[Congressional Record Volume 144, Number 144 (Monday, October 12, 1998)]
[House]
[Pages H10622-H10632]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




   EXTENDING CERTAIN EXPIRING PROVISIONS OF THE INTERNAL REVENUE CODE

  Mr. ARCHER. Madam Speaker, I move to suspend the rules and pass the 
bill (H.R. 4738) to amend the Internal Revenue Code of 1986 to extend 
certain expiring provisions, provide tax relief for farmers and small 
businesses, and for other purposes, as amended.
  The Clerk read as follows:

                               H.R. 4738

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

     SECTION 1. AMENDMENT OF 1986 CODE; TABLE OF CONTENTS.

       (a) Amendment of 1986 Code.--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.
       (b) Table of Contents.--

Sec. 1. Amendment of 1986 Code; table of contents.

   TITLE I--EXTENSION AND MODIFICATION OF CERTAIN EXPIRING PROVISIONS

                       Subtitle A--Tax Provisions

Sec. 101. Research credit.
Sec. 102. Work opportunity credit.
Sec. 103. Income averaging for farmers made permanent.
Sec. 104. Contributions of stock to private foundations; expanded 
              public inspection of private foundations' annual returns.
Sec. 105. Subpart F exemption for active financing income.
Sec. 106. Disclosure of return information on income contingent student 
              loans.

             Subtitle B--Generalized System of Preferences

Sec. 111. Extension of Generalized System of Preferences.

                       TITLE II--OTHER PROVISIONS

Sec. 201. Depreciation study.
Sec. 202. Production flexibility contract payments.
Sec. 203. 100 percent deduction for health insurance costs of self-
              employed individuals.
Sec. 204. Increase in volume cap on private activity bonds.
Sec. 205. Modification of estimated tax safe harbors.
Sec. 206. Exemption for students employed by State schools, colleges, 
              or universities.

                       TITLE III--REVENUE OFFSETS

Sec. 301. Treatment of certain deductible liquidating distributions of 
              regulated investment companies and real estate investment 
              trusts.
Sec. 302. Inclusion of rotavirus gastroenteritis as a taxable vaccine.
Sec. 303. Clarification and expansion of mathematical error assessment 
              procedures.
Sec. 304. Clarification of definition of specified liability loss.

                    TITLE IV--TECHNICAL CORRECTIONS

Sec. 401. Definitions; coordination with other titles.
Sec. 402. Amendments related to Internal Revenue Service Restructuring 
              and Reform Act of 1998.
Sec. 403. Amendments related to Taxpayer Relief Act of 1997.
Sec. 404. Amendments related to Tax Reform Act of 1984.
Sec. 405. Other amendments.

   TITLE I--EXTENSION AND MODIFICATION OF CERTAIN EXPIRING PROVISIONS

                       Subtitle A--Tax Provisions

     SEC. 101. RESEARCH CREDIT.

       (a) Temporary Extension.--Paragraph (1) of section 41(h) 
     (relating to termination) is amended--
       (1) by striking ``June 30, 1998'' and inserting ``December 
     31, 1999'';
       (2) by striking ``24-month'' and inserting ``42-month''; 
     and
       (3) by striking ``24 months'' and inserting ``42 months''.
       (b) Technical Amendment.--Subparagraph (D) of section 
     45C(b)(1) is amended by striking ``June 30, 1998'' and 
     inserting ``December 31, 1999''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to amounts paid or incurred after June 30, 1998.

     SEC. 102. WORK OPPORTUNITY CREDIT.

       (a) Temporary Extension.--Subparagraph (B) of section 
     51(c)(4) (relating to termination) is amended by striking 
     ``June 30, 1998'' and inserting ``December 31, 1999''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to individuals who begin work for the employer 
     after June 30, 1998.

     SEC. 103. INCOME AVERAGING FOR FARMERS MADE PERMANENT.

       Subsection (c) of section 933 of the Taxpayer Relief Act of 
     1997 is amended by striking ``, and before January 1, 2001''.

     SEC. 104. CONTRIBUTIONS OF STOCK TO PRIVATE FOUNDATIONS; 
                   EXPANDED PUBLIC INSPECTION OF PRIVATE 
                   FOUNDATIONS' ANNUAL RETURNS.

       (a) Special Rule for Contributions of Stock Made 
     Permanent.--
       (1) In general.--Paragraph (5) of section 170(e) is amended 
     by striking subparagraph (D) (relating to termination).
       (2) Effective date.--The amendment made by paragraph (1) 
     shall apply to contributions made after June 30, 1998.
       (b) Expanded Public Inspection of Private Foundations' 
     Annual Returns, Etc.--
       (1) In general.--Section 6104 (relating to publicity of 
     information required from certain exempt organizations and 
     certain trusts) is amended by striking subsections (d) and 
     (e) and inserting after subsection (c) the following new 
     subsection:
       ``(d) Public Inspection of Certain Annual Returns and 
     Applications for Exemption.--
       ``(1) In general.--In the case of an organization described 
     in subsection (c) or (d) of section 501 and exempt from 
     taxation under section 501(a)--
       ``(A) a copy of--
       ``(i) the annual return filed under section 6033 (relating 
     to returns by exempt organizations) by such organization; and
       ``(ii) if the organization filed an application for 
     recognition of exemption under section 501, the exempt status 
     application materials of such organization,

     shall be made available by such organization for inspection 
     during regular business hours by any individual at the 
     principal office of such organization and, if such 
     organization regularly maintains 1 or more regional or 
     district offices having 3 or more employees, at each such 
     regional or district office; and
       ``(B) upon request of an individual made at such principal 
     office or such a regional or district office, a copy of such 
     annual return and exempt status application materials shall 
     be provided to such individual without charge other than a 
     reasonable fee for any reproduction and mailing costs.

     The request described in subparagraph (B) must be made in 
     person or in writing. If such request is made in person, such 
     copy shall be provided immediately and, if made in writing, 
     shall be provided within 30 days.
       ``(2) 3-year limitation on inspection of returns.--
     Paragraph (1) shall apply to an annual return filed under 
     section 6033 only during the 3-year period beginning on the 
     last day prescribed for filing such return (determined with 
     regard to any extension of time for filing).
       ``(3) Exceptions from disclosure requirement.--
       ``(A) Nondisclosure of contributors, etc.--Paragraph (1) 
     shall not require the disclosure of the name or address of 
     any contributor to the organization. In the case of an 
     organization described in section 501(d),

[[Page H10623]]

     paragraph (1) shall not require the disclosure of the copies 
     referred to in section 6031(b) with respect to such 
     organization.
       ``(B) Nondisclosure of certain other information.--
     Paragraph (1) shall not require the disclosure of any 
     information if the Secretary withheld such information from 
     public inspection under subsection (a)(1)(D).
       ``(4) Limitation on providing copies.--Paragraph (1)(B) 
     shall not apply to any request if, in accordance with 
     regulations promulgated by the Secretary, the organization 
     has made the requested documents widely available, or the 
     Secretary determines, upon application by an organization, 
     that such request is part of a harassment campaign and that 
     compliance with such request is not in the public interest.
       ``(5) Exempt status application materials.--For purposes of 
     paragraph (1), the term `exempt status applicable materials' 
     means the application for recognition of exemption under 
     section 501 and any papers submitted in support of such 
     application and any letter or other document issued by the 
     Internal Revenue Service with respect to such application.''.
       (2) Conforming amendments.--
       (A) Subsection (c) of section 6033 is amended by adding 
     ``and'' at the end of paragraph (1), by striking paragraph 
     (2), and by redesignating paragraph (3) as paragraph (2).
       (B) Subparagraph (C) of section 6652(c)(1) is amended by 
     striking ``subsection (d) or (e)(1) of section 6104 (relating 
     to public inspection of annual returns)'' and inserting 
     ``section 6104(d) with respect to any annual return''.
       (C) Subparagraph (D) of section 6652(c)(1) is amended by 
     striking ``section 6104(e)(2) (relating to public inspection 
     of applications for exemption)'' and inserting ``section 
     6104(d) with respect to any exempt status application 
     materials (as defined in such section)''.
       (D) Section 6685 is amended by striking ``or (e)''.
       (E) Section 7207 is amended by striking ``or (e)''.
       (3) Effective date.--
       (A) In general.--Except as provided in subparagraph (B), 
     the amendments made by this subsection shall apply to 
     requests made after the later of December 31, 1998, or the 
     60th day after the Secretary of the Treasury first issues the 
     regulations referred to in such section 6104(d)(4) of the 
     Internal Revenue Code of 1986, as amended by this section.
       (B) Publication of annual returns.--Section 6104(d) of such 
     Code, as in effect before the amendments made by this 
     subsection, shall not apply to any return the due date for 
     which is after the date such amendments take effect under 
     subparagraph (A).

     SEC. 105. SUBPART F EXEMPTION FOR ACTIVE FINANCING INCOME.

       (a) Income Derived From Banking, Financing, or Similar 
     Businesses.--Section 954(h) (relating to income derived in 
     the active conduct of banking, financing, or similar 
     businesses) is amended to read as follows:
       ``(h) Special Rule for Income Derived in the Active Conduct 
     of Banking, Financing, or Similar Businesses.--
       ``(1) In general.--For purposes of subsection (c)(1), 
     foreign personal holding company income shall not include 
     qualified banking or financing income of an eligible 
     controlled foreign corporation.
       ``(2) Eligible controlled foreign corporation.--For 
     purposes of this subsection--
       ``(A) In general.--The term `eligible controlled foreign 
     corporation' means a controlled foreign corporation which--
       ``(i) is predominantly engaged in the active conduct of a 
     banking, financing, or similar business, and
       ``(ii) conducts substantial activity with respect to such 
     business.
       ``(B) Predominantly engaged.--A controlled foreign 
     corporation shall be treated as predominantly engaged in the 
     active conduct of a banking, financing, or similar business 
     if--
       ``(i) more than 70 percent of the gross income of the 
     controlled foreign corporation is derived directly from the 
     active and regular conduct of a lending or finance business 
     from transactions with customers which are not related 
     persons,
       ``(ii) it is engaged in the active conduct of a banking 
     business and is an institution licensed to do business as a 
     bank in the United States (or is any other corporation not so 
     licensed which is specified by the Secretary in regulations), 
     or
       ``(iii) it is engaged in the active conduct of a securities 
     business and is registered as a securities broker or dealer 
     under section 15(a) of the Securities Exchange Act of 1934 or 
     is registered as a Government securities broker or dealer 
     under section 15C(a) of such Act (or is any other corporation 
     not so registered which is specified by the Secretary in 
     regulations).
       ``(3) Qualified banking or financing income.--For purposes 
     of this subsection--
       ``(A) In general.--The term `qualified banking or financing 
     income' means income of an eligible controlled foreign 
     corporation which--
       ``(i) is derived in the active conduct of a banking, 
     financing, or similar business by--

       ``(I) such eligible controlled foreign corporation, or
       ``(II) a qualified business unit of such eligible 
     controlled foreign corporation,

