Text: H.R.3798 — 102nd Congress (1991-1992)All Information (Except Text)

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Introduced in House

 
 
HR 3798 IH
102d CONGRESS
1st Session
 H. R. 3798
To stimulate economic recovery by providing tax incentives and other benefits
to revive the real estate market.
IN THE HOUSE OF REPRESENTATIVES
November 18, 1991
Mr. GUNDERSON (for himself, Mr. WEBER, Mr. RIGGS, Mr. ZELIFF, Mr. DANNEMEYER,
Mr. KYL, Mrs. JOHNSON of Connecticut, and Mr. WALKER) introduced the following
bill; which was referred jointly to the Committees on Ways and Means and
Banking, Finance and Urban Affairs
A BILL
To stimulate economic recovery by providing tax incentives and other benefits
to revive the real estate market.
  Be it enacted by the Senate and House of Representatives of the United
  States of America in Congress assembled,
SECTION 1. SHORT TITLE; AMENDMENT OF 1986 CODE.
  (a) SHORT TITLE- This Act may be cited as the `Real Estate Recovery Act
  of 1991'.
  (b) AMENDMENT OF 1986 CODE- Except as otherwise expressly provided,
  whenever in this Act 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.
Table of Contents
Sec. 1. Short title; amendment of 1986 Code.
TITLE I--REDUCTION IN CAPITAL GAINS TAX FOR INDIVIDUALS
Subtitle A--Reduction in Capital Gains Tax for Individuals
Sec. 101. Reduction in capital gains tax for individuals.
Sec. 102. Prevention of excessive deduction.
Subtitle B--Inflation Adjustment for Investments
Sec. 111. Indexing of certain investments after April 15, 1991 for purposes
of determining gain.
TITLE II--CREDIT FOR PURCHASE OF NEW PRINCIPAL RESIDENCE
Sec. 201. Credit for purchasing new principal residence.
TITLE III--ENTERPRISE ZONES
Subtitle A--Designation
Sec. 301. Designation of zones.
Sec. 302. Reporting requirements.
Sec. 303. Interaction with other Federal programs.
Subtitle B--Federal Income Tax Incentives
Sec. 311. Definitions and regulations; employee credit; capital gain exclusion;
stock expensing.
Sec. 312. Alternative minimum tax.
Sec. 313. Adjusted gross income defined.
Sec. 314. Effective date.
Subtitle C--Regulatory Flexibility
Sec. 321. Definition of small entities in enterprise zone for purposes of
analysis of regulatory functions.
Sec. 322. Waiver or modification of agency rules in enterprise zones.
Sec. 323. Federal agency support of enterprise zones.
Subtitle D--Establishment of Foreign Trade Zones in Enterprise Zones
Sec. 331. Foreign-trade zone preferences.
Subtitle E--Repeal of Title VII of the Housing and Community Development
Act of 1987
Sec. 341. Repeal.
TITLE IV--APPRAISAL REQUIREMENTS AND RTC AND FDIC INVENTORY PROPERTY
Sec. 401. Extension of phase-in for State licensed appraisals to 1992.
Sec. 402. Limitation on RTC and FDIC property disposal based on local real
estate markets.
TITLE V--TAX-FREE WITHDRAWALS FROM INDIVIDUAL RETIREMENT ACCOUNTS FOR FIRST
HOME PURCHASES
Sec. 501. Tax-free IRA withdrawal for first home purchase.
TITLE VI--TREATMENT OF RENTAL REAL PROPERTY OPERATIONS UNDER PASSIVE LOSS RULES
Sec. 601. Treatment of rental real property operations under passive loss
rules.
TITLE VII--PRODUCTION INVESTMENT TAX INCENTIVE
Sec. 701. Reinstatement of 5-percent investment tax credit.
TITLE VIII--FREEZE ON BANKS' TOTAL CAPITAL STANDARD
Sec. 801. Minimum total capital.
TITLE IX--RESOLUTION TRUST CORPORATION REFINANCING
Sec. 901. Thrift Resolution Funding Provisions.
TITLE X--RESTRUCTURING OF THE OVERSIGHT BOARD AND THE RTC
TITLE XI--CLARIFICATION OF TREATMENT OF CERTAIN FSLIC FINANCIAL ASSISTANCE
SEC. 201. REDUCTION IN INDIVIDUAL CAPITAL GAINS RATE.
  (a) GENERAL RULE- Subsection (h) of section 1 (relating to maximum capital
  gains rate) is amended to read as follows:
  `(h) MAXIMUM CAPITAL GAINS RATE- If a taxpayer has a net capital gain for
  any taxable year, then the tax imposed by this section shall not exceed
  the sum of--
  `(A) a tax computed at the rates and in the same manner as if this
  subsection had not been enacted on the taxable income reduced by the net
  capital gain, plus
  `(B) a tax equal to the sum of--
  `(i) 7.5 percent of so much of the net capital gain as does not exceed--
  `(I) the maximum amount of taxable income to which the 15-percent rate
  applies under the table applicable to the taxpayer, reduced by
  `(II) the taxable income to which subparagraph (A) applies, plus
  `(ii) 15 percent of the net capital gain in excess of the net capital gain
  to which clause (i) applies.'
  (b) PHASEOUT OF PERSONAL EXEMPTIONS AND LIMITATION ON DEDUCTION OF ITEMIZED
  DEDUCTIONS NOT TO RESULT FROM NET CAPITAL GAIN-
  (1)(A) Subparagraphs (A) and (B) of section 151(d)(3) (relating to
  phaseout of exemption amount) are each amended by inserting `modified'
  before `adjusted gross income'.
  (B) Paragraph (3) of section 151(d) of such Code is amended by redesignating
  subparagraphs (D) and (E) as subparagraphs (E) and (F), respectively,
  and by inserting after subparagraph (C) the following new subparagraph:
  `(D) MODIFIED ADJUSTED GROSS INCOME- For purposes of this paragraph, the
  term `modified adjusted gross income' means adjusted gross income reduced
  by net capital gain.'
  (2) Subsection (a) of section 68 (relating to overall limitation on
  itemized deductions) is amended by inserting `(reduced by net capital gain
  (determined in accordance with the last sentence of section 151(d)(3)(D)))'
  after `adjusted gross income'.
  (c) TECHNICAL AMENDMENTS-
  (1) Paragraph (1) of section 170(e) is amended by striking `the amount of
  gain' in the material following subparagraph (B)(ii) and inserting `13/28
  (19/34 in the case of a corporation) of the amount of gain'.
  (2)(A) The second sentence of section 7518(g)(6)(A) is amended by striking
  `28 percent (34 percent in the case of a corporation)' and inserting
  `15 percent'.
  (B) The second sentence of section 607(h)(6)(A) of the Merchant Marine
  Act, 1936, is amended by striking `28 percent (34 percent in the case of
  a corporation)' and inserting `15 percent'.
SEC. 202. REDUCTION IN CORPORATE CAPITAL GAINS RATE.
  (a) GENERAL RULE- Section 1201 (relating to alternative tax for corporations)
  is amended by redesignating subsection (b) as subsection (c), and by
  striking subsection (a) and inserting the following:
  `(a) GENERAL RULE- If for any taxable year a corporation has a net capital
  gain, then, in lieu of the tax imposed by sections 11, 511, or 831(a)
  (whichever applies), there is hereby imposed a tax (if such tax is less
  than the tax imposed by such section) which shall consist of the sum of--
  `(1) a tax computed on the taxable income reduced by the net capital gain,
  at the same rates and in the same manner as if this subsection had not
  been enacted, plus
  `(2) a tax of 15 percent of the net capital gain.
  `(b) TRANSITIONAL RULE- In the case of a taxable year which includes
  December 31, 1991, the amount of the net capital gain for purposes of
  subsection (a) shall not exceed the net capital gain determined by only
  taking into account gains and losses properly taken into account for the
  portion of the taxable year on or after such date.'
  (b) TECHNICAL AMENDMENTS-
  (1) Clause (iii) of section 852(b)(3)(D) is amended by striking `66 percent'
  and inserting `85 percent'.
  (2) Paragraphs (1) and (2) of section 1445(e) are each amended by striking
  `34 percent' and inserting `15 percent'.
SEC. 203. REDUCTION OF MINIMUM TAX RATE ON CAPITAL GAINS.
  Subparagraph (A) of section 55(b)(1) (relating to tentative minimum tax)
  is amended to read as follows:
  `(A) the sum of--
  `(i) 15 percent of the lesser of--
  `(I) the net capital gain (determined with the adjustments provided in this
  part and (to the extent applicable) the limitations of sections 1(h)(2)
  and 1201(b)), or
  `(II) so much of the alternative minimum taxable income for the taxable
  year as exceeds the exemption amount, plus
  `(ii) 20 percent (24 percent in the case of a taxpayer other than a
  corporation) of the amount (if any) by which the excess referred to in
  clause (i)(II) exceeds the net capital gain (as so determined), reduced by'.
SEC. 204. INDEXING OF CERTAIN ASSETS FOR PURPOSES OF DETERMINING GAIN OR LOSS.
  (a) IN GENERAL- Part II of subchapter O of chapter 1 (relating to basis
  rules of general application) is amended by inserting after section 1021
  the following new section:
`SEC. 1022. INDEXING OF CERTAIN ASSETS FOR PURPOSES OF DETERMINING GAIN
OR LOSS.
  `(a) General Rule-
  `(1) INDEXED BASIS SUBSTITUTED FOR ADJUSTED BASIS- Except as provided
  in paragraph (2), if an indexed asset which has been held for more than
  1 year is sold or otherwise disposed of, for purposes of this title the
  indexed basis of the asset shall be substituted for its adjusted basis.
  `(2) EXCEPTION FOR DEPRECIATION, ETC- The deduction for depreciation,
  depletion, and amortization shall be determined without regard to the
  application of paragraph (1) to the taxpayer or any other person.
  `(b) INDEXED ASSET-
  `(1) IN GENERAL- For purposes of this section, the term `indexed asset'
  means--
  `(A) stock in a corporation, and
  `(B) tangible property (or any interest therein), which is a capital asset
  of property used in the trade or business (as defined in section 1231(b)).
  `(2) CERTAIN PROPERTY EXCLUDED- For purposes of this section, the term
  `indexed asset' does not include--
  `(A) CREDITOR'S INTEREST- Any interest in property which is in the nature
  of a creditor's interest.
  `(B) OPTIONS- Any option or other right to acquire an interest in property.
  `(C) NET LEASE PROPERTY- In the case of a lessor, net lease property
  (within the meaning of subsection (h)(1)).
  `(D) CERTAIN PREFERRED STOCK- Stock which is fixed and preferred as to
  dividends and does not participate in corporate growth to any significant
  extent.
  `(E) STOCK IN CERTAIN CORPORATIONS- Stock in--
  `(i) an S corporation (within the meaning of section 1361),
  `(ii) a personal holding company (as defined in section 542), and
  `(iii) a foreign corporation.
  `(3) EXCEPTION FOR STOCK IN FOREIGN CORPORATION WHICH IS REGULARLY TRADED
  ON NATIONAL OR REGIONAL EXCHANGE- Clause (iii) of paragraph (2)(E) shall
  not apply to stock in a foreign corporation the stock of which is listed on
  the New York Stock Exchange, the American Stock Exchange, or any domestic
  regional exchange for which quotations are published on a regular basis
  other than--
  `(A) stock of a foreign investment company (within the meaning of section
  1246(b)), and
  `(B) stock in a foreign corporation held by a United States person who
  meets the requirements of section 1248(a)(2).
  `(c) INDEXED BASIS- For purposes of this section--
  `(1) INDEXED BASIS- The indexed basis for any asset is--
  `(A) the adjusted basis of the asset, multiplied by
  `(B) the applicable inflation ratio.
  `(2) APPLICABLE INFLATION RATIO- The applicable inflation ratio for any
  asset is the percentage arrived at by dividing--
  `(A) the gross national product deflator for the calendar quarter in which
  the disposition takes place, by
  `(B) the gross national product deflator for the calendar quarter in which
  the asset was acquired by the taxpayer (or, if later, the calendar quarter
  ending December 31, 1991).
The applicable inflation ratio shall not be taken into account unless it
is greater than 1. The applicable inflation ratio for any asset shall be
rounded to the nearest one-tenth of 1 percent.
  `(3) GROSS NATIONAL PRODUCT DEFLATOR- The gross national product deflator
  for any calendar quarter is the implicit price deflator for the gross
  national product for such quarter (as shown in the first revision thereof).
  `(4) SECRETARY TO PUBLISH TABLES- The Secretary shall publish tables
  specifying the applicable inflation ratios for each calendar quarter.
