[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[S. 1134 Placed on Calendar Senate (PCS)]

                                                       Calendar No. 124

106th CONGRESS

  1st Session

                                S. 1134

                          [Report No. 106-54]

_______________________________________________________________________

                                 A BILL

     To amend the Internal Revenue Code of 1986 to allow tax-free 
    expenditures from education individual retirement accounts for 
   elementary and secondary school expenses, to increase the maximum 
    annual amount of contributions to such accounts, and for other 
                               purposes.

_______________________________________________________________________

                              May 26, 1999

                 Read twice and placed on the calendar





                                                       Calendar No. 124
106th CONGRESS
  1st Session
                                S. 1134

                          [Report No. 106-54]

     To amend the Internal Revenue Code of 1986 to allow tax-free 
    expenditures from education individual retirement accounts for 
   elementary and secondary school expenses, to increase the maximum 
    annual amount of contributions to such accounts, and for other 
                               purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                              May 26, 1999

    Mr. Roth, from the Committee on Finance, reported the following 
     original bill; which was read twice and placed on the calendar

_______________________________________________________________________

                                 A BILL


 
     To amend the Internal Revenue Code of 1986 to allow tax-free 
    expenditures from education individual retirement accounts for 
   elementary and secondary school expenses, to increase the maximum 
    annual amount of contributions to such accounts, 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. SHORT TITLE; AMENDMENT OF 1986 CODE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Affordable 
Education Act of 1999''.
    (b) Amendment of 1986 Code.--Except as otherwise expressly 
provided, whenever in this Act an amendment or repeal is expressed in 
terms of an amendment to, or repeal of, a section or other provision, 
the reference shall be considered to be made to a section or other 
provision of the Internal Revenue Code of 1986.
    (c) Table of Contents.--The table of contents for this Act is as 
follows:

Sec. 1. Short title; amendment of 1986 Code; table of contents.
                 TITLE I--EDUCATION SAVINGS INCENTIVES

Sec. 101. Modifications to education individual retirement accounts.
Sec. 102. Modifications to qualified tuition programs.
                    TITLE II--EDUCATIONAL ASSISTANCE

Sec. 201. Extension of exclusion for employer-provided educational 
                            assistance.
Sec. 202. Elimination of 60-month limit on student loan interest 
                            deduction.
Sec. 203. Exclusion of certain amounts received under the National 
                            Public Health Service Corps Scholarship 
                            Program and the F. Edward Hebert Armed 
                            Forces Health Professions Scholarship and 
                            Financial Assistance Program.
  TITLE III--LIBERALIZATION OF TAX-EXEMPT FINANCING RULES FOR PUBLIC 
                          SCHOOL CONSTRUCTION

Sec. 301. Additional increase in arbitrage rebate exception for 
                            governmental bonds used to finance 
                            educational facilities.
Sec. 302. Treatment of qualified public educational facility bonds as 
                            exempt facility bonds.
Sec. 303. Federal guarantee of school construction bonds by Federal 
                            Housing Finance Board.
                      TITLE IV--REVENUE PROVISIONS

Sec. 401. Modification to foreign tax credit carryback and carryover 
                            periods.
Sec. 402. Limitation on use of non-accrual experience method of 
                            accounting.
Sec. 403. Returns relating to cancellations of indebtedness by 
                            organizations lending money.
Sec. 404. Extension of Internal Revenue Service user fees.
Sec. 405. Property subject to a liability treated in same manner as 
                            assumption of liability.
Sec. 406. Charitable split-dollar life insurance, annuity, and 
                            endowment contracts.
Sec. 407. Transfer of excess defined benefit plan assets for retiree 
                            health benefits.
Sec. 408. Limitations on welfare benefit funds of 10 or more employer 
                            plans.
Sec. 409. Modification of installment method and repeal of installment 
                            method for accrual method taxpayers.
Sec. 410. Inclusion of certain vaccines against streptococcus 
                            pneumoniae to list of taxable vaccines.

                 TITLE I--EDUCATION SAVINGS INCENTIVES

SEC. 101. MODIFICATIONS TO EDUCATION INDIVIDUAL RETIREMENT ACCOUNTS.

