Summary: S.2238 — 100th Congress (1987-1988)All Information (Except Text)

Bill summaries are authored by CRS.

Shown Here:
Indefinitely postponed in Senate (10/11/1988)

(Measure indefinitely postponed in Senate, H.R. 4333 passed in lieu)

Technical Corrections Act of 1988 - Title I: Technical Corrections to Tax Reform Act of 1986 - Makes a technical adjustment to an assessment rule applicable when the owner of a large amount of cash is not identified.

Revises the rate of the accumulated earnings tax on corporations from a variable rate based on income below and in excess of $100,000 to a flat 28 percent of accumulated taxable income.

Makes a technical amendment relating to the exemption of certain individuals from the requirement to file an income tax return.

States that reimbursement by a third party (rather than by an employer) shall not affect the permissibility of the tax deduction for reimbursed employee expenses.

Revises the definition of "exempt function" in the context of taxation of political organizations.

Amends Internal Revenue Code (IRC) and Social Security Act provisions relating to nonresident aliens temporarily in the United States for the purpose of studying at vocational or other recognized nonacademic institutions.

Deletes provisions describing the treatment of Social Security benefits for purposes of defining earned income.

Amends provisions relating to the two percent floor on miscellaneous itemized deductions to: (1) add provisions concerning the coordination of such limitation with the limitation on the tax deduction for trade and business expenses; and (2) revise the determination of adjusted gross income of estates and trusts with respect to such limitation.

Adds provisions relating to the deductibility of meal and entertainment expenses incurred during a move reimbursed by an employer.

Limits the tax deduction of expenses in connection with portions of dwelling units allocated to business uses.

Amends provisions governing the computation of the earnings and profits of certain foreign corporations for purposes of determining the effect of depreciation on such earnings and profits.

Amends the IRC with regard to the application of the accelerated cost recovery system (ACRS) in cases of: (1) certain property placed in service in churning transactions; (2) certain transfers; and (3) certain property subject to U.S. tax and used by a foreign person or entity.

Permits greater taxpayer discretion in using the 150 percent declining balance method of depreciation for ACRS purposes and specifies the applicable recovery period to be used in such cases.

Terminates special rules for the tax treatment of sound recordings for property placed in service after 1985.

Makes other technical amendments and corrections relating to provisions: (1) modifying the ACRS; and (2) limiting expensing of depreciable assets.

Revises Tax Reform Act (TRA) provisions that specify effective dates of new law.

Makes technical amendments and corrections to a number of transitional rules provided in the TRA with respect to urban renovation projects. Makes technical amendments and corrections to the Tax Reform Acts of both 1986 and 1984 concerning property treated under prior tax Acts.

Adds a number of projects to those covered under special transitional rules. Amends the TRA concerning the applicability of modifications of the ACRS to a number of specific properties.

Makes technical amendments and corrections to IRC and TRA provisions relating to transition property with respect to the former regular investment tax credit. Adds: (1) an exception to the application of certain adjustment rules relating to such credit; and (2) a number of properties to be considered as transition property.

Makes technical revisions of the ordering rules in connection with components of the investment credit and certain credits no longer extant for purposes of the general business credit.

Makes technical amendments to TRA provisions relating to the effective 15-year carryback of existing carryforwards of steel companies. Establishes rule criteria to apply to overpayments under this section.

Amends the IRC with respect to the income tax research credit.

Amends the IRC to disallow use of any depreciation deduction with respect to: (1) any trademark or trade name expenditure; or (2) any railroad grading or tunnel bore.

Makes technical amendments and corrections to TRA provisions relating to the modification of the investment tax credit for certain rehabilitation expenditures.

Makes technical amendments to the IRC with respect to the low-income housing credit, including: (1) amendments of special rules for nontaxable transfers; (2) the addition of an exception to rules governing basis reduction for certain residential rental units; (3) the exclusion from the eligible basis of a building of amounts deducted for depreciation; (4) the addition of provisions applicable to rent-restricted units in cases when Federal rental assistance is reduced as a tenant's income increases; (5) provisions relating to limitations on the aggregate credit allowable with respect to projects located in a State; (6) a prohibition of any carryback of the credit before 1987; and (7) a revision of the definition of "qualified low-income housing project" to include, under certain circumstances, residential rental property having units occupied by persons making de minimis equity contributions.

Corrects a reference in the Merchant Marine Act, 1936.

Makes technical amendments and corrections to IRC and TRA provisions relating to capital gains. Revises: (1) the description of taxable income from foreign sources for capital gains purposes; (2) the definition of a "capital gains rate differential" and its applicability to the calculation of the bad debt reserves of certain financial institutions; (3) a special rule relating to the withholding of tax on dispositions of U.S. real property interests by domestic partnerships, trusts, or estates; and (4) provisions dealing with incentive stock options.

Makes technical amendments to the TRA and the IRC to revise and limit the tax exclusion for the discharge of qualified farm indebtedness and to provide for its coordination with other tax exclusions.

Makes a technical amendment relating to the taxation of capital gains from dispositions of interests in oil, gas, geothermal, or other mineral properties.

Makes technical amendments and corrections to the IRC and the TRA with respect to tax shelter and interest limitations, revising provisions relating to: (1) methods of accounting, including revisions of the phase-in of the disallowance of passive activity losses or credits held before the date of enactment of the Tax Reform Act of 1986 (October 22, 1986); (2) the definition of a "qualified investor" for purposes of the transitional rule for interests in low-income housing projects; (3) the phase-in of the limitation on investment interest; and (4) determinations of indebtedness for purposes of the personal interest disallowance, including provisions related to qualified residence interest.

