Us Congress 2023-2024 Regular Session

Us Congress House Bill HB368 Compare Versions

Only one version of the bill is available at this time.

Old	New	Differences
1	1	I
2	2	118THCONGRESS
3	3	1
4	4	STSESSION H. R. 368
5	5	To amend the Internal Revenue Code of 1986 to promote new business
6	6	innovation, and for other purposes.
7	7	IN THE HOUSE OF REPRESENTATIVES
8	8	JANUARY13, 2023
9	9	Mr. B
10	10	UCHANANintroduced the following bill; which was referred to the
11	11	Committee on Ways and Means
12	12	A BILL
13	13	To amend the Internal Revenue Code of 1986 to promote
14	14	new business innovation, and for other purposes.
15	15	Be it enacted by the Senate and House of Representa-1
16	16	tives of the United States of America in Congress assembled, 2
17	17	SECTION 1. SHORT TITLE. 3
18	18	This Act may be cited as the ‘‘American Innovation 4
19	19	Act of 2023’’. 5
20	20	SEC. 2. SIMPLIFICATION AND EXPANSION OF DEDUCTION 6
21	21	FOR START-UP AND ORGANIZATIONAL EX-7
22	22	PENDITURES. 8
23	23	(a) I
24	24	NGENERAL.—Section 195 of the Internal Rev-9
25	25	enue Code of 1986 is amended by redesignating sub-10
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28	28	•HR 368 IH
29	29	sections (c) and (d) as subsections (d) and (e), respec-1
30	30	tively, and by striking all that precedes subsection (d) (as 2
31	31	so redesignated) and inserting the following: 3
32	32	‘‘SEC. 195. START-UP AND ORGANIZATIONAL EXPENDI-4
33	33	TURES. 5
34	34	‘‘(a) C
35	35	APITALIZATION OF EXPENDITURES.—Except 6
36	36	as otherwise provided in this section, no deduction shall 7
37	37	be allowed for start-up or organizational expenditures. 8
38	38	‘‘(b) E
39	39	LECTIONTODEDUCT.— 9
40	40	‘‘(1) I
41	41	N GENERAL.—If a taxpayer elects the ap-10
42	42	plication of this subsection with respect to any active 11
43	43	trade or business— 12
44	44	‘‘(A) the taxpayer shall be allowed a deduc-13
45	45	tion for the taxable year in which such active 14
46	46	trade or business begins in an amount equal to 15
47	47	the lesser of— 16
48	48	‘‘(i) the aggregate amount of start-up 17
49	49	and organizational expenditures paid or in-18
50	50	curred in connection with such active trade 19
51	51	or business, or 20
52	52	‘‘(ii) $20,000, reduced (but not below 21
53	53	zero) by the amount by which such aggre-22
54	54	gate amount exceeds $120,000, and 23
55	55	‘‘(B) the remainder of such start-up and 24
56	56	organizational expenditures shall be charged to 25
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59	59	•HR 368 IH
60	60	capital account and allowed as an amortization 1
61	61	deduction determined by amortizing such ex-2
62	62	penditures ratably over the 180-month period 3
63	63	beginning with the month in which the active 4
64	64	trade or business begins. 5
65	65	‘‘(2) A
66	66	PPLICATION TO ORGANIZATIONAL EX -6
67	67	PENDITURES.—In the case of organizational expend-7
68	68	itures with respect to any corporation or partner-8
69	69	ship, the active trade or business referred to in para-9
70	70	graph (1) means the first active trade or business 10
71	71	carried on by such corporation or partnership. 11
72	72	‘‘(3) I
73	73	NFLATION ADJUSTMENT .—In the case of 12
74	74	any taxable year beginning after December 31, 13
75	75	2023, the $20,000 and $120,000 amounts in para-14
76	76	graph (1)(A)(ii) shall each be increased by an 15
77	77	amount equal to— 16
78	78	‘‘(A) such dollar amount, multiplied by 17
79	79	‘‘(B) the cost-of-living adjustment deter-18
80	80	mined under section 1(f)(3) for the calendar 19
81	81	year in which the taxable year begins, deter-20
82	82	mined by substituting ‘calendar year 2022’ for 21
83	83	‘calendar year 2016’ in subparagraph (A)(ii) 22
84	84	thereof. 23
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87	87	•HR 368 IH
88	88	If any amount as increased under the preceding sen-1
89	89	tence is not a multiple of $1,000, such amount shall 2
