An Act to amend the Internal Revenue Code of 1954 with respect to excise tax on certain trucks, buses, tractors, et cetera, home production of beer and wine, refunds of the taxes on gasoline and special fuels to aerial applicators, and partial rollovers of lump sum distributions.
PL 95-458 (H.R.1337), enacted 10/14/1978

PUBLIC LAW 95-458—OCT. 14, 1978 
92 STAT. 1255 
Public Law 95-458 
95th Congress 
An Act 
To amend the Internal Revenue Code of 1954 with respect to excise tax on 
certain trucks, buses, tractors, et cetera, home production of beer and wine, 
refunds of the taxes on gasoline and special fuels to aerial applicators, and 
partial rollovers of lump sum distributions. 
Oct. 14. 1978 
[H.R. 1337] 
Internal Revenue 
Code of 1954, 
amendments. 
26 u s e 4216. 
26 u s e 4216 
note. 
Be it enacted hy the Senate amd House of Representatwes 
of the 
United States of America in Congress asseiribled^ 
SECTION 
1
. 
EXCISE 
TAX 
ON 
CERTAIN 
TRUCKS, 
BUSES, 
TRACTORS, 
ETC. 
(a) I N GENERAL.—Paragraph (1) of section 4216(b) of the Internal 
Revenue Code of 1954 (relating to constructive sale price) is amended 
by inserting after the second sentence thereof the following new 
sentence: "In the case of an article the sale of which is taxable under 
section 4061 (a) and which is sold at retail, the computation under the 26 USC 4061 
first sentence of this paragraph shall be a percentage (not greater 
than 100 percent) of the actual selling price based on the highest price 
for which such articles are sold by manufacturers and producers in 
the ordinary course of trade (determined without regard to any indi-
vidual manufacturer's or producer's cost)". 
(b) CONFORMING AMENDMENT.—The second sentence of paragraph 
, 
, . j 
(1) of such section 4216(b) is amended by inserting "(other than an 
article the sale of which is taxable under section 4061 ( a ) ) " after "sold 
at retail". 
(c) EFFECTIVE DATE.—The amendments made by this section shall 
apply to articles sold by the manufacturer or producer on or after 
the first day of the first calendar quarter beginning 30 days or more 
after the date of enactment of this Act. 
SEC. 2. HOME PRODUCTION OF BEER AND WINE. 
(a) EXEMPTION FROM TAX ON WINE.—Section 5042(a) (2) of the 26 USC 5042. 
Internal Revenue Code of 1954 (relating to production of wine for 
personal consumption) is amended to read as follows: 
"(2) W I N E FOR PERSONAL OR FAMILY USE.—Subject to regula-
tions prescribed by the Secretary— 
" ( A ) EXEMPTION.—^Any adult may, without payment of 
tax, produce wine for personal or family use and not for sale. 
" ( B ) LIMITATION.—The aggregate amount of wine exempt 
from tax under this paragraph with respect to any house-
hold shall not exceed— 
"(i) 200 gallons per calendar year if there are 2 or 
more adults in such household, or 
"(ii) 100 gallons per calendar year if there is only 1 
adult in such household. 
"(C) ADULTS.—^For purposes of this paragraph, the term 
'adult' means an individual who has attained 18 years of age, 
or the minimum age (if any) established by law applicable 
^^,; ,_,,, 
in the locality in which the household is situated at which 
wine may be sold to individuals, whichever is greater.". 
EXEMPTION FROM TAX ON BEER.— 
(1) I N GENERAL.—-Section 5053 of such Code (relating to 26 USC 5053. 
exemptions from excise tax on beer) is amended by redesignat-
(b) 
92 STAT. 1256 
PUBLIC LAW 95-458—OCT. 14, 1978 
ing subsection (e) as subsection (f) and by inserting after sub-
section (d) the following new section: 
"(e) BEER FOR PERSONAL OR FAMILY USE.—Subject to regulation 
prescribed by the Secretary, any adult may, without payment of tax, 
Limitation. 
produce beer for personal or family use and not for sale. The ag-
gregate amount of beer exempt from tax under this subsection with 
respect to any household shall not exceed— 
" (1) 200 gallons per calendar year if there are 2 or more adults 
in such household, or 
" (2) 100 gallons per calendar year if there is only 1 adult in 
such household. 
"Adult." 
For purposes of this subsection, the term 'adult' means an individual 
who has attained 18 years of age, or the mininmm age (if any) estab-
lished by law applicable in the locality in which the household is 
situated at which beer may be sold to individuals, whichever is 
greater.". 
