378
(b) REPEAL
OF 4.3-CENT MOTOR FUEL EXCISE
TAXES ON RAILROADS AND INLAND WATERWAY TRANS-
PORTATION WHICH REMAIN IN GENERAL FUND.—
(1) TAXES ON TRAINS.—
(A) IN
GENERAL.—Subparagraph (A) of
section 4041(a)(1) is amended by striking ‘‘or
a diesel-powered train’’ each place it appears
and by striking ‘‘or train’’.
(B) CONFORMING AMENDMENTS.—
(i) 
Subparagraph 
(C) 
of 
section
4041(a)(1) is amended by striking clause
(ii) and by redesignating clause (iii) as
clause (ii).
(ii) Subparagraph (C) of section
4041(b)(1) is amended by striking all that
follows ‘‘section 6421(e)(2)’’ and inserting
a period.
(iii) Paragraph (3) of section 4083(a)
is amended by striking ‘‘or a diesel-pow-
ered train’’.
(iv) Section 6421(f) is amended by
striking paragraph (3).
(v) Section 6427(l) is amended by
striking paragraph (3).
(2) FUEL USED ON INLAND WATERWAYS.—
379
(A) IN GENERAL.—Paragraph (1) of sec-
tion 4042(b) is amended by adding ‘‘and’’ at
the end of subparagraph (A), by striking ‘‘,
and’’ at the end of subparagraph (B) and in-
serting a period, and by striking subparagraph
(C).
(B) 
CONFORMING
AMENDMENT.—Para-
graph (2) of section 4042(b) is amended by
striking subparagraph (C).
(c) EFFECTIVE DATE.—The amendments made by
this subsection shall take effect on October 1, 1999 (Octo-
ber 1, 2003, in the case of the amendments made by sub-
section (b)), but shall not take effect if section 1321 does
not take effect.
SEC. 1323. REPEAL OF EXCISE TAX ON FISHING TACKLE
BOXES.
(a) IN GENERAL.—Paragraph (6) of section 4162(a)
(defining sport fishing equipment) is amended by striking
subparagraph (C) and by redesignating subparagraphs
(D) through (J) as subparagraphs (C) through (I), respec-
tively.
(b) EFFECTIVE DATE.—The amendment made by
this section shall apply to articles sold by the manufac-
turer, producer, or importer more than 30 days after the
date of the enactment of this Act.
380
SEC. 1324. CLARIFICATION OF EXCISE TAX IMPOSED ON
ARROW COMPONENTS.
(a) IN GENERAL.—Paragraph (2) of section 4161(b)
(relating to bows and arrows, etc.) is amended to read as
follows:
‘‘(2) ARROWS.—
‘‘(A) IN GENERAL.—There is hereby im-
posed on the sale by the manufacturer, pro-
ducer, or importer of any shaft, point, article
used to attach a point to a shaft, nock, or vane
of a type used in the manufacture of any arrow
which after its assembly—
‘‘(i) measures 18 inches overall or
more in length, or
‘‘(ii) measures less than 18 inches
overall in length but is suitable for use
with a bow described in paragraph (1)(A),
a tax equal to 12.4 percent of the price for
which so sold.
‘‘(B) REDUCED RATE ON CERTAIN HUNT-
ING POINTS.—Subparagraph (A) shall be ap-
plied by substituting ‘11 percent’ for ‘12.4 per-
cent’ in the case of a point which is designed
primarily for use in hunting fish or large ani-
mals.’’.
381
(b) EFFECTIVE DATE.—The amendment made by
this section shall apply to articles sold by the manufac-
turer, producer, or importer after the close of the first cal-
endar month ending more than 30 days after the date of
the enactment of this Act.
Subtitle D—Improvements in Low-
Income Housing Credit
SEC. 1331. INCREASE IN STATE CEILING ON LOW-INCOME
HOUSING CREDIT.
(a) INCREASE IN STATE CEILING.—Clause (i) of sec-
tion 42(h)(3)(C) (relating to State housing credit ceiling)
is amended by striking ‘‘$1.25’’ and inserting ‘‘the appli-
cable amount under subparagraph (H)’’.
(b) APPLICABLE AMOUNT; ADJUSTMENT OF STATE
CEILING
FOR INCREASES
IN COST-OF-LIVING.—Para-
graph (3) of section 42(h) (relating to housing credit dol-
lar amount for agencies) is amended by adding at the end
the following new subparagraphs:
‘‘(H) INITIAL AMOUNT OF STATE CEIL-
ING.—For purposes of subparagraph (C)(i), the
applicable amount shall be determined under
the following table:
‘‘For calendar year:
The applicable amount is:
2000 ............................................................................. $1.35
2001 .............................................................................
