[Congressional Bills 107th Congress]
[From the U.S. Government Publishing Office]
[S. 302 Introduced in Senate (IS)]







107th CONGRESS
  1st Session
                                 S. 302

   To amend the Internal Revenue Code of 1986 to reduce the maximum 
 capital gain tax rate for gains from property held for more than 5 or 
                               10 years.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                           February 13, 2001

  Mr. Shelby 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 reduce the maximum 
 capital gain tax rate for gains from property held for more than 5 or 
                               10 years.

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

SECTION 1. REDUCTION IN MAXIMUM CAPITAL GAIN RATES FOR 5-YEAR AND 10-
              YEAR GAINS.

    (a) In General.--Paragraph (2) of section 1(h) of the Internal 
Revenue Code of 1986 (relating to maximum capital gains rate) is 
amended to read as follows:
            ``(2) Reduced capital gain rates for qualified 5-year and 
        10-year gain.--
                    ``(A) Reduction in 10-percent rate.--In the case of 
                any taxable year beginning after December 31, 2001, the 
                rate under paragraph (1)(B) shall be--
                            ``(i) 8 percent with respect to so much of 
                        the amount to which the 10-percent rate would 
                        otherwise apply as does not exceed qualified 5-
                        year gain,
                            ``(ii) 5 percent with respect to so much of 
                        the amount to which the 10-percent rate would 
                        otherwise apply as does not exceed qualified 
                        10-year gain, and
                            ``(iii) 10 percent with respect to the 
                        remainder of such amount.
                    ``(B) Reduction in 20-percent rate.--The rate under 
                paragraph (1)(C) shall be--
                            ``(i) 10 percent with respect to so much of 
                        the amount to which the 20-percent rate would 
                        otherwise apply as does not exceed the lesser 
                        of--
                                    ``(I) the excess of qualified 5-
                                year gain over the amount of such gain 
                                taken into account under subparagraph 
                                (A) of this paragraph, or
                                    ``(II) the amount of qualified 5-
                                year gain (determined by taking into 
                                account only property the holding 
                                period for which begins after December 
                                31, 2001),
                            ``(ii) 5 percent with respect to so much of 
                        the amount to which the 20-percent rate would 
                        otherwise apply as does not exceed the lesser 
                        of--
                                    ``(I) the excess of qualified 10-
                                year gain over the amount of such gain 
                                taken into account under subparagraph 
                                (A) of this paragraph, or
                                    ``(II) the amount of qualified 10-
                                year gain (determined by taking into 
                                account only property the holding 
                                period for which begins after December 
                                31, 2001), and
                            ``(iii) 20 percent with respect to the 
                        remainder of such amount.
                For purposes of determining under the preceding 
                sentence whether the holding period of property begins 
                after December 31, 2001, the holding period of property 
                acquired pursuant to the exercise of an option (or 
                other right or obligation to acquire property) shall 
                include the period such option (or other right or 
                obligation) was held.''.
    (b) Qualified 5-year and 10-year Gain.--Paragraph (9) of section 
1(h) of the Internal Revenue Code of 1986 is amended to read as 
follows:
            ``(9) Qualified 5-year and 10-year gain.--For purposes of 
        this subsection--
                    ``(A) Qualified 5-year gain.--The term `qualified 
                5-year gain' means the aggregate long-term capital gain 
                from property held for more than 5 years but not more 
                than 10 years.
                    ``(B) Qualified 10-year gain.--The term `qualified 
                10-year gain' means the aggregate long-term capital 
                gain from property held for more than 10 years.
                    ``(C) Determination of gain.--The determination 
                under subparagraph (A) or (B) shall be made without 
                regard to collectibles gain, gain described in 
                paragraph (7)(A)(i), and section 1202 gain.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2001.
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