331
‘‘(A) section 303(b) (relating to distribu-
tions in redemption of stock to pay death
taxes),
‘‘(B) section 2032A (relating to special
valuation of certain farms, etc., real property),
and
‘‘(C) subchapter C of chapter 64 (relating
to lien for taxes),
the value of the gross estate shall include the value
of all property to the extent of any interest therein
of which the decedent has at any time made a trans-
fer, by trust or otherwise, during the 3-year period
ending on the date of the decedent’s death.
‘‘(2) COORDINATION WITH SECTION 6166.—An
estate shall be treated as meeting the 35 percent of
adjusted 
gross 
estate 
requirement 
of 
section
6166(a)(1) only if the estate meets such requirement
both with and without the application of paragraph
(1).
‘‘(3) SMALL TRANSFERS.—Paragraph (1) shall
not apply to any transfer (other than a transfer with
respect to a life insurance policy) made during a cal-
endar year to any donee if the decedent was not re-
quired by section 6019 (other than by reason of sec-
332
tion 6019(a)(2)) to file any gift tax return for such
year with respect to transfers to such donee.
‘‘(d) EXCEPTION.—Subsection (a) shall not apply to
any bona fide sale for an adequate and full consideration
in money or money’s worth.
‘‘(e) TREATMENT OF CERTAIN TRANSFERS FROM
REVOCABLE TRUSTS.—For purposes of this section and
section 2038, any transfer from any portion of a trust with
respect to which the decedent was the grantor during any
period when the decedent held the power to revest in the
decedent title to such portion shall be treated as a transfer
made directly by the decedent.’’
(b) CLERICAL AMENDMENT.—The table of sections
for part III of subchapter A of chapter 11 is amended
by striking ‘‘gifts’’ in the item relating to section 2035
and inserting ‘‘certain gifts’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to the estates of decedents dying
after the date of the enactment of this Act.
SEC. 703. CLARIFICATION OF QUALIFIED TERMINABLE IN-
TEREST RULES.
(a) GENERAL RULE.—
(1) ESTATE TAX.—Subparagraph (B) of section
2056(b)(7) (defining qualified terminable interest
333
property) is amended by adding at the end thereof
the following new clause:
‘‘(v)(i) TREATMENT OF CERTAIN IN-
COME DISTRIBUTIONS.—An income inter-
est shall not fail to qualify as a qualified
income interest for life solely because in-
come for the period after the last distribu-
tion date and on or before the date of the
surviving spouse’s death is not required to
be distributed to the surviving spouse or to
the estate of the surviving spouse.’’
(2) GIFT
TAX.—Paragraph (3) of section
2523(f) is amended by striking ‘‘and (iv)’’ and in-
serting ‘‘, (iv), and (vi)’’.
(b) CLARIFICATION OF SUBSEQUENT INCLUSIONS.—
Section 2044 is amended by adding at the end thereof the
following new subsection:
‘‘(d) CLARIFICATION OF INCLUSION OF CERTAIN IN-
COME.—The amount included in the gross estate under
subsection (a) shall include the amount of any income
from the property to which this section applies for the pe-
riod after the last distribution date and on or before the
date of the decedent’s death if such income is not other-
wise included in the decedent’s gross estate.’’
(c) EFFECTIVE DATE.—
334
(1) IN GENERAL.—The amendments made by
this section shall apply with respect to the estates of
decedents dying, and gifts made, after the date of
the enactment of this Act.
(2) APPLICATION OF SECTION 2044 TO TRANS-
FERS BEFORE DATE OF ENACTMENT.—In the case
of the estate of any decedent dying after the date of
the enactment of this Act, if there was a transfer of
property on or before such date—
(A) such property shall not be included in
the gross estate of the decedent under section
2044 of the Internal Revenue Code of 1986 if
no prior marital deduction was allowed with re-
spect to such a transfer of such property to the
decedent, but
(B) such property shall be so included if
such a deduction was allowed.
SEC. 704. TRANSITIONAL RULE UNDER SECTION 2056A.