Makes technical amendments and corrections to TRA and IRC corporate tax provisions. Revises the percentage to be used in computing the deduction for dividends received from certain foreign sales corporations. Includes amendments relating to: (1) the reduction of corporate shareholders' basis in stock by the nontaxed portion of extraordinary dividends; (2) the limitation on net operating loss carryforwards and certain built-in losses following a change in corporate ownership, including provisions relating to built-in gains and gains attributable to stock acquisitions (section 338 gains), rules relating to constructive stock ownership, and provisions applicable when the old loss corporation is in a title 11 or similar proceeding; and (3) recognition of gain and loss on distributions of property in corporate liquidations.

Restructures IRC provisions dealing with transfers of partnership and trust interests by corporations.

Makes technical amendments relating to: (1) transfers of property from the United States to foreign corporations; (2) sales or exchanges of stock in certain foreign corporations; (3) accounting provisions in connection with distributions of installment obligations by an S corporation in complete liquidation; and (4) the taxation of C corporations that elect subchapter S status, including revisions of provisions dealing with the tax imposed when passive investment income exceeds 25 percent of the gross receipts of certain S corporations.

Adds to the IRC provisions dealing with special allocation rules for certain partnership transactions.

Makes technical amendments and corrections concerning: (1) the definition of "related persons" with respect to the installment method of accounting; (2) the treatment of amortizable bond premium as interest; (3) certain entities not to be treated as corporations, including a special rule for persons holding income interests; (4) the taxation generally of regulated investment companies and their shareholders, including changes of definitions and revisions of the excise tax on undistributed income of such companies.

Makes technical amendments to TRA and IRC provisions with respect to real estate investment trusts, including: (1) provisions specifying asset and income requirements; (2) certain definitions; (3) distribution requirements; and (4) the excise tax on undistributed income of such trusts.

Makes technical amendments to IRC provisions dealing with the taxation of real estate mortgage investment conduits (REMICs). Imposes a 34 percent tax on a REMIC's net income from foreclosure property. Reduces the amount of taxable income of a REMIC by the amount of such tax.

Imposes a tax on contributions to a REMIC after the startup day in an amount equal to the amount of the contribution. Permits specified exceptions.

Imposes a 15 percent tax on: (1) any transfer of a residual interest in a REMIC to a disqualified organization (certain political entities, tax-exempt organizations, and rural utility cooperatives); and (2) a pass-through entity if a disqualified organization is the record holder of an interest in the entity at any time during the year.

Makes corrections to TRA and IRC rules for accruing the original discount on regular interests and similar debt instruments.

Amends the TRA to direct the Secretary of the Treasury (Secretary) to: (1) study the operation of these REMIC-related amendments and their impact on the competitiveness of savings and loan and similar institutions; and (2) report the results to specified congressional committees by January 1, 1990.

Makes technical amendments and corrections to IRC provisions with respect to the alternative minimum tax, including provisions relating to: (1) the phase-out of the exemption amount with respect to married individuals filing separate returns; (2) the treatment of taxes on dividends from Puerto Rico and U.S. possession corporations; (3) adjustments applicable to taxpayers in computing alternative minimum taxable income, including disallowance of the standard deduction and the deduction for personal exemptions in calculations to determine the taxable income of noncorporate taxpayers; (4) tax preference items; (5) the denial of certain losses and the determination of their amount; and (6) transitional provisions.

Revises provisions limiting the amount of the general business tax credit.

Amends accounting provisions of the TRA and the IRC. Directs the Secretary to prescribe regulations as necessary to prevent the use of related parties, pass-through entities, or intermediaries to evade certain limitations on the use of the cash method of accounting. Includes technical amendments of provisions relating to: (1) the special rule for the spudding of oil or gas wells; (2) capitalization and inclusion in inventory costs of certain expenses; (3) accounting methods for long-term contracts, including the addition of provisions permitting the Secretary to prescribe a simplified procedure for allocation of costs in certain cases and a prohibition against applying the look-back method to certain contracts; (4) the taxable years of certain entities, such as partnerships and common trust funds; (5) allocation of installment indebtedness, including provisions dealing with dispositions of personal property under revolving credit plans and installment obligations arising out of certain stock or securities sales; (6) disallowance of the use of the installment method of accounting for certain obligations; and (7) income attributable to utility services.

Makes technical amendments and corrections to TRA and IRC provisions concerning financial institutions. Includes amendments with respect to: (1) the credit for investment in certain depreciable property in cases when the mutual savings bank or other financial institution is a lessee; (2) the tax deduction for bad debt reserves of banks; (3) the pro rata allocation of interest expense to tax-exempt interest; and (4) the treatment of losses on deposits or accounts in insolvent financial institutions, including provisions allowing an institution whose deposits are not insured under Federal law to elect to treat losses on account of its bankruptcy or insolvency as ordinary losses.

Amends the IRC to state that charitable gift annuities (those owned by an individual who made a tax-deductible charitable contribution to the annuities' issuer) are not commercial-type insurance for purposes of determining the tax-exempt status of organization. Directs the Secretary of the Treasury to revise the tables used to determine the amount of a charitable contribution to reflect interest rates and recent mortality experience.

Makes technical amendments to the TRA and IRC with respect to insurance products and companies. Includes amendments relating to: (1) phase-in provisions for insurance companies whose income is now taxable but was not previously subject to taxation; (2) the treatment of certain dividends and interest; (3) the discounting of unpaid losses and certain unpaid expenses; (4) the alternative tax for certain small companies; and (5) adjustments of the shareholders surplus account when alternative minimum tax is imposed. Amends provisions of the Tax Reform Act of 1984 that permit a mutual life insurance company to elect to treat individual noncancellable accident and health policies as cancellable.

