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American Association of Airport Executives &
Airports Council International - North America Legislative Affairs Representing the nation's airports in Washington, D.C. |
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H.R. 3448
SEC. 1614. ELECTION TO CEASE STATUS AS QUALIFIED SCHOLARSHIP
FUNDING CORPORATION.
(a) IN GENERAL- Subsection (d) of section 150 (relating to
definitions and special rules) is amended by adding at the end the
following new paragraph:
`(3) ELECTION TO CEASE STATUS AS QUALIFIED SCHOLARSHIP
FUNDING CORPORATION-
`(A) IN GENERAL- Any qualified scholarship funding bond,
and qualified student loan bond, outstanding on the date of
the issuer's election under this paragraph (and any bond
(or series of bonds) issued to refund such a bond) shall
not fail to be a tax-exempt bond solely because the issuer
ceases to be described in subparagraphs (A) and (B) of
paragraph (2) if the issuer meets the requirements of
subparagraphs (B) and (C) of this paragraph.
`(B) ASSETS AND LIABILITIES OF ISSUER TRANSFERRED TO
TAXABLE SUBSIDIARY- The requirements of this subparagraph
are met by an issuer if--
`(i) all of the student loan notes of the issuer and
other assets pledged to secure the repayment of
qualified scholarship funding bond indebtedness of the
issuer are transferred to another corporation within a
reasonable period after the election is made under this
paragraph;
`(ii) such transferee corporation assumes or
otherwise provides for the payment of all of the
qualified scholarship funding bond indebtedness of the
issuer within a reasonable period after the election is
made under this paragraph;
`(iii) to the extent permitted by law, such
transferee corporation assumes all of the
responsibilities, and succeeds to all of the rights, of
the issuer under the issuer's agreements with the
Secretary of Education in respect of student loans;
`(iv) immediately after such transfer, the issuer,
together with any other issuer which has made an
election under this paragraph in respect of such
transferee, hold all of the senior stock in such
transferee corporation; and
`(v) such transferee corporation is not exempt from
tax under this chapter.
`(C) ISSUER TO OPERATE AS INDEPENDENT ORGANIZATION
DESCRIBED IN SECTION 501(C)(3)- The requirements of this
subparagraph are met by an issuer if, within a reasonable
period after the transfer referred to in subparagraph (B)--
`(i) the issuer is described in section 501(c)(3) and
exempt from tax under section 501(a);
`(ii) the issuer no longer is described in
subparagraphs (A) and (B) of paragraph (2); and
`(iii) at least 80 percent of the members of the
board of directors of the issuer are independent members.
`(D) SENIOR STOCK- For purposes of this paragraph, the
term `senior stock' means stock--
`(i) which participates pro rata and fully in the
equity value of the corporation with all other common
stock of the corporation but which has the right to
payment of liquidation proceeds prior to payment of
liquidation proceeds in respect of other common stock
of the corporation;
`(ii) which has a fixed right upon liquidation and
upon redemption to an amount equal to the greater of--
`(I) the fair market value of such stock on the date of
liquidation or redemption (whichever is applicable); or
`(II) the fair market value of all assets transferred in exchange
for such stock and reduced by the amount of all liabilities of the
corporation which has made an election under this paragraph assumed
by the transferee corporation in such transfer;
`(iii) the holder of which has the right to require
the transferee corporation to redeem on a date that is
not later than 10 years after the date on which an
election under this paragraph was made and pursuant to
such election such stock was issued; and
`(iv) in respect of which, during the time such stock
is outstanding, there is not outstanding any equity
interest in the corporation having any liquidation,
redemption or dividend rights in the corporation which
are superior to those of such stock.
`(E) INDEPENDENT MEMBER- The term `independent member'
means a member of the board of directors of the issuer who
(except for services as a member of such board) receives no
compensation directly or indirectly--
`(i) for services performed in connection with such
transferee corporation, or
`(ii) for services as a member of the board of
directors or as an officer of such transferee
corporation.
For purposes of clause (ii), the term `officer' includes
any individual having powers or responsibilities similar to
those of officers.
`(F) COORDINATION WITH CERTAIN PRIVATE FOUNDATION TAXES-
For purposes of sections 4942 (relating to the excise tax
on a failure to distribute income) and 4943 (relating to
the excise tax on excess business holdings), the transferee
corporation referred to in subparagraph (B) shall be
treated as a functionally related business (within the
meaning of section 4942(j)(4)) with respect to the issuer
during the period commencing with the date on which an
election is made under this paragraph and ending on the
date that is the earlier of--
`(i) the last day of the last taxable year for which
more than 50 percent of the gross income of such
transferee corporation is derived from, or more than 50
percent of the assets (by value) of such transferee
corporation consists of, student loan notes incurred
under the Higher Education Act of 1965; or
`(ii) the last day of the taxable year of the issuer
during which occurs the date which is 10 years after
the date on which the election under this paragraph is
made.
`(G) ELECTION- An election under this paragraph may be
revoked only with the consent of the Secretary.'.
(b) EFFECTIVE DATE- The amendment made by this section shall take
effect on the date of the enactment of this Act.
SEC. 1615. CERTAIN TAX BENEFITS DENIED TO INDIVIDUALS FAILING TO
PROVIDE TAXPAYER IDENTIFICATION NUMBERS.
(a) PERSONAL EXEMPTION-
(1) IN GENERAL- Section 151 (relating to allowance of
deductions for personal exemptions) is amended by adding at the
end the following new subsection:
`(e) IDENTIFYING INFORMATION REQUIRED- No exemption shall be
allowed under this section with respect to any individual unless
the TIN of such individual is included on the return claiming the
exemption.'.
(2) CONFORMING AMENDMENTS-
(A) Subsection (e) of section 6109 is repealed.
(B) Section 6724(d)(3) is amended by adding `and' at the
end of subparagraph (C), by striking subparagraph (D), and
by redesignating subparagraph (E) as subparagraph (D).
(b) DEPENDENT CARE CREDIT- Subsection (e) of section 21 (relating
to expenses for household and dependent care services necessary for
gainful employment) is amended by adding at the end the following
new paragraph:
`(10) IDENTIFYING INFORMATION REQUIRED WITH RESPECT TO
QUALIFYING INDIVIDUALS- No credit shall be allowed under this
section with respect to any qualifying individual unless the
TIN of such individual is included on the return claiming the
credit.'.
(c) EXTENSION OF PROCEDURES APPLICABLE TO MATHEMATICAL OR
CLERICAL ERRORS- Section 6213(g)(2) (relating to the definition of
mathematical or clerical errors), as amended by the Personal
Responsibility and Work Opportunity Reconciliation Act of 1996, is
amended by striking `and' at the end of subparagraph (F), by
striking the period at the end of subparagraph (G) and inserting `,
and', and by inserting at the end the following new subparagraph:
`(H) an omission of a correct TIN required under section
21 (relating to expenses for household and dependent care
services necessary for gainful employment) or section 151
(relating to allowance of deductions for personal
exemptions).'.
(d) EFFECTIVE DATE-
(1) IN GENERAL- The amendments made by this section shall
apply with respect to returns the due date for which (without
regard to extensions) is on or after the 30th day after the
date of the enactment of this Act.
(2) SPECIAL RULE FOR 1995 AND 1996- In the case of returns
for taxable years beginning in 1995 or 1996, a taxpayer shall
not be required by the amendments made by this section to
provide a taxpayer identification number for a child who is
born after October 31, 1995, in the case of a taxable year
beginning in 1995 or November 30, 1996, in the case of a
taxable year beginning in 1996.
SEC. 1616. REPEAL OF BAD DEBT RESERVE METHOD FOR THRIFT SAVINGS
ASSOCIATIONS.
(a) IN GENERAL- Section 593 (relating to reserves for losses on
loans) is amended by adding at the end the following new subsections:
`(f) TERMINATION OF RESERVE METHOD- Subsections (a), (b), (c),
and (d) shall not apply to any taxable year beginning after
December 31, 1995.
`(g) 6-YEAR SPREAD OF ADJUSTMENTS-
`(1) IN GENERAL- In the case of any taxpayer who is required
by reason of subsection (f) to change its method of computing
reserves for bad debts--
`(A) such change shall be treated as a change in a method
of accounting,
`(B) such change shall be treated as initiated by the
taxpayer and as having been made with the consent of the
Secretary, and
`(C) the net amount of the adjustments required to be
taken into account by the taxpayer under section 481(a)--
`(i) shall be determined by taking into account only
applicable excess reserves, and
`(ii) as so determined, shall be taken into account
ratably over the 6-taxable year period beginning with
the first taxable year beginning after December 31, 1995.
`(2) APPLICABLE EXCESS RESERVES-
`(A) IN GENERAL- For purposes of paragraph (1), the term
`applicable excess reserves' means the excess (if any) of--
`(i) the balance of the reserves described in
subsection (c)(1) (other than the supplemental reserve)
as of the close of the taxpayer's last taxable year
beginning before January 1, 1996, over
`(ii) the lesser of--
`(I) the balance of such reserves as of the close of the
taxpayer's last taxable year beginning before January 1, 1988, or
`(II) the balance of the reserves described in subclause (I),
reduced in the same manner as under section 585(b)(2)(B)(ii) on
the basis of the taxable years described in clause (i) and this
clause.
