[Congressional Bills 107th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3090 Reported in House (RH)]






                                                 Union Calendar No. 153
107th CONGRESS
  1st Session
                                H. R. 3090

                          [Report No. 107-251]

            To provide tax incentives for economic recovery.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                            October 11, 2001

  Mr. Thomas introduced the following bill; which was referred to the 
                      Committee on Ways and Means

                            October 17, 2001

  Reported with an amendment, committed to the Committee of the Whole 
       House on the State of the Union, and ordered to be printed
 [Strike out all after the enacting clause and insert the part printed 
                               in italic]
[For text of introduced bill, see copy of bill as introduced on October 
                               11, 2001]

_______________________________________________________________________

                                 A BILL


 
            To provide tax incentives for economic recovery.

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

SECTION 1. SHORT TITLE; ETC.

    (a) Short Title.--This Act may be cited as the ``Economic Security 
and Recovery Act of 2001''.
    (b) References to Internal Revenue Code of 1986.--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.--

Sec. 1. Short title; etc.

                      TITLE I--BUSINESS PROVISIONS

Sec. 101. Special depreciation allowance for certain property acquired 
                            after September 10, 2001, and before 
                            September 11, 2004.
Sec. 102. Temporary increase in expensing under section 179.
Sec. 103. Repeal of alternative minimum tax on corporations.
Sec. 104. Carryback of certain net operating losses allowed for 5 
                            years.
Sec. 105. Recovery period for depreciation of certain leasehold 
                            improvements.

                    TITLE II--INDIVIDUAL PROVISIONS

Sec. 201. Acceleration of 25 percent individual income tax rate.
Sec. 202. Repeal of 5-year holding period requirement for reduced 
                            individual capital gains rates.
Sec. 203. Temporary increase in deduction for capital losses of 
                            taxpayers other than corporations.
Sec. 204. Temporary expansion of penalty-free retirement plan 
                            distributions for health insurance premiums 
                            of unemployed individuals.

          TITLE III--EXTENSIONS OF CERTAIN EXPIRING PROVISIONS

                    Subtitle A--Two-Year Extensions

Sec. 301. Allowance of nonrefundable personal credits against regular 
                            and minimum tax liability.
Sec. 302. Credit for qualified electric vehicles.
Sec. 303. Credit for electricity produced from renewable resources.
Sec. 304. Work opportunity credit.
Sec. 305. Welfare-to-work credit.
Sec. 306. Deduction for clean-fuel vehicles and certain refueling 
                            property.
Sec. 307. Taxable income limit on percentage depletion for oil and 
                            natural gas produced from marginal 
                            properties.
Sec. 308. Qualified zone academy bonds.
Sec. 309. Cover over of tax on distilled spirits.
Sec. 310. Parity in the application of certain limits to mental health 
                            benefits.
Sec. 311. Delay in effective date of requirement for approved diesel or 
                            kerosene terminals.

                    Subtitle B--One-Year Extensions

Sec. 321. One-year extension of availability of medical savings 
                            accounts.

                    Subtitle C--Permanent Extensions

Sec. 331. Subpart F exemption for active financing.

                      Subtitle D--Other Provisions

Sec. 341. Excluded cancellation of indebtedness income of S corporation 
                            not to result in adjustment to basis of 
                            stock of shareholders.
Sec. 342. Limitation on use of nonaccrual experience method of 
                            accounting.

            TITLE IV--SUPPLEMENTAL REBATE; OTHER PROVISIONS

Sec. 401. Supplemental rebate.
Sec. 402. Special Reed Act transfer in fiscal year 2002.

           TITLE V--HEALTH CARE ASSISTANCE FOR THE UNEMPLOYED

Sec. 501. Health care assistance for the unemployed.

                      TITLE I--BUSINESS PROVISIONS

SEC. 101. SPECIAL DEPRECIATION ALLOWANCE FOR CERTAIN PROPERTY ACQUIRED 
              AFTER SEPTEMBER 10, 2001, AND BEFORE SEPTEMBER 11, 2004.

    (a) In General.--Section 168 (relating to accelerated cost recovery 
system) is amended by adding at the end the following new subsection:
    ``(k) Special Allowance for Certain Property Acquired After 
September 10, 2001, and Before September 11, 2004.--
            ``(1) Additional allowance.--In the case of any qualified 
        property--
                    ``(A) the depreciation deduction provided by 
                section 167(a) for the taxable year in which such 
                property is placed in service shall include an 
                allowance equal to 30 percent of the adjusted basis of 
                the qualified property, and
                    ``(B) the adjusted basis of the qualified property 
                shall be reduced by the amount of such deduction before 
                computing the amount otherwise allowable as a 
                depreciation deduction under this chapter for such 
                taxable year and any subsequent taxable year.
            ``(2) Qualified property.--For purposes of this 
        subsection--
                    ``(A) In general.--The term `qualified property' 
                means property--
                            ``(i)(I) to which this section applies 
                        which has a recovery period of 20 years or less 
                        or which is water utility property, or
                            ``(II) which is computer software (as 
                        defined in section 167(f)(1)(B)) for which a 
                        deduction is allowable under section 167(a) 
                        without regard to this subsection,
                            ``(ii) the original use of which commences 
                        with the taxpayer after September 10, 2001,
                            ``(iii) which is--
                                    ``(I) acquired by the taxpayer 
                                after September 10, 2001, and 
before September 11, 2004, but only if no written binding contract for 
the acquisition was in effect before September 11, 2001, or
                                    ``(II) acquired by the taxpayer 
                                pursuant to a written binding contract 
                                which was entered into after September 
                                10, 2001, and before September 11, 
                                2004, and
                            ``(iv) which is placed in service by the 
                        taxpayer before January 1, 2005.
                    ``(B) Exceptions.--
                            ``(i) Alternative depreciation property.--
                        The term `qualified property' shall not include 
                        any property to which the alternative 
                        depreciation system under subsection (g) 
                        applies, determined--
                                    ``(I) without regard to paragraph 
                                (7) of subsection (g) (relating to 
                                election to have system apply), and
                                    ``(II) after application of section 
                                280F(b) (relating to listed property 
                                with limited business use).
                            ``(ii) Election out.--If a taxpayer makes 
                        an election under this clause with respect to 
                        any class of property for any taxable year, 
                        this subsection shall not apply to all property 
                        in such class placed in service during such 
                        taxable year.
                            ``(iii) Repaired or reconstructed 
                        property.--Except as otherwise provided in 
                        regulations, the term `qualified property' 
                        shall not include any repaired or reconstructed 
                        property.
                            ``(iv) Qualified leasehold improvement 
                        property.--The term `qualified property' shall 
                        not include any qualified leasehold improvement 
                        property (as defined in section 168(e)(6)).
                    ``(C) Special rules relating to original use.--
                            ``(i) Self-constructed property.--In the 
                        case of a taxpayer manufacturing, constructing, 
                        or producing property for the taxpayer's own 
                        use, the requirements of clause (iii) of 
                        subparagraph (A) shall be treated as met if the 
                        taxpayer begins manufacturing, constructing, or 
                        producing the property after September 10, 
                        2001, and before September 11, 2004.
                            ``(ii) Sale-leasebacks.--For purposes of 
                        subparagraph (A)(ii), if property--
                                    ``(I) is originally placed in 
                                service after September 10, 2001, by a 
                                person, and
                                    ``(II) sold and leased back by such 
                                person within 3 months after the date 
                                such property was originally placed in 
                                service,
                        such property shall be treated as originally 
                        placed in service not earlier than the date on 
                        which such property is used under the leaseback 
                        referred to in subclause (II).
                    ``(D) Coordination with section 280f.--For purposes 
                of section 280F--
                            ``(i) Automobiles.--In the case of a 
                        passenger automobile (as defined in section 
                        280F(d)(5)) which is qualified property, the 
                        Secretary shall increase the limitation under 
                        section 280F(a)(1)(A)(i) by $4,600.
                            ``(ii) Listed property.--The deduction 
                        allowable under paragraph (1) shall be taken 
                        into account in computing any recapture amount 
                        under section 280F(b)(2).''
    (b) Allowance Against Alternative Minimum Tax.--
            (1) In general.--Section 56(a)(1)(A) (relating to 
        depreciation adjustment for alternative minimum tax) is amended 
        by adding at the end the following new clause:
                            ``(iii) Additional allowance for certain 
                        property acquired after september 10, 2001, and 
                        before september 11, 2004.--The deduction under 
                        section 168(k) shall be allowed.''
            (2) Conforming amendment.--Clause (i) of section 
        56(a)(1)(A) is amended by striking ``clause (ii)'' both places 
        it appears and inserting ``clauses (ii) and (iii)''.
    (c) Effective Date.--The amendments made by this section shall 
apply to property placed in service after September 10, 2001, in 
taxable years ending after such date.

