[Congressional Bills 104th Congress]
[From the U.S. Government Publishing Office]
[H.R. 831 Enrolled Bill (ENR)]

        H.R.831

                       One Hundred Fourth Congress

                                 of the

                        United States of America


                          AT THE FIRST SESSION

         Begun and held at the City of Washington on Wednesday,
  the fourth day of January, one thousand nine hundred and ninety-five


                                 An Act


 
  To amend the Internal Revenue Code of 1986 to permanently extend the 
 deduction for the health insurance costs of self-employed individuals, 
 to repeal the provision permitting nonrecognition of gain on sales and 
     exchanges effectuating policies of the Federal Communications 
                   Commission, and for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,
SECTION 1. PERMANENT EXTENSION AND INCREASE OF DEDUCTION FOR HEALTH 
INSURANCE COSTS OF SELF-EMPLOYED INDIVIDUALS.
    (a) Permanent Extension.--Subsection (l) of section 162 of the 
Internal Revenue Code of 1986 (relating to special rules for health 
insurance costs of self-employed individuals) is amended by striking 
paragraph (6).
    (b) Increase in Deduction.--Paragraph (1) of section 162(l) of the 
Internal Revenue Code of 1986 is amended by striking ``25 percent'' and 
inserting ``30 percent''.
    (c) Effective Dates.--
        (1) Extension.--The amendment made by subsection (a) shall 
    apply to taxable years beginning after December 31, 1993.
        (2) Increase.--The amendment made by subsection (b) shall apply 
    to taxable years beginning after December 31, 1994.
SEC. 2. REPEAL OF NONRECOGNITION ON FCC CERTIFIED SALES AND EXCHANGES.
    (a) In General.--Subchapter O of chapter 1 of the Internal Revenue 
Code of 1986 is amended by striking part V (relating to changes to 
effectuate FCC policy).
    (b) Conforming Amendments.--Sections 1245(b)(5) and 1250(d)(5) of 
the Internal Revenue Code of 1986 are each amended--
        (1) by striking ``section 1071 (relating to gain from sale or 
    exchange to effectuate polices of FCC) or'', and
        (2) by striking ``1071 and'' in the heading thereof.
    (c) Clerical Amendment.--The table of parts for such subchapter O 
is amended by striking the item relating to part V.
    (d) Effective Date.--
        (1) In general.--The amendments made by this section shall 
    apply to--
            (A) sales and exchanges on or after January 17, 1995, and
            (B) sales and exchanges before such date if the FCC tax 
        certificate with respect to such sale or exchange is issued on 
        or after such date.
        (2) Binding contracts.--
            (A) In general.--The amendments made by this section shall 
        not apply to any sale or exchange pursuant to a written 
        contract which was binding on January 16, 1995, and at all 
        times thereafter before the sale or exchange, if the FCC tax 
        certificate with respect to such sale or exchange was applied 
        for, or issued, on or before such date.
            (B) Sales contingent on issuance of certificate.--
                (i) In general.--A contract shall be treated as not 
            binding for purposes of subparagraph (A) if the sale or 
            exchange pursuant to such contract, or the material terms 
            of such contract, were contingent, at any time on January 
            16, 1995, on the issuance of an FCC tax certificate. The 
            preceding sentence shall not apply if the FCC tax 
            certificate for such sale or exchange is issued on or 
            before January 16, 1995.
                (ii) Material terms.--For purposes of clause (i), the 
            material terms of a contract shall not be treated as 
            contingent on the issuance of an FCC tax certificate solely 
            because such terms provide that the sales price would, if 
            such certificate were not issued, be increased by an amount 
            not greater than 10 percent of the sales price otherwise 
            provided in the contract.
        (3) FCC tax certificate.--For purposes of this subsection, the 
    term ``FCC tax certificate'' means any certificate of the Federal 
    Communications Commission for the effectuation of section 1071 of 
    the Internal Revenue Code of 1986 (as in effect on the day before 
    the date of the enactment of this Act).
SEC. 3. SPECIAL RULES RELATING TO INVOLUNTARY CONVERSIONS.
    (a) Replacement Property Acquired by Corporations From Related 
Persons.--
        (1) In general.--Section 1033 of the Internal Revenue Code of 
    1986 (relating to involuntary conversions) is amended by 
    redesignating subsection (i) as subsection (j) and by inserting 
    after subsection (h) the following new subsection:
    ``(i) Nonrecognition Not To Apply if Corporation Acquires 
Replacement Property From Related Person.--
        ``(1) In general.--In the case of--
            ``(A) a C corporation, or
            ``(B) a partnership in which 1 or more C corporations own, 
        directly or indirectly (determined in accordance with section 
        707(b)(3)), more than 50 percent of the capital interest, or 
        profits interest, in such partnership at the time of the 
        involuntary conversion,
    subsection (a) shall not apply if the replacement property or stock 
    is acquired from a related person. The preceding sentence shall not 
    apply to the extent that the related person acquired the 
    replacement property or stock from an unrelated person during the 
    period described in subsection (a)(2)(B).
        ``(2) Related person.--For purposes of this subsection, a 
    person is related to another person if the person bears a 
    relationship to the other person described in section 267(b) or 
    707(b)(1).''
        (2) Effective date.--The amendment made by paragraph (1) shall 
    apply to involuntary conversions occurring on or after February 6, 
    1995.
    (b) Application of Section 1033 to Certain Sales Required for 
Microwave Relocation.--
        (1) In general.--Section 1033 of the Internal Revenue Code of 
    1986 (relating to involuntary conversions), as amended by 
    subsection (a), is amended by redesignating subsection (j) as 
    subsection (k) and by inserting after subsection (i) the following 
    new subsection:
    ``(j) Sales or Exchanges To Implement Microwave Relocation 
Policy.--
        ``(1) In general.--For purposes of this subtitle, if a taxpayer 
    elects the application of this subsection to a qualified sale or 
    exchange, such sale or exchange shall be treated as an involuntary 
    conversion to which this section applies.
        ``(2) Qualified sale or exchange.--For purposes of paragraph 
    (1), the term `qualified sale or exchange' means a sale or exchange 
    before January 1, 2000, which is certified by the Federal 
    Communications Commission as having been made by a taxpayer in 
    connection with the relocation of the taxpayer from the 1850-
    1990MHz spectrum by reason of the Federal Communications 
    Commission's reallocation of that spectrum for use for personal 
    communications services. The Commission shall transmit copies of 
    certifications under this paragraph to the Secretary.''
        (2) Effective date.--The amendment made by paragraph (1) shall 
    apply to sales or exchanges after March 14, 1995.
SEC. 4. DENIAL OF EARNED INCOME CREDIT FOR INDIVIDUALS HAVING EXCESSIVE 
INVESTMENT INCOME.
    (a) In General.--Section 32 of the Internal Revenue Code of 1986 is 
amended by redesignating subsections (i) and (j) as subsections (j) and 
(k), respectively, and by inserting after subsection (h) the following 
new subsection:
    ``(i) Denial of Credit for Individuals Having Excessive Investment 
Income.--
        ``(1) In general.--No credit shall be allowed under subsection 
    (a) for the taxable year if the aggregate amount of disqualified 
    income of the taxpayer for the taxable year exceeds $2,350.
        ``(2) Disqualified income.--For purposes of paragraph (1), the 
    term `disqualified income' means--
            ``(A) interest or dividends to the extent includible in 
        gross income for the taxable year,
            ``(B) interest received or accrued during the taxable year 
        which is exempt from tax imposed by this chapter, and
            ``(C) the excess (if any) of--
                ``(i) gross income from rents or royalties not derived 
            in the ordinary course of a trade or business, over
                ``(ii) the sum of--

