HR 99 IHCommentsClose CommentsPermalink

112th CONGRESSCommentsClose CommentsPermalink

1st SessionCommentsClose CommentsPermalink

H. R. 99CommentsClose CommentsPermalink

To amend the Internal Revenue Code of 1986 to reduce taxes by providing an alternative determination of income tax liability for individuals, repealing the estate and gift taxes, reducing corporate income tax rates, reducing the maximum tax for individuals on capital gains and dividends to 10 percent, indexing the basis of assets for purposes of determining capital gain or loss, creating tax-free accounts for retirement savings, lifetime savings, and life skills, repealing the adjusted gross income threshold in the medical care deduction for individuals under age 65 who have no employer health coverage, and for other purposes.CommentsClose CommentsPermalink

IN THE HOUSE OF REPRESENTATIVESCommentsClose CommentsPermalink

January 5, 2011CommentsClose CommentsPermalink

Mr. DREIER introduced the following bill; which was referred to the Committee on Ways and MeansCommentsClose CommentsPermalink

A BILLCommentsClose CommentsPermalink

To amend the Internal Revenue Code of 1986 to reduce taxes by providing an alternative determination of income tax liability for individuals, repealing the estate and gift taxes, reducing corporate income tax rates, reducing the maximum tax for individuals on capital gains and dividends to 10 percent, indexing the basis of assets for purposes of determining capital gain or loss, creating tax-free accounts for retirement savings, lifetime savings, and life skills, repealing the adjusted gross income threshold in the medical care deduction for individuals under age 65 who have no employer health coverage, and for other purposes.CommentsClose CommentsPermalink

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,CommentsClose CommentsPermalink

SECTION 1. SHORT TITLE, ETC.

(a) Short Title- This Act may be cited as the ‘Fair and Simple Tax Act of 2011’.CommentsClose CommentsPermalink





(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.CommentsClose CommentsPermalink





(c) Table of Contents-CommentsClose CommentsPermalink





Sec. 1. Short title, etc.CommentsClose CommentsPermalink





Sec. 2. Simplified alternative determination of income tax liability for individuals.CommentsClose CommentsPermalink





Sec. 3. Repeal of estate and gift taxes.CommentsClose CommentsPermalink





Sec. 4. Alternative minimum tax exemption amounts indexed for inflation.CommentsClose CommentsPermalink





Sec. 5. Maximum corporate income tax rate reduced to 25 percent.CommentsClose CommentsPermalink





Sec. 6. 15 percent rate on dividends and capital gains of individuals reduced to 10 percent.CommentsClose CommentsPermalink





Sec. 7. Indexing of certain assets for purposes of determining gain or loss.CommentsClose CommentsPermalink





Sec. 8. Retirement savings accounts.CommentsClose CommentsPermalink





Sec. 9. Lifetime savings accounts.CommentsClose CommentsPermalink





Sec. 10. Lifetime skills accounts.CommentsClose CommentsPermalink





Sec. 11. Expanded deduction for medical care expenses; expansion of individuals to whom health savings accounts may be passed on death.CommentsClose CommentsPermalink





Sec. 12. Research credit made permanent.CommentsClose CommentsPermalink





Sec. 13. Tax provisions of prior laws made permanent.CommentsClose CommentsPermalink

SEC. 2. SIMPLIFIED ALTERNATIVE DETERMINATION OF INCOME TAX LIABILITY FOR INDIVIDUALS.

(a) In General- Subchapter A of chapter 1 (relating to determination of tax liability) is amended by adding at the end the following new part:CommentsClose CommentsPermalink

‘PART VIII--ALTERNATIVE DETERMINATION OF TAX LIABILITY FOR INDIVIDUALS

‘Sec. 59B. Alternative determination of tax liability for individuals.CommentsClose CommentsPermalink

‘SEC. 59B. ALTERNATIVE DETERMINATION OF TAX LIABILITY FOR INDIVIDUALS.

‘(a) In General- In the case of an individual, the net income tax of the taxpayer shall be the tax determined under this section.CommentsClose CommentsPermalink





‘(b) Determination of Tax- The tax determined under this section is the amount equal to--CommentsClose CommentsPermalink





‘(1) the sum of--CommentsClose CommentsPermalink





‘(A) 10 percent of so much of simplified taxable income as does not exceed $40,000,CommentsClose CommentsPermalink





‘(B) 15 percent of so much of simplified taxable income as exceeds $40,000 but does not exceed $150,000, andCommentsClose CommentsPermalink





‘(C) 30 percent of so much of simplified taxable income as exceeds $150,000, reduced byCommentsClose CommentsPermalink





‘(2) the sum of the credits allowed by--CommentsClose CommentsPermalink





‘(A) section 31 (relating to tax withheld on wages), andCommentsClose CommentsPermalink





‘(B) section 24 (relating to child tax credit).CommentsClose CommentsPermalink





‘(c) Simplified Taxable Income- For purposes of this section, the term ‘simplified taxable income’ means the amount equal to--CommentsClose CommentsPermalink





‘(1) gross income, minusCommentsClose CommentsPermalink





‘(2) the sum of--CommentsClose CommentsPermalink





‘(A) the deduction for personal exemptions allowed by section 151,CommentsClose CommentsPermalink





‘(B) the deduction allowed by section 163 for acquisition indebtedness (as defined in section 163(h)(3)(B)) with respect to the principal residence (within the meaning of section 121) of the taxpayer,CommentsClose CommentsPermalink





‘(C) the deduction allowed by section 164 for State and local income taxes,CommentsClose CommentsPermalink





‘(D) the deduction allowed by section 170 (relating to charitable, etc., contributions and gifts), andCommentsClose CommentsPermalink





‘(E) the deduction allowed by section 213 (relating to medical, dental, etc., expenses) to the extent such deduction is determined under section 213(a)(2) (relating to individuals who have not attained age 65 and are not covered under an employer health plan).CommentsClose CommentsPermalink





‘(d) Net Income Tax- For purposes of this section, the term ‘net income tax’ means the sum of the regular tax liability and the tax imposed by section 55, reduced by the credits allowable under this part.CommentsClose CommentsPermalink





‘(e) Estate and Trusts- This section shall not apply to an estate or trust.CommentsClose CommentsPermalink





‘(f) Section To Be Elective- This section shall apply to a taxpayer for a taxable year only if elected by the taxpayer for such year. Such election, once made for a taxable year, shall be irrevocable without the consent of the Secretary.’.CommentsClose CommentsPermalink





(b) Clerical Amendment- The table of parts for such subchapter is amended by adding at the end the following new item:CommentsClose CommentsPermalink

‘Part VIII. Alternative Determination of Tax Liability for Individuals.’.

(c) Effective Date- The amendments made by this section shall apply to taxable years beginning after December 31, 2010.CommentsClose CommentsPermalink

SEC. 3. REPEAL OF ESTATE AND GIFT TAXES.

(a) In General- Subtitle B is hereby repealed.CommentsClose CommentsPermalink





(b) Effective Date- The repeal made by subsection (a) shall apply to the estates of decedents dying, and gifts and generation-skipping transfers made, after December 31, 2010.CommentsClose CommentsPermalink

SEC. 4. ALTERNATIVE MINIMUM TAX EXEMPTION AMOUNTS INDEXED FOR INFLATION.

