Federal Tax - Major Tax Acts and Reports XXXXXXXXXX), Senate Finance Committee Report on HR 3448, the Small Business Job Protection Act of 1996 (PubLNo XXXXXXXXXX), Congress (United States) Click to...

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Federal Tax - Major Tax Acts and Reports (1986-2019), Senate Finance Committee Report on HR 3448, the Small Business Job Protection Act of 1996 (PubLNo 104-188), Congress (United States) Click to open document in a browser SRepNo 104-281 104th Congress [Click here for text of P.L. 104-188.—CCH] [SRepNo 104-281, HR 3448, PubLNo 104-188] Date originally published: June 19, 1996 104th Congress 2d Session SENATE (Report 104-281) SMALL BUSINESS JOB PROTECTION ACT OF 1996 COMMITTEE ON FINANCE UNITED STATES SENATE REPORT on H.R. 3448 [Including cost estimate of the Congressional Budget Office] June 18, 1996 * * * * * CONTENTS I. LEGISLATIVE BACKGROUND II. EXPLANATION OF THE BILL (TITLE I) SMALL BUSINESS AND OTHER TAX PROVISIONS A. Small Business Provisions 1. Increase in expensing for small business (sec. 1111) 2. Tax credit for Social Security taxes paid with respect to employee cash tips (sec. 1112) 3. Treatment of dues paid to agricultural or horticultural organizations (sec. 1113) 4. Clarify employment tax status of certain fishermen (sec. 1114) 5. Modify rules governing issuance of tax-exempt bonds for first-time farmers (sec. 1115) 6. Clarify treatment of newspaper distributors and carriers as direct sellers (sec. 1116) 7. Application of involuntary conversion rules to property damaged as a result of Presidentially declared disasters (sec. 1117) 8. Establish 15-year recovery period for retail motor fuel outlet stores (sec. 1118) 9. Treatment of leasehold improvements (sec. 1119) 10. Increase deductibility of business meal expenses for certain seafood processing facilities (sec. 1120) 11. Provide a lower rate of excise tax on certain hard ciders (sec. 1121) 12. Modifications to section 530 of the Revenue Act of 1978 (sec. 1122) B. Extension of Certain Expiring Provisions ©2019 CCH Incorporated and its affiliates and licensors. All rights reserved. Subject to Terms & Conditions: http://researchhelp.cch.com/License_Agreement.htm 1 http://prod.resource.cch.com/resource/scion/document/default/%28%40%40MTA01+SREPNO104-281%2909013e2c83a4ccdf?cfu=TAA&cpid=WKUS-TAA-IC&uAppCtx=RWI http://prod.resource.cch.com/resource/scion/citation/pit/PL104-188/CONG?cfu=TAA&cpid=WKUS-TAA-IC&uAppCtx=RWI http://researchhelp.cch.com/License_Agreement.htm 1. Work opportunity tax credit (sec. 1201) 2. Employer-provided educational assistance (sec. 1202) 3. Research and experimentation tax credit (sec. 1203) 4. Orphan drug tax credit (sec. 1204) 5. Contributions of stock to private foundations (sec. 1205) 6. Tax credit for producing fuel from a nonconventional source (sec. 1206) 7. Suspend imposition of diesel fuel tax on recreational motorboats (sec. 1207) C. Provisions Relating to S Corporations 1. S corporations permitted to have 75 shareholders (sec. 1301) 2. Electing small business trusts (sec. 1302) 3. Expansion of post-death qualification for certain trusts (sec. 1303) 4. Financial institutions permitted to hold safe harbor debt (sec. 1304) 5. Rules relating to inadvertent terminations and invalid elections (sec. 1305) 6. Agreement to terminate year (sec. 1306) 7. Expansion of post-termination transition period (sec. 1307) 8. S corporations permitted to hold subsidiaries (sec. 1308) 9. Treatment of distributions during loss years (sec. 1309) 10. Treatment of S corporations under subchapter C (sec. 1310) 11. Elimination of certain earnings and profits (sec. 1311) 12. Carryover of disallowed losses and deductions under at-risk rules allowed (sec. 1312) 13. Adjustments to basis of inherited S stock to reflect certain items of income (sec. 1313) 14. S corporations eligible for rules applicable to real property subdivided for sale by noncorporate taxpayers (sec. 1314) 15. Certain financial institutions as eligible corporations (sec. 1315) 16. Certain tax-exempt entities allowed to be shareholders (sec. 1316) 17. Reelection of subchapter S status (sec. 1317(b)) PENSION SIMPLIFICATION