I
104TH CONGRESS
2D SESSION
H. R. 3999
To ensure that the States have sufficient funds to assure the effectiveness
of the work requirements of the program of block grants for temporary
assistance for needy families, to provide such funds through tax reforms,
and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
AUGUST 2, 1996
Mr. OBEY introduced the following bill; which was referred to the Committee
on Ways and Means and in addition to the Committee on Science, for
a period to be subsequently determined by the Speaker, in each case for
consideration of such provisions as fall within the jurisdiction of the Com-
mittee concerned
A BILL
To ensure that the States have sufficient funds to assure
the effectiveness of the work requirements of the pro-
gram of block grants for temporary assistance for needy
families, to provide such funds through tax reforms, and
for other purposes.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘Making Work Require-
ments Work Act of 1996’’.
TITLE 
I—GRANTS 
TO 
STATES
FOR OPERATION OF WORK
PROGRAMS
SEC. 101. GRANTS TO STATES FOR OPERATION OF WORK
PROGRAMS.
(a) IN GENERAL.—Section 403(a) of the Social Secu-
rity Act, as amended by the Personal Responsibility and
Work Opportunity Reconciliation Act of 1996, is amended
by adding at the end the following:
‘‘(5) SUPPLEMENTAL GRANT FOR OPERATION
OF WORK PROGRAM.—
‘‘(A) GRANTS.—Each eligible State shall
be entitled to receive from the Secretary for
each of fiscal years 1997 through 2002 a grant
for the purpose of enabling the State to comply
with section 407.
‘‘(B) AMOUNT OF GRANT.—The amount of
the grant to be made to a State for any fiscal
year under subparagraph (A) shall be the
amount that bears the same ratio to the
amount specified in subparagraph (C) for the
fiscal year as the number of families that the
Secretary estimates will be eligible to receive as-
sistance during the fiscal year under the State
program funded under this part that include an
adult or a minor child head of household who
may be required to engage in work pursuant to
section 407 bears to the number of such fami-
lies that the Secretary estimates will be eligible
to receive assistance during the fiscal year
under all State programs funded under this
part.
‘‘(C) APPROPRIATIONS.—
‘‘(i) IN GENERAL.—Out of any money
in the Treasury of the United States not
otherwise appropriated, there are appro-
priated for grants under this paragraph—
‘‘(I) $178,000,000 for fiscal year
1997;
‘‘(II) $283,000,000 for fiscal
year 1998;
‘‘(III) $898,000,000 for fiscal
year 1999;
‘‘(IV) $1,260,000,000 for fiscal
year 2000;
‘‘(V) $1,622,000,000 for fiscal
year 2001; and
‘‘(VI) $2,033,000,000 for fiscal
year 2002.
‘‘(ii) AVAILABILITY.—Amounts appro-
priated pursuant to clause (i) shall remain
available until expended.’’.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) of this section shall take effect as if in-
cluded in section 103(a)(1) of the Personal Responsibility
and Work Opportunity Reconciliation Act of 1996 on the
date of the enactment of such Act.
TITLE II—REVENUE OFFSETS
SEC. 200. AMENDMENT OF 1986 CODE; TABLE OF CON-
TENTS.
(a) AMENDMENT OF 1986 CODE.—Except as other-
wise expressly provided, whenever in this title an amend-
ment or repeal is expressed in terms of an amendment
to, or repeal of, a section or other provision, the reference
shall be considered to be made to a section or other provi-
sion of the Internal Revenue Code of 1986.
(b) TABLE OF CONTENTS.—
TITLE II—REVENUE OFFSETS
Sec. 200. Amendment of 1986 Code; table of contents.
Subtitle A—Corporate Reforms
Sec. 201. Repeal of percentage depletion for certain nonfuel minerals mined on
Federal lands.
Subtitle B—Foreign Provisions
Sec. 202. Definition of foreign personal holding company income.
Sec. 203. Modification to foreign tax credit carryback and carryover periods.
Sec. 204. Modifications of foreign tax credit rules applicable to dual capacity
taxpayers.
