Expansion of qualified small business stock gain exclusion

(a) Phased increase in exclusion for gain from qualified small business stock (1) In general Section 1202(a)(1) is amended to read as follows: (1) In general In the case of a taxpayer other than a corporation, gross income shall not include— (A) except as provided in paragraphs (3) and (4), 50 percent of any gain from the sale or exchange of qualified small business stock acquired on or before the applicable date and held for more than 5 years, and (B) the applicable percentage of any gain from the sale or exchange of qualified small business stock acquired after the applicable date and held for at least 3 years.. (2) Applicable percentage Section 1202(a) is amended by adding at the end the following new paragraph: (5) Applicable percentage The applicable percentage under paragraph (1) shall be determined under the following table: Years stock held: Applicable percentage: 3 years 50% 4 years 75% 5 years or more 100%. (3) Applicable date; acquisition date Section 1202(a), as amended by paragraph (2), is amended by adding at the end the following new paragraph: (6) Applicable date; acquisition date For purposes of this section— (A) Applicable date The term applicable date means the date of the enactment of this paragraph. (B) Acquisition date In the case of any stock which would (but for this paragraph) be treated as having been acquired before, on, or after the applicable date, whichever is applicable, the acquisition date for purposes of this section shall be the first day on which such stock was held by the taxpayer determined after the application of section 1223.. (4) Continued treatment as not item of tax preference (A) In general Section 57(a)(7) 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 2010, an amount. (B) Conforming amendment Section 1202(a)(4) is amended— (i) by striking, and at the end of subparagraph (B) and inserting a period, and (ii) by striking subparagraph (C). (5) Other conforming amendments (A) Paragraphs (3)(A) and (4)(A) of section 1202(a) are each amended by striking paragraph (1) and inserting paragraph (1)(A). (B) Paragraph (4)(A) of section 1202(a) is amended by inserting and on or before the applicable date after 2010. (C) Sections 1202(b)(2), 1202(g)(2)(A), and 1202(j)(1)(A) are each amended by striking more than 5 years and inserting at least 3 years (more than 5 years in the case of stock acquired on or before the applicable date). (6) Effective dates (A) In general Except as provided in subparagraph (B), the amendments made by this subsection shall apply to taxable years beginning after the date of the enactment of this Act. (B) Continued treatment as not item of tax preference The amendments made by paragraph (4) shall take effect as if included in the enactment of section 2011 of the Creating Small Business Jobs Act of 2010. (b) Increase in per issuer limitation (1) In general Subparagraph (A) of section 1202(b)(1) is amended to read as follows: (A) the applicable dollar limit for the taxable year, or. (2) Applicable dollar limit Section 1202 (b) is amended by adding at the end the following: (4) Applicable dollar limit For purposes of paragraph (1)(A), the applicable dollar limit for any taxable year with respect to eligible gain from 1 or more dispositions by a taxpayer of qualified business stock of a corporation is— (A) if such stock was acquired by the taxpayer on or before the applicable date, $10,000,000, reduced by the aggregate amount of eligible gain taken into account by the taxpayer under subsection (a) for prior taxable years and attributable to dispositions of stock issued by such corporation and acquired by the taxpayer before, on, or after the applicable date, and (B) if such stock was acquired by the taxpayer after the applicable date, $15,000,000, reduced by the sum of— (i) the aggregate amount of eligible gain taken into account by the taxpayer under subsection (a) for prior taxable years and attributable to dispositions of stock issued by such corporation and acquired by the taxpayer before, on, or after the applicable date, plus (ii) the aggregate amount of eligible gain taken into account by the taxpayer under subsection (a) for the taxable year and attributable to dispositions of stock issued by such corporation and acquired by the taxpayer on or before the applicable date. (5) Inflation adjustment (A) In general In the case of any taxable year beginning after 2026, the $15,000,000 amount in paragraph (4)(B) shall be increased by an amount equal