H.R. 2014 "Taxpayer Relief Act of 1997"
"Taxpayer Fairness Act of 1997"
(continued)
`SEC. 1400B. CREDIT FOR EQUITY INVESTMENTS IN AND LOANS TO DISTRICT
OF COLUMBIA BUSINESSES.
`(a) GENERAL RULE- For purposes of section 38, the DC Zone
investment credit determined under this section for any taxable
year is--
`(1) the qualified lender credit for such year, and
`(2) the qualified equity investment credit for such year.
`(b) QUALIFIED LENDER CREDIT- For purposes of this section--
`(1) IN GENERAL- The qualified lender credit for any taxable
year is the amount of credit specified for such year by the
Economic Development Corporation with respect to qualified
District loans made by the taxpayer.
`(2) LIMITATION- In no event may the qualified lender credit
with respect to any loan exceed 25 percent of the cost of the
property purchased with the proceeds of the loan.
`(3) QUALIFIED DISTRICT LOAN- For purposes of paragraph (1),
the term `qualified district loan' means any loan for the
purchase (as defined in section 179(d)(2)) of property to which
section 168 applies (or would apply but for section 179) (or
land which is functionally related and subordinate to such
property) and substantially all of the use of which is in the
District of Columbia and is in the active conduct of a trade or
business in the District of Columbia. A rule similar to the
rule of section 1397C(a)(2) shall apply for purposes of the
preceding sentence.
`(c) QUALIFIED EQUITY INVESTMENT CREDIT-
`(1) IN GENERAL- For purposes of this section, the qualified
equity investment credit determined under this section for any
taxable year is an amount equal to the percentage specified by
the Economic Development Corporation (but not greater than 25
percent) of the aggregate amount paid in cash by the taxpayer
during the taxable year for the purchase of District business
investments.
`(2) DISTRICT BUSINESS INVESTMENT- For purposes of this
subsection, the term `District business investment' means--
`(A) any District business stock, and
`(B) any District partnership interest.
`(3) DISTRICT BUSINESS STOCK- For purposes of this subsection--
`(A) IN GENERAL- Except as provided in subparagraph (B),
the term `District business stock' means any stock in a
domestic corporation if--
`(i) such stock is acquired by the taxpayer at its
original issue (directly or through an underwriter)
solely in exchange for cash, and
`(ii) as of the time such stock was issued, such
corporation was engaged in a trade or business in the
District of Columbia (or, in the case of a new
corporation, such corporation was being organized for
purposes of engaging in such a trade or business).
`(B) REDEMPTIONS- A rule similar to the rule of section
1202(c)(3) shall apply for purposes of this paragraph.
`(4) QUALIFIED DISTRICT PARTNERSHIP INTEREST- For purposes of
this subsection, the term `qualified District partnership
interest' means any interest in a partnership if--
`(A) such interest is acquired by the taxpayer from the
partnership solely in exchange for cash, and
`(B) as of the time such interest was acquired, such
partnership was engaging in a trade or business in the
District of Columbia (or, in the case of a new partnership,
such partnership was being organized for purposes of
engaging in such a trade or business).
A rule similar to the rule of paragraph (3)(B) shall apply for
purposes of this paragraph.
`(5) RECAPTURE OF CREDIT UPON CERTAIN DISPOSITIONS OF
DISTRICT BUSINESS INVESTMENTS-
`(A) IN GENERAL- If a taxpayer disposes of any District
business investment (or any other property the basis of
which is determined in whole or in part by reference to the
adjusted basis of such investment) before the end of the
5-year period beginning on the date such investment was
acquired by the taxpayer, the taxpayer's tax imposed by
this chapter for the taxable year in which such
distribution occurs shall be increased by the aggregate
decrease in the credits allowed under section 38 for all
prior taxable years which would have resulted solely from
reducing to zero any credit determined under this section
with respect to such investment.
`(B) EXCEPTIONS- Subparagraph (A) shall not apply to any
gift, transfer, or transaction described in paragraph (1),
(2), or (3) of section 1245(b).
`(C) SPECIAL RULE- Any increase in tax under subparagraph
(A) shall not be treated as a tax imposed by this chapter
for purposes of--
`(i) determining the amount of any credit allowable
under this chapter, and
`(ii) determining the amount of the tax imposed by
section 55.
`(6) BASIS REDUCTION- For purposes of this title, the basis
of any District business investment shall be reduced by the
amount of the credit determined under this section with respect
to such investment.
`(d) LIMITATION ON AMOUNT OF CREDIT-
`(1) IN GENERAL- The amount of the DC Zone investment credit
determined under this section with respect to any taxpayer for
any taxable year shall not exceed the credit amount allocated
to such taxpayer for such taxable year by the Economic
Development Corporation.
`(2) OVERALL LIMITATION- The aggregate credit amount which
may be allocated by the Economic Development Corporation under
this section shall not exceed $75,000,000.
`(3) CRITERIA FOR ALLOCATING CREDIT AMOUNTS- The allocation
of credit amounts under this section shall be made in
accordance with criteria established by the Economic
Development Corporation. In establishing such criteria, such
Corporation shall take into account--
`(A) the degree to which the business receiving the loan
or investment will provide job opportunities for low and
moderate income residents of the DC Zone, and
`(B) whether such business is within the DC Zone.
`(e) ECONOMIC DEVELOPMENT CORPORATION- For purposes of this
section, the term `Economic Development Corporation' has the
meaning given such term by section 1400A(b).
`(f) REGULATIONS- The Secretary shall prescribe such regulations
as may be appropriate to carry out this section.
`(g) APPLICATION OF SECTION- This section shall apply to any
credit amount allocated for taxable years beginning after December
31, 1997, and before January 1, 2003.
`SEC. 1400C. ZERO PERCENT CAPITAL GAINS RATE.
`(a) EXCLUSION- Gross income shall not include qualified capital
gain from the sale or exchange of any DC Zone asset held for more
than 5 years.
`(b) DC ZONE ASSET- For purposes of this section--
`(1) IN GENERAL- The term `DC Zone asset' means--
`(A) any DC Zone business stock,
`(B) any DC Zone partnership interest, and
`(C) any DC Zone business property.
`(2) DC ZONE BUSINESS STOCK-
`(A) IN GENERAL- The term `DC Zone business stock' means
any stock in a domestic corporation which is originally
issued after December 31, 1997, if--
`(i) such stock is acquired by the taxpayer, before
January 1, 2003, at its original issue (directly or
through an underwriter) solely in exchange for cash,
`(ii) as of the time such stock was issued, such
corporation was a DC Zone business (or, in the case of
a new corporation, such corporation was being organized
for purposes of being a DC Zone business), and
`(iii) during substantially all of the taxpayer's
holding period for such stock, such corporation
qualified as a DC Zone business.
`(B) REDEMPTIONS- A rule similar to the rule of section
1202(c)(3) shall apply for purposes of this paragraph.
`(3) DC ZONE PARTNERSHIP INTEREST- The term `DC Zone
partnership interest' means any capital or profits interest in
a domestic partnership which is originally issued after
December 31, 1997, if--
`(A) such interest is acquired by the taxpayer, before
January 1, 2003, from the partnership solely in exchange
for cash,
`(B) as of the time such interest was acquired, such
partnership was a DC Zone business (or, in the case of a
new partnership, such partnership was being organized for
purposes of being a DC Zone business), and
`(C) during substantially all of the taxpayer's holding
period for such interest, such partnership qualified as a
DC Zone business.
A rule similar to the rule of paragraph (2)(B) shall apply for
purposes of this paragraph.
`(4) DC ZONE BUSINESS PROPERTY-
`(A) IN GENERAL- The term `DC Zone business property'
means tangible property if--
`(i) such property was acquired by the taxpayer by
purchase (as defined in section 179(d)(2)) after
December 31, 1997, and before January 1, 2003,
`(ii) the original use of such property in the DC
Zone commences with the taxpayer, and
`(iii) during substantially all of the taxpayer's
holding period for such property, substantially all of
the use of such property was in a DC Zone business of
the taxpayer.
`(B) SPECIAL RULE FOR BUILDINGS WHICH ARE SUBSTANTIALLY
IMPROVED-
`(i) IN GENERAL- The requirements of clauses (i) and
(ii) of subparagraph (A) shall be treated as met with
respect to--
`(I) property which is substantially improved by the taxpayer
before January 1, 2003, and
`(II) any land on which such property is located.
`(ii) SUBSTANTIAL IMPROVEMENT- For purposes of clause
(i), property shall be treated as substantially
improved by the taxpayer only if, during any 24-month
period beginning after December 31, 1997, additions to
basis with respect to such property in the hands of the
taxpayer exceed the greater of--
`(I) an amount equal to the adjusted basis of such property at
the beginning of such 24-month period in the hands of the taxpayer,
or
`(II) $5,000.
`(6) TREATMENT OF SUBSEQUENT PURCHASERS, ETC- The term `DC
Zone asset' includes any property which would be a DC Zone
asset but for paragraph (2)(A)(i), (3)(A), or (4)(A)(ii) in the
hands of the taxpayer if such property was a DC Zone asset in
the hands of a prior holder.
`(7) 5-YEAR SAFE HARBOR- If any property ceases to be a DC
Zone asset by reason of paragraph (2)(A)(iii), (3)(C), or
(4)(A)(iii) after the 5-year period beginning on the date the
taxpayer acquired such property, such property shall continue
to be treated as meeting the requirements of such paragraph;
except that the amount of gain to which subsection (a) applies
on any sale or exchange of such property shall not exceed the
amount which would be qualified capital gain had such property
been sold on the date of such cessation.
`(c) DC ZONE BUSINESS- For purposes of this section, the term `DC
Zone business' means any entity which is an enterprise zone
business (as defined in section 1397B), determined by treating no
area other than the DC Zone as an empowerment zone or enterprise
community.
`(d) OTHER DEFINITIONS AND SPECIAL RULES- For purposes of this
section--
`(1) QUALIFIED CAPITAL GAIN- Except as otherwise provided in
this subsection, the term `qualified capital gain' means any
gain recognized on the sale or exchange of--
`(A) a capital asset, or
`(B) property used in the trade or business (as defined
in section 1231(b)).
`(2) GAIN BEFORE 1998 OR AFTER 2007 NOT QUALIFIED- The term
`qualified capital gain' shall not include any gain
attributable to periods before January 1, 1998, or after
December 31, 2007.
`(3) CERTAIN GAIN ON REAL PROPERTY NOT QUALIFIED- The term
`qualified capital gain' shall not include any gain which would
be treated as ordinary income under section 1250 if section
1250 applied to all depreciation rather than the additional
depreciation.
`(4) INTANGIBLES AND LAND NOT INTEGRAL PART OF DC ZONE
BUSINESS- The term `qualified capital gain' shall not include
any gain which is attributable to real property, or an
intangible asset, which is not an integral part of a DC Zone
business.
`(5) RELATED PARTY TRANSACTIONS- The term `qualified capital
gain' shall not include any gain attributable, directly or
indirectly, in whole or in part, to a transaction with a
related person. For purposes of this paragraph, persons are
related to each other if such persons are described in section
267(b) or 707(b)(1).
`(e) CERTAIN OTHER RULES TO APPLY- Rules similar to the rules of
subsections (g), (h), (i)(2), and (j) of section 1202 shall apply
for purposes of this section.
