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Johnson Tax Cut Legislation
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05/27/99 THU 17:17 FAX 202 622 0236
TAX POLICY
5
001
DEPARTMENT THE OF THE TREASUMY
1789
Department Of The Treasury
Office of Tax Analysis
1500 Pennsylvania Avenue, N.W.
Washington, D.C. 20220
To:
Name:
Nicole Radner
Firm/Organization: DPC
Fax Number:
456-2878
Phone Number: 456-7263
Number of pages (including this cover sheet):
Date; Time: May 27, 1999; 5:15PM
From:
Janet Holtzblatt
Phone: 202/622-1327 Fax: 202/622-0236
Comments: Draft of Johnson bill in today's tax press.
NOTE: THIS MESSAGE IS INTENDED ONLY FOR THE USE OF THE INDIVIDUAL OR
ENTITY TO WHOM IT IS ADDRESSED AND MAY CONTAIN INFORMATION THAT IS
PRIVILEGED, CONFIDENTIAL, AND/OR RESTRICTED AS TO OR EXEMPT FROM
DISCLOSURE UNDER APPLICABLE LAWS. If the recipient of this message is not the addressee
(i.e. the intended recipient), you are hereby notified that you should not read this document and that
any dissemination, distribution, or copying of this communication, except insofar as is necessary to
deliver this document to the intended recipient, is strictly prohibited. If you have received this
communication in error, please notify the sender immediately by telephone, and you will be
provided further instructions about the return or destruction of this document. Thank you.
UNCLASSIFIED
05/27/99 THU 17:17 FAX 202 622 0236
TAX POLICY
002
TAX. BUDGET & ACCOUNTING TEXT
L-2
(No. 102)
Text of Tax Relief for Working Americans Act by Rep. Nancy Johnson (R-Conn.)
TITLE T IN LOW-INCOME HOUSING CREDIT STATE
10eTH CONGRESS
H.R.
CEILING
1ST SESSION
in TC: increase = State - .n - me.
TITLE IND SANCH PISK MANAGEMENT ACCOUNTS
Sev 801 Part: and FIRST mail accounts
TITLE INTERNENTIVES FOR UREAN REVITAMENTION 1ND OPEN
STACE
IN THE HOUSE OF REPRESENTATIVES
See. 90; Expensure of remediation examined a was
nated are missine of Littered after
See. RC2. Mudifications To - - of cannel - real
new for THE and of qualified collection
its. JUINSON of Connecticut introduced the following bill which was referred
contributions
TO The Committee 0::
TITLE I-EXTENSION OF (TRTAIN EXPIRING PROVISIONS
See 1001. Research envels.
Sr. 1002 Nork emportuncy endit.
See. 1003. Permanent subpart F - for - Grancing include
A BILL
- 1004. Credit for electricity provinced form reneitable -
To amend the Internal Revenue Code of 1986 to provide
3
marriage penalty relief. incentives to encourage health
coverage. and increased child care assistance. to extend
1
TITLE I-MARRIAGE PENALTY
certain expiring tax provisions, and for other purposes.
2
RELIEF
]
Bc if enacted by the Senate and House of Represento-
3 SEC. 101. BASIC STANDARD DEDUCTION FOR MARRIED IN-
2 rives of the United States of America in Congress assembled,
4
DIVIDUALS TO BE TWICE THE DEDUCTION
3 SECTION 1. SHORT TITLE.
5
FOR UNMARRIED INDIVIDUALS
4
(a) SHORT TITLE-This Act may DC cited as the
6
(a) 1v GENERAL - Paragraph (2) of section 63(c) of
5 "Tax Relief for Working Americans Act of 1999".
7 the Internal Revenue Code of 1986 (relating to standard
6
(b) TABLE OF CONTENTS-
8 deduction) is amended-
Sev. : Smith title
9
(1) by striking "$5,000" in subparagraph (A)
TITLE I-MARRIAGE PENALTY RELIEF
10
and inscring "rwice the dollar amount in effect
2
11
under subparagraph (C) for the Laxable year",
See 101 Busic stundard decluration from married individuals in be The the rie
12
(2) by adding "or" at the end of subparagraph
docume for unnurred individuals
13
TITLE π-1DJUSTMENT OF SOCIAL SECUR TY EARNING LIMIT
(B).
See. 201. Adjustment in monthly exempt amount for purposes of the social -
14
(3) by striking "in the case of" and all that fol-
easiry earnings: Less=
15
TITLE DI-INCENTIVES FOR HEALTH AND LONG-TERM CARE
lows in subperagraph (C) and inserting "in any
COVERAGE
16
other ease.", and
Sev. 30: Credit for health insurance a of providery nainsance individuals
issued indeviduals with COBRA coverage.
17
(4) by striking subparagraph (D).
Sev. 302 Deduction for bealth insurance evists of empiryees and additional
individuals
18
(i)) TECHNICAL AMENDMENT.-Subparagrapih (B) of
See 303 Credit for - with immeterm care needs.
TITLE N-EXPANSION OF DETENDENT CARE T15 CREDIT
19 section 1(f)(6) of such Code is amended by striking
See 40: Expansion of dispension: Calle TALE -
20 "(other than with" and all that follows through "shall be
TITLE "-MITERNATIVE MINIMUM TAX RELIEF
21 applied" and inserting "(other than sections 63(c)(4) and
- 302 Nonrefundable personal credits allented against sitermative manimmm
T.O.
22 151(d)(4)(A)) shall be applied".
in 502 Income INVOICE for funders TVC Tu Include unternative numiname
liability
23
(c) EFFECTIVE DATE.-The amendments made by
TITLE "7-ELDITNATION OF 60-MONTH LIMIT ON STUDENT I.O.LV
INTEREST DEDUCTION
24 this secuon shall apply to taxable years beginning after
in no: Elimination of 50-morrh limit OF ender bun Internal deduction.
25 December 31. 1999
5-27-99
COPYRIGHT O 1999 BY THE BUREAU OF NATIONAL AFFAIRS. INC.. WASHINGTON. D.C. DTR ISSN 0092-6884
1003
05/27/99 THU 17:18 FAX 202 622 0236
TAX POLICY
(No. 102:
L-S
TAX, BUDGET & ACCOUNTING TEXT
4.
15 chapter A of chapter 1 of the Internal Revenue Code 01
1
TITLE I-ADJUSTMENT OF SO-
16 1986 relating to no refundable personal credits R:
CIAL SECURITY EARNING
1- amended by insurung after section 25A tite following new
2
3
LIMIT
18 section
4 SEC. 201. ADJUSTMENT IN MONTHLY EXEMPT AMOUNT FOR
19 "SEC. Z5B. HEALTH INSURANCE COSTS OF PREVIOUSLY UN.
5
PURPOSES OF THE SOCIAL SECURITY EARN.
20
INSURED INDIVIDUALS AND INDIVIDUALS
INGS TEST.
21
WITH COBRA COVERAGE.
6
i
(a) INCREASE IN MONTHLY EXEMPT AMOUNT FOR
22
Tip 1x GENERAL-in the case of an individual
5 INDIVIDUALS WHO HAVE ATTAINED RETIREMENT
23 there small be allowed as al credit against the Lex imposed
9 AGE.-Section 203(f)(8)(D) of the Social Security Act (42
24 by this chapter for the taxable year as amount equal LC
10 U.S.C. +03(f)(8)(D)) is amended-
25 60 percent of the amount paid during the taxable year
11
(1) in clause (iii). by inserting "and" at the
6
12
enc. and
] for coverage for the taxpayer. his spouse. and dependents
13
(2) by striking clauses (iv) through (vii) and in-
2 under qualified health insurance.
14
setting the following new clause:
3
"(b) DOLLAR LIMITATION-
15
(iiv) for each month of any taxable
4
"(I) IN GENERAL-The amount allowed as ,
16
year ending after 1999 and before 2001.
5
credit under subsection (a) ID the taxpayer for the
17
$2.500.".
6
taxable year shall not exceed the sum of the monthly
18
(b) CONFORMING AMENDMENTS-
7
limitations for eligible months during such taxable
19
(1) Section 203(f)($)(B)(iii) of such Act (12
8
year.
20
U.S.C. 403(f)(8)(B)(i)) is amended-
9
"(2) MONTHLY LIMITATION.-The monthly lim-
21
(A) by striking "after 2001 and before
10
itation for any eligible month is the amount equal to
22
2003" and inserting "after 1999 and before
11
yes of
23
2001": and
12
"(4) $1.200 if. as of the first day of such
24
(B) in subclause (II). by striking "2001"
13
month the taxpayer has self-only coverage
25
and inserting "1998".
14
under qualified health insurance. and
15
5
"(B) $2.400 if. as of the first day of such
16
]
(2) The second sentence of section 223(d)(4)(A)
month. the taxpayer has family coverage under
17
2
of such Act (42 U.S.C. 423(3)(4)(A)) is ainended by
qualified health insurance.
18
3
inserting "and section 201 of the Tax Relief for
"(3) ELIGIBLE MONTH-For purposes of this
19
4
Working Americans Act of 1999" after "1996".
subsection-
5
20
(c) EFFECTIVE DATE-The amendments made by
"(A) IN GENERAL.-The term religible
6 this section shall apply with respect to taxable years begin-
21
month' means any month which begins at least
7 ning after 1999.
22
1 year after the most recent month that the
8 TITLE III-INCENTIVES FOR
23
individual-
9
HEALTH AND LONG-TERM
24
Tii) was eligible to participate in any
10
CARE COVERAGE
25
group health plan of an employer which
11 SEC. 301. CREDIT FOR HEALTH INSURANCE COSTS OF PRE
12
VIOUSLY UNINSURED INDIVIDUALS AND IN.
I
provided qualified health insurance (deter-
13
DIVIDUALS WITH COBRA COVERAGE.
2
mined without regard to subsection
14
(a) IN GENERAL-Subpert 1 of part IV of sub-
3
(d)(2)). or
DAILY TAX REPORT ISSN 0092-6884
BNA 5-27-99
05/27/99 THU 17:18 FAX 202 622 0236
TAX POLICY
004
TAX, BUDGET & ACCOUNTING TEXT
1-4
(No. 102)
(iii) participated in any group health
19
a credit under this section shall be reduced (but no:
4
$
plan of any other entity which provided
20
below zero) by the amount determined under para-
such insurance.
2!
graph (21
é
"(B) JOINT RETURNS-In the case of a
27
"(2) AMOUNT OF REDUCTION.-
7
8
joint return. a month shall be treated as an cli-
23
"(A) IN GENERAL - The amount deter-
24
mined under this paragraph shall be the
9
gible month only if it is an eligible month of
9.
