[House Report 105-380]
[From the U.S. Government Publishing Office]



105th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES

 1st Session                                                    105-380
_______________________________________________________________________


 
  PROVIDING FOR CONSIDERATION OF H.R. 2676, THE IRS RESTRUCTURING AND 
                           REFORM ACT OF 1997

                                _______
                                

  November 4, 1997.--Referred to the House Calendar and ordered to be 
                                printed

_______________________________________________________________________


    Mr. Dreier, from the Committee on Rules, submitted the following

                              R E P O R T

                       [To accompany H. Res. 303]

    The Committee on Rules, having had under consideration 
House Resolution 303, by a non-record vote, report the same to 
the House with the recommendation that the resolution be 
adopted.

               BRIEF SUMMARY OF PROVISIONS OF RESOLUTION

    The resolution provides for consideration of H.R. 2676, the 
``IRS Restructuring and Reform Act of 1997'' under a closed 
rule. The rule provides for two hours of debate equally divided 
and controlled by the chairman and ranking member of the 
Committee on Ways and Means.
    The rule provides that the amendment in the nature of a 
substitute recommended by the Committee on Ways and Means, as 
modified by the amendments printed in this report, be 
considered as adopted. All points of order are waived against 
the bill, as amended. Finally, the rule provides one motion to 
recommit with or without instructions.

        SUMMARY OF AMENDMENTS CONSIDERED AS ADOPTED BY THE RULE

    Archer.--Clarifies the authorization for low income 
taxpayer clinics and the salaries of members of the Oversight 
Board to correct Budget Act violations.
    Portman.--Clarifies that IRS management and employees may 
address in the written agreement between them any personnel 
flexibility issues in a demonstration project.
    Dreier.--Rules Committee substitute to section 422 relating 
to the Joint Committee on Taxation's preparation of a Tax 
Complexity Analysis.
    Archer.--Adds the text of H.R. 2645, the Tax Technical 
Corrections Act of 1997 as a new title at the end of the bill.

  Explantion of Rules Committee Substitute to Section 422 of H.R. 2676

    As reported by the House Committee on Ways and Means, 
Section 422 of H.R. 2676 requires the Joint Committee on 
Taxation to provide a ``Tax Complexity Analysis'' for 
legislation reported by the House Committee on Ways and Means 
and the Senate Committee on Finance and all conference reports 
that would amend the Internal Revenue Code. The analysis would 
identify those provisions in a bill of conference report that 
the staff of the Joint Committee on Taxation determines would 
add significant complexity or simplification to the tax laws. 
If the report accompanying such legislation does not include a 
Tax Complexity Analysis, the legislation would be subject to a 
point of order in the House and Senate.
    The Rules Committee substitute makes a number of clarifying 
and technical changes to Section 422.
    For purposes of the requirement that the Joint Committee on 
Taxation provide a ``Tax Complexity Analysis,'' the term 
``legislation'' is further defined as ``bills or joint 
resolutions'' reported by the House Committee on Ways and 
Means, the Senate Committee on Finance or a committee of 
conference.
    For purposes of compliance with Section 422, the Committee 
involved shall either include the Tax Complexity Analysis in 
the committee report or cause it to be printed in the 
Congressional Record prior to consideration of the legislation 
in the House and Senate.
    References to ``the staff'' of the Joint Committee on 
Taxation are removed.
    Tax Complexity Analysis is defined as ``a report which is 
prepared by the Joint Committee on Taxation and which 
identifies the provisions of the legislation adding significant 
complexity or providing significant implication (as determined 
by the Joint Committee on Taxation) and includes the basis for 
such determination.''
    Language containing the point of order in the House of 
Representatives with respect to legislation reported by the 
Committee on Ways and Means and by a Committee of conference is 
stricken from Section 8024 of the Internal Revenue Code and 
inserted in the rules of the House of Representatives. 
Specifically:
          Clause 2(l) of House rule XI is amended to require 
        the report of the Committee on Ways and Means on any 
        bill or joint resolution containing any provision 
        amending the Internal Revenue Code of 1986 to contain a 
        Tax Complexity Analysis unless the Committee causes to 
        have such Analysis printed in the Congressional Record 
        prior to the consideration of the bill or joint 
        resolution; and
          House rule XXVIII is amended to prohibit 
        consideration of a conference report which contains any 
        provision amending the Internal Revenue Code unless the 
        accompanying joint statement of managers contains a Tax 
        Complexity Analysis, unless such Analysis is printed in 
        the Congressional Record prior to the consideration of 
        the report.

   Text of Amendments to H.R. 2676 Considered as Adopted by the Rule

    In section 7802(e)(1) of the Internal Revenue Code of 1986 
(relating to compensation of Members of the Oversight Board), 
as proposed to be added by section 101--
          (1) in subparagraph (A), strike ``compensated at a 
        rate of $30,000 per year'' and insert ``compensated at 
        a rate not to exceed $30,000 per year''; and
          (B) in subparagraph (B), strike ``compensated at a 
        rate of $50,000'' and insert ``compensated at a rate 
        not to exceed $50,000''.
    At the end of subsection (b) of section 9301 of title 5, 
United States Code (as proposed to be amended by section 111), 
add the following new paragraph:
          ``(3) Includible matters.--the written agreement may 
        address any flexibilities under section 9302, 9303, or 
        9304, including any matter proposed to be included in a 
        demonstration project under section 9304.
    On page 82, line 18, strike ``shall'' and insert ``may, 
subject to the availability of appropriated funds,''.
  Amend section 422 to read as follows:

SEC. 422. TAX COMPLEXITY ANALYSIS.

  (a) Requiring Analysis to Accompany Certain Legislation.--
          (1) In general.--Chapter 92 (relating to powers and 
        duties of the Joint Committee on Taxation) is amended 
        by adding at the end the following new section:

``SEC. 8024. TAX COMPLEXITY ANALYSIS.

  ``(a) In General.--If--
          ``(1) a bill or joint resolution is reported by the 
        Committee on Finance of the Senate, the Committee on 
        Ways and Means of the House of Representatives, or any 
        committee of conference, and
          ``(2) such legislation includes any provision 
        amending the Internal Revenue Code of 1986,
the report for such legislation shall contain a Tax Complexity 
Analysis unless the committee involved causes to have the Tax 
Complexity Analysis printed in the Congressional Record prior 
to the consideration of the legislation in the House of 
Representatives or the Senate (as the case may be).
  ``(b) Legislation Subject to Point of Order.--It shall not be 
in order in the Senate to consider any bill or joint resolution 
described in subsection (a) required to be accompanied by a Tax 
Complexity Analysis that does not contain a Tax Complexity 
Analysis.
  ``(c) Responsibilities of the Commissioner.--The Commissioner 
shall provide the Joint Committee on Taxation with such 
information as is necessary to prepare Tax Complexity Analyses.
  ``(d) Tax Complexity Analysis Defined.--For purposes of this 
section, the term `Tax Complexity Analysis' means, with respect 
to a bill or joint resolution, a report which is prepared by 
the Joint Committee on Taxation and which identifies the 
provisions of the legislation adding significant complexity or 
providing significant simplification (as determined by the 
Joint Committee) and includes the basis for such 
determination.''
          (2) Clerical amendment.--The table of sections for 
        chapter 92 is amended by adding at the end the 
        following new item:

        ``Sec. 8024. Tax complexity analysis.''
  (b) Legislation Subject to Point of Order in House of 
Representatives.--
          (1) Legislation reported by committee on ways and 
        means.--Clause 2(l) of rule XI of the Rules of the 
        House of Representatives is amended by adding at the 
        end the following new subparagraph:
  ``(8) The report of the Committee on Ways and Means on any 
bill or joint resolution containing any provision amending the 
Internal Revenue Code of 1986 shall include a Tax Complexity 
Analysis prepared by the Joint Committee on Taxation in 
accordance with section 8024 of the Internal Revenue Code of 
1986 unless the Committee on Ways and Means causes to have such 
Analysis printed in the Congressional Record prior to the 
consideration of the bill or joint resolution.''.
          (2) Conference reports.--Rule XXVIII of the Rules of 
        the House of Representatives is amended by adding at 
        the end the following new clause:
  ``7. It shall not be in order to consider the report of a 
committee of conference which contains any provision amending 
the Internal Revenue Code of 1986 unless--
          ``(a) the accompanying joint explanatory statement 
        contains a Tax Complexity Analysis prepared by the 
        Joint Committee on Taxation in accordance with section 
        8024 of the Internal Revenue Code of 1986, or
          ``(b) such Analysis is printed in the Congressional 
        Record prior to the consideration of the report.''.
  (c) Effective Date.--The amendments made by this section 
shall apply to legislation considered on or after January 1, 
1998.
  At the end of the bill, insert the following new title:

            TITLE VI--TAX TECHNICAL CORRECTIONS ACT OF 1997

SEC. 601. SHORT TITLE.

  This title may be cited as the ``Tax Technical Corrections 
Act of 1997''.

SEC. 602. DEFINITIONS.

  For purposes of this title--
          (1) 1986 Code.--The term ``1986 Code'' means the 
        Internal Revenue Code of 1986.
          (2) 1997 Act.--The term ``1997 Act'' means the 
        Taxpayer Relief Act of 1997.

