Page 170

139 STAT. 240 PUBLIC LAW 119–21—JULY 4, 2025 ‘‘any residential construction contract (as defined in section 460(e)(4))’’. (c) EFFECTIVE DATE.—The amendments made by this section shall apply to contracts entered into in taxable years beginning after the date of the enactment of this Act. Subchapter D—Permanent Investments in Small Business and Rural America SEC. 70431. EXPANSION OF QUALIFIED SMALL BUSINESS STOCK GAIN EXCLUSION. (a) PHASED INCREASE IN EXCLUSION FOR GAIN FROM QUALIFIED SMALL BUSINESS STOCK.— (1) IN GENERAL.—Section 1202(a)(1) is amended to read as follows: ‘‘(1) IN GENERAL.— In the case of a taxpayer other than a corporation, gross income shall not include— ‘‘(A) except as provided in paragraphs (3) and (4), 50 percent of any gain from the sale or exchange of qualified small business stock acquired on or before the applicable date and held for more than 5 years, and ‘‘(B) the applicable percentage of any gain from the sale or exchange of qualified small business stock acquired after the applicable date and held for at least 3 years.’’. (2) APPLICABLE PERCENTAGE.—Section 1202(a) is amended by adding at the end the following new paragraph: ‘‘(5) APPLICABLE PERCENTAGE.—The applicable percentage under paragraph (1) shall be determined under the following table: ‘‘Years stock held: Applicable percentage: 3 years ....................................................................... 50% 4 years ....................................................................... 75% 5 years or more ........................................................ 100%’’. (3) APPLICABLE DATE; ACQUISITION DATE.—Section 1202(a), as amended by paragraph (2), is amended by adding at the end the following new paragraph: ‘‘(6) APPLICABLE DATE; ACQUISITION DATE.—For purposes of this section— ‘‘(A) APPLICABLE DATE.—The term ‘applicable date’ means the date of the enactment of this paragraph. ‘‘(B) ACQUISITION DATE.—In the case of any stock which would (but for this paragraph) be treated as having been acquired before, on, or after the applicable date, whichever is applicable, the acquisition date for purposes of this sec- tion shall be the first day on which such stock was held by the taxpayer determined after the application of section 1223.’’. (4) CONTINUED TREATMENT AS NOT ITEM OF TAX PREF- ERENCE.— (A) IN GENERAL.—Section 57(a)(7) is amended by striking ‘‘An amount’’ and inserting ‘‘In the case of stock Definition. Time periods. 26 USC 56 note.