`(f) SALES AND EXCHANGES OF INTERESTS IN PARTNERSHIPS AND S
CORPORATIONS WHICH ARE DC ZONE BUSINESSES- In the case of the sale
or exchange of an interest in a partnership, or of stock in an S
corporation, which was a DC Zone business during substantially all
of the period the taxpayer held such interest or stock, the amount
of qualified capital gain shall be determined without regard to--
`(1) any gain which is attributable to real property, or an
intangible asset, which is not an integral part of a DC Zone
business, and
`(2) any gain attributable to periods before January 1, 1998,
or after December 31, 2007.
`SEC. 1400D. CREDIT TO PROVIDE EQUIVALENT OF 10 PERCENT RATE
BRACKET IN LIEU OF 15 PERCENT BRACKET.
`(a) IN GENERAL- In the case of a DC Zone individual, there shall
be allowed as a credit against the tax imposed by this chapter for
the taxable year an amount equal to 5 percent of so much of the
taxpayer's taxable income for the year as does not exceed the
highest amount of such income which is subject to the 15 percent
rate under section 1.
`(b) DC ZONE INDIVIDUAL- For purposes of this section, the term
`DC Zone individual' means an individual who has a principal place
of abode in the District of Columbia Enterprise Zone for not less
than 183 days of the taxable year.
`(c) CREDIT NOT TO APPLY TO ESTATE OR TRUST- This section shall
not apply to an estate or trust.
`(d) COORDINATION WITH OTHER CREDITS- For purposes of this
chapter, the credit under this section shall be treated as a credit
under subpart A of part IV of subchapter A.
`(e) TERMINATION- This section shall not apply to any taxable
year beginning after December 31, 2007.'.
(b) CREDITS MADE PART OF GENERAL BUSINESS CREDIT-
(1) Subsection (b) of section 38 is amended by striking
`plus' at the end of paragraph (11), by striking the period at
the end of paragraph (12) and inserting `, plus', and by adding
at the end the following new paragraph:
`(13) the DC Zone investment credit determined under section
1400B(a).'.
(2) Subsection (d) of section 39 is amended by adding at the
end the following new paragraph:
`(8) NO CARRYBACK OF DC ZONE CREDITS BEFORE EFFECTIVE DATE-
No portion of the unused business credit for any taxable year
which is attributable to the credit under section 1400B, or to
the credits under subchapter U by reason of section 1400, may
be carried back to a taxable year ending before the date of the
enactment of sections 1400B and 1400.'.
(3) Subsection (c) of section 196 is amended by striking
`and' at the end of paragraph (6), by striking the period at
the end of paragraph (7) and inserting `, and', and by adding
at the end the following new paragraph:
`(8) the DC Zone investment credit determined under section
1400B(a).'.
(c) CLERICAL AMENDMENT- The table of subchapters for chapter 1 is
amended by adding at the end the following new item:
`SUBCHAPTER W. DISTRICT OF COLUMBIA ENTERPRISE ZONE.'.
(d) EFFECTIVE DATE- This section shall take effect on the date of
the enactment of this Act.
SEC. 702. INCENTIVES CONDITIONED ON OTHER DC REFORM.
The amendments made by section 701 shall not take effect unless
an entity known as the Economic Development Corporation is created
by Federal law in 1997 as part of the District of Columbia
government.
TITLE VIII--WELFARE-TO-WORK INCENTIVES
SEC. 801. INCENTIVES FOR EMPLOYING LONG-TERM FAMILY ASSISTANCE
RECIPIENTS.
(a) IN GENERAL- Subpart F of part IV of subchapter A of chapter 1
is amended by inserting after section 51 the following new section:
`SEC. 51A. TEMPORARY INCENTIVES FOR EMPLOYING LONG-TERM FAMILY
ASSISTANCE RECIPIENTS.
`(a) DETERMINATION OF AMOUNT- For purposes of section 38, the
amount of the welfare-to-work credit determined under this section
for the taxable year shall be equal to--
`(1) 35 percent of the qualified first-year wages for such
year, and
`(2) 50 percent of the qualified second-year wages for such
year.
`(b) QUALIFIED WAGES DEFINED- For purposes of this section--
`(1) IN GENERAL- The term `qualified wages' means the wages
paid or incurred by the employer during the taxable year to
individuals who are long-term family assistance recipients.
`(2) QUALIFIED FIRST-YEAR WAGES- The term `qualified
first-year wages' means, with respect to any individual,
qualified wages attributable to service rendered during the
1-year period beginning with the day the individual begins work
for the employer.
`(3) QUALIFIED SECOND-YEAR WAGES- The term `qualified
second-year wages' means, with respect to any individual,
qualified wages attributable to service rendered during the
1-year period beginning on the day after the last day of the
1-year period with respect to such individual determined under
paragraph (2).
`(4) ONLY FIRST $10,000 OF WAGES PER YEAR TAKEN INTO ACCOUNT-
The amount of the qualified first-year wages, and the amount of
qualified second-year wages, which may be taken into account
with respect to any individual shall not exceed $10,000 per year.
`(5) WAGES-
`(A) IN GENERAL- The term `wages' has the meaning given
such term by section 51(c), without regard to paragraph (4)
thereof.
`(B) CERTAIN AMOUNTS TREATED AS WAGES- The term `wages'
includes amounts paid or incurred by the employer which are
excludable from such recipient's gross income under--
`(i) section 105 (relating to amounts received under
accident and health plans),
`(ii) section 106 (relating to contributions by
employer to accident and health plans),
`(iii) section 127 (relating to educational
assistance programs) or would be so excludable but for
section 127(d), but only to the extent paid or incurred
to a person not related to the employer, or
`(iv) section 129 (relating to dependent care
assistance programs).
The amount treated as wages by clause (i) or (ii) for any
period shall be based on the reasonable cost of coverage
for the period, but shall not exceed the applicable premium
for the period under section 4980B(f)(4).
`(C) SPECIAL RULES FOR AGRICULTURAL AND RAILWAY LABOR- If
such recipient is an employee to whom subparagraph (A) or
(B) of section 51(h)(1) applies, rules similar to the rules
of such subparagraphs shall apply except that--
`(i) such subparagraph (A) shall be applied by
substituting `$10,000' for `$6,000', and
`(ii) such subparagraph (B) shall be applied by
substituting `$833.33' for `$500'.
`(c) LONG-TERM FAMILY ASSISTANCE RECIPIENTS- For purposes of this
section--
`(1) IN GENERAL- The term `long-term family assistance
recipient' means any individual who is certified by the
designated local agency (as defined in section 51(d)(10))--
`(A) as being a member of a family receiving assistance
under a IV-A program (as defined in section 51(d)(2)(B))
for at least the 18-month period ending on the hiring date.
`(B)(i) as being a member of a family receiving such
assistance for 18 months beginning after the date of the
enactment of this section, and
`(ii) as having a hiring date which is not more than 2
years after the end of the earliest such 18-month period, or
`(C)(i) as being a member of a family which ceased to be
eligible after the date of the enactment of this section
for such assistance by reason of any limitation imposed by
Federal or State law on the maximum period such assistance
is payable to a family, and
`(ii) as having a hiring date which is not more than 2
years after the date of such cessation.
`(2) HIRING DATE- The term `hiring date' has the meaning
given such term by section 51(d).
`(d) CERTAIN RULES TO APPLY-
`(1) IN GENERAL- Rules similar to the rules of section 52,
and subsections (d)(11), (f), (g), (i) (as in effect on the day
before the date of the enactment of the Taxpayer Reief Act of
1997), (j), and (k) of section 51, shall apply for purposes of
this section.
`(2) CREDIT TO BE PART OF GENERAL BUSINESS CREDIT, ETC-
References to section 51 in section 38(b), 280C(a), and
1396(c)(3) shall be treated as including references to this
section.
`(e) COORDINATION WITH WORK OPPORTUNITY CREDIT- If a credit is
allowed under this section to an employer with respect to an
individual for any taxable year, then for purposes of applying
section 51 to such employer, such individual shall not be treated
as a member of a targeted group for such taxable year.
`(f) TERMINATION- This section shall not apply to individuals who
begin work for the employer after April 30, 1999.'.
(b) CLERICAL AMENDMENT- The table of sections for subpart F of
part IV of subchapter A of chapter 1 is amended by inserting after
the item relating to section 51 the following new item:
`SEC. 51A. TEMPORARY INCENTIVES FOR EMPLOYING LONG-TERM FAMILY
ASSISTANCE RECIPIENTS.'.
(c) EFFECTIVE DATE- The amendments made by this section shall
apply to individuals who begin work for the employer after December
31, 1997.
TITLE IX--MISCELLANEOUS PROVISIONS
SUBTITLE A--PROVISIONS RELATING TO EXCISE TAXES
SEC. 901. REPEAL OF TAX ON DIESEL FUEL USED IN RECREATIONAL BOATS.
(a) IN GENERAL- Subparagraph (B) of section 6421(e)(2) (defining
off-highway business use) is amended by striking clauses (iii) and
(iv).
(b) CONFORMING AMENDMENTS-
(1) Subparagraph (A) of section 4041(a)(1) is amended--
(A) by striking `, a diesel-powered train, or a
diesel-powered boat' each place it appears and inserting
`or a diesel-powered train', and
(B) by striking `vehicle, train, or boat' and inserting
`vehicle or train'.
(2) Paragraph (1) of section 4041(a) is amended by striking
subparagraph (D).
(3) Paragraph (2) of section 9503(f) is amended by striking
subparagraph (C) and by redesignating subparagraphs (D) and (E)
as subparagraphs (C) and (D), respectively.
(c) EFFECTIVE DATE- The amendments made by this section shall
take effect on January 1, 1998.
SEC. 902. CONTINUED APPLICATION OF TAX ON IMPORTED RECYCLED
HALON-1211.
(a) IN GENERAL- Paragraph (1) of section 4682(d) is amended by
striking `recycled halon' and inserting `recycled Halon-1301 or
recycled Halon-2402'.
(b) EFFECTIVE DATE- The amendment made by subsection (a) shall
take effect on the date of the enactment of this Act.
SEC. 903. UNIFORM RATE OF TAX ON VACCINES.
(a) IN GENERAL- Subsection (b) of section 4131 is amended to read
as follows:
`(b) AMOUNT OF TAX-
`(1) IN GENERAL- The amount of the tax imposed by subsection
(a) shall be 84 cents per dose of any taxable vaccine.
`(2) COMBINATIONS OF VACCINES- If any taxable vaccine is
described in more than 1 subparagraph of section 4132(a)(1),
the amount of the tax imposed by subsection (a) on such vaccine
shall be the sum of the amounts for the vaccines which are so
included.'.
(b) TAXABLE VACCINES- Paragraph (1) of section 4132(a) is amended
to read as follows:
`(1) TAXABLE VACCINE- The term `taxable vaccine' means any of
the following vaccines which are manufactured or produced in
the United States or entered into the United States for
consumption, use, or warehousing:
`(A) Any vaccine containing diphtheria toxoid.
`(B) Any vaccine containing tetanus toxoid.
`(C) Any vaccine containing pertussis bacteria, extracted
or partial cell bacteria, or specific pertussis antigens.
`(D) Any vaccine against measles.
`(E) Any vaccine against mumps.
`(F) Any vaccine against rubella.
`(G) Any vaccine containing polio virus.
`(H) Any HIB vaccine.
`(I) Any vaccine against hepatitis B.
`(J) Any vaccine against chicken pox.'.
