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‘‘(2) INDIAN EMPLOYEE.—For purposes of para-
graph (1), the term ‘Indian employee’ means an em-
ployee who is an enrolled member of an Indian tribe
or the spouse of such a member.
‘‘(b) QUALIFIED
WAGES; QUALIFIED
EMPLOYEE
HEALTH INSURANCE COSTS.—For purposes of this sec-
tion—
‘‘(1) QUALIFIED WAGES.—
‘‘(A) IN
GENERAL.—The term ‘qualified
wages’ means any wages paid or incurred by an
employer for services performed by an employee
while such employee is a qualified employee.
‘‘(B) COORDINATION WITH TARGETED JOBS
CREDIT.—The term ‘qualified wages’ shall not
include wages attributable to service rendered
during the 1-year period beginning with the day
the individual begins work for the employer if
any portion of such wages is taken into account
in determining the credit under section 51.
‘‘(2) QUALIFIED EMPLOYEE HEALTH INSURANCE
COSTS.—
‘‘(A) IN GENERAL.—The term ‘qualified em-
ployee health insurance costs’ means any amount
paid or incurred by an employer for health in-
surance to the extent such amount is attributable
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to coverage provided to any employee while such
employee is a qualified employee.
‘‘(B) 
EXCEPTION
FOR
AMOUNTS
PAID
UNDER
SALARY
REDUCTION
ARRANGEMENTS.—
No amount paid or incurred for health insurance
pursuant to a salary reduction arrangement
shall be taken into account under subparagraph
(A).
‘‘(c) QUALIFIED EMPLOYEE.—For purposes of this sec-
tion—
‘‘(1) IN GENERAL.—Except as otherwise provided
in this subsection, the term ‘qualified employee’
means, with respect to any period, any employee of
an employer if—
‘‘(A) substantially all of the services per-
formed during such period by such employee for
such employer are performed within an Indian
reservation,
‘‘(B) the principal place of abode of such
employee while performing such services is on or
near the reservation in which the services are
performed, and
‘‘(C) the employee began work for such em-
ployer on or after January 1, 1994.
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‘‘(2) CREDIT
ALLOWED
ONLY
FOR
FIRST
YEARS.—An employee shall not be treated as a quali-
fied employee for any period after the date 7 years
after the day on which such employee first began work
for the employer.
‘‘(3) INDIVIDUALS RECEIVING WAGES IN EXCESS
OF $30,000 NOT ELIGIBLE.—An employee shall not be
treated as a qualified employee for any taxable year
of the employer if the total amount of the wages paid
or incurred by such employer to such employee during
such taxable year (whether or not for services within
an Indian reservation) exceeds the amount deter-
mined at an annual rate of $30,000. The Secretary
shall adjust the $30,000 amount contained in the pre-
ceding sentence for years beginning after 1993 at the
same time and in the same manner as under section
415(d).
‘‘(4) EMPLOYMENT MUST BE TRADE OR BUSI-
NESS EMPLOYMENT.—An employee shall be treated as
a qualified employee for any taxable year of the em-
ployer only if more than 50 percent of the wages paid
or incurred by the employer to such employee during
such taxable year are for services performed in a
trade or business of the employer. Any determination
as to whether the preceding sentence applies with re-
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spect to any employee for any taxable year shall be
made without regard to subsection (f)(2).
‘‘(5) CERTAIN EMPLOYEES NOT ELIGIBLE.—The
term ‘qualified employee’ shall not include—
‘‘(A) any individual described in subpara-
graph (A), (B), or (C) of section 51(i)(1),
‘‘(B) any 5-percent owner (as defined in
section 416(i)(1)(B)),
‘‘(C) any individual who is neither an en-
rolled member of an Indian tribe nor the spouse
of an enrolled member of an Indian tribe, and
‘‘(D) any individual if the services per-
formed by such individual for the employer in-
volve the conduct of class I, II, or III gaming as
defined in section 4 of the Indian Gaming Regu-
latory Act (25 U.S.C. 2703), or are performed in
a building housing such gaming activity.
‘‘(6) INDIAN TRIBE DEFINED.—The term ‘Indian
tribe’ means any Indian tribe, band, nation, pueblo,
or other organized group or community, including
any Alaska Native village, or regional or village cor-
poration, as defined in, or established pursuant to,
the Alaska Native Claims Settlement Act (43 U.S.C.