1.45
2002 .............................................................................
1.55
2003 .............................................................................
1.65
2004 and thereafter .....................................................
1.75.
382
‘‘(I) COST-OF-LIVING ADJUSTMENT.—
‘‘(i) IN GENERAL.—In the case of a
calendar year after 2004 the $1.75 amount
in subparagraph (H) shall be increased by
an amount equal to—
‘‘(I) such dollar amount, multi-
plied by
‘‘(II) the cost-of-living adjust-
ment determined under section 1(f)(3)
for such calendar year by substituting
‘calendar year 2003’ for ‘calendar
year 1992’ in subparagraph (B) there-
of.
‘‘(ii) ROUNDING.—Any increase under
clause (i) which is not a multiple of 5 cents
shall be rounded to the next lowest mul-
tiple of 5 cents.’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to calendar years after 1999.
SEC. 1332. MODIFICATION OF CRITERIA FOR ALLOCATING
HOUSING CREDITS AMONG PROJECTS.
(a) SELECTION CRITERIA.—Subparagraph (C) of
section 42(m)(1) (relating to certain selection criteria
must be used) is amended—
383
(1) by inserting ‘‘, including whether the project
includes the use of existing housing as part of a
community revitalization plan’’ before the comma at
the end of clause (iii), and
(2) by striking clauses (v), (vi), and (vii) and
inserting the following new clauses:
‘‘(v) tenant populations with special
housing needs,
‘‘(vi) public housing waiting lists,
‘‘(vii) tenant populations of individ-
uals with children, and
‘‘(viii) projects intended for eventual
tenant ownership.’’.
(b) PREFERENCE FOR COMMUNITY REVITALIZATION
PROJECTS LOCATED IN QUALIFIED CENSUS TRACTS.—
Clause (ii) of section 42(m)(1)(B) is amended by striking
‘‘and’’ at the end of subclause (I), by adding ‘‘and’’ at
the end of subclause (II), and by inserting after subclause
(II) the following new subclause:
‘‘(III) projects which are located
in qualified census tracts (as defined
in subsection (d)(5)(C)) and the devel-
opment of which contributes to a con-
certed 
community 
revitalization
plan,’’.
384
SEC. 1333. ADDITIONAL RESPONSIBILITIES OF HOUSING
CREDIT AGENCIES.
(a) MARKET STUDY; PUBLIC DISCLOSURE OF RA-
TIONALE
FOR NOT FOLLOWING CREDIT ALLOCATION
PRIORITIES.—Subparagraph (A) of section 42(m)(1) (re-
lating to responsibilities of housing credit agencies) is
amended by striking ‘‘and’’ at the end of clause (i), by
striking the period at the end of clause (ii) and inserting
a comma, and by adding at the end the following new
clauses:
‘‘(iii) a comprehensive market study
of the housing needs of low-income individ-
uals in the area to be served by the project
is conducted before the credit allocation is
made and at the developer’s expense by a
disinterested party who is approved by
such agency, and
‘‘(iv) a written explanation is available
to the general public for any allocation of
a housing credit dollar amount which is
not made in accordance with established
priorities and selection criteria of the hous-
ing credit agency.’’.
(b) SITE VISITS.—Clause (iii) of section 42(m)(1)(B)
(relating to qualified allocation plan) is amended by insert-
ing before the period ‘‘and in monitoring for noncompli-
385
ance with habitability standards through regular site vis-
its’’.
SEC. 1334. MODIFICATIONS TO RULES RELATING TO BASIS
OF BUILDING WHICH IS ELIGIBLE FOR CRED-
IT.
(a) HOME ASSISTANCE
NOT
TO
DISQUALIFY
BUILDING
FOR ADDITIONAL CREDIT AVAILABLE
TO
BUILDINGS IN HIGH COST AREAS.—Clause (i) of section
42(i)(2)(E) (relating to buildings receiving HOME assist-
ance) is amended by striking the last sentence.
