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"(4) For minimum tax for taxpayers other than corporations, see section 55.".

(2) Subsection (d) of section 443 (relating to adjustment in computing minimum tax for short periods) is amended to read as follows:

"(d) ADJUSTMENT IN COMPUTING MINIMUM TAX FOR TAX PREFERENCES.-If a return is made for a short period by reason of subsection (a), then

"(1) in the case of a taxpayer other than a corporation, the alternative minimum taxable income for the short period shall be placed on an annual basis by multiplying that amount by 12 and dividing the result by the number of months in the short period, and the amount computed under paragraph (1) of section 55(a) shall be the same part of the tax computed on the annual basis as the number of months in the short period is of 12 months; and

"(2) in the case of a corporation, the $10,000 amount specified in section 56 (relating to minimum tax for tax preferences), modified as provided by section 58, shall be reduced to the amount which bears the same ratio to such specified amount as the number of days in the short period bears to 365.".

(3) Subsection (d) of section 511 (relating to tax preferences) is amended to read as follows:

"(d) TAX PREFERENCES.—

“(1) ORGANIZATIONS TAXABLE AT CORPORATE RATES.-If an organization is subject to tax on unrelated business taxable income pursuant to subsection (a), the tax imposed by section 56 shall apply to such organizations with respect to items of tax preference which enter into the computation of unrelated business taxable income in the same manner as section 56 applies to corporations.

"(2) ORGANIZATIONS TAXABLE AS TRUSTS.-If an organization is subject to tax on unrelated business taxable income pursuant to subsection (b), the taxes imposed by section 55 and section 56 (as the case may be) shall apply to such organization with respect to items of tax preference which enter into the computation of unrelated business taxable income."

(4) Paragraph (1) of section 871(b) (relating to tax on nonresident alien individuals) is amended by inserting ", section 55," after "section 1".

(5) Subsection (b) of section 877 (relating to expatriation to avoid tax) is amended by inserting ", section 55," after "section 1".

(6) Section 904(h) (relating to cross references) is amended to read as follows:

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"(1) For increase of limitation under subsection (a) for taxes paid with respect to amounts received which were included in the gross income of the taxpayer for a prior taxable year as a United States shareholder with respect to a controlled foreign corporation, see section 960(b).

"(2) For modification of limitation under subsection (a) for purposes of determining the amount of credit which can be taken by an individual against the alternative minimum tax, see section 55(c).".

(7) Paragraph (1) of section 6015(c) (defining estimated tax) is amended by striking out "section 56" and inserting in lieu thereof "section 55 or 56".

(8) Subparagraph (A) of section 6362(b) (relating to qualified individual income taxes) is amended by striking out "section 56" and inserting in lieu thereof "section 55 or 56".

(9) Paragraph (1) of section 6654(f) (relating to tax computed after applications of credit against tax) is amended by striking out "section 56" and inserting in lieu thereof "section 55 or 56".

(f) CLERICAL AMENDMENT.-The table of sections for part VI of subchapter A of chapter 1 is amended by adding at the beginning thereof the following new item:

"Sec. 55. Alternative Minimum Tax for Taxpayers other than Corporations.".

(g) EFFECTIVE DATE.-The amendments made by this section shall apply to taxable years beginning after December 31, 1978, except that the amendment made by paragraph (1) of subsection (b) shall apply to sales and exchanges made after July 26, 1978, in taxable years ending after such date.

SEC. 422. TREATMENT OF INTANGIBLE DRILLING COSTS FOR PURPOSES OF THE MINIMUM TAX.

Subsection (b) of section 308 of the Tax Reduction and Simplification Act of 1977 is amended by striking out ", and before January 1, 1978".

SEC. 423. AMENDMENT TO DEFINITION OF FOREIGN SOURCE CAPITAL GAIN TAX PREFERENCES.

