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In This Issue: Conference Report Explanation of H.R. 2014 (With Footnotes)

JUL. 30, 1997

Conference Report to Accompany H.R. 2014 (Report 105-220)

DATED JUL. 30, 1997
DOCUMENT ATTRIBUTES
Citations: Conference Report to Accompany H.R. 2014 (Report 105-220)

 

====== SUMMARY ======

This issue of Tax Notes Today contains the full text of the revenue reconciliation conference committee's "Statement of Managers," an explanatory report for the Taxpayer Relief Act of 1997 (H.R. 2014; P.L. 105-34). A previous version of the conference report appeared in the August 1, 1997 issue of Tax Notes Today (see Doc 97-22325 (522 pages) or 97 TNT 148-20 to 97 TNT 148- 40).

The bill, which was approved by the House and Senate July 31 and signed into law by President Clinton August 5, includes tax provisions such as a child credit, estate and gift tax reform, education- and savings-related incentives, and various simplification measures. (For online presentation, the report has been broken up by section. This citation includes the table of contents.)

====== FULL TEXT ======

105th Congress

 

1st Session

HOUSE OF REPRESENTATIVES

REPORT 105-220

TAXPAYER RELIEF ACT OF 1997

CONFERENCE REPORT

 

To Accompany

 

H.R. 2014

July 30, 1997. -- Order to be printed

* * * * *

(H. R. 2014--STATEMENT OF MANAGERS)

CONTENTS

I. CHILD AND DEPENDENT CARE TAX CREDIT; HEALTH CARE FOR CHILDREN

A. Child Tax Credit (sec. 101(a), (c), and (d) of the House bill

 

and sec. 101 of the Senate amendment)

B. Expand Definition of High-Risk Individuals With Respect to

 

Tax-Exempt State-Sponsored Organizations Providing Health

 

Coverage (sec. 101(b) of the House bill)

C. Indexing of the Dependent Care Credit; Phase Out for High-

 

Income Taxpayers (sec. 102 of the House bill)

D. Tax Credit for Employer Expenses for Child Care Facilities

 

(sec. 103 of the Senate amendment)

E. Expansion of Coordinated Enforcement Efforts Between the

 

Internal Revenue Service and the Health and Human Services

 

Office of Child Support Enforcement (sec. 104 of the Senate

 

amendment)

F. Penalty-Free Withdrawals From IRAs for Adoption Expenses

 

(sec. 105 of the Senate amendment)

II. EDUCATION TAX INCENTIVES

A. Tax Benefits Relating to Education Expenses

1. HOPE tax credit and Lifetime Learning tax credit for

 

higher education tuition expenses (sec. 201 of the House

 

bill the Senate amendment)

2. Tax treatment of qualified State tuition programs and

 

education IRAs; exclusion for certain distributions from

 

education IRAs used to pay qualified higher education

 

expenses (secs. 202(a), (b), and (d) and 211-212 of the

 

House bill and secs. 211-213 of the Senate amendment)

3. Phase out qualified tuition reduction exclusion (sec.

 

202(c) of the House bill)

4. Deduction for student loan interest (sec. 202 of the

 

Senate amendment)

5. Penalty-free withdrawals from IRAs for higher education

 

expenses (sec. 203 of the House bill sec. 203 of and the

 

Senate amendment)

6. Tax credit for expenses for education which supplements

 

elementary and secondary education (sec. 204 of the

 

House bill)

7. Certain teacher education expenses not subject to 2-

 

percent floor on miscellaneous itemized deductions (sec.

 

224 of the Senate amendment)

B. Other Education-Related Tax Provisions

1. Extension of exclusion for employer-provided educational

 

assistance (sec. 221 of the House bill and sec. 221 of

 

the Senate amendment)

2. Modification of $150 million limit on qualified

 

501(c)(3) bonds other than hospital bonds (sec. 222 of

 

the House bill and sec. 222 of the Senate amendment)

3. Enhanced deduction for corporate contributions of

 

computer technology and equipment (sec. 223 of the House

 

bill)

4. Expansion of arbitrage rebate exception for certain

 

bonds (sec. 223 of the Senate amendment)

5. Treatment of cancellation of certain student loans (sec.

 

224 of the House bill and sec. 225 of the Senate

 

amendment)

6. Tax credit for holders of qualified zone academy bonds

III. SAVINGS AND INVESTMENT TAX INCENTIVES

A. Individual Retirement Arrangements

1. Increase deductible IRA phase-out range and modify

 

active participant rule (sec. 301 of the Senate

 

amendment)

2. Tax-free nondeductible IRAs (sec. 301 of the House bill

 

and sec. 302 of the Senate amendment)

3. Modifications to early withdrawal tax (sec. 301 of the

 

House bill and sec. 303 of the Senate amendment)

4. IRA investments in coins and bullion (sec. 304 of the

 

Senate amendment)

B. Capital Gains Provisions

1. Maximum rate of tax on net capital gains of individuals

 

(sec. 311 of the House bill and sec. 311 of the Senate

 

amendment)

2. Small business stock (sec. 311 of the House bill and

 

secs. 312-313 of the Senate amendment)

3. Indexing of certain assets for purposes of determining

 

gain (sec. 312 of the House bill)

4. Exclusion of gain from sale of principal residence (sec.

 

313 of the House bill and sec. 314 of the Senate

 

amendment)

5. Corporate capital gains (sec. 321 of the House bill)

IV. ALTERNATIVE MINIMUM TAX PROVISIONS

A. Increase Exemption Amount Applicable to Individual

 

Alternative Minimum Tax (sec. 401 of the House bill and sec.