(2) 
ILLEGALLY PRODUCED BEER.— 
26 use 5051. 
(A) Section 5051 of such Code (relating to imposition and 
rate of tax) is amended by adding at the end thereof the 
following new subsection: 
"(c) 
ILLEGALLY PRODUCED BEER.—The production of any beer 
at any place in the United States shall be subject to tax at the rate 
prescribed in subsection (a) and such tax shall be due and payable 
26 use 5054. 
as provided in section 5054(a) (3) unless— 
"(1) such beer is produced in a brewery ({ualified under the 
26 use 5401. 
provisions of subchapter G, or 
26 use 5053. 
«^2) such production is exempt from tax under section 5053(e) 
- 
~ 
(relating to beer for personal or family use).". 
' • 
(B) Section 5054(a) (3) of such Code (relating to illegally 
produced beer) is amended to read as follows: 
"(3) ILLEGALLY PRODUCED BEER.—The tax on any beer pro-
duced in the United States shall be due and payable immediately 
.S*ilc :)?IJ oS 
upon production unless— 
"(A) such beer is produced in a brewery qualified under 
the provisions of subchapter G, or 
fe'u 
"(B) such production is exempt from tax under sections 
5053(e) (relating to beer for personal or family use).". 
26 use 5092. 
(3) DEFINITION O
F BREWER.—Section 5092 of such Code (defin-
ing brewer) is amended to read as follows: 
"SEC. 5092. DEFINITION OF BREWER. 
"Every person who brews beer (except a person who produces only 
beer exempt from tax under section 5053(e)) and every person who 
produces beer for sale shall be deemed to be a brewer.". 
(4) EXEMPTION FROM CERTAIN PROVISIONS RELATING TO DISTILLING 
26 use 5222. 
MATERIALS.—Section 5222(a)(2)(C) of such Code (relating to 
certain exemptions) is amended by striking out "; or" and insert-
ing in lieu thereof "or 5053 (e); or". 
(5) PENALTY FOR UNLAWFUL PRODUCTION OF BEER.— 
26 use 5674. 
(A) Section 5674 of such Code (relating to penalty for 
unlawful removal of beer) is amended to read as follows: 
"SEC. 5674. PENALTY FOR UNLAWFUL PRODUCTION OR REMOVAL OF 
.-.^.^ ,,.,: .. 
BEER. 
"(a) UNLAWFUL PRODUCTION.—Any person who brews beer or pro-
duces beer shall be fined not more than $1,000, or imprisoned not more 
than 1 year, or both, unless such beer is brewed or produced in a brewery 
PUBLIC LAW 95-458—OCT. 14, 1978 
92 STAT. 1257 
qualified under subchapter G or such production is exempt from tax 26 USC 5401. 
under section 5053(e) (relating to beer for personal or family use). 
26 USC 5053. 
"(b) 
UNLAWFUL REMOVAL.—Any brewer or other person who Penalty, 
removes or in any way aids in the removal from any brewery of 
beer without complying with the provisions of this chapter or regu-
lations issued pursuant thereto shall be fined not more than $1,000, 
or imprisoned not more than 1 year, or both.". 
(B) The item relating to section 5674 in the table of 26 USC 5674. 
sections for part I I I of subchapter J of chapter 51 of such 
Code is amended to read as follows: 
"Sec. 5674. Penalty for unlawful production or removal of beer.", 
(c) EFFECTIVE DATE.—The amendments made by this section shall 26 USC 5042 
take effect on the first day of the first calendar month which begins note, 
more than 90 days after the date of the enactment of this Act. 
SEC. 3. REFUNDS TO BE MADE TO AERIAL APPLICATORS IN CERTAIN 
CASES. 
(a) ENTITLEMENT OF AERIAL ArpLicATORs TO KEFUND OF GASOLINE 
TAX IN CERTAIN CASES.—Subsection (c) of section 6420 of the Internal 
Revenue Code of 1954 (defining use on a farm for farming purposes) 
26 USC 6420. 
is amended by redesignating paragraph (4) as paragraph (5) and 
by inserting after paragraph (3) the following new paragraph: 
s 
"(4) 
CERTAIN FARMING USE OTHER THAN BY OWNER, ETC.—In 
applying paragraph (3)(A) to a use on a farm for any purpose 
described in paragraph (3) (A) by any person other than the 
owner, tenant, or operator of such farm— 
" ( A ) the owner, tenant, or operator of such farm shall be 
treated as the user and ultimate purchaser of the gasoline, 
except that 
" ( B ) if the person so using the gasoline is an aerial appli-
cator who is the ultimate purchaser* of the gasoline and the 
person described in subparagraph (A) waives (at such time 
and in such form and manner as the Secretary shall prescribe) 
' ' 
his right to be treated as the user and ultimate purchaser 
of the gasoline, then subparagraph (A) of this paragraph 
shall not apply and the aerial applicator shall be treated as 
having used such gasoline on a farm for farming purposes.". 