Amends IRC and TRA provisions dealing with limitation and nondiscrimination requirements applicable to pensions and deferred compensation plans. Includes amendments relating to: (1) the treatment of married individuals filing separate returns and living apart for purposes of the limitation on the deduction for qualified retirement contributions; (2) nondeductible contributions to individual retirement plans, including the institution of a $50 penalty for failure to report designated nondeductible contributions; (3) distributions on deferrals in excess of the $7,000 limitation on the exclusion from gross income; (4) adjustments to limitations on contributions and benefits under qualified plans; (5) modifications of provisions governing tax-deferred compensation plans of State and local government and of tax-exempt organizations; (6) special rules for simplified employee pensions (SEPs), including a technical amendment to the Social Security Act and a new provision prohibiting employee election of a salary reduction arrangement in cases when the SEP does not meet the requirements necessary to ensure the distribution of excess contributions; (7) the application of nondiscrimination rules to integrated plans; (8) minimum employee coverage requirements for qualified plans, including new provisions to address employers having only highly compensated employees; (9) certain definitions; (10) cash or deferred arrangements, including new provisions to govern distributions upon the termination of a plan or the disposition of either a corporation's assets or its interest in a subsidiary; and (11) nondiscrimination requirements for employer matching contributions, employee contributions, and tax-sheltered annuities.

Amends TRA and IRC provisions dealing with the treatment of distributions and various other aspects of pensions and deferred compensation plans. Includes technical amendments and corrections with respect to: (1) the taxation of distributions, including revisions of special rules for partial distributions; (2) the additional tax on early distributions from qualified retirement plans, including the repeal of provisions triggering additional tax when an employee receives certain distributions before reaching age 59 1/2; (3) the class of taxpayers permitted to elect to treat certain lump-sum distributions received in 1987 as if they were received in 1986; (4) the tax on nondeductible contributions to qualified employer plans; (5) the excise tax on the reversion of qualified plan assets to an employer, including revisions relating to employee stock ownership plans; (6) the excise tax on excess distributions from qualified retirement plans, including an addition to the rules for computing excess retirement accumulation; and (7) the tax treatment of the Federal Thrift Savings Fund.

Makes technical amendments and corrections to TRA and IRC provisions relating to employee benefits and employee stock ownership plans (ESOPs). Includes amendments with respect to: (1) the loss of the tax-exempt status of any organization that is part of a plan failing to meet certain requirements; (2) cafeteria plans; (3) technical amendments of the Social Security Act; (4) the definition of the terms "wages" and "compensation" for certain purposes; (5) taxes relating to funded welfare benefit plans, including the imposition of a new excise tax on funds that include discriminatory employee benefit plans; (6) additional requirements for certain tax-exempt organizations; (7) the deductibility of the health insurance costs of self-employed individuals; (8) the employee tax exclusion of amounts paid by an employer for dependent care assistance, including a new paperwork requirement for employers; (9) the estate tax deduction for proceeds from sales of employer securities; (10) loans used to acquire employer securities, including provisions relating to the period of applicability of the exclusion of interest on such securities acquisitions loans; and (11) qualification requirements for ESOPs.

Makes technical amendments and corrections to foreign tax provisions of the TRA and the IRC. Includes amendments relating to: (1) limitations on the foreign tax credit, including a definition of "financial services income" for purposes of such limitations; (2) source rules for personal property sales, including the addition of a special rule for certain stock sales by residents of Puerto Rico; (3) the treatment of gain from the sale of stock of a foreign corporation when the gain would ordinarily be sourced in the United States but, pursuant to a treaty obligation of the United States, the taxpayer chooses to treat the gain as foreign source income; (4) the tax exemption of certain transportation-related income of foreign corporations; (5) income from U.S. sources with respect to companies meeting foreign business requirements; (6) rules for allocating interest to foreign source income, including revisions to phase-in rules; (7) the taxation of income earned through foreign corporations, including special rules for certain captive insurance companies and for determining the earnings and profits of a controlled foreign corporation for purposes of computing amounts to be included in the gross income of U.S. shareholders; (8) a new provision requiring certain shareholders in foreign corporations to file information returns; (9) subpart F income generally (types of income particularly suited to tax haven activity); (10) deductions for dividends received from certain foreign corporations; (11) the disposition of investment in U.S. real property; (12) passive foreign investment companies, including the interest charge on tax deferrals, the treatment of qualified electing funds, and a special rule for the treatment of certain foreign corporations owning at least 25 percent stock in a domestic corporation; (13) treatment of passive foreign investment company stock owned by a pooled income fund; (14) the branch profits tax on foreign corporations; (15) exemptions from the excise tax on policies issued by foreign insurers; (16) the treatment of deferred payments and appreciation arising out of business conducted by foreign corporations or by nonresident aliens within the United States; (17) withholding tax on foreign partners' share of a partnership's "effectively connected taxable income"; (18) income of foreign governments, including the addition of limitations on the tax exclusion from gross income of certain employees; (19) the treatment of losses of separate business units of dual residence corporations; (20) foreign currency transactions, including provisions for determining foreign taxes and the earnings and profits of foreign corporations; (21) tax treatment of the Virgin Islands (V.I.), including provisions for the coordination of U.S. and V.I. income taxes; (22) the addition of provisions relating to the coordination of U.S. treaty obligations, amendments made by the TRA, and technical corrections effected by this Act; (23) taxation of domestic international sales corporation (DISC) income to tax-exempt shareholders; and (24) treatment of shared foreign sales corporations, including a revision of rules governing the deduction for dividends received from such corporations.

