[Congressional Bills 113th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4089 Introduced in House (IH)]
113th CONGRESS
2d Session
H. R. 4089
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
February 25, 2014
Mr. Rohrabacher (for himself, Mr. McKinley, and Mr. Jones) 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 83
the following new section:
``SEC. 83A. QUALIFIED STOCK DISTRIBUTIONS TO EMPLOYEES.
``(a) In General.--If an employee elects to have this section apply
with respect to any qualified employee stock distribution, gross income
shall not include--
``(1) so many shares of employer securities received by an
individual in a qualified employee stock distribution of such
individual's employer as does not exceed the maximum stock
amount,
``(2) any gain on employer securities excluded from gross
income under paragraph (1) if such employer security is held by
such individual for not less than 10 years, and
``(3) in the case of any qualified disposition of an
employer security which is described in paragraph (2) (and
which meets the holding requirement of such paragraph), any
gain on so much stock acquired during the 60-day period
beginning on the date of such disposition as does not exceed
the fair market value of the employer security so disposed
(determined as of the time of disposition).
``(b) Definitions.--For purposes of this section--
``(1) Employer securities.--The term `employer securities'
has the meaning given such term in section 409(l), except that
paragraph (3) thereof shall be applied by substituting `the
date of the qualified employee stock distribution' for `the
date of the acquisition by the tax credit employee stock
ownership plan'.
``(2) Qualified employee stock distribution.--The term
`qualified employee stock distribution' means a distribution by
an employer of employer securities to employees (determined as
of the date of the distribution) of such employer as
compensation for services, except that there may be disregarded
any employee who (as of the date of the distribution)--
``(A) has not attained age 18,
``(B) has not completed 12 months of service with
the employer,
``(C) is a nonresident alien,
``(D) is a citizen or resident of a foreign
jurisdiction (including any individual who is also a
citizen or resident of the United States) if the
distribution to such individual is prohibited under the
laws of such foreign jurisdiction,
``(E) holds 10 percent or more of the outstanding
stock of the employer, or
``(F) is an employee whose compensation from the
employer is subject to disclosure under rules
promulgated by the Securities and Exchange Commission.
``(3) Maximum stock amount.--The term `maximum stock
amount' means, with respect to any distribution, the lowest
number of employer securities received by any employee of the
employer in such distribution.
``(4) Qualified disposition.--
``(A) In general.--The term `qualified disposition'
means, with respect to the disposition of any employer
security described in paragraph (2) of subsection (a)
(and which meets the holding requirement of such
paragraph) during any calendar year, the disposition of
a number of shares of such security not in excess of
the excess of--
``(i) the applicable percentage of the
aggregate number of shares of such security
received during the calendar year that such
security was received, over
``(ii) the aggregate number of shares of
such security taken into account under this
subparagraph for all prior calendar years.
``(B) Applicable percentage.--For purposes of
clause (i), the applicable percentage is, with respect
to any calendar year following the calendar year in
which such security was received, the percentage
determined in accordance with the following table:
The applicable
``In the case of: percentage is:
The first through tenth such calendar years.. 0 percent
The eleventh such calendar year.............. 10 percent
The twelfth such calendar year............... 20 percent
The thirteenth such calendar year............ 30 percent
The fourteenth such calendar year............ 40 percent
The fifteenth such calendar year............. 50 percent
The sixteenth such calendar year............. 60 percent
The seventeenth such calendar year........... 70 percent
The eighteenth such calendar year............ 80 percent
The nineteenth such calendar year............ 90 percent
Any subsequent calendar year................. 100 percent.
``(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) Coordination With Section 83.--In the case of a transfer of
employer securities to which subsection (a)(1) applies--
``(1) In general.--Section 83 shall not apply.
``(2) Deduction by employer.--There shall be allowed as a
deduction under section 162, to the person for whom were
performed the services in connection with which such securities
were transferred, an amount equal to the fair market value of
such securities (determined as of the time of such transfer).
Such deduction shall be allowed for the taxable year which
includes the date of such transfer.
``(e) Recapture if Stock Disposed During Required Holding Period.--
If an amount is excluded from gross income under subsection (a)(1) with
respect to any employer security and the individual disposes of such
security at any time during the 5-year period beginning on the date
that such individual received such security--
``(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.
``(f) Basis of Stock Equal to Fair Market Value at Time of
Transfer.--Notwithstanding section 1012, in the case of a transfer of
employer securities to which subsection (a)(1) applies, the basis of
such securities in the hands of the transferee immediately after such
transfer shall be equal to the fair market value of such securities
(determined as of the time of such transfer).
``(g) Aggregation Rule.--Two or more persons who are treated as a
single employer under subsection (b), (c), (m), or (o) of section 414
shall be treated as a single employer for purposes of this section.
``(h) Election.--The election under subsection (a) shall be made at
such time and in such manner as the Secretary may prescribe. Once made,
such election may be revoked only with the consent of the Secretary.
``(i) Regulations.--The Secretary shall issue such regulations or
other guidance as may be necessary or appropriate to carry out this
section, including regulations or other guidance which--
``(1) provide for the application of this section to stock
options,
``(2) provide mechanisms by which to satisfy the
requirements of this section in the event that an employee is
inadvertently excluded from a distribution of employer
securities (including a case where a service provider is
treated as not an employee by the employer, but is determined
to be an employee), and
``(3) require such reporting under sections 6045 and 6051
with respect to transfers of stock to which subsection (a)
applies as the Secretary determines to be necessary or
appropriate to carry out this section.''.
(b) Clerical Amendment.--The table of sections for such part is
amended by inserting after the item relating to section 83 the
following new item:
``Sec. 83A. Qualified stock distributions to employees.''.
(c) Effective Date.--The amendments made by this section shall
apply to stock received by employees after the date of the enactment of
this Act.
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