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water, and which, without regard to this para-
graph, would be 20-year property, and
‘‘(B) any municipal sewer.’’.
(B) CONFORMING
AMENDMENTS.—Section
168 is amended—
(i) by striking subparagraph (F) of
subsection (e)(3), and
(ii) by striking the item relating to
subparagraph (F) in the table in subsection
(g)(3).
(4) ALTERNATIVE SYSTEM.—Clause (iv) of sec-
tion 168(g)(2)(C) is amended by inserting ‘‘or water
utility property’’ after ‘‘tunnel bore’’.
(5) EFFECTIVE DATE.—The amendments made
by this subsection shall apply to property placed in
service after June 12, 1996, other than property
placed in service pursuant to a binding contract in
effect before June 10, 1996, and at all times thereafter
before the property is placed in service.
SEC. 1612. ELECTION TO CEASE STATUS AS QUALIFIED
SCHOLARSHIP FUNDING CORPORATION.
(a) IN GENERAL.—Subsection (d) of section 150 (relat-
ing to definitions and special rules) is amended by adding
at the end the following new paragraph:
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‘‘(3) ELECTION TO CEASE STATUS AS QUALIFIED
SCHOLARSHIP FUNDING CORPORATION.—
‘‘(A) IN GENERAL.—Any qualified scholar-
ship funding bond, and qualified student loan
bond, outstanding on the date of the issuer’s elec-
tion under this paragraph (and any bond (or se-
ries of bonds) issued to refund such a bond) shall
not fail to be a tax-exempt bond solely because
the issuer ceases to be described in subpara-
graphs (A) and (B) of paragraph (2) if the is-
suer meets the requirements of subparagraphs
(B) and (C) of this paragraph.
‘‘(B) ASSETS AND LIABILITIES OF ISSUER
TRANSFERRED
TO
TAXABLE
SUBSIDIARY.—The
requirements of this subparagraph are met by an
issuer if—
‘‘(i) all of the student loan notes of the
issuer and other assets pledged to secure the
repayment of qualified scholarship funding
bond indebtedness of the issuer are trans-
ferred to another corporation within a rea-
sonable period after the election is made
under this paragraph;
‘‘(ii) such transferee corporation as-
sumes or otherwise provides for the payment
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of all of the qualified scholarship funding
bond indebtedness of the issuer within a
reasonable period after the election is made
under this paragraph;
‘‘(iii) to the extent permitted by law,
such transferee corporation assumes all of
the responsibilities, and succeeds to all of
the rights, of the issuer under the issuer’s
agreements with the Secretary of Education
in respect of student loans;
‘‘(iv) immediately after such transfer,
the issuer, together with any other issuer
which has made an election under this
paragraph in respect of such transferee,
hold all of the senior stock in such transferee
corporation; and
‘‘(v) such transferee corporation is not
exempt from tax under this chapter.
‘‘(C) ISSUER TO OPERATE AS INDEPENDENT
ORGANIZATION
DESCRIBED
IN
SECTION
501(C)(3).—The requirements of this subpara-
graph are met by an issuer if, within a reason-
able period after the transfer referred to in sub-
paragraph (B)—
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‘‘(i) the issuer is described in section
501(c)(3) and exempt from tax under sec-
tion 501(a);
‘‘(ii) the issuer no longer is described
in subparagraphs (A) and (B) of paragraph
(2); and
‘‘(iii) at least 80 percent of the mem-
bers of the board of directors of the issuer
are independent members.
‘‘(D) SENIOR STOCK.—For purposes of this
paragraph, the term ‘senior stock’ means stock—
‘‘(i) which participates pro rata and
fully in the equity value of the corporation
with all other common stock of the corpora-
tion but which has the right to payment of
liquidation proceeds prior to payment of
liquidation proceeds in respect of other com-
mon stock of the corporation;
‘‘(ii) which has a fixed right upon liq-
uidation and upon redemption to an
amount equal to the greater of—
‘‘(I) the fair market value of such
stock on the date of liquidation or re-
demption (whichever is applicable); or
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‘‘(II) the fair market value of all
assets transferred in exchange for such
stock and reduced by the amount of all
liabilities of the corporation which has
made an election under this paragraph
assumed by the transferee corporation
in such transfer;
‘‘(iii) the holder of which has the right
to require the transferee corporation to re-
deem on a date that is not later than 10
years after the date on which an election
under this paragraph was made and pursu-
ant to such election such stock was issued;
and
‘‘(iv) in respect of which, during the
time such stock is outstanding, there is not
outstanding any equity interest in the cor-
poration having any liquidation, redemp-
tion or dividend rights in the corporation
which are superior to those of such stock.
‘‘(E) INDEPENDENT
MEMBER.—The term
‘independent member’ means a member of the
board of directors of the issuer who (except for
services as a member of such board) receives no
compensation directly or indirectly—
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‘‘(i) for services performed in connec-
tion with such transferee corporation, or
‘‘(ii) for services as a member of the
board of directors or as an officer of such
transferee corporation.
For purposes of clause (ii), the term ‘officer’ in-
cludes any individual having powers or respon-
sibilities similar to those of officers.
‘‘(F) COORDINATION
WITH
CERTAIN
PRI-
VATE FOUNDATION TAXES.—For purposes of sec-
tions 4942 (relating to the excise tax on a failure
to distribute income) and 4943 (relating to the
excise tax on excess business holdings), the trans-
feree corporation referred to in subparagraph (B)
shall be treated as a functionally related business
(within the meaning of section 4942(j)(4)) with
respect to the issuer during the period commenc-
ing with the date on which an election is made
under this paragraph and ending on the date
that is the earlier of—
‘‘(i) the last day of the last taxable
year for which more than 50 percent of the
gross income of such transferee corporation
is derived from, or more than 50 percent of
the assets (by value) of such transferee cor-
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poration consists of, student loan notes in-
curred under the Higher Education Act of
1965; or
‘‘(ii) the last day of the taxable year of
the issuer during which occurs the date
which is 10 years after the date on which
the election under this paragraph is made.
‘‘(G) ELECTION.—An election under this
paragraph may be revoked only with the consent
of the Secretary.’’.
(b) EFFECTIVE DATE.—The amendment made by this
section shall take effect on the date of the enactment of this
Act.
SEC. 1613. CERTAIN TAX BENEFITS DENIED TO INDIVID-
UALS FAILING TO PROVIDE TAXPAYER IDEN-
TIFICATION NUMBERS.
(a) PERSONAL EXEMPTION.—
(1) IN GENERAL.—Section 151 (relating to al-
lowance of deductions for personal exemptions) is
amended by adding at the end the following new sub-
section:
‘‘(e) IDENTIFYING INFORMATION REQUIRED.—No ex-
emption shall be allowed under this section with respect to
any individual unless the TIN of such individual is in-
cluded on the return claiming the exemption.’’.
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(2) CONFORMING AMENDMENTS.—
(A) Subsection (e) of section 6109 is re-
pealed.
(B) Section 6724(d)(3) is amended by add-
ing ‘‘and’’ at the end of subparagraph (C), by
striking subparagraph (D), and by redesignating
subparagraph (E) as subparagraph (D).
(b) DEPENDENT CARE CREDIT.—Subsection (e) of sec-
tion 21 (relating to expenses for household and dependent
care services necessary for gainful employment) is amended
by adding at the end the following new paragraph:
‘‘(10) IDENTIFYING
INFORMATION
REQUIRED
WITH
RESPECT
TO
QUALIFYING
INDIVIDUALS.—No
credit shall be allowed under this section with respect
to any qualifying individual unless the TIN of such
individual is included on the return claiming the
credit.’’.
(c) EXTENSION
OF PROCEDURES APPLICABLE
TO
MATHEMATICAL
OR
CLERICAL
ERRORS.—Section
6213(g)(2) (relating to the definition of mathematical or
clerical errors) is amended by striking ‘‘and’ at the end of
subparagraph (D), by striking the period at the end of sub-
paragraph (E) and inserting ‘‘, and’’, and by inserting at
the end the following new subparagraph:
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‘‘(F) an omission of a correct TIN required
under section 21 (relating to expenses for house-
hold and dependent care services necessary for
gainful employment) or section 151 (relating to
allowance of deductions for personal exemp-
tions).’’.
(d) EFFECTIVE DATE.—
(1) IN
GENERAL.—The amendments made by
this section shall apply with respect to returns the
due date for which (without regard to extensions) is
on or after the 30th day after the date of the enact-
ment of this Act.
(2) SPECIAL RULE FOR 1995 AND 1996.—In the
case of returns for taxable years beginning in 1995 or
1996, a taxpayer shall not be required by the amend-
ments made by this section to provide a taxpayer
identification number for a child who is born after
October 31, 1995, in the case of a taxable year begin-
ning in 1995 or November 30, 1996, in the case of a
taxable year beginning in 1996.
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PART II—FINANCIAL ASSET SECURITIZATION
INVESTMENTS
SEC. 1621. FINANCIAL ASSET SECURITIZATION INVEST-
MENT TRUSTS.
(a) IN GENERAL.—Subchapter M of chapter 1 is
amended by adding at the end the following new part:
‘‘PART V—FINANCIAL ASSET SECURITIZATION
INVESTMENT TRUSTS
‘‘Sec. 860H. Taxation of a FASIT; other general rules.
‘‘Sec. 860I. Gain recognition on contributions to and distributions
from a FASIT and in other cases.
‘‘Sec. 860J. Non-FASIT losses not to offset certain FASIT inclu-
sions.
‘‘Sec. 860K. Treatment of transfers of high-yield interests to dis-
qualified holders.
‘‘Sec. 860L. Definitions and other special rules.
‘‘SEC. 860H. TAXATION OF A FASIT; OTHER GENERAL RULES.
‘‘(a) TAXATION OF FASIT.—A FASIT as such shall
not be subject to taxation under this subtitle (and shall not
be treated as a trust, partnership, corporation, or taxable
mortgage pool).
‘‘(b) TAXATION OF HOLDER OF OWNERSHIP INTER-
EST.—In determining the taxable income of the holder of
the ownership interest in a FASIT—
‘‘(1) all assets, liabilities, and items of income,
gain, deduction, loss, and credit of a FASIT shall be
treated as assets, liabilities, and such items (as the
case may be) of such holder,
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‘‘(2) the constant yield method (including the
rules of section 1272(a)(6)) shall be applied under an
accrual method of accounting in determining all in-
terest, acquisition discount, original issue discount,
and market discount and all premium deductions or
adjustments with respect to all debt instruments of the
FASIT,
‘‘(3) there shall not be taken into account any
item of income, gain, or deduction allocable to a pro-
hibited transaction, and
‘‘(4) interest accrued by the FASIT which is ex-
empt from tax imposed by this subtitle shall, when
taken into account by such holder, be treated as ordi-
nary income.
For purposes of this subtitle, securities treated as held by
such holder under paragraph (1) shall be treated as held
for investment.
‘‘(c) TREATMENT OF REGULAR INTERESTS.—For pur-
poses of this title—
‘‘(1) a regular interest in a FASIT, if not other-
wise a debt instrument, shall be treated as a debt in-
strument,
‘‘(2) section 163(e)(5) shall not apply to such an
interest, and
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‘‘(3) amounts includible in gross income with re-
spect to such an interest shall be determined under an
accrual method of accounting.
‘‘SEC. 860I. GAIN RECOGNITION ON CONTRIBUTIONS TO
AND DISTRIBUTIONS FROM A FASIT AND IN
OTHER CASES.
‘‘(a) TREATMENT
OF
PROPERTY
ACQUIRED
BY
FASIT.—
‘‘(1) PROPERTY
ACQUIRED
FROM
HOLDER
OF
OWNERSHIP
INTEREST
OR
RELATED
PERSON.—If
property is sold or contributed to a FASIT by the
holder of the ownership interest in such FASIT (or by
a related person) gain (if any) shall be recognized to
such holder (or person) in an amount equal to the ex-
cess (if any) of such property’s value under subsection
(d) on the date of such sale or contribution over its
adjusted basis on such date.
‘‘(2) PROPERTY ACQUIRED OTHER THAN FROM
HOLDER OF OWNERSHIP INTEREST OR RELATED PER-
SON.—Property which is acquired by a FASIT other
than in a transaction to which paragraph (1) applies
shall be treated—
‘‘(A) as having been acquired by the holder
of the ownership interest in the FASIT for an
amount equal to the FASIT’s adjusted basis in
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such property as of the date such property is ac-
quired by the FASIT, and
‘‘(B) as having been sold by such holder to
the FASIT at its value under subsection (d) on
such date.
‘‘(b) GAIN RECOGNITION
ON PROPERTY OUTSIDE
FASIT WHICH SUPPORTS REGULAR INTERESTS.—If prop-
erty held by the holder of the ownership interest in a FASIT
(or by any person related to such holder) supports any regu-
lar interest in such FASIT—
‘‘(1) gain shall be recognized to such holder in
the same manner as if such holder had sold such
property at its value under subsection (d) on the ear-
liest date such property supports such an interest,
and
‘‘(2) such property shall be treated as held by
such FASIT for purposes of this part.
‘‘(c) DEFERRAL OF GAIN RECOGNITION.—The Sec-
retary may prescribe regulations which—
‘‘(1) provide that gain otherwise recognized
under subsection (a) or (b) shall not be recognized be-
fore the earliest date on which such property supports
any regular interest in such FASIT or any indebted-
ness of the holder of the ownership interest (or of any
person related to such holder), and
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‘‘(2) provide such adjustments to the other provi-
sions of this part to the extent appropriate in the con-
text of the treatment provided under paragraph (1).
‘‘(d) VALUATION.—For purposes of this section—
‘‘(1) IN GENERAL.—The value of any property
under this subsection shall be—
‘‘(A) in the case of a debt instrument which
is not traded on an established securities market,
the sum of the present values of the reasonably
expected payments under such instrument deter-
mined (in the manner provided by regulations
prescribed by the Secretary)—
‘‘(i) as of the date of the event resulting
in the gain recognition under this section,
and
‘‘(ii) by using a discount rate equal to
120 percent of the applicable Federal rate
(as defined in section 1274(d)), or such
other discount rate specified in such regula-
tions, compounded semiannually, and
‘‘(B) in the case of any other property, its
fair market value.
‘‘(2) SPECIAL RULE FOR REVOLVING LOAN AC-
COUNTS.—For purposes of paragraph (1)—
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‘‘(A) each extension of credit (other than the
accrual of interest) on a revolving loan account
shall be treated as a separate debt instrument,
and
‘‘(B) payments on such extensions of credit
having substantially the same terms shall be ap-
plied to such extensions beginning with the earli-
est such extension.
‘‘(e) SPECIAL RULES.—
‘‘(1) NONRECOGNITION RULES NOT TO APPLY.—
Gain required to be recognized under this section
shall be recognized notwithstanding any other provi-
sion of this subtitle.
‘‘(2) BASIS
ADJUSTMENTS.—The basis of any
property on which gain is recognized under this sec-
tion shall be increased by the amount of gain so rec-
ognized.
‘‘SEC. 860J. NON-FASIT LOSSES NOT TO OFFSET CERTAIN
FASIT INCLUSIONS.
‘‘(a) IN GENERAL.—The taxable income of the holder
of the ownership interest or any high-yield interest in a
FASIT for any taxable year shall in no event be less than
such holder’s taxable income determined solely with respect
to such interests.
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‘‘(b) COORDINATION WITH SECTION 172.—Any in-
crease in the taxable income of any holder of the ownership
interest or a high-yield interest in a FASIT for any taxable
year by reason of subsection (a) shall be disregarded—
‘‘(1) in determining under section 172 the
amount of any net operating loss for such taxable
year, and
‘‘(2) in determining taxable income for such tax-
able year for purposes of the 2nd sentence of section
172(b)(2).
‘‘(c) COORDINATION WITH MINIMUM TAX.—For pur-
poses of part VI of subchapter A of this chapter—
‘‘(1) the reference in section 55(b)(2) to taxable
income shall be treated as a reference to taxable in-
come determined without regard to this section,
‘‘(2) the alternative minimum taxable income of
any holder of the ownership interest or a high-yield
interest in a FASIT for any taxable year shall in no
event be less than such holder’s taxable income deter-
mined solely with respect to such interests, and
‘‘(3) any increase in taxable income under this
section shall be disregarded for purposes of computing
the alternative tax net operating loss deduction.
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‘‘SEC. 860K. TREATMENT OF TRANSFERS OF HIGH-YIELD IN-
TERESTS TO DISQUALIFIED HOLDERS.
‘‘(a) GENERAL RULE.—In the case of any high-yield
interest which is held by a disqualified holder—
‘‘(1) the gross income of such holder shall not in-
clude any income (other than gain) attributable to
such interest, and
‘‘(2) amounts not includible in the gross income
of such holder by reason of paragraph (1) shall be in-
cluded (at the time otherwise includible under para-
graph (1)) in the gross income of the most recent
holder of such interest which is not a disqualified
holder.
‘‘(b) EXCEPTIONS.—Rules similar to the rules of para-
graphs (4) and (7) of section 860E(e) shall apply to the
tax imposed by reason of subsection (a).