Makes technical amendments and corrections to TRA and IRC provisions with respect to tax-exempt bonds. Includes amendments relating to: (1) various types of State and local bonds, including qualified small issue bonds, qualified student loan bonds; and qualified 501(c)(3) bonds; (2) requirements applicable to certain private bonds, such as issues of scholarship funding bonds and volunteer fire department bonds; (3) arbitrage rebate requirements and refunding bond provisions with respect to governmental units issuing $5,000,000 or less of bonds; (4) the definition of "investment property" for arbitrage bond purposes; (5) provisions, including transitional rules, relating to refundings and to the volume cap; (6) termination of the mortgage bond policy statement requirement; (7) provisions relating to certain established State programs, including a technical amendment of the Mortgage Subsidy Bond Tax Act of 1980; and (8) transitional rules for specific facilities.

Enacts into positive law a specified Treasury Regulation governing amounts held in a sinking fund for a bond issue.

Makes technical amendments and corrections to IRC and TRA provisions dealing with the income taxation of trusts and estates, including provisions relating to: (1) reversionary interests; (2) charitable remainder trust beneficiaries; and (3) an exception for charitable trusts, private foundations, and certain estates and trusts from the penalty tax for failure to pay estimated income tax.

Makes technical amendments and corrections of the IRC and TRA relating to the unearned income of minor children, including new provisions addressing the alternative minimum tax.

Makes technical amendments and corrections to IRC and TRA provisions with respect to the generation-skipping transfer tax, including provisions concerning: (1) special rules for determining the inclusion ratio for charitable lead annuity trusts, certain inter vivos transfers, and certain direct skips that are nontaxable gifts, as well as valuation of property in connection with the GST exemption for inclusion ratio purposes; (2) disregard of certain support obligations arising under State law when determining a person's interest in a trust; and (3) special rules governing certain transfers to grandchildren.

Makes technical amendments and corrections to compliance and tax administration sections of the TRA and the IRC, including amendments relating to: (1) the penalty for tax underpayment due to negligence and fraud; and (2) reporting requirements applicable to real estate transactions, including provisions excluding certain farm managers from the definition of "broker" and prohibiting a real estate reporting person from separately charging a customer for making certain required filings. Creates an exception from information reporting requirements for certain classified and confidential contracts between a Federal executive agency and another person.

Declares that certain salary recommendations submitted by the President for special trial judges shall not be effective to the extent such salaries are not equal to 90 percent of the rate for Tax Court judges and are not paid in the same installments as Tax Court judges' salaries.

Makes technical amendments and corrections to TRA and IRC provisions with respect to retirement pay for U.S. Tax Court judges.

Amends provisions of the IRC relating to tax administration. Revises levy exemptions related to service-connected disability payments to: (1) remove the exemption for certain veterans' life insurance benefits; and (2) add exemptions for wartime and peacetime death compensation, burial benefits, and dependency and indemnity compensation for service-connected deaths.

Includes the refundable earned income credit in deficiency assessments.

Makes technical amendments and corrections to TRA and IRC provisions with respect to the tax-exempt status of certain title holding corporations or trusts (an exception initiated by the TRA).

Makes other technical amendments and corrections to TRA and IRC provisions, including amendments relating to the excise tax on gasoline.

Increases the rate of the gasoline tax on gasoline used to produce gasohol.

Makes technical amendments and corrections to the IRC and to the Tax Reform Acts of both 1984 and 1986 relating to: (1) tax-exempt entity leasing provisions as applicable to tax-exempt controlled entities; (2) the nonrecognition of gain or loss with respect to certain transfers in connection with corporate reorganizations and the treatment of distributions in such cases; (3) the deductibility of excess golden parachute payments; (4) accounting changes with respect to designated settlement funds; (5) the exclusion from gross investment income of dividends from certain subsidiaries of life insurance companies; (6) special rules for stripped bonds of tax-exempt organizations; (7) technical amendments related to the Medicare program; (8) the status of certain loans of artwork for purposes of gift tax liability; and (9) pension plans, including technical amendments related to the Retirement Equity Act of 1984.

Title II: Amendments Related to Tax Provisions in Other Legislation - Makes technical amendments and corrections to IRC provisions relating to: (1) directions to the Secretary to provide regulatory guidance to govern circumstances when a refund of the excise tax on certain chemicals shall be made directly to an exporter; (2) the addition of an exemption of regulated investment companies and real estate investment trusts from the environmental tax; (3) the tax on certain fuels to fund the Leaking Underground Storage Tank Trust Fund; (4) taxation of qualified methanol and ethanol fuel; (5) the Leaking Underground Storage Tank Trust Fund tax as applied to gasoline used in aviation and in trains; (6) the floor stocks tax on gasoline; (7) the excise tax on fuel used in commercial transportation on inland waterways; (8) exemption from the port use excise tax for cargo transported between Alaska, Hawaii, and any U.S. possession for ultimate use or consumption at the relevant destination.

Amends the Harbor Maintenance Revenue Act of 1986 to delay the due date for the Secretary of the Treasury's study of cargo diversion.

Makes technical amendments related to the Omnibus Budget Reconciliation Act of 1986 with respect to tax-exempt mutual or cooperative telephone or electric companies.