  `(d) SPECIAL RULES- For purposes of this section--
  `(1) TREATMENT AS SEPARATE ASSET- In the case of any asset, the following
  shall be treated as a separate asset:
  `(A) a substantial improvement to property,
  `(B) in the case of stock of a corporation, a substantial contribution to
  capital, and
  `(C) any other portion of an asset to the extent that separate treatment
  of such portion is appropriate to carry out the purposes of this section.
  `(2) Assets which are not indexed assets throughout holding period-
  `(A) IN GENERAL- The applicable inflation ratio shall be appropriately
  reduced for calendar months at any time during which the asset was not an
  indexed asset.
  `(B) CERTAIN SHORT SALES- For purposes of applying subparagraph (A), an
  asset shall be treated as not an indexed asset for any short sale period
  during which the taxpayer or the taxpayer's spouse sells short property
  substantially identical to the asset. For purposes of the preceding sentence,
  the short sale period begins on the day after the substantially identical
  property is sold and ends on the closing date for the sale.
  `(3) TREATMENT OF CERTAIN DISTRIBUTIONS- A distribution with respect to stock
  in a corporation which is not a dividend shall be treated as a disposition.
  `(4) SECTION CANNOT INCREASE ORDINARY LOSS- To the extent that (but for
  this paragraph) this section would create or increase a net ordinary loss
  to which section 1231(a)(2) applies or an ordinary loss to which any other
  provision of this title applies, such provision shall not apply. The taxpayer
  shall be treated as having a long-term capital loss in an amount equal to
  the amount of the ordinary loss to which the preceding sentence applies.
  `(5) ACQUISITION DATE WHERE THERE HAS BEEN PRIOR APPLICATION OF SUBSECTION
  (a)(1) WITH RESPECT TO THE TAXPAYER- If there has been a prior application
  of subsection (a)(1) to an asset while such asset was held by the taxpayer,
  the date of acquisition of such asset by the taxpayer shall be treated as
  not earlier than the date of the most recent such prior application.
  `(6) COLLAPSIBLE CORPORATIONS- The application of section 341(a) (relating to
  collapsible corporations) shall be determined without regard to this section.
  `(e) CERTAIN CONDUIT ENTITIES-
  `(1) REGULATED INVESTMENT COMPANIES; REAL ESTATE INVESTMENT TRUSTS; COMMON
  TRUST FUNDS-
  `(A) IN GENERAL- Stock in a qualified investment entity shall be an indexed
  asset for any calendar month in the same ratio as the fair market value of
  the assets held by such entity at the close of such month which are indexed
  assets bears to the fair market value of all assets of such entity at the
  close of such month.
  `(B) RATIO OF 90 PERCENT OR MORE- If the ratio for any calendar month
  determined under subparagraph (A) would (but for the subparagraph) be 90
  percent or more, such ratio for such month shall be 100 percent.
  `(C) RATIO OF 10 PERCENT OR LESS- If the ratio for any calendar month
  determined under subparagraph (A) would (but for this subparagraph) be 10
  percent or less, such ratio for such month shall be zero.
  `(D) VALUATION OF ASSETS IN CASE OF REAL ESTATE INVESTMENT TRUSTS- Nothing
  in this paragraph shall require a real estate investment trust to value
  its assets more frequently than once each 36 months (except where such
  trust ceases to exist). The ratio under subparagraph (A) for any calendar
  month for which there is no valuation shall be the trustee's good faith
  judgment as to such valuation.
  `(E) QUALIFIED INVESTMENT ENTITY- For purposes of this paragraph, the term
  `qualified investment entity' means--
  `(i) a regulated investment company (within the meaning of section 851),
  `(ii) a real estate investment trust (within the meaning of section 856), and
  `(iii) a common trust fund (within the meaning of section 584).
  `(2) PARTNERSHIPS- In the case of a partnership, the adjustment made
  under subsection (a) at the partnership level shall be passed through to
  the partners.
  `(3) SUBCHAPTER S CORPORATIONS- In the case of an electing small business
  corporation, the adjustment under subsection (a) at the corporate level
  shall be passed through to the shareholders.
  `(f) DISPOSITIONS BETWEEN RELATED PERSONS-
  `(1) IN GENERAL- This section shall not apply to any sale or other
  disposition of property between related persons except to the extent
  that the basis  of such property in the hands of the transferee is a
  substituted basis.
  `(2) RELATED PERSONS DEFINED- For purposes of this section, the term
  `related persons' means--
  `(A) persons bearing a relationship set forth in section 267(b), and
  `(B) persons treated as single employer under subsection (b) or (c) of
  section 414.
  `(g) TRANSFERS TO INCREASE INDEXING ADJUSTMENT OR DEPRECIATION ALLOWANCE-
  If any person transfers cash, debt, or any other property to another person
  and the principal purpose of such transfer is--
  `(1) to secure or increase an adjustment under subsection (a), or
  `(2) to increase (by reason of an adjustment under subsection (a)) a
  deduction for depreciation, depletion, or amortization,
the Secretary may disallow part or all of such adjustment or increase.
  `(h) DEFINITIONS- For purposes of this section--
  `(1) NET LEASE PROPERTY DEFINED- The term `net lease property' means leased
  real property where--
  `(A) the term of the lease (taking into account options to renew) was 50
  percent or more of the useful life of the property, and
  `(B) for the period of the lease, the sum of the deductions with respect to
  such property which are allowable to the lessor solely by reason of section
  162 (other than rents and reimbursed amounts with respect to such property)
  is 15 percent or less of the rental income produced by such property.
  `(2) STOCK INCLUDES INTEREST IN COMMON TRUST FUND- The term `stock in
  a corporation' includes any interest in a common fund (as defined in
  section 584(a)).
  `(i) REGULATIONS- The Secretary shall prescribe such regulations as may
  be necessary or appropriate to carry out the purposes of this section.'
  (b) CLERICAL AMENDMENT- This table of sections for part II of subchapter
  O of such chapter 1 is amended by inserting after the item relating to
  section 1021 the following new item:
`Sec. 1022. Indexing of certain assets for purposes of determining gain
or loss.'
  (c) ADJUSTMENT TO APPLY FOR PURPOSES OF DETERMINING EARNINGS AND PROFITS-
  Subsection (f) of section 312 (relating to effect on earnings and profits
  of gain or loss and of receipt of tax-free distributions) is amended by
  adding at the end thereof the following new paragraph:
  `(3) EFFECT ON EARNINGS AND PROFITS OF INDEXED BASIS- For substitution of
  indexed basis for adjusted basis in the case of the disposition of certain
  assets after December 31, 1991, see section 1022(a)(1).'
SEC. 205. INDEXING OF LIMITATION ON CAPITAL LOSSES OF INDIVIDUALS.
  Section 1211 (relating to limitation on capital losses) is amended by
  adding at the end thereof the following new subsection:
  `(c) INDEXATION OF LIMITATION ON NONCORPORATE TAXPAYERS-
  `(1) IN GENERAL- In the case of any taxable year beginning in a calendar
  year after 1991, the $3,000 and $1,500 amounts under subsection (b)(1)
  shall be increased by an amount equal to--
  `(A) such dollar amount, multiplied by
  `(B) the applicable inflation adjustment for the calendar year in which
  the taxable year begins.
  `(2) APPLICABLE INFLATION ADJUSTMENT- For purposes of paragraph (1), the
  applicable inflation adjustment for any calendar year is the percentage
  (if any) by which--
  `(A) the gross national product deflator for the last calendar quarter of
  the preceding calendar year, exceeds
  `(B) the gross national product deflator for the last calendar quarter
  of 1990.
For purposes of this paragraph, the term `gross national product deflator'
has the meaning given such term by section 1022(c)(3).'
SEC. 206. EXCLUSION OF GAIN FROM SALE OF PRINCIPAL RESIDENCE.
  (a) IN GENERAL- Section 121 (relating to one-time exclusion of gain from
  sale of principal residence by individual who has attained age 55) is
  amended to read as follows:
`SEC. 121. EXCLUSION OF GAIN FROM SALE OF PRINCIPAL RESIDENCE.
  `(a) GENERAL RULE- Gross income does not include gain from the sale or
  exchange of property if such property has been owned and used by the
  taxpayer as the taxpayer's principal residence.
  `(b) SPECIAL RULES-
  `(1) TENANT-STOCKHOLDER IN COOPERATIVE HOUSING CORPORATION- For purposes
  of this section, if the taxpayer holds stock as a tenant-stockholder
  (as defined in section 216) in a cooperative housing corporation (as
  defined in such section), then the use requirements of subsection (a)
  shall be applied to the house or apartment which the taxpayer was entitled
  to occupy as such stockholder.
  `(2)  INVOLUNTARY CONVERSIONS- For purposes of this section, the destruction,
  theft, seizure, requisition, or condemnation of property shall be treated
  as the sale of such property.
  `(3) PROPERTY USED IN PART AS PRINCIPAL RESIDENCE- In the case of property
  only a portion of which has been owned and used by the taxpayer as the
  taxpayer's principal residence, this section shall apply with respect to so
  much of the gain from sale or exchange of such property as is determined,
  under regulations prescribed by the Secretary, to be attributable to the
  portion of the property so owned and used by the taxpayer.'
  (b) CONFORMING AMENDMENTS-
  (1) Paragraph (3) of section 1033(h) is amended to read as follows:
  `(3) For exclusion from gross income of gain from involuntary conversion
  of principal residence, see section 121.'
  (2) Subsection (l) of section 1034 is amended to read as follows:
  `(l) TERMINATION- This section shall not apply to any sale or exchange
  occurring after December 31, 1991, in taxable years ending after such date.'
  (3) Section 1038 is amended by striking subsection (e) and redesignating
  subsections (f) and (g) as subsections (e) and (f), respectively.
  (4) Paragraph (7) of section 1250(d) is amended to read as follows:
  `(7) DISPOSITION OF PRINCIPAL RESIDENCE- Subsection (a) shall not apply
  to a disposition of property to the extent used by the taxpayer as the
  taxpayer's principal residence (within the meaning of section 121).'
  (5) Subsection (c) of section 6012 is amended by striking `one-time exclusion
  of gain from sale of principal residence by individual who has attained
  age 55' and inserting `exclusion of gain from sale of principal residence'.
  (c) CLERICAL AMENDMENT- The table of sections for part III of subchapter
  B of chapter 1 is amended by striking the item relating to section 121
  and inserting the following new item:
`Sec. 121. Exclusion of gain from sale of principal residence.'
SEC. 207. EFFECTIVE DATES.
  (a) IN GENERAL- Except as provided in subsection (b), the amendments made
  by this title shall apply to sales or exchanges occurring after December
  31, 1991, in taxable years ending after such date.
  (b) INDEXING OF LOSS LIMITATION- The amendments made by section 205 shall
  apply to taxable years beginning after December 31, 1991.
TITLE II--CREDIT FOR PURCHASE OF NEW PRINCIPAL RESIDENCE.
SEC. 201. CREDIT FOR PURCHASE OF NEW PRINCIPAL RESIDENCE.
  (a) IN GENERAL- Subpart A of part IV of subchapter A of chapter 1 (relating
  to nonrefundable personal credits) is amended by inserting after section
  22 the following new section:
`SEC. 23. PURCHASE OF NEW PRINCIPAL RESIDENCE.
  `(a) GENERAL RULE- In the case of an individual there is allowed, as
  a credit against the tax imposed by this chapter for the taxable year,
  an amount equal to 5 percent of the purchase price of a new principal
  residence purchased or constructed by the taxpayer.
  `(b) LIMITATIONS-
  `(1) MAXIMUM CREDIT- The credit allowed under subsection (a) may not
  exceed $2,000.
  `(2) LIMITATION TO ONE RESIDENCE- The credit under this section shall be
  allowed with respect to only one residence of the taxpayer.
  `(3) MARRIED INDIVIDUALS- In the case of a husband and wife who file a
  joint return, the amount specified under paragraph (1) shall apply to the
  joint return. In the case of a married individual filing a separate return,
  paragraph (1) shall be applied by substituting `$1,000' for `$2,000'.
  `(4) CERTAIN OTHER TAXPAYERS- In the case of individuals to whom paragraph
  (3) does not apply who together purchase the same new principal residence
  for use as their principal residence, the amount of the credit allowed under
  subsection (a) shall be allocated among such individuals as prescribed
  by the Secretary, but the sum of the amounts allowed to such individuals
  shall not exceed $2,000 with respect to that residence.
  `(c) DEFINITIONS- For purposes of this section--
  `(1) NEW PRINCIPAL RESIDENCE- The term `new principal residence' means a
  principal residence (within the meaning of section 1034), the original use
  of which begins with the taxpayer, and includes, without being limited
  to, a single family structure, a residential unit in a condominium or
  cooperative housing project, and a mobile home.
