I
107TH CONGRESS
1ST SESSION
H. R. 300
To amend the Internal Revenue Code of 1986 to allow individuals an exclusion
from gross income for certain amounts of capital gains distributions
from regulated investment companies.
IN THE HOUSE OF REPRESENTATIVES
JANUARY 30, 2001
Mr. SAXTON 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 allow indi-
viduals an exclusion from gross income for certain
amounts of capital gains distributions from regulated
investment companies.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. PARTIAL EXCLUSION OF CAPITAL GAINS DIS-
TRIBUTIONS FROM REGULATED INVESTMENT
COMPANIES.
(a) IN GENERAL.—Part III of subchapter B of chap-
ter 1 of the Internal Revenue Code of 1986 (relating to
items specifically excluded from gross income) is amended
by inserting after section 115 the following new section:
‘‘SEC. 116. PARTIAL EXCLUSION OF CAPITAL GAINS DIS-
TRIBUTIONS FROM REGULATED INVESTMENT
COMPANIES.
‘‘(a) IN GENERAL.—In the case of an individual,
gross income shall not include any capital gain dividend—
‘‘(1) which is distributed by a regulated invest-
ment company to which part I of subchapter M ap-
plies, and
‘‘(2) which is automatically reinvested by the
company in the stock of such company with respect
to which the dividend is distributed.
‘‘(b) MAXIMUM EXCLUSION.—The amount excluded
from gross income under subsection (a) for the taxable
year shall not exceed—
‘‘(1) $5,000, or
‘‘(2) in the case of a joint return, twice the
amount applicable under paragraph (1).
‘‘(c) CAPITAL GAIN DIVIDEND.—For purposes of this
section, the term ‘capital gain dividend’ means—
‘‘(1) any capital gain dividend (as defined by
section 852(b)(3)(C)), and
‘‘(2) the portion of any other dividend des-
ignated by the company (under rules similar to the
rules of such section) as representing such dividend’s
proportionate share of the net short-term capital
gain of the company.
‘‘(d) INFLATION ADJUSTMENT OF MAXIMUM EXCLU-
SION.—
‘‘(1) IN GENERAL.—In the case of any taxable
year beginning in a calendar year after 2000, the
$5,000 amount in subsection (b)(1) shall be in-
creased by an amount equal to—
‘‘(A) such dollar amount, multiplied by
‘‘(B) the cost-of-living adjustment deter-
mined under section 1(f)(3) for the calendar
year in which the taxable year begins, deter-
mined by substituting ‘calendar year 1999’ for
‘calendar year 1992’ in subparagraph (B)
thereof.
‘‘(2) ROUNDING RULES.—If any amount after
adjustment under paragraph (1) is not a multiple of
$100, such amount shall be rounded to the nearest
multiple of $100.
‘‘(e) NO BASIS ADJUSTMENT.—No adjustment shall
be made to the taxpayer’s basis in the shares of the regu-
lated investment company by reason of any amount ex-
cluded from gross income under this section.’’
(b) CLERICAL AMENDMENT.—The table of sections
for part III of subchapter B of chapter 1 of such Code
is amended by inserting after the item relating to section
115 the following new item:
‘‘Sec. 116. Partial exclusion of capital gains distributions from
regulated investment companies.’’
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
December 31, 1999.
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