[Congressional Record (Bound Edition), Volume 145 (1999), Part 5]
[Senate]
[Pages 7396-7402]
[From the U.S. Government Publishing Office, www.gpo.gov]




          STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS

      By Mr. INOUYE:
  S. 874. A bill to repeal the reduction in the deductible portion of 
expenses for business meals and entertainment; to the Committee on 
Finance.


 REPEAL THE REDUCTION IN BUSINESS MEALS AND ENTERTAINMENT TAX DEDUCTION

  Mr. INOUYE. Mr. President, I rise to introduce legislation to repeal 
the current fifty percent tax deduction for business meals and 
entertainment expenses, and to gradually restore the tax deduction to 
80 percent over a five-year period. Restoration of this deduction is 
essential to the livelihood of the food service, travel, tourism, and 
entertainment industries throughout the United States. These industries 
are being economically harmed as a result of the 50 percent tax 
deduction.
  The deduction for business meals and entertainment was reduced from 
80 percent to 50 percent under the Omnibus Budget Reconciliation Act of 
1993, and went into effect on January 1, 1994. Many companies, small 
and large, have changed their policies and guidelines on travel and 
entertainment expenses as a result of this reduction. Additionally, 
businesses have been forced to curtail company reimbursement policies 
because of the reduction in business meals and entertainment expenses. 
In some cases, businesses have even eliminated their expense accounts. 
Consequently, restaurants which previously relied heavily on business 
lunches and dinners are being adversely affected by the reduction in 
business meals. For example:
  Currently, there are 23.3 million business meal spenders in the U.S. 
down from 25.3 million in 1989.
  The total economic impact on small businesses of restoring the 
business meal deductibility from 50 percent to 80 percent ranges from 
$8 to $690 million, depending on the state.
  In Hawaii, the restaurant industry alone employs 47,400 people and 
generates $2 billion into the state's economy. An increase in the 
business meal tax deduction from 50 percent to 80 percent would result 
in a 13 percent increase in business meal spending in the State of 
Hawaii.
  One issue of great importance to business travelers is the 
deductibility of expenses, particularly the business meal expense.

[[Page 7397]]

  Restauranteurs have reported lower business meal sales forcing some 
restaurants to close during luncheon hours and lay off employees which 
in turn adversely affects those employed in agriculture, food 
processing, and any businesses related to the restaurant sector.
  With sales equaling more than 4 percent of the U.S. gross domestic 
product, and more than 10.2 million persons employed in the industry, 
the restaurant business is obviously very important to the economic 
foundation of America. The 50 percent deduction has adversely affected 
the restaurant and entertainment industry and resulted in detrimental 
factors for the U.S. economy as a whole. I urge my colleagues to join 
me in cosponsoring this important legislation.
  Mr. President, I ask unanimous consent that the bill text be printed 
in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                 S. 874

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

     SECTION 1. REPEAL OF REDUCTION IN BUSINESS MEALS AND 
                   ENTERTAINMENT TAX DEDUCTION.

       (a) In General.--Section 274(n)(1) of the Internal Revenue 
     Code of 1986 (relating to only 50 percent of meal and 
     entertainment expenses allowed as deduction) is amended by 
     striking ``50 percent'' and inserting ``the applicable 
     percentage''.
       (b) Applicable Percentage.--Section 274(n) of the Internal 
     Revenue Code of 1986 is amended by striking paragraph (3) and 
     inserting the following:
       ``(3) Applicable percentage.--For purposes of paragraph 
     (1), the term `applicable percentage' means the percentage 
     determined under the following table:

``For taxable years
  beginning                                              The applicable
  in calendar year--                                    percentage is--
  1999..........................................................56 ....

  2000..........................................................62 ....

  2001..........................................................68 ....

  2002..........................................................74 ....

  2003 or thereafter..........................................80.''....

       (c) Conforming Amendment.--The heading for section 274(n) 
     of the Internal Revenue Code of 1986 is amended by striking 
     ``Only 50 percent'' and inserting ``Portion''.
       (d) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     1998.
                                 ______
                                 
      By Mr. ALLARD (for himself, Mr. Gramm, Mr. Bennett, Mr. Shelby, 
        Mr. Abraham, Mr. Hagel, Mr. Enzi, Mr. Mack, and Mr. Grams):
  S. 875. A bill to amend the Internal Revenue Code of 1986 to expand S 
corporation eligibility for banks, and for other purposes; to the 
Committee on Finance.


    small business and financial institutions tax relief act of 1999

  Mr. ALLARD. Mr. President, today I am pleased to introduce 
legislation that will expand and improve Subchapter S of the Internal 
Revenue Code. I am joined in this effort by Senators Gramm, Bennett, 
Shelby, Abraham, Hagel, Enzi, Mack, and Grams.
  The Subchapter S provisions of the Internal Revenue Code reflect the 
desire of Congress to eliminate the double tax burden on small business 
corporations. Pursuant to that desire, Subchapter S has been 
liberalized a number of times, most recently in 1996. This legislation 
contains several provisions that will make the Subchapter S election 
more widely available to small businesses in all sectors. It also 
contains several provisions of particular benefit to community banks 
that may be contemplating a conversion to Subchapter S. Financial 
institutions were first made eligible for the Subchapter S election in 
1996. This legislation builds on and clarifies the Subchapter S 
provisions applicable to financial institutions.
  Mr. President, I ask unanimous consent that the text of the bill and 
the attached explanation of the provisions of the bill be printed in 
the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                 S. 875

       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 ``Small Business and Financial 
     Institutions Tax Relief Act of 1999''.

     SEC. 2. EXPANSION OF S CORPORATION ELIGIBLE SHAREHOLDERS TO 
                   INCLUDE IRAS.

