Omnibus Budget Reconciliation Act of 1990 (P.L. 101-508) (Title XI--Revenue Reconciliation Act of 1990)
Omnibus Budget Reconciliation Act of 1990 (P.L. 101-508) (Title XI--Revenue Reconciliation Act of 1990)
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H.R. 5835, Enrolled Bill
One Hundred First Congress
of the
United States of America
AT THE SECOND SESSION
Begun and held at the City of Washington on Tuesday,
the twenty-third day of January, one thousand nine hundred and ninety
An Act
To provide for reconciliation pursuant to section 4 of the concurrent resolution on the budget for fiscal year 1991.
Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the 'Omnibus Budget Reconciliation Act of 1990'.
SEC. 2. TABLE OF TITLES.
Title I. Agriculture and related programs.
Title II. Banking, housing, and related programs.
Title III. Student loans and labor provisions.
Title IV. Medicare, Medicaid, and other health-related programs.
Title V. Income security, human resources, and related programs.
Title VI. Energy and environmental programs.
Title VII. Civil service and postal service programs.
Title VIII. Veterans' programs.
Title IX. Transportation.
Title X. Miscellaneous user fees and other provisions.
Title XI. Revenue provisions.
Title XII. Pensions.
Title XIII. Budget enforcement.
* * * * * * *
ENROLLMENT ERRATA
Pursuant to the provisions of H.J. Res. 682, waiving certain enrollment requirements with respect to any reconciliation bill, appropriation bill, or continuing resolution for the remainder of the One Hundred First Congress, and providing for the subsequent preparation and certification of printed enrollments, this printed enrollment contains corrections in indentation, type face, and type size and includes identifying obvious errors in spelling and punctuation in the hand enrollment.
SEC. 4000. REFERENCES IN SUBTITLE; TABLE OF CONTENTS.
(a) AMENDMENTS TO THE SOCIAL SECURITY ACT.--Except as otherwise specifically provided, whenever in this title an amendment is expressed in terms of an amendment to or repeal of a section or other provision, the reference shall be considered to be made to that section or other provision of the Social Security Act.
(b) TABLE OF CONTENTS.--The table of contents of this subtitle is as follows:
Sec. 4000. References in subtitle; table of contents.
Part 3--Provisions Relating to Parts A and B
Sec. 4203. Extension of secondary payor provisions.
SEC. 4203. EXTENSION OF SECONDARY PAYOR PROVISIONS.
(a) EXTENSION OF TRANSFER OF DATA.--
(1) Section 1862(b)(5)(C)(iii) (42 U.S.C. 1395y(b)(5)(C)(iii)) is amended by striking 'September 30, 1991' and inserting 'September 30, 1995'.
(2) Section 6103(l)(12)(F) of the Internal Revenue Code of 1986 is amended--
(A) in clause (i), by striking 'September 30, 1991' and inserting 'September 30, 1995';
(B) in clause (ii)(I), by striking '1990' and inserting '1994'; and
(C) in clause (ii)(II), by striking '1991' and inserting '1995'.
(c) INDIVIDUALS WITH END STAGE RENAL DISEASE.--
(1) IN GENERAL.--Section 1862(b)(1)(C) (42 U.S.C. 1395y(b)(1)(C)) is amended--
(A) in clause (i), by striking 'during the 12-month period' and all that follows and inserting 'during the 12-month period which begins with the first month in which the individual becomes entitled to benefits under part A under the provisions of section 226A, or, if earlier, the first month in which the individual would have been entitled to benefits under such part under the provisions of section 226A if the individual had filed an application for such benefits; and'
(B) in the matter following clause (ii), by adding at the end the following: 'Effective for items and services furnished on or after February 1, 1991, and on or before January 1, 1996, (with respect to periods beginning on or after February 1, 1990), clauses (i) and (ii) shall be applied by substituting '18-month' for '12-month' each place it appears.'.
(2) GAO STUDY OF EXTENSION OF SECONDARY PAYER PERIOD.--
(A) The Comptroller General shall conduct a study of the impact of the application of clause (iii) of section 1862(b)(1)(C) of the Social Security Act on individuals entitled to benefits under title XVIII of such Act by reason of section 226A of such Act, and shall include in such report information relating to--
(i) the number (and geographic distribution) of such individuals for whom Medicare is secondary;
(ii) the amount of savings to the Medicare program achieved annually by reason of the application of such clause;
(iii) the effect on access to employment, and employment-based health insurance, for such individuals and their family members (including coverage by employment-based health insurance of cost-sharing requirements under Medicare after such employment-based insurance becomes secondary);
(iv) the effect on the amount paid for each dialysis treatment under employment-based health insurance;
(v) the effect on cost-sharing requirements under employment-based health insurance (and on out-of-pocket expenses of such individuals) during the period for which Medicare is secondary;
(vi) the appropriateness of applying the provisions of section 1862(b)(1)(C) to all group health plans.
(B) The Comptroller General shall submit a preliminary report on the study conducted under subparagraph (A) to the Committees on Ways and Means and Energy and Commerce of the House of Representatives and the Committee on Finance of the Senate not later than January 1, 1993, and a final report on such study not later than January 1, 1995.
TITLE V--INCOME SECURITY, HUMAN RESOURCES, AND RELATED PROGRAMS
Subtitle B--Old-Age, Survivors, and Disability Insurance
SEC. 5100. TABLE OF CONTENTS.
Sec. 5101. Amendment of the Social Security Act.
* * * * * * *
Sec. 5111. Amendments relating to social security account statements.
* * * * * * *
Sec. 5125. Tier 1 railroad retirement tax rates explicitly determined by reference to social security taxes.
Sec. 5126. Transfer to railroad retirement account.
* * * * * * *
Sec. 5129. Recovery of OASDI overpayments by means of reduction in tax refunds.
Sec. 5130. Miscellaneous technical corrections.
Except as otherwise expressly provided, whenever in this subtitle an amendment or repeal is expressed in terms of an amendment to, or repeal of, a section or other provision, the reference shall be considered to be made to a section or other provision of the Social Security Act.
* * * * * * *
SEC. 5111. AMENDMENTS RELATING TO SOCIAL SECURITY ACCOUNT STATEMENTS.
(a) IN GENERAL.--Section 1142 (42 U.S.C. 1320b-13), as added by section 10308 of the Omnibus Budget Reconciliation Act of 1989 (103 Stat. 2485), is amended--
(1) by striking 'SEC. 1142.' and inserting 'SEC. 1143.'; and
(2) in subsection (c)(2), by striking ' a biennial' and inserting 'an annual'.
(b) DISCLOSURE OF ADDRESS INFORMATION BY INTERNAL REVENUE SERVICE TO SOCIAL SECURITY ADMINISTRATION.--
(1) IN GENERAL.--Section 6103(m) of the Internal Revenue Code of 1986 (relating to disclosure of taxpayer identity information) is amended by adding at the end the following new paragraph:
'(7) SOCIAL SECURITY ACCOUNT STATEMENT FURNISHED BY SOCIAL SECURITY ADMINISTRATION.--Upon written request by the Commissioner of Social Security, the Secretary may disclose the mailing address of any taxpayer who is entitled to receive a social security account statement pursuant to section 1143(c) of the Social Security Act, for use only by officers, employees or agents of the Social Security Administration for purposes of mailing such statement to such taxpayer.'.
(2) SAFEGUARDS.--Section 6103(p)(4) of such Code (relating to safeguards) is amended, in the matter following subparagraph (f)(iii), by striking 'subsection (m)(2), (4), or (6)' and inserting 'paragraph (2), (4), (6), or (7) of subsection (m)'.
(3) UNAUTHORIZED DISCLOSURE PENALTIES.--Paragraph (2) of section 7213(a) of such Code (relating to unauthorized disclosure of returns and return information) is amended by striking '(m)(2), (4), or (6)' and inserting '(m)(2), (4), (6), or (7)'.
SEC. 5124. COLLECTION OF EMPLOYEE SOCIAL SECURITY AND RAILROAD RETIREMENT TAXES ON TAXABLE GROUP-TERM LIFE INSURANCE PROVIDED TO RETIREES.
(a) SOCIAL SECURITY TAXES.--Section 3102 of the Internal Revenue Code of 1986 (relating to deduction of tax from wages) is amended by adding at the end thereof the following new subsection:
'(d) SPECIAL RULE FOR CERTAIN TAXABLE GROUP-TERM LIFE INSURANCE BENEFITS.--
'(1) IN GENERAL.--In the case of any payment for group-term life insurance to which this subsection applies--
'(A) subsection (a) shall not apply,
'(B) the employer shall separately include on the statement required under section 6051--
'(i) the portion of the wages which consists of payments for group-term life insurance to which this subsection applies, and
'(ii) the amount of the tax imposed by section 3101 on such payments, and
'(C) the tax imposed by section 3101 on such payments shall be paid by the employee.
'(2) BENEFITS TO WHICH SUBSECTION APPLIES.--This subsection shall apply to any payment for group-term life insurance to the extent--
'(A) such payment constitutes wages, and
'(B) such payment is for coverage for periods during which an employment relationship no longer exists between the employee and the employer.'
'(d) SPECIAL RULE FOR CERTAIN TAXABLE GROUP-TERM LIFE INSURANCE BENEFITS.--
'(1) IN GENERAL.--In the case of any payment for group-term life insurance to which this subsection applies--
'(A) subsection (a) shall not apply,
'(B) the employer shall separately include on the statement required under section 6051--
'(i) the portion of the compensation which consists of payments for group-term life insurance to which this subsection applies, and
'(ii) the amount of the tax imposed by section 3201 on such payments, and
'(C) the tax imposed by section 3201 on such payments shall be paid by the employee.
'(2) BENEFITS TO WHICH SUBSECTION APPLIES.--This subsection shall apply to any payment for group-term life insurance to the extent--
'(A) such payment constitutes compensation, and
'(B) such payment is for coverage for periods during which an employment relationship no longer exists between the employee and the employer.'
SEC. 5125. TIER 1 RAILROAD RETIREMENT TAX RATES EXPLICITLY DETERMINED BY REFERENCE TO SOCIAL SECURITY TAXES.
(a) TAX ON EMPLOYEES.--Subsection (a) of section 3201 of the Internal Revenue Code of 1986 (relating to rate of tax) is amended--
(1) by striking 'following' and inserting 'applicable', and
(2) by striking 'employee:' and all that follows and inserting 'employee. For purposes of the preceding sentence, the term 'applicable percentage' means the percentage equal to the sum of the rates of tax in effect under subsections (a) and (b) of section 3101 for the calendar year.'
(b) TAX ON EMPLOYEE REPRESENTATIVES.--Paragraph (1) of section 3211(a) of such Code (relating to rate of tax) is amended--
(1) by striking 'following' and inserting 'applicable', and
(2) by striking 'representative:' and all that follows and inserting 'representative. For purposes of the preceding sentence, the term 'applicable percentage' means the percentage equal to the sum of the rates of tax in effect under subsections (a) and (b) of section 3101 and subsections (a) and (b) of section 3111 for the calendar year.'
(c) TAX ON EMPLOYERS.--Subsection (a) of section 3221 of such Code (relating to rate of tax) is amended--
(1) by striking 'following' and inserting 'applicable', and
(2) by striking 'employer:' and all that follows and inserting 'employer. For purposes of the preceding sentence, the term 'applicable percentage' means the percentage equal to the sum of the rates of tax in effect under subsections (a) and (b) of section 3111 for the calendar year.'
Subsection (c)(1)(A) of section 224 of the Railroad Retirement Solvency Act of 1983 (relating to section 72(r) revenue increase transferred to certain railroad accounts) is amended by striking '1990' and inserting '1992'.
* * * * * * *
SEC. 5129. RECOVERY OF OASDI OVERPAYMENTS BY MEANS OF REDUCTION IN TAX REFUNDS.
(a) ADDITIONAL METHOD OF RECOVERY.--Section 204(a)(1)(A) (42 U.S.C. 404(a)(1)(A)) is amended by inserting after 'payments to such overpaid person,' the following:
(1) in subsection (a), by striking 'OASDI overpayment and';
(2) by redesignating subsection (f) as subsection (g); and
(3) by inserting the following new subsection after subsection (e):
'(f)(1) Subsection (a) shall apply with respect to an OASDI overpayment made to any individual only if such individual is not currently entitled to monthly insurance benefits under title II of the Social Security Act.
'(2)(A) The requirements of subsection (b) shall not be treated as met in the case of the recovery of an OASDI overpayment from any individual under this section unless the notification under subsection (b)(1) describes the conditions under which the Secretary of Health and Human Services is required to waive recovery of an overpayment, as provided under section 204(b) of the Social Security Act.
'(B) In any case in which an individual files for a waiver under section 204(b) of the Social Security Act within the 60-day period referred to in subsection (b)(2), the Secretary of Health and Human Services shall not certify to the Secretary of the Treasury that the debt is valid under subsection (b)(4) before rendering a decision on the waiver request under such section 204(b). In lieu of payment, pursuant to subsection (c), to the Secretary of Health and Human Services of the amount of any reduction under this subsection based on an OASDI overpayment, the Secretary of the Treasury shall deposit such amount in the Federal Old-Age and Survivors Insurance Trust Fund or the Federal Disability Insurance Trust Fund, whichever is certified to the Secretary of the Treasury as appropriate by the Secretary of Health and Human Services.'.
(1) IN GENERAL.--Subsection (d) of section 6402 of the Internal Revenue Code of 1986 (relating to collection of debts owed to Federal agencies) is amended--
(A) in paragraph (1), by striking 'any OASDI overpayment and'; and
(B) by striking paragraph (3) and inserting the following new paragraph:
'(3) TREATMENT OF OASDI OVERPAYMENTS.--
'(A) REQUIREMENTS.--Paragraph (1) shall apply with respect to an OASDI overpayment only if the requirements of paragraphs (1) and (2) of section 3720A(f) of title 31, United States Code, are met with respect to such overpayment.
'(B) NOTICE; PROTECTION OF OTHER PERSONS FILING JOINT RETURN.--
'(i) NOTICE.--In the case of a debt consisting of an OASDI overpayment, if the Secretary determines upon receipt of the notice referred to in paragraph (1) that the refund from which the reduction described in paragraph (1)(A) would be made is based upon a joint return, the Secretary shall--
'(I) notify each taxpayer filing such joint return that the reduction is being made from a refund based upon such return, and
'(II) include in such notification a description of the procedures to be followed, in the case of a joint return, to protect the share of the refund which may be payable to another person.
'(ii) ADJUSTMENTS BASED ON PROTECTIONS GIVEN TO OTHER TAXPAYERS ON JOINT RETURN.--If the other person filing a joint return with the person owing the OASDI overpayment takes appropriate action to secure his or her proper share of the refund subject to reduction under this subsection, the Secretary shall pay such share to such other person. The Secretary shall deduct the amount of such payment from amounts which are derived from subsequent reductions in refunds under this subsection and are payable to a trust fund referred to in subparagraph (C).
'(C) DEPOSIT OF AMOUNT OF REDUCTION INTO APPROPRIATE TRUST FUND.--In lieu of payment, pursuant to paragraph (1)(B), of the amount of any reduction under this subsection to the Secretary of Health and Human Services, the Secretary shall deposit such amount in the Federal Old-Age and Survivors Insurance Trust Fund or the Federal Disability Insurance Trust Fund, whichever is certified to the Secretary as appropriate by the Secretary of Health and Human Services.
'(D) OASDI OVERPAYMENT.--For purposes of this paragraph, the term 'OASDI overpayment' means any overpayment of benefits made to an individual under title II of the Social Security Act.'.
(2) PRESERVATION OF REMEDIES.--Subsection (e) of section 6402 of such Code (relating to review of reductions) is amended in the last sentence by inserting before the period the following:
'or any such action against the Secretary of Health and Human Services which is otherwise available with respect to recoveries of overpayments of benefits under section 204 of the Social Security Act'.
(d) EFFECTIVE DATE.--The amendments made by this section--
(1) shall take effect January 1, 1991, and
(2) shall not apply to refunds to which the amendments made by section 2653 of the Deficit Reduction Act of 1984 (98 Stat. 1153) do not apply.
(a) IN GENERAL.--
(1) AMENDMENT RELATING TO SECTION 7088 OF PUBLIC LAW 100-690.--Section 208 (42 U.S.C. 408) is amended, in the last undesignated paragraph, by striking 'section 405(c)(2) of this title' and inserting 'section 205(c)(2)'.
(2) AMENDMENTS RELATING TO SECTION 322 OF PUBLIC LAW 98-21.--Paragraphs (1) and (2) of section 322(b) of the Social Security Amendments of 1983 (Public Law 98-21, 97 Stat. 121) are each amended by inserting 'the first place it appears' before 'the following'.
(3) AMENDMENT RELATING TO SECTION 1011B(b)(4) OF PUBLIC LAW 100-647.--Section 211(a) (42 U.S.C. 411(a)) is amended by redesignating the second paragraph (14) as paragraph (15).
(4) AMENDMENT RELATING TO SECTION 2003(d) OF PUBLIC LAW 100-647.--Paragraph (3) of section 3509(d) of the Internal Revenue Code of 1986 (as amended by section 2003(d) of the Technical and Miscellaneous Revenue Act of 1988 (Public Law 100-647; 102 Stat. 3598)) is further amended by striking 'subsection (d)(4)' and inserting 'subsection (d)(3)'.
(5) AMENDMENT RELATING TO SECTION 10208 OF PUBLIC LAW 101-239.--Section 209(a)(7)(B) (42 U.S.C. 409(a)(7)(B)) is amended by striking 'subparagraph (B)' in the matter following clause (ii) and inserting 'clause (ii)'.
(b) EFFECTIVE DATES.--The amendments made by subsection (a) shall be effective as if included in the enactment of the provision to which it relates.
* * * * * * *
Subtitle F--Miscellaneous
SEC. 8051. USE OF INTERNAL REVENUE SERVICE AND SOCIAL SECURITY ADMINISTRATION DATA FOR INCOME VERIFICATION.
(a) DISCLOSURE OF TAX INFORMATION.--
(1) Subparagraph (D) of section 6103(l)(7) of the Internal Revenue Code of 1986 (relating to disclosure of return information to Federal, State, and local agencies administering certain programs) is amended--
(A) by striking out 'and' at the end of clause (vi);
(B) by striking out the period at the end of clause (vii) and inserting in lieu thereof '; and'; and
(C) by adding at the end the following:
'(viii)(I) any needs-based pension provided under chapter 15 of title 38, United States Code, or under any other law administered by the Secretary of Veterans Affairs;
'(II) parents' dependency and indemnity compensation provided under section 415 of title 38, United States Code;
'(III) health-care services furnished under section 610(a)(1)(I), 610(a)(2), 610(b), and 612(a)(2)(B) of such title; and
'(IV) compensation paid under chapter 11 of title 38, United States Code, at the 100 percent rate based solely on unemployability and without regard to the fact that the disability or disabilities are not rated as 100 percent disabling under the rating schedule.
(2) The heading of paragraph (7) of section 6103(l) of such Code is amended by striking out 'OR THE FOOD STAMP ACT OF 1977' and inserting in lieu thereof ', THE FOOD STAMP ACT OF 1977, OR TITLE 38, UNITED STATES CODE'.
(b) USE OF INCOME INFORMATION FOR NEEDS-BASED PROGRAMS.--
(1) Chapter 53 of title 38, United States Code, is amended by adding at the end the following new section:
'(a) The Secretary shall notify each applicant for a benefit or service described in subsection (c) of this section that income information furnished by the applicant to the Secretary may be compared with information obtained by the Secretary from the Secretary of Health and Human Services or the Secretary of the Treasury under section 6103(l)(7)(D)(viii) of the Internal Revenue Code of 1986. The Secretary shall periodically transmit to recipients of such benefits and services additional notifications of such matters.
'(b) The Secretary may not, by reason of information obtained from the Secretary of Health and Human Services or the Secretary of the Treasury under section 6103(l)(7)(D)(viii) of the Internal Revenue Code of 1986, terminate, deny, suspend, or reduce any benefit or service described in subsection (c) of this section until the Secretary takes appropriate steps to verify independently information relating to the following:
'(1) The amount of the asset or income involved.
'(2) Whether such individual actually has (or had) access to such asset or income for the individual's own use.
'(3) The period or periods when the individual actually had such asset or income.
'(c) The benefits and services described in this subsection are the following:
'(1) Needs-based pension benefits provided under chapter 15 of this title or under any other law administered by the Secretary.
'(2) Parents' dependency and indemnity compensation provided under section 415 of this title.
'(3) Health-care services furnished under sections 610(a)(1)(I), 610(a)(2), 610(b), and 612(a)(2)(B) of this title.
'(4) Compensation paid under chapter 11 of this title at the 100 percent rate based solely on unemployability and without regard to the fact that the disability or disabilities are not rated as 100 percent disabling under the rating schedule.
'(d) In the case of compensation described in subsection (c)(4) of this section, the Secretary may independently verify or otherwise act upon wage or self-employment information referred to in subsection (b) of this section only if the Secretary finds that the amount and duration of the earnings reported in that information clearly indicate that the individual may no longer be qualified for a rating of total disability.
'(e) The Secretary shall inform the individual of the findings made by the Secretary on the basis of verified information under subsection (b) of this section, and shall give the individual an opportunity to contest such findings, in the same manner as applies to other information and findings relating to eligibility for the benefit or service involved.
'(f) The Secretary shall pay the expenses of carrying out this section from amounts available to the Department for the payment of compensation and pension.
'(g) The authority of the Secretary to obtain information from the Secretary of the Treasury or the Secretary of Health and Human Services under section 6103(l)(7)(D)(viii) of the Internal Revenue Code of 1986 expires on September 30, 1992.'.
(2) The table of sections at the beginning of such chapter is amended by adding at the end the following new item:
(c) NOTICE TO CURRENT BENEFICIARIES.--
(1) The Secretary of Veterans Affairs shall notify individuals who (as of the date of the enactment of this Act) are applicants for or recipients of the benefits described in subsection (c) (other than paragraph (3)) of section 3117 of title 38, United States Code (as added by subsection (b)), that income information furnished to the Secretary by such applicants and recipients may be compared with information obtained by the Secretary from the Secretary of Health and Human Services or the Secretary of the Treasury under clause (viii) of section 6103(l)(7)(D) of the Internal Revenue Code of 1986 (as added by subsection (a)).
(2) Notification under paragraph (1) shall be made not later than 90 days after the date of the enactment of this Act.
(3) The Secretary of Veterans Affairs may not obtain information from the Secretary of Health and Human Services or the Secretary of the Treasury under section 6103(l)(7)(D)(viii) of the Internal Revenue Code of 1986 (as added by subsection (a)) until notification under paragraph (1) is made.
(d) GAO STUDY.--The Comptroller General of the United States shall conduct a study of the effectiveness of the amendments made by this section and shall submit a report on such study to the Committees on Veterans' Affairs and Ways and Means of the House of Representatives and the Committees on Veterans' Affairs and Finance of the Senate not later than January 1, 1992.
SEC. 9001. SENSE OF CONGRESS THAT HIGHWAY USER TAXES SHOULD BE DEDICATED TO THE HIGHWAY TRUST FUND.
(a) FINDINGS.--Congress finds that--
(1) highway motor fuel taxes have in the past been dedicated to the Highway Trust Fund and used for the development of the surface transportation system;
(2) extraordinary budget pressures have led to consideration of the need for a temporary, 5-year highway motor fuels tax for deficit reduction;
(3) any portion of the new taxes deposited into the Highway Trust Fund shall be available to accommodate our country's vital transportation needs;
(4) adequate funding of transportation is a key component of a national strategy for economic growth; and
(5) use of the highway motor fuels taxes for deficit reduction should be temporary so that we can return as soon as possible to the dedicated user fee principle in order to ensure fairness to highway users and to ensure that needed transportation infrastructure improvements are made.
(b) SENSE OF CONGRESS.--It is the sense of Congress that--
(1) any increase in motor fuel excise taxes that are deposited in the Highway Trust Fund shall be available for surface transportation purposes;
(2) the Budget Resolutions for fiscal years 1991 through 1995 should accommodate the Nation's transportation needs and the section 302(a) allocations should provide budget authority and outlays attributable to the increase in deposits into the Highway Trust Fund as a result of any increases in motor fuels taxes through implementation of this Act;
(3) Congress reaffirms the principle that highway motor fuel taxes should be deposited in the Highway Trust Fund; and
(4) to the extent the highway motor fuel taxes are used for deficit reduction during the 5-year period beginning with fiscal year 1991, the Congress should return to the dedicated user fee principle as soon as possible but no later than the end of fiscal year 1995.
SEC. 11001. SHORT TITLE; ETC.
(a) SHORT TITLE.--This title may be cited as the 'Revenue Reconciliation Act of 1990'.
(b) AMENDMENT OF 1986 CODE.--Except as otherwise expressly provided, whenever in this title an amendment or repeal is expressed in terms of an amendment to, or repeal of, a section or other provision, the reference shall be considered to be made to a section or other provision of the Internal Revenue Code of 1986.
(c) SECTION 15 NOT TO APPLY.--Except as otherwise expressly provided in this title, no amendment made by this title shall be treated as a change in a rate of tax for purposes of section 15 of the Internal Revenue Code of 1986.
(d) TABLE OF CONTENTS.--
Part I--Provisions Affecting High-Income Individuals
Sec. 11101. Elimination of provision reducing marginal tax rate for high-income taxpayers.
Sec. 11102. Increase in rate of individual alternative minimum tax.
Sec. 11103. Overall limitation on itemized deductions.
Sec. 11104. Phaseout of personal exemptions.
Part II--Modifications of Earned Income Credit
Sec. 11111. Modifications of earned income tax credit.
Sec. 11112. Requirement of identifying number for certain dependents.
Sec. 11113. Study of advance payments.
Sec. 11114. Program to increase public awareness.
Sec. 11116. Coordination with refund provision.
Part I--Taxes Related to Health and the Environment
Sec. 11201. Increase in excise taxes on distilled spirits, wine, and beer.
Sec. 11202. Increase in excise taxes on tobacco products.
Sec. 11203. Additional chemicals subject to tax on ozone-depleting chemicals.
Part II--User-Related Taxes
Sec. 11211. Increase and extension of highway-related taxes and trust fund.
Sec. 11212. Improvements in administration of gasoline excise tax.
Sec. 11213. Increase and extension of aviation-related taxes and trust fund; repeal of reduction in rates.
Sec. 11214. Increase in harbor maintenance tax.
Sec. 11215. Extension of Leaking Underground Storage Tank Trust Fund taxes.
Sec. 11216. Amendments to gas guzzler tax.
Sec. 11217. Telephone excise tax modified and made permanent.
Sec. 11218. Floor stocks tax treatment of articles in foreign trade zones.
Part III--Taxes on Luxury Items
Sec. 11221. Taxes on luxury items.
Part IV--4-Year Extension of Hazardous Substance Superfund
Part I--Insurance Provisions
Sec. 11302. Treatment of certain nonlife reserves of life insurance companies.
Sec. 11303. Treatment of life insurance reserves of insurance companies which are not life insurance companies.
Part II--Compliance Provisions
Sec. 11311. Suspension of statute of limitations during proceedings to enforce certain summonses.
Sec. 11312. Accuracy-related penalty to apply to section 482 adjustments.
Sec. 11313. Treatment of persons providing services.
Sec. 11315. Other reporting requirements.
Sec. 11316. Study of section 482.
Sec. 11317. 10-year period of limitation on collection after assessment.
Sec. 11318. Return requirement where cash received in trade or business.
Sec. 11319. 5-year extension of Internal Revenue Service user fees.
Part III--Corporate Provisions
Sec. 11321. Recognition of gain by distributing corporation in certain section 355 transactions.
Sec. 11322. Modifications to regulations issued under section 305(c).
Sec. 11323. Modifications to section 1060.
Sec. 11324. Modification to corporation equity reduction limitations on net operating loss carrybacks.
Sec. 11325. Issuance of debt or stock in satisfaction of indebtedness.
Part IV--Employment Tax Provisions
Sec. 11331. Increase in dollar limitation on amount of wages subject to hospital insurance tax.
Sec. 11332. Coverage of certain State and local employees under social security.
Sec. 11333. Extension of FUTA surtax.
Sec. 11334. Deposits of payroll taxes.
Part V--Miscellaneous Provisions
Sec. 11341. Increase in rate of interest payable on large corporate underpayments.
Sec. 11342. Denial of deduction for unnecessary cosmetic surgery.
Sec. 11343. Special rules where grantor of trust is a foreign person.
Sec. 11344. Treatment of contributions of appreciated property under minimum tax.
Sec. 11402. Research credit.
Sec. 11403. Employer-provided educational assistance.
Sec. 11404. Group legal services plans.
Sec. 11405. Targeted jobs credit.
Sec. 11406. Energy investment credit for solar and geothermal property.
Sec. 11407. Low-income housing credit.
Sec. 11408. Qualified mortgage bonds.
Sec. 11409. Qualified small issue bonds.
Sec. 11410. Health insurance costs of self-employed individuals.
Sec. 11411. Expenses for drugs for rare conditions.
Part I--Modifications of Existing Credits
Sec. 11501. Extension and modification of credit for producing fuel from nonconventional source.
Sec. 11502. Credit for small producers of ethanol; modification of alcohol fuels credit.
Part II--Enhanced Oil Recovery Credit
Sec. 11511. Tax credit for enhanced oil recovery.
Part III--Modifications of Percentage Depletion
Sec. 11521. Percentage depletion permitted after transfer of proven property.
Sec. 11523. Increase in percentage depletion allowance for marginal production.
Part IV--Minimum Tax Treatment
Sec. 11531. Special energy deduction for minimum tax.
Sec. 11701. Amendments related to Revenue Reconciliation Act of 1989.
Sec. 11702. Amendments related to Technical and Miscellaneous Revenue Act of 1988.
Sec. 11703. Miscellaneous amendments.
Sec. 11704. Miscellaneous clerical changes.
Sec. 11802. Miscellaneous provisions.
Sec. 11812. Elimination of obsolete provisions in section 167.
Sec. 11813. Elimination of expired or obsolete investment tax credit provisions.
Sec. 11814. Elimination of obsolete provisions in section 243(b).
Sec. 11815. Elimination of expired provisions in percentage depletion.
Sec. 11816. Elimination of expired provisions in section 29.
Subtitle I--Public Debt Limit
SEC. 11101. ELIMINATION OF PROVISION REDUCING MARGINAL TAX RATE FOR HIGH-INCOME TAXPAYERS.
(a) GENERAL RULE.--Section 1 (relating to tax imposed) is amended by striking subsections (a) through (e) and inserting the following:
'(a) MARRIED INDIVIDUALS FILING JOINT RETURNS AND SURVIVING SPOUSES.--There is hereby imposed on the taxable income of--
'(1) every married individual (as defined in section 7703) who makes a single return jointly with his spouse under section 6013, and
'(2) every surviving spouse (as defined in section 2(a)),
a tax determined in accordance with the following table:
'If taxable income is: The tax is:
Not over $32,450 15% of taxable income.
Over $32,450 but not $4,867.50, plus 28% of
over $78,400 the excess over $32,450.
Over $78,400 $17,733.50, plus 31% of
the excess over $78,400.
'If taxable income is: The tax is:
Not over $26,050 15% of taxable income.
Over $26,050 but not $3,907.50, plus 28% of the
over $67,200 excess over $26,500.
Over $67,200 $15,429.50, plus 31% of the
excess over $67,200.
'If taxable income is: The tax is:
Not over $19,450 15% of taxable income.
Over $19,450 but $2,917.50, plus 28% of the
not over $47,050 excess over $19,450.
Over $47,050 $10,645.50, plus 31% of the
excess over $47,050.
'If taxable income is: The tax is:
Not over $16,225 15% of taxable income.
Over $16,225 but not $2,433.75, plus 28% of the
over $39,200 excess over $16,225.
Over $39,200 $8,866.75, plus 31% of the
excess over $39,200.
'(1) every estate, and
'(2) every trust,
taxable under this subsection a tax determined in accordance with the following table:
'If taxable income is: The tax is:
Not over $3,300 15% of taxable income.
Over $3,300 but not $495, plus 28% of the
over $9,900 excess over $3,300.
Over $9,900 $2,343, plus 31% of the
excess over $9,900.'
(1) IN GENERAL.--Section 1 is amended by striking subsection (g) (relating to phaseout of 15-percent rate and personal exemptions).
(2) CONFORMING AMENDMENT.--Subparagraph (A) of section 1(f)(6) (relating to adjustments for inflation) is amended by striking 'subsection (g)(4),'.
(c) 28 PERCENT MAXIMUM CAPITAL GAINS RATE.--Subsection (j) of section 1 (relating to maximum capital gains rate) is amended to read as follows:
'(j) MAXIMUM CAPITAL GAINS RATE.--If a taxpayer has a net capital gain for any taxable year, then the tax imposed by this section shall not exceed the sum of--
'(1) a tax computed at the rates and in the same manner as if this subsection had not been enacted on the greater of--
'(A) taxable income reduced by the amount of the net capital gain, or
'(B) the amount of taxable income taxed at a rate below 28 percent, plus
'(2) a tax of 28 percent of the amount of taxable income in excess of the amount determined under paragraph (1).'
(d) TECHNICAL AMENDMENTS.--
(1)(A) Subsection (f) of section 1 is amended--
(ii) by striking '1987' in paragraph (3)(B) and inserting '1989'.
(B) Subparagraph (B) of section 32(i)(1) is amended by striking '1987' and inserting '1989'.
(C) Subparagraph (C) of section 41(e)(5) is amended--
(i) by inserting ', by substituting 'calendar year 1987' for 'calendar year 1989' in subparagraph (B) thereof' before the period at the end of clause (i),
(ii) by striking '1987' in clause (ii) and inserting '1989', and
(iii) by adding at the end of clause (ii) the following new sentence:
'Such substitution shall be in lieu of the substitution under clause (i).'.
(D) Subparagraph (B) of section 63(c)(4) is amended by inserting ', by substituting 'calendar year 1987' for 'calendar year 1989' in subparagraph (B) thereof' before the period at the end.
(E) Clause (ii) of section 135(b)(2)(B) is amended by striking ', determined by substituting 'calendar year 1989' for 'calendar year 1987' in subparagraph (B) thereof'.
(F) Subparagraph (B) of section 151(d)(3) is amended by striking '1987' and inserting '1989'.
(G) Clause (ii) of section 513(h)(2)(C) is amended by inserting ', by substituting 'calendar year 1987' for 'calendar year 1989' in subparagraph (B) thereof' before the period at the end.
(2) Section 1 is amended by striking subsection (h) and redesignating subsections (i) and (j) as subsections (g) and (h), respectively.
(3) Subsection (j) of section 59 is amended--
(A) by striking 'section 1(i)' each place it appears and inserting 'section 1(g)', and
(B) by striking 'section 1(i)(3)(B)' in paragraph (2)(C) and inserting 'section 1(g)(3)(B)'.
(4) Paragraph (4) of section 691(c) is amended by striking '1(j)' and inserting '1(h)'.
(5)(A) Clause (i) of section 904(b)(3)(D) is amended by striking 'subsection (j)' and inserting 'subsection (h)'.
(B) Subclause (I) of section 904(b)(3)(E)(iii) is amended by striking 'section 1(j)' and inserting 'section 1(h)'.
(6) Clause (iv) of section 6103(e)(1)(A) is amended by striking 'section 1(j)' and inserting 'section 1(g)'.
(7)(A) Subparagraph (A) of section 7518(g)(6) is amended by striking '1(j)' and inserting '1(h)'.
(B) Subparagraph (A) of section 607(h)(6) of the Merchant Marine Act, 1936 is amended by striking '1(j)' and inserting '1(h)'.
SEC. 11102. INCREASE IN RATE OF INDIVIDUAL ALTERNATIVE MINIMUM TAX.
(a) GENERAL RULE.--Subparagraph (A) of section 55(b)(1) (relating to tentative minimum tax) is amended by striking '21 percent' and inserting '24 percent'.
(b) EFFECTIVE DATE.--The amendment made by subsection (a) shall apply to taxable years beginning after December 31, 1990.
SEC. 11103. OVERALL LIMITATION ON ITEMIZED DEDUCTIONS.
(a) IN GENERAL.--Part I of subchapter B of chapter 1 is amended by adding at the end thereof the following new section:
'SEC. 68. OVERALL LIMITATION ON ITEMIZED DEDUCTIONS.
'(a) GENERAL RULE.--In the case of an individual whose adjusted gross income exceeds the applicable amount, the amount of the itemized deductions otherwise allowable for the taxable year shall be reduced by the lesser of--
'(1) 3 percent of the excess of adjusted gross income over the applicable amount, or
'(2) 80 percent of the amount of the itemized deductions otherwise allowable for such taxable year.
'(b) APPLICABLE AMOUNT.--
'(1) IN GENERAL.--For purposes of this section, the term 'applicable amount' means $100,000 ($50,000 in the case of a separate return by a married individual within the meaning of section 7703).
'(2) INFLATION ADJUSTMENTS.--In the case of any taxable year beginning in a calendar year after 1991, each dollar amount contained in paragraph (1) shall be increased by an amount equal to--
'(A) such dollar amount, multiplied by
'(B) the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which the taxable year begins, by substituting 'calendar year 1990' for 'calendar year 1989' in subparagraph (B) thereof.'
'(1) the deduction under section 213 (relating to medical, etc. expenses),
'(2) any deduction for investment interest (as defined in section 163(d)), and
'(3) the deduction under section 165(a) for losses described in subsection (c)(3) or (d) of section 165.
'(d) COORDINATION WITH OTHER LIMITATIONS.--This section shall be applied after the application of any other limitation on the allowance of any itemized deduction.
'(e) EXCEPTION FOR ESTATES AND TRUSTS.--This section shall not apply to any estate or trust.
'(f) TERMINATION.--This section shall not apply to any taxable year beginning after December 31, 1995.'
(b) COORDINATION WITH MINIMUM TAX.--Paragraph (1) of section 56(b) is amended by adding at the end thereof the following new subparagraph:
(d) CLERICAL AMENDMENT.--The table of sections for part I of subchapter B of chapter 1 is amended by adding a 77 the end thereof the following new item:
'Sec. 68. Overall limitation on itemized deductions.'
(e) EFFECTIVE DATE.--The amendments made by this section shall apply to taxable years beginning after December 31, 1990.
SEC. 11104. PHASEOUT OF PERSONAL EXEMPTIONS.
(a) GENERAL RULE.--Subsection (d) of section 151 is amended to read as follows:
'(d) EXEMPTION AMOUNT.--For purposes of this section--
'(1) IN GENERAL.--Except as otherwise provided in this subsection, the term 'exemption amount' means $2,000.
'(2) EXEMPTION AMOUNT DISALLOWED IN CASE OF CERTAIN DEPENDENTS.--In the case of an individual with respect to whom a deduction under this section is allowable to another taxpayer for a taxable year beginning in the calendar year in which the individual's taxable year begins, the exemption amount applicable to such individual for such individual's taxable year shall be zero.
'(3) PHASEOUT.--
'(A) IN GENERAL.--In the case of any taxpayer whose adjusted gross income for the taxable year exceeds the threshold amount, the exemption amount shall be reduced by the applicable percentage.
'(B) APPLICABLE PERCENTAGE.--For purposes of subparagraph (A), the term 'applicable percentage' means 2 percentage points for each $2,500 (or fraction thereof) by which the taxpayer's adjusted gross income for the taxable year exceeds the threshold amount. In the case of a married individual filing a separate return, the preceding sentence shall be applied by substituting '$1,250' for '$2,500'. In no event shall the applicable percentage exceed 100 percent.
'(C) THRESHOLD AMOUNT.--For purposes of this paragraph, the term 'threshold amount' means--
'(i) $150,000 in the case of a joint of a return or a surviving spouse (as defined in section 2(a)),
'(ii) $125,000 in the case of a head of a household (as defined in section 2(b) 78
'(iii) $100,000 in the case of an individual who is not married and who is not a surviving spouse or head of a household, and
'(iv) $75,000 in the case of a married individual filing a separate return.
For purposes of this paragraph, marital status shall be determined under section 7703.
'(D) COORDINATION WITH OTHER PROVISIONS.--The provisions of this paragraph shall not apply for purposes of determining whether a deduction under this section with respect to any individual is allowable to another taxpayer for any taxable year.
'(E) TERMINATION.--This paragraph shall not apply to any taxable year beginning after December 31, 1995.
'(4) INFLATION ADJUSTMENTS.--
'(A) ADJUSTMENT TO BASIC AMOUNT OF EXEMPTION.--In the case of any taxable year beginning in a calendar year after 1989, the dollar amount contained in paragraph (1) 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 the calendar year in which the tax-able year begins, by substituting 'calendar year 1988' for 'calendar year 1989' in subparagraph (B) thereof.
'(B) ADJUSTMENT TO THRESHOLD AMOUNTS FOR YEARS AFTER 1991.--In the case of any taxable year beginning in a calendar year after 1991, each dollar amount contained in paragraph (3)(C) 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 the calendar year in which the taxable year begins, by substituting 'calendar year 1990' for 'calendar year 1989' in subparagraph (B) thereof.'
(1) by striking 'section 151(d)(3)' in subparagraph (A) and inserting 'section 151(d)(4)', and
(2) by striking 'section 151(d)(3)' in subparagraph (B) and inserting 'section 151(d)(4)(A)'.
(c) EFFECTIVE DATE.--The amendments made by this section shall apply to taxable years beginning after December 31, 1990.
SEC. 11111. MODIFICATIONS OF EARNED INCOME TAX CREDIT.
(a) IN GENERAL.--So much of section 32 (relating to earned income credit) as precedes subsection (d) thereof is amended to read as follows:
'SEC. 32. EARNED INCOME.
'(a) ALLOWANCE OF CREDIT.--In the case of an eligible individual, there shall be allowed as a credit against the tax imposed by this subtitle for the taxable year an amount equal to the sum of--
'(1) the basic earned income credit, and
'(2) the health insurance credit.
'(b) COMPUTATION OF CREDIT.--For purposes of this section--
'(1) BASIC EARNED INCOME CREDIT.--
'(A) IN GENERAL.--The term 'basic earned income credit' means an amount equal to the credit percentage of so much of the taxpayer's earned income for the taxable year as does not exceed $5,714.
'(B) LIMITATION.--The amount of the basic earned income credit allowable to a taxpayer for any taxable year shall not exceed the excess (if any) of--
'(i) the credit percentage of $5,714, over
'(ii) the phaseout percentage of so much of the adjusted gross income (or, if greater the earned income) of the taxpayer for the taxable year as exceeds $9,000.
'(C) PERCENTAGES.--For purposes of this paragraph--
'(i) IN GENERAL.--Except as provided in clause (ii), the percentages shall be determined as follows:
eligible individual percentage is: percentage is:
with:
1 qualifying child 23 16.43
2 or more qualifying
children 25 17.86
'(I) For taxable years beginning in 1991, the percentages are:
eligible individual percentage is: percentage is:
with:
1 qualifying child 16.7 11.93
2 or more qualifying
children 17.3 12.36
eligible individual percentage is: percentage is:
with:
1 qualifying child 17.6 12.57
2 or more qualifying
children 18.4 13.14
eligible individual percentage is: percentage is:
with:
1 qualifying child 18.5 13.21
2 or more qualifying
children 19.5 13.93
'(i) the credit percentage shall be increased by 5 percentage points, and
'(ii) the phaseout percentage shall be increased by 3.57 percentage points.
If the taxpayer elects to take a child into account under this subparagraph, such child shall not be treated as a qualifying individual under section 21.
'(2) HEALTH INSURANCE CREDIT.--
'(A) IN GENERAL.--The term 'health insurance credit' means an amount determined in the same manner as the basic earned income credit except that--
'(i) the credit percentage shall be equal to 6 percent, and
'(ii) the phaseout percentage shall be equal to 4.285 percent.
'(B) LIMITATION BASED ON HEALTH INSURANCE COSTS.--The amount of the health insurance credit determined under subparagraph (A) for any taxable year shall not exceed the amounts paid by the taxpayer during the taxable year for insurance coverage--
'(i) which constitutes medical care (within the meaning of section 213(d)(1)(C)), and
'(ii) which includes at least 1 qualifying child.
For purposes of this subparagraph, the rules of section 213(d)(6) shall apply.
'(C) SUBSIDIZED EXPENSES.--A taxpayer may not take into account under subparagraph (B) any amount to the extent that--
'(i) such amount is paid, reimbursed, or subsidized by the Federal Government, a State or local government, or any agency or instrumentality thereof; and
'(ii) the payment, reimbursement, or subsidy of such amount is not includible in the gross income of the recipient.
'(1) ELIGIBLE INDIVIDUAL.--
'(A) IN GENERAL.--The term 'eligible individual' means any individual who has a qualifying child for the taxable year.
'(B) QUALIFYING CHILD INELIGIBLE.--If an individual is the qualifying child of a taxpayer for any taxable year of such taxpayer beginning in a calendar year, such individual shall not be treated as an eligible individual for any taxable year of such individual beginning in such calendar year.
'(C) 2 OR MORE ELIGIBLE INDIVIDUALS.--If 2 or more individuals would (but for this subparagraph and after application of subparagraph (B)) be treated as eligible individuals with respect to the same qualifying child for taxable years beginning in the same calendar year, only the individual with the highest adjusted gross income for such taxable years shall be treated as an eligible individual with respect to such qualifying child.
'(D) EXCEPTION FOR INDIVIDUAL CLAIMING BENEFITS UNDER SECTION 911.--The term 'eligible individual' does not include any individual who claims the benefits of section 911 (relating to citizens or residents living abroad) for the taxable year.
'(2) EAREND INCOME.--
'(A) The term 'earned income' means--
'(i) wages, salaries, tips, and other employee compensation, plus
'(ii) the amount of the taxpayer's net earnings from self-employment for the taxable year (within the meaning of section 1402(a)), but such net earnings shall be determined with regard to the deduction allowed to the taxpayer by section 164(f).
'(B) For purposes of subparagraph (A)--
'(i) the earned income of an individual shall be computed without regard to any community property laws,
'(ii) no amount received as a pension or annuity shall be taken into account, and
'(iii) no amount to which section 871(a) applies (relating to income of nonresident alien individuals not connected with United States business) shall be taken into account.
'(A) IN GENERAL.--The term 'qualifying child' means, with respect to any taxpayer for any taxable year, an individual--
'(i) who bears a relationship to the taxpayer described in subparagraph (B),
'(ii) except as provided in subparagraph (B)(iii), who has the same principal place of abode as the taxpayer for more than one-half of such taxable year,
'(iii) who meets the age requirements of subparagraph (C), and
'(iv) with respect to whom the taxpayer meets the identification requirements of subparagraph (D).
'(B) RELATIONSHIP TEST.--
'(i) IN GENERAL.--An individual bears a relationship to the taxpayer described in this subparagraph if such individual is--
'(I) a son or daughter of the taxpayer, or a descendant of either,
'(II) a stepson or stepdaughter of the taxpayer, or
'(III) an eligible foster child of the taxpayer.
'(ii) MARRIED CHILDREN.--Clause (i) shall not apply to any individual who is married as of the close of the taxpayer's taxable year unless the taxpayer is entitled to a deduction under section 151 for such taxable year with respect to such individual (or would be so entitled but for paragraph (2) or (4) of section 152(e)).
'(iii) ELIGIBLE FOSTER CHILD.--For purposes of clause (i)(III), the term 'eligible foster child' means an individual not described in clause (i)(I) or (II) who--
'(I) the taxpayer cares for as the taxpayer's own child, and
'(II) has the same principal place of abode as the taxpayer for the taxpayer's entire taxable year.
'(iv) ADOPTION.--For purposes of this subparagraph, a child who is legally adopted, or who is placed with the taxpayer by an authorized placement agency for adoption by the taxpayer, shall be treated as a child by blood.
'(C) AGE REQUIREMENTS.--An individual meets the requirements of this subparagraph if such individual--
'(i) has not attained the age of 19 as of the close of the calendar year in which the taxable year of the taxpayer begins,
'(ii) is a student (as defined in section 151(c)(4)) who has not attained the age of 24 as of the close of such calendar year, or
'(iii) is permanently and totally disabled (as defined in section 22(e)(3)) at any time during the taxable year.
'(D) IDENTIFICATION REQUIREMENTS.--
'(i) IN GENERAL.--The requirements of this subparagraph are met if--
'(I) the taxpayer includes the name and age of each qualifying child (without regard to this subparagraph) on the return of tax for the taxable year, and
'(II) in the case of an individual who has attained the age of 1 year before the close of the taxpayer's taxable year, the taxpayer includes the taxpayer identification number of such individual on such return of tax for such taxable year.
'(ii) INSURANCE POLICY NUMBER.--In the case of any taxpayer with respect to which the health insurance credit is allowed under subsection (a)(2), the Secretary may require a taxpayer to include an insurance policy number or other adequate evidence of insurance in addition to any information required to be included in clause (i).
'(iii) OTHER METHODS.--The Secretary may prescribe other methods for providing the information described in clause (i) or (ii).
'(E) ABODE MUST BE IN THE UNITED STATES.--The requirements of subparagraphs (A)(ii) and (B)(iii)(II) shall be met only if the principal place of abode is in the United States.'
'(j) COORDINATION WITH CERTAIN MEANS-TESTED PROGRAMS.--For purposes of--
'(1) the United States Housing Act of 1937,
'(2) title V of the Housing Act of 1949,
'(3) section 101 of the Housing and Urban Development Act of 1965,
'(4) sections 221(d)(3), 235, and 236 of the National Housing Act, and
'(5) the Food Stamp Act of 1977,
any refund made to an individual (or the spouse of an individual) by reason of this section, and any payment made to such individual (or such spouse) by an employer under section 3507, shall not be treated as income (and shall not be taken into account in determining resources for the month of its receipt and the following month).'
(c) ADVANCE PAYMENT OF CREDIT.--Subparagraphs (B) and (C) of section 3507(c)(2) are amended to read as follows:
'(i) of not more than the credit percentage under section 32(b)(1) (without regard to subparagraph (D) thereof) for an eligible individual with 1 qualifying child and with earned income not in excess of the amount of earned income taken into account under section 32(a)(1), which
'(ii) phases out between the amount of earned income at which the phaseout begins under section 32(b)(1)(B)(ii) and the amount of income at which the credit under section 32(a)(1) phases out for an eligible individual with 1 qualifying child, or
'(C) if an earned income eligibility certificate is in effect with respect to the spouse of the employee, shall treat the credit as if it were a credit determined under subparagraph (B) by substituting 1/2 of the amounts of earned income described in such subparagraph for such amounts.'
(1) MEDICAL DEDUCTION.--Section 213 is amended by adding at the end thereof the following new subsection:
'(f) COORDINATION WITH HEALTH INSURANCE CREDIT UNDER SECTION 32.--The amount otherwise taken into account under subsection (a) as expenses paid for medical care shall be reduced by the amount (if any) of the health insurance credit allowable to the taxpayer for the taxable year under section 32.'
(2) SELF-EMPLOYED INDIVIDUALS.--Paragraph (3) of section 162(l) is amended to read as follows:
'(3) COORDINATION WITH MEDICAL DEDUCTION, ETC.--
'(A) MEDICAL DEDUCTION.--Any amount paid by a taxpayer for insurance to which paragraph (1) applies shall not be taken into account in computing the amount allowable to the taxpayer as a deduction under section 213(a).
'(B) HEALTH INSURANCE CREDIT.--The amount otherwise taken into account under paragraph (1) as paid for insurance which constitutes medical care shall be reduced by the amount (if any) of the health insurance credit allowable to the taxpayer for the taxable year under section 32.'
(1) by striking 'or (ii)' in subparagraph (A)(i) thereof,
(2) by striking 'clause (iii)' in subparagraph (A)(ii) and inserting 'clause (ii)', and
(3) by amending subparagraph (B) to read as follows:
'(B) DOLLAR AMOUNTS.--The dollar amounts referred to in this subparagraph are--
'(i) the $5,714 dollar amounts contained in subsection (b)(1), and
'(ii) the $9,000 amount contained in subsection (b)(1)(B)(ii).'
SEC. 11112. REQUIREMENT OF IDENTIFYING NUMBER FOR CERTAIN DEPENDENTS.
(a) GENERAL RULE.--Paragraph (2) of section 6109(e) (relating to furnishing number for certain dependents) is amended by striking '2 years' and inserting '1 year'.
(b) EFFECTIVE DATE.--The amendment made by subsection (a) shall apply to returns for taxable years beginning after December 31, 1990.
SEC. 11113. STUDY OF ADVANCE PAYMENTS.
(a) IN GENERAL.--The Comptroller General of the United States shall, in consultation with the Secretary of the Treasury, conduct a study of advance payments required by section 3507 of the Internal Revenue Code of 1986 to determine--
(1) the effectiveness of the advance payment system (including an analysis of why so few employees take advantage of such system), and
(2) the manner in which such system can be implemented to alleviate administrative complexity, if any, for small business, and
(3) if there are any other problems in the administration of such system.
(b) REPORT.--Not later than 1 year after the date of the enactment of this title, the Comptroller shall report the results of the study conducted under subsection (a), together with any recommendations, to the Committee on Finance of the United States Senate and the Committee on Ways and Means of the House of Representatives.
SEC. 11114. PROGRAM TO INCREASE PUBLIC AWARENESS.