SEC. 603. AMENDMENTS RELATED TO TITLE I OF 1997 ACT.

  (a) Amendments Related to Section 101(a) of 1997 Act.--
          (1) Subsection (d) of section 24 of the 1986 Code is 
        amended--
                  (A) by striking paragraphs (3) and (4),
                  (B) by redesignating paragraph (5) as 
                paragraph (3), and
                  (C) by striking paragraphs (1) and (2) and 
                inserting the following new paragraphs:
          ``(1) In general.--In the case of a taxpayer with 3 
        or more qualifying children for any taxable year, the 
        aggregate credits allowed under subpart C shall be 
        increased by the lesser of--
                  ``(A) the credit which would be allowed under 
                this section without regard to this subsection 
                and the limitation under section 26(a), or
                  ``(B) the amount by which the aggregate 
                amount of credits allowed by this subpart 
                (without regard to this subsection) would 
                increase if the limitation imposed by section 
                26(a) were increased by the excess (if any) 
                of--
                          ``(i) the taxpayer's social security 
                        taxes for the taxable year, over
                          ``(ii) the credit allowed under 
                        section 32 (determined without regard 
                        to subsection (n)) for the taxable 
                        year.
                The amount of the credit allowed under this 
                subsection shall not be treated as a credit 
                allowed under this subpart and shall reduce the 
                amount of credit otherwise allowable under 
                subsection (a) without regard to section 26(a).
          ``(2) Reduction of credit to taxpayer subject to 
        alternative minimum tax.--The credit determined under 
        this subsection for the taxable year shall be reduced 
        by the excess (if any) of--
                  ``(A) the amount of tax imposed by section 55 
                (relating to alternative minimum tax) with 
                respect to such taxpayer for such taxable year, 
                over
                  ``(B) the amount of the reduction under 
                section 32(h) with respect to such taxpayer for 
                such taxable year.''
          (2) Paragraph (3) of section 24(d) of the 1986 Code 
        (as redesignated by paragraph (1)) is amended by 
        striking ``paragraph (3)'' and inserting ``paragraph 
        (1)''.
  (b) Amendments Related to Section 101(b) of 1997 Act.--
          (1) The subsection (m) of section 32 of the 1986 Code 
        added by section 101(b) of the 1997 Act is amended to 
        read as follows:
  ``(n) Supplemental Child Credit.--
          ``(1) In general.--In the case of a taxpayer with 
        respect to whom a credit is allowed under section 24 
        for the taxable year, the credit otherwise allowable 
        under this section shall be increased by the lesser 
        of--
                  ``(A) the credit which would be allowed under 
                section 24 without regard to this subsection 
                and the limitation under section 26(a), or
                  ``(B) the amount by which the aggregate 
                amount of credits allowed by subpart A (without 
                regard to this subsection) would be reduced if 
                the limitation imposed by section 26(a) were 
                reduced by the excess (if any) of--
                          ``(i) the credit allowed by this 
                        section (without regard to this 
                        subsection) for the taxable year, over
                          ``(ii) the taxpayer's social security 
                        taxes (as defined in section 24(d)) for 
                        the taxable year.
        The credit determined under this subsection shall be 
        allowed without regard to any other provision of this 
        section, including subsection (d).
          ``(2) Coordination with other credits.--
                  ``(A) In general.--The amount of the credit 
                under this subsection shall reduce the amount 
                of the credit otherwise allowable under section 
                24, but the amount of the credit under this 
                subsection (and such reduction) shall not 
                otherwise be taken into account in determining 
                the amount of any other credit allowable under 
                this part.
                  ``(B) Treatment of credit under section 
                24(d).--For purposes of this subsection, the 
                credit determined under section 24(d) shall be 
                treated as not allowed under section 24.''

SEC. 604. AMENDMENTS RELATED TO TITLE II OF 1997 ACT.

  (a) Amendments Related to Section 201 of 1997 Act.--
          (1) The item relating to section 25A in the table of 
        sections for subpart A of part IV of subchapter A of 
        chapter 1 of the 1986 Code is amended to read as 
        follows:

        ``Sec. 25A. Hope and Lifetime Learning credits.''

          (2) Subsection (a) of section 6050S of the 1986 Code 
        is amended to read as follows:
  ``(a) In General.--Any person--
          ``(1) which is an eligible educational institution--
                  ``(A) which receives payments for qualified 
                tuition and related expenses with respect to 
                any individual for any calendar year, or
                  ``(B) which makes reimbursements or refunds 
                (or similar amounts) to any individual of 
                qualified tuition and related expenses,
          ``(2) which is engaged in a trade or business of 
        making payments to any individual under an insurance 
        arrangement as reimbursements or refunds (or similar 
        amounts) of qualified tuition and related expenses, or
          ``(3) except as provided in regulations, any person 
        which is engaged in a trade or business and, in the 
        course of which, receives from any individual interest 
        aggregating $600 or more for any calendar year on 1 or 
        more qualified education loans,
shall make the return described in subsection (b) with respect 
to the individual at such time as the Secretary may by 
regulations prescribe.''
          (3) Subparagraph (A) of section 201(c)(2) of the 1997 
        Act is amended to read as follows:
                  ``(A) Subparagraph (B) of section 6724(d)(1) 
                (relating to definitions) is amended by 
                redesignating clauses (x) through (xv) as 
                clauses (xi) through (xvi), respectively, and 
                by inserting after clause (ix) the following 
                new clause:
                          `` `(x) section 6050S (relating to 
                        returns relating to payments for 
                        qualified tuition and related 
                        expenses),' ''.
  (b) Amendments Related to Section 211 of 1997 Act.--
          (1) Paragraph (3) of section 135(c) of the 1986 Code 
        is amended to read as follows:
          ``(3) Eligible educational institution.--The term 
        `eligible educational institution' has the meaning 
        given such term by section 529(e)(5).''.
          (2) Subparagraph (A) of section 529(c)(3) of the 1986 
        Code is amended by striking ``section 72(b)'' and 
        inserting ``section 72''.
  (c) Amendments Related to Section 213 of 1997 Act.--
          (1)(A) Section 530(b)(1)(E) of the 1986 Code 
        (defining education individual retirement account) is 
        amended to read as follows:
                  ``(E) Any balance to the credit of the 
                designated beneficiary on the date on which the 
                beneficiary attains age 30 shall be distributed 
                within 30 days after such date to the 
                beneficiary or, if the beneficiary dies before 
                attaining age 30, shall be distributed within 
                30 days after the date of death to the estate 
                of such beneficiary.''
          (B) Subsection (d) of section 530 of the 1986 Code is 
        amended by adding at the end the following new 
        paragraph:
          ``(8) Deemed distribution on required distribution 
        date.--In any case in which a distribution is required 
        under subsection (b)(1)(E), any balance to the credit 
        of a designated beneficiary as of the close of the 30-
        day period referred to in such subsection for making 
        such distribution shall be deemed distributed at the 
        close of such period.''
          (2)(A) Paragraph (1) of section 530(d) of the 1986 
        Code is amended by striking ``section 72(b)'' and 
        inserting ``section 72''.
          (B) Subsection (e) of section 72 of the 1986 Code is 
        amended by inserting after paragraph (8) the following 
        new paragraph:
          ``(9) Extension of paragraph (2)(b) to qualified 
        state tuition programs and educational individual 
        retirement accounts.--Notwithstanding any other 
        provision of this subsection, paragraph (2)(B) shall 
        apply to amounts received under a qualified State 
        tuition program (as defined in section 529(b)) or under 
        an education individual retirement account (as defined 
        in section 530(b)). The rule of paragraph (8)(B) shall 
        apply for purposes of this paragraph.''
          (3) So much of section 530(d)(4)(C) of the 1986 Code 
        as precedes clause (ii) thereof is amended to read as 
        follows:
                  ``(C) Contributions returned before due date 
                of return.--Subparagraph (A) shall not apply to 
                the distribution of any contribution made 
                during a taxable year on behalf of the 
                designated beneficiary if--
                          ``(i) such distribution is made on or 
                        before the day prescribed by law 
                        (including extensions of time) for 
                        filing the beneficiary's return of tax 
                        for the taxable year or, if the 
                        beneficiary is not required to file 
                        such a return, the 15th day of the 4th 
                        month of the taxable year following the 
                        taxable year, and''.
          (4) Subparagraph (C) of section 135(c)(2) of the 1986 
        Code is amended--
                  (A) by inserting ``and education individual 
                retirement accounts'' in the heading after 
                ``program'', and
                  (B) by striking ``section 529(c)(3)(A)'' and 
                inserting ``section 72''.
          (5) Subparagraph (A) of section 4973(e)(1) of the 
        1986 Code is amended by inserting before the comma 
        ``(or, if less, the sum of the maximum amounts 
        permitted to be contributed under section 530(c) by the 
        contributors to such accounts for such year)''.
  (d) Amendment Related to Section 224 of 1997 Act.--Section 
170(e)(6)(F) of the 1986 Code (relating to termination) is 
amended by striking ``1999'' and inserting ``2000''.
  (e) Amendments Related to Section 225 of 1997 Act.--
          (1) The last sentence of section 108(f)(2) of the 
        1986 Code is amended to read as follows:
        ``The term `student loan' includes any loan made by an 
        educational organization described in section 
        170(b)(1)(A)(ii) or by an organization exempt from tax 
        under section 501(a) to refinance a loan to an 
        individual to assist the individual in attending any 
        such educational organization but only if the 
        refinancing loan is pursuant to a program of the 
        refinancing organization which is designed as described 
        in subparagraph (D)(ii).''
          (2) Section 108(f)(3) of the 1986 Code is amended by 
        striking ``(or by an organization described in 
        paragraph (2)(E) from funds provided by an organization 
        described in paragraph (2)(D))''.
  (f) Amendments Related to Section 226 of 1997 Act.--
          (1) Section 226(a) of the 1997 Act is amended by 
        striking ``section 1397E'' and inserting ``section 
        1397D''.
          (2) Section 1397E(d)(4)(B) of the 1986 Code is 
        amended by striking ``local education agency as 
        defined'' and inserting ``local educational agency as 
        defined''.

