S 1160 IS
106th CONGRESS
1st Session
S. 1160
To amend the Internal Revenue Code of 1986 to provide marriage
penalty relief, incentives to encourage health coverage, and increased child
care assistance, to extend certain expiring tax provisions, and for other
purposes.
IN THE SENATE OF THE UNITED STATES
May 27, 1999
Mr. GRASSLEY (for himself and Mrs. FEINSTEIN) 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 provide marriage
penalty relief, incentives to encourage health coverage, and increased child
care assistance, to extend certain expiring tax provisions, 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.
(a) SHORT TITLE- This Act may be cited as the `Tax Relief for Working
Americans Act of 1999'.
TITLE I--MARRIAGE PENALTY RELIEF
Sec. 101. Basic standard deduction for married individuals to be twice
the deduction for unmarried individuals.
TITLE II--ADJUSTMENT OF SOCIAL SECURITY EARNING LIMIT
Sec. 201. Adjustment in monthly exempt amount for purposes of the social
security earnings test.
TITLE III--INCENTIVES FOR HEALTH AND LONG-TERM CARE COVERAGE
Sec. 301. Credit for health insurance costs of previously uninsured
individuals and individuals with COBRA coverage.
Sec. 302. Deduction for health insurance costs of employees and
self-employed individuals.
Sec. 303. Credit for taxpayers with long-term care needs.
TITLE IV--EXPANSION OF DEPENDENT CARE TAX CREDIT
Sec. 401. Expansion of dependent care tax credit.
TITLE V--ALTERNATIVE MINIMUM TAX RELIEF
Sec. 501. Nonrefundable personal credits allowed against alternative
minimum tax.
Sec. 502. Income averaging for farmers not to increase alternative
minimum tax liability.
TITLE VI--ELIMINATION OF 60-MONTH LIMIT ON STUDENT LOAN INTEREST
DEDUCTION
Sec. 601. Elimination of 60-month limit on student loan interest
deduction.
TITLE VII--INCREASE IN LOW-INCOME HOUSING CREDIT STATE CEILING
Sec. 701. Increase in State ceiling on low-income housing credit.
TITLE VIII--FARM AND RANCH RISK MANAGEMENT ACCOUNTS
Sec. 801. Farm and ranch risk management accounts.
TITLE IX--INCENTIVES FOR URBAN REVITALIZATION AND OPEN SPACE
Sec. 901. Expensing of environmental remediation costs expanded to
contaminated sites outside of targeted areas.
Sec. 902. Modifications to encourage contributions of capital gain real
property made for conservation purposes and of qualified conservation
contributions.
TITLE X--EXTENSION OF CERTAIN EXPIRING PROVISIONS
Sec. 1001. Research credit.
Sec. 1002. Work opportunity credit.
Sec. 1003. Permanent subpart F exemption for active financing
income.
Sec. 1004. Credit for electricity produced from renewable
resources.
TITLE I--MARRIAGE PENALTY 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) of the Internal Revenue
Code of 1986 (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) of such Code
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.
TITLE II--ADJUSTMENT OF SOCIAL SECURITY EARNING LIMIT
SEC. 201. ADJUSTMENT IN MONTHLY EXEMPT AMOUNT FOR PURPOSES OF THE SOCIAL
SECURITY EARNINGS TEST.
(a) INCREASE IN MONTHLY EXEMPT AMOUNT FOR INDIVIDUALS WHO HAVE ATTAINED
RETIREMENT AGE- Section 203(f)(8)(D) of the Social Security Act (42 U.S.C.
403(f)(8)(D)) is amended--
(1) in clause (iii), by inserting `and' at the end; and
(2) by striking clauses (iv) through (vii) and inserting the following
new clause:
`(iv) for each month of any taxable year ending after 1999 and
before 2001, $2,500.'.
(b) CONFORMING AMENDMENTS-
(1) Section 203(f)(8)(B)(ii) of such Act (42 U.S.C. 403(f)(8)(B)(ii)) is
amended--
(A) by striking `after 2001 and before 2003' and inserting `after 1999
and before 2001'; and
(B) in subclause (II), by striking `2001' and inserting
`1998'.
(2) The second sentence of section 223(d)(4)(A) of such Act (42 U.S.C.
423(d)(4)(A)) is amended by inserting `and section 201 of the Tax Relief for
Working Americans Act of 1999' after `1996'.
(c) EFFECTIVE DATE- The amendments made by this section shall apply with
respect to taxable years beginning after 1999.
TITLE III--INCENTIVES FOR HEALTH AND LONG-TERM CARE
COVERAGE
SEC. 301. CREDIT FOR HEALTH INSURANCE COSTS OF PREVIOUSLY UNINSURED
INDIVIDUALS AND INDIVIDUALS WITH COBRA COVERAGE.
(a) IN GENERAL- Subpart A of part IV of subchapter A of chapter 1 of the
Internal Revenue Code of 1986 (relating to nonrefundable personal credits) is
amended by inserting after section 25A the following new section:
`SEC. 25B. HEALTH INSURANCE COSTS OF PREVIOUSLY UNINSURED INDIVIDUALS AND
INDIVIDUALS WITH COBRA COVERAGE.
`(a) IN GENERAL- In the case of an individual, there shall be allowed as a
credit against the tax imposed by this chapter for the taxable year an amount
equal to 60 percent of the amount paid during the taxable year for coverage
for the taxpayer, his spouse, and dependents under qualified health
insurance.
`(1) IN GENERAL- The amount allowed as a credit under subsection (a) to
the taxpayer for the taxable year shall not exceed the sum of the monthly
limitations for eligible months during such taxable year.
`(2) MONTHLY LIMITATION- The monthly limitation for any eligible month
is the amount equal to 1/12 of--
`(A) $1,200 if, as of the first day of such month, the taxpayer has
self-only coverage under qualified health insurance, and
`(B) $2,400 if, as of the first day of such month, the taxpayer has
family coverage under qualified health insurance.
`(3) ELIGIBLE MONTH- For purposes of this subsection--
`(A) IN GENERAL- The term `eligible month' means any month which
begins at least 1 year after the most recent month that the
individual--
`(i) was eligible to participate in any group health plan of an
employer which provided qualified health insurance (determined without
regard to subsection (d)(2)), or
`(ii) participated in any group health plan of any other entity
which provided such insurance.
