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TAXPAYER RELIEF ACT OF 1997
Statement of the Managers
Index of Sub-Sections
Introduction to the Statement of Managers
Explanation of the TRA97
.
I.
CHILD AND DEPENDENT CARE TAX CREDIT; HEALTH CARE FOR CHILDREN
II. EDUCATION TAX INCENTIVES
III. SAVINGS AND
INVESTMENT TAX INCENTIVES
IV. ALTERNATIVE MINIMUM
TAX PROVISIONS
V.
ESTATE, GIFT, AND GENERATION-SKIPPING TAX PROVISIONS
VI.
EXTENSION OF CERTAIN EXPIRING TAX PROVISIONS
VII. DISTRICT OF
COLUMBIA TAX INCENTIVES
VIII. WELFARE-TO-WORK TAX
CREDIT
IX. MISCELLANEOUS PROVISIONS
X. REVENUE-INCREASE PROVISIONS
XI. FOREIGN TAX
PROVISIONS
XII. SIMPLIFICATION PROVISIONS
XIII. ESTATE, GIFT,
AND TRUST SIMPLIFICATION
XIV. EXCISE TAX
XV. PENSION AND
EMPLOYEE BENEFIT PROVISIONS
XVI. SENSE OF THE SENATE
RESOLUTIONS
XVII. TECHNICAL
CORRECTIONS PROVISIONS
XVIII OTHER TAX
PROVISIONS
XIX TRADE PROVISIONS
XX.
LIMITED TAX BENEFITS SUBJECT TO THE LINE ITEM VETO ACT
The links at the top of this page are to sections within this document. The links to the various parts of the Taxpayers' Relief Act of 1997 are provided below.
The cross links that are underlined in light blue (in red if you've been to that page) are to the separate web pages representing different parts of the Statement of the Managers (SOM) explanation of The Taxpayer's Relief Act of 1997. The other portions of this index page have been included on this page so you can see what the sub-topics are for those segments of the SOM. In some cases, the links are to sub-sections of main parts of the bills because the size of the files made it necessary to separate the sub-sections.
I. CHILD AND DEPENDENT CARE TAX CREDIT; HEALTH CARE FOR CHILDREN
A. Child Tax Credit (sec. 101(a), (c), and (d) of the House bill and sec. 101of the Senate amendment)
B. Expand Definition of High-Risk Individuals With Respect to Tax-Exempt State-Sponsored Organizations Providing Health Coverage (sec. 101(b) of the House bill)
C. Indexing of the Dependent Care Credit; Phase Out for High-Income Taxpayers (sec. 102 of the House bill)
D. Tax Credit for Employer Expenses for Child Care Facilities (sec. 103 of the Senate amendment)
E. Expansion of Coordinated Enforcement Efforts Between the Internal Revenue Service and the Health and Human Services Office of Child Support Enforcement (sec. 104 of the Senate amendment)
F. Penalty-Free Withdrawals From IRAs for Adoption Expenses (sec. 105 of the Senate amendment)
A-1. Tax Benefits Relating to Education Expenses
1. HOPE tax credit and Lifetime Learning tax credit for higher education tuition expenses (sec. 201 of the House bill the Senate amendment)
2. Tax treatment of qualified State tuition programs and education IRAs; exclusion for certain distributions from education IRAs used to pay qualified higher education expenses (secs. 202(a), (b), and (d) and 211-212 of the House bill and secs. 211-213 of the Senate amendment)
A-2. Other Tax Benefits Relating to Education Expenses
3. Phase out qualified tuition reduction exclusion (sec. 202(c) of the House bill)
4. Deduction for student loan interest (sec. 202 of the Senate amendment)
5. Penalty-free withdrawals from IRAs for higher education expenses (sec. 203 of the House bill sec. 203 of and the Senate amendment)
6. Tax credit for expenses for education which supplements elementary and secondary education (sec. 204 of the House bill)
7. Certain teacher education expenses not subject to 2-percent floor on miscellaneous itemized deductions (sec. 224 of the Senate amendment)
B. Other Education-Related Tax Provisions
1. Extension of exclusion for employer-provided educational assistance (sec. 221 of the House bill and sec. 221 of the Senate amendment)
2. Modification of $150 million limit on qualified 501(c)(3) bonds other than hospital bonds (sec. 222 of the House bill and sec. 222 of the Senate amendment) 3. Enhanced deduction for corporate contributions of computer technology and equipment (sec. 223 of the House bill)
4. Expansion of arbitrage rebate exception for certain bonds (sec. 223 of the Senate amendment)
5. Treatment of cancellation of certain student loans (sec. 224 of the House bill and sec. 225 of the Senate amendment)
6. Tax credit for holders of qualified zone academy bonds
III. SAVINGS AND INVESTMENT TAX INCENTIVES
A. Individual Retirement Arrangements
1. Increase deductible IRA phase-out range and modify active participant rule (sec. 301 of the Senate amendment)
2. Tax-free nondeductible IRAs (sec. 301 of the House bill and sec. 302 of the Senate amendment)
3. Modifications to early withdrawal tax (sec. 301 of the House bill and sec. 303 of the Senate amendment)
4. IRA investments in coins and bullion (sec. 304 of the Senate amendment)
B. Capital Gains Provisions
1. Maximum rate of tax on net capital gains of individuals (sec. 311 of the House bill and sec. 311 of the Senate amendment)
2. Small business stock (sec. 311 of the House bill and secs. 312-313 of the Senate amendment)