                    ``(I) the deductions (other than interest) which 
                are clearly and directly allocable to such gross 
                income, plus
                    ``(II) interest deductions properly allocable to 
                such gross income.''

    (b) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 1995.
SEC. 5. EXTENSION OF SPECIAL RULE FOR CERTAIN GROUP HEALTH PLANS.
    Section 13442(b) of the Omnibus Budget Reconciliation Act of 1993 
(Public Law 103-66) is amended by striking ``May 12, 1995'' and 
inserting ``December 31, 1995''.

SEC. 6. STUDY OF EXPATRIATION TAX.

    (a) In General.--The staff of the Joint Committee on Taxation shall 
conduct a study of the issues presented by any proposals to affect the 
taxation of expatriation, including an evaluation of--
        (1) the effectiveness and enforceability of current law with 
    respect to the tax treatment of expatriation,
        (2) the current level of expatriation for tax avoidance 
    purposes,
        (3) any restrictions imposed by any constitutional requirement 
    that the Federal income tax apply only to realized gains,
        (4) the application of international human rights principles to 
    taxation of expatriation,
        (5) the possible effects of any such proposals on the free flow 
    of capital into the United States,
        (6) the impact of any such proposals on existing tax treaties 
    and future treaty negotiations,
        (7) the operation of any such proposals in the case of 
    interests in trusts,
        (8) the problems of potential double taxation in any such 
    proposals,
        (9) the impact of any such proposals on the trade policy 
    objectives of the United States,
        (10) the administrability of such proposals, and
        (11) possible problems associated with existing law, including 
    estate and gift tax provisions.
    (b) Report.--The Chief of Staff of the Joint Committee on Taxation 
shall, not later than June 1, 1995, report the results of the study 
conducted under subsection (a) to the Chairmen of the Committee on Ways 
and Means of the House of Representatives and the Committee on Finance 
of the Senate.

                               Speaker of the House of Representatives.

                            Vice President of the United States and    
                                               President of the Senate.