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SEC. 11372. EXTENSION OF WITHHOLDING TO CERTAIN
GAMBLING WINNINGS.
(a) REPEAL OF EXEMPTION FOR BINGO AND KENO.—
Paragraph (5) of section 3402(q) is amended to read as fol-
lows:
‘‘(5) EXEMPTION FOR SLOT MACHINES.—The tax
imposed under paragraph (1) shall not apply to
winnings from a slot machine.’’.
(b) THRESHOLD AMOUNT.—Paragraph (3) of section
3402(q) is amended—
(1) by striking ‘‘(B) and (C)’’ in subparagraph
(A) and inserting ‘‘(B), (C), and (D)’’, and
(2) by adding at the end the following new sub-
paragraph:
‘‘(D) BINGO AND KENO.—Proceeds of more
than $5,000 from a wager placed in a bingo or
keno game.’’.
(c) EFFECTIVE DATE.—The amendments made by this
section shall take effect on January 1, 1996.
SEC. 11373. LOSSES FROM FORECLOSURE PROPERTY.
(a) IN GENERAL.—Section 818(b) is amended by add-
ing at the end the following new paragraph:
‘‘(2) LOSSES FROM FORECLOSURE PROPERTY.—
‘‘(A) IN
GENERAL.—The amortizable por-
tion of any loss arising from the sale or exchange
of foreclosure property which (without regard to
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this paragraph) is treated as a capital loss shall
be treated as a loss from the sale or exchange of
real property used in carrying on an insurance
business which is recognized ratably over the 10-
taxable year period beginning with the taxable
year following the taxable year in which the sale
or exchange of the foreclosure property occurred.
‘‘(B) AMORTIZABLE
PORTION.—For pur-
poses of this paragraph—
‘‘(i) IN
GENERAL.—The amortizable
portion of a loss referred to in subpara-
graph (A) is the percentage (not greater
than 20 percent) of such loss to which the
taxpayer elects to have this paragraph
apply.
‘‘(ii) SUBSEQUENT MODIFICATIONS OF
AMOUNT.—The taxpayer may elect for any
of the taxable years in the change period to
change (subject to the limitation under
clause (i)) the percentage of a loss referred
to in subparagraph (A) which is treated as
the amortizable portion of such loss. If the
taxpayer so elects, each such changed per-
centage shall be treated as if it were the per-
centage specified in the election made under
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clause (i), and proper adjustments shall be
made for all taxable years to reflect each
such change.
‘‘(iii) STATUTE OF LIMITATIONS.— For
purposes of section 6501(h) and 6511(d)(2),
any change by reason of an election under
clause (ii) shall be treated as a capital loss
carryback from the year such change is
made.
‘‘(iv) CHANGE PERIOD.—For purposes
of clause (ii), the change period is the 3-tax-
able year period following the taxable year
in which the sale or exchange of the fore-
closure property occurred.
‘‘(C) ELECTION
TO
TREAT
UNAMORTIZED
ORDINARY LOSSES AS CAPITAL LOSSES.—
‘‘(i) IN GENERAL.—The taxpayer may
elect to treat any unused amount of any or-
dinary loss described in subparagraph (A)
as a capital loss arising in the taxable year
for which the election under this subpara-
graph is made.
‘‘(ii) LIMITATION
ON
ELECTION.—An
election may be made under clause (i) with
respect to any loss only for any taxable year
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in the 5-taxable year period following the
taxable year referred to in subparagraph
(A).
‘‘(iii) UNUSED AMOUNT OF ORDINARY
LOSS.—For purposes of clause (i), the un-
used amount of an ordinary loss is the
amount of the amortizable portion of any
loss which has not been recognized as of the
close of the preceding taxable year.
‘‘(iv) ORDERING
RULE.—Any unused
amount of an ordinary loss with respect to
which an election was made under clause
(i) shall be treated as coming first from the
last taxable year in the 10-taxable year pe-
riod referred to in subparagraph (A) and
then from each preceding taxable year in re-
verse chronological order.