PROVISIONS A. Simplified Distribution Rules (secs. 1401-1404) B. Increased Access to Retirement Savings Plans 1. Establish SIMPLE retirement plans for small employers (secs. 1421-1422) 2. Tax-exempt organizations eligible under section 401(k) (sec. 1426) 3. Spousal IRAs (sec. 1427) C. Nondiscrimination Provisions 1. Definition of highly compensated employees and repeal of family aggregation rules (sec. 1431) 2. Modification of additional participation requirements (sec. 1432) 3. Nondiscrimination rules for qualified cash or deferred arrangements and matching contributions (sec. 1433) 4. Definition of compensation for purposes of the limits on contributions and benefits (sec. 1434) D. Miscellaneous Pension Simplification ©2019 CCH Incorporated and its affiliates and licensors. All rights reserved. Subject to Terms & Conditions: http://researchhelp.cch.com/License_Agreement.htm 2 http://researchhelp.cch.com/License_Agreement.htm 1. Plans covering self-employed individuals (sec. 1441) 2. Elimination of special vesting rule for multiemployer plans (sec. 1442) 3. Distributions under rural cooperative plans (sec. 1443) 4. Treatment of governmental plans under section 415 (sec. 1444) 5. Uniform retirement age (sec. 1445) 6. Contributions on behalf of disabled employees (sec. 1446) 7. Treatment of deferred compensation plans of State and local governments and tax-exempt organizations (sec. 1447) 8. Trust requirement for deferred compensation plans of State and local governments (sec. 1448) 9. Correction of GATT interest and morality rate provisions in the Retirement Protection Act (sec. 1449) 10. Multiple salary reduction agreements permitted under section 403(b) (sec. 1450(a)) 11. Treatment of Indian tribal governments under section 403(b) (sec. 1450(b)) 12. Application of elective deferral limit to section 403(b) contracts (sec. 1450(c)) 13. Waiver of minimum waiting period for qualified plan distributions (sec. 1451) 14. Repeal of combined plan limit (sec. 1452) 15. Tax on prohibited transactions (sec. 1453) 16. Treatment of leased employees (sec. 1454) 17. Uniform penalty provisions to apply to certain pension reporting requirements (sec. 1455) 18. Retirement benefits of ministers not subject to tax on net earnings from self-employment (sec. 1456) 19. Treasury to provide model forms for spousal consent and qualified domestic relations orders (sec. 1457) 20. Treatment of length of service awards for certain volunteers under section 457 (sec. 1458) 21. Date for adoption of plan amendments (sec. 1459) OTHER PROVISIONS A. Miscellaneous Revenue Provisions 1. Exempt Alaska from diesel dyeing requirement while Alaska is exempt from similar Clean Air Act dyeing requirement (sec. 1801) 2. Application of common paymaster rules to certain agency accounts at State universities (sec. 1802) 3. Modifications to excise tax on ozone-depleting chemicals a. Exempt imported recycled halons from the excise tax on ozone-depleting chemicals (sec. 1803) b. Exempt chemicals used in metered-dose inhalers from the excise tax on ozone-depleting chemicals (sec. 1803) 4. Tax-exempt bonds for the sale of Alaska Power Administration facility (sec. 1804) 5. Allow bank common trust funds to transfer assets to regulated investment companies without taxation (sec. 1805) 6. Treatment of qualified State tuition programs (sec. 1806) REVENUE OFFSETS 1. Modifications of the Puerto Rico and possession tax credit (sec. 1601) 2. Repeal 50-percent interest income exclusion for financial institution loans to ESOPs (sec. 1602) ©2019 CCH Incorporated and its affiliates and licensors. All rights reserved. Subject to Terms & Conditions: http://researchhelp.cch.com/License_Agreement.htm 3 http://researchhelp.cch.com/License_Agreement.htm 3. Taxation of punitive damages received on account of personal injury or sickness (sec. 1603) 4. Extension and phaseout of excise tax on luxury automobiles (sec. 1604) 5. Allow certain persons engaged in the local furnishing of electricity or gas to elect not to be eligible for future tax-exempt bond financing (sec. 1605) 6. Repeal of financial institution transition rule to interest allocation rules (sec. 1606) 