SEC. 102. TEMPORARY INCREASE IN EXPENSING UNDER SECTION 179.

    (a) In General.--The table contained in section 179(b)(1) (relating 
to dollar limitation) is amended to read as follows:

        ``If the taxable year
                                                         The applicable
          begins in:
                                                             amount is:
                  2001...............................          $24,000 
                  2002 or 2003.......................          $35,000 
                  2004 or thereafter.................        $25,000.''
    (b) Temporary Increase in Amount of Property Triggering Phaseout of 
Maximum Benefit.--Paragraph (2) of section 179(b) is amended by 
inserting before the period ``($325,000 in the case of taxable years 
beginning during 2002 or 2003)''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2001.

SEC. 103. REPEAL OF ALTERNATIVE MINIMUM TAX ON CORPORATIONS.

    (a) In General.--So much of section 55 as precedes subsection 
(b)(2) is amended to read as follows:

``SEC. 55. ALTERNATIVE MINIMUM TAX FOR TAXPAYERS OTHER THAN 
              CORPORATIONS.

    ``(a) In General.--In the case of a taxpayer other than a 
corporation, there is hereby imposed (in addition to any other tax 
imposed by this subtitle) a tax equal to the excess (if any) of--
            ``(1) the tentative minimum tax for the taxable year, over
            ``(2) the regular tax for the taxable year.
    ``(b) Tentative Minimum Tax.--For purposes of this part--
            ``(1) Amount of tentative tax.--
                    ``(A) In general.--The tentative minimum tax for 
                the taxable year is the sum of--
                            ``(i) 26 percent of so much of the taxable 
                        excess as does not exceed $175,000, plus
                            ``(ii) 28 percent of so much of the taxable 
                        excess as exceeds $175,000.
                The amount determined under the preceding sentence 
                shall be reduced by the alternative minimum tax foreign 
                tax credit for the taxable year.
                    ``(B) Taxable excess.--For purposes of this 
                subsection, the term `taxable excess' means so much of 
                the alternative minimum taxable income for the taxable 
                year as exceeds the exemption amount.
                    ``(C) Married individual filing separate return.--
                In the case of a married individual filing a separate 
                return, clause (i) shall be applied by substituting 
                `$87,500' for `$175,000' each place it appears. For 
                purposes of the preceding sentence, marital status 
                shall be determined under section 7703.''
    (b) Conforming Amendments.--
            (1) Paragraph (3) of section 55(b) is amended by striking 
        ``paragraph (1)(A)(i)'' and inserting ``paragraph (1)(A)''.
            (2) Paragraph (1) of section 55(c) is amended by striking 
        ``, the section 936 credit allowable under section 27(b), and 
        the Puerto Rico economic activity credit under section 30A''.
            (3)(A) Paragraph (1) of section 55(d) is amended by--
                    (i) by striking ``for taxpayers other than 
                corporations'' in the heading, and
                    (ii) by striking ``In the case of a taxpayer other 
                than a corporation, the'' and inserting ``The''.
            (B) Section 55(d) is amended by striking paragraph (2) and 
        by redesignating paragraph (3) as paragraph (2).
            (C) Subparagraph (A) of section 55(d)(2), as so 
        redesignated is amended by striking ``or (2)''.
            (4) Section 55 is amended by striking subsection (e).
            (5)(A) The designation and heading for subsection (a) of 
        section 56 is amended to read as follows:
    ``(a) General Rules.--''.
            (B) Paragraph (1) of section 56(a) is amended by striking 
        subparagraph (D).
            (C) Paragraph (6) of section 56(a) is amended--
                    (i) by striking ``paragraph (2) or subsection 
                (b)(2)'' and inserting ``paragraph (2) or (9)'', and
                    (ii) by striking ``or (5), or subsection (b)(2)'' 
                and inserting ``(5), or (9)''.
            (6)(A) Subsection (b) of section 56 is amended by striking 
        so much of such subsection as precedes paragraph (1) and by 
        redesignating paragraphs (1), (2), and (3) as paragraphs (8), 
        (9), and (10), respectively, of subsection (a).
            (B) Paragraph (9) of section 56(a), as so redesignated, is 
        amended by striking subparagraph (C) and by redesignating 
        subparagraph (D) as subparagraph (C).
            (7) Section 56 is amended by striking subsections (c) and 
        (g) and by redesignating subsections (d) and (e) as subsections 
        (b) and (c), respectively.
            (8) Subparagraph (E) of section 57(a)(2) is amended--
                    (A) by striking ``for independent producers'' in 
                the heading, and
                    (B) by striking clause (i) and inserting the 
                following new clause:
                            ``(i) In general.--This paragraph shall not 
                        apply to any taxable year beginning after 
                        December 31, 1992.''
            (9) Subsection (a) of section 58 is amended by striking 
        paragraph (3) and by redesignating paragraph (4) as paragraph 
        (3).
            (10)(A) Section 59 is amended by striking subsections (b) 
        and (f) and by redesignating subsections (c), (d), (e), (g), 
        (h), (i), and (j) as subsections (b), (c), (d), (e), (f), (g), 
        and (h), respectively.
            (B) Paragraph (2) of section 59(d), as so redesignated, is 
        amended by striking ``(determined without regard to section 
        291)''.
            (C) Sections 173(b), 174(f)(2), 263(c), 263A(c)(6), 616(e), 
        617(i), and 1016(a)(20) are each amended by striking ``59(e)'' 
        each place it appears and inserting ``59(d)''.
            (11) Subsection (d) of section 11 is amended by striking 
        ``the taxes imposed by subsection (a) and section 55'' and 
        inserting ``the tax imposed by subsection (a)''.
            (12) Section 12 is amended by striking paragraph (7).
            (13) Paragraph (6) of section 29(b) is amended to read as 
        follows:
            ``(6) Application with other credits.--The credit allowed 
        by subsection (a) for any taxable year shall not exceed the 
        excess (if any) of the regular tax for the taxable year reduced 
        by the sum of the credits allowable under subpart A and section 
        27. In the case of a taxpayer other than a corporation, such 
        excess shall be further reduced (but not below zero) by the 
        tentative minimum tax for the taxable year.''
            (14) Paragraph (3) of section 30(b) is amended to read as 
        follows:
            ``(3) Application with other credits.--The credit allowed 
        by subsection (a) for any taxable year shall not exceed the 
        excess (if any) of the regular tax for the taxable year reduced 
        by the sum of the credits allowable under subpart A and 
        sections 27 and 29. In the case of a taxpayer other than a 
        corporation, such excess shall be further reduced (but not 
        below zero) by the tentative minimum tax for the taxable 
        year.''
            (15)(A) Paragraph (1) of section 38(c) is amended to read 
        as follows:
            ``(1) In general.--
                    ``(A) Corporations.--In the case of a corporation, 
                the credit allowed under subsection (a) for any taxable 
                year shall not exceed the excess (if any) of the 
                taxpayer's net income tax over 25 percent of so much of 
the taxpayer's net regular tax liability as exceeds $25,000.
                    ``(B) Taxpayers other than corporations.--In the 
                case of a taxpayer other than a corporation, the credit 
                allowed under subsection (a) for any taxable year shall 
                not exceed the excess (if any) of the taxpayer's net 
                income tax over the greater of--
                            ``(i) the tentative minimum tax for the 
                        taxable year, or
                            ``(ii) 25 percent of so much of the 
                        taxpayer's net regular tax liability as exceeds 
                        $25,000.