       ``(ii) is derived from one or more transactions--

       ``(I) with customers located in a country other than the 
     United States, and
       ``(II) substantially all of the activities in connection 
     with which are conducted directly by the corporation or unit 
     in its home country, and

       ``(iii) is treated as earned by such corporation or unit in 
     its home country for purposes of such country's tax laws.
       ``(B) Limitation on nonbanking and nonsecurities 
     businesses.--No income of an eligible controlled foreign 
     corporation not described in clause (ii) or (iii) of 
     paragraph (2)(B) (or of a qualified business unit of such 
     corporation) shall be treated as qualified banking or 
     financing income unless more than 30 percent of such 
     corporation's or unit's gross income is derived directly from 
     the active and regular conduct of a lending or finance 
     business from transactions with customers which are not 
     related persons and which are located within such 
     corporation's or unit's home country.
       ``(C) Substantial activity requirement for cross border 
     income.--The term `qualified banking or financing income' 
     shall not include income derived from 1 or more transactions 
     with customers located in a country other than the home 
     country of the eligible controlled foreign corporation or a 
     qualified business unit of such corporation unless such 
     corporation or unit conducts substantial activity with 
     respect to a banking, financing, or similar business in its 
     home country.
       ``(D) Determinations made separately.--For purposes of this 
     paragraph, the qualified banking or financing income of an 
     eligible controlled foreign corporation and each qualified 
     business unit of such corporation shall be determined 
     separately for such corporation and each such unit by taking 
     into account--
       ``(i) in the case of the eligible controlled foreign 
     corporation, only items of income, deduction, gain, or loss 
     and activities of such corporation not properly allocable or 
     attributable to any qualified business unit of such 
     corporation, and
       ``(ii) in the case of a qualified business unit, only items 
     of income, deduction, gain, or loss and activities properly 
     allocable or attributable to such unit.
       ``(4) Lending or finance business.--For purposes of this 
     subsection, the term `lending or finance business' means the 
     business of--
       ``(A) making loans,
       ``(B) purchasing or discounting accounts receivable, notes, 
     or installment obligations,
       ``(C) engaging in leasing (including entering into leases 
     and purchasing, servicing, and disposing of leases and leased 
     assets),
       ``(D) issuing letters of credit or providing guarantees,
       ``(E) providing charge and credit card services, or
       ``(F) rendering services or making facilities available in 
     connection with activities described in subparagraphs (A) 
     through (E) carried on by--
       ``(i) the corporation (or qualified business unit) 
     rendering services or making facilities available, or
       ``(ii) another corporation (or qualified business unit of a 
     corporation) which is a member of the same affiliated group 
     (as defined in section 1504, but determined without regard to 
     section 1504(b)(3)).
       ``(5) Other definitions.--For purposes of this subsection--
       ``(A) Customer.--The term `customer' means, with respect to 
     any controlled foreign corporation or qualified business 
     unit, any person which has a customer relationship with such 
     corporation or unit and which is acting in its capacity as 
     such.
       ``(B) Home country.--Except as provided in regulations--
       ``(i) Controlled foreign corporation.--The term `home 
     country' means, with respect to any controlled foreign 
     corporation, the country under the laws of which the 
     corporation was created or organized.
       ``(ii) Qualified business unit.--The term `home country' 
     means, with respect to any qualified business unit, the 
     country in which such unit maintains its principal office.
       ``(C) Located.--The determination of where a customer is 
     located shall be made under rules prescribed by the 
     Secretary.
       ``(D) Qualified business unit.--The term `qualified 
     business unit' has the meaning given such term by section 
     989(a).
       ``(E) Related person.--The term `related person' has the 
     meaning given such term by subsection (d)(3).
       ``(6) Coordination with exception for dealers.--Paragraph 
     (1) shall not apply to income described in subsection 
     (c)(2)(C)(ii) of a dealer in securities (within the meaning 
     of section 475) which is an eligible controlled foreign 
     corporation described in paragraph (2)(B)(iii).
       ``(7) Anti-abuse rules.--For purposes of applying this 
     subsection and subsection (c)(2)(C)(ii)--
       ``(A) there shall be disregarded any item of income, gain, 
     loss, or deduction with respect to any transaction or series 
     of transactions one of the principal purposes of which is 
     qualifying income or gain for the exclusion under this 
     section, including any transaction or series of transactions 
     a principal purpose of which is the acceleration or deferral 
     of any item in order to claim the benefits of such exclusion 
     through the application of this subsection,
       ``(B) there shall be disregarded any item of income, gain, 
     loss, or deduction of an entity which is not engaged in 
     regular and continuous transactions with customers which are 
     not related persons,
       ``(C) there shall be disregarded any item of income, gain, 
     loss, or deduction with respect to any transaction or series 
     of transactions utilizing, or doing business with--

[[Page H10624]]

       ``(i) one or more entities in order to satisfy any home 
     country requirement under this subsection, or
       ``(ii) a special purpose entity or arrangement, including a 
     securitization, financing, or similar entity or arrangement,

     if one of the principal purposes of such transaction or 
     series of transactions is qualifying income or gain for the 
     exclusion under this subsection, and
       ``(D) a related person, an officer, a director, or an 
     employee with respect to any controlled foreign corporation 
     (or qualified business unit) which would otherwise be treated 
     as a customer of such corporation or unit with respect to any 
     transaction shall not be so treated if a principal purpose of 
     such transaction is to satisfy any requirement of this 
     subsection.
       ``(8) Regulations.--The Secretary shall prescribe such 
     regulations as may be necessary or appropriate to carry out 
     the purposes of this subsection, subsection (c)(1)(B)(i), 
     subsection (c)(2)(C)(ii), and the last sentence of subsection 
     (e)(2).
       ``(9) Application.--This subsection, subsection 
     (c)(2)(C)(ii), and the last sentence of subsection (e)(2) 
     shall apply only to the first taxable year of a foreign 
     corporation beginning after December 31, 1998, and before 
     January 1, 2000, and to taxable years of United States 
     shareholders with or within which such taxable year of such 
     foreign corporation ends.''.
       (b) Income Derived From Insurance Business.--
       (1) Income attributable to issuance or reinsurance.--
       (A) In general.--Section 953(a) (defining insurance income) 
     is amended to read as follows:
       ``(a) Insurance Income.--
       ``(1) In general.--For purposes of section 952(a)(1), the 
     term `insurance income' means any income which--
       ``(A) is attributable to the issuing (or reinsuring) of an 
     insurance or annuity contract, and
       ``(B) would (subject to the modifications provided by 
     subsection (b)) be taxed under subchapter L of this chapter 
     if such income were the income of a domestic insurance 
     company.
       ``(2) Exception.--Such term shall not include any exempt 
     insurance income (as defined in subsection (e)).''.
       (B) Exempt insurance income.--Section 953 (relating to 
     insurance income) is amended by adding at the end the 
     following new subsection:
       ``(e) Exempt Insurance Income.--For purposes of this 
     section--
       ``(1) Exempt insurance income defined.--
       ``(A) In general.--The term `exempt insurance income' means 
     income derived by a qualifying insurance company which--
       ``(i) is attributable to the issuing (or reinsuring) of an 
     exempt contract by such company or a qualifying insurance 
     company branch of such company, and
       ``(ii) is treated as earned by such company or branch in 
     its home country for purposes of such country's tax laws.
       ``(B) Exception for certain arrangements.--Such term shall 
     not include income attributable to the issuing (or 
     reinsuring) of an exempt contract as the result of any 
     arrangement whereby another corporation receives a 
     substantially equal amount of premiums or other consideration 
     in respect of issuing (or reinsuring) a contract which is not 
     an exempt contract.
       ``(C) Determinations made separately.--For purposes of this 
     subsection and section 954(i), the exempt insurance income 
     and exempt contracts of a qualifying insurance company or any 
     qualifying insurance company branch of such company shall be 
     determined separately for such company and each such branch 
     by taking into account--
       ``(i) in the case of the qualifying insurance company, only 
     items of income, deduction, gain, or loss, and activities of 
     such company not properly allocable or attributable to any 
     qualifying insurance company branch of such company, and
       ``(ii) in the case of a qualifying insurance company 
     branch, only items of income, deduction, gain, or loss and 
     activities properly allocable or attributable to such branch.
       ``(2) Exempt contract.--
       ``(A) In general.--The term `exempt contract' means an 
     insurance or annuity contract issued or reinsured by a 
     qualifying insurance company or qualifying insurance company 
     branch in connection with property in, liability arising out 
     of activity in, or the lives or health of residents of, a 
     country other than the United States.
       ``(B) Minimum home country income required.--
       ``(i) In general.--No contract of a qualifying insurance 
     company or of a qualifying insurance company branch shall be 
     treated as an exempt contract unless such company or branch 
     derives more than 30 percent of its net written premiums from 
     exempt contracts (determined without regard to this 
     subparagraph)--

       ``(I) which cover applicable home country risks, and
       ``(II) with respect to which no policyholder, insured, 
     annuitant, or beneficiary is a related person (as defined in 
     section 954(d)(3)).

       ``(ii) Applicable home country risks.--The term `applicable 
     home country risks' means risks in connection with property 
     in, liability arising out of activity in, or the lives or 
     health of residents of, the home country of the qualifying 
     insurance company or qualifying insurance company branch, as 
     the case may be, issuing or reinsuring the contract covering 
     the risks.
       ``(C) Substantial activity requirements for cross border 
     risks.--A contract issued by a qualifying insurance company 
     or qualifying insurance company branch which covers risks 
     other than applicable home country risks (as defined in 
     subparagraph (B)(ii)) shall not be treated as an exempt 
     contract unless such company or branch, as the case may be--
       ``(i) conducts substantial activity with respect to an 
     insurance business in its home country, and
       ``(ii) performs in its home country substantially all of 
     the activities necessary to give rise to the income generated 
     by such contract.
       ``(3) Qualifying insurance company.--The term `qualifying 
     insurance company' means any controlled foreign corporation 
     which--
       ``(A) is subject to regulation as an insurance (or 
     reinsurance) company by its home country, and is licensed, 
     authorized, or regulated by the applicable insurance 
     regulatory body for its home country to sell insurance, 
     reinsurance, or annuity contracts to persons other than 
     related persons (within the meaning of section 954(d)(3)) in 
     such home country,
       ``(B) derives more than 50 percent of its aggregate net 
     written premiums from the issuance or reinsurance by such 
     controlled foreign corporation and each of its qualifying 
     insurance company branches of contracts--
       ``(i) covering applicable home country risks (as defined in 
     paragraph (2)) of such corporation or branch, as the case may 
     be, and
       ``(ii) with respect to which no policyholder, insured, 
     annuitant, or beneficiary is a related person (as defined in 
     section 954(d)(3)),