(a) GENERAL RULE.—In the case of any trust cre-
ated under an instrument executed before the date of the
enactment of the Revenue Reconciliation Act of 1990,
such trust shall be treated as meeting the requirements
of paragraph (1) of section 2056A(a) of the Internal Reve-
nue Code of 1986 if the trust instrument requires that
335
all trustees of the trust be individual citizens of the United
States or domestic corporations.
(b) EFFECTIVE DATE.—The provisions of subsection
(a) shall take effect as if included in the provisions of sec-
tion 11702(g) of the Revenue Reconciliation Act of 1990.
SEC. 705. OPPORTUNITY TO CORRECT CERTAIN FAILURES
UNDER SECTION 2032A.
(a) GENERAL RULE.—Paragraph (3) of section
2032A(d) (relating to modification of election and agree-
ment to be permitted) is amended to read as follows:
‘‘(3) MODIFICATION OF ELECTION AND AGREE-
MENT TO BE PERMITTED.—The Secretary shall pre-
scribe procedures which provide that in any case in
which the executor makes an election under para-
graph (1) (and submits the agreement referred to in
paragraph (2)) within the time prescribed therefor,
but—
‘‘(A) the notice of election, as filed, does
not contain all required information, or
‘‘(B) signatures of 1 or more persons re-
quired to enter into the agreement described in
paragraph (2) are not included on the agree-
ment as filed, or the agreement does not con-
tain all required information,
336
the executor will have a reasonable period of time
(not exceeding 90 days) after notification of such
failures to provide such information or signatures.’’
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall apply to the estates of decedents dying
after the date of the enactment of this Act.
TITLE VIII—EXCISE TAX
SIMPLIFICATION
Subtitle A—Fuel Tax Provisions
SEC. 801. REPEAL OF CERTAIN RETAIL AND USE TAXES.
(a) IN GENERAL.—Section 4041 is amended to read
as follows:
‘‘SEC. 4041. SPECIAL MOTOR FUELS AND NONCOMMERCIAL
AVIATION GASOLINE.
‘‘(a) SPECIAL MOTOR FUELS.—
‘‘(1) IN GENERAL.—There is hereby imposed a
tax on benzol, benzene, naphtha, liquefied petroleum
gas, casing head and natural gasoline, or any other
liquid—
‘‘(A) sold by any person to an owner, les-
see, or other operator of a motor vehicle or a
motorboat for use as a fuel in such motor vehi-
cle or motorboat, or
‘‘(B) used by any person as a fuel in a
motor vehicle or motorboat unless there was a
339
‘‘(II) the deficit reduction rate
applicable under paragraph (2) shall
be 1.25 cents per gallon.
‘‘(ii) NATURAL
GAS-DERIVED
METH-
ANOL OR ETHANOL FUEL.—The term ‘nat-
ural-gas derived methanol or ethanol fuel’
means any liquid at least 85 percent of
which consists of methanol, ethanol, or
other alcohol produced from natural gas.
‘‘(C) OTHER
FUELS
CONTAINING
ALCO-
HOL.—
‘‘(i) IN GENERAL.—Under regulations
prescribed by the Secretary, in the case of
any liquid at least 10 percent of which con-
sists of alcohol (as defined in section
4081(c)(3)), the Highway Trust Fund fi-
nancing rate applicable under paragraph
(2) shall be the comparable rate under sec-
tion 4081.
‘‘(ii) LATER
SEPARATION.—If any
person separates the liquid fuel from a
mixture of the liquid fuel and alcohol to
which clause (i) applies, such separation
shall be treated as a sale of the liquid fuel.
Any tax imposed on such sale shall be re-
340
duced by the amount (if any) of the tax
imposed on the sale of such mixture.
‘‘(iii) TERMINATION.—Clause (i) shall
not apply to any sale or use after Septem-
ber 30, 2000.
‘‘(D) LIQUEFIED
PETROLEUM
GAS.—The
rate of tax applicable under paragraph (2) to
liquefied petroleum gas shall be determined
without regard to the Leaking Underground
Storage Tank Trust Fund financing rate under
section 4081.
‘‘(5) EXEMPTION FOR OFF-HIGHWAY BUSINESS
USE.—No tax shall be imposed by paragraph (1) on
liquids sold for use or used in an off-highway busi-
ness use (within the meaning of section 6420(f)).
