Pub.L. 104-189 To redesignate the Dunning Post Office in Chicago, Illinois, as the ``Roger P. McAuliffe Post Office''. <> ...

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Public Law 104-188
104th Congress

                                 An Act


 
 To provide tax relief for small businesses, to protect jobs, to create 
 opportunities, to increase the take home pay of workers, to amend the 
    Portal-to-Portal Act of 1947 relating to the payment of wages to 
 employees who use employer owned vehicles, and to amend the Fair Labor 
 Standards Act of 1938 to increase the minimum wage rate and to prevent 
job loss by providing flexibility to employers in complying with minimum 
    wage and overtime requirements under that Act. <<NOTE: Aug. 20, 
                         1996 -  [H.R. 3448]>> 

    Be it enacted by the Senate and House of Representatives of the 
United States of America <<NOTE: Small Business Job Protection Act of 
1996.>>  in Congress assembled,

SECTION 1. SHORT TITLE; <<NOTE: 26 USC 1 note.>>  TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Small Business Job 
Protection Act of 1996''.
    (b) Table of Contents.--

Sec. 1. Short title; table of contents.

            TITLE I--SMALL BUSINESS AND OTHER TAX PROVISIONS

Sec. 1101. Amendment of 1986 Code.
Sec. 1102. Underpayments of estimated tax.

                       Subtitle A--Expensing; Etc.

Sec. 1111. Increase in expense treatment for small businesses.
Sec. 1112. Treatment of employee tips.
Sec. 1113. Treatment of storage of product samples.
Sec. 1114. Treatment of certain charitable risk pools.
Sec. 1115. Treatment of dues paid to agricultural or horticultural 
                      organizations.
Sec. 1116. Clarification of employment tax status of certain fishermen.
Sec. 1117. Modifications of tax-exempt bond rules for first-time 
                      farmers.
Sec. 1118. Newspaper distributors treated as direct sellers.
Sec. 1119. Application of involuntary conversion rules to presidentially 
                      declared disasters.
Sec. 1120. Class life for gas station convenience stores and similar 
                      structures.
Sec. 1121. Treatment of abandonment of lessor improvements at 
                      termination of lease.
Sec. 1122. Special rules relating to determination whether individuals 
                      are employees for purposes of employment taxes.
Sec. 1123. Treatment of housing provided to employees by academic health 
                      centers.

          Subtitle B--Extension of Certain Expiring Provisions

Sec. 1201. Work opportunity tax credit.
Sec. 1202. Employer-provided educational assistance programs.
Sec. 1203. FUTA exemption for alien agricultural workers.
Sec. 1204. Research credit.
Sec. 1205. Orphan drug tax credit.
Sec. 1206. Contributions of stock to private foundations.
Sec. 1207. Extension of binding contract date for biomass and coal 
                      facilities.
Sec. 1208. Moratorium for excise tax on diesel fuel sold for use or used 
                      in diesel-powered motorboats.

            Subtitle C--Provisions Relating to S Corporations

Sec. 1301. S corporations permitted to have 75 shareholders.
Sec. 1302. Electing small business trusts.

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Sec. 1303. Expansion of post-death qualification for certain trusts.
Sec. 1304. Financial institutions permitted to hold safe harbor debt.
Sec. 1305. Rules relating to inadvertent terminations and invalid 
                      elections.
Sec. 1306. Agreement to terminate year.
Sec. 1307. Expansion of post-termination transition period.
Sec. 1308. S corporations permitted to hold subsidiaries.
Sec. 1309. Treatment of distributions during loss years.
Sec. 1310. Treatment of S corporations under subchapter C.
Sec. 1311. Elimination of certain earnings and profits.
Sec. 1312. Carryover of disallowed losses and deductions under at-risk 
                      rules allowed.
Sec. 1313. Adjustments to basis of inherited S stock to reflect certain 
                      items of income.
Sec. 1314. S corporations eligible for rules applicable to real property 
                      subdivided for sale by noncorporate taxpayers.
Sec. 1315. Financial institutions.
Sec. 1316. Certain exempt organizations allowed to be shareholders.
Sec. 1317. Effective date.

