[Congressional Bills 108th Congress]
[From the U.S. Government Publishing Office]
[S. 842 Introduced in Senate (IS)]






108th CONGRESS
  1st Session
                                 S. 842

 To amend the Internal Revenue Code of 1986 to provide tax relief for 
               small businesses, and for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             April 9, 2003

 Mr. Kerry introduced the following bill; which was read twice and 
        referred to the Committee on FinanceYYYYYYYYYYYYYYYYYYYYYYYYYYY

_______________________________________________________________________

                                 A BILL


 
 To amend the Internal Revenue Code of 1986 to provide tax relief for 
               small businesses, and for other purposes.

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

SECTION 1. SHORT TITLE; AMENDMENT OF 1986 CODE.

    (a) Short Title.--This Act may be cited as the ``Affordable Small 
Business Stimulus and Simplification Act of 2003''.
    (b) Amendment of 1986 Code.--Except as otherwise expressly 
provided, whenever in this Act an amendment or repeal is expressed in 
terms of an amendment to, or repeal of, a section or other provision, 
the reference shall be considered to be made to a section or other 
provision of the Internal Revenue Code of 1986.

SEC. 2. INCREASE IN EXPENSE TREATMENT FOR SMALL BUSINESSES.

    (a) In General.--Section 179(b)(1) (relating to dollar limitation) 
is amended to read as follows:
            ``(1) Dollar limitation.--
                    ``(A) In general.--The aggregate cost which may be 
                taken into account under subsection (a) for any taxable 
                year shall not exceed the following applicable amount:

                                                         The applicable
``If the taxable year begins in:                             amount is:
    2003..........................................             $35,000 
    2004..........................................             $36,000 
    2005..........................................             $37,000 
    2006..........................................             $38,000 
    2007..........................................             $39,000 
    2008 or thereafter............................             $40,000.
                    ``(B) Inflation adjustment.--In the case of any 
                taxable year beginning in a calendar year after 2008, 
                the $40,000 amount contained in subparagraph (A) shall 
                be increased by an amount equal to--
                            ``(i) such dollar amount, multiplied by
                            ``(ii) the cost-of-living adjustment 
                        determined under section 1(f)(3) for the 
                        calendar year in which the taxable year begins, 
                        by substituting `calendar year 2007' for 
                        `calendar year 1992' in subparagraph (B) 
                        thereof.
                If any amount as adjusted under this subparagraph is 
                not a multiple of $500, such amount shall be rounded to 
                the next highest multiple of $500.''.
    (b) Expansion of Phase-Out of Limitation.--Section 179(b)(2) is 
amended to read as follows:
            ``(2) Reduction in limitation.--
                    ``(A) In general.--The limitation under paragraph 
                (1) for any taxable year shall be reduced (but not 
                below zero) by the amount by which the cost of section 
                179 property for which a deduction is allowable 
                (without regard to this subsection) under subsection 
                (a) for such taxable year exceeds the following 
                applicable amount:

                                                         The applicable
``If the taxable year begins in:                             amount is:
    2003..........................................            $350,000 
    2004..........................................            $360,000 
    2005..........................................            $370,000 
    2006..........................................            $380,000 
    2007..........................................            $390,000 
    2008 or thereafter............................            $400,000.
                    ``(B) Inflation adjustment.--In the case of any 
                taxable year beginning in a calendar year after 2008, 
                the $400,000 amount contained in subparagraph (A) shall 
                be increased by an amount equal to--
                            ``(i) such dollar amount, multiplied by
                            ``(ii) the cost-of-living adjustment 
                        determined under section 1(f)(3) for the 
                        calendar year in which the taxable year begins, 
                        by substituting `calendar year 2007' for 
                        `calendar year 1992' in subparagraph (B) 
                        thereof.
                If any amount as adjusted under this subparagraph is 
                not a multiple of $5,000, such amount shall be rounded 
                to the next highest multiple of $5,000.''.
    (c) Time of Deduction.--The second sentence of section 179(a) 
(relating to election to expense certain depreciable business assets) 
is amended by inserting ``(or, if the taxpayer elects, the preceding 
taxable year if the property was purchased in such preceding year)'' 
after ``service''.
    (d) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2003.

