H.R. 854 (103rd): Senior Citizen Capital Gains Rate Reduction Act of 1993

103rd Congress, 1993–1994. Text as of Feb 04, 1993 (Introduced).

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HR 854 IH

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 following 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 Representatives 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 Revenue 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 Senior Citizens-

      ‘(1) IN GENERAL- If a taxpayer who has attained 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-percent rate applies under the table applicable 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-

        ‘(A) JOINT RETURNS- In the case of a joint return, if one spouse meets the age requirement of paragraph (1), both spouses shall be treated as meeting such requirement.

        ‘(B) COORDINATION WITH SUBSECTION (h)- Subsection (h) shall not apply to any individual to whom paragraph (1) applies.’

    (b) TECHNICAL AMENDMENT- 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 ‘the amount of gain (or, in the case of an individual who meets the age requirement of section 1(i), 13/28 of the amount of gain)’.

SEC. 3. REDUCTION IN MINIMUM TAX RATE ON CAPITAL GAINS OF SENIOR CITIZENS.

    Paragraph (1) of section 55(b) of the Internal Revenue Code of 1986 (relating to tentative minimum tax) is amended by adding at the end thereof the following new paragraph:

      ‘(3) REDUCTION IN TAX ON CAPITAL GAINS OF SENIOR CITIZENS- In the case of an individual who meets the age requirement of section 1(i), subparagraph (A) of paragraph (1) shall be applied as if it read as follows:

        ‘(A) the sum of--

          ‘(i) 15 percent of the lesser of--

            ‘(I) the net capital gain (determined with the adjustments provided in this part), or

            ‘(II) so much of the alternative minimum taxable income for the taxable 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 chapter 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 PURPOSES OF DETERMINING GAIN OR LOSS.

    ‘(a) GENERAL RULE-

      ‘(1) INDEXED BASIS SUBSTITUTED FOR ADJUSTED 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 disposed of by an individual who meets the age requirement of section 1(i), for purposes of this title the indexed basis of the asset shall be substituted for its adjusted basis.

      ‘(2) EXCEPTION FOR DEPRECIATION, ETC- The deduction for depreciation, depletion, and amortization 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 section--

      ‘(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 applicable 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 disposition 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 applicable inflation ratios for each calendar quarter.

    ‘(d) SPECIAL RULES- For purposes of this section--

      ‘(1) TREATMENT AS SEPARATE RETIREMENT ASSET- In the case of any retirement asset, the following shall be treated as a separate asset:

        ‘(A) a substantial improvement to property,

        ‘(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 INDEXED 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 retirement 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 CITIZEN 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 inflation adjustment for any calendar year is the percentage (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 national 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 taxable years beginning after December 31, 1992.