the sales.
H. R. 2264—94
Receipts from such non-Federal sales of the Golden Eagle Passport
shall be deposited into the special account established in subsection
(i), to be allocated between the Secretary of the Interior and the
Secretary of Agriculture in the same ratio as receipts from admis-
sion into Federal fee areas administered by the Secretary of Agri-
culture and the Secretary of the Interior pursuant to subsection
(a).’’.
(e) CONFORMING AMENDMENT.—Section 4(a)(1)(A) of the Land
and Water Conservation Fund Act of 1965 (16 U.S.C. 4601–
6a(a)(1)(A)) is amended by striking the third sentence in its entirety
and inserting in lieu thereof ‘‘The annual permit shall be valid
for a period of 12 months from the date the annual fee is paid.’’.
SEC. 10003. COMMUNICATION SITE FEES.
Notwithstanding any other provision of law, for fiscal year
1994, the Secretary of Agriculture and the Secretary of the Interior
shall assess and collect annual charges for the utilization of existing
radio, television, and commercial telephone transmission commu-
nication sites located on Federal lands administered by the Forest
Service and the Bureau of Land Management at a level 10 percent
above the fee assessed and collected during fiscal year 1993. For
a site located after the enactment of this Act, the charges for
fiscal year 1994 shall be equal in amount to the charges assessed
for a comparable new site located before the enactment of this
Act, plus 10 percent.
Subtitle B—Hardrock Mining Claim
Maintenance Fee
SEC. 10101. FEE.
(a) CLAIM MAINTENANCE FEE.—The holder of each unpatented
mining claim, mill or tunnel site located pursuant to the Mining
Laws of the United States, whether located before or after the
enactment of this Act, shall pay to the Secretary of the Interior,
on or before August 31 of each year, for years 1994 through 1998,
a claim maintenance fee of $100 per claim. Such claim maintenance
fee shall be in lieu of the assessment work requirement contained
in the Mining Law of 1872 (30 U.S.C. 28–28e) and the related
filing requirements contained in section 314 (a) and (c) of the
Federal Land Policy and Management Act of 1976 (43 U.S.C. 1744
(a) and (c)).
(b) TIME OF PAYMENT.—The claim maintenance fee payable
pursuant to subsection (a) for any assessment year shall be paid
before the commencement of the assessment year, except that for
the initial assessment year in which the location is made, the
locator shall pay the claim maintenance fee at the time the location
notice is recorded with the Bureau of Land Management. The
location fee imposed under section 10102 shall be payable not
later than 90 days after the date of location.
(c) OIL SHALE CLAIMS SUBJECT TO CLAIM MAINTENANCE FEES
UNDER ENERGY POLICY ACT OF 1992.—This section shall not apply
to any oil shale claims for which a fee is required to be paid
under section 2511(e)(2) of the Energy Policy Act of 1992 (Public
Law 102–486; 106 Stat. 3111; 30 U.S.C. 242).
(d) WAIVER.—(1) The claim maintenance fee required under
this section may be waived for a claimant who certifies in writing
H. R. 2264—95
to the Secretary that on the date the payment was due, the claimant
and all related parties—
(A) held not more than 10 mining claims, mill sites, or
tunnel sites, or any combination thereof, on public lands; and
(B) have performed assessment work required under the
Mining Law of 1872 (30 U.S.C. 28–28e) to maintain the mining
claims held by the claimant and such related parties for the
assessment year ending on noon of September 1 of the calendar
year in which payment of the claim maintenance fee was due.
(2) For purposes of paragraph (1), with respect to any claimant,
the term ‘‘related party’’ means—
(A) the spouse and dependent children (as defined in section
152 of the Internal Revenue Code of 1986), of the claimant;
and
(B) a person who controls, is controlled by, or is under
common control with the claimant.
For purposes of this section, the term control includes actual control,
legal control, and the power to exercise control, through or by
common directors, officers, stockholders, a voting trust, or a holding
company or investment company, or any other means.
SEC. 10102. LOCATION FEE.
Notwithstanding any other provision of law, for every
unpatented mining claim, mill or tunnel site located after the
date of enactment of this subtitle and before September 30, 1998,
pursuant to the Mining Laws of the United States, the locator
shall, at the time the location notice is recorded with the Bureau
of Land Management, pay to the Secretary of the Interior a location
fee, in addition to the claim maintenance fee required by section
10101, of $25.00 per claim.
SEC. 10103. CO-OWNERSHIP.
The co-ownership provisions of the Mining Law of 1872 (30
U.S.C. 28) shall remain in effect, except that in applying such
provisions, the annual claim maintenance fee required under this
Act shall, where applicable, replace applicable assessment require-
ments and expenditures.
SEC. 10104. FAILURE TO PAY.
Failure to pay the claim maintenance fee or the location fee
as required by this subtitle shall conclusively constitute a forfeiture
of the unpatented mining claim, mill or tunnel site by the claimant
and the claim shall be deemed null and void by operation of law.
SEC. 10105. OTHER REQUIREMENTS.
(a) FEDERAL LAND POLICY AND MANAGEMENT ACT REQUIRE-
MENTS.—Nothing in this subtitle shall change or modify the require-
ments of section 314(b) of the Federal Land Policy and Management
Act of 1976 (43 U.S.C. 1744(b)), or the requirements of section
314(c) of the Federal Land Policy and Management Act of 1976
(43 U.S.C. 1744(c)) related to filings required by section 314(b),
and such requirements shall remain in effect with respect to claims,
and mill or tunnel sites for which fees are required to be paid
under this section.
(b) REVISED STATUTES SECTION 2324.—The third sentence of
section 2324 of the Revised Statutes (30 U.S.C. 28) is amended
by inserting after ‘‘On each claim located after the tenth day of
May, eighteen hundred and seventy-two,’’ the following: ‘‘that is
H. R. 2264—96
granted a waiver under section 10101 of the Omnibus Budget
Reconciliation Act of 1993,’’.
(c) FEE ADJUSTMENTS.—(1) The Secretary of the Interior shall
adjust the fees required by this subtitle to reflect changes in the
Consumer Price Index published by the Bureau of Labor Statistics
of the Department of Labor every 5 years after the date of the
enactment of this Act, or more frequently if the Secretary deter-
mines an adjustment to be reasonable.
(2) The Secretary shall provide claimants notice of any adjust-
ment made under this subsection not later than July 1 of any
year in which the adjustment is made.
(3) A fee adjustment under this subsection shall begin to apply
the first assessment year which begins after adjustment is made.
SEC. 10106. REGULATIONS.
The Secretary of the Interior shall promulgate rules and regula-
tions to carry out the terms and conditions of this subtitle as
soon as practicable after the date of the enactment of this subtitle.
Subtitle C—Mineral Receipts
SEC. 10201. AMENDMENT TO THE MINERAL LEASING ACT.
Section 35 of the Mineral Leasing Act (30 U.S.C. 191) is
amended as follows:
(1) Delete the last sentence and redesignate the remaining
language as subsection (a).
(2) Amend subsection (a) by inserting ‘‘and, subject to the
provisions of subsection (b),’’ between the words ‘‘United
States;’’ and ‘‘50 per centum’’.
(3) Add a new subsection (b) as follows:
‘‘(b)(1) In calculating the amount to be paid to States during
any fiscal year under this section or under any other provision
of law requiring payment to a State of any revenues derived from
the leasing of any onshore lands or interest in land owned by
the United States for the production of the same types of minerals
leasable under this Act or of geothermal steam, 50 percent of
the portion of the enacted appropriation of the Department of
the Interior and any other agency during the preceding fiscal year
allocable to the administration of all laws providing for the leasing
of any onshore lands or interest in land owned by the United
States for the production of the same types of minerals leasable
under this Act or of geothermal steam, and to enforcement of
such laws, shall be deducted from the receipts derived under those
laws in approximately equal amounts each month (subject to para-
graph (4)) prior to the division and distribution of such receipts
between the States and the United States.
‘‘(2) The proportion of the deduction provided in paragraph
(1) allocable to each State shall be determined by dividing the
monies disbursed to the State during the preceding fiscal year
derived from onshore mineral leasing referred to in paragraph
(1) in that State by the total money disbursed to States during
the preceding fiscal year from such onshore mineral leasing in
all States.
‘‘(3) In the event the deduction apportioned to any State under
this subsection exceeds 50 percent of the Secretary of the Interior’s
estimate of the amounts attributable to onshore mineral leasing
H. R. 2264—97
referred to in paragraph (1) within that State during the preceding
fiscal year, the deduction from receipts received from leases in
that State shall be limited to such estimated amounts and the
total amount to be deducted from such onshore mineral leasing
receipts shall be reduced accordingly.
‘‘(4) If the amount otherwise deductible under this subsection
in any month from the portion of receipts to be distributed to
a State exceeds the amount payable to the State during that month,
any amount exceeding the amount payable shall be carried forward
and deducted from amounts payable to the State in subsequent
months. If any amount remains to be carried forward at the end
of the fiscal year, such amount shall not be deducted from any
disbursements in any subsequent fiscal year.
‘‘(5) All deductions to be made pursuant to this subsection
shall be made in full during the fiscal year in which such deductions
were incurred.’’.
SEC. 10202. CONFORMING AMENDMENTS.
(a) MINERAL LEASING ACT FOR ACQUIRED LANDS.—Section 6(a)
of the Mineral Leasing Act for Acquired Lands (30 U.S.C. 355)
is amended by striking ‘‘All receipts’’ at the beginning of the first
sentence and inserting the following: ‘‘Subject to the provisions
of section 35(b) of the Mineral Leasing Act (30 U.S.C. 191(b)),
all receipts’’.
(b) GEOTHERMAL STEAM ACT.—Section 20 of the Geothermal
Steam Act (30 U.S.C. 1019) is amended by striking ‘‘All moneys’’
at the beginning thereof and inserting ‘‘Subject to the provisions
of section 35(b) of the Mineral Leasing Act (30 U.S.C. 191(b)),
all moneys’’.
TITLE XI—CIVIL SERVICE AND POST
OFFICE PROVISIONS
Subtitle A—Civil Service
SEC. 11001. DELAY IN COST-OF-LIVING ADJUSTMENTS IN FEDERAL
EMPLOYEE RETIREMENT BENEFITS DURING FISCAL
YEARS 1994, 1995, AND 1996.
(a) APPLICABILITY.—This section shall apply with respect to
any cost-of-living increase scheduled to take effect, during fiscal
year 1994, 1995, or 1996, under—
(1) section 8340(b) or 8462(b) of title 5, United States
Code;
(2) section 826 or 858 of the Foreign Service Act of 1980;
or
(3) section 291 of the Central Intelligence Agency Retire-
ment Act (50 U.S.C. 2131), as set forth in section 802 of the
CIARDS Technical Corrections Act of 1992 (Public Law 102–
496; 106 Stat. 3196).
(b) DELAY IN EFFECTIVE DATE OF ADJUSTMENTS.—A cost-of-
living increase described in subsection (a) shall not take effect
until the first day of the third calendar month after the date
such increase would otherwise take effect.
(c) RULE OF CONSTRUCTION.—Nothing in this section shall be
considered to affect any determination relating to eligibility for
H. R. 2264—98
an annuity increase or the amount of the first increase in an
annuity under section 8340 (b) or (c) or section 8462 (b) or (c)
of title 5, United States Code, or comparable provisions of law.
SEC. 11002. PERMANENT ELIMINATION OF THE ALTERNATIVE-FORM-
OF-ANNUITY OPTION EXCEPT FOR INDIVIDUALS WITH
A CRITICAL MEDICAL CONDITION.
(a) CIVIL SERVICE RETIREMENT SYSTEM; FEDERAL EMPLOYEES’
RETIREMENT SYSTEM.—Sections 8343a and 8420a of title 5, United
States Code, are each amended—
(1) in subsection (a) by striking ‘‘an employee or Member
may,’’ and inserting ‘‘any employee or Member who has a
life-threatening affliction or other critical medical condition
may,’’; and
(2) by striking subsection (f).
(b) FOREIGN SERVICE RETIREMENT AND DISABILITY SYSTEM.—
Section 807(e)(1) of the Foreign Service Act of 1980 (22 U.S.C.
4047(e)(1)) is amended by striking ‘‘a participant may,’’ and insert-
ing ‘‘any participant who has a life-threatening affliction or other
critical medical condition may,’’.
(c) CENTRAL INTELLIGENCE AGENCY RETIREMENT AND DISABIL-
ITY SYSTEM.—Section 294(a) of the Central Intelligence Agency
Retirement Act (50 U.S.C. 2143(a)), as set forth in section 802
of the CIARDS Technical Corrections Act of 1992 (Public Law
102–496; 106 Stat. 3196), is amended by striking ‘‘a participant
may,’’ and inserting ‘‘any participant who has a life-threatening
affliction or other critical medical condition may,’’.
(d) EFFECTIVE DATE.—The amendments made by this section
shall become effective on October 1, 1994, and shall apply with
respect to any annuity commencing on or after that date.
SEC. 11003. APPLICATION OF MEDICARE PART B LIMITS TO PHYSI-
CIANS’ SERVICES FURNISHED TO FEDERAL EMPLOYEE
HEALTH BENEFITS ENROLLEES AGE 65 OR OLDER.
(a) IN GENERAL.—Section 8904(b) of title 5, United States Code,
is amended—
(1) in paragraph (1) by inserting ‘‘(A)’’ after ‘‘(b)(1)’’ and
by adding at the end the following:
‘‘(B)(i) A plan, other than a prepayment plan described in
section 8903(4), may not provide benefits, in the case of any retired
enrolled individual who is age 65 or older and is not entitled
to Medicare supplementary medical insurance benefits under part
B of title XVIII of the Social Security Act (42 U.S.C. 1395j et
seq.), to pay a charge imposed for physicians’ services (as defined
in section 1848(j) of such Act, 42 U.S.C. 1395w–4(j)) which are
covered for purposes of benefit payments under this chapter and
under such part, to the extent that such charge exceeds the fee
schedule amount under section 1848(a) of such Act (42 U.S.C.
1395w–4(a)).
‘‘(ii) Physicians and suppliers who have in force participation
agreements with the Secretary of Health and Human Services
consistent with section 1842(h)(1) of such Act (42 U.S.C.
1395u(h)(1)), whereby the participating provider accepts Medicare
benefits (including allowable deductible and coinsurance amounts)
as full payment for covered items and services shall accept equiva-
lent benefit and enrollee cost-sharing under this chapter as full
payment for services described in clause (i). Physicians and suppli-
ers who are nonparticipating physicians and suppliers for purposes
H. R. 2264—99
of part B of title XVIII of such Act shall not impose charges
that exceed the limiting charge under section 1848(g) of such Act
(42 U.S.C. 1395w–4(g)) with respect to services described in clause
(i) provided to enrollees described in such clause. The Office of
Personnel Management shall notify a physician or supplier who
is found to have violated this clause and inform them of the require-
ments of this clause and sanctions for such a violation. The Office
of Personnel Management shall notify the Secretary of Health and
Human Services if a physician or supplier is found to knowingly
and willfully violate this clause on a repeated basis and the Sec-
retary of Health and Human Services may invoke appropriate sanc-
tions in accordance with sections 1128A(a) and 1848(g)(1) of such
Act (42 U.S.C. 1320a–7a(a), 1395w–4(g)(1)) and applicable regula-
tions.
‘‘(C) If the Secretary of Health and Human Services determines
that a violation of this subsection warrants excluding a provider
from participation for a specified period under title XVIII of the
Social Security Act, the Office shall enforce a corresponding exclu-
sion of such provider for purposes of this chapter.’’;
(2) in paragraph (3)(B)—
(A) by inserting ‘‘(i)’’ after ‘‘includes’’; and
(B) by inserting before the period at the end the follow-
ing: ‘‘, and (ii) the fee schedule amounts and limiting
charges for physicians’ services established under section
1848 of such Act (42 U.S.C. 1395w–4) and the identity
of participating physicians and suppliers who have in force
agreements with such Secretary under section 1842(h) of
such Act (42 U.S.C. 1395u(h))’’; and
(3) by adding at the end the following:
‘‘(4) The Director of the Office of Personnel Management shall
enter into an arrangement with the Secretary of Health and Human
Services, to be effective before the first day of the fifth month
that begins before each contract year, under which—
‘‘(A) physicians and suppliers (whether or not participating)
under the Medicare program will be notified of the requirements
of paragraph (1)(B);
‘‘(B) enforcement procedures will be in place to carry out
such paragraph (including enforcement of protections against
overcharging of beneficiaries); and
‘‘(C) Medicare program information described in paragraph
(3)(B)(ii) will be supplied to carriers under paragraph (3)(A).’’.
(b) EFFECTIVE DATE.—The amendments made by subsection
(a) shall apply with respect to contract years beginning on or
after January 1, 1995.
SEC. 11004. FEDERAL EMPLOYEES’ SURVIVOR ANNUITY IMPROVE-
MENTS.
(a) CIVIL SERVICE RETIREMENT SYSTEM.—
(1) REDUCTION FOR SPOUSAL ANNUITY.—Section 8339(j) of
title 5, United States Code, is amended—
(A) in paragraph (3)—
(i) in the second sentence by striking ‘‘, within
such 2-year period,’’; and
(ii) by striking the fourth sentence and inserting
the following: ‘‘The Office shall, by regulation, provide
for payment of the deposit required under this para-
graph by a reduction in the annuity of the employee
H. R. 2264—100
or Member. The reduction shall, to the extent prac-
ticable, be designed so that the present value of the
future reduction is actuarially equivalent to the deposit
required under this paragraph, except that the total
reductions in the annuity of an employee or Member
to pay deposits required by the provisions of this para-
graph, paragraph (5), or subsection (k)(2) shall not
exceed 25 percent of the annuity computed under sub-
sections (a) through (i), (n), and (q), including adjust-
ments under section 8340. The reduction, which shall
be effective on the same date as the election under
this paragraph, shall be permanent and unaffected
by any future termination of the entitlement of the
former spouse. Such reduction shall be independent
of and in addition to the reduction required under
the first sentence of this paragraph.’’; and
(B) in paragraph (5)(C)—
(i) in clause (ii) by striking ‘‘, within 2 years after
the date of the remarriage or, if later, the death or
remarriage of the former spouse (or of the last such
surviving former spouse),’’; and
(ii) by amending clause (iii) to read as follows:
‘‘(iii) The Office shall, by regulation, provide for pay-
ment of the deposit required under clause (ii) by a reduction
in the annuity of the employee or Member. The reduction
shall, to the extent practicable, be designed so that the
present value of the future reduction is actuarially equiva-
lent to the deposit required under clause (ii), except that
total reductions in the annuity of an employee or Member
to pay deposits required by the provisions of this paragraph
or paragraph (3) shall not exceed 25 percent of the annuity
computed under subsections (a) through (i), (n), and (q),
including adjustments under section 8340. The reduction
required by this clause, which shall be effective on the
same date as the election under clause (i), shall be perma-
nent and unaffected by any future termination of the
marriage. Such reduction shall be independent of and in
addition to the reduction required under clause (i).’’.