       (a) In General.--Section 1361(c)(2)(A) of the Internal 
     Revenue Code of 1986 (relating to certain trusts permitted as 
     shareholders) is amended by inserting after clause (v) the 
     following:
       ``(vi) A trust which constitutes an individual retirement 
     account under section 408(a), including one designated as a 
     Roth IRA under section 408A.''
       (b) Treatment as Shareholder.--Section 1361(c)(2)(B) of the 
     Internal Revenue Code of 1986 (relating to treatment as 
     shareholders) is amended by adding at the end the following:
       ``(vi) In the case of a trust described in clause (vi) of 
     subparagraph (A), the individual for whose benefit the trust 
     was created shall be treated as a shareholder.''
       (c) Sale of Stock in IRA Relating To S Corporation Election 
     Exempt From Prohibited Transaction Rules.--Section 4975(d) of 
     the Internal Revenue Code of 1986 (relating to exemptions) is 
     amended by striking ``or'' at the end of paragraph (14), by 
     striking the period at the end of paragraph (15) and 
     inserting ``; or'', and by adding at the end the following:
       ``(16) a sale of stock held by a trust which constitutes an 
     individual retirement account under section 408(a) to the 
     individual for whose benefit such account is established if 
     such sale is pursuant to an election under section 1362(a).''
       (d) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     1999.

     SEC. 3. EXCLUSION OF INVESTMENT SECURITIES INCOME FROM 
                   PASSIVE INCOME TEST FOR BANK S CORPORATIONS.

       (a) In General.--Section 1362(d)(3)(C) of the Internal 
     Revenue Code of 1986 (defining passive investment income) is 
     amended by adding at the end the following:
       ``(v) Exception for banks; etc.--In the case of a bank (as 
     defined in section 581), a bank holding company (as defined 
     in section 246A(c)(3)(B)(ii)), or a qualified subchapter S 
     subsidiary bank, the term `passive investment income' shall 
     not include--

       ``(I) interest income earned by such bank, bank holding 
     company, or qualified subchapter S subsidiary bank, or
       ``(II) dividends on assets required to be held by such 
     bank, bank holding company, or qualified subchapter S 
     subsidiary bank to conduct a banking business, including 
     stock in the Federal Reserve Bank, the Federal Home Loan 
     Bank, or the Federal Agricultural Mortgage Bank or 
     participation certificates issued by a Federal Intermediate 
     Credit Bank.''

       (b) Effective Date.--The amendment made by this section 
     shall apply to taxable years beginning after December 31, 
     1996.

     SEC. 4. INCREASE IN NUMBER OF ELIGIBLE SHAREHOLDERS TO 150.

       (a) In General.--Section 1361(b)(1)(A) of the Internal 
     Revenue Code of 1986 (defining small business corporation) is 
     amended by striking ``75'' and inserting ``150''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to taxable years beginning after December 31, 
     1999.

     SEC. 5. TREATMENT OF QUALIFYING DIRECTOR SHARES.

       (a) In General.--Section 1361 of the Internal Revenue Code 
     of 1986 is amended by adding at the end the following:
       ``(f) Treatment of Qualifying Director Shares.--
       ``(1) In general.--For purposes of this subchapter--
       ``(A) qualifying director shares shall not be treated as a 
     second class of stock, and
       ``(B) no person shall be treated as a shareholder of the 
     corporation by reason of holding qualifying director shares.
       ``(2) Qualifying director shares defined.--For purposes of 
     this subsection, the term `qualifying director shares' means 
     any shares of stock in a bank (as defined in section 581) or 
     in a bank holding company registered as such with the Federal 
     Reserve System--
       ``(i) which are held by an individual solely by reason of 
     status as a director of such bank or company or its 
     controlled subsidiary; and
       ``(ii) which are subject to an agreement pursuant to which 
     the holder is required to dispose of the shares of stock upon 
     termination of the holder's status as a director at the same 
     price as the individual acquired such shares of stock.
       ``(3) Distributions.--A distribution (not in part or full 
     payment in exchange for stock) made by the corporation with 
     respect to qualifying director shares shall be includible as 
     ordinary income of the holder and deductible to the 
     corporation as an expense in computing taxable income under 
     section 1363(b) in the year such distribution is received.''
       (b) Conforming Amendments.--
       (1) Section 1361(b)(1) of the Internal Revenue Code of 1986 
     is amended by inserting ``, except as provided in subsection 
     (f),'' before ``which does not''.
       (2) Section 1366(a) of such Code is amended by adding at 
     the end the following:
       ``(3) Allocation with respect to qualifying director 
     shares.--The holders of

[[Page 7398]]

     qualifying director shares (as defined in section 1361(f)) 
     shall not, with respect to such shares of stock, be allocated 
     any of the items described in paragraph (1).''
       (3) Section 1373(a) of such Code is amended by striking 
     ``and'' at the end of paragraph (1), by striking the period 
     at the end of paragraph (2) and inserting ``, and'', and 
     adding at the end the following:
       ``(3) no amount of an expense deductible under this 
     subchapter by reason of section 1361(f)(3) shall be 
     apportioned or allocated to such income.''
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     1996.

     SEC. 6. BAD DEBT CHARGE OFFS IN YEARS AFTER ELECTION YEAR 
                   TREATED AS ITEMS OF BUILT-IN LOSS.

       The Secretary of the Treasury shall modify Regulation 
     1.1374-4(f) for S corporation elections made in taxable years 
     beginning after December 31, 1996, with respect to bad debt 
     deductions under section 166 of the Internal Revenue Code of 
     1986 to treat such deductions as built-in losses under 
     section 1374(d)(4) of such Code during the entire period 
     during which the bank recognizes built-in gains from changing 
     its accounting method for recognizing bad debts from the 
     reserve method under section 585 of such Code to the charge-
     off method under section 166 of such Code.

     SEC. 7. INCLUSION OF BANKS IN 3-YEAR S CORPORATION RULE FOR 
                   CORPORATE PREFERENCE ITEMS.

       (a) In General.--Section 1363(b) of the Internal Revenue 
     Code of 1986 (relating to computation of corporation's 
     taxable income) is amended by adding at the end the following 
     new flush sentence:

     ``Paragraph (4) shall apply to any bank whether such bank is 
     an S corporation or a qualified subchapter S subsidiary.''
       (b) Effective Date.--The amendment made by this section 
     shall apply to taxable years beginning after December 31, 
     1999.

     SEC. 8. C CORPORATION RULES TO APPLY FOR FRINGE BENEFIT 
                   PURPOSES.