`(B) SPECIAL RULE FOR THRIFTS WHICH BECOME SMALL BANKS-
In the case of a bank (as defined in section 581) which was
not a large bank (as defined in section 585(c)(2)) for its
first taxable year beginning after December 31, 1995--
`(i) the balance taken into account under
subparagraph (A)(ii) shall not be less than the amount
which would be the balance of such reserves as of the
close of its last taxable year beginning before such
date if the additions to such reserves for all taxable
years had been determined under section 585(b)(2)(A), and
`(ii) the opening balance of the reserve for bad
debts as of the beginning of such first taxable year
shall be the balance taken into account under
subparagraph (A)(ii) (determined after the application
of clause (i) of this subparagraph).
The preceding sentence shall not apply for purposes of
paragraphs (5) and (6) or subsection (e)(1).
`(3) RECAPTURE OF PRE-1988 RESERVES WHERE TAXPAYER CEASES TO
BE BANK- If, during any taxable year beginning after December
31, 1995, a taxpayer to which paragraph (1) applied is not a
bank (as defined in section 581), paragraph (1) shall apply to
the reserves described in paragraph (2)(A)(ii) and the
supplemental reserve; except that such reserves shall be taken
into account ratably over the 6-taxable year period beginning
with such taxable year.
`(4) SUSPENSION OF RECAPTURE IF RESIDENTIAL LOAN REQUIREMENT
MET-
`(A) IN GENERAL- In the case of a bank which meets the
residential loan requirement of subparagraph (B) for the
first taxable year beginning after December 31, 1995, or
for the following taxable year--
`(i) no adjustment shall be taken into account under
paragraph (1) for such taxable year, and
`(ii) such taxable year shall be disregarded in
determining--
`(I) whether any other taxable year is a taxable year for which
an adjustment is required to be taken into account under paragraph
(1), and
`(II) the amount of such adjustment.
`(B) RESIDENTIAL LOAN REQUIREMENT- A taxpayer meets the
residential loan requirement of this subparagraph for any
taxable year if the principal amount of the residential
loans made by the taxpayer during such year is not less
than the base amount for such year.
`(C) RESIDENTIAL LOAN- For purposes of this paragraph,
the term `residential loan' means any loan described in
clause (v) of section 7701(a)(19)(C) but only if such loan
is incurred in acquiring, constructing, or improving the
property described in such clause.
`(D) BASE AMOUNT- For purposes of subparagraph (B), the
base amount is the average of the principal amounts of the
residential loans made by the taxpayer during the 6 most
recent taxable years beginning on or before December 31,
1995. At the election of the taxpayer who made such loans
during each of such 6 taxable years, the preceding sentence
shall be applied without regard to the taxable year in
which such principal amount was the highest and the taxable
year in such principal amount was the lowest. Such an
election may be made only for the first taxable year
beginning after such date, and, if made for such taxable
year, shall apply to the succeeding taxable year unless
revoked with the consent of the Secretary.
`(E) CONTROLLED GROUPS- In the case of a taxpayer which
is a member of any controlled group of corporations
described in section 1563(a)(1), subparagraph (B) shall be
applied with respect to such group.
`(5) CONTINUED APPLICATION OF FRESH START UNDER SECTION 585
TRANSITIONAL RULES- In the case of a taxpayer to which
paragraph (1) applied and which was not a large bank (as
defined in section 585(c)(2)) for its first taxable year
beginning after December 31, 1995:
`(A) IN GENERAL- For purposes of determining the net
amount of adjustments referred to in section
585(c)(3)(A)(iii), there shall be taken into account only
the excess (if any) of the reserve for bad debts as of the
close of the last taxable year before the disqualification
year over the balance taken into account by such taxpayer
under paragraph (2)(A)(ii) of this subsection.
`(B) TREATMENT UNDER ELECTIVE CUT-OFF METHOD- For
purposes of applying section 585(c)(4)--
`(i) the balance of the reserve taken into account
under subparagraph (B) thereof shall be reduced by the
balance taken into account by such taxpayer under
paragraph (2)(A)(ii) of this subsection, and
`(ii) no amount shall be includible in gross income
by reason of such reduction.
`(6) SUSPENDED RESERVE INCLUDED AS SECTION 381(c) ITEMS- The
balance taken into account by a taxpayer under paragraph
(2)(A)(ii) of this subsection and the supplemental reserve
shall be treated as items described in section 381(c).
`(7) CONVERSIONS TO CREDIT UNIONS- In the case of a taxpayer
to which paragraph (1) applied which becomes a credit union
described in section 501(c) and exempt from taxation under
section 501(a)--
`(A) any amount required to be included in the gross
income of the credit union by reason of this subsection
shall be treated as derived from an unrelated trade or
business (as defined in section 513), and
`(B) for purposes of paragraph (3), the credit union
shall not be treated as if it were a bank.
`(8) REGULATIONS- The Secretary shall prescribe such
regulations as may be necessary to carry out this subsection
and subsection (e), including regulations providing for the
application of such subsections in the case of acquisitions,
mergers, spin-offs, and other reorganizations.'.
(b) CONFORMING AMENDMENTS-
(1) Subsection (d) of section 50 is amended by adding at the
end the following new sentence:
`Paragraphs (1)(A), (2)(A), and (4) of the section 46(e) referred
to in paragraph (1) of this subsection shall not apply to any
taxable year beginning after December 31, 1995.'
(2) Subsection (e) of section 52 is amended by striking
paragraph (1) and by redesignating paragraphs (2) and (3) as
paragraphs (1) and (2), respectively.
(3) Subsection (a) of section 57 is amended by striking
paragraph (4).
(4) Section 246 is amended by striking subsection (f).
(5) Clause (i) of section 291(e)(1)(B) is amended by
striking `or to which section 593 applies'.
(6) Subparagraph (A) of section 585(a)(2) is amended by
striking `other than an organization to which section 593
applies'.
(7)(A) The material preceding subparagraph (A) of section
593(e)(1) is amended by striking `by a domestic building and
loan association or an institution that is treated as a mutual
savings bank under section 591(b)' and inserting `by a taxpayer
having a balance described in subsection (g)(2)(A)(ii)'.
(B) Subparagraph (B) of section 593(e)(1) is amended to read
as follows:
`(B) then out of the balance taken into account under
subsection (g)(2)(A)(ii) (properly adjusted for amounts
charged against such reserves for taxable years beginning
after December 31, 1987),'.
(C) The second sentence of section 593(e)(1) is amended by
striking `the association or an institution that is treated as
a mutual savings bank under section 591(b)' and inserting `a
taxpayer having a balance described in subsection (g)(2)(A)(ii)'.
(D) The third sentence of section 593(e)(1) is amended by
striking `an association' and inserting `a taxpayer having a
balance described in subsection (g)(2)(A)(ii)'.
(E) Paragraph (1) of section 593(e) is amended by adding at
the end the following new sentence: `This paragraph shall not
apply to any distribution of all of the stock of a bank (as
defined in section 581) to another corporation if, immediately
after the distribution, such bank and such other corporation
are members of the same affiliated group (as defined in section
1504) and the provisions of section 5(e) of the Federal Deposit
Insurance Act (as in effect on December 31, 1995) or similar
provisions are in effect.'.
(8) Section 595 is hereby repealed.
(9) Section 596 is hereby repealed.
(10) Subsection (a) of section 860E is amended--
(A) by striking `Except as provided in paragraph (2),
the' in paragraph (1) and inserting `The',
(B) by striking paragraphs (2) and (4) and redesignating
paragraphs (3), (5), and (6) as paragraphs (2), (3), and
(4), respectively,
(C) by striking in paragraph (2) (as so redesignated) all
that follows `subsection' and inserting a period, and
(D) by striking the last sentence of paragraph (4) (as so
redesignated).
(11) Paragraph (3) of section 992(d) is amended by striking
`or 593'.
(12) Section 1038 is amended by striking subsection (f).
(13) Clause (ii) of section 1042(c)(4)(B) is amended by
striking `or 593'.
(14) Subsection (c) of section 1277 is amended by striking
`or to which section 593 applies'.
(15) Subparagraph (B) of section 1361(b)(2) is amended by
striking `or to which section 593 applies'.
(16) The table of sections for part II of subchapter H of
chapter 1 is amended by striking the items relating to sections
595 and 596.
(c) EFFECTIVE DATES-
(1) IN GENERAL- Except as otherwise provided in this
subsection, the amendments made by this section shall apply to
taxable years beginning after December 31, 1995.