1601 et seq.) which is recognized as eligible for the
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special programs and services provided by the United
States to Indians because of their status as Indians.
‘‘(7) INDIAN RESERVATION DEFINED.—The term
‘Indian reservation’ means a reservation, as defined
in—
‘‘(A) section 3(d) of the Indian Financing
Act of 1974 (25 U.S.C. 1452(d)), or
‘‘(B) section 4(10) of the Indian Child Wel-
fare Act of 1978 (25 U.S.C. 1903 (10)).
‘‘(d) EARLY TERMINATION OF EMPLOYMENT BY EM-
PLOYER.—
‘‘(1) IN GENERAL.—If the employment of any
employee is terminated by the taxpayer before the day
1 year after the day on which such employee began
work for the employer—
‘‘(A) no wages (or qualified employee health
insurance costs) with respect to such employee
shall be taken into account under subsection (a)
for the taxable year in which such employment
is terminated, and
‘‘(B) the tax under this chapter for the tax-
able year in which such employment is termi-
nated shall be increased by the aggregate credits
(if any) allowed under section 38(a) for prior
taxable years by reason of wages (or qualified
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employee health insurance costs) taken into ac-
count with respect to such employee.
‘‘(2) 
CARRYBACKS
AND
CARRYOVERS
AD-
JUSTED.—In the case of any termination of employ-
ment to which paragraph (1) applies, the carrybacks
and carryovers under section 39 shall be properly ad-
justed.
‘‘(3) SUBSECTION
NOT
TO
APPLY
IN
CERTAIN
CASES.—
‘‘(A) IN
GENERAL.—Paragraph (1) shall
not apply to—
‘‘(i) a termination of employment of
an employee who voluntarily leaves the em-
ployment of the taxpayer,
‘‘(ii) a termination of employment of
an individual who before the close of the pe-
riod referred to in paragraph (1) becomes
disabled to perform the services of such em-
ployment unless such disability is removed
before the close of such period and the tax-
payer fails to offer reemployment to such
individual, or
‘‘(iii) a termination of employment of
an individual if it is determined under the
applicable State unemployment compensa-
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tion law that the termination was due to
the misconduct of such individual.
‘‘(B) CHANGES IN FORM OF BUSINESS.—
For purposes of paragraph (1), the employment
relationship between the taxpayer and an em-
ployee shall not be treated as terminated—
‘‘(i) by a transaction to which section
381(a) applies if the employee continues to
be employed by the acquiring corporation,
or
‘‘(ii) by reason of a mere change in the
form of conducting the trade or business of
the taxpayer if the employee continues to be
employed in such trade or business and the
taxpayer retains a substantial interest in
such trade or business.
‘‘(4) SPECIAL RULE.—Any increase in tax under
paragraph (1) shall not be treated as a tax imposed
by this chapter for purposes of—
‘‘(A) determining the amount of any credit
allowable under this chapter, and
‘‘(B) determining the amount of the tax im-
posed by section 55.
‘‘(e) CREDIT LIMITATION AMOUNT.—For purposes of
this section—
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‘‘(1) CREDIT LIMITATION AMOUNT.—The credit
limitation amount for a taxable year shall be an
amount equal to the credit rate (10 or 30 percent as
determined under subsection (a)) multiplied by the
increased credit base.
‘‘(2) INCREASED CREDIT BASE.—The increased
credit base for a taxable year shall be the excess of—
‘‘(A) the sum of any qualified wages and
qualified employee health insurance costs paid or
incurred by the employer during the taxable year
with respect to employees whose wages (paid or
incurred by the employer) during the taxable
year do not exceed the amount determined under
paragraph (3) of subsection (c), over
‘‘(B) the sum of any qualified wages and
qualified employee health insurance costs paid or
incurred by the employer (or any predecessor)
during calendar year 1993 with respect to em-
ployees whose wages (paid or incurred by the
employer or any predecessor) during 1993 did
not exceed $30,000.
‘‘(3) SPECIAL
RULE
FOR
SHORT
TAXABLE
YEARS.—For any taxable year having less than 12
months—
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‘‘(A) the amounts paid or incurred by the
employer shall be annualized for purposes of de-
termining the increased credit base, and
‘‘(B) the credit limitation amount shall be
multiplied by a fraction, the numerator of which
is the number of days in the taxable year and
the denominator of which is 365.