`(B) JOINT RETURNS- In the case of a joint return, a month shall be
treated as an eligible month only if it is an eligible month of each
spouse, determined by applying this paragraph separately to each
spouse.
`(4) CERTAIN OTHER COVERAGE- Amounts paid for coverage of an individual
for any month shall not be taken into account under subsection (a) if, as of
the first day of such month, such individual is covered under any medical
care program described in--
`(A) title XVIII, XIX, or XXI of the Social Security Act,
`(B) chapter 55 of title 10, United States Code,
`(C) chapter 17 of title 38, United States Code,
`(D) chapter 89 of title 5, United States Code, or
`(E) the Indian Health Care Improvement Act.
`(5) SPECIAL RULE FOR MARRIED INDIVIDUALS- In the case of an
individual--
`(A) who is married (within the meaning of section 7703) as of the
close of the taxable year but does not file a joint return for such year,
and
`(B) who does not live apart from such individual's spouse at all
times during the taxable year,
the limitation under paragraph (2)(A) (and not the limitation under
paragraph (2)(B)) shall apply to such individual.
`(c) LIMITATION BASED ON ADJUSTED GROSS INCOME-
`(1) IN GENERAL- The aggregate amount which would (but for this
subsection) be allowed as a credit under this section shall be reduced (but
not below zero) by the amount determined under paragraph (2).
`(2) AMOUNT OF REDUCTION-
`(A) IN GENERAL- The amount determined under this paragraph shall be
the amount which bears the same ratio to such aggregate amount
as--
`(I) the taxpayer's modified adjusted gross income for such
taxable year, over
`(II) the applicable dollar amount, bears to
`(B) MODIFIED ADJUSTED GROSS INCOME- For purposes of this paragraph,
the term `modified adjusted gross income' means adjusted gross income
increased by any amount excluded from gross income under section 911, 931,
or 933.
`(C) ROUNDING- Any amount determined under subparagraph (A) which is
not a multiple of $10 shall be rounded to the next lowest $10.
`(3) APPLICABLE DOLLAR AMOUNT- For purposes of paragraph (2), the term
`applicable dollar amount' means--
`(A) $60,000 in the case of a taxpayer whose qualified health
insurance coverage covers more than 1 individual referred to in subsection
(a), and
`(i) in any case not described in subparagraph (A), and
`(ii) in the case of a married individual filing a separate
return.
For purposes of this paragraph, marital status shall be determined under
section 7703.
`(d) QUALIFIED HEALTH INSURANCE- For purposes of this section--
`(1) IN GENERAL- Except as otherwise provided in this paragraph, the
term `qualified health insurance' means insurance which constitutes medical
care, as defined in section 213(d) without regard to--
`(A) paragraph (1)(C) thereof, and
`(B) so much of paragraph (1)(D) thereof as relates to qualified
long-term care insurance contracts.
`(2) EXCLUSION OF COVERAGE PROVIDED UNDER GROUP HEALTH PLANS, ETC- Such
term shall not include insurance provided through any group health plan of
an employer or any other entity.
`(3) EXCLUSION OF CERTAIN OTHER CONTRACTS- Such term shall not include
insurance if a substantial portion of its benefits are excepted benefits (as
defined in section 9832(c)).
`(e) INDIVIDUALS WITH COBRA COVERAGE- In the case of continuation coverage
under a group health plan which is required to be provided by Federal law for
an individual during the period specified in section 4980B(f)(2)(B),
notwithstanding subsection (d)--
`(1) such coverage shall be treated as qualified health insurance,
and
`(2) the term `eligible month' includes months of such coverage.
`(1) COORDINATION WITH OTHER DEDUCTIONS- No credit shall be allowed
under this section for the taxable year if any amount paid for qualified
health insurance is taken into account in determining the deduction allowed
for such year under section 213 or 222.
`(2) DENIAL OF CREDIT TO DEPENDENTS- No credit shall be allowed under
this section to any individual with respect to whom a deduction under
section 151 is allowable to another taxpayer for a taxable year beginning in
the calendar year in which such individual's taxable year begins.
`(3) INFLATION ADJUSTMENT-
`(A) IN GENERAL- In the case of a taxable year beginning after 2000,
each dollar amount in subsection (c)(3) 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, determined by
substituting `calendar year 1999' for `calendar year 1992' in
subparagraph (B) thereof.
`(B) ROUNDING- If any amount as adjusted under subparagraph (A) is not
a multiple of $100, such amount shall be rounded to the next lowest
multiple of $100.'
(b) CLERICAL AMENDMENT- The table of sections for subpart A part IV of
subchapter A of chapter 1 of such Code is amended by inserting after the item
relating to section 25A the following new item:
`Sec. 25B. Health insurance costs of previously uninsured individuals and
individuals with COBRA coverage.'
(c) EFFECTIVE DATE- The amendments made by this section shall apply to
taxable years beginning after December 31, 1999.
SEC. 302. DEDUCTION FOR HEALTH INSURANCE COSTS OF EMPLOYEES AND
SELF-EMPLOYED INDIVIDUALS.
(a) IN GENERAL- Part VII of subchapter B of chapter 1 of the Internal
Revenue Code of 1986 (relating to additional itemized deductions) is amended
by redesignating section 222 as section 223 and by inserting after section 221
the following new section:
`SEC. 222. COSTS OF HEALTH INSURANCE AND LONG-TERM CARE INSURANCE.
`(a) IN GENERAL- In the case of an individual, there shall be allowed as a
deduction an amount equal to the sum of--
`(1) the applicable health care percentage of the amount paid during the
taxable year for coverage for the taxpayer, his spouse, and dependents under
qualified health insurance, and
`(2) the applicable long-term care percentage of the amount of eligible
long-term care premiums (as defined in section 213(d)(10)) paid during the
taxable year for coverage for the taxpayer, his spouse, and dependents under
a qualified long-term care insurance contract (as defined in section
7702B(b)).
`(b) APPLICABLE PERCENTAGES- For purposes of subsection (a)--
`(1) APPLICABLE HEALTH CARE PERCENTAGE-
`(A) IN GENERAL- Except as provided in subparagraph (B), the
applicable health care percentage shall be determined in accordance with
the following table:
`For taxable years beginning
--The applicable health
in calendar year--
--care percentage is--
--60
--70
--80
--90
--100.