(a) GENERAL RULE.-Section 58(g)(2) (relating to capital gains and stock options) is amended by striking out the period at the end of the last sentence thereof, and inserting the following: "; except that, for purposes of subparagraph (B), preferential treatment shall be deemed not to be accorded to capital gain recognized on the receipt of property (other than money) in exchange for stock of a corporation which is engaged in the active conduct of a trade or business within one or more foreign countries or possessions if (i) such exchange is described in section 332, 351, 354, 355, 356, or 361, (ii) such exchange is made in the foreign country or possession in which such corporation's business is primarily carried on, (iii) such exchange is not subject to tax by such foreign country or possession because it is regarded under the laws of such country or possession as a transaction in which gain or loss is either not realized or not recognized, and (iv) such gain, if it had been realized and recognized under the laws of such country or possession, would not have been accorded preferential treatment and would have been subject to tax at a rate of at least 28 percent (30 percent if the exchange occurs before January 1, 1979). For purposes of computing the minimum tax, if any, which may be payable on a subsequent transaction involving any property received upon the exchange of stock described in the preceding sentence, the property received shall be treated as having the same basis in the taxpayer's hands immediately after such exchange as such stock had immediately before such exchange."

(b) EFFECTIVE DATE.-The amendment made by this section shall take effect on the date of the enactment of this Act.

Subtitle C-Maximum Tax Provisions

SEC. 441. TREATMENT OF CAPITAL GAINS FOR PURPOSES OF THE MAXIMUM TAX.

(a) GENERAL RULE.-Subparagraph (b) of section 1348(b)(2) (relating to definition of personal service income) is amended by striking out "items of tax preference (as defined in section 57)" and inserting in lieu thereof "items of tax preference described in subsection (a) (other than paragraph (9)) of section 57".

(b) EFFECTIVE DATE.

(1) GENERAL RULE.-The amendment made by subsection (a) shall apply with respect to taxable years beginning after October 31, 1978.

(2) TRANSITIONAL RULES.-In the case of a taxable year which begins before November 1, 1978, and ends after October 31, 1978, the amendment made by subsection (a) shall apply with respect to so much of the net capital gain of the taxpayer for the taxable year as is attributable to sales or exchanges after October 31, 1978.

SEC. 442. DETERMINATION OF PERSONAL SERVICE INCOME FROM NONSALARIED TRADE OR BUSINESS ACTIVITIES.

(a) IN GENERAL.-Subparagraph (A) of section 1348(b)(1) (relating to personal service income) is amended by adding at the end thereof the following: "For purposes of this subparagraph, section 911(b) shall be applied without regard to the phrase ', not in excess of 30 percent of his share of net profits of such trade or business,'.".

(b) EFFECTIVE DATE.-The amendment made by subsection (a) shall apply with respect to taxable years beginning after December 31, 1978.

TITLE V-OTHER TAX PROVISION

Subtitle A-Administrative Provisions

SEC. 501. REPORTING REQUIREMENTS WITH RESPECT TO CHARGED TIPS. (a) RECORDS.-Section 6001 (relating to notice or regulations requiring records, statements, and special returns) is amended by adding at the end thereof the following: "The only records which an employer shall be required to keep under this section in connection with charged tips shall be charge receipts and copies of statements furnished by employees under section 6053(a)."

(b) RETURNS.-Section 6041 (relating to information at source) is amended by redesignating subsection (d) as subsection (c) and by adding at the end thereof the following new subsection:

"(d) SECTION DOES NOT APPLY TO CERTAIN TIPS.-This section shall not apply to tips with respect to which section 6053(a) (relating to reporting of tips) applies."

(c) EFFECTIVE DATE.-The amendments made by this section shall apply to payments made after December 31, 1978.

SEC. 502. EXTENSION OF OPTIONAL SMALL TAX CASE PROCEDURES AND EXPANSION OF AUTHORITY OF COMMISSIONERS OF TAX COURT.

(a) EXTENDING THE OPTIONAL SMALL TAX CASE PROCEDURES TO ADDITIONAL TAXPAYERS.

(1) IN GENERAL.-Subsection (a) of section 7463 (relating to small tax cases) is amended by striking out paragraphs (1) and (2) and inserting in lieu thereof the following:

"(1) $5,000 for any one taxable year, in the case of the taxes imposed by subtitle A,

"(2) $5,000, in the case of the tax imposed by chapter 11, or "(3) $5,000 for any one calendar year, in the case of the tax imposed by chapter 12,".

(2) CONFORMING AMENDMENTS.—

(A) The heading of section 7463 is amended by striking out "$1,500" and inserting in lieu thereof "$5,000".

