1088), as in effect on the date of the enactment
of this section, and
‘‘(B) is eligible to participate in programs
under title IV of such Act.
‘‘(d) SPECIAL RULES.—
‘‘(1) NO DOUBLE BENEFIT.—
‘‘(A) IN GENERAL.—No deduction shall be
allowed under subsection (a) for qualified high-
er education expenses with respect to which a
deduction is allowable to the taxpayer under
any other provision of this chapter unless the
taxpayer irrevocably waives his right to the de-
duction of such expenses under such other pro-
vision.
‘‘(B) DEPENDENTS.—No deduction shall
be allowed under subsection (a) to any individ-
ual with respect to whom a deduction under
section 151 is allowable to another taxpayer for
a taxable year beginning in the calendar year in
which such individual’s taxable year begins.
‘‘(C) SAVINGS BOND EXCLUSION.—A de-
duction shall be allowed under subsection (a)
for qualified higher education expenses only to
the extent the amount of such expenses exceeds
the amount excludable under section 135 for
the taxable year.
‘‘(2) LIMITATION ON TAXABLE YEAR OF DE-
DUCTION.—
‘‘(A) IN GENERAL.—A deduction shall be
allowed under subsection (a) for any taxable
year only to the extent the qualified higher edu-
cation expenses are in connection with enroll-
ment at an institution of higher education
during the taxable year.
‘‘(B) CERTAIN PREPAYMENTS ALLOWED.—
Subparagraph (A) shall not apply to qualified
higher education expenses paid during a taxable
year if such expenses are in connection with an
academic term beginning during such taxable
year or during the first 3 months of the next
taxable year.
‘‘(3) ADJUSTMENT
FOR
CERTAIN
SCHOLAR-
SHIPS AND VETERANS BENEFITS.—The amount of
qualified higher education expenses otherwise taken
into account under subsection (a) with respect to the
education of an individual shall be reduced (before
the application of subsection (b)) by the sum of the
amounts received with respect to such individual for
the taxable year as—
‘‘(A) a qualified scholarship (as defined in
section 117) which under section 117 is not in-
cludable in gross income,
‘‘(B) an educational assistance allowance
under chapter 30, 31, 32, 34, or 35 of title 38,
United States Code, or
‘‘(C) a payment (other than a gift, be-
quest, devise, or inheritance within the meaning
of section 102(a)) for educational expenses, or
attributable to enrollment at an eligible edu-
cational institution, which is exempt from in-
come taxation by any law of the United States.
‘‘(4) MARRIED INDIVIDUALS FILING SEPARATE
RETURNS.—In the case of a married individual filing
a separate return, subsection (b)(2)(B) shall be ap-
plied by substituting ‘$40,000’ for ‘$60,000’ and
‘$7,500’ for ‘$15,000’. For purposes of this section,
marital status shall be determined under section
7703.
‘‘(5) NONRESIDENT ALIENS.—If the taxpayer is
a nonresident alien individual for any portion of the
taxable year, this section shall apply only if such in-
dividual is treated as a resident alien of the United
States for purposes of this chapter by reason of an
election under subsection (g) or (h) of section 6013.
‘‘(6) REGULATIONS.—The Secretary may pre-
scribe such regulations as may be necessary or ap-
propriate to carry out this section, including regula-
tions requiring recordkeeping and information re-
porting.’’
(b) DEDUCTION
ALLOWED
IN
COMPUTING
AD-
JUSTED GROSS INCOME.—Section 62(a) of such Code is
amended by inserting after paragraph (16) the following
new paragraph:
‘‘(17) 
HIGHER
EDUCATION
TUITION
AND
FEES.—The deduction allowed by section 221.’’
(c) CONFORMING AMENDMENT.—The table of sec-
tions for part VII of subchapter B of chapter 1 of such
Code is amended by striking the item relating to section
221 and inserting:
‘‘Sec. 221. Higher education tuition and fees.
‘‘Sec. 222. Cross reference.’’
(d) EFFECTIVE DATE.—The amendments made by
this section shall apply to payments made after December
31, 1996.
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