‘‘(f) OTHER DEFINITIONS AND SPECIAL RULES.—For
purposes of this section—
‘‘(1) WAGES.—The term ‘wages’ has the same
meaning given to such term in section 51.
‘‘(2) CONTROLLED GROUPS.—
‘‘(A) All employers treated as a single em-
ployer under section (a) or (b) of section 52 shall
be treated as a single employer for purposes of
this section.
‘‘(B) The credit (if any) determined under
this section with respect to each such employer
shall be its proportionate share of the wages and
qualified employee health insurance costs giving
rise to such credit.
‘‘(3) CERTAIN
OTHER
RULES
MADE
APPLICA-
BLE.—Rules similar to the rules of section 51(k) and
subsections (c), (d), and (e) of section 52 shall apply.
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‘‘(4) COORDINATION WITH NONREVENUE LAWS.—
Any reference in this section to a provision not con-
tained in this title shall be treated for purposes of this
section as a reference to such provision as in effect on
the date of the enactment of this paragraph.’’
(c) DENIAL OF DEDUCTION FOR PORTION OF WAGES
EQUAL TO INDIAN EMPLOYMENT CREDIT.—
(1) Subsection (a) of section 280C (relating to
rule for targeted jobs credit) is amended by striking
‘‘51(a)’’ and inserting ‘‘45(a), 51(a), and’’.
(2) Subsection (c) of section 196 (relating to de-
duction for certain unused business credits) is amend-
ed by striking ‘‘and’’ at the end of paragraph (5), by
striking the period at the end of paragraph (6) and
inserting ‘‘, and’’, and by adding at the end the fol-
lowing new paragraph:
‘‘(7) the Indian employment credit determined
under section 45(a).’’
(d) DENIAL
OF CARRYBACKS
TO PREENACTMENT
YEARS.—Subsection (d) of section 39 is amended by adding
at the end thereof the following new paragraph:
‘‘(4) NO CARRYBACK OF SECTION 45 CREDIT BE-
FORE ENACTMENT.—No portion of the unused busi-
ness credit for any taxable year which is attributable
to the Indian employment credit determined under
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section 45 may be carried to a taxable year ending
before the date of the enactment of section 45.’’
(e) CLERICAL AMENDMENT.—The table of sections for
subpart D of part IV of subchapter A of chapter 1 is amend-
ed by adding at the end thereof the following:
‘‘Sec. 45. Indian employment credit.’’
(f) EFFECTIVE DATE.—The amendments made by this
section shall apply to wages paid or incurred after Decem-
ber 31, 1993.
Subtitle B—Revenue Increases
PART I—PROVISIONS AFFECTING INDIVIDUALS
Subpart A—Rate Increases
SEC. 8201. INCREASE IN TOP MARGINAL RATE UNDER SEC-
TION 1.
(a) GENERAL RULE.—Section 1 (relating to tax im-
posed) is amended by striking subsections (a) through (e)
and inserting the following:
‘‘(a) MARRIED INDIVIDUALS FILING JOINT RETURNS
AND SURVIVING SPOUSES.—There is hereby imposed on the
taxable income of—
‘‘(1) every married individual (as defined in sec-
tion 7703) who makes a single return jointly with his
spouse under section 6013, and
‘‘(2) every surviving spouse (as defined in section
2(a)),
a tax determined in accordance with the following table:
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every married individual (as defined in section 7703) who
does not make a single return jointly with his spouse under
section 6013, a tax determined in accordance with the fol-
lowing table:
‘‘If taxable income is:
The tax is:
Not over $18,450 ..............................
15% of taxable income.
Over $18,450 but not over $44,575
$2,767.50, plus 28% of the excess over
$18,450.
Over $44,575 but not over $70,000
$10,082.50, plus 31% of the excess over
$44,575.
Over $70,000 .....................................
$17,964.25, plus 36% of the excess over
$70,000.
‘‘(e) ESTATES AND TRUSTS.—There is hereby imposed
on the taxable income of—
‘‘(1) every estate, and
‘‘(2) every trust,
taxable under this subsection a tax determined in accord-
ance with the following table:
‘‘If taxable income is:
The tax is:
Not over $1,500 ................................
15% of taxable income.
Over $1,500 but not over $3,500 .....
$225, plus 28% of the excess over
$1,500.
Over $3,500 but not over $5,500 .....
$785, plus 31% of the excess over
$3,500.