       (a) In General.--Section 1372 of the Internal Revenue Code 
     of 1986 (relating to partnership rules to apply for fringe 
     benefit purposes) is repealed.
       (b) Partnership Rules To Apply for Health Insurance Costs 
     of Certain S Corporation Shareholders.--Paragraph (5) of 
     section 162(1) of the Internal Revenue Code of 1986 is 
     amended to read as follows:
       ``(5) Treatment of certain s corporation shareholders.--
       ``(A) In general.--This subsection shall apply in the case 
     of any 2-percent shareholder of an S corporation, except 
     that--
       ``(i) for purposes of this subsection, such shareholder's 
     wages (as defined in section 3121) from the S corporation 
     shall be treated as such shareholder's earned income (within 
     the meaning of section 401(c)(1)), and
       ``(ii) there shall be such adjustments in the application 
     of this subsection as the Secretary may by regulations 
     prescribe.
       ``(B) 2-percent shareholder defined.--For purposes of this 
     paragraph, the term `2-percent shareholder' means any person 
     who owns (or is considered as owning within the meaning of 
     section 318) on any day during the taxable year of the S 
     corporation more than 2 percent of the outstanding stock of 
     such corporation or stock possessing more than 2 percent of 
     the total combined voting power of all stock of such 
     corporation.''
       (c) Conforming Amendment.--The table of sections for part 
     III of subchapter S of chapter 1 of the Internal Revenue Code 
     of 1986 is amended by striking the item relating to section 
     1372.
       (d) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     1999.

     SEC. 9. EXPANSION OF S CORPORATION ELIGIBLE SHAREHOLDERS TO 
                   INCLUDE FAMILY LIMITED PARTNERSHIPS.

       (a) In General.--Section 1361(b)(1)(B) of the Internal 
     Revenue Code of 1986 (defining small business corporation) is 
     amended--
       (1) by striking ``or an organization'' and inserting ``an 
     organization'', and
       (2) by inserting ``, or a family partnership described in 
     subsection (c)(8)'' after ``subsection (c)(6)''.
       (b) Family Partnership.--Section 1361(c) of the Internal 
     Revenue Code of 1986 (relating to special rules for applying 
     subsection (b)), as amended by section 5, is amended by 
     adding at the end the following:
       ``(8) Family partnerships.--
       ``(A) In general.--For purposes of subsection (b)(1)(B), 
     any partnership or limited liability company may be a 
     shareholder in an S corporation if--
       ``(i) all partners or members are members of 1 family as 
     determined under section 704(e)(3), and
       ``(ii) all of the partners or members would otherwise be 
     eligible shareholders of an S corporation.
       ``(B) Treatment as shareholders.--For purposes of 
     subsection (b)(1)(A), in the case of a partnership or limited 
     liability company described in subparagraph (A), each partner 
     or member shall be treated as a shareholder.''
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     1999.

     SEC. 10. ISSUANCE OF PREFERRED STOCK PERMITTED.

       (a) In General.--Section 1361 of the Internal Revenue Code 
     of 1986, as amended by section 5(a), is amended by adding at 
     the end the following:
       ``(g) Treatment of Qualified Preferred Stock.--
       ``(1) In general.--For purposes of this subchapter--
       ``(A) qualified preferred stock shall not be treated as a 
     second class of stock, and
       ``(B) no person shall be treated as a shareholder of the 
     corporation by reason of holding qualified preferred stock.
       ``(2) Qualified preferred stock defined.--For purposes of 
     this subsection, the term `qualified preferred stock' means 
     stock which meets the requirements of subparagraphs (A), (B), 
     and (C) of section 1504(a)(4). Stock shall not fail to be 
     treated as qualified preferred stock solely because it is 
     convertible into other stock.
       ``(3) Distributions.--A distribution (not in part or full 
     payment in exchange for stock) made by the corporation with 
     respect to qualified preferred stock shall be includible as 
     ordinary income of the holder and deductible to the 
     corporation as an expense in computing taxable income under 
     section 1363(b) in the year such distribution is received.''
       (b) Conforming Amendments.--
       (1) Section 1361(b)(1) of the Internal Revenue Code of 
     1986, as amended by section 5(b)(1), is amended by striking 
     ``subsection (f)'' and inserting ``subsections (f) and (g)''.
       (2) Section 1366(a) of such Code, as amended by section 
     5(b)(2), is amended by adding at the end the following:
       ``(4) Allocation with respect to qualified preferred 
     stock.--The holders of qualified preferred stock (as defined 
     in section 1361(g)) shall not, with respect to such stock, be 
     allocated any of the items described in paragraph (1).''
       (3) Section 1373(a)(3) of such Code, as added by section 
     5(b)(3), is amended by inserting ``or 1361(g)(3)'' after 
     ``section 1361(f)(3)''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     1999.

     SEC. 11. CONSENT TO ELECTIONS.

       (a) 90 Percent of Shares Required for Consent to 
     Election.--Section 1362(a)(2) of the Internal Revenue Code of 
     1986 (relating to all shareholders must consent to election) 
     is amended--
       (1) by striking ``all persons who are shareholders in'' and 
     inserting ``shareholders holding at least 90 percent of the 
     shares of'', and
       (2) by striking ``All shareholders'' in the heading and 
     inserting ``At least 90 percent of shares''.
       (b) Rules for Consent.--Section 1362(a) of the Internal 
     Revenue Code of 1986 (relating to election) is amended by 
     adding at the end the following:
       ``(3) Rules for consent.--For purposes of making any 
     consent required under paragraph (2) or subsection 
     (d)(1)(B)--
       ``(A) each joint owner of shares shall consent with respect 
     to such shares,
       ``(B) the personal representative or other fiduciary 
     authorized to act on behalf of the estate of a deceased 
     individual shall consent for the estate,
       ``(C) one parent, the custodian, the guardian, or the 
     conservator shall consent with respect to shares owned by a 
     minor or subject to a custodianship, guardianship, 
     conservatorship, or similar arrangement,
       ``(D) the trustee of a trust shall consent with respect to 
     shares owned in trust,
       ``(E) the trustee of the estate of a bankrupt individual 
     shall consent for shares owned by a bankruptcy estate,
       ``(F) an authorized officer or the trustee of an 
     organization described in subsection (c)(6) shall consent for 
     the shares owned by such organization, and
       ``(G) in the case of a partnership or limited liability 
     company described in subsection (c)(8)--
       ``(i) all general partners shall consent with respect to 
     shares owned by such partnership,
       ``(ii) all managers shall consent with respect to shares 
     owned by such company if management of such company is vested 
     in 1 or more managers, and
       ``(iii) all members shall consent with respect to shares 
     owned by such company if management of such company is vested 
     in the members.''
       (c) Treatment of Nonconsenting Shareholder Stock.--
       (1) In general.--Section 1361 of the Internal Revenue Code 
     of 1986, as amended by section 10(a), is amended by adding at 
     the end the following:
       ``(h) Treatment of Nonconsenting Shareholder Stock.--
       ``(1) In general.--For purposes of this subchapter--
       ``(A) nonconsenting shareholder stock shall not be treated 
     as a second class of stock,
       ``(B) such stock shall be treated as C corporation stock, 
     and
       ``(C) the shareholder's pro rata share under section 
     1366(a)(1) with respect to such stock shall be subject to tax 
     paid by the S corporation at the highest rate of tax 
     specified in section 11(b).
       ``(2) Nonconsenting shareholder stock defined.--For 
     purposes of this subsection, the term `nonconsenting 
     shareholder stock' means stock of an S corporation which is 
     held by a shareholder who did not consent to

