article: SECTION 1. INCREASED EXCLUSION AND OTHER MODIFICATIONS APPLICABLE TO QUALIFIED SMALL BUSINESS STOCK. (a) Increased Exclusion.-- (1) In general.--Subsection (a) of section 1202 of the Internal Revenue Code of 1986 (50-percent exclusion for gain from certain small business stock) is amended-- (A) by striking ``50 percent'' and inserting ``75 percent'', and (B) by striking ``50-Percent'' in the heading and inserting ``75-Percent''. (2) Conforming amendments.-- (A) Paragraph (8) of section 1(h) of such Code is amended to read as follows: ``(8) Section 1202 gain.--For purposes of this subsection, the term `section 1202 gain' means an amount equal to 25 percent of the gain which would be excluded from gross income under section 1202(a) without regard to the 75 percent limitation in such section.'' (B) The heading for section 1202 of such Code is amended by striking ``50-percent'' and inserting ``75- percent''. (C) The table of sections for part I of subchapter P of chapter 1 of such Code is amended by striking ``50-percent'' in the item relating to section 1202 and inserting ``75-percent''. (b) Reduction in Holding Period.-- (1) In general.--Subsection (a) of section 1202 of such Code is amended by striking ``5 years'' and inserting ``3 years''. (2) Conforming amendment.--Subsections (g)(2)(A) and (j)(1)(A) of section 1202 of such Code are each amended by striking ``5 years'' and inserting ``3 years''. (c) Exclusion Available to Corporations.-- (1) In general.--Subsection (a) of section 1202 of such Code is amended by striking ``other than a corporation''. (2) Technical amendment.--Subsection (c) of section 1202 of such Code is amended by adding at the end the following new paragraph: ``(4) Stock held among members of controlled group not eligible.--Stock of a member of a parent-subsidiary controlled group (as defined in subsection (d)(3)) shall not be treated as qualified small business stock while held by another member of such group.'' (d) Repeal of Minimum Tax Preference.-- (1) In general.--Subsection (a) of section 57 of such Code (relating to items of tax preference) is amended by striking paragraph (7). (2) Technical amendment.--Subclause (II) of section 53(d)(1)(B)(ii) of such Code is amended by striking ``, (5), and (7)'' and inserting ``and (5)''. (e) Stock of Larger Businesses Eligible for Exclusion.-- (1) In general.--Paragraph (1) of section 1202(d) of such Code (defining qualified small business) is amended by striking ``$50,000,000'' each place it appears and inserting ``$300,000,000''. (2) Inflation adjustment.--Section 1202(d) of such Code is amended by adding at the end the following: ``(4) Inflation adjustment of asset limitation.--In the case of stock issued in any calendar year after 1999, the $300,000,000 amount contained in paragraph (1) shall 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 1998' for `calendar year 1992' in subparagraph (B) thereof. If any amount as adjusted under the preceding sentence is not a multiple of $10,000, such amount shall be rounded to the nearest multiple of $10,000.'' (f) Repeal of Per-Issuer Limitation.--Section 1202 of such Code is amended by striking subsection (b). (g) Other Modifications.-- (1) Repeal of working capital limitation.--Section 1202(e)(6) of such Code (relating to working capital) is amended-- (A) in subparagraph (B), by striking ``2 years'' and inserting ``5 years''; and (B) by striking the last sentence. (2) Exception from redemption rules where business purpose.--Section 1202(c)(3) of such Code (relating to certain purchases by corporation of its own stock) is amended by adding at the end the following: ``(D) Waiver where business purpose.--A purchase of stock by the issuing corporation shall be disregarded for purposes of subparagraph (B) if the issuing corporation establishes that there was a business purpose for such purchase and one of the principal purposes of the purchase was not to avoid the limitations of this section.'' (h) Qualified Trade or Business.--Section 1202(e)(3) of such Code (defining qualified trade or business) is amended by inserting ``and'' at the end of subparagraph (C), by striking ``, and'' at the end of subparagraph (D) and inserting a period, and by striking subparagraph (E). (i) Effective Dates.-- (1) In general.--Except as provided in paragraph (2), the amendments made by this section apply to stock issued after the date of enactment of this Act. (2) Special rule.--The amendments made by subsections (a), (c), (e), (f), and (g)(1) apply to stock issued after August 10, 1993. SEC. 2. INCREASED EXCLUSION FOR INCENTIVE STOCK OPTIONS; EXCEPTION FROM ALTERNATIVE MINIMUM TAX. (a) Increased Exclusion.--Subsection (d) of section 422 of the Internal Revenue Code of 1986 (relating to $100,000 per year limitation) is amended by striking ``$100,000'' each place it appears and inserting ``$200,000''. (b) Exception From Alternative Minimum Tax.--Subsection (b) of section 56 of such Code is amended by striking paragraph (3). (c) Effective Date.--The amendments made by this section shall apply to options exercised in calendar years beginning after the date of the enactment of this Act.
summary: Amends Internal Revenue Code provisions concerning the exclusion of gain from certain small business stock to, among other things: (1) increase from 50 to 75 percent the amount of gain excluded from the sale certain small business stock; (2) reduce from five to three years the holding period applicable to such a sale; (3) make such exclusion available to corporations; and (4) make the stock of larger businesses eligible. Doubles the annual limitation on incentive stock options.