  `(2) PURCHASE PRICE- The term `purchase price' means the adjusted basis
  of the new principal residence on the date of the acquisition thereof.
  `(3) PURCHASE- The term `purchase' means any acquisition of property,
  but only if--
  `(A) the property is not acquired from a person whose relationship to
  the person acquiring it would result in the disallowance of losses under
  section 267 or 707(b) (but, in applying section 267(b) and (c) purposes of
  this section, paragraph (4) of section 267(c) shall be treated as providing
  that the family of an individual shall include only his spouse, ancestors,
  and lineal descendants), and
  `(B) the basis of the property in the hands of the person acquiring it is
  not determined--
  `(i) in whole or in part by reference to the adjusted basis of such property
  in the hands of the person from whom acquired, or
  `(ii) under section 1014(a) (relating to property acquired from a decedent).
  `(d) RECAPTURE FOR CERTAIN DISPOSITIONS-
  `(1) IN GENERAL- Except as provided in paragraphs (2) and (3), if the
  taxpayer disposes of property with respect to the purchase of which a credit
  was allowed under subsection (a) at any time within 36 months after the date
  on which he acquired it (or, in the case of construction by the taxpayer,
  on the day on which he first occupied it) as his principal residence,
  then the tax imposed under this chapter for the taxable year in which
  terminates the replacement period under paragraph (2) with respect to the
  disposition is increased by an amount equal to the amount allowed as a
  credit for the purchase of such property.
  `(2) ACQUISITION OF NEW RESIDENCE- If, in connection with a disposition
  described in paragraph (1) and within the applicable period prescribed in
  section 1034, the taxpayer purchases or constructs a new principal residence,
  then the provisions of paragraph (1) shall not apply and the tax imposed by
  this chapter for the taxable year following the taxable year during which
  disposition occurs is increased by an amount which bears the same ratio
  to the amount allowed as a credit for the purchase of the old residence
  as (A) the adjusted sales price of the old residence (within the meaning
  of section 1034), reduced (but not below zero) by the taxpayer's cost of
  purchasing the new residence (within the meaning of such section) bears to
  (B) the adjusted sales price of the old residence.
  `(3) DEATH OF OWNER; CASUALTY LOSS; INVOLUNTARY CONVERSION; ETC- The
  provisions of paragraph (1) do not apply to--
  `(A) a disposition of a residence made on account of the death of any
  individual having a legal or equitable interest therein occurring during
  the 36 month period to which reference is made under such paragraph,
  `(B) a disposition of the old residence if it is substantially or completely
  destroyed by a casualty described in section 165(c)(3) or compulsorily
  and involuntarily converted (within the meaning of section 1033(a)), or
  `(C) a disposition pursuant to a settlement in a divorce or legal
  separation proceeding where the other spouse retains the residence as
  principal residence.
  `(e) PROPERTY TO WHICH SECTION APPLIES- The provisions of this section
  apply to a new principal residence which is acquired by the taxpayer after
  October 31, 1991, and before November 1, 1992.'
  (b) CLERICAL AMENDMENT- The table of sections for such subpart A is amended
  by inserting after the item relating to section 22 the following new item:
`Sec. 23. Credit for purchase of new principal residence.'
  (c) EFFECTIVE DATE- The amendments made by this section shall apply to
  taxable years ending after October 31, 1991.
TITLE III--ENTERPRISE ZONES
Subtitle A--Designation
SEC. 301. DESIGNATION OF ZONES.
  (a) GENERAL RULE- Chapter 80 (relating to general rules) is amended by
  adding at the end thereof the following new subchapter:
`Subchapter D--Designation of Enterprise Zones
`Sec. 7880. Designation.
`SEC. 7880. DESIGNATION.
  `(a) DESIGNATION OF ZONES-
  `(1) DEFINITION- For purposes of this title, the term `enterprise zone'
  means any area--
  `(A) which is nominated by one or more local governments and the State
  or States in which it is located for designation as an enterprise zone
  (hereinafter in this section referred to as a `nominated area'), and
  `(B) which the Secretary of Housing and Urban Development, after consultation
  with--
  `(i) the Secretaries of Agriculture, Commerce, Labor, and the Treasury;
  the Director of the Office of Management and Budget; and the Administrator
  of the Small Business Administration, and
  `(ii) in the case of an area on an Indian reservation, the Secretary of
  the Interior,
designates as an enterprise zone.
  `(2) AUTHORITY TO DESIGNATE- The Secretary of Housing and Urban Development
  is authorized to designate enterprise zones in accordance with the provisions
  of this section.
  `(3) LIMITATIONS ON DESIGNATIONS-
  `(A) PUBLICATION OF REGULATIONS- Before designating any area as an enterprise
  zone and not later than 4 months following the date of the enactment of this
  section, the Secretary of Housing and Urban Development shall prescribe by
  regulation, after consultation with the officials described in paragraph
  (1)(B)--
  `(i) the procedures for nominating an area, and
  `(ii) the procedures for designation as an enterprise zone, including a
  method for comparing courses of action under subsection (d) proposed for
  nominated areas, and the other factors specified in subsection (e).
  `(B) TIME LIMITATIONS- The Secretary of Housing and Urban Development shall
  designate nominated areas as enterprise zones only during the 48-month
  period beginning on the later of--
  `(i) the first day of the first month following the month in which the
  effective date of the regulations described in subparagraph (A) occurs, or
  `(ii) June 30, 1991.
  `(C) NUMBER OF DESIGNATIONS-
  `(i) IN GENERAL- The Secretary of Housing and Urban Development may
  designate--
  `(I) not more than 50 nominated areas as enterprise zones under this
  section, and
  `(II) not more than 15 nominated areas as enterprise zones during the first
  12-month period beginning on the date determined under subparagraph (B),
  not more than 30 by the end of the second 12-month period, not more than
  45 by the end of the third 12-month period, and not more than 50 by the
  end of the fourth 12-month period.
  `(ii) MINIMUM DESIGNATION IN RURAL AREAS- Of the areas designated as
  enterprise zones, at least one-third must be areas that are--
  `(I) within a local government jurisdiction or jurisdictions with a
  population of less than 50,000 (as determined using the most recent census
  data available);
  `(II) outside of a metropolitan statistical area (within the meaning of
  section 143(k)(2)(B)); or
  `(III) determined by the Secretary of Housing and Urban Development,
  after consultation with the Secretary of Commerce, to be rural areas.
  `(D) PROCEDURAL RULES- The Secretary of Housing and Urban Development
  shall not make any designations under this section unless--
  `(i) the local government and the State in which the nominated area is
  located have the authority to--
  `(I) nominate such area for designation as an enterprise zone,
  `(II) make the State and local commitments under subsection (d), and
  `(III) provide assurances satisfactory to the Secretary of Housing and
  Urban Development that such commitments will be fulfilled, and
  `(ii) a nomination therefor is submitted by such State and local governments
  in such a manner and in such form, and contains such information, as the
  Secretary of Housing and Urban Development shall prescribe by regulation.
  `(4) NOMINATION PROCESS FOR INDIAN RESERVATIONS- In the case of a nominated
  area on an Indian reservation, the reservation governing body (as determined
  by the Secretary of the Interior) shall be deemed to be both the State
  and local governments with respect to such area.
  `(b) TIME PERIOD FOR WHICH DESIGNATION IS IN EFFECT-
  `(1) IN GENERAL- Any designation of an area as an enterprise zone shall
  remain in effect during the period beginning on the date of the designation
  and ending on the earliest of--
  `(A) December 31 of the 24th calendar year following the calendar year in
  which such date occurs,
  `(B) the termination date specified by the State and local governments
  as provided in the nomination submitted in accordance with subsection
  (a)(3)(D)(ii),
  `(C) such other date as the Secretary of Housing and Urban Development
  shall specify as a condition of designation, or
  `(D) the date upon which the Secretary of Housing and Urban Development
  revokes such designation.
  `(2) REVOCATION OF DESIGNATION- The Secretary of Housing and Urban
  Development, after consultation with the officials described in subsection
  (a)(1)(B), may revoke the designation of an area if the Secretary of Housing
  and Urban Development determines that the State or a local government in
  which the area is located is not complying substantially with the agreed
  course of action for the area.
  `(c) AREA AND ELIGIBILITY REQUIREMENTS-
  `(1) IN GENERAL- The Secretary of Housing and Urban Development may
  designate a nominated area as an enterprise zone only if it meets the
  requirements of paragraphs (2) and (3).
  `(2) AREA REQUIREMENTS- A nominated area meets the requirements of this
  paragraph if--
  `(A) the area is within the jurisdiction of the local government;
  `(B) the boundary of the area is continuous; and
  `(C) the area--
  `(i) has a population, as determined by the most recent census data
  available, of not less than--
  `(I) 4,000 if any portion of such area (other than a rural area described
  in subsection (a)(3)(C)(ii)) is located within a metropolitan statistical
  area (as designated by the Director of the Office of Management and Budget)
  with a population of 50,000 or more; or
  `(II) 1,000 in any other case; or
  `(ii) is entirely within an Indian reservation (as determined by the
  Secretary of the Interior).
  `(3) ELIGIBILITY REQUIREMENTS- For purposes of paragraph (1), a nominated
  area meets the requirements of this paragraph if the State or local
  governments in which the nominated area is located certifies, and the
  Secretary of Housing and Urban Development accepts such certification, that--
  `(A) the area is one of pervasive poverty, unemployment and general distress;
  `(B) the area is located wholly within the jurisdiction of a local government
  that is eligible for Federal assistance under section 119 of the Housing
  and Community Development Act of 1974, as in effect on the date of the
  enactment of this Act;
  `(C) the unemployment rate for the area, as determined by the appropriate
  available data, was not less than 1.5 times the national unemployment rate
  for the period;
  `(D) the poverty rate (as determined by the most recent census data
  available) for each populous census tract (or where not tracted, the
  equivalent county division as defined by the Bureau of the Census for the
  purpose of defining poverty areas) within the area was not less than 20
  percent for the period to which such data relate; and
  `(E) the area meets at least one of the following criteria:
  `(i) Not less than 70 percent of the households living in the area have
  incomes below 80 percent of the median income of households of the local
  government (determined in the same manner as under section 119(b)(2)
  of the Housing and Community Development Act of 1974).
  `(ii) The population of the area decreased by 20 percent or more between
  1970 and 1980 (as determined from the most recent census available).
  `(4) ELIGIBILITY REQUIREMENTS FOR RURAL AREAS- For purposes of paragraph (1),
  a nominated area that is a rural area described in subsection (a)(3)(C)(ii)
  meets the requirements of paragraph (3) if the State and local governments
  in which it is located certify and the Secretary, after such review of
  supporting data as he deems appropriate, accepts such certification,
  that the area meets--
  `(A) the criteria set forth in subparagraphs (A) and (B) of paragraph
  (3); and
  `(B) not less than one of the criteria set forth in the other subparagraphs
  of paragraph (3).
  `(d) REQUIRED STATE AND LOCAL COMMITMENTS-
  `(1) IN GENERAL- No nominated area shall be designated as an enterprise
  zone unless the State and the local government or governments of the
  jurisdictions in which the nominated area is located agree in writing that,
  during any period during which the nominated area is an enterprise zone,
  such governments will follow a specified course of action designed to
  reduce the various burdens borne by employers or employees in such area.
  `(2) COURSE OF ACTION- The course of action under paragraph (1) may include,
  but is not limited to--
  `(A) the reduction or elimination of tax rates or fees applying within
  the enterprise zone,
  `(B) actions to reduce, remove, simplify, or streamline governmental
  requirements applying within the enterprise zone,
  `(C) an increase in the level or efficiency of local services within
  the enterprise zone, for example, crime prevention, and drug enforcement
  prevention and treatment,
  `(D) involvement in the program by private entities, organizations,
  neighborhood associations, and community groups, particularly those within
  the nominated area, including a commitment from such private entities
  to provide jobs and job training for, and technical, financial or other
  assistance to, employers, employees, and residents of the nominated area,
  `(E) mechanisms to increase equity ownership by residents and employees
  within the enterprise zone,
  `(F) donation (or sale below market value) of land and buildings to benefit
  low and moderate income people,
  `(G) linkages to--
  `(i) job training,
  `(ii) transportation,
  `(iii) education,
  `(iv) day care,
  `(v) health care, and
  `(vi) other social service support,
  `(H) provision of supporting public facilities, and infrastructure
  improvements,
  `(I) encouragement of local entrepreneurship; and
  `(J) other factors determined essential to support enterprise zone activities
  and encourage livability or quality of life.
  `(3) LATER MODIFICATION OF A COURSE OF ACTION- The Secretary of Housing
  and Urban Development may by regulation prescribe procedures to permit or
  require a course of action to be updated or modified during the time that
  a designation is in effect.