10
cach spouse. determined by applying this para-
1
amount which bears the same ratio to such are
11
graph separately to each spouse.
2
12
"(4) CERTAIN OTHER COVERAGE-Amounts
gregate amount as-
"(i) the excess of-
13
paid for coverage of an individual for any month
3
14
shall not bc taken into account under subsection (a)
4
"(I) the taxpayer's modified ad-
if as of the first day of such month. such individual
5
justed gross income for such taxable
15
16
is covered under any medical care program described
6
year, over
7
"(II) the applicable dollar
17
in-
"(3) title XVIII, XIX, or XXI of the So-
8
amount. bears to
18
9
"(ii) $10.000.
19
cial Security Act,
20
"(B) chapter 55 of title 10, United States
10
"(B) MODIFIED ADJUSTED GROSS IN-
11
COME-For purposes of this paragraph. the
21
Code,
"(C) chapter 17 of title 38, United States
12
term 'modified adjusted gross income' means
22
13
adjusted gross income increased by any amount
23
Code.
"(D) chapter 89 of title 5, United States
14
excluded from gross income under section 911,
24
15
931, or 933.
25
Code, or
16
"(C) ROUNDING-Any amount determined
8
17
under subparagraph (A) which is not a multiple
I
"(E) the Indian Health Care Improvement
18
of $10 shall bc rounded to the next lowest $10.
2
ACL.
19
"(3) APPLICABLE DOLLAR AMOUNT-For pur-
3
"(5) SPECIAL RULE FOR MARRIED INDIVID-
20
poses of paragraph (2), the term applicable dollar
4
UALS.-In the case of an individual-
21
amount' mcans-
5
"(A) who is married (within the meaning
22
"(A) $60.000 in the case of a taxpayer
6
of section 7703) as of the close of the taxable
23
whose qualified health insurance coverage cov-
-J
year but does not file a joint return for such
24
crs more than 1 individual referred to in sub-
§
year. and
25
section (a). and
9
"(B) who does not live apart from such in-
10
dividual's spouse at all times during the taxable
10
11
year,
1
"(B) $30,000-
12
the limitation under paragraph (2)(A) (and not the
2
"(i) in any case not described in sub-
13
limitation under paragraph (2)(B)) shall apply to
3
paragraph (A), and
14
such individual.
4
"(ii) in the case of a married individ-
15
"(c) LIMITATION BASED ON ADJUSTED GROSS IN.
5
ual filing a separate return.
16 COME -
6
For purposes of this paragraph, marital status shall
17
"(1) IN GENERAL.-Thc agricuate amount
7
be determined under section 7703.
18
which would (but for this subsection) be allowed as
8
"(d) QUALIFIED HEALTH INSURANCE.-For pur.
5-27-99
COPYRIGHT 0 1999 BY THE BUREAU OF NATIONAL AFFAIRS. INC., WASHINGTON. D.C. DTR ISSN 0092-6884
05/27/99 THU 17:18 FAX 202 622 0236
TAX POLICY
005
(No. 102)
L-5
TAX, BUDGET & ACCOUNTING TEXT
24
such individual's taxabic year begins.
9 poses of this section-
10
"(1) 1x GENERAL Except as otherwise pro-
25
"(3) INFLATION ADJUSTMENT-
11
vided in this paragraph the term qualified health
12
insurance means insurance which constitutes medi-
1
"(A) IN GENERAL.-In the case of a tax-
12
13
cal care. as defined in section 213(d) without regard
2
able year beginning after 2000. cach dollar
to-
3
amount in subsection (c)(3) shall be increased
14
15
"(1) paragraph (1)(C) thereof. and
4
by an amount equal to-
16
"(B) so much of paragraph (1)(D) thereof
5
"(i) such dollar amount. multiplied by
as relates to qualified long-term care insurance
"(ii) the cost-of-ining adjustment dc-
17
6
18
contracts.
7
termined under section 1(f)(3) for the cal-
19
"(2) EXCLUSION OF COVERAGE PROVIDED
8
endar year in which the taxable year be-
20
UNDER GROUP HEALTH PLANS. ETC.Such term
9
gins. determined by substituting caiendar
21
shall not include insurance provided through any
10
year 1999' for 'calendar year 1992 in sub-
22
group health plan of an employer or any other cn-
11
paragraph (B) thereof.
23
tity.
12
"(B) ROUNDING.-If any amount as ad-
24
"(3) EXCLUSION OF CERTAIN OTHER CO.
13
justed under subparagraph (A) is not H multiple
25
THACTS-Such term shall not include insurance if a
14
of $100, such amount shall be rounded to the
15
RCNT lowest multiple of $100."
11
(b) CLERICAL AMENDMENT -The table of sections
1
substantial portion of its benefits are excepted bene-
16
fits (as defined in section 9832(c)).
17 for subpart A part IV of subchapter A of chapter 1 of
2
3
"(c) INDIVIDUALS WITH COBRA CONTERGE-In
18 such Code'is amended by inserting after the item relating
4 the case of continuation coverage under a group health
19 to section 25A the following new item:
"See. 25B. Health ansurance custs of preciously uninsured incli-
5 plan which is required tc be provided by Federal law for
viduais and individuals with COBRA contrage."
6 an individual during the period specified in section
20
(c) EFFECTIVE DATE.-The amendments made by
7 4980B(f)(2)(B), notwithstanding subsection (d)-
21 this section shall apply to taxable years beginning after
S
"(1) such coverage shall be treated as qualified
22 December 31, 1999.
9
health insurance. and
13
10
"(2) the term 'eligible month' includes months
1 SEC. 302. DEDUCTION FOR HEALTH INSURANCE COSTS OF
11
of such coverage.
2
EMPLOYEES AND SELF-EMPLOYED INDIVID-
12
"(f) SPECIAL RULES.-
3
UALS.
13
"(1) COORDINATION WITH OTHER DEDUC-
4
(a) IN GENERAL-Part VII of subchapter B of chap-
14
TIONS-No credit shall be allowed under this sec-
5 ter 1 of the Internal Revenue Code of 1986 (relating to
15
tion for the taxable year if any amount paid for
6 additional itemized deductions) is amended by redesignat-
16
qualified health insurance is taken into account in
7 ing section 222 as section 223 and by inscring after sec-
17
determining the deduction allowed for such year
8 tion 221 the following new section:
18
under section 213 or 222.
9 "SEC. 222 COSTS OF HEALTH INSURANCE AND LONG-TERM
19
"(2) DENLAL OF CREDIT TO DEPENDENTS-No
10
CARE INSURANCE
20
credit shall be allowed under this section to any indi-
11
"(a) IN GENERAL-In the case of an individual.
21
vidual with respect to whom a deduction under sec-
12 there shall be allowed as a deduction an amount equal to
22
tion 151 is allowable to another taspayer for a tax-
13 the sum of-
23
able year beginning in the calendar year in which
14
"(1) the applicable health care percentage of
DAILY TAX REPORT ISSN 0092-6884
BNA 5-27-99
05/27/99 THU 17:19 FAX 202 622 0236
TAX POLICY
006
L-6
(No. 102)
TAX. BUDGET & ACCOUNTING TEXT
15
the amount paid during the taxable year to: cov-
15
16
-rage for the taxpayer. his spouse. and dependents
number of years of continuous coverage was of
17
under qualified health insurance. and
the close of the taxable year: of the individua.
18
"(2) the applicable long-term care percentage of
3
under ? qualified long-term: care insurance con-
19
the amount of eligible long-term care preniums (as
1.
unet las defined in section 7702B
20
defined in section 213(d)(10)) paid during the LOV-
"If the number of years of
The applicable long-term
connumous coverage is
care percentage -
ii
able year for coverage for the LEXDEVER his spouse.
loss TAME
is
-1: kils: be 1525 than
in
22
and dependents under a qualified long-term care in-
.11 irust 2 on: in TRANS 3
TO
1: irace 3 J... in than +
2;
-1: TRANT - but State:
or
23
surance contract (as defined in section 7702B(b)).
A:
-
5
:00
24
(b) APPLICABLE PERCENTAGES.-For purposes of
5
TB) SPECIAL RULES FOR INDIVIDUALS
25 subsection
6
WHO HAVE ATTAINED AGE 60.-In the case of
7
H11 individual 15/20 has attained age 60 HS of the
8
close of the taxable year. the following table
1+
9
shall be substituted for the table in subpara-
1
"(1) APPLICABLE HEALTH CARE PERCENT-
10
graph (A).
2
AGE.-
"If the number of years of
The applicable long-term
3
"(A) IN GENERAL Execpt as provided in
continuous coverage is-
care percentage is
Less riLIE 1
50
4
subparagraph (B), the applicable health care
-IT beard 1 bill less than 2
70
M least 1 brit Inc. than 3
11
5
percentage shall be determined in accordance
a least 3
100
6
with the following table:
11
"(C) ONLY COVERAGE AFTER 1999 TAKEN
"For taxable years beginning
The applicable health
12
INTO ACCOUNT-Oniy coverage for periods
in calendar year-
care percentage is
2000
60
13
after December 31. 1999, shall be taken into
2001
70
2002
30
14
account under this paragraph
2003
90
2004 and thereafter
100
15
"(D) CONTINUOUS COVERAGE.-An indi-
7
(B) SPECIAL RULE.-In the case of an
16
vidual shall not fail to be treated as having con-
8
individual who is an employee within the mean-
17
timons coverage if the aggregate breaks in cov-
9
ing of section 401(c)(1) and whose qualified
10
health insurance is not provided through a
16
11
group health plan of an employer subparagraph
1
crage during any 1-year period are less than 60
12
(A) shall be applied by substituting '100' for
2
days.
13
90' but only with respect TO the lesser of the
3
"(E) SELF-EMPLOYED INDIVIDUALS.-In
14
texpayer's carned income (within the meaning
4
the case of an individual who is an employee
15
of section 401(c)) or the payments referred to
5
within the meaning of section 401(c)(1) and
16
in subsection (a)(1).