     except that in the case of a branch, such premiums shall only 
     be taken into account to the extent such premiums are treated 
     as earned by such branch in its home country for purposes of 
     such country's tax laws, and
       ``(C) is engaged in the insurance business and would be 
     subject to tax under subchapter L if it were a domestic 
     corporation.
       ``(4) Qualifying insurance company branch.--The term 
     `qualifying insurance company branch' means a qualified 
     business unit (within the meaning of section 989(a)) of a 
     controlled foreign corporation if--
       ``(A) such unit is licensed, authorized, or regulated by 
     the applicable insurance regulatory body for its home country 
     to sell insurance, reinsurance, or annuity contracts to 
     persons other than related persons (within the meaning of 
     section 954(d)(3)) in such home country, and
       ``(B) such controlled foreign corporation is a qualifying 
     insurance company, determined under paragraph (3) as if such 
     unit were a qualifying insurance company branch.
       ``(5) Life insurance or annuity contract.--For purposes of 
     this section and section 954, the determination of whether a 
     contract issued by a controlled foreign corporation or a 
     qualified business unit (within the meaning of section 
     989(a)) is a life insurance contract or an annuity contract 
     shall be made without regard to sections 72(s), 101(f), 
     817(h), and 7702 if--
       ``(A) such contract is regulated as a life insurance or 
     annuity contract by the corporation's or unit's home country, 
     and
       ``(B) no policyholder, insured, annuitant, or beneficiary 
     with respect to the contract is a United States person.
       ``(6) Home country.--For purposes of this subsection, 
     except as provided in regulations--
       ``(A) Controlled foreign corporation.--The term `home 
     country' means, with respect to a controlled foreign 
     corporation, the country in which such corporation is created 
     or organized.
       ``(B) Qualified business unit.--The term `home country' 
     means, with respect to a qualified business unit (as defined 
     in section 989(a)), the country in which the principal office 
     of such unit is located and in which such unit is licensed, 
     authorized, or regulated by the applicable insurance 
     regulatory body to sell insurance, reinsurance, or annuity 
     contracts to persons other than related persons (as defined 
     in section 954(d)(3)) in such country.
       ``(7) Anti-abuse rules.--For purposes of applying this 
     subsection and section 954(i)--
       ``(A) the rules of section 954(h)(7) (other than 
     subparagraph (B) thereof) shall apply,
       ``(B) there shall be disregarded any item of income, gain, 
     loss, or deduction of, or derived from, an entity which is 
     not engaged in regular and continuous transactions with 
     persons which are not related persons,
       ``(C) there shall be disregarded any change in the method 
     of computing reserves a principal purpose of which is the 
     acceleration or deferral of any item in order to claim the 
     benefits of this subsection or section 954(i),
       ``(D) a contract of insurance or reinsurance shall not be 
     treated as an exempt contract (and premiums from such 
     contract shall not be taken into account for purposes of 
     paragraph (2)(B) or (3)) if--
       ``(i) any policyholder, insured, annuitant, or beneficiary 
     is a resident of the United States and such contract was 
     marketed to such resident and was written to cover a risk 
     outside the United States, or
       ``(ii) the contract covers risks located within and without 
     the United States and the qualifying insurance company or 
     qualifying insurance company branch does not maintain such 
     contemporaneous records, and

[[Page H10625]]

     file such reports, with respect to such contract as the 
     Secretary may require,
       ``(E) the Secretary may prescribe rules for the allocation 
     of contracts (and income from contracts) among 2 or more 
     qualifying insurance company branches of a qualifying 
     insurance company in order to clearly reflect the income of 
     such branches, and
       ``(F) premiums from a contract shall not be taken into 
     account for purposes of paragraph (2)(B) or (3) if such 
     contract reinsures a contract issued or reinsured by a 
     related person (as defined in section 954(d)(3)).

     For purposes of subparagraph (D), the determination of where 
     risks are located shall be made under the principles of 
     section 953.
       ``(8) Coordination with subsection (c).--In determining 
     insurance income for purposes of subsection (c), exempt 
     insurance income shall not include income derived from exempt 
     contracts which cover risks other than applicable home 
     country risks.
       ``(9) Regulations.--The Secretary shall prescribe such 
     regulations as may be necessary or appropriate to carry out 
     the purposes of this subsection and section 954(i).
       ``(10) Application.--This subsection and section 954(i) 
     shall apply only to the first taxable year of a foreign 
     corporation beginning after December 31, 1998, and before 
     January 1, 2000, and to taxable years of United States 
     shareholders with or within which such taxable year of such 
     foreign corporation ends.
       ``(11) Cross reference.--

  ``For income exempt from foreign personal holding company income, see 
section 954(i).''.

       (2) Exemption from foreign personal holding company 
     income.--Section 954 (defining foreign base company income) 
     is amended by adding at the end the following new subsection:
       ``(i) Special Rule for Income Derived in the Active Conduct 
     of Insurance Business.--
       ``(1) In general.--For purposes of subsection (c)(1), 
     foreign personal holding company income shall not include 
     qualified insurance income of a qualifying insurance company.
       ``(2) Qualified insurance income.--The term `qualified 
     insurance income' means income of a qualifying insurance 
     company which is--
       ``(A) received from a person other than a related person 
     (within the meaning of subsection (d)(3)) and derived from 
     the investments made by a qualifying insurance company or a 
     qualifying insurance company branch of its reserves allocable 
     to exempt contracts or of 80 percent of its unearned premiums 
     from exempt contracts (as both are determined in the manner 
     prescribed under paragraph (4)), or
       ``(B) received from a person other than a related person 
     (within the meaning of subsection (d)(3)) and derived from 
     investments made by a qualifying insurance company or a 
     qualifying insurance company branch of an amount of its 
     assets allocable to exempt contracts equal to--
       ``(i) in the case of property, casualty, or health 
     insurance contracts, one-third of its premiums earned on such 
     insurance contracts during the taxable year (as defined in 
     section 832(b)(4)), and
       ``(ii) in the case of life insurance or annuity contracts, 
     10 percent of the reserves described in subparagraph (A) for 
     such contracts.
       ``(3) Principles for determining insurance income.--Except 
     as provided by the Secretary, for purposes of subparagraphs 
     (A) and (B) of paragraph (2)--
       ``(A) in the case of any contract which is a separate 
     account-type contract (including any variable contract not 
     meeting the requirements of section 817), income credited 
     under such contract shall be allocable only to such contract, 
     and
       ``(B) income not allocable under subparagraph (A) shall be 
     allocated ratably among contracts not described in 
     subparagraph (A).
       ``(4) Methods for determining unearned premiums and 
     reserves.--For purposes of paragraph (2)(A)--
       ``(A) Property and casualty contracts.--The unearned 
     premiums and reserves of a qualifying insurance company or a 
     qualifying insurance company branch with respect to property, 
     casualty, or health insurance contracts shall be determined 
     using the same methods and interest rates which would be used 
     if such company or branch were subject to tax under 
     subchapter L, except that--
       ``(i) the interest rate determined for the functional 
     currency of the company or branch, and which, except as 
     provided by the Secretary, is calculated in the same manner 
     as the Federal mid-term rate under section 1274(d), shall be 
     substituted for the applicable Federal interest rate, and
       ``(ii) such company or branch shall use the appropriate 
     foreign loss payment pattern.
       ``(B) Life insurance and annuity contracts.--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).
       ``(C) Limitation on reserves.--In no event shall the 
     reserve determined under this paragraph for any contract as 
     of any time exceed the amount which would be taken into 
     account with respect to such contract as of such time in 
     determining foreign statement reserves (less any catastrophe, 
     deficiency, equalization, or similar reserves).
       ``(5) Amount of reserve.--The amount of the reserve 
     determined under this paragraph with respect to any contract 
     shall be determined in the same manner as it would be 
     determined if the qualifying insurance company or qualifying 
     insurance company branch were subject to tax under subchapter 
     L, except that in applying such subchapter--
       ``(A) the interest rate determined for the functional 
     currency of the company or branch, and which, except as 
     provided by the Secretary, is calculated in the same manner 
     as the Federal mid-term rate under section 1274(d), shall be 
     substituted for the applicable Federal interest rate,
       ``(B) the highest assumed interest rate permitted to be 
     used in determining foreign statement reserves shall be 
     substituted for the prevailing State assumed interest rate, 
     and
       ``(C) tables for mortality and morbidity which reasonably 
     reflect the current mortality and morbidity risks in the 
     company's or branch's home country shall be substituted for 
     the mortality and morbidity tables otherwise used for such 
     subchapter.
     The Secretary may provide that the interest rate and 
     mortality and morbidity tables of a qualifying insurance 
     company may be used for 1 or more of its qualifying insurance 
     company branches when appropriate.
       ``(6) Definitions.--For purposes of this subsection, any 
     term used in this subsection which is also used in section 
     953(e) shall have the meaning given such term by section 
     953.''.
       (3) Reserves.--Section 953(b) is amended by redesignating 
     paragraph (3) as paragraph (4) and by inserting after 
     paragraph (2) the following new paragraph:
       ``(3) Reserves for any insurance or annuity contract shall 
     be determined in the same manner as under section 954(i).''.
       (c) Special Rules for Dealers.--Section 954(c)(2)(C) is 
     amended to read as follows:
       ``(C) Exception for dealers.--Except as provided by 
     regulations, in the case of a regular dealer in property 
     which is property described in paragraph (1)(B), forward 
     contracts, option contracts, or similar financial instruments 
     (including notional principal contracts and all instruments 
     referenced to commodities), there shall not be taken into 
     account in computing foreign personal holding company 
     income--
       ``(i) any item of income, gain, deduction, or loss (other 
     than any item described in subparagraph (A), (E), or (G) of 
     paragraph (1)) from any transaction (including hedging 
     transactions) entered into in the ordinary course of such 
     dealer's trade or business as such a dealer, and
       ``(ii) if such dealer is a dealer in securities (within the 
     meaning of section 475), any interest or dividend or 
     equivalent amount described in subparagraph (E) or (G) of 
     paragraph (1) from any transaction (including any hedging 
     transaction or transaction described in section 956(c)(2)(J)) 
     entered into in the ordinary course of such dealer's trade or 
     business as such a dealer in securities, but only if the 
     income from the transaction is attributable to activities of 
     the dealer in the country under the laws of which the dealer 
     is created or organized (or in the case of a qualified 
     business unit described in section 989(a), is attributable to 
     activities of the unit in the country in which the unit both 
     maintains its principal office and conducts substantial 
     business activity).''.
       (d) Exemption From Foreign Base Company Services Income.--
     Paragraph (2) of section 954(e) is amended by inserting 
     ``or'' at the end of subparagraph (A), by striking ``, or'' 
     at the end of subparagraph (B) and inserting a period, by 
     striking subparagraph (C), and by adding at the end the 
     following new flush sentence:

     ``Paragraph (1) shall also not apply to income which is 
     exempt insurance income (as defined in section 953(e)) or 
     which is not treated as foreign personal holding income by 
     reason of subsection (c)(2)(C)(ii), (h), or (i).''.
       (e) Exemption for Gain.--Section 954(c)(1)(B)(i) (relating 
     to net gains from certain property transactions) is amended 
     by inserting ``other than property which gives rise to income 
     not treated as foreign personal holding company income by 
     reason of subsection (h) or (i) for the taxable year'' before 
     the comma at the end.