(b) ADJUSTED BASIS TO INCLUDE PORTION OF CER-
TAIN BUILDINGS USED BY LOW-INCOME INDIVIDUALS
WHO ARE NOT TENANTS AND BY PROJECT EMPLOY-
EES.—Paragraph (4) of section 42(d) (relating to special
rules relating to determination of adjusted basis) is
amended—
(1) by striking ‘‘subparagraph (B)’’ in subpara-
graph (A) and inserting ‘‘subparagraphs (B) and
(C)’’,
(2) by redesignating subparagraph (C) as sub-
paragraph (D), and
(3) by inserting after subparagraph (B) the fol-
lowing new subparagraph:
386
‘‘(C) INCLUSION OF BASIS OF PROPERTY
USED
TO
PROVIDE
SERVICES
FOR
CERTAIN
NONTENANTS.—
‘‘(i) 
IN
GENERAL.—The 
adjusted
basis of any building located in a qualified
census tract (as defined in paragraph
(5)(C)) shall be determined by taking into
account the adjusted basis of property (of
a character subject to the allowance for de-
preciation and not otherwise taken into ac-
count) used throughout the taxable year in
providing any community service facility.
‘‘(ii) LIMITATION.—The increase in
the adjusted basis of any building which is
taken into account by reason of clause (i)
shall not exceed 20 percent of the eligible
basis of the qualified low-income housing
project of which it is a part. For purposes
of the preceding sentence, all community
service facilities which are part of the same
qualified low-income housing project shall
be treated as 1 facility.
‘‘(iii) COMMUNITY
SERVICE
FACIL-
ITY.—For purposes of this subparagraph,
the term ‘community service facility’
387
means any facility designed to serve pri-
marily individuals whose income is 60 per-
cent or less of area median income (within
the meaning of subsection (g)(1)(B)).’’.
SEC. 1335. OTHER MODIFICATIONS.
(a) ALLOCATION
OF CREDIT LIMIT
TO CERTAIN
BUILDINGS.—
(1) The first sentence of section 42(h)(1)(E)(ii)
is amended by striking ‘‘(as of’’ the first place it ap-
pears and inserting ‘‘(as of the later of the date
which is 6 months after the date that the allocation
was made or’’.
(2) The last sentence of section 42(h)(3)(C) is
amended by striking ‘‘project which’’ and inserting
‘‘project which fails to meet the 10 percent test
under paragraph (1)(E)(ii) on a date after the close
of the calendar year in which the allocation was
made or which’’.
(b) DETERMINATION OF WHETHER BUILDINGS ARE
LOCATED IN HIGH COST AREAS.—The first sentence of
section 42(d)(5)(C)(ii)(I) is amended—
(1) by inserting ‘‘either’’ before ‘‘in which 50
percent’’, and
(2) by inserting before the period ‘‘ or which
has a poverty rate of at least 25 percent’’.
388
SEC. 1336. CARRYFORWARD RULES.
(a) IN GENERAL.—Clause (ii) of section 42(h)(3)(D)
(relating to unused housing credit carryovers allocated
among certain states) is amended by striking ‘‘the excess’’
and all that follows and inserting ‘‘the excess (if any) of—
‘‘(I) the unused State housing
credit ceiling for the year preceding
such year, over
‘‘(II) the aggregate housing cred-
it dollar amount allocated for such
year.’’.
(b) CONFORMING AMENDMENT.—The second sen-
tence of section 42(h)(3)(C) (relating to State housing
credit ceiling) is amended by striking ‘‘clauses (i) and
(iii)’’ and inserting ‘‘clauses (i) through (iv)’’.
SEC. 1337. EFFECTIVE DATE.
Except as otherwise provided in this subtitle, the
amendments made by this subtitle shall apply to—
(1) housing credit dollar amounts allocated
after December 31, 2000, and
(2) buildings placed in service after such date
to the extent paragraph (1) of section 42(h) of the
Internal Revenue Code of 1986 does not apply to
any building by reason of paragraph (4) thereof, but
only with respect to bonds issued after such date.
389
Subtitle E—Entrepreneurial Equity
Capital Formation
PART I—TAX-FREE CONVERSIONS OF SPECIAL-
IZED SMALL BUSINESS INVESTMENT COMPA-
NIES INTO PASS-THRU ENTITIES
SEC. 1341. MODIFICATIONS TO PROVISIONS RELATING TO
REGULATED INVESTMENT COMPANIES.