3. Indexing of certain assets for purposes of determining gain (sec. 312 of the House bill)
4. Exclusion of gain from sale of principal residence (sec. 313 of the House bill and sec. 314 of the Senate amendment)
5. Corporate capital gains (sec. 321 of the House bill)
IV. ALTERNATIVE MINIMUM TAX PROVISIONS
A. Increase Exemption Amount Applicable to Individual Alternative Minimum Tax (sec. 401 of the House bill and sec. 102 of the Senate amendment)
B. Repeal Alternative Minimum Tax for Small Businesses and Repeal the Depreciation Adjustment (secs. 402-403 of the House bill and secs. 55-56 of the Senate amendment)
C. Repeal AMT Installment Method Adjustment for Farmers (sec. 404 of the House bill and sec. 732 of the Senate amendment)
V. ESTATE, GIFT, AND GENERATION-SKIPPING TAX PROVISIONS
A. Estate and Gift Tax Provisions
1. Increase in estate and gift tax unified credit (sec. 501(a) of the House bill and sec. 401(a) of the Senate amendment)
2. Indexing of certain other estate and gift tax provisions (sec. 501(b)-(e) of the House bill and sec. 401(b)-(e) of the Senate amendment)
3. Estate tax exclusion for qualified family-owned businesses (sec. 402 of the Senate amendment)
4. Reduction in estate tax for certain land subject to permanent conservation easement (sec. 403 of the Senate amendment)
5. Installment payments of estate tax attributable to closely held businesses (secs. 502-503 of the House bill and secs. 404-405 of the Senate amendment)
6. Estate tax recapture from cash leases of specially-valued property (sec. 504 of the House bill and sec. 406 of the Senate amendment) 7. Clarify eligibility for extension of time for payment of estate tax (sec. 505 of the House bill)
8. Gifts may not be revalued for estate tax purposes after expiration of statute of limitations (sec. 506 of the House bill)
9. Repeal of throwback rules applicable to domestic trusts (sec. 507 of the House bill)
10. Unified credit of decedent increased by unified credit of spouse used on split gift included in decedent's gross estate (sec. 508 of the House bill)
11. Reformation of defective bequests to spouse of decedent (sec. 509 of the House bill)
B. Generation-Skipping Tax Provisions
1. Severing of trusts holding property having an inclusion ratio of greater than zero (sec. 511 of the House bill)
2. Modification of generation-skipping transfer tax for transfers to individuals with deceased parents (sec. 512 of the House bill and sec. 407 of the Senate amendment)
VI. EXTENSION OF CERTAIN EXPIRING TAX PROVISIONS
A. Research Tax Credit (sec. 601 of the House bill and sec. 501 of the Senate amendment)
B. Contributions of Stock to Private Foundations (sec. 602 of the House bill and sec. 502 of the Senate amendment)
C. Work Opportunity Tax Credit (sec. 603 of the House bill and sec. 503 of the Senate amendment)
D. Orphan Drug Tax Credit (sec. 604 of the House bill and sec. 504 of the Senate amendment)
VII. DISTRICT OF COLUMBIA TAX INCENTIVES (secs. 701-702 of the House bill and sec. 601 of the Senate amendment)
VIII. WELFARE-TO-WORK TAX CREDIT (sec. 801 of the House bill)
1. Repeal excise tax on diesel fuel used in recreational motorboats (sec. 901 of the House bill and sec. 701 of the Senate amendment)
2. Continued application of tax on imported recycled Halon-1211 (sec. 902 of the House bill)
3. Transfer of General Fund highway fuels tax revenues to the Highway Trust Fund (sec. 704 of the Senate amendment)
4. Tax certain alternative fuels based on energy equivalency to gasoline (sec. 705 of the Senate amendment)
5. Extend and modify tax benefits for ethanol (sec. 605 of the House bill and sec. 707 of the Senate amendment)
6. Treat certain gasoline "chain retailers" as wholesale distributors under the gasoline excise tax refund rules (sec. 904 of the House bill)
7. Exemption of electric and other clean-fuel motor vehicles from luxury automobile classification (sec. 905 of the House bill)
8. Reduce rate of alcohol excise tax on certain hard ciders (sec. 703 of the Senate amendment)
9. Study feasibility of moving collection point for distilled spirits excise tax (sec. 706 of the Senate amendment)
10. Codify Treasury Department regulations regulating wine labels (sec. 708 of the Senate amendment)
11. Uniform rate of excise tax on vaccines (sec. 903 of the House bill and sec. 844 of the Senate amendment)
1. Authority to postpone certain tax-related deadlines by reason of Presidentially declared disaster (sec. 921 of the House bill)
2. Use of certain appraisals to establish amount of disaster loss (sec. 922 of the House bill)
3. Treatment of livestock sold on account of weather-related conditions (sec. 923 of the House bill and sec. 721 of the Senate amendment)
4. Mortgage bond financing for residences located in Presidentially declared disaster areas (sec. 924 of the House bill and sec. 723 of the Senate amendment)
5. Rules relating to denial of earned income credit on basis of disqualified income (sec. 722 of the Senate amendment)
