[Congressional Bills 107th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2903 Introduced in House (IH)]
107th CONGRESS
1st Session
H. R. 2903
To amend the Internal Revenue Code of 1986 to encourage investment in
small companies.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
September 20, 2001
Mr. Greenwood introduced the following bill; which was referred to the
Committee on Ways and Means
_______________________________________________________________________
A BILL
To amend the Internal Revenue Code of 1986 to encourage investment in
small companies.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Small Investment Tax Relief Act of
2001''.
SEC. 2. EXCLUSION FOR GAIN FROM STOCK OF SMALL, PUBLICLY TRADED
COMPANIES.
(a) In General.--Part 1 of subchapter P of chapter 1 of the
Internal Revenue Code of 1986 (relating to treatment of capital gains)
is amended by inserting after section 1202 the following new section:
``SEC. 1203. EXCLUSION FOR GAIN FROM STOCK OF SMALL, PUBLICLY TRADED
COMPANIES.
``(a) General Rule.--In the case of a taxpayer other than a
corporation, gross income shall not include any gain from the sale or
exchange of section 1203 stock held for more than 1 year.
``(b) Limitation.--The amount excluded under subsection (a) for a
taxable year may not exceed $100,000 ($50,000 in the case of a separate
return by a married individual).
``(c) 1203 Stock.--For purposes of subsection (a), the term `1203
stock' means any stock--
``(1) in a C corporation which is acquired after the date
of the enactment of this section if--
``(A) as of the date of acquisition, such
corporation is a qualified small business, and
``(B) except as provided in subsection (e), such
stock is acquired--
``(i) in exchange for money or other
property, or
``(ii) as compensation for services
provided to such corporation (other than
services performed as an underwriter of such
stock), and
``(2) which, at the time of sale or exchange giving rise to
gain to be excluded under subsection (a), is publicly traded on
any established domestic national or regional stock exchange or
stock market, the Over the Counter Bulletin Board, or the
National Quotation Bureau.
For purposes of the preceding sentence, rules similar to the rules of
section 1202(c)(3) shall apply.
``(d) Qualified Small Business.--For purposes of this section--
``(1) In general.--The term `qualified small business'
means any domestic corporation which is a C corporation if the
market capitalization of such corporation (or any predecessor
thereof), determined with respect to the date of acquisition of
stock, is not more than $150,000,000.
``(2) Determination of market capitalization.--For purposes
of paragraph (1), market capitalization, with respect to the
date of acquisition of stock, shall be--
``(A) the amount equal to--
``(i) the closing price of a share of stock
in the corporation as of the end of the
reporting period ending immediately before such
date of acquisition, multiplied by
``(ii) the number of outstanding shares of
such stock in the corporation as of the end of
such period, or
``(B) in the case that subparagraph (A) does not
apply, determined (by taking into account all facts and
circumstances) on the basis of the most recent amounts
paid for each class of stock in the corporation
outstanding on the date of the acquisition of the 1203
stock.
``(3) Reporting period.--For purposes of paragraph (2), the
term `reporting period' means the period for which the most
recent annual or quarterly report is required to be filed with
the Securities and Exchange Commission under section 13(a)(2)
of the Securities Exchange Act of 1934 (15 U.S.C. 78m(a)(2),
78o(d)) or periodic information required under section 15(d) of
such Act (15 U.S.C. 78o(d)), as the case may be.
``(4) Aggregation rules.--For purposes of paragraph (1),
rules similar to the rules of section 1202(d)(3) shall apply.
``(e) Additional Rules.--
``(1) In general.--For purposes of this section, rules
similar to the rules of subsections (f), (g), (h), (i), (j),
and (k) of section 1202 shall apply, except that subsection
(j)(1)(A) of section 1202 shall be applied by substituting `1
year' for `5 years'.
``(2) Qualified small business stock.--Sales and exchanges
taken into account under section 1202 shall not be taken into
account under this section.''.
(b) Conforming Amendments.--
(1) The first sentence of section 642(c)(4) of such Code is
amended--
(A) by inserting ``or 1203(a)'' after ``1202(a)'',
and
(B) by inserting ``or 1203, as the case may be''
before the period at the end.
(2) Section 643(a)(3) of such Code is amended by striking
``section 1202'' and inserting ``sections 1202 and 1203''.
(3) Section 691(c)(4) of such Code is amended by inserting
``1203,'' after ``1202,''.
(4) Section 871(a)(2) of such Code is amended by striking
``section 1202'' and inserting ``sections 1202 and 1203''.
(5) The second sentence of section 1044(d) of such Code is
amended by inserting ``or 1203'' before the period at the end.
(6) Section 1202(b) of such Code is amended by inserting at
the end the following new subsection:
``(4) Section 1203 stock.--Sales and exchanges taken into
account under section 1203 shall not be taken into account
under this section.''.
(c) Clerical Amendment.--The table of sections for part 1 of
subchapter P of chapter 1 of such Code is amended by inserting after
the item relating to section 1202 the following new item:
``Sec. 1203. Exclusion for gain from
stock of small, publicly traded
companies.''.
(d) Effective Date.--The amendments made by this section shall
apply to securities acquired after the date of the enactment of this
Act.
<all>
Introduced in House
Introduced in House
Referred to the House Committee on Ways and Means.
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