‘‘(D) FORECLOSURE PROPERTY.—For pur-
poses of this paragraph, the term ‘foreclosure
property’ means any real property used in a
trade or businesses (as defined in section 1231(b)
without regard to this subsection) which is ac-
quired by a life insurance company as the result
of—
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‘‘(i) such company having bid on such
property at foreclosure, or
‘‘(ii) such company having otherwise
reduced such property to ownership or pos-
session by agreement or process of law, after
there was a default (or default was immi-
nent) on indebtedness which such property
secured.
‘‘(E) TIME FOR MAKING ELECTIONS.—Any
election under this paragraph for any taxable
year shall be made on or before the due date (in-
cluding extensions) for the return of tax for such
taxable year.’’
(b) CONFORMING AMENDMENTS.—Section 818(b) is
amended—
(1) by striking ‘‘In the’’ and inserting:
‘‘(1) IN GENERAL.—In the ’’, and
(2) by redesignating paragraphs (1) and (2) and
subparagraphs (A) and (B) of paragraph (1) as sub-
paragraphs (A) and (B) and clauses (i) and (ii) of
subparagraph (A), respectively.
(c) EFFECTIVE DATE.—The amendments made by this
section shall apply to taxable years beginning after Decem-
ber 31, 1994.
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SEC. 11374. NONRECOGNITION TREATMENT FOR CERTAIN
TRANSFERS BY COMMON TRUST FUNDS TO
REGULATED INVESTMENT COMPANIES.
(a) GENERAL RULE.—Section 584 (relating to com-
mon trust funds) is amended by redesignating subsection
(h) as subsection (i) and by inserting after subsection (g)
the following new subsection:
‘‘(h) NONRECOGNITION TREATMENT
FOR CERTAIN
TRANSFERS TO REGULATED INVESTMENT COMPANIES.—
‘‘(1) IN GENERAL.—If—
‘‘(A) pursuant to a single plan, a common
trust fund transfers substantially all of its assets
to one or more regulated investment companies
in exchange solely for stock in the company or
companies to which such assets are so trans-
ferred, and
‘‘(B) such stock is distributed by such com-
mon trust fund to participants in such common
trust fund in exchange solely for their interests
in such common trust fund,
no gain or loss shall be recognized by such common
trust fund by reason of such transfer or distribution,
and no gain or loss shall be recognized by any partic-
ipant in such common trust fund by reason of such
exchange.
‘‘(2) BASIS RULES.—
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‘‘(A) REGULATED INVESTMENT COMPANY.—
The basis of any asset received by a regulated in-
vestment company in a transfer referred to in
paragraph (1)(A) shall be the same as it would
be in the hands of the common trust fund.
‘‘(B) PARTICIPANTS.—The basis of the stock
which is received in an exchange referred to in
paragraph (1)(B) shall be the same as that of the
property exchanged. If stock in more than one
regulated investment company is received in
such exchange, the basis determined under the
preceding sentence shall be allocated among the
stock in each such company on the basis of re-
spective fair market values.
‘‘(3) TREATMENT OF ASSUMPTIONS OF LIABIL-
ITY.—
‘‘(A) IN GENERAL.—In determining whether
the transfer referred to in paragraph (1)(A) is in
exchange solely for stock in one or more regu-
lated investment companies, the assumption by
any such company of a liability of the common
trust fund, and the fact that any property trans-
ferred by the common trust fund is subject to a
liability, shall be disregarded.
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‘‘(B) SPECIAL RULE WHERE ASSUMED LI-
ABILITIES EXCEED BASIS.—
‘‘(i) IN GENERAL.—If, in any transfer
referred to in paragraph (1)(A), the as-
sumed liabilities exceed the aggregate ad-
justed bases (in the hands of the common
trust fund) of the assets transferred to the
regulated investment company or compa-
nies—
‘‘(I) notwithstanding paragraph
(1), gain shall be recognized to the
common trust fund on such transfer in
an amount equal to such excess,
‘‘(II) the basis of the assets re-
ceived by the regulated investment
company or companies in such trans-
fer shall be increased by the amount so
recognized, and
‘‘(III) any adjustment to the basis
of a participant’s interest in the com-
mon trust fund as a result of the gain
so recognized shall be treated as occur-
ring immediately before the exchange
referred to in paragraph (1)(B).