6. Penalty-free withdrawals from IRAs for disaster-related expenses (sec. 724 of the Senate amendment)
7. Elimination of 10-percent floor for casualty losses resulting from Presidentially declared disaster (sec. 725 of the Senate amendment)
8. Requirement to abate interest by reason of Presidentially declared disaster (sec. 726 of the Senate amendment)
C. Provisions Relating to Employment Taxes
1. Employment tax status of distributors of bakery products (sec. 931 of the House bill)
2. Clarification of standard to be used in determining tax status of retail securities brokers (sec. 932 of the House bill and sec. 779 of the Senate amendment)
3. Clarification of exemption from self-employment tax for certain termination payments received by former insurance salesmen (sec. 933 of the House bill)
4. Safe harbor for independent contractors (sec. 934 of the House bill) 5. Combined employment tax reporting demonstration project (sec. 769 of the Senate amendment)
D. Provisions Relating to Small Businesses
1. Delay imposition of penalties for failure to make payments electronically through EFTPS (sec. 941 of the House bill and sec. 731 of the Senate amendment)
2. Home office deduction: clarification of definition of principal place of business (sec. 942 of the House bill)
3. Increase deduction for health insurance costs of self-employed individuals (sec. 733 of the Senate amendment)
E-1. Other Provisions - Parts 1 through 10
1. Shrinkage estimates for inventory accounting (sec. 951 of the House bill and sec. 1013 of the Senate amendment)
2. Treatment of workmen's compensation liability under rules for certain personal injury liability assignments (sec. 952 of the House bill)
3. Tax-exempt status for certain State workmen's compensation act companies (sec. 953 of the House bill and sec. 761 of the Senate amendment)
4. Election for 1987 partnerships to continue exception from treatment of publicly traded partnerships as corporations (sec. 954 of the House bill and sec. 762 of the Senate amendment)
5. Exclusion from UBIT for certain corporate sponsorship payments (sec. 955 of the House bill and sec. 763 of the Senate amendment)
6. Timeshare associations (sec. 956 of the House bill and sec. 764 of the Senate amendment)
7. Deferral of gain on certain sales of farm product refiners and processors (sec. 958 of the House bill) 8. Exception from real estate reporting requirements for sales of principal residences (sec. 959 of the House bill and secs. 314(c) and 601(d) of the Senate amendment)
9. Increased deduction for business meals while operating under Department of Transportation hours of service limitations (sec. 960 of the House bill and sec. 765 of the Senate amendment)
10. Deductibility of meals provided for the convenience of the employer and provided by remote seafood processors (secs. 765 and 778 of the Senate amendment)
E-2. Other Provisions - Parts 11 through 20
11. Deduction of traveling expenses while working away from home on qualified construction projects (sec. 775 of the Senate amendment)
12. Provide above-the-line-deduction for certain business expenses (sec. 766 of the Senate amendment)
13. Increase in standard mileage rate for purposes of computing charitable deduction (sec. 767 of the Senate amendment)
14. Expensing of environmental remediation costs ("brownfields") (sec. 768 of the Senate amendment)
15. Treatment of consolidation of certain mutual savings bank life insurance departments (sec. 962 of the House bill)
16. Offset of past-due, legally enforceable State tax obligations against Federal overpayments (sec. 963 of the House bill)
17. Modify limits on depreciation of luxury automobiles for certain clean-burning fuel and electric vehicles (sec. 964 of the House bill)
18. Survivor benefits of public safety officers killed in the line of duty (sec. 965 of the House bill and sec. 784 of the Senate amendment)
19. Temporary suspension of income limitations on percentage depletion for production from marginal wells (sec. 966 of the House bill and sec. 772 of the Senate amendment)
E-3. Other Provisions - Parts 21 through 32
20. Extend production credit for electricity produced from wind and closed loop biomass (sec. 771 of the Senate amendment)
21. Modification of advance refunding rules for certain tax-exempt bonds issued by the Virgin Islands (sec. 957 of the House bill)
22. Qualified small-issue bonds (sec. 770 of the Senate amendment)
23. Treatment of bonds issued by the Federal Home Loan Bank Board under the Federal guarantee rules (sec. 774 of the Senate amendment)
24. Current refundings of certain bonds issued by Indian Tribal governments (sec. 789 of the Senate amendment)
25. Purchasing of receivables by tax-exempt hospital cooperative service organizations (sec. 773 of the Senate amendment)
26. Charitable contribution deduction for certain expenses incurred in support of Native Alaskan subsistence whaling (sec. 776 of the Senate amendment)