(2) REDUCTION
RELATING
TO
FORMER
SPOUSE.—Section
8339(k)(2) of title 5, United States Code, is amended—
(A) in subparagraph (B)(ii) by striking ‘‘Within 2 years
after the date of the marriage, the’’ and inserting ‘‘The’’;
and
(B) by amending subparagraph (C) to read as follows:
‘‘(C) The Office shall, by regulation, provide for payment
of the deposit required under subparagraph (B)(ii) by a reduc-
tion in the annuity of the employee or Member. The reduction
shall, to the extent practicable, be designed so that the present
value of the future reduction is actuarially equivalent to the
deposit required under subparagraph (B)(ii), except that total
reductions in the annuity of an employee or Member to pay
deposits required by this subsection or subsection (j)(3) shall
not exceed 25 percent of the annuity computed under sub-
sections (a) through (i), (n), and (q), including adjustments
under section 8340. The reduction required by this subpara-
graph, which shall be effective on the same date as the election
under subparagraph (A), shall be permanent and unaffected
H. R. 2264—101
by any future termination of the marriage. Such reduction
shall be independent of and in addition to the reduction
required under subparagraph (A).’’.
(3) DEPOSITS.—Section 8334(h) of title 5, United States
Code, is amended by striking ‘‘and by section 8339(j)(5)(C)
and the last sentence of section 8339(k)(2) of this title’’.
(b) FEDERAL EMPLOYEES’ RETIREMENT SYSTEM.—Section 8418
of title 5, United States Code, is amended—
(1) in subsection (a)(1) by striking ‘‘, before the expiration
of the 2-year period involved,’’; and
(2) by amending subsection (b) to read as follows:
‘‘(b) The Office shall, by regulation, provide for payment of
the deposit required under subsection (a) by a reduction in the
annuity of the employee or Member. The reduction shall, to the
extent practicable, be designed so that the present value of the
future reduction is actuarially equivalent to the deposit required
under subsection (a), except that the total reductions in the annuity
of an employee or Member to pay deposits required by this section
shall not exceed 25 percent of the annuity computed under section
8415 or section 8452, including adjustments under section 8462.
The reduction required by this subsection, which shall be effective
at the same time as the election under section 8416 (b) and (c)
or section 8417(b), shall be permanent and unaffected by any future
termination of the marriage or the entitlement of the former spouse.
Such reduction shall be independent of and in addition to the
reduction required under section 8416 (b) and (c) or section
8417(b).’’.
(c) EFFECTIVE DATE.—
(1) IN GENERAL.—The amendments made by this section
shall take effect on the first day of the first month beginning
at least 30 days after the date of the enactment of this Act
and shall apply to all deposits required under section 8339(j)
(3) or (5), 8339(k)(2), or 8418 of title 5, United States Code,
on which no payment has been made prior to such effective
date.
(2) PARTIAL DEPOSIT.—For any deposit required under sec-
tion 8339(j) (3) or (5), 8339(k)(2), or 8418 of title 5, United
States Code, or section 4 (b) or (c) of the Civil Service Retire-
ment Spouse Equity Act of 1984 (5 U.S.C. 8341 note) that
has been partially, but not fully, paid before the effective date
of this Act, the Office shall by regulation provide for determin-
ing the remaining portion of the deposit and for payment of
the remaining portion of the deposit by a prospective reduction
in the annuity of the employee or Member. The reduction
shall be similar to the reductions provided pursuant to the
amendments made under this section.
SEC. 11005. TEMPORARY EXTENSION AND MODIFICATION OF THE
METHOD FOR DETERMINING GOVERNMENT CONTRIBU-
TIONS UNDER FEHBP IN THE ABSENCE OF A GOVERN-
MENT-WIDE INDEMNITY BENEFIT PLAN.
Public Law 101–76 (5 U.S.C. 8906 note) is amended by striking
the matter after the enacting clause and before paragraph (2)
of subsection (a) and inserting the following:
‘‘That (a)(1) in the administration of chapter 89 of title 5, United
States Code, for each of contract years 1990 through 1998 (inclu-
sive), in order to compute the average subscription charges under
H. R. 2264—102
section 8906(a) of such title for such contract years, the subscription
charges in effect for the indemnity benefit plan on the beginning
date of each such contract year—
‘‘(A) shall be deemed to be the subscription charges which
were in effect for such plan on the beginning date of the
preceding contract year as adjusted under paragraph (2); or
‘‘(B) if subparagraph (A) does not apply, shall be deemed
to be—
‘‘(i) the subscription charges which were deemed under
this Act to have been in effect for such plan with respect
to the preceding contract year as adjusted under paragraph
(2), except as provided in clause (ii); or
‘‘(ii) for each of contract years 1997 and 1998, the
subscription charges which would be derived by applying
the terms of clause (i), reduced by 1 percent.’’.
Subtitle B—Postal Service
SEC. 11101. PAYMENTS TO BE MADE BY THE UNITED STATES POSTAL
SERVICE.
(a) RELATING TO CORRECTED CALCULATIONS FOR PAST RETIRE-
MENT COLAS.—In addition to any other payments required under
section 8348(m) of title 5, United States Code, or any other provision
of law, the United States Postal Service shall pay into the Civil
Service Retirement and Disability Fund a total of $693,000,000,
of which—
(1) at least one-third shall be paid not later than September
30, 1996;
(2) at least two-thirds shall be paid not later than Septem-
ber 30, 1997; and
(3) any remaining balance shall be paid not later than
September 30, 1998.
(b) RELATING TO CORRECTED CALCULATIONS FOR PAST HEALTH
BENEFITS.—In addition to any other payments required under sec-
tion 8906(g)(2) of title 5, United States Code, or any other provision
of law, the United States Postal Service shall pay into the Employ-
ees Health Benefits Fund a total of $348,000,000, of which—
(1) at least one-third shall be paid not later than September
30, 1996;
(2) at least two-thirds shall be paid not later than Septem-
ber 30, 1997; and
(3) any remaining balance shall be paid not later than
September 30, 1998.
TITLE XII—VETERANS’ AFFAIRS
PROVISIONS
SEC. 12001. SHORT TITLE.
This title may be cited as the ‘‘Veterans Reconciliation Act
of 1993’’.
H. R. 2264—103
SEC. 12002. EXTENSION OF AUTHORITY TO REQUIRE THAT CERTAIN
VETERANS AGREE TO MAKE COPAYMENTS IN EXCHANGE
FOR RECEIVING HEALTH-CARE BENEFITS.
(a) HOSPITAL AND MEDICAL CARE.—Section 8013(e) of the Omni-
bus Budget Reconciliation Act of 1990 (Public Law 101–508; 38
U.S.C. 1710 note) is amended—
(1) by striking out ‘‘September 30, 1992’’ in the first sen-
tence and inserting in lieu thereof ‘‘September 30, 1998’’; and
(2) by striking out the second sentence.
(b) OUTPATIENT MEDICATIONS.—Section 1722A(c) of title 38,
United States Code, is amended—
(1) by striking out ‘‘September 30, 1992’’ in the first sen-
tence and inserting in lieu thereof ‘‘September 30, 1998’’; and
(2) by striking out the second sentence.
SEC. 12003. EXTENSION OF AUTHORITY FOR MEDICAL CARE COST
RECOVERY.
Section 1729(a)(2)(E) of title 38, United States Code, is amended
by striking out ‘‘before August 1, 1994,’’ and inserting in lieu thereof
‘‘before October 1, 1998,’’.
SEC. 12004. EXTENSION OF CERTAIN INCOME VERIFICATION AUTHOR-
ITY.
Section 5317(g) of title 38, United States Code, is amended
by striking out ‘‘September 30, 1997’’ and inserting in lieu thereof
‘‘September 30, 1998’’.
SEC. 12005. EXTENSION OF LIMITATION ON PENSION FOR CERTAIN
RECIPIENTS OF MEDICAID-COVERED NURSING HOME
CARE.
Section 5503(f)(7) of title 38, United States Code, is amended
by striking out ‘‘September 30, 1997’’ and inserting in lieu thereof
‘‘September 30, 1998’’.
SEC. 12006. EXTENSION OF PROCEDURES APPLICABLE TO LIQUIDA-
TION SALES ON DEFAULTED HOME LOANS GUARANTEED
BY THE DEPARTMENT OF VETERANS AFFAIRS.
(a) INCLUSION OF LOSSES.—Section 3732(c) of title 38, United
States Code, is amended—
(1) in paragraph (1)(C), by striking out ‘‘resale,’’ and insert-
ing in lieu thereof ‘‘resale (including losses sustained on the
resale of the property),’’; and
(2) in paragraph (11), by striking out ‘‘shall’’ and all that
follows and inserting in lieu thereof ‘‘shall apply to loans closed
before October 1, 1998.’’.
(b) EFFECTIVE DATE.—The amendments made by this section
shall become effective October 1, 1993.
SEC. 12007. LOAN FEES.
(a) INCREASE IN HOME LOAN FEES.—Subsection (a) of section
3729 of title 38, United States Code, is amended—
(1) by striking out paragraph (6); and
(2) by inserting after paragraph (3) the following:
‘‘(4) With respect to a loan closed after September 30, 1993,
and before October 1, 1998, for which a fee is collected under
paragraph (1), the amount of such fee, as computed under para-
graph (2), shall be increased by 0.75 percent of the total loan
H. R. 2264—104
amount other than in the case of a loan described in subparagraph
(A), (D)(ii), or (E) of paragraph (2).’’.
(b) FEE FOR MULTIPLE USE OF HOUSING ASSISTANCE.—Sub-
section (a) of such section, as amended by subsection (a) of this
section, is amended by adding at the end the following:
‘‘(5)(A) Except as provided in subparagraph (B) of this para-
graph, notwithstanding paragraphs (2) and (4) of this subsection,
after a veteran has obtained an initial loan pursuant to section
3710 of this title, the amount of such fee with respect to any
additional loan obtained under this chapter by such veteran shall
be 3 percent of the total loan amount.
‘‘(B) Subparagraph (A) of this paragraph does not apply with
respect to (i) a loan obtained by a veteran with a downpayment
described in paragraph (2)(B), (2)(C), or (2)(D)(iii) of this subsection,
and (ii) loans described in paragraph (2)(E) of this subsection.
‘‘(C) This paragraph applies with respect to a loan closed after
September 30, 1993, and before October 1, 1998.’’.
(c) CONFORMING AMENDMENT.—Paragraph (2) of subsection (a)
of such section is amended by striking out ‘‘paragraph (6)’’ and
inserting in lieu thereof ‘‘paragraphs (4) and (5)’’.
SEC. 12008. POLICY REGARDING COST-OF-LIVING ADJUSTMENT IN
COMPENSATION RATES.
(a) POLICY.—The fiscal year 1994 cost-of-living adjustments
in the rates of and limitations for compensation payable under
chapter 11 of title 38, United States Code, and of dependency
and indemnity compensation payable under chapter 13 of such
title, except as provided in subsection (b) of this section, will be
no more than a percentage equal to the percentage by which benefit
amounts payable under title II of the Social Security Act (42 U.S.C.
401 et seq.) are increased effective December 1, 1993, as a result
of a determination under section 215(i) of such Act (42 U.S.C.
415(i)), with all increased monthly rates and limitations (other
than increased rates or limitations equal to a whole dollar amount)
rounded down to the next lower dollar.
(b) LIMITATION ON FISCAL YEAR 1994 COST-OF-LIVING ADJUST-
MENT FOR CERTAIN DIC RECIPIENTS.—(1) During fiscal year 1994,
the amount of any increase in any of the rates of dependency
and indemnity compensation in effect under section 1311(a)(3) of
title 38, United States Code, will not exceed 50 percent of the
new law increase, rounded down (if not an even dollar amount)
to the next lower dollar.
(2) For purposes of paragraph (1), the new law increase is
the amount by which the rate of dependency and indemnity com-
pensation provided for recipients under section 1311(a)(1) of such
title is increased for fiscal year 1994.
SEC. 12009. LIMITATION REGARDING COST-OF-LIVING ADJUSTMENTS
FOR MONTGOMERY GI BILL BENEFITS.
(a) BENEFITS PAYABLE UNDER CHAPTER 30.—Section 3015(g)
of title 38, United States Code, is amended—
(1) by striking out ‘‘(1)’’ and all that follows through ‘‘(2)’’
and by redesignating subparagraphs (A) and (B) as paragraphs
(1) and (2), respectively; and
(2) in paragraph (2), as redesignated by paragraph (1)
of this subsection, by striking out ‘‘subparagraph (A)’’ and
inserting in lieu thereof ‘‘paragraph (1)’’.
H. R. 2264—105
(b) BENEFITS PAYABLE UNDER SELECTED RESERVE PROGRAM.—
Section 2131(b)(2) of title 10, United States Code, is amended—
(1) by striking out ‘‘(A)’’ the first place it appears and
all that follows through ‘‘(B) With respect to’’ and inserting
in lieu thereof ‘‘With respect to’’;
(2) by redesignating clauses (i) and (ii) as subparagraphs
(A) and (B), respectively; and
(3) in subparagraph (B), as redesignated by paragraph
(2) of this subsection, by striking out ‘‘clause (i)’’ and inserting
in lieu thereof ‘‘subparagraph (A)’’.
(c) LIMITATION.—The fiscal year 1995 cost-of-living adjustments
in the rates of educational assistance payable under chapter 30
of title 38, United States Code, and under chapter 106 of title
10, United States Code, shall be the percentage equal to 50 percent
of the percentage by which such assistance would be increased
under section 3015(g) of title 38, and under section 2131(b)(2)
of title 10, United States Code, respectively, but for this section.
(d) TECHNICAL AMENDMENTS.—(1) Section 301(c) of Public Law
102–568 (106 Stat. 4326) is amended by striking out ‘‘Section
3015(f)’’ and inserting in lieu thereof ‘‘Section 3015(g) (as redesig-
nated by section 307(a)(1))’’.
(2) Section 307(a) of such Public Law (106 Stat. 4328) is
amended by striking out ‘‘(as amended by section 301)’’.
(3) The amendments made by paragraphs (1) and (2) shall
apply as if included in the enactment of Public Law 102–568.
TITLE XIII—REVENUE, HEALTH CARE,
HUMAN RESOURCES, INCOME SECU-
RITY, CUSTOMS AND TRADE, FOOD
STAMP PROGRAM, AND TIMBER SALE
PROVISIONS
CHAPTER 1—REVENUE PROVISIONS
SEC. 13001. SHORT TITLE; ETC.
(a) SHORT TITLE.—This chapter may be cited as the ‘‘Revenue
Reconciliation Act of 1993’’.
(b) AMENDMENT TO 1986 CODE.—Except as otherwise expressly
provided, whenever in this chapter an amendment or repeal is
expressed in terms of an amendment to, or repeal of, a section
or other provision, the reference shall be considered to be made
to a section or other provision of the Internal Revenue Code of
1986.
(c) SECTION 15 NOT TO APPLY.—Except in the case of the
amendments made by section 13221 (relating to corporate rate
increase), no amendment made by this chapter shall be treated
as a change in a rate of tax for purposes of section 15 of the
Internal Revenue Code of 1986.
(d) WAIVER
OF ESTIMATED TAX PENALTIES.—No addition to
tax shall be made under section 6654 or 6655 of the Internal
Revenue Code of 1986 for any period before April 16, 1994 (March
16, 1994, in the case of a corporation), with respect to any
underpayment to the extent such underpayment was created or
increased by any provision of this chapter.
H. R. 2264—106
(e) TABLE OF CONTENTS.—
CHAPTER 1—REVENUE PROVISIONS
Sec. 13001. Short title; etc.
Subchapter A—Training and Investment Incentives
PART I—PROVISIONS RELATING TO EDUCATION AND TRAINING
Sec. 13101. Employer-provided educational assistance.
Sec. 13102. Targeted jobs credit.
PART II—INVESTMENT INCENTIVES
SUBPART A—RESEARCH AND CLINICAL TESTING CREDITS
Sec. 13111. Extension of research and clinical testing credits.
Sec. 13112. Modification of fixed base percentage for startup companies.
SUBPART B—CAPITAL GAIN PROVISIONS
Sec. 13113. 50-percent exclusion for gain from certain small business stock.
Sec. 13114. Rollover of gain from sale of publicly traded securities into specialized
small business investment companies.
SUBPART C—MODIFICATION TO MINIMUM TAX DEPRECIATION RULES
Sec. 13115. Modification to minimum tax depreciation rules.
SUBPART D—INCREASE IN EXPENSE TREATMENT FOR SMALL BUSINESSES
Sec. 13116. Increase in expense treatment for small businesses.
SUBPART E—TAX EXEMPT BONDS
Sec. 13121. High-speed intercity rail facility bonds exempt from State volume cap.
Sec. 13122. Permanent extension of qualified small issue bonds.
PART III—EXPANSION AND SIMPLIFICATION OF EARNED INCOME TAX CREDIT
Sec. 13131. Expansion and simplification of earned income tax credit.
PART IV—INCENTIVES FOR INVESTMENT IN REAL ESTATE
SUBPART A—EXTENSION OF QUALIFIED MORTGAGE BONDS AND LOW-INCOME HOUSING
CREDIT
Sec. 13141. Permanent extension of qualified mortgage bonds.
Sec. 13142. Low-income housing credit.
SUBPART B—PASSIVE LOSS RULES
Sec. 13143. Application of passive loss rules to rental real estate activities.
SUBPART C—PROVISIONS RELATING TO REAL ESTATE INVESTMENTS BY PENSION FUNDS
Sec. 13144. Real estate property acquired by a qualified organization.
Sec. 13145. Repeal of special treatment of publicly treated partnerships.
Sec. 13146. Title-holding companies permitted to receive small amounts of unre-
lated business taxable income.
Sec. 13147. Exclusion from unrelated business tax of gains from certain property.
Sec. 13148. Exclusion from unrelated business tax of certain fees and option pre-
miums.
Sec. 13149. Treatment of pension fund investments in real estate investment
trusts.
SUBPART D—DISCHARGE OF INDEBTEDNESS
Sec. 13150. Exclusion from gross income for income from discharge of qualified real
property business indebtedness.
SUBPART E—INCREASE IN RECOVERY PERIOD FOR NONRESIDENTIAL REAL PROPERTY
Sec. 13151. Increase in recovery period for nonresidential real property.
PART V—LUXURY TAX
Sec. 13161. Repeal of luxury excise taxes other than on passenger vehicles.
Sec. 13162. Exemption from luxury excise tax for certain equipment installed on
passenger vehicles for use by disabled individuals.
Sec. 13163. Tax on diesel fuel used in noncommercial boats.
PART VI—OTHER CHANGES
Sec. 13171. Alternative minimum tax treatment of contributions of appreciated
property.
H. R. 2264—107
Sec. 13172. Substantiation requirement for deduction of certain charitable contribu-
tions.
Sec. 13173. Disclosure related to quid pro quo contributions.
Sec. 13174. Temporary extension of deduction for health insurance costs of self-em-
ployed individuals.
Subchapter B—Revenue Increases
PART I—PROVISIONS AFFECTING INDIVIDUALS
SUBPART A—RATE INCREASES
Sec. 13201. Increase in top marginal rate under section 1.
