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Rep. Dana Rohrabacher [R-CA] introduced H.R. 6419: To amend the Internal Revenue Code of 1986 to exclude from gross income compensation received by employees consisting of qualified distributions of employer stock on June 26, 2008, which was cosponsored by Rep. Virgil Goode [R-VA], Rep. Walter Jones [R-NC], and Rep. Peter Roskam [R-IL], and has been referred to the House Ways and Means Committee. Rep. Ron Paul [R-TX] also cosponsored the bill on July 17, 2008.

Here is the text of the legislation:

HR 6419 IH

110th CONGRESS

2d Session

H. R. 6419

To amend the Internal Revenue Code of 1986 to exclude from gross income compensation received by employees consisting of qualified distributions of employer stock.

IN THE HOUSE OF REPRESENTATIVES

June 26, 2008

Mr. ROHRABACHER (for himself, Mr. GOODE, Mr. JONES of North Carolina, and Mr. ROSKAM) 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 exclude from gross income compensation received by employees consisting of qualified distributions of employer stock.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. QUALIFIED STOCK DISTRIBUTIONS TO EMPLOYEES.

(a) In General- Part III of subchapter B of chapter 1 of the Internal Revenue Code of 1986 is amended by inserting after section 139A the following new section:

'SEC. 139B. QUALIFIED STOCK DISTRIBUTIONS TO EMPLOYEES.

'(a) In General- Gross income shall not include--

'(1) so many shares of any stock received by an individual in a qualified employee stock distribution of such individual's employer as does not exceed the maximum stock amount, and

'(2) any gain on stock excluded from gross income under paragraph (1) if such stock is held by such individual for not less than 10 years.

'(b) Definitions and Special Rules- For purposes of this section--

'(1) QUALIFIED EMPLOYEE STOCK DISTRIBUTION- The term 'qualified employee stock distribution' means a distribution by an employer of stock of such employer to all employees (determined as of the date of the distribution) of such employer as compensation for services.

'(2) MAXIMUM STOCK AMOUNT- The term 'maximum stock amount' means, with respect to any distribution, the lowest number of shares of stock of the employer received by any employee of the employer in such distribution.

'(c) Employment Taxes- Amounts excluded from gross income under subsection (a)(1) shall not be taken into account as wages for purposes of chapters 21, 22, 23, 23A, and 24.

'(d) Recapture if Stock Disposed During Required Holding Period- If an amount is excluded from gross income under subsection (a)(1) with respect to any stock and the individual disposes of such stock at any time during the 10-year period beginning on the date that such individual received such stock--

'(1) the gross income of such individual for the taxable year which includes the date of such disposition shall be increased by the amount so excluded, and

'(2) the tax imposed by this chapter for such taxable year shall be increased by the sum of the amounts of tax which would have been imposed under subchapters A and B of chapters 21 and 22 if subsection (c) had not applied with respect to such amount.

For purposes of this title and the Social Security Act, any increase in tax under paragraph (2) shall be treated as imposed under the provision of chapter 21 or 22 with respect to which such increase relates.

'(e) Regulations- The Secretary shall issue such regulations as may be necessary or appropriate to carry out this section, including regulations which provide for the application of this section to stock options.'.

(b) Clerical Amendment- The table of section for such part is amended by inserting after the item relating to section 139A the following new item:

'Sec. 139B. Qualified stock distributions to employees.'.

(c) Effective Date- The amendments made by this section shall apply to stock received by employees after December 31, 2008.


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