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Page:United States Statutes at Large Volume 98 Part 1.djvu/1067

 PUBLIC LAW 98-369—JULY 18, 1984

98 STAT. 1019

(d) CLERICAL AMENDMENT.—The table of sections for part I of subchapter D of chapter 32 is amended by adding at the end thereof the following new item: "Sec. 4162. Definitions; treatment of certain resales." (e) EFFECTIVE DATE.—

26 USC 4162

(1) IN GENERAL.—Except as provided in paragraph (2), the note. amendments made by this section shall apply with respect to articles sold by the manufacturer, producer, or importer after September 30, 1984. (2) TREATMENT OF CERTAIN RESALES.—Subsection (c) of section 4162 of the Internal Revenue Code of 1954 (relating to treat- Ante, p. 1017. ment of certain resales), as added by this section, shall apply to sales by related persons (as defined in such subsection) after the date of the enactment of this Act. SEC. 1016. ESTABLISHMENT OF AQUATIC RESOURCES TRUST FUND. (a) GENERAL RULE.—Subchapter A of chapter 98 (relating to Trust

Fund Code) is amended by adding at the end thereof the following new section: "SEC. 9504. AQUATIC RESOURCES TRUST FUND. "(a) CREATION OF TRUST F U N D. —

''

26 USC 9504.

"(1) IN GENERAL.—There is hereby established in the Treasury of the United States a trust fund to be known as the Aquatic Resources Trust Fund'. "(2) ACCOUNTS IN TRUST FUND.—The Aquatic Resources Trust Fund shall consist of— "(A) a Sport Fish Restoration Account, and "(B) a Boat Safety Account. Each such Account shall consist of such amounts as may be appropriated, credited, or paid to it as provided in this section, section 9503(c)(4), or section 9602(b). "(b) SPORT FISH RESTORATION ACCOUNT.— "(1) TRANSFER OF CERTAIN TAXES TO ACCOUNT.—There is

•); ' ' ' " • hereby appropriated to the Sport Fish Restoration Account amounts equivalent to the following amounts received in the Treasury on or after October 1, 1984— "(A) the taxes imposed by section 4161(a) (relating to Ante, p. 1017. sport fishing equipment), and "(B) the import duties imposed on fishing tackle under subpart B of part 5 of schedule 7 of the Tariff Schedules of • Jj' I the United States (19 U.S.C. 1202) and on yachts and pleasure craft under subpart D of part 6 of schedule 6 of such Schedules. "(2) EXPENDITURES FROM ACCOUNT.—Amounts in the Sport Fish Restoration Account shall be available, as provided by appropriation Acts, to carry out the purposes of the Act entitled A n Act to provide that the United States shall aid the States in fish restoration and management projects, and for other pur"'• ' • poses', approved August 9, 1950 (as in effect on June 1, 1984). "(c) EXPENDITURES FROM BOAT SAFETY ACCOUNT.—Amounts in the

Boat Safety Account shall be available, as provided by appropriation Acts, for making expenditures before April 1, 1989, to carry out the purposes of section 18106 of title 46, United States Code (as in effect 97 Stat. 596. on June 1, 1984). "(d) CROSS REFERENCE.—

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Page:United States Statutes at Large Volume 98 Part 1.djvu/1068

 98 STAT. 1020

PUBLIC LAW 98-369—JULY 18, 1984 "For provision transferring motorboat fuels taxes to Boat Safety Account and Sport Fish Restoration Account, see section 9503(c)(4)." (b) TRANSFERS FROM HIGHWAY TRUST FUND.—

26 USC 9503.

(1) Subparagraph (A) of section 9503(c)(4) of such Code is amended— (A) by striking out "the National Recreational Boating Safety and Facilities Improvement Fund established by section 202 of the Recreational Boating Fund Act" in clause (i) and inserting in lieu thereof "the Boat Safety Account in the Aquatic Resources Trust Fund", (B) by striking out "the amount in the National Recreational Boating Safety and Facilities Improvement Fund" in clause (ii) and inserting in lieu thereof "the amount in the Boat Safety Account", and (C) by striking out "NATIONAL RECREATIONAL BOATING SAFETY AND FACILITIES IMPROVEMENT FUND" in the Subparagraph heading and inserting in lieu thereof "BOAT SAFETY ACCOUNT".

(2) Paragraph (4) of section 9503(c) is amended by redesignating subparagraph (C) as subparagraph (D) and by striking out subparagraph (B) and inserting in lieu thereof the following new subparagraphs: "(B) $1,000,000 PER YEAR OF EXCESS TRANSFERRED TO LAND AND WATER CONSERVATION FUND.—

J3i. i

16 USC 460Z-4^60^-11:

"(i) IN GENERAL.—Any amount received in the Highway Trust Fund— "(I) which is attributable to motorboat fuel taxes, and "(II) which is not transferred from the Highway Trust Fund under subparagraph (A), shall be transferred (subject to the limitation of clause (ii)) by the Secretary from the Highway Trust Fund into the land and water conservation fund provided for in title I of the Land and Water Conservation Fund Act of 1965. "(ii) LIMITATION.—The aggregate amount transferred under this subparagraph during any fiscal year shall not exceed $1,000,000. "(C) EXCESS FUNDS TRANSFERRED TO SPORT FISH RESTORA-

TION ACCOUNT.—Any amount received in the Highway Trust Fund— "(i) which is attributable to motorboat fuel taxes, and "(ii) which is not transferred from the Highway Trust Fund under subparagraph (A) or (B), shall be transferred by the Secretary from the Highway Trust Fund into the Sport Fish Restoration Account in the Aquatic Resources Trust Fund." (c) CONFORMING AMENDMENTS.—

Repeal. 97 Stat. 596.

(1) Section 13107 of title 46, United States Code, is hereby repealed. (2) The table of sections for chapter 181 of title 46, United States Code, is amended by striking out the item relating to section 13107. (d) CLERICAL AMENDMENT.—The table of sections for subchapter A of chapter 98 is amended by adding at the end thereof the following new item: "Sec. 9504. Aquatic Resources Trust Fund." 3 71, •(}»,'?- '?!

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license: Creative Commons - Attribution Share-Alike - https://creativecommons.org/licenses/by-sa/4.0/


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Page:United States Statutes at Large Volume 98 Part 1.djvu/1069

 PUBLIC LAW 98-369—JULY 18, 1984

98 STAT. 1021

(e) EFFECTIVE DATE.— 26 USC 9504 (1) IN GENERAL.—The amendments made by this section shall 'lote. take effect on October 1, 1984. (2) BOAT SAFETY ACCOUNT TREATED AS CONTINUATION OF NATIONAL RECREATIONAL BOATING SAFETY AND FACILITIES IMPROVE-

MENT FUND.—The Boat Safety Account in the Aquatic Resources Trust Fund established by the amendments made by this section shall be treated for all purposes of law as the continuation of the National Recreational Boating Safety and Facilities Improvement Fund established by section 13107 of title 46, United States Code. Any reference in any law to the Ante, p. 1020. National Recreational Boating Safety and Facilities Improvement Fund established by such section shall be deemed to include (wherever appropriate) a reference to such Boat Safety ,< Account. SEC. 1017. TAX ON CERTAIN ARROWS. (a) GENERAL RULE.—Paragraph (1) of section 4161(b) (relating to 26 USC 4161. bows and arrows) is amended to read as follows: "(1) Bows AND ARROWS.—There is hereby imposed on the sale by the manufacturer, producer, or importer— "(A) of any bow which has a draw weight of 10 pounds or more, and "(B) of any arrow which— "(i) measures 18 inches overall or more in length, or w. "(ii) measures less than 18 inches overall in length but is suitable for use with a bow described in subparai' graph (A). a tax equal to 11 percent of the price for which so sold." (b) COORDINATION WITH TAX ON SPORT FISHING EQUIPMENT.—

(1) Subsection (b) of section 4161 is amended by adding at the end thereof the following new paragraph: "(3) COORDINATION WITH SUBSECTION (a).—No tax shall be imposed under this subsection with respect to any article taxable under subsection (a)." (2) Paragraph (2) of section 4161(b) is amended by striking out "(other than a fishing reel)". (c) EFFECTIVE DATE.—The amendments made by this section shall 26 USC 4161 apply with respect to articles sold by the manufacturer, producer, or note, importer after September 30, 1984. •

PART II—OTHER EXCISE TAXES SEC. 1018. EXEMPTION FROM AVIATION EXCISE TAX FOR CERTAIN HELICOPTER OPERATIONS. (a) EXEMPTION FROM FUEL TAX.—Paragraph (1) of section 4041(1) 26 USC 4041. (relating to exemption for certain helicopter uses) is amended to read as follows: "(1) transporting individuals, equipment, or supplies in— "(A) the exploration for, or the development or removal of, hard minerals, or "(B) the exploration for oil or gas, or". (b) EXEMPTION FROM TAX ON TRANSPORTATION BY AIR.—Para-

graph (1) of section 4261(e) (relating to exemption for certain helicopter uses) is amended to read as follows: "(1) transporting individuals, equipment, or supplies in—

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Page:United States Statutes at Large Volume 98 Part 1.djvu/1070

 98 STAT. 1022

PUBLIC LAW 98-369—JULY 18, 1984

' ' 26 USC 4041 note. 26 USC 4261 note.

"(A) the exploration for, or the development or removal of, hard minerals, or "(B) the exploration for oil or gas, or",

•-

(c) EFFECTIVE DATE.— (1) SUBSECTION (a).—The

amendment made by subsection (a) shall take effect on April 1, 1984. (2) SUBSECTION (b).—The amendment made by subsection (b) shall apply to transportation beginning after March 31, 1984, but shall not apply to any amount paid on or before such date. SEC. 1019. TECHNICAL AMENDMENTS TO THE HAZARDOUS S13BSTANCE RESPONSE REVENUE ACT OF 1980. (a) CLARIFICATION OF EXCEPTED SUBSTANCES.—

26 USC 4662.

(1) IN GENERAL.—Subsection (b) of section 4662 (relating to definitions and special rules with respect to tax on certain chemicals) is amended by adding at the end thereof the following new paragraphs: "(5) SUBSTANCES USED IN THE PRODUCTION OF MOTOR FUEL, ETC.—

^,

f*' -

"(A) IN GENERAL.—In the case of any chemical described in subparagraph (D) which is a qualified fuel substance, no tax shall be imposed under section 4661(a). "(B) QUALIFIED FUEL SUBSTANCE.—For purposes of this section, the term 'qualified fuel substance' means any substance— "(i) used in a qualified fuel use by the manufacturer, producer, or importer, "(ii) sold for use by any purchaser in a qualified fuel use, or "(iii) sold for resale by any purchaser for use, or resale for ultimate use, in a qualified fuel use. "(C) QUALIFIED FUEL USE.—For purposes of this subsection, the term 'qualified fuel use' means— "(i) any use in the manufacture or production of any motor fuel, diesel fuel, aviation fuel, or jet fuel, or "(ii) any use as such a fuel. "(D) CHEMICALS TO WHICH PARAGRAPH APPLIES.—For purposes of this subsection, the chemicals described in this subparagraph are acetylene, benzene, butylene, butadiene, ethylene, naphthalene, propylene, toluene, and xylene. "(E) TAXATION OF NONQUALIFIED SALE OR USE.—For purposes of section 4661(a), if no tax was imposed by such section on the sale or use of any chemical by reason of subparagraph (A), the first person who sells or uses such chemical other than in a sale or use described in subparagraph (A) shall be treated as the manufacturer of such chemical. "(6) SUBSTANCE HAVING TRANSITORY PRESENCE DURING REFINING PROCESS, ETC.—

"(A) IN GENERAL.—No tax shall be imposed under section 4661(a) on any taxable chemical described in subparagraph (B) by reason of the transitory presence of such chemical during any process of smelting, refining, or otherwise extracting any substance not subject to tax under section 4661(a). "(B) CHEMICALS TO WHICH SUBPARAGRAPH (A) APPLIES.—

The chemicals described in this subparagraph are—

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Page:United States Statutes at Large Volume 98 Part 1.djvu/1071

 PUBLIC LAW 98-369—JULY 18, 1984

98 STAT. 1023

"(i) barium sulfide, cupric sulfate, cupric oxide, cuprous oxide, lead oxide, zinc chloride, and zinc sulfate, and "(ii) any solution or mixture containing any chemical described in clause (i). "(C) REMOVAL TREATED AS USE.—Nothing in subparagraph (A) shall be construed to apply to any chemical which is removed from or ceases to be part of any smelting, refining, or other extraction process."