    (a) Maximum Annual Contributions.--
            (1) In general.--Section 530(b)(1)(A)(iii) (defining 
        education individual retirement account) is amended by striking 
        ``$500'' and inserting ``the contribution limit for such 
        taxable year''.
            (2) Contribution limit.--Section 530(b) (relating to 
        definitions and special rules) is amended by adding at the end 
        the following new paragraph:
            ``(4) Contribution limit.--The term `contribution limit' 
        means $500 ($2,000 in the case of any taxable year beginning 
        after December 31, 1999, and ending before January 1, 2004).''
            (3) Conforming amendment.--Section 4973(e)(1)(A) is amended 
        by striking ``$500'' and inserting ``the contribution limit (as 
        defined in section 530(b)(4)) for such taxable year''.
    (b) Tax-Free Expenditures for Elementary and Secondary School 
Expenses.--
            (1) In general.--Section 530(b)(2) (defining qualified 
        higher education expenses) is amended to read as follows:
            ``(2) Qualified education expenses.--
                    ``(A) In general.--The term `qualified education 
                expenses' means--
                            ``(i) qualified higher education expenses 
                        (as defined in section 529(e)(3)), and
                            ``(ii) qualified elementary and secondary 
                        education expenses (as defined in paragraph 
                        (5)).
                Such expenses shall be reduced as provided in section 
                25A(g)(2).
                    ``(B) Qualified state tuition programs.--Such term 
                shall include any contribution to a qualified State 
                tuition program (as defined in section 529(b)) on 
                behalf of the designated beneficiary (as defined in 
                section 529(e)(1)); but there shall be no increase in 
                the investment in the contract for purposes of applying 
                section 72 by reason of any portion of such 
                contribution which is not includible in gross income by 
                reason of subsection (d)(2).''
            (2) Qualified elementary and secondary education 
        expenses.--Section 530(b) (relating to definitions and special 
        rules), as amended by subsection (a)(2), is amended by adding 
        at the end the following new paragraph:
            ``(5) Qualified elementary and secondary education 
        expenses.--
                    ``(A) In general.--The term `qualified elementary 
                and secondary education expenses' means--
                            ``(i) expenses for tuition, fees, academic 
                        tutoring, special needs services, books, 
                        supplies, computer equipment (including related 
                        software and services), and other equipment 
                        which are incurred in connection with the 
                        enrollment or attendance of the designated 
                        beneficiary of the trust as an elementary or 
                        secondary school student at a public, private, 
                        or religious school, and
                            ``(ii) expenses for room and board, 
                        uniforms, transportation, and supplementary 
                        items and services (including extended day 
                        programs) which are required or provided by a 
                        public, private, or religious school in 
                        connection with such enrollment or attendance.
                    ``(B) Special rule for homeschooling.--Such term 
                shall include expenses described in subparagraph (A)(i) 
                in connection with education provided by homeschooling 
                if the requirements of any applicable State or local 
                law are met with respect to such education.
                    ``(C) School.--The term `school' means any school 
                which provides elementary education or secondary 
                education (kindergarten through grade 12), as 
                determined under State law.''
            (3) Special rules for applying exclusion to elementary and 
        secondary expenses.--Section 530(d)(2) (relating to 
        distributions for qualified higher education expenses) is 
        amended by adding at the end the following new subparagraph:
                    ``(E) Special rules for elementary and secondary 
                expenses.--
                            ``(i) In general.--The aggregate amount of 
                        qualified elementary and secondary education 
                        expenses taken into account for purposes of 
                        this paragraph with respect to any education 
                        individual retirement account for all taxable 
                        years shall not exceed the sum of the aggregate 
                        contributions to such account for taxable years 
                        beginning after December 31, 1999, and before 
                        January 1, 2004, and earnings on such 
                        contributions.
                            ``(ii) Special operating rules.--For 
                        purposes of clause (i)--
                                    ``(I) the trustee of an education 
                                individual retirement account shall 
                                keep separate accounts with respect to 
                                contributions and earnings described in 
                                clause (i), and
                                    ``(II) if there are distributions 
                                in excess of qualified elementary and 
                                secondary education expenses for any 
                                taxable year, such excess distributions 
                                shall be allocated first to 
                                contributions and earnings not 
                                described in clause (i).''
            (4) Conforming amendments.--Section 530 is amended--
                    (A) by striking ``higher'' each place it appears in 
                subsections (b)(1) and (d)(2), and
                    (B) by striking ``higher'' in the heading for 
                subsection (d)(2).
    (c) Waiver of Age Limitations for Children With Special Needs.--
Section 530(b)(1) (defining education individual retirement account) is 
amended by adding at the end the following flush sentence:
        ``The age limitations in the preceding sentence and paragraphs 
        (5) and (6) of subsection (d) shall not apply to any designated 
        beneficiary with special needs (as determined under regulations 
        prescribed by the Secretary).''
    (d) Entities Permitted To Contribute to Accounts.--Section 
530(c)(1) (relating to reduction in permitted contributions based on 
adjusted gross income) is amended by striking ``The maximum amount 
which a contributor'' and inserting ``In the case of a contributor who 
is an individual, the maximum amount the contributor''.
    (e) Time When Contributions Deemed Made.--
            (1) In general.--Section 530(b) (relating to definitions 
        and special rules), as amended by subsection (b)(2), is amended 
        by adding at the end the following new paragraph:
            ``(6) Time when contributions deemed made.--An individual 
        shall be deemed to have made a contribution to an education 
        individual retirement account on the last day of the preceding 
        taxable year if the contribution is made on account of such 
        taxable year and is made not later than the time prescribed by 
        law for filing the return for such taxable year (not including 
        extensions thereof).''
            (2) Extension of time to return excess contributions.--
        Subparagraph (C) of section 530(d)(4) (relating to additional 
        tax for distributions not used for educational expenses) is 
        amended--
                    (A) by striking clause (i) and inserting the 
                following new clause:
                            ``(i) such distribution is made before the 
                        1st day of the 6th month of the taxable year 
                        following the taxable year, and'', and
                    (B) by striking ``due date of return'' in the 
                heading and inserting ``june''.
    (f) Coordination With Hope and Lifetime Learning Credits and 
Qualified Tuition Programs.--
            (1) In general.--Section 530(d)(2)(C) is amended to read as 
        follows:
                    ``(C) Coordination with hope and lifetime learning 
                credits and qualified tuition programs.--
                            ``(i) Credit coordination.--
                                    ``(I) In general.--Except as 
                                provided in subclause (II), 
                                subparagraph (A) shall not apply for 
                                any taxable year to any qualified 
                                higher education expenses with respect 
                                to any individual if a credit is 
                                allowed under section 25A with respect 
                                to such expenses for such taxable year.
                                    ``(II) Special coordination rule.--
                                In the case of any taxable year 
                                beginning after December 31, 1999, and 
                                before January 1, 2004, subclause (I) 
                                shall not apply, but the total amount 
                                of qualified higher education expenses 
                                otherwise taken into account under 
                                subparagraph (A) with respect to an 
                                individual for such taxable year shall 
                                be reduced (after the application of 
                                the reduction provided in section 
                                25A(g)(2)) by the amount of such 
                                expenses which were taken into account 
                                in determining the credit allowed to 
                                the taxpayer or any other person under 
                                section 25A with respect to such 
                                expenses.
                            ``(ii) Coordination with qualified tuition 
                        programs.--If the aggregate distributions to 
                        which subparagraph (A) and section 529(c)(3)(B) 
                        apply exceed the total amount of qualified 
                        higher education expenses otherwise taken into 
                        account under subparagraph (A) (after the 
                        application of clause (i)) with respect to an 
                        individual for any taxable year, the taxpayer 
                        shall allocate such expenses among such 
                        distributions for purposes of determining the 
                        amount of the exclusion under subparagraph (A) 
                        and section 529(c)(3)(B).''
            (2) Conforming amendments.--
                    (A) Subsection (e) of section 25A is amended to 
                read as follows:
    ``(e) Election Not To Have Section Apply.--A taxpayer may elect not 
to have this section apply with respect to the qualified tuition and 
related expenses of an individual for any taxable year.''
                    (B) Section 135(d)(2)(A) is amended by striking 
                ``allowable'' and inserting ``allowed''.
                    (C) Section 530(b)(2)(A) is amended by striking ``, 
                reduced as provided in section 25A(g)(2)''.
                    (D) Section 530(d)(2)(D) is amended--
                            (i) by striking ``or credit'', and
                            (ii) by striking ``credit or'' in the 
                        heading.
                    (E) Section 4973(e)(1) is amended by adding ``and'' 
                at the end of subparagraph (A), by striking 
                subparagraph (B), and by redesignating subparagraph (C) 
                as subparagraph (B).
    (g) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 1999.

