[Congressional Bills 107th Congress]
[From the U.S. Government Publishing Office]
[S. 232 Introduced in Senate (IS)]







107th CONGRESS
  1st Session
                                 S. 232

  To amend the Internal Revenue Code of 1986 to exclude United States 
  savings bond income from gross income if used to pay long-term care 
                               expenses.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                            January 31, 2001

 Mr. Cleland (for himself, Mr. Durbin, Mr. Hagel, Mr. Corzine, and Ms. 
   Landrieu) 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 exclude United States 
  savings bond income from gross income if used to pay long-term care 
                               expenses.

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

SECTION 1. EXCLUSION OF UNITED STATES SAVINGS BOND INCOME FROM GROSS 
              INCOME IF USED TO PAY LONG-TERM CARE EXPENSES.

    (a) In General.--Subsection (a) of section 135 of the Internal 
Revenue Code of 1986 (relating to income from United States savings 
bonds used to pay higher education tuition and fees) is amended to read 
as follows:
    ``(a) Exclusion.--
            ``(1) General rule.--In the case of an individual who pays 
        qualified expenses during the taxable year, no amount shall be 
        includible in gross income by reason of the redemption during 
        such year of any qualified United States savings bond.
            ``(2) Qualified expenses.--For purposes of this section, 
        the term `qualified expenses' means--
                    ``(A) qualified higher education expenses, and
                    ``(B) eligible long-term care expenses.''.
    (b) Limitation Where Redemption Proceeds Exceed Qualified 
Expenses.--Section 135(b)(1) of the Internal Revenue Code of 1986 
(relating to limitation where redemption proceeds exceed higher 
education expenses) is amended--
            (1) by striking ``higher education'' in subparagraph 
        (A)(ii), and
            (2) by striking ``higher education'' in the heading 
        thereof.
    (c) Eligible Long-Term Care Expenses.--Section 135(c) of the 
Internal Revenue Code of 1986 (relating to definitions) is amended by 
redesignating paragraph (4) as paragraph (5) and by inserting after 
paragraph (3) the following new paragraph:
            ``(4) Eligible long-term care expenses.--The term `eligible 
        long-term care expenses' means qualified long-term care 
        expenses (as defined in section 7702B(c)) and eligible long-
        term care premiums (as defined in section 213(d)(10)) of--
                    ``(A) the taxpayer,
                    ``(B) the taxpayer's spouse, or
                    ``(C) any dependent of the taxpayer with respect to 
                whom the taxpayer is allowed a deduction under section 
                151.''.
    (d) Adjustments.--Section 135(d) of the Internal Revenue Code of 
1986 (relating to special rules) is amended by redesignating paragraphs 
(3) and (4) as paragraphs (4) and (5), respectively, and by inserting 
after paragraph (2) the following new paragraph:
            ``(3) Eligible long-term care expense adjustments.--The 
        amount of eligible long-term care expenses otherwise taken into 
        account under subsection (a) with respect to an individual 
        shall be reduced (before the application of subsection (b)) by 
        the sum of--
                    ``(A) any amount paid for qualified long-term care 
                services (as defined in section 7702B(c)) provided to 
                such individual and described in section 213(d)(11), 
                plus
                    ``(B) any amount received by the taxpayer or the 
                taxpayer's spouse or dependents for the payment of 
                eligible long-term care expenses which is excludable 
                from gross income.''.
    (e) Coordination With Deductions.--
            (1) Section 213 of the Internal Revenue Code of 1986 
        (relating to medical, dental, etc., expenses) is amended by 
        adding at the end the following new subsection:
    ``(f) Coordination With Savings Bond Income Used for Expenses.--Any 
expense taken into account in determining the exclusion under section 
135 shall not be treated as an expense paid for medical care.''.
            (2) Section 162(l) of such Code (relating to special rules 
        for health insurance costs of self-employed individuals) is 
        amended by adding at the end the following new paragraph:
            ``(6) Coordination with savings bond income used for 
        expenses.--Any expense taken into account in determining the 
        exclusion under section 135 shall not be treated as an expense 
        paid for medical care.''.
    (f) Clerical Amendments.--
            (1) The heading for section 135 of the Internal Revenue 
        Code of 1986 is amended by inserting ``and long-term care 
        expenses'' after ``fees''.
            (2) The item relating to section 135 in the table of 
        sections for part III of subchapter B of chapter 1 of such Code 
        is amended by inserting ``and long-term care expenses'' after 
        ``fees''.
    (g) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2000.
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