(a) IN GENERAL.—Section 851 (relating to definition
of regulated investment company) is amended by adding
at the end the following new subsection:
‘‘(i) SPECIAL RULES FOR SPECIALIZED SMALL BUSI-
NESS INVESTMENT COMPANIES.—
‘‘(1) IN
GENERAL.—For purposes of deter-
mining whether a specialized small business invest-
ment company is a regulated investment company
for purposes of this subchapter—
‘‘(A) income derived from an investment as
a limited partner in a partnership shall be
treated as qualifying income under subsection
(b)(2) if—
‘‘(i) the company does not participate
in the active management of the normal
business operations of the partnership, and
‘‘(ii) the company’s investment in
such partnership is an investment per-
390
mitted for specialized small business in-
vestment companies under the Small Busi-
ness Investment Act of 1958, and
‘‘(B) the requirements of subsection (b)(3)
shall be treated as met if, at the close of each
quarter of the taxable year, at least 50 percent
of the value of its total assets is represented
by—
‘‘(i) assets described in subsection
(b)(3)(A)(i), and
‘‘(ii) other investments permitted to
be made by a specialized small business in-
vestment company under the Small Busi-
ness Investment Act of 1958.
‘‘(2) COORDINATION
OF
DISTRIBUTION
RE-
QUIREMENTS
WITH
SBIC
REQUIREMENTS.—A spe-
cialized small business investment company shall be
treated as meeting the requirements of section
852(a)(1) if the deduction for dividends paid during
the taxable year (as defined in section 561, but with-
out regard to capital gain dividends) equals or ex-
ceeds the lesser of the amount required under sec-
tion 852(a)(1) or 100 percent of the maximum
amount that the company would be permitted to dis-
391
tribute during such year under the Small Business
Investment Act of 1958.
‘‘(3) SPECIALIZED
SMALL
BUSINESS
INVEST-
MENT COMPANY.—For purposes of this subsection,
the term ‘specialized small business investment com-
pany’ has the meaning given to such term by section
1044(c)(3).
‘‘(4) REFERENCES TO 1958 ACT.—For purposes
of this subsection, references to the Small Business
Investment Act of 1958 shall be treated as ref-
erences to such Act as in effect on May 13, 1993.’’.
(b) EFFECTIVE DATE.—The amendment made by
this section shall apply to taxable years beginning after
the date of the enactment of this Act.
SEC. 1342. TAX-FREE REORGANIZATION OF SPECIALIZED
SMALL BUSINESS INVESTMENT COMPANY AS
A PARTNERSHIP.
(a) IN GENERAL.—If, within 180 days after the date
of the enactment of this Act, a corporation which is a spe-
cialized small business investment company transfers sub-
stantially all of its assets to a partnership (including its
license to operate as a specialized small business invest-
ment company) solely in exchange for partnership inter-
ests in such partnership, no gain or loss shall be recog-
nized to the corporation on such a transfer if—
392
(1) immediately after such exchange, such cor-
poration holds partnership interests in such partner-
ship having a value equal to at least 80 percent of
the total value of all partnership interests in such
partnership, and
(2) before the 90th day after such exchange,
such corporation transfers all partnership interests
held by the corporation in such partnership, and all
remaining assets of the corporation, to its share-
holders in the complete liquidation of such corpora-
tion.
(b) NONRECOGNITION OF GAIN OR LOSS TO COR-
PORATION ON DISTRIBUTION OF PARTNERSHIP INTER-
ESTS.—In the case of any distribution of a partnership
interest acquired by the liquidating corporation in an ex-
change to which subsection (a) applies—
(1) no gain or loss shall be recognized to the
liquidating corporation by reason of such distribu-
tion, and
(2) such distribution shall not be treated as a
sale 
or 
exchange 
for 
purposes 
of 
section
708(b)(1)(B) of the Internal Revenue Code of 1986.
(c) GAIN RECOGNIZED BY SHAREHOLDERS ON RE-
CEIPT OF PROPERTY OTHER THAN PARTNERSHIP INTER-
ESTS.—
393
(1) IN GENERAL.—No gain or loss shall be rec-
ognized to a shareholder of a corporation on the
transfer of such shareholder’s stock in such corpora-
tion to such corporation solely in exchange for a
partnership interest in the partnership referred to in
subsection (a)(1).
(2) RECEIPT OF PROPERTY.—If paragraph (1)
would apply to an exchange but for the fact that
there is received, in addition to the partnership in-
terests permitted to be received under paragraph
(1), other property or money, then—
(A) gain (if any) to such recipient shall be
recognized, but not in excess of—
(i) the amount of money received, plus
(ii) the fair market value of such
other property received, and
(B) no loss to such recipient shall be rec-
ognized.
(d) BASIS.—The basis of property received in any ex-
change to which this section applies shall be determined
in accordance with rules similar to the rules of section 358
of the Internal Revenue Code of 1986.