Over $5,500 .......................................
$1,405, plus 36% of the excess over
$5,500.’’
(b) CONFORMING AMENDMENTS.—
(1) Section 531 is amended by striking ‘‘28 per-
cent’’ and inserting ‘‘36 percent’’.
(2) Section 541 is amended by striking ‘‘28 per-
cent’’ and inserting ‘‘36 percent’’.
(3)(A) Subsection (f) of section 1 is amended—
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(i) by striking ‘‘1990’’ in paragraph (1)
and inserting‘‘1993’’, and
(ii) by striking ‘‘1989’’ in paragraph (3)(B)
and inserting ‘‘1992’’.
(B) Subsection (f) of section 1 is amended by
adding at the end thereof the following new para-
graph:
‘‘(7) SPECIAL RULE FOR CERTAIN BRACKETS.—
‘‘(A) CALENDAR YEAR 1994.—In prescribing
the tables under paragraph (1) which apply with
respect to taxable years beginning in calendar
year 1994, the Secretary shall make no adjust-
ment to the dollar amounts at which the 36 per-
cent rate bracket begins or at which the 39.6 per-
cent rate begins under any table contained in
subsection (a), (b), (c), (d), or (e).
‘‘(B) LATER
CALENDAR
YEARS.—In pre-
scribing tables under paragraph (1) which apply
with respect to taxable years beginning in a cal-
endar year after 1994, the cost-of-living adjust-
ment used in making adjustments to the dollar
amounts referred to in subparagraph (A) shall be
determined under paragraph (3) by substituting
‘1993’ for ‘1992’.’’
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(C) Subparagraph (C) of section 41(e)(5) is
amended by striking ‘‘1989’’ each place it appears
and inserting ‘‘1992’’.
(D) Subparagraph (B) of section 63(c)(4) is
amended by striking ‘‘1989’’ and inserting ‘‘1992’’.
(E) Subparagraph (B) of section 68(b)(2) is
amended by striking ‘‘1989’’ and inserting ‘‘1992’’.
(F) Subparagraph (B) of section 132(f)(6) is
amended by striking ‘‘, determined by substituting’’
and all that follows down through the period at the
end thereof and inserting a period.
(G) Subparagraphs (A)(ii) and (B)(ii) of section
151(d)(4) are each amended by striking ‘‘1989’’ and
inserting ‘‘1992’’.
(H) Clause (ii) of section 513(h)(2)(C) is amend-
ed by striking ‘‘1989’’ and inserting ‘‘1992’’.
(c) EFFECTIVE DATE.—The amendments made by this
section shall apply to taxable years beginning after Decem-
ber 31, 1992.
SEC. 8202. SURTAX ON HIGH-INCOME TAXPAYERS.
(a) GENERAL RULE.—
(1) Subsection (a) of section 1 (as amended by
section 8201) is amended by striking the last item in
the table contained therein and inserting the follow-
ing:
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‘‘Over 
$140,000 
but 
not 
over
$250,000.
$35,928.50, plus 36% of the excess over
$140,000.
Over $250,000 ...................................
$75,528.50, plus 39.6% of the excess
over $250,000.’’
(2) Subsection (b) of section 1 (as so amended)
is amended by striking the last item in the table con-
tained therein and inserting the following:
‘‘Over 
$127,500 
but 
not 
over
$250,000.
$33,385, plus 36% of the excess over
$127,500.
Over $250,000 ...................................
$77,485, plus 39.6% of the excess over
$250,000.’’
(3) Subsection (c) of section 1 (as so amended)
is amended by striking the last item in the table con-
tained therein and inserting the following:
‘‘Over 
$115,000 
but 
not 
over
$250,000.
$31,172, plus 36% of the excess over
$115,000.
Over $250,000 ...................................
$79,772, plus 39.6% of the excess over
$250,000.’’
(4) Subsection (d) of section 1 (as so amended)
is amended by striking the last item in the table con-
tained therein and inserting the following:
‘‘Over 
$70,000 
but 
not 
over
$125,000.
$17,964.25, plus 36% of the excess over
$70,000.
Over $125,000 ...................................
$37,764.25, plus 39.6% of the excess
over $125,000.’’
(5) Subsection (e) of section 1 (as so amended)
is amended by striking the last item in the table con-
tained therein and inserting the following:
‘‘Over $5,500 but not over $7,500 ...
