II 110th CONGRESS 2d Session S. 2628 IN THE SENATE OF THE UNITED STATES February 13, 2008 Mr. Ensign 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 treat income earned by mutual funds from exchange-traded funds holding precious metal bullion as qualifying income.

1.

Income earned by mutual funds from exchange-traded funds holding precious metal bullion treated as qualifying income

(a)

In general

Section 851 of the Internal Revenue Code of 1986 is amended by adding at the end the following new subsection: (i)

Bullion exchange-traded funds

(1)

In general

In the case of any interest in a trust which is described in paragraph (2)— (A)such interest shall not fail to be treated as a security for purposes of this section by reason of any provision of subpart E of part I of subchapter J (relating to grantors and others treated as substantial owners), (B)any net income derived from such interest shall be treated for purposes of subsection (b)(2) as gain from the disposition of such interest, and (C)the last sentence of subsection (b) shall not apply to such interest. (2)

Interests in bullion exchange-traded funds described

An interest in a trust is described in this paragraph if— (A)such interest is a security (as defined in section 2(a)(36) of the Investment Company Act of 1940, as amended), determined without regard to subpart E of part I of subchapter J, (B)such interests are regularly traded on an established securities market in the United States, and (C)at least 95 percent of the assets of the trust are bullion described in section 408(m)(3)(B). . (b)

Effective date

The amendment made by this section shall apply to taxable years beginning after the date of the enactment of this Act.