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If the transfer referred to in paragraph
(1)(A) is to two or more regulated invest-
ment companies, the basis increase under
subclause (II) shall be allocated among such
companies on the basis of the respective fair
market values of the assets received by each
of such companies.
‘‘(ii) ASSUMED LIABILITIES.—For pur-
poses of clause (i), the term ‘assumed liabil-
ities’ means the aggregate of—
‘‘(I) any liability of the common
trust fund assumed by any regulated
investment company in connection
with the transfer referred to in para-
graph (1)(A), and
‘‘(II) any liability to which prop-
erty so transferred is subject.
‘‘(4) COMMON TRUST FUND MUST MEET DIVER-
SIFICATION RULES.—This subsection shall not apply
to any common trust fund which would not meet the
requirements of section 368(a)(2)(F)(ii) if it were a
corporation. For purposes of the preceding sentence,
Government securities shall not be treated as securi-
ties of an issuer in applying the 25-percent and 50-
percent test and such securities shall not be excluded
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for purposes of determining total assets under clause
(iv) of section 368(a)(2)(F).’’.
(b) EFFECTIVE DATE.—The amendment made by sub-
section (a) shall apply to transfers after December 31, 1995.
SEC. 11375. EXCLUSION FOR ENERGY CONSERVATION SUB-
SIDIES LIMITED TO SUBSIDIES WITH RE-
SPECT TO DWELLING UNITS.
(a) IN GENERAL.—Paragraph (1) of section 136(c)
(defining energy conservation measure) is amended by
striking ‘‘energy demand—’’ and all that follows and in-
serting ‘‘energy demand with respect to a dwelling unit.’’
(b) CONFORMING AMENDMENTS.—
(1) Subsection (a) of section 136 is amended to
read as follows:
‘‘(a) EXCLUSION.—Gross income shall not include the
value of any subsidy provided (directly or indirectly) by
a public utility to a customer for the purchase or installa-
tion of any energy conservation measure.’’
(2) Paragraph (2) of section 136(c) is amend-
ed—
(A) by striking subparagraph (A) and by
redesignating subparagraphs (B) and (C) as sub-
paragraphs (A) and (B), respectively, and
(B) by striking ‘‘AND SPECIAL RULES’’ in
the paragraph heading.
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(c) EFFECTIVE DATE.—The amendments made by this
section shall apply to amounts received after December 31,
1995, unless received pursuant to a written binding con-
tract in effect on September 13, 1995, and at all times there-
after.
SEC. 11376. ELECTION TO CEASE STATUS AS QUALIFIED
SCHOLARSHIP FUNDING CORPORATION.
(a) IN GENERAL.—Subsection (d) of section 150 (relat-
ing to definitions and special rules) is amended by adding
at the end thereof the following new paragraph:
‘‘(3) ELECTION TO CEASE STATUS AS QUALIFIED
SCHOLARSHIP FUNDING CORPORATION.—
‘‘(A) IN GENERAL.—Any qualified scholar-
ship funding bond, and qualified student loan
bond, outstanding on the date of the issuer’s elec-
tion under this paragraph (and any bond (or se-
ries of bonds) issued to refund such a bond) shall
not fail to be a tax-exempt bond solely because
the issuer ceases to be described in subpara-
graphs (A) and (B) of paragraph (2) if the is-
suer meets the requirements of subparagraphs
(B) and (C) of this paragraph.
