160
•HR 1200 SC4
‘‘(A) DOLLAR
LIMITS.—The aggregate
amount allowable as a deduction under sub-
section (a) in connection with a commencement
of work shall not exceed $5,000. The aggregate
amount allowable as a deduction under sub-
section (a) in connection with a commencement
of work which is attributable to expenses de-
scribed in subparagraphs (C) or (D) of para-
graph (1) shall not exceed $1,500.’’
(2) CONFORMING AMENDMENTS.—
(A) Subparagraph (B) of section 217(b)(2)
(as so redesignated) is amended by striking the
second sentence and inserting the following: ‘‘In
the case of a husband and wife filing separate
returns, subparagraph (A) shall be applied by
substituting ‘$750’ for ‘$1,500’, and by sub-
stituting ‘$2,500’ for ‘$5,000’.’’
(B) Paragraph (1) of section 217(h) is
amended by striking subparagraphs (B) and
(C) and inserting the following:
‘‘(B) subsection (b)(2)(A) shall be applied
by substituting ‘$4,500’ for ‘$1,500’, and
‘‘(C) appropriate adjustments to the appli-
cation of the last sentence of subsection
(b)(2)(B) shall be made to take into account
161
•HR 1200 SC4
the provisions of subparagraph (B) of this para-
graph.’’
(d) INCREASE IN MILEAGE REQUIREMENTS.—Para-
graph (1) of section 217(c) is amended by striking ‘‘35
miles’’ each place it appears and inserting ‘‘60 miles’’.
(e) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
December 31, 1994.
SEC. 834. TOP ESTATE AND GIFT TAX RATES MADE PERMA-
NENT.
(a) GENERAL RULE.—The table contained in para-
graph (1) of section 2001(c) is amended by striking the
last item and inserting the following new items:
‘‘Over $2,500,000 but not over
$3,000,000.
$1,025,800, plus 53% of the excess
over $2,500,000.
Over $3,000,000 ............................
$1,290,800, plus 55% of the excess
over $3,000,000.’’
(b) CONFORMING AMENDMENTS.—
(1) Subsection (c) of section 2001 is amended
by striking paragraph (2) and by redesignating
paragraph (3) as paragraph (2).
(2) Paragraph (2) of section 2001(c), as redes-
ignated by paragraph (1), is amended by striking
‘‘($18,340,000 in the case of decedents dying, and
gifts made, after 1992)’’.
162
•HR 1200 SC4
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply in the case of decedents dying, and
gifts made, after December 31, 1994.
SEC. 835. ELIMINATION OF DEDUCTION FOR CLUB MEM-
BERSHIP FEES.
(a) IN GENERAL.—Subsection (a) of section 274 (re-
lating to disallowance of certain entertainment, etc., ex-
penses) is amended by adding at the end thereof the fol-
lowing new paragraph:
‘‘(3) DENIAL
OF
DEDUCTION
FOR
CLUB
DUES.—Notwithstanding the preceding provisions of
this subsection, no deduction shall be allowed under
this chapter for amounts paid or incurred for mem-
bership in any club organized for business, pleasure,
recreation, or other social purpose.’’
(b) EFFECTIVE DATE.—The amendment made by
this section shall apply to amounts paid or incurred after
December 31, 1994.
SEC. 836. INCREASE OF SOCIAL SECURITY BENEFITS IN-
CLUDED IN INCOME.
(a) IN GENERAL.—Subsections (a) and (b) of section
86 are each amended by striking ‘‘one-half’’ each place
it appears and inserting ‘‘85 percent’’.
163
•HR 1200 SC4
(b) EFFECTIVE DATE.—The amendment made by
this section shall apply to taxable years beginning after
December 31, 1994.
SEC. 837. LONG-TERM HEALTH CARE PREMIUM FOR THE
ELDERLY.
(a) IN GENERAL.—Except as provided in subsection
(b), each individual who at any time in a month is 65
years of age or older and is eligible for benefits under title
XXI of the Social Security Act in the month shall pay
a long-term care/health care premium for the month of
$65.