Not later than the first calendar year following the date of the enactment of this subtitle, the Secretary of the Treasury, or the Secretary's delegate, shall establish a taxpayer awareness program to inform the taxpaying public of the availability of the credit for dependent care allowed under section 21 of the Internal Revenue Code of 1986 and the earned income credit and child health insurance under section 32 of such Code. Such public awareness program shall be designed to assure that individuals who may be eligible are informed of the availability of such credit and filing procedures. The Secretary shall use appropriate means of communication to carry out the provisions of this section.
SEC. 11115. EXCLUSION FROM INCOME AND RESOURCES OF EARNED INCOME TAX CREDIT UNDER TITLES IV, XVI, AND XIX OF THE SOCIAL SECURITY ACT.
(a) EXCLUSIONS UNDER TITLE IV.--
(1) EXCLUSIONS FROM RESOURCES.--Section 402(a)(7)(B) of the Social Security Act (42 U.S.C. 602(a)(7)(B)) is amended--
(A) by striking 'or' before '(iii)'; and
(B) by inserting ', or (iv) for the month of receipt and the following month, any refund of Federal income taxes made to such family by reason of section 32 of the Internal Revenue Code of 1986 (relating to earned income credit), and any payment made to such family by an employer under section 3507 of such Code (relating to advance payment of earned income credit)' before the semicolon.
(2) EXCLUSIONS FROM INCOME.--Section 402(a)(18) of the Social Security Act (42 U.S.C. 602(a)(18)) is amended by inserting 'or 8(A)(viii)' after 'other than paragraph 8(A)(v)'.
(b) EXCLUSIONS UNDER TITLE XVI.--
(1) EXCLUSIONS FROM INCOME.--Section 1612(b) of the Social Security Act (42 U.S.C. 1382a(b)), as amended by sections 5031(a) and 5035(a) of this Act, is amended--
(A) by striking 'and' at the end of paragraph (17);
(B) by striking the period at the end of paragraph (18) and inserting '; and'; and
(C) by adding at the end the following:
'(19) any refund of Federal income taxes made to such individual (or such spouse) by reason of section 32 of the Internal Revenue Code of 1986 (relating to earned income tax credit), and any payment made to such individual (or such spouse) by an employer under section 3507 of such Code (relating to advance payment of earned income credit).'.
(2) EXCLUSIONS FROM RESOURCES.--Section 1613(a) of the Social Security Act (42 U.S.C. 1382b(a)), as amended by sections 5031(b) and 5035(b) of this Act, is amended--
(A) by striking 'and' at the end of paragraph (8);
(B) by striking the period at the end of paragraph (9) and inserting '; and'; and
(C) by adding at the end the following new paragraph:
'(10) for the month of receipt and the following month, any refund of Federal income taxes made to such individual (or such spouse) by reason of section 32 of the Internal Revenue Code of 1986 (relating to earned income tax credit), and any payment made to such individual (or such spouse) by an employer under section 3507 of such Code (relating to advance payment of earned income credit).'.
(c) EXCLUSIONS UNDER TITLE XIX.--Pursuant to section 1902(a)(17) of the Social Security Act (42 U.S.C. 1396a(a)(17)), the Secretary of Health and Human Services shall promulgate regulations to exempt from any determination of income and resources (for the month of receipt and the following month) under title XIX of the Social Security Act any refund of Federal income taxes made to an individual by reason of section 32 of the Internal Revenue Code of 1986 (relating to earned income tax credit), and any payment made to an individual by an employer under section 3507 of such Code (relating to advance payment of earned income credit).
(d) AFDC WAIVER OF OVERPAYMENT.--For the purposes of section 402(a)(18) of the Social Security Act (42 U.S.C. 602(a)(18)), a State agency designated under a State plan under section 402(a)(3) of such Act may waive any overpayment of aid that resulted from the receipt by a family of a refund of Federal income taxes by reason of section 32 of the Internal Revenue Code of 1986 (relating to earned income tax credit) or any payment made to such family by an employer under section 3507 of such Code (relating to advance payment of earned income credit) during the period beginning on January 1, 1990, and ending on December 31, 1990.
(e) EFFECTIVE DATE.--The amendments made by subsections (a) though 79 (c) shall apply to determinations of income or resources made for any period after December 31, 1990.
SEC. 11116. COORDINATION WITH REFUND PROVISION.
For purposes of section 1324(b)(2) of title 31 of the United States Code, section 32 of the Internal Revenue Code of 1986 (as amended by this Act) shall be considered to be a credit provision of the Internal Revenue Code of 1954 enacted before January 1, 1978.
SEC. 11201. INCREASE IN EXCISE TAXES ON DISTILLED SPIRITS, WINE, AND BEER.
(a) DISTILLED SPIRITS.--
(1) IN GENERAL.--Paragraphs (1) and (3) of section 5001(a) (relating to rate of tax on distilled spirits) are each amended by striking '$12.50' and inserting '$13.50'.
(2) TECHNICAL AMENDMENT.--Paragraphs (1) and (2) of section 5010(a) (relating to credit for wine content and for flavors content) are each amended by striking '$12.50' and inserting '$13.50'.
(b) WINE.--
(1) TAX INCREASES.--
(A) WINES CONTAINING NOT MORE THAN 14 PERCENT ALCOHOL.--Paragraph (1) of section 5041(b) (relating to rates of tax on wines) is amended by striking '17 cents' and inserting '$1.07'.
(B) WINES CONTAINING MORE THAN 14 (BUT NOT MORE THAN 21) PERCENT ALCOHOL.--Paragraph (2) of section 5041(b) is amended by striking '67 cents' and inserting '$1.57'.
(C) WINES CONTAINING MORE THAN 21 (BUT NOT MORE THAN 24) PERCENT ALCOHOL.--Paragraph (3) of section 5041(b) is amended by striking '$2.25' and inserting '$3.15'.
(D) ARTIFICIALLY CARBONATED WINES.--Paragraph (5) of section 5041(b) is amended by striking '$2.40' and inserting '$3.30'.
(2) CREDIT FOR SMALL DOMESTIC PRODUCERS.--Section 5041 is amended by redesignating subsections (c), (d), and (e) as subsections (d), (e), and (f), respectively, and by inserting after subsection (b) the following new subsection:
'(c) CREDIT FOR SMALL DOMESTIC PRODUCERS.--
'(1) ALLOWANCE OF CREDIT.--Except as provided in paragraph (2), in the case of a person who produces not more than 250,000 wine gallons of wine during the calendar year, there shall be allowed as a credit against any tax imposed by this title (other than chapters 2, 21, and 22) of 90 cents per wine gallon on the 1st 100,000 wine gallons of wine (other than wine described in subsection (b)(4)) which are removed during such year for consumption or sale and which have been produced at qualified facilities in the United States.
'(2) REDUCTION IN CREDIT.--The credit allowable by paragraph (1) shall be reduced (but not below zero) by 1 percent for each 1,000 wine gallons of wine produced in excess of 150,000 wine gallons of wine during the calendar year.
'(3) TIME FOR DETERMINING AND ALLOWING CREDIT.--The credit allowable by paragraph (1)--
'(A) shall be determined at the same time the tax is determined under subsection (a) of this section, and
'(B) shall be allowable at the time any tax described in paragraph (1) is payable as if the credit allowable by this subsection constituted a reduction in the rate of such tax.
'(4) CONTROLLED GROUPS.--Rules similar to rules of section 5051(a)(2)(B) shall apply for purposes of this subsection.
'(5) DENIAL OF DEDUCTION.--Any deduction under subtitle A with respect to any tax against which a credit is allowed under this subsection shall only be for the amount of such tax as reduced by such credit.
'(6) REGULATIONS.--The Secretary may prescribe such regulations as may be necessary 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 to assure proper reduction of such credit for persons producing more than 150,000 wine gallons of wine during a calendar year.'
(3) CONFORMING AMENDMENT.--Paragraph (3) of section 5061(b) is amended to read as follows:
'(3) section 5041(e),'.
(c) BEER.--
(1) IN GENERAL.--Paragraph (1) of section 5051(a) (relating to imposition and rate of tax on beer) is amended by striking '$9' and inserting '$18'.
(2) REGULATIONS.--Paragraph (2) of section 5051(a) is amended by adding at the end thereof the following new subparagraph:
'(C) REGULATIONS.--The Secretary may prescribe such regulations as may be necessary to prevent the reduced rates provided in this paragraph from benefiting any person who produces more than 2,000,000 barrels of beer during a calendar year.'
(e) FLOOR STOCKS TAXES.--
(1) IMPOSITION OF TAX.--
(A) IN GENERAL.--In the case of any tax-increased article--
(i) on which tax was determined under part I of subchapter A of chapter 51 of the Internal Revenue Code of 1986 or section 7652 of such Code before January 1, 1991, and
(ii) which is held on such date for sale by any person,
there shall be imposed a tax at the applicable rate on each such article.
(B) APPLICABLE RATE.--For purposes of subparagraph (A), the applicable rate is--
(i) $1 per proof gallon in the case of distilled spirits,
(ii) $0.90 per wine gallon in the case of wine described in paragraph (1), (2), (3), or (5) of section 5041(b) of such Code, and
(iii) $9 per barrel in the case of beer.
In the case of a fraction of a gallon or barrel, the tax imposed by subparagraph (A) shall be the same fraction as the amount of such tax imposed on a whole gallon or barrel.
(C) TAX-INCREASED ARTICLE.--For purposes of this subsection, the term 'tax-increased article' means distilled spirits, wine described in paragraph (1), (2), (3), or (5) of section 5041(b) of such Code, and beer.
(2) EXCEPTION FOR SMALL DOMESTIC PRODUCERS.--
(A) In the case of wine held by the producer thereof on January 1, 1991, if a credit would have been allowable under section 5041(c) of such Code (as added by this section) on such wine had the amendments made by subsection (b) applied to all wine removed during 1990 and had the wine so held been removed for consumption on December 31, 1990, the tax imposed by paragraph (1) on such wine shall be reduced by the credit which would have been so allowable.
(B) In the case of beer held by the producer thereof on January 1, 1991, if the rate of the tax imposed by section 5051 of such Code would have been determined under subsection (a)(2) thereof had the beer so held been removed for consumption on December 31, 1990, the tax imposed by paragraph (1) on such beer shall not apply.
(C) For purposes of this paragraph, an article shall not be treated as held by the producer if title thereto had at any time been transferred to any other person.
(3) EXCEPTION FOR CERTAIN SMALL WHOLESALE OR RETAIL DEALERS.--No tax shall be imposed by paragraph (1) on tax-increased articles held on January 1, 1991, by any dealer if--
(A) the aggregate liquid volume of tax-increased articles held by such dealer on such date does not exceed 500 wine gallons, and
(B) such dealer submits to the Secretary (at the time and in the manner required by the Secretary) such information as the Secretary shall require for purposes of this paragraph.
(4) CREDIT AGAINST TAX.--Each dealer shall be allowed as a credit against the taxes imposed by paragraph (1) an amount equal to--
(A) $240 to the extent such taxes are attributable to distilled spirits,
(B) $270 to the extent such taxes are attributable to wine, and
(C) $87 to the extent such taxes are attributable to beer.
Such credit shall not exceed the amount of taxes imposed by paragraph (1) with respect to distilled spirits, wine, or beer, as the case may be, for which the dealer is liable.
(5) LIABILITY FOR TAX AND METHOD OF PAYMENT.--
(A) LIABILITY FOR TAX.--A person holding any tax-increased article on January 1, 1991, to which the tax imposed by paragraph (1) applies shall be liable for such tax.
(B) METHOD OF PAYMENT.--The tax imposed by paragraph (1) shall be paid in such manner as the Secretary shall prescribe by regulations.
(C) TIME FOR PAYMENT.--The tax imposed by paragraph (1) shall be paid on or before June 30, 1991.
(6) CONTROLLED GROUPS.--
(A) CORPORATIONS.--In the case of a controlled group--
(i) the 500 wine gallon amount specified in paragraph (3), and
(ii) the $240, $270, and $87 amounts specified in paragraph (4),
shall be apportioned among the dealers who are component members of such group in such manner as the Secretary shall by regulations prescribe. For purposes of the preceding sentence, the term 'controlled group' has the meaning given to such term by subsection (a) of section 1563 of such Code; except that for such purposes the phrase 'more than 50 percent' shall be substituted for the phrase 'at least 80 percent' each place it appears in such subsection.
(B) NONINCORPORATED DEALERS UNDER COMMON CONTROL.--Under regulations prescribed by the Secretary, principles similar to the principles of subparagraph (A) shall apply to a group of dealers under common control where 1 or more of such dealers is not a corporation.
(7) OTHER LAWS APPLICABLE.--
(A) IN GENERAL.--All provisions of law, including penalties, applicable to the comparable excise tax with respect to any tax-increased article shall, insofar as applicable and not inconsistent with the provisions of this subsection, apply to the floor stocks taxes imposed by paragraph (1) to the same extent as if such taxes were imposed by the comparable excise tax.
(B) COMPARABLE EXCISE TAX.--For purposes of subparagraph (A), the term 'comparable excise tax' means--
(i) the tax imposed by section 5001 of such Code in the case of distilled spirits,
(ii) the tax imposed by section 5041 of such Code in the case of wine, and
(iii) the tax imposed by section 5051 of such Code in the case of beer.
(A) IN GENERAL.--Terms used in this subsection which are also used in subchapter A of chapter 51 of such Code shall have the respective meanings such terms have in such part.
(B) PERSON.--The term 'person' includes any State or political subdivision thereof, or any agency or instrumentality of a State or political subdivision thereof.
(C) SECRETARY.--The term 'Secretary' means the Secretary of the Treasury or his delegate.
(9) TREATMENT OF IMPORTED PERFUMES CONTAINING DISTILLED SPIRITS.--For purposes of this subsection, any article described in section 5001(a)(3) of such Code shall be treated as distilled spirits; except that the tax imposed by paragraph (1) shall be imposed on a wine gallon basis in lieu of a proof gallon basis. To the extent provided by regulations prescribed by the Secretary, the preceding sentence shall not apply to any article held on January 1, 1991, on the premises of a retail establishment.
(a) CIGARS.--Subsection (a) of section 5701 is amended--
(1) by striking '75 cents per thousand' in paragraph (1) and inserting '$1.125 cents per thousand (93.75 cents per thousand on cigars removed during 1991 or 1992)', and
(2) by striking 'equal to' and all that follows in paragraph (2) and inserting 'equal to--
'(A) 10.625 percent of the price for which sold but not more than $25 per thousand on cigars removed during 1991 or 1992, and
'(B) 12.75 percent of the price for which sold but not more than $30 per thousand on cigars removed after 1992.'
(1) by striking '$8 per thousand' in paragraph (1) and inserting '$12 per thousand ($10 per thousand on cigarettes removed during 1991 or 1992)', and
(2) by striking '$16.80 per thousand' in paragraph (2) and inserting '$25.20 per thousand ($21 per thousand on cigarettes removed during 1991 or 1992)'.
(c) CIGARETTE PAPERS.--Subsection (c) of section 5701 is amended by striking '1/2 cent' and inserting '0.75 cent (0.625 cent on cigarette papers removed during 1991 or 1992)'.
(d) CIGARETTE TUBES.--Subsection (d) of section 5701 is amended by striking '1 cent' and inserting '1.5 cents (1.25 cents on cigarette tubes removed during 1991 or 1992)'.
(e) SMOKELESS TOBACCO.--Subsection (e) of section 5701 is amended--
(1) by striking '24 cents' in paragraph (1) and inserting '36 cents (30 cents on snuff removed during 1991 or 1992)', and
(2) by striking '8 cents' in paragraph (2) and inserting '12 cents (10 cents on chewing tobacco removed during 1991 or 1992)'.
(f) PIPE TOBACCO.--Subsection (f) of section 5701 is amended by striking '45 cents' and inserting '67.5 cents (56.25 cents on pipe tobacco removed during 1991 or 1992)'.
(g) DETERMINATION OF PRICE.--Subsection (m) of section 5702 is amended to read as follows:
'(m) DETERMINATION OF PRICE ON CIGARS.--In determining price for purposes of section 5701(a)(2)--
'(1) there shall be included any charge incident to placing the article in condition ready for use,
'(2) there shall be excluded--
'(A) the amount of the tax imposed by this chapter or section 7652, and
'(B) if stated as a separate charge, the amount of any retail sales tax imposed by any State or political subdivision thereof or the District of Columbia, whether the liability for such tax is imposed on the vendor or vendee, and
'(3) rules similar to the rules of section 4216(b) shall apply.'
(h) EFFECTIVE DATE.--The amendments made by this section shall apply with respect to articles removed after December 31, 1990.
(i) FLOOR STOCKS TAXES ON CIGARETTES.--
(1) IMPOSITION OF TAX.--On cigarettes manufactured in or imported into the United States which are removed before any tax-increase date and held on such date for sale by any person, there shall be imposed the following taxes:
(A) SMALL CIGARETTES.--On cigarettes, weighing not more than 3 pounds per thousand, $2 per thousand.
(B) LARGE CIGARETTES.--On cigarettes weighing more than 3 pounds per thousand, $4.20 per thousand; except that, if more than 6-1/2 inches in length, they shall be taxable at the rate prescribed for cigarettes weighing not more than 3 pounds per thousand, counting each 2-3/4 inches, or fraction thereof, of the length of each as one cigarette.
(2) EXCEPTION FOR CERTAIN AMOUNTS OF CIGARETTES.--
(A) IN GENERAL.--No tax shall be imposed by paragraph (1) on cigarettes held on any tax-increase date by any person if--
(i) the aggregate number of cigarettes held by such person on such date does not exceed 30,000, and
(ii) such person submits to the Secretary (at the time and in the manner required by the Secretary) such information as the Secretary shall require for purposes of this subparagraph.
For purposes of this subparagraph, in the case of cigarettes measuring more than 6-1/2 inches in length, each 2-3/4 inches (or fraction thereof) of the length of each shall be counted as one cigarette.
(B) AUTHORITY TO EXEMPT CIGARETTES HELD IN VENDING MACHINES.--To the extent provided in regulations prescribed by the Secretary, no tax shall be imposed by paragraph (1) on cigarettes held for retail sale on any tax-increase date by any person in any vending machine. If the Secretary provides such a benefit with respect to any person, the Secretary may reduce the 30,000 amount in subparagraph (A) and the $60 amount in paragraph (3) with respect to such person.
(3) CREDIT AGAINST TAX.--Each person shall be allowed as a credit against the taxes imposed by paragraph (1) an amount equal to $60. Such credit shall not exceed the amount of taxes imposed by paragraph (1) for which such person is liable.
(4) LIABILITY FOR TAX AND METHOD OF PAYMENT.--
(A) LIABILITY FOR TAX.--A person holding cigarettes on any tax-increase date to which any tax imposed by paragraph (1) applies shall be liable for such tax.
(B) METHOD OF PAYMENT.--The tax imposed by paragraph (1) shall be paid in such manner as the Secretary shall prescribe by regulations.
(C) TIME FOR PAYMENT.--The tax imposed by paragraph (1) shall be paid on or before the 1st June 30 following the tax-increase date.
(5) DEFINITIONS.--For purposes of this subsection--
(A) TAX-INCREASE DATE.--The term 'tax-increase date' means January 1, 1991, and January 1, 1993.
(B) OTHER DEFINITIONS.--Terms used in this subsection which are also used in section 5702 of the Internal Revenue Code of 1986 shall have the respective meanings such terms have in such section.
(C) SECRETARY.--The term 'Secretary' means the Secretary of the Treasury or his delegate.
(6) CONTROLLED GROUPS.--Rules similar to the rules of section 11201(e)(6) shall apply for purposes of this subsection.
(7) OTHER LAWS APPLICABLE.--All provisions of law, including penalties, applicable with respect to the taxes imposed by section 5701 of such Code shall, insofar as applicable and not inconsistent with the provisions of this subsection, apply to the floor stocks taxes imposed by paragraph (1), to the same extent as if such taxes were imposed by such section 5701.
(a) GENERAL RULE.--
(1) The table set forth in section 4682(a)(2) (defining ozone-depleting chemical) is amended by striking the period after the last item and by adding at the end thereof the following new items:
Methyl chloroform 1,1,1-trichloroethane
CFC-13 CF3Cl
CFC-111 C2FCl5
CFC-112 C2F2Cl4
CFC-211 C3FCl7
CFC-212 C3F2Cl6
CFC-213 C3F3Cl5
CFC-214 C3F4Cl4
CFC-215 C3F5Cl3
CFC-216 C3F6Cl2
CFC-217 C3F7Cl.'
Methyl chloroform 0.1
CFC-13 1.0
CFC-111 1.0
CFC-112 1.0
CFC-211 1.0
CFC-212 1.0
CFC-213 1.0
CFC-214 1.0
CFC-215 1.0
CFC-216 1.0
CFC-217 1.0.'
'(i) IN GENERAL.--Subparagraph (B) shall be applied separately with respect to newly listed chemicals and other chemicals.
'(ii) APPLICATION TO NEWLY LISTED CHEMICALS.--In applying subparagraph (B) to newly listed chemicals--
'(I) subparagraph (B) shall be applied by substituting '1989' for '1986' each place it appears, and
'(II) clause (i)(II) thereof shall be applied by substituting for the regulations referred to therein any regulations (whether or not prescribed by the Secretary) which the Secretary determines are comparable to the regulations referred to in such clause with respect to newly listed chemicals.
'(iii) NEWLY LISTED CHEMICAL.--For purposes of this subparagraph, the term 'newly listed chemical' means any substance which appears in the table contained in subsection (a)(2) below Halon-2402.'
'(i) INITIALLY LISTED CHEMICALS.--The base tax amount for purposes of subparagraph (A) with respect to any sale or use during a calendar year before 1995 with respect to any ozone-depleting chemical other than a newly listed chemical (as defined in section 4682(d)(3)(C)) is the amount determined under the following table for such calendar year:
1990 or 1991 $1.37
1992 1.67
1993 or 1994 2.65.
1991 or 1992 $1.37
1993 1.67
1994 3.00
1995 3.10.
(1) The last sentence of section 4682(c)(2) is amended by inserting '(other than methyl chloroform)' after 'ozone-depleting chemical'.
(2) Paragraph (3) of section 4682(h) is amended by striking 'April 1' and inserting 'June 30'.
(e) EFFECTIVE DATE.--The amendments made by this section shall take effect on January 1, 1991.
(f) DEPOSITS FOR 1ST QUARTER OF 1991.--No deposit of any tax imposed by subchapter D of chapter 38 of the Internal Revenue Code of 1986 on any substance treated as an ozone-depleting chemical by reason of the amendment made by subsection (a)(1) shall be required to be made before April 1, 1991.
SEC. 11211. INCREASE AND EXTENSION OF HIGHWAY-RELATED TAXES AND TRUST FUND.
(a) INCREASE IN TAX ON GASOLINE.--
(1) IN GENERAL.--Subparagraph (A) of section 4081(a)(2) (relating to rate of tax) is amended--
(A) by striking 'and' at the end of clause (i),
(B) by striking the period at the end of clause (ii) and inserting ', and', and
(C) by adding at the end thereof the following new clause:
'(iii) the deficit reduction rate.'
(A) by striking '9 cents a gallon, and' and inserting '11.5 cents a gallon,',
(B) by striking the period at the end of clause (ii) and inserting ', and', and
(C) by adding at the end thereof the following new clause:
'(iii) the deficit reduction rate is 2.5 cents a gallon.'
'(3) DEFICIT REDUCTION RATE.--On and after October 1, 1995, the deficit reduction rate under subsection (a)(2) shall not apply.'
(4) 15-CENT TAX ON GASOLINE USED IN NONCOMMERCIAL AVIATION.--Paragraph (3) of section 4041(c) is amended--
(A) by striking '12 cents' and inserting '15 cents', and
(B) by striking 'the Highway Trust Fund financing rate' and inserting 'the sum of the Highway Trust Fund financing rate plus the deficit reduction rate'.
(5) CONFORMING AMENDMENTS.--
(A) Paragraph (1) of section 4081(c) is amended--
(i) by striking 'applied by' and all that follows through 'in the case' and inserting 'applied by substituting rates which are 10/9th of the otherwise applicable rates in the case', and
(ii) by adding at the end thereof the following: 'For purposes of this subsection, in the case of the Highway Trust Fund financing rate, the otherwise applicable rate is 6.1 cents a gallon.'
(B) Paragraph (2) of section 4081(c) is amended by striking 'at a rate equivalent to 3 cents' and inserting 'at a Highway Trust Fund financing rate equivalent to 6.1 cents'.
(C) Subsection (c) of section 4081 is amended by redesignating paragraph (4) as paragraph (5) and by inserting after paragraph (3) the following new paragraph:
'(4) LOWER RATE ON GASOHOL MADE OTHER THAN FROM ETHANOL.--In the case of gasohol none of the alcohol in which consists of ethanol, paragraphs (1) and (2) shall be applied by substituting '5.5 cents' for '6.1 cents'.
(D) Subparagraph (B) of section 9503(b)(4) is amended by striking '4081' and inserting '4041, 4081,'.
(E) Subparagraph (A) of section 9503(c)(2) is amended by adding at the end thereof the following new sentence:
'The amounts payable from the Highway Trust Fund under this subparagraph or paragraph (3) shall be determined by taking into account only the Highway Trust Fund financing rate applicable to any fuel.'
(F) Subsection (b) of section 9503 is amended by adding at the end thereof the following new paragraph:
'(5) GENERAL REVENUE DEPOSITS OF CERTAIN TAXES ON ALCOHOL MIXTURES.--For purposes of this section, the amounts which would (but for this paragraph) be required to be appropriated under subparagraphs (A), (E), and (F) of paragraph (1) shall be reduced by--
'(A) 0.6 cent per gallon in the case of taxes imposed on any mixture at least 10 percent of which is alcohol (as defined in section 4081(c)(3)) if any portion of such alcohol is ethanol, and
'(B) 0.67 cent per gallon in the case of gasoline or diesel fuel used in producing a mixture described in subparagraph (A).'
(6) EFFECTIVE DATE.--Except as otherwise provided in this subsection, the amendments made by this subsection shall apply to gasoline removed (as defined in section 4082 of the Internal Revenue Code of 1986) after November 30, 1990.
(b) INCREASE IN OTHER TAXES.--
(1) DEFICIT REDUCTION RATE.--
(A) Clause (i) of section 4091(b)(1)(A) is amended by inserting 'and the diesel fuel deficit reduction rate' after 'financing rate'.
(B) Subsection (b) of section 4091 is amended by redesignating paragraphs (4) and (5) as paragraphs (5) and (6), respectively, and by inserting after paragraph (3) the following new paragraph:
'(4) DIESEL FUEL DEFICIT REDUCTION RATE.--For purposes of paragraph (1), except as provided in subsection (c), the diesel fuel deficit reduction rate is 2.5 cents per gallon.'
(C) Paragraph (6) of section 4091(b), as redesignated by subparagraph (A), is amended by adding at the end thereof the following new subparagraph:
'(D) The diesel fuel deficit reduction rate shall not apply on and after October 1, 1995.'
(2) INCREASE IN HIGHWAY TRUST FUND FINANCING RATE.--Paragraph (2) of section 4091(b) is amended by striking '15 cents' and inserting '17.5 cents'.
(3) INCREASE IN TAX ON SPECIAL MOTOR FUELS.--Paragraph (2) of section 4041(a) is amended by striking 'of 9 cents a gallon' and by inserting at the end thereof the following new sentence:
'The rate of the tax imposed by this paragraph shall be the sum of the Highway Trust Fund financing rate and the deficit reduction rate in effect under section 4081 at the time of such sale or use.'
(4) DEFICIT REDUCTION TAX TO APPLY TO FUEL USED IN TRAINS.--
(A) Paragraph (2) of section 4093(c) is amended by redesignating subparagraph (B) as subparagraph (C) and by inserting after subparagraph (A) the following new subparagraph:
'(B) DEFICIT REDUCTION TAX ON FUEL USED IN TRAINS.--In the case of fuel sold for use in a diesel-powered train, paragraph (1) also shall not apply to so much of the tax imposed by section 4091 as is attributable to the diesel fuel deficit reduction rate imposed by such section.'
(B)(i) Subsection (l) of section 6427 is amended by adding at the end thereof the following new paragraph:
'(4) NO REFUND OF DEFICIT REDUCTION TAX ON FUEL USED IN TRAINS.--In the case of fuel used in a diesel-powered train, paragraph (1) also shall not apply to so much of the tax imposed by section 4091 as is attributable to the diesel fuel deficit reduction rate imposed by such section.'
(6) CONFORMING AMENDMENTS.--
(A) Paragraph (1) of section 4091(c) is amended--
(i) by striking '9 cents' and inserting '12.1 cents' and by striking '10 cents' and inserting '13.44 cents', and
(ii) by striking 'shall be 1/9 cent per gallon' and inserting 'and the diesel fuel deficit reduction rate shall be 10/9th of the otherwise applicable such rates'.
(B) Paragraph (2) of section 4091(c) is amended by striking '9 cents' and inserting '12.1 cents'.
(C)(i) Paragraph (1) of section 4041(a) is amended by striking 'of 15 cents a gallon' and by inserting before the last sentence the following new sentence:
'The rate of the tax imposed by this paragraph shall be the sum of the Highway Trust Fund financing rate and the diesel fuel deficit reduction rate in effect under section 4091 at the time of such sale or use.'
(D) Clause (i) of section 4041(b)(2)(A) is amended to read as follows:
'(i) the Highway Trust Fund financing rate applicable under subsection (a)(2) shall be 5.4 cents per gallon less than the otherwise applicable rate (6 cents per gallon in the case of a mixture none of the alcohol in which consists of ethanol), and'.
(E)(i) Paragraph (1) of section 4041(k) is amended by striking subparagraphs (A), (B), and (C) and inserting the following new subparagraphs:
'(A) the Highway Trust Fund financing rates under paragraphs (1) and (2) of subsection (a) shall be the comparable rates under sections 4081(c) and 4091(c), as the case may be,
'(B) no tax shall be imposed by subsection (c)(1), and
'(C) no tax shall be imposed by subsection (c)(2).'
(ii) Subsection (q) of section 6427 is amended to read as follows:
'(1) any tax is imposed by section 4081 at a rate determined under subsection (c) thereof on gasohol (as defined in such subsection), and
'(2) such gasohol is used as a fuel in any aircraft in noncommercial aviation (as defined in section 4041(c)(4)),
the Secretary shall pay (without interest) to the ultimate purchaser of such gasohol an amount equal to 1.4 cents (2 cents in the case of a mixture none of the alcohol in which consists of ethanol) multiplied by the number of gallons of gasohol so used.'
'(A) under subsection (a)(2) the Highway Trust Fund financing rate shall be 5.75 cents per gallon and the deficit reduction rate shall be 1.25 cents per gallon, and'.
(G) Subsection (d) of section 9502 is amended by adding at the end thereof the following new paragraph:
'(4) TRANSFERS FOR REFUNDS AND CREDITS NOT TO EXCEED TRUST FUND REVENUES ATTRIBUTABLE TO FUEL USED.--The amounts payable from the Airport and Airway Trust Fund under paragraph (2) or (3) shall not exceed the amounts required to be appropriated to such Trust Fund with respect to fuel so used.'
(H) Subparagraph (D) of section 9503(c)(4) is amended by striking '(to the extent attributable to the Highway Trust Fund financing rate)' and by inserting before the period ', but only to the extent such taxes are attributable to the Highway Trust Fund financing rates under such sections'.
(7) EFFECTIVE DATE.--The amendments made by this subsection shall take effect on December 1, 1990.
(c) EXTENSION OF TAXES.--The following provisions are each amended by striking '1993' each place it appears and inserting '1995':
(1) Section 4051(c) (relating to tax on heavy trucks and trailers sold at retail).
(2) Section 4071(d) (relating to tax on tires and tread rubber).
(3) Section 4081(d)(1) (relating to gasoline tax).
(4) Section 4091(b)(6)(A) (relating to diesel fuel tax), as redesignated by subsection (b).
(5) Sections 4481(e), 4482(c)(4), and 4482(d) (relating to highway use tax).
(d) EXTENSION OF EXEMPTIONS.--The following provisions are each amended by striking '1993' each place it appears and inserting '1995':
(1) Section 4041(f)(3) (relating to exemptions for farm use).
(2) Section 4041(g) (relating to other exemptions).
(3) Section 4221(a) (relating to certain tax-free sales).
(4) Section 4483(g) (relating to termination of exemptions for highway use tax).
(5) Section 6420(h) (relating to gasoline used on farms).
(6) Section 6421(i) (relating to gasoline used for certain nonhighway purposes, etc.).
(7) Section 6427(g)(5) (relating to advance repayment of increased diesel fuel tax).
(8) Section 6427(o) (relating to fuels not used for taxable purposes).
(e) EXTENSION OF REDUCED RATES OF TAX ON FUELS CONTAINING ALCOHOL.--The following provisions are each amended by striking '1993' each place it appears and inserting '2000':
(1) Section 4041(b)(2)(C) (relating to qualified methanol and ethanol fuel).
(2) Section 4041(k)(3) (relating to fuels containing alcohol).
(3) Section 4081(c)(5) (relating to gasoline mixed with alcohol), as redesignated by subsection (a).
(4) Subsections (c)(3) and (d)(3) of section 4091 (relating to diesel fuel and aviation fuel mixed with alcohol and aviation fuel used to produce certain alcohol fuels).
(f) OTHER PROVISIONS.--
(1) FLOOR STOCKS REFUNDS.--Section 6412(a)(1) (relating to floor stocks refunds) is amended--
(A) by striking '1993' each place it appears and inserting '1995', and
(B) by striking '1994' each place it appears and inserting '1996'.
(2) INSTALLMENT PAYMENTS OF HIGHWAY USE TAX.--Section 6156(e)(2) (relating to installment payments of tax on use of highway motor vehicles) is amended by striking '1993' and inserting '1995'.
(g) EXTENSION OF DEPOSITS INTO TRUST FUND.--
(1) IN GENERAL.--Subsection (b), and paragraphs (2), (3), and (4) of subsection (c), of section 9503 (relating to the Highway Trust Fund) are each amended--
(A) by striking '1993' each place it appears and inserting '1995', and
(B) by striking '1994' each place it appears and inserting '1996'.
(2) CONFORMING AMENDMENTS TO LAND AND WATER CONSERVATION FUND.--Section 201(b) of the Land and Water Conservation Fund Act of 1965 (16 U.S.C. 460l-11) is amended--
(A) by striking '1993' and inserting '1995', and
(B) by striking '1994' each place it appears and inserting '1996'.
(1) IN GENERAL.--Paragraph (2) of section 9503(e) is amended by striking '1 cent' and inserting '1.5 cents'.
(2) EFFECTIVE DATE.--The amendment made by paragraph (1) shall apply to amounts attributable to taxes imposed on or after December 1, 1990.
(i) TRANSFERS OF SMALL-ENGINE FUEL TAXES INTO SPORT FISH RESTORATION ACCOUNT.--
(1) IN GENERAL.--Section 9503(c) (relating to expenditures from highway trust fund) is amended by adding at the end thereof the following new paragraph:
'(5) TRANSFERS FROM THE TRUST FUND FOR SMALL-ENGINE FUEL TAXES.--
'(A) IN GENERAL.--The Secretary shall pay from time to time from the Highway Trust Fund into the Sport Fish Restoration Account in the Aquatic Resources Trust Fund amounts (as determined by him) equivalent to the small-engine fuel taxes received on or after December 1, 1990, and before October 1, 1995.
'(B) SMALL-ENGINE FUEL TAXES.--For purposes of this paragraph, the term 'small-engine fuel taxes' means the taxes under section 4081 with respect to gasoline used as a fuel in the nonbusiness use of small-engine outdoor power equipment, but only to the extent such taxes are attributable to the Highway Trust Fund financing rate under such section.'
(2) CONFORMING AMENDMENT.--Section 9504(a)(2) (relating to accounts in aquatic resources trust fund) is amended by inserting 'section 9503(c)(5),' after 'section 9503(c)(4),'.
(3) EXPENDITURES FOR COASTAL WETLANDS RESTORATION.--Section 9504(b)(2) (relating to expenditures from sport fish restoration account) is amended to read as follows:
'(2) EXPENDITURES FROM ACCOUNT.--Amounts in the Sport Fish Restoration Account shall be available, as provided by appropriation Acts, for making expenditures--
'(A) to carry out the purposes of the Act entitled 'An Act to provide that the United States shall aid the States in fish restoration and management projects, and for other purposes', approved August 9, 1950 (as in effect on October 1, 1988), and
'(B) to carry out the purposes of any law which is substantially identical to S. 3252 of the 101st Congress, as introduced.
Amounts transferred to such account under section 9503(c)(5) may be used only for making expenditures described in subparagraph (B) of this paragraph.'
(4) EFFECTIVE DATE.--The amendments made by this subsection shall take effect on December 1, 1990.
(j) FLOOR STOCKS TAXES.--
(1) IMPOSITION OF TAX.--In the case of--
(A) gasoline and diesel fuel on which tax was imposed under section 4081 or 4091 of such Code before December 1, 1990, and which is held on such date by any person, or
(B) diesel fuel on which no tax was imposed under section 4091 of such Code at the Highway Trust Fund financing rate before December 1, 1990, and which is held on such date by any person for use as a fuel in a train,
there is hereby imposed a floor stocks tax on such gasoline and diesel fuel.
(2) RATE OF TAX.--The rate of the tax imposed by paragraph (1) shall be--
(A) 5 cents per gallon in the case of fuel described in paragraph (1)(A), and
(B) 2.5 cents per gallon in the case of fuel described in paragraph (1)(B).
In the case of any fuel held for use in producing a mixture described in section 4081(c)(1) or section 4091(c)(1)(A) of such Code, subparagraph (A) shall be applied by substituting '6.22 cents' for '5 cents'. If no alcohol in such mixture is ethanol, the preceding sentence shall be applied by substituting '5.56 cents' for '6.22 cents'.
(3) LIABILITY FOR TAX AND METHOD OF PAYMENT.--
(A) LIABILITY FOR TAX.--A person holding gasoline or diesel fuel on December 1, 1990, to which the tax imposed by paragraph (1) applies shall be liable for such tax.
(B) METHOD OF PAYMENT.--The tax imposed by paragraph (1) shall be paid in such manner as the Secretary shall prescribe.
(C) TIME FOR PAYMENT.--The tax imposed by paragraph (1) shall be paid on or before May 31, 1991.
(4) DEFINITIONS.--For purposes of this subsection--
(A) HELD BY A PERSON.--Gasoline and diesel fuel shall be considered as 'held by a person' if title thereto has passed to such person (whether or not delivery to the person has been made).
(B) GASOLINE.--The term 'gasoline' has the meaning given such term by section 4082 of such Code.
(C) DIESEL FUEL.--The term 'diesel fuel' has the meaning given such term by section 4092 of such Code.
(D) SECRETARY.--The term 'Secretary' means the Secretary of the Treasury or his delegate.
(5) EXCEPTION FOR EXEMPT USES.--The tax imposed by paragraph (1) shall not apply to gasoline or diesel fuel held by any person exclusively for any use to the extent a credit or refund of the tax imposed by section 4081 or 4091 of such Code, as the case may be, is allowable for such use.
(6) EXCEPTION FOR FUEL HELD IN VEHICLE TANK.--No tax shall be imposed by paragraph (1) on gasoline or diesel fuel held in the tank of a motor vehicle or motorboat.
(7) EXCEPTION FOR CERTAIN AMOUNTS OF FUEL.--
(A) IN GENERAL.--No tax shall be imposed by paragraph (1)--
(i) on gasoline held on December 1, 1990, by any person if the aggregate amount of gasoline held by such person on such date does not exceed 4,000 gallons, and
(ii) on diesel fuel held on December 1, 1990, by any person if the aggregate amount of diesel fuel held by such person on such date does not exceed 2,000 gallons.
The preceding sentence shall apply only if such person submits to the Secretary (at the time and in the manner required by the Secretary) such information as the Secretary shall require for purposes of this paragraph.
(B) EXEMPT FUEL.--For purposes of subparagraph (A), there shall not be taken into account fuel held by any person which is exempt from the tax imposed by paragraph (1) by reason of paragraph (5) or (6).
(C) CONTROLLED GROUPS.--For purposes of this paragraph, rules similar to the rules of paragraph (6) of section 11201(e) of this Act shall apply.
(8) OTHER LAWS APPLICABLE.--All provisions of law, including penalties, applicable with respect to the taxes imposed by section 4081 of such Code in the case of gasoline and section 4091 of such Code in the case of diesel fuel shall, insofar as applicable and not inconsistent with the provisions of this subsection, apply with respect to the floor stock taxes imposed by paragraph (1) to the same extent as if such taxes were imposed by such section 4081 or 4091.
(9) TRANSFER OF PORTION OF FLOOR STOCKS REVENUE TO HIGHWAY TRUST FUND.--For purposes of determining the amount transferred to the Highway Trust Fund, the tax imposed by paragraph (1) on fuel described in subparagraph (A) thereof shall be treated as imposed at a Highway Trust Fund financing rate to the extent of 2.5 cents per gallon.
(a) IN GENERAL.--Paragraph (1) of section 4081(a) is amended to read as follows:
'(1) TAX ON REMOVAL, ENTRY, OR SALE.--
'(A) IN GENERAL.--There is hereby imposed a tax at the rate specified in paragraph (2) on--
'(i) the removal of gasoline from any refinery,
'(ii) the removal of gasoline from any terminal,
'(iii) the entry into the United States of gasoline for consumption, use, or warehousing, and
'(iv) the sale of gasoline to any person who is not registered under section 4101 unless there was a prior taxable removal or entry of such gasoline under clause (i), (ii), or (iii).
'(B) EXCEPTION FOR BULK TRANSFERS TO REGISTERED TERMINALS.--The tax imposed by this paragraph shall not apply to any removal or entry of gasoline transferred in bulk to a terminal if the person removing or entering the gasoline and the operator of such terminal are registered under section 4101.'
(1) IN GENERAL.--Section 4101 is amended to read as follows:
'(a) REGISTRATION.--Every person required by the Secretary to register under this section with respect to the tax imposed by section 4081 or 4091 shall register with the Secretary at such time, in such form and manner, and subject to such terms and conditions, as the Secretary may by regulations prescribe. A registration under this section may be used only in accordance with regulations prescribed under this section.
'(b) BONDS AND LIENS.--
'(1) IN GENERAL.--Under regulations prescribed by the Secretary, the Secretary may require, as a condition of permitting any person to be registered under subsection (a), that such person--
'(A) give a bond in such sum as the Secretary determines appropriate, and
'(B) agree to the imposition of a lien--
'(i) on such property (or rights to property) of such person used in the trade or business for which the registration is sought, or
'(ii) with the consent of such person, on any other property (or rights to property) of such person as the Secretary determines appropriate.
'(2) RELEASE OR DISCHARGE OF LIEN.--If a lien is imposed pursuant to paragraph (1), the Secretary shall issue a certificate of discharge or a release of such lien in connection with a transfer of the property if there is furnished to the Secretary (and accepted by him) a bond in such sum as the Secretary determines appropriate or the transferor agrees to the imposition of a substitute lien under paragraph (1)(B) in such sum as the Secretary determines appropriate. The Secretary shall respond to any request to discharge or release a lien imposed pursuant to paragraph (1) in connection with a transfer of property not later than 90 days after the date the request for such a discharge or release is made.
'(c) DENIAL, REVOCATION, OR SUSPENSION OF REGISTRATION.--Rules similar to the rules of section 4222(c) shall apply to registration under this section.
'(d) INFORMATION REPORTING.--The Secretary may require--
'(1) information reporting by any person registered under this section, and
'(2) information reporting by such other persons as the Secretary deems necessary to carry out this part.'
(2) CLARIFICATION OF GENERAL REGISTRATION RULES.--Subsection (c) of section 4222 is amended--
(A) by striking 'revoked or suspended' in the material preceding paragraph (1) and inserting 'denied, revoked, or suspended',
(B) by striking 'revocation or suspension' each place it appears and inserting 'denial, revocation, or suspension', and
(C) by striking in the heading 'REVOCATION OR SUSPENSION' and inserting 'DENIAL, REVOCATION, OR SUSPENSION'.
(3) DISCLOSURE PERMITTED OF REGISTRATION INFORMATION.--Subsection (k) of section 6103 is amended by adding at the end thereof the following new paragraph:
'(7) DISCLOSURE OF EXCISE TAX REGISTRATION INFORMATION.--To the extent the Secretary determines that disclosure is necessary to permit the effective administration of subtitle D, the Secretary may disclose--
'(A) the name, address, and registration number of each person who is registered under any provision of subtitle D (and, in the case of a registered terminal operator, the address of each terminal operated by such operator), and
'(B) the registration status of any person.'
(4) CONFORMING AMENDMENT.--Section 4093 is amended by striking subsection (e) (relating to special administrative rules) and by redesignating subsection (f) as subsection (e).
(c) CERTAIN ADDITIONAL PERSONS LIABLE FOR TAX WHERE WILLFUL FAILURE TO PAY.--Subpart C of part III of subchapter A of chapter 32 is amended by adding at the end thereof the following new section:
'SEC. 4103. CERTAIN ADDITIONAL PERSONS LIABLE FOR TAX WHERE WILLFUL FAILURE TO PAY.
'In any case in which there is a willful failure to pay the tax imposed by section 4081 or 4091, each person--
'(1) who is an officer, employee, or agent of the taxpayer who is under a duty to assure the payment of such tax and who willfully fails to perform such duty, or
'(2) who willfully causes the taxpayer to fail to pay such tax,
shall be jointly and severally liable with the taxpayer for the tax to which such failure relates.'
(d) REFUNDS IN CERTAIN CASES.--
(1) IN GENERAL.--Section 4081 is amended by adding at the end thereof the following new subsection:
'(e) REFUNDS IN CERTAIN CASES.--Under regulations prescribed by the Secretary, if any person who paid the tax imposed by this section with respect to any gasoline establishes to the satisfaction of the Secretary that a prior tax was paid (and not credited or refunded) with respect to such gasoline, then an amount equal to the tax paid by such person shall be allowed as a refund (without interest) to such person in the same manner as if it were an overpayment of tax imposed by this section.'
(2) DENIAL OF CREDITS.--Subsection (d) of section 6416 is amended by adding at the end thereof the following new sentence:
'The preceding sentence shall not apply to the tax imposed by section 4081 in the case of refunds described in section 4081(e).'
(e) TECHNICAL AND CONFORMING AMENDMENTS.--
(1) Paragraph (1) of section 6724(d) is amended by striking 'or' at the end of clause (x), by striking ', or subsection (e),' in clause (xi), by striking the period at the end of clause (xi) and inserting ', or', and by inserting after clause (xi) the following new clause:
(3) The table of sections for subpart C of part III of subchapter A of chapter 32 is amended by adding at the end thereof the following new item:
(f) EFFECTIVE DATES.--
(1) IN GENERAL.--Except as provided in paragraph (2), the amendments made by this section shall take effect on July 1, 1991.
(2) REGISTRATION, ETC.--The amendments made by subsections (b), (c), and (e) (other than paragraph (2) thereof) shall take effect on December 1, 1990.
(a) INCREASE IN RATES ON TRANSPORTATION.--
(1) TRANSPORTATION OF PERSONS.--Subsections (a) and (b) of section 4261 are each amended by striking '8 percent' and inserting '10 percent'.
(2) TRANSPORTATION OF PROPERTY.--Subsection (a) of section 4271 is amended by striking '5 percent' and inserting '6.25 percent'.
(3) EFFECTIVE DATE.--The amendments made by this subsection shall apply to transportation beginning after November 30, 1990, but shall not apply to amounts paid on or before such date.
(b) INCREASE IN RATES ON FUEL.--
(1) IN GENERAL.--Paragraph (3) of section 4091(b) is amended--
(A) by striking '14 cents' and inserting '17.5 cents', and
(B) by inserting 'except as provided in subsection (d),' after 'paragraph (1),'.
(2) CONFORMING AMENDMENTS.--
(A) Paragraph (1) of section 4041(c) is amended by striking '14 cents' and inserting '17.5 cents'.
(B)(i) Subparagraph (B) of section 4041(k)(1), as amended by section 11211, is amended to read as follows:
'(B) the rate of the tax imposed by subsection (c)(1) shall be the comparable rate under section 4091(d), and'.
(ii) Subparagraph (B) of section 4041(m)(1) is amended to read as follows:
'(B) the rate of the tax imposed by subsection (c)(1) shall be the comparable rate under section 4091(d)(1).'
(C)(i) Paragraphs (1) and (2) of section 4091(d) are amended to read as follows:
'(1) IN GENERAL.--The Airport and Airway Trust Fund financing rate shall be--
'(A) 4.1 cents per gallon in the case of the sale of any mixture of aviation fuel if--
'(i) at least 10 percent of such mixture consists of alcohol (as defined in section 4081(c)(3)), and
'(ii) the aviation fuel in such mixture was not taxed under subparagraph (B), and
'(B) 4.56 cents per gallon in the case of the sale of aviation fuel for use (at the time of such sale) in producing a mixture described in subparagraph (A).
In the case of a sale described in subparagraph (B), the Leaking Underground Storage Tank Trust Fund financing rate shall be 1/9 cent per gallon.
'(2) LATER SEPARATION.--If any person separates the aviation fuel from a mixture of the aviation fuel and alcohol on which tax was imposed under subsection (a) at the Airport and Airway Trust Fund financing rate equivalent to 4.1 cents per gallon by reason of this subsection (or with respect to which a credit or payment was allowed or made by reason of section 6427(f)(1)), such person shall be treated as the producer of such aviation fuel. The amount of tax imposed on any sale of such aviation fuel by such person shall be reduced by the amount of tax imposed (and not credited or refunded) on any prior sale of such fuel.'
(D) Section 4091 is amended by adding at the end thereof the following new subsection:
'(1) subsections (c)(1)(A) and (c)(2), and subsections (d)(1)(A) and (d)(2), shall each be applied by substituting rates which are 0.6 cents less than the rates contained therein, and
'(2) subsections (c)(1)(B) and (d)(1)(B) shall be applied by substituting rates which are 10/9 of the rates determined under paragraph (1).'
(3) Subsection (f) of section 6427 is amended to read as follows:
'(f) GASOLINE, DIESEL FUEL, AND AVIATION FUEL USED TO PRODUCE CERTAIN ALCOHOL FUELS.--
'(1) IN GENERAL.--Except as provided in subsection (k), if any gasoline, diesel fuel, or aviation fuel on which tax was imposed by section 4081 or 4091 at the regular tax rate is used by any person in producing a mixture described in section 4081(c), 4091(c)(1)(A), or 4091(d)(1)(A) (as the case may be) which is sold or used in such person's trade or business the Secretary shall pay (without interest) to such person an amount equal to the excess of the regular tax rate over the incentive tax rate with respect to such fuel.
'(2) DEFINITIONS.--For purposes of paragraph (1)--
'(A) REGULAR TAX RATE.--The term 'regular tax rate' means--
'(i) in the case of gasoline, the aggregate rate of tax imposed by section 4081 determined without regard to subsection (c) thereof,
'(ii) in the case of diesel fuel, the aggregate rate of tax imposed by section 4091 on such fuel determined without regard to subsection (c) thereof, and
'(iii) in the case of aviation fuel, the aggregate rate of tax imposed by section 4091 on such fuel determined without regard to subsection (d) thereof.
'(B) INCENTIVE TAX RATE.--The term 'incentive tax rate' means--
'(i) in the case of gasoline, the aggregate rate of tax imposed by section 4081 with respect to fuel described in subsection (c)(1) thereof,
'(ii) in the case of diesel fuel, the aggregate rate of tax imposed by section 4091 with respect to fuel described in subsection (c)(1)(B) thereof, and
'(iii) in the case of aviation fuel, the aggregate rate of tax imposed by section 4091 with respect to fuel described in subsection (d)(1)(B) thereof.
'(4) TERMINATION.--This subsection shall not apply with respect to any mixture sold or used after September 30, 1995.'
(4) EFFECTIVE DATE.--The amendments made by this subsection shall take effect on December 1, 1990.
(5) FLOOR STOCKS TAXES.--
(A) IMPOSITION OF TAX.--In the case of aviation fuel on which tax was imposed under section 4041(c)(1) or 4091 of the Internal Revenue Code of 1986 before December 1, 1990, and which is held on such date by any person, there is hereby imposed a floor stocks tax on such fuel.
(B) RATE OF TAX.--The rate of the tax imposed by subparagraph (A) shall be 3.5 cents per gallon.
(C) LIABILITY FOR TAX AND METHOD OF PAYMENT.--
(i) LIABILITY FOR TAX.--A person holding fuel on December 1, 1990, to which the tax imposed by this paragraph applies shall be liable for such tax.
(ii) METHOD OF PAYMENT.--The tax imposed by this paragraph shall be paid in such manner as the Secretary shall prescribe.
(iii) TIME FOR PAYMENT.--The tax imposed by this paragraph shall be paid on or before May 31, 1991.
(D) DEFINITIONS.--For purposes of this paragraph--
(i) HELD BY A PERSON.--Fuel shall be considered as 'held by a person' if title thereto has passed to such person (whether or not delivery to the person has been made).
(ii) AVIATION FUEL.--The term 'aviation fuel' has the meaning given such term by section 4092(a) of such Code.
