EXTENSION AND MODIFICATION OF EXCLUSION FOR EMPLOYER-PROVIDED EDUCATIONAL ASSISTANCE.

SEC. 4001. EXTENSION AND MODIFICATION OF EXCLUSION FOR EMPLOYER-PROVIDED EDUCATIONAL ASSISTANCE. (a) Extension.— Subsection (d) of section 127 of the 1986 Code (relating to educational assistance programs) is amended by striking out “December 31, 1987” and inserting in lieu thereof “December 31, 1988”. (b) Restrictions Relating to Education at the Graduate Level.— (1) In general.— Paragraph (1) of section 127(c) of the 1986 Code is amended by adding at the end thereof the following new sentence: “The term ‘educational assistance’ also does not include any payment for, or the provision of any benefits with respect to, any graduate level course of a kind normally taken by an individual pursuing a program leading to a law, business, medical, or other advanced academic or professional degree.” (2) Special rule for teaching and research assistants.— Subsection (d) of section 117 of the 1986 Code is amended by adding at the end thereof the following new paragraph: “(5) Special rules for teaching and research assistants.— In the case of the education of an individual who is a graduate student at an educational organization described in section 170(b)(1)(A)(ii) and who is engaged in teaching or research activities for such organization, paragraph (2) shall be applied as if it did not contain the phrase ‘(below the graduate level)’.” (c) Effective Dates.— The amendments made by this section shall apply to taxable years beginning after December 31, 1987.