Economic Recovery Tax Act of 1981

Economic Recovery Tax Act of 1981 - Title I: Individual Income Tax Provisions - Subtitle A: Tax Reductions - Amends the Internal Revenue Code to reduce individual and estate and trust income tax rates for 1982, 1983, and 1984 and thereafter. Reduces the highest marginal tax rate from 70 to 50 percent, effective in 1982. Allows a tax credit of one and one-fourth percent of an individual's tax liability for the tax year of 1981. Repeals the 50 percent maximum tax rate on personal service income, effective in 1982. Reduces the alternative minimum tax and the personal holding company tax to correspond with the reductions in the the highest marginal tax rates.

Revises withholding requirements to provide for withholding reductions in 1981, 1982, and 1983. Specifies such reduction as 10 percent in 1982 and 10 percent in 1983. Authorizes the Secretary of the Treasury to issue regulations permitting wage earners to increase or decrease their withholding allowances.

Establishes a maximum tax rate on long-term capital gains of 20 percent for sales and exchanges (by taxpayers other than corporations) occurring after June 10, 1981 and before January 1, 1982. Decrease the holding period requirement for long-term capital gain or loss treatment from one-year to six months.

Allows married individuals filing a joint return an income tax deduction from gross income of ten percent of the lesser of $30,000 or the qualified earned income of the lower income spouse. Specifies that the rate of such deduction shall be five percent, instead of ten percent, in taxable year 1982.

Requires annual cost of living adjustments, based on the Consumer Price Index, to individual income tax rates, the zero bracket amount, the personal tax exemption, and the minimum income tax return amount beginning in 1985.

Subtitle B: Income Earned Abroad - Increases from $20,000 to $75,000 in 1982 (with annual adjustments up to $95,000 in 1986 and thereafter) the earned income exclusion for U.S. citizens working abroad who are bona fide residents of a foreign country. Repeals the requirement that, as a condition of their employment, such individuals reside in a hardship area. Reduces from 17 to 11 months the residency requirement for such exclusion. Permits the tax exclusion of the housing costs of such individuals in the amount by which the taxpayer's housing costs exceed 16 percent of a GS-14, step 1 salary level for a Federal employee. Permits a tax deduction for excess housing costs which are not excludable.

Waives the residency requirements for such exclusion if the Secretary of the Treasury determines that the taxpayer would otherwise have met the residency requirement but for the occurrence of civil unrest, war, or other adverse conditions precluding the normal conduct of business. Repeals the existing income tax deduction for certain living expenses of U.S. citizens abroad.

Provides for an income tax exclusion for the value of employer-provided lodging in a camp in cases where satisfactory housing is not generally available.

Amends the Foreign Earned Income Act of 1978 to revise reporting requirements to require the Secretary and certain Federal Government agencies to report to specified congressional committees on the operation and effects of the foreign earned income exclusion quadrennially beginning after the enactment of this Act.

Subtitle C: Miscellaneous Provisions - Permits taxpayers who do not itemize to claim a deduction from gross income for a specified percentage of their charitable contributions beginning in 1982, limits such deduction to $100 for the years 1982, 1983 and 1984. Terminates such deduction after 1986.

Increases the time period for rollover of the gain on the sale of a principal residence from 18 months to 2 years.

Increases the amount of the one-time exclusion of gain from sale of a principal residence by an individual who has attained age 55 from $100,000 to $125,000.

Title II: Business Incentive Provisions - Subtitle A: Cost Recovery Provisions - Amends the Internal Revenue Code to revise the method for determining useful lives of business assets for purposes of computing allowable depreciation deductions. Replaces the asset depreciation range (ADR) method with a schedule of capital cost recovery periods for four classes of business property.

