409
Subtitle H—Tax-Free Transfer of
Bottled 
Distilled 
Spirits 
to
Bonded Dealers
SEC. 1371. TAX-FREE TRANSFER OF BOTTLED DISTILLED
SPIRITS FROM DISTILLED SPIRITS PLANT TO
BONDED DEALER.
(a) DOMESTIC BOTTLED DISTILLED SPIRITS.—
(1) IN GENERAL.—The last sentence of section
5212 is amended by inserting before the period ‘‘and
shall not apply to bottled distilled spirits transferred
from a distilled spirits plant (other than a bonded
dealer) to a bonded dealer if the proprietor of such
plant notifies (in such form and manner as the Sec-
retary prescribes by regulations) such bonded dealer
of the amount of tax determined on the distilled
spirits so transferred’’.
(2) TRANSFER OF LIABILITY CONTINGENT ON
FURNISHING
OF
CERTAIN
INFORMATION.—Para-
graph (2) of section 5005(c) is amended by adding
at the end the following new sentence: ‘‘In the case
of a transfer of bottled distilled spirits from a dis-
tilled spirits plant to a bonded dealer, the preceding
provisions of this subsection shall apply only to the
extent of the amount specified by the proprietor of
410
such plant in accordance with the last sentence of
section 5212.’’.
(b) COMPARABLE TREATMENT FOR IMPORTED BOT-
TLED DISTILLED SPIRITS.—Subsection (a) of section
5232 is amended to read as follows:
‘‘(a) TRANSFER
TO
DISTILLED
SPIRITS
PLANT
WITHOUT PAYMENT OF TAX.—
‘‘(1) IN GENERAL.—Distilled spirits imported
or brought into the United States in bulk containers
may, under such regulations as the Secretary shall
prescribe, be withdrawn from customs custody and
transferred in such bulk containers or by pipeline to
the bonded premises of a distilled spirits plant with-
out payment of the internal revenue tax imposed on
such distilled spirits by section 5001.
‘‘(2) IMPORTED
BOTTLED
DISTILLED
SPIR-
ITS.—The restriction under paragraph (1) to trans-
fers in bulk or by pipeline shall not apply to bottled
distilled spirits transferred from customs custody to
a bonded dealer if the proprietor of the customs
bonded warehouse notifies (in such form and man-
ner as the Secretary prescribes by regulations) such
bonded dealer of the amount of tax determined on
the distilled spirits so transferred.
411
‘‘(3) TRANSFER OF LIABILITY.—The person op-
erating the bonded premises of the distilled spirits
plant to which such spirits are transferred shall be-
come liable for the tax on distilled spirits withdrawn
from customs custody under this section upon re-
lease of the spirits from customs custody, and the
importer, or the person bringing such distilled spirits
into the United States, shall thereupon be relieved of
his liability for such tax. In the case of a transfer
of bottled distilled spirits from a customs bonded
warehouse to a bonded dealer, the preceding sen-
tence shall apply only to the extent of the amount
specified by the proprietor of such warehouse in ac-
cordance with paragraph (2).’’.
(c) PENALTY FOR FALSE OR ERRONEOUS INFORMA-
TION TO BONDED DEALERS.—
(1) IN GENERAL.—Section 5684 is amended by
redesignating subsections (b) and (c) as subsections
(c) and (d), respectively, and inserting after sub-
section (a) the following new subsection:
‘‘(b) FALSE
OR
ERRONEOUS
INFORMATION
TO
BONDED DEALERS.—Any distilled spirits plant or im-
porter which furnishes false or erroneous information to
a bonded dealer relating to the amount of tax determined
on a product, as required under sections 5212 and 5232,
412
shall, in addition to any other penalty imposed by this
title, be liable for a penalty equal to the greater of $1,000
or 5 times the amount of additional tax due on the prod-
uct.’’.
(2) CONFORMING AMENDMENT.—Subsection (c)
of section 5684, as redesignated by paragraph (1),
is amended by striking ‘‘subsection (a)’’ and insert-
ing ‘‘subsections (a) and (b)’’.
SEC. 1372. ESTABLISHMENT OF DISTILLED SPIRITS PLANT.
Section 5171 is amended—
(1) by striking from subsection (a) ‘‘or proc-
essor’’ and inserting ‘‘processor, or bonded dealer’’,
and
(2) by striking from subsection (b) ‘‘or both.’’
and inserting ‘‘as a bonded dealer, or as any com-
bination thereof.’’.
SEC. 1373. DISTILLED SPIRITS PLANTS.
Section 5178(a) is amended by adding at the end the
following new paragraph:
‘‘(5) BONDED DEALER OPERATIONS.—Any per-
son establishing a distilled spirits plant to conduct
operations as a bonded dealer may, as described in
the application for registration—
413
‘‘(A) store distilled spirits in any approved
container on the bonded premises of such plant,
and
‘‘(B) under such regulations as the Sec-
retary shall prescribe, store taxpaid distilled
spirits, beer and wine and such other beverages
and items (products) not subject to tax or regu-
lation under this title on such bonded prem-
ises.’’.
SEC. 1374. BONDED DEALERS.
(a) IN GENERAL.—Subpart A of part I of subchapter
A of chapter 51 (relating to distilled spirits) is amended
by adding at the end the following new section:
‘‘SEC. 5011. ELECTION TO BE TREATED AS BONDED
DEALER.
‘‘(a) ELECTION.—
‘‘(1) IN GENERAL.—Any wholesale dealer, or
any control State entity, may elect to be treated as
a bonded dealer if such wholesale dealer or entity
sells bottled distilled spirits exclusively to 1 or more
of the following: wholesale dealers in liquor, inde-
pendent retail dealers, or other bonded dealers.
‘‘(2) ELECTION
BY
CERTAIN
ENTITIES
NOT
PERMITTED.—
414
‘‘(A) RETAIL
DEALERS.—Except in the
case of a control State entity, the election under
paragraph (1) may not be made by a retail
dealer in liquor.
‘‘(B) 
SMALL
DEALERS.—The 
election
under paragraph (1) may not be made by any
person who is part of a group treated as a sin-
gle taxpayer under section 5061(e)(3) if the
gross receipts of such group from the sale of
distilled spirits during the 12-month period
prior to making such election is less than
$10,000,000.
‘‘(3) CONTROL STATE ENTITIES PERMITTED TO
SELL TO RELATED RETAIL DEALERS.—In the case
of a control State entity, paragraph (1) shall be ap-
plied by substituting ‘retail dealers’ for ‘independent
retail dealers’.