‘‘(b) NONCOMMERCIAL AVIATION GASOLINE.—
‘‘(1) IN GENERAL.—There is hereby imposed a
tax on gasoline—
‘‘(A) sold by any person to an owner, les-
see, or other operator of an aircraft for use as
a fuel in such aircraft in noncommercial avia-
tion, or
‘‘(B) used by any person as a fuel in an
aircraft in noncommercial aviation unless there
341
was a taxable sale of such gasoline under sub-
paragraph (A).
The tax imposed by this paragraph shall be in addi-
tion to any tax imposed by section 4081.
‘‘(2) RATE OF TAX.—The rate of the tax im-
posed by paragraph (1) on any gasoline is the excess
of 15 cents a gallon over the sum of the Highway
Trust Fund financing rate plus the deficit reduction
rate at which tax was imposed on such gasoline
under section 4081.
‘‘(3) NONCOMMERCIAL
AVIATION.—For pur-
poses of this subsection, the term ‘noncommercial
aviation’ means any use of an aircraft other than
use in a business of transporting persons or property
for compensation or hire by air. Such term includes
any use of an aircraft, in a business described in the
preceding sentence, which is properly allocable to
any transportation exempt from the taxes imposed
by sections 4261 and 4271 by reason of section
4281 or 4282.
‘‘(4) EXEMPTION FOR FUELS CONTAINING AL-
COHOL.—No tax shall be imposed by this subsection
on any liquid at least 10 percent of which consists
of alcohol (as defined in section 4081(c)(3)).
342
‘‘(5) EXEMPTION
FOR
CERTAIN
HELICOPTER
USES.—No tax shall be imposed by this subsection
on gasoline sold for use or used in a helicopter for
purposes of providing transportation with respect to
which the requirements of subsection (e) or (f) of
section 4261 are met.
‘‘(6) REGISTRATION.—Except as provided in
regulations prescribed by the Secretary, if any gaso-
line is sold by any person for use as a fuel in an air-
craft, it shall be presumed for purposes of this sub-
section that a tax imposed by this subsection applies
to the sale of such gasoline unless the purchaser is
registered in such manner (and furnished such infor-
mation in respect of the use of the gasoline) as the
Secretary shall by regulations provide.
‘‘(7) GASOLINE.—For purposes of this sub-
section, the term ‘gasoline’ has the meaning given
such term by section 4082.
‘‘(8) TERMINATION.—Paragraph (1) shall not
apply to any sale or use after December 31, 1995.
‘‘(c) EXEMPTION FOR FARM USE.—
‘‘(1) IN
GENERAL.—Under regulations pre-
scribed by the Secretary, no tax shall be imposed
under this section on any liquid sold for use or used
on a farm for farming purposes (determined in ac-
343
cordance with paragraphs (1), (2), and (3) of section
6420(e)).
‘‘(2) TERMINATION.—Except with respect to so
much of the tax imposed by subsection (a) as is de-
termined by reference to the Leaking Underground
Storage Tank Trust Fund financing rate under sec-
tion 4081, paragraph (1) shall not apply after Sep-
tember 30, 1999.
‘‘(d) EXEMPTIONS FOR STATE AND LOCAL GOVERN-
MENTS, SCHOOLS, EXPORTATION, AND SUPPLIES
FOR
VESSELS AND AIRCRAFT.—
‘‘(1) IN
GENERAL.—Under regulations pre-
scribed by the Secretary, no tax shall be imposed
under this section on any liquid sold for use, or
used, in an exempt use described in paragraph (4),
(5), (6), or (7) of section 6420(b).
‘‘(2) TERMINATION.—Except with respect to so
much of the tax imposed by subsection (a) as is de-
termined by reference to the Leaking Underground
Storage Tank Trust Fund financing rate under sec-
tion 4081, after September 30, 1999, paragraph (1)
shall not apply to exempt uses described in para-
graph (4) and (5) of section 6420(b).