(a) In General- Subsection (d) of section 55 (relating to exemption amount) is amended by adding at the end the following new paragraph:CommentsClose CommentsPermalink





‘(4) INFLATION ADJUSTMENT-CommentsClose CommentsPermalink





‘(A) IN GENERAL- In the case of any taxable year beginning in a calendar year after 2011, the dollar amounts contained in paragraphs (1), (2), and (3) shall be increased by an amount equal to--CommentsClose CommentsPermalink





‘(i) such dollar amount, multiplied byCommentsClose CommentsPermalink





‘(ii) the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which the taxable year begins, determined by substituting ‘calendar year 2010’ for ‘calendar year 1992’ in subparagraph (B) thereof.CommentsClose CommentsPermalink





‘(B) ROUNDING- Any increase determined under subparagraph (A) shall be rounded to the nearest multiple of $100.’.CommentsClose CommentsPermalink





(b) Prior Increase Made Permanent- Paragraph (1) of section 55(d) is amended--CommentsClose CommentsPermalink





(1) by striking ‘$45,000 ($72,450 in the case of taxable years beginning in 2010 and $74,450 in the case of taxable years beginning in 2011)’ and inserting ‘$74,450’,CommentsClose CommentsPermalink





(2) by striking ‘$33,750 ($47,450 in the case of taxable years beginning in 2010 and $48,450 in the case of taxable years beginning in 2011)’ and inserting ‘$48,450’, andCommentsClose CommentsPermalink





(3) by striking ‘paragraph (1)(A)’ and inserting ‘subparagraph (A)’.CommentsClose CommentsPermalink





(c) Effective Date- The amendments made by this section shall apply to taxable years beginning after December 31, 2010.CommentsClose CommentsPermalink

SEC. 5. MAXIMUM CORPORATE INCOME TAX RATE REDUCED TO 25 PERCENT.

(a) In General- Paragraph (1) of section 11(b) (relating to amount of tax on corporations) is amended to read as follows:CommentsClose CommentsPermalink





‘(1) IN GENERAL- The amount of the tax imposed by subsection (a) shall be the sum of--CommentsClose CommentsPermalink





‘(A) 15 percent of so much of the taxable income as does not exceed $50,000, andCommentsClose CommentsPermalink





‘(B) 25 percent of so much of the taxable income as exceeds $50,000.’.CommentsClose CommentsPermalink





(b) Personal Service Corporations- Paragraph (2) of section 11(b) is amended by striking ‘35 percent’ and inserting ‘25 percent’.CommentsClose CommentsPermalink





(c) Conforming Amendments- Paragraphs (1) and (2) of section 1445(e) are each amended by striking ‘35 percent’ and inserting ‘25 percent’.CommentsClose CommentsPermalink





(d) Effective Date- The amendments made by this section shall apply to taxable years beginning after December 31, 2010; except that the amendments made by subsection (c) shall take effect on January 1, 2011.CommentsClose CommentsPermalink

SEC. 6. 15 PERCENT RATE ON DIVIDENDS AND CAPITAL GAINS OF INDIVIDUALS REDUCED TO 10 PERCENT.

(a) In General- Subparagraph (C) of section 1(h)(1) (relating to maximum capital gains rate) is amended by striking ‘15 percent’ and inserting ‘10 percent’.CommentsClose CommentsPermalink





(b) Effective Date- The amendment made by this section shall apply to taxable years beginning after December 31, 2010.CommentsClose CommentsPermalink

SEC. 7. 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 redesignating section 1023 as section 1024 and by inserting after section 1022 the following new section:CommentsClose CommentsPermalink

‘SEC. 1023. INDEXING OF CERTAIN ASSETS FOR PURPOSES OF DETERMINING GAIN OR LOSS.

‘(a) General Rule-CommentsClose CommentsPermalink





‘(1) INDEXED BASIS SUBSTITUTED FOR ADJUSTED BASIS- Solely for purposes of determining gain or loss on the sale or other disposition by a taxpayer (other than a corporation) of an indexed asset which has been held for more than 3 years, the indexed basis of the asset shall be substituted for its adjusted basis.CommentsClose CommentsPermalink





‘(2) EXCEPTION FOR DEPRECIATION, ETC- The deductions for depreciation, depletion, and amortization shall be determined without regard to the application of paragraph (1) to the taxpayer or any other person.CommentsClose CommentsPermalink





‘(b) Indexed Asset-CommentsClose CommentsPermalink





‘(1) IN GENERAL- For purposes of this section, the term ‘indexed asset’ means--CommentsClose CommentsPermalink





‘(A) common stock in a C corporation (other than a foreign corporation), andCommentsClose CommentsPermalink





‘(B) tangible property,CommentsClose CommentsPermalink





which is a capital asset or property used in the trade or business (as defined in section 1231(b)).CommentsClose CommentsPermalink





‘(2) STOCK IN CERTAIN FOREIGN CORPORATIONS INCLUDED- For purposes of this section--CommentsClose CommentsPermalink





‘(A) IN GENERAL- The term ‘indexed asset’ includes common stock in a foreign corporation which is regularly traded on an established securities market.CommentsClose CommentsPermalink





‘(B) EXCEPTION- Subparagraph (A) shall not apply to--CommentsClose CommentsPermalink





‘(i) stock in a passive foreign investment company (as defined in section 1296), andCommentsClose CommentsPermalink





‘(ii) stock in a foreign corporation held by a United States person who meets the requirements of section 1248(a)(2).CommentsClose CommentsPermalink





‘(C) TREATMENT OF AMERICAN DEPOSITORY RECEIPTS- An American depository receipt for common stock in a foreign corporation shall be treated as common stock in such corporation.CommentsClose CommentsPermalink





‘(c) Indexed Basis- For purposes of this section--CommentsClose CommentsPermalink





‘(1) IN GENERAL- The indexed basis for any asset is--CommentsClose CommentsPermalink





‘(A) the adjusted basis of the asset, increased byCommentsClose CommentsPermalink





‘(B) the applicable inflation adjustment.CommentsClose CommentsPermalink





‘(2) APPLICABLE INFLATION ADJUSTMENT- The applicable inflation adjustment for any asset is an amount equal to--CommentsClose CommentsPermalink





‘(A) the adjusted basis of the asset, multiplied byCommentsClose CommentsPermalink





‘(B) the percentage (if any) by which--CommentsClose CommentsPermalink





‘(i) the gross domestic product deflator for the last calendar quarter ending before the asset is disposed of, exceedsCommentsClose CommentsPermalink





‘(ii) the gross domestic product deflator for the last calendar quarter ending before the asset was acquired by the taxpayer (or, if later, the calendar quarter ending on December 31, 2009).CommentsClose CommentsPermalink





The percentage under subparagraph (B) shall be rounded to the nearest 1/10 of 1 percentage point.CommentsClose CommentsPermalink





‘(3) GROSS DOMESTIC PRODUCT DEFLATOR- The gross domestic product deflator for any calendar quarter is the implicit price deflator for the gross domestic product for such quarter (as shown in the last revision thereof released by the Secretary of Commerce before the close of the following calendar quarter).CommentsClose CommentsPermalink





