[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[S. 1160 Introduced in Senate (IS)]







106th CONGRESS
  1st Session
                                S. 1160

To amend the Internal Revenue Code of 1986 to provide marriage penalty 
 relief, incentives to encourage health coverage, and increased child 
  care assistance, to extend certain expiring tax provisions, and for 
                            other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                              May 27, 1999

Mr. Grassley (for himself and Mrs. Feinstein) introduced the following 
  bill; which was read twice and referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL


 
To amend the Internal Revenue Code of 1986 to provide marriage penalty 
 relief, incentives to encourage health coverage, and increased child 
  care assistance, to extend certain expiring tax provisions, 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.

    (a) Short Title.--This Act may be cited as the ``Tax Relief for 
Working Americans Act of 1999''.
    (b) Table of Contents.--

Sec. 1. Short title.
                    TITLE I--MARRIAGE PENALTY RELIEF

Sec. 101. Basic standard deduction for married individuals to be twice 
                            the deduction for unmarried individuals.
         TITLE II--ADJUSTMENT OF SOCIAL SECURITY EARNING LIMIT

Sec. 201. Adjustment in monthly exempt amount for purposes of the 
                            social security earnings test.
      TITLE III--INCENTIVES FOR HEALTH AND LONG-TERM CARE COVERAGE

Sec. 301. Credit for health insurance costs of previously uninsured 
                            individuals and individuals with COBRA 
                            coverage.
Sec. 302. Deduction for health insurance costs of employees and self-
                            employed individuals.
Sec. 303. Credit for taxpayers with long-term care needs.
            TITLE IV--EXPANSION OF DEPENDENT CARE TAX CREDIT

Sec. 401. Expansion of dependent care tax credit.
                TITLE V--ALTERNATIVE MINIMUM TAX RELIEF

Sec. 501. Nonrefundable personal credits allowed against alternative 
                            minimum tax.
Sec. 502. Income averaging for farmers not to increase alternative 
                            minimum tax liability.
   TITLE VI--ELIMINATION OF 60-MONTH LIMIT ON STUDENT LOAN INTEREST 
                               DEDUCTION

Sec. 601. Elimination of 60-month limit on student loan interest 
                            deduction.
     TITLE VII--INCREASE IN LOW-INCOME HOUSING CREDIT STATE CEILING

Sec. 701. Increase in State ceiling on low-income housing credit.
          TITLE VIII--FARM AND RANCH RISK MANAGEMENT ACCOUNTS

Sec. 801. Farm and ranch risk management accounts.
      TITLE IX--INCENTIVES FOR URBAN REVITALIZATION AND OPEN SPACE

Sec. 901. Expensing of environmental remediation costs expanded to 
                            contaminated sites outside of targeted 
                            areas.
Sec. 902. Modifications to encourage contributions of capital gain real 
                            property made for conservation purposes and 
                            of qualified conservation contributions.
           TITLE X--EXTENSION OF CERTAIN EXPIRING PROVISIONS

Sec. 1001. Research credit.
Sec. 1002. Work opportunity credit.
Sec. 1003. Permanent subpart F exemption for active financing income.
Sec. 1004. Credit for electricity produced from renewable resources.

                    TITLE I--MARRIAGE PENALTY RELIEF

SEC. 101. BASIC STANDARD DEDUCTION FOR MARRIED INDIVIDUALS TO BE TWICE 
              THE DEDUCTION FOR UNMARRIED INDIVIDUALS.

    (a) In General.--Paragraph (2) of section 63(c) of the Internal 
Revenue Code of 1986 (relating to standard deduction) is amended--
            (1) by striking ``$5,000'' in subparagraph (A) and 
        inserting ``twice the dollar amount in effect under 
        subparagraph (C) for the taxable year'',
            (2) by adding ``or'' at the end of subparagraph (B),
            (3) by striking ``in the case of'' and all that follows in 
        subparagraph (C) and inserting ``in any other case.'', and
            (4) by striking subparagraph (D).
    (b) Technical Amendment.--Subparagraph (B) of section 1(f)(6) of 
such Code is amended by striking ``(other than with'' and all that 
follows through ``shall be applied'' and inserting ``(other than 
sections 63(c)(4) and 151(d)(4)(A)) shall be applied''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 1999.

         TITLE II--ADJUSTMENT OF SOCIAL SECURITY EARNING LIMIT

SEC. 201. ADJUSTMENT IN MONTHLY EXEMPT AMOUNT FOR PURPOSES OF THE 
              SOCIAL SECURITY EARNINGS TEST.

    (a) Increase in Monthly Exempt Amount for Individuals Who Have 
Attained Retirement Age.--Section 203(f)(8)(D) of the Social Security 
Act (42 U.S.C. 403(f)(8)(D)) is amended--
            (1) in clause (iii), by inserting ``and'' at the end; and
            (2) by striking clauses (iv) through (vii) and inserting 
        the following new clause:
                            ``(iv) for each month of any taxable year 
                        ending after 1999 and before 2001, $2,500.''.
    (b) Conforming Amendments.--
            (1) Section 203(f)(8)(B)(ii) of such Act (42 U.S.C. 
        403(f)(8)(B)(ii)) is amended--
                    (A) by striking ``after 2001 and before 2003'' and 
                inserting ``after 1999 and before 2001''; and
                    (B) in subclause (II), by striking ``2001'' and 
                inserting ``1998''.
            (2) The second sentence of section 223(d)(4)(A) of such Act 
        (42 U.S.C. 423(d)(4)(A)) is amended by inserting ``and section 
        201 of the Tax Relief for Working Americans Act of 1999'' after 
        ``1996''.
    (c) Effective Date.--The amendments made by this section shall 
apply with respect to taxable years beginning after 1999.

      TITLE III--INCENTIVES FOR HEALTH AND LONG-TERM CARE COVERAGE

SEC. 301. CREDIT FOR HEALTH INSURANCE COSTS OF PREVIOUSLY UNINSURED 
              INDIVIDUALS AND INDIVIDUALS WITH COBRA COVERAGE.

    (a) In General.--Subpart A of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986 (relating to nonrefundable 
personal credits) is amended by inserting after section 25A the 
following new section:

``SEC. 25B. HEALTH INSURANCE COSTS OF PREVIOUSLY UNINSURED INDIVIDUALS 
              AND INDIVIDUALS WITH COBRA COVERAGE.