‘‘(c) DISQUALIFIED HOLDER.—For purposes of this
section, the term ‘disqualified holder’ means any holder
other than—
‘‘(1) an eligible corporation (as defined in sec-
tion 860L(a)(2)), or
‘‘(2) a FASIT.
‘‘(d) TREATMENT OF INTERESTS HELD BY SECURI-
TIES DEALERS.—
‘‘(1) IN
GENERAL.—Subsection (a) shall not
apply to any high-yield interest held by a disqualified
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holder if such holder is a dealer in securities who ac-
quired such interest exclusively for sale to customers
in the ordinary course of business (and not for invest-
ment).
‘‘(2) CHANGE IN DEALER STATUS.—
‘‘(A) IN GENERAL.—In the case of a dealer
in securities which is not an eligible corporation
(as defined in section 860L(a)(2)), if—
‘‘(i) such dealer ceases to be a dealer in
securities, or
‘‘(ii) such dealer commences holding
the high-yield interest for investment,
there is hereby imposed (in addition to other
taxes) an excise tax equal to the product of the
highest rate of tax specified in section 11(b)(1)
and the income of such dealer attributable to
such interest for periods after the date of such
cessation or commencement.
‘‘(B) HOLDING FOR 31 DAYS OR LESS.—For
purposes of subparagraph (A)(ii), a dealer shall
not be treated as holding an interest for invest-
ment before the 32d day after the date such deal-
er acquired such interest unless such interest is
so held as part of a plan to avoid the purposes
of this paragraph.
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‘‘(C) ADMINISTRATIVE
PROVISIONS.—The
deficiency procedures of subtitle F shall apply to
the tax imposed by this paragraph.
‘‘(e) TREATMENT OF HIGH-YIELD INTERESTS IN PASS-
THRU ENTITIES.—
‘‘(1) IN GENERAL.—If a pass-thru entity (as de-
fined in section 860E(e)(6)) issues a debt or equity
interest—
‘‘(A) which is supported by any regular in-
terest in a FASIT, and
‘‘(B) which has an original yield to matu-
rity which is greater than each of—
‘‘(i) the sum determined under clauses
(i) and (ii) of section 163(i)(1)(B) with re-
spect to such debt or equity interest, and
‘‘(ii) the yield to maturity to such en-
tity on such regular interest (determined as
of the date such entity acquired such inter-
est),
there is hereby imposed on the pass-thru entity a tax
(in addition to other taxes) equal to the product of the
highest rate of tax specified in section 11(b)(1) and
the income of the holder of such debt or equity interest
which is properly attributable to such regular inter-
est. For purposes of the preceding sentence, the yield
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to maturity of any equity interest shall be determined
under regulations prescribed by the Secretary.
‘‘(2) EXCEPTION.—The Secretary may provide
that paragraph (1) shall not apply to arrangements
not having as a principal purpose the avoidance of
the purposes of this subsection.
‘‘SEC. 860L. DEFINITIONS AND OTHER SPECIAL RULES.
‘‘(a) FASIT.—
‘‘(1) IN GENERAL.—For purposes of this title, the
terms ‘financial asset securitization investment trust’
and ‘FASIT’ mean any entity—
‘‘(A) for which an election to be treated as
a FASIT applies for the taxable year,
‘‘(B) all of the interests in which are regu-
lar interests or the ownership interest,
‘‘(C) which has only 1 ownership interest
and such ownership interest is held directly by
an eligible corporation,
‘‘(D) as of the close of the 3rd month begin-
ning after the day of its formation and at all
times thereafter, substantially all of the assets of
which (including assets treated as held by the en-
tity under section 860I(c)(2)) consist of per-
mitted assets, and
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‘‘(E) which is not described in section
851(a).
A rule similar to the rule of the last sentence of sec-
tion 860D(a) shall apply for purposes of this para-
graph.
‘‘(2) ELIGIBLE CORPORATION.—For purposes of
paragraph (1)(C), the term ‘eligible corporation’
means any domestic C corporation other than—
‘‘(A) a corporation which is exempt from, or
is not subject to, tax under this chapter,
‘‘(B) an entity described in section 851(a)
or 856(a),
‘‘(C) a REMIC, and
‘‘(D) an organization to which part I of
subchapter T applies.
‘‘(3) ELECTION.—An entity (otherwise meeting
the requirements of paragraph (1)) may elect to be
treated as a FASIT. Except as provided in paragraph
(5), such an election shall apply to the taxable year
for which made and all subsequent taxable years un-
less revoked with the consent of the Secretary.
‘‘(4) TERMINATION.—If any entity ceases to be a
FASIT at any time during the taxable year, such en-
tity shall not be treated as a FASIT for such taxable
year or any succeeding taxable year.
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‘‘(5) INADVERTENT TERMINATIONS, ETC.—Rules
similar to the rules of section 860D(b)(2)(B) shall
apply to inadvertent failures to qualify or remain
qualified as a FASIT.
‘‘(b) INTERESTS
IN FASIT.—For purposes of this
part—
‘‘(1) REGULAR INTEREST.—
‘‘(A) IN GENERAL.—The term ‘regular in-
terest’ means any interest which is issued by a
FASIT after the startup date with fixed terms
and which is designated as a regular interest
if—
‘‘(i) such interest unconditionally enti-
tles the holder to receive a specified prin-
cipal amount (or other similar amount),
‘‘(ii) except as otherwise provided by
the Secretary—
‘‘(I) in the case of a FASIT which
would be treated as a REMIC if an
election under section 860D(b) had
been made, interest payments (or other
similar amounts), if any, with respect
to such interest at or before maturity
meet the requirements applicable under
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clause 
(i) 
or 
(ii) 
of 
section
860G(a)(1)(B), or
‘‘(II) in the case of any other
FASIT, interest payments (or other
similar amounts), if any, with respect
to such interest are determined based
on a fixed rate, a current rate which is
reasonably expected to measure contem-
poraneous variations in the cost of
newly borrowed funds in the currency
in which the regular interest is de-
nominated, or any combination of such
rates,
‘‘(iii) such interest does not have a
stated 
maturity 
(including 
options 
to
renew) greater than 30 years (or such
longer period as may be permitted by regu-
lations),
‘‘(iv) the issue price of such interest
does not exceed 125 percent of its stated
principal amount, and
‘‘(v) the yield to maturity on such in-
terest is less than the sum determined under
section 163(i)(1)(B) with respect to such in-
terest.
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An interest shall not fail to meet the require-
ments of clause (i) merely because the timing
(but not the amount) of the principal payments
(or other similar amounts) may be contingent on
the extent that payments on debt instruments
held by the FASIT are made in advance of an-
ticipated payments and on the amount of income
from permitted assets.
‘‘(B) HIGH-YIELD INTERESTS.—
‘‘(i) IN GENERAL.—The term ‘regular
interest’ includes any high-yield interest.
‘‘(ii) 
HIGH-YIELD
INTEREST.—The
term ‘high-yield interest’ means any interest
which would be described in subparagraph
(A) but for failing to meet the requirements
of one or more of clauses (i), (iv), or (v)
thereof.
‘‘(2) OWNERSHIP INTEREST.—The term ‘owner-
ship interest’ means the interest issued by a FASIT
after the startup day which is designated as an own-
ership interest and which is not a regular interest.
‘‘(c) PERMITTED
ASSETS.—For purposes of this
part—
‘‘(1) IN GENERAL.—The term ‘permitted asset’
means—
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‘‘(A) cash or cash equivalents,
‘‘(B) any debt instrument (as defined in
section 1275(a)(1)) under which interest pay-
ments (or other similar amounts), if any, at or
before maturity meet the requirements applicable
under clause (i) or (ii) of section 860G(a)(1)(B),
‘‘(C) foreclosure property,
‘‘(D) any asset—
‘‘(i) which is an interest rate or foreign
currency notional principal contract, letter
of credit, insurance, guarantee against pay-
ment defaults, or other similar instrument
permitted by the Secretary, and
‘‘(ii) which is reasonably required to
guarantee or hedge against the FASIT’s
risks associated with being the obligor on
interests issued by the FASIT,
‘‘(E) contract rights to acquire debt instru-
ments described in subparagraph (B) or assets
described in subparagraph (D), and
‘‘(F) any regular interest in another
FASIT.
‘‘(2) DEBT ISSUED BY HOLDER OF OWNERSHIP
INTEREST NOT PERMITTED ASSET.—The term ‘per-
mitted asset’ shall not include any debt instrument is-
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sued by the holder of the ownership interest in the
FASIT or by any person related to such holder or
any direct or indirect interest in such a debt instru-
ment. The preceding sentence shall not apply to cash
equivalents and to any other investment specified in
regulations prescribed by the Secretary.
‘‘(3) FORECLOSURE PROPERTY.—The term ‘fore-
closure property’ means property—
‘‘(A) which would be foreclosure property
under section 856(e) (determined without regard
to paragraph (5) thereof) if acquired by a real
estate investment trust, and
‘‘(B) which is acquired in connection with
the default or imminent default of a debt instru-
ment held by the FASIT unless the security in-
terest in such property was created for the prin-
cipal purpose of permitting the FASIT to invest
in such property.
Solely for purposes of subsection (a)(1), the deter-
mination of whether any property is foreclosure prop-
erty shall be made without regard to section
856(e)(4).
‘‘(d) STARTUP DAY.—For purposes of this part—
‘‘(1) IN
GENERAL.—The term ‘startup day’
means the date designated in the election under sub-
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section (a)(3) as the startup day of the FASIT. Such
day shall be the beginning of the first taxable year of
the FASIT.
‘‘(2) TREATMENT OF PROPERTY HELD ON START-
UP DAY.—All property held (or treated as held under
section 860I(c)(2)) by an entity as of the startup day
shall be treated as contributed to such entity on such
day by the holder of the ownership interest in such
entity.
‘‘(e) TAX ON PROHIBITED TRANSACTIONS.—
‘‘(1) IN GENERAL.—There is hereby imposed for
each taxable year of a FASIT a tax equal to 100 per-
cent of the net income derived from prohibited trans-
actions. Such tax shall be paid by the holder of the
ownership interest in the FASIT.
‘‘(2) PROHIBITED TRANSACTIONS.—For purposes
of this part, the term ‘prohibited transaction’
means—
‘‘(A) the receipt of any income derived from
any asset that is not a permitted asset,
‘‘(B) except as provided in paragraph (3),
the disposition of any permitted asset,
‘‘(C) the receipt of any income derived from
any loan originated by the FASIT, and
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‘‘(D) the receipt of any income representing
a fee or other compensation for services (other
than any fee received as compensation for a
waiver, amendment, or consent under permitted
assets (other than foreclosure property) held by
the FASIT).
‘‘(3) EXCEPTION
FOR
INCOME
FROM
CERTAIN
DISPOSITIONS.—
‘‘(A) IN GENERAL.—Paragraph (2)(B) shall
not apply to a disposition which would not be a
prohibited transaction (as defined in section
860F(a)(2)) by reason of—
‘‘(i) clause (ii), (iii), or (iv) of section
860F(a)(2)(A), or
‘‘(ii) section 860F(a)(5),
if the FASIT were treated as a REMIC and debt
instruments described in subsection (c)(1)(B)
were treated as qualified mortgages.
‘‘(B) SUBSTITUTION
OF
DEBT
INSTRU-
MENTS; 
REDUCTION
OF
OVER-
COLLATERALIZATION.—Paragraph (2)(B) shall
not apply to—
‘‘(i) the substitution of a debt instru-
ment described in subsection (c)(1)(B) for
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another debt instrument which is a per-
mitted asset, or
‘‘(ii) the distribution of a debt instru-
ment contributed by the holder of the owner-
ship interest to such holder in order to re-
duce over-collateralization of the FASIT,
but only if a principal purpose of acquiring the
debt instrument which is disposed of was not the
recognition of gain (or the reduction of a loss) as
a result of an increase in the market value of the
debt instrument after its acquisition by the
FASIT.
‘‘(C) LIQUIDATION OF CLASS OF REGULAR
INTERESTS.—Paragraph (2)(B) shall not apply
to the complete liquidation of any class of regu-
lar interests.
‘‘(4) NET INCOME.—For purposes of this sub-
section, net income shall be determined in accordance
with section 860F(a)(3).
‘‘(f) COORDINATION WITH WASH SALES RULES.—
Rules similar to the rules of section 860F(d) shall apply
to the ownership interest in a FASIT.
‘‘(g) RELATED PERSON.—For purposes of this part, a
person (hereinafter in this subsection referred to as the ‘re-
lated person’) is related to any person if—
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‘‘(1) the related person bears a relationship to
such person specified in section 267(b) or section
707(b)(1), or
‘‘(2) the related person and such person are en-
gaged in trades or businesses under common control
(within the meaning of subsections (a) and (b) of sec-
tion 52).
For purposes of paragraph (1), in applying section 267(b)
or 707(b)(1), ‘20 percent’ shall be substituted for ‘50 per-
cent’.
‘‘(h) REGULATIONS.—The Secretary shall prescribe
such regulations as may be necessary or appropriate to
carry out the purposes of this part, including regulations
to prevent the abuse of the purposes of this part through
transactions 
which 
are 
not 
primarily 
related 
to
securitization of debt instruments by a FASIT.’’.
(b) TECHNICAL AMENDMENTS.—
(1) Paragraph (2) of section 26(b) is amended by
striking ‘‘and’’ at the end of subparagraph (M), by
striking the period at the end of subparagraph (N)
and inserting ‘‘, and’’, and by adding at the end the
following new subparagraph:
‘‘(O) section 860K (relating to treatment of
transfers of high-yield interests to disqualified
holders).’’.
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(2) Paragraph (6) of section 56(g) is amended by
striking ‘‘or REMIC’’ and inserting ‘‘REMIC, or
FASIT’’.
(3) Clause (ii) of section 382(l)(4)(B) is amended
by striking ‘‘or a REMIC to which part IV of sub-
chapter M applies’’ and inserting ‘‘a REMIC to
which part IV of subchapter M applies, or a FASIT
to which part V of subchapter M applies’’.
(4) Paragraph (1) of section 582(c) is amended
by inserting ‘‘, and any regular or ownership interest
in a FASIT,’’ after ‘‘REMIC’’.
(5) Subparagraph (E) of section 856(c)(6) is
amended by adding at the end the following new sen-
tence: ‘‘The principles of the preceding provisions of
this subparagraph shall apply to regular and owner-
ship interests in a FASIT.’’.
(6) Subparagraph (C) of section 1202(e)(4) is
amended by striking ‘‘or REMIC’’ and inserting
‘‘REMIC, or FASIT’’.
(7) Clause (xi) of section 7701(a)(19)(C) is
amended to read as follows:
‘‘(xi) any regular or residual interest
in a REMIC, and any regular or ownership
interest in a FASIT, but only in the pro-
portion which the assets of such REMIC or
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FASIT consist of property described in any
of the preceding clauses of this subpara-
graph; except that if 95 percent or more of
the assets of such REMIC or FASIT are as-
sets described in clauses (i) through (x), the
entire interest in the REMIC or FASIT
shall qualify.’’.
(8) Subparagraph (A) of section 7701(i)(2) is
amended by inserting ‘‘or a FASIT’’ after ‘‘a
REMIC’’.
(c) CLERICAL AMENDMENT.—The table of parts for
subchapter M of chapter 1 is amended by adding at the
end the following new item:
‘‘Part V. Financial asset securitization investment trusts.’’.
(d) EFFECTIVE DATE.—The amendments made by this
section shall take effect on the date of the enactment of this
Act.
(e) TREATMENT OF EXISTING SECURITIZATION ENTI-
TIES.—
(1) IN GENERAL.—In the case of the holder of the
ownership interest in a pre-effective date FASIT—
(A) gain shall not be recognized under sec-
tion 860L(d)(2) of the Internal Revenue Code of
1986 on property deemed contributed to the
FASIT, and
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(B) gain shall not be recognized under sec-
tion 860I of such Code on property contributed
to such FASIT,
until such property (or portion thereof) ceases to be
properly allocable to a pre-FASIT interest.
(2) ALLOCATION OF PROPERTY TO PRE-FASIT IN-
TEREST.—For purposes of paragraph (1), property
shall be allocated to a pre-FASIT interest in such
manner as the Secretary of the Treasury may pre-
scribe, except that all property in a FASIT shall be
treated as properly allocable to pre-FASIT interests if
the fair market value of all such property does not ex-
ceed 107 percent of the aggregate principal amount of
all outstanding pre-FASIT interests.
(3) DEFINITIONS.—For purposes of this sub-
section—
(A) 
PRE-EFFECTIVE
DATE
FASIT.—The
term ‘‘pre-effective date FASIT’’ means any
FASIT if the entity (with respect to which the
election under section 860L(a)(3) of such Code
was made) was in existence on June 10, 1996.
(B) PRE-FASIT INTEREST.—The term ‘‘pre-
FASIT interest’’ means any interest in the en-
tity referred to in subparagraph (A) which was
issued before the startup day (other than any in-
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terest held by the holder of the ownership interest
in the FASIT).
PART III—TREATMENT OF INDIVIDUALS WHO
EXPATRIATE
SEC. 1631. REVISION OF TAX RULES ON EXPATRIATION.
