[Congressional Bills 104th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3550 Introduced in House (IH)]







104th CONGRESS
  2d Session
                                H. R. 3550

To amend the Internal Revenue Code of 1986 to exclude from gross income 
the gain realized from the sale or exchange of a capital asset used to 
 generate self-employment income if the entire amount of such gain is 
             deposited in an individual retirement account.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                              May 29, 1996

  Mr. McDade 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 exclude from gross income 
the gain realized from the sale or exchange of a capital asset used to 
 generate self-employment income if the entire amount of such gain is 
             deposited in an individual retirement account.

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

SECTION 1. INCOME EXCLUSION FOR GAIN FROM DISPOSAL OF A CAPITAL ASSET.

    (a) In General.--Part III of subchapter B of chapter 1 of the 
Internal Revenue Code of 1986 is amended by redesignating section 137 
as section 138 and inserting after section 136 the following new 
section:

``SEC. 137. GAIN FROM SALE OR EXCHANGE OF A CAPITAL ASSET USED TO 
              GENERATE SELF-EMPLOYMENT INCOME.

    ``(a) In General.--Gross income does not include any gain on the 
sale or exchange of a capital asset used in the production of earnings 
from self-employment if the entire amount of such gain is deposited in 
a individual retirement account.
    ``(b) Definitions.--For the purposes of this section--
            ``(1) Self-employment.--The term `self-employment' has the 
        meaning given to such term in chapter 2 of this subtitle.
            ``(2) Individual retirement account.--The term `individual 
        retirement account' has the meaning given to such term by 
        section 408.''
    (b) Conforming Amendments.--
            (1) Subsection (d) of section 219 of such Code is amended 
        by adding at the end the following:
            ``(5) Denial of deduction for amount contributed from sale 
        or exchange of a capital asset used to generate self-employment 
        income.--No deduction shall be allowed under this section with 
        respect to any amount excluded from gross income by section 
        137.''
            (2) Section 408 of such Code is amended by redesignating 
        subsection (p) as subsection (q) and inserting after subsection 
        (o) the following new subsection:
    ``(p) Contribution Limitations Respecting Sale or Exchange of 
Capital Asset Used To Generate Self-Employment Income.--Any limitation 
under this title on contributions to an individual retirement account 
is hereby increased by the amount contributed to an individual 
retirement account which is excluded from gross income under section 
137.''
    (c) Clerical Amendment.--The table of sections for part III of 
subchapter B of chapter 1 of such Code is amended by striking the item 
relating to section 137 and inserting:

``Sec. 137. Gain from sale or exchange of a capital asset used to 
                            generate self-employment income.
``Sec. 138. Cross references to other Acts.''
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