109 HR 4960 IH: Tax Fairness for Small Business Act of 2006 U.S. House of Representatives 2006-03-15 text/xml EN Pursuant to Title 17 Section 105 of the United States Code, this file is not subject to copyright protection and is in the public domain.

I 109th CONGRESS 2d Session H. R. 4960 IN THE HOUSE OF REPRESENTATIVES March 15, 2006 Mr. Cantor (for himself and Mr. Pomeroy) 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 5-year amortization of goodwill and other section 197 intangibles that are acquired from a small business.

1.

Short title

This Act may be cited as the Tax Fairness for Small Business Act of 2006.

2.

5-year amortization of certain intangibles acquired from eligible small businesses after December 31, 2005

(a)

In general

Section 197 of the Internal Revenue Code of 1986 (relating to amortization of goodwill and certain other intangibles) is amended by redesignating subsection (g) as subsection (h) and inserting after subsection (f) the following new subsection: (g)

5-year amortization of intangibles acquired from eligible small businesses after December 31, 2005

(1)

In general

In the case of any qualified amortizable section 197 intangible, subsection (a) shall be applied by substituting 5-year period for 15-year period. (2)

Qualified amortizable section 197 intangible

For purposes of this subsection, the term qualified amortizable section 197 intangible means any amortizable section 197 intangible which is acquired in a transaction (or series of transactions) involving the acquisition of assets constituting a trade or business or substantial portion thereof from an eligible small business (as defined in section 474(c)) after December 31, 2005. (3)

Maximum amount per business

(A)

In general

The aggregate adjusted basis of qualified amortizable section 197 intangibles of each eligible small business which the taxpayer may amortize under paragraph (1) shall not exceed $5,000,000. (B)

Allocation of dollar amount

(i)

Controlled group

For purposes of applying the dollar limitations in subparagraph (A)— (I)all component members of a controlled group shall be treated as one taxpayer, and (II)such dollar limitations shall be allocated among the component members of such controlled group in such manner as the Secretary prescribes.For purposes of the preceding sentence, the term controlled group has the meaning given to such term by section 1563(a), except that more than 50 percent shall be substituted for at least 80 percent each place it appears in section 1563(a)(1). (ii)

Partnerships and S corporations

In the case of a partnership, the dollar limitations in subparagraph (A) shall apply with respect to the partnership and with respect to each partner. A similar rule shall apply in the case of an S corporation and its shareholders. (C)

Subsection not to apply to trusts

This subsection shall not apply to trusts. (D)

Estates

The benefit of the special deduction provided by this subsection shall be allowed to estates in the same manner as in the case of an individual. The allowable deduction shall be apportioned between the income beneficiary and the fiduciary in the manner prescribed by the Secretary. Any amount so apportioned to a beneficiary shall be taken into account for purposes of determining the amount allowable as a deduction under this subsection to such beneficiary.. (b)

Effective date

The amendment made by this section shall apply to acquisitions of qualified amortizable section 197 intangibles (as defined in section 197(g)(2) of the Internal Revenue Code of 1986, as added by this section) after December 31, 2005.