,i #aacth ,,congress #b;d ,session ,h4 ,r4 #djhi ,,in ,,the ,,house ,,of ,,representatives ,february #be1 #bjad ,mr4 ,rohrabacher 7for himself1 ,mr4 ,mc,kinley1 and ,mr4 ,jones7 introduced the following bill2 which was referred to the ,committee on ,ways and ,means ,a ,,bill ,to amend the ,internal ,revenue ,code of #aihf to exclude from gross income compensation received by employees consisting of qualified distributions of employer stock4 #a4 ,qualified stock distributions to employees 7a7 ,in general ,part ,,iii of subchapter ,b of chapter #a of the ,internal ,revenue ,code of #aihf is amended by inserting after section #hc the following new section3 #hc;,a4 ,qualified stock distributions to employees 7a7 ,in general ,if an employee elects to have this section apply with respect to any qualified employee stock distribution1 gross income shall not include-- 7#a7 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 amount1 7#b7 any gain on employer securities excluded from gross income under paragraph 7#a7 if such employer security is held by such individual for not less than #aj years1 and 7#c7 in the case of any qualified disposition of an employer security which is described in paragraph 7#b7 7and which meets the holding requirement of such paragraph71 any gain on so much stock acquired during the #fj-;day period beginning on the date of such disposition as does not exceed the fair market value of the employer security so disposed 7determined as of the time of disposition74 7b7 ,definitions ,for purposes of this section-- 7#a7 ,employer securities ,the term employer securities has the meaning given such term in section #dji7l71 except that paragraph 7#c7 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 plan4 7#b7 ,qualified employee stock distribution ,the term qualified employee stock distribution means a distribution by an employer of employer securities to employees 7determined as of the date of the distribution7 of such employer as compensation for services1 except that there may be disregarded any employee who 7as of the date of the distribution7-- 7,a7 has not attained age #ah1 7,b7 has not completed #ab months of service with the employer1 7,c7 is a nonresident alien1 7,d7 is a citizen or resident of a foreign jurisdiction 7including any individual who is also a citizen or resident of the ,united ,states7 if the distribution to such individual is prohibited under the laws of such foreign jurisdiction1 7,e7 holds #aj percent or more of the outstanding stock of the employer1 or 7,f7 is an employee whose compensation from the employer is subject to disclosure under rules promulgated by the ,securities and ,exchange ,commission4 7#c7 ,maximum stock amount ,the term maximum stock amount means1 with respect to any distribution1 the lowest number of employer securities received by any employee of the employer in such distribution4 7#d7 ,qualified disposition 7,a7 ,in general ,the term qualified disposition means1 with respect to the disposition of any employer security described in paragraph 7#b7 of subsection 7a7 7and which meets the holding requirement of such paragraph7 during any calendar year1 the disposition of a number of shares of such security not in excess of the excess of-- 7i7 the applicable percentage of the aggregate number of shares of such security received during the calendar year that such security was received1 over 7ii7 the aggregate number of shares of such security taken into account under this subparagraph for all prior calendar years4 7,b7 ,applicable percentage ,for purposes of clause 7i71 the applicable percentage is1 with respect to any calendar year following the calendar year in which such security was received1 the percentage determined in accordance with the following table3 ,the applicable ,in the case of3percentage is3 ,the first through tenth such calendar years#j percent ,the eleventh such calendar year#aj percent ,the twelfth such calendar year#bj percent ,the thirteenth such calendar year#cj percent ,the fourteenth such calendar year#dj percent ,the fifteenth such calendar year#ej percent ,the sixteenth such calendar year#fj percent ,the seventeenth such calendar year#gj percent ,the eighteenth such calendar year#hj percent ,the nineteenth such calendar year#ij percent ,any subsequent calendar year#ajj percent4 7c7 ,employment taxes ,amounts excluded from gross income under subsection 7a77#a7 shall not be taken into account as wages for purposes of chapters #ba1 #bb1 #bc1 #bc;,a1 and #bd4 7d7 ,coordination with section #hc ,in the case of a transfer of employer securities to which subsection 7a77#a7 applies-- 7#a7 ,in general ,section #hc shall not apply4 7#b7 ,deduction by employer ,there shall be allowed as a deduction under section #afb1 to the person for whom were performed the services in connection with which such securities were transferred1 an amount equal to the fair market value of such securities 7determined as of the time of such transfer74 ,such deduction shall be allowed for the taxable year which includes the date of such transfer4 7e7 ,recapture if stock disposed during required holding period ,if an amount is excluded from gross income under subsection 7a77#a7 with respect to any employer security and the individual disposes of such security at any time during the #e-year period beginning on the date that such individual received such security-- 7#a7 the gross income of such individual for the taxable year which includes the date of such disposition shall be increased by the amount so excluded1 and 7#b7 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 #ba and #bb if subsection 7c7 had not applied with respect to such amount4 ,for purposes of this title and the ,social ,security ,act1 any increase in tax under paragraph 7#b7 shall be treated as imposed under the provision of chapter #ba or #bb with respect to which such increase relates4 7f7 ,basis of stock equal to fair market value at time of transfer ,notwithstanding section #ajab1 in the case of a transfer of employer securities to which subsection 7a77#a7 applies1 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 7determined as of the time of such transfer74 7g7 ,aggregation rule ,two or more persons who are treated as a single employer under subsection 7b71 7c71 7m71 or 7o7 of section #dad shall be treated as a single employer for purposes of this section4 7h7 ,election ,the election under subsection 7a7 shall be made at such time and in such manner as the ,secretary may prescribe4 ,once made1 such election may be revoked only with the consent of the ,secretary4 7i7 ,regulations ,the ,secretary shall issue such regulations or other guidance as may be necessary or appropriate to carry out this section1 including regulations or other guidance which-- 7#a7 provide for the application of this section to stock options1 7#b7 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 7including a case where a service provider is treated as not an employee by the employer1 but is determined to be an employee71 and 7#c7 require such reporting under sections #fjde and #fjea with respect to transfers of stock to which subsection 7a7 applies as the ,secretary determines to be necessary or appropriate to carry out this section4 4 7b7 ,clerical amendment ,the table of sections for such part is amended by inserting after the item relating to section #hc the following new item3 ,sec4 #hc;,a4 ,qualified stock distributions to employees4 4 7c7 ,effective date ,the amendments made by this section shall apply to stock received by employees after the date of the enactment of this ,act4