[Congressional Bills 111th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3520 Introduced in House (IH)]

111th CONGRESS
  1st Session
                                H. R. 3520

To amend the Internal Revenue Code of 1986 to exclude capital gains on 
   sales and exchanges of residences purchased in a foreclosure sale.


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                    IN THE HOUSE OF REPRESENTATIVES

                             July 31, 2009

  Mr. Smith of Nebraska (for himself, Mr. Rohrabacher, and Mr. Lance) 
 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 capital gains on 
   sales and exchanges of residences purchased in a foreclosure sale.

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

SECTION 1. EXCLUSION OF CAPITAL GAIN ON SALES AND EXCHANGES OF HOMES 
              PURCHASED IN A FORECLOSURE SALE.

    (a) In General.--Part I of subchapter P of chapter 1 of the 
Internal Revenue Code of 1986 (relating to treatment of capital gains) 
is amended by adding at the end the following new section:

``SEC. 1203. GAIN ON SALES AND EXCHANGES OF HOMES PURCHASED IN A 
              FORECLOSURE SALE.

    ``(a) In General.--Gross income shall not include qualified gain.
    ``(b) Qualified Gain.--For purposes of subsection (a), the term 
`qualified gain' means any gain from the sale or exchange of any 
qualified residential property which is acquired after the date of the 
enactment of this section, as the result of having bid on such property 
at foreclosure, or by operation of an agreement or process of law, 
after there was a default (or a default was imminent) on indebtedness 
which such property secured.
    ``(c) Qualified Residential Property.--For purposes of this 
section, the term `qualified residential property' means a residential 
property which--
            ``(1) is a capital asset,
            ``(2) is located in the United States, and
            ``(3) consists of from 1 to 4 dwelling units.
    ``(d) Basis Reduction.--The basis of any qualified residential 
property shall be reduced by the amount of any exclusion determined 
under this section with respect to such property.
    ``(e) Termination.--Subsection (a) shall not to sales and exchanges 
after the end of the 18-month period beginning on the date of the 
enactment of this section.''.
    (b) Basis.--Section 1016(a) of such Code is amended by striking 
``and'' at the end of paragraph (36), by striking the period at the end 
of paragraph (37) and inserting ``, and'', and by adding at the end the 
following new paragraph:
            ``(38) to the extent provided in section 1203(d).''.
    (c) Conforming Amendment.--The table of sections for part I of 
subchapter P of chapter 1 of such Code is amended by adding at the end 
the following new item:

``Sec. 1203. Gain on sales and exchanges of homes purchased in a 
                            foreclosure sale.''.
    (d) Effective Date.--The amendments made by this section shall 
apply with respect to property purchased on or after the date of the 
enactment of this Act.
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