6
whose qualified long-term care insurance con-
17
(2) APPLICABLE LONG-TERM CARE PERCENT-
7
tract (85 defined in section 7702B(b)) is not
18
AGE
S
provided through a group health plan of an cm-
19
"(A) IN GENERAL.Execpt 25 otherwise
9
ployer, the applicable long-term: care percentage
20
provided in this paragraph. the applicable long-
10
shall be
21
term care percentage shall be determined
11
(ii) 100 percent with respect to the
22
cordunce with the following table based on the
12
lesser of-
5-27-99
COPYRIGHT - 1999 BY THE BUREAU OF NATIONAL AFFAIRS. INC.. WASHINGTON. D.C. DTR ISSN 0092-6884
05/27/99
THU 17:19 FAX 202 622 0236
TAX POLICY
5
007
TAX, BUDGET & ACCOUNTING TEXT
(No. 102)
L-7
13
"(I) the cligible long-term care
1S
14
premiums (as defined in section
1
employer paragraph (3) of section 25B(d) sha!
15
213(d)(10) referred to in subsection
13
not apply for purposes of this section
15
(a)(2). 0:
"
"(B) LIMITATION-Thc amount taken
17
"(II) the excess of the taxpayer's
4
into account under subsection (a)(1) by reason
18
carned income (within the meaning of
5
of subparagrapii (A) shall not exceed the excess
19
section 401(c)) for the taxabic year
6
of-
20
over the payments referred to in sub-
7
"(i) the texpayer's carned income
21
section (a)(1). and
8
(within the meaning of section 401(c).
22
"(ii) the percentage determined under
9
over
23
the other provisions of this paragraph with
10
"(ii) the amount which would (without
24
respect to the remainder of such premiums
11
regard to this paragraph) be taken into ac-
25
(determined by treating the premiums
12
count under subsection (a)(1)
13
"1c) SPECIAL RTLES-
I7
14
"(1) COORDINATION WITH MEDICAL DEDUC-
1
taken into account under clause (i) as
15
TION. ETC-Any amount paid by a taxpayer for in-
2
being attributable to individuals in the
16
surance TO which subsection (a) applies shall not be
3
order of their ages, beginning with the old-
17
taken into account in computing the amount allow-
4
cst).
18
able ID the taxpayer as a deduction under section
5
"(c) EXCLUSION OF SUBSIDIZED COVERAGE.Sub-
19
213(a).
6 section (a) shall not apply to any taxpayer for any cal-
20
(2) DEDUCTION NOT ALLOWED FOR SELF-EX-
7 endar month for which the Laxpayer participates in any
21
PLOYMENT TAX PURPOSES-The deduction allow.
8 group health plan of an employer or any other entity if
22
able by reason of this section shall not be taken into
9 less than 50 percent of the cost of the taxpayer's coverage
23
account in determining an individual's net earnings
10 under such plan is borne by the taxpayer. The preceding
24
from self-employment (within the meaning of section
11 sentence shall be applied separately with respect to para-
25
1402(a)) for purposes of chapter 2."
12 graphs (1) and (2) of subsection (a).
13
(d) QUALIFIED HEALTH INSURANCE-For pur-
19
14 poses of this section-
I
(b) CONFORMING AMENDMENTS.-
15
"(1) Ix GENERAL-The term 'qualified health
2
(1) Subsection (1) of section 162 of such Code
16
insurance bas the meaning given such term by SQC-
3
is hereby repealed.
17
tion 25B(d) determined without regard to paragraph
4
(2) Subsection (a) of section 62 of such Code
18
(2) thereof.
5
is amended by inserting after paragraph (17) the
19
"(2) SPECIAL RULE-
6
following new item:
20
(A) IN GENERAL-In the case of an indi-
7
-(18) COSTS OF HEALTH INSURANCE AND
21
vidual who is an employee within the meaning
8
LONG-TERM CARE INSURANCE-The deduction al-
22
of section 401(c)(1) and whose qualified health
9
lowed by section 222."
23
insurance (without regard to this paragraph) is
10
(3) The table of sections for part VII of sub-
2-
not provided through a group health plan of an
11
chapter B of chapter 1 of such Code is amended by
DAILY.TAX REPORT ISSN 0092-6884
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TAX POLICY
008
TAX. BUDGET & ACCOUNTING TEXT
L-8
(No. 102)
21
12
striking the last item and inscring the following
1
any texable year. the aggregate credits allowed
13
new items:
2
under subpart C shall be increased by the lesses
See 222. Casts of nexts insurance and long term cure insur-
SINCE
See 223. Cruss reference
3
of-".
14
(2) EFFECTIVE DATE-The amendments made by
4
(3) CONFORMING MIENDMENTS-
15 this section shall apply TO taxable years beginning after
5
(A) The heading for section 32(n) of such
16 December 31. 1999.
6
Code is amended by striiang "CHED" and in-
17 SEC. 303. CREDIT FOR TAXPAYERS WITH LONG-TERM CARE
7
scrting "Famin CARE".
NEEDS.
8
(B) The heading for secure 2÷ is amended
18
19
(8) ALLOWANCE OF CREDIT-
9
to read as follows:
(I) IN GENERAL-Section 24(a) of the Internal
10 "SEC. 24. FAMILY CARE CREDIT."
20
21
Revenue Code of 1986 (relating to allowance of child
11
(C) The table of sections for subpart A of
22
IAX credit) is amended to read as follows:
12
part IV of subchapter 1 of chapter 1 of such
13
Code is amended by striking the item relating
20
14
to section 24 and inserting the following new
1
Tia) ALLOWANCE OF CREDIT-There shall be al-
15
item:
2 lowed as a credit against the tax imposed by this chapter
"See 34. Family SHIP erevill".
3 for the taxable year an amount equal to the sum of-
16
(b) DEFINITIONS-Sccrion 24(c) of such Code (de
4
"(1) $500 multiplied by the number of qualify-
17 fining qualifying child) is amended to read as follows:
5
ing children of the taxpayer, plus
18
"(c) DEFINITIONS.-For purposes of this section-
6
"(2) $1.000 multiplied by the number of appli-
19
"(1) QUALIFYING CHILD.-
I
cable individuals with respect TO whom the taxpayer
20
"(3) 1x GENERAL-The term 'qualifying
S
is an eligible caregiver for the taxable year.
21
child' means any individual if-
9 Ln any case in which the applicable individual and the cli-
22
"(i) the taxpayer is allowed a deduc-
10 gible caregiver are the same individual, the credit allowed
23
tion under section 151 with respect to such
11 by paragraph (2) with respect to such individual shall not
24
individual for the taxable year.
12 exceed the aggregate amount paid by the taxpayer during
22
.13 the taxable year (not compensated for by insurance or oth-
1
"(ii) such individual has not attained
14 cruise) for qualified long-term care services (as defined
2
the age of IT as of the close of the cal-
15 in section 7702B(c) for such individual"
3
endar year in which the taxable year of the
16
(2) ADDITIONAL CREDIT FOR TAXPAYER WITH
4
taxpayer begins, and
17
G OR MORE SEPARATE CREDIT AMOUNTS-So much
5
"(iii) such individual bears a relation-
1S
of section 24(d) of such Code as preeedes paragraph
6
ship to the taxpayer described in section
19
(1)(A) thereof is amended to read as follows:
7
32(c)(3)(B).
20
"(d) ADDITIONAL CREDIT FOR TAXPAYERS WITH 3
8
"(B) EXCEPTION FOR CERTAIN NONCITI-
21 OR MORE SEPARATE CREDIT AMOUNTS.-
9
ZENS-The term qualifying child shall not in-
==
"(1) IN GENERAL-If the sum of the number
10
clude any individual who would not be a de-
23
of qualifying children of the taxpayer and the num-
11
pendent if the first sentence of section
21
be: of applicable individuals with respect to which
12
152(b)(3) were applied without regard LO all
25
the taxpayer is an eligible caregiver is 3 or more for
13
that follows resident of the United States
5-27-99
COPYRIGHT © 1999 BY THE BUREAU OF NATIONAL AFFAIRS, INC.. WASHINGTON, D.C. DTR ISSN 0092-6884
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TAX POLICY
009
(No. 102)
L-9
TAX. BUDGET & ACCOUNTING TEXT
24
14
"(2) APPLICABLE INDIVIDUAL-
15
"(d) 15 GENERAL-Tie term applicable
1
able to preform. without reminding or
individual means. with respect to any taxable
13
cuing assistance. at icast 1 activity of
16
year: any individual who has been certified. be-
3
a: least : activity of daily living (as SQ
17
18
fore the due date for filing the return of tax for
4
defined) or to inc extent provided ir.
19
the taxable year (without extensions), by a phy-
5
regulations prescribed by the Sec-
sician (as defined in section 1861(r)(1) of the
6
relary (in consultation with the Sec-
20
Social Security Act) as being an individual with
T
retary of Health and Human Serv-
21
long-term care needs described in subparagraph
$
ices). is unable to engage in ago ap-
22
9
propriate activities.
23
(B) for a period-
"(i) which is at least 180 consecutive
10
"(ii) The individual is at least 2 but
24
11
not 6 years of age and is unable due to a
25
days, and
12
loss of functional capacity to perform
23
13
(without substantial assistance from an.
1
"(ii) a portion of which occurs within
14
other individual) at least 2 of the following
2
the taxable year.
15
activities: cating, transferring or mobility.
3
Such term shall not include any individual oth-
16
"(iii) The individual is under 2 years
4
crwise meeting the requirements of the preced-
17
of age and requires specific durable medi-
5
ing sentence unless within the 39½ month pe-
18
cal equipment by reason of a severe health
6
fiod ending on such due date (or such other pc-
19
condition or requires a skilled practitioner
7
riod as the Secretary prescribes) a physician (as
20
trained to address the individual's condi-
8
so defined) has certified that such individual
21
tion to be available if the individual's par-
9
meets such requirements.
22
ents or guardians are absent.
10
"(B) INDIVIDUALS WITH LONG-TERM CARE
23
"(3) ELIGIBLE CAREGIVER-
11
NEEDS-An individual is described in this sub-
12
paragraph if the individual meets any of the fol-
25
13
lowing requirements:
I
"(A) IN GENERAL-A taxpayer shall be
14
"(i) The individual is at least 6 years
2
treated as an eligible caregiver for any taxable
15
of age and—
3
year with respect to the following individuals:
16
"(I) is unable to perform (with-
4
"(i) The taxpayer.
17
out substantial assistance from an-
5
"(ii) The taxpayer's spouse.
18
other individual) at least 3 activities
6
"(iii) An individual with respect to
19
of daily living (as defined in section
7
whom the taxpayer is allowed a deduction
20
7702B(c)(2)(B)) due to a loss of
8
under section 151 for the taxable year.
