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(b) CONFORMING AMENDMENT.—Section 304(j) of
such Act, as redesignated by subsection (a)(1) of this sec-
tion, is amended by striking ‘‘subsection (h)’’ and insert-
ing ‘‘subsection (i)’’.
(c) EFFECTIVE DATE.—The amendments made by
this section apply to goods entered, or withdrawn from
warehouse for consumption, on or after the date of enact-
ment of this Act.
SEC. 2424. EXTENSION OF NONDISCRIMINATORY TREAT-
MENT (NORMAL TRADE RELATIONS TREAT-
MENT) TO THE PRODUCTS OF MONGOLIA.
(a) FINDINGS.—The Congress finds that Mongolia—
(1) has received normal trade relations treat-
ment since 1991 and has been found to be in full
compliance with the freedom of emigration require-
ments under title IV of the Trade Act of 1974;
(2) has emerged from nearly 70 years of com-
munism and dependence on the former Soviet
Union, approving a new constitution in 1992 which
has established a modern parliamentary democracy
charged with guaranteeing fundamental human
rights, freedom of expression, and an independent
judiciary;
(3) has held 4 national elections under the new
constitution, 2 presidential and 2 parliamentary,
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thereby solidifying the nation’s transition to democ-
racy;
(4) has undertaken significant market-based
economic reforms, including privatization, the reduc-
tion of government subsidies, the elimination of most
price controls and virtually all import tariffs, and
the closing of insolvent banks;
(5) has concluded a bilateral trade treaty with
the United States in 1991, and a bilateral invest-
ment treaty in 1994;
(6) has acceded to the Agreement Establishing
the World Trade Organization, and extension of un-
conditional normal trade relations treatment to the
products of Mongolia would enable the United States
to avail itself of all rights under the World Trade
Organization with respect to Mongolia; and
(7) has demonstrated a strong desire to build
friendly relationships and to cooperate fully with the
United States on trade matters.
(b) TERMINATION OF APPLICATION OF TITLE IV OF
THE TRADE ACT OF 1974 TO MONGOLIA.—
(1) PRESIDENTIAL DETERMINATIONS AND EX-
TENSIONS OF NONDISCRIMINATORY TREATMENT.—
Notwithstanding any provision of title IV of the
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Trade Act of 1974 (19 U.S.C. 2431 et seq.), the
President may—
(A) determine that such title should no
longer apply to Mongolia; and
(B) after making a determination under
subparagraph (A) with respect to Mongolia,
proclaim the extension of nondiscriminatory
treatment (normal trade relations treatment) to
the products of that country.
(2) TERMINATION OF APPLICATION OF TITLE
IV.—On or after the effective date of the extension
under paragraph (1)(B) of nondiscriminatory treat-
ment to the products of Mongolia, title IV of the
Trade Act of 1974 shall cease to apply to that coun-
try.
SEC. 2425. ENHANCED CARGO INSPECTION PILOT PRO-
GRAM.
(a) IN GENERAL.—The Commissioner of Customs is
authorized to establish a pilot program for fiscal year
1999 to provide 24-hour cargo inspection service on a fee-
for-service basis at an international airport described in
subsection (b). The Commissioner may extend the pilot
program for fiscal years after fiscal year 1999 if the Com-
missioner determines that the extension is warranted.
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(b) AIRPORT DESCRIBED.—The international airport
described in this subsection is a multi-modal international
airport that—
(1) is located near a seaport; and
(2) serviced more than 185,000 tons of air
cargo in 1997.
SEC. 2426. PAYMENT OF EDUCATION COSTS OF DEPEND-
ENTS OF CERTAIN CUSTOMS SERVICE PER-
SONNEL.
Notwithstanding section 2164 of title 10, United
States Code, the Department of Defense shall permit the
dependent children of deceased United States Customs
Aviation Group Supervisor Pedro J. Rodriquez attending
the Antilles Consolidated School System in Puerto Rico,
to complete their primary and secondary education within
this school system without cost to such children or any
parent, relative, or guardian of such children. The United
States Customs Service shall reimburse the Department
of Defense for reasonable education expenses to cover
these costs.
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TITLE III—AMENDMENTS TO IN-
TERNAL REVENUE CODE OF
1986
SEC. 3001. PROPERTY SUBJECT TO A LIABILITY TREATED
IN SAME MANNER AS ASSUMPTION OF LI-
ABILITY.
(a) REPEAL OF PROPERTY SUBJECT TO A LIABILITY
TEST.—
(1) SECTION 357.—Section 357(a)(2) of the In-
ternal Revenue Code of 1986 (relating to assump-
tion of liability) is amended by striking ‘‘, or ac-
quires from the taxpayer property subject to a liabil-
ity’’.
(2) SECTION 358.—Section 358(d)(1) of such
Code (relating to assumption of liability) is amended
by striking ‘‘or acquired from the taxpayer property
subject to a liability’’.
(3) SECTION 368.—
(A) Section 368(a)(1)(C) of such Code is
amended by striking ‘‘, or the fact that prop-
erty acquired is subject to a liability,’’.
(B) 
The 
last 
sentence 
of 
section
368(a)(2)(B) of such Code is amended by strik-
ing ‘‘, and the amount of any liability to which
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any property acquired from the acquiring cor-
poration is subject,’’.