to — (i) such dollar amount, multiplied by (ii) the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which the taxable year begins, determined by substituting calendar year 2025 for calendar year 2016 in subparagraph (A)(ii) thereof. If any increase under this subparagraph is not a multiple of $10,000, such increase shall be rounded to the nearest multiple of $10,000. (B) No increase once limit reached If, for any taxable year, the eligible gain attributable to dispositions of stock issued by a corporation and acquired by the taxpayer after the applicable date exceeds the applicable dollar limit, then notwithstanding any increase under subparagraph (A) for any subsequent taxable year, the applicable dollar limit for such subsequent taxable year shall be zero.. (3) Separate returns Subparagraph (A) of section 1202(b)(3) is amended to read as follows: (A) Separate returns In the case of a separate return by a married individual for any taxable year— (i) paragraph (4)(A) shall be applied by substituting $5,000,000 for $10,000,000, and (ii) paragraph (4)(B) shall be applied by substituting one-half of the dollar amount in effect under such paragraph for the taxable year for the amount so in effect.. (4) Effective date The amendments made by this subsection shall apply to taxable years beginning after the date of the enactment of this Act. (c) Increase in limit in aggregate gross assets (1) In general Subparagraphs (A) and (B) of section 1202(d)(1) are each amended by striking $50,000,000 and inserting $75,000,000. (2) Inflation adjustment Section 1202(b) is amended by adding at the end the following: (4) Inflation adjustment In the case of any taxable year beginning after 2026, the $75,000,000 amounts in paragraphs (1)(A) and (1)(B) shall each be increased by an amount equal to— (A) such dollar amount, multiplied by (B) the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which the taxable year begins, determined by substituting calendar year 2025 for calendar year 2016 in subparagraph (A)(ii) thereof. If any increase under this paragraph is not a multiple of $10,000, such increase shall be rounded to the nearest multiple of $10,000.. (3) Effective date The amendments made by this subsection shall apply to stock issued after the date of the enactment of this Act.

(a) Phased increase in exclusion for gain from qualified small business stock (1) In general Section 1202(a)(1) is amended to read as follows: (1) In general In the case of a taxpayer other than a corporation, gross income shall not include— (A) except as provided in paragraphs (3) and (4), 50 percent of any gain from the sale or exchange of qualified small business stock acquired on or before the applicable date and held for more than 5 years, and (B) the applicable percentage of any gain from the sale or exchange of qualified small business stock acquired after the applicable date and held for at least 3 years.. (2) Applicable percentage Section 1202(a) is amended by adding at the end the following new paragraph: (5) Applicable percentage The applicable percentage under paragraph (1) shall be determined under the following table: Years stock held: Applicable percentage: 3 years 50% 4 years 75% 5 years or more 100%. (3) Applicable date; acquisition date Section 1202(a), as amended by paragraph (2), is amended by adding at the end the following new paragraph: (6) Applicable date; acquisition date For purposes of this section— (A) Applicable date The term applicable date means the date of the enactment of this paragraph. (B) Acquisition date In the case of any stock which would (but for this paragraph) be treated as having been acquired before, on, or after the applicable date, whichever is applicable, the acquisition date for purposes of this section shall be the first day on which such stock was held by the taxpayer determined after the application of section 1223.. (4) Continued treatment as not item of tax preference (A) In general Section 57(a)(7) 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 2010, an amount. (B) Conforming amendment Section 1202(a)(4) is amended— (i) by striking, and at the end of subparagraph (B) and inserting a period, and (ii) by striking subparagraph (C). (5) Other conforming amendments (A) Paragraphs (3)(A) and (4)(A) of section 1202(a) are each amended by striking paragraph (1) and inserting paragraph (1)(A). (B) Paragraph (4)(A) of section 1202(a) is amended by inserting and on or before the applicable date after 2010. (C) Sections 1202(b)(2), 1202(g)(2)(A), and 