                   Subtitle D--Pension Simplification

                Chapter 1--Simplified Distribution Rules

Sec. 1401. Repeal of 5-year income averaging for lump-sum distributions.
Sec. 1402. Repeal of $5,000 exclusion of employees' death benefits.
Sec. 1403. Simplified method for taxing annuity distributions under 
                      certain employer plans.
Sec. 1404. Required distributions.

             Chapter 2--Increased Access to Retirement Plans

                   subchapter a--simple savings plans

Sec. 1421. Establishment of savings incentive match plans for employees 
                      of small employers.
Sec. 1422. Extension of simple plan to 401(k) arrangements.

                     subchapter b--other provisions

Sec. 1426. Tax-exempt organizations eligible under section 401(k).
Sec. 1427. Homemakers eligible for full IRA deduction.

                 Chapter 3--Nondiscrimination Provisions

Sec. 1431. Definition of highly compensated employees; repeal of family 
                      aggregation.
Sec. 1432. Modification of additional participation requirements.
Sec. 1433. Nondiscrimination rules for qualified cash or deferred 
                      arrangements and matching contributions.
Sec. 1434. Definition of compensation for section 415 purposes.

                   Chapter 4--Miscellaneous Provisions

Sec. 1441. Plans covering self-employed individuals.
Sec. 1442. Elimination of special vesting rule for multiemployer plans.
Sec. 1443. Distributions under rural cooperative plans.
Sec. 1444. Treatment of governmental plans under section 415.
Sec. 1445. Uniform retirement age.
Sec. 1446. Contributions on behalf of disabled employees.
Sec. 1447. Treatment of deferred compensation plans of State and local 
                      governments and tax-exempt organizations.
Sec. 1448. Trust requirement for deferred compensation plans of State 
                      and local governments.
Sec. 1449. Transition rule for computing maximum benefits under section 
                      415 limitations.
Sec. 1450. Modifications of section 403(b).
Sec. 1451. Special rules relating to joint and survivor annuity 
                      explanations.
Sec. 1452. Repeal of limitation in case of defined benefit plan and 
                      defined contribution plan for same employee; 
                      excess distributions.
Sec. 1453. Tax on prohibited transactions.
Sec. 1454. Treatment of leased employees.
Sec. 1455. Uniform penalty provisions to apply to certain pension 
                      reporting requirements.
Sec. 1456. Retirement benefits of ministers not subject to tax on net 
                      earnings from self-employment.
Sec. 1457. Sample language for spousal consent and qualified domestic 
                      relations forms.

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Sec. 1458. Treatment of length of service awards to volunteers 
                      performing fire fighting or prevention services, 
                      emergency medical services, or ambulance services.
Sec. 1459. Alternative nondiscrimination rules for certain plans that 
                      provide for early participation.
Sec. 1460. Clarification of application of ERISA to insurance company 
                      general accounts.
Sec. 1461. Special rules for chaplains and self-employed ministers.
Sec. 1462. Definition of highly compensated employee for pre-ERISA rules 
                      for church plans.
Sec. 1463. Rule relating to investment in contract not to apply to 
                      foreign missionaries.
Sec. 1464. Waiver of excise tax on failure to pay liquidity shortfall.
Sec. 1465. Date for adoption of plan amendments.

                   Subtitle E--Foreign Simplification

Sec. 1501. Repeal of inclusion of certain earnings invested in excess 
                      passive assets.