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..

(2) CREDIT OR REFUND FOR USE AS QUALIFIED FUEL, ETC.—

Subsection (d) of section 4662 (relating to refund or credit for 26 USC 4662. certain uses) is amended by adding at the end thereof the following new paragraph: . sj? "(3) USE AS QUALIFIED FUEL.—Under regulations prescribed by the Secretary, if— "(A) a tax under section 4661 was paid with respect to any chemical described in subparagraph (D) of subsection (b)(5) without regard to subsection (b)(5), and "(B) any person uses such chemical as a qualified fuel substance, then an amount equal to the excess of the tax so paid over the tax determined with regard to subsection (b)(5) shall be allowed as a credit or refund (without interest) to such person in the same manner as if it were an overpayment of tax imposed by this section." (3) METHANE AND BUTANE USED IN PRODUCTION OF MOTOR FUEL,

ETC.—Paragraph (1) of section 4662(b) is amended by inserting "or in the manufacture or production of any motor fuel, diesel fuel, aviation fuel, or jet fuel" after "than as a fuel". (b) CLARIFICATION OF USE AS FERTILIZER.—

(1) IN GENERAL.—Paragraph (2) of section 4662(b) is amended by striking out subparagraphs (B) and (C) and inserting in lieu thereof the following: "(B)

,i

QUALIFIED FERTILIZER SUBSTANCE.—For purposes of

this section, the term 'qualified fertilizer substance' means any substance— "(i) used in a qualified fertilizer use by the manufacturer, producer, or importer, "(ii) sold for use by any purchaser in a qualified fertilizer use, or "(iii) sold for resale by any purchaser for use, or resale for ultimate use, in a qualified fertilizer use. "(C) QUALIFIED FERTILIZER USE.—The term 'qualified fertilizer use' means any use in the manufacture or production of fertilizer or for direct application as a fertilizer. "(D) TAXATION OF NONQUALIFIED SALE OR USE.—For purposes of section 4661(a), if no tax was imposed by such section on the sale or use of any chemical by reason of subparagraph. (A), the first person who sells or uses such chemical other than in a sale or use described in subparagraph (A) shall be treated as the manufacturer of such chemical." (2) TECHNICAL AMENDMENTS.—

(A) Subparagraph (A) of section 4662(b)(2) is amended by striking out "qualified substance" and inserting in lieu thereof "qualified fertilizer substance".

"* '

' ' -

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text: Author:Michael Kulischer

title: Author:Michael Kulischer


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Page:United States Statutes at Large Volume 98 Part 1.djvu/1072

 98 STAT. 1024 26 USC 4662.

26 USC 4662 note. 94 Stat. 2797.

PUBLIC LAW 98-369—JULY 18, 1984

(B) Subparagraph (B) of section 4662(d)(2) is amended to read as follows: "(B) any person uses such substance as a qualified fertilizer substance,". (c) CONFORMING AMENDMENT.—Subsection (c) of section 4662 (relating to use by manufacturer, etc., considered sale) is amended by striking out "If' and inserting in lieu thereof "Except as provided in subsection (b), i f. (d) EFFECTIVE DATE.— (1) IN GENERAL.—The amendments made by this section shall take effect as if included in the amendments made by section 211(a) of the Hazardous Substance Response Revenue Act of 1980. (2) WAIVER OF LIMITATION.—If refund or credit of any overpayment of tax resulting from the application of the amendments made by this section is prevented at any time before the date which for one year after the date of the enactment of this Act by the operation of any law or rule of law (including res judicata), refund or credit of such overpayment (to the extent attributable to the application of such amendments) may, nevertheless, be made or allowed if claim therefor is filed on or before the date which for one year after the date of the enactment of this Act.

Subtitle C—Estate and Gift Tax Provisions

26 USC 6166.

SEC. 1021. DEFERRAL OF ESTATE TAXES FOR INTEREST IN HOLDING COMPANY WHICH OWNS STOCK IN CLOSELY HELD OPERATING COMPANY. (a) GENERAL RULE.—Subsection (b) of section 6166 (relating to extension of time for payment of estate tax where estate consists largely of interests in closely held business) is amended by adding at the end thereof the following new paragraph: "(8) STOCK IN HOLDING COMPANY COMPANY STOCK IN CERTAIN CASES.—

TREATED

AS

BUSINESS

"(A) IN GENERAL.—If the executor elects the benefits of this paragraph, then— "(i) HOLDING COMPANY STOCK TREATED AS BUSINESS

COMPANY STOCK.—For purposes of this section, the portion of the stock of any holding company which represents direct ownership (or indirect ownership through 1 or more other holding companies) by such company in a business company shall be deemed to be stock in such business company. "(ii) 5-YEAR DEFERRAL FOR PRINCIPAL NOT TO APPLY.— The executor shall be treated as having selected under subsection (a)(3) the date prescribed by section 6151(a). "(iii) 4-PERCENT INTEREST RATE NOT TO APPLY.—Section 6601(j) (relating to 4-percent rate of interest) shall not apply. "(B) ALL STOCK MUST BE NON-READILY-TRADABLE STOCK.—

No stock shall be taken into account for purposes of applying this paragraph unless it is non-readily-tradable stock (within the meaning of paragraph (7)(B)). "(C) APPLICATION OF VOTING STOCK REQUIREMENT OF PARA-

GRAPH (1)(c)(i).—For purposes of clause (i) of paragraph (1)(C), the deemed stock resulting from the application of

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Page:United States Statutes at Large Volume 98 Part 1.djvu/1073

 PUBLIC LAW 98-369—JULY 18, 1984 ^' •

^' •

(b)

98 STAT. 1025

subparagraph (A) shall be treated as voting stock to the extent that voting stock in the holding company owns directly (or through the voting stock of 1 or more other holding companies) voting stock in the business company. "(D) DEFINITIONS.—For purposes of this paragraph— "(i) HOLDING COMPANY.—The term 'holding company' means any corporation holding stock in another corporation. "(ii) BUSINESS COMPANY.—The term 'business company' means any corporation carrying on a trade or business." DEFERRAL OF ESTATE TAXES NOT AVAILABLE FOR PASSIVE

ASSETS.—Subsection (b) of section 6166 is amended by adding at the 26 USC 6166. end thereof the following new paragraph: "(9) DEFERRAL NOT AVAILABLE FOR PASSIVE ASSETS.—

"(A) IN GENERAL.—For purposes of subsection (a)(1) and determining the closely held business amount (but not for purposes of subsection (g)), the value of any interest in a closely held business shall not include the value of that portion of such interest which is attributable to passive assets held by the business. "(B) PASSIVE ASSET DEFINED.—For purposes of this paragraph— "(i) IN GENERAL.—The term 'passive asset' means any asset other than an asset used in carrying on a trade or business. •'• "(ii) STOCK TREATED AS PASSIVE ASSET.—The term 'passive asset' includes any stock in another corporation unless— "(I) such stock is treated as held by the decedent by reason of an election under paragraph (8), and "(II) such stock qualified under subsection (a)(1). "(iii) EXCEPTION FOR ACTIVE CORPORATIONS.—If— "(I) a corporation owns 20 percent or more in •f-^i/c- '.): -, value of the voting stock of another corporation, or such other corporation has 15 or fewer shareholders, and "(II) 80 percent or more of the value of the assets of each such corporation is attributable to assets used in carrying on a trade or business, then such corporations shall be treated as 1 corporation for purposes of clause (ii). For purposes of applying subclause (II) to the corporation holding the stock of the other corporation, such stock shall not be taken into account." (c) ACCELERATION OF PAYMENT.—Paragraph (1) of section 6166(g) (relating to disposition of interest; withdrawal of funds from business) is amended by adding at the end thereof the following new subparagraphs: "(E) CHANGES IN INTEREST IN HOLDING COMPANY.—If any

''

stock in a holding company is treated as stock in a business company by reason of subsection (b)(8)(A)— "(i) any disposition of any interest in such stock in such holding company which was included in determining the gross estate of the decedent, or "(ii) any withdrawal of any money or other property from such holding company attributable to any interest

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Page:United States Statutes at Large Volume 98 Part 1.djvu/1074

 98 STAT. 1026

PUBLIC LAW 98-369—JULY 18, 1984 included in determining the gross estate of the decedent, shall be treated for purposes of subparagraph (A) as a disposition of (or a withdrawal with respect to) the stock qualifying under subsection (a)(1). "(F) CHANGES IN INTEREST IN BUSINESS COMPANY.—If any

,

stock in a holding company is treated as stock in a business company by reason of subsection (b)(8)(A)— "(i) any disposition of any interest in such stock in the business company by such holding company, or "(ii) any withdrawal of any money or other property from such business company attributable to such stock by such holding company owning such stock, shall be treated for purposes of subparagraph (A) as a disposition of (or a withdrawal with respect to) the stock qualifying under subsection (a)(1)." (d) UNDISTRIBUTED INCOME OF ESTATE.—Paragraph (2) of section

26 USC 6166.

26 USC 6166

note.

6166(g) (relating to undistributed income of estate) is amended by adding at the end thereof the following new subparagraph: "(C) For purposes of this paragraph, if any stock in a corporation is treated as stock in another corporation by reason of subsection (b)(8)(A), any dividends paid by such other corporation to the corporation shall be treated as paid to the estate of the decedent to the extent attributable to the stock qualifying under subsection (a)(1)." (e) EFFECTIVE DATE.—

(1) I^f GENERAL.—The amendments made by this section shall apply with respect to estates of decedents dying after the date of the enactment of this Act. (2) SPECIAL RULE.—

(A) IN GENERAL.—At the election of the executor, if— (i) a corporation has 15 or fewer shareholders on June 22, 1984, and at all times thereafter before the date of the decedent's death, and (ii) stock of such corporation is included in the gross estate of the decedent, then all other corporations all of the stock of which is owned directly or indirectly by the corporation described in clauses (i) and (ii) shall be treated as one corporation for purposes of section 6166 of the Internal Revenue Code of 1954. (B) EFFECT OF ELECTION.—Any executor who elects the

Ante, p. 1024.