SEC. 102. MODIFICATIONS TO QUALIFIED TUITION PROGRAMS.

    (a) Eligible Educational Institutions Permitted To Maintain 
Qualified Tuition Programs.--
          (1) In general.--Section 529(b)(1) (defining qualified State 
        tuition program) is amended by inserting ``or by 1 or more 
        eligible educational institutions'' after ``maintained by a 
        State or agency or instrumentality thereof''.
            (2) Private qualified tuition programs limited to benefit 
        plans.--Clause (ii) of section 529(b)(1)(A) is amended by 
        inserting ``in the case of a program established and maintained 
        by a State or agency or instrumentality thereof,'' before ``may 
        make''.
            (3) Conforming amendments.--
                    (A) Sections 72(e)(9), 135(c)(2)(C), 135(d)(1)(D), 
                529, 530(b)(2)(B), 4973(e), and 6693(a)(2)(C) are each 
                amended by striking ``qualified State tuition'' each 
                place it appears and inserting ``qualified tuition''.
                    (B) The headings for sections 72(e)(9) and 
                135(c)(2)(C) are each amended by striking ``qualified 
                state tuition'' and inserting ``qualified tuition''.
                    (C) The headings for sections 529(b) and 
                530(b)(2)(B) are each amended by striking ``Qualified 
                state tuition'' and inserting ``Qualified tuition''.
                    (D) The heading for section 529 is amended by 
                striking ``state''.
                    (E) The item relating to section 529 in the table 
                of sections for part VIII of subchapter F of chapter 1 
                is amended by striking ``State''.
    (b) Exclusion From Gross Income of Education Distributions From 
Qualified Tuition Programs.--
            (1) In general.--Section 529(c)(3)(B) (relating to 
        distributions) is amended to read as follows:
                    ``(B) Distributions for qualified higher education 
                expenses.--
                            ``(i) In general.--For purposes of this 
                        paragraph--
                                    ``(I) no amount shall be includible 
                                in gross income under subparagraph (A) 
                                by reason of a distribution which 
                                consists of providing a benefit to the 
                                distributee which, if paid for by the 
                                distributee, would constitute payment 
                                of a qualified higher education 
                                expense, and
                                    ``(II) the amount which (determined 
                                without regard to subclause (I)) would 
                                be includible in gross income under 
                                subparagraph (A) by reason of any other 
                                distribution shall not be so includible 
                                in an amount which bears the same ratio 
                                to the amount which would be so 
                                includible as the qualified higher 
education expenses bear to such aggregate distributions.
                            ``(ii) Nonapplication of clause.--In the 
                        case of any taxable year beginning before 
                        January 1, 2004, clause (i) shall not apply 
                        with respect to any distribution in such 
                        taxable year under a qualified tuition program 
                        established and maintained by 1 or more 
                        eligible educational institutions.
                            ``(iii) In-kind distributions.--Any benefit 
                        furnished to a designated beneficiary under a 
                        qualified tuition program shall be treated as a 
                        distribution to the beneficiary for purposes of 
                        this paragraph.
                            ``(iv) Coordination with hope and lifetime 
                        learning credits.--
                                    ``(I) In general.--Except as 
                                provided in subclause (II), clause (i) 
                                shall not apply for any taxable year to 
                                any qualified higher education expenses 
                                with respect to any individual if a 
                                credit is allowed under section 25A 
                                with respect to such expenses for such 
                                taxable year.
                                    ``(II) Special coordination rule.--
                                In the case of any taxable year 
                                beginning after December 31, 1999, and 
                                before January 1, 2004, subclause (I) 
                                shall not apply, but the total amount 
                                of qualified higher education expenses 
                                otherwise taken into account under 
                                clause (i) with respect to an 
                                individual for such taxable year shall 
                                be reduced (after the application of 
                                the reduction provided in section 
                                25A(g)(2)) by the amount of such 
                                expenses which were taken into account 
                                in determining the credit allowed to 
                                the taxpayer or any other person under 
                                section 25A with respect to such 
                                expenses.
                            ``(v) Coordination with education iras.--If 
                        the aggregate distributions to which clause (i) 
                        and section 530(d)(2)(A) apply exceed the total 
                        amount of qualified higher education expenses 
                        otherwise taken into account under clause (i) 
                        (after the application of clause (iv)) with 
                        respect to an individual for any taxable year, 
                        the taxpayer shall allocate such expenses among 
                        such distributions for purposes of determining 
                        the amount of the exclusion under clause (i) 
                        and section 530(d)(2)(A).''
            (2) Conforming amendments.--
                    (A) Section 135(d)(2)(B) is amended by striking 
                ``section 530(d)(2)'' and inserting ``sections 
                529(c)(3)(B)(i) and 530(d)(2)''.
                    (B) Section 221(e)(2)(A) is amended by inserting 
                ``529,'' after ``135,''.
    (c) Beneficiary May Change Program.--Section 529(c)(3)(C) (relating 
to change in beneficiaries) is amended--
            (1) by striking ``transferred to the credit'' in clause (i) 
        and inserting ``transferred--
                                    ``(I) to another qualified tuition 
                                program for the benefit of the 
                                designated beneficiary, or
                                    ``(II) to the credit'',
            (2) by adding at the end the following new clause:
                            ``(iii) Limitation on certain rollovers.--
                        Clause (i)(I) shall only apply to the first 3 
                        transfers with respect to a designated 
                        beneficiary.'', and
            (3) by inserting ``or programs'' after ``beneficiaries'' in 
        the heading.
    (d) Member of Family Includes First Cousin.--Section 529(e)(2) 
(defining member of family) is amended by striking ``and'' at the end 
of subparagraph (B), by striking the period at the end of subparagraph 
(C) and by inserting ``; and'', and by adding at the end the following 
new subparagraph:
                    ``(D) any first cousin of such beneficiary.''
    (e) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 1999.

                    TITLE II--EDUCATIONAL ASSISTANCE

SEC. 201. EXTENSION OF EXCLUSION FOR EMPLOYER-PROVIDED EDUCATIONAL 
              ASSISTANCE.

    (a) In General.--Section 127(d) (relating to termination of 
exclusion for educational assistance programs) is amended by striking 
``May 31, 2000'' and inserting ``June 30, 2004''.
    (b) Repeal of Limitation on Graduate Education.--
            (1) In general.--The last sentence of section 127(c)(1) is 
        amended by striking ``, and such term also does not include any 
        payment for, or the provision of any benefits with respect to, 
        any graduate level course of a kind normally taken by an 
        individual pursuing a program leading to a law, business, 
        medical, or other advanced academic or professional degree''.
            (2) Effective date.--The amendment made by paragraph (1) 
        shall apply with respect to expenses relating to courses 
        beginning after December 31, 1999.