(a) IN GENERAL.—Subpart A of part II of subchapter
N of chapter 1 is amended by inserting after section 877
the following new section:
‘‘SEC. 877A. TAX RESPONSIBILITIES OF EXPATRIATION.
‘‘(a) GENERAL RULES.—For purposes of this sub-
title—
‘‘(1) MARK TO MARKET.—Except as provided in
subsection (f), all property of a covered expatriate to
which this section applies shall be treated as sold on
the expatriation date for its fair market value.
‘‘(2) RECOGNITION OF GAIN OR LOSS.—In the
case of any sale under paragraph (1)—
‘‘(A) notwithstanding any other provision of
this title, any gain arising from such sale shall
be taken into account for the taxable year of the
sale unless such gain is excluded from gross in-
come under part III of subchapter B, and
‘‘(B) any loss arising from such sale shall
be taken into account for the taxable year of the
sale to the extent otherwise provided by this title,
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except that section 1091 shall not apply (and
section 1092 shall apply) to any such loss.
‘‘(3) EXCLUSION
FOR
CERTAIN
GAIN.—The
amount which would (but for this paragraph) be in-
cludible in the gross income of any individual by rea-
son of this section shall be reduced (but not below
zero) by $600,000. For purposes of this paragraph, al-
locable expatriation gain taken into account under
subsection (f)(2) shall be treated in the same manner
as an amount required to be includible in gross in-
come.
‘‘(4) ELECTION TO CONTINUE TO BE TAXED AS
UNITED STATES CITIZEN.—
‘‘(A) IN GENERAL.—If an expatriate elects
the application of this paragraph—
‘‘(i) this section (other than this para-
graph) shall not apply to the expatriate, but
‘‘(ii) the expatriate shall be subject to
tax under this title, with respect to property
to which this section would apply but for
such election, in the same manner as if the
individual were a United States citizen.
‘‘(B) LIMITATION ON AMOUNT OF ESTATE,
GIFT, 
AND
GENERATION-SKIPPING
TRANSFER
TAXES.—The aggregate amount of taxes imposed
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under subtitle B with respect to any transfer of
property by reason of an election under subpara-
graph (A) shall not exceed the amount of income
tax which would be due if the property were sold
for its fair market value immediately before the
time of the transfer or death (taking into account
the rules of paragraph (2)).
‘‘(C) REQUIREMENTS.—Subparagraph (A)
shall not apply to an individual unless the indi-
vidual—
‘‘(i) provides security for payment of
tax in such form and manner, and in such
amount, as the Secretary may require,
‘‘(ii) consents to the waiver of any
right of the individual under any treaty of
the United States which would preclude as-
sessment or collection of any tax which may
be imposed by reason of this paragraph,
and
‘‘(iii) complies with such other require-
ments as the Secretary may prescribe.
‘‘(D) ELECTION.—An election under sub-
paragraph (A) shall apply to all property to
which this section would apply but for the elec-
tion and, once made, shall be irrevocable. Such
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election shall also apply to property the basis of
which is determined in whole or in part by ref-
erence to the property with respect to which the
election was made.
‘‘(b) ELECTION TO DEFER TAX.—
‘‘(1) IN GENERAL.—If the taxpayer elects the ap-
plication of this subsection with respect to any prop-
erty—
‘‘(A) no amount shall be required to be in-
cluded in gross income under subsection (a)(1)
with respect to the gain from such property for
the taxable year of the sale, but
‘‘(B) the taxpayer’s tax for the taxable year
in which such property is disposed of shall be in-
creased by the deferred tax amount with respect
to the property.
Except to the extent provided in regulations, subpara-
graph (B) shall apply to a disposition whether or not
gain or loss is recognized in whole or in part on the
disposition.
‘‘(2) DEFERRED TAX AMOUNT.—
‘‘(A) IN GENERAL.—For purposes of para-
graph (1), the term ‘deferred tax amount’ means,
with respect to any property, an amount equal
to the sum of—
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‘‘(i) the difference between the amount
of tax paid for the taxable year described in
paragraph (1)(A) and the amount which
would have been paid for such taxable year
if the election under paragraph (1) had not
applied to such property, plus
‘‘(ii) an amount of interest on the
amount described in clause (i) determined
for the period—
‘‘(I) beginning on the 91st day
after the expatriation date, and
‘‘(II) ending on the due date for
the taxable year described in para-
graph (1)(B),
by using the rates and method applicable
under section 6621 for underpayments of
tax for such period.
For purposes of clause (ii), the due date is the
date prescribed by law (determined without re-
gard to extension) for filing the return of the tax
imposed by this chapter for the taxable year.
‘‘(B) ALLOCATION
OF
LOSSES.—For pur-
poses of subparagraph (A), any losses described
in subsection (a)(2)(B) shall be allocated ratably
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among 
the 
gains 
described 
in 
subsection
(a)(2)(A).
‘‘(3) SECURITY.—
‘‘(A) IN
GENERAL.—No election may be
made under paragraph (1) with respect to any
property unless adequate security is provided
with respect to such property.
‘‘(B) ADEQUATE SECURITY.—For purposes
of subparagraph (A), security with respect to
any property shall be treated as adequate secu-
rity if—
‘‘(i) it is a bond in an amount equal
to the deferred tax amount under paragraph
(2)(A) for the property, or
‘‘(ii) the taxpayer otherwise establishes
to the satisfaction of the Secretary that the
security is adequate.
‘‘(4) WAIVER OF CERTAIN RIGHTS.—No election
may be made under paragraph (1) unless the tax-
payer consents to the waiver of any right under any
treaty of the United States which would preclude as-
sessment or collection of any tax imposed by reason
of this section.
‘‘(5) DISPOSITIONS.—For purposes of this sub-
section, a taxpayer making an election under this
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subsection with respect to any property shall be treat-
ed as having disposed of such property—
‘‘(A) immediately before death if such prop-
erty is held at such time, and
‘‘(B) at any time the security provided with
respect to the property fails to meet the require-
ments of paragraph (3) and the taxpayer does
not correct such failure within the time specified
by the Secretary.
‘‘(6) ELECTIONS.—An election under paragraph
(1) shall only apply to property described in the elec-
tion and, once made, is irrevocable. An election may
be under paragraph (1) with respect to an interest in
a trust with respect to which gain is required to be
recognized under subsection (f)(1).
‘‘(c) COVERED EXPATRIATE.—For purposes of this sec-
tion—
‘‘(1) IN GENERAL.—The term ‘covered expatriate’
means an expatriate—
‘‘(A) whose average annual net income tax
(as defined in section 38(c)(1)) for the period of
5 taxable years ending before the expatriation
date is greater than $100,000, or
‘‘(B) whose net worth as of such date is
$500,000 or more.
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If the expatriation date is after 1996, such $100,000
and $500,000 amounts 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 such calendar year by substituting ‘1995’
for ‘1992’ in subparagraph (B) thereof. Any increase
under the preceding sentence shall be rounded to the
nearest multiple of $1,000.
‘‘(2) EXCEPTIONS.—An individual shall not be
treated as a covered expatriate if—
‘‘(A) the individual—
‘‘(i) became at birth a citizen of the
United States and a citizen of another
country and, as of the expatriation date,
continues to be a citizen of, and is taxed as
a resident of, such other country, and
‘‘(ii) has been a resident of the United
States 
(as 
defined 
in 
section
7701(b)(1)(A)(ii)) for not more than 8 tax-
able years during the 15-taxable year period
ending with the taxable year during which
the expatriation date occurs, or
‘‘(B)(i) the individual’s relinquishment of
United States citizenship occurs before such indi-
vidual attains age 181⁄2, and
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‘‘(ii) the individual has been a resident of
the United States (as so defined) for not more
than 5 taxable years before the date of relin-
quishment.
‘‘(d) PROPERTY TO WHICH SECTION APPLIES.—For
purposes of this section—
‘‘(1) IN GENERAL.—Except as otherwise provided
by the Secretary, this section shall apply to—
‘‘(A) any interest in property held by a cov-
ered expatriate on the expatriation date the gain
from which would be includible in the gross in-
come of the expatriate if such interest had been
sold for its fair market value on such date in a
transaction in which gain is recognized in whole
or in part, and
‘‘(B) any other interest in a trust to which
subsection (f) applies.
‘‘(2) EXCEPTIONS.—This section shall not apply
to the following property:
‘‘(A) UNITED STATES REAL PROPERTY IN-
TERESTS.—Any United States real property in-
terest (as defined in section 897(c)(1)), other
than stock of a United States real property hold-
ing corporation which does not, on the expatria-
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tion date, meet the requirements of section
897(c)(2).
‘‘(B) INTEREST
IN
CERTAIN
RETIREMENT
PLANS.—
‘‘(i) IN GENERAL.—Any interest in a
qualified retirement plan (as defined in sec-
tion 4974(c)), other than any interest at-
tributable to contributions which are in ex-
cess of any limitation or which violate any
condition for tax-favored treatment.
‘‘(ii) FOREIGN PENSION PLANS.—
‘‘(I) IN GENERAL.—Under regula-
tions prescribed by the Secretary, in-
terests in foreign pension plans or
similar retirement arrangements or
programs.
‘‘(II) LIMITATION.—The value of
property which is treated as not sold
by reason of this subparagraph shall
not exceed $500,000.
‘‘(e) DEFINITIONS.—For purposes of this section—
‘‘(1) 
EXPATRIATE.—The 
term 
‘expatriate’
means—
‘‘(A) any United States citizen who relin-
quishes his citizenship, or
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‘‘(B) any long-term resident of the United
States who—
‘‘(i) ceases to be a lawful permanent
resident of the United States (within the
meaning of section 7701(b)(6)), or
‘‘(ii) commences to be treated as a resi-
dent of a foreign country under the provi-
sions of a tax treaty between the United
States and the foreign country and who
does not waive the benefits of such treaty
applicable to residents of the foreign coun-
try.
‘‘(2) EXPATRIATION DATE.—The term ‘expatria-
tion date’ means—
‘‘(A) the date an individual relinquishes
United States citizenship, or
‘‘(B) in the case of a long-term resident of
the United States, the date of the event described
in clause (i) or (ii) of paragraph (1)(B).
‘‘(3) RELINQUISHMENT OF CITIZENSHIP.—A citi-
zen shall be treated as relinquishing his United States
citizenship on the earliest of—
‘‘(A) the date the individual renounces his
United States nationality before a diplomatic or
consular officer of the United States pursuant to
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paragraph (5) of section 349(a) of the Immigra-
tion and Nationality Act (8 U.S.C. 1481(a)(5)),
‘‘(B) the date the individual furnishes to the
United States Department of State a signed
statement of voluntary relinquishment of United
States nationality confirming the performance of
an act of expatriation specified in paragraph
(1), (2), (3), or (4) of section 349(a) of the Im-
migration and Nationality Act (8 U.S.C.
1481(a)(1)–(4)),
‘‘(C) the date the United States Department
of State issues to the individual a certificate of
loss of nationality, or
‘‘(D) the date a court of the United States
cancels a naturalized citizen’s certificate of natu-
ralization.
Subparagraph (A) or (B) shall not apply to any in-
dividual unless the renunciation or voluntary relin-
quishment is subsequently approved by the issuance to
the individual of a certificate of loss of nationality by
the United States Department of State.
‘‘(4) LONG-TERM RESIDENT.—
‘‘(A) IN
GENERAL.—The term ‘long-term
resident’ means any individual (other than a cit-
izen of the United States) who is a lawful per-
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manent resident of the United States in at least
8 taxable years during the period of 15 taxable
years ending with the taxable year during which
the expatriation date occurs. For purposes of the
preceding sentence, an individual shall not be
treated as a lawful permanent resident for any
taxable year if such individual is treated as a
resident of a foreign country for the taxable year
under the provisions of a tax treaty between the
United States and the foreign country and does
not waive the benefits of such treaty applicable
to residents of the foreign country.
‘‘(B) SPECIAL RULE.—For purposes of sub-
paragraph (A), there shall not be taken into ac-
count—
‘‘(i) any taxable year during which
any prior sale is treated under subsection
(a)(1) as occurring, or
‘‘(ii) any taxable year prior to the tax-
able year referred to in clause (i).
‘‘(f) SPECIAL RULES APPLICABLE TO BENEFICIARIES’
INTERESTS IN TRUST.—
‘‘(1) IN GENERAL.—Except as provided in para-
graph (2), if an individual is determined under para-
graph (3) to hold an interest in a trust—
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‘‘(A) the individual shall not be treated as
having sold such interest,
‘‘(B) such interest shall be treated as a sep-
arate share in the trust, and
‘‘(C)(i) such separate share shall be treated
as a separate trust consisting of the assets alloca-
ble to such share,
‘‘(ii) the separate trust shall be treated as
having sold its assets immediately before the ex-
patriation date for their fair market value and
as having distributed all of its assets to the indi-
vidual as of such time, and
‘‘(iii) the individual shall be treated as hav-
ing recontributed the assets to the separate trust.
Subsection (a)(2) shall apply to any income, gain, or
loss of the individual arising from a distribution de-
scribed in subparagraph (C)(ii).
‘‘(2) SPECIAL RULES FOR INTERESTS IN QUALI-
FIED TRUSTS.—
‘‘(A) IN GENERAL.—If the trust interest de-
scribed in paragraph (1) is an interest in a
qualified trust—
‘‘(i) paragraph (1) and subsection (a)
shall not apply, and
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‘‘(ii) in addition to any other tax im-
posed by this title, there is hereby imposed
on each distribution with respect to such in-
terest a tax in the amount determined
under subparagraph (B).
‘‘(B) AMOUNT OF TAX.—The amount of tax
under subparagraph (A)(ii) shall be equal to the
lesser of—
‘‘(i) the highest rate of tax imposed by
section 1(e) for the taxable year in which
the expatriation date occurs, multiplied by
the amount of the distribution, or
‘‘(ii) the balance in the deferred tax ac-
count immediately before the distribution
determined without regard to any increases
under subparagraph (C)(ii) after the 30th
day preceding the distribution.
‘‘(C) DEFERRED TAX ACCOUNT.—For pur-
poses of subparagraph (B)(ii)—
‘‘(i) OPENING BALANCE.—The opening
balance in a deferred tax account with re-
spect to any trust interest is an amount
equal to the tax which would have been im-
posed on the allocable expatriation gain
with respect to the trust interest if such
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gain had been included in gross income
under subsection (a).
‘‘(ii) INCREASE
FOR
INTEREST.—The
balance in the deferred tax account shall be
increased by the amount of interest deter-
mined (on the balance in the account at the
time the interest accrues), for periods after
the 90th day after the expatriation date, by
using the rates and method applicable
under section 6621 for underpayments of
tax for such periods.
‘‘(iii) DECREASE
FOR
TAXES
PRE-
VIOUSLY PAID.—The balance in the tax de-
ferred account shall be reduced—
‘‘(I) by the amount of taxes im-
posed by subparagraph (A) on any dis-
tribution to the person holding the
trust interest, and
‘‘(II) in the case of a person hold-
ing a nonvested interest, to the extent
provided in regulations, by the amount
of taxes imposed by subparagraph (A)
on distributions from the trust with re-
spect to nonvested interests not held by
such person.
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‘‘(D) ALLOCABLE EXPATRIATION GAIN.—For
purposes of this paragraph, the allocable expa-
triation gain with respect to any beneficiary’s
interest in a trust is the amount of gain which
would be allocable to such beneficiary’s vested
and nonvested interests in the trust if the bene-
ficiary held directly all assets allocable to such
interests.
‘‘(E) TAX DEDUCTED AND WITHHELD.—
‘‘(i) IN GENERAL.—The tax imposed by
subparagraph (A)(ii) shall be deducted and
withheld by the trustees from the distribu-
tion to which it relates.
‘‘(ii) EXCEPTION WHERE FAILURE TO
WAIVE TREATY RIGHTS.—If an amount may
not be deducted and withheld under clause
(i) by reason of the distributee failing to
waive any treaty right with respect to such
distribution—
‘‘(I) the tax imposed by subpara-
graph (A)(ii) shall be imposed on the
trust and each trustee shall be person-
ally liable for the amount of such tax,
and
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‘‘(II) any other beneficiary of the
trust shall be entitled to recover from
the distributee the amount of such tax
imposed on the other beneficiary.
‘‘(F) DISPOSITION.—If a trust ceases to be
a qualified trust at any time, a covered expatri-
ate disposes of an interest in a qualified trust,
or a covered expatriate holding an interest in a
qualified trust dies, then, in lieu of the tax im-
posed by subparagraph (A)(ii), there is hereby
imposed a tax equal to the lesser of—
‘‘(i) the tax determined under para-
graph (1) as if the expatriation date were
the date of such cessation, disposition, or
death, whichever is applicable, or
‘‘(ii) the balance in the tax deferred ac-
count immediately before such date.
Such tax shall be imposed on the trust and each
trustee shall be personally liable for the amount
of such tax and any other beneficiary of the trust
shall be entitled to recover from the covered expa-
triate or the estate the amount of such tax im-
posed on the other beneficiary.