26 USC 2055.

application of this paragraph shall be treated as having made the election under paragraph (8) of section 6166(b) of such Code. SEC. 1022. PERMANENT RULES FOR REFORMING GOVERNING INSTRUMENTS CREATING CHARITABLE REMAINDER TRUSTS AND OTHER CHARITABLE INTERESTS. (a) GENERAL RuLE.—Paragraph (3) of section 2055(e) (relating to disallowance of deductions in certain cases) is amended to read as follows: "(3) REFORMATIONS TO COMPLY WITH PARAGRAPH (2).—

"(A) IN GENERAL.—A deduction shall be allowed under subsection (a) in respect of any qualified reformation. "(B) QUALIFIED REFORMATION.—For purposes of this paragraph, the term 'qualified reformation' means a change of a

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Page:United States Statutes at Large Volume 98 Part 1.djvu/1075

 PUBLIC LAW 98-369—JULY 18, 1984 ic ' ' '

"

,,,,.,

98 STAT. 1027

governing instrument by reformation, amendment, construction, or otherwise which changes a reformable interest into a qualified interest but only if— "(i) any difference between— "(I) the actuarial value (determined as of the date of the decedent's death) of the qualified interest, and "(II) the actuarial value (as so determined) of the reformable interest, does not exceed 5 percent of the actuarial value (as so determined) of the reformable interest, "(ii) in the case of— "(I) a charitable remainder interest, the nonremainder interest (before and after the qualified reformation) terminated at the same time, or "(II) any other interest, the reformable interest and the qualified interest are for the same period, and "(iii) such change is effective as of the date of the decedent's death. A nonremainder interest (before reformation) for a term of years in excess of 20 years shall be treated as satisfying subclause (I) of clause (ii) if such interest (after reformation) is for a term of 20 years. "(C) REFORMABLE INTEREST.—For purposes of this paragraph— "(i) IN GENERAL.—The term 'reformable interest' means any interest for which a deduction would be allowable under subsection (a) at the time of the decedent's death but for paragraph (2). "(ii)

. '3tet

i;

.,

BENEFICIARY'S INTEREST MUST BE FIXED.—The

term 'reformable interest' does not include any interest unless, before the remainder vests in possession, all payments to persons other than an organization described in subsection (a) are expressed either in specified dollar amounts or a fixed percentage of the fair market value of the property. For purposes of determining whether all such payments are expressed as a fixed percentage of the fair market value of the property, section 664(d)(3) shall be taken into account. "(iii) SPECIAL RULE WHERE TIMELY COMMENCEMENT OF REFORMATION.—Clause (ii) shall not apply to any interest if a judicial proceeding is commenced to change such interest into a qualified interest not later than the 90th day after— "(I) if an estate tax return is required to be filed, the last date (including extensions) for filing such return, or "(II) if no estate tax return is required to be filed, the last date (including extensions) for filing the income tax return for the 1st taxable year for which such a return is required to be filed by the trust. "(iv) SPECIAL RULE FOR WILL EXECUTED BEFORE JANU-

ARY 1, 1979, ETC.—In the case of any interest passing under a will executed before January 1, 1979, or under

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Page:United States Statutes at Large Volume 98 Part 1.djvu/1076

 98 STAT. 1028

PUBLIC LAW 98-369—JULY 18, 1984 a trust created before such date, clause (ii) shall not apply. "(D) QUALIFIED INTEREST.—For purposes of this paragraph, the term 'qualified interest' means an interest for which a deduction is allowable under subsection (a). "(E) LIMITATION.—The deduction referred to in subparagraph (A) shall not exceed the amount of the deduction which would have been allowable for the reformable interest but for paragraph (2). "(F) SPECIAL RULE WHERE INCOME BENEFICIARY DIES.—If

c

26 USC 4940 et seq.

(by reason of the death of any individual, or by termination or distribution of a trust in accordance with the terms of the trust instrument) by the due date for filing the estate tax return (including any extension thereof) a reformable interest is in a wholly charitable trust or passes directly to a person or for a use described in subsection (a), a deduction shall be allowed for such reformable interest as if it had met the requirements of paragraph (2) on the date of the decedent's death. For purposes of the preceding sentence, the term 'wholly charitable trust' means a charitable trust which, upon the allowance of a deduction, would be described in section 4947(a)(1). "(G) STATUTE OF LIMITATIONS.—The period for assessing any deficiency of any tax attributable to the application of this paragraph shall not expire before the date 1 year after the date on which the Secretary is notified that such reformation has occurred. "(H) REGULATIONS.—The Secretary shall prescribe such regulations as may be necessary to carry out the purposes of this paragraph, including regulations providing such adjustments in the application of the provisions of section 508 (relating to special rules relating to section 501(c)(3) organizations), subchapter J (relating to estates, trusts, beneficiaries, and decedents), and chapter 42 (relating to private foundations) as may be necessary by reason of the qualified reformation. "(I) REFORMATIONS PERMITTED IN CASE OF REMAINDER INTERESTS IN RESIDENCE OR FARM, POOLED INCOME FUNDS,

ETC.—The Secretary shall prescribe regulations (consistent with the provisions of this paragraph) permitting reformations in the case of any failure— "(i) to meet the requirements of section 170(f)(3)(B) (relating to remainder interests in personal residence or farm, etc.), or "(ii) to meet the requirements of section 642(c)(5)." 26 USC 170.

OJ) INCOME TAX DEDUCTION.—Subsection (f) of section 170 (relating

to disallowance of deduction in certain cases and special rules) is amended by adding at the end thereof the following new paragraph: "(7) REFORMATIONS TO COMPLY WITH PARAGRAPH (2).—

Ante, p. 1026.

"(A) IN GENERAL.—A deduction shall be allowed under subsection (a) in respect of any qualified reformation (within the meaning of section 2055(e)(3)(B)). "(B) RULES SIMILAR TO SECTION 2055(e)(3) TO APPLY.—For

26 USC 2522.

purposes of this paragraph, rules similar to the rules of section 2055(e)(3) shall apply." (c) GiFT TAX DEDUCTION.—Subsection (c) of section 2522 is amended by adding at the end thereof the following new paragraph:

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Page:United States Statutes at Large Volume 98 Part 1.djvu/1077

 PUBLIC LAW 98-369—JULY 18, 1984

STAT. 1029

"(4) REFORMATIONS TO COMPLY WITH PARAGRAPH (2).—

inc

"(A) IN GENERAL.—A deduction shall be allowed under subsection (a) in respect of any qualified reformation (within the meaning of section 2055(e)(3)(B)). Ante, p. 1026. "(B) RULES SIMILAR TO SECTION 2055(e)(3) TO APPLY.—For

purposes of this paragraph, rules similar to the rules of section 2055(e)(3) shall apply." (d) TREATMENT OF CERTAIN CONTINGENCIES UNDER SECTION 664.— Section 664 (relating to charitable remainder trusts) is amended by 26 USC 664. adding at the end thereof the following subsection: "(f) CERTAIN CONTINGENCIES PERMITTED.— "(1) GENERAL RULE.—If a trust would,

but for a qualified contingency, meet the requirements of paragraph (1)(A) or (2)(A) of subsection (d), such trust shall be treated as meeting such requirements.

?

"(2) VALUE DETERMINED WITHOUT REGARD TO QUALIFIED CON-

TINGENCY.—For purposes of determining the amount of any charitable contribution (or the actuarial value of any interest), a qualified contingency shall not be taken into account. "(3) QuAUFiED CONTINGENCY.—For purposes of this subsection, the term 'qualified contingency' means any provision of a trust which provides that, upon the happening of a contingency, the payments described in paragraph (1)(A) or (2)(A) of subsection (d) (as the case may be) will terminate not later than such payments would otherwise terminate under the trust." (e) EFFECTIVE DATE.— (1) SUBSECTIONS (a),

26 USC 2055

(b), AND (C).—The amendments made by note. subsections (a), (b), and (c) shall apply to reformations after December 31, 1978; except that such amendments shall not apply to any reformation to which section 2055(e)(3) of the Internal Revenue Code of 1954 (as in effect on the day before the date of the enactment of this Act) applies. For purposes of applying clause (iii) of section 2055(e)(3)(C) of such Code (as amended by this section), the 90th day described in such clause shall be treated as not occurring before the 90th day after the date of the enactment of this Act. (2) SUBSECTION (d).—The amendment made by subsection (d) shall apply to transfers after December 31, 1978. (3) STATUTE OF LIMITATIONS.—

(A) IN GENERAL.—If on the date of the enactment of this Act (or at any time before the date 1 year after such date of enactment), credit or refund of any overpayment of tax attributable to the amendments made by this section is barred by any law or rule of law, such credit or refund of such overpayment may nevertheless be made if claim therefor is filed before the date 1 year after the date of the enactment of this Act. (B) No INTEREST WHERE STATUTE CLOSED ON DATE OF EN-

ACTMENT.—In any case where the making of the credit or refund of the overpayment described in subparagraph (A) is barred on the date of the enactment of this Act, no interest shall be allowed with respect to such overpayment (or any related adjustment) for the period before the date 180 days after the date on which the Secretary of the Treasury (or his delegate) is notified that the reformation has occurred.

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 98 STAT. 1030

26 USC 2032.

PUBLIC LAW 98-369—JULY 18, 1984

SEC. 1023. ALTERNATE VALUATION ELECTION AVAILABLE ONLY WHERE IT RESULTS IN REDUCTION OF GROSS ESTATE AND ESTATE TAX. (a) GENERAL RuLE.—Section 2032 (relating to alternate valuation) is amended by redesignating subsection (c) as subsection (d) and by inserting after subsection (b) the following new subsection: "(c) ELECTION MUST DECREASE GROSS ESTATE AND ESTATE TAX.—

26 USC 2032 note.

No election may be made under this section with respect to an estate unless such election will decrease— "(1) the value of the gross estate, and "(2) the amount of the tax imposed by this chapter (reduced by credits allowable against such tax)." (b) EFFECTIVE DATE.—The amendments made by subsection (a) shall apply with respect to estates of decedents dying after the date of the enactment of this Act. SEC. 1024. ALTERNATE VALUATION ELECTION AVAILABLE ON CERTAIN LATE RETURNS. (a) GENERAL RULE.—Subsection (d) of section 2032 (relating to time of election), as amended by section 1023, is amended to read as follows: "(d) ELECTION.—

"(1) IN GENERAL.—The election provided for in this section shall be made by the executor on the return of the tax imposed by this chapter. Such election, once made, shall be irrevocable. "(2) EXCEPTION.—No election may be made under this section if such return is filed more than 1 year after the time prescribed by law (including extensions) for filing such return." (b) EFFECTIVE DATE.—

26 USC 2001 et seq.

Supra.

