I 111th CONGRESS 1st Session H. R. 396 IN THE HOUSE OF REPRESENTATIVES January 9, 2009 Mr. Cohen (for himself, Mr. Wexler, and Mr. Gallegly) 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 provide that certain net capital gain of individuals who have attained age 65 shall not be subject to tax.

1.

Short title

This Act may be cited as the Senior Assets Verification Exemption (SAVE) from Capital Gains Tax Act of 2009.

2.

Deduction for net capital gain on long-held assets of individuals who have attained age 65

(a)

In general

Part I of subchapter P of chapter 1 of the Internal Revenue Code of 1986 is amended by adding at the end the following new section:

1203.

Deduction for net capital gain on long-held assets of individuals who have attained age 65

(a)

In general

In the case of an eligible taxpayer, there shall be allowed a deduction against gross income the amount equal to the taxpayer's qualified net capital gain for the taxable year. (b)

Eligible taxpayer

For purposes of this section— (1)

In general

The term eligible taxpayer means any individual who has attained age 65 before the close of the taxable year. (2)

Joint returns

In the case of a taxpayer filing a joint return, such taxpayer shall be treated as an eligible individual if either spouse has attained age 65 before the close of the taxable year. (c)

Qualified net capital gain

For purposes of this section, the term qualified net capital gain means the lesser of— (1)net capital gain, or (2)net capital gain determined by taking into account only assets held for at least 15 years.

. (b)

Coordination with maximum capital gains rates

Paragraph (2) of section 1(h) of such Code is amended to read as follows: (2)

Reduction of net capital gain

For purposes of this subsection, the net capital gain for any taxable year shall be reduced (but not below zero) by the sum of— (A)the amount which the taxpayer takes into account as investment income under section 163(d)(4)(B)(iii), and (B)the deduction allowed by section 1203. . (c)

Deduction allowable in computing adjusted gross income

Subsection (a) of section 62 of such Code (defining adjusted gross income) is amended by inserting after paragraph (21) the following new paragraph: (22)

Certain net capital gain of individuals attaining age 65

The deduction allowed by section 1203. . (d)

Conforming amendments

(1)Subparagraph (E) of section 163(d)(4) of such Code is amended to read as follows: (E)

Coordination with capital gains deduction

The net capital gain taken into account under section 1202 for any taxable year shall be reduced (but not below zero) by the amount which the taxpayer takes into account as investment income under subparagraph (B)(iii) for such year. . (2)Subparagraph (B) of section 172(d)(2) of such Code is amended to read as follows: (B)the exclusion under section 1202, and the deduction under section 1203, shall not be allowed. . (3)Paragraph (4) of section 691(c) of such Code is amended by inserting 1203, after 1202,. (4)Paragraph (2) of section 871(a) of such Code is amended by inserting or 1203, after 1202,. (5)Paragraph (1) of section 1402(i) of such Code is amended by inserting , and the deduction provided by section 1203 shall not apply before the period at the end thereof. (6)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. Deduction for net capital gain on long-held assets of individuals who have attained age 65.. (e)

Effective date

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