A bill to amend the Internal Revenue Code of 1986 to treat income earned by mutual funds from exchange-traded funds holding precious metal bullion as qualifying income.

Amends the Internal Revenue Code to treat income earned by mutual funds from interests holding certain gold, silver, platinum, or palladium bullion that are regularly traded on an established U.S. securities market as qualifying income (i.e., passed through and taxed at individual income tax rates).

[Congressional Bills 112th Congress]
[From the U.S. Government Publishing Office]
[S. 107 Introduced in Senate (IS)]

112th CONGRESS
  1st Session
                                 S. 107

 To amend the Internal Revenue Code of 1986 to treat income earned by 
mutual funds from exchange-traded funds holding precious metal bullion 
                         as qualifying income.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

             January 25 (legislative day, January 5), 2011

  Mr. Ensign introduced the following bill; which was read twice and 
                  referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL


 
 To amend the Internal Revenue Code of 1986 to treat income earned by 
mutual funds from exchange-traded funds holding precious metal bullion 
                         as qualifying income.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. INCOME EARNED BY MUTUAL FUNDS FROM EXCHANGE-TRADED FUNDS 
              HOLDING PRECIOUS METAL BULLION TREATED AS QUALIFYING 
              INCOME.

    (a) In General.--Section 851 of the Internal Revenue Code of 1986, 
as amended by the Regulated Investment Company Modernization Act of 
2010, is amended by adding at the end the following new subsection:
    ``(j) Bullion Exchange-Traded Funds.--
            ``(1) In general.--In the case of any interest in a trust 
        which is described in paragraph (2)--
                    ``(A) such interest shall not fail to be treated as 
                a security for purposes of this section by reason of 
                any provision of subpart E of part I of subchapter J 
                (relating to grantors and others treated as substantial 
                owners),
                    ``(B) any net income derived from such interest 
                shall be treated for purposes of subsection (b)(2) as 
                gain from the disposition of such interest, and
                    ``(C) the last sentence of subsection (b) shall not 
                apply to such interest.
            ``(2) Interests in bullion exchange-traded funds 
        described.--An interest in a trust is described in this 
        paragraph if--
                    ``(A) such interest is a security (as defined in 
                section 2(a)(36) of the Investment Company Act of 1940, 
                as amended), determined without regard to subpart E of 
                part I of subchapter J,
                    ``(B) such interests are regularly traded on an 
                established securities market in the United States, and
                    ``(C) at least 95 percent of the assets of the 
                trust are bullion described in section 408(m)(3)(B).''.
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after the date of the enactment of this Act.
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