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H.R.3874
To amend the Internal Revenue Code of 1986 to provide tax relief for
small businesses, and for other purposes. (Introduced in the House)
`(B) the remaining proceeds of the issue will be spent with due
diligence for such purpose.
`(3) EARNINGS ON PROCEEDS- Any earnings on proceeds during the temporary
period shall be treated as proceeds of the issue for purposes of applying
subsection (a)(1) and paragraph (1) of this subsection.
`PART III--INCENTIVES FOR EDUCATION ZONES
`Sec. 1400H. Qualified zone academy bonds.
`SEC. 1400H. QUALIFIED ZONE ACADEMY BONDS.
`(a) QUALIFIED ZONE ACADEMY BOND- For purposes of this subchapter--
`(1) IN GENERAL- The term `qualified zone academy bond' means any bond
issued as part of an issue if--
`(A) 95 percent or more of the proceeds of such issue are to be used
for a qualified purpose with respect to a qualified zone academy
established by a local educational agency,
`(B) the bond is issued by a State or local government within the
jurisdiction of which such academy is located,
`(i) designates such bond for purposes of this section,
`(ii) certifies that it has written assurances that the private
business contribution requirement of paragraph (2) will be met with
respect to such academy, and
`(iii) certifies that it has the written approval of the local
educational agency for such bond issuance, and
`(D) the term of each bond which is part of such issue does not exceed
15 years.
Rules similar to the rules of section 1400G(g) shall apply for purposes
of paragraph (1).
`(2) PRIVATE BUSINESS CONTRIBUTION REQUIREMENT-
`(A) IN GENERAL- For purposes of paragraph (1), the private business
contribution requirement of this paragraph is met with respect to any
issue if the local educational agency that established the qualified zone
academy has written commitments from private entities to make qualified
contributions having a present value (as of the date of issuance of the
issue) of not less than 10 percent of the proceeds of the issue.
`(B) QUALIFIED CONTRIBUTIONS- For purposes of subparagraph (A), the
term `qualified contribution' means any contribution (of a type and
quality acceptable to the local educational agency) of--
`(i) equipment for use in the qualified zone academy (including
state-of-the-art technology and vocational equipment),
`(ii) technical assistance in developing curriculum or in training
teachers in order to promote appropriate market driven technology in the
classroom,
`(iii) services of employees as volunteer mentors,
`(iv) internships, field trips, or other educational opportunities
outside the academy for students, or
`(v) any other property or service specified by the local
educational agency.
`(3) QUALIFIED ZONE ACADEMY- The term `qualified zone academy' means any
public school (or academic program within a public school) which is
established by and operated under the supervision of a local educational
agency to provide education or training below the postsecondary level
if--
`(A) such public school or program (as the case may be) is designed in
cooperation with business to enhance the academic curriculum, increase
graduation and employment rates, and better prepare students for the
rigors of college and the increasingly complex workforce,
`(B) students in such public school or program (as the case may be)
will be subject to the same academic standards and assessments as other
students educated by the local educational agency,
`(C) the comprehensive education plan of such public school or program
is approved by the local educational agency, and
`(D)(i) such public school is located in an empowerment zone or
enterprise community (including any such zone or community designated
after the date of the enactment of this section), or
`(ii) there is a reasonable expectation (as of the date of issuance of
the bonds) that at least 35 percent of the students attending such school
or participating in such program (as the case may be) will be eligible for
free or reduced-cost lunches under the school lunch program established
under the National School Lunch Act.
`(4) QUALIFIED PURPOSE- The term `qualified purpose' means, with respect
to any qualified zone academy--
`(A) constructing, rehabilitating, or repairing the public school
facility in which the academy is established,
`(B) acquiring the land on which such facility is to be constructed
with part of the proceeds of such issue,
`(C) providing equipment for use at such academy,
`(D) developing course materials for education to be provided at such
academy, and
`(E) training teachers and other school personnel in such
academy.