90	90	be rounded to the nearest multiple of $1,000. 3
91	91	‘‘(c) A
92	92	LLOWANCE OF DEDUCTIONUPONLIQUIDA-4
93	93	TION ORDISPOSITION.— 5
94	94	‘‘(1) L
95	95	IQUIDATION OF PARTNERSHIP OR COR -6
96	96	PORATION.—If any partnership or corporation is 7
97	97	completely liquidated by the taxpayer, any start-up 8
98	98	or organizational expenditures paid or incurred in 9
99	99	connection with such partnership or corporation 10
100	100	which were not allowed as a deduction by reason of 11
101	101	this section may be deducted to the extent allowable 12
102	102	under section 165. 13
103	103	‘‘(2) D
104	104	ISPOSITION OF TRADE OR BUSINESS .—If 14
105	105	any trade or business is completely disposed of or 15
106	106	discontinued by the taxpayer, any start-up expendi-16
107	107	tures paid or incurred in connection with such trade 17
108	108	or business which were not allowed as a deduction 18
109	109	by reason of this section (and not taken into account 19
110	110	in connection with a liquidation to which paragraph 20
111	111	(1) applies) may be deducted to the extent allowable 21
112	112	under section 165. For purposes of this paragraph, 22
113	113	in the case of any deduction allowed under sub-23
114	114	section (b)(1) with respect to both start-up and or-24
115	115	ganizational expenditures, the amount treated as so 25
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118	118	•HR 368 IH
119	119	allowed with respect to start-up expenditures shall 1
120	120	bear the same ratio to such deduction as the start- 2
121	121	up expenditures taken into account in determining 3
122	122	such deduction bears to the aggregate of the start- 4
123	123	up and organizational expenditures so taken into ac-5
124	124	count.’’. 6
125	125	(b) O
126	126	RGANIZATIONAL EXPENDITURES.—Section 7
127	127	195(d) of such Code, as redesignated by subsection (a), 8
128	128	is amended by adding at the end the following new para-9
129	129	graphs: 10
130	130	‘‘(3) O
131	131	RGANIZATIONAL EXPENDITURES .—The 11
132	132	term ‘organizational expenditures’ means any ex-12
133	133	penditure which— 13
134	134	‘‘(A) is incident to the creation of a cor-14
135	135	poration or a partnership, 15
136	136	‘‘(B) is chargeable to capital account, and 16
137	137	‘‘(C) is of a character which, if expended 17
138	138	incident to the creation of a corporation or a 18
139	139	partnership having an ascertainable life, would 19
140	140	be amortizable over such life. 20
141	141	‘‘(4) A
142	142	PPLICATION TO CERTAIN DISREGARDED 21
143	143	ENTITIES.—In the case of any entity with a single 22
144	144	owner that is disregarded as an entity separate from 23
145	145	its owner, this section shall be applied in the same 24
146	146	manner as if such entity were a corporation.’’. 25
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149	149	•HR 368 IH
150	150	(c) ELECTION.—Section 195(e)(2) of such Code, as 1
151	151	redesignated by subsection (a), is amended to read as fol-2
152	152	lows: 3
153	153	‘‘(2) P
154	154	ARTNERSHIPS AND S CORPORATIONS .—In 4
155	155	the case of any partnership or S corporation, the 5
156	156	election under subsection (b) shall be made (and this 6
157	157	section shall be applied) at the entity level.’’. 7
158	158	(d) C
159	159	ONFORMINGAMENDMENTS.— 8
160	160	(1)(A) Part VIII of subchapter B of chapter 1 9
161	161	is amended by striking section 248 of such Code 10
162	162	(and by striking the item relating to such section in 11
163	163	the table of sections of such part). 12
164	164	(B) Section 170(b)(2)(D)(ii) of such Code is 13
165	165	amended by striking ‘‘(except section 248)’’. 14
166	166	(C) Section 312(n)(3) of such Code is amended 15
167	167	by striking ‘‘Sections 173 and 248’’ and inserting 16
168	168	‘‘Sections 173 and 195’’. 17
169	169	(D) Section 535(b)(3) of such Code is amended 18
170	170	by striking ‘‘(except section 248)’’. 19
171	171	(E) Section 545(b)(3) of such Code is amended 20