27. Designation of additional empowerment zones; modification of empowerment zone and enterprise community criteria (sec. 777 of the Senate amendment)
28. Conducting of certain qualified games of chance not treated as unrelated trade or business (sec. 783 of the Senate amendment)
29. Exclusion from income of certain severance payments (sec. 788(a) of the Senate amendment)
30. Special rule for thrift institutions that became large banks (sec. 790 of the Senate amendment)
31. Income averaging for farmers (sec. 792 of the Senate amendment)
32. Intercity Passenger Rail Fund; elective carryback of existing net operating losses of the National Railroad Passenger Corporation (Amtrak) (sec. 702 of the Senate amendment)
X. REVENUE-INCREASE PROVISIONS
1. Require recognition of gain on certain appreciated positions in personal property (sec. 1001(a) of the House bill and sec. 801(a) of the Senate amendment)
2. Election of mark-to-market for securities traders and for traders and dealers in commodities (sec. 1001(b) of the House bill and sec. 801(b) of the Senate amendment)
3. Limitation on exception for investment companies under section 351 (sec. 1002 of the House bill and sec. 802 of the Senate amendment)
4. Disallowance of interest on indebtedness allocable to tax-exempt obligations (sec. 1003 of the House bill)
5. Gains and losses from certain terminations with respect to property (sec. 1004 of the House bill and sec. 803 of the Senate amendment)
6. Determination of original issue discount where pooled debt obligations subject to acceleration (sec. 1005 of the House bill)
7. Deny interest deduction on certain debt instruments (sec. 1006 of the House bill)
B. Corporate Organizations and Reorganizations
1. Require gain recognition for certain extraordinary dividends (sec. 1011 of the House bill and sec. 811 of the Senate amendment)
2. Require gain recognition on certain distributions of controlled corporation stock (sec. 1012 of the House bill and sec. 812 of the Senate amendment)
3. Reform tax treatment of certain corporate stock transfers (sec. 1013 of the House bill and sec. 813 of the Senate amendment)
4. Modify holding period for dividends-received deduction (sec. 1014 of the House bill and sec. 814 of the Senate amendment)
1. Registration of confidential corporate tax shelters and substantial understatement penalty (sec. 1021 of the House bill and sec. 821 of the Senate amendment)
2. Treat certain preferred stock as boot (sec. 1022 of the House bill and sec. 822 of the Senate amendment)
1. Reporting of certain payments made to attorneys (sec. 1031 of the House bill)
2. Information reporting on persons receiving contract payments from certain Federal agencies (sec. 1032 of the House bill and sec. 831 of the Senate amendment)
3. Disclosure of tax return information for administration of certain veterans programs (sec. 1033 of the House bill and sec. 832 of the Senate amendment)
4. Establish IRS continuous levy and improve debt collection
a. Continuous levy (sec. 1034 of the House bill and sec. 834 of the Senate amendment)
b. Modifications of levy exemptions (secs. 1035-1036 of the House bill and secs. 835-836 of the Senate amendment)
5. Consistency rule for beneficiaries of trusts and estates (sec. 1037 of the House bill and sec. 833 of the Senate amendment)
1. Extension and modification of Airport and Airway Trust Fund excise taxes (sec. 1041 of the House bill and sec. 841 of the Senate amendment)
2. Extend diesel fuel excise tax rules to kerosene (sec. 1042 of the House bill)
3. Reinstate Leaking Underground Storage Tank Trust Fund excise tax (sec. 1043 of the House bill and sec. 842 of the Senate amendment)
4. Application of communications excise tax to prepaid telephone cards (sec. 1044 of the House bill and sec. 843 of the Senate amendment)
5. Modify treatment of tires under the heavy vehicle retail excise tax on trucks (sec. 1402 of the House bill and sec. 845 of the Senate amendment)
6. Increase tobacco excise taxes (sec. 846 of the Senate amendment)
F. Provisions Relating to Tax-Exempt Organizations
1. Extend UBIT rules to second-tier subsidiaries and amend control test (sec. 1051 of the House bill and sec. 851 of the Senate amendment)
2. Limitation on increase in basis of property resulting from sale by tax-exempt entity to related person (sec. 1052 of the House bill and sec. 852 of the Senate amendment)
3. Reporting and proxy tax requirements for political and lobbying expenditures of certain tax-exempt organizations (sec. 1053 of the House bill)
4. Repeal grandfather rule with respect to pension business of certain insurers (sec. 1054 of the House bill and sec. 853 of the Senate amendment)
1. Inclusion of income from notional principal contracts and stock lending transactions under Subpart F (sec. 1171 of the House bill and sec. 861 of the Senate amendment)
2. Restrict like-kind exchange rules for certain personal property (sec 1172 of the House bill and sec. 862 of the Senate amendment).