 

102 of the Senate amendment)

B. Repeal Alternative Minimum Tax for Small Businesses and

 

Repeal the Depreciation Adjustment (secs. 402-403 of the

 

House bill and secs. 55-56 of the Senate amendment)

C. Repeal AMT Installment Method Adjustment for Farmers (sec.

 

404 of the House bill and sec. 732 of the Senate amendment)

V. ESTATE, GIFT, AND GENERATION-SKIPPING TAX PROVISIONS

A. Estate and Gift Tax Provisions

1. Increase in estate and gift tax unified credit (sec.

 

501(a) of the House bill and sec. 401(a) of the Senate

 

amendment)

2. Indexing of certain other estate and gift tax provisions

 

(sec. 501(b)-(e) of the House bill and sec. 401(b)-(e)

 

of the Senate amendment)

3. Estate tax exclusion for qualified family-owned

 

businesses (sec. 402 of the Senate amendment)

4. Reduction in estate tax for certain land subject to

 

permanent conservation easement (sec. 403 of the Senate

 

amendment)

5. Installment payments of estate tax attributable to

 

closely held businesses (secs. 502-503 of the House bill

 

and secs. 404-405 of the Senate amendment)

6. Estate tax recapture from cash leases of specially-

 

valued property (sec. 504 of the House bill and sec. 406

 

of the Senate amendment)

7. Clarify eligibility for extension of time for payment of

 

estate tax (sec. 505 of the House bill)

8. Gifts may not be revalued for estate tax purposes after

 

expiration of statute of limitations (sec. 506 of the

 

House bill)

9. Repeal of throwback rules applicable to domestic trusts

 

(sec. 507 of the House bill)

10. Unified credit of decedent increased by unified credit

 

of spouse used on split gift included in decedent's

 

gross estate (sec. 508 of the House bill)

11. Reformation of defective bequests to spouse of decedent

 

(sec. 509 of the House bill)

B. Generation-Skipping Tax Provisions

1. Severing of trusts holding property having an inclusion

 

ratio of greater than zero (sec. 511 of the House bill)

2. Modification of generation-skipping transfer tax for

 

transfers to individuals with deceased parents (sec. 512

 

of the House bill and sec. 407 of the Senate amendment)

VI. EXTENSION OF CERTAIN EXPIRING TAX PROVISIONS

A. Research Tax Credit (sec. 601 of the House bill and sec. 501

 

of the Senate amendment)

B. Contributions of Stock to Private Foundations (sec. 602 of

 

the House bill and sec. 502 of the Senate amendment)

C. Work Opportunity Tax Credit (sec. 603 of the House bill and

 

sec. 503 of the Senate amendment)

D. Orphan Drug Tax Credit (sec. 604 of the House bill and sec.

 

504 of the Senate amendment)

VII. DISTRICT OF COLUMBIA TAX INCENTIVES (secs. 701-702 of the House

 

bill and sec. 601 of the Senate amendment)

VIII. WELFARE-TO-WORK TAX CREDIT (sec. 801 of the House bill)

IX. MISCELLANEOUS PROVISIONS

A. Excise Tax Provisions

1. Repeal excise tax on diesel fuel used in recreational

 

motorboats (sec. 901 of the House bill and sec. 701 of

 

the Senate amendment)

2. Continued application of tax on imported recycled Halon-

 

1211 (sec. 902 of the House bill)

3. Transfer of General Fund highway fuels tax revenues to

 

the Highway Trust Fund (sec. 704 of the Senate

 

amendment)

4. Tax certain alternative fuels based on energy

 

equivalency to gasoline (sec. 705 of the Senate

 

amendment)

5. Extend and modify tax benefits for ethanol (sec. 605 of

 

the House bill and sec. 707 of the Senate amendment)

6. Treat certain gasoline "chain retailers" as wholesale

 

distributors under the gasoline excise tax refund rules

 

(sec. 904 of the House bill)

7. Exemption of electric and other clean-fuel motor

 

vehicles from luxury automobile classification (sec. 905

 

of the House bill)

8. Reduce rate of alcohol excise tax on certain hard ciders

 

(sec. 703 of the Senate amendment)

9. Study feasibility of moving collection point for

 

distilled spirits excise tax (sec. 706 of the Senate

 

amendment)

10. Codify Treasury Department regulations regulating wine

 

labels (sec. 708 of the Senate amendment)

11. Uniform rate of excise tax on vaccines (sec. 903 of the

 

House bill and sec. 844 of the Senate amendment)

B. Disaster Relief Provisions

1. Authority to postpone certain tax-related deadlines by

 

reason of Presidentially declared disaster (sec. 921 of

 

the House bill)

2. Use of certain appraisals to establish amount of

 

disaster loss (sec. 922 of the House bill)

3. Treatment of livestock sold on account of weather-

 

related conditions (sec. 923 of the House bill and sec.

 

721 of the Senate amendment)

4. Mortgage bond financing for residences located in

 

Presidentially declared disaster areas (sec. 924 of the

 

House bill and sec. 723 of the Senate amendment)

5. Rules relating to denial of earned income credit on

 

basis of disqualified income (sec. 722 of the Senate

 

amendment)

6. Penalty-free withdrawals from IRAs for disaster-related

 

expenses (sec. 724 of the Senate amendment)

7. Elimination of 10-percent floor for casualty losses

 

resulting from Presidentially declared disaster (sec.

