[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[S. 3047 Introduced in Senate (IS)]







106th CONGRESS
  2d Session
                                S. 3047

   To amend the Internal Revenue Code of 1986 to expand the Lifetime 
Learning credit and provide an optional deduction for qualified tuition 
                         and related expenses.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                           September 14, 2000

   Mr. Biden 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 expand the Lifetime 
Learning credit and provide an optional deduction for qualified tuition 
                         and related expenses.

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

SECTION 1. MODIFICATION OF LIFETIME LEARNING CREDIT AND OPTIONAL 
              DEDUCTION FOR TUITION EXPENSES.

    (a) Modification of Lifetime Learning Credit.--
            (1) Increase in percentage.--Section 25A(c)(1) of the 
        Internal Revenue Code of 1986 (relating to per taxpayer credit) 
        is amended by striking ``20 percent'' and inserting ``28 
        percent''.
            (2) Limitation based on modified adjusted gross income.--
                    (A) In general.--Section 25A(d)(2) of the Internal 
                Revenue Code of 1986 (relating to amount of reduction) 
                is amended to read as follows:
            ``(2) Amount of reduction.--
                    ``(A) Hope scholarship.--In the case of the Hope 
                Scholarship credit, the amount determined under this 
                paragraph is the amount which bears the same ratio to 
                the amount which would be so taken into account as--
                            ``(i) the excess of--
                                    ``(I) the taxpayer's modified 
                                adjusted gross income for such taxable 
                                year, over
                                    ``(II) $40,000 ($80,000 in the case 
                                of a joint return), bears to
                            ``(ii) $10,000 ($20,000 in the case of a 
                        joint return).
                    ``(B) Lifetime learning.--In the case of the 
                Lifetime Learning credit, the amount determined under 
                subparagraph (A) shall be determined by substituting 
                `$50,000 ($100,000 in the case of a joint return)' for 
                `$40,000 ($80,000 in the case of a joint return)' in 
                clause (i)(II) of such subparagraph.''.
                    (B) Conforming amendment.--Section 25A(h)(2)(A) of 
                the Internal Revenue Code of 1986 is amended by 
                striking ``the $40,000 and $80,000 amounts'' and 
                inserting ``each dollar amount''.
    (b) Deduction for Qualified Tuition and Related Expenses in Lieu of 
Lifetime Learning Credit.--
            (1) In general.--Part VII of subchapter B of chapter 1 of 
        the Internal Revenue Code of 1986 is amended by redesignating 
        section 222 as section 223 and inserting after section 221 the 
        following new section:

``SEC. 222. QUALIFIED TUITION EXPENSES.

    ``(a) Allowance of Deduction.--In the case of an individual, there 
shall be allowed as a deduction for the taxable year an amount equal to 
the lesser of--
            ``(1) the qualified tuition and related expenses (within 
        the meaning of section 25A(c)) paid by the taxpayer for the 
        taxable year, or
            ``(2) $10,000 ($5,000 in the case of taxable years 
        beginning in 2001 or 2002).
    ``(b) Special Rules.--
            ``(1) In general.--Rules similar to the rules of section 
        25A(g) shall apply for purposes of this section.
            ``(2) Rules for determining expenses.--Rules similar to the 
        rules of section 25A(c)(2) shall apply for purposes of 
        determining the qualified tuition and related expenses to be 
        taken into account under subsection (a).
    ``(c) Limitation Based on Modified Adjusted Gross Income.--The 
amount which would (but for this subsection) be taken into account 
under subsection (a) for the taxable year shall be reduced (but not 
below zero) by the amount determined under section 25A(d)(2)(B) by 
applying the modified adjusted gross income as defined in section 
25A(d)(3) and determined without regard to the deduction under this 
section.
    ``(d) Coordination With Certain Credits.--No deduction shall be 
allowed under this section with respect to the qualified tuition and 
related expenses of any individual unless a taxpayer elects not to have 
section 25A apply for the taxable year with respect to--
            ``(1) such individual, in the case of the Hope Scholarship 
        credit, and
            ``(2) the taxpayer, in the case of the Lifetime Learning 
        credit.
    ``(e) Coordination with exclusions.--No deduction shall be allowed 
under this section with respect to an individual for any taxable year 
if any portion of any distribution during such taxable year from an 
education individual retirement account is excluded from gross income 
under section 530(d)(2).''.
            (2) Deduction allowed whether or not taxpayer itemizes 
        other deductions.--Section 62(a) of the Internal Revenue Code 
        of 1986 (defining adjusted gross income) is amended by 
        inserting after paragraph (17) the following new paragraph:
            ``(18) Qualified tuition and related expenses.--The 
        deduction allowed by section 222.''.
            (3) Conforming amendment.--The table of sections for part 
        VII of subchapter B of chapter 1 of the Internal Revenue Code 
        of 1986 is amended by striking the last item and inserting the 
        following new items:

                              ``Sec. 222. Qualified tuition and related 
                                        expenses.
                              ``Sec. 223. Cross reference.''

    (c) Effective Date.--The amendments made by this section shall 
apply to expenses paid in taxable years beginning after December 31, 
2000.

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