‘‘(G) DEFINITIONS
AND
SPECIAL
RULE.—
For purposes of this paragraph—
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‘‘(i) QUALIFIED
TRUST.—The term
‘qualified trust’ means a trust—
‘‘(I) which is organized under,
and governed by, the laws of the Unit-
ed States or a State, and
‘‘(II) with respect to which the
trust instrument requires that at least
1 trustee of the trust be an individual
citizen of the United States or a do-
mestic corporation.
‘‘(ii) VESTED
INTEREST.—The term
‘vested interest’ means any interest which,
as of the expatriation date, is vested in the
beneficiary.
‘‘(iii) 
NONVESTED
INTEREST.—The
term ‘nonvested interest’ means, with re-
spect to any beneficiary, any interest in a
trust which is not a vested interest. Such
interest shall be determined by assuming the
maximum exercise of discretion in favor of
the beneficiary and the occurrence of all
contingencies in favor of the beneficiary.
‘‘(iv) ADJUSTMENTS.—The Secretary
may provide for such adjustments to the
bases of assets in a trust or a deferred tax
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account, and the timing of such adjust-
ments, in order to ensure that gain is taxed
only once.
‘‘(3) DETERMINATION OF BENEFICIARIES’ INTER-
EST IN TRUST.—
‘‘(A) DETERMINATIONS UNDER PARAGRAPH
(1).—For purposes of paragraph (1), a bene-
ficiary’s interest in a trust shall be based upon
all relevant facts and circumstances, including
the terms of the trust instrument and any letter
of wishes or similar document, historical pat-
terns of trust distributions, and the existence of
and functions performed by a trust protector or
any similar advisor.
‘‘(B) OTHER DETERMINATIONS.—For pur-
poses of this section—
‘‘(i) CONSTRUCTIVE OWNERSHIP.—If a
beneficiary of a trust is a corporation, part-
nership, trust, or estate, the shareholders,
partners, or beneficiaries shall be deemed to
be the trust beneficiaries for purposes of this
section.
‘‘(ii) TAXPAYER RETURN POSITION.—A
taxpayer shall clearly indicate on its in-
come tax return—
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‘‘(I) the methodology used to de-
termine that taxpayer’s trust interest
under this section, and
‘‘(II) if the taxpayer knows (or
has reason to know) that any other
beneficiary of such trust is using a dif-
ferent methodology to determine such
beneficiary’s trust interest under this
section.
‘‘(g) TERMINATION OF DEFERRALS, ETC.—On the date
any property held by an individual is treated as sold under
subsection (a), notwithstanding any other provision of this
title—
‘‘(1) any period during which recognition of in-
come or gain is deferred shall terminate, and
‘‘(2) any extension of time for payment of tax
shall cease to apply and the unpaid portion of such
tax shall be due and payable at the time and in the
manner prescribed by the Secretary.
‘‘(h) IMPOSITION OF TENTATIVE TAX.—
‘‘(1) IN GENERAL.—If an individual is required
to include any amount in gross income under sub-
section (a) for any taxable year, there is hereby im-
posed, immediately before the expatriation date, a tax
in an amount equal to the amount of tax which
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would be imposed if the taxable year were a short tax-
able year ending on the expatriation date.
‘‘(2) DUE DATE.—The due date for any tax im-
posed by paragraph (1) shall be the 90th day after the
expatriation date.
‘‘(3) TREATMENT OF TAX.—Any tax paid under
paragraph (1) shall be treated as a payment of the
tax imposed by this chapter for the taxable year to
which subsection (a) applies.
‘‘(4) DEFERRAL OF TAX.—The provisions of sub-
section (b) shall apply to the tax imposed by this sub-
section to the extent attributable to gain includible in
gross income by reason of this section.
‘‘(i) 
COORDINATION
WITH
ESTATE
AND
GIFT
TAXES.—If subsection (a) applies to property held by an
individual for any taxable year and—
‘‘(1) such property is includible in the gross es-
tate of such individual solely by reason of section
2107, or
‘‘(2) section 2501 applies to a transfer of such
property by such individual solely by reason of sec-
tion 2501(a)(3),
then there shall be allowed as a credit against the additional
tax imposed by section 2101 or 2501, whichever is applica-
ble, solely by reason of section 2107 or 2501(a)(3) an
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amount equal to the increase in the tax imposed by this
chapter for such taxable year by reason of this section.
‘‘(j) REGULATIONS.—The Secretary shall prescribe
such regulations as may be necessary or appropriate to
carry out the purposes of this section, including regula-
tions—
‘‘(1) to prevent double taxation by ensuring
that—
‘‘(A) appropriate adjustments are made to
basis to reflect gain recognized by reason of sub-
section (a) and the exclusion provided by sub-
section (a)(3), and
‘‘(B) any gain by reason of a deemed sale
under subsection (a) of an interest in a corpora-
tion, partnership, trust, or estate is reduced to
reflect that portion of such gain which is attrib-
utable to an interest in a trust which a share-
holder, partner, or beneficiary is treated as hold-
ing directly under subsection (f)(3)(B)(i), and
‘‘(2) which provide for the proper allocation of
the exclusion under subsection (a)(3) to property to
which this section applies.
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‘‘(k) CROSS REFERENCE.—
‘‘For income tax treatment of individuals who ter-
minate 
United 
States 
citizenship, 
see 
section
7701(a)(47).’’.
(b) INCLUSION IN INCOME OF GIFTS AND INHERIT-
ANCES FROM COVERED EXPATRIATES.—Section 102 (relat-
ing to gifts, etc. not included in gross income) is amended
by adding at the end the following new subsection:
‘‘(d) GIFTS AND INHERITANCES FROM COVERED EX-
PATRIATES.—Subsection (a) shall not exclude from gross in-
come the value of any property acquired by gift, bequest,
devise, or inheritance from a covered expatriate after the
expatriation date. For purposes of this subsection, any term
used in this subsection which is also used in section 877A
shall have the same meaning as when used in section
877A.’’.
(c) DEFINITION OF TERMINATION OF UNITED STATES
CITIZENSHIP.—Section 7701(a) is amended by adding at
the end the following new paragraph:
‘‘(47) TERMINATION OF UNITED STATES CITIZEN-
SHIP.—An individual shall not cease to be treated as
a United States citizen before the date on which the
individual’s citizenship is treated as relinquished
under section 877A(e)(3).’’.
(d) COMPARABLE ESTATE
AND GIFT TAX TREAT-
MENT.—
(1) ESTATE TAX.—
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(A) IN GENERAL.—Subsection (a) of section
2107 is amended to read as follows:
‘‘(a) TREATMENT OF EXPATRIATES.—
‘‘(1) RATE OF TAX.—A tax computed in accord-
ance with the table contained in section 2001 is here-
by imposed on the transfer of the taxable estate, deter-
mined as provided in section 2106, of every decedent
nonresident who is an expatriate if the expatriation
date of the decedent is within the 10-year period end-
ing with the date of death, unless such expatriation
did not have for 1 of its principal purposes the avoid-
ance of taxes under this subtitle or subtitle A.
‘‘(2) CERTAIN INDIVIDUALS TREATED AS HAVING
TAX
AVOIDANCE
PURPOSE.—For purposes of para-
graph (1), an individual shall be treated as having a
principal purpose to avoid such taxes if such individ-
ual is a covered expatriate.
‘‘(3) DEFINITIONS.—For purposes of this sub-
section, the terms ‘expatriate’, ‘expatriation date’, and
‘covered expatriate’ have the meanings given such
terms by section 877A.’’.
(B) CREDIT FOR FOREIGN DEATH TAXES.—
Subsection (c) of section 2107 is amended by re-
designating paragraph (2) as paragraph (3) and
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by inserting after paragraph (1) the following
new paragraph:
‘‘(2) CREDIT FOR FOREIGN DEATH TAXES.—
‘‘(A) IN
GENERAL.—The tax imposed by
subsection (a) shall be credited with the amount
of any estate, inheritance, legacy, or succession
taxes actually paid to any foreign country in re-
spect of any property which is included in the
gross estate solely by reason of subsection (b).
‘‘(B) LIMITATIONS ON CREDIT.—The credit
allowed by subparagraph (A) for such taxes paid
to a foreign country shall not exceed the lesser
of—
‘‘(i) the amount which bears the same
ratio to the amount of such taxes actually
paid to such foreign country in respect of
property included in the gross estate as the
value of the property included in the gross
estate solely by reason of subsection (b)
bears to the value of all property subjected
to such taxes by such foreign country, or
‘‘(ii) such property’s proportionate
share of the excess of—
‘‘(I) the tax imposed by subsection
(a), over
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‘‘(II) the tax which would be im-
posed by section 2101 but for this sec-
tion.
The amount applicable under clause (i) or (ii)
shall be reduced by the amount of any credit al-
lowed under section 877A(i).
‘‘(C) PROPORTIONATE
SHARE.—For pur-
poses of subparagraph (B), a property’s propor-
tionate share is the percentage of the value of the
property which is included in the gross estate
solely by reason of subsection (b) bears to the
total value of the gross estate.’’.
(C) EXPANSION OF INCLUSION IN GROSS ES-
TATE OF STOCK OF FOREIGN CORPORATIONS.—
Paragraph (2) of section 2107(b) is amended by
striking ‘‘more than 50 percent of’’ and all that
follows and inserting ‘‘more than 50 percent of—
‘‘(A) the total combined voting power of all
classes of stock entitled to vote of such corpora-
tion, or
‘‘(B) the total value of the stock of such cor-
poration,’’.
(2) GIFT TAX.—
(A) IN GENERAL.—Paragraph (3) of section
2501(a) is amended to read as follows:
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‘‘(3) EXCEPTION.—
‘‘(A) CERTAIN
INDIVIDUALS.—Paragraph
(2) shall not apply in the case of a donor who
is an expatriate if the expatriation date of the
donor is within the 10-year period ending with
the date of transfer, unless such expatriation did
not have for 1 of its principal purposes the
avoidance of taxes under this subtitle or subtitle
A.
‘‘(B) CERTAIN
INDIVIDUALS
TREATED
AS
HAVING
TAX
AVOIDANCE
PURPOSE.—For pur-
poses of subparagraph (A), an individual shall
be treated as having a principal purpose to
avoid such taxes if such individual is a covered
expatriate.
‘‘(C) CREDIT FOR FOREIGN GIFT TAXES.—
The tax imposed by this section solely by reason
of this paragraph shall be credited with the
amount of any gift tax actually paid to any for-
eign country in respect of any gift which is tax-
able under this section solely by reason of this
paragraph. The amount of such credit shall be
reduced by the amount of the credit allowed
under section 877A(i).
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‘‘(D) DEFINITIONS.—For purposes of this
paragraph, the term ‘expatriate’, ‘expatriation
date’, and ‘covered expatriate’ have the meanings
given such terms by section 877A.’’.
(e) CONFORMING AMENDMENTS.—
(1) Section 877 is amended by adding at the end
the following new subsection:
‘‘(f) APPLICATION.—This section shall not apply to
any individual who relinquishes (within the meaning of
section 877A(e)(3)) United States citizenship on or after
February 6, 1995.’’.
(2) Section 2107(c) is amended by adding at the
end the following new paragraph:
‘‘(3) CROSS REFERENCE.—For credit against the
tax imposed by subsection (a) for expatriation tax, see
section 877A(i).’’.
(3) Section 2501(a)(3) is amended by adding at
the end the following new flush sentence:
‘‘For credit against the tax imposed under this section
by reason of this paragraph, see section 877A(i).’’.
(4) Paragraph (10) of section 7701(b) is amend-
ed by adding at the end the following new sentence:
‘‘This paragraph shall not apply to any long-term
resident of the United States who is an expatriate (as
defined in section 877A(e)(1)).’’.
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(f) CLERICAL AMENDMENT.—The table of sections for
subpart A of part II of subchapter N of chapter 1 is amend-
ed by inserting after the item relating to section 877 the
following new item:
‘‘Sec. 877A. Tax responsibilities of expatriation.’’.
(g) EFFECTIVE DATE.—
(1) IN GENERAL.—Except as provided in this
subsection, the amendments made by this section shall
apply to expatriates (within the meaning of section
877A(e) of the Internal Revenue Code of 1986, as
added by this section) whose expatriation date (as so
defined) occurs on or after February 6, 1995.
(2) GIFTS AND BEQUESTS.—Section 102(d) of
the Internal Revenue Code of 1986 (as added by sub-
section (b)) shall apply to amounts received from ex-
patriates (as so defined) whose expatriation date (as
so defined) occurs on and after February 6, 1995.
(3) SPECIAL RULES RELATING TO CERTAIN ACTS
OCCURRING BEFORE FEBRUARY 6, 1995.—In the case
of an individual who took an act of expatriation spec-
ified in paragraph (1), (2), (3), or (4) of section
349(a) of the Immigration and Nationality Act (8
U.S.C. 1481(a) (1)–(4)) before February 6, 1995, but
whose expatriation date (as so defined) occurs after
February 6, 1995—
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(A) the amendment made by subsection (c)
shall not apply,
(B) the amendment made by subsection
(e)(1) shall not apply for any period prior to the
expatriation date, and
(C) the other amendments made by this sec-
tion shall apply as of the expatriation date.
(4) DUE DATE FOR TENTATIVE TAX.—The due
date under section 877A(h)(2) of such Code shall in
no event occur before the 90th day after the date of
the enactment of this Act.
SEC. 1632. INFORMATION ON INDIVIDUALS EXPATRIATING.
(a) IN GENERAL.—Subpart A of part III of subchapter
A of chapter 61 is amended by inserting after section 6039E
the following new section:
‘‘SEC. 6039F. INFORMATION ON INDIVIDUALS EXPATRIAT-
ING.
‘‘(a) REQUIREMENT.—
‘‘(1) IN GENERAL.—Notwithstanding any other
provision of law, any expatriate (within the meaning
of section 877A(e)(1)) shall provide a statement which
includes the information described in subsection (b).
‘‘(2) TIMING.—
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‘‘(A) CITIZENS.—In the case of an expatri-
ate described in section 877(e)(1)(A), such state-
ment shall be—
‘‘(i) provided not later than the expa-
triation date (within the meaning of section
877A(e)(2)), and
‘‘(ii) provided to the person or court
referred to in section 877A(e)(3).
‘‘(B) NONCITIZENS.—In the case of an ex-
patriate described in section 877A(e)(1)(B), such
statement shall be provided to the Secretary with
the return of tax imposed by chapter 1 for the
taxable year during which the event described in
such section occurs.
‘‘(b) INFORMATION TO BE PROVIDED.—Information
required under subsection (a) shall include—
‘‘(1) the taxpayer’s TIN,
‘‘(2) the mailing address of such individual’s
principal foreign residence,
‘‘(3) the foreign country in which such individ-
ual is residing,
‘‘(4) the foreign country of which such individual
is a citizen,
‘‘(5) in the case of an individual having a net
worth of at least the dollar amount applicable under
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section 877A(c)(1)(B), information detailing the as-
sets and liabilities of such individual, and
‘‘(6) such other information as the Secretary
may prescribe.
‘‘(c) PENALTY.—Any individual failing to provide a
statement required under subsection (a) shall be subject to
a penalty for each year during any portion of which such
failure continues in an amount equal to the greater of—
‘‘(1) 5 percent of the additional tax required to
be paid under section 877A for such year, or
‘‘(2) $1,000,
unless it is shown that such failure is due to reasonable
cause and not to willful neglect.
‘‘(d) INFORMATION
TO
BE
PROVIDED
TO
SEC-
RETARY.—Notwithstanding any other provision of law—
‘‘(1) any Federal agency or court which collects
(or is required to collect) the statement under sub-
section (a) shall provide to the Secretary—
‘‘(A) a copy of any such statement, and
‘‘(B) the name (and any other identifying
information) of any individual refusing to com-
ply with the provisions of subsection (a),
‘‘(2) the Secretary of State shall provide to the
Secretary a copy of each certificate as to the loss of
American nationality under section 358 of the Immi-
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gration and Nationality Act which is approved by the
Secretary of State, and
‘‘(3) the Federal agency primarily responsible for
administering the immigration laws shall provide to
the Secretary the name of each lawful permanent resi-
dent of the United States (within the meaning of sec-
tion 7701(b)(6)) whose status as such has been re-
voked or has been administratively or judicially de-
termined to have been abandoned.
Notwithstanding any other provision of law, not later than
30 days after the close of each calendar quarter, the Sec-
retary shall publish in the Federal Register the name of
each individual relinquishing United States citizenship
(within the meaning of section 877A(e)(3)) with respect to
whom the Secretary receives information under the preced-
ing sentence during such quarter.
‘‘(e) EXEMPTION.—The Secretary may by regulations
exempt any class of individuals from the requirements of
this section if the Secretary determines that applying this
section to such individuals is not necessary to carry out
the purposes of this section.’’.
(b) CLERICAL AMENDMENT.—The table of sections for
such subpart A is amended by inserting after the item relat-
ing to section 6039E the following new item:
‘‘Sec. 6039F. Information on individuals expatriating.’’.