Sec. 13202. Surtax on high-income taxpayers.
Sec. 13203. Modifications to alternative minimum tax rates and exemption
amounts.
Sec. 13204. Overall limitation on itemized deductions for high-income taxpayers
made permanent.
Sec. 13205. Phaseout of personal exemption of high-income taxpayers made perma-
nent.
Sec. 13206. Provisions to prevent conversion of ordinary income to capital gain.
SUBPART B—OTHER PROVISIONS
Sec. 13207. Repeal of limitation on amount of wages subject to health insurance
employment tax.
Sec. 13208. Top estate and gift tax rates made permanent.
Sec. 13209. Reduction in deductible portion of business meals and entertainment.
Sec. 13210. Elimination of deduction for club membership fees.
Sec. 13211. Disallowance of deduction for certain employee remuneration in excess
of $1,000,000.
Sec. 13212. Reduction in compensation taken into account in determining contribu-
tions and benefits under qualified retirement plans.
Sec. 13213. Modifications to deduction for moving expenses.
Sec. 13214. Simplification of individual estimated tax safe harbor based on last
year’s tax.
Sec. 13215. Social security and tier 1 railroad retirement benefits.
PART II—PROVISIONS AFFECTING BUSINESSES
Sec. 13221. Increase in top marginal rate under section 11.
Sec. 13222. Denial of deduction for lobbying expenses.
Sec. 13223. Mark to market accounting method for securities dealers.
Sec. 13224. Clarification of treatment of certain FSLIC financial assistance.
Sec. 13225. Modification of corporate estimated tax rules.
Sec. 13226. Modifications of discharge of indebtedness provisions.
Sec. 13227. Limitation on section 936 credit.
Sec. 13228. Modification to limitation on deduction for certain interest.
PART III—FOREIGN TAX PROVISIONS
SUBPART A—CURRENT TAXATION OF CERTAIN EARNINGS OF CONTROLLED FOREIGN
CORPORATIONS
Sec. 13231. Earnings invested in excess passive assets.
Sec. 13232. Modification to taxation of investment in United States property.
Sec. 13233. Other modifications to subpart F.
SUBPART B—ALLOCATION OF RESEARCH AND EXPERIMENTAL EXPENDITURES
Sec. 13234. Allocation of research and experimental expenditures.
SUBPART C—OTHER PROVISIONS
Sec. 13235. Repeal of certain exceptions for working capital.
Sec. 13236. Modifications of accuracy-related penalty.
Sec. 13237. Denial of portfolio interest exemption for contingent interest.
Sec. 13238. Regulations dealing with conduit arrangements.
Sec. 13239. Treatment of export of certain softwood logs.
PART IV—TRANSPORTATION FUELS PROVISIONS
SUBPART A—TRANSPORTATION FUELS TAX
Sec. 13241. Transportation fuels tax.
SUBPART B—MODIFICATIONS TO TAX ON DIESEL FUEL
Sec. 13242. Modifications to tax on diesel fuel.
Sec. 13243. Floor stocks tax.
SUBPART C—OTHER PROVISIONS
H. R. 2264—108
Sec. 13244. Increased deposits into Mass Transit Account.
Sec. 13245. Floor stocks tax on aviation fuel held on October 1, 1995.
PART V—COMPLIANCE PROVISIONS
Sec. 13251. Modifications to substantial understatement penalty.
Sec. 13252. Returns relating to the cancellation of indebtedness by certain financial
entities.
PART VI—TREATMENT OF INTANGIBLES
Sec. 13261. Amortization of goodwill and certain other intangibles.
Sec. 13262. Treatment of certain payments to retired or deceased partner.
PART VII—MISCELLANEOUS PROVISIONS
Sec. 13271. Disallowance of interest on certain overpayments of tax.
Sec. 13272. Denial of deduction relating to travel expenses.
Sec. 13273. Increase in withholding from supplemental wage payments.
Subchapter C—Empowerment Zones, Enterprise Communities, Rural Development
Investment Areas, Etc.
PART I—EMPOWERMENT ZONES, ENTERPRISE COMMUNITIES, AND RURAL
DEVELOPMENT INVESTMENT AREAS
Sec. 13301. Designation and treatment of empowerment zones, enterprise commu-
nities, and rural development investment areas.
Sec. 13302. Technical and conforming amendments.
Sec. 13303. Effective date.
PART II—CREDIT FOR CONTRIBUTIONS TO CERTAIN COMMUNITY DEVELOPMENT
CORPORATIONS
Sec. 13311. Credit for contributions to certain community development corpora-
tions.
PART III—INVESTMENT IN INDIAN RESERVATIONS
Sec. 13321. Accelerated depreciation for property on Indian reservations.
Sec. 13322. Indian employment credit.
Subchapter D—Other Provisions
PART I—DISCLOSURE PROVISIONS
Sec. 13401. Disclosure of return information for administration of certain veterans
programs.
Sec. 13402. Disclosure of return information to carry out income contingent repay-
ment of student loans.
Sec. 13403. Use of return information for income verification under certain housing
assistance programs.
PART II—PUBLIC DEBT LIMIT
Sec. 13411. Increase in public debt limit.
PART III—VACCINE PROVISIONS
Sec. 13421. Excise tax on certain vaccines made permanent.
Sec. 13422. Continuation coverage under group health plans of costs of pediatric
vaccines.
PART IV—DISASTER RELIEF PROVISIONS
Sec. 13431. Modification of involuntary conversion rules for certain disaster-related
conversions.
PART V—MISCELLANEOUS PROVISIONS
Sec. 13441. Increase in presidential election campaign check-off.
Sec. 13442 Special rule for hospital services.
Sec. 13443. Credit for portion of employer social security taxes paid with respect
to employee cash tips.
Sec. 13444. Availability and use of death information.
H. R. 2264—109
Subchapter A—Training and Investment Incentives
PART I—PROVISIONS RELATING TO
EDUCATION AND TRAINING
SEC. 13101. EMPLOYER-PROVIDED EDUCATIONAL ASSISTANCE.
(a) EXTENSION OF EXCLUSION.—
(1) IN GENERAL.—Subsection (d) of section 127 (relating
to educational assistance programs) is amended to read as
follows:
‘‘(d) TERMINATION.—This section shall not apply to taxable years
beginning after December 31, 1994.’’
(2) CONFORMING
AMENDMENT.—Paragraph (2) of section
103(a) of the Tax Extension Act of 1991 is hereby repealed.
(b) COORDINATION WITH SECTION 132.—Paragraph (8) of section
132(i) is amended to read as follows:
‘‘(8) APPLICATION OF SECTION TO OTHERWISE TAXABLE EDU-
CATIONAL OR TRAINING BENEFITS.—Amounts paid or expenses
incurred by the employer for education or training provided
to the employee which are not excludable from gross income
under section 127 shall be excluded from gross income under
this section if (and only if) such amounts or expenses are
a working condition fringe.’’
(c) EFFECTIVE DATES.—
(1) SUBSECTION (a).—The amendments made by subsection
(a) shall apply to taxable years ending after June 30, 1992.
(2) SUBSECTION (b).—The amendment made by subsection
(b) shall apply to taxable years beginning after December 31,
1988.
SEC. 13102. TARGETED JOBS CREDIT.
(a) EXTENSION OF CREDIT.—Paragraph (4) of section 51(c) (relat-
ing to termination) is amended by striking ‘‘June 30, 1992’’ and
inserting ‘‘December 31, 1994’’.
(b) EFFECTIVE DATE.—The amendment made by subsection (a)
shall apply to individuals who begin work for the employer after
June 30, 1992.
PART II—INVESTMENT INCENTIVES
Subpart A—Research and Clinical Testing Credits
SEC. 13111. EXTENSION OF RESEARCH AND CLINICAL TESTING CRED-
ITS.
(a) RESEARCH CREDIT.—
(1) IN GENERAL.—Subsection (h) of section 41 (relating to
credit for research activities) is amended—
(A) by striking ‘‘June 30, 1992’’ each place it appears
and inserting ‘‘June 30, 1995’’, and
(B) by striking ‘‘July 1, 1992’’ each place it appears
and inserting ‘‘July 1, 1995’’.
(2) CONFORMING AMENDMENT.—Subparagraph (D) of sec-
tion 28(b)(1) is amended by striking ‘‘June 30, 1992’’ and insert-
ing ‘‘June 30, 1995’’.
(b) CLINICAL TESTING CREDIT.—Subsection (e) of section 28
is amended by striking ‘‘June 30, 1992’’ and inserting ‘‘December
31, 1994’’.
H. R. 2264—110
(c) EFFECTIVE DATE.—The amendments made by this section
shall apply to taxable years ending after June 30, 1992.
SEC. 13112. MODIFICATION 
OF 
FIXED-BASE 
PERCENTAGE 
FOR
STARTUP COMPANIES.
(a) GENERAL RULE.—Clause (ii) of section 41(c)(3)(B) is amended
to read as follows:
‘‘(ii) FIXED-BASE PERCENTAGE.—In a case to which
this subparagraph applies, the fixed-base percentage
is—
‘‘(I) 3 percent for each of the taxpayer’s 1st
5 taxable years beginning after December 31, 1993,
for which the taxpayer has qualified research
expenses,
‘‘(II) in the case of the taxpayer’s 6th such
taxable year, 1⁄6 of the percentage which the aggre-
gate qualified research expenses of the taxpayer
for the 4th and 5th such taxable years is of the
aggregate gross receipts of the taxpayer for such
years,
‘‘(III) in the case of the taxpayer’s 7th such
taxable year, 1⁄3 of the percentage which the aggre-
gate qualified research expenses of the taxpayer
for the 5th and 6th such taxable years is of the
aggregate gross receipts of the taxpayer for such
years,
‘‘(IV) in the case of the taxpayer’s 8th such
taxable year, 1⁄2 of the percentage which the aggre-
gate qualified research expenses of the taxpayer
for the 5th, 6th, and 7th such taxable years is
of the aggregate gross receipts of the taxpayer
for such years,
‘‘(V) in the case of the taxpayer’s 9th such
taxable year, 2⁄3 of the percentage which the aggre-
gate qualified research expenses of the taxpayer
for the 5th, 6th, 7th, and 8th such taxable years
is of the aggregate gross receipts of the taxpayer
for such years,
‘‘(VI) in the case of the taxpayer’s 10th such
taxable year, 5⁄6 of the percentage which the aggre-
gate qualified research expenses of the taxpayer
for the 5th, 6th, 7th, 8th, and 9th such taxable
years is of the aggregate gross receipts of the
taxpayer for such years, and
‘‘(VII) for taxable years thereafter, the percent-
age which the aggregate qualified research
expenses for any 5 taxable years selected by the
taxpayer from among the 5th through the 10th
such taxable years is of the aggregate gross
receipts of the taxpayer for such selected years.’’.
(b) CONFORMING AMENDMENTS.—
(1) Clause (iii) of section 41(c)(3)(B) is amended by striking
‘‘clause (i)’’ and inserting ‘‘clauses (i) and (ii)’’.
(2) Subparagraph (D) of section 41(c)(3) is amended by
striking ‘‘subparagraph (A)’’ and inserting ‘‘subparagraphs (A)
and (B)(ii)’’.
H. R. 2264—111
(c) EFFECTIVE DATE.—The amendments made by this section
shall apply to taxable years beginning after December 31, 1993.
Subpart B—Capital Gain Provisions
SEC. 13113. 50-PERCENT EXCLUSION FOR GAIN FROM CERTAIN SMALL
BUSINESS STOCK.
(a) GENERAL RULE.—Part I of subchapter P of chapter 1 (relat-
ing to capital gains and losses) is amended by adding at the end
thereof the following new section:
‘‘SEC. 1202. 50-PERCENT EXCLUSION FOR GAIN FROM CERTAIN SMALL
BUSINESS STOCK.
‘‘(a) 50-PERCENT EXCLUSION.—In the case of a taxpayer other
than a corporation, gross income shall not include 50 percent of
any gain from the sale or exchange of qualified small business
stock held for more than 5 years.
‘‘(b) PER-ISSUER LIMITATION ON TAXPAYER’S ELIGIBLE GAIN.—
‘‘(1) IN
GENERAL.—If the taxpayer has eligible gain for
the taxable year from 1 or more dispositions of stock issued
by any corporation, the aggregate amount of such gain from
dispositions of stock issued by such corporation which may
be taken into account under subsection (a) for the taxable
year shall not exceed the greater of—
‘‘(A) $10,000,000 reduced by the aggregate amount of
eligible gain taken into account by the taxpayer under
subsection (a) for prior taxable years and attributable to
dispositions of stock issued by such corporation, or
‘‘(B) 10 times the aggregate adjusted bases of qualified
small business stock issued by such corporation and dis-
posed of by the taxpayer during the taxable year.
For purposes of subparagraph (B), the adjusted basis of any
stock shall be determined without regard to any addition to
basis after the date on which such stock was originally issued.
‘‘(2) ELIGIBLE GAIN.—For purposes of this subsection, the
term ‘eligible gain’ means any gain from the sale or exchange
of qualified small business stock held for more than 5 years.
‘‘(3) TREATMENT OF MARRIED INDIVIDUALS.—
‘‘(A) SEPARATE RETURNS.—In the case of a separate
return by a married individual, paragraph (1)(A) shall be
applied by substituting ‘$5,000,000’ for ‘$10,000,000’.
‘‘(B) ALLOCATION OF EXCLUSION.—In the case of any
joint return, the amount of gain taken into account under
subsection (a) shall be allocated equally between the
spouses for purposes of applying this subsection to subse-
quent taxable years.
‘‘(C) MARITAL STATUS.—For purposes of this subsection,
marital status shall be determined under section 7703.
‘‘(c) QUALIFIED SMALL BUSINESS STOCK.—For purposes of this
section—
‘‘(1) IN GENERAL.—Except as otherwise provided in this
section, the term ‘qualified small business stock’ means any
stock in a C corporation which is originally issued after the
date of the enactment of the Revenue Reconciliation Act of
1993, if—
‘‘(A) as of the date of issuance, such corporation is
a qualified small business, and
H. R. 2264—112
‘‘(B) except as provided in subsections (f) and (h), such
stock is acquired by the taxpayer at its original issue
(directly or through an underwriter)—
‘‘(i) in exchange for money or other property (not
including stock), or
‘‘(ii) as compensation for services provided to such
corporation (other than services performed as an
underwriter of such stock).
‘‘(2) ACTIVE BUSINESS REQUIREMENT; ETC.—
‘‘(A) IN
GENERAL.—Stock in a corporation shall not
be treated as qualified small business stock unless, during
substantially all of the taxpayer’s holding period for such
stock, such corporation meets the active business require-
ments of subsection (e) and such corporation is a C corpora-
tion.
‘‘(B) SPECIAL
RULE
FOR
CERTAIN
SMALL
BUSINESS
INVESTMENT COMPANIES.—
‘‘(i) WAIVER OF ACTIVE BUSINESS REQUIREMENT.—
Notwithstanding any provision of subsection (e), a cor-
poration shall be treated as meeting the active business
requirements of such subsection for any period during
which such corporation qualifies as a specialized small
business investment company.
‘‘(ii) SPECIALIZED
SMALL
BUSINESS
INVESTMENT
COMPANY.—For purposes of clause (i), the term ‘special-
ized small business investment company’ means any
eligible corporation (as defined in subsection (e)(4))
which is licensed to operate under section 301(d) of
the Small Business Investment Act of 1958 (as in
effect on May 13, 1993).
‘‘(3) CERTAIN
PURCHASES
BY
CORPORATION
OF
ITS
OWN
STOCK.—
‘‘(A) REDEMPTIONS FROM TAXPAYER OR RELATED PER-
SON.—Stock acquired by the taxpayer shall not be treated
as qualified small business stock if, at any time during
the 4-year period beginning on the date 2 years before
the issuance of such stock, the corporation issuing such
stock purchased (directly or indirectly) any of its stock
from the taxpayer or from a person related (within the
meaning of section 267(b) or 707(b)) to the taxpayer.
‘‘(B) SIGNIFICANT REDEMPTIONS.—Stock issued by a cor-
poration shall not be treated as qualified business stock
if, during the 2-year period beginning on the date 1 year
before the issuance of such stock, such corporation made
1 or more purchases of its stock with an aggregate value
(as of the time of the respective purchases) exceeding 5
percent of the aggregate value of all of its stock as of
the beginning of such 2-year period.
‘‘(C) TREATMENT
OF
CERTAIN
TRANSACTIONS.—If any
transaction is treated under section 304(a) as a distribution
in redemption of the stock of any corporation, for purposes
of subparagraphs (A) and (B), such corporation shall be
treated as purchasing an amount of its stock equal to
the amount treated as such a distribution under section
304(a).
‘‘(d) QUALIFIED
SMALL
BUSINESS.—For purposes of this
section—
H. R. 2264—113
‘‘(1) IN
GENERAL.—The term ‘qualified small business’
means any domestic corporation which is a C corporation if—
‘‘(A) the aggregate gross assets of such corporation
(or any predecessor thereof) at all times on or after the
date of the enactment of the Revenue Reconciliation Act
of 1993 and before the issuance did not exceed $50,000,000,
‘‘(B) the aggregate gross assets of such corporation
immediately after the issuance (determined by taking into
account amounts received in the issuance) do not exceed
$50,000,000, and
‘‘(C) such corporation agrees to submit such reports
to the Secretary and to shareholders as the Secretary may
require to carry out the purposes of this section.
‘‘(2) AGGREGATE GROSS ASSETS.—
‘‘(A) IN GENERAL.—For purposes of paragraph (1), the
term ‘aggregate gross assets’ means the amount of cash
and the aggregate adjusted bases of other property held
by the corporation.
‘‘(B) TREATMENT OF CONTRIBUTED PROPERTY.—For pur-
poses of subparagraph (A), the adjusted basis of any prop-
erty contributed to the corporation (or other property with
a basis determined in whole or in part by reference to
the adjusted basis of property so contributed) shall be
determined as if the basis of the property contributed to
the corporation (immediately after such contribution) were
equal to its fair market value as of the time of such con-
tribution.
‘‘(3) AGGREGATION RULES.—
‘‘(A) IN GENERAL.—All corporations which are members
of the same parent-subsidiary controlled group shall be
treated as 1 corporation for purposes of this subsection.
‘‘(B) PARENT-SUBSIDIARY CONTROLLED GROUP.—For pur-
poses of subparagraph (A), the term ‘parent-subsidiary con-
trolled group’ means any controlled group of corporations
as defined in section 1563(a)(1), except that—
‘‘(i) ‘more than 50 percent’ shall be substituted
for ‘at least 80 percent’ each place it appears in section
1563(a)(1), and
‘‘(ii) section 1563(a)(4) shall not apply.
‘‘(e) ACTIVE BUSINESS REQUIREMENT.—
‘‘(1) IN GENERAL.—For purposes of subsection (c)(2), the
requirements of this subsection are met by a corporation for
any period if during such period—
‘‘(A) at least 80 percent (by value) of the assets of
such corporation are used by such corporation in the active
conduct of 1 or more qualified trades or businesses, and
‘‘(B) such corporation is an eligible corporation.