21
functional capacity, or
9
"(iv) An individual who would be de-
22
"(II) requires substantial super-
10
seribed in clause (iii) for the taxable year
23
vision to protect such individual from
11
if section 151(c)(1)(A) were applied by
24
threats to health and safety due to se-
12
substituting for the exemption amount an
25
vere cognitive impairment and is un-
13
amount equal to the sum of the exemption
DAILY TAX REPORT ISSN 0092-6884
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TAX POLICY
010
TAX, BUDGET & ACCOUNTING TEXT
L-10
(No. 102)
14
amount. the standard de. _ction under sec-
27
15
tion 63(c)(2)(C), and any additional stand-
1
files a WTITEN declaration in such form
and deduction under section 63(c)(3) which
2
and manner as the Secretary may pre-
16
17
would be applicable to the individual if
3
scribe) that such individual will not claim
18
clause (iii) applied.
4
such applicable individual for the credit
19
"(v) An individual who would be de-
5
under this section
20
scribed in clause (iii) for the taxable year
6
"(ii) No AGREEMENT.-I: each mei-
21
if-
7
vidual required under claimse ii IC file :)
22
"(I) the requirements of clause
8
written declaration under clause 11' does
23
(iv) are met with respect to the indi-
9
not do so. the individual with the highest
24
vidual, and
10
modified adjusted gross income Las defined
11
in section 32(e)(5)) shall be treated as the
26
12
eligible caregiver.
1
"(11) the requirements of sub-
13
"(iii) MARRIED INDIVIDUALS FILING
2
paragraph (B) are met with respect to
14
SEPARATELY In the case of married indi-
3
the individual in licu of the support
15
viduals filing separately. the determination
4
LOSL of section 152(a).
16
under this subparagraph as to whether the
5
"(B) RESIDENCY TEST-The require-
17
husband or wife is the eligible earegiver
6
ments of this subparagraph are met if an indi-
18
shall be made under the rules of clause (ii)
7
vidual has as his principal place of abode the
19
(whether or not one of them has filed &
8
home of the taxpayer and-
20
written declaration under clause (i)).".
9
"(i) in the case of an individual who
21
(e) IDENTIFICATION REQUIREMENTS
10
is an nucestor or desecudant of the LAX-
22
(1) IN GENERAL Section 24(c) of such Code
11
payer or the taxpayer's spouse. is H mem-
23
is amended by adding at the end the following new
12
ber of the taxpayer's household for over
24
sentence: "No credit shall be alloweri under this sec-
13
half the taxable year. or
25
tion to il taxpayer with respect to any applicable in-
14
"(ii) in the case of any other individ-
15
ua!. is я member of the taxpayer's house-
25
I
16
hold for the entire taxable year.
dividual miless the taxpayer includes the name and
2
17
"((") SPECIAL RULES WHERE MORE THAN
taxpayer identification number of such individual.
3
18
1 ELIGIBLE CAREGIVER-
and the identification number of the physician cer-
4
19
"(i) IN GENERAL- If more than 1 in-
tifying such individual. on the return of Lax for the
5
dividual is H11 eligible earegiver with re.
taxable year.".
20
6
21
spect to the same applicable individual for
(2) ASSESSMENT-Sccuon 6213(g)(2)(1) of
7
such Code is amended—
22
taxable years ending with or within the
8
23
same calendar year. a taxpayer shall be
it' by inserting TO: physician identifica-
9
treated as the eligible caregiver if each
tion" after "correct TIN". and
24
10
25
such individual (other than the taxpayer:
(B) by striking "child" and inserting
11
"family care".
5-27-99
COPYRIGHT - 1999 BY THE BUREAU OF NATIONAL AFFAIRS. INC., WASHINGTON, D.C. DTR ISSN 0092-6884
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TAX POLICY
011
TAX, BUDGET & ACCOUNTING TEXT
(No. 102)
L-22
12
(d) EFFECTIVE DATE-The amendments made by
30
i this section shall apply to taxable years beginning after
"(A) the amount of empioyment-related CX-
14 December 31. 1999.
2
penses incurred for such qualifying individuals
15
TITLE IV-EXPANSION OF
3
for the taxable year determined under this see-
16
DEPENDENT CARE TAX CREDIT
4
won without regard to this paracraphic or
17 SEC. 401 EXPANSION OF DEPENDENT CARE TAX CREDIT.
5
"(B) $120 for cach month in such taxable
18
(a) INCREASE IN PERCENTAGE OF EMPLOYMENT-
6
year during which such qualifying individual is
19 RELATED EXPENSES ALLOWED 15 CREDIT.-Paragraph
7
under the age of 1."
20 (2) of section 21(a) of the Internal Revenue Code of 1986
8
(e) EFFECTIVE DATE-The amendments made by
21 (defining applicable percentage) is amended to read as fol-
9 this section apply to taxable years beginning after Decem-
22 lows:
10 her 31. 1999.
23
"(2) APPLICABLE PERCENTAGE DEFINED.-
11
TITLE V-ALTERNATIVE
24
(A) IN GENERAL.-For purposes of para-
12
MINIMUM TAX RELIEF
25
graph (1). the term "applicable percentage
13 SEC. 501. NONREFUNDABLE PERSONAL CREDITS ALLOWED
14
AGAINST ALTERNATIVE MINIMUM TAX
15
(a) IN GENERAL-Subsection (a) of section 26 of the
29
16 Internal Revenue Code of 1986 is amended to read as foi-
1
means 50 percent reduced (but not below 20
17 lows:
2
percent) by each $2,000 (or fraction thereof) by
18
"(a) LIMITATION BASED ON AMOUNT OF Tax-The
3
which the taxpayers's adjusted gross income for
19 aggregate amount of credits allowed by this subpart for
4
the taxable year exceeds $30,000.
5
20 the taxable year shall not exceed the sum of-
"(B) PHASEIN-In the case of taxable
21
6
years beginning before January 1, 2004, the
"(1) the taxpayer's regular tax liability for the
22
7
taxable year reduced the foreign Lay credit allowable
percentage determined under the following table
23
8
under section 27(a). and
shall be substituted for '50 percent':
"For taxable years beginning
24
"(2) the tax imposed for the taxable year by
in calendar year-
The percentage
2000
30
25
section 55(a).".
2001
35
2002
31
40
2001
43.1
1
(b) CONFORMING AMENDMENTS-
9
(b) MINIMUM CREDIT ALLOWED FOR STAY-AT-HOME
2
(1) Subsection (d) of section 24 of such Code
10 PARENTS-Subsection (c) of section 21 of such Code (re
3
is amended by striking paragraph (2) and by redes-
11 lating to special rules) is amended by adding at the end
4
ignating paragraph (3) as paragraph (2).
12 the following:
5
(2) Section 904 of such Code is amended by
13
"(11) MINDIUM CREDIT ALLOWED FOR STAY-
6
striking subsection (h) and by redesignating sub-
14
AT-HOME PARENTS-Notwithstanding subsection
7
sections (i), (j), and (k) as subsections (h). (i), and
15
(d). in the case of any taxpayer with one or more
8
(j). respectively.
16
qualifying individuals described in subsection
9
(c) EFFECTIVE DATE-The amendments made by
17
(b)(1)(A) under the age of 1 at any time during the
10 this section shall apply to taxable years beginning after
18
taxable year. such taxpayer shall be deemed to have
11 December 31. 1999.
19
employment-related expenses with respect to such
12 SEC. 502 INCOME AVERAGING FOR FARMERS NOT TO IN.
20
qualifying individuals in an amount cqual to the
13
CREASE ALTERNATIVE MINIMUM TAX LIABIL-
21
greater of-
14
ITY.
DAILY TAX REPORT ISSN 0092-6884
BNA
5-27-99
L-12
(No. 102)
TAX, BUDGET & ACCOUNTING TEXT
15
(a) IN GENERAL-Section 55(c) of the Internal Rev-
33
16 enuc Code of 1986 (defining regular tax) is amended by
1
(b) ADJUSTMENT OF STATE CEILING FOR IN-
17 redesignating paragraph (2) as paragraph (3) and by in-
2 CREASES IN COST-OF-LINING.-Paragraph (3) of section
18 serting after paragraph (1) the following new paragraph
3 42(b) of such Code (relating to housing credit dollar
19
"(2) COORDINATION WTTH INCOME AVERAGING
4 amount for agencies) is amended by adding at the end
20
FOR FARMERS.-Solely for purposes of this section;
5 the following new subparagraph
21
section 1301 (relating to averaging of farm income)
6
"(H) COST-OF-LIVING ADJUSTMENT.-
22
shall not apply in computing the regular tax"
7
"(i) IN GENERAL.-In the case of a
23
(b) EFFECTIVE DATE.-The amendment made by
8
calendar year after 2000. the dollar
24 this section shall apply to taxable years beginning after
9
amount contained in subparagraph (C)(i)
25 December 31, 1998.
10
shall be increased by an amount equal to-
11
"(I) such dollar amount multi-
32
12
plied by
TITLE VI-ELIMINATION OF 60-
13
1
"(II) the cost-of-living adjust-
2
MONTH LIMIT ON STUDENT
14
ment determined under section 1(f)(8)
3
LOAN INTEREST DEDUCTION
15
for such calendar year by substituting
16
4 SEC. 601 ELIMINATION OF 60-MONTH LIMIT ON STUDENT
'calendar year 1999' for 'calendar
5.
LOAN INTEREST DEDUCTION.
17
year 1992' in subparagraph (B) there-
6
(a) IN GENERAL-Section 221 of the Internal Reve-
18
of.
7 nuc Code of 1986 (relating to interest on education loans)
19
"(ii) ROUNDING.-If any increase
8 is amended by striking subsection (d) and by redesignat-
20
under clause (i) is not a multiple of 5
9 ing subsections (c), (f), and (g) as subsections (d), (e),
21
cents, such increase shall be rounded to
10 and (f), respectively.
22
the next lowest multiple of 5 cents."
11
(b) CONFORMING AMENDMENT-Secian 6050(e) of
23
(c) EFFECTIVE DATE.-The amendments made by
12 the Internal Revenue Code of 1986 is amended by striking
24 this section shall apply to calendar years after 1999.
13 "section 221(c)(1)" and inserting "section 221(d)(1)".
34
14
(c) EFFECTIVE DATE-The amendments made by
1
TITLE VIII-FARM AND RANCH
15 this section shall apply with respect to any loan interest
2 RISK MANAGEMENT ACCOUNTS
16 paid after December 31, 1997.