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(c) EFFECTIVE DATE.—The amendments made by this
section shall apply to individuals to whom section 877A
of the Internal Revenue Code of 1986 applies and whose
expatriation date (as defined in section 877A(e)(2)) occurs
on or after February 6, 1995, except that no statement shall
be required by such amendments before the 90th day after
the date of the enactment of this Act.
SEC. 1633. REPORT ON TAX COMPLIANCE BY UNITED
STATES CITIZENS AND RESIDENTS LIVING
ABROAD.
Not later than 90 days after the date of the enactment
of this Act, the Secretary of the Treasury shall prepare and
submit to the Committee on Ways and Means of the House
of Representatives and the Committee on Finance of the
Senate a report—
(1) describing the compliance with subtitle A of
the Internal Revenue Code of 1986 by citizens and
lawful permanent residents of the United States
(within the meaning of section 7701(b)(6) of such
Code) residing outside the United States, and
(2) recommending measures to improve such
compliance (including improved coordination between
executive branch agencies).
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Subtitle F—Technical Corrections
SEC. 1701. COORDINATION WITH OTHER SUBTITLES.
For purposes of applying the amendments made by
any subtitle of this title other than this subtitle, the provi-
sions of this subtitle shall be treated as having been enacted
immediately before the provisions of such other subtitles.
SEC. 1702. AMENDMENTS 
RELATED 
TO 
REVENUE 
REC-
ONCILIATION ACT OF 1990.
(a) AMENDMENTS RELATED TO SUBTITLE A.—
(1) Subparagraph (B) of section 59(j)(3) is
amended by striking ‘‘section 1(i)(3)(B)’’ and insert-
ing ‘‘section 1(g)(3)(B)’’.
(2) Clause (i) of section 151(d)(3)(C) is amended
by striking ‘‘joint of a return’’ and inserting ‘‘joint
return’’.
(b) AMENDMENTS RELATED TO SUBTITLE B.—
(1) Paragraph (1) of section 11212(e) of the Rev-
enue Reconciliation Act of 1990 is amended by strik-
ing ‘‘Paragraph (1) of section 6724(d)’’ and inserting
‘‘Subparagraph (B) of section 6724(d)(1)’’.
(2)(A) Subparagraph (B) of section 4093(c)(2),
as in effect before the amendments made by the Reve-
nue Reconciliation Act of 1993, is amended by insert-
ing before the period ‘‘unless such fuel is sold for ex-
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clusive use by a State or any political subdivision
thereof’’.
(B) Paragraph (4) of section 6427(l), as in effect
before the amendments made by the Revenue Rec-
onciliation Act of 1993, is amended by inserting be-
fore the period ‘‘unless such fuel was used by a State
or any political subdivision thereof’’.
(3) Paragraph (1) of section 6416(b) is amended
by striking ‘‘chapter 32 or by section 4051’’ and in-
serting ‘‘chapter 31 or 32’’.
(4) Section 7012 is amended—
(A) by striking ‘‘production or importation
of gasoline’’ in paragraph (3) and inserting
‘‘taxes on gasoline and diesel fuel’’, and
(B) by striking paragraph (4) and redesig-
nating paragraphs (5) and (6) as paragraphs
(4) and (5), respectively.
(5) Subsection (c) of section 5041 is amended by
striking paragraph (6) and by inserting the following
new paragraphs:
‘‘(6) CREDIT FOR TRANSFEREE IN BOND.—If—
‘‘(A) wine produced by any person would be
eligible for any credit under paragraph (1) if re-
moved by such person during the calendar year,
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‘‘(B) wine produced by such person is re-
moved during such calendar year by any other
person (hereafter in this paragraph referred to as
the ‘transferee’) to whom such wine was trans-
ferred in bond and who is liable for the tax im-
posed by this section with respect to such wine,
and
‘‘(C) such producer holds title to such wine
at the time of its removal and provides to the
transferee such information as is necessary to
properly determine the transferee’s credit under
this paragraph,
then, the transferee (and not the producer) shall be al-
lowed the credit under paragraph (1) which would be
allowed to the producer if the wine removed by the
transferee had been removed by the producer on that
date.
‘‘(7) REGULATIONS.—The Secretary may pre-
scribe such regulations as may be necessary to carry
out the purposes of this subsection, including regula-
tions—
‘‘(A) to prevent the credit provided in this
subsection from benefiting any person who pro-
duces more than 250,000 wine gallons of wine
during a calendar year, and
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‘‘(B) to assure proper reduction of such
credit for persons producing more than 150,000
wine gallons of wine during a calendar year.’’.
(6) Paragraph (3) of section 5061(b) is amended
to read as follows:
‘‘(3) section 5041(f),’’.
(7) Section 5354 is amended by inserting ‘‘(tak-
ing into account the appropriate amount of credit
with respect to such wine under section 5041(c))’’
after ‘‘any one time’’.
(c) AMENDMENTS RELATED TO SUBTITLE C.—
(1) Paragraph (4) of section 56(g) is amended by
redesignating subparagraphs (I) and (J) as subpara-
graphs (H) and (I), respectively.
(2) Subparagraph (B) of section 6724(d)(1) is
amended—
(A) by striking ‘‘or’’ at the end of clause
(xii), and
(B) by striking the period at the end of
clause (xiii) and inserting ‘‘, or’’.
(3) Subsection (g) of section 6302 is amended by
inserting ‘‘, 22,’’ after ‘‘chapters 21’’.
(4) The earnings and profits of any insurance
company to which section 11305(c)(3) of the Revenue
Reconciliation Act of 1990 applies shall be deter-
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mined without regard to any deduction allowed under
such section; except that, for purposes of applying sec-
tions 56 and 902, and subpart F of part III of sub-
chapter N of chapter 1 of the Internal Revenue Code
of 1986, such deduction shall be taken into account.
(5) Subparagraph (D) of section 6038A(e)(4) is
amended—
(A) by striking ‘‘any transaction to which
the summons relates’’ and inserting ‘‘any af-
fected taxable year’’, and
(B) by adding at the end thereof the follow-
ing new sentence: ‘‘For purposes of this subpara-
graph, the term ‘affected taxable year’ means
any taxable year if the determination of the
amount of tax imposed for such taxable year is
affected by the treatment of the transaction to
which the summons relates.’’.
(6) Subparagraph (A) of section 6621(c)(2) is
amended by adding at the end thereof the following
new flush sentence:
‘‘The preceding sentence shall be applied without
regard to any such letter or notice which is with-
drawn by the Secretary.’’.
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(7) Clause (i) of section 6621(c)(2)(B) is amend-
ed by striking ‘‘this subtitle’’ and inserting ‘‘this
title’’.
(d) AMENDMENTS RELATED TO SUBTITLE D.—
(1) Notwithstanding section 11402(c) of the Rev-
enue Reconciliation Act of 1990, the amendment
made by section 11402(b)(1) of such Act shall apply
to taxable years ending after December 31, 1989.
(2) Clause (ii) of section 143(m)(4)(C) is amend-
ed—
(A) by striking ‘‘any month of the 10-year
period’’ and inserting ‘‘any year of the 4-year
period’’,
(B) by striking ‘‘succeeding months’’ and
inserting ‘‘succeeding years’’, and
(C) by striking ‘‘over the remainder of such
period (or, if lesser, 5 years)’’ and inserting ‘‘to
zero over the succeeding 5 years’’.
(e) AMENDMENTS RELATED TO SUBTITLE E.—
(1)(A) Clause (ii) of section 56(d)(1)(B) is
amended to read as follows:
‘‘(ii) appropriate adjustments in the
application of section 172(b)(2) shall be
made to take into account the limitation of
subparagraph (A).’’.
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(B) For purposes of applying sections 56(g)(1)
and 56(g)(3) of the Internal Revenue Code of 1986
with respect to taxable years beginning in 1991 and
1992, the reference in such sections to the alternative
tax net operating loss deduction shall be treated as
including a reference to the deduction under section
56(h) of such Code as in effect before the amendments
made by section 1915 of the Energy Policy Act of
1992.
(2) Clause (i) of section 613A(c)(3)(A) is amend-
ed by striking ‘‘the table contained in’’.
(3) Section 6501 is amended—
(A) by striking subsection (m) (relating to
deficiency attributable to election under section
44B) and by redesignating subsections (n) and
(o) as subsections (m) and (n), respectively, and
(B) by striking ‘‘section 40(f) or 51(j)’’ in
subsection (m) (as redesignated by subparagraph
(A)) and inserting ‘‘section 40(f), 43, or 51(j)’’.
(4) Subparagraph (C) of section 38(c)(2) (as in
effect on the day before the date of the enactment of
the Revenue Reconciliation Act of 1990) is amended
by inserting before the period at the end of the first
sentence the following: ‘‘and without regard to the de-
duction under section 56(h)’’.
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(5) 
The 
amendment 
made 
by 
section
1913(b)(2)(C)(i) of the Energy Policy Act of 1992
shall apply to taxable years beginning after December
31, 1990.
(f) AMENDMENTS RELATED TO SUBTITLE F.—
(1)(A) Section 2701(a)(3) is amended by adding
at the end thereof the following new subparagraph:
‘‘(C) VALUATION OF QUALIFIED PAYMENTS
WHERE NO LIQUIDATION, ETC. RIGHTS.—In the
case of an applicable retained interest which is
described in subparagraph (B)(i) but not sub-
paragraph (B)(ii), the value of the distribution
right shall be determined without regard to this
section.’’.
(B) Section 2701(a)(3)(B) is amended by insert-
ing ‘‘CERTAIN’’ before ‘‘QUALIFIED’’ in the heading
thereof.
(C) Sections 2701 (d)(1) and (d)(4) are each
amended by striking ‘‘subsection (a)(3)(B)’’ and in-
serting ‘‘subsection (a)(3) (B) or (C)’’.
(2) Clause (i) of section 2701(a)(4)(B) is amend-
ed by inserting ‘‘(or, to the extent provided in regula-
tions, the rights as to either income or capital)’’ after
‘‘income and capital’’.
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(3) Clause (i) of section 2701(c)(1)(B) is amend-
ed to read as follows:
‘‘(i) a right to distributions with re-
spect to any interest which is junior to the
rights of the transferred interest,’’.
(4)(A) Clause (i) of section 2701(c)(3)(C) is
amended to read as follows:
‘‘(i) IN
GENERAL.—Payments under
any interest held by a transferor which
(without regard to this subparagraph) are
qualified payments shall be treated as
qualified payments unless the transferor
elects not to treat such payments as quali-
fied payments. Payments described in the
preceding sentence which are held by an ap-
plicable family member shall be treated as
qualified payments only if such member
elects to treat such payments as qualified
payments.’’.
(B) The first sentence of section 2701(c)(3)(C)(ii)
is amended to read as follows: ‘‘A transferor or appli-
cable family member holding any distribution right
which (without regard to this subparagraph) is not a
qualified payment may elect to treat such right as a
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qualified payment, to be paid in the amounts and at
the times specified in such election.’’.
(C) The time for making an election under the
second sentence of section 2701(c)(3)(C)(i) of the In-
ternal Revenue Code of 1986 (as amended by sub-
paragraph (A)) shall not expire before the due date
(including extensions) for filing the transferor’s re-
turn of the tax imposed by section 2501 of such Code
for the first calendar year ending after the date of en-
actment.
(5) Section 2701(d)(3)(A)(iii) is amended by
striking ‘‘the period ending on the date of’’.
(6) Subclause (I) of section 2701(d)(3)(B)(ii) is
amended by inserting ‘‘or the exclusion under section
2503(b),’’ after ‘‘section 2523,’’.
(7) Section 2701(e)(5) is amended—
(A) by striking ‘‘such contribution to cap-
ital or such redemption, recapitalization, or
other change’’ in subparagraph (A) and insert-
ing ‘‘such transaction’’, and
(B) by striking ‘‘the transfer’’ in subpara-
graph (B) and inserting ‘‘such transaction’’.
(8) Section 2701(d)(4) is amended by adding at
the end thereof the following new subparagraph:
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‘‘(C) TRANSFER TO TRANSFERORS.—In the
case of a taxable event described in paragraph
(3)(A)(ii) involving a transfer of an applicable
retained interest from an applicable family
member to a transferor, this subsection shall con-
tinue to apply to the transferor during any pe-
riod the transferor holds such interest.’’.
(9) Section 2701(e)(6) is amended by inserting
‘‘or to reflect the application of subsection (d)’’ before
the period at the end thereof.
(10)(A) Section 2702(a)(3)(A) is amended—
(i) by striking ‘‘to the extent’’ and inserting
‘‘if’’ in clause (i),
(ii) by striking ‘‘or’’ at the end of clause (i),
(iii) by striking the period at the end of
clause (ii) and inserting ‘‘, or’’, and
(iv) by adding at the end thereof the follow-
ing new clause:
‘‘(iii) to the extent that regulations
provide that such transfer is not inconsist-
ent with the purposes of this section.’’.
(B)(i) Section 2702(a)(3) is amended by striking
‘‘incomplete transfer’’ each place it appears and in-
serting ‘‘incomplete gift’’.
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(ii) The heading for section 2702(a)(3)(B) is
amended by striking ‘‘INCOMPLETE TRANSFER’’ and
inserting ‘‘INCOMPLETE GIFT’’.
(g) AMENDMENTS RELATED TO SUBTITLE G.—
(1)(A) Subsection (a) of section 1248 is amend-
ed—
(i) by striking ‘‘, or if a United States per-
son receives a distribution from a foreign cor-
poration which, under section 302 or 331, is
treated as an exchange of stock’’ in paragraph
(1), and
(ii) by adding at the end thereof the follow-
ing new sentence: ‘‘For purposes of this section,
a United States person shall be treated as having
sold or exchanged any stock if, under any provi-
sion of this subtitle, such person is treated as re-
alizing gain from the sale or exchange of such
stock.’’.
(B) Paragraph (1) of section 1248(e) is amended
by striking ‘‘, or receives a distribution from a domes-
tic corporation which, under section 302 or 331, is
treated as an exchange of stock’’.
(C) Subparagraph (B) of section 1248(f)(1) is
amended by striking ‘‘or 361(c)(1)’’ and inserting
‘‘355(c)(1), or 361(c)(1)’’.
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(D) Paragraph (1) of section 1248(i) is amended
to read as follows:
‘‘(1) IN GENERAL.—If any shareholder of a 10-
percent corporate shareholder of a foreign corporation
exchanges stock of the 10-percent corporate share-
holder for stock of the foreign corporation, such 10-
percent corporate shareholder shall recognize gain in
the same manner as if the stock of the foreign cor-
poration received in such exchange had been—
‘‘(A) issued to the 10-percent corporate
shareholder, and
‘‘(B) then distributed by the 10-percent cor-
porate shareholder to such shareholder in re-
demption or liquidation (whichever is appro-
priate).
The amount of gain recognized by such 10-percent
corporate shareholder under the preceding sentence
shall not exceed the amount treated as a dividend
under this section.’’.
(2) Section 897 is amended by striking sub-
section (f).
(3) Paragraph (13) of section 4975(d) is amend-
ed by striking ‘‘section 408(b)’’ and inserting ‘‘section
408(b)(12)’’.
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(4) Clause (iii) of section 56(g)(4)(D) is amend-
ed by inserting ‘‘, but only with respect to taxable
years beginning after December 31, 1989’’ before the
period at the end thereof.
(5)(A) Paragraph (11) of section 11701(a) of the
Revenue Reconciliation Act of 1990 (and the amend-
ment made by such paragraph) are hereby repealed,
and section 7108(r)(2) of the Revenue Reconciliation
Act of 1989 shall be applied as if such paragraph
(and amendment) had never been enacted.
(B) Subparagraph (A) shall not apply to any
building if the owner of such building establishes to
the satisfaction of the Secretary of the Treasury or his
delegate that such owner reasonably relied on the
amendment made by such paragraph (11).
(h) AMENDMENTS RELATED TO SUBTITLE H.—
(1)(A) Clause (vi) of section 168(e)(3)(B) is
amended by striking ‘‘or’’ at the end of subclause (I),
by striking the period at the end of subclause (II) and
inserting ‘‘, or’’, and by adding at the end thereof the
following new subclause:
‘‘(III) is described in section
48(l)(3)(A)(ix) (as in effect on the day
before the date of the enactment of the
Revenue Reconciliation Act of 1990).’’.
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(B) Subparagraph (B) of section 168(e)(3) (re-
lating to 5-year property) is amended by adding at
the end the following flush sentence:
‘‘Nothing in any provision of law shall be con-
strued to treat property as not being described in
clause (vi)(I) (or the corresponding provisions of
prior law) by reason of being public utility
property 
(within 
the 
meaning 
of 
section
48(a)(3)).’’.
(C) Subparagraph (K) of section 168(g)(4) is
amended by striking ‘‘section 48(a)(3)(A)(iii)’’ and
inserting ‘‘section 48(l)(3)(A)(ix) (as in effect on the
day before the date of the enactment of the Revenue
Reconciliation Act of 1990)’’.
(2) Clause (ii) of section 172(b)(1)(E) is amend-
ed by striking ‘‘subsection (m)’’ and inserting ‘‘sub-
section (h)’’.
