[104th Congress Public Law 7]
[From the U.S. Government Printing Office]
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[DOCID: f:publ7.104]
[[Page 109 STAT. 93]]
Public Law 104-7
104th Congress
An Act
To amend the Internal Revenue Code of 1986 to permanently extend the
deduction for the health insurance costs of self-employed individuals,
to repeal the provision permitting nonrecognition of gain on sales and
exchanges effectuating policies of the Federal Communications
Commission, and for other purposes. <<NOTE: Apr. 11, 1995 - [H.R.
831]>>
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. PERMANENT EXTENSION AND INCREASE OF DEDUCTION FOR
HEALTH INSURANCE COSTS OF SELF-
EMPLOYED INDIVIDUALS.
(a) Permanent Extension.--Subsection (l) of section 162 of the
Internal Revenue Code of 1986 (relating to special rules for health
insurance costs of self-employed individuals) is amended by striking
paragraph (6).
(b) Increase in Deduction.--Paragraph (1) of section 162(l) of the
Internal Revenue Code of 1986 is amended by striking ``25 percent'' and
inserting ``30 percent''.
(c) <<NOTE: 26 USC 162 note.>> Effective Dates.--
(1) Extension.--The amendment made by subsection (a) shall
apply to taxable years beginning after December 31, 1993.
(2) Increase.--The amendment made by subsection (b) shall
apply to taxable years beginning after December 31, 1994.
SEC. 2. REPEAL OF NONRECOGNITION ON FCC CERTIFIED SALES AND
EXCHANGES.
(a) In General.--Subchapter O of chapter 1 of the Internal
Revenue <<NOTE: 26 USC 1071.>> Code of 1986 is amended by striking part
V (relating to changes to effectuate FCC policy).
(b) Conforming Amendments.--Sections 1245(b)(5) and 1250(d)(5) of
the Internal Revenue Code of 1986 are each amended--
(1) by striking ``section 1071 (relating to gain from sale
or exchange to effectuate polices of FCC) or'', and
(2) by striking ``1071 and'' in the heading thereof.
(c) <<NOTE: 26 USC prec. 1001.>> Clerical Amendment.--The table of
parts for such subchapter O is amended by striking the item relating to
part V.
(d) <<NOTE: 26 USC 1071 note.>> Effective Date.--
(1) In general.--The amendments made by this section shall
apply to--
(A) sales and exchanges on or after January 17,
1995, and
(B) sales and exchanges before such date if the FCC
tax certificate with respect to such sale or exchange is
issued on or after such date.
(2) Binding contracts.--
[[Page 109 STAT. 94]]
(A) In general.--The amendments made by this section
shall not apply to any sale or exchange pursuant to a
written contract which was binding on January 16, 1995,
and at all times thereafter before the sale or exchange,
if the FCC tax certificate with respect to such sale or
exchange was applied for, or issued, on or before such
date.
(B) Sales contingent on issuance of certificate.--
(i) In general.--A contract shall be treated
as not binding for purposes of subparagraph (A) if
the sale or exchange pursuant to such contract, or
the material terms of such contract, were
contingent, at any time on January 16, 1995, on
the issuance of an FCC tax certificate. The
preceding sentence shall not apply if the FCC tax
certificate for such sale or exchange is issued on
or before January 16, 1995.
(ii) Material terms.--For purposes of clause
(i), the material terms of a contract shall not be
treated as contingent on the issuance of an FCC
tax certificate solely because such terms provide
that the sales price would, if such certificate
were not issued, be increased by an amount not
greater than 10 percent of the sales price
otherwise provided in the contract.
(3) FCC tax certificate.--For purposes of this subsection,
the term ``FCC tax certificate'' means any certificate of the
Federal Communications Commission for the effectuation of
section 1071 of the Internal Revenue Code of 1986 (as in effect
on the day before the date of the enactment of this Act).
SEC. 3. SPECIAL RULES RELATING TO INVOLUNTARY CONVERSIONS.
(a) Replacement Property Acquired by Corporations From Related
Persons.--
(1) In general.--Section 1033 of the Internal Revenue Code
of 1986 (relating to involuntary conversions) is amended by
redesignating subsection (i) as subsection (j) and by inserting
after subsection (h) the following new subsection:
``(i) Nonrecognition Not To Apply if Corporation Acquires
Replacement Property From Related Person.--
``(1) In general.--In the case of--
``(A) a C corporation, or
``(B) a partnership in which 1 or more C
corporations own, directly or indirectly (determined in
accordance with section 707(b)(3)), more than 50 percent
of the capital interest, or profits interest, in such
partnership at the time of the involuntary conversion,
subsection (a) shall not apply if the replacement property or
stock is acquired from a related person. The preceding sentence
shall not apply to the extent that the related person acquired
the replacement property or stock from an unrelated person
during the period described in subsection (a)(2)(B).
``(2) Related person.--For purposes of this subsection, a
person is related to another person if the person bears a
relationship to the other person described in section 267(b) or
707(b)(1).''