SEC. 202. ELIMINATION OF 60-MONTH LIMIT ON STUDENT LOAN INTEREST 
              DEDUCTION.

    (a) In General.--Section 221 (relating to interest on education 
loans) is amended by striking subsection (d) and by redesignating 
subsections (e), (f), and (g) as subsections (d), (e), and (f), 
respectively.
    (b) Conforming Amendment.--Section 6050S(e) is amended by striking 
``section 221(e)(1)'' and inserting ``section 221(d)(1)''.
    (c) Effective Date.--The amendments made by this section shall 
apply with respect to any loan interest paid after December 31, 1999.

SEC. 203. EXCLUSION OF CERTAIN AMOUNTS RECEIVED UNDER THE NATIONAL 
              PUBLIC HEALTH SERVICE CORPS SCHOLARSHIP PROGRAM AND THE 
              F. EDWARD HEBERT ARMED FORCES HEALTH PROFESSIONS 
              SCHOLARSHIP AND FINANCIAL ASSISTANCE PROGRAM.

    (a) In General.--Section 117(c) (relating to the exclusion from 
gross income amounts received as a qualified scholarship) is amended--
            (1) by striking ``Subsections (a)'' and inserting the 
        following:
            ``(1) In general.--Except as provided in paragraph (2), 
        subsections (a)'', and
            (2) by adding at the end the following new paragraph:
            ``(2) Exceptions.--Paragraph (1) shall not apply to any 
        amount received by an individual under--
                    ``(A) the National Public Health Service Corps 
                Scholarship Program under section 338A(g)(1)(A) of the 
                Public Health Service Act, or
                    ``(B) the Armed Forces Health Professions 
                Scholarship and Financial Assistance program under 
                subchapter I of chapter 105 of title 10, United States 
                Code.''
    (b) Effective Date.--The amendments made by subsection (a) shall 
apply to amounts received in taxable years beginning after December 31, 
1993.

  TITLE III--LIBERALIZATION OF TAX-EXEMPT FINANCING RULES FOR PUBLIC 
                          SCHOOL CONSTRUCTION

SEC. 301. ADDITIONAL INCREASE IN ARBITRAGE REBATE EXCEPTION FOR 
              GOVERNMENTAL BONDS USED TO FINANCE EDUCATIONAL 
              FACILITIES.

    (a) In General.--Section 148(f)(4)(D)(vii) (relating to increase in 
exception for bonds financing public school capital expenditures) is 
amended by striking ``$5,000,000'' the second place it appears and 
inserting ``$10,000,000''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to obligations issued in calendar years beginning after December 
31, 1999.

SEC. 302. TREATMENT OF QUALIFIED PUBLIC EDUCATIONAL FACILITY BONDS AS 
              EXEMPT FACILITY BONDS.

    (a) Treatment as Exempt Facility Bond.--Subsection (a) of section 
142 (relating to exempt facility bond) is amended by striking ``or'' at 
the end of paragraph (11), by striking the period at the end of 
paragraph (12) and inserting ``, or'', and by adding at the end the 
following new paragraph:
            ``(13) qualified public educational facilities.''
    (b) Qualified Public Educational Facilities.--Section 142 (relating 
to exempt facility bond) is amended by adding at the end the following 
new subsection:
    ``(k) Qualified Public Educational Facilities.--
            ``(1) In general.--For purposes of subsection (a)(13), the 
        term `qualified public educational facility' means any school 
        facility which is--
                    ``(A) part of a public elementary school or a 
                public secondary school, and
                    ``(B) owned by a private, for-profit corporation 
                pursuant to a public-private partnership agreement with 
                a State or local educational agency described in 
                paragraph (2).
            ``(2) Public-private partnership agreement described.--A 
        public-private partnership agreement is described in this 
        paragraph if it is an agreement--
                    ``(A) under which the corporation agrees--
                            ``(i) to do 1 or more of the following: 
                        construct, rehabilitate, refurbish, or equip a 
                        school facility, and
                            ``(ii) at the end of the term of the 
                        agreement, to transfer the school facility to 
                        such agency for no additional consideration, 
                        and
                    ``(B) the term of which does not exceed the term of 
                the issue to be used to provide the school facility.
            ``(3) School facility.--For purposes of this subsection, 
        the term `school facility' means--
                    ``(A) school buildings,
                    ``(B) functionally related and subordinate 
                facilities and land with respect to such buildings, 
                including any stadium or other facility primarily used 
                for school events, and
                    ``(C) any property, to which section 168 applies 
                (or would apply but for section 179), for use in the 
                facility.
            ``(4) Public schools.--For purposes of this subsection, the 
        terms `elementary school' and `secondary school' have the 
        meanings given such terms by section 14101 of the Elementary 
        and Secondary Education Act of 1965 (20 U.S.C. 8801), as in 
effect on the date of the enactment of this subsection.
            ``(5) Annual aggregate face amount of tax-exempt 
        financing.--
                    ``(A) In general.--An issue shall not be treated as 
                an issue described in subsection (a)(13) if the 
                aggregate face amount of bonds issued by the State 
                pursuant thereto (when added to the aggregate face 
                amount of bonds previously so issued during the 
                calendar year) exceeds an amount equal to the greater 
                of--
                            ``(i) $10 multiplied by the State 
                        population, or
                            ``(ii) $5,000,000.
                    ``(B) Allocation rules.--
                            ``(i) In general.--Except as otherwise 
                        provided in this subparagraph, the State may 
                        allocate the amount described in subparagraph 
                        (A) for any calendar year in such manner as the 
                        State determines appropriate.
                            ``(ii) Rules for carryforward of unused 
                        limitation.--A State may elect to carry forward 
                        an unused limitation for any calendar year for 
                        3 calendar years following the calendar year in 
                        which the unused limitation arose under rules 
                        similar to the rules of section 146(f), except 
                        that the only purpose for which the 
                        carryforward may be elected is the issuance of 
                        exempt facility bonds described in subsection 
                        (a)(13).''
    (c) Exemption From General State Volume Caps.--Paragraph (3) of 
section 146(g) (relating to exception for certain bonds) is amended--
            (1) by striking ``or (12)'' and inserting ``(12), or 
        (13)'', and
            (2) by striking ``and environmental enhancements of 
        hydroelectric generating facilities'' and inserting 
        ``environmental enhancements of hydroelectric generating 
        facilities, and qualified public educational facilities''.
    (d) Exemption From Limitation on Use for Land Acquisition.--Section 
147(h) (relating to certain rules not to apply to mortgage revenue 
bonds, qualified student loan bonds, and qualified 501(c)(3) bonds) is 
amended by adding at the end the following new paragraph:
            ``(3) Exempt facility bonds for qualified public-private 
        schools.--Subsection (c) shall not apply to any exempt facility 
        bond issued as part of an issue described in section 142(a)(13) 
        (relating to qualified public educational facilities).''
    (e) Conforming Amendment.--The heading for section 147(h) is 
amended by striking ``Mortgage Revenue Bonds, Qualified Student Loan 
Bonds, and Qualified 501(c)(3) Bonds'' and inserting ``Certain Bonds''.
    (f) Effective Date.--The amendments made by this section shall 
apply to bonds issued after December 31, 1999.

