An Act to amend subsection section 213 of the Internal Revenue Code of 1954 to increase tliemaximum limitations on the amount allowable as a deduction for medical, dental, etc., expenses
PL 87-863 (H.R.10620), enacted 10/23/1962

76 STAT.] 
PUBLIC LAW 87-863-OCT. 23, 1962 
1141 
Public Law 87-863 
AN ACT 
To amend section 213 of the Internal Revenue Code of 1954 to increase tlie 
maximum limitations on the amount allowable as a deduction for medical, 
dental, etc., expenses, and for other purposes. 
Be it enacted hy the Senate and House of Representatives 
of the 
United States of America in Congress assembled^ That (a) subsection 
(c) of section 213 of the Internal Kevenue Code of 1954 (relating to 
maximum limitations on deduction for medical, dental, etc.. expenses) 
is amended— 
(1) by striking out "$2,500" and inserting in lieu thereof 
"$5,000", 
(2) by striking out "$5,000" and inserting in lieu thereof 
"$10,000", and 
(3) by striking out "$10,000" and inserting in lieu thereof 
"$20,000". 
(b) Subsection (g) of such section (relating to maximum limita-
tion if taxpayer or spouse has attained age 65 and is disabled) is 
amended— 
(1) by striking out "$15,000" each place it appears therein and 
inserting in lieu thereof "$20,000", and 
(2) by striking out "$30,000" and inserting in lieu thereof 
"$40,000". 
(c) The amendments made by subsections (a) and (b) shall apply 
only with respect to taxable years beginning after December 31,196L 
SEC. 2. (a) Section 401 of the Internal Revenue Code of 1954 
(relating to qualified pension, profit-sharing, and stock bonus plans) 
is amended by redesignating subsection (h) as subsection (i) and 
by inserting after subsection (g) the following new subsection: 
"(h) 
MEDICAL, ETC.. BENEFITS FOR RETIRED EMPLOYEES AND THEIR 
SPOUSES AND DEPENDENTS.—Under regulations prescribed by the Sec-
retary or his delegate, a pension or annuity plan may provide for the 
payment of benefits for sickness, accident, hospitalization, and medical 
expenses of retired employees, their spouses and their dependents, but 
only if— 
"(1) such benefits are subordinate to the retirement benefits 
provided by the plan, 
"(2) a separate account is established and maintained for such 
benefits, 
"(3) the employer's contributions to such separate account are 
reasonable and ascertainable, 
"(4) it is impossible, at any time prior to the satisfaction of 
all liabilities under the plan to provide such benefits, for any part 
of the corpus or income of such separate account to be (within 
the taxable year or thereafter) used for, or diverted to, any pur-
pose other than the providing of such benefits, and 
"(5) notwithstanding the provisions of subsection (a)(2), 
upon the satisfaction of all liabilities under the plan to provide 
such benefits, any amount remaining in such separate account 
must, under the terms of the plan, be returned to the employer." 
(b) Section 404(a)(2) of such Code (relating to employees' an-
nuities) is amended— 
(1) by inserting after "purchase of retirement annuities" the 
following: ", or retirement annuities and medical benefits as 
described in section 401(h),"; and 
(2) by inserting after "such retirement annuities" the follow-
ing : ", or such retirement annuities and medical benefits". 
October 23, 1962 
[H. R. 10620] 
T axe s. 
Medical ex-
pense deductions. 
26 use 213. 
26 use 401. 
Ante, p. 811. 
Ante, p. 819. 
26 use 404. 
1142 
PUBLIC L
A
W 87-863-OCT. 23, 1962 
[76 STAT. 
(c) The amendments made by subsections (a) and (b) shall apply 
to taxable years begmning after the date of the enactment of this Act. 
SEC. 3. Any taxpayer who exercised an option to capitalize intangi-
ble drilling and development costs under the regulations recognized 
59 Stat. 844. 
and approved by the Congress in IL (^on. Res. 50, 79th Congress, or 
under section 39.23(m)-16 of regulations 118, is hereby granted a new 
option for the first taxable year ending on or after the date of the 
enactment of this Act to deduct sucli costs as expenses. Such new 
option shall be exercised at the time of filing the income tax return 
for such first taxable year, but otherwise shall be treated, for all pur-
poses, as an option exercised under, and subject to, section 263(c) of 
26 use 263. 
the Internal Revenue Code of 1954 and the regulations prescribed 
thereunder. 
26 use 5123. 
SEC. 4. (a) Section 5123(b) of the Internal Revenue Code of 1954 
(relating to application of special tax on retail dealers in liquor where 
business is conducted in more than one location) is amended by adding 
at the end thereof the following new paragraph: 
"(3) 
LIQUOR SIX)RES OPERATED BY STAJES, POLITICAL SIBDIVISIONS, 
ETC.—A State, a political subdivision of a State, or the District of 
(Columbia shall not be required to pay more than one special tax 
26 use 5121. 
as a retail dealer in liquors under section 5121 (a) regardless of the 
number of locations at which such State, political subdivision, or 
District carries on business as a retail dealer in liquors." 