‘‘(b) INDEPENDENT RETAIL DEALER.—For purposes
of subsection (a), the term ‘independent retail dealer’
means, with respect to a bonded dealer, any retail dealer
if—
‘‘(1) the bonded dealer does not have a greater
than 10 percent ownership interest in, or control of,
the retail dealer,
415
‘‘(2) the retail dealer does not have a greater
than 10 percent ownership interest in, or control of,
the bonded dealer, and
‘‘(3) no person has a greater than 10 percent
ownership interest in, or control of, both the bonded
and retail dealer.
For purposes of this subsection, rules similar to the rules
of section 318 shall apply.
‘‘(c) INVENTORY OWNED AT TIME OF ELECTION.—
Any bottled distilled spirits in the inventory of any person
electing under this section to be treated as a bonded dealer
shall not be subject to additional Federal excise tax on
such spirits as a result of the election being in effect to
the extent that the bonded dealer establishes that the Fed-
eral excise tax previously has been determined and paid
at the time the election becomes effective.
‘‘(d) REVOCATION OF ELECTION.—The election made
under this section may be revoked by the bonded dealer
at any time, but once revoked shall not be made again
without the consent of the Secretary. When the election
is revoked, the bonded dealer shall immediately withdraw
the distilled spirits on determination of tax in accordance
with a tax payment procedure established by the Sec-
retary.
416
‘‘(e) APPROVAL OF APPLICATION.—Any application
under section 5171(c) submitted by a person electing to
be treated as a bonded dealer shall be subject to the same
conditions as an application for a basic permit under sec-
tion 204(a)(2) of title 27 of the United States Code (the
Federal Alcohol Administration Act) and shall be accorded
notice and hearing as described in section 204(b) of such
title 27.
‘‘(f) ADDITIONAL TAX.—
‘‘(1) IN GENERAL.—In addition to any other
tax imposed by this chapter, there is hereby imposed
on each bonded dealer a tax for each semimonthly
period under section 5061(d) for which an election
under this section is in effect for such dealer.
‘‘(2) AMOUNT OF TAX.—The tax imposed by
this subsection for any semimonthly period shall be
equal to 1.5 percent of the liability for tax under
sections 5001 and 7652 of such dealer for such
semimonthly period.
‘‘(3) PAYMENT OF TAX.—The tax imposed by
this subsection shall be paid with the return of tax
for such semimonthly period.
‘‘(4) TAXPAYERS
NOT
PAYING
ON
SEMI-
MONTHLY BASIS.—If the taxes referred to in para-
graph (2) are not paid on the basis of semimonthly
417
periods, this subsection shall be applied by sub-
stituting the time such taxes are required to be paid
for such periods.
‘‘(5) TERMINATION.—The tax imposed by this
subsection shall not apply to any semimonthly period
ending after December 31, 2010.’’.
(b) CONFORMING AMENDMENTS.—
(1) Section 5002(a) is amended by adding the
end the following new paragraphs:
‘‘(16) BONDED
DEALER.—The term ‘bonded
dealer’ means any person who has elected under sec-
tion 5011 to be treated as a bonded dealer.
‘‘(17) CONTROL
STATE
ENTITY.—The term
‘control State entity’ means a State or a political
subdivision of a State in which only the State or a
political subdivision thereof is allowed under applica-
ble law to perform distilled spirit operations, or any
instrumentality of such a State or political subdivi-
sion.’’.
(2) The table of sections of subpart A of part
I of subchapter A of chapter 51 and the table of
contents of subtitle E are each amended by adding
at the appropriate places:
‘‘Sec. 5011. Election to be treated as bonded dealer.’’.
418
SEC. 1375. TIME FOR COLLECTING TAX ON DISTILLED SPIR-
ITS.
(a) IN GENERAL.—Section 5061(d) is amended by
adding at the end the following new paragraph:
‘‘(6) ADVANCED PAYMENT OF DISTILLED SPIR-
ITS
TAX
BY
BONDED
DEALERS.—Notwithstanding
the preceding provisions of this subsection, in the
case of any tax imposed by section 5001, 5011(f), or
7652 with respect to a bonded dealer who has an
election under section 5011 in effect on September
20 of any year, any payment which would, but for
this paragraph, be due in October or November of
that year, shall be made on such September 20. No
penalty or interest shall be imposed for the period
after such September 20 and before the due date for
such payment (determined without regard to this
paragraph) to the extent that the tax due exceeds
the payment which would have been due in such Oc-
tober and November had the election under section
5011 been in effect.’’.
(b) PAYMENT BY ELECTRONIC FUND TRANSFER.—
Section 5061(e)(1) is amended by inserting ‘‘and any
bonded dealer,’’ after ‘‘respectively,’’.
419
SEC. 1376. EXEMPTION FROM OCCUPATIONAL TAX NOT AP-
PLICABLE.
Section 5113(a) is amended by adding at the end the
following new sentence: ‘‘The exemption under this sub-
section shall not apply to a proprietor of a distilled spirits
plant whose premises are used for operations of a bonded
dealer.’’.
SEC. 1377. TECHNICAL, CONFORMING, AND CLERICAL
AMENDMENTS.
(a) TECHNICAL AND CONFORMING AMENDMENTS.—
(1) Section 5003(3) is amended by striking
‘‘certain’’.
(2) Subsection (a) of section 5214 is amended
by inserting ‘‘(other than a bonded dealer)’’ after
‘‘distilled spirits plant’’.
(3) Section 5362(b)(5) is amended by adding at
the end the following new sentence: ‘‘This term shall
not apply to premises used for operations as a bond-
ed dealer.’’.
(4) Section 5551(a) is amended by inserting
‘‘bonded dealer,’’ after ‘‘processor,’’ each place it ap-
pears.
(5) Section 5601(a) (2), (3), (4), (5), and (b)
are amended by inserting ‘‘, bonded dealer’’ before
‘‘or processor’’ each place it appears.
(6) Section 5602 is amended—
421
crease the efficient collection of distilled spirits excise
taxes.
SEC. 1379. EFFECTIVE DATE.
(a) IN GENERAL.—Except as otherwise provided in
this section, the amendments made by this subtitle shall
take effect at the beginning of the first calendar quarter
that begins after one hundred and twenty days following
enactment.
(b) AUTHORITY TO ESTABLISH DISTILLED SPIRITS
PLANT.—
(1) IN GENERAL.—The amendments made by
section 1372 of this Act shall take effect on the date
of the enactment of this Act.