Sec. 205. Rules relating to foreign oil and gas income.
Subtitle C—Accounting Provisions
Sec. 206. Termination of suspense accounts for family corporations required to
use accrual method of accounting.
Subtitle A—Corporate Reforms
SEC. 201. REPEAL OF PERCENTAGE DEPLETION FOR CER-
TAIN NONFUEL MINERALS MINED ON FED-
ERAL LANDS.
(a) IN GENERAL.—Section 613 (relating to percent-
age depletion) is amended by adding at the end the follow-
ing new subsection:
‘‘(f) DENIAL OF PERCENTAGE DEPLETION FOR CER-
TAIN
NONFUEL
MINERALS
MINED
ON
FEDERAL
LANDS.—
‘‘(1) IN GENERAL.—In the case of any applica-
ble nonfuel mineral, the allowance for depletion shall
be computed without reference to this section.
‘‘(2) APPLICABLE
NONFUEL
MINERAL.—For
purposes of this subsection, the term ‘applicable
nonfuel mineral’ means any mineral which—
‘‘(A) is subject to a mining claim under
chapter six of title XXXII of the Revised Stat-
utes (commonly referred to as the ‘General
Mining Law of 1872’, 30 U.S.C. 21 et seq.), or
‘‘(B) was originally acquired (whether or
not by the taxpayer) pursuant to a patent
granted under such chapter.’’
option contracts, or similar financial instru-
ments (including notional principal contracts),
there shall not be taken into account in comput-
ing foreign personal holding income any item of
income, gain, deduction, or loss from any trans-
action (including hedging transactions) entered
into in the ordinary course of such dealer’s
trade or business as such a dealer.’’
(3) CONFORMING AMENDMENT.—Subparagraph
(B) of section 954(c)(1) is amended—
(A) by striking the second sentence, and
(B) by striking ‘‘also’’ in the last sentence.
(b) PAYMENTS IN LIEU OF DIVIDENDS.—Paragraph
(1) of section 954(c), as amended by subsection (a), is
amended by adding at the end the following new subpara-
graph:
‘‘(G) PAYMENTS IN LIEU OF DIVIDENDS.—
Payments in lieu of dividends which are made
pursuant to an agreement to which section
1058 applies.’’
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
the date of the enactment of this Act.
SEC. 
203. 
MODIFICATION 
TO 
FOREIGN 
TAX 
CREDIT
CARRYBACK AND CARRYOVER PERIODS.
(a) IN GENERAL.—Subsection (c) of section 904 (re-
lating to limitation on credit) is amended—
(1) by striking ‘‘in the second preceding taxable
year,’’, and
(2) by striking ‘‘or fifth’’ and inserting ‘‘fifth,
sixth, or seventh’’.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall apply to credits arising in taxable
years beginning after December 31, 1996.
SEC. 204. MODIFICATIONS OF FOREIGN TAX CREDIT RULES
APPLICABLE TO DUAL CAPACITY TAXPAYERS.
(a) IN GENERAL.—Section 901 (relating to credit for
taxes of foreign countries and of possessions of the United
States) is amended by redesignating subsection (k) as sub-
section (l) and by inserting after subsection (j) the follow-
ing new subsection:
‘‘(k) SPECIAL RULES RELATING TO DUAL CAPACITY
TAXPAYERS.—
‘‘(1) GENERAL
RULE.—Notwithstanding any
other provision of this chapter, any amount paid or
accrued by a dual capacity taxpayer to a foreign
country or possession of the United States for any
period shall not be considered a tax—
‘‘(A) if, for such period, the foreign coun-
try or possession does not impose a generally
applicable income tax, or
‘‘(B) to the extent such amount exceeds
the amount (determined in accordance with reg-
ulations) which—
‘‘(i) is paid by such dual capacity tax-
payer pursuant to the generally applicable
income tax imposed by the country or pos-
session, or
‘‘(ii) would be paid if the generally ap-
plicable income tax imposed by the country
or possession were applicable to such dual
capacity taxpayer.