(c) CONFORMING AMENDMENT- Subsection (a) of section 4132 is
amended by striking paragraphs (2), (3), and (4) and by
redesignating paragraphs (5) through (8) as paragraphs (2) through
(5), respectively.
(d) EFFECTIVE DATE- The amendments made by this section shall
take effect on October 1, 1997.
SEC. 904. OPERATORS OF MULTIPLE GASOLINE RETAIL OUTLETS TREATED AS
WHOLESALE DISTRIBUTOR FOR REFUND PURPOSES.
(a) IN GENERAL- Subparagraph (B) of section 6416(a)(4) (defining
whole distributor) is amended by adding at the end the following
new sentence: `Such term includes any person who makes retail sales
of gasoline at 10 or more retail motor fuel outlets.'.
(b) EFFECTIVE DATE- The amendment made by subsection (a) shall
take effect on the date of the enactment of this Act.
SEC. 905. EXEMPTION OF ELECTRIC AND OTHER CLEAN-FUEL MOTOR VEHICLES
FROM LUXURY AUTOMOBILE CLASSIFICATION.
(a) IN GENERAL- Subsection (a) of section 4001 (relating to
imposition of tax) is amended to read as follows:
`(a) IMPOSITION OF TAX-
`(1) IN GENERAL- There is hereby imposed on the 1st retail
sale of any passenger vehicle a tax equal to 10 percent of the
price for which so sold to the extent such price exceeds the
applicable amount.
`(2) APPLICABLE AMOUNT-
`(A) IN GENERAL- Except as provided in subparagraphs (B)
and (C), the applicable amount is $30,000.
`(B) QUALIFIED CLEAN-FUEL VEHICLE PROPERTY- In the case
of a passenger vehicle which is propelled by a fuel which
is not a clean-burning fuel to which is installed qualified
clean-fuel vehicle property (as defined in section
179A(c)(1)(A)) for purposes of permitting such vehicle to
be propelled by a clean-burning fuel, the applicable amount
is equal to the sum of--
`(i) $30,000, plus
`(ii) the increase in the price for which the
passenger vehicle was sold (within the meaning of
section 4002) due to the installation of such property.
`(C) PURPOSE BUILT PASSENGER VEHICLE-
`(i) IN GENERAL- In the case of a purpose built
passenger vehicle, the applicable amount is equal to
150 percent of $30,000.
`(ii) PURPOSE BUILT PASSENGER VEHICLE- For purposes
of clause (i), the term `purpose built passenger
vehicle' means a passenger vehicle produced by an
original equipment manufacturer and designed so that
the vehicle may be propelled primarily by electricity.'.
(b) CONFORMING AMENDMENTS-
(1) Subsection (e) of section 4001 (relating to inflation
adjustment) is amended to read as follows:
`(e) INFLATION ADJUSTMENT-
`(1) IN GENERAL- The $30,000 amount in subparagraphs (A),
(B)(i), and (C)(i) of subsection (a)(2) shall be increased by
an amount equal to--
`(A) $30,000, multiplied by
`(B) the cost-of-living adjustment under section 1(f)(3)
for the calendar year in which the vehicle is sold,
determined by substituting `calendar year 1990' for
`calendar year 1992' in subparagraph (B) thereof.
`(2) ROUNDING- If any amount as adjusted under paragraph (1)
is not a multiple of $2,000, such amount shall be rounded to
the next lowest multiple of $2,000.'.
(2) Subsection (f) of section 4001 (relating to phasedown) is
amended by striking `subsection (a)' and inserting `subsection
(a)(1)'.
(3) Subparagraph (B) of section 4003(a)(2) is amended to read
as follows:
`(B) the appropriate applicable amount as determined
under section 4001(a)(2).'.
(c) EFFECTIVE DATE- The amendments made by this section shall
apply to sales and installations occurring on or after the date of
the enactment of this Act.
SUBTITLE B--PROVISIONS RELATING TO PENSIONS AND FRINGE BENEFITS
SEC. 911. SECTION 401(K) PLANS FOR CERTAIN IRRIGATION AND DRAINAGE
ENTITIES.
(a) IN GENERAL- Subparagraph (B) of section 401(k)(7) (relating
to rural cooperative plan) is amended--
(1) by striking `and' at the end of clause (iii), by
redesignating clause (iv) as clause (v), and by inserting after
clause (iii) the following new clause:
`(iv) any organization which--
`(I) is a mutual irrigation or ditch company described in section
501(c)(12) (without regard to the 85 percent requirement thereof), or
`(II) is a district organized under the laws of a State as a
municipal corporation for the purpose of irrigation, water
conservation, or drainage, and', and
(2) in clause (v), as so redesignated, by striking `or (iii)'
and inserting `, (iii), or (iv)'.
(b) EFFECTIVE DATE- The amendments made by subsection (a) shall
apply to years beginning after December 31, 1997.
SEC. 912. EXTENSION OF MORATORIUM ON APPLICATION OF CERTAIN
NONDISCRIMINATION RULES TO STATE AND LOCAL
GOVERNMENTS.
(a) GENERAL NONDISCRIMINATION AND PARTICIPATION RULES-
(1) NONDISCRIMINATION REQUIREMENTS- Section 401(a)(5)
(relating to qualified pension, profit-sharing, and stock bonus
plans) is amended by adding at the end the following:
`(G) GOVERNMENTAL PLANS- Paragraphs (3) and (4) shall not
apply to a governmental plan (within the meaning of section
414(d)).'.
(2) ADDITIONAL PARTICIPATION REQUIREMENTS- Section
401(a)(26)(H) (relating to additional participation
requirements) is amended to read as follows:
`(H) EXCEPTION FOR GOVERNMENTAL PLANS- This paragraph
shall not apply to a governmental plan (within the meaning
of section 414(d)).'.
(3) MINIMUM PARTICIPATION STANDARDS- Section 410(c)(2)
(relating to application of participation standards to certain
plans) is amended to read as follows:
`(2) A plan described in paragraph (1) shall be treated as
meeting the requirements of this section for purposes of
section 401(a), except that in the case of a plan described in
subparagraph (B), (C), or (D) of paragraph (1), this paragraph
shall only apply if such plan meets the requirements of section
401(a)(3) (as in effect on September 1, 1974).'.
(b) PARTICIPATION STANDARDS FOR QUALIFIED CASH OR DEFERRED
ARRANGEMENTS- Section 401(k)(3) (relating to application of
participation and discrimination standards) is amended by adding at
the end the following:
`(G)(i) The requirements of subparagraph (A)(i) and (C)
shall not apply to a governmental plan (within the meaning
of section 414(d)).
`(ii) The requirements of subsection (m)(2) (without
regard to subsection (a)(4)) shall apply to any matching
contribution of a governmental plan (as so defined).'.
(c) NONDISCRIMINATION RULES FOR SECTION 403(b) PLANS- Section
403(b)(12) (relating to nondiscrimination requirements) is amended
by adding at the end the following:
`(C) GOVERNMENTAL PLANS- For purposes of paragraph
(1)(D), the requirements of subparagraph (A)(i) shall not
apply to a governmental plan (within the meaning of section
414(d)).'.
(d) EFFECTIVE DATE-
(1) IN GENERAL- The amendments made by this section apply to
taxable years beginning on or after the date of enactment of
this Act.
(2) TREATMENT FOR YEARS BEGINNING BEFORE DATE OF ENACTMENT- A
governmental plan (within the meaning of section 414(d) of the
Internal Revenue Code of 1986) shall be treated as satisfying
the requirements of sections 401(a)(3), 401(a)(4), 401(a)(26),
401(k), 401(m), 403 (b)(1)(D) and (b)(12), and 410 of such Code
for all taxable years beginning before the date of enactment of
this Act.
SEC. 913. TREATMENT OF CERTAIN DISABILITY BENEFITS RECEIVED BY
FORMER POLICE OFFICERS OR FIREFIGHTERS.
(a) GENERAL RULE- For purposes of determining whether any amount
to which this section applies is excludable from gross income under
section 104(a)(1) of the Internal Revenue Code of 1986, the
following conditions shall be treated as personal injuries or
sickness in the course of employment:
(1) Heart disease.
(2) Hypertension.
(b) AMOUNTS TO WHICH SECTION APPLIES- This section shall apply to
any amount--
(1) which is payable--
(A) to an individual (or to the survivors of an
individual) who was a full-time employee of any police
department or fire department which is organized and
operated by a State, by any political subdivision thereof,
or by any agency or instrumentality of a State or political
subdivision thereof, and
(B) under a State law (as amended on May 19, 1992) which
irrebuttably presumed that heart disease and hypertension
are work-related illnesses but only for employees
separating from service before July 1, 1992; and
(2) which was received in calendar year 1989, 1990, or 1991.
(c) WAIVER OF STATUTE OF LIMITATIONS- If, on the date of the
enactment of this Act (or at any time within the 1-year period
beginning on such date of enactment) credit or refund of any
overpayment of tax resulting from the provisions of this section is
barred by any law or rule of law, credit or refund of such
overpayment shall, nevertheless, be allowed or made if claim
therefore is filed before the date 1 year after such date of
enactment.
SEC. 914. PORTABILITY OF PERMISSIVE SERVICE CREDIT UNDER
GOVERNMENTAL PENSION PLANS.
(a) IN GENERAL- Section 415(b)(2) (relating to the limitation for
defined benefit plans) is amended by adding at the end the
following new subparagraph:
`(J) PURCHASE OF PERMISSIVE SERVICE CREDIT-
`(i) BENEFITS TREATED AS DERIVED FROM EMPLOYER
CONTRIBUTIONS- For purposes of this section, the term
`annual benefit' shall include the accrued benefit
derived from contributions to a governmental plan
(within the meaning of section 414(d)) to purchase
permissive service credit.
`(ii) DEFINITION OF PERMISSIVE SERVICE CREDIT- For
purposes of this subparagraph, the term `permissive
service credit' means credit--
`(I) for a period of service recognized by a governmental plan
for purposes of calculating an employee's accrued benefit under
such plan,
`(II) which such employee has not received (or has forfeited), and
`(III) which such employee may receive only by making a
contribution, as determined under the governmental plan, which does
not exceed the amount (actuarially determined under the terms of
such governmental plan) necessary to fund the accrued benefit
attributable to such period of service.
`(iii) NO EFFECT ON EMPLOYER `PICK-UP' CONTRIBUTIONS-
Nothing in this subparagraph shall be construed as
preventing the application of section 414(h) to
contributions to purchase permissive service credit.'.
(b) CONFORMING AMENDMENT- Section 415(c)(2) is amended by adding
at the end the following new sentence: `The term `annual addition'
shall not include contributions to purchase permissive service
credit (within the meaning of subsection (b)(2)(J)).'.
(c) EFFECTIVE DATE- The amendments made by this section shall
apply to years beginning after December 31, 1997.
SEC. 915. GRATUITOUS TRANSFERS FOR THE BENEFIT OF EMPLOYEES.
(a) IN GENERAL- Subparagraph (C) of section 664(d)(1) and
subparagraph (C) of section 664(d)(2) are each amended by striking
the period at the end thereof and inserting `or, to the extent the
remainder interest is in qualified employer securities (as defined
in paragraph (3)(C)), is to be transferred to an employee stock
ownership plan (as defined in section 4975(e)(7)) in a qualified
gratuitous transfer (as defined by subsection (g)).'.