(3) Sections 805(a)(4)(E), 832(b)(5)(C)(ii)(II),
and 832(b)(5)(D)(ii)(II) are each amended by strik-
ing ‘‘243(b)(5)’’ and inserting ‘‘243(b)(2)’’.
(4) Subparagraph (A) of section 243(b)(3) is
amended by inserting ‘‘of’’ after ‘‘In the case’’.
(5) The subsection heading for subsection (a) of
section 280F is amended by striking ‘‘INVESTMENT
TAX CREDIT AND’’.
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(6) Clause (i) of section 1504(c)(2)(B) is amend-
ed by inserting ‘‘section’’ before ‘‘243(b)(2)’’.
(7) Paragraph (3) of section 341(f) is amended
by striking ‘‘351, 361, 371(a), or 374(a)’’ and insert-
ing ‘‘351, or 361’’.
(8) Paragraph (2) of section 243(b) is amended
to read as follows:
‘‘(2) AFFILIATED GROUP.—For purposes of this
subsection:
‘‘(A) IN
GENERAL.—The term ‘affiliated
group’ has the meaning given such term by sec-
tion 1504(a), except that for such purposes sec-
tions 1504(b)(2), 1504(b)(4), and 1504(c) shall
not apply.
‘‘(B) GROUP MUST BE CONSISTENT IN FOR-
EIGN
TAX
TREATMENT.—The requirements of
paragraph (1)(A) shall not be treated as being
met with respect to any dividend received by a
corporation if, for any taxable year which in-
cludes the day on which such dividend is re-
ceived—
‘‘(i) 1 or more members of the affili-
ated group referred to in paragraph (1)(A)
choose to any extent to take the benefits of
section 901, and
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‘‘(ii) 1 or more other members of such
group claim to any extent a deduction for
taxes otherwise creditable under section
901.’’.
(9) 
The 
amendment 
made 
by 
section
11813(b)(17) of the Revenue Reconciliation Act of
1990 shall be applied as if the material stricken by
such amendment included the closing parenthesis
after ‘‘section 48(a)(5)’’.
(10) Paragraph (1) of section 179(d) is amended
by striking ‘‘in a trade or business’’ and inserting ‘‘a
trade or business’’.
(11) Subparagraph (E) of section 50(a)(2) is
amended by striking ‘‘section 48(a)(5)(A)’’ and in-
serting ‘‘section 48(a)(5)’’.
(12) 
The 
amendment 
made 
by 
section
11801(c)(9)(G)(ii) of the Revenue Reconciliation Act
of 1990 shall be applied as if it struck ‘‘Section
422A(c)(2)’’ and inserted ‘‘Section 422(c)(2)’’.
(13) Subparagraph (B) of section 424(c)(3) is
amended by striking ‘‘a qualified stock option, an in-
centive stock option, an option granted under an em-
ployee stock purchase plan, or a restricted stock op-
tion’’ and inserting ‘‘an incentive stock option or an
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option granted under an employee stock purchase
plan’’.
(14) Subparagraph (E) of section 1367(a)(2) is
amended by striking ‘‘section 613A(c)(13)(B)’’ and
inserting ‘‘section 613A(c)(11)(B)’’.
(15) Subparagraph (B) of section 460(e)(6) is
amended by striking ‘‘section 167(k)’’ and inserting
‘‘section 168(e)(2)(A)(ii)’’.
(16) Subparagraph (C) of section 172(h)(4) is
amended by striking ‘‘subsection (b)(1)(M)’’ and in-
serting ‘‘subsection (b)(1)(E)’’.
(17) Section 6503 is amended—
(A) by redesignating the subsection relating
to extension in case of certain summonses as sub-
section (j), and
(B) by redesignating the subsection relating
to cross references as subsection (k).
(18) Paragraph (4) of section 1250(e) is hereby
repealed.
(19) Paragraph (1) of section 179(d) is amended
by adding at the end the following new sentence:
‘‘Such term shall not include any property described
in section 50(b) and shall not include air condi-
tioning or heating units.’’.
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‘‘(i) EFFECTIVE DATE.—Except as otherwise expressly
provided, any amendment made by this section shall take
effect as if included in the provision of the Revenue Rec-
onciliation Act of 1990 to which such amendment relates.’’.
SEC. 1703. AMENDMENTS RELATED TO REVENUE REC-
ONCILIATION ACT OF 1993.
(a) AMENDMENT RELATED
TO SECTION 13114.—
Paragraph (2) of section 1044(c) is amended to read as fol-
lows:
‘‘(2) PURCHASE.—The taxpayer shall be consid-
ered to have purchased any property if, but for sub-
section (d), the unadjusted basis of such property
would be its cost within the meaning of section
1012.’’.
(b) AMENDMENTS RELATED TO SECTION 13142.—
(1) Subparagraph (B) of section 13142(b)(6) of
the Revenue Reconciliation Act of 1993 is amended to
read as follows:
‘‘(B) FULL-TIME
STUDENTS, WAIVER
AU-
THORITY, AND PROHIBITED DISCRIMINATION.—
The amendments made by paragraphs (2), (3),
and (4) shall take effect on the date of the enact-
ment of this Act.’’.
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(2) Subparagraph (C) of section 13142(b)(6) of
such Act is amended by striking ‘‘paragraph (2)’’ and
inserting ‘‘paragraph (5)’’.
(c) AMENDMENT RELATED TO SECTION 13161.—
(1) IN GENERAL.—Subsection (e) of section 4001
(relating to inflation adjustment) is amended to read
as follows:
‘‘(e) INFLATION ADJUSTMENT.—
‘‘(1) IN GENERAL.—The $30,000 amount in sub-
section (a) and section 4003(a) shall be increased by
an amount equal to—
‘‘(A) $30,000, multiplied by
‘‘(B) the cost-of-living adjustment under sec-
tion 1(f)(3) for the calendar year in which the
vehicle is sold, determined by substituting ‘cal-
endar year 1990’ for ‘calendar year 1992’ in
subparagraph (B) thereof.
‘‘(2) ROUNDING.—If any amount as adjusted
under paragraph (1) is not a multiple of $2,000, such
amount shall be rounded to the next lowest multiple
of $2,000.’’.
(2) EFFECTIVE DATE.—The amendment made by
paragraph (1) shall take effect on the date of the en-
actment of this Act.
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(d) AMENDMENT RELATED
TO SECTION 13201.—
Clause (ii) of section 135(b)(2)(B) is amended by inserting
before the period at the end thereof the following: ‘‘, deter-
mined by substituting ‘calendar year 1989’ for ‘calendar
year 1992’ in subparagraph (B) thereof’’.
(e) AMENDMENTS RELATED TO SECTION 13203.—Sub-
section (a) of section 59 is amended—
(1) by striking ‘‘the amount determined under
section 55(b)(1)(A)’’ in paragraph (1)(A) and
(2)(A)(i) and inserting ‘‘the pre-credit tentative mini-
mum tax’’,
(2) by striking ‘‘specified in section 55(b)(1)(A)’’
in paragraph (1)(C) and inserting ‘‘specified in sub-
paragraph (A)(i) or (B)(i) of section 55(b)(1) (which-
ever applies)’’,
(3) by striking ‘‘which would be determined
under section 55(b)(1)(A)’’ in paragraph (2)(A)(ii)
and inserting ‘‘which would be the pre-credit tentative
minimum tax’’, and
(4) by adding at the end thereof the following
new paragraph:
‘‘(3) PRE-CREDIT
TENTATIVE
MINIMUM
TAX.—
For purposes of this subsection, the term ‘pre-credit
tentative minimum tax’ means—
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‘‘(A) in the case of a taxpayer other than a
corporation, the amount determined under the
first sentence of section 55(b)(1)(A)(i), or
‘‘(B) in the case of a corporation, the
amount 
determined 
under 
section
55(b)(1)(B)(i).’’.
(f) AMENDMENT RELATED TO SECTION 13221.—Sec-
tions 1201(a) and 1561(a) are each amended by striking
‘‘last sentence’’ each place it appears and inserting ‘‘last
2 sentences’’.
(g) AMENDMENTS RELATED TO SECTION 13222.—
(1) Subparagraph (B) of section 6033(e)(1) is
amended by adding at the end thereof the following
new clause:
‘‘(iii) COORDINATION
WITH
SECTION
527(f).—This subsection shall not apply to
any amount on which tax is imposed by
reason of section 527(f).’’.
(2) Clause (i) of section 6033(e)(1)(B) is amend-
ed by striking ‘‘this subtitle’’ and inserting ‘‘section
501’’.
(h) AMENDMENT RELATED TO SECTION 13225.—Para-
graph (3) of section 6655(g) is amended by striking all that
follows ‘‘ ‘3rd month’ ’’ in the sentence following subpara-
graph (C) and inserting ‘‘, subsection (e)(2)(A) shall be ap-
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plied by substituting ‘2 months’ for ‘3 months’ in clause
(i)(I), the election under clause (i) of subsection (e)(2)(C)
may be made separately for each installment, and clause
(ii) of subsection (e)(2)(C) shall not apply.’’.
(i) AMENDMENTS RELATED TO SECTION 13231.—
(1) Subparagraph (G) of section 904(d)(3) is
amended by striking ‘‘section 951(a)(1)(B)’’ and in-
serting 
‘‘subparagraph 
(B) 
or 
(C) 
of 
section
951(a)(1)’’.
(2) Paragraph (1) of section 956A(b) is amended
to read as follows:
‘‘(1) the amount (not including a deficit) re-
ferred to in section 316(a)(1) to the extent such
amount was accumulated in prior taxable years be-
ginning after September 30, 1993, and’’.
(3) Subsection (f) of section 956A is amended by
inserting before the period at the end thereof: ‘‘and
regulations coordinating the provisions of subsections
(c)(3)(A) and (d)’’.
(4) Subsection (b) of section 958 is amended by
striking ‘‘956(b)(2)’’ each place it appears and insert-
ing ‘‘956(c)(2)’’.
(5)(A) Subparagraph (A) of section 1297(d)(2) is
amended by striking ‘‘The adjusted basis of any
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(1) Subsection (d) of section 39 is amended—
(A) by striking ‘‘45’’ in the heading of
paragraph (5) and inserting ‘‘45A’’, and
(B) by striking ‘‘45’’ in the heading of
paragraph (6) and inserting ‘‘45B’’.
(2) Subparagraph (A) of section 108(d)(9) is
amended by striking ‘‘paragraph (3)(B)’’ and insert-
ing ‘‘paragraph (3)(C)’’.
(3) Subparagraph (C) of section 143(d)(2) is
amended by striking the period at the end thereof and
inserting a comma.
(4) Clause (ii) of section 163(j)(6)(E) is amended
by striking ‘‘which is a’’ and inserting ‘‘which is’’.
(5) Subparagraph (A) of section 1017(b)(4) is
amended by striking ‘‘subsection (b)(2)(D)’’ and in-
serting ‘‘subsection (b)(2)(E)’’.
(6) So much of section 1245(a)(3) as precedes
subparagraph (A) thereof is amended to read as fol-
lows:
‘‘(3) SECTION 1245 PROPERTY.—For purposes of
this section, the term ‘section 1245 property’ means
any property which is or has been property of a char-
acter subject to the allowance for depreciation pro-
vided in section 167 and is either—’’.
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(7) Paragraph (2) of section 1394(e) is amend-
ed—
(A) by striking ‘‘(i)’’ and inserting ‘‘(A)’’,
and
(B) by striking ‘‘(ii)’’ and inserting ‘‘(B)’’.
(8) Subsection (m) of section 6501 (as redesig-
nated by section 1602) is amended by striking ‘‘or
51(j)’’ and inserting ‘‘45B, or 51(j)’’.
(9)(A) The section 6714 added by section
13242(b)(1) of the Revenue Reconciliation Act of 1993
is hereby redesignated as section 6715.
(B) The table of sections for part I of subchapter
B of chapter 68 is amended by striking ‘‘6714’’ in the
item added by such section 13242(b)(2) of such Act
and inserting ‘‘6715’’.
(10) Paragraph (2) of section 9502(b) is amend-
ed by inserting ‘‘and before’’ after ‘‘1982,’’.
(11) Subsection (a)(3) of section 13206 of the
Revenue Reconciliation Act of 1993 is amended by
striking ‘‘this section’’ and inserting ‘‘this sub-
section’’.
(12) Paragraph (1) of section 13215(c) of the
Revenue Reconciliation Act of 1993 is amended by
striking ‘‘Public Law 92–21’’ and inserting ‘‘Public
Law 98–21’’.
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(13) Paragraph (2) of section 13311(e) of the
Revenue Reconciliation Act of 1993 is amended by
striking ‘‘section 1393(a)(3)’’ and inserting ‘‘section
1393(a)(2)’’.
(14) Subparagraph (B) of section 117(d)(2) is
amended by striking ‘‘section 132(f)’’ and inserting
‘‘section 132(h)’’.
(o) EFFECTIVE DATE.—Any amendment made by this
section shall take effect as if included in the provision of
the Revenue Reconciliation Act of 1993 to which such
amendment relates.
SEC. 1704. MISCELLANEOUS PROVISIONS.
(a) APPLICATION OF AMENDMENTS MADE BY TITLE
XII OF
OMNIBUS
BUDGET
RECONCILIATION
ACT
OF
1990.—Except as otherwise expressly provided, whenever in
title XII of the Omnibus Budget Reconciliation Act of 1990
an amendment or repeal is expressed in terms of an amend-
ment to, or repeal of, a section or other provision, the ref-
erence shall be considered to be made to a section or other
provision of the Internal Revenue Code of 1986.
(b) TREATMENT
OF
CERTAIN
AMOUNTS
UNDER
HEDGE BOND RULES.—
(1) 
IN
GENERAL.—Clause 
(iii) 
of 
section
149(g)(3)(B) is amended to read as follows:
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‘‘(iii) AMOUNTS HELD PENDING REIN-
VESTMENT OR REDEMPTION.—Amounts held
for not more than 30 days pending reinvest-
ment or bond redemption shall be treated as
invested in bonds described in clause (i).’’.
(2) EFFECTIVE DATE.—The amendment made by
paragraph (1) shall take effect as if included in the
amendments made by section 7651 of the Omnibus
Budget Reconciliation Act of 1989.
(c) TREATMENT OF CERTAIN DISTRIBUTIONS UNDER
SECTION 1445.—
(1) IN
GENERAL.—Paragraph (3) of section
1445(e) is amended by adding at the end thereof the
following new sentence: ‘‘Rules similar to the rules of
the preceding provisions of this paragraph shall
apply in the case of any distribution to which section
301 applies and which is not made out of the earn-
ings and profits of such a domestic corporation.’’.
(2) EFFECTIVE DATE.—The amendment made by
paragraph (1) shall apply to distributions after the
date of the enactment of this Act.
(d) TREATMENT OF CERTAIN CREDITS UNDER SEC-
TION 469.—
(1) IN GENERAL.—Subparagraph (B) of section
469(c)(3) is amended by adding at the end thereof the
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following new sentence: ‘‘If the preceding sentence ap-
plies to the net income from any property for any
taxable year, any credits allowable under subpart B
(other than section 27(a)) or D of part IV of sub-
chapter A for such taxable year which are attributable
to such property shall be treated as credits not from
a passive activity to the extent the amount of such
credits does not exceed the regular tax liability of the
taxpayer for the taxable year which is allocable to
such net income.’’.
(2) EFFECTIVE DATE.—The amendment made by
paragraph (1) shall apply to taxable years beginning
after December 31, 1986.
(e) TREATMENT OF DISPOSITIONS UNDER PASSIVE
LOSS RULES.—
(1) IN GENERAL.—Subparagraph (A) of section
469(g)(1) is amended to read as follows:
‘‘(A) IN GENERAL.—If all gain or loss real-
ized on such disposition is recognized, the excess
of—
‘‘(i) any loss from such activity for
such taxable year (determined after the ap-
plication of subsection (b)), over
‘‘(ii) any net income or gain for such
taxable year from all other passive activities
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(determined after the application of sub-
section (b)),
shall be treated as a loss which is not from a
passive activity.’’.
(2) EFFECTIVE DATE.—The amendment made by
paragraph (1) shall apply to taxable years beginning
after December 31, 1986.
(f) MISCELLANEOUS AMENDMENTS TO FOREIGN PRO-
VISIONS.—
(1) COORDINATION
OF
UNIFIED
ESTATE
TAX
CREDIT WITH TREATIES.—Subparagraph (A) of sec-
tion 2102(c)(3) is amended by adding at the end
thereof the following new sentence: ‘‘For purposes of
the preceding sentence, property shall not be treated
as situated in the United States if such property is
exempt from the tax imposed by this subchapter
under any treaty obligation of the United States.’’.
(2) TREATMENT OF CERTAIN INTEREST PAID TO
RELATED PERSON.—
(A) Subparagraph (B) of section 163(j)(1)
is amended by inserting before the period at the
end thereof the following: ‘‘(and clause (ii) of
paragraph (2)(A) shall not apply for purposes of
applying this subsection to the amount so treat-
ed)’’.
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(B) Subsection (j) of section 163 is amended
by redesignating paragraph (7) as paragraph
(8) and by inserting after paragraph (6) the fol-
lowing new paragraph:
‘‘(7) COORDINATION WITH PASSIVE LOSS RULES,
ETC.—This subsection shall be applied before sections
465 and 469.’’.
