I
104TH CONGRESS
1ST SESSION
H. R. 593
To amend the Internal Revenue Code of 1986 to increase the dollar limitation
on the 1-time exclusion of gain from sale of a principal residence by
individuals who have attained age 55, to increase the amount of the
unified estate and gift tax credits, and to reduce the tax on capital
gains.
IN THE HOUSE OF REPRESENTATIVES
JANUARY 19, 1995
Mr. ROHRABACHER (for himself, Mr. DOOLITTLE, Mr. MOORHEAD, Mr.
MANZULLO, Mr. BURTON of Indiana, Mr. HASTERT, Mr. STUMP, Mr.
MCCOLLUM, Mr. BLUTE, Mr. BARTLETT of Maryland, Mr. KING, Mr.
KNOLLENBERG, Mr. ZIMMER, Mr. SENSENBRENNER, Mr. BUNNING of
Kentucky, Mr. SPENCE, Mr. DORNAN, Mr. BUNN of Oregon, Mr.
FORBES, Mr. MCHUGH, Mr. SMITH of New Jersey, Mr. FOX of Penn-
sylvania, Mr. HALL of Texas, Mr. ISTOOK, and Mr. SOLOMON) 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 increase
the dollar limitation on the 1-time exclusion of gain
from sale of a principal residence by individuals who
have attained age 55, to increase the amount of the
unified estate and gift tax credits, and to reduce the
tax on capital gains.
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 ‘‘Senior Citizens’ Tax
Relief Act of 1995’’.
SEC. 2. INCREASE IN LIMITATION ON 1-TIME EXCLUSION OF
GAIN FROM SALE OF PRINCIPAL RESIDENCE.
(a) GENERAL RULE.—Paragraph (1) of section
121(b) of the Internal Revenue Code of 1986 (relating to
dollar limitation) is amended by striking ‘‘$125,000
($62,500’’ and inserting ‘‘$205,000 ($102,500’’.
(b) COST-OF-LIVING ADJUSTMENTS.—Subsection (b)
of section 121 of such Code is amended by adding at the
end thereof the following new paragraph:
‘‘(4) COST-OF-LIVING
ADJUSTMENTS.—In the
case of any taxable year beginning in a calendar
year after 1995, each dollar amount set forth in
paragraph (1) shall be increased 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, by sub-
stituting ‘calendar year 1994’ for ‘calendar year
1992’ in subparagraph (B) thereof.
Any increase determined under the preceding sen-
tence shall be rounded to the nearest multiple of
$1,000.’’
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to any sale or exchange after
December 31, 1994.
SEC. 3. INCREASE IN UNIFIED ESTATE AND GIFT TAX
CREDITS.
(a) ESTATE TAX CREDIT.—
(1) Subsection (a) of section 2010 of the Inter-
nal Revenue Code of 1986 (relating to unified credit
against 
estate 
tax) 
is 
amended 
by 
striking
‘‘$193,500’’ and inserting ‘‘the applicable credit
amount’’.
(2) Section 2010 of such Code is amended by
redesignating subsection (c) as subsection (d) and by
inserting after subsection (b) the following new sub-
section:
‘‘(c) APPLICABLE CREDIT AMOUNT.—For purposes
of this section—
‘‘(1) IN
GENERAL.—The applicable credit
amount is the amount of the tentative tax which
would be determined under the rate schedule set
forth in section 2001(c) if the amount with respect
to which such tentative tax is to be computed were
$808,000.
‘‘(2) COST-OF-LIVING
ADJUSTMENTS.—In the
case of any decedent dying, and gift made, in a cal-
endar year after 1995, the $808,000 amount set
forth in paragraph (1) shall be increased by an
amount equal to—
‘‘(A) $808,000, multiplied by
‘‘(B) the cost-of-living adjustment deter-
mined under section 1(f)(3) for such calendar
year by substituting ‘calendar year 1994’ for
‘calendar year 1992’ in subparagraph (B)
thereof.
Any increase determined under the preceding sen-
tence shall be rounded to the nearest multiple of
$1,000.’’
(3) Paragraph (1) of section 6018(a) of such
Code is amended by striking ‘‘$600,000’’ and insert-
ing ‘‘$808,000 (adjusted as provided in section
2010(c)(2))’’.
(4) Paragraph (2) of section 2001(c) of such
Code is amended by striking ‘‘$21,040,000’’ and in-
serting ‘‘the amount at which the effective tax rate
under this section is 55 percent’’.
(5) Subparagraph (A) of section 2102(c)(3) of
such Code is amended by striking ‘‘$192,800’’ and
inserting ‘‘the applicable credit amount in effect
under section 2010(c) for the calendar year which
includes the date of death’’.
(b) UNIFIED GIFT TAX CREDIT.—Paragraph (1) of
section 2505(a) of such Code is amended by striking
‘‘$193,500’’ and inserting ‘‘the applicable credit amount
in effect under section 2010(c) for such calendar year’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to the estates of decedents dying,
and gifts made, after December 31, 1994.
SEC. 4. REDUCTION IN CAPITAL GAINS TAX FOR INDIVID-
UALS.