    ``(a) In General.--In the case of an individual, there shall be 
allowed as a credit against the tax imposed by this chapter for the 
taxable year an amount equal to 60 percent of the amount paid during 
the taxable year for coverage for the taxpayer, his spouse, and 
dependents under qualified health insurance.
    ``(b) Dollar Limitation.--
            ``(1) In general.--The amount allowed as a credit under 
        subsection (a) to the taxpayer for the taxable year shall not 
        exceed the sum of the monthly limitations for eligible months 
        during such taxable year.
            ``(2) Monthly limitation.--The monthly limitation for any 
        eligible month is the amount equal to \1/12\ of--
                    ``(A) $1,200 if, as of the first day of such month, 
                the taxpayer has self-only coverage under qualified 
                health insurance, and
                    ``(B) $2,400 if, as of the first day of such month, 
                the taxpayer has family coverage under qualified health 
                insurance.
            ``(3) Eligible month.--For purposes of this subsection--
                    ``(A) In general.--The term `eligible month' means 
                any month which begins at least 1 year after the most 
                recent month that the individual--
                            ``(i) was eligible to participate in any 
                        group health plan of an employer which provided 
                        qualified health insurance (determined without 
                        regard to subsection (d)(2)), or
                            ``(ii) participated in any group health 
                        plan of any other entity which provided such 
                        insurance.
                    ``(B) Joint returns.--In the case of a joint 
                return, a month shall be treated as an eligible month 
                only if it is an eligible month of each spouse, 
                determined by applying this paragraph separately to 
                each spouse.
            ``(4) Certain other coverage.--Amounts paid for coverage of 
        an individual for any month shall not be taken into account 
        under subsection (a) if, as of the first day of such month, 
        such individual is covered under any medical care program 
        described in--
                    ``(A) title XVIII, XIX, or XXI of the Social 
                Security Act,
                    ``(B) chapter 55 of title 10, United States Code,
                    ``(C) chapter 17 of title 38, United States Code,
                    ``(D) chapter 89 of title 5, United States Code, or
                    ``(E) the Indian Health Care Improvement Act.
            ``(5) Special rule for married individuals.--In the case of 
        an individual--
                    ``(A) who is married (within the meaning of section 
                7703) as of the close of the taxable year but does not 
                file a joint return for such year, and
                    ``(B) who does not live apart from such 
                individual's spouse at all times during the taxable 
                year,
        the limitation under paragraph (2)(A) (and not the limitation 
        under paragraph (2)(B)) shall apply to such individual.
    ``(c) Limitation Based on Adjusted Gross Income.--
            ``(1) In general.--The aggregate amount which would (but 
        for this subsection) be allowed as a credit under this section 
        shall be reduced (but not below zero) by the amount determined 
        under paragraph (2).
            ``(2) Amount of reduction.--
                    ``(A) In general.--The amount determined under this 
                paragraph shall be the amount which bears the same 
                ratio to such aggregate amount as--
                            ``(i) the excess of--
                                    ``(I) the taxpayer's modified 
                                adjusted gross income for such taxable 
                                year, over
                                    ``(II) the applicable dollar 
                                amount, bears to
                            ``(ii) $10,000.
                    ``(B) Modified adjusted gross income.--For purposes 
                of this paragraph, the term `modified adjusted gross 
                income' means adjusted gross income increased by any 
                amount excluded from gross income under section 911, 
                931, or 933.
                    ``(C) Rounding.--Any amount determined under 
                subparagraph (A) which is not a multiple of $10 shall 
                be rounded to the next lowest $10.
            ``(3) Applicable dollar amount.--For purposes of paragraph 
        (2), the term `applicable dollar amount' means--
                    ``(A) $60,000 in the case of a taxpayer whose 
                qualified health insurance coverage covers more than 1 
                individual referred to in subsection (a), and
                    ``(B) $30,000--
                            ``(i) in any case not described in 
                        subparagraph (A), and
                            ``(ii) in the case of a married individual 
                        filing a separate return.
        For purposes of this paragraph, marital status shall be 
        determined under section 7703.
    ``(d) Qualified Health Insurance.--For purposes of this section--
            ``(1) In general.--Except as otherwise provided in this 
        paragraph, the term `qualified health insurance' means 
        insurance which constitutes medical care, as defined in section 
        213(d) without regard to--
                    ``(A) paragraph (1)(C) thereof, and
                    ``(B) so much of paragraph (1)(D) thereof as 
                relates to qualified long-term care insurance 
                contracts.
            ``(2) Exclusion of coverage provided under group health 
        plans, etc.--Such term shall not include insurance provided 
        through any group health plan of an employer or any other 
        entity.
            ``(3) Exclusion of certain other contracts.--Such term 
        shall not include insurance if a substantial portion of its 
        benefits are excepted benefits (as defined in section 9832(c)).
    ``(e) Individuals With COBRA Coverage.--In the case of continuation 
coverage under a group health plan which is required to be provided by 
Federal law for an individual during the period specified in section 
4980B(f)(2)(B), notwithstanding subsection (d)--
            ``(1) such coverage shall be treated as qualified health 
        insurance, and
            ``(2) the term `eligible month' includes months of such 
        coverage.
    ``(f) Special Rules.--
            ``(1) Coordination with other deductions.--No credit shall 
        be allowed under this section for the taxable year if any 
        amount paid for qualified health insurance is taken into 
        account in determining the deduction allowed for such year 
        under section 213 or 222.
            ``(2) Denial of credit to dependents.--No credit shall be 
        allowed under this section to any individual with respect to 
        whom a deduction under section 151 is allowable to another 
        taxpayer for a taxable year beginning in the calendar year in 
        which such individual's taxable year begins.
            ``(3) Inflation adjustment.--
                    ``(A) In general.--In the case of a taxable year 
                beginning after 2000, each dollar amount in subsection 
                (c)(3) shall be increased by an amount equal to--
                            ``(i) such dollar amount, multiplied by
                            ``(ii) 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 1999' 
                        for `calendar year 1992' in subparagraph (B) 
                        thereof.
                    ``(B) Rounding.--If any amount as adjusted under 
                subparagraph (A) is not a multiple of $100, such amount 
                shall be rounded to the next lowest multiple of $100.''
    (b) Clerical Amendment.--The table of sections for subpart A part 
IV of subchapter A of chapter 1 of such Code is amended by inserting 
after the item relating to section 25A the following new item:

                              ``Sec. 25B. Health insurance costs of 
                                        previously uninsured 
                                        individuals and individuals 
                                        with COBRA coverage.''
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 1999.

SEC. 302. DEDUCTION FOR HEALTH INSURANCE COSTS OF EMPLOYEES AND SELF-
              EMPLOYED INDIVIDUALS.

    (a) In General.--Part VII of subchapter B of chapter 1 of the 
Internal Revenue Code of 1986 (relating to additional itemized 
deductions) is amended by redesignating section 222 as section 223 and 
by inserting after section 221 the following new section:

``SEC. 222. COSTS OF HEALTH INSURANCE AND LONG-TERM CARE INSURANCE.

