To amend the Internal Revenue Code of 1986 to allow an above-the-line deduction against individual income tax for interest on indebtedness and for State sales and excise taxes with respect to the purchase of certain motor vehicles.

SA 104. Ms. MIKULSKI (for herself and Mr. Brownback) submitted an
amendment intended to be proposed to amendment SA 98 proposed by Mr.
Inouye (for himself and Mr. Baucus) to the bill H.R. 1, making
supplemental appropriations for job preservation and creation,
infrastructure investment, energy efficiency and science, assistance to
the unemployed, and State and local fiscal stabilization, for fiscal
year ending September 30, 2009, and for other purposes; which was order
to lie on the table; as follows:

On page 570, after line 8, insert the following:

SEC. --. ABOVE-THE-LINE DEDUCTION FOR INTEREST ON
INDEBTEDNESS WITH RESPECT TO THE PURCHASE OF
CERTAIN MOTOR VEHICLES.

(a) In General.--Paragraph (2) of section 163(h) of the
Internal Revenue Code of 1986 is amended--
(1) by striking ``and'' at the end of subparagraph (E),
(2) by striking the period at the end of subparagraph (F)
and inserting ``, and'', and
(3) by adding at the end the following new subparagraph:
``(G) any qualified motor vehicle interest (within the
meaning of paragraph (5)).''.
(b) Qualified Motor Vehicle Interest.--Section 163(h) of
the Internal Revenue Code of 1986 is amended by adding at the
end the following new paragraph:
``(5) Qualified motor vehicle interest.--For purposes of
this subsection--
``(A) In general.--The term `qualified motor vehicle
interest' means any interest which is paid or accrued during
the taxable year on any indebtedness which--
``(i) is incurred after November 12, 2008, and before
January 1, 2010, in acquiring any qualified motor vehicle of
the taxpayer, and
``(ii) is secured by such qualified motor vehicle.
Such term also includes any indebtedness secured by such
qualified motor vehicle resulting from the refinancing of
indebtedness meeting the requirements of the preceding
sentence (or this sentence); but only to the extent the
amount of the indebtedness resulting from such refinancing
does not exceed the amount of the refinanced indebtedness.
``(B) Dollar limitation.--The aggregate amount of
indebtedness treated as described in subparagraph (A) for any
period shall not exceed $49,500 ($24,750 in the case of a
separate return by a married individual).
``(C) Income limitation.--The amount otherwise treated as
interest under subparagraph (A) for any taxable year (after
the application of subparagraph (B)) shall be reduced (but
not below zero) by the amount which bears the same ratio to
the amount which is so treated as--
``(i) the excess (if any) of--

``(I) the taxpayer's modified adjusted gross income for
such taxable year, over
``(II) $125,000 ($250,000 in the case of a joint return),
bears to

``(ii) $10,000.
For purposes of the preceding sentence, the term `modified
adjusted gross income' means the adjusted gross income of the
taxpayer for the taxable year increased by any amount
excluded from gross income under section 911, 931, or 933.
``(D) Qualified motor vehicle.--The term `qualified motor
vehicle' means a passenger automobile (within the meaning of
section 30B(h)(3)) or a light truck (within the meaning of
such section)--
``(i) which is acquired for use by the taxpayer and not for
resale after November 12, 2008, and before January 1, 2010,
``(ii) the original use of which commences with the
taxpayer, and
``(iii) which has a gross vehicle weight rating of not more
than 8,500 pounds.''.
(c) Deduction Allowed Above-the-Line.--Section 62(a) of the
Internal Revenue Code of 1986 is amended by inserting after
paragraph (21) the following new paragraph:
``(22) Qualified motor vehicle interest.--The deduction
allowed under section 163 by reason of subsection (h)(2)(G)
thereof.''.
(d) Reporting of Qualified Motor Vehicle Interest.--
(1) In general.--Subpart B of part III of subchapter A of
chapter 61 of the Internal

[[Page S1279]]

Revenue Code of 1986 is amended by adding at the end the
following new section:

``SEC. 6050X. RETURNS RELATING TO QUALIFIED MOTOR VEHICLE
INTEREST RECEIVED IN TRADE OR BUSINESS FROM
INDIVIDUALS.

``(a) Qualified Motor Vehicle Interest.--Any person--
``(1) who is engaged in a trade or business, and
``(2) who, in the course of such trade or business,
receives from any individual interest aggregating $600 or
more for any calendar year on any indebtedness secured by a
qualified motor vehicle (as defined in section 163(h)(5)(D)),

shall make the return described in subsection (b) with
respect to each individual from whom such interest was
received at such time as the Secretary may by regulations
prescribe.
``(b) Form and Manner of Returns.--A return is described in
this subsection if such return--
``(1) is in such form as the Secretary may prescribe,
``(2) contains--
``(A) the name and address of the individual from whom the
interest described in subsection (a)(2) was received,
``(B) the amount of such interest received for the calendar
year, and
``(C) such other information as the Secretary may
prescribe.
``(c) Application to Governmental Units.--For purposes of
subsection (a)--
``(1) Treated as persons.--The term `person' includes any
governmental unit (and any agency or instrumentality
thereof).
``(2) Special rules.--In the case of a governmental unit or
any agency or instrumentality thereof--
``(A) subsection (a) shall be applied without regard to the
trade or business requirement contained therein, and
``(B) any return required under subsection (a) shall be
made by the officer or employee appropriately designated for
the purpose of making such return.
``(d) Statements to Be Furnished to Individuals With
Respect to Whom Information Is Required.--Every person
required to make a return under subsection (a) shall furnish
to each individual whose name is required to be set forth in
such return a written statement showing--
``(1) the name, address, and phone number of the
information contact of the person required to make such
return, and
``(2) the aggregate amount of interest described in
subsection (a)(2) received by the person required to make
such return from the individual to whom the statement is
required to be furnished

