‘‘SEC. 1203. DEDUCTION FOR NET CAPITAL GAIN OF CER-
TAIN INDIVIDUALS. 
‘‘(a) IN GENERAL.—In the case of an individual, 
there shall be allowed a deduction against gross income 
the amount equal to the taxpayer’s net capital gain for 
such year. 
‘‘(b) LIMITATION BASED ON ADJUSTED GROSS IN-
COME.— 
‘‘(1) IN GENERAL.—The amount which would 
(but for this paragraph) be allowed as a deduction 
under subsection (a) shall be reduced (but not below 
zero) by the amount which bears the same ratio to 
such amount as— 
‘‘(A) the excess (if any) of— 
‘‘(i) the taxpayer’s modified adjusted 
gross income for the taxable year, over 
‘‘(ii) the threshold amount bears to 
‘‘(B) $10,000 ($20,000 in the case of a 
joint return). 
‘‘(2) THRESHOLD AMOUNT.—For purposes of 
paragraph (1), the threshold amount is $100,000 
(twice such amount in the case of a joint return). 
‘‘(3) INFLATION ADJUSTMENT.—In the case of 
any taxable year beginning in a calendar year after 
2008, the $100,000 amount contained in paragraph 
(1)(B) shall be increased by an amount equal to— 
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‘‘(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 2007’ 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) MODIFIED ADJUSTED GROSS INCOME.—For 
purposes of this section, the term ‘modified adjusted gross 
income’ means adjusted gross income determined— 
‘‘(1) without regard to this section and sections 
199, 911, 931, and 933, and 
‘‘(2) after application of sections 86, 135, 137, 
219, 221, 222, and 469.’’. 
(b) COORDINATION WITH MAXIMUM CAPITAL GAINS 
RATES.—Paragraph (2) of section 1(h) of such Code is 
amended to read as follows: 
‘‘(2) REDUCTION OF NET CAPITAL GAIN.—For 
purposes of this subsection, the net capital gain for 
any taxable year shall be reduced (but not below 
zero) by the sum of— 
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‘‘(A) the amount which the taxpayer takes 
into account as investment income under sec-
tion 163(d)(4)(B)(iii), and 
‘‘(B) the deduction allowed by section 
1203.’’. 
(c) DEDUCTION ALLOWED WHETHER OR NOT INDI-
VIDUAL ITEMIZES OTHER DEDUCTIONS.—Subsection (a) 
of section 62 of such Code is amended by inserting before 
the last sentence the following new paragraph: 
‘‘(22) NET CAPITAL GAIN OF CERTAIN INDIVID-
UALS.—The deduction allowed by section 1203.’’. 
(d) CONFORMING AMENDMENTS.— 
(1) 
Sections 
86(b)(2)(A), 
135(c)(4)(A), 
137(b)(3)(A), and 221(b)(2)(C)(i) of such Code are 
each amended by striking ‘‘and 933’’ and inserting 
‘‘933, and 1203’’. 
(2) Subparagraph (B) of section 172(d)(2) of 
such Code is amended to read as follows: 
‘‘(B) the exclusion under section 1202, and 
the deduction under section 1203, shall not be 
allowed.’’. 
(3) Section 219(g)(3)(A)(ii) of such Code is 
amended by striking ‘‘and 911’’ and inserting ‘‘911, 
and 1203’’. 
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(4) Section 469(i)(3)(F)(ii) of such Code is 
amended by striking ‘‘and 137’’ and inserting ‘‘137, 
and 1203’’. 
(5) Paragraph (4) of section 691(c) of such 
Code is amended by inserting ‘‘1203,’’ after 
‘‘1202,’’. 
(6) Paragraph (2) of section 871(a) of such 
Code is amended by inserting ‘‘or 1203,’’ after 
‘‘1202,’’. 
(7) The table of sections for part I of sub-
chapter P of chapter 1 of such Code is amended by 
adding at the end the following new item: 
‘‘Sec. 1203. Deduction for net capital gain of certain individuals.’’. 
(e) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
the date of the enactment of this Act. 
Æ 
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