(b) QUALIFIED GRATUITOUS TRANSFER DEFINED- Section 664 is amended
by adding at the end the following new subsection:
`(g) QUALIFIED GRATUITOUS TRANSFER OF QUALIFIED EMPLOYER
SECURITIES-
`(1) IN GENERAL- For purposes of this section, the term
`qualified gratuitous transfer' means a transfer of qualified
employer securities to an employee stock ownership plan (as
defined in section 4975(e)(7)) but only to the extent that--
`(A) the securities transferred previously passed from a
decedent dying before January 1, 1999, to a trust described
in paragraph (1) or (2) of subsection (d),
`(B) no deduction under section 404 is allowable with
respect to such transfer,
`(C) such plan contains the provisions required by
paragraph (3),
`(D) such plan treats such securities as being
attributable to employer contributions but without regard
to the limitations otherwise applicable to such
contributions under section 404, and
`(E) the employer whose employees are covered by the plan
described in this paragraph files with the Secretary a
verified written statement consenting to the application of
sections 4978 and 4979A with respect to such employer.
`(2) EXCEPTION- The term `qualified gratuitous transfer'
shall not include a transfer of qualified employer securities
to an employee stock ownership plan unless--
`(A) such plan was in existence on August 1, 1996,
`(B) at the time of the transfer, the decedent and
members of the decedent's family (within the meaning of
section 267(c)(4)) own (directly or through the application
of section 318(a)) no more than 10 percent of the value of
the stock of the corporation referred to in paragraph (4),
and
`(C) immediately after the transfer, such plan owns
(after the application of section 318(a)(4)) at least 60
percent of the value of the outstanding stock of the
corporation.
`(3) PLAN REQUIREMENTS- A plan contains the provisions
required by this paragraph if such plan provides that--
`(A) the qualified employer securities so transferred are
allocated to plan participants in a manner consistent with
section 401(a)(4),
`(B) plan participants are entitled to direct the plan as
to the manner in which such securities which are entitled
to vote and are allocated to the account of such
participant are to be voted,
`(C) an independent trustee votes the securities so
transferred which are not allocated to plan participants,
`(D) each participant who is entitled to a distribution
from the plan has the rights described in subparagraphs (A)
and (B) of section 409(h)(1),
`(E) such securities are held in a suspense account under
the plan to be allocated each year, up to the limitations
under section 415(c), after first allocating all other
annual additions for the limitation year, up to the
limitations under sections 415 (c) and (e), and
`(F) on termination of the plan, all securities so
transferred which are not allocated to plan participants as
of such termination are to be transferred to, or for the
use of, an organization described in section 170(c).
For purposes of the preceding sentence, the term `independent
trustee' means any trustee who is not a member of the family
(within the meaning of section 267(c)(4)) of the decedent or a
5-percent shareholder. A plan shall not fail to be treated as
meeting the requirements of section 401(a) by reason of meeting
the requirements of this subsection.
`(4) QUALIFIED EMPLOYER SECURITIES- For purposes of this
section, the term `qualified employer securities' means
employer securities (as defined in section 409(l)) which are
issued by a domestic corporation--
`(A) which has no outstanding stock which is readily
tradable on an established securities market, and
`(B) which has only 1 class of stock.
`(5) TREATMENT OF SECURITIES ALLOCATED BY EMPLOYEE STOCK
OWNERSHIP PLAN TO PERSONS RELATED TO DECEDENT OR 5-PERCENT
SHAREHOLDERS-
`(A) IN GENERAL- If any portion of the assets of the plan
attributable to securities acquired by the plan in a
qualified gratuitous transfer are allocated to the account
of--
`(i) any person who is related to the decedent
(within the meaning of section 267(b)), or
`(ii) any person who, at the time of such allocation
or at any time during the 1-year period ending on the
date of the acquisition of qualified employer
securities by the plan, is a 5-percent shareholder of
the employer maintaining the plan,
the plan shall be treated as having distributed (at the
time of such allocation) to such person or shareholder the
amount so allocated.
`(B) 5-PERCENT SHAREHOLDER- For purposes of subparagraph
(A), the term `5-percent shareholder' means any person who
owns (directly or through the application of section
318(a)) more than 5 percent of the outstanding stock of the
corporation which issued such qualified employer securities
or of any corporation which is a member of the same
controlled group of corporations (within the meaning of
section 409(l)(4)) as such corporation. For purposes of t
he preceding sentence, section 318(a) shall be applied
without regard to the exception in paragraph (2)(B)(i)
thereof.
`(C) Cross reference-
`For excise tax on allocations described in subparagraph (A), see
section 4979A.
`(6) TAX ON FAILURE TO TRANSFER UNALLOCATED SECURITIES TO
CHARITY ON TERMINATION OF PLAN- If the requirements of
paragraph (3)(F) are not met with respect to any securities,
there is hereby imposed a tax on the employer maintaining the
plan in an amount equal to the sum of--
`(A) the amount of the increase in the tax which would be
imposed by chapter 11 if such securities were not
transferred as described in paragraph (1), and
`(B) interest on such amount at the underpayment rate
under section 6621 (and compounded daily) from the due date
for filing the return of the tax imposed by chapter 11.'.
(c) CONFORMING AMENDMENTS-
(1) Section 401(a)(1) is amended by inserting `or by a
charitable remainder trust pursuant to a qualified gratuitous
transfer (as defined in section 664(g)(1)),' after `stock bonus
plans),'.
(2) Section 404(a)(9) is amended by inserting after
subparagraph (B) the following new subparagraph:
`(C) A qualified gratuitous transfer (as defined in
section 664(g)(1)) shall have no effect on the amount or
amounts otherwise deductible under paragraph (3) or (7) or
under this paragraph.'.
(3) Section 415(c)(6) is amended by adding at the end thereof
the following new sentence:
`The amount of any qualified gratuitous transfer (as defined in
section 664(g)(1)) allocated to a participant for any
limitation year shall not exceed the limitations imposed by
this section, but such amount shall not be taken into account
in determining whether any other amount exceeds the limitations
imposed by this section.'.
(4) Section 415(e) is amended--
(A) by redesignating paragraph (6) as paragraph (7), and
(B) by inserting after paragraph (5) the following new
paragraph:
`(6) SPECIAL RULE FOR QUALIFIED GRATUITOUS TRANSFERS- Any
qualified gratuitous transfer of qualified employer securities
(as defined by section 664(g)) shall not be taken into account
in calculating, and shall not be subject to, the limitations
provided in this subsection.'.
(5) Subparagraph (B) of section 664(d)(1) and subparagraph
(B) of section 664(d)(2) are each amended by inserting `and
other than qualified gratuitous transfers described in
subparagraph (C)' after `subparagraph (A)'.
(6) Paragraph (4) of section 674(b) is amended by inserting
before the period `or to an employee stock ownership plan (as
defined in section 4975(e)(7)) in a qualified gratuitous
transfer (as defined in section 664(g)(1))'.
(7) Section 2055(a) is amended--
(i) by striking `or' at the end of paragraph (3),
(ii) by striking the period at the end of paragraph (4)
and inserting `; or', and
(iii) by inserting after paragraph (4) the following new
paragraph:
`(5) to an employee stock ownership plan if such transfer
qualifies as a qualified gratuitous transfer of qualified
employer securities within the meaning of section 664(g).'.
(8) Paragraph (8) of section 2056(b) is amended to read as
follows:
`(8) SPECIAL RULE FOR CHARITABLE REMAINDER TRUSTS-
`(A) IN GENERAL- If the surviving spouse of the decedent
is the only beneficiary of a qualified charitable remainder
trust who is not a charitable beneficiary nor an ESOP
beneficiary, paragraph (1) shall not apply to any interest
in such trust which passes or has passed from the decedent
to such surviving spouse.
`(B) DEFINITIONS- For purposes of subparagraph (A)--
`(i) CHARITABLE BENEFICIARY- The term `charitable
beneficiary' means any beneficiary which is an
organization described in section 170(c).
`(ii) ESOP BENEFICIARY- The term `ESOP beneficiary'
means any beneficiary which is an employee stock
ownership plan (as defined in section 4975(e)(7)) that
holds a remainder interest in qualified employer
securities (as defined in section 664(g)(4)) to be
transferred to such plan in a qualified gratuitous
transfer (as defined in section 664(g)(1)).
`(iii) QUALIFIED CHARITABLE REMAINDER TRUST- The term
`qualified charitable remainder trust' means a
charitable remainder annuity trust or a charitable
remainder unitrust (described in section 664).'.
(9) Section 4947(b) is amended by inserting after paragraph
(3) the following new paragraph:
`(4) SECTION 507- The provisions of section 507(a) shall not
apply to a trust which is described in subsection (a)(2) by
reason of a distribution of qualified employer securities (as
defined in section 664(g)(4)) to an employee stock ownership
plan (as defined in section 4975(e)(7)) in a qualified
gratuitous transfer (as defined by section 664(g)).'.
(10) The last sentence of section 4975(e)(7) is amended by
inserting `and section 664(g)' after `section 409(n)'
(11) Subsection (a) of section 4978 is amended--
(A) by inserting `or acquired any qualified employer
securities in a qualified gratuitous transfer to which
section 664(g) applied' after `section 1042 applied', and
(B) by inserting before the period at the end of
subparagraph (B) `60 percent of the total value of all
employer securities as of such disposition in the case of
any qualified employer securities in a qualified gratuitous
transfer to which section 664(g) applied)'.
(12) Paragraph (2) of section 4978(b) is amended--
(A) by inserting `or acquired in the qualified gratuitous
transfer to which section 664(g) applied' after `section
1042 applied', and
(B) by inserting `or to which section 664(g) applied'
after `section 1042 applied' in subparagraph (C) thereof.
(13) Subsection (c) of section 4978 is amended by striking
`written statement' and all that follows and inserting `written
statement described in section 664(g)(1)(E) or in section
1042(b)(3) (as the case may be).'.
(14) Paragraph (2) of section 4978(e) is amended by striking
the period and inserting `; except that such section shall be
applied without regard to subparagraph (B) thereof for purposes
of applying this section and section 4979A with respect to
securities acquired in a qualified gratuitous transfer (as
defined in section 664(g)(1)).'.
(15) Subsection (a) of section 4979A is amended to read as
follows:
`(a) IMPOSITION OF TAX- If--
`(1) there is a prohibited allocation of qualified securities
by any employee stock ownership plan or eligible worker-owned
cooperative, or
`(2) there is an allocation described in section 664(g)(5)(A),
there is hereby imposed a tax on such allocation equal to 50
percent of the amount involved.'.
(16) Subsection (c) of section 4979A is amended to read as
follows:
`(c) LIABILITY FOR TAX- The tax imposed by this section shall be
paid by--
`(1) the employer sponsoring such plan, or
`(2) the eligible worker-owned cooperative,
which made the written statement described in section 664(g)(1)(E)
or in section 1042(b)(3)(B) (as the case may be).'.
(17) Section 4979A is amended by redesignating subsection (d)
as subsection (e) and by inserting after subsection (c) the
following new subsection:
`(d) SPECIAL STATUTE OF LIMITATIONS FOR TAX ATTRIBUTABLE TO
CERTAIN ALLOCATIONS- The statutory period for the assessment of any
tax imposed by this section on an allocation described in
subsection (a)(2) of qualified employer securities shall not expire
before the date which is 3 years from the later of--
`(1) the 1st allocation of such securities in connection with
a qualified gratuitous transfer (as defined in section
664(g)(1)), or
`(2) the date on which the Secretary is notified of the
allocation described in subsection (a)(2).'.
