To amend the Internal Revenue Code of 1986 to provide for installment reporting of certain gain from the sale of an interest in a service business.

March 6, 2003

Mr. HERGER introduced the following bill; which was referred to the Committee on Ways and Means

To amend the Internal Revenue Code of 1986 to provide for installment reporting of certain gain from the sale of an interest in a service business.

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

SECTION 1. SHORT TITLE.

This Act may be cited as the `Installment Sale Protection Act of 2003'.

SEC. 2. INTANGIBLES RECAPTURE GAIN FROM CERTAIN SALES OF SERVICE BUSINESS INTERESTS ELIGIBLE FOR INSTALLMENT REPORTING.

(a) IN GENERAL- Section 453(i)(2) of the Internal Revenue Code of 1986 (relating to recapture income) is amended by adding at the end the following sentence: `Notwithstanding the preceding sentence, such term shall not include amounts attributable to any amortizable section 197 intangible (as defined in section 197(c)) in connection with the disposition by an individual of an interest in a business in which capital is not a material income-producing factor, if such individual has been an active participant in such business for at least 5 of the 7 years preceding such disposition.'.

(b) EFFECTIVE DATE- The amendment made by this section shall apply to sales in taxable years ending after the date of the enactment of this Act.

END