1202(j)(1)(A) are each amended by striking more than 5 years and inserting at least 3 years (more than 5 years in the case of stock acquired on or before the applicable date). (6) Effective dates (A) In general Except as provided in subparagraph (B), the amendments made by this subsection shall apply to taxable years beginning after the date of the enactment of this Act. (B) Continued treatment as not item of tax preference The amendments made by paragraph (4) shall take effect as if included in the enactment of section 2011 of the Creating Small Business Jobs Act of 2010. (b) Increase in per issuer limitation (1) In general Subparagraph (A) of section 1202(b)(1) is amended to read as follows: (A) the applicable dollar limit for the taxable year, or. (2) Applicable dollar limit Section 1202 (b) is amended by adding at the end the following: (4) Applicable dollar limit For purposes of paragraph (1)(A), the applicable dollar limit for any taxable year with respect to eligible gain from 1 or more dispositions by a taxpayer of qualified business stock of a corporation is— (A) if such stock was acquired by the taxpayer on or before the applicable date, $10,000,000, reduced by the aggregate amount of eligible gain taken into account by the taxpayer under subsection (a) for prior taxable years and attributable to dispositions of stock issued by such corporation and acquired by the taxpayer before, on, or after the applicable date, and (B) if such stock was acquired by the taxpayer after the applicable date, $15,000,000, reduced by the sum of— (i) the aggregate amount of eligible gain taken into account by the taxpayer under subsection (a) for prior taxable years and attributable to dispositions of stock issued by such corporation and acquired by the taxpayer before, on, or after the applicable date, plus (ii) the aggregate amount of eligible gain taken into account by the taxpayer under subsection (a) for the taxable year and attributable to dispositions of stock issued by such corporation and acquired by the taxpayer on or before the applicable date. (5) Inflation adjustment (A) In general In the case of any taxable year beginning after 2026, the $15,000,000 amount in paragraph (4)(B) shall be increased by an amount equal to — (i) such dollar amount, multiplied by (ii) the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which the taxable year begins, determined by substituting calendar year 2025 for calendar year 2016 in subparagraph (A)(ii) thereof. If any increase under this subparagraph is not a multiple of $10,000, such increase shall be rounded to the nearest multiple of $10,000. (B) No increase once limit reached If, for any taxable year, the eligible gain attributable to dispositions of stock issued by a corporation and acquired by the taxpayer after the applicable date exceeds the applicable dollar limit, then notwithstanding any increase under subparagraph (A) for any subsequent taxable year, the applicable dollar limit for such subsequent taxable year shall be zero.. (3) Separate returns Subparagraph (A) of section 1202(b)(3) is amended to read as follows: (A) Separate returns In the case of a separate return by a married individual for any taxable year— (i) paragraph (4)(A) shall be applied by substituting $5,000,000 for $10,000,000, and (ii) paragraph (4)(B) shall be applied by substituting one-half of the dollar amount in effect under such paragraph for the taxable year for the amount so in effect.. (4) Effective date The amendments made by this subsection shall apply to taxable years beginning after the date of the enactment of this Act. (c) Increase in limit in aggregate gross assets (1) In general Subparagraphs (A) and (B) of section 1202(d)(1) are each amended by striking $50,000,000 and inserting $75,000,000. (2) Inflation adjustment Section 1202(b) is amended by adding at the end the following: (4) Inflation adjustment In the case of any taxable year beginning after 2026, the $75,000,000 amounts in paragraphs (1)(A) and (1)(B) shall each be increased by an amount equal to— (A) such dollar amount, multiplied by (B) the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which the taxable year begins, determined by substituting calendar year 2025 for calendar year 2016 in subparagraph (A)(ii) thereof. If any increase under this paragraph is not a multiple of $10,000, such increase shall be rounded to the nearest multiple of $10,000.. (3) Effective date The amendments made by this subsection shall apply to stock issued after the date of the enactment of this Act.