[Congressional Bills 108th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1558 Introduced in House (IH)]







108th CONGRESS
  1st Session
                                H. R. 1558

 To amend the Internal Revenue Code of 1986 to allow a married couple 
    conducting an unincorporated trade or business to elect out of 
                          partnership status.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             April 2, 2003

 Mr. Doggett (for himself, Ms. DeLauro, Mr. Lewis of Georgia, Mr. Neal 
 of Massachusetts, Mr. Sanders, Mr. Sandlin, and Mr. Stark) 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 a married couple 
    conducting an unincorporated trade or business to elect out of 
                          partnership status.

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

SECTION 1. ELECTION OUT OF PARTNERSHIP STATUS BY MARRIED COUPLE 
              CONDUCTING AN UNINCORPORATED TRADE OR BUSINESS.

    (a) In General.--Section 761 of the Internal Revenue Code of 1986 
(defining terms for purposes of partnerships) is amended by 
redesignating subsection (f) as subsection (g) and by inserting after 
subsection (e) the following new subsection:
    ``(f) Election Out of Partnership Status by Married Couple 
Conducting an Unincorporated Trade or Business.--
            ``(1) In general.--In the case of a trade or business 
        conducted by a husband and wife who file a joint return for the 
        taxable year and who own all of the capital and profits 
        interests of such trade or business, such husband and wife may 
        elect for purposes of this title that such trade or business 
        shall not be treated as a partnership.
            ``(2) Treatment of items.--
                    ``(A) In general.--All items of income, gain, loss, 
                deduction, and credit relating to a trade or business 
                with respect to which an election is made for the 
                taxable year shall, except as provided in subparagraph 
                (B), be divided equally between the spouses, and each 
                spouse shall take into account such spouse's respective 
                share of such items as if they were attributable to a 
                trade or business conducted by such spouse as a sole 
                proprietor.
                    ``(B) Allocation of share based on division of 
                labor.--Under regulations, the husband and wife may 
                provide, in lieu of the equal allocation of their 
                respective shares under subparagraph (A), for an 
                allocation of such shares based on their proportionate 
                share of the work performed by such spouses in the 
                trade or business.
            ``(3) Exception.--Paragraph (1) shall not apply to a trade 
        or business which is a corporation.''.
    (b) Net Earnings From Self-Employment.--
            (1) Subsection (a) of section 1402 of such Code (defining 
        net earnings from self-employment) is amended by striking 
        ``and'' at the end of paragraph (14), by striking the period at 
        the end of paragraph (15) and inserting ``; and'', and by 
        inserting after paragraph (15) the following new paragraph:
            ``(16) notwithstanding the preceding provisions of this 
        subsection, each spouse's share of income or loss from a trade 
        or business with respect to which an election is in effect 
        under section 761(f) shall be taken into account as provided in 
        section 761(f)(2) in determining net earnings from self-
        employment of such spouse.''.
            (2) Subsection (a) of section 211 of the Social Security 
        Act (defining net earnings from self-employment) is amended by 
        striking ``and'' at the end of paragraph (14), by striking the 
        period at the end of paragraph (15) and inserting ``; and'', 
        and by inserting after paragraph (15) the following new 
        paragraph:
            ``(16) Notwithstanding the preceding provisions of this 
        subsection, each spouse's share of income or loss from a trade 
        or business with respect to which an election is in effect 
        under section 761(f) shall be taken into account as provided in 
        section 761(f)(2) of the Internal Revenue Code of 1986 in 
        determining net earnings from self-employment of such 
        spouse.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2002.
                                 <all>