[Congressional Bills 111th Congress]
[From the U.S. Government Printing Office]
[S. 78 Introduced in Senate (IS)]
111th CONGRESS
1st Session
S. 78
To amend the Internal Revenue Code of 1986 to provide a full exclusion
for gain from certain small business stocks.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
January 6, 2009
Mr. Kerry (for himself and Ms. Snowe) 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 provide a full exclusion
for gain from certain small business stocks.
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 ``Invest in Small Business Act of
2009''.
SEC. 2. INCREASED EXCLUSION AND OTHER MODIFICATIONS APPLICABLE TO
QUALIFIED SMALL BUSINESS STOCK.
(a) Increased Exclusion.--
(1) In general.--Subsection (a) of section 1202 of the
Internal Revenue Code of 1986 (relating partial exclusion for
gain from certain small business stock) is amended to read as
follows:
``(a) Exclusion.--Gross income shall not include 100 percent of any
gain from the sale or exchange of qualified small business stock held
for more than 4 years.''.
(2) Rule relating to stock held among members of controlled
group.--Subsection (c) of section 1202 of such Code is amended
by adding at the end the following new paragraph:
``(4) Stock held among members of 25-percent controlled
group not eligible.--
``(A) In general.--Stock of a member of a 25-
percent controlled group shall not be treated as
qualified small business stock while held by another
member of such group.
``(B) 25-percent controlled group.--For purposes of
subparagraph (A), the term `25-percent controlled
group' means any controlled group of corporations as
defined in section 1563(a)(1), except that--
``(i) `more than 25 percent' shall be
substituted for `at least 80 percent' each
place it appears in section 1563(a)(1), and
``(ii) section 1563(a)(4) shall not
apply.''.
(3) Conforming amendments.--
(A) Subsections (b)(2), (g)(2)(A), and (j)(1)(A) of
section 1202 of such Code are each amended by striking
``5 years'' and inserting ``4 years''.
(B) The heading for section 1202 of such Code is
amended by striking ``partial''.
(C) The item relating to section 1202 in the table
of sections for part I of subchapter P of chapter 1 of
such Code is amended by striking ``Partial exclusion''
and inserting ``Exclusion''.
(D) Section 1223(13) of such Code is amended by
striking ``1202(a)(2),''.
(b) Repeal of Minimum Tax Preference.--
(1) In general.--Subsection (a) of section 57 of the
Internal Revenue Code of 1986 (relating to items of tax
preference) is amended by striking paragraph (7).
(2) Technical amendment.--Subclause (II) of section
53(d)(1)(B)(ii) of such Code is amended by striking ``, (5),
and (7)'' and inserting ``and (5)''.
(c) Repeal of 28 Percent Capital Gains Rate on Qualified Small
Business Stock.--
(1) In general.--Subparagraph (A) of section 1(h)(4) of the
Internal Revenue Code of 1986 is amended to read as follows:
``(A) collectibles gain, over''.
(2) Conforming amendments.--
(A) Section 1(h) of such Code is amended by
striking paragraph (7).
(B)(i) Section 1(h) of such Code is amended by
redesignating paragraphs (8), (9), (10), (11), (12),
and (13) as paragraphs (7), (8), (9), (10), (11), and
(12), respectively.
(ii) Sections 163(d)(4)(B), 854(b)(5), 857(c)(2)(D)
of such Code are each amended by striking ``section
1(h)(11)(B)'' and inserting ``section 1(h)(10)(B)''.
(iii) The following sections of such Code are each
amended by striking ``section 1(h)(11)'' and inserting
``section 1(h)(10)'':
(I) Section 301(f)(4).
(II) Section 306(a)(1)(D).
(III) Section 584(c).
(IV) Section702(a)(5).
(V) Section 854(a).
(VI) Section 854(b)(2).
(iv) The heading of section 857(c)(2) is amended by
striking ``1(h)(11)'' and inserting ``1(h)(10)''.
(d) Increase Aggregate Asset Limitation for Qualified Small
Businesses.--
(1) In general.--Paragraph (1) of section 1202(d) of the
Internal Revenue Code of 1986 (relating to qualified small
business) is amended by striking ``$50,000,000'' each place it
appears and inserting ``$100,000,000''.
(2) Inflation adjustment.--Section 1202(d) of such Code is
amended by adding at the end the following new paragraph:
``(4) Inflation adjustment.--
``(A) In general.--In the case of any taxable year
beginning in a calendar year after 2009, each of the
$100,000,000 dollar amounts in paragraph (1) shall be
increased by an amount equal to--
``(i) such dollar amount, multiplied by
``(ii) the cost-of-living adjustment
determined under section 1(f)(3) for the
calendar year in which the taxable year begins,
determined by substituting `calendar year 2008'
for `calendar year 1992' in subparagraph (B)
thereof.
``(B) Rounding.--If any amount as adjusted under
subparagraph (A) is not a multiple of $1,000, such
amount shall be rounded to the next lowest multiple of
$100.''.
(e) Effective Date.--
(1) In general.--The amendments made by this section apply
to stock issued after December 31, 2009.
(2) Special rule for stock issued before january 1, 2010.--
The amendments made by subsections (a), (b), and (c) shall
apply to sales or exchanges--
(A) made after December 31, 2009,
(B) of stock issued before such date,
(C) by a taxpayer other than a corporation.
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