I 111th CONGRESS 1st Session H. R. 2445 IN THE HOUSE OF REPRESENTATIVES May 14, 2009 Mr. Paul 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 exclude from gross income discharges of personal indebtedness outside of bankruptcy.

1.

Exclusion for discharges of personal indebtedness outside of bankruptcy

(a)

In general

Paragraph (1) of section 108(a) of the Internal Revenue Code of 1986 is amended by striking or at the end of subparagraph (D), by striking the period at the end of subparagraph (E) and inserting , or, and by inserting after subparagraph (E) the following: (F)the indebtedness discharged is qualified personal indebtedness. . (b)

Qualified personal indebtedness

Section 108 of such Code is amended by adding at the end the following: (j)

Qualified personal indebtedness

For purposes of this section, the term qualified personal indebtedness means any indebtedness of an individual other than— (1)indebtedness properly allocable to a trade or business, (2)indebtedness which is a student loan (as defined in subsection (f)), (3)qualified principal residence indebtedness, and (4)indebtedness to which subparagraph (A) or (B) of subsection (a)(1) applies. . (c)

Conforming Amendments

(1)Section 108(a)(2)(A) of such Code is amended by striking and (E) and inserting (E), and (F). (2)Section 108(a)(2)(B) of such Code is amended by striking (C) and (D) and inserting (C), (D), and (F). (d)

Effective date

The amendments made by this section shall apply to discharges of indebtedness after December 31, 2008.