Establishes cost recovery periods for the following classes of business property: (1) three-year property, including certain tangible personal property with a present class life of four years or less or used for research or experimentation; (2) five-year property, including certain tangible personal property which is not three-year property, ten-year property, or 15-year public utility property; (3) ten-year property, including certain public utility property with a present class life of more than 18 but less than 25 years and certain real property with a present class life of 12.5 years or less, and railroad tank cars; (4) 15-year public utility property, including all such property with a present class life of more than 25 years. Sets forth separate recovery schedules for property placed in service before 1985 and for property placed in service in 1985 and thereafter.

Establishes as a separate class of business property 15-year real property which does not have a present class life of 12.5 years or less. Directs the Secretary to prescribe a schedule of recovery for such property which provides for a 15-year recovery period and utilizes the 175 percent (200 percent for low-income housing) declining balance method of depreciation in the early years of recovery with a switch to the straight-line method in the remaining years.

Permits taxpayers to elect to use the straight-line method of depreciation with specified recovery periods in lieu of the prescribed accelerated method.

Excludes from eligibility for accelerated cost recovery the following types of property: (1) property placed in service before January 1, 1981; (2) property depreciable on a basis other than time; (3) public utility property for which the normalization method of accounting is not used; and (4) certain property placed in service prior to 1981 which is transferred or leased in a transaction occurring after 1981 which does not alter its use.

Revises component depreciation rules to provide that the taxpayer must utilize the same recovery period and method of depreciation for a building and its structural components. Allows separate depreciation of substantial improvements.

Provides special rules for the depreciation of recovery property used predominantly outside of the United States.

Repeals the retirement-replacement-betterment methods of depreciation allowed for certain types of property. Specifies that such property shall be depreciated using a ratable method.

Sets forth rules for determining the eligibility of lessors of recovery property for accelerated depreciation deductions and for the investment tax credit.

Specifies that the salvage value of cost recovery property shall not be taken into account in computing allowable depreciation.

Includes mass commuting vehicles as qualified leased property. Directs the Secretary to prescribe leasing regulations.

Provides special rules for determining allowable deductions for recovery property in the case of certain corporate transfers and liquidations.

Provides that the gain on the disposition of single purpose agricultural or horticultural facilities and petroleum product storage facilities shall be treated as ordinary income to the extent of prior depreciation taken.

Repeals the Secretary's authority to prescribe regulations on the treatment of repair allowances as presently deductible business expenses.

Permits a taxpayer to elect to expense (i.e. currently deduct) the cost of new or used tangible personal property used in the taxpayer's business during a taxable year in lieu of current provisions permitting additional first year depreciation. Sets the amount of such deduction at $5000 in 1982 with biennial increments of $2500 up to $10,000 in 1986.

Requires the recapture as ordinary income of excess depreciation from recovery property which is subsequently sold or exchanged.

Treats the accelerated cost recovery deduction as an item of tax preference for purposes of the minimum tax.

Revises the method of computing the adjustment to earnings and profits for depreciation. Specifies that such adjustment shall be determined using the straight-line method of depreciation over prescribed extended recovery periods.

Extends the carryover periods for certain net operating losses and tax credits.

Subtitle B: Investment Tax Credit Provisions - Revises the applicable percentage for determination of the investment tax credit to make eligible for such credit: (1) 100 percent of the basis of ten-year, five-year recovery property, or 15-year public utility; and (2) 60 percent of the basis of three-year recovery property.

Revises the progress expenditure rules to eliminate the useful life requirement for depreciable property being constructed by or for a taxpayer for use in trade or business (qualified progress expenditure property) and to apply to such property the revised percentages for determining the investment tax credit under this Act.

Qualifies petroleum product storage facilities for the investment tax credit.

Limits the amount of the investment tax credit to the amount that the taxpayer has at risk. Sets forth special at risk limitations in the case of certain third party lenders.

Revises the recapture rules for recovery property eligible for the investment tax credit. Prescribes recapture percentages for recovery property which ceases to be investment tax credit property based on the type of property and the amount of time such property is in service.