     SEC. 106. DISCLOSURE OF RETURN INFORMATION ON INCOME 
                   CONTINGENT STUDENT LOANS.

       Subparagraph (D) of section 6103(l)(13) (relating to 
     disclosure of return information to carry out income 
     contingent repayment of student loans) is amended by striking 
     ``September 30, 1998'' and inserting ``September 30, 2003''.

             Subtitle B--Generalized System of Preferences

     SEC. 111. EXTENSION OF GENERALIZED SYSTEM OF PREFERENCES.

       (a) Extension of Duty-Free Treatment Under System.--Section 
     505 of the Trade Act of 1974 (29 U.S.C. 2465) is amended by 
     striking ``June 30, 1998'' and inserting ``December 31, 
     1999''.
       (b) Retroactive Application for Certain Liquidations and 
     Reliquidations.--
       (1) In general.--Notwithstanding section 514 of the Tariff 
     Act of 1930 or any other provision of law, and subject to 
     paragraph (2), any entry--
       (A) of an article to which duty-free treatment under title 
     V of the Trade Act of 1974 would have applied if such title 
     had been in effect during the period beginning on July 1,

[[Page H10626]]

     1998, and ending on the day before the date of the enactment 
     of this Act; and

       (B) that was made after June 30, 1998, and before the date 
     of the enactment of this Act,
     shall be liquidated or reliquidated as free of duty, and the 
     Secretary of the Treasury shall refund any duty paid with 
     respect to such entry. As used in this subsection, the term 
     ``entry'' includes a withdrawal from warehouse for 
     consumption.
       (2) Requests.--Liquidation or reliquidation may be made 
     under paragraph (1) with respect to an entry only if a 
     request therefor is filed with the Customs Service, within 
     180 days after the date of the enactment of this Act, that 
     contains sufficient information to enable the Customs 
     Service--
       (A) to locate the entry; or
       (B) to reconstruct the entry if it cannot be located.

                       TITLE II--OTHER PROVISIONS

     SEC. 201. DEPRECIATION STUDY.

       The Secretary of the Treasury (or the Secretary's 
     delegate)--
       (1) shall conduct a comprehensive study of the recovery 
     periods and depreciation methods under section 168 of the 
     Internal Revenue Code of 1986, and
       (2) not later than March 31, 2000, shall submit the results 
     of such study, together with recommendations for determining 
     such periods and methods in a more rational manner, to the 
     Committee on Ways and Means of the House of Representatives 
     and the Committee on Finance of the Senate.

     SEC. 202. PRODUCTION FLEXIBILITY CONTRACT PAYMENTS.

       (a) In General.--The options under paragraphs (2) and (3) 
     of section 112(d) of the Federal Agriculture Improvement and 
     Reform Act of 1996 (7 U.S.C. 7212(d) (2) and (3)), as in 
     effect on the date of the enactment of this Act, shall be 
     disregarded in determining the taxable year for which any 
     payment under a production flexibility contract under 
     subtitle B of title I of such Act (as so in effect) is 
     properly includible in gross income for purposes of the 
     Internal Revenue Code of 1986.
       (b) Effective Date.--Subsection (a) shall apply to taxable 
     years ending after December 31, 1995.

     SEC. 203. 100 PERCENT DEDUCTION FOR HEALTH INSURANCE COSTS OF 
                   SELF-EMPLOYED INDIVIDUALS.

       (a) In General.--The table contained in subparagraph (B) of 
     section 162(l)(1) (relating to special rules for health 
     insurance costs of self-employed individuals) is amended by 
     striking the last 3 items and inserting the following new 
     item:

  ``2003 and thereafter......................................100.''....

       (b) Effective Date.--The amendment made by this section 
     shall apply to taxable years beginning after December 31, 
     1998.

     SEC. 204. INCREASE IN VOLUME CAP ON PRIVATE ACTIVITY BONDS.

       (a) In General.--Subsection (d) of section 146 (relating to 
     volume cap) is amended by striking paragraphs (1) and (2) and 
     inserting the following new paragraphs:
       ``(1) In general.--The State ceiling applicable to any 
     State for any calendar year shall be the greater of--
       ``(A) an amount equal to the per capita limit for such year 
     multiplied by the State population, or
       ``(B) the aggregate limit for such year.

     Subparagraph (B) shall not apply to any possession of the 
     United States.
       ``(2) Per capita limit; aggregate limit.--For purposes of 
     paragraph (1), the per capita limit, and the aggregate limit, 
     for any calendar year shall be determined in accordance with 
     the following table:
       

  1999 through 2002..............         $50            $150,000,000
  2003...........................          55             165,000,000
  2004...........................          60             180,000,000
  2005...........................          65             195,000,000
  2006...........................          70             210,000,000
  2007 and thereafter............          75           225,000,000.''

       (b) Effective Date.--The amendment made by this section 
     shall apply to calendar years after 1998.

     SEC. 205. MODIFICATION OF ESTIMATED TAX SAFE HARBORS.

       (a) In General.--The table contained in clause (i) of 
     section 6654(d)(1)(C) (relating to limitation on use of 
     preceding year's tax) is amended by striking the item 
     relating to 1998, 1999, or 2000 and inserting the following 
     new items:

  ``1998.......................................................105 ....

   1999 or 2000..............................................106''.....

       (b) Effective Date.--The amendment made by this section 
     shall apply with respect to any installment payment for 
     taxable years beginning after December 31, 1999.

     SEC. 206. EXEMPTION FOR STUDENTS EMPLOYED BY STATE SCHOOLS, 
                   COLLEGES, OR UNIVERSITIES.

       (a) In General.--Notwithstanding section 218 of the Social 
     Security Act, any agreement with a State (or any modification 
     thereof) entered into pursuant to such section may, at the 
     option of such State, be modified at any time on or after 
     January 1, 1999, and on or before March 31, 1999, so as to 
     exclude service performed in the employ of a school, college, 
     or university if such service is performed by a student who 
     is enrolled and is regularly attending classes at such 
     school, college, or university.
       (b) Effective Date of Modification.--Any modification of an 
     agreement pursuant to subsection (a) shall be effective with 
     respect to services performed after June 30, 2000.
       (c) Irrevocability of Modification.--If any modification of 
     an agreement pursuant to subsection (a) terminates coverage 
     with respect to service performed in the employ of a school, 
     college, or university, by a student who is enrolled and 
     regularly attending classes at such school, college, or 
     university, the Commissioner of Social Security and the State 
     may not thereafter modify such agreement so as to again make 
     the agreement applicable to such service performed in the 
     employ of such school, college, or university.

                       TITLE III--REVENUE OFFSETS

     SEC. 301. TREATMENT OF CERTAIN DEDUCTIBLE LIQUIDATING 
                   DISTRIBUTIONS OF REGULATED INVESTMENT COMPANIES 
                   AND REAL ESTATE INVESTMENT TRUSTS.

       (a) In General.--Section 332 (relating to complete 
     liquidations of subsidiaries) is amended by adding at the end 
     the following new subsection:
       ``(c) Deductible Liquidating Distributions of Regulated 
     Investment Companies and Real Estate Investment Trusts.--If a 
     corporation receives a distribution from a regulated 
     investment company or a real estate investment trust which is 
     considered under subsection (b) as being in complete 
     liquidation of such company or trust, then, notwithstanding 
     any other provision of this chapter, such corporation shall 
     recognize and treat as a dividend from such company or trust 
     an amount equal to the deduction for dividends paid allowable 
     to such company or trust by reason of such distribution.''.
       (b) Conforming Amendments.--
       (1) The material preceding paragraph (1) of section 332(b) 
     is amended by striking ``subsection (a)'' and inserting 
     ``this section''.
       (2) Paragraph (1) of section 334(b) is amended by striking 
     ``section 332(a)'' and inserting ``section 332''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to distributions after May 21, 1998.
       (d) Assumptions.--In making the estimate required for this 
     Act by section 252(d)(2) of the Balanced Budget and Emergency 
     Deficit Control Act of 1985, that part of the estimate that 
     measures the change in receipts resulting from the amendments 
     made by this section shall be based on up-to-date economic 
     and technical assumptions notwithstanding section 
     252(d)(2)(B) of such Act. All other parts of such estimate 
     required by such section 252(d)(2) shall be made pursuant to 
     the requirements of such section 252(d)(2)(B).

     SEC. 302. INCLUSION OF ROTAVIRUS GASTROENTERITIS AS A TAXABLE 
                   VACCINE.

       (a) In General.--Paragraph (1) of section 4132 (defining 
     taxable vaccine) is amended by adding at the end the 
     following new subparagraph:
       ``(K) Any vaccine against rotavirus gastroenteritis.''.
       (b) Effective Date.--
       (1) Sales.--The amendment made by this section shall apply 
     to sales after the date of the enactment of this Act.
       (2) Deliveries.--For purposes of paragraph (1), in the case 
     of sales on or before the date of the enactment of this Act 
     for which delivery is made after such date, the delivery date 
     shall be considered the sale date.

     SEC. 303. CLARIFICATION AND EXPANSION OF MATHEMATICAL ERROR 
                   ASSESSMENT PROCEDURES.

       (a) TIN Deemed Incorrect if Information on Return Differs 
     With Agency Records.--Paragraph (2) of section 6213(g) 
     (defining mathematical or clerical error) is amended by 
     adding at the end the following flush sentence:

     ``A taxpayer shall be treated as having omitted a correct TIN 
     for purposes of the preceding sentence if information 
     provided by the taxpayer on the return with respect to the 
     individual whose TIN was provided differs from the 
     information the Secretary obtains from the person issuing the 
     TIN.''.
       (b) Expansion of Mathematical Error Procedures to Cases 
     Where TIN Establishes Individual Not Eligible for Tax 
     Credit.--Paragraph (2) of section 6213(g) is amended by 
     striking ``and'' at the end of subparagraph (J), by striking 
     the period at the end of the subparagraph (K) and inserting 
     ``, and'', and by inserting after subparagraph (K) the 
     following new subparagraph:
       ``(L) the inclusion on a return of a TIN required to be 
     included on the return under section 21, 24, or 32 if--
       ``(i) such TIN is of an individual whose age affects the 
     amount of the credit under such section; and
       ``(ii) the computation of the credit on the return reflects 
     the treatment of such individual as being of an age different 
     from the individual's age based on such TIN.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years ending after the date of the 
     enactment of this Act.

     SEC. 304. CLARIFICATION OF DEFINITION OF SPECIFIED LIABILITY 
                   LOSS.

       (a) In General.--Subparagraph (B) of section 172(f)(1) 
     (defining specified liability loss) is amended to read as 
     follows:
       ``(B)(i) Any amount allowable as a deduction under this 
     chapter (other than section 468(a)(1) or 468A(a)) which is in 
     satisfaction of a liability under a Federal or State law 
     requiring--
       ``(I) the reclamation of land;
       ``(II) the decommissioning of a nuclear power plant (or any 
     unit thereof);
       ``(III) the dismantlement of a drilling platform;

[[Page H10627]]

       ``(IV) the remediation of environmental contamination; or
       ``(V) a payment under any workers compensation act (within 
     the meaning of section 461(h)(2)(C)(i)).
       ``(ii) A liability shall be taken into account under this 
     subparagraph only if--
       ``(I) the act (or failure to act) giving rise to such 
     liability occurs at least 3 years before the beginning of the 
     taxable year; and
       ``(II) the taxpayer used an accrual method of accounting 
     throughout the period or periods during which such act (or 
     failure to act) occurred.''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to net operating losses arising in taxable years 
     ending after the date of the enactment of this Act.