(2) SUBSECTION (b)(7)(B)- The amendments made by subsection
(b)(7)(B) shall not apply to any distribution with respect to
preferred stock if--
(A) such stock is outstanding at all times after October
31, 1995, and before the distribution, and
(B) such distribution is made before the date which is 1
year after the date of the enactment of this Act (or, in
the case of stock which may be redeemed, if later, the date
which is 30 days after the earliest date that such stock
may be redeemed).
(3) SUBSECTION (b)(8)- The amendment made by subsection
(b)(8) shall apply to property acquired in taxable years
beginning after December 31, 1995.
(4) SUBSECTION (b)(10)- The amendments made by subsection
(b)(10) shall not apply to any residual interest held by a
taxpayer if such interest has been held by such taxpayer at all
times after October 31, 1995.
SEC. 1617. EXCLUSION FOR ENERGY CONSERVATION SUBSIDIES LIMITED TO
SUBSIDIES WITH RESPECT TO DWELLING UNITS.
(a) IN GENERAL- Paragraph (1) of section 136(c) (defining energy
conservation measure) is amended by striking `energy demand--' and
all that follows and inserting `energy demand with respect to a
dwelling unit.'.
(b) CONFORMING AMENDMENTS-
(1) Subsection (a) of section 136 is amended to read as
follows:
`(a) EXCLUSION- Gross income shall not include the value of any
subsidy provided (directly or indirectly) by a public utility to a
customer for the purchase or installation of any energy
conservation measure.'.
(2) Paragraph (2) of section 136(c) is amended--
(A) by striking subparagraph (A) and by redesignating
subparagraphs (B) and (C) as subparagraphs (A) and (B),
respectively, and
(B) by striking `AND SPECIAL RULES' in the paragraph
heading.
(c) EFFECTIVE DATE- The amendments made by this section shall
apply to amounts received after December 31, 1996, unless received
pursuant to a written binding contract in effect on September 13,
1995, and at all times thereafter.
PART II--FINANCIAL ASSET SECURITIZATION INVESTMENTS
SEC. 1621. FINANCIAL ASSET SECURITIZATION INVESTMENT TRUSTS.
(a) IN GENERAL- Subchapter M of chapter 1 is amended by adding at
the end the following new part:
`PART V--FINANCIAL ASSET SECURITIZATION INVESTMENT TRUSTS
`SEC. 860H. TAXATION OF A FASIT; OTHER GENERAL RULES.
`SEC. 860I. GAIN RECOGNITION ON CONTRIBUTIONS TO A FASIT AND IN
OTHER CASES.
`SEC. 860J. NON-FASIT LOSSES NOT TO OFFSET CERTAIN FASIT INCLUSIONS.
`SEC. 860K. TREATMENT OF TRANSFERS OF HIGH-YIELD INTERESTS TO
DISQUALIFIED HOLDERS.
`SEC. 860L. DEFINITIONS AND OTHER SPECIAL RULES.
`SEC. 860H. TAXATION OF A FASIT; OTHER GENERAL RULES.
`(a) TAXATION OF FASIT- A FASIT as such shall not be subject to
taxation under this subtitle (and shall not be treated as a trust,
partnership, corporation, or taxable mortgage pool).
`(b) TAXATION OF HOLDER OF OWNERSHIP INTEREST- In determining the
taxable income of the holder of the ownership interest in a FASIT--
`(1) all assets, liabilities, and items of income, gain,
deduction, loss, and credit of a FASIT shall be treated as
assets, liabilities, and such items (as the case may be) of
such holder,
`(2) the constant yield method (including the rules of
section 1272(a)(6)) shall be applied under an accrual method of
accounting in determining all interest, acquisition discount,
original issue discount, and market discount and all premium
deductions or adjustments with respect to each debt instrument
of the FASIT,
`(3) there shall not be taken into account any item of
income, gain, or deduction allocable to a prohibited
transaction, and
`(4) interest accrued by the FASIT which is exempt from tax
imposed by this subtitle shall, when taken into account by such
holder, be treated as ordinary income.
`(c) TREATMENT OF REGULAR INTERESTS- For purposes of this title--
`(1) a regular interest in a FASIT, if not otherwise a debt
instrument, shall be treated as a debt instrument,
`(2) section 163(e)(5) shall not apply to such an interest, and
`(3) amounts includible in gross income with respect to such
an interest shall be determined under an accrual method of
accounting.
`SEC. 860I. GAIN RECOGNITION ON CONTRIBUTIONS TO A FASIT AND IN
OTHER CASES.
`(a) TREATMENT OF PROPERTY ACQUIRED BY FASIT-
`(1) PROPERTY ACQUIRED FROM HOLDER OF OWNERSHIP INTEREST OR
RELATED PERSON- If property is sold or contributed to a FASIT
by the holder of the ownership interest in such FASIT (or by a
related person) gain (if any) shall be recognized to such
holder (or person) in an amount equal to the excess (if any) of
such property's value under subsection (d) on the date of such
sale or contribution over its adjusted basis on such date.
`(2) PROPERTY ACQUIRED OTHER THAN FROM HOLDER OF OWNERSHIP
INTEREST OR RELATED PERSON- Property which is acquired by a
FASIT other than in a transaction to which paragraph (1)
applies shall be treated--
`(A) as having been acquired by the holder of the
ownership interest in the FASIT for an amount equal to the
FASIT's cost of acquiring such property, and
`(B) as having been sold by such holder to the FASIT at
its value under subsection (d) on such date.
`(b) GAIN RECOGNITION ON PROPERTY OUTSIDE FASIT WHICH SUPPORTS
REGULAR INTERESTS- If property held by the holder of the ownership
interest in a FASIT (or by any person related to such holder)
supports any regular interest in such FASIT--
`(1) gain shall be recognized to such holder (or person) in
the same manner as if such holder (or person) had sold such
property at its value under subsection (d) on the earliest date
such property supports such an interest, and
`(2) such property shall be treated as held by such FASIT for
purposes of this part.
`(c) DEFERRAL OF GAIN RECOGNITION- The Secretary may prescribe
regulations which--
`(1) provide that gain otherwise recognized under subsection
(a) or (b) shall not be recognized before the earliest date on
which such property supports any regular interest in such FASIT
or any indebtedness of the holder of the ownership interest (or
of any person related to such holder), and
`(2) provide such adjustments to the other provisions of this
part to the extent appropriate in the context of the treatment
provided under paragraph (1).
`(d) VALUATION- For purposes of this section--
`(1) IN GENERAL- The value of any property under this
subsection shall be--
`(A) in the case of a debt instrument which is not traded
on an established securities market, the sum of the present
values of the reasonably expected payments under such
instrument determined (in the manner provided by
regulations prescribed by the Secretary)--
`(i) as of the date of the event resulting in the
gain recognition under this section, and
`(ii) by using a discount rate equal to 120 percent
of the applicable Federal rate (as defined in section
1274(d)), or such other discount rate specified in such
regulations, compounded semiannually, and
`(B) in the case of any other property, its fair market
value.
`(2) SPECIAL RULE FOR REVOLVING LOAN ACCOUNTS- For purposes
of paragraph (1)--
`(A) each extension of credit (other than the accrual of
interest) on a revolving loan account shall be treated as a
separate debt instrument, and
`(B) payments on such extensions of credit having
substantially the same terms shall be applied to such
extensions beginning with the earliest such extension.
`(e) SPECIAL RULES-
`(1) NONRECOGNITION RULES NOT TO APPLY- Gain required to be
recognized under this section shall be recognized
notwithstanding any other provision of this subtitle.
`(2) BASIS ADJUSTMENTS- The basis of any property on which
gain is recognized under this section shall be increased by the
amount of gain so recognized.
`SEC. 860J. NON-FASIT LOSSES NOT TO OFFSET CERTAIN FASIT INCLUSIONS.
`(a) IN GENERAL- The taxable income of the holder of the
ownership interest or any high-yield interest in a FASIT for any
taxable year shall in no event be less than the sum of--
`(1) such holder's taxable income determined solely with
respect to such interests (including gains and losses from
sales and exchanges of such interests), and
`(2) the excess inclusion (if any) under section 860E(a)(1)
for such taxable year.
`(b) COORDINATION WITH SECTION 172- Any increase in the taxable
income of any holder of the ownership interest or a high-yield
interest in a FASIT for any taxable year by reason of subsection
(a) shall be disregarded--
`(1) in determining under section 172 the amount of any net
operating loss for such taxable year, and
`(2) in determining taxable income for such taxable year for
purposes of the second sentence of section 172(b)(2).
`(c) COORDINATION WITH MINIMUM TAX- For purposes of part VI of
subchapter A of this chapter--
`(1) the reference in section 55(b)(2) to taxable income
shall be treated as a reference to taxable income determined
without regard to this section,
`(2) the alternative minimum taxable income of any holder of
the ownership interest or a high-yield interest in a FASIT for
any taxable year shall in no event be less than such holder's
taxable income determined solely with respect to such
interests, and
`(3) any increase in taxable income under this section shall
be disregarded for purposes of computing the alternative tax
net operating loss deduction.