(iii) SECRETARY.--The term 'Secretary' means the Secretary of the Treasury or his delegate.
(E) EXCEPTION FOR EXEMPT USES.--The tax imposed by this paragraph shall not apply to fuel held by any person exclusively for any use which is a nontaxable use (as defined in section 6427(l) of such Code).
(F) OTHER LAWS APPLICABLE.--All provisions of law, including penalties, applicable with respect to the taxes imposed by section 4091 of such Code shall, insofar as applicable and not inconsistent with the provisions of this paragraph, apply with respect to the floor stock taxes imposed by this paragraph to the same extent as if such taxes were imposed by such section 4091.
(1) Section 9502 is amended by adding at the end thereof the following new subsection:
'(e) SPECIAL RULES FOR TRANSFERS INTO TRUST FUND.--
'(1) INCREASES IN TAX REVENUES BEFORE 1993 TO REMAIN IN GENERAL FUND.--In the case of taxes imposed before January 1, 1993, the amounts which would (but for this paragraph) be required to be appropriated under paragraphs (1), (2), and (3) of subsection (b) shall be 3 cents per gallon less (3.5 cents per gallon less in the case of taxes imposed by section 4041(c)(1) and 4091) than the amounts which would (but for this sentence) be appropriated under such paragraphs.
'(2) CERTAIN TAXES ON ALCOHOL MIXTURES TO REMAIN IN GENERAL FUND.--For purposes of this section, the amounts which would (but for this paragraph) be required to be appropriated under paragraphs (1), (2), and (3) of subsection (b) shall be reduced by--
'(A) 0.6 cent per gallon in the case of taxes imposed on any mixture at least 10 percent of which is alcohol (as defined in section 4081(c)(3)) if any portion of such alcohol is ethanol, and
'(B) 0.67 cent per gallon in the case of fuel used in producing a mixture described in subparagraph (A).'
(2) Paragraph (2) of section 9502(b) is amended by inserting 'and the deficit reduction rate' after 'financing rate'.
(d) EXTENSION OF TAXES AND TRUST FUND.--
(1) TRANSPORTATION TAXES.--Sections 4261(g) and 4271(d) are each amended by striking 'January 1, 1991' and inserting 'January 1, 1996'.
(2) FUEL TAXES.--
(A) Subparagraph (B) of section 4091(b)(6), as redesignated by section 11211, is amended by striking 'January 1, 1991' and inserting 'January 1, 1996'.
(B) Paragraph (5) of section 4041(c) is amended by striking 'December 31, 1990' and inserting 'December 31, 1995'.
(3) DEPOSITS INTO TRUST FUND.--Subsection (b) of section 9502 (relating to transfer to Airport and Airway Trust Fund of amounts equivalent to certain taxes) is amended by striking 'January 1, 1991' each place it appears and inserting 'January 1, 1996'.
(4) EXPENDITURE PURPOSES TO INCLUDE THE FEDERAL AVIATION ADMINISTRATION RESEARCH, ENGINEERING, AND DEVELOPMENT AUTHORIZATION ACT OF 1990 AND THE AVIATION SAFETY AND CAPACITY EXPANSION ACT OF 1990.--Subparagraph (A) of section 9502(d)(1) is amended by striking '(as such Acts were in effect on the date of the enactment of the Airport and Airway Safety and Capacity Expansion Act of 1987)' and inserting 'or the Federal Aviation Administration Research, Engineering, and Development Authorization Act of 1990 or the Aviation Safety and Capacity Expansion Act of 1990 (as such Acts were in effect on the date of the enactment of the Aviation Safety and Capacity Expansion Act of 1990)'.
(e) REPEAL OF REDUCTION IN RATES.--
(1) Section 4283 (relating to reduction in aviation related taxes in certain cases) is hereby repealed.
(2) The table of sections for part III of subchapter C of chapter 33 is amended by striking the item relating to section 4283.
(3) Subsection (c) of section 4041 is amended by striking paragraph (6).
(f) COORDINATION WITH OTHER PROVISIONS.--No amendment or any other provision of this section shall take effect unless the Airport Noise and Capacity Act of 1990, the Aviation Safety and Capacity Expansion Act of 1990, and the Federal Aviation Administration Research, Engineering, and Development Authorization Act of 1990 are enacted as part of this Act and are identical to the provisions of such Acts as included in the conference report on H.R. 5835 of the 101st Congress.
SEC. 11214. INCREASE IN HARBOR MAINTENANCE TAX.
(a) IN GENERAL.--Subsection (b) of section 4461 is amended by striking '0.04 percent' and inserting '0.125 percent'.
(b) EFFECTIVE DATE.--The amendment made by subsection (a) shall take effect on January 1, 1991.
SEC. 11215. EXTENSION OF LEAKING UNDERGROUND STORAGE TANK TRUST FUND TAXES.
(a) IN GENERAL.--Paragraph (2) of section 4081(d) is amended to read as follows:
'(2) LEAKING UNDERGROUND STORAGE TANK TRUST FUND FINANCING RATE.--The Leaking Underground Storage Tank Trust Fund financing rate under subsection (a)(2) shall not apply after December 31, 1995.'
(b) EFFECTIVE DATE.--The amendment made by subsection (a) shall take effect on December 1, 1990.
SEC. 11216. AMENDMENTS TO GAS GUZZLER TAX.
(a) INCREASE IN RATE OF TAX.--Subsection (a) of section 4064 (relating to gas guzzler tax) is amended to read as follows:
'(a) IMPOSITION OF TAX.--There is hereby imposed on the sale by the manufacturer of each automobile a tax determined in accordance with the following table:
'If the fuel economy of the model type
in which the automobile falls is: The tax is:
At least 22.5 $ 0
At least 21.5 but less than 22.5 1,000
At least 20.5 but less than 21.5 1,300
At least 19.5 but less than 20.5 1,700
At least 18.5 but less than 19.5 2,100
At least 17.5 but less than 18.5 2,600
At least 16.5 but less than 17.5 3,000
At least 15.5 but less than 16.5 3,700
At least 14.5 but less than 15.5 4,500
At least 13.5 but less than 14.5 5,400
At least 12.5 but less than 13.5 6,400
Less than 12.5 7,700.'
(e) EFFECTIVE DATES.--
(1) SUBSECTIONS (a) AND (b).--The amendments made by subsections (a) and (b) shall apply to sales after December 31, 1990.
(2) SUBSECTION (c).--The amendments made by subsection (c) shall take effect on January 1, 1991.
(3) SUBSECTION (d).--The amendment made by subsection (d) shall take effect on the date of the enactment of this section.
(a) TAX MADE PERMANENT.--Paragraph (2) of section 4251(b) is amended by striking 'percent;' and all that follows and inserting 'percent.'
(b) ACCELERATION OF DEPOSIT REQUIREMENTS.--
(1) IN GENERAL.--Subsection (e) of section 6302 (relating to time for deposit of taxes of airline tickets) is amended--
(A) by inserting 'COMMUNICATIONS SERVICES AND' before 'AIRLINE', and
(B) by inserting 'section 4251 or' before 'subsection (a) or (b)'.
(2) EFFECTIVE DATE.--The amendment made by paragraph (1) shall apply to payments of taxes considered collected during semimonthly periods beginning after December 31, 1990.
(c) ONE-TIME FILING OF TELEPHONE EXCISE TAX EXEMPTION CERTIFICATES.--
(1) IN GENERAL.--Section 4253 is amended by adding at the end thereof the following new subsection:
'(k) FILING OF EXEMPTION CERTIFICATES.--
'(1) IN GENERAL.--In order to claim an exemption under subsection (c), (h), (i), or (j), a person shall provide to the provider of communications services a statement (in such form and manner as the Secretary may provide) certifying that such person is entitled to such exemption.
'(2) DURATION OF CERTIFICATE.--Any statement provided under paragraph (1) shall remain in effect until--
'(A) the provider of communications services has actual knowledge that the information provided in such statement is false, or
'(B) such provider is notified by the Secretary that the provider of the statement is no longer entitled to an exemption described in paragraph (1).
If any information provided in such statement is no longer accurate, the person providing such statement shall inform the provider of communications services within 30 days of any change of information.'
(2) EFFECTIVE DATE.--
(A) IN GENERAL.--The amendment made by paragraph (1) shall apply to any claim for exemption made after the date of the enactment of this Act.
(B) DURATION OF EXISTING CERTIFICATES.--Any annual certificate of exemption effective on the date of the enactment of this Act shall remain effective until the end of the annual period.
Notwithstanding the Act of June 18, 1934 (48 Stat. 998, 19 U.S.C. 81a) or any other provision of law, any article which is located in a foreign trade zone on the effective date of any increase in tax under the amendments made by this part or part I shall be subject to floor stocks taxes imposed by such parts if--
(2) such article is held on such date under the supervision of a customs officer pursuant to the 2d proviso of such section 3(a).
SEC. 11221. TAXES ON LUXURY ITEMS.
(a) IN GENERAL.--Chapter 31 (relating to retail excise taxes) is amended by redesignating subchapters A and B as subchapters B and C, respectively, and by inserting before subchapter B (as so redesignated) the following new subchapter:
'Subchapter A--Certain Luxury Items
'Part I. Imposition of taxes.
'Part II. Rules of general applicability.
'PART I. IMPOSITION OF TAXES
'Subpart A. Passenger vehicles, boats, and aircraft.
'Subpart B. Jewelry and furs.
'Subpart A--Passenger Vehicles, Boats, and Aircraft
'Sec. 4001. Passenger vehicles.
'Sec. 4002. Boats.
'Sec. 4003. Aircraft.
'Sec. 4004. Rules applicable to subpart A.
'SEC. 4001. PASSENGER VEHICLES.
'(a) IMPOSITION OF TAX.--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 $30,000.
'(b) PASSENGER VEHICLE.--
'(1) IN GENERAL.--For purposes of subsection (a), the term 'passenger vehicle' means any 4-wheeled vehicle--
'(A) which is manufactured primarily for use on public streets, roads, and highways, and
'(B) which is rated at 6,000 pounds unloaded gross vehicle weight or less.
'(2) SPECIAL RULES.--
'(A) TRUCKS AND VANS.--In the case of a truck or van, paragraph (1)(B) shall be applied by substituting 'gross vehicle weight' for 'unloaded gross vehicle weight'.
'(B) LIMOUSINES.--In the case of a limousine, paragraph (1) shall be applied without regard to subparagraph (B) thereof.
'SEC. 4002. BOATS.
'(a) IMPOSITION OF TAX.--There is hereby imposed on the 1st retail sale of any boat a tax equal to 10 percent of the price for which so sold to the extent such price exceeds $100,000.
'(b) EXCEPTIONS.--The tax imposed by this section shall not apply to the sale of any boat for use by the purchaser exclusively in the active conduct of--
'(1) a trade or business of commercial fishing or transporting persons or property for compensation or hire, or
'(2) any other trade or business unless the boat is to be used predominantly in any activity which is of a type generally considered to constitute entertainment, amusement, or recreation.
'(a) IMPOSITION OF TAX.--There is hereby imposed on the 1st retail sale of any aircraft a tax equal to 10 percent of the price for which so sold to the extent such price exceeds $250,000.
'(b) AIRCRAFT.--For purposes of this section, the term 'aircraft' means any aircraft--
'(1) which is propelled by a motor, and
'(2) which is capable of carrying 1 or more individuals.
'(c) 80 PERCENT GENERAL BUSINESS USE.--
'(1) IN GENERAL.--The tax imposed by this section shall not apply to the sale of any aircraft if 80 percent of the use by the purchaser is in any trade or business.
'(2) PROOF OF BUSINESS USE.--On the income tax return for each of the 1st 2 taxable years ending after the date an aircraft on which no tax was imposed by this section by reason of paragraph (1) was placed in service, the taxpayer filing such return shall demonstrate to the satisfaction of the Secretary that the use of such aircraft during each such year met the requirement of paragraph (1).
'(3) IMPOSITION OF LUXURY TAX WHERE FAILURE OF PROOF.--If the requirement of paragraph (2) is not met for either of the taxable years referred to therein, the taxpayer filing such returns shall pay the tax which would (but for paragraph (1)) have been imposed on such aircraft plus interest determined under subchapter C of chapter 67 during the period beginning on the date such tax would otherwise have been imposed. If such taxpayer fails to pay the tax imposed pursuant to the preceding sentence, no deduction shall be allowed under section 168 for any taxable year with respect to the aircraft involved.
'(d) OTHER EXCEPTIONS.--The tax imposed by this section shall not apply to the sale of any aircraft for use by the purchaser exclusively--
'(1) in the aerial application of fertilizers or other substances,
'(2) in the case of a helicopter, in a use described in paragraph (1) or (2) of section 4261(e),
'(3) in a trade or business of providing flight training, or
'(4) in a trade or business of transporting persons or property for compensation or hire.
'(a) EXEMPTION FOR LAW ENFORCEMENT USES, ETC.--No tax shall be imposed under this subpart on the sale of any article--
'(1) to the Federal Government, or a State or local government, for use exclusively in police, firefighting, search and rescue, or other law enforcement or public safety activities, or in public works activities, or
'(2) to any person for use exclusively in providing emergency medical services.
'(b) SEPARATE PURCHASE OF ARTICLE AND PARTS AND ACCESSORIES THEREFOR.--Under regulations prescribed by the Secretary--
'(1) IN GENERAL.--Except as provided in paragraph (2), if--
'(A) the owner, lessee, or operator of any article taxable under this subpart (determined without regard to price) installs (or causes to be installed) any part or accessory on such article, and
'(B) such installation is not later than the date 6 months after the date the article was 1st placed in service,
then there is hereby imposed on such installation a tax equal to 10 percent of the price of such part or accessory and its installation.
'(2) LIMITATION.--The tax imposed by paragraph (1) on the installation of any part or accessory shall not exceed 10 percent of the excess (if any) of--
'(A) the sum of--
'(i) the price of such part or accessory and its installation,
'(ii) the aggregate price of the parts and accessories (and their installation) installed before such part or accessory, plus
'(iii) the price for which the passenger vehicle, boat, or aircraft was sold, over
'(B) $30,000 in the case of a passenger vehicle, $100,000 in the case of a boat, and $250,000 in the case of an aircraft.
'(3) EXCEPTIONS.--Paragraph (1) shall not apply if--
'(A) the part or accessory installed is a replacement part or accessory, or
'(B) the aggregate price of the parts and accessories (and their installation) described in paragraph (1) with respect to the taxable article does not exceed $200 (or such other amount or amounts as the Secretary may by regulation prescribe).
'(4) INSTALLERS SECONDARILY LIABLE FOR TAX.--The owners of the trade or business installing the parts or accessories shall be secondarily liable for the tax imposed by this subsection.
'(c) IMPOSITION OF TAX ON SALES, ETC., WITHIN 2 YEARS OF ARTICLES PURCHASED TAX-FREE.--
'(1) IN GENERAL.--If--
'(A) no tax was imposed under this subchapter on the 1st retail sale of any article by reason of its exempt use, and
'(B) within 2 years after the date of such 1st retail sale, such article is resold by the purchaser or such purchaser makes a substantial non-exempt use of such article,
then such sale or use of such article by such purchaser shall be treated as the 1st retail sale of such article for a price equal to its fair market value at the time of such sale or use.
'(2) EXEMPT USE.--For purposes of this subsection, the term 'exempt use' means any use of an article if the 1st retail sale of such article is not taxable under this subchapter by reason of such use.
'Sec. 4006. Jewelry.
'Sec. 4007. Furs.
'SEC. 4006. JEWELRY.
'(a) IMPOSITION OF TAX.--There is hereby imposed on the 1st retail sale of any jewelry a tax equal to 10 percent of the price for which so sold to the extent such price exceeds $10,000.
'(b) JEWELRY.--For purposes of subsection (a), the term 'jewelry' means all articles commonly or commercially known as jewelry, whether real or imitation, including watches.
'(c) MANUFACTURE FROM CUSTOMER'S MATERIAL.--If--
'(1) a person, in the course of a trade or business, produces jewelry from material furnished directly or indirectly by a customer, and
'(2) the jewelry is for the use of, and not for resale by, such customer
the delivery of such jewelry to such customer shall be treated as the 1st retail sale of such jewelry for a price equal to its fair market value at the time of such delivery.
'SEC. 4007. FURS.
'(a) IMPOSITION OF TAX.--There is hereby imposed on the 1st retail sale of the following articles a tax equal to 10 percent of the price for which so sold to the extent such price exceeds $10,000:
'(1) Articles made of fur on the hide or pelt.
'(2) Articles of which such fur is a major component.
'(b) MANUFACTURE FROM CUSTOMER'S MATERIAL.--If--
'(1) a person, in the course of a trade or business, produces an article of the kind described in subsection (a) from fur on the hide or pelt furnished, directly or indirectly, by a customer, and
'(2) the article is for the use of, and not for resale by, such customer,
the delivery of such article to such customer shall be treated as the 1st retail sale of such article for a price equal to its fair market value at the time of such delivery.
'PART II--RULES OF GENERAL APPLICABILITY
'Sec. 4011. Definitions and special rules.
'Sec. 4012. Termination.
'SEC. 4011. DEFINITIONS AND SPECIAL RULES.
'(a) 1ST RETAIL SALE.--For purposes of this subchapter, the term '1st retail sale' means the 1st sale, for a purpose other than resale, after manufacture, production, or importation.
'(b) USE TREATED AS SALE.--
'(1) IN GENERAL.--If any person uses an article taxable under this subchapter (including any use after importation) before the 1st retail sale of such article, then such person shall be liable for tax under this subchapter in the same manner as if such article were sold at retail by him.
'(2) EXEMPTION FOR FURTHER MANUFACTURE.--Paragraph (1) shall not apply to use of an article as material in the manufacture or production of, or as a component part of, another article taxable under this subchapter to be manufactured or produced by him.
'(3) EXEMPTION FOR DEMONSTRATION USE OF PASSENGER VEHICLES.--Paragraph (1) shall not apply to any use of a passenger vehicle as a demonstrator for a potential customer while the potential customer is in the vehicle.
'(4) EXCEPTION FOR USE AFTER IMPORTATION OF CERTAIN ARTICLES.--Paragraph (1) shall not apply to the use of an article after importation if the user or importer establishes to the satisfaction of the Secretary that the 1st use of the article occurred before January 1, 1991, outside the United States.
'(5) COMPUTATION OF TAX.--In the case of any person made liable for tax by paragraph (1), the tax shall be computed on the price at which similar articles are sold at retail in the ordinary course of trade, as determined by the Secretary.
'(c) LEASES CONSIDERED AS SALES.--For purposes of this subchapter--
'(1) IN GENERAL.--Except as otherwise provided in this subsection, the lease of an article (including any renewal or any extension of a lease or any subsequent lease of such article) by any person shall be considered a sale of such article at retail.
'(2) SPECIAL RULES FOR CERTAIN LEASES OF PASSENGER VEHICLES, BOATS, AND AIRCRAFT.--
'(A) TAX NOT IMPOSED ON SALE FOR LEASING IN A QUALIFIED LEASE.--The sale of a passenger vehicle, boat, or aircraft to a person engaged in a leasing or rental trade or business of the article involved for leasing by such person in a qualified lease shall not be treated as the 1st retail sale of such article.
'(B) QUALIFIED LEASE.--For purposes of subparagraph (A), the term 'qualified lease' means--
'(i) any lease in the case of a boat or an aircraft, and
'(ii) any long-term lease (as defined in section 4052) in the case of any passenger vehicle.
'(C) SPECIAL RULES.--In the case of a qualified lease of an article which is treated as the 1st retail sale of such article--
'(i) DETERMINATION OF PRICE.--The tax under this subchapter shall be computed on the lowest price for which the article is sold by retailers in the ordinary course of trade.
'(ii) PAYMENT OF TAX.--Rules similar to the rules of section 4217(e)(2) shall apply.
'(iii) NO TAX WHERE EXEMPT USE BY LESSEE.--No tax shall be imposed on any lease payment under a qualified lease if the lessee's use of the article under such lease is an exempt use (as defined in section 4004(c)) of such article.
'(1) IN GENERAL.--In determining price for purposes of this subchapter--
'(A) there shall be included any charge incident to placing the article in condition ready for use,
'(B) there shall be excluded--
'(i) the amount of the tax imposed by this subchapter,
'(ii) if stated as a separate charge, the amount of any retail sales tax imposed by any State or political subdivision thereof or the District of Columbia, whether the liability for such tax is imposed on the vendor or vendee, and
'(iii) the value of any component of such article if--
'(I) such component is furnished by the 1st user of such article, and
'(II) such component has been used before such furnishing, and
Subparagraph (B)(iii) shall not apply for purposes of the taxes imposed by sections 4006 and 4007.
'(2) OTHER RULES.--Rules similar to the rules of paragraphs (2) and (4) of section 4052(b) shall apply for purposes of this subchapter.
'(e) PARTS AND ACCESSORIES SOLD WITH TAXABLE ARTICLE.--Parts and accessories sold on, in connection with, or with the sale of any article taxable under this subchapter shall be treated as part of the article.
'(f) PARTIAL PAYMENTS, ETC.--In the case of a contract, sale, or arrangement described in paragraph (2), (3), or (4) of section 4216(c), rules similar to the rules of section 4217(e)(2) shall apply for purposes of this subchapter.
'SEC. 4012. TERMINATION.
'The taxes imposed by this subchapter shall not apply to any sale or use after December 31, 1999.'
(b) EXEMPTION FOR EXPORTS.--
(1) The material preceding paragraph (1) of section 4221(a) is amended by striking 'section 4051' and inserting 'subchapter A or C of chapter 31'.
(2) Subsection (a) of section 4221 is amended by adding at the end thereof the following new sentence:
'In the case of taxes imposed by subchapter A of chapter 31, paragraphs (1), (3), (4), and (5) shall not apply.'
(c) EXEMPTION FOR SALES TO THE UNITED STATES.--Section 4293 is amended by inserting 'subchapter A of chapter 31,' before 'section 4041'.
(d) TECHNICAL AMENDMENTS.--
(1) Subsection (c) of section 4221 is amended by striking 'section 4053(a)(6)' and inserting 'section 4001(c), 4002(b), 4003(c), 4004(a), or 4053(a)(6)'.
(2) Paragraph (1) of section 4221(d) is amended by striking 'the tax imposed by section 4051' and inserting 'taxes imposed by subchapter A or C of chapter 31'.
(3) Subsection (d) of section 4222 is amended by striking 'sections 4053(a)(6)' and inserting 'sections 4001(c), 4002(b), 4003(c), 4004(a), 4053(a)(6)'.
(e) CLERICAL AMENDMENT.--The table of subchapters for chapter 31 is amended to read as follows:
'Subchapter A. Certain luxury items.
'Subchapter B. Special fuels.
'Subchapter C. Heavy trucks and trailers.'
(f) EFFECTIVE DATE.--
(1) IN GENERAL.--The amendments made by this section shall take effect on January 1, 1991.
(2) EXCEPTION FOR BINDING CONTRACTS.--In determining whether any tax imposed by subchapter A of chapter 31 of the Internal Revenue Code of 1986, as added by this section, applies to any sale after December 31, 1990, there shall not be taken into account the amount paid for any article (or any part or accessory therefor) if the purchaser held on September 30, 1990, a contract (which was binding on such date and at all times thereafter before the purchase) for the purchase of such article (or such part or accessory).
SEC. 11231. 4-YEAR EXTENSION OF HAZARDOUS SUBSTANCE SUPERFUND.
(a) EXTENSION OF TAXES.--
(1) The following provisions of the Internal Revenue Code of 1986 are each amended by striking 'January 1, 1992' and inserting 'January 1, 1996':
(A) Section 59A(e)(1) (relating to application of environmental tax).
(B) Paragraphs (1) and (3) of section 4611(e) (relating to application of Hazardous Substance Superfund financing rate).
(2) Paragraph (2) of section 4611(e) of such Code is amended--
(A) by striking '1989' and inserting '1993',
(B) by striking '1990' each place it appears and inserting '1994', and
(C) by striking '1991' each place it appears and inserting '1995'.
(c) EXTENSION OF REPAYMENT DEADLINE FOR SUPERFUND BORROWING.--Subparagraph (B) of section 9507(d)(3) is amended by striking 'December 31, 1991' and inserting 'December 31, 1995'.
(d) EXTENSION OF AUTHORIZATION OF APPROPRIATIONS TO TRUST FUND.--Subsection (b) of section 517 of the Superfund Revenue Act of 1986 (26 U.S.C. 9507 note) is amended by striking 'and' at the end of paragraph (4), by striking the period at the end of paragraph (5) and inserting ', and', and by adding at the end thereof the following new paragraphs:
'(6) 1992, $250,000,000,
'(7) 1993, $250,000,000,
'(8) 1994, $250,000,000, and
'(9) 1995, $250,000,000.'
PART I--INSURANCE PROVISIONS
Subpart A--Provisions Related to Policy Acquisition Costs
SEC. 11301. CAPITALIZATION OF POLICY ACQUISITION EXPENSES.
(a) GENERAL RULE.--Part III of subchapter L of chapter 1 (relating to provisions of general application) is amended by adding at the end thereof the following new section:
'SEC. 848. CAPITALIZATION OF CERTAIN POLICY ACQUISITION EXPENSES.
'(a) GENERAL RULE.--In the case of an insurance company--
'(1) specified policy acquisition expenses for any taxable year shall be capitalized, and
'(2) such expenses shall be allowed as a deduction ratably over the 120-month period beginning with the first month in the second half of such taxable year.
'(b) 5-YEAR AMORTIZATION FOR FIRST $5,000,000 OF SPECIFIED POLICY ACQUISITION EXPENSES.--
'(1) IN GENERAL.--Paragraph (2) of subsection (a) shall be applied with respect to so much of the specified policy acquisition expenses of an insurance company for any taxable year as does not exceed $5,000,000 by substituting '60-month' for '120-month'.
'(2) PHASE-OUT.--If the specified policy acquisition expenses of an insurance company exceed $10,000,000 for any taxable year, the $5,000,000 amount under paragraph (1) shall be reduced (but not below zero) by the amount of such excess.
'(3) SPECIAL RULE FOR MEMBERS OF CONTROLLED GROUP.--In the case of any controlled group--
'(A) all insurance companies which are members of such group shall be treated as 1 company for purposes of this subsection, and
'(B) the amount to which paragraph (1) applies shall be allocated among such companies in such manner as the Secretary may prescribe.
For purposes of the preceding sentence, the term 'controlled group' means any controlled group of corporations as defined in section 1563(a); except that subsections (a)(4) and (b)(2)(D) of section 1563 shall not apply, and subsection (b)(2)(C) of section 1563 shall not apply to the extent it excludes a foreign corporation to which section 842 applies.
'(4) EXCEPTION FOR ACQUISITION EXPENSES ATTRIBUTABLE TO CERTAIN REINSURANCE CONTRACTS.--Paragraph (1) shall not apply to any specified policy acquisition expenses for any taxable year which are attributable to premiums or other consideration under any reinsurance contract.
'(c) SPECIFIED POLICY ACQUISITION EXPENSES.--For purposes of this section--
'(1) IN GENERAL.--The term 'specified policy acquisition expenses' means, with respect to any taxable year, so much of the general deductions for such taxable year as does not exceed the sum of--
'(A) 1.75 percent of the net premiums for such taxable year on specified insurance contracts which are annuity contracts,
'(B) 2.05 percent of the net premiums for such taxable year on specified insurance contracts which are group life insurance contracts, and
'(C) 7.7 percent of the net premiums for such taxable year on specified insurance contracts not described in subparagraph (A) or (B).
'(2) GENERAL DEDUCTIONS.--The term 'general deductions' means the deductions provided in part VI of subchapter B (sec. 161 and following, relating to itemized deductions) and in part I of subchapter D (sec. 401 and following, relating to pension, profit sharing, stock bonus plans, etc.).
'(d) NET PREMIUMS.--For purposes of this section--
'(1) IN GENERAL.--The term 'net premiums' means, with respect to any category of specified insurance contracts set forth in subsection (c)(1), the excess (if any) of--
'(A) the gross amount of premiums and other consideration on such contracts, over
'(B) return premiums on such contracts and premiums and other consideration incurred for reinsurance of such contracts.
The rules of section 803(b) shall apply for purposes of the preceding sentence.
'(2) AMOUNTS DETERMINED ON ACCRUAL BASIS.--In the case of an insurance company subject to tax under part II of this subchapter, all computations entering into determinations of net premiums for any taxable year shall be made in the manner required under section 811(a) for life insurance companies.
'(3) TREATMENT OF CERTAIN POLICYHOLDER DIVIDENDS AND SIMILAR AMOUNTS.--Net premiums shall be determined without regard to section 808(e) and without regard to other similar amounts treated as paid to, and returned by, the policyholder.
'(4) SPECIAL RULES FOR REINSURANCE.--
'(A) Premiums and other consideration incurred for reinsurance shall be taken into account under paragraph (1)(B) only to the extent such premiums and other consideration are includible in the gross income of an insurance company taxable under this subchapter or are subject to tax under this chapter by reason of subpart F of part III of subchapter N.
'(B) The Secretary shall prescribe such regulations as may be necessary to ensure that premiums and other consideration with respect to reinsurance are treated consistently by the ceding company and the reinsurer.
'(1) SPECIFIED INSURANCE CONTRACT.--
'(A) IN GENERAL.--Except as otherwise provided in this paragraph, the term 'specified insurance contract' means any life insurance, annuity, or noncancellable accident and health insurance contract (or any combination thereof).
'(B) EXCEPTIONS.--The term 'specified insurance contract' shall not include--
'(i) any pension plan contract (as defined in section 818(a)),
'(ii) any flight insurance or similar contract, and
'(iii) any qualified foreign contract (as defined in section 807(e)(4) without regard to paragraph (5) of this subsection).
'(A) which covers a group of individuals defined by reference to employment relationship, membership in an organization, or similar factor,
'(B) the premiums for which are determined on a group basis, and
'(C) the proceeds of which are payable to (or for the benefit of) persons other than the employer of the insured, an organization to which the insured belongs, or other similar person.
'(3) TREATMENT OF ANNUITY CONTRACTS COMBINED WITH NONCANCELLABLE ACCIDENT AND HEALTH INSURANCE.--Any annuity contract combined with noncancellable accident and health insurance shall be treated as a noncancellable accident and health insurance contract and not as an annuity contract.
'(4) TREATMENT OF GUARANTEED RENEWABLE CONTRACTS.--The rules of section 816(e) shall apply for purposes of this section.
'(5) TREATMENT OF REINSURANCE CONTRACT.--A contract which reinsures another contract shall be treated in the same manner as the reinsured contract.
'(f) SPECIAL RULE WHERE NEGATIVE NET PREMIUMS.--
'(1) IN GENERAL.--If for any taxable year there is a negative capitalization amount with respect to any category of specified insurance contracts set forth in subsection (c)(1)--
'(A) the amount otherwise required to be capitalized under this section for such taxable year with respect to any other category of specified insurance contracts shall be reduced (but not below zero) by such negative capitalization amount, and
'(B) such negative capitalization amount (to the extent not taken into account under subparagraph (A))--
'(i) shall reduce (but not below zero) the unamortized balance (as of the beginning of such taxable year) of the amounts previously capitalized under subsection (a) (beginning with the amount capitalized for the most recent taxable year), and
'(ii) to the extent taken into account as such a reduction, shall be allowed as a deduction for such taxable year.
'(A) the amount determined under subparagraph (B) of subsection (d)(1) with respect to such category, exceeds
'(B) the amount determined under subparagraph (A) of subsection (d)(1) with respect to such category.
'(h) SECRETARIAL AUTHORITY TO ADJUST CAPITALIZATION AMOUNTS.--
'(1) IN GENERAL.--Except as provided in paragraph (2), the Secretary may provide that a type of insurance contract will be treated as a separate category for purposes of this section (and prescribe a percentage applicable to such category) if the Secretary determines that the deferral of acquisition expenses for such type of contract which would otherwise result under this section is substantially greater than the deferral of acquisition expenses which would have resulted if actual acquisition expenses (including indirect expenses) and the actual useful life for such type of contract had been used.
'(2) ADJUSTMENT TO OTHER CONTRACTS.--If the Secretary exercises his authority with respect to any type of contract under paragraph (1), the Secretary shall adjust the percentage which would otherwise have applied under subsection (c)(1) to the category which includes such type of contract so that the exercise of such authority does not result in a decrease in the amount of revenue received under this chapter by reason of this section for any fiscal year.
'(i) TREATMENT OF QUALIFIED FOREIGN CONTRACTS UNDER ADJUSTED CURRENT EARNINGS PREFERENCE.--For purposes of determining adjusted current earnings under section 56(g), acquisition expenses with respect to contracts described in clause (iii) of subsection (e)(1)(B) shall be capitalized and amortized in accordance with the treatment generally required under generally accepted accounting principles as if this subsection applied to such contracts for all taxable years.
'(j) TRANSITIONAL RULE.--In the case of any taxable year which includes September 30, 1990, the amount taken into account as the net premiums (or negative capitalization amount) with respect to any category of specified insurance contracts shall be the amount which bears the same ratio to the amount which (but for this subsection) would be so taken into account as the number of days in such taxable year on or after September 30, 1990, bears to the total number of days in such taxable year.'
(b) REPEAL OF SPECIAL TREATMENT OF ACQUISITION EXPENSES UNDER MINIMUM TAX.--Paragraph (4) of section 56(g) is amended by striking subparagraph (F) and redesignating subparagraphs (G) and (H) as subparagraphs (F) and (G), respectively.
(c) CLERICAL AMENDMENT.--The table of sections for part III of subchapter L of chapter 1 is amended by adding at the end thereof the following new item:
'Sec. 848. Capitalization of certain policy acquisition expenses.'
(d) EFFECTIVE DATE.--
(1) IN GENERAL.--The amendments made by subsections (a) and (c) shall apply to taxable years ending on or after September 30, 1990. Any capitalization required by reason of such amendments shall not be treated as a change in method of accounting for purposes of the Internal Revenue Code of 1986.
(2) SUBSECTION (b).--
(A) IN GENERAL.--The amendment made by subsection (b) shall apply to taxable years beginning on or after September 30, 1990, except that, in the case of a small insurance company, such amendment shall apply to taxable years beginning after December 31, 1989. For purposes of this paragraph, the term 'small insurance company' means any insurance company which meets the requirements of section 806(a)(3) of the Internal Revenue Code of 1986; except that paragraph (2) of section 806(c) of such Code shall not apply.
(B) SPECIAL RULES FOR YEAR WHICH INCLUDES SEPTEMBER 30, 1990.--In the case of any taxable year which includes September 30, 1990, the amount of acquisition expenses which is required to be capitalized under section 56(g)(4)(F) of the Internal Revenue Code of 1986 (as in effect before the amendment made by subsection (b)) by a company which is not a small insurance company shall be the amount which bears the same ratio to the amount which (but for this subparagraph) would be so required to be capitalized as the number of days in such taxable year before September 30, 1990, bears to the total number of days in such taxable year. A similar reduction shall be made in the amount amortized for such taxable year under such section 56(g)(4)(F).
(a) GENERAL RULE.--Subsection (e) of section 807 (relating to special rules for computing reserves) is amended by adding at the end thereof the following new paragraph:
'(7) SPECIAL RULES FOR TREATMENT OF CERTAIN NONLIFE RESERVES.--
'(A) IN GENERAL.--The amount taken into account for purposes of subsections (a) and (b) as--
'(i) the opening balance of the items referred to in subparagraph (C), and
'(ii) the closing balance of such items,
shall be 80 percent of the amount which (without regard to this subparagraph) would have been taken into account as such opening or closing balance, as the case may be.
'(B) TRANSITIONAL RULE.--
'(i) IN GENERAL.--In the case of any taxable year beginning on or after September 30, 1990, and before September 30, 1996, there shall be included in the gross income of any life insurance company an amount equal to 3-1/3 percent of such company's closing balance of the items referred to in subparagraph (C) for its most recent taxable year beginning before September 30, 1990.
'(ii) TERMINATION AS LIFE INSURANCE COMPANY.--Except as provided in section 381(c)(22), if, for any taxable year beginning on or before September 30, 1996, the taxpayer ceases to be a life insurance company, the aggregate inclusions which would have been made under clause (i) for such taxable year and subsequent taxable years but for such cessation shall be taken into account for the taxable year preceding such cessation year.
'(C) DESCRIPTION OF ITEMS.--For purposes of this paragraph, the items referred to in this subparagraph are the items described in subsection (c) which consist of unearned premiums and premiums received in advance under insurance contracts not described in section 816(b)(1)(B).'
SEC. 11303. TREATMENT OF LIFE INSURANCE RESERVES OF INSURANCE COMPANIES WHICH ARE NOT LIFE INSURANCE COMPANIES.
(a) GENERAL RULE.--Paragraph (4) of section 832(b) (defining premiums earned) is amended by striking 'section 807, pertaining' and all that follows down through the period at the end of the first sentence which follows subparagraph (C) and inserting 'section 807.'.
(b) TECHNICAL AMENDMENT.--Subparagraph (A) of section 832(b)(7) is amended--
(1) by striking 'amounts included in unearned premiums under the 2nd sentence of such subparagraph' and inserting 'insurance contracts described in section 816(b)(1)(B)', and
(2) by striking 'such amounts into account' and inserting 'such contracts into account'.
(c) EFFECTIVE DATE.--
(1) IN GENERAL.--The amendments made by this section shall apply to taxable years beginning on or after September 30, 1990.
(2) AMENDMENTS TREATED AS CHANGE IN METHOD OF ACCOUNTING.--In the case of any taxpayer who is required by reason of the amendments made by this section to change his method of computing reserves--
(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,
(C) such change shall be treated as having been made with the consent of the Secretary, and
(D) the net adjustments which are required by section 481 of the Internal Revenue Code of 1986 to be taken into account by the taxpayer shall be taken into account over a period not to exceed 4 taxable years beginning with the taxpayer's first taxable year beginning on or after September 30, 1990.
(3) COORDINATION WITH SECTION 832(b)(4)(C).--The amendments made by this section shall not affect the application of section 832(b)(4)(C) of the Internal Revenue Code of 1986.
SEC. 11305. TREATMENT OF SALVAGE RECOVERABLE.
(a) GENERAL RULE.--Subparagraph (A) of section 832(b)(5) (defining losses incurred) is amended to read as follows:
'(i) To losses paid during the taxable year, deduct salvage and reinsurance recovered during the taxable year.
'(ii) To the result so obtained, add all unpaid losses on life insurance contracts plus all discounted unpaid losses (as defined in section 846) outstanding at the end of the taxable year and deduct all unpaid losses on life insurance contracts plus all discounted unpaid losses outstanding at the end of the preceding taxable year.
'(iii) To the results so obtained, add estimated salvage and reinsurance recoverable as of the end of the preceding taxable year and deduct estimated salvage and reinsurance recoverable as of the end of the taxable year.
The amount of estimated salvage recoverable shall be determined on a discounted basis in accordance with procedures established by the Secretary.'
(c) EFFECTIVE DATE.--
(1) IN GENERAL.--The amendments made by this section shall apply to taxable years beginning after December 31, 1989.
(2) AMENDMENTS TREATED AS CHANGE IN METHOD OF ACCOUNTING.--
(A) IN GENERAL.--In the case of any taxpayer who is required by reason of the amendments made by this section to change his method of computing losses incurred--
(i) such change shall be treated as a change in a method of accounting,
(ii) such change shall be treated as initiated by the taxpayer, and
(iii) such change shall be treated as having been made with the consent of the Secretary.
(B) ADJUSTMENTS.--In applying section 481 of the Internal Revenue Code of 1986 with respect to the change referred to in subparagraph (A)--
(i) only 13 percent of the net amount of adjustments (otherwise required by such section 481 to be taken into account by the taxpayer) shall be taken into account, and
(ii) the portion of such net adjustments which is required to be taken into account by the taxpayer (after the application of clause (i)) shall be taken into account over a period not to exceed 4 taxable years beginning with the taxpayer's 1st taxable year beginning after December 31, 1989.
(4) SPECIAL RULE FOR OVERESTIMATES.--If for any taxable year beginning after December 31, 1989--
(A) the amount of the section 481 adjustment which would have been required without regard to paragraph (2) and any discounting, exceeds
(B) the sum of the amount of salvage recovered taken into account under section 832(b)(5)(A)(i) for the taxable year and any preceding taxable year beginning after December 31, 1989, attributable to losses incurred with respect to any accident year beginning before 1990 and the undiscounted amount of estimated salvage recoverable as of the close of the taxable year on account of such losses,
87 percent of such excess (adjusted for discounting used in determining the amount of salvage recoverable as of the close of the last taxable year of the taxpayer beginning before January 1, 1990) shall be included in gross income for such taxable year.
(5) EFFECT ON EARNINGS AND PROFITS.--The earnings and profits of any insurance company for its 1st taxable year beginning after December 31, 1989, shall be increased by the amount of the section 481 adjustment which would have been required but for paragraph (2). For purposes of applying sections 56, 902, 952(c)(1), and 960 of the Internal Revenue Code of 1986, earnings and profits of a corporation shall be determined by applying the principles of paragraph (2)(B).
SEC. 11307. WAIVER OF ESTIMATED TAX PENALTIES.
No addition to tax shall be made under section 6655 of the Internal Revenue Code of 1986 for any period before March 16, 1991, with respect to any underpayment to the extent such underpayment was created or increased by any provision of this part.
SEC. 11311. SUSPENSION OF STATUTE OF LIMITATIONS DURING PROCEEDINGS TO ENFORCE CERTAIN SUMMONSES.
(a) GENERAL RULE.--Section 6503 (relating to suspension of running of period of limitation) is amended by redesignating subsection (k) as subsection (l) and by inserting after subsection (j) the following new subsection:
'(k) EXTENSION IN CASE OF CERTAIN SUMMONSES.--
'(1) IN GENERAL--If any designated summons is issued by the Secretary with respect to any return of tax by a corporation, the running of any period of limitations provided in section 6501 on the assessment of such tax shall be suspended--
'(A) during any judicial enforcement period--
'(i) with respect to such summons, or
'(ii) with respect to any other summons which is issued during the 30-day period which begins on the date on which such designated summons is issued and which relates to the same return as such designated summons, and
'(B) if the court in any proceeding referred to in paragraph (3) requires any compliance with a summons referred to in subparagraph (A), during the 120-day period beginning with the 1st day after the close of the suspension under subparagraph (A).
If subparagraph (B) does not apply, such period shall in no event expire before the 60th day after the close of the suspension under subparagraph (A).
'(2) DESIGNATED SUMMONS.--For purposes of this subsection--
'(A) IN GENERAL.--The term 'designated summons' means any summons issued for purposes of determining the amount of any tax imposed by this title if--
'(i) such summons is issued at least 60 days before the day on which the period prescribed in section 6501 for the assessment of such tax expires (determined with regard to extensions), and
'(ii) such summons clearly states that it is a designated summons for purposes of this subsection.
'(B) LIMITATION.--A summons which relates to any return shall not be treated as a designated summons if a prior summons which relates to such return was treated as a designated summons for purposes of this subsection.
'(3) JUDICIAL ENFORCEMENT PERIOD.--For purposes of this subsection, the term 'judicial enforcement period' means, with respect to any summons, the period--
'(A) which begins on the day on which a court proceeding with respect to such summons is brought, and
'(B) which ends on the day on which there is a final resolution as to the summoned person's response to such summons.'
SEC. 11312. ACCURACY-RELATED PENALTY TO APPLY TO SECTION 482 ADJUSTMENTS.
(a) GENERAL RULE.--Subsection (e) of section 6662 (defining substantial valuation overstatement under chapter 1) is amended to read as follows:
'(e) SUBSTANTIAL VALUATION MISSTATEMENT UNDER CHAPTER 1.--
'(1) IN GENERAL.--For purposes of this section, there is a substantial valuation misstatement under chapter 1 if--
'(A) the value of any property (or the adjusted basis of any property) claimed on any return of tax imposed by chapter 1 is 200 percent or more of the amount determined to be the correct amount of such valuation or adjusted basis (as the case may be), or
'(B)(i) the price for any property or services (or for the use of property) claimed on any such return in connection with any transaction between persons described in section 482 is 200 percent or more (or 50 percent or less) of the amount determined under section 482 to be the correct amount of such price, or
'(ii) the net section 482 transfer price adjustment for the taxable year exceeds $10,000,000.
'(3) NET SECTION 482 TRANSFER PRICE ADJUSTMENT.--For purposes of this subsection--
'(A) IN GENERAL.--The term 'net section 482 transfer price adjustment' means, with respect to any taxable year, the net increase in taxable income for the taxable year (determined without regard to any amount carried to such taxable year from another taxable year) resulting from adjustments under section 482 in the price for any property or services (or for the use of property).
'(B) CERTAIN ADJUSTMENTS EXCLUDED IN DETERMINING THRESHOLD.--For purposes of determining whether the $10,000,000 threshold requirement of paragraph (1)(B)(ii) is met, there shall be excluded--
'(i) any portion of the net increase in taxable income referred to in subparagraph (A) which is attributable to any redetermination of a price if it is shown that there was a reasonable cause for the taxpayer's determination of such price and that the taxpayer acted in good faith with respect to such price, and
'(ii) any portion of such net increase which is attributable to any transaction solely between foreign corporations unless, in the case of any of such corporations, the treatment of such transaction affects the determination of income from sources within the United States or taxable income effectively connected with the conduct of a trade or business within the United States.
'(C) SPECIAL RULE.--If the regular tax (as defined in section 55(c)) imposed by chapter 1 on the taxpayer is determined by reference to an amount other than taxable income, such amount shall be treated as the taxable income of such taxpayer for purposes of this paragraph.'
(1) Paragraph (3) of section 6662(b) is amended to read as follows:
'(3) Any substantial valuation misstatement under chapter 1.'
(2) Subparagraph (A) of section 6662(h)(2) is amended to read as follows:
'(A) any substantial valuation misstatement under chapter 1 as determined under subsection (e) by substituting--
'(i) '400 percent' for '200 percent' each place it appears,
'(ii) '25 percent' for '50 percent', and
'(iii) '$20,000,000' for '$10,000,000','.
SEC. 11313. TREATMENT OF PERSONS PROVIDING SERVICES.
(a) GENERAL RULE.--Subsection (n) of section 6103 (relating to certain other persons) is amended--
(1) by striking 'and the programming' and inserting 'the programming', and
(2) by inserting after 'of equipment,' the following 'and the providing of other services,'.
(b) EFFECTIVE DATE.--The amendment made by subsection (a) shall take effect on the date of the enactment of this Act.
SEC. 11314. APPLICATION OF AMENDMENTS MADE BY SECTION 7403 OF REVENUE RECONCILIATION ACT OF 1989 TO TAXABLE YEARS BEGINNING ON OR BEFORE JULY 10, 1989.
(a) GENERAL RULE.--The amendments made by section 7403 of the Revenue Reconciliation Act of 1989 shall apply to--
(1) any requirement to furnish information under section 6038A(a) of the Internal Revenue Code of 1986 (as amended by such section 7403) if the time for furnishing such information under such section is after the date of the enactment of this Act,
(2) any requirement under such section 6038A(a) to maintain records which were in existence on or after March 20, 1990,
(3) any requirement to authorize a corporation to act as a limited agent under section 6038A(e)(1) of such Code (as so amended) if the time for authorizing such action is after the date of the enactment of this Act, and
(4) any summons issued after such date of enactment,
without regard to when the taxable year (to which the information, records, authorization, or summons relates) began. Such amendments shall also apply in any case to which they would apply without regard to this section.
(b) CONTINUATION OF OLD FAILURES.--In the case of any failure with respect to a taxable year beginning on or before July 10, 1989, which first occurs on or before the date of the enactment of this Act but which continues after such date of enactment, section 6038A(d)(2) of the Internal Revenue Code of 1986 (as amended by subsection (c) of such section 7403) shall apply for purposes of determining the amount of the penalty imposed for 30-day periods referred to in such section 6038A(d)(2) which begin after the date of the enactment of this Act.
SEC. 11315. OTHER REPORTING REQUIREMENTS.
(a) GENERAL RULE.--Subpart A of part III of subchapter A of chapter 61 (relating to information concerning persons subject to special provisions) is amended by inserting after section 6038B the following new section:
'SEC. 6038C. INFORMATION WITH RESPECT TO FOREIGN CORPORATIONS ENGAGED IN U.S. BUSINESS.
'(a) REQUIREMENT.--If a foreign corporation (hereinafter in this section referred to as the 'reporting corporation') is engaged in a trade or business within the United States at any time during a taxable year--
'(1) such corporation shall furnish (at such time and in such manner as the Secretary shall by regulations prescribe) the information described in subsection (b), and
'(2) such corporation shall maintain (at the location, in the manner, and to the extent prescribed in regulations) such records as may be appropriate to determine the liability of such corporation for tax under this title as the Secretary shall by regulations prescribe (or shall cause another person to so maintain such records).
'(b) REQUIRED INFORMATION.--For purposes of subsection (a), the information described in this subsection is--
'(1) the information described in section 6038A(b), and
'(2) such other information as the Secretary may prescribe by regulations relating to any item not directly connected with a transaction for which information is required under paragraph (1).
'(c) PENALTY FOR FAILURE TO FURNISH INFORMATION OR MAINTAIN RECORDS.--The provisions of subsection (d) of section 6038A shall apply to--
'(1) any failure to furnish (within the time prescribed by regulations) any information described in subsection (b), and
'(2) any failure to maintain (or cause another to maintain) records as required by subsection (a),
in the same manner as if such failure were a failure to comply with the provisions of section 6038A.
'(d) ENFORCEMENT OF REQUESTS FOR CERTAIN RECORDS.--
'(1) AGREEMENT TO TREAT CORPORATION AS AGENT.--The rules of paragraph (3) shall apply to any transaction between the reporting corporation and any related party who is a foreign person unless such related party agrees (in such manner and at such time as the Secretary shall prescribe) to authorize the reporting corporation to act as such related party's limited agent solely for purposes of applying sections 7602, 7603, and 7604 with respect to any request by the Secretary to examine records or produce testimony related to any such transaction or with respect to any summons by the Secretary for such records or testimony. The appearance of persons or production of records by reason of the reporting corporation being such an agent shall not subject such persons or records to legal process for any purpose other than determining the correct treatment under this title of any transaction between the reporting corporation and such related party.
'(2) RULES WHERE INFORMATION NOT FURNISHED.--If--
'(A) for purposes of determining the amount of the reporting corporation's liability for tax under this title, the Secretary issues a summons to such corporation to produce (either directly or as an agent for a related party who is a foreign person) any records or testimony,
'(B) such summons is not quashed in a proceeding begun under paragraph (4) of section 6038A(e) (as made applicable by paragraph (4) of this subsection) and is not determined to be invalid in a proceeding begun under section 7604(b) to enforce such summons, and
'(C) the reporting corporation does not substantially comply in a timely manner with such summons and the Secretary has sent by certified or registered mail a notice to such reporting corporation that such reporting corporation has not so substantially complied,
the Secretary may apply the rules of paragraph (3) with respect to any transaction or item to which such summons relates (whether or not the Secretary begins a proceeding to enforce such summons). If the reporting corporation fails to maintain (or cause another to maintain) records as required by subsection (a), and by reason of that failure, the summons is quashed in a proceeding described in subparagraph (B) or the reporting corporation is not able to provide the records requested in the summons, the Secretary may apply the rules of paragraph (3) with respect to any transaction or item to which the records relate.
'(3) APPLICABLE RULES.--If the rules of this paragraph apply to any transaction or item, the treatment of such transaction (or the amount and treatment of any such item) shall be determined by the Secretary in the Secretary's sole discretion from the Secretary's own knowledge or from such information as the Secretary may obtain through testimony or otherwise.
'(4) JUDICIAL PROCEEDINGS.--The provisions of section 6038A(e)(4) shall apply with respect to any summons referred to in paragraph (2)(A); except that subparagraph (D) of such section shall be applied by substituting 'transaction or item' for 'transaction'.
'(e) DEFINITIONS.--For purposes of this section, the terms 'related party', 'foreign person', and 'records' have the respective meanings given to such terms by section 6038A(c).'
(b) CONFORMING AMENDMENTS.--
(1) Paragraph (1) of section 6038A(a) is amended by striking 'or is a foreign corporation engaged in trade or business within the United States'.
(2) The table of sections for subpart A of part III of subchapter A of chapter 61 is amended by inserting after the item relating to section 6038B the following new item:
(c) EFFECTIVE DATE.--The amendments made by this section shall apply to--
(1) any requirement to furnish information under section 6038C(a) of the Internal Revenue Code of 1986 (as added by this section) if the time for furnishing such information under such section is after the date of the enactment of this Act,
(2) any requirement under such section 6038C(a) to maintain records which were in existence on or after March 20, 1990,
(3) any requirement to authorize a corporation to act as a limited agent under section 6038C(d)(1) of such Code (as so added) if the time for authorizing such action is after the date of the enactment of this Act, and
(4) any summons issued after such date of enactment,
without regard to when the taxable year (to which the information, records, authorization, or summons relates) began.
SEC. 11316. STUDY OF SECTION 482.
(a) GENERAL RULE.--The Secretary of the Treasury or his delegate shall conduct a study of the application and administration of section 482 of the Internal Revenue Code of 1986. Such study shall include examination of--
(1) the effectiveness of the amendments made by this part in increasing levels of compliance with such section 482,
(2) use of advanced determination agreements with respect to issues under such section 482,
(3) possible legislative or administrative changes to assist the Internal Revenue Service in increasing compliance with such section 482, and
(4) coordination of the administration of such section 482 with similar provisions of foreign tax laws and with domestic nontax laws.
