Higher rate of tax on bonuses paid by certain businesses owned by the Federal Government

(a)

In general

Section 1 of the Internal Revenue Code of 1986 (relating to tax imposed on individuals) is amended by adding at the end the following new subsection:

(j)

Tax on bonuses paid by certain businesses owned by the Federal Government

(1)

In general

In the case of any individual who receives a covered bonus during the taxable year, the tax imposed by this section shall be increased by an amount equal to 60 percent of the covered bonus. (2)

Covered bonus

For purposes of this subsection— (A)

In general

The term covered bonus means any payment in the nature of a bonus which is paid by any person if at the time such bonus is paid the ownership interest of the Federal Government in such person is— (i)in the case of a corporation, 79 percent or more of the stock of such person (by vote or value), (ii)in the case of a partnership, 79 percent or more of the profits interests or capital interests in such person, and (iii)in any other case, 79 percent or more of the beneficial interests in such person. (B)

Controlled groups

(i)

In general

For purposes of subparagraph (A), all persons treated as a single employer under subsection (a) or (b) of section 52 or under subsection (m) or (o) of section 414 shall be treated as one person. (ii)

Inclusion of foreign corporations

For purposes of clause (i), in applying subsections (a) and (b) of section 52 to this section, section 1563 shall be applied without regard to subsection (b)(2)(C) thereof. (C)

Aggregate bonus must exceed $10,000

This subsection shall not apply with respect to bonuses paid to the taxpayer during the taxable year by a person described in subparagraph (A) if the aggregate amount of such bonuses paid by such person with respect to the taxpayer does not exceed $10,000.

(b)

Effective date

The amendment made by this section shall apply to taxable years beginning after December 31, 2008.