 

725 of the Senate amendment)

8. Requirement to abate interest by reason of

 

Presidentially declared disaster (sec. 726 of the Senate

 

amendment)

C. Provisions Relating to Employment Taxes

1. Employment tax status of distributors of bakery products

 

(sec. 931 of the House bill)

2. Clarification of standard to be used in determining tax

 

status of retail securities brokers (sec. 932 of the

 

House bill and sec. 779 of the Senate amendment)

3. Clarification of exemption from self-employment tax for

 

certain termination payments received by former

 

insurance salesmen (sec. 933 of the House bill)

4. Safe harbor for independent contractors (sec. 934 of the

 

House bill)5. Combined employment tax reporting

 

demonstration project (sec. 769 of the Senate amendment)

D. Provisions Relating to Small Businesses

1. Delay imposition of penalties for failure to make

 

payments electronically through EFTPS (sec. 941 of the

 

House bill and sec. 731 of the Senate amendment)

2. Home office deduction: clarification of definition of

 

principal place of business (sec. 942 of the House bill)

3. Increase deduction for health insurance costs of self-

 

employed individuals (sec. 733 of the Senate amendment)

E. Other Provisions

1. Shrinkage estimates for inventory accounting (sec. 951

 

of the House bill and sec. 1013 of the Senate amendment)

2. Treatment of workmen's compensation liability under

 

rules for certain personal injury liability assignments

 

(sec. 952 of the House bill)

3. Tax-exempt status for certain State workmen's

 

compensation act companies (sec. 953 of the House bill

 

and sec. 761 of the Senate amendment)

4. Election for 1987 partnerships to continue exception

 

from treatment of publicly traded partnerships as

 

corporations (sec. 954 of the House bill and sec. 762 of

 

the Senate amendment)

5. Exclusion from UBIT for certain corporate sponsorship

 

payments (sec. 955 of the House bill and sec. 763 of the

 

Senate amendment)

6. Timeshare associations (sec. 956 of the House bill and

 

sec. 764 of the Senate amendment)

7. Deferral of gain on certain sales of farm product

 

refiners and processors (sec. 958 of the House bill)

8. Exception from real estate reporting requirements for

 

sales of principal residences (sec. 959 of the House

 

bill and secs. 314(c) and 601(d) of the Senate

 

amendment)

9. Increased deduction for business meals while operating

 

under Department of Transportation hours of service

 

limitations (sec. 960 of the House bill and sec. 765 of

 

the Senate amendment)

10. Deductibility of meals provided for the convenience of

 

the employer and provided by remote seafood processors

 

(secs. 765 and 778 of the Senate amendment)

11. Deduction of traveling expenses while working away from

 

home on qualified construction projects (sec. 775 of the

 

Senate amendment)

12. Provide above-the-line-deduction for certain business

 

expenses (sec. 766 of the Senate amendment)

13. Increase in standard mileage rate for purposes of

 

computing charitable deduction (sec. 767 of the Senate

 

amendment)

14. Expensing of environmental remediation costs

 

("brownfields") (sec. 768 of the Senate amendment)

15. Treatment of consolidation of certain mutual savings

 

bank life insurance departments (sec. 962 of the House

 

bill)

16. Offset of past-due, legally enforceable State tax

 

obligations against Federal overpayments (sec. 963 of

 

the House bill)

17. Modify limits on depreciation of luxury automobiles for

 

certain clean- burning fuel and electric vehicles (sec.

 

964 of the House bill)

18. Survivor benefits of public safety officers killed in

 

the line of duty (sec. 965 of the House bill and sec.

 

784 of the Senate amendment)

19. Temporary suspension of income limitations on percentage

 

depletion for production from marginal wells (sec. 966

 

of the House bill and sec. 772 of the Senate amendment)

20. Extend production credit for electricity produced from

 

wind and "closed loop" biomass (sec. 771 of the Senate

 

amendment)

21. Modification of advance refunding rules for certain tax-

 

exempt bonds issued by the Virgin Islands (sec. 957 of

 

the House bill)

22. Qualified small-issue bonds (sec. 770 of the Senate

 

amendment)

23. Treatment of bonds issued by the Federal Home Loan Bank

 

Board under the Federal guarantee rules (sec. 774 of the

 

Senate amendment)

24. Current refundings of certain bonds issued by Indian

 

Tribal governments (sec. 789 of the Senate amendment)

25. Purchasing of receivables by tax-exempt hospital

 

cooperative service organizations (sec. 773 of the

 

Senate amendment)

26. Charitable contribution deduction for certain expenses

 

incurred in support of Native Alaskan subsistence

 

whaling (sec. 776 of the Senate amendment)

27. Designation of additional empowerment zones;

 

modification of empowerment zone and enterprise

 

community criteria (sec. 777 of the Senate amendment)

28. Conducting of certain qualified games of chance not

 

treated as unrelated trade or business (sec. 783 of the

 

Senate amendment)

29. Exclusion from income of certain severance payments

 

(sec. 788(a) of the Senate amendment)

30. Special rule for thrift institutions that became large

 

banks (sec. 790 of the Senate amendment)

31. Income averaging for farmers (sec. 792 of the Senate

 

amendment)

32. Intercity Passenger Rail Fund; elective carryback of

 

existing net operating losses of the National Railroad

 