                    TITLE IV--TECHNICAL CORRECTIONS

     SEC. 401. DEFINITIONS; COORDINATION WITH OTHER TITLES.

       (a) Definitions.--For purposes of this title--
       (1) 1986 code.--The term ``1986 Code'' means the Internal 
     Revenue Code of 1986.
       (2) 1998 act.--The term ``1998 Act'' means the Internal 
     Revenue Service Restructuring and Reform Act of 1998 (Public 
     Law 105-206).
       (3) 1997 act.--The term ``1997 Act'' means the Taxpayer 
     Relief Act of 1997 (Public Law 105-34).
       (b) Coordination With Other Titles.--For purposes of 
     applying the amendments made by any title of this Act other 
     than this title, the provisions of this title shall be 
     treated as having been enacted immediately before the 
     provisions of such other titles.

     SEC. 402. AMENDMENTS RELATED TO INTERNAL REVENUE SERVICE 
                   RESTRUCTURING AND REFORM ACT OF 1998.

       (a) Amendment Related to Section 1101 of 1998 Act.--
     Paragraph (5) of section 6103(h) of the 1986 Code, as added 
     by section 1101(b) of the 1998 Act, is redesignated as 
     paragraph (6).
       (b) Amendment Related to Section 3001 of 1998 Act.--
     Paragraph (2) of section 7491(a) of the 1986 Code is amended 
     by adding at the end the following flush sentence:

     ``Subparagraph (C) shall not apply to any qualified revocable 
     trust (as defined in section 645(b)(1)) with respect to 
     liability for tax for any taxable year ending after the date 
     of the decedent's death and before the applicable date (as 
     defined in section 645(b)(2)).''.
       (c) Amendments Related to Section 3201 of 1998 Act.--
       (1) Section 7421(a) of the 1986 Code is amended by striking 
     ``6015(d)'' and inserting ``6015(e)''.
       (2) Subparagraph (A) of section 6015(e)(3) is amended by 
     striking ``of this section'' and inserting ``of subsection 
     (b) or (f)''.
       (d) Amendment Related to Section 3301 of 1998 Act.--
     Paragraph (2) of section 3301(c) of the 1998 Act is amended 
     by striking ``The amendments'' and inserting ``Subject to any 
     applicable statute of limitation not having expired with 
     regard to either a tax underpayment or a tax overpayment, the 
     amendments''.
       (e) Amendment Related to Section 3401 of 1998 Act.--Section 
     3401(c) of the 1998 Act is amended--
       (1) in paragraph (1), by striking ``7443(b)'' and inserting 
     ``7443A(b)''; and
       (2) in paragraph (2), by striking ``7443(c)'' and inserting 
     ``7443A(c)''.
       (f) Amendment Related to Section 3433 of 1998 Act.--Section 
     7421(a) of the 1986 Code is amended by inserting ``6331(i),'' 
     after ``6246(b),''.
       (g) Amendment Related to Section 3467 of 1998 Act.--The 
     subsection (d) of section 6159 of the 1986 Code relating to 
     cross reference is redesignated as subsection (e).
       (h) Amendment Related to Section 3708 of 1998 Act.--
     Subparagraph (A) of section 6103(p)(3) of the 1986 Code is 
     amended by inserting ``(f)(5),'' after ``(c), (e),''.
       (i) Amendments Related to Section 5001 of 1998 Act.--
       (1) Subparagraph (B) of section 1(h)(13) of the 1986 Code 
     is amended by striking ``paragraph (7)(A)'' and inserting 
     ``paragraph (7)(A)(i)''.
       (2)(A) Subparagraphs (A)(i)(II), (A)(ii)(II), and (B)(ii) 
     of section 1(h)(13) of the 1986 Code shall not apply to any 
     distribution after December 31, 1997, by a regulated 
     investment company or a real estate investment trust with 
     respect to--
       (i) gains and losses recognized directly by such company or 
     trust, and
       (ii) amounts properly taken into account by such company or 
     trust by reason of holding (directly or indirectly) an 
     interest in another such company or trust to the extent that 
     such subparagraphs did not apply to such other company or 
     trust with respect to such amounts.
       (B) Subparagraph (A) shall not apply to any distribution 
     which is treated under section 852(b)(7) or 857(b)(8) of the 
     1986 Code as received on December 31, 1997.
       (C) For purposes of subparagraph (A), any amount which is 
     includible in gross income of its shareholders under section 
     852(b)(3)(D) or 857(b)(3)(D) of the 1986 Code after December 
     31, 1997, shall be treated as distributed after such date.
       (D)(i) For purposes of subparagraph (A), in the case of a 
     qualified partnership with respect to which a regulated 
     investment company meets the holding requirement of clause 
     (iii)--
       (I) the subparagraphs referred to in subparagraph (A) shall 
     not apply to gains and losses recognized directly by such 
     partnership for purposes of determining such company's 
     distributive share of such gains and losses, and
       (II) such company's distributive share of such gains and 
     losses (as so determined) shall be treated as recognized 
     directly by such company.

     The preceding sentence shall apply only if the qualified 
     partnership provides the company with written documentation 
     of such distributive share as so determined.
       (ii) For purposes of clause (i), the term ``qualified 
     partnership'' means, with respect to a regulated investment 
     company, any partnership if--
       (I) the partnership is an investment company registered 
     under the Investment Company Act of 1940,
       (II) the regulated investment company is permitted to 
     invest in such partnership by reason of section 12(d)(1)(E) 
     of such Act or an exemptive order of the Securities and 
     Exchange Commission under such section, and
       (III) the regulated investment company and the partnership 
     have the same taxable year.
       (iii) A regulated investment company meets the holding 
     requirement of this clause with respect to a qualified 
     partnership if (as of January 1, 1998)--
       (I) the value of the interests of the regulated investment 
     company in such partnership is 35 percent or more of the 
     value of such company's total assets, or
       (II) the value of the interests of the regulated investment 
     company in such partnership and all other qualified 
     partnerships is 90 percent or more of the value of such 
     company's total assets.
       (3) Paragraph (13) of section 1(h) of the 1986 Code is 
     amended by adding at the end the following new subparagraph:
       ``(D) Charitable remainder trusts.--Subparagraphs (A) and 
     (B)(ii) shall not apply to any capital gain distribution made 
     by a trust described in section 664.''
       (j) Amendment Related to Section 7004 of 1998 Act.--Clause 
     (i) of section 408A(c)(3)(C) of the 1986 Code, as amended by 
     section 7004 of the 1998 Act, is amended by striking the 
     period at the end of subclause (II) and inserting ``, and''.
       (k) Effective Date.--The amendments made by this section 
     shall take effect as if included in the provisions of the 
     1998 Act to which they relate.

     SEC. 403. AMENDMENTS RELATED TO TAXPAYER RELIEF ACT OF 1997.

       (a) Amendments Related to Section 202 of 1997 Act.--
       (1) Paragraph (2) of section 163(h) of the 1986 Code is 
     amended by striking ``and'' at the end of subparagraph (D), 
     by striking the period at the end of subparagraph (E) and 
     inserting ``, and'', and by adding at the end the following 
     new subparagraph:
       ``(F) any interest allowable as a deduction under section 
     221 (relating to interest on educational loans).''
       (2)(A) Subparagraph (C) of section 221(b)(2) of the 1986 
     Code is amended--
       (i) by striking ``135, 137,'' in clause (i),
       (ii) by inserting ``135, 137,'' after ``sections 86,'' in 
     clause (ii), and
       (iii) by striking the last sentence.
       (B) Sections 86(b)(2)(A), 135(c)(4)(A), and 
     219(g)(3)(A)(ii) of the 1986 Code are each amended by 
     inserting ``221,'' after ``137,''.
       (C) Subparagraph (A) of section 137(b)(3) of the 1986 Code 
     is amended by inserting ``221,'' before ``911,''.
       (D) Clause (iii) of section 469(i)(3)(E) of the 1986 Code 
     is amended to read as follows:
       ``(iii) the amounts allowable as a deduction under sections 
     219 and 221, and''.
       (3) The last sentence of section 221(e)(1) of the 1986 Code 
     is amended by inserting before the period ``or to any person 
     by reason of a loan under any qualified employer plan (as 
     defined in section 72(p)(4)) or under any contract referred 
     to in section 72(p)(5)''.
       (b) Provision Related to Section 311 of 1997 Act.--In the 
     case of any capital gain distribution made after 1997 by a 
     trust to which section 664 of the 1986 Code applies with 
     respect to amounts properly taken into account by such trust 
     during 1997, paragraphs (5)(A)(i)(I), (5)(A)(ii)(I), and 
     (13)(A) of section 1(h) of the 1986 Code (as in effect for 
     taxable years ending on December 31, 1997) shall not apply.
       (c) Amendment Related to Section 506 of 1997 Act.--Section 
     2001(f)(2) of the 1986 Code is amended by adding at the end 
     the following:

     ``For purposes of subparagraph (A), the value of an item 
     shall be treated as shown on a return if the item is 
     disclosed in the return, or in a statement attached to the 
     return, in a manner adequate to apprise the Secretary of the 
     nature of such item.''.
       (d) Amendments Related to Section 904 of 1997 Act.--
       (1) Paragraph (1) of section 9510(c) of the 1986 Code is 
     amended to read as follows:
       ``(1) In general.--Amounts in the Vaccine Injury 
     Compensation Trust Fund shall be available, as provided in 
     appropriation Acts, only for--
       ``(A) the payment of compensation under subtitle 2 of title 
     XXI of the Public Health Service Act (as in effect on August 
     5, 1997) for vaccine-related injury or death with respect to 
     any vaccine--
       ``(i) which is administered after September 30, 1988, and
       ``(ii) which is a taxable vaccine (as defined in section 
     4132(a)(1)) at the time compensation is paid under such 
     subtitle 2, or
       ``(B) the payment of all expenses of administration (but 
     not in excess of $9,500,000 for any fiscal year) incurred by 
     the Federal Government in administering such subtitle.''.