SEC. 605. AMENDMENTS RELATED TO TITLE III OF 1997 ACT.

  (a) Amendments Related to Section 301 of 1997 Act.--Section 
219(g) of the 1986 Code is amended--
          (1) by inserting ``or the individual's spouse'' after 
        ``individual'' in paragraph (1), and
          (2) by striking paragraph (7) and inserting:
          ``(7) Special rule for spouses who are not active 
        participants.--If this subsection applies to an 
        individual for any taxable year solely because their 
        spouse is an active participant, then, in applying this 
        subsection to the individual (but not their spouse)--
                  ``(A) the applicable dollar amount under 
                paragraph (3)(B)(i) shall be $150,000, and
                  ``(B) the amount applicable under paragraph 
                (2)(A)(ii) shall be $10,000.''
  (b) Amendments Related to Section 302 of 1997 Act.--
          (1) Section 408A(c)(3)(A) of the 1986 Code is amended 
        by striking ``shall be reduced'' and inserting ``shall 
        not exceed an amount equal to the amount determined 
        under paragraph (2)(A) for such taxable year, 
        reduced''.
          (2) Section 408A(c)(3) of the 1986 Code (relating to 
        limits based on modified adjusted gross income) is 
        amended--
                  (A) by inserting ``or a married individual 
                filing a separate return'' after ``joint 
                return'' in subparagraph (A)(ii), and
                  (B) by striking ``and the deduction under 
                section 219 shall be taken into account'' in 
                subparagraph (C)(i).
          (3) Section 408A(d)(2) of the 1986 Code (defining 
        qualified distribution) is amended by striking 
        subparagraph (B) and inserting the following:
                  ``(B) Distributions within nonexclusion 
                period.--A payment or distribution from a Roth 
                IRA shall not be treated as a qualified 
                distribution under subparagraph (A) if such 
                payment or distribution is made before the 
                exclusion date for the Roth IRA.
                  ``(C) Exclusion date.--For purposes of this 
                section, the exclusion date for any Roth IRA is 
                the first day of the taxable year immediately 
                following the 5-taxable year period beginning 
                with--
                          ``(i) the first taxable year for 
                        which a contribution to any Roth IRA 
                        maintained for the benefit of the 
                        individual was made, or
                          ``(ii) in the case of a Roth IRA to 
                        which 1 or more qualified rollover 
                        contributions were made--
                                  ``(I) from an individual 
                                retirement plan other than a 
                                Roth IRA, or
                                  ``(II) from another Roth IRA 
                                to the extent such 
                                contributions areproperly 
allocable to contributions described in subclause (I),
                        the most recent taxable year for which 
                        any such qualified rollover 
                        contribution was made.''
          (4) Section 408A(d)(3) of the 1986 Code (relating to 
        rollovers from IRAs other than Roth IRAs) is amended by 
        adding at the end the following:
                  ``(F) Special rule for applying section 72.--
                          ``(i) In general.--If--
                                  ``(I) any distribution from a 
                                Roth IRA is made before the 
                                exclusion date, and
                                  ``(II) any portion of such 
                                distribution is properly 
                                allocable to a qualified 
                                rollover contribution described 
                                in paragraph (2)(C)(ii),
                        then section 72(t) shall be applied as 
                        if such portion were includible in 
                        gross income.
                          ``(ii) Limitation.--Clause (i) shall 
                        apply only to the extent of the amount 
                        includible in gross income under 
                        subparagraph (A)(i) by reason of the 
                        qualified rollover contribution.
                  ``(G) Special rules for contributions to 
                which 4-year averaging applies.--In the case of 
                a qualified rollover contribution to a Roth IRA 
                of a distribution to which subparagraph 
                (A)(iii) applied, the following rules shall 
                apply:
                          ``(i) Death of distributee.--
                                  ``(I) In general.--If the 
                                individual required to include 
                                amounts in gross income under 
                                such subparagraph dies before 
                                all of such amounts are 
                                included, all remaining amounts 
                                shall be included in gross 
                                income for the taxable year 
                                which includes the date of 
                                death.
                                  ``(II) Special rule for 
                                surviving spouse.--If the 
                                spouse of the individual 
                                described in subclause (I) 
                                acquires the Roth IRA to which 
                                such qualified rollover 
                                contribution is properly 
                                allocable, the spouse may elect 
                                to include the remaining 
                                amounts described in subclause 
                                (I) in the spouse's gross 
                                income in the taxable years of 
                                the spouse ending with or 
                                within the taxable years of 
                                such individual in which such 
                                amounts would otherwise have 
                                been includible.
                          ``(ii) Additional tax for early 
                        distribution.--
                                  ``(I) In general.--If any 
                                distribution from a Roth IRA is 
                                made before the exclusion date, 
                                and any portion of such 
                                distribution is properly 
                                allocable to such qualified 
                                rollover contribution, the 
                                distributee's tax under this 
                                chapter for the taxable year in 
                                which the amount is received 
                                shall be increased by 10 
                                percent of the amount of such 
                                portion not in excess of the 
                                amount includible in gross 
                                income under subparagraph 
                                (A)(i) by reason of such 
                                qualified rollover 
                                contribution.
                                  ``(II) Treatment of tax.--For 
                                purposes of this title, any tax 
                                imposed by subclause (I) shall 
                                be treated as a tax imposed by 
                                section 72(t) and shall be in 
                                addition to any other tax 
                                imposed by such section.''
          (5)(A) Section 408A(d)(4) of the 1986 Code is amended 
        to read as follows:
          ``(4) Aggregation and ordering rules.--
                  ``(A) Aggregation rules.--Section 408(d)(2) 
                shall be applied separately with respect to--
                          ``(i) Roth IRAs and other individual 
                        retirement plans,
                          ``(ii) Roth IRAs described in 
                        paragraph (2)(C)(ii) and Roth IRAs not 
                        so described, and
                          ``(iii) Roth IRAs described in 
                        paragraph (2)(C)(ii) with different 
                        exclusion dates.
                  ``(B) Ordering rules.--For purposes of 
                applying section 72 to any distribution from a 
                Roth IRA which is not a qualified distribution, 
                such distribution shall be treated as made--
                          ``(i) from contributions to the 
                        extent that the amount of such 
                        distribution, when added to all 
                        previous distributions from the Roth 
                        IRA, does not exceed the aggregate 
                        contributions to the Roth IRA, and
                          ``(ii) from such contributions in the 
                        following order:
                                  ``(I) Qualified rollover 
                                contributions to the extent 
                                includible in gross income in 
                                the manner described in 
                                paragraph (3)(A)(iii).
                                  ``(II) Qualified rollover 
                                contributions not described in 
                                subclause (I) to the extent 
                                includible in gross income 
                                under paragraph (3)(A).
                                  ``(III) Contributions not 
                                described in subclause (I) or 
                                (II).
                Such rules shall also apply in determining the 
                character of qualified rollover contributions 
                from one Roth IRA to another Roth IRA.''
          (B) Section 408A(d)(1) of the 1986 Code is amended to 
        read as follows:
          ``(1) Exclusion.--Any qualified distribution from a 
        Roth IRA shall not be includible in gross income.''
          (6)(A) Section 408A(d) of the 1986 Code (relating to 
        distribution rules) is amended by adding at the end the 
        following:
          ``(6) Taxpayer may make adjustments before due 
        date.--
                  ``(A) In general.--Except as provided by the 
                Secretary, if, on or before the due date for 
                any taxable year, a taxpayer transfers in a 
                trustee-to-trustee transfer any contribution to 
                an individual retirement plan made during such 
                taxable year from such plan to any other 
                individual retirement plan, then, for purposes 
                of this chapter, such contribution shall be 
                treated as having been made to the transferee 
                plan (and not the transferor plan).
                  ``(B) Special rules.--
                          ``(i) Transfer of earnings.--
                        Subparagraph (A) shall not apply to the 
                        transfer of any contribution unless 
                        such transfer is accompanied by any net 
                        income allocable to such contribution.
                          ``(ii) No deduction.--Subparagraph 
                        (A) shall apply to the transfer of any 
                        contribution only to the extent no 
                        deduction was allowed with respect to 
                        the contribution to the transferor 
                        plan.
                  ``(C) Due date.--For purposes of this 
                paragraph, the due date for any taxable year is 
                the last date for filing the return of tax for 
                such taxable year (including extensions).''
          (B) Section 408A(d)(3) of the 1986 Code, as amended 
        by this subsection, is amended by striking subparagraph 
        (D) and by redesignating subparagraphs (E), (F), and 
        (G) as subparagraphs (D), (E), and (F), respectively.
          (7) Section 302(b) of the 1997 Act is amended by 
        striking ``Section 4973(b)'' and inserting ``Section 
        4973''.
          (8) Section 408A of the 1986 Code is amended by 
        adding at the end the following new subsection:
  ``(f) Individual Retirement Plan.--For purposes of this 
section, except as provided by the Secretary, the term 
`individual retirement plan' shall not include a simplified 
employee pension or a simple retirement account.''
  (c) Amendments Related to Section 303 of 1997 Act.--
          (1) Section 72(t)(8)(E) of the 1986 Code is amended--
                  (A) by striking ``120 days'' and inserting 
                ``120th day'', and
                  (B) by striking ``60 days'' and inserting 
                ``60th day''.
          (2)(A) Section 402(c) of the 1986 Code is amended by 
        adding at the end the following:
          ``(11) Denial of rollover treatment for transfers of 
        hardship distributions to individual retirement 
        plans.--This subsection shall not apply to the transfer 
        of any hardship distribution described in section 
        401(k)(2)(B)(i)(IV) from a qualified cash or deferred 
        arrangement to an eligible retirement plan described in 
        clause (i) or (ii) of paragraph (8)(B).''
          (B) The amendment made by this paragraph shall apply 
        to distributions made after December 31, 1997.
  (d) Amendments Related to Section 311 of 1997 Act.--
          (1) Subsection (h) of section 1 of the 1986 Code 
        (relating to maximum capital gains rate) is amended to 
        read as follows:
  ``(h) Maximum Capital Gains Rate.--
          ``(1) In general.--If a taxpayer has a net capital 
        gain for any taxable year, the tax imposed by this 
        section for such taxable year shall not exceed the sum 
        of--
                  ``(A) a tax computed at the rates and in the 
                same manner as if this subsection had not been 
                enacted on the greater of--
                          ``(i) taxable income reduced by the 
                        net capital gain, or
                          ``(ii) the lesser of--
                                  ``(I) the amount of taxable 
                                income taxed at a rate below 28 
                                percent, or
                                  ``(II) taxable income reduced 
                                by the adjusted net capital 
                                gain,
                  ``(B) 10 percent of so much of the adjusted 
                net capital gain (or, if less, taxable income) 
                as does not exceed the excess (if any) of--
                          ``(i) the amount of taxable income 
                        which would (without regard to this 
                        paragraph) be taxed at a rate below 28 
                        percent, over
                          ``(ii) the taxable income reduced by 
                        the adjusted net capital gain,
                  ``(C) 20 percent of the adjusted net capital 
                gain (or, if less, taxable income) in excess of 
                the amount on which a tax is determined under 
                subparagraph (B),
                  ``(D) 25 percent of the excess (if any) of--
                          ``(i) the unrecaptured section 1250 
                        gain (or, if less, the net capital 
                        gain), over
                          ``(ii) the excess (if any) of--
                                  ``(I) the sum of the amount 
                                on which tax is determined 
                                under subparagraph (A) plus the 
                                net capital gain, over
                                  ``(II) taxable income, and
                  ``(E) 28 percent of the amount of taxable 
                income in excess of the sum of the amounts on 
                which tax is determined under the preceding 
                subparagraphs of this paragraph.
          ``(2) Reduced capital gain rates for qualified 5-year 
        gain.--
                  ``(A) Reduction in 10-percent rate.--In the 
                case of any taxable year beginning after 