(b) REPORT.--Not later than March 1, 1992, the Secretary of the Treasury or his delegate shall submit to the Committee on Ways and Means of the House of Representatives and the Committee on Finance of the Senate a report on the study conducted under subsection (a), together with such recommendations as he may deem advisable.
SEC. 11317. 10-YEAR PERIOD OF LIMITATION ON COLLECTION AFTER ASSESSMENT.
(a) IN GENERAL.--Subsection (a) of section 6502 (relating to collection after assessment) is amended--
(1) by striking '6 years' in paragraph (1) and inserting '10 years', and
(2) by striking '6-year period' each place it appears in paragraph (2) and inserting '10-year period'.
(b) CONFORMING AMENDMENT.--Paragraph (3) of section 6323(g) is amended by striking '6 years' each place it appears and inserting '10 years'.
(c) EFFECTIVE DATE.--The amendments made by this section shall apply to--
(1) taxes assessed after the date of the enactment of this Act, and
(2) taxes assessed on or before such date if the period specified in section 6502 of the Internal Revenue Code of 1986 (determined without regard to the amendments made by subsection (a)) for collection of such taxes has not expired as of such date.
(a) CERTAIN MONETARY INSTRUMENTS TREATED AS CASH.--Subsection (d) of section 6050I (relating to returns relating to cash received in trade or business) is amended to read as follows:
'(d) CASH INCLUDES FOREIGN CURRENCY AND CERTAIN MONETARY INSTRUMENTS.--For purposes of this section, the term 'cash' includes--
'(1) foreign currency, and
'(2) to the extent provided in regulations prescribed by the Secretary, any monetary instrument (whether or not in bearer form) with a face amount of not more than $10,000.
Paragraph (2) shall not apply to any check drawn on the account of the writer in a financial institution referred to in subsection (c)(1)(B).'
(b) INCREASE IN PENALTY FOR INTENTIONAL DISREGARD OF REPORTING REQUIREMENT.--Paragraph (2) of section 6721(e) (relating to penalty for intentional disregard) is amended--
(1) by inserting '6050I,' after '6050H,' in subparagraph (A),
(2) by striking 'or' at the end of subparagraph (A),
(3) by striking 'and' at the end of subparagraph (B) and inserting 'or', and
(4) by inserting after subparagraph (B) the following new subparagraph:
'(C) in the case of a return required to be filed under section 6050I(a) with respect to any transaction (or related transactions), the greater of--
'(i) $25,000, or
'(ii) the amount of cash (within the meaning of section 6050I(d)) received in such transaction (or related transactions) to the extent the amount of such cash does not exceed $100,000, and'.
'(f) STRUCTURING TRANSACTIONS TO EVADE REPORTING REQUIREMENTS PROHIBITED.--'.
(d) STUDY.--The Secretary of the Treasury or his delegate shall conduct a study on the operation of section 6050I of the Internal Revenue Code of 1986. Such study shall include an examination of--
(1) the extent of compliance with the provisions of such section,
(2) the effectiveness of the penalties in ensuring compliance with the provisions of such section,
(3) methods to increase compliance with the provisions of such section and ways Form 8300 could be simplified, and
(4) appropriate methods to increase the usefulness and availability of information submitted under the provisions of such section.
Not later than March 31, 1991, the Secretary shall submit to the Committee on Ways and Means of the House of Representatives and the Committee on Finance of the Senate a report on the study conducted under this subsection, together with such recommendations as he may deem advisable.
(e) EFFECTIVE DATES.--
(1) The amendments made by subsections (a) and (b) shall apply to amounts received after the date of the enactment of this Act.
(2) The amendment made by subsection (c) shall take effect on the date of the enactment of this Act.
(3) Not later than June 1, 1991, the Secretary of the Treasury or his delegate shall prescribe regulations under section 6050I(d)(2) of the Internal Revenue Code of 1986 (as amended by this section).
(a) GENERAL RULE.--Subsection (c) of section 10511 of the Revenue Act of 1987 (relating to fees for requests for ruling, determination, and similar letters) is amended by adding at the end thereof the following new sentence: 'Subsection (a) shall also apply with respect to requests made after September 30, 1990, and before October 1, 1995.'
(b) EFFECTIVE DATE.--The amendment made by this section shall take effect on September 29, 1990, except that no advance payment shall be required for any fee for any requests filed after September 29, 1990, and before the 30th day after the date of the enactment of this Act.
SEC. 11321. RECOGNITION OF GAIN BY DISTRIBUTING CORPORATION IN CERTAIN SECTION 355 TRANSACTIONS.
(a) GENERAL RULE.--Section 355 (relating to distribution of stock and securities of a controlled corporation) is amended by striking subsection (c) and inserting the following new subsections:
'(c) TAXABILITY OF CORPORATION ON DISTRIBUTION.--
'(1) IN GENERAL.--Except as provided in paragraph (2), no gain or loss shall be recognized to a corporation on any distribution to which this section (or so much of section 356 as relates to this section) applies and which is not in pursuance of a plan of reorganization.
'(2) DISTRIBUTION OF APPRECIATED PROPERTY.--
'(A) IN GENERAL.--If--
'(i) in a distribution referred to in paragraph (1), the corporation distributes property other than qualified property, and
'(ii) the fair market value of such property exceeds its adjusted basis (in the hands of the distributing corporation),
then gain shall be recognized to the distributing corporation as if such property were sold to the distributee at its fair market value.
'(B) QUALIFIED PROPERTY.--For purposes of subparagraph (A), the term 'qualified property' means any stock or securities in the controlled corporation.
'(C) TREATMENT OF LIABILITIES.--If any property distributed in the distribution referred to in paragraph (1) is subject to a liability or the shareholder assumes a liability of the distributing corporation in connection with the distribution, then, for purposes of subparagraph (A), the fair market value of such property shall be treated as not less than the amount of such liability.
'(3) COORDINATION WITH SECTIONS 311 AND 336(a).--Sections 311 and 336(a) shall not apply to any distribution referred to in paragraph (1).
'(d) RECOGNITION OF GAIN ON CERTAIN DISTRIBUTIONS OF STOCK OR SECURITIES IN CONTROLLED CORPORATION.--
'(1) IN GENERAL.--In the case of a disqualified distribution, any stock or securities in the controlled corporation shall not be treated as qualified property for purposes of subsection (c)(2) of this section or section 361(c)(2).
'(2) DISQUALIFIED DISTRIBUTION.--For purposes of this subsection, the term 'disqualified distribution' means any distribution to which this section (or so much of section 356 as relates to this section) applies if, immediately after the distribution--
'(A) any person holds disqualified stock in the distributing corporation which constitutes a 50-percent or greater interest in such corporation, or
'(B) any person holds disqualified stock in the controlled corporation (or, if stock of more than 1 controlled corporation is distributed, in any controlled corporation) which constitutes a 50-percent or greater interest in such corporation.
'(3) DISQUALIFIED STOCK.--For purposes of this subsection, the term 'disqualified stock' means--
'(A) any stock in the distributing corporation acquired by purchase after October 9, 1990, and during the 5-year period ending on the date of the distribution, and
'(B) any stock in any controlled corporation--
'(i) acquired by purchase after October 9, 1990, and during the 5-year period ending on the date of the distribution, or
'(ii) received in the distribution to the extent attributable to distributions on--
'(I) stock described in subparagraph (A), or
'(II) any securities in the distributing corporation acquired by purchase after October 9, 1990, and during the 5-year period ending on the date of the distribution.
'(5) PURCHASE.--For purposes of this subsection--
'(A) IN GENERAL.--Except as otherwise provided in this paragraph, the term 'purchase' means any acquisition but only if--
'(i) the basis of the property acquired in the hands of the acquirer is not determined (I) in whole or in part by reference to the adjusted basis of such property in the hands of the person from whom acquired, or (II) under section 1014(a), and
'(ii) the property is not acquired in an exchange to which section 351, 354, 355, or 356 applies.
'(B) CERTAIN SECTION 351 EXCHANGES TREATED AS PURCHASES.--The term 'purchase' includes any acquisition of property in an exchange to which section 351 applies to the extent such property is acquired in exchange for--
'(i) any cash or cash item,
'(ii) any marketable stock or security, or
'(iii) any debt of the transferor.
'(C) CARRYOVER BASIS TRANSACTIONS.--If--
'(i) any person acquires property from another person who acquired such property by purchase (as determined under this paragraph with regard to this subparagraph), and
'(ii) the adjusted basis of such property in the hands of such acquirer is determined in whole or in part by reference to the adjusted basis of such property in the hands of such other person,
such acquirer shall be treated as having acquired such property by purchase on the date it was so acquired by such other person.
'(6) SPECIAL RULE WHERE SUBSTANTIAL DIMINUTION OF RISK.--
'(A) IN GENERAL.--If this paragraph applies to any stock or securities for any period, the running of any 5-year period set forth in subparagraph (A) or (B) of paragraph (3) (whichever applies) shall be suspended during such period.
'(B) PROPERTY TO WHICH SUSPENSION APPLIES.--This paragraph applies to any stock or securities for any period during which the holder's risk of loss with respect to such stock or securities, or with respect to any portion of the activities of the corporation, is (directly or indirectly) substantially diminished by--
'(i) an option,
'(ii) a short sale,
'(iii) any special class of stock, or
'(iv) any other device or transaction.
'(A) IN GENERAL.--For purposes of this subsection, a person and all persons related to such person (within the meaning of 267(b) or 707(b)(1)) shall be treated as one person.
'(B) PERSONS ACTING PURSUANT TO PLANS OR ARRANGEMENTS.--If two or more persons act pursuant to a plan or arrangement with respect to acquisitions of stock or securities in the distributing corporation or controlled corporation, such persons shall be treated as one person for purposes of this subsection.
'(8) ATTRIBUTION FROM ENTITIES.--
'(A) IN GENERAL.--Paragraph (2) of section 318(a) shall apply in determining whether a person holds stock or securities in any corporation (determined by substituting '10 percent' for '50 percent' in subparagraph (C) of such paragraph (2) and by treating any reference to stock as including a reference to securities).
'(B) DEEMED PURCHASE RULE.--If--
'(i) any person acquires by purchase an interest in any entity, and
'(ii) such person is treated under subparagraph (A) as holding any stock or securities by reason of holding such interest,
such stock or securities shall be treated as acquired by purchase by such person on the later of the date of the purchase of the interest in such entity or the date such stock or securities are acquired by purchase by such entity.
'(9) REGULATIONS.--The Secretary shall prescribe such regulations as may be necessary to carry out the purposes of this subsection, including--
'(A) regulations to prevent the avoidance of the purposes of this subsection through the use of related persons, intermediaries, pass-thru entities, options, or other arrangements, and
'(B) regulations modifying the definition of the term 'purchase'.'
'(5) CROSS REFERENCE.--
'For provision providing for recognition of gain in certain distributions, see section 355(d).'
(c) EFFECTIVE DATE.--
(1) IN GENERAL.--Except as otherwise provided in this subsection, the amendments made by this section shall apply to distributions after October 9, 1990.
(2) BINDING CONTRACT EXCEPTION.--The amendments made by this section shall not apply to any distribution pursuant to a written binding contract in effect on October 9, 1990, and at all times thereafter before such distribution.
(3) TRANSITIONAL RULES.--For purposes of subparagraphs (A) and (B) of section 355(d)(3) of the Internal Revenue Code of 1986 (as amended by subsection (a)), an acquisition shall be treated as occurring on or before October 9, 1990, if--
(A) such acquisition is pursuant to a written binding contract in effect on October 9, 1990, and at all times thereafter before such acquisition,
(B) such acquisition is pursuant to a transaction which was described in documents filed with the Securities and Exchange Commission on or before October 9, 1990, or
(C) such acquisition is pursuant to a transaction--
(i) the material terms of which were described in a written public announcement on or before October 9, 1990,
(ii) which was the subject of a prior filing with the Securities and Exchange Commission, and
(iii) which is the subject of a subsequent filing with the Securities and Exchange Commission before January 1, 1991.
(a) GENERAL RULE.--Subsection (c) of section 305 (relating to certain transactions treated as distributions) is amended by adding at the end thereof the following new sentence: 'Regulations prescribed under the preceding sentence shall provide that--
'(1) where the issuer of stock is required to redeem the stock at a specified time or the holder of stock has the option to require the issuer to redeem the stock, a redemption premium resulting from such requirement or option shall be treated as reasonable only if the amount of such premium does not exceed the amount determined under the principles of section 1273(a)(3),
'(2) a redemption premium shall not fail to be treated as a distribution (or series of distributions) merely because the stock is callable, and
'(3) in any case in which a redemption premium is treated as a distribution (or series of distributions), such premium shall be taken into account under principles similar to the principles of section 1272(a).'
(b) EFFECTIVE DATE.--
(1) IN GENERAL.--Except as provided in paragraph (2), the amendment made by subsection (a) shall apply to stock issued after October 9, 1990.
(2) EXCEPTION.--The amendment made by subsection (a) shall not apply to any stock issued after October 9, 1990, if--
(A) such stock is issued pursuant to a written binding contract in effect on October 9, 1990, and at all times thereafter before such issuance,
(B) such stock is issued pursuant to a registration or offering statement filed on or before October 9, 1990, with a Federal or State agency regulating the offering or sale of securities and such stock is issued before the date 90 days after the date of such filing, or
(C) such stock is issued pursuant to a plan filed on or before October 9, 1990, in a title 11 or similar case (as defined in section 368(a)(3)(A) of the Internal Revenue Code of 1986).
(a) EFFECT OF ALLOCATION AGREEMENTS.--Subsection (a) of section 1060 (relating to special allocation rules for certain asset allocations) is amended by adding at the end thereof the following new sentence:
'If in connection with an applicable asset acquisition, the transferee and transferor agree in writing as to the allocation of any consideration, or as to the fair market value of any of the assets, such agreement shall be binding on both the transferee and transferor unless the Secretary determines that such allocation (or fair market value) is not appropriate.'
(b) INFORMATION REQUIRED IN CASE OF CERTAIN TRANSFERS OF INTEREST IN ENTITIES.--
(1) IN GENERAL.--Section 1060 is amended by redesignating subsection (e) as subsection (f) and by inserting after subsection (d) the following new subsection:
'(e) INFORMATION REQUIRED IN CASE OF CERTAIN TRANSFERS OF INTERESTS IN ENTITIES.--
'(1) IN GENERAL.--If--
'(A) a person who is a 10-percent owner with respect to any entity transfers an interest in such entity, and
'(B) in connection with such transfer, such owner (or a related person) enters into an employment contract, covenant not to compete, royalty or lease agreement, or other agreement with the transferee,
such owner and the transferee shall, at such time and in such manner as the Secretary may prescribe, furnish such information as the Secretary may require.
'(2) 10-PERCENT OWNER.--For purposes of this subsection--
'(A) IN GENERAL.--The term '10-percent owner' means, with respect to any entity, any person who holds 10 percent or more (by value) of the interests in such entity immediately before the transfer.
'(B) CONSTRUCTIVE OWNERSHIP.--Section 318 shall apply in determining ownership of stock in a corporation. Similar principles shall apply in determining the ownership of interests in any other entity.
'(3) RELATED PERSON.--For purposes of this subsection, the term 'related person' means any person who is related (within the meaning of section 267(b) or 707(b)(1)) to the 10-percent owner.'
(2) TECHNICAL AMENDMENT.--Clause (x) of section 6724(d)(1)(B) is amended by striking 'section 1060(b)', and inserting 'subsection (b) or (e) of section 1060'.
(c) INFORMATION REQUIRED IN SECTION 338(h)(10) TRANSACTIONS.--
(1) IN GENERAL.--Paragraph (10) of section 338(h) is amended by adding at the end thereof the following new subparagraph:
'(C) INFORMATION REQUIRED TO BE FURNISHED TO THE SECRETARY.--Under regulations, where an election is made under subparagraph (A), the purchasing corporation and the common parent of the selling consolidated group shall, at such times and in such manner as may be provided in regulations, furnish to the Secretary the following information:
'(i) The amount allocated under subsection (b)(5) to goodwill or going concern value.
'(ii) Any modification of the amount described in clause (i).
'(iii) Any other information as the Secretary deems necessary to carry out the provisions of this paragraph.'
(1) IN GENERAL.--Except as provided in paragraph (2), the amendments made by this section shall apply to acquisitions after October 9, 1990.
(2) BINDING CONTRACT EXCEPTION.--The amendments made by this section shall not apply to any acquisition pursuant to a written binding contract in effect on October 9, 1990, and at all times thereafter before such acquisition.
(a) REPEAL OF EXCEPTION FOR ACQUISITIONS OF SUBSIDIARIES.--Clause (ii) of section 172(m)(3)(B) (relating to exceptions) is amended to read as follows:
(1) IN GENERAL.--Except as provided in paragraph (2), the amendment made by subsection (a) shall apply to acquisitions after October 9, 1990.
(2) BINDING CONTRACT EXCEPTION.--The amendment made by subsection (a) shall not apply to any acquisition pursuant to a written binding contract in effect on October 9, 1990, and at all times thereafter before such acquisition.
(a) ISSUANCE OF DEBT INSTRUMENT.--
(1) Subsection (e) of section 108 (relating to general rules for discharge of indebtedness) is amended by adding at the end thereof the following new paragraph:
'(11) INDEBTEDNESS SATISFIED BY ISSUANCE OF DEBT INSTRUMENT.--
'(A) IN GENERAL.--For purposes of determining income of a debtor from discharge of indebtedness, if a debtor issues a debt instrument in satisfaction of indebtedness, such debtor shall be treated as having satisfied the indebtedness with an amount of money equal to the issue price of such debt instrument.
'(B) ISSUE PRICE.--For purposes of subparagraph (A), the issue price of any debt instrument shall be determined under sections 1273 and 1274. For purposes of the preceding sentence, section 1273(b)(4) shall be applied by reducing the stated redemption price of any instrument by the portion of such stated redemption price which is treated as interest for purposes of this chapter.'
(2) Subsection (a) of section 1275 is amended by striking paragraph (4) and redesignating paragraph (5) as paragraph (4).
(b) LIMITATION ON STOCK FOR DEBT EXCEPTION.--
(1) IN GENERAL.--Subparagraph (B) of section 108(e)(10) is amended to read as follows:
'(B) EXCEPTION FOR CERTAIN STOCK IN TITLE 11 CASES AND INSOLVENT DEBTORS.--
'(i) IN GENERAL.--Subparagraph (A) shall not apply to any transfer of stock of the debtor (other than disqualified stock)--
'(I) by a debtor in a title 11 case, or
'(II) by any other debtor but only to the extent such debtor is insolvent.
'(ii) DISQUALIFIED STOCK.--For purposes of clause (i), the term 'disqualified stock' means any stock with a stated redemption price if--
'(I) such stock has a fixed redemption date,
'(II) the issuer of such stock has the right to redeem such stock at one or more times, or
'(III) the holder of such stock has the right to require its redemption at one or more times.'
'Any stock which is disqualified stock (as defined in paragraph (10)(B)(ii)) shall not be treated as stock for purposes of this paragraph.'
(c) EFFECTIVE DATE.--
(1) IN GENERAL.--Except as provided in paragraph (2), the amendments made by this section shall apply to debt instruments issued, and stock transferred, after October 9, 1990, in satisfaction of any indebtedness.
(2) EXCEPTIONS.--The amendments made by this section shall not apply to any debt instrument issued, or stock transferred, in satisfaction of any indebtedness if such issuance or transfer (as the case may be)--
(A) is in a title 11 or similar case (as defined in section 368(a)(3)(A) of the Internal Revenue Code of 1986) which was filed on or before October 9, 1990,
(B) is pursuant to a written binding contract in effect on October 9, 1990, and at all times thereafter before such issuance or transfer,
(C) is pursuant to a transaction which was described in documents filed with the Securities and Exchange Commission on or before October 9, 1990, or
(D) is pursuant to a transaction--
(i) the material terms of which were described in a written public announcement on or before October 9, 1990,
(ii) which was the subject of a prior filing with the Securities and Exchange Commission, and
(iii) which is the subject of a subsequent filing with the Securities and Exchange Commission before January 1, 1991.
SEC. 11331. INCREASE IN DOLLAR LIMITATION ON AMOUNT OF WAGES SUBJECT TO HOSPITAL INSURANCE TAX.
(a) HOSPITAL INSURANCE TAX.--
(1) IN GENERAL.--Paragraph (1) of section 3121(a) is amended--
(A) by striking 'contribution and benefit base (as determined under section 230 of the Social Security Act)' each place it appears and inserting 'applicable contribution base (as determined under subsection (x))', and
(B) by striking 'such contribution and benefit base' and inserting 'such applicable contribution base'.
(2) APPLICABLE CONTRIBUTION BASE.--Section 3121 is amended by adding at the end thereof the following new subsection:
'(x) APPLICABLE CONTRIBUTION BASE.--For purposes of this chapter--
'(1) OLD-AGE, SURVIVORS, AND DISABILITY INSURANCE.--For purposes of the taxes imposed by sections 3101(a) and 3111(a), the applicable contribution base for any calendar year is the contribution and benefit base determined under section 230 of the Social Security Act for such calendar year.
'(2) HOSPITAL INSURANCE.--For purposes of the taxes imposed by section 3101(b) and 3111(b), the applicable contribution base is--
'(A) $125,000 for calendar year 1991, and
'(B) for any calendar year after 1991, the applicable contribution base for the preceding year adjusted in the same manner as is used in adjusting the contribution and benefit base under section 230(b) of the Social Security Act.'
(1) IN GENERAL.--Subsection (b) of section 1402 is amended by striking 'the contribution and benefit base (as determined under section 230 of the Social Security Act)' and inserting 'the applicable contribution base (as determined under subsection (k))'.
(2) APPLICABLE CONTRIBUTION BASE.--Section 1402 is amended by adding at the end thereof the following new subsection:
'(k) APPLICABLE CONTRIBUTION BASE.--For purposes of this chapter--
'(1) OLD-AGE, SURVIVORS, AND DISABILITY INSURANCE.--For purposes of the tax imposed by section 1401(a), the applicable contribution base for any calendar year is the contribution and benefit base determined under section 230 of the Social Security Act for such calendar year.
'(2) HOSPITAL INSURANCE.--For purposes of the tax imposed by section 1401(b), the applicable contribution base for any calendar year is the applicable contribution base determined under section 3121(x)(2) for such calendar year.'
(c) RAILROAD RETIREMENT TAX.--Clause (i) of section 3231(e)(2)(B) is amended to read as follows:
'(I) IN GENERAL.--Except as provided in subclause (II) of this clause and in clause (ii), the term 'applicable base' means for any calendar year the contribution and benefit base determined under section 230 of the Social Security Act for such calendar year.
'(II) HOSPITAL INSURANCE TAXES.--For purposes of applying so much of the rate applicable under section 3201(a) or 3221(a) (as the case may be) as does not exceed the rate of tax in effect under section 3101(b), and for purposes of applying so much of the rate of tax applicable under section 3211(a)(1) as does not exceed the rate of tax in effect under section 1401(b), the term 'applicable base' means for any calendar year the applicable contribution base determined under section 3121(x)(2) for such calendar year.'
(1) Paragraph (3) of section 6413(c) is amended to read as follows:
'(3) SEPARATE APPLICATION FOR HOSPITAL INSURANCE TAXES.--In applying this subsection with respect to--
'(A) the tax imposed by section 3101(b) (or any amount equivalent to such tax), and
'(B) so much of the tax imposed by section 3201 as is determined at a rate not greater than the rate in effect under section 3101(b),
the applicable contribution base determined under section 3121(x)(2) for any calendar year shall be substituted for 'contribution and benefit base (as determined under section 230 of the Social Security Act)' each place it appears.'
(2) Sections 3122 and 3125 are each amended by striking 'contribution and benefit base limitation' each place it appears and inserting 'applicable contribution base limitation'.
(e) EFFECTIVE DATE.--The amendments made by this section shall apply to 1991 and later calendar years.
SEC. 11332. COVERAGE OF CERTAIN STATE AND LOCAL EMPLOYEES UNDER SOCIAL SECURITY.
(a) EMPLOYMENT UNDER OASDI.--Paragraph (7) of section 210(a) of the Social Security Act (42 U.S.C. 410(a)(7)) is amended--
(1) by striking 'or' at the end of subparagraph (D);
(2) by striking the semicolon at the end of subparagraph (E) and inserting ', or'; and
(3) by adding at the end the following new subparagraph:
'(F) service in the employ of a State (other than the District of Columbia, Guam, or American Samoa), of any political subdivision thereof, or of any instrumentality of any one or more of the foregoing which is wholly owned thereby, by an individual who is not a member of a retirement system of such State, political subdivision, or instrumentality, except that the provisions of this subparagraph shall not be applicable to service performed--
'(i) by an individual who is employed to relieve such individual from unemployment;
'(ii) in a hospital, home, or other institution by a patient or inmate thereof;
'(iii) by any individual as an employee serving on a temporary basis in case of fire, storm, snow, earthquake, flood, or other similar emergency;
'(iv) by an election official or election worker if the remuneration paid in a calendar year for such service is less than $100; or
'(v) by an employee in a position compensated solely on a fee basis which is treated pursuant to section 211(c)(2)(E) as a trade or business for purposes of inclusion of such fees in net earnings from self employment;
for purposes of this subparagraph, except as provided in regulations prescribed by the Secretary of the Treasury, the term 'retirement system' has the meaning given such term by section 218(b)(4);'.
(1) by striking 'or' at the end of subparagraph (D);
(2) by striking the semicolon at the end of subparagraph (E) and inserting ', or'; and
(3) by adding at the end the following new subparagraph:
'(F) service in the employ of a State (other than the District of Columbia, Guam, or American Samoa), of any political subdivision thereof, or of any instrumentality of any one or more of the foregoing which is wholly owned thereby, by an individual who is not a member of a retirement system of such State, political subdivision, or instrumentality, except that the provisions of this subparagraph shall not be applicable to service performed--
'(i) by an individual who is employed to relieve such individual from unemployment;
'(ii) in a hospital, home, or other institution by a patient or inmate thereof;
'(iii) by any individual as an employee serving on a temporary basis in case of fire, storm, snow, earthquake, flood, or other similar emergency;
'(iv) by an election official or election worker if the remuneration paid in a calendar year for such service is less than $100; or
'(v) by an employee in a position compensated solely on a fee basis which is treated pursuant to section 1402(c)(2)(E) as a trade or business for purposes of inclusion of such fees in net earnings from self-employment;
for purposes of this subparagraph, except as provided in regulations prescribed by the Secretary, the term 'retirement system' has the meaning given such term by section 218(b)(4) of the Social Security Act;'.
(1) by striking 'and' at the end of subparagraph (D);
(2) by striking the period at the end of subparagraph (E) and inserting in lieu thereof ', and'; and
(3) by adding at the end the following new subparagraph:
'(F) service described in section 210(a)(7)(F) which is included as 'employment' under section 210(a).'.
SEC. 11333. EXTENSION OF FUTA SURTAX.
(a) IN GENERAL.--Section 3301 (relating to rate of FUTA tax) is amended--
(1) by striking '1988, 1989, and 1990' in paragraph (1) and inserting '1988 through 1995', and
(2) by striking '1991' in paragraph (2) and inserting '1996'.
(b) EFFECTIVE DATE.--The amendments made by this section shall apply to wages paid after December 31, 1990.
SEC. 11334. DEPOSITS OF PAYROLL TAXES.
(a) IN GENERAL.--80 Subsection (g) of section 6302 is amended to read as follows:
'(g) DEPOSITS OF SOCIAL SECURITY TAXES AND WITHHELD INCOME TAXES.--If, under regulations prescribed by the Secretary, a person is required to make deposits of taxes imposed by chapters 21 and 24 on the basis of eighth-month periods, such person shall make deposits of such taxes on the 1st banking day after any day on which such person has $100,000 or more of such taxes for deposit.'
(b) TECHNICAL AMENDMENT.--Paragraph (2) of section 7632(b) of the Revenue Reconciliation Act of 1989 is hereby repealed.
(c) EFFECTIVE DATE.--The amendments made by this section shall apply to amounts required to be deposited after December 31, 1990.
SEC. 11341. INCREASE IN RATE OF INTEREST PAYABLE ON LARGE CORPORATE UNDERPAYMENTS.
(a) GENERAL RULE.--Section 6621 (relating to determination of rate of interest) is amended by adding at the end thereof the following new subsection:
'(c) INCREASE IN UNDERPAYMENT RATE FOR LARGE CORPORATE UNDERPAYMENTS.--
'(1) IN GENERAL.--For purposes of determining the amount of interest payable under section 6601 on any large corporate underpayment for periods after the applicable date, paragraph (2) of subsection (a) shall be applied by substituting '5 percentage points' for '3 percentage points'.
'(2) APPLICABLE DATE.--For purposes of this subsection--
'(A) IN GENERAL.--The applicable date is the 30th day after the earlier of--
'(i) the date on which the 1st letter of proposed deficiency which allows the taxpayer an opportunity for administrative review in the Internal Revenue Service Office of Appeals is sent, or
'(ii) the date on which the deficiency notice under section 6212 is sent.
'(B) SPECIAL RULES.--
'(i) NONDEFICIENCY PROCEDURES.--In the case of any underpayment of any tax imposed by this subtitle to which the deficiency procedures do not apply, subparagraph (A) shall be applied by taking into account any letter or notice provided by the Secretary which notifies the taxpayer of the assessment or proposed assessment of the tax.
'(ii) EXCEPTION WHERE AMOUNTS PAID IN FULL.--For purposes of subparagraph (A), a letter or notice shall be disregarded if, during the 30-day period beginning on the day on which it was sent, the taxpayer makes a payment equal to the amount shown as due in such letter or notice, as the case may be.
'(A) IN GENERAL.--The term 'large corporate underpayment' means any underpayment of a tax by a C corporation for any taxable period if the amount of such underpayment for such period exceeds $100,000.
'(B) TAXABLE PERIOD.--For purposes of subparagraph (A), the term 'taxable period' means--
'(i) in the case of any tax imposed by subtitle A, the taxable year, or
'(ii) in the case of any other tax, the period to which the underpayment relates.'
SEC. 11342. DENIAL OF DEDUCTION FOR UNNECESSARY COSMETIC SURGERY.
(a) IN GENERAL.--Section 213(d) (defining medical care) is attended by adding at the end thereof the following new paragraph:
'(9) COSMETIC SURGERY.--
'(A) IN GENERAL.--The term 'medical care' does not include cosmetic surgery or other similar procedures, unless the surgery or procedure is necessary to ameliorate a deformity arising from, or directly related to, a congenital abnormality, a personal injury resulting from an accident or trauma, or disfiguring disease.
'(B) COSMETIC SURGERY DEFINED.--For purposes of this paragraph, the term 'cosmetic surgery' means any procedure which is directed at improving the patient's appearance and does not meaningfully promote the proper function of the body or prevent or treat illness or disease.'
SEC. 11343. SPECIAL RULES WHERE GRANTOR OF TRUST IS A FOREIGN PERSON.
(a) IN GENERAL.--Section 672 (relating to definitions and rules) is amended by adding at the end thereof the following new subsection:
'(f) SPECIAL RULE WHERE GRANTOR IS FOREIGN PERSON.--
'(1) IN GENERAL.--If--
'(A) but for this subsection, a foreign person would be treated as the owner of any portion of a trust, and
'(B) such trust has a beneficiary who is a United States person,
such beneficiary shall be treated as the grantor of such portion to the extent such beneficiary has made transfers of property by gift (directly or indirectly) to such foreign person. For purposes of the preceding sentence, any gift shall not be taken into account to the extent such gift would be excluded from taxable gifts under section 2503(b).
'(2) REGULATIONS.--The Secretary shall prescribe such regulations as may be necessary to carry out the purposes of this subsection.'
(b) EFFECTIVE DATE.--The amendments made by this section shall apply to--
(1) any trust created after the date of the enactment of this Act, and
(2) any portion of a trust created on or before such date which is attributable to amounts contributed to the trust after such date.
Subparagraph (B) of section 57(a)(6) (relating to appreciated property charitable deduction) is amended by adding at the end thereof the following new sentence: 'In the case of any taxable year beginning in 1991, such term shall not include any tangible personal property.'
SEC. 11401. ALLOCATION OF RESEARCH AND EXPERIMENTAL EXPENDITURES.
(a) EXTENSION.--Paragraph (5) of section 864(f) (relating to allocation of research and experimental expenditures) is amended to read as follows:
'(5) YEARS TO WHICH RULE APPLIES.--This subsection shall apply to the taxpayer's first 2 taxable years beginning after August 1, 1989, and on or before August 1, 1991.'
(b) EFFECTIVE DATE.--The amendment made by subsection (a) shall apply to taxable years beginning after August 1, 1989.
SEC. 11402. RESEARCH CREDIT.
(a) EXTENSION.--Subsection (h) of section 41 (relating to credit for increasing research activities) is amended--
(1) by striking 'December 31, 1990' each place it appears and inserting 'December 31, 1991', and
(2) by striking 'January 1, 1991' each place it appears and inserting 'January 1, 1992'.
(b) CONFORMING AMENDMENTS.--
(1) Subsection (a) of section 7110 of the Revenue Reconciliation Act of 1989 is amended by striking paragraph (2).
(2) Subparagraph (D) of section 28(b)(1) is amended by striking 'December 31, 1990' and inserting 'December 31, 1991'.
(c) EFFECTIVE DATE.--The amendments made by this section shall apply to taxable years beginning after December 31, 1989.
SEC. 11403. EMPLOYER-PROVIDED EDUCATIONAL ASSISTANCE.
(a) IN GENERAL.--Subsection (d) of section 127 (relating to educational assistance programs) is amended by striking 'September 30, 1990' and inserting 'December 31, 1991'.
(b) REPEAL OF LIMITATION ON GRADUATE LEVEL ASSISTANCE.--Section 127(c)(1) is amended by striking the last sentence.
(c) CONFORMING AMENDMENT.--Subsection (a) of section 7101 of the Revenue Reconciliation Act of 1989 is amended by striking paragraph (2).
(d) EFFECTIVE DATES.--
(1) IN GENERAL.--Except as provided in paragraph (2), the amendments made by this section shall apply to taxable years beginning after December 31, 1989.
(2) SUBSECTION (b).--The amendment made by subsection (b) shall apply to taxable years beginning after December 31, 1990.
(a) IN GENERAL.--Subsection (e) of section 120 (relating to amounts received under qualified group legal services plans) is amended by striking 'September 30, 1990' and inserting 'December 31, 1991'.
(b) CONFORMING AMENDMENT.--Subsection (a) of section 7102 of the Revenue Reconciliation Act of 1989 is amended by striking paragraph (2).
(c) EFFECTIVE DATE.--The amendments made by this section shall apply to taxable years beginning after December 31, 1989.
SEC. 11405. TARGETED JOBS CREDIT.
(a) IN GENERAL.--Paragraph (4) of section 51(c) is amended by striking 'September 30, 1990' and inserting 'December 31, 1991'.
(b) AUTHORIZATION.--Paragraph (2) of section 261(f) of the Economic Recovery Act of 1981 is amended by striking 'fiscal year 1982' and all that follows through 'necessary' and inserting 'each fiscal year such sums as may be necessary'.
(c) EFFECTIVE DATES.--
(1) CREDIT.--The amendment made by subsection (a) shall apply to individuals who begin work for the employer after September 30, 1990.
(2) AUTHORIZATION.--The amendment made by subsection (b) shall apply to fiscal years beginning after 1990.
The table contained in section 46(b)(2)(A) (relating to energy percentage) is amended by striking 'Sept. 30, 1990' in clauses (viii) and (ix) and inserting 'Dec. 31, 1991'.
SEC. 11407. LOW-INCOME HOUSING CREDIT.
(a) EXTENSION.--
(1) IN GENERAL.--Subsection (o) of section 42 (relating to low-income housing credit) is amended--
(A) by striking '1990' each place it appears in paragraph (1) and inserting '1991', and
(B) by striking paragraph (2) and inserting the following new paragraph:
'(2) EXCEPTION FOR BOND-FINANCED BUILDINGS IN PROGRESS.--For purposes of paragraph (1)(B), a building shall be treated as placed in service before 1992 if--
'(A) the bonds with respect to such building are issued before 1992,
'(B) the taxpayer's basis in the project (of which the building is a part) as of December 31, 1991, is more than 10 percent of the taxpayer's reasonably expected basis in such project as of December 31, 1993, and
'(C) such building is placed in service before January 1, 1994.'
(2) CONFORMING AMENDMENT.--Subsection (a) of section 7108 of the Revenue Reconciliation Act of 1989 is amended by striking paragraph (2).
(3) EFFECTIVE DATE.--The amendments made by this subsection shall apply to calendar years after 1989.
(b) ADDITIONAL AMENDMENTS.--
(1) CLARIFICATION OF TENANT RIGHTS OF 1ST REFUSAL.--Paragraph (7) of section 42(i), as redesignated by subtitle G of this title, is amended by striking 'the tenants of such building' and inserting 'the tenants (in cooperative form or otherwise) or resident management corporation of such building or by a qualified nonprofit organization (as defined in subsection (h)(5)(C)) or government agency'.
(2) MONITORING NONCOMPLIANCE.--Clause (iv) of section 42(m)(1)(B) is amended to read as follows:
(A) IN GENERAL.--The last sentence of paragraph (2) of section 42(c), as added by subtitle G of this title, is amended by inserting before the period '(other than assistance under the Stewart B. McKinney Homeless Assistance Act of 1988 (as in effect on the date of the enactment of this sentence))'.
(6) AFDC RECIPIENT STUDENTS NOT TO DISQUALIFY UNIT.--Subparagraph (D) of section 42(i)(3) is amended to read as follows:
'(D) CERTAIN STUDENTS NOT TO DISQUALIFY UNIT.--A unit shall not fail to be treated as a low-income unit merely because it is occupied by an individual who is--
'(i) a student and receiving assistance under title IV of the Social Security Act, or
'(ii) enrolled in a job training program receiving assistance under the Job Training Partnership Act or under other similar Federal, State, or local laws.'
(A) IN GENERAL.--Subparagraph (B) of section 42(m)(2) is amended by striking 'and' at the end of clause (i), by striking the period at the end of clause (ii) and inserting ', and', and by adding at the end thereof the following:
'(iii) the percentage of the housing credit dollar amount used for project costs other than the cost of intermediaries.
Clause (iii) shall not be applied so as to impede the development of projects in hard-to-develop areas.'
(B) CONFORMING AMENDMENT.--Subparagraph (B) of section 42(m)(1) is amended by striking clause (ii) and by redesignating clauses (iii) and (iv) as clauses (ii) and (iii), respectively.
(8) 10-YEAR RULE NOT TO APPLY TO ACQUISITION OF CERTAIN SINGLE-FAMILY RESIDENCES.--Clause (ii) of section 42(d)(2)(D) is amended by striking 'or' at the end of subclause (III), by striking the period at the end of subclause (IV) and inserting ', or', and by adding at the end thereof the following:
(A) by inserting 'own an interest in the project (directly or through a partnership) and' after 'nonprofit organization is to' in subparagraph (B),
(B) by striking 'and' at the end of clause (i) of subparagraph (C), by redesignating clause (ii) of such subparagraph as clause (iii), and by inserting after clause (i) of such subparagraph the following new clause:
'(ii) such organization is determined by the State housing credit agency not to be affiliated with or controlled by a for-profit organization; and', and
(C) by inserting 'ownership and' before 'material participation' in subparagraph (D).
(10) EFFECTIVE DATES.--
(A) IN GENERAL.--Except as otherwise provided in this paragraph, the amendments made by this subsection shall apply to--
(i) determinations under section 42 of the Internal Revenue Code of 1986 with respect to housing credit dollar amounts allocated from State housing credit ceilings for calendar years after 1990, or
(ii) buildings placed in service after December 31, 1990, to the extent paragraph (1) of section 42(h) of such Code does not apply to any building by reason of paragraph (4) thereof, but only with respect to bonds issued after such date.
(B) TENANT RIGHTS, ETC.--The amendments made by paragraphs (1), (6), (8), and (9) shall take effect on the date of the enactment of this Act.
(C) MONITORING.--The amendment made by paragraph (2) shall take effect on January 1, 1992, and shall apply to buildings placed in service before, on, or after such date.
(D) STUDY.--The Inspector General of the Department of Housing and Urban Development and the Secretary of the Treasury shall jointly conduct a study of the effectiveness of the amendment made by paragraph (5) in carrying out the purposes of section 42 of the Internal Revenue Code of 1986. The report of such study shall be submitted not later than January 1, 1993, to the Committee on Ways and Means of the House of Representatives and the Committee on Finance of the Senate.
(1) IN GENERAL.--At the election of an individual, the credit determined under section 42 of the Internal Revenue Code of 1986 for the taxpayer's first taxable year ending on or after October 25, 1990, shall be 150 percent of the amount which would (but for this paragraph) be so allowable with respect to investments held by such individual on or before October 25, 1990.
(2) REDUCTION IN AGGREGATE CREDIT TO REFLECT INCREASED 1990 CREDIT.--The aggregate credit allowable to any person under section 42 of such Code with respect to any investment for taxable years after the first taxable year referred to in paragraph (1) shall be reduced on a pro rata basis by the amount of the increased credit allowable by reason of paragraph (1) with respect to such first taxable year. The preceding sentence shall not be construed to affect whether any taxable year is part of the credit, compliance, or extended use periods.
(3) ELECTION.--The election under paragraph (1) shall be made at the time and in the manner prescribed by the Secretary of the Treasury or his delegate, and, once made, shall be irrevocable. In the case of a partnership, such election shall be made by the partnership.
(a) IN GENERAL.--Subparagraph (B) of section 143(a)(1) (defining qualified mortgage bond) is amended by striking 'September 30, 1990' each place it appears and inserting 'December 31, 1991'.
(b) MORTGAGE CREDIT CERTIFICATES.--Subsection (h) of section 25 (relating to interest on certain home mortgages) is amended by striking 'September 30, 1990' and inserting 'December 31, 1991'.
(c) MODIFICATION AND SIMPLIFICATION OF RECAPTURE RULES.--
(1) MODIFICATION OF HOLDING PERIOD PERCENTAGE.--
(A) Clause (i) of section 143(m)(4)(C) is amended to read as follows:
'(i) IN GENERAL.--The term 'holding period percentage' means the percentage determined in accordance with the following table:
during a year after the The holding period
testing date which is: percentage is:
The 1st such year 20
The 2d such year 40
The 3d such year 60
The 4th such year 80
The 5th such year 100
The 6th such year 80
The 7th such year 60
The 8th such year 40
The 9th such year 20.'
(C) Subparagraph (B) of section 143(m)(2) is amended by striking '10 years' and inserting '9 years'.
(2) MODIFICATION OF RECAPTURE AMOUNT BASED ON TAXPAYER'S INCOME.--
(A) Subparagraph (A) of section 143(m)(4) is amended by striking 'and' at the end of clause (i), by striking the period at the end of clause (ii) and inserting ', and', and by adding at the end thereof the following new clause:
'(iii) the income percentage.'
(B) Paragraph (4) of section 143(m) is amended by adding at the end thereof the following new subparagraph:
'(E) INCOME PERCENTAGE.--The term 'income percentage' means the percentage (but not greater than 100 percent) which--
'(i) the excess of--
'(I) the modified adjusted gross income of the taxpayer for the taxable year in which the disposition occurs, over
'(II) the adjusted qualifying income for such taxable year, bears to
'(ii) $5,000.
The percentage determined under the preceding sentence shall be rounded to the nearest whole percentage point (or, if it includes a half of a percentage point, shall be increased to the nearest whole percentage point).'
(C)(i) Paragraph (5) of section 143(m) is amended by striking all that precedes subparagraph (C) and inserting the following:
'(5) ADJUSTED QUALIFYING INCOME; MODIFIED ADJUSTED GROSS INCOME.--
'(A) ADJUSTED QUALIFYING INCOME.--For purposes of paragraph (4), the term 'adjusted qualifying income' means the product of--
'(i) the highest family income which (as of the date the financing was provided) would have met the requirements of subsection (f) with respect to the residents, and
'(ii) 1.05 to the nth power where 'n' equals the number of full years during the period beginning on the date the financing was provided and ending on the date of the disposition.
For purposes of clause (i), highest family income shall be determined without regard to subsection (f)(3)(A) and on the basis of the number of members of the taxpayer's family as of the date of the disposition.'
(ii) Subparagraph (C) of section 143(m)(5) is redesignated as subparagraph (B) and is amended by striking 'this paragraph' and inserting 'paragraph (4)'.
(A) Paragraph (1) of section 143(m) is amended by striking 'increased by' and all that follows and inserting 'increased by the lesser of--
'(A) the recapture amount with respect to such indebtedness, or
'(B) 50 percent of the gain (if any) on the disposition of such interest.'
(B) Paragraph (6) of section 143(m) is amended--
(i) by striking 'LIMITATION' in the heading and inserting 'SPECIAL RULES RELATING TO LIMITATION',
(ii) by striking the first sentence of subparagraph (A), and
(iii) by striking 'the preceding sentence' in subparagraph (A) and inserting 'paragraph (1)'.
(C) Clause (ii) of section 143(m)(7)(B) is amended to read as follows:
'(ii) the adjusted qualifying income (as defined in paragraph (5)) for each category of family size for each year of the 9-year period beginning on the date the financing was provided.'
(1) BONDS.--The amendment made by subsection (a) shall apply to bonds issued after September 30, 1990.
(2) CERTIFICATES.--The amendment made by subsection (b) shall apply to elections for periods after September 30, 1990.
(3) SIMPLIFICATION.--The amendment made by subsection (c) shall take effect as if included in the amendments made by section 4005 of the Technical and Miscellaneous Revenue Act of 1988.
(a) IN GENERAL.--Subparagraph (B) of section 144(a)(12) (relating to termination dates) is amended by striking 'September 30, 1990' and inserting 'December 31, 1991'.
(b) EFFECTIVE DATE.--The amendment made by this section shall apply to bonds issued after September 30, 1990.
SEC. 11410. HEALTH INSURANCE COSTS OF SELF-EMPLOYED INDIVIDUALS.
(a) IN GENERAL.--Paragraph (6) of section 162(l) (relating to special rules for health insurance costs of self-employed individuals) is amended by striking 'September 30, 1990' and inserting 'December 31, 1991'.
(b) CONFORMING AMENDMENT.--Subsection (a) of section 7107 of the Revenue Reconciliation Act of 1989 is amended by striking paragraph (2).
(c) EFFECTIVE DATE.--The amendments made by this section shall apply to taxable years beginning after December 31, 1989.
SEC. 11411. EXPENSES FOR DRUGS FOR RARE CONDITIONS.
Subsection (e) of section 28 (relating to clinical testing expenses for certain drugs for rare diseases or conditions) is amended by striking 'December 31, 1990' and inserting 'December 31, 1991'.
SEC. 11501. EXTENSION AND MODIFICATION OF CREDIT FOR PRODUCING FUEL FROM NONCONVENTIONAL SOURCE.
(a) EXTENSION.--Section 29(f)(1) of the Internal Revenue Code of 1986 (relating to application of section) is amended--
(1) by striking '1991' in clauses (i) and (ii) of subparagraph (A) and inserting '1993', and
(2) by striking '2001' in subparagraph (B) and inserting '2003'.
(b) MODIFICATION WITH RESPECT TO GAS FROM TIGHT FORMATIONS.--
(1) IN GENERAL.--Subparagraph (B) of section 29(c)(2) of such Code is amended to read as follows:
'(B) SPECIAL RULES FOR GAS FROM TIGHT FORMATIONS.--The term 'gas produced from a tight formation' shall only include gas from a tight formation--
'(i) which, as of April 20, 1977, was committed or dedicated to interstate commerce (as defined in section 2(18) of the Natural Gas Policy Act of 1978, as in effect on the date of the enactment of this clause), or
'(ii) which is produced from a well drilled after such date of enactment.'
(c) COORDINATION WITH ENHANCED OIL RECOVERY CREDIT.--
(1) IN GENERAL.--Section 29(b) is amended by redesignating paragraph (5) as paragraph (6) and by inserting after paragraph (4) the following new paragraph:
'(5) CREDIT REDUCED FOR ENHANCED OIL RECOVERY CREDIT.--The amount allowable as a credit under subsection (a) with respect to any project for any taxable year (determined after application of paragraphs (1), (2), (3), and (4)) shall be reduced by the excess (if any) of--
'(A) the aggregate amount allowed under section 38 for the taxable year and any prior taxable year by reason of any enhanced oil recovery credit determined under section 43 with respect to such project, over
'(B) the aggregate amount recaptured with respect to the amount described in subparagraph (A) under this paragraph for any prior taxable year.'
(2) EFFECTIVE DATE.--The amendment made by paragraph (1) shall apply to taxable years beginning after December 31, 1990.
(a) ALLOWANCE OF CREDIT.--Section 40(a) (relating to alcohol used as fuel) is amended--
(1) by striking the period at the end of paragraph (2) and inserting ', plus', and
(2) by adding at the end thereof the following new paragraph:
'(3) in the case of an eligible small ethanol producer, the small ethanol producer credit.'
(b) SMALL ETHANOL PRODUCER CREDIT.--Subsection (b) of section 40 is amended--
(1) by redesignating paragraph (4) as paragraph (5),
(2) by inserting after paragraph (3) the following new paragraph:
'(4) SMALL ETHANOL PRODUCER CREDIT.--
'(A) IN GENERAL.--The small ethanol producer credit of any eligible small ethanol producer for any taxable year is 10 cents for each gallon of qualified ethanol fuel production of such producer.
'(B) QUALIFIED ETHANOL FUEL PRODUCTION.--For purposes of this paragraph, the term 'qualified ethanol fuel production' means any alcohol which is ethanol which is produced by an eligible small ethanol producer, and which during the taxable year--
'(i) is sold by such producer to another person--
'(I) for use by such other person in the production of a qualified mixture in such other person's trade or business (other than casual off-farm production),
'(II) for use by such other person as a fuel in a trade or business, or
'(III) who sells such ethanol at retail to another person and places such ethanol in the fuel tank of such other person, or
'(ii) is used or sold by such producer for any purpose described in clause (i).
'(C) LIMITATION.--The qualified ethanol fuel production of any producer for any taxable year shall not exceed 15,000,000 gallons.
'(D) ADDITIONAL DISTILLATION EXCLUDED.--The qualified ethanol fuel production of any producer for any taxable year shall not include any alcohol which is purchased by the producer and with respect to which such producer increases the proof of the alcohol by additional distillation.'; and
(3) by striking 'AND ALCOHOL CREDIT' in the heading for such subsection and inserting ', ALCOHOL CREDIT, AND SMALL ETHANOL PRODUCER CREDIT'.
(c) DEFINITIONS AND SPECIAL RULES FOR ELIGIBLE SMALL ETHANOL PRODUCER CREDIT.--Section 40 is amended by adding at the end thereof the following new subsection:
'(g) DEFINITIONS AND SPECIAL RULES FOR ELIGIBLE SMALL ETHANOL PRODUCER CREDIT.--For purposes of this section--
'(1) ELIGIBLE SMALL ETHANOL PRODUCER.--The term 'eligible small ethanol producer' means a person who, at all times during the taxable year, has a productive capacity for alcohol (as defined in subsection (d)(1)(A) without regard to clauses (i) and (ii)) not in excess of 30,000,000 gallons.
'(2) AGGREGRATION RULE.--For purposes of the 15,000,000 gallon limitation under subsection (b)(4)(C) and the 30,000,000 gallon limitation under paragraph (1), all members of the same controlled group of corporations (within the meaning of section 267(f)) and all persons under common control (within the meaning of section 52(b) but determined by treating an interest of more than 50 percent as a controlling interest) shall be treated as 1 person.
'(3) PARTNERSHIP, S CORPORATIONS, AND OTHER PASS-THRU ENTITIES.--In the case of a partnership, trust, S corporation, or other pass-thru entity, the limitations contained in subsection (b)(4)(C) and paragraph (1) shall be applied at the entity level and at the partner or similar level.
'(4) ALLOCATION.--For purposes of this subsection, in the case of a facility in which more than 1 person has an interest, productive capacity shall be allocated among such persons in such manner as the Secretary may prescribe.
'(5) REGULATIONS.--The Secretary may prescribe such regulations as may be necessary--
'(A) to prevent the credit provided for in subsection (a)(3) from directly or indirectly benefiting any person with a direct or indirect productive capacity of more than 30,000,000 gallons of alcohol during the taxable year, or
'(B) to prevent any person from directly or indirectly benefiting with respect to more than 15,000,000 gallons during the taxable year.'
(1) IN GENERAL.--Section 40(d)(3) is amended by redesignating subparagraph (C) as subparagraph (D) and by inserting after subparagraph (B) the following new subparagraph:
'(C) PRODUCER CREDIT.--If--
'(i) any credit was determined under subsection (a)(3), and
'(ii) any person does not use such fuel for a purpose described in subsection (b)(4)(B),
then there is hereby imposed on such person a tax equal to 10 cents a gallon for each gallon of such alcohol.'
