TABLE OF CONTENTS:
Title I: Family Relief
Subtitle A: Tax Relief
Subtitle B: Relief from Social Security Earning Test
Title II: Business Relief
Title III: Savings and Investment
Title IV: Education
Lifetime Tax Relief Act of 1999 - Title I: Family Relief - Subtitle A: Tax Relief - Amends the Internal Revenue Code (IRC) to: (1) set the basic standard deduction for married individuals at twice the deduction for unmarried individuals; (2) increase the personal exemption from $2,000 to $3,500; (3) reduce individual income taxes by increasing the amounts of income subject to tax at the 15 percent rate; and (4) fully allow nonrefundable personal credits against regular tax liability during 1999 and 2000 (currently, 1998).
Subtitle B: Relief From Social Security Earning Test - Eliminates the earnings test for individuals of retirement age.
Title II: Business Relief - Provides for the phaseout of subtitle B (Estate and Gift Taxes) of the IRC with the total repeal of such subtitle being effective January 1, 2010.
Makes permanent the: (1) research credit; (2) work opportunity credit; and (3) subpart F (relating to special rule for income derived in the active conduct of banking, financing, or similar businesses) exemption for active financing income.
Provides for the deduction of 100 percent of the health insurance costs of self-employed individuals.
Increases from 50 to 100 percent the amount of gain excluded from the sale certain small business stock. Reduces from five to three years the holding period applicable to such a sale. Makes such exclusion available to corporations. Makes the stock of larger businesses eligible. Doubles the annual limitation on incentive stock options.
Title III: Savings and Investment - Excludes from the gross income of an individual up to $1,000 of net capital gain.
Increases the maximum amount of the IRA deduction to $3,000.
Doubles the elective deferral limit if an employee's spouse is not participating in elective deferral plans.
Title IV: Education - Set forth provisions concerning: (1) financing school construction; (2) the exclusion from income of education distributions from qualified tuition programs; and (3) coverage of private tuition programs.
[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1084 Introduced in House (IH)]
106th CONGRESS
1st Session
H. R. 1084
To amend the Internal Revenue Code of 1986 to provide tax relief, to
encourage savings and investment, and to provide incentives for public
school construction, and to amend the Social Security Act to provide
relief from the earnings test.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
March 11, 1999
Ms. Dunn (for herself, Mr. Weller, Mr. Gillmor, Mr. Hill of Montana,
Mr. Lewis of California, Mr. Hostettler, Mrs. Fowler, Mr. Spence, Mr.
Cunningham, and Mrs. Biggert) 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 provide tax relief, to
encourage savings and investment, and to provide incentives for public
school construction, and to amend the Social Security Act to provide
relief from the earnings test.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
(a) Short Title.--This Act may be cited as the ``Lifetime Tax
Relief Act of 1999''.
(b) Amendment of 1986 Code.--Except as otherwise expressly
provided, whenever in this Act an amendment or repeal is expressed in
terms of an amendment to, or repeal of, a section or other provision,
the reference shall be considered to be made to a section or other
provision of the Internal Revenue Code of 1986.
(c) Section 15 Not To Apply.--No amendment made by section 103
shall be treated as a change in a rate of tax for purposes of section
15 of the Internal Revenue Code of 1986 .
(d) Table of Contents.--
Sec. 1. Short title.
TITLE I--FAMILY RELIEF
Subtitle A--Tax Relief
Sec. 101. Basic standard deduction for married individuals to be twice
the deduction for unmarried individuals.
Sec. 102. Increase in personal exemption.
Sec. 103. Reduction of individual income taxes by increasing amounts of
income subject to tax at the 15 percent
rate.
Sec. 104. Nonrefundable personal credits fully allowed against regular
tax liability during 1999 and 2000.
Subtitle B--Relief From Social Security Earning Test
Sec. 111. Elimination of earnings test for individuals who have
attained retirement age.
Sec. 112. Conforming amendments eliminating the special exempt amount
for individuals who have attained
retirement age.
Sec. 113. Additional conforming amendments.
Sec. 114. Effective date.
TITLE II--BUSINESS RELIEF
Sec. 201. Phaseout of estate and gift taxes.
Sec. 202. Modification and permanent extension of research credit.
Sec. 203. Work opportunity credit made permanent.
Sec. 204. Permanent subpart F exemption for active financing income.
Sec. 205. Deduction for health insurance costs of self-employed
individuals increased to 100 percent.
Sec. 206. Increased exclusion and other modifications applicable to
qualified small business stock.
Sec. 207. Increased exclusion for incentive stock options; exception
from alternative minimum tax.
TITLE III--SAVINGS AND INVESTMENT
Sec. 301. Exclusion from gross income of certain amounts of the net
capital gain of individuals.
Sec. 302. Increase in maximum amount of deduction for IRAs.
Sec. 303. Higher elective deferral limit if employee's spouse is not a
participant in section 401(k) plan.
TITLE IV--EDUCATION
Sec. 401. Amendments to encourage additional school construction.
Sec. 402. Modification of arbitrage rebate rules applicable to public
school construction bonds.
Sec. 403. Additional increase in arbitrage rebate exception for
governmental bonds used to finance public
school facilities.