                    ``(C) Definitions.--For purposes of this 
                paragraph--
                            ``(i) the term `net income tax' means the 
                        sum of the regular tax liability and the tax 
                        imposed by section 55, reduced by the credits 
                        allowable under subparts A and B of this part, 
                        and
                            ``(ii) the term `net regular tax liability' 
                        means the regular tax liability reduced by the 
                        sum of the credits allowable under subparts A 
                        and B of this part.''
            (B) Clause (ii) of section 38(c)(2)(A) is amended to read 
        as follows:
                            ``(ii) for purposes of applying paragraph 
                        (1) to such credit--
                                    ``(I) the applicable limitation 
                                under paragraph (1) (as modified by 
                                subclause (II) in the case of a 
                                taxpayer other than a corporation) 
                                shall be reduced by the credit allowed 
                                under subsection (a) for the taxable 
                                year (other than the empowerment zone 
                                employment credit), and
                                    ``(II) in the case of a taxpayer 
                                other than a corporation, 75 percent of 
                                the tentative minimum tax shall be 
                                substituted for the tentative minimum 
                                tax under subparagraph (B)(i) 
                                thereof.''
            (C) Paragraph (3) of section 38(c) is amended by striking 
        ``subparagraph (B) of'' each place it appears.
            (16)(A) Subclause (I) of section 53(d)(1)(B)(ii) is amended 
        by striking ``subsection (b)(1)'' and inserting ``subsection 
        (a)(8)''.
            (B) Clause (iv) of section 53(d)(1)(B) is hereby repealed.
            (17)(A) Part VII of subchapter A of chapter 1 is hereby 
        repealed.
            (B) The table of parts for subchapter A of chapter 1 is 
        amended by striking the item relating to part VII.
            (C) Paragraph (2) of section 26(b) is amended by striking 
        subparagraph (B) and by redesignating the succeeding 
        subparagraphs accordingly.
            (D) Subsection (c) of section 30A is amended by striking 
        paragraph (1) and redesignating the succeeding paragraphs 
        accordingly.
            (E) Subsection (a) of section 164 is amended by striking 
        paragraph (5).
            (F) Subsection (a) of section 275 is amended by striking 
        ``Paragraph (1) shall not apply to the tax imposed by section 
        59A.''
            (G) Paragraph (1) of section 882(a) is amended by striking 
        ``59A,''.
            (H) Paragraph (3) of section 936(a) is amended by striking 
        subparagraph (A) and redesignating the succeeding subparagraphs 
        accordingly.
            (I) Subsection (a) of section 1561 is amended by adding 
        ``and'' at the end of paragraph (2), by striking ``, and'' at 
        the end of paragraph (3) and inserting a period, and by 
        striking paragraph (4).
            (J) Subparagraph (A) of section 6425(c)(1) is amended by 
        adding ``plus'' at the end of clause (i), by striking ``plus'' 
        at the end of clause (ii) and inserting ``over'', and by 
        striking clause (iii).
            (18) Section 382(l) (relating to limitation on net 
        operating loss carryforwards and certain built-in losses 
        following ownership change) is amended by striking paragraph 
        (7) and by redesignating paragraph (8) as paragraph (7).
            (19) Paragraph (2) of section 815(c) (relating to 
        distributions to shareholders from pre-1984 policyholders 
        surplus account) is amended by striking the last sentence.
            (20) Section 847 (relating to special estimated tax 
        payments) is amended--
                    (A) in paragraph (9), by striking the last 
                sentence; and
                    (B) in paragraph (10), by inserting ``and'' at the 
                end of subparagraph (A) and by striking subparagraph 
                (B) and redesignating subparagraph (C) as subparagraph 
                (B).
            (21) Section 848 (relating to capitalization of certain 
        policy acquisition expenses) is amended by striking subsection 
        (i) and by redesignating subsection (j) as subsection (i).
            (22) Paragraph (1) of section 882(a) (relating to tax on 
        income of foreign corporations connected with United States 
        business) is amended by striking ``55,''.
            (23) Paragraph (1) of section 962(a) (relating to election 
        by individuals to be subject to tax at corporate rates) is 
        amended by striking ``sections 11 and 55'' and inserting 
        ``section 11''.
            (24) Subsection (a) of section 1561 (relating to 
        limitations on certain multiple tax benefits in the case of 
        certain controlled corporations) is amended by striking the 
        last sentence.
            (25) Subparagraph (A) of section 6425(c)(1) (defining 
        income tax liability), as amended by paragraph (17) is amended 
        to read as follows:
                    ``(A) the tax imposed by section 11 or 1201(a), or 
                subchapter L of chapter 1, whichever is applicable, 
                over''.
            (26)(A) Paragraph (2) of section 6655(e) is amended--
                    (i) by striking ``, alternative minimum taxable 
                income, and modified alternative minimum taxable 
                income'' each place it appears in subparagraphs (A) and 
                (B)(i), and
                    (ii) by striking clause (iii) of subparagraph (B).
            (B) Subparagraph (A) of section 6655(g)(1) (relating to 
        failure by corporation to pay estimated income tax), is amended 
        to read as follows:
                    ``(A) the sum of--
                            ``(i) the tax imposed by section 11 or 
                        1201(a), or subchapter L of chapter 1, 
                        whichever applies, plus
                            ``(ii) the tax imposed by section 887, 
                        over''.
            (27) The table of sections for part VI of subchapter A of 
        chapter 1 is amended by striking the item relating to section 
        55 and inserting the following new item:

                              ``Sec. 55. Alternative minimum tax for 
                                        taxpayers other than 
                                        corporations.''
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2000.
    (d) Refund of Unused Minimum Tax Credit.--
            (1) In general.--In the case of a corporation--
                    (A) section 53(c) of the Internal Revenue Code of 
                1986 shall not apply to such corporation's first 
                taxable year beginning after December 31, 2000, and
                    (B) for purposes of such Code (other than section 
                53 of such Code), the credit allowed by section 53 of 
                such Code for such first taxable year shall be treated 
                as if it were allowed by subpart C of part IV of 
                subchapter A of chapter 1 of such Code (relating to 
                refundable credits).
            (2) Special rules relating to carrybacks.--In the case of a 
        carryback of a corporation from a taxable year beginning after 
        December 31, 2000, to a taxable year beginning before January 
        1, 2001--
                    (A) the tax imposed by section 55 of such Code 
                shall not be increased or decreased by reason of such a 
                carryback,
                    (B) tentative minimum tax shall not be increased or 
                decreased by reason of such a carryback for purposes of 
                determining the amount of any credit other than the 
                credit allowed by section 38, and
                    (C) the amount of such a carryback which is taken 
                into account in determining tentative minimum tax for 
                purposes of section 38(c) shall be the amount of such 
                carryback which is taken into account in determining 
                regular tax liability.