                       Subtitle F--Revenue Offsets

                       Part I--General Provisions

Sec. 1601. Modifications of Puerto Rico and possession tax credit.
Sec. 1602. Repeal of exclusion for interest on loans used to acquire 
                      employer securities.
Sec. 1603. Certain amounts derived from foreign corporations treated as 
                      unrelated business taxable income.
Sec. 1604. Depreciation under income forecast method.
Sec. 1605. Repeal of exclusion for punitive damages and for damages not 
                      attributable to physical injuries or sickness.
Sec. 1606. Repeal of diesel fuel tax rebate to purchasers of diesel-
                      powered automobiles and light trucks.
Sec. 1607. Extension and phasedown of luxury passenger automobile tax.
Sec. 1608. Termination of future tax-exempt bond financing for local 
                      furnishers of electricity and gas.
Sec. 1609. Extension of Airport and Airway Trust Fund excise taxes.
Sec. 1610. Basis adjustment to property held by corporation where stock 
                      in corporation is replacement property under 
                      involuntary conversion rules.
Sec. 1611. Treatment of certain insurance contracts on retired lives.
Sec. 1612. Treatment of modified guaranteed contracts.
Sec. 1613. Treatment of contributions in aid of construction.
Sec. 1614. Election to cease status as qualified scholarship funding 
                      corporation.
Sec. 1615. Certain tax benefits denied to individuals failing to provide 
                      taxpayer identification numbers.
Sec. 1616. Repeal of bad debt reserve method for thrift savings 
                      associations.
Sec. 1617. Exclusion for energy conservation subsidies limited to 
                      subsidies with respect to dwelling units.

           Part II--Financial Asset Securitization Investments

Sec. 1621. Financial Asset Securitization Investment Trusts.

                    Subtitle G--Technical Corrections

Sec. 1701. Coordination with other subtitles.
Sec. 1702. Amendments related to Revenue Reconciliation Act of 1990.
Sec. 1703. Amendments related to Revenue Reconciliation Act of 1993.
Sec. 1704. Miscellaneous provisions.

                      Subtitle H--Other Provisions

Sec. 1801. Exemption from diesel fuel dyeing requirements with respect 
                      to certain States.
Sec. 1802. Treatment of certain university accounts.
Sec. 1803. Modifications to excise tax on ozone-depleting chemicals.
Sec. 1804. Tax-exempt bonds for sale of Alaska Power Administration 
                      facility.
Sec. 1805. Nonrecognition treatment for certain transfers by common 
                      trust funds to regulated investment companies.
Sec. 1806. Qualified State tuition programs.
Sec. 1807. Adoption assistance.
Sec. 1808. Removal of barriers to interethnic adoption.
Sec. 1809. 6-month delay of electronic fund transfer requirement.

                Subtitle I--Foreign Trust Tax Compliance

Sec. 1901. Improved information reporting on foreign trusts.

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Sec. 1902. Comparable penalties for failure to file return relating to 
                      transfers to foreign entities.
Sec. 1903. Modifications of rules relating to foreign trusts having one 
                      or more 
                      United States beneficiaries.
Sec. 1904. Foreign persons not to be treated as owners under grantor 
                      trust rules.
Sec. 1905. Information reporting regarding foreign gifts.
Sec. 1906. Modification of rules relating to foreign trusts which are 
                      not grantor trusts.
Sec. 1907. Residence of trusts, etc.

              Subtitle J--Generalized System of Preferences

Sec. 1951. Short title.
Sec. 1952. Generalized System of Preferences.
Sec. 1953. Effective date.
Sec. 1954. Conforming amendments.

                       TITLE II--PAYMENT OF WAGES

Sec. 2101. Short title.
Sec. 2102. Proper compensation for use of employer vehicles.
Sec. 2103. Effective date.
Sec. 2104. Minimum wage increase.
Sec. 2105. Fair Labor Standards Act Amendments.

            TITLE I--SMALL BUSINESS AND OTHER TAX PROVISIONS

SEC. 1101. AMENDMENT OF 1986 CODE.

    Except as otherwise expressly provided, whenever in this title an 
amendment or repeal is expressed in terms of an amendment to, or repeal 
of, a section or other provision, the reference shall be considered to 
be made to a section or other provision of the Internal Revenue Code of 
1986.

SEC. 1102. UNDERPAYMENTS <<NOTE: 26 USC 6654 note.>>  OF ESTIMATED TAX.

    No addition to the tax shall be made under section 6654 or 6655 of 
the Internal Revenue Code of 1986 (relating to failure to pay estimated 
tax) with respect to any underpayment of an installment required to be 
paid before the date of the enactment of this Act to the extent such 
underpayment was created or increased by any provision of this title.

                       Subtitle A--Expensing; Etc.

SEC. 1111. INCREASE IN EXPENSE TREATMENT FOR SMALL BUSINESSES.

    (a) General <<NOTE: 26 USC 179.>>  Rule.--Paragraph (1) of section 

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