[[Page 7399]]

     an election under section 1362(a) with respect to such S 
     corporation.
       ``(3) Distributions.--A distribution (not in part or full 
     payment in exchange for stock) made by the corporation with 
     respect to nonconsenting shareholder stock shall be 
     includible as ordinary income of the holder and deductible to 
     the corporation as an expense in computing taxable income 
     under section 1363(b) in the year such distribution is 
     received.''
       (2) Conforming amendment.--Section 1361(b)(1) of the 
     Internal Revenue Code of 1986, as amended by section 
     10(b)(1), is amended by striking ``subsections (f) and (g)'' 
     and inserting ``subsections (f), (g), and (h)''.
       (d) Effective Date.--The amendments made by this section 
     shall apply to elections made in taxable years beginning 
     after December 31, 1999.

     SEC. 12. INFORMATION RETURNS FOR QUALIFIED SUBCHAPTER S 
                   SUBSIDIARIES.

       (a) In General.--Section 1361(b)(3)(A) of the Internal 
     Revenue Code of 1986 (relating to treatment of certain wholly 
     owned subsidiaries) is amended by inserting ``and in the case 
     of information returns required under part III of subchapter 
     A of chapter 61'' after ``Secretary''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to taxable years beginning after December 31, 
     1999.
                                  ____


   Small Business and Financial Institutions Tax Relief Act of 1999--
      Legislation To Reduce the Federal Tax Burden on Small Banks

       This legislation expands Subchapter S of the IRS Code. 
     Subchapter S corporations do not pay corporate income taxes, 
     earnings are passed through to the shareholders where income 
     taxes are paid, eliminating the double taxation of 
     corporations. By contrast, Subchapter C corporations pay 
     corporate income taxes on earnings, and shareholders pay 
     income taxes again on those same earnings when they pass 
     through as dividends. Subchapter S of the IRS Code was 
     enacted in 1958 to reduce the tax burden on small business. 
     The Subchapter S provisions have been liberalized a number of 
     times over the last two decades, significantly in 1982, and 
     again in 1996. This reflects a desire on the part of Congress 
     to reduce taxes on small business.
       This S corporation legislation would benefit many small 
     businesses, but its provisions are particularly applicable to 
     banks. Congress made S corporation status available to small 
     banks for the first time in the 1996 ``Small Business Job 
     Protection Act'' but many banks are having trouble qualifying 
     under the current rules. The proposed legislation:
       Permits S corporation shares to be held as Individual 
     Retirement Accounts (IRAs), and permits IRA shareholders to 
     purchase their shares from the IRA in order to facilitate a 
     Subchapter S election.
       Clarifies that interest and dividends on investments 
     maintained by a bank for liquidity and safety and soundness 
     purposes shall not be ``passive'' income. This is necessary 
     because S corporations are restricted in the amount of 
     passive investment income they may generate.
       Increases the number of S corporation eligible shareholders 
     from 75 to 150.
       Provides that any stock that bank directors must hold under 
     banking regulations shall not be a disqualifying second class 
     of stock. This is necessary because S corporations are 
     permitted only one class of stock.
       Permits banks to treat bad debt charge offs as items of 
     built in loss over the same number of years that the 
     accumulated bad debt reserve must be recaptured (four years) 
     for built in gains tax purposes. This provision is necessary 
     to properly match built in gains and losses relating to 
     accounting for bad debts. Banks that are converting to S 
     corporations must convert from the reserve method of 
     accounting to the specific charge off method and the 
     recapture of the accumulated bad debt reserve is built in 
     gain. Presently the presumption that a bad debt charge off is 
     a built in loss applies only to the first S corporation year.
       Clarifies that the general 3 Year S corporation rule for 
     certain ``preference'' items applies to interest deductions 
     by S corporation banks, thereby providing equitable treatment 
     for S corporation banks. S corporations that convert from C 
     corporations are denied certain interest deductions 
     (preference items) for up to 3 years after the conversion, at 
     the end of three years the deductions are allowed.
       Provides that non-health care related fringe benefits such 
     as group-term life insurance will be excludable from wages 
     for ``more-than-two-percent'' shareholders. Current law taxes 
     the fringe benefits of these shareholders. Health care 
     related benefits are not included because their deductibility 
     would increase the revenue impact of the legislation.
       Permits Family Limited Partnerships to be shareholders in 
     Subchapter S corporations. Many family owned small businesses 
     are organized as Family Limited Partnerships or controlled by 
     Family Limited Partnerships for a variety of reasons. A 
     number of small banks have Family Limited Partnership 
     shareholders, and this legislation would for the first time 
     permit those partnerships to be S corporation shareholders.
       Permits S corporations to issue preferred stock in addition 
     to common. Prohibited under current law which permits S 
     corporations to have only one class of stock. Because of 
     limitations on the number of common shareholders, banks need 
     to be able to issue preferred stock in order to have adequate 
     access to equity.
       Reduces the required level of shareholder consent to 
     convert to an S corporation from unanimous to 90 percent of 
     shares. Non-consenting shareholders retain their stock, with 
     such stock treated as C corporation stock. The procedures for 
     consent are clarified in order to streamline the process.
       Clarifies that Qualified Subchapter S Subsidiaries (QSSS) 
     provide information returns under their own tax id number. 
     This can help avoid confusion by depositors and other parties 
     over the insurance of deposits and the payer of salaries and 
     interest.
                                 ______
                                 