‘‘(2) SPECIAL RULE FOR CERTAIN ACTIVITIES.—For purposes
of paragraph (1), if, in connection with any future qualified
trade or business, a corporation is engaged in—
‘‘(A) start-up activities described in section 195(c)(1)(A),
‘‘(B) activities resulting in the payment or incurring
of expenditures which may be treated as research and
experimental expenditures under section 174, or
‘‘(C) activities with respect to in-house research
expenses described in section 41(b)(4),
H. R. 2264—114
assets used in such activities shall be treated as used in the
active conduct of a qualified trade or business. Any determina-
tion under this paragraph shall be made without regard to
whether a corporation has any gross income from such activities
at the time of the determination.
‘‘(3) QUALIFIED TRADE OR BUSINESS.—For purposes of this
subsection, the term ‘qualified trade or business’ means any
trade or business other than—
‘‘(A) any trade or business involving the performance
of services in the fields of health, law, engineering, architec-
ture, accounting, actuarial science, performing arts,
consulting, athletics, financial services, brokerage services,
or any trade or business where the principal asset of such
trade or business is the reputation or skill of 1 or more
of its employees,
‘‘(B) any banking, insurance, financing, leasing, invest-
ing, or similar business,
‘‘(C) any farming business (including the business of
raising or harvesting trees),
‘‘(D) any business involving the production or extrac-
tion of products of a character with respect to which a
deduction is allowable under section 613 or 613A, and
‘‘(E) any business of operating a hotel, motel, res-
taurant, or similar business.
‘‘(4) ELIGIBLE
CORPORATION.—For purposes of this sub-
section, the term ‘eligible corporation’ means any domestic cor-
poration; except that such term shall not include—
‘‘(A) a DISC or former DISC,
‘‘(B) a corporation with respect to which an election
under section 936 is in effect or which has a direct or
indirect subsidiary with respect to which such an election
is in effect,
‘‘(C) a regulated investment company, real estate
investment trust, or REMIC, and
‘‘(D) a cooperative.
‘‘(5) STOCK IN OTHER CORPORATIONS.—
‘‘(A) LOOK-THRU IN CASE OF SUBSIDIARIES.—For pur-
poses of this subsection, stock and debt in any subsidiary
corporation shall be disregarded and the parent corporation
shall be deemed to own its ratable share of the subsidiary’s
assets, and to conduct its ratable share of the subsidiary’s
activities.
‘‘(B) PORTFOLIO STOCK OR SECURITIES.—A corporation
shall be treated as failing to meet the requirements of
paragraph (1) for any period during which more than 10
percent of the value of its assets (in excess of liabilities)
consists of stock or securities in other corporations which
are not subsidiaries of such corporation (other than assets
described in paragraph (6)).
‘‘(C) SUBSIDIARY.—For purposes of this paragraph, a
corporation shall be considered a subsidiary if the parent
owns more than 50 percent of the combined voting power
of all classes of stock entitled to vote, or more than 50
percent in value of all outstanding stock, of such corpora-
tion.
‘‘(6) WORKING CAPITAL.—For purposes of paragraph (1)(A),
any assets which—
H. R. 2264—115
‘‘(A) are held as a part of the reasonably required
working capital needs of a qualified trade or business of
the corporation, or
‘‘(B) are held for investment and are reasonably
expected to be used within 2 years to finance research
and experimentation in a qualified trade or business or
increases in working capital needs of a qualified trade
or business,
shall be treated as used in the active conduct of a qualified
trade or business. For periods after the corporation has been
in existence for at least 2 years, in no event may more than
50 percent of the assets of the corporation qualify as used
in the active conduct of a qualified trade or business by reason
of this paragraph.
‘‘(7) MAXIMUM REAL ESTATE HOLDINGS.—A corporation shall
not be treated as meeting the requirements of paragraph (1)
for any period during which more than 10 percent of the total
value of its assets consists of real property which is not used
in the active conduct of a qualified trade or business. For
purposes of the preceding sentence, the ownership of, dealing
in, or renting of real property shall not be treated as the
active conduct of a qualified trade or business.
‘‘(8) COMPUTER
SOFTWARE
ROYALTIES.—For purposes of
paragraph (1), rights to computer software which produces
active business computer software royalties (within the mean-
ing of section 543(d)(1)) shall be treated as an asset used
in the active conduct of a trade or business.
‘‘(f) STOCK ACQUIRED ON CONVERSION OF OTHER STOCK.—If
any stock in a corporation is acquired solely through the conversion
of other stock in such corporation which is qualified small business
stock in the hands of the taxpayer—
‘‘(1) the stock so acquired shall be treated as qualified
small business stock in the hands of the taxpayer, and
‘‘(2) the stock so acquired shall be treated as having been
held during the period during which the converted stock was
held.
‘‘(g) TREATMENT OF PASS-THRU ENTITIES.—
‘‘(1) IN GENERAL.—If any amount included in gross income
by reason of holding an interest in a pass-thru entity meets
the requirements of paragraph (2)—
‘‘(A) such amount shall be treated as gain described
in subsection (a), and
‘‘(B) for purposes of applying subsection (b), such
amount shall be treated as gain from a disposition of stock
in the corporation issuing the stock disposed of by the
pass-thru entity and the taxpayer’s proportionate share
of the adjusted basis of the pass-thru entity in such stock
shall be taken into account.
‘‘(2) REQUIREMENTS.—An amount meets the requirements
of this paragraph if—
‘‘(A) such amount is attributable to gain on the sale
or exchange by the pass-thru entity of stock which is quali-
fied small business stock in the hands of such entity (deter-
mined by treating such entity as an individual) and which
was held by such entity for more than 5 years, and
‘‘(B) such amount is includible in the gross income
of the taxpayer by reason of the holding of an interest
H. R. 2264—116
in such entity which was held by the taxpayer on the
date on which such pass-thru entity acquired such stock
and at all times thereafter before the disposition of such
stock by such pass-thru entity.
‘‘(3) LIMITATION BASED ON INTEREST ORIGINALLY HELD BY
TAXPAYER.—Paragraph (1) shall not apply to any amount to
the extent such amount exceeds the amount to which paragraph
(1) would have applied if such amount were determined by
reference to the interest the taxpayer held in the pass-thru
entity on the date the qualified small business stock was
acquired.
‘‘(4) PASS-THRU ENTITY.—For purposes of this subsection,
the term ‘pass-thru entity’ means—
‘‘(A) any partnership,
‘‘(B) any S corporation,
‘‘(C) any regulated investment company, and
‘‘(D) any common trust fund.
‘‘(h) CERTAIN TAX-FREE AND OTHER TRANSFERS.—For purposes
of this section—
‘‘(1) IN GENERAL.—In the case of a transfer described in
paragraph (2), the transferee shall be treated as—
‘‘(A) having acquired such stock in the same manner
as the transferor, and
‘‘(B) having held such stock during any continuous
period immediately preceding the transfer during which
it was held (or treated as held under this subsection) by
the transferor.
‘‘(2) DESCRIPTION OF TRANSFERS.—A transfer is described
in this subsection if such transfer is—
‘‘(A) by gift,
‘‘(B) at death, or
‘‘(C) from a partnership to a partner of stock with
respect to which requirements similar to the requirements
of subsection (g) are met at the time of the transfer (without
regard to the 5-year holding period requirement).
‘‘(3) CERTAIN RULES MADE APPLICABLE.—Rules similar to
the rules of section 1244(d)(2) shall apply for purposes of this
section.
‘‘(4) INCORPORATIONS
AND
REORGANIZATIONS
INVOLVING
NONQUALIFIED STOCK.—
‘‘(A) IN
GENERAL.—In the case of a transaction
described in section 351 or a reorganization described in
section 368, if qualified small business stock is exchanged
for other stock which would not qualify as qualified small
business stock but for this subparagraph, such other stock
shall be treated as qualified small business stock acquired
on the date on which the exchanged stock was acquired.
‘‘(B) LIMITATION.—This section shall apply to gain from
the sale or exchange of stock treated as qualified small
business stock by reason of subparagraph (A) only to the
extent of the gain which would have been recognized at
the time of the transfer described in subparagraph (A)
if section 351 or 368 had not applied at such time. The
preceding sentence shall not apply if the stock which is
treated as qualified small business stock by reason of
subparagraph (A) is issued by a corporation which (as
H. R. 2264—117
of the time of the transfer described in subparagraph (A))
is a qualified small business.
‘‘(C) SUCCESSIVE APPLICATION.—For purposes of this
paragraph, stock treated as qualified small business stock
under subparagraph (A) shall be so treated for subsequent
transactions or reorganizations, except that the limitation
of subparagraph (B) shall be applied as of the time of
the first transfer to which such limitation applied (deter-
mined after the application of the second sentence of
subparagraph (B)).
‘‘(D) CONTROL
TEST.—In the case of a transaction
described in section 351, this paragraph shall apply only
if, immediately after the transaction, the corporation issu-
ing the stock owns directly or indirectly stock representing
control (within the meaning of section 368(c)) of the cor-
poration whose stock was exchanged.
‘‘(i) BASIS RULES.—For purposes of this section—
‘‘(1) STOCK EXCHANGED FOR PROPERTY.—In the case where
the taxpayer transfers property (other than money or stock)
to a corporation in exchange for stock in such corporation—
‘‘(A) such stock shall be treated as having been acquired
by the taxpayer on the date of such exchange, and
‘‘(B) the basis of such stock in the hands of the taxpayer
shall in no event be less than the fair market value of
the property exchanged.
‘‘(2) TREATMENT
OF
CONTRIBUTIONS
TO
CAPITAL.—If the
adjusted basis of any qualified small business stock is adjusted
by reason of any contribution to capital after the date on
which such stock was originally issued, in determining the
amount of the adjustment by reason of such contribution, the
basis of the contributed property shall in no event be treated
as less than its fair market value on the date of the contribu-
tion.
‘‘(j) TREATMENT OF CERTAIN SHORT POSITIONS.—
‘‘(1) IN GENERAL.—If the taxpayer has an offsetting short
position with respect to any qualified small business stock,
subsection (a) shall not apply to any gain from the sale or
exchange of such stock unless—
‘‘(A) such stock was held by the taxpayer for more
than 5 years as of the first day on which there was such
a short position, and
‘‘(B) the taxpayer elects to recognize gain as if such
stock were sold on such first day for its fair market value.
‘‘(2) OFFSETTING SHORT POSITION.—For purposes of para-
graph (1), the taxpayer shall be treated as having an offsetting
short position with respect to any qualified small business
stock if—
‘‘(A) the taxpayer has made a short sale of substantially
identical property,
‘‘(B) the taxpayer has acquired an option to sell
substantially identical property at a fixed price, or
‘‘(C) to the extent provided in regulations, the taxpayer
has entered into any other transaction which substantially
reduces the risk of loss from holding such qualified small
business stock.
For purposes of the preceding sentence, any reference to the
taxpayer shall be treated as including a reference to any person
H. R. 2264—118
who is related (within the meaning of section 267(b) or 707(b))
to the taxpayer.
‘‘(k) REGULATIONS.—The Secretary shall prescribe such regula-
tions as may be appropriate to carry out the purposes of this
section, including regulations to prevent the avoidance of the pur-
poses of this section through split-ups, shell corporations, partner-
ships, or otherwise.’’
(b) ONE-HALF
OF EXCLUSION TREATED
AS PREFERENCE
FOR
MINIMUM TAX.—
(1) IN GENERAL.—Subsection (a) of section 57 (relating to
items of tax preference) is amended by adding at the end
thereof the following new paragraph:
‘‘(8) EXCLUSION
FOR
GAINS
ON
SALE
OF
CERTAIN
SMALL
BUSINESS STOCK.—An amount equal to one-half of the amount
excluded from gross income for the taxable year under section
1202.’’
(2) CONFORMING
AMENDMENT.—Subclause (II) of section
53(d)(1)(B)(ii) is amended by striking ‘‘and (6)’’ and inserting
‘‘(6), and (8)’’.
(c) PENALTY
FOR
FAILURE
TO
COMPLY
WITH
REPORTING
REQUIREMENTS.—Section 6652 is amended by inserting before the
last subsection thereof the following new subsection:
‘‘(k) FAILURE TO MAKE REPORTS REQUIRED UNDER SECTION
1202.—In the case of a failure to make a report required under
section 1202(d)(1)(C) which contains the information required by
such section on the date prescribed therefor (determined with regard
to any extension of time for filing), there shall be paid (on notice
and demand by the Secretary and in the same manner as tax)
by the person failing to make such report, an amount equal to
$50 for each report with respect to which there was such a failure.
In the case of any failure due to negligence or intentional disregard,
the preceding sentence shall be applied by substituting ‘$100’ for
‘$50’. In the case of a report covering periods in 2 or more years,
the penalty determined under preceding provisions of this sub-
section shall be multiplied by the number of such years.’’
(d) CONFORMING AMENDMENTS.—
(1)(A) Section 172(d)(2) (relating to modifications with
respect to net operating loss deduction) is amended to read
as follows:
‘‘(2) CAPITAL GAINS AND LOSSES OF TAXPAYERS OTHER THAN
CORPORATIONS.—In the case of a taxpayer other than a
corporation—
‘‘(A) the amount deductible on account of losses from
sales or exchanges of capital assets shall not exceed the
amount includable on account of gains from sales or
exchanges of capital assets; and
‘‘(B) the exclusion provided by section 1202 shall not
be allowed.’’
(B) Subparagraph (B) of section 172(d)(4) is amended by
inserting ‘‘, (2)(B),’’ after ‘‘paragraph (1)’’.
(2) Paragraph (4) of section 642(c) is amended to read
as follows:
‘‘(4) ADJUSTMENTS.—To the extent that the amount other-
wise allowable as a deduction under this subsection consists
of gain described in section 1202(a), proper adjustment shall
be made for any exclusion allowable to the estate or trust
under section 1202. In the case of a trust, the deduction allowed
H. R. 2264—119
by this subsection shall be subject to section 681 (relating
to unrelated business income).’’
(3) Paragraph (3) of section 643(a) is amended by adding
at the end thereof the following new sentence: ‘‘The exclusion
under section 1202 shall not be taken into account.’’.
(4) Paragraph (4) of section 691(c) is amended by striking
‘‘1201, and 1211’’ and inserting ‘‘1201, 1202, and 1211’’.
(5) The second sentence of paragraph (2) of section 871(a)
is amended by inserting ‘‘such gains and losses shall be deter-
mined without regard to section 1202 and’’ after ‘‘except that’’.
(6) The table of sections for part I of subchapter P of
chapter 1 is amended by adding after the item relating to
section 1201 the following new item:
‘‘Sec. 1202. 50-percent exclusion for gain from certain small business stock.’’
(e) EFFECTIVE DATE.—The amendments made by this section
shall apply to stock issued after the date of the enactment of
this Act.
SEC. 13114. ROLLOVER OF GAIN FROM SALE OF PUBLICLY TRADED
SECURITIES 
INTO 
SPECIALIZED 
SMALL 
BUSINESS
INVESTMENT COMPANIES.
(a) IN GENERAL.—Part III of subchapter O of chapter 1 (relating
to common nontaxable exchanges) is amended by adding at the
end the following new section:
‘‘SEC. 1044. ROLLOVER OF PUBLICLY TRADED SECURITIES GAIN INTO
SPECIALIZED SMALL BUSINESS INVESTMENT COMPA-
NIES.
‘‘(a) NONRECOGNITION
OF GAIN.—In the case of the sale of
any publicly traded securities with respect to which the taxpayer
elects the application of this section, gain from such sale shall
be recognized only to the extent that the amount realized on such
sale exceeds—
‘‘(1) the cost of any common stock or partnership interest
in a specialized small business investment company purchased
by the taxpayer during the 60-day period beginning on the
date of such sale, reduced by
‘‘(2) any portion of such cost previously taken into account
under this section.
This section shall not apply to any gain which is treated as ordinary
income for purposes of this subtitle.
‘‘(b) LIMITATIONS.—
‘‘(1) LIMITATION ON INDIVIDUALS.—In the case of an individ-
ual, the amount of gain which may be excluded under sub-
section (a) for any taxable year shall not exceed the lesser
of—
‘‘(A) $50,000, or
‘‘(B) $500,000, reduced by the amount of gain excluded
under subsection (a) for all preceding taxable years.
‘‘(2) LIMITATION
ON
C
CORPORATIONS.—In the case of a
C corporation, the amount of gain which may be excluded
under subsection (a) for any taxable year shall not exceed
the lesser of—
‘‘(A) $250,000, or
‘‘(B) $1,000,000, reduced by the amount of gain
excluded under subsection (a) for all preceding taxable
years.
H. R. 2264—120
‘‘(3) SPECIAL RULES FOR MARRIED INDIVIDUALS.—For pur-
poses of this subsection—
‘‘(A) SEPARATE RETURNS.—In the case of a separate
return by a married individual, paragraph (1) shall be
applied by substituting ‘$25,000’ for ‘$50,000’ and ‘$250,000’
for ‘$500,000’.
‘‘(B) ALLOCATION OF GAIN.—In the case of any joint
return, the amount of gain excluded under subsection (a)
for any taxable year shall be allocated equally between
the spouses for purposes of applying this subsection to
subsequent taxable years.
‘‘(C) MARITAL STATUS.—For purposes of this subsection,
marital status shall be determined under section 7703.
‘‘(4) SPECIAL RULES FOR C CORPORATION.—For purposes of
this subsection—
‘‘(A) all corporations which are members of the same
controlled group of corporations (within the meaning of
section 52(a)) shall be treated as 1 taxpayer, and
‘‘(B) any gain excluded under subsection (a) by a prede-
cessor of any C corporation shall be treated as having
been excluded by such C corporation.
‘‘(c) DEFINITIONS AND SPECIAL RULES.—For purposes of this
section—
‘‘(1) PUBLICLY
TRADED
SECURITIES.—The term ‘publicly
traded securities’ means securities which are traded on an
established securities market.
‘‘(2) PURCHASE.—The term ‘purchase’ has the meaning
given such term by section 1043(b)(4).
‘‘(3) SPECIALIZED SMALL BUSINESS INVESTMENT COMPANY.—
The term ‘specialized small business investment company’
means any partnership or corporation which is licensed by
the Small Business Administration under section 301(d) of the
Small Business Investment Act of 1958 (as in effect on May
13, 1993).
‘‘(4) CERTAIN ENTITIES NOT ELIGIBLE.—This section shall
not apply to any estate, trust, partnership, or S corporation.
‘‘(d) BASIS ADJUSTMENTS.—If gain from any sale is not recog-
nized by reason of subsection (a), such gain shall be applied to
reduce (in the order acquired) the basis for determining gain or
loss of any common stock or partnership interest in any specialized
small business investment company which is purchased by the
taxpayer during the 60-day period described in subsection (a). This
subsection shall not apply for purposes of section 1202.’’
(b) CONFORMING
AMENDMENT.—Paragraph (24) of section
1016(a) is amended—
(1) by striking ‘‘section 1043’’ and inserting ‘‘section 1043
or 1044’’, and
(2) by striking ‘‘section 1043(c)’’ and inserting ‘‘section
1043(c) or 1044(d), as the case may be’’.
