To amend the Internal Revenue Code of 1986 to permanently extend the deduction for the health insurance costs of self-employed individuals, to repeal the provision permitting nonrecognition of gain on sales and exchanges effectuating policies of the Federal Communications Commission, and for other purposes.
PL 104-7 (H.R.831), enacted 04/11/1995

PUBLIC LAW 104^7—APR. 11, 1995 
109 STAT. 93 
Public Law 104-7 
104th Congress 
An Act 
To amend the Internal Revenue Code of 1986 to permanently extend the deduction 
for the health insurance costs of self-employed individuals, to repeal the provision 
Apr. 11, 1995 
permitting nonrecognition of gain on sales and exchanges effectuating policies 
[HR 831] 
of the Federal Communications Commission, and for other purposes. 
Be it enacted by the Senate and House of Representatives of 
the United States of America in Congress assembled, 
SECTION 1. PERMANENT EXTENSION AND INCREASE OF DEDUCTION 
FOR HEALTH INSURANCE COSTS OF SELF-EMPLOYED 
INDIVIDUALS. 
(a) PERMANENT EXTENSION.—Subsection (1) of section 162 of 
the Internal Revenue Code of 1986 (relating to special rules for 
health insurance costs of self-employed individuals) is amended 
by striking paragraph (6). 
(b) INCREASE IN DEDUCTION.—Paragraph (1) of section 162(1) 
of the Internal Revenue Code of 1986 is amended by striking 
"25 percent" and inserting "30 percent". 
(c) EFFECTIVE DATES.— 
26 use i62 note. 
(1) EXTENSION.—^The amendment made by subsection (a) 
shall apply to taxable years beginning after December 31, 1993. 
(2) INCREASE.—The amendment made by subsection (b) 
shall apply to taxable years beginning after December 31, 1994. 
SEC. 2. REPEAL OF NONRECOGNITION ON FCC CERTIFIED SALES AND 
EXCHANGES. 
(a) IN GENERAL.—Subchapter O of chapter 1 of the Internal 
Revenue Code of 1986 is amended by striking part V (relating 
26 USC 1071. 
to changes to effectuate FCC policy). 
(b) 
CONFORMING 
AMENDMENTS.—Sections 
1245(b)(5) 
and 
1250(d)(5) of the Internal Revenue Code of 1986 are each amended— 
(1) by striking "section 1071 (relating to gain from sale 
or exchange to effectuate polices of FCC) or", and 
(2) by striking "i07i AND" in the heading thereof 
(c) CLERICAL AMENDMENT.—^The table of parts for such sub- 26 use prec. 
chapter O is amended by striking the item relating to part V. lOOl. 
(d) EFFECTIVE DATE.— 
26 use io7i 
(1) IN GENERAL.—^The amendments made by this section note, 
shall apply to— 
(A) sales and exchanges on or after January 17, 1995, 
and 
(B) sales and exchanges before such date if the FCC 
tax certificate with respect to such sale or exchange is 
issued on or after such date. 
(2) B I N D I N G CONTRACTS.— 
109 STAT. 94 
PUBLIC LAW 104-7—APR. 11, 1995 
(A) IN GENERAL.—^The amendments made by this sec-
tion shall not apply to any sale or exchange pursuant 
to a written contract which was binding on January 16, 
1995, 
and at all times thereafter before the sale or 
exchange, if the FCC tax certificate with respect to such 
sale or exchange was applied for, or issued, on or before 
such date. 
(B) SALES CONTINGENT ON ISSUANCE OF CERTIFICATE.— 
(i) IN GENERAL.—^A contract shall be treated as 
not binding for purposes of subparagraph (A) if the 
sale or exchange pursuant to such contract, or the 
material terms of such contract, were contingent, at 
any time on January 16, 1995, on the issuance of 
an FCC tax certificate. The preceding sentence shall 
not apply if the FCC tax certificate for such sale or 
exchange is issued on or before January 16, 1995. 
