[Congressional Bills 111th Congress]
[From the U.S. Government Publishing Office]
[H.R. 5318 Introduced in House (IH)]

111th CONGRESS
  2d Session
                                H. R. 5318

  To amend the Internal Revenue Code of 1986 to waive the 10-percent 
  penalty on early distributions from individual retirement plans for 
                      small business investments.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                              May 14, 2010

   Mr. Gingrey of Georgia (for himself, Mr. Pence, Mr. Bartlett, Mr. 
Bishop of Utah, Mrs. Blackburn, Mr. Franks of Arizona, Ms. Granger, Mr. 
 Hall of Texas, Mrs. Lummis, Mr. Marchant, Mr. McClintock, Mr. Pitts, 
and Mr. Posey) 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 waive the 10-percent 
  penalty on early distributions from individual retirement plans for 
                      small business investments.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Small Business Investment Penalty 
Relief Act of 2010''.

SEC. 2. FINDINGS.

    Congress finds the following:
            (1) In March 2010, the Department of Labor reported 
        approximately 15 million people out of work, thereby making the 
        national unemployment rate at 9.7 percent.
            (2) Small businesses account for approximately 25 million, 
        or 99.7 percent, of employers in the United States.
            (3) In the last 15 years, small businesses have accounted 
        for approximately 22 million new jobs, or roughly 93 percent of 
        the net new jobs created.
            (4) Since the commencement of the financial crisis, small 
        businesses have been denied loans, seen credit lines curtailed, 
        and have lost access to venture capital and securities markets.

SEC. 3. WAIVER OF 10-PERCENT PENALTY ON SMALL BUSINESS DISTRIBUTIONS.

    Paragraph (2) of section 72(t) of the Internal Revenue Code of 1986 
is amended by adding at the end the following new subparagraph:
                    ``(H) Small business distributions.--
                            ``(i) In general.--Any payment or 
                        distribution to the individual during 2010 or 
                        2011 to the extent that for the taxable year 
                        such amount does not exceed the lesser of--
                                    ``(I) the small business investment 
                                of the individual for the taxable year, 
                                or
                                    ``(II) the lesser of $10,000, or 25 
                                percent of the nonforefeitable value of 
                                the plan at the beginning of the 
                                taxable year.
                            ``(ii) Small business investment.--For 
                        purposes of this subparagraph, the term `small 
                        business investment' means, with respect to a 
                        qualified small business, an amount equal to 
                        the basis of property which--
                                    ``(I) is placed in service during 
                                the taxable year,
                                    ``(II) is used in the trade or 
                                business of the taxpayer, and
                                    ``(III) is subject to the allowance 
                                for depreciation provided in section 
                                167 or is real property used in such 
                                trade or business.
                            ``(iii) Qualified small business.--For 
                        purposes of this subparagraph--
                                    ``(I) In general.--The term 
                                `qualified small business' means any 
                                trade or business the gross receipts of 
                                which for the preceding taxable year 
                                did not exceed $20,000,000 or which 
                                employed not more than 50 full-time 
                                employees during the preceding taxable 
                                year.
                                    ``(II) Full-time.--An employee 
                                shall be considered full-time if such 
                                employee is employed at least 30 hours 
                                per week for 20 or more calendar weeks 
                                in the taxable year.
                                    ``(III) Controlled groups.--For 
                                purposes of subclause (I), all persons 
                                treated as a single employer under 
                                subsection (a) or (b) of section 52 or 
                                subsection (m) or (o) of section 414 
                                shall be treated as a single trade or 
                                business.
                            ``(iv) Related persons.--A person shall be 
                        treated as related to another person if the 
                        relationship between such persons would result 
                        in the disallowance of losses under section 267 
                        or 707(b).''.
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