3 SEC. 801. FARM AND RANCH RISE MANAGEMENT AC
17 TITLE VII-INCREASE IN LOW-IN-
4
COUNTS
18
COME
HOUSING
CREDIT
5
(a) IN GENERAL.Subpart C of part II of sub-
19
STATE CEILING
6 chapter E of chapter 1 of the Internal Revenue Code of
20 SEC. 701. INCREASE IN STATE CEILING ON LOW-INCOME
7 1986 (relating to taxable year for which deductions taken)
21
HOUSING CREDIT.
8 is amended by inserting after section 468B the following
22
(a) IN GENERAL.-Clause (i) of section 42(h)(3)(C)
9 new section:
23 of the Internal Revenue Code of 1986 (relating to State
10 "SEC. 488C. FARM AND RANCH RISK MANAGEMENT AC
24 housing credit ceiling) is amended by striking "$1.25" and
11
COUNTS
25 inserting "$1.75".
12
"(a) DEDUCTION ALLOWED.-In the case of an indi-
5-27-99
COPYRIGHT 1999 BY THE BUREAU OF NATIONAL AFFAIRS, INC., WASHINGTON, D.C. DTR ISSN 0092-6884
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TAX POLICY
013
(No. 102)
L.13
TAX. BUDGET & ACCOUNTING TEXT
13 vidual ongaged in >>> eligible farming business. there shall
30
14 be allowed ** " decimetion for any taxable year the amount
I
1274)c)(2)) and which pay such interest nr.
15 paid in cash by the respayer during the taxable year to
2
less often than annually
16 >) Farm and Ranch Risk Management Account (herein-
3
"(D) All income of the trust is distributed
17 after referred to as the FARRM Account).
4
currently to the grantor
18
"(b) LIMITATION-The amount which " taxpayer
5
"(E) The assess of the trus: will not be
19 may pay into the FARRM Account for any taxable year
6
commingled with other property except in H
20 shall not exceed 20 percent of so much of the taxable in-
7
common trust fund or common investment
21 come of the taxpayer (determined without regard to this
8
find.
22 section) which is attributable (determined in the manner
9
"(2) ACCOUNT T.LNED AS GRANTOR TRUST
23 applicable under section 1301) to any eligible farming
10
The grantor of a FARRM Account shall be treated
24 business.
11
for purposes of this title as the owner of such Ac-
12
count and shall be subject to tax thereon in accord-
35
13
ance with subpart E of part I of subchapter -J of
I
"(e) ELIGIBLE FARMING BUSINESS.-For purposes
14
this chapter (relating to grantors and others treated
2 of this section. the term 'eligible farming business' means
15
85 substantial owners).
3 any farming business (HS defined in section 263A(c)(4))
16
"(c) INCLUSION OF AMOUNTS DISTRIBUTED-
4 which is not a passive activity (within the meaning of sec-
17
'*(1) IN GENERAL.Execpt as provided in para-
5 tion 469(c)) of the taxpayer.
18
graph (2). there shall be includible in the gross in-
6
"(d) FARRM ACCOUNT-For purposes of this
19
come of the taxpayer for any taxable year-
7 section-
20
"(A) any amount distributed from a
8
"(1) IN GENERAL-The term FARRM Ac-
21
FARRM Account of the taxpayer during such
9
count' means 21 trust created or organized in the
22
taxable year, and
10
United States for the exclusive benefit of the Lax-
23
"(B) any deemed distribution under-
11
payer. but only if the written governing instrument
24
"(i) subsection (f)(1) (relating to de
12
creating the trust meets the following requirements:
25
posits not distributed within 3 years).
13
(A) No contribution will be accepted for
37
14
any taxable year in excess of the amount al-
1
("(ii) subsection (f)(2) (relating to ccs.
15
lowed as a deduction under subsection (a) for
2
sation in eligible farming business). and
16
such year.
3
"(iii) subparagraph (A) or (B) of sub-
17
"(B) The trustee is H bank (as defined in
4
section (f)(3) (relating to prohibited trans-
18
section 4DS(n)) or another person who dem-
5
actions and pledging account as security).
19
oustrates to the satisfaction of the Secretary
6
"(2) EXCEPTIONS-Paragraps (1)(A) shall not
20
that the manner in which such person will ad-
7
apply ID-
21
minister the trust will be consistent with the rc-
8
"(A) any distribution 10 the extent attrib-
22
quirements of this section.
9
utable to income of the Account. and
23
"((') The assets of the trust consist en-
10
"(B) the distribution of any contribution
24
tirely of cash or of obligations which have ade-
11
paid during a taxable year to a FARRM Ac-
25
quate stated interest (as defined in section
12
count to the extent that such contribution ('X-
DAILY TAX REPORT ISSN 0092-6884
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TAX POLICY
014
TAX, BUDGET & ACCOUNTING TEXT
L-14
(No. 102)
39
13
earnis the limitation applicable under subsection
1
Account show be treated as made from deposits
14
(b) if requirements similar to the requirements
2
in the order in which such deposits were made.
15
of section 408(d)(4) are met
3
beginning with the earliest deposits. For pur-
10
For purposes of subparagraph (A). distributions
4
poses of the preceding sentence. income of such
17
shall be treated as first attributable to income and
5
an Account shall be treated as at deposit made
18
then TO other amounts.
6
on the date such income is received by the Ac-
19
-(3) EXCLUSION FROM SELF-EMPLOYMENT
7
count.
20
T.A.-Amounts included in gross income under this
Do
"(2) CESSATION IN ELIGIBLE FARMING BUSH
21
subsection shall not be included in determining net
9
NESS-At the clase of the first disqualification !X*-
22
earnings from solf-employment under section 1402.
10
riod after H. period for which the taxpayer was en-
23
"(f) SPECIAL RULES-
11
gaged in 1111 eligible farming business. there shall De
24
"(1) TAX ON DEPOSITS IN ACCOUNT WHICH
12
deemed distributed from the FARRM Account (if
25
ARE NOT DISTRIBUTED WITHIN In YEARS-
13
any) of the taxpayer an amount equal to the balance
14
in such Account at the cluse of such disqualification
38
15
period. For purposes of the preceding sentence. the
1
"(A) IN GENERAL-If, at the close of any
16
term disqualification period" means any period of 2
2
taxable year. there is a nonqualified balance in
17
consecutive taxable years for which the taxpayer is
3
any FARRM Account-
18
not engaged in HII eligible farming business.
4
"(i) there shall be deemed distributed
19
"(3) CERTAIN RULES TO APPLY -Rules similar
5
from such Account during such taxable
20
to the following rules shall apply for purposes of this
6
year an amount equal to such balance. and
21
section:
7
"(ii) the taxpayer's tax imposed by
22
"(A) Section 408(e)(2) (relating to loss of
8
this chapter for such taxable year shall be
23
exemption of account where individual engages
9
increased by 10 percent of such deemed
24
in prohibited transmetion).
10
distribution.
!!
The preceding sentence shall not apply if an
40
12
amount equal TO such nonqualified balance is
1
"(B) Section 408(c)(4) (relating to effect
13
distributed from such Account to the taxpayer
2
of pledging account as security).
before the due date (including extensions) for
3
"((") Section 408(g) (relating to commu-
14
filing the return of tax imposed by this chapter
4
15
nity property laws).
5
16
for such year (or. if carlier. the date the Las-
"(D) Section 408(h) (relating to custodial
17
payer files such return for such year).
6
accounts).
"(B) NONQUALIFIED BALANCE-For pur-
7
"(4) TIME WHEN PAYMENTS DEEMED MADE -
18
19
poses of subparagraph (A). the term "non-
8
For purposes of this section. a taxpayer shall be
20
qualified balance' means any balance in the Ac-
9
deemed to have made a payment to " FARRM Ae-
21
count on the last day of the taxable year which
10
count on the last day of a taxable year if such pay-
22
is attributable to amounts deposited in such Ac-
11
ment is made on account of such taxable year and
23
count before the 4th preceding taxable year.
12
is made within 3½ months after the close of such
24
"((") ORDERING RULE.-For purposes of
13
taxable year.
25
this paragraph. distributions from a FARRY
14
"(5) INDIVIDUALFor purposes of this sec-
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(No. 102)
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TAX. BUDGET & ACCOUNTING TEXT
42
15
tion. the term individual shall not include an extate
1 tributed W the Account under section 468C(b) for such
16
or TRUST
2 taxable year. For purposes of this subsection. any con-
17
"(g) REPORTS-The trustee of H FARRM Account
3 tribution which is distributed out of the FARRM Account
18 shall make such reports regarding such Account to the
4 in a distribution to which section 465C(e)(2)(B) applies
19 Secretary and to the person for whose benefit the Account
5 shall ix treated as an amount not contributed."
20 is maintained with respect to contributions. distributions.
6
(3) The section heading tor section 4973 of
21 nnci such other matters as the Secretary may require
7
such Code is amended to read as follows:
22 under regulations. The reports required by-this subsection
23 shall be filed at such time and in such manner and fur-
8 "SEC. 4973 EXCESS CONTRIBUTIONS TO CERTAIN AC-
9
COUNTS. ANNUITIES. ETC.".
24 nished to such persons at such time and in such manner
10
(4) The table of sections for chapter 43 of such
25 HN may be required by those regulations."
11
Code is amended by striking the item relating to see-
12
tion 4973 and inserting the following new item:
41
4973. Exerns - TO: certing - annivities.
1
(b) DEDUCTION ALLOWED IN COMPUTING AD-
13
(d) Tax ON PROHIBITED TRANSACTIONS-
2 JUSTED GROSS INCOME-Subsection (a) of section 62 of
14
(1) Subsection (c) of section 4975 of such Code
3 such Coric (defining adjusted gross income) is amended
15
(relating to prohibited transactions) is amended by
4 by inserting after paragraph (18) the following new para-
16
adding at the end the following new paragraph:
5 graph:
17
"(6) SPECIAL RULE FOR FARRM ACCOUNTS-
6
"(19) CONTRIBUTIONS TO FARM AND RANCH
18
A person for whose benefit & FARRM Account
7
RISK MANAGEMENT ACCOUNTS.-The deduction al-
19
(within the meaning of section 468C(d)) is estab-
8
lowed by section 468C(a)."
20
lished shall be exempt from the Lax imposed by this
9
(c) TAX ON EXCESS CONTRIBUTIONS-
21
section with respect to any transaction concerning
10
(1) Subsection (a) of section 4973 of such Code
22
such Account (which would otherwise be taxable
11
(relating to tax on certain excess contributions) is
23
under this section) if. with respect to such trans-
12
amended by striking "or" at the end of paragraph
24
action. the account ceases 10 be a FARRM Account
13
(3). by redesignating paragraph (4) as paragraph
14
(5). and by inserting after paragraph (3) the follow-
43
15
ing new paragraph:
I
by reason of the application of section 468C(f)(3)(A)
16
-(+) a FARRM Account (within the meaning of
2
to such Account."