(c) CLERICAL AMENDMENT.—The table of sections for part III
of subchapter O of chapter 1 is amended by adding at the end
the following new item:
‘‘Sec. 1044. Rollover of publicly traded securities gain into specialized small
business investment companies.’’
(d) EFFECTIVE DATE.—The amendments made by this section
shall apply to sales on and after the date of the enactment of
this Act, in taxable years ending on and after such date.
H. R. 2264—121
Subpart C—Modification to Minimum Tax
Depreciation Rules
SEC. 13115. MODIFICATION TO MINIMUM TAX DEPRECIATION RULES.
(a) ELIMINATION OF ACE DEPRECIATION ADJUSTMENT.—Clause
(i) of section 56(g)(4)(A) (relating to depreciation adjustments for
computing adjusted current earnings) is amended by adding at
the end thereof the following new sentence: ‘‘The preceding sentence
shall not apply to any property placed in service after December
31, 1993, and the depreciation deduction with respect to such prop-
erty shall be determined under the rules of subsection (a)(1)(A).’’.
(b) EFFECTIVE DATES.—
(1) IN GENERAL.—Except as provided in paragraph (2), the
amendments made by this section shall apply to property placed
in service after December 31, 1993.
(2) COORDINATION WITH TRANSITIONAL RULES.—The amend-
ments made by this section shall not apply to any property
to which paragraph (1) of section 56(a) of the Internal Revenue
Code of 1986 does not apply by reason of subparagraph (C)(i)
thereof.
Subpart D—Increase in Expense Treatment for
Small Businesses
SEC. 13116. INCREASE 
IN 
EXPENSE 
TREATMENT 
FOR 
SMALL
BUSINESSES.
(a) GENERAL RULE.—Paragraph (1) of section 179(b) (relating
to dollar limitation) is amended by striking ‘‘$10,000’’ and inserting
‘‘$17,500’’.
(b) EFFECTIVE DATE.—The amendment made by subsection (a)
shall apply to taxable years beginning after December 31, 1992.
Subpart E—Tax Exempt Bonds
SEC. 13121. HIGH-SPEED INTERCITY RAIL FACILITY BONDS EXEMPT
FROM STATE VOLUME CAP.
(a) IN GENERAL.—Paragraph (4) of section 146(g) (relating to
exemption for certain bonds) is amended by adding at the end
thereof the following flush sentence:
‘‘Paragraph (4) shall be applied without regard to ‘75 percent of’
if all of the property to be financed by the net proceeds of the
issue is to be owned by a governmental unit (within the meaning
of section 142(b)(1)).’’
(b) EFFECTIVE DATE.—The amendment made by subsection (a)
shall apply to bonds issued after December 31, 1993.
SEC. 13122. PERMANENT EXTENSION OF QUALIFIED SMALL ISSUE
BONDS.
(a) IN GENERAL.—Subparagraph (B) of section 144(a)(12) is
amended to read as follows:
‘‘(B) BONDS ISSUED TO FINANCE MANUFACTURING FACILI-
TIES
AND
FARM
PROPERTY.—Subparagraph (A) shall not
apply to any bond issued as part of an issue 95 percent
or more of the net proceeds of which are to be used to
provide—
‘‘(i) any manufacturing facility, or
H. R. 2264—122
‘‘(ii) any land or property in accordance with sec-
tion 147(c)(2).’’
(b) EFFECTIVE DATE.—The amendment made by subsection (a)
shall apply to bonds issued after June 30, 1992.
(c) TREATMENT UNDER INDUCEMENT REGULATIONS.—If the 1-
year period specified in Treasury Regulation § 1.103–8(a)(5) (as
in effect before July 1, 1993) or any successor regulation would
(but for this subsection) expire after June 30, 1992, and before
January 1, 1994, such period shall not expire before January 1,
1994.
PART III—EXPANSION AND SIMPLIFICATION
OF EARNED INCOME TAX CREDIT
SEC. 13131. EXPANSION AND SIMPLIFICATION OF EARNED INCOME
TAX CREDIT.
(a) GENERAL RULE.—Section 32 (relating to earned income
credit) is amended by striking subsections (a) and (b) and inserting
the following:
‘‘(a) ALLOWANCE OF CREDIT.—
‘‘(1) IN GENERAL.—In the case of an eligible individual,
there shall be allowed as a credit against the tax imposed
by this subtitle for the taxable year an amount equal to the
credit percentage of so much of the taxpayer’s earned income
for the taxable year as does not exceed the earned income
amount.
‘‘(2) LIMITATION.—The amount of the credit allowable to
a taxpayer under paragraph (1) for any taxable year shall
not exceed the excess (if any) of—
‘‘(A) the credit percentage of the earned income
amount, over
‘‘(B) the phaseout percentage of so much of the adjusted
gross income (or, if greater, the earned income) of the
taxpayer for the taxable year as exceeds the phaseout
amount.
‘‘(b) PERCENTAGES AND AMOUNTS.—For purposes of subsection
(a)—
‘‘(1) PERCENTAGES.—The credit percentage and the phase-
out percentage shall be determined as follows:
‘‘(A) IN GENERAL.—In the case of taxable years begin-
ning after 1995:
In the case of an eligible
individual with:
The credit percentage is:
The phaseout percentage
is:
1 qualifying child ........
34 ......................................
15.98
2 or more qualifying
children ....................
40 ......................................
21.06
No qualifying children
7.65 .................................
7.65
‘‘(B) TRANSITIONAL PERCENTAGES FOR 1995.—In the case
of taxable years beginning in 1995:
In the case of an eligible
individual with:
The credit percentage is:
The phaseout percentage
is:
1 qualifying child ........
34 ......................................
15.98
2 or more qualifying
children ....................
36 ......................................
20.22
No qualifying children
7.65 .................................
7.65
H. R. 2264—123
‘‘(C) TRANSITIONAL PERCENTAGES FOR 1994.—In the case
of a taxable year beginning in 1994:
In the case of an eligible
individual with:
The credit percentage is:
The phaseout percentage
is:
1 qualifying child ........
26.3 ...................................
15.98
2 or more qualifying
children ....................
30 ......................................
17.68
No qualifying children
7.65 .................................
7.65
‘‘(2) AMOUNTS.—The earned income amount and the phase-
out amount shall be determined as follows:
‘‘(A) IN GENERAL.—In the case of taxable years begin-
ning after 1994:
In the case of an eligible
individual with:
The earned income
amount is:
The phaseout amount is:
1 qualifying child ........
$6,000 ...............................
$11,000
2 or more qualifying
children ....................
$8,425 ...............................
$11,000
No qualifying children
$4,000 ...............................
$5,000
‘‘(B) TRANSITIONAL AMOUNTS.—In the case of a taxable
year beginning in 1994:
In the case of an eligible
individual with:
The earned income
amount is:
The phaseout amount is:
1 qualifying child ........
$7,750 ...............................
$11,000
2 or more qualifying
children ....................
$8,425 ...............................
$11,000
No qualifying children
$4,000 ...............................
$5,000’’.
(b) ELIGIBLE INDIVIDUAL.—Subparagraph (A) of section 32(c)(1)
(defining eligible individual) is amended to read as follows:
‘‘(A) IN
GENERAL.—The term ‘eligible individual’
means—
‘‘(i) any individual who has a qualifying child for
the taxable year, or
‘‘(ii) any other individual who does not have a
qualifying child for the taxable year, if—
‘‘(I) such individual’s principal place of abode
is in the United States for more than one-half
of such taxable year,
‘‘(II) such individual (or, if the individual is
married, either the individual or the individual’s
spouse) has attained age 25 but not attained age
65 before the close of the taxable year, and
‘‘(III) such individual is not a dependent for
whom a deduction is allowable under section 151
to another taxpayer for any taxable year beginning
in the same calendar year as such taxable year.
For purposes of the preceding sentence, marital status
shall be determined under section 7703.’’
(c) INFLATION ADJUSTMENTS.—Section 32(i) (relating to inflation
adjustments) is amended—
(1) by striking paragraphs (1) and (2) and inserting the
following new paragraph:
H. R. 2264—124
‘‘(1) IN GENERAL.—In the case of any taxable year beginning
after 1994, each dollar amount contained in subsection (b)(2)(A)
shall be increased by an amount equal to—
‘‘(A) such dollar amount, multiplied by
‘‘(B) the cost-of-living adjustment determined under
section 1(f)(3), for the calendar year in which the taxable
year begins, by substituting ‘calendar year 1993’ for ‘cal-
endar year 1992’.’’, and
(2) by redesignating paragraph (3) as paragraph (2).
(d) CONFORMING AMENDMENTS.—
(1) Subparagraph (D) of section 32(c)(3) is amended—
(A) by striking ‘‘clause (i) or (ii)’’ in clause (iii) and
inserting ‘‘clause (i)’’,
(B) by striking clause (ii), and
(C) by redesignating clause (iii) as clause (ii).
(2) Paragraph (3) of section 162(l) is amended to read
as follows:
‘‘(3) 
COORDINATION
WITH
MEDICAL
DEDUCTION.—Any
amount paid by a taxpayer for insurance to which paragraph
(1) applies shall not be taken into account in computing the
amount allowable to the taxpayer as a deduction under section
213(a).’’
(3) Section 213 is amended by striking subsection (f).
(4) Subsection (b) of section 3507 is amended by redesignat-
ing paragraphs (2) and (3) as paragraphs (3) and (4), respec-
tively, and by inserting after paragraph (1) the following new
paragraph:
‘‘(2) certifies that the employee has 1 or more qualifying
children (within the meaning of section 32(c)(3)) for such taxable
year,’’.
(5) Subparagraph (B) of section 3507(c)(2) is amended by
striking clauses (i) and (ii) and inserting the following:
‘‘(i) of not more than 60 percent of the credit
percentage in effect under section 32(b)(1) for an
eligible individual with 1 qualifying child and with
earned income not in excess of the earned income
amount in effect under section 32(b)(2) for such an
eligible individual, which
‘‘(ii) phases out at 60 percent of the phaseout
percentage in effect under section 32(b)(1) for such
an eligible individual between the phaseout amount
in effect under section 32(b)(2) for such an eligible
individual and the amount of earned income at which
the credit under section 32(a) phases out for such
an eligible individual, or’’.
(6) Section 3507 is amended by adding at the end thereof
the following new subsection:
‘‘(f) INTERNAL REVENUE SERVICE NOTIFICATION.—The Internal
Revenue Service shall take such steps as may be appropriate to
ensure that taxpayers who have 1 or more qualifying children
and who receive a refund of the credit under section 32 are aware
of the availability of earned income advance amounts under this
section.’’
(e) EFFECTIVE DATE.—The amendments made by this section
shall apply to taxable years beginning after December 31, 1993.
H. R. 2264—125
PART IV—INCENTIVES FOR INVESTMENT IN
REAL ESTATE
Subpart A—Extension of Qualified Mortgage
Bonds and Low-Income Housing Credit
SEC. 13141. PERMANENT 
EXTENSION 
OF 
QUALIFIED 
MORTGAGE
BONDS.
(a) IN GENERAL.—Paragraph (1) of section 143(a) (defining
qualified mortgage bond) is amended to read as follows:
‘‘(1) QUALIFIED MORTGAGE BOND DEFINED.—For purposes
of this title, the term ‘qualified mortgage bond’ means a bond
which is issued as part of a qualified mortgage issue.’’
(b) MORTGAGE CREDIT CERTIFICATES.—Section 25 is amended
by striking subsection (h) and by redesignating subsections (i) and
(j) as subsections (h) and (i), respectively.
(c) TREATMENT OF RESALE PRICE CONTROL AND SUBSIDY LIEN
PROGRAMS.—Subsection (k) of section 143 is amended by adding
at the end thereof the following new paragraph:
‘‘(10) TREATMENT OF RESALE PRICE CONTROL AND SUBSIDY
LIEN PROGRAMS.—
‘‘(A) IN GENERAL.—In the case of a residence which
is located in a high housing cost area (as defined in section
143(f)(5)), the interest of a governmental unit in such resi-
dence by reason of financing provided under any qualified
program shall not be taken into account under this section
(other than subsection (m)), and the acquisition cost of
the residence which is taken into account under subsection
(e) shall be such cost reduced by the amount of such financ-
ing.
‘‘(B) QUALIFIED PROGRAM.—For purposes of subpara-
graph (A), the term ‘qualified program’ means any govern-
mental program providing mortgage loans (other than 1st
mortgage loans) or grants—
‘‘(i) which restricts (throughout the 9-year period
beginning on the date the financing is provided) the
resale of the residence to a purchaser qualifying under
this section and to a price determined by an index
that reflects less than the full amount of any apprecia-
tion in the residence’s value, or
‘‘(ii) which provides for deferred or reduced interest
payments on such financing and grants the govern-
mental unit a share in the appreciation of the resi-
dence,
but only if such financing is not provided directly or
indirectly through the use of any tax-exempt private activ-
ity bond.’’
(d) FINANCING ALLOWED
FOR CONTRACT
FOR DEED AGREE-
MENTS.—
(1) IN GENERAL.—Paragraph (2) of section 143(d) (relating
to exceptions to 3-year requirement) is amended—
(A) by striking ‘‘and’’ at the end of subparagraph (A),
(B) by adding ‘‘and’’ at the end of subparagraph (B),
and
(C) by inserting after subparagraph (B) the following
new subparagraph:
H. R. 2264—126
‘‘(C) financing with respect to land described in sub-
section (i)(1)(C) and the construction of any residence
thereon.’’
(2) EXCEPTION
TO
NEW
MORTGAGE
REQUIREMENT.—Para-
graph (1) of section 143(i) (relating to mortgages must be new
mortgages) is amended by adding at the end thereof the follow-
ing new subparagraph:
‘‘(C) EXCEPTION
FOR
CERTAIN
CONTRACT
FOR
DEED
AGREEMENTS.—
‘‘(i) IN GENERAL.—In the case of land possessed
under a contract for deed by a mortgagor—
‘‘(I) whose principal residence (within the
meaning of section 1034) is located on such land,
and
‘‘(II) whose family income (as defined in sub-
section (f)(2)) is not more than 50 percent of
applicable median family income (as defined in
subsection (f)(4)),
the contract for deed shall not be treated as an existing
mortgage for purposes of subparagraph (A).
‘‘(ii) CONTRACT FOR DEED DEFINED.—For purposes
of this subparagraph, the term ‘contract for deed’
means a seller-financed contract for the conveyance
of land under which—
‘‘(I) legal title does not pass to the purchaser
until the consideration under the contract is fully
paid to the seller, and
‘‘(II) the seller’s remedy for nonpayment is
forfeiture rather than judicial or nonjudicial fore-
closure.’’
(3) ACQUISITION
COST
INCLUDES
COST
OF
LAND.—Clause
(iii) of section 143(k)(3)(B) is amended by inserting ‘‘(other
than land described in subsection (i)(1)(C)(i))’’ after ‘‘cost of
land’’.
(e) FINANCING
OF NEW 2-FAMILY RESIDENCES PERMITTED.—
Paragraph (7) of section 143(k) is amended by adding at the end
thereof the following flush sentence:
‘‘Subparagraph (B) shall not apply to any 2-family residence
if the residence is a targeted area residence and the family
income of the mortgagor meets the requirement of subsection
(f)(3)(B).’’
(f) EFFECTIVE DATES.—
(1) BONDS.—The amendment made by subsection (a) shall
apply to bonds issued after June 30, 1992.
(2) CERTIFICATES.—The amendment made by subsection
(b) shall apply to elections for periods after June 30, 1992.
(3) SUBSECTIONS (c) AND (e).—The amendments made by
subsections (c) and (e) shall apply to qualified mortgage bonds
issued and mortgage credit certificates provided on or after
the date of enactment of this Act.
(4) CONTRACT FOR DEED AGREEMENTS.—The amendments
made by subsection (d) shall apply to loans originated and
credit certificates provided after the date of the enactment
of this Act.
SEC. 13142. LOW-INCOME HOUSING CREDIT.
(a) PERMANENT EXTENSION.—
H. R. 2264—127
(1) IN GENERAL.—Section 42 (relating to low-income hous-
ing credit) is amended by striking subsection (o).
(2) EFFECTIVE DATE.—The amendment made by paragraph
(1) shall apply to periods ending after June 30, 1992.
(b) MODIFICATIONS.—
(1) HOUSING CREDIT AGENCY DETERMINATION OF REASON-
ABLENESS
OF
PROJECT
COSTS.—Subparagraph (B) of section
42(m)(2) (relating to credit allocated to building not to exceed
amount necessary to assure project feasibility) is amended—
(A) by striking ‘‘and’’ at the end of clause (ii),
(B) by striking the period at the end of clause (iii)
and inserting ‘‘, and’’, and
(C) by inserting after clause (iii) the following new
clause:
‘‘(iv) the reasonableness of the developmental and
operational costs of the project.’’
(2) UNITS WITH CERTAIN FULL-TIME STUDENTS NOT DISQUALI-
FIED.—Subparagraph (D) of section 42(i)(3) (defining low-income
unit) is amended to read as follows:
‘‘(D) CERTAIN
STUDENTS
NOT
TO
DISQUALIFY
UNIT.—
A unit shall not fail to be treated as a low-income unit
merely because it is occupied—
‘‘(i) by an individual who is—
‘‘(I) a student and receiving assistance under
title IV of the Social Security Act, or
‘‘(II) enrolled in a job training program receiv-
ing assistance under the Job Training Partnership
Act or under other similar Federal, State, or local
laws, or
‘‘(ii) entirely by full-time students if such students
are—
‘‘(I) single parents and their children and such
parents and children are not dependents (as
defined in section 152) of another individual, or
‘‘(II) married and file a joint return.’’
(3) TREASURY WAIVERS OF CERTAIN DE MINIMIS ERRORS AND
RECERTIFICATIONS.—Subsection (g) of section 42 (relating to
qualified low-income housing projects) is amended by adding
at the end thereof the following new paragraph:
‘‘(8) WAIVER
OF
CERTAIN
DE
MINIMIS
ERRORS
AND
RECERTIFICATIONS.—On application by the taxpayer, the Sec-
retary may waive—
‘‘(A) any recapture under subsection (j) in the case
of any de minimis error in complying with paragraph (1),
or
‘‘(B) any annual recertification of tenant income for
purposes of this subsection, if the entire building is occu-
pied by low-income tenants.’’
(4) DISCRIMINATION AGAINST TENANTS PROHIBITED.—Section
42(h)(6)(B) (defining extended low-income housing commitment)
is amended by redesignating clauses (iv) and (v) as clauses
(v) and (vi) and by inserting after clause (iii) the following
new clause:
‘‘(iv) which prohibits the refusal to lease to a holder
of a voucher or certificate of eligibility under section
8 of the United States Housing Act of 1937 because
H. R. 2264—128
of the status of the prospective tenant as such a
holder,’’.