Sec. 404. Exclusion from gross income of education distributions from
qualified tuition programs; coverage of
private programs.
TITLE I--FAMILY RELIEF
Subtitle A--Tax Relief
SEC. 101. BASIC STANDARD DEDUCTION FOR MARRIED INDIVIDUALS TO BE TWICE
THE DEDUCTION FOR UNMARRIED INDIVIDUALS.
(a) In General.--Paragraph (2) of section 63(c) (relating to
standard deduction) is amended--
(1) by striking ``$5,000'' in subparagraph (A) and
inserting ``twice the dollar amount in effect under
subparagraph (C) for the taxable year'',
(2) by adding ``or'' at the end of subparagraph (B),
(3) by striking ``in the case of'' and all that follows in
subparagraph (C) and inserting ``in any other case.'', and
(4) by striking subparagraph (D).
(b) Technical Amendment.--Subparagraph (B) of section 1(f)(6) is
amended by striking ``(other than with'' and all that follows through
``shall be applied'' and inserting ``(other than sections 63(c)(4) and
151(d)(4)(A)) shall be applied''.
(c) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 1999.
SEC. 102. INCREASE IN PERSONAL EXEMPTION.
(a) In General.--Paragraph (1) of section 151(d) (relating to
exemption amount) is amended by striking ``$2,000'' and inserting
``$3,500''.
(b) Conforming Amendment.--Subparagraph (A) of section 151(d)(4) is
amended to read as follows:
``(A) Adjustment to basic amount of exemption.--In
the case of any taxable year beginning in a calendar
year after 2000, the dollar amount contained in
paragraph (1) shall be increased by an amount equal
to--
``(i) such dollar amount, multiplied by
``(ii) the cost-of-living adjustment
determined under section 1(f)(3) for the
calendar year in which the taxable year
begins.''.
(c) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 1999.
SEC. 103. REDUCTION OF INDIVIDUAL INCOME TAXES BY INCREASING AMOUNTS OF
INCOME SUBJECT TO TAX AT THE 15 PERCENT RATE.
(a) General Rule.--Section 1 (relating to tax imposed) is amended
by striking subsections (a) through (e) and inserting the following:
``(a) Married Individuals Filing Joint Returns and Surviving
Spouses.--There is hereby imposed on the taxable income of every
married individual (as defined in section 7703) who makes a single
return jointly with his spouse under section 6013, and every surviving
spouse (as defined in section 2(a)), a tax determined in accordance
with the following tables:
``(1) For taxable years beginning in 2000.--
``If taxable income is: The tax is:
Not over $53,560...............
15% of taxable income.
Over $53,560 but not over
$124,900.
$8,034, plus 28% of the excess
over $53,560.
Over $124,900 but not over
$260,500.
$28,009.20, plus 31% of the
excess over $124,900.
Over $260,500 but not over
$566,300.
$70,045.20, plus 36% of the
excess over $260,500.
Over $566,300..................
$180,133.20, plus 39.6% of the
excess over $566,300.
``(2) For taxable years beginning in 2001.--
``If taxable income is: The tax is:
Not over $55,105...............
15% of taxable income.
Over $55,105 but not over
$124,900.
$8,265.75, plus 28% of the
excess over $55,105.
Over $124,900 but not over
$260,500.
$27,808.35, plus 31% of the
excess over $124,900.
Over $260,500 but not over
$566,300.
$69,844.35, plus 36% of the
excess over $260,500.
Over $566,300..................
$179,932.35, plus 39.6% of the
excess over $566,300.
``(3) For taxable years beginning after 2001.--
``If taxable income is: The tax is:
Not over $56,650...............
15% of taxable income.
Over $56,650 but not over
$124,900.
$8,497.50, plus 28% of the
excess over $56,650.
Over $124,900 but not over
$260,500.
$27,607.50, plus 31% of the
excess over $124,900.
Over $260,500 but not over
$566,300.
$69,643.50, plus 36% of the
excess over $260,500.
Over $566,300..................
$179,731.50, plus 39.6% of the
excess over $566,300.
``(b) Heads of Households.--There is hereby imposed on the taxable
income of every head of a household (as defined in section 2(b)) a tax
determined in accordance with the following tables:
``(1) For taxable years beginning in 2000.--
``If taxable income is: The tax is:
Not over $35,932...............
15% of taxable income.
Over $35,932 but not over
$89,150.
$5,389.80, plus 28% of the
excess over $35,932.
Over $89,150 but not over
$144,400.
$20,290.84, plus 31% of the
excess over $89,150.
Over $144,400 but not over
$283,150.
$37,418.34, plus 36% of the
excess over $144,400.
Over $283,150..................
$87,368.34, plus 39.6% of the
excess over $283,150.
``(2) For taxable years beginning in 2001.--
``If taxable income is: The tax is:
Not over $36,969...............
15% of taxable income.
Over $36,969 but not over
$89,150.
$5,545.35, plus 28% of the
excess over $36,969.
Over $89,150 but not over
$144,400.
$20,156.03, plus 31% of the
excess over $89,150.
Over $144,400 but not over
$283,150.
$37,283.53, plus 36% of the
excess over $144,400.
Over $283,150..................