SEC. 104. CARRYBACK OF CERTAIN NET OPERATING LOSSES ALLOWED FOR 5 
              YEARS.

    (a) In General.--Paragraph (1) of section 172(b) (relating to years 
to which loss may be carried) is amended by adding at the end the 
following new subparagraph:
                    ``(H) In the case of a taxpayer which has a net 
                operating loss for any taxable year ending after 
                September 10, 2001, and before September 11, 2004, 
                subparagraph (A)(i) shall be applied by substituting 
                `5' for `2' and subparagraph (F) shall not apply.''.
    (b) Election To Disregard 5-Year Carryback.--Section 172 (relating 
to net operating loss deduction) is amended by redesignating subsection 
(j) as subsection (k) and by inserting after subjection (i) the 
following new subsection:
    ``(j) Election To Disregard 5-Year Carryback for Certain Net 
Operating Losses.--Any taxpayer entitled to a 5-year carryback under 
subsection (b)(1)(H) from any loss year may elect to have the carryback 
period with respect to such loss year determined without regard to 
subsection (b)(1)(H). Such election shall be made in such manner as may 
be prescribed by the Secretary and shall be made by the due date 
(including extensions of time) for filing the taxpayer's return for the 
taxable year of the net operating loss. Such election, once made for 
any taxable year, shall be irrevocable for such taxable year.''.
    (c) Temporary Suspension of 90 Percent Limit on Certain NOL 
Carrybacks.--Subparagraph (A) of section 56(b)(1) (relating to general 
rule defining alternative tax net operating loss deduction), as amended 
by section 103, is amended to read as follows:
                    ``(A) the amount of such deduction shall not exceed 
                the sum of--
                            ``(i) the lesser of--
                                    ``(I) the amount of such deduction 
                                attributable to net operating losses 
                                (other than the deduction attributable 
                                to carrybacks described in clause 
                                (ii)(I)), or
                                    ``(II) 90 percent of alternate 
                                minimum taxable income determined 
                                without regard to such deduction, plus
                            ``(ii) the lesser of--
                                    ``(I) the amount of such deduction 
                                attributable to carrybacks of net 
                                operating losses for taxable years 
                                ending after September 10, 2001, and 
                                before September 11, 2004, or
                                    ``(II) alternate minimum taxable 
                                income determined without regard to 
                                such deduction reduced by the amount 
                                determined under clause (i), and''.
    (d) Effective Date.--The amendments made by this section shall 
apply to net operating losses for taxable years ending after September 
10, 2001.

SEC. 105. RECOVERY PERIOD FOR DEPRECIATION OF CERTAIN LEASEHOLD 
              IMPROVEMENTS.

    (a) 15-Year Recovery Period.--Subparagraph (E) of section 168(e)(3) 
(relating to 15-year property) is amended by striking ``and'' at the 
end of clause (ii), by striking the period at the end of clause (iii) 
and inserting ``, and'', and by adding at the end the following new 
clause:
                            ``(iv) any qualified leasehold improvement 
                        property.''.
    (b) Qualified Leasehold Improvement Property.--Subsection (e) of 
section 168 is amended by adding at the end the following new 
paragraph:
            ``(6) Qualified leasehold improvement property.--
                    ``(A) In general.--The term `qualified leasehold 
                improvement property' means any improvement to an 
                interior portion of a building which is nonresidential 
                real property if--
                            ``(i) such improvement is made under or 
                        pursuant to a lease (as defined in subsection 
                        (h)(7))--
                                    ``(I) by the lessee (or any 
                                sublessee) of such portion, or
                                    ``(II) by the lessor of such 
                                portion,
                            ``(ii) such portion is to be occupied 
                        exclusively by the lessee (or any sublessee) of 
                        such portion, and
                            ``(iii) such improvement is placed in 
                        service more than 3 years after the date the 
                        building was first placed in service.
                    ``(B) Certain improvements not included.--Such term 
                shall not include any improvement for which the 
                expenditure is attributable to--
                            ``(i) the enlargement of the building,
                            ``(ii) any elevator or escalator,
                            ``(iii) any structural component benefiting 
                        a common area, and
                            ``(iv) the internal structural framework of 
                        the building.
                    ``(C) Definitions and special rules.--For purposes 
                of this paragraph--
                            ``(i) Commitment to lease treated as 
                        lease.--A commitment to enter into a lease 
                        shall be treated as a lease, and the parties to 
                        such commitment shall be treated as lessor and 
                        lessee, respectively.
                            ``(ii) Related persons.--A lease between 
                        related persons shall not be considered a 
                        lease. For purposes of the preceding sentence, 
                        the term `related persons' means--
                                    ``(I) members of an affiliated 
                                group (as defined in section 1504), and
                                    ``(II) persons having a 
                                relationship described in subsection 
                                (b) of section 267; except that, for 
                                purposes of this clause, the phrase `80 
                                percent or more' shall be substituted 
                                for the phrase `more than 50 percent' 
                                each place it appears in such 
                                subsection.
                    ``(D) Improvements made by lessor.--
                            ``(i) In general.--In the case of an 
                        improvement made by the person who was the 
                        lessor of such improvement when such 
                        improvement was placed in service, such 
                        improvement shall be qualified leasehold 
                        improvement property (if at all) only so long 
                        as such improvement is held by such person.
                            ``(ii) Exception for changes in form of 
                        business.--Property shall not cease to be 
                        qualified leasehold improvement property under 
                        clause (i) by reason of--
                                    ``(I) death,
                                    ``(II) a transaction to which 
                                section 381(a) applies, or
                                    ``(III) a mere change in the form 
                                of conducting the trade or business so 
                                long as the property is retained in 
                                such trade or business as qualified 
                                leasehold improvement property and the 
                                taxpayer retains a substantial interest 
                                in such trade or business.''
    (c) Requirement To Use Straight Line Method.--Paragraph (3) of 
section 168(b) is amended by adding at the end the following new 
subparagraph:
                    ``(G) Qualified leasehold improvement property 
                described in subsection (e)(6).''.
    (d) Alternative System.--The table contained in section 
168(g)(3)(B) is amended by adding at the end the following new item:

  ``(E)(iv)..........................................       15''.      
    (e) Effective Date.--The amendments made by this section shall 
apply to qualified leasehold improvement property placed in service 
after September 10, 2001.

