A bill to amend the Tax Reform Act of 1986 to provide for the deductibility of State and local income and sales taxes exceeding 1 percent of adjusted gross income.

Amends the Tax Reform Act of 1986 to allow a deduction for State, local, and foreign income, war profits, and excess profits taxes and State and local general sales taxes, but only to the extent their aggregate exceeds one percent of adjusted gross income.

Requires taxes paid in connection with an acquisition or disposition of property, to the extent they are not deductible, to be treated as: (1) part of the cost of the acquired property; or (2) a reduction in the amount realized on disposition.