  `(e) PRIORITY OF DESIGNATION- In choosing nominated areas for designation,
  the Secretary of Housing and Urban Development shall give preference to
  the nominated areas--
  `(1) with respect to which the strongest and highest quality contributions
  have been promised as part of the course of action, taking into consideration
  the fiscal ability of the nominating State and local governments to provide
  tax relief,
  `(2) with respect to which the nominating State and local governments have
  provided the most effective and enforceable guarantees that the proposed
  course of action will actually be carried out during the period of the
  enterprise zone designation,
  `(3) with respect to which private entities have made the most substantial
  commitments in additional resources and contributions, including the
  creation of new or expanded business activities, and
  `(4) which best exhibit such other factors determined by the Secretary
  of Housing and Urban Development, including relative distress, as are
  consistent with the intent of the enterprise zone program and have the
  greatest likelihood of success.
  `(f) GEOGRAPHIC DISTRIBUTION- In making designations, the Secretary of
  Housing and Urban Development will take into consideration a reasonable
  geographic distribution of enterprise zones.
  `(g) DEFINITIONS- For the purposes of this title--
  `(1) GOVERNMENTS- If more than one government seeks to nominate an area
  as an enterprise zone, any reference to, or requirement of, this section
  shall apply to all such governments.
  `(2) STATE- The term `State' shall also include Puerto Rico, the Virgin
  Islands, Guam, American Samoa, the Northern Mariana Islands, and any other
  possession of the United States.
  `(3) LOCAL GOVERNMENT- The term `local government' means--
  `(A) any county, city, town, township, parish, village, or other general
  purpose political subdivision of a State,
  `(B) any combination of political subdivisions described in subparagraph
  (A) recognized by the Secretary of Housing and Urban Development, and
  `(C) the District of Columbia.'.
  `(h) CROSS REFERENCES FOR--
 `(1) definitions, see section 1391,
 `(2) treatment of employees in enterprise zones, see section 1392, and
 `(3) treatment of investments in enterprise zones, see sections 1393
 and 1394.'.
  (b) CLERICAL AMENDMENT- The table of subchapters for chapter 80 is amended
  by adding at the end thereof the following new item:
`SUBCHAPTER D. Designation of enterprise zones.'.
SEC. 302. REPORTING REQUIREMENTS
  Not later than the close of the second calendar year after the calendar year
  in which the Secretary of Housing and Urban Development first designates
  areas as enterprise zones, and at the close of each second calendar year
  thereafter, the Secretary of Housing and Urban Development shall submit to
  the Congress a report on the effects of such designation in accomplishing
  the purposes of this Act.
SEC. 303. INTERACTION WITH OTHER FEDERAL PROGRAMS.
  (a) COORDINATION WITH RELOCATION ASSISTANCE- The designation of an
  enterprise zone under section 7880 of the Internal Revenue Code of 1986
  (as added by this Act) shall not--
  (1) constitute approval of a Federal or federally assisted program or project
  (within the meaning of the Uniform Relocation Assistance and Real Property
  Acquisition Policies Act of 1970 (42 U.S.C. 4601)); or
  (2) entitle any person displaced from real property located in such zone
  to any rights or any benefits under such Act.
  (b) COORDINATION WITH ENVIRONMENTAL POLICY- Designation of an enterprise
  zone under section 7880 of such Code shall not constitute a Federal action
  for purposes of applying the procedural requirements of the National
  Environmental Policy Act of 1969 (42 U.S.C. 4341) or other provisions of
  Federal law relating to the protection of the environment.
Subtitle B--Federal Income Tax Incentives
SEC. 311. DEFINITIONS AND REGULATIONS; EMPLOYEE CREDIT; CAPITAL GAIN EXCLUSION;
STOCK EXPENSING.
  (a) GENERAL RULE- Chapter 1 (relating to normal tax and surtax rules)
  is amended by inserting after subchapter T the following new subchapter:
`Subchapter U--Enterprise Zones
`Sec. 1391. Definitions and regulatory authority.
`Sec. 1392. Credit for enterprise zone employees.
`Sec. 1393. Enterprise zone capital gain.
`Sec. 1394. Enterprise zone stock.
`SEC. 1391. DEFINITIONS AND REGULATORY AUTHORITY.
  `(a) Enterprise Zone-
  `(1) IN GENERAL- For purposes of this subchapter, the term `enterprise
  zone' means any area which the Secretary of Housing and Urban Development
  designates pursuant to section 7880(a) as a Federal enterprise zone for
  purposes of this title.
  `(2) TERMINATION OF ENTERPRISE ZONE- An area will cease to constitute
  an enterprise zone once its designation as such terminates or is revoked
  under section 7880(b).
  `(b) Enterprise Zone Business-
  `(1) IN GENERAL- For purposes of this subchapter, the term `enterprise zone
  business' means an activity constituting the active conduct of a trade or
  business within an enterprise zone, and with respect to which--
  `(A) at least 80 percent of the gross income in each calendar year is
  attributable to the active conduct of a trade or business within an
  enterprise zone,
  `(B) less than 10 percent of the property (as measured by unadjusted basis)
  constitutes stocks, securities, or property held for use by customers,
  `(C) no more than an insubstantial portion of the property constitutes
  collectibles (as defined in section 408(m)(2)), unless such collectibles
  constitute property held primarily for sale to customers in the ordinary
  course of the active trade or business,
  `(D) substantially all of the property (whether owned or leased) is located
  within an enterprise zone, and
  `(E) substantially all of the employees work within an enterprise zone.
  `(2) RELATED ACTIVITIES TAKEN INTO ACCOUNT- Except as otherwise provided in
  regulations, all activities conducted by a taxpayer and persons related to
  the taxpayer shall be treated as one activity for purposes of paragraph (1).
  `(3) SPECIAL RULES-
  `(A) RENTAL REAL PROPERTY- For purposes of paragraph (1), real property
  located within an enterprise zone and held for use by customers other than
  related persons shall be treated as the active conduct of a trade or business
  for purposes of paragraph (1)(A) and as not subject to paragraph (1)(B).
  `(B) TERMINATION OF ENTERPRISE ZONE BUSINESS- An activity shall cease to
  be an enterprise zone business if--
  `(i) the designation of the enterprise zone in which the activity is
  conducted terminates or is revoked pursuant to section 7880(b);
  `(ii) more than 50 percent (by value) of the activity's property or services
  are obtained from related persons other than enterprise zone businesses; or
  `(iii) more than 50 percent of the activity's gross income is attributable
  to property or services provided to related persons other than enterprise
  zone businesses.
  `(c) ENTERPRISE ZONE PROPERTY-
  `(1) IN GENERAL- For purposes of this subchapter, the term `enterprise
  zone property' means--
  `(A) any tangible personal property located in an enterprise zone and used
  by the taxpayer in an enterprise zone business, and
  `(B) any real property located in an enterprise zone and used by the
  taxpayer in an enterprise zone business.
In no event shall any financial property or intangible interest in property
be treated as constituting enterprise zone property, whether or not such
property is used in the active conduct of an enterprise zone business.
  `(2) TERMINATION OF ENTERPRISE ZONE- The treatment of property as enterprise
  zone property under subparagraph (A) shall not terminate upon the termination
  or revocation of the designation of the enterprise zone in which the property
  is located, but instead shall terminate immediately after the first sale
  or exchange of such property occurring after the expiration or revocation.
  `(d) RELATED PERSONS- For purposes of this subchapter, a person shall be
  treated as related to another person if--
  `(1) the relationship of such persons is described in section 267(b)
  or 707(b)(1), or
  `(2) such persons are engaged in trades or businesses under common control
  (within the meaning of subsections (a) and (b) of section 52).
For purposes of paragraph (1), in applying section 267(b) or 707(b)(1),
`33 percent' shall be substituted for `50 percent'.
  `(e) REGULATORY AUTHORITY- The Secretary shall prescribe such regulations
  as may be necessary or appropriate to carry out the purposes of subtitle
  C of title II of the Economic Growth Act of 1991, including--
  `(1) providing that Federal tax relief is unavailable to an activity that
  does not stimulate employment in, or revitalization of, enterprise zones,
  `(2) providing for appropriate coordination with other Federal programs
  that, in combination, might enable activity within enterprise zones to be
  more than 100 percent subsidized by the Federal Government, and
  `(3) preventing the avoidance of the rules in this subchapter.
`SEC. 1392. CREDIT FOR ENTERPRISE ZONE EMPLOYEES.
  `(a) GENERAL RULE- In the case of a taxpayer who is an enterprise zone
  employee, there shall be allowed as a credit against the tax imposed by
  this subtitle for the taxable year an amount equal to 5 percent of so much
  of the qualified wages of the taxpayer for the taxable year as does not
  exceed $10,500.
  `(b) DEFINITIONS- For purposes of this section--
  `(1) ENTERPRISE ZONE EMPLOYEE- The term `enterprise zone employee' means
  an individual--
  `(A) performing services during the taxable year that are directly related
  to the conduct of an enterprise zone business,
  `(B) substantially all of the services described in paragraph (1)(A)
  are performed within an enterprise zone, and
  `(C) the employer for whom the services described in paragraph (1)(A)
  are performed is not the Federal government, any State government or
  subdivision thereof, or any local government.
  `(2) WAGES- The term `wages' has the meaning given to such term by subsection
  (b) of section 3306 (determined without regard to any dollar limitation
  contained in such subsection).
  `(3) QUALIFIED WAGES- The term `qualified wages' means all wages of the
  taxpayer, to the extent attributable to services described in paragraph (1).
  `(c) Limitations-
  `(1) PHASE-OUT OF CREDIT- The amount of the credit allowable to a taxpayer
  under subsection (a) for any taxable year shall not exceed the excess
  (if any) of--
  `(A) $525, over
  `(B) 10.5 percent of so much of the taxpayer's total wages (whether or
  not constituting qualified wages) as exceeds $20,000.
  `(2) PARTIAL TAXABLE YEAR- If designation of an area as an enterprise zone
  occurs, expires, or is revoked pursuant to section 7880 on a date other
  than the first or last day of the taxable year of the taxpayer, or in
  the case of a short taxable year, the limitations specified in subsection
  (c)(1) shall be adjusted on a pro rata basis (based upon the number of days).
  `(d) REDUCTION OF CREDIT TO TAXPAYERS SUBJECT TO ALTERNATIVE MINIMUM
  TAX- The credit allowed under this section for the taxable year shall be
  reduced by the amount (if any) of tax imposed by section 55 (relating to
  the alternative minimum tax) with respect to such taxpayer for such year.
  `(e) CREDIT TREATED AS SUBPART C CREDIT- For purposes of this title, the
  credit allowed under subsection (a) shall be treated as a credit allowed
  under subpart C of part IV of subchapter A of this chapter.
`SEC. 1393. ENTERPRISE ZONE CAPITAL GAIN.
  `(a) GENERAL RULE- Gross income does not include the amount of any gain
  constituting enterprise zone capital gain.
  `(b) DEFINITION- For purposes of this section--
  `(1) IN GENERAL- The term `enterprise zone capital gain' means gain--
  `(A) treated as long-term capital gain,
  `(B) allocable in accordance with the rules under subsection (b)(5) of
  section 338 to the sale or exchange of enterprise zone property, and
  `(C) properly attributable to periods of use in an enterprise zone business.
  `(2) LIMITATIONS- Enterprise zone capital gain does not include any gain
  attributable to--
  `(A) the sale or exchange of property not constituting enterprise zone
  property with respect to the taxpayer throughout the period of twenty-four
  full calendar months immediately preceding the sale or exchange,
  `(B) any collectibles (as defined in section 408(m)), or
  `(C) sales or exchanges to persons controlled by the same interests.
  `(c) BASIS- Amounts excluded from gross income pursuant to subsection (a)
  shall not be applied in reduction to the basis of any property held by
  the taxpayer.
`SEC. 1394. ENTERPRISE ZONE STOCK.
  `(a) GENERAL RULE- At the election of any individual, the aggregate amount
  paid by such taxpayer during the taxable year for the purchase of enterprise
  zone stock on the original issue of such stock by a qualified issuer shall
  be allowed as a deduction.
  `(b) Limitations-
  `(1) CEILING- The maximum amount allowed as a deduction under subsection (a)
  to a taxpayer shall not exceed $50,000 for any taxable year, nor $250,000
  during the taxpayer's lifetime.
  `(A) EXCESS AMOUNTS- If the amount otherwise deductible by any person
  under subsection (a) exceeds the limitation under this paragraph (1)--
  `(i) the amount of such excess shall be treated as an amount paid in the
  next taxable year, and
  `(ii) the deduction allowed for any taxable year shall be allocated among
  the enterprise zone stock purchased by such person in accordance with the
  purchase price per share.
