article: SECTION 1. DEDUCTION FOR STUDENT LOAN PAYMENTS BY MEDICAL PROFESSIONALS PRACTICING IN RURAL AREAS. (a) Interest on Student Loans Not Treated as Personal Interest.-- Section 163(h)(2) of the Internal Revenue Code of 1986 (defining personal interest) is amended by striking ``and'' at the end of subparagraph (D), by striking the period at the end of subparagraph (E) and inserting ``, and'', and by adding at the end thereof the following new subparagraph: ``(F) any qualified medical education interest (within the meaning of subsection (k)).''. (b) Qualified Medical Education Interest Defined.--Section 163 of the Internal Revenue Code of 1986 (relating to interest expenses) is amended by redesignating subsection (k) as subsection (l) and by inserting after subsection (j) the following new subsection: ``(k) Qualified Medical Education Interest of Medical Professionals Practicing in Rural Areas.-- ``(1) In general.--For purposes of subsection (h)(2)(F), the term `qualified medical education interest' means an amount which bears the same ratio to the interest paid on qualified educational loans during the taxable year by an individual performing services under a qualified rural medical practice agreement as-- ``(A) the number of months during the taxable year during which such services were performed, bears to ``(B) the number of months in the taxable year. ``(2) Dollar limitation.--The aggregate amount which may be treated as qualified medical education interest for any taxable year with respect to any individual shall not exceed $5,000. ``(3) Qualified rural medical practice agreement.--For purposes of this subsection-- ``(A) In general.--The term `qualified rural medical practice agreement' means a written agreement between an individual and an applicable rural community under which the individual agrees-- ``(i) in the case of a medical doctor, upon completion of the individual's residency (or internship if no residency is required), or ``(ii) in the case of a registered nurse, nurse practitioner, or physician's assistant, upon completion of the education to which the qualified education loan relates, to perform full-time services as such a medical professional in the applicable rural community for a period of 24 consecutive months. An individual and an applicable rural community may elect to have the agreement apply for 36 consecutive months rather than 24 months. ``(B) Special rule for computing periods.--An individual shall be treated as meeting the 24 or 36 consecutive month requirement under subparagraph (A) if, during each 12-consecutive month period within either such period, the individual performs full-time services as a medical doctor, registered nurse, nurse practitioner, or physician's assistant, whichever applies, in the applicable rural community during 9 of the months in such 12-consecutive month period. For purposes of this subsection, an individual meeting the requirements of the preceding sentence shall be treated as performing services during the entire 12-month period. ``(C) Applicable rural community.--The term `applicable rural community' means-- ``(i) any political subdivision of a State which-- ``(I) has a population of 5,000 or less, and ``(II) has a per capita income of $15,000 or less, or ``(ii) an Indian reservation which has a per capita income of $15,000 or less. ``(4) Qualified educational loan.--The term `qualified educational loan' means any indebtedness to pay qualified tuition and related expenses (within the meaning of section 117(b)) and reasonable living expenses-- ``(A) which are paid or incurred-- ``(i) as a candidate for a degree as a medical doctor at an educational institution described in section 170(b)(1)(A)(ii), or ``(ii) in connection with courses of instruction at such an institution necessary for certification as a registered nurse, nurse practitioner, or physician's assistant, and ``(B) which are paid or incurred within a reasonable time before or after such indebtedness is incurred. ``(5) Recapture.--If an individual fails to carry out a qualified rural medical practice agreement during any taxable year, then-- ``(A) no deduction with respect to such agreement shall be allowable by reason of subsection (h)(2)(F) for such taxable year and any subsequent taxable year, and ``(B) there shall be included in gross income for such taxable year the aggregate amount of the deductions allowable under this section (by reason of subsection (h)(2)(F)) for all preceding taxable years. ``(6) Definitions.--For purposes of this subsection, the terms `registered nurse', `nurse practitioner', and `physician's assistant' have the meaning given such terms by section 1861 of the Social Security Act.''. (b) Deduction Allowed in Computing Adjusted Gross Income.--Section 62(a) of the Internal Revenue Code of 1986 is amended by inserting after paragraph (14) the following new paragraph: ``(15) Interest on student loans of rural health professionals.--The deduction allowable by reason of section 163(h)(2)(F) (relating to student loan payments of medical professionals practicing in rural areas).''. (c) Effective Date.--The amendments made by this section shall apply to taxable years beginning after December 31, 1992.
summary: Amends the Internal Revenue Code to allow an itemized deduction for personal interest paid on an education loan by a health care professional (medical doctor, registered nurse, nurse-practitioner, or physician's assistant) performing services in a rural community or on certain Indian reservations for at least 24 consecutive months under a written agreement. Limits such deduction to $5,000. Allows the computation of such deduction in determining adjusted gross income.