Nothing in this paragraph shall be construed to
imply the proper treatment of any such amount
not in excess of the amount determined under
subparagraph (B).
‘‘(2) DUAL
CAPACITY
TAXPAYER.—For pur-
poses of this subsection, the term ‘dual capacity tax-
payer’ means, with respect to any foreign country or
possession of the United States, a person who—
‘‘(A) is subject to a levy of such country or
possession, and
‘‘(B) receives (or will receive) directly or
indirectly a specific economic benefit (as deter-
mined in accordance with regulations) from
such country or possession.
‘‘(3) GENERALLY APPLICABLE INCOME TAX.—
For purposes of this subsection—
‘‘(A) IN GENERAL.—The term ‘generally
applicable income tax’ means an income tax (or
a series of income taxes) which is generally im-
posed under the laws of a foreign country or
possession on income derived from the conduct
of a trade or business within such country or
possession.
‘‘(B) EXCEPTIONS.—Such term shall not
include a tax unless it has substantial applica-
tion, by its terms and in practice, to—
‘‘(i) persons who are not dual capacity
taxpayers, and
‘‘(ii) persons who are citizens or resi-
dents of the foreign country or posses-
sion.’’
(b) EFFECTIVE DATE.—
(1) IN GENERAL.—The amendments made by
this section shall apply to taxes paid or accrued in
taxable years beginning after the date of the enact-
ment of this Act.
(2) 
CONTRARY
TREATY
OBLIGATIONS
UPHELD.—The amendments made by this section
shall not apply to the extent contrary to any treaty
obligation of the United States.
SEC. 205. RULES RELATING TO FOREIGN OIL AND GAS IN-
COME.
(a) SEPARATE BASKET FOR FOREIGN TAX CRED-
IT.—
(1) IN
GENERAL.—Paragraph (1) of section
904(d) (relating to separate application of section
with respect to certain categories of income) is
amended by striking ‘‘and’’ at the end of subpara-
graph (H), by redesignating subparagraph (I) as
subparagraph (J), and by inserting after subpara-
graph (H) the following new subparagraph:
‘‘(I) foreign oil and gas income, and’’.
(2) DEFINITION.—Paragraph (2) of section
904(d) is amended by redesignating subparagraphs
(H) and (I) as subparagraphs (I) and (J), respec-
tively, and by inserting after subparagraph (G) the
following new subparagraph:
‘‘(H) FOREIGN OIL AND GAS INCOME.—
The term ‘foreign oil and gas income’ has the
meaning given such term by section 954(g).’’
(3) CONFORMING AMENDMENTS.—
(A) Section 904(d)(3)(F)(i) is amended by
striking ‘‘or (E)’’ and inserting ‘‘(E), or (I)’’.
(B) Section 907(a) is hereby repealed.
(C) Section 907(c)(4) is hereby repealed.
(D) Section 907(f) is hereby repealed.
(4) EFFECTIVE DATES.—
(A) IN GENERAL.—The amendments made
by this section shall apply to taxable years be-
ginning after the date of the enactment of this
Act.
(B) TRANSITIONAL RULES.—
(i) SEPARATE BASKET TREATMENT.—
Any taxes paid or accrued in a taxable
year beginning on or before the date of the
enactment of this Act, with respect to in-
come which was described in subparagraph
(I) of section 904(d)(1) of such Code (as
in effect on the day before the date of the
enactment of this Act), shall be treated as
taxes paid or accrued with respect to for-
eign oil and gas income to the extent the
taxpayer establishes to the satisfaction of
the Secretary of the Treasury that such
taxes were paid or accrued with respect to
foreign oil and gas income.
(ii) CARRYOVERS.—Any unused oil
and gas extraction taxes which under sec-
tion 907(f) of such Code (as so in effect)
would have been allowable as a carryover
to the taxpayer’s first taxable year begin-
ning after the date of the enactment of
this Act (without regard to the limitation
of paragraph (2) of such section 907(f) for
first taxable year) shall be allowed as
carryovers under section 904(c) of such
Code in the same manner as if such taxes
were unused taxes under such section
904(c) with respect to foreign oil and gas
extraction income.