(e) ADDITIONAL REQUIREMENTS.—This section shall
not apply to any specialized small business investment
company unless—
394
(1) such company elects to be subject to tax on
its built-in gains computed in a manner similar to
that provided in section 1374 of such Code (without
regard to any recognition period (as defined in sub-
section (d)(7) thereof)), and
(2) such company distributes all of its accumu-
lated earnings and profits (in distributions to which
section 301 of such Code applies) before its liquida-
tion under this section.
If, after making an election under paragraph (1), a com-
pany ceases to be a specialized small business investment
company, such company shall be treated as having dis-
posed of all of its assets for purposes of applying para-
graph (1).
(f) SPECIALIZED SMALL BUSINESS INVESTMENT
COMPANY.—For purposes of this section, the term ‘‘spe-
cialized small business investment company’’ has the
meaning given to such term by section 1044(c)(3) of such
Code.
395
PART II—ADDITIONAL INCENTIVES RELATED TO
INVESTING IN SPECIALIZED SMALL BUSI-
NESS INVESTMENT COMPANIES
SEC. 1346. EXPANSION OF NONRECOGNITION TREATMENT
FOR SECURITIES GAIN ROLLED OVER INTO
SPECIALIZED SMALL BUSINESS INVESTMENT
COMPANIES.
(a) EXTENSION OF ROLLOVER PERIOD.—Paragraph
(1) of section 1044(a) (relating to nonrecognition of gain)
is amended by striking ‘‘60-day period’’ and inserting
‘‘180-day period’’.
(b) INCREASE OF MAXIMUM EXCLUSION.—
(1) IN GENERAL.—Paragraphs (1) and (2) of
section 1044(b) (relating to limitations) are amend-
ed to read as follows:
‘‘(1) LIMITATION
ON
INDIVIDUALS.—In the
case of an individual, the amount of gain which may
be excluded under subsection (a) for any taxable
year shall not exceed—
‘‘(A) $750,000, reduced by
‘‘(B) the amount of gain excluded under
subsection (a) for all preceding taxable years.
‘‘(2) LIMITATION ON C CORPORATIONS.—In the
case of a C corporation, the amount of gain which
may be excluded under subsection (a) for any tax-
able year shall not exceed—
396
‘‘(A) $2,000,000, reduced by
‘‘(B) the amount of gain excluded under
subsection (a) for all preceding taxable years.’’.
(2) CONFORMING AMENDMENT.—Subparagraph
(A) of section 1044(b)(3) (relating to special rules
for married individuals) is amended to read as fol-
lows:
‘‘(A) SEPARATE RETURNS.—In the case of
a separate return by a married individual, para-
graph (1) shall be applied by substituting
‘$375,000’ for ‘$750,000’.’’.
(c) EXTENSION TO PREFERRED STOCK.—Paragraph
(1) of section 1044(a) is amended by striking ‘‘common’’.
(d) EFFECTIVE DATE.—The amendments made by
this section shall apply to sales occurring after the date
of the enactment of this Act.
SEC. 1347. MODIFICATIONS TO EXCLUSION FOR GAIN FROM
QUALIFIED SMALL BUSINESS STOCK.
(a) IN GENERAL.—Section 1202 (relating to 50-per-
cent exclusion for gain from certain small business stock)
is amended by redesignating subsection (k) as subsection
(l) and by inserting after subsection (j) the following new
subsection:
‘‘(k) SPECIAL RULES
FOR SPECIALIZED SMALL
BUSINESS INVESTMENT COMPANIES.—
397
‘‘(1) INCREASE
IN
EXCLUSION.—In the case
of—
‘‘(A) the sale or exchange of stock in a
specialized small business investment company,
and
‘‘(B) any amount treated under subsection
(g) as gain described in subsection (a) by rea-
son of the sale or exchange of stock in a spe-
cialized small business investment company,
subsection (a) shall be applied by substituting ‘60
percent’ for ‘50 percent’.
‘‘(2) WAIVER OF ACTIVE BUSINESS REQUIRE-
MENT.—Notwithstanding any provision of subsection
(e), a corporation shall be treated as meeting the ac-
tive business requirements of such subsection for
any period during which such corporation qualifies
as a specialized small business investment company.
‘‘(3) SPECIALIZED
SMALL
BUSINESS
INVEST-
MENT COMPANY.—For purposes of this section, the
term ‘specialized small business investment com-
pany’ means any eligible corporation (as defined in
subsection (e)(4)) which is licensed to operate under
section 301(d) of the Small Business Investment Act
of 1958 (as in effect on May 13, 1993).’’.
