1.Short
title; amendment of 1986 Code; table of contents
(a)This Act may be cited
as the Small Business Tax Relief Act
of 2009
.
(b)Except as otherwise expressly provided,
whenever in this Act an amendment or repeal is expressed in terms of an
amendment to, or repeal of, a section or other provision, the reference shall
be considered to be made to a section or other provision of the Internal
Revenue Code of 1986.
(c)The table of
contents for this Act is as follows:
2.Permanent increase in
limitations on expensing of certain depreciable business assets
(a)Subsection (b) of
section 179 (relating to limitations) is amended—
(1)by striking $25,000
and all
that follows in paragraph (1) and inserting $500,000.
,
(2)by striking
$200,000
and all that follows in paragraph (2) and inserting
$2,000,000
,
(3)by striking
after 2007 and before 2011, the $120,000 and $500,000
in
paragraph (5)(A) and inserting after 2009, the $500,000 and the
$2,000,000
,
(4)by striking
2006
in paragraph (5)(A)(ii) and inserting 2008
,
and
(5)by striking
paragraph (7).
(b)Permanent
expensing of computer softwareSection 179(d)(1)(A)(ii) of the
Internal Revenue Code of 1986 (defining section 179 property) is amended by
striking and before 2011
.
(c)The amendments made by this section shall apply to taxable
years beginning after December 31, 2008.
3.Modification of
corporate income tax rates
(a)Paragraph (1) of section 11(b) (relating to amount of
tax) is amended to read as follows:
(1)The amount of the tax imposed by subsection (a) shall be
the sum of—
(A)15 percent of so
much of the taxable income as does not exceed $1,000,000,
(B)25 percent of so
much of the taxable income as exceeds $1,000,000 but does not exceed
$1,500,000,
(C)34 percent of so
much of the taxable income as exceeds $1,500,000 but does not exceed
$10,000,000, and
(D)35 percent of so
much of the taxable income as exceeds $10,000,000.
In the
case of a corporation which has taxable income in excess of $2,000,000 for any
taxable year, the amount of tax determined under the preceding sentence for
such taxable year shall be increased by the lesser of (i) 5 percent of such
excess, or (ii) $235,000. In the case of a corporation which has taxable income
in excess of $15,000,000, the amount of the tax determined under the foregoing
provisions of this paragraph shall be increased by an additional amount equal
to the lesser of (i) 3 percent of such excess, or (ii)
$100,000..
(b)The amendment made by this section shall apply to taxable
years beginning after December 31, 2009.
4.General business
credits of eligible small businesses not subject to alternative minimum
tax
(a)Section 38(c) (relating to limitation based on amount of
tax) is amended by redesignating paragraph (5) as paragraph (6) and by
inserting after paragraph (4) the following new paragraph:
(5)Special rules
for eligible small business credits
(A)In the case of eligible small business credits—
(i)this section and
section 39 shall be applied separately with respect to such credits, and
(ii)in applying
paragraph (1) to such credits—
(I)the tentative
minimum tax shall be treated as being zero, and
(II)the limitation
under paragraph (1) (as modified by subclause (I)) shall be reduced by the
credit allowed under subsection (a) for the taxable year (other than the
eligible small business credits).
(B)Eligible small
business creditsFor purposes of this subsection, the term
eligible small business credits means the sum of the credits
listed in subsection (b) which are determined for the taxable year with respect
to an eligible small business. Such credits shall not be taken into account
under paragraph (2), (3), or (4).
(C)For purposes of this subsection, the term eligible
small business means, with respect to any taxable year—
(i)a corporation the
stock of which is not publicly traded, or
(ii)a
partnership,
which
meets the gross receipts test of section 448(c) (by substituting
$50,000,000
for $5,000,000
each place it appears)
for the taxable year (or, in the case of a sole proprietorship, which would
meet the test if such proprietorship were a
corporation)..
(b)The amendments made by this section shall apply to credits
determined in taxable years beginning after December 31, 2009, and to
carrybacks of such credits.