`(d) AFFILIATED GROUPS- All members of an affiliated group filing
a consolidated return shall be treated as one taxpayer for purposes
of this section.
`SEC. 860K. TREATMENT OF TRANSFERS OF HIGH-YIELD INTERESTS TO
DISQUALIFIED HOLDERS.
`(a) GENERAL RULE- In the case of any high-yield interest which
is held by a disqualified holder--
`(1) the gross income of such holder shall not include any
income (other than gain) attributable to such interest, and
`(2) amounts not includible in the gross income of such
holder by reason of paragraph (1) shall be included (at the
time otherwise includible under paragraph (1)) in the gross
income of the most recent holder of such interest which is not
a disqualified holder.
`(b) EXCEPTIONS- Rules similar to the rules of paragraphs (4) and
(7) of section 860E(e) shall apply to the tax imposed by reason of
the inclusion in gross income under subsection (a).
`(c) DISQUALIFIED HOLDER- For purposes of this section, the term
`disqualified holder' means any holder other than--
`(1) an eligible corporation (as defined in section
860L(a)(2)), or
`(2) a FASIT.
`(d) TREATMENT OF INTERESTS HELD BY SECURITIES DEALERS-
`(1) IN GENERAL- Subsection (a) shall not apply to any
high-yield interest held by a disqualified holder if such
holder is a dealer in securities who acquired such interest
exclusively for sale to customers in the ordinary course of
business (and not for investment).
`(2) CHANGE IN DEALER STATUS-
`(A) IN GENERAL- In the case of a dealer in securities
which is not an eligible corporation (as defined in section
860L(a)(2)), if--
`(i) such dealer ceases to be a dealer in securities,
or
`(ii) such dealer commences holding the high-yield
interest for investment,
there is hereby imposed (in addition to other taxes) an
excise tax equal to the product of the highest rate of tax
specified in section 11(b)(1) and the income of such dealer
attributable to such interest for periods after the date of
such cessation or commencement.
`(B) HOLDING FOR 31 DAYS OR LESS- For purposes of
subparagraph (A)(ii), a dealer shall not be treated as
holding an interest for investment before the thirty-second
day after the date such dealer acquired such interest
unless such interest is so held as part of a plan to avoid
the purposes of this paragraph.
`(C) ADMINISTRATIVE PROVISIONS- The deficiency procedures
of subtitle F shall apply to the tax imposed by this
paragraph.
`(e) TREATMENT OF HIGH-YIELD INTERESTS IN PASS-THRU ENTITIES-
`(1) IN GENERAL- If a pass-thru entity (as defined in section
860E(e)(6)) issues a debt or equity interest--
`(A) which is supported by any regular interest in a
FASIT, and
`(B) which has an original yield to maturity which is
greater than each of--
`(i) the sum determined under clauses (i) and (ii) of
section 163(i)(1)(B) with respect to such debt or
equity interest, and
`(ii) the yield to maturity to such entity on such
regular interest (determined as of the date such entity
acquired such interest),
there is hereby imposed on the pass-thru entity a tax (in
addition to other taxes) equal to the product of the highest
rate of tax specified in section 11(b)(1) and the income of the
holder of such debt or equity interest which is properly
attributable to such regular interest. For purposes of the
preceding sentence, the yield to maturity of any equity
interest shall be determined under regulations prescribed by
the Secretary.
`(2) EXCEPTION- Paragraph (1) shall not apply to arrangements
not having as a principal purpose the avoidance of the purposes
of this subsection.
`SEC. 860L. DEFINITIONS AND OTHER SPECIAL RULES.
`(a) FASIT-
`(1) IN GENERAL- For purposes of this title, the terms
`financial asset securitization investment trust' and `FASIT'
mean any entity--
`(A) for which an election to be treated as a FASIT
applies for the taxable year,
`(B) all of the interests in which are regular interests
or the ownership interest,
`(C) which has only one ownership interest and such
ownership interest is held directly by an eligible
corporation,
`(D) as of the close of the third month beginning after
the day of its formation and at all times thereafter,
substantially all of the assets of which (including assets
treated as held by the entity under section 860I(b)(2))
consist of permitted assets, and
`(E) which is not described in section 851(a).
A rule similar to the rule of the last sentence of section
860D(a) shall apply for purposes of this paragraph.
`(2) ELIGIBLE CORPORATION- For purposes of paragraph (1)(C),
the term `eligible corporation' means any domestic C
corporation other than--
`(A) a corporation which is exempt from, or is not
subject to, tax under this chapter,
`(B) an entity described in section 851(a) or 856(a),
`(C) a REMIC, and
`(D) an organization to which part I of subchapter T
applies.
`(3) ELECTION- An entity (otherwise meeting the requirements
of paragraph (1)) may elect to be treated as a FASIT. Except as
provided in paragraph (5), such an election shall apply to the
taxable year for which made and all subsequent taxable years
unless revoked with the consent of the Secretary.
`(4) TERMINATION- If any entity ceases to be a FASIT at any
time during the taxable year, such entity shall not be treated
as a FASIT after the date of such cessation.
`(5) INADVERTENT TERMINATIONS, ETC- Rules similar to the
rules of section 860D(b)(2)(B) shall apply to inadvertent
failures to qualify or remain qualified as a FASIT.
`(6) PERMITTED ASSETS NOT TREATED AS INTEREST IN FASIT-
Except as provided in regulations prescribed by the Secretary,
any asset which is a permitted asset at the time acquired by a
FASIT shall not be treated at any time as an interest in such
FASIT.
`(b) INTERESTS IN FASIT- For purposes of this part--
`(1) REGULAR INTEREST-
`(A) IN GENERAL- The term `regular interest' means any
interest which is issued by a FASIT after the startup date
with fixed terms and which is designated as a regular
interest if--
`(i) such interest unconditionally entitles the
holder to receive a specified principal amount (or
other similar amount),
`(ii) interest payments (or other similar amounts),
if any, with respect to such interest are determined
based on a fixed rate, or, except as otherwise provided
by the Secretary, at a variable rate permitted under
section 860G(a)(1)(B)(i),
`(iii) such interest does not have a stated maturity
(including options to renew) greater than 30 years (or
such longer period as may be permitted by regulations),
`(iv) the issue price of such interest does not
exceed 125 percent of its stated principal amount, and
`(v) the yield to maturity on such interest is less
than the sum determined under section 163(i)(1)(B) with
respect to such interest.
An interest shall not fail to meet the requirements of
clause (i) merely because the timing (but not the amount)
of the principal payments (or other similar amounts) may be
contingent on the extent that payments on debt instruments
held by the FASIT are made in advance of anticipated
payments and on the amount of income from permitted assets.
`(B) HIGH-YIELD INTERESTS-
`(i) IN GENERAL- The term `regular interest' includes
any high-yield interest.
`(ii) HIGH-YIELD INTEREST- The term `high-yield
interest' means any interest which would be described
in subparagraph (A) but for--
`(I) failing to meet the requirements of one or more of clauses
(i), (iv), or (v) thereof, or
`(II) failing to meet the requirement of clause (ii) thereof but
only if interest payments (or other similar amounts), if any, with
respect to such interest consist of a specified portion of the
interest payments on permitted assets and such portion does not
vary during the period such interest is outstanding.
`(2) OWNERSHIP INTEREST- The term `ownership interest' means
the interest issued by a FASIT after the startup day which is
designated as an ownership interest and which is not a regular
interest.
`(c) PERMITTED ASSETS- For purposes of this part--
`(1) IN GENERAL- The term `permitted asset' means--
`(A) cash or cash equivalents,
`(B) any debt instrument (as defined in section
1275(a)(1)) under which interest payments (or other similar
amounts), if any, at or before maturity meet the
requirements applicable under clause (i) or (ii) of section
860G(a)(1)(B),
`(C) foreclosure property,
`(D) any asset--
`(i) which is an interest rate or foreign currency
notional principal contract, letter of credit,
insurance, guarantee against payment defaults, or other
similar instrument permitted by the Secretary, and
`(ii) which is reasonably required to guarantee or
hedge against the FASIT's risks associated with being
the obligor on interests issued by the FASIT,
`(E) contract rights to acquire debt instruments
described in subparagraph (B) or assets described in
subparagraph (D),
`(F) any regular interest in another FASIT, and
`(G) any regular interest in a REMIC.
`(2) DEBT ISSUED BY HOLDER OF OWNERSHIP INTEREST NOT
PERMITTED ASSET- The term `permitted asset' shall not include
any debt instrument issued by the holder of the ownership
interest in the FASIT or by any person related to such holder
or any direct or indirect interest in such a debt instrument.
The preceding sentence shall not apply to cash equivalents and
to any other investment specified in regulations prescribed by
the Secretary.
`(3) FORECLOSURE PROPERTY-
`(A) IN GENERAL- The term `foreclosure property' means
property--
`(i) which would be foreclosure property under
section 856(e) (determined without regard to paragraph
(5) thereof) if such property were real property
acquired by a real estate investment trust, and
`(ii) which is acquired in connection with the
default or imminent default of a debt instrument held
by the FASIT unless the security interest in such
property was created for the principal purpose of
permitting the FASIT to invest in such property.