17
section 468((d)). or".
3
(2) Paragraph (1) of section 4975(c) of such
18
(2) Section 4973 of such Code is amended by
4
Code is sunended by redesignating subparagraphs
19
adding at the end the following new subsection:
5
(E) and (F) as subparagraphs (F) and (G). respec-
20
"(g) ENCESS CONTRIBUTIONS TO FARRM Ac-
6
tively. and by inserting after subparagraph (D) the
21 COUNTS-For purposes of this section. in the case of a
7
following new subparagraph:
22 FARRM Account (within the meaning of section
8
"(E) a FARRM Account described in see-
23 468((d)). the term excess contributions' means the
9
tion 468((d).".
24 amount by which the amount contributed for the taxable
10
(e) FAILURE To PROVIDE REPORTS ON FARRM AC-
25 year to the Account exceeds the amount which may be con-
11 COUNTS-Paragraph (2) of section 6693(a) of such Code
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L-16
(No. 102)
45
12 (relating to failure to provide reports on certain tax-fa-
1 alr the date of the chactment of this Act in taxable years
13 vored accounts or annuities) is amended by redesignating
2 ending after such date.
14 subparagraphs (C) and (D) as subparagraphs (D) and
3 SEC. 902 MODIFICATIONS TO ENCOURAGE CONTRIBU-
15 (E), respectively. and by inscrung after subparagraph (B)
4
TIONS OF CAPTTAL GAIN REAL PROPERTY
16 the following new subparagraph:
"(C) section 468C(g) (relating to FARRM
5
MADE FOR CONSERVATION PURPOSES AND
17
6
OF QUALIFIED CONSERVATION CONTRIBU-
18
Accounts).".
7
TIONS
19
(f) CLERICAL AMENDMENT.-The table of sections
8
(a) CONTRIBUTIONS OF CAPITAL GUN REAL PROP-
20 for subpart C of part II of subchapter E of chapter 1 of
9 ERTY MADE FOR CONSERVATION PURPOSES AND OF
21 such Code is amended by inserting after the item relating
10 QUALIFIED CONSERVATION CONTRIBUTIONS NOT SUB-
22 to section 468B the following new item:
11 JECT TO SPECIAL LIMITATION ON CONTRIBUTIONS OF
"See 468C. Furm and Ranch Risk Minagement Accounts"
23
(g) EFFECTIVE DATE-The amendments made by
12 CAPITAL GAIN PROPERTY-SubpatagTaph (C) of section
24 this section shall apply to taxable years beginning after
13 170(b)(1) of the Internal Revenue Code of 1986 (relating
14 to special limitation with respect to contributions de
25 the date of the enactment of this Act.
15 scribed in subparagraph (A) of capital gain property) is
44
16 amended by redesignating clause (iv) as clause (v) and by
1
TITLE
IX-INCENTIVES
FOR
17 inserting after clause (iii) the following new clause:
2
URBAN REVITALIZATION AND
18
"(iv) in the case of charitable con-
3
OPEN SPACE
19
tributions described in subparagraph (A)
4 SEC. 901. EXPENSING OF ENVIRONMENTAL REMEDIATION
20
of capital gain property, clauses (i) and (ii)
5
COSTS EXPANDED TO CONTAMINATED SITES
21
shall not apply to-
6
OUTSIDE OF TARGETED AREAS.
22
"(I) any qualified conservation
7
(a) IN GENERAL-Clause (ii) of section 198(e)(1)(A)
23
contribution (as defined in section
8 of the Internal Revenue Code of 1986 (relating to quali-
24
170(b)). or
9 fied contaminated sites) is amended to read as follows:
10
"(ii) which is within the United
46
11
States, and".
1
"(II) any other contribution of
12
(b) EXPENSE TREATMENT MADE PERMANENT.-
2
capital gain property which is real
13 Section 198 of such Code is amended by striking sub-
3
property if the contribution is of the
14 section (h).
4
donor's entire interest in such prop-
15
(c) CONFORMING AMENDMENT-Paragraph (2) of
5
crty and is to a qualified organization
16 section 198(c) of such Code is amended to read as follows:
6
(as defined in section 170(h)(3))
17
"(2) NATIONAL PRIORITIES LISTED SITES NOT
7
which is organized for conservation
18
INCLUDED.-Such term shall not include any site
8
purposes (as defined in section
19
which is on. or proposed for, the national priorities
9
170(h)(4)(A)) and which provides the
20
list under section 105(a)(8)(B) of the Comprehen-
10
taxpayer, at the time of such dona-
21
sive Environmental Response, Compensation, and
11
tion, a letter of intent which contains
22
Liability ACI of 1980 (as in offect on the date of the
12
an acknowledgment of the donec's in-
23
cnactment of this section)."
13
tent that the property is being ac-
24
(d) EFFECTIVE DATE-The amendments made by
14
quired for any such conservation pur-
25 this section shall apply to expenditures paid or incurred
15
posc.".
5-27-99
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TAX POLICY
017
(No. 102)
L-17
TAX, BUDGET & ACCOUNTING TEXT
(b) UNLIMITED CARRYOVER FOR CONTRIBUTIONS OF
3
curred after June 30, 1999.
16
17 CAPITAL GAIN REAL PR ."ERTY FOR CONSERVATION
4
(b) INCREASE IN PERCENTAGES UNDER ALTER-
18 PURPOSES AND OF QUALIFIED CONSERVATION CON-
5 NATIVE INCREMENTAL CREDIT-
19 TRIBUTIONS OF CAPITAL GAIN PROPERTY-Paragraph
6
(1) 15 GENERAL-Subparagraph (A) of section
20 (1) of section 170(d) of such Code in amended by adding
7
41(c)(4) of such Code is amended-
21 at the end the following new subparagraph:
8
(A) by striking "1.65 percent" and inscrt-
22
"(C) UNLIMITED CARRYOVER FOR CON-
9
ing "2.65 percent".
23
TRIBUTIONS OF CAPITAL GAIN REAL PROPERTY
10
(B) by striking "2.2 percent" and inserting
24
FOR CONSERVATION PURPOSES AND OF QUALI-
11
"3.2 pereent", and
25
FIED CONSERVATION CONTRIBUTIONS OF CAP.
12
(C) by striking "2.75 percent" and insert-
13
ing "3.75 percent".
14
(2) EFFECTIVE DATE-Thc amendments made
47
15
by this subsection shall apply to taxable years begin-
1
ITAL GAIN PROPERTY-The 5 taxable year lim-
16
ning after June 30, 1999.
2
itation in subparagraph (A) shall not apply to
17 SEC. 1002 WORK OPPORTUNITY CREDIT.
3
any charitable contribution to which clauses (i)
18
(a) CREDIT MADE PERMANENT-Subsection (c) of
4
and (ii) of subsection (b)(1)(C) do not apply by
19 section 51 of the Internal Revenue Code of 1986 is amend-
S
reason of clause (iv) thereof. For purposes of
20 ed by striking paragraph (4).
6
this paragraph, the excess described in the ma-
21
(b) EFFECTIVE DATE-The amendment made by
7
terial preceding clause (i) of subparagraph (A)
22 subsection (a) shall apply to individuals who begin work
8
shall be treated as attributable to contributions
described in the preceding sentence of this sub-
23 for the employer after June 30, 1999.
9
10
paragraph to the exient of such contributions.".
49
11
(c) EFFECTIVE DATE-The amendment made by
1 SEC. 1003. PERMANENT SURPART F EXEMPTION FOR AC-
12 this section shall apply to contributions made in taxable
2
TIVE FINANCING INCOME.
13 years beginning after the date of the enactment of this
3
(a) BANKING, FINANCING, OR SIMILAR BUSI-
14 Act.
4 NESSES-Subscction (h) of section 954 of the Internal
15
TITLE X-EXTENSION OF
$ Revenue Code of 1986 (relating to special rule for income
16 CERTAIN EXPIRING PROVISIONS
6 derived in the active conduct of banking, financing, or
17 SEC. 1001. RESEARCH CREDIT.
7 similar businesses) is amended by striking paragraph (9).
18
(a) CREDIT MADE PERMANENT.-
8
(b) INSURANCE BUSINESSES-Subsection (a) of see-
19
(1) IN GENERAL-Section 41 of the Internal
9 tion 953 of such Code (defining insurance income) is
20
Revenue Code of 1986 (relating to credit for increas-
10 amonded by striking paragraph (10) and by redesignating
21
ing research activities) is amended by striking sub-
11 paragraph (11) as paragraph (10).
22
section (h).
12
(c) EFFECTIVE DATE.-The amendments made by
23
(2) CONFORMING AMENDMENT-Paragraph (1)
13 this section shall apply to taxable years of a foreign cor
24
section 45C(b) of such Code is amended by striking
14 poration beginning after December 31, 1998, and to tax-
25
subparagraph (D).
15 able years of United States shareholders with or within
16 which such taxable years of such foreign corporation end.
46
17 SEC. 1004. CREDIT FOR ELECTRICITY PRODUCED FROM RE-
1
(3) EFFECTIVE DATE.-The amendments made
18
NEWABLE RESOURCES.
2
by this subsection shall apply to amounts paid or in-
19
(a) EXTENSION AND MODIFICATION OF PLACED-IN-
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018
TAX. BUDGET & ACCOUNTING TEXT
L-18
(No. 102)
20 SERVICE Paragraph (3) of section 45(c) of the
7
"(ii) in the case of a qualified facility
21 Internal Revenue Code of 1986 is amended to read as foi-
8
described in subparagrapii (B)(iii-
9
"(1) the 10-year period: referred
22 lows.
(3) QUALIFIED FACILITY.-
10
to in subsection (a) shall be treated as
23
(id) WIND FACULITIES- the case of a
11
beginning no earlier than the date of
2-
25
Laculty using wind to produce electricity, the
12
the enactment of this paragrapin and
26
term qualified facility' means any facility
13
"(II the amount o: the credit
14
determined under subsection to with
15
respect 10 any project tor any taxable
50
owned by the taxpayer which is originally
16
year shall be adjusted by multiplying
I
1)
placed in service after December 31, 1993. and
17
such amount (determined without re-
18
"
before July 1. 2004.
gard to this clause) by 0.59."
