[Congressional Bills 105th Congress]
[From the U.S. Government Publishing Office]
[H.R. 507 Introduced in House (IH)]







105th CONGRESS
  1st Session
                                H. R. 507

 To amend the Internal Revenue Code of 1986 to exempt from income tax 
the gain from the sale of a business closely held by an individual who 
              has attained age 62, and for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                            February 4, 1997

 Mr. Andrews 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 exempt from income tax 
the gain from the sale of a business closely held by an individual who 
              has attained age 62, and for other purposes.

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

SECTION 1. EXCLUSION FROM INCOME TAX OF GAIN FROM SALE OF CLOSELY HELD 
              BUSINESS BY INDIVIDUALS WHO HAVE ATTAINED AGE 62.

    (a) In General.--Part III of subchapter B of chapter 1 of the 
Internal Revenue Code of 1986 (relating to items specifically excluded 
from gross income) is amended by redesignating section 138 as section 
139 and by inserting after section 137 the following new section:

``SEC. 138. SALE OF CLOSELY HELD BUSINESS BY INDIVIDUALS WHO HAVE 
              ATTAINED AGE 62.

    ``(a) In General.--In the case of an individual, gross income does 
not include the gain (whether received in single sum or otherwise) from 
the sale or exchange of a qualified interest in a closely held business 
if--
            ``(1) the individual has attained age 62 before the date of 
        such sale or exchange,
            ``(2) the adjusted gross income of the individual for the 
        tax year in which such sale or exchange occurs does not exceed 
        $1,000,000 (determined without regard to such sale or 
        exchange), and
            ``(3) the individual so elects.
    ``(b) One-Time Exclusion.--Subsection (a) shall not apply to any 
sale or exchange by the taxpayer if an election under subsection (a) 
with respect to any other sale or exchange is in effect.
    ``(c) Qualified Interest in a Closely Held Business.--
            ``(1) In general.--For purposes of subsection (a), the term 
        `qualified interest in a closely held business' means an 
        interest in a closely held business (as defined by section 
        6166(b)(1)) if the fair market value of the assets of such 
        business is $500,000 or less, determined at the time of such 
        sale or exchange.
            ``(2) Rule for applying section 6166(b)(1).--For purposes 
        of paragraph (1), rules similar to rules of paragraphs (2) and 
        (9) of subsection (b) and subsection (c) of section 6166 shall 
        apply.
            ``(3) Aggregation rules.--All persons treated as a single 
        employer under subsection (a) or (b) of section 52 or 
        subsection (m) or (o) of section 414 shall be treated as one 
        person for purposes of paragraph (1).
    ``(d) Election.--An election under subsection (a) may be made or 
revoked at any time before the expiration of the period for making a 
claim for credit or refund of the tax imposed by this chapter for the 
taxable year in which the sale or exchange occurred.''
    (b) 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 138 and inserting the following:

                              ``Sec. 138. Sale of closely held business 
                                        by individuals who have 
                                        attained age 62.
                              ``Sec. 139. Cross reference to other 
                                        Acts.''
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years ending after December 31, 1996, with respect to 
a sale or exchange after December 31, 1996.
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