    ``(a) In General.--In the case of an individual, there shall be 
allowed as a deduction an amount equal to the sum of--
            ``(1) the applicable health care percentage of the amount 
        paid during the taxable year for coverage for the taxpayer, his 
        spouse, and dependents under qualified health insurance, and
            ``(2) the applicable long-term care percentage of the 
        amount of eligible long-term care premiums (as defined in 
        section 213(d)(10)) paid during the taxable year for coverage 
        for the taxpayer, his spouse, and dependents under a qualified 
        long-term care insurance contract (as defined in section 
        7702B(b)).
    ``(b) Applicable Percentages.--For purposes of subsection (a)--
            ``(1) Applicable health care percentage.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), the applicable health care percentage 
                shall be determined in accordance with the following 
                table:

                ``For taxable years beginning
                                                  The applicable health
                  in calendar year--
                                                   care percentage is--
                    2000...................................      60    
                    2001...................................      70    
                    2002...................................      80    
                    2003...................................      90    
                    2004 and thereafter....................    100.    
                    ``(B) Special rule.--In the case of an individual 
                who is an employee within the meaning of section 
                401(c)(1) and whose qualified health insurance is not 
                provided through a group health plan of an employer, 
                subparagraph (A) shall be applied by substituting `100' 
                for `90' but only with respect to the lesser of the 
                taxpayer's earned income (within the meaning of section 
                401(c)) or the payments referred to in subsection 
                (a)(1).
            ``(2) Applicable long-term care percentage.--
                    ``(A) In general.--Except as otherwise provided in 
                this paragraph, the applicable long-term care 
                percentage shall be determined in accordance with the 
                following table based on the number of years of 
continuous coverage (as of the close of the taxable year) of the 
individual under a qualified long-term care insurance contract (as 
defined in section 7702B(b)):

                ``If the number of years of
                                               The applicable long-term
                  continuous coverage is--
                                                 care percentage is--  
                    Less than 1............................      50    
                    At least 1 but less than 2.............      60    
                    At least 2 but less than 3.............      70    
                    At least 3 but less than 4.............      80    
                    At least 4 but less than 5.............      90    
                    At least 5.............................    100.    
                    ``(B) Special rules for individuals who have 
                attained age 60.--In the case of an individual who has 
                attained age 60 as of the close of the taxable year, 
                the following table shall be substituted for the table 
                in subparagraph (A).

                ``If the number of years of
                                               The applicable long-term
                  continuous coverage is--
                                                 care percentage is--  
                    Less than 1............................      60    
                    At least 1 but less than 2.............      70    
                    At least 2 but less than 3.............      85    
                    At least 3.............................    100.    
                    ``(C) Only coverage after 1999 taken into 
                account.--Only coverage for periods after December 31, 
                1999, shall be taken into account under this paragraph.
                    ``(D) Continuous coverage.--An individual shall not 
                fail to be treated as having continuous coverage if the 
                aggregate breaks in coverage during any 1-year period 
                are less than 60 days.
                    ``(E) Self-employed individuals.--In the case of an 
                individual who is an employee within the meaning of 
                section 401(c)(1) and whose qualified long-term care 
                insurance contract (as defined in section 7702B(b)) is 
                not provided through a group health plan of an 
                employer, the applicable long-term care percentage 
                shall be--
                            ``(i) 100 percent with respect to the 
                        lesser of--
                                    ``(I) the eligible long-term care 
                                premiums (as defined in section 
                                213(d)(10)) referred to in subsection 
                                (a)(2), or
                                    ``(II) the excess of the taxpayer's 
                                earned income (within the meaning of 
                                section 401(c)) for the taxable year 
                                over the payments referred to in 
                                subsection (a)(1), and
                            ``(ii) the percentage determined under the 
                        other provisions of this paragraph with respect 
                        to the remainder of such premiums (determined 
                        by treating the premiums taken into account 
                        under clause (i) as being attributable to 
                        individuals in the order of their ages, 
                        beginning with the oldest).
    ``(c) Exclusion of Subsidized Coverage.--Subsection (a) shall not 
apply to any taxpayer for any calendar month for which the taxpayer 
participates in any group health plan of an employer or any other 
entity if less than 50 percent of the cost of the taxpayer's coverage 
under such plan is borne by the taxpayer. The preceding sentence shall 
be applied separately with respect to paragraphs (1) and (2) of 
subsection (a).
    ``(d) Qualified Health Insurance.--For purposes of this section--
            ``(1) In general.--The term `qualified health insurance' 
        has the meaning given such term by section 25B(d) determined 
        without regard to paragraph (2) thereof.
            ``(2) Special rule.--
                    ``(A) In general.--In the case of an individual who 
                is an employee within the meaning of section 401(c)(1) 
                and whose qualified health insurance (without regard to 
                this paragraph) is not provided through a group health 
                plan of an employer, paragraph (3) of section 25B(d) 
                shall not apply for purposes of this section.
                    ``(B) Limitation.--The amount taken into account 
                under subsection (a)(1) by reason of subparagraph (A) 
                shall not exceed the excess of--
                            ``(i) the taxpayer's earned income (within 
                        the meaning of section 401(c)), over
                            ``(ii) the amount which would (without 
                        regard to this paragraph) be taken into account 
                        under subsection (a)(1).
    ``(e) Special Rules.--
            ``(1) Coordination with medical deduction, etc.--Any amount 
        paid by a taxpayer for insurance to which subsection (a) 
        applies shall not be taken into account in computing the amount 
        allowable to the taxpayer as a deduction under section 213(a).
            ``(2) Deduction not allowed for self-employment tax 
        purposes.--The deduction allowable by reason of this section 
        shall not be taken into account in determining an individual's 
        net earnings from self-employment (within the meaning of 
        section 1402(a)) for purposes of chapter 2.''
    (b) Conforming Amendments.--
            (1) Subsection (l) of section 162 of such Code is hereby 
        repealed.
            (2) Subsection (a) of section 62 of such Code is amended by 
        inserting after paragraph (17) the following new item:
            ``(18) Costs of health insurance and long-term care 
        insurance.--The deduction allowed by section 222.''
            (3) The table of sections for part VII of subchapter B of 
        chapter 1 of such Code is amended by striking the last item and 
        inserting the following new items:

                              ``Sec. 222. Costs of health insurance and 
                                        long-term care insurance.
                              ``Sec. 223. Cross reference.''
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 1999.

SEC. 303. CREDIT FOR TAXPAYERS WITH LONG-TERM CARE NEEDS.

    (a) Allowance of Credit.--
            (1) In general.--Section 24(a) of the Internal Revenue Code 
        of 1986 (relating to allowance of child tax credit) is amended 
        to read as follows:
    ``(a) Allowance of Credit.--There shall be allowed as a credit 
against the tax imposed by this chapter for the taxable year an amount 
equal to the sum of--
            ``(1) $500 multiplied by the number of qualifying children 
        of the taxpayer, plus
            ``(2) $1,000 multiplied by the number of applicable 
        individuals with respect to whom the taxpayer is an eligible 
        caregiver for the taxable year.
In any case in which the applicable individual and the eligible 
caregiver are the same individual, the credit allowed by paragraph (2) 
with respect to such individual shall not exceed the aggregate amount 
paid by the taxpayer during the taxable year (not compensated for by 
insurance or otherwise) for qualified long-term care services (as 
defined in section 7702B(c)) for such individual.''
            (2) Additional credit for taxpayer with 3 or more separate 
        credit amounts.--So much of section 24(d) of such Code as 
        precedes paragraph (1)(A) thereof is amended to read as 
        follows:
    ``(d) Additional Credit for Taxpayers With 3 or More Separate 
Credit Amounts.--
            ``(1) In general.--If the sum of the number of qualifying 
        children of the taxpayer and the number of applicable 
        individuals with respect to which the taxpayer is an eligible 
        caregiver is 3 or more for any taxable year, the aggregate 
        credits allowed under subpart C shall be increased by the 
        lesser of--''.
            (3) Conforming amendments.--
                    (A) The heading for section 32(n) of such Code is 
                amended by striking ``Child'' and inserting ``Family 
                Care''.
                    (B) The heading for section 24 is amended to read 
                as follows:

``SEC. 24. FAMILY CARE CREDIT.''

