Real AMT Relief Act of 2001

Real AMT Relief Act of 2001 - Amends the Internal Revenue Code to provide for a graduated phaseout of the alternative minimum tax (AMT) on individuals (such tax to be eliminated for individuals as of 2005). Provides for coordination with: (1) income averaging for farmers; and (2) the child care credit.

Increases the gross receipts test, including the first three-year period, for the small corporation AMT exemption.

[Congressional Bills 107th Congress]
[From the U.S. Government Publishing Office]
[S. 616 Introduced in Senate (IS)]







107th CONGRESS
  1st Session
                                 S. 616

 To amend the Internal Revenue Code of 1986 to repeal the alternative 
minimum tax on individuals, to raise the exemption for small businesses 
                 from such tax, and for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             March 26, 2001

  Mr. Hutchinson (for himself and Mr. Bond) introduced the following 
  bill; which was read twice and referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL


 
 To amend the Internal Revenue Code of 1986 to repeal the alternative 
minimum tax on individuals, to raise the exemption for small businesses 
                 from such tax, and for other purposes.

    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 ``Real AMT Relief Act of 2001''.

 SEC. 2. ALTERNATIVE MINIMUM TAX.

    (a) Repeal of Alternative Minimum Tax on Individuals.--
            (1) In general.--Section 55(a) of the Internal Revenue Code 
        of 1986 (relating to alternative minimum tax imposed) is 
        amended by adding at the end the following new flush sentence:
``For purposes of this title, the tentative minimum tax on any taxpayer 
other than a corporation for any taxable year beginning after December 
31, 2004, shall be zero.''.
            (2) Reduction of tax on individuals prior to repeal.--
        Section 55 of such Code (relating to alternative minimum tax 
        imposed) is amended by adding at the end the following new 
        subsection:
    ``(f) Phaseout of Tax on Individuals.--
            ``(1) In general.--The tax imposed by this section on a 
        taxpayer other than a corporation for any taxable year 
        beginning after December 31, 2000, and before January 1, 2005, 
        shall be the applicable percentage of the tax which would be 
        imposed but for this subsection.
            ``(2) Applicable percentage.--For purposes of paragraph 
        (1), the applicable percentage shall be determined in 
        accordance with the following table:
                ``For taxable years beginning
                                                         The applicable
                  in calendar year--
                                                        percentage is--
                    2001...................................         80 
                    2002...................................         60 
                    2003...................................         40 
                    2004...................................     20.''. 

            (3) Nonrefundable personal credits fully allowed against 
        regular tax liability.--
                    (A) In general.--Section 26(a) of such Code 
                (relating to limitation based on amount of tax) is 
                amended to read as follows:
    ``(a) Limitation Based on Amount of Tax.--The aggregate amount of 
credits allowed by this subpart for the taxable year shall not exceed 
the taxpayer's regular tax liability for the taxable year.''.
                    (B) Child credit.--Section 24(d) is amended by 
                striking paragraph (2) and by redesignating paragraph 
                (3) as paragraph (2).
            (4) Effective date.--The amendments made by this subsection 
        shall apply to taxable years beginning after December 31, 2000.
    (b) Income Averaging Not To Increase Alternative Minimum Tax 
Liability.--
            (1) In general.--Section 55(c) of the Internal Revenue Code 
        of 1986 (relating to regular tax) is amended by redesignating 
        paragraph (2) as paragraph (3) and by inserting after paragraph 
        (1) the following:
            ``(2) Coordination with income averaging for farmers.--
        Solely for purposes of this section, section 1301 (relating to 
        averaging of farm income) shall not apply in computing the 
        regular tax.''.
            (2) Effective date.--The amendment made by this subsection 
        shall apply to taxable years beginning after December 31, 2000.
    (c) Expansion of the Exemption From the Alternative Minimum Tax for 
Small Corporations.--
            (1) In general.--Section 55(e)(1)(A) of the Internal 
        Revenue Code of 1986 (relating to exemption for small 
        corporations) is amended to read as follows:
                    ``(A) $10,000,000 gross receipts test.--The 
                tentative minimum tax of a corporation shall be zero 
                for any taxable year if the corporation's average 
                annual gross receipts for all 3-taxable-year periods 
                ending before such taxable year does not exceed 
                $10,000,000. For purposes of the preceding sentence, 
                only taxable years beginning after December 31, 1997, 
                shall be taken into account.''.
            (2) Gross receipts test for first 3-year period.--Section 
        55(e)(1)(B) of such Code (relating to exemption for small 
        corporations) is amended to read as follows:
                    ``(B) $7,500,000 gross receipts test for first 3-
                year period.--Subparagraph (A) shall be applied by 
                substituting `$7,500,000' for `$10,000,000' for the 
                first 3-taxable-year period (or portion thereof) of the 
                corporation which is taken into account under 
                subparagraph (A).''.
            (3) Effective date.--The amendments made by this subsection 
        shall apply to taxable years beginning after December 31, 2000.
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