(2) DEEMED
QUALIFICATION
IN
CERTAIN
CASES.—Each wholesale dealer—
(A) who is required to file an application
for registration under section 5171(c) of the In-
ternal Revenue Code of 1986,
(B) whose operations are required to be
covered by a basic permit under the Federal Al-
cohol Administration Act (27 U.S.C. 203 and
204) and who has received such a basic permit
as an importer, wholesaler, or both, and
(C) has obtained a bond required under
this subchapter,
422
shall be treated as having such application approved
as of the first day of the first calendar quarter that
begins at least 9 months after the application is filed
until such time as the Secretary or the Secretary’s
delegate takes final action on such application.
(3) CONTROL STATE ENTITIES.—In the case of
a control State entity, paragraph (2) shall be applied
without regard to subparagraph (B) thereof.
(c) EQUITABLE TREATMENT OF BONDED DEALERS
USING LIFO INVENTORY.—The Secretary of the Treas-
ury or the Secretary’s delegate shall provide such rules
as may be necessary to assure that taxpayers using the
last-in first-out method of inventory valuation do not suf-
fer a recapture of their LIFO reserve by reason of making
the election under section 5011 of such Code or by reason
of operating a bonded wine cellar as permitted by section
5351 of such Code.
SEC. 1380. STUDY.
Not later than June 1, 2002, the Secretary of the
Treasury or the Secretary’s delegate shall prepare and
submit to the Congress a report—
(1) on the extent to which (if any) there has
been a decrease in compliance with the provisions of
chapter 51 of the Internal Revenue Code of 1986 by
reason of the amendments made by this subtitle, and
423
(2) on any particular compliance issues in ap-
plying the credit allowable by section 5010 of such
Code under the amendments made by this subtitle.
TITLE XIV—EXTENSIONS OF
EXPIRING PROVISIONS
SEC. 1401. RESEARCH CREDIT.
(a) EXTENSION.—
(1) IN
GENERAL.—Paragraph (1) of section
41(h) (relating to termination) is amended—
(A) by striking ‘‘June 30, 1999’’ and in-
serting ‘‘June 30, 2004’’, and
(B) by striking the material following sub-
paragraph (B).
(2) TECHNICAL
AMENDMENT.—Subparagraph
(D) of section 45C(b)(1) is amended by striking
‘‘June 30, 1999’’ and inserting ‘‘June 30, 2004’’.
(3) EFFECTIVE DATE.—The amendments made
by this subsection shall apply to amounts paid or in-
curred after June 30, 1999.
(b) INCREASE
IN PERCENTAGES UNDER ALTER-
NATIVE INCREMENTAL CREDIT.—
(1) IN GENERAL.—Subparagraph (A) of section
41(c)(4) is amended—
(A) by striking ‘‘1.65 percent’’ and insert-
ing ‘‘2.65 percent’’,
424
(B) by striking ‘‘2.2 percent’’ and inserting
‘‘3.2 percent’’, and
(C) by striking ‘‘2.75 percent’’ and insert-
ing ‘‘3.75 percent’’.
(2) EFFECTIVE DATE.—The amendments made
by this subsection shall apply to taxable years begin-
ning after June 30, 1999.
SEC. 1402. SUBPART F EXEMPTION FOR ACTIVE FINANCING
INCOME.
(a) 
IN
GENERAL.—Sections 
953(e)(10) 
and
954(h)(9) are each amended—
(1) by striking ‘‘the first taxable year’’ and in-
serting ‘‘taxable years’’, and
(2) by striking ‘‘January 1, 2000’’ and insert-
ing ‘‘January 1, 2005’’.
(b) EFFECTIVE DATE.—The amendment made by
this section shall apply to taxable years beginning after
December 31, 1999.
SEC. 1403. TAXABLE INCOME LIMIT ON PERCENTAGE DE-
PLETION FOR MARGINAL PRODUCTION.
(a) IN GENERAL.—Subparagraph (H) of section
613A(c)(6) is amended by striking ‘‘January 1, 2000’’ and
inserting ‘‘January 1, 2005’’.
425
(b) EFFECTIVE DATE.—The amendment made by
this section shall apply to taxable years beginning after
December 31, 1999.
SEC. 1404. WORK OPPORTUNITY CREDIT AND WELFARE-TO-
WORK CREDIT.
(a) TEMPORARY EXTENSION.—Sections 51(c)(4)(B)
and 51A(f) (relating to termination) are each amended by
striking ‘‘June 30, 1999’’ and inserting ‘‘December 31,
2001’’.
(b) CLARIFICATION OF FIRST YEAR OF EMPLOY-
MENT.—Paragraph (2) of section 51(i) is amended by
striking ‘‘during which he was not a member of a targeted
group’’.
(c) ELECTRONIC FILING OF CERTIFICATION.—Not
later than July 1, 2001, the Secretary of the Treasury
or the Secretary’s delegate shall provide an electronic for-
mat by which employers may submit requests to des-
ignated local agencies (as defined in section 51(d)(11) of
the Internal Revenue Code of 1986) for certifications that
individuals are members of targeted groups for purposes
of section 51 of such Code.
(d) EFFECTIVE DATE.—The amendments made by
this section shall apply to individuals who begin work for
the employer after June 30, 1999.
426
TITLE XV—REVENUE OFFSETS
SEC. 1501. RETURNS RELATING TO CANCELLATIONS OF IN-
DEBTEDNESS BY ORGANIZATIONS LENDING
MONEY.
(a) 
IN
GENERAL.—Paragraph 
(2) 
of 
section
6050P(c) (relating to definitions and special rules) is
amended by striking ‘‘and’’ at the end of subparagraph
(B), by striking the period at the end of subparagraph
(C) and inserting ‘‘, and’’, and by inserting after subpara-
graph (C) the following new subparagraph:
‘‘(D) any organization a significant trade
or business of which is the lending of money.’’.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall apply to discharges of indebtedness
after December 31, 1999.
SEC. 1502. EXTENSION OF INTERNAL REVENUE SERVICE
USER FEES.
(a) IN GENERAL.—Chapter 77 (relating to miscella-
neous provisions) is amended by adding at the end the
following new section:
‘‘SEC. 7527. INTERNAL REVENUE SERVICE USER FEES.
‘‘(a) GENERAL RULE.—The Secretary shall establish
a program requiring the payment of user fees for—
427
‘‘(1) requests to the Internal Revenue Service
for ruling letters, opinion letters, and determination
letters, and
‘‘(2) other similar requests.
‘‘(b) PROGRAM CRITERIA.—
‘‘(1) IN GENERAL.—The fees charged under the
program required by subsection (a)—
‘‘(A) shall vary according to categories (or
subcategories) established by the Secretary,
‘‘(B) shall be determined after taking into
account the average time for (and difficulty of)
complying with requests in each category (and
subcategory), and
‘‘(C) shall be payable in advance.