$87,233.53, plus 39.6% of the
excess over $283,150.
``(3) For taxable years beginning after 2001.--
``If taxable income is: The tax is:
Not over $38,514...............
15% of taxable income.
Over $38,514 but not over
$89,150.
$5,777.10, plus 28% of the
excess over $38,514.
Over $89,150 but not over
$144,400.
$19,955.18, plus 31% of the
excess over $89,150.
Over $144,400 but not over
$283,150.
$37,082.68, plus 36% of the
excess over $144,400.
Over $283,150..................
$87,032.68, plus 39.6% of the
excess over $283,150.
``(c) Other Individuals.--There is hereby imposed on the taxable
income of every individual (other than an individual to whom subsection
(a) or (b) applies) a tax determined in accordance with the following
tables:
``(1) For taxable years beginning in 2000.--
``If taxable income is: The tax is:
Not over $26,780...............
15% of taxable income.
Over $26,780 but not over
$62,450.
$4,017, plus 28% of the excess
over $26,780.
Over $62,450 but not over
$130,250.
$14,004.60, plus 31% of the
excess over $62,450.
Over $130,250 but not over
$283,150.
$35,022.60, plus 36% of the
excess over $130,250.
Over $283,150..................
$90,066.60, plus 39.6% of the
excess over $283,150.
``(2) For taxable years beginning in 2001.--
``If taxable income is: The tax is:
Not over $27,553...............
15% of taxable income.
Over $27,553 but not over
$62,450.
$4,132.95, plus 28% of the
excess over $27,553.
Over $62,450 but not over
$130,250.
$13,904.11, plus 31% of the
excess over $62,450.
Over $130,250 but not over
$283,150.
$34,922.11, plus 36% of the
excess over $130,250.
Over $283,150..................
$89,966.11, plus 39.6% of the
excess over $283,150.
``(3) For taxable years beginning after 2001.--
``If taxable income is: The tax is:
Not over $28,326...............
15% of taxable income.
Over $28,326 but not over
$62,450.
$4,248.90, plus 28% of the
excess over $28,326.
Over $62,450 but not over
$130,250.
$13,803.62, plus 31% of the
excess over $62,450.
Over $130,250 but not over
$283,150.
$34,821.62, plus 36% of the
excess over $130,250.
Over $283,150..................
$89,865.62, plus 39.6% of the
excess over $283,150.
``(d) Estates and Trusts.--There is hereby imposed on the taxable
income of every estate and every trust taxable under this subsection a
tax determined in accordance with the following tables:
``(1) For taxable years beginning in 2000.--
``If taxable income is: The tax is:
Not over $1,820................
15% of taxable income.
Over $1,820 but not over $4,050
$273, plus 28% of the excess
over $1,820.
Over $4,050 but not over $6,200
$897.40, plus 31% of the excess
over $4,050.
Over $6,200 but not over $8,450
$1,563.90, plus 36% of the
excess over $6,200.
Over $8,450....................
$2,373.90, plus 39.6% of the
excess over $8,450.
``(2) For taxable years beginning in 2001.--
``If taxable income is: The tax is:
Not over $1,873................
15% of taxable income.
Over $1,873 but not over $4,050
$280.95, plus 28% of the excess
over $1,873.
Over $4,050 but not over $6,200
$890.51, plus 31% of the excess
over $4,050.
Over $6,200 but not over $8,450
$1,557.01, plus 36% of the
excess over $6,200.
Over $8,450....................
$2,367.01, plus 39.6% of the
excess over $8,450.
``(3) For taxable years beginning after 2001.--
``If taxable income is: The tax is:
Not over $1,926................
15% of taxable income.
Over $1,926 but not over $4,050
$288.90, plus 28% of the excess
over $1,926.
Over $4,050 but not over $6,200
$883.62, plus 31% of the excess
over $4,050.
Over $6,200 but not over $8,450
$1,550.12, plus 36% of the
excess over $6,200.
Over $8,450....................
$2,360.12, plus 39.6% of the
excess over $8,450.''.
(b) Inflation Adjustment To Apply in Determining Rates After
1999.--Subsection (f) of section 1 is amended--
(1) by striking ``1993'' in paragraph (1) and inserting
``1999'',
(2) by striking ``1992'' in paragraph (3)(B) and inserting
``1998'', and
(3) by striking paragraph (7).
(c) Conforming Amendments.--
(1) The following provisions are each amended by striking
``1992'' and inserting ``1998'' each place it appears:
(A) Section 25A(h).
(B) Section 32(j)(1)(B).
(C) Section 41(e)(5)(C).
(D) Section 59(j)(2)(B).
(E) Section 63(c)(4)(B).
(F) Section 68(b)(2)(B).
(G) Section 135(b)(2)(B)(ii).
(H) Section 151(d)(4).
(I) Section 220(g)(2).
(J) Section 221(g)(1)(B).
(K) Section 512(d)(2)(B).
(L) Section 513(h)(2)(C)(ii).
(M) Section 685(c)(3)(B).
(N) Section 877(a)(2).
(O) Section 911(b)(2)(D)(ii)(II).
(P) Section 2032A(a)(3)(B).
(Q) Section 2503(b)(2)(B).