(a) GENERAL RULE.—Part I of subchapter P of
chapter 1 of the Internal Revenue Code of 1986 is amend-
ed by inserting after section 1201 the following new
section:
‘‘SEC. 1202. DEDUCTION FOR CAPITAL GAINS.
‘‘(a) GENERAL RULE.—If, for any taxable year, a
taxpayer other than a corporation has a net capital gain,
an amount equal to 50 percent of the net capital gain shall
be allowed as a deduction.
‘‘(b) ESTATES AND TRUSTS.—In the case of an es-
tate or trust, the deduction under subsection (a) shall be
computed by excluding the portion (if any) of the gains
for the taxable year from sales or exchanges of capital as-
sets which, under sections 652 and 662 (relating to inclu-
sions of amounts in gross income of beneficiaries of
trusts), is includible by the income beneficiaries as gain
derived from the sale or exchange of capital assets.
‘‘(c) COORDINATION WITH TREATMENT OF CAPITAL
GAIN UNDER LIMITATION ON INVESTMENT INTEREST.—
For purposes of this section, the net capital gain for any
taxable year shall be reduced (but not below zero) by the
amount which the taxpayer takes into account as invest-
ment income under section 163(d)(4)(B)(iii).’’
(b) MINIMUM TAX.—Section 56(b) of such Code is
amended by adding at the end thereof the following new
paragraph:
‘‘(4) CAPITAL
GAINS
DEDUCTION
DISALLOW-
ANCE.—The deduction under section 1202 shall not
be allowed.’’
(c) CONFORMING AMENDMENTS.—
(1) Section 13113 of the Revenue Reconcili-
ation Act of 1993 (relating to 50-percent exclusion
for gain from certain small business stock), and the
amendments made by such section, are hereby re-
pealed; and the Internal Revenue Code of 1986 shall
be applied as if such section (and amendments) had
never been enacted.
(2) Subsection (h) of section 1 of such Code is
hereby repealed.
(3) Section 62(a) of such Code is amended by
inserting after paragraph (15) the following new
paragraph:
‘‘(16) CAPITAL GAINS DEDUCTION.—The deduc-
tion allowed by section 1202.’’
(4) Section 170(e)(1)(B) of such Code is
amended by inserting ‘‘(or, in the case of a taxpayer
other than a corporation, 50 percent of the amount
of gain)’’ after ‘‘the amount of gain’’.
(5)(A) Section 172(d)(2) of such Code is
amended to read as follows:
‘‘(2) CAPITAL
GAINS
AND
LOSSES
OF
TAX-
PAYERS OTHER THAN CORPORATIONS.—In the case
of a taxpayer other than a corporation—
‘‘(A) the amount deductible on account of
losses from sales or exchanges of capital assets
shall not exceed the amount includible on ac-
count of gains from sales or exchanges of cap-
ital assets; and
‘‘(B) the deduction provided by section
1202 shall not be allowed.’’
(B) Subparagraph (B) of section 172(d)(4) of
such Code is amended by inserting ‘‘, (2)(B),’’ after
‘‘paragraph (1)’’.
(6)(A) Section 220 of such Code is amended to
read as follows:
‘‘SEC. 220. CROSS REFERENCES.
‘‘(1) For deduction for net capital gain, see section
1202.
‘‘(2) For deductions in respect of a decedent, see
section 691.’’
(B) The table of sections for part VII of sub-
chapter B of chapter 1 is amended by striking ‘‘ref-
erence’’ in the item relating to section 220 and in-
serting ‘‘references’’.
(7) Paragraph (4) of section 642(c) of such
Code is amended to read as follows:
‘‘(4) ADJUSTMENTS.—To the extent that the
amount otherwise allowable as a deduction under
this subsection consists of gain from the sale or ex-
change of capital assets held for more than 1 year,
proper adjustment shall be made for any deduction
allowable to the estate or trust under section 1202
(relating to deduction for net capital gain). In the
case of a trust, the deduction allowed by this sub-
section shall be subject to section 681 (relating to
unrelated business income).’’
(8) Paragraph (3) of section 643(a) of such
Code is amended by adding at the end thereof the
following new sentence: ‘‘The deduction under sec-
tion 1202 (relating to deduction for net capital gain)
shall not be taken into account.’’.
(9) Paragraph (6)(C) of section 643(a) of such
Code is amended—
(A) by inserting ‘‘(i)’’ before ‘‘there’’, and
(B) by inserting ‘‘, and (ii) the deduction
under section 1202 (relating to deduction for
capital gains) shall not be taken into account’’
before the period at the end thereof.
(10) Paragraph (4) of section 691(c) of such
Code is amended by striking ‘‘1(h), 1201’’ and in-
serting ‘‘1201, 1202,’’.
(11) The second sentence of paragraph (2) of
section 871(a) of such Code is amended by inserting
‘‘such gains and losses shall be determined without
regard to section 1202 (relating to deduction for net
capital gain) and’’ after ‘‘except that’’.
(12)(A) Subparagraph (B) of section 904(b)(2)
of such Code is amended by striking so much of
such subparagraph as precedes clause (i) and insert-
ing the following:
‘‘(B) SPECIAL RULES WHERE CORPORATE
CAPITAL
RATE
GAIN
DIFFERENTIAL.—In the
case of a corporation, for any taxable year for