(b) CLARIFICATION
OF ASSUMPTION
OF LIABIL-
ITY.—
(1) IN GENERAL.—Section 357 of the Internal
Revenue Code of 1986 is amended by adding at the
end the following new subsection:
‘‘(d) DETERMINATION OF AMOUNT OF LIABILITY AS-
SUMED.—
‘‘(1) IN GENERAL.—For purposes of this sec-
tion, 
section 
358(d), 
section 
362(d), 
section
368(a)(1)(C), and section 368(a)(2)(B), except as
provided in regulations—
‘‘(A) a recourse liability (or portion there-
of) shall be treated as having been assumed if,
as determined on the basis of all facts and cir-
cumstances, the transferee has agreed to, and is
expected to, satisfy such liability (or portion),
whether or not the transferor has been relieved
of such liability; and
‘‘(B) except to the extent provided in para-
graph (2), a nonrecourse liability shall be treat-
ed as having been assumed by the transferee of
any asset subject to such liability.
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‘‘(2) EXCEPTION
FOR
NONRECOURSE
LIABIL-
ITY.—The amount of the nonrecourse liability treat-
ed as described in paragraph (1)(B) shall be reduced
by the lesser of—
‘‘(A) the amount of such liability which an
owner of other assets not transferred to the
transferee and also subject to such liability has
agreed with the transferee to, and is expected
to, satisfy; or
‘‘(B) the fair market value of such other
assets (determined without regard to section
7701(g)).
‘‘(3) REGULATIONS.—The Secretary shall pre-
scribe such regulations as may be necessary to carry
out the purposes of this subsection and section
362(d). The Secretary may also prescribe regula-
tions which provide that the manner in which a li-
ability is treated as assumed under this subsection
is applied, where appropriate, elsewhere in this
title.’’.
(2) LIMITATION ON BASIS INCREASE ATTRIB-
UTABLE
TO
ASSUMPTION
OF
LIABILITY.—Section
362 of such Code is amended by adding at the end
the following new subsection:
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‘‘(d) LIMITATION
ON
BASIS
INCREASE
ATTRIB-
UTABLE TO ASSUMPTION OF LIABILITY.—
‘‘(1) IN GENERAL.—In no event shall the basis
of any property be increased under subsection (a) or
(b) above the fair market value of such property (de-
termined without regard to section 7701(g)) by rea-
son of any gain recognized to the transferor as a re-
sult of the assumption of a liability.
‘‘(2) TREATMENT OF GAIN NOT SUBJECT TO
TAX.—Except as provided in regulations, if—
‘‘(A) gain is recognized to the transferor as
a result of an assumption of a nonrecourse li-
ability by a transferee which is also secured by
assets not transferred to such transferee; and
‘‘(B) no person is subject to tax under this
title on such gain,
then, for purposes of determining basis under sub-
sections (a) and (b), the amount of gain recognized
by the transferor as a result of the assumption of
the liability shall be determined as if the liability as-
sumed by the transferee equaled such transferee’s
ratable portion of such liability determined on the
basis of the relative fair market values (determined
without regard to section 7701(g)) of all of the as-
sets subject to such liability.’’.
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(c) APPLICATION TO PROVISIONS OTHER THAN SUB-
CHAPTER C.—
(1) SECTION 584.—Section 584(h)(3) of the In-
ternal Revenue Code of 1986 is amended—
(A) by striking ‘‘, and the fact that any
property transferred by the common trust fund
is subject to a liability,’’ in subparagraph (A);
and
(B) by striking clause (ii) of subparagraph
(B) and inserting:
‘‘(ii) 
ASSUMED
LIABILITIES.—For
purposes of clause (i), the term ‘assumed
liabilities’ means any liability of the com-
mon trust fund assumed by any regulated
investment company in connection with the
transfer referred to in paragraph (1)(A).
‘‘(C) ASSUMPTION.—For purposes of this
paragraph, in determining the amount of any li-
ability assumed, the rules of section 357(d)
shall apply.’’.
(2) SECTION 1031.—The last sentence of section
1031(d) of such Code is amended—
(A) by striking ‘‘assumed a liability of the
taxpayer or acquired from the taxpayer prop-
erty subject to a liability’’ and inserting ‘‘as-
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sumed (as determined under section 357(d)) a
liability of the taxpayer’’; and
(B) by striking ‘‘or acquisition (in the
amount of the liability)’’.
(d) CONFORMING AMENDMENTS.—
(1) Section 351(h)(1) of the Internal Revenue
Code of 1986 is amended by striking ‘‘, or acquires
property subject to a liability,’’.
(2) Section 357 of such Code is amended by
striking ‘‘or acquisition’’ each place it appears in
subsection (a) or (b).
(3) Section 357(b)(1) of such Code is amended
by striking ‘‘or acquired’’.
(4) Section 357(c)(1) of such Code is amended
by striking ‘‘, plus the amount of the liabilities to
which the property is subject,’’.
(5) Section 357(c)(3) of such Code is amended
by striking ‘‘or to which the property transferred is
subject’’.
(6) Section 358(d)(1) of such Code is amended
by striking ‘‘or acquisition (in the amount of the li-
ability)’’.
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(e) EFFECTIVE DATE.—The amendments made by
this section shall apply to transfers after October 18,
1998.
Passed the House of Representatives February 9,
1999.
Attest:
JEFF TRANDAHL,
Clerk.