398
(b) CONFORMING AMENDMENT.—Section 1202(c)(2)
is amended to read as follows:
‘‘(2) ACTIVE BUSINESS REQUIREMENT, ETC.—
Stock in a corporation shall not be treated as quali-
fied small business stock unless, during substantially
all of the taxpayer’s holding period for such stock,
such corporation meets the active business require-
ments of subsection (e) and such corporation is a C
corporation.’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to sales and exchanges occurring
after the date of the enactment of this Act.
Subtitle F—Other Provisions
SEC. 1351. INCREASE IN VOLUME CAP ON PRIVATE ACTIV-
ITY BONDS.
(a) IN GENERAL.—Subsection (d) of section 146 (re-
lating to volume cap) is amended by striking paragraph
(2), by redesignating paragraphs (3) and (4) as para-
graphs (2) and (3), respectively, and by striking para-
graph (1) and inserting the following new paragraph:
‘‘(1) IN GENERAL.—The State ceiling applicable
to any State for any calendar year shall be the
greater of—
‘‘(A) an amount equal to $75 multiplied by
the State population, or
399
‘‘(B) $225,000,000.
Subparagraph (B) shall not apply to any possession
of the United States.’’.
(b) CONFORMING AMENDMENT.—Sections 25(f)(3)
and 42(h)(3)(E)(iii) are each amended by striking ‘‘sec-
tion 146(d)(3)(C)’’ and inserting ‘‘section 146(d)(2)(C)’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to calendar years after 1999.
SEC. 1352. TAX TREATMENT OF ALASKA NATIVE SETTLE-
MENT TRUSTS.
(a) IN GENERAL.—Subpart A of part I of subchapter
J of chapter 1 (relating to general rules for taxation of
trusts and estates) is amended by adding at the end the
following new section:
‘‘SEC. 
646. 
ELECTING 
ALASKA 
NATIVE 
SETTLEMENT
TRUSTS.
‘‘(a) IN GENERAL.—Except as otherwise provided in
this section, the provisions of this subchapter and section
1(e) shall apply to all Settlement Trusts.
‘‘(b) BENEFICIARIES
OF ELECTING TRUST NOT
TAXED ON CONTRIBUTIONS.—
‘‘(1) IN GENERAL.—In the case of a Settlement
Trust for which an election under paragraph (2) is
in effect for any taxable year, no amount shall be in-
cludible in the gross income of a beneficiary of the
400
Settlement Trust by reason of a contribution to the
Settlement Trust made during such taxable year.
‘‘(2) ONE-TIME ELECTION.—
‘‘(A) IN
GENERAL.—A Settlement Trust
may elect to have the provisions of this section
apply to the trust and its beneficiaries.
‘‘(B) TIME AND METHOD OF ELECTION.—
An election under subparagraph (A) shall be
made—
‘‘(i) before the due date (including ex-
tensions) for filing the Settlement Trust’s
return of tax for the 1st taxable year of
the Settlement Trust ending after Decem-
ber 31, 1999, and
‘‘(ii) by attaching to such return of
tax a statement specifically providing for
such election.
‘‘(C) PERIOD ELECTION IN EFFECT.—Ex-
cept as provided in paragraph (3), an election
under subparagraph (A)—
‘‘(i) shall apply to the 1st taxable year
described in subparagraph (B)(i) and all
subsequent taxable years, and
‘‘(ii) may not be revoked once it is
made.
401
‘‘(c) SPECIAL RULES WHERE TRANSFER RESTRIC-
TIONS MODIFIED.—
‘‘(1) TRANSFER OF BENEFICIAL INTERESTS.—
If, at any time, a beneficial interest in a Settlement
Trust may be disposed of to a person in a manner
which would not be permitted by section 7(h) of the
Alaska Native Claims Settlement Act (43 U.S.C.
1606(h)) if the interest were Settlement Common
Stock—
‘‘(A) no election may be made under sub-
section (b)(2) with respect to such trust, and
‘‘(B) if such an election is in effect as of
such time, such election shall cease to apply for
purposes of subsection (b)(1) as of the 1st day
of the taxable year following the taxable year in
which such disposition is first permitted.
‘‘(2) STOCK IN CORPORATION.—If—
‘‘(A) the Settlement Common Stock in any
Native Corporation which transferred assets to
a Settlement Trust making an election under
subsection (b)(2) may be disposed of to a per-
son in a manner not permitted by section 7(h)
of the Alaska Native Claims Settlement Act (43
U.S.C. 1606(h)), and
402
‘‘(B) at any time after such disposition of
stock is first permitted, such corporation trans-
fers assets to such trust,
subparagraph (B) of paragraph (1) shall be applied
to such trust on and after the date of the transfer
in the same manner as if the trust permitted dis-
positions of beneficial interests in the trust in a
manner not permitted by such section 7(h).
