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‘‘(iii) provides that legal title to such
property remains with the rent-to-own
dealer until the customer makes all the
payments described in clause (ii) or early
purchase payments required under the con-
tract to acquire legal title to the item of
property,
‘‘(iv) provides a beginning date and a
maximum period of time for which the con-
tract may be in effect that does not exceed
156 weeks or 36 months from such begin-
ning date (including renewals or options to
extend),
‘‘(v) provides for level payments with-
in the 156-week or 36-month period that,
in the aggregate, generally exceed the nor-
mal retail price of the consumer property
plus interest,
‘‘(vi) provides for payments under the
contract that, in the aggregate, do not ex-
ceed $10,000 per item of consumer prop-
erty,
‘‘(vii) provides that the customer does
not have any legal obligation to make all
the payments referred to in clause (ii) set
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forth under the contract, and that at the
end of each payment period the customer
may either continue to use the consumer
property by making the payment for the
next payment period or return such prop-
erty to the rent-to-own dealer in good
working order, in which case the customer
does not incur any further obligations
under the contract and is not entitled to a
return of any payments previously made
under the contract, and
‘‘(viii) provides that the customer has
no right to sell, sublease, mortgage, pawn,
pledge, encumber, or otherwise dispose of
the consumer property until all the pay-
ments stated in the contract have been
made.’’.
(c) EFFECTIVE DATE.—The amendment made by
this section shall apply to property placed in service after
the date of the enactment of this Act.
SEC. 1069. REPEAL OF SPECIAL RULE FOR RENTAL USE OF
VACATION HOMES, ETC., FOR LESS THAN 15
DAYS.
(a) IN GENERAL.—Section 280A (relating to dis-
allowance of certain expenses in connection with business
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use of home, rental of vacation homes, etc.) is amended
by striking subsection (g).
(b) NO BASIS REDUCTION UNLESS DEPRECIATION
CLAIMED.—Section 1016 is amended by redesignating
subsection (e) as subsection (f) and by inserting after sub-
section (d) the following new subsection:
‘‘(e) SPECIAL RULE WHERE RENTAL USE OF VACA-
TION HOME, ETC., FOR LESS THAN 15 DAYS.—If a dwell-
ing unit is used during the taxable year by the taxpayer
as a residence and such dwelling unit is actually rented
for less than 15 days during the taxable year, the reduc-
tion under subsection (a)(2) by reason of such rental use
in any taxable year beginning after December 31, 1997,
shall not exceed the depreciation deduction allowed for
such rental use.’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
December 31, 1997.
SEC. 1070. EXPANSION OF REQUIREMENT THAT INVOLUN-
TARILY 
CONVERTED 
PROPERTY 
BE 
RE-
PLACED WITH PROPERTY ACQUIRED FROM
AN UNRELATED PERSON.
(a) IN GENERAL.—Subsection (i) of section 1033 is
amended to read as follows:
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‘‘(i) REPLACEMENT PROPERTY MUST BE ACQUIRED
FROM UNRELATED PERSON IN CERTAIN CASES.—
‘‘(1) IN GENERAL.—If the property which is in-
voluntarily converted is held by a taxpayer to which
this subsection applies, subsection (a) shall not apply
if the replacement property or stock is acquired from
a related person. The preceding sentence shall not
apply to the extent that the related person acquired
the replacement property or stock from an unrelated
person during the period applicable under subsection
(a)(2)(B).
‘‘(2) TAXPAYERS TO WHICH SUBSECTION AP-
PLIES.—This subsection shall apply to—
‘‘(A) a C corporation,
‘‘(B) a partnership in which 1 or more C
corporations own, directly or indirectly (deter-
mined in accordance with section 707(b)(3)),
more than 50 percent of the capital interest, or
profits interest, in such partnership at the time
of the involuntary conversion, and
‘‘(C) any other taxpayer if, with respect to
property which is involuntarily converted during
the taxable year, the aggregate of the amount
of realized gain on such property on which
there is realized gain exceeds $100,000.
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In the case of a partnership, subparagraph (C) shall
apply with respect to the partnership and with re-
spect to each partner. A similar rule shall apply in
the case of an S corporation and its shareholders.
‘‘(3) RELATED PERSON.—For purposes of this
subsection, a person is related to another person if
the person bears a relationship to the other person
described in section 267(b) or 707(b)(1).’’.
(b) EFFECTIVE DATE.—The amendment made by
this section shall apply to involuntary conversions occur-
ring after June 8, 1997.
SEC. 1071. TREATMENT OF EXCEPTION FROM INSTALL-
MENT SALES RULES FOR SALES OF PROP-
ERTY BY A MANUFACTURER TO A DEALER.
(a) IN GENERAL.—Paragraph (2) of section 811(c)
of the Tax Reform Act of 1986 is hereby repealed.
(b) EFFECTIVE DATE.—
(1) IN
GENERAL.—The amendment made by
this section shall apply to taxable years beginning
after the date of the enactment of this Act.
(2) COORDINATION WITH SECTION 481.—In the
case of any taxpayer required by this section to
change its method of accounting for any taxable
year—
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(A) such changes shall be treated as initi-
ated by the taxpayer,
(B) such changes shall be treated as made
with the consent of the Secretary, and
(C) the net amount of the adjustments re-
quired to be taken into account under section
481(a) of the Internal Revenue Code of 1986
shall be taken into account ratably over the 4
taxable year period beginning with the first tax-
able year beginning after the date of the enact-
ment of this Act.
TITLE XI—SIMPLIFICATION AND
OTHER 
FOREIGN-RELATED
PROVISIONS
Subtitle A—General Provisions
SEC. 1101. TREATMENT OF COMPUTER SOFTWARE AS FSC
EXPORT PROPERTY.
(a) IN GENERAL.—Subparagraph (B) of section
927(a)(2) (relating to property excluded from eligibility as
FSC export property) is amended by inserting ‘‘, and
other than computer software (whether or not patented)’’
before ‘‘, for commercial or home use’’.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall apply to gross receipts attributable to