,i  #aai? ,,congress  #a/ ,session  ,h4 
,r4 #dgci  ,,9 ,,! ,,h\se ,,(           
,,repres5tatives  ,july #bc1 #bjbe,mr4  
,suozzi 7= himself1 ,mr4 ,kelly (       
,p5nsylvania1 ,mr4 ,?ompson ( ,cali=nia1
 ,mr4 ,fitzpatrick1 ,mr4 ,l>son (       
,connecticut1 ,ms4 ,malliotakis1 ,mr4   
,panetta1 ,ms4 ,t5ney1 ,ms4 ,sewell1    
,mr4 ,smuck]1 & ,mr4 ,hors=d7 introduc$ 
! foll[+ bill2 :i* 0 ref]r$ to !        
,committee on ,ways & ,means  ,a ,,bill 
,to am5d ! ,int]nal ,rev5ue ,code (     
#aihf to provide a r$uc$ rate ( tax =   
corporations t ma9ta9 a plan = di/ribut+
 equity to employees1 & = o!r purposes4 
#a4 ,%ort title ,?is ,act may be cit$ z 
! ,%>e ,hold] ,allocation = ,rew>ds to  
,employees ,plan ,act or z ! ,,%>e ,plan
 ,act4  #b4 ,r$uc$ rate ( tax =         
corporations t ma9ta9 a plan = di/ribut+
 equity to employees  7a7 ,9 g5]al ,"p  
,,ii ( sub*apt] ,a ( *apt] #a ( !       
,int]nal ,rev5ue ,code ( #aihf is am5d$ 
by r$esignat+ section #ab z section #ac 
& by ins]t+ aft] section #aa ! foll[+   

new new section3  #ab4 ,r$uc$ rate ( tax
 = corporations ma9ta9+ ,,%>e plans  7a7
 ,9 g5]al ,9 ! case ( any corporation   
:i* is a ,,%>e corporation = any taxable
 ye>1 ! rate ( tax "u section #aa7;b7   
%all be #c p]c5tage po9ts less ?an !    
rate ( tax o!rwise 9 effect "u su*      
section4 ,! prec$+ s5t5ce %all n apply  
to any ,,%>e corporation = any taxable  
ye>1 if ! application ( su* s5t5ce to   
su* taxable ye> w\ld cause ! aggregate  
income tax r$uctions = su* taxable ye> &
 all prec$+ taxable ye>s ( su*          
corporation by reason ( ?is section to  
exce$ ! aggregate m>ket value ( /ock    
describ$ 9 subsection 7c77#a77;,a7      
7det]m9$ z ( ! date ( issue ( su* /ock7 
) respect to su* corporation4  7b7 ,,%>e
 corporation ,= purposes ( ?is section--
 7#a7 ,9 g5]al ,! t]m ,,%>e corporation 
means1 ) respect to any taxable ye>1 any
 corporation-- 7,a7 :i* has an av]age ( 
#ejj or m full-"t employees resid5t 9 ! 
,unit$ ,/ates dur+ su* taxable ye>1     
7,b7 :i* 7z ( ! close ( su* taxable ye>7

 is domicil$ 9 ! ,unit$ ,/ates1  7,c7   
:i* demon/rates to ! satisfaction ( !   
,secret>y t su* corporation 7z ( ! close
 ( su* taxable ye>7 has-- 7i7 a ,,%>e   
ratio ( n less ?an #e p]c5t1 or  7ii7   
made di/ributions ( common /ock ( su*   
corporation to employees ( su*          
corporation pursuant to a ,,%>e plan    
dur+ su* taxable ye> :i* 9 ! aggregate  
equals or exce$s #a p]c5t ( ! aggregate 
out/&+ %>es ( common /ock ( su*         
corporation 7o!r ?an %>es held by su*   
corporation71 &  7,d7 9 ! case ( any    
corporation ! common /ock ( :i* is n 7z 
( ! close ( su* taxable ye>7 regul>ly   
trad$ on an e/abli%$ securities m>ket1  
:i* demon/rates to ! satisfaction ( !   
,secret>y t su* corporation has-- 7i7   
conduct$ 7z ( ! close ( su* taxable ye>7
 a valid m>ket valuation ( su*          
corporation1 &  7ii7 provid$ employees )
 adequate opportunities dur+ su* taxable
 ye> to liquidate ! employee's hold+s ( 
su* corporation's /ock at ! fair m>ket  
value ( su* /ock4  7#b7 ,safe h>bor =   

