I 

113TH CONGRESS 

1ST SESSION H. R. 2558 

To amend the Internal Revenue Code of 1986 to provide for the tax treatment 

of small business start-up savings accounts. 

IN THE HOUSE OF REPRESENTATIVES 

JUNE 27, 2013 

Mr. MAFFEI 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 provide 

for the tax treatment of small business start-up savings 

accounts. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Incentivize Growth 

5 Now In Tomorrow’s Entrepreneurs Act of 2013’’. 

6 SEC. 2. SMALL BUSINESS START-UP SAVINGS ACCOUNTS. 

7 (a) IN GENERAL.—Subchapter F of chapter 1 of the 

8 Internal Revenue Code of 1986 is amended by adding at 

9 the end the following new part: 


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1 ‘‘PART IX—SMALL BUSINESS START-UP SAVINGS 

2 ACCOUNTS 

‘‘Sec. 530A. Small Business Start-up Savings Accounts. 

3 ‘‘SEC. 530A. SMALL BUSINESS START-UP SAVINGS AC4 COUNTS. 

5 ‘‘(a) GENERAL RULE.—A small business start-up 

6 savings account shall be exempt from taxation under this 

7 subtitle. Notwithstanding the preceding sentence, the 

8 small business start-up savings account shall be subject 

9 to the taxes imposed by section 511 (relating to imposition 

10 of tax on unrelated business income of charitable organiza11 tions). 

12 ‘‘(b) SMALL BUSINESS START-UP SAVINGS AC13 COUNT.—The term ‘small business start-up savings ac14 count’ means a trust created or organized in the United 

15 States exclusively for the purpose of making qualified 

16 start-up expenditures of the individual who is the des17 ignated beneficiary of the trust (and designated as a small 

18 business start-up savings account at the time created or 

19 organized), but only if the written governing instrument 

20 creating the trust meets the following requirements: 

21 ‘‘(1) Except in the case of a rollover contribu22 tion described in subsection (d)(4), no contribution 

23 will be accepted unless it is in cash, and contribu24 tions will not be accepted if such contribution would 


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1 result in aggregate contributions for the taxable year 

2 not exceeding the lesser of— 

3 ‘‘(A) $10,000, or 

4 ‘‘(B) an amount equal to the compensation 

5 (as defined in section 219(f)(1)) