Reforestation Tax Act of 1998 - Amends the Internal Revenue Code to allow a deduction to a taxpayer who has a qualified timber gain in an amount equal to the qualified percentage of such gain. Decreases the amortization period for reforestation expenditures.
[Congressional Bills 105th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4126 Introduced in House (IH)]
105th CONGRESS
2d Session
H. R. 4126
To amend the Internal Revenue Code of 1986 to modify certain provisions
relating to the treatment of forestry activities.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
June 24, 1998
Ms. Dunn 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 certain provisions
relating to the treatment of forestry activities.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Reforestation Tax Act of 1998''.
SEC. 2. PARTIAL INFLATION ADJUSTMENT FOR TIMBER.
(a) In General.--Part I of subchapter P of chapter 1 of the
Internal Revenue Code of 1986 (relating to treatment of capital gains)
is amended by adding at the end the following new section:
``SEC. 1203. PARTIAL INFLATION ADJUSTMENT FOR TIMBER.
``(a) In General.--At the election of any taxpayer who has
qualified timber gain for any taxable year, there shall be allowed as a
deduction from gross income an amount equal to the qualified percentage
of such gain.
``(b) Qualified Timber Gain.--For purposes of this section, the
term `qualified timber gain' means long-term capital gain from the sale
or exchange of timber.
``(c) Qualified Percentage.--For purposes of this section, the term
`qualified percentage' means the percentage (not exceeding 50 percent)
determined by multiplying--
``(1) 3 percent, by
``(2) the number of years in the holding period of the
taxpayer with respect to the timber.
``(d) Estates and Trusts.--In the case of an estate or trust, the
deduction under subsection (a) shall be computed by excluding the
portion of (if any) the gains for the taxable year from sales or
exchanges of capital assets which, under sections 652 and 662 (relating
to inclusions of amounts in gross income of beneficiaries of trusts),
is includible by the income beneficiaries as gain derived from the sale
or exchange of capital assets.''
(b) Coordination With Maximum Rates of Tax on Net Capital Gains.--
(1) Subsection (h)(4) of section 1 of such Code (relating
to maximum capital gains rate) is amended by striking ``and''
at the end of subparagraph (C), by striking the period at the
end of subparagraph (D) and inserting ``, and'', and by adding
after subparagraph (D) the following new subparagraph:
``(E) qualified timber gain with respect to which
an election is in effect under section 1203.''
(2) Subsection (a) of section 1201 of such Code (relating
to the alternative tax for corporations) is amended by
inserting at the end thereof the following new sentence:
``For purposes of this section, net capital gain shall be determined
without regard to qualified timber gain (as defined in section 1203)
with respect to which an election is in effect under section 1203.''
(c) Allowance of Deduction in Computing Adjusted Gross Income.--
Subsection (a) of section 62 of such Code (relating to definition of
adjusted gross income) is amended by inserting after paragraph (17) the
following new paragraph:
``(18) Partial inflation adjustment for timber.--The
deduction allowed by section 1203.''
(d) Technical Amendments.--
(1) Subparagraph (B) of section 172(d)(2) of such Code is
amended to read as follows:
``(B) the exclusion under section 1202 and the
deduction under section 1203 shall not be allowed.''
(2) The last sentence of section 453A(c)(3) of such Code is
amended by striking ``(whichever is appropriate)'' and
inserting ``or the deduction under section 1203 (whichever is
appropriate)''.
(3) Section 641(d)(2)(C) of such Code is amended by
inserting after clause (iii) the following new clause:
``(iv) The deduction under section 1203.''
(4) The first sentence of section 642(c)(4) of such Code is
amended to read as follows: ``To the extent that the amount
otherwise allowable as a deduction under this subsection
consists of gain described in section 1202(a) or qualified
timber gain (as defined in section 1203(b)), proper adjustment
shall be made for any exclusion allowable under section 1202,
and any deduction allowable under section 1203, to the estate
or trust.''
(5) The last sentence of section 643(a)(3) of such Code is
amended to read as follows: ``The exclusion under section 1202
and the deduction under section 1203 shall not be taken into
account.''
(6) Subparagraph (C) of section 643(a)(6) of such Code is
amended by inserting ``(i)'' before ``there shall'' and by
inserting before the period ``, and (ii) the deduction under
section 1203 (relating to partial inflation adjustment for
timber) shall not be taken into account''.
(7) Paragraph (4) of section 691(c) of such Code is amended
by inserting ``1203,'' after ``1202,''.
(8) The second sentence of paragraph (2) of section 871(a)
of such Code is amended by striking ``section 1202'' and
inserting ``sections 1202 and 1203''.
(e) Clerical Amendment.--The table of sections for part I of
subchapter P of chapter 1 of such Code is amended by adding at the end
the following new item:
``Sec. 1203. Partial inflation adjustment
for timber.''
(f) Effective Date.--The amendments made by this section shall
apply to sales or exchanges after December 31, 1997.
SEC. 3. AMORTIZATION OF REFORESTATION EXPENDITURES AND REFORESTATION
TAX CREDIT.
(a) Decrease in Amortization Period.--
(1) In general.--Section 194(a) of the Internal Revenue
Code of 1986 is amended by striking ``84 months'' and inserting
``60 months''.
(2) Conforming amendment.--Section 194(a) of such Code is
amended by striking ``84-month period'' and inserting ``60-
month period''.
(b) Remove Cap on Amortizable Basis.--
(1) Section 194 of such Code is amended by striking
subsection (b) and by redesignating subsections (c) and (d) as
subsections (b) and (c), respectively.
(2) Subsection (b) of section 194 of such Code (as
redesignated by paragraph (1)) is amended by striking paragraph
(4).
(3) Paragraph (1) of section 48(b) of such Code is amended
by striking ``(after the application of section 194(b)(1))''.
(c) Effective Date.--The amendments made by this section shall
apply to additions to capital account made after December 31, 1997.
<all>
Introduced in House
Introduced in House
Referred to the House Committee on Ways and Means.
Sponsor introductory remarks on measure. (CR E1222-1223)
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