[[Page H10628]]

       (2) Section 9510(b) of the 1986 Code is amended by adding 
     at the end the following new paragraph:
       ``(3) Limitation on transfers to vaccine injury 
     compensation trust fund.--No amount may be appropriated to 
     the Vaccine Injury Compensation Trust Fund on and after the 
     date of any expenditure from the Trust Fund which is not 
     permitted by this section. The determination of whether an 
     expenditure is so permitted shall be made without regard to--
       ``(A) any provision of law which is not contained or 
     referenced in this title or in a revenue Act, and
       ``(B) whether such provision of law is a subsequently 
     enacted provision or directly or indirectly seeks to waive 
     the application of this paragraph.''.
       (e) Amendments Related to Section 915 of 1997 Act.--
       (1) Section 915 of the 1997 Act is amended--
       (A) in subsection (b), by inserting ``or 1998'' after 
     ``1997'', and
       (B) by amending subsection (d) to read as follows:
       ``(d) Effective Date.--This section shall apply to taxable 
     years ending with or within calendar year 1997.''.
       (2) Paragraph (2) of section 6404(h) of the 1986 Code is 
     amended by inserting ``Robert T. Stafford'' before 
     ``Disaster''.
       (f) Amendments Related to Section 1012 of 1997 Act.--
       (1) Paragraph (2) of section 351(c) of the 1986 Code, as 
     amended by section 6010(c) of the 1998 Act, is amended by 
     inserting ``, or the fact that the corporation whose stock 
     was distributed issues additional stock,'' after ``dispose of 
     part or all of the distributed stock''.
       (2) Clause (ii) of section 368(a)(2)(H) of the 1986 Code, 
     as amended by section 6010(c) of the 1998 Act, is amended by 
     inserting ``, or the fact that the corporation whose stock 
     was distributed issues additional stock,'' after ``dispose of 
     part or all of the distributed stock''.
       (g) Provision Related to Section 1042 of 1997 Act.--Rules 
     similar to the rules of section 1.1502-75(d)(5) of the 
     Treasury Regulations shall apply with respect to any 
     organization described in section 1042(b) of the 1997 Act.
       (h) Amendment Related to Section 1082 of 1997 Act.--
     Subparagraph (F) of section 172(b)(1) of the 1986 Code is 
     amended by adding at the end the following new clause:
       ``(iv) Coordination with paragraph (2).--For purposes of 
     applying paragraph (2), an eligible loss for any taxable year 
     shall be treated in a manner similar to the manner in which a 
     specified liability loss is treated.''
       (i) Amendment Related to Section 1084 of 1997 Act.--
     Paragraph (3) of section 264(f) of the 1986 Code is amended 
     by adding at the end the following flush sentence:

     ``If the amount described in subparagraph (A) with respect to 
     any policy or contract does not reasonably approximate its 
     actual value, the amount taken into account under 
     subparagraph (A) shall be the greater of the amount of the 
     insurance company liability or the insurance company reserve 
     with respect to such policy or contract (as determined for 
     purposes of the annual statement approved by the National 
     Association of Insurance Commissioners) or shall be such 
     other amount as is determined by the Secretary.''
       (j) Amendment Related to Section 1175 of 1997 Act.--
     Subparagraph (C) of section 954(e)(2) of the 1986 Code is 
     amended by striking ``subsection (h)(8)'' and inserting 
     ``subsection (h)(9)''.
       (k) Amendment Related to Section 1205 of 1997 Act.--
     Paragraph (2) of section 6311(d) of the 1986 Code is amended 
     by striking ``under such contracts'' in the last sentence and 
     inserting ``under any such contract for the use of credit, 
     debit, or charge cards for the payment of taxes imposed by 
     subtitle A''.
       (l) Effective Date.--The amendments made by this section 
     shall take effect as if included in the provisions of the 
     1997 Act to which they relate.

     SEC. 404. AMENDMENTS RELATED TO TAX REFORM ACT OF 1984.

       (a) In General.--Subparagraph (C) of section 172(d)(4) of 
     the 1986 Code is amended to read as follows:
       ``(C) any deduction for casualty or theft losses allowable 
     under paragraph (2) or (3) of section 165(c) shall be treated 
     as attributable to the trade or business; and''.
       (b) Conforming Amendments.--
       (1) Paragraph (3) of section 67(b) of the 1986 Code is 
     amended by striking ``for losses described in subsection 
     (c)(3) or (d) of section 165'' and inserting ``for casualty 
     or theft losses described in paragraph (2) or (3) of section 
     165(c) or for losses described in section 165(d)''.
       (2) Paragraph (3) of section 68(c) of the 1986 Code is 
     amended by striking ``for losses described in subsection 
     (c)(3) or (d) of section 165'' and inserting ``for casualty 
     or theft losses described in paragraph (2) or (3) of section 
     165(c) or for losses described in section 165(d)''.
       (3) Paragraph (1) of section 873(b) is amended to read as 
     follows:
       ``(1) Losses.--The deduction allowed by section 165 for 
     casualty or theft losses described in paragraph (2) or (3) of 
     section 165(c), but only if the loss is of property located 
     within the United States.''
       (c) Effective Dates.--
       (1) The amendments made by subsections (a) and (b)(3) shall 
     apply to taxable years beginning after December 31, 1983.
       (2) The amendment made by subsection (b)(1) shall apply to 
     taxable years beginning after December 31, 1986.
       (3) The amendment made by subsection (b)(2) shall apply to 
     taxable years beginning after December 31, 1990.

     SEC. 405. OTHER AMENDMENTS.

       (a) Amendments Related to Section 6103 of 1986 Code.--
       (1) Subsection (j) of section 6103 of the 1986 Code is 
     amended by adding at the end the following new paragraph:
       ``(5) Department of agriculture.--Upon request in writing 
     by the Secretary of Agriculture, the Secretary shall furnish 
     such returns, or return information reflected thereon, as the 
     Secretary may prescribe by regulation to officers and 
     employees of the Department of Agriculture whose official 
     duties require access to such returns or information for the 
     purpose of, but only to the extent necessary in, structuring, 
     preparing, and conducting the census of agriculture pursuant 
     to the Census of Agriculture Act of 1997 (Public Law 105-
     113).''.
       (2) Paragraph (4) of section 6103(p) of the 1986 Code is 
     amended by striking ``(j)(1) or (2)'' in the material 
     preceding subparagraph (A) and in subparagraph (F) and 
     inserting ``(j)(1), (2), or (5)''.
       (3) The amendments made by this subsection shall apply to 
     requests made on or after the date of the enactment of this 
     Act.
       (b) Amendment Related to Section 9004 of Transportation 
     Equity Act for the 21st Century.--
       (1) Paragraph (2) of section 9503(f) of the 1986 Code is 
     amended to read as follows:
       ``(2) notwithstanding section 9602(b), obligations held by 
     such Fund after September 30, 1998, shall be obligations of 
     the United States which are not interest-bearing.''
       (2) The amendment made by paragraph (1) shall take effect 
     on October 1, 1998.
       (c) Amendment Related to Treasury and General Government 
     Appropriations Act, 1999.--
       (1) The Treasury and General Government Appropriations Act, 
     1999 is amended by striking section 804 (relating to 
     technical and clarifying amendments relating to judicial 
     retirement program).
       (2) The amendment made by paragraph (1) shall take effect 
     as if such section 804 had never been enacted.
       (d) Clerical Amendments.--
       (1) Clause (i) of section 51(d)(6)(B) of the 1986 Code is 
     amended by striking ``rehabilitation plan'' and inserting 
     ``plan for employment''. The reference to ``plan for 
     employment'' in such clause shall be treated as including a 
     reference to the rehabilitation plan referred to in such 
     clause as in effect before the amendment made by the 
     preceding sentence.
       (2) Paragraph (3) of section 56(a) of the 1986 Code is 
     amended by striking ``section 460(b)(2)'' and inserting 
     ``section 460(b)(1)'' and by striking ``section 460(b)(4)'' 
     and inserting ``section 460(b)(3)''.
       (3) Paragraph (10) of section 2031(c) of the 1986 Code is 
     amended by striking ``section 2033A(e)(3)'' and inserting 
     ``section 2057(e)(3)''.
       (4) Subparagraphs (C) and (D) of section 6693(a)(2) of the 
     1986 Code are each amended by striking ``Section'' and 
     inserting ``section''.

  The SPEAKER pro tempore. Pursuant to the rule, the gentleman from 
Texas (Mr. Archer) and the gentleman from New York (Mr. Rangel) each 
will control 20 minutes.
  The Chair recognizes the gentleman from Texas (Mr. Archer).


                             General Leave

  Mr. ARCHER. Madam Speaker, I ask unanimous consent that all Members 
may have 5 legislative days within which to revise and extend their 
remarks and include extraneous material on H.R. 4738, as amended.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from Texas?
  There was no objection.
  Mr. ARCHER. Madam Speaker, I yield myself such time as I may consume.
  Madam Speaker, the plan before us today does three principal things: 
It extends a series of tax relief provisions to help businesses create 
jobs; it helps people coming off of welfare as well as other hard to 
place workers to get jobs; and it includes three provisions to help 
farmers and ranchers who have been hard hit by tough times.
  This plan gives farmers and other small business owners 100 percent 
deduction for their health insurance costs in the year 2003, four years 
earlier than current law.
  I am particularly pleased about two other agricultural provisions. 
The bill lets farmers benefit from permanent income averaging, and the 
other provision protects family farmers from having to pay tax on farm 
program payments that have not actually been received in the year.
  Due to the importance of this non-controversial bill, I hope and 
expect that it will be passed in the Senate so it can be signed into 
law.

[[Page H10629]]