  `(2) RELATED PERSON-
  `(A) IN GENERAL- The taxpayer and all individuals related to the taxpayer
  shall be treated as one person for purposes of the limitations described
  in subsection (b)(1).
  `(B) EXCESS AMOUNTS- The limitations described in subsection (b)(1) shall
  be allocated among the taxpayer and related persons in accordance with
  their respective purchases of enterprise zone stock.
  `(3) PARTIAL TAXABLE YEAR- If designation of an area as an enterprise zone
  occurs, expires, or is revoked pursuant to section 7880 on a date other
  than the first or last day of the taxable year of the taxpayer, or in
  the case of a short taxable year, the limitations specified in subsection
  (b)(1) shall be adjusted on a pro rata basis (based upon the number of days).
  `(c) DISPOSITIONS OF STOCK-
  `(1) GAIN TREATED AS ORDINARY INCOME- Except as otherwise provided in
  regulations, if a taxpayer disposes of any enterprise zone stock with
  respect to which a deduction was allowed under subsection (a), the amount
  realized upon such disposition shall be treated as ordinary income and
  recognized notwithstanding any other provision of this subtitle.
  `(2) Interest charged if disposition within 5 years of purchase-
  `(A) IN GENERAL- If a taxpayer disposes of any enterprise zone stock before
  the end of the 5-year period beginning on the date such stock was purchased
  by the taxpayer, the tax imposed by this chapter for the taxable year in
  which such disposition occurs shall be increased by the amount determined
  under subparagraph (B).
  `(B) ADDITIONAL AMOUNT- For purposes of subparagraph (A), the additional
  amount shall be equal to the amount of interest (determined at the rate
  applicable under section 6621(a)(2)) that would accrue--
  `(i) during the period beginning on the date the stock was purchased by the
  taxpayer and ending on the date such stock was disposed of by the taxpayer,
  `(ii) on an amount equal to the aggregate decrease in tax of the taxpayer
  resulting from the deduction allowed under this subsection (a) with respect
  to the stock so disposed of.
  `(d) DISQUALIFICATION-
  `(1) ISSUER OR STOCK CEASES TO QUALIFY- If a taxpayer elects the deduction
  under subsection (a) with respect to enterprise zone stock, and either--
  `(A) the issuer with respect to which the election was made ceases to be
  a qualified issuer, or
  `(B) the proceeds from the issuance of the taxpayer's enterprise zone stock
  fail or otherwise cease to be invested by the issuer in enterprise zone
  property, then, notwithstanding any provision of this subtitle other than
  paragraph (2) to the contrary, the taxpayer shall recognize as ordinary
  income the amount of the deduction allowed under subsection (a) with
  respect to the issuer's enterprise zone stock.
  `(2) SPECIAL RULES-
  `(A) LIQUIDATION- Where enterprise zone property acquired with proceeds
  from the issuance of enterprise zone stock is sold or exchanged pursuant
  to a plan of complete liquidation, the treatment described in paragraph
  (1) shall be inapplicable.
  `(B) TERMINATION OF ENTERPRISE ZONE- The treatment of an activity as an
  enterprise zone business shall not cease for purposes of paragraph (1)
  solely by reason of the termination or revocation of the designation of
  the enterprise zone with respect to the activity.
  `(C) PARTIAL DISQUALIFICATION- Where some, but not all, of the property
  acquired by the issuer with the proceeds of enterprise zone stock ceases to
  constitute enterprise zone property, the treatment described in paragraph
  (1) shall be modified as follows--
  `(i) the total amount recognized as ordinary income by all shareholders
  of the issuer shall be limited to an amount of deduction allowed up to the
  unadjusted basis of property ceasing to constitute enterprise zone property,
  `(ii) the amount recognized shall be allocated among enterprise zone
  stock with respect to which the election in subsection (a) was made in
  the reverse order in which such stock was issued, and
  `(iii) the amount recognized shall be apportioned among taxpayers having
  made the election in subsection (a) in the ratios in which the stock
  described in paragraph (2)(C)(ii) was purchased.
  `(3) ADDITIONAL AMOUNT- If income is recognized pursuant to paragraph
  (1) at any time before the close of the 5th calendar year ending after
  the date the enterprise zone stock was purchased, the tax imposed by this
  chapter with respect to such income shall be increased by an amount equal
  to the amount of interest (determined at the rate applicable under section
  6621(a)(2)) that would accrue--
  `(A) during the period beginning on the date the stock was purchased by
  the taxpayer and ending on the date of the disqualification event described
  in paragraph (1),
  `(B) on an amount equal to the aggregate decrease in tax of the taxpayer
  resulting from the deduction allowed under this subsection (a) with respect
  to the stock so disqualified.
  `(e) DEFINITIONS- For purposes of this section--
  `(1) ENTERPRISE ZONE STOCK- The term `enterprise zone stock' means common
  stock issued by a qualified issuer, but only to the extent that the amount
  of proceeds of such issuance are used by such issuer no later than twelve
  months followed issuance to acquire and maintain an equal amount of newly
  acquired enterprise zone property.
  `(2) QUALIFIED ISSUER-
  `(A) IN GENERAL- The term `qualified issuer' means any subchapter C
  corporation which--
  `(i) does not have more than one class of stock,
  `(ii) is engaged solely in the conduct of one or more enterprise zone
  businesses,
  `(iii) does not own or lease more than $5 million of total property
  (including money), as measured by the unadjusted basis of the property, and
  `(iv) more than 20 percent of the total voting power and 20 percent of
  the total value of the stock of such corporation is owned by individuals,
  partnerships, estates or trusts.
  `(B) LIMITATION ON TOTAL ISSUANCES- A qualified issuer may issue no more
  than an aggregate of $5 million of enterprise zone stock.
  `(C) AGGREGATION- For purposes of applying the limitations under paragraph
  (2), the issuer and all related persons shall be treated as one person.
  `(3) AMOUNT PAID- For purposes of subsection (a), the amount `paid' by a
  taxpayer for any taxable year shall not include the issuance of evidences
  of indebtedness of the taxpayer (whether or not such indebtedness is
  guaranteed by another person), nor amounts paid by the taxpayer after the
  close of the taxable year.
  `(f) ISSUANCES IN EXCHANGE FOR PROPERTY- If enterprise zone stock is issued
  in exchange for property, then notwithstanding any provision of subchapter
  C of this chapter to the contrary--
  `(1) the issuance shall be treated for purposes of this subtitle as the
  sale of the property at its then fair market value to the corporation, and
  a contribution to the corporation of the proceeds immediately thereafter
  in exchange for the enterprise zone stock, and
  `(2) the issuer's basis for the property shall be equal to the fair market
  value of such property at the time of issuance.
  `(g) BASIS ADJUSTMENT- For purposes of this subtitle, if a taxpayer elects
  the deduction under subsection (a), the taxpayer's basis (without regard
  to this subsection) for the enterprise zone stock with respect to such
  election shall be reduced by the deduction allowed or allowable.
  `(h) LIMITATIONS ON ASSESSMENT AND COLLECTION- If a taxpayer elects the
  deduction under subsection (a) for any taxable year, then--
  `(1) the period for assessment and collection of any deficiency attributable
  to any part of the deduction shall not expire before one year following
  expiration of such period of the qualified issuer that includes the
  circumstances giving rise to the deficiency, and
  `(2) such deficiency may be assessed before expiration of the period
  described in paragraph (1) notwithstanding any provisions of this subtitle
  to the contrary.
  `(i) Cross Reference-
 For treatment of the deduction under subsection (a) for purposes of the
 alternative minimum tax, see section 56.'.
  (b) TECHNICAL AMENDMENT- Subsection (a) of section 1016 (relating to
  adjustments to basis) is amended by striking out `and' at the end of
  paragraph (23); by striking out the period at the end of paragraph (24)
  and inserting in lieu thereof `; and'; and by adding at the end thereof
  the following new paragraph:
  `(25) to the extent provided in section 1394(g), in the case of stock
  with respect to which a deduction was allowed or allowable under section
  1394(a).'.
  (c) CLERICAL AMENDMENT- The table of subchapters for chapter 1 is amended
  by inserting after the item relating to subchapter T the following new item:
`SUBCHAPTER U. Enterprise zones.'
SEC. 312. ALTERNATIVE MINIMUM TAX.
  (a) CORPORATIONS- Section 56(g)(4)(B) (relating to adjustments based
  on adjusted current earnings of corporations) is amended by adding the
  following new clause at the end thereof:
  `(iii) EXCLUSION OF ENTERPRISE ZONE CAPITAL GAIN- Clause (i) shall not apply
  in the case of any enterprise zone capital gain (as defined in section
  1393(b)), and such gain shall not be included in income for purposes of
  computing alternative minimum taxable income.'.
  (b) INDIVIDUALS- Section 56(b) (relating to adjustments to the alternative
  minimum taxable income of individuals) is amended by adding the following
  new paragraph at the end thereof:
  `(4) ENTERPRISE ZONE STOCK- No deduction shall be allowed for the purchase
  of enterprise zone stock (as defined in section 1394(e)).'.
SEC. 313. ADJUSTED GROSS INCOME DEFINED.
  Section 62(a) (relating to the definition of adjusted gross income) is
  amended by inserting after paragraph (14) the following new paragraph:
  `(15) ENTERPRISE ZONE STOCK- The deduction allowed by section 1394.'.
SEC. 314. EFFECTIVE DATE.
  The amendments made by this subtitle shall apply to taxable years ending
  after December 31, 1990.
Subtitle C--Regulatory Flexibility
SEC. 321. DEFINITION OF SMALL ENTITIES IN ENTERPRISE ZONE FOR PURPOSES OF
ANALYSIS OF REGULATORY FUNCTIONS.
  Section 601 of title 5, United States Code, is amended by--
  (1) striking out `and' at the end of paragraph (5); and
  (2) striking out paragraph (6) and inserting in lieu thereof the following:
  `(6) the term `small entity' means--
  `(A) a small business, small organization, or small governmental jurisdiction
  defined in paragraphs (3), (4), and (5) of this section, respectively; and
  `(B) any qualified enterprise zone business; any unit of government that
  nominated an area which the Secretary of Housing and Urban Development
  designates as an enterprise zone (within the meaning of section 7880
  of the Internal Revenue Code of 1986) that has a rule pertaining to the
  carrying out of any project, activity, or undertaking within such zone;
  and any not-for-profit enterprise carrying out a significant portion of
  its activities within such a zone; and
  `(7) the term `qualified enterprise zone business' means any person,
  corporation, or other entity--
  `(A) which is engaged in the active conduct of a trade or business within
  an enterprise zone (within the meaning of section 7880 of the Internal
  Revenue Code of 1986); and
  `(B) for whom at least 50 percent of its employees are qualified employees
  (within the meaning of section 1392(b)(1) of such Code).'.
SEC. 322. WAIVER OR MODIFICATION OF AGENCY RULES IN ENTERPRISE ZONES.
  (a) Chapter 6 of title 5, United States Code, is amended by redesignating
  sections 611 and 612 as sections 612 and 613, respectively, and inserting
  the following new section immediately after section 610:
`Sec. 611. Waiver or modification of agency rules in enterprise zones
  `(a) Upon the written request of any government which nominated an area
  that the Secretary of Housing and Urban Development has designated as an
  enterprise zone under section 7880 of the Internal Revenue Code of 1986,
  an agency is authorized, in order to further the job creation, community
  development, or economic revitalization objectives with respect to such
  zone, to waive or modify all or part of any rule which it has authority
  to promulgate, as such rule pertains to the carrying out of projects,
  activities, or undertakings within such zone.
  `(b) Nothing in this section shall authorize an agency to waive or modify
  any rule adopted to carry out a statute or Executive order which prohibits,
  or the purpose of which is to protect persons against, discrimination on
  the basis of race, color, religion, sex, familial status, national origin,
  age, or handicap.
  `(c) A request under subsection (a) shall specify the rule or rules to be
  waived or modified and the change proposed, and shall briefly describe why
  the change would promote the achievement of the job creation, community
  development, or economic revitalization objectives of the enterprise
  zone. If such a request is made to any agency other than the Department
  of Housing and Urban Development, the requesting government shall send a
  copy of the request to the Secretary of Housing and Urban Development at
  the time the request is made.