(b) ENTITLEMENT OF AERIAL APPLICATORS TO REFUND OF SPECIAL 
FUELS TAX I N CERTAIN CASES.—The second sentence of subsection (c) 
of section 6427 of such Code (relating to use for farming purposes) 
26 USC 6427. 
is amended to read as follows: "For purposes of this subsection, if 
fuel is used on a farm by any person other than the owner, tenant, 
or operator of such farm, the rules of paragraph (4) of section 6420 (c) 
shall be applied (except that 'liquid taxable under section 4041' shall 26 USC 4041. 
be substituted for 'gasoline' each place it appears in such paragraph 
(4)).". 
(c) CONFORMING AMENDMENT.—Subparagraph (A) of section 6420 
(c) (3) of such Code is amended by striking out "except that" and 
' 
all that follows down through the semicolon at the end of such sub- 
'' * ' ' 
paragraph ( A ) . 
(d) EFFECTIVE DATE.—The amendments made by this section shall 26 USC 6420 
take effect on the first day of the first calendar quarter which begins note. 
more than 90 days after the date of the enactment of this Act. 
'" ""'""' ' 
SEC. 4. PARTIAL ROLLOVERS OF LUMP SUM DISTRIBUTIONS. 
(a) 
PARTIAL ROLLOVER FROM EMPLOYEES' TRUSTS PERMITTED.— 
92 STAT. 1258 
PUBLIC LAW 95-458—OCT. 14, 1978 
Paragraph (5) of section 402(a) of the Internal Revenue Code of 
26 use 402. 
1954 (relating to rollover amounts) is amended to read as follows: 
" ( 5 ) ROLLOVER AMOUNTS.— 
" ( A ) GENERAL RULE.—If— 
"(i) the balance to the credit of an employee in a 
qualified trust is paid to him in a qualifying rollover 
distribution, 
' 
"(ii) the employee transfers any portion of the prop-
erty he receives in such distribution to an eligible retire-
ment plan, and 
"(iii) in the case of a distribution of property other 
than money, the amount so transferred consists of the 
property distributed, 
then such distribution (to the extent so transferred) shall 
not be includible in gross income for the taxable year in 
which paid. 
" ( B ) MAXIMUM AMOUNT WHICH MAT BE ROLLED OVER.— 
In the case of any qualifying rollover distribution, the maxi-
, ,. 
mumamounttransferredto which subparagraph (A) applies 
shall not exceed the fair market value of all the property 
the employee receives in the distribution, reduced by the 
employee contributions. 
" ( C ) TRANSFER MUST BE MADE WITHIN 6 o DAYS OF RECEIPT.— 
Subparagraph (A) shall not apply to any transfer of a 
distribution made after the 60th day following the day on 
which the employee received the property distributed. 
" ( D ) DEFINITIONS.—For purposes of this paragraph— 
"(i) QUALIFYING ROLLOVER DISTRIBUTION.—The term 
'qualifying rollover distribution' means 1 or more 
distributions— 
" ( I ) within 1 taxable year of the employee on 
account of a termination of the plan of which the 
, ' 
^ 
trust is a part or, in the case of a profit-sharing or 
stock bonus plan, a complete discontinuance of con-
tributions under such plan, or 
" ( I I ) which constitute a lump sum distribution 
within the meaning of subsection ( e ) ( 4 ) ( A ) (deter-
" . 
mined without reference to subsection (e) (4) ( B ) ) . 
.<>j . 
. 
"(ii) EMPLOYEE CONTRIBUTIONS.—The term'employee 
contributions'means— 
" (I) the excess of the amounts considered contrib-
uted by the employee (determined by applying sec-
26 use 72. 
tion 72(f)), over 
" ( I I ) any amounts theretofore distributed to the 
' 
employee which were not includible in gross income. 