‘‘(2) EXEMPTIONS, ETC.—The Secretary shall
provide for such exemptions (and reduced fees)
under such program as the Secretary determines to
be appropriate.
‘‘(3) AVERAGE FEE REQUIREMENT.—The aver-
age fee charged under the program required by sub-
section (a) shall not be less than the amount deter-
mined under the following table:
‘‘Category:
Average Fee:
Employee plan ruling and opinion ...........................................
$250
Exempt organization ruling .....................................................
$350
Employee plan determination ..................................................
$300
Exempt organization determination ........................................
$275
Chief counsel ruling .................................................................
$200.
428
‘‘(c) TERMINATION.—No fee shall be imposed under
this section with respect to requests made after September
30, 2009.’’.
(b) CONFORMING AMENDMENTS.—
(1) The table of sections for chapter 77 is
amended by adding at the end the following new
item:
‘‘Sec. 7527. Internal Revenue Service user fees.’’.
(2) Section 10511 of the Revenue Act of 1987
is repealed.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to requests made after the date
of the enactment of this Act.
SEC. 1503. LIMITATIONS ON WELFARE BENEFIT FUNDS OF
10 OR MORE EMPLOYER PLANS.
(a) BENEFITS TO WHICH EXCEPTION APPLIES.—
Section 419A(f)(6)(A) (relating to exception for 10 or
more employer plans) is amended to read as follows:
‘‘(A) IN GENERAL.—This subpart shall not
apply to a welfare benefit fund which is part of
a 10 or more employer plan if the only benefits
provided through the fund are 1 or more of the
following:
‘‘(i) Medical benefits.
‘‘(ii) Disability benefits.
429
‘‘(iii) Group term life insurance bene-
fits which do not provide for any cash sur-
render value or other money that can be
paid, assigned, borrowed, or pledged for
collateral for a loan.
The preceding sentence shall not apply to any
plan which maintains experience-rating arrange-
ments with respect to individual employers.’’.
(b) LIMITATION ON USE OF AMOUNTS FOR OTHER
PURPOSES.—Section 4976(b) (defining disqualified ben-
efit) is amended by adding at the end the following new
paragraph:
‘‘(5) SPECIAL
RULE
FOR
OR
MORE
EM-
PLOYER PLANS EXEMPTED FROM PREFUNDING LIM-
ITS.—For purposes of paragraph (1)(C), if—
‘‘(A) subpart D of part I of subchapter D
of chapter 1 does not apply by reason of section
419A(f)(6) to contributions to provide 1 or
more welfare benefits through a welfare benefit
fund under a 10 or more employer plan, and
‘‘(B) any portion of the welfare benefit
fund attributable to such contributions is used
for a purpose other than that for which the con-
tributions were made,
430
then such portion shall be treated as reverting to the
benefit of the employers maintaining the fund.’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to contributions paid or accrued
after June 9, 1999, in taxable years ending after such
date.
SEC. 1504. INCREASE IN ELECTIVE WITHHOLDING RATE
FOR NONPERIODIC DISTRIBUTIONS FROM
DEFERRED COMPENSATION PLANS.
(a) IN GENERAL.—Section 3405(b)(1) (relating to
withholding) is amended by striking ‘10 percent’ and in-
serting ‘15 percent’.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall apply to distributions after December
31, 1999.
SEC. 1505. CONTROLLED ENTITIES INELIGIBLE FOR REIT
STATUS.
(a) IN GENERAL.—Subsection (a) of section 856 (re-
lating to definition of real estate investment trust) is
amended by striking ‘‘and’’ at the end of paragraph (6),
by redesignating paragraph (7) as paragraph (8), and by
inserting after paragraph (6) the following new paragraph:
‘‘(7) which is not a controlled entity (as defined
in subsection (l)); and’’.
431
(b) CONTROLLED ENTITY.—Section 856 is amended
by adding at the end the following new subsection:
‘‘(l) CONTROLLED ENTITY.—
‘‘(1) IN GENERAL.—For purposes of subsection
(a)(7), an entity is a controlled entity if, at any time
during the taxable year, one person (other than a
qualified entity)—
‘‘(A) in the case of a corporation, owns
stock—
‘‘(i) possessing at least 50 percent of
the total voting power of the stock of such
corporation, or
‘‘(ii) having a value equal to at least
50 percent of the total value of the stock
of such corporation, or
‘‘(B) in the case of a trust, owns beneficial
interests in the trust which would meet the re-
quirements of subparagraph (A) if such inter-
ests were stock.
‘‘(2) QUALIFIED
ENTITY.—For purposes of
paragraph (1), the term ‘qualified entity’ means—
‘‘(A) any real estate investment trust, and
‘‘(B) any partnership in which one real es-
tate investment trust owns at least 50 percent
432
of the capital and profits interests in the part-
nership.
‘‘(3) ATTRIBUTION
RULES.—For purposes of
this paragraphs (1) and (2)—
‘‘(A) IN GENERAL.—Rules similar to the
rules of subsections (d)(5) and (h)(3) shall
apply.
‘‘(B) STAPLED ENTITIES.—A group of en-
tities which are stapled entities (as defined in
section 269B(c)(2)) shall be treated as 1 per-
son.
‘‘(4) EXCEPTION FOR CERTAIN NEW REITS.—
‘‘(A) IN GENERAL.—The term ‘controlled
entity’ shall not include an incubator REIT.
‘‘(B) INCUBATOR
REIT.—A corporation
shall be treated as an incubator REIT for any
taxable year during the eligibility period if it
meets all the following requirements for such
year:
‘‘(i) The corporation elects to be treat-
ed as an incubator REIT.
‘‘(ii) The corporation has only voting
common stock outstanding.
433
‘‘(iii) Not more than 50 percent of the
corporation’s real estate assets consist of
mortgages.
‘‘(iv) From not later than the begin-
ning of the last half of the second taxable
year, at least 10 percent of the corpora-
tion’s capital is provided by lenders or eq-
uity investors who are unrelated to the cor-
poration’s largest shareholder.
‘‘(v) The directors of the corporation
adopt a resolution setting forth an intent
to engage in a going public transaction.
No election may be made with respect to any
REIT if an election under this subsection was
in effect for any predecessor of such REIT.