‘‘(e) EXEMPTION FOR USE BY CERTAIN AIRCRAFT
MUSEUMS.—Under regulations prescribed by the Sec-
344
retary, no tax shall be imposed under this section on any
liquid sold for use or used in an exempt use described in
section 6420(b)(11).’’
(b) CERTAIN ADDITIONAL PURCHASERS OF FUEL
TREATED AS PRODUCERS.—
(1) IN GENERAL.—Subparagraph (C) of section
4092(b)(1) is amended to read as follows:
‘‘(C) REDUCED-TAX PURCHASERS TREAT-
ED AS PRODUCERS.—Any person to whom any
fuel is sold in a sale on which the amount of
tax otherwise required to be paid under section
4091 is reduced under section 4093 shall be
treated as the producer of such fuel. The
amount of tax imposed by section 4091 on any
sale of such fuel by such person shall be re-
duced by the amount of tax imposed under sec-
tion 4091 (and not credited or refunded) on
any prior sale of such fuel.’’
(2) CONFORMING AMENDMENT.—Subsection (b)
of section 4093 is amended by inserting ‘‘(as defined
in section 4092(b) without regard to paragraph
(1)(C) thereof)’’ after ‘‘producer’’.
345
SEC. 802. REVISION OF FUEL TAX CREDIT AND REFUND
PROCEDURES.
(a) REFUNDS TO CERTAIN SELLERS
OF DIESEL
FUEL AND AVIATION FUEL.—
(1) IN
GENERAL.—Paragraph (2) of section
6416(b) is amended by striking ‘‘4091 or 4121’’ and
inserting ‘‘4121 or 4091; except that this paragraph
shall apply to a person selling diesel fuel or aviation
fuel for a use described in the first sentence if such
person meets such requirements as the Secretary
may by regulations prescribe’’.
(2) LIMITATIONS ON AMOUNT OF TAX; ONLY
HIGHWAY TRUST FUND FINANCING RATE TO BE
REFUNDABLE.—Paragraph (2) of section 6416(b) is
amended by adding at the end thereof the following
new sentence: ‘‘This paragraph shall not apply to
the taxes imposed by sections 4081 and 4091 with
respect to any use to the same extent that section
6420(a) does not apply to such use by reason of
paragraph (1) or (2) of section 6420(c).’’
(b) CONSOLIDATION OF REFUND PROVISIONS; RE-
PEAL OF CONSENT REQUIREMENT FOR REFUND OF FUEL
TAXES TO CROPDUSTERS, ETC.—Section 6420 (relating
to gasoline used on farms) is amended to read as follows:
346
‘‘SEC. 6420. CERTAIN TAXES ON FUELS USED FOR EXEMPT
PURPOSES.
‘‘(a) IN GENERAL.—Except as otherwise provided in
this section, if any fuel on which tax was imposed under
section 4041, 4081, or 4091 is used in an exempt use,
the Secretary shall pay (without interest) to the ultimate
purchaser of such fuel the amount equal to the aggregate
tax imposed on such fuel under such sections.
‘‘(b) EXEMPT USES.—For purposes of this section,
the term ‘exempt use’ means—
‘‘(1) in the case of diesel fuel, use other than
as a fuel in a diesel-powered highway vehicle,
‘‘(2) in the case of aviation fuel, use other than
as a fuel in an aircraft,
‘‘(3) in the case of gasoline or aviation fuel,
used in an aircraft other than in noncommercial
aviation (as defined in section 4041(b)),
‘‘(4) use by any State, any political subdivision
of a State, or the District of Columbia,
‘‘(5) use by a nonprofit educational organiza-
tion (as defined in section 4221(d)(5)),
‘‘(6) export,
‘‘(7) use as supplies for vessels or aircraft
(within the meaning of section 4221(d)(3)),
‘‘(8) use on a farm for farming purposes (with-
in the meaning of subsection (e)),
347
‘‘(9) use in an off-highway business use (within
the meaning of subsection (f)),
‘‘(10) use in qualified bus transportation (with-
in the meaning of subsection (g)),
‘‘(11) use by an aircraft museum (within the
meaning of subsection (h)),
‘‘(12) use in a nonpurpose use (within the
meaning of subsection (i)),
‘‘(13) use in a helicopter for purposes of provid-
ing transportation with respect to which the require-
ments of subsection (e) or (f) of section 4261 are
met, and
‘‘(14) use in producing a mixture of a fuel if at
least 10 percent of such mixture consists of alcohol
(as defined in section 4081(c)(3)) and if such mix-
ture is sold or used in the trade or business of the
person producing such mixture.