elective limitation on am\nt ( /ock     
grant$ to ea* employee  7,a7 ,9 g5]al ,a
 corporation %all n be treat$ z fail+ to
 meet ! requirem5t ( p>agraph 7#a77;,c7 
solely because ! ,,%>e plan ( su*       
corporation provides t ! am\nt ( common 
/ock ( su* corporation di/ribut$ "u su* 
plan to ea* employee %all n exce$       
#bej1jjj 7det]m9$ on ! basis ( ! fair   
m>ket value ( ea* %>e on ! date (       
issuance ( su* %>e74  7,b7 ,adju/m5t ,9 
! case ( any taxable ye> beg9n+ aft]    
,decemb] #ca1 #bjbe1 ! ,secret>y %all   
annually adju/ ! #bej1jjj am\nt specifi$
 9 subp>agraph 7,a7 to take into acc\nt 
national private sector wage gr[?       
7det]m9$ ) respect to a base ye> (      
#bjbd74  7c7 ,,%>e ratio ,= purposes (  
?is section-- 7#a7 ,9 g5]al ,! t]m ,,%>e
 ratio means1 ) respect to any          
corporation = any taxable ye>1 ! ratio  
7express$ z a p]c5tage7 (-- 7,a7 !      
aggregate %>es ( common /ock ( su*      
corporation :i* h be5 grant$ to         
p>ticipat+ employees ( su* corporation  

pursuant to a ,,%>e plan dur+ su*       
taxable ye> or any prior taxable ye>1   
divid$ by  7,b7 ! aggregate out/&+ %>es 
( common /ock ( su* corporation 7o!r ?an
 %>es held by su* corporation74  7#b7   
,treatm5t ( c]ta9 grants be=e e/abli%m5t
 ( ,,%>e plan ,if su* corporation       
demon/rates to ! satisfaction ( !       
,secret>y t1 dur+ ! #aj ye>s prec$+ !   
date ( ! enactm5t ( ?is section1 su*    
corporation made grants ( common /ock to
 eligible employees ( su* corporation   
:i* 7 n 9 ex*ange = comp5sation 7o!r ?an
 s]vice z an employee71 su* /ock %all be
 tak5 into acc\nt "u p>agraph 7#a77;,a74
  7#c7 ,treatm5t ( conv]tible /ock ,9 ! 
case ( any class ( /ock ( any           
corporation :i* may be conv]t$ to common
 /ock1 su* /ock %all be tak5 into acc\nt
 z common /ock "u p>agraphs 7#a77;,b7 & 
7#b7 on a fully dilut$ basis4  7#d7     
,exclusion ( inc5tive equity  7,a7 ,9   
g5]al ,inc5tive equity %all n be tak5   
into acc\nt "u subp>agraph 7,a7 or 7,b7 
( p>agraph 7#a7 7includ+ any /ock :i*   

w\ld o!rwise be s tak5 into acc\nt by   
reason ( p>agraph 7#b7 or 7#c774  7,b7  
,inc5tive equity ,= purposes ( ?is      
p>agraph1 ! t]m inc5tive equity means   
any p]=mance-bas$ re/rict$ /ock grant$  
to an employee ( ! corporation1 any /ock
 acquir$ pursuant to a p]=mance-bas$    
inc5tive /ock option grant$ to an       
employee ( ! corporation1 or any simil> 
grant ( p]=mance-bas$ /ock or conv]tible
 equity4  7#e7 ,treatm5t ( =feit$ /ock  
,9 ! case ( any /ock :i* is =feit$ 7by  
reason ( a failure to ve/ or o!rwise71  
su* /ock %all n be tak5 into acc\nt "u  
p>agraph 7#a7 aft] ! second cal5d> ye>  
foll[+ ! cal5d> ye> 9 :i* su* /ock is s 
=feit$4  7d7 ,,%>e plan ,= purposes (   
?is section-- 7#a7 ,9 g5]al ,! t]m ,,%>e
 plan means1 ) respect to any           
corporation1 a plan :i* provides = mak+ 
p]iodic di/ributions ( common /ock ( su*
 corporation to ea* p>ticipat+ employee 
( su* corporation 7det]m9$ z ! date (   
ea* su* p]iodic di/ribution74  7#b7     
,p>ticipat+ employees  7,a7 ,9 g5]al ,! 

