"(1) a partial tax computed on the taxable income

reduced by an amount equal to the sum of

"(A) 40 percent of the adjusted class A capital gain, and

gain,

"(B) 50 percent of the adjusted class B capital

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plus

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"(2) an amount equal to the sum of

"(A) 21 percent of the adjusted class A capital gain, and

"(B) 25 percent of the adjusted class B capital gain."

(B) DEDUCTION FOR CAPITAL GAINS. See

tion 1202 (relating to deduction for capital gains)

is amended to read as follows:

16 "SEC. 1202. DEDUCTION FOR CAPITAL GAINS.

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"(a) GENERAL RULE. In the ease of a taxpayer other

18 than a corporation, a deduction from gross income shall 19 be allowed equal to the sum of

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"(1) 60 percent of the adjusted class A capital gain, and

gain.

“(2) 50 percent of the adjusted class B capital

(b) SPECIAL RULE. In the ease of an estate or trust,

25 the deduction allowable under subsection (a) shall be com

1 puted by excluding the portion (if any), of the gains for 2 the taxable year from sales or exchanges of capital assets, 3 which, under sections 652 and 662 (relating to inclusions 4 of amounts in gross income of beneficiaries of trusts), is 5 ineludible by the income beneficiaries as gain derived from 6 the sale or exchange of capital assets."

(C) DEFINITIONS. Section 1222 (relating to

other terms relating to capital gains and losses) is amended to read as follows:

"SEC. 1222 OTHER TERMS RELATING TO CAPITAL GAINS

AND LOSSES.

"(a) TERMS APPLICABLE TO ALL TAXPAYERS. For purposes of this subtitle

"(1) SHORT-TERM CAPITAL GAIN. The term 'short-term capital gain' means gain from the sale or exchange of a capital asset held for not more than 6 months, if and to the extent such gain is taken into ae

count in computing gross income.

The term

"(2) SHORT-TERM CAPITAL LOSS. 'short term capital loss' means less from the sale or exchange of a capital asset held for not more than 6 months, if and to the extent that such loss is taken into

account in computing taxable income.

"(3) NET SHORT-TERM CAPITAL GAIN. The term 'net short-term capital gain' means the excess of short

term capital gains for the taxable year over the shortterm capital losses for such year.

"(4) NET SHORT TERM CAPITAL LOSS. The term

net short-term capital loss' means the excess of short

term capital losses for the taxable year over the shortterm capital gains for such year.

"(b) TERMS APPLICABLE TO CORPORATIONS. FOF purposes of this subtitle, in the ease of a corporation

“(1) LONG TERM CAPITAL GAIN. The term longterm capital gain' means gain from the sale or exchange of a capital asset held for more than 6 months, if and to

the extent such gain is taken into account in computing gross income.

"(2) LONG-TERM CAPITAL LOss. The term longterm capital loss' means loss from the sale or exchange of a capital asset held for more than 6 months, if and to

the extent that such loss is taken into account in com

puting taxable income.

“(3) NET LONG TERM CAPITAL GAIN. The term net long term capital gain' means the excess of long

term capital gains for the taxable year over the long

term capital losses for such year.

"(4) NET LONG-TERM CAPITAL LOSS. The term

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'net long term capital loss' means the excess of longterm capital losses for the taxable year over the longterm capital gains for such year.

"(5) NET CAPITAL GAIN. The term 'net capital

gain' means the excess of the gains from sales or ex

changes of capital assets over the losses from such sales or exchanges.

"(6) NET CAPITAL LOSS. The term 'net capital loss' means the excess of the losses from sales or exchanges of capital assets over the sum allowed under section 1211(a). For purposes of determining losses under this paragraph, amounts which are short-term eapital losses under section 1212 shall be excluded.

"(e) TERMS APPLICABLE TO TAXPAYERS OTHER 15 THAN CORPORATIONS. For purposes of this subtitle, in 16 the ease of a taxpayer other than a corporation

"(1) CLASS B CAPITAL GAIN. The term 'class

B capital gain' means gain from the sale or exchange of a capital asset held for more than 6 months but not more than 2 years, if and to the extent such gain is

taken into account in computing gross income.

"(2) CLASS B CAPITAL LOSS. The term 'class B

capital loss' means loss from the sale or exchange of a

capital asset held for more than 6 months but not more than 2 years, if and to the extent that such loss is taken into account in computing taxable income.

“(3) CLASS A CAPITAL GAIN. The term 'class A

capital gain' means gain from the sale or exchange of a

eapital asset held for more than 2 years, if and to the

extent such gain is taken into account in computing gross income.

“(4) CLASS A CAPITAL LOSS. The term 'class A capital loss' means loss from the sale or exchange of a capital asset held for more than 2 years, if and to the extent that such loss is taken into account in com puting taxable income.

“(5) NET CLASS B CAPITAL GAIN. The term 'net class B capital gain' means the excess of class B capital

gains for the taxable year over the class B capital losses

for such year.

"(6) NET CLASS B CAPITAL LOSS. The term 'net class B capital loss' means the excess of class B capital losses for the taxable year over the class B capital gains

for such year.

"(7) NET CLASS A CAPITAL GAIN. The term 'net class A capital gain' means the excess of class A capital gains for the taxable year over the class A capital losses for such year.