`(B) SPECIAL RULE- In the case of an individual who is an employee
within the meaning of section 401(c)(1) and whose qualified health
insurance is not provided through a group health plan of an employer,
subparagraph (A) shall be applied by substituting `100' for `90' but only
with respect to the lesser of the taxpayer's earned income (within the
meaning of section 401(c)) or the payments referred to in subsection
(a)(1).
`(2) APPLICABLE LONG-TERM CARE PERCENTAGE-
`(A) IN GENERAL- Except as otherwise provided in this paragraph, the
applicable long-term care percentage shall be determined in accordance
with the following table based on the
number of years of continuous coverage (as of the close of the taxable year)
of the individual under a qualified long-term care insurance contract (as
defined in section 7702B(b)):
`If the number of years of
--The applicable long-term
continuous coverage is--
--care percentage is--
--50
At least 1 but less than 2
--60
At least 2 but less than 3
--70
At least 3 but less than 4
--80
At least 4 but less than 5
--90
--100.
`(B) SPECIAL RULES FOR INDIVIDUALS WHO HAVE ATTAINED AGE 60- In the
case of an individual who has attained age 60 as of the close of the
taxable year, the following table shall be substituted for the table in
subparagraph (A).
`If the number of years of
--The applicable long-term
continuous coverage is--
--care percentage is--
--60
At least 1 but less than 2
--70
At least 2 but less than 3
--85
--100.
`(C) ONLY COVERAGE AFTER 1999 TAKEN INTO ACCOUNT- Only coverage for
periods after December 31, 1999, shall be taken into account under this
paragraph.
`(D) CONTINUOUS COVERAGE- An individual shall not fail to be treated
as having continuous coverage if the aggregate breaks in coverage during
any 1-year period are less than 60 days.
`(E) SELF-EMPLOYED INDIVIDUALS- In the case of an individual who is an
employee within the meaning of section 401(c)(1) and whose qualified
long-term care insurance contract (as defined in section 7702B(b)) is not
provided through a group health plan of an employer, the applicable
long-term care percentage shall be--
`(i) 100 percent with respect to the lesser of--
`(I) the eligible long-term care premiums (as defined in section
213(d)(10)) referred to in subsection (a)(2), or
`(II) the excess of the taxpayer's earned income (within the
meaning of section 401(c)) for the taxable year over the payments
referred to in subsection (a)(1), and
`(ii) the percentage determined under the other provisions of this
paragraph with respect to the remainder of such premiums (determined by
treating the premiums taken into account under clause (i) as being
attributable to individuals in the order of their ages, beginning with
the oldest).
`(c) EXCLUSION OF SUBSIDIZED COVERAGE- Subsection (a) shall not apply to
any taxpayer for any calendar month for which the taxpayer participates in any
group health plan of an employer or any other entity if less than 50 percent
of the cost of the taxpayer's coverage under such plan is borne by the
taxpayer. The preceding sentence shall be applied separately with respect to
paragraphs (1) and (2) of subsection (a).
`(d) QUALIFIED HEALTH INSURANCE- For purposes of this section--
`(1) IN GENERAL- The term `qualified health insurance' has the meaning
given such term by section 25B(d) determined without regard to paragraph (2)
thereof.
`(A) IN GENERAL- In the case of an individual who is an employee
within the meaning of section 401(c)(1) and whose qualified health
insurance (without regard to this paragraph) is not provided through a
group health plan of an employer, paragraph (3) of section 25B(d) shall
not apply for purposes of this section.
`(B) LIMITATION- The amount taken into account under subsection (a)(1)
by reason of subparagraph (A) shall not exceed the excess of--
`(i) the taxpayer's earned income (within the meaning of section
401(c)), over
`(ii) the amount which would (without regard to this paragraph) be
taken into account under subsection (a)(1).
`(1) COORDINATION WITH MEDICAL DEDUCTION, ETC- Any amount paid by a
taxpayer for insurance to which subsection (a) applies shall not be taken
into account in computing the amount allowable to the taxpayer as a
deduction under section 213(a).
`(2) DEDUCTION NOT ALLOWED FOR SELF-EMPLOYMENT TAX PURPOSES- The
deduction allowable by reason of this section shall not be taken into
account in determining an individual's net earnings from self-employment
(within the meaning of section 1402(a)) for purposes of chapter 2.'
(b) CONFORMING AMENDMENTS-
(1) Subsection (l) of section 162 of such Code is hereby repealed.
(2) Subsection (a) of section 62 of such Code is amended by inserting
after paragraph (17) the following new item:
`(18) COSTS OF HEALTH INSURANCE AND LONG-TERM CARE INSURANCE- The
deduction allowed by section 222.'
(3) The table of sections for part VII of subchapter B of chapter 1 of
such Code is amended by striking the last item and inserting the following
new items:
`Sec. 222. Costs of health insurance and long-term care insurance.
`Sec. 223. Cross reference.'
(c) EFFECTIVE DATE- The amendments made by this section shall apply to
taxable years beginning after December 31, 1999.
SEC. 303. CREDIT FOR TAXPAYERS WITH LONG-TERM CARE NEEDS.
(1) IN GENERAL- Section 24(a) of the Internal Revenue Code of 1986
(relating to allowance of child tax credit) is amended to read as
follows:
`(a) ALLOWANCE OF CREDIT- There shall be allowed as a credit against the
tax imposed by this chapter for the taxable year an amount equal to the sum
of--
`(1) $500 multiplied by the number of qualifying children of the
taxpayer, plus
`(2) $1,000 multiplied by the number of applicable individuals with
respect to whom the taxpayer is an eligible caregiver for the taxable
year.
In any case in which the applicable individual and the eligible caregiver
are the same individual, the credit allowed by paragraph (2) with respect to
such individual shall not exceed the aggregate amount paid by the taxpayer
during the taxable year (not compensated for by insurance or otherwise) for
qualified long-term care services (as defined in section 7702B(c)) for such
individual.'
(2) ADDITIONAL CREDIT FOR TAXPAYER WITH 3 OR MORE SEPARATE CREDIT
AMOUNTS- So much of section 24(d) of such Code as precedes paragraph (1)(A)
thereof is amended to read as follows:
`(d) ADDITIONAL CREDIT FOR TAXPAYERS WITH 3 OR MORE SEPARATE CREDIT
AMOUNTS-
`(1) IN GENERAL- If the sum of the number of qualifying children of the
taxpayer and the number of applicable individuals with respect to which the
taxpayer is an eligible caregiver is 3 or more for any taxable year, the
aggregate credits allowed under subpart C shall be increased by the lesser
of--'.