Passenger Corporation (Amtrak) (sec. 702 of the Senate

 

amendment)

X. REVENUE-INCREASE PROVISIONS

A. Financial Products

1. Require recognition of gain on certain appreciated

 

positions in personal property (sec. 1001(a) of the

 

House bill and sec. 801(a) of the Senate amendment)

2. Election of mark-to-market for securities traders and

 

for traders and dealers in commodities (sec. 1001(b) of

 

the House bill and sec. 801(b) of the Senate amendment)

3. Limitation on exception for investment companies under

 

section 351 (sec. 1002 of the House bill and sec. 802 of

 

the Senate amendment)

4. Disallowance of interest on indebtedness allocable to

 

tax-exempt obligations (sec. 1003 of the House bill)

5. Gains and losses from certain terminations with respect

 

to property (sec. 1004 of the House bill and sec. 803 of

 

the Senate amendment)

6. Determination of original issue discount where pooled

 

debt obligations subject to acceleration (sec. 1005 of

 

the House bill)

7. Deny interest deduction on certain debt instruments

 

(sec. 1006 of the House bill)

B. Corporate Organizations and Reorganizations

1. Require gain recognition for certain extraordinary

 

dividends (sec. 1011 of the House bill and sec. 811 of

 

the Senate amendment)

2. Require gain recognition on certain distributions of

 

controlled corporation stock (sec. 1012 of the House

 

bill and sec. 812 of the Senate amendment)

3. Reform tax treatment of certain corporate stock

 

transfers (sec. 1013 of the House bill and sec. 813 of

 

the Senate amendment)

4. Modify holding period for dividends-received deduction

 

(sec. 1014 of the House bill and sec. 814 of the Senate

 

amendment)

C. Other Corporate Provisions

1. Registration of confidential corporate tax shelters and

 

substantial understatement penalty (sec. 1021 of the

 

House bill and sec. 821 of the Senate amendment)

2. Treat certain preferred stock as "boot" (sec. 1022 of

 

the House bill and sec. 822 of the Senate amendment)

D. Administrative Provisions

1. Reporting of certain payments made to attorneys (sec.

 

1031 of the House bill)

2. Information reporting on persons receiving contract

 

payments from certain Federal agencies (sec. 1032 of the

 

House bill and sec. 831 of the Senate amendment)

3. Disclosure of tax return information for administration

 

of certain veterans programs (sec. 1033 of the House

 

bill and sec. 832 of the Senate amendment)

4. Establish IRS continuous levy and improve debt

 

collection

a. Continuous levy (sec. 1034 of the House bill and

 

sec. 834 of the Senate amendment)

b. Modifications of levy exemptions (secs. 1035-1036

 

of the House bill and secs. 835-836 of the Senate

 

amendment)

5. Consistency rule for beneficiaries of trusts and estates

 

(sec. 1037 of the House bill and sec. 833 of the Senate

 

amendment)

E. Excise Tax Provisions

1. Extension and modification of Airport and Airway Trust

 

Fund excise taxes (sec. 1041 of the House bill and sec.

 

841 of the Senate amendment)

2. Extend diesel fuel excise tax rules to kerosene (sec.

 

1042 of the House bill)

3. Reinstate Leaking Underground Storage Tank Trust Fund

 

excise tax (sec. 1043 of the House bill and sec. 842 of

 

the Senate amendment)

4. Application of communications excise tax to prepaid

 

telephone cards (sec. 1044 of the House bill and sec.

 

843 of the Senate amendment)

5. Modify treatment of tires under the heavy vehicle retail

 

excise tax on trucks (sec. 1402 of the House bill and

 

sec. 845 of the Senate amendment)

6. Increase tobacco excise taxes (sec. 846 of the Senate

 

amendment)

F. Provisions Relating to Tax-Exempt Organizations

1. Extend UBIT rules to second-tier subsidiaries and amend

 

control test (sec. 1051 of the House bill and sec. 851

 

of the Senate amendment)

2. Limitation on increase in basis of property resulting

 

from sale by tax-exempt entity to related person (sec.

 

1052 of the House bill and sec. 852 of the Senate

 

amendment)

3. Reporting and proxy tax requirements for political and

 

lobbying expenditures of certain tax-exempt

 

organizations (sec. 1053 of the House bill)

4. Repeal grandfather rule with respect to pension business

 

of certain insurers (sec. 1054 of the House bill and

 

sec. 853 of the Senate amendment)

G. Foreign Provisions

1. Inclusion of income from notional principal contracts

 

and stock lending transactions under Subpart F (sec.

 

1171 of the House bill and sec. 861 of the Senate

 

amendment)

2. Restrict like-kind exchange rules for certain personal

 

property (sec 1172 of the House bill and sec. 862 of the

 

Senate amendment).

3. Impose holding period requirement for claiming foreign

 

tax credits with respect to dividends (sec. 1173 of the

 

House bill and sec. 863 of the Senate amendment)

4. Penalties for failure to file disclosure of exemption

 

for income from the international operation of ships or

 

aircraft by foreign persons (sec. 1174 of the House

 

bill)

5. Limitation on treaty benefits for payments to hybrid

 

entities (sec. 1175 of the House bill and sec. 742 of

 

the Senate amendment)

6. Interest on underpayments that are reduced by foreign

 

tax credit carrybacks (sec. 1176 of the House bill and

 

sec. 865 of the Senate amendment)

7. Determination of period of limitations relating to

 

foreign tax credits (sec. 1177 of the House bill and

 

sec. 866 of the Senate amendment)

8. Treatment of income from certain sales of inventory as

 

U. S. source (sec. 864 of the Senate amendment)

9. Modify foreign tax credit carryover rules (sec. 867 of

 

the Senate amendment)

10. Repeal special exception to foreign tax credit

 

limitation for alternative minimum tax purposes (sec.