(R) Section 2631(c)(1)(B).
(S) Section 4001(e)(1)(B).
(T) Section 4261(e)(4)(A)(ii).
(U) Section 6039F(d).
(V) Section 6323(i)(4)(B).
(W) Section 6601(j)(3)(B).
(X) Section 7430(c)(1).
(2) Subclause (II) of section 42(h)(6)(G)(i) is amended by
striking ``1987'' and inserting ``1998''.
(3) Subparagraph (B) of section 132(f)(6) is amended by
inserting before the period ``, determined by substituting
`calendar year 1992' for `calendar year 1998' in subparagraph
(B) thereof''.
(d) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 1999.
SEC. 104. NONREFUNDABLE PERSONAL CREDITS FULLY ALLOWED AGAINST REGULAR
TAX LIABILITY DURING 1999 AND 2000.
(a) In General.--The last sentence of section 26(a) is by striking
``1998'' and inserting ``1998, 1999, or 2000''.
(b) Effective Date.--The amendment made by this section shall apply
to taxable years beginning after December 31, 1999.
Subtitle B--Relief From Social Security Earning Test
SEC. 111. ELIMINATION OF EARNINGS TEST FOR INDIVIDUALS WHO HAVE
ATTAINED RETIREMENT AGE.
Section 203 of the Social Security Act (42 U.S.C. 403) is amended--
(1) in subsection (c)(1), by striking ``the age of
seventy'' and inserting ``retirement age (as defined in section
216(l))'';
(2) in paragraphs (1)(A) and (2) of subsection (d), by
striking ``the age of seventy'' each place it appears and
inserting ``retirement age (as defined in section 216(l))'';
(3) in subsection (f)(1)(B), by striking ``was age seventy
or over'' and inserting ``was at or above retirement age (as
defined in section 216(l))'';
(4) in subsection (f)(3)--
(A) by striking ``33\1/3\ percent'' and all that
follows through ``any other individual,'' and inserting
``50 percent of such individual's earnings for such
year in excess of the product of the exempt amount as
determined under paragraph (8),''; and
(B) by striking ``age 70'' and inserting
``retirement age (as defined in section 216(l))'';
(5) in subsection (h)(1)(A), by striking ``age 70'' each
place it appears and inserting ``retirement age (as defined in
section 216(l))''; and
(6) in subsection (j)--
(A) in the heading, by striking ``Age Seventy'' and
inserting ``Retirement Age''; and
(B) by striking ``seventy years of age'' and
inserting ``having attained retirement age (as defined
in section 216(l))''.
SEC. 112. CONFORMING AMENDMENTS ELIMINATING THE SPECIAL EXEMPT AMOUNT
FOR INDIVIDUALS WHO HAVE ATTAINED RETIREMENT AGE.
(a) Uniform Exempt Amount.--Section 203(f)(8)(A) of the Social
Security Act (42 U.S.C. 403(f)(8)(A)) is amended by striking ``the new
exempt amounts (separately stated for individuals described in
subparagraph (D) and for other individuals) which are to be
applicable'' and inserting ``a new exempt amount which shall be
applicable''.
(b) Conforming Amendments.--Section 203(f)(8)(B) of the Social
Security Act (42 U.S.C. 403(f)(8)(B)) is amended--
(1) in the matter preceding clause (i), by striking
``Except'' and all that follows through ``whichever'' and
inserting ``The exempt amount which is applicable for each
month of a particular taxable year shall be whichever'';
(2) in clauses (i) and (ii), by striking ``corresponding''
each place it appears; and
(3) in the last sentence, by striking ``an exempt amount''
and inserting ``the exempt amount''.
(c) Repeal of Basis for Computation of Special Exempt Amount.--
Section 203(f)(8)(D) of the Social Security Act (42 U.S.C.
403(f)(8)(D)) is repealed.
SEC. 113. ADDITIONAL CONFORMING AMENDMENTS.
(a) Elimination of Redundant References to Retirement Age.--Section
203 of the Social Security Act (42 U.S.C. 403) is amended--
(1) in subsection (c), in the last sentence, by striking
``nor shall any deduction'' and all that follows and inserting
``nor shall any deduction be made under this subsection from
any widow's or widower's insurance benefit if the widow,
surviving divorced wife, widower, or surviving divorced husband
involved became entitled to such benefit prior to attaining age
60.''; and
(2) in subsection (f)(1), by striking clause (D) and
inserting the following: ``(D) for which such individual is
entitled to widow's or widower's insurance benefits if such
individual became so entitled prior to attaining age 60,''.
(b) Conforming Amendment to Provisions for Determining Amount of
Increase on Account of Delayed Retirement.--Section 202(w)(2)(B)(ii) of
the Social Security Act (42 U.S.C. 402(w)(2)(B)(ii)) is amended--
(1) by striking ``either''; and
(2) by striking ``or suffered deductions under section
203(b) or 203(c) in amounts equal to the amount of such
benefit''.
