Higher Education Family Opportunity Act of 1998

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Higher Education Family Opportunity 
Act of 1998''.

SEC. 2. DEDUCTION FOR POSTSECONDARY TUITION AND RELATED EXPENSES IN 
              LIEU OF HOPE AND LIFETIME LEARNING CREDIT.

    (a) In General.--Part VII of subchapter B of chapter 1 of the 
Internal Revenue Code of 1986 (relating to additional itemized 
deductions for individuals) is amended by redesignating section 222 as 
section 223 and by inserting after section 221 the following new 
section:

``SEC. 222. DEDUCTION FOR POSTSECONDARY TUITION AND RELATED EXPENSES IN 
              LIEU OF HOPE AND LIFETIME LEARNING CREDIT.

    ``(a) Allowance of Deduction.--In the case of an individual, there 
shall be allowed as a deduction for the taxable year an amount equal to 
the qualified tuition and related expenses paid or incurred by such 
individual.
    ``(b) Limitation.--
            ``(1) In general.--The amount allowable as a deduction 
        under subsection (a) for a taxable year shall not exceed the 
        deductible limit for each eligible student.
            ``(2) Deductible limit.--For purposes of paragraph (1), the 
        deductible limit for a taxable year shall be determined in 
        accordance with the following table:

``Taxable years beginning                                              
  in calendar year:                                   Deductible limit:
        1999................................................... $5,000 
        2000................................................... $5,500 
        2001................................................... $6,000 
        2002................................................... $6,500 
        2003................................................... $7,000 
        2004................................................... $7,500 
        2005................................................... $8,000 
        2006................................................... $8,500 
        2007................................................... $9,000 
        2008................................................... $9,500 
        2009 and thereafter....................................$10,000.
    ``(c) Qualified Tuition and Related Expenses; Eligible Student.--
The terms `qualified tuition and related expenses' and `eligible 
student' shall have the same meanings given to such terms by section 
25A.
    ``(d) Applicable Rules.--For purposes of this section, rules 
similar to the rules of section 25A(g) shall apply.''.
    (b) Deduction Not a Miscellaneous Itemized Deduction.--Subsection 
(b) of section 67 of such Code (relating to miscellaneous itemized 
deductions) is amended by striking ``and'' at the end of paragraph 
(11), by striking the period at the end of paragraph (12) and inserting 
``, and'', and by adding at the end the following new paragraph:
            ``(13) the deduction under section 222 (relating to 
        deduction for postsecondary tuition and related expenses in 
        lieu of Hope and Lifetime Learning credit).''.
    (c) Conforming Amendments.--
            (1) Subparagraph (B) of section 72(t)(7) of such Code is 
        amended by inserting ``or 222(e)(2), as the case may be'' after 
        ``section 25A(g)(2)''.
            (2) Paragraph (2) of section 135(d) of such Code is amended 
        by inserting ``or 222, as the case may be,'' after ``section 
        25A''.
            (3) Paragraph (2) of section 221(e) of such Code is amended 
        by striking ``and'' after subparagraph (A), by striking the 
        period at the end of subparagraph (B) and inserting ``, and'', 
        and by inserting after subparagraph (B) the following new 
        subparagraph:
                    ``(C) the amount allowed as a deduction under 
                section 222.''.
            (4) Paragraph (2) of section 6213(g) of such Code is 
        amended--
                    (A) by striking ``and'' at the end of subparagraph 
                (J) (as added by section 201(b) of the Taxpayer Relief 
                Act of 1997),
                    (B) by redesignating subparagraph (J) (as added by 
                section 1085(a)(3) of the Taxpayer Relief Act of 1997) 
                as subparagraph (K) and by striking the period at the 
                end of such subparagraph and inserting ``, and'', and
                    (C) by adding at the end the following new 
                subparagraph:
                    ``(L) an omission of a correct TIN required under 
                section 222(e)(1) (relating to higher education tuition 
                and related expenses) to be included on a return.''.
    (d) Clerical Amendment.--The table of sections for part VII of 
subchapter B of chapter 1 of such Code is amended by striking the last 
item and inserting the following new items:

                              ``Sec. 222. Deduction for postsecondary 
                                        tuition and related expenses in 
                                        lieu of Hope and Lifetime 
                                        Learning credit.
                              ``Sec. 223. Cross reference.''.
    (e) Effective Date.--The amendments made by this section shall 
apply to expenses paid or incurred after December 31, 1998, for 
education furnished in academic periods beginning after such date.

Summary: Higher Education Family Opportunity Act of 1998 - Amends the Internal Revenue Code to permit a deduction for qualified tuition and related expenses in lieu of the Hope and Lifetime Learning credits. Sets the deductible limit at $5,000 for 1999 and increases such limit by $500 annually until it reaches $10,000 for years 2009 and thereafter.