Makes technical corrections and amendments related to the Revenue Act of 1987, including amendments of IRC provisions dealing with: (1) dependent care expenses under cafeteria plans; (2) the installment method of accounting; (3) election by various entities of a taxable year other than the required one and the required payments for such entities; (4) publicly traded partnerships; (5) effective dates of various corporate tax provisions; (6) limitations on the use of preacquisition losses to offset built-in gains following corporate ownership changes; (7) the excise tax on the receipt of greenmail; (8) the interest rate to be used to compute tax reserves for life insurance companies; and (9) treatment of foreign insurance companies.

Makes technical amendments to provisions of the IRC and of ERISA dealing with: (1) the tax on nondeductible contributions to qualified employer plans, as applied to self-employed individuals; and (2) how assets are to be allocated when a single plan splits into two or more plans (spin-offs).

Amends IRC provisions relating to the manufacturers excise tax on certain vaccines.

Makes a number of technical amendments to pension provisions of the TRA, the IRC, and ERISA dealing with: (1) vesting standards; (2) plan amendments; (3) health care continuation coverage (includes amendments to the Public Health Service Act); and (4) the normal retirement age under various pension plans.

Makes a number of technical amendments to provisions of the IRC and of ERISA (including amendments of the Pension Protection Act) dealing with: (1) modifications of the minimum funding standard for pension plans; (2) the time for making plan contributions; (3) funding waivers; (4) plan terminations; (5) Pension Benefit Guaranty Corporation premiums; (6) reporting requirements; and (7) the interest rate to be used in calculating employee accumulated plan contributions.

Repeals reporting requirements associated with the already repealed crude oil windfall profit tax.

Revises reporting provisions applicable to partnerships to require separate reporting of unrelated business taxable income.

Title III: Corrections to Diesel Fuel Excise Tax Collection and Exemption Procedures - Amends the IRC to prohibit, with limited exceptions, the imposition of the excise tax on diesel and aviation fuels in connection with sales to a purchaser for use in public intercity, local, or school buses or for statutorily nontaxable uses (including off-highway business uses, State or local government uses, and shipping uses). Sets forth registration requirements for both sellers and purchasers participating in exempt sales. Establishes reporting requirements for producers and importers and penalties for failure to report. Provides for refunds, with interest, of taxes paid on or after April 1, 1988, and before September 30, 1988.

Permits expedited procedures for refunds or income tax credits with respect to retail sales of diesel and aviation fuel employed in nontaxable uses. Provides for the payment of interest in connection with such refunds.

Treats marine retailers of taxable fuel as producers for purposes of the excise tax on diesel and aviation fuels.

Requires that the reduced gasoline tax rate be applied with respect to gasoline used to produce gasohol after the time of the relevant removal or sale.

Title IV: Other Corrections and Modifications - Subtitle A: Corporate Estimated Tax Payments - Revises IRC provisions that permit a corporation that annualizes estimated income tax installments to reduce an installment payment without penalty to increase the percentage of the earlier deficiency that must be included in the subsequent payment.

Subtitle B: Indian Fishing Rights - Amends the IRC to prohibit the imposition of any Federal income or employment tax in connection with income derived by an Indian or Indian tribe from the exercise of fishing rights secured by treaty, Executive Order, or Act of Congress.

Amends the Social Security Act and other Federal law to direct that any treaty, Executive Order, or Act of Congress securing Indian fishing rights be construed to prohibit the imposition of any State or local income tax on income derived from the exercise of the protected right if such income is exempt from Federal income taxation.

Subtitle C: Repeal of Limitation on Treasury Long-Term Bond Authority - Repeals Federal law that sets a $270,000,000,000 limit on the face amount of bonds that the Secretary of the Treasury has authority to issue at interest rates exceeding 4.25 percent.

Subtitle D: Simplification and Clarification Provisions - Expresses the sense of the Senate concerning tax-exempt financing of residential rental projects by not-for-profit organizations and the treatment of the issue by the House of Representatives in H.R. 4333.

Expresses the sense of the Senate that the U.S. tax laws should provide for the deductibility of all or part of the costs of adopting a child.

Directs the Secretary of the Treasury to study and report to specified congressional committees on the economic effects of smoking. Enumerates topics to be addressed in the study, including the effects of tobacco excise taxes on smoking in all age groups and of health care costs associated with smoking.

Amends the IRC to permit a taxpayer aged 55 or older to qualify for the one-time income tax exclusion of gain from the sale of a principal residence even if physical or mental incapacity has necessitated the taxpayer's leaving the relevant property to be cared for in a health care facility.

Broadens the scope of IRC provisions concerning losses from wash sales of stock or securities to apply them also to contracts or options to acquire or sell stock or securities.

Denies effect of specified treaties with the United Kingdom (on behalf of Bermuda) and with Barbados in preventing the imposition of a U.S. insurance excise tax with respect to coverage for 1990 and thereafter.

Disallows the marital deduction for estate and gift tax purposes when property passes to an alien spouse. Permits an exclusion from the decedent's estate with respect to property that is situated in the United States and placed in a trust in which the surviving spouse has a qualifying income interest for life.

Increases the estate and gift tax rates applied to the estates of nonresident aliens, applying to them the same rates applied to U.S. citizens and residents.

Amends the IRC to impose an excise tax of $100 per day per qualified beneficiary on any nongovernmental employer employing 20 or more employees that fails to comply with group health plan continuation coverage requirements. Describes the required features of this coverage. Repeals the current penalties for compliance failures.

