,i  #aac? ,,congress  #b;d ,session  ,h4
 ,r4 #djhi  ,,9 ,,! ,,h\se ,,(          
,,repres5tatives  ,febru>y #be1 #bjad   
,mr4 ,rohraba*] 7= himself1 ,mr4        
,mc,kinley1 & ,mr4 ,jones7 introduc$ !  
foll[+ bill2 :i* 0 ref]r$ to !          
,committee on ,ways & ,means  ,a ,,bill 
,to am5d ! ,int]nal ,rev5ue ,code (     
#aihf to exclude f gross income         
comp5sation receiv$ by employees consi/+
 ( qualifi$ di/ributions ( employ] /ock4
  #a4 ,qualifi$ /ock di/ributions to    
employees  7a7 ,9 g5]al ,"p ,,iii (     
sub*apt] ,b ( *apt] #a ( ! ,int]nal     
,rev5ue ,code ( #aihf is am5d$ by ins]t+
 aft] section #hc ! foll[+ new section3 
#hc;,a4 ,qualifi$ /ock di/ributions to  
employees  7a7 ,9 g5]al ,if an employee 
elects to h ?is section apply ) respect 
to any qualifi$ employee /ock           
di/ribution1 gross income %all n        
include--  7#a7 s _m %>es ( employ]     
securities receiv$ by an individual 9 a 
qualifi$ employee /ock di/ribution ( su*
 individual's employ] z does n exce$ !  

maximum /ock am\nt1  7#b7 any ga9 on    
employ] securities exclud$ f gross      
income "u p>agraph 7#a7 if su* employ]  
security is held by su* individual = n  
less ?an #aj ye>s1 &  7#c7 9 ! case (   
any qualifi$ disposition ( an employ]   
security :i* is describ$ 9 p>agraph 7#b7
 7& :i* meets ! hold+ requirem5t ( su*  
p>agraph71 any ga9 on s mu* /ock acquir$
 dur+ ! #fj-;day p]iod beg9n+ on ! date 
( su* disposition z does n exce$ ! fair 
m>ket value ( ! employ] security s      
dispos$ 7det]m9$ z ( ! "t (             
disposition74  7b7 ,def9itions ,=       
purposes ( ?is section--  7#a7 ,employ] 
securities ,! t]m employ] securities has
 ! mean+ giv5 su* t]m 9 section #dji7l71
 except t p>agraph 7#c7 !re( %all be    
appli$ by sub/itut+ ! date ( ! qualifi$ 
employee /ock di/ribution = ! date ( !  
acquisition by ! tax cr$it employee /ock
 own]%ip plan4  7#b7 ,qualifi$ employee 
/ock di/ribution ,! t]m qualifi$        
employee /ock di/ribution means a       
di/ribution by an employ] ( employ]     

securities to employees 7det]m9$ z ( !  
date ( ! di/ribution7 ( su* employ] z   
comp5sation = s]vices1 except t !re may 
be disreg>d$ any employee :o 7z ( ! date
 ( ! di/ribution7--  7,a7 has n atta9$  
age #ah1  7,b7 has n complet$ #ab mon?s 
( s]vice ) ! employ]1  7,c7 is a        
nonresid5t ali51  7,d7 is a citiz5 or   
resid5t ( a =eign jurisdiction 7includ+ 
any individual :o is also a citiz5 or   
resid5t ( ! ,unit$ ,/ates7 if !         
di/ribution to su* individual is        
prohibit$ "u ! laws ( su* =eign         
jurisdiction1  7,e7 holds #aj p]c5t or m
 ( ! out/&+ /ock ( ! employ]1 or  7,f7  
is an employee ^: comp5sation f !       
employ] is subject to disclosure "u     
rules promulgat$ by ! ,securities &     
,ex*ange ,commission4  7#c7 ,maximum    
/ock am\nt ,! t]m maximum /ock am\nt    
means1 ) respect to any di/ribution1 !  
l[e/ numb] ( employ] securities receiv$ 
by any employee ( ! employ] 9 su*       
di/ribution4  7#d7 ,qualifi$ disposition
  7,a7 ,9 g5]al ,! t]m qualifi$         

disposition means1 ) respect to !       
disposition ( any employ] security      
describ$ 9 p>agraph 7#b7 ( subsection   
7a7 7& :i* meets ! hold+ requirem5t (   
su* p>agraph7 dur+ any cal5d> ye>1 !    
disposition ( a numb] ( %>es ( su*      
security n 9 excess ( ! excess (--  7i7 
! applicable p]c5tage ( ! aggregate     
numb] ( %>es ( su* security receiv$ dur+
 ! cal5d> ye> t su* security 0 receiv$1 
ov]  7ii7 ! aggregate numb] ( %>es ( su*
 security tak5 into acc\nt "u ?is       
subp>agraph = all prior cal5d> ye>s4    
7,b7 ,applicable p]c5tage ,= purposes ( 
clause 7i71 ! applicable p]c5tage is1 ) 
respect to any cal5d> ye> foll[+ !      
cal5d> ye> 9 :i* su* security 0 receiv$1
 ! p]c5tage det]m9$ 9 accordance ) !    
foll[+ table3  ,! applicable ,9 ! case  
(3p]c5tage is3  ,! fir/ ?r\gh t5? su*   
cal5d> ye>s#j p]c5t ,! elev5? su* cal5d>
 ye>#aj p]c5t ,! twelf? su* cal5d>      
ye>#bj p]c5t ,! ?irte5? su* cal5d>      
ye>#cj p]c5t ,! f\rte5? su* cal5d>      
ye>#dj p]c5t ,! fifte5? su* cal5d>      