3. Impose holding period requirement for claiming foreign tax credits with respect to dividends (sec. 1173 of the House bill and sec. 863 of the Senate amendment)
4. Penalties for failure to file disclosure of exemption for income from the international operation of ships or aircraft by foreign persons (sec. 1174 of the House bill)
5. Limitation on treaty benefits for payments to hybrid entities (sec. 1175 of the House bill and sec. 742 of the Senate amendment)
6. Interest on underpayments that are reduced by foreign tax credit carrybacks (sec. 1176 of the House bill and sec. 865 of the Senate amendment)
7. Determination of period of limitations relating to foreign tax credits (sec. 1177 of the House bill and sec. 866 of the Senate amendment)
8. Treatment of income from certain sales of inventory as U.S. source (sec. 864 of the Senate amendment)
9. Modify foreign tax credit carryover rules (sec. 867 of the Senate amendment)
10. Repeal special exception to foreign tax credit limitation for alternative minimum tax purposes (sec. 868 of the Senate amendment)
H. Pension and Employee Benefit Provisions
1. Cashout of certain accrued benefits (sec. 917 of the House bill and sec. 879 of the Senate amendment)
2. Election to receive taxable cash compensation in lieu of nontaxable parking benefits (sec. 880 of the Senate amendment)
3. Repeal of excess distribution and excess retirement accumulation taxes (sec. 882 of the Senate amendment)
4. Tax on prohibited transactions (sec. 884 of the Senate amendment)
5. Basis recovery rules (sec. 885 of the Senate amendment)
I. Other Revenue-Increase Provisions
1. Phase out suspense accounts for certain large farm corporations (sec. 1061 of the House bill and sec. 871 of the Senate amendment)
2. Modify net operating loss carryback and carryforward rules (sec. 1062 of the House bill and sec. 872 of the Senate amendment)
3. Expand the limitations on deductibility of interest and premiums with respect to life insurance, endowment, and annuity contracts (sec. 1063 of the House bill and sec. 873 of the Senate amendment)
4. Allocation of basis of properties distributed to a partner by a partnership (sec. 1064 of the House bill and sec. 874 of the Senate amendment)
5. Treatment of inventory items of a partnership (sec. 1065 of the House bill and sec. 875 of the Senate amendment)
6. Treatment of appreciated property contributed to a partnership (sec. 1066 of the House bill)
7. Earned income credit compliance provisions (sec. 1067 of the House bill and sec. 5851 of the Senate amendment to H.R. 2015)
a. Deny EIC eligibility for prior acts of recklessness or fraud
b. Recertification required when taxpayer found to be ineligible for EIC in past
c. Due diligence requirements for paid preparers
d. Modify the definition of AGI used to phaseout the EIC
8. Eligibility for income forecast method (sec. 1068 of the House bill and sec. 876 of the Senate amendment)
9. Require taxpayers to include rental value of residence in income without regard to period of rental (sec. 1069 of the House bill)
10. Modify the exception to the related-party rule of section 1033 for individuals to only provide an exception for de minimis amounts (sec. 1070 of the House bill and sec. 877 of the Senate amendment)
11. Repeal of exception for certain sales by manufacturers to dealers (sec. 1071 of the House bill and sec. 878 of the Senate amendment
12. Extension of Federal unemployment surtax (sec. 881 of the Senate amendment)
13. Treatment of charitable remainder trusts (sec. 883 of the Senate amendment)
14. Modify general business credit carryback and carryforward rules (sec. 788(b) of the Senate amendment)
15. Using Federal case registry of child support orders for tax enforcement purposes
16. Expanded SSA records for tax enforcement
17. Treatment of amounts received under the work requirements of the Personal Responsibility and Work Opportunity Act of 1996
1. Simplify foreign tax credit limitation for individuals (sec. 1103 of the House bill and sec. 901 of the Senate amendment)
2. Simplify translation of foreign taxes (sec. 1104 of the House bill and sec. 902 of the Senate amendment)
3. Election to use simplified foreign tax credit limitation for alternative minimum tax purposes (sec. 1105 of the House bill and sec. 903 of the Senate amendment)
4. Simplify treatment of personal transactions in foreign currency (sec. 1106 of the House bill and sec. 904 of the Senate amendment)
5. Simplify foreign tax credit limitation for dividends from 10/50 companies (sec. 1107 of the House bill)
B. General Provisions Affecting Treatment of Controlled Foreign Corporations (secs. 1111-1113 of the House bill and secs. 911-913 of the Senate amendment)
C. Modification of Passive Foreign Investment Company Provisions to Eliminate Overlap With Subpart F, to Allow Mark-to-Market Election, and to Require Measurement Based on Value for PFIC Asset Test (secs. 1121-1123 of the House bill and secs. 751-753 of the Senate amendment)
D. Simplify Formation and Operation of International Joint Ventures (secs. 1131, 1141-1145, and 1151 of the House bill and secs. 921, 931-935, and 941 of the Senate amendment)
E. Modification of Reporting Threshold for Stock Ownership of a Foreign Corporation (sec. 1146 of the House bill and sec. 936 of the Senate amendment)