SEC. 3. STANDARD DEDUCTION FOR BUSINESS EXPENSES OF SOLE PROPRIETORS.

    (a) In General.--Section 162 (relating to trade or business 
expenses) is amended by redesignating subsection (p) as subsection (q) 
and by inserting after subsection (o) the following new subsection:
    ``(p) Standard Deduction for Business Expenses of Sole 
Proprietors.--
            ``(1) In general.--For purposes of determining a deduction 
        under subsection (a), any sole proprietor may elect under this 
        subsection a standard deduction in lieu of itemizing expenses.
            ``(2) Standard deduction.--For purposes of paragraph (1)--
                    ``(A) In general.--The standard deduction is equal 
                to $500.
                    ``(B) Inflation adjustment.--In the case of any 
                taxable year beginning in a calendar year after 2004, 
                the $500 amount contained in subparagraph (A) shall be 
                increased by an amount equal to--
                            ``(i) such dollar amount, multiplied by
                            ``(ii) the cost-of-living adjustment 
                        determined under section 1(f)(3) for the 
                        calendar year in which the taxable year begins, 
                        by substituting `calendar year 2003' for 
`calendar year 1992' in subparagraph (B) thereof.
                If any amount as adjusted under this subparagraph is 
                not a multiple of $50, such amount shall be rounded to 
                the nearest multiple of $50.''.
    (b) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2003.

SEC. 4. MODIFICATIONS OF EXCLUSIONS AND ROLLOVERS OF GAIN ON QUALIFIED 
              SMALL BUSINESS STOCK.

    (a) Exclusion of Gain on Qualified Small Business Stock.--
            (1) Increase in exclusion percentage.--
                    (A) In general.--Section 1202(a)(1) (relating to 
                exclusion for gain from certain small business stock) 
                is amended by striking ``50 percent'' and inserting 
                ``75 percent''.
                    (B) 100-percent exclusion for critical technology 
                and specialized small business investment businesses.--
                Section 1202(a) is amended by adding at the end the 
                following new paragraph:
            ``(3) Critical technology and specialized small business 
        investment businesses.--
                    ``(A) In general.--In the case of qualified small 
                business stock acquired after the date of the enactment 
                of this paragraph which is stock in--
                            ``(i) a critical technology corporation, or
                            ``(ii) a corporation which is a specialized 
                        small business investment company (as defined 
                        in subsection (c)(2)(B)(ii)),
                paragraph (1) shall be applied by substituting `100 
                percent' for `75 percent'.
                    ``(B) Critical technology corporation.--The term 
                `critical technology corporation' means a corporation 
                substantially all of the active business activities of 
                which during substantially all of a taxpayer's holding 
                period of stock in the corporation are in connection 
                with--
                            ``(i) transportation or homeland security 
                        technologies,
                            ``(ii) antiterrorism technologies,
                            ``(iii) technologies enhancing security by 
                        improving methods of personal identification 
                        (including biometrics),
                            ``(iv) environmental technologies for 
                        pollution minimization, remediation, or waste 
                        management,
                            ``(v) national defense technologies, or
                            ``(vi) energy efficiency or the development 
                        of non-fossil based fuel source 
                        technologies.''.
                    (C) Empowerment zone conforming amendment.--Section 
                1202(a)(2)(A) is amended--
                            (i) by striking ``60 percent'' and 
                        inserting ``100 percent'', and
                            (ii) by striking ``50 percent'' and 
                        inserting ``75 percent''.
            (2) Decrease in holding period.--
                    (A) In general.--Section 1202(a)(1) is amended by 
                striking ``5 years'' and inserting ``4 years''.
                    (B) Conforming amendment.--Section 1202(j)(1)(A) is 
                amended by striking ``5 years'' and inserting ``4 
                years''.
            (3) Exclusion available to corporations.--
                    (A) In general.--Subsection (a) of section 1202 
                (relating to partial exclusion for gains from certain 
                small business stock) is amended by striking ``other 
                than a corporation''.
                    (B) Technical amendment.--Subsection (c) of section 
                1202 is amended by adding at the end the following new 
                paragraph:
            ``(4) Stock held among members of controlled group not 
        eligible.--Stock of a member of a parent-subsidiary controlled 
        group (as defined in subsection (d)(3)) shall not be treated as 
        qualified small business stock while held by another member of 
        such group.''.
            (4) Stock of larger businesses eligible for exclusion.--
                    (A) In general.--Paragraph (1) of section 1202(d) 
                (defining qualified small business) is amended by 
                striking ``$50,000,000'' each place it appears and 
                inserting ``$100,000,000''.
                    (B) Inflation adjustment.--Section 1202(d) 
                (defining qualified small business) is amended by 
                adding at the end the following:
            ``(5) Inflation adjustment of asset limitation.--In the 
        case of stock issued in any calendar year after 2004, the 
        $100,000,000 amount contained in paragraph (1) shall be 
        increased by an amount equal to--
                    ``(A) such dollar amount, multiplied by
                    ``(B) the cost-of-living adjustment determined 
                under section 1(f)(3) for the calendar year, determined 
                by substituting `calendar year 2003' for `calendar year 
                1992' in subparagraph (B) thereof.
        If any amount as adjusted under the preceding sentence is not a 
        multiple of $10,000, such amount shall be rounded to the 
        nearest multiple of $10,000.''.
    (b) Increase in Period To Purchase Replacement Stock and Qualify 
for Rollover.--
            (1) In general.--Section 1045(a)(2) (relating to 
        nonrecognition of gain) is amended by striking ``60-day'' and 
        inserting ``180-day''.
            (2) Conforming amendment.--Section 1045(b)(2) is amended by 
        striking ``60-day'' and inserting ``180-day''.
    (c) Effective Dates.--
            (1) Exclusion.--The amendments made by subsection (a) shall 
        apply to stock issued after the date of the enactment of this 
        Act.
            (2) Rollover.--The amendment made by subsection (b) shall 
        apply to sales after the date of the enactment of this Act.