Increases the investment tax credit for qualified rehabilitation expenditures based upon the age of a building or its certification as a historic structure. Repeals the special 60-month amortization rules for certified historic structures and rules permitting accelerated depreciation for rehabilitation of certified historic structures.

Increases the limit on the amount of used property eligible for the investment tax credit.

Subtitle C: Incentives for Research and Experimentation - Allows a nonrefundable income tax credit for 25 percent of the qualified research expenses incurred by a taxpayer in carrying on any trade or business to the extent that such expenses exceed the average amount of the taxpayers expenses in a specified base period. Defines "qualified research expenses" as amount paid or incurred for in-house and contract research. Allows such credit for basic research contracted out to colleges, universities, and tax-exempt scientific research institutes. Excludes from eligibility for such credit research in the social sciences or humanities, and research funded by any other person or governmental entity. Provides for a three-year carryback and a fifteen-year carryover of any unused credit amounts. Terminates such credit after 1985.

Revises the limits on the allowable deduction for corporate charitable contributions of inventory property which is contributed to an institution of higher education and used for research purposes. Sets forth eligibility requirements for such deduction including the following: (1) that such property be scientific equipment or apparatus; (2) that the donee use such property in the United States; and (3) that the use of the property be for research in the physical or biological sciences. Excludes certain small business corporations, personal holding companies, and service organizations from eligibility for such increased deduction. Requires that all research and experimentation expenditures which are paid or incurred for research conducted in the United States shall be allocated and apportioned to income from sources within the United States.

Subtitle D: Small Business Provisions - Reduces the corporate income tax rates for corporations with a taxable income of $50,000 or less.

Increases from $150,000 to $250,000 the amount which corporations may accumulate for reasonable needs of the business without being subject to the tax on accumulated earnings. Disallows such increase for corporations performing services in the areas of health, law, engineering, architecture, accounting, actuarial science, performing arts, or consulting. Increases the allowable number of shareholders in a Subchapter S corporation from 15 to 25. Permits qualified trusts to be shareholders of Subchapter S corporations. Allows a beneficiary of such a trust to elect to be treated as the owner of stock in any Subchapter S corporation.

Terminates the status of a qualified Subchapter S trust at any time during which the trust owns no Subchapter S corporation stock or the corporation ceases to qualify as such.

Revises the Last-In-first-Out (LIFO) inventory accounting rules. Directs the Secretary to prescribe regulations permitting the use of certain governmental indexes in inventorying goods under such method. Allows businesses with average gross receipts of $1,000,000 for three years (ending with the taxable year) to elect one inventory pool for purposes of dollar value LIFO inventory accounting. Permits three-year averaging of inventory value for taxpayers who elect LIFO accounting. Requires the Secretary to study and report to Congress on simplified methods of tax accounting for inventory.

Subtitle E: Savings and Loan Associations - Sets forth special rules for the tax treatment of reorganizations involving financially troubled thrift institutions.

Permits tax-free reorganizations of building and loan associations, cooperative banks, and mutual savings banks which are subject to the jurisdiction of the Federal Home Loan Bank Board or the Federal Savings and Loan Insurance Corporation without regard to judicially-created requirements as to the distribution of stocks and securities of the transferee corporation.

Specifies rules for the limitation of net operating loss carryovers for certain financial institutions in reorganization.

Exempts distributions to the Federal Savings and Loan Insurance Corporation in redemption of certain interests in a domestic building and loan association from recapture requirements for distributions out of excess bad debt reserves.

Excludes from the gross income of a domestic building and loan association all money or property contributed to such association by the Federal Savings and Loan Insurance Corporation under its financial assistance program without reduction in the basis of the association's property.