‘‘(C) ELIGIBILITY PERIOD.—The eligibility
period (for which an incubator REIT election
can be made) begins with the REIT’s second
taxable year and ends at the close of the
REIT’s third taxable year, but, subject to the
following rules, it may be extended for an addi-
tional 2 taxable years if the REIT so elects:
‘‘(i) A REIT cannot elect to extend
the eligibility period unless it agrees that,
if it does not engage in a going public
434
transaction by the end of the extended eli-
gibility period, it shall pay Federal income
taxes for the 2 years of the extended eligi-
bility period as if it had not made an incu-
bator REIT election and had ceased to
qualify as a REIT for those 2 taxable
years.
‘‘(ii) In the event the corporation
ceases to be treated as a REIT by oper-
ation of clause (i), the corporation shall file
any appropriate amended returns reflecting
the change in status within 3 months of
the close of the extended eligibility period.
Interest would be payable but, unless there
was a finding under subparagraph (D), no
substantial underpayment penalties shall
be imposed. The corporation shall, at the
same time, also notify its shareholders and
any other persons whose tax position is, or
may reasonably be expected to be, affected
by the change in status so they also may
file any appropriate amended returns to
conform their tax treatment consistent
with the corporation’s loss of REIT status.
The Secretary shall provide appropriate
435
regulations setting forth transferee liability
and other provisions to ensure collection of
tax and the proper administration of this
provision.
‘‘(iii) Clause (i) and (ii) shall not
apply if the corporation allows its incu-
bator REIT status to lapse at the end of
the initial 2-year eligibility period without
engaging in a going public transaction,
provided the corporation satisfies the re-
quirements of the closely-held test com-
mencing with its fourth taxable year. In
such a case, the corporation’s directors
may still be liable for the penalties de-
scribed in subparagraph (D) during the eli-
gibility period.
‘‘(D) SPECIAL
PENALTIES.—If the Sec-
retary determines that an incubator REIT elec-
tion was filed for a principal purpose other than
as part of a reasonable plan to undertake a
going public transaction, an excise tax of
$20,000 would be imposed on each of the cor-
poration’s directors for each taxable year for
which an election was in effect.
436
‘‘(E) GOING
PUBLIC
TRANSACTION.—For
purposes of this paragraph, a going public
transaction means—
‘‘(i) a public offering of shares of the
stock of the incubator REIT;
‘‘(ii) a transaction, or series of trans-
actions, that results in the stock of the in-
cubator REIT being regularly traded on an
established securities market and that re-
sults in at least 50 percent of such stock
being held by shareholders who are unre-
lated to persons who held such stock before
it began to be so regularly traded; or
‘‘(iii) any transaction resulting in
ownership of the REIT by 200 or more
persons (excluding the largest single share-
holder) who in the aggregate own at least
50 percent of the stock of the REIT.
For the purposes of this subparagraph, the
rules of paragraph (3) shall apply in deter-
mining the ownership of stock.
‘‘(F) DEFINITIONS.—The term ‘established
securities market’ shall have the meaning set
forth in the regulations under section 897.’’.
437
(c) CONFORMING AMENDMENT.—Paragraph (2) of
section 856(h) is amended by striking ‘‘and (6)’’ each
place it appears and inserting ‘‘, (6), and (7)’’.
(d) EFFECTIVE DATE.—
(1) IN GENERAL.—The amendments made by
this section shall apply to taxable years ending after
July 12, 1999.
(2) EXCEPTION
FOR
EXISTING
CONTROLLED
ENTITIES.—The amendments made by this section
shall not apply to any entity which is a controlled
entity (as defined in section 856(l) of the Internal
Revenue Code of 1986, as added by this section) as
of July 12, 1999, which is a real estate investment
trust for the taxable year which includes such date,
and which has significant business assets or activi-
ties as of such date.
SEC. 1506. TREATMENT OF GAIN FROM CONSTRUCTIVE
OWNERSHIP TRANSACTIONS.
(a) IN GENERAL.—Part IV of subchapter P of chap-
ter 1 (relating to special rules for determining capital
gains and losses) is amended by inserting after section
1259 the following new section:
438
‘‘SEC. 1260. GAINS FROM CONSTRUCTIVE OWNERSHIP
TRANSACTIONS.
‘‘(a) IN GENERAL.—If the taxpayer has gain from
a constructive ownership transaction with respect to any
financial asset and such gain would (without regard to this
section) be treated as a long-term capital gain—
‘‘(1) such gain shall be treated as ordinary in-
come to the extent that such gain exceeds the net
underlying long-term capital gain, and
‘‘(2) to the extent such gain is treated as a
long-term capital gain after the application of para-
graph (1), the determination of the capital gain rate
(or rates) applicable to such gain under section 1(h)
shall be determined on the basis of the respective
rate (or rates) that would have been applicable to
the net underlying long-term capital gain.
‘‘(b) INTEREST CHARGE ON DEFERRAL OF GAIN
RECOGNITION.—
‘‘(1) IN GENERAL.—If any gain is treated as
ordinary income for any taxable year by reason of
subsection (a)(1), the tax imposed by this chapter
for such taxable year shall be increased by the
amount of interest determined under paragraph (2)
with respect to each prior taxable year during any
portion of which the constructive ownership trans-
action was open. Any amount payable under this
439
paragraph shall be taken into account in computing
the amount of any deduction allowable to the tax-
payer for interest paid or accrued during such tax-
able year.
‘‘(2) AMOUNT OF INTEREST.—The amount of
interest determined under this paragraph with re-
spect to a prior taxable year is the amount of inter-
est which would have been imposed under section
6601 on the underpayment of tax for such year
which would have resulted if the gain (which is
treated as ordinary income by reason of subsection
(a)(1)) had been included in gross income in the tax-
able years in which it accrued (determined by treat-
ing the income as accruing at a constant rate equal
to the applicable Federal rate as in effect on the day
the transaction closed). The period during which
such interest shall accrue shall end on the due date
(without extensions) for the return of tax imposed
by this chapter for the taxable year in which such
transaction closed.
‘‘(3) APPLICABLE
FEDERAL
RATE.—For pur-
poses of paragraph (2), the applicable Federal rate
is the applicable Federal rate determined under
1274(d) (compounded semiannually) which would
440
apply to a debt instrument with a term equal to the
period the transaction was open.
‘‘(4) NO CREDITS AGAINST INCREASE IN TAX.—
Any increase in tax under paragraph (1) shall not
be treated as tax imposed by this chapter for pur-
poses of determining—
‘‘(A) the amount of any credit allowable
under this chapter, or
‘‘(B) the amount of the tax imposed by
section 55.