(ii) MATERIAL TERMS.—For purposes of clause (i), 
the material terms of a contract shall not be treated 
as contingent on the issuance of an FCC tax certificate 
solely because such terms provide that the sales price 
would, if such certificate were not issued, be increased 
by an amount not greater than 10 percent of the sales 
price otherwise provided in the contract. 
(3) FCC TAX CERTIFICATE.—^For purposes of this subsection, 
the term "FCC tax certificate" means any certificate of the 
Federal Communications Commission for the effectuation of 
section 1071 of the Internal Revenue Code of 1986 (as in 
effect on the day before the date of the enactment of this 
Act). 
SEC. 3. SPECIAL RULES RELATING TO INVOLUNTARY CONVERSIONS. 
(a) REPLACEMENT PROPERTY ACQUIRED BY CORPORATIONS FROM 
RELATED PERSONS.— 
(1) IN GENERAL.—Section 1033 of the Internal Revenue 
Code of 1986 (relating to involuntary conversions) is amended 
by redesignating subsection (i) as subsection (j) and by inserting 
after subsection (h) the following new subsection: 
"(I) NONRECOGNITION NOT TO APPLY IF CORPORATION ACQUIRES 
REPLACEMENT PROPERTY FROM RELATED PERSON.— 
"(1) IN GENERAL.—In the case of— 
"(A) a C corporation, or 
"(B) a partnership in which 1 or more C corporations 
own, directly or indirectly (determined in accordance with 
section 707(b)(3)), more than 50 percent of the capital 
interest, or profits interest, in such partnership at the 
time of the involuntary conversion, 
subsection (a) shall not apply if the replacement property or 
stock is acquired from a related person. The preceding sentence 
shall not apply to the extent that the related person acquired 
the replacement property or stock from an unrelated person 
during the period described in subsection (a)(2)(B). 
"(2) RELATED PERSON.—^For purposes of this subsection, 
a person is related to another person if the person bears a 
relationship to the other person described in section 267(b) 
or 707(b)(1)." 
PUBLIC LAW 104-7—APR. 11, 1995 
109 STAT. 95 
(2) EFFECTIVE DATE.—^The amendment made by paragraph 
26 use 1033 
(1) shall apply to involuntary conversions occurring on or after 
note. 
February 6, 1995. 
(b) APPLICATION OF SECTION 1033 TO CERTAIN SALES REQUIRED 
FOR MICROWAVE RELOCATION.— 
(1) IN GENERAL.—Section 1033 of the Internal Revenue 
Code of 1986 (relating to involuntary conversions), as amended 
by subsection (a), is amended by redesignating subsection (j) 
as subsection (k) and by inserting after subsection (i) the follow-
ing new subsection: 
"(j) SALES OR EXCHANGES TO IMPLEMENT MICROWAVE RELOCA-
TION POLICY.— 
"(1) IN GENERAL.—For purposes of this subtitle, if a tax-
payer elects the application of this subsection to a qualified 
sale or exchange, such sale or exchange shall be treated as 
an involuntary conversion to which this section applies. 
"(2) QUALIFIED SALE OR EXCHANGE.—For purposes of para-
graph (1), the term 'qualified sale or exchange' means a sale 
or exchange before January 1, 2000, which is certified by the 
Federal Communications Commission as having been made 
by a taxpayer in connection with the relocation of the taxpayer 
from the 1850-1990MHz spectrum by reason of the Federal 
Communications Commission's reallocation of that spectrum 
for use for personal communications services. The Commission 
shall transmit copies of certifications under this paragraph 
to the Secretary." 
(2) EFFECTIVE DATE.—^The amendment made by paragraph 
26 USC 1033 
(1) shall apply to sales or exchanges after March 14, 1995. °ote. 
SEC. 4. DENIAL OF EARNED INCOME CREDIT FOR INDIVIDUALS HAV-
ING EXCESSIVE INVESTMENT INCOME. 
