I 

109TH CONGRESS 

1ST SESSION H. R. 3461 

To amend the Internal Revenue Code of 1986 to exempt from income tax 

the gain from the sale of a business closely held by an individual who 

has attained age 62, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

JULY 27, 2005 

Mr. ANDREWS 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 exempt 

from income tax the gain from the sale of a business 

closely held by an individual who has attained age 62, 

and for other purposes. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Seniors’ Family Busi5 ness Enhancement Act’’. 
2 

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1 SEC. 2. EXCLUSION FROM INCOME TAX OF GAIN FROM 

2 SALE OF CLOSELY HELD BUSINESS BY INDI3 VIDUALS WHO HAVE ATTAINED AGE 62. 

4 (a) IN GENERAL.—Part III of subchapter B of chap5 ter 1 of the Internal Revenue Code of 1986 (relating to 

6 items specifically excluded from gross income) is amended 

7 by inserting after section 139A the following new section: 

8 ‘‘SEC. 139B. SALE OF CLOSELY HELD BUSINESS BY INDIVID9 UALS WHO HAVE ATTAINED AGE 62. 

10 ‘‘(a) IN GENERAL.—In the case of an individual, 

11 gross income does not include the gain (whether received 

12 in single sum or otherwise) from the sale or exchange of 

13 a qualified interest in a closely held business if— 

14 ‘‘(1) the individual has attained age 62 before 

15 the date of such sale or exchange, 

16 ‘‘(2) the adjusted gross income of the individual 

17 for the tax year in which such sale or exchange oc18 curs does not exceed $1,000,000 (determined with19 out regard to such sale or exchange), and 

20 ‘‘(3) the individual so elects. 

21 ‘‘(b) ONE-TIME EXCLUSION.—Subsection (a) shall 

22 not apply to any sale or exchange by the taxpayer if an 

23 election under subsection (a) with respect to any other sale 

24 or exchange is in effect. 

25 ‘‘(c) QUALIFIED INTEREST IN A CLOSELY HELD

26 BUSINESS.— 
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1 ‘‘(1) IN GENERAL.—For purposes of subsection 

2 (a), the term ‘qualified interest in a closely held 

3 business’ means an interest in a closely held busi4 ness (as defined by section 6166(b)(1)) if the fair 

5 market value of the assets of such business is 

6 $500,000 or less, determined at the time of such 

7 sale or exchange. 

8 ‘‘(2) RULE FOR APPLYING SECTION

9 6166(b)(1).—For purposes of paragraph (1), rules 

10 similar to rules of paragraphs (2) and (9) of sub11 section (b) and subsection (c) of section 6166 shall 

12 apply. 

13 ‘‘(3) AGGREGATION RULES.—All persons treat14 ed as a single employer under subsection (a) or (b) 

15 of section 52 or subsection (m) or (o) of section 414 

16 shall be treated as one person for purposes of para17 graph (1). 

18 ‘‘(d) ELECTION.—An election under subsection (a) 

19 may be made or revoked at any time before the expiration 

20 of the period for making a claim for credit or refund of 

21 the tax imposed by this chapter for the taxable year in 

22 which the sale or exchange occurred.’’. 

23 (b) CLERICAL AMENDMENT.—The table of sections 

24 for part III of subchapter B of chapter 1 of such Code 
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1 is amended by inserting after the item relating to section 

2 139A the following new item: 

‘‘Sec. 139B. Sale of closely held business by individuals who have attained age 

62.’’. 

3 (c) EFFECTIVE DATE.—The amendments made by 

4 this section shall apply to sales and exchanges made after 

5 December 31, 2004. 

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