[Congressional Record Volume 158, Number 59 (Tuesday, April 24, 2012)]
[Senate]
[Pages S2657-S2658]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. REID:
  S. 2343. A bill to amend the Higher Education act of 1965 to extend 
the reduced interest rate for Federal Direct Stafford Loans, and for 
other purposes; placed on the calendar.
  Mr. REID. Mr. President, I ask unanimous consent that the text of the 
bill be printed in the Record.
  There being no objection, the text of the bill was ordered to be 
printed in the Record as follows:

                                S. 2343

       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 ``Stop the Student Loan 
     Interest Rate Hike Act of 2012''.

     SEC. 2. INTEREST RATE EXTENSION.

       Section 455(b)(7)(D) of the Higher Education Act of 1965 
     (20 U.S.C. 1087e(b)(7)(D)) is amended--
       (1) in the matter preceding clause (i), by striking ``and 
     before July 1, 2012,'' and inserting ``and before July 1, 
     2013,''; and
       (2) in clause (v), by striking ``and before July 1, 2012,'' 
     and inserting ``and before July 1, 2013,''.

     SEC. 3. EMPLOYMENT TAX TREATMENT OF PROFESSIONAL SERVICE 
                   BUSINESSES.

       (a) In General.--Section 1402 of the Internal Revenue Code 
     of 1986 is amended by adding at the end the following new 
     subsection:
       ``(m) Special Rules for Professional Service Businesses.--
       ``(1) Shareholders providing services to specified s 
     corporations.--
       ``(A) In general.--In the case of an applicable shareholder 
     who provides substantial services with respect to a 
     professional service business referred to in subparagraph (C) 
     of a specified S corporation--
       ``(i) such shareholder shall be treated as engaged in the 
     trade or business of such professional service business with 
     respect to items of income or loss described in section 1366 
     which are attributable to such business, and
       ``(ii) such shareholder's net earnings from self-employment 
     shall include such shareholder's pro rata share of such items 
     of income or loss, except that in computing such pro rata 
     share of such items the exceptions provided in subsection (a) 
     shall apply.
       ``(B) Treatment of family members.--Except as otherwise 
     provided by the Secretary, the applicable shareholder's pro 
     rata share of items referred to in subparagraph (A) shall be 
     increased by the pro rata share of such items of each member 
     of such applicable shareholder's family (within the meaning 
     of section 318(a)(1)) who does not provide substantial 
     services with respect to such professional service business.
       ``(C) Specified s corporation.--For purposes of this 
     subsection, the term `specified S corporation' means--
       ``(i) any S corporation which is a partner in a partnership 
     which is engaged in a professional service business if 
     substantially all of the activities of such S corporation are 
     performed in connection with such partnership, and
       ``(ii) any other S corporation which is engaged in a 
     professional service business if 75 percent or more of the 
     gross income of such business is attributable to service of 3 
     or fewer shareholders of such corporation.
       ``(D) Applicable shareholder.--For purposes of this 
     paragraph, the term `applicable shareholder' means any 
     shareholder whose modified adjusted gross income for the 
     taxable year exceeds--
       ``(i) in the case of a shareholder making a joint return 
     under section 6013 or a surviving spouse (as defined in 
     section 2(a)), $250,000,
       ``(ii) in the case of a married shareholder (as defined in 
     section 7703) filing a separate return, half of the dollar 
     amount determined under clause (i), and
       ``(iii) in any other case, $200,000.
       ``(2) Partners.--
       ``(A) In general.--In the case of any partnership which is 
     engaged in a professional service business, subsection 
     (a)(13) shall not apply to any applicable partner who 
     provides substantial services with respect to such 
     professional service business.
       ``(B) Applicable partner.--For purposes of this paragraph, 
     the term `applicable partner' means any partner whose 
     modified adjusted gross income for the taxable year exceeds--
       ``(i) in the case of a partner making a joint return under 
     section 6013 or a surviving spouse (as defined in section 
     2(a)), $250,000,
       ``(ii) in the case of a married partner (as defined in 
     section 7703) filing a separate return, half of the dollar 
     amount determined under clause (i), and
       ``(iii) in any other case, $200,000.
       ``(3) Professional service business.--For purposes of this 
     subsection, the term `professional service business' means 
     any trade or business (or portion thereof) providing services 
     in the fields of health, law, lobbying, engineering, 
     architecture, accounting, actuarial science, performing arts, 
     consulting, athletics, investment advice or management, or 
     brokerage services.
       ``(4) Modified adjusted gross income.--For purposes of this 
     subsection, the term `modified adjusted gross income' means 
     adjusted gross income--
       ``(A) determined without regard to any deduction allowed 
     under section 164(f), and
       ``(B) increased by the amount excluded from gross income 
     under section 911(a)(1).
       ``(5) Regulations.--The Secretary shall prescribe such 
     regulations as may be necessary or appropriate to carry out 
     the purposes of this subsection, including regulations which 
     prevent the avoidance of the purposes of this subsection 
     through tiered entities or otherwise.
       ``(6) Cross reference.--For employment tax treatment of 
     wages paid to shareholders of S corporations, see subtitle 
     C.''.
       (b) Conforming Amendment.--Section 211 of the Social 
     Security Act is amended by adding at the end the following 
     new subsection:
       ``(l) Special Rules for Professional Service Businesses.--
       ``(1) Shareholders providing services to specified s 
     corporations.--
       ``(A) In general.--In the case of an applicable shareholder 
     who provides substantial services with respect to a 
     professional service business referred to in subparagraph (C) 
     of a specified S corporation--
       ``(i) such shareholder shall be treated as engaged in the 
     trade or business of such professional service business with 
     respect to items of income or loss described in section 1366 
     of the Internal Revenue Code of 1986 which are attributable 
     to such business, and