(2) CONFORMING AMENDMENT.--Section 40(d)(3)(D), as redesignated by paragraph (1), is amended by striking 'subparagraph (A) or (B)' and inserting 'subparagraph (A), (B), or (C)'.
(e) REDUCED CREDIT FOR ETHANOL BLENDERS.--
(1) IN GENERAL.--Section 40, as amended by subsection (c), is amended by adding at the end thereof the following new subsection:
'(h) REDUCED CREDIT FOR ETHANOL BLENDERS.--In the case of any alcohol mixture credit or alcohol credit with respect to any alcohol which is ethanol--
'(1) subsections (b)(1)(A) and (b)(2)(A) shall be applied by substituting '54 cents' for '60 cents';
'(2) subsection (b)(3) shall be applied by substituting '40 cents' for '45 cents' and '54 cents' for '60 cents'; and
'(3) subparagraphs (A) and (B) of subsection (d)(3) shall be applied by substituting '54 cents' for '60 cents' and '40 cents' for '45 cents'.'
(2) CONFORMING AMENDMENT.--Section 40(b) is amended by inserting ', and except as provided in subsection (h)' in the matter preceding paragraph (1) thereof.
(f) TERMINATION.--Subsection (e) of section 40 is amended to read as follows:
'(e) TERMINATION.--
'(1) IN GENERAL.--This section shall not apply to any sale or use--
'(A) for any period after December 31, 2000, or
'(B) for any period before January 1, 2001, during which the Highway Trust Fund financing rate under section 4081(a)(2) is not in effect.
'(2) NO CARRYOVERS TO CERTAIN YEARS AFTER EXPIRATION.--If this section ceases to apply for any period by reason of paragraph (1), no amount attributable to any sale or use before the first day of such period may be carried under section 39 by reason of this section (treating the amount allowed by reason of this section as the first amount allowed by this subpart) to any taxable year beginning after the 3-taxable-year period beginning with the taxable year in which such first day occurs.'
(g) CONFORMING AMENDMENTS TO TARIFF SCHEDULE.--
(1) Heading 9901.00.50 of the Harmonized Tariff Schedule of the United States (19 U.S.C. 3007) is amended--
(A) by striking '15.85' each place it appears and inserting '14.27',
(B) by striking '12.6' and inserting '11.34', and
(C) by striking the date in the effective period column and inserting 'Before 10/1/2000, except that the rate for articles described in this heading shall not apply during any period before 10/1/2000 during which the Highway Trust Fund financing rate under section 4081(a)(2) of the Internal Revenue Code of 1986 is not in effect.'
(2) Heading 9901.00.52 of the Harmonized Tariff Schedule of the United States is amended--
(A) by striking '6.66' each place it appears and inserting '5.99',
(B) by striking '5.29' and inserting '4.76', and
(C) by striking 'The earlier of 12/31/92, or the date on which Treasury regulation sec. 1.40-1 is withdrawn or declared invalid.' in the effective period column and inserting: 'Before the earlier of 10/1/2000, or the date on which Treas. Reg. 1.40-1 is withdrawn or declared invalid, except that the rate for articles described in this heading shall not apply during any period before 10/1/2000 during which the Highway Trust Fund financing rate under section 4081(a)(2) of the Internal Revenue Code of 1986 is not in effect.'
(1) Except as provided in paragraph (2), the amendments made by this section shall apply to alcohol produced, and sold or used, in taxable years beginning after December 31, 1990.
(2) The amendments made by subsection (g) shall apply to articles entered or withdrawn from warehouse on or after January 1, 1991.
SEC. 11511. TAX CREDIT FOR ENHANCED OIL RECOVERY.
(a) IN GENERAL.--Subpart D of part IV of subchapter A of chapter 1 (relating to business related credits) is amended by adding at the end thereof the following new section:
'SEC. 43. ENHANCED OIL RECOVERY CREDIT.
'(a) GENERAL RULE.--For purposes of section 38, the enhanced oil recovery credit for any taxable year is an amount equal to 15 percent of the taxpayer's qualified enhanced oil recovery costs for such taxable year.
'(b) PHASE-OUT OF CREDIT AS CRUDE OIL PRICES INCREASE.--
'(1) IN GENERAL.--The amount of the credit determined under subsection (a) for any taxable year shall be reduced by an amount which bears the same ratio to the amount of such credit (determined without regard to this paragraph) as--
'(A) the amount by which the reference price for the calendar year preceding the calendar year in which the taxable year begins exceeds $28, bears to
'(B) $6.
'(2) REFERENCE PRICE.--For purposes of this subsection, the term 'reference price' means, with respect to any calendar year, the reference price determined for such calendar year under section 29(d)(2)(C).
'(3) INFLATION ADJUSTMENT.--
'(A) IN GENERAL.--In the case of any taxable year beginning in a calendar year after 1991, there shall be substituted for the $28 amount under paragraph (1)(A) an amount equal to the product of--
'(i) $28, multiplied by
'(ii) the inflation adjustment factor for such calendar year.
'(B) INFLATION ADJUSTMENT FACTOR.--The term 'inflation adjustment factor' means, with respect to any calendar year, a fraction the numerator of which is the GNP implicit price deflator for the preceding calendar year and the denominator of which is the GNP implicit price deflator for 1990. For purposes of the preceding sentence, the term 'GNP implicit price deflator' means the first revision of the implicit price deflator for the gross national product as computed and published by the Secretary of Commerce. Not later than April 1 of any calendar year, the Secretary shall publish the inflation adjustment factor for the preceding calendar year.
'(1) IN GENERAL.--The term 'qualified enhanced oil recovery costs' means any of the following:
'(A) Any amount paid or incurred during the taxable year for tangible property--
'(i) which is an integral part of a qualified enhanced oil recovery project, and
'(ii) with respect to which depreciation (or amortization in lieu of depreciation) is allowable under this chapter.
'(B) Any intangible drilling and development costs--
'(i) which are paid or incurred in connection with a qualified enhanced oil recovery project, and
'(ii) with respect to which the taxpayer may make an election under section 263(c) for the taxable year.
'(C) Any qualified tertiary injectant expenses which are paid or incurred in connection with a qualified enhanced oil recovery project and for which a deduction is allowable under section 193 for the taxable year.
'(2) QUALIFIED ENHANCED OIL RECOVERY PROJECT.--For purposes of this subsection--
'(A) IN GENERAL.--The term 'qualified enhanced oil recovery project' means any project--
'(i) which involves the application (in accordance with sound engineering principles) of 1 or more tertiary recovery methods (as defined in section 193(b)(3)) which can reasonably be expected to result in more than an insignificant increase in the amount of crude oil which will ultimately be recovered,
'(ii) which is located within the United States (within the meaning of section 638(1)), and
'(iii) with respect to which the first injection of liquids, gases, or other matter commences after December 31, 1990.
'(B) CERTIFICATION.--A project shall not be treated as a qualified enhanced oil recovery project unless the operator submits to the Secretary (at such times and in such manner as the Secretary provides) a certification from a petroleum engineer that the project meets (and continues to meet) the requirements of subparagraph (A).
'(3) AT-RISK LIMITATION.--For purposes of determining qualified enhanced oil recovery costs, rules similar to the rules of section 49(a)(1), section 49(a)(2), and section 49(b) shall apply.
'(4) SPECIAL RULE FOR CERTAIN GAS DISPLACEMENT PROJECTS.--For purposes of this section, immiscible non-hydrocarbon gas displacement shall be treated as a tertiary recovery method under section 193(b)(3).
'(d) OTHER RULES.--
'(1) DISALLOWANCE OF DEDUCTION.--Any deduction allowable under this chapter for any costs taken into account in computing the amount of the credit determined under subsection (a) shall be reduced by the amount of such credit attributable to such costs.
'(2) BASIS ADJUSTMENTS.--For purposes of this subtitle, if a credit is determined under this section for any expenditure with respect to any property, the increase in the basis of such property which would (but for this subsection) result from such expenditure shall be reduced by the amount of the credit so allowed.
'(e) ELECTION TO HAVE CREDIT NOT APPLY.--
'(1) IN GENERAL.--A taxpayer may elect to have this section not apply for any taxable year.
'(2) TIME FOR MAKING ELECTION.--An election under paragraph (1) for any taxable year may be made (or revoked) at any time before the expiration of the 3-year period beginning on the last date prescribed by law for filing the return for such taxable year (determined without regard to extensions).
'(3) MANNER OF MAKING ELECTION.--An election under paragraph (1) (or revocation thereof) shall be made in such manner as the Secretary may by regulations prescribe.'
(b) ADDITION TO GENERAL BUSINESS CREDIT.--
(1) IN GENERAL.--Section 38(b) (defining current year business credit) is amended by striking 'plus' at the end of paragraph (4), by striking the period at the end of paragraph (5) and inserting ', plus', and by adding at the end thereof the following new paragraph:
'(6) the enhanced oil recovery credit under section 43(a).'
(2) CARRYBACKS.--Section 39(d) is amended by adding at the end thereof the following new paragraph:
'(5) NO CARRYBACK OF ENHANCED OIL RECOVERY CREDIT BEFORE 1991.--No portion of the unused business credit for any taxable year which is attributable to the credit determined under section 43(a) (relating to enhanced oil recovery credit) may be carried to a taxable year beginning before January 1, 1991.'
(3) DEDUCTION FOR UNUSED CREDIT.--Section 196(c) is amended by striking 'and' at the end of paragraph (3), by striking the period at the end of paragraph (4) and inserting ', and', and by adding at the end thereof the following new paragraph:
'(5) the enhanced oil recovery credit determined under section 43(a).'
(c) CONFORMING AMENDMENTS.--
(1) The table of sections for subpart D of part IV of subchapter A of chapter 1 is amended by adding at the end thereof the following new item:
(d) EFFECTIVE DATES.--
(1) IN GENERAL.--The amendments made by this section shall apply to costs paid or incurred in taxable years beginning after December 31, 1990.
(2) SPECIAL RULE FOR SIGNIFICANT EXPANSION OF PROJECTS.--For purposes of section 43(c)(2)(A)(iii) of the Internal Revenue Code of 1986 (as added by subsection (a)), any significant expansion after December 31, 1990, of a project begun before January 1, 1991, shall be treated as a project with respect to which the first injection commences after December 31, 1990.
SEC. 11521. PERCENTAGE DEPLETION PERMITTED AFTER TRANSFER OF PROVEN PROPERTY.
(a) IN GENERAL.--Subsection (c) of section 613A (relating to limitations on percentage depletion in the case of oil and gas wells) is amended by striking paragraphs (9) and (10) and by redesignating paragraphs (11), (12), and (13) as paragraphs (9), (10), and (11), respectively.
(b) TECHNICAL AMENDMENT.--Paragraph (11) of section 613A(c), as redesignated by subsection (a), is amended by striking subparagraphs (C) and (D).
(c) EFFECTIVE DATE.--The amendments made by this section shall apply to transfers after October 11, 1990.
SEC. 11522. NET INCOME LIMITATION ON PERCENTAGE DEPLETION INCREASED FROM 50 PERCENT TO 100 PERCENT OF PROPERTY NET INCOME FOR OIL AND GAS PROPERTIES.
(a) IN GENERAL.--The second sentence of subsection (a) of section 613 (relating to percentage depletion) is amended by inserting '(100 percent in the case of oil and gas properties)' after '50 percent'.
(b) CONFORMING AMENDMENTS.--
(1) Subparagraph (C) of section 613A(c)(7) is amended by striking '50-percent' and inserting 'taxable income'.
(2) Section 614(d) is amended by striking '50 percent' and inserting 'taxable income'.
(c) EFFECTIVE DATE.--The amendments made by this section shall apply to taxable years beginning after December 31, 1990.
SEC. 11523. INCREASE IN PERCENTAGE DEPLETION ALLOWANCE FOR MARGINAL PRODUCTION.
(a) IN GENERAL.--Paragraph (6) of section 613A(c) is amended to read as follows:
'(6) OIL AND NATURAL GAS PRODUCED FROM MARGINAL PROPERTIES.--
'(A) IN GENERAL.--Except as provided in subsection (d) and subparagraph (B), the allowance for depletion under section 611 shall be computed in accordance with section 613 with respect to--
'(i) so much of the taxpayer's average daily marginal production of domestic crude oil as does not exceed the taxpayer's depletable oil quantity (determined without regard to paragraph (3)(A)(ii)), and
'(ii) so much of the taxpayer's average daily marginal production of domestic natural gas as does not exceed the taxpayer's depletable natural gas quantity (determined without regard to paragraph (3)(A)(ii)),
and the applicable percentage shall be deemed to be specified in subsection (b) of section 613 for purposes of subsection (a) of that section.
'(B) ELECTION TO HAVE PARAGRAPH APPLY TO PRO RATA PORTION OF MARGINAL PRODUCTION.--If the taxpayer elects to have this subparagraph apply for any taxable year, the rules of subparagraph (A) shall apply to the average daily marginal production of domestic crude oil or domestic natural gas of the taxpayer to which paragraph (1) would have applied without regard to this paragraph.
'(C) APPLICABLE PERCENTAGE.--For purposes of subparagraph (A), the term 'applicable percentage' means the percentage (not greater than 25 percent) equal to the sum of--
'(i) 15 percent, plus
'(ii) 1 percentage point for each whole dollar by which $20 exceeds the reference price for crude oil for the calendar year preceding the calendar year in which the taxable year begins.
For purposes of this paragraph, the term 'reference price' means, with respect to any calendar year, the reference price determined for such calendar year under section 29(d)(2)(C).
'(D) MARGINAL PRODUCTION.--The term 'marginal production' means domestic crude oil or domestic natural gas which is produced during any taxable year from a property which--
'(i) is a stripper well property for the calendar year in which the taxable year begins, or
'(ii) is a property substantially all of the production of which during such calendar year is heavy oil.
'(E) STRIPPER WELL PROPERTY.--For purposes of this paragraph, the term 'stripper well property' means, with respect to any calendar year, any property with respect to which the amount determined by dividing--
'(i) the average daily production of domestic crude oil and domestic natural gas from producing wells on such property for such calendar year, by
'(ii) the number of such wells,
is 15 barrel equivalents or less.
'(F) HEAVY OIL.--For purposes of this paragraph, the term 'heavy oil' means domestic crude oil produced from any property if such crude oil had a weighted average gravity of 20 degrees API or less (corrected to 60 degrees Fahrenheit).
'(G) AVERAGE DAILY MARGINAL PRODUCTION.--For purposes of this subsection--
'(i) the taxpayer's average daily marginal production of domestic crude oil or natural gas for any taxable year shall be determined by dividing the taxpayer's aggregate marginal production of domestic crude oil or natural gas, as the case may be, during the taxable year by the number of days in such taxable year, and
'(ii) in the case of a taxpayer holding a partial interest in the production from any property (including any interest held in any partnership), such taxpayer's production shall be considered to be that amount of such production determined by multiplying the total production of such property by the taxpayer's percentage participation in the revenues from such property.'
(1) by striking clause (ii) and inserting:
(c) EFFECTIVE DATE.--The amendments made by this section shall apply to taxable years beginning after December 31, 1990.
SEC. 11531. SPECIAL ENERGY DEDUCTION FOR MINIMUM TAX.
(a) IN GENERAL.--Section 56 (relating to adjustments in computing alternative minimum taxable income) is amended by adding at the end thereof the following new subsection:
'(h) ADJUSTMENT BASED ON ENERGY PREFERENCES.--
'(1) IN GENERAL.--In computing the alternative minimum taxable income of any taxpayer other than an integrated oil company for any taxable year beginning after 1990, there shall be allowed as a deduction an amount equal to the lesser of--
'(A) the alternative tax energy preference deduction, or
'(B) 40 percent of alternative minimum taxable income.
'(2) PHASE-OUT OF DEDUCTION AS OIL PRICES INCREASE.--The amount of the deduction under paragraph (1) (determined without regard to this paragraph) shall be reduced (but not below zero) by the amount which bears the same ratio to such amount as--
'(A) the excess of the reference price of crude oil for the calendar year preceding the calendar year in which the taxable year begins over $28, bears to
'(B) $6.
For purposes of this paragraph, the reference price for any calendar year shall be determined under section 29(d)(2)(C) and the $28 amount under subparagraph (A) shall be adjusted at the same time and in the same manner as under section 43(b)(3).
'(3) ALTERNATIVE TAX ENERGY PREFERENCE DEDUCTION.--For purposes of paragraph (1), the term 'alternative tax energy preference deduction' means an amount equal to the sum of--
'(A) in the case of the intangible drilling cost preference, an amount equal to the sum of--
'(i) 75 percent of the portion of the intangible drilling cost preference attributable to qualified exploratory costs, plus
'(ii) 15 percent of the excess (if any) of--
'(I) the intangible drilling cost preference, over
'(II) the portion of the intangible drilling cost preference attributable to qualified exploratory costs, plus
'(4) INTANGIBLE DRILLING COST PREFERENCE.--For purposes of this subsection--
'(A) IN GENERAL.--The term 'intangible drilling cost preference' means the amount by which alternative minimum taxable income would be reduced if it were computed without regard to section 57(a)(2) and subsection (g)(4)(D)(i).
'(B) PORTION ATTRIBUTABLE TO QUALIFIED EXPLORATORY COSTS.--For purposes of subparagraph (A), the portion of the intangible drilling cost preference attributable to qualified exploratory costs is an amount which bears the same ratio to the intangible drilling cost preference as--
'(i) the qualified exploratory costs of the taxpayer for the taxable year, bear to
'(ii) the total intangible drilling and development costs with respect to which the taxpayer may make an election under section 263(c) for the taxable year.
'(6) QUALIFIED EXPLORATORY COSTS.--For purposes of this subsection--
'(A) IN GENERAL.--The term 'qualified exploratory costs' means intangible drilling and development costs of a taxpayer other than an integrated oil company which--
'(i) the taxpayer may elect to deduct as expenses under section 263(c), and
'(ii) are paid or incurred in connection with the drilling of an exploratory well located in the United States (within the meaning of section 638(1)).
'(B) EXPLORATORY WELL.--The term 'exploratory well' means any of the following oil or gas wells:
'(i) An oil or gas well which is completed (or if not completed, with respect to which drilling operations cease) before the completion of any other well which--
'(I) is located within 1.25 miles from the well, and
'(II) is capable of production in commercial quantities.
'(ii) An oil or gas well which is not described in clause (i) but which has a total depth which is at least 800 feet below the deepest completion depth of any well within 1.25 miles which is capable of production in commercial quantities.
'(iii) An oil or gas well capable of production in commercial quantities which is not described in clause (i) or (ii) but which is completed into a new reservoir, except that this clause shall not apply to a gas well if the gas is produced (or to be produced) from Devonian shale, coal seams, or a tight formation (determined in a manner similar to the manner under section 29(c)(2)).
A well shall not be treated as an exploratory well unless the operator submits to the Secretary (at such time and in such manner as the Secretary may provide) a certification from a petroleum engineer that the well is described in one of the preceding clauses.
'(C) CERTAIN COSTS NOT INCLUDED.--The term 'qualified exploratory costs' shall not include any cost paid or incurred--
'(i) in constructing, acquiring, transporting, erecting, or installing an offshore platform, or
'(ii) with respect to the drilling of a well from an offshore platform unless it is the first well which penetrates a reservoir.
'(D) INTEGRATED OIL COMPANY.--For purposes of this paragraph, the term 'integrated oil company' means, with respect to any taxable year, any producer of crude oil to whom subsection (c) of section 613A does not apply by reason of paragraph (2) or (4) of section 613A(d).
'(7) SPECIAL RULES.--
'(A) ALTERNATIVE MINIMUM TAXABLE INCOME.--For purposes of paragraphs (1)(B), (4)(A), and (5), alternative minimum taxable income shall be determined without regard to the deduction allowable under this subsection and the alternative tax net operating loss deduction under subsection (a)(4).
'(B) GEOTHERMAL DEPOSITS.--For purposes of this subsection, intangible drilling and development costs shall not include costs with respect to wells drilled for any geothermal deposits (as defined in section 613(e)(3)).
'(8) REGULATIONS.--The Secretary may by regulation provide for appropriate adjustments in computing alternative minimum taxable income or adjusted current earnings for any taxable year following a taxable year for which a deduction was allowed under this subsection to ensure that no double benefit is allowed by reason of such deduction.'
(b) CONFORMING AMENDMENTS.--
(1) Section 56(d)(1)(A) is amended to read as follows:
'(A) the amount of such deduction shall not exceed the excess (if any) of--
'(i) 90 percent of alternative minimum taxable income determined without regard to such deduction and the deduction under subsection (h), over
'(ii) the deduction under subsection (h), and'.
(3) Section 59A(b)(1) is amended by inserting 'or the alternative tax energy preference deduction under section 56(h)' before ', and'.
(c) EFFECTIVE DATE.--The amendments made by this section shall apply to taxable years beginning after December 31, 1990.
SEC. 11601. REPEAL OF SECTION 2036(c).
(a) IN GENERAL.--Section 2036 (relating to transfers with retained life estate) is amended by striking subsection (c) and by redesignating subsection (d) as subsection (c).
(b) CONFORMING AMENDMENTS.--
(1) Section 2207B is amended--
(A) by striking subsection (b) and redesignating subsections (c), (d), and (e) as subsections (b), (c), and (d), respectively,
(B) by striking 'subsections (a) and (b)' in subsection (c) (as so redesignated) and inserting 'subsection (a)', and
(C) by striking 'subsections (a), (b), and (c)' in subsection (c) (as so redesignated) and inserting 'subsections (a) and (b)'.
(2) Section 2501(d) is amended by striking paragraph (3).
(c) EFFECTIVE DATE.--The amendments made by this section shall apply in the case of property transferred after December 17, 1987.
SEC. 11602. SPECIAL VALUATION RULES.
(a) IN GENERAL.--Subtitle B is amended by adding at the end thereof the following new chapter:
'CHAPTER 14--SPECIAL VALUATION RULES
'Sec. 2701. Special valuation rules in case of transfers of certain interests in corporations or partnerships.
'Sec. 2702. Special valuation rules in case of transfers of interests in trusts.
'Sec. 2703. Certain rights and restrictions disregarded.
'Sec. 2704. Treatment of certain lapsing rights and restrictions.
'SEC. 2701. SPECIAL VALUATION RULES IN CASE OF TRANSFERS OF CERTAIN INTERESTS IN CORPORATIONS OR PARTNERSHIPS.
'(a) VALUATION RULES.--
'(1) IN GENERAL.--Solely for purposes of determining whether a transfer of an interest in a corporation or partnership to (or for the benefit of) a member of the transferor's family is a gift (and the value of such transfer), the value of any right--
'(A) which is described in subparagraph (A) or (B) of subsection (b)(1), and
'(B) which is with respect to any applicable retained interest that is held by the transferor or an applicable family member immediately after the transfer,
shall be determined under paragraph (3). This paragraph shall not apply to the transfer of any interest for which market quotations are readily available (as of the date of transfer) on an established securities market.
'(2) EXCEPTIONS FOR MARKETABLE RETAINED INTERESTS, ETC.--Paragraph (1) shall not apply to any right with respect to an applicable retained interest if--
'(A) market quotations are readily available (as of the date of the transfer) for such interest on an established securities market,
'(B) such interest is of the same class as the transferred interest, or
'(C) such interest is proportionally the same as the transferred interest, without regard to nonlapsing differences in voting power (or, for a partnership, nonlapsing differences with respect to management and limitations on liability).
Subparagraph (C) shall not apply to any interest in a partnership if the transferor or an applicable family member has the right to alter the liability of the transferee of the transferred property. Except as provided by the Secretary, any difference described in subparagraph (C) which lapses by reason of any Federal or State law shall be treated as a nonlapsing difference for purposes of such subparagraph.
'(3) VALUATION OF RIGHTS TO WHICH PARAGRAPH (1) APPLIES.--
'(A) IN GENERAL.--The value of any right described in paragraph (1), other than a distribution right which consists of a right to receive a qualified payment, shall be treated as being zero.
'(B) VALUATION OF QUALIFIED PAYMENTS.--If--
'(i) any applicable retained interest confers a distribution right which consists of the right to a qualified payment, and
'(ii) there are 1 or more liquidation, put, call, or conversion rights with respect to such interest,
'(4) MINIMUM VALUATION OF JUNIOR EQUITY.--
'(A) IN GENERAL.--In the case of a transfer described in paragraph (1) of a junior equity interest in a corporation or partnership, such interest shall in no event be valued at an amount less than the value which would be determined if the total value of all of the junior equity interests in the entity were equal to 10 percent of the sum of--
'(i) the total value of all of the equity interests in such entity, plus
'(ii) the total amount of indebtedness of such entity to the transferor (or an applicable family member).
'(B) DEFINITIONS.--For purposes of this paragraph--
'(i) JUNIOR EQUITY INTEREST.--The term 'junior equity interest' means common stock or, in the case of a partnership, any partnership interest under which the rights as to income and capital are junior to the rights of all other classes of equity interests.
'(ii) EQUITY INTEREST.--The term 'equity interest' means stock or any interest as a partner, as the case may be.
'(1) IN GENERAL.--The term 'applicable retained interest' means any interest in an entity with respect to which there is--
'(A) a distribution right, but only if, immediately before the transfer described in subsection (a)(1), the transferor and applicable family members hold (after application of subsection (e)(3)) control of the entity, or
'(B) a liquidation, put, call, or conversion right.
'(2) CONTROL.--For purposes of paragraph (1)--
'(A) CORPORATIONS.--In the case of a corporation, the term 'control' means the holding of at least 50 percent (by vote or value) of the stock of the corporation.
'(B) PARTNERSHIPS.--In the case of a partnership, the term 'control' means--
'(i) the holding of at least 50 percent of the capital or profits interests in the partnership, or
'(ii) in the case of a limited partnership, the holding of any interest as a general partner.
'(1) DISTRIBUTION RIGHT.--
'(A) IN GENERAL.--The term 'distribution right' means--
'(i) a right to distributions from a corporation with respect to its stock, and
'(ii) a right to distributions from a partnership with respect to a partner's interest in the partnership.
'(B) EXCEPTIONS.--The term 'distribution right' does not include--
'(i) a right to distributions with respect to any junior equity interest (as defined in subsection (a)(4)(B)(i)),
'(ii) any liquidation, put, call, or conversion right, or
'(iii) any right to receive any guaranteed payment described in section 707(c) of a fixed amount.
'(A) IN GENERAL.--The term 'liquidation, put, call, or conversion right' means any liquidation, put, call, or conversion right, or any similar right, the exercise or nonexercise of which affects the value of the transferred interest.
'(B) EXCEPTION FOR FIXED RIGHTS.--
'(i) IN GENERAL.--The term 'liquidation, put, call, or conversion right' does not include any right which must be exercised at a specific time and at a specific amount.
'(ii) TREATMENT OF CERTAIN RIGHTS.--If a right is assumed to be exercised in a particular manner under subsection (a)(3)(B), such right shall be treated as so exercised for purposes of clause (i).
'(C) EXCEPTION FOR CERTAIN RIGHTS TO CONVERT.--The term 'liquidation, put, call, or conversion right' does not include any right which--
'(i) is a right to convert into a fixed number (or a fixed percentage) of shares of the same class of stock in a corporation as the transferred stock in such corporation under subsection (a)(1) (or stock which would be of the same class but for nonlapsing differences in voting power),
'(ii) is nonlapsing,
'(iii) is subject to proportionate adjustments for splits, combinations, reclassifications, and similar changes in the capital stock, and
'(iv) is subject to adjustments similar to the adjustments under subsection (d) for accumulated but unpaid distributions.
A rule similar to the rule of the preceding sentence shall apply for partnerships.
'(3) QUALIFIED PAYMENT.--
'(A) IN GENERAL.--Except as otherwise provided in this paragraph, the term 'qualified payment' means any dividend payable on a periodic basis under any cumulative preferred stock (or a comparable payment under any partnership interest) to the extent that such dividend (or comparable payment) is determined at a fixed rate.
'(B) TREATMENT OF VARIABLE RATE PAYMENTS.--For purposes of subparagraph (A), a payment shall be treated as fixed as to rate if such payment is determined at a rate which bears a fixed relationship to a specified market interest rate.
'(C) ELECTIONS.--
'(i) WAIVER OF QUALIFIED PAYMENT TREATMENT.--A transferor or applicable family member may elect with respect to payments under any interest specified in such election to treat such payments as payments which are not qualified payments.
'(ii) ELECTION TO HAVE INTEREST TREATED AS QUALIFIED PAYMENT.--A transferor or any applicable family member may elect to treat any distribution right as a qualified payment, to be paid in the amounts and at the times specified in such election. The preceding sentence shall apply only to the extent that the amounts and times so specified are not inconsistent with the underlying legal instrument giving rise to such right.
'(iii) ELECTIONS IRREVOCABLE.--Any election under this subparagraph with respect to an interest shall, once made, be irrevocable.
'(1) IN GENERAL.--If a taxable event occurs with respect to any distribution right to which subsection (a)(3)(B) applied, the following shall be increased by the amount determined under paragraph (2):
'(A) The taxable estate of the transferor in the case of a taxable event described in paragraph (3)(A)(i).
'(B) The taxable gifts of the transferor for the calendar year in which the taxable event occurs in the case of a taxable event described in paragraph (3)(A)(ii) or (iii).
'(2) AMOUNT OF INCREASE.--
'(A) IN GENERAL.--The amount of the increase determined under this paragraph shall be the excess (if any) of--
'(i) the value of the qualified payments payable during the period beginning on the date of the transfer under subsection (a)(1) and ending on the date of the taxable event determined as if--
'(I) all such payments were paid on the date payment was due, and
'(II) all such payments were reinvested by the transferor as of the date of payment at a yield equal to the discount rate used in determining the value of the applicable retained interest described in subsection (a)(1), over
'(ii) the value of such payments paid during such period computed under clause (i) on the basis of the time when such payments were actually paid.
'(B) LIMITATION ON AMOUNT OF INCREASE.--
'(i) IN GENERAL.--The amount of the increase under subparagraph (A) shall not exceed the applicable percentage of the excess (if any) of--
'(I) the value (determined as of the date of the taxable event) of all equity interests in the entity which are junior to the applicable retained interest, over
'(II) the value of such interests (determined as of the date of the transfer to which subsection (a)(1) applied).
'(ii) APPLICABLE PERCENTAGE.--For purposes of clause (i), the applicable percentage is the percentage determined by dividing--
'(I) the number of shares in the corporation held (as of the date of the taxable event) by the transferor which are applicable retained interests of the same class, by
'(II) the total number of shares in such corporation (as of such date) which are of the same class as the class described in subclause (I).
A similar percentage shall be determined in the case of interests in a partnership.
'(iii) DEFINITION.--For purposes of this subparagraph, the term 'equity interest' has the meaning given such term by subsection (a)(4)(B).
'(C) GRACE PERIOD.--For purposes of subparagraph (A), any payment of any distribution during the 4-year period beginning on its due date shall be treated as having been made on such due date.
'(3) TAXABLE EVENTS.--For purposes of this subsection--
'(A) IN GENERAL.--The term 'taxable event' means any of the following:
'(i) The death of the transferor if the applicable retained interest conferring the distribution right is includible in the estate of the transferor.
'(ii) The transfer of such applicable retained interest.
'(iii) At the election of the taxpayer, the payment of any qualified payment after the period described in paragraph (2)(C), but only with respect to the period ending on the date of such payment.
'(B) EXCEPTION WHERE SPOUSE IS TRANSFEREE.--
'(i) DEATHTIME TRANSFERS.--Subparagraph (A)(i) shall not apply to any interest includible in the gross estate of the transferor if a deduction with respect to such interest is allowable under section 2056 or 2106(a)(3).
'(ii) LIFETIME TRANSFERS.--A transfer to the spouse of the transferor shall not be treated as a taxable event under subparagraph (A)(ii) if such transfer does not result in a taxable gift by reason of--
'(I) any deduction allowed under section 2523, or
'(II) consideration for the transfer provided by the spouse.
'(iii) SPOUSE SUCCEEDS TO TREATMENT OF TRANSFEROR.--If an event is not treated as a taxable event by reason of this subparagraph, the transferee spouse or surviving spouse (as the case may be) shall be treated in the same manner as the transferor in applying this subsection with respect to the interest involved.
'(A) FAMILY MEMBER TREATED IN SAME MANNER AS TRANSFEROR.--For purposes of this subsection, an applicable family member shall be treated in the same manner as the transferor with respect to any distribution right retained by such family member to which subsection (a)(3)(B) applied.
'(B) TRANSFER TO APPLICABLE FAMILY MEMBER.--In the case of a taxable event described in paragraph (3)(A)(ii) involving the transfer of an applicable retained interest to an applicable family member (other than the spouse of the transferor), the applicable family member shall be treated in the same manner as the transferor in applying this subsection to distributions accumulating with respect to such interest after such taxable event.
'(5) TRANSFER TO INCLUDE TERMINATION.--For purposes of this subsection, any termination of an interest shall be treated as a transfer.
'(e) OTHER DEFINITIONS AND RULES.--For purposes of this section--
'(1) MEMBER OF THE FAMILY.--The term 'member of the family' means, with respect to any transferor--
'(A) the transferor's spouse,
'(B) a lineal descendant of the transferor or the transferor's spouse, and
'(C) the spouse of any such descendant.
'(2) APPLICABLE FAMILY MEMBER.--The term 'applicable family member' means, with respect to any transferor--
'(A) the transferor's spouse,
'(B) an ancestor of the transferor or the transferor's spouse, and
'(C) the spouse of any such ancestor.
'(3) ATTRIBUTION RULES.--
'(A) INDIRECT HOLDINGS AND TRANSFERS.--An individual shall be treated as holding any interest to the extent such interest is held indirectly by such individual through a corporation, partnership, trust, or other entity. If any individual is treated as holding any interest by reason of the preceding sentence, any transfer which results in such interest being treated as no longer held by such individual shall be treated as a transfer of such interest.
'(B) CONTROL.--For purposes of subsections 81 (b)(1), an individual shall be treated as holding any interest held by the individual's brothers, sisters, or lineal descendants.
'(4) EFFECT OF ADOPTION.--A relationship by legal adoption shall be treated as a relationship by blood.
'(5) CERTAIN CHANGES TREATED AS TRANSFERS.--Except as provided in regulations, a contribution to capital or a redemption, recapitalization, or other change in the capital structure of a corporation or partnership shall be treated as a transfer of an interest in such entity to which this section applies if the taxpayer or an applicable family member--
'(A) receives an applicable retained interest in such entity pursuant to such contribution to capital or such redemption, recapitalization, or other change, or
'(B) under regulations, otherwise holds, immediately after the transfer, an applicable retained interest in such entity.
This paragraph shall not apply to any transaction (other than a contribution to capital) if the interests in the entity held by the transferor, applicable family members, and members of the transferor's family before and after the transaction are substantially identical.
'(6) ADJUSTMENTS.--Under regulations prescribed by the Secretary, if there is any subsequent transfer, or inclusion in the gross estate, of any applicable retained interest which was valued under the rules of subsection (a), appropriate adjustments shall be made for purposes of chapter 11, 12, or 13 to reflect the increase in the amount of any prior taxable gift made by the transferor or decedent by reason of such valuation.
'(7) TREATMENT AS SEPARATE INTERESTS.--The Secretary may by regulation provide that any applicable retained interest shall be treated as 2 or more separate interests for purposes of this section.
'(a) VALUATION RULES.--
'(1) IN GENERAL.--Solely for purposes of determining whether a transfer of an interest in trust to (or for the benefit of) a member of the transferor's family is a gift (and the value of such transfer), the value of any interest in such trust retained by the transferor or any applicable family member (as defined in section 2701(e)(2)) shall be determined as provided in paragraph (2).
'(2) VALUATION OF RETAINED INTERESTS.--
'(A) IN GENERAL.--The value of any retained interest which is not a qualified interest shall be treated as being zero.
'(B) VALUATION OF QUALIFIED INTEREST.--The value of any retained interest which is a qualified interest shall be determined under section 7520.
'(3) EXCEPTIONS.--
'(A) IN GENERAL.--This subsection shall not apply to any transfer--
'(i) to the extent such transfer is an incomplete transfer, or
'(ii) if such transfer involves the transfer of an interest in trust all the property in which consists of a residence to be used as a personal residence by persons holding term interests in such trust.
'(B) INCOMPLETE TRANSFER.--For purposes of subparagraph (A), the term 'incomplete transfer' means any transfer which would not be treated as a gift whether or not consideration was received for such transfer.
'(1) any interest which consists of the right to receive fixed amounts payable not less frequently than annually,
'(2) any interest which consists of the right to receive amounts which are payable not less frequently than annually and are a fixed percentage of the fair market value of the property in the trust (determined annually), and
'(3) any noncontingent remainder interest if all of the other interests in the trust consist of interests described in paragraph (1) or (2).
'(c) CERTAIN PROPERTY TREATED AS HELD IN TRUST.--For purposes of this section--
'(1) IN GENERAL.--The transfer of an interest in property with respect to which there is 1 or more term interests shall be treated as a transfer of an interest in a trust.
'(2) JOINT PURCHASES.--If 2 or more members of the same family acquire interests in any property described in paragraph (1) in the same transaction (or a series of related transactions), the person (or persons) acquiring the term interests in such property shall be treated as having acquired the entire property and then transferred to the other persons the interests acquired by such other persons in the transaction (or series of transactions). Such transfer shall be treated as made in exchange for the consideration (if any) provided by such other persons for the acquisition of their interests in such property.
'(3) TERM INTEREST.--The term 'term interest' means--
'(A) a life interest in property, or
'(B) an interest in property for a term of years.
'(4) VALUATION RULE FOR CERTAIN TERM INTERESTS.--If the nonexercise of rights under a term interest in tangible property would not have a substantial effect on the valuation of the remainder interest in such property--
'(A) subparagraph (A) of subsection (a)(2) shall not apply to such term interest, and
'(B) the value of such term interest for purposes of applying subsection (a)(1) shall be the amount which the holder of the term interest establishes as the amount for which such interest could be sold to an unrelated third party.
'(e) MEMBER OF THE FAMILY.--For purposes of this section, the term 'member of the family' shall have the meaning given such term by section 2704(c)(2).
'SEC. 2703. CERTAIN RIGHTS AND RESTRICTIONS DISREGARDED.
'(a) GENERAL RULE.--For purposes of this subtitle, the value of any property shall be determined without regard to--
'(1) any option, agreement, or other right to acquire or use the property at a price less than the fair market value of the property (without regard to such option, agreement, or right), or
'(2) any restriction on the right to sell or use such property.
'(b) EXCEPTIONS.--Subsection (a) shall not apply to any option, agreement, right, or restriction which meets each of the following requirements:
'(1) It is a bona fide business arrangement.
'(2) It is not a device to transfer such property to members of the decedent's family for less than full and adequate consideration in money or money's worth.
'(3) Its terms are comparable to similar arrangements entered into by persons in an arms' length transaction.
'(a) TREATMENT OF LAPSED VOTING OR LIQUIDATION RIGHTS.--
'(1) IN GENERAL.--For purposes of this subtitle, if--
'(A) there is a lapse of any voting or liquidation right in a corporation or partnership, and
'(B) the individual holding such right immediately before the lapse and members of such individual's family hold, both before and after the lapse, control of the entity,
such lapse shall be treated as a transfer by such individual by gift, or a transfer which is includible in the gross estate of the decedent, whichever is applicable, in the amount determined under paragraph (2).
'(2) AMOUNT OF TRANSFER.--For purposes of paragraph (1), the amount determined under this paragraph is the excess (if any) of--
'(A) the value of all interests in the entity held by the individual described in paragraph (1) immediately before the lapse (determined as if the voting and liquidation rights were nonlapsing), over
'(B) the value of such interests immediately after the lapse.
'(3) SIMILAR RIGHTS.--The Secretary may by regulations apply this subsection to rights similar to voting and liquidation rights.
'(b) CERTAIN RESTRICTIONS ON LIQUIDATION DISREGARDED.--
'(1) IN GENERAL.--For purposes of this subtitle, if--
'(A) there is a transfer of an interest in a corporation or partnership to (or for the benefit of) a member of the transferor's family, and
'(B) the transferor and members of the transferor's family hold, immediately before the transfer, control of the entity,
any applicable restriction shall be disregarded in determining the value of the transferred interest.
'(2) APPLICABLE RESTRICTION.--For purposes of this subsection, the term 'applicable restriction' means any restriction--
'(A) which effectively limits the ability of the corporation or partnership to liquidate, and
'(B) with respect to which either of the following applies:
'(i) The restriction lapses, in whole or in part, after the transfer referred to in paragraph (1).
'(ii) The transferor or any member of the transferor's family, either alone or collectively, has the right after such transfer to remove, in whole or in part, the restriction.
'(A) any commercially reasonable restriction which arises as part of any financing by the corporation or partnership with a person who is not related to the transferor or transferee, or a member of the family of either, or
'(B) any restriction imposed, or required to be imposed, by any Federal or State law.
'(4) OTHER RESTRICTIONS.--The Secretary may by regulations provide that other restrictions shall be disregarded in determining the value of the transfer of any interest in a corporation or partnership to a member of the transferor's family if such restriction has the effect of reducing the value of the transferred interest for purposes of this subtitle but does not ultimately reduce the value of such interest to the transferee.
'(c) DEFINITIONS AND SPECIAL RULES.--For purposes of this section--
'(1) CONTROL.--The term 'control' has the meaning given such term by section 2701(b)(2).
'(2) MEMBER OF THE FAMILY.--The term 'member of the family' means, with respect to any individual--
'(A) such individual's spouse,
'(B) any ancestor or lineal descendant of such individual or such individual's spouse,
'(C) any brother or sister of the individual, and
'(D) any spouse of any individual described in subparagraph (B) or (C).
'(3) ATTRIBUTION.--The rule of section 2701(e)(3)(A) shall apply for purposes of determining the interests held by any individual.'
(b) EXTENSION OF STATUTE OF LIMITATIONS.--Subsection (c) of section 6501 (relating to limitations on assessment and collection) is amended by adding at the end thereof the following new paragraph:
'(9) GIFT TAX ON CERTAIN GIFTS NOT SHOWN ON RETURN.--If any gift of property the value of which is determined under section 2701 or 2702 (or any increase in taxable gifts required under section 2701(d)) is required to be shown on a return of tax imposed by chapter 12 (without regard to section 2503(b)), and is not shown on such return, any tax imposed by chapter 12 on such gift may be assessed, or a proceeding in court for the collection of such tax may be begun without assessment, at any time. The preceding sentence shall not apply to any item not shown as a gift on such return if such item is disclosed in such return, or in a statement attached to the return, in a manner adequate to apprise the Secretary of the nature of such item.'
(c) CONFORMING AMENDMENT.--The table of chapters for subtitle B is amended by adding at the end thereof the following item:
'Chapter 14. Special Valuation Rules.'
(d) STUDY.--The Secretary of the Treasury shall conduct a study of--
(1) the prevalence and types of options and agreements used to distort the valuation of property for purposes of subtitle B of the Internal Revenue Code of 1986, and
(2) other methods using discretionary rights to distort the value of property for such purposes.
The Secretary shall, not later than December 31, 1992, report the results of such study, together with such legislative recommendations as the Secretary considers necessary, to the Committee on Finance of the Senate and the Committee on Ways and Means of the House of Representatives.
(e) EFFECTIVE DATES.--
(1) SUBSECTION (a).--
(A) IN GENERAL.--The amendments made by subsection (a)--
(i) to the extent such amendments relate to sections 2701 and 2702 of the Internal Revenue Code of 1986 (as added by such amendments), shall apply to transfers after October 8, 1990,
(ii) to the extent such amendments relate to section 2703 of such Code (as so added), shall apply to--
(I) agreements, options, rights, or restrictions entered into or granted after October 8, 1990, and
(II) agreements, options, rights, or restrictions which are substantially modified after October 8, 1990, and
(iii) to the extent such amendments relate to section 2704 of such Code (as so added), shall apply to restrictions or rights (or limitations on rights) created after October 8, 1990.
(B) EXCEPTION.--For purposes of subparagraph (A)(i), with respect to property transferred before October 9, 1990--
(i) any failure to exercise a right of conversion,
(ii) any failure to pay dividends, and
(iii) any failure to exercise other rights specified in regulations,
(2) SUBSECTION (b).--The amendment made by subsection (b) shall apply to gifts after October 8, 1990.
SEC. 11611. CREDIT FOR COST OF PROVIDING ACCESS FOR DISABLED INDIVIDUALS.
(a) GENERAL RULE.--Subpart D of part IV of subchapter A of chapter 1 (relating to business related credits), as amended by subtitle E, is amended by adding at the end thereof the following new section:
'SEC. 44. EXPENDITURES TO PROVIDE ACCESS TO DISABLED INDIVIDUALS.
'(a) GENERAL RULE.--For purposes of section 38, in the case of an eligible small business, the amount of the disabled access credit determined under this section for any taxable year shall be an amount equal to 50 percent of so much of the eligible access expenditures for the taxable year as exceed $250 but do not exceed $10,250.
'(b) ELIGIBLE SMALL BUSINESS.--For purposes of this section, the term 'eligible small business' means any person if--
'(1) either--
'(A) the gross receipts of such person for the preceding taxable year did not exceed $1,000,000, or
'(B) in the case of a person to which subparagraph (A) does not apply, such person employed not more than 30 full-time employees during the preceding taxable year, and
'(2) such person elects the application of this section for the taxable year.
For purposes of paragraph (1)(B), an employee shall be considered full-time if such employee is employed at least 30 hours per week for 20 or more calendar weeks in the taxable year.
'(c) ELIGIBLE ACCESS EXPENDITURES.--For purposes of this section--
'(1) IN GENERAL.--The term 'eligible access expenditures' means amounts paid or incurred by an eligible small business for the purpose of enabling such eligible small business to comply with applicable requirements under the Americans With Disabilities Act of 1990 (as in effect on the date of the enactment of this section).
'(2) CERTAIN EXPENDITURES INCLUDED.--The term 'eligible access expenditures' includes amounts paid or incurred--
'(A) for the purpose of removing architectural, communication, physical, or transportation barriers which prevent a business from being accessible to, or usable by, individuals with disabilities,
'(B) to provide qualified interpreters or other effective methods of making aurally delivered materials available to individuals with hearing impairments,
'(C) to provide qualified readers, taped texts, and other effective methods of making visually delivered materials available to individuals with visual impairments,
'(D) to acquire or modify equipment or devices for individuals with disabilities, or
'(E) to provide other similar services, modifications, materials, or equipment.
'(3) EXPENDITURES MUST BE REASONABLE.--Amounts paid or incurred for the purposes described in paragraph (2) shall include only expenditures which are reasonable and shall not include expenditures which are unnecessary to accomplish such purposes.
'(4) EXPENSES IN CONNECTION WITH NEW CONSTRUCTION ARE NOT ELIGIBLE.--The term 'eligible access expenditures' shall not include amounts described in paragraph (2)(A) which are paid or incurred in connection with any facility first placed in service after the date of the enactment of this section.
'(5) EXPENDITURES MUST MEET STANDARDS.--The term 'eligible access expenditures' shall not include any amount unless the taxpayer establishes, to the satisfaction of the Secretary, that the resulting removal of any barrier (or the provision of any services, modifications, materials, or equipment) meets the standards promulgated by the Secretary with the concurrence of the Architectural and Transportation Barriers Compliance Board and set forth in regulations prescribed by the Secretary.
'(d) DEFINITION OF DISABILITY; SPECIAL RULES.--For purposes of this section--
'(1) DISABILITY.--The term 'disability' has the same meaning as when used in the Americans With Disabilities Act of 1990 (as in effect on the date of the enactment of this section).
'(2) CONTROLLED GROUPS.--
'(A) IN GENERAL.--All members of the same controlled group of corporations (within the meaning of section 52(a)) and all persons under common control (within the meaning of section 52(b)) shall be treated as 1 person for purposes of this section.
'(B) DOLLAR LIMITATION.--The Secretary shall apportion the dollar limitation under subsection (a) among the members of any group described in subparagraph (A) in such manner as the Secretary shall by regulations prescribe.
'(3) PARTNERSHIPS AND S CORPORATIONS.--In the case of a partnership, the limitation under subsection (a) shall apply with respect to the partnership and each partner. A similar rule shall apply in the case of an S corporation and its shareholders.
'(4) SHORT YEARS.--The Secretary shall prescribe such adjustments as may be appropriate for purposes of paragraph (1) of subsection (b) if the preceding taxable year is a taxable year of less than 12 months.
'(5) GROSS RECEIPTS.--Gross receipts for any taxable year shall be reduced by returns and allowances made during such year.
'(6) TREATMENT OF PREDECESSORS.--The reference to any person in paragraph (1) of subsection (b) shall be treated as including a reference to any predecessor.
'(7) DENIAL OF DOUBLE BENEFIT.--In the case of the amount of the credit determined under this section--
'(A) no deduction or credit shall be allowed for such amount under any other provision of this chapter, and
'(B) no increase in the adjusted basis of any property shall result from such amount.
(b) CREDIT MADE PART OF GENERAL BUSINESS CREDIT.--
(1) IN GENERAL.--Subsection (b) of section 38, as amended by subtitle E, is amended by striking 'plus' at the end of paragraph (5), by striking the period at the end of paragraph (6) and inserting ', plus' and by adding at the end thereof the following new paragraph:
'(7) in the case of an eligible small business (as defined in section 44(b)), the disabled access credit determined under section 44(a).'
(2) CARRYBACKS.--Section 39(d) is amended by adding at the end thereof the following new paragraph:
'(5) NO CARRYBACK OF SECTION 44 CREDIT BEFORE ENACTMENT.--No portion of the unused business credit for any taxable year which is attributable to the disabled access credit determined under section 44 may be carried to a taxable year ending before the date of the enactment of section 44.'
(c) DEDUCTION REDUCED FOR ARCHITECTURAL AND TRANSPORTATION BARRIER REMOVAL EXPENSES.--Section 190(c) (relating to expenditures to remove architectural and transportation barriers to the handicapped and elderly) is amended by striking '$35,000' and inserting '$15,000'.
(d) CLERICAL AMENDMENT.--The table of sections for subpart D of part IV of subchapter A of chapter 1, as amended by subtitle E, is amended by adding at the end thereof the following new item:
'Sec. 44. Expenditures to provide access to disabled individuals.'
(e) EFFECTIVE DATES.--
(1) IN GENERAL.--Except as provided in paragraph (2), the amendments made by this section shall apply to expenditures paid or incurred after the date of the enactment of this Act.
(2) SUBSECTION (c).--The amendment made by subsection (c) shall apply to taxable years beginning after the date of the enactment of this Act.
SEC. 11621. REVIEW OF IMPACT OF REGULATIONS ON SMALL BUSINESS.
(a) GENERAL RULE.--Subsection (f) of section 7805 (relating to review of impact of regulations on small business) is amended to read as follows:
'(f) REVIEW OF IMPACT OF REGULATIONS ON SMALL BUSINESS.--
'(1) SUBMISSIONS TO SMALL BUSINESS ADMINISTRATION.--After publication of any proposed or temporary regulation by the Secretary, the Secretary shall submit such regulation to the Chief Counsel for Advocacy of the Small Business Administration for comment on the impact of such regulation on small business. Not later than the date 4 weeks after the date of such submission, the Chief Counsel for Advocacy shall submit comments on such regulation to the Secretary.
'(2) CONSIDERATION OF COMMENTS.--In prescribing any final regulation which supersedes a proposed or temporary regulation which had been submitted under this subsection to the Chief Counsel for Advocacy of the Small Business Administration--
'(A) the Secretary shall consider the comments of the Chief Counsel for Advocacy on such proposed or temporary regulation, and
'(B) the Secretary shall discuss any response to such comments in the preamble of such final regulation.
'(3) SUBMISSION OF CERTAIN FINAL REGULATIONS.--In the case of the promulgation by the Secretary of any final regulation (other than a temporary regulation) which does not supersede a proposed regulation, the requirements of paragraphs (1) and (2) shall apply; except that--
'(A) the submission under paragraph (1) shall be made at least 4 weeks before the date of such promulgation, and
'(B) the consideration (and discussion) required under paragraph (2) shall be made in connection with the promulgation of such final regulation.'
SEC. 11622. GRAPHIC PRESENTATION OF MAJOR CATEGORIES OF FEDERAL OUTLAYS AND INCOME.
(a) GENERAL RULE.--Chapter 77 (relating to miscellaneous provisions) is amended by adding at the end thereof the following new section:
'SEC. 7523. GRAPHIC PRESENTATION OF MAJOR CATEGORIES OF FEDERAL OUTLAYS AND INCOME.
'(a) GENERAL RULE.--In the case of any booklet of instructions for Form 1040, 1040A, or 1040EZ prepared by the Secretary for filing individual income tax returns for taxable years beginning in any calendar year, the Secretary shall include in a prominent place--
'(1) a pie-shaped graph showing the relative sizes of the major outlay categories, and
'(2) a pie-shaped graph showing the relative sizes of the major income categories.
'(b) DEFINITIONS AND SPECIAL RULES.--For purposes of subsection (a)--
'(1) MAJOR OUTLAY CATEGORIES.--The term 'major outlay categories' means the following:
'(A) Defense, veterans, and foreign affairs.
'(B) Social security, Medicare, and other retirement.
'(C) Physical, human, and community development.
'(D) Social programs.
'(E) Law enforcement and general government.
'(F) Interest on the debt.