Revises provisions relating to nondiscrimination requirements applied to employee accident or health plans, employer-provided group-term life insurance plans, and certain other statutory employee benefit plans. Directs the Secretary of the Treasury to prescribe rules in connection with these revisions no later than October 1, 1988.

Amends the Federal Unemployment Tax Act to exempt from State unemployment tax law coverage (providing for payments in lieu of unemployment fund contributions) any service performed in the employ of a tax-exempt private elementary or secondary school that is operated primarily for religious purposes.

Permits a State to treat family services providers as independent contractors for employment tax purposes with respect to the period beginning on January 1, 1984, and ending on December 31, 1990, if enumerated conditions are met. Requires the Secretary of the Treasury to report to specified congressional committees on the tax status of providers compensated under these conditions.

Amends estate tax provisions of the IRC with respect to treatment of transfers leading to disproportionate interests in an enterprise to treat as gifts any subsequent transfer: (1) by the original transferor (of the retained interest); or (2) by the original transferee (to a person who is not in the original transferor's family).

Excepts specified types of transactions from inclusion in the gross estate for tax purposes.

Permits a right of recovery to the executor of an estate with respect to property transferred but with a retained life interest such as to require the property to be included in the estate. Applies this provision to both estate and gift tax.

Subtitle E: Education Savings - Education Savings Act of 1988 - Amends the IRC to permit an income tax exclusion to a taxpayer who transfers a qualified U.S. savings bond to an eligible institution of higher education or vocational school to pay the higher education expenses (tuition, fees, books, supplies, and equipment) of the taxpayer or any other individual. Excludes from gross income the lesser of: (1) the otherwise taxable amount involved in the transfer; or (2) the amount of the relevant higher education expenses. Phases out the permissible exclusion in the case of taxpayers having adjusted gross income of $60,000 or more, disallowing it entirely when income exceeds $80,000.

Directs the Secretary of the Treasury to advise the general public of the program established by this Act.

Amends Federal law to permit: (1) the type of transfer of U.S. savings bonds that would be necessary to effect the tax exclusions described in this Act; and (2) redemption of such bonds by recipient institutions.

Makes technical amendments that would allow a similar tax exclusion with respect to payments to qualified State prepaid tuition plans.

Denies the income tax dependency exemption with respect to a dependent student who has attained age 24 by the close of the calendar year.

Subtitle F: Disaster Assistance Payments - Amends the IRC to permit a farmer to defer until the following year the taxation of income received as disaster payments under title II of the Disaster Assistance Act of 1988.

Permits taxpayers who produce pistachio trees to elect to deduct preproductive costs associated with their planting, cultivation, and maintenance.

Classifies trees or vines bearing fruit or nuts as ten-year property and provides for their depreciation based on the straight line method.

Title V: Railroad Unemployment and Retirement Programs - Railroad Unemployment Insurance and Retirement Improvement Act of 1988 - Subtitle A: Financing Provisions - Amends the Railroad Unemployment Insurance Act to redefine "compensation"" to provide that amounts in excess of the monthly compensation base shall not be recognized. Establishes a formula for such monthly compensation base.

Directs the Railroad Retirement Board (the Board) to: (1) compute the monthly compensation base according to certain guidelines; (2) compute the maximum daily benefit rate applicable to days of unemployment and sickness; and (3) publish notice of these computations in the Federal Register. Revises the guidelines for employer contributions.

Sets forth a special transition rule for public commuter railroads with respect to each of calendar years 1988 through 1990 to provide that such a carrier's contribution shall be equal to the amount of benefits attributable to the carrier (thus allowing the carriers to cover their unemployment and sickness costs in the Railroad Unemployment Compensation Program on a "reimbursable basis" for these years). Requires the Board to maintain an individual employer record for each employer, and the records necessary to determine pooled charges and pooled credits, as well as unallocated balances for the system. Provides for the combining of joint individual employer records upon the employers' request in the event of a merger, consolidation, unification, or reorganization. Establishes a 12 percent employer contribution limit (or 12.5 percent when a 3.5 surtax is in effect). Revises the guidelines for employee representatives' contributions.

Establishes deadlines by which the Board must proclaim certain account balances, pooled ratios, and surcharge rates. Requires the Board to publish these proclamations in the Federal Register.

Increases from 0.5 to 0.65 the percentage of employer and employee contributions to be credited to the railroad unemployment insurance administration fund.

Requires the Board to: (1) notify the base year employer when an employee files a claim for benefits; (2) afford the employer opportunity to respond before making an initial determination on such claim; and (3) notify the employer when the Board initially makes a determination to pay claim benefits. Prescribes guidelines for administrative and judicial review of Board determinations to make such payments.

Requires the Board to report annually to the Congress regarding the financial status of the railroad unemployment insurance system.

Amends the Internal Revenue Code regarding the railroad unemployment repayment tax to impose: (1) an excise tax upon every rail employer equal to four percent of total rail wages paid per month; and (2) an income tax upon rail employee representatives equal to four percent of rail wages paid to them each month. Terminates such tax if loans to the railroad unemployment fund are repaid. Provides for the continuation of certain surtax rates through 1989.

Applies these taxes to remuneration paid after December 31, 1988.

Directs the Comptroller General to report to the Congress the results of a study concerning the frequency of fraud and payment errors in the railroad unemployment compensation program.

Subtitle B: Benefit and Other Adjustments - Permits no unemployment or sickness benefits during the first registration period within a benefit year in which the employee has more than four days of unemployment or sickness. Imposes a 14-day waiting period before benefit payments. Excludes four days of sickness when computing sickness benefits in any registration period.