F. Other Foreign Simplification Provisions
1. Transition rules for certain trusts (sec. 1161 of the House bill and sec. 951 of the Senate amendment)
2. Simplify stock and securities trading safe harbor (sec. 1162 of the House bill and sec. 952 of the Senate amendment)
3. Clarification of determination of foreign taxes deemed paid (sec. 1178(a) of the House bill and sec. 953(a) of the Senate amendment)
4. Clarification of foreign tax credit limitation for financial services income (sec. 1178(b) of the House bill and sec. 953(b) of the Senate amendment)
1. Eligibility of licenses of computer software for foreign sales corporation benefits (sec. 1101 of the House bill and sec. 741 of the Senate amendment)
2. Increase dollar limitation on section 911 exclusion (sec. 1102 of the House bill)
3. Treatment of certain securities positions under the subpart F investment in U.S. property rules (sec. 743 of the Senate amendment)
4. Exception from foreign personal holding company income under subpart F for active financing income (sec. 744 of the Senate amendment)
5. Treat service income of nonresident alien individuals earned on foreign ships as foreign source income and disregard the U.S. presence of such individuals (sec. 745 of the Senate amendment)
XII. SIMPLIFICATION PROVISIONS RELATING TO INDIVIDUALS AND BUSINESSES
A. Provisions Relating to Individuals
1. Modifications to standard deduction of dependents; AMT treatment of certain minor children (sec. 1201 of the House bill and sec. 1001 of the Senate amendment)
2. Increase de minimis threshold for estimated tax to $1,000 for individuals (sec. 1202 of the House bill and sec. 1002 of the Senate amendment)
3. Optional methods for computing SECA tax combined (sec. 1203 of the House bill)
4. Treatment of certain reimbursed expenses of rural letter carrier's vehicles (sec. 1204 of the House bill and sec. 1003 of the Senate amendment)
5. Travel expenses of Federal employees participating in a Federal criminal investigation (sec. 1205 of the House bill and sec. 1004 of the Senate amendment)
6. Payment of taxes by commercially acceptable means (sec. 1206 of the House bill)
B. Provisions Relating to Businesses Generally
1. Modifications to look-back method for long-term contracts (sec. 1211 of the House bill and sec. 1011 of the Senate amendment)
2. Minimum tax treatment of certain property and casualty insurance companies (sec. 1212 of the House bill and sec. 1012 of the Senate amendment)
3. Treatment of construction allowances provided to lessees (sec. 961 of the House bill and sec. 1014 of the Senate amendment)
C. Partnership Simplification Provisions
1. General provisions
a. Simplified flow-through for electing large partnerships (sec. 1221 of the House bill and sec. 1021 of the Senate amendment)
b. Simplified audit procedures for electing large partnerships (sec. 1222 of the House bill and sec. 1022 of the Senate amendment)
c. Due date for furnishing information to partners of electing large partnerships (sec. 1223 of the House bill and sec. 1023 of the Senate amendment)
d. Partnership returns required on magnetic media (sec. 1224 of the House bill and sec. 1024 of the Senate amendment)
e. Treatment of partnership items of individual retirement arrangements (sec. 1225 of the House bill and sec. 1025 of the Senate amendment)
2. Other partnership audit rules
a. Treatment of partnership items in deficiency proceedings (sec. 1231 of the House bill and sec. 1031 of the Senate amendment)
b. Partnership return to be determinative of audit procedures to be followed (sec. 1232 of the House bill and sec. 1032 of the Senate amendment)
c. Provisions relating to statute of limitations (sec. 1233 of the House bill and sec. 1033 of the Senate amendment)
d. Expansion of small partnership exception (sec. 1234 of the House bill and sec. 1034 of the Senate amendment)
e. Exclusion of partial settlements from 1-year limitation on assessment (sec. 1235 of the House bill and sec. 1035 of the Senate amendment)
f. Extension of time for filing a request for administrative adjustment (sec. 1236 of the House bill and sec. 1036 of the Senate amendment)
g. Availability of innocent spouse relief in context of partnership proceedings (sec. 1237 of the House bill and sec. 1037 of the Senate amendment)
h. Determination of penalties at partnership level (sec. 1238 of the House bill and sec. 1038 of the Senate amendment)
i. Provisions relating to Tax Court jurisdiction (sec. 1239 of the House bill and sec. 1039 of the Senate amendment)
j. Treatment of premature petitions filed by notice partners or 5-percent groups (sec. 1240 of the House bill and sec. 1040 of the Senate amendment)
k. Bonds in case of appeals from certain proceedings (sec. 1241 of the House bill and sec. 1041 of the Senate amendment)
l. Suspension of interest where delay in computational adjustment resulting from certain settlements (sec. 1242 of the House bill and sec. 1042 of the Senate amendment)
m. Special rules for administrative adjustment requests with respect to bad debts or worthless securities (sec. 1243 of the House bill and sec. 1043 of the Senate amendment)