(B) the table of sections for part II of subchapter C of chapter 76 is amended by striking out "$1,500" in the item relating to section 7463 and inserting in lieu thereof "$5,000". (b) AUTHORITY TO ASSIGN SMALL TAX CASES TO COMMISSIONERS.— Section 7463 (relating to small tax cases) is amended by adding at the end thereof the following new subsection:

"(g) COMMISSIONERS.-The chief judge of the Tax Court may assign proceedings conducted under this section to be heard by the Commissioners of the court, and the court may authorize a commissioner to make the decision of the court with respect to any such proceeding, subject to such conditions and review as the court may by rule provide."

(c) AUTHORITY OF TAX COURT COMMISSIONERS TO ADMINISTER OATHS, PROCURE TESTIMONY, ETC.-Subsection (a) of section 7456 (relating to the administration of oaths and testimony) is amended—

(1) by striking out "any judge of the Tax Court" each place it appears and inserting in lieu thereof "any judge or commissioner of the Tax Court"; and

(2) by striking out "by the judge" and inserting in lieu thereof "by the judge or commissioner".

(d) Effective Dates.—

(1) SUBSECTION (a).-The amendments made by subsection (a) shall take effect on the first day of the first calendar month beginning more than 180 days after the date of the enactment of this Act.

(2) SUBSECTIONS (b) AND (c).—The amendments made by subsection (b) and (c) shall take effect on the date of the enactment of this Act.

SEC. 503. DISCLOSURE OF RETURN INFORMATION TO CERTAIN FEDERAL OFFICERS AND EMPLOYEES FOR PURPOSES OF TAX ADMINISTRATION, ETC.

(a) IN GENERAL.-Paragraph (2) of section 6103(h) (relating to Department of Justice) is amended

(1) by striking out "A" after the heading, and inserting in lieu thereof "In a matter involving tax administration, a",

(2) by striking out "attorneys" after "open to inspection by or disclosure to", in paragraph (2) and inserting in lieu thereof "officers and employees'

(3) by inserting "any proceeding before a Federal grand jury or" before "preparation for any proceeding" in paragraph (2), (4) by striking out "in a matter involving tax administration" after "or any Federal or State court".

(b) APPLICATION TO TAXPAYER.

(1) Section 6103(h)(2) is amended by striking out subparagraph (A) and inserting in lieu thereof the following:

"(A) the taxpayer is or may be a party to the proceeding, or the proceeding arose out of, or in connection with, determining the taxpayer's civil or criminal liability, or the collection of such civil liability in respect of any tax imposed under this title;".

(2) Section 6103(h)(4) is amended by striking out subparagraph (A) and inserting in lieu thereof the following:

"(A) the taxpayer is a party to the proceeding, or the proceeding arose out of, or in connection with, determining the taxpayer's civil or criminal liability, or the collection of such civil liability, in respect of any tax imposed under this title;".

SEC. 504. REFUND ADJUSTMENTS FOR AMOUNTS HELD UNDER CLAIM OF RIGHT.

(a) IN GENERAL.-Section 6411 (relating to application for adjustment) is amended by adding at the end thereof the following new subsection:

"(d) TENTATIVE REFUND OF TAX UNDER CLAIM OF RIGHT ADJUSTMENT.

"(1) APPLICATION.-A taxpayer may file an application for a tentative refund of any amount treated as an overpayment of tax for the taxable year under section 1341(b)(1). Such application shall be in such manner and form as the Secretary may prescribe by regulation and shall

"(A) be verified in the same manner as an application under subsection (a),

"(B) be filed during the period beginning on the date of filing the return for such taxable year and ending on the date 12 months from the last day of such taxable year, and "(C) set forth in such detail and with such supporting data such regulations prescribe

"(i) the amount of the tax for such taxable year computed without regard to the deduction described in section 1341(a)(2),

"(ii) the amount of the tax for all prior taxable years for which the decrease in tax provided in section 1341(a)(5)(B) was computed,

"(iii) the amount determined under section 1341(a)(5)(B),

"(iv) the amount of the overpayment determined under section 1341(b)(1); and

"(v) such other information as the Secretary may require.

"(2) ALLOWANCE OF ADJUSTMENTS.-Within a period of 90 days from the date on which an application is filed under paragraph (1), or from the last day of the month in which falls the last date prescribed by law (including any extension of time granted the taxpayer) for filing the return for taxable year in which the overpayment occurs, whichever is later, the Secretary shall— "(A) review the application,

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