$1,405, plus 36% of the excess over
$5,500.
Over $7,500 .......................................
$2,125, plus 39.6% of the excess over
$7,500.’’
(b) SURTAX ON NET CAPITAL GAINS.—Section 1(h)
(relating to maximum capital gains rate) is amended by
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striking the period at the end of paragraph (2) and insert-
ing ‘‘, plus’’, and by adding at the end the following new
paragraph:
‘‘(3) a tax of 2.8 percent of the lesser of—
‘‘(A) the net capital gain, or
‘‘(B) the amount of taxable income in excess
of the dollar amount at which the last rate
bracket begins for such taxable year in the table
contained in subsection (a), (b), (c), (d), or (e),
whichever is applicable.’’
(c) TECHNICAL AMENDMENT.—Sections 531 and 541
(as amended by section 8201) are each amended by striking
‘‘36 percent’’ and inserting ‘‘39.6 percent’’.
(d) EFFECTIVE DATE.—The amendments made by this
section shall apply to taxable years beginning after Decem-
ber 31, 1992.
SEC. 8203. MODIFICATIONS TO ALTERNATIVE MINIMUM TAX
RATES AND EXEMPTION AMOUNTS.
(a) INCREASE IN RATE.—Paragraph (1) of section
55(b) (defining tentative minimum tax) is amended to read
as follows:
‘‘(1) AMOUNT OF TENTATIVE TAX.—
‘‘(A) NONCORPORATE TAXPAYERS.—
‘‘(i) IN GENERAL.—In the case of a
taxpayer other than a corporation, the ten-
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tative minimum tax for the taxable year is
the sum of—
‘‘(I) 26 percent of so much of the
taxable excess as does not exceed
$175,000, plus
‘‘(II) 28 percent of so much of the
taxable excess as exceeds $175,000.
The amount determined under the preceding
sentence shall be reduced by the alternative
minimum tax foreign tax credit for the tax-
able year.
‘‘(ii) TAXABLE EXCESS.—For purposes
of clause (i), the term ‘taxable excess’ means
so much of the alternative minimum taxable
income for the taxable year as exceeds the
exemption amount.
‘‘(iii) MARRIED
INDIVIDUAL
FILING
SEPARATE RETURN.—In the case of a mar-
ried individual filing a separate return,
clause (i) shall be applied by substituting
‘$87,500’ for ‘$175,000’ each place it ap-
pears. For purposes of the preceding sen-
tence, marital status shall be determined
under section 7703.
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‘‘(B) CORPORATIONS.—In the case of a cor-
poration, the tentative minimum tax for the tax-
able year is—
‘‘(i) 20 percent of so much of the alter-
native minimum taxable income for the tax-
able year as exceeds the exemption amount,
reduced by
‘‘(ii) the alternative minimum tax for-
eign tax credit for the taxable year.’’
(b) INCREASE IN EXEMPTION AMOUNTS.—Paragraph
(1) of section 55(d) (defining exemption amount) is amend-
ed—
(1) by striking ‘‘$40,000’’ in subparagraph (A)
and inserting ‘‘$45,000’’,
(2) by striking ‘‘$30,000’’ in subparagraph (B)
and inserting ‘‘$33,750’’, and
(3) by striking ‘‘$20,000’’ in subparagraph (C)
and inserting ‘‘$22,500’’.
(c) CONFORMING AMENDMENTS.—
(1) The last sentence of section 55(d)(3) is
amended by striking ‘‘$155,000 or (ii) $20,000’’ and
inserting ‘‘$165,000 or (ii) $22,500’’.
(2)(A) Subparagraph (A) of section 897(a)(2) is
amended by striking ‘‘the amount determined under
section 55(b)(1)(A) shall not be less than 21 percent
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of’’ and inserting ‘‘the taxable excess for purposes of
section 55(b)(1)(A) shall not be less than’’.
(B) The heading for paragraph (2) of section
897(a) is amended by striking ‘‘21-PERCENT’’.
(d) EFFECTIVE DATE.—The amendments made by this
section shall apply to taxable years beginning after Decem-
ber 31, 1992.
SEC. 8203A. RATE INCREASES NOT TO TAKE EFFECT UNTIL
JULY 1, 1993.
