I
103D CONGRESS
1ST SESSION
H. R. 53
To amend the Internal Revenue Code of 1986 to provide a 30-percent capital
gains deduction for both corporate and noncorporate taxpayers.
IN THE HOUSE OF REPRESENTATIVES
JANUARY 5, 1993
Mr. ARCHER (for himself and Mr. SHAYS) 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 provide
a 30-percent capital gains deduction for both corporate
and noncorporate taxpayers.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. CAPITAL GAINS DEDUCTION.
(a) GENERAL RULE.—Part I of subchapter P of
chapter 1 of the Internal Revenue Code of 1986 (relating
to treatment of capital gains) is amended to read as fol-
lows:
‘‘PART I—TREATMENT OF CAPITAL GAINS
‘‘Sec. 1201. Capital gains deduction.
‘‘SEC. 1201. CAPITAL GAINS DEDUCTION.
‘‘(a) GENERAL RULE.—If for any taxable year a tax-
payer has a net capital gain, 30 percent of such gain shall
be a deduction from gross income.
‘‘(b) ESTATE AND TRUSTS.—In the case of an estate
or trust, the deduction shall be computed by excluding the
portion (if any) of the gains for the taxable year from sales
or exchanges of capital assets which, under sections 652
and 662 (relating to inclusions of amounts in gross income
of beneficiaries of trusts), is includible by the income bene-
ficiaries as gain derived from the sale or exchange of cap-
ital assets.
‘‘(c) TRANSITIONAL RULE.—In the case of a taxable
year in which the date of the enactment of this sentence
occurs, the amount taken into account as the net capital
gain under subsection (a) shall not exceed the net capital
gain determined by only taking into account gains and
losses properly taken into account for the portion of the
taxable year after such date of enactment.’’
(b) DEDUCTION ALLOWABLE
IN COMPUTING AD-
JUSTED GROSS INCOME.—Subsection (a) of section 62 of
such Code is amended by inserting after paragraph (13)
the following new paragraph:
‘‘(14) LONG-TERM
CAPITAL
GAINS.—The de-
duction allowed by section 1201.’’
(c) TECHNICAL AND CONFORMING CHANGES.—
(1) Section 1 of such Code is amended by strik-
ing subsection (j).
(2) Paragraph (1) of section 170(e) of such
Code is amended by striking ‘‘the amount of gain’’
in the material following subparagraph (B)(ii) and
inserting ‘‘50 percent of the amount of gain’’.
(3)(A) Paragraph (2) of section 172(d) of such
Code is amended to read as follows:
‘‘(2) CAPITAL GAINS AND LOSSES.—
‘‘(A) LOSSES OF TAXPAYERS OTHER THAN
CORPORATIONS.—In the case of a taxpayer
other than a corporation, the amount deductible
on account of losses from sales or exchanges of
capital assets shall not exceed the amount in-
cludible on account of gains from sales or ex-
changes of capital assets.
‘‘(B) DEDUCTION UNDER SECTION 1201.—
The deduction under section 1201 shall not be
allowed.’’
(B) Subparagraph (B) of section 172(d)(4) of
such Code is amended by striking ‘‘paragraphs (1)
and (3)’’ and inserting ‘‘paragraphs (1), (2)(B), and
(3)’’.
(4) 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 1201
(relating to deduction for excess of capital gains over
capital losses). In the case of a trust, the deduction
allowed by this subsection shall be subject to section
681 (relating to unrelated business income).’’
(5) 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 1201 (relating to deduction of excess of capital
gains over capital losses) shall not be taken into ac-
count.’’
(6) Paragraph (4) of section 691(c) of such
Code is amended by striking ‘‘sections 1(j), 1201,
and 1211’’ and inserting ‘‘sections 1201 and 1211’’.
(7) The second sentence of section 871(a)(2) of
such Code is amended by inserting ‘‘such gains and
losses shall be determined without regard to section
1201 (relating to deduction for capital gains) and’’
after ‘‘except that’’.
(8)(A) Subsection (b) of section 1211 of such
Code is amended by striking ‘‘the lower of’’ and all
that follows down through the period at the end
thereof and inserting ‘‘whichever of the following is
the smallest—
‘‘(1) $3,000 ($1,500 in the case of a married
individual filing a separate return),
‘‘(2) the excess of such losses over such gains,
or
‘‘(3) the sum of—
‘‘(A) the excess of the net short-term cap-
ital loss over the net long-term capital gain, and
‘‘(B) one-half of the excess of the net long-
term capital loss over the net short-term capital
gain.’’