Solely for purposes of subsection (a)(1), the determination
of whether any property is foreclosure property shall be
made without regard to section 856(e)(4).
`(B) AUTHORITY TO REDUCE GRACE PERIOD- In the case of
property other than real property and other than personal
property incident to real property, the Secretary may by
regulation reduce for purposes of subparagraph (A) the
periods otherwise applicable under paragraphs (2) and (3)
of section 856(e).
`(d) STARTUP DAY- For purposes of this part--
`(1) IN GENERAL- The term `startup day' means the date
designated in the election under subsection (a)(3) as the
startup day of the FASIT. Such day shall be the beginning of
the first taxable year of the FASIT.
`(2) TREATMENT OF PROPERTY HELD ON STARTUP DAY- All property
held (or treated as held under section 860I(c)(2)) by an entity
as of the startup day shall be treated as contributed to such
entity on such day by the holder of the ownership interest in
such entity.
`(e) TAX ON PROHIBITED TRANSACTIONS-
`(1) IN GENERAL- There is hereby imposed for each taxable
year of a FASIT a tax equal to 100 percent of the net income
derived from prohibited transactions. Such tax shall be paid by
the holder of the ownership interest in the FASIT.
`(2) PROHIBITED TRANSACTIONS- For purposes of this part, the
term `prohibited transaction' means--
`(A) the receipt of any income derived from any asset
that is not a permitted asset,
`(B) except as provided in paragraph (3), the disposition
of any permitted asset,
`(C) the receipt of any income derived from any loan
originated by the FASIT, and
`(D) the receipt of any income representing a fee or
other compensation for services (other than any fee
received as compensation for a waiver, amendment, or
consent under permitted assets (other than foreclosure
property) held by the FASIT).
`(3) EXCEPTION FOR INCOME FROM CERTAIN DISPOSITIONS-
`(A) IN GENERAL- Paragraph (2)(B) shall not apply to a
disposition which would not be a prohibited transaction (as
defined in section 860F(a)(2)) by reason of--
`(i) clause (ii), (iii), or (iv) of section
860F(a)(2)(A), or
`(ii) section 860F(a)(5), if the FASIT were treated
as a REMIC and debt instruments described in subsection
(c)(1)(B) were treated as qualified mortgages.
`(B) SUBSTITUTION OF DEBT INSTRUMENTS; REDUCTION OF
OVER-COLLATERALIZATION- Paragraph (2)(B) shall not apply to--
`(i) the substitution of a debt instrument described
in subsection (c)(1)(B) for another debt instrument
which is a permitted asset, or
`(ii) the distribution of a debt instrument
con-tributed by the holder of the ownership interest to
such holder in order to reduce over-collateralization
of the FASIT,
but only if a principal purpose of acquiring the debt
instrument which is disposed of was not the recognition of
gain (or the reduction of a loss) as a result of an
increase in the market value of the debt instrument after
its acquisition by the FASIT.
`(C) LIQUIDATION OF CLASS OF REGULAR INTERESTS- Paragraph
(2)(B) shall not apply to the complete liquidation of any
class of regular interests.
`(4) NET INCOME- For purposes of this subsection, net income
shall be determined in accordance with section 860F(a)(3).
`(f) COORDINATION WITH OTHER PROVISIONS-
`(1) WASH SALES RULES- Rules similar to the rules of section
860F(d) shall apply to the ownership interest in a FASIT.
`(2) SECTION 475- Except as provided by the Secretary by
regulations, if any security which is sold or contributed to a
FASIT by the holder of the ownership interest in such FASIT was
required to be marked-to-market under section 475 by such
holder, section 475 shall continue to apply to such security;
except that in applying section 475 while such security is held
by the FASIT, the fair market value of such security for
purposes of section 475 shall not be less than its value under
section 860I(d).
`(g) RELATED PERSON- For purposes of this part, a person
(hereinafter in this subsection referred to as the `related
person') is related to any person if--
`(1) the related person bears a relationship to such person
specified in section 267(b) or section 707(b)(1), or
`(2) the related person and such person are engaged in trades
or businesses under common control (within the meaning of
subsections (a) and (b) of section 52).
For purposes of paragraph (1), in applying section 267(b) or
707(b)(1), `20 percent' shall be substituted for `50 percent'.
`(h) REGULATIONS- The Secretary shall prescribe such regulations
as may be necessary or appropriate to carry out the purposes of
this part, including regulations to prevent the abuse of the
purposes of this part through transactions which are not primarily
related to securitization of debt instruments by a FASIT.'.
(b) TECHNICAL AMENDMENTS-
(1) Paragraph (2) of section 26(b) is amended by striking
`and' at the end of subparagraph (M), by striking the period at
the end of subparagraph (N) and inserting `, and', and by
adding at the end the following new subparagraph:
`(O) section 860K (relating to treatment of transfers of
high-yield interests to disqualified holders).'.
(2) Paragraph (6) of section 56(g) is amended by striking
`or REMIC' and inserting `REMIC, or FASIT'.
(3) Clause (ii) of section 382(l)(4)(B) is amended by
striking `or a REMIC to which part IV of subchapter M applies'
and inserting `a REMIC to which part IV of subchapter M
applies, or a FASIT to which part V of subchapter M applies'.
(4) Paragraph (1) of section 582(c) is amended by inserting
`, and any regular interest in a FASIT,' after `REMIC'.
(5) Subparagraph (E) of section 856(c)(6) is amended by
adding at the end the following new sentence: `The principles
of the preceding provisions of this subparagraph shall apply to
regular interests in a FASIT.'.
(6) Paragraph (3) of section 860G(a) is amended by striking
`and' at the end of subparagraph (B), by striking the period at
the end of subparagraph (C) and inserting `, and', and by
inserting after subparagraph (C) the following new subparagraph:
`(D) any regular interest in a FASIT which is transferred
to, or purchased by, the REMIC as described in clauses (i)
and (ii) of subparagraph (A) but only if 95 percent or more
of the value of the assets of such FASIT is at all times
attributable to obligations described in subparagraph (A)
(without regard to such clauses).'.
(7) Subparagraph (C) of section 1202(e)(4) is amended by
striking `or REMIC' and inserting `REMIC, or FASIT'.
(8) Clause (xi) of section 7701(a)(19)(C) is amended to read
as follows:
`(xi) any regular or residual interest in a REMIC,
and any regular interest in a FASIT, but only in the
proportion which the assets of such REMIC or FASIT
consist of property described in any of the preceding
clauses of this subparagraph; except that if 95 percent
or more of the assets of such REMIC or FASIT are assets
described in clauses (i) through (x), the entire
interest in the REMIC or FASIT shall qualify.'.
(9) Subparagraph (A) of section 7701(i)(2) is amended by
inserting `or a FASIT' after `a REMIC'.
(c) CLERICAL AMENDMENT- The table of parts for subchapter M of
chapter 1 is amended by adding at the end the following new item:
`PART V. FINANCIAL ASSET SECURITIZATION INVESTMENT TRUSTS.'.
(d) EFFECTIVE DATE- The amendments made by this section shall
take effect on September 1, 1997.
(e) TREATMENT OF EXISTING SECURITIZATION ENTITIES-
(1) IN GENERAL- In the case of the holder of the ownership
interest in a pre-effective date FASIT--
(A) gain shall not be recognized under section 860L(d)(2)
of the Internal Revenue Code of 1986 on property deemed
contributed to the FASIT, and
(B) gain shall not be recognized under section 860I of
such Code on property contributed to such FASIT,
until such property (or portion thereof) ceases to be properly
allocable to a pre-FASIT interest.
(2) ALLOCATION OF PROPERTY TO PRE-FASIT INTEREST- For
purposes of paragraph (1), property shall be allocated to a
pre-FASIT interest in such manner as the Secretary of the
Treasury may prescribe, except that all property in a FASIT
shall be treated as properly allocable to pre-FASIT interests
if the fair market value of all such property does not exceed
107 percent of the aggregate principal amount of all
outstanding pre-FASIT interests.
(3) DEFINITIONS- For purposes of this subsection--
(A) PRE-EFFECTIVE DATE FASIT- The term `pre-effective
date FASIT' means any FASIT if the entity (with respect to
which the election under section 860L(a)(3) of such Code
was made) is in existence on August 31, 1997.
(B) PRE-FASIT INTEREST- The term `pre-FASIT interest'
means any interest in the entity referred to in
subparagraph (A) which was issued before the startup day
(other than any interest held by the holder of the
ownership interest in the FASIT).
SUBTITLE G--TECHNICAL CORRECTIONS
SEC. 1701. COORDINATION WITH OTHER SUBTITLES.
For purposes of applying the amendments made by any subtitle of
this title other than this subtitle, the provisions of this
subtitle shall be treated as having been enacted immediately before
the provisions of such other subtitles.