(d) EFFECTIVE DATE- The amendments made by this section shall
apply to transfers made by trusts to, or for the use of, an
employee stock ownership plan after the date of the enactment of
this Act.
SEC. 916. TREATMENT OF CERTAIN TRANSPORTATION ON NON-COMMERCIALLY
OPERATED AIRCRAFT AS A FRINGE BENEFIT EXCLUDABLE
FROM GROSS INCOME.
(a) IN GENERAL- Subsection (b) of section 132 (relating to
no-additional-cost service defined) is amended to read as follows:
`(b) NO-ADDITIONAL-COST SERVICE DEFINED- For purposes of this
section, the term `no-additional-cost service' means any service
provided by an employer to an employee for use by such employee if--
`(1) such service--
`(A) is offered for sale to customers in the ordinary
course of the line of business of the employer in which the
employee is performing services, or
`(B) consists of transportation on an aircraft, if--
`(i) transportation on such aircraft is not offered
for sale to customers,
`(ii) such transportation for use by such employee is
provided on a flight made in the ordinary course of the
trade or business of an employer which owns or leases
such aircraft for use in such trade or business, and
`(iii) the flight on which the transportation is
provided would have been made whether or not such
employee was transported on the flight, and
`(2) the employer incurs no substantial additional cost
(including forgone revenue) in providing such service to the
employee (determined without regard to any amount paid by the
employee for such service).'.
(b) EFFECTIVE DATE- The amendment made by subsection (a) shall
apply to services provided after December 31, 1997.
SEC. 917. MINIMUM PENSION ACCRUED BENEFIT DISTRIBUTABLE WITHOUT
CONSENT INCREASED TO $5,000.
(a) IN GENERAL- Subparagraph (A) of section 411(a)(11) (relating
to restrictions on certain mandatory distributions) is amended by
striking `$3,500' and inserting `the applicable limit'.
(b) APPLICABLE LIMIT- Paragraph (11) of section 411(a) is amended
by adding at the end the following new subparagraph:
`(D) APPLICABLE LIMIT-
`(i) IN GENERAL- For purposes of subparagraph (A),
the applicable limit is $5,000.
`(ii) INFLATION ADJUSTMENT- In the case of plan years
beginning in a calendar year after 1998, the dollar
amount contained in clause (i) shall be increased by an
amount equal to--
`(I) such dollar amount, multiplied by
`(II) the cost-of-living adjustment determined under section
1(f)(3) for such calendar year by substituting `calendar year 1997'
for `calendar year 1992' in subparagraph (B) thereof.
If any amount as adjusted under the preceding sentence
is not a multiple of $50, such amount shall be rounded
to the next lowest multiple of $50.'.
(c) CONFORMING AMENDMENTS-
(1) Section 411(a)(7)(B), paragraphs (1) and (2) of section
417(e), and section 457(e)(9) are each amended by striking
`$3,500' each place in appears (other than the headings) and
inserting `the applicable limit under section 411(a)(11)(D)'.
(2) The headings for paragraphs (1) and (2) of section 417(e)
and subparagraph (A) of section 457(e)(9) are each amended by
striking `$3,500' and inserting `APPLICABLE LIMIT'.
(d) EFFECTIVE DATE- The amendments made by this section shall
apply to plan years beginning after the date of the enactment of
this Act.
SEC. 918. CLARIFICATION OF CERTAIN RULES RELATING TO EMPLOYEE STOCK
OWNERSHIP PLANS OF S CORPORATIONS.
(a) CERTAIN CASH DISTRIBUTIONS PERMITTED-
(1) Paragraph (2) of section 409(h) is amended by adding at
the end the following new subparagraph:
`(B) PLAN MAINTAINED BY S CORPORATION- In the case of a
plan established and maintained by an S corporation which
otherwise meets the requirements of this subsection or
section 4975(e)(7), such plan shall not be treated as
failing to meet the requirements of this subsection or
section 401(a) merely because it does not permit a
participant to exercise the right described in paragraph
(1)(A) if such plan provides that the participant entitled
to a distribution has a right to receive the distribution
in cash.'.
(2) Paragraph (2) of section 409(h) is amended--
(A) by striking `a plan which' in the first sentence and
inserting the following:
`(A) IN GENERAL- A plan which', and
(B) by moving the text before subparagraph (B) 2 ems to
the right.
(b) SHAREHOLDER-EMPLOYEES NOT TREATED AS OWNER-EMPLOYEES UNDER
TAX ON PROHIBITED TRANSACTIONS- The last sentence of section
4975(d) is amended by striking all that follows `preceding
sentence,' through `Revision Act of 1982,'.
(c) EFFECTIVE DATE- The amendments made by this section shall
apply to taxable years beginning after December 31, 1997.
SUBTITLE C--REVISIONS RELATING TO DISASTERS
SEC. 921. AUTHORITY TO POSTPONE CERTAIN TAX-RELATED DEADLINES BY
REASON OF PRESIDENTIALLY DECLARED DISASTER.
(a) IN GENERAL- Chapter 77 is amended by inserting after section
7508 the following new section:
`SEC. 7508A. AUTHORITY TO POSTPONE CERTAIN TAX-RELATED DEADLINES BY
REASON OF PRESIDENTIALLY DECLARED DISASTER.
`(a) IN GENERAL- In the case of a taxpayer determined by the
Secretary to be affected by a Presidentially declared disaster (as
defined by section 1033(h)(3)), the Secretary may prescribe
regulations under which a period of up to 90 days may be
disregarded in determining, under the internal revenue laws, in
respect of any tax liability (including any penalty, additional
amount, or addition to the tax) of such taxpayer--
`(1) whether any of the acts by the taxpayer described in
paragraph (1) of section 7508(a) were performed within the time
prescribed therefor, and
`(2) the amount of any credit or refund.
`(b) INTEREST ON OVERPAYMENTS AND UNDERPAYMENTS- Subsection (a)
shall not apply for the purpose of determining interest on any
overpayment or underpayment.'.
(b) CLERICAL AMENDMENT- The table of sections for chapter 77 is
amended by inserting after the item relating to section 7508 the
following new item:
`SEC. 7508A. AUTHORITY TO POSTPONE CERTAIN TAX-RELATED DEADLINES BY
REASON OF PRESIDENTIALLY DECLARED DISASTER.'.
(c) EFFECTIVE DATE- The amendments made by this section shall
apply with respect to any period for performing an act that has not
expired before the date of the enactment of this Act.
SEC. 922. USE OF CERTAIN APPRAISALS TO ESTABLISH AMOUNT OF DISASTER
LOSS.
(a) IN GENERAL- Subsection (i) of section 165 is amended by
adding at the end the following new paragraph:
`(4) USE OF DISASTER LOAN APPRAISALS TO ESTABLISH AMOUNT OF
LOSS- Nothing in this title shall be construed to prohibit the
Secretary from prescribing regulations or other guidance under
which an appraisal for the purpose of obtaining a loan of
Federal funds or a loan guarantee from the Federal Government
as a result of a Presidentially declared disaster (as defined
by section 1033(h)(3)) may be used to establish the amount of
any loss described in paragraph (1) or (2).'.
(b) EFFECTIVE DATE- The amendment made by subsection (a) shall
take effect on the date of the enactment of this Act.
SEC. 923. TREATMENT OF LIVESTOCK SOLD ON ACCOUNT OF WEATHER-RELATED
CONDITIONS.
(a) DEFERRAL OF INCOME INCLUSION- Subsection (e) of section 451
(relating to special rules for proceeds from livestock sold on
account of drought) is amended--
(1) by striking `drought conditions, and that these drought
conditions' in paragraph (1) and inserting `drought, flood, or
other weather-related conditions, and that such conditions'; and
(2) by inserting `, FLOOD, OR OTHER WEATHER-RELATED
CONDITIONS' after `DROUGHT' in the subsection heading.
(b) INVOLUNTARY CONVERSIONS- Subsection (e) of section 1033
(relating to livestock sold on account of drought) is amended--
(1) by inserting `, flood, or other weather-related
conditions' before the period at the end thereof; and
(2) by inserting `, FLOOD, OR OTHER WEATHER-RELATED
CONDITIONS' after `DROUGHT' in the subsection heading.
(c) EFFECTIVE DATE- The amendments made by this section shall
apply to sales and exchanges after December 31, 1996.
SEC. 924. MORTGAGE FINANCING FOR RESIDENCES LOCATED IN DISASTER
AREAS.
Subsection (k) of section 143 (relating to mortgage revenue
bonds; qualified mortgage bond and qualified veteran's mortgage
bond) is amended by adding at the end the following new paragraph:
`(11) SPECIAL RULES FOR RESIDENCES LOCATED IN DISASTER AREAS-
In the case of a residence located in an area determined by the
President to warrant assistance from the Federal Government
under the Disaster Relief and Emergency Assistance Act (as in
effect on the date of the enactment of the Taxpayer Relief Act
of 1997), this section shall be applied with the following
modifications to financing provided with respect to such
residence within 1 year after the date of the disaster
declaration:
`(A) Subsection (d) (relating to 3-year requirement)
shall not apply.
`(B) Subsections (e) and (f) (relating to purchase price
requirement and income requirement) shall be applied as if
such residence were a targeted area residence.
The preceding sentence shall apply only with respect to bonds
issued after December 31, 1996, and before January 1, 2000.'.
SUBTITLE D--PROVISIONS RELATING TO EMPLOYMENT TAXES
SEC. 931. CLARIFICATION OF EMPLOYMENT TAX STATUS OF INDIVIDUALS
DISTRIBUTING BAKERY PRODUCTS.
(a) INTERNAL REVENUE CODE- Subparagraph (A) of section 3121(d)(3)
is amended by striking `bakery products,'.
(b) SOCIAL SECURITY ACT- Subparagraph (A) of section 210(j)(3) of
the Social Security Act is amended by striking `bakery products,'.
(c) EFFECTIVE DATE- The amendments made by this section shall
apply to services performed after December 31, 1997.
SEC. 932. CLARIFICATION OF STANDARD TO BE USED IN DETERMINING
EMPLOYMENT TAX STATUS OF SECURITIES BROKERS.
(a) IN GENERAL- In determining for purposes of the Internal
Revenue Code of 1986 whether a registered representative of a
securities broker-dealer is an employee (as defined in section
3121(d) of the Internal Revenue Code of 1986), no weight shall be
given to instructions from the service recipient which are imposed
only in compliance with investor protection standards imposed by
the Federal Government, any State government, or a governing body
pursuant to a delegation by a Federal or State agency.
(b) EFFECTIVE DATE- Subsection (a) shall apply to services
performed after December 31, 1997.
SEC. 933. CLARIFICATION OF EXEMPTION FROM SELF-EMPLOYMENT TAX FOR
CERTAIN TERMINATION PAYMENTS RECEIVED BY FORMER
INSURANCE SALESMEN.