"(iii) 
QUALIFIED TRUST.—The term 'qualified trust' 
26 use 401. 
means an employees' trust described in section 401(a) 
26 use 501. 
, , 
which is exempt from tax under section 501(a). 
"(iv) ELIGIBLE RETIREMENT PLAN.—The term 'eligible 
^ ^ .,. 
. .y. 
retirement plan'means— 
" , 
" ( I ) an individual retirement account described 
26 use 408. 
• 
, 
in section 408(a), 
" ( I I ) an individual retirement annuity described 
*^^. 
in section 408(b) 
(other 
than an endowment 
' ' ' • ' 
contract), 
PUBLIC LAW 95-458—OCT. 14, 1978 
92 STAT. 1259 
' * 
' ' 
"(III) a retirement bond described in section 409, 26 USC 409. 
' " ' 
"' 
" (IV) a qualified trust, and 
, 
, 
"(V) an annuity plan described in section 403(a). 26 USC 403. 
• "(E) SPECIAL RULES.— 
"(i) 
TRANSFER TREATED AS ROLLOVER CONTRIBUTION 
U
N
D
E
R SECTION 4 0 8.—For purposes of this title, a transfer 26 USC 408. 
described in subparagraph (A) to an eligible retirement 
plan described in subclause (I), (II), or (III) of sub-
paragraph (D) (iv) shall be treated as a rollover con-
tribution described in section 408 (d) (3). 
"(ii) 
SELF-EMPLOYED 
INDIVIDUALS 
AND 
OWNER-
EMPLOYEES.—An eligible retirement plan described in 
subclause (IV) or (V) of subparagraph (D) (iv) shall 
not be treated as an eligible retirement plan for the 
transfer of a distribution if any part of the distribution 
is attributable to a trust forming part of a plan under 
which the employee was an employee within the mean-
ing of section 401(c) (1) at the time contributions were 26 USC 401. 
made on his behal f under the plan." 
(b) PARTIAL ROLLOVER OF ANNUITY CONTRACTS PERMITTED.—Sub-
section (a) of section 403 of such Code (relating to taxability of 26 USC 403. 
beneficiary under a qualified annuity plan) is amended by striking 
out paragraphs (4) and (5) and inserting in lieu thereof the following 
new paragraph: 
"(4) 
ROLLOVER AMOUNTS.— 
"(A) GENERAL RULE.—If— 
" (i) the balance to the credit of an employee in an em-
ployee annuity described in paragraph (1) is paid to him 
in a qualifying rollover distribution. 
"(ii) the employee transfers any portion of the prop- 
' 
'; 
erty he receives in such distribution to an eligible retire-
ment plan, and 
"(iii) in the case of a distribution of property other 
.. , .. 
than money, the amount so transferred consists of the 
* "' 
^ 
property distributed, 
then such distribution (to the extent so transferred) shall not 
be includible in gross income for the taxable year in which 
- 
-
paid. 
"(B) CERTAIN RULES MADE APPLICABLE.—^Eules similar to 
the rules of subparagraphs (B) through (E) of section 402 Ante, p. 1258. 
(a)(5) and of paragraph (6) of section 402(a) shall apply 26 USC 402. 
for purposes of subparagraph (A)." 
(c) TAXATION OF PORTION NOT ROLLED OVER.— 
(1) I N GENERAL.—Paragraph (6) of section 402(a) of such 
Code (relating to special rollover rules) is amended by adding at 
the end thereof the following new subparagraph: 
"(C) 
TREATMENT OF PORTION NOT ROLLED OVER.—If any 
portion of a lump sum distribution is transferred in a transfer 
to which paragraph (5) (A) applies, paragraph (2) of sub- Ante, p. 1258. 
section (a), and paragraphs (1) and (3) of subsection (e) 
shall not apply with respect to such lump sum distribution." 
(2) CONFORMING AMENDMENTS.—Paragraph (6) of section 
402 (a) of such Code is amended— 
(A) by striking out "For purposes of paragraph (5) (A) 
(i)"» 
39-194 O—80—pt, 1 
83 : QL3 
92 STAT. 1260 
PUBLIC LAW 95-458—OCT. 14, 1978 
Ante, p. 1258. , 
26 use 402 note. 
Ante, p. 1258. 
26 use 403. 
[m^ 
42 use 1382e 
notes. 
42 use 1381. 
42 use 1382e. 