‘‘(c) FINANCIAL
ASSET.—For purposes of this
section—
‘‘(1) IN GENERAL.—The term ‘financial asset’
means—
‘‘(A) any equity interest in any pass-thru
entity, and
‘‘(B) 
to 
the 
extent 
provided 
in
regulations—
‘‘(i) any debt instrument, and
‘‘(ii) any stock in a corporation which
is not a pass-thru entity.
‘‘(2) PASS-THRU
ENTITY.—For purposes of
paragraph (1), the term ‘pass-thru entity’ means—
‘‘(A) a regulated investment company,
‘‘(B) a real estate investment trust,
441
‘‘(C) an S corporation,
‘‘(D) a partnership,
‘‘(E) a trust,
‘‘(F) a common trust fund,
‘‘(G) a passive foreign investment company
(as defined in section 1297),
‘‘(H) a foreign personal holding company,
and
‘‘(I) a foreign investment company (as de-
fined in section 1246(b)).
‘‘(d) CONSTRUCTIVE OWNERSHIP TRANSACTION.—
For purposes of this section—
‘‘(1) IN
GENERAL.—The taxpayer shall be
treated as having entered into a constructive owner-
ship transaction with respect to any financial asset
if the taxpayer—
‘‘(A) holds a long position under a notional
principal contract with respect to the financial
asset,
‘‘(B) enters into a forward or futures con-
tract to acquire the financial asset,
‘‘(C) is the holder of a call option, and is
the grantor of a put option, with respect to the
financial asset and such options have substan-
442
tially equal strike prices and substantially con-
temporaneous maturity dates, or
‘‘(D) to the extent provided in regulations
prescribed by the Secretary, enters into 1 or
more other transactions (or acquires 1 or more
positions) that have substantially the same ef-
fect as a transaction described in any of the
preceding subparagraphs.
‘‘(2) EXCEPTION FOR POSITIONS WHICH ARE
MARKED TO MARKET.—This section shall not apply
to any constructive ownership transaction if all of
the positions which are part of such transaction are
marked to market under any provision of this title
or the regulations thereunder.
‘‘(3) LONG POSITION UNDER NOTIONAL PRIN-
CIPAL
CONTRACT.—A person shall be treated as
holding a long position under a notional principal
contract with respect to any financial asset if such
person—
‘‘(A) has the right to be paid (or receive
credit for) all or substantially all of the invest-
ment yield (including appreciation) on such fi-
nancial asset for a specified period, and
443
‘‘(B) is obligated to reimburse (or provide
credit for) all or substantially all of any decline
in the value of such financial asset.
‘‘(4) FORWARD CONTRACT.—The term ‘forward
contract’ means any contract to acquire in the fu-
ture (or provide or receive credit for the future value
of) any financial asset.
‘‘(e) 
NET
UNDERLYING
LONG-TERM
CAPITAL
GAIN.—For purposes of this section, in the case of any
constructive ownership transaction with respect to any fi-
nancial asset, the term ‘net underlying long-term capital
gain’ means the aggregate net capital gain that the tax-
payer would have had if—
‘‘(1) the financial asset had been acquired for
fair market value on the date such transaction was
opened and sold for fair market value on the date
such transaction was closed, and
‘‘(2) only gains and losses that would have re-
sulted from the deemed ownership under paragraph
(1) were taken into account.
The amount of the net underlying long-term capital gain
with respect to any financial asset shall be treated as zero
unless the amount thereof is established by clear and con-
vincing evidence.
444
‘‘(f) SPECIAL RULE WHERE TAXPAYER TAKES DE-
LIVERY.—Except as provided in regulations prescribed by
the Secretary, if a constructive ownership transaction is
closed by reason of taking delivery, this section shall be
applied as if the taxpayer had sold all the contracts, op-
tions, or other positions which are part of such transaction
for fair market value on the closing date. The amount of
gain recognized under the preceding sentence shall not ex-
ceed the amount of gain treated as ordinary income under
subsection (a). Proper adjustments shall be made in the
amount of any gain or loss subsequently realized for gain
recognized and treated as ordinary income under this sub-
section.
‘‘(g) REGULATIONS.—The Secretary shall prescribe
such regulations as may be necessary or appropriate to
carry out the purposes of this section, including
regulations—
‘‘(1) to permit taxpayers to mark to market
constructive ownership transactions in lieu of apply-
ing this section, and
‘‘(2) to exclude certain forward contracts which
do not convey substantially all of the economic re-
turn with respect to a financial asset.’’.
445
(b) CLERICAL AMENDMENT.—The table of sections
for part IV of subchapter P of chapter 1 is amended by
adding at the end the following new item:
‘‘Sec. 1260. Gains from constructive ownership transactions.’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to transactions entered into after
July 11, 1999.
SEC. 1507. TRANSFER OF EXCESS DEFINED BENEFIT PLAN
ASSETS FOR RETIREE HEALTH BENEFITS.
(a) EXTENSION.—Paragraph (5) of section 420(b)
(relating to expiration) is amended by striking ‘‘in any
taxable year beginning after December 31, 2000’’ and in-
serting ‘‘made after September 30, 2009’’.
(b) APPLICATION
OF MINIMUM COST REQUIRE-
MENTS.—
(1) IN
GENERAL.—Paragraph (3) of section
420(c) is amended to read as follows:
‘‘(3) MINIMUM COST REQUIREMENTS.—
‘‘(A) IN GENERAL.—The requirements of
this paragraph are met if each group health
plan or arrangement under which applicable
health benefits are provided provides that the
applicable employer cost for each taxable year
during the cost maintenance period shall not be
less than the higher of the applicable employer
costs for each of the 2 taxable years imme-
446
diately preceding the taxable year of the quali-
fied transfer.
‘‘(B) APPLICABLE EMPLOYER COST.—For
purposes of this paragraph, the term ‘applicable
employer cost’ means, with respect to any tax-
able year, the amount determined by dividing—
‘‘(i) the qualified current retiree
health liabilities of the employer for such
taxable year determined—
‘‘(I) without regard to any reduc-
tion under subsection (e)(1)(B), and
‘‘(II) in the case of a taxable
year in which there was no qualified
transfer, in the same manner as if
there had been such a transfer at the
end of the taxable year, by
‘‘(ii) the number of individuals to
whom coverage for applicable health bene-
fits was provided during such taxable year.
‘‘(C) ELECTION TO COMPUTE COST SEPA-
RATELY.—An employer may elect to have this
paragraph applied separately with respect to in-
dividuals eligible for benefits under title XVIII
of the Social Security Act at any time during
447
the taxable year and with respect to individuals
not so eligible.