SEC. 1702. AMENDMENTS RELATED TO REVENUE RECONCILIATION ACT OF 1990.
(a) AMENDMENTS RELATED TO SUBTITLE A-
(1) Subparagraph (B) of section 59(j)(3) is amended by
striking `section 1(i)(3)(B)' and inserting `section 1(g)(3)(B)'.
(2) Clause (i) of section 151(d)(3)(C) is amended by striking
`joint of a return' and inserting `joint return'.
(b) AMENDMENTS RELATED TO SUBTITLE B-
(1) Paragraph (1) of section 11212(e) of the Revenue
Reconciliation Act of 1990 is amended by striking `Paragraph
(1) of section 6724(d)' and inserting `Subparagraph (B) of
section 6724(d)(1)'.
(2)(A) Subparagraph (B) of section 4093(c)(2), as in effect
before the amendments made by the Revenue Reconciliation Act of
1993, is amended by inserting before the period `unless such
fuel is sold for exclusive use by a State or any political
subdivision thereof'.
(B) Paragraph (4) of section 6427(l), as in effect before the
amendments made by the Revenue Reconciliation Act of 1993, is
amended by inserting before the period `unless such fuel was
used by a State or any political subdivision thereof'.
(3) Paragraph (1) of section 6416(b) is amended by striking
`chapter 32 or by section 4051' and inserting `chapter 31 or 32'.
(4) Section 7012 is amended--
(A) by striking `production or importation of gasoline'
in paragraph (3) and inserting `taxes on gasoline and
diesel fuel', and
(B) by striking paragraph (4) and redesignating
paragraphs (5) and (6) as paragraphs (4) and (5),
respectively.
(5) Subsection (c) of section 5041 is amended by striking
paragraph (6) and by inserting the following new paragraphs:
`(6) CREDIT FOR TRANSFEREE IN BOND- If--
`(A) wine produced by any person would be eligible for
any credit under paragraph (1) if removed by such person
during the calendar year,
`(B) wine produced by such person is removed during such
calendar year by any other person (hereafter in this
paragraph referred to as the `transferee') to whom such
wine was transferred in bond and who is liable for the tax
imposed by this section with respect to such wine, and
`(C) such producer holds title to such wine at the time
of its removal and provides to the transferee such
information as is necessary to properly determine the
transferee's credit under this paragraph,
then, the transferee (and not the producer) shall be allowed
the credit under paragraph (1) which would be allowed to the
producer if the wine removed by the transferee had been removed
by the producer on that date.
`(7) REGULATIONS- The Secretary may prescribe such
regulations as may be necessary to carry out the purposes of
this subsection, including regulations--
`(A) to prevent the credit provided in this subsection
from benefiting any person who produces more than 250,000
wine gallons of wine during a calendar year, and
`(B) to assure proper reduction of such credit for
persons producing more than 150,000 wine gallons of wine
during a calendar year.'.
(6) Paragraph (3) of section 5061(b) is amended to read as
follows:
`(3) section 5041(f),'.
(7) Section 5354 is amended by inserting `(taking into
account the appropriate amount of credit with respect to such
wine under section 5041(c))' after `any one time'.
(c) AMENDMENTS RELATED TO SUBTITLE C-
(1) Paragraph (4) of section 56(g) is amended by
redesignating subparagraphs (I) and (J) as subparagraphs (H)
and (I), respectively.
(2) Subparagraph (B) of section 6724(d)(1) is amended--
(A) by striking `or' at the end of clause (xii), and
(B) by striking the period at the end of clause (xiii)
and inserting `, or'.
(3) Subsection (g) of section 6302 is amended by in-serting
`, 22,' after `chapters 21'.
(4) The earnings and profits of any insurance company to
which section 11305(c)(3) of the Revenue Reconciliation Act of
1990 applies shall be determined without regard to any
deduction allowed under such section; except that, for
pur-poses of applying sections 56 and 902, and subpart F of
part III of subchapter N of chapter 1 of the Internal Revenue
Code of 1986, such deduction shall be taken into account.
(5) Subparagraph (D) of section 6038A(e)(4) is amended--
(A) by striking `any transaction to which the summons
relates' and inserting `any affected taxable year', and
(B) by adding at the end thereof the following new
sentence: `For purposes of this subparagraph, the term
`affected taxable year' means any taxable year if the
determination of the amount of tax imposed for such taxable
year is affected by the treatment of the transaction to
which the summons relates.'.
(6) Subparagraph (A) of section 6621(c)(2) is amended by
adding at the end thereof the following new flush sentence:
`The preceding sentence shall be applied without regard to
any such letter or notice which is withdrawn by the
Secretary.'.
(7) Clause (i) of section 6621(c)(2)(B) is amended by
striking `this subtitle' and inserting `this title'.
(d) AMENDMENTS RELATED TO SUBTITLE D-
(1) Notwithstanding section 11402(c) of the Revenue
Reconciliation Act of 1990, the amendment made by section
11402(b)(1) of such Act shall apply to taxable years ending
after December 31, 1989.
(2) Clause (ii) of section 143(m)(4)(C) is amended--
(A) by striking `any month of the 10-year period' and
inserting `any year of the 4-year period',
(B) by striking `succeeding months' and inserting
`succeeding years', and
(C) by striking `over the remainder of such period (or,
if lesser, 5 years)' and inserting `to zero over the
succeeding 5 years'.
(e) AMENDMENTS RELATED TO SUBTITLE E-
(1)(A) Clause (ii) of section 56(d)(1)(B) is amended to read
as follows:
`(ii) appropriate adjustments in the application of
section 172(b)(2) shall be made to take into account
the limitation of subparagraph (A).'.
(B) For purposes of applying sections 56(g)(1) and 56(g)(3)
of the Internal Revenue Code of 1986 with respect to taxable
years beginning in 1991 and 1992, the reference in such
sections to the alternative tax net operating loss deduction
shall be treated as including a reference to the deduction
under section 56(h) of such Code as in effect before the
amendments made by section 1915 of the Energy Policy Act of 1992.
(2) Clause (i) of section 613A(c)(3)(A) is amended by
striking `the table contained in'.
(3) Section 6501 is amended--
(A) by striking subsection (m) (relating to deficiency
attributable to election under section 44B) and by
redesignating subsections (n) and (o) as subsections (m)
and (n), respectively, and
(B) by striking `section 40(f) or 51(j)' in subsection
(m) (as redesignated by subparagraph (A)) and inserting
`section 40(f), 43, or 51(j)'.
(4) Subparagraph (C) of section 38(c)(2) (as in effect on the
day before the date of the enactment of the Revenue
Reconciliation Act of 1990) is amended by inserting before the
period at the end of the first sentence the following: `and
without regard to the deduction under section 56(h)'.
(5) The amendment made by section 1913(b)(2)(C)(i) of the
Energy Policy Act of 1992 shall apply to taxable years
beginning after December 31, 1990.
(f) AMENDMENTS RELATED TO SUBTITLE F-
(1)(A) Section 2701(a)(3) is amended by adding at the end
thereof the following new subparagraph:
`(C) VALUATION OF QUALIFIED PAYMENTS WHERE NO
LIQUIDATION, ETC. RIGHTS- In the case of an applicable
retained interest which is described in subparagraph (B)(i)
but not subparagraph (B)(ii), the value of the distribution
right shall be determined without regard to this section.'.
(B) Section 2701(a)(3)(B) is amended by inserting `CERTAIN'
before `QUALIFIED' in the heading thereof.
(C) Sections 2701 (d)(1) and (d)(4) are each amended by
striking `subsection (a)(3)(B)' and inserting `subsection
(a)(3) (B) or (C)'.
(2) Clause (i) of section 2701(a)(4)(B) is amended by
inserting `(or, to the extent provided in regulations, the
rights as to either income or capital)' after `income and
capital'.
(3)(A) Section 2701(b)(2) is amended by adding at the end
thereof the following new subparagraph:
`(C) APPLICABLE FAMILY MEMBER- For purposes of this
subsection, the term `applicable family member' includes
any lineal descendant of any parent of the transferor or
the transferor's spouse.'.
(B) Section 2701(e)(3) is amended--
(i) by striking subparagraph (B), and
(ii) by striking so much of paragraph (3) as precedes
`shall be treated as holding' and inserting:
`(3) ATTRIBUTION OF INDIRECT HOLDINGS AND TRANSFERS- An
individual'.
(C) Section 2704(c)(3) is amended by striking `section
2701(e)(3)(A)' and inserting `section 2701(e)(3)'.
(4) Clause (i) of section 2701(c)(1)(B) is amended to read as
follows:
`(i) a right to distributions with respect to any
interest which is junior to the rights of the
transferred interest,'.
(5)(A) Clause (i) of section 2701(c)(3)(C) is amended to read
as follows:
`(i) IN GENERAL- Payments under any interest held by
a transferor which (without regard to this
subparagraph) are qualified payments shall be treated
as qualified payments unless the transferor elects not
to treat such payments as qualified payments. Payments
described in the preceding sentence which are held by
an applicable family member shall be treated as
qualified payments only if such member elects to treat
such payments as qualified payments.'.