                December 31, 2000, the rate under paragraph 
                (1)(B) shall be 8 percent with respect to so 
                much of the amount to which the 10-percent rate 
                would otherwise apply as does not exceed 
                qualified 5-year gain, and 10 percent with 
                respect to the remainder of such amount.
                  ``(B) Reduction in 20-percent rate.--The rate 
                under paragraph (1)(C) shall be 18 percent with 
                respect to so much of the amount to which the 
                20-percent rate would otherwise apply as does 
                not exceed the lesser of--
                          ``(i) the excess of qualified 5-year 
                        gain over the amount of such gain taken 
                        into account under subparagraph (A) of 
                        this paragraph, or
                          ``(ii) the amount of qualified 5-year 
                        gain (determined by taking into account 
                        only property the holding period for 
                        which begins after December 31, 2000),
                and 20 percent with respect to the remainder of 
                such amount. For purposes of determining under 
                the preceding sentence whether the holding 
                period of property begins after December 31, 
                2000, the holding period of property acquired 
                pursuant to the exercise of an option (or other 
                right or obligation to acquire property) shall 
                include the period such option (or other right 
                or obligation) was held.
          ``(3) Net capital gain taken into account as 
        investment income.--For purposes of this subsection, 
        the net capital gain for any taxable year shall be 
        reduced (but not below zero) by the amount which the 
        taxpayer takes into account as investment income under 
        section 163(d)(4)(B)(iii).
          ``(4) Adjusted net capital gain.--For purposes of 
        this subsection, the term `adjusted net capital gain' 
        means net capital gain reduced (but not below zero) by 
        the sum of--
                  ``(A) unrecaptured section 1250 gain, and
                  ``(B) 28 percent rate gain.
          ``(5) 28 percent rate gain.--For purposes of this 
        subsection--
                  ``(A) In general.--The term `28 percent rate 
                gain' means the excess (if any) of--
                          ``(i) the sum of--
                                  ``(I) the aggregate long-term 
                                capital gain from property held 
                                for more than 1 year but not 
                                more than 18 months,
                                  ``(II) collectibles gain, and
                                  ``(III) section 1202 gain, 
                                over
                          ``(ii) the sum of--
                                  ``(I) the aggregate long-term 
                                capital loss (not described in 
                                subclause (IV)) from property 
                                referred to in clause (i)(I),
                                  ``(II) collectibles loss,
                                  ``(III) the net short-term 
                                capital loss, and
                                  ``(IV) the amount of long-
                                term capital loss carried under 
                                section 1212(b)(1)(B) to the 
                                taxable year.
                  ``(B) Special rules.--
                          ``(i) Short sales and options.--Rules 
                        similar to the rules of subsections (b) 
                        and (d) of section 1233 shall apply to 
                        substantially identical property, and 
                        section 1092(f) with respect to stock, 
                        held for more than 1 year but not more 
                        than 18 months.
                          ``(ii) Section 1256 contracts.--
                        Amounts treated as long-term capital 
                        gain or loss under section 1256(a)(3) 
                        shall be treated as attributable to 
                        property held for more than 18 months.
          ``(6) Collectibles gain and loss.--For purposes of 
        this subsection--
                  ``(A) In general.--The terms `collectibles 
                gain' and `collectibles loss' mean gain or loss 
                (respectively) from the sale or exchange of a 
                collectible (as defined in section 408(m) 
                without regard to paragraph (3) thereof) which 
                is a capital asset held for more than 18 months 
                but only to the extent such gain is taken into 
                account in computing gross income and such loss 
                is taken into account in computing taxable 
                income.
                  ``(B) Partnerships, etc.--For purposes of 
                subparagraph (A), any gain from the sale of an 
                interest in a partnership, S corporation, or 
                trust which is attributable to unrealized 
                appreciation in the value of collectibles shall 
                be treated as gain from the sale or exchange of 
                a collectible. Rules similar to the rules of 
                section 751 shall apply for purposes of the 
                preceding sentence.
          ``(7) Unrecaptured section 1250 gain.--For purposes 
        of this subsection--
                  ``(A) In general.--The term `unrecaptured 
                section 1250 gain' means the excess (if any) 
                of--
                          ``(i) the amount of long-term capital 
                        gain (not otherwise treated as ordinary 
                        income) which would be treated as 
                        ordinary income if--
                                  ``(I) section 1250(b)(1) 
                                included all depreciation and 
                                the applicable percentage under 
                                section 1250(a) were 100 
                                percent, and
                                  ``(II) only gain from 
                                property held for more than 18 
                                months were taken into account, 
                                over
                          ``(ii) the excess (if any) of--
                                  ``(I) the amount described in 
                                paragraph (5)(A)(ii), over
                                  ``(II) the amount described 
                                in paragraph (5)(A)(i).
                  ``(B) Limitation with respect to section 1231 
                property.--The amount described in subparagraph 
                (A)(i) from sales, exchanges, and conversions 
                described in section 1231(a)(3)(A) for any 
                taxable year shall not exceed the net section 
                1231 gain (as defined in section 1231(c)(3)) 
                for such year.
          ``(8) Section 1202 gain.--For purposes of this 
        subsection, the term `section 1202 gain' means an 
        amount equal to the gain excluded from gross income 
        under section 1202(a).
          ``(9) Qualified 5-year gain.--For purposes of this 
        subsection, the term `qualified 5-year gain' means the 
        amount of long-term capital gain which would be 
        computed for the taxable year if only gains from the 
        sale or exchange of property held by the taxpayer for 
        more than 5 years were taken into account. The 
        determination under the preceding sentence shall be 
        made without regard to collectibles gain, gain 
        described in paragraph (7)(A)(i), and section 1202 
        gain.
          ``(10) Coordination with recapture of net ordinary 
        losses under section 1231.--If any amount is treated as 
        ordinary income under section 1231(c), such amount 
        shall be allocated among the separate categories of net 
        section 1231 gain (as defined in section 1231(c)(3)) in 
        such manner as the Secretary may by forms or 
        regulations prescribe.
          ``(11) Regulations.--The Secretary may prescribe such 
        regulations as are appropriate (including regulations 
        requiring reporting) to apply this subsection in the 
        case of sales and exchanges by pass-thru entities and 
        of interests in such entities.
          ``(12) Pass-thru entity defined.--For purposes of 
        this subsection, the term `pass-thru entity' means--
                  ``(A) a regulated investment company,
                  ``(B) a real estate investment trust,
                  ``(C) an S corporation,
                  ``(D) a partnership,
                  ``(E) an estate or trust,
                  ``(F) a common trust fund,
                  ``(G) a foreign investment company which is 
                described in section 1246(b)(1) and for which 
                an election is in effect under section 1247, 
                and
                  ``(H) a qualified electing fund (as defined 
                in section 1295).
          ``(13) Special rules for periods during 1997.--
                  ``(A) Determination of 28 percent rate 
                gain.--In applying paragraph (5)--
                          ``(i) the amount determined under 
                        subclause (I) of paragraph (5)(A)(i) 
                        shall include long-term capital gain 
                        (not otherwise described in paragraph 
                        (5)(A)(i)) which is properly taken into 
                        account for the portion of the taxable 
                        year before May 7, 1997,
                          ``(ii) the amounts determined under 
                        subclause (I) of paragraph (5)(A)(ii) 
                        shall include long-term capital loss 
                        (not otherwise described in paragraph 
                        (5)(A)(ii)) which is properly taken 
                        into account for the portion of the 
                        taxable year before May 7, 1997, and
                          ``(iii) clauses (i)(I) and (ii)(I) of 
                        paragraph (5)(A) shall be applied by 
                        not taking into account any gain and 
                        loss on property held for more than 1 
                        year but not more than 18 months which 
                        is properly taken into account for the 
                        portion of the taxable year after May 
                        6, 1997, and before July 29, 1997.
                  ``(B) Other special rules.--
                          ``(i) Determination of unrecaptured 
                        section 1250 gain not to include pre-
                        may 7, 1997 gain.--The amount 
                        determined under paragraph (7)(A)(i) 
                        shall not include gain properly taken 
                        into account for the portion of the 
                        taxable year before May 7, 1997.
                          ``(ii) Other transitional rules for 
                        18-month holding period.--Paragraphs 
                        (6)(A) and (7)(A)(i)(II) shall be 
                        applied by substituting `1 year' for 
                        `18 months' with respect to gain 
                        properly taken into account for the 
                        portion of the taxable year after May 
                        6, 1997, and before July 29, 1997.
                  ``(C) Special rules for pass-thru entities.--
                In applying this paragraph with respect to any 
                pass-thru entity, the determination of when 
                gains and loss are properly taken into account 
                shall be made at the entity level.''
          (2) In general.--Paragraph (3) of section 55(b) of 
        the 1986 Code is amended to read as follows:
          ``(3) Maximum rate of tax on net capital gain of 
        noncorporate taxpayers.--The amount determined under 
        the first sentence of paragraph (1)(A)(i) shall not 
        exceed the sum of--
                  ``(A) the amount determined under such first 
                sentence computed at the rates and in the same 
                manner as if this paragraph had not been 
                enacted on the taxable excess reduced by the 
                lesser of--
                          ``(i) the net capital gain, or
                          ``(ii) the sum of--
                                  ``(I) the adjusted net 
                                capital gain, plus
                                  ``(II) the unrecaptured 
                                section 1250 gain, plus
                  ``(B) 10 percent of so much of the adjusted 
                net capital gain (or, if less, taxable excess) 
                as does not exceed the amount on which a tax is 
                determined under section 1(h)(1)(B), plus
                  ``(C) 20 percent of the adjusted net capital 
                gain (or, if less, taxable excess) in excess of 
                the amount on which tax is determined under 
                subparagraph (B), plus
                  ``(D) 25 percent of the amount of taxable 
                excess in excess of the sum of the amounts on 
                which tax is determined under the preceding 
                subparagraphs of this paragraph.
        In the case of taxable years beginning after December 
        31, 2000, rules similar to the rules of section 1(h)(2) 
        shall apply for purposes of subparagraphs (B) and (C). 
        Terms used in this paragraph which are also used in 
        section 1(h) shall have the respective meanings given 
        such terms by section 1(h) but computed with the 
        adjustments under this part.''.
          (3) Section 57(a)(7) of the 1986 Code is amended by 
        adding at the end the following new sentence: ``In the 
        case of stock the holding period of which begins after 
        December 31, 2000 (determined with the application of 
        the last sentence of section 1(h)(2)(B)), the preceding 
        sentence shall be applied by substituting `28 percent' 
        for `42 percent'.''.
          (4) Paragraphs (11) and (12) of section 1223, and 
        section 1235(a), of the 1986 Code are eachamended by 
striking ``1 year'' each place it appears and inserting ``18 months''.
  (e) Amendments Related to Section 312 of 1997 Act.--
          (1) Section 121(c)(1) of the 1986 Code is amended to 
        read as follows:
          ``(1) In general.--In the case of a sale or exchange 
        to which this subsection applies, the ownership and use 
        requirements of subsection (a), and subsection (b)(3), 
        shall not apply; but the dollar limitation under 
        paragraph (1) or (2) of subsection (b), whichever is 
        applicable, shall be equal to--
                  ``(A) the amount which bears the same ratio 
                to such limitation (determined without regard 
                to this paragraph) as
                  ``(B)(i) the shorter of--
                          ``(I) the aggregate periods, during 
                        the 5-year period ending on the date of 
                        such sale or exchange, such property 
                        has been owned and used by the taxpayer 
                        as the taxpayer's principal residence, 
                        or
                          ``(II) the period after the date of 
                        the most recent prior sale or exchange 
                        by the taxpayer to which subsection (a) 
                        applied and before the date of such 
                        sale or exchange, bears to
                  ``(ii) 2 years.''.
          (2) Section 312(d)(2) of the 1997 Act (relating to 
        sales before date of enactment) is amended by inserting 
        ``on or'' before ``before'' each place it appears in 
        the text and heading.
  (f) Amendment Related to Section 313 of 1997 Act.--Section 
1045 of the 1986 Code is amended by adding at the end the 
following new subsection:
  ``(c) Limitation on Application to Partnerships and S 
Corporations.--Subsection (a) shall apply to a partnership or S 
corporation for a taxable year only if at all times during such 
taxable year all of the partners in the partnership, or all of 
the shareholders of the S corporation, are natural persons or 
estates.''