(C) The amendments made by this para-
graph shall apply as if included in the amend-
ments made by section 7210(a) of the Revenue
Reconciliation Act of 1989.
(3) TREATMENT
OF
INTEREST
ALLOCABLE
TO
EFFECTIVELY CONNECTED INCOME.—
(A) IN GENERAL.—
(i) 
Subparagraph 
(B) 
of 
section
884(f)(1) is amended by striking ‘‘to the ex-
tent’’ and all that follows down through
‘‘subparagraph (A)’’ and inserting ‘‘to the
extent that the allocable interest exceeds the
interest described in subparagraph (A)’’.
(ii) The second sentence of section
884(f)(1) is amended by striking ‘‘reason-
ably expected’’ and all that follows down
through the period at the end thereof and
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inserting ‘‘reasonably expected to be alloca-
ble interest.’’.
(iii) Paragraph (2) of section 884(f) is
amended to read as follows:
‘‘(2) ALLOCABLE
INTEREST.—For purposes of
this subsection, the term ‘allocable interest’ means any
interest which is allocable to income which is effec-
tively connected (or treated as effectively connected)
with the conduct of a trade or business in the United
States.’’.
(B) EFFECTIVE
DATE.—The amendments
made by subparagraph (A) shall take effect as if
included in the amendments made by section
1241(a) of the Tax Reform Act of 1986.
(4) CLARIFICATION OF SOURCE RULE.—
(A) IN GENERAL.—Paragraph (2) of section
865(b) is amended by striking ‘‘863(b)’’ and in-
serting ‘‘863’’.
(B) EFFECTIVE
DATE.—The amendment
made by subparagraph (A) shall take effect as if
included in the amendments made by section
1211 of the Tax Reform Act of 1986.
(5) REPEAL OF OBSOLETE PROVISIONS.—
(A) Paragraph (1) of section 6038(a) is
amended by striking ‘‘, and’’ at the end of sub-
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paragraph (E) and inserting a period, and by
striking subparagraph (F).
(B) Subsection (b) of section 6038A is
amended by adding ‘‘and’’ at the end of para-
graph (2), by striking ‘‘, and’’ at the end of
paragraph (3) and inserting a period, and by
striking paragraph (4).
(g) TREATMENT
OF ASSIGNMENT
OF INTEREST
IN
CERTAIN BOND-FINANCED FACILITIES.—
(1) IN GENERAL.—Subparagraph (A) of section
1317(3) of the Tax Reform Act of 1986 is amended
by adding at the end thereof the following new sen-
tence: ‘‘A facility shall not fail to be treated as de-
scribed in this subparagraph by reason of an assign-
ment (or an agreement to an assignment) by the gov-
ernmental unit on whose behalf the bonds are issued
of any part of its interest in the property financed by
such bonds to another governmental unit.’’.
(2) EFFECTIVE DATE.—The amendment made by
paragraph (1) shall take effect as if included in such
section 1317 on the date of the enactment of the Tax
Reform Act of 1986.
(h) CLARIFICATION OF TREATMENT OF MEDICARE EN-
TITLEMENT UNDER COBRA PROVISIONS.—
(1) IN GENERAL.—
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(A) 
Subclause 
(V) 
of 
section
4980B(f)(2)(B)(i) is amended to read as follows:
‘‘(V) 
MEDICARE
ENTITLEMENT
FOLLOWED BY QUALIFYING EVENT.—In
the case of a qualifying event described
in paragraph (3)(B) that occurs less
than 18 months after the date the cov-
ered employee became entitled to bene-
fits under title XVIII of the Social Se-
curity Act, the period of coverage for
qualified beneficiaries other than the
covered employee shall not terminate
under this clause before the close of the
36-month period beginning on the date
the covered employee became so enti-
tled.’’.
(B) Clause (v) of section 602(2)(A) of the
Employee Retirement Income Security Act of
1974 is amended to read as follows:
‘‘(v) MEDICARE
ENTITLEMENT
FOL-
LOWED BY QUALIFYING EVENT.—In the case
of a qualifying event described in section
603(2) that occurs less than 18 months after
the date the covered employee became enti-
tled to benefits under title XVIII of the So-
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(1) IN GENERAL.—Subsection (a) of section 860E
is amended by adding at the end thereof the following
new paragraph:
‘‘(6) COORDINATION WITH MINIMUM TAX.—For
purposes of part VI of subchapter A of this chapter—
‘‘(A) the reference in section 55(b)(2) to tax-
able income shall be treated as a reference to tax-
able income determined without regard to this
subsection,
‘‘(B) the alternative minimum taxable in-
come of any holder of a residual interest in a
REMIC for any taxable year shall in no event
be less than the excess inclusion for such taxable
year, and
‘‘(C) any excess inclusion shall be dis-
regarded for purposes of computing the alter-
native tax net operating loss deduction.
The preceding sentence shall not apply to any organi-
zation to which section 593 applies, except to the ex-
tent provided in regulations prescribed by the Sec-
retary under paragraph (2).’’.
(2) EFFECTIVE DATE.—The amendment made by
paragraph (1) shall take effect as if included in the
amendments made by section 671 of the Tax Reform
Act of 1986 unless the taxpayer elects to apply such
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amendment only to taxable years beginning after the
date of the enactment of this Act.
(j) EXEMPTION FROM HARBOR MAINTENANCE TAX
FOR CERTAIN PASSENGERS.—
(1) IN GENERAL.—Subparagraph (D) of section
4462(b)(1) (relating to special rule for Alaska, Ha-
waii, and possessions) is amended by inserting before
the period the following: ‘‘, or passengers transported
on United States flag vessels operating solely within
the State waters of Alaska or Hawaii and adjacent
international waters’’.
(2) EFFECTIVE DATE.—The amendment made by
paragraph (1) shall take effect as if included in the
amendments made by section 1402(a) of the Harbor
Maintenance Revenue Act of 1986.
(k) AMENDMENTS RELATED TO REVENUE PROVISIONS
OF ENERGY POLICY ACT OF 1992.—
(1) Effective with respect to taxable years begin-
ning after December 31, 1990, subclause (II) of sec-
tion 53(d)(1)(B)(iv) is amended to read as follows:
‘‘(II) the adjusted net minimum
tax for any taxable year is the amount
of the net minimum tax for such year
increased in the manner provided in
clause (iii).’’.
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(2) Subsection (g) of section 179A is redesignated
as subsection (f).
(3) Subparagraph (E) of section 6724(d)(3) is
amended by striking ‘‘section 6109(f)’’ and inserting
‘‘section 6109(h)’’.
(4)(A) Subsection (d) of section 30 is amended—
(i) by inserting ‘‘(determined without re-
gard to subsection (b)(3))’’ before the period at
the end of paragraph (1) thereof, and
(ii) by adding at the end thereof the follow-
ing new paragraph:
‘‘(4) ELECTION TO NOT TAKE CREDIT.—No credit
shall be allowed under subsection (a) for any vehicle
if the taxpayer elects to not have this section apply
to such vehicle.’’.
(B) Subsection (m) of section 6501 (as redesig-
nated by section 1602) is amended by striking ‘‘sec-
tion 40(f)’’ and inserting ‘‘section 30(d)(4), 40(f)’’.
(5) Subclause (III) of section 501(c)(21)(D)(ii) is
amended by striking ‘‘section 101(6)’’ and inserting
‘‘section 101(7)’’ and by striking ‘‘1752(6)’’ and in-
serting ‘‘1752(7)’’.
(6) Paragraph (1) of section 1917(b) of the En-
ergy Policy Act of 1992 shall be applied as if ‘‘at a
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HR 3448 EAS
rate’’ appeared instead of ‘‘at the rate’’ in the mate-
rial proposed to be stricken.
(7) Paragraph (2) of section 1921(b) of the En-
ergy Policy Act of 1992 shall be applied as if a
comma appeared after ‘‘(2)’’ in the material proposed
to be stricken.
(8) Subsection (a) of section 1937 of the Energy
Policy Act of 1992 shall be applied as if ‘‘Subpart B’’
appeared instead of ‘‘Subpart C’’.
(l) TREATMENT OF QUALIFIED FOOTBALL COACHES
PLAN.—
(1) IN GENERAL.—For purposes of the Internal
Revenue Code of 1986, a qualified football coaches
plan—
(A) shall be treated as a multiemployer col-
lectively bargained plan, and
(B) notwithstanding section 401(k)(4)(B) of
such Code, may include a qualified cash and de-
ferred arrangement under section 401(k) of such
Code.
(2) QUALIFIED FOOTBALL COACHES PLAN.—For
purposes of this subsection, the term ‘‘qualified foot-
ball coaches plan’’ means any defined contribution
plan which is established and maintained by an orga-
nization—
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HR 3448 EAS
(A) which is described in section 501(c) of
such Code,
(B) the membership of which consists en-
tirely of individuals who primarily coach foot-
ball as full-time employees of 4-year colleges or
universities described in section 170(b)(1)(A)(ii)
of such Code, and
(C) which was in existence on September
18, 1986.
(3) EFFECTIVE
DATE.—This subsection shall
apply to years beginning after December 22, 1987.
(m) DETERMINATION OF UNRECOVERED INVESTMENT
IN ANNUITY CONTRACT.—
(1) IN GENERAL.—Subparagraph (A) of section
72(b)(4) is amended by inserting ‘‘(determined with-
out regard to subsection (c)(2))’’ after ‘‘contract’’.
(2) EFFECTIVE DATE.—The amendment made by
paragraph (1) shall take effect as if included in the
amendments made by section 1122(c) of the Tax Re-
form Act of 1986.
(n) MODIFICATIONS
TO
ELECTION
TO
INCLUDE
CHILD’S INCOME ON PARENT’S RETURN.—
(1) ELIGIBILITY FOR ELECTION.—Clause (ii) of
section 1(g)(7)(A) (relating to election to include cer-
335
HR 3448 EAS
tain unearned income of child on parent’s return) is
amended to read as follows:
‘‘(ii) such gross income is more than
the 
amount 
described 
in 
paragraph
(4)(A)(ii)(I) and less than 10 times the
amount so described,’’.
(2) COMPUTATION OF TAX.—Subparagraph (B)
of section 1(g)(7) (relating to income included on par-
ent’s return) is amended—
(A) by striking ‘‘$1,000’’ in clause (i) and
inserting ‘‘twice the amount described in para-
graph (4)(A)(ii)(I)’’, and
(B) by amending subclause (II) of clause
(ii) to read as follows:
‘‘(II) for each such child, 15 per-
cent of the lesser of the amount de-
scribed in paragraph (4)(A)(ii)(I) or
the excess of the gross income of such
child over the amount so described,
and’’.
(3) MINIMUM TAX.—Subparagraph (B) of section
59(j)(1) is amended by striking ‘‘$1,000’’ and insert-
ing ‘‘twice the amount in effect for the taxable year
under section 63(c)(5)(A)’’.
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(4) EFFECTIVE DATE.—The amendments made
by this subsection shall apply to taxable years begin-
ning after December 31, 1995.
(o) TREATMENT OF CERTAIN VETERANS’ REEMPLOY-
MENT RIGHTS.—
(1) IN GENERAL.—Section 414 is amended by
adding at the end the following new subsection:
‘‘(u) SPECIAL RULES RELATING TO VETERANS’ REEM-
PLOYMENT RIGHTS UNDER USERRA.—
‘‘(1) TREATMENT
OF
CERTAIN
CONTRIBUTIONS
MADE
PURSUANT
TO
VETERANS’ 
REEMPLOYMENT
RIGHTS.—If any contribution is made by an em-
ployer or an employee under an individual account
plan with respect to an employee, or by an employee
to a defined benefit plan that provides for employee
contributions, and such contribution is required by
reason of such employee’s rights under chapter 43 of
title 38, United States Code, resulting from qualified
military service, then—
‘‘(A) such contribution shall not be subject
to any otherwise applicable limitation contained
in section 402(g), 402(h), 403(b), 404(a), 404(h),
408, 415, or 457, and shall not be taken into ac-
count in applying such limitations to other con-
tributions or benefits under such plan or any
337
HR 3448 EAS
other plan, with respect to the year in which the
contribution is made,
‘‘(B) such contribution shall be subject to
the limitations referred to in subparagraph (A)
with respect to the year to which the contribu-
tion relates (in accordance with rules prescribed
by the Secretary), and
‘‘(C) such plan shall not be treated as fail-
ing to meet the requirements of section 401(a)(4),
401(a)(26), 401(k)(3), 401(k)(11), 401(k)(12),
401(m), 403(b)(12), 408(k)(3), 408(k)(6), 408(p),
410(b), or 416 by reason of the making of (or the
right to make) such contribution.
For purposes of the preceding sentence, any elective
deferral or employee contribution made under para-
graph (2) shall be treated as required by reason of the
employee’s rights under such chapter 43.
‘‘(2) REEMPLOYMENT
RIGHTS
UNDER
USERRA
WITH RESPECT TO ELECTIVE DEFERRALS.—
‘‘(A) IN
GENERAL.—For purposes of this
subchapter and section 457, if an employee is en-
titled to the benefits of chapter 43 of title 38,
United States Code, with respect to any plan
which provides for elective deferrals, the em-
ployer sponsoring the plan shall be treated as
338
HR 3448 EAS
meeting the requirements of such chapter 43 with
respect to such elective deferrals only if such em-
ployer—
‘‘(i) permits such employee to make ad-
ditional elective deferrals under such plan
(in the amount determined under subpara-
graph (B) or such lesser amount as is elect-
ed by the employee) during the period which
begins on the date of the reemployment of
such employee with such employer and has
the same length as the lesser of—
‘‘(I) the product of 3 and the pe-
riod of qualified military service which
resulted in such rights, and
‘‘(II) 5 years, and
‘‘(ii) makes a matching contribution
with respect to any additional elective defer-
ral made pursuant to clause (i) which
would have been required had such deferral
actually been made during the period of
such qualified military service.
‘‘(B) AMOUNT OF MAKEUP REQUIRED.—The
amount determined under this subparagraph
with respect to any plan is the maximum
amount of the elective deferrals that the individ-
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ual would have been permitted to make under the
plan in accordance with the limitations referred
to in paragraph (1)(A) during the period of
qualified military service if the individual had
continued to be employed by the employer during
such period and received compensation as deter-
mined under paragraph (7). Proper adjustment
shall be made to the amount determined under
the preceding sentence for any elective deferrals
actually made during the period of such quali-
fied military service.
‘‘(C) ELECTIVE DEFERRAL.—For purposes
of this paragraph, the term ‘elective deferral’ has
the meaning given such term by section
402(g)(3); except that such term shall include
any deferral of compensation under an eligible
deferred compensation plan (as defined in sec-
tion 457(b)).
‘‘(D) AFTER-TAX
EMPLOYEE
CONTRIBU-
TIONS.—References in subparagraphs (A) and
(B) to elective deferrals shall be treated as in-
cluding references to employee contributions.
‘‘(3) CERTAIN RETROACTIVE ADJUSTMENTS NOT
REQUIRED.—For purposes of this subchapter and sub-
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chapter E, no provision of chapter 43 of title 38,
United States Code, shall be construed as requiring—
‘‘(A) any crediting of earnings to an em-
ployee with respect to any contribution before
such contribution is actually made, or
‘‘(B) any allocation of any forfeiture with
respect to the period of qualified military service.
‘‘(4) LOAN
REPAYMENT
SUSPENSIONS
PER-
MITTED.—If any plan suspends the obligation to
repay any loan made to an employee from such plan
for any part of any period during which such em-
ployee is performing service in the uniformed services
(as defined in chapter 43 of title 38, United States
Code), whether or not qualified military service, such
suspension shall not be taken into account for pur-
poses of section 72(p), 401(a), or 4975(d)(1).
‘‘(5) QUALIFIED MILITARY SERVICE.—For pur-
poses of this subsection, the term ‘qualified military
service’ means any service in the uniformed services
(as defined in chapter 43 of title 38, United States
Code) by any individual if such individual is entitled
to reemployment rights under such chapter with re-
spect to such service.
‘‘(6) INDIVIDUAL ACCOUNT PLAN.—For purposes
of this subsection, the term ‘individual account plan’
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means any defined contribution plan (including any
tax-sheltered annuity plan under section 403(b), any
simplified employee pension under section 408(k),
any qualified salary reduction arrangement under
section 408(p), and any eligible deferred compensa-
tion plan (as defined in section 457(b)).
‘‘(7) COMPENSATION.—For purposes of sections
403(b)(3), 415(c)(3), and 457(e)(5), an employee who
is in qualified military service shall be treated as re-
ceiving compensation from the employer during such
period of qualified military service equal to—
‘‘(A) the compensation the employee would
have received during such period if the employee
were not in qualified military service, deter-
mined based on the rate of pay the employee
would have received from the employer but for
absence during the period of qualified military
service, or
‘‘(B) if the compensation the employee
would have received during such period was not
reasonably certain, the employee’s average com-
pensation from the employer during the 12-
month period immediately preceding the quali-
fied military service (or, if shorter, the period of
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HR 3448 EAS
employee contributions or elective deferrals only
to the extent the individual makes payment to
the plan with respect to such contributions or de-
ferrals. No such payment may exceed the amount
the individual would have been permitted or re-
quired to contribute had the individual remained
continuously employed by the employer through-
out the period of qualified military service. Any
payment to such plan shall be made during the
period beginning with the date of reemployment
and whose duration is 3 times the period of the
qualified military service (but not greater than
5 years).