                    TITLE II--INDIVIDUAL PROVISIONS

SEC. 201. ACCELERATION OF 25 PERCENT INDIVIDUAL INCOME TAX RATE.

    (a) In General.--The table contained in paragraph (2) of section 
1(i) (relating to reductions in rates after June 30, 2001) is amended--
            (1) by striking ``27.0%'' and inserting ``25.0%'', and
            (2) by striking ``26.0%'' and inserting ``25.0%''.
    (b) Reduction Not To Increase Minimum Tax.--
            (1) Subparagraph (A) of section 55(d)(1) is amended by 
        striking ``($49,000 in the case of taxable years beginning in 
        2001, 2002, 2003, and 2004)'' and inserting ``($49,000 in the 
        case of taxable years beginning in 2001, $52,200 in the case of 
        taxable years beginning in 2002 or 2003, and $50,700 in the 
        case of taxable years beginning in 2004)''.
            (2) Subparagraph (B) of section 55(d)(1) is amended by 
        striking ``($35,750 in the case of taxable years beginning in 
        2001, 2002, 2003, and 2004)'' and inserting ``($35,750 in the 
        case of taxable years beginning in 2001, $37,350 in the case of 
        taxable years beginning in 2002 or 2003, and $36,600 in the 
        case of taxable years beginning in 2004)''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2001.
    (d) Section 15 Not To Apply.--No amendment made by this section 
shall be treated as a change in a rate of tax for purposes of section 
15 of the Internal Revenue Code of 1986 .

SEC. 202. REPEAL OF 5-YEAR HOLDING PERIOD REQUIREMENT FOR REDUCED 
              INDIVIDUAL CAPITAL GAINS RATES.

    (a) In General.--
            (1) Sections 1(h)(1)(B) and 55(b)(3)(B) are each amended by 
        striking ``10 percent'' and inserting ``8 percent''.
            (2) The following sections are each amended by striking 
        ``20 percent'' and inserting ``18 percent'':
                    (A) Section 1(h)(1)(C).
                    (B) Section 55(b)(3)(C).
                    (C) Section 1445(e)(1).
                    (D) The second sentence of section 7518(g)(6)(A).
                    (E) The second sentence of section 607(h)(6)(A) of 
                the Merchant Marine Act, 1936.
    (b) Conforming Amendments.--
            (1) Subsection (e) of section 311 of the Taxpayer Relief 
        Act of 1997 is repealed.
            (2) Section 1(h) is amended--
                    (A) by striking paragraphs (2) and (9),
                    (B) by redesignating paragraphs (3) through (8) as 
                paragraphs (2) through (7), respectively, and
                    (C) by redesignating paragraphs (10), (11), and 
                (12) as paragraphs (8), (9), and (10), respectively.
            (3) Paragraph (3) of section 55(b) is amended by striking 
        ``In the case of taxable years beginning after December 31, 
        2000, rules similar to the rules of section 1(h)(2) shall apply 
        for purposes of subparagraphs (B) and (C).''.
            (4) Paragraph (7) of section 57(a) is amended by striking 
        the last sentence and by striking ``42 percent'' and inserting 
        ``28 percent''.
    (c) Transitional Rules for Taxable Years Which Include October 12, 
2001.--For purposes of applying section 1(h) of the Internal Revenue 
Code of 1986 in the case of a taxable year which includes October 12, 
2001--
            (1) The amount of tax determined under subparagraph (B) of 
        section 1(h)(1) of such Code shall be the sum of--
                    (A) 8 percent of the lesser of--
                            (i) the sum of--
                                    (I) the net capital gain taking 
                                into account only gain or loss properly 
                                taken into account for the portion of 
                                the taxable year on or after October 
                                12, (determined without regard to 
                                collectibles gain or loss, gain 
                                described in section (1)(h)(6)(A)(i) of 
                                such Code, and section 1202 gain), and
                                    (II) the qualified 5-year gain (as 
                                defined in section 1(h)(9) of the 
                                Internal Revenue Code of 1986, as in 
                                effect on the day before the date of 
                                the enactment of this Act) properly 
                                taken into account for the portion of 
                                the taxable year before October 12, 
                                2001, or
                            (ii) the amount on which a tax is 
                        determined under such subparagraph (without 
                        regard to this subsection), plus
                    (B) 10 percent of the excess (if any) of--
                            (i) the amount on which a tax is determined 
                        under such subparagraph (without regard to this 
                        subsection), over
                            (ii) the amount on which a tax is 
                        determined under subparagraph (A).
            (2) The amount of tax determined under subparagraph (C) of 
        section (1)(h)(1) of such Code shall be the sum of--
                    (A) 18 percent of the lesser of--
                            (i) the excess (if any) of the amount of 
                        net capital gain determined under subparagraph 
                        (A)(i)(I) of paragraph (1) of this subsection 
                        over the amount on which a tax is determined 
                        under subparagraph (A) of paragraph (1) of this 
                        subsection, or
                            (ii) the amount on which a tax is 
                        determined under such subparagraph (C) (without 
                        regard to this subsection), plus
                    (B) 20 percent of the excess (if any) of--
                            (i) the amount on which a tax is determined 
                        under such subparagraph (C) (without regard to 
                        this subsection), over
                            (ii) the amount on which a tax is 
                        determined under subparagraph (A) of this 
                        paragraph.
            (3) For purposes of applying section 55(b)(3) of such Code, 
        rules similar to the rules of paragraphs (1) and (2) of this 
        subsection shall apply.
            (4) In applying this subsection with respect to any pass-
        thru entity, the determination of when gains and loss are 
        properly taken into account shall be made at the entity level.
            (5) Terms used in this subsection which are also used in 
        section 1(h) of such Code shall have the respective meanings 
        that such terms have in such section.
    (d) Effective Dates.--
            (1) In general.--Except as otherwise provided by this 
        subsection, the amendments made by this section shall apply to 
        taxable years ending on or after October 12, 2001.
            (2) Withholding.--The amendment made by subsection 
        (a)(2)(C) shall apply to amounts paid after the date of the 
        enactment of this Act.
            (3) Election to recognize gain on assests held on january 
        1, 2001.--The repeal made by subsection (b)(1) shall take 
        effect as if included in section 311 of the Taxpayer Relief Act 
        of 1997, and the Internal Revenue Code of 1986 shall be applied 
        and administered as if subsection (e) of such section 311 had 
        never been enacted.
            (4) Small business stock.--The amendments made by 
        subsection (b)(4) shall apply to dispositions on or after 
        October 12, 2001.

SEC. 203. TEMPORARY INCREASE IN DEDUCTION FOR CAPITAL LOSSES OF 
              TAXPAYERS OTHER THAN CORPORATIONS.

    (a) In General.--Subsection (b) of section 1211 (relating to 
limitation on capital losses for taxpayers other than corporations) is 
amended by adding at the end the following flush sentence:
``Paragraph (1) shall be applied by substituting `$4,000' for `$3,000' 
and `$2,000' for `$1,500' in the case of taxable years beginning in 
2001, and by substituting `$5,000' for `$3,000' and `$2,500' for 
`$1,500' in the case of taxable years beginning in 2002.''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to taxable years beginning after December 31, 2000.

SEC. 204. TEMPORARY EXPANSION OF PENALTY-FREE RETIREMENT PLAN 
              DISTRIBUTIONS FOR HEALTH INSURANCE PREMIUMS OF UNEMPLOYED 
              INDIVIDUALS.