Subtitle F: Stock Options - Revises the tax treatment of restricted stock options. Extends the tax exclusion for such options to those exercised or granted after December 31, 1980. Limits the aggregate fair market value of the stock for which an employee may be granted options to $75,000 in the case of an option granted after December 31, 1980 and to $150,000 in the case of an option granted before July 24, 1981, and exercised on or after July 24, 1981. Revises the special rule for certain options granted after December 31, 1963, to limit such rule to those options granted since that date and before January 1, 1981. Repeals the termination date for exercising such an option.

Title III: Savings Provisions - Subtitle A: Interest Exclusion - Excludes from gross income interest received on a savings certificate issued after September 30, 1981 and before January 1, 1983 by a qualified bank, savings and loan institution, credit union, or industrial loan association or bank. Disallows the issuance of tax-exempt savings certificates by foreign branches and international banking facilities of U.S. banks. Requires that such certificates be made available in $500 denominations, have a maturity of one year, and have an investment yield which does not exceed 70 percent of the Treasury bill rate. Permits such exclusion only to the extent that the interest income received by the taxpayer exceeds the amount of such income received in the previous year, up to $1000 ($2000 for joint returns). Requires institutions issuing such certificates to invest 75 percent of the proceeds from such certificates or other qualified net savings in residential financing and agricultural loans. Requires the Secretary to report to Congress on such exemption's effectiveness in generating additional savings.

Provides for the exclusion from gross income of 15 percent of interest from specified sources, beginning in 1985. Limits the amount of such exclusion to 15 percent of the lesser of $3,000 ($6000 for joint returns) or the amount of net interest received by the taxpayer.

Amends the Crude Oil Windfall Profit Tax Act of 1980 to repeal the partial exclusion of interest from gross income.

Subtitle B: Retirement Savings Provisions - Revises rules for the retirement savings deduction. Increases the amount of the allowable tax deduction for contributions to an individual retirement account (IRA) for individuals not covered by other plans to the lesser of $2000 ($2,250 for a spousal IRA) or the individual's compensation income.

Allows employees a deduction for employer contributions to a simplified employee pension. Limits such deduction to the lesser of 15 percent of the taxpayers' compensation or the amount of such contribution (up to $7,500).

Repeals existing provisions relating to the tax deduction for retirement savings for certain married individuals. Requires that the maximum deduction for retirement savings contributions by married individuals be computed separately for each individual.

Increases the limit on deductible contributions to self-employed retirement plans from $7,500 to $15,000 or 15 percent of the earned income derived by employees from the trade or business, whichever is less. Increases the amount of compensation which may be used to determine annual benefit accruals for purposes of applying limits on deductible contributions.

Revises rules relating to the taxation of the beneficiaries of qualified bond purchase plans and for the rollover of the proceeds from redemption of such bonds into IRA's or other annuities.

Subtitle C: Reinvestment of Dividends in Public Utilities - Permits the exclusion from income of up to $1,500 ($3,000 for joint returns) per year of public utility stock dividends by shareholders who choose to receive a common stock dividend rather than other property under a qualified plan established by a domestic public utility corporation. Requires that the stock be newly issued common stock and that the number of shares distributed to any shareholder be determined by reference to a value which is not less than 95 and not more than 105 percent of the stock's fair market value before distribution. Disallows such exclusion if the corporation has repurchased any of its stock within one year before or after the distribution date unless the corporation establishes a business purpose for such purchase. Excludes trusts and estates, nonresident aliens, and five percent shareholders from eligibility for such exclusion. Provides for the recapture of tax benefits upon disposition of such stock.

Title IV: Estate and Gift Tax Provisions - Subtitle A: Increase in Unified Credit; Rate Reduction; Unlimited Marital Deduction - Increases the unified credit against the estate and gift taxes from $47,000 to $192,800 by specified annual increments through 1987. Increases from $175,000 to $600,000, by specified annual increments through 1987, the minimum gross estate requirement for filing of a return.

Reduces the maximum estate and gift tax rates to 50 percent by specified annual decrements through 1985.