Amends the daily unemployment or sickness benefit rates to prohibit daily benefits from exceeding: (1) $24.00 until July 1, 1988; and (2) $30.00 for registration periods beginning after June 30, 1988, but before July 1, 1989.

Requires the Board to compute a maximum daily rate not below $30.00.

Redefines "qualified employee" to mean an employee whose base year compensation is at least 2.5 times the monthly compensation base.

Increases from $10.00 to $15.00 the maximum permitted subsidiary remuneration.

Subtitle C: Retirement Act Amendments - Amends the Railroad Retirement Act of 1974 to entitle certain employees to a specified lump sum benefit equal to the employee's contribution to the retirement fund made from compensation for which the employee did not receive service credit. Restricts these payments to employees with at least ten years' service and who are retiring. Eliminates as a disqualifier for annuity benefits any compensated service rendered after receipt of annuity benefits to the annuitant's last employer. Repeals the requirement that an annuitant relinquish all rights to return to the service of the person by whom the annuitant was last employed in order to qualify for annuity benefits.

Increases the earnings limit for disability annuitants from $200 a month to $400 a month (and from $2,400 a year to $4,800 a year).

Redefines "war service period" to deem the period June 15, 1948, to December 15, 1950, a war service period with respect to persons who returned to railroad employment without an intervening employment following military service.

Title VI: Amendments Relating to Social Security Act Programs - Subtitle A: Old-Age, Survivors, and Disability Insurance and Related Provisions - Amends title II (Old Age, Survivors and Disability Insurance) of the Social Security Act to extend through June 30, 1989, the period during which continued payment of disability benefits and Medicare payments based on disability may take place pending appeals of benefit denial determinations made prior to January 1, 1990.

Requires the Secretary of Health and Human Services to report annually, rather than semiannually, to specified congressional committees with respect to continuing disability reviews.

Denies benefits to persons deported or ordered to be deported because of associations with the Nazi government of Germany during World War II.

Requires an individual to present satisfactory proof of a social security account number before receiving any social security benefits.

Permits eligible surviving spouses to substitute a certificate of election for an application to establish entitlement for certain reduced survivors' benefits.

Makes technical corrections relating to the Old Age, Survivors and Disability Insurance program.

Subtitle B: Public Assistance and Unemployment Compensation - Amends the Omnibus Budget Reconciliation Act of 1987 to delay from October 1, 1988, to October 1, 1989, the date before which the Secretary of Health and Human Services may take action to implement specified regulations concerning emergency assistance to homeless families under the aid to families with dependent children program.

Amends title XVI (Supplemental Security Income) of the Social Security Act to exclude the value of Federal housing assistance in determining income and resources under the supplemental security income program.

Subtitle C: National Commission on Children - Postpones for one year the dates by which the National Commission on Children must submit interim and final reports to the President and to specified congressional committees. Extends the life of the Commission one additional year. Limits the authorization of appropriations to FY 1989 and 1990.

Subtitle D: Medicare - Amends title XVIII (Medicare) of the Social Security Act to authorize direct payment to cover services of physician-employed registered nurses who assist in surgery.

Amends the Consolidated Omnibus Budget Reconciliation Act of 1985 to extend for an additional year the moratorium on competitive bidding demonstrations for laboratory services under Medicare.

Title VII: Manassas National Battlefield Park - Manassas National Battlefield Park Amendments of 1988 - Amends Federal law to include a specified area of land within the Manassas National Battlefield Park, Virginia. Provides that all right, title, and interest in such land shall vest in the United States. Requires the United States to compensate the owners of such land. Prohibits the Secretary of the Interior from allowing the unauthorized use of such land. Allows the Secretary to permit the termination of all operations on and the removal of equipment, facilities, and personal property from such land.

Directs the Secretary to cooperate with Virginia to promote the scenic preservation of views from within the Park.

Requires the Secretary to conduct a study regarding the relocation of specified highways in, and in the vicinity of, the Park. Authorizes appropriations.

Title VIII: Sanctions Against Iraq - Sanctions Against Iraqi Chemical Weapons Use Act - Sets forth congressional findings concerning Iraq's use of chemical weapons and the treatment of the Kurdish people in Iraq.

Prohibits: (1) the sale to Iraq of any license for the export to Iraq of any itme on the U.S. Munitions list; (2) the issuance of any license for the export to Iraq of any titem on the U.S. Munitions list; (3) the export to Iraq of any goods or technology on the Export Administration Act control list; and (4) the issuance of licenses for the export to Iraq of any chemical that the President determines may be used primarily in the production of chemical weapons or devoted to chemical warfare purposes. States that the United States shall oppose any loan or financial or technical assistance to Iraq by international financial institutions.

Requires the President ot impose additional sanctions against Iraq, unless he certifies to the Congress that: (1) Iraq is not using chemical weapons in violation of international law; (2) Iraq has provided reliable assurances that it will not use chemical weapons in the future, and (3) Iraq is willing to allow on-site inspections by the United Nations or other impartial observers, or other reliable means exist to ensure that Iraq is not using chemical weapons.

Authorizes the following additional sanctions: (1) prohibiting or restricting the importation of oil, petroleum products, or other goods from Iraq; (2) prohibiting or restricting the export to Iraq of agricultural commodities and other goods and technology under authority of the Export Administration Act; (3) denying to Iraq credits or credit guarantees through the Export-Import Bank of the United States; or (4) downgrading or suspending diplomatic relations with Iraq. Specifies that contract sanctity shall apply for contracts signed before September 15, 1988. Requires the President to report to the Congress periodically on any such actions taken.

