,,ii #aaith ,,congress #ast ,session ,s4 #fie ,,in ,,the ,,senate ,,of ,,the ,,united ,,states ,february #bd1 #bjbe,mr4 ,cornyn introduced the following bill2 which was read twice and referred to the ,committee on ,finance ,a ,,bill ,to amend the ,internal ,revenue ,code of #aihf to modify the exclusion for gain from qualified small business stock4 #a4 ,short title ,this ,act may be cited as the ,small ,business ,investment ,act of #bjbe4 #b4 ,phased increase in exclusion for gain from qualified small business stock 7a7 ,in general ,section #abjb7;a77#a7 of the ,internal ,revenue ,code of #aihf is amended-- 7#a7 by striking #ej percent and inserting the applicable percentage1 and 7#b7 by striking held for more than #e years and inserting held for at least #c years4 7b7 ,applicable percentage ,section #abjb7;a7 of such ,code is amended by adding at the end the following new paragraph3 7#e7 ,applicable percentage ,except as provided in paragraphs 7#c7 and 7#d71 the applicable percentage under paragraph 7#a7 shall be determined under the following table3 ,years stock held3,applicable percentage3#c years#ejd years#gee years or more#ajj 4 7c7 ,continued treatment as not item of tax preference 7#a7 ,in general ,section #eg7;a77#g7 of such ,code is amended by striking ,an amount and inserting ,in the case of stock acquired on or before the date of the enactment of the ,creating ,small ,business ,jobs ,act of #bjaj1 an amount4 7#b7 ,conforming amendment ,section #abjb7;a77#d7 of such ,code is amended-- 7,a7 by striking 1 and at the end of subparagraph 7,b7 and inserting a period1 and 7,b7 by striking subparagraph 7,c74 7d7 ,other conforming amendments 7#a7 ,section #abjb7;a77#d7 of such ,code is amended by inserting and before the date of the enactment of the ,small ,business ,investment ,act of #bjbe after ,act of #bjaj4 7#b7 ,paragraphs 7#c7 and 7#d7 of section #abjb7;a7 of such ,code are each amended by inserting held for more than #e years and after ,in the case of qualified small business stock4 7#c7 ,section #abjb7;a77#c77;,a7 of such ,code is amended to read as follows3 7,a7 the applicable percentage under paragraph 7#a7 shall be #ge percent1 and 4 7#d7 ,section #abjb7;a77#d77;,a7 of such ,code is amended to read as follows3 7,a7 the applicable percentage under paragraph 7#a7 shall be #ajj percent1 and 4 7#e7 ,section #abjb7;b77#b7 of such ,code is amended by striking more than #e years and inserting at least #c years4 7#f7 ,section #abjb7;g77#b77;,a7 of such ,code is amended by striking more than #e years and inserting at least #c years4 7#g7 ,section #abjb7;j77#a77;,a7 of such ,code is amended by striking more than #e years and inserting at least #c years4 7e7 ,effective date 7#a7 ,in general ,except as provided in paragraph 7#b71 the amendments made by this section shall apply to stock acquired after the date of the enactment of this ,act4 7#b7 ,continued treatment as not item of tax preference ,the amendment made by subsection 7c7 shall take effect as if included in the enactment of section #bjaa of the ,creating ,small ,business ,jobs ,act of #bjaj4 #c4 ,tacking holding period of convertible debt instruments 7a7 ,in general ,section #abjb7;f7 of the ,internal ,revenue ,code of #aihf is amended-- 7#a7 by redesignating paragraphs 7#a7 and 7#b7 as subparagraphs 7,a7 and 7,b7 and moving such subparagraphs 7as so redesignated7 #b ems to the right1 7#b7 by striking conversion of other stock4--,if any stock and inserting the following3 conversion4-- 7#a7 ,other stock ,if any stock 1 and 7#c7 by adding at the end the following new paragraph3 7#b7 ,convertible debt instruments 7,a7 ,in general ,if any stock in a corporation is acquired by the taxpayer1 without recognition of gain1 solely through the conversion of a qualified convertible debt instrument-- 7i7 the stock so acquired shall be treated as qualified small business stock in the hands of the taxpayer1 and 7ii7 the stock so acquired shall be treated as having been held during the period during which the qualified convertible debt instrument was held4 7,b7 ,qualified convertible debt instrument ,for purposes of this paragraph1 the term qualified convertible debt instrument means any bond or other evidence of indebtedness-- 7i7 which is originally issued by the corporation to the taxpayer1 7ii7 the issuer of which-- 7,i7 from issuance until conversion1 is a qualified small business1 and 7,,ii7 during substantially all of the taxpayer's holding period of such bond or evidence of indebtedness1 the corporation meets the active business requirements of subsection 7e71 and 7iii7 which is convertible into stock in the corporation4 4 7b7 ,effective date ,the amendments made by this section shall apply to debt instruments originally issued after the date of the enactment of this ,act4 #d4 ,gain exclusion allowed with respect to qualified small business stock in corporation 7a7 ,in general ,section #abjb7;c7 of the ,internal ,revenue ,code of #aihf is amended-- 7#a7 by striking ,c corporation in paragraphs 7#a7 and inserting corporation1 and 7#b7 by striking and such corporation is a ,c corporation in paragraph 7#b77;,a74 7b7 ,qualified small business definition ,section #abjb7;d77#a7 of such ,code is amended by striking which is a ,c corporation4 7c7 ,clarification of aggregation rules applicable to ,s corporations ,section #abjb7;d77#c7 of such ,code is amended by adding at the end the following new subparagraph3 7,c7 ,clarification with respect to s corporations ,any determination of the members of a controlled group of corporations under this paragraph shall include taking into account any stock ownership in an ,s corporation4 4 7d7 ,treatment of passive losses ,section #dfi7;g77#a7 of such ,code is amended by adding at the end the following new subparagraph3 7,d7 ,certain dispositions of small business stock ,in the case of a disposition any gain from which is excluded from gross income under section #abjb1 subparagraph 7,a7 shall not apply4 4 7e7 ,special rules relating to ,s corporations ,section #abjb7;e7 of such ,code is amended by adding at the end the following new paragraph3 7#i7 ,applied at s corporation level ,in the case of an ,s corporation1 the requirements of this subsection shall be applied at the corporate level4 4 7f7 ,effective date ,the amendments made by this section shall apply to stock acquired after the date of the enactment of this ,act4