[[Page S2658]]

       ``(ii) such shareholder's net earnings from self-employment 
     shall include such shareholder's pro rata share of such items 
     of income or loss, except that in computing such pro rata 
     share of such items the exceptions provided in subsection (a) 
     shall apply.
       ``(B) Treatment of family members.--Except as otherwise 
     provided by the Secretary of the Treasury, the applicable 
     shareholder's pro rata share of items referred to in 
     subparagraph (A) shall be increased by the pro rata share of 
     such items of each member of such applicable shareholder's 
     family (within the meaning of section 318(a)(1) of the 
     Internal Revenue Code of 1986) who does not provide 
     substantial services with respect to such professional 
     service business.
       ``(C) Specified s corporation.--For purposes of this 
     subsection, the term `specified S corporation' means--
       ``(i) any S corporation (as defined in section 1361(a) of 
     the Internal Revenue Code of 1986) which is a partner in a 
     partnership which is engaged in a professional service 
     business if substantially all of the activities of such S 
     corporation are performed in connection with such 
     partnership, and
       ``(ii) any other S corporation (as so defined) which is 
     engaged in a professional service business if 75 percent or 
     more of the gross income of such business is attributable to 
     service of 3 or fewer shareholders of such corporation.
       ``(D) Applicable shareholder.--For purposes of this 
     paragraph, the term `applicable shareholder' means any 
     shareholder whose modified adjusted gross income for the 
     taxable year exceeds--
       ``(i) in the case of a shareholder making a joint return 
     under section 6013 of the Internal Revenue Code of 1986 or a 
     surviving spouse (as defined in section 2(a) of such Code), 
     $250,000,
       ``(ii) in the case of a married shareholder (as defined in 
     section 7703 of such Code) filing a separate return, half of 
     the dollar amount determined under clause (i), and
       ``(iii) in any other case, $200,000.
       ``(2) Partners.--
       ``(A) In general.--In the case of any partnership which is 
     engaged in a professional service business, subsection 
     (a)(12) shall not apply to any applicable partner who 
     provides substantial services with respect to such 
     professional service business.
       ``(B) Applicable partner.--For purposes of this paragraph, 
     the term `applicable partner' means any partner whose 
     modified adjusted gross income for the taxable year exceeds--
       ``(i) in the case of a partner making a joint return under 
     section 6013 of the Internal Revenue Code of 1986 or a 
     surviving spouse (as defined in section 2(a) of such Code), 
     $250,000,
       ``(ii) in the case of a married partner (as defined in 
     section 7703 of such Code) filing a separate return, half of 
     the dollar amount determined under clause (i), and
       ``(iii) in any other case, $200,000.
       ``(3) Professional service business.--For purposes of this 
     subsection, the term `professional service business' means 
     any trade or business (or portion thereof) providing services 
     in the fields of health, law, lobbying, engineering, 
     architecture, accounting, actuarial science, performing arts, 
     consulting, athletics, investment advice or management, or 
     brokerage services.
       ``(4) Modified adjusted gross income.--For purposes of this 
     subsection, the term `modified adjusted gross income' means 
     adjusted gross income as determined under section 62 of the 
     Internal Revenue Code of 1986--
       ``(A) determined without regard to any deduction allowed 
     under section 164(f) of such Code, and
       ``(B) increased by the amount excluded from gross income 
     under section 911(a)(1) of such Code.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2012.

     SEC. 4. COMPLIANCE PROVISION.

       The budgetary effects of this Act, for the purpose of 
     complying with the Statutory Pay-As-You-Go-Act of 2010, shall 
     be determined by reference to the latest statement titled 
     ``Budgetary Effects of PAYGO Legislation'' for this Act, 
     submitted for printing in the Congressional Record by the 
     Chairman of the Senate Budget Committee, provided that such 
     statement has been submitted prior to the vote on passage.

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