[[Page 109 STAT. 95]]
(2) <<NOTE: 26 USC 1033 note.>> Effective date.--The
amendment made by paragraph (1) shall apply to involuntary
conversions occurring on or after February 6, 1995.
(b) Application of Section 1033 to Certain Sales Required for
Microwave Relocation.--
(1) In general.--Section 1033 of the Internal Revenue Code
of 1986 (relating to involuntary conversions), as amended by
subsection (a), is amended by redesignating subsection (j) as
subsection (k) and by inserting after subsection (i) the
following new subsection:
``(j) Sales or Exchanges To Implement Microwave Relocation Policy.--
``(1) In general.--For purposes of this subtitle, if a
taxpayer elects the application of this subsection to a
qualified sale or exchange, such sale or exchange shall be
treated as an involuntary conversion to which this section
applies.
``(2) Qualified sale or exchange.--For purposes of paragraph
(1), the term `qualified sale or exchange' means a sale or
exchange before January 1, 2000, which is certified by the
Federal Communications Commission as having been made by a
taxpayer in connection with the relocation of the taxpayer from
the 1850-1990MHz spectrum by reason of the Federal
Communications Commission's reallocation of that spectrum for
use for personal communications services. The Commission shall
transmit copies of certifications under this paragraph to the
Secretary.''
(2) <<NOTE: 26 USC 1033 note.>> Effective date.--The
amendment made by paragraph (1) shall apply to sales or
exchanges after March 14, 1995.
SEC. 4. DENIAL OF EARNED INCOME CREDIT FOR INDIVIDUALS HAVING
EXCESSIVE INVESTMENT INCOME.
(a) In General.--Section 32 of the Internal Revenue Code of 1986 is
amended by redesignating subsections (i) and (j) as subsections (j) and
(k), respectively, and by inserting after subsection (h) the following
new subsection:
``(i) Denial of Credit for Individuals Having Excessive Investment
Income.--
``(1) In general.--No credit shall be allowed under
subsection (a) for the taxable year if the aggregate amount of
disqualified income of the taxpayer for the taxable year exceeds
$2,350.
``(2) Disqualified income.--For purposes of paragraph (1),
the term `disqualified income' means--
``(A) interest or dividends to the extent includible
in gross income for the taxable year,
``(B) interest received or accrued during the
taxable year which is exempt from tax imposed by this
chapter, and
``(C) the excess (if any) of--
``(i) gross income from rents or royalties not
derived in the ordinary course of a trade or
business, over
``(ii) the sum of--
``(I) the deductions (other than
interest) which are clearly and directly
allocable to such gross income, plus
``(II) interest deductions properly
allocable to such gross income.''
[[Page 109 STAT. 96]]
(b) <<NOTE: 26 USC 32 note.>> Effective Date.--The amendments made
by this section shall apply to taxable years beginning after December
31, 1995.
SEC. 5. EXTENSION OF SPECIAL RULE FOR CERTAIN GROUP HEALTH PLANS.
Section 13442(b) of the Omnibus Budget Reconciliation Act of
1993 <<NOTE: 26 USC 162 note.>> (Public Law 103-66) is amended by
striking ``May 12, 1995'' and inserting ``December 31, 1995''.
SEC. 6. STUDY OF EXPATRIATION TAX.
(a) In General.--The staff of the Joint Committee on Taxation shall
conduct a study of the issues presented by any proposals to affect the
taxation of expatriation, including an evaluation of--
(1) the effectiveness and enforceability of current law with
respect to the tax treatment of expatriation,
(2) the current level of expatriation for tax avoidance
purposes,
(3) any restrictions imposed by any constitutional
requirement that the Federal income tax apply only to realized
gains,
(4) the application of international human rights principles
to taxation of expatriation,
(5) the possible effects of any such proposals on the free
flow of capital into the United States,
(6) the impact of any such proposals on existing tax
treaties and future treaty negotiations,
(7) the operation of any such proposals in the case of
interests in trusts,
(8) the problems of potential double taxation in any such
proposals,
(9) the impact of any such proposals on the trade policy
objectives of the United States,
(10) the administrability of such proposals, and
(11) possible problems associated with existing law,
including estate and gift tax provisions.
(b) Report.--The Chief of Staff of the Joint Committee on Taxation
shall, not later than June 1, 1995, report the results of the study
conducted under subsection (a) to the Chairmen of the Committee on Ways
and Means of the House of Representatives and the Committee on Finance
of the Senate.
Approved April 11, 1995.
LEGISLATIVE HISTORY--H.R. 831:
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HOUSE REPORTS: Nos. 104-32 (Comm. on Ways and Means) and 104-92 (Comm.
of Conference).
SENATE REPORTS: No. 104-16 (Comm. on Finance).
CONGRESSIONAL RECORD, Vol. 141 (1995):
Feb. 21, considered and passed House.
Mar. 24, considered and passed Senate, amended.
Mar. 30, House agreed to conference report.
Mar. 31, Apr. 3, Senate considered and agreed to conference
report.
WEEKLY COMPILATION OF PRESIDENTIAL DOCUMENTS, Vol. 31 (1995):
Apr. 6, Presidential statement.
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