    (a) In General.--Subparagraph (D) of section 72(t)(2) is amended by 
adding at the end the following new clause:
                            ``(iv) Special rules for individuals 
                        receiving unemployment compensation after 
                        september 10, 2001, and before january 1, 
                        2003.--In the case of an individual who 
                        receives unemployment compensation for 4 
                        consecutive weeks after September 10, 2001, and 
                        before January 1, 2003--
                                    ``(I) clause (i) shall apply to 
                                distributions from all qualified 
                                retirement plans (as defined in section 
                                4974(c)), and
                                    ``(II) such 4 consecutive weeks 
                                shall be substituted for the 12 
                                consecutive weeks referred to in 
                                subclause (I) of clause (i).''
    (b) Effective Date.--The amendment made by this section shall apply 
to distributions after the date of the enactment of this Act.

          TITLE III--EXTENSIONS OF CERTAIN EXPIRING PROVISIONS

                    Subtitle A--Two-Year Extensions

SEC. 301. ALLOWANCE OF NONREFUNDABLE PERSONAL CREDITS AGAINST REGULAR 
              AND MINIMUM TAX LIABILITY.

    (a) In General.--Paragraph (2) of section 26(a) is amended--
            (1) by striking ``rule for 2000 and 2001.--'' and inserting 
        ``rule for 2000, 2001, 2002, and
        2003.--'', and
            (2) by striking ``during 2000 or 2001,'' and inserting 
        ``during 2000, 2001, 2002, or 2003,''.
    (b) Conforming Amendments.--
            (1) Section 904(h) is amended by striking ``during 2000 or 
        2001'' and inserting ``during 2000, 2001, 2002, or 2003''.
            (2) The amendments made by sections 201(b), 202(f), and 
        618(f) of the Economic Growth and Tax Relief Reconciliation Act 
        of 2001 shall not apply to taxable years beginning during 2002 
        and 2003.
    (c) Technical Correction.--Section 24(d)(1)(B) is amended by 
striking ``amount of credit allowed by this section'' and inserting 
``aggregate amount of credits allowed by this subpart''.
    (d) Effective Dates.--
            (1) The amendments made by subsections (a) and (b) shall 
        apply to taxable years beginning after December 31, 2001.
            (2) The amendment made by subsection (c) shall apply to 
        taxable years beginning after December 31, 2000.

SEC. 302. CREDIT FOR QUALIFIED ELECTRIC VEHICLES.

    (a) In General.--Section 30 is amended--
            (1) in subsection (b)(2)--
                    (A) by striking ``December 31, 2001,'' and 
                inserting ``December 31, 2003,'', and
                    (B) in subparagraphs (A), (B), and (C), by striking 
                ``2002'', ``2003'', and ``2004'', respectively, and 
                inserting ``2004'', ``2005'', and ``2006'', 
                respectively, and
            (2) in subsection (e), by striking ``December 31, 2004'' 
        and inserting ``December 31, 2006''.
    (b) Conforming Amendments.--
            (1) Subparagraph (C) of section 280F(a)(1) is amended by 
        adding at the end the following new clause
                            ``(iii) Application of subparagraph.--This 
                        subparagraph shall apply to property placed in 
                        service after August 5, 1997, and before 
                        January 1, 2007.''.
            (2) Subsection (b) of section 971 of the Taxpayer Relief 
        Act of 1997 is amended by striking ``and before January 1, 
        2005''.
    (c) Effective Date.--The amendments made by this section shall take 
effect on the date of the enactment of this Act.

SEC. 303. CREDIT FOR ELECTRICITY PRODUCED FROM RENEWABLE RESOURCES.

    (a) In General.--Subparagraphs (A), (B), and (C) of section 
45(c)(3) are each amended by striking ``2002'' and inserting ``2004''.
    (b) Effective Date.--The amendments made by subsection (a) shall 
take effect on the date of the enactment of this Act.

SEC. 304. WORK OPPORTUNITY CREDIT.

    (a) In General.--Subparagraph (B) of section 51(c)(4) is amended by 
striking ``2001'' and inserting ``2003''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to individuals who begin work for the employer after December 31, 
2001.

SEC. 305. WELFARE-TO-WORK CREDIT.

    (a) In General.--Subsection (f) of section 51A is amended by 
striking ``2001'' and inserting ``2003''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to individuals who begin work for the employer after December 31, 
2001.

SEC. 306. DEDUCTION FOR CLEAN-FUEL VEHICLES AND CERTAIN REFUELING 
              PROPERTY.

    (a) In General.--Section 179A is amended--
            (1) in subsection (b)(1)(B)--
                    (A) by striking ``December 31, 2001,'' and 
                inserting ``December 31, 2003,'', and
                    (B) in clauses (i), (ii), and (iii), by striking 
                ``2002'', ``2003'', and ``2004'', respectively, and 
                inserting ``2004'', ``2005'', and ``2006'', 
                respectively, and
            (2) in subsection (f), by striking ``December 31, 2004'' 
        and inserting ``December 31, 2006''.
    (b) Effective Date.--The amendments made by subsection (a) shall 
take effect on the date of the enactment of this Act.

SEC. 307. TAXABLE INCOME LIMIT ON PERCENTAGE DEPLETION FOR OIL AND 
              NATURAL GAS PRODUCED FROM MARGINAL PROPERTIES.

    (a) In General.--Subparagraph (H) of section 613A(c)(6) is amended 
by striking ``2002'' and inserting ``2004''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to taxable years beginning after December 31, 2001.

SEC. 308. QUALIFIED ZONE ACADEMY BONDS.

    (a) In General.--Paragraph (1) of section 1397E(e) is amended by 
striking ``2000, and 2001'' and inserting ``2000, 2001, 2002, and 
2003''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
take effect on the date of the enactment of this Act.

SEC. 309. COVER OVER OF TAX ON DISTILLED SPIRITS.

    (a) In General.--Paragraph (1) of section 7652(f) is amended by 
striking ``January 1, 2002'' and inserting ``January 1, 2004''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
take effect on the date of the enactment of this Act.

SEC. 310. PARITY IN THE APPLICATION OF CERTAIN LIMITS TO MENTAL HEALTH 
              BENEFITS.

    (a) In General.--Subsection (f) of section 9812 is amended by 
striking ``2001'' and inserting ``2003''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to plan years beginning after December 31, 2001.

SEC. 311. DELAY IN EFFECTIVE DATE OF REQUIREMENT FOR APPROVED DIESEL OR 
              KEROSENE TERMINALS.

    Paragraph (2) of section 1032(f) of the Taxpayer Relief Act of 1997 
(Public Law 105-34) is amended by striking ``January 1, 2002'' and 
inserting ``January 1, 2004''.

                    Subtitle B--One-Year Extensions

SEC. 321. ONE-YEAR EXTENSION OF AVAILABILITY OF MEDICAL SAVINGS 
              ACCOUNTS.

    (a) In General.--Paragraphs (2) and (3)(B) of section 220(i) 
(defining cut-off year) are each amended by striking ``2002'' each 
place it appears and inserting ``2003''.
    (b) Conforming Amendments.--
            (1) Paragraph (2) of section 220(j) is amended by striking 
        ``1998, 1999, or 2001'' each place it appears and inserting 
        ``1998, 1999, 2001, or 2002''.
            (2) Subparagraph (A) of section 220(j)(4) is amended by 
        striking ``and 2001'' and inserting ``2001, and 2002''.
    (c) Effective Date.--The amendments made by this section shall take 
effect on the date of the enactment of this Act.