`(b) LIMITATIONS ON AMOUNT OF BONDS DESIGNATED-
`(1) IN GENERAL- There is a national zone academy bond limitation for
each calendar year. Such limitation is--
`(A) $400,000,000 for 1998,
`(B) $400,000,000 for 1999,
`(C) $400,000,000 for 2000,
`(D) $1,400,000,000 for 2001,
`(E) except as provided in paragraph (3), zero after 2001.
`(2) ALLOCATION OF LIMITATION-
`(A) ALLOCATION AMONG STATES-
`(i) 1998, 1999, and 2000 LIMITATIONS- The national zone academy
bond limitations for calendar years 1998, 1999, and 2000 shall be
allocated by the Secretary among the States on the basis of their
respective populations of individuals below the poverty line (as defined
by the Office of Management and Budget).
`(ii) LIMITATION AFTER 2000- The national zone academy bond
limitation for any calendar year after 2000 shall be allocated by the
Secretary among the States in the manner prescribed by section 1400G(d);
except that in making the allocation under this clause, the Secretary
shall take into account--
`(I) Basic Grants attributable to large local educational agencies
(as defined in section 1400G(e)).
`(II) the national zone academy bond limitation.
`(B) ALLOCATION TO LOCAL EDUCATIONAL AGENCIES- The limitation amount
allocated to a State under subparagraph (A) shall be allocated by the
State education agency to qualified zone academies within such
State.
`(C) DESIGNATION SUBJECT TO LIMITATION AMOUNT- The maximum aggregate
face amount of bonds issued during any calendar year which may be
designated under subsection (a) with respect to any qualified zone academy
shall not exceed the limitation amount allocated to such academy under
subparagraph (B) for such calendar year.
`(3) CARRYOVER OF UNUSED LIMITATION- If for any calendar year--
`(A) the limitation amount under this subsection for any State,
exceeds
`(B) the amount of bonds issued during such year which are designated
under subsection (a) (or the corresponding provisions of prior law) with
respect to qualified zone academies within such State,
the limitation amount under this subsection for such State for the
following calendar year shall be increased by the amount of such
excess.'.
(b) REPORTING- Subsection (d) of section 6049 of such Code (relating to
returns regarding payments of interest) is amended by adding at the end the
following new paragraph:
`(8) REPORTING OF CREDIT ON QUALIFIED PUBLIC SCHOOL MODERNIZATION
BONDS-
`(A) IN GENERAL- For purposes of subsection (a), the term `interest'
includes amounts includible in gross income under section 1400F(f) and
such amounts shall be treated as paid on the credit allowance date (as
defined in section 1400F(d)(2)).
`(B) REPORTING TO CORPORATIONS, ETC- Except as otherwise provided in
regulations, in the case of any interest described in subparagraph (A) of
this paragraph, subsection (b)(4) of this section shall be applied without
regard to subparagraphs (A), (H), (I), (J), (K), and (L)(i).
`(C) REGULATORY AUTHORITY- The Secretary may prescribe such
regulations as are necessary or appropriate to carry out the purposes of
this paragraph, including regulations which require more frequent or more
detailed reporting.'
(c) OTHER CONFORMING AMENDMENTS-
(1) Subchapter U of chapter 1 of such Code is amended by striking part
IV, by redesignating part V as part IV, and by redesignating section 1397F
as section 1397E.
(2) The table of subchapters for chapter 1 of such Code is amended by
adding at the end the following new item:
`Subchapter X. Public school modernization provisions.'
(3) The table of parts of subchapter U of chapter 1 of such Code is
amended by striking the last 2 items and inserting the following item:
`Part IV. Regulations.'
(1) IN GENERAL- Except as otherwise provided in this subsection, the
amendments made by this section shall apply to obligations issued after
December 31, 2000.