SEC. 303. FEDERAL GUARANTEE OF SCHOOL CONSTRUCTION BONDS BY FEDERAL 
              HOUSING FINANCE BOARD.

    (a) In General.--Section 149(b)(3) (relating to exceptions) is 
amended by adding at the end the following new subparagraph:
                    ``(E) Certain guaranteed school construction 
                bonds.--Any bond issued as part of an issue 95 percent 
                or more of the net proceeds of which are used for 
                public school construction shall not be treated as 
                federally guaranteed for any calendar year by reason of 
                any guarantee by the Federal Housing Finance Board 
                (through any Federal Home Loan Bank) under the Federal 
                Home Loan Bank Act (12 U.S.C. 1421 et seq.), as in 
                effect on the date of the enactment of this 
                subparagraph, to the extent the face amount of such 
                bond, when added to the aggregate face amount of such 
                bonds previously so guaranteed for such year, does not 
                exceed $500,000,000.''
    (b) Effective Date.--The amendment made by this section shall apply 
to bonds issued after December 31, 1999.

                      TITLE IV--REVENUE PROVISIONS

SEC. 401. MODIFICATION TO FOREIGN TAX CREDIT CARRYBACK AND CARRYOVER 
              PERIODS.

    (a) In General.--Section 904(c) (relating to limitation on credit) 
is amended--
            (1) by striking ``in the second preceding taxable year,'', 
        and
            (2) by striking ``or fifth'' and inserting ``fifth, sixth, 
        or seventh''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to credits arising in taxable years beginning after December 31, 
2001.

SEC. 402. LIMITATION ON USE OF NON-ACCRUAL EXPERIENCE METHOD OF 
              ACCOUNTING.

    (a) In General.--Section 448(d)(5) (relating to special rule for 
services) is amended--
            (1) by inserting ``in fields described in paragraph 
        (2)(A)'' after ``services by such person'', and
            (2) by inserting ``certain personal'' before ``services'' 
        in the heading.
    (b) Effective Date.--
            (1) In general.--The amendments made by this section shall 
        apply to taxable years ending after the date of the enactment 
        of this Act.
            (2) Change in method of accounting.--In the case of any 
        taxpayer required by the amendments made by this section to 
        change its method of accounting for its first taxable year 
        ending after the date of the enactment of this Act--
                    (A) such change shall be treated as initiated by 
                the taxpayer,
                    (B) such change shall be treated as made with the 
                consent of the Secretary of the Treasury, and
                    (C) the net amount of the adjustments required to 
                be taken into account by the taxpayer under section 481 
                of the Internal Revenue Code of 1986 shall be taken 
                into account over a period (not greater than 4 taxable 
                years) beginning with such first taxable year.

SEC. 403. RETURNS RELATING TO CANCELLATIONS OF INDEBTEDNESS BY 
              ORGANIZATIONS LENDING MONEY.

    (a) In General.--Paragraph (2) of section 6050P(c) (relating to 
definitions and special rules) is amended by striking ``and'' at the 
end of subparagraph (B), by striking the period at the end of 
subparagraph (C) and inserting ``, and'', and by inserting after 
subparagraph (C) the following new subparagraph:
                    ``(D) any organization a significant trade or 
                business of which is the lending of money.''
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to discharges of indebtedness after December 31, 1999.

SEC. 404. EXTENSION OF INTERNAL REVENUE SERVICE USER FEES.

    (a) In General.--Chapter 77 (relating to miscellaneous provisions) 
is amended by adding at the end the following new section:

``SEC. 7527. INTERNAL REVENUE SERVICE USER FEES.

    ``(a) General Rule.--The Secretary shall establish a program 
requiring the payment of user fees for--
            ``(1) requests to the Internal Revenue Service for ruling 
        letters, opinion letters, and determination letters, and
            ``(2) other similar requests.
    ``(b) Program Criteria.--
            ``(1) In general.--The fees charged under the program 
        required by subsection (a)--
                    ``(A) shall vary according to categories (or 
                subcategories) established by the Secretary,
                    ``(B) shall be determined after taking into account 
                the average time for (and difficulty of) complying with 
                requests in each category (and subcategory), and
                    ``(C) shall be payable in advance.
            ``(2) Exemptions, etc.--The Secretary shall provide for 
        such exemptions (and reduced fees) under such program as the 
        Secretary determines to be appropriate.
            ``(3) Average fee requirement.--The average fee charged 
        under the program required by subsection (a) shall not be less 
        than the amount determined under the following table:

``Category                                                  Average Fee
    Employee plan ruling and opinion..............                $250 
    Exempt organization ruling....................                $350 
    Employee plan determination...................                $300 
    Exempt organization determination.............                $275 
    Chief counsel ruling..........................                $200.
    ``(c) Termination.--No fee shall be imposed under this section with 
respect to requests made after September 30, 2009.''
    (b) Conforming Amendments.--
            (1) The table of sections for chapter 77 is amended by 
        adding at the end the following new item:

                              ``Sec. 7527. Internal Revenue Service 
                                        user fees.''
            (2) Section 10511 of the Revenue Act of 1987 is repealed.
    (c) Effective Date.--The amendments made by this section shall 
apply to requests made after the date of the enactment of this Act.

SEC. 405. PROPERTY SUBJECT TO A LIABILITY TREATED IN SAME MANNER AS 
              ASSUMPTION OF LIABILITY.