  `(d) In considering a request, the agency shall weigh the extent to which
  the proposed change is likely to further job creation, community development,
  or economic revitalization within the enterprise zone against the effect the
  change is likely to have on the underlying purposes of applicable statutes
  in the geographic area which would be affected by the change. The agency
  shall approve the request whenever it finds, in its discretion, that the
  public interest which the proposed change would serve in furthering such job
  creation, community development, or economic revitalization outweighs the
  public interest which continuation of the rule unchanged would serve. The
  agency shall not approve any request to waive or modify a rule if that
  waiver or modification would--
  `(1) violate a statutory requirement (including any requirements of the
  Fair Labor Standards Act of 1938 (52 Stat. 1060; 29 U.S.C. 201 et seq.)); or
  `(2) be likely to present a significant risk to the public health, including
  environmental or occupational health or safety, or of environmental
  pollution.
  `(e) If a request is disapproved, the agency shall inform all the requesting
  governments, and the Department of Housing and Urban Development, in
  writing of the reasons therefor and shall, to the maximum extent possible,
  work with such governments to develop an alternative, consistent with the
  standards contained in subsection (d).
  `(f) Agencies shall discharge their responsibilities under this section
  in an expeditious manner, and shall make a determination on requests not
  later than 90 days after their receipt.
  `(g) A waiver or modification of a rule under subsection (a) shall not
  be considered to be a rule, rulemaking, or regulation under chapter 5 of
  this title. To facilitate reaching its decision on any requested waiver
  or modification, the agency may seek the views of interested parties and,
  if the views are to be sought, determine how they should be obtained and
  to what extent, if any, they should be taken into account in considering
  the request. The agency shall publish a notice in the Federal Register
  stating any waiver or modification of a rule under this section, the time
  such waiver or modification takes effect and its duration, and the scope
  of applicability of such waiver or modification.
  `(h) In the event that an agency proposes to amend a rule for which a
  waiver or modification under this section is in effect, the agency shall
  not change the waiver or modification to impose additional requirements
  unless it determines, consistent with standards contained in subsection
  (d), that such action is necessary. Such determinations shall be published
  with the proposal to amend such rule.
  `(i) No waiver or modification of a rule under this section shall remain
  in effect with respect to an enterprise zone after the enterprise zone
  designation has expired or has been revoked.
  `(j) For purposes of this section, the term `rule' means (1) any rule as
  defined in section 551(4) of this title or (2) any rulemaking conducted
  on the record after opportunity for an agency hearing pursuant to sections
  556 and 557 of this title.'.
  (b) The analysis for chapter 6 of title 5, United States Code, is amended by
  redesignating the items relating to sections 611 and 612 as items relating
  to sections 612 and 613, respectively, and by inserting after the item
  relating to section 610 the following new item:
`611. Waiver or modification of agency rules in enterprise zones.'.
  (c) Section 601(2) of such title 5 is amended by inserting `(except for
  purposes of section 611' immediately before `means'.
  (d) Section 613 of such title 5, as redesignated by subsection (a),
  is amended--
  (1) in subsection (a) by inserting `(except section 611)' immediately after
  `chapter'; and
  (2) in subsection (b) by inserting `as defined in section 601(2)' immediately
  before the period at the end of the first sentence.
SEC. 323. FEDERAL AGENCY SUPPORT OF ENTERPRISE ZONES.
  In order to maximize all agencies' support of enterprise zones, the Secretary
  of Housing and Urban Development is authorized to convene regional and
  local coordinating councils of any appropriate agencies to assist State
  and local governments to achieve the objectives agreed to in the course
  of action under section 7880 of the Internal Revenue Code of 1986.
Subtitle D--Establishment of Foreign Trade Zones in Enterprise Zones
SEC. 331. FOREIGN-TRADE ZONE PREFERENCES.
  (a) PREFERENCE IN ESTABLISHMENT OF FOREIGN-TRADE ZONES IN REVITALIZATION
  AREAS- In processing applications for the establishment of foreign-trade
  zones pursuant to an Act `To provide for the establishment, operation, and
  maintenance of foreign-trade zones in ports of entry of the United States,
  to expedite and encourage foreign commerce, and for other purposes',
  approved June 18, 1934 (48 Stat. 998), the Foreign-Trade Zone Board
  shall consider on a priority basis and expedite, to the maximum extent
  possible, the processing of any application involving the establishment
  of a foreign-trade zone within an enterprise zone designated pursuant to
  section 7880 of the Internal Revenue Code of 1986.
  (b) APPLICATION PROCEDURE- In processing applications for the establishment
  of ports of entry pursuant to `An Act making appropriations for sundry
  civil expenses of the Government for the fiscal year ending June thirtieth,
  nineteen hundred and fifteen, and for other purposes', approved August 1,
  1914 (38 Stat. 609), the Secretary of the Treasury shall consider on a
  priority basis and expedite, to the maximum extent possible, the processing
  of any application involving the establishment of a port of entry which
  is necessary to permit the establishment of a foreign-trade zone within
  an enterprise zone so designated.
  (c) APPLICATION EVALUATION- In evaluating applications for the establishment
  of foreign-trade zones and ports of entry in connection with enterprise
  zones so designated, the Foreign-Trade Zone Board and the Secretary of the
  Treasury shall approve the applications, to the maximum extent practicable,
  consistent with their respective statutory responsibilities.
Subtitle E--Repeal of Title VII of the Housing and Community Development
Act of 1987
SEC. 341. REPEAL.
  Title VII of the Housing and Community Development Act of 1987 is hereby
  repealed.
TITLE IV--APPRAISAL REQUIREMENTS AND RTC AND FDIC INVENTORY PROPERTY
SEC. 401. EXTENSION OF PHASE-IN FOR STATE LICENSED APPRAISALS TO 1992.
  Section 1119(a) of the Financial Institutions Reform, Recovery, and
  Enforcement Act of 1989 (12 U.S.C. 3348(a)) is amended by striking `1991'
  each place it appears and inserting `1992'.
SEC. 402.  LIMITATION ON RTC AND FDIC PROPERTY DISPOSAL BASED ON LOCAL REAL
ESTATE MARKETS.
  (a) STUDY- The Secretary of Housing and Urban Development shall annually
  conduct a study of the real estate market conditions within each local
  market area (as established under subsection (b)) to determine whether
  the sale of inventory properties by the Resolution Trust Corporation and
  the Federal Deposit Insurance Corporation is affecting or will affect the
  value of real estate within the local market areas. The study shall be
  carried out not later than January 31 of each year.
  (b) LOCAL MARKET AREAS- For purposes of this section, the Secretary shall
  divide the geographical area of the United States into local market areas,
  which shall be geographical areas having related real estate market and
  valuation conditions, trends, and characteristics. A local market area
  may include areas in more than one State.
  (c) DETERMINATION- Upon the conclusion of each annual study under this
  section, the Secretary shall determine whether sales of inventory properties
  in each local market area is resulting or will result in a substantial
  decrease in the value of real estate in the local market area. Not
  later than January 31 of each year, the Secretary shall submit to the
  Congress, the Federal Deposit Insurance Corporation, and the Resolution
  Trust Corporation, a report describing the results and conclusions of the
  study conducted under subsection (a) for the year and containing written
  determinations under this subsection for each local market area.
  (d) LIMITATION ON SALES- Upon the submission by the Secretary, in any
  year, of a determination under subsection (c) that the sales of inventory
  properties in a local market area are resulting or will result in a
  substantial decrease in the value of real estate in the local market area,
  notwithstanding any other law, the Federal Deposit Insurance Corporation
  and the Resolution Trust Corporation shall withhold from sale or other
  disposition any inventory properties located in such local market area
  until a subsequent determination under subsection (c) that the sale of such
  properties in the local market area are not decreasing and will not decrease
  the value of real estate in the local market area. During any period in which
  any inventory properties are withheld from sale under this subsection, the
  Federal Deposit Insurance Corporation and the Resolution Trust Corporation
  shall manage and maintain the properties in accordance with applicable laws.
  (e) CONSIDERATIONS- In conducting the study under subsection (a) and
  making determinations for each local market area under subsection (c),
  the Secretary shall determine and consider--
  (1) the number of properties in each local market area (and the number of
  residential dwelling units, if any, in such properties) that the Resolution
  Trust Corporation and the Federal Deposit Insurance Corporation expect to
  acquire in inventory;
  (2) the number of properties in each local market area (and the number
  of dwelling units, if any, in such properties) that mortgage lending
  institutions expect to acquire in inventory during the ensuing year;
  (3) the number of inventory properties in each local market area (and the
  number of dwelling units, if any, in such properties) that are held by the
  Resolution Trust Corporation and the Federal Deposit Insurance Corporation
  at such time;
  (4) the number of properties in each local market area (and the number
  of dwelling units, if any, in such properties) that are held by mortgage
  lending institutions;
  (5) the number of properties in each local market area (and the number
  of dwelling units, if any, in such properties), not including inventory
  properties, that are listed for sale at such time; and
  (6) real estate values and trends for each local market area, based on
  the best estimates of the Secretary and other published real estate values
  and trend reports.
  (f) CONSULTATION- In conducting the study under subsection (a) and making
  determinations under subsection (c), the Secretary shall consult with
  mortgage lenders, real estate agents, real estate auctioneers, real estate
  appraisers, and other individuals in each local market area to determine
  the condition of the real estate market in the local market area and the
  effect of the sale of inventory properties on the real estate market.
  (g) DEFINITIONS- For purposes of this section:
  (1) INVENTORY PROPERTY- The term `inventory property' means a residential
  or commercial property--
  (A) to which the Resolution Trust Corporation or the Federal Deposit
  Insurance Corporation has acquired title in the capacity of conservator
  or receiver; and
  (B) for which the Resolution Trust Corporation or the Federal Deposit
  Insurance Corporation, as applicable, has not made a commitment to sell
  or otherwise dispose of the property.
  (2) SECRETARY- The term `Secretary' means the Secretary of Housing and
  Urban Development.
  (3) STATE- The terms `United States' and  `State' mean the States of the
  United States, the District of Columbia, any territory of the United
  States, Puerto Rico, Guam, American Samoa, the Trust Territory of the
  Pacific Islands, the Virgin Islands, and the Northern Mariana Islands.
TITLE V--TAX-FREE WITHDRAWALS FROM INDIVIDUAL RETIREMENT ACCOUNTS FOR FIRST
HOME PURCHASES
SEC. 501. TAX-FREE IRA WITHDRAWAL FOR FIRST HOME PURCHASE.
  (a) GENERAL RULE- Subsection (d) of section 408 is amended by adding at
  the end thereof the following new paragraph:
  `(8) DISTRIBUTIONS USED TO PURCHASE FIRST HOME- In the case of a qualified
  first-time homebuyer distribution (as defined in subsection (p))--
  `(A) the amount of such distribution shall not be includible in gross
  income; and
  `(B) section 72(t) shall not apply.'
  (b) QUALIFIED FIRST-TIME HOMEBUYER DISTRIBUTION- Section 408 is amended
  by redesignating subsection (p) as subsection (q) and by inserting after
  subsection (o) the following new subsection:
  `(p) QUALIFIED FIRST-TIME HOMEBUYER DISTRIBUTION-
  `(1) IN GENERAL- For purposes of this subsection and subsection (d)(8),
  the term `qualified first-time homebuyer distribution' means any payment
  or distribution received by a first-time homebuyer (or by a parent or
  grandparent of a first-time homebuyer) from an individual retirement plan to
  the extent such payment or distribution is used by the individual receiving
  the payment or distribution before the close of the 60th day after the day on
  which such payment or distribution is received to pay qualified acquisition
  costs with respect to a principal residence for such first-time homebuyer.
  `(2) 25 PERCENT ACCOUNT LIMIT-
  `(A) IN GENERAL- A distribution shall not be treated as a qualified
  first-time homebuyer distribution to the extent it exceeds the amount
  (if any) by which--
  `(i) 25 percent of the sum of--
  `(I) the aggregate balance of individual retirement accounts established
  on behalf of an individual, plus
  `(II) the aggregate amounts previously treated as qualified first-time
  homebuyer distributions, exceeds
  `(ii) the amount determined under clause (i)(II).
  `(B) LIMITATION NOT TO APPLY FOR PURPOSES OF SECTION 72(t)- Section 72(t)
  shall not apply to any distribution which would be a qualified first-time
  homebuyer distribution but for the limitations of subparagraph (A).
  `(3) SPECIAL RULES-
  `(A) BASIS REDUCTION- The basis of any principal residence described
  in paragraph (1) shall be reduced by any amount excluded from the gross
  income of such first-time homebuyer (or parent or grandparent thereof)
  by reason of this section.
  `(B) RECOGNITION OF GAIN AS ORDINARY INCOME-
  `(i) IN GENERAL- Notwithstanding any other provision of this subtitle,
  except as provided in clause (ii)--
  `(I) gain (if any) on the sale or exchange of a principal residence to
  which paragraph (1) applies shall, to the extent of the amount excluded
  from gross income under this section, be treated as ordinary income by
  such individual, and
  `(II) section 72(t) shall apply to such amount.
