S.Amdt. 636

1. Adds SEC. ____. FAMILY LEAVE TAX CREDIT; REPEAL OF TAX BENEFITS RELATING TO COMPANY-OWNED LIFE INSURANCE at the end of subtitle C of title V

   Adds a section

   In S. 1054 · Placed on Calendar Senate

   (c) Effective Date.--The amendments made by this section shall apply to amounts paid or accrued after the date of enactment of this section in taxable years ending after such date.

   Inserted: SEC. ____. FAMILY LEAVE TAX CREDIT; REPEAL OF TAX BENEFITS RELATING TO COMPANY-OWNED LIFE INSURANCE.

   Inserted: (a) In General.--

   Inserted: (1) Allowance of credit.--Subpart A of part IV of subchapter A of chapter 1 (relating to refundable credits) is amended inserting after section 24 the following new section:

   Inserted: "SEC. 24A. FAMILY LEAVE CREDIT.

   Inserted: "(a) In General.--There shall be allowed as a credit against the tax imposed by this chapter for the taxable year with respect to each qualified child of the taxpayer an amount equal to $500 ($1,000 in the case of taxable years 2005 and 2006, and $1,500 in the case of taxable years after 2006).

   Inserted: "(b) Limitation.--

   Inserted: "(1) In general.--The amount of the credit allowable under subsection (a) shall be reduced (but not below zero) by $50 for each $1,000 (or fraction thereof) by which the taxpayer's modified adjusted gross income exceeds the threshold amount. For purposes of the preceding sentence, the term 'modified adjusted gross income' means adjusted gross income increased by any amount excluded from gross income under section 911, 931, or 933.

   Inserted: "(2) Threshold amount.--For purposes of paragraph (1), the term 'threshold amount' means--

   Inserted: "(i) $110,000 in the case of a joint return,

   Inserted: "(ii) $75,000 in the case of an individual who is not married, and

   Inserted: "(iii) $ 55,000 in the case of a married individual filing a separate return.

   Inserted: For purposes of this paragraph, marital status shall be determined under section 7703.

   Show 39 more inserted paragraphsShow less

   Inserted: "(c) Portion of Credit Refundable.--The aggregate credits allowed to a taxpayer under subpart C shall be increased by the lesser of--

   Inserted: "(1) the credit which would be allowed under this section without regard to this subsection and the limitation under section 26(a), or

   Inserted: "(2) the amount by which the aggregate amount of credits allowed by this subpart (determined without regard to this subsection) would increase if the limitation imposed by section 26(a) were increased by the taxpayer's earned income (within the meaning of section 32(c)(2)) over such limitation.

   Inserted: The amount of the credit allowed under this subsection shall not be treated as a credit allowed under this subpart and shall reduce the amount of credit otherwise allowable under subsection (a) without regard to section 26(a).

   Inserted: "(d) Qualified Child.--For purposes of this section, the term 'qualified child' means with respect to any taxable year--

   Inserted: "(1) except with respect to an individual described in paragraph (2), any qualifying child (as defined in section 24(c) by substituting 'age of 1' for 'age of 17' in paragraph (1)(B) thereof), and

   Inserted: "(2) any individual adopted by the taxpayer in such year (within the meaning of section 23).

   Inserted: "(e) Inflation Adjustment.--

   Inserted: "(1) In general.--In the case of a taxable year beginning after 2007, the $1,500 amount under subsection (a) shall be increased by an amount equal to--

   Inserted: "(A) such dollar amount, multiplied by

   Inserted: "(B) 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 2006' for calendar year '1992' in subparagraph (B) thereof.

   Inserted: "(2) Rounding.--If any amount as adjusted under subparagraph (A) is not a multiple of $10, such amount shall be rounded to the next lowest multiple of $10.".

   Inserted: (2) Credit Allowed Against Alternative Minimum Tax.--

   Inserted: (A) In general.--Subsection (b) of section 24A (relating to family leave credit), as added by paragraph (1), is amended by adding at the end the following new paragraph:

   Inserted: "(3) Limitation based on amount of tax.--The credit allowed under subsection (a) for any taxable year shall not exceed the excess of--

   Inserted: "(A) the sum of the regular tax liability (as defined in section 26(b)) plus the tax imposed by section 55, over

   Inserted: "(B) the sum of the credits allowable under this subpart (other than this section and sections 23, 24, and 25B) and section 27 for the taxable year.".

   Inserted: (B) Conforming amendments.--

   Inserted: (i) The heading for section 24A(b) is amended to read as follows: "Limitations.--".

   Inserted: (B) The heading for section 24A(b)(1) is amended to read as follows: "Limitation based on adjusted gross income.--".

   Inserted: (C) Section 24A(c) is amended by striking "section 26(a)" each place it appears and inserting "subsection (b)(3)".

   Inserted: (D) Subparagraph (C) of section 25(e)(1) is amended by inserting "24A," after "24,".

   Inserted: (E) Section 904(h) is amended by inserting "24A," after "24,".

   Inserted: (F) Subsection (d) of section 1400C is amended by inserting "24A," after "24,".

   Inserted: (3) Conforming amendment.--The table of sections for subpart A of part IV of subchapter A of chapter 1 is amended by inserting after the item relating to section 24 the following new item:

   Inserted: "Sec. 24A. Family leave credit.".

   Inserted: (4) Effective Date.--

   Inserted: (A) Except as provided in subparagraph (B), the amendments made by this subsection shall apply to taxable years beginning after December 31, 2002.

   Inserted: (B) The amendments made by paragraph (2) shall apply to taxable years beginning after December 31, 2003.

   Inserted: (b) Repeal of Tax Benefits Relating to Company-Owned Life Insurance.--

   Inserted: (1) Inclusion of life insurance investment gains.--Section 72 (relating to annuities; certain proceeds of endowment and life insurance contracts) is amended by inserting after subsection (j) the following new subsection:

   Inserted: "(k) Treatment of Certain Company-Owned Life Insurance Contracts.--In the case of a company-owned life insurance contract, the income on the contract (as determined under section 7702(g)) for any taxable year shall be includible in gross income for such year unless the contract covers the life solely of individuals who are key persons (as defined in section 264(e)(3)).".

   Inserted: (2) Repeal of exclusion for death benefits.--Section 101 (relating to certain death benefits) is amended by adding at the end the following new subsection:

   Inserted: "(j) Proceeds of Certain Company-Owned Life Insurance.--Notwithstanding any other provision of this section, there shall be included in gross income of the beneficiary of a company-owned life insurance contract (unless the contract covers the life solely of individuals who are key persons (as defined in section 264(e)(3)))--

   Inserted: "(1) amounts received during the taxable year under such contract, less

   Inserted: "(2) the sum of amounts which the beneficiary establishes as investment in the contract plus premiums paid under the contract.

   Inserted: Amounts included in gross income under the preceding sentence shall be so included under section 72.".

   Inserted: (3) Effective date.--The amendments made by this subsection shall apply to contracts entered into after the date of enactment of this section.

   Inserted: (c) Repeal of Dividend Exclusion.--The amendments made by section 201 of this Act are repealed.

   Original wording

   At the end of subtitle C of title V, insert the following:

Read automatically from the Congressional Record. Check the original before relying on it.

As printed