S 402 ISCommentsClose CommentsPermalink

To amend the Internal Revenue Code of 1986 to allow a deduction for qualified timber gains.CommentsClose CommentsPermalink

January 25, 2007

Mrs. LINCOLN (for herself, Mr. SMITH, Mr. LOTT, Mr. CORNYN, Mr. PRYOR, Mrs. HUTCHISON, Mrs. MURRAY, Mrs. DOLE, Ms. CANTWELL, Mr. BURR, Mr. SHELBY, Mr. COCHRAN, Mr. VITTER, and Ms. LANDRIEU) introduced the following bill; which was read twice and referred to the Committee on FinanceCommentsClose CommentsPermalink

To amend the Internal Revenue Code of 1986 to allow a deduction for qualified timber gains.CommentsClose CommentsPermalink

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,CommentsClose CommentsPermalink

SECTION 1. SHORT TITLE.

This Act may be cited as the `Timber Tax Act of 2007'.CommentsClose CommentsPermalink

SEC. 2. DEDUCTION FOR QUALIFIED TIMBER GAIN.

(a) In General- Part I of subchapter P of chapter 1 of the Internal Revenue Code of 1986 is amended by adding at the end the following new section:CommentsClose CommentsPermalink

`SEC. 1203. DEDUCTION FOR QUALIFIED TIMBER GAIN.

`(a) In General- In the case of a taxpayer which elects the application of this section for a taxable year, there shall be allowed a deduction against gross income in an amount equal to 60 percent of the lesser of--CommentsClose CommentsPermalink





`(1) the taxpayer's qualified timber gain for such year, orCommentsClose CommentsPermalink





`(2) the taxpayer's net capital gain for such year.CommentsClose CommentsPermalink





`(b) Qualified Timber Gain- For purposes of this section, the term `qualified timber gain' means, with respect to any taxpayer for any taxable year, the excess (if any) of--CommentsClose CommentsPermalink





`(1) the sum of the taxpayer's gains described in subsections (a) and (b) of section 631 for such year, overCommentsClose CommentsPermalink





`(2) the sum of the taxpayer's losses described in such subsections for such year.CommentsClose CommentsPermalink





`(c) Special Rules for Pass-Thru Entities- In the case of any qualified timber gain of a pass-thru entity (as defined in section 1(h)(10)), the election under this section shall be made separately by each taxpayer subject to tax on such gain.'.CommentsClose CommentsPermalink





(b) Coordination With Maximum Capital Gains Rates-CommentsClose CommentsPermalink





(1) TAXPAYERS OTHER THAN CORPORATIONS- Paragraph (2) of section 1(h) of the Internal Revenue Code of 1986 is amended to read as follows:CommentsClose CommentsPermalink





`(2) REDUCTION OF NET CAPITAL GAIN- For purposes of this subsection, the net capital gain for any taxable year shall be reduced (but not below zero) by the sum of--CommentsClose CommentsPermalink





`(A) the amount which the taxpayer takes into account as investment income under section 163(d)(4)(B)(iii), andCommentsClose CommentsPermalink





`(B) the lesser of--CommentsClose CommentsPermalink





`(i) the amount described in paragraph (1) of section 1203(a), orCommentsClose CommentsPermalink





`(ii) the amount described in paragraph (2) of such section.'.CommentsClose CommentsPermalink





(2) CORPORATIONS- Section 1201 of such Code is amended by redesignating subsection (b) as subsection (c) and inserting after subsection (a) the following new subsection:CommentsClose CommentsPermalink





`(b) Qualified Timber Gain Not Taken Into Account- For purposes of this section, in the case of a corporation with respect to which an election is in effect under section 1203, the net capital gain for any taxable year shall be reduced (but not below zero) by the corporation's qualified timber gain (as defined in section 1203(b)).'.CommentsClose CommentsPermalink





(c) Deduction Allowed Whether or Not Individual Itemizes Other Deductions- Subsection (a) of section 62 of the Internal Revenue Code of 1986 is amended by inserting before the last sentence the following new paragraph:CommentsClose CommentsPermalink





`(22) QUALIFIED TIMBER GAINS- The deduction allowed by section 1203.'.CommentsClose CommentsPermalink





(d) Deduction Allowed in Computing Adjusted Current Earnings- Subparagraph (C) of section 56(g)(4) of the Internal Revenue Code of 1986 is amended by adding at the end the following new clause:CommentsClose CommentsPermalink





`(vii) DEDUCTION FOR QUALIFIED TIMBER GAIN- Clause (i) shall not apply to any deduction allowed under section 1203.'.CommentsClose CommentsPermalink





(e) Deduction Allowed in Computing Taxable Income of Electing Small Business Trusts- Subparagraph (C) of section 641(c)(2) of the Internal Revenue Code of 1986 is amended by inserting after clause (iii) the following new clause:CommentsClose CommentsPermalink





`(iv) The deduction allowed under section 1203.'.CommentsClose CommentsPermalink





(f) Conforming Amendments-CommentsClose CommentsPermalink





(1) Subparagraph (B) of section 172(d)(2) of the Internal Revenue Code of 1986 is amended to read as follows:CommentsClose CommentsPermalink





`(B) the exclusion under section 1202 and the deduction under section 1203 shall not be allowed.'.CommentsClose CommentsPermalink





(2) Paragraph (4) of section 642(c) of such Code is amended by striking the first sentence and inserting the following: `To the extent that the amount otherwise allowable as a deduction under this subsection consists of gain described in section 1202(a) or qualified timber gain (as defined in section 1203(b)), proper adjustment shall be made for any exclusion allowable to the estate or trust under section 1202 and for any deduction allowable to the estate or trust under section 1203.'CommentsClose CommentsPermalink





(3) Paragraph (3) of section 643(a) of such Code is amended by striking the last sentence and inserting the following: `The exclusion under section 1202 and the deduction under section 1203 shall not be taken into account.'CommentsClose CommentsPermalink





(4) Subparagraph (C) of section 643(a)(6) of such Code is amended to read as follows:CommentsClose CommentsPermalink





`(C) Paragraph (3) shall not apply to a foreign trust. In the case of such a trust--CommentsClose CommentsPermalink





`(i) there shall be included gains from the sale or exchange of capital assets, reduced by losses from such sales or exchanges to the extent such losses do not exceed gains from such sales or exchanges, andCommentsClose CommentsPermalink





`(ii) the deduction under section 1203 shall not be taken into account.'.CommentsClose CommentsPermalink





(5) Paragraph (4) of section 691(c) of such Code is amended by inserting `1203,' after `1202,'.CommentsClose CommentsPermalink





(6) Paragraph (2) of section 871(a) of such Code is amended by inserting `or 1203' after `section 1202'.CommentsClose CommentsPermalink





(7) The table of sections for part I of subchapter P of chapter 1 of such Code is amended by adding at the end the following new item:CommentsClose CommentsPermalink





`Sec. 1203. Deduction for qualified timber gain.'.CommentsClose CommentsPermalink





(g) Effective Date-CommentsClose CommentsPermalink





(1) IN GENERAL- The amendments made by this section shall apply to taxable years ending after the date of the enactment of this Act.CommentsClose CommentsPermalink





(2) TAXABLE YEARS WHICH INCLUDE DATE OF ENACTMENT- In the case of any taxable year which includes the date of the enactment of this Act, for purposes of the Internal Revenue Code of 1986, the taxpayer's qualified timber gain shall not exceed the excess that would be described in section 1203(b) of such Code, as added by this section, if only dispositions of timber after such date were taken into account.CommentsClose CommentsPermalink