[Congressional Record Volume 145, Number 94 (Tuesday, June 29, 1999)]
[Senate]
[Pages S7826-S7827]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. MURKOWSKI (for himself, Mr. Breaux, Mr. Gorton, Mr. 
        Cochran, Mr. Hutchinson, Ms. Collins, Mrs. Lincoln, Mr. Shelby, 
        Ms. Snowe, Mrs. Murray, Mr. Sessions, Mr. Smith of Oregon, Mrs. 
        Hutchison, Mr. Grams, and Ms. Landrieu):
  S. 1303. A bill to amend the Internal Revenue Code of 1986 to modify 
certain provisions relating to the treatment of forestry activities; to 
the Committee on Finance.


                   THE REFORESTATION TAX ACT OF 1999

  Mr. MURKOWSKI. Mr. President, on June 17, I introduced bipartisan 
legislation (1240) providing capital gains for the forest products 
industry and lifting the existing cap on the reforestation tax credit 
and amortization provisions of the tax Code.
  Unfortunately, because of a clerical error, the section of the bill 
that lifted the cap on the tax credit and the amortization provisions 
of the Code was inadvertently omitted from the bill. Today I am 
reintroducing the bill as it was originally intended to be drafted.
  I ask unanimous consent that the text of the bill be printed in the 
Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 1303

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

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Reforestation Tax Act of 
     1999''.

     SEC. 2. PARTIAL INFLATION ADJUSTMENT FOR TIMBER.

       (a) In General.--Part I of subchapter P of chapter 1 of the 
     Internal Revenue Code of 1986 (relating to treatment of 
     capital gains) is amended by adding at the end the following 
     new section:

     ``SEC. 1203. PARTIAL INFLATION ADJUSTMENT FOR TIMBER.

       ``(a) In General.--At the election of any taxpayer who has 
     qualified timber gain for any taxable year, there shall be 
     allowed as a deduction from gross income an amount equal to 
     the qualified percentage of such gain.
       ``(b) Qualified Timber Gain.--For purposes of this section, 
     the term `qualified timber gain' means gain from the 
     disposition of timber which the taxpayer has owned for more 
     than 1 year.
       ``(c) Qualified Percentage.--For purposes of this section, 
     the term `qualified percentage' means the percentage (not 
     exceeding 50 percent) determined by multiplying--
       ``(1) 3 percent, by
       ``(2) the number of years in the holding period of the 
     taxpayer with respect to the timber.
       ``(d) Estates and Trusts.--In the case of an estate or 
     trust, the deduction under subsection (a) shall be computed 
     by excluding the portion of (if any) the gains for the 
     taxable year from sales or exchanges of capital assets which, 
     under sections 652 and 662 (relating to inclusions of amounts 
     in gross income of beneficiaries of trusts), is includible by 
     the income beneficiaries as gain derived from the sale or 
     exchange of capital assets.''
       (b) Coordination With Maximum Rates of Tax on Net Capital 
     Gains.--
       (1) Section 1(h) of such Code (relating to maximum capital 
     gains rate) is amended by adding at the end the following new 
     paragraph:
       ``(14) Qualified timber gain.--For purposes of this 
     section, net capital gain shall be determined without regard 
     to qualified timber gain (as defined in section 1203) with 
     respect to which an election is in effect under section 
     1203.''

[[Page S7827]]

       (2) Subsection (a) of section 1201 of such Code (relating 
     to the alternative tax for corporations) is amended by 
     inserting at the end the following new sentence:

     ``For purposes of this section, net capital gain shall be 
     determined without regard to qualified timber gain (as 
     defined in section 1203) with respect to which an election is 
     in effect under section 1203.''
       (c) Allowance of Deduction in Computing Adjusted Gross 
     Income.--Subsection (a) of section 62 of such Code (relating 
     to definition of adjusted gross income) is amended by 
     inserting after paragraph (17) the following new paragraph:
       ``(18) Partial inflation adjustment for timber.--The 
     deduction allowed by section 1203.''
       (d) Technical Amendments.--
       (1) Subparagraph (B) of section 172(d)(2) of such Code is 
     amended to read as follows:
       ``(B) the exclusion under section 1202 and the deduction 
     under section 1203 shall not be allowed.''
       (2) The last sentence of section 453A(c)(3) of such Code is 
     amended by striking ``(whichever is appropriate)'' and 
     inserting ``or the deduction under section 1203 (whichever is 
     appropriate)''.
       (3) Section 641(c)(2)(C) of such Code is amended by 
     inserting after clause (iii) the following new clause:
       ``(iv) The deduction under section 1203.''
       (4) The first sentence of section 642(c)(4) of such Code is 
     amended to read as follows: ``To the extent that the amount 
     otherwise allowable as a deduction under this subsection 
     consists of gain described in section 1202(a) or qualified 
     timber gain (as defined in section 1203(b)), proper 
     adjustment shall be made for any exclusion allowable under 
     section 1202, and any deduction allowable under section 1203, 
     to the estate or trust.''
       (5) The last sentence of section 643(a)(3) of such Code is 
     amended to read as follows: ``The exclusion under section 
     1202 and the deduction under section 1203 shall not be taken 
     into account.''
       (6) The last sentence of section 643(a)(6)(C) of such Code 
     is amended by inserting ``(i)'' before ``there shall'' and by 
     inserting before the period ``, and (ii) the deduction under 
     section 1203 (relating to partial inflation adjustment for 
     timber) shall not be taken into account''.
       (7) Paragraph (4) of section 691(c) of such Code is amended 
     by inserting ``1203,'' after ``1202,''.
       (8) The second sentence of paragraph (2) of section 871(a) 
     of such Code is amended by striking ``section 1202'' and 
     inserting ``sections 1202 and 1203''.
       (e) Clerical Amendment.--The table of sections for part I 
     of subchapter P of chapter 1 of such Code is amended by 
     adding at the end the following new item:

``Sec. 1203. Partial inflation adjustment for timber.''

       (f) Effective Date.--The amendments made by this section 
     shall apply to sales or exchanges after December 31, 1998.

     SEC. 3. AMORTIZATION OF REFORESTATION EXPENDITURES AND 
                   REFORESTATION TAX CREDIT.

       (a) Decrease in Amortization Period.--
       (1) In general.--Section 194(a) of the Internal Revenue 
     Code of 1986 is amended by striking ``84 months'' and 
     inserting ``60 months''.
       (2) Conforming amendment.--Section 194(a) of such Code is 
     amended by striking ``84-month period'' and inserting ``60-
     month period''.
       (b) Removal of Cap on Amortizable Basis.--
       (1) Section 194 of the Internal Revenue Code of 1986 is 
     amended by striking subsection (b) and by redesignating 
     subsections (c) and (d) as subsections (b) and (c), 
     respectively.
       (2) Subsection (b) of section 194 of such Code (as 
     redesignated by paragraph (1)) is amended by striking 
     paragraph (4).
       (3) Paragraph (1) of section 48(b) of such Code is amended 
     by striking ``(after the application of section 194(b)(1))''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to additions to capital account made after 
     December 31, 1998.

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