(c) Provisions Relating to Earnings Taken Into Account in
Determining Substantial Gainful Activity of Blind Individuals.--The
second sentence of section 223(d)(4) of such Act (42 U.S.C. 423(d)(4))
is amended by striking ``if section 102 of the Senior Citizens' Right
to Work Act of 1996 had not been enacted'' and inserting the following:
``if the amendments to section 203 made by section 102 of the Senior
Citizens' Right to Work Act of 1996 and by subtitle B of title I of the
Lifetime Tax Relief Act of 1999 had not been enacted''.
SEC. 114. EFFECTIVE DATE.
The amendments and repeals made by this subtitle shall apply with
respect to taxable years ending after December 31, 1999.
TITLE II--BUSINESS RELIEF
SEC. 201. PHASEOUT OF ESTATE AND GIFT TAXES.
(a) Repeal of Estate and Gift Taxes.--Subtitle B (relating to
estate and gift taxes) is repealed effective with respect to estates of
decedents dying, and gifts made, after December 31, 2009.
(b) Phaseout of Tax.--Subsection (c) of section 2001 (relating to
imposition and rate of tax) is amended by adding at the end the
following new paragraph:
``(3) Phaseout of tax.--In the case of estates of decedents
dying, and gifts made, during any calendar year after 1999 and
before 2010--
``(A) In general.--The tentative tax under this
subsection shall be determined by using a table
prescribed by the Secretary (in lieu of using the table
contained in paragraph (1)) which is the same as such
table; except that--
``(i) each of the rates of tax shall be
reduced (but not below zero) by the number of
percentage points determined under subparagraph
(B), and
``(ii) the amounts setting forth the tax
shall be adjusted to the extent necessary to
reflect the adjustments under clause (i).
``(B) Percentage points of reduction.--
The number of
``For calendar year: percentage points is:
2000.......................................... 5
2001.......................................... 10
2002.......................................... 15
2003.......................................... 20
2004.......................................... 25
2005.......................................... 30
2006.......................................... 35
2007.......................................... 40
2008.......................................... 45
2009.......................................... 50.
``(C) Coordination with paragraph (2).--Paragraph
(2) shall be applied by reducing the 55 percent
percentage contained therein by the number of
percentage points determined for such calendar year
under subparagraph (B).
``(D) Coordination with credit for state death
taxes.--Rules similar to the rules of subparagraph (A)
shall apply to the table contained in section 2011(b)
except that the number of percentage points referred to
in subparagraph (A)(i) shall be determined under the
following table:
The number of
``For calendar year: percentage points is:
2000.......................................... 1\1/2\
2001.......................................... 3
2002.......................................... 4\1/2\
2003.......................................... 6
2004.......................................... 7\1/2\
2005.......................................... 9
2006.......................................... 10\1/2\
2007.......................................... 12
2008.......................................... 13\1/2\
2009.......................................... 15.''
(c) Effective Date.--The amendments made by this section shall
apply to estates of decedents dying, and gifts made, after December 31,
1999.
SEC. 202. MODIFICATION AND PERMANENT EXTENSION OF RESEARCH CREDIT.
(a) Credit Made Permanent.--
(1) In general.--Section 41 (relating to credit for
increasing research activities) is amended by striking
subsection (h).
(2) Conforming amendment.--Paragraph (1) of section 45C(b)
is amended by striking subparagraph (D).
(b) Increase in Alternative Incremental Credit Rates.--Subparagraph
(A) of section 41(c)(4) is amended--
(1) by striking ``1.65 percent'' in clause (i) and
inserting ``2.65 percent'',
(2) by striking ``2.2 percent'' in clause (ii) and
inserting ``3.2 percent'', and
(3) by striking ``2.75 percent'' in clause (iii) and
inserting ``3.75 percent''.
(c) Effective Date.--The amendments made by this section shall
apply to amounts paid or incurred after June 30, 1999.
SEC. 203. WORK OPPORTUNITY CREDIT MADE PERMANENT.
(a) In General.--Subsection (c) of section 51 is amended by
striking paragraph (4).
(b) Effective Date.--The amendment made by subsection (a) shall
apply to individuals who begin work for the employer after June 30,
1999.
SEC. 204. PERMANENT SUBPART F EXEMPTION FOR ACTIVE FINANCING INCOME.
(a) Banking, Financing, or Similar Businesses.--Subsection (h) of
section 954 (relating to special rule for income derived in the active
conduct of banking, financing, or similar businesses) is amended by
striking paragraph (9).
(b) Insurance Businesses.--Subsection (a) of section 953 (defining
insurance income) is amended by striking paragraph (10) and by
redesignating paragraph (11) as paragraph (10).
(c) Effective Date.--The amendments made by this section shall
apply to taxable years of a foreign corporation beginning after
December 31, 1998, and to taxable years of United States shareholders
with or within which such taxable years of such foreign corporation
end.
SEC. 205. DEDUCTION FOR HEALTH INSURANCE COSTS OF SELF-EMPLOYED
INDIVIDUALS INCREASED TO 100 PERCENT.
(a) In General.--Paragraph (1) of section 162(l) (relating to
special rules for health insurance costs of self-employed individuals)
is amended to read as follows:
``(1) Allowance of deduction.--In the case of an individual
who is an employee within the meaning of section 401(c)(1),
there shall be allowed as a deduction under this section an
amount equal to the amount paid during the taxable year for
insurance which constitutes medical care for the taxpayer, the
taxpayer's spouse, and dependents.''
