[Congressional Bills 104th Congress]
[From the U.S. Government Publishing Office]
[H.R. 831 Reported in Senate (RS)]
Calendar No. 34
104th CONGRESS
1st Session
H. R. 831
[Report No. 104-16]
_______________________________________________________________________
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.
_______________________________________________________________________
March 20 (legislative day, March 16), 1995
Reported with an amendment
Calendar No. 34
104th CONGRESS
1st Session
H. R. 831
[Report No. 104-16]
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
February 22, 1995
Received; read twice and referred to the Committee on Finance
March 20 (legislative day, March 16), 1995
Reported by Mr. Packwood, with an amendment
[Strike out all after the enacting clause and insert the part printed
in italic]
_______________________________________________________________________
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,
<DELETED>SECTION 1. PERMANENT EXTENSION OF DEDUCTION FOR HEALTH
INSURANCE COSTS OF SELF-EMPLOYED INDIVIDUALS.</DELETED>
<DELETED> (a) In General.--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).</DELETED>
<DELETED> (b) Effective Date.--The amendment made by subsection (a)
shall apply to taxable years beginning after December 31,
1993.</DELETED>
<DELETED>SEC. 2. REPEAL OF NONRECOGNITION ON FCC CERTIFIED SALES AND
EXCHANGES.</DELETED>
<DELETED> (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).</DELETED>
<DELETED> (b) Clerical Amendment.--The table of parts for such
subchapter O is amended by striking the item relating to part
V.</DELETED>
<DELETED> (c) Effective Date.--</DELETED>
<DELETED> (1) In general.--The amendments made by this
section shall apply to--</DELETED>
<DELETED> (A) sales and exchanges on or after
January 17, 1995, and</DELETED>
<DELETED> (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.</DELETED>
<DELETED> (2) Binding contracts.--</DELETED>
<DELETED> (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.</DELETED>
<DELETED> (B) Sales contingent on issuance of
certificate.--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.</DELETED>
<DELETED> (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).</DELETED>
<DELETED>SEC. 3. NONRECOGNITION ON INVOLUNTARY CONVERSIONS NOT TO APPLY
IF REPLACEMENT PROPERTY ACQUIRED FROM RELATED
PERSON.</DELETED>
<DELETED> (a) 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:</DELETED>
<DELETED> ``(i) Nonrecognition Not To Apply if Replacement Property
Acquired From Related Person.--Subsection (a) shall not apply if the
replacement property or stock acquired is acquired from a related
person. For purposes of the preceding sentence, a person is related to
another person if the relationship between such persons would result in
a disallowance of losses under section 267 or 707(b).''</DELETED>
<DELETED> (b) Effective Date.--The amendment made by subsection (a)
shall apply to replacement property or stock acquired on or after
February 6, 1995.</DELETED>
<DELETED>SEC. 4. PHASEOUT OF EARNED INCOME CREDIT FOR INDIVIDUALS
HAVING MORE THAN $2,500 OF TAXABLE INTEREST AND
DIVIDENDS.</DELETED>
<DELETED> (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:</DELETED>
<DELETED> ``(i) Phaseout of Credit for Individuals Having More Than
$2,500 of Taxable Interest and Dividends.--If the aggregate amount of
interest and dividends includible in the gross income of the taxpayer
for the taxable year exceeds $2,500, the amount of the credit which
would (but for this subsection) be allowed under this section for such
taxable year shall be reduced (but not below zero) by an amount which
bears the same ratio to such amount of credit as such excess bears to
$650.''</DELETED>
<DELETED> (b) Inflation Adjustment.--Subsection (j) of section 32 of
such Code (relating to inflation adjustments), as redesignated by
subsection (a), is amended by striking paragraph (2) and by inserting
the following new paragraphs:</DELETED>
<DELETED> ``(2) Interest and dividend income limitation.--In
the case of a taxable year beginning in a calendar year after
1996, each dollar amount contained in subsection (i) shall be
increased by an amount equal to--</DELETED>
<DELETED> ``(A) such dollar amount, multiplied
by</DELETED>
<DELETED> ``(B) the cost-of-living adjustment
determined under section 1(f)(3) for the calendar year
in which the taxable year begins, determined by
substituting `calendar year 1995' for `calendar year
1992' in subparagraph (B) thereof.</DELETED>
<DELETED> ``(3) Rounding.--If any amount as adjusted under
paragraph (1) or (2) is not a multiple of $10, such dollar
amount shall be rounded to the nearest multiple of
$10.''</DELETED>
<DELETED> (c) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after December 31,
1995.</DELETED>
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.--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.
