[Congressional Bills 105th Congress]
[From the U.S. Government Publishing Office]
[H.R. 533 Introduced in House (IH)]







105th CONGRESS
  1st Session
                                H. R. 533

To amend the Internal Revenue Code of 1986 to clarify the treatment of 
                     frequent flyer mileage awards.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                            February 4, 1997

 Mrs. Kennelly of Connecticut introduced the following bill; which was 
              referred to the Committee on Ways and Means

_______________________________________________________________________

                                 A BILL


 
To amend the Internal Revenue Code of 1986 to clarify the treatment of 
                     frequent flyer mileage awards.

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

SECTION 1. CLARIFICATION OF TREATMENT OF FREQUENT FLYER MILEAGE AND 
              AWARDS.

    (a) In General.--Part III of subchapter B of chapter 1 of the 
Internal Revenue Code of 1986 is amended by redesignating section 138 
as section 139 and by inserting after section 137 the following new 
section:

``SEC. 138. FREQUENT FLYER MILEAGE AND AWARDS.

    ``(a) In General.--If an individual receives a frequent flyer 
benefit as a result of the purchase in a trade or business of property 
or services--
            ``(1) no amount shall be includible in such individual's 
        gross income by reason of receiving such benefit,
            ``(2) no deduction otherwise allowable for the purchase of 
        such property or services shall be reduced by reason of such 
        benefit, and
            ``(3) no deduction shall be allowed for the portion of any 
        transportation purchased using such a benefit.
    ``(b) Frequent Flyer Benefit.--For purposes of this section, the 
term `frequent flyer benefit' means any right to receive (or the 
receipt of) air transportation services or other benefit for an 
individual for free or at a reduced cost by reason of prior purchases 
of property or services. Such term shall include such a right only if 
the value of such right is de minimis relative to the cost of property 
or services purchased in order to receive such right.''
    (b) Clarification of Treatment Under Reimbursement Arrangements.--
Subsection (c) of section 62 of such Code is amended by adding at the 
end the following new flush sentence:
``An arrangement shall not be treated as described in paragraph (2) 
merely because it permits the employee to retain a frequent flyer 
benefit (as defined in section 138(b)).''
    (c) Clerical Amendment.--The table of sections for part III of 
subchapter B of chapter 1 of such Code is amended by striking the last 
item and inserting the following new items:

                              ``Sec. 138. Frequent flyer mileage and 
                                        awards.
                              ``Sec. 139. Cross references to other 
                                        Acts.''
    (d) Effective Date.--The amendments made by this section shall 
apply to taxable years ending after the date of the enactment of this 
Act.
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