172	172	by striking ‘‘(except section 248)’’. 21
173	173	(F) Section 545(b)(4) of such Code is amended 22
174	174	by striking ‘‘(except section 248)’’. 23
175	175	(G) Section 834(c)(7) of such Code is amended 24
176	176	by striking ‘‘(except section 248)’’. 25
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180	180	(H) Section 852(b)(2)(C) of such Code is 1
181	181	amended by striking ‘‘(except section 248)’’. 2
182	182	(I) Section 857(b)(2)(A) of such Code is 3
183	183	amended by striking ‘‘(except section 248)’’. 4
184	184	(J) Section 1363(b) of such Code is amended 5
185	185	by adding ‘‘and’’ at the end of paragraph (2), by 6
186	186	striking paragraph (3), and by redesignating para-7
187	187	graph (4) as paragraph (3). 8
188	188	(K) Section 1375(b)(1)(B)(i) of such Code is 9
189	189	amended by striking ‘‘(other than the deduction al-10
190	190	lowed by section 248, relating to organization ex-11
191	191	penditures)’’. 12
192	192	(2)(A) Section 709 of such Code is amended to 13
193	193	read as follows: 14
194	194	‘‘SEC. 709. TREATMENT OF SYNDICATION FEES. 15
195	195	‘‘No deduction shall be allowed under this chapter to 16
196	196	a partnership or to any partner of the partnership for any 17
197	197	amounts paid or incurred to promote the sale of (or to 18
198	198	sell) an interest in the partnership.’’. 19
199	199	(B) The item relating to section 709 in the 20
200	200	table of sections for part I of subchapter K of chap-21
201	201	ter 1 of such Code is amended to read as follows: 22
202	202	‘‘Sec. 709. Treatment of syndication fees.’’.
203	203	(3) Section 1202(e)(2)(A) of such Code is 23
204	204	amended by striking ‘‘section 195(c)(1)(A)’’ and in-24
205	205	serting ‘‘section 195(d)(1)(A)’’. 25
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208	208	•HR 368 IH
209	209	(4) The item relating to section 195 in the table 1
210	210	of contents of part VI of subchapter B of chapter 1 2
211	211	of such Code is amended to read as follows: 3
212	212	‘‘Sec. 195. Start-up and organizational expenditures.’’.
213	213	(e) EFFECTIVEDATE.—The amendments made by 4
214	214	this section shall apply to expenditures paid or incurred 5
215	215	in connection with active trades or businesses which begin 6
216	216	in taxable years beginning after December 31, 2022. 7
217	217	SEC. 3. PRESERVATION OF START-UP NET OPERATING 8
218	218	LOSSES AND TAX CREDITS AFTER OWNER-9
219	219	SHIP CHANGE. 10
220	220	(a) A
221	221	PPLICATION TO NETOPERATINGLOSSES.— 11
222	222	Section 382(d) of the Internal Revenue Code of 1986 is 12
223	223	amended by adding at the end the following new para-13
224	224	graph: 14
225	225	‘‘(4) E
226	226	XCEPTION FOR START-UP LOSSES.— 15
227	227	‘‘(A) I
228	228	N GENERAL.—In the case of any net 16
229	229	operating loss carryforward described in para-17
230	230	graph (1)(A) which arose in a start-up period 18
231	231	taxable year, the amount of such net operating 19
232	232	loss carryforward otherwise taken into account 20
233	233	under such paragraph shall be reduced by the 21
234	234	net start-up loss determined with respect to the 22
235	235	trade or business referred to in subparagraph 23
236	236	(B)(i) for such start-up period taxable year. 24
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239	239	•HR 368 IH
240	240	‘‘(B) START-UP PERIOD TAXABLE YEAR .— 1
241	241	The term ‘start-up period taxable year’ means 2
242	242	any taxable year of the old loss corporation 3
243	243	which— 4
244	244	‘‘(i) begins before the close of the 3- 5
245	245	year period beginning on the date on which 6
246	246	any trade or business of such corporation 7
247	247	begins as an active trade or business (as 8
248	248	determined under section 195(d)(2) with-9
249	249	out regard to subparagraph (B) thereof), 10
250	250	and 11
251	251	‘‘(ii) ends after January 31, 2023. 12
252	252	‘‘(C) N
253	253	ET START-UP LOSS.— 13