‘‘(B) ASSETS AND LIABILITIES OF ISSUER
TRANSFERRED
TO
TAXABLE
SUBSIDIARY.—The
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requirements of this subparagraph are met by an
issuer if—
‘‘(i) all of the student loan notes of the
issuer and other assets pledged to secure the
repayment of qualified scholarship funding
bond indebtedness of the issuer are trans-
ferred to another corporation within a rea-
sonable period after the election is made
under this paragraph;
‘‘(ii) such transferee corporation as-
sumes or otherwise provides for the payment
of all of the qualified scholarship funding
bond indebtedness of the issuer within a
reasonable period after the election is made
under this paragraph;
‘‘(iii) to the extent permitted by law,
such transferee corporation assumes all of
the responsibilities, and succeeds to all of
the rights, of the issuer under the issuer’s
agreements with the Secretary of Education
in respect of student loans;
‘‘(iv) immediately after such transfer,
the issuer, together with any other issuer
which has made an election under this
paragraph in respect of such transferee,
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hold all of the senior stock in such transferee
corporation; and
‘‘(v) such transferee corporation is not
exempt from tax under this chapter.
‘‘(C) ISSUER TO OPERATE AS INDEPENDENT
ORGANIZATION
DESCRIBED
IN
SECTION
501(c)(3).—The requirements of this subpara-
graph are met by an issuer if, within a reason-
able period after the transfer referred to in sub-
paragraph (B)—
‘‘(i) the issuer is described in section
501(c)(3) and exempt from tax under sec-
tion 501(a);
‘‘(ii) the issuer no longer is described
in subparagraphs (A) and (B) of paragraph
(2); and
‘‘(iii) at least 80 percent of the mem-
bers of the board of directors of the issuer
are independent members.
‘‘(D) SENIOR STOCK.—For purposes of this
paragraph, the term ‘senior stock’ means stock—
‘‘(i) which participates pro rata and
fully in the equity value of the corporation
with all other common stock of the corpora-
tion but which has the right to payment of
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liquidation proceeds prior to payment of
liquidation proceeds in respect of other com-
mon stock of the corporation;
‘‘(ii) which has a fixed right upon liq-
uidation and upon redemption to an
amount equal to the greater of—
‘‘(I) the fair market value of such
stock on the date of liquidation or re-
demption (whichever is applicable); or
‘‘(II) the fair market value of all
assets transferred in exchange for such
stock and reduced by the amount of all
liabilities of the corporation which has
made an election under this paragraph
assumed by the transferee corporation
in such transfer;
‘‘(iii) the holder of which has the right
to require the transferee corporation to re-
deem on a date that is not later than 10
years after the date on which an election
under this paragraph was made and pursu-
ant to such election such stock was issued;
and
‘‘(iv) in respect of which, during the
time such stock is outstanding, there is not
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outstanding any equity interest in the cor-
poration having any liquidation, redemp-
tion or dividend rights in the corporation
which are superior to those of such stock.
‘‘(E) INDEPENDENT
MEMBER.—The term
‘independent member’ means a member of the
board of directors of the issuer who (except for
services as a member of such board) receives no
compensation directly or indirectly—
‘‘(i) for services performed in connec-
tion with such transferee corporation, or
‘‘(ii) for services as a member of the
board of directors or as an officer of such
transferee corporation.
For purposes of clause (ii), the term ‘officer’ in-
cludes any individual having powers or respon-
sibilities similar to those of officers.
‘‘(F) COORDINATION
WITH
CERTAIN
PRI-
VATE FOUNDATION TAXES.—For purposes of sec-
tions 4942 (relating to the excise tax on a failure
to distribute income) and 4943 (relating to the
excise tax on excess business holdings), the trans-
feree corporation referred to in subparagraph (B)
shall be treated as a functionally related business
(within the meaning of section 4942(j)(4)) with
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respect to the issuer during the period commenc-
ing with the date on which an election is made
under this paragraph and ending on the date
that is the earlier of—
‘‘(i) the last day of the last taxable
year for which more than 50 percent of the
gross income of such transferee corporation
is derived from, or more than 50 percent of
the assets (by value) of such transferee cor-
poration consists of, student loan notes in-
curred under the Higher Education Act of
1965; or
‘‘(ii) the last day of the taxable year of
the issuer during which occurs the date
which is 10 years after the date on which
the election under this paragraph is made.