(2) REPEAL OF RESTRICTION
ON ZONE ACADEMY BOND HOLDERS- In the case of bonds to which section 1397E of
the Internal Revenue Code of 1986 (as in effect before the date of the
enactment of this Act) applies, the limitation of such section to eligible
taxpayers (as defined in subsection (d)(6) of such section) shall not apply
after the date of the enactment of this Act.
Subtitle F--Increased Estate Tax Relief for Family-Owned Business
Interests
SEC. 251. INCREASE IN ESTATE
TAX BENEFIT FOR FAMILY-OWNED
BUSINESS INTERESTS.
(a) TRANSFER TO CREDIT PROVISIONS- Section 2057 of the Internal Revenue
Code of 1986 (relating to family-owned business interests) is hereby moved to
part II of subchapter A of chapter 11 of such Code, inserted after section
2010, and redesignated as section 2010A.
(b) INCREASE IN CREDIT; SURVIVING SPOUSE ALLOWED UNUSED CREDIT OF
DECEDENT- Subsection (a) of section 2010A of such Code, as redesignated by
subsection (a) of this section, is amended to read as follows:
`(a) INCREASE IN UNITED CREDIT- For purposes of determining the unified
credit under section 2010 in the case of an estate of a decedent to which this
section applies--
`(1) IN GENERAL- The applicable exclusion amount under section 2010(c)
shall be increased (but not in excess of $2,000,000) by the adjusted value
of the qualified family-owned business interests of the decedent which are
described in subsection (b)(2) and for which no deduction is allowed under
section 2056.
`(2) TREATMENT OF UNUSED LIMITATION OF PREDECEASED SPOUSE- In the case
of a decedent--
`(A) having no surviving spouse, but
`(B) who was the surviving spouse of a decedent--
`(i) who died after December 31, 2000, and
`(ii) whose estate met
the requirements of subsection (b)(1) other than subparagraph (B)
thereof,
there shall be substituted for `$2,000,000' in paragraph (1) an amount
equal to the excess of $4,000,000 over the exclusion equivalent of the
credit allowed under section 2010 (as increased by this section) to the
estate of the decedent
referred to in subparagraph (B). For purposes of the preceding sentence, the
exclusion equivalent of the credit is the amount on which a tentative tax under section 2001(c) equal to
such credit would be imposed.'
(c) CONFORMING AMENDMENTS-
(1) The table of sections for part IV of subchapter A of chapter 11 of
such Code is amended by striking the item relating to section 2057.
(2) Paragraph (10) of section 2031(c) of such Code is amended by
striking `section 2057(e)(3)' and inserting `section 2010A(e)(3)'.
(3) The table of sections for part II of subchapter A of chapter 11 of
such Code is amended by inserting after the item relating to section 2010
the following new item:
`Sec. 2010A. Family-owned business interests.'
(d) EFFECTIVE DATE- The amendments made by this section shall apply to
estates of decedents dying after December 31, 2000.
Subtitle G--Revenue Offsets
PART I--REVISION OF TAX
RULES ON EXPATRIATION
SEC. 261. REVISION OF TAX
RULES ON EXPATRIATION.
(a) IN GENERAL- Subpart A of part II of subchapter N of chapter 1 of the
Internal Revenue Code of 1986 is amended by inserting after section 877 the
following new section:
`SEC. 877A. TAX
RESPONSIBILITIES OF EXPATRIATION.
`(a) GENERAL RULES- For purposes of this subtitle--
`(1) MARK TO MARKET- Except as provided in subsection (f), all property
of a covered expatriate to whom this section applies shall be treated as
sold on the day before the expatriation date for its fair market
value.
`(2) RECOGNITION OF GAIN OR LOSS- In the case of any sale under
paragraph (1)--
`(A) notwithstanding any other provision of this title, any gain
arising from such sale shall be taken into account for the taxable year of
the sale, and
`(B) any loss arising from such sale shall be taken into account for
the taxable year of the sale to the extent otherwise provided by this
title, except that section 1091 shall not apply to any such loss.
Proper adjustment shall be made in the amount of any gain or loss
subsequently realized for gain or loss taken into account under the
preceding sentence.