(b) Effective Date.--The amendment made by this section shall apply
to taxable years beginning after December 31, 1999.
SEC. 206. INCREASED EXCLUSION AND OTHER MODIFICATIONS APPLICABLE TO
QUALIFIED SMALL BUSINESS STOCK.
(a) Increased Exclusion.--
(1) In general.--Subsection (a) of section 1202 (50-percent
exclusion for gain from certain small business stock) is
amended--
(A) by striking ``50 percent'' and inserting ``100
percent'', and
(B) by striking ``50-Percent'' in the heading and
inserting ``100-Percent''.
(2) Conforming amendments.--
(A) Subparagraph (A) of section 1(h)(5) is amended
to read as follows:
``(A) collectibles gain, over''.
(B) Section 1(h) is amended by striking paragraph
(8).
(C) Paragraph (9) of section 1(h) is amended by
striking ``, gain described in paragraph (7)(A)(i), and
section 1202 gain'' and inserting ``and gain described
in paragraph (7)(A)(i)''.
(D) The heading for section 1202 is amended by
striking ``50-percent'' and inserting ``100-percent''.
(E) The table of sections for part I of subchapter
P of chapter 1 is amended by striking ``50-percent'' in
the item relating to section 1202 and inserting ``100-
percent''.
(b) Reduction in Holding Period.--
(1) In general.--Subsection (a) of section 1202 is amended
by striking ``5 years'' and inserting ``3 years''.
(2) Conforming amendment.--Subsections (g)(2)(A) and
(j)(1)(A) of section 1202 are each amended by striking ``5
years'' and inserting ``3 years''.
(c) Exclusion Available to Corporations.--
(1) In general.--Subsection (a) of section 1202 is amended
by striking ``other than a corporation''.
(2) Technical amendment.--Subsection (c) of section 1202 is
amended by adding at the end the following new paragraph:
``(4) Stock held among members of controlled group not
eligible.--Stock of a member of a parent-subsidiary controlled
group (as defined in subsection (d)(3)) shall not be treated as
qualified small business stock while held by another member of
such group.''
(d) Repeal of Minimum Tax Preference.--
(1) In general.--Subsection (a) of section 57 (relating to
items of tax preference) is amended by striking paragraph (7).
(2) Technical amendment.--Subclause (II) of section
53(d)(1)(B)(ii) is amended by striking ``, (5), and (7)'' and
inserting ``and (5)''.
(e) Stock of Larger Businesses Eligible for Exclusion.--
(1) In general.--Paragraph (1) of section 1202(d) (defining
qualified small business) is amended by striking
``$50,000,000'' each place it appears and inserting
``$300,000,000''.
(2) Inflation adjustment.--Section 1202(d) is amended by
adding at the end the following:
``(4) Inflation adjustment of asset limitation.--In the
case of stock issued in any calendar year after 2000, the
$300,000,000 amount contained in paragraph (1) shall be
increased by an amount equal to--
``(A) such dollar amount, multiplied by
``(B) the cost-of-living adjustment determined
under section 1(f)(3) for the calendar year in which
the taxable year begins, determined by substituting
`calendar year 1999' for `calendar year 1992' in
subparagraph (B) thereof.
If any amount as adjusted under the preceding sentence is not a
multiple of $10,000, such amount shall be rounded to the
nearest multiple of $10,000.''
(f) Repeal of Per-Issuer Limitation.--Section 1202 is amended by
striking subsection (b).
(g) Other Modifications.--
(1) Repeal of working capital limitation.--Section
1202(e)(6) (relating to working capital) is amended--
(A) in subparagraph (B), by striking ``2 years''
and inserting ``5 years''; and
(B) by striking the last sentence.
(2) Exception from redemption rules where business
purpose.--Section 1202(c)(3) (relating to certain purchases by
corporation of its own stock) is amended by adding at the end
the following:
``(D) Waiver where business purpose.--A purchase of
stock by the issuing corporation shall be disregarded
for purposes of subparagraph (B) if the issuing
corporation establishes that there was a business
purpose for such purchase and one of the principal
purposes of the purchase was not to avoid the
limitations of this section.''
(h) Qualified Trade or Business.--Section 1202(e)(3) (defining
qualified trade or business) is amended by inserting ``and'' at the end
of subparagraph (C), by striking ``, and'' at the end of subparagraph
(D) and inserting a period, and by striking subparagraph (E).
(i) Effective Dates.--
(1) In general.--Except as provided in paragraph (2), the
amendments made by this section apply to stock issued after the
date of enactment of this Act.
(2) Special rule.--The amendments made by subsections (a),
(c), (e), (f), and (g)(1) apply to stock issued after August
10, 1993.
SEC. 207. INCREASED EXCLUSION FOR INCENTIVE STOCK OPTIONS; EXCEPTION
FROM ALTERNATIVE MINIMUM TAX.
(a) Increased Exclusion.--Subsection (d) of section 422 (relating
to $100,000 per year limitation) is amended by striking ``$100,000''
each place it appears and inserting ``$200,000''.
(b) Exception From Alternative Minimum Tax.--Subsection (b) of
section 56 is amended by striking paragraph (3).