      By Mr. HOLLINGS:
  S. 876. A bill to amend the Communications Act of 1934 to require 
that the broadcast of violent video programming be limited to hours 
when children are not reasonably likely to comprise a substantial 
portion of the audience; to the Committee on Commerce, Science, and 
Transportation.


           children's protection from violent programming act

  Mr. HOLLINGS. Mr. President, I rise to offer legislation to help 
parents limit the amount of television violence coming into their 
homes. We have reviewed this issue for decades and the analysis has not 
changed. All of the assurances and promises have been insufficient to 
protect our children from the dangerous influence of television 
violence.
  The bill that I introduce today requires a safeharbor time period 
during which broadcasters and basic cable programmers would not be 
permitted to transmit violent programming. The legislation directs the 
Federal Communications Commission to develop an appropriate safeharbor 
time period to protect television audiences that are likely to be 
comprised of a substantial number of children.
  We can argue all day long about which study reaches what conclusion 
about the impacts of television violence. But it defies common sense to 
believe that television violence does not impact our kids in some 
adverse way. Even the National Cable Television Association's own study 
on television violence states that the ``evidence of the harmful 
effects associated with televised violence'' is ``firmly established.''
  The recent events in Littleton, Colorado serve to highlight the sad 
and unfortunate fact that violence in our culture is begetting violence 
by our youths. violence is everywhere, it is readily accessible, and, 
to make matters worse, it is a source of corporate profits. A recent 
Washington Post article entitled, ``When Death Imitates Art,'' made 
this very point. It states:

       For young people, the culture at large is bathed in blood 
     and violence . . . where the more extreme the message, the 
     more over the top gruesomeness, the better. . . . Film, 
     television, music, dress, technology, games: They've become 
     one giant playground filled with accessible evil, darker than 
     ever before.

  While we know we can't regulate every market and every technology, 
and don't want to, we also know that the purveyors of violence must be 
held accountable in those instances when we can do so, consistent with 
our values and our Constitution. One way to do this is through 
television programming.
  This approach has already been successfully applied to television 
with respect to indecent programming, for which a safeharbor has been 
on the books since 1992--an approach that the D.C. Circuit has 
validated. I am confident that a similar result would be obtained if 
the video programming industry or First Amendment advocates were to 
attack this legislation that I introduce today. Indeed, prior 
legislative history also substantiates the constitutionality of my 
approach. In 1993, when I introduced my safeharbor legislation for the 
first time, the Commerce Committee held a hearing at which Attorney 
General Janet Reno and FCC Commissioner Reed Hundt both testified that 
the bill was constitutional.
  Now, I know that there will be opponents of this legislation who will 
state that the ratings system is working, that the V-chip is being 
deployed, and

[[Page 7400]]

that our parents are being armed with the tools to protect their 
children from television violence. I also know that some Senators wrote 
a letter in July 1997, suggesting that the government forbear from 
regulation TV violence. But I'm not convinced. We should not forbear 
from protecting our children.
  Besides, the ratings system is incomplete. For example, one major 
broadcast network refuses to this day to use content ratings, and one 
major cable channel refuses to use any ratings at all. We all know what 
is going on here--money talks and violence sells. A recent article in 
USA Today illustrates this point. Entitled ``TV Violence for Profit,'' 
the article reports that some TV networks and basic cable channels 
increase the amount of violent programming during ``sweeps--the key 
months when Nielson measures audience size in every market.''
  Regardless, even if the industry is right that the V-Chip will 
eventually be the magic solution, we all know that thousands, and 
perhaps millions of families, will be without a V-chip for years. The 
V-chip is not required by the FCC to be manufactured in all television 
until January 1, 2000. Will every parent go to Circuit City on New 
Year's day and buy a new TV with a V-chip? Of course not. The V-Chip is 
not a complete solution. The only complete solution is a safeharbor.
  To conclude, I want to stress that this is an issue about 
accountability and responsibility. Those responsible for supplying 
video programming have been granted a public trust through the 
availability of broadcast spectrum and FCC licenses to deliver their 
programming to America's children. They should be responsible in their 
programming choices. We know, however, that market forces may encourage 
them to be irresponsible and transmit excessive violent programming. We 
in the Congress therefore have a responsibility to hold them 
accountable. This legislation does just that.
  Mr. President, 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. 876

       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 ``Children's Protection from 
     Violent Programming Act''.

     SEC. 2. FINDINGS.