                    (C) The table of sections for subpart A of part IV 
                of subchapter A of chapter 1 of such Code is amended by 
                striking the item relating to section 24 and inserting 
                the following new item:

                              ``Sec. 24. Family care credit.''.
    (b) Definitions.--Section 24(c) of such Code (defining qualifying 
child) is amended to read as follows:
    ``(c) Definitions.--For purposes of this section--
            ``(1) Qualifying child.--
                    ``(A) In general.--The term `qualifying child' 
                means any individual if--
                            ``(i) the taxpayer is allowed a deduction 
                        under section 151 with respect to such 
                        individual for the taxable year,
                            ``(ii) such individual has not attained the 
                        age of 17 as of the close of the calendar year 
                        in which the taxable year of the taxpayer 
                        begins, and
                            ``(iii) such individual bears a 
                        relationship to the taxpayer described in 
                        section 32(c)(3)(B).
                    ``(B) Exception for certain noncitizens.--The term 
                `qualifying child' shall not include any individual who 
                would not be a dependent if the first sentence of 
                section 152(b)(3) were applied without regard to all 
                that follows `resident of the United States'.
            ``(2) Applicable individual.--
                    ``(A) In general.--The term `applicable individual' 
                means, with respect to any taxable year, any individual 
                who has been certified, before the due date for filing 
                the return of tax for the taxable year (without 
                extensions), by a physician (as defined in section 
                1861(r)(1) of the Social Security Act) as being an 
                individual with long-term care needs described in 
                subparagraph (B) for a period--
                            ``(i) which is at least 180 consecutive 
                        days, and
                            ``(ii) a portion of which occurs within the 
                        taxable year.
                Such term shall not include any individual otherwise 
                meeting the requirements of the preceding sentence 
                unless within the 39\1/2\ month period ending on such 
                due date (or such other period as the Secretary 
                prescribes) a physician (as so defined) has certified 
                that such individual meets such requirements.
                    ``(B) Individuals with long-term care needs.--An 
                individual is described in this subparagraph if the 
                individual meets any of the following requirements:
                            ``(i) The individual is at least 6 years of 
                        age and--
                                    ``(I) is unable to perform (without 
                                substantial assistance from another 
                                individual) at least 3 activities of 
                                daily living (as defined in section 
                                7702B(c)(2)(B)) due to a loss of 
                                functional capacity, or
                                    ``(II) requires substantial 
                                supervision to protect such individual 
                                from threats to health and safety due 
                                to severe cognitive impairment and is 
                                unable to perform, without reminding or 
                                cuing assistance, at least 1 activity 
                                of daily living (as so defined) or to 
                                the extent provided in regulations 
                                prescribed by the Secretary (in 
                                consultation with the Secretary of 
                                Health and Human Services), is unable 
                                to engage in age appropriate 
                                activities.
                            ``(ii) The individual is at least 2 but not 
                        6 years of age and is unable due to a loss of 
                        functional capacity to perform (without 
                        substantial assistance from another individual) 
                        at least 2 of the following activities: eating, 
                        transferring, or mobility.
                            ``(iii) The individual is under 2 years of 
                        age and requires specific durable medical 
                        equipment by reason of a severe health 
                        condition or requires a skilled practitioner 
                        trained to address the individual's condition 
                        to be available if the individual's parents or 
                        guardians are absent.
            ``(3) Eligible caregiver.--
                    ``(A) In general.--A taxpayer shall be treated as 
                an eligible caregiver for any taxable year with respect 
                to the following individuals:
                            ``(i) The taxpayer.
                            ``(ii) The taxpayer's spouse.
                            ``(iii) An individual with respect to whom 
                        the taxpayer is allowed a deduction under 
                        section 151 for the taxable year.
                            ``(iv) An individual who would be described 
                        in clause (iii) for the taxable year if section 
                        151(c)(1)(A) were applied by substituting for 
                        the exemption amount an amount equal to the sum 
                        of the exemption amount, the standard deduction 
                        under section 63(c)(2)(C), and any additional 
                        standard deduction under section 63(c)(3) which 
                        would be applicable to the individual if clause 
                        (iii) applied.
                            ``(v) An individual who would be described 
                        in clause (iii) for the taxable year if--
                                    ``(I) the requirements of clause 
                                (iv) are met with respect to the 
                                individual, and
                                    ``(II) the requirements of 
                                subparagraph (B) are met with respect 
                                to the individual in lieu of the 
                                support test of section 152(a).
                    ``(B) Residency test.--The requirements of this 
                subparagraph are met if an individual has as his 
                principal place of abode the home of the taxpayer and--
                            ``(i) in the case of an individual who is 
                        an ancestor or descendant of the taxpayer or 
                        the taxpayer's spouse, is a member of the 
                        taxpayer's household for over half the taxable 
                        year, or
                            ``(ii) in the case of any other individual, 
                        is a member of the taxpayer's household for the 
                        entire taxable year.
                    ``(C) Special rules where more than 1 eligible 
                caregiver.--
                            ``(i) In general.--If more than 1 
                        individual is an eligible caregiver with 
                        respect to the same applicable individual for 
                        taxable years ending with or within the same 
                        calendar year, a taxpayer shall be treated as 
                        the eligible caregiver if each such individual 
                        (other than the taxpayer) files a written 
                        declaration (in such form and manner as the 
                        Secretary may prescribe) that such individual 
                        will not claim such applicable individual for 
                        the credit under this section.
                            ``(ii) No agreement.--If each individual 
                        required under clause (i) to file a written 
                        declaration under clause (i) does not do so, 
                        the individual with the highest modified 
                        adjusted gross income (as defined in section 
                        32(c)(5)) shall be treated as the eligible 
                        caregiver.
                            ``(iii) Married individuals filing 
                        separately.--In the case of married individuals 
                        filing separately, the determination under this 
                        subparagraph as to whether the husband or wife 
                        is the eligible caregiver shall be made under 
                        the rules of clause (ii) (whether or not one of 
                        them has filed a written declaration under 
                        clause (i)).''.
    (c) Identification Requirements.--
            (1) In general.--Section 24(e) of such Code is amended by 
        adding at the end the following new sentence: ``No credit shall 
        be allowed under this section to a taxpayer with respect to any 
        applicable individual unless the taxpayer includes the name and 
        taxpayer identification number of such individual, and the 
        identification number of the physician certifying such 
        individual, on the return of tax for the taxable year.''.
            (2) Assessment.--Section 6213(g)(2)(I) of such Code is 
        amended--
                    (A) by inserting ``or physician identification'' 
                after ``correct TIN'', and
                    (B) by striking ``child'' and inserting ``family 
                care''.
    (d) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 1999.