SEC. 606. AMENDMENTS RELATED TO TITLE V OF 1997 ACT.

  (a) Amendments Related to Section 501 of 1997 Act.--
          (1) Subsection (c) of section 2631 of the 1986 Code 
        is amended by striking ``an individual who dies'' and 
        inserting ``a generation-skipping transfer''.
          (2) Subsection (f) of section 501 of the 1997 Act is 
        amended by inserting ``(other than the amendment made 
        by subsection (d))'' after ``this section''.
  (b) Amendments Related to Section 502 of 1997 Act.--
          (1) Subsection (a) of section 2033A of the 1986 Code 
        is amended to read as follows:
  ``(a) Exclusion.--
          ``(1) In general.--In the case of an estate of a 
        decedent to which this section applies, the value of 
        the gross estate shall not include the lesser of--
                  ``(A) the adjusted value of the qualified 
                family-owned business interests of the decedent 
                otherwise includible in the estate, or
                  ``(B) the exclusion limitation with respect 
                to such estate.
          ``(2) Exclusion limitation.--
                  ``(A) In general.--The exclusion limitation 
                with respect to any estate is the amount of 
                reduction in the tentative tax base with 
                respect to such estate which would be required 
                in order to reduce the tax imposed by section 
                2001(b) (determined without regard to this 
                section) by an amount equal to the maximum 
                credit equivalent benefit.
                  ``(B) Maximum credit equivalent benefit.--For 
                purposes of subparagraph (A), the term `maximum 
                credit equivalent benefit' means the excess 
                of--
                          ``(i) the amount by which the 
                        tentative tax imposed by section 
                        2001(b) (determined without regard to 
                        this section) would be reduced if the 
                        tentative tax base were reduced by 
                        $675,000, over
                          ``(ii) the amount by which the 
                        applicable credit amount under section 
                        2010(c) with respect to such estate 
                        exceeds such applicable credit amount 
                        in effect for 1998.
                  ``(C) Tentative tax base.--For purposes of 
                this paragraph, the term `tentative tax base' 
                means the amount with respect to which the tax 
                imposed by section 2001(b) would be computed 
                without regard to this section.''
          (2) Section 2033A(b)(3) of the 1986 Code is amended 
        to read as follows:
          ``(3) Includible gifts of interests.--The amount of 
        the gifts of qualified family-owned business interests 
        determined under this paragraph is the sum of--
                  ``(A) the amount of such gifts from the 
                decedent to members of the decedent's family 
                taken into account under section 2001(b)(1)(B), 
                plus
                  ``(B) the amount of such gifts otherwise 
                excluded under section 2503(b),
        to the extent such interests are continuously held by 
        members of such family (other than the decedent's 
        spouse) between the date of the gift and the date of 
        the decedent's death.''
  (c) Amendments Related to Section 503 of the 1997 Act.--
          (1) Clause (iii) of section 6166(b)(7)(A) of the 1986 
        Code is amended to read as follows:
                          ``(iii) for purposes of applying 
                        section 6601(j), the 2-percent portion 
                        (as defined in such section) shall be 
                        treated as being zero.''
          (2) Clause (iii) of section 6166(b)(8)(A) of the 1986 
        Code is amended to read as follows:
                          ``(iii) 2-percent interest rate not 
                        to apply.--For purposes of applying 
                        section 6601(j), the 2-percent portion 
                        (as defined in such section) shall be 
                        treated as being zero.''
  (d) Amendment Related to Section 505 of the 1997 Act.--
Paragraphs (1) and (2) of section 7479(a) of the 1986 Code are 
each amended by striking ``an estate,'' and inserting ``an 
estate (or with respect to any property included therein),''.
  (e) Amendments Related to Section 506 of the 1997 Act.--
          (1) Subsection (c) of section 2504 of the 1986 Code 
        is amended by striking ``was assessed or paid'' and 
        inserting ``was finally determined for purposes of this 
        chapter''.
          (2) Paragraph (1) of section 506(e) of the 1997 Act 
        is amended by striking ``and (c)'' and inserting ``, 
        (c), and (d)''.