       The Congress makes the following findings:
       (1) Television influences the perception children have of 
     the values and behavior that are common and acceptable in 
     society.
       (2) Broadcast television, cable television, and video 
     programming are--
       (A) pervasive presences in the lives of all American 
     children; and
       (B) readily accessible to all American children.
       (3) Violent video programming influences children, as does 
     indecent programming.
       (4) There is empirical evidence that children exposed to 
     violent video programming at a young age have a higher 
     tendency to engage in violent and aggressive behavior later 
     in life than those children not so exposed.
       (5) Children exposed to violent video programming are prone 
     to assume that acts of violence are acceptable behavior and 
     therefore to imitate such behavior.
       (6) Children exposed to violent video programming have an 
     increased fear of becoming a victim of violence, resulting in 
     increased self-protective behaviors, resulting in increased 
     self-protective behaviors and increased mistrust of others.
       (7) There is a compelling governmental interest in limiting 
     the negative influences of violent video programming on 
     children.
       (8) There is a compelling governmental interest in 
     channeling programming with violent content to periods of the 
     day when children are not likely to comprise a substantial 
     portion of the television audience.
       (9) Because some programming that is readily accessible to 
     minors remains unrated and therefore cannot be blocked solely 
     on the basis of its violent content, restricting the hours 
     when violent video programming is shown is the least 
     restrictive and most narrowly tailored means to achieve a 
     compelling governmental interest.
       (10) Warning labels about the violent content of video 
     programming will not in themselves prevent children from 
     watching violent video programming.
       (11) Although many programs are now subject to both age-
     based and content-based ratings, some broadcast and non-
     premium cable programs remain unrated with respect to the 
     content of their programming.
       (12) Technology-based solutions may be helpful in 
     protecting some children, but may not be effective in 
     achieving the compelling governmental interest in protecting 
     all children from violent programming when parents are only 
     able to block programming that has in fact been rated for 
     violence.
       (13) Technology-based solutions will not be installed in 
     all newly manufactured televisions until January 1, 2000.
       (14) Even though technology-based solutions will be readily 
     available, many consumers of video programming will not 
     actually own such technology for several years and therefore 
     will be unable to take advantage of content based ratings to 
     prevent their children from watching violent programming.
       (15) In light of the fact that some programming remains 
     unrated for content, and given that many consumers will not 
     have blocking technology in the near future, the channeling 
     of violent programming is the least restrictive means to 
     limit the exposure of children to the harmful influences of 
     violent programming.
       (16) Restricting the hours when violent programming can be 
     shown protects the interests of children whose parents are 
     unavailable, are unable to supervise their children's viewing 
     behavior, do not have the benefit of technology-based 
     solutions, are unable to afford the costs of technology-based 
     solution, or are unable to determine the content of those 
     shows that are only subject to age-based ratings.

     SEC. 3. UNLAWFUL DISTRIBUTION OF VIOLENT VIDEO PROGRAMMING.

       Title VII of the Communications Act of 1934 (47 U.S.C. 701 
     et seq.) is amended by adding at the end the following:

     ``SEC. 715. UNLAWFUL DISTRIBUTION OF VIOLENT VIDEO 
                   PROGRAMMING NOT SPECIFICALLY BLOCKABLE BY 
                   ELECTRONIC MEANS.

       ``(a) Unlawful Distribution.--It shall be unlawful for any 
     person to distribute to the public any violent video 
     programming during hours when children are reasonably likely 
     to comprise a substantial portion of the audience.
       ``(b) Rulemaking Proceeding.--The Commission shall conduct 
     a rulemaking proceeding to implement the provisions of this 
     section and shall promulgate final regulations pursuant to 
     that proceeding not later than 9 months after the date of 
     enactment of the Children's Protection from Violent 
     Programming Act. As part of that proceeding, the Commission--
       ``(1) may exempt from the prohibition under subsection (a) 
     programming (including news programs and sporting events) 
     whose distribution does not conflict with the objective of 
     protecting children from the negative influences of violent 
     video programming, as that objective is reflected in the 
     findings in section 551(a) of the Telecommunications Act of 
     1996;
       ``(2) shall exempt premium and pay-per-view cable 
     programming; and
       ``(3) shall define the term `hours when children are 
     reasonably likely to comprise a substantial portion of the 
     audience' and the term `violent video programming'.
       ``(c) Repeat Violations.--If a person repeatedly violates 
     this section or any regulation promulgated under this 
     section, the Commission shall, after notice and opportunity 
     for hearing, revoke any license issued to that person under 
     this Act.
       ``(d) Consideration of Violations in License Renewals.--The 
     Commission shall consider, among the elements in its review 
     of an application for renewal of a license under this Act, 
     whether the licensee has complied with this section and the 
     regulations promulgated under this section.
       ``(e) Distribute Defined.--In this section, the term 
     `distribute' means to send, transmit, retransmit, telecast, 
     broadcast, or cablecast, including by wire, microwave, or 
     satellite.''.

     SEC. 4. SEPARABILITY.

       If any provision of this Act, or any provision of an 
     amendment made by this Act, or the application thereof to 
     particular persons or circumstances, is found to be 
     unconstitutional, the remainder of this Act or that 
     amendment, or the application thereof to other persons or 
     circumstances shall not be affected.

     SEC. 5. EFFECTIVE DATE.

       The prohibition contained in section 715 of the 
     Communications Act of 1934 (as added by section 3 of this 
     Act) and the regulations promulgated thereunder shall take 
     effect 1 year after the regulations are adopted by the 
     Commission.
                                 ______
                                 
      By Mr. BROWNBACK (for himself, Mr. Nickles, and Mr. Craig):
  S. 877. A bill to encourage the provision of advanced service, and 
for other purposes; to the Committee on Commerce, Science, and 
Transportation.


            BROADBAND INTERNET REGULATORY RELIEF ACT OF 1999

  Mr. BROWNBACK. Mr. President, I rise today to introduce the Broadband 
Internet Regulatory Relief Act of 1999 on behalf of myself, Senator 
Nickles, and Senator Craig. This bill is intended to speed up the 
deployment of

[[Page 7401]]