            TITLE IV--EXPANSION OF DEPENDENT CARE TAX CREDIT

SEC. 401. EXPANSION OF DEPENDENT CARE TAX CREDIT.

    (a) Increase in Percentage of Employment-Related Expenses Allowed 
as Credit.--Paragraph (2) of section 21(a) of the Internal Revenue Code 
of 1986 (defining applicable percentage) is amended to read as follows:
            ``(2) Applicable percentage defined.--
                    ``(A) In general.--For purposes of paragraph (1), 
                the term `applicable percentage' means 50 percent 
                reduced (but not below 20 percent) by each $2,000 (or 
                fraction thereof) by which the taxpayers's adjusted 
                gross income for the taxable year exceeds $30,000.
                    ``(B) Phasein.--In the case of taxable years 
                beginning before January 1, 2004, the percentage 
                determined under the following table shall be 
                substituted for `50 percent':

                ``For taxable years beginning
                  in calendar year--
                                                    The percentage is--
                    2000...................................      30    
                    2001...................................      35    
                    2002...................................      40    
                    2003...................................   45.''    
    (b) Minimum Credit Allowed for Stay-at-Home Parents.--Subsection 
(e) of section 21 of such Code (relating to special rules) is amended 
by adding at the end the following:
            ``(11) Minimum credit allowed for stay-at-home parents.--
        Notwithstanding subsection (d), in the case of any taxpayer 
        with one or more qualifying individuals described in subsection 
        (b)(1)(A) under the age of 1 at any time during the taxable 
        year, such taxpayer shall be deemed to have employment-related 
        expenses with respect to such qualifying individuals in an 
        amount equal to the greater of--
                    ``(A) the amount of employment-related expenses 
                incurred for such qualifying individuals for the 
                taxable year (determined under this section without 
                regard to this paragraph), or
                    ``(B) $120 for each month in such taxable year 
                during which such qualifying individual is under the 
                age of 1.''
    (c) Effective Date.--The amendments made by this section apply to 
taxable years beginning after December 31, 1999.

                TITLE V--ALTERNATIVE MINIMUM TAX RELIEF

SEC. 501. NONREFUNDABLE PERSONAL CREDITS ALLOWED AGAINST ALTERNATIVE 
              MINIMUM TAX.

    (a) In General.--Subsection (a) of section 26 of the Internal 
Revenue Code of 1986 is amended to read as follows:
    ``(a) Limitation Based on Amount of Tax.--The aggregate amount of 
credits allowed by this subpart for the taxable year shall not exceed 
the sum of--
            ``(1) the taxpayer's regular tax liability for the taxable 
        year reduced by the foreign tax credit allowable under section 
        27(a), and
            ``(2) the tax imposed for the taxable year by section 
        55(a).''.
    (b) Conforming Amendments.--
            (1) Subsection (d) of section 24 of such Code is amended by 
        striking paragraph (2) and by redesignating paragraph (3) as 
        paragraph (2).
            (2) Section 904 of such Code is amended by striking 
        subsection (h) and by redesignating subsections (i), (j), and 
        (k) as subsections (h), (i), and (j), respectively.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 1999.

SEC. 502. INCOME AVERAGING FOR FARMERS NOT TO INCREASE ALTERNATIVE 
              MINIMUM TAX LIABILITY.

    (a) In General.--Section 55(c) of the Internal Revenue Code of 1986 
(defining regular tax) is amended by redesignating paragraph (2) as 
paragraph (3) and by inserting after paragraph (1) the following new 
paragraph:
            ``(2) Coordination with income averaging for farmers.--
        Solely for purposes of this section, section 1301 (relating to 
        averaging of farm income) shall not apply in computing the 
        regular tax.''
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after December 31, 1998.

   TITLE VI--ELIMINATION OF 60-MONTH LIMIT ON STUDENT LOAN INTEREST 
                               DEDUCTION

SEC. 601. ELIMINATION OF 60-MONTH LIMIT ON STUDENT LOAN INTEREST 
              DEDUCTION.

    (a) In General.--Section 221 of the Internal Revenue Code of 1986 
(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 6050(e) of the Internal Revenue 
Code of 1986 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, 1997.

     TITLE VII--INCREASE IN LOW-INCOME HOUSING CREDIT STATE CEILING

SEC. 701. INCREASE IN STATE CEILING ON LOW-INCOME HOUSING CREDIT.

    (a) In General.--Clause (i) of section 42(h)(3)(C) of the Internal 
Revenue Code of 1986 (relating to State housing credit ceiling) is 
amended by striking ``$1.25'' and inserting ``$1.75''.
    (b) Adjustment of State Ceiling for Increases in Cost-of-Living.--
Paragraph (3) of section 42(h) of such Code (relating to housing credit 
dollar amount for agencies) is amended by adding at the end the 
following new subparagraph:
                    ``(H) Cost-of-living adjustment.--
                            ``(i) In general.--In the case of a 
                        calendar year after 2000, the dollar amount 
                        contained in subparagraph (C)(i) shall be 
                        increased by an amount equal to--
                                    ``(I) such dollar amount, 
                                multiplied by
                                    ``(II) the cost-of-living 
                                adjustment determined under section 
                                1(f)(3) for such calendar year by 
                                substituting `calendar year 1999' for 
                                `calendar year 1992' in subparagraph 
                                (B) thereof.
                            ``(ii) Rounding.--If any increase under 
                        clause (i) is not a multiple of 5 cents, such 
                        increase shall be rounded to the next lowest 
                        multiple of 5 cents.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to calendar years after 1999.

          TITLE VIII--FARM AND RANCH RISK MANAGEMENT ACCOUNTS

SEC. 801. FARM AND RANCH RISK MANAGEMENT ACCOUNTS.

    (a) In General.--Subpart C of part II of subchapter E of chapter 1 
of the Internal Revenue Code of 1986 (relating to taxable year for 
which deductions taken) is amended by inserting after section 468B the 
following new section:

``SEC. 468C. FARM AND RANCH RISK MANAGEMENT ACCOUNTS.