 

868 of the Senate amendment)

H. Pension and Employee Benefit Provisions

1. Cashout of certain accrued benefits (sec. 917 of the

 

House bill and sec. 879 of the Senate amendment)

2. Election to receive taxable cash compensation in lieu of

 

nontaxable parking benefits (sec. 880 of the Senate

 

amendment)

3. Repeal of excess distribution and excess retirement

 

accumulation taxes (sec. 882 of the Senate amendment)

4. Tax on prohibited transactions (sec. 884 of the Senate

 

amendment)

5. Basis recovery rules (sec. 885 of the Senate amendment)

I. Other Revenue-Increase Provisions

1. Phase out suspense accounts for certain large farm

 

corporations (sec. 1061 of the House bill and sec. 871

 

of the Senate amendment)

2. Modify net operating loss carryback and carryforward

 

rules (sec. 1062 of the House bill and sec. 872 of the

 

Senate amendment)

3. Expand the limitations on deductibility of interest and

 

premiums with respect to life insurance, endowment, and

 

annuity contracts (sec. 1063 of the House bill and sec.

 

873 of the Senate amendment)

4. Allocation of basis of properties distributed to a

 

partner by a partnership (sec. 1064 of the House bill

 

and sec. 874 of the Senate amendment)

5. Treatment of inventory items of a partnership (sec. 1065

 

of the House bill and sec. 875 of the Senate amendment)

6. Treatment of appreciated property contributed to a

 

partnership (sec. 1066 of the House bill)

7. Earned income credit compliance provisions (sec. 1067 of

 

the House bill and sec. 5851 of the Senate amendment to

 

H. R. 2015)

a. Deny EIC eligibility for prior acts of recklessness

 

or fraud

b. Recertification required when taxpayer found to be

 

ineligible for EIC in past

c. Due diligence requirements for paid preparers

d. Modify the definition of AGI used to phaseout the

 

EIC

8. Eligibility for income forecast method (sec. 1068 of the

 

House bill and sec. 876 of the Senate amendment)

9. Require taxpayers to include rental value of residence

 

in income without regard to period of rental (sec. 1069

 

of the House bill)

10. Modify the exception to the related-party rule of

 

section 1033 for individuals to only provide an

 

exception for de minimis amounts (sec. 1070 of the House

 

bill and sec. 877 of the Senate amendment)

11. Repeal of exception for certain sales by manufacturers

 

to dealers (sec. 1071 of the House bill and sec. 878 of

 

the Senate amendment

12. Extension of Federal unemployment surtax (sec. 881 of

 

the Senate amendment)

13. Treatment of charitable remainder trusts (sec. 883 of

 

the Senate amendment)

14. Modify general business credit carryback and

 

carryforward rules (sec. 788(b) of the Senate amendment)

15. Using Federal case registry of child support orders for

 

tax enforcement purposes

16. Expanded SSA records for tax enforcement

17. Treatment of amounts received under the work

 

requirements of the Personal Responsibility and Work

 

Opportunity Act of 1996

XI. FOREIGN TAX PROVISIONS

A. General Provisions

1. Simplify foreign tax credit limitation for individuals

 

(sec. 1103 of the House bill and sec. 901 of the Senate

 

amendment)

2. Simplify translation of foreign taxes (sec. 1104 of the

 

House bill and sec. 902 of the Senate amendment)

3. Election to use simplified foreign tax credit limitation

 

for alternative minimum tax purposes (sec. 1105 of the

 

House bill and sec. 903 of the Senate amendment)

4. Simplify treatment of personal transactions in foreign

 

currency (sec. 1106 of the House bill and sec. 904 of

 

the Senate amendment)

5. Simplify foreign tax credit limitation for dividends

 

from 10/50 companies (sec. 1107 of the House bill)

B. General Provisions Affecting Treatment of Controlled Foreign

 

Corporations (secs. 1111-1113 of the House bill and secs.

 

911-913 of the Senate amendment)

C. Modification of Passive Foreign Investment Company Provisions

 

to Eliminate Overlap With Subpart F, to Allow Mark-to-Market

 

Election, and to Require Measurement Based on Value for PFIC

 

Asset Test (secs. 1121-1123 of the House bill and secs. 751-

 

753 of the Senate amendment)

D. Simplify Formation and Operation of International Joint

 

Ventures (secs. 1131, 1141-1145, and 1151 of the House bill

 

and secs. 921, 931-935, and 941 of the Senate amendment)

E. Modification of Reporting Threshold for Stock Ownership of a

 

Foreign Corporation (sec. 1146 of the House bill and sec. 936

 

of the Senate amendment)

F. Other Foreign Simplification Provisions

1. Transition rules for certain trusts (sec. 1161 of the

 

House bill and sec. 951 of the Senate amendment)

2. Simplify stock and securities trading safe harbor (sec.

 

1162 of the House bill and sec. 952 of the Senate

 

amendment)