broadband networks throughout the United States and to make residential 
high-speed Internet access a widely-available service.
  Mr. President, the Internet has revolutionized the way we 
communicate, conduct business, shop, and learn. The Internet presents 
us with the opportunity to remove distance as an obstacle to employment 
and education. But while tens of millions of Americans now log onto the 
Internet every day, narrowband connections to the Internet make using 
the Net a slow and cumbersome process.
  Broadband connections, on the other hand, provide ultra-fast access 
to the Internet. With a broadband connection, users may download and 
upload data from and to the Internet at substantially greater speeds 
than with a narrowband connection. From downloading full-motion video 
to uploading an architect's plans, broadband permits consumers to 
utilize many more applications that will increase the value of the 
Internet as a communications medium.
  The technology to provide broadband connections to the Internet is a 
reality. Cable companies are deploying hybrid fiber-coax (HFC) networks 
that will enable cable modems to provide high-speed Internet access. In 
addition, telephone companies have discovered a way to provide high-
speed Internet access over their copper-based telephone loops. With the 
addition of a digital switch in a telephone company's central office, a 
digital modem at a customer's premises, and the conditioning of a 
copper loop, consumers may obtain access to the Internet at more than 
ten time the speed of narrowband connections.
  The most promising technology employed by telephone companies for 
residential high-speed Internet access is digital subscriber line (DSL) 
technology. The family of DSL services, especially asymmetric digital 
subscriber line (ADSL) service, have the greatest potential to ensure 
that all consumers throughout the United States obtain high-speed 
Internet access. Cable service has penetration rates approaching 
telephone service in urban and densely-populated suburban areas. 
However, cable penetration is much lower in rural areas whereas the 
ubiquity of the telephone network makes telephone penetration rates 
close to one hundred percent even in rural areas. Thus, for many rural 
consumers, including those in Kansas, high-speed Internet access may 
only be available in the next several years through the telephone 
network.
  As a result, Congress needs to ensure that high-speed Internet access 
is being made available over the public telephone network as rapidly as 
possible. While ADSL service is being rolled out in may urban and 
densely-populated suburban areas, most rural consumers do not have 
access to it.
  I am introducing the Broadband Internet Regulatory Relief Act to 
ensure that high-speed Internet access is available to my rural 
constituents as soon as possible. To accomplish this goal, I am 
proposing to provide regulatory relief to telephone companies willing 
to deliver broadband connections to rural areas. My proposal has 
several components.
  First, incumbent local exchange carriers that make seventy percent of 
their loops ready to support high-speed Internet access will not have 
to resell their advanced services to competitors and will not have to 
make the network elements used exclusively for the provision of 
advanced services available to competitors. Second, the prices for 
advanced services offered by incumbent local exchange carriers that 
face competition in the provision of such services will be deregulated. 
Third, where incumbent local exchange carriers are offering advanced 
services but do not face competition, the companies will receive 
pricing flexibility. Fourth, competitive local exchange carriers will 
not be required to resell their advanced services.
  Mr. President, the ubiquity of our nation's telephone network 
presents us with a tremendous opportunity to deliver high-speed 
Internet access to our rural constituents at a pace comparable with the 
rate at which urban and suburban consumers will be offered such 
service. But to realize this goal, we must remove unnecessary 
regulation that has impeded the rapid deployment of broadband networks. 
Advanced services should not be regulated in the same manner as basic 
telephone service. Broadband services are an entirely new market, one 
in which no company can exercise market power.
  In the absence of market power, the incumbents should not have to 
resell their advanced services or provide competitors with access to 
unbundled advanced service elements. And pricing regulations applied to 
telephone service should not be applied to advanced services. In 
addition, a competitive local exchange carrier willing to deploy the 
facilities necessary to provide broadband services should not be forced 
to resell its service.
  Mr. President, I am confident that we can ensure the rapid deployment 
of broadband networks to rural areas. But to do so, we must be willing 
to provide companies with an incentive to build out their broadband 
networks in rural areas. The Broadband Internet Regulatory Relief Act 
would provide companies with such incentives, and I hope that my 
colleagues will support this crucial legislation.
                                 ______
                                 
      By Mr. TORRICELLI (for himself, Mr. Mack, Mr. Gregg, Mr. Graham, 
        Mr. Moynihan, Mr. Kerry, Mrs. Boxer, Mr. Reed, Mrs. Feinstein, 
        and Mrs. Murray):
  S. 878. A bill to amend the Federal Water Pollution Control Act to 
permit grants for the national estuary program to be used for the 
development and implementation of a comprehensive conservation and 
management plan, to reauthorize appropriations to carry out the 
program, and for other purposes; to the Committee on Environment and 
Public Works.


               national estuary conservation act of 1999

  Mr. TORRICELLI. Mr. President, today, Senators Mack, Gregg, Graham, 
Moynihan, Kerry, Boxer, Reed, Feinstein, Murray, and I are introducing 
the National Estuary Conservation Act of 1999. I rise to draw this 
country's attention to our nationally significant estuaries that are 
threatened by pollution, development, or overuse. With forty five 
percent of the nation's population residing in estuarine areas, there 
is a compelling need for us to promote comprehensive planning and 
management efforts to restore and protect them.
  Estuaries are significant habitat for fish, birds, and other wildlife 
because they provide safe spawning grounds and nurseries. Seventy five 
percent of the U.S. commercial fish catch depends on estuaries during 
some stage of their life. Commercial and recreational fisheries 
contribute $111 billion to the nation's economy and support 1.5 million 
jobs. Estuaries are also important to our nation's tourist economy for 
boating and outdoor recreation. Coastal tourism in just four states--
New Jersey, Florida, Texas, and California--totals $75 billion.
  Due to their popularity, the overall capacity of our nation's 
estuaries to function as healthy productive ecosystems is declining. 
This is a result of the cumulative effects of increasing development 
and fast growing year round populations which increase dramatically in 
the summer. Land development, and associated activities that come with 
people's desire to live and play near these beautiful resources, cause 
runoff and storm water discharges that contribute to siltation, 
increased nutrients, and other contamination. Bacterial contamination 
closes many popular beaches and shellfish harvesting areas in 
estuaries. Also, several estuaries are afflicted by problems that still 
require significant research. Examples include the outbreaks of the 
toxic microbe, Pfiesteria piscicida, in rivers draining to estuaries in 
Maryland and Virginia.
  Congress recognized the importance of preserving and enhancing 
coastal environments with the establishment of the National Estuary 
Program in the Clean Water Act Amendments of 1987. The Program's 
purpose is of facilitate state and local governments preparation of 
comprehensive conservation and management plans for threatened 
estuaries of national significance. In support of this effort, section 
320 of the

[[Page 7402]]

Clean Water Act authorized the EPA to make grants to states to develop 
environmental management plans. To date, 28 estuaries across the 
country have been designated into the Program. However, the law fails 
to provide assistance once plans are complete and ready for 
implementation. Already, 18 of the 28 plans are finished.
  As the majority of plans are now in the implementation stage, it is 
incumbent upon us to maintain the partnership the Federal Government 
initiated ten years ago to insure that our nationally significant 
estuaries are protected. The legislation we are introducing will take 
the next step by giving EPA authority to make grants for plan 
implementation and authorize annual appropriations in the amount of $50 
million. To insure the program is a true partnership and leverage 
scarce resources, there is a direct match requirement for grant 
recipients so funds will be available to upgrade sewage treatment 
plants, fix combined sewer overflows, control urban stormwater 
discharges, and reduce polluted runoff into estuarine areas.
                                 ______
                                 
