[Congressional Bills 107th Congress]
[From the U.S. Government Publishing Office]
[S. 1134 Introduced in Senate (IS)]
107th CONGRESS
1st Session
S. 1134
To amend the Internal Revenue Code of 1986 to modify the rules
applicable to qualified small business stock.
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IN THE SENATE OF THE UNITED STATES
June 28, 2001
Mr. Lieberman (for himself and Mr. Hatch) 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 modify the rules
applicable to qualified small business stock.
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 ``Venture Capital Gains and Growth Act
of 2001''.
SEC. 2. MODIFICATIONS APPLICABLE TO QUALIFIED SMALL BUSINESS STOCK.
(a) 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)''.
(b) Increase in Rollover Period for Qualified Small Business
Stock.--Subsections (a)(1) and (b)(3) of section 1045 of the Internal
Revenue Code of 1986 (relating to rollover of gain from qualified small
business stock to another qualified small business stock) are each
amended by striking ``60-day'' and inserting ``180-day''.
(c) Reduction in Holding Period.--
(1) In general.--Subsection (a) of section 1202 of the
Internal Revenue Code of 1986 (relating to partial exclusion
for gains from certain small business stock) is amended by
striking ``5 years'' and inserting ``3 years''.
(2) Conforming amendment.--Subsections (g)(2)(A) and
(j)(1)(A) of section 1202 of such Code are each amended by
striking ``5 years'' and inserting ``3 years''.
(d) Repeal of Per-Issuer Limitation.--Section 1202(b) of the
Internal Revenue Code of 1986 (relating to per-issuer limitations on
taxpayer's eligible gain) is repealed.
(e) Qualified Trade or Business.--Section 1202(e)(3) of the
Internal Revenue Code of 1986 (relating to qualified trade or business)
is amended by inserting ``, and is anticipated to continue to be,''
before ``the reputation'' in subparagraph (A).
(f) Other Modifications.--
(1) Repeal of working capital limitation.--Section
1202(e)(6) of the Internal Revenue Code of 1986 (relating to
working capital) is amended--
(A) in subparagraph (B), by striking ``2 years''
and inserting ``5 years''; and
(B) by striking the last sentence.
(2) Exception from redemption rules where business
purpose.--Section 1202(c)(3) of such Code (relating to certain
purchases by corporation of its own stock) is amended by adding
at the end the following new subparagraph:
``(D) Waiver where business purpose.--A purchase of
stock by the issuing corporation shall be disregarded
for purposes of subparagraph (B) if the issuing
corporation establishes that there was a business
purpose for such purchase and one of the principal
purposes of the purchase was not to avoid the
limitations of this section.''.
(g) Increased Exclusion.--
(1) In general.--Subsection (a) of section 1202 of the
Internal Revenue Code of 1986 (relating to 50-percent exclusion
for gain from certain small business stock) is amended by
striking ``50 percent'' and inserting ``100 percent''.
(2) Conforming amendments.--
(A) Subparagraph (A) of section 1(h)(5) of such
Code is amended to read as follows:
``(A) collectibles gain, over''.
(B) Section 1(h) of such Code is amended by
striking paragraph (8).
(C) Paragraph (9) of section 1(h) of such Code is
amended by striking ``, gain described in paragraph
(7)(A)(i), and section 1202 gain'' and inserting ``and
gain described in paragraph (7)(A)(i)''.
(D) Section 1(h) of such Code is amended by
redesignating paragraphs (9) (as amended by
subparagraph (C)), (10), (11), and (12) as paragraphs
(8), (9), (10), and (11), respectively.
(E) The heading for section 1202 of such Code is
amended by striking ``partial'' and inserting ``100-
percent''.
(F) The table of sections for part I of subchapter
P of chapter 1 of such Code is amended by striking
``Partial'' in the item relating to section 1202 and
inserting ``100-percent''.
(h) Exclusion Available to Corporations.--
(1) In general.--Subsection (a) of section 1202 of the
Internal Revenue Code of 1986 (relating to partial exclusion
for gains from certain small business stock) is amended by
striking ``other than a corporation''.
(2) Technical amendment.--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 controlled group not
eligible.--Stock of a member of a parent-subsidiary controlled
group (as defined in subsection (d)(3)) shall not be treated as
qualified small business stock while held by another member of
such group.''.
(i) Stock of Larger Businesses Eligible for Exclusion.--
(1) In general.--Paragraph (1) of section 1202(d) of the
Internal Revenue Code of 1986 (defining qualified small
business) is amended by striking ``$50,000,000'' each place it
appears and inserting ``$300,000,000''.
(2) Inflation adjustment.--Section 1202(d) of such Code
(defining qualified small business) is amended by adding at the
end the following:
``(4) Inflation adjustment of asset limitation.--In the
case of stock issued in any calendar year after 2002, the
$300,000,000 amount contained in paragraph (1) shall be
increased by an amount equal to--
``(A) such dollar amount, multiplied by
``(B) 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 2001' for `calendar year 1992' in
subparagraph (B) thereof.
If any amount as adjusted under the preceding sentence is not a
multiple of $10,000, such amount shall be rounded to the
nearest multiple of $10,000.''.
(j) Effective Date.--The amendments made by this section shall
apply to stock issued after the date of the enactment of this Act.
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