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INTRODUCTION

The bills described in this pamphlet have been scheduled for a public hearing on September 26, 1983, before the Senate Finance Subcommittee on Taxation and Debt Management.

The six bills scheduled for the hearing are: (1) S. 120 (relating to extending the allowance of the special deduction for expenses for removing barriers to the handicapped); (2) S. 1397 (relating to alternative test for qualification for the rehabilitation investment credit); (3) S. 1584 (relating to amendments to the foreign tax credit); (4) S. 1814 (relating to deduction for loss in value of bus operating authorities); (5) S. 1815 (relating to income tax exemption for certain title-holding corporations); and (6) S. 1826 ("Hunger Relief Incentives Tax Act of 1983").

The first part of the pamphlet is a summary of the bills. This is followed in the second part by a more detailed description of the bills, including present law, explanation of provisions, and effective dates.

(1)

I. SUMMARY

1. S. 120-Senators Dole, Symms, Pryor, Grassley, and others

Extend Allowance of Special Deduction for Expenses of
Removing Barriers to the Handicapped

Under present law, the special deduction for qualified expenditures (up to $25,000 per year) incurred for the purpose of making facilities and certain vehicles accessible to, and usable by, handicapped and elderly individuals applies to expenses paid or incurred in taxable years beginning before 1983 (Code sec. 190). The bill would extend the existing deduction provision for two years, i.e., to qualified expenditures paid or incurred in taxable years beginning before 1985.

2. S. 1397-Senators Danforth and Eagleton Alternative Test for Qualification for the Rehabilitation Investment Credit

Present law provides a three-tier investment credit for expenditures incurred in the rehabilitation of certain older buildings (Code sec. 48). The credit is equal to 15 percent of qualified rehabilitation expenditures in the case of buildings at least 30 years old; 20 percent in the case of buildings at least 40 years old; and 25 percent in the case of certified historic structures. Rehabilitations must satisfy certain requirements to be eligible for the credit, including a requirement that at least 75 percent of the external walls of the building must be retained as such after the rehabilitation.

The bill would provide an alternative to the 75-percent externalwall test where at least 50 percent of the external walls of the building are retained as such and certain other requirements are met. The provisions of the bill would apply retroactively to rehabilitation expenditures incurred after May 26, 1983.

3. S. 1584-Senators Danforth, Bentsen, and Huddleston

Amendments to the Foreign Tax Credit

a. Domestic loss recapture rule

Under present law, foreign losses of a U.S. taxpayer are, in effect, recaptured through the foreign tax credit limitation when the taxpayer subsequently derives foreign income (Code sec. 904(f)). The bill would establish a domestic loss recapture rule the operation of which would be similar to the operation of the present foreign loss recapture rule. The bill would treat as foreign income a portion of domestic income derived after to a year in which a domestic loss is incurred. The effect of this recharacterization would

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