(B) The first sentence of section 2701(c)(3)(C)(ii) is
amended to read as follows: `A transferor or applicable family
member holding any distribution right which (without regard to
this subparagraph) is not a qualified payment may elect to
treat such right as a qualified payment, to be paid in the
amounts and at the times specified in such election.'.
(C) The time for making an election under the second sentence
of section 2701(c)(3)(C)(i) of the Internal Revenue Code of
1986 (as amended by subparagraph (A)) shall not expire before
the due date (including extensions) for filing the transferor's
return of the tax imposed by section 2501 of such Code for the
first calendar year ending after the date of enactment.
(6) Section 2701(d)(3)(A)(iii) is amended by striking `the
period ending on the date of'.
(7) Subclause (I) of section 2701(d)(3)(B)(ii) is amended by
inserting `or the exclusion under section 2503(b),' after
`section 2523,'.
(8) Section 2701(e)(5) is amended--
(A) by striking `such contribution to capital or such
redemption, recapitalization, or other change' in
subparagraph (A) and inserting `such transaction', and
(B) by striking `the transfer' in subparagraph (B) and
inserting `such transaction'.
(9) Section 2701(d)(4) is amended by adding at the end
thereof the following new subparagraph:
`(C) TRANSFER TO TRANSFERORS- In the case of a taxable
event described in paragraph (3)(A)(ii) involving a
transfer of an applicable retained interest from an
applicable family member to a transferor, this subsection
shall continue to apply to the transferor during any period
the transferor holds such interest.'.
(10) Section 2701(e)(6) is amended by inserting `or to
reflect the application of subsection (d)' before the period at
the end thereof.
(11)(A) Section 2702(a)(3)(A) is amended--
(i) by striking `to the extent' and inserting `if' in
clause (i),
(ii) by striking `or' at the end of clause (i),
(iii) by striking the period at the end of clause (ii)
and inserting `, or', and
(iv) by adding at the end thereof the following new clause:
`(iii) to the extent that regulations provide that
such transfer is not inconsistent with the purposes of
this section.'.
(B)(i) Section 2702(a)(3) is amended by striking `incomplete
transfer' each place it appears and inserting `incomplete gift'.
(ii) The heading for section 2702(a)(3)(B) is amended by
striking `INCOMPLETE TRANSFER' and inserting `INCOMPLETE GIFT'.
(g) AMENDMENTS RELATED TO SUBTITLE G-
(1)(A) Subsection (a) of section 1248 is amended--
(i) by striking `, or if a United States person receives
a distribution from a foreign corporation which, under
section 302 or 331, is treated as an exchange of stock' in
paragraph (1), and
(ii) by adding at the end thereof the following new
sentence: `For purposes of this section, a United States
person shall be treated as having sold or exchanged any
stock if, under any provision of this subtitle, such person
is treated as realizing gain from the sale or exchange of
such stock.'.
(B) Paragraph (1) of section 1248(e) is amended by striking
`, or receives a distribution from a domestic corporation
which, under section 302 or 331, is treated as an exchange of
stock'.
(C) Subparagraph (B) of section 1248(f)(1) is amended by
striking `or 361(c)(1)' and inserting `355(c)(1), or 361(c)(1)'.
(D) Paragraph (1) of section 1248(i) is amended to read as
follows:
`(1) IN GENERAL- If any shareholder of a 10-percent corporate
shareholder of a foreign corporation exchanges stock of the
10-percent corporate shareholder for stock of the foreign
corporation, such 10-percent corporate shareholder shall
recognize gain in the same manner as if the stock of the
foreign corporation received in such exchange had been--
`(A) issued to the 10-percent corporate share-holder, and
`(B) then distributed by the 10-percent corporate
shareholder to such shareholder in redemption or
liquidation (whichever is appropriate).
The amount of gain recognized by such 10-percent corporate
shareholder under the preceding sentence shall not exceed the
amount treated as a dividend under this section.'.
(2) Section 897 is amended by striking subsection (f).
(3) Paragraph (13) of section 4975(d) is amended by striking
`section 408(b)' and inserting `section 408(b)(12)'.
(4) Clause (iii) of section 56(g)(4)(D) is amended by
inserting `, but only with respect to taxable years beginning
after December 31, 1989' before the period at the end thereof.
(5)(A) Paragraph (11) of section 11701(a) of the Revenue
Reconciliation Act of 1990 (and the amendment made by such
paragraph) are hereby repealed, and section 7108(r)(2) of the
Revenue Reconciliation Act of 1989 shall be applied as if such
paragraph (and amendment) had never been enacted.
(B) Subparagraph (A) shall not apply to any building if the
owner of such building establishes to the satisfaction of the
Secretary of the Treasury or his delegate that such owner
reasonably relied on the amendment made by such paragraph (11).
(h) AMENDMENTS RELATED TO SUBTITLE H-
(1)(A) Clause (vi) of section 168(e)(3)(B) is amended by
striking `or' at the end of subclause (I), by striking the
period at the end of subclause (II) and inserting `, or', and
by adding at the end thereof the following new subclause:
`(III) is described in section 48(l)(3)(A)(ix) (as in effect on
the day before the date of the enactment of the Revenue
Reconciliation Act of 1990).'.
(B) Subparagraph (B) of section 168(e)(3) (relating to 5-year
property) is amended by adding at the end the following flush
sentence:
`Nothing in any provision of law shall be construed to
treat property as not being described in clause (vi)(I) (or
the corresponding provisions of prior law) by reason of
being public utility property (within the meaning of
section 48(a)(3)).'.
(C) Subparagraph (K) of section 168(g)(4) is amended by
striking `section 48(a)(3)(A)(iii)' and inserting `section
48(l)(3)(A)(ix) (as in effect on the day before the date of the
enactment of the Revenue Reconciliation Act of 1990)'.
(2) Clause (ii) of section 172(b)(1)(E) is amended by
striking `subsection (m)' and inserting `subsection (h)'.
(3) Sections 805(a)(4)(E), 832(b)(5)(C)(ii)(II), and
832(b)(5)(D)(ii)(II) are each amended by striking `243(b)(5)'
and inserting `243(b)(2)'.
(4) Subparagraph (A) of section 243(b)(3) is amended by
inserting `of' after `In the case'.
(5) The subsection heading for subsection (a) of section 280F
is amended by striking `Investment Tax Credit and'.
(6) Clause (i) of section 1504(c)(2)(B) is amended by
inserting `section' before `243(b)(2)'.
(7) Paragraph (3) of section 341(f) is amended by striking
`351, 361, 371(a), or 374(a)' and inserting `351, or 361'.
(8) Paragraph (2) of section 243(b) is amended to read as
follows:
`(2) AFFILIATED GROUP- For purposes of this subsection:
`(A) IN GENERAL- The term `affiliated group' has the
meaning given such term by section 1504(a), except that for
such purposes sections 1504(b)(2), 1504(b)(4), and 1504(c)
shall not apply.
`(B) GROUP MUST BE CONSISTENT IN FOREIGN TAX TREATMENT-
The requirements of paragraph (1)(A) shall not be treated
as being met with respect to any dividend received by a
corporation if, for any taxable year which includes the day
on which such dividend is received--
`(i) 1 or more members of the affiliated group
referred to in paragraph (1)(A) choose to any extent to
take the benefits of section 901, and
`(ii) 1 or more other members of such group claim to
any extent a deduction for taxes otherwise creditable
under section 901.'.
(9) The amendment made by section 11813(b)(17) of the Revenue
Reconciliation Act of 1990 shall be applied as if the material
stricken by such amendment included the closing parenthesis
after `section 48(a)(5)'.
(10) Paragraph (1) of section 179(d) is amended by striking
`in a trade or business' and inserting `a trade or business'.
(11) Subparagraph (E) of section 50(a)(2) is amended by
striking `section 48(a)(5)(A)' and inserting `section 48(a)(5)'.
(12) The amendment made by section 11801(c)(9)(G)(ii) of the
Revenue Reconciliation Act of 1990 shall be applied as if it
struck `Section 422A(c)(2)' and inserted `Section 422(c)(2)'.
(13) Subparagraph (B) of section 424(c)(3) is amended by
striking `a qualified stock option, an incentive stock option,
an option granted under an employee stock purchase plan, or a
restricted stock option' and inserting `an incentive stock
option or an option granted under an employee stock purchase
plan'.
(14) Subparagraph (E) of section 1367(a)(2) is amended by
striking `section 613A(c)(13)(B)' and inserting `section
613A(c)(11)(B)'.
(15) Subparagraph (B) of section 460(e)(6) is amended by
striking `section 167(k)' and inserting `section
168(e)(2)(A)(ii)'.
(16) Subparagraph (C) of section 172(h)(4) is amended by
striking `subsection (b)(1)(M)' and inserting `subsection
(b)(1)(E)'.
