I
105TH CONGRESS
1ST SESSION
H. R. 2403
To amend the Internal Revenue Code of 1986 to reduce the rate of tax
on unrecaptured section 1250 gain from 25 percent to 20 percent.
IN THE HOUSE OF REPRESENTATIVES
SEPTEMBER 4, 1997
Mr. ENGLISH of Pennsylvania (for himself, Mr. SHAW, Mr. BURR of North
Carolina, Mr. COBLE, Mr. GEKAS, Mr. METCALF, Ms. STABENOW, and
Mr. WELLER) 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 reduce
the rate of tax on unrecaptured section 1250 gain from
25 percent to 20 percent.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. MAXIMUM CAPITAL GAINS RATES FOR INDIVID-
UALS.
(a) REGULAR TAX.—Paragraph (1) of section 1(h)
of the Internal Revenue Code of 1986 (relating to maxi-
mum capital gains rate) is amended to read as follows:
‘‘(1) IN GENERAL.—If a taxpayer has a net
capital gain for any taxable year, the tax imposed by
this section for such taxable year shall not exceed
the sum of—
‘‘(A) a tax computed at the rates and in
the same manner as if this subsection had not
been enacted on the greater of—
‘‘(i) taxable income reduced by the net
capital gain, or
‘‘(ii) the lesser of—
‘‘(I) the amount of taxable in-
come taxed at a rate below 28 per-
cent, or
‘‘(II) the taxable income reduced
by the adjusted net capital gain, plus
‘‘(B) 28 percent of the amount of taxable
income in excess of the sum of—
‘‘(i) the adjusted net capital gain, plus
‘‘(ii) the amount on which tax is de-
termined under subparagraph (A), plus
‘‘(C) 10 percent of so much of the tax-
payer’s adjusted net capital gain (or, if less,
taxable income) as does not exceed the excess
(if any) of—
‘‘(i) the amount of taxable income
which would (without regard to this para-
graph) be taxed at a rate below 28 per-
cent, over
‘‘(ii) the taxable income reduced by
the adjusted net capital gain, plus
‘‘(D) 20 percent of the taxpayer’s adjusted
net capital gain (or, if less, taxable income) in
excess of the amount on which a tax is deter-
mined under subparagraph (C).’’.
(b) MINIMUM TAX.—Paragraph (3) of section 55(b)
of such Code is amended to read as follows:
‘‘(3) MAXIMUM RATE OF TAX ON NET CAPITAL
GAIN OF NONCORPORATE TAXPAYERS.—The amount
determined under the first sentence of paragraph
(1)(A)(i) shall not exceed the sum of—
‘‘(A) the amount determined under such
first sentence computed at the rates and in the
same manner as if this paragraph had not been
enacted on the taxable excess reduced by the
lesser of—
‘‘(i) the net capital gain, or
‘‘(ii) the adjusted net capital gain,
plus
‘‘(B) 10 percent of so much of the tax-
payer’s adjusted net capital gain (or, if less,
taxable excess) as does not exceed the amount
on which a tax is determined under section
1(h)(1)(C), plus
‘‘(C) 20 percent of the taxpayer’s adjusted
net capital gain (or, if less, taxable excess) in
excess of the amount on which tax is deter-
mined under subparagraph (B).
In the case of taxable years beginning after Decem-
ber 31, 2000, rules similar to the rules of section
1(h)(2) shall apply for purposes of subparagraphs
(B) and (C). Terms used in this paragraph which
are also used in section 1(h) shall have the respec-
tive meanings given such terms by section 1(h).’’.
(c) CONFORMING AMENDMENTS.—
(1) Paragraph (2) of section 1(h) of such Code
is amended—
(A) by striking ‘‘paragraph (1)(D)’’ in sub-
paragraph 
(A) 
and 
inserting 
‘‘paragraph
(1)(C)’’, and
(B) by striking ‘‘paragraph (1)(E)’’ in sub-
paragraph 
(B) 
and 
inserting 
‘‘paragraph
(1)(D)’’.
(2) Paragraph (4) of section 1(h) of such Code
is amended by striking subparagraph (B) and by re-
designating subparagraphs (C) and (D) as subpara-
graph (B) and (C), respectively.
(3) Subsection (h) of section 1 of such Code is
amended by striking paragraph (6) and by redesig-
nating paragraphs (7) through (11) as paragraphs
(6) through (10), respectively.
(4) Paragraph (8) of section 1(h) of such Code,
as redesignated by paragraph (3), is amended by
striking ‘‘unrecaptured section 1250 gain (deter-
mined without regard to subparagraph (B) of para-
graph (6)),’’.
(5) Subparagraph (A) of section 1(h)(9) of such
Code, as redesignated by paragraph (3), is amended
by striking ‘‘paragraph (8)(A)’’ and inserting ‘‘para-
graph (7)(A)’’.
(6) Paragraph (10) of section 1(h) of such
Code, as redesignated by paragraph (3), is amended
by striking ‘‘paragraph (10)(C)’’ and inserting
‘‘paragraph (9)(C)’’.
(d) EFFECTIVE DATE.—The amendments made by
this section shall take effect as if included in the amend-
ments made by section 311 of the Taxpayer Relief Act
of 1997.
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