(3) CONFORMING AMENDMENTS-
(A) The heading for section 32(n) of such Code is amended by striking
`CHILD' and inserting `FAMILY CARE'.
(B) The heading for section 24 is amended to read as follows:
`SEC. 24. FAMILY CARE CREDIT.'
(C) The table of sections for subpart A of part IV of subchapter A of
chapter 1 of such Code is amended by striking the item relating to section
24 and inserting the following new item:
`Sec. 24. Family care credit.'.
(b) DEFINITIONS- Section 24(c) of such Code (defining qualifying child) is
amended to read as follows:
`(c) DEFINITIONS- For purposes of this section--
`(A) IN GENERAL- The term `qualifying child' means any individual
if--
`(i) the taxpayer is allowed a deduction under section 151 with
respect to such individual for the taxable year,
`(ii) such individual has not attained the age of 17 as of the close
of the calendar year in which the taxable year of the taxpayer begins,
and
`(iii) such individual bears a relationship to the taxpayer
described in section 32(c)(3)(B).
`(B) EXCEPTION FOR CERTAIN NONCITIZENS- The term `qualifying child'
shall not include any individual who would not be a dependent if the first
sentence of section 152(b)(3) were applied without regard to all that
follows `resident of the United States'.
`(2) APPLICABLE INDIVIDUAL-
`(A) IN GENERAL- The term `applicable individual' means, with respect
to any taxable year, any individual who has been certified, before the due
date for filing the return of tax for the taxable year (without
extensions), by a physician (as defined in section 1861(r)(1) of the
Social Security Act) as being an individual with long-term care needs
described in subparagraph (B) for a period--
`(i) which is at least 180 consecutive days, and
`(ii) a portion of which occurs within the taxable year.
Such term shall not include any individual otherwise meeting the
requirements of the preceding sentence unless within the 39 1/2 month
period ending on such due date (or such other period as the Secretary
prescribes) a physician (as so defined) has certified that such individual
meets such requirements.
`(B) INDIVIDUALS WITH LONG-TERM CARE NEEDS- An individual is described
in this subparagraph if the individual meets any of the following
requirements:
`(i) The individual is at least 6 years of age and--
`(I) is unable to perform (without substantial assistance from
another individual) at least 3 activities of daily living (as defined
in section 7702B(c)(2)(B)) due to a loss of functional capacity,
or
`(II) requires substantial supervision to protect such individual
from threats to health and safety due to severe cognitive impairment
and is unable to perform, without reminding or cuing assistance, at
least 1 activity of daily living (as so defined) or to the extent
provided in regulations prescribed by the Secretary (in consultation
with the Secretary of Health and Human Services), is unable to engage
in age appropriate activities.
`(ii) The individual is at least 2 but not 6 years of age and is
unable due to a loss of functional capacity to perform (without
substantial assistance from another individual) at least 2 of the
following activities: eating, transferring, or mobility.
`(iii) The individual is under 2 years of age and requires specific
durable medical equipment by reason of a severe health condition or
requires a skilled practitioner trained to address the individual's
condition to be available if the individual's parents or guardians are
absent.
`(A) IN GENERAL- A taxpayer shall be treated as an eligible caregiver
for any taxable year with respect to the following individuals:
`(ii) The taxpayer's spouse.
`(iii) An individual with respect to whom the taxpayer is allowed a
deduction under section 151 for the taxable year.
`(iv) An individual who would be described in clause (iii) for the
taxable year if section 151(c)(1)(A) were applied by substituting for
the exemption amount an amount equal to the sum of the exemption amount,
the standard deduction under section 63(c)(2)(C), and any additional
standard deduction under section 63(c)(3) which would be applicable to
the individual if clause (iii) applied.
`(v) An individual who would be described in clause (iii) for the
taxable year if--
`(I) the requirements of clause (iv) are met with respect to the
individual, and
`(II) the requirements of subparagraph (B) are met with respect to
the individual in lieu of the support test of section
152(a).
`(B) RESIDENCY TEST- The requirements of this subparagraph are met if
an individual has as his principal place of abode the home of the taxpayer
and--
`(i) in the case of an individual who is an ancestor or descendant
of the taxpayer or the taxpayer's spouse, is a member of the taxpayer's
household for over half the taxable year, or
`(ii) in the case of any other individual, is a member of the
taxpayer's household for the entire taxable year.
`(C) SPECIAL RULES WHERE MORE THAN 1 ELIGIBLE CAREGIVER-
`(i) IN GENERAL- If more than 1 individual is an eligible caregiver
with respect to the same applicable individual for taxable years ending
with or within the same calendar year, a taxpayer shall be treated as
the eligible caregiver if each such individual (other than the taxpayer)
files a written declaration (in such form and manner as the Secretary
may prescribe) that such individual will not claim such applicable
individual for the credit under this section.
`(ii) NO AGREEMENT- If each individual required under clause (i) to
file a written declaration under clause (i) does not do so, the
individual with the highest modified adjusted gross income (as defined
in section 32(c)(5)) shall be treated as the eligible
caregiver.
`(iii) MARRIED INDIVIDUALS FILING SEPARATELY- In the case of married
individuals filing separately, the determination under this subparagraph
as to whether the husband or wife is the eligible caregiver shall be
made under the rules of clause (ii) (whether or not one of them has
filed a written declaration under clause (i)).'.
(c) IDENTIFICATION REQUIREMENTS-
(1) IN GENERAL- Section 24(e) of such Code is amended by adding at the
end the following new sentence: `No credit shall be allowed under this
section to a taxpayer with respect to any applicable individual unless the
taxpayer includes the name and taxpayer identification number of such
individual, and the identification number of the physician certifying such
individual, on the return of tax for the taxable year.'.
(2) ASSESSMENT- Section 6213(g)(2)(I) of such Code is amended--
(A) by inserting `or physician identification' after `correct TIN',
and
(B) by striking `child' and inserting `family care'.
(d) EFFECTIVE DATE- The amendments made by this section shall apply to
taxable years beginning after December 31, 1999.
TITLE IV--EXPANSION OF DEPENDENT CARE TAX CREDIT
SEC. 401. EXPANSION OF DEPENDENT CARE TAX CREDIT.