  I thank the Members who suggested ideas that are included in the 
plan, and I thank the minority for their cooperation in expediting 
consideration of the bill on the floor today.
  Madam Speaker, I reserve the balance of my time.
  Mr. RANGEL. Madam Speaker, I yield myself such time as I may consume.
  Madam Speaker, I rise in support of the bill before us today. It 
should have been before this House a long time ago. Provisions such as 
the research tax credit and work opportunity tax credit should have 
been extended. A lot of people have depended on it.
  We Democrats have agreed not to offer any amendments because we 
believe to do so would have delayed the enactment of this very 
important legislation.
  However, in other circumstances there would have been several 
amendments that we would have proposed. On October 1st of this year, 
the temporary increase in the rum carry-over provision expired. Failure 
to extend that temporary increase will have adverse consequences to 
Puerto Rico and the Virgin Islands. I am very disappointed that we are 
not able to extend that temporary increase in this bill.
  Extensions of my qualified zone academy zone program would have been 
a big step in addressing the large need of school construction and 
modernization. The provision previously adopted by the House that 
liberalized the arbitrage rules for school construction bond would do 
little to meet school construction needs.
  I am also disappointed that the bill does not extend the welfare to 
work credit. It expires at the end of April of next year, and 
realistically there is little prospect for enacting a timely extension 
next year.
  There is also broad bipartisan support on this committee for an 
increase in the low income housing tax credit program. There is no 
reason why we should not have been able to do that in the context of 
this legislation. Next year American families with children will be 
faced with extraordinary complex rules when claiming the child credit 
enacted last year. There is no justification for the complexity of 
those rules and this committee should have adopted the legislation of 
the gentleman from Massachusetts (Mr. Neal) that would waive in tax 
year 1998 the minimum tax limitation on the child credit.
  I do not understand why reauthorization of the trade adjustment 
assistance program for workers and firms which terminated on September 
3 was not included in this package.
  The Senate has a different version of this legislation, and I think 
the other body's version is far superior to what we have to today, but 
in particular I support the extension of trade adjustment assistance 
and the minimum tax waiver contained in the other body's version. I am 
hopeful that disagreements over the detail of this legislation will not 
endanger its enactment.
  Madam Speaker, I reserve the balance of my time.
  Mr. ARCHER. Madam Speaker, I yield such time as he may consume to the 
gentleman from Louisiana (Mr. McCrery).
  (Mr. McCRERY asked and was given permission to revise and extend his 
remarks.)
  Mr. McCRERY. Madam Speaker, I rise in support of this tax bill.
  Madam Speaker, I commend Chairman Archer on the inclusion in this 
bill of the provision to modify and extend the present law treatment of 
active financial services income under Subpart F of the Internal 
Revenue Code. The provision permits U.S.-based finance companies, 
insurance companies banks, securities dealers, and other financial 
services firms to act like other U.S. industries doing business abroad 
and defer U.S. tax on the earnings from the active operations of their 
foreign subsidiaries until such earnings are returned to the U.S. 
parent company.
  In particular, I commend Chairman Archer and his staff for the 
resolution of two questions relating to the interaction of this subpart 
F provision. The first deals with active financial services income and 
the ability of the U.S. financial services industry to use so-called 
hybrid arrangements and other techniques to reduce their foreign taxes. 
The second clarifies whether the subpart F provision will work as 
intended if the Treasury Department fails to make current, effective 
conforming changes to existing regulations, such as the exception for 
same-country dividends and interest.
  Additionally, I understand that the provision to modify and extend 
the present law treatment of active financial services income under 
Subpart F contemplates that the Treasury Department will make current 
effective conforming changes to existing regulations that do not take 
account the exception provided by the provision. As an example, it is 
intended that debt instruments held by a U.S.-controlled foreign 
corporation, the income from which qualifies for the treatment provided 
by the bill, will be considered to be assets used in a trade or 
business for purposes of the regulatory requirements under the 
exception for same-country dividends and interest.
  There clarifications are necessary because in January of this year, 
the Treasury Department issued Notice 98-11, attacking the use of 
hybrid arrangements to reduce the foreign taxes of U.S.-owned foreign 
companies. Chairman Archer, along with a bipartisan majority of the 
Ways and Means Committee, strongly opposed the Treasury Department's 
action on Notice 98-11. In response to the concerns raised by Chairman 
Archer, in June of this year, the Treasury Department issued Notice 98-
35, the purpose of which was ``to allow Congress an appropriate period 
to review the important policy issues raised . . . and if appropriate 
address the issues by legislation.'' Notice 98-35 also anticipated, and 
explicitly provided for, the use of hybrid arrangements to reduce 
foreign taxes with respect to financial services income, and provided 
specific rules for this application during the interim.
  I am very pleased that the provision modifying and extending the 
subpart F exception for active financial services income was carefully 
drafted so that nothing in the provision would authorize or allow the 
exception to be denied because a hybrid arrangement, or any other 
technique available under foreign law, is used to reduce foreign tax.
  Mr. RANGEL. Madam Speaker, I yield 2 minutes to the gentleman from 
Maryland (Mr. Cardin).
  Mr. CARDIN. Madam Speaker, first let me thank my friend from New York 
and my friend from Texas for bringing this matter to the floor. I 
strongly support the bill before us.
  Principally let me say that this bill provides some relief to people 
that are needed and it provides some help to businesses. It is a good 
bill and it is paid for. It will not violate our commitment to preserve 
all of the surplus until we have come up with a plan to save Social 
Security. So this is a bill that I believe will enjoy broad support in 
this House because it does good things and it is totally paid for.
  As the chairman pointed out, it accelerates the self-employed health 
insurance benefits. That is good. On both sides of the aisle we have 
been trying to help self-employed people by making it easier for them 
to provide health benefits to their employees.
  It extends expiring tax provisions, the research tax credit, very 
important for this Nation for research and development as well as the 
work opportunity tax credit, which is used to help people find 
employment, which will be very difficult otherwise. It has been a very 
successful program and this bill extends that program. Contributions to 
private foundations of appreciated property, we make that permanent. 
That will help private foundations in their efforts to carry out their 
charitable activities.
  As the chairman pointed out, there are very good provisions in here 
for farmers, including income averaging, ones that are generally 
supported.
  One additional provision I would like to compliment the chairman for 
including deals with private activity bond caps. By raising those caps, 
we are going to help state and local governments in dealing with a lot 
of the infrastructure needs of this country. It is a good provision.
  The provisions in here are all good, they are paid for, and I urge my 
colleagues to support them. I join with the ranking member in my 
disappointment that we do not have other provisions that should be 
included in a tax bill before we adjourn, and hopefully we will be able 
to work out some additional provisions before Congress adjourns this 
year.
  Mr. RANGEL. Madam Speaker, I yield 5 minutes to the gentleman from 
Massachusetts (Mr. Neal).
  (Mr. NEAl of Massachusetts asked and was given permission to revise 
and extend his remarks.)
  Mr. NEAL of Massachusetts. Madam Speaker, I want to thank first of 
all the gentleman from New York (Mr. Rangel) and the gentleman from 
Texas (Mr. Archer) for bringing this bill to the floor. I believe that, 
by and large, this is a very good piece of legislation.

[[Page H10630]]

                              {time}  1745

  I support extension of the expiring provisions, and I am pleased that 
we will have this chance today to ensure that these provisions do not 
expire and that there will be no lapse in these valuable tax credits.
  The Research Experimentation Credit is important to Massachusetts. 
Massachusetts is the home of many high-tech companies and universities 
that develop technology. The research tax credit inspires the 
development of technology, which leads to both economic and job growth. 
The work opportunity tax credit plays a vital role in helping 
individuals move from welfare to work. This credit is a valuable 
program that enables many individuals to become self-sufficient. The 
program has been effective, and it should indeed be continued.
  Madam Speaker, there is one provision I believe, however, that should 
have been included in this legislation. Recently I have introduced 
legislation, H.R. 4611, which provides a temporary waiver for the 
taxable year 1998 of minimum tax rules that deny many families the full 
amount of the nonrefundable personal credit such as the child tax 
credit and the HOPE and lifetime learning credits.
  The Senate finance package included this provision in their extenders 
bill. I commend them for addressing this important issue, and I hope 
that we will seriously consider accepting this provision from the 
Senate.
  The Senate bill strikes the appropriate balance between families and 
business. The House bill addresses important issues, but the Senate 
bill, I believe, goes further in including an extremely important 
provision for families, temporary relief from the interaction of the 
minimum tax with the child tax credit.
  Without this fix, all families who claim the child credit with 
incomes above $45,000 for joint filers and $33,750 for single filers 
will be required to make some sort of minimum tax calculation. The 
minimum tax is not only complicated, it can penalize middle income 
taxpayers who claim the new personal tax credits.
  The Department of Treasury estimates that, in 1998, the alternative 
minimum tax will deny 800,000 taxpayers who are entitled to both the 
child tax credit and the education tax credit the full benefits of 
these credits.
  Without enactment of legislation to address this issue, taxpayers who 
are planning to claim the child credit should be warned that the 
computation of their taxes will be difficult, time consuming and, I 
believe, unnecessarily complex. Without simplifying the child tax 
credit, the child tax credit form that will be required on next year's 
tax filing will become a nightmare.
  Madam Speaker, it is a shame that we did not address this issue in 
this bill today. The Joint Committee on Taxation estimates that a 1-
year solution for taxable year 1998 would cost $474 million. But by not 
addressing the interaction of minimum tax with nonrefundable personal 
credits, many families will be cheated of the credits that we, indeed, 
promised them. The average family will have to pay a tax return 
preparer in order to fill out forms for these new credits.
  Let me also share a quote with my colleagues from a letter that I 
witnessed today from the editor of Tax Notes, Mr. Christopher Bergin. 
He says,

       Apparently, few of us Washington types are surprised that 
     the basis of the bill Republican leaders were trying to build 
     at the last minute is a package extending expiring provisions 
     that help mostly business or rich people who like to name 
     foundations after themselves. But House leaders are taking 
     the chance that those outside of Washington, the average 
     taxpayers, may figure out that their congressional 
     representatives did not have time to prevent the alternative 
     minimum tax from eating their child credits because they were 
     too busy taking care of multinational financial 
     intermediaries.

  I disagree with part of what was stated, but I also believe that we 
should have taken up this issue, and I hope that we will do so in the 
near future.
  I have introduced a permanent solution this year, and I hope that we 
will give families the opportunity that we stated just a short time 
ago, and I hope that we will not bury them in their tax forms come 
1999.
  I also thank the gentleman from Texas (Mr. Archer) and the gentleman 
from New York (Mr. Rangel) once again for getting this bill to the 
floor. By and large, it is a very good piece of legislation.
  Madam Speaker, I support extension of the expiring tax provisions. 
Unfortunately, this was a very small bill whose main purpose was to 
extend the expiring provisions. Other valuable provisions were not able 
to be included. I would like to briefly mention a provision that was 
included in the House-passed version of the Taxpayer Relief Act of 
1997, but it was not enacted because it was not included in the 
conference agreement.
  This provision clarifies the tax treatment of the state-mandated 
consolidation of mutual savings bank life insurance departments. 
Savings Bank Life Insurance is unique to the three States of New York, 
Connecticut, and Massachusetts. Last year with the help of Chairman 
Archer, the House addressed this issue.
  This provision clarifies the tax treatment of a 12-year dividends 
payout associated with a state-mandated consolidation by treating it as 
a deductible policyholder dividend rather than a non-deductible 
redemption of equity. This provision is extremely important to 
Massachusetts because in 1990, the State legislature consolidated the 
State's saving bank life insurance departments into a new non-public 
stock company, while still providing for the sale of its products 
through these State banking institutions. New York and Connecticut may 
follow the consolidation approach taken by Massachusetts.
  I am enclosing a letter to Chairman Archer thanking him for his 
assistance on this issue. I look forward to bringing closure to this 
issue next Congress.

                                    Congress of the United States,


                                     House of Representatives,

                                  Washington, DC, October 8, 1998.
     Hon. Chairman Bill Archer,
     Chairman, Committee on Ways and Means,
     Longworth HOB, Washington, DC.
       Dear Chairman Archer: I am writing to thank you for your 
     continued support for a provision that addresses potential 
     adverse consequences for Savings Bank Life Insurance (SBLI) 
     institutions that are unique to the three states of New York, 
     Connecticut, and Massachusetts. Last year with your 
     invaluable assistance, a provision was included in the House 
     passed Taxpayer Relief Act of 1997, but it was not enacted 
     because it was not included in the conference agreement for 
     that legislation. The provision would clarify the tax 
     treatment of the state-mandated consolidation of mutual 
     savings banks' life insurance departments.
       More specifically, the provision would clarify how the 
     Internal Revenue Code of 1986 should treat certain 
     policyholder dividends mandated by the Massachusetts State 
     Legislature in 1990. This legislation consolidated the 
     state's saving bank life insurance departments into a new 
     non-public stock company, while still providing for the sale 
     of its products through these state banking institutions. 
     Because of the IRS's interpretation of current law, it is 
     essential that Congress clarify that the 12-year dividends 
     payout associated with this consolidation should be treated 
     as a deductible policyholder dividend rather than a non-
     deductible redemption of equity.
       While only the Savings Bank Life Insurance Company of 
     Massachusetts will be affected by the IRS's current 
     interpretation of the Code, the SBLI industries in both New 
     York and Connecticut may be adversely affected if the Code is 
     not properly clarified because they may follow the 
     consolidation approach taken by Massachusetts.
       Once again, Mr. Chairman thank you for your assistance. I 
     look forward to working with you on this issue next Congress.
           Sincerely,
                                                  Richard E. Neal,
                                               Member of Congress.