‘(d) Suspension of Holding Period Where Diminished Risk of Loss; Treatment of Short Sales-CommentsClose CommentsPermalink





‘(1) IN GENERAL- If the taxpayer (or a related person) enters into any transaction which substantially reduces the risk of loss from holding any asset, such asset shall not be treated as an indexed asset for the period of such reduced risk.CommentsClose CommentsPermalink





‘(2) SHORT SALES-CommentsClose CommentsPermalink





‘(A) IN GENERAL- In the case of a short sale of an indexed asset with a short sale period in excess of 3 years, for purposes of this title, the amount realized shall be an amount equal to the amount realized (determined without regard to this paragraph) increased by the applicable inflation adjustment. In applying subsection (c)(2) for purposes of the preceding sentence, the date on which the property is sold short shall be treated as the date of acquisition and the closing date for the sale shall be treated as the date of disposition.CommentsClose CommentsPermalink





‘(B) SHORT SALE PERIOD- For purposes of subparagraph (A), the short sale period begins on the day that the property is sold and ends on the closing date for the sale.CommentsClose CommentsPermalink





‘(e) Treatment of Regulated Investment Companies and Real Estate Investment Trusts-CommentsClose CommentsPermalink





‘(1) ADJUSTMENTS AT ENTITY LEVEL-CommentsClose CommentsPermalink





‘(A) IN GENERAL- Except as otherwise provided in this paragraph, the adjustment under subsection (a) shall be allowed to any qualified investment entity (including for purposes of determining the earnings and profits of such entity).CommentsClose CommentsPermalink





‘(B) EXCEPTION FOR CORPORATE SHAREHOLDERS- Under regulations--CommentsClose CommentsPermalink





‘(i) in the case of a distribution by a qualified investment entity (directly or indirectly) to a corporation--CommentsClose CommentsPermalink





‘(I) the determination of whether such distribution is a dividend shall be made without regard to this section, andCommentsClose CommentsPermalink





‘(II) the amount treated as gain by reason of the receipt of any capital gain dividend shall be increased by the percentage by which the entity’s net capital gain for the taxable year (determined without regard to this section) exceeds the entity’s net capital gain for such year determined with regard to this section, andCommentsClose CommentsPermalink





‘(ii) there shall be other appropriate adjustments (including deemed distributions) so as to ensure that the benefits of this section are not allowed (directly or indirectly) to corporate shareholders of qualified investment entities.CommentsClose CommentsPermalink





For purposes of the preceding sentence, any amount includible in gross income under section 852(b)(3)(D) shall be treated as a capital gain dividend and an S corporation shall not be treated as a corporation.CommentsClose CommentsPermalink





‘(C) EXCEPTION FOR QUALIFICATION PURPOSES- This section shall not apply for purposes of sections 851(b) and 856(c).CommentsClose CommentsPermalink





‘(D) EXCEPTION FOR CERTAIN TAXES IMPOSED AT ENTITY LEVEL-CommentsClose CommentsPermalink





‘(i) TAX ON FAILURE TO DISTRIBUTE ENTIRE GAIN- If any amount is subject to tax under section 852(b)(3)(A) for any taxable year, the amount on which tax is imposed under such section shall be increased by the percentage determined under subparagraph (B)(i)(II). A similar rule shall apply in the case of any amount subject to tax under paragraph (2) or (3) of section 857(b) to the extent attributable to the excess of the net capital gain over the deduction for dividends paid determined with reference to capital gain dividends only. The first sentence of this clause shall not apply to so much of the amount subject to tax under section 852(b)(3)(A) as is designated by the company under section 852(b)(3)(D).CommentsClose CommentsPermalink





‘(ii) OTHER TAXES- This section shall not apply for purposes of determining the amount of any tax imposed by paragraph (4), (5), or (6) of section 857(b).CommentsClose CommentsPermalink





‘(2) ADJUSTMENTS TO INTERESTS HELD IN ENTITY-CommentsClose CommentsPermalink





‘(A) REGULATED INVESTMENT COMPANIES- Stock in a regulated investment company (within the meaning of section 851) shall be an indexed asset for any calendar quarter in the same ratio as--CommentsClose CommentsPermalink





‘(i) the average of the fair market values of the indexed assets held by such company at the close of each month during such quarter, bears toCommentsClose CommentsPermalink





‘(ii) the average of the fair market values of all assets held by such company at the close of each such month.CommentsClose CommentsPermalink





‘(B) REAL ESTATE INVESTMENT TRUSTS- Stock in a real estate investment trust (within the meaning of section 856) shall be an indexed asset for any calendar quarter in the same ratio as--CommentsClose CommentsPermalink





‘(i) the fair market value of the indexed assets held by such trust at the close of such quarter, bears toCommentsClose CommentsPermalink





‘(ii) the fair market value of all assets held by such trust at the close of such quarter.CommentsClose CommentsPermalink





‘(C) RATIO OF 80 PERCENT OR MORE- If the ratio for any calendar quarter determined under subparagraph (A) or (B) would (but for this subparagraph) be 80 percent or more, such ratio for such quarter shall be 100 percent.CommentsClose CommentsPermalink





‘(D) RATIO OF 20 PERCENT OR LESS- If the ratio for any calendar quarter determined under subparagraph (A) or (B) would (but for this subparagraph) be 20 percent or less, such ratio for such quarter shall be zero.CommentsClose CommentsPermalink





‘(E) LOOK-THRU OF PARTNERSHIPS- For purposes of this paragraph, a qualified investment entity which holds a partnership interest shall be treated (in lieu of holding a partnership interest) as holding its proportionate share of the assets held by the partnership.CommentsClose CommentsPermalink





‘(3) TREATMENT OF RETURN OF CAPITAL DISTRIBUTIONS- Except as otherwise provided by the Secretary, a distribution with respect to stock in a qualified investment entity which is not a dividend and which results in a reduction in the adjusted basis of such stock shall be treated as allocable to stock acquired by the taxpayer in the order in which such stock was acquired.CommentsClose CommentsPermalink





‘(4) QUALIFIED INVESTMENT ENTITY- For purposes of this subsection, the term ‘qualified investment entity’ means--CommentsClose CommentsPermalink





‘(A) a regulated investment company (within the meaning of section 851), andCommentsClose CommentsPermalink





‘(B) a real estate investment trust (within the meaning of section 856).CommentsClose CommentsPermalink





‘(f) Other Pass-Thru Entities-CommentsClose CommentsPermalink





‘(1) PARTNERSHIPS-CommentsClose CommentsPermalink





‘(A) IN GENERAL- In the case of a partnership, the adjustment made under subsection (a) at the partnership level shall be passed through to the partners.CommentsClose CommentsPermalink





‘(B) SPECIAL RULE IN THE CASE OF SECTION 754 ELECTIONS- In the case of a transfer of an interest in a partnership with respect to which the election provided in section 754 is in effect--CommentsClose CommentsPermalink





‘(i) the adjustment under section 743(b)(1) shall, with respect to the transferor partner, be treated as a sale of the partnership assets for purposes of applying this section, andCommentsClose CommentsPermalink