254	254	‘‘(i) I
255	255	N GENERAL.—The term ‘net 14
256	256	start-up loss’ means, with respect to any 15
257	257	trade or business referred to in subpara-16
258	258	graph (B)(i) for any start-up period tax-17
259	259	able year, the amount which bears the 18
260	260	same ratio (but not greater than 1) to the 19
261	261	net operating loss carryforward which 20
262	262	arose in such start-up period taxable year 21
263	263	as— 22
264	264	‘‘(I) the net operating loss (if 23
265	265	any) which would have been deter-24
266	266	mined for such start-up period taxable 25
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269	269	•HR 368 IH
270	270	year if only items of income, gain, de-1
271	271	duction, and loss properly allocable to 2
272	272	such trade or business were taken into 3
273	273	account, bears to 4
274	274	‘‘(II) the amount of the net oper-5
275	275	ating loss determined for such start- 6
276	276	up period taxable year. 7
277	277	‘‘(ii) S
278	278	PECIAL RULE FOR LAST TAX -8
279	279	ABLE YEAR IN START-UP PERIOD.—In the 9
280	280	case of any start-up period taxable year 10
281	281	which ends after the close of the 3-year pe-11
282	282	riod described in subparagraph (B)(i) with 12
283	283	respect to any trade or business, the net 13
284	284	start-up loss with respect to such trade or 14
285	285	business for such start-up period taxable 15
286	286	year shall be the same proportion of such 16
287	287	loss (determined without regard to this 17
288	288	clause) as the proportion of such start-up 18
289	289	period taxable year which is on or before 19
290	290	the last day of such period. 20
291	291	‘‘(D) A
292	292	PPLICATION TO NET OPERATING 21
293	293	LOSS ARISING IN YEAR OF OWNERSHIP 22
294	294	CHANGE.—Subparagraph (A) shall apply to any 23
295	295	net operating loss described in paragraph 24
296	296	(1)(B) in the same manner as such subpara-25
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299	299	•HR 368 IH
300	300	graph applies to net operating loss 1
301	301	carryforwards described in paragraph (1)(A), 2
302	302	but by only taking into account the amount of 3
303	303	such net operating loss (and the amount of the 4
304	304	net start-up loss) which is allocable under para-5
305	305	graph (1)(B) to the period described in such 6
306	306	paragraph. Proper adjustment in the allocation 7
307	307	of the net start-up loss under the preceding 8
308	308	sentence shall be made in the case of a taxable 9
309	309	year to which subparagraph (C)(ii) applies. 10
310	310	‘‘(E) A
311	311	PPLICATION TO TAXABLE YEARS 11
312	312	WHICH ARE START-UP PERIOD TAXABLE YEARS 12
313	313	WITH RESPECT TO MORE THAN 1 TRADE OR 13
314	314	BUSINESS.—In the case of any net operating 14
315	315	loss carryforward which arose in a taxable year 15
316	316	which is a start-up period taxable year with re-16
317	317	spect to more than 1 trade or business— 17
318	318	‘‘(i) this paragraph shall be applied 18
319	319	separately with respect to each such trade 19
320	320	or business, and 20
321	321	‘‘(ii) the aggregate reductions under 21
322	322	subparagraph (A) shall not exceed such net 22
323	323	operating loss carryforward. 23
324	324	‘‘(F) C
325	325	ONTINUITY OF BUSINESS REQUIRE -24
326	326	MENT.—If the new loss corporation does not 25
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329	329	•HR 368 IH
330	330	continue the trade or business referred to in 1
331	331	subparagraph (B)(i) at all times during the 2- 2
332	332	year period beginning on the change date, this 3
333	333	paragraph shall not apply with respect to such 4
334	334	trade or business. 5
335	335	‘‘(G) C
336	336	ERTAIN TITLE 11 OR SIMILAR 6
337	337	CASES.— 7
338	338	‘‘(i) M
339	339	ULTIPLE OWNERSHIP 8
340	340	CHANGES.—In the case of a 2nd ownership 9
341	341	change to which subsection (l)(5)(D) ap-10
342	342	plies, this paragraph shall not apply for 11