87 Stat. 155. 
or.v; ,, 
(B) by striking out "A complete*' in subparagraph (A) 
and inserting in lieu thereof "For purposes of paragraph 
/ {
. ; 
(^ ) (I^) (i) 5 ^ complete", and 
(C) by inserting "For purposes of paragraph (5) (D) 
(i)—" after "ASSETS.—" in subparagraph (B). 
(d) EFFECTIVE DATES.— 
(1) I N GENERAL.—The amendments made by subsections (a), 
i, 
(b), and (c) shall apply with respect to taxable years beginning 
;!' after December 31,1974. 
(2) 
VALIDATION OF CERTAIN ATTEMPTED ROLLOVERS.—If 
the 
. taxpayer— 
(A) attempted to comply with the requirements of section 
402(a)(5) or 403(a)(4) of the Internal Revenue Code of 
1954 for a taxable year beginning before the date of the 
enactment of this Act, and 
(B) failed to meet the requirements of such section that all 
property received in the distribution be transferred, 
, such section (as amended by this section) shall be applied by 
treating any transfer of property made on or before December 31, 
1978, as if it were made on or before the 60th day after the day 
,. 
on which the taxpayer received such property. For purposes of 
the preceding sentence, a transfer of money shall be treated as a 
transfer of property received in a distribution to the extent that 
the amount of the money transferred does not exceed the highest 
fair market value of the property distributed during the 60-day 
period beginning on the date on which the taxpayer received such 
property. 
SEC. 5. CASH PAYMENTS IN LIEU OF FOOD STAMPS TO RECIPIENTS OF 
SSI BENEFITS. 
(a) Section 8(d) of Public Law 93-233 is amended by adding at the 
end thereof the following new sentences: "For purposes of this sub-
section, if the State requests the Secretary to make the finding specified 
in the first sentence of this subsection and to make an additional cash 
payment under title X V I in lieu of food stamps, in the amount and 
the manner described below, to every individual in the State who does 
not have an eligible spouse and who receives a supplementary payment 
pursuant to an agreement under section 1616(a) of the Act (other than 
ian individual who (i) receives such a supplementary payment at a 
level prescribed by the State by reason of his or her residence in an 
institution, or other living arrangement in which board and care are 
provided, or (ii) receives payments pursuant to section 212 of Public 
Law 93-66 at a level in excess of the level applicable to such individual 
as established by the State under such agreement), the Secretary shall 
make such payments if he finds that the conditions of paragraph (1) 
have been met (and for this purpose the conditions of paragraph (1) 
shall be considered to have been met to the extent that they involve 
amounts payable under the law referred to in paragraph (1) (B) not-
withstanding the suspension in 1978 of the cost-of-living increase in 
State suppleirientary payments under such law) for months beginning 
with the first month in which, as determined by the Secretary, such 
additional cash payment can be made, and ending with the month 
before the first subsequent month for which the conditions of para-
graph (1) are met without regard to this sentence (and the require-
ments of paragraph (2) shall also be considered to have been met, 
effective on the first day of such first subsequent month, for purposes 
PUBLIC LAW 95-458—OCT. 14, 1978 
92 STAT. 1261 
of applying the first sentence of this subsection to that month and 
succeeding months). For purposes of the preceding sentence, the 
amount of an additional cash payment under title XVI in lieu of 42 USC 1381. 
food stamps shall equal the cash value of the minimum allotment 
specified by section 8 (a) of the Food Stamp Act of 1977 for one-person 7 USC 2017. 
households, and such additional cash payment shall be appropriately 
included in or with the check issued to such individual in payment of 
his supplementary security income benefit (or supplementary pay-
ment under such section 1616 (a)).". 
42 USC 1382e. 
(b) No additional cash payment under title XVI of the Social 42 USC 1382e 
Security Act may be made pursuant to the third sentence of section ^g^ijsc 1381 
8 (d) of Public Law 93-233 (as added by subsection (a) of this section) 
^2 usC 1382e 
for any month beginning before October 1, 1978, or ending after note. 
September 30,1979. 
Approved October 14, 1978. 
''im 
LEGISLATIVE HISTORY: 
HOUSE REPORT No. 95-976 (Comm. on Ways and Means). 
SENATE REPORT No. 95-1127 (Comm. on Finance). 
CONGRESSIONAL RECORD, Vol. 124 (1978): 
May 16, considered and passed House. 
Aug. 25, considered and passed Senate, amended. 
Sept. 7, 12, House agreed to Senate amendments with amendments. 
Sept. 28, Senate concurred in House amendments.