    ``(a) Deduction Allowed.--In the case of an individual engaged in 
an eligible farming business, there shall be allowed as a deduction for 
any taxable year the amount paid in cash by the taxpayer during the 
taxable year to a Farm and Ranch Risk Management Account (hereinafter 
referred to as the `FARRM Account').
    ``(b) Limitation.--The amount which a taxpayer may pay into the 
FARRM Account for any taxable year shall not exceed 20 percent of so 
much of the taxable income of the taxpayer (determined without regard 
to this section) which is attributable (determined in the manner 
applicable under section 1301) to any eligible farming business.
    ``(c) Eligible Farming Business.--For purposes of this section, the 
term `eligible farming business' means any farming business (as defined 
in section 263A(e)(4)) which is not a passive activity (within the 
meaning of section 469(c)) of the taxpayer.
    ``(d) FARRM Account.--For purposes of this section--
            ``(1) In general.--The term `FARRM Account' means a trust 
        created or organized in the United States for the exclusive 
        benefit of the taxpayer, but only if the written governing 
        instrument creating the trust meets the following requirements:
                    ``(A) No contribution will be accepted for any 
                taxable year in excess of the amount allowed as a 
                deduction under subsection (a) for such year.
                    ``(B) The trustee is a bank (as defined in section 
                408(n)) or another person who demonstrates to the 
                satisfaction of the Secretary that the manner in which 
                such person will administer the trust will be 
                consistent with the requirements of this section.
                    ``(C) The assets of the trust consist entirely of 
                cash or of obligations which have adequate stated 
                interest (as defined in section 1274(c)(2)) and which 
                pay such interest not less often than annually.
                    ``(D) All income of the trust is distributed 
                currently to the grantor.
                    ``(E) The assets of the trust will not be 
                commingled with other property except in a common trust 
                fund or common investment fund.
            ``(2) Account taxed as grantor trust.--The grantor of a 
        FARRM Account shall be treated for purposes of this title as 
        the owner of such Account and shall be subject to tax thereon 
        in accordance with subpart E of part I of subchapter J of this 
        chapter (relating to grantors and others treated as substantial 
        owners).
    ``(e) Inclusion of Amounts Distributed.--
            ``(1) In general.--Except as provided in paragraph (2), 
        there shall be includible in the gross income of the taxpayer 
        for any taxable year--
                    ``(A) any amount distributed from a FARRM Account 
                of the taxpayer during such taxable year, and
                    ``(B) any deemed distribution under--
                            ``(i) subsection (f)(1) (relating to 
                        deposits not distributed within 5 years),
                            ``(ii) subsection (f)(2) (relating to 
                        cessation in eligible farming business), and
                            ``(iii) subparagraph (A) or (B) of 
                        subsection (f)(3) (relating to prohibited 
                        transactions and pledging account as security).
            ``(2) Exceptions.--Paragraph (1)(A) shall not apply to--
                    ``(A) any distribution to the extent attributable 
                to income of the Account, and
                    ``(B) the distribution of any contribution paid 
                during a taxable year to a FARRM Account to the extent 
                that such contribution exceeds the limitation 
                applicable under subsection (b) if requirements similar 
                to the requirements of section 408(d)(4) are met.
        For purposes of subparagraph (A), distributions shall be 
        treated as first attributable to income and then to other 
        amounts.
            ``(3) Exclusion from self-employment tax.--Amounts included 
        in gross income under this subsection shall not be included in 
        determining net earnings from self-employment under section 
        1402.
    ``(f) Special Rules.--
            ``(1) Tax on deposits in account which are not distributed 
        within 5 years.--
                    ``(A) In general.--If, at the close of any taxable 
                year, there is a nonqualified balance in any FARRM 
                Account--
                            ``(i) there shall be deemed distributed 
                        from such Account during such taxable year an 
                        amount equal to such balance, and
                            ``(ii) the taxpayer's tax imposed by this 
                        chapter for such taxable year shall be 
                        increased by 10 percent of such deemed 
                        distribution.
                The preceding sentence shall not apply if an amount 
                equal to such nonqualified balance is distributed from 
                such Account to the taxpayer before the due date 
                (including extensions) for filing the return of tax 
                imposed by this chapter for such year (or, if earlier, 
                the date the taxpayer files such return for such year).
                    ``(B) Nonqualified balance.--For purposes of 
                subparagraph (A), the term `nonqualified balance' means 
                any balance in the Account on the last day of the 
                taxable year which is attributable to amounts deposited 
                in such Account before the 4th preceding taxable year.
                    ``(C) Ordering rule.--For purposes of this 
                paragraph, distributions from a FARRM Account shall be 
                treated as made from deposits in the order in which 
                such deposits were made, beginning with the earliest 
                deposits. For purposes of the preceding sentence, 
                income of such an Account shall be treated as a deposit 
                made on the date such income is received by the 
                Account.
            ``(2) Cessation in eligible farming business.--At the close 
        of the first disqualification period after a period for which 
        the taxpayer was engaged in an eligible farming business, there 
        shall be deemed distributed from the FARRM Account (if any) of 
        the taxpayer an amount equal to the balance in such Account at 
        the close of such disqualification period. For purposes of the 
        preceding sentence, the term `disqualification period' means 
        any period of 2 consecutive taxable years for which the 
        taxpayer is not engaged in an eligible farming business.
            ``(3) Certain rules to apply.--Rules similar to the 
        following rules shall apply for purposes of this section:
                    ``(A) Section 408(e)(2) (relating to loss of 
                exemption of account where individual engages in 
                prohibited transaction).
                    ``(B) Section 408(e)(4) (relating to effect of 
                pledging account as security).
                    ``(C) Section 408(g) (relating to community 
                property laws).
                    ``(D) Section 408(h) (relating to custodial 
                accounts).
            ``(4) Time when payments deemed made.--For purposes of this 
        section, a taxpayer shall be deemed to have made a payment to a 
        FARRM Account on the last day of a taxable year if such payment 
        is made on account of such taxable year and is made within 3\1/
        2\ months after the close of such taxable year.
            ``(5) Individual.--For purposes of this section, the term 
        `individual' shall not include an estate or trust.
    ``(g) Reports.--The trustee of a FARRM Account shall make such 
reports regarding such Account to the Secretary and to the person for 
whose benefit the Account is maintained with respect to contributions, 
distributions, and such other matters as the Secretary may require 
under regulations. The reports required by this subsection shall be 
filed at such time and in such manner and furnished to such persons at 
such time and in such manner as may be required by those 
regulations.''.
    (b) Deduction Allowed in Computing Adjusted Gross Income.--
Subsection (a) of section 62 of such Code (defining adjusted gross 
income) is amended by inserting after paragraph (18) the following new 
paragraph:
            ``(19) Contributions to farm and ranch risk management 
        accounts.--The deduction allowed by section 468C(a).''
    (c) Tax on Excess Contributions.--
            (1) Subsection (a) of section 4973 of such Code (relating 
        to tax on certain excess contributions) is amended by striking 
        ``or'' at the end of paragraph (3), by redesignating paragraph 
        (4) as paragraph (5), and by inserting after paragraph (3) the 
        following new paragraph:
            ``(4) a FARRM Account (within the meaning of section 
        468C(d)), or''.
            (2) Section 4973 of such Code is amended by adding at the 
        end the following new subsection:
    ``(g) Excess Contributions to FARRM Accounts.--For purposes of this 
section, in the case of a FARRM Account (within the meaning of section 
468C(d)), the term `excess contributions' means the amount by which the 
amount contributed for the taxable year to the Account exceeds the 
amount which may be contributed to the Account under section 468C(b) 
for such taxable year. For purposes of this subsection, any 
contribution which is distributed out of the FARRM Account in a 
distribution to which section 468C(e)(2)(B) applies shall be treated as 
an amount not contributed.''.
            (3) The section heading for section 4973 of such Code is 
        amended to read as follows:

``SEC. 4973. EXCESS CONTRIBUTIONS TO CERTAIN ACCOUNTS, ANNUITIES, 
              ETC.''.