(a) INTERNAL REVENUE CODE- Section 1402 (relating to definitions)
is amended by adding at the end the following new subsection:
`(k) CODIFICATION OF TREATMENT OF CERTAIN TERMINATION PAYMENTS
RECEIVED BY FORMER INSURANCE SALESMEN- Nothing in subsection (a)
shall be construed as including in the net earnings from
self-employment of an individual any amount received during the
taxable year from an insurance company on account of services
performed by such individual as an insurance salesman for such
company if--
`(1) such amount is received after termination of such
individual's agreement to perform such services for such company,
`(2) such individual performs no services for such company
after such termination and before the close of such taxable year,
`(3) such individual enters into a covenant not to compete
against such company which applies to at least the 1-year
period beginning on the date of such termination, and
`(4) the amount of such payment--
`(A) depends solely on policies sold by such individual
during the last year of such agreement and the extent to
which such policies remain in force for some period after
such termination, and
`(B) does not depend to any extent on length of service
or overall earnings from services performed for such
company.'.
(b) SOCIAL SECURITY ACT- Section 211 of the Social Security Act
is amended by adding at the end the following new subsection:
`CODIFICATION OF TREATMENT OF CERTAIN TERMINATION PAYMENTS RECEIVED
BY FORMER INSURANCE SALESMEN
`(j) Nothing in subsection (a) shall be construed as including in
the net earnings from self-employment of an individual any amount
received during the taxable year from an insurance company on
account of services performed by such individual as an insurance
salesman for such company if--
`(1) such amount is received after termination of such
individual's agreement to perform such services for such company,
`(2) such individual performs no services for such company
after such termination and before the close of such taxable year,
`(3) such individual enters into a covenant not to compete
against such company which applies to at least the 1-year
period beginning on the date of such termination, and
`(4) the amount of such payment--
`(A) depends solely on policies sold by such individual
during the last year of such agreement and the extent to
which such policies remain in force for some period after
such termination, and
`(B) does not depend to any extent on length of service
or overall earnings from services performed for such
company.'.
(c) EFFECTIVE DATE- The amendments made by this section shall
apply to payments after December 31, 1997.
SEC. 934. STANDARDS FOR DETERMINING WHETHER INDIVIDUALS ARE NOT
EMPLOYEES.
(a) IN GENERAL- Chapter 25 (general provisions relating to
employment taxes) is amended by adding after section 3510 the
following new section:
`SEC. 3511. STANDARDS FOR DETERMINING WHETHER INDIVIDUALS ARE NOT
EMPLOYEES.
`(a) GENERAL RULE- For purposes of this title, and
notwithstanding any provision of this title to the contrary, if the
requirements of subsections (b), (c), and (d) are met with respect
to any service performed by any individual, then with respect to
such service--
`(1) the service provider shall not be treated as an employee,
`(2) the service recipient shall not be treated as an
employer, and
`(3) the payor shall not be treated as an employer.
`(b) SERVICE PROVIDER REQUIREMENTS WITH REGARD TO SERVICE
RECIPIENT- For the purposes of subsection (a), the requirements of
this subsection are met if the service provider, in connection with
performing the service--
`(1) has a significant investment in assets and/or training,
`(2) incurs significant unreimbursed expenses,
`(3) agrees to perform the service for a particular amount of
time or to complete a specific result and is liable for damages
for early termination without cause,
`(4) is paid primarily on a commissioned basis, or
`(5) purchases products for resale.
`(c) ADDITIONAL SERVICE PROVIDER REQUIREMENTS WITH REGARD TO
OTHERS- For the purposes of subsection (a), the requirements of
this subsection are met if--
`(1) the service provider--
`(A) has a principal place of business,
`(B) does not primarily provide the service in the
service recipient's place of business, or
`(C) pays a fair market rent for use of the service
recipient's place of business; or
`(2) the service provider--
`(A) is not required to perform service exclusively for
the service recipient, and
`(B) in the year involved, or in the preceding or
subsequent year--
`(i) has performed a significant amount of service
for other persons,
`(ii) has offered to perform service for other
persons through--
`(I) advertising,
`(II) individual written or oral solicitations,
`(III) listing with registries, agencies, brokers, and other
persons in the business of providing referrals to other service
recipients, or
`(IV) other similar activities, or
`(iii) provides service under a business name which
is registered with (or for which a license has been
obtained from) a State, a political subdivision of a
State, or any agency or instrumentality of 1 or more
States or political subdivisions.
`(d) WRITTEN DOCUMENT REQUIREMENTS- For purposes of subsection
(a), the requirements of this subsection are met if the services
performed by the individual are performed pursuant to a written
contract between such individual and the person for whom the
services are performed, or the payor, and such contract provides
that the individual will not be treated as an employee with respect
to such services for purposes of this subtitle or subtitle A.
`(e) SPECIAL RULES- For purposes of this section--
`(1) If for any taxable year any service recipient or payor
fails to meet the applicable reporting requirements of sections
6041(a), 6041A(a), or 6051 with respect to a service provider,
then, unless such failure is due to reasonable cause and not
willful neglect, this section shall not apply in determining
whether such service provider shall not be treated as an
employee of such service recipient or payor for such year.
`(2) If the service provider is performing services through
an entity owned in whole or in part by such service provider,
then the references to `service provider' in subsections (b)
through (d) may include such entity, provided that the written
contract referred to in paragraph (1) of subsection (d) may be
with either the service provider or such entity and need not be
with both.
`(f) DEFINITIONS- For the purposes of this section--
`(1) SERVICE PROVIDER- The term `service provider' means any
individual who performs service for another person.
`(2) SERVICE RECIPIENT- Except as provided in paragraph (5),
the term `service recipient' means the person for whom the
service provider performs such service.
`(3) PAYOR- Except as provided in paragraph (5), the term
`payor' means the person who pays the service provider for the
performance of such service in the event that the service
recipients do not pay the service provider.
`(4) IN CONNECTION WITH PERFORMING THE SERVICE- The term `in
connection with performing the service' means in connection or
related to--
`(A) the actual service performed by the service provider
for the service recipients or for other persons for whom
the service provider has performed similar service, or
`(B) the operation of the service provider's trade or
business.
`(5) EXCEPTIONS- The terms `service recipient' and `payor' do
not include any entity which is owned in whole or in part by
the service provider.'.
(b) CLERICAL AMENDMENT- The table of sections for chapter 25 is
amended by adding at the end the following new item:
`SEC. 3511. STANDARDS FOR DETERMINING WHETHER INDIVIDUALS ARE NOT
EMPLOYEES.'.
(c) EFFECTIVE DATE- The amendments made by this section shall
apply to services performed after December 31, 1997.
SUBTITLE E--PROVISIONS RELATING TO SMALL BUSINESSES
SEC. 941. WAIVER OF PENALTY THROUGH 1998 ON SMALL BUSINESSES
FAILING TO MAKE ELECTRONIC FUND TRANSFERS OF TAXES.
No penalty shall be imposed under the Internal Revenue Code of
1986 solely by reason of a failure by a person to use the
electronic fund transfer system established under section 6302(h)
of such Code if--
(1) such person is a member of a class of taxpayers first
required to use such system on or after July 1, 1997, and
(2) such failure occurs before January 1, 1999.
SEC. 942. CLARIFICATION OF TREATMENT OF HOME OFFICE USE FOR
ADMINISTRATIVE AND MANAGEMENT ACTIVITIES.
(a) IN GENERAL- Paragraph (1) of section 280A(c) is amended by
adding at the end the following new sentence: `For purposes of
subparagraph (A), the term `principal place of business' includes a
place of business which is used by the taxpayer for the
administrative or management activities of any trade or business of
the taxpayer if there is no other fixed location of such trade or
business where the taxpayer conducts substantial administrative or
management activities of such trade or business.'.
(b) EFFECTIVE DATE- The amendment made by subsection (a) shall
apply to taxable years beginning after December 31, 1997.
SUBTITLE F--OTHER PROVISIONS
SEC. 951. USE OF ESTIMATES OF SHRINKAGE FOR INVENTORY ACCOUNTING.
(a) IN GENERAL- Section 471 (relating to general rule for
inventories) is amended by redesignating subsection (b) as
subsection (c) and by inserting after subsection (a) the following
new subsection:
`(b) ESTIMATES OF INVENTORY SHRINKAGE PERMITTED- A method of
determining inventories shall not be deemed not to clearly reflect
income solely because it utilizes estimates of inventory shrinkage
that are confirmed by a physical count only after the last day of
the taxable year if--
`(1) the taxpayer normally does a physical count of
inventories at each location on a regular and consistent basis,
and
`(2) the taxpayer makes proper adjustments to such
inventories and to its estimating methods to the extent such
estimates are greater than or less than the actual shrinkage.'.
(b) EFFECTIVE DATE-
(1) IN GENERAL- The amendment made by this section shall
apply to taxable years ending after the date of the enactment
of this Act.
(2) COORDINATION WITH SECTION 481- In the case of any
taxpayer permitted by this section to change its method of
accounting to a permissible method for any taxable year--
(A) such changes shall be treated as initiated by the
taxpayer,
(B) such changes shall be treated as made with the
consent of the Secretary, and
(C) the period for taking into account the adjustments
under section 481 by reason of such change shall be 4 years.
SEC. 952. ASSIGNMENT OF WORKMEN'S COMPENSATION LIABILITY ELIGIBLE
FOR EXCLUSION RELATING TO PERSONAL INJURY
LIABILITY ASSIGNMENTS.
(a) IN GENERAL- Subsection (c) of section 130 (relating to
certain personal injury liability assignments) is amended--
(1) by inserting `, or as compensation under any workmen's
compensation act,' after `(whether by suit or agreement)' in
the material preceding paragraph (1),
(2) by inserting `or the workmen's compensation claim,' after
`agreement,' in paragraph (1), and
(3) by striking `section 104(a)(2)' in paragraph (2)(D) and
inserting `paragraph (1) or (2) of section 104(a)'.
(b) EFFECTIVE DATE- The amendments made by subsection (a) shall
apply to claims under workmen's compensation acts filed after the
date of the enactment of this Act.
SEC. 953. TAX-EXEMPT STATUS FOR CERTAIN STATE WORKER'S COMPENSATION
ACT COMPANIES.
(a) IN GENERAL- Section 501(c)(27) (relating to membership
organizations under workmen's compensation acts) is amended by
adding at the end the following:
`(B) Any organization (including a mutual insurance company)
if--
`(i) such organization is created by State law and is
organized and operated under State law exclusively to--
`(I) provide workmen's compensation insurance which
is required by State law or with respect to which State
law provides significant disincentives if such
insurance is not purchased by an employer, and
`(II) provide related coverage which is incidental to
workmen's compensation insurance,
`(ii) such organization must provide workmen's
compensation insurance to any employer in the State (for
employees in the State or temporarily assigned
out-of-State) which seeks such insurance and meets other
reasonable requirements relating thereto,
`(iii)(I) the State makes a financial commitment with
respect to such organization either by extending the full
faith and credit of the State to debt of such organization
or by providing the initial operating capital of such
organization and (II) in the case of periods after the date
of enactment of this subparagraph, the assets of such
organization revert to the State upon dissolution, and
`(iv) the majority of the board of directors or oversight
body of such organization are appointed by the chief
executive officer or other executive branch official of the
State, by the State legislature, or by both.'.
(b) CONFORMING AMENDMENTS- Section 501(c)(27) of such Code is
amended by inserting `(A)' after `(27)', by redesignating
subparagraphs (A), (B), and (C) as clauses (i), (ii), and (iii),
respectively, and by redesignating clauses (i) and (ii) of
subparagraphs (B) and (C) (before redesignation) as subclauses (I)
and (II), respectively.
(c) EFFECTIVE DATE- The amendments made by this section shall
apply to taxable years beginning after December 31, 1997.
