< Back to H.R. 3042 (104th Congress, 1995–1996)

Text of the Tax-Free Savings and Investment Income Act

This bill was introduced on March 7, 1996, in a previous session of Congress, but was not enacted. The text of the bill below is as of Mar 7, 1996 (Introduced).

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HR 3042 IH

104th CONGRESS

2d Session

H. R. 3042

To amend the Internal Revenue Code of 1986 to allow individuals an exclusion from gross income for certain amounts of unearned income.

IN THE HOUSE OF REPRESENTATIVES

March 7, 1996

Mr. FIELDS of Louisiana 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 allow individuals an exclusion from gross income for certain amounts of unearned income.

    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 ‘Tax-Free Savings and Investment Income Act’.

SEC. 2. EXCLUSION OF CERTAIN AMOUNTS OF UNEARNED INCOME OF INDIVIDUALS.

    (a) IN GENERAL- Part III of subchapter B of chapter 1 of the Internal Revenue Code of 1986 (relating to amounts specifically excluded from gross income) is amended by inserting after section 115 the following new section:

‘SEC. 116. PARTIAL EXCLUSION OF UNEARNED INCOME RECEIVED BY INDIVIDUALS.

    ‘(a) EXCLUSION FROM GROSS INCOME- In the case of an individual, gross income does not include unearned income.

    ‘(b) LIMITATION- The aggregate amount excluded under subsection (a) for any taxable year shall not exceed $5,000 ($10,000 in the case of a joint return).

    ‘(c) UNEARNED INCOME- For purposes of this section, the term ‘unearned income’ means income other than--

      ‘(1) wages, salaries, tips, and other employee compensation, and

      ‘(2) earned income (as defined in section 401(c)(2)).

    Such term includes any income from a pension or annuity.

    ‘(d) CERTAIN NONRESIDENT ALIENS INELIGIBLE FOR EXCLUSION- In the case of a nonresident alien individual, subsection (a) shall apply only--

      ‘(1) in determining the tax imposed for the taxable year pursuant to section 871(b)(1) and only in respect of unearned income which is effectively connected with the conduct of a trade or business within the United States, or

      ‘(2) in determining the tax imposed for the taxable year pursuant to section 877(b).

    ‘(e) ESTATES AND TRUSTS INELIGIBLE FOR EXCLUSION- Subsection (a) shall not apply to an estate or trust.’

    (b) CLERICAL AMENDMENT- The table of sections for part III of subchapter B of chapter 1 of such Code is amended by inserting after the item relating to section 115 the following new item:

‘Sec. 116. Partial exclusion of unearned income received by individuals.’

    (c) EFFECTIVE DATE- The amendments made by this section shall apply to taxable years beginning after the date of the enactment of this Act.