26 USC 2032A.

(1) IN GENERAL.—The amendment made by subsection (a) shall apply to estates of decedents dying after the date of the enactment of this Act. (2) TRANSITIONAL RULE.—In the case of an estate of a decedent dying before the date of the enactment of this Act if— (A) a credit or refund of the tax imposed by chapter 11 of the Internal Revenue Code of 1954 is not prevented on the date of the enactment of this Act by the operation of any law or rule of law, (B) the election under section 2032 of the Internal Revenue Code of 1954 would have met the requirements of such section (as amended by this section and section 1023) had the decedent died after the date of enactment of this Act, and (C) a claim for credit or refund of such tax with respect to such estate is filed not later than the 90th day after the date of the enactment of this Act, then such election shall be treated as a valid election under such section 2032. The statutory period for the assessment of any deficiency which is attributable to an election under this paragraph shall not expire before the close of the 2-year period beginning on the date of the enactment of this Act. SEC. 102.5. MODIFICATION OF ELECTION OR AGREEMENT UNDER SECTION 2032A. (a) IN GENERAL.—Section 2032A(d) (relating to election and agreement) is amended by adding at the end thereof the following new paragraph:

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98 STAT. 1031

"(3) MODIFICATION OF ELECTION AND AGREEMENT TO BE PERMIT-

TED.—The Secretary shall prescribe procedures which provide that in any case in which— "(A) the executor makes an election under paragraph (1) within the time prescribed for filing such election, and "(B) substantially complies with the regulations prescribed by the Secretary with respect to such election, but— ' ' "(i) the notice of election, as filed, does not contain all required information, or ^'* '-, J, "(ii) signatures of 1 or more persons required to enter into the agreement described in paragraph (2) are not included on the agreement as filed, or the agreement does not contain all required information, the executor will have a reasonable period of time (not exceed• ing 90 days) after notification of such failures to provide such ^ information or agreements." (b) EFFECTIVE DATE.— 26 USC 2032A (1) IN GENERAL.—The amendment made by this section shall note. apply to estates of decedents dying after December 31, 1976. (2) REFUND OR CREDIT OF OVERPAYMENT BARRED BY STATUTE OF

»

f '

LIMITATIONS.—Notwithstanding section 6511(a) of the Internal Revenue Code of 1954 or any other period of limitation or lapse of time, a claim for credit or refund of overpayment of the tax imposed by such Code which arises by reason of this section may be filed by any person at any time within the 1-year period beginning on the date of the enactment of this Act. Sections 6511(b) and 6514 of such Code shall not apply to any claim for credit or refund filed under this subsection within such 1-year period.

SEC. 1026. NO GAIN RECOGNIZED FROM NET GIFTS MADE BEFORE MARCH 4, 1981. (a) IN GENERAL.—In the case of any transfer of property subject to gift tax made before March 4, 1981, for purposes of subtitle A of the Internal Revenue Code of 1954, gross income of the donor shall not include any amount attributable to the donee's payment of (or agreement to pay) any gift tax imposed with respect to such gift. (b) GIFT TAX DEFINED.—For purposes of subsection (a), the term "gift tax" means— (1) the tax imposed by chapter 12 of such Code, and (2) any tax imposed by a State (or the District of Columbia) on transfers by gifts. (c) STATUTE OF LIMITATIONS.—If refund or credit of any overpayment of tax resulting from subsection (a) is prevented on the date of the enactment of this Act (or at any time within 1 year after such date) by the operation of any law or rule of law (including res judicata), refund or credit of such overpayment (to the extent attributable to subsection (a)) may nevertheless be made or allowed if claim therefor is filed within 1 year after the date of the enactment of this Act.

26 USC 61 note.

26 USC l.

26 USC 2501 et ^eo-.

SEC. 1027. MARITAL DEDUCTION FOR A USUFRUCT. (a) IN GENERAL.—Subclause (1) of section 2056(b)(7)(B)(ii) (relating 26 USC 2056. to qualifying income interest for life) is amended by inserting ", or has a usufruct interest for life in the property" after "intervals". (b) LIMITATION ON DEDUCTIONS FROM GROSS ESTATE.—Paragraph

(1) of section 2053(c) (relating to limitations on deductions for ex- 26 USC 2053.

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PUBLIC LAW 98-369—JULY 18, 1984

penses, indebtedness, and taxes) is amended by adding at the end thereof the following new subparagraph: "(C) CERTAIN CLAIMS BY REMAINDERMEN.—No deduction

26 USC 2053 note. 95 Stat. 301.

26 USC 2001 et ««9-

shall be allowed under this section for a claim against the estate by a remainderman relating to any property described in section 2044." (c) EFFECTIVE DATE.—The amendments made by this section shall take effect as if included in the amendment made by section 403 of the Economic Recovery Tax Act of 1981. SEC. 1028. CREDIT AGAINST ESTATE TAX FOR TRANSFERS TO TOIYABE NATIONAL FOREST. (a) CREDIT ALLOWED.—Subject to the provisions of this section, and notwithstanding any period of limitation or lapse of time, the Secretary of the Treasury or his delegate shall allow credit against the tax imposed by chapter 11 of the Internal Revenue Code of 1954 (relating to the imposition of estate tax)— (1) upon the estate of Nell J. Redfield for the conveyance by the estate of the United States of real property included in the gross estate and located within and adjacent to the boundaries of the Toiyabe National Forest; and (2) upon the estate of Elizabeth Schultz Rabe for the conveyance by the estate to the United States of real property included in the gross estate and known as Parcel No. 4 containing 97.60 acres, more or less, located in the County of Douglas, State of Nevada, and described as follows: The NEy4 of the SWy4, the NWy4 of the SEy4, and a portion of the SEy4 of the NWy4 of Section 23, Township 13 North, Range 18 East, M.D.B.&M., more particularly described as follows: All that portion of the SEy4 of the NWy4 excepting therefrom the following: Beginning at a United States Forest Service Brass Cap, being the C-N yie corner of Section 23; thence South 0°45'24" West 500.00 feet to an iron pipe; thence South 44°50'02" West 945.42 feet to an iron pipe; thence North 89°46'12" West 301.78 feet to a point; thence tangent North 20°28'20" East on the arc of a circular curve to the left with a radius of 800 feet through a central angle of 40°44'50" an arc distance of 568.94 feet to a point; thence North 20°02'42" West 683.17 feet to a point; thence South 88°35'38" East 1206.29 feet to the Point of Beginning, containing 22.40 acres, more or less. (b) AMOUNT OF CREDIT.—The amount allowed as a credit under subsection (a) shall be equal to the lesser of— (1) the fair market value of the real property transferred by each estate as of the valuation date used for purposes of the tax imposed by chapter 11 of such Code, or (2) the Federal estate tax liability (and interest thereon) of each estate. (c) LIMITATIONS.—

(1) The provisions of this section shall apply only if the executor of each estate executes a deed (in accordance with the laws of the State in which such real property is situated) transferring title to the United States before the date which is 90 days after the date of the enactment of this Act, but only if such title is satisfactory to the Attorney General or his delegate.

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98 STAT. 1033

(2) The provisions of this section shall apply only if the real property transferred is accepted by the Secretary of Agriculture and added to the Toiyabe National Forest. The lands shall be transferred to the Secretary of Agriculture without reimbursement or payment from the Department of Agriculture. (3) Unless the Secretary of Agriculture determines and certi^, fies to the Secretary of the Treasury that there has been an expeditious transfer of the real property under this section, no interest payable with respect to the tax imposed by chapter 11 of the Internal Revenue Code of 1954 shall be deemed to be 26 USC 2001 et waived by reasons of the "provisions of this section. ^^Q-

Subtitle D—Charitable Contributions and Exempt Organizations SEC. 1031. INCREASE IN CHARITABLE VOLUNTEER MILEAGE.

(a) IN GENERAL.—Section 170 (relating to charitable, etc., contribu- 26 USC 170. tions and gifts) is amended by redesignating subsections 0) and (k) as subsections (k) and (1), respectively, and by inserting after subsection (i) the following new subsection: "(j) STANDARD MILEAGE RATE FOR U S E OF PASSENGER AUTOMO-

BILE.—For purposes of computing the deduction under this section for use of a passenger automobile the standard mileage rate shall be 12 cents per mile." Qo) EFFECTIVE DATE.—The amendments made by subsection (a) 26 USC 170 note. shall apply to taxable years beginning after December 31, 1984. SEC. 1032. CERTAIN ORGANIZATIONS PROVIDING CHILD CARE INCLUDED WITHIN THE DEFINITION OF TAX-EXEMPT ORGANIZATIONS. (a) IN GENERAL.—Section 501 (relating to exemption from tax on 26 USC 50i. corporations, certain trusts, etc.) is amended by redesignating sub- Post, p. 1206. section (k) as subsection (1) and inserting after subsection (j) the following new subsection: "(k) TREATMENT OF CERTAIN ORGANIZATIONS PROVIDING CHILD

CARE.—For purposes of subsection (c)(3) of this section and sections 170(c)(2), 2055(a)(2), and 2522(a)(2), the term 'educational purposes' includes the providing of care of children away from their homes if— "(1) substantially all of the care provided by the organization is for purposes of enabling individuals to be gainfully employed, and "(2) the services provided by the organization are available to the general public." (b) CROSS REFERENCES.—

•

"(1) Subsection (k) of section 170, as redesignated by 26 USC 170. section 1031 of this Act, is amended by redesignating para- Post, p. 1206. graphs (1) through (8) as paragraphs (2) through (9), respectively, and by inserting before paragraph (2) (as so redesignated) the following new paragraph: "(1) For treatment of certain organizations providing child care, see section 501(k)."

Supra.

(2) Subsection (f) of section 2055 is amended by redesignating 26 USC 2055. paragraphs (2) through (11) as paragraphs (3) through (12), respectively, and by inserting after paragraph (1) the following new paragraph:

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98 STAT. 1034

"(2) For treatment of certain organizations providing child care, see section 501(k)."

Ante, p. 1033. 26 USC 2522.

(3) Subsection (d) of section 2522 is amended by redesignating paragraphs (1) and (2) as paragraphs (2) and (3), respectively, and by inserting before paragraph (2) (as so redesignated) the following new paragraph: "(1) For treatment of certain organizations providing child care, see section 501(k)." (c) EFFECTIVE DATES.—The amendments made by subsections

26 USC 170 note.

(a) and (b) shall apply to taxable years beginning after the date of the enactment of this Act. SEC. 1033. RESTRICTIONS ON CHURCH TAX INQUIRIES AND EXAMINATIONS.

26 USC 7612. 26 USC 7611.

(a) IN GENERAL.—Subchapter A of chapter 78 (relating to discovery of liability and enforcement of title) is amended by redesignating section 7611 as section 7612 and inserting after section 7610 the following new section: "SEC, 7611. RESTRICTIONS ON CHURCH TAX INQUIRIES AND EXAMINATIONS. "(a) RESTRICTIONS ON INQUIRIES.—

"(1) IN GENERAL.—The Secretary may begin a church tax inquiry only if— "(A) the reasonable belief requirements of paragraph (2), and "(B) the notice requirements of paragraph (3), have been met. "(2) REASONABLE BELIEF REQUIREMENTS.—The requirements of this paragraph are met with respect to any church tax inquiry if an appropriate high-level Treasury official reasonably believes (on the basis of facts and circumstances recorded in writing) that the church— "(A) may not be exempt, by reason of its status as a church, from tax under section 501(a), or "(B) may be carrying on an unrelated trade or business (within the meaning of section 513) or otherwise engaged in activities subject to taxation under this title. "(3) INQUIRY NOTICE REQUIREMENTS.—

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"(A) IN GENERAL.—The requirements of this paragraph are met with respect to any church tax inquiry if, before beginning such inquiry, the Secretary provides written notice to the church of the beginning of such inquiry. "(B) CONTENTS OF INQUIRY NOTICE.—The notice required by this paragraph shall include— "(i) an explanation of— "(I) the concerns which gave rise to such inquiry, and "(II) the general subject matter of such inquiry, "(ii) a general explanation of the applicable— "(I) administrative and constitutional provisions with respect to such inquiry (including the right to a conference with the Secretary before any examination of church records), and

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98 STAT. 1035

"(II) provisions of this title which authorize such inquiry or which may be otherwise involved in such inquiry.

"(b) RESTRICTIONS ON EXAMINATIONS.—

I n

"(1) IN GENERAL.—The Secretary may begin a church tax examination only if the requirements of paragraph (2) have been met and such examination may be made only— "(A) in the case of church records, to the extent necessary to determine the liability for, and the amount of, any tax imposed by this title, and "(B) in the case of religious activities, to the extent necessary to determine whether an organization claiming to be a church is a church for any period.