ye>#ej p]c5t ,! sixte5? su* cal5d>      
ye>#fj p]c5t ,! sev5te5? su* cal5d>     
ye>#gj p]c5t ,! eighte5? su* cal5d>     
ye>#hj p]c5t ,! n9ete5? su* cal5d>      
ye>#ij p]c5t ,any subsequ5t cal5d>      
ye>#ajj p]c5t4  7c7 ,employm5t taxes    
,am\nts exclud$ f gross income "u       
subsection 7a77#a7 %all n be tak5 into  
acc\nt z wages = purposes ( *apt]s #ba1 
#bb1 #bc1 #bc;,a1 & #bd4  7d7           
,coord9ation ) section #hc ,9 ! case ( a
 transf] ( employ] securities to :i*    
subsection 7a77#a7 applies--  7#a7 ,9   
g5]al ,section #hc %all n apply4  7#b7  
,d$uction by employ] ,!re %all be all[$ 
z a d$uction "u section #afb1 to ! p]son
 = :om 7 p]=m$ ! s]vices 9 connection ) 
:i* su* securities 7 transf]r$1 an am\nt
 equal to ! fair m>ket value ( su*      
securities 7det]m9$ z ( ! "t ( su*      
transf]74 ,su* d$uction %all be all[$ = 
! taxable ye> :i* includes ! date ( su* 
transf]4  7e7 ,recapture if /ock dispos$
 dur+ requir$ hold+ p]iod ,if an am\nt  
is exclud$ f gross income "u subsection 

7a77#a7 ) respect to any employ]        
security & ! individual disposes ( su*  
security at any "t dur+ ! #e-ye> p]iod  
beg9n+ on ! date t su* individual       
receiv$ su* security--  7#a7 ! gross    
income ( su* individual = ! taxable ye> 
:i* includes ! date ( su* disposition   
%all be increas$ by ! am\nt s exclud$1 &
  7#b7 ! tax impos$ by ?is *apt] = su*  
taxable ye> %all be increas$ by ! sum ( 
! am\nts ( tax :i* w\ld h be5 impos$ "u 
sub*apt]s ,a & ,b ( *apt]s #ba & #bb if 
subsection 7c7 _h n appli$ ) respect to 
su* am\nt4  ,= purposes ( ?is title & ! 
,social ,security ,act1 any increase 9  
tax "u p>agraph 7#b7 %all be treat$ z   
impos$ "u ! provision ( *apt] #ba or #bb
 ) respect to :i* su* increase relates4 
7f7 ,basis ( /ock equal to fair m>ket   
value at "t ( transf] ,not)/&+ section  
#ajab1 9 ! case ( a transf] ( employ]   
securities to :i* subsection 7a77#a7    
applies1 ! basis ( su* securities 9 !   
h&s ( ! transf]ee imm$iately aft] su*   
transf] %all be equal to ! fair m>ket   

value ( su* securities 7det]m9$ z ( ! "t
 ( su* transf]74  7g7 ,aggregation rule 
,two or m p]sons :o are treat$ z a s+le 
employ] "u subsection 7b71 7c71 7m71 or 
7o7 ( section #dad %all be treat$ z a   
s+le employ] = purposes ( ?is section4  
7h7 ,election ,! election "u subsection 
7a7 %all be made at su* "t & 9 su* mann]
 z ! ,secret>y may prescribe4 ,once     
made1 su* election may be revok$ only ) 
! cons5t ( ! ,secret>y4  7i7            
,regulations ,! ,secret>y %all issue su*
 regulations or o!r guidance z may be   
necess>y or appropriate to c>ry out ?is 
section1 includ+ regulations or o!r     
guidance :i*--  7#a7 provide = !        
application ( ?is section to /ock       
options1  7#b7 provide me*anisms by :i* 
to satisfy ! requirem5ts ( ?is section 9
 ! ev5t t an employee is inadv]t5tly    
exclud$ f a di/ribution ( employ]       
securities 7includ+ a case :]e a s]vice 
provid] is treat$ z n an employee by !  
employ]1 b is det]m9$ to be an          
employee71 &  7#c7 require su* report+  

"u sections #fjde & #fjea ) respect to  
transf]s ( /ock to :i* subsection 7a7   
applies z ! ,secret>y det]m9es to be    
necess>y or appropriate to c>ry out ?is 
section4  4  7b7 ,cl]ical am5dm5t ,!    
table ( sections = su* "p is am5d$ by   
ins]t+ aft] ! item relat+ to section #hc
 ! foll[+ new item3  ,sec4 #hc;,a4      
,qualifi$ /ock di/ributions to          
employees4  4  7c7 ,effective date ,!   
am5dm5ts made by ?is section %all apply 
to /ock receiv$ by employees aft] ! date
 ( ! enactm5t ( ?is ,act4