(b) EXCEPTION FOR LOW-INCOME ELDERLY.—The
Secretary of Health and Human Services shall provide a
process whereby individuals with an adjusted gross income
which does not exceed $8,500 (or $10,700 in the case of
joint adjusted gross income in the case of a married indi-
vidual) are not liable for the premium imposed under
paragraph (1).
(c) COLLECTION OF PREMIUM.—The premium im-
posed under this section shall be collected in the same
manner (including deduction from Social Security checks)
as the premium imposed under part B of title XVIII of
the Social Security Act was collected under section 1840
of such Act as of the date of the enactment of this Act.
164
•HR 1200 SC4
(d) DEPOSIT
INTO
NATIONAL
HEALTH
TRUST
FUND.—Premiums collected under this section shall be
transferred to and deposited into the National Health
Trust Fund in the same manner as premiums collected
under section 1840 of the Social Security Act were
transferred and deposited into the Federal Supple-
mentary Medical Insurance Trust Fund.
(e) COST-OF-LIVING ADJUSTMENT OF PREMIUM.—In
the case of months beginning in any calendar year after
1996, the dollar amount contained in paragraph (1) shall
be increased by an amount equal to such dollar amount,
multiplied by the cost-of-living adjustment determined
under section 1(f)(3) for the calendar year in which the
month begins.
(f) APPLICATION OF SECTION.—This section shall
apply to months beginning after December 31, 1994.
Subtitle 
E—Other 
Revenue 
In-
creases 
Primarily 
Affecting
Businesses
SEC. 841. MARK TO MARKET ACCOUNTING METHOD FOR
SECURITIES DEALERS.
(a) GENERAL RULE.—Subpart D of part II of sub-
chapter E of chapter 1 (relating to inventories) is
amended by adding at the end thereof the following new
section:
165
•HR 1200 SC4
‘‘SEC. 475. MARK TO MARKET ACCOUNTING METHOD FOR
DEALERS IN SECURITIES.
‘‘(a) GENERAL RULE.—Notwithstanding any other
provision of this subpart, the following rules shall apply
to securities held by a dealer in securities:
‘‘(1) Any security which is inventory in the
hands of the dealer shall be included in inventory at
its fair market value.
‘‘(2) In the case of any security which is not in-
ventory in the hands of the dealer and which is held
at the close of any taxable year—
‘‘(A) the dealer shall recognize gain or loss
as if such security were sold for its fair market
value on the last business day of such taxable
year, and
‘‘(B) any gain or loss shall be taken into
account for such taxable year.
Proper adjustment shall be made in the amount of
any gain or loss subsequently realized for gain or
loss taken into account under the preceding sen-
tence. The Secretary may provide by regulations for
the application of this paragraph at times other than
the times provided in this paragraph.
‘‘(b) EXCEPTIONS.—
‘‘(1) IN
GENERAL.—Subsection (a) shall not
apply to—
166
•HR 1200 SC4
‘‘(A) any security held for investment,
‘‘(B)(i) any security described in sub-
section (c)(2)(C) which is acquired (including
originated) by the taxpayer in the ordinary
course of a trade or business of the taxpayer
and which is not held for sale, and (ii) any obli-
gation to acquire a security described in clause
(i) if such obligation is entered into in the ordi-
nary course of such trade or business and is not
held for sale, and
‘‘(C) any security which is a hedge with re-
spect to—
‘‘(i) a security to which subsection (a)
does not apply, or
‘‘(ii) a position, right to income, or a
liability which is not a security in the
hands of the taxpayer.
To the extent provided in regulations, subparagraph
(C) shall not apply to any security held by a person
in its capacity as a dealer in securities.
‘‘(2) IDENTIFICATION
REQUIRED.—A security
shall not be treated as described in subparagraph
(A), (B), or (C) of paragraph (1), as the case may
be, unless such security is clearly identified in the
dealer’s records as being described in such subpara-
167
•HR 1200 SC4
graph before the close of the day on which it was ac-
quired, originated, or entered into (or such other
time as the Secretary may by regulations prescribe).
