I
103D CONGRESS
1ST SESSION
H. R. 854
To amend the Internal Revenue Code of 1986 to reduce the capital gains
tax in the case of senior citizens.
IN THE HOUSE OF REPRESENTATIVES
FEBRUARY 4, 1993
Mr. MYERS of Indiana (for himself, Mr. ROHRABACHER, Mr. DORNAN, Mr.
DOOLITTLE, Mr. GALLEGLY, and Mr. LIGHTFOOT) introduced the follow-
ing bill; which was referred to the Committee on Ways and Means
A BILL
To amend the Internal Revenue Code of 1986 to reduce
the capital gains tax in the case of senior citizens.
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 Citizen Capital
Gains Rate Reduction Act of 1993’’.
SEC. 2. REDUCTION IN CAPITAL GAINS RATE FOR SENIOR
CITIZENS.
(a) GENERAL RULE.—Section 1 of the Internal Reve-
nue Code of 1986 (relating to tax imposed on individuals)
is amended by adding at the end thereof the following new
subsection:
‘‘(i) REDUCTION IN CAPITAL GAINS RATE FOR SEN-
IOR CITIZENS.—
‘‘(1) IN GENERAL.—If a taxpayer who has at-
tained age 60 before the close of the taxable year
has a net capital gain, then the tax imposed by this
section 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 taxable income reduced by
the net capital gain, plus
‘‘(B) a tax equal to the sum of—
‘‘(i) 7.5 percent of so much of the net
capital gain as does not exceed—
‘‘(I) the maximum amount of
taxable income to which the 15-per-
cent rate applies under the table ap-
plicable to the taxpayer, reduced by
‘‘(II) the taxable income to which
subparagraph (A) applies, plus
‘‘(ii) 15 percent of the net capital gain
in excess of the net capital gain to which
clause (i) applies.
‘‘(2) SPECIAL RULES.—
‘‘ ‘(i) 15 percent of the lesser of—
‘‘ ‘(I) the net capital gain (deter-
mined with the adjustments provided
in this part), or
‘‘ ‘(II) so much of the alternative
minimum taxable income for the tax-
able year as exceeds the exemption
amount, plus
‘‘ ‘(ii) 24 percent of the amount (if
any) by which the excess referred to in
clause (i)(II) exceeds the net capital gain
(as so determined), reduced by’.’’
SEC. 4. INDEXING OF RETIREMENT ASSETS FOR PURPOSES
OF DETERMINING GAIN OR LOSS.
(a) IN GENERAL.—Part II of subchapter O of chap-
ter 1 of the Internal Revenue Code of 1986 (relating to
basis rules of general application) is amended by inserting
after section 1021 the following new section:
‘‘SEC. 1022. INDEXING OF RETIREMENT ASSETS FOR PUR-
POSES OF DETERMINING GAIN OR LOSS.
‘‘(a) GENERAL RULE.—
‘‘(1) INDEXED
BASIS
SUBSTITUTED
FOR
AD-
JUSTED BASIS.—Except as provided in paragraph
(2), if an indexed retirement asset which has been
held for more than 5 years is sold or otherwise dis-
posed of by an individual who meets the age require-
ment of section 1(i), for purposes of this title the in-
dexed basis of the asset shall be substituted for its
adjusted basis.
‘‘(2) EXCEPTION
FOR
DEPRECIATION, ETC.—
The deduction for depreciation, depletion, and amor-
tization shall be determined without regard to the
application of paragraph (1) to the taxpayer or any
other person.
‘‘(b) INDEXED RETIREMENT ASSET.—For purposes
of this section, the term ‘indexed retirement asset’
means—
‘‘(1) stock in a corporation, and
‘‘(2) tangible property (or any interest therein),
which is a capital asset or property used in the trade
or business (as defined in section 1231(b)).
‘‘(c) INDEXED BASIS.—For purposes of this sec-
tion—
‘‘(1) INDEXED BASIS.—The indexed basis for
any retirement asset is—
‘‘(A) the adjusted basis of the retirement
asset, multiplied by
‘‘(B) the applicable inflation ratio.
‘‘(2) APPLICABLE INFLATION RATIO.—The ap-
plicable inflation ratio for any retirement asset is the
percentage arrived at by dividing—
‘‘(A) the gross national product deflator
for the calendar quarter in which the disposi-
tion takes place, by
‘‘(B) the gross national product deflator
for the calendar quarter in which the retirement
asset was acquired by the taxpayer (or, if later,
the calendar quarter ending December 31,
1992).
The applicable inflation ratio shall not be taken into
account unless it is greater than 1. The applicable
inflation ratio for any retirement asset shall be
rounded to the nearest one-tenth of 1 percent.
‘‘(3) GROSS NATIONAL PRODUCT DEFLATOR.—
The gross national product deflator for any calendar
quarter is the implicit price deflator for the gross
national product for such quarter (as shown in the
first revision thereof).
‘‘(4) SECRETARY
TO
PUBLISH
TABLES.—The
Secretary shall publish tables specifying the applica-
ble inflation ratios for each calendar quarter.
‘‘(d) SPECIAL RULES.—For purposes of this sec-
tion—
‘‘(1) TREATMENT AS SEPARATE RETIREMENT
ASSET.—In the case of any retirement asset, the fol-
lowing shall be treated as a separate asset:
‘‘(A) a substantial improvement to prop-
erty,
‘‘(B) in the case of stock of a corporation,
a substantial contribution to capital, and
‘‘(C) any other portion of a retirement
asset to the extent that separate treatment of
such portion is appropriate to carry out the
purposes of this section.
‘‘(2) RETIREMENT ASSETS WHICH ARE NOT IN-
DEXED ASSETS THROUGHOUT HOLDING PERIOD.—
The applicable inflation ratio shall be appropriately
reduced for calendar months at any time during
which the retirement asset was not an indexed re-
tirement asset.’’.
SEC. 5. INDEXING OF LIMITATION ON CAPITAL LOSSES OF
SENIOR CITIZENS.
Section 1211 of the Internal Revenue Code of 1986
(relating to limitation on capital losses) is amended by
adding at the end thereof the following new subsection:
‘‘(c) INDEXATION OF LIMITATION ON SENIOR CITI-
ZEN TAXPAYERS.—
‘‘(1) IN GENERAL.—In applying subsection (b)
to an individual who meets the age requirement of
section 1(i), the $3,000 and $1,500 amounts under
subsection (b)(1) shall be increased by an amount
equal to—
‘‘(A) such dollar amount, multiplied by
‘‘(B) the applicable inflation adjustment
for the calendar year in which the taxable year
begins.
‘‘(2) APPLICABLE INFLATION ADJUSTMENT.—
For purposes of paragraph (1), the applicable infla-
tion adjustment for any calendar year is the percent-
age (if any) by which—
‘‘(A) the gross national product deflator
for the last calendar quarter of the preceding
calendar year, exceeds
‘‘(B) the gross national product deflator
for the last calendar quarter of 1991.
For purposes of this paragraph, the term ‘gross na-
tional product deflator’ has the meaning given such
term by section 1022(c)(3).’’.
SEC. 6. EFFECTIVE DATE.
The amendments made by this Act shall apply to tax-
able years beginning after December 31, 1992.
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