To amend the Internal Revenue Code of 1986 to allow employers a credit against income tax for increasing employment.

Summary: Small Business Jobs Creation Act of 2004 - Amends the Internal Revenue Code to allow an employer with annual gross receipts of less than $25 million a business tax credit for 50 percent of the excess of unemployment insurance wages paid in the current year over 102 percent of such wages paid during the preceding calendar year. Limits the annual amount of such credit to $100,000. Terminates the credit after 2009.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Small Business Jobs Creation Act of 
2004''.

SEC. 2. CREDIT FOR INCREASING EMPLOYMENT.

    (a) In General.--Subpart D of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986 (relating to business related 
credits) is amended by adding at the end the following new section:

``SEC. 45G. CREDIT FOR INCREASING EMPLOYMENT.

    ``(a) General Rule.--For purposes of section 38, in the case of an 
eligible employer, the increased employment credit for any taxable year 
shall be an amount equal to 50 percent of the excess of--
            ``(1) the aggregate unemployment insurance wages paid 
        during the calendar year ending during such taxable year, over
            ``(2) 102 percent of the aggregate unemployment insurance 
        wages paid during the preceding calendar year.
    ``(b) Eligible Employer.--For purposes of this section--
            ``(1) In general.--The term `eligible employer' means any 
        employer having gross receipts for the taxable year of less 
        than $25,000,000.
            ``(2) Gross receipts.--For purposes of this subsection, 
        gross receipts for any taxable year shall be reduced by returns 
        and allowances made during the taxable year.
    ``(c) Minimum Preceding Year Wages.--For purposes of determining 
the amount of the credit under subsection (a) with respect to any 
calendar year, the amount described in subsection (a)(2) shall be 
deemed to be not less than 50 percent of the amount of such wages paid 
during such preceding calendar year.
    ``(d) Total Wages Must Increase.--The amount of the credit 
determined under this section for any taxable year shall not exceed the 
amount which would be determined for such year under subsection (a) 
(without regard to subsection (b)) if--
            ``(1) the aggregate amounts taken into account as 
        unemployment insurance wages were determined without any dollar 
        limitation, and
            ``(2) `105 percent' were substituted for `102 percent' in 
        subsection (a).
    ``(e) $100,000 Per Year Limitation on Credit.--The amount of the 
credit determined under this section for any employer with respect to 
any calendar year shall not exceed $100,000.
    ``(f) Unemployment Insurance Wages.--For purposes of this section, 
the term `unemployment insurance wages' has the meaning given to the 
term `wages' by section 3306(b).
    ``(g) Special Rules.--Rules similar to the following rules shall 
apply for purposes of this section:
            ``(1) Section 51(g) (relating to United States Employment 
        Service to notify employers of availability of credit).
            ``(2) Section 51(h)(1) (relating to special rules for 
        agricultural labor and railway labor).
            ``(3) Section 52 (relating to special rules for work 
        opportunity credit).
            ``(4) Section 41(f) (relating to adjustments for certain 
        acquisitions, etc.).
    ``(h) Other Special Rules.--
            ``(1) Change in status from self-employed to employee.--
        If--
                    ``(A) during any calendar year an individual has 
                net earnings from self-employment (as defined in 
                section 1402(a)) which are attributable to a trade or 
                business, and
                    ``(B) for any portion of the succeeding calendar 
                year such individual is an employee of such trade or 
                business,
        then, for purposes of determining the credit allowable for a 
        taxable year beginning in such succeeding calendar year, the 
        employer's aggregate unemployment insurance wages for the 
        calendar year preceding the calendar year referred to in 
        subparagraph (A) shall be increased by an amount equal to so 
        much of the net earnings referred to in subparagraph (A) as 
        does not exceed $7,000.
            ``(2) $50,000 limitation in the case of married individuals 
        filing separate returns.--In the case of a husband or wife who 
        files a separate return, the limitation under subsection (e) 
        shall be $50,000 in lieu of $100,000. This subsection shall not 
        apply if the spouse of the taxpayer has no interest in a trade 
        or business for the taxable year of such spouse which ends 
        within or with the taxpayer's taxable year.
    ``(i) Termination.--This section shall not apply to any taxable 
year beginning after 2009.''.
    (b) Denial of Double Benefit.--Subsection (a) of section 280C of 
such Code is amended by inserting ``45G(a),'' after ``45A(a),''.
    (c) Credit Treated as Business Credit.--Subsection (b) of section 
38 of such Code is amended by striking ``plus'' at the end of paragraph 
(14), by striking the period at the end of paragraph (15) and inserting 
``, plus'', and by adding at the end the following:
            ``(16) the increased employment credit determined under 
        section 45G(a).''.
    (d) Clerical Amendment.--The table of sections for subpart D of 
part IV of subchapter A of chapter I is amended by adding at the end 
the following:

                              ``Sec. 45G. Credit for increasing 
                                        employment.''.
    (e) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2004.