‘(ii) with respect to the transferee partner, the partnership’s holding period for purposes of this section in such assets shall be treated as beginning on the date of such adjustment.CommentsClose CommentsPermalink





‘(2) S CORPORATIONS- In the case of an S corporation, the adjustment made under subsection (a) at the corporate level shall be passed through to the shareholders. This section shall not apply for purposes of determining the amount of any tax imposed by section 1374 or 1375.CommentsClose CommentsPermalink





‘(3) COMMON TRUST FUNDS- In the case of a common trust fund, the adjustment made under subsection (a) at the trust level shall be passed through to the participants.CommentsClose CommentsPermalink





‘(4) INDEXING ADJUSTMENT DISREGARDED IN DETERMINING LOSS ON SALE OF INTEREST IN ENTITY- Notwithstanding the preceding provisions of this subsection, for purposes of determining the amount of any loss on a sale or exchange of an interest in a partnership, S corporation, or common trust fund, the adjustment made under subsection (a) shall not be taken into account in determining the adjusted basis of such interest.CommentsClose CommentsPermalink





‘(g) Dispositions Between Related Persons-CommentsClose CommentsPermalink





‘(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.CommentsClose CommentsPermalink





‘(2) RELATED PERSONS DEFINED- For purposes of this section, the term ‘related persons’ means--CommentsClose CommentsPermalink





‘(A) persons bearing a relationship set forth in section 267(b), andCommentsClose CommentsPermalink





‘(B) persons treated as single employer under subsection (b) or (c) of section 414.CommentsClose CommentsPermalink





‘(h) Transfers To Increase Indexing Adjustment- If any person transfers cash, debt, or any other property to another person and the principal purpose of such transfer is to secure or increase an adjustment under subsection (a), the Secretary may disallow part or all of such adjustment or increase.CommentsClose CommentsPermalink





‘(i) Special Rules- For purposes of this section--CommentsClose CommentsPermalink





‘(1) TREATMENT OF IMPROVEMENTS, ETC- If there is an addition to the adjusted basis of any tangible property or of any stock in a corporation during the taxable year by reason of an improvement to such property or a contribution to capital of such corporation--CommentsClose CommentsPermalink





‘(A) such addition shall never be taken into account under subsection (c)(1)(A) if the aggregate amount thereof during the taxable year with respect to such property or stock is less than $1,000, andCommentsClose CommentsPermalink





‘(B) such addition shall be treated as a separate asset acquired at the close of such taxable year if the aggregate amount thereof during the taxable year with respect to such property or stock is $1,000 or more.CommentsClose CommentsPermalink





A rule similar to the rule of the preceding sentence shall apply to 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.CommentsClose CommentsPermalink





‘(2) ASSETS WHICH ARE NOT INDEXED ASSETS THROUGHOUT HOLDING PERIOD- The applicable inflation adjustment shall be appropriately reduced for periods during which the asset was not an indexed asset.CommentsClose CommentsPermalink





‘(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.CommentsClose CommentsPermalink





‘(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.CommentsClose CommentsPermalink





‘(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.CommentsClose CommentsPermalink





‘(j) Regulations- The Secretary shall prescribe such regulations as may be necessary or appropriate to carry out the purposes of this section.’.CommentsClose CommentsPermalink





(b) Clerical Amendment- The table of sections for part II of subchapter O of chapter 1 is amended by striking the item relating to section 1023 and inserting after the item relating to section 1022 the following new items:CommentsClose CommentsPermalink





‘Sec. 1023. Indexing of certain assets for purposes of determining gain or loss.CommentsClose CommentsPermalink





‘Sec. 1024. Cross references.’.CommentsClose CommentsPermalink





(c) Effective Date- The amendments made by this section shall apply to dispositions after December 31, 2010, in taxable years ending after such date.CommentsClose CommentsPermalink

SEC. 8. RETIREMENT SAVINGS ACCOUNTS.

(a) In General- Subpart A of part I of subchapter D of chapter 1 (relating to pension, profit-sharing, stock bonus plans, etc.) is amended by inserting after section 408A the following new section:CommentsClose CommentsPermalink

‘SEC. 408B. RETIREMENT SAVINGS ACCOUNTS.

‘(a) General Rule- Except as provided in this section, a Retirement Savings Account shall be treated for purposes of this title in the same manner as an individual retirement plan.CommentsClose CommentsPermalink





‘(b) Retirement Savings Account- For purposes of this title, the term ‘Retirement Savings Account’ means an individual retirement plan (as defined in section 7701(a)(37)) which is designated at the time of establishment of the plan as a Retirement Savings Account. Such designation shall be made in such manner as the Secretary may prescribe.CommentsClose CommentsPermalink





‘(c) Treatment of Contributions-CommentsClose CommentsPermalink





‘(1) NO DEDUCTION ALLOWED- No deduction shall be allowed under section 219 for a contribution to a Retirement Savings Account.CommentsClose CommentsPermalink





‘(2) CONTRIBUTION LIMIT- The aggregate amount of contributions for any taxable year to all Retirement Savings Accounts maintained for the benefit of an individual shall not exceed $5,000.CommentsClose CommentsPermalink





‘(3) CONTRIBUTIONS PERMITTED AFTER AGE 70 1/2 - Contributions to a Retirement Savings Account may be made even after the individual for whom the account is maintained has attained age 70 1/2 .CommentsClose CommentsPermalink





‘(4) MANDATORY DISTRIBUTION RULES NOT TO APPLY BEFORE DEATH- Notwithstanding subsections (a)(6) and (b)(3) of section 408 (relating to required distributions), the following provisions shall not apply to any Retirement Savings Account:CommentsClose CommentsPermalink





‘(A) Section 401(a)(9)(A).CommentsClose CommentsPermalink





‘(B) The incidental death benefit requirements of section 401(a).CommentsClose CommentsPermalink





‘(5) ROLLOVER CONTRIBUTIONS-CommentsClose CommentsPermalink





‘(A) IN GENERAL- No rollover contribution may be made to or from a Retirement Savings Account except from or to another such Account, as the case may be.CommentsClose CommentsPermalink





‘(B) COORDINATION WITH LIMIT- Any rollover permitted under subparagraph (A) shall not be taken into account for purposes of paragraph (2).CommentsClose CommentsPermalink





‘(6) TIME WHEN CONTRIBUTIONS MADE- For purposes of this section, the rule of section 219(f)(3) shall apply.CommentsClose CommentsPermalink





‘(d) Distribution Rules- Any qualified distribution (as defined in section 408A(d)(2)) from a Retirement Savings Account shall not be includible in gross income.’.CommentsClose CommentsPermalink





(b) Conforming Amendments-CommentsClose CommentsPermalink





(1) Clause (vi) of section 1361(c)(2)(A) is amended by inserting ‘or a Retirement Savings Account under section 408B’ after ‘Roth IRA under section 408A’.CommentsClose CommentsPermalink





(2) Section 4973 (relating to tax on excess contributions to certain tax-favored accounts and annuities) is amended by inserting after subsection (g) the following new subsection:CommentsClose CommentsPermalink