    (a) Repeal of Property Subject to a Liability Test.--
            (1) Section 357.--Section 357(a)(2) (relating to assumption 
        of liability) is amended by striking ``, or acquires from the 
        taxpayer property subject to a liability''.
            (2) Section 358.--Section 358(d)(1) (relating to assumption 
        of liability) is amended by striking ``or acquired from the 
        taxpayer property subject to a liability''.
            (3) Section 368.--
                    (A) Section 368(a)(1)(C) is amended by striking ``, 
                or the fact that property acquired is subject to a 
                liability,''.
                    (B) The last sentence of section 368(a)(2)(B) is 
                amended by striking ``, and the amount of any liability 
                to which any property acquired from the acquiring 
                corporation is subject,''.
    (b) Clarification of Assumption of Liability.--
            (1) In general.--Section 357 is amended by adding at the 
        end the following new subsection:
    ``(d) Determination of Amount of Liability Assumed.--
            ``(1) In general.--For purposes of this section, section 
        358(d), section 362(d), section 368(a)(1)(C), and section 
        368(a)(2)(B), except as provided in regulations--
                    ``(A) a recourse liability (or portion thereof) 
                shall be treated as having been assumed if, as 
                determined on the basis of all facts and circumstances, 
                the transferee has agreed to, and is expected to, 
                satisfy such liability (or portion), whether or not the 
transferor has been relieved of such liability, and
                    ``(B) except to the extent provided in paragraph 
                (2), a nonrecourse liability shall be treated as having 
                been assumed by the transferee of any asset subject to 
                such liability.
            ``(2) Exception for nonrecourse liability.--The amount of 
        the nonrecourse liability treated as described in paragraph 
        (1)(B) shall be reduced by the lesser of--
                    ``(A) the amount of such liability which an owner 
                of other assets not transferred to the transferee and 
                also subject to such liability has agreed with the 
                transferee to, and is expected to, satisfy, or
                    ``(B) the fair market value of such other assets 
                (determined without regard to section 7701(g)).
            ``(3) Regulations.--The Secretary shall prescribe such 
        regulations as may be necessary to carry out the purposes of 
        this subsection and section 362(d). The Secretary may also 
        prescribe regulations which provide that the manner in which a 
        liability is treated as assumed under this subsection is 
        applied, where appropriate, elsewhere in this title.''
            (2) Limitation on basis increase attributable to assumption 
        of liability.--Section 362 is amended by adding at the end the 
        following new subsection:
    ``(d) Limitation on Basis Increase Attributable to Assumption of 
Liability.--
            ``(1) In general.--In no event shall the basis of any 
        property be increased under subsection (a) or (b) above the 
        fair market value of such property (determined without regard 
        to section 7701(g)) by reason of any gain recognized to the 
        transferor as a result of the assumption of a liability.
            ``(2) Treatment of gain not subject to tax.--Except as 
        provided in regulations, if--
                    ``(A) gain is recognized to the transferor as a 
                result of an assumption of a nonrecourse liability by a 
                transferee which is also secured by assets not 
                transferred to such transferee, and
                    ``(B) no person is subject to tax under this title 
                on such gain,
        then, for purposes of determining basis under subsections (a) 
        and (b), the amount of gain recognized by the transferor as a 
        result of the assumption of the liability shall be determined 
        as if the liability assumed by the transferee equaled such 
        transferee's ratable portion of such liability determined on 
        the basis of the relative fair market values (determined 
        without regard to section 7701(g)) of all of the assets subject 
        to such liability.''
    (c) Application to Provisions Other Than Subchapter C.--
            (1) Section 584.--Section 584(h)(3) is amended--
                    (A) by striking ``, and the fact that any property 
                transferred by the common trust fund is subject to a 
                liability,'' in subparagraph (A), and
                    (B) by striking clause (ii) of subparagraph (B) and 
                inserting:
                            ``(ii) Assumed liabilities.--For purposes 
                        of clause (i), the term `assumed liabilities' 
                        means any liability of the common trust fund 
                        assumed by any regulated investment company in 
                        connection with the transfer referred to in 
                        paragraph (1)(A).
                    ``(C) Assumption.--For purposes of this paragraph, 
                in determining the amount of any liability assumed, the 
                rules of section 357(d) shall apply.''
            (2) Section 1031.--The last sentence of section 1031(d) is 
        amended--
                    (A) by striking ``assumed a liability of the 
                taxpayer or acquired from the taxpayer property subject 
                to a liability'' and inserting ``assumed (as determined 
                under section 357(d)) a liability of the taxpayer'', 
                and
                    (B) by striking ``or acquisition (in the amount of 
                the liability)''.
    (d) Conforming Amendments.--
            (1) Section 351(h)(1) is amended by striking ``, or 
        acquires property subject to a liability,''.
            (2) Section 357 is amended by striking ``or acquisition'' 
        each place it appears in subsection (a) or (b).
            (3) Section 357(b)(1) is amended by striking ``or 
        acquired''.
            (4) Section 357(c)(1) is amended by striking ``, plus the 
        amount of the liabilities to which the property is subject,''.
            (5) Section 357(c)(3) is amended by striking ``or to which 
        the property transferred is subject''.
            (6) Section 358(d)(1) is amended by striking ``or 
        acquisition (in the amount of the liability)''.
    (e) Effective Date.--The amendments made by this section shall 
apply to transfers after October 19, 1998.

SEC. 406. CHARITABLE SPLIT-DOLLAR LIFE INSURANCE, ANNUITY, AND 
              ENDOWMENT CONTRACTS.