SEC. 607. AMENDMENTS RELATED TO TITLE VII OF 1997 ACT.

  (a) Amendment Related to Section 1400 of 1986 Code.--Section 
1400(b)(2)(B) of the 1986 Code is amended by inserting ``as 
determined on the basis of the 1990 census'' after ``percent''.
  (b) Amendments Related to Section 1400B of 1986 Code.--
          (1) Section 1400B(d)(2) of the 1986 Code is amended 
        by inserting ``as determined on the basis of the 1990 
        census'' after ``percent''.
          (2) Section 1400B(b) of the 1986 Code is amended by 
        redesignating paragraphs (6) and (7) as paragraphs (5) 
        and (6), respectively.
  (c) Amendments Related to Section 1400C of 1986 Code.--
          (1) Paragraph (1) of section 1400C(c) of the 1986 
        Code is amended to read as follows:
          ``(1) In general.--The term `first-time homebuyer' 
        means any individual if such individual (and if 
        married, such individual's spouse) had no present 
        ownership interest in a principal residence in the 
        District of Columbia during the 1-year period ending on 
        the date of the purchase of the principal residence to 
        which this section applies.''
          (2) Subparagraph (B) of section 1400C(e)(2) of the 
        1986 Code is amended by inserting before the period 
        ``on the date the taxpayer first occupies such 
        residence''.
          (3) Paragraph (3) of section 1400C(e) of the 1986 
        Code is amended by striking all that follows 
        ``principal residence'' and inserting ``on the date 
        such residence is purchased.''
          (4) Subsection (i) of section 1400C of the 1986 Code 
        is amended to read as follows:
  ``(i) Application of Section.--This section shall apply to 
property purchased after August 4, 1997, and before January 1, 
2001.''
          (5) Subsection (c) of section 23 of the 1986 Code is 
        amended by inserting ``and section 1400C'' after 
        ``other than this section''.
          (6) Subparagraph (C) of section 25(e)(1) of the 1986 
        Code is amended by striking ``section 23'' and 
        inserting ``sections 23 and 1400C''.

SEC. 608. AMENDMENTS RELATED TO TITLE IX OF 1997 ACT.

  (a) Amendment Related to Section 901 of 1997 Act.--Section 
9503(c)(7) of the 1986 Code is amended--
          (1) by striking ``resulting from the amendments made 
        by'' and inserting ``(and transfers to the Mass Transit 
        Account) resulting from the amendments made by 
        subsections (a) and (b) of section 901 of'', and
          (2) by inserting before the period ``and deposits in 
        the Highway Trust Fund (and transfers to the Mass 
        Transit Account) shall be treated as made when they 
        would have been required to be made without regard to 
        section 901(e) of the Taxpayer Relief Act of 1997''.
  (b) Amendment Related to Section 907 of 1997 Act.--Paragraph 
(2) of section 9503(e) of the 1986 Code is amended by striking 
the last sentence and inserting the following new sentence: 
``For purposes of the preceding sentence, the term `mass 
transit portion' means, for any fuel with respect to which tax 
was imposed under section 4041 or 4081 and otherwise deposited 
into the Highway Trust Fund, the amount determined at the rate 
of--
                  ``(A) except as otherwise provided in this 
                sentence, 2.86 cents per gallon,
                  ``(B) 1.77 cents per gallon in the case of 
                any partially exempt methanol or ethanol fuel 
                (as defined in section 4041(m)) none of the 
                alcohol in which consists of ethanol,
                  ``(C) 1.86 cents per gallon in the case of 
                liquefied natural gas,
                  ``(D) 2.13 cents per gallon in the case of 
                liquefied petroleum gas, and
                  ``(E) 9.71 cents per MCF (determined at 
                standard temperature and pressure) in the case 
                of compressed natural gas.''
  (c) Amendment Related to Section 976 of 1997 Act.--Section 
6103(d)(5) of the 1986 Code is amended by striking ``section 
967 of the Taxpayer Relief Act of 1997.'' and inserting 
``section 976 of the Taxpayer Relief Act of 1997. Subsections 
(a)(2) and (p)(4) and sections 7213 and 7213A shall not apply 
with respect to disclosures or inspections made pursuant to 
this paragraph.''

SEC. 609. AMENDMENTS RELATED TO TITLE X OF 1997 ACT.

