DETAILED CONTENTS Letter of transmittal........... I. Legislative Background of the Act. II. General Reasons for the Act. III. General Explanation of the Act Title I. Individual Income Tax Provisions A. BASIC RATE STRUCTURE. 1. Tax rate schedules........... 2. Standard deduction... 3. Personal exemption B. EARNED INCOME CREDIT C. EXCLUSIONS FROM INCOME... 1. Unemployment compensation benefits. 3. Scholarships and fellowships. 1. Disallowance of itemized deduction for State 2. Increased floor for itemized deduction for med- 3. Repeal of deduction for certain adoption ex- 49 D. DEDUCTIONS FOR PERSONAL EXPENDITURES...... 4. Deductibility of mortgage interest and taxes E. EXPENSES FOR BUSINESS OR INVESTMENT.. 1. Limitations on deductions for meals, travel, 2. Floor on deductibility of miscellaneous item- F. REPEAL OF POLITICAL CONTRIBUTIONS TAX CREDIT (V) Page Title II. Capital Cost Provisions......... A. DEPRECIATION; REGULAR INVESTMENT TAX CREDIT; 1. Depreciation...... 2. Regular investment tax credit.......... 3. Finance leases...... B. LIMITATION ON GENERAL BUSINESS CREDIT ...... C. RESEARCH AND DEVELOPMENT 1. Tax credit for increasing research expendi- 2. Augmented charitable deduction for certain 3. Tax credit for orphan drug clinical testing........ 1. Trademark and trade name expeditures...... E. REAL ESTATE PROVISIONS 1. Tax credit for rehabilitation expenditures...... 89 89 99 110 110 127 128 128 140 141 143 143 144 145 147 ....... Title IV. Agriculture, Natural Resources, and Energy A. AGRICULTURE PROVISIONS. 181 184 186 187 187 1. Special expensing provisions: soil and water B. OIL, GAS, GEOTHERMAL, AND HARD MINERAL PROPER- 195 1. Intangible drilling costs and mining explora- 195 2. Modification of percentage depletion rules......... 199 199 b. Excess percentage depletion for coal and iron ore... 200 3. Gain from disposition of interests in oil, gas, 202 C. ENERGY-RELATED TAX CREDITS AND OTHER INCENTIVES. 204 7. Working interest in oil and gas property. 250 B. EXTENSION OF AT-RISK RULES TO REAL ESTATE ACTIVI B. CORPORATE DIVIDENDS RECEIVED DEDUCTION 274 276 277 E. EXTRAORDINARY DIVIDENDS RECEIVED BY CORPORATE 280 F. SPECIAL LIMITATIONS ON NET OPERATING Loss AND 288 G. RECOGNITION OF GAIN OR LOSS ON LIQUIDATING SALES 328 355 M. DEFINITION OF PERSONAL HOLDING COMPANY INCOME Title VII. Minimum Tax Provisions. 371 375 384 402 429 MINIMUM TAX ON CORPORATIONS AND INDIVIDUALS 429 436 2. Preferences and adjustments applying to both 439 3. Additional preferences and adjustments (other 445 4. Business untaxed reported profits and adjusted 448 ........ 5. Additional preferences and adjustments apply ing to corporations 462 9. Limitation on the use of foreign tax credits, 470 A. LIMITATIONS ON THE USE OF THE CASH METHOD OF ACCOUNTING 474 .... B. SIMPLIFIED DOLLAR VALUE LIFO METHOD FOR CERTAIN 481 C. INSTALLMENT SALES.... D. CAPITALIZATION RULES FOR INVENTORY, CONSTRUCTION, E. LONG-TERM CONTRACTS 488 501 524 B. INTEREST ON DEBT USED TO PURCHASE OR CARRY TAX- 558 C. SPECIAL RULES FOR NET OPERATING LOSSES OF FINAN- 567 D. REPEAL OF SPECIAL RULES FOR REORGANIZATIONS OF 569 572 Title X. Insurance Products and Companies.......... 575 A. INSURANCE POLICYHOLDERS 575 1. Interest on installment payments of life insur- 2. Tax-exempt organizations engaged in insur- 3. Operations loss deduction of insolvent compa Page 583 nies 592 C. PROPERTY AND CASUALTY INSURANCE COMPANY TAX- 594 1. Inclusion in income of 20 percent of unearned 594 2. Treatment of certain dividends and tax-exempt 598 3. Loss reserves 600 4. Protection against loss account for mutual 618 5. Special exemptions, rates, and deductions of 619 6. Study of treatment of property and casualty 621 7. Physicians' and surgeons' mutual protection Title XI. Pensions and Deferred Compensation; Employee A. LIMITATIONS ON TREATMENT of Tax-Favored SavinGS ...... 4. Unfunded deferred compensation arrange- 5. Deferred annuity contracts 6. Elective contributions under tax-sheltered an- 661 7. Special rules for simplified employee pensions. 3. Vesting standards.. 687 4. Application of nondiscrimination rules to inte- 690 1. Uniform minimum distribution rules 5. Benefits treated as accruing ratably for pur- 6. Modification of rules for benefit forfeitures....... C. TREATMENT OF DISTRIBUTIONS... 2. Uniform additional income tax for early distri- 700 702 703 708 708 712 3. Taxation of distributions..... 719 |