t]m p>ticipat+ employee means1 ) respect
 to any corporation1 any eligible       
employee ( su* corporation :o is treat$ 
z a p>ticipat+ employee "u ! t]ms ( !   
plan4  7,b7 #hj-p]c5t requirem5t ,a plan
 %all n be treat$ z a ,,%>e plan unless1
 ) respect to ea* p]iodic di/ribution   
made "u su* plan1 ! l[e/ comp5sat$ #hj  
p]c5t ( eligible employees ( su*        
corporation are p>ticipat+ employees )  
respect to su* di/ribution4  7#c7       
,eligible employee ,! t]m eligible      
employee means1 ) respect to any        
corporation1 any full-"t employee :o is 
bas$ 9 ! ,unit$ ,/ates & :o does n      
receive #bej1jjj or m 9 annual ca%      
comp5sation f su* corporation 7det]m9$  
)\t reg>d to ,,%>e plan /ock74 ,!       
#bej1jjj am\nt specifi$ 9 ! prec$+      
s5t5ce %all be adju/$ z provid$ 9       
subsection 7b77#b77;,b74  7#d7 ,common  
/ock  7,a7 ,9 g5]al ,! t]m common /ock  
means1 ) respect to any corporation1    
/ock :i* has ! same economic & vot+     
rights z ! mo/ widely held 7det]m9$ )\t 

reg>d to any /ock issu$ "u ! ,,%>e plan7
 common /ock ( su* corporation :i* has  
bo? economic & vot+ rights4  7,b7       
,sub/itution ( index-bas$ mutual funds  
or ,e,t,fs ,%>es ( an index-bas$ mutual 
fund or ex*ange trad$ fund %all be      
treat$ = purposes ( ?is section 9 ! same
 mann] z %>es ( common /ock issu$ by !  
corporation ref]r$ to 9 subp>agraph 7,a7
 9 ! same ratio t ! fair m>ket value (  
su* %>es ( ! index-bas$ mutual fund or  
ex*ange trad$ fund be>s to ! fair m>ket 
value ( su* %>es ( common /ock1 det]m9$ 
z ( ! date t su* %>es ( ! index-bas$    
mutual fund or ex*ange trad$ fund are   
di/ribut$ to ! employee4  7#e7          
,di/ribution requirem5ts  7,a7 ,9 g5]al 
,a plan %all n be treat$ z a ,,%>e plan 
unless ! di/ributions made "u su* plan--
 7i7 are made )\t comp5sation 7o!r ?an  
s]vice z an employee71  7ii7 except z   
provid$ 9 subp>agraph 7,b71 are made 9  
equal am\nts to ea* p>ticipat+ employee 
7det]m9$ 9 ! aggregate ) respect to any 
cal5d> ye> & prop]ly adju/$ ) respect   

any employee n employ$ at all times dur+
 su* cal5d> ye>71  7iii7 ve/ 9 !        
employee aft] su* p]iod ( employm5t ( ! 
employee by ! di/ribut+ corporation z   
may be specifi$ 9 su* plan1 except t !  
p]iod s specifi$-- 7,i7 may n exce$ #e  
ye>s & ! employ] may elect :e!r to treat
 p]iods ( employm5t occurr+ be=e !      
e/abli%m5t ( ! plan z c\nt+ t[>d su*    
p]iod1 &  7,,ii7 %all be treat$ z       
satisfi$ ^u retirem5t1 t]m9ation (      
employm5t )\t cause1 or *ange 9 control 
( ! corporation1 &  7iv7 may be sold or 
transf]r$ )\t re/riction once ve/$4     
7,b7 ,adju/m5ts = p]iod ( s]vice ,!     
requirem5t ( subp>agraph 7,a77ii7 %all  
be treat$ z met if su* requirem5t is met
 :5 appli$ sep>ately to gr\ps (         
p>ticipat+ employees divid$ 7"u ! t]ms (
 ! corporation's ,,%>e plan7 on ! basis 
( ! p]iod = :i* su* employees h be5     
employ$ by ! di/ribut+ corporation4  7e7
 ,publication by ,treasury ,! ,secret>y 
%all make publicly available ) respect  
to ea* taxable ye> a li/ ( corporations 