(5) HOME ASSISTANCE NOT TO RESULT IN CERTAIN BUILD-
INGS BEING FEDERALLY SUBSIDIZED.—Paragraph (2) of section
42(i) (relating to determination of whether building is federally
subsidized) is amended by adding at the end thereof the follow-
ing new subparagraph:
‘‘(E) BUILDINGS RECEIVING HOME ASSISTANCE.—
‘‘(i) IN GENERAL.—Assistance provided under the
HOME Investment Partnerships Act (as in effect on
the date of the enactment of this subparagraph) with
respect to any building shall not be taken into account
under subparagraph (D) if 40 percent or more of the
residential units in the building are occupied by
individuals whose income is 50 percent or less of area
median gross income. Subsection (d)(5)(C) shall not
apply to any building to which the preceding sentence
applies.
‘‘(ii) SPECIAL RULE FOR CERTAIN HIGH-COST HOUS-
ING
AREAS.—In the case of a building located in a
city described in section 142(d)(6), clause (i) shall be
applied by substituting ‘25 percent’ for ‘40 percent’.’’
(6) EFFECTIVE DATES.—
(A) IN GENERAL.—Except as provided in subparagraphs
(B) and (C), the amendments made by this subsection shall
apply to—
(i) determinations under section 42 of the Internal
Revenue Code of 1986 with respect to housing credit
dollar amounts allocated from State housing credit ceil-
ings after June 30, 1992, or
(ii) buildings placed in service after June 30, 1992,
to the extent paragraph (1) of section 42(h) of such
Code does not apply to any building by reason of para-
graph (4) thereof, but only with respect to bonds issued
after such date.
(B) WAIVER AUTHORITY AND PROHIBITED DISCRIMINA-
TION.—The amendments made by paragraphs (3) and (4)
shall take effect on the date of the enactment of this
Act.
(C) HOME ASSISTANCE.—The amendment made by
paragraph (2) shall apply to periods after the date of the
enactment of this Act.
(c) ELECTION TO DETERMINE RENT LIMITATION BASED ON NUM-
BER OF BEDROOMS AND DEEP RENT SKEWING.—
(1) In the case of a building to which the amendments
made by subsection (e)(1) or (n)(2) of section 7108 of the Reve-
nue Reconciliation Act of 1989 did not apply, the taxpayer
may elect to have such amendments apply to such building
if the taxpayer has met the requirements of the procedures
described in section 42(m)(1)(B)(iii) of the Internal Revenue
Code of 1986.
(2) In the case of the amendment made by such subsection
(e)(1), such election shall apply only with respect to tenants
first occupying any unit in the building after the date of the
election.
(3) In the case of the amendment made by such subsection
(n)(2), such election shall apply only if rents of low-income
H. R. 2264—129
tenants in such building do not increase as a result of such
election.
(4) An election under this subsection may be made only
during the 180-day period beginning on the date of the enact-
ment of this Act and, once made, shall be irrevocable.
Subpart B—Passive Loss Rules
SEC. 13143. APPLICATION OF PASSIVE LOSS RULES TO RENTAL REAL
ESTATE ACTIVITIES.
(a) RENTAL REAL ESTATE ACTIVITIES OF PERSONS IN REAL PROP-
ERTY BUSINESS NOT AUTOMATICALLY TREATED AS PASSIVE ACTIVI-
TIES.—Subsection (c) of section 469 (defining passive activity) is
amended by adding at the end thereof the following new paragraph:
‘‘(7) SPECIAL RULES FOR TAXPAYERS IN REAL PROPERTY BUSI-
NESS.—
‘‘(A) IN GENERAL.—If this paragraph applies to any
taxpayer for a taxable year—
‘‘(i) paragraph (2) shall not apply to any rental
real estate activity of such taxpayer for such taxable
year, and
‘‘(ii) this section shall be applied as if each interest
of the taxpayer in rental real estate were a separate
activity.
Notwithstanding clause (ii), a taxpayer may elect to treat
all interests in rental real estate as one activity. Nothing
in the preceding provisions of this subparagraph shall be
construed as affecting the determination of whether the
taxpayer materially participates with respect to any
interest in a limited partnership as a limited partner.
‘‘(B) TAXPAYERS TO WHOM PARAGRAPH APPLIES.—This
paragraph shall apply to a taxpayer for a taxable year
if—
‘‘(i) more than one-half of the personal services
performed in trades or businesses by the taxpayer
during such taxable year are performed in real prop-
erty trades or businesses in which the taxpayer materi-
ally participates, and
‘‘(ii) such taxpayer performs more than 750 hours
of services during the taxable year in real property
trades or businesses in which the taxpayer materially
participates.
In the case of a joint return, the requirements of the
preceding sentence are satisfied if and only if either spouse
separately satisfies such requirements. For purposes of the
preceding sentence, activities in which a spouse materially
participates shall be determined under subsection (h).
‘‘(C) REAL PROPERTY TRADE OR BUSINESS.—For purposes
of this paragraph, the term ‘real property trade or business’
means any real property development, redevelopment,
construction, reconstruction, acquisition, conversion, rental,
operation, management, leasing, or brokerage trade or busi-
ness.
‘‘(D) SPECIAL RULES FOR SUBPARAGRAPH (B).—
‘‘(i) CLOSELY HELD C CORPORATIONS.—In the case
of a closely held C corporation, the requirements of
subparagraph (B) shall be treated as met for any tax-
H. R. 2264—130
able year if more than 50 percent of the gross receipts
of such corporation for such taxable year are derived
from real property trades or businesses in which the
corporation materially participates.
‘‘(ii) PERSONAL
SERVICES
AS
AN
EMPLOYEE.—For
purposes of subparagraph (B), personal services per-
formed as an employee shall not be treated as per-
formed in real property trades or businesses. The
preceding sentence shall not apply if such employee
is a 5-percent owner (as defined in section 416(i)(1)(B))
in the employer.’’
(b) CONFORMING AMENDMENTS.—
(1) Paragraph (2) of section 469(c) is amended by striking
‘‘The’’ and inserting ‘‘Except as provided in paragraph (7), the’’.
(2) Clause (iv) of section 469(i)(3)(E) is amended by insert-
ing ‘‘or any loss allowable by reason of subsection (c)(7)’’ after
‘‘loss’’.
(c) EFFECTIVE DATE.—The amendments made by this section
shall apply to taxable years beginning after December 31, 1993.
Subpart C—Provisions Relating to Real Estate
Investments by Pension Funds
SEC. 13144. REAL ESTATE PROPERTY ACQUIRED BY A QUALIFIED
ORGANIZATION.
(a) MODIFICATIONS OF EXCEPTIONS.—Paragraph (9) of section
514(c) (relating to real property acquired by a qualified organization)
is amended by adding at the end thereof the following new
subparagraphs:
‘‘(G) SPECIAL
RULES
FOR
PURPOSES
OF
THE
EXCEP-
TIONS.—Except as otherwise provided by regulations—
‘‘(i) SMALL LEASES DISREGARDED.—For purposes of
clauses (iii) and (iv) of subparagraph (B), a lease to
a person described in such clause (iii) or (iv) shall
be disregarded if no more than 25 percent of the
leasable floor space in a building (or complex of build-
ings) is covered by the lease and if the lease is on
commercially reasonable terms.
‘‘(ii) COMMERCIALLY
REASONABLE
FINANCING.—
Clause (v) of subparagraph (B) shall not apply if the
financing is on commercially reasonable terms.
‘‘(H) QUALIFYING SALES BY FINANCIAL INSTITUTIONS.—
‘‘(i) IN GENERAL.—In the case of a qualifying sale
by a financial institution, except as provided in regula-
tions, clauses (i) and (ii) of subparagraph (B) shall
not apply with respect to financing provided by such
institution for such sale.
‘‘(ii) QUALIFYING
SALE.—For purposes of this
clause, there is a qualifying sale by a financial institu-
tion if—
‘‘(I) a qualified organization acquires property
described in clause (iii) from a financial institution
and any gain recognized by the financial institu-
tion with respect to the property is ordinary
income,
‘‘(II) the stated principal amount of the financ-
ing provided by the financial institution does not
H. R. 2264—131
exceed the amount of the outstanding indebtedness
(including accrued but unpaid interest) of the
financial institution with respect to the property
described in clause (iii) immediately before the
acquisition referred to in clause (iii) or (v), which-
ever is applicable, and
‘‘(III) the present value (determined as of the
time of the sale and by using the applicable Fed-
eral rate determined under section 1274(d)) of the
maximum amount payable pursuant to the financ-
ing that is determined by reference to the revenue,
income, or profits derived from the property cannot
exceed 30 percent of the total purchase price of
the property (including the contingent payments).
‘‘(iii) 
PROPERTY
TO
WHICH
SUBPARAGRAPH
APPLIES.—Property is described in this clause if such
property is foreclosure property, or is real property
which—
‘‘(I) was acquired by the qualified organization
from 
a 
financial 
institution 
which 
is 
in
conservatorship or receivership, or from the con-
servator or receiver of such an institution, and
‘‘(II) was held by the financial institution at
the time it entered into conservatorship or
receivership.
‘‘(iv) FINANCIAL INSTITUTION.—For purposes of this
subparagraph, the term ‘financial institution’ means—
‘‘(I) any financial institution described in sec-
tion 581 or 591(a),
‘‘(II) any other corporation which is a direct
or indirect subsidiary of an institution referred
to in subclause (I) but only if, by virtue of being
affiliated with such institution, such other corpora-
tion is subject to supervision and examination by
a Federal or State agency which regulates institu-
tions referred to in subclause (I), and
‘‘(III) any person acting as a conservator or
receiver of an entity referred to in subclause (I)
or (II) (or any government agency or corporation
succeeding to the rights or interest of such person).
‘‘(v) FORECLOSURE PROPERTY.—For purposes of this
subparagraph, the term ‘foreclosure property’ means
any real property acquired by the financial institution
as the result of having bid on such property at fore-
closure, or by operation of an agreement or process
of law, after there was a default (or a default was
imminent) on indebtedness which such property
secured.’’.
(b) CONFORMING AMENDMENT.—Paragraph (9) of section 514(c)
is amended—
(1) by adding the following new sentence at the end of
subparagraph (A): ‘‘For purposes of this paragraph, an interest
in a mortgage shall in no event be treated as real property.’’,
and
(2) by striking the last sentence of subparagraph (B).
(c) EFFECTIVE DATES.—
H. R. 2264—132
(1) IN GENERAL.—The amendments made by this section
shall apply to acquisitions on or after January 1, 1994.
(2) SMALL LEASES.—The provisions of section 514(c)(9)(G)(i)
of the Internal Revenue Code of 1986 shall, in addition to
any leases to which the provisions apply by reason of paragraph
(1), apply to leases entered into on or after January 1, 1994.
SEC. 13145. REPEAL OF SPECIAL TREATMENT OF PUBLICLY TREATED
PARTNERSHIPS.
(a) GENERAL RULE.—Subsection (c) of section 512 is amended—
(1) by striking paragraph (2),
(2) by redesignating paragraph (3) as paragraph (2), and
(3) by striking ‘‘paragraph (1) or (2)’’ in paragraph (2)
(as so redesignated) and inserting ‘‘paragraph (1)’’.
(b) EFFECTIVE DATE.—The amendments made by subsection
(a) shall apply to partnership years beginning on or after January
1, 1994.
SEC. 13146. TITLE-HOLDING COMPANIES PERMITTED TO RECEIVE
SMALL AMOUNTS OF UNRELATED BUSINESS TAXABLE
INCOME.
(a) GENERAL
RULE.—Paragraph
(25)
of
section
501(c)
is
amended by adding at the end thereof the following new subpara-
graph:
‘‘(G)(i) An organization shall not be treated as failing
to be described in this paragraph merely by reason of
the receipt of any otherwise disqualifying income which
is incidentally derived from the holding of real property.
‘‘(ii) Clause (i) shall not apply if the amount of gross
income described in such clause exceeds 10 percent of the
organization’s gross income for the taxable year unless
the organization establishes to the satisfaction of the Sec-
retary that the receipt of gross income described in clause
(i) in excess of such limitation was inadvertent and reason-
able steps are being taken to correct the circumstances
giving rise to such income.’’
(b) CONFORMING AMENDMENT.—Paragraph (2) of section 501(c)
is amended by adding at the end thereof the following new sentence:
‘‘Rules similar to the rules of subparagraph (G) of paragraph (25)
shall apply for purposes of this paragraph.’’
(c) EFFECTIVE DATE.—The amendments made by this section
shall apply to taxable years beginning on or after January 1, 1994.
SEC. 13147. EXCLUSION FROM UNRELATED BUSINESS TAX OF GAINS
FROM CERTAIN PROPERTY.
(a) GENERAL RULE.—Subsection (b) of section 512 (relating
to modifications) is amended by adding at the end thereof the
following new paragraph:
‘‘(16)(A) Notwithstanding paragraph (5)(B), there shall be
excluded all gains or losses from the sale, exchange, or other
disposition of any real property described in subparagraph (B)
if—
‘‘(i) such property was acquired by the organization
from—
‘‘(I) a financial institution described in section 581
or 591(a) which is in conservatorship or receivership,
or
H. R. 2264—133
‘‘(II) the conservator or receiver of such an institu-
tion (or any government agency or corporation succeed-
ing to the rights or interests of the conservator or
receiver),
‘‘(ii) such property is designated by the organization
within the 9-month period beginning on the date of its
acquisition as property held for sale, except that not more
than one-half (by value determined as of such date) of
property acquired in a single transaction may be so
designated,
‘‘(iii) such sale, exchange, or disposition occurs before
the later of—
‘‘(I) the date which is 30 months after the date
of the acquisition of such property, or
‘‘(II) the date specified by the Secretary in order
to assure an orderly disposition of property held by
persons described in subparagraph (A), and
‘‘(iv) while such property was held by the organization,
the aggregate expenditures on improvements and develop-
ment activities included in the basis of the property are
(or were) not in excess of 20 percent of the net selling
price of such property.
‘‘(B) Property is described in this subparagraph if it is
real property which—
‘‘(i) was held by the financial institution at the time
it entered into conservatorship or receivership, or
‘‘(ii) was foreclosure property (as defined in section
514(c)(9)(H)(v)) which secured indebtedness held by the
financial institution at such time.
For purposes of this subparagraph, real property includes an
interest in a mortgage.’’
(b) EFFECTIVE DATE.—The amendment made by subsection (a)
shall apply to property acquired on or after January 1, 1994.
SEC. 13148. EXCLUSION FROM UNRELATED BUSINESS TAX OF CER-
TAIN FEES AND OPTION PREMIUMS.
(a) LOAN COMMITMENT FEES.—Paragraph (1) of section 512(b)
(relating to modifications) is amended by inserting ‘‘amounts
received or accrued as consideration for entering into agreements
to make loans,’’ before ‘‘and annuities’’.
(b) OPTION PREMIUMS.—The second sentence of section 512(b)(5)
is amended—
(1) by striking ‘‘all gains on’’ and inserting ‘‘all gains or
losses recognized, in connection with the organization’s invest-
ment activities, from’’,
(2) by striking ‘‘, written by the organization in connection
with its investment activities,’’ and
(3) by inserting ‘‘or real property and all gains or losses
from the forfeiture of good-faith deposits (that are consistent
with established business practice) for the purchase, sale, or
lease of real property in connection with the organization’s
investment activities’’ before the period.
(c) EFFECTIVE DATE.—The amendments made by this section
shall apply to amounts received on or after January 1, 1994.
H. R. 2264—134
SEC. 13149. TREATMENT OF PENSION FUND INVESTMENTS IN REAL
ESTATE INVESTMENT TRUSTS.
(a) GENERAL RULE.—Subsection (h) of section 856 (relating
to closely held determinations) is amended by adding at the end
thereof the following new paragraph:
‘‘(3) TREATMENT OF TRUSTS DESCRIBED IN SECTION 401(a).—
‘‘(A) LOOK-THRU TREATMENT.—
‘‘(i) IN
GENERAL.—Except as provided in clause
(ii), in determining whether the stock ownership
requirement of section 542(a)(2) is met for purposes
of paragraph (1)(A), any stock held by a qualified trust
shall be treated as held directly by its beneficiaries
in proportion to their actuarial interests in such trust
and shall not be treated as held by such trust.
‘‘(ii) CERTAIN
RELATED
TRUSTS
NOT
ELIGIBLE.—
Clause (i) shall not apply to any qualified trust if
one or more disqualified persons (as defined in section
4975(e)(2), without regard to subparagraphs (B) and
(I) thereof) with respect to such qualified trust hold
in the aggregate 5 percent or more in value of the
interests in the real estate investment trust and such
real estate investment trust has accumulated earnings
and profits attributable to any period for which it
did not qualify as a real estate investment trust.
‘‘(B) COORDINATION WITH PERSONAL HOLDING COMPANY
RULES.—If any entity qualifies as a real estate investment
trust for any taxable year by reason of subparagraph (A),
such entity shall not be treated as a personal holding
company for such taxable year for purposes of part II
of subchapter G of this chapter.
‘‘(C) TREATMENT FOR PURPOSES OF UNRELATED BUSI-
NESS TAX.—If any qualified trust holds more than 10 per-
cent (by value) of the interests in any pension-held REIT
at any time during a taxable year, the trust shall be
treated as having for such taxable year gross income from
an unrelated trade or business in an amount which bears
the same ratio to the aggregate dividends paid (or treated
as paid) by the REIT to the trust for the taxable year
of the REIT with or within which the taxable year of
the trust ends (the ‘REIT year’) as—
‘‘(i) the gross income (less direct expenses related
thereto) of the REIT for the REIT year from unrelated
trades or businesses (determined as if the REIT were
a qualified trust), bears to
‘‘(ii) the gross income (less direct expenses related
thereto) of the REIT for the REIT year.
This subparagraph shall apply only if the ratio determined
under the preceding sentence is at least 5 percent.
‘‘(D) PENSION-HELD REIT.—The purposes of subpara-
graph (C)—
‘‘(i) IN GENERAL.—A real estate investment trust
is a pension-held REIT if such trust would not have
qualified as a real estate investment trust but for
the provisions of this paragraph and if such trust is
predominantly held by qualified trusts.
H. R. 2264—135
‘‘(ii) PREDOMINANTLY
HELD.—For purposes of
clause (i), a real estate investment trust is predomi-
nantly held by qualified trusts if—
‘‘(I) at least 1 qualified trust holds more than
25 percent (by value) of the interests in such real
estate investment trust, or
‘‘(II) 1 or more qualified trusts (each of whom
own more than 10 percent by value of the interests
in such real estate investment trust) hold in the
aggregate more than 50 percent (by value) of the
interests in such real estate investment trust.
‘‘(E) QUALIFIED
TRUST.—For purposes of this para-
graph, the term ‘qualified trust’ means any trust described
in section 401(a) and exempt from tax under section
501(a).’’
(b) EFFECTIVE DATE.—The amendment made by this section
shall apply to taxable years beginning after December 31, 1993.
Subpart D—Discharge of Indebtedness
SEC. 13150. EXCLUSION FROM GROSS INCOME FOR INCOME FROM DIS-
CHARGE OF QUALIFIED REAL PROPERTY BUSINESS
INDEBTEDNESS.
