[Congressional Bills 103th Congress]
[From the U.S. Government Publishing Office]
[S. 263 Introduced in Senate (IS)]

103d CONGRESS
  1st Session
                                 S. 263

  To amend the Internal Revenue Code of 1986 to allow a deduction for 
amounts paid by a health care professional as interest on student loans 
if the professional agrees to practice medicine for at least 2 years in 
                           a rural community.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

             January 28 (legislative day, January 5), 1993

 Mr. Pressler introduced the following bill; which was read twice and 
                  referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL


 
  To amend the Internal Revenue Code of 1986 to allow a deduction for 
amounts paid by a health care professional as interest on student loans 
if the professional agrees to practice medicine for at least 2 years in 
                           a rural community.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. DEDUCTION FOR STUDENT LOAN PAYMENTS BY MEDICAL PROFESSIONALS 
              PRACTICING IN RURAL AREAS.

    (a) Interest on Student Loans Not Treated as Personal Interest.--
Section 163(h)(2) of the Internal Revenue Code of 1986 (defining 
personal interest) is amended by striking ``and'' at the end of 
subparagraph (D), by striking the period at the end of subparagraph (E) 
and inserting ``, and'', and by adding at the end thereof the following 
new subparagraph:
            ``(F) any qualified medical education interest (within the 
        meaning of subsection (k)).''.
    (b) Qualified Medical Education Interest Defined.--Section 163 of 
the Internal Revenue Code of 1986 (relating to interest expenses) is 
amended by redesignating subsection (k) as subsection (l) and by 
inserting after subsection (j) the following new subsection:
    ``(k) Qualified Medical Education Interest of Medical Professionals 
Practicing in Rural Areas.--
            ``(1) In general.--For purposes of subsection (h)(2)(F), 
        the term `qualified medical education interest' means an amount 
        which bears the same ratio to the interest paid on qualified 
        educational loans during the taxable year by an individual 
        performing services under a qualified rural medical practice 
        agreement as--
                    ``(A) the number of months during the taxable year 
                during which such services were performed, bears to
                    ``(B) the number of months in the taxable year.
            ``(2) Dollar limitation.--The aggregate amount which may be 
        treated as qualified medical education interest for any taxable 
        year with respect to any individual shall not exceed $5,000.
            ``(3) Qualified rural medical practice agreement.--For 
        purposes of this subsection--
                    ``(A) In general.--The term `qualified rural 
                medical practice agreement' means a written agreement 
                between an individual and an applicable rural community 
                under which the individual agrees--
                            ``(i) in the case of a medical doctor, upon 
                        completion of the individual's residency (or 
                        internship if no residency is required), or
                            ``(ii) in the case of a registered nurse, 
                        nurse practitioner, or physician's assistant, 
                        upon completion of the education to which the 
                        qualified education loan relates,
                to perform full-time services as such a medical 
                professional in the applicable rural community for a 
                period of 24 consecutive months. An individual and an 
                applicable rural community may elect to have the 
                agreement apply for 36 consecutive months rather than 
                24 months.
                    ``(B) Special rule for computing periods.--An 
                individual shall be treated as meeting the 24 or 36 
                consecutive month requirement under subparagraph (A) 
                if, during each 12-consecutive month period within 
                either such period, the individual performs full-time 
                services as a medical doctor, registered nurse, nurse 
                practitioner, or physician's assistant, whichever 
                applies, in the applicable rural community during 9 of 
                the months in such 12-consecutive month period. For 
                purposes of this subsection, an individual meeting the 
                requirements of the preceding sentence shall be treated 
                as performing services during the entire 12-month 
                period.
                    ``(C) Applicable rural community.--The term 
                `applicable rural community' means--
                            ``(i) any political subdivision of a State 
                        which--
                                    ``(I) has a population of 5,000 or 
                                less, and
                                    ``(II) has a per capita income of 
                                $15,000 or less, or
                            ``(ii) an Indian reservation which has a 
                        per capita income of $15,000 or less.
            ``(4) Qualified educational loan.--The term `qualified 
        educational loan' means any indebtedness to pay qualified 
        tuition and related expenses (within the meaning of section 
        117(b)) and reasonable living expenses--
                    ``(A) which are paid or incurred--
                            ``(i) as a candidate for a degree as a 
                        medical doctor at an educational institution 
                        described in section 170(b)(1)(A)(ii), or
                            ``(ii) in connection with courses of 
                        instruction at such an institution necessary 
                        for certification as a registered nurse, nurse 
                        practitioner, or physician's assistant, and
                    ``(B) which are paid or incurred within a 
                reasonable time before or after such indebtedness is 
                incurred.
            ``(5) Recapture.--If an individual fails to carry out a 
        qualified rural medical practice agreement during any taxable 
        year, then--
                    ``(A) no deduction with respect to such agreement 
                shall be allowable by reason of subsection (h)(2)(F) 
                for such taxable year and any subsequent taxable year, 
                and
                    ``(B) there shall be included in gross income for 
                such taxable year the aggregate amount of the 
                deductions allowable under this section (by reason of 
                subsection (h)(2)(F)) for all preceding taxable years.
            ``(6) Definitions.--For purposes of this subsection, the 
        terms `registered nurse', `nurse practitioner', and 
        `physician's assistant' have the meaning given such terms by 
        section 1861 of the Social Security Act.''.
    (b) Deduction Allowed in Computing Adjusted Gross Income.--Section 
62(a) of the Internal Revenue Code of 1986 is amended by inserting 
after paragraph (14) the following new paragraph:
            ``(15) Interest on student loans of rural health 
        professionals.--The deduction allowable by reason of section 
        163(h)(2)(F) (relating to student loan payments of medical 
        professionals practicing in rural areas).''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 1992.

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