I 111th CONGRESS 1st Session H. R. 4211 IN THE HOUSE OF REPRESENTATIVES December 3, 2009 Mr. Thompson of California (for himself and Ms. Woolsey) 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 treat nonrecourse small business investment company loans from the Small Business Administration as amounts at risk for purposes of determining the deduction for losses.

1.

Nonrecourse small business investment company loans from the Small Business Administration treated as amounts at risk

(a)

In general

Subparagraph (B) of section 465(b)(6) of the Internal Revenue Code of 1986 is amended to read as follows: (B)

Qualified nonrecourse financing

For purposes of this paragraph— (i)

In general

The term qualified nonrecourse financing means any financing— (I)which is qualified real property financing or qualified SBIC financing, (II)except to the extent provided in regulations, with respect to which no person is personally liable for repayment, and (III)which is not convertible debt. (ii)

Qualified real property financing

The term qualified real property financing means any financing which— (I)is borrowed by the taxpayer with respect to the activity of holding real property, (II)is secured by real property used in such activity, and (III)is borrowed by the taxpayer from a qualified person or represents a loan from any Federal, State, or local government or instrumentality thereof, or is guaranteed by any Federal, State, or local government. (iii)

Qualified SBIC financing

The term qualified SBIC financing means any financing which— (I)is borrowed by a small business investment company (within the meaning of section 301 of the Small Business Investment Act of 1958), (II)is secured by property used or held, directly or indirectly, by such small business investment company, and (III)is borrowed from, or guaranteed by, the Small Business Administration under the authority of section 303(b) of such Act. . (b)

Conforming amendments

Subparagraph (A) of section 465(b)(6) of such Code is amended— (1)by striking in the case of an activity of holding real property,, and (2)by striking which is secured by real property used in such activity. (c)

Effective date

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