  `(ii) EXCEPTION- Clause (i) shall not apply to any taxable year to the
  extent of any amount which, before the due date (without extensions) for
  filing the return for such year, the taxpayer contributes to an individual
  retirement account. Such amount shall not be taken into account for purposes
  of any provision of this title relating to excess contributions.
  `(iii) COORDINATION WITH OTHER PROVISIONS- In the event all or part of the
  gain referred to in clause (i) is treated as ordinary income under any other
  provision of this subtitle, such provision shall be applied before clause
  (i).
  `(C) SPECIAL RULE WHERE DELAY IN ACQUISITION- If--
  `(i) any amount is paid or distributed from an individual retirement account
  to an individual for purposes of being used as provided in paragraph (1), and
  `(ii) by reason of a delay in the acquisition of the residence, such amount
  cannot be so used,
the amount so paid or distributed may be paid into an individual retirement
account as provided in section 408(d)(3)(A)(i) without regard to section
408(d)(3)(B), and, if so paid into such other plan, such amount shall not
be taken into account in determining whether section 408(d)(3)(A)(i) applies
to any other amount.
  `(D) DEFINITIONS- For purposes of this paragraph--
  `(i) QUALIFIED ACQUISITION COSTS- The term `qualified acquisition
  costs' means the costs of acquiring, constructing, or reconstructing a
  residence. Such term includes any usual or reasonable settlement, financing,
  or other closing costs.
  `(ii) FIRST-TIME HOMEBUYER- The term `first-time homebuyer' means any
  individual if such individual (and if married, such individual's spouse)
  had no present ownership interest in a principal residence during the
  3-year period ending on the date of acquisition of the principal residence
  to which this paragraph applies.
  `(iii) PRINCIPAL RESIDENCE- The term `principal residence' has the same
  meaning as when used in section 1034.
  `(iv) DATE OF ACQUISITION- The term `date of acquisition' means the date--
  `(I) on which a binding contract to acquire the principal residence to
  which paragraph (1) applies is entered into, or
  `(II) on which construction or reconstruction of such a principal residence
  is commenced.'
  (c) EFFECTIVE DATE- The amendments made by this section shall apply to
  taxable years beginning after December 31, 1991.
TITLE VI--TREATMENT OF RENTAL REAL PROPERTY OPERATIONS UNDER PASSIVE LOSS RULES
SEC. 601. TREATMENT OF RENTAL REAL PROPERTY OPERATIONS UNDER PASSIVE LOSS RULES
  (a) IN GENERAL- Subsection (c) of section 469 (relating to passive activity
  losses and credits limited) is amended by adding at the end the following
  new paragraphs:
  `(7) TAXPAYERS ENGAGED IN THE REAL PROPERTY BUSINESS- In the case of
  a taxpayer engaged in the real property business, the determination of
  what constitutes an activity and whether an activity is a passive activity
  shall be made by treating the taxpayer's rental real property operations,
  undertakings and activities in the same manner as nonrental trade or
  business operations, undertakings, and activities.
  `(8) INDIVIDUALS ENGAGED IN THE REAL PROPERTY BUSINESS- For purposes of
  paragraph (7), an individual is engaged in the real property business if--
  `(A) such individual spends at least 50 percent of such individual's
  working time in real property operations; and
  `(B) such individual spends more than 500 hours during the taxable year
  in real property operations.
  `(9) REAL PROPERTY OPERATIONS- For purposes of paragraph (8), the term `real
  property operations' means any real property development, redevelopment,
  construction, reconstruction, acquisition, conversion, rental, operation,
  management, leasing, brokerage, appraisal, and finance operations.
  `(10) WORKING TIME- For purposes of paragraph (8), the term `working
  time' means any time spent as an employee, sole proprietor, S corporation
  shareholder, partner in a partnership, or beneficiary of a trust or estate.
  `(11) CLOSELY HELD C CORPORATIONS ENGAGED IN THE REAL PROPERTY BUSINESS-
  For purposes of paragraph (7), a closely held C corporation is engaged in
  the real property business if--
  `(A) 1 or more shareholders owning stock representing more than 50 percent
  (by value) of the outstanding stock of such corporation materially
  participate in the aggregate real property activities of such corporation; or
  `(B) such corporation meets the requirements of section 465(c)(7)(C)
  (without regard to clause (iv)) with respect to the aggregate real property
  activities of such corporation.'
  (b) CONFORMING AMENDMENTS-
  (1) Paragraph (2) of section 469(c) is amended to read as follows:
  `(2) PASSIVE ACTIVITY INCLUDES CERTAIN RENTAL ACTIVITIES- Except for
  rental activities treated in the same manner as nonrental trade or
  business activities pursuant to paragraph (7), each rental activity is a
  passive activity without regard to whether or not the taxpayer materially
  participates in the rental activity.'
  (2) Paragraph (4) of such section 469(c) is amended to read as follows:
  `(4) MATERIAL PARTICIPATION NOT REQUIRED FOR PARAGRAPH (3)- Paragraph (3)
  shall be applied without regard to whether or not the taxpayer materially
  participates in the activity.'
  (c) EFFECTIVE DATE- The amendments made by this section shall apply to
  taxable years beginning after December 31, 1991.
TITLE VII--PRODUCTION INVESTMENT INCENTIVE
SEC. 701. CHANGES IN ELECTION TO EXPENSE CERTAIN DEPRECIABLE BUSINESS ASSETS.
  (a) INCREASE IN LIMIT FOR PRODUCTIVE EQUIPMENT- Paragraph (1) of section
  179(b) of the Internal Revenue Code of 1986 (relating to election to
  expense certain depreciable property) is amended by striking `$10,000.' and
  inserting `$10,000 ($250,000 in the case of section 179 property for use
  as an integral part of manufacturing, production, or extraction).'
  (b) MEDIUM-SIZED COMPANIES ELIGIBLE- Paragraph (2) of section 179(b)
  of such Code is amended by striking `$200,000.' and inserting `$200,000
  ($1,000,000 in the case of section 179 property for use as an integral
  part of manufacturing, production, or extraction).'
  (c) DEDUCTIONS UNDER SECTION 179 EXCLUDED FROM MINIMUM TAX-
  (1) Paragraph (1) of section 56(a) of such Code is amended by adding at
  the end thereof the following new subparagraph:
  `(E) SPECIAL RULE FOR SECTION 179 PROPERTY- In the case of section 179
  property (as defined in section 179(d)), the deduction allowable under
  section 179 shall be treated as allowable under the alternative system of
  section 168(g).'
  (2) Subparagraph (A) of section 56(g)(4) of such Code is amended by adding
  at the end thereof the following new clause:
  `(vi) SPECIAL RULE FOR SECTION 179 PROPERTY- In the case of section 179
  property (as defined in section 179(d)), the deduction allowable under
  section 179 shall be treated as allowable under the alternative system of
  section 168(g).'
  (d) EFFECTIVE DATE- The amendments made by this section shall apply to
  taxable years beginning after December 31, 1990.
TITLE VIII--FREEZE ON BANKS' TOTAL CAPITAL STANDARD
SEC. 801. MINIMUM TOTAL CAPITAL.
  (a) IN GENERAL- Notwithstanding any other provision of law, the minimum
  amount of total capital which any insured depository institution may
  be required to maintain, pursuant to any regulation prescribed by an
  appropriate Federal banking agency, shall not exceed 7.25 percent of the
  total assets of such institution.
  (b) DEFINITIONS- For purposes of this section, the terms `appropriate Federal
  banking agency' and `insured depository institution' have the meanings
  given to such terms in section 3 of the Federal Deposit Insurance Act.
TITLE IX--RESOLUTION TRUST CORPORATION REFINANCING
SECTION. 901. SHORT TITLE.
  This title may be cited as the `Resolution Trust Corporation Refinancing
  Act of 1991'.
SEC. 902. FUNDING FOR RESOLUTION OF FAILED THRIFTS.
  Section 21A(i)(2) of the Federal Home Loan Bank Act (12 U.S.C. 1441(i)(2))
  is amended by striking `$30,000,000,000' and inserting instead
  `$110,000,000,000'.
SEC. 903. RTC WORKING CAPITAL BORROWING LIMIT.
  Section 21A(j)(1) of the Federal Home Loan Bank Act (12 U.S.C. 1441a(j)(1))
  is amended to read as follows:
  `(1) IN GENERAL- The total amount of outstanding obligations of the
  Corporation may not exceed the lesser of--
  `(A) $160,000,000,000; or
  `(B) the amount that is equal to the Corporation's estimate of the fair
  market value of assets held by the Corporation.'.
SEC. 904. APPOINTMENT BY DIRECTOR OF THE OFFICE OF THRIFT SUPERVISION.
  Section 11(c)(6)(B) of the Federal Deposit Insurance Act (12
  U.S.C. 1821(c)(6)(B)) is amended--
  (a) in clause (i)--
  (1) by striking `3-year'; and
  (2) by inserting `and ending September 30, 1993' after `1989'; and
SEC. 905. EXTENSION OF RESOLUTION TRUST CORPORATION DUTY.
  Section 21A(b)(3)(A)(ii)(II) of the Federal Home Loan Bank Act (12
  U.S.C. 1441a(b)(3)(A)(ii)(II)) is amended--
  (a) by striking `within the 3-year' and inserting instead `during the'; and
  (b) by inserting `and ending September 30, 1993' after `Act'.
TITLE X--RESTRUCTURING OF THE OVERSIGHT BOARD AND THE RESOLUTION TRUST
CORPORATION
SEC. 1001. SHORT TITLE.
  This title may be cited as the `Resolution Trust Corporation Restructuring
  Act of 1991'.
SEC. 1002. ACCOUNTABILITY OF OVERSIGHT BOARD.
  Section 21A(a)(2) of the Federal Home Loan Bank Act (12 U.S.C. 1441a(a)(2))
  is amended--
  (a) by striking `and be accountable for'; and
  (b) by inserting `and shall be accountable for the duties assigned to
  the Oversight Board by this Act' after `(hereinafter referred to in this
  section as the `Corporation')'.
SEC. 1003. RESTRUCTURING OF OVERSIGHT BOARD.
  Section 21A(a)(3) of the Federal Home Loan Bank Act (12 U.S.C. 1441a(a)(3))
  is amended--
  (a) in subparagraph (A), by striking `5 members' and inserting `5 voting
  members and 2 non-voting members. The non-voting members shall be the
  Chairperson of the Board of Directors of the Federal Deposit Insurance
  Corporation and the chief executive officer of the Corporation. The voting
  members shall be'; and
  (b) in subparagraph (E) by striking `3 members' and inserting instead
  `3 voting members'.
SEC. 1004. OVERSIGHT BOARD DUTIES AND AUTHORITIES.
  Section 21A(a)(6) of the Federal Home Loan Bank Act (12 U.S.C. 1441a(a)(6))
  is amended--
  (a) by amending subparagraph (A) to read as follows:
  `(A) To review overall strategies, policies, and goals established by the
  Corporation for its activities. After consultation with the Corporation,
  the Oversight Board may require the modification of any such overall
  strategies, policies, and goals. Overall strategies, policies, and goals
  shall include such items as--
  `(i) overall strategies, policies, and goals for case resolutions, the
  management and disposition of assets, the use of private contractors,
  and the use of notes, guarantees or other obligations by the Corporation;
  `(ii) overall financial goals, plans, and budgets; and
  `(iii) restructuring agreements described in subsection (b)(11)(B).';
  (b) in subparagraph (B), by inserting `financial plans, budgets, and'
  after `implementation';
  (c) by amending subparagraph (C) to read as follows:
  `(C) To review all rules, regulations, standards, policies, principles,
  procedures, guidelines, and statements that may be adopted or announced by
  the Corporation. After consultation with the Corporation, the Oversight
  Board may require the modification of any such rules, regulations,
  standards, policies, principles, procedures, guidelines, or statements
  that it deems materially inconsistent with overall strategies, policies,
  or goals established by or for the Corporation, or with the policies or
  purposes of applicable law, or with the efficient and economical discharge
  of the Corporation's duties, or with sound public policy. In all cases, the
  rules, regulations, standards, policies, principles, procedures, guidelines,
  and statements relating to the Corporation's powers and activities as
  a conservator or receiver shall be consistent with the Federal Deposit
  Insurance Act. The provisions of this subparagraph shall not apply to
  internal administrative policies and procedures (including but not limited
  to such matters as personnel practices, divisions and organization of
  staffing, delegations of authority, and practices respecting day-to-day
  administration of the Corporation's affairs) and determinations or actions
  described in paragraph (8) of this subsection.'; and
  (d) by adding at the end thereof the following new subparagraph:
  `(K) To appoint (and at any time to remove) a person as chief executive
  officer of the Corporation, to appoint a person as a member of the Board
  of Directors of the Corporation pursuant to subsection (b)(8)(A)(iii)
  of this section, and to appoint the successors to each.'.
