I 

111TH CONGRESS 

2D SESSION H. R. 6323 

To exempt gain from the sale of certain C corporation stock from the 

capital gains rate increase resulting from the sunset of the Jobs and 

Growth Tax Relief Reconciliation Act of 2003. 

IN THE HOUSE OF REPRESENTATIVES 

SEPTEMBER 29, 2010 

Mr. CROWLEY introduced the following bill; which was referred to the 

Committee on Ways and Means 

A BILL 

To exempt gain from the sale of certain C corporation stock 

from the capital gains rate increase resulting from the 

sunset of the Jobs and Growth Tax Relief Reconciliation 

Act of 2003. 

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

3 SECTION 1. EXEMPTION FROM CAPITAL GAINS RATE IN4 CREASE FOR QUALIFIED GAIN FROM SALE 

5 OR EXCHANGE OF QUALIFIED CORPORATE 

6 STOCK. 

7 (a) IN GENERAL.—Any increase in capital gains 

8 rates resulting from section 303 of the Jobs and Growth 


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1 Tax Relief Reconciliation Act of 2003 shall not apply to 

2 any qualified gain from the sale or exchange of qualified 

3 corporate stock held by the taxpayer for more than 5 

4 years. 

5 (b) QUALIFIED CORPORATE STOCK.—For purposes 

6 of this section, the term ‘‘qualified corporate stock’’ means 

7 any stock in a C corporation (as defined in section 

8 1361(a)(2) of the Internal Revenue Code of 1986), if— 

9 (1) as of the date of sale and during substan10 tially all of the taxpayer’s holding period for such 

11 stock, such corporation has a principal place of busi12 ness in the United States and meets the active busi13 ness requirements of section 1202(e) of such Code, 

14 (2) for at least two years preceding the date of 

15 sale, such corporation has paid for at least 60 per16 cent of each full time employee’s health insurance 

17 coverage, and 

18 (3) for at least two years preceding the date of 

19 sale, such corporation has contributed to a defined 

20 contribution plan in a manner that meets the safe 

21 harbor non-discrimination requirements under sec22 tion 401(k)(12) of such Code. 

23 (c) QUALIFIED GAIN.—For purposes of this section, 

24 the term ‘‘qualified gain’’ means any gain from the sale 

25 of stock constituting more than 50 percent of the total 


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1 voting power of all classes entitled to vote and more than 

2 50 percent of the total value of stock of such corporation, 

3 if— 

4 (1) during the applicable period, an amount 

5 equal to at least 5 percent of the sales proceeds is 

6 transferred to or for the benefit of eligible employees 

7 of the corporation, and 

8 (2) without taking into account the amount 

9 transferred under paragraph (1), the aggregate 

10 amount paid as compensation and benefits to eligible 

11 employees of the corporation during each year of the 

12 applicable period is at least equal to the base 

13 amount. 

14 (d) DEFINITIONS.—For purposes of this section— 

15 (1) ELIGIBLE EMPLOYEE.—The term ‘‘eligible 

16 employee’’ means any full-time employee, other than 

17 an employee who, any time during the 2-year period 

18 preceding the date of sale, is— 

19 (A) a key employee within the meaning of 

20 section 416(i) of such Code, 

21 (B) an employee whose annual W–2 wages 

22 exceed $250,000, or, 

23 (C) an employee whose principal place of 

24 employment is outside the United States. 


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1 (2) APPLICABLE PERIOD.—The term ‘‘applica2 ble period’’ means the calendar year in which the 

3 sale of the qualified corporate stock occurs and the 

4 immediately preceding calendar year. 

5 (3) BASE AMOUNT.—The term ‘‘base amount’’ 

6 means an amount equal to— 

7 (A) the average annual total compensation 

8 and benefits paid to eligible employees of the 

9 corporation during the three calendar year pe10 riod immediately preceding the applicable pe11 riod, multiplied by 

12 (B) the cost of living adjustment for the 

13 first year of the applicable period. 

14 (e) REGULATIONS.—The Secretary of the Treasury 

15 shall prescribe such regulations as may be necessary or 

16 appropriate to carry out the purposes of this paragraph. 

17 (f) EFFECTIVE DATE.—This section shall apply to 

18 gain from the sale of stock in taxable years beginning after 

19 the date of the enactment of this Act and before the date 

20 that is 5 years after the date of such enactment. 

Æ 


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