(a) IN GENERAL.—Paragraph (1) of section 108(a) (relating to
income from discharge of indebtedness) is amended by striking
‘‘or’’ at the end of subparagraph (B), by striking the period at
the end of subparagraph (C) and inserting ‘‘, or’’, and by adding
at the end the following new subparagraph:
‘‘(D) in the case of a taxpayer other than a C corporation,
the indebtedness discharged is qualified real property business
indebtedness.’’
(b) QUALIFIED REAL PROPERTY BUSINESS INDEBTEDNESS.—Sec-
tion 108 is amended by inserting after subsection (b) the following
new subsection:
‘‘(c) TREATMENT OF DISCHARGE OF QUALIFIED REAL PROPERTY
BUSINESS INDEBTEDNESS.—
‘‘(1) BASIS REDUCTION.—
‘‘(A) IN GENERAL.—The amount excluded from gross
income under subparagraph (D) of subsection (a)(1) shall
be applied to reduce the basis of the depreciable real prop-
erty of the taxpayer.
‘‘(B) CROSS
REFERENCE.—For provisions making the
reduction described in subparagraph (A), see section 1017.
‘‘(2) LIMITATIONS.—
‘‘(A) INDEBTEDNESS IN EXCESS OF VALUE.—The amount
excluded under subparagraph (D) of subsection (a)(1) with
respect to any qualified real property business indebtedness
shall not exceed the excess (if any) of—
‘‘(i) the outstanding principal amount of such
indebtedness (immediately before the discharge), over
‘‘(ii) the fair market value of the real property
described in paragraph (3)(A) (as of such time), reduced
by the outstanding principal amount of any other quali-
fied real property business indebtedness secured by
such property (as of such time).
‘‘(B) OVERALL
LIMITATION.—The amount excluded
under subparagraph (D) of subsection (a)(1) shall not exceed
H. R. 2264—136
the aggregate adjusted bases of depreciable real property
(determined after any reductions under subsections (b) and
(g)) held by the taxpayer immediately before the discharge
(other than depreciable real property acquired in con-
templation of such discharge).
‘‘(3) QUALIFIED REAL PROPERTY BUSINESS INDEBTEDNESS.—
The term ‘qualified real property business indebtedness’ means
indebtedness which—
‘‘(A) was incurred or assumed by the taxpayer in
connection with real property used in a trade or business
and is secured by such real property,
‘‘(B) was incurred or assumed before January 1, 1993,
or if incurred or assumed on or after such date, is qualified
acquisition indebtedness, and
‘‘(C) with respect to which such taxpayer makes an
election to have this paragraph apply.
Such term shall not include qualified farm indebtedness.
Indebtedness under subparagraph (B) shall include indebted-
ness resulting from the refinancing of indebtedness under
subparagraph (B) (or this sentence), but only to the extent
it does not exceed the amount of the indebtedness being
refinanced.
‘‘(4) QUALIFIED ACQUISITION INDEBTEDNESS.—For purposes
of paragraph (3)(B), the term ‘qualified acquisition indebted-
ness’ means, with respect to any real property described in
paragraph (3)(A), indebtedness incurred or assumed to acquire,
construct, reconstruct, or substantially improve such property.
‘‘(5) REGULATIONS.—The Secretary shall issue such regula-
tions as are necessary to carry out this subsection, including
regulations preventing the abuse of this subsection through
cross-collateralization or other means.’’
(c) TECHNICAL AMENDMENTS.—
(1) Subparagraph (A) of section 108(a)(2) is amended by
striking ‘‘and (C)’’ and inserting ‘‘, (C), and (D)’’.
(2) Subparagraph (B) of section 108(a)(2) is amended to
read as follows:
‘‘(B) INSOLVENCY EXCLUSION TAKES PRECEDENCE OVER
QUALIFIED FARM EXCLUSION AND QUALIFIED REAL PROPERTY
BUSINESS EXCLUSION.—Subparagraphs (C) and (D) of para-
graph (1) shall not apply to a discharge to the extent
the taxpayer is insolvent.’’
(3) Subsection (d) of section 108 is amended—
(A) by striking ‘‘subsections (a), (b), and (g)’’ in para-
graphs (6) and (7)(A) and inserting ‘‘subsections (a), (b),
(c), and (g)’’,
(B) by striking ‘‘SUBSECTIONS (a), (b), AND (g)’’ in the
subsection heading and inserting ‘‘CERTAIN PROVISIONS’’,
and
(C) by striking ‘‘SUBSECTIONS (a), (b), AND (g)’’ in the
headings of paragraphs (6) and (7)(A) and inserting ‘‘CER-
TAIN PROVISIONS’’.
(4) Subparagraph (B) of section 108(d)(7) is amended by
adding at the end thereof the following new sentence: ‘‘The
preceding sentence shall not apply to any discharge to the
extent that subsection (a)(1)(D) applies to such discharge.’’
H. R. 2264—137
(5) Subparagraph (A) of section 108(d)(9) is amended by
inserting ‘‘or under paragraph (3)(B) of subsection (c)’’ after
‘‘subsection (b)’’.
(6) Paragraph (2) of section 1017(a) is amended by striking
‘‘or (b)(5)’’ and inserting ‘‘, (b)(5), or (c)(1)’’.
(7) Subparagraph (A) of section 1017(b)(3) is amended by
inserting ‘‘or (c)(1)’’ after ‘‘subsection (b)(5)’’.
(8) Section 1017(b)(3) is amended by adding at the end
the following new subparagraph:
‘‘(F) SPECIAL
RULES
FOR
QUALIFIED
REAL
PROPERTY
BUSINESS INDEBTEDNESS.—In the case of any amount which
under section 108(c)(1) is to be applied to reduce basis—
‘‘(i) depreciable property shall only include depre-
ciable real property for purposes of subparagraphs (A)
and (C),
‘‘(ii) subparagraph (E) shall not apply, and
‘‘(iii) in the case of property taken into account
under section 108(c)(2)(B), the reduction with respect
to such property shall be made as of the time imme-
diately before disposition if earlier than the time under
subsection (a).’’
(9) Paragraph (1) of section 703(b) is amended by striking
‘‘subsection (b)(5)’’ and inserting ‘‘subsection (b)(5) or (c)(3)’’.
(d) EFFECTIVE DATE.—The amendments made by this section
shall apply to discharges after December 31, 1992, in taxable years
ending after such date.
Subpart E—Increase in Recovery Period for
Nonresidential Real Property
SEC. 13151. INCREASE IN RECOVERY PERIOD FOR NONRESIDENTIAL
REAL PROPERTY.
(a) GENERAL RULE.—Paragraph (1) of section 168(c) (relating
to applicable recovery period) is amended by striking the item
relating to nonresidential real property and inserting the following:
‘‘Nonresidential real property ..........................................................
39 years.’’.
(b) EFFECTIVE DATE.—
(1) IN GENERAL.—Except as provided in paragraph (2), the
amendment made by subsection (a) shall apply to property
placed in service by the taxpayer on or after May 13, 1993.
(2) EXCEPTION.—The amendments made by this section
shall not apply to property placed in service by the taxpayer
before January 1, 1994, if—
(A) the taxpayer or a qualified person entered into
a binding written contract to purchase or construct such
property before May 13, 1993, or
(B) the construction of such property was commenced
by or for the taxpayer or a qualified person before
May 13, 1993.
For purposes of this paragraph, the term ‘‘qualified person’’
means any person who transfers his rights in such a contract
or such property to the taxpayer but only if the property is
not placed in service by such person before such rights are
transferred to the taxpayer.
H. R. 2264—138
PART V—LUXURY TAX
SEC. 13161. REPEAL OF LUXURY EXCISE TAXES OTHER THAN ON PAS-
SENGER VEHICLES.
(a) IN GENERAL.—Subchapter A of chapter 31 (relating to retail
excise taxes) is amended to read as follows:
‘‘Subchapter A—Luxury Passenger Automobiles
‘‘Sec. 4001. Imposition of tax.
‘‘Sec. 4002. 1st retail sale; uses, etc. treated as sales; determination of price.
‘‘Sec. 4003. Special rules.
‘‘SEC. 4001. IMPOSITION OF TAX.
‘‘(a) IMPOSITION OF TAX.—There is hereby imposed on the 1st
retail sale of any passenger vehicle a tax equal to 10 percent
of the price for which so sold to the extent such price exceeds
$30,000.
‘‘(b) PASSENGER VEHICLE.—
‘‘(1) IN
GENERAL.—For purposes of this subchapter, the
term ‘passenger vehicle’ means any 4-wheeled vehicle—
‘‘(A) which is manufactured primarily for use on public
streets, roads, and highways, and
‘‘(B) which is rated at 6,000 pounds unloaded gross
vehicle weight or less.
‘‘(2) SPECIAL RULES.—
‘‘(A) TRUCKS
AND
VANS.—In the case of a truck or
van, paragraph (1)(B) shall be applied by substituting ‘gross
vehicle weight’ for ‘unloaded gross vehicle weight’.
‘‘(B) LIMOUSINES.—In the case of a limousine, para-
graph (1) shall be applied without regard to subparagraph
(B) thereof.
‘‘(c) EXCEPTIONS FOR TAXICABS, ETC.—The tax imposed by this
section shall not apply to the sale of any passenger vehicle for
use by the purchaser exclusively in the active conduct of a trade
or business of transporting persons or property for compensation
or hire.
‘‘(d) EXEMPTION FOR LAW ENFORCEMENT USES, ETC.—No tax
shall be imposed by this section on the sale of any passenger
vehicle—
‘‘(1) to the Federal Government, or a State or local govern-
ment, for use exclusively in police, firefighting, search and
rescue, or other law enforcement or public safety activities,
or in public works activities, or
‘‘(2) to any person for use exclusively in providing emer-
gency medical services.
‘‘(e) INFLATION ADJUSTMENT.—
‘‘(1) IN
GENERAL.—If, for any calendar year, the excess
(if any) of—
‘‘(A) $30,000, increased by the cost-of-living adjustment
for the calendar year, over
‘‘(B) the dollar amount in effect under subsection (a)
for the calendar year,
is equal to or greater than $2,000, then the $30,000 amount
in subsection (a) and section 4003(a) (as previously adjusted
under this subsection) for any subsequent calendar year shall
be increased by the amount of such excess rounded to the
next lowest multiple of $2,000.
H. R. 2264—139
‘‘(2) COST-OF-LIVING ADJUSTMENT.—For purposes of para-
graph (1), the cost-of-living adjustment for any calendar year
shall be the cost-of-living adjustment under section 1(f)(3) for
such calendar year, determined by substituting ‘calendar year
1990’ for ‘calendar year 1992’ in subparagraph (B) thereof.
‘‘(f) TERMINATION.—The tax imposed by this section shall not
apply to any sale or use after December 31, 1999.
‘‘SEC. 4002. 1ST RETAIL SALE; USES, ETC. TREATED AS SALES; DETER-
MINATION OF PRICE.
‘‘(a) 1ST RETAIL SALE.—For purposes of this subchapter, the
term ‘1st retail sale’ means the 1st sale, for a purpose other than
resale, after manufacture, production, or importation.
‘‘(b) USE TREATED AS SALE.—
‘‘(1) IN GENERAL.—If any person uses a passenger vehicle
(including any use after importation) before the 1st retail sale
of such vehicle, then such person shall be liable for tax under
this subchapter in the same manner as if such vehicle were
sold at retail by him.
‘‘(2) EXEMPTION FOR FURTHER MANUFACTURE.—Paragraph
(1) shall not apply to use of a vehicle as material in the
manufacture or production of, or as a component part of,
another vehicle taxable under this subchapter to be manufac-
tured or produced by him.
‘‘(3) EXEMPTION FOR DEMONSTRATION USE.—Paragraph (1)
shall not apply to any use of a passenger vehicle as a dem-
onstrator.
‘‘(4) EXCEPTION FOR USE AFTER IMPORTATION OF CERTAIN
VEHICLES.—Paragraph (1) shall not apply to the use of a vehicle
after importation if the user or importer establishes to the
satisfaction of the Secretary that the 1st use of the vehicle
occurred before January 1, 1991, outside the United States.
‘‘(5) COMPUTATION OF TAX.—In the case of any person made
liable for tax by paragraph (1), the tax shall be computed
on the price at which similar vehicles are sold at retail in
the ordinary course of trade, as determined by the Secretary.
‘‘(c) LEASES CONSIDERED
AS SALES.—For purposes of this
subchapter—
‘‘(1) IN GENERAL.—Except as otherwise provided in this
subsection, the lease of a vehicle (including any renewal or
any extension of a lease or any subsequent lease of such vehicle)
by any person shall be considered a sale of such vehicle at
retail.
‘‘(2) SPECIAL RULES FOR LONG-TERM LEASES.—
‘‘(A) TAX
NOT
IMPOSED
ON
SALE
FOR
LEASING
IN
A
QUALIFIED LEASE.—The sale of a passenger vehicle to a
person engaged in a passenger vehicle leasing or rental
trade or business for leasing by such person in a long-
term lease shall not be treated as the 1st retail sale of
such vehicle.
‘‘(B) LONG-TERM LEASE.—For purposes of subparagraph
(A), the term ‘long-term lease’ means any long-term lease
(as defined in section 4052).
‘‘(C) SPECIAL RULES.—In the case of a long-term lease
of a vehicle which is treated as the 1st retail sale of
such vehicle—
H. R. 2264—140
‘‘(i) DETERMINATION OF PRICE.—The tax under this
subchapter shall be computed on the lowest price for
which the vehicle is sold by retailers in the ordinary
course of trade.
‘‘(ii) PAYMENT OF TAX.—Rules similar to the rules
of section 4217(e)(2) shall apply.
‘‘(iii) NO
TAX
WHERE
EXEMPT
USE
BY
LESSEE.—
No tax shall be imposed on any lease payment under
a long-term lease if the lessee’s use of the vehicle
under such lease is an exempt use (as defined in section
4003(b)) of such vehicle.
‘‘(d) DETERMINATION OF PRICE.—
‘‘(1) IN
GENERAL.—In determining price for purposes of
this subchapter—
‘‘(A) there shall be included any charge incident to
placing the passenger vehicle in condition ready for use,
‘‘(B) there shall be excluded—
‘‘(i) the amount of the tax imposed by this sub-
chapter,
‘‘(ii) if stated as a separate charge, the amount
of any retail sales tax imposed by any State or political
subdivision thereof or the District of Columbia,
whether the liability for such tax is imposed on the
vendor or vendee, and
‘‘(iii) the value of any component of such passenger
vehicle if—
‘‘(I) such component is furnished by the 1st
user of such passenger vehicle, and
‘‘(II) such component has been used before
such furnishing, and
‘‘(C) the price shall be determined without regard to
any trade-in.
‘‘(2) OTHER
RULES.—Rules similar to the rules of para-
graphs (2) and (4) of section 4052(b) shall apply for purposes
of this subchapter.
‘‘SEC. 4003. SPECIAL RULES.
‘‘(a) SEPARATE PURCHASE OF VEHICLE AND PARTS AND ACCES-
SORIES
THEREFOR.—Under 
regulations 
prescribed 
by 
the
Secretary—
‘‘(1) IN GENERAL.—Except as provided in paragraph (2),
if—
‘‘(A) the owner, lessee, or operator of any passenger
vehicle installs (or causes to be installed) any part or
accessory on such vehicle, and
‘‘(B) such installation is not later than the date 6
months after the date the vehicle was 1st placed in service,
then there is hereby imposed on such installation a tax equal
to 10 percent of the price of such part or accessory and its
installation.
‘‘(2) LIMITATION.—The tax imposed by paragraph (1) on
the installation of any part or accessory shall not exceed 10
percent of the excess (if any) of—
‘‘(A) the sum of—
‘‘(i) the price of such part or accessory and its
installation,
H. R. 2264—141
‘‘(ii) the aggregate price of the parts and acces-
sories (and their installation) installed before such part
or accessory, plus
‘‘(iii) the price for which the passenger vehicle
was sold, over
‘‘(B) $30,000.
‘‘(3) EXCEPTIONS.—Paragraph (1) shall not apply if—
‘‘(A) the part or accessory installed is a replacement
part or accessory,
‘‘(B) the part or accessory is installed to enable or
assist an individual with a disability to operate the vehicle,
or to enter or exit the vehicle, by compensating for the
effect of such disability, or
‘‘(C) the aggregate price of the parts and accessories
(and their installation) described in paragraph (1) with
respect to the vehicle does not exceed $200 (or such other
amount or amounts as the Secretary may by regulation
prescribe).
The price of any part or accessory (and its installation) to
which paragraph (1) does not apply by reason of this paragraph
shall not be taken into account under paragraph (2)(A).
‘‘(4) INSTALLERS SECONDARILY LIABLE FOR TAX.—The owners
of the trade or business installing the parts or accessories
shall be secondarily liable for the tax imposed by this sub-
section.
‘‘(b) IMPOSITION OF TAX ON SALES, ETC., WITHIN 2 YEARS OF
VEHICLES PURCHASED TAX-FREE.—
‘‘(1) IN GENERAL.—If—
‘‘(A) no tax was imposed under this subchapter on
the 1st retail sale of any passenger vehicle by reason of
its exempt use, and
‘‘(B) within 2 years after the date of such 1st retail
sale, such vehicle is resold by the purchaser or such pur-
chaser makes a substantial nonexempt use of such vehicle,
then such sale or use of such vehicle by such purchaser shall
be treated as the 1st retail sale of such vehicle for a price
equal to its fair market value at the time of such sale or
use.
‘‘(2) EXEMPT
USE.—For purposes of this subsection, the
term ‘exempt use’ means any use of a vehicle if the 1st retail
sale of such vehicle is not taxable under this subchapter by
reason of such use.
‘‘(c) PARTS AND ACCESSORIES SOLD WITH TAXABLE PASSENGER
VEHICLE.—Parts and accessories sold on, in connection with, or
with the sale of any passenger vehicle shall be treated as part
of the vehicle.
‘‘(d) PARTIAL PAYMENTS, ETC.—In the case of a contract, sale,
or arrangement described in paragraph (2), (3), or (4) of section
4216(c), rules similar to the rules of section 4217(e)(2) shall apply
for purposes of this subchapter.’’
(b) TECHNICAL AMENDMENTS.—
(1) Subsection (c) of section 4221 is amended by striking
‘‘4002(b), 4003(c), 4004(a)’’ and inserting ‘‘4001(d)’’.
(2) Subsection (d) of section 4222 is amended by striking
‘‘4002(b), 4003(c), 4004(a)’’ and inserting ‘‘4001(d)’’.
H. R. 2264—142
(3) The table of subchapters for chapter 31 is amended
by striking the item relating to subchapter A and inserting
the following:
‘‘Subchapter A. Luxury passenger vehicles.’’
(c) EFFECTIVE DATE.—The amendments made by this section
shall take effect on January 1, 1993, except that the provisions
of section 4001(e) of the Internal Revenue Code of 1986 (as amended
by subsection (a)) shall take effect on the date of the enactment
of this Act.