Repeals the existing limitations on the marital deduction for gift and estate taxes. Revises the definition of "qualified joint interest" for purposes of the valuation of interests in property held by the decedent and the decedent's spouse. Qualifies certain terminable interests for the marital deduction. Requires the inclusion in the gross estate of any property in which the decedent had an income interest for life if: (1) the marital deduction was allowed with respect to the transfer of such property to the decedent; and (2) the disposition of the income interest in such property is not considered a transfer of such property under other provisions of the Internal Revenue Code.

Provides that any disposition of an income interest for life in any property shall be treated as a transfer of such property if the marital deduction was allowed with respect to the transfer of such property to the donor. Provides for a right of recovery of estate and gift tax in the case of certain marital deduction property.

Subtitle B: Other Estate Tax Provisions - Increases the maximum reduction (currently $500,000) in fair market value under the special estate tax valuation based on use for certain farms and small businesses annually to $1,000,000 in 1983 and thereafter.

Allows property put to a qualified use by a family member to qualify for special use valuation.

Qualifies estates of decedents who were disabled or retired for the special valuation of certain farms based on use if such decedents materially participated in the operation of the farm for five out of eight years preceding the year in which they became disabled or eligible for disability benefits under title II (Old Age, Survivors and Disability Insurance) of the Social Security Act.

Permits the spouse of a decedent to use such valuation if the spouse takes over active management upon the decedent's death.

Reduces from 15 to ten years the length of time a qualified property must be held and put to a qualified use following the decedent's death before it can be disposed of without incurring a recapture of estate tax benefits. Permits such period to begin on the later of the decedent's death or on a date within one year after death when the qualified use begins. Permits active management rather than material participation as a test for qualification of the estate for spouses, children under 21, students, and disabled individuals who receive property from a decedent who qualified for special use valuation.

Allows the like kind exchange of property without loss of special use valuation eligibility. Allows valuation based on net crop share rentals as an alternative method of valuing farms. Repeals the requirement that an heir elect special treatment for involuntary conversions of qualified real property, thus making such treatment automatic upon such conversion.

Includes in the value of woodlands which qualify for the special use valuation the value of the trees growing on such property. Requires the recapture of estate tax benefits upon the disposition or severance of standing timber on such property.

Permits an increase in basis of specially valued property on which a recapture tax is paid. Revises the definition of "family member" for purposes of the special use valuation. Qualifies certain property transferred to discretionary trust and certain property purchased from a decedent's estate for such valuation.

Requires that an election to use special valuation be made on the decedents' estate tax return (rather than by the due date of that return as under present law).

Provides that any period of ownership, qualified use, or material participation in the operation of a farm or other business by the decedent or family member shall be applied to qualified replacement property in the case of a like-kind exchange or involuntary conversion of the original property.

Limits the recognition of gain to an estate on the transfer of special use valuation property to the heir of such estate to the extent that the fair market value of such property exceeds the value of such property for estate tax purposes computed without regard to the special use valuation rules.

Allows an executor of an estate to request the Secretary to audit the fair market value of any special valuation property. Provides that if the executor and the Secretary cannot agree as to the value of such property the executor may bring an action in the Tax Court for a declaration of the fair market value of such property. Makes such declaration final and conclusive, and unreviewable by any other court. Provides that if the executor should fail to contest the Secretary's valuation of such property then the value as so determined by the Secretary shall be binding and conclusive. Provides that if the Secretary should fail to disagree with value of the property as claimed by the executor then the value as so determined by the executor shall be binding and conclusive.

Modifies the alternate extension of time for payment of the estate tax where the estate consists largely of an interest in a closely held business to: (1) allow an installment payment election if the value of the interest in the closely held business is 35 percent of the value of the gross estate; (2) revise the formula regarding the inclusion in the value of a gross estate of interests in two or more closely held businesses; (3) increase to 50 percent the value of an interest disposed of which will accelerate the payment of tax; (4) permit payment, but with a penalty, of an installment within six months after the due date; and (5) provide the payment of tax will not be accelerated upon the death of decedent's heir or a subsequent transferee if the interest passes to a family member.

