Sec. 1002. Deduction for adjusted net capital gain
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Part VI of subchapter B of chapter 1, as amended by section 3105, is amended by inserting after section 168 the following new section: If for any taxable year a taxpayer other than a corporation has an adjusted net capital gain, 40 percent of the amount of the adjusted net capital gain shall be allowed as a deduction from gross income. For purposes of this section, the term adjusted net capital gain means the sum of— net capital gain reduced (but not below zero) by the net collectibles gain, plus qualified dividend income.
For purposes of this section, the net capital gain for any taxable year shall be reduced (but not below zero) by the amount which the taxpayer takes into account as investment income under section 163(d)(4)(B)(iii). For purposes of this section— The term net collectibles gain means the excess (if any) of— collectibles gain, over collectibles loss. The terms collectibles gain and collectibles loss mean gain or loss (respectively) from the sale or exchange of a collectible (as defined in section 408(m) without regard to paragraph
(3)thereof) which is a capital asset held for more than 1 year but only to the extent such gain is taken into account in computing gross income and such loss is taken into account in computing taxable income. For purposes of paragraph (2), any gain from the sale of an interest in a partnership, S corporation, or trust which is attributable to unrealized appreciation in the value of collectibles shall be treated as gain from the sale or exchange of a collectible. Rules similar to the rules of section 751 shall apply for purposes of the preceding sentence. For purposes of this section— The term qualified dividend income means dividends received during the taxable year from— domestic corporations, and qualified foreign corporations. Such term shall not include— any dividend from a corporation which for the taxable year of the corporation in which the distribution is made, or the preceding taxable year, is a corporation exempt from tax under section 501 or 521, any amount allowed as a deduction under section 591 (relating to deduction for dividends paid by mutual savings banks, etc.), and any dividend described in section 404(k). 246(c) Such term shall not include any dividend on any share of stock— with respect to which the holding period requirements of section 246(c) are not met (determined without regard to paragraph
(5)of section 246(c) and by substituting in section 246(c) 60 days for 45 days each place it appears and by substituting 121-day period for 91-day period ), or to the extent that the taxpayer is under an obligation (whether pursuant to a short sale or otherwise) to make related payments with respect to positions in substantially similar or related property. Except as otherwise provided in this subparagraph, the term qualified foreign corporation means any foreign corporation if— such corporation is incorporated in a possession of the United States, or such corporation is eligible as a qualified resident for all of the benefits provided under a comprehensive income tax treaty with the United States which the Secretary determines is satisfactory for purposes of this paragraph and which includes an exchange of information program. A foreign corporation not otherwise treated as a qualified foreign corporation under subparagraph
(A)shall be so treated with respect to any dividend paid by such corporation if the stock with respect to which such dividend is paid is readily tradable on an established securities market in the United States. The term qualified foreign corporation shall not include any foreign corporation which for the taxable year of the corporation in which the dividend was paid, or the preceding taxable year, is a passive foreign investment company (as defined in section 1297). A dividend received from a regulated investment company or a real estate investment trust shall be subject to the limitations prescribed in sections 854 and 857. . Section 62(a) is amended by inserting after paragraph
(7)the following new paragraph: The deduction allowed by section 169. . The amendments made by this section shall apply to taxable years beginning after December 31, 2014.