,i  #aadth ,,congress  #b;d ,session    
,h4 ,r4 #fbcg  ,,in ,,the ,,house ,,of  
,,representatives  ,september #bh1      
#bjaf,mr4 ,danny ,k4 ,davis of ,illinois
 introduced the following bill2 which   
was referred to the ,committee on ,ways 
and ,means  ,a ,,bill  ,to amend the    
,internal ,revenue ,code of #aihf to    
coordinate the reduction in the         
,american ,opportunity ,tax ,credit with
 ,federal ,pell ,grants1 to the extent  
such grants are attributable to expenses
 not eligible for such credit1 and for  
other purposes4  #a4 ,short title ,this 
,act may be cited as the ,american      
,opportunity ,tax ,credit ,reform ,act4 
#b4 ,american ,opportunity ,tax ,credit 
coordination with ,pell grants  7a7 ,in 
general ,section #be;,a7i7 of the       
,internal ,revenue ,code of #aihf is    
amended by adding at the end the        
following new paragraph3  7#h7          
,coordination with ,pell ,grants not    
used for qualified tuition and related  
expenses ,for purposes of this          

subsection1 any amount determined with  
respect to an individual under          
subsection 7g77#b7 which is attributable
 to a ,federal ,pell ,grant under       
section #dja of the ,higher ,education  
,act of #aife 7#bj ,u4,s4,c4 #ajgj;a7   
shall be reduced 7but not below zero7 by
 the amount of expenses 7other than     
qualified tuition and related expenses7 
which are taken into account in         
determining the cost of attendance 7as  
defined in section #dgb of the ,higher  
,education ,act of #aife1 as in effect  
on the date of the enactment of this    
paragraph7 of such individual at an     
eligible educational institution for the
 academic period for which the credit   
under this section is being determined4 
4  7b7 ,effective date ,the amendments  
made by this section shall apply to     
taxable years beginning after ,december 
#ca1 #bjaf4  #c4 ,expansion of ,pell    
,grant exclusion from gross income  7a7 
,in general ,section #aag7;b77#a7 of the
 ,internal ,revenue ,code of #aihf is   

amended-- 7#a7 by striking the period at
 the end and inserting 1 or1  7#b7 by   
striking received by an individual as a 
scholarship and inserting the following3
 received by an individual--  7,a7 as a 
scholarship  1 and  7#c7 by adding at   
the end the following new subparagraph3 
7,b7 as a ,federal ,pell ,grant under   
section #dja of the ,higher ,education  
,act of #aife 7#bj ,u4,s4,c4 #ajgj;a74  
4  7b7 ,effective date ,the amendments  
made by this section shall apply to     
taxable years beginning after ,december 
#ca1 #bjaf4