(a) INCREASE IN PERCENTAGE OF EMPLOYMENT-RELATED EXPENSES ALLOWED AS
CREDIT- Paragraph (2) of section 21(a) of the Internal Revenue Code of 1986
(defining applicable percentage) is amended to read as follows:
`(2) APPLICABLE PERCENTAGE DEFINED-
`(A) IN GENERAL- For purposes of paragraph (1), the term `applicable
percentage' means 50 percent reduced (but not below 20 percent) by each
$2,000 (or fraction thereof) by which the taxpayers's adjusted gross
income for the taxable year exceeds $30,000.
`(B) PHASEIN- In the case of taxable years beginning before January 1,
2004, the percentage determined under the following table shall be
substituted for `50 percent':
`For taxable years beginning
in calendar year--
--The percentage is--
--30
--35
--40
--45.'
(b) MINIMUM CREDIT ALLOWED FOR STAY-AT-HOME PARENTS- Subsection (e) of
section 21 of such Code (relating to special rules) is amended by adding at
the end the following:
`(11) MINIMUM CREDIT ALLOWED FOR STAY-AT-HOME PARENTS- Notwithstanding
subsection (d), in the case of any taxpayer with one or more qualifying
individuals described in subsection (b)(1)(A) under the age of 1 at any time
during the taxable year, such taxpayer shall be deemed to have
employment-related expenses with respect to such qualifying individuals in
an amount equal to the greater of--
`(A) the amount of employment-related expenses incurred for such
qualifying individuals for the taxable year (determined under this section
without regard to this paragraph), or
`(B) $120 for each month in such taxable year during which such
qualifying individual is under the age of 1.'
(c) EFFECTIVE DATE- The amendments made by this section apply to taxable
years beginning after December 31, 1999.
TITLE V--ALTERNATIVE MINIMUM TAX RELIEF
SEC. 501. NONREFUNDABLE PERSONAL CREDITS ALLOWED AGAINST ALTERNATIVE MINIMUM
TAX.
(a) IN GENERAL- Subsection (a) of section 26 of the Internal Revenue Code
of 1986 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 sum of--
`(1) the taxpayer's regular tax liability for the taxable year reduced
by the foreign tax credit allowable under section 27(a), and
`(2) the tax imposed for the taxable year by section 55(a).'.
(b) CONFORMING AMENDMENTS-
(1) Subsection (d) of section 24 of such Code is amended by striking
paragraph (2) and by redesignating paragraph (3) as paragraph (2).
(2) Section 904 of such Code is amended by striking subsection (h) and
by redesignating subsections (i), (j), and (k) as subsections (h), (i), and
(j), respectively.
(c) EFFECTIVE DATE- The amendments made by this section shall apply to
taxable years beginning after December 31, 1999.
SEC. 502. INCOME AVERAGING FOR FARMERS NOT TO INCREASE ALTERNATIVE MINIMUM
TAX LIABILITY.
(a) IN GENERAL- Section 55(c) of the Internal Revenue Code of 1986
(defining regular tax) is amended by redesignating paragraph (2) as paragraph
(3) and by inserting after paragraph (1) the following new paragraph:
`(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.'
(b) EFFECTIVE DATE- The amendment made by this section shall apply to
taxable years beginning after December 31, 1998.
TITLE VI--ELIMINATION OF 60-MONTH LIMIT ON STUDENT LOAN INTEREST
DEDUCTION
SEC. 601. ELIMINATION OF 60-MONTH LIMIT ON STUDENT LOAN INTEREST
DEDUCTION.
(a) IN GENERAL- Section 221 of the Internal Revenue Code of 1986 (relating
to interest on education loans) is amended by striking subsection (d) and by
redesignating subsections (e), (f), and (g) as subsections (d), (e), and (f),
respectively.
(b) CONFORMING AMENDMENT- Section 6050(e) of the Internal Revenue Code of
1986 is amended by striking `section 221(e)(1)' and inserting `section
221(d)(1)'.
(c) EFFECTIVE DATE- The amendments made by this section shall apply with
respect to any loan interest paid after December 31, 1997.
TITLE VII--INCREASE IN LOW-INCOME HOUSING CREDIT STATE
CEILING
SEC. 701. INCREASE IN STATE CEILING ON LOW-INCOME HOUSING CREDIT.
(a) IN GENERAL- Clause (i) of section 42(h)(3)(C) of the Internal Revenue
Code of 1986 (relating to State housing credit ceiling) is amended by striking
`$1.25' and inserting `$1.75'.
(b) ADJUSTMENT OF STATE CEILING FOR INCREASES IN COST-OF-LIVING- Paragraph
(3) of section 42(h) of such Code (relating to housing credit dollar amount
for agencies) is amended by adding at the end the following new
subparagraph:
`(H) COST-OF-LIVING ADJUSTMENT-
`(i) IN GENERAL- In the case of a calendar year after 2000, the
dollar amount contained in subparagraph (C)(i) 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 such calendar year by substituting `calendar year 1999'
for `calendar year 1992' in subparagraph (B) thereof.
`(ii) ROUNDING- If any increase under clause (i) is not a multiple
of 5 cents, such increase shall be rounded to the next lowest multiple
of 5 cents.'.
(c) EFFECTIVE DATE- The amendments made by this section shall apply to
calendar years after 1999.
TITLE VIII--FARM AND RANCH RISK MANAGEMENT ACCOUNTS
SEC. 801. FARM AND RANCH RISK MANAGEMENT ACCOUNTS.
(a) IN GENERAL- Subpart C of part II of subchapter E of chapter 1 of the
Internal Revenue Code of 1986 (relating to taxable year for which deductions
taken) is amended by inserting after section 468B the following new
section:
`SEC. 468C. FARM AND RANCH RISK MANAGEMENT ACCOUNTS.
`(a) DEDUCTION ALLOWED- In the case of an individual engaged in an
eligible farming business, there shall be allowed as a deduction for any
taxable year the amount paid in cash by the taxpayer during the taxable year
to a Farm and Ranch Risk Management Account (hereinafter referred to as the
`FARRM Account').
`(b) LIMITATION- The amount which a taxpayer may pay into the FARRM
Account for any taxable year shall not exceed 20 percent of so much of the
taxable income of the taxpayer (determined without regard to this section)
which is attributable (determined in the manner applicable under section 1301)
to any eligible farming business.
`(c) ELIGIBLE FARMING BUSINESS- For purposes of this section, the term
`eligible farming business' means any farming business (as defined in section
263A(e)(4)) which is not a passive activity (within the meaning of section
469(c)) of the taxpayer.