Allows an executor of an estate to petition the Tax Court for a declaratory judgment concerning: (1) whether an estate is eligible for the extension of time for payment of the estate tax; (2) the amount of the adjusted gross estate determined on the basis of the facts in existence on the date for filing the return of tax; or (3) whether there is an acceleration of the time for payment. Allows such remedy only after the petitioner has exhausted all available administrative remedies. Makes any such declaratory judgement final and conclusive, and unreviewable by any other court.

Provides that, for purposes of the estate and gift tax charitable deduction, a work of art and the copyright on such work of art shall be treated as separate properties.

Provides that the gifts made within three years of a decedent's death shall not be included in the gross estate of a decedent dying after 1981. Disallows such exclusion for certain transfers. Allows a step-up in basis for appreciated property acquired by the decedent by gift within one year of death.

Allows a disclaimer of an interest in property for estate tax purposes in specified circumstances.

Repeals the estate tax deduction for bequests to certain minor children.

Subtitle C: Other Gift Tax Provisions - Increases from $3,000 to $10,000 the annual gift tax exclusion. Provides an unlimited tax exclusion for payments of educational expenses and medical expenses. Permits the payment of gift taxes annually rather than quarterly.

Title V: Tax Straddles - Amends the Internal Revenue Code to allow taxpayers to deduct straddle losses only to the extent of the sum of straddle gains and net non-straddle commodity gains. Permits the carry forward of any disallowed straddle losses. Defines "straddle transaction" as the sale, exchange, or disposition of: (1) a futures contract; (2) a forward contract; (3) a commodity (including metals); (4) Treasury bills and other debt instruments; (5) currency; or (6) any interest in such assets.

Exempts hedging transactions from the rule limiting straddle losses. Specifies that syndicates are not entitled to the hedging exemption.

Disallows as a deduction, and makes chargeable to capital account, interest and carrying charges with respect to personal property which is part of a straddle. Exempts hedging transactions from such capitalization rule.

Exempts futures traders from the capitalization rule and sets forth special rules allowing such traders to offset gains from commodity-related transactions. States that a taxpayer shall be considered to hold an offsetting position if there is a substantial reduction of the taxpayer's risk of loss from holding any position with respect to personal property because the taxpayer also holds one or more other positions with respect to personal property (commodities, evidences of indebtedness, currency, and other types of personal property).

Creates a rebuttable presumption that two or more positions are offsetting if: (1) the positions are in the same personal property, even if in an altered form; (2) the positions are sold or marketed as offsetting positions; (3) the aggregate margin requirement for the positions is less than the sum of the margin requirements for each position; (4) the positions are in debt instruments; or (5) the positions are determined under regulations prescribed by the Secretary of the Treasury to be offsetting positions.

Provides that obligations of the United States, a State or local government, or a U.S. possession issued on a discount basis and payable without interest in less than one year shall be treated as capital assets in determining tax consequences of gain or loss with respect to such obligations. Specifies that the discount on such obligations shall be treated as ordinary income.

Excludes from capital gains tax treatment gain by a securities dealer from the sale or exchange of any security, unless the security was clearly identified in the dealer's records before the end of the day after the date of acquisition as a security held for investment (currently, before the end of the 30th day after the date of acquisition).

States that the straddle loss limitations shall apply to property acquired and positions established after January 27, 1981. Requires the Secretary of the Treasury to study and report to Congress on the effects of such limitation.

Title VI: Energy Provisions - Subtitle A: Changes in Windfall Profit Tax - Increases from $1000 to $2500 the amount of the credit for any windfall profit tax paid in connection with taxable crude oil which is attributable to a qualified royalty interest. Exempts certain royalty owners from windfall profit tax withholding. Provides a reduction in estimated income tax and withholding of income tax for individuals and corporations eligible for such credit. Reduces from 30 to 15 percent the amount of the windfall profit tax on newly discovered tier three oil by specified annual increments through 1986.