(iii) LOSSES.—The amendment made
by paragraph (3)(C) shall not apply to for-
eign oil and gas extraction losses arising in
taxable years beginning on or before the
date of the enactment of this Act.
(b) ELIMINATION OF DEFERRAL FOR FOREIGN OIL
AND GAS EXTRACTION INCOME.—
(1) GENERAL RULE.—Paragraph (1) of section
954(g) (defining foreign base company oil related in-
come) is amended to read as follows:
‘‘(1) IN GENERAL.—Except as otherwise pro-
vided in this subsection, the term ‘foreign oil and
gas income’ means any income of a kind which
would be taken into account in determining the
amount of—
‘‘(A) foreign oil and gas extraction income
(as defined in section 907(c)), or
‘‘(B) foreign oil related income (as defined
in section 907(c)).’’
(2) CONFORMING AMENDMENTS.—
(A) Subsections (a)(5), (b)(5), and (b)(8)
of section 954 are each amended by striking
‘‘base company oil related income’’ each place it
appears (including in the heading of subsection
(b)(8)) and inserting ‘‘oil and gas income’’.
(B) Subsection (b)(4) of section 954 is
amended by striking ‘‘base company oil-related
income’’ and inserting ‘‘oil and gas income’’.
(C) The subsection heading for subsection
(g) of section 954 is amended by striking
‘‘FOREIGN BASE COMPANY OIL RELATED IN-
COME’’ and inserting ‘‘FOREIGN OIL AND GAS
INCOME’’.
(D) Subparagraph (A) of section 954(g)(2)
is amended by striking ‘‘foreign base company
oil related income’’ and inserting ‘‘foreign oil
and gas income’’.
(3) EFFECTIVE DATE.—The amendments made
by this subsection shall apply to taxable years of for-
eign corporations beginning after the date of the en-
actment of this Act, and to taxable years of United
States shareholders ending with or within such tax-
able years of foreign corporations.
Subtitle C—Accounting Provisions
SEC. 206. TERMINATION OF SUSPENSE ACCOUNTS FOR
FAMILY CORPORATIONS REQUIRED TO USE
ACCRUAL METHOD OF ACCOUNTING.
(a) IN GENERAL.—Subsection (i) of section 447 (re-
lating to method of accounting for corporations engaged
in farming) is amended by adding at the end the following
new paragraph:
‘‘(7) TERMINATION.—
‘‘(A) IN GENERAL.—No suspense account
may be established under this subsection by any
corporation required by this section to change
its method of accounting for any taxable year
ending after September 13, 1996.
‘‘(B) 10-YEAR
PHASEOUT
OF
EXISTING
SUSPENSE ACCOUNTS.—Each suspense account
under this subsection shall be reduced (but not
below zero) for each of the first 10 taxable
years beginning after September 13, 1995, by
an amount equal to the applicable portion of
such account. Any reduction in a suspense ac-
count under this paragraph shall be included in
gross income for the taxable year of the reduc-
tion. The amount of the reduction required
under this paragraph for any taxable year shall
be reduced (but not below zero) by the amount
of any reduction required for such taxable year
under any other provision of this subsection.
‘‘(C) APPLICABLE
PORTION.—For pur-
poses of subparagraph (B), the term ‘applicable
portion’ means, for any taxable year, the
amount which would ratably reduce the amount
in the account (after taking into account prior
reductions) to zero over the period consisting of
such taxable year and the remaining taxable
years in such first 10 taxable years.’’
(b) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years ending after Sep-
tember 13, 1996.
TITLE III—REPEAL OF PROTO-
TYPE 
DEMONSTRATION 
OF
ADVANCED NUCLEAR REAC-
TOR TECHNOLOGY
SEC. 301. Sections 13493, 13494, and 13495 of the
Energy Policy Act of 1992, Public Law 102–486, part C,
42 U.S.C. 13493, 13494, and 13495) are hereby repealed.
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