Amends the Internal Revenue Code, with respect to qualified State tuition programs to, among other things: (1) provide for the exclusion from gross income of distributions used for qualified higher education expenses; (2) include room and board in the definition of qualified higher education expenses; and (3) permit income from redeemed U.S. savings bonds to be used to contribute, without including such income in gross income (subject to income limitations), to a qualified State tuition program.
[Congressional Bills 105th Congress]
[From the U.S. Government Printing Office]
[H.R. 1355 Introduced in House (IH)]
105th CONGRESS
1st Session
H. R. 1355
To amend the Internal Revenue Code of 1986 to modify the tax treatment
of qualified State tuition programs.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
April 16, 1997
Mrs. Thurman (for herself and Mr. Shaw) introduced the following bill;
which was referred to the Committee on Ways and Means
_______________________________________________________________________
A BILL
To amend the Internal Revenue Code of 1986 to modify the tax treatment
of qualified State tuition programs.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. MODIFICATIONS OF TAX TREATMENT OF QUALIFIED STATE TUITION
PROGRAMS.
(a) Exclusion of Distributions Used for Educational Purposes.--
Subparagraph (B) of section 529(c)(3) of the Internal Revenue Code of
1986 (relating to treatment of distributions) is amended to read as
follows:
``(B) Distributions for qualified higher education
expenses.--Subparagraph (A) shall not apply to any
distribution to the extent--
``(i) the distribution is used exclusively
to pay qualified higher education expenses of
the distributee, or
``(ii) the distribution consists of
providing a benefit to the distributee which,
if paid for by the distributee, would
constitute payment of a qualified higher
education expense.''
(b) Qualified Higher Education Expenses To Include Room and
Board.--Section 529(e)(3) of the Internal Revenue Code of 1986
(defining qualified higher education expenses) is amended by adding at
the end the following: ``Such term shall also include reasonable costs
(as determined under the qualified State tuition program) incurred by
the designated beneficiary for room and board while attending such
institution.''
(c) Additional Modifications.--
(1) Member of family.--Paragraph (2) of section 529(e) of
the Internal Revenue Code of 1986 (relating to other
definitions and special rules) is amended to read as follows:
``(2) Member of family.--The term `member of family'
means--
``(A) an individual who bears a relationship to
another individual which is a relationship described in
paragraphs (1) through (8) of section 152(a), and
``(B) a spouse of any individual described in
subparagraph (A).''
(2) Eligible educational institution.--Section 529(e) of
such Code is amended--
(A) in paragraph (3), by striking ``(as defined in
section 135(c)(3))'' and inserting ``(within the
meaning of paragraph (5))'', and
(B) by adding at the end the following:
``(5) Eligible educational institution.--The term `eligible
educational institution' means an institution--
``(A) which is described in section 481 of the
Higher Education Act of 1965 (20 U.S.C. 1088), as in
effect on the date of the enactment of this paragraph,
and
``(B) which is eligible to participate in a program
under title IV of such Act.''
(3) Technical amendments.--
(A) Subparagraph (B) of section 529(e)(1) of such
Code is amended by striking ``subsection (c)(2)(C)''
and inserting ``subsection (c)(3)(C)''.
(B) Subparagraph (C) of section 529(e)(1) of such
Code is amended by inserting ``(or agency or
instrumentality thereof)'' after ``State or local
government''.
(C) Paragraph (2) of section 1806(c) of the Small
Business Job Protection Act of 1996 is amended by
striking so much of the first sentence as follows
subparagraph (B)(ii) and inserting the following:
``then such program (as in effect on August 20, 1996) shall be
treated as a qualified State tuition program with respect to
contributions (and earnings allocable thereto) pursuant to
contracts entered into under such program before the first date
on which such program meets such requirements (determined
without regard to this paragraph) and the provisions of such
program (as so in effect) shall apply in lieu of section 529(b)
of the Internal Revenue Code of 1986 with respect to such
contributions and earnings.''
(d) Coordination With Education Savings Bond.--Section 135(c)(2) of
the Internal Revenue Code of 1986 (defining qualified higher education
expenses) is amended by adding at the end the following:
``(C) Contributions to qualified state tuition
program.--Such term shall include any contribution to a
qualified State tuition program (as defined in section
529) on behalf of a designated beneficiary (as so
defined) who is an individual described in subparagraph
(A).''
(e) Effective Dates.--
(1) In general.--Except as provided in paragraph (2), the
amendments made by this section shall apply to taxable years
beginning after December 31, 1996.
(2) Additional modifications.--The amendments made by
subsection (c) shall take effect as if included in the
amendments made by, and the provisions of, section 1806 of the
Small Business Job Protection Act of 1996.
<all>
Introduced in House
Introduced in House
Referred to the House Committee on Ways and Means.
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