Tax-Free Savings and Investment Income Act

Tax-Free Savings and Investment Income Act - Amends the Internal Revenue Code to exclude from gross income up to $5,000 ($10,000 in the case of a joint return) of unearned income. Defines unearned income to mean income other than income from: (1) wages, salaries, tips, and other employee compensation; and (2) earned income from self-employment. Includes pension and annuity income in such definition. Makes ineligible for the exclusion: (1) certain nonresident aliens; and (2) estates and trusts.

[Congressional Bills 104th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3042 Introduced in House (IH)]







104th CONGRESS
  2d Session
                                H. R. 3042

  To amend the Internal Revenue Code of 1986 to allow individuals an 
  exclusion from gross income for certain amounts of unearned income.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             March 7, 1996

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

_______________________________________________________________________

                                 A BILL


 
  To amend the Internal Revenue Code of 1986 to allow individuals an 
  exclusion from gross income for certain amounts of unearned income.

    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 ``Tax-Free Savings and Investment 
Income Act''.

SEC. 2. EXCLUSION OF CERTAIN AMOUNTS OF UNEARNED INCOME OF INDIVIDUALS.

    (a) In General.--Part III of subchapter B of chapter 1 of the 
Internal Revenue Code of 1986 (relating to amounts specifically 
excluded from gross income) is amended by inserting after section 115 
the following new section:

``SEC. 116. PARTIAL EXCLUSION OF UNEARNED INCOME RECEIVED BY 
              INDIVIDUALS.

    ``(a) Exclusion From Gross Income.--In the case of an individual, 
gross income does not include unearned income.
    ``(b) Limitation.--The aggregate amount excluded under subsection 
(a) for any taxable year shall not exceed $5,000 ($10,000 in the case 
of a joint return).
    ``(c) Unearned Income.--For purposes of this section, the term 
`unearned income' means income other than--
            ``(1) wages, salaries, tips, and other employee 
        compensation, and
            ``(2) earned income (as defined in section 401(c)(2)).
Such term includes any income from a pension or annuity.
    ``(d) Certain Nonresident Aliens Ineligible For Exclusion.--In the 
case of a nonresident alien individual, subsection (a) shall apply 
only--
            ``(1) in determining the tax imposed for the taxable year 
        pursuant to section 871(b)(1) and only in respect of unearned 
        income which is effectively connected with the conduct of a 
        trade or business within the United States, or
            ``(2) in determining the tax imposed for the taxable year 
        pursuant to section 877(b).
    ``(e) Estates and Trusts Ineligible for Exclusion.--Subsection (a) 
shall not apply to an estate or trust.''
    (b) Clerical Amendment.--The table of sections for part III of 
subchapter B of chapter 1 of such Code is amended by inserting after 
the item relating to section 115 the following new item:

                              ``Sec. 116. Partial exclusion of unearned 
                                        income received by 
                                        individuals.''
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after the date of the enactment of 
this Act.
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