(17) Section 6503 is amended--
(A) by redesignating the subsection relating to extension
in case of certain summonses as subsection (j), and
(B) by redesignating the subsection relating to cross
references as subsection (k).
(18) Paragraph (4) of section 1250(e) is hereby repealed.
(19) Paragraph (1) of section 179(d) is amended by adding at
the end the following new sentence: `Such term shall not
include any property described in section 50(b) and shall not
include air conditioning or heating units.'.
`(i) EFFECTIVE DATE- Except as otherwise expressly provided, any
amendment made by this section shall take effect as if included in
the provision of the Revenue Reconciliation Act of 1990 to which
such amendment relates.'.
SEC. 1703. AMENDMENTS RELATED TO REVENUE RECONCILIATION ACT OF 1993.
(a) AMENDMENT RELATED TO SECTION 13114- Paragraph (2) of section
1044(c) is amended to read as follows:
`(2) PURCHASE- The taxpayer shall be considered to have
purchased any property if, but for subsection (d), the
unadjusted basis of such property would be its cost within the
meaning of section 1012.'.
(b) AMENDMENTS RELATED TO SECTION 13142-
(1) Subparagraph (B) of section 13142(b)(6) of the Revenue
Reconciliation Act of 1993 is amended to read as follows:
`(B) FULL-TIME STUDENTS, WAIVER AUTHORITY, AND PROHIBITED
DISCRIMINATION- The amendments made by paragraphs (2), (3),
and (4) shall take effect on the date of the enactment of
this Act.'.
(2) Subparagraph (C) of section 13142(b)(6) of such Act is
amended by striking `paragraph (2)' and inserting `paragraph
(5)'.
(c) AMENDMENT RELATED TO SECTION 13161-
(1) IN GENERAL- 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 subsection (a) and
section 4003(a) 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) EFFECTIVE DATE- The amendment made by paragraph (1) shall
take effect on the date of the enactment of this Act.
(d) AMENDMENT RELATED TO SECTION 13201- Clause (ii) of section
135(b)(2)(B) is amended by inserting before the period at the end
thereof the following: `, determined by substituting `calendar year
1989' for `calendar year 1992' in subparagraph (B) thereof'.
(e) AMENDMENTS RELATED TO SECTION 13203- Subsection (a) of
section 59 is amended--
(1) by striking `the amount determined under section
55(b)(1)(A)' in paragraph (1)(A) and (2)(A)(i) and inserting
`the pre-credit tentative minimum tax',
(2) by striking `specified in section 55(b)(1)(A)' in
paragraph (1)(C) and inserting `specified in subparagraph
(A)(i) or (B)(i) of section 55(b)(1) (whichever applies)',
(3) by striking `which would be determined under section
55(b)(1)(A)' in paragraph (2)(A)(ii) and inserting `which would
be the pre-credit tentative minimum tax', and
(4) by adding at the end thereof the following new paragraph:
`(3) PRE-CREDIT TENTATIVE MINIMUM TAX- For purposes of this
subsection, the term `pre-credit tentative minimum tax' means--
`(A) in the case of a taxpayer other than a corporation,
the amount determined under the first sentence of section
55(b)(1)(A)(i), or
`(B) in the case of a corporation, the amount determined
under section 55(b)(1)(B)(i).'.
(f) AMENDMENT RELATED TO SECTION 13221- Sections 1201(a) and
1561(a) are each amended by striking `last sentence' each place it
appears and inserting `last 2 sentences'.
(g) AMENDMENTS RELATED TO SECTION 13222-
(1) Subparagraph (B) of section 6033(e)(1) is amended by
adding at the end thereof the following new clause:
`(iii) COORDINATION WITH SECTION 527(f)- This
subsection shall not apply to any amount on which tax
is imposed by reason of section 527(f).'.
(2) Clause (i) of section 6033(e)(1)(B) is amended by
striking `this subtitle' and inserting `section 501'.
(h) AMENDMENT RELATED TO SECTION 13225- Paragraph (3) of section
6655(g) is amended by striking all that follows `3rd month' in the
sentence following subparagraph (C) and inserting `, subsection
(e)(2)(A) shall be applied by substituting `2 months' for `3
months' in clause (i)(I), the election under clause (i) of
subsection (e)(2)(C) may be made separately for each installment,
and clause (ii) of subsection (e)(2)(C) shall not apply.'.
(i) AMENDMENTS RELATED TO SECTION 13231-
(1) Subparagraph (G) of section 904(d)(3) is amended by
striking `section 951(a)(1)(B)' and inserting `subparagraph (B)
or (C) of section 951(a)(1)'.
(2) Paragraph (1) of section 956A(b) is amended to read as
follows:
`(1) the amount (not including a deficit) referred to in
section 316(a)(1) to the extent such amount was accumulated in
prior taxable years beginning after September 30, 1993, and'.
(3) Subsection (f) of section 956A is amended by inserting
before the period at the end thereof: `and regulations
coordinating the provisions of subsections (c)(3)(A) and (d)'.
(4) Subsection (b) of section 958 is amended by striking
`956(b)(2)' each place it appears and inserting `956(c)(2)'.
(5)(A) Subparagraph (A) of section 1297(d)(2) is amended by
striking `The adjusted basis of any asset' and inserting `The
amount taken into account under section 1296(a)(2) with respect
to any asset'.
(B) The paragraph heading of paragraph (2) of section 1297(d)
is amended to read as follows:
`(2) AMOUNT TAKEN INTO ACCOUNT- '.
(6) Subsection (e) of section 1297 is amended by inserting
`For purposes of this part--' after the subsection heading.
(j) AMENDMENT RELATED TO SECTION 13241- Subparagraph (B) of
section 40(e)(1) is amended to read as follows:
`(B) for any period before January 1, 2001, during which
the rates of tax under section 4081(a)(2)(A) are 4.3 cents
per gallon.'.
(k) AMENDMENT RELATED TO SECTION 13242- Paragraph (4) of section
6427(f) is amended by striking `1995' and inserting `1999'.
(l) AMENDMENT RELATED TO SECTION 13261- Clause (iii) of section
13261(g)(2)(A) of the Revenue Reconciliation Act of 1993 is amended
by striking `by the taxpayer' and inserting `by the taxpayer or a
related person'.
(m) AMENDMENT RELATED TO SECTION 13301- Subparagraph (B) of
section 1397B(d)(5) is amended by striking `preceding'.
(n) CLERICAL AMENDMENTS-
(1) Subsection (d) of section 39 is amended--
(A) by striking `45' in the heading of paragraph (5) and
inserting `45A', and
(B) by striking `45' in the heading of paragraph (6) and
inserting `45B'.
(2) Subparagraph (A) of section 108(d)(9) is amended by
striking `paragraph (3)(B)' and inserting `paragraph (3)(C)'.
(3) Subparagraph (C) of section 143(d)(2) is amended by
striking the period at the end thereof and inserting a comma.
(4) Clause (ii) of section 163(j)(6)(E) is amended by
striking `which is a' and inserting `which is'.
(5) Subparagraph (A) of section 1017(b)(4) is amended by
striking `subsection (b)(2)(D)' and inserting `subsection
(b)(2)(E)'.
(6) So much of section 1245(a)(3) as precedes subparagraph
(A) thereof is amended to read as follows:
`(3) SECTION 1245 PROPERTY- For purposes of this section, the
term `section 1245 property' means any property which is or has
been property of a character subject to the allowance for
depreciation provided in section 167 and is either--'.
(7) Paragraph (2) of section 1394(e) is amended--
(A) by striking `(i)' and inserting `(A)', and
(B) by striking `(ii)' and inserting `(B)'.
(8) Subsection (m) of section 6501 (as redesignated by
section 1602) is amended by striking `or 51(j)' and inserting
`45B, or 51(j)'.
(9)(A) The section 6714 added by section 13242(b)(1) of the
Revenue Reconciliation Act of 1993 is hereby redesignated as
section 6715.
(B) The table of sections for part I of subchapter B of
chapter 68 is amended by striking `6714' in the item added by
such section 13242(b)(2) of such Act and inserting `6715'.
(10) Paragraph (2) of section 9502(b) is amended by inserting
`and before' after `1982,'.
(11) Subsection (a)(3) of section 13206 of the Revenue
Reconciliation Act of 1993 is amended by striking `this
section' and inserting `this subsection'.
(12) Paragraph (1) of section 13215(c) of the Revenue
Reconciliation Act of 1993 is amended by striking `Public Law
92-21' and inserting `Public Law 98-21'.
(13) Paragraph (2) of section 13311(e) of the Revenue
Reconciliation Act of 1993 is amended by striking `section
1393(a)(3)' and inserting `section 1393(a)(2)'.
(14) Subparagraph (B) of section 117(d)(2) is amended by
striking `section 132(f)' and inserting `section 132(h)'.
(o) EFFECTIVE DATE- Any amendment made by this section shall take
effect as if included in the provision of the Revenue
Reconciliation Act of 1993 to which such amendment relates.