(B) So much of paragraph (2) of section
1212(b) of such Code as precedes subparagraph (B)
thereof is amended to read as follows:
‘‘(2) SPECIAL RULES.—
‘‘(A) ADJUSTMENTS.—
‘‘(i) For purposes of determining the
excess referred to in paragraph (1)(A),
there shall be treated as short-term capital
gain in the taxable year an amount equal
to the lesser of—
‘‘(I) the amount allowed for the
taxable year under paragraph (1), (2),
or (3) of section 1211(b), or
‘‘(II) the adjusted taxable income
for such taxable year.
‘‘(ii) For purposes of determining the
excess referred to in paragraph (1)(B),
there shall be treated as short-term capital
gain in the taxable year an amount equal
to the lesser of—
‘‘(I) the sum of the amount al-
lowed for the taxable year under para-
graph (1), (2), or (3) of section
1211(b), and the excess of the amount
so allowed over the net short-term
capital loss (determined without re-
gard to this subsection) for such year,
or
‘‘(II) the adjusted taxable income
for such taxable year.’’
(C) Clause (i) of section 1211(b)(2)(B) of such
Code is amended by striking ‘‘paragraph (1) or (2)’’
and inserting ‘‘paragraph (1), (2), or (3)’’.
(D) In the case of a taxable year in which the
date of the enactment of this Act occurs, proper ad-
justments in the application of the provisions
amended by this paragraph shall be made to take
into account the provisions of section 1201(c) of
such Code (as amended by subsection (a)).
(9) Paragraph (1) of section 1402(i) of such
Code is amended by inserting ‘‘, and the deduction
provided by section 1201 shall not apply’’ before the
period at the end thereof.
(10) Section 12 of such Code is amended by
striking paragraph (4) and redesignating the follow-
ing paragraphs accordingly.
(11) Paragraph (2) of section 527(b) of such
Code is hereby repealed.
(12) Paragraph (2) of section 801(a) of such
Code is hereby repealed.
(13) Subsection (c) of section 831(c) of such
Code is amended by striking paragraph (1) and re-
designating the following paragraphs accordingly.
(14)(A) Subparagraph (A) of section 852(b)(3)
of such Code is amended by striking ‘‘, determined
as provided in section 1201(a), on’’ and inserting
‘‘of 17 percent of’’.
(B) Clause (iii) of section 852(b)(3)(D) of such
Code is amended—
(i) by striking ‘‘66 percent’’ and inserting
‘‘83 percent’’, and
(ii) by striking ‘‘section 1201(a)’’ and in-
serting ‘‘subparagraph (A)’’.
(15) Clause (ii) of section 857(b)(3)(A) of such
Code is amended by striking ‘‘determined at the rate
provided in section 1201(a) on’’ and inserting ‘‘of 17
percent of’’.
(16) Paragraph (1) of section 882(a) of such
Code is amended by striking ‘‘section 11, 55, or
1201(a)’’ and inserting ‘‘section 11 or 55’’.
(17) Subsection (b) of section 904 of such Code
is amended by striking paragraphs (2)(B), (3)(B),
(3)(D), and (3)(E).
(18) Subsection (b) of section 1374 of such
Code is amended by striking paragraph (4).
(19) Subsection (b) of section 1381 is amended
by striking ‘‘or 1201’’.
(20) Clause (i) of section 6425(c)(1)(A) of such
Code is amended by striking ‘‘or 1201(a)’’.
(21) Clause (i) of section 6655(g)(1)(A) of such
Code is amended by striking ‘‘or 1201(a)’’.
(22)(A) 
The 
second 
sentence 
of 
section
7518(g)(6)(A) of such Code is amended—
(i) by striking ‘‘during a taxable year to
which section 1(j) or 1201(a) applies’’, and
(ii) by striking ‘‘28 percent (34 percent’’
and inserting ‘‘14 percent (17 percent’’.
(B) 
The 
second 
sentence 
of 
section
607(h)(6)(A) of the Merchant Marine Act, 1936 is
amended—
(i) by striking ‘‘during a taxable year to
which section 1(j) or 1201(a) of such Code ap-
plies’’, and
(ii) by striking ‘‘28 percent (34 percent’’
and inserting ‘‘14 percent (17 percent’’.
(d) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years ending after the
date of the enactment of this Act; except that the amend-
ment made by subsection (c)(2) shall apply only to con-
tributions after such date of enactment.
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