  (a) Amendments Related to Section 1001 of 1997 Act.--
          (1) Paragraph (2) of section 1259(b) of the 1986 Code 
        is amended--
                  (A) by striking ``debt'' each place it 
                appears in clauses (i) and (ii) of subparagraph 
                (A) and inserting ``position'',
                  (B) by striking ``and'' at the end of 
                subparagraph (A), and
                  (C) by redesignating subparagraph (B) as 
                subparagraph (C) and by inserting after 
                subparagraph (A) the following new 
                subparagraph:
                  ``(B) any hedge with respect to a position 
                described in subparagraph (A), and''.
          (2) Section 1259(d)(1) of the 1986 Code is amended by 
        inserting ``(including cash)'' after ``property''.
          (3) Subparagraph (D) of section 475(f)(1) of the 1986 
        Code is amended by adding at the end the following new 
        sentence: ``Subsection (d)(3) shall not apply under the 
        preceding sentence for purposes of applying sections 
        1402 and 7704.''
          (4) Subparagraph (C) of section 1001(d)(3) of the 
        1997 Act is amended by striking ``within the 30-day 
        period beginning on'' and inserting ``before the close 
        of the 30th day after''.
  (b) Amendments Related to Section 1012 of 1997 Act.--
          (1) Paragraph (1) of section 1012(d) of the 1997 Act 
        is amended by striking ``1997, pursuant'' and inserting 
        ``1997; except that the amendment made by subsection 
        (a) shall apply to such distributions only if 
        pursuant''.
          (2) Subparagraph (A) of section 355(e)(3) of the 1986 
        Code is amended--
                  (A) by striking ``shall not be treated as 
                described in'' and inserting ``shall not be 
                taken into account in applying'', and
                  (B) by striking clause (iv) and inserting the 
                following new clause:
                          ``(iv) The acquisition of stock in 
                        the distributing corporation or any 
                        controlled corporation to the extent 
                        that the percentage of stock owned 
                        directly or indirectly in such 
                        corporation by each person owning stock 
                        in such corporation immediately before 
                        the acquisition does not decrease.''
  (c) Amendments Related to Section 1014 of 1997 Act.--
          (1) Paragraph (1) of section 351(g) of the 1986 Code 
        is amended by adding ``and'' at the end of subparagraph 
        (A) and by striking subparagraphs (B) and (C) and 
        inserting the following new subparagraph:
                  ``(B) if (and only if) the transferor 
                receives stock other than nonqualified 
                preferred stock--
                          ``(i) subsection (b) shall apply to 
                        such transferor, and
                          ``(ii) such nonqualified preferred 
                        stock shall be treated as other 
                        property for purposes of applying 
                        subsection (b).''
          (2) Clause (ii) of section 354(a)(2)(C) of 1986 Code 
        is amended by adding at the end the following new 
        subclause:
                                  ``(III) Extension of statute 
                                of limitations.--The statutory 
                                period for the assessment of 
                                any deficiency attributable to 
                                a corporation failing to be a 
                                family-owned corporation shall 
                                not expire before the 
                                expiration of 3 years after the 
                                date the Secretary is notified 
                                by the corporation (in such 
                                manner as the Secretary may 
                                prescribe) of such failure, and 
                                such deficiency may be assessed 
                                before the expiration of such 
                                3-year period notwithstanding 
                                the provisions of any other law 
                                or rule of law which would 
                                otherwise prevent such 
                                assessment.''
  (d) Amendment Related to Section 1024 of 1997 Act.--Section 
6331(h)(1) of the 1986 Code is amended by striking ``The effect 
of a levy'' and inserting ``If the Secretary approves a levy 
under this subsection, the effect of such levy''.
  (e) Amendments Related to Section 1031 of 1997 Act.--
          (1) Subsection (l) of section 4041 of the 1986 Code 
        is amended by striking ``subsection (e) or (f)'' and 
        inserting ``subsection (f) or (g)''.
          (2) Subsection (b) of section 9502 of the 1986 Code 
        is amended by moving the sentence added at the end of 
        paragraph (1) to the end of such subsection.
          (3) Subsection (c) of section 6421 of the 1986 Code 
        is amended--
                  (A) by striking ``(2)(A)'' and inserting 
                ``(2)'', and
                  (B) by adding at the end the following 
                sentence: ``Subsection (a) shall not apply to 
                gasoline to which this subsection applies.''
  (f) Amendments Related to Section 1032 of 1997 Act.--
          (1) Section 1032(a) of the 1997 Act is amended by 
        striking ``Subsection (a) of section 4083'' and 
        inserting ``Paragraph (1) of section 4083(a)''.
          (2) Section 1032(e)(12)(A) of the 1997 Act shall be 
        applied as if ``gasoline, diesel fuel,'' were the 
        material proposed to be stricken.
          (3) Paragraph (1) of section 4101(e) of the 1986 Code 
        is amended by striking ``dyed diesel fuel and 
        kerosene'' and inserting ``such fuel in a dyed form''.
  (g) Amendment Related to Section 1055 of 1997 Act.--Section 
6611(g)(1) of the 1986 Code is amended by striking ``(e), and 
(h)'' and inserting ``and (e)''.
  (h) Amendment Related to Section 1083 of 1997 Act.--Section 
1083(a)(2) of the 1997 Act is amended--
          (1) by striking ``21'' and inserting ``20'', and
          (2) by striking ``22'' and inserting ``21''.
  (i) Amendment Related to Section 1084 of 1997 Act.--
          (1) Paragraph (3) of section 264(a) of the 1986 Code 
        is amended by striking ``subsection (c)'' and inserting 
        ``subsection (d)''.
          (2) Paragraph (4) of section 264(a) of the 1986 Code 
        is amended by striking ``subsection (d)'' and inserting 
        ``subsection (e)''.
          (3) Paragraph (4) of section 264(f) of the 1986 Code 
        is amended by adding at the end the following new 
        subparagraph:
                  ``(E) Master contracts.--If coverage for each 
                insured under a master contract is treated as a 
                separate contract for purposes of sections 
                817(h), 7702, and 7702A, coverage for each such 
                insured shall be treated as a separate contract 
                for purposes of subparagraph (A). For purposes 
                of the preceding sentence, the term `master 
                contract' shall not include any group life 
                insurance contract (as defined in section 
                848(e)(2)).''
          (4)(A) Clause (iv) of section 264(f)(5)(A) of the 
        1986 Code is amended by striking the second sentence.
          (B) Subparagraph (B) of section 6724(d)(1) of the 
        1986 Code is amended by striking ``or'' at the end of 
        clause (xv), by striking the period at the end of 
        clause (xvi) and inserting ``, or'', and by adding at 
        the end the following new clause:
                          ``(xvii) section 264(f)(5)(A)(iv) 
                        (relating to reporting with respect to 
                        certain life insurance and annuity 
                        contracts).''
          (C) Paragraph (2) of section 6724(d) of the 1986 Code 
        is amended by striking ``or'' at the end of 
        subparagraph (Y), by striking the period at the end of 
        subparagraph (Z) and inserting ``or'', and by adding at 
        the end the following new subparagraph:
                  ``(AA) section 264(f)(5)(A)(iv) (relating to 
                reporting with respect to certain life 
                insurance and annuity contracts).''
  (j) Amendment Related to Section 1085 of 1997 Act.--Paragraph 
(5) of section 32(c) of the 1986 Code is amended--
          (1) by inserting before the period at the end of 
        subparagraph (A) ``and increased by the amounts 
        described in subparagraph (C)'',
          (2) by adding ``or'' at the end of clause (iii) of 
        subparagraph (B), and
          (3) by striking all that follows subclause (II) of 
        subparagraph (B)(iv) and inserting the following:
                                  ``(III) other trades or 
                                businesses.
                        For purposes of clause (iv), there 
                        shall not be taken into account items 
                        which are attributable to a trade or 
                        business which consists of the 
                        performance of services by the taxpayer 
                        as an employee.
                  ``(C) Certain amounts included.--An amount is 
                described in this subparagraph if it is--
                          ``(i) interest received or accrued 
                        during the taxable year which is exempt 
                        from tax imposed by this chapter, or
                          ``(ii) amounts received as a pension 
                        or annuity, and any distributions or 
                        payments received from an individual 
                        retirement plan, by the taxpayer during 
                        the taxable year to the extent not 
                        included in gross income.
                Clause (ii) shall not include any amount which 
                is not includible in gross income by reason of 
                section 402(c), 403(a)(4), 403(b), 408(d) (3), 
                (4), or (5), or 457(e)(10).''
  (k) Amendment Related to Section 1088 of 1997 Act.--Section 
1088(b)(2)(C) of the 1997 Act is amended by inserting ``more 
than 1 year'' before ``after''.
  (l) Amendment Related to Section 1089 of 1997 Act.--
Paragraphs (1)(C) and (2)(C) of section 664(d) of the 1986 Code 
are each amended by adding ``, and'' at the end.

SEC. 610. AMENDMENTS RELATED TO TITLE XI OF 1997 ACT.

  (a) Amendment Related to Section 1103 of 1997 Act.--The 
paragraph (3) of section 59(a) added by section 1103 of the 
1997 Act is redesignated as paragraph (4).
  (b) Amendment Related to Section 1121 of 1997 Act.--Section 
1298(a)(2)(B) of the 1986 Code is amended by adding at the end 
the following new sentence: ``Section 1297(e) shall not apply 
in determining whether a corporation is a passive foreign 
investment company for purposes of this subparagraph.''
  (c) Amendment Related to Section 1122 of 1997 Act.--Section 
672(f)(3)(B) of the 1986 Code is amended by striking ``section 
1296'' and inserting ``section 1297''.
  (d) Amendment Related to Section 1123 of 1997 Act.--The 
subsection (e) of section 1297 of the 1986 Code added by 
section 1123 of the 1997 Act is redesignated as subsection (f).
  (e) Amendment Related to Section 1144 of 1997 Act.--
Paragraphs (1) and (2) of section 1144(c) of the 1997 Act are 
each amended by striking ``6038B(b)'' and inserting ``6038B(c) 
(as redesignated by subsection (b))''.

SEC. 611. AMENDMENTS RELATED TO TITLE XII OF 1997 ACT.

  (a) Amendment Related to Section 1204 of 1997 Act.--The last 
sentence of section 162(a) of the 1986 Code is amended by 
striking ``investigate'' and all that follows and inserting 
``investigate or prosecute, or provide support services for the 
investigation or prosecution of, a Federal crime.''
  (b) Amendments Related to Section 1205 of 1997 Act.--
          (1) Section 6311(e)(1) of the 1986 Code is amended by 
        striking ``section 6103(k)(8)'' and inserting ``section 
        6103(k)(9)''.
          (2) Paragraph (8) of section 6103(k) of the 1986 Code 
        (as added by section 1205(c)(1) of the 1997 Act) is 
        redesignated as paragraph (9).
          (3) The heading for section 7431(g) of the 1986 Code 
        is amended by striking ``(8)'' and inserting ``(9)''.
          (4) Section 1205(c)(3) of the 1997 Act shall be 
        applied as if it read as follows:
          ``(3) Section 6103(p)(3)(A), as amended by section 
        1026(b)(1)(A), is amended by striking ``or (8)'' and 
        inserting ``(8), or (9)''.
          (5) Section 1213(b) of the 1997 Act is amended by 
        striking ``section 6724(d)(1)(A)'' and inserting 
        ``section 6724(d)(1)''.
  (c) Amendment Related to Section 1226 of 1997 Act.--Section 
1226 of the 1997 Act is amended by striking ``ending on or'' 
and inserting ``beginning''.
  (d) Amendment Related to Section 1285 of 1997 Act.--Section 
7430(b) of the 1986 Code is amended by redesignating paragraph 
(5) as paragraph (4).

SEC. 612. AMENDMENTS RELATED TO TITLE XIII OF 1997 ACT.

  (a) Section 646 of the 1986 Code is redesignated as section 
645.
  (b) The item relating to section 646 in the table of sections 
for subpart A of part I of subchapter J of chapter 1 of the 
1986 Code is amended by striking ``Sec. 646'' and inserting 
``Sec. 645''.
  (c) Paragraph (1) of section 2652(b) of the 1986 Code is 
amended by striking ``section 646'' and inserting ``section 
645''.
  (d) Paragraph (3) of section 1(g) of the 1986 Code is amended 
by striking subparagraph (C) and by redesignating subparagraph 
(D) as subparagraph (C).
  (e) Section 641 of the 1986 Code is amended by striking 
subsection (c) and by redesignating subsection (d) as 
subsection (c).
  (f) Paragraph (4) of section 1361(e) of the 1986 Code is 
amended by striking ``section 641(d)'' and inserting ``section 
641(c)''.
  (g) Subparagraph (A) of section 6103(e)(1) of the 1986 Code 
is amended by striking clause (ii) and by redesignating clauses 
(iii) and (iv) as clauses (ii) and (iii), respectively.