.The written statement required under the preceding sentence
shall be furnished on or before January 31 of the year
following the calendar year for which the return under
subsection (a) was required to be made.
``(e) Returns Which Would Be Required to Be Made by 2 or
More Persons.--Except to the extent provided in regulations
prescribed by the Secretary, in the case of interest received
by any person on behalf of another person, only the person
first receiving such interest shall be required to make the
return under subsection (a).''.
(2) Amendments relating to penalties.--
(A) Section 6721(e)(2)(A) of such Code is amended by
striking ``or 6050L'' and inserting ``6050L, or 6050X''.
(B) Section 6722(c)(1)(A) of such Code is amended by
striking ``or 6050L(c)'' and inserting ``6050L(c), or
6050X(d)''.
(C) Subparagraph (B) of section 6724(d)(1) of such Code is
amended by redesignating clauses (xvi) through (xxii) as
clauses (xvii) through (xxiii), respectively, and by
inserting after clause (xii) the following new clause:
``(xvi) section 6050X (relating to returns relating to
qualified motor vehicle interest received in trade or
business from individuals),''.
(D) Paragraph (2) of section 6724(d) of such Code is
amended by striking the period at the end of subparagraph
(DD) and inserting ``, or'' and by inserting after
subparagraph (DD) the following new subparagraph:
``(EE) section 6050X(d) (relating to returns relating to
qualified motor vehicle interest received in trade or
business from individuals).''.
(3) Clerical amendment.--The table of sections for subpart
B of part III of subchapter A of chapter 61 of such Code is
amended by inserting after the item relating to section 6050W
the following new item:

``Sec. 6050X. Returns relating to qualified motor vehicle interest
received in trade or business from individuals.''.

(e) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after December 31,
2008.

SEC. --. ABOVE-THE-LINE DEDUCTION FOR STATE SALES TAX AND
EXCISE TAX ON THE PURCHASE OF CERTAIN MOTOR
VEHICLES.

(a) In General.--Subsection (a) of section 164 of the
Internal Revenue Code of 1986 is amended by inserting after
paragraph (5) the following new paragraph:
``(6) Qualified motor vehicle taxes.''.
(b) Qualified Motor Vehicle Taxes.--Subsection (b) of
section 164 of the Internal Revenue Code of 1986 is amended
by adding at the end the following new paragraph:
``(6) Qualified motor vehicle taxes.--
``(A) In general.--For purposes of this section, the term
`qualified motor vehicle taxes' means any State or local
sales or excise tax imposed on the purchase of a qualified
motor vehicle (as defined in section 163(h)(5)(D)).
``(B) Dollar limitation.--The amount taken into account
under subparagraph (A) for any taxable year shall not exceed
$49,500 ($24,750 in the case of a separate return by a
married individual).
``(C) Income limitation.--The amount otherwise taken into
account under subparagraph (A) (after the application of
subparagraph (B)) for any taxable year shall be reduced (but
not below zero) by the amount which bears the same ratio to
the amount which is so treated as--
``(i) the excess (if any) of--

``(I) the taxpayer's modified adjusted gross income for
such taxable year, over
``(II) $125,000 ($250,000 in the case of a joint return),
bears to

``(ii) $10,000.
For purposes of the preceding sentence, the term `modified
adjusted gross income' means the adjusted gross income of the
taxpayer for the taxable year increased by any amount
excluded from gross income under section 911, 931, or 933.
``(D) Qualified motor vehicle taxes not included in cost of
acquired property.--The last sentence of subsection (a) shall
not apply to any qualified motor vehicle taxes.
``(E) Coordination with general sales tax.--This paragraph
shall not apply in the case of a taxpayer who makes an
election under paragraph (5) for the taxable year.''.
(c) Conforming Amendments.--Paragraph (5) of section 163(h)
of the Internal Revenue Code of 1986, as added by section 1,
is amended--
(1) by adding at the end the following new subparagraph:
``(E) Exclusion.--If the indebtedness described in
subparagraph (A) includes the amounts of any State or local
sales or excise taxes paid or accrued by the taxpayer in
connection with the acquisition of a qualified motor vehicle,
the aggregate amount of such indebtedness taken into account
under such subparagraph shall be reduced, but not below zero,
by the amount of any such taxes for which a deduction is
allowed under section 164(a) by reason of paragraph (6)
thereof.'', and
(2) by inserting ``, after the application of subparagraph
(E),'' after ``for any period'' in subparagraph (B).
(d) Deduction Allowed Above-the-Line.--Section 62(a) of the
Internal Revenue Code of 1986, as amended by section 1, is
amended by inserting after paragraph (22) the following new
paragraph:
``(23) Qualified motor vehicle taxes.--The deduction
allowed under section 164 by reason of subsection (a)(6)
thereof.''.
(e) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after December 31,
2008.
______