(c) Effective Date.--The amendments made by this section shall
apply to options exercised in calendar years beginning after the date
of the enactment of this Act.
TITLE III--SAVINGS AND INVESTMENT
SEC. 301. EXCLUSION FROM GROSS INCOME OF CERTAIN AMOUNTS OF THE NET
CAPITAL GAIN OF INDIVIDUALS.
(a) In General.--Part I of subchapter P of chapter 1 (relating to
treatment of capital gains) is amended by adding at the end the
following new section:
``SEC. 1203. EXCLUSION OF CERTAIN AMOUNTS OF NET CAPITAL GAIN OF
INDIVIDUALS.
``(a) General Rule.--In the case of an individual, gross income
shall not include an amount equal to the net capital gain of the
taxpayer for the taxable year.
``(b) Limitation.--The amount excluded from gross income under
subsection (a) shall not exceed $1,000 ($2,000 in the case of a joint
return).''
(b) Conforming Amendments.--
(1) Section 1222 is amended by adding at the end the
following new sentence:
``Determinations under this section shall be made before the
application of section 1203.''
(2) The table of sections for part I of subchapter P of
chapter 1 is amended by adding at the end the following new
item:
``Sec. 1203. Exclusion of certain amounts
of net capital gain of
individuals.''
(c) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 1999.
SEC. 302. INCREASE IN MAXIMUM AMOUNT OF DEDUCTION FOR IRAS.
(a) Increase in Maximum Amount of Deduction.--Subparagraph (A) of
section 219(b)(1) (relating to maximum amount of deduction) is amended
by striking ``$2,000'' and inserting ``$3,000''.
(b) Conforming Amendments.--
(1) Subsections (a)(1) and (b) of section 408 are each
amended by striking ``$2,000'' each place it appears and
inserting ``the dollar limitation in effect under section
219(b)(1)(A)''.
(2) Subsection (j) of section 408 is amended by striking
``the $2,000 amounts contained'' and inserting ``the dollar
limitations referred to''.
(3) Paragraph (8) of section 408(p) is amended by striking
``$2,000'' and inserting ``the dollar limitation in effect
under section 219(b)(1)(A)''.
(c) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 1999.
SEC. 303. HIGHER ELECTIVE DEFERRAL LIMIT IF EMPLOYEE'S SPOUSE IS NOT A
PARTICIPANT IN ELECTIVE DEFERRALS PLAN.
(a) In General.--Paragraph (1) of section 402(g) (relating to
limitation on elective deferrals) is amended to read as follows:
``(1) Dollar limitation.--
``(A) In general.--Notwithstanding subsections
(e)(3) and (h)(1)(B), the elective deferrals of any
individual for any taxable year shall be included in
such individual's gross income to the extent the amount
of such deferrals for the taxable year exceeds $7,000.
``(B) Higher limitation if spouse of employee not
eligible to participate in elective deferral plan.--In
the case of a married individual whose spouse is not
eligible at any time during the taxable year to
participate in any plan or contract which permits
elective deferrals--
``(I) the dollar amount applicable to such
individual under subparagraph (A) shall be
twice the dollar amount which would otherwise
be applicable for the taxable year, and
``(II) elective deferrals permitted by this
subparagraph shall not be taken into account
under section 415, 401(a)(4), or
401(k)(4)(A)(ii).''
(b) Effective Date.--The amendment made by subsection (a) shall
apply to taxable years beginning after December 31, 1999.
TITLE IV--EDUCATION
SEC. 401. AMENDMENTS TO ENCOURAGE ADDITIONAL SCHOOL CONSTRUCTION.
(a) In General.--Clause (i) of section 149(d)(3)(A) is amended--
(1) by striking ``or'' at the end of subclause (I),
(2) by adding ``or'' at the end of subclause (II), and
(3) by inserting after subclause (II) the following:
``(III) the 2d advance refunding of
the original bond if the original bond
was issued after 1985 or the 3d advance
refunding of the original bond if the
original bond was issued before 1986
if, in either case, the original bond
was issued to finance the construction,
reconstruction, or rehabilitation of
public elementary and secondary
schools, provided that the issuer in
good faith estimates the present value
savings, if any, associated with such
advance refunding and applies those
savings to the construction,
reconstruction, or rehabilitation of
public elementary and secondary
schools,''.
(b) Effective Date.--The amendment made by this section shall apply
to refunding obligations issued after December 31, 1999.
SEC. 402. MODIFICATION OF ARBITRAGE REBATE RULES APPLICABLE TO PUBLIC
SCHOOL CONSTRUCTION BONDS.
(a) In General.--Subparagraph (C) of section 148(f)(4) is amended
by adding at the end the following new clause:
``(xviii) 4-year spending requirement for
public school construction issue.--
``(I) In general.--In the case of a
public school construction issue, the
spending requirements of clause (ii)
shall be treated as met if at least 10
percent of the available construction
proceeds of the construction issue are
spent for the governmental purposes of
the issue within the 1-year period
beginning on the date the bonds are
issued, 30 percent of such proceeds are
spent for such purposes within the 2-
year period beginning on such date, 50
percent of such proceeds are spent for
such purposes within the 3-year period
beginning on such date, and 100 percent
of such proceeds are spent for such
purposes within the 4-year period
beginning on such date.
