PUBLIC LAW 100-647—NOV. 10, 1988

102 STAT. 3689

"(B) INFLATION ADJUSTMENT.—In the case of any taxable
year beginning in a calendar year after 1990, each dollar
amount contained in subparagraph (A) shall be increased
by an amount equal to—

"(i) such dollar amount, multiplied by
"(ii) the cost-of-living adjustment under section l(fX3)
for the calendar year in which the taxable year begins,
determined by substituting 'calendar year 1989 for
'calendar year 1987' in subparagraph (B) thereof.
"(C) ROUNDING.—If any amount as adjusted under
subparagraph (A) or (B) is not a multiple of $50, such
amount shall be rounded to the nearest multiple of $50 (or
if such amount is a multiple of $25, such amount shall be
rounded to the next highest multiple of $50).
"(c) DEFINITIONS.—For purposes of this section—

"(1) QUALIFIED UNITED STATES SAVINGS BOND.—The term
'qualified United States savings bond' means any United States
savings bond issued—

"(A) after December 31,1989,

"(B) to an individual who has attained age 24 before the
date of issuance, and

"(C) at discount under section 3105 of title 31, United
States Code.
"(2) QUALIFIED HIGHER EDUCATION EXPENSES.-—

"(A) IN GENERAL.—The term 'qualified higher education
expenses7 means tuition and fees required for the enroll-
ment or attendance of—
"(i) the taxpayer,
"(ii) the taxpayer's spouse, or

"(iii) any dependent of the taxpayer with respect to
whom the taxpayer is allowed a deduction under sec-
tion 151,
at an eligible educational institution.

"(B) EXCEPTION FOR EDUCATION INVOLVING SPORTS, ETC.—
Such term shall not include expenses with respect to any
course or other education involving sports, games, or hob-
bies other than as part of a degree program.
"(3) ELIGIBLE EDUCATIONAL INSTITUTION.—The term 'eligible
educational institution' means—

"(A) an institution described in section 1201(a) or
subparagraph (C) or (D) of section 481(aXD of the Higher
Education Act of 1965 (as in effect on October 21,1988), and
"(B) an area vocational education school (as defined in
subparagraph (C) or (D) of section 521(3) of the Carl D.
Perkins Vocational Education Act) which is in any State (as
defined in section 521(27) of such Act), as such sections are
in effect on October 21,1988.

"(4) MODIFIED ADJUSTED GROSS INCOME.—The term 'modified
adjusted gross income' means the adjusted gross income of the
taxpayer for the taxable year determined—

"(A) without regard to this section and sections 911, 931,
and 933, and

"(B) after the application of sections 86, 469, and 219.
"(d) SPECIAL RULES.—

"(1) ADJUSTMENT FOR CERTAIN SCHOLARSHIPS AND VETERANS
BENEFITS.—The amount of qualified higher education expenses
otherwise taken into account under subsection (a) respect to the