            (4) The table of sections for chapter 43 of such Code is 
        amended by striking the item relating to section 4973 and 
        inserting the following new item:

                              ``Sec. 4973. Excess contributions to 
                                        certain accounts, annuities, 
                                        etc.''.
    (d) Tax on Prohibited Transactions.--
            (1) Subsection (c) of section 4975 of such Code (relating 
        to prohibited transactions) is amended by adding at the end the 
        following new paragraph:
            ``(6) Special rule for farrm accounts.--A person for whose 
        benefit a FARRM Account (within the meaning of section 468C(d)) 
        is established shall be exempt from the tax imposed by this 
        section with respect to any transaction concerning such Account 
        (which would otherwise be taxable under this section) if, with 
        respect to such transaction, the account ceases to be a FARRM 
        Account by reason of the application of section 468C(f)(3)(A) 
        to such Account.''.
            (2) Paragraph (1) of section 4975(e) of such Code is 
        amended by redesignating subparagraphs (E) and (F) as 
        subparagraphs (F) and (G), respectively, and by inserting after 
        subparagraph (D) the following new subparagraph:
                    ``(E) a FARRM Account described in section 
                468C(d),''.
    (e) Failure To Provide Reports on FARRM Accounts.--Paragraph (2) of 
section 6693(a) of such Code (relating to failure to provide reports on 
certain tax-favored accounts or annuities) is amended by redesignating 
subparagraphs (C) and (D) as subparagraphs (D) and (E), respectively, 
and by inserting after subparagraph (B) the following new subparagraph:
                    ``(C) section 468C(g) (relating to FARRM 
                Accounts).''.
    (f) Clerical Amendment.--The table of sections for subpart C of 
part II of subchapter E of chapter 1 of such Code is amended by 
inserting after the item relating to section 468B the following new 
item:

                              ``Sec. 468C. Farm and Ranch Risk 
                                        Management Accounts.''.
    (g) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after the date of the enactment of 
this Act.

      TITLE IX--INCENTIVES FOR URBAN REVITALIZATION AND OPEN SPACE

SEC. 901. EXPENSING OF ENVIRONMENTAL REMEDIATION COSTS EXPANDED TO 
              CONTAMINATED SITES OUTSIDE OF TARGETED AREAS.

    (a) In General.--Clause (ii) of section 198(c)(1)(A) of the 
Internal Revenue Code of 1986 (relating to qualified contaminated 
sites) is amended to read as follows:
                            ``(ii) which is within the United States, 
                        and''.
    (b) Expense Treatment Made Permanent.--Section 198 of such Code is 
amended by striking subsection (h).
    (c) Conforming Amendment.--Paragraph (2) of section 198(c) of such 
Code is amended to read as follows:
            ``(2) National priorities listed sites not included.--Such 
        term shall not include any site which is on, or proposed for, 
        the national priorities list under section 105(a)(8)(B) of the 
        Comprehensive Environmental Response, Compensation, and 
        Liability Act of 1980 (as in effect on the date of the 
        enactment of this section).''
    (d) Effective Date.--The amendments made by this section shall 
apply to expenditures paid or incurred after the date of the enactment 
of this Act in taxable years ending after such date.

SEC. 902. MODIFICATIONS TO ENCOURAGE CONTRIBUTIONS OF CAPITAL GAIN REAL 
              PROPERTY MADE FOR CONSERVATION PURPOSES AND OF QUALIFIED 
              CONSERVATION CONTRIBUTIONS.

    (a) Contributions of Capital Gain Real Property Made for 
Conservation Purposes and of Qualified Conservation Contributions Not 
Subject to Special Limitation on Contributions of Capital Gain 
Property.--Subparagraph (C) of section 170(b)(1) of the Internal 
Revenue Code of 1986 (relating to special limitation with respect to 
contributions described in subparagraph (A) of capital gain property) 
is amended by redesignating clause (iv) as clause (v) and by inserting 
after clause (iii) the following new clause:
                            ``(iv) In the case of charitable 
                        contributions described in subparagraph (A) of 
                        capital gain property, clauses (i) and (ii) 
                        shall not apply to--
                                    ``(I) any qualified conservation 
                                contribution (as defined in section 
                                170(h)), or
                                    ``(II) any other contribution of 
                                capital gain property which is real 
                                property if the contribution is of the 
                                donor's entire interest in such 
                                property and is to a qualified 
                                organization (as defined in section 
                                170(h)(3)) which is organized for 
                                conservation purposes (as defined in 
                                section 170(h)(4)(A)) and which 
                                provides the taxpayer, at the time of 
                                such donation, a letter of intent which 
                                contains an acknowledgment of the 
                                donee's intent that the property is 
                                being acquired for any such 
                                conservation purpose.''.
    (b) Unlimited Carryover for Contributions of Capital Gain Real 
Property for Conservation Purposes and of Qualified Conservation 
Contributions of Capital Gain Property.--Paragraph (1) of section 
170(d) of such Code in amended by adding at the end the following new 
subparagraph:
                    ``(C) Unlimited carryover for contributions of 
                capital gain real property for conservation purposes 
                and of qualified conservation contributions of capital 
                gain property.--The 5 taxable year limitation in 
                subparagraph (A) shall not apply to any charitable 
                contribution to which clauses (i) and (ii) of 
                subsection (b)(1)(C) do not apply by reason of clause 
                (iv) thereof. For purposes of this paragraph, the 
                excess described in the material preceding clause (i) 
                of subparagraph (A) shall be treated as attributable to 
                contributions described in the preceding sentence of 
                this subparagraph to the extent of such 
                contributions.''.
    (c) Effective Date.--The amendment made by this section shall apply 
to contributions made in taxable years beginning after the date of the 
enactment of this Act.

           TITLE X--EXTENSION OF CERTAIN EXPIRING PROVISIONS

SEC. 1001. RESEARCH CREDIT.

    (a) Credit Made Permanent.--
            (1) In general.--Section 41 of the Internal Revenue Code of 
        1986 (relating to credit for increasing research activities) is 
        amended by striking subsection (h).
            (2) Conforming amendment.--Paragraph (1) section 45C(b) of 
        such Code is amended by striking subparagraph (D).
            (3) Effective date.--The amendments made by this subsection 
        shall apply to amounts paid or incurred after June 30, 1999.
    (b) Increase in Percentages Under Alternative Incremental Credit.--
            (1) In general.--Subparagraph (A) of section 41(c)(4) of 
        such Code is amended--
                    (A) by striking ``1.65 percent'' and inserting 
                ``2.65 percent'',
                    (B) by striking ``2.2 percent'' and inserting ``3.2 
                percent'', and
                    (C) by striking ``2.75 percent'' and inserting 
                ``3.75 percent''.
            (2) Effective date.--The amendments made by this subsection 
        shall apply to taxable years beginning after June 30, 1999.