4
"(B) BIOMASS FACHLITIES--In the case of
19
(h) CREDIT NOT To APPLY TO ELECTRICITY SOLD
a facility using biomass to produce electricity,
20 TO UTILITIES UNDER CERTAIN CONTRACTS-Subscction
5
6
the term 'qualified facility means. with respect
21 (b) of section 45 of such Code is amended by adding at
7
to any month any facility owned by the Lax-
22 the end the following new paragraph:
8
payer which is originally placed in service before
23
"(4) CREDIT NOT TO APPLY TO ELECTRICITY
9
July 1. 2004. if. for such month-
24
SOLD TO UTILITIES UNDER CERTAIN CONTRACTS-
10
"(i) biomass comprises not less than
11
TO percent (on " B:u basis) of the average
52
12
monthly fuel input of the facility for the
I
"(A) IN GENERAL.- The credit determined
13
taxable year which includes such month. or
2
under subsection (a) shall not apply to
14
"(ii) in the case of it facility prin-
3
electricity-
15
cipally using coal to produce electricity,
4
"(i) produced at & qualified facility
16
biomass comprises not more than 25 per-
5
placed in service by the taxpayer after
17
cent (on il Bru basis) of the average
6
June 30. 1999. and
18
monthly fuel imput of the facility for the
7
"(ii) sold to a utility pursuant to a
19
taxable year which includes such month.
8
contract originally entered into before Jan-
20
"((") SPECIAL RULES-
9
usry 1. 1987 (whether or not amended or
21
"(i) In the case of 31 qualified facility
10
restated after that date).
22
described in subparagraph (B)(i)-
11
"(B) Subparagraph (A) shall not apply
23
:'(1) the 10-year period referred
12
if-
24
to in subsection (a) shall be treated as
13
"(i) the prices for energy and capacity
14
from such facility are established pursuani
51
15
to an amendment IO the contract referred
1
beginning no carlier than the date of
16
to in subparagraph (A)(ii):
2
the enactment of this paragraph. and
17
(iii) such amendment provides that
IN
"(II) subsection (b)(3) shall not
18
the prices set forth in the contract which
4
apply to any such facility originally
19
exceed avoided cost prices determined at
is
placed in service before January 1.
20
the time of delivery shall apply only to any
6
1997.
21
mual quantities of electricity (prorated for
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TAX POLICY
019
TAX. BUDGET & ACCOUNTING TEXT
(No. 102)
L.19
partial years) which do not exceed the
3
22
(1) 1N GENERASubparagrai (b of section
23
greater of-
1
45(e)(1) of such Code is amended to read as follows
24
"(I) the average annual quantity
5
"(B) biomass ..
25
of electricity sold to the utility under
6
(2) BIOMASS DEFINED.-Paragrapia @: 0: SCC:-
-1
tion 45(c) of such Code is amended to read as [oi-
53
8
lows:
I
the contract during calendar years
9
"(2) BIOMASS The term biomass means-
2
1994. 1995. 1996. 1997. and 1996.
10
"TA' any organic material trom as plant
3
or
11
which is planted excinsively for purposes of
4
"(II) the estimate of the annual
12
being used at a qualified facility to produce
5
electricity production set forth in the
13
electricity. and
6
contract, or. if there is no such esti-
14
"(B) any solid. nonhazardous. cellulosic
7
mate. the greatest annual quantity of
15
waste material. which is segregated from other
8
electricity sold to the utility under the
16
waste materials. and which is derived from-
9
contract in any of the calendar years
17
"(i) any of the following forest-related
10
1996. 1997. or 1998: and
18
resources: mill residues. precommercial
11
"(iii) such amendment provides that
19
thinnings. slush. and brush. but not includ-
12
energy and capacity in excess of the limits-
20
ing old-growth timber.
13
tion in clause (ii) may be-
21
"(ii) waste pallets. crates. and
14
"(I)- sold to the utility only at
22
dannage. manufacturing and construction
15
prices that do not exceed avoided cost
23
wood wastes (other than pressure-treated.
16
prices determined at the time of deliv-
24
chemically-treated. or painted wood
17
cry. or
25
wastes). and bundscape or right-of-way tree
IS
"(II) sold to a third party subject
19
TO 21 mutually agreed upon advance
55
20
I
notice 10 the utility.
trimmings. but not including unsegregated
2
21
For purposes of this subparagraph. avoided cost
municipal solid waste (garbage). or
22
3
prices shall be determined as provided for in 18
"(iii) agriculture sources, including or-
23
4
CFR 292.304(d)(1) or any successor regula-
chard tree crops. vineyard, grain. legumes,
24
5
ticn
sugar. and other crop by-products or resi-
6
dues."
54
7
(d) EFFECTIVE DATE-The amendments made by
1
(c) QUALIFIED FACILITIES INCLUDE ALL BIOMASS
8 this section shall apply to electricity produced after the
2 FACILITIES.-
9 date of the enactment of this Act.
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TAX POLICY
020
TAX. BUDGET & ACCOUNTING TEXT
L-20
(No. 102)
Summary, Highlights, Examples, and Revenue Estimates
For Tax Relief for Working Americans Act by Rep. Nancy Johnson (R-Conn.)
AT-A-GLANCE SUMMARY
THE TAX RELIEF FOR WORKING AMERICANS ACT
Sponsored by Rep. Nancy Johnson and Sens Grassley and Feinstein
Marriage Pensity Relief: Increase the standard deduction for married taxpayers to put them on
equal fooring with unmarried couples. (Cost: $27.6 billion)
Senior Citizen Relief: Allow seniors to eam up to $30,000 a year before losing any Social Security
benefits. (Cost: 53.4 billion)
Tax Breaks for Health Care Coverage Provide health care tax credits and deducrions for low- and
middle-income Americans. (Cost: 528.8 billion)
Long-Term Health Care: Create 3 tax deduction to reduce the COST of long-term care insurance and
a tax credit to help families cafe for a dependent relative in their home. (Cost: $9.1 billion)
Child Care and Education: Protect the HOPE college credit. Lifetime Learning credit, $500 Child
credit, and the Child and Dependent Care tax credit for middle-class taxpayers against the AMT.
(Cost: 56.6 billion) The bill would also improve the Child and Dependent Care Tax Credit and
provide tax relief for stay-at-home spouses. (Cost: 532 billion)
Student Loan Interest Deduction: Allow middle-income taxpayers to deduct student loan interest
payments on their federal taxes beyond the current 60-month payment. (Cost: $295 million)
Affordable Housing: Increase the annual limitation on state-authority to allocate Low Income
Housing Tax Credits from $1.25 per capita to $1.75 per capita and index the cap to inflation.
(Cost: $1.1 billion)
Economic Security for Farmers: Allow farmers to commibute up to 20% of their annual income to
tax-deferred accounts and cusure that income averaging does not trigger AMT. (Cost: $600 million)
Urban Revitalization and Preservation of Open Space. Allow for deduction of clean-up COSTS of
contaminated urban sites and increase the deduction for land donations to 50%. (Cost: 5700 million)
Research and Experimentation Tax Credit: Expires 6/30/99. Make permanent the R&D Tax
Credit and increase the Alternative Incremental Research Credit (Cost: $11 billion)
Work Opportunity Tax Credit: Expires 6/30/99. Make WOTC permanent (Cost: =2 billion)
Equal Treatmer: for American Companies (Exceptions under Subpart F): Expires 12/31/99.
Treat U.S.-based financial services companies the same as other U.S. -based companies operating in
overseas markets. (Cost: $4.6 billion)
Tax Credit for Electricity Produced from Renewable Resources; Expires 6/30/99. Extend the
placed in service deadline for wind energy and "closed-loop biomass" facilities until July 1. 2004.
(Cost: $300 million)
Total Bill Cost: $100 billion over 5 years and $271 billion over 10 years
5-27-99
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DAILY
TAX
BILL HIGHLIGHTS
Delp Meet the Cost of 11calth Care: (Cost $7 I billion)
REPORT
The Tax Relief for Working Americans Act
Current law provides the same IRX incentives for employer-subsidized long-term CAIC insurance and
Sponsored by ucp. Nancy Johnson, Sen. Charles Grassley, and Sen. Disnue Feinstein
employer-subsidized health insurance. Individuals can deduct the cost of long-term CABE insurance and long-
terms care services if flacir total health care spending enceeds 7 5% of Nicir adjusted gross income The bill
would create a fox deduction for Individuals who pay at least 50% of the cost of their qualified long-term
ISSN
Total DI Cost: $100 billion over 5 years
care insurance. The deduction would begin In 2000 at 50% and increase by 111% cach year that A person
malatains continuous coverage. Individuals Aged 60 and over world qualify for nn acceiented phose-in
0092-6884
schedule. The bill would also create a tax credit to help caregivers with the cost of cating for a dependent
Marriage Penalty Relief: (Cost: $27.6 billion)
relative in their home and individuals without caregivers with the cost of uninsured long-term care services.
TAX, BUDGET & ACCOUNTING TEXT
05/27/99 17:24 0236
The credit would be worth $500 in 2000 and increase to $700 in 2001 and $1000 in 2002
Under current law, a husband and wife filing jointly R.J taxed at a higher level than an unmarried
couple For 1998, the standard deduction was $4,250 for singles (totaling $8,500 for an unmarried couple)
versus $7,100 for spouses filing jointly. This resulted in married couples phying-tax on on additional $1,400
Preserve Tax Breaks for Child Care and Education:
in income that they would not pay if they were two single people filing. The bill would increase the
standard deduction for massied taxpayers to twice that of A single filet ($8,500 in 1998) putling them on
The individual alternative minimum tax (AMT) was originally intended to prevent upper-income
equal footing with unmarried couples.
taxpayers from using tax incentives and creative tax planning to avoid paying any tax. Unformulately, more
and more middle-income familles will be subject to the AMT R$ they take advantage of child and education
tax credits The bill would prevent the HOPE college credit, Lifetime Learning credit, $500 Child credit,
Senior Citizen Relief: (Cost: $3.4 billion)
and the Child and Dependent Care tax credit from triggering the AMT for middle-incume families.
(Cost $6.6.billion)
In 1999, seniors aged 65.69 can earn up to $15,500 without losing any Social Security benefits.
For each $3 in carnings above the limit, these seniors lose $1 In Social Security benefits. The earnings limit
The bill would also improve the Child and Dependent Care Tax Credit to help nicel the Recds of
is scheduled to increase in $30,000 by 2002. The 60 would speed up the increase to $30,000 in 2000.
low-and middle-inconte families by phasing-in an increase in the credit rate from 30% in 2000 to 50% in
2004 and Intreasing the income nl which a family can receive the maximum credit from $10,000 to $30,000.