‘‘(c) TAX TREATMENT OF DISTRIBUTIONS TO BENE-
FICIARIES.—
‘‘(1) IN GENERAL.—In the case of a Settlement
Trust for which an election under subsection (b)(2)
is in effect for any taxable year, any distribution to
a beneficiary shall be included in gross income of the
beneficiary as ordinary income to the extent such
distribution reduces the earnings and profits of any
Native Corporation making a contribution to such
Trust.
‘‘(2) EARNINGS AND PROFITS.—The earnings
and profits of any Native Corporation making a con-
tribution to a Settlement Trust shall not be reduced
on account thereof at the time of such contribution,
but such earnings and profits shall be reduced (up
to the amount of such contribution) as distributions
403
are thereafter made by the Settlement Trust which
exceed the sum of—
‘‘(A) such Trust’s total undistributed net
income for all prior years during which an elec-
tion under subsection (b)(2) is in effect, and
‘‘(B) such Trust’s distributable net income.
‘‘(d) DEFINITIONS.—For purposes of this section—
‘‘(1) NATIVE CORPORATION.—The term ‘Native
Corporation’ has the meaning given such term by
section 3(m) of the Alaska Native Claims Settlement
Act (43 U.S.C. 1602(m)).
‘‘(2) SETTLEMENT TRUST.—The term ‘Settle-
ment Trust’ means a trust which constitutes a Set-
tlement Trust under section 39 of the Alaska Native
Claims Settlement Act (43 U.S.C. 1629e).’’.
(b) WITHHOLDING ON DISTRIBUTIONS BY ELECTING
ANCSA SETTLEMENT TRUSTS.—Section 3402 is amend-
ed by adding at the end the following new subsection:
‘‘(t) TAX WITHHOLDING
ON DISTRIBUTIONS
BY
ELECTING ANCSA SETTLEMENT TRUSTS.—
‘‘(1) IN GENERAL.—Any Settlement Trust (as
defined in section 646(d)) for which an election
under section 646(b)(2) is in effect (in this sub-
section referred to as an ‘electing trust’) and which
makes a payment to any beneficiary which is includ-
404
able in gross income under section 646(c) shall de-
duct and withhold from such payment a tax in an
amount equal to such payment’s proportionate share
of the annualized tax.
‘‘(2) EXCEPTION.—The tax imposed by para-
graph (1) shall not apply to any payment to the ex-
tent that such payment, when annualized, does not
exceed an amount equal to the amount in effect
under section 6012(a)(1)(A)(i) for taxable years be-
ginning in the calendar year in which the payment
is made.
‘‘(3) ANNUALIZED TAX.—For purposes of para-
graph (1), the term ‘annualized tax’ means, with re-
spect to any payment, the amount of tax which
would be imposed by section 1(c) (determined with-
out regard to any rate of tax in excess of 31 per-
cent) on an amount of taxable income equal to the
excess of—
‘‘(A) the annualized amount of such pay-
ment, over
‘‘(B) the amount determined under para-
graph (2).
‘‘(4) ANNUALIZATION.—For purposes of this
subsection, amounts shall be annualized in the man-
ner prescribed by the Secretary.
405
‘‘(5) 
ALTERNATE
WITHHOLDING
PROCE-
DURES.—At the election of an electing trust, the tax
imposed by this subsection on any payment made by
such trust shall be determined in accordance with
such tables or computational procedures as may be
specified in regulations prescribed by the Secretary
(in lieu of in accordance with paragraphs (2) and
(3)).
‘‘(6) COORDINATION WITH OTHER SECTIONS.—
For purposes of this chapter and so much of subtitle
F as relates to this chapter, payments which are
subject to withholding under this subsection shall be
treated as if they were wages paid by an employer
to an employee.’’.
(c) REPORTING.—Section 6041 is amended by adding
at the end the following new subsection:
‘‘(f) APPLICATION TO ALASKA NATIVE SETTLEMENT
TRUSTS.—In the case of any distribution from a Settle-
ment Trust (as defined in section 646(d)) to a beneficiary
which is includable in gross income under section 646(c),
this section shall apply, except that—
‘‘(1) this section shall apply to such distribution
without regard to the amount thereof,
‘‘(2) the Settlement Trust shall include on any
return or statement required by this section infor-
406
mation as to the character of such distribution (if
applicable) and the amount of tax imposed by chap-
ter 1 which has been deducted and withheld from
such distribution, and
‘‘(3) the filing of any return or statement re-
quired by this section shall satisfy any requirement
to file any other form or schedule under this title
with respect to distributive share information (in-
cluding any form or schedule to be included with the
trust’s tax return).’’.