‘‘(D) COST
MAINTENANCE
PERIOD.—For
purposes of this paragraph, the term ‘cost
maintenance period’ means the period of 5 tax-
able years beginning with the taxable year in
which the qualified transfer occurs. If a taxable
year is in 2 or more overlapping cost mainte-
nance periods, this paragraph shall be applied
by taking into account the highest applicable
employer cost required to be provided under
subparagraph (A) for such taxable year.’’.
(2) CONFORMING AMENDMENTS.—
(A) Clause (iii) of section 420(b)(1)(C) is
amended by striking ‘‘benefits’’ and inserting
‘‘cost’’.
(B) Subparagraph (D) of section 420(e)(1)
is amended by striking ‘‘and shall not be sub-
ject to the minimum benefit requirements of
subsection (c)(3)’’ and inserting ‘‘or in calcu-
lating applicable employer cost under subsection
(c)(3)(B)’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to qualified transfers occurring
after the date of the enactment of this Act.
448
SEC. 1508. MODIFICATION OF INSTALLMENT METHOD AND
REPEAL OF INSTALLMENT METHOD FOR AC-
CRUAL METHOD TAXPAYERS.
(a) REPEAL OF INSTALLMENT METHOD FOR AC-
CRUAL BASIS TAXPAYERS.—
(1) IN
GENERAL.—Subsection (a) of section
453 (relating to installment method) is amended to
read as follows:
‘‘(a) USE OF INSTALLMENT METHOD.—
‘‘(1) IN GENERAL.—Except as otherwise pro-
vided in this section, income from an installment
sale shall be taken into account for purposes of this
title under the installment method.
‘‘(2) ACCRUAL
METHOD
TAXPAYER.—The in-
stallment method shall not apply to income from an
installment sale if such income would be reported
under an accrual method of accounting without re-
gard to this section. The preceding sentence shall
not apply to a disposition described in subparagraph
(A) or (B) of subsection (l)(2).’’.
(2) 
CONFORMING
AMENDMENTS.—Sections
453(d)(1), 453(i)(1), and 453(k) are each amended
by striking ‘‘(a)’’ each place it appears and inserting
‘‘(a)(1)’’.
(b) MODIFICATION OF PLEDGE RULES.—Paragraph
(4) of section 453A(d) (relating to pledges, etc., of install-
449
ment obligations) is amended by adding at the end the
following: ‘‘A payment shall be treated as directly secured
by an interest in an installment obligation to the extent
an arrangement allows the taxpayer to satisfy all or a por-
tion of the indebtedness with the installment obligation.’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to sales or other dispositions occur-
ring on or after the date of the enactment of this Act.
SEC. 1509. LIMITATION ON USE OF NONACCRUAL EXPERI-
ENCE METHOD OF ACCOUNTING.
(a) IN GENERAL.—Section 448(d)(5) (relating to
special rule for services) is amended—
(1) by inserting ‘‘in fields described in para-
graph (2)(A)’’ after ‘‘services by such person’’, and
(2) by inserting ‘‘CERTAIN PERSONAL’’ before
‘‘SERVICES’’ in the heading.
(b) EFFECTIVE DATE.—
(1) IN GENERAL.—The amendments made by
this section shall apply to taxable years ending after
the date of the enactment of this Act.
(2) CHANGE IN METHOD OF ACCOUNTING.—In
the case of any taxpayer required by the amend-
ments made by this section to change its method of
accounting for its first taxable year ending after the
date of the enactment of this Act—
450
(A) such change shall be treated as initi-
ated by the taxpayer,
(B) such change shall be treated as made
with the consent of the Secretary of the Treas-
ury, and
(C) the net amount of the adjustments re-
quired to be taken into account by the taxpayer
under section 481 of the Internal Revenue Code
of 1986 shall be taken into account over a pe-
riod (not greater than 4 taxable years) begin-
ning with such first taxable year.
SEC. 1510. EXCLUSION OF LIKE-KIND EXCHANGE PROP-
ERTY FROM NONRECOGNITION TREATMENT
ON THE SALE OF A PRINCIPAL RESIDENCE.
(a) IN GENERAL.—Subsection (d) of section 121 (re-
lating to the exclusion of gain from the sale of a principal
residence) is amended by adding at the end the following
new paragraph:
‘‘(9) LIKE-KIND
EXCHANGES.—Subsection (a)
shall not apply to any sale or exchange of a resi-
dence if such residence was acquired by the taxpayer
during the 5-year period ending on the date of such
sale or exchange in an exchange in which any
amount of gain was not recognized under section
1031.’’.
451
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall apply to any sale or exchange of a
principal residence after the date of the enactment of this
Act.
TITLE XVI—TECHNICAL
CORRECTIONS
SEC. 1601. AMENDMENTS RELATED TO TAX AND TRADE RE-
LIEF EXTENSION ACT OF 1998.
(a) AMENDMENT RELATED TO SECTION 1004(b) OF
THE ACT.—Subsection (d) of section 6104 is amended by
adding at the end the following new paragraph:
‘‘(6) APPLICATION
TO
NONEXEMPT
CHARI-
TABLE TRUSTS AND NONEXEMPT PRIVATE FOUNDA-
TIONS.—The organizations referred to in paragraphs
(1) and (2) of section 6033(d) shall comply with the
requirements of this subsection relating to annual
returns filed under section 6033 in the same manner
as the organizations referred to in paragraph (1).’’.
(b) AMENDMENTS RELATED TO SECTION 4003 OF
THE ACT.—
(1) Subsection (b) of section 4003 of the Tax
and Trade Relief Extension Act of 1998 is amended
by inserting ‘‘(7)(A)(i)(II),’’ after ‘‘(5)(A)(ii)(I),’’.
452
(2) Subparagraph (A) of section 9510(c)(1) is
amended by striking ‘‘August 5, 1997’’ and insert-
ing ‘‘October 21, 1998’’.
(c) VACCINE TAX AND TRUST FUND.—Sections 1503
and 1504 of the Vaccine Injury Compensation Program
Modification Act (and the amendments made by such sec-
tions) are hereby repealed.
(d) EFFECTIVE DATE.—The amendments made by
this section shall take effect as if included in the provisions
of the Tax and Trade Relief Extension Act of 1998 to
which they relate.
SEC. 1602. AMENDMENTS RELATED TO INTERNAL REVENUE
SERVICE RESTRUCTURING AND REFORM ACT
OF 1998.
(a) AMENDMENT RELATED TO 1103 OF THE ACT.—
Paragraph (6) of section 6103(k) is amended—
(1) by inserting ‘‘and an officer or employee of
the Office of Treasury Inspector General for Tax
Administration’’ after ‘‘internal revenue officer or
employee’’, and
(2) by striking ‘‘INTERNAL REVENUE’’ in the
heading and inserting ‘‘CERTAIN’’.