3. Clarification of determination of foreign taxes deemed

 

paid (sec. 1178(a) of the House bill and sec. 953(a) of

 

the Senate amendment)

4. Clarification of foreign tax credit limitation for

 

financial services income (sec. 1178(b) of the House

 

bill and sec. 953(b) of the Senate amendment)

G. Other Foreign Provisions

1. Eligibility of licenses of computer software for foreign

 

sales corporation benefits (sec. 1101 of the House bill

 

and sec. 741 of the Senate amendment)

2. Increase dollar limitation on section 911 exclusion

 

(sec. 1102 of the House bill)

3. Treatment of certain securities positions under the

 

subpart F investment in U. S. property rules (sec. 743

 

of the Senate amendment)

4. Exception from foreign personal holding company income

 

under subpart F for active financing income (sec. 744 of

 

the Senate amendment)

5. Treat service income of nonresident alien individuals

 

earned on foreign ships as foreign source income and

 

disregard the U. S. presence of such individuals (sec.

 

745 of the Senate amendment)

XII. SIMPLIFICATION PROVISIONS RELATING TO INDIVIDUALS AND BUSINESSES

A. Provisions Relating to Individuals

1. Modifications to standard deduction of dependents; AMT

 

treatment of certain minor children (sec. 1201 of the

 

House bill and sec. 1001 of the Senate amendment)

2. Increase de minimis threshold for estimated tax to

 

$1,000 for individuals (sec. 1202 of the House bill and

 

sec. 1002 of the Senate amendment)

3. Optional methods for computing SECA tax combined (sec.

 

1203 of the House bill)

4. Treatment of certain reimbursed expenses of rural letter

 

carrier's vehicles (sec. 1204 of the House bill and sec.

 

1003 of the Senate amendment)

5. Travel expenses of Federal employees participating in a

 

Federal criminal investigation (sec. 1205 of the House

 

bill and sec. 1004 of the Senate amendment)

6. Payment of taxes by commercially acceptable means (sec.

 

1206 of the House bill)

B. Provisions Relating to Businesses Generally

1. Modifications to look-back method for long-term

 

contracts (sec. 1211 of the House bill and sec. 1011 of

 

the Senate amendment)

2. Minimum tax treatment of certain property and casualty

 

insurance companies (sec. 1212 of the House bill and

 

sec. 1012 of the Senate amendment)

3. Treatment of construction allowances provided to lessees

 

(sec. 961 of the House bill and sec. 1014 of the Senate

 

amendment)

C. Partnership Simplification Provisions

1. General provisions

a. Simplified flow-through for electing large

 

partnerships (sec. 1221 of the House bill and sec.

 

1021 of the Senate amendment)

b. Simplified audit procedures for electing large

 

partnerships (sec. 1222 of the House bill and sec.

 

1022 of the Senate amendment)

c. Due date for furnishing information to partners of

 

electing large partnerships (sec. 1223 of the House

 

bill and sec. 1023 of the Senate amendment)

d. Partnership returns required on magnetic media

 

(sec. 1224 of the House bill and sec. 1024 of the

 

Senate amendment)

e. Treatment of partnership items of individual

 

retirement arrangements (sec. 1225 of the House

 

bill and sec. 1025 of the Senate amendment)

2. Other partnership audit rules

a. Treatment of partnership items in deficiency

 

proceedings (sec. 1231 of the House bill and sec.

 

1031 of the Senate amendment)

b. Partnership return to be determinative of audit

 

procedures to be followed (sec. 1232 of the House

 

bill and sec. 1032 of the Senate amendment)

c. Provisions relating to statute of limitations (sec.

 

1233 of the House bill and sec. 1033 of the Senate

 

amendment)

d. Expansion of small partnership exception (sec. 1234

 

of the House bill and sec. 1034 of the Senate

 

amendment)

e. Exclusion of partial settlements from 1-year

 

limitation on assessment (sec. 1235 of the House

 

bill and sec. 1035 of the Senate amendment)

f. Extension of time for filing a request for

 

administrative adjustment (sec. 1236 of the House

 

bill and sec. 1036 of the Senate amendment)

g. Availability of innocent spouse relief in context

 

of partnership proceedings (sec. 1237 of the House

 

bill and sec. 1037 of the Senate amendment)

h. Determination of penalties at partnership level

 

(sec. 1238 of the House bill and sec. 1038 of the

 

Senate amendment)

i. Provisions relating to Tax Court jurisdiction (sec.

 

1239 of the House bill and sec. 1039 of the Senate

 

amendment)

j. Treatment of premature petitions filed by notice

 

partners or 5-percent groups (sec. 1240 of the

 

House bill and sec. 1040 of the Senate amendment)

k. Bonds in case of appeals from certain proceedings

 

(sec. 1241 of the House bill and sec. 1041 of the

 

Senate amendment)

l. Suspension of interest where delay in computational

 

adjustment resulting from certain settlements (sec.

 

1242 of the House bill and sec. 1042 of the Senate

 

amendment)

m. Special rules for administrative adjustment

 

requests with respect to bad debts or worthless

 

securities (sec. 1243 of the House bill and sec.

 

1043 of the Senate amendment)

3. Closing of partnership taxable year with respect to

 

deceased partner (sec. 1246 of the House bill and sec.