      By Mr. CONRAD (for himself, Mr. Mack, Mr. Nickles, Mr. Robb, and 
        Mr. Baucus):
  S. 879. A bill to amend the Internal Revenue Code of 1986 to provide 
a shorter recovery period for the depreciation of certain leasehold 
improvements; to the Committee on Finance.


              ten-year leasehold improvement depreciation

  Mr. CONRAD. Mr. President, I rise today, joined by my colleagues Mr. 
Nickles, Mr. Mack, Mr. Robb, and Mr. Baucus, to introduce important 
legislation to provide for a 10-year depreciation life for leasehold 
improvements. Leasehold improvements are the alterations to leased 
space made by a building owner as part of the lease agreement with a 
tenant.
  These improvements can include interior walls, partitions, flooring, 
lighting, wiring and plumbing--essentially any fixture that an owner 
provides in space leased to a tenant. They keep a building modern, 
upgraded, and energy efficient. In actual commercial use, leasehold 
improvements typically last as long as the lease--an average of 5 to 10 
years. However, the Internal Revenue Code requires leasehold 
improvements to be depreciated over 39 years--the life of the building.
  Economically, this makes no sense. The owner receives taxable income 
over the life of the lease (i.e., 10 years), yet can only recover the 
costs of the improvements associated with the lease over 39 years--a 
rate nearly four times slower. This wild mismatch of income and 
expenses causes the owner to incur an artificially high tax cost on 
these improvements.
  The bill we introduce today will correct this irrational and 
uneconomic tax treatment by shortening the cost recovery period for 
certain leasehold improvements from 39 years to a more realistic 10 
years. If enacted, this legislation would more closely align the 
expenses incurred to construct these improvements with the income they 
generate during the lease term.
  For example, a building owner who makes a $100,000 leasehold 
improvement for a 10-year, $1 million lease would be able to recover 
this entire investment by the end of that lease at a rate of $10,000 
per year. Under current law, this $100,000 improvement is recovered at 
a rate of $2,564 per year over 39 years.
  By reducing this cost recovery period, the expense of making these 
improvements would fall more into line with the economics of a 
commercial lease transaction, and more property owners would be able to 
adapt their buildings to fit the demanding needs of today's modern 
business tenant. Small business should find this bill particularly 
helpful, because small businesses turn over their rental space more 
frequently than larger businesses. And we cannot forget that over 80 
percent of building owners who provide space to small businesses are 
themselves small businesses.
  We have an interest in keeping existing buildings commercially 
viable. When older buildings can serve tenants who need modern, 
efficient commercial space, there is less pressure for developing 
greenfields in outlying areas. Americans are concerned about preserving 
open space, natural resources and a sense of neighborhood. The current 
law 39-year cost recovery for leasehold improvements is an impediment 
to reinvesting in existing properties and communities.
  This legislation has the strong backing of six major real estate 
organizations, including the National Realty Committee, the national 
Association of Realtors, the International Council of Shopping Centers, 
the national Association of Industrial and Office Properties, the 
national Association of Real Estate Investment Trusts, and the Building 
and Office Managers Association, International.
  I urge all Senators to join us in supporting this legislation to 
provide rational depreciation treatment for leasehold improvements.
  Mr. President, 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. 879

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

     SECTION 1. RECOVERY PERIOD FOR DEPRECIATION OF CERTAIN 
                   LEASEHOLD IMPROVEMENTS.

       (a) 10-Year Recovery Period.--Subparagraph (D) of section 
     168(e)(3) of the Internal Revenue Code of 1986 (relating to 
     10-year property) is amended by striking ``and'' at the end 
     of clause (i), by striking the period at the end of clause 
     (ii) and inserting ``, and'', and by adding at the end the 
     following new clause:
       ``(iii) any qualified leasehold improvement property.''.
       (b) Qualified Leasehold Improvement Property.--Subsection 
     (e) of section 168 of such Code is amended by adding at the 
     end the following new paragraph:
       ``(6) Qualified leasehold improvement property.--
       ``(A) In general.--The term `qualified leasehold 
     improvement property' means any improvement to an interior 
     portion of a building which is nonresidential real property 
     if--
       ``(i) such improvement is made under or pursuant to a lease 
     (as defined in subsection (h)(7))--

       ``(I) by the lessee (or any sublessee) of such portion, or
       ``(II) by the lessor of such portion,

       ``(ii) such portion is to be occupied exclusively by the 
     lessee (or any sublessee) of such portion, and
       ``(iii) such improvement is placed in service more than 3 
     years after the date the building was first placed in 
     service.
       ``(B) Certain improvements not included.--Such term shall 
     not include any improvement for which the expenditure is 
     attributable to--
       ``(i) the enlargement of the building,
       ``(ii) any elevator or escalator,
       ``(iii) any structural component benefiting a common area, 
     and
       ``(iv) the internal structural framework of the building.
       ``(C) Definitions and special rules.--For purposes of this 
     paragraph--
       ``(i) Commitment to lease treated as lease.--A commitment 
     to enter into a lease shall be treated as a lease, and the 
     parties to such commitment shall be treated as lessor and 
     lessee, respectively.
       ``(ii) Related persons.--A lease between related persons 
     shall not be considered a lease. For purposes of the 
     preceding sentence, the term `related persons' means--

       ``(I) members of an affiliated group (as defined in section 
     1504), and
       ``(II) persons having a relationship described in 
     subsection (b) of section 267; except that, for purposes of 
     this clause, the phrase `80 percent or more' shall be 
     substituted for the phrase `more than 50 percent' each place 
     it appears in such subsection.''

       (c) Requirement To Use Straight Line Method.--Paragraph (3) 
     of section 168(b) of such Code is amended by adding at the 
     end the following new subparagraph:
       ``(G) Qualified leasehold improvement property described in 
     subsection (e)(6).''.
       (d) Alternative System.--The table contained in section 
     168(g)(3)(B) of such Code is amended by inserting after the 
     item relating to subparagraph (D)(ii) the following new item:

  ``(D)(iii).................................................10 ''.    
       (e) Effective Date.--The amendments made by this section 
     shall apply to qualified leasehold improvement property 
     placed in service after the date of the enactment of this 
     Act.

                          ____________________