Title VI of H.R. 2676, as passed by the House on November 5, 1997, contains technical corrections to the 1997 Act and other legislation. Except for one instance noted below, the Chairman's mark generally contains the provisions of Title VI of H.R. 2676. Some of these provisions would be modified by the Chairman's mark. In addition, the Chairman's mark contains additional proposed technical corrections. The differences between the proposed technical corrections in the Chairman's mark and the provisions contained in Title VI of H.R. 2676 are briefly described below.

1. Education Incentives of the 1997 Act

Education IRAs.--The Chairman's mark adds provisions to: (1) provide that the excise tax of section 4973 would apply to each year that an excess contribution remains in an education IRA and (2) clarify that a beneficiary of an education IRA must be a life-in-being. In addition, the Chairman's mark includes tax technical corrections that were included in S. 1133, as reported by the Senate Finance Committee on February 19, 1998.

Student loan interest.--The Chairman's mark adds a provision to clarify that only the borrower may deduct student loan interest.

Enhanced deduction for corporate donations of computers.--The Chairman's mark adds a provision to clarify the entities and organizations to which computers may be donated for purposes of the enhanced deduction.

Qualified State tuition programs.--The Chairman's mark adds a provision that would include the original beneficiary's spouse within the definition of "member of the family."

Qualified zone academy bonds.--The Chairman's mark adds a provision that would clarify the application of the credit to the estimated tax and overpayment rules.

2. Savings Incentives of the 1997 Act

The Chairman's mark would modify the technical corrections relating to Individual Retirement Arrangements ("IRAs") in H.R. 2676 as passed by the House bill as follows.

Conversion of IRAs into Roth IRAs.--In the case of conversions of IRAs into Roth IRAs, the taxpayer would be able to elect whether to have the amount converted includible in income in the year of the conversion (or the year of withdrawal if the conversion is accomplished through a roll over) or ratably over 4 years. If an individual elects application of the 4-year spread and withdraws amounts before the entire amount of the conversion has been included in income, the amount withdrawn would be includible in income (in addition to any amount required to be included under the 4-year spread). In no case would the amount includible under this proposal exceed the amount converted. This proposal would replace the additional 10-percent tax under H.R. 2676 for 1998 conversions. Under the proposal, a new 5-year holding period for determining whether distributions from a Roth IRA are qualified distributions would not apply to converted amounts. The proposal would eliminate the rules in H.R. 2676 regarding separate accounts. The proposal would also clarify calculation of adjusted gross income for purposes of applying the $100,000 adjusted gross income limit on individuals eligible to convert IRAs to Roth IRAs.

Penalty-free distributions for education expenses and purchase of first homes.--The Chairman's mark would modify the provision in H.R. 2676 as passed by the House intended to prevent avoidance of the 10-percent early withdrawal tax in the case of hardship distributions under qualified plans and similar arrangements by providing that hardship distributions from qualified cash or deferred arrangements and similar plan are not eligible rollover distributions (and not subject to 20 percent withholding). The Chairman's mark would also modify the effective date of the House bill provision.

3. Capital Gains Provisions of the 1997 Act

The Chairman's mark would modify two provisions of H.R. 2676 to (1) clarify the provision relating to the holding period of positions in certain short sales and straddles, and (2) provide that new section 1045 (relating to rollovers of small business stock) applies to stock held by certain partnerships with trusts as partners. The Chairman's mark adds a provision to clarify the amount of exclusion applicable to the sale of a principal residence by a married couple filing a joint return who do not qualify for the full $500,000 exclusion.

4. Alternative Minimum Tax Provisions of the 1997 Act

The Chairman's mark adds provisions that would (1) conform the regular-tax election to use AMT depreciation to the changes made to AMT depreciation by the 1997 Act and (2) clarify the eligibility of the small corporation exemption.

5. Estate and Gift Tax Provisions of the 1997 Act

The Chairman's mark would modify the provisions of H.R. 2676 that: (1) clarify the effective date for the generation-skipping exemption; (2) coordinate the unified credit and the qualified family-owned business exclusion; and (3) clarify the rules governing revaluation of gifts. The Chairman's mark also adds provisions that would: (1) clarify the phaseout range for the 5 percent surtax to phase out the benefits of the unified credit and graduated rates; (2) clarify that interests eligible for the family-owned business exclusion must be passed to a qualified heir; (3) clarify the "trade or business" requirement for the family-owned business exclusion; (4) convert the family-owned business exclusion into a deduction; (5) make other technical changes to items cross-referenced in the family-owned business provision; and (6) clarify the treatment of post mortem conservation contributions.

6. D.C. Zone Incentives of the 1997 Act

The Chairman's mark would modify provisions of H.R. 2676 to further clarify the definitions of businesses and property eligible for special incentives available with respect to the D.C. zone. In addition, the Chairman's mark would add a provision that provides that the phase out rules applicable to the D.C. first-time home buyers credit is not applicable to credit carryovers.

7. Miscellaneous Provisions of the 1997 Act

The Chairman's mark adds provisions that would: (1) clarify the qualification of the reduced rate of tax on hard ciders; (2) clarify the treatment of the tax paid by electing publicly treated partnerships; (3) modify the depreciation limitation of electric vehicles; and (4) modify the definition of "non-Amtrak State" for purposes of the Amtrak net operating loss provision.

8. Revenue-Increase Provisions of the 1997 Act

The Chairman's mark adds provisions that would: (1) provide coordination between the basis adjustment rules relating to extraordinary dividends and similar rules applicable to consolidated returns; (2) clarify the interaction of section 355 and rules relating to certain divisive transactions involving asset contributions to a subsidiary; (3) clarify the application of section 304 to certain international transactions; (4) clarify the treatment of prepaid telephone cards for telephone excise tax purposes; (5) modify the unrelated business income tax rules applicable to second-tier subsidiaries; and (6) clarify the allocation of basis of properties distributed by a partnership.

9. Foreign Provisions of the 1997 Act

The Chairman's mark adds provisions that would: (1) clarify the treatment of PFIC option holders; (2) clarify the application of PFIC mark-to-market rules to RICs; (3) clarify the interaction between the PFIC and other mark-to-market regimes; and (4) modify the interaction between section 901(k) and the foreign tax credit flow-through rules for RICs.

10. Simplification Provisions of the 1997 Act

The Chairman's mark adds a provision that would provide that distributions from a REIT are deemed to first come from any non-REIT earnings.

11. Estate, Gift, and Trust Simplification Provisions of the 1997 Act

The Chairman's mark adds provisions that would (1) clarify the treatment of revocable trusts for purposes of the generation-skipping transfer tax, and (2) provide regulatory authority for simplified reporting of funeral trusts terminated during the taxable year.

12. Pension and Employee Benefits Provisions of the 1997 Act

The Chairman's mark adds a clarification to the scope of the provision relating to the treatment of disability payments made to public safety employees.

13. Technical Corrections Relating to Other Legislation

Adoption credit.--The Chairman's mark would add a provision that would provide that the phase-out rules applicable to the adoption credit is not applicable to credit carryovers.

Disclosure requirements of apostolic organizations.--The Chairman's mark would add a provision that would provide that section 501(d) apostolic organizations are not required to disclose Schedules K-1.

Earned income credit qualification.--The Chairman's mark would add provisions that would clarify the application of the taxpayer identification number rules for purposes of determining eligibility for the earned income credit.

Stapled REIT grandfather rule.--The Chairman's mark does not include the provision of H.R. 2676 relating to the grandfather rule applicable to stapled REITS.