3. Closing of partnership taxable year with respect to deceased partner (sec. 1246 of the House bill and sec. 1046 of the Senate amendment)
D. Modifications of Rules for Real Estate Investment Trusts (secs. 1251-1263 of the House bill and secs. 1051-1063 of the Senate amendment)
E. Repeal the "Short-Short" Test for Regulated Investment Companies (sec. 1271 of the House bill and sec. 1071 of the Senate amendment)
1. Provide reasonable cause exception for additional penalties (sec. 1281 of the House bill and sec. 1081 of the Senate amendment)
2. Clarification of period for filing claims for refunds (sec. 1282 of the House bill and sec. 1082 of the Senate amendment)
3. Repeal of authority to disclose whether a prospective juror has been audited (sec. 1283 of the House bill and sec. 1083 of the Senate amendment)
4. Clarify statute of limitations for items from pass-through entities (sec. 1284 of the House bill and sec. 1084 of the Senate amendment)
5. Awarding of administrative costs and attorneys fees (sec. 1285 of the House bill)
6. Prohibition on browsing (secs. 1286-1287 of the House bill and secs. 1085-1086 of the Senate amendment)
XIII. ESTATE, GIFT, AND TRUST SIMPLIFICATION PROVISIONS
1. Eliminate gift tax filing requirements for gifts to charities (sec. 1301 of the House bill and secs 1101 of the Senate amendment)
2. Clarification of waiver of certain rights of recovery (sec. 1302 of the House bill and sec. 1102 of the Senate amendment)
3. Transitional rule under section 2056A (sec. 1303 of the House bill and sec. 1103 of the Senate amendment)
4. Clarifications relating to disclaimers (sec. 1304 of the House bill)
5. Amend 5 or 5 power (sec. 1305 of the House bill)
6. Treatment of estate tax purposes of short-term obligations held by nonresident aliens (sec. 1306 of the House bill and sec. 1104 of the Senate amendment)
7. Certain revocable trusts treated as part of estate (sec. 1307 of the House bill)
8. Distributions during first 65 days of taxable year of estate (sec. 1308 of the House bill and sec. 1105 of the Senate amendment)
9. Separate share rules available to estates (sec. 1309 of the House bill and sec. 1106 of the Senate amendment)
10. Executor of estate and beneficiaries treated as related persons for disallowance of losses (sec. 1310 of the House bill and sec. 1107 of the Senate amendment)
11. Limitation on taxable year of estates (sec. 1311 of the House bill)
12. Simplified taxation of earnings of pre-need funeral trusts (sec. 1312 of the House bill and sec. 1108 of the Senate amendment)
13. Adjustments for gifts within 3 years of decedent's death (sec. 1313 of the House bill and sec. 1109 of the Senate amendment)
14. Clarify relationship between community property rights and retirement benefits (sec. 1314 of the House bill and sec. 1110 of the Senate amendment
15. Treatment under qualified domestic trust rules of forms of ownership which are not trusts (sec. 1315 of the House bill and sec. 1111 of the Senate amendment)
16. Opportunity to correct certain failures under section 2032A (sec. 1316 of the House bill and sec. 1112 of the Senate amendment)
17. Authority to waive requirement of U.S. trustee for qualified domestic trusts (sec. 1317 of the House bill and sec. 1113 of the Senate amendment)
XIV. EXCISE TAX AND OTHER SIMPLIFICATION PROVISIONS
A. Excise Tax Simplification Provisions
1. Increase de minimis limit for after-market alternations subject to heavy truck and luxury automobile excise taxes (sec. 1401 of the House bill and sec. 1201 of the Senate amendment)
2. Simplification of excise taxes on distilled spirits, wine, and beer (secs. 1411-1422 of the House bill and secs. 1211-1222 of the Senate amendment)
3. Authority for Internal Revenue Service to grant exemptions from excise tax registration requirements (sec. 1431 of the House bill and sec. 1231 of the Senate amendment)
4. Repeal of expired excise tax provisions (sec. 1432 of the House bill and sec. 1232 of the Senate amendment)
5. Modifications to the excise tax on arrows (sec. 1233 of the Senate amendment)
6. Modifications to heavy highway vehicle retail excise tax (sec. 1234 of the Senate amendment)
7. Treatment of skydiving flights as noncommercial aviation (sec. 1235 of the Senate amendment)
8. Eliminate double taxation of certain aviation fuels sold to producers by fixed base operators (sec. 1236 of the Senate amendment)
B. Tax-Exempt Bond Provisions
1. Repeal of $100,000 limitation on unspent proceeds under 1-year exception from rebate (sec. 1441 of the House bill and sec. 1241 of the Senate amendment)
2. Exception from rebate for earnings on bona fide debt service fund under construction bond rules (sec. 1442 of the House bill and sec. 1242 of the Senate amendment)
3. Repeal of debt service-based limitation on investment in certain nonpurpose investments (sec. 1443 of the House bill and sec. 1243 of the Senate amendment)
4. Repeal of expired provisions relating to student loan bonds (sec. 1444 of the House bill and sec. 1244 of the Senate amendment)
C. Tax Court Procedures
1. Overpayment determinations of Tax Court (sec. 1451 of the House bill and sec. 1251 of the Senate amendment)
2. Redetermination of interest pursuant to motion (sec. 1452 of the House bill and sec. 1252 of the Senate amendment)