`(d) FARRM ACCOUNT- For purposes of this section--
`(1) IN GENERAL- The term `FARRM Account' means a trust created or
organized in the United States for the exclusive benefit of the taxpayer,
but only if the written governing instrument creating the trust meets the
following requirements:
`(A) No contribution will be accepted for any taxable year in excess
of the amount allowed as a deduction under subsection (a) for such
year.
`(B) The trustee is a bank (as defined in section 408(n)) or another
person who demonstrates to the satisfaction of the Secretary that the
manner in which such person will administer the trust will be consistent
with the requirements of this section.
`(C) The assets of the trust consist entirely of cash or of
obligations which have adequate stated interest (as defined in section
1274(c)(2)) and which pay such interest not less often than
annually.
`(D) All income of the trust is distributed currently to the
grantor.
`(E) The assets of the trust will not be commingled with other
property except in a common trust fund or common investment fund.
`(2) ACCOUNT TAXED AS GRANTOR TRUST- The grantor of a FARRM Account
shall be treated for purposes of this title as the owner of such Account and
shall be subject to tax thereon in accordance with subpart E of part I of
subchapter J of this chapter (relating to grantors and others treated as
substantial owners).
`(e) INCLUSION OF AMOUNTS DISTRIBUTED-
`(1) IN GENERAL- Except as provided in paragraph (2), there shall be
includible in the gross income of the taxpayer for any taxable year--
`(A) any amount distributed from a FARRM Account of the taxpayer
during such taxable year, and
`(B) any deemed distribution under--
`(i) subsection (f)(1) (relating to deposits not distributed within
5 years),
`(ii) subsection (f)(2) (relating to cessation in eligible farming
business), and
`(iii) subparagraph (A) or (B) of subsection (f)(3) (relating to
prohibited transactions and pledging account as security).
`(2) EXCEPTIONS- Paragraph (1)(A) shall not apply to--
`(A) any distribution to the extent attributable to income of the
Account, and
`(B) the distribution of any contribution paid during a taxable year
to a FARRM Account to the extent that such contribution exceeds the
limitation applicable under subsection (b) if requirements similar to the
requirements of section 408(d)(4) are met.
For purposes of subparagraph (A), distributions shall be treated as
first attributable to income and then to other amounts.
`(3) EXCLUSION FROM SELF-EMPLOYMENT TAX- Amounts included in gross
income under this subsection shall not be included in determining net
earnings from self-employment under section 1402.
`(1) TAX ON DEPOSITS IN ACCOUNT WHICH ARE NOT DISTRIBUTED WITHIN 5
YEARS-
`(A) IN GENERAL- If, at the close of any taxable year, there is a
nonqualified balance in any FARRM Account--
`(i) there shall be deemed distributed from such Account during such
taxable year an amount equal to such balance, and
`(ii) the taxpayer's tax imposed by this chapter for such taxable
year shall be increased by 10 percent of such deemed
distribution.
The preceding sentence shall not apply if an amount equal to such
nonqualified balance is distributed from such Account to the taxpayer
before the due date (including extensions) for filing the return of tax
imposed by this chapter for such year (or, if earlier, the date the
taxpayer files such return for such year).
`(B) NONQUALIFIED BALANCE- For purposes of subparagraph (A), the term
`nonqualified balance' means any balance in the Account on the last day of
the taxable year which is attributable to amounts deposited in such
Account before the 4th preceding taxable year.
`(C) ORDERING RULE- For purposes of this paragraph, distributions from
a FARRM Account shall be treated as made from deposits in the order in
which such deposits were made, beginning with the earliest deposits. For
purposes of the preceding sentence, income of such an Account shall be
treated as a deposit made on the date such income is received by the
Account.
`(2) CESSATION IN ELIGIBLE FARMING BUSINESS- At the close of the first
disqualification period after a period for which the taxpayer was engaged in
an eligible farming business, there shall be deemed distributed from the
FARRM Account (if any) of the taxpayer an amount equal to the balance in
such Account at the close of such disqualification period. For purposes of
the preceding sentence, the term `disqualification period' means any period
of 2 consecutive taxable years for which the taxpayer is not engaged in an
eligible farming business.
`(3) CERTAIN RULES TO APPLY- Rules similar to the following rules shall
apply for purposes of this section:
`(A) Section 408(e)(2) (relating to loss of exemption of account where
individual engages in prohibited transaction).
`(B) Section 408(e)(4) (relating to effect of pledging account as
security).
`(C) Section 408(g) (relating to community property laws).
`(D) Section 408(h) (relating to custodial accounts).
`(4) TIME WHEN PAYMENTS DEEMED MADE- For purposes of this section, a
taxpayer shall be deemed to have made a payment to a FARRM Account on the
last day of a taxable year if such payment is made on account of such
taxable year and is made within 3 1/2 months after the close of such taxable
year.
`(5) INDIVIDUAL- For purposes of this section, the term `individual'
shall not include an estate or trust.
`(g) REPORTS- The trustee of a FARRM Account shall make such reports
regarding such Account to the Secretary and to the person for whose benefit
the Account is maintained with respect to contributions, distributions, and
such other matters as the Secretary may require under regulations. The reports
required by this subsection shall be filed at such time and in such manner and
furnished to such persons at such time and in such manner as may be required
by those regulations.'.
(b) DEDUCTION ALLOWED IN COMPUTING ADJUSTED GROSS INCOME- Subsection (a)
of section 62 of such Code (defining adjusted gross income) is amended by
inserting after paragraph (18) the following new paragraph:
`(19) CONTRIBUTIONS TO FARM AND RANCH RISK MANAGEMENT ACCOUNTS- The
deduction allowed by section 468C(a).'
(c) TAX ON EXCESS CONTRIBUTIONS-
(1) Subsection (a) of section 4973 of such Code (relating to tax on
certain excess contributions) is amended by striking `or' at the end of
paragraph (3), by redesignating paragraph (4) as paragraph (5), and by
inserting after paragraph (3) the following new paragraph:
`(4) a FARRM Account (within the meaning of section 468C(d)), or'.