`(3) EXCLUSION FOR CERTAIN GAIN- The amount which would (but for this
paragraph) be includible in the gross income of any individual by reason of
this section shall be reduced (but not below zero) by $600,000. For purposes
of this paragraph, allocable expatriation gain taken into account under
subsection (f)(2) shall be treated in the same manner as an amount required
to be includible in gross income.
`(b) ELECTION TO DEFER TAX
-
`(1) IN GENERAL- If the taxpayer elects the application of this
subsection with respect to any property treated as sold by reason of
subsection (a), the payment of the additional tax attributable to such property
shall be postponed until the due date of the return for the taxable year in
which such property is disposed of (or, in the case of property disposed of
in a transaction in which gain is not recognized in whole or in part, until
such other date as the Secretary may prescribe).
`(2) DETERMINATION OF TAX
WITH RESPECT TO PROPERTY- For purposes of paragraph (1), the additional
tax attributable to any
property is an amount which bears the same ratio to the additional tax imposed by this chapter for the
taxable year solely by reason of subsection (a) as the gain taken into
account under subsection (a) with respect to such property bears to the
total gain taken into account under subsection (a) with respect to all
property to which subsection (a) applies.
`(3) TERMINATION OF POSTPONEMENT- No tax may be postponed under this
subsection later than the due date for the return of tax imposed by this chapter for the
taxable year which includes the date of death of the expatriate (or, if
earlier, the time that the security provided with respect to the property
fails to meet the requirements of paragraph (4), unless the taxpayer
corrects such failure within the time specified by the Secretary).
`(A) IN GENERAL- No election may be made under paragraph (1) with
respect to any property unless adequate security is provided with respect
to such property.
`(B) ADEQUATE SECURITY- For purposes of subparagraph (A), security
with respect to any property shall be treated as adequate security
if--
`(i) it is a bond in an amount equal to the deferred tax amount under paragraph
(2)(A) for the property, or
`(ii) the taxpayer otherwise establishes to the satisfaction of the
Secretary that the security is adequate.
`(5) WAIVER OF CERTAIN RIGHTS- No election may be made under paragraph
(1) unless the taxpayer consents to the waiver of any right under any treaty
of the United States which would preclude assessment or collection of any
tax imposed by reason of this
section.
`(6) ELECTIONS- An election under paragraph (1) shall only apply to
property described in the election and, once made, is irrevocable. An
election may be under paragraph (1) with respect to an interest in a trust
with respect to which gain is required to be recognized under subsection
(f)(1).
`(7) INTEREST- For purposes of section 6601, the last date for the
payment of tax shall be
determined without regard to the election under this subsection.
`(c) COVERED EXPATRIATE- For purposes of this section--
`(1) IN GENERAL- The term `covered expatriate' means an expatriate who
meets the requirements of subparagraph (A) or (B) of section
877(a)(2).
`(2) EXCEPTIONS- An individual shall not be treated as a covered
expatriate if--
`(i) became at birth a citizen of the United States and a citizen of
another country and, as of the expatriation date, continues to be a
citizen of, and is taxed as a resident of, such other country,
and
`(ii) has been a resident of the United States (as defined in
section 7701(b)(1)(A)(ii)) for not more than 8 taxable years during the
15-taxable year period ending with the taxable year during which the
expatriation date occurs, or
`(B)(i) the individual's relinquishment of United States citizenship
occurs before such individual attains age 18 1/2 , and
`(ii) the individual has been a resident of the United States (as so
defined) for not more than 5 taxable years before the date of
relinquishment.
`(d) SECTION NOT TO APPLY TO CERTAIN PROPERTY- This section shall not
apply to the following property:
`(1) UNITED STATES REAL PROPERTY INTERESTS- Any United States real
property interest (as defined in section 897(c)(1)), other than stock of a
United States real property holding corporation which does not, on the day
before the expatriation date, meet the requirements of section
897(c)(2).
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