(a) IN GENERAL.—Section 1 (relating to tax imposed)
is amended by adding at the end the following new sub-
section:
‘‘(i) SPECIAL RULES FOR TAXABLE YEARS BEGINNING
IN 1993.—
‘‘(1) IN GENERAL.—In the case of taxable years
beginning in calendar year 1993, each of the tables
contained in subsections (a), (b), (c), (d), and (e)
shall be applied—
‘‘(A) by substituting ‘33.5 percent’ for ‘36
percent’,
‘‘(B) by substituting ‘35.3 percent’ for ‘39.6
percent’, and
‘‘(C) by substituting for the dollar amount
of tax in the last rate bracket the dollar amount
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determined under the table contained in para-
graph (2).
‘‘(2) DOLLAR
AMOUNT
OF
TAX.—The dollar
amount substituted under paragraph (1) shall be de-
termined as follows:
‘‘In the case of:
The dollar amount is:
Subsection (a) ......................
$72,778.50 for $75,528.50.
Subsection (b) .......................
$74,422.50 for $77,485.00.
Subsection (c) .......................
$76,397.00 for $79,772.00.
Subsection (d) ......................
$36,389.25 for $37,764.25.
Subsection (e) .......................
$2,075.00 for $2,125.00.’’
(b) CONFORMING AMENDMENTS.—
(1) Sections 531 and 541 (as amended by section
8202) are each amended by inserting ‘‘(35.3 percent
in the case of taxable years beginning in calendar
year 1993)’’ after ‘‘39.6 percent’’.
(2) Section 1(h)(3), as added by section 8202(b),
is amended by inserting ‘‘(1.4 percent in the case of
taxable years beginning in calendar year 1993)’’ after
‘‘2.8 percent’’.
(3) Paragraph (1) of section 55(b), as amended
by section 8203, is amended by adding at the end the
following new subparagraph:
‘‘(C) SPECIAL RULES FOR 1993.—In the case
of any taxable year beginning in the calendar
year 1993, subparagraph (A)(i) shall be applied
by substituting—
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‘‘(i) ‘25 percent’ for ‘26 percent’ in
subclause (I), and
‘‘(ii) ‘26 percent’ for ‘28 percent’ in
subclause (II).’’
(c) EFFECTIVE DATE.—The amendments made by this
section shall apply to taxable years beginning after Decem-
ber 31, 1992.
SEC. 8204. OVERALL LIMITATION ON ITEMIZED DEDUC-
TIONS FOR HIGH-INCOME TAXPAYERS MADE
PERMANENT.
Subsection (f) of section 68 (relating to overall limita-
tion on itemized deductions) is hereby repealed.
SEC. 8205. PHASEOUT OF PERSONAL EXEMPTION OF HIGH-
INCOME TAXPAYERS MADE PERMANENT.
Section 151(d)(3) (relating to phaseout of personal ex-
emption) is amended by striking subparagraph (E).
SEC. 8206. PROVISIONS TO PREVENT CONVERSION OF OR-
DINARY INCOME TO CAPITAL GAIN.
(a) INTEREST
EMBEDDED
IN
FINANCIAL TRANS-
ACTIONS.—
(1) IN GENERAL.—Part IV of subchapter P of
chapter 1 (relating to special rules for determining
capital gains and losses) is amended by adding at the
end the following new section:
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‘‘SEC. 1258. RECHARACTERIZATION OF GAIN FROM CERTAIN
FINANCIAL TRANSACTIONS.
‘‘(a) GENERAL RULE.—In the case of any gain—
‘‘(1) which (but for this section) would be treated
as gain from the sale or exchange of a capital asset,
and
‘‘(2) which is recognized on the disposition or
other termination of any position which was held as
part of a conversion transaction,
such gain (to the extent such gain does not exceed the appli-
cable imputed income amount) shall be treated as ordinary
income.
‘‘(b) APPLICABLE IMPUTED INCOME AMOUNT.—For
purposes of subsection (a), the term ‘applicable imputed in-
come amount’ means, with respect to any disposition or
other termination referred to in subsection (a), an amount
equal to—
‘‘(1) the amount of interest which would have ac-
crued on the taxpayer’s net investment in the conver-
sion transaction for the period ending on the date of
such disposition or other termination (or, if earlier,
the date on which the requirements of subsection (c)
ceased to be satisfied) at a rate equal to 120 percent
of the applicable rate, reduced by
‘‘(2) the amount treated as ordinary income
under subsection (a) with respect to any prior dis-