'(2) MAJOR INCOME CATEGORIES.--The term 'major income categories' means the following:
'(A) Social security, Medicare, and unemployment and other retirement taxes.
'(B) Personal income taxes.
'(C) Corporate income taxes.
'(D) Borrowing to cover the deficit.
'(E) Excise, customs, estate, gift, and miscellaneous taxes.
'(3) REQUIRED FOOTNOTES.--The pie-shaped graph showing the major outlay categories shall include the following footnotes:
'(A) A footnote to the category referred to in paragraph (1)(A) showing the percentage of the total outlays which is for defense, the percentage of total outlays which is for veterans, and the percentage of total outlays which is for foreign affairs.
'(B) A footnote to the category referred to in paragraph (1)(C) showing that such category consists of agriculture, natural resources, environment, transportation, education, job training, economic development, space, energy, and general science.
'(C) A footnote to the category referred to in paragraph (1)(D) showing the percentage of the total outlays which is for Medicaid, food stamps, and aid to families with dependent children and the percentage of total outlays which is for public health, unemployment, assisted housing, and social services.
'(4) DATA ON WHICH GRAPHS ARE BASED.--The graphs required under subsection (a) shall be based on data for the most recent fiscal year for which complete data is available as of the completion of the preparation of the instructions by the Secretary.'
(b) CLERICAL AMENDMENT.--The table of sections for chapter 77 is amended by adding at the end thereof the following new item:
'Sec. 7523. Graphic presentation of major categories of Federal outlays and income.'
(c) EFFECTIVE DATE.--The amendments made by this section shall apply to instructions prepared for taxable years beginning after 1990.
SEC. 11700. 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. 11701. AMENDMENTS RELATED TO REVENUE RECONCILIATION ACT OF 1989.
(a) AMENDMENTS RELATED TO SECTION 7108.--
(1)(A) Paragraph (2) of section 42(c) is amended by adding at the end thereof the following new sentence: 'Such term does not include any building with respect to which moderate rehabilitation assistance is provided, at any time during the compliance period, under section 8(e)(2) of the United States Housing Act of 1937.'
(B) Paragraph (1) of section 42(b) is amended by striking the last sentence.
(2) Subclause (I) of section 42(d)(5)(C)(ii) is amended--
(A) by inserting 'which is designated by the Secretary of Housing and Urban Development and, for the most recent year for which census data are available on household income in such tract,' after 'census tract', and
(B) by inserting before the period 'for such year'.
(3)(A) Clause (i) of section 42(g)(2)(D) is amended by inserting before the period 'and such unit continues to be rent-restricted'.
(B) In the case of a building to which (but for this subparagraph) the amendment made by subparagraph (A) does not apply, such amendment shall apply to--
(i) determinations of qualified basis for taxable years beginning after the date of the enactment of this Act, and
(ii) determinations of qualified basis for taxable years beginning on or before such date except that determinations for such taxable years shall be made without regard to any reduction in gross rent after August 3, 1990, for any period before August 4, 1990.
(5)(A) Subparagraph (A) of section 42(g)(3) is amended by striking 'the 12-month period beginning on the date the building is placed in service' and inserting 'the 1st year of the credit period for such building'.
(B) In the case of a building to which the amendment made by subparagraph (A) does not apply, the period specified in section 42(g)(3)(A) of the Internal Revenue Code of 1986 (as in effect before the amendment made by subparagraph (A)) shall not expire before the close of the taxable year following the taxable year in which the building is placed in service.
(6)(A) The second sentence of section 42(h)(3)(C) is amended by striking 'the amount described in clause (i)' and inserting 'the sum of the amounts described in clauses (i) and (iii)'.
(B) Subclause (II) of section 42(h)(3)(D)(ii) is amended by striking 'the amount described in clause (i)' and inserting 'the sum of the amounts described in clauses (i) and (iii)'.
(7)(A) Clause (i) of section 42(h)(6)(B) is amended by inserting before the comma 'and which prohibits the actions described in subclauses (I) and (II) of subparagraph (E)(ii)'.
(B) Clause (ii) of section 42(h)(6)(B) is amended by striking 'requirement' and inserting 'requirement and prohibitions'.
(8)(A) Subparagraph (B) of section 42(h)(6) is amended by redesignating clauses (iii) and (iv) as clauses (iv) and (v), respectively, and by inserting after clause (ii) the following new clause:
(B) Paragraph (6) of section 42(h) is amended by striking subparagraph (J) and by redesignating subparagraphs (K) and (L) as subparagraphs (J) and (K), respectively.
(C) Subclause (II) of section 42(h)(6)(E)(ii) is amended by inserting before the period 'not otherwise permitted under this section'.
(D) Subparagraph (F) of section 42(h)(6) is amended by inserting 'the nonlow-income portion of the building for fair market value and' before 'the low-income portion'.
(9) Subclause (I) of section 42(h)(6)(E)(i) is amended by inserting before the comma 'unless the Secretary determines that such acquisition is part of an arrangement with the taxpayer a purpose of which is to terminate such period'.
(10) Paragraph (8) of section 42(i) is redesignated as paragraph (7).
(11) Paragraph (2) of section 7108(r) of the Revenue Reconciliation Act of 1989 is amended by inserting before the period 'but only with respect to bonds issued after such date'.
(12) Paragraph (6) of section 7108(r) of the Revenue Reconciliation Act of 1989 is amended by inserting 'after' after 'issued'.
(b) AMENDMENTS RELATED TO SECTION 7202.--
(1) Subparagraph (A) of section 163(e)(5) is amended by striking the last sentence and inserting the following:
'For purposes of this paragraph, rules similar to the rules of subsection (i)(3)(B) shall apply in determining the amount of the original issue discount and when the original issue discount is paid.'
(2) Paragraph (3) of section 163(i) is amended--
(A) by striking '(or stock)' each place it appears in subparagraph (B), and
(B) by adding at the end thereof the following new sentence:
'Except for purposes of paragraph (1)(B), any reference to an obligation in subparagraph (B) of this paragraph shall be treated as including a reference to stock.'
(c) AMENDMENTS RELATED TO SECTION 7210.--
(1) Subparagraph (C) of section 163(j)(2) is amended by striking 'less such' and inserting 'reduced (but not below zero) by such'.
(2) Clause (ii) of section 163(j)(2)(A) is amended by striking 'and on such other days' and inserting 'or on any other day'.
(d) AMENDMENTS RELATED TO SECTION 7211.--Clause (iii) of section 172(b)(1)(M) is amended--
(1) by striking 'a C corporation' in the material preceding subclause (I),
(2) by striking 'which acquires' in subclause (I) and inserting 'a C corporation which acquires',
(3) by striking 'a corporation' in subclause (II) and inserting 'a C corporation', and
(4) by striking 'any successor corporation' in subclause (III) and inserting 'any C corporation which is a successor'.
(e) AMENDMENTS RELATED TO SECTION 7301.--
(1) Paragraph (2) of section 4978B(e) is amended to read as follows:
'(2) SECTION 133 SECURITIES.--The term 'section 133 securities' means employer securities acquired by an employee stock ownership plan in a transaction to which section 133 applied.'
(2) Subsection (d) of section 4978B is amended by adding at the end thereof the following new paragraph:
'(4) COORDINATION WITH OTHER TAXES.--This section shall not apply to any disposition which is subject to tax under section 4978 or section 4978A (as in effect on the day before the date of enactment of this section).'
(f) AMENDMENT RELATED TO SECTION 7401.--Paragraph (2) of section 6038(e) is amended by adding at the end thereof the following new sentence: 'In the case of a specified foreign corporation (as defined in section 898), the taxable year of such corporation shall be treated as its annual accounting period.'
(g) AMENDMENTS RELATED TO SECTION 7506.--
(1) The material preceding subclause (I) in section 4682(d)(3)(B)(i) is amended by striking 'or produced' and inserting ', produced, or imported'.
(2) Subclause (I) of section 4682(d)(3)(B)(i) is amended to read as follows:
(4) Clause (i) of section 4682(d)(3)(B) is amended by striking the period at the end of subclause (II) and inserting ', and' and by adding at the end thereof the following new subclause:
(i) AMENDMENT RELATED TO SECTION 7622.--Paragraph (4) of section 1253(d) is amended by striking 'or any period of amortization under this section' and inserting 'under this section or any period of amortization under this subtitle for any payment described in this section'.
(j) AMENDMENTS RELATED TO SECTION 7652.--
(1) Subclause (II) of section 148(f)(4)(B)(i) is amended to read as follows:
(3) Paragraph (4) of section 148(f) is amended--
(A) by redesignating subparagraphs (C) and (D) as subparagraphs (D) and (E), respectively, and
(B) by inserting after subparagraph (B) the following new subparagraph:
'(C) EXCEPTION FROM REBATE FOR CERTAIN PROCEEDS TO BE USED TO FINANCE CONSTRUCTION EXPENDITURES.--
'(i) IN GENERAL.--In the case of a construction issue, paragraph (2) shall not apply to the available construction proceeds of such issue if the spending requirements of clause (ii) are met.
'(ii) SPENDING REQUIREMENTS.--The spending requirements of this clause are met if at least--
'(I) 10 percent of the available construction proceeds of the construction issue are spent for the governmental purposes of the issue within the 6-month period beginning on the date the bonds are issued,
'(II) 45 percent of such proceeds are spent for such purposes within the 1-year period beginning on such date,
'(III) 75 percent of such proceeds are spent for such purposes within the 18-month period beginning on such date, and
'(IV) 100 percent of such proceeds are spent for such purposes within the 2-year period beginning on such date.
'(iii) EXCEPTION FOR REASONABLE RETAINAGE.--The spending requirement of clause (ii)(IV) shall be treated as met if--
'(I) such requirement would be met at the close of such 2-year period but for a reasonable retainage (not exceeding 5 percent of the available construction proceeds of the construction issue), and
'(II) 100 percent of the available construction proceeds of the construction issue are spent for the governmental purposes of the issue within the 3-year period beginning on the date the bonds are issued.
'(iv) CONSTRUCTION ISSUE.--For purposes of this subparagraph, the term 'construction issue' means any issue if--
'(I) at least 75 percent of the available construction proceeds of such issue are to be used for construction expenditures with respect to property which is to be owned by a governmental unit or a 501(c)(3) organization, and
'(II) all of the bonds which are part of such issue are qualified 501(c)(3) bonds, bonds which are not private activity bonds, or private activity bonds issued to finance property to be owned by a governmental unit or a 501(c)(3) organization.
For purposes of this subparagraph, the term 'construction' includes reconstruction and rehabilitation, and rules similar to the rules of section 142(b)(1)(B) shall apply.
'(v) PORTIONS OF ISSUES USED FOR CONSTRUCTION.--If--
'(I) all of the construction expenditures to be financed by an issue are to be financed from a portion thereof, and
'(II) the issuer elects to treat such portion as a construction issue for purposes of this subparagraph,
then, for purposes of this subparagraph and subparagraph (B), such portion shall be treated as a separate issue.
'(vi) AVAILABLE CONSTRUCTION PROCEEDS.--For purposes of this subparagraph--
'(I) IN GENERAL.--The term 'available construction proceeds' means the amount equal to the issue price (within the meaning of sections 1273 and 1274) of the construction issue, increased by earnings on the issue price, earnings on amounts in any reasonably required reserve or replacement fund not funded from the issue, and earnings on all of the foregoing earnings, and reduced by the amount of the issue price in any reasonably required reserve or replacement fund and the issuance costs financed by the issue.
'(II) EARNINGS ON RESERVE INCLUDED ONLY FOR CERTAIN PERIODS.--The term 'available construction proceeds' shall not include amounts earned on any reasonably required reserve or replacement fund after the earlier of the close of the 2-year period described in clause (ii) or the date the construction is substantially completed.
'(III) PAYMENTS ON ACQUIRED PURPOSE OBLIGATIONS EXCLUDED.--The term 'available construction proceeds' shall not include payments on any obligation acquired to carry out the governmental purposes of the issue and shall not include earnings on such payments.
'(IV) ELECTION TO REBATE ON EARNINGS ON RESERVE.--At the election of the issuer, the term 'available construction proceeds' shall not include earnings on any reasonably required reserve or replacement fund.
'(vii) ELECTION TO PAY PENALTY IN LIEU OF REBATE.--
'(I) IN GENERAL.--At the election of the issuer, paragraph (2) shall not apply to available construction proceeds which do not meet the spending requirements of clause (ii) if the issuer pays a penalty, with respect to each 6-month period after the date the bonds were issued, equal to 1-1/2 percent of the amount of the available construction proceeds of the issue which, as of the close of such 6-month period, is not spent as required by clause (ii).
'(II) TERMINATION.--The penalty imposed by this clause shall cease to apply only as provided in clause (viii) or after the latest maturity date of any bond in the issue (including any refunding bond with respect thereto).
'(viii) ELECTION TO TERMINATE 1-1/2 PERCENT PENALTY.--At the election of the issuer (made not later than 90 days after the earlier of the end of the initial temporary period or the date the construction is substantially completed), the penalty under clause (vii) shall not apply to any 6-month period after the initial temporary period under subsection (c) if the requirements of subclauses (I), (II), and (III) are met.
'(I) 3 PERCENT PENALTY.--The requirement of this subclause is met if the issuer pays a penalty equal to 3 percent of the amount of available construction proceeds of the issue which is not spent for the governmental purposes of the issue as of the close of such initial temporary period multiplied by the number of years (including fractions thereof) in the initial temporary period.
'(II) YIELD RESTRICTION AT CLOSE OF TEMPORARY PERIOD.--The requirement of this subclause is met if the amount of the available construction proceeds of the issue which is not spent for the governmental purposes of the issue as of the close of such initial temporary period is invested at a yield not exceeding the yield on the issue or which is invested in any tax-exempt bond which is not investment property.
'(III) REDEMPTION OF BONDS AT EARLIEST CALL DATE.--The requirement of this subclause is met if the amount of the available construction proceeds of the issue which is not spent for the governmental purposes of the issue as of the earliest date on which bonds may be redeemed is used to redeem bonds on such date.
'(ix) ELECTION TO TERMINATE 1-1/2 PERCENT PENALTY BEFORE END OF TEMPORARY PERIOD.--If--
'(I) the construction to be financed by a construction issue is substantially completed before the end of the initial temporary period,
'(II) the issuer identifies an amount of available construction proceeds which will not be spent for the governmental purposes of the issue,
'(III) the issuer has made the election under clause (viii), and
'(IV) the issuer makes an election under this clause before the close of the initial temporary period and not later than 90 days after the date the construction is substantially completed,
then clauses (vii) and (viii) shall be applied to the available construction proceeds so identified as if the initial temporary period ended as of the date the election is made.
'(x) FAILURE TO PAY PENALTIES.--In the case of a failure (which is not due to willful neglect) to pay any penalty required to be paid under clause (vii) or (viii) in the amount or at the time prescribed therefor, the Secretary may treat such failure as not occurring if, in addition to paying such penalty, the issuer pays a penalty equal to the sum of--
'(I) 50 percent of the amount which was not paid in accordance with clauses (vii) and (viii), plus
'(II) interest (at the underpayment rate established under section 6621) on the portion of the amount which was not paid on the date required for the period beginning on such date.
The Secretary may waive all or any portion of the penalty under this clause. Bonds which are part of an issue with respect to which there is a failure to pay the amount required under this clause (and any refunding bond with respect thereto) shall be treated as not being, and as never having been, tax-exempt bonds.
'(xi) ELECTION FOR POOLED FINANCING BONDS.--At the election of the issuer of an issue the proceeds of which are to be used to make or finance loans (other than nonpurpose investments) to 2 or more persons, the periods described in clauses (ii) and (iii) shall begin on--
'(I) the date the loan is made, in the case of loans made within the 1-year period after the date the bonds are issued, and
'(II) the date following such 1-year period, in the case of loans made after such 1-year period.
If such an election applies to an issue, the requirements of paragraph (2) shall apply to amounts earned before the beginning of the periods determined under the preceding sentence.
'(xii) PAYMENTS OF PRINCIPAL NOT TO AFFECT REQUIREMENTS.--For purposes of this subparagraph, payments of principal on the bonds which are part of the construction issue shall not be treated as an expenditure of the available construction proceeds of the issue.
'(xiii) REFUNDING BONDS.--
'(I) IN GENERAL.--Except as provided in this clause, clause (vii)(II), and the last sentence of clause (x), this subparagraph shall not apply to any refunding bond and no proceeds of a refunded bond shall be treated for purposes of this subparagraph as proceeds of a refunding bond.
'(II) DETERMINATION OF CONSTRUCTION PORTION OF ISSUE.--For purposes of clause (v), any portion of an issue which is used to refund any issue (or portion thereof) shall be treated as a separate issue.
'(III) COORDINATION WITH REBATE REQUIREMENT ON REFUNDING BONDS.--The requirements of paragraph (2) shall be treated as met with respect to earnings for any period if a penalty is paid under clause (vii) or (viii) with respect to such earnings for such period.
'(xiv) DETERMINATION OF INITIAL TEMPORARY PERIOD.--For purposes of this subparagraph, the end of the initial temporary period shall be determined without regard to section 149(d)(3)(A)(iv).
'(xv) ELECTIONS.--Any election under this subparagraph (other than clauses (viii) and (ix)) shall be made on or before the date the bonds are issued; and, once made, shall be irrevocable.
'(xvi) TIME FOR PAYMENT OF PENALTIES.--Any penalty under this subparagraph shall be paid to the United States not later than 90 days after the period to which the penalty relates.'
(A) by striking 'subsection (f)(4)(B)(iv)(IV)' and inserting 'subsection (f)(4)(C)(iv)', and
(B) by striking 'subsection (f)(4)(B)(iv)(VIII)' and inserting 'subsection (f)(4)(C)(v)'.
(6) Subsection (c) of section 7652 of the 1989 Act is amended by striking 'Subparagraph (A) of section 148(c)(2)' and inserting 'Section 148(c)(2)'.
(7) In the case of a bond issued before the date of the enactment of this Act, the period for making the election under section 148(f)(4)(C)(viii) of the Internal Revenue Code of 1986 (as added by this subsection) shall not expire before the date which is 180 days after such date of enactment.
(8) Section 148(f)(4)(C)(xiii)(II) of such Code (as added by this subsection) shall apply only to refunding bonds issued after August 3, 1990.
(k) AMENDMENT RELATED TO SECTION 7811.--The second sentence of section 403(b)(12)(A) is amended by inserting 'involving a one-time irrevocable election' after 'similar arrangement'.
(l) AMENDMENTS RELATED TO SECTION 7815.--
(1) Subsection (d) of section 2056 is amended by redesignating the paragraph relating to reformations permitted as paragraph (5).
(2) The period during which a proceeding may be commenced under section 2056(d)(5)(A)(ii) of the Internal Revenue Code of 1986 (as redesignated by paragraph (1)) shall not expire before the date 6 months after the date of the enactment of this Act.
(3) Paragraph (16) of section 7815(d) of the Revenue Reconciliation Act of 1989 is amended by inserting '(or would have been so treated if the donor were a citizen of the United States)' after 'of such Code'.
(m) AMENDMENT RELATED TO SECTION 7881.--Paragraph (13) of section 4975(d) is amended by inserting before the semicolon at the end thereof the following: 'or which is exempt from section 406 of such Act by reason of section 408(b) of such Act'.
(n) EFFECTIVE DATE.--Except as otherwise provided in this section, any amendment made by this section shall take effect as if included in the provision of the Revenue Reconciliation Act of 1989 to which such amendment relates.
SEC. 11702. AMENDMENTS RELATED TO TECHNICAL AND MISCELLANEOUS REVENUE ACT OF 1988.
(a) AMENDMENTS RELATED TO SECTION 1006.--
(1) Paragraph (5) of section 367(a) is amended by striking 'section 361' and inserting 'subsection (a) or (b) of section 361'.
(2) Subsection (d) of section 453B is amended to read as follows:
'(d) EXCEPTION FOR DISTRIBUTIONS TO WHICH SECTION 337(a) APPLIES.--Subsection (a) shall not apply to any distribution to which section 337(a) applies.'
(b) AMENDMENTS RELATED TO SECTION 1008.--
(1) Subparagraph (B) of section 447(g)(4) is amended to read as follows:
'(B) QUALIFIED FARMING TRADE OR BUSINESS.--
'(i) IN GENERAL.--The term 'qualified farming trade or business' means the trade or business of farming--
'(I) sugar cane,
'(II) any plant with a preproductive period (as defined in section 263A(e)(3)) of 2 years or less, and
'(III) any other plant (other than any citrus or almond tree) if an election by the corporation under this subparagraph is in effect.
In the case of a partnership and for purposes of paragraph (3)(A), subclauses (II) and (III) shall not apply.
'(ii) EFFECT OF ELECTION.--For purposes of paragraphs (1) and (2) of section 263A(e), any election under this subparagraph shall be treated as if it were an election under subsection (d)(3) of section 263A.
'(iii) ELECTION.--Unless the Secretary otherwise consents, an election under this subparagraph may be made only for the corporation's 1st taxable year which begins after December 31, 1986, and during which the corporation engages in a farming business. Any such election, once made, may be revoked only with the consent of the Secretary.'
(c) AMENDMENT RELATED TO SECTION 1012.--Subsection (b) of section 6114 is amended by striking 'by regulations'.
(d) AMENDMENTS RELATED TO SECTION 1014.--
(1) Subparagraph (B) of section 59(j)(1) is amended by inserting '(or, if greater, the child's share of the unused parental minimum tax exemption)' before the period at the end thereof.
(2) Subsection (j) of section 59 is amended by adding at the end thereof the following new paragraph:
'(3) UNUSED PARENTAL MINIMUM TAX EXEMPTION.--
'(A) IN GENERAL.--For purposes of this subsection, the term 'unused parental minimum tax exemption' means the excess (if any) of--
'(i) the exemption amount applicable to the parent under section 55(d), over
'(ii) the parent's alternative minimum taxable income.
'(B) CERTAIN RULES MADE APPLICABLE.--A child's share of any unused parental minimum tax exemption shall be determined under rules similar to the rules of section 1(i)(3)(B), and rules similar to the rules of paragraphs (3)(D) and (5) of section 1(i) shall apply for purposes of this paragraph.'
(3) Subparagraph (D) of section 59(j)(2), is amended by striking 'paragraphs (5) and (6)' and inserting 'paragraphs (3)(D), (5), and (6)'.
(e) AMENDMENTS RELATED TO SECTION 1018.--
(1) Subsection (e) of section 468B is amended by striking 'This section' and inserting 'This section (other than subsection (g))'.
(2) Subsection (c) of section 355 is amended to read as follows:
'(c) TAXABILITY OF CORPORATION ON DISTRIBUTION.--
'(1) IN GENERAL.--Except as provided in paragraph (2), no gain or loss shall be recognized to a corporation on any distribution to which this section (or so much of section 356 as relates to this section) applies and which is not in pursuance of a plan of reorganization.
'(2) DISTRIBUTION OF APPRECIATED PROPERTY.--
'(A) IN GENERAL.--If--
'(i) in a distribution referred to in paragraph (1), the corporation distributes property other than stock or securities in the controlled corporation, and
'(ii) the fair market value of such property exceeds its adjusted basis (in the hands of the distributing corporation),
then gain shall be recognized to the distributing corporation as if such property were sold to the distributee at its fair market value.
'(B) TREATMENT OF LIABILITIES.--If any property distributed in the distribution referred to in paragraph (1) is subject to a liability or the shareholder assumes a liability of the distributing corporation in connection with the distribution, then, for purposes of subparagraph (A), the fair market value of such property shall be treated as not less than the amount of such liability.
'(3) COORDINATION WITH SECTIONS 311 AND 336(a).--Sections 311 and 336(a) shall not apply to any distribution referred to in paragraph (1).'
(f) AMENDMENT RELATED TO SECTION 3011.--Paragraph (1) of section 4980B(d) is amended to read as follows:
'(1) any failure of a group health plan to meet the requirements of subsection (f) with respect to any qualified beneficiary if the qualifying event with respect to such beneficiary occurred during the calendar year immediately following a calendar year during which all employers maintaining such plan normally employed fewer than 20 employees on a typical business day,'.
(g) AMENDMENTS RELATED TO SECTION 5033.--
(1) Subsection (i) of section 2523 is amended by adding at the end thereof the following new sentence:
'This subsection shall not apply to any transfer resulting from the acquisition of rights under a joint and survivor annuity described in subsection (f)(6).'
(2)(A) Paragraph (1) of section 2056A(a) is amended to read as follows:
'(1) THE TRUST INSTRUMENT.--
'(A) requires that at least 1 trustee of the trust be an individual citizen of the United States or a domestic corporation, and
'(B) provides that no distribution (other than a distribution of income) may be made from the trust unless a trustee who is an individual citizen of the United States or a domestic corporation has the right to withhold from such distribution the tax imposed by this section on such distribution,'.
(B) Subsection (b) of section 2056A is amended by adding at the end thereof the following new paragraphs:
'(14) COORDINATION WITH TERMINABLE INTEREST RULES.--Any interest in a qualified domestic trust shall not be treated as failing to meet the requirements of paragraph (5) or (7) of section 2056(b) merely by reason of any provision of the trust instrument permitting the withholding from any distribution of an amount to pay the tax imposed by paragraph (1) on such distribution.
'(15) NO TAX ON CERTAIN DISTRIBUTIONS.--No tax shall be imposed by paragraph (1) on any distribution to the surviving spouse to the extent such distribution is to reimburse such surviving spouse for any tax imposed by subtitle A on any item of income of the trust to which such surviving spouse is not entitled under the terms of the trust.'
(3)(A) Subsection (d) of section 2056A is amended by adding at the end thereof the following new sentence:
'No election may be made under this section on any return if such return is filed more than one year after the time prescribed by law (including extensions) for filing such return.'
(4) Subparagraph (A) of section 2056A(b)(10) is amended by striking 'section 2032' and inserting 'section 2011, 2014, 2032'.
(5) Paragraph (3) of section 2056(d) is amended by striking 'section 2056A(b)(6)' and inserting 'section 2056A(b)(7)'.
(h) AMENDMENTS RELATED TO SECTION 6009.--
(1) Subparagraph (B) of section 135(b)(2) is amended by striking 'each dollar amount' and inserting 'the $40,000 and $60,000 amounts'.
(2) Subparagraph (C) of section 135(b)(2) is amended by striking '(A) or'.
(i) AMENDMENTS RELATED TO SECTION 6282.--Subsection (e) of section 216 is amended--
(1) by striking 'ASSOCIATIONS' in the subsection heading and inserting 'CORPORATIONS', and
(2) by striking 'association' and inserting 'corporation'.
(j) EFFECTIVE DATE.--Any amendment made by this section shall take effect as if included in the provision of the Technical and Miscellaneous Revenue Act of 1988 to which such amendment relates.
SEC. 11703. MISCELLANEOUS AMENDMENTS.
(a) SALES TO COMPLY WITH CONFLICT-OF-INTEREST REQUIREMENTS.--
(1) IN GENERAL.--Subsection (a) of section 1043 is amended by striking 'reduced by any basis adjustment under subsection (c) attributable to a prior sale' and inserting 'to the extent not previously taken into account under this subsection'.
(2) EFFECTIVE DATE.--The amendment made by paragraph (1) shall apply to sales after November 30, 1989.
(b) CONFORMING AMENDMENT TO REPEAL OF SECTION 89.--
(1) IN GENERAL.--Subparagraph (B) of section 414(n)(2) is amended by striking '(6 months in the case of core health benefits)'.
(2) EFFECTIVE DATE.--The amendment made by subsection (a) shall take effect as if included in the amendments made by section 1151 of the Tax Reform Act of 1986.
(c) AMENDMENTS TO GENERATION-SKIPPING TRANSFER TAX.--
(1) Subparagraph (B) of section 2642(c)(2) is amended by striking 'such individual dies before the trust is terminated' and inserting 'the trust does not terminate before the individual dies'.
(2) Paragraph (2) of section 2642(c) is amended by adding at the end thereof the following new sentence: 'Rules similar to the rules of section 2652(c)(3) shall apply for purposes of subparagraph (A).'
(3) Subparagraph (C) of section 1433(b)(2) of the Tax Reform Act of 1986 shall not exempt any generation-skipping transfer from the amendments made by subtitle D of title XVI of such Act to the extent such transfer is attributable to property transferred by gift or by reason of the death of another person to the decedent (or trust) referred to in such subparagraph after August 3, 1990.
(4) The amendments made by paragraphs (1) and (2) shall apply to transfers after March 31, 1988.
(d) TREATMENT OF CERTAIN PARTNERSHIP INTEREST UNDER SECTION 1031.--
(1) IN GENERAL.--Paragraph (2) of section 1031(a) is amended by adding at the end thereof the following new sentence:
'For purposes of this section, an interest in a partnership which has in effect a valid election under section 761(a) to be excluded from the application of all of subchapter K shall be treated as an interest in each of the assets of such partnership and not as an interest in a partnership.'
(2) EFFECTIVE DATE.--The amendment made by paragraph (1) shall apply to transfers after July 18, 1984.
(e) TREATMENT OF CERTAIN SEPARATED EMPLOYEES.--
(1) IN GENERAL.--Paragraph (6) of section 79(d) is amended by striking 'any retired employee' and inserting 'any former employee'.
(2) EFFECTIVE DATE.--The amendment made by paragraph (1) shall apply to employees separating from service after the date of the enactment of this Act.
(f) TREATMENT OF CERTAIN MEDICAL CARE REIMBURSEMENTS UNDER WAGE WITHHOLDING.--
(1) IN GENERAL.--Subsection (a) of section 3401 is amended by striking 'or' at the end of paragraph (18), by striking the period at the end of paragraph (19) and inserting '; or', and by adding at the end thereof the following new paragraph:
'(20) for any medical care reimbursement made to or for the benefit of an employee under a self-insured medical reimbursement plan (within the meaning of section 105(h)(6)).'
(2) EFFECTIVE DATE.--The amendment made by paragraph (1) shall apply as if included in the amendments made by section 1151 of the Tax Reform Act of 1986 but shall not apply to any amount paid before the date of the enactment of this Act which the employer treated as wages for purposes of chapter 24 of the Internal Revenue Code of 1986 when paid.
(g) TREATMENT OF CERTAIN INTERESTS UNDER WINDFALL PROFIT TAX.--
(1) IN GENERAL.--Paragraph (1) of section 1879(o) of the Tax Reform Act of 1986 is amended by striking 'held by' and inserting 'held by the Protestant Episcopal Church Foundation of the Diocese of Oklahoma or held by'.
(2) EFFECTIVE DATE.--The amendment made by paragraph (1) shall take effect as if included in section 1879(o) of the Tax Reform Act of 1986.
(a) GENERAL RULE.--
(1) Clause (ii) of section 56(g)(4)(D) is amended by striking 'year' and inserting 'years'.
(2) The heading of subparagraph (B) of section 172(m)(4) is amended by striking 'SUBSECTION (B)(2)' and inserting 'SUBSECTION (b)(2)'.
(3) Paragraph (2) of section 351(e) is amended by striking 'are used' and inserting 'is used'.
(4) The heading of subparagraph (B) of section 413(c)(7) is amended by striking 'ASSET' and inserting 'ASSETS'.
(5) Subparagraph (C) of section 461(i)(3) is amended to read as follows:
'(C) any tax shelter (as defined in section 6662(d)(2)(C)(ii)).'
(6) Subparagraph (A) of section 469(m)(3) is amended by striking 'preenactment' and inserting 'pre-enactment'.
(7) Subsection (c) of section 597 is amended by striking 'The purposes of' and inserting 'For purposes of'.
(8) The last sentence of subsection (a) of section 860D is amended by inserting a closing parenthesis before the period at the end thereof.
(9) Subparagraph (A) of section 860G(a)(3) is amended by striking the comma after 'secured'.
(10) Subparagraph (B) of section 927(g)(2) is amended by striking 'prescribed' and inserting 'prescribe'.
(11) Paragraph (1) of section 936(e) is amended by striking 'subsection (a)(1)' each place it appears and inserting 'subsection (a)(2)'.
(12) Subparagraph (C) of section 1017(b)(4) is amended by striking 'subparagraph' and inserting 'subparagraphs'.
(13) The material preceding subparagraph (A) of section 1245(a)(3) is amended by striking 'or (3)' and inserting 'or (3))'.
(14) Paragraph (2) of section 1441(b) is amended by inserting 'section' before '170(b)(1)(A)(ii)'.
(15) Clause (ii) of section 2056A(b)(2)(B) is amended by striking 'therefore' and inserting 'therefor'.
(16) The item relating to section 2056A in the table of sections for part IV of subchapter A of chapter 11 is amended by striking 'trusts' and inserting 'trust'.
(17) Subclause (I) of section 2642(d)(2)(B)(i) is amended by striking 'state' and inserting 'State'.
(18) The heading of chapter 23A is amended by striking 'chapter 23A. railroad' and inserting 'chapter 23a--railroad'.
(19) Paragraphs (9) and (10) of section 3231(e) are redesignated as paragraphs (8) and (9), respectively.
(20) Subparagraph (D) of section 4093(c)(4) is amended by striking 'reduced tax sale' and inserting 'reduced-tax sale'.
(21) Paragraph (3) of section 5061(b) is amended to read as follows:
'(3) section 5041(e),'.
(22) Paragraph (3) of section 6013(e) is amended by striking 'section 6661(b)(2)(A)' and inserting 'section 6662(d)(2)(A)'.
(23) Subsection (c) of section 6038A is amended by redesignating paragraphs (4), (5), and (6) as paragraphs (3), (4), and (5), respectively.
(24) Paragraph (3) of section 6039D(d) is amended by striking all that follows 'plan (and not' and inserting 'the employer).'
(25) Paragraph (4) of section 6045(e) is amended by striking 'broker' and inserting 'reporting person'.
(26) The heading for subsection (a) of section 6323 is amended by striking 'PURCHASES' and inserting 'PURCHASERS'.
(27) Subsection (a) of section 6332 is amended by striking 'subsections (b) and (c)' and inserting 'this section'.
(28) The last sentence of section 6655(g)(3) is amended by striking all that follows: '11 months' and inserting 'in clause (i)(IV).'
(29) Paragraph (3) of section 7519(c) is amended by striking 'payable on later of' and inserting 'payable on the later of'.
(30) The section 7521 added by section 6233 of the Technical and Miscellaneous Revenue Act of 1988 is redesignated as section 7522.
(31) The table of sections for chapter 77 is amended by striking the item added by such section 6233 and inserting the following:
(33) Subparagraph (C) of section 7608(c)(5) is amended--
(A) by striking 'interested' in clause (i)(I) and inserting 'interest', and
(B) by striking 'title 3' in clause (ii) and inserting 'title 31'.
(34) Subparagraph (C) of section 7701(j)(1) is amended by striking so much of such subparagraph as precedes 'contributions to the Thrift' and inserting the following:
'(C) subject to section 401(k)(4)(B) and any dollar limitation on the application of section 402(a)(8),'.
(35) Paragraph (1) of section 1012(t) of the Technical and Miscellaneous Revenue Act of 1988 is amended by inserting '(as amended by paragraph (2))' after 'clause (ii)'.
(36) Subparagraph (F) of section 1014(g)(4) of the Technical and Miscellaneous Revenue Act of 1988 is amended by striking 'subparagraph' in clause (ii) and inserting 'paragraph'.
(37) Paragraph (28) of section 1018(u) of the Technical and Miscellaneous Revenue Act of 1988 is amended by inserting 'net' before 'capital loss' each place it appears.
(38) Subparagraph (C) of section 2001(d)(6) of the Technical and Miscellaneous Revenue Act of 1988 is amended by striking 'a gallon' and inserting 'per gallon'.
(39) Paragraph (3) of section 5033(a) of the Technical and Miscellaneous Revenue Act of 1988 is amended by striking 'chapter 1' and inserting 'chapter 11'.
(40) Paragraph (2) of section 232(a) of the Railroad Retirement Revenue Act of 1983 is amended by striking 'section 516(b)' each place it appears and inserting 'section 7106(b)'.
(b) EFFECTIVE DATE.--The amendments made by this section shall take effect on the date of the enactment of this Act.
PART I--REPEAL OF EXPIRED OR OBSOLETE PROVISIONS
Subpart A--General Provisions
SEC. 11801. REPEAL OF EXPIRED OR OBSOLETE PROVISIONS.
(a) REPEALS.--The following provisions are hereby repealed:
(1) Section 23 (relating to residential energy credit).
(2) Paragraph 82 (1), (2), (3), and (4) of section 39(d) (relating to transitional rules).
(3) Subsection (f) of section 56 (relating to adjustments for book income of corporations).
(4) Subsection (h) of section 63 (relating to transitional rule for taxable years beginning in 1987).
(5) Subsection (i) of section 83 (relating to transitional rules).
(6) Section 110 (relating to income tax paid by lessee corporation).
(7) Section 113 (relating to mustering-out payments for members of the Armed Forces).
(8) Section 114 (relating to sports programs conducted for the American National Red Cross).
(9) Section 124 (relating to qualified transportation provided by employers).
(10) Section 128 (relating to interest on certain savings certificates).
(11) Subsection (i) of section 170 (relating to rule for nonitemization of deductions).
(12) Section 184 (relating to amortization of certain railroad rolling stock).
(13) Section 188 (relating to amortization of certain expenditures for child care facilities).
(14) Subsection (d) of section 190 (relating to application of section).
(15) Section 250 (relating to certain payments to the National Railroad Passenger Corporation).
(16) Subsection (b) of section 263 (relating to expenditures for advertising and good will).
(17) Subsection (e) of section 305 (relating to dividend reinvestment in stock of public utilities).
(18) Subsection (h) of section 306 (relating to stock received in transactions to which 1939 Code applies).
(19) Part IV of subchapter C of chapter 1 (relating to insolvency reorganizations).
(20) Section 422 (relating to qualified stock options).
(21) Section 424 (relating to restricted stock options).
(22) Subsection (d) of section 503 (relating to special rule for loans).
(23) Paragraph (14) of section 512(b) (relating to modifications applicable in computing unrelated business taxable income).
(24) Subsection (c) of section 545 (relating to special adjustment to taxable income).
(25) Paragraphs (2), (3), and (4) of section 582(c) (relating to bond, etc., losses and gains of financial institutions).
(26) Paragraph (2) of section 585(b) (relating to percentage method).
(27) Subsection (i) of section 617 (relating to certain pre-1970 exploration expenditures).
(28) Part II of subchapter I of chapter 1 (relating to payments to encourage exploration, etc., for defense purposes).
(29) Subparagraphs (C) and (D) of section 861(a)(1) (relating to source rule for interest).
(30) Subsection (k) of section 897 (relating to foreign corporations acquired before enactment).
(31) Subsection (e) of section 904 (relating to transitional rules for carrybacks and carryovers on the per-country limitation).
(32) Subsections (e) and (f)(3)(C) of section 907 (relating to transitional rules).
(33) Section 1039 (relating to certain sales of low-income housing projects).
(34) Part VIII of subchapter O of chapter 1 (relating to distributions pursuant to Bank Holding Company Act).
(35) Section 1238 (relating to amortization in excess of depreciation).
(36) Subsection (c) of section 1401 (relating to credit against self-employment taxes).
(37) Chapter 4 (relating to rules applicable to recovery of excessive profits on Government contracts).
(38) Section 1564 (relating to transitional rules in the case of certain controlled corporations).
(39) Subsection (b) of section 2010 (relating to phase-in of credit).
(40) Subsection (b) of section 2505 (relating to phase-in of credit).
(41) Paragraph (3) of section 3402(a) (relating to changes made by section 101 of the Economic Recovery Tax Act of 1981).
(42) Section 3510 (relating to credit for increased social security employee taxes and railroad retirement tier 1 employee taxes imposed during 1984).
(43) Paragraph (3) of section 6018(a) (relating to phase-in of filing requirement amount).
(44) Section 6158 (relating to installment payment of tax attributable to divestitures pursuant to Bank Holding Company Act Amendments of 1970).
(45) Subchapter E of chapter 64 (relating to collection of State individual income taxes).
(46) Subsection (e) of section 6427 (relating to use in certain taxicabs).
(47) Section 6428 (relating to 1981 rate reduction tax credit).
(48) Chapter 37 (relating to excise tax on sugar).
(b) CLERICAL AMENDMENTS.--
(1) The table of sections for subpart A of part IV of subchapter A of chapter 1 is amended by striking the item relating to section 23.
(2) The table of sections for part III of subchapter B of chapter 1 is amended by striking the items relating to sections 110, 113, 114, 124, and 128.
(3) The table of sections for part VI of subchapter B of chapter 1 is amended by striking the items relating to sections 184 and 188.
(4) The table of sections for part VIII of subchapter B of chapter 1 is amended by striking the item relating to section 250.
(5) The table of parts for subchapter C of chapter 1 is amended by striking the item relating to part IV.
(6) The table of sections for part II of subchapter D of chapter 1 is amended by striking the items relating to sections 422 and 424.
(7) The table of parts for subchapter I of chapter 1 is amended by striking the item relating to part II.
(8) The table of sections for part III of subchapter O of chapter 1 is amended by striking the item relating to section 1039.
(9) The table of parts for subchapter O of chapter 1 is amended by striking the item relating to part VIII.
(10) The table of sections for part IV of subchapter P of chapter 1 is amended by striking the item relating to section 1238.
(11) The table of chapters for subtitle A is amended by striking the item relating to chapter 4.
(12) The table of sections for part II of subchapter B of chapter 6 is amended by striking the item relating to section 1564.
(13) The table of sections for subchapter A of chapter 62 is amended by striking the item relating to section 6158.
(14) The table of subchapters for chapter 64 is amended by striking the item relating to subchapter E.
(15) The table of sections for subchapter B of chapter 65 is amended by striking the item relating to section 6428.
(16) The table of sections for chapter 25 is amended by striking the item relating to section 3510.
(17) The table of chapters for subtitle D is amended by striking the item relating to chapter 37.
(c) CONFORMING AMENDMENTS.--
(1) AMENDMENT RELATING TO REPEAL OF SECTION 23.--Subsection (a) of section 1016 is amended by striking paragraph (20) and by redesignating the following paragraphs accordingly.
(2) AMENDMENTS RELATING TO REPEAL OF SECTION 56(f).--
(A) Paragraph (1) of section 56(c) is amended to read as follows:
'(1) ADJUSTMENT FOR ADJUSTED CURRENT EARNINGS.--Alternative minimum taxable income shall be adjusted as provided in subsection (g).'
(B) Paragraphs (1) and (2) of section 59(g) are each amended by striking 'beginning after 1989'.
(C) Clause (iii) of section 56(g)(4)(C) is amended to read as follows:
'(iii) TREATMENT OF TAXES ON DIVIDENDS FROM 936 CORPORATIONS.--
'(I) IN GENERAL.--For purposes of determining the alternative minimum foreign tax credit, 75 percent of any withholding or income tax paid to a possession of the United States with respect to dividends received from a corporation eligible for the credit provided by section 936 shall be treated as a tax paid to a foreign country by the corporation receiving the dividend.
'(II) LIMITATION.--If the aggregate amount of the dividends referred to in subclause (I) for any taxable year exceeds the excess referred to in paragraph (1), the amount treated as tax paid to a foreign country under subclause (I) shall not exceed the amount which would be so treated without regard to this subclause multiplied by a fraction the numerator of which is the excess referred to in paragraph (1) and the denominator of which is the aggregate amount of such dividends.
'(III) TREATMENT OF TAXES IMPOSED ON 936 CORPORATION.--For purposes of this clause, taxes paid by any corporation eligible for the credit provided by section 936 to a possession of the United States shall be treated as a withholding tax paid with respect to any dividend paid by such corporation to the extent such taxes would be treated as paid by the corporation receiving the dividend under rules similar to the rules of section 902 (and the amount of any such dividend shall be increased by the amount so treated).'
(E) Paragraph (2) of section 59A(b) is amended by striking '(and the last sentence of section 56(f)(2)(B))'.
(3) AMENDMENT RELATING TO REPEAL OF SECTION 124.--Subsection (f) of section 125 is amended by striking 'section 117, 124,' and inserting 'section 117,'.
(4) AMENDMENT RELATING TO REPEAL OF SECTION 128.--Paragraph (2) of section 265(a) is amended by striking 'subtitle' and all that follows down through the period at the end thereof and inserting 'subtitle.'
(5) AMENDMENT RELATING TO REPEAL OF SECTION 170(i).--Section 170 is amended by redesignating subsections (j), (k), (l), (m), and (n) as subsections (i), (j), (k), (l), and (m), respectively.
(6) AMENDMENTS RELATING TO REPEAL OF AMORTIZATION PROVISIONS.--
(A) Subsection (a) of section 48 is amended by striking paragraph (8).
(B) Subsection (f) of section 642 is amended by striking 'sections 169, 184, 187, and 188' and inserting 'section 169'.
(C) Paragraph (2) of section 861(e) is amended by striking 'referred to in subparagraph (B) of section 184(d)(1)' and inserting 'all of whose stock is owned by one or more domestic common carriers by railroad'.
(D) Subparagraph (B) of section 1082(a)(2) is amended by striking '169, 184, or 188' and inserting '169'.
(E) Subparagraph (C) of section 1245(a)(3) is amended by striking '188,' and inserting '188 (as in effect before its repeal by the Revenue Reconciliation Act of 1990),'.
(F) Paragraph (3) of section 1250(b) is amended by striking '188,' and inserting '188 (as in effect before its repeal by the Revenue Reconciliation Act of 1990),'.
(7) AMENDMENTS RELATING TO REPEAL OF SECTION 305(e).--
(A) Paragraph (1) of section 305(d) is amended by striking '(other than subsection (e))'.
(B) Subsection (f) of section 305 is redesignated as subsection (e).
(8) AMENDMENTS RELATED TO REPEAL OF SPECIAL TREATMENT OF INSOLVENCY REORGANIZATIONS.--
(A) Subsection (b) of section 47 is amended by inserting 'or' at the end of paragraph (1), by striking out ', or' at the end of paragraph (2), and inserting a period, and by striking paragraph (3).
(B) Subparagraph (B) of section 168(i)(7) is amended by striking '371(a), 374(a),'.
(C) Subparagraph (D) of section 247(b)(2) is amended by striking ', a transaction to which section 371 (relating to insolvency reorganization) applies,'.
(D) Subsection (d) of section 354 is hereby repealed.
(E) Clause (i) of section 356(d)(2)(B) is amended by striking 'or (d)'.
(F)(i) Section 357 is amended by striking '351, 361, 371, or 374' each place it appears and inserting '351 or 361'.
(ii) Paragraph (2) of section 357(c) is amended by inserting 'or' at the end of subparagraph (A), by striking subparagraph (B), and by redesignating subparagraph (C) as subparagraph (B).
(G) Section 358 is amended--
(i) in subsection (a), by striking '361, 371(b), or 374' and inserting 'or 361', and
(ii) by striking subsection (b)(3).
(H) Paragraph (3) of section 1245(b) is amended by striking '371(a), 374(a),'.
(I) Paragraph (3) of section 1250(d) is amended by striking '371(a), 374(a),'.
(9) AMENDMENTS RELATING TO REPEAL OF SECTIONS 422 AND 424.--
(A)(i) Section 422A is redesignated as section 422 and section 425 is redesignated as section 424.
(ii) The table of sections for part II of subchapter D of chapter 1 is amended by redesignating the items relating to sections 422A and 425 as items relating to sections 422 and 424, respectively.
(B) Section 421 is amended--
(i) in subsection (a)--
(I) by striking '422(a), 422A(a), 423(a), or 424(a)' and inserting '422(a) or 423(a)',
(II) by striking 'except as provided in section 422(c)(1),' in paragraph (1), and
(III) by striking '425(a)' in paragraph (2) and inserting '424(a)';
(ii) in subsection (b)--
(I) by striking '422(a), 422A(a), 423(a), or 424(a)' and inserting '422(a) or 423(a)', and
(II) by striking '422(a)(1), 422A(a)(1), 423(a)(1), or 424(a)(1),' and inserting '422(a)(1) or 423(a)(1),';
(iii) in subsection (c)--
(I) by striking '422(a), 422A(a), 423(a), and 424(a)' in paragraph (1)(A) and inserting '422(a) and 423(a)',
(II) by striking 'sections 423(c) and 424(c)(1)' in paragraph (1)(B) and inserting 'section 423(c)',
(III) by striking '422(c)(1), 423(c), or 424(c)(1)' each place it appears in paragraphs (2) and (3)(A) and inserting '423(c)',
(IV) by striking 'sections 422(c)(1), 423(c), and 424(c)(1)' in paragraph (3)(B) and inserting 'section 423(c)', and
(V) by striking 'such sections' in paragraph (3)(B) and inserting 'such section'.
(i) by striking '425(a)' in subsection (a)(2) and inserting '424(a)', and
(ii) by striking paragraph (5) of subsection (c) and by redesignating paragraphs (6), (7), and (8), of subsection (c) as paragraphs (5), (6), and (7), respectively.
(D) Subsection (a) of section 423 is amended--
(i) by striking '(other than a restricted stock option granted pursuant to a plan described in section 424(c)(3)(B))', and
(ii) by striking '425(a)' and inserting '424(a)'.
(E) Subsection (b) of section 423 is amended by striking '425(d)' in paragraph (3) and inserting '424(d)'.
(F) Section 424 (as redesignated by subparagraph (A)) is amended--
(i) by striking '425(a)' in subsection (a) and inserting '424(a)',
(ii) by striking '422(a)(1), 422A(a)(1), 423(a)(1), or 424(a)(1)' in subsection (c)(3)(A)(ii) and inserting '422(a)(1) or 423(a)(1)',
(iii) by striking '422(b)(7), 422A(b)(6), 423(b)(3), and 424(b)(3)' in subsection (d) and inserting '422(b)(6) and 423(b)(3)',
(iv) in subsection (g)--
(I) by striking '422(a)(2), 422A(a)(2), 423(a)(2), and 424(a)(2)' and inserting '422(a)(2) and 423(a)(2)', and
(II) by striking '425(a)' and inserting '424(a)', and
(v) in subsection (h)--
(I) by striking paragraph (2) and inserting the following:
'(A) the fair market value of such stock on the date of the original granting of the option,
'(B) the fair market value of such stock on the date of the making of such modification, extension, or renewal, or
'(C) the fair market value of such stock at the time of the making of any intervening modification, extension, or renewal.'
(III) by striking the sentence following paragraph (3)(C).
(i) by striking 'section 422A' and inserting 'section 422', and
(ii) by striking 'section 422A(c)(2)' and inserting 'section 422(c)(2)'.
(H) Clause (ii) of section 1042(c)(2)(B) is amended by striking 'section 83, 422, 422A, 423, or 424 applies' and inserting 'section 83, 422, or 423 applied (or to which section 422 or 424 (as in effect on the day before the date of the enactment of the Revenue Reconciliation Act of 1990) applied)'.
(I)(i) Subparagraph (B) of section 402(a)(3) is amended by striking 'section 425' and inserting 'section 424'.
(ii) Clause (i) of section 402(a)(6)(B) is amended by striking 'section 425(f)' and inserting 'section 424(f)'.
(J) Section 6039 is amended--
(i) by striking paragraphs (1) and (2) of subsection (a) and inserting the following:
'(2) which in any calendar year records (or has by its agent recorded) a transfer of the legal title of a share of stock acquired by the transferor pursuant to his exercise of an option described in section 423(c) (relating to special rule where option price is between 85 percent and 100 percent of value of stock),',
(iii) by amending subsection (c) to read as follows:
'For definition of--
'(1) the term 'incentive stock option', see section 422(b), and
'(2) the term 'employee stock purchase plan' see section 423(b).'
(10) AMENDMENTS RELATING TO REPEAL OF SECTION 545(c).--
(A) Paragraph (15) of section 381(c) is hereby repealed.
(B) Section 545 is amended by redesignating subsection (d) as subsection (c).
(11) AMENDMENTS RELATING TO REPEAL OF PARAGRAPHS (2), (3), AND (4) OF SECTION 582(c).--Subsection (c) of section 582 is amended--
(A) by striking 'paragraph (5)' in paragraph (1) and inserting 'paragraph (2)', and
(B) by redesignating paragraph (5) as paragraph (2).
(12) AMENDMENTS RELATING TO REPEAL OF SECTION 585(b)(2).--
(A) Paragraph (4) of section 57(a) is amended by striking '585 or'.
(B) Subparagraph (A) of section 291(e)(1) is hereby repealed.
(C) Paragraph (1) of section 585(b) is amended by striking 'shall not exceed' and all that follows down through the period at the end thereof and inserting 'shall not exceed the addition to the reserve for losses on loans determined under the experience method as provided in paragraph (2).'
(D) Subsection (b) of section 585 is amended by redesignating paragraphs (3) and (4) as paragraphs (2) and (3), respectively.
(E) Paragraph (3) of section 585(b) (as redesignated by subparagraph (A)) is amended to read as follows:
'(3) REGULATIONS; DEFINITION OF LOAN.--The Secretary shall define the term loan and prescribe such regulations as may be necessary to carry out the purposes of this section.'
(F) Paragraphs (1)(A) and (E) of section 593(b) are each amended by striking 'section 585(b)(3)' and inserting 'section 585(b)(2)'.
(13) AMENDMENT RELATING TO REPEAL OF SECTION 617(i).--Section 617 is amended by redesignating subsection (j) as subsection (i).