                    Subtitle C--Permanent Extensions

SEC. 331. SUBPART F EXEMPTION FOR ACTIVE FINANCING.

    (a) In General.--
            (1) Section 953(e)(10) is amended--
                    (A) by striking ``, and before January 1, 2002,'', 
                and
                    (B) by striking the second sentence.
            (2) Section 954(h)(9) is amended by striking ``, and before 
        January 1, 2002,''.
    (b) Life Insurance and Annuity Contracts.--
            (1) In general.--Subparagraph (B) of section 954(i)(4) is 
        amended to read as follows:
                    ``(B) Life insurance and annuity contracts.--
                            ``(i) In general.--Except as provided in 
                        clause (ii), the amount of the reserve of a 
                        qualifying insurance company or qualifying 
                        insurance company branch for any life insurance 
                        or annuity contract shall be equal to the 
                        greater of--
                                    ``(I) the net surrender value of 
                                such contract (as defined in section 
                                807(e)(1)(A)), or
                                    ``(II) the reserve determined under 
                                paragraph (5).
                            ``(ii) Ruling request.--The amount of the 
                        reserve under clause (i) shall be the foreign 
                        statement reserve for the contract (less any 
                        catastrophe, deficiency, equalization, or 
                        similar reserves), if, pursuant to a ruling 
                        request submitted by the taxpayer, the 
                        Secretary determines that the factors taken 
                        into account in determining the foreign 
                        statement reserve provide an appropriate means 
                        of measuring income.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2001.

                      Subtitle D--Other Provisions

SEC. 341. EXCLUDED CANCELLATION OF INDEBTEDNESS INCOME OF S CORPORATION 
              NOT TO RESULT IN ADJUSTMENT TO BASIS OF STOCK OF 
              SHAREHOLDERS.

    (a) In General.--Subparagraph (A) of section 108(d)(7) (relating to 
certain provisions to be applied at corporate level) is amended by 
inserting before the period ``, including by not taking into account 
under section 1366(a) any amount excluded under subsection (a) of this 
section''.
    (b) Effective Date.--The amendment made by this section shall apply 
to discharges of indebtedness after October 11, 2001, in taxable years 
ending after such date.

SEC. 342. LIMITATION ON USE OF NONACCRUAL EXPERIENCE METHOD OF 
              ACCOUNTING.

    (a) In General.--Paragraph (5) of section 448(d) is amended to read 
as follows:
            ``(5) Special rule for certain services.--
                    ``(A) In general.--In the case of any person using 
                an accrual method of accounting with respect to amounts 
                to be received for the performance of services by such 
                person, such person shall not be required to accrue any 
                portion of such amounts which (on the basis of such 
person's experience) will not be collected if--
                            ``(i) such services are in fields referred 
                        to in paragraph (2)(A), or
                            ``(ii) such person meets the gross receipts 
                        test of subsection (c) for all prior taxable 
                        years.
                    ``(B) Exception.--This paragraph shall not apply to 
                any amount if interest is required to be paid on such 
                amount or there is any penalty for failure to timely 
                pay such amount.
                    ``(C) Regulations.--The Secretary shall prescribe 
                regulations to permit taxpayers to determine amounts 
                referred to in subparagraph (A) using computations or 
                formulas which, based on experience, accurately reflect 
                the amount of income that will not be collected by such 
                person. A taxpayer may adopt, or request consent of the 
                Secretary to change to, a computation or formula that 
                clearly reflects the taxpayer's experience. A request 
                under the preceding sentence shall be approved only if 
                such computation or formula clearly reflects the 
                taxpayer's experience.''.
    (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 of 4 years (or if less, the 
                number of taxable years that the taxpayer used the 
                method permitted under section 448(d)(5) of such Code 
                as in effect before the date of the enactment of this 
                Act) beginning with such first taxable year.

            TITLE IV--SUPPLEMENTAL REBATE; OTHER PROVISIONS

SEC. 401. SUPPLEMENTAL REBATE.

    (a) In General.--Section 6428 (relating to acceleration of 10 
percent income tax rate bracket benefit for 2001) is amended by adding 
at the end the following new subsection:
    ``(f) Supplemental Rebate.--
            ``(1) In general.--Each individual who was an eligible 
        individual for such individual's first taxable year beginning 
        in 2000 and who, before October 16, 2001, filed a return of tax 
        imposed by subtitle A for such taxable year shall be treated as 
        having made a payment against the tax imposed by chapter 1 for 
        such first taxable year in an amount equal to the supplemental 
        refund amount for such taxable year.
            ``(2) Supplemental refund amount.--For purposes of this 
        subsection, the supplemental refund amount is an amount equal 
        to the excess (if any) of--
                    ``(A)(i) $600 in the case of taxpayers to whom 
                section 1(a) applies,
                    ``(ii) $500 in the case of taxpayers to whom 
                section 1(b) applies, and
                    ``(iii) $300 in the case of taxpayers to whom 
                subsections (c) or (d) of section 1 applies, over
                    ``(B) the taxpayer's advance refund amount under 
                subsection (e).
            ``(3) Timing of payments.--In the case of any overpayment 
        attributable to this subsection, the Secretary shall, subject 
        to the provisions of this title, refund or credit such 
        overpayment as rapidly as possible.
            ``(4) No interest.--No interest shall be allowed on any 
        overpayment attributable to this subsection.''
    (b) Conforming Amendments.--
            (1) Subparagraph (A) of section 6428(d)(1) is amended by 
        striking ``subsection (e)'' and inserting ``subsections (e) and 
        (f)''.
            (2) Subparagraph (B) of section 6428(d)(1) is amended by 
        striking ``subsection (e)'' and inserting ``subsection (e) or 
        (f)''.
            (3) Paragraph (3) of section 6428(e) is amended by striking 
        ``December 31, 2001'' and inserting ``the date of the enactment 
        of the Economic Security and Recovery Act of 2001''.
    (c) Effective Date.--The amendments made by this section shall take 
effect on the date of the enactment of this Act.

SEC. 402. SPECIAL REED ACT TRANSFER IN FISCAL YEAR 2002.

