[Congressional Bills 107th Congress]
[From the U.S. Government Publishing Office]
[H.R. 475 Introduced in House (IH)]
107th CONGRESS
1st Session
H. R. 475
To amend the Internal Revenue Code of 1986 to allow a deduction for
amounts paid to any qualified State tuition program and to provide that
distributions from such programs which are used to pay educational
expenses shall not be includible in gross income.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
February 6, 2001
Mr. Rogers of Michigan (for himself, Mr. English, Mr. Camp, Mrs. Kelly,
Ms. Granger, Mr. Smith of Michigan, and Mr. Knollenberg) introduced the
following bill; which was referred to the Committee on Ways and Means
_______________________________________________________________________
A BILL
To amend the Internal Revenue Code of 1986 to allow a deduction for
amounts paid to any qualified State tuition program and to provide that
distributions from such programs which are used to pay educational
expenses shall not be includible in gross income.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Securing Affordable Vocational and
Collegiate Education (SAVE) Act.''
SEC. 2. DEDUCTION FOR PAYMENTS TO QUALIFIED STATE TUITION PROGRAMS.
(a) In General.--Part VII of subchapter B of chapter 1 of the
Internal Revenue Code of 1986 (relating to additional itemized
deductions for individuals) is amended by redesignating section 222 as
section 223 and by inserting after section 221 the following new
section:
``SEC. 222. PAYMENTS TO QUALIFIED STATE TUITION PROGRAMS.
``(a) Allowance of Deduction.--In the case of an individual, there
shall be allowed as a deduction an amount equal to the amount paid by
the taxpayer during the taxable year to any qualified State tuition
program (as defined in section 529) for the benefit of any designated
beneficiary (as defined in such section).
``(b) Dollar Limitation.--The deduction allowed by subsection (a)
for the taxable year shall not exceed $5,000 ($10,000 in the case of a
joint return).''
(b) Deduction Allowed in Computing Adjusted Gross Income.--Section
62(a) of such Code is amended by inserting after paragraph (17) the
following new paragraph:
``(18) Payments to qualified state tuition programs.--The
deduction allowed by section 222.''
(c) Conforming Amendment.--The table of sections for part VII of
subchapter B of chapter 1 of such Code is amended by striking the item
relating to section 222 and inserting:
``Sec. 222. Payments to qualified State
tuition programs.
``Sec. 223. Cross reference.''
(d) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2001.
SEC. 3. EXCLUSION FROM GROSS INCOME OF EDUCATION DISTRIBUTIONS FROM
QUALIFIED STATE TUITION PROGRAMS.
(a) In General.--Section 529(c)(3)(B) of the Internal Revenue Code
of 1986 (relating to distributions) is amended to read as follows:
``(B) Distributions for qualified higher education
expenses.--For purposes of this paragraph--
``(i) In-kind distributions.--No amount
shall be includible in gross income under
subparagraph (A) by reason of a distribution
which consists of providing a benefit to the
distributee which, if paid for by the
distributee, would constitute payment of a
qualified higher education expense.
``(ii) Cash distributions.--In the case of
distributions not described in clause (i), if--
``(I) such distributions do not
exceed the qualified higher education
expenses (reduced by expenses described
in clause (i)), no amount shall be
includible in gross income, and
``(II) in any other case, the
amount otherwise includible in gross
income shall be reduced by an amount
which bears the same ratio to such
amount as such expenses bear to such
distributions.
``(iii) Treatment as distributions.--Any
benefit furnished to a designated beneficiary
under a qualified State tuition program shall
be treated as a distribution to the beneficiary
for purposes of this paragraph.
``(iv) Coordination with hope and lifetime
learning credits.--The total amount of
qualified higher education expenses with
respect to an individual for the taxable year
shall be reduced--
``(I) as provided in section
25A(g)(2), and
``(II) by the amount of such
expenses which were taken into account
in determining the credit allowed to
the taxpayer or any other person under
section 25A.
``(v) Coordination with education
individual retirement accounts.--If, with
respect to an individual for any taxable year--
``(I) the aggregate distributions
to which clauses (i) and (ii) and
section 530(d)(2)(A) apply, exceed
``(II) the total amount of
qualified higher education expenses
otherwise taken into account under
clauses (i) and (ii) (after the
application of clause (iv)) for such
year,
the taxpayer shall allocate such expenses among
such distributions for purposes of determining
the amount of the exclusion under clauses (i)
and (ii) and section 530(d)(2)(A).''.
(b) Conforming Amendments.--
(1) Section 135(d)(2)(B) of such Code is amended by
striking ``the exclusion under section 530(d)(2)'' and
inserting ``the exclusions under sections 529(c)(3)(B)(i) and
530(d)(2)''.
(2) Section 221(e)(2)(A) of such Code is amended by
inserting ``529,'' after ``135,''.
(c) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2001.
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