(a) IN GENERAL.—Section 32 of the Internal Revenue Code 
of 1986 is amended by redesignating subsections (i) and (j) as 
subsections (j) and (k), respectively, and by inserting after sub-
section (h) the following new subsection: 
"(i) DENIAL OF CREDIT FOR INDIVIDUALS HAVING EXCESSIVE 
INVESTMENT INCOME.— 
"(1) IN GENERAL.—No credit shall be allowed under sub-
section (a) for the taxable year if the aggregate amount of 
disqualified income of the taxpayer for the taxable year exceeds 
$2,350. 
"(2) DISQUALIFIED INCOME.—For purposes of paragraph (1), 
the term 'disqualified income' means— 
"(A) interest or dividends to the extent includible in 
gross income for the taxable year, 
"(B) interest received or accrued during the taxable 
year which is exempt from tax imposed by this chapter, 
and 
"(C) the excess (if any) of— 
"(i) gross income from rents or royalties not derived 
in the ordinary course of a trade or business, over 
"(ii) the sum of— 
"(I) the deductions (other than interest) which 
are clearly and directly allocable to such gross 
income, plus 
"(II) interest deductions properly allocable to 
such gross income." 
109 STAT. 96 
PUBLIC LAW 104-7—APR. 11, 1995 
26 use 32 note. 
(b) EFFECTIVE DATE.—^The amendments made by this section 
shall apply to taxable years beginning after December 31, 1995. 
SEC. 5. EXTENSION OF SPECIAL RULE FOR CERTAIN GROUP HEALTH 
PLANS. 
Section 13442(b) of the Omnibus Budget Reconciliation Act 
26 use 162 note, of 1993 (Public Law 103-66) is amended by striking "May 12, 
1995" and inserting "December 31, 1995". 
SEC. 6. STUDY OF EXPATRIATION TAX. 
(a) IN GENERAL.—^The staff of the Joint Committee on Taxation 
shall conduct a study of the issues presented by any proposals 
to affect the taxation of expatriation, including an evaluation of— 
(1) the effectiveness and enforceability of current law with 
respect to the tax treatment of expatriation, 
(2) the current level of expatriation for tax avoidance pur-
poses, 
(3) any restrictions imposed by any constitutional require-
ment that the Federal income tax apply only to realized gains, 
(4) the application of international human rights principles 
to taxation of expatriation, 
(5) the possible effects of any such proposals on the free 
flow of capital into the United States, 
(6) the impact of any such proposals on existing tax treaties 
and future treaty negotiations, 
(7) the operation of any such proposals in the case of 
interests in trusts, 
(8) the problems of potential double taxation in any such 
proposals, 
(9) the impact of any such proposals on the trade policy 
objectives of the United States, 
(10) the administrability of such proposals, and 
(11) possible problems associated with existing law, includ-
ing estate and gift tax provisions. 
(b) REPORT.—The Chief of Staff of the Joint Committee on 
Taxation shall, not later than June 1, 1995, report the results 
of the study conducted under subsection (a) to the Chairmen of 
the Committee on Ways and Means of the House of Representatives 
and the Committee on Finance of the Senate. 
Approved April 11, 1995. 
LEGISLATIVE HISTORY—H.R. 831: 
HOUSE REPORTS: Nos. 104-32 (Comm. on Ways and Means) and 104-92 (Comm. 
of Conference). 
SENATE REPORTS: No. 104-16 (Comm. on Finance). 
CONGRESSIONAL RECORD, Vol. 141 (1995): 
Feb. 21, considered and passed House. 
Mar. 24, considered and passed Senate, amended. 
Mar. 30, House agreed to conference report. 
Mar. 31, Apr. 3, Senate considered and agreed to conference report. 
WEEKLY COMPILATION OF PRESIDENTIAL DOCUMENTS, Vol. 31 (1995): 
Apr. 6, Presidential statement.