 

1046 of the Senate amendment)

D. Modifications of Rules for Real Estate Investment Trusts

 

(secs. 1251-1263 of the House bill and secs. 1051-1063 of the

 

Senate amendment)

E. Repeal the "Short-Short" Test for Regulated Investment

 

Companies (sec. 1271 of the House bill and sec. 1071 of the

 

Senate amendment)

F. Taxpayer Protections

1. Provide reasonable cause exception for additional

 

penalties (sec. 1281 of the House bill and sec. 1081 of

 

the Senate amendment)

2. Clarification of period for filing claims for refunds

 

(sec. 1282 of the House bill and sec. 1082 of the Senate

 

amendment)

3. Repeal of authority to disclose whether a prospective

 

juror has been audited (sec. 1283 of the House bill and

 

sec. 1083 of the Senate amendment)

4. Clarify statute of limitations for items from pass-

 

through entities (sec. 1284 of the House bill and sec.

 

1084 of the Senate amendment)

5. Awarding of administrative costs and attorneys fees

 

(sec. 1285 of the House bill)

6. Prohibition on browsing (secs. 1286-1287 of the House

 

bill and secs. 1085-1086 of the Senate amendment)

XIII. ESTATE, GIFT, AND TRUST SIMPLIFICATION PROVISIONS

1. Eliminate gift tax filing requirements for gifts to

 

charities (sec. 1301 of the House bill and secs. 1101 of

 

the Senate amendment)

2. Clarification of waiver of certain rights of recovery

 

(sec. 1302 of the House bill and sec. 1102 of the Senate

 

amendment)

3. Transitional rule under section 2056A (sec. 1303 of the

 

House bill and sec. 1103 of the Senate amendment)

4. Clarifications relating to disclaimers (sec. 1304 of the

 

House bill)

5. Amend "5 or 5 power" (sec. 1305 of the House bill)

6. Treatment of estate tax purposes of short-term

 

obligations held by nonresident aliens (sec. 1306 of the

 

House bill and sec. 1104 of the Senate amendment)

7. Certain revocable trusts treated as part of estate (sec.

 

1307 of the House bill)

8. Distributions during first 65 days of taxable year of

 

estate (sec. 1308 of the House bill and sec. 1105 of the

 

Senate amendment)

9. Separate share rules available to estates (sec. 1309 of

 

the House bill and sec. 1106 of the Senate amendment)

10. Executor of estate and beneficiaries treated as related

 

persons for disallowance of losses (sec. 1310 of the

 

House bill and sec. 1107 of the Senate amendment)

11. Limitation on taxable year of estates (sec. 1311 of the

 

House bill)

12. Simplified taxation of earnings of pre-need funeral

 

trusts (sec. 1312 of the House bill and sec. 1108 of the

 

Senate amendment)

13. Adjustments for gifts within 3 years of decedent's death

 

(sec. 1313 of the House bill and sec. 1109 of the Senate

 

amendment)

14. Clarify relationship between community property rights

 

and retirement benefits (sec. 1314 of the House bill and

 

sec. 1110 of the Senate amendment

15. Treatment under qualified domestic trust rules of forms

 

of ownership which are not trusts (sec. 1315 of the

 

House bill and sec. 1111 of the Senate amendment)

16. Opportunity to correct certain failures under section

 

2032A (sec. 1316 of the House bill and sec. 1112 of the

 

Senate amendment)

17. Authority to waive requirement of U. S. trustee for

 

qualified domestic trusts (sec. 1317 of the House bill

 

and sec. 1113 of the Senate amendment)

XIV. EXCISE TAX AND OTHER SIMPLIFICATION PROVISIONS

A. Excise Tax Simplification Provisions

1. Increase de minimis limit for after-market alternations

 

subject to heavy truck and luxury automobile excise

 

taxes (sec. 1401 of the House bill and sec. 1201 of the

 

Senate amendment)

2. Simplification of excise taxes on distilled spirits,

 

wine, and beer (secs. 1411-1422 of the House bill and

 

secs. 1211-1222 of the Senate amendment)

3. Authority for Internal Revenue Service to grant

 

exemptions from excise tax registration requirements

 

(sec. 1431 of the House bill and sec. 1231 of the Senate

 

amendment)

4. Repeal of expired excise tax provisions (sec. 1432 of

 

the House bill and sec. 1232 of the Senate amendment)

5. Modifications to the excise tax on arrows (sec. 1233 of

 

the Senate amendment)

6. Modifications to heavy highway vehicle retail excise tax

 

(sec. 1234 of the Senate amendment)

7. Treatment of skydiving flights as noncommercial aviation

 

(sec. 1235 of the Senate amendment)

8. Eliminate double taxation of certain aviation fuels sold

 

to producers by "fixed base operators" (sec. 1236 of the

 

Senate amendment)

B. Tax-Exempt Bond Provisions

1. Repeal of $100,000 limitation on unspent proceeds under

 

1-year exception from rebate (sec. 1441 of the House

 

bill and sec. 1241 of the Senate amendment)

2. Exception from rebate for earnings on bona fide debt

 

service fund under construction bond rules (sec. 1442 of

 

the House bill and sec. 1242 of the Senate amendment)

3. Repeal of debt service-based limitation on investment in

 

certain nonpurpose investments (sec. 1443 of the House

 

bill and sec. 1243 of the Senate amendment)

4. Repeal of expired provisions relating to student loan

 

bonds (sec. 1444 of the House bill and sec. 1244 of the

 

Senate amendment)

C. Tax Court Procedures

1. Overpayment determinations of Tax Court (sec. 1451 of

 

the House bill and sec. 1251 of the Senate amendment)

2. Redetermination of interest pursuant to motion (sec.

 

1452 of the House bill and sec. 1252 of the Senate

 

amendment)

3. Application of net worth requirement for awards of

 

litigation costs (sec. 1453 of the House bill and sec.

