I
103D CONGRESS
1ST SESSION
H. R. 3101
To amend the Internal Revenue Code of 1986 to provide a temporary reduc-
tion in the tax on capital gains and to provide for the indexing of
certain assets.
IN THE HOUSE OF REPRESENTATIVES
SEPTEMBER 21, 1993
Mr. KYL 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 temporary reduction in the tax on capital gains and
to provide for the indexing of certain assets.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘Window of Oppor-
tunity Act’’.
TITLE 
I—TEMPORARY 
REDUC-
TION IN TAX ON CAPITAL
GAINS
SEC. 101. TEMPORARY REDUCTION IN INDIVIDUAL CAPITAL
GAINS TAX.
Section 1 of the Internal Revenue Code of 1986 (re-
lating to tax imposed on individuals) is amended by adding
at the end thereof the following new subsection:
‘‘(i) TEMPORARY REDUCTION
IN CAPITAL GAINS
RATE.—
‘‘(1) IN GENERAL.—If a taxpayer has a morato-
rium period gain for any taxable year—
‘‘(A) subsection (h) shall not apply to such
taxable year, and
‘‘(B) the tax imposed by this section for
such taxable year shall not exceed the sum of—
‘‘(i) a tax computed at the rates and
in the same manner as if this subsection
had not been enacted on taxable income re-
duced by the amount of the net capital
gain,
‘‘(ii) 6 percent of the lesser of—
‘‘(I) the moratorium period gain
for the taxable year, or
‘‘(II) the portion of the tax-
payer’s taxable income for the taxable
year which would be taxed at a rate in
excess of 28 percent (determined with-
out regard to this subsection and sub-
section (h)),
‘‘(iii) 3 percent of the portion of the
moratorium period gain for the taxable
year which is not subject to tax under
clause (ii), and
‘‘(iv) 28 percent of the excess (if any)
of the net capital gain for the taxable year
over the moratorium period gain.
‘‘(2) MORATORIUM
PERIOD
GAIN.—For pur-
poses of this subsection, the term ‘moratorium pe-
riod gain’ means the lesser of—
‘‘(A) the net capital gain for the taxable
year determined by only taking into account
gain and loss properly taken into account for
the portion of the taxable year within the mora-
torium period, or
‘‘(B) the net capital gain for the taxable
year.
‘‘(3) MORATORIUM PERIOD.—For purposes of
this subsection, the term ‘moratorium period’ means
the 1 year period beginning on the date of the enact-
ment of the Window of Opportunity Act.
‘‘(4) TREATMENT OF PASS-THRU ENTITIES.—
‘‘(A) IN GENERAL.—In applying this sub-
section with respect to any pass-thru entity, the
determination of the period for which any gain
or loss is properly taken into account shall be
made at the entity level.
‘‘(B) PASS-THRU
ENTITY.—For purposes
of subparagraph (A), the term ‘pass-thru entity’
means—
‘‘(i) a regulated investment company,
‘‘(ii) a real estate investment trust,
‘‘(iii) an S corporation,
‘‘(iv) a partnership,
‘‘(v) an estate or trust, and
‘‘(vi) a common trust fund.’’
SEC. 102. TEMPORARY REDUCTION IN CORPORATE CAP-
ITAL GAINS TAX.
Section 1201 of the Internal Revenue Code of 1986
(relating to alternative tax for corporations) is amended
by redesignating subsection (b) as subsection (c) and by
inserting after subsection (a) the following new subsection:
‘‘(b) TEMPORARY REDUCTION
IN CAPITAL GAINS
RATE.—
‘‘(1) IN GENERAL.—If a corporation has a mor-
atorium period gain for any taxable year—
‘‘(A) subsection (a) shall not apply to such
taxable year, and
‘‘(B) in lieu of any tax imposed by section
11, 511, 801(a), or 831 (a) or (b), there is
hereby imposed a tax (if such tax is less than
the tax imposed by such sections) which shall
consist of the sum of—
‘‘(i) a tax computed at the rates and
in the same manner as if this subsection
had not been enacted on taxable income re-
duced by the amount of the net capital
gain,
‘‘(ii) 6 percent of the lesser of—
‘‘(I) the moratorium period gain
for the taxable year, or
‘‘(II) the portion of the tax-
payer’s taxable income for the taxable
year which would be taxed at a rate in
excess of 25 percent (determined with-
out regard to this subsection),
‘‘(iii) 3 percent of the portion of the
moratorium period gain for the taxable
year which is not subject to tax under
clause (ii), and
‘‘(iv) 34 percent of the excess of the
net capital gain for the taxable year over
the moratorium period gain.
‘‘(2) MORATORIUM
PERIOD
GAIN.—For pur-
poses of this subsection, the term ‘moratorium pe-
riod gain’ has the meaning given such term by sec-
tion 1(i)(2).’’
SEC. 103. TEMPORARY REDUCTION IN MINIMUM TAX.