^

"(2) NOTICE OF EXAMINATION; OPPORTUNITY FOR CONFERENCE.—

The requirements of this paragraph are met with respect to any church tax examination if— "(A) at least 15 days before the beginning of such examination, the Secretary provides the notice described in paragraph (3) to both the church and the appropriate regional counsel of the Internal Revenue Service, and "(B) the church has a reasonable time to participate in a conference described in paragraph (3)(A)(iii), but only if the church requests such a conference before the beginning of the examination. "(3) CONTENTS OF EXAMINATION NOTICE, ET CETERA.—

"(A) IN GENERAL.—The notice described in this paragraph V is a written notice which includes— "(i) a copy of the church tax inquiry notice provided to the church under subsection (a), "(ii) a description of the church records and activities which the Secretary seeks to examine, "(iii) an offer to have a conference between the church and the Secretary in order to discuss, and attempt to resolve, concerns relating to such examina:.;;..w u; tion, and "(iv) a copy of all documents which were collected or

prepared by the Internal Revenue Service for use in such examination and the disclosure of which is re.ryrS quired by the Freedom of Information Act (5 U.S.C. 552). tc

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"(B) EARUEST DAY EXAMINATION NOTICE MAY BE PROVID-

ED.—The examination notice described in subparagraph (A) shall not be provided to the church before the 15th day after the date on which the church tax inquiry notice was provided to the church under subsection (a).

.i if.« V m bs

"(C) OPINION OF REGIONAL COUNSEL WITH RESPECT TO EX-

AMINATION.—Any regional counsel of the Internal Revenue Service who receives an examination notice under paragraph (1) may, within 15 days after such notice is provided, submit to the regional commissioner for the region an advisory objection to the examination. "(4) EXAMINATION OF RECORDS AND ACTIVITIES NOT SPECIFIED IN

NOTICE.—Within the course of a church tax examination which (at the time the examination begins) meets the requirements of paragraphs (1) and (2), the Secretary may examine any church records or religious activities which were not specified in the examination notice to the extent such examination meets the

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 98 STAT. 1036

PUBLIC LAW 98-369—JULY 18, 1984 requirement of subparagraph (A) or (B) of paragraph (1) (whichever applies). "(c) LIMITATION ON PERIOD OF INQUIRIES AND EXAMINATIONS.— "(1) INQUIRIES AND EXAMINATIONS MUST BE COMPLETED WITHIN 2 YEARS.—

"(A) IN GENERAL.—The Secretary shall complete any church tax status inquiry or examination (and make a final determination with respect thereto) not later than the date which is 2 years after the examination notice date. "(B) INQUIRIES NOT FOLLOWED BY EXAMINATIONS.—In the

case of a church tax inquiry with respect to which there is no examination notice under subsection (b), the Secretary shall complete such inquiry (and make a final determination with respect thereto) not later than the date which is 90 days after the inquiry notice date. "(2) SUSPENSION OF 2-YEAR PERIOD.—The running of the 2-year

period described in paragraph (1)(A) and the 90-day period in paragraph (1)(B) shall be suspended— "(A) for any period during which— "(i) a judicial proceeding brought by the church against the Secretary with respect to the church tax inquiry or examination is pending or being appealed, "(ii) a judicial proceeding brought by the Secretary against the church (or any official thereof) to compel compliance with any reasonable request of the Secretary in a church tax examination for examination of church records or religious activities is pending or being appealed, or "(iii) the Secretary is unable to take actions with respect to the church tax inquiry or examination by reason of an order issued in any judicial proceeding brought under section 7609, "(B) for any period in excess of 20 days (but not in excess of 6 months) in which the church or its agents fail to comply with any reasonable request of the Secretary for church records or other information, or "(C) for any period mutually agreed upon by the Secretary and the church. "(d) LIMITATIONS ON REVOCATION OF TAX-EXEMPT STATUS, ETC.—

26 USC 6311.

"(1) IN GENERAL.—The Secretary may— "(A) determine that an orgsmization is not a church which— "(i) is exempt from taxation by reason of section 501(a), or "(ii) is described in section 170(c), or "(B)(i) send a notice of deficiency of any tax involved in a church tax examination, or "(ii) in the case of any tax with respect to which subchapter B of chapter 63 (relating to deficiency procedures) does not apply, assess any underpayment of such tax involved in a church tax examination, only if the appropriate regional counsel of the Internal Revenue Service determines in writing that there has been substantial compliance with the requirements of this section and approves in writing of such revocation, notice of deficiency, or assessment. "(2) LIMITATIONS ON PERIOD OF ASSESSMENT.—

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98 STAT. 1037

"(A) REVOCATION OF TAX-EXEMPT STATUS.—

i J

"(i) 3-YEAR STATUTE OF LIMITATIONS GENERALLY.—In the case of any church tax examination with respect to the revocation of tax-exempt status under section 501(a), any tax imposed by chapter 1 (other than section 511) may be assessed, or a proceeding in court for collection of such tax may be begun without assessment, only for the 3 most recent taxable years ending before the examination notice date. "(ii) 6-YEAR STATUTE OF LIMITATIONS WHERE TAXEXEMPT STATUS REVOKED.—If an Organization is not a church exempt from tax under section 501(a) for any of the 3 taxable years described in clause (i), clause (i) shall be applied by substituting '6 most recent taxable years' for '3 most recent taxable years'. "(B) UNRELATED BUSINESS TAX.—In the case of any church tax examination with respect to the tax imposed by section 511 (relating to unrelated business income), such tax may be assessed, or a proceeding in court for the collection of such tax may be begun without assessment, only with respect to the 6 most recent taxable years ending before the examination notice date. "(C) EXCEPTION WHERE SHORTER STATUTE OF LIMITATIONS OTHERWISE APPLICABLE.—Subparagraphs (A) and (B) shall

not be construed to increase the period otherwise applicable under subchapter A of chapter 66 (relating to limitations on 26 USC 6501. assessment and collection). "(e) INFORMATION NOT COLLECTED IN SUBSTANTIAL COMPLIANCE WITH PROCEDURES TO STAY SUMMONS PROCEEDING.—

"(1) IN GENERAL.—If there has not been substantial compliance with— "(A) the notice requirements of subsection (a) or (b), "(B) the conference requirement described in subsection (b)(3)(A)(iii), or "(C) the approval requirement of subsection (d)(1) (if ap^ plicable), with respect to any church tax inquiry or examination, any proceeding to compel compliance with any summons with respect to such inquiry or examination shall be stayed until the court finds that all practicable steps to correct the noncompliance have been taken. The period applicable under paragraph (1) or subsection (c) shall not be suspended during the period of any stay under the preceding sentence. "(2) REMEDY TO BE EXCLUSIVE.—No suit may be maintained, and no defense may be raised in any proceeding (other than as provided in paragraph (1)), by reason of any noncompliance by the Secretary with the requirements of this section. '(f) LIMITATIONS ON ADDITIONAL INQUIRIES AND EXAMINATIONS.—

"(1) IN GENERAL.—If any church tax inquiry or examination with respect to any church is completed and does not result in— "(A) a revocation, notice of deficiency, or assessment described in subsection (d)(1), or "(B) a request by the Secretary for any significant change in the operational practices of the church (including the adequacy of accounting practices), no other church tax inquiry or examination may begin with respect to such church during the applicable 5-year period

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Page:United States Statutes at Large Volume 98 Part 1.djvu/1086

 98 STAT. 1038

,

^

PUBLIC LAW 98-369—JULY 18, 1984

unless such inquiry or examination is approved in writing by the Assistant Commissioner for Employee Plans and Exempt Organizations of the Internal Revenue Service or does not involve the same or similar issues involved in the preceding inquiry or examination. For purposes of the preceding sentence, an inquiry or examination shall be treated as completed not later than the expiration of the applicable period under paragraph (1) of subsection (c). "(2) APPLICABLE 5-YEAR PERIOD.—For purposes of paragraph (1), the term 'applicable 5-year period' means the 5-year period beginning on the date the notice taken into account for purposes of subsection (c)(1) was provided. For purposes of the preceding sentence, the rules of subsection (c)(2) shall apply. "(g) TREATMENT OF FINAL REPORT OF REVENUE AGENT.—Any final report of an agent of the Internal Revenue Service shall be treated as a determination of the Secretary under paragraph (1) of section 7428(a), and any church receiving such a report shall be treated for purposes of sections 7428 and 7430 as having exhausted the administrative remedies available to it. "(h) DEFINITIONS.—For purposes of this section— "(1) CHURCH.—The term 'church' includes— "(A) any organization claiming to be a church, and "(B) any convention or association of churches. "(2) CHURCH TAX INQUIRY.—The term 'church tax inquiry' means any inquiry to a church (other than an examination) to serve as a basis for determining whether a church— "(A) is exempt from tax under section 501(a) by reason of its status as a church, or "(B) is carrying on an unrelated trade or business (within the meaning of section 513) or otherwise engaged in activities which may be subject to taxation under this title. "(3) CHURCH TAX EXAMINATION.—The term 'church tax examination' means any examination for purposes of making a determination described in paragraph (2) of— "(A) church records at the request of the Internal Reve^, nue Service, or "(B) the religious activities of any church. "(4) CHURCH RECORDS.—

"(A) IN GENERAL.—The term 'church records' means all corporate and financial records regularly kept by a church, including corporate minute books and lists of members and contributors. "(B) EXCEPTION.—Such term shall not include records acquired— "(i) pursuant to a summons to which section 7609 applies, or "(ii) from any governmental agency. "(5) INQUIRY NOTICE DATE.—The term 'inquiry notice date' means the date the notice with respect to a church tax inquiry is provided under subsection (a). "(6) EXAMINATION NOTICE DATE.—The term 'examination notice date' means the date the notice with respect to a church tax examination is provided under subsection (b) to the church. "(7) APPROPRIATE HIGH-LEVEL TREASURY OFFICIAL.—The term 'approporiate high-level Treasury official' means the Secretary of the Treasury or any delegate of the Secretary whose rank is

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98 STAT. 1039

no lower than that of a principal Internal Revenue officer for an internal revenue region, "(i) SECTION N O T TO APPLY TO CRIMINAL INVESTIGATIONS, ETC.—

This section shall not apply to— "(A) any criminal investigation, "(B) any inquiry or examination relating to the tax liability of any person other than a church, "(C) any assessment under section 6851 (relating to termination assessments of income tax) or section 6861 (relating to jeopardy assessments of income taxes, etc), (D) any willful attempt to defeat or evade any tax imposed by this title, or "(E) any knowing failure to file a return of tax imposed by the title." (b) TECHNICAL AMENDMENT RELATING TO SUBPOENA POWER OF THE DISTRICT COURT FOR THE DISTRICT OF COLUMBIA.—Section 7428 (relat- 26 USC 7428.

ing to declaratory judgments relating to status and classification of organizations under section 501(c)(3), etc.) is amended by adding at the end thereof the following new subsection: "(d) SUBPOENA POWER FOR DISTRICT COURT FOR DISTRICT OF COLUM-

BIA.—In any action brought under this section in the district court of the United States for the District of Columbia, a subpoena requiring the attendance of a witness at a trial or hearing may be served at any place in the United States." (c) CONFORMING AMENDMENTS.—

(1) Subsection (c) of section 7605 (relating to time and place of 26 USC 7605. examination) is amended to read as follows: "(C) CROSS REFERENCE.—

"For provisions restricting church tax inquiries and examinations, see section 7611." Ante, p. 1034.