    (a) In General.--Subsection (f) of section 170 (relating to 
disallowance of deduction in certain cases and special rules) is 
amended by adding at the end the following new paragraph:
            ``(10) Split-dollar life insurance, annuity, and endowment 
        contracts.--
                    ``(A) In general.--Nothing in this section or in 
                section 545(b)(2), 556(b)(2), 642(c), 2055, 2106(a)(2), 
                or 2522 shall be construed to allow a deduction, and no 
                deduction shall be allowed, for any transfer to or for 
                the use of an organization described in subsection (c) 
                if in connection with such transfer--
                            ``(i) the organization directly or 
                        indirectly pays, or has previously paid, any 
                        premium on any personal benefit contract with 
                        respect to the transferor, or
                            ``(ii) there is an understanding or 
                        expectation that any person will directly or 
                        indirectly pay any premium on any personal 
                        benefit contract with respect to the 
                        transferor.
                    ``(B) Personal benefit contract.--For purposes of 
                subparagraph (A), the term `personal benefit contract' 
                means, with respect to the transferor, any life 
                insurance, annuity, or endowment contract if any direct 
                or indirect beneficiary under such contract is the 
                transferor, any member of the transferor's family, or 
                any other person (other than an organization described 
                in subsection (c)) designated by the transferor.
                    ``(C) Application to charitable remainder trusts.--
                In the case of a transfer to a trust referred to in 
                subparagraph (E), references in subparagraphs (A) and 
                (F) to an organization described in subsection (c) 
                shall be treated as a reference to such trust.
                    ``(D) Exception for certain annuity contracts.--If, 
                in connection with a transfer to or for the use of an 
                organization described in subsection (c), such 
                organization incurs an obligation to pay a charitable 
                gift annuity (as defined in section 501(m)) and such 
                organization purchases any annuity contract to fund 
                such obligation, persons receiving payments under the 
                charitable gift annuity shall not be treated for 
                purposes of subparagraph (B) as indirect beneficiaries 
                under such contract if--
                            ``(i) such organization possesses all of 
                        the incidents of ownership under such contract,
                            ``(ii) such organization is entitled to all 
                        the payments under such contract, and
                            ``(iii) the timing and amount of payments 
                        under such contract are substantially the same 
                        as the timing and amount of payments to each 
                        such person under such obligation (as such 
                        obligation is in effect at the time of such 
                        transfer).
                    ``(E) Exception for certain contracts held by 
                charitable remainder trusts.--A person shall not be 
                treated for purposes of subparagraph (B) as an indirect 
                beneficiary under any life insurance, annuity, or 
                endowment contract held by a charitable remainder 
                annuity trust or a charitable remainder unitrust (as 
                defined in section 664(d)) solely by reason of being 
                entitled to any payment referred to in paragraph (1)(A) 
                or (2)(A) of section 664(d) if--
                            ``(i) such trust possesses all of the 
                        incidents of ownership under such contract, and
                            ``(ii) such trust is entitled to all the 
                        payments under such contract.
                    ``(F) Excise tax on premiums paid.--
                            ``(i) In general.--There is hereby imposed 
                        on any organization described in subsection (c) 
                        an excise tax equal to the premiums paid by 
                        such organization on any life insurance, 
                        annuity, or endowment contract if the payment 
                        of premiums on such contract is in connection 
                        with a transfer for which a deduction is not 
                        allowable under subparagraph (A), determined 
                        without regard to when such transfer is made.
                            ``(ii) Payments by other persons.--For 
                        purposes of clause (i), payments made by any 
                        other person pursuant to an understanding or 
                        expectation referred to in subparagraph (A) 
                        shall be treated as made by the organization.
                            ``(iii) Reporting.--Any organization on 
                        which tax is imposed by clause (i) with respect 
                        to any premium shall file an annual return 
                        which includes--
                                    ``(I) the amount of such premiums 
                                paid during the year and the name and 
                                TIN of each beneficiary under the 
                                contract to which the premium relates, 
                                and
                                    ``(II) such other information as 
                                the Secretary may require.
                        The penalties applicable to returns required 
                        under section 6033 shall apply to returns 
                        required under this clause. Returns required 
                        under this clause shall be furnished at such 
                        time and in such manner as the Secretary shall 
                        by forms or regulations require.
                            ``(iv) Certain rules to apply.--The tax 
                        imposed by this subparagraph shall be treated 
                        as imposed by chapter 42 for purposes of this 
                        title other than subchapter B of chapter 42.
                    ``(G) Special rule where state requires 
                specification of charitable gift annuitant in 
                contract.--In the case of an obligation to pay a 
                charitable gift annuity referred to in subparagraph (D) 
                which is entered into under the laws of a State which 
                requires, in order for the charitable gift annuity to 
                be exempt from insurance regulation by such State, that 
                each beneficiary under the charitable gift annuity be 
                named as a beneficiary under an annuity contract issued 
                by an insurance company authorized to transact business 
                in such State, the requirements of clauses (i) and (ii) 
                of subparagraph (D) shall be treated as met if--
                            ``(i) such State law requirement was in 
                        effect on February 8, 1999,
                            ``(ii) each such beneficiary under the 
                        charitable gift annuity is a bona fide resident 
                        of such State at the time the obligation to pay 
                        a charitable gift annuity is entered into, and
                            ``(iii) the only persons entitled to 
                        payments under such contract are persons 
                        entitled to payments as beneficiaries under 
                        such obligation on the date such obligation is 
entered into.
                    ``(H) Regulations.--The Secretary shall prescribe 
                such regulations as may be necessary or appropriate to 
                carry out the purposes of this paragraph, including 
                regulations to prevent the avoidance of such 
                purposes.''
    (b) Effective Date.--
            (1) In general.--Except as otherwise provided in this 
        section, the amendment made by this section shall apply to 
        transfers made after February 8, 1999.
            (2) Excise tax.--Except as provided in paragraph (3) of 
        this subsection, section 170(f)(10)(F) of the Internal Revenue 
        Code of 1986 (as added by this section) shall apply to premiums 
        paid after the date of the enactment of this Act.
            (3) Reporting.--Clause (iii) of such section 170(f)(10)(F) 
        shall apply to premiums paid after February 8, 1999 (determined 
        as if the tax imposed by such section applies to premiums paid 
        after such date).

SEC. 407. TRANSFER OF EXCESS DEFINED BENEFIT PLAN ASSETS FOR RETIREE 
              HEALTH BENEFITS.