SEC. 13162. EXEMPTION FROM LUXURY EXCISE TAX FOR CERTAIN
EQUIPMENT INSTALLED ON PASSENGER VEHICLES FOR
USE BY DISABLED INDIVIDUALS.
(a) IN GENERAL.—Paragraph (3) of section 4004(b) (relating
to separate purchase of article and parts and accessories therefor),
as in effect on the day before the date of the enactment of this
Act, is amended—
(1) by striking ‘‘or’’ at the end of subparagraph (A),
(2) by redesignating subparagraph (B) as subparagraph
(C),
(3) by inserting after subparagraph (A) the following new
subparagraph:
‘‘(B) the part or accessory is installed on a passenger
vehicle to enable or assist an individual with a disability
to operate the vehicle, or to enter or exit the vehicle,
by compensating for the effect of such disability, or’’, and
(4) by inserting after subparagraph (C) the following flush
sentence:
‘‘The price of any part or accessory (and its installation) to
which paragraph (1) does not apply by reason of this paragraph
shall not be taken into account under paragraph (2)(A).’’
(b) EFFECTIVE DATE.—The amendments made by this section
shall take effect as if included in the amendments made by section
11221(a) of the Omnibus Budget Reconciliation Act of 1990.
(c) PERIOD
FOR FILING CLAIMS.—If refund or credit of any
overpayment of tax resulting from the application of the amend-
ments made by this section is prevented at any time before the
close of the 1-year period beginning on the date of the enactment
of this Act by the operation of any law or rule of law (including
res judicata), refund or credit of such overpayment (to the extent
attributable to such amendments) may, nevertheless, be made or
allowed if claim therefor is filed before the close of such 1-year
period.
SEC. 13163. TAX ON DIESEL FUEL USED IN NONCOMMERCIAL BOATS.
(a) GENERAL RULE.—
(1) Paragraph (2) of section 4092(a) (defining diesel fuel)
is amended by striking ‘‘or a diesel-powered train’’ and inserting
‘‘, a diesel-powered train, or a diesel-powered boat’’.
(2) Paragraph (1) of section 4041(a) is amended—
(A) by striking ‘‘diesel-powered highway vehicle’’ each
place it appears and inserting ‘‘diesel-powered highway
vehicle or diesel-powered boat’’, and
(B) by striking ‘‘such vehicle’’ and inserting ‘‘such
vehicle or boat’’.
(3) Subparagraph (B) of section 4092(b)(1) is amended by
striking ‘‘commercial and noncommercial vessels’’ each place
H. R. 2264—143
it appears and inserting ‘‘vessels for use in an off-highway
business use (as defined in section 6421(e)(2)(B))’’.
(b) EXEMPTION
FOR
USE
IN
FISHERIES
OR
COMMERCIAL
TRANSPORTATION.—Subparagraph (B) of section 6421(e)(2) is
amended to read as follows:
‘‘(B) USES IN BOATS.—
‘‘(i) IN
GENERAL.—Except as otherwise provided
in this subparagraph, the term ‘off-highway business
use’ does not include any use in a motorboat.
‘‘(ii) FISHERIES AND WHALING.—The term ‘off-high-
way business use’ shall include any use in a vessel
employed in the fisheries or in the whaling business.
‘‘(iii) EXCEPTION FOR DIESEL FUEL.—The term ‘off-
highway business use’ shall include the use of diesel
fuel in a boat in the active conduct of—
‘‘(I) a trade or business of commercial fishing
or transporting persons or property for compensa-
tion or hire, and
‘‘(II) except as provided in clause (iv), any
other trade or business.
‘‘(iv) NONCOMMERCIAL
BOATS.—In the case of a
boat used predominantly in any activity which is of
a type generally considered to constitute entertain-
ment, amusement, or recreation, clause (iii)(II) shall
not apply to—
‘‘(I) the taxes under sections 4041(a)(1) and
4081 for the period after December 31, 1993, and
before January 1, 2000, and
‘‘(II) so much of the tax under sections
4041(a)(1) and 4081 as does not exceed 4.3 cents
per gallon for the period after December 31, 1999.’’
(c) RETENTION OF TAXES IN GENERAL FUND.—Subsection (b)
of section 9508 (relating to transfers to Leaking Underground Stor-
age Tank Trust Fund) is amended by adding at the end thereof
the following new sentence: ‘‘For purposes of this subsection, there
shall not be taken into account the taxes imposed by sections
4041 and 4081 on diesel fuel sold for use or used as fuel in a
diesel-powered boat.’’
(d) EFFECTIVE DATE.—The amendments made by this section
shall take effect on January 1, 1994.
PART VI—OTHER CHANGES
SEC. 13171. ALTERNATIVE MINIMUM TAX TREATMENT OF CONTRIBU-
TIONS OF APPRECIATED PROPERTY.
(a) REPEAL
OF TAX PREFERENCE.—Subsection (a) of section
57 (as amended by section 13113) is amended by striking paragraph
(6) (relating to appreciated property charitable deduction) and by
redesignating paragraphs (7) and (8) as paragraphs (6) and (7),
respectively.
(b) EFFECT ON ADJUSTED CURRENT EARNINGS.—Paragraph (4)
of section 56(g) is amended by adding at the end thereof the follow-
ing new subparagraph:
‘‘(J) TREATMENT OF CHARITABLE CONTRIBUTIONS.—Not-
withstanding subparagraphs (B) and (C), no adjustment
related to the earnings and profits effects of any charitable
H. R. 2264—144
contribution shall be made in computing adjusted current
earnings.’’
(c) CONFORMING
AMENDMENT.—Subclause (II) of section
53(d)(1)(B)(ii) (as amended by section 13113) is amended by striking
‘‘(5), (6), and (8)’’ and inserting ‘‘(5), and (7)’’.
(d) EFFECTIVE DATE.—The amendments made by this section
shall apply to contributions made after June 30, 1992, except that
in the case of any contribution of capital gain property which
is not tangible personal property, such amendments shall apply
only if the contribution is made after December 31, 1992.
SEC. 13172. SUBSTANTIATION REQUIREMENT FOR DEDUCTION OF
CERTAIN CHARITABLE CONTRIBUTIONS.
(a) SUBSTANTIATION REQUIREMENT.—Section 170(f) (providing
special rules relating to the deduction of charitable contributions
and gifts) is amended by adding at the end the following new
paragraph:
‘‘(8) SUBSTANTIATION REQUIREMENT FOR CERTAIN CONTRIBU-
TIONS.—
‘‘(A) GENERAL RULE.—No deduction shall be allowed
under subsection (a) for any contribution of $250 or more
unless the taxpayer substantiates the contribution by a
contemporaneous written acknowledgment of the contribu-
tion by the donee organization that meets the requirements
of subparagraph (B).
‘‘(B) CONTENT
OF
ACKNOWLEDGEMENT.—An acknowl-
edgement meets the requirements of this subparagraph
if it includes the following information:
‘‘(i) The amount of cash and a description (but
not value) of any property other than cash contributed.
‘‘(ii) Whether the donee organization provided any
goods or services in consideration, in whole or in part,
for any property described in clause (i).
‘‘(iii) A description and good faith estimate of the
value of any goods or services referred to in clause
(ii) or, if such goods or services consist solely of intangi-
ble religious benefits, a statement to that effect.
For purposes of this subparagraph, the term ‘intangible
religious benefit’ means any intangible religious benefit
which is provided by an organization organized exclusively
for religious purposes and which generally is not sold in
a commercial transaction outside the donative context.
‘‘(C) CONTEMPORANEOUS.—For purposes of subpara-
graph (A), an acknowledgment shall be considered to be
contemporaneous if the taxpayer obtains the acknowledg-
ment on or before the earlier of—
‘‘(i) the date on which the taxpayer files a return
for the taxable year in which the contribution was
made, or
‘‘(ii) the due date (including extensions) for filing
such return.
‘‘(D) SUBSTANTIATION
NOT
REQUIRED
FOR
CONTRIBU-
TIONS REPORTED BY THE DONEE ORGANIZATION.—Subpara-
graph (A) shall not apply to a contribution if the donee
organization files a return, on such form and in accordance
with such regulations as the Secretary may prescribe,
H. R. 2264—145
which includes the information described in subparagraph
(B) with respect to the contribution.
‘‘(E) REGULATIONS.—The Secretary shall prescribe such
regulations as may be necessary or appropriate to carry
out the purposes of this paragraph, including regulations
that may provide that some or all of the requirements
of this paragraph do not apply in appropriate cases.’’
(b) EFFECTIVE DATE.—The provisions of this section shall apply
to contributions made on or after January 1, 1994.
SEC. 13173. DISCLOSURE 
RELATED 
TO 
QUID 
PRO 
QUO
CONTRIBUTIONS.
(a) DISCLOSURE REQUIREMENT.—Subchapter B of chapter 61
(relating to information and returns) is amended by redesignating
section 6115 as section 6116 and by inserting after section 6114
the following new section:
‘‘SEC. 6115. DISCLOSURE RELATED TO QUID PRO QUO CONTRIBU-
TIONS.
‘‘(a) DISCLOSURE REQUIREMENT.—If an organization described
in section 170(c) (other than paragraph (1) thereof) receives a quid
pro quo contribution in excess of $75, the organization shall, in
connection with the solicitation or receipt of the contribution, pro-
vide a written statement which—
‘‘(1) informs the donor that the amount of the contribution
that is deductible for Federal income tax purposes is limited
to the excess of the amount of any money and the value of
any property other than money contributed by the donor over
the value of the goods or services provided by the organization,
and
‘‘(2) provides the donor with a good faith estimate of the
value of such goods or services.
‘‘(b) QUID PRO QUO CONTRIBUTION.—For purposes of this sec-
tion, the term ‘quid pro quo contribution’ means a payment made
partly as a contribution and partly in consideration for goods or
services provided to the payor by the donee organization. A quid
pro quo contribution does not include any payment made to an
organization, organized exclusively for religious purposes, in return
for which the taxpayer receives solely an intangible religious benefit
that generally is not sold in a commercial transaction outside the
donative context.’’
(b) PENALTY FOR FAILURE TO DISCLOSE.—Part I of subchapter
B of chapter 68 (relating to assessable penalties) is amended by
inserting after section 6713 the following new section:
‘‘SEC. 6714. FAILURE 
TO 
MEET 
DISCLOSURE 
REQUIREMENTS
APPLICABLE TO QUID PRO QUO CONTRIBUTIONS.
‘‘(a) IMPOSITION OF PENALTY.—If an organization fails to meet
the disclosure requirement of section 6115 with respect to a quid
pro quo contribution, such organization shall pay a penalty of
$10 for each contribution in respect of which the organization
fails to make the required disclosure, except that the total penalty
imposed by this subsection with respect to a particular fundraising
event or mailing shall not exceed $5,000.
‘‘(b) REASONABLE CAUSE EXCEPTION.—No penalty shall be
imposed under this section with respect to any failure if it is
shown that such failure is due to reasonable cause.’’
(c) CLERICAL AMENDMENTS.—
H. R. 2264—146
(1) The table for subchapter B of chapter 61 is amended
by striking the item relating to section 6115 and inserting
the following new items:
‘‘Sec. 6115. Disclosure related to quid pro quo contributions.
‘‘Sec. 6116. Cross reference.’’
(2) The table for part I of subchapter B of chapter 68
is amended by inserting after the item for section 6713 the
following new item:
‘‘Sec. 6714. Failure to meet disclosure requirements applicable to quid pro
quo contributions.’’
(d) EFFECTIVE DATE.—The provisions of this section shall apply
to quid pro quo contributions made on or after January 1, 1994.
SEC. 13174. TEMPORARY EXTENSION OF DEDUCTION FOR HEALTH
INSURANCE COSTS OF SELF-EMPLOYED INDIVIDUALS.
(a) IN GENERAL.—
(1) EXTENSION.—Paragraph (6) of section 162(l) (relating
to special rules for health insurance costs of self-employed
individuals) is amended by striking ‘‘June 30, 1992’’ and insert-
ing ‘‘December 31, 1993’’.
(2) CONFORMING
AMENDMENT.—Paragraph (2) of section
110(a) of the Tax Extension Act of 1991 is hereby repealed.
(3) EFFECTIVE DATE.—The amendments made by this sub-
section shall apply to taxable years ending after June 30,
1992.
(b) DETERMINATION OF ELIGIBILITY FOR EMPLOYER-SPONSORED
HEALTH PLAN.—
(1) IN
GENERAL.—Paragraph (2)(B) of section 162(l) is
amended to read as follows:
‘‘(B) OTHER COVERAGE.—Paragraph (1) shall not apply
to any taxpayer for any calendar month for which the
taxpayer is eligible to participate in any subsidized health
plan maintained by any employer of the taxpayer or of
the spouse of the taxpayer.’’
(2) EFFECTIVE DATE.—The amendment made by paragraph
(1) shall apply to taxable years beginning after December 31,
1992.
Subchapter B—Revenue Increases
PART I—PROVISIONS AFFECTING
INDIVIDUALS
Subpart A—Rate Increases
SEC. 13201. INCREASE IN TOP MARGINAL RATE UNDER SECTION 1.
(a) GENERAL RULE.—Section 1 (relating to tax imposed) is
amended by striking subsections (a) through (e) and inserting the
following:
‘‘(a) MARRIED INDIVIDUALS FILING JOINT RETURNS AND SURVIV-
ING SPOUSES.—There is hereby imposed on the taxable income
of—
‘‘(1) every married individual (as defined in section 7703)
who makes a single return jointly with his spouse under section
6013, and
‘‘(2) every surviving spouse (as defined in section 2(a)),
H. R. 2264—147
a tax determined in accordance with the following table:
‘‘If taxable income is:
The tax is:
Not over $36,900 ................................
15% of taxable income.
Over $36,900 but not over $89,150 ...
$5,535, plus 28% of the excess over
$36,900.
Over $89,150 but not over $140,000
$20,165, plus 31% of the excess over
$89,150.
Over $140,000 ....................................
$35,928.50, plus 36% of the excess over
$140,000.
‘‘(b) HEADS OF HOUSEHOLDS.—There is hereby imposed on the
taxable income of every head of a household (as defined in section
2(b)) a tax determined in accordance with the following table:
‘‘If taxable income is:
The tax is:
Not over $29,600 ................................
15% of taxable income.
Over $29,600 but not over $76,400 ...
$4,440, plus 28% of the excess over
$29,600.
Over $76,400 but not over $127,500
$17,544, plus 31% of the excess over
$76,400.
Over $127,500 ....................................
$33,385, plus 36% of the excess over
$127,500.
‘‘(c) UNMARRIED INDIVIDUALS (OTHER THAN SURVIVING SPOUSES
AND HEADS OF HOUSEHOLDS).—There is hereby imposed on the
taxable income of every individual (other than a surviving spouse
as defined in section 2(a) or the head of a household as defined
in section 2(b)) who is not a married individual (as defined in
section 7703) a tax determined in accordance with the following
table:
‘‘If taxable income is:
The tax is:
Not over $22,100 ................................
15% of taxable income.
Over $22,100 but not over $53,500 ...
$3,315, plus 28% of the excess over
$22,100.
Over $53,500 but not over $115,000
$12,107, plus 31% of the excess over
$53,500.
Over $115,000 ....................................
$31,172, plus 36% of the excess over
$115,000.
‘‘(d) MARRIED INDIVIDUALS FILING SEPARATE RETURNS.—There
is hereby imposed on the taxable income of every married individual
(as defined in section 7703) who does not make a single return
jointly with his spouse under section 6013, a tax determined in
accordance with the following table:
‘‘If taxable income is:
The tax is:
Not over $18,450 ................................
15% of taxable income.
Over $18,450 but not over $44,575 ...
$2,767.50, plus 28% of the excess over
$18,450.
Over $44,575 but not over $70,000 ...
$10,082.50, plus 31% of the excess over
$44,575.
Over $70,000 ......................................
$17,964.25, plus 36% of the excess over
$70,000.
‘‘(e) ESTATES AND TRUSTS.—There is hereby imposed on the
taxable income of—
‘‘(1) every estate, and
‘‘(2) every trust,
taxable under this subsection a tax determined in accordance with
the following table:
‘‘If taxable income is:
The tax is:
Not over $1,500 ..................................
15% of taxable income.
Over $1,500 but not over $3,500 .......
$225, plus 28% of the excess over
$1,500.
H. R. 2264—150
(7) EXCEPTION FOR ESTATES AND TRUSTS.—This subsection
shall not apply in the case of an estate or trust.
SEC. 13202. SURTAX ON HIGH-INCOME TAXPAYERS.
(a) GENERAL RULE.—
(1) Subsection (a) of section 1 (as amended by section
13201) is amended by striking the last item in the table con-
tained therein and inserting the following:
‘‘Over 
$140,000 
but 
not 
over
$250,000.
$35,928.50, plus 36% of the excess over
$140,000.
Over $250,000 ....................................
$75,528.50, plus 39.6% of the excess
over $250,000.’’
(2) Subsection (b) of section 1 (as so amended) is amended
by striking the last item in the table contained therein and
inserting the following:
‘‘Over 
$127,500 
but 
not 
over
$250,000.
$33,385, plus 36% of the excess over
$127,500.
Over $250,000 ....................................
$77,485, plus 39.6% of the excess over
$250,000.’’
(3) Subsection (c) of section 1 (as so amended) is amended
by striking the last item in the table contained therein and
inserting the following:
‘‘Over 
$115,000 
but 
not 
over
$250,000.
$31,172, plus 36% of the excess over
$115,000.
Over $250,000 ....................................
$79,772, plus 39.6% of the excess over
$250,000.’’
(4) Subsection (d) of section 1 (as so amended) is amended
by striking the last item in the table contained therein and
inserting the following:
‘‘Over $70,000 but not over $125,000
$17,964.25, plus 36% of the excess over
$70,000.
Over $125,000 ....................................
$37,764.25, plus 39.6% of the excess
over $125,000.’’
(5) Subsection (e) of section 1 (as so amended) is amended
by striking the last item in the table contained therein and
inserting the following:
‘‘Over $5,500 but not over $7,500 .....
$1,405, plus 36% of the excess over
$5,500.
Over $7,500 ........................................
$2,125, plus 39.6% of the excess over
$7,500.’’
(b) TECHNICAL
AMENDMENT.—Sections 531 and 541 (as
amended by section 13201) are each amended by striking ‘‘36 per-
cent’’ and inserting ‘‘39.6 percent’’.
(c) EFFECTIVE DATE.—The amendments made by this section
shall apply to taxable years beginning after December 31, 1992.
SEC. 13203. MODIFICATIONS TO ALTERNATIVE MINIMUM TAX RATES
AND EXEMPTION AMOUNTS.
(a) INCREASE IN RATE.—Paragraph (1) of section 55(b) (defining
tentative minimum tax) is amended to read as follows:
‘‘(1) AMOUNT OF TENTATIVE TAX.—
‘‘(A) NONCORPORATE TAXPAYERS.—
‘‘(i) IN GENERAL.—In the case of a taxpayer other
than a corporation, the tentative minimum tax for
the taxable year is the sum of—
‘‘(I) 26 percent of so much of the taxable excess
as does not exceed $175,000, plus