(2) The table of sections for subchapter A of chapter 78 is amended by striking out the item relating to section 7611 and inserting in lieu thereof the following: "Sec. 7611. Restrictions on church tax inquiries and examinations. "Sec. 7612. Cross references." (d) EFFECTIVE DATE.—The amendments made by this section shall

26 USC 76ii apply with respect to inquiries and examinations beginning after note. December 31, 1984. SEC. 1034. ACQUISITION INDEBTEDNESS OF CERTAIN EDUCATIONAL INSTITUTIONS. (a) GENERAL RULE.—Paragraph (9) of section 514(c) (relating to 26 USC 514. unrelated debt-financed income) is amended to read as follows: "(9) REAL PROPERTY ACQUIRED BY A QUALIFIED ORGANIZATION.—

"(A) IN GENERAL.—Except as provided in subparagraph (B), the term 'acquisition indebtedness' does not, for purposes of this section, include indebtedness incurred by a qualified organization in acquiring or improving any real property. "(B) EXCEPTIONS.—The provisions of subparagraph (A) shall not apply in any case in which— "(i) the price for the acquisition or improvement is not a fixed amount determined as of the date of the acquisition or the completion of the improvement; ' (ii) the amount of any indebtedness or any other amount payable with respect to such indebtedness, or

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 98 STAT. 1040

PUBLIC LAW 98-369—JULY 18, 1984 I,;

aoH. hu Ante, p. 509.

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the time for making any payment of any such amount, is dependent, in whole or in part, upon any revenue, income, or profits derived from such real property; "(iii) the real property is at any time after the acquisition leased by the qualified organization to the person selling such property to such organization or to any person who bears a relationship described in section 267(b) or 101(h) to such person; "(iv) the real property is acquired by a qualified trust from, or is at any time after the acquisition leased by such trust to, any person who— "(I) bears a relationship which is described in subparagraph (C), (E), or (G) of section 4975(e)(2) to any plan with respect to which such trust was formed, or "(11) bears a relationship which is described in subparagraph (F) or (H) of section 4975(e)(2) to any person described in subclause (I); "(v) any person described in clause (iii) or (iv) provides the qualified organization with financing in connection with the acquisition or improvement; or "(vi) the real property is held by a partnership unless the partnership meets the requirements of clauses (i) through (v) and unless— "(I) all of the partners of the partnership are ' •' qualified organizations, or "(II) each allocation to a partner of the partnership which is a qualified organization is a qualified allocation (within the meaning of section 168(j)(9)). For purposes of clause (vi)(I), an organization shall not be treated as a qualified organization if any income of such organization would be unrelated business taxable income (determined without regard to this paragraph). "(C) QUALIFIED ORGANIZATION.—For purposes of this paragraph, the term 'qualified organization' means— "(i) an organization described in section 170(b)(1)(A) (ii) and its affiliated support organizations described in section 509(a); or "(ii) any trust which constitutes a qualified trust under section 401. "(D) OTHER PASS-THRU ENTITIES; TIERED ENTITIES.—Rules

similar to the rules of subparagraph (B)(vi) shall also apply in the case of any pass-thru entity other than a partnership and in the case of tiered partnerships and other entities." 26 USC 514.

(b) TREATMENT OF SEGREGATED ASSET ACCOUNTS.—Section

514

(relating to unrelated debt-financed income) is amended by adding at the end thereof the following new subsection: "(g) REGULATIONS.—The Secretary shall prescribe such regulations as may be necessary or appropriate to carry out the purposes of this section, including regulations to prevent the circumvention of any provision of this section through the use of segregated asset accounts. 26 USC 514 note.

(c) EFFECTIVE D A T E S. —

(1) IN GENERAL.—The amendments made by this section shall apply to indebtedness incurred after the date of the enactment of this Act.

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 PUBLIC LAW 98-369—JULY 18, 1984

98 STAT. 1041

(2) EXCEPTION FOR INDEBTEDNESS O N CERTAIN PROPERTY AC-

QUIRED BEFORE JANUARY 1, 1985.—

(A) The amendment made by subsection (a) shall not apply to any indebtedness incurred before January 1, 1985, by a partnership described in subparagraph (B) if such indebtedness is incurred with respect to property acquired (directly or indirectly) by such partnership before such date. (B) A partnership is described in this subparagraph if— (i) before October 21, 1983, the partnership was organized, a request for exemption with respect to such partnership was filed with the Department of Labor, and a private placement memorandum stating the maximum number of units in the partnership that would be offered had been circulated, (ii) the interest in the property to be acquired, directly or indirectly (including through acquiring an interest in another partnership) by such partnership was described in such private placement memorandum, and (iii) the marketing of partnership interests in such partnership is completed not later than 2 years after the later of the date of enactment of this Act or the date of publication in the Federal Register of such exemption by the Department of Labor and the aggregate number of units in such partnership sold does not exceed the amount described in clause (i). (3) EXCEPTION FOR INDEBTEDNESS ON CERTAIN PROPERTY AC-

i 30 j ^ i >

^

QUIRED BEFORE JANUARY 1, 1986.—

(A) The amendment made by subsection (a) shall not apply to any indebtedness incurred before January 1, 1986, by a partnership described in subparagraph (B) if such indebtedness is incurred with respect to property acquired (directly or indirectly) by such partnership before such date. (B) A partnership is described in this paragraph if— (i) before March 6, 1984, the partnership was organized and publicly announced, the maximum amount of interests which would be sold in such partnership, and (ii) the marketing of partnership interests in such partnership is completed not later than the 90th day after the date of the enactment of this Act and the aggregate amount of interests in such partnership sold does not exceed the maximum amount described in clause (i). For purposes of clause (i), the maximum amount taken into account shall be the greatest of the amounts shown in the registration statement, prospectus, or partnership agreement. (C) BINDING CONTRACTS.—For purposes of this paragraph, property shall be deemed to have been acquired before January 1, 1986, if such property is acquired pursuant to a written contract which, on January 1, 1986, and at all times thereafter, required the acquisition of such property and such property is placed in service not later than 6 months after the date such contract was entered into.

31-194 0 - 86 - 35: QL. 3 Part 1

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Page:United States Statutes at Large Volume 98 Part 1.djvu/1090

 98 STAT. 1042

PUBLIC LAW 98-369—JULY 18, 1984

SEC. 1035. TRANSITIONAL RULE RELATING TO THE DEFINITION OF QUALIFIED CONSERVATION CONTRIBUTIONS. 26 USC 170. (a) IN GENERAL.—Subparagraph (B) of section 170(h)(5) (defining exclusively for conservation purposes) is amended to read as follows: "(B) No SURFACE MINING PERMITTED.— "(i) IN GENERAL.—Except as provided in clause (ii), in the case of a contribution of any interest where there is a retention of a qualified mineral interest, subparagraph (A) shall not be treated as met if at any time there may be extraction or removal of minerals by any surface mining method. "(ii) SPECIAL RULE.—With respect to any contribution of property in which the ownership of the surface estate and mineral interests were separated before June 13, 1976, and remain so separated, subparagraph (A) shall be treated as met if the probability of surface mining occurring on such property is so remote as to be negligible." 26 USC 170 note. (b) EFFECTIVE DATE.—The amendment made by subsection (a) shall apply to contributions made after the date of the enactment of this Act.

Subtitle E—Income Tax Credits 26 USC 51.

SEC. 1041. 1-YEAR EXTENSION OF TARGETED JOBS CREDIT. (a) IN GENERAL.—Paragraph (3) of section 51(c) (defining wages qualifying for targeted jobs credit) is amended by striking out "December 31, 1984" and inserting in lieu thereof "December 31, 1985". (b) ADDITIONAL AUTHORIZATION OF APPROPRIATIONS.—Paragraph

26 USC 51 note.

(2) of section 261(f) of the Economic Recovery Tax Act of 1981 is amended by striking out "fiscal years 1983 and 1984" and inserting in lieu thereof "fiscal years 1983, 1984, and 1985". ^:

26 USC 51.

(c) TARGETED JOBS CREDIT TECHNICAL AMENDMENTS.— (1) TREATMENT OF SUCCESSOR EMPLOYERS; TREATMENT OF EMPLOYEES PERFORMING SERVICES FOR OTHER PERSONS.—Section

51 (relating to amount of targeted jobs credit) is amended by adding at the end thereof the following new subsection: "(j) TREATMENT OF SUCCESSOR EMPLOYERS; TREATMENT OF EMPLOYEES PERFORMING SERVICES FOR OTHER PERSONS.— "(1) TREATMENT OF SUCCESSOR EMPLOYERS.—Under regulations

prescribed by the Secretary, in the case of a successor employer referred to in section 3306(b)(1), the determination of the amount of the credit under this section with respect to wages paid by such successor employer shall be made in the same manner as if such wages were paid by the predecessor employer referred to in such section. "(2) TREATMENT OF EMPLOYEES PERFORMING SERVICES FOR OTHER PERSONS.—No credit shall be determined under this sec-

tion with respect to remuneration paid by an employer to an employee for services performed by such employee for another person unless the amount reasonably expected to be received by the employer for such services from such other person exceeds the remuneration paid by the employer to such employee for such services."

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 PUBLIC LAW 98-369—JULY 18, 1984

98 STAT. 1043

(2) SPECIAL RULE FOR CERTIFICATION.—Subparagraph (A) of

section 51(d)(16) (relating to special rules for certifications) is 26 USC 51. amended by adding at the end thereof the following new sentence: "For purposes of the preceding sentence, if on or before the day on which such individual begins work for the employer, such individual has received from a designated local agency (or other agency or organization designated pursuant to a written agreement with such designated local agency) a written preliminary determination that such individual is a member of a targeted group, then 'the fifth day' shall be substituted for 'the day' in such sentence." (3)

-

AGE

REQUIREMENT

FOR

QUALIFIED

SUMMER

YOUTH

EMPLOYEE.—Clause (ii) of section 51(d)(12)(A) (defining qualified summer youth employee) is amended by striking out "(as defined in paragraph (14))" and inserting in lieu thereof "(or if later, on May 1 of the calendar year involved)". (4) TECHNICAL AMENDMENT.—Paragraph (2) of section 51(b) is amended by striking out "(or, in the case of a vocational rehabilitation referral, the day the individual begins work for the employer on or after the beginning of such individual's rehabili' ^^^' * ^ tation plan)". (5) EFFECTIVE DATES.— 26 USC 51 note. (A) IN GENERAL.—Except as provided in subparagraph (B), the amendments made by this section shall apply to individuals who begin work for the employer after the date of the enactment of this Act. (B) SPECIAL RULE FOR EMPLOYEES PERFORMING SERVICES

FOR OTHER PERSONS.—Paragraph (2) of section 51(j) of the Internal Revenue Code of 1954 (as added by this subsection) Ante, p. 837. and the amendment made by paragraph (3) of this subsection shall apply to individuals who begin work for the employer after December 31, 1984. SEC. 1042. INCREASE IN EARNED INCOME CREDIT. (a) INCREASE IN RATE OF CREDIT.—Subsection (a) of section 32 26 USC 32. (relating to earned income credit), as redesignated by title IV of this ^"-te, p. 826. Act, is amended by striking out "10 percent" and inserting in lieu thereof "11 percent". (b) ADJUSTMENT OF CREDIT PHASE-OUT.—Paragraph (2) of section

32(b) (as so redesignated) is amended to read as follows: "(2) 12% percent of so much of the adjusted gross income (or, if greater, the earned income) of the taxpayer for the taxable year as exceeds $6,500." (c) CREDIT NOT ALLOWABLE TO TAXPAYERS SUBJECT TO ALTERNA-

M >8 b.i.