(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 C corporation,
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 MORE THAN
$2,450 OF 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 More Than $2,450 of
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 $2,450.
``(2) Disqualified income.--For purposes of paragraph (1),
the term `disqualified income' means--
``(A) interest which is received or accrued during
the taxable year (whether or not exempt from tax),
``(B) dividends to the extent includible in gross
income for the taxable year, 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) expenses (other than
interest) which are clearly and
directly allocable to such gross
income, plus
``(II) interest expenses 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. REVISION OF TAX RULES ON EXPATRIATION.
(a) In General.--Subpart A of part II of subchapter N of chapter 1
of the Internal Revenue Code of 1986 is amended by inserting after
section 877 the following new section:
``SEC. 877A. TAX RESPONSIBILITIES OF EXPATRIATION.
``(a) General Rule.--For purposes of this subtitle, if any United
States citizen relinquishes his citizenship during a taxable year--
``(1) except as provided in subsection (f)(2), all property
held by such citizen at the time immediately before such
relinquishment shall be treated as sold at such time for its
fair market value, and
``(2) notwithstanding any other provision of this title,
any gain or loss shall be taken into account for such taxable
year.
Paragraph (2) shall not apply to amounts excluded from gross income
under part III of subchapter B.
``(b) Exclusion for Certain Gain.--The amount which would (but for
this subsection) be includible in the gross income of any individual by
reason of subsection (a) shall be reduced (but not below zero) by
$600,000.
``(c) Property Treated as Held.--For purposes of this section,
except as otherwise provided by the Secretary, an individual shall be
treated as holding--
``(1) all property which would be includible in his gross
estate under chapter 11 were such individual to die at the time
the property is treated as sold,
``(2) any other interest in a trust which the individual is
treated as holding under the rules of subsection (f)(1), and
``(3) any other interest in property specified by the
Secretary as necessary or appropriate to carry out the purposes
of this section.
``(d) Exceptions.--The following property shall not be treated as
sold for purposes of this section:
``(1) United states real property interests.--Any United
States real property interest (as defined in section
897(c)(1)), other than stock of a United States real property
holding corporation which does not, on the date the individual
relinquishes his citizenship, meet the requirements of section
897(c)(2).
``(2) Interest in certain retirement plans.--
``(A) In general.--Any interest in a qualified
retirement plan (as defined in section 4974(c)), other
than any interest attributable to contributions which
are in excess of any limitation or which violate any
condition for taxfavored treatment.
``(B) Foreign pension plans.--
``(i) In general.--Under regulations
prescribed by the Secretary, interests in
foreign pension plans or similar retirement
arrangements or programs.
``(ii) Limitation.--The value of property
which is treated as not sold by reason of this
subparagraph shall not exceed $500,000.
``(e) Relinquishment of Citizenship.--For purposes of this section,
a citizen shall be treated as relinquishing his United States
citizenship on the earliest of--
``(1) the date the individual renounces his United States
nationality before a diplomatic or consular officer of the
United States pursuant to paragraph (5) of section 349(a) of
the Immigration and Nationality Act (8 U.S.C. 1481(a)(5)),
``(2) the date the individual furnishes to the United
States Department of State a signed statement of voluntary
relinquishment of United States nationality confirming the
performance of an act of expatriation specified in paragraph
(1), (2), (3), or (4) of section 349(a) of the Immigration and
Nationality Act (8 U.S.C. 1481(a)(1)-(4)),
``(3) the date the United States Department of State issues
to the individual a certificate of loss of nationality, or
``(4) the date a court of the United States cancels a
naturalized citizen's certificate of naturalization.
Paragraph (1) or (2) shall not apply to any individual unless the
renunciation or voluntary relinquishment is subsequently approved by
the issuance to the individual of a certificate of loss of nationality
by the United States Department of State.
``(f) Special Rules Applicable to Beneficiaries' Interests in
Trust.--
``(1) Determination of beneficiaries' interest in trust.--
For purposes of this section--
``(A) General rule.--A beneficiary's interest in a
trust shall be based upon all relevant facts and
circumstances, including the terms of the trust
instrument and any letter of wishes or similar
document, historical patterns of trust distributions,
and the existence of and functions performed by a trust
protector or any similar advisor.
``(B) Special rule.--In the case of beneficiaries
whose interests in a trust cannot be determined under
subparagraph (A)--
``(i) the beneficiary having the closest
degree of kinship to the grantor shall be
treated as holding the remaining interests in
the trust not determined under subparagraph (A)
to be held by any other beneficiary, and
``(ii) if 2 or more beneficiaries have the
same degree of kinship to the grantor, such
remaining interests shall be treated as held
equally by such beneficiaries.