 

1253 of the Senate amendment)

4. Tax Court jurisdiction for determination of employment

 

status (sec. 1454 of the House bill and sec. 1254 of the

 

Senate amendment)

D. Other Provisions

1. Due date for first quarter estimated tax payments by

 

private foundations (sec. 1461 of the House bill and

 

sec. 1261 of the Senate amendment)

2. Withholding of Commonwealth income taxes from wages of

 

Federal employees (sec. 1462 of the House bill and sec.

 

1262 of the Senate amendment)

3. Certain notices disregarded under provision increasing

 

interest rate on large corporate underpayments (sec.

 

1463 of the House bill and sec. 1263 of the Senate

 

amendment)

XV. PENSION AND EMPLOYEE BENEFIT PROVISIONS

A. Miscellaneous Provisions Relating to Pensions and Other

 

Benefits

1. Cash or deferred arrangements for irrigation and

 

drainage entities (sec. 911 of the House bill)

2. Permanent moratorium on application of nondiscrimination

 

rules to State and local governmental plans (sec. 912 of

 

the House bill and sec. 1308 of the Senate amendment)

3. Treatment of certain disability payments to public

 

safety employees (sec. 913 of the House bill and sec.

 

785 of the Senate amendment)

4. Portability of permissive service credit under

 

governmental pension plans (sec. 914 of the House bill)

5. Gratuitous transfers for the benefit of employees (sec.

 

915 of the House bill)

6. Treatment of certain transportation on noncommercially

 

operated aircraft as a fringe benefit (sec. 916 of the

 

House bill)

7. Clarification of certain rules relating to ESOPs of S

 

corporations (sec. 918 of the House bill and sec. 1309

 

of the Senate amendment)

8. Repeal application of UBIT to ESOPs of S corporations

 

(sec. 716 of the Senate amendment)

9. Treatment of multiemployer plans under section 415 (sec.

 

711 of the Senate amendment)

10. Modification of partial termination rules (sec. 712 of

 

the House amendment)

11. Increase in full funding limit (sec. 713 of the Senate

 

amendment)

12. Spousal consent required for distributions from section

 

401(k) plans (sec. 714 of the Senate amendment)

13. Contributions on behalf of a minister to a church plan

 

(sec. 715 of the Senate amendment)

14. Exclusion of ministers from discrimination testing of

 

certain non-church retirement plans (sec. 715 of the

 

Senate amendment)

15. Diversification in section 401(k) plan investments (sec.

 

717 of the Senate amendments)

16. Removal of dollar limitation on benefit payments from a

 

defined benefit plan for police and fire employees (sec.

 

786 of the Senate amendment)

17. Church plan exception to prohibition on discrimination

 

against individuals based on health status

18. Newborns' and mothers' health protection; mental health

 

parity

B. Pension Simplification Provisions

1. Matching contributions of self-employed individuals not

 

treated as elective deferrals (sec. 1301 of the Senate

 

amendment) 2. Contributions to IRAs through payroll

 

deductions (sec. 1302 of the Senate amendment) 3. Plans

 

not disqualified merely by accepting rollover

 

contributions (sec. 1303 of the Senate amendment) 4.

 

Modification of prohibition on assignment or alienation

 

(sec. 1304 of the Senate amendment) 5. Elimination of

 

paperwork burdens on plans (sec. 1305 of the Senate

 

amendment) 6. Modification of section 403(b) exclusion

 

allowance to conform to section 415 modifications (sec.

 

1306 of the Senate amendment) 7. New technologies in

 

retirement plans (sec. 1307 of the Senate amendment) 8.

 

Modification of 10-percent tax on nondeductible

 

contributions (sec. 1310 of the Senate amendment) 9.

 

Modify funding requirements for certain plans (sec. 1311

 

of the Senate amendment) 10. Date for adoption of plan

 

amendments

XVI. SENSE OF THE SENATE RESOLUTIONS

A. Sense of the Senate Regarding Reform of the Internal Revenue

 

Code of 1986 (sec. 780 of the Senate amendment)

B. Sense of the Senate Regarding Tax Treatment of Stock Options

 

(sec. 781 of the Senate amendment)

C. Sense of the Senate Regarding Estate Taxes (sec. 782 of the

 

Senate amendments)

D. Sense of the Senate Regarding Who Should Benefit From Tax

 

Cuts (sec. 791 of the Senate amendment)

E. Sense of the Senate Regarding Self-Employment Taxes of

 

Limited Partners (sec. 734 of the Senate amendment)

XVII. TECHNICAL CORRECTIONS PROVISIONS

XVIII. OTHER TAX PROVISION

A. Estimated Tax Requirements of Individuals for 1997 and 1998

 

(sec. 311(d) of the House bill)

XIX. TRADE PROVISIONS

A. Extension of Duty-Free Treatment Under the Generalized System

 

of Preferences (sec. 971 of the House bill)

B. Temporary Suspension of Vessel Repair Duty (sec. 972 of the

 

House bill)

C. United States-Caribbean Basin Trade Partnership Act (secs.

 

981-988 of the House bill)

XX. LIMITED TAX BENEFITS SUBJECT TO THE LINE ITEM VETO ACT

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