Paragraph (14) shall not apply with respect to any mix-
ture sold or used after September 30, 2000.
‘‘(c) LIMITATIONS ON AMOUNT OF PAYMENT.—
‘‘(1) NO REFUND OF LEAKING UNDERGROUND
STORAGE
TANK
TRUST
FUND
TAXES
IN
CERTAIN
CASES.—Subsection (a) shall not apply to so much
of the taxes imposed by sections 4081 and 4091 as
348
are attributable to a Leaking Underground Storage
Tank Trust Fund financing rate in the case of—
‘‘(A) fuel used in a train, and
‘‘(B) fuel used in any aircraft (except as
supplies for vessels or aircraft within the mean-
ing of section 4221(d)(3)).
‘‘(2) NO REFUND OF DEFICIT REDUCTION TAX
ON DIESEL FUEL USED IN TRAINS.—Subsection (a)
shall not apply to so much of the tax imposed by
section 4091 as is attributable to a deficit reduction
rate in the case of diesel fuel used in a diesel-pow-
ered train unless such fuel was used by a State or
any political subdivision thereof.
‘‘(3) NO REFUND OF PORTION OF TAX ON DIE-
SEL FUEL USED IN CERTAIN BUSES.—
‘‘(A) IN GENERAL.—Except as provided in
subparagraphs (B) and (C), the rate of tax
taken into account under subsection (a) with re-
spect to diesel fuel used in qualified bus trans-
portation (within the meaning of subsection
(g)(1)) shall be 3.1 cents per gallon less than
the aggregate rate of tax imposed on such fuel
by section 4091.
‘‘(B) EXCEPTION FOR SCHOOL BUS TRANS-
PORTATION.—Subparagraph (A) shall not apply
349
to fuel used in an automobile bus while engaged
in 
transportation 
described 
in 
subsection
(g)(1)(B).
‘‘(C) EXCEPTION FOR CERTAIN INTRACITY
TRANSPORTATION.—Subparagraph 
(A) 
shall
not apply to fuel used in any automobile bus
while engaged in furnishing (for compensation)
intracity passenger land transportation—
‘‘(i) which is available to the general
public, and
‘‘(ii) which is scheduled and along
regular routes,
but only if such bus is a qualified local bus.
‘‘(D) QUALIFIED
LOCAL
BUS.—For pur-
poses of this paragraph, the term ‘qualified
local bus’ means any local bus—
‘‘(i) which has a seating capacity of at
least 20 adults (not including the driver),
and
‘‘(ii) which is under contract with (or
is receiving more than a nominal subsidy
from) any State or local government (as
defined in section 4221(d)) to furnish such
transportation.
‘‘(4) ALCOHOL FUELS.—
350
‘‘(A) IN GENERAL.—In the case of a fuel
used as described in subsection (b)(14) and on
which tax was imposed at regular tax rate, the
rate of tax taken into account under subsection
(a) with respect to the fuel so used shall equal
the excess of the regular tax rate over the in-
centive tax rate.
‘‘(B) REGULAR
TAX
RATE.—The term
‘regular tax rate’ means—
‘‘(i) in the case of gasoline, the aggre-
gate rate of tax imposed by section 4081
determined without regard to subsection
(c) thereof,
‘‘(ii) in the case of diesel fuel, the ag-
gregate rate of tax imposed by section
4091 on such fuel determined without re-
gard to subsection (c) thereof, and
‘‘(iii) in the case of aviation fuel, the
aggregate rate of tax imposed by section
4091 on such fuel determined without re-
gard to subsection (d) thereof.
‘‘(C) INCENTIVE
TAX
RATE.—The term
‘incentive tax rate’ means—
‘‘(i) in the case of gasoline, the aggre-
gate rate of tax imposed by section 4081