    (a) Extension.--
            (1) In general.--Section 420(b)(5) (relating to expiration) 
        is amended by striking ``in any taxable year beginning after 
        December 31, 2000'' and inserting ``made after September 30, 
        2009''.
            (2) Conforming amendments.--
                    (A) Section 101(e)(3) of the Employee Retirement 
                Income Security Act of 1974 (29 U.S.C. 1021(e)(3)) is 
                amended by striking ``1995'' and inserting ``2001''.
            (B) Section 403(c)(1) of such Act (29 U.S.C. 1103(c)(1)) is 
        amended by striking ``1995'' and inserting ``2001''.
            (C) Paragraph (13) of section 408(b) of such Act (29 U.S.C. 
        1108(b)(13)) is amended--
                    (i) by striking ``in a taxable year beginning 
                before January 1, 2001'' and inserting ``made before 
                October 1, 2009'', and
                    (ii) by striking ``1995'' and inserting ``2001''.
    (b) Application of Minimum Cost Requirements.--
            (1) In general.--Section 420(c)(3) is amended to read as 
        follows:
            ``(3) Minimum cost requirements.--
                    ``(A) In general.--The requirements of this 
                paragraph are met if each group health plan or 
                arrangement under which applicable health benefits are 
                provided provides that the applicable employer cost for 
                each taxable year during the cost maintenance period 
                shall not be less than the higher of the applicable 
                employer costs for each of the 2 taxable years 
                immediately preceding the taxable year of the qualified 
                transfer.
                    ``(B) Applicable employer cost.--For purposes of 
                this paragraph, the term `applicable employer cost' 
                means, with respect to any taxable year, the amount 
                determined by dividing--
                            ``(i) the qualified current retiree health 
                        liabilities of the employer for such taxable 
                        year determined--
                                    ``(I) without regard to any 
                                reduction under subsection (e)(1)(B), 
                                and
                                    ``(II) in the case of a taxable 
                                year in which there was no qualified 
                                transfer, in the same manner as if 
                                there had been such a transfer at the 
                                end of the taxable year, by
                            ``(ii) the number of individuals to whom 
                        coverage for applicable health benefits was 
                        provided during such taxable year.
                    ``(C) Election to compute cost separately.--An 
                employer may elect to have this paragraph applied 
                separately with respect to individuals eligible for 
                benefits under title XVIII of the Social Security Act 
                at any time during the taxable year and with respect to 
                individuals not so eligible.
                    ``(D) Cost maintenance period.--For purposes of 
                this paragraph, the term `cost maintenance period' 
                means the period of 5 taxable years beginning with the 
                taxable year in which the qualified transfer occurs. If 
                a taxable year is in 2 or more overlapping cost 
                maintenance periods, this paragraph shall be applied by 
                taking into account the highest applicable employer 
                cost required to be provided under subparagraph (A) for 
                such taxable year.''
            (2) Conforming amendments.--
                    (A) Section 420(b)(1)(C)(iii) is amended by 
                striking ``benefits'' and inserting ``cost''.
                    (B) Section 420(e)(1)(D) is amended by striking 
                ``and shall not be subject to the minimum benefit 
                requirements of subsection (c)(3)'' and inserting ``or 
                in calculating applicable employer cost under 
                subsection (c)(3)(B)''.
    (c) Effective Date.--The amendments made by this section shall 
apply to qualified transfers occurring after December 31, 2000, and 
before October 1, 2009.

SEC. 408. LIMITATIONS ON WELFARE BENEFIT FUNDS OF 10 OR MORE EMPLOYER 
              PLANS.

    (a) Benefits to Which Exception Applies.--Section 419A(f)(6)(A) 
(relating to exception for 10 or more employer plans) is amended to 
read as follows:
                    ``(A) In general.--This subpart shall not apply to 
                a welfare benefit fund which is part of a 10 or more 
                employer plan if the only benefits provided through the 
                fund are 1 or more of the following:
                            ``(i) Medical benefits.
                            ``(ii) Disability benefits.
                            ``(iii) Group term life insurance benefits 
                        which do not provide for any cash surrender 
                        value or other money that can be paid, 
                        assigned, borrowed, or pledged for collateral 
                        for a loan.
                The preceding sentence shall not apply to any plan 
                which maintains experience-rating arrangements with 
                respect to individual employers.''
    (b) Limitation on Use of Amounts for Other Purposes.--Section 
4976(b) (defining disqualified benefit) is amended by adding at the end 
the following new paragraph:
            ``(5) Special rule for 10 or more employer plans exempted 
        from prefunding limits.--For purposes of paragraph (1)(C), if--
                    ``(A) subpart D of part I of subchapter D of 
                chapter 1 does not apply by reason of section 
                419A(f)(6) to contributions to provide 1 or more 
                welfare benefits through a welfare benefit fund under a 
                10 or more employer plan, and
                    ``(B) any portion of the welfare benefit fund 
                attributable to such contributions is used for a 
                purpose other than that for which the contributions 
                were made,
        then such portion shall be treated as reverting to the benefit 
        of the employers maintaining the fund.''
    (c) Effective Date.--The amendments made by this section shall 
apply to contributions paid or accrued after the date of the enactment 
of this Act, in taxable years ending after such date.

SEC. 409. MODIFICATION OF INSTALLMENT METHOD AND REPEAL OF INSTALLMENT 
              METHOD FOR ACCRUAL METHOD TAXPAYERS.

    (a) Repeal of Installment Method for Accrual Basis Taxpayers.--
            (1) In general.--Subsection (a) of section 453 (relating to 
        installment method) is amended to read as follows:
    ``(a) Use of Installment Method.--
            ``(1) In general.--Except as otherwise provided in this 
        section, income from an installment sale shall be taken into 
        account for purposes of this title under the installment 
        method.
            ``(2) Accrual method taxpayer.--The installment method 
        shall not apply to income from an installment sale if such 
        income would be reported under an accrual method of accounting 
        without regard to this section. The preceding sentence shall 
        not apply to a disposition described in subparagraph (A) or (B) 
        of subsection (l)(2).''
            (2) Conforming amendments.--Sections 453(d)(1), 453(i)(1), 
        and 453(k) are each amended by striking ``(a)'' each place it 
        appears and inserting ``(a)(1)''.
    (b) Modification of Pledge Rules.--Paragraph (4) of section 453A(d) 
(relating to pledges, etc., of installment obligations) is amended by 
adding at the end the following: ``A payment shall be treated as 
directly secured by an interest in an installment obligation to the 
extent an arrangement allows the taxpayer to satisfy all or a portion 
of the indebtedness with the installment obligation.''
    (c) Effective Date.--The amendments made by this section shall 
apply to sales or other dispositions occurring on or after the date of 
the enactment of this Act.

SEC. 410. INCLUSION OF CERTAIN VACCINES AGAINST STREPTOCOCCUS 
              PNEUMONIAE TO LIST OF TAXABLE VACCINES.

    (a) In General.--Section 4132(a)(1) (defining taxable vaccine) is 
amended by adding at the end the following new subparagraph:
                    ``(L) Any conjugate vaccine against streptococcus 
                pneumoniae.''
    (b) Effective Date.--
            (1) Sales.--The amendment made by this section shall apply 
        to vaccine sales beginning on the day after the date on which 
        the Centers for Disease Control makes a final recommendation 
        for routine administration to children of any conjugate vaccine 
        against streptococcus pneumoniae.
            (2) Deliveries.--For purposes of paragraph (1), in the case 
        of sales on or before the date described in such paragraph for 
        which delivery is made after such date, the delivery date shall 
        be considered the sale date.