(d) CLERICAL AMENDMENT.—The table of sections
for subpart A of part I of subchapter J of chapter 1 is
amended by adding at the end the following new item:
‘‘Sec. 646. Electing Alaska Native Settlement Trusts.’’.
(e) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years of Settlement
Trusts ending after December 31, 1999, and to contribu-
tions to such trusts after such date.
SEC. 1353. INCREASE IN THRESHOLD FOR JOINT COM-
MITTEE REPORTS ON REFUNDS AND CRED-
ITS.
(a) GENERAL RULE.—Subsections (a) and (b) of sec-
tion 6405 are each amended by striking ‘‘$1,000,000’’ and
inserting ‘‘$2,000,000’’.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall take effect on the date of the enact-
407
ment of this Act, except that such amendment shall not
apply with respect to any refund or credit with respect
to a report that has been made before such date of the
enactment under section 6405 of the Internal Revenue
Code of 1986.
SEC. 1354. CLARIFICATION OF DEPRECIATION STUDY.
Paragraph (1) of section 2022 of the Tax and Trade
Relief Extension Act of 1998 (Public Law 105–277; 112
Stat. 2681-903) is amended by inserting after ‘‘1986,’’ the
following: ‘‘including such periods and methods applicable
to section 1250 property used in connection with a fran-
chise (within the meaning of section 1253) and owned by
the franchisee,’’.
Subtitle G—Tax Court Provisions
SEC. 1361. TAX COURT FILING FEE IN ALL CASES COM-
MENCED BY FILING PETITION.
(a) IN GENERAL.—Section 7451 (relating to fee for
filing a Tax Court petition) is amended by striking all that
follows ‘‘petition’’ and inserting a period.
(b) EFFECTIVE DATE.—The amendment made by
this section shall take effect on the date of the enactment
of this Act.
408
SEC. 1362. EXPANDED USE OF TAX COURT PRACTICE FEE.
Subsection (b) of section 7475 (relating to use of
fees) is amended by inserting before the period at the end
‘‘and to provide services to pro se taxpayers’’.
SEC. 1363. CONFIRMATION OF AUTHORITY OF TAX COURT
TO 
APPLY 
DOCTRINE 
OF 
EQUITABLE
RECOUPMENT.
(a) CONFIRMATION OF AUTHORITY OF TAX COURT
TO APPLY DOCTRINE OF EQUITABLE RECOUPMENT.—
Subsection (b) of section 6214 (relating to jurisdiction
over other years and quarters) is amended by adding at
the end the following new sentence: ‘‘Notwithstanding the
preceding sentence, the Tax Court may apply the doctrine
of equitable recoupment to the same extent that it is avail-
able in civil tax cases before the district courts of the
United States and the United States Court of Federal
Claims.’’.
(b) EFFECTIVE DATE.—The amendments made by
this section shall apply to any action or proceeding in the
Tax Court with respect to which a decision has not become
final (as determined under section 7481 of the Internal
Revenue Code of 1986) as of the date of the enactment
of this Act.
420
(A) by inserting ‘‘, warehouseman, proc-
essor, or bonded dealer’’ after ‘‘distiller’’, and
(B) by inserting ‘‘or possessed’’ after ‘‘dis-
tilled’’.
(7) Sections 5180 and 5681 are repealed.
(b) CLERICAL AMENDMENTS.—
(1) The table of sections for subchapter B of
chapter 51 is amended by striking the item relating
to section 5180.
(2) The table of sections for part IV of sub-
chapter J of chapter 51 is amended by striking the
item relating to section 5681.
SEC. 1378. COOPERATIVE AGREEMENTS.
(a) STUDY.—The Secretary of the Treasury shall
study and report to Congress concerning possible adminis-
trative efficiencies which could inure to the benefit of the
Federal Government of cooperative agreements with
States regarding the collection of distilled spirits excise
taxes. Such study shall include, but not be limited to, pos-
sible benefits of the standardization of forms and collec-
tion procedures and shall be submitted 1 year after the
date of the enactment of this Act.
(b) COOPERATIVE AGREEMENT.—The Secretary of
the Treasury is authorized to enter into such cooperative
agreements with States which the Secretary deems will in-