    (a) Repeal of Certain Provisions Added by the Balanced Budget Act 
of 1997.--
            (1) In general.--The following provisions of section 903 of 
        the Social Security Act (42 U.S.C. 1103) are repealed:
                    (A) Paragraph (3) of subsection (a).
                    (B) The last sentence of subsection (c)(2).
            (2) Savings provision.--Any amounts transferred before the 
        date of enactment of this Act under the provision repealed by 
        paragraph (1)(A) shall remain subject to section 903 of the 
        Social Security Act, as last in effect before such date of 
        enactment.
    (b) Special Transfer in Fiscal Year 2002.--Section 903 of the 
Social Security Act is amended by adding at the end the following:

                 ``Special Transfer in Fiscal Year 2002

    ``(d)(1) The Secretary of the Treasury shall transfer (as of the 
date determined under paragraph (5)(A)) from the Federal unemployment 
account to the account of each State in the Unemployment Trust Fund the 
amount determined with respect to such State under paragraph (2).
    ``(2) The amount to be transferred under this subsection to a State 
account shall (as determined by the Secretary of Labor and certified by 
such Secretary to the Secretary of the Treasury) be equal to--
            ``(A) the amount which would have been required to have 
        been transferred under this section to such account at the 
        beginning of fiscal year 2002 if section 402(a)(1) of the 
        Economic Security and Recovery Act of 2001 had been enacted 
        before the close of fiscal year 2001, minus
            ``(B) the amount which was in fact transferred under this 
        section to such account at the beginning of fiscal year 2002.
    ``(3)(A) Except as provided in paragraph (4), amounts transferred 
to a State account pursuant to this subsection may be used only in the 
payment of cash benefits--
            ``(i) to individuals with respect to their unemployment, 
        and
            ``(ii) which are allowable under subparagraph (B) or (C).
    ``(B)(i) At the option of the State, cash benefits under this 
paragraph may include amounts which shall be payable as regular or 
additional compensation for individuals eligible for regular 
compensation under the unemployment compensation law of such State.
    ``(ii) Any additional compensation under clause (i) may not be 
taken into account for purposes of any determination relating to the 
amount of any extended compensation for which an individual might be 
eligible.
    ``(C)(i) At the option of the State, cash benefits under this 
paragraph may include amounts which shall be payable to 1 or more 
categories of individuals not otherwise eligible for regular 
compensation under the unemployment compensation law of such State.
    ``(ii) The benefits paid under this subparagraph to any individual 
may not, for any period of unemployment, exceed the maximum amount of 
regular compensation authorized under the unemployment compensation law 
of such State for that same period, plus any additional benefits 
(described in subparagraph (B)(i)) which could have been paid with 
respect to that amount.
    ``(D) Amounts transferred to a State account under this subsection 
may be used in the payment of cash benefits to individuals only for 
weeks of unemployment--
            ``(i) beginning after the date of enactment of this 
        subsection, and
            ``(ii) ending on or before March 11, 2003.
    ``(4) Amounts transferred to a State account under this subsection 
may be used for the administration of its unemployment compensation law 
and public employment offices (including in connection with benefits 
described in paragraph (3) and any recipients thereof), subject to the 
same conditions as set forth in subsection (c)(2) (excluding 
subparagraph (B) thereof, and deeming the reference to `subsections (a) 
and (b)' in subparagraph (D) thereof to include this subsection).
    ``(5) Transfers under this subsection--
            ``(A) shall be made on such date as the Secretary of Labor 
        (in consultation with the Secretary of the Treasury) shall 
        determine, but in no event later than 10 days after the date of 
        enactment of this subsection, and
            ``(B) may, notwithstanding any other provision of this 
        subsection, be made only to the extent that they do not to 
        exceed--
                    ``(i) the balance in the Federal unemployment 
                account as of the date determined under subparagraph 
                (A), or
                    ``(ii) the total amount that was transferred under 
                this section to the Federal unemployment account at the 
                beginning of fiscal year 2002,
        whichever is less.''
    (c) Limitations on Transfers.--Section 903(b) of the Social 
Security Act shall apply to transfers under section 903(d) of such Act 
(as amended by this section). For purposes of the preceding sentence, 
such section 903(b) shall be deemed to be amended as follows:
            (1) By substituting ``the transfer date described in 
        subsection (d)(5)(A)'' for ``October 1 of any fiscal year''.
            (2) By substituting ``remain in the Federal unemployment 
        account'' for ``be transferred to the Federal unemployment 
        account as of the beginning of such October 1''.
            (3) By substituting ``fiscal year 2002 (after the transfer 
        date described in subsection (d)(5)(A))'' for ``the fiscal year 
        beginning on such October 1''.
            (4) By substituting ``under subsection (d)'' for ``as of 
        October 1 of such fiscal year''.
            (5) By substituting ``(as of the close of fiscal year 
        2002)'' for ``(as of the close of such fiscal year)''.
    (d) Technical Amendments.--(1) Sections 3304(a)(4)(B) and 
3306(f)(2) of the Internal Revenue Code of 1986 are amended by 
inserting ``or 903(d)(4)'' before ``of the Social Security Act''.
    (2) Section 303(a)(5) of the Social Security Act is amended in the 
second proviso by inserting ``or 903(d)(4)'' after ``903(c)(2)''.
    (e) Regulations.--The Secretary of Labor may prescribe any 
operating instructions or regulations necessary to carry out this 
section and the amendments made by this section.

           TITLE V--HEALTH CARE ASSISTANCE FOR THE UNEMPLOYED

SEC. 501. HEALTH CARE ASSISTANCE FOR THE UNEMPLOYED.

    Title XX of the Social Security Act (42 U.S.C. 1397-1397f) is 
amended by adding at the end the following:

``SEC. 2008. GRANTS FOR HEALTH CARE ASSISTANCE FOR THE UNEMPLOYED.

    ``(a) Funding.--For purposes of section 2003, the amount specified 
in section 2003(c) for fiscal year 2002 is increased by $3,000,000,000.
    ``(b) Use of Funds.--Notwithstanding any other provision of this 
title, to the extent that an amount paid to a State under section 2002 
is attributable to funds made available by reason of subsection (a) of 
this section--
            ``(1) the State shall use the amount to assist an 
        unemployed individual who is not eligible for Federal health 
        coverage to purchase health care coverage for the individual or 
        any member of the family of the individual who is not so 
        eligible; and
            ``(2) the amount--
                    ``(A) shall be used to supplement, not supplant, 
                any other Federal, State, or local funds that are used 
                for the provision of health care coverage; and
                    ``(B) may not be included in determining the amount 
                of non-Federal contributions required under any 
                program.
    ``(c) Definitions.--In this section:
            ``(1) Unemployed individual.--The term `unemployed 
        individual' means an individual who--
                    ``(A) is without a job (determined in accordance 
                with the criteria used by the Bureau of Labor 
                Statistics of the Department of Labor in defining 
                individuals as unemployed);
                    ``(B) is seeking and available for work; and
                    ``(C) has or had a benefit year (within the meaning 
                of section 205 of the Federal-State Extended 
                Unemployment Compensation Act of 1970) beginning on or 
                after January 1, 2001.
            ``(2) Federal health coverage.--
                    ``(A) In general.--Subject to subparagraph (B), the 
                term `Federal health coverage' means coverage under any 
                medical care program described in--
                            ``(i) title XVIII, XIX, or XXI of this Act 
                        (other than under section 1928);
                            ``(ii) chapter 55 of title 10, United 
                        States Code;
                            ``(iii) chapter 17 of title 38, United 
                        States Code;
                            ``(iv) chapter 89 of title 5, United States 
                        Code (other than coverage which is comparable 
                        to continuation coverage under section 4980B of 
                        the Internal Revenue Code of 1986); or
                            ``(v) the Indian Health Care Improvement 
                        Act.
                    ``(B) Special rule.--Such term does not include 
                coverage under a qualified long-term care insurance 
                contract.''.




                                                 Union Calendar No. 153

107th CONGRESS

  1st Session

                               H.R. 3090

                          [Report No. 107-251]

_______________________________________________________________________

                                 A BILL

            To provide tax incentives for economic recovery.

_______________________________________________________________________

                            October 17, 2001

  Reported with an amendment, committed to the Committee of the Whole 
       House on the State of the Union, and ordered to be printed