SEC. 613. AMENDMENTS RELATED TO TITLE XIV OF 1997 ACT.

  (a) Amendment Related to Section 1434 of 1997 Act.--Paragraph 
(2) of section 4052(f) of the 1986Code is amended by striking 
``this section'' and inserting ``such section''.
  (b) Amendment Related to Section 1436 of 1997 Act.--Paragraph 
(2) of section 4091(a) of the 1986 Code is amended by inserting 
``or on which tax has been credited or refunded'' after ``such 
paragraph''.

SEC. 614. AMENDMENTS RELATED TO TITLE XV OF 1997 ACT.

  (a) Amendment Related to Section 1501 of 1997 Act.--The 
paragraph (8) of section 408(p) of the 1986 Code added by 
section 1501(b) of the 1997 Act is redesignated as paragraph 
(9).
  (b) Amendment Related to Section 1505 of 1997 Act.--Section 
1505(d)(2) of the 1997 Act is amended by striking ``(b)(12)'' 
and inserting ``(b)(12)(A)(i)''.
  (c) Amendment Related to Section 1531 of 1997 Act.--
Subsection (f) of section 9811 of the 1986 Code (as added by 
section 1531 of the 1997 Act) is redesignated as subsection 
(e).

SEC. 615. AMENDMENTS RELATED TO TITLE XVI.

  (a) Amendments Related to Section 1601(d) of 1997 Act.--
          (1) Amendments related to section 1601(d)(1)--
                  (A) Section 408(p)(2)(D)(i) of the 1986 Code 
                is amended by striking ``or (B)'' in the last 
                sentence.
                  (B) Section 408(p) of the 1986 Code is 
                amended by adding at the end the following:
          ``(10) Special rules for acquisitions, dispositions, 
        and similar transactions.--
                  ``(A) In general.--An employer which fails to 
                meet any applicable requirement by reason of an 
                acquisition, disposition, or similar 
                transaction shall not be treated as failing to 
                meet such requirement during the transition 
                period if--
                          ``(i) the employer satisfies 
                        requirements similar to the 
                        requirements of section 
                        410(b)(6)(C)(i)(II), and
                          ``(ii) the qualified salary reduction 
                        arrangement maintained by the employer 
                        would satisfy the requirements of this 
                        subsection after the transaction if the 
                        employer which maintained the 
                        arrangement before the transaction had 
                        remained a separate employer.
                  ``(B) Applicable requirement.--For purposes 
                of this paragraph, the term `applicable 
                requirement' means--
                          ``(i) the requirement under paragraph 
                        (2)(A)(i) that an employer be an 
                        eligible employer,
                          ``(ii) the requirement under 
                        paragraph (2)(D) that an arrangement be 
                        the only plan of an employer, and
                          ``(iii) the participation 
                        requirements under paragraph (4).
                  ``(C) Transition period.--For purposes of 
                this paragraph, the term `transition period' 
                means the period beginning on the date of any 
                transaction described in subparagraph (A) and 
                ending on the last day of the second calendar 
                year following the calendar year in which such 
                transaction occurs.''
                  (C) Section 408(p)(2) of the 1986 Code is 
                amended--
                          (i) by striking ``the preceding 
                        sentence shall apply only in accordance 
                        with rules similar to the rules of 
                        section 410(b)(6)(C)(i)'' in the last 
                        sentence of subparagraph (C)(i)(II) and 
                        inserting ``the preceding sentence 
                        shall not apply'', and
                          (ii) by striking clause (iii) of 
                        subparagraph (D).
          (2) Amendment to section 1601(d)(4).--Section 
        1601(d)(4)(A) of the 1997 Act is amended--
                  (A) by striking ``Section 403(b)(11)'' and 
                inserting ``Paragraphs (7)(A)(ii) and (11) of 
                section 403(b)'', and
                  (B) by striking ``403(b)(1)'' in clause (ii) 
                and inserting ``403(b)(10)''.
  (b) Amendment Related to Section 1601(f)(4) of 1997 Act.--
Subsection (d) of section 6427 of the 1986 Code is amended--
          (1) by striking ``Helicopters'' in the heading and 
        inserting ``Other Aircraft Uses'', and
          (2) by inserting ``or a fixed-wing aircraft'' after 
        ``helicopter''.

SEC. 616. AMENDMENT RELATED TO OMNIBUS BUDGET RECONCILIATION ACT OF 
                    1993.

  (a) In General.--Section 196(c) of the 1986 Code is amended 
by striking ``and'' at the end of paragraph (6), by striking 
the period at the end of paragraph (7), and insert ``, and'', 
and by adding at the end the following new paragraph:
          ``(8) the employer social security credit determined 
        under section 45B(a).''
  (b) Effective Date.--The amendment made by this section shall 
take effect as if included in the amendments made by section 
13443 of the Revenue Reconciliation Act of 1993.

SEC. 617. AMENDMENT RELATED TO TAX REFORM ACT OF 1984.

  (a) In General.--Paragraph (3) of section 136(c) of the Tax 
Reform Act of 1984 is amended by adding at the end the 
following flush sentence:
        ``The treatment under the preceding sentence shall 
        apply to each period after June 30, 1983, during which 
        such members are stapled entities, whether or not such 
        members are stapled entities for all periods after June 
        30, 1983.''
  (b) Effective Date.--The amendment made by subsection (a) 
shall take effect as if included in the Tax Reform Act of 1984 
as of the date of the enactment of such Act.

SEC. 618. AMENDMENT RELATED TO TAX REFORM ACT OF 1986.

  (a) In General.--Section 6401(b)(1) of the 1986 Code is 
amended by striking ``and D'' and inserting ``D, and G''.
  (b) Effective Date.--The amendment made by subsection (a) 
shall take effect as if included in the amendments made by 
section 701(b) of the Tax Reform Act of 1986.

SEC. 619. MISCELLANEOUS CLERICAL AND DEADWOOD CHANGES.

  (a)(1) Section 6421 of the 1986 Code is amended by 
redesignating subsections (j) and (k) as subsections (i) and 
(j), respectively.
  (2) Subsection (b) of section 34 of the 1986 Code is amended 
by striking ``section 6421(j)'' and inserting ``section 
6421(i)''.
  (3) Subsections (a) and (b) of section 6421 of the 1986 Code 
are each amended by striking ``subsection (j)'' and inserting 
``subsection (i)''.
  (b) Sections 4092(b) and 6427(q)(2) of the 1986 Code are each 
amended by striking ``section 4041(c)(4)'' and inserting 
``section 4041(c)(2)''.
  (c) Sections 4221(c) and 4222(d) of the 1986 Code are each 
amended by striking ``4053(a)(6)'' and inserting ``4053(6)''.
  (d) Paragraph (5) of section 6416(b) of the 1986 Code is 
amended by striking ``section 4216(e)(1)'' each place it 
appears and inserting ``section 4216(d)(1)''.
  (e) Paragraph (3) of section 6427(f) of the 1986 Code is 
amended by striking ``, (e),''.
  (f)(1) Section 6427 of the 1986 Code, as amended by paragraph 
(2), is amended by redesignating subsections (n), (p), (q), and 
(r) as subsections (m), (n), (o), and (p), respectively.
  (2) Paragraphs (1) and (2)(A) of section 6427(i) of the 1986 
Code are each amended by striking ``(q)'' and inserting 
``(o)''.
  (g) Subsection (e) of section 9502 of the 1986 Code is 
amended to read as follows:
  ``(e) Certain Taxes on Alcohol Mixtures To Remain in General 
Fund.--For purposes of this section, the amounts which would 
(but for this subsection) be required to be appropriated under 
subparagraphs (A), (C), and (D) of subsection (b)(1) shall be 
reduced by--
          ``(1) 0.6 cent per gallon in the case of taxes 
        imposed on any mixture at least 10 percent of which is 
        alcohol (as defined in section 4081(c)(3)) if any 
        portion of such alcohol is ethanol, and
          ``(2) 0.67 cent per gallon in the case of fuel used 
        in producing a mixture described in paragraph (1).''
  (h)(1) Clause (i) of section 9503(c)(2)(A) of the 1986 Code 
is amended by adding ``and'' at the end of subclause (II), by 
striking subclause (III), and by redesignating subclause (IV) 
as subclause (III).
  (2) Clause (ii) of such section is amended by striking 
``gasoline, special fuels, and lubricating oil'' each place it 
appears and inserting ``fuel''.
  (i) The amendments made by this section shall take effect on 
the date of the enactment of this Act.

SEC. 620. EFFECTIVE DATE.

  Except as otherwise provided in this title, the amendments 
made by this title shall take effect as if included in the 
provisions of the Taxpayer Relief Act of 1997 to which they 
relate.

                                
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