SEC. 5. RECOVERY PERIOD FOR DEPRECIATION OF COMPUTERS AND PERIPHERAL 
              EQUIPMENT AND COMPUTER SOFTWARE.

    (a) Recovery Period for Computers.--
            (1) 3-year period.--
                    (A) In general.--Subparagraph (A) of section 
                168(e)(3) (relating to 3-year property) is amended by 
                striking ``and'' at the end of clause (ii), by striking 
                the period at the end of clause (iii) and inserting ``, 
                and'', and by adding at the end the following new 
                clause:
                            ``(iv) any computers or peripheral 
                        equipment (as defined in subsection 
                        (i)(2)(B)).''.
                    (B) Conforming amendment.--Clause (iv) of section 
                168(e)(3)(B) (relating to 5-year property) is amended 
                by inserting ``(except computers or peripheral 
                equipment)'' before the comma.
            (2) 3-year recovery period under alternative depreciation 
        system for tax-exempt use property, etc.--Subparagraph (C) of 
        section 168(g)(3) (relating to alternative depreciation system 
        for certain property) is amended to read as follows:
                    ``(C) Qualified technological equipment.--
                            ``(i) In general.--Except as provided in 
                        clause (ii), in the case of any qualified 
                        technological equipment, the recovery period 
                        used for purposes of paragraph (2) shall be 5 
                        years.
                            ``(ii) Computers or peripheral equipment.--
                        In the case of any computer or peripheral 
                        equipment, the recovery period used for 
                        purposes of paragraph (2) shall be 3 years.''.
    (b) 24-Month Useful Life for Depreciation of Computer Software.--
Subparagraph (A) of section 167(f)(1) (relating to computer software) 
is amended by striking ``36 months'' and inserting ``24 months''.
    (c) Effective Date.--The amendments made by this section shall 
apply to property placed in service after the date of the enactment of 
this Act.

SEC. 6. CLARIFICATION OF DEDUCTION FOR HEALTH INSURANCE COSTS OF SELF-
              EMPLOYED INDIVIDUALS.

    (a) In General.--The first sentence of section 162(l)(2)(B) is 
amended to read as follows: ``Paragraph (1) shall not apply to any 
taxpayer for any calendar month for which the taxpayer participates in 
any subsidized health plan maintained by any employer (other than an 
employer described in section 401(c)(4)) of the taxpayer or the spouse 
of the taxpayer.''.
    (b) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2002.

SEC. 7. DISCLOSURE OF TAX INFORMATION TO FACILITATE COMBINED EMPLOYMENT 
              TAX REPORTING.

