Higher rate of tax on bonuses paid by businesses receiving TARP funds

(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)

Rate of tax on bonuses paid by businesses receiving TARP funds

(1)

In general

In the case of any individual who receives a TARP bonus during the taxable year, the tax imposed by this section shall be equal to— (A)the tax which would be imposed by this section if the taxable income of such individual for the taxable year were reduced (but not below zero) by the TARP bonus of such individual, plus (B)the amount equal to the TARP bonus. (2)

TARP bonus

For purposes of this subsection— (A)

In general

The term TARP bonus means the excess of— (i)the aggregate payments in the nature of a bonus which are paid by any person if— (I)such person (or any predecessor of such person) received assistance under title I of division A the Emergency Economic Stabilization Act of 2008 during the taxable year or any prior taxable year, or (II)such person acquired a major portion of a trade or business, or the major portion of a separate unit of a trade or business, from any person which received such assistance with respect to such portion or unit, over (ii)$1. (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.

(b)

Effective date

The amendment made by this section shall apply to taxable years ending after the date of the enactment of this Act.