Page:United States Statutes at Large Volume 111 Part 1.djvu/955

 PUBLIC LAW 105-34—AUG. 5, 1997 111 STAT. 931 "(2) AMOUNTS PAID OUTSIDE THE UNITED STATES.—In the case of amounts paid outside the United States for taxable transportation, the taxes imposed by subsections (a) and (b) shall apply only if such transportation begins and ends in the United States. " (3) AMOUNTS PAID FOR RIGHT TO AWARD FREE OR REDUCED RATE AIR TRANSPORTATION. — "(A) IN GENERAL. — Any amount paid (and the value of any other benefit provided) to an air carrier (or any related person) for the right to provide mileage awards for (or other reductions in the cost of) any transportation of persons by air shall be treated for purposes of subsection (a) as an amount paid for taxable transportation, and such amount shall be taxable under subsection (a) without regard to any other provision of this subchapter. "(B) CONTROLLED GROUP.— For purposes of subparagraph (A), a corporation and all wholly owned subsidiaries of such corporation shall be treated as 1 corporation. "(C) REGULATIONS.—The Secretary shall prescribe rules which reallocate items of income, deduction, credit, exclusion, or other allowance to the extent necessary to prevent the avoidance of tax imposed by reason of this paragraph. The Secretary may prescribe rules which exclude from the tax imposed by subsection (a) amounts attributable to mileage awards which are used other than for transportation of persons by air. "(4) INFLATION ADJUSTMENT OF DOLLAR RATES OF TAX. — "(A) IN GENERAL.—In the case of taxable events in a calendar year after the last nonindexed year, the $3.00 amount contained in subsection (b) and each dollar amoiint contained in subsection (c) shall be increased by an amount equal to— "(i) such dollar amount, multiplied by "(ii) the cost-of-living adjustment determined under section 1(f)(3) for such calendar year by substituting the year before the last nonindexed year for 'calendar year 1992' in subparagraph (B) thereof. If any increase determined under the preceding sentence is not a multiple of 10 cents, such increase shall be rounded to the nearest multiple of 10 cents. "(B) LAST NONINDEXED YEAR.— For purposes of subparagraph (A), the last nonindexed year is— "(i) 2002 in the case of the $3.00 amount contained in subsection (b), and "(ii) 1998 in the case of the dollar amounts contained in subsection (c). "(C) TAXABLE EVENT.— For purposes of subparagraph (A), in the case of the tax imposed subsection (b), the beginning of the domestic segment shall be treated as the taxable event. "(5) RATES OF TICKET TAX FOR TRANSPORTATION BEGINNING BEFORE OCTOBER 1, 1999.— Subsection (a) shall be applied by substituting for 7.5 percent'— "(A) *9 percent' in the case of transportation beginning after September 30, 1997, and before October 1, 1998, and

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