‘‘(9) PLANS NOT SUBJECT TO TITLE 38.—This
subsection shall not apply to any retirement plan to
which chapter 43 of title 38, United States Code, does
not apply.
‘‘(10) REFERENCES.—For purposes of this sec-
tion, any reference to chapter 43 of title 38, United
States Code, shall be treated as a reference to such
chapter as in effect on December 12, 1994 (without re-
gard to any subsequent amendment).’’.
(2) EFFECTIVE DATE.—The amendment made by
this subsection shall be effective as of December 12,
1994.
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(p) REPORTING OF REAL ESTATE TRANSACTIONS.—
(1) IN
GENERAL.—Paragraph (3) of section
6045(e) (relating to prohibition of separate charge for
filing return) is amended by adding at the end the
following new sentence: ‘‘Nothing in this paragraph
shall be construed to prohibit the real estate reporting
person from taking into account its cost of complying
with such requirement in establishing its charge
(other than a separate charge for complying with such
requirement) to any customer for performing services
in the case of a real estate transaction.’’.
(2) EFFECTIVE DATE.—The amendment made by
paragraph (1) shall take effect as if included in sec-
tion 1015(e)(2)(A) of the Technical and Miscellaneous
Revenue Act of 1988.
(q) CLARIFICATION OF DENIAL OF DEDUCTION FOR
STOCK REDEMPTION EXPENSES.
(1) IN
GENERAL.—Paragraph (1) of section
162(k) is amended by striking ‘‘the redemption of its
stock’’ and inserting ‘‘the reacquisition of its stock or
of the stock of any related person (as defined in sec-
tion 465(b)(3)(C))’’.
(2) CERTAIN
DEDUCTIONS
PERMITTED.—Sub-
paragraph (A) of section 162(k)(2) is amended by
striking ‘‘or’’ at the end of clause (i), by redesignating
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HR 3448 EAS
clause (ii) as clause (iii), and by inserting after
clause (i) the following new clause:
‘‘(ii) deduction for amounts which are
properly allocable to indebtedness and am-
ortized over the term of such indebtedness,
or’’.
(3) CLERICAL
AMENDMENT.—The subsection
heading for subsection (k) of section 162 is amended
by striking ‘‘REDEMPTION’’ and inserting ‘‘REACQUI-
SITION’’.
(4) EFFECTIVE DATE.—
(A) IN GENERAL.—Except as provided in
subparagraph (B), the amendments made by this
subsection shall apply to amounts paid or in-
curred after September 13, 1995, in taxable
years ending after such date.
(B) 
PARAGRAPH
(2).—The 
amendment
made by paragraph (2) shall take effect as if in-
cluded in the amendment made by section 613 of
the Tax Reform Act of 1986.
(r) CLERICAL AMENDMENT TO SECTION 404.—
(1) IN
GENERAL.—Paragraph (1) of section
404(j) is amended by striking ‘‘(10)’’ and inserting
‘‘(9)’’.
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(2) EFFECTIVE DATE.—The amendment made by
paragraph (1) shall take effect as if included in the
amendments made by section 713(d)(4)(A) of the Def-
icit Reduction Act of 1984.
(s) PASSIVE INCOME NOT TO INCLUDE FSC INCOME,
ETC.—
(1) IN
GENERAL.—Paragraph (2) of section
1296(b) is amended by striking ‘‘or’’ at the end of
subparagraph (B), by striking the period at the end
of subparagraph (C) and inserting ‘‘, or’’, and by in-
serting after subparagraph (C) the following new sub-
paragraph:
‘‘(D) which is foreign trade income of a
FSC or export trade income of an export trade
corporation (as defined in section 971).’’.
(2) EFFECTIVE DATE.—The amendment made by
paragraph (1) shall take effect as if included in the
amendments made by section 1235 of the Tax Reform
Act of 1986.
(t) MISCELLANEOUS CLERICAL AMENDMENTS.—
(1) Subclause (II) of section 56(g)(4)(C)(ii) is
amended by striking ‘‘of the subclause’’ and inserting
‘‘of subclause’’.
(2) Paragraph (2) of section 72(m) is amended
by inserting ‘‘and’’ at the end of subparagraph (A),
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HR 3448 EAS
by striking subparagraph (B), and by redesignating
subparagraph (C) as subparagraph (B).
(3) Paragraph (2) of section 86(b) is amended by
striking ‘‘adusted’’ and inserting ‘‘adjusted’’.
(4)(A) The heading for section 112 is amended
by striking ‘‘COMBAT PAY’’ and inserting ‘‘COMBAT
ZONE COMPENSATION’’.
(B) The item relating to section 112 in the table
of sections for part III of subchapter B of chapter 1
is amended by striking ‘‘combat pay’’ and inserting
‘‘combat zone compensation’’.
(C) Paragraph (1) of section 3401(a) is amended
by striking ‘‘combat pay’’ and inserting ‘‘combat zone
compensation’’.
(5) Clause (i) of section 172(h)(3)(B) is amended
by striking the comma at the end thereof and insert-
ing a period.
(6) Clause (ii) of section 543(a)(2)(B) is amend-
ed by striking ‘‘section 563(c)’’ and inserting ‘‘section
563(d)’’.
(7) Paragraph (1) of section 958(a) is amended
by striking ‘‘sections 955(b)(1) (A) and (B),
955(c)(2)(A)(ii), and 960(a)(1)’’ and inserting ‘‘sec-
tion 960(a)(1)’’.
348
HR 3448 EAS
(8) Subsection (g) of section 642 is amended by
striking ‘‘under 2621(a)(2)’’ and inserting ‘‘under
section 2621(a)(2)’’.
(9) Section 1463 is amended by striking ‘‘this
subsection’’ and inserting ‘‘this section’’.
(10) Subsection (k) of section 3306 is amended
by inserting a period at the end thereof.
(11) The item relating to section 4472 in the
table of sections for subchapter B of chapter 36 is
amended by striking ‘‘and special rules’’.
(12) Paragraph (3) of section 5134(c) is amend-
ed by striking ‘‘section 6662(a)’’ and inserting ‘‘sec-
tion 6665(a)’’.
(13) Paragraph (2) of section 5206(f) is amended
by striking ‘‘section 5(e)’’ and inserting ‘‘section
105(e)’’.
(14) Paragraph (1) of section 6050B(c) is
amended by striking ‘‘section 85(c)’’ and inserting
‘‘section 85(b)’’.
(15) Subsection (k) of section 6166 is amended
by striking paragraph (6).
(16) Subsection (e) of section 6214 is amended to
read as follows:
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HR 3448 EAS
‘‘(e) CROSS REFERENCE.—
‘‘For provision giving Tax Court jurisdiction to
order a refund of an overpayment and to award
sanctions, see section 6512(b)(2).’’.
(17) The section heading for section 6043 is
amended by striking the semicolon and inserting a
comma.
(18) The item relating to section 6043 in the
table of sections for subpart B of part III of sub-
chapter A of chapter 61 is amended by striking the
semicolon and inserting a comma.
(19) The table of sections for part I of subchapter
A of chapter 68 is amended by striking the item relat-
ing to section 6662.
(20)(A) Section 7232 is amended—
(i) by striking ‘‘LUBRICATING OIL,’’ in
the heading, and
(ii) by striking ‘‘lubricating oil,’’ in the
text.
(B) The table of sections for part II of sub-
chapter A of chapter 75 is amended by striking ‘‘lu-
bricating oil,’’ in the item relating to section 7232.
(21) Paragraph (1) of section 6701(a) of the Om-
nibus Budget Reconciliation Act of 1989 is amended
by striking ‘‘subclause (IV)’’ and inserting ‘‘subclause
(V)’’.
350
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(22) Clause (ii) of section 7304(a)(2)(D) of such
Act is amended by striking ‘‘subsection (c)(2)’’ and
inserting ‘‘subsection (c)’’.
(23) Paragraph (1) of section 7646(b) of such
Act is amended by striking ‘‘section 6050H(b)(1)’’
and inserting ‘‘section 6050H(b)(2)’’.
(24) Paragraph (10) of section 7721(c) of such
Act 
is 
amended 
by 
striking 
‘‘section
6662(b)(2)(C)(ii)’’ 
and 
inserting 
‘‘section
6661(b)(2)(C)(ii)’’.
(25) Subparagraph (A) of section 7811(i)(3) of
such Act is amended by inserting ‘‘the first place it
appears’’ before ‘‘in clause (i)’’.
(26) Paragraph (10) of section 7841(d) of such
Act is amended by striking ‘‘section 381(a)’’ and in-
serting ‘‘section 381(c)’’.
(27) Paragraph (2) of section 7861(c) of such Act
is amended by inserting ‘‘the second place it appears’’
before ‘‘and inserting’’.
(28) Paragraph (1) of section 460(b) is amended
by striking ‘‘the look-back method of paragraph (3)’’
and inserting ‘‘the look-back method of paragraph
(2)’’.
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(29) Subparagraph (C) of section 50(a)(2) is
amended by striking ‘‘subsection (c)(4)’’ and inserting
‘‘subsection (d)(5)’’.
(30) Subparagraph (B) of section 172(h)(4) is
amended by striking the material following the head-
ing and preceding clause (i) and inserting ‘‘For pur-
poses of subsection (b)(2)—’’.
(31) Subparagraph (A) of section 355(d)(7) is
amended by inserting ‘‘section’’ before ‘‘267(b)’’.
(32) Subparagraph (C) of section 420(e)(1) is
amended by striking ‘‘mean’’ and inserting ‘‘means’’.
(33) Paragraph (4) of section 537(b) is amended
by striking ‘‘section 172(i)’’ and inserting ‘‘section
172(f)’’.
(34) Subparagraph (B) of section 613(e)(1) is
amended by striking the comma at the end thereof
and inserting a period.
(35) Paragraph (4) of section 856(a) is amended
by striking ‘‘section 582(c)(5)’’ and inserting ‘‘section
582(c)(2)’’.
(36) 
Sections 
904(f)(2)(B)(i) 
and
907(c)(4)(B)(iii) are each amended by inserting ‘‘(as
in effect on the day before the date of the enactment
of the Revenue Reconciliation Act of 1990)’’ after
‘‘section 172(h)’’.
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(37) Subsection (b) of section 936 is amended by
striking ‘‘subparagraphs (D)(ii)(I)’’ and inserting
‘‘subparagraphs (D)(ii)’’.
(38) Subsection (c) of section 2104 is amended
by striking ‘‘subparagraph (A), (C), or (D) of section
861(a)(1)’’ and inserting ‘‘section 861(a)(1)(A)’’.
(39) Subparagraph (A) of section 280A(c)(1) is
amended to read as follows:
‘‘(A) as the principal place of business for
any trade or business of the taxpayer,’’.
(40) Section 6038 is amended by redesignating
the subsection relating to cross references as subsection
(f).
(41) Clause (iv) of section 6103(e)(1)(A) is
amended by striking all that follows ‘‘provisions of’’
and inserting ‘‘section 1(g) or 59(j);’’.
(42) The subsection (f) of section 6109 of the In-
ternal Revenue Code of 1986 which was added by sec-
tion 2201(d) of Public Law 101–624 is redesignated
as subsection (g).
(43) Subsection (b) of section 7454 is amended
by striking ‘‘section 4955(e)(2)’’ and inserting ‘‘sec-
tion 4955(f)(2)’’.
(44) Subsection (d) of section 11231 of the Reve-
nue Reconciliation Act of 1990 shall be applied as if
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‘‘comma’’ appeared instead of ‘‘period’’ and as if the
paragraph (9) proposed to be added ended with a
comma.
(45) Paragraph (1) of section 11303(b) of the
Revenue Reconciliation Act of 1990 shall be applied
as if ‘‘paragraph’’ appeared instead of ‘‘subpara-
graph’’ in the material proposed to be stricken.
(46) Subsection (f) of section 11701 of the Reve-
nue Reconciliation Act of 1990 is amended by insert-
ing ‘‘(relating to definitions)’’ after ‘‘section 6038(e)’’.
(47) Subsection (i) of section 11701 of the Reve-
nue Reconciliation Act of 1990 shall be applied as if
‘‘subsection’’ appeared instead of ‘‘section’’ in the ma-
terial proposed to be stricken.
(48) Subparagraph (B) of section 11801(c)(2) of
the Revenue Reconciliation Act of 1990 shall be ap-
plied as if ‘‘section 56(g)’’ appeared instead of ‘‘sec-
tion 59(g)’’.
(49) Subparagraph (C) of section 11801(c)(8) of
the Revenue Reconciliation Act of 1990 shall be ap-
plied as if ‘‘reorganizations’’ appeared instead of ‘‘re-
organization’’ in the material proposed to be stricken.
(50) Subparagraph (H) of section 11801(c)(9) of
the Revenue Reconciliation Act of 1990 shall be ap-
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plied as if ‘‘section 1042(c)(1)(B)’’ appeared instead
of ‘‘section 1042(c)(2)(B)’’.
(51) Subparagraph (F) of section 11801(c)(12) of
the Revenue Reconciliation Act of 1990 shall be ap-
plied as if ‘‘and (3)’’ appeared instead of ‘‘and (E)’’.
(52) Subparagraph (A) of section 11801(c)(22) of
the Revenue Reconciliation Act of 1990 shall be ap-
plied as if ‘‘chapters 21’’ appeared instead of ‘‘chap-
ter 21’’ in the material proposed to be stricken.
(53) Paragraph (3) of section 11812(b) of the
Revenue Reconciliation Act of 1990 shall be applied
by not executing the amendment therein to the head-
ing of section 42(d)(5)(B).
(54) Clause (i) of section 11813(b)(9)(A) of the
Revenue Reconciliation Act of 1990 shall be applied
as if a comma appeared after ‘‘(3)(A)(ix)’’ in the ma-
terial proposed to be stricken.
(55) Subparagraph (F) of section 11813(b)(13)
of the Revenue Reconciliation Act of 1990 shall be ap-
plied as if ‘‘tax’’ appeared after ‘‘investment’’ in the
material proposed to be stricken.
(56) Paragraph (19) of section 11813(b) of the
Revenue Reconciliation Act of 1990 shall be applied
as if ‘‘Paragraph (20) of section 1016(a), as redesig-
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nated by section 11801,’’ appeared instead of ‘‘Para-
graph (21) of section 1016(a)’’.
(57) Paragraph (5) section 8002(a) of the Sur-
face Transportation Revenue Act of 1991 shall be ap-
plied as if ‘‘4481(e)’’ appeared instead of ‘‘4481(c)’’.
(58) Section 7872 is amended—
(A) by striking ‘‘foregone’’ each place it ap-
pears in subsections (a) and (e)(2) and inserting
‘‘forgone’’, and
(B) by striking ‘‘FOREGONE’’ in the heading
for subsection (e) and the heading for paragraph
(2) of subsection (e) and inserting ‘‘FORGONE’’.
(59) Paragraph (7) of section 7611(h) is amend-
ed by striking ‘‘approporiate’’ and inserting ‘‘appro-
priate’’.
(60) The heading of paragraph (3) of section
419A(c) is amended by striking ‘‘SEVERENCE’’ and
inserting ‘‘SEVERANCE’’.
(61) Clause (ii) of section 807(d)(3)(B) is
amended by striking ‘‘Commissoners’ ’’ and inserting
‘‘Commissioners’ ’’.
(62) Subparagraph (B) of section 1274A(c)(1) is
amended by striking ‘‘instument’’ and inserting ‘‘in-
strument’’.
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(63) Subparagraph (B) of section 724(d)(3) by
striking ‘‘Subparagaph’’ and inserting ‘‘Subpara-
graph’’.
(64) The last sentence of paragraph (2) of section
42(c) is amended by striking ‘‘of 1988’’.
(65) Paragraph (1) of section 9707(d) is amend-
ed by striking ‘‘diligence,’’ and inserting ‘‘diligence’’.
(66) Subsection (c) of section 4977 is amended
by striking ‘‘section 132(i)(2)’’ and inserting ‘‘section
132(h)’’.
(67) The last sentence of section 401(a)(20) is
amended by striking ‘‘section 211’’ and inserting
‘‘section 521’’.
(68) Subparagraph (A) of section 402(g)(3) is
amended by striking ‘‘subsection (a)(8)’’ and insert-
ing ‘‘subsection (e)(3)’’.
(69) The last sentence of section 403(b)(10) is
amended by striking ‘‘an direct’’ and inserting ‘‘a
direct’’.
(70) Subparagraph (A) of section 4973(b)(1) is
amended by striking ‘‘sections 402(c)’’ and inserting
‘‘section 402(c)’’.
(71) Paragraph (12) of section 3405(e) is
amended by striking ‘‘(b)(3)’’ and inserting ‘‘(b)(2)’’.