:i* ! ,secret>y has id5tifi$ z ,,%>e    
corporations4  7f7 ,d$uction = ,,%>e    
plan /ock di/ributions ,,%>e            
corporations %all be all[$ a d$uction   
equal to ! fair m>ket value 7det]m9$ z (
 di/ribution7 ( /ock di/ribut$ pursuant 
to a ,,%>e plan dur+ ! taxable ye>4  7g7
 ,corporate "r ,to implem5t ,,%>e plan  
,not)/&+ any o!r provision ( ,f$]al1    
,/ate1 or local law1 a corporation %all 
n be prev5t$ or enjo9$ f1 or subject to 
any monet>y or o!r p5alty or damages =1 
e/abli%+1 ma9ta9+1 or mak+ di/ributions 
( /ock pursuant to1 a ,,%>e plan4  7h7  
,aggregation rules ,9 ! case ( any      
controll$ gr\p 7)9 ! mean+ ( section    
#aefc7;a771 ! ,secret>y may issue su*   
regulations or o!r guidance z !         
,secret>y det]m9es to be appropriate =  
purposes ( apply+ ! provisions ( ?is    
section to su* gr\p1 includ+ regulations
 or o!r guidance t coord9ates or        
consolidates ! ,,%>e plans ( !          
corporations 9 su* gr\p or all[s or     
requires employees ( any corporation 9  

su* gr\p to receive /ock ( ano!r        
corporation 9 su* gr\p pursuant to su*  
,,%>e plans4  4  7b7 ,cl]ical am5dm5t ,!
 table ( sections = "p ,,ii ( sub*apt]  
,a ( *apt] #a ( ! ,int]nal ,rev5ue ,code
 ( #aihf is am5d$ by r$esignat+ ! item  
relat+ to section #ab z an item relat+  
to section #ac & by ins]t+ aft] ! item  
relat+ to section #aa ! foll[+ new item3
  ,sec4 #ab4 ,r$uc$ rate ( tax =        
corporations ma9ta9+ ,,%>e plans4  4    
7c7 ,effective date ,! am5dm5ts made by 
?is section %all apply to taxable ye>s  
beg9n+ m ?an #a ye> aft] ! date ( !     
enactm5t ( ?is ,act4  #c4 ,di/ributions 
( /ock issu$ "u ,,%>e plans exclud$ f   
gross income  7a7 ,9 g5]al ,"p ,,iii (  
sub*apt] ,b ( *apt] #a ( ! ,int]nal     
,rev5ue ,code ( #aihf is am5d$ by ins]t+
 aft] section #aci;,i ! foll[+ new      
section3  #aci;,j4 ,,%>e plan           
di/ributions  7a7 ,9 g5]al ,gross income
 %all n include any ,,%>e plan /ock     
receiv$ by an employee "u a ,,%>e plan4 
7b7 ,def9itions relat$ to ,,%>e plans ,=

 purposes ( ?is section-- 7#a7 ,,%>e    
plan ,! t]m ,,%>e plan has ! mean+ giv5 
su* t]m 9 section #ab4  7#b7 ,,%>e plan 
/ock ,! t]m ,,%>e plan /ock means1 )    
respect to any employee1 /ock receiv$ by
 su* employee "u a ,,%>e plan4  4  7b7  
,cl]ical am5dm5t ,! table ( sections =  
"p ,,iii ( sub*apt] ,b ( *apt] #a ( !   
,int]nal ,rev5ue ,code ( #aihf is am5d$ 
by ins]t+ aft] ! item relat+ to section 
#aci;,i ! foll[+ new item3  ,sec4       
#aci;,j4 ,,%>e plan di/ributions4  4    
7c7 ,effective date ,! am5dm5ts made by 
?is section %all apply to /ock receiv$  
aft] ! date ( ! enactm5t ( ?is ,act4