‘‘(G) ELECTION.—An election under this
paragraph may be revoked only with the consent
of the Secretary.’’
(b) EFFECTIVE DATE.—The amendment made by this
section shall take effect on the date of the enactment of this
Act.
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‘‘(ii) an affiliate of such organization
which is exempt from tax under section
501(a), or
‘‘(iii) a director or officer of, or an in-
dividual who performs services for, such or-
ganization or affiliate but only if the insur-
ance covers primarily risks associated with
the performance of services for the benefit of
such organization or affiliate.
For purposes of this subparagraph, the deter-
mination as to whether an entity is an affiliate
of an organization shall be made under rules
similar to the rules of section 168(h)(4)(B).
‘‘(C) REGULATIONS.—The Secretary shall
prescribe such regulations as may be necessary
or appropriate to carry out the purposes of this
paragraph, including regulations for the appli-
cation of this paragraph in the case of income
paid through 1 or more entities or between 2 or
more chains of entities.’’
(b) EFFECTIVE DATE.—The amendment made by this
section shall apply to amounts included in gross income
in any taxable year beginning after December 31, 1995.
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SEC. 11378. REPEAL OF FINANCIAL INSTITUTION TRANSI-
TION 
RULE 
TO 
INTEREST 
ALLOCATION
RULES.
(a) IN GENERAL.—Paragraph (5) of section 1215(c)
of the Tax Reform Act of 1986 (Public Law 99–514, 100
Stat. 2548) is hereby repealed.
(b) EFFECTIVE DATE.—The amendments made by this
section shall apply to taxable years beginning after Decem-
ber 31, 1995.
SEC. 11379. REPEAL OF BAD DEBT RESERVE METHOD FOR
THRIFT SAVINGS ASSOCIATIONS.
(a) IN GENERAL.—Section 593 (relating to reserves for
losses on loans) is hereby repealed.
(b) CONFORMING AMENDMENTS.—
(1) Subsection (d) of section 50 is amended by
adding at the end the following new sentence:
‘‘Paragraphs (1)(A), (2)(A), and (4) of section 46(e) re-
ferred to in paragraph (1) of this subsection shall not apply
to any taxable year beginning after December 31, 1995.’’
(2) Subsection (e) of section 52 is amended by
striking paragraph (1) and by redesignating para-
graphs (2) and (3) as paragraphs (1) and (2), respec-
tively.
(3) Subsection (a) of section 57 is amended by
striking paragraph (4).
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(4) Section 246 is amended by striking sub-
section (f).
(5) Clause (i) of section 291(e)(1)(B) is amended
by striking ‘‘or to which section 593 applies’’.
(6) Subparagraph (A) of section 585(a)(2) is
amended by striking ‘‘other than an organization to
which section 593 applies’’.
(7) Sections 595 and 596 are hereby repealed.
(8) Subsection (a) of section 860E is amended—
(A) by striking ‘‘Except as provided in
paragraph (2), the’’ in paragraph (1) and in-
serting ‘‘The’’,
(B) by striking paragraphs (2) and (4) and
redesignating paragraphs (3) and (5) as para-
graphs (2) and (3), respectively, and
(C) by striking in paragraph (2) (as so re-
designated) all that follows ‘‘subsection’’ and in-
serting a period.
(9) Paragraph (3) of section 992(d) is amended
by striking ‘‘or 593’’.
(10) Section 1038 is amended by striking sub-
section (f).
(11) Clause (ii) of section 1042(c)(4)(B) is
amended by striking ‘‘or 593’’.
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(12) Subsection (c) of section 1277 is amended
by striking ‘‘or to which section 593 applies’’.
(13) Subparagraph (B) of section 1361(b)(2) is
amended by striking ‘‘or to which section 593 ap-
plies’’.
