[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1891 Introduced in House (IH)]







106th CONGRESS
  1st Session
                                H. R. 1891

    To amend the Internal Revenue Code of 1986 to provide a partial 
  exclusion from gross income for dividends and interest received by 
                              individuals.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                              May 20, 1999

 Mr. Hulshof (for himself, Mr. Neal of Massachusetts, Mrs. Johnson of 
  Connecticut, Mr. Herger, Mr. Watkins, Mr. English, Mr. Weller, Mr. 
    Price of North Carolina, Mr. Talent, Mr. Kolbe, and Mr. Forbes) 
 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 provide a partial 
  exclusion from gross income for dividends and interest received by 
                              individuals.

    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 ``Savings Advancement and Enhancement 
(SAVE) Act of 1999''.

SEC. 2. EXEMPTION OF CERTAIN INTEREST AND DIVIDEND INCOME FROM TAX.

    (a) In General.--Part III of subchapter B of chapter 1 of the 
Internal Revenue Code of 1986 (relating to amounts specifically 
excluded from gross income) is amended by inserting after section 115 
the following new section:

``SEC. 116. PARTIAL EXCLUSION OF DIVIDENDS AND INTEREST RECEIVED BY 
              INDIVIDUALS.

    ``(a) Exclusion From Gross Income.--Gross income does not include 
dividends and interest received during the taxable year by an 
individual.
    ``(b) Limitations.--
            ``(1) Maximum amount.--The aggregate amount excluded under 
        subsection (a) for any taxable year shall not exceed $200 ($400 
        in the case of a joint return).
            ``(2) Certain dividends excluded.--Subsection (a) shall not 
        apply to any dividend from a corporation which, for the taxable 
        year of the corporation in which the distribution is made, or 
        for the next preceding taxable year of the corporation, is a 
        corporation exempt from tax under section 501 (relating to 
        certain charitable, etc., organization) or section 521 
        (relating to farmers' cooperative associations).
    ``(c) Special Rules.--For purposes of this section--
            ``(1) Exclusion not to apply to capital gain dividends from 
        regulated investment companies and real estate investment 
        trusts.--

                                ``For treatment of capital gain 
dividends, see sections 854(a) and 857(c).
            ``(2) Certain nonresident aliens ineligible for 
        exclusion.--In the case of a nonresident alien individual, 
        subsection (a) shall apply only--
                    ``(A) in determining the tax imposed for the 
                taxable year pursuant to section 871(b)(1) and only in 
                respect of dividends and interest which are effectively 
                connected with the conduct of a trade or business 
                within the United States, or
                    ``(B) in determining the tax imposed for the 
                taxable year pursuant to section 877(b).
            ``(3) Dividends from employee stock ownership plans.--
        Subsection (a) shall not apply to any dividend described in 
        section 404(k).''.
    (b) Conforming Amendments.--
            (1)(A) Subparagraph (A) of section 135(c)(4) of such Code 
        is amended by inserting ``116,'' before ``137''.
            (B) Subsection (d) of section 135 of such Code is amended 
        by redesignating paragraph (4) as paragraph (5) and by 
        inserting after paragraph (3) the following new paragraph:
            ``(4) Coordination with section 116.--This section shall be 
        applied before section 116.''.
            (2) Paragraph (2) of section 265(a) of such Code is amended 
        by inserting before the period ``, or to purchase or carry 
        obligations or shares, or to make deposits, to the extent the 
        interest thereon is excludable from gross income under section 
        116''.
            (3) Subsection (c) of section 584 of such Code is amended 
        by adding at the end thereof the following new flush sentence:
``The proportionate share of each participant in the amount of 
dividends or interest received by the common trust fund and to which 
section 116 applies shall be considered for purposes of such section as 
having been received by such participant.''.
            (4) Subsection (a) of section 643 of such Code is amended 
        by redesignating paragraph (7) as paragraph (8) and by 
        inserting after paragraph (6) the following new paragraph:
            ``(7) Dividends or interest.--There shall be included the 
        amount of any dividends or interest excluded from gross income 
        pursuant to section 116.''.
            (5) Section 854(a) of such Code is amended by inserting 
        ``section 116 (relating to partial exclusion of dividends and 
        interest received by individuals) and'' after ``For purposes 
        of''.
            (6) Section 857(c) of such Code is amended to read as 
        follows:
    ``(c) Restrictions Applicable to Dividends Received From Real 
Estate Investment Trusts.--
            ``(1) Treatment for section 116.--For purposes of section 
        116 (relating to partial exclusion of dividends and interest 
        received by individuals), a capital gain dividend (as defined 
        in subsection (b)(3)(C)) received from a real estate investment 
        trust which meets the requirements of this part shall not be 
        considered as a dividend.
            ``(2) Treatment for section 243.--For purposes of section 
        243 (relating to deductions for dividends received by 
        corporations), a dividend received from a real estate 
        investment trust which meets the requirements of this part 
        shall not be considered as a dividend.''.
            (7) The table of sections for part III of subchapter B of 
        chapter 1 of such Code is amended by inserting after the item 
        relating to section 115 the following new item:

                              ``Sec. 116. Partial exclusion of 
                                        dividends and interest received 
                                        by individuals.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 1999.
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