SEC. 1005. LIMITATION OF OVERSIGHT BOARD AUTHORITY.
  Section 21A(a)(8)(A) of the Federal Home Loan Bank Act (12
  U.S.C. 1441a(a)(8)(A)) is amended--
  (a) by striking `(i) involving' and inserting instead `involving (i)'; and
  (b) by striking `provide general policies and procedures' and inserting
  instead `review overall strategies, policies, and goals established by
  the Corporation'.
SEC. 1006. DUTIES OF THE RESOLUTION TRUST CORPORATION.
  Section 21A(b)(3) of the Federal Home Loan Bank Act (12 U.S.C. 1441a(b)(3))
  is amended--
  (a) by redesignating subparagraph (D) as subparagraph (E); and
  (b) by inserting after subparagraph (C) the following new subparagraph:
  `(D) To develop and establish overall strategies, policies, and goals
  for the Corporation, subject to review by the Oversight Board pursuant to
  subsection (a)(6)(A) of this section.'.
SEC. 1007. MANAGEMENT OF THE RESOLUTION TRUST CORPORATION.
  Section 21A(b)(1)(C) of the Federal Home Loan Bank Act (12
  U.S.C. 1441a(b)(1)(C)) is amended to read as follows:
  `(C) MANAGEMENT BY BOARD OF DIRECTORS- The Corporation shall be managed
  by or under the direction of its Board of Directors.'.
SEC. 1008. RESTRUCTURING OF THE RESOLUTION TRUST CORPORATION BOARD OF
DIRECTORS.
  Section 21A(b)(8) of the Federal Home Loan Bank Act (12 U.S.C. 1441a(b)(8))
  is amended--
  (a) by amending subparagraph (A) to read as follows:
  `(A) IN GENERAL- Except as provided in subsection (m), the Board of
  Directors of the Corporation shall consist of--
  `(i) the members of the Board of Directors of the Federal Deposit Insurance
  Corporation;
  `(ii) the chief executive officer of the Corporation; and
  `(iii) one other person appointed by the Oversight Board after consultation
  with the Corporation, whose term of office shall be determined by the
  Oversight Board.'; and
  (b) by amending subparagraph (B) to read as follows:
  `(B) CHAIRPERSON- The Corporation's chief executive officer shall serve
  as the Chairperson of the Board of Directors of the Corporation.'.
SEC. 1009. STAFF OF THE RESOLUTION TRUST CORPORATION; CHIEF EXECUTIVE OFFICER.
  Section 21A(b)(9) of the Federal Home Loan Bank Act (12 U.S.C. 1441a(b)(9))
  is amended--
  (a) in subparagraph (A), by striking `Unless the Oversight Board exercises
  its authority under subsection (m), the' and inserting instead `The';
  (b) in subparagraph (B), by amending clause (i) to read as follows:
  `(i) FDIC- The Corporation shall use employees (selected by the Corporation)
  of the Federal Deposit Insurance Corporation and the Federal Deposit
  Insurance Corporation shall provide such personnel to the Corporation for its
  use. Notwithstanding the foregoing, the Federal Deposit Insurance Corporation
  need not provide to the Corporation any employee of the Federal Deposit
  Insurance Corporation who was employed by the Federal Deposit Insurance
  Corporation on the date of enactment of the Resolution Trust Corporation
  Restructuring Act of 1991 and who had not theretofore been provided to the
  Corporation by the Federal Deposit Insurance Corporation. In addition to
  persons otherwise employed by the Federal Deposit Insurance Corporation,
  the Federal Deposit Insurance Corporation shall employ, and shall provide
  to the Corporation, such persons as the Corporation may request from time
  to time. Federal Deposit Insurance Corporation employees provided to the
  Corporation shall be subject to the direction and control of the Corporation
  and any of them may be returned to the Federal Deposit Insurance Corporation
  at any time by the Corporation in the discretion of the Corporation. The
  Corporation shall reimburse the Federal Deposit Insurance Corporation for the
  actual costs incurred in providing such employees. Any permanent employee
  of the Federal Deposit Insurance Corporation who was performing services
  on behalf of the Corporation immediately prior to the enactment of the
  Resolution Trust Corporation Restructuring Act of 1991 shall continue to
  be provided to the Corporation after enactment unless the chief executive
  officer determines the services of any such employee to be unnecessary, in
  which case such employee shall be returned to a similar position performing
  services on behalf of the Federal Deposit Insurance Corporation. In any
  ensuing reduction-in-force or reorganization within the Federal Deposit
  Insurance Corporation, any such employee shall compete with the same rights
  as any other Federal Deposit Insurance Corporation employee. The Corporation
  may use administrative services of the Federal Deposit Insurance Corporation
  and, if it does so, shall reimburse the Federal Deposit Insurance Corporation
  for the actual costs of providing such services.'; and
  (c) by adding at the end thereof the following new subparagraph:
  `(C) CHIEF EXECUTIVE OFFICER- The Corporation shall have a chief executive
  officer appointed by, and removable at any time by, the Oversight Board. The
  chief executive officer shall be an employee of the Federal Deposit Insurance
  Corporation provided to the Corporation for that purpose and shall receive
  such compensation and benefits as the Corporation's Board of Directors may
  determine from time to time in accordance with the laws and regulations
  applicable to the personnel practices of the Federal Deposit Insurance
  Corporation. The Corporation shall define such chief executive officer's
  duties and authorities in such manner, and the  Corporation's Board of
  Directors shall provide the chief executive officer with such powers, as
  shall be adequate for the chief executive officer's efficient management
  and administration of the Corporation's day-to-day affairs. Among such
  duties, authorities, and powers shall be the duty, authority, and power,
  subject to the ultimate direction of the Corporation's Board of Directors
  (and subject to the exercise by the Oversight Board of its powers, duties,
  and authorities with respect to the Corporation):
  `(i) To specify the duties, authorities, and powers of other officers of
  the Corporation and the duties, authorities, and powers of other persons,
  including employees of the Federal Deposit Insurance Corporation, acting
  on behalf of the Corporation.
  `(ii) To make and modify staffing plans and organizational and management
  structures of the Corporation to most the goals of this Act and other
  applicable laws.
  `(iii) To direct all aspects of the Corporation's operations in a manner
  consistent with general practices of the private sector and with this Act
  and other applicable law.
  `(iv) To modify and implement existing standards, policies, principles,
  procedures, guidelines, and statements in order to optimize the Corporation's
  performance, including but not limited to its performance in the disposition
  of assets.
  `(v) To develop, adopt, and implement new standards, policies, principles,
  procedures, guidelines, and statements in order to optimize the Corporation's
  performance, including but not limited to its performance in the disposition
  of assets.
  `(vi) To set and adjust the compensation and benefits of persons (other
  than the chief executive officer) acting on behalf of the Corporation in
  accordance with laws and regulations applicable to the personnel practices
  of the Federal Deposit Insurance Corporation.
  `(vii) To choose employees of the Federal Deposit Insurance Corporation to
  be provided to the Corporation by the Federal Deposit Insurance Corporation,
  to request that the Federal Deposit Insurance Corporation employ specified
  persons for that purpose, and to return at any time to the Federal Deposit
  Insurance Corporation any such employee so provided.'.
SEC. 1010. RIGHTS OF EMPLOYEES UPON SUNSET.
  The Financial Institutions Reform, Recovery, and Enforcement Act of 1989
  is amended--
  (a) in section 404(9)--
  (1) by striking `section 21A(m)' and inserting instead `section 21A(o)';
  (2) by striking `of such Corporation shall be transferred to' and inserting
  instead `of the Federal Deposit Insurance Corporation assigned to the
  Resolution Trust Corporation shall be reassigned to a position within'; and
  (3) by striking `of this subsection' and inserting instead `of this
  section'; and
  (b) in section 404(2)--
  `(B) To provide for a chief executive officer to be appointed by the
  Oversight Board.'; and
  (B) in subparagraph (N), by deleting `on behalf of the Federal Deposit
  Insurance Corporation, acting as exclusive manager'; and
  (3) in paragraph (12)--
  (A) in subparagraph (A), by amending the last sentence to read `The
  Corporation may establish overall strategies, policies, and goals for its
  activities and may issue such rules, regulations, standards, policies,
  principles, procedures, guidelines, and statements as the Corporation
  considers necessary or appropriate to carry out its duties.'; and
  (B) by amending subparagraph (B) to read as follows:
  `(B) REVIEW ETC- Such overall strategies, policies, and goals, and such
  rules, regulations, standards, policies, principles, procedures, guidelines,
  and statements--
  `(i) shall be provided by the Corporation to the Oversight Board promptly
  or prior to publication or announcement to the extent practicable;
  `(ii) shall be subject to the review of the Oversight Board as provided
  in subsection (a)(6)(A) (with respect to overall strategies, policies,
  and goals) or subsection (a)(6)(C) (with respect to rules, regulations,
  standards, policies, principles, procedures, guidelines, and statements); and
  `(iii) shall be promulgated pursuant to subchapter II of chapter 5 of
  title 5, United States Code.';
  (c) in subsection (m)--
  (1) in paragraph (1)--
  (A) by striking `Notwithstanding any other provision of law, the Oversight
  Board has the ultimate authority to supervise the Corporation and is
  ultimately accountable for the administration of the Corporation.'; and
  (B) by striking `Federal Deposit Insurance Corporation (or any replacement)
  from its position as exclusive manager of the Corporation and from all
  of its responsibilities and authorities to act for the Corporation,'
  and inserting instead `entire Board of Directors of the Corporation'; and
  (2) in paragraph (3), by striking `Federal Deposit Insurance' and inserting
  `entire Board of Directors of the'; and
  (d) by amending subsection (n) to read as follows:
  `(n) OPERATION OF CORPORATION AFTER EXERCISE OF POWERS UNDER SUBSECTION
  (m)- If the Oversight Board exercises authority under subsection (m),
  the Oversight Board shall--
  `(1) select a new Board of Directors and a new chief executive officer
  for the Corporation; and
  `(2) provide to Congress, not later than 60 days before the removal of the
  Board of Directors of the Corporation, the identity of the new Board of
  Directors and the new chief executive officer selected pursuant to paragraph
  (1).'.
TITLE XI--CLARIFICATION OF TREATMENT OF CERTAIN FSLIC FINANCIAL ASSISTANCE
  (a) GENERAL RULE- For purposes of chapter 1 of the Internal Revenue Code
  of 1986--
  (1) any FSLIC assistance payable with respect to any loss of principal,
  capital, or similar amount upon the disposition of any asset shall be taken
  into account as compensation for such loss for purposes of section 165 of
  such Code, and
  (2) any FSLIC assistance payable with respect to any debt shall be taken
  into account for purposes of section 166, 585, or 593 of such Code in
  determining whether such debt is worthless (or the extent to which such debt
  is worthless) and in determining the amount of any addition to a reserve
  for bad debts arising from the worthlessness or partial worthlessness of
  such debts.
  (b) FSLIC ASSISTANCE- For purposes of this section the term `FSLIC
  assistance' means any money or other property provided with respect
  to a domestic building and loan association by the Federal Savings and
  Loan Insurance Corporation, the FSLIC Resolution Fund, or the Resolution
  Trust Corporation pursuant to section 406(f) of the National Housing Act
  or section 21A of the Federal Home Loan Bank Act (or under any similar
  provision of law).
  (c) Effective Date-
  (1) IN GENERAL- Except as provided in the subsection, the provisions of
  this section shall apply to FSLIC financial assistance paid with respect
  to any asset disposed of on or after January 1, 1991.
  (2) EXCEPTIONS- The provisions of this section shall not apply to--
  (A) any payment to which the amendments made by section 1401(a)(3) of the
  Financial Institution Reform, Recovery, and Enforcement Act of 1989 apply,
  (B) any amount received by a taxpayer to the extent that the Internal
  Revenue Service has issued, in writing, to the taxpayer prior to January 1,
  1991, an Internal Revenue Service ruling or a closing agreement expressly
  providing that such amount shall not be taken into account in determining
  the amount of any loss under section 165 or in determining the worthlessness
  or partial worthlessness of an asset for purposes of section 166, 585,
  or 593 of such Code, and
  (C) any FSLIC financial assistance provided with respect to deductions or
  losses recognized prior to the commitment to pay such assistance.
  (d) CONTRACT RIGHTS- Nothing in this section shall be construed as affecting
  any private contractual rights and remedies that are otherwise available
  to parties of agreements for the provision of Federal financial assistance.