(14) The table of sections for part II of sub-
chapter H of chapter 1 is amended by striking the
items relating to sections 593, 595, and 596.
(c) EFFECTIVE DATE.—
(1) IN GENERAL.—Except as provided in para-
graph (2), the amendments made by this section shall
apply to taxable years beginning after December 31,
1995.
(2) REPEAL OF SECTION 595.—The repeal of sec-
tion 595 under subsection (b)(7) shall apply to prop-
erty acquired in taxable years beginning after Decem-
ber 31, 1995.
(d) 6-YEAR SPREAD OF ADJUSTMENTS.—
(1) IN GENERAL.—In the case of any taxpayer
who is required by reason of the amendments made
by this section to change its method of computing re-
serves for bad debts—
(A) such change shall be treated as a change
in a method of accounting,
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(B) such change shall be treated as initiated
by the taxpayer and as having been made with
the consent of the Secretary, and
(C) the net amount of the adjustments re-
quired to be taken into account by the taxpayer
under section 481(a)—
(i) shall be determined by taking into
account only applicable excess reserves, and
(ii) as so determined, shall be taken
into account ratably over the 6-taxable year
period beginning with the first taxable year
beginning after December 31, 1995.
(2) APPLICABLE EXCESS RESERVES.—
(A) IN GENERAL.—For purposes of para-
graph (1), the term ‘applicable excess reserves’
means the excess (if any) of—
(i) the balance of the reserves described
in section 593(c)(1) of such Code (as in ef-
fect on the day before the date of the enact-
ment of this Act) as of the close of the tax-
payer’s last taxable year beginning before
January 1, 1996, over
(ii) the lesser of—
(I) the balance of such reserves as
of the close of the taxpayer’s last tax-
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able year beginning before January 1,
1988, or
(II) the balance of the reserves de-
scribed in subclause (I), reduce by an
amount determined in the same man-
ner as under section 585(b)(2)(B)(ii)
on the basis of the taxable years de-
scribed in clause (i) and this clause.
(B) SPECIAL
RULE
FOR
THRIFTS
WHICH
BECOME SMALL BANKS.—In the case of a bank
(as defined in section 581 of such Code) which
is not a large bank (as defined in section
585(c)(2) of such Code) for its first taxable year
beginning after December 31, 1995—
(i) the balance taken into account
under subparagraph (A)(ii) shall not be less
than the amount which would be the bal-
ance of such reserve as of the close of its last
taxable year beginning before January 1,
1996, if the additions to such reserve for all
taxable years had been determined under
section 585(b)(2)(A), and
(ii) the opening balance of the reserve
for bad debts as of the beginning of such
first taxable year shall be the balance taken
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into account under subparagraph (A)(ii)
(determined after the application of clause
(i) of this subparagraph).
The preceding sentence shall not apply for pur-
poses of paragraphs (5), (6), and (7).
(3) RECAPTURE OF PRE-1988 RESERVES WHERE
TAXPAYER CEASES TO BE BANK.—If during any tax-
able year beginning after December 31, 1995, a tax-
payer to which paragraph (1) applied is not a bank
(as defined in section 581), paragraph (1) shall apply
to the reserves described in subparagraph (A)(ii) ex-
cept that such reserves shall be taken into account rat-
ably over the 6-taxable year period beginning with
such taxable year.
(4) SUSPENSION OF RECAPTURE IF RESIDENTIAL
LOAN REQUIREMENT MET.—
(A) IN GENERAL.—In the case of a bank
which meets the residential loan requirement of
subparagraph (B) for a taxable year beginning
after December 31, 1995, and before January 1,
1998—
(i) no adjustment shall be taken into
account under paragraph (1) for such tax-
able year, and
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(ii) such taxable year shall be dis-
regarded in determining—
(I) whether any other taxable year
is a taxable year for which an adjust-
ment is required to be taken into ac-
count under paragraph (1), and
(II) the amount of such adjust-
ment.
