end thereof the following: ‘‘and section 1222
shall be applied without regard to paragraph
(12) thereof (relating to special rule for collect-
ibles)’’.
(c) MINIMUM TAX.—Section 56(b) 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.’’
(d) CONFORMING AMENDMENTS.—
(1) Subsection (h) of section 1 is hereby re-
pealed.
(2) Section 12 is amended by striking para-
graph (4) and redesignating the following para-
graphs accordingly.
(3) Section 62(a) is amended by inserting after
paragraph (14) the following new paragraph:
‘‘(15) CAPITAL GAINS DEDUCTION.—The deduc-
tion allowed by section 1202.’’
(4) Clause (ii) of section 163(d)(4)(B) is
amended by inserting ‘‘, reduced by the amount of
any deduction allowable under section 1202 attrib-
utable to gain from such property’’ after ‘‘invest-
ment’’.
(5)(A) Section 170(e)(1)(B) is amended by in-
serting ‘‘(or, in the case of a taxpayer other than a
corporation, the nondeductible percentage of the
amount of gain)’’ after ‘‘the amount of gain’’.
(B) Section 170(e)(1) is amended by adding at
the end thereof the following new sentence: ‘‘For
purposes of subparagraph (B), the term ‘nondeduct-
ible percentage’ means 100 percent minus the appli-
cable percentage with respect to such property under
section 1202(b).’’
(6)(A) Section 172(d)(2) (relating to modifica-
tions with respect to net operating loss deduction) 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) is
amended by inserting ‘‘, (2)(B),’’ after ‘‘paragraph
(1)’’.
(7)(A) Section 220 (relating to cross reference)
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’’.
(8) Paragraph (4) of section 642(c) 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).’’
(9) Paragraph (3) of section 643(a) is amended
by adding at the end thereof the following new sen-
tence: ‘‘The deduction under section 1202 (relating
to deduction for net capital gain) shall not be taken
into account.’’
(10) Paragraph (6)(C) of section 643(a) is
amended—
(A) by inserting ‘‘(i)’’ before ‘‘there’’, and
(B) by inserting ‘‘, and (ii) the deduction
under section 1202 (relating to deduction for
excess of capital gains over capital losses)’’ be-
fore the period at the end thereof.
(11) Paragraph (4) of section 691(c) is amend-
ed by striking ‘‘1(h),’’.
(12) The second sentence of paragraph (2) of
section 871(a) is amended by inserting ‘‘such gains
and losses shall be determined without regard to sec-
tion 1202 (relating to deduction for net capital gain)
and’’ after ‘‘except that’’.
(13)(A) Subparagraph (B) of section 904(b)(2)
is amended by striking out so much of such subpara-
graph as precedes clause (i) and inserting the follow-
ing:
‘‘(B) SPECIAL RULES WHERE CORPORATE
CAPITAL
RATE
GAIN
DIFFERENTIAL.—In the