HOMEMAKERS ELIGIBLE FOR FULL IRA DEDUCTION.

SEC. 1427. HOMEMAKERS ELIGIBLE FOR FULL IRA DEDUCTION. (a) Spousal IRA Computed on Basis of Compensation of Both Spouses.— Subsection (c) of section 219 (relating to special rules for certain married individuals) is amended to read as follows: “(c) Special Rules for Certain Married Individuals.— “(1) In general.— In the case of an individual to whom this paragraph applies for the taxable year, the limitation of paragraph (1) of subsection (b) shall be equal to the lesser of— “(A) the dollar amount in effect under subsection (b)(1)(A) for the taxable year, or “(B) the sum of— “(i) the compensation includible in such individual’s gross income for the taxable year, plus “(ii) the compensation includible in the gross income of such individual’s spouse for the taxable year reduced by the amount allowed as a deduction under subsection (a) to such spouse for such taxable year. “(2) Individuals to whom paragraph (1) applies.— Paragraph (1) shall apply to any individual if— “(A) such individual files a joint return for the taxable year, and “(B) the amount of compensation (if any) includible in such individual’s gross income for the taxable year is less than the compensation includible in the oss income of such individual’s spouse for the taxable year.”. (b) Conforming Amendments.— (1) Paragraph (2) of section 219(f) (relating to other definitions and special rules) is amended by striking “subsections (bl and (c)” and inserting “subsection (b)”. (2) Section 219(g)(1) is amended by striking “(c)(2)” and inserting “(c)(1)(A)”. (3) Section 408(d)(5) is amended by striking “$2,250” and inserting “the dollar amount in effect under section 219(b)(1)(A)”. (c) Effective Date.— The amendments made by this section shall apply to taxable years beginning after December 31, 1996.