(1) IN
GENERAL.—Subsection (a) of section 
1202 of the Internal Revenue Code of 1986 (relating 
to exclusion) is amended to read as follows: 
‘‘(a) EXCLUSION.—Gross income shall not include 
any gain from the sale or exchange of qualified small busi-
ness stock held for more than 3 years.’’. 
(2) RULE RELATING TO STOCK HELD AMONG 
MEMBERS OF CONTROLLED GROUP.—Subsection (c) 
of section 1202 of such Code is amended by adding 
at the end the following new paragraph: 
‘‘(4) STOCK HELD AMONG MEMBERS OF 25-PER-
CENT CONTROLLED GROUP NOT ELIGIBLE.— 
‘‘(A) IN GENERAL.—Stock of a member of 
a 25-percent controlled group shall not be treat-
ed as qualified small business stock while held 
by another member of such group. 
‘‘(B) 25-PERCENT CONTROLLED GROUP.— 
For purposes of subparagraph (A), the term 
‘25-percent controlled group’ means any con-
trolled group of corporations as defined in sec-
tion 1563(a)(1), except that— 
‘‘(i) ‘more than 25 percent’ shall be 
substituted for ‘at least 80 percent’ each 
place it appears in section 1563(a)(1), and 
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‘‘(ii) section 1563(a)(4) shall not 
apply.’’. 
(3) CONFORMING AMENDMENTS.— 
(A) Subsections (b)(2), (g)(2)(A), and 
(j)(1)(A) of section 1202 of such Code are each 
amended by striking ‘‘5 years’’ and inserting ‘‘3 
years’’. 
(B) Section 1223(13) of such Code is 
amended by striking ‘‘1202(a)(2)’’. 
(C) The heading for section 1202 of such 
Code is amended by striking ‘‘PARTIAL’’. 
(D) The item relating to section 1202 in 
the table of sections for part I of subchapter P 
of chapter 1 of such Code is amended to read 
as follows: 
‘‘Sec. 1202. Exclusion for gain from certain small business stock.’’. 
(b) REPEAL OF MINIMUM TAX PREFERENCE.— 
(1) IN GENERAL.—Subsection (a) of section 57 
of the Internal Revenue Code of 1986 (relating to 
items of tax preference) is amended by striking 
paragraph (7). 
(2) TECHNICAL AMENDMENT.—Subclause (II) 
of section 53(d)(1)(B)(ii) of such Code is amended 
by striking ‘‘, (5), and (7)’’ and inserting ‘‘and (5)’’. 
(c) REPEAL OF 28 PERCENT CAPITAL GAINS RATE 
ON QUALIFIED SMALL BUSINESS STOCK.— 
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(1) IN GENERAL.—Subparagraph (A) of section 
1(h)(4) of the Internal Revenue Code of 1986 is 
amended to read as follows: 
‘‘(A) collectibles gain, over’’. 
(2) CONFORMING AMENDMENTS.— 
(A) Section 1(h) of such Code is amended 
by striking paragraph (7). 
(B)(i) Section 1(h) of such Code is amend-
ed by redesignating paragraphs (8), (9), (10), 
(11), (12), and (13) as paragraphs (7), (8), (9), 
(10), (11), and (12), respectively. 
(ii) 
Sections 
163(d)(4)(B), 
854(b)(5), 
857(c)(2)(D) of such Code are each amended 
by striking ‘‘section 1(h)(11)(B)’’ and inserting 
‘‘section 1(h)(10)(B)’’. 
(iii) The following sections of such Code 
are 
each 
amended 
by 
striking 
‘‘section 
1(h)(11)’’ and inserting ‘‘section 1(h)(10)’’: 
(I) Section 301(f)(4). 
(II) Section 306(a)(1)(D). 
(III) Section 584(c). 
(IV) Section702(a)(5). 
(V) Section 854(a). 
(VI) Section 854(b)(2). 
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(iv) The heading of section 857(c)(2) is 
amended by striking ‘‘1(h)(11)’’ and inserting 
‘‘1(h)(10)’’. 
(d) INCREASE AGGREGATE ASSET LIMITATION FOR 
QUALIFIED SMALL BUSINESSES.— 
(1) IN
GENERAL.—Paragraph (1) of section 
1202(d) of the Internal Revenue Code of 1986 (re-
lating to qualified small business) is amended by 
striking ‘‘$50,000,000’’ each place it appears and in-
serting ‘‘$100,000,000’’. 
(2) INFLATION ADJUSTMENT.—Section 1202(d) 
of such Code is amended by adding at the end the 
following new paragraph: 
‘‘(4) INFLATION ADJUSTMENT.— 
‘‘(A) IN
GENERAL.—In the case of any 
taxable year beginning in a calendar year after 
2009, each of the $100,000,000 dollar amounts 
in paragraph (1) shall be increased by an 
amount equal to— 
‘‘(i) such dollar amount, multiplied by 
‘‘(ii) the cost-of-living adjustment de-
termined under section 1(f)(3) for the cal-
endar year in which the taxable year be-
gins, determined by substituting ‘calendar 
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year 2008’ for ‘calendar year 1992’ in sub-
paragraph (B) thereof. 
‘‘(B) ROUNDING.—If any amount as ad-
justed under subparagraph (A) is not a multiple 
of $1,000, such amount shall be rounded to the 
next lowest multiple of $100.’’. 
(e) EFFECTIVE DATE.— 
(1) IN GENERAL.—The amendments made by 
this section apply to stock issued after December 31, 
2008. 
(2) SPECIAL RULE FOR STOCK ISSUED BEFORE 
JANUARY 1, 2009.—The amendments made by sub-
sections (a), (b), and (c) shall apply to sales or ex-
changes— 
(A) made after December 31, 2008, 
(B) of stock issued on or before such date, 
and 
(C) by a taxpayer other than a corpora-
tion. 
Æ 
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