SEC. 1002. WORK OPPORTUNITY CREDIT.

    (a) Credit Made Permanent.--Subsection (c) of section 51 of the 
Internal Revenue Code of 1986 is amended by striking paragraph (4).
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to individuals who begin work for the employer after June 30, 
1999.

SEC. 1003. PERMANENT SUBPART F EXEMPTION FOR ACTIVE FINANCING INCOME.

    (a) Banking, Financing, or Similar Businesses.--Subsection (h) of 
section 954 of the Internal Revenue Code of 1986 (relating to special 
rule for income derived in the active conduct of banking, financing, or 
similar businesses) is amended by striking paragraph (9).
    (b) Insurance Businesses.--Subsection (a) of section 953 of such 
Code (defining insurance income) is amended by striking paragraph (10) 
and by redesignating paragraph (11) as paragraph (10).
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years of a foreign corporation beginning after 
December 31, 1998, and to taxable years of United States shareholders 
with or within which such taxable years of such foreign corporation 
end.

SEC. 1004. CREDIT FOR ELECTRICITY PRODUCED FROM RENEWABLE RESOURCES.

    (a) Extension and Modification of Placed-in-Service Rules.--
Paragraph (3) of section 45(c) of the Internal Revenue Code of 1986 is 
amended to read as follows:
            ``(3) Qualified facility.--
                    ``(A) Wind facilities.--In the case of a facility 
                using wind to produce electricity, the term `qualified 
                facility' means any facility owned by the taxpayer 
                which is originally placed in service after December 
                31, 1993, and before July 1, 2004.
                    ``(B) Biomass facilities.--In the case of a 
                facility using biomass to produce electricity, the term 
                `qualified facility' means, with respect to any month, 
                any facility owned by the taxpayer which is originally 
                placed in service before July 1, 2004, if, for such 
                month--
                            ``(i) biomass comprises not less than 75 
                        percent (on a Btu basis) of the average monthly 
                        fuel input of the facility for the taxable year 
                        which includes such month, or
                            ``(ii) in the case of a facility 
                        principally using coal to produce electricity, 
                        biomass comprises not more than 25 percent (on 
                        a Btu basis) of the average monthly fuel input 
                        of the facility for the taxable year which 
                        includes such month.
                    ``(C) Special rules.--
                            ``(i) In the case of a qualified facility 
                        described in subparagraph (B)(i)--
                                    ``(I) the 10-year period referred 
                                to in subsection (a) shall be treated 
                                as beginning no earlier than the date 
                                of the enactment of this paragraph, and
                                    ``(II) subsection (b)(3) shall not 
                                apply to any such facility originally 
                                placed in service before January 1, 
                                1997.
                            ``(ii) In the case of a qualified facility 
                        described in subparagraph (B)(ii)--
                                    ``(I) the 10-year period referred 
                                to in subsection (a) shall be treated 
                                as beginning no earlier than the date 
                                of the enactment of this paragraph, and
                                    ``(II) the amount of the credit 
                                determined under subsection (a) with 
                                respect to any project for any taxable 
                                year shall be adjusted by multiplying 
                                such amount (determined without regard 
                                to this clause) by 0.59.''.
    (b) Credit Not To Apply to Electricity Sold to Utilities Under 
Certain Contracts.--Subsection (b) of section 45 of such Code is 
amended by adding at the end the following new paragraph:
            ``(4) Credit not to apply to electricity sold to utilities 
        under certain contracts.--
                    ``(A) In general.--The credit determined under 
                subsection (a) shall not apply to electricity--
                            ``(i) produced at a qualified facility 
                        placed in service by the taxpayer after June 
                        30, 1999, and
                            ``(ii) sold to a utility pursuant to a 
                        contract originally entered into before January 
                        1, 1987 (whether or not amended or restated 
                        after that date).
                    ``(B) .--Subparagraph (A) shall not apply if--
                            ``(i) the prices for energy and capacity 
                        from such facility are established pursuant to 
                        an amendment to the contract referred to in 
                        subparagraph (A)(ii);
                            ``(ii) such amendment provides that the 
                        prices set forth in the contract which exceed 
                        avoided cost prices determined at the time of 
                        delivery shall apply only to annual quantities 
                        of electricity (prorated for partial years) 
                        which do not exceed the greater of--
                                    ``(I) the average annual quantity 
                                of electricity sold to the utility 
                                under the contract during calendar 
                                years 1994, 1995, 1996, 1997, and 1998, 
                                or
                                    ``(II) the estimate of the annual 
                                electricity production set forth in the 
                                contract, or, if there is no such 
                                estimate, the greatest annual quantity 
                                of electricity sold to the utility 
                                under the contract in any of the 
                                calendar years 1996, 1997, or 1998; and
                            ``(iii) such amendment provides that energy 
                        and capacity in excess of the limitation in 
                        clause (ii) may be--
                                    ``(I) sold to the utility only at 
                                prices that do not exceed avoided cost 
                                prices determined at the time of 
                                delivery, or
                                    ``(II) sold to a third party 
                                subject to a mutually agreed upon 
                                advance notice to the utility.
                For purposes of this subparagraph, avoided cost prices 
                shall be determined as provided for in 18 CFR 
                292.304(d)(1) or any successor regulation.''.
    (c) Qualified Facilities Include All Biomass Facilities.--
            (1) In general.--Subparagraph (B) of section 45(c)(1) of 
        such Code is amended to read as follows:
                    ``(B) biomass.''
            (2) Biomass defined.--Paragraph (2) of section 45(c) of 
        such Code is amended to read as follows:
            ``(2) Biomass.--The term `biomass' means--
                    ``(A) any organic material from a plant which is 
                planted exclusively for purposes of being used at a 
                qualified facility to produce electricity, and
                    ``(B) any solid, nonhazardous, cellulosic waste 
                material, which is segregated from other waste 
                materials, and which is derived from--
                            ``(i) any of the following forest-related 
                        resources: mill residues, precommercial 
                        thinnings, slash, and brush, but not including 
                        old-growth timber,
                            ``(ii) waste pallets, crates, and dunnage, 
                        manufacturing and construction wood wastes 
                        (other than pressure-treated, chemically-
                        treated, or painted wood wastes), and landscape 
                        or right-of-way tree trimmings, but not 
                        including unsegregated municipal solid waste 
                        (garbage), or
                            ``(iii) agriculture sources, including 
                        orchard tree crops, vineyard, grain, legumes, 
                        sugar, and other crop by-products or 
                        residues.''
    (d) Effective Date.--The amendments made by this section shall 
apply to electricity produced after the date of the enactment of this 
Act.
                                 <all>