Allows the President to lift any sanctions imposed pursuant to this Act if the President determines and certifies to the Congress that Iraq: (1) is not using chemical weapons; (2) has provided reliable assurances that it will not use chemical weapons in the future; and (3) is willing to allow on-site inspections by the United Nations or other impartial observers, or other means exist to ensure that Iraq is not using chemical weapons.

Directs the President to submit to specified congressional leaders an assessment of whether the Government of Iraq is respecting internationally recognized human rights, especially those of the Kurdish minority. Enumerates required report contents.

Urges Turkey to cooperate with any United Nations or other appropriate investigation of Iraqi use of chemical weapons. Commends Turkey for its humanitarian decision to accept Kurdish refugees.

Calls upon the President to: (1) bring before the United Nations the matter of Iraq's use of poison gas against its own nationals; and (2) demand that appropriate and effective measures be taken against Iraq for its repeated use of chemical weapons.

Calls upon the President to: (1) seek multinational cooperation in: (1) imposing sanctions and otherwise bringing pressure on Iraq in orders to obtain a cessation of Iraq's use of chemical weapons; and (2) obtaining Iraqi respect for the internationally recognized human rights of the Kurdish minority in Iraq.

Expresses the sense of the Congress that the United States should cooperate with and participate in multilateral efforts to assist Kurdish refugees who are in need of medical treatment and other humanitarian aid.

States that it is the policy of the United States to prohibit the export of goods and technology to Iraq that would significantly contribute to its military potential.

Urges the President to review any proposed export to Iraq of goods or technology valued at over $50,000,000.

Terminates all authority under this title and any sanctions deriving from it as of July 1, 1991.

(Miscellaneous) - Creates special administrative rules requiring notice to Native Corporations concerning the use of Corporation losses by a taxpayer who has contracted with the Corporation.

Establishes new law or amends current IRC and TRA provisions with respect to: (1) securities acquisition loans; (2) discriminatory classifications for cafeteria plans; (3) waiver of the appraisal requirement with respect to certain charitable contributions of property; (4) the valuation of group-term life insurance; (5) the authority to exempt articles from the excise tax on heavy trucks and trailers in cases when the benefit accrues to the United States; (6) distributions by cooperative housing corporations; (7) cash or deferred arrangements of railroad employees; (8) the definition of "part-time employee" for employee benefits requirement purposes; (9) special rules for applying spin-off rules to bridge banks; and (10) variable contracts investments in Government securities.

Excepts any State-law mandated disposition of qualified employer securities by a corporate employee stock ownership plan from the excise tax on ESOP dispositions.

Amends various titles of the Social Security Act to modify the term of office of public members of the boards of trustees of the Social Security trust funds.

Treats as deductible medical care expenses amounts paid for qualified home improvements to mitigate radon gas exposure.

Reduces from 20 years to 15 years the length of service requirement applicable in determining the eligibility of police or fire fighters for special limitations of benefits under defined benefit plans.

Permits only a single imposition of the harbor maintenance (port) tax on cargo moving under a single bill of lading that undergoes multiple loading or unloading at any U.S. ports for relay to its ultimate destination in Alaska, Hawaii, or any U.S. possession.

Directs the Secretary of the Treasury to study and report to specified congressional committees concerning determinations of U.S. resident status for Federal tax law purposes.

Provides for Medicare coverage of a medical escort or attendant on commercial airlines.

Directs: (1) the Secretary of Health and Human Services (HHS) to report to the Congress on recommendations for Medicare reimbursement of hospitals having a specified area wage index; and (2) the Prospective Payment Assessment Commission to study and report to the Congress on the appropriate payment for certain hospitals and how the hospitals' costs should be treated when computing area wage indices.

Requires the use of the Consumer Price Index for All Urban Consumers (CPI-U) in determining cost of living adjustments for various Federal benefits and allowances.

Amends title VII (Administration) of the Social Security Act to instruct the Executive Director of the National Commission on Social Security to implement a grant program to establish and support rural health research centers located at both public and not-for-profit entities, to provide an information base and policy analysis capacity on rural health issues. Authorizes appropriations.

Establishes the National Advisory Committee on Rural Health to advise the Secretary of HHS and the Congress concerning rural health care services and how to finance them. Directs the Committee to submit an annual report to both entities. Terminates the Committee three years after this Act's enactment. Authorizes appropriations.

Expresses the sense of the Senate that: (1) Medicaid reform should be undertaken early in the 101st Congress; (2) the reform should ensure services in a wide range of residential settings; and (3) the national goal with respect to disabled persons should be independence, productivity, and community integration.

Directs the Secretary of HHS to report to specified congressional committees concerning: (1) applications for disability-related benefits associated with the complex related to acquired immune deficiency syndrome (AIDS); and (2) arrangements for coordinating Social Security Administration and State disability agency programs with respect to providing disability-related benefits for persons claiming AIDS disabilities.

Makes a number of trade technical amendments of the Trade Act of 1974, the Omnibus Trade and Competitiveness Act of 1988, the Tariff Act of 1930, and the Tariff Schedules of the United States.

Directs the Secretaries of the Treasury and of State, acting jointly with the U.S. Trade Representative, to conduct and coordinate a study designed to investigate and evaluate possible frameworks for enhanced cooperation between the United States and Japan in the form of extensive economic and security arrangements. Describes procedures to be followed in conducting the study, including required study topics. Requires the submission of both interim and final reports to the President and to specified congressional committees. Lists required report contents.

Amends Federaal law with respect to the calculation of the relative values in the operations of petroleum refineries in a foreign trade zone.