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104TH CONGRESS

1ST SESSION H. R. 693

Relating to the valuation of stock received by certain employees in connection

with the performance of services as employees.

IN THE HOUSE OF REPRESENTATIVES

JANUARY 26, 1995

Mr. HALL of Texas introduced the following bill; which was referred to the

Committee on Ways and Means

A BILL

Relating to the valuation of stock received by certain employees in connection with the performance of services as

employees.

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

3 SECTION 1. VALUATION OF CERTAIN STOCK.

4 (a) GENERAL RULE.—If—

5 (1) stock in a corporation was on March 24,

6 1981, transferred by such corporation to an em7 ployee of such corporation,

8 (2) such transfer was in connection with an ini9 tial public offering of stock in such corporation,
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1 (3) the employee receiving such stock was sub2 ject to restrictions as to its transferability which

3 were imposed in connection with such public offer4 ing, and

5 (4) on April 15, 1982, the fair market value of

6 such stock was less than 50 percent of its fair mar7 ket value on March 24, 1981,

8 the amount includable in the gross income of the employee

9 under section 83 of the Internal Revenue Code of 1986

10 by reason of the receipt of such stock shall be determined

11 by using its fair market value on April 15, 1982 (or, if

12 earlier, the date on which the employee disposed of such

13 stock).

14 (b) STATUTE OF LIMITATIONS.—

15 (1) OVERPAYMENTS.—If refund or credit of any

16 overpayment of tax resulting from the application of

17 subsection (a) is prevented at any time before the

18 close of the 1-year period beginning on the date of

19 the enactment of this Act by the operation of any

20 law or rule of law (including res judicata), refund or

21 credit of such overpayment (to the extent attrib22 utable to the application of subsection (a)) shall,

23 nevertheless, be made or allowed if claim therefor is

24 filed before the close of such 1-year period.
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1 (2) DEFICIENCIES.—If the assessment of any

2 deficiency of tax resulting from the application of

3 subsection (a) is prevented at any time before the

4 close of the 1-year period referred to in paragraph

5 (1) by the operation of any law or rule of law (in6 cluding res judicata), assessment of such deficiency

7 (to the extent attributable to the application of sub8 section (a)) may, nevertheless, be made within such

9 1-year period.

10 (c) OTHER SPECIAL RULES.—

11 (1) WAIVER OF PENALTIES WHERE STOCK

12 SOLD.—If any stock to which subsection (a) applies

13 was sold by the employee before the date of the en14 actment of this Act, no penalty shall be imposed

15 under subchapter A of chapter 68 of such Code by

16 reason of any underpayment of tax to the extent at17 tributable to the application of subsection (a).

18 (2) SECRETARY TO OPEN CLOSING AGREE19 MENTS.—Notwithstanding section 7121(b) of such

20 Code, the Secretary of the Treasury or his delegate

21 shall, at the request of any individual to whom sub22 section (a) applies, reopen any agreement referred to

23 in section 7121(a) of such Code entered into by such

24 individual for purposes of giving effect to this sec25 tion.
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1 (d) EFFECTIVE DATE.—This section shall apply to

2 taxable years ending after March 24, 1981.

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