AMENDMENTS RELATED TO TITLE II OF 1997 ACT.

SEC. 6004. AMENDMENTS RELATED TO TITLE II OF 1997 ACT. (a) Amendments Related to Section 201 of 1997 Act.— (1) The item relating to section 25A in the table of sections for subpart A of part IV of subchapter A of chapter 1 of the 1986 Code is amended to read as follows: Sec. 25A. Hope and Lifetime Learning credits.”. (2) Subsection (a) of section 6050S of the 1986 Code is amended to read as follows: “(a) In General.— Any person— “(1) which is an eligible educational institution— “(A) which receives payments for qualified tuition and related expenses with respect to any individual for any calendar year; or “(B) which makes reimbursements or refunds (or similar amounts) to any individual of qualified tuition and related expenses; “(2) which is engaged in a trade or business of making payments to any individual under an insurance arrangement as reimbursements or refunds (or similar amounts) of qualified tuition and related expenses; or “(3) except as provided in regulations, which is engaged in a trade or business and, in the course of which, receives from any individual interest aggregating $600 or more for any calendar year on one or more qualified education loans, shall make the return described in subsection (b) with respect to the individual at such time as the Secretary may by regulations prescribe.”. (3) Subparagraph (A) of section 201(c)(2) of the 1997 Act is amended to read as follows: (A) Subparagraph (B) of section 6724(d)(1) (relating to definitions) is amended by redesignating clauses (x) through (xv) as clauses (xi) through (xvi), respectively, and by inserting after clause (ix) the following new clause: “‘(x) section 6050S (relating to returns relating to payments for qualified tuition and related expenses),‘”. (b) Amendments Related to Section 202 of 1997 Act.— (1) Paragraph (1) of section 221(e) of the 1986 Code is amended by inserting “by the taxpayer solely” after “incurred” the first place it appears.112 STAT. 793 (2) .— Subsection (d) of section 221 of the 1986 Code is amended by adding at the end the following new sentence: “Such 60 months shall be determined in the manner prescribed by the Secretary in the case of multiple loans which are refinanced by, or serviced as, a single loan and in the case of loans incurred before the date of the enactment of this section.”. (c) Amendments Related to Section 211 of 1997 Act.— (1) Paragraph (3) of section 135(c) of the 1986 Code is amended to read as follows: “(3) Eligible educational institution.— The term ‘eligible educational institution’ has the meaning given such term by section 529(e)(5).”. (2) Subparagraph (A) of section 529(c)(3) of the 1986 Code is amended by striking “section 72(b)” and inserting “section 72”. (3) Paragraph (2) of section 529(e) of the 1986 Code is amended to read as follows: “(2) Member of family.— The term ‘member of the family’ means, with respect to any designated beneficiary— “(A) the spouse of such beneficiary; “(B) an individual who bears a relationship to such beneficiary which is described in paragraphs (1) through (8) of section 152(a); and “(C) the spouse of any individual described in subparagraph (B).”. (d) Amendments Related to Section 213 of 1997 Act.— (1) Section 530(b)(1) of the 1986 Code (defining education individual retirement account) is amended by inserting “an individual who is” before “the designated beneficiary” in the material preceding subparagraph (A). (2) (A) Section 530(b)(1)(E) of the 1986 Code (defining education individual retirement account) is amended to read as follows: “(E) Except as provided in subsection (d)(7), any balance to the credit of the designated beneficiary on the date on which the beneficiary attains age 30 shall be distributed within 30 days after such date to the beneficiary or, if the beneficiary dies before attaining age 30, shall be distributed within 30 days after the date of death of such beneficiary.”. (B) Paragraph (7) of section 530(d) of the 1986 Code is amended by inserting at the end the following new sentence: “In applying the preceding sentence, members of the family (as so defined) of the designated beneficiary shall be treated in the same manner as the spouse under such paragraph (8).”. (C) Subsection (d) of section 530 of the 1986 Code is amended by adding at the end the following new paragraph: “(8) Deemed distribution on required distribution date.— In any case in which a distribution is required under subsection (b)(1)(E), any balance to the credit of a designated beneficiary as of the close of the 30-day period referred to in such subsection for making such distribution shall be deemed distributed at the close of such period.”. (3) (A) Paragraph (1) of section 530(d) of the 1986 Code is amended by striking “section 72(b)” and inserting “section 72”.112 STAT. 794 (B) Subsection (e) of section 72 of the 1986 Code is amended by inserting after paragraph (8) the following new paragraph: “(9) Extension of paragraph (2)(b) to qualified state tuition programs and educational individual retirement accounts.— Notwithstanding any other provision of this subsection, paragraph (2)(B) shall apply to amounts received under a qualified State tuition program (as defined in section 529(b)) or under an education individual retirement account (as defined in section 530(b)). The rule of paragraph (8)(B) shall apply for purposes of this paragraph.”. (4) Paragraph (2) of section 135(d) of the 1986 Code is amended to read as follows: “(2) Coordination with other higher education benefits.— The amount of the qualified higher education expenses otherwise taken into account under subsection (a) with respect to the education of an individual shall be reduced (before the application of subsection (b)) by— “(A) the amount of such expenses which are taken into account in determining the credit allowable to the taxpayer or any other person under section 25A with respect to such expenses; and “(B) the amount of such expenses which are taken into account in determining the exclusion under section 530(d)(2).”. (5) Section 530(d)(2) of the 1986 Code (relating to distributions for qualified higher education expenses) is amended by adding at the end the following new subparagraph: “(D) Disallowance of excluded amounts as credit or deduction.