‘(h) Excess Contributions to Retirement Savings Accounts- For purposes of this section, in the case of contributions to a Retirement Savings Account (within the meaning of section 408B(b)), the term ‘excess contributions’ means the sum of--CommentsClose CommentsPermalink





‘(1) the excess (if any) of--CommentsClose CommentsPermalink





‘(A) the amount contributed for the taxable year to Retirement Savings Accounts (other than a rollover contribution from another such Account), overCommentsClose CommentsPermalink





‘(B) $5,000, andCommentsClose CommentsPermalink





‘(2) the amount determined under this subsection for the preceding taxable year, reduced by the sum of--CommentsClose CommentsPermalink





‘(A) the distributions out of the Accounts for the taxable year, andCommentsClose CommentsPermalink





‘(B) the excess (if any) of $5,000 over the amount contributed by the individual to all Retirement Savings Accounts for the taxable year.CommentsClose CommentsPermalink





For purposes of this subsection, any contribution which is distributed from a Retirement Savings Account in a distribution described in section 408(d)(4) shall be treated as an amount not contributed.’.CommentsClose CommentsPermalink





(3) The table of sections for subpart A of part I of subchapter D of chapter 1 is amended by inserting after the item relating to section 408A the following new item:CommentsClose CommentsPermalink





‘Sec. 408B. Retirement Savings Accounts.’.CommentsClose CommentsPermalink





(c) Effective Date- The amendments made by this section shall apply to amounts contributed for taxable years beginning after December 31, 2010.CommentsClose CommentsPermalink

SEC. 9. LIFETIME SAVINGS ACCOUNTS.

(a) In General- Subchapter F of chapter 1 (relating to exempt organizations) is amended by adding at the end the following new part:CommentsClose CommentsPermalink

‘PART IX--LIFETIME SAVINGS ACCOUNTS.

‘Sec. 530B. Lifetime Savings Accounts.CommentsClose CommentsPermalink

‘SEC. 530B. LIFETIME SAVINGS ACCOUNTS.

‘(a) In General- A Lifetime Savings Account shall be exempt from taxation under this subtitle. Notwithstanding the preceding sentence, the Lifetime Savings Account shall be subject to the taxes imposed by section 511 (relating to imposition of tax on unrelated business income of charitable organizations).CommentsClose CommentsPermalink





‘(b) Definitions and Special Rules- For purposes of this section--CommentsClose CommentsPermalink





‘(1) LIFETIME SAVINGS ACCOUNT- The term ‘Lifetime Savings Account’ means a trust created or organized in the United States exclusively for the benefit of an individual who is the designated beneficiary of the trust (and designated as a Lifetime Savings Account at the time created or organized), but only if the written governing instrument creating the trust meets the following requirements:CommentsClose CommentsPermalink





‘(A) No contribution will be accepted--CommentsClose CommentsPermalink





‘(i) unless it is in cash, andCommentsClose CommentsPermalink





‘(ii) except in the case of rollover contributions from another Lifetime Savings Account, if such contribution would result in aggregate contributions for the taxable year exceeding $5,000.CommentsClose CommentsPermalink





‘(B) The trustee is a bank (as defined in section 408(n)) or another person who demonstrates to the satisfaction of the Secretary that the manner in which that person will administer the trust will be consistent with the requirements of this section or who has so demonstrated with respect to any individual retirement plan.CommentsClose CommentsPermalink





‘(C) No part of the trust assets will be invested in life insurance contracts.CommentsClose CommentsPermalink





‘(D) The assets of the trust shall not be commingled with other property except in a common trust fund or common investment fund.CommentsClose CommentsPermalink





‘(2) TIME WHEN CONTRIBUTIONS DEEMED MADE- An individual shall be deemed to have made a contribution to a Lifetime Savings Account on the last day of the preceding taxable year if the contribution is made on account of such taxable year and is made not later than the time prescribed by law for filing the return for such taxable year (not including extensions thereof).CommentsClose CommentsPermalink





‘(3) CONTRIBUTIONS RETURNED BEFORE DUE DATE OF RETURN- A rule similar to the rule of section 408(d)(4) shall apply for purposes of this section.CommentsClose CommentsPermalink





‘(c) Distribution Not Includible- Distributions from a Lifetime Savings Account shall not be includible in gross income.CommentsClose CommentsPermalink





‘(d) Tax Treatment of Accounts- Rules similar to the rules of paragraphs (2) and (4) of section 408(e) shall apply to any Lifetime Savings Account.CommentsClose CommentsPermalink





‘(e) Community Property Laws- This section shall be applied without regard to any community property laws.CommentsClose CommentsPermalink





‘(f) Custodial Accounts- For purposes of this section, a custodial account shall be treated as a trust if the assets of such account are held by a bank (as defined in section 408(n) or another person who demonstrates, to the satisfaction of the Secretary, that the manner in which he will administer the account will be consistent with the requirements of this section, and if the custodial account would, except for the fact that it is not a trust, constitute an account described in subsection (b)(1)). For purposes of this title, in the case of a custodial account treated as a trust by reason of the preceding sentence, the custodian of such account shall be treated as the trustee thereof.CommentsClose CommentsPermalink





‘(g) Reports- The trustee of a Lifetime Savings Account shall make such reports regarding such Account to the Secretary and to the beneficiary of the Account with respect to contributions, distributions, and such other matters as the Secretary may require. The reports required by this subsection shall be filed at such time and in such manner and furnished to such individuals at such time and in such manner as may be required.’.CommentsClose CommentsPermalink





(b) Tax of Excess Contributions-CommentsClose CommentsPermalink





(1) Subsection (a) of section 4973 (relating to tax on excess contributions to certain tax-favored accounts and annuities) is amended by striking ‘or’ at the end of paragraph (4), by adding ‘or’ at the end of paragraph (5), and by inserting after paragraph (5) the following new paragraph:CommentsClose CommentsPermalink





‘(6) a Lifetime Savings Account (as defined by section 530B(b)),’.CommentsClose CommentsPermalink





(2) Section 4973 is amended by inserting after subsection (h) the following new subsection:CommentsClose CommentsPermalink





‘(i) Excess Contributions to Lifetime Savings Accounts- For purposes of this section, in the case of contributions to a Lifetime Savings Account (within the meaning of section 530B(b)), the term ‘excess contributions’ means the sum of--CommentsClose CommentsPermalink





‘(1) the excess (if any) of--CommentsClose CommentsPermalink





‘(A) the amount contributed for the taxable year to Lifetime Savings Accounts (other than a rollover contribution from another such Account), overCommentsClose CommentsPermalink





‘(B) $5,000, andCommentsClose CommentsPermalink





‘(2) the amount determined under this subsection for the preceding taxable year, reduced by the sum of--CommentsClose CommentsPermalink





‘(A) the distributions out of such Accounts for the taxable year, andCommentsClose CommentsPermalink





‘(B) the excess (if any) of $5,000 over the amount contributed by the individual to all such Accounts for the taxable year.CommentsClose CommentsPermalink





For purposes of this subsection, any contribution which is distributed from a Lifetime Savings Account in a distribution described in section 530B(b)(3) shall be treated as an amount not contributed.’.CommentsClose CommentsPermalink