    Section 6103(d)(5) is amended to read as follows:
            ``(5) Disclosure for combined employment tax reporting.--
        The Secretary may disclose taxpayer identity information and 
        signatures to any agency, body, or commission of any State for 
        the purpose of carrying out with such agency, body, or 
        commission a combined Federal and State employment tax 
        reporting program approved by the Secretary. Subsections (a)(2) 
        and (p)(4) and sections 7213 and 7213A shall not apply with 
        respect to disclosures or inspections made pursuant to this 
        paragraph.''.

SEC. 8. INCOME AVERAGING FOR FARMERS AND FISHERMEN NOT TO INCREASE 
              ALTERNATIVE MINIMUM TAX LIABILITY.

    (a) In General.--Section 55(c) (defining regular tax) is amended by 
redesignating paragraph (2) as paragraph (3) and by inserting after 
paragraph (1) the following new paragraph:
            ``(2) Coordination with income averaging for farmers and 
        fishermen.--Solely for purposes of this section, section 1301 
        (relating to averaging of farm and fishing income) shall not 
        apply in computing the regular tax.''.
    (b) Allowing Income Averaging for Fishermen.--
            (1) In general.--Section 1301(a) is amended by striking 
        ``farming business'' and inserting ``farming business or 
        fishing business''.
            (2) Definition of elected farm income.--
                    (A) In general.--Clause (i) of section 
                1301(b)(1)(A) is amended by inserting ``or fishing 
                business'' before the semicolon.
                    (B) Conforming amendment.--Subparagraph (B) of 
                section 1301(b)(1) is amended by inserting ``or fishing 
                business'' after ``farming business'' both places it 
                occurs.
            (3) Definition of fishing business.--Section 1301(b) is 
        amended by adding at the end the following new paragraph:
            ``(4) Fishing business.--The term `fishing business' means 
        the conduct of commercial fishing as defined in section 3 of 
        the Magnuson-Stevens Fishery Conservation and Management Act 
        (16 U.S.C. 1802).''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2003.

SEC. 9. MODIFICATION OF UNRELATED BUSINESS INCOME LIMITATION ON 
              INVESTMENT IN CERTAIN DEBT-FINANCED PROPERTIES.

    (a) In General.--Section 514(c)(6) (relating to acquisition 
indebtedness) is amended--
            (1) by striking ``include an obligation'' and inserting 
        ``include--
                    ``(A) an obligation'',
            (2) by striking the period at the end and inserting ``, 
        or'', and
            (3) by adding at the end the following:
                    ``(B) indebtedness incurred by a small business 
                investment company licensed under the Small Business 
                Investment Act of 1958 which is evidenced by a 
                debenture--
                            ``(i) issued by such company under section 
                        303(a) such Act, or
                            ``(ii) held or guaranteed by the Small 
                        Business Administration.''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to acquisitions made on or after the date of the enactment of 
this Act.

SEC. 10. EXCLUSION FROM PARTNERSHIP FILING REQUIREMENTS FOR MARRIED 
              COUPLES AS BUSINESS CO-OWNERS.

    (a) In General.--Section 6031 (relating to return of partnership 
income) is amended by adding the following new subsection:
    ``(f) Exception for Married Individuals as Partnership Co-Owners.--
This section shall not apply to a partnership for any taxable year if--
            ``(1) all of the capital or profits interests in the 
        partnership are owned by 2 individuals who are a married couple 
        (as determined under section 7703),
            ``(2) such individuals elect the application of this 
        subsection for such taxable year, and
            ``(3) such individuals file a joint return for all taxable 
        years of such individuals which include items from such taxable 
        year of the partnership.
The Secretary shall prescribe regulations for the retention of such 
records as may be necessary for the administration of this chapter in 
any case where an election is made under this subchapter.''.
    (b) Married Couples as Business Co-Owners Permitted To File 
Separate Self-Employment Tax Schedules.--Section 6017 (relating to 
self-employment tax returns) is amended by adding the following new 
sentence: ``The preceding sentence shall apply even if the husband and 
wife elect, under section 6031(f), to be excluded from the filing 
requirements of section 6031.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after the date of the enactment of 
this Act.
                                 <all>