TAX POLICY
The bill also provides needed assistance to parents who secrifice a second income to siny lune wis. their
Expand Tax Brenks for Health Care Coverage: (Cost: $28.8 billion)
children by providing thein with a credit 10 help with the costs of raising a child under the age of I ::. home.
(Cost: $3.2 billion)
Current law provides over $135 billion in tax deductions for employers who offer health insurance
to their workers. Individuals who purchase their own health insurance can only take a deduction if (heir
total licald care spending exceeds 7.5% of their adjusted gross income - A high threshold that effectively
Eliminate 60-Month Lunit on Student Loan Interest Deduction: (Cost $295 million)
eliminates the deduction for most people.
The Taxpayer Relief Act of 1997 contained a provision allowing middle-income taxpayers 10 deduct
The bill would create a 6(1% tax credit for low- and middle-income people who lack employer-
student loan interest payments. The deduction is being phased in and was limited to 60 monthly payments.
provided coverage and purchase individual or COBRA coverage. The credit would be capped at $1200
The bill allows taxpayers who meet the income guidelines established in the expayer Relief Act to deduct
for individuals namel $2400 for comples and families. Individuals with on adjusted gross income below
student loan interest payments on their federal income taxes beyond the current 60-manth payment
$10,000 and couples and Immilies with income below $70,000 would be eligible.
The bill would also create a tax deduction for people whose income is above the credit cap or who
Increase Affordable Housing: (Cost: $1.1 billian)
are eligible for employer-sponsored coverage The deduction would be above-the-line so that people would
not have to itemize their taxes to take advantage of it People who pay 50% of more of the cost of their
The bill would increase the annual limitation on state authority to allocate Lnw Income Inusing Tax
enployer-sponsored coverage could take the deduction for the amount that they pay. " would be phased-in
Credits from $1.25 per capita to $1.75 per capita and index the cap In inflation The Housing Credit is the
to reach 100% by 2004, starting All 60% in 2000 and Increasing by 10% each year. The deduction would
primary federal-state tool for building affordable rental housing ACTOSS the country. lie current cap lans
not delay the increase of the self-employed deduction (currently scheduled to increase to 100% in 2003),
not been adjusted since the program was created in 1986, over which time inflation has creded the Housing
but it would allow The self-employed to inke A 10% higher deduction in years 2000, 2001. and 2002. Both
Credit's purchasing power by nearly 50 percent Nationwide, demand for Housing Credits nutships supply
the credit and the deduction are for major medical insurance, not policies that provide limited 01
by more than three to one
supplemental coverage.
(No. 102)
5-27-99 BNA
L-21
021
5-27-99
L-22
Create Economic Security for Enrmers: (Cost: $600 million)
REAL-LIFE EXAMPLES
The bill gives fanners A funncial tool to mmuage the risk of price and income Auctuations inherent
in agriculture by enabling them to contribute up to 20% of their annual income In tax-deferred accounts.
THE TAX RELIEF FOR WORKING AMERICANS ACT
The funds would be taxed as regular income as long as they are withdrawn with. years the maney
is not withdrawn within five years, il is subject to an additional 10% penalty. This will encourage Cormers
Sponsored by Rep. Nancy Johnson and Sens. Grossley and Feinstein
to save some of their income during good years and allow use of the funds to supplained income during
(No. 102)
bad years The bill also ensures that income averaging does not increase a farmer's liability for the
alternative minimum Tax.
Marriage Penalty:
Encourage Urban Revitalization and Preservation of Open Space: (Cost $700
Inder current law, a married counte filing jointly, who each cain $30,000, would pay
$13,300 in federal takes Under this provision, this married couple would pay $12,708
a
million)
savings of $392
Disincentives In the tax code contribute to the decay of out unben Denters and the loss of our rural
Social Security Earnings Limit:
05/27/99 17:25 FAX 622 0238
landscapes The bill would allow for deduction of the clean-up costs of all contaminated urban siles. The
COPYRIGHT = 1999 BY THE OF NATIONAL INC., WASHINGTON, D.C. DTR ISSN
bill would also increase the deduction for land donations from 30% to 10%. Together, these provisions
encourage the relise of abandoned urban properties, promote the preservation of our farmland and
If a senior aged 67 CBFNS $30,000 in 2000, under current law, his Social Security benefits
greenspaces and combat urban sprawl.
would be reduced by $4,333. Under this provision, he would lose no Social Security benefits
Health Coverage:
Extend Tax Incentives to Grow the Economy:
Health Insurance Credit
Research and Experimentation Tax Credit (R&D Tax Credit): Expires 6/30/99. The bill would
make permanent the R&D Tax Credit, which provides U.S. companies a proven incentive 10 maintain and
(I) An individual with all Income of $30,000 who purchases bealth insurance al a cost nf
increase Their investment in research and development in the United States. It would also increase the FAICS
$2000 would be eligible for a $1,200 tax credit. Williout the credit her taxes would be $3,457
The credit would lower for taxes to $2,257
of the Alternative Incremental Research Credit (AIRC), which was enacted in 1996 to stimulate research
TAX
in companies ineligible for the traditional credit. (Cost: $11 billion)
(2) ^ family (two parents and two children) with an income of $60,000 who purchases a
Work Opportunity Tax Credit (WOTC): Expires 6/30/99, WOTC encourages employers to
health insurance policy at a cost of $4,000 would be eligible for A $2,100 tax credit. Without the
credit, their taxes would be $5,319. The credit would lower their taxes to $2,919.
participate In the national goal of moving people off of welfare and into the workforce by helping to offsel
the costs of recruiting, hiring, and training new workers. The bill would make WOTC permanent.
Health Insurance Deduction
(Cost $2 billion)
Equal Treatment for American Companies (Exceptions under Subpart F)I Expires 12/31/99.
(I).An individual with a grass income of $50,000 pays 60% of the cost of his employer-
Current law ensutes that foreign affiliates of U.S financial services companies are not taxed by the U.S. on
sponsored plan or $1,200 Without the deduction. his 1anable income is $13,050, and the Inx lic
their active trade of Imsiness income until that income is returned to the US parent company The bill
owes is $8,766. The deduction would lower his taxable income to $41,850. and his taxes to
would treat US -based financial services companies the same AS other U.S. based companies operating in
$8,430 a savings of $116.
overseas markets (Cost $41 billion)
(2) ^ couple (married filing jointly) with BII income of $75,000 purchases a health
Tax Credit for Electricity Produced from Renewable Resources; Explres 6/10/99, Current law
insurance policy at a cost of $5,000 Williout the deduction, their tanable income is $62,500. and
allows wind energy and "closed-loop biomass" Facilities placed in service before July I, 1999 10 claim ten
the tax they owe is $12.002 The deduction would lower their taxable income to $57,500. and
years of production tax credits The bitl would extend this placed in service deadline until July I. 2004.
their taxes 10 $10.602 A savings of $1,400
Additionally, the bill would expand the definition of biomess and make the credit available for five years for
electricity produced after the date of enactment from all qualified blomass facilities. and R partial credit for
Long Term Care Insurance Deduction
electricity produced by facilities that co-fire hiomass with coal (Cnst: $100 million)
An individual aged 55 who has purchased 8 LTC insurance pulicy at A cost of $1,2110 for 6
continuous years is eligible for 8 100% deduction for the cast of that prilicy If her invoice income
House Cosponsors:
Upton, Lazio, Bochlert, Greenwood, Leach, Shays, Ehlers,
is $40,000). the tax she news is $7,912 1 his deduction would lower Pier taxable income to
LoBiondo, Gilchrest, Bass, Hom, Bilbray, Kolbe, Quinn, Pryce,
$38,800, AND her tax to $7,576 I savings nf $336
0092-6884
TAX, BUDGET & ACCOUNTING TEXT
English, Foley, Frelinghuysen. Manzullo. and Ose.
022
05/27/99 THU 17:25 FAX 202 622 0236
TAX POLICY
1
023
(No. 102)
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TAX. BUDGET & ACCOUNTING TEXT
Long Term Care Credit
A coupie who are providing care for their mother in their home would be eligible for the
$1000 LTC tax credit If their texable income is $30.000, the tax they owe IS $4,504 The credit
would JOWE their taxes to $2.504
Alternative Minimum Tax:
(1) A couple with a teenage child ($500 child credit). a child In the first year of coliege
($1.500 HOPE scholarship). and a child in the last year of college (51,000 Lifetime Learning
Credit): total earnings of $65,000; $3,000 of interest and dividends: $500 each in IRA deductions.
would have a net regular tax liability of $4,487 (57.487. less $3.000 in credits). but ine AMT
increases this family's tax liability to $5,720. resulting in a loss of $1,233 in tax credits
(2) A head of household raxpayer. earning $45,000; with $500 in interest and dividends. a
5750 IRA deduction one child with 2 $1,500 HOPE scholarship and one child with a $1,000
Lifetime Learning Credit. This taxpayer loses $800 of credits due to the AMT.
THE TAX RELIEF FOR WORKING AMERICANS ACT
Sponsored by Rep. Nancy L.Johnson (R-CT), Sen. Charles E. Grassley (R-IA). and
Sen. Dianne Feinstein (D-CA)
Revenue Estimate
[Rounded in Billions of Dollars]
5-Year
10-Year
Marriage Penalty
$27.6
$61.4
Social Security Earnings Limit
$ 3.4
3.4
Health Insurance Credit
$ 92
$21.4
Health Insurance Deduction
$19.6
$58.6
Long Term Care Insurance Deduction
$ 4.0
$12.5
Long Term Care Credit
$ 5.1
$14.0
Personal Credits Against the AMT
$ 6.6
$323
Child Care
$ 32
$ 9.4
60-Month Student Loan Interest Deduction
S 0.3
$ 0.7
Low Income Housing T-x Credit
$ 1.1
$ 6.6
Farmer Accounts
S 0.6
$ 0.9
Farmer Income Averaging/AMT
*
.
Contaminated Sites Clean-up Deduction
$ 0.6
S 1.7
Land Conservation Deduction
$ 0.1
$ 0.2
R&D Tax Credit
$11.0
$27.2
WOTC
$ 2.0
$ 4,5
Exception from Subpart F
$ 4.6
$15.3
Wind/Biomass Tax Credit
$ 0.3
$ 1.0
TOTAL:
$100 billion
$271 billion
* Less than $50 million
DAILY TAX REPORT ISSN 0092-6884
BNA 5-27-99