Title VII: Administrative Provisions - Subtitle A: Prohibition of Disclosure of Audit Methods - Provides that Federal law shall not be construed to require the disclosure of methods for the selection of tax returns for audits.

Subtitle B: Changes in Interest Rate for Overpayments and Underpayments - Revises rules for the determination of the interest rate on overpayments or underpayments of taxes. Changes such rate of interest from 90 percent to 100 percent of the prime rate.

Subtitle C: Changes in Certain Penalties and in Requirements Relating to Returns - Changes certain penalties for providing false information with respect to the withholding of tax. Requires an addition to tax for underpayments of tax by individuals and certain corporations attributable to a valuation overstatement that results in an underpayment of taxes of at least $1000. Requires an addition to tax for underpayments attributable to negligent or intentional disregard of rules or regulations.

Increases penalties for failure to file certain returns or furnish certain registration statements. Increases the penalty for overstated deposit claims.

Provides that no declaration of estimated tax by individuals is required if such estimated tax is less than a specified amount.

Subtitle D: Cash Management - Increases from 60 to 80 percent the amount in total tax liability which certain large corporations must pay in estimated taxes.

Subtitle E: Financing of Railroad Retirement System - Increases the rate of the employer and employee railroad retirement taxes. Allows the Railroad Retirement Account to borrow funds from the Treasury if the balance of such Account is insufficient to pay annuity amounts due. Revises the definition of "compensation" for purposes of railroad retirement taxes.

Title VIII: Miscellaneous Provisions - Allows motor carriers an income tax deduction for the value of motor carrier operating authorities held by the taxpayer on July 1, 1980. Requires the deduction of such amount over a 60-month period.

Allows State legislators an income tax deduction for travel expenses incurred while engaged in legislative business away from their home district. Limits such deduction to 110 percent of the daily amount allowable for State employees or the daily amount allowable for Federal employees away from home but serving in the United States. Disallows such deduction for State legislators whose district residence is within 50 miles from the State capitol building.

Permits the exclusion from gross income of interest on certain industrial development bonds if the proceeds of such bonds are used to finance qualified mass commuting vehicles which are leased to a publicly-owned transportation system. Terminates such exclusion after 1984.

Terminates the new jobs tax credit in 1981 in the case of youths participating in a qualified cooperative education program and in 1983 in the case of any other members of a targeted group. Includes WIN registrants and involuntarily terminated CETA employees as targeted groups. Eliminates the age requirement applicable to Vietnam veterans. Repeals provisions limiting qualifying first year wages to 30 percent of the unemployment insurance wages paid by an employer. Disallows such credit with respect to amounts paid to certain relatives of the taxpayer or shareholders of the taxpayer corporation.

Extends through May 31, 1983, the prohibition on the issuance of any regulations by the Internal Revenue Service concerning: (1) employer fringe benefits; and (2) the deduction of commuting expenses to temporary job sites.

Extends until 1983 the effective date of the requirement that construction period interest and taxes for low-income housing projects be amortized (instead of expensed as an immediate deduction).

Revises rules relating to substantial risks of forfeiture of property transferred to employees in connection with the performance of services for purposes of the income taxation of such property.

Provides that bonds issued by a volunteer fire department to finance the acquisition, construction, reconstruction, or improvement of firefighting property shall be treated as obligations of a local government and the interest on such bonds shall be excluded from gross income. Provides that a volunteer fire department qualifies for such tax treatment of its bonds if it: (1) is organized and operated to provide firefighting services in an area which does not have any other firefighting services; (2) is required by a local government to furnish firefighting services; (3) receives over half of its funding from local government; and (4) makes no charge for its services.