Text: H.R.7292 — 110th Congress (2007-2008)All Information (Except Text)

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Introduced in House (11/19/2008)


110th CONGRESS
2d Session
H. R. 7292


To amend the Internal Revenue Code of 1986 to exclude from gross income compensation received by employees consisting of qualified distributions of employer stock.


IN THE HOUSE OF REPRESENTATIVES

November 19, 2008

Mr. Rohrabacher 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 compensation received by employees consisting of qualified distributions of employer stock.

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

SECTION 1. Qualified stock distributions to employees.

(a) In general.—Part III of subchapter B of chapter 1 of the Internal Revenue Code of 1986 is amended by inserting after section 139A the following new section:

“SEC. 139B. Qualified stock distributions to employees.

“(a) In general.—Gross income shall not include—

“(1) so many shares of any stock received by an individual in a qualified employee stock distribution of such individual’s employer as does not exceed the maximum stock amount,

“(2) any gain on stock excluded from gross income under paragraph (1) if such stock is held by such individual for not less than 10 years, and

“(3) in the case of any qualified disposition of stock which is described in paragraph (2) (and which meets the holding requirement of such paragraph), any gain on so much stock acquired during the 60-day period beginning on the date of such disposition as does not exceed the fair market value of the stock so disposed (determined as of the time of disposition).

“(b) Definitions and special rules.—For purposes of this section—

“(1) QUALIFIED EMPLOYEE STOCK DISTRIBUTION.—The term ‘qualified employee stock distribution’ means a distribution by an employer of stock of such employer to all employees (determined as of the date of the distribution) of such employer as compensation for services.

“(2) MAXIMUM STOCK AMOUNT.—The term ‘maximum stock amount’ means, with respect to any distribution, the lowest number of shares of stock of the employer received by any employee of the employer in such distribution.

“(3) QUALIFIED DISPOSITION.—

“(A) IN GENERAL.—The term ‘qualified disposition’ means, with respect to the disposition of any stock described in paragraph (2) during any calendar year, the disposition of a number of shares of such stock not in excess of the excess of—

“(i) the applicable percentage of the aggregate number of shares of such stock received during the calendar year that such stock was received, over

“(ii) the aggregate number of shares of such stock taken into account under this subparagraph for all prior calendar years.

“(B) APPLICABLE PERCENTAGE.—For purposes of clause (i), the applicable percentage is, with respect to any calendar year following the calendar year in which such stock was received, the percentage determined in accordance with the following table:


The applicable
In the case of: percentage is:
The first through tenth such calendar years 0 percent
The eleventh such calendar year 10 percent
The twelfth such calendar year 20 percent
The thirteenth such calendar year 30 percent
The fourteenth such calendar year 40 percent
The fifteenth such calendar year 50 percent
The sixteenth such calendar year 60 percent
The seventeenth such calendar year 70 percent
The eighteenth such calendar year 80 percent
The nineteenth such calendar year 90 percent
Any subsequent calendar year 100 percent.

“(c) Employment taxes.—Amounts excluded from gross income under subsection (a)(1) shall not be taken into account as wages for purposes of chapters 21, 22, 23, 23A, and 24.

“(d) Recapture if stock disposed during required holding period.—If an amount is excluded from gross income under subsection (a)(1) with respect to any stock and the individual disposes of such stock at any time during the 5-year period beginning on the date that such individual received such stock—

“(1) the gross income of such individual for the taxable year which includes the date of such disposition shall be increased by the amount so excluded, and

“(2) the tax imposed by this chapter for such taxable year shall be increased by the sum of the amounts of tax which would have been imposed under subchapters A and B of chapters 21 and 22 if subsection (c) had not applied with respect to such amount.

For purposes of this title and the Social Security Act, any increase in tax under paragraph (2) shall be treated as imposed under the provision of chapter 21 or 22 with respect to which such increase relates.

“(e) Regulations.—The Secretary shall issue such regulations as may be necessary or appropriate to carry out this section, including regulations which provide for the application of this section to stock options.”.

(b) Clerical amendment.—The table of section for such part is amended by inserting after the item relating to section 139A the following new item:


“Sec. 139B. Qualified stock distributions to employees.”.

(c) Effective date.—The amendments made by this section shall apply to stock received by employees after December 31, 2008.


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