‘‘(3) SECURITIES
SUBSEQUENTLY
NOT
EX-
EMPT.—If a security ceases to be described in para-
graph (1) at any time after it was identified as such
under paragraph (2), subsection (a) shall apply to
any changes in value of the security occurring after
the cessation.
‘‘(4) SPECIAL RULE FOR PROPERTY HELD FOR
INVESTMENT.—To the extent provided in regula-
tions, subparagraph (A) of paragraph (1) shall not
apply to any security described in subparagraph (D)
or (E) of subsection (c)(2) which is held by a dealer
in such securities.
‘‘(c) DEFINITIONS.—For purposes of this section—
‘‘(1) DEALER IN SECURITIES DEFINED.—The
term ‘dealer in securities’ means a taxpayer who—
‘‘(A) regularly purchases securities from or
sells securities to customers in the ordinary
course of a trade or business; or
‘‘(B) regularly offers to enter into, assume,
offset, assign or otherwise terminate positions
in securities with customers in the ordinary
course of a trade or business.
168
•HR 1200 SC4
‘‘(2) SECURITY DEFINED.—The term ‘security’
means any—
‘‘(A) share of stock in a corporation;
‘‘(B) partnership or beneficial ownership
interest in a widely held or publicly traded part-
nership or trust;
‘‘(C) note, bond, debenture, or other evi-
dence of indebtedness;
‘‘(D) interest rate, currency, or equity no-
tional principal contract;
‘‘(E) evidence of an interest in, or a deriv-
ative financial instrument in, any security de-
scribed in subparagraph (A), (B), (C), or (D),
or any currency, including any option, forward
contract, short position, and any similar finan-
cial instrument in such a security or currency;
and
‘‘(F) position which—
‘‘(i) is not a security described in sub-
paragraph (A), (B), (C), (D), or (E),
‘‘(ii) is a hedge with respect to such
a security, and
‘‘(iii) is clearly identified in the deal-
er’s records as being described in this sub-
paragraph before the close of the day on
169
•HR 1200 SC4
which it was acquired or entered into (or
such other time as the Secretary may by
regulations prescribe).
Subparagraph (E) shall not include any contract to
which section 1256(a) applies.
‘‘(3) HEDGE.—The term ‘hedge’ means any po-
sition which reduces the dealer’s risk of interest rate
or price changes or currency fluctuations, including
any position which is reasonably expected to become
a hedge within 60 days after the acquisition of the
position.
‘‘(d) SPECIAL RULES.—For purposes of this sec-
tion—
‘‘(1) COORDINATION WITH CERTAIN RULES.—
The rules of sections 263(g), 263A, and 1256(a)
shall not apply to securities to which subsection (a)
applies, and section 1091 shall not apply (and sec-
tion 1092 shall apply) to any loss recognized under
subsection (a).
‘‘(2) IMPROPER
IDENTIFICATION.—If a tax-
payer—
‘‘(A) identifies any security under sub-
section (b)(2) as being described in subsection
(b)(1) and such security is not so described, or
170
•HR 1200 SC4
‘‘(B) fails under subsection (c)(2)(F)(iii) to
identify any position which is described in sub-
section (c)(2)(F) (without regard to clause (iii)
thereof) at the time such identification is
required,
the provisions of subsection (a) shall apply to such
security or position, except that any loss under this
section prior to the disposition of the security or po-
sition shall be recognized only to the extent of gain
previously recognized under this section (and not
previously taken into account under this paragraph)
with respect to such security or position.
‘‘(3) CHARACTER OF GAIN OR LOSS.—
‘‘(A) IN GENERAL.—Except as provided in
subparagraph (B) or section 1236(b)—
‘‘(i) IN GENERAL.—Any gain or loss
with respect to a security under subsection
(a)(2) shall be treated as ordinary income
or loss.
‘‘(ii) SPECIAL
RULE
FOR
DISPOSI-
TIONS.—If—
‘‘(I) gain or loss is recognized
with respect to a security before the
close of the taxable year, and