TivE MINIMUM TAX.—Section 32 (as so redesignated) is amended by adding at the end thereof the following new subsection: "(h) REDUCTION OF CREDIT TO TAXPAYERS SUBJECT TO ALTERNATIVE MINIMUM TAX.—The credit allowed under this section for the tax-

able year shall be reduced by the amount of tax imposed by section 55 (relating to alternative minimum tax for taxpayers other than corporations) with respect to such taxpayer for such taxable year." (d) TECHNICAL AMENDMENTS.—

(1) Paragraph (1) of section 32(b) (as so redesignated) is amended by striking out "$500" and inserting in lieu thereof "$550". (2) Subparagraphs (A) and (B) of section 32(f)(2» (as so redesignated) are amended to read as follows:

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Page:United States Statutes at Large Volume 98 Part 1.djvu/1092

 98 STAT. 1044

26 USC 3507.

26 USC 32 note.

26 USC 48.

PUBLIC LAW 98-369—JULY 18, 1984

"(A) for earned income between $0 and $11,000, and "(B) for adjusted gross income between $6,500 and $11,000." (3) Clauses (i) and (ii) of section 3507(c)(2)(B) are amended to read as follows: "(i) of not more than 11 percent of the first $5,000 of earned income, which "(ii) phases out between $6i^00 and $11,000 of earned income, or". (4) Clauses (i) and (ii) of section 3507(c)(2)(C) are amended to read as follows: "(i) of not more than 11 percent of the first $2,500 of earned income, which "(ii) phases out between $3,250 and $5,500 of earned income." (e) EFFECTIVE DATE.—The amendments made by this section shall apply to taxable years beginning after December 31, 1984. SEC. 1043. ALTERNATIVE TEST FOR DEFINITION OF QUALIFIED REHABILITATED BUILDING. (a) IN GENERAL.—Paragraph (1) of section 48(g) (relating to qualified rehabilitated buildings) is amended by adding at the end thereof the following new subparagraph: "(E) ALTERNATIVE TEST FOR DEFINITION OF QUALIFIED REHABILI-

26 USC 48 note.

TATED BUILDING.—The requirement in clause (iii) of subparagraph (A) shall be deemed to be satisfied if in the rehabilitation process— "(i) 50 percent or more of the existing external walls of the building are retained in place as external walls, "(ii) 75 percent or more of the existing external walls of such building are retained in place as internal or external walls, and "(iii) 75 percent or more of the existing internal structural framework of such building is retained in place." 0^) EFFECTIVE DATE.—The amendments made by this section shall apply to expenditures incurred after December 31, 1983, in taxable years ending after such date.

Subtitle F—Miscellaneous Housing Provisions

26 USC 165.

SEC. 1051. DISASTER LOSS DEDUCTION WHERE TAXPAYER ORDERED TO DEMOLISH OR RELOCATE RESIDENCE IN DISASTER AREA BECAUSE OF DISASTER. (a) GENERAL RULE.—Section 165 (relating to losses) is amended by redesignating subsection (k) as subsection (1) and by inserting after subsection (j) the following new subsection: "(k) TREATMENT AS DISASTER Loss WHERE TAXPAYER ORDERED TO DEMOLISH OR RELOCATE RESIDENCE IN DISASTER AREA BECAUSE OF

42 USC 5121 note.

DISASTER.—In the case of a taxpayer whose residence is located in an area which has been determined by the President of the United States to warrant assistance by the Federal Government under the Disaster Relief Act of 1974, if— "(1) not later than the 120th day after the date of such determination, the taxpayer is ordered, by the government of the State or any political subdivision thereof in which such residence is located, to demolish or relocate such residence, and

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 PUBLIC LAW 98-369—JULY 18, 1984

98 STAT. 1045

"(2) the residence has been rendered unsafe for use as a residence by reason of the disaster, any loss attributable to such disaster shall be treated as a loss which arises from a casualty and which is described in subsection (i)." (b) EFFECTIVE DATE.—The amendment made by subsection (a) 26 USC 165 note. shall apply to taxable years ending after December 31, 1981, with respect to residences in areas determined by the President of the United States, after such date, to warrant assistance by the Federal Government under the Disaster Relief Act of 1974. 42 USC 5121 note. SEC. 1052. ALLOCATION OF EXPENSES TO PARSONAGE ALLOWANCES. With respect to any mortgage interest or real property tax costs paid or incurred before January 1, 1986, by any minister of the gospel who owned and occupied a home before January 3, 1983 (or had a contract to purchase a home before such date and subsequently owned and occupied such home), the application of section 265(1) of the Internal Revenue Code of 1954 to such costs shall be determined without regard to Revenue Ruling 83-3 (and without regard to any other regulation, ruling, or decision reaching the same result, or a result similar to the result, set forth in such Revenue Ruling). SEC. 1053. ARMED FORCES OVERSEAS QUARTERS. (a) IN GENERAL.—Subsection (h) of section 1034 (relating to roll- 26 USC 1034. over of gain on sale of principal residence) is amended to read as follows: "(h) MEMBERS OF ARMED FORCES.—

"(1) IN GENERAL.—The running of any period of time specified in subsection (a) or (c) (other than the 2 years referred to in subsection (c)(4)) shall be suspended during any time that the taxpayer (or his spouse if the old residence and the new residence are each used by the taxpayer and his spouse as their principal residence) serves on extended active duty with the Armed Forces of the United States after the date of the sale of the old residence, except that any such period of time as so suspended shall not extend beyond the date 4 years after the date of the sale of the old residence. "(2) MEMBERS STATIONED OUTSIDE THE UNITED STATES OR REQUIRED TO RESIDE IN GOVERNMENT QUARTERS.—In the case of any

taxpayer who, during any period of time the running of which is suspended by paragraph (1)— "(A) is stationed outside of the United States, or "(B) after returning from a tour of duty outside of the United States and pursuant to a determination by the Secretary of Defense that adequate off-base housing is not available at a remote base site, is required to reside in onbase Government quarters, any such period of time as so suspended shall not expire before the last day described in subparagraph (A) or (B), as the case may be, except that any such period of time as so suspended shall not extend beyond the date which is 8 years after the date of the sale of the old residence. "(3) EXTENDED ACTIVE DUTY DEFINED.—For purposes of this subsection, the term 'extended active duty' means any period of active duty pursuant to a call or order to such duty for a period in excess of 90 days or for an indefinite period."

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Page:United States Statutes at Large Volume 98 Part 1.djvu/1094

 98 STAT. 1046 26 USC 1034 •^ot®-

PUBLIC LAW 98-369—JULY 18, 1984

(b) EFFECTIVE DATE.—The amendments made by this section shall apply to sales of old residences (within the meaning of section 1034 of the Internal Revenue Code of 1954) after the date of the enactment of this Act. SEC. 1054. TREATMENT OF HOME WON IN LOCAL RADIO CONTEST AND SPECIALLY DESIGNED FOR HANDICAPPED FOSTER CHILD.

26 USC 1 et seq.

(a) IN GENERAL.—If the Federal income tax attributable to the receipt of the prize described in subsection (b) is paid not later than one year after the date of the enactment of this Act, such payment shall be treated for purposes of the Internal Revenue Code of 1954 as being in full satisfaction of such tax and all interest, additions to the tax, additional amounts, and penalties in respect of liability for such Federal income tax, 0?) DESCRIPTION OF PRIZE.—For purposes of subsection (a), the prize described in this subsection is a residence which— (1) was won by the taxpayer in a local radio contest, (2) was specially designed to meet the needs of a handicapped foster child of the taxpayer, (3) is the principal residence (within the meaning of section 1034 of such Code) of the taxpayer, and (4) had a lien placed on it by the Internal Revenue Service on May 24, 1983, after an Internal Revenue Service supervisor had overruled two payment schedules negotiated with the taxpayer for the payment of taxes, interest, and penalties on income attributable to such residence for the taxpayer's 1980 taxable year. (c) TAX DETERMINED WITHOUT REGARD TO INTEREST, ETC.—For

purposes of subsection (a), the Federal income tax attributable to the prize described in subsection Oo) shall be determined without regard to interest, additions to the tax, additional amounts, and penalties.

Subtitle G—Extension of Existing Provisions and Transition Rules SEC. 1061. EXTENSION OF PAYMENT-IN-KIND TAX TREATMENT ACT OF 1983 TO WHEAT FOR 1984 CROP YEAR. (a) EXTENSION.—

26 USC 61 note.

(1) IN GENERAL.—Section 5 of the Payment-in-Kind Tax Treatment Act of 1983 (relating to definitions and special rules) is amended by redesignating subsection O> as subsection (c) and by t) inserting after subsection (a) the following new subsection: "(b) EXTENSION TO WHEAT PLANTED AND HARVESTED IN 1984.—In the case of wheat— "(1) any reference in this Act to the 1983 crop year shall include a reference to the 1984 crop year, and "(2) any reference to the 1983 payment-in-kind program shall include a reference to any program for the 1984 year for wheat which meets the requirements of subparagraphs (A) and (B) of subsection (a)(1)." (2) DEFINITION OF CROP YEAR.—Paragraph (2) of section 5(a) of

such Act is amended to read as follows: "(2) CROP YEAR.—The term '1983 crop year' means the crop year for any crop the planting or harvesting period for which occurs during 1983. The term '1984 crop year' means the crop

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 PUBLIC LAW 98-369—JULY 18, 1984

98 STAT. 1047

^'

year for wheat the planting and harvesting period for which occurs during 1984." (b) EFFECTIVE DATE.—The amendments made by this section shall 26 USC 61 note. apply with respect to commodities received for the 1984 crop year (as defined in section 5(a)(2) of the Payment-in-Kind Tax Treatment Act of 1983 as amended by subsection (a)). Ante, p. 1046. SEC. 1062. EXTENSION OF INCREASED DEDUCTION FOR ELIMINATING ARCHITECTURAL AND TRANSPORTATION BARRIERS TO THE HANDICAPPED. (a) EXTENSION.—

(1) IN GENERAL.—Subsection (d) of section 190 (relating to 26 USC 190. expenditures to remove architectural and transportation barriers to the handicapped and elderly) is amended to read as follows: "(d) APPLICATION OF SECTION.—This section shall apply to— "(1) taxable years beginning after December 31, 1976, and before January 1, 1983, and "(2) taxable years beginning after December 31, 1983, and before January 1, 1986." (2) CONFORMING AMENDMENT.—Subsection (c) of section 2122

of the Tax Reform Act of 1976 (26 U.S.C. 190 note) (relating to effective date for allowance of deduction for eliminating archii ',tectural and transportation barriers for the handicapped) is -•-'••^ amended by striking out "and before January 1, 1983". (b) INCREASE IN DEDUCTION.—Subsection (c) of section 190 (relating to limitation of deduction) is amended by striking out "$25,000" and inserting in lieu thereof "$35,000". (c) EFFECTIVE DATE.—The amendment made by subsection (b) shall 26 USC 190 note. apply to taxable years beginning after December 31, 1983. SEC. 1063. PERMANENT DISALLOWANCE OF DEDUCTION FOR EXPENSES OF DEMOLITION OF CERTAIN STRUCTURES. (a) EXTENSION TO ALL STRUCTURES; DISALLOWANCE MADE PERMA-

NENT.—Section 280B (relating to demolition of certain historic struc- 26 USC 280B. tures) is amended— (1) by striking out all of subsection (a) which precedes paragraph (1) thereof and inserting in lieu thereof the following: "In the case of the demolition of any structure—"; and .^ij > (2) by striking out subsections (b) and (c). (b) CONFORMING AMENDMENTS.—

(1) The heading for section 280B is amended by striking out "CERTAIN HISTORIC". (2) The item relating to section 280B in the table of sections for part IX of subchapter B of chapter 1 is amended by striking out "certain historic". (c) EFFECTIVE DATE.—The amendments made by this section shall 26 USC 280B apply to taxable years beginning after December 31, 1983. note. SEC. 1064. AMORTIZATION OF EXPENDITURES TO REHABILITATE LOWINCOME RENTAL HOUSING. ,^ Subsection (k) of section 167 (relating to depreciation of expendi- 26 USC 167. tures to rehabilitate low-income rental housing) is amended by striking out "January 1, 1984" each place it appears and inserting in lieu thereof "January 1, 1987".