3. Application of net worth requirement for awards of litigation costs (sec. 1453 of the House bill and sec. 1253 of the Senate amendment)
4. Tax Court jurisdiction for determination of employment status (sec. 1454 of the House bill and sec. 1254 of the Senate amendment)
D. Other Provisions
1. Due date for first quarter estimated tax payments by private foundations (sec. 1461 of the House bill and sec. 1261 of the Senate amendment)
2. Withholding of Commonwealth income taxes from wages of Federal employees (sec. 1462 of the House bill and sec. 1262 of the Senate amendment)
3. Certain notices disregarded under provision increasing interest rate on large corporate underpayments (sec. 1463 of the House bill and sec. 1263 of the Senate amendment)
XV. PENSION AND EMPLOYEE BENEFIT PROVISIONS
A. Miscellaneous Provisions Relating to Pensions and Other Benefits
1. Cash or deferred arrangements for irrigation and drainage entities (sec. 911 of the House bill)
2. Permanent moratorium on application of nondiscrimination rules to State and local governmental plans (sec. 912 of the House bill and sec. 1308 of the Senate amendment)
3. Treatment of certain disability payments to public safety employees (sec. 913 of the House bill and sec. 785 of the Senate amendment)
4. Portability of permissive service credit under governmental pension plans (sec. 914 of the House bill)
5. Gratuitous transfers for the benefit of employees (sec. 915 of the House bill)
6. Treatment of certain transportation on noncommercially operated aircraft as a fringe benefit (sec. 916 of the House bill)
7. Clarification of certain rules relating to ESOPs of S corporations (sec. 918 of the House bill and sec. 1309 of the Senate amendment)
8. Repeal application of UBIT to ESOPs of S corporations (sec. 716 of the Senate amendment)
9. Treatment of multiemployer plans under section 415 (sec. 711 of the Senate amendment)
10. Modification of partial termination rules (sec. 712 of the House amendment)
11. Increase in full funding limit (sec. 713 of the Senate amendment)
12. Spousal consent required for distributions from section 401(k) plans (sec. 714 of the Senate amendment)
13. Contributions on behalf of a minister to a church plan (sec. 715 of the Senate amendment)
14. Exclusion of ministers from discrimination testing of certain non-church retirement plans (sec. 715 of the Senate amendment)
15. Diversification in section 401(k) plan investments (sec. 717 of the Senate amendments)
16. Removal of dollar limitation on benefit payments from a defined benefit plan for police and fire employees (sec. 786 of the Senate amendment)
17. Church plan exception to prohibition on discrimination against individuals based on health status
18. Newborns' and mothers' health protection; mental health parity
B. Pension Simplification Provisions
1. Matching contributions of self-employed individuals not treated as elective deferrals (sec. 1301 of the Senate amendment)
2. Contributions to IRAs through payroll deductions (sec. 1302 of the Senate amendment)
3. Plans not disqualified merely by accepting rollover contributions (sec. 1303 of the Senate amendment)
4. Modification of prohibition on assignment or alienation (sec. 1304 of the Senate amendment)
5. Elimination of paperwork burdens on plans (sec. 1305 of the Senate amendment)
6. Modification of section 403(b) exclusion allowance to conform to section 415 modifications (sec. 1306 of the Senate amendment)
7. New technologies in retirement plans (sec. 1307 of the Senate amendment)
8. Modification of 10-percent tax on nondeductible contributions (sec. 1310 of the Senate amendment)
9. Modify funding requirements for certain plans (sec. 1311 of the Senate amendment)
10. Date for adoption of plan amendments
XVI. SENSE OF THE SENATE RESOLUTIONS
A. Sense of the Senate Regarding Reform of the Internal Revenue Code of 1986 (sec. 780 of the Senate amendment)
B. Sense of the Senate Regarding Tax Treatment of Stock Options (sec. 781 of the Senate amendment)
C. Sense of the Senate Regarding Estate Taxes (sec. 782 of the Senate amendments)
D. Sense of the Senate Regarding Who Should Benefit From Tax Cuts (sec. 791 of the Senate amendment)
E. Sense of the Senate Regarding Self-Employment Taxes of Limited Partners (sec. 734 of the Senate amendment)
XVII. TECHNICAL CORRECTIONS PROVISIONS
A. Estimated Tax Requirements of Individuals for 1997 and 1998 (sec. 311(d) of the House bill)
A. Extension of Duty-Free Treatment Under the Generalized System of Preferences (sec. 971 of the House bill)
B. Temporary Suspension of Vessel Repair Duty (sec. 972 of the House bill)
C. United States-Caribbean Basin Trade Partnership Act (secs. 981-988 of the House bill)
XX. LIMITED TAX BENEFITS SUBJECT TO THE LINE ITEM VETO ACT
The Taxpayer's Relief Act of 1997 is a public document that has been copied intact and made available as part of this Tax Help web site. The original document obtained from the House Ways & Means Committee web site was about one megabyte in size. To make it easier to locate different parts of the document, it was broken into sections, and in some cases, into sub-sections. Cross links were created from the index to the separate sections of the bill. The indexing and organization was done by Vernon Jacobs.