(2) Section 4973 of such Code is amended by adding at the end the
following new subsection:
`(g) EXCESS CONTRIBUTIONS TO FARRM ACCOUNTS- For purposes of this section,
in the case of a FARRM Account (within the meaning of section 468C(d)), the
term `excess contributions' means the amount by which the amount contributed
for the taxable year to the Account exceeds the amount which may be
contributed to the Account under section 468C(b) for such taxable year. For
purposes of this subsection, any contribution which is distributed out of the
FARRM Account in a distribution to which section 468C(e)(2)(B) applies shall
be treated as an amount not contributed.'.
(3) The section heading for section 4973 of such Code is amended to read
as follows:
`SEC. 4973. EXCESS CONTRIBUTIONS TO CERTAIN ACCOUNTS, ANNUITIES, ETC.'.
(4) The table of sections for chapter 43 of such Code is amended by
striking the item relating to section 4973 and inserting the following new
item:
`Sec. 4973. Excess contributions to certain accounts, annuities, etc.'.
(d) TAX ON PROHIBITED TRANSACTIONS-
(1) Subsection (c) of section 4975 of such Code (relating to prohibited
transactions) is amended by adding at the end the following new
paragraph:
`(6) SPECIAL RULE FOR FARRM ACCOUNTS- A person for whose benefit a FARRM
Account (within the meaning of section 468C(d)) is established shall be
exempt from the tax imposed by this section with respect to any transaction
concerning such Account (which would otherwise be taxable under this
section) if, with respect to such transaction, the account ceases to be a
FARRM Account by reason of the application of section 468C(f)(3)(A) to such
Account.'.
(2) Paragraph (1) of section 4975(e) of such Code is amended by
redesignating subparagraphs (E) and (F) as subparagraphs (F) and (G),
respectively, and by inserting after subparagraph (D) the following new
subparagraph:
`(E) a FARRM Account described in section 468C(d),'.
(e) FAILURE TO PROVIDE REPORTS ON FARRM ACCOUNTS- Paragraph (2) of section
6693(a) of such Code (relating to failure to provide reports on certain
tax-favored accounts or annuities) is amended by redesignating subparagraphs
(C) and (D) as subparagraphs (D) and (E), respectively, and by inserting after
subparagraph (B) the following new subparagraph:
`(C) section 468C(g) (relating to FARRM Accounts).'.
(f) CLERICAL AMENDMENT- The table of sections for subpart C of part II of
subchapter E of chapter 1 of such Code is amended by inserting after the item
relating to section 468B the following new item:
`Sec. 468C. Farm and Ranch Risk Management Accounts.'.
(g) EFFECTIVE DATE- The amendments made by this section shall apply to
taxable years beginning after the date of the enactment of this Act.
TITLE IX--INCENTIVES FOR URBAN REVITALIZATION AND OPEN
SPACE
SEC. 901. EXPENSING OF ENVIRONMENTAL REMEDIATION COSTS EXPANDED TO
CONTAMINATED SITES OUTSIDE OF TARGETED AREAS.
(a) IN GENERAL- Clause (ii) of section 198(c)(1)(A) of the Internal
Revenue Code of 1986 (relating to qualified contaminated sites) is amended to
read as follows:
`(ii) which is within the United States, and'.
(b) EXPENSE TREATMENT MADE PERMANENT- Section 198 of such Code is amended
by striking subsection (h).
(c) CONFORMING AMENDMENT- Paragraph (2) of section 198(c) of such Code is
amended to read as follows:
`(2) NATIONAL PRIORITIES LISTED SITES NOT INCLUDED- Such term shall not
include any site which is on, or proposed for, the national priorities list
under section 105(a)(8)(B) of the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980 (as in effect on the date of the
enactment of this section).'
(d) EFFECTIVE DATE- The amendments made by this section shall apply to
expenditures paid or incurred
after the date of the enactment of this Act in taxable years ending after
such date.
SEC. 902. MODIFICATIONS TO ENCOURAGE CONTRIBUTIONS OF CAPITAL GAIN REAL
PROPERTY MADE FOR CONSERVATION PURPOSES AND OF QUALIFIED CONSERVATION
CONTRIBUTIONS.
(a) CONTRIBUTIONS OF CAPITAL GAIN REAL PROPERTY MADE FOR CONSERVATION
PURPOSES AND OF QUALIFIED CONSERVATION CONTRIBUTIONS NOT SUBJECT TO SPECIAL
LIMITATION ON CONTRIBUTIONS OF CAPITAL GAIN PROPERTY- Subparagraph (C) of
section 170(b)(1) of the Internal Revenue Code of 1986 (relating to special
limitation with respect to contributions described in subparagraph (A) of
capital gain property) is amended by redesignating clause (iv) as clause (v)
and by inserting after clause (iii) the following new clause:
`(iv) In the case of charitable contributions described in
subparagraph (A) of capital gain property, clauses (i) and (ii) shall
not apply to--
`(I) any qualified conservation contribution (as defined in
section 170(h)), or
`(II) any other contribution of capital gain property which is
real property if the contribution is of the donor's entire interest in
such property and is to a qualified organization (as defined in
section 170(h)(3)) which is organized for conservation purposes (as
defined in section 170(h)(4)(A)) and which provides the taxpayer, at
the time of such donation, a letter of intent which contains an
acknowledgment of the donee's intent that the property is being
acquired for any such conservation purpose.'.
(b) UNLIMITED CARRYOVER FOR CONTRIBUTIONS OF CAPITAL GAIN REAL PROPERTY
FOR CONSERVATION PURPOSES AND OF QUALIFIED CONSERVATION CONTRIBUTIONS OF
CAPITAL GAIN PROPERTY- Paragraph (1) of section 170(d) of such Code in amended
by adding at the end the following new subparagraph:
`(C) UNLIMITED CARRYOVER FOR CONTRIBUTIONS OF CAPITAL GAIN REAL
PROPERTY FOR CONSERVATION PURPOSES AND OF QUALIFIED CONSERVATION
CONTRIBUTIONS OF CAPITAL GAIN PROPERTY- The 5 taxable year limitation in
subparagraph (A) shall not apply to any charitable contribution to which
clauses (i) and (ii) of subsection (b)(1)(C) do not apply by reason of
clause (iv) thereof. For purposes of this paragraph, the excess described
in the material preceding clause (i) of subparagraph (A) shall be treated
as attributable to contributions described in the preceding sentence of
this subparagraph to the extent of such contributions.'.
(c) EFFECTIVE DATE- The amendment made by this section shall apply to
contributions made in taxable years beginning after the date of the enactment
of this Act.