SEC. 954. ELECTION TO CONTINUE EXCEPTION FROM TREATMENT OF PUBLICLY
TRADED PARTNERSHIPS AS CORPORATIONS.
(a) IN GENERAL- Section 7704 is amended by adding at the end
thereof the following new subsection:
`(g) EXCEPTION FOR EXISTING PUBLICLY TRADED PARTNERSHIPS-
`(1) IN GENERAL- Subsection (a) shall not apply to an
existing publicly traded partnership which elects the
application of this subsection and consents to the application
of the tax imposed by paragraph (3).
`(2) EXISTING PUBLICLY TRADED PARTNERSHIP- For purposes of
this section, the term `existing publicly traded partnership'
means any publicly traded partnership to which subsection (a)
does not apply as of the date of the enactment of this
paragraph (other than by reason of subsection (c)(1)).
`(3) ADDITIONAL TAX ON ELECTING PUBLICLY TRADED PARTNERSHIPS-
`(A) IMPOSITION OF TAX- There is hereby imposed for each
taxable year on the income of every electing publicly
traded partnership a tax equal to 15 percent of the gross
income for such taxable year from the active conduct of
trades and businesses by the partnership.
`(B) ELECTING PUBLICLY TRADED PARTNERSHIP- For purposes
of this paragraph, the term `electing publicly traded
partnership' means any partnership for which the consent
under paragraph (1) is in effect.
`(C) ADJUSTMENTS IN THE CASE OF TIERED PARTNERSHIPS- For
purposes of this paragraph, if the income of the
partnership includes its distributive share of income from
another partnership for any taxable year, the gross income
referred to in subparagraph (A) shall include the gross
income of such other partnership from the active conduct of
trades and businesses of such other partnership (in lieu of
such distributive share). A similar rule shall apply in the
case of lower-tiered partnerships.
`(D) TREATMENT OF TAX- For purposes of this title, the
tax imposed by this paragraph shall be treated as imposed
by chapter 1 other than for purposes of determining the
amount of any credit allowable under chapter 1.
`(4) ELECTION- An election and consent under this subsection
shall apply to the taxable year for which made and all
subsequent taxable years unless revoked by the partnership.
Such revocation may be made without the consent of the
Secretary, but, once so revoked, may not be reinstated.'.
(b) EFFECTIVE DATE- The amendment made by this section shall
apply to taxable years beginning after December 31, 1997.
SEC. 955. EXCLUSION FROM UNRELATED BUSINESS TAXABLE INCOME FOR
CERTAIN SPONSORSHIP PAYMENTS.
(a) IN GENERAL- Section 513 (relating to unrelated trade or
business income) is amended by adding at the end the following new
subsection:
`(i) TREATMENT OF CERTAIN SPONSORSHIP PAYMENTS-
`(1) IN GENERAL- The term `unrelated trade or business' does
not include the activity of soliciting and receiving qualified
sponsorship payments.
`(2) QUALIFIED SPONSORSHIP PAYMENTS- For purposes of this
subsection--
`(A) IN GENERAL- The term `qualified sponsorship payment'
means any payment made by any person engaged in a trade or
business with respect to which there is no arrangement or
expectation that such person will receive any substantial
return benefit other than the use or acknowledgement of the
name or logo (or product lines) of such person's trade or
business in connection with the activities of the
organization that receives such payment. Such a use or
acknowledgement does not include advertising such person's
products or services (including messages containing
qualitative or comparative language, price information or
other indications of savings or value, an endorsement, or
an inducement to purchase, sell, or use such products or
services).
`(B) LIMITATIONS-
`(i) CONTINGENT PAYMENTS- The term `qualified
sponsorship payment' does not include any payment if
the amount of such payment is contingent upon the level
of attendance at one or more events, broadcast ratings,
or other factors indicating the degree of public
exposure to one or more events.
`(ii) ACKNOWLEDGEMENTS OR ADVERTISING IN PERIODICALS-
The term `qualified sponsorship payment' does not
include any payment which entitles the payor to an
acknowledgement or advertising in regularly scheduled
and printed material published by or on behalf of the
payee organization that is not related to and primarily
distributed in connection with a specific event
conducted by the payee organization.
`(3) ALLOCATION OF PORTIONS OF SINGLE PAYMENT- For purposes
of this subsection, to the extent that a portion of a payment
would (if made as a separate payment) be a qualified
sponsorship payment, such portion of such payment and the other
portion of such payment shall be treated as separate payments.'.
(b) EFFECTIVE DATE- The amendment made by this section shall
apply to payments solicited or received after December 31, 1997.
SEC. 956. ASSOCIATIONS OF HOLDERS OF TIMESHARE INTERESTS TO BE
TAXED LIKE OTHER HOMEOWNERS ASSOCIATIONS.
(a) TIMESHARE ASSOCIATIONS INCLUDED AS HOMEOWNER ASSOCIATIONS-
(1) IN GENERAL- Paragraph (1) of section 528(c) (defining
homeowners association) is amended--
(A) by striking `or a residential real estate management
association' and inserting `, a residential real estate
management association, or a timeshare association' in the
material preceding subparagraph (A),
(B) by striking `or' at the end of clause (i) of
subparagraph (B), by striking the period at the end of
clause (ii) of subparagraph (B) and inserting `, or', and
by adding at the end of subparagraph (B) the following new
clause:
`(iii) owners of timeshare rights to use, or
timeshare ownership interests in, association property
in the case of a timeshare association,', and
(C) by inserting `and, in the case of a timeshare
association, for activities provided to or on behalf of
members of the association' before the comma at the end of
subparagraph (C).
(2) TIMESHARE ASSOCIATION DEFINED- Subsection (c) of section
528 is amended by redesignating paragraph (4) as paragraph (5)
and by inserting after paragraph (3) the following new paragraph:
`(4) TIMESHARE ASSOCIATION- The term `timeshare association'
means any organization (other than a condominium management
association) meeting the requirement of subparagraph (A) of
paragraph (1) if any member thereof holds a timeshare right to
use, or a timeshare ownership interest in, real property
constituting association property.'.
(b) EXEMPT FUNCTION INCOME- Paragraph (3) of section 528(d) is
amended by striking `or' at the end of subparagraph (A), by
striking the period at the end of subparagraph (B) and inserting `,
or', and by adding at the end the following new subparagraph:
`(C) owners of timeshare rights to use, or timeshare
ownership interests in, real property in the case of a
timeshare association.'.
(c) RATE OF TAX- Subsection (b) of section 528 (relating to
certain homeowners associations) is amended by inserting before the
period `(32 percent of such income in the case of a timeshare
association)'.
(d) EFFECTIVE DATE- The amendments made by this section shall
apply to taxable years beginning after December 31, 1996.
SEC. 957. ADDITIONAL ADVANCE REFUNDING OF CERTAIN VIRGIN ISLAND
BONDS.
Subclause (I) of section 149(d)(3)(A)(i) of the Internal Revenue
Code of 1986 shall not apply to the second advance refunding of any
issue of the Virgin Islands which was first advance refunded before
June 9, 1997, if the debt provisions of the refunding bonds are
changed to repeal the priority first lien requirement of the
refunded bonds.
SEC. 958. NONRECOGNITION OF GAIN ON SALE OF STOCK TO CERTAIN
FARMERS' COOPERATIVES.
(a) IN GENERAL- Section 1042 (relating to sales of stock to
employee stock ownership plans or certain cooperatives) is amended
by adding at the end the following new subsection:
`(g) APPLICATION OF SECTION TO SALES OF STOCK IN AGRICULTURAL
REFINERS AND PROCESSORS TO ELIGIBLE FARM COOPERATIVES-
`(1) IN GENERAL- This section shall apply to the sale of
stock of a qualified refiner or processor to an eligible
farmers' cooperative.
`(2) QUALIFIED REFINER OR PROCESSOR- For purposes of this
subsection, the term `qualified refiner or processor' means a
domestic corporation--
`(A) substantially all of the activities of which consist
of the active conduct of the trade or business of refining
or processing agricultural or horticultural products, and
`(B) which purchases more than one-half of such products
to be refined or processed from--
`(i) farmers who make up the eligible farmers'
cooperative which is purchasing stock in the
corporation in a transaction to which this subsection
is to apply, and
`(ii) such cooperative.
`(3) ELIGIBLE FARMERS' COOPERATIVE- For purposes of this
section, the term `eligible farmers' cooperative' means an
organization to which part I of subchapter T applies which is
engaged in the marketing of agricultural or horticultural
products.
`(4) SPECIAL RULES- In applying this section to a sale to
which paragraph (1) applies--
`(A) the eligible farmers' cooperative shall be treated
in the same manner as a cooperative described in subsection
(b)(1)(B),
`(B) subsection (b)(2) shall be applied by substituting
`100 percent' for `30 percent' each place it appears,
`(C) the determination as to whether any stock in the
domestic corporation is a qualified security shall be made
without regard to whether the stock is an employer security
or to subsection (c)(1)(A), and
`(D) paragraphs (2)(D) and (7) of subsection (c) shall
not apply.'.
(b) EFFECTIVE DATE- The amendment made by this section shall
apply to sales after December 31, 1997.
SEC. 959. EXCEPTION FROM REPORTING OF REAL ESTATE TRANSACTIONS FOR
SALES AND EXCHANGES OF CERTAIN PRINCIPAL
RESIDENCES.
(a) IN GENERAL- Subsection (e) of section 6045 (relating to
return required in the case of real estate transactions) is amended
by adding at the end the following new paragraph:
`(5) EXCEPTION FOR SALES OR EXCHANGES OF CERTAIN PRINCIPAL
RESIDENCES-
`(A) IN GENERAL- Paragraph (1) shall not apply to any
sale or exchange of a residence for $250,000 or less if the
person referred to in paragraph (2)(A) receives written
assurance in a form acceptable to the Secretary from the
seller that--
`(i) such residence is the principal residence
(within the meaning of section 121) of the seller,
`(ii) there is no federally subsidized mortgage
financing assistance with respect to the mortgage on
such residence, and
`(iii) the seller meets the requirements of section
121(a) with respect to such sale or exchange.
If such assurance includes an assurance that the seller is
married, the preceding sentence shall be applied by
substituting `$500,000' for `$250,000'.
`(B) SELLER- For purposes of this paragraph, the term
`seller' includes the person relinquishing the residence in
an exchange.'.
(b) EFFECTIVE DATE- The amendment made by subsection (a) shall
apply to sales and exchanges after the date of the enactment of
this Act.
SEC. 960. INCREASED DEDUCTIBILITY OF BUSINESS MEAL EXPENSES FOR
INDIVIDUALS SUBJECT TO FEDERAL HOURS OF SERVICE.
(a) IN GENERAL- Section 274(n) (relating to only 50 percent of
meal and entertainment expenses allowed as deduction) is amended by
adding at the end the following new paragraph:
`(3) SPECIAL RULE FOR INDIVIDUALS SUBJECT TO FEDERAL HOURS OF
SERVICE-
`(A) IN GENERAL- In the case of any expenses for food or
beverages consumed while away from home (within the meaning
of section 162(a)(2)) by an individual during, or incident
to, the period of duty subject to the hours of service
limitations of the Department of Transportation, paragraph
(1) shall be applied by substituting `the applicable
percentage' for `50 percent'.