(b) AMENDMENT RELATED TO SECTION 3509 OF
THE ACT.—Subparagraph (A) of section 6110(g)(5) is
454
‘‘and the proper amount of employment tax under such
determination’’.
(d) EFFECTIVE DATE.—The amendments made by
this section shall take effect as if included in the provisions
of the Taxpayer Relief of 1997 to which they relate.
SEC. 1604. OTHER TECHNICAL CORRECTIONS.
(a) AFFILIATED CORPORATIONS
IN CONTEXT
OF
WORTHLESS SECURITIES.—
(1) Subparagraph (A) of section 165(g)(3) is
amended to read as follows:
‘‘(A) the taxpayer owns directly stock in
such corporation meeting the requirements of
section 1504(a)(2), and’’.
(2) Paragraph (3) of section 165(g) is amended
by striking the last sentence.
(3) The amendments made by this subsection
shall apply to taxable years beginning after Decem-
ber 31, 1984.
(b) REFERENCE TO CERTAIN STATE PLANS.—
(1) Subparagraph (B) of section 51(d)(2) is
amended—
(A) by striking ‘‘plan approved’’ and in-
serting ‘‘program funded’’, and
(B) by striking ‘‘(relating to assistance for
needy families with minor children)’’.
455
(2) The amendment made by paragraph (1)
shall take effect as if included in the amendments
made by section 1201 of the Small Business Job
Protection Act of 1996.
(c) AMOUNT
OF IRA CONTRIBUTION
OF LESSER
EARNING SPOUSE.—
(1) Clause (ii) of section 219(c)(1)(B) is
amended by striking ‘‘and’’ at the end of subclause
(I), by redesignating subclause (II) as subclause
(III), and by inserting after subclause (I) the fol-
lowing new subclause:
‘‘(II) the amount of any des-
ignated nondeductible contribution (as
defined in section 408(o)) on behalf of
such spouse for such taxable year,
and’’.
(2) The amendment made by paragraph (1)
shall take effect as if included in section 1427 of the
Small Business Job Protection Act of 1996.
(d) MODIFIED ENDOWMENT CONTRACTS.—
(1) Paragraph (2) of section 7702A(a) is
amended by inserting ‘‘or this paragraph’’ before the
period.
456
(2) Clause (ii) of section 7702A(c)(3)(A) is
amended by striking ‘‘under the contract’’ and in-
serting ‘‘under the old contract’’.
(3) The amendments made by this subsection
shall take effect as if included in the amendments
made by section 5012 of the Technical and Miscella-
neous Revenue Act of 1988.
(e) LUMP-SUM DISTRIBUTIONS.—
(1) Clause (ii) of section 401(k)(10)(B) is
amended by adding at the end the following new
sentence: ‘‘Such term includes a distribution of an
annuity contract from—
‘‘(I) a trust which forms a part
of a plan described in section 401(a)
and which is exempt from tax under
section 501(a), or
‘‘(II) an annuity plan described
in section 403(a).’’.
(2) The amendment made by paragraph (1)
shall take effect as if included in section 1401 of the
Small Business Job Protection Act of 1996.
(f) TENTATIVE
CARRYBACK
ADJUSTMENTS
OF
LOSSES FROM SECTION 1256 CONTRACTS.—
457
(1) Subsection (a) of section 6411 is amended
by striking ‘‘section 1212(a)(1)’’ and inserting ‘‘sub-
section (a)(1) or (c) of section 1212’’.
(2) The amendment made by paragraph (1)
shall take effect as if included in the amendments
made by section 504 of the Economic Recovery Tax
Act of 1981.
SEC. 1605. CLERICAL CHANGES.
(1) Subsection (f) of section 67 is amended by
striking ‘‘the last sentence’’ and inserting ‘‘the sec-
ond sentence’’.
(2) The heading for paragraph (5) of section
408(d) is amended to read as follows:
‘‘(5) DISTRIBUTIONS
OF
EXCESS
CONTRIBU-
TIONS AFTER DUE DATE FOR TAXABLE YEAR AND
CERTAIN EXCESS ROLLOVER CONTRIBUTIONS.—’’.
(3) The heading for subparagraph (B) of sec-
tion 529(e)(3) is amended by striking ‘‘UNDER
GUARANTEED PLANS’’.
(4)(A) Subsection (e) of section 678 is amended
by striking ‘‘an electing small business corporation’’
and inserting ‘‘an S corporation’’.
(B) Clause (v) of section 6103(e)(1)(D) is
amended to read as follows:
458
‘‘(v) if the corporation was an S cor-
poration, any person who was a share-
holder during any part of the period cov-
ered by such return during which an elec-
tion under section 1362(a) was in effect,
or’’.
(5) Subparagraph (B) of section 995(b)(3) is
amended by striking ‘‘the Military Security Act of
1954 (22 U.S.C. 1934)’’ and inserting ‘‘section 38
of the International Security Assistance and Arms
Export Control Act of 1976 (22 U.S.C. 2778)’’.
(6) Subparagraph (B) of section 4946(c)(3) is
amended by striking ‘‘the lowest rate of compensa-
tion prescribed for GS–16 of the General Schedule
under section 5332’’ and inserting ‘‘the lowest rate
of basic pay for the Senior Executive Service under
section 5382’’.
TITLE XVII—COMMITMENT TO
DEBT REDUCTION
SEC. 1701. COMMITMENT TO DEBT REDUCTION.
(a) FINDINGS.—The Congress finds that—
(1) the national debt of the United States held
by the public is $3.619 trillion as of fiscal year
1999;
459
(2) the Federal budget is projected to produce
a surplus each year in the next 10 fiscal years; and
(3) refunding taxes and reducing the national
debt held by the public will assure continued eco-
nomic growth and financial freedom for future gen-
erations.
(b) SENSE OF THE CONGRESS.—It is the sense of
the Congress that the national debt held by the public
shall be reduced from $3.619 trillion to a level below $1.61
trillion by fiscal year 2009.
TITLE XVIII—BUDGETARY
TREATMENT
SEC. 1801. EXCLUSION OF EFFECTS OF THIS ACT FROM
PAYGO SCORECARD.
Upon the enactment of this Act, the Director of the
Office of Management and Budget shall not make any es-
timate of changes in direct spending outlays and receipts
under section 252(d) of the Balanced Budget and Emer-
gency Deficit Control Act of 1985 resulting from the en-
actment of this Act.
Passed the House of Representatives July 22, 1999.
Attest:
Clerk.