343	343	purposes of determining the pre-change 12
344	344	loss with respect to such 2nd ownership 13
345	345	change. 14
346	346	‘‘(ii) C
347	347	ERTAIN INSOLVENCY TRANS -15
348	348	ACTIONS.—If subsection (l)(6) applies for 16
349	349	purposes of determining the value of the 17
350	350	old loss corporation under subsection (e), 18
351	351	this paragraph shall not apply. 19
352	352	‘‘(H) N
353	353	OT APPLICABLE TO DISALLOWED 20
354	354	INTEREST.—This paragraph shall not apply for 21
355	355	purposes of applying the rules of paragraph (1) 22
356	356	to the carryover of disallowed interest under 23
357	357	paragraph (3). 24
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360	360	•HR 368 IH
361	361	‘‘(I) TRANSITION RULE.—This paragraph 1
362	362	shall not apply with respect to any trade or 2
363	363	business if the date on which such trade or 3
364	364	business begins as an active trade or business 4
365	365	(as determined under section 195(d)(2) without 5
366	366	regard to subparagraph (B) thereof) is on or 6
367	367	before January 31, 2023.’’. 7
368	368	(b) A
369	369	PPLICATION TOEXCESSCREDITS.—Section 383 8
370	370	of such Code is amended by redesignating subsection (e) 9
371	371	as subsection (f) and by inserting after subsection (d) the 10
372	372	following new subsection: 11
373	373	‘‘(e) E
374	374	XCEPTION FORSTART-UPEXCESSCREDITS.— 12
375	375	‘‘(1) I
376	376	N GENERAL.—In the case of any unused 13
377	377	general business credit of the corporation under sec-14
378	378	tion 39 which arose in a start-up period taxable 15
379	379	year, the amount of such unused general business 16
380	380	credit otherwise taken into account under subsection 17
381	381	(a)(2)(A) shall be reduced by the start-up excess 18
382	382	credit determined with respect to any trade or busi-19
383	383	ness referred to in section 382(d)(4)(B)(i) for such 20
384	384	start-up period taxable year. 21
385	385	‘‘(2) S
386	386	TART-UP PERIOD TAXABLE YEAR .—For 22
387	387	purposes of this subsection, the term ‘start-up pe-23
388	388	riod taxable year’ has the meaning given such term 24
389	389	in section 382(d)(4)(B). 25
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392	392	•HR 368 IH
393	393	‘‘(3) START-UP EXCESS CREDIT.—For purposes 1
394	394	of this subsection, the term ‘start-up excess credit’ 2
395	395	means, with respect to any trade or business re-3
396	396	ferred to in section 382(d)(4)(B)(i) for any start-up 4
397	397	period taxable year, the amount which bears the 5
398	398	same ratio to the unused general business credit 6
399	399	which arose in such start-up period taxable year 7
400	400	as— 8
401	401	‘‘(A) the amount of the general business 9
402	402	credit which would have been determined for 10
403	403	such start-up period taxable year if only credits 11
404	404	properly allocable to such trade or business 12
405	405	were taken into account, bears to 13
406	406	‘‘(B) the amount of the general business 14
407	407	credit determined for such start-up period tax-15
408	408	able year. 16
409	409	‘‘(4) A
410	410	PPLICATION OF CERTAIN RULES .—Rules 17
411	411	similar to the rules of subparagraphs (C)(ii), (D), 18
412	412	(E), and (F) of section 382(d)(4) shall apply for 19
413	413	purposes of this subsection. 20
414	414	‘‘(5) T
415	415	RANSITION RULE.—This subsection shall 21
416	416	not apply with respect to any trade or business if 22
417	417	the date on which such trade or business begins as 23
418	418	an active trade or business (as determined under 24
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421	421	•HR 368 IH
422	422	section 195(d)(2) without regard to subparagraph 1
423	423	(B) thereof) is on or before January 31, 2023.’’. 2
424	424	(c) E
425	425	FFECTIVEDATE.—The amendments made by 3
426	426	this section shall apply to taxable years ending after Janu-4
427	427	ary 31, 2023. 5
428	428	Æ
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