TITLE X--EXTENSION OF CERTAIN EXPIRING PROVISIONS
SEC. 1001. RESEARCH CREDIT.
(a) CREDIT MADE PERMANENT-
(1) IN GENERAL- Section 41 of the Internal Revenue Code of 1986
(relating to credit for increasing research activities) is amended by
striking subsection (h).
(2) CONFORMING AMENDMENT- Paragraph (1) section 45C(b) of such Code is
amended by striking subparagraph (D).
(3) EFFECTIVE DATE- The amendments made by this subsection shall apply
to amounts paid or incurred after June 30, 1999.
(b) INCREASE IN PERCENTAGES UNDER ALTERNATIVE INCREMENTAL CREDIT-
(1) IN GENERAL- Subparagraph (A) of section 41(c)(4) of such Code is
amended--
(A) by striking `1.65 percent' and inserting `2.65 percent',
(B) by striking `2.2 percent' and inserting `3.2 percent',
and
(C) by striking `2.75 percent' and inserting `3.75 percent'.
(2) EFFECTIVE DATE- The amendments made by this subsection shall apply
to taxable years beginning after June 30, 1999.
SEC. 1002. WORK OPPORTUNITY CREDIT.
(a) CREDIT MADE PERMANENT- Subsection (c) of section 51 of the Internal
Revenue Code of 1986 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. 1003. PERMANENT SUBPART F EXEMPTION FOR ACTIVE FINANCING INCOME.
(a) BANKING, FINANCING, OR SIMILAR BUSINESSES- Subsection (h) of section
954 of the Internal Revenue Code of 1986 (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 of such Code
(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. 1004. CREDIT FOR ELECTRICITY PRODUCED FROM RENEWABLE RESOURCES.
(a) EXTENSION AND MODIFICATION OF PLACED-IN-SERVICE RULES- Paragraph (3)
of section 45(c) of the Internal Revenue Code of 1986 is amended to read as
follows:
`(A) WIND FACILITIES- In the case of a facility using wind to produce
electricity, the term `qualified facility' means any facility owned by the
taxpayer which is originally placed in service after December 31, 1993,
and before July 1, 2004.
`(B) BIOMASS FACILITIES- In the case of a facility using biomass to
produce electricity, the term `qualified facility' means, with respect to
any month, any facility owned by the taxpayer which is originally placed
in service before July 1, 2004, if, for such month--
`(i) biomass comprises not less than 75 percent (on a Btu basis) of
the average monthly fuel input of the facility for the taxable year
which includes such month, or
`(ii) in the case of a facility principally using coal to produce
electricity, biomass comprises not more than 25 percent (on a Btu basis)
of the average monthly fuel input of the facility for the taxable year
which includes such month.
`(i) In the case of a qualified facility described in subparagraph
(B)(i)--
`(I) the 10-year period referred to in subsection (a) shall be
treated as beginning no earlier than the date of the enactment of this
paragraph, and
`(II) subsection (b)(3) shall not apply to any such facility
originally placed in service before January 1, 1997.
`(ii) In the case of a qualified facility described in subparagraph
(B)(ii)--
`(I) the 10-year period referred to in subsection (a) shall be
treated as beginning no earlier than the date of the enactment of this
paragraph, and
`(II) the amount of the credit determined under subsection (a)
with respect to any project for any taxable year shall be adjusted by
multiplying such amount (determined without regard to this clause) by
0.59.'.
(b) CREDIT NOT TO APPLY TO ELECTRICITY SOLD TO UTILITIES UNDER CERTAIN
CONTRACTS- Subsection (b) of section 45 of such Code is amended by adding at
the end the following new paragraph:
`(4) Credit not to apply to electricity sold to utilities under certain
contracts-
`(A) IN GENERAL- The credit determined under subsection (a) shall not
apply to electricity--
`(i) produced at a qualified facility placed in service by the
taxpayer after June 30, 1999, and
`(ii) sold to a utility pursuant to a contract originally entered
into before January 1, 1987 (whether or not amended or restated after
that date).
`(B) - Subparagraph (A) shall not apply if--
`(i) the prices for energy and capacity from such facility are
established pursuant to an amendment to the contract referred to in
subparagraph (A)(ii);
`(ii) such amendment provides that the prices set forth in the
contract which exceed avoided cost prices determined at the time of
delivery shall apply only to annual quantities of electricity (prorated
for partial years) which do not exceed the greater of--
`(I) the average annual quantity of electricity sold to the
utility under the contract during calendar years 1994, 1995, 1996,
1997, and 1998, or
`(II) the estimate of the annual electricity production set forth
in the contract, or, if there is no such estimate, the greatest annual
quantity of electricity sold to the utility under the contract in any
of the calendar years 1996, 1997, or 1998; and
`(iii) such amendment provides that energy and capacity in excess of
the limitation in clause (ii) may be--
`(I) sold to the utility only at prices that do not exceed avoided
cost prices determined at the time of delivery, or
`(II) sold to a third party subject to a mutually agreed upon
advance notice to the utility.
For purposes of this subparagraph, avoided cost prices shall be
determined as provided for in 18 CFR 292.304(d)(1) or any successor
regulation.'.
(c) QUALIFIED FACILITIES INCLUDE ALL BIOMASS FACILITIES-
(1) IN GENERAL- Subparagraph (B) of section 45(c)(1) of such Code is
amended to read as follows:
(2) BIOMASS DEFINED- Paragraph (2) of section 45(c) of such Code is
amended to read as follows:
`(2) BIOMASS- The term `biomass' means--
`(A) any organic material from a plant which is planted exclusively
for purposes of being used at a qualified facility to produce electricity,
and
`(B) any solid, nonhazardous, cellulosic waste material, which is
segregated from other waste materials, and which is derived
from--
`(i) any of the following forest-related resources: mill residues,
precommercial thinnings, slash, and brush, but not including old-growth
timber,
`(ii) waste pallets, crates, and dunnage, manufacturing and
construction wood wastes (other than pressure-treated,
chemically-treated, or painted wood wastes), and landscape or
right-of-way tree trimmings, but not including unsegregated municipal
solid waste (garbage), or
`(iii) agriculture sources, including orchard tree crops, vineyard,
grain, legumes, sugar, and other crop by-products or
residues.'
(d) EFFECTIVE DATE- The amendments made by this section shall apply to
electricity produced after the date of the enactment of this Act.
END