(14) AMENDMENTS RELATING TO REPEAL OF SECTION 861(a)(1)(C) AND (D).--Paragraph (1) of section 861(a) is amended by inserting 'and' at the end of subparagraph (A) and by striking the comma at the end of subparagraph (B) and inserting a period.
(15) AMENDMENTS RELATING TO REPEAL OF SECTION 1039.--
(A) Paragraphs (1)(A)(i) and (2)(B)(ii) of section 1250(a) are each amended by inserting '(as in effect on the day before the date of the enactment of the Revenue Reconciliation Act of 1990)' after 'section 1039(b)(1)(B)'.
(B) Subsection (d) of section 1250 is amended by striking paragraph (8).
(C) Section 1250 is amended by striking subsection (g) and by redesignating subsections (h) and (i) as subsections (g) and (h), respectively.
(16) AMENDMENT RELATING TO REPEAL OF SECTION 1401(c).--Section 1401 is amended by redesignating subsection (d) as subsection (c).
(17) AMENDMENTS RELATING TO RENEGOTIATION PROVISIONS.--
(A) Section 6422 is amended by striking paragraph (6) and redesignating the succeeding paragraphs accordingly.
(B) Subparagraph (A) of section 6511(d)(2) is amended by striking '; except that' and all that follows down through the period at the end of the first sentence and inserting a period.
(C) Section 6515 is amended by striking paragraph (2) and redesignating the succeeding paragraphs accordingly.
(18) AMENDMENT RELATING TO REPEAL OF SECTION 1564.--Paragraph (5) of section 535(c) is amended by striking 'sections 1561 and 1564' and inserting 'section 1561'.
(19) AMENDMENTS RELATED TO REPEAL OF UNIFIED CREDIT PHASE-IN PROVISIONS.--
(A) Section 2010 is amended by redesignating subsections (c) and (d) as subsections (b) and (c), respectively.
(B) Section 2505 is amended by redesignating subsections (c) and (d) as subsections (b) and (c), respectively.
(C) Subsection (a) of section 6018 is amended by redesignating paragraphs (4) and (5) as paragraphs (3) and (4), respectively.
(20) AMENDMENTS RELATED TO REPEAL OF SECTION 6158.--
(A) Section 6503 is amended by striking subsection (h) and redesignating subsections (i), (j), and (k) as subsections (h), (i), and (j), respectively.
(B) Paragraph (2) of section 6601(b) is amended--
(i) by striking 'or 6158(a)' in the material preceding subparagraph (A),
(ii) by striking 'or 6158(a), as the case may be' in subparagraph (A), and
(iii) by striking the last sentence.
(A) Section 6405 is amended by striking subsection (d).
(B) Section 7463 is amended by striking subsection (f).
(22) AMENDMENTS RELATING TO REPEAL OF CHAPTER 37.--
(A) Subsection (b) of section 6302 is amended by striking 'chapter 21' and all that follows down through 'chapter 37,' and inserting 'chapter 21, 31, 32, or 33, or by section 4481'.
(B)(i) Section 6418 is hereby repealed.
(ii) The table of sections for subchapter B of chapter 65 is amended by striking the item relating to section 6418.
(C) Subsection (e) of section 6511 is hereby repealed.
(D)(i) Section 7240 is hereby repealed.
(ii) The table of sections for part II of subchapter A of chapter 75 is amended by striking the item relating to section 7240.
(E)(i) Subsection (a) of section 7655 is amended by striking the semicolon at the end of paragraph (2) and inserting a period and by striking paragraph (3).
(ii) Subsection (b) of section 7655 is amended by striking the semicolon at the end of paragraph (2) and inserting a period and by striking paragraph (3).
(A) Paragraph (1) of section 6427(i) is amended by striking '(e),'.
(B) Subparagraph (A) of section 6427(i)(2) is amended to read as follows:
'(A) IN GENERAL.--If $1,000 or more is payable under subsections (a), (b), (d), (g), (h), and (q) to any person with respect to fuel used (or a qualified diesel powered highway vehicle purchased) during any of the first 3 quarters of his taxable year, a claim may be filed under this section with respect to fuel used (or a qualified diesel powered highway vehicle purchased), during such quarter.'
(C) Paragraph (2) of section 6427(i) is amended by striking subparagraph (B) and redesignating subparagraph (C) as subparagraph (B).
(a) REPEAL OF SECTION 72(t)(2)(C).--Subsection (t) of section 72 is amended--
(1) by striking subparagraph (C) of paragraph (2),
(2) by redesignating subparagraph (D) of paragraph (2) as subparagraph (C), and
(3) by striking '(C), and (D)' in paragraph (3)(A) and inserting 'and (C)'.
(b) REPEAL OF OBSOLETE PROVISIONS IN SECTION 274.--
(1) Paragraph (2) of section 274(l) is amended to read as follows:
'(2) SKYBOXES, ETC.--In the case of a skybox or other private luxury box leased for more than 1 event, the amount allowable as a deduction under this chapter with respect to such events shall not exceed the sum of the face value of non-luxury box seat tickets for the seats in such box covered by the lease. For purposes of the preceding sentence, 2 or more related leases shall be treated as 1 lease.'
(2) Subsection (n) of section 274 is amended--
(A) in paragraph (2)--
(i) by striking subparagraph (D) and redesignating subparagraphs (E) and (F) as subparagraphs (D) and (E), respectively,
(ii) by striking 'described in subparagraph (E)' and inserting 'described in subparagraph (D)', and
(iii) by striking 'of subparagraph (F)' and inserting 'of subparagraph (E)', and
(B) by striking paragraph (3).
'(i) at the Federal short-term rate or rates (determined under section 1274) in effect, and
'(ii) by compounding semiannually.'
(1) Paragraph (1) of section 556(b) is amended by striking the last 2 sentences.
(2) The amendment made by paragraph (1) shall not apply to any corporation with respect to which an election under the second sentence of section 556(b)(1) of the Internal Revenue Code of 1986 (as in effect before the amendment made by paragraph (1)) is in effect unless such corporation elects to have such amendment apply and agrees to such adjustments as the Secretary of the Treasury or his delegate may require.
(e) ELIMINATION OF UNNECESSARY SECTION RELATING TO JURY DUTY PAY REMITTED TO EMPLOYER.--
(1) Paragraph (13) of section 62(a) is amended to read as follows:
'(13) JURY DUTY PAY REMITTED TO EMPLOYER.--Any deduction allowable under this chapter by reason of an individual remitting any portion of any jury pay to such individual's employer in exchange for payment by the employer of compensation for the period such individual was performing jury duty. For purposes of the preceding sentence, the term 'jury pay' means any payment received by the individual for the discharge of jury duty.'
(2) Part VII of subchapter B of chapter 1 is amended by striking out section 220 and redesignating section 221 as section 220.
(3) The table of sections for part VII of subchapter B of chapter 1 is amended by striking the items relating to sections 220 and 221 and inserting in lieu thereof the following:
(f) OTHER PROVISIONS.--
(1) Section 541 is amended by striking '(38.5 percent in the case of taxable years beginning in 1987)'.
(2) Subsection (e) of section 665 is amended to read as follows:
'(e) PRECEDING TAXABLE YEAR.--For purposes of this subpart--
'(1) In the case of a foreign trust created by a United States person, the term 'preceding taxable year' does not include any taxable year of the trust to which this part does not apply.
'(2) In the case of a preceding taxable year with respect to which a trust qualified, without regard to this subpart, under the provisions of subpart B, for purposes of the application of this subpart to such trust for such taxable year, such trust shall, in accordance with regulations prescribed by the Secretary, be treated as a trust to which subpart C applies.'
(3) Subsection (c) of section 668 is amended to read as follows:
'(c) INTEREST CHARGE NOT DEDUCTIBLE.--The interest charge determined under this section shall not be allowed as a deduction for purposes of any tax imposed by this title.'
(4) Paragraph (1) of section 1503(c) is amended by striking the last 2 sentences thereof.
(5) Paragraph (2) of section 2032A(a) is amended to read as follows:
'(2) LIMITATION ON AGGREGATE REDUCTION IN FAIR MARKET VALUE.--The aggregate decrease in the value of qualified real property taken into account for purposes of this chapter which results from the application of paragraph (1) with respect to any decedent shall not exceed $750,000.'
SEC. 11811. ELIMINATION OF EXPIRED PROVISIONS IN SECTION 172.
(a) GENERAL RULE.--Subsection (b) of section 172 is amended to read as follows:
'(b) NET OPERATING LOSS CARRYBACKS AND CARRYOVERS.--
'(1) YEARS TO WHICH LOSS MAY BE CARRIED.--
'(A) GENERAL RULE.--Except as otherwise provided in this paragraph, a net operating loss for any taxable year--
'(i) shall be a net operating loss carryback to each of the 3 taxable years preceding the taxable year of such loss, and
'(ii) shall be a net operating loss carryover to each of the 15 taxable years following the taxable year of the loss.
'(B) SPECIAL RULES FOR REITs.--
'(i) IN GENERAL.--A net operating loss for a REIT year shall not be a net operating loss carryback to any taxable year preceding the taxable year of such loss.
'(ii) SPECIAL RULE.--In the case of any net operating loss for a taxable year which is not a REIT year, such loss shall not be carried back to any taxable year which is a REIT year.
'(iii) REIT YEAR.--For purposes of this subparagraph, the term 'REIT year' means any taxable year for which the provisions of part II of subchapter M (relating to real estate investment trusts) apply to the taxpayer.
'(C) SPECIFIED LIABILITY LOSSES.--In the case of a taxpayer which has a specified liability loss (as defined in subsection (f)) for a taxable year, such specified liability loss shall be a net operating loss carryback to each of the 10 taxable years preceding the taxable year of such loss.
'(D) BAD DEBT LOSSES OF COMMERCIAL BANKS.--In the case of any bank (as defined in section 585(a)(2)), the portion of the net operating loss for any taxable year beginning after December 31, 1986, and before January 1, 1994, which is attributable to the deduction allowed under section 166(a) shall be a net operating loss carryback to each of the 10 taxable years preceding the taxable year of the loss and a net operating loss carryover to each of the 5 taxable years following the taxable year of such loss.
'(E) EXCESS INTEREST LOSS.--
'(i) IN GENERAL.--If--
'(I) there is a corporate equity reduction transaction, and
'(II) an applicable corporation has a corporate equity reduction interest loss for any loss limitation year ending after August 2, 1989,
then the corporate equity reduction interest loss shall be a net operating loss carryback and carryover to the taxable years described in subparagraph (A), except that such loss shall not be carried back to a taxable year preceding the taxable year in which the corporate equity reduction transaction occurs.
'(ii) LOSS LIMITATION YEAR.--For purposes of clause (i) and subsection (m), the term 'loss limitation year' means, with respect to any corporate equity reduction transaction, the taxable year in which such transaction occurs and each of the 2 succeeding taxable years.
'(iii) APPLICABLE CORPORATION.--For purposes of clause (i), the term 'applicable corporation' means--
'(I) a C corporation which acquires stock, or the stock of which is acquired in a major stock acquisition,
'(II) a C corporation making distributions with respect to, or redeeming, its stock in connection with an excess distribution, or
'(III) a C corporation which is a successor of a corporation described in subclause (I) or (II).
'(iv) OTHER DEFINITIONS.--
'For definitions of terms used in this subparagraph, see subsection (h).
'(A) with the modifications specified in subsection (d) other than paragraphs (1), (4), and (5) thereof, and
'(B) by determining the amount of the net operating loss deduction without regard to the net operating loss for the loss year or for any taxable year thereafter,
and the taxable income so computed shall not be considered to be less than zero.
'(3) ELECTION TO WAIVE CARRYBACK.--Any taxpayer entitled to a carryback period under paragraph (1) may elect to relinquish the entire carryback period with respect to a net operating loss for any taxable year. Such election shall be made in such manner as may be prescribed by the Secretary, and shall be made by the due date (including extensions of time) for filing the taxpayer's return for the taxable year of the net operating loss for which the election is to be in effect. Such election, once made for any taxable year, shall be irrevocable for such taxable year.'
(b) CONFORMING AMENDMENTS.--
(1) Section 172 is amended by striking subsections (g), (h), (i), and (k), and by redesignating subsections (j), (l), (m), and (n) as subsections (f), (g), (h), and (i), respectively.
(2)(A) Subsection (f) of section 172 (as redesignated by paragraph (1)) is amended to read as follows:
'(f) RULES RELATING TO SPECIFIED LIABILITY LOSS.--For purposes of this section--
'(1) IN GENERAL.--The term 'specified liability loss' means the sum of the following amounts to the extent taken into account in computing the net operating loss for the taxable year:
'(A) Any amount allowable as a deduction under section 162 or 165 which is attributable to--
'(i) product liability, or
'(ii) expenses incurred in the investigation or settlement of, or opposition to, claims against the taxpayer on account of product liability.
'(B) Any amount (not described in subparagraph (A)) allowable as a deduction under this chapter with respect to a liability which arises under a Federal or State law or out of any tort of the taxpayer if--
'(i) in the case of a liability arising out of a Federal or State law, the act (or failure to act) giving rise to such liability occurs at least 3 years before the beginning of the taxable year, or
'(ii) in the case of a liability arising out of a tort, such liability arises out of a series of actions (or failures to act) over an extended period of time a substantial portion of which occurs at least 3 years before the beginning of the taxable year.
'(2) LIMITATION.--The amount of the specified liability loss for any taxable year shall not exceed the amount of the net operating loss for such taxable year.
'(3) SPECIAL RULE FOR NUCLEAR POWERPLANTS.--Except as provided in regulations prescribed by the Secretary, that portion of a specified liability loss which is attributable to amounts incurred in the decommissioning of a nuclear power plant (or any unit thereof) may, for purposes of subsection (b)(1)(C), be carried back to each of the taxable years during the period--
'(A) beginning with the taxable year in which such plant (or unit thereof) was placed in service, and
'(B) ending with the taxable year preceding the loss year.
'(4) PRODUCT LIABILITY.--The term 'product liability' means--
'(A) liability of the taxpayer for damages on account of physical injury or emotional harm to individuals, or damage to or loss of the use of property, on account of any defect in any product which is manufactured, leased, or sold by the taxpayer, but only if
'(B) such injury, harm, or damage arises after the taxpayer has completed or terminated operations with respect to, and has relinquished possession of, such product.
'(5) COORDINATION WITH SUBSECTION (b)(2).--For purposes of applying subsection (b)(2), a specified liability loss for any taxable year shall be treated as a separate net operating loss for such taxable year to be taken into account after the remaining portion of the net operating loss for such taxable year.
'(6) ELECTION.--Any taxpayer entitled to a 10-year carryback under subsection (b)(1)(C) from any loss year may elect to have the carryback period with respect to such loss year determined without regard to subsection (b)(1)(C). Such election shall be made in such manner as may be prescribed by the Secretary and shall be made by the due date (including extensions of time) for filing the taxpayer's return for the taxable year of the net operating loss. Such election, once made for any taxable year, shall be irrevocable for that taxable year.'
(B) The portion of any loss which is attributable to a deferred statutory or tort liability loss (as defined in section 172(k) of the Internal Revenue Code of 1986 as in effect on the day before the date of the enactment of this Act) may not be carried back to any taxable year beginning before January 1, 1984, by reason of the amendment made by subparagraph (A).
(3) Paragraph (2) of section 172(g) (as redesignated by paragraph (1)) is amended to read as follows:
'(2) COORDINATION WITH SUBSECTION (b)(2).--For purposes of subsection (b)(2), the portion of a net operating loss for any taxable year which is attributable to the deduction allowed under section 166(a) shall be treated in a manner similar to the manner in which a specified liability loss is treated.'
(4) Subparagraph (B) of section 172(h)(4) (as redesignated by paragraph (1)) is amended to read as follows:
'(B) COORDINATION WITH SUBSECTION (b)(2).--For purposes of subsection (b)(2)--
'(i) a corporate equity reduction interest loss shall be treated in a manner similar to the manner in which a specified liability loss is treated, and
'(ii) in determining the net operating loss deduction for any prior taxable year referred to in the 3rd sentence of subsection (b)(2), the portion of any net operating loss which may not be carried to such taxable year under subsection (b)(1)(E) shall not be taken into account.'
SEC. 11812. ELIMINATION OF OBSOLETE PROVISIONS IN SECTION 167.
(a) GENERAL RULE.--Section 167 is amended--
(1) by striking subsections (b), (c), (d), (e), (f), (j), (k), (l), (m), (p), and (q) and by redesignating subsections (g), (h), (r), and (s) as subsections (c), (d), (e), and (f), respectively, and
(2) by inserting after subsection (a) the following new subsection:
'(b) CROSS REFERENCE.--
'For determination of depreciation deduction in case of property to which section 168 applies, see section 168.'
(b) CONFORMING AMENDMENTS.--
(1) Subsection (e) of section 167 (as redesignated by subsection (a)) is amended by striking '(h)' each place it appears in paragraphs (3)(B) and (4)(B) and inserting '(d)'.
(2)(A) Subparagraph (A) of section 168(e)(2) is amended to read as follows:
'(A) RESIDENTIAL RENTAL PROPERTY.--
'(i) RESIDENTIAL RENTAL PROPERTY.--The term 'residential rental property' means any building or structure if 80 percent or more of the gross rental income from such building or structure for the taxable year is rental income from dwelling units.
'(ii) DEFINITIONS.--For purposes of clause (i)--
'(I) the term 'dwelling unit' means a house or apartment used to provide living accommodations in a building or structure, but does not include a unit in a hotel, motel, or other establishment more than one-half of the units in which are used on a transient basis, and
'(II) if any portion of the building or structure is occupied by the taxpayer, the gross rental income from such building or structure shall include the rental value of the portion so occupied.'
'(10) PUBLIC UTILITY PROPERTY.--The term 'public utility property' means property used predominantly in the trade or business of the furnishing or sale of--
'(A) electrical energy, water, or sewage disposal services,
'(B) gas or steam through a local distribution system,
'(C) telephone services, or other communication services if furnished or sold by the Communications Satellite Corporation for purposes authorized by the Communications Satellite Act of 1962 (47 U.S.C. 701), or
'(D) transportation of gas or steam by pipeline,
if the rates for such furnishing or sale, as the case may be, have been established or approved by a State or political subdivision thereof, by any agency or instrumentality of the United States, or by a public service or public utility commission or other similar body of any State or political subdivision thereof.'
(C) Paragraph (2) of section 168(f) is amended by striking 'section 167(l)(3)(A)' and inserting 'subsection (i)(10)'.
(D) Paragraph (1) of section 168(i) is amended by adding at the end thereof the following new sentence:
'The reference in this paragraph to subsection (m) of section 167 shall be treated as a reference to such subsection as in effect on the day before the date of the enactment of the Revenue Reconciliation Act of 1990.'
(E) Clause (ii) of section 168(i)(9)(A) is amended by striking '(determined without regard to section 167(l))'.
(3) Sections 42(d)(2)(D)(i)(I) and 42(d)(5)(B) are each amended by striking 'section 167(k)' and inserting 'section 167(k) (as in effect on the day before the date of the enactment of the Revenue Reconciliation Act of 1990)'.
(4) Subparagraph (D) of section 56(a)(1) is amended by striking 'section 167(l)(3)(A)' and inserting 'section 168(i)(10)'.
(5) Paragraph (2) of section 312(k) is amended to read as follows:
'(2) EXCEPTION.--If for any taxable year a method of depreciation was used by the taxpayer which the Secretary has determined results in a reasonable allowance under section 167(a) and which is the unit-of-production method or other method not expressed in a term of years, then the adjustment to earnings and profits for depreciation for such year shall be determined under the method so used (in lieu of the straight line method).'
(6)(A) Paragraph (6) of section 381(c) is amended by striking 'subsections (b), (j), and (k) of section 167' and inserting 'sections 167 and 168'.
(B) Subsection (c) of section 381 is amended by striking paragraph (24) and redesignating paragraphs (25) and (26) as paragraphs (24) and (25), respectively.
(7) Subparagraph (C) of section 404(a)(1) is amended by striking 'section 167(l)(3)(A)(iii)' and inserting 'section 168(i)(10)(C)'.
(8) Clause (i) of section 460(e)(6)(A) is amended by striking 'section 167(k)' and inserting 'section 168(e)(2)(A)(ii)'.
(9) Subsection (e) of section 642 is amended by striking '167(h)' and inserting '167(d)'.
(10) Paragraph (2) of section 1016(a) is amended by striking 'under section 167(b)(1)' and inserting 'under the straight line method'.
(11) Subsection (a) of section 1250 is amended by redesignating paragraph (4) as paragraph (5) and by inserting after paragraph (3) the following new paragraph:
'(4) SPECIAL RULE.--For purposes of this subsection, any reference to section 167(k) or 167(j)(2)(B) shall be treated as a reference to such section as in effect on the day before the date of the enactment of the Revenue Reconciliation Act of 1990.'
(12) Paragraph (4) of section 1250(b) is amended by striking '167(k)' each place it appears and inserting '167(k) (as in effect on the day before the date of the enactment of the Revenue Reconciliation Act of 1990)'.
(13) Subparagraph (B) of section 7701(e)(5) is amended by inserting before the period at the end thereof the following: '(as in effect on the day before the date of the enactment of the Revenue Reconciliation Act of 1990)'.
(c) EFFECTIVE DATE.--
(1) IN GENERAL.--Except as provided in paragraph (2), the amendments made by this section shall apply to property placed in service after the date of the enactment of this Act.
(2) EXCEPTION.--The amendments made by this section shall not apply to any property to which section 168 of the Internal Revenue Code of 1986 does not apply by reason of subsection (f)(5) thereof.
(3) EXCEPTION FOR PREVIOUSLY GRANDFATHER EXPENDITURES.--The amendments made by this section shall not apply to rehabilitation expenditures described in section 252(f)(5) of the Tax Reform Act of 1986 (as added by section 1002(l)(31) of the Technical and Miscellaneous Revenue Act of 1988).
(a) GENERAL RULE.--Subpart E of part IV of subchapter A of chapter 1 is amended to read as follows:
'Subpart E--Rules for Computing Investment Credit
'Sec. 46. Amount of credit.
'Sec. 47. Rehabilitation credit.
'Sec. 48. Energy credit; reforestation credit.
'Sec. 49. At-risk rules.
'Sec. 50. Other special rules.
'SEC. 46. AMOUNT OF CREDIT.
'83 For purposes of section 38, the amount of the investment credit determined under this section for any taxable year shall be the sum of--
'(1) the rehabilitation credit,
'(2) the energy credit, and
'(3) the reforestation credit.
'(a) GENERAL RULE.--For purposes of section 46, the rehabilitation credit for any taxable year is the sum of--
'(1) 10 percent of the qualified rehabilitation expenditures with respect to any qualified rehabilitated building other than a certified historic structure, and
'(2) 20 percent of the qualified rehabilitation expenditures with respect to any certified historic structure.
'(b) WHEN EXPENDITURES TAKEN INTO ACCOUNT.--
'(1) IN GENERAL.--Qualified rehabilitation expenditures with respect to any qualified rehabilitated building shall be taken into account for the taxable year in which such qualified rehabilitated building is placed in service.
'(2) COORDINATION WITH SUBSECTION (d).--The amount which would (but for this paragraph) be taken into account under paragraph (1) with respect to any qualified rehabilitated building shall be reduced (but not below zero) by any amount of qualified rehabilitation expenditures taken into account under subsection (d) by the taxpayer or a predecessor of the taxpayer (or, in the case of a sale and leaseback described in section 50(a)(2)(C), by the lessee), to the extent any amount so taken into account has not been required to be recaptured under section 50(a).
'(c) DEFINITIONS.--For purposes of this section--
'(1) QUALIFIED REHABILITATED BUILDING.--
'(A) IN GENERAL.--The term 'qualified rehabilitated building' means any building (and its structural components) if--
'(i) such building has been substantially rehabilitated,
'(ii) such building was placed in service before the beginning of the rehabilitation,
'(iii) in the case of any building other than a certified historic structure, in the rehabilitation process--
'(I) 50 percent or more of the existing external walls of such building are retained in place as external walls,
'(II) 75 percent or more of the existing external walls of such building are retained in place as internal or external walls, and
'(III) 75 percent or more of the existing internal structural framework of such building is retained in place, and
'(iv) depreciation (or amortization in lieu of depreciation) is allowable with respect to such building.
'(B) BUILDING MUST BE FIRST PLACED IN SERVICE BEFORE 1936.--In the case of a building other than a certified historic structure, a building shall not be a qualified rehabilitated building unless the building was first placed in service before 1936.
'(C) SUBSTANTIALLY REHABILITATED DEFINED.--
'(i) IN GENERAL.--For purposes of subparagraph (A)(i), a building shall be treated as having been substantially rehabilitated only if the qualified rehabilitation expenditures during the 24-month period selected by the taxpayer (at the time and in the manner prescribed by regulation) and ending with or within the taxable year exceed the greater of--
'(I) the adjusted basis of such building (and its structural components), or
'(II) $5,000.
The adjusted basis of the building (and its structural components) shall be determined as of the beginning of the 1st day of such 24-month period, or of the holding period of the building, whichever is later. For purposes of the preceding sentence, the determination of the beginning of the holding period shall be made without regard to any reconstruction by the taxpayer in connection with the rehabilitation.
'(ii) SPECIAL RULE FOR PHASED REHABILITATION.--In the case of any rehabilitation which may reasonably be expected to be completed in phases set forth in architectural plans and specifications completed before the rehabilitation begins, clause (i) shall be applied by substituting '60-month period' for '24-month period'.
'(iii) LESSEES.--The Secretary shall prescribe by regulation rules for applying this subparagraph to lessees.
'(D) RECONSTRUCTION.--Rehabilitation includes reconstruction.
'(2) QUALIFIED REHABILITATION EXPENDITURE DEFINED.--
'(A) IN GENERAL.--The term 'qualified rehabilitation expenditure' means any amount properly chargeable to capital account--
'(i) for property for which depreciation is allowable under section 168 and which is--
'(I) nonresidential real property,
'(II) residential rental property,
'(III) real property which has a class life of more than 12.5 years, or
'(IV) an addition or improvement to property described in subclause (I), (II), or (III), and
'(ii) in connection with the rehabilitation of a qualified rehabilitated building.
'(B) CERTAIN EXPENDITURES NOT INCLUDED.--The term 'qualified rehabilitation expenditure' does not include--
'(i) STRAIGHT LINE DEPRECIATION MUST BE USED.--Any expenditure with respect to which the taxpayer does not use the straight line method over a recovery period determined under subsection (c) or (g) of section 168. The preceding sentence shall not apply to any expenditure to the extent the alternative depreciation system of section 168(g) applies to such expenditure by reason of subparagraph (B) or (C) of section 168(g)(1).
'(ii) COST OF ACQUISITION.--The cost of acquiring any building or interest therein.
'(iii) ENLARGEMENTS.--Any expenditure attributable to the enlargement of an existing building.
'(iv) CERTIFIED HISTORIC STRUCTURE, ETC.--Any expenditure attributable to the rehabilitation of a certified historic structure or a building in a registered historic district, unless the rehabilitation is a certified rehabilitation (within the meaning of subparagraph (C)). The preceding sentence shall not apply to a building in a registered historic district if--
'(I) such building was not a certified historic structure,
'(II) the Secretary of the Interior certified to the Secretary that such building is not of historic significance to the district, and
'(III) if the certification referred to in subclause (II) occurs after the beginning of the rehabilitation of such building, the taxpayer certifies to the Secretary that, at the beginning of such rehabilitation, he in good faith was not aware of the requirements of subclause (II).
'(v) TAX-EXEMPT USE PROPERTY.--
'(I) IN GENERAL.--Any expenditure in connection with the rehabilitation of a building which is allocable to the portion of such property which is (or may reasonably be expected to be) tax-exempt use property (within the meaning of section 168(h)).
'(II) CLAUSE NOT TO APPLY FOR PURPOSES OF PARAGRAPH (1)(C).--This clause shall not apply for purposes of determining under paragraph (1)(C) whether a building has been substantially rehabilitated.
'(vi) EXPENDITURES OF LESSEE.--Any expenditure of a lessee of a building if, on the date the rehabilitation is completed, the remaining term of the lease (determined without regard to any renewal periods) is less than the recovery period determined under section 168(c).
'(C) CERTIFIED REHABILITATION.--For purposes of subparagraph (B), the term 'certified rehabilitation' means any rehabilitation of a certified historic structure which the Secretary of the Interior has certified to the Secretary as being consistent with the historic character of such property or the district in which such property is located.
'(D) NONRESIDENTIAL REAL PROPERTY; RESIDENTIAL RENTAL PROPERTY; CLASS LIFE.--For purposes of subparagraph (A), the terms 'nonresidential real property,' 'residential rental property,' and 'class life' have the respective meanings given such terms by section 168.
'(3) CERTIFIED HISTORIC STRUCTURE DEFINED.--
'(A) IN GENERAL.--The term 'certified historic structure' means any building (and its structural components) which--
'(i) is listed in the National Register, or
'(ii) is located in a registered historic district and is certified by the Secretary of the Interior to the Secretary as being of historic significance to the district.
'(B) REGISTERED HISTORIC DISTRICT.--The term 'registered historic district' means--
'(i) any district listed in the National Register, and
'(ii) any district--
'(I) which is designated under a statute of the appropriate State or local government, if such statute is certified by the Secretary of the Interior to the Secretary as containing criteria which will substantially achieve the purpose of preserving and rehabilitating buildings of historic significance to the district, and
'(II) which is certified by the Secretary of the Interior to the Secretary as meeting substantially all of the requirements for the listing of districts in the National Register.
'(1) IN GENERAL.--In the case of any building to which this subsection applies, except as provided in paragraph (3)--
'(A) if such building is self-rehabilitated property, any qualified rehabilitation expenditure with respect to such building shall be taken into account for the taxable year for which such expenditure is properly chargeable to capital account with respect to such building, and
'(B) if such building is not self-rehabilitated property, any qualified rehabilitation expenditure with respect to such building shall be taken into account for the taxable year in which paid.
'(2) PROPERTY TO WHICH SUBSECTION APPLIES.--
'(A) IN GENERAL.--This subsection shall apply to any building which is being rehabilitated by or for the taxpayer if--
'(i) the normal rehabilitation period for such building is 2 years or more, and
'(ii) it is reasonable to expect that such building will be a qualified rehabilitated building in the hands of the taxpayer when it is placed in service.
Clauses (i) and (ii) shall be applied on the basis of facts known as of the close of the taxable year of the taxpayer in which the rehabilitation begins (or, if later, at the close of the first taxable year to which an election under this subsection applies).
'(B) NORMAL REHABILITATION PERIOD.--For purposes of subparagraph (A), the term 'normal rehabilitation period' means the period reasonably expected to be required for the rehabilitation of the building--
'(i) beginning with the date on which physical work on the rehabilitation begins (or, if later, the first day of the first taxable year to which an election under this subsection applies), and
'(ii) ending on the date on which it is expected that the property will be available for placing in service.
'(A) COMPONENT PARTS, ETC.--Property which is to be a component part of, or is otherwise to be included in, any building to which this subsection applies shall be taken into account--
'(i) at a time not earlier than the time at which it becomes irrevocably devoted to use in the building, and
'(ii) as if (at the time referred to in clause (i)) the taxpayer had expended an amount equal to that portion of the cost to the taxpayer of such component or other property which, for purposes of this subpart, is properly chargeable (during such taxable year) to capital account with respect to such building.
'(B) CERTAIN BORROWING DISREGARDED.--Any amount borrowed directly or indirectly by the taxpayer from the person rehabilitating the property for him shall not be treated as an amount expended for such rehabilitation.
'(C) LIMITATION FOR BUILDINGS WHICH ARE NOT SELF-REHABILITATED.--
'(i) IN GENERAL.--In the case of a building which is not self-rehabilitated, the amount taken into account under paragraph (1)(B) for any taxable year shall not exceed the amount which represents the portion of the overall cost to the taxpayer of the rehabilitation which is properly attributable to the portion of the rehabilitation which is completed during such taxable year.
'(ii) CARRY-OVER OF CERTAIN AMOUNTS.--In the case of a building which is not a self-rehabilitated building, if for the taxable year--
'(I) the amount which (but for clause (i)) would have been taken into account under paragraph (1)(B) exceeds the limitation of clause (i), then the amount of such excess shall be taken into account under paragraph (1)(B) for the succeeding taxable year, or
'(II) the limitation of clause (i) exceeds the amount taken into account under paragraph (1)(B), then the amount of such excess shall increase the limitation of clause (i) for the succeeding taxable year.
'(E) NO PROGRESS EXPENDITURES FOR CERTAIN PRIOR PERIODS.--No qualified rehabilitation expenditures shall be taken into account under this subsection for any period before the first day of the first taxable year to which an election under this subsection applies.
'(F) NO PROGRESS EXPENDITURES FOR PROPERTY FOR YEAR IT IS PLACED IN SERVICE, ETC.--In the case of any building, no qualified rehabilitation expenditures shall be taken into account under this subsection for the earlier of--
'(i) the taxable year in which the building is placed in service, or
'(ii) the first taxable year for which recapture is required under section 50(a)(2) with respect to such property,
or for any taxable year thereafter.
'(4) SELF-REHABILITATED BUILDING.--For purposes of this subsection, the term 'self-rehabilitated building' means any building if it is reasonable to believe that more than half of the qualified rehabilitation expenditures for such building will be made directly by the taxpayer.
'(5) ELECTION.--This subsection shall apply to any taxpayer only if such taxpayer has made an election under this paragraph. Such an election shall apply to the taxable year for which made and all subsequent taxable years. Such an election, once made, may be revoked only with the consent of the Secretary.
'(a) ENERGY CREDIT.--
'(1) IN GENERAL.--For purposes of section 46, the energy credit for any taxable year is the energy percentage of the basis of each energy property placed in service during such taxable year.
'(2) ENERGY PERCENTAGE.--
'(A) IN GENERAL.--Except as provided in subparagraph (B), the energy percentage is 10 percent.
'(B) TERMINATION.--Effective with respect to periods after December 31, 1991, the energy percentage is zero. For purposes of the preceding sentence, rules similar to the rules of section 48(m) (as in effect on the day before the date of the enactment of the Revenue Reconciliation Act of 1990) shall apply.
'(C) COORDINATION WITH REHABILITATION CREDIT.--The energy percentage shall not apply to that portion of the basis of any property which is attributable to qualified rehabilitation expenditures.
'(3) ENERGY PROPERTY.--For purposes of this subpart, the term 'energy property' means any property--
'(A) which is--
'(i) equipment which uses solar energy to generate electricity, to heat or cool (or provide hot water for use in) a structure, or to provide solar process heat, or
'(ii) equipment used to produce, distribute, or use energy derived from a geothermal deposit (within the meaning of section 613(e)(2)), but only, in the case of electricity generated by geothermal power, up to (but not including) the electrical transmission stage,
'(B)(i) the construction, reconstruction, or erection of which is completed by the taxpayer, or
'(ii) which is acquired by the taxpayer if the original use of such property commences with the taxpayer,
'(C) with respect to which depreciation (or amortization in lieu of depreciation) is allowable, and
'(D) which meets the performance and quality standards (if any) which--
'(i) have been prescribed by the Secretary by regulations (after consultation with the Secretary of Energy), and
'(ii) are in effect at the time of the acquisition of the property.
'(4) SPECIAL RULE FOR PROPERTY FINANCED BY SUBSIDIZED ENERGY FINANCING OR INDUSTRIAL DEVELOPMENT BONDS.--
'(A) REDUCTION OF BASIS.--For purposes of applying the energy percentage to any property, if such property is financed in whole or in part by--
'(i) subsidized energy financing, or
'(ii) the proceeds of a private activity bond (within the meaning of section 141) the interest on which is exempt from tax under section 103,
the amount taken into account as the basis of such property shall not exceed the amount which (but for this subparagraph) would be so taken into account multiplied by the fraction determined under subparagraph (B).
'(B) DETERMINATION OF FRACTION.--For purposes of subparagraph (A), the fraction determined under this subparagraph is 1 reduced by a fraction--
'(i) the numerator of which is that portion of the basis of the property which is allocable to such financing or proceeds, and
'(ii) the denominator of which is the basis of the property.
'(C) SUBSIDIZED ENERGY FINANCING.--For purposes of subparagraph (A), the term 'subsidized energy financing' means financing provided under a Federal, State, or local program a principal purpose of which is to provide subsidized financing for projects designed to conserve or produce energy.
'(5) CERTAIN PROGRESS EXPENDITURE RULES MADE APPLICABLE.--Rules similar to the rules of subsections (c)(4) and (d) of section 46 (as in effect on the day before the date of the enactment of the Revenue Reconciliation Act of 1990) shall apply for purposes of this subsection.
'(b) REFORESTATION CREDIT.--
'(1) IN GENERAL.--For purposes of section 46, the reforestation credit for any taxable year is 10 percent of the portion of the amortizable basis of any qualified timber property which was acquired during such taxable year and which is taken into account under section 194 (after the application of section 194(b)(1)).
'(2) DEFINITIONS.--For purposes of this subpart, the terms 'amortizable basis' and 'qualified timber property' have the respective meanings given to such terms by section 194.
'(a) GENERAL RULE.--
'(1) CERTAIN NONRECOURSE FINANCING EXCLUDED FROM CREDIT BASE.--
'(A) LIMITATION.--The credit base of any property to which this paragraph applies shall be reduced by the nonqualified nonrecourse financing with respect to such credit base (as of the close of the taxable year in which placed in service).
'(B) PROPERTY TO WHICH PARAGRAPH APPLIES.--This paragraph applies to any property which--
'(i) is placed in service during the taxable year by a taxpayer described in section 465(a)(1), and
'(ii) is used in connection with an activity with respect to which any loss is subject to limitation under section 465.
'(C) CREDIT BASE DEFINED.--For purposes of this paragraph, the term 'credit base' means--
'(i) the portion of the basis of any qualified rehabilitated building attributable to qualified rehabilitation expenditures,
'(ii) the basis of any energy property, and
'(iii) the amortizable basis of any qualified timber property.
'(D) NONQUALIFIED NONRECOURSE FINANCING.--
'(i) IN GENERAL.--For purposes of this paragraph and paragraph (2), the term 'nonqualified nonrecourse financing' means any nonrecourse financing which is not qualified commercial financing.
'(ii) QUALIFIED COMMERCIAL FINANCING.--For purposes of this paragraph, the term 'qualified commercial financing' means any financing with respect to any property if--
'(I) such property is acquired by the taxpayer from a person who is not a related person,
'(II) the amount of the nonrecourse financing with respect to such property does not exceed 80 percent of the credit base of such property, and
'(III) such financing is borrowed from a qualified person or represents a loan from any Federal, State, or local government or instrumentality thereof, or is guaranteed by any Federal, State, or local government.
Such term shall not include any convertible debt.
'(iii) NONRECOURSE FINANCING.--For purposes of this subparagraph, the term 'nonrecourse financing' includes--
'(I) any amount with respect to which the taxpayer is protected against loss through guarantees, stop-loss agreements, or other similar arrangements, and
'(II) except to the extent provided in regulations, any amount borrowed from a person who has an interest (other than as a creditor) in the activity in which the property is used or from a related person to a person (other than the taxpayer) having such an interest.
In the case of amounts borrowed by a corporation from a shareholder, subclause (II) shall not apply to an interest as a share-holder.
'(iv) QUALIFIED PERSON.--For purposes of this paragraph, the term 'qualified person' means any person which is actively and regularly engaged in the business of lending money and which is not--
'(I) a related person with respect to the taxpayer,
'(II) a person from which the taxpayer acquired the property (or a related person to such person), or
'(III) a person who receives a fee with respect to the taxpayer's investment in the property (or a related person to such person).
'(v) RELATED PERSON.--For purposes of this subparagraph, the term 'related person' has the meaning given such term by section 465(b)(3)(C). Except as otherwise provided in regulations prescribed by the Secretary, the determination of whether a person is a related person shall be made as of the close of the taxable year in which the property is placed in service.
'(E) APPLICATION TO PARTNERSHIPS AND S CORPORATIONS.--For purposes of this paragraph and paragraph (2)--
'(i) IN GENERAL.--Except as otherwise provided in this subparagraph, in the case of any partnership or S corporation, the determination of whether a partner's or shareholder's allocable share of any financing is nonqualified nonrecourse financing shall be made at the partner or shareholder level.
'(ii) SPECIAL RULE FOR CERTAIN RECOURSE FINANCING OF S CORPORATION.--A shareholder of an S corporation shall be treated as liable for his allocable share of any financing provided by a qualified person to such corporation if--
'(I) such financing is recourse financing (determined at the corporate level), and
'(II) such financing is provided with respect to qualified business property of such corporation.
'(iii) QUALIFIED BUSINESS PROPERTY.--For purposes of clause (ii), the term 'qualified business property' means any property if--
'(I) such property is used by the corporation in the active conduct of a trade or business,
'(II) during the entire 12-month period ending on the last day of the taxable year, such corporation had at least 3 full-time employees who were not owner-employees (as defined in section 465(c)(7)(E)(i)) and substantially all the services of whom were services directly related to such trade or business, and
'(III) during the entire 12-month period ending on the last day of such taxable year, such corporation had at least 1 full-time employee substantially all of the services of whom were in the active management of the trade or business.
'(iv) DETERMINATION OF ALLOCABLE SHARE.--The determination of any partner's or shareholder's allocable share of any financing shall be made in the same manner as the credit allowable by section 38 with respect to such property.
'(F) SPECIAL RULES FOR ENERGY PROPERTY.--Rules similar to the rules of subparagraph (F) of section 46(c)(8) (as in effect on the day before the date of the enactment of the Revenue Reconciliation Act of 1990) shall apply for purposes of this paragraph.
'(2) SUBSEQUENT DECREASES IN NONQUALIFIED NONRECOURSE FINANCING WITH RESPECT TO THE PROPERTY.--
'(A) IN GENERAL.--If, at the close of a taxable year following the taxable year in which the property was placed in service, there is a net decrease in the amount of nonqualified nonrecourse financing with respect to such property, such net decrease shall be taken into account as an increase in the credit base for such property in accordance with subparagraph (C).
'(B) CERTAIN TRANSACTIONS NOT TAKEN INTO ACCOUNT.--For purposes of this paragraph, nonqualified nonrecourse financing shall not be treated as decreased through the surrender or other use of property financed by nonqualified nonrecourse financing.
'(C) MANNER IN WHICH TAKEN INTO ACCOUNT.--
'(i) CREDIT DETERMINED BY REFERENCE TO TAXABLE YEAR PROPERTY PLACED IN SERVICE.--For purposes of determining the amount of credit allowable under section 38 and the amount of credit subject to the early disposition or cessation rules under section 50(a), any increase in a taxpayer's credit base for any property by reason of this paragraph shall be taken into account as if it were property placed in service by the taxpayer in the taxable year in which the property referred to in subparagraph (A) was first placed in service.
'(ii) CREDIT ALLOWED FOR YEAR OF DECREASE IN NONQUALIFIED NONRECOURSE FINANCING.--Any credit allowable under this subpart for any increase in qualified investment by reason of this paragraph shall be treated as earned during the taxable year of the decrease in the amount of nonqualified nonrecourse financing.
'(1) IN GENERAL.--If, as of the close of the taxable year, there is a net increase with respect to the taxpayer in the amount of nonqualified nonrecourse financing (within the meaning of subsection (a)(1)) with respect to any property to which subsection (a)(1) applied, then the tax under this chapter for such taxable year shall be increased by an amount equal to the aggregate decrease in credits allowed under section 38 for all prior taxable years which would have resulted from reducing the credit base (as defined in subsection (a)(1)(C)) taken into account with respect to such property by the amount of such net increase. For purposes of determining the amount of credit subject to the early disposition or cessation rules of section 50(a), the net increase in the amount of the nonqualified nonrecourse financing with respect to the property shall be treated as reducing the property's credit base in the year in which the property was first placed in service.
'(2) TRANSFERS OF DEBT MORE THAN 1 YEAR AFTER INITIAL BORROWING NOT TREATED AS INCREASING NONQUALIFIED NONRECOURSE FINANCING.--For purposes of paragraph (1), the amount of nonqualified nonrecourse financing (within the meaning of subsection (a)(1)(D)) with respect to the taxpayer shall not be treated as increased by reason of a transfer of (or agreement to transfer) any evidence of any indebtedness if such transfer occurs (or such agreement is entered into) more than 1 year after the date such indebtedness was incurred.
'(3) SPECIAL RULES FOR CERTAIN ENERGY PROPERTY.--Rules similar to the rules of section 47(d)(3) (as in effect on the day before the date of the enactment of the Revenue Reconciliation Act of 1990) shall apply for purposes of this subsection.
'(4) SPECIAL RULE.--Any increase in tax under paragraph (1) shall not be treated as tax imposed by this chapter for purposes of determining the amount of any credit allowable under subpart A, B, D, or G.
'(a) RECAPTURE IN CASE OF DISPOSITIONS, ETC.--Under regulations prescribed by the Secretary--
'(1) EARLY DISPOSITION, ETC.--
'(A) GENERAL RULE.--If, during any taxable year, investment credit property is disposed of, or otherwise ceases to be investment credit property with respect to the taxpayer, before the close of the recapture period, then the tax under this chapter for such taxable year shall be increased by the recapture percentage of 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 subpart with respect to such property.
'(B) RECAPTURE PERCENTAGE.--For purposes of subparagraph (A), the recapture percentage shall be determined in accordance with the following table:
investment credit property within percentage is:
(i) One full year after placed in service 100
(ii) One full year after the close of the
period described in clause (i) 80
(iii) One full year after the close of the
period described in clause (ii) 60
(iv) One full year after the close of the
period described in clause (iii) 40
(v) One full year after the close of the
period described in clause (iv) 20
'(A) IN GENERAL.--If during any taxable year any building to which section 47(d) applied ceases (by reason of sale or other disposition, cancellation or abandonment of contract, or otherwise) to be, with respect to the taxpayer, property which, when placed in service, will be a qualified rehabilitated building, then the tax under this chapter for such taxable year shall be increased by an amount equal to the aggregate decrease in the credits allowed under section 38 for all prior taxable years which would have resulted solely from reducing to zero the credit determined under this subpart with respect to such building.
'(B) CERTAIN EXCESS CREDIT RECAPTURED.--Any amount which would have been applied as a reduction under paragraph (2) of section 47(b) but for the fact that a reduction under such paragraph cannot reduce the amount taken into account under section 47(b)(1) below zero shall be treated as an amount required to be recaptured under subparagraph (A) for the taxable year during which the building is placed in service.
'(C) CERTAIN SALES AND LEASEBACKS.-Under regulations prescribed by the Secretary, a sale by, and leaseback to, a taxpayer who, when the property is placed in service, will be a lessee to whom the rules referred to in subsection (c)(4) apply shall not be treated as a cessation described in subparagraph (A) to the extent that the amount which will be passed through to the lessee under such rules with respect to such property is not less than the qualified rehabilitation expenditures properly taken into account by the lessee under section 47(d) with respect to such property.
'(D) COORDINATION WITH PARAGRAPH (1).--If, after property is placed in service, there is a disposition or other cessation described in paragraph (1), then paragraph (1) shall be applied as if any credit which was allowable by reason of section 47(d) and which has not been required to be recaptured before such disposition, cessation, or change in use were allowable for the taxable year the property was placed in service.
'(E) SPECIAL RULES.--Rules similar to the rules of this paragraph shall apply in cases where qualified progress expenditures were taken into account under the rules referred to in section 48(a)(5)(A).
'(3) CARRYBACKS AND CARRYOVERS ADJUSTED.--In the case of any cessation described in paragraph (1) or (2), the carrybacks and carryovers under section 39 shall be adjusted by reason of such cessation.
'(4) SUBSECTION NOT TO APPLY IN CERTAIN CASES.--Paragraphs (1) and (2) shall not apply to--
'(A) a transfer by reason of death, or
'(B) a transaction to which section 381(a) applies.
For purposes of this subsection, property shall not be treated as ceasing to be investment credit property with respect to the taxpayer by reason of a mere change in the form of conducting the trade or business so long as the property is retained in such trade or business as investment credit property and the taxpayer retains a substantial interest in such trade or business.
'(5) DEFINITIONS AND SPECIAL RULES.--
'(A) INVESTMENT CREDIT PROPERTY.--For purposes of this subsection, the term 'investment credit property' means any property eligible for a credit determined under this subpart.
'(B) TRANSFER BETWEEN SPOUSES OR INCIDENT TO DIVORCE.--In the case of any transfer described in subsection (a) of section 1041--
'(i) the foregoing provisions of this subsection shall not apply, and
'(ii) the same tax treatment under this subsection with respect to the transferred property shall apply to the transferee as would have applied to the transferor.
'(C) SPECIAL RULE.--Any increase in tax under paragraph (1) or (2) shall not be treated as tax imposed by this chapter for purposes of determining the amount of any credit allowable under subpart A, B, D, or G.
'(1) PROPERTY USED OUTSIDE UNITED STATES.--
'(A) IN GENERAL.--Except as provided in subparagraph (B), no credit shall be determined under this subpart with respect to any property which is used predominantly outside the United States.
'(B) EXCEPTIONS.--Subparagraph (A) shall not apply to any property described in section 168(g)(4).
'(2) PROPERTY USED FOR LODGING.--No credit shall be determined under this subpart with respect to any property which is used predominantly to furnish lodging or in connection with the furnishing of lodging. The preceding sentence shall not apply to--
'(A) nonlodging commercial facilities which are available to persons not using the lodging facilities on the same basis as they are available to persons using the lodging facilities. 84
'(B) property used by a hotel or motel in connection with the trade or business of furnishing lodging where the predominant portion of the accommodations is used by transients;
'(C) a certified historic structure to the extent of that portion of the basis which is attributable to qualified rehabilitation expenditures; and
'(D) any energy property.
'(3) PROPERTY USED BY CERTAIN TAX-EXEMPT ORGANIZATION.--No credit shall be determined under this subpart with respect to any property used by an organization (other than a cooperative described in section 521) which is exempt from the tax imposed by this chapter unless such property is used predominantly in an unrelated trade or business the income of which is subject to tax under section 511. If the property is debt-financed property (as defined in section 514(b)), the amount taken into account for purposes of determining the amount of the credit under this subpart with respect to such property shall be that percentage of the amount (which but for this paragraph would be so taken into account) which is the same percentage as is used under section 514(a), for the year the property is placed in service, in computing the amount of gross income to be taken into account during such taxable year with respect to such property. If any qualified rehabilitated building is used by the tax-exempt organization pursuant to a lease, this paragraph shall not apply for purposes of determining the amount of the rehabilitation credit.
'(4) PROPERTY USED BY GOVERNMENTAL UNITS OR FOREIGN PERSONS OR ENTITIES.--
'(A) IN GENERAL.--No credit shall be determined under this subpart with respect to any property used--
'(i) by the United States, any State or political subdivision thereof, any possession of the United States, or any agency or instrumentality of any of the foregoing, or
'(ii) by any foreign person or entity (as defined in section 168(h)(2)(C)), but only with respect to property to which section 168(h)(2)(A)(iii) applies (determined after the application of section 168(h)(2)(B)).
'(B) EXCEPTION FOR SHORT-TERM LEASES.--This paragraph and paragraph (3) shall not apply to any property by reason of use under a lease with a term of less than 6 months (determined under section 168(i)(3)).
'(C) EXCEPTION FOR QUALIFIED REHABILITATED BUILDINGS LEASED TO GOVERNMENTS, ETC.--If any qualified rehabilitated building is leased to a governmental unit (or a foreign person or entity) this paragraph shall not apply for purposes of determining the rehabilitation credit with respect to such building.
'(D) SPECIAL RULES FOR PARTNERSHIPS, ETC.--For purposes of this paragraph and paragraph (3), rules similar to the rules of paragraphs (5) and (6) of section 168(h) shall apply.
'(E) CROSS REFERENCE.--
'For special rules for the application of this paragraph and paragraph (3), see section 168(h).'
'(1) IN GENERAL.--For purposes of this subtitle, if a credit is determined under this subpart with respect to any property, the basis of such property shall be reduced by the amount of the credit so determined.
'(2) CERTAIN DISPOSITIONS.--If during any taxable year there is a recapture amount determined with respect to any property the basis of which was reduced under paragraph (1), the basis of such property (immediately before the event resulting in such recapture) shall be increased by an amount equal to such recapture amount. For purposes of the preceding sentence, the term 'recapture amount' means any increase in tax (or adjustment in carrybacks or carryovers) determined under subsection (a).
'(3) SPECIAL RULE.--In the case of any energy credit or reforestation credit--
'(A) only 50 percent of such credit shall be taken into account under paragraph (1), and
'(B) only 50 percent of any recapture amount attributable to such credit shall be taken into account under paragraph (2).
'(4) RECAPTURE OF REDUCTIONS.--
'(A) IN GENERAL.--For purposes of sections 1245 and 1250, any reduction under this subsection shall be treated as a deduction allowed for depreciation.
'(B) SPECIAL RULE FOR SECTION 1250.--For purposes of section 1250(b), the determination of what would have been the depreciation adjustments under the straight line method shall be made as if there had been no reduction under this section.
'(5) ADJUSTMENT IN BASIS OF INTEREST IN PARTNERSHIP OR S CORPORATION.--The adjusted basis of--
'(A) a partner's interest in a partnership, and
'(B) stock in an S corporation,
shall be appropriately adjusted to take into account adjustments made under this subsection in the basis of property held by the partnership or S corporation (as the case may be).
