LOWER CAPITAL GAINS RATES TO APPLY TO PROPERTY HELD MORE THAN 1 YEAR.

SEC. 5001. LOWER CAPITAL GAINS RATES TO APPLY TO PROPERTY HELD MORE THAN 1 YEAR. (a) General Rule.— (1) Paragraph (5) of section 1(h) is amended to read as follows: “(5) 28-percent rate gain.— For purposes of this subsection, the term ‘28-percent rate gain’ means the excess (if any) of— “(A) the sum of— “(i) collectibles gain; and “(ii) section 1202 gain, over “(B) the sum of— “(i) collectibles loss; “(ii) the net short-term capital loss; and “(iii) the amount of long-term capital loss carried under section 1212(b)(1)(B) to the taxable year.”. (2) Subparagraph (A) of section 1(h)(6) is amended by striking “18 months” and inserting “1 year?”. (3) Clauses (i) and (ii) of section 1(h)(7)(A) are amended to read as follows: “(i) the amount of long-term capital gain (not otherwise treated as ordinary income) which would be treated as ordinary income if section 1250(b)(1) included all depreciation and the applicable percentage under section 1250(a) were 100 percent, over “(ii) the excess (if any) of— “(I) the amount described in paragraph (5)(B); over. “(II) the amount described in paragraph (5)(A).”.112 STAT. 788 (4) So much of paragraph (13) of section 1(h) as precedes subparagraph (C) is amended to read as follows: “(13) Special rules.— “(A) Determination of 28-percent rate gain.— In applying paragraph (5)— “(i) the amount determined under subparagraph (A) of paragraph (5) shall include long-term capital gain (not otherwise described in such subparagraph)— “(I) which is properly taken into account for the portion of the taxable year before May 7, 1997; or “(II) from property held not more than 18 months which is properly taken into account for the portion of the taxable year after July 28, 1997, and before January 1, 1998; “(ii) the amount determined under subparagraph (B) of paragraph (5) shall include long-term capital loss (not otherwise described in such subparagraph)— “(I) which is properly taken into account for the portion of the taxable year before May 7, 1997; or “(II) from property held not more than 18 months which is properly taken into account for the portion of the taxable year after July 28, 1997, and before January 1, 1998; and “(iii) subparagraph (B) of paragraph (5) (as in effect immediately before the enactment of this clause) shall apply to amounts properly taken into account before January 1, 1998. “(B) Determination of unrecaptured section 1250 gain.— The amount determined under paragraph (7)(A) shall not include gain— “(i) which is properly taken into account for the portion of the taxable year before May 7, 1997; or “(ii) from property held not more than 18 months which is properly taken into account for the portion of the taxable year after July 28, 1997, and before January 1, 1998.”. (5) Paragraphs (11) and (12) of section 1223, and section 1235(a), are each amended by striking “18 months” each place it appears and inserting “1 year”. (b) Effective Dates.— (1) In general.— Except as provided in paragraph (2), the amendments made by this section shall apply to taxable years ending after December 31, 1997. (2) Subsection (a)(5).— The amendments made by subsection (a)(5) shall take effect on January 1, 1998.