5.General business
credits of eligible small businesses carried back 5 years
(a)Section 39(a)
(relating to carryback and carryforward of unused credits) is amended by adding
at the end the following new paragraph:
(4)5-year
carryback for eligible small business credits
(A)Notwithstanding subsection (d), in the case of eligible
small business credits—
(i)this section
shall be applied separately from the business credit (other than the eligible
small business credits) or the marginal oil and gas well production
credit,
(ii)paragraph (1)
shall be applied by substituting each of the 5 taxable years
for
the taxable year
in subparagraph (A) thereof, and
(iii)paragraph (2)
shall be applied—
(I)by substituting
25 taxable years
for 21 taxable years
in
subparagraph (A) thereof, and
(II)by substituting
24 taxable years
for 20 taxable years
in
subparagraph (B) thereof.
(B)Eligible small
business creditsFor purposes of this subsection, the term
eligible small business credits has the meaning given such term by
section
38(c)(5)(B).
.
(b)Section 39(a)(3)(A) is amended by inserting or
the eligible small business credits
after
credit)
.
(c)The amendments made by this section shall apply to credits
arising in taxable years beginning after December 31, 2009.
6.Deduction for
eligible small business income
(a)Paragraph (1) of
section 199(a) is amended to read as follows:
(1)There shall be
allowed as a deduction an amount equal to the sum of—
(A)9 percent of the lesser of—
(i)the qualified production activities income
of the taxpayer for the taxable year, or
(ii)taxable income (determined without regard
to this section) for the taxable year, and
(B)in the case of an eligible small business
for any taxable year beginning after 2009, 20 percent of the lesser of—
(i)the eligible small business income of the
taxpayer for the taxable year, or
(ii)taxable income (determined without regard
to this section) for the taxable
year.
.
(b)Eligible small
business; eligible small business incomeSection 199 is amended by adding at the end
the following new subsection:
(e)Eligible small
business; eligible small business income
(1)For purposes of this
section, the term eligible small business has the meaning given
such term by section 38(c)(5)(C).
(2)Eligible small
business income
(A)For purposes of this
section, the term eligible small business income means the excess
of—
(i)the income of the eligible small business
which—
(I)is attributable to the actual conduct of a
trade or business,
(II)is income from sources within the United
States (within the meaning of section 861), and
(III)is not passive income (as defined in
section 904(d)(2)(B)), over
(ii)the sum of—
(I)the cost of goods sold that are allocable
to such income, and
(II)other expenses, losses, or deductions
(other than the deduction allowed under this section), which are properly
allocable to such income.
(B)The following shall not be treated as
income of an eligible small business for purposes of subparagraph (A):
(i)Any income which is attributable to any
property described in section 1400N(p)(3).
(ii)Any income which is attributable to the
ownership or management of any professional sports team.
(iii)Any income which is attributable to a trade
or business described in subparagraph (B) of section 1202(e)(3).
(iv)Any income which is attributable to any
property with respect to which records are required to be maintained under
section 2257 of title 18, United States Code.
(C)Rules similar to
the rules of paragraphs (2), (3), (4)(D), and (7) of subsection (c) shall apply
for purposes of this paragraph.
(3)Except as otherwise
provided by the Secretary, rules similar to the rules of subsection (d) shall
apply for purposes of this
subsection.
.
(c)Section 199(a)(2)
is amended by striking paragraph (1)
and inserting
paragraph (1)(A)
.
(d)The amendments made by
this section shall apply to taxable years beginning after December 31,
2009.
7.Reduction in
recognition period for built-in gains tax
(a)Paragraph (7) of
section 1374(d) (relating to definitions and special rules) is amended to read
as follows:
(7)
(A)The term
recognition period means the 5-year period beginning with the 1st
day of the 1st taxable year for which the corporation was an S
corporation.
(B)Special rule
for distributions to shareholdersFor purposes of applying this section to
any amount includible in income by reason of distributions to shareholders
pursuant to section 593(e), subparagraph (A) shall be applied without regard to
the phrase
10-year
.