``(C) Constructive ownership.--If a beneficiary of
a trust is a corporation, partnership, trust, or
estate, the shareholders, partners, or beneficiaries
shall be deemed to be the trust beneficiaries for
purposes of this section.
``(D) Taxpayer return position.--A taxpayer shall
clearly indicate on its income tax return--
``(i) the methodology used to determine
that taxpayer's trust interest under this
section, and
``(ii) if the taxpayer knows (or has reason
to know) that any other beneficiary of such
trust is using a different methodology to
determine such beneficiary's trust interest
under this section.
``(2) Deemed sale in case of trust interest.--If an
individual who relinquishes his citizenship during the taxable
year is treated under paragraph (1) as holding an interest in a
trust for purposes of this section--
``(A) the individual shall not be treated as having
sold such interest,
``(B) such interest shall be treated as a separate
share in the trust, and
``(C)(i) such separate share shall be treated as a
separate trust consisting of the assets allocable to
such share,
``(ii) the separate trust shall be treated as
having sold its assets immediately before the
relinquishment for their fair market value and as
having distributed all of its assets to the individual
as of such time, and
``(iii) the individual shall be treated as having
recontributed the assets to the separate trust.
Subsection (a)(2) shall apply to any income, gain, or loss of
the individual arising from a distribution described in
subparagraph (B)(ii).
``(g) Termination of Deferrals, Etc.--On the date any property held
by an individual is treated as sold under subsection (a),
notwithstanding any other provision of this title--
``(1) any period during which recognition of income or gain
is deferred shall terminate, and
``(2) any extension of time for payment of tax shall cease
to apply and the unpaid portion of such tax shall be due and
payable at the time and in the manner prescribed by the
Secretary.
``(h) Rules Relating to Payment of Tax.--
``(1) Imposition of tentative tax.--
``(A) In general.--If an individual is required to
include any amount in gross income under subsection (a)
for any taxable year, there is hereby imposed,
immediately before the individual relinquishes United
States citizenship, a tax in an amount equal to the
amount of tax which would be imposed if the taxable
year were a short taxable year ending on the date of
such relinquishment.
``(B) Due date.--The due date for any tax imposed
by subparagraph (A) shall be the 90th day after the
date the individual relinquishes United States
citizenship.
``(C) Treatment of tax.--Any tax paid under
subparagraph (A) shall be treated as a payment of the
tax imposed by this chapter for the taxable year to
which subsection (a) applies.
``(2) Deferral of tax.--The provisions of section 6161
shall apply to the portion of any tax attributable to amounts
included in gross income under subsection (a) in the same
manner as if such portion were a tax imposed by chapter 11.
``(i) Regulations.--The Secretary shall prescribe such regulations
as may be necessary or appropriate to carry out the purposes of this
section, including regulations providing appropriate adjustments to
basis to reflect gain recognized by reason of subsection (a) and the
exclusion provided by subsection (b).
``(j) Cross Reference.--
``For termination of United States
citizenship for tax purposes, see section 7701(a)(47).''
(b) Definition of Termination of United States Citizenship.--
Section 7701(a) of the Internal Revenue Code of 1986 is amended by
adding at the end the following new paragraph:
``(47) Termination of united states citizenship.--An
individual shall not cease to be treated as a United States
citizen before the date on which the individual's citizenship
is treated as relinquished under section 877A(e).''
(c) Conforming Amendment.--Section 877 of the Internal Revenue Code
of 1986 is amended by adding at the end the following new subsection:
``(f) Application.--This section shall not apply to any individual
who relinquishes (within the meaning of section 877A(e)) United States
citizenship on and after February 6, 1995.''
(d) Clerical Amendment.--The table of sections for subpart A of
part II of subchapter N of chapter 1 of the Internal Revenue Code of
1986 is amended by inserting after the item relating to section 877 the
following new item:
``Sec. 877A. Tax responsibilities of
expatriation.''
(e) Effective Date.--
(1) In general.--The amendments made by this section shall
apply to United States citizens who relinquish (within the
meaning of section 877A(e) of the Internal Revenue Code of
1986, as added by this section) United States citizenship on or
after February 6, 1995.
(2) Due date for tentative tax.--The due date under section
877A(h)(1)(B) of such Code shall in no event occur before the
90th day after the date of the enactment of this Act.
HR 831 RS----2