`(B) APPLICABLE PERCENTAGE- For purposes of this
paragraph, the term `applicable percentage' means the
percentage determined under the following table:
`For taxable years beginning
The applicable
in calendar year--
percentage is--
1998 or 1999
55
2000 or 2001
60
2002 or 2003
65
2004 or 2005
70
2006 or 2007
75
2008 or thereafter
80.'.
(b) EFFECTIVE DATE- The amendment made by subsection (a) shall
apply to taxable years beginning after December 31, 1997.
SEC. 961. QUALIFIED LESSEE CONSTRUCTION ALLOWANCES FOR SHORT-TERM
LEASES.
(a) IN GENERAL- Part III of subchapter B of chapter 1 is amended
by inserting after section 109 the following new section:
`SEC. 110. QUALIFIED LESSEE CONSTRUCTION ALLOWANCES FOR SHORT-TERM
LEASES.
`(a) IN GENERAL- Gross income of a lessee does not include any
amount received in cash (or treated as a rent reduction) by a
lessee from a lessor--
`(1) under a short-term lease of retail space, and
`(2) for the purpose of such lessee's constructing or
improving qualified long-term real property for use in such
lessee's trade or business at such retail space,
but only to the extent that such amount does not exceed the amount
expended by the lessee for such construction or improvement.
`(b) CONSISTENT TREATMENT BY LESSOR- Qualified long-term real
property constructed or improved in connection with any amount
excluded from a lessee's income by reason of subsection (a) shall
be treated as nonresidential real property by the lessor.
`(c) DEFINITIONS- For purposes of this section--
`(1) QUALIFIED LONG-TERM REAL PROPERTY- The term `qualified
long-term real property' means nonresidential real property
which is part of, or otherwise present at, the retail space
referred to in subsection (a) and which reverts to the lessor
at the termination of the lease.
`(2) SHORT-TERM LEASE- The term `short-term lease' means a
lease (or other agreement for occupancy or use) of retail space
for 15 years or less (as determined under the rules of section
168(i)(3)).
`(3) RETAIL SPACE- The term `retail space' means real
property leased, occupied, or otherwise used by a lessee in its
trade or business of selling tangible personal property or
services to the general public.
`(d) INFORMATION REQUIRED TO BE FURNISHED TO SECRETARY- Under
regulations, the lessee and lessor described in subsection (a)
shall, at such times and in such manner as may be provided in such
regulations, furnish to the Secretary--
`(1) information concerning the amounts received (or treated
as a rent reduction) and expended as described in subsection
(a), and
`(2) any other information which the Secretary deems
necessary to carry out the provisions of this section.'.
(b) TREATMENT AS INFORMATION RETURN- Subparagraph (A) of section
6724(d)(1)(A) is amended by striking `or' at the end of clause
(vii), by adding `or' at the end of clause (viii), and by adding at
the end the following new clause:
`(ix) section 110(d) (relating to qualified lessee
construction allowances for short-term leases),'.
(c) CROSS REFERENCE- Paragraph (8) of section 168(i) (relating to
treatment of leasehold improvements) is amended by adding at the
end the following new subparagraph:
`(C) CROSS REFERENCE-
`For treatment of qualified long-term real property constructed or
improved in connection with cash or rent reduction from lessor to
lessee, see section 110(b).'.
(d) CLERICAL AMENDMENT- The table of sections for part III of
subchapter B of chapter 1 is amended by inserting after the item
relating to section 109 the following new item:
`SEC. 110. QUALIFIED LESSEE CONSTRUCTION ALLOWANCES FOR SHORT-TERM
LEASES.'.
(e) EFFECTIVE DATE- The amendments made by this section shall
apply to leases entered into after the date of the enactment of
this Act.
SEC. 962. TAX TREATMENT OF CONSOLIDATIONS OF LIFE INSURANCE
DEPARTMENTS OF MUTUAL SAVINGS BANKS.
(a) GENERAL RULE- Section 594 (relating to alternative tax for
mutual savings banks conducting life insurance business) is amended
by adding at the end thereof the following new subsection:
`(c) TREATMENT OF CONSOLIDATIONS- If 2 or more life insurance
departments to which subsection (a) applied are consolidated into a
single life insurance company pursuant to a requirement of State
law--
`(1) such consolidation shall be treated as a reorganization
described in section 368(a)(1)(E), and
`(2) any payments required to be made to policyholders in
connection with such consolidation shall be treated as
policyholder dividends deductible under section 808 but only if--
`(A) such payments are only with respect to policies in
effect immediately before such consolidation,
`(B) such payments are only with respect to policies
which are participating before and after such consolidation,
`(C) such payments shall cease with respect to any policy
if such policy lapses after such consolidation,
`(D) the policyholders before such consolidation had no
divisible right to the surplus of any such department and
had no right to vote, and
`(E) the approval of such policyholders was not required
for such consolidation.'.
(b) EFFECTIVE DATE- The amendment made by subsection (a) shall
take effect on December 31, 1991.
SEC. 963. OFFSET OF PAST-DUE, LEGALLY ENFORCEABLE STATE TAX
OBLIGATIONS AGAINST OVERPAYMENTS.
(a) IN GENERAL- Section 6402 is amended by redesignating
subsections (e) through (i) as subsections (f) through (j),
respectively, and by inserting after subsection (d) the following
new subsection:
`(e) COLLECTION OF PAST-DUE, LEGALLY ENFORCEABLE STATE TAX
OBLIGATIONS-
`(1) IN GENERAL- Upon receiving notice from any State that a
named person owes a past-due, legally enforceable State tax
obligation to such State, the Secretary shall, under such
conditions as may be prescribed by the Secretary--
`(A) reduce the amount of any overpayment payable to such
person by the amount of such State tax obligation;
`(B) pay the amount by which such overpayment is reduced
under subparagraph (A) to such State and notify such State
of such person's name, taxpayer identification number,
address, and the amount collected; and
`(C) notify the person making such overpayment that the
overpayment has been reduced by an amount necessary to
satisfy a past-due, legally enforceable State tax obligation.
If an offset is made pursuant to a joint return, the notice
under subparagraph (B) shall include the names, taxpayer
identification numbers, and addresses of each person filing
such return.
`(2) OFFSET PERMITTED ONLY AGAINST RESIDENTS OF STATE SEEKING
OFFSET- Paragraph (1) shall apply to an overpayment by any
person for a taxable year only if the address shown on the
return for such taxable year is an address within the State
seeking the offset.
`(3) PRIORITIES FOR OFFSET- Any overpayment by a person shall
be reduced pursuant to this subsection--
`(A) after such overpayment is reduced pursuant to--
`(i) subsection (a) with respect to any liability for
any internal revenue tax on the part of the person who
made the overpayment,
`(ii) subsection (c) with respect to past-due
support, and
`(iii) subsection (d) with respect to any past-due,
legally enforceable debt owed to a Federal agency, and
`(B) before such overpayment is credited to the future
liability for any Federal internal revenue tax of such
person pursuant to subsection (b).
If the Secretary receives notice from 1 or more agencies of the
State of more than 1 debt subject to paragraph (1) that is owed
by such person to such an agency, any overpayment by such
person shall be applied against such debts in the order in
which such debts accrued.
`(4) NOTICE; CONSIDERATION OF EVIDENCE- No State may take
action under this subsection until such State--
`(A) notifies the person owing the past-due State tax
liability that the State proposes to take action pursuant
to this section,
`(B) gives such person at least 60 days to present
evidence that all or part of such liability is not past-due
or not legally enforceable,
`(C) considers any evidence presented by such person and
determines that an amount of such debt is past-due and
legally enforceable, and
`(D) satisfies such other conditions as the Secretary may
prescribe to ensure that the determination made under
subparagraph (C) is valid and that the State has made
reasonable efforts to obtain payment of such State tax
obligation.
`(5) PAST-DUE, LEGALLY ENFORCEABLE STATE TAX OBLIGATION- For
purposes of this subsection, the term `past-due, legally
enforceable State tax obligation' means a debt--
`(A)(i) which resulted from--
`(I) a judgment rendered by a court of competent
jurisdiction which has determined an amount of State
tax to be due, or
`(II) a determination after an administrative hearing
which has determined an amount of State tax to be due,
and
`(ii) which is no longer subject to judicial review, or
`(B) which resulted from a State tax which has been
assessed but not collected, the time for redetermination of
which has expired, and which has not been delinquent for
more than 10 years.
For purposes of this paragraph, the term `State tax' includes
any local tax administered by the chief tax administration
agency of the State.
`(6) REGULATIONS- The Secretary shall issue regulations
prescribing the time and manner in which States must submit
notices of past-due, legally enforceable State tax obligations
and the necessary information that must be contained in or
accompany such notices. The regulations shall specify the types
of State taxes and the minimum amount of debt to which the
reduction procedure established by paragraph (1) may be
applied. The regulations may require States to pay a fee to
reimburse the Secretary for the cost of applying such
procedure. Any fee paid to the Secretary pursuant to the
preceding sentence shall be used to reimburse appropriations
which bore all or part of the cost of applying such procedure.
`(7) ERRONEOUS PAYMENT TO STATE- Any State receiving notice
from the Secretary that an erroneous payment has been made to
such State under paragraph (1) shall pay promptly to the
Secretary, in accordance with such regulations as the Secretary
may prescribe, an amount equal to the amount of such erroneous
payment (without regard to whether any other amounts payable to
such State under such paragraph have been paid to such State).'.
(b) DISCLOSURE OF CERTAIN INFORMATION TO STATES REQUESTING REFUND
OFFSETS FOR PAST-DUE, LEGALLY ENFORCEABLE STATE TAX OBLIGATIONS-
(1) Paragraph (10) of section 6103(l) is amended by striking
`(c) or (d)' each place it appears and inserting `(c), (d), or
(e)'.
(2) The paragraph heading for such paragraph (10) is amended
by striking `SECTION 6402(c) OR 6402(d)' and inserting
`SUBSECTION (c), (d), OR (e) OF SECTION 6402'.
(c) CONFORMING AMENDMENTS-
(1) Subsection (a) of section 6402 is amended by striking
`(c) and (d)' and inserting `(c), (d), and (e)'.
(2) Paragraph (2) of section 6402(d) is amended by striking
`and before such overpayment' and inserting `and before such
overpayment is reduced pursuant to subsection (e) and before
such overpayment'.
(3) Subsection (f) of section 6402, as redesignated by
subsection (a), is amended--
(A) by striking `(c) or (d)' and inserting `(c), (d), or
(e)', and
(B) by striking `Federal agency' and inserting `Federal
agency or State'.
(4) Subsection (h) of section 6402, as redesignated by
subsection (a), is amended by striking `subsection (c)' and
inserting `subsection (c) or (e)'.
(d) AMENDMENTS APPLIED AFTER TECHNICAL CORRECTIONS TO PERSONAL
RESPONSIBILITY AND WORK OPPORTUNITY RECONCILIATION ACT OF 1996-
(1) Section 110(l) of the Personal Responsibility and Work
Opportunity Reconciliation Act of 1996 is amended by striking
paragraphs (4), (5), and (7) (and the amendments made by such
paragraphs), and the Internal Revenue Code of 1986 shall be
applied as if such paragraphs (and amendments) had never been
enacted.
(2) For purposes of applying the amendments made by this
section other than this subsection, the provisions of this
subsection shall be treated as having been enacted immediately
before the other provisions of this section.
(e) EFFECTIVE DATE- The amendments made by this section (other
than subsection (d)) shall apply to refunds payable under section
6402 of the Internal Revenue Code of 1986 after December 31, 1998.
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