``(II) Public school construction
issue.--For purposes of this clause,
the term `public school construction
issue' means any construction issue if
no bond which is part of such issue is
a private activity bond and all of the
available construction proceeds of such
issue are to be used for the
construction (as defined in clause
(iv)) of public school facilities to
provide education or training below the
postsecondary level or for the
acquisition of land that is
functionally related and subordinate to
such facilities.
``(III) Other rules to apply.--
Rules similar to the rules of the
preceding provisions of this
subparagraph which apply to clause (ii)
also apply to this clause.''.
(b) Effective Date.--The amendment made by this section shall apply
to obligations issued after December 31, 1999.
SEC. 403. ADDITIONAL INCREASE IN ARBITRAGE REBATE EXCEPTION FOR
GOVERNMENTAL BONDS USED TO FINANCE PUBLIC SCHOOL
FACILITIES.
(a) In General.--Section 148(f)(4)(D)(vii) (relating to increase in
exception for bonds financing public school capital expenditures) is
amended by striking ``$5,000,000'' the second place it appears and
inserting ``$15,000,000''.
(b) Effective Date.--The amendment made by subsection (a) shall
apply to obligations issued after December 31, 1999.
SEC. 404. EXCLUSION FROM GROSS INCOME OF EDUCATION DISTRIBUTIONS FROM
QUALIFIED TUITION PROGRAMS; COVERAGE OF PRIVATE PROGRAMS.
(a) Exclusion.--
(1) In general.--Subparagraph (B) of section 529(c)(3)
(relating to distributions) is amended to read as follows:
``(B) Distributions for qualified higher education
expenses.--If a distributee elects the application of
this subparagraph for any taxable year--
``(i) no amount shall be includible in
gross income by reason of a distribution which
consists of providing a benefit to the
distributee which, if paid for by the
distributee, would constitute payment of a
qualified higher education expense, and
``(ii) the amount which (but for the
election) would be includible in gross income
by reason of any other distribution shall not
be so includible in an amount which bears the
same ratio to the amount which would be so
includible as the amount of the qualified
higher education expenses of the distributee
bears to the amount of the distribution.''
(2) Additional tax on amounts not used for higher education
expenses.--Section 529 is amended by adding at the end the
following new subsection:
``(f) Additional Tax for Distributions Not Used for Educational
Expenses.--
``(1) In general.--The tax imposed by section 530(d)(4)
shall apply to payments and distributions from qualified
tuition programs in the same manner as such tax applies to
education individual retirement accounts.
``(2) Excess contributions returned before due date of
return.--Paragraph (1) shall not apply to the distribution to a
contributor of any contribution paid during a taxable year to a
qualified tuition program to the extent that such contribution
exceeds the limitation in section 4973(e) if such distribution
(and the net income with respect to such excess contribution)
meets requirements comparable to the requirements of clauses
(i) and (ii) of section 530(d)(4)(C).''
(3) Coordination with education credits.--Section 25A(e)(2)
is amended by inserting ``529(c)(3)(B) or'' before
``530(d)(2)''.
(4) Effective date.--The amendments made by this subsection
shall apply to distributions after December 31, 1999, for
education furnished in academic periods beginning after such
date.
(b) Eligible Educational Institutions Permitted To Maintain
Qualified Tuition Programs.--
(1) In general.--Paragraph (1) of section 529(b) (defining
qualified State tuition program) is amended by inserting ``or
by one or more eligible educational institutions'' after
``maintained by a State or agency or instrumentality thereof''.
(2) Conforming amendments.--
(A) Paragraph (2) of section 26(b) is amended by
redesignating subparagraphs (E) through (Q) as
subparagraphs (F) through (R), respectively, and by
inserting after subparagraph (D) the following new
subparagraph:
``(E) section 529(f) (relating to additional tax on
certain distributions from qualified tuition
programs),''.
(B) The text and headings of sections 529 and 530
are amended by striking ``qualified State tuition
program'' each place it appears and inserting
``qualified tuition program''.
(C)(i) The section heading of section 529 is
amended to read as follows:
``SEC. 529. QUALIFIED TUITION PROGRAMS.''
(ii) The item relating to section 529 in the table
of sections for part VIII of subchapter F of chapter 1
is amended by striking ``State''.
(3) Effective date.--The amendments made by this subsection
shall apply to taxable years beginning after December 31, 1999.
(c) Change of Qualified Tuition Program or of Designated
Beneficiary.--
(1) In general.--Clause (i) of section 529(c)(3)(C) is
amended by inserting ``to another qualified tuition program for
the benefit of the designated beneficiary or'' after
``transferred''.
(2) Inclusion of siblings as member of family.--Paragraph
(2) of section 529(e) is amended by striking ``subparagraph
(B).'' and inserting ``subparagraph (B),
except that such term shall include any sibling (whether by the
whole or half blood) of the designated beneficiary.''.
(3) Effective date.--The amendments made by this subsection
shall apply to taxable years beginning after December 31, 1999.
<all>
Introduced in House
Introduced in House
Referred to the House Committee on Ways and Means.
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