.
(b)The amendment made by
this section shall apply to taxable years beginning after December 31,
2010.
8.Carryback of net
operating losses of certain small businesses allowed for 5 yearsSubparagraph (H) of section 172(b)(1) is
amended to read as follows:
(H)5-year
carryback of losses of certain small businesses
(i)In the case of a net operating loss with respect to any
eligible small business for any taxable year ending after 2008, or, if
applicable, following the taxable year with respect to which an election was
made by such eligible small business under this subparagraph (as in effect
before the date of the enactment of the Small
Business Tax Relief Act of 2009)—
(I)subparagraph
(A)(i) shall be applied by substituting 5
for
2
,
(II)subparagraph
(E)(ii) shall be applied by substituting 4
for 2
,
and
(III)subparagraph
(F) shall not apply.
(ii)For purposes of clause (i), the term eligible
small business has the meaning given such term by section
38(c)(5)(C).
.
9.Modifications to
exclusion for gain from certain small business stock
(a)Temporary
increase in exclusionParagraph (3) of section 1202(a) (relating
to exclusion) is amended to read as follows:
(3)Special rules
for stock acquired before 2011In the case of qualified small
business stock—
(A)acquired after
the date of the American Recovery and Reinvestment Tax Act of 2009 and on or
before the date of the enactment of the Small
Business Tax Relief Act of 2009—
(i)paragraph (1)
shall be applied by substituting 75 percent
for 50
percent
, and
(ii)paragraph (2)
shall not apply, and
(B)acquired after
the date of the enactment of the Small
Business Tax Relief Act of 2009 and before January 1,
2011—
(i)paragraph (1)
shall be applied by substituting 100 percent
for 50
percent
,
(ii)paragraph (2)
shall not apply, and
(iii)section
57(a)(7) shall not
apply.
.
(b)
(1)Subparagraph (A) of section 1202(b)(1) (relating to
per-issuer limitation on taxpayer's eligible gain) is amended by striking
$10,000,000
and inserting $15,000,000
.
(2)Subparagraph (A) of section 1202(b)(3) (relating to
treatment of married individuals) is amended by striking paragraph
(1)(A) shall be applied by substituting $5,000,000
for
$10,000,000
and inserting the amount under
paragraph (1)(A) shall be half of the amount otherwise in
effect
.
(c)Modification of
definition of qualified small businessSection 1202(d)(1)
(defining qualified small business) is amended by striking
$50,000,000
each place it appears and inserting
$75,000,000
.
(d)Section 1202 (relating to partial exclusion for gain
from certain small business stock) is amended by redesignating subsection (k)
as subsection (l) and by inserting after subsection (j) the following new
subsection:
(k)
(1)In the case of any taxable year beginning after 2009, the
$15,000,000 amount in subsection (b)(1)(A), the $75,000,000 amount in
subsection (d)(1)(A), and the $75,000,000 amount in subsection (d)(1)(B) shall
each be increased by an amount equal to—
(A)such dollar
amount, multiplied by
(B)the cost of
living adjustment determined under section 1(f)(3) for the calendar year in
which the taxable year begins, determined by substituting calendar year
2008
for calendar year 1992
in subparagraph (B)
thereof.
(2)If
any amount as adjusted under paragraph (1) is not a multiple of $1,000,000 such
amount shall be rounded to the next lowest multiple of
$1,000,000.
.
(e)
(1)Exclusion;
qualified small businessThe amendments made by subsections (a)
and (c) shall apply to stock acquired after the date of the enactment of this
Act.
(2)Limitation;
inflation adjustmentThe amendments made by subsections (b) and
(d) shall apply to taxable years ending after the date of the enactment of this
Act.
10.Deduction for
health insurance costs in computing self-employment taxes
(a)Section 162(l) (relating to special rules for health
insurance costs of self-employed individuals) is amended by striking paragraph
(4) and by redesignating paragraph (5) as paragraph (4).
(b)The amendments made by this section shall apply to taxable
years beginning after the date of the enactment of this Act.