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[Congressional Bills 111th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4561 Introduced in House (IH)]

111th CONGRESS
  2d Session
                                H. R. 4561

    To amend the Internal Revenue Code of 1986 to provide a limited 
   exclusion from gross income for the discharge of indebtedness of 
                              individuals.

_______________________________________________________________________

                    IN THE HOUSE OF REPRESENTATIVES

                            February 2, 2010

Mr. Lewis of Georgia 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 a limited 
   exclusion from gross income for the discharge of indebtedness of 
                              individuals.

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

SECTION 1. EXCLUSION FROM GROSS INCOME FOR DISCHARGE OF INDEBTEDNESS OF 
              INDIVIDUALS.

    (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 adding at the end the following new 
subparagraph:
                    ``(F) the indebtedness discharged is qualified 
                individual indebtedness.''.
    (b) Qualified Individual Indebtedness.--Section 108 of such Code is 
amended by adding at the end the following new subsection:
    ``(j) Special Rules Relating to Qualified Individual 
Indebtedness.--
            ``(1) Qualified individual indebtedness defined.--For 
        purposes of this section, the term `qualified individual 
        indebtedness' means any indebtedness of an individual other 
        than indebtedness which is--
                    ``(A) discharged on account of services performed 
                for the lender, or
                    ``(B) held at any time by a person related to such 
                individual.
        For purposes of subparagraph (B), a person shall be treated as 
        related to another person if the relationship between such 
        persons would result in a disallowance of losses under section 
        267 or 707(b).
            ``(2) Dollar limitation.--The amount of qualified 
        individual indebtedness excluded from gross income under 
        subsection (a)(1)(F) with respect to any individual for any 
        taxable year shall not exceed the excess of--
                    ``(A) $10,000, over
                    ``(B) the aggregate amount excluded from the gross 
                income of such individual under subsection (a)(1) for 
                such taxable year and all prior taxable years 
                (determined without regard to the amount excluded under 
                subsection (a)(1)(F) for such taxable year).
            ``(3) Joint returns.--In the case of a joint return--
                    ``(A) the dollar limitation under paragraph (2) 
                shall be applied separately to each spouse, and
                    ``(B) the taxpayer may elect to treat any 
                indebtedness of either spouse as indebtedness of the 
                other spouse.''.
    (c) Coordination.--
            (1) In general.--Paragraph (2) of section 108(a) of such 
        Code is amended by adding at the end the following new 
        subparagraph:
                    ``(D) Precedence of individual indebtedness 
                exclusion.--
                            ``(i) Individual indebtedness exclusion 
                        takes precedence over insolvency exclusion 
                        unless elected otherwise.--Paragraph (1)(B) 
                        shall not apply to a discharge to which 
                        paragraph (1)(F) applies unless the taxpayer 
                        elects to apply paragraph (1)(B) in lieu of 
                        paragraph (1)(F).
                            ``(ii) Other exclusions take precedence.--
                        Subparagraph (F) shall not apply to a discharge 
                        to which subparagraph (C), (D), or (E) 
                        applies.''.
            (2) Title 11 exclusion takes precedence.--Subparagraph (A) 
        of section 108(a)(2) of such Code is amended by striking ``and 
        (E)'' and inserting ``(E), and (F)''.
    (d) Effective Date.--The amendments made by this section shall 
apply to discharges of indebtedness after the date of the enactment of 
this Act.
                                 <all>
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