  Mr. ARCHER. Madam Speaker, I yield myself such time as I may consume.
  I would simply to respond to the gentleman from Massachusetts on the 
issue of removing from the alternative minimum tax formula many of the 
nonrefundable credits that would help higher middle income people.
  The gentleman I am surprised would make the statement that he made, 
because we not only have considered that, it was part of the tax bill 
that passed the House of Representatives and made permanent in that 
bill, and that bill is currently over in the Senate being held up by 
the minority that refuses to let it pass cloture and be adopted.
  So that provision not only takes care of 1998 but takes care of all 
succeeding years, because it is a permanent provision in the law. I am 
sure the gentleman did not mean to imply that we had been callous 
relative to that issue this year, because we certainly have not.
  Madam Speaker, I reserve the balance of my time.
  Mr. RANGEL. Madam Speaker, I yield 3 minutes to the gentlewoman from 
Michigan (Ms. Stabenow).

[[Page H10631]]

  Ms. STABENOW. Madam Speaker, I would first like to commend the 
leadership of the Committee on Ways and Means for this bill. There are 
some very, very important provisions in this bill that will certainly 
help the people that I represent in Michigan.
  I would like to highlight just a couple of those of particular 
significance. One is the permanent extension of income-averaging for 
farmers. I was pleased the day that I was sworn into the 105th 
Congress, along with my friend and colleague from Michigan, Nick Smith, 
to be cosponsoring legislation to provide a permanent extension of 
income-averaging for farmers, and I am very pleased to see this in this 
legislation, as am I pleased to see the permanent extension of the 
current provisions regarding contributions for private foundation.
  I also think it is very important that we have accelerated the 
deduction for health care for self-employed individuals. I would only 
ask that, as we move forward, that instead of continuing to extend the 
research tax credit year-by-year, that we seriously consider and, in 
fact, in the coming year, if not in this bill, permanently extend the 
research tax credit so that those involved in the critical long-term 
research efforts of this country know and can plan for the long term as 
they make decisions that will create jobs for American workers and 
important new discoveries for Americans.
  Madam Speaker, I have twice authored in the last 2 years letters to 
the President and to my colleagues urging that we adopt a permanent 
extension of the research tax credit. Over 140 Members of this House 
have signed those letters, and I notice that as we debate the question 
of the advanced technology program and other programs where Members 
have indicated that they believe that the private sector should be 
taking the leadership in research efforts, long-term, risky research 
efforts for the country, that, as we do that, we send a mixed message 
when we, in fact, do not permanently extend the research tax credit for 
our country.
  So I would urge that, as we move forward, that we make that permanent 
extension a top priority.
  Mr. RANGEL. Madam Speaker, I yield back the balance of my time.
  Mr. ARCHER. Madam Speaker, I include for the Record at this point the 
final revenue table for the bill.

                        ESTIMATED BUDGET EFFECTS OF H.R. 4738, THE ``REVENUE EXTENSION ACT OF 1998,'' TO BE CONSIDERED UNDER SUSPENSION ON THE HOUSE FLOOR--FISCAL YEARS
                                                                                    [In millions of dollars]
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
              Provision                      Effective           1999       2000       2001       2002       2003       2004       2005       2006       2007     1999-02    2003-07    1999-07
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
1. Extension of Expiring Provisions:
    A. Extending the R&E Credit       7/1/98................     -1,526       -866       -409       -296       -170        -39  .........  .........  .........     -3,907       -209     -3,306
     (through 12/31/99).
    B. Extend Work Opportunity Tax    wpoifibwa 6/30/98.....       -245       -227       -126        -50        -18         -3  .........  .........  .........       -648        -21       -669
     Credit (through 12/31/99).
    C. Extend Contributions of        7/1/98 \1\............        -23        -56        -71        -83        -91        -95       -100       -104       -109       -233       -499       -732
     Appreciated Stock to Private
     Foundations (permanent); Public
     Inspection of Private
     Foundation Annual Returns.
    D. 1-Year Modified Extension of   tybi 1999.............       -117       -378  .........  .........  .........  .........  .........  .........  .........       -495  .........       -495
     Exemption from Subpart F for
     Active Financing Income (as in
     H.R. 4579).
    E. Extend the Generalized System  7/1/98................       -393        -84  .........  .........  .........  .........  .........  .........  .........       -477  .........       -477
     of Preferences (through 12/31/
     88) \2\.
    F. Permanent Extension of Income  tyba 12/31/00.........  .........  .........         -2        -21        -22        -22        -23        -24        -24        -23       -115       -138
     Averaging for Farmers.
    G. Extension of Tex Information   10/1/98...............                                                        Negligible Budget Effect
     Reporting for Income Contingent
     Student Loan Program \2\.
                                     -----------------------------------------------------------------------------------------------------------------------------------------------------------
        Subtotal of Extension of      ......................     -2,304     -1,611       -608       -450       -301       -159       -123       -128       -133     -4,973       -844     -5,817
         Expiring Provisions.
II. Other Provisions:
    A. Treasury Study on              ......................  .........  .........  .........  .........  .........  .........  .........  .........  .........  .........  .........  .........
     Depreciation (due 3/31/00).
    B. Production Flexibility         tyea 12/31/95.........                                                       Negligible Revenue Effect
     Contract Payments to Farmers
     Not Included in Income Prior to
     Receipt.
    C. Self-Employed Health           tyba 12/31/02.........  .........  .........  .........  .........       -206       -637       -680       -602       -257  .........     -2,382     -2,382
     Insurance Deduction--100% in
     2003 and thereafter.
    D. Increase Private Activity      1/1/03................  .........  .........  .........  .........        -11        -44       -111       -177       -252  .........       -595       -595
     Bond Volume Cap to the Greater
     of $55 Per Capita or $165
     Million Starting in 2003;
     Phased in Ratably to the
     Greater of $75 Million Per
     Capita or $225 million in 2007.
    E. Prior Year Estimated Tax Safe  tyba 12/31/99.........  .........        525  .........       -525  .........  .........  .........  .........  .........  .........  .........  .........
     Harbor for Individuals With AGI
     over $150,000 (106% in 2000 and
     2001).
    F. State Election to Exempt       spa 6/30/00...........  .........         -5        -47        -49        -51        -52        -54        -56        -58       -101       -271       -372
     Student Employees From Social
     Security \2\.
                                     -----------------------------------------------------------------------------------------------------------------------------------------------------------
        Subtotal of Other Provisions  ......................  .........        520        -47       -574       -268       -733       -845       -835       -567       -101     -3,248     -3,349
III. Revenue Offset Provision:
    A. Change the Treatment of        dma 5/21/98...........      2,425      1,109        723        640        672        705        741        778        817      4,897      3,713      8,610
     Certain Deductible Liquidating
     Distributions of RICs and REITs.
    B. Add Vaccines Against           vpa DOE...............          1          2          3          4          5          6          6          6          7         11         31         42
     Rotavirus Gastroenteritis to
     the List of Taxable Vaccines
     ($0.75 per dose).
    C. Clarify and Expand Math Error  tyea DOE..............         12         25         26         27         28         29         30         31         32         90        150        240
     Procedures.
    D. Restrict Special Net           NOLgi tyea DOE........         14         21         29         39         42         40         40         40         42        103        204        308
     Operating Loss Carryback Rules
     for Specified Liability Losses.
                                     -----------------------------------------------------------------------------------------------------------------------------------------------------------
        Subtotal of Revenue Offset    ......................      2,452      1,157        781        710        747        780        817        855        898      5,101      4,098      9,200
         Provisions.
IV. Tax Technical Corrections         ......................                                                           No Revenue Effect
 Provisions.
                                     ===========================================================================================================================================================
            Net Total...............  ......................        148         66        126       -314        178       -112       -151       -108        198         27          6        34
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
SOURCE: Joint Committee on Taxation.
NOTE: Details may not add to totals due to rounding.
Legend for ``Effective column: dma=distributions made after; DOE=date of enactment; NOLgi=net operating losses generated in; spa=services performed after; tyba=taxable years begining after;
  tybi=taxable years beginning in; tyea=taxable years ending after; vpa=vaccines purchased after; wpoifibwa=wages paid or incurred for individuals beginning work after.
\1\ The additional public inspection provisions apply to requests made after the later of the date which is 60 days after the date on which the Treasury Department publishes regulations or 12/
  31/98.
\2\ Estimate provided by the Congressional Budget Office.


  Mr. SMITH of Oregon. Madam Speaker, I appreciate the opportunity to 
rise once again in support of tax relief for America's farmers and 
ranchers. Regrettably, even though Chairman Archer's laudatory efforts 
recently to provide substantial tax relief to our agricultural 
producers, small businessmen, and families will not move forward, the 
American people now understand which party is for lower taxes and sound 
tax policy.
  Today, Chairman Archer brings to the floor a scaled-down package of 
Tax Code extensions, which appear to enjoy the support of Congress and 
the administration. I regret we cannot do more; but I applaud the Ways 
and Means Committee for not giving up on the American people.
  Making income averaging permanent provides U.S. farmers and ranchers 
a useful tool they may use to even out their tax liabilities from one 
year to the next. In agriculture, and

[[Page H10632]]

especially in light of the current crisis, this significantly mitigates 
the economic hazards of farming and ranching.
  The bill also accelerates the phase-in of the health insurance 
deduction that will be extremely helpful to farmers and other self-
employed people and their families. The full deduction will be realized 
in 2003.
  Finally, Madam Speaker, this bill assists agricultural producers in 
meeting their tax obligations under the Agricultural Market Transition 
Act (AMTA) of the 1996 farm bill. Congress already has provided the 
USDA with authority to speed up AMTA payments, which will help many 
farmers this year, and with this bill, these payments will receive an 
appropriate tax treatment.
  This is a good bill. It will be helpful to American agriculture, and 
it is the very least we can do. I urge all my colleagues will vote for 
it.
  Mr. ARCHER. Madam Speaker, I yield back the balance of my time.
  The SPEAKER pro tempore. The question is on the motion offered by the 
gentleman from Texas (Mr. Archer) that the House suspend the rules and 
pass the bill, H.R. 4738, as amended.
  The question was taken; and (two-thirds having voted in favor 
thereof) the rules were suspended and the bill, as amended, was passed.
  A motion to reconsider was laid on the table.

                          ____________________