(c) Tax on Prohibited Transactions-CommentsClose CommentsPermalink





(1) IN GENERAL- Paragraph (1) of section 4975(e) (relating to prohibited transactions) is amended by striking ‘or’ at the end of subparagraph (F), by redesignating subparagraph (G) as subparagraph (H), and by inserting after subparagraph (F) the following new subparagraph:CommentsClose CommentsPermalink





‘(G) a Lifetime Savings Account described in section 530B, or’.CommentsClose CommentsPermalink





(2) SPECIAL RULE- Subsection (c) of section 4975 is amended by inserting after paragraph (6) the following new paragraph:CommentsClose CommentsPermalink





‘(7) SPECIAL RULES FOR LIFETIME SAVINGS ACCOUNTS- An individual for whose benefit a Lifetime Savings Account is established and any contributor to such account shall be exempt from the tax imposed by this section with respect to any transaction concerning such account (which would otherwise be taxable under this section) if section 530B(d) applies with respect to such transaction.’.CommentsClose CommentsPermalink





(d) Failure To Provide Reports- Paragraph (2) of section 6693(a) (relating to failure to provide reports on certain tax-favored accounts or annuities; penalties relating to designated nondeductible contributions) is amended by striking ‘and’ at the end of subparagraph (D), by striking the period at the end of subparagraph (E) and inserting ‘, and’, and by inserting after subparagraph (E) the end the following new subparagraph:CommentsClose CommentsPermalink





‘(F) section 530B(g) (relating to Lifetime Savings Accounts).’.CommentsClose CommentsPermalink





(e) Clerical Amendment- The table of parts for subchapter F of chapter 1 is amended by adding at the end the following new item:CommentsClose CommentsPermalink





‘Part IX. Lifetime Savings Accounts.’.CommentsClose CommentsPermalink

SEC. 10. LIFETIME SKILLS ACCOUNTS.

(a) In General- Part VIII of subchapter F of chapter 1 (relating to higher education savings entities) is amended by adding at the end the following new section:CommentsClose CommentsPermalink

‘SEC. 530A. LIFETIME SKILLS ACCOUNTS.

‘(a) In General- A Lifetime Skills Account shall be exempt from taxation under this subtitle. Notwithstanding the preceding sentence, the Lifetime Skills Account shall be subject to the taxes imposed by section 511 (relating to imposition of tax on unrelated business income of charitable organizations).CommentsClose CommentsPermalink





‘(b) Definitions and Special Rules- For purposes of this section--CommentsClose CommentsPermalink





‘(1) LIFETIME SKILLS ACCOUNT- The term ‘Lifetime Skills Account’ means a trust created or organized in the United States exclusively for the purpose of paying the qualified life skills expenses of an individual who is the designated beneficiary of the trust (and designated as a Lifetime Skills Account at the time created or organized), but only if the written governing instrument creating the trust meets the following requirements:CommentsClose CommentsPermalink





‘(A) No contribution will be accepted--CommentsClose CommentsPermalink





‘(i) unless it is in cash, andCommentsClose CommentsPermalink





‘(ii) except in the case of rollover contributions from another such Account, if such contribution would result in aggregate contributions for the taxable year exceeding $1,000.CommentsClose CommentsPermalink





‘(B) The trustee is a bank (as defined in section 408(n)) or another person who demonstrates to the satisfaction of the Secretary that the manner in which that person will administer the trust will be consistent with the requirements of this section or who has so demonstrated with respect to any individual retirement plan.CommentsClose CommentsPermalink





‘(C) No part of the trust assets will be invested in life insurance contracts.CommentsClose CommentsPermalink





‘(D) The assets of the trust shall not be commingled with other property except in a common trust fund or common investment fund.CommentsClose CommentsPermalink





‘(2) QUALIFIED LIFE SKILLS EXPENSES- The term ‘qualified life skills expenses’ means expenses for any of the following services:CommentsClose CommentsPermalink





‘(A) Comprehensive and specialized assessments of the skill levels and service needs of adults and dislocated workers, which may include--CommentsClose CommentsPermalink





‘(i) diagnostic testing and use of other assessment tools, andCommentsClose CommentsPermalink





‘(ii) in-depth interviewing and evaluation to identify employment barriers and appropriate employment goals.CommentsClose CommentsPermalink





‘(B) Development of an individual employment plan, to identify the employment goals, appropriate achievement objectives, and appropriate combination of services for the participant to achieve the employment goals.CommentsClose CommentsPermalink





‘(C) Individual counseling and career planning.CommentsClose CommentsPermalink





‘(D) Short-term prevocational services, including development of learning skills, communication skills, interviewing skills, punctuality, personal maintenance skills, and professional conduct, to prepare individuals for unsubsidized employment or training.CommentsClose CommentsPermalink





‘(E) Occupational skills training, including training for nontraditional employment.CommentsClose CommentsPermalink





‘(F) On-the-job training.CommentsClose CommentsPermalink





‘(G) Programs that combine workplace training with related instruction, which may include cooperative education programs.CommentsClose CommentsPermalink





‘(H) Training programs operated by the private sector.CommentsClose CommentsPermalink





‘(I) Skill upgrading and retraining.CommentsClose CommentsPermalink





‘(J) Entrepreneurial training.CommentsClose CommentsPermalink





‘(K) Job readiness training.CommentsClose CommentsPermalink





‘(L) Adult education and literacy activities provided in combination with services described in any of subparagraphs (E) through (K).CommentsClose CommentsPermalink





‘(M) Customized training conducted with a commitment by an employer or group of employers to employ an individual upon successful completion of the training.CommentsClose CommentsPermalink





‘(3) TIME WHEN CONTRIBUTIONS DEEMED MADE- An individual shall be deemed to have made a contribution to a Lifetime Skills Account on the last day of the preceding taxable year if the contribution is made on account of such taxable year and is made not later than the time prescribed by law for filing the return for such taxable year (not including extensions thereof).CommentsClose CommentsPermalink





‘(c) Tax Treatment of Distributions-CommentsClose CommentsPermalink





‘(1) IN GENERAL- Any distribution from a Lifetime Skills Account shall be includible in the gross income of the distributee in the manner provided in section 72.CommentsClose CommentsPermalink





‘(2) DISTRIBUTIONS FOR QUALIFIED LIFE SKILLS EXPENSES-CommentsClose CommentsPermalink





‘(A) IN GENERAL- No amount shall be includible in gross income under paragraph (1) if the qualified life skills expenses of the designated beneficiary during the taxable year are not less than the aggregate distributions during the taxable year.CommentsClose CommentsPermalink





‘(B) DISTRIBUTIONS IN EXCESS OF EXPENSES- If such aggregate distributions exceed such expenses during the taxable year, the amount otherwise includible in gross income under paragraph (1) shall be reduced by the amount which bears the same ratio to the amount which would be includible in gross income under paragraph (1) (without regard to this subparagraph) as the qualified life skills expenses bear to such aggregate distributions.CommentsClose CommentsPermalink





‘(C) COORDINATION WITH OTHER EDUCATION SAVINGS INCENTIVES- For purposes of subparagraph (A), rules similar to the rules of subparagraph (C) of section 530(d)(2) shall apply.CommentsClose CommentsPermalink