(B) RESIDENTIAL LOAN REQUIREMENT.—A
taxpayer meets the residential loan requirement
of this subparagraph for any taxable year if the
principal amount of the residential loans made
by the taxpayer during such year is not less than
the base amount for such year.
(C) RESIDENTIAL LOAN.—For purposes of
this paragraph, the term ‘‘residential loan’’
means any loan described in clause (v) of section
7701(a)(19)(C) of such Code but only if such
loan is incurred in acquiring, constructing, or
improving the property described in such clause.
(D) BASE AMOUNT.—For purposes of sub-
paragraph (B), the base amount is the average
of the principal amounts of the residential loans
made by the taxpayer during the 6 most recent
taxable years beginning before January 1, 1996.
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At the election of the taxpayer who made such
loans during each of such 6 taxable years, the
preceding sentence shall be applied without re-
gard to the taxable year in which such principal
amount was the highest and the taxable year in
such principal amount was the lowest. Such an
election may be made only for the first taxable
year beginning after December 31, 1995, and, if
made for such taxable year, shall apply to the
succeeding taxable year unless revoked with the
consent of the Secretary of the Treasury or his
delegate.
(E) CONTROLLED GROUPS.—In the case of
a taxpayer which is a member of any controlled
group of corporations described in section
1563(a)(1) of such Code, subparagraph (B) shall
be applied with respect to such group.
(5) CONTINUED APPLICATION OF FRESH START
UNDER SECTION 585 TRANSITIONAL RULES.—In the
case of a taxpayer to which paragraph (1) applied
and which was not a large bank (as defined in section
585(c)(2) of such Code) for its first taxable year be-
ginning after December 31, 1995:
(A) IN GENERAL.—For purposes of deter-
mining the net amount of adjustments referred to
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in section 585(c)(3)(A)(iii) of such Code, there
shall be taken into account only the excess of the
reserve for bad debts as of the close of the last
taxable year before the disqualification year over
the balance taken into account by such taxpayer
under paragraph (2)(A)(ii) of this subsection.
(B) TREATMENT UNDER ELECTIVE CUT-OFF
METHOD.—For purposes of applying section
585(c)(4) of such Code—
(i) the balance of the reserve taken into
account under subparagraph (B) thereof
shall be reduced by the balance taken into
account by such taxpayer under paragraph
(2)(A)(ii) of this subsection, and
(ii) no amount shall be includible in
gross income by reason of such reduction.
(6) 
CONTINUED
APPLICATION
OF
SECTION
593(e).—Notwithstanding the amendments made by
this section, in the case of a taxpayer to which para-
graph (1) of this subsection applies, section 593(e) of
such Code (as in effect on the day before the date of
the enactment of this Act) shall continue to apply to
such taxpayer as if such taxpayer were a domestic
building and loan association but the amount of the
reserves taken into account under subparagraphs (B)
1612
HR 2491 EAS
graphs (4) and (6) in the case of acquisitions, merg-
ers, spin-offs, and other reorganizations.
SEC. 11380. NEWSPAPER DISTRIBUTORS TREATED AS DI-
RECT SELLERS.
(a) IN GENERAL.—Section 3508(b)(2)(A) in amended
by striking ‘‘or’’ at the end of clause (i), by inserting ‘‘or’’
at the end of clause (ii), and by inserting after clause (ii)
the following new clause:
‘‘(iii) is engaged in the trade or busi-
ness of the delivering or distribution of
newspapers or shopping news (including
any services directly related to such trade or
business),’’.
(b) EFFECTIVE DATE.—The amendments made by this
section shall apply to services performed after December 31,
1995.
Subtitle J—Tax Simplification
CHAPTER 1—PROVISIONS RELATING TO
INDIVIDUALS
Subchapter A—Provisions Relating To Roll-
over of Gain on Sale of Principal Resi-
dence
SEC. 11401. MULTIPLE SALES WITHIN ROLLOVER PERIOD.
(a) GENERAL RULE.—