26 use 5113. 
(b) Section 5113(b) of such Code (relating to application of spe-
cial tax on wholesale dealers in liquor to liquor stores operated by 
States, political subdivisions, etc.) is amended— 
(1) by striking out "or Territory" and "'Territory," each place 
such terms appear, and 
(2) by striking out "if such liquor store" and inserting in lieu 
thereof "if such State, political subdivision, or District*'. 
Effective date. 
(c) The amendments made by subsections (a) and (b) of this sec-
1 ion shall take effect on July 1,1962. 
26 use 1341. 
SEC. 5. (a) Section 1341(b) of the Internal Revenue Code of 1954 
(relating to special rules applicable to computation of tax where tax-
payer restores substantial amount held under claim of right) is 
amended by adding at the end thereof the following new paragraphs: 
"(4) For purposes of determining whether paragraph (4) or 
paragraph (5) of subsection (a) applies— 
"(A) in any case where the deduction referred to in para-
graph (4) of subsection (a) results in a net operating loss, such 
loss shall, for purposes of computing the tax for the taxable 
year under such paragraph (4), be carried back to the same 
extent and in the same manner as is provided under section 172; 
and 
"(B) in any case where the exclusion referred to in para-
graph (5) (B) of subsection (a) results in a net operating loss 
or capital loss for the prior taxable year (or years), such loss 
shall, for purposes of computing the decrease in tax for the 
prior taxable year (or years) under such paragraph (5)(B), 
be carried back and carried over to the same extent and in the 
26 use 172, 
same manner as is provided under section 172 or section 1212, 
^212. 
except that no carryover beyond the taxable year shall be taken 
into account. 
"(5) For purposes of this cha])ter, the net operating loss de-
scribed in paragraph (4) (A) of this subsection, or the net operat-
ing loss or capital loss described in paragraph (4) (B) of this 
subsection, as the case may be, shall (after the application of 
paragraph (4) or (5) (B) of subsection (a) for the taxable year) 
76 STAT.] 
PUBLIC LAW 87-864-OCT. 23, 1962 
1143 
be taken into account under section 172 or 1212 for taxable years 
after the taxable year to the same extent and in the same jaanner 
as— 
"(A) a net operating loss sustained for the taxable year, 
if paragraph (4) of subsection (a) applied, or 
"(B) a net operating loss or capital loss sustained for the 
prior taxable year (or years), if paragraph (5) (B) of subsec-
tion (a) applied." 
(b) The amendment made by subsection (a) shall be effective with 
Effective date. 
respect to taxable years beginning on or after January 1,1962. 
SEC. 6. (a) (1) Section 7608 of the Internal Revenue Code of 1954 
26 use 7608. 
(relating to authority of Internal Revenue enforcement officers) is 
amended by adding at the end thereof the following new subsection: 
"(b) 
ENFORCEMENT or 
LAWS RELATING TO INTERNAL REVENUE 
OTHER THAN SUBTITLE E . — 
"(1) Any criminal investigator of the Intelligence Division or 
of the Internal Security Division of the Internal Revenue Service 
whom the Secretary or his delegate charges with the duty of 
enforcing any of the criminal provisions of the internal revenue 
laws or any other criminal provisions of law relating to internal 
revenue for the enforcement of which the Secretary or his delegate 
is responsible is, in the performance of his duties, authorized to 
perform the functions described in paragraph (2). 
"(2) The functions authorized under this subsection to be per-
formed by an officer referred to in paragraph (1) are— 
" (A) to execute and serve search warrants and arrest war-
rants, and serve subpoenas and summonses issued under au-
thority of the United States; 
"(B) to make arrests without warrant for any offense 
against the United States relating to the internal revenue laws 
committed in his presence, or for any felonj cognizable under 
such laws if he has reasonable grounds to believe that the person 
to be arrested has committed or is committing any such felony; 
and 
"(C) to make seizures of property subject to forfeiture 
under the internal revenue laws." 
(2) Such section is further amended by striking out "Any" and in-
serting in lieu thereof "(a) ENFORCEMENT OF SUBTITLE E AND OTHER 
LAWS PERTAINING TO LIQUOR, TOBACCO, AND FIREARMS.—Any". 
(b) The amendments made by subsection (a) shall take effect on 
Effective date. 
the day after the date of enactment of this Act. 
Approved October 23, 1962. 
Public Law 87-864 
JOINT RESOLUTION 
Fixing the time of assembly of the Eighty-eighth Congress. 
Resolved 
by the Senate 
and House of Representatives 
of the 
United States of America in Congress assembled^ That the Eighty-
eighth Congross shall assemble at noon on Wednesday, January 9, 
Approved October 23, 1962. 
October 23, 1962 
[H. J. Res. 907]