‘(D) DISALLOWANCE OF EXCLUDED AMOUNTS AS DEDUCTION, CREDIT, OR EXCLUSION- No deduction, credit, or exclusion shall be allowed to the taxpayer under any other section of this chapter for any qualified life skills expenses to the extent taken into account in determining the amount of the exclusion under this paragraph.CommentsClose CommentsPermalink





‘(3) SPECIAL RULES FOR APPLYING ESTATE AND GIFT TAXES WITH RESPECT TO ACCOUNT- Rules similar to the rules of paragraphs (2), (4), and (5) of section 529(c) shall apply for purposes of this section.CommentsClose CommentsPermalink





‘(4) ADDITIONAL TAX FOR DISTRIBUTIONS NOT USED FOR LIFE SKILLS EXPENSES-CommentsClose CommentsPermalink





‘(A) IN GENERAL- The tax imposed by this chapter for any taxable year on any taxpayer who receives a payment or distribution from a Lifetime Skills Account which is includible in gross income shall be increased by 10 percent of the amount which is so includible.CommentsClose CommentsPermalink





‘(B) EXCEPTIONS- Rules similar to the following rules shall apply for purposes of this subsection:CommentsClose CommentsPermalink





‘(i) Subparagraphs (B) and (C) of section 530(d)(4).CommentsClose CommentsPermalink





‘(ii) Paragraphs (5), (6), (7), and (8) of section 530(d).CommentsClose CommentsPermalink





‘(d) Tax Treatment of Accounts- Rules similar to the rules of paragraphs (2) and (4) of section 408(e) shall apply to any Lifetime Skills Account.CommentsClose CommentsPermalink





‘(e) Community Property Laws- This section shall be applied without regard to any community property laws.CommentsClose CommentsPermalink





‘(f) Custodial Accounts- For purposes of this section, a custodial account shall be treated as a trust if the assets of such account are held by a bank (as defined in section 408(n) or another person who demonstrates, to the satisfaction of the Secretary, that the manner in which he will administer the account will be consistent with the requirements of this section, and if the custodial account would, except for the fact that it is not a trust, constitute an account described in subsection (b)(1)). For purposes of this title, in the case of a custodial account treated as a trust by reason of the preceding sentence, the custodian of such account shall be treated as the trustee thereof.CommentsClose CommentsPermalink





‘(g) Reports- The trustee of a Lifetime Skills Account shall make such reports regarding such account to the Secretary and to the beneficiary of the Account with respect to contributions, distributions, and such other matters as the Secretary may require. The reports required by this subsection shall be filed at such time and in such manner and furnished to such individuals at such time and in such manner as may be required.’.CommentsClose CommentsPermalink





(b) Tax on Excess Contributions-CommentsClose CommentsPermalink





(1) IN GENERAL- Subsection (a) of section 4973, as amended by section 9 of this Act, is amended by striking ‘or’ at the end of paragraph (5), by adding ‘or’ at the end of paragraph (6), and by inserting after paragraph (6) the following new paragraph:CommentsClose CommentsPermalink





‘(7) a Lifetime Skills Account (as defined in section 530A(b)),’.CommentsClose CommentsPermalink





(2) EXCESS CONTRIBUTION DEFINED- Section 4973, as amended by section 9 of this Act, is amended by inserting after subsection (i) the following new subsection:CommentsClose CommentsPermalink





‘(j) Excess Contributions to Lifetime Skills Accounts- For purposes of this section, in the case of contributions to a Lifetime Skills Account (within the meaning of section 530A(b)), the term ‘excess contributions’ means the sum of--CommentsClose CommentsPermalink





‘(1) the excess (if any) of--CommentsClose CommentsPermalink





‘(A) the amount contributed for the taxable year to Lifetime Skills Accounts (other than a rollover contribution from another such Account), overCommentsClose CommentsPermalink





‘(B) $1,000, andCommentsClose CommentsPermalink





‘(2) the amount determined under this subsection for the preceding taxable year, reduced by the sum of--CommentsClose CommentsPermalink





‘(A) the distributions out of such Accounts for the taxable year, andCommentsClose CommentsPermalink





‘(B) the excess (if any) of $1,000 over the amount contributed by the individual to all such Accounts for the taxable year.CommentsClose CommentsPermalink





For purposes of this subsection, any contribution which is distributed from a Lifetime Skills Account in a distribution to which rules similar to the rules of section 530(d)(4)(C) apply under section 530B(c)(4)(B)(i) shall be treated as an amount not contributed.’.CommentsClose CommentsPermalink





(c) Tax on Prohibited Transactions-CommentsClose CommentsPermalink





(1) IN GENERAL- Paragraph (1) of section 4975(e) (relating to prohibited transactions), as amended by section 9 of this Act, is amended by striking ‘or’ at the end of subparagraph (G), by redesignating subparagraph (H) as subparagraph (I), and by inserting after subparagraph (G) the following new subparagraph:CommentsClose CommentsPermalink





‘(H) a Lifetime Skills Account described in section 530A, or’.CommentsClose CommentsPermalink





(2) SPECIAL RULE- Subsection (c) of section 4975, as amended by section 9 of this Act, is amended by adding at the end the following new paragraph:CommentsClose CommentsPermalink





‘(8) SPECIAL RULES FOR LIFETIME SKILLS ACCOUNTS- An individual for whose benefit a Lifetime Skills Account is established and any contributor to such account shall be exempt from the tax imposed by this section with respect to any transaction concerning such account (which would otherwise be taxable under this section) if section 530A(d) applies with respect to such transaction.’.CommentsClose CommentsPermalink





(d) Failure To Provide Reports- Paragraph (2) of section 6693(a) (relating to failure to provide reports on certain tax-favored accounts or annuities; penalties relating to designated nondeductible contributions), as amended by section 9 of this Act, is amended by striking ‘and’ at the end of subparagraph (E), by striking the period at the end of subparagraph (F) and inserting ‘, and’, and by adding at the end the following new subparagraph:CommentsClose CommentsPermalink





‘(G) section 530A(g) (relating to Lifetime Skills Accounts).’.CommentsClose CommentsPermalink





(e) Technical Amendments-CommentsClose CommentsPermalink





(1) Section 26(b)(2) is amended by striking ‘and’ at the end of subparagraph (W), by striking the period at the end of subparagraph (X) and inserting ‘, and’, and by adding at the end the following new subparagraph:CommentsClose CommentsPermalink





‘(Y) section 530A(c)(4) (relating to Lifetime Skills Accounts).’.CommentsClose CommentsPermalink





(2) Paragraph (9) of section 72(e) is amended--CommentsClose CommentsPermalink





(A) by striking ‘COVERDELL’ in the heading,CommentsClose CommentsPermalink





(B) by striking ‘or under a Coverdell’ and inserting ‘, under a Coverdell’, andCommentsClose CommentsPermalink





(C) by inserting ‘, or under a Lifetime Skills Account (as defined in section 530A(b))’ after ‘530(b))’.CommentsClose CommentsPermalink





(3) Subparagraph (C) of section 135(c)(2) is amended--CommentsClose CommentsPermalink





(A) in the heading by striking ‘AND’ and by adding at the end ‘, AND LIFETIME SKILLS ACCOUNTS’,CommentsClose CommentsPermalink