'(d) CERTAIN RULES MADE APPLICABLE.--For purposes of this subpart, rules similar to the rules of the following provisions (as in effect on the day before the date of the enactment of the Revenue Reconciliation Act of 1990) shall apply:
'(1) Section 46(e) (relating to limitations with respect to certain persons).
'(2) Section 46(f) (relating to limitation in case of certain regulated companies).
'(3) Section 46(h) (relating to special rules for cooperatives).
'(4) Paragraphs (2) and (3) of section 48(b) (relating to special rule for sale-leasebacks).
'(5) Section 48(d) (relating to certain leased property).
'(6) Section 48(f) (relating to estates and trusts).
'(7) Section 48(r) (relating to certain 501(d) organizations).'
(b) CONFORMING AMENDMENTS.--
(1)(A) Subclause (III) of section 29(b)(3)(A)(i) is amended by striking 'section 48(l)(11)(C)' and inserting 'section 48(a)(4)(C)'.
(B) Paragraph (4) of section 29(b) is amended by striking 'section 47' each place it appears and inserting 'section 49(b) or 50(a)'.
(C) Paragraph (3) of section 29(c) is amended to read as follows:
'(3) BIOMASS.--The term 'biomass' means any organic material other than--
'(A) oil and natural gas (or any product thereof), and
'(B) coal (including lignite) or any product thereof.'
(2)(A) Paragraph (1) of section 38(b) is amended by striking 'section 46(a)' and inserting 'section 46'.
(B) Subsection (c) of section 38 is amended by striking paragraph (2) and by redesignating paragraph (3) as paragraph (2).
(C) Subparagraph (C) of section 38(c)(2) (as redesignated by subparagraph (B)) is amended--
(i) by inserting '(as in effect on the day before the date of the enactment of the Revenue Reconciliation Act of 1990)' after '46(e)(1)', and
(ii) by inserting '(as so in effect)' after '46(e)(2)'.
(D) Subsection (d) of section 38 is amended--
(i) by striking 'sections 46(f), 47(a), 196(a), and any other provision' and inserting 'any provision',
(ii) by amending paragraph (2) to read as follows:
'(B) the credit determined under section 46--
'(i) to the extent attributable to the employee plan percentage (as defined in section 46(a)(2)(E) as in effect on the day before the date of the enactment of the Tax Reform Act of 1984) shall be treated as a credit listed after paragraph (1) of section 46, and
'(ii) to the extent attributable to the regular percentage (as defined in section 46(b)(1) as in effect on the day before the date of the enactment of the Revenue Reconciliation Act of 1990) shall be treated as the first credit listed in section 46.'
(A) in paragraph (1)--
(i) by striking '46(c)(8)' and inserting '49(a)(1)',
(ii) by striking '46(c)(9)' and inserting '49(a)(2)', and
(iii) by striking '47(d)(1)' and inserting '49(b)(1)', and
(B) by striking '46(c)(8)(D)(iv)(II)' in paragraphs (2)(A)(ii) and (2)(D) and inserting '49(a)(1)(D)(iv)(II)'.
(4) Subsection (e) of section 52 is amended by striking 'section 46' and inserting 'section 46 (as in effect on the day before the date of the enactment of the Revenue Reconciliation Act of 1990)'.
(5) Paragraph (1) of section 55(c) is amended by striking 'section 47' and inserting 'section 49(b) or 50(a)'.
(6) Subparagraph (B) of section 108(g)(1) is amended by striking 'section 46(c)(8)(D)(iv)' and inserting 'section 49(a)(1)(D)(iv)'.
(7) Paragraph (4) of section 145(d) is amended--
(A) by striking 'section 48(g)(1)(C)' each place it appears and inserting 'section 47(c)(1)(C)', and
(B) by striking 'section 48(g)(1)(C)(i)' and inserting 'section 47(c)(1)(C)(i)'.
(8) Subparagraph (B) of section 147(d)(3) is amended by striking 'section 48(g)(2)(B)' and inserting 'section 47(c)(2)(B)'.
(9)(A) Clause (vi) of section 168(e)(3)(B) is amended--
(ii) by inserting '(as in effect on the day before the date of the enactment of the Revenue Reconciliation Act of 1990)' after '48(l)' in subclause (II).
(B)(i) Subparagraph (D)(i) of section 168(e)(3) is amended by striking 'section 48(p)' and inserting 'subsection (i)(13)'.
(ii) Subsection (i) of section 168 is amended by adding at the end thereof the following new paragraph:
'(A) IN GENERAL.--The term 'single purpose agricultural or horticultural structure' means--
'(i) a single purpose livestock structure, and
'(ii) a single purpose horticultural structure.
'(B) DEFINITIONS.--For purposes of this paragraph--
'(i) SINGLE PURPOSE LIVESTOCK STRUCTURE.--The term 'single purpose livestock structure' means any enclosure or structure specifically designed, constructed, and used--
'(I) for housing, raising, and feeding a particular type of livestock and their produce, and
'(II) for housing the equipment (including any replacements) necessary for the housing, raising, and feeding referred to in subclause (I).
'(ii) SINGLE PURPOSE HORTICULTURAL STRUCTURE.--The term 'single purpose horticultural structure' means--
'(I) a greenhouse specifically designed, constructed, and used for the commercial production of plants, and
'(II) a structure specifically designed, constructed, and used for the commercial production of mushrooms.
'(iii) STRUCTURES WHICH INCLUDE WORK SPACE.--An enclosure or structure which provides work space shall be treated as a single purpose agricultural or horticultural structure only if such work space is solely for--
'(I) the stocking, caring for, or collecting of livestock or plants (as the case may be) or their produce,
'(II) the maintenance of the enclosure or structure, and
'(III) the maintenance or replacement of the equipment or stock enclosed or housed therein.
'(iv) LIVESTOCK.--The term 'livestock' includes poultry.'
(C) Paragraph (4) of section 168(g) is amended to read as follows:
'(4) EXCEPTION FOR CERTAIN PROPERTY USED OUTSIDE UNITED STATES.--Subparagraph (A) of paragraph (1) shall not apply to--
'(A) any aircraft which is registered by the Administrator of the Federal Aviation Agency and which is operated to and from the United States or is operated under contract with the United States;
'(B) rolling stock which is used within and without the United States and which is--
'(i) of a domestic railroad corporation providing transportation subject to subchapter I of chapter 105 of title 49, or
'(ii) of a United States person (other than a corporation described in clause (i)) but only if the rolling stock is not leased to one or more foreign persons for periods aggregating more than 12 months in any 24-month period;
'(C) any vessel documented under the laws of the United States which is operated in the foreign or domestic commerce of the United States;
'(D) any motor vehicle of a United States person (as defined in section 7701(a)(30)) which is operated to and from the United States;
'(E) any container of a United States person which is used in the transportation of property to and from the United States;
'(F) any property (other than a vessel or an aircraft) of a United States person which is used for the purpose of exploring for, developing, removing, or transporting resources from the outer Continental Shelf (within the meaning of section 2 of the Outer Continental Shelf Lands Act, as amended and supplemented; (43 U.S.C. 1331));
'(G) any property which is owned by a domestic corporation (other than a corporation which has an election in effect under section 936) or by a United States citizen (other than a citizen entitled to the benefits of section 931 or 933) and which is used predominantly in a possession of the United States by such a corporation or such a citizen, or by a corporation created or organized in, or under the law of, a possession of the United States;
'(H) any communications satellite (as defined in section 103(3) of the Communications Satellite Act of 1962, 47 U.S.C. 702(3)), or any interest therein, of a United States person;
'(I) any cable, or any interest therein, of a domestic corporation engaged in furnishing telephone service to which section 168(i)(10)(C) applies (or of a wholly owned domestic subsidiary of such a corporation), if such cable is part of a submarine cable system which constitutes part of a communication link exclusively between the United States and one or more foreign countries;
'(J) any property (other than a vessel or an aircraft) of a United States person which is used in international or territorial waters within the northern portion of the Western Hemisphere for the purpose of exploring for, developing, removing, or transporting resources from ocean waters or deposits under such waters;
'(K) any property described in section 48(a)(3)(A)(iii) which is owned by a United States person and which is used in international or territorial waters to generate energy for use in the United States; and
'(L) any satellite (not described in subparagraph (H)) or other spacecraft (or any interest therein) held by a United States person if such satellite or other spacecraft was launched from within the United States.
For purposes of subparagraph (J), the term 'northern portion of the Western Hemisphere' means the area lying west of the 30th meridian west of Greenwich, east of the international dateline, and north of the Equator, but not including any foreign country which is a country of South America.'
(10) Subparagraph (B) of section 170(h)(4) is amended by striking 'section 48(g)(3)(B)' and inserting 'section 47(c)(3)(B)'.
(11)(A) Paragraph (1) of section 179(d) is amended by striking 'section 38 property' and inserting 'section 1245 property (as defined in section 1245(a)(3))'.
(B) Paragraph (5) of section 179(d) is amended to read as follows:
'(5) SECTION NOT TO APPLY TO CERTAIN NONCORPORATE LESSORS.--This section shall not apply to any section 179 property which is purchased by a person who is not a corporation and with respect to which such person is the lessor unless--
'(A) the property subject to the lease has been manufactured or produced by the lessor, or
'(B) the term of the lease (taking into account options to renew) is less than 50 percent of the class life of the property (as defined in section 168(i)(1)), and for the period consisting of the first 12 months after the date on which the property is transferred to the lessee the sum of the deductions with respect to such property which are allowable to the lessor solely by reason of section 162 (other than rents and reimbursed amounts with respect to such property) exceeds 15 percent of the rental income produced by such property.'
(12)(A) Paragraph (1) of section 196(c) is amended--
(ii) by striking 'section 48(q)' and inserting 'section 50(c)'.
(B) Paragraph (1) of section 196(d) is amended--
(i) by striking 'section 46(a)' and inserting 'section 46', and
(ii) by striking 'other than a credit to which section 48(q)(3) applies' and inserting 'other than the rehabilitation credit'.
(ii) by striking 'the credit determined under section 46(a) or' in paragraph (2)(B) (as redesignated by clause (i)).
(B) Subsection (b) of section 280F is amended by striking paragraph (1) and redesignating the following paragraphs accordingly.
(C) The paragraph heading for paragraph (1) of section 280F(c) is amended by striking 'credits and'.
(D) Subparagraph (A) of section 280F(d)(3) is amended by striking 'the amount of any credit allowable under section 38 to the employee or'.
(E) The section heading of section 280F is amended by striking 'INVESTMENT TAX CREDIT AND'.
(F) The table of sections for part IX of subchapter B of chapter 1 is amended by striking 'investment credit and' in the item relating to section 280F.
(14) Paragraph (5) of section 312(k) is amended by striking 'section 48(q)' and inserting 'section 50(c)'.
(15) Subparagraph (D) of section 465(b)(6) is amended by striking '46(c)(8)(D)(iv)' each place it appears and inserting '49(a)(1)(D)(iv)'.
(16)(A) Paragraphs (3)(B) and (6)(B)(ii) of section 469(i) are each amended by striking 'rehabilitation investment credit (within the meaning of section 48(o))' and inserting 'rehabilitation credit determined under section 47'.
(B) Paragraph (1) of section 469(k) is amended by striking 'rehabilitation investment credit (within the meaning of section 48(o))' and inserting 'rehabilitation credit determined under section 47'.
(17) Subparagraph (A) of section 861(e)(1) is amended by striking 'which is section 38 property (or would be section 38 property but for section 48(a)(5)' and inserting 'which is section 1245 property (as defined in section 1245(a)(3))'.
(18) Subparagraph (B) of section 865(c)(3) is amended by striking 'section 48(a)(2)(B)' and inserting 'section 168(g)(4)'.
(19) Paragraph (21) of section 1016(a) is amended by striking 'section 48(q) and inserting 'section 50(c)'.
(20) Subparagraph (A) of section 1033(g)(3) is amended by striking 'with respect to which the investment credit determined under section 46(a) is or has been claimed or'.
(21) Subparagraph (D) of section 1245(a)(3) is amended by striking 'section 48(p)' and inserting 'section 168(i)(13)'.
(22) Subsection (b) of section 1274A is amended by inserting ', as in effect on the day before the date of the enactment of the Revenue Reconciliation Act of 1990' after 'section 48(b)'.
(23) Subsection (d) of section 1371 is amended--
(A) by striking 'section 47(b)' in paragraph (1) and inserting 'section 50(a)(4)', and
(B) by striking 'section 47' in paragraphs (2) and (3) and inserting 'section 49(b) or 50(a)'.
(24) Section 1388 is amended by striking subsection (k).
(25) Subparagraph (B) of section 1503(e)(3) is amended by striking 'section 48(q)' and inserting 'section 50(c)'.
(26) The table of subparts for part IV of subchapter A of chapter 1 is amended by striking the item relating to subpart E and inserting the following:
(c) EFFECTIVE DATE.--
(1) IN GENERAL.--Except as provided in paragraph (2), the amendments made by this section shall apply to property placed in service after December 31, 1990.
(2) EXCEPTIONS.--The amendments made by this section shall not apply to--
(A) any transition property (as defined in section 49(e) of the Internal Revenue Code of 1986 (as in effect on the day before the date of the enactment of this Act),
(B) any property with respect to which qualified progress expenditures were previously taken into account under section 46(d) of such Code (as so in effect), and
(C) any property described in section 46(b)(2)(C) of such Code (as so in effect).
(a) IN GENERAL.--Subsection (b) of section 243 is amended to read as follows:
'(b) QUALIFYING DIVIDENDS.--
'(1) IN GENERAL.--For purposes of this section, the term 'qualifying dividend' means any dividend received by a corporation--
'(A) if at the close of the day on which such dividend is received, such corporation is a member of the same affiliated group as the corporation distributing such dividend, and
'(B) if--
'(i) such dividend is distributed out of the earnings and profits of a taxable year of the distributing corporation which ends after December 31, 1963, for which an election under section 1562 was not in effect, and on each day of which the distributing corporation and the corporation receiving the dividend were members of such affiliated group, or
'(ii) such dividend is paid by a corporation with respect to which an election under section 936 is in effect for the taxable year in which such dividend is paid.
'(3) SPECIAL RULE FOR GROUPS WHICH INCLUDE LIFE INSURANCE COMPANIES.--
'(A) IN GENERAL.--In the case an affiliated group which includes 1 or more insurance companies under section 801, no dividend by any member of such group shall be treated as a qualifying dividend unless an election under this paragraph is in effect for the taxable year in which the dividend is received. The preceding sentence shall not apply in the case of a dividend described in paragraph (1)(B)(ii).
'(B) EFFECT OF ELECTION.--If an election under this paragraph is in effect with respect to any affiliated group--
'(i) part II of subchapter B of chapter 6 (relating to certain controlled corporations) shall be applied with respect to the members of such group without regard to sections 1563(a)(4) and 1563(b)(2)(D), and
'(ii) for purposes of this subsection, a distribution by any member of such group which is subject to tax under section 801 shall not be treated as a qualifying dividend if such distribution is out of earnings and profits for a taxable year for which an election under this paragraph is not effective and for which such distributing corporation was not a component member of a controlled group of corporations within the meaning of section 1563 solely by reason of section 1563(b)(2)(D).
'(C) ELECTION.--An election under this paragraph shall be made by the common parent of the affiliated group and at such time and in such manner as the Secretary shall by regulations prescribe. Any such election shall be binding on all members of such group and may be revoked only with the consent of the Secretary.'
(1) by striking 'section 243(b)(6)' and inserting 'section 243(b)(3)', and
(2) by striking 'section 243(b)(5)' and inserting '243(b)(2)'.
(c) EFFECTIVE DATE.--
(1) IN GENERAL.--The amendments made by this section shall apply to taxable years beginning after December 31, 1990.
(2) TREATMENT OF OLD ELECTIONS.--For purposes of section 243(b)(3) of the Internal Revenue Code of 1986 (as amended by subsection (a)), any reference to an election under such section shall be treated as including a reference to an election under section 243(b) of such Code (as in effect on the day before the date of the enactment of this Act).
(a) SECTION 613A.--
(1) GENERAL RULE.--Subsection (c) of section 613A is amended--
(A) by striking 'the applicable percentage (determined in accordance with the table contained in paragraph (5))' in paragraph (1) and inserting '15 percent',
(B) by amending subparagraph (B) of paragraph (3) to read as follows:
'(B) TENTATIVE QUANTITY.--For purposes of subparagraph (A), the tentative quantity is 1,000 barrels.', and
(C) by striking paragraphs (5), and (7)(E).
(2) CONFORMING AMENDMENTS.--
(A) Subparagraphs (A) and (B) of section 613A(c)(7) are each amended by striking 'specified in paragraph (5)' and inserting 'specified in paragraph (1)'.
(B) Paragraphs (8)(B), (8)(C), and (9) are each amended by striking 'determined under the table contained in paragraph (3)(B)' each place it appears and inserting 'determined under paragraph (3)(B)'.
(1) Subsection (e) of section 613 is amended by striking paragraph (2) and by redesignating paragraphs (3) and (4) as paragraphs (2) and (3), respectively.
(2) Subparagraph (B) of section 613(e)(1) is amended to read as follows:
'(B) 15 percent shall be deemed to be the percentage specified in subsection (b),'.
(3) Sections 57(a)(2)(D)(ii), 263(c), and 465(c)(1)(E) are each amended by striking 'section 613(e)(3)' and inserting 'section 613(e)(2)'.
(a) GENERAL RULE.-Paragraph (1) of section 29(c) is amended by inserting 'and' at the end of subparagraph (B), by striking the comma at the end of subparagraph (C) and inserting a period, and by striking subparagraphs (D) and (E).
(b) CONFORMING AMENDMENTS.--
(1) Subsection (c) of section 29 is amended by striking paragraphs (4) and (5).
(2) Paragraph (4) of section 29(d) is amended to read as follows:
'(4) GAS FROM GEOPRESSURED BRINE, DEVONIAN SHALE, COAL SEAMS, OR A TIGHT FORMATION.--The amount of the credit allowable under subsection (a) shall be determined without regard to any production attributable to a property from which gas from Devonian shale, coal seams, geopressured brine, or a tight formation was produced in marketable quantities before January 1, 1980.'
(3) Subsection (d) of section 29 is amended by striking paragraph (5) and redesignating the following paragraphs accordingly.
(4) Paragraph (5) of section 29(d) (as redesignated by paragraph (3)) is amended by striking 'subparagraph (C), (D), or (E)' and inserting 'subparagraph (C)'.
(5) Subsection (f) of section 29 is amended to read as follows:
'(f) APPLICATION OF SECTION.--This section shall apply with respect to qualified fuels--
'(1) which are--
'(A) produced from a well drilled after December 31, 1979, and before January 1, 1993, or
'(B) produced in a facility placed in service after December 31, 1979, and before January 1, 1993, and
'(2) which are sold before January 1, 2003.'
SEC. 11821. EFFECTIVE DATE.
(a) GENERAL RULE.--Except as otherwise provided in this part, the amendments made by this part shall take effect on the date of the enactment of this Act.
(b) SAVINGS PROVISION.--If--
(1) any provision amended or repealed by this part applied to--
(A) any transaction occurring before the date of the enactment of this Act,
(B) any property acquired before such date of enactment, or
(C) any item of income, loss, deduction, or credit taken into account before such date of enactment, and
(2) the treatment of such transaction, property, or item under such provision would (without regard to the amendments made by this part) affect liability for tax for periods ending after such date of enactment,
nothing in the amendments made by this part shall be construed to affect the treatment of such transaction, property, or item for purposes of determining liability for tax for periods ending after such date of enactment.
SEC. 11831. EXTENSION OF DATE FOR FILING REPORTS ON CERTAIN STUDIES.
(a) GENERAL RULE.--The date for the submission of the report on any study listed in subsection (b) is hereby extended to the due date for such study determined under subsection (b).
(b) LIST OF STUDIES AND DUE DATES.--
In the case of the study required under: The due date is:
Section 1211(d) of the Tax Reform Act
of 1986 (relating to source rule on
sales of personal property) January 1, 1992
Section 407 of the Compact of Free
Association Act of 1985 (relating to
Tax provisions on Micronesia Compact
of Free Association) January 1, 1991
Section 634 of the Tax Reform Act of
1986 (relating to reform of
subchapter C) January 1, 1992
Section 9301(c)(3) of the Omnibus
Budget Reconciliation Act of 1987
(relating to full funding limitation) April 15, 1991
Section 6056 of the Technical and
Miscellaneous Revenue Act of 1988
(relating to minimum participation rules) February 15, 1991
Section 6072 of the Technical and
Miscellaneous Revenue Act of 1988
(relating to treatment of certain
technical personnel) February 15, 1991
Section 6305(e) of the Technical and
Miscellaneous Revenue Act of 1988
(relating to treatment of certain
family services providers) January 1, 1992
Section 6064(d)(4) of the Technical
and Miscellaneous Revenue Act of 1988
(relating to deferred compensation plans
of State and local governments and
tax-exempt organizations) January 1, 1992
Section 6067(b) of the Technical and
Miscellaneous Revenue Act of 1988
(relating to spin-off of defined
benefit plan assets to bridge banks) January 1, 1992
Section 7612(f) of the Revenue
Reconciliation Act of 1989
(relating to depreciation treatment
of certain vehicles) April 15, 1991
Section 1012(c)(2) of the Tax Reform
Act of 1986 (relating to fraternal
beneficiary associations) July 1, 1992
Section 1025 of the Tax Reform Act of
1986 (relating to property and
casualty insurance companies) January 1, 1992
SEC. 11832. REPEAL OF CERTAIN STUDIES.
The following provisions are hereby repealed:
(2) Section 560 of the Deficit Reduction Act of 1984 (relating to employee welfare benefit plans).
(3) Section 621(d) of the Tax Reform Act of 1986 (relating to depreciation, built-in deductions, and informal bankruptcy workouts).
(4) Section 702 of the Tax Reform Act of 1986 (relating to book earnings and profits adjustments).
(5) Section 675(d) of the Tax Reform Act of 1986, as amended by section 1006(w) of the Technical and Miscellaneous Revenue Act of 1988 (relating to impact of REMIC provisions on thrift industry).
(a) DUE DATE FOR REPORTS.--Subsection (a) of section 208 of the Foreign Earned Income Act of 1978 (as amended by section 114 of the Economic Recovery Tax Act of 1981) is amended by striking so much of such subsection as precedes 'the Secretary of the Treasury' and inserting the following:
'(a) GENERAL RULE.--As soon as practicable after December 31, 1993, and as soon as practicable after the close of each fifth calendar year thereafter,'.
(b) INFORMATION FROM FEDERAL AGENCIES.--Subsection (b) of such section 208 (as so amended) is amended by striking 'shall furnish' and inserting 'shall keep such records and furnish'.
SEC. 11834. INCREASE IN THRESHOLD FOR JOINT COMMITTEE REPORTS ON REFUNDS AND CREDITS.
(a) GENERAL RULE.--Subsections (a) and (b) of section 6405 are each amended by striking '$200,000' and inserting '$1,000,000'.
(b) EFFECTIVE DATE.--The amendment made by subsection (a) shall take effect on the date of the enactment of this Act, except that such amendment shall not apply with respect to any refund or credit with respect to a report has been made before such date of enactment under section 6405 of the Internal Revenue Code of 1986.
SEC. 11901. INCREASE IN PUBLIC DEBT LIMIT.
(a) Subsection (b) of section 3101 of title 31, United States Code, is amended by striking the dollar limitation contained in such subsection and inserting '$4,145,000,000,000'.
(b) RESTORATION OF TRUST FUNDS FOR 1990.--
(1) IN GENERAL.--
(A) OBLIGATIONS ISSUED.--Except as provided in paragraph (2), within 30 days after the expiration of any debt issuance suspension period to which this subsection applies, the Secretary of the Treasury shall issue to each Federal fund obligations under chapter 31 of title 31, United States Code, which bear such issue dates, interest rates, and maturity dates as are necessary to ensure that, after such obligations are issued, the holdings of such Federal fund will replicate to the maximum extent practicable the obligations that would have been held by such Federal fund if any--
(i) failure to invest amounts in such Federal fund (or any disinvestment) resulting from the limitation of section 3101(b) of title 31, United States Code, had not occurred, and
(ii) issuance of such obligations had occurred immediately on the expiration of the debt issuance suspension period.
(B) INTEREST CREDITED.--On the first normal interest payment date or within 30 days after the expiration of any debt issuance suspension period (whichever is later) to which this subsection applies, the Secretary of the Treasury shall credit to each Federal fund an amount determined by the Secretary, after taking into account the actions taken pursuant to subparagraph (A), to be equal to the income lost by such Federal fund by reason of any failure to invest amounts in such Federal fund (or any disinvestment) resulting from the limitation of such section 3101(b), including any income lost between the expiration of the debt issuance suspension period and the date of the credit.
(2) INTEREST ON MARKET-BASED OBLIGATIONS.--With respect to any Federal fund which invests in market-based special obligations, on the expiration of a debt issuance suspension period to which this subsection applies, the Secretary of the Treasury shall immediately credit to such fund an amount equal to the interest that would have been earned by such fund during the debt issuance suspension period if the daily balance in such fund that the Secretary was unable to invest by reason of the limitation of such section 3101(b) had been invested each day during such period, overnight, in obligations under chapter 31 of title 31, United States Code, earning interest at a rate determined by the Secretary in accordance with the standard practice of the Department of the Treasury.
(3) DEBT ISSUANCE SUSPENSION PERIODS TO WHICH SUBSECTION APPLIES.--This subsection shall apply to debt issuance suspension periods beginning on or after October 15, 1990, and ending before January 1, 1991.
(4) CREDITED AMOUNTS TREATED AS INTEREST.--All amounts credited under this subsection shall be treated as interest on obligations issued under chapter 31 of title 31, United States Code, for all purposes of Federal law.
(5) DEFINITIONS.--For purposes of this subsection--
(A) DEBT ISSUANCE SUSPENSION PERIOD.--The term 'debt issuance suspension period' means any period for which the Secretary of the Treasury determines that the issuance of obligations of the United States sufficient to conduct the orderly financial operations of the United States may not be made without exceeding the limitation imposed by section 3101(b) of title 31, United States Code.
(B) FEDERAL FUND.--The term 'Federal fund' means any Federal trust fund or Government account established pursuant to Federal law to which the Secretary of the Treasury has issued or is expressly authorized by law directly to issue obligations under chapter 31 of title 31, United States Code, in respect of public money, money otherwise required to be deposited in the Treasury, or amounts appropriated; except that such term shall not include the Civil Service Retirement and Disability Fund or the Thrift Savings Fund of the Federal Employees' Retirement System.
SEC. 12001. INCREASE IN REVERSION TAX.
Section 4980(a) (relating to tax on reversion of qualified plan assets to employer) is amended by striking '15 percent' and inserting '20 percent'.
SEC. 12002. ADDITIONAL TAX IF NO REPLACEMENT PLAN.
(a) IN GENERAL.--Section 4980 is amended by adding at the end thereof the following new subsection:
'(d) INCREASE IN TAX FOR FAILURE TO ESTABLISH REPLACEMENT PLAN OR INCREASE BENEFITS.--
'(1) IN GENERAL.--Subsection (a) shall be applied by substituting '50 percent' for '20 percent' with respect to any employer reversion from a qualified plan unless--
'(A) the employer establishes or maintains a qualified replacement plan, or
'(B) the plan provides benefit increases meeting the requirements of paragraph (3).
'(2) QUALIFIED REPLACEMENT PLAN.--For purposes of this subsection, the term 'qualified replacement plan' means a qualified plan established or maintained by the employer in connection with a qualified plan termination (hereinafter referred to as the 'replacement plan') with respect to which the following requirements are met:
'(A) PARTICIPATION REQUIREMENT.--At least 95 percent of the active participants in the terminated plan who remain as employees of the employer after the termination are active participants in the replacement plan.
'(B) ASSET TRANSFER REQUIREMENT.--
'(i) 25 PERCENT CUSHION.--A direct transfer from the terminated plan to the replacement plan is made before any employer reversion, and the transfer is in an amount equal to the excess (if any) of--
'(I) 25 percent of the maximum amount which the employer could receive as an employer reversion without regard to this subsection, over
'(II) the amount determined under clause (ii).
'(ii) REDUCTION FOR INCREASE IN BENEFITS.--The amount determined under this clause is an amount equal to the present value of the aggregate increases in the accrued benefits under the terminated plan of any participants or beneficiaries pursuant to a plan amendment which--
'(I) is adopted during the 60-day period ending on the date of termination of the qualified plan, and
'(II) takes effect immediately on the termination date.
'(iii) TREATMENT OF AMOUNT TRANSFERRED.--In the case of the transfer of any amount under clause (i)--
'(I) such amount shall not be includible in the gross income of the employer,
'(II) no deduction shall be allowable with respect to such transfer, and
'(III) such transfer shall not be treated as an employer reversion for purposes of this section.
'(i) IN GENERAL.--In the case of any defined contribution plan, the portion of the amount transferred to the replacement plan under subparagraph (B)(i) is--
'(I) allocated under the plan to the accounts of participants in the plan year in which the transfer occurs, or
'(II) credited to a suspense account and allocated from such account to accounts of participants no less rapidly than ratably over the 7-plan-year period beginning with the year of the transfer.
'(ii) COORDINATION WITH SECTION 415 LIMITATION.--If, by reason of any limitation under section 415, any amount credited to a suspense account under clause (i)(II) may not be allocated to a participant before the close of the 7-year period under such clause--
'(I) such amount shall be allocated to the accounts of other participants, and
'(II) if any portion of such amount may not be allocated to other participants by reason of any such limitation, shall be allocated to the participant as provided in section 415.
'(iii) TREATMENT OF INCOME.--Any income on any amount credited to a suspense account under clause (i)(II) shall be allocated to accounts of participants no less rapidly than ratably over the remainder of the period determined under such clause (after application of clause (ii)).
'(iv) UNALLOCATED AMOUNTS AT TERMINATION.--If any amount credited to a suspense account under clause (i)(II) is not allocated as of the termination date of the replacement plan--
'(I) such amount shall be allocated to the accounts of participants as of such date, except that any amount which may not be allocated by reason of any limitation under section 415 shall be allocated to the accounts of other participants, and
'(II) if any portion of such amount may not be allocated to other participants under subclause (I) by reason of such limitation, such portion shall be treated as an employer reversion to which this section applies.
'(A) IN GENERAL.--The requirements of this paragraph are met if a plan amendment to the terminated plan is adopted in connection with the termination of the plan which provides pro rata increases in the accrued benefits of all qualified participants which--
'(i) have an aggregate present value not less than 20 percent of the maximum amount which the employer could receive as an employer reversion without regard to this subsection, and
'(ii) take effect immediately on the termination date.
'(B) PRO RATA INCREASE.--For purposes of subparagraph (A), a pro rata increase is an increase in the present value of the accrued benefit of each qualified participant in an amount which bears the same ratio to the aggregate amount determined under subparagraph (A)(i) as--
'(i) the present value of such participant's accrued benefit (determined without regard to this subsection), bears to
'(ii) the aggregate present value of accrued benefits of the terminated plan (as so determined).
'(4) COORDINATION WITH OTHER PROVISIONS.--
'(A) LIMITATIONS.--A benefit may not be increased under paragraph (2)(B)(ii) or (3)(A), and an amount may not be allocated to a participant under paragraph (2)(C), if such increase or allocation would result in a failure to meet any requirement under section 401(a)(4) or 415.
'(B) TREATMENT AS EMPLOYER CONTRIBUTIONS.--Any increase in benefits under paragraph (2)(B)(ii) or (3)(A), or any allocation of any amount (or income allocable thereto) to any account under paragraph (2)(C), shall be treated as an annual benefit or annual addition for purposes of section 415.
'(C) 10-YEAR PARTICIPATION REQUIREMENT.--Except as provided by the Secretary, section 415(b)(5)(D) shall not apply to any increase in benefits by reason of this subsection to the extent that the application of this subparagraph does not discriminate in favor of highly compensated employees (as defined in section 414(q)).
'(5) DEFINITIONS AND SPECIAL RULES.--For purposes of this subsection--
'(A) QUALIFIED PARTICIPANT.--The term 'qualified participant' means an individual who--
'(i) is an active participant,
'(ii) is a participant or beneficiary in pay status as of the termination date,
'(iii) is a participant not described in clause (i) or (ii)--
'(I) who has a nonforfeitable right to an accrued benefit under the terminated plan as of the termination date, and
'(II) whose service, which was creditable under the terminated plan, terminated during the period beginning 3 years before the termination date and ending with the date on which the final distribution of assets occurs, or
'(iv) is a beneficiary of a participant described in clause (iii)(II) and has a nonforfeitable right to an accrued benefit under the terminated plan as of the termination date.
'(B) PRESENT VALUE.--Present value shall be determined as of the termination date and on the same basis as liabilities of the plan are determined on termination.
'(C) REALLOCATION OF INCREASE.--Except as provided in paragraph (2)(C), if any benefit increase is reduced by reason of the last sentence of paragraph (3)(A)(ii) or paragraph (4), the amount of such reduction shall be allocated to the remaining participants on the same basis as other increases (and shall be treated as meeting any allocation requirement of this subsection).
'(D) PLANS TAKEN INTO ACCOUNT.--For purposes of determining whether there is a qualified replacement plan under paragraph (2), the Secretary may provide that--
'(i) 2 or more plans may be treated as 1 plan, or
'(ii) a plan of a successor employer may be taken into account.
'(E) SPECIAL RULE FOR PARTICIPATION REQUIREMENT.--For purposes of paragraph (2)(A), all employers treated as 1 employer under section 414(b), (c), (m), or (o) shall be treated as 1 employer.
'(6) SUBSECTION NOT TO APPLY TO EMPLOYER IN BANKRUPTCY.--This subsection shall not apply to an employer who, as of the termination date of the qualified plan, is in bankruptcy liquidation under chapter 7 of title 11 of the United States Code or in similar proceedings under State law.'
(b) AMENDMENTS TO EMPLOYEE RETIREMENT INCOME SECURITY ACT.--
(1) FIDUCIARY RESPONSIBILITY.--Section 404 of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1104) is amended by adding at the end thereof the following new subsection:
'(d)(1) If, in connection with the termination of a pension plan which is a single-employer plan, there is an election to establish or maintain a qualified replacement plan, or to increase benefits, as provided under section 4980(d) of the Internal Revenue Code of 1986, a fiduciary shall discharge the fiduciary's duties under this title and title IV in accordance with the following requirements:
'(i) under section 4980(d)(2)(B) of such Code with respect to the transfer of assets from the terminated plan to a qualified replacement plan, and
'(ii) under section 4980(d)(2)(B)(ii) or 4980(d)(3) of such Code with respect to any increase in benefits under the terminated plan.
'(B) In the case of a fiduciary of a qualified replacement plan, any requirement--
'(i) under section 4980(d)(2)(A) of such Code with respect to participation in the qualified replacement plan of active participants in the terminated plan,
'(ii) under section 4980(d)(2)(B) of such Code with respect to the receipt of assets from the terminated plan, and
'(iii) under section 4980(d)(2)(C) of such Code with respect to the allocation of assets to participants of the qualified replacement plan.
'(A) any term used in this subsection which is also used in section 4980(d) of the Internal Revenue Code of 1986 shall have the same meaning as when used in such section, and
'(B) any reference in this subsection to the Internal Revenue Code of 1986 shall be a reference to such Code as in effect immediately after the enactment of the Omnibus Budget Reconciliation Act of 1990.'
(2) CONFORMING AMENDMENTS.--
(A) Section 404(a)(1)(D) of such Act (29 U.S.C. 1104(a)(1)(D)) is amended by striking 'or title IV' and inserting 'and title IV'.
(B) Section 4044(d) of such Act (29 U.S.C. 1344(d)) is amended by adding at the end thereof the following new paragraph:
'(4) Nothing in this subsection shall be construed to limit the requirements of section 4980(d) of the Internal Revenue Code of 1986 (as in effect immediately after the enactment of the Omnibus Budget Reconciliation Act of 1990) or section 404(d) of this Act with respect to any distribution of residual assets of a single-employer plan to the employer.'
(C) Section 3 of such Act (29 U.S.C. 1002) is amended by adding at the end thereof the following new paragraph:
'(41) The term 'single-employer plan' means a plan which is not a multiemployer plan.'
(a) IN GENERAL.--Except as provided in subsection (b), the amendments made by this subtitle shall apply to reversions occurring after September 30, 1990.
(b) EXCEPTION.--The amendments made by this subtitle shall not apply to any reversion after September 30, 1990, if--
(1) in the case of plans subject to title IV of the Employee Retirement Income Security Act of 1974, a notice of intent to terminate under such title was provided to participants (or if no participants, to the Pension Benefit Guaranty Corporation) before October 1, 1990,
(2) in the case of plans subject to title I (and not to title IV) of such Act, a notice of intent to reduce future accruals under section 204(h) of such Act was provided to participants in connection with the termination before October 1, 1990,
(3) in the case of plans not subject to title I or IV of such Act, a request for a determination letter with respect to the termination was filed with the Secretary of the Treasury or the Secretary's delegate before October 1, 1990, or
(4) in the case of plans not subject to title I or IV of such Act and having only 1 participant, a resolution terminating the plan was adopted by the employer before October 1, 1990.
SEC. 12011. TRANSFER OF EXCESS PENSION ASSETS TO RETIREE HEALTH ACCOUNTS.
(a) IN GENERAL.--Part I of subchapter D of chapter 1 (relating to pension, profit-sharing, and stock bonus plans) is amended by adding at the end thereof the following new subpart:
'Subpart E--Treatment of Transfers to Retiree Health Accounts
'Sec. 420. Transfers of excess pension assets to retiree health accounts.
'SEC. 420. TRANSFERS OF EXCESS PENSION ASSETS TO RETIREE HEALTH ACCOUNTS.
'(a) GENERAL RULE.--If there is a qualified transfer of any excess pension assets of a defined benefit plan (other than a multiemployer plan) to a health benefits account which is part of such plan--
'(1) a trust which is part of such plan shall not be treated as failing to meet the requirements of subsection (a) or (h) of section 401 solely by reason of such transfer (or any other action authorized under this section),
'(2) no amount shall be includible in the gross income of the employer maintaining the plan solely by reason of such transfer,
'(3) such transfer shall not be treated--
'(A) as an employer reversion for purposes of section 4980, or
'(B) as a prohibited transaction for purposes of section 4975, and
'(4) the limitations of subsection (d) shall apply to such employer.
'(b) QUALIFIED TRANSFER.--For purposes of this section--
'(1) IN GENERAL.--The term 'qualified transfer' means a transfer--
'(A) of excess pension assets of a defined benefit plan to a health benefits account which is part of such plan in a taxable year beginning after December 31, 1990,
'(B) which does not contravene any other provision of law, and
'(C) with respect to which the following requirements are met in connection with the plan--
'(i) the use requirements of subsection (c)(1),
'(ii) the vesting requirements of subsection (c)(2), and
'(iii) the minimum cost requirements of subsection (c)(3).
'(A) IN GENERAL.--No more than 1 transfer with respect to any plan during a taxable year may be treated as a qualified transfer for purposes of this section.
'(B) EXCEPTION.--A transfer described in paragraph (4) shall not be taken into account for purposes of subparagraph (A).
'(3) LIMITATION ON AMOUNT TRANSFERRED.--The amount of excess pension assets which may be transferred in a qualified transfer shall not exceed the amount which is reasonably estimated to be the amount the employer maintaining the plan will pay (whether directly or through reimbursement) out of such account during the taxable year of the transfer for qualified current retiree health liabilities.
'(4) SPECIAL RULE FOR 1990.--
'(A) IN GENERAL.--Subject to the provisions of subsection (c), a transfer shall be treated as a qualified transfer if such transfer--
'(i) is made after the close of the taxable year preceding the employer's first taxable year beginning after December 31, 1990, and before the earlier of--
'(I) the due date (including extensions) for the filing of the return of tax for such preceding taxable year, or
'(II) the date such return is filed, and
'(ii) does not exceed the expenditures of the employer for qualified current retiree health liabilities for such preceding taxable year.
'(B) DEDUCTION REDUCED.--The amount of the deductions otherwise allowable under this chapter to an employer for the taxable year preceding the employer's first taxable year beginning after December 31, 1990, shall be reduced by the amount of any qualified transfer to which this paragraph applies.
'(C) COORDINATION WITH REDUCTION RULE.--Subsection (e)(1)(B) shall not apply to a transfer described in subparagraph (A).
'(5) EXPIRATION.--No transfer in any taxable year beginning after December 31, 1995, shall be treated as a qualified transfer.
'(c) REQUIREMENTS OF PLANS TRANSFERRING ASSETS.--
'(1) USE OF TRANSFERRED ASSETS.--
'(A) IN GENERAL.--Any assets transferred to a health benefits account in a qualified transfer (and any income allocable thereto) shall be used only to pay qualified current retiree health liabilities (other than liabilities of key employees not taken into account under subsection (e)(1)(D)) for the taxable year of the transfer (whether directly or through reimbursement).
'(B) AMOUNTS NOT USED TO PAY FOR HEALTH BENEFITS.--
'(i) IN GENERAL.--Any assets transferred to a health benefits account in a qualified transfer (and any income allocable thereto) which are not used as provided in subparagraph (A) shall be transferred out of the account to the transferor plan.
'(ii) TAX TREATMENT OF AMOUNTS.--Any amount transferred out of an account under clause (i)--
'(I) shall not be includible in the gross income of the employer for such taxable year, but
'(II) shall be treated as an employer reversion for purposes of section 4980 (without regard to subsection (d) thereof).
'(2) REQUIREMENTS RELATING TO PENSION BENEFITS ACCRUING BEFORE TRANSFER.--
'(A) IN GENERAL.--The requirements of this paragraph are met if the plan provides that the accrued pension benefits of any participant or beneficiary under the plan become nonforfeitable in the same manner which would be required if the plan had terminated immediately before the qualified transfer (or in the case of a participant who separated during the 1-year period ending on the date of the transfer, immediately before such separation).
'(B) SPECIAL RULE FOR 1990.--In the case of a qualified transfer described in subsection (b)(4), the requirements of this paragraph are met with respect to any participant who separated from service during the taxable year to which such transfer relates by recomputing such participant's benefits as if subparagraph (A) had applied immediately before such separation.
'(3) MINIMUM COST REQUIREMENTS.--
'(A) IN GENERAL.--The requirements of this paragraph are met if each group health plan or arrangement under which applicable health benefits are provided provides that the applicable employer cost for each taxable year during the cost maintenance period shall not be less than the higher of the applicable employer costs for each of the 2 taxable years immediately preceding the taxable year of the qualified transfer.
'(B) APPLICABLE EMPLOYER COST.--For purposes of this paragraph, the term 'applicable employer cost' means, with respect to any taxable year, the amount determined by dividing--
'(i) the qualified current retiree health liabilities of the employer for such taxable year determined--
'(I) without regard to any reduction under subsection (e)(1)(B), and
'(II) in the case of a taxable year in which there was no qualified transfer, in the same manner as if there had been such a transfer at the end of the taxable year, by
'(ii) the number of individuals to whom coverage for applicable health benefits was provided during such taxable year.
'(C) ELECTION TO COMPUTE COST SEPARATELY.--An employer may elect to have this paragraph applied separately with respect to individuals eligible for benefits under title XVIII of the Social Security Act at any time during the taxable year and with respect to individuals not so eligible.
'(D) COST MAINTENANCE PERIOD.--For purposes of this paragraph, the term 'cost maintenance period' means the period of 5 taxable years beginning with the taxable year in which the qualified transfer occurs. If a taxable year is in 2 or more overlapping cost maintenance periods, this paragraph shall be applied by taking into account the highest applicable employer cost required to be provided under subparagraph (A) for such taxable year.
'(1) DEDUCTION LIMITATIONS.--No deduction shall be allowed--
'(A) for the transfer of any amount to a health benefits account in a qualified transfer (or any retransfer to the plan under subsection (c)(1)(B)),
'(B) for qualified current retiree health liabilities paid out of the assets (and income) described in subsection (c)(1), or
'(C) for any amounts to which subparagraph (B) does not apply and which are paid for qualified current retiree health liabilities for the taxable year to the extent such amounts are not greater than the excess (if any) of--
'(i) the amount determined under subparagraph (A) (and income allocable thereto), over
'(ii) the amount determined under subparagraph (B).
'(e) DEFINITION AND SPECIAL RULES.--For purposes of this section--
'(1) QUALIFIED CURRENT RETIREE HEALTH LIABILITIES.--For purposes of this section--
'(A) IN GENERAL.--The term 'qualified current retiree health liabilities' means, with respect to any taxable year, the aggregate amounts (including administrative expenses) which would have been allowable as a deduction to the employer for such taxable year with respect to applicable health benefits provided during such taxable year if--
'(i) such benefits were provided directly by the employer, and
'(ii) the employer used the cash receipts and disbursements method of accounting.
For purposes of the preceding sentence, the rule of section 419(c)(3)(B) shall apply.
'(B) REDUCTIONS FOR AMOUNTS PREVIOUSLY SET ASIDE.--The amount determined under subparagraph (A) shall be reduced by any amount previously contributed to a health benefits account or welfare benefit fund (as defined in section 419(e)(1)) to pay for the qualified current retiree health liabilities. The portion of any reserves remaining as of the close of December 31, 1990, shall be allocated on a pro rata basis to qualified current retiree health liabilities.
'(C) APPLICABLE HEALTH BENEFITS.--The term 'applicable health benefits' mean health benefits or coverage which are provided to--
'(i) retired employees who, immediately before the qualified transfer, are entitled to receive such benefits upon retirement and who are entitled to pension benefits under the plan, and
'(ii) their spouses and dependents.
'(D) KEY EMPLOYEES EXCLUDED.--If an employee is a key employee (within the meaning of section 416(i)(1)) with respect to any plan year ending in a taxable year, such employee shall not be taken into account in computing qualified current retiree health liabilities for such taxable year or in calculating applicable employer cost under subsection (c)(3)(B).
'(2) EXCESS PENSION ASSETS.--The term 'excess pension assets' means the excess (if any) of--
'(A) the amount determined under section 412(c)(7)(A)(ii), over
'(B) the greater of--
'(i) the amount determined under section 412(c)(7)(A)(i), or
'(ii) 125 percent of current liability (as defined in section 412(c)(7)(B)).
'(3) HEALTH BENEFITS ACCOUNT.--The term 'health benefits account' means an account established and maintained under section 401(h).
'(4) COORDINATION WITH SECTION 412.--In the case of a qualified transfer to a health benefits account--
'(A) any assets transferred in a plan year on or before the valuation date for such year (and any income allocable thereto) shall, for purposes of section 412, be treated as assets in the plan as of the valuation date for such year, and
'(B) the plan shall be treated as having a net experience loss under section 412(b)(2)(B)(iv) in an amount equal to the amount of such transfer (reduced by any amounts transferred back to the pension plan under subsection (c)(1)(B)) and for which amortization charges begin for the first plan year after the plan year in which such transfer occurs, except that such section shall be applied to such amount by substituting '10 plan years' for '5 plan years'.'
(c) EFFECTIVE DATES.--
(1) IN GENERAL.--The amendments made by this section shall apply to transfers in taxable years beginning after December 31, 1990.
(2) WAIVER OF ESTIMATED TAX PENALTIES.--No addition to tax shall be made under section 6654 or section 6655 of the Internal Revenue Code of 1986 for the taxable year preceding the taxpayer's 1st taxable year beginning after December 31, 1990, with respect to any underpayment to the extent such underpayment was created or increased by reason of section 420(b)(4)(B) of such Code (as added by subsection (a)).
(a) EXCLUSIVE BENEFIT REQUIREMENT.--Section 403(c)(1) of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1103(c)(1)) is amended by inserting ', or under section 420 of the Internal Revenue Code of 1986 (as in effect on January 1, 1991)' after 'insured plans)'.
(b) EXEMPTIONS FROM PROHIBITED TRANSACTIONS.--Section 408(b) of such Act (29 U.S.C. 1108(b)) is amended by adding at the end thereof the following new paragraph:
'(13) Any transfer in a taxable year beginning before January 1, 1996, of excess pension assets from a defined benefit plan to a retiree health account in a qualified transfer permitted under section 420 of the Internal Revenue Code of 1986 (as in effect on January 1, 1991).'
(c) FUNDING LIMITATIONS.--Section 302 of such Act (29 U.S.C. 1082) is amended by redesignating subsection (g) as subsection (h) and by adding at the end thereof the following new subsection:
'(g) QUALIFIED TRANSFERS TO HEALTH BENEFIT ACCOUNTS.--For purposes of this section, in the case of a qualified transfer (as defined in section 420 of the Internal Revenue Code of 1986)--
'(1) any assets transferred in a plan year on or before the valuation date for such year (and any income allocable thereto) shall, for purposes of subsection (c)(7), be treated as assets in the plan as of the valuation date for such year, and
'(2) the plan shall be treated as having a net experience loss under subsection (b)(2)(B)(iv) in an amount equal to the amount of such transfer (reduced by any amounts transferred back to the plan under section 420(c)(1)(B) of such Code) and for which amortization charges begin for the first plan year after the plan year in which such transfer occurs, except that such subsection shall be applied to such amount by substituting '10 plan years' for '5 plan years'.'
(d) NOTICE REQUIREMENTS.--
(1) IN GENERAL.--Section 101 of such Act (29 U.S.C. 1021) is amended by redesignating subsection (e) as subsection (f) and by inserting after subsection (d) the following new subsection:
'(e) NOTICE OF TRANSFER OF EXCESS PENSION ASSETS TO HEALTH BENEFITS ACCOUNTS.--
'(1) NOTICE TO PARTICIPANTS.--Not later than 60 days before the date of a qualified transfer by an employee pension benefit plan of excess pension assets to a health benefits account, the administrator of the plan shall notify (in such manner as the Secretary may prescribe) each participant and beneficiary under the plan of such transfer. Such notice shall include information with respect to the amount of excess pension assets, the portion to be transferred, the amount of health benefits liabilities expected to be provided with the assets transferred, and the amount of pension benefits of the participant which will be nonforfeitable immediately after the transfer.
'(2) NOTICE TO SECRETARIES, ADMINISTRATOR, AND EMPLOYEE ORGANIZATIONS.--
'(A) IN GENERAL.--Not later than 60 days before the date of any qualified transfer by an employee pension benefit plan of excess pension assets to a health benefits account, the employer maintaining the plan from which the transfer is made shall provide the Secretary, the Secretary of the Treasury, the administrator, and each employee organization representing participants in the plan a written notice of such transfer. A copy of any such notice shall be available for inspection in the principal office of the administrator.
'(B) INFORMATION RELATING TO TRANSFER.--Such notice shall identify the plan from which the transfer is made, the amount of the transfer, a detailed accounting of assets projected to be held by the plan immediately before and immediately after the transfer, and the current liabilities under the plan at the time of the transfer.
'(C) AUTHORITY FOR ADDITIONAL REPORTING REQUIREMENTS.--The Secretary may prescribe such additional reporting requirements as may be necessary to carry out the purposes of this section.
'(3) DEFINITIONS.--For purposes of paragraph (1), any term used in such paragraph which is also used in section 420 of the Internal Revenue Code of 1986 (as in effect on January 1, 1991) shall have the same meaning as when used in such section.'
(2) PENALTIES.--
(A) Section 502(c)(1) of such Act (29 U.S.C. 1132(c)(1)) is amended by inserting 'or section 101(e)(1)' after 'section 606'.
(B) Section 502(c)(3) of such Act (29 U.S.C. 1132(c)(3)) is amended--
(i) by inserting 'or who fails to meet the requirements of section 101(e)(2) with respect to any person' after 'beneficiary' the first place it appears, and
(ii) by inserting 'or to such person' after 'beneficiary' the second place it appears.
SEC. 12021. INCREASE IN PREMIUM RATES.
(a) INCREASE IN BASIC PREMIUM.--
(1) IN GENERAL.--Clause (i) of section 4006(a)(3)(A) of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1306(a)(3)(A)) is amended by striking 'for plan years beginning after December 31, 1987, an amount equal to the sum of $16' and inserting 'for plan years beginning after December 31, 1990, an amount equal to the sum of $19'.
(2) CONFORMING AMENDMENT.--Section 4006(c)(1)(A) of such Act (29 U.S.C. 1306(c)(1)(A)) is amended by adding at the end the following new clause:
(1) by striking '$6.00' in clause (ii) and inserting '$9.00', and
(2) by striking '$34' in clause (iv)(I) and inserting '$53'.
(c) EFFECTIVE DATE.--The amendments made by this section shall apply to plan years beginning after December 31, 1990.
Speaker of the House of Representatives.
Vice President of the United States and President of the Senate.
I certify this to be correct printing of the hand enrollment of Public Law 101-508 pursuant to Public Law 101-466.
President of the United States.
FOOTNOTES
77 So in original. Probably should be 'at'.
78 So in original. Probably should be '2(b))'.
79 So in original. Probably should be 'through'.
80 So in original. Probably should be 'GENERAL.--'.
81 So in original. Probably should be 'subsection'.
82 So in original. Probably should be 'Paragraphs'.
83 So in original. Probably should be 'For'.
84 So in original. Probably should be 'facilities,'.
END OF FOOTNOTES
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