— No deduction or credit shall be allowed to the taxpayer under any other section of this chapter for any qualified education expenses to the extent taken into account in determining the amount of the exclusion under this paragraph.”. (6) Section 530(d)(4)(B) of the 1986 Code (relating to exceptions) is amended by striking “or” at the end of clause (ii), by striking the period at the end of clause (iii) and inserting “; or”, and by adding at the end the following new clause: “(iv) an amount which is includible in gross income solely because the taxpayer elected under paragraph (2)(C) to waive the application of paragraph (2) for the taxable year.”. (7) So much of section 530(d)(4)(C) of the 1986 Code as precedes clause (ii) thereof is amended to read as follows: “(C) Contributions returned before due date of return.— Subparagraph (A) shall not apply to the distribution of any contribution made during a taxable year on behalf of the designated beneficiary if— “(i) such distribution is made on or before the day prescribed by law (including extensions of time) for filing the beneficiary’s return of tax for the taxable year or, if the beneficiary is not required to file such a return, the 15th day of the 4th month of the taxable year following the taxable year; and”. (8) (A) Paragraph (5) of section 530(d) of the 1986 Code is amended by striking the first sentence and inserting the following new sentence: “Paragraph (1) shall not apply to any 112 STAT. 795amount paid or distributed from an education individual retirement account to the extent that the amount received is paid, not later than the 60th day after the date of such payment or distribution, into another education individual retirement account for the benefit of the same beneficiary or a member of the family (within the meaning of section 529(e)(2)) of such beneficiary who has not attained age 30 as of such date.”. (B) Paragraph (6) of section 530(d) of the 1986 Code is amended by inserting before the period “and has not attained age 30 as of the date of such change”. (9) Subparagraph (C) of section 135(c)(2) of the 1986 Code is amended— (A) by inserting “and education individual retirement accounts” in the heading after “program”; and (B) by striking “section 529(c)(3)(A)” and inserting “section 72”. (10) (A) Paragraph (1) of section 4973(e) of the 1986 Code is amended to read as follows: “(1) In general.— In the case of education individual retirement accounts maintained for the benefit of any one beneficiary, the term ‘excess contributions’ means the sum of— “(A) the amount by which the amount contributed for the taxable year to such accounts exceeds $500 (or, if less, the sum of the maximum amounts permitted to be contributed under section 530(c) by the contributors to such accounts for such year); “(B) if any amount is contributed (other than a contribution described in section 530(b)(2)(B)) during such year to a qualified State tuition program for the benefit of such beneficiary, any amount contributed to such accounts for such taxable year; and “(C) the amount determined under this subsection for the preceding taxable year, reduced by the sum of— “(i) the distributions out of the accounts for the taxable year (other than rollover distributions); and “(ii) the excess (if any) of the maximum amount which may be contributed to the accounts for the taxable year over the amount contributed to the accounts for the taxable year.”. (B) Paragraph (2) of section 4973(e) of the 1986 Code is amended by striking subparagraph (B) and by redesignating subparagraph (C) as subparagraph (B). (e) Amendments Related to Section 224 of 1997 Act.— (1) Clauses (vi) and (vii) of section 170(e)(6)(B) of the 1986 Code are each amended by striking “entity’s” and inserting “donee‘s”. (2) Clause (iv) of section 170(e)(6)(B) of the 1986 Code is amended by striking “organization or entity” and inserting “donee”. (3) Subclause (I) of section 170(e)(6)(C)(ii) of the 1986 Code is amended by striking “an entity” and inserting “a donee”. (4) Section 170(e)(6)(F) of the 1986 Code (relating to termination) is amended by striking “1999” and inserting “2000”. (f) Amendments Related to Section 225 of 1997 Act.— (1) The last sentence of section 108(f)(2) of the 1986 Code is amended to read as follows:112 STAT. 796 “The term ‘student loan’ includes any loan made by an educational organization described in section 170(b)(1)(A)(ii) or by an organization exempt from tax under section 501(a) to refinance a loan to an individual to assist the individual in attending any such educational organization but only if the refinancing loan is pursuant to a program of the refinancing organization which is designed as described in subparagraph (D)(ii).”. (2) Section 108(f)(3) of the 1986 Code is amended by striking “(or by an organization described in paragraph (2)(E) from funds provided by an organization described in paragraph (2)(D))”. (g) Amendments Related to Section 226 of 1997 Act.— (1) Section 226(a) of the 1997 Act is amended by striking “section 1397E” and inserting “section 1397D”. (2) Section 1397E(d)(4)(B) of the 1986 Code is amended by striking “local education agency as defined” and inserting “local educational agency as defined”. (3) Section 1397E is amended by adding at the end the following new subsection: “(h) Credit Treated as Allowed Under Part IV of Subchapter A.— For purposes of subtitle F, the credit allowed by this section shall be treated as a credit allowable under part IV of subchapter A of this chapter.”. (4) Subsection (g) of section 1397E of the 1986 Code is amended by inserting “(determined without regard to subsection (c))” after “section”. (5) Subparagraph (D) of section 42(j)(4) of the 1986 Code is amended by striking “subpart A, B, D, or G of this part” and inserting “this chapter”. (6) Paragraph (4) of section 49(b) of the 1986 Code is amended by striking “subpart A, B, D, or G” and inserting “this chapter”. (7) Subparagraph (C) of section 50(a)(5) of the 1986 Code is amended by striking “subpart A, B, D, or G” and inserting ”this chapter”.