Subsection (b) of section 55 of the Internal Revenue
Code of 1986 (defining tentative minimum tax) is amend-
ed by adding at the end thereof the following new para-
graph:
‘‘(3) TEMPORARY REDUCTION IN TAX ON CAP-
ITAL GAINS.—
‘‘(A) IN GENERAL.—If the taxpayer has a
moratorium period gain for any taxable year,
the amount determined under subparagraph (A)
of paragraph (1) shall not exceed the sum of—
‘‘(i) the amount determined under
subparagraph (A) on the amount of the
taxable excess reduced by the moratorium
period gain,
‘‘(ii) 6 percent of the moratorium pe-
riod gain for the taxable year to the extent
such gain does not exceed the amount sub-
ject to tax under section 1(i)(1)(B)(ii) or
section 1201(b)(1)(B)(ii), and
‘‘(iii) 3 percent of the portion of the
moratorium period gain for the taxable
year which is not subject to tax under
clause (ii).
‘‘(B) TAXABLE EXCESS.—For purposes of
this paragraph, the term ‘taxable excess’ means
the excess of the alternative minimum taxable
income for the taxable year over the exemption
amount.
‘‘(C) MORATORIUM
PERIOD
GAIN.—For
purposes of this paragraph, the term ‘morato-
rium period gain’ has the meaning given to
such term by section 1(i)(2); except that in no
event shall the amount of the moratorium pe-
riod gain exceed the taxable excess.’’
SEC. 104. EFFECTIVE DATE.
The amendments made by this title shall apply to tax-
able years ending after the date of the enactment of this
Act.
TITLE II—INDEXING OF CERTAIN
ASSETS
SEC. 201. INDEXING OF CERTAIN ASSETS FOR PURPOSES
OF DETERMINING GAIN OR LOSS.
(a) IN GENERAL.—Part II of subchapter O of chap-
ter 1 of the Internal Revenue Code of 1986 (relating to
basis rules of general application) is amended by inserting
after section 1021 the following new section:
‘‘SEC. 1022. INDEXING OF CERTAIN ASSETS FOR PURPOSES
OF DETERMINING GAIN OR LOSS.
‘‘(a) GENERAL RULE.—
‘‘(1) INDEXED
BASIS
SUBSTITUTED
FOR
AD-
JUSTED BASIS.—Except as provided in paragraph
(2), if an indexed asset which has been held for
more than 1 year is sold or otherwise disposed of,
for purposes of this title the indexed basis of the
asset shall be substituted for its adjusted basis.
‘‘(2) EXCEPTION
FOR
DEPRECIATION, ETC.—
The deduction for depreciation, depletion, and amor-
tization shall be determined without regard to the
application of paragraph (1) to the taxpayer or any
other person.
‘‘(b) INDEXED ASSET.—
‘‘(1) IN GENERAL.—For purposes of this sec-
tion, the term ‘indexed asset’ means—
‘‘(A) stock in a corporation, and
‘‘(B) tangible property (or any interest
therein),
which is a capital asset or property used in the trade
or business (as defined in section 1231(b)).
‘‘(2) CERTAIN
PROPERTY
EXCLUDED.—For
purposes of this section, the term ‘indexed asset’
does not include—
‘‘(A) CREDITOR’S INTEREST.—Any interest
in property which is in the nature of a credi-
tor’s interest.
‘‘(B) OPTIONS.—Any option or other right
to acquire an interest in property.
‘‘(C) NET LEASE PROPERTY.—In the case
of a lessor, net lease property (within the mean-
ing of subsection (h)(1)).
‘‘(D) CERTAIN PREFERRED STOCK.—Stock
which is fixed and preferred as to dividends and
does not participate in corporate growth to any
significant extent.
‘‘(E) 
STOCK
IN
FOREIGN
CORPORA-
TIONS.—Stock in a foreign corporation.
‘‘(3) EXCEPTION FOR STOCK IN FOREIGN COR-
PORATION WHICH IS REGULARLY TRADED ON NA-
TIONAL
OR
REGIONAL
EXCHANGE.—Paragraph
(2)(E) shall not apply to stock in a foreign corpora-
tion the stock of which is listed on the New York
Stock Exchange, the American Stock Exchange, or
any domestic regional exchange for which quotations
are published on a regular basis other than—
‘‘(A) stock of a foreign investment com-
pany (within the meaning of section 1246(b)),
and
‘‘(B) stock in a foreign corporation held by
a United States person who meets the require-
ments of section 1248(a)(2).
‘‘(c) INDEXED BASIS.—For purposes of this sec-
tion—
‘‘(1) INDEXED BASIS.—The indexed basis for
any asset is—
‘‘(A) the adjusted basis of the asset, multi-
plied by
‘‘(B) the applicable inflation ratio.
‘‘(2) APPLICABLE INFLATION RATIO.—The ap-
plicable inflation ratio for any asset is the percent-
age arrived at by dividing—
‘‘(A) the gross national product deflator
the calendar quarter in which the disposition
takes place, by