7. Reinstate Airport and Airway Trust Fund excise taxes (sec. 1607) 8. Modify basis adjustment rules under section 1033 (sec. 1608) 9. Extension of withholding to certain gambling winnings (sec. 1609) 10. Treatment of certain insurance contracts on retired lives (sec. 1610) 11. Treatment of contributions in aid of construction for water utilities (sec. 1611(a)) 12. Require water utility property to be depreciated over 25 years (sec. 1611(b)) 13. Treatment of financial asset securitization investment trusts (“FASITs”) (sec. 1621) 14. Revision of expatriation tax rules (secs. 1631-1633) TAX TECHNICAL CORRECTIONS PROVISIONS A. Technical Corrections to the Revenue Reconciliation Act of 1990 1. Excise tax provisions a. Application of the 2.5-cents-per-gallon tax on fuel used in rail transportation to States and local governments (sec. 1702(b)(2)) b. Small winery production credit and bonding requirements (secs. 1702(b)(5), (6), and (7)) 2. Other revenue-increase provisions of the 1990 Act a. Deposits of Railroad Retirement Tax Act taxes (sec. 1702(c)(3)) b. Treatment of salvage and subrogation of property and casualty insurance companies (sec. 1702(c)(4)) c. Information with respect to certain foreign owned or foreign corporations: Suspension of statute of limitations during certain judicial proceedings (sec. 1702(c)(5)) d. Rate of interest for large corporate underpayments (secs. 1702(c)(6) and (7)) 3. Research credit provision: Effective date for repeal of special proration rule (sec. 1702(d)(1)) 4. Energy tax provision: Alternative minimum tax adjustment based on energy preferences (secs. 1702(e)(1) and (4)) 5. Estate tax freezes (sec. 1702(f)) 6. Miscellaneous provisions a. Conforming amendments to the repeal of the General Utilities doctrine (secs. 1702(g)(1) and (2)) b. Prohibited transaction rules (sec. 1702(g)(3)) c. Effective date of LIFO adjustment for purposes of computing adjusted current earnings (sec. 1702(g)(4)) d. Low-income housing tax credit (sec. 1702(g)(5)) 7. Expired or obsolete provisions (“deadwood provisions”) (sec. 1702(h)(1)-(18)) B. Technical Corrections to the Revenue Reconciliation Act of 1993 1. Treatment of full-time students under the low-income housing credit (sec. 1703(b)(1)) 2. Indexation of threshold applicable to excise tax on luxury automobiles (sec. 1703(c)) ©2019 CCH Incorporated and its affiliates and licensors. All rights reserved. Subject to Terms & Conditions: http://researchhelp.cch.com/License_Agreement.htm 4 http://researchhelp.cch.com/License_Agreement.htm 3. Indexation of the limitation based on modified adjusted gross income for income from United States savings bonds used to pay higher education tuition and fees (sec. 1703(d)) 4. Reporting and notification requirements for lobbying and political expenditures of tax-exempt organizations (sec. 1703(g)) 5. Estimated tax rules for certain tax-exempt organizations (sec. 1703(h)) 6. Current taxation of certain earnings of controlled foreign corporations—application of foreign tax credit limitations (sec. 1703(i)(1)) 7. Current taxation of certain earnings of controlled foreign corporations—measurement of accumulated earnings (sec. 1703(i)(2)) 8. Current taxation of certain earnings of controlled foreign corporations—aggregation and look-through rules (sec. 1703(i)(3)) 9. Treatment of certain leased assets for PFIC purposes (sec. 1703(i)(5)) 10. Expiration date of special ethanol blender refund (sec. 1703(k)) 11. Amortization of goodwill and certain other intangibles (sec. 1703(l)) 12. Empowerment zones and eligibility of small farms for tax incentives (sec. 1703(m)) C. Other Tax Technical Corrections 1. Hedge bonds (sec. 1704(b)) 2. Withholding on distributions from U.S. real property holding companies (sec. 1704(c)) 3. Treatment of credits attributable to working interests in oil and gas properties (sec. 1704(d)) 4. Clarification of passive loss disposition rule (sec. 1704(e)) 5. Estate tax unified credit allowed nonresident aliens under twenty (sec. 1704(f)(1)) 6. Limitation on deduction for certain interest paid by corporation to related persons (sec. 1704(f)(2)(A)) 7. Interaction between passive activity loss