(B) by striking ‘or to a Coverdell’ and inserting ‘to a Coverdell’, andCommentsClose CommentsPermalink





(C) by inserting ‘, or to a Lifetime Skills Account (as defined in section 530A(b))’ after ‘530)’.CommentsClose CommentsPermalink





(4) Subparagraph (A) of section 221(d)(2) is amended by striking ‘or 530’ and inserting ‘530, or 530A’.CommentsClose CommentsPermalink





(5) Subparagraph (B) of section 222(c)(2) is amended by striking ‘or 530(d)(2)’ and inserting ‘530(d)(2), or 530A(c)(2)’.CommentsClose CommentsPermalink





(6) Clause (vi) of section 529(c)(3)(B) is amended--CommentsClose CommentsPermalink





(A) by adding at the end of the heading ‘AND LIFETIME SKILLS ACCOUNTS’, andCommentsClose CommentsPermalink





(B) by striking ‘and section 530(d)(2)(A) apply’ each place it appears and inserting ‘, section 530(d)(2)(A), and 530A(c)(2)(A) apply’.CommentsClose CommentsPermalink





(7) The table of sections for part VIII of subchapter F of chapter 1 is amended by adding at the end the following new item:CommentsClose CommentsPermalink





‘Sec. 530A. Lifetime Skills Accounts.’.CommentsClose CommentsPermalink





(f) Effective Date- The amendments made by this section shall apply to taxable years beginning after December 31, 2010.CommentsClose CommentsPermalink

SEC. 11. EXPANDED DEDUCTION FOR MEDICAL CARE EXPENSES; EXPANSION OF INDIVIDUALS TO WHOM HEALTH SAVINGS ACCOUNTS MAY BE PASSED ON DEATH.

(a) In General- Subsection (a) of section 213 (relating to medical, dental, etc., expenses) is amended to read as follows:CommentsClose CommentsPermalink





‘(a) Allowance of Deduction-CommentsClose CommentsPermalink





‘(1) IN GENERAL- There shall be allowed as a deduction the expenses paid during the taxable year, not compensated for by insurance or otherwise, for medical care of the taxpayer, his spouse, or a dependent (as defined in section 152, determined without regard to subsections (b)(1), (b)(2), and (d)(1)(B) thereof), to the extent that such expenses exceed 7.5 percent of adjusted gross income.CommentsClose CommentsPermalink





‘(2) INDIVIDUALS WHO HAVE NOT ATTAINED AGE 65 AND ARE NOT COVERED UNDER AN EMPLOYER PLAN-CommentsClose CommentsPermalink





‘(A) IN GENERAL- The expenses for medical care of an individual which are incurred while the individual is an eligible individual may be taken into account under paragraph (1) without regard to the adjusted gross income threshold.CommentsClose CommentsPermalink





‘(B) ELIGIBLE INDIVIDUAL- For purposes of this paragraph, the term ‘eligible individual’ means any individual--CommentsClose CommentsPermalink





‘(i) who has not attained age 65 as of the close of the taxable year, andCommentsClose CommentsPermalink





‘(ii) who is not covered by any plan sponsored by an employer of such individual, such individual’s spouse, or of any other individual with respect to whom such individual is a dependent (within the meaning of paragraph (1)).CommentsClose CommentsPermalink





‘(C) LIMITATIONS-CommentsClose CommentsPermalink





‘(i) PER INDIVIDUAL- The amount of each individual’s expenses which may be taken into account by reason of subparagraph (A) for the taxable year shall not exceed $7,500.CommentsClose CommentsPermalink





‘(ii) PER TAXPAYER- If expenses for the medical care of more than 1 eligible individual are paid by the taxpayer, clause (i) shall not apply and the aggregate expenses which may be taken into account by reason of subparagraph (A) for the taxable year shall not exceed $15,000.CommentsClose CommentsPermalink





‘(D) UNUSED LIMITATION MAY BE DEPOSITED INTO HEALTH SAVINGS ACCOUNT-CommentsClose CommentsPermalink





‘(i) IN GENERAL- Except as otherwise provided in this subparagraph, if the limitation under subparagraph (C) applicable to an individual exceeds the expenses taken into account by reason of subparagraph (A), then, for purposes of section 223 (relating to health savings accounts)--CommentsClose CommentsPermalink





‘(I) such individual shall be treated as an eligible individual for purposes of such section, andCommentsClose CommentsPermalink





‘(II) the limitation otherwise applicable under section 223(b) shall be increased by an amount equal to such excess.CommentsClose CommentsPermalink





‘(ii) ALLOCATION OF PER TAXPAYER LIMITATION- For purposes of clause (i), the limitation under subparagraph (C)(ii) shall be allocated among the individuals whose expenses are paid in proportion to their respective shares of such expenses.CommentsClose CommentsPermalink





‘(iii) TREATMENT OF DEPENDENTS- Clause (i) shall not apply to a dependent (within the meaning of paragraph (1)) of the taxpayer, and any excess determined under clause (i) for such dependent shall be allowed to the taxpayer. In the case of a joint return, any excess allowed to the taxpayer under the preceding sentence shall be divided equally between the husband and wife.’.CommentsClose CommentsPermalink





(b) Heath Savings Accounts May Be Passed to Other Than Spouse- Paragraph (8) of section 223(f) (relating to treatment after death of account beneficiary) is amended to read as follows:CommentsClose CommentsPermalink





‘(8) TREATMENT AFTER DEATH OF ACCOUNT BENEFICIARY- If an individual acquires the account beneficiary’s interest in a health savings account by reason of being the designated beneficiary of such account at the death of the account beneficiary, such health savings account shall be treated as if the individual were the account beneficiary.’.CommentsClose CommentsPermalink





(c) Effective Date- The amendments made by this section shall apply to taxable years beginning after December 31, 2010.CommentsClose CommentsPermalink

SEC. 12. RESEARCH CREDIT MADE PERMANENT.

(a) In General- Section 41 (relating to credit for increasing research activities) is amended by striking subsection (h).CommentsClose CommentsPermalink





(b) Conforming Amendment- Paragraph (1) of section 45C(b) is amended by striking subparagraph (D).CommentsClose CommentsPermalink





(c) Effective Date- The amendments made by this section shall apply to amounts paid or incurred after December 31, 2010.CommentsClose CommentsPermalink

SEC. 13. TAX PROVISIONS OF PRIOR LAWS MADE PERMANENT.

(a) Economic Growth and Tax Relief Reconciliation Act of 2001- Title IX of the Economic Growth and Tax Relief Reconciliation Act of 2001 (relating to sunset of provisions of Act) is hereby repealed.CommentsClose CommentsPermalink





(b) Jobs and Growth Tax Relief Reconciliation Act of 2003-CommentsClose CommentsPermalink





(1) Section 107 of the Jobs and Growth Tax Relief Reconciliation Act of 2003 (relating to application of EGTRRA sunset to this title) is hereby repealed.CommentsClose CommentsPermalink





(2) Section 303 of the Jobs and Growth Tax Relief Reconciliation Act of 2003 is hereby repealed.CommentsClose CommentsPermalink