[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[S. 3974 Introduced in Senate (IS)]








109th CONGRESS
  2d Session
                                S. 3974

   To permit a special amortization deduction for intangible assets 
 acquired from eligible small businesses to take account of the actual 
    economic useful life of such assets and to encourage growth in 
   industries for which intangible assets are an important source of 
                                revenue.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                           September 28, 2006

Mr. Bunning (for himself and Mr. Conrad) introduced the following bill; 
     which was read twice and referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL


 
   To permit a special amortization deduction for intangible assets 
 acquired from eligible small businesses to take account of the actual 
    economic useful life of such assets and to encourage growth in 
   industries for which intangible assets are an important source of 
                                revenue.

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

SECTION 1. SPECIAL AMORTIZATION DEDUCTION FOR CERTAIN INTANGIBLE 
              PROPERTY 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) Special Deduction for Certain Property Acquired From Eligible 
Small Businesses After December 31, 2005.--
            ``(1) Special deduction.--In the case of any amortizable 
        section 197 intangible--
                    ``(A) the amortization deduction provided by 
                subsection (a) for the taxable year in which such 
                property is acquired shall include an allowance equal 
                to 100 percent of the adjusted basis of the taxpayer's 
                qualified section 197 intangible property, and
                    ``(B) the adjusted basis of the qualified section 
                197 intangible property shall be reduced by the amount 
                of such deduction before computing the amount otherwise 
                allowable as an amortization deduction under subsection 
                (a) for such taxable year and any subsequent taxable 
                year.
            ``(2) Qualified section 197 intangible property.--For 
        purposes of this subsection, the term `qualified section 197 
        intangible property' 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) Limitations.--
                    ``(A) Maximum dollar amount.--The aggregate amount 
                of adjusted basis of qualified section 197 intangible 
                property which a taxpayer may take into account under 
                this subsection for any taxable year shall not exceed 
                $5,000,000 ($2,500,000 in the case of a separate return 
                of a married individual (as defined in section 7703)).
                    ``(B) Allocation of dollar amount.--
                            ``(i) Controlled group.--For purposes of 
                        applying the dollar limitation under 
                        subparagraph (A)--
                                    ``(I) all component members of a 
                                controlled group shall be treated as 
                                one taxpayer, and
                                    ``(II) the Secretary shall, under 
                                regulations prescribed by him, 
                                apportion such dollar limitation among 
                                the component members of such 
                                controlled group.
                        For purposes of the preceding sentence, the 
                        term `controlled group' has the meaning 
                        assigned to it by section 1563(a), except that 
                        the phrase `more than 50 percent' shall be 
                        substituted for the phrase `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 
                        limitation contained 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 under regulations 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 taxable years beginning after December 31, 2005.
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