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 98 STAT. 1048

PUBLIC LAW 98-369—JULY 18, 1984

SEC. 1065. RULES TREATING INDIAN TRIBAL GOVERNMENTS AS STATES MADE PERMANENT.

26 USC 7871 note.

(a) IN GENERAL.—Section 204 of the Indian Tribal Governmental Tax Status Act of 1982 is amended— (1) by striking out "and before January 1, 1985," each place it appears, and (2) by striking out ", and shall cease to apply at the close of December 31, 1984" in paragraph (5) thereof.

97 Stat. 87 26 USC 7871.

Paragraph (6) of section 7871 (relating to Indian tribal governments treated as States for certain purposes) is amended by striking out subparagraphs (B) and (C) and inserting in lieu thereof the following: "(B) section 105(e) (relating to accident and health plans), "(C) section 117(b)(2)(A) (relating to scholarships and fellowship grants), "(D) section 162(e) (relating to appearances, etc., with respect to legislation) "(E) section 403(b)(l)(A)(ii) (relating to the taxation of contributions of certain employers for employee annuities), and "(F) section 454(b)(2) (relating to discount obligations). (c) EFFECTIVE DATE.—The amendment made by subsection Oa) shall apply to taxable years beginning after December 31, 1984.

0?) TREATMENT AS STATE EXPANDED FOR CERTAIN PURPOSES.—

26 USC 7871 "ote.

SEC. 1066. TRANSITIONAL RULE FOR TREATMENT OF CERTAIN INCOME FROM S CORPORATIONS. 26 USC 163 note.

26 USC 1 note.

(a) IN GENERAL.—If—

(1) a corporation had an election in effect under subchapter S of the Internal Revenue Code of 1954 for the taxable years of such corporation beginning in 1982, 1983, and 1984, and (2) a shareholder of such corporation makes an election to have this section apply, then any qualified income which such shareholder takes into account by reason of holding stock in such corporation for any taxable year of such corporation beginning in 1983 or 1984 shall be treated for purposes of section 163(d) of the Internal Revenue Code of 1954 as such income would have been treated but for the enactment of the Subchapter S Revision Act of 1982. (b) QUALIFIED INCOME.—For purposes of subsection (a), the term "qualified income" means any income other than income which is attributable to personal services performed by the shareholder for the corporation. (c) ELECTION.—The election under subsection (a)(2) shall be made at such time and in such manner as the Secretary of the Treasury or his delegate may by regulations prescribe. SEC. 1067. SPECIAL LEASING RULES FOR CERTAIN COAL GASIFICATION FACILITIES.

(a) IN GENERAL.—Paragraph (3) of section 208(d) of the Tax Equity 26 USC 168 note, and Fiscal Responsibility Act of 1982 is amended by adding at the end thereof the following new subparagraph: "(G) COAL GASIFICATION FACILITIES.—

"(i) IN GENERAL.—Property is described in this subparagraph if such property—

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Page:United States Statutes at Large Volume 98 Part 1.djvu/1097

 PUBLIC LAW 98-369—JULY 18, 1984

98 STAT. 1049

"(I) is used directly in connection with the manufacture or production of low sulfur gaseous fuel from coal, and "(II) would be described in subparagraph (A) if 'July 1, 1984' were substituted for 'January 1, 1983'., "(ii) SPECIAL RULE.—For purposes of determining whether property described in this subparagraph is described in subparagraph (A), such property shall be treated as having been acquired during the period referred to in subparagraph (A)(ii) if at least 20 percent of the cost of such property is paid during such period, "(iii) LIMITATION ON AMOUNT.—Clause (i) shall only apply to the lease of an undivided interest in the property in an amount which does not exceed the lesser of— .^ ^ ^ "(I) 50 percent of the cost basis of such property, or "(II) $67,500,000. "(iv) PLACED IN SERVICE.—In the case of property to which this subparagraph applies— "(I) such property shall be treated as placed in service when the taxpayer receives an operating permit with respect to such property from a State environmental protection agency, and "(II) the term of the lease with respect to such property shall be treated as being 5 years." (b) SPECIAL RULE FOR SUBSECTION (a).—The amount of any recap- 26 USC 168 note. ture under section 47 of the Internal Revenue Code of 1954 with respect to the credit allowed under section 38 of such Code with Ante, p. 827. respect to progress expenditures (within the meaning of section 46(d) of such Code) shall apply only to the percentage of the cost basis of the coal gasification facility to which the amendment made by subsection (a) applies. (c) EFFECTIVE DATE.—The amendment made by subsection (a) shall 26 USC 168 note. take effect as if included in the provision of section 208(d)(3) of the Tax Equity and Fiscal Responsibility Act of 1982.

Subtitle H—Additional Provisions SEC. 1071. TAX TREATMENT OF REGULATED INVESTMENT COMPANIES. (a) PERSONAL HOLDING COMPANIES PERMITTED TO B E REGULATED INVESTMENT COMPANIES.—

(1) IN GENERAL.—Subsection (a) of section 851 (defining regu- 26 USC 851. lated investment company) is amended by striking out "(other than a personal holding company as defined in section 542)". (2) SPECIAL RULE FOR RATE OF TAX.—Paragraph (1) of section

852(b) (relating to imposition of tax on regulated investment 26 USC 852. companies) is amended by adding at the end thereof the following new sentence: "In the case of a regulated investment company which is a personal holding company (as defined in section 542), that tax shall be computed at the highest rate of tax specified in section 11(b)." (3) REQUIREMENT THAT INVESTMENT COMPANY HAVE NO EARNINGS AND PROFITS ACCUMULATED IN YEAR FOR WHICH IT WAS NOT A REGULATED INVESTMENT COMPANY.—Subsection (a) of section

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Page:United States Statutes at Large Volume 98 Part 1.djvu/1098

 98 STAT. 1050 26 USC 852.

PUBLIC LAW 98-369—JULY 18, 1984 852 (relating to requirements applicable to regulated investment companies) is amended by striking out "and" at the end of paragraph (1), by striking out the period at the end of paragraph (2) and inserting in lieu thereof ", and", and by adding at the end thereof the following new paragraph: "(3) either— "(A) the provisions of this part applied to the investment company for all taxable years ending on or after November 8, 1983, or "(B) as of the close of the taxable year, the investment company has no earnings and profits accumulated in any taxable year to which the provisions of this part (or the corresponding provisions of prior law) did not apply to it." (4) PROCEDURES SIMILAR TO DEFICIENCY DIVIDEND PROCEDURES

MADE APPLICABLE.—Section 852 is amended by adding at the end thereof the following new subsection: "(e) PROCEDURES SIMILAR TO DEFICIENCY DIVIDEND PROCEDURES MADE APPLICABLE.— "(1) IN GENERAL.—If—

"(A) there is a determination that the provisions of this part do not apply to an investment company for any taxable year (hereinafter in this subsection referred to as the 'nonRIC year'), and "(B) such investment company meets the distribution requirements of paragraph (2) with respect to the non-RIC year, for purposes of applying subsection (a)(3) to subsequent taxable years, the provisions of this part shall be treated as applying to such investment company for the non-RIC year. "(2) DISTRIBUTION REQUIREMENTS.—

"(A) IN GENERAL.—The distribution requirements of this paragraph are met with respect to any non-RIC year if, within the 90-day period beginning on the date of the determination (or within such longer period as the Secretary may permit), the investment company makes 1 or more qualified designated distributions and the amount of such distributions is not less than the excess of— "(i) the portion of the accumulated earnings and profits of the investment company (as of the date of the determination) which are attributable to the non-RIC year, over "(ii) any interest payable under paragraph (3). "(B) QUALIFIED DESIGNATED DISTRIBUTION.—For purposes of this paragraph, the term 'qualified designated distribution' means any distribution made by the investment company if— "(i) section 301 applies to such distribution, and "(ii) such distribution is designated (at such time and in such manner as the Secretary shall by regulations prescribe) as being taken into account under this paragraph with respect to the non-RIC year. "(C) EFFECT ON DIVIDENDS PAID DEDUCTION.—Any qualified designated distribution shall not be included in the amount of dividends paid for purposes of computing the dividends paid deduction for any taxable year. "(3) INTEREST CHARGE.—

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text:
Page:United States Statutes at Large Volume 98 Part 1.djvu/1099

 PUBLIC LAW 98-369—JULY 18, 1984

98 STAT. 1051

"(A) IN GENERAL.—If paragraph (1) applies to any nonRIC year of an investment company, such investment company shall pay interest at the annual rate established under section 6621— "(i) on an amount equal to 50 percent of the amount referred to in paragraph (2)(A)(i), "(ii) for the period— "(I) which begins on the last day prescribed for payment of the tax imposed for the non-RIC year (determined without regard to extensions), and "(II) which ends on the date the determination is made. "(B) COORDINATION WITH SUBTITLE F.—Any interest payable under subparagraph (A) may be assessed and collected at any time during the period during which any tax imposed for the taxable year in which the determination is made may be assessed and collected.

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"(4) PROVISION NOT TO APPLY IN THE CASE OF FRAUD.—The

provisions of this subsection shall not apply if the determination contains a finding that the failure to meet any requirement of this part was due to fraud with intent to evade tax. "(5) DETERMINATION.—For purposes of this subsection, the term 'determination' has the meaning given to such term by section 860(e). Such term also includes a determination by the investment company filed with the Secretary that the provisions of this part do not apply to the investment company for a taxable year." (5) EFFECTIVE DATES.— 26 USC 852 note. (A) IN GENERAL.—Except as otherwise provided in this paragraph, the amendments made by this subsection shall apply to taxable years beginning after December 31, 1982. (B) INVESTMENT COMPANIES WHICH WERE REGULATED INVESTMENT COMPANIES FOR YEARS ENDING BEFORE NOVEM-

BER 8, 1983.—In the case of any investment company to which the provisions of part I of subchapter M of chapter 1 of the Internal Revenue Code of 1954 applied for any tax- 26 USC 851. able year ending before November 8, 1983, for purposes of section 852(a)(3)(B) of the Internal Revenue Code of 1954 (as Ante, p. 1050. amended by this subsection), no earnings and profits accumulated in any taxable year ending before January 1, 1984, shall be taken into account. i (C)

INVESTMENT

COMPANIES

BEGINNING

BUSINESS

IN

1983.—In the case of an investment company which began business in 1983 (and was not a successor corporation), earnings and profits accumulated during its first taxable year shall not be taken into account for purposes of section 852(a)(3)(B) of such Code (as so amended). (D) INVESTMENT COMPANIES REGISTERING BEFORE NOVEM-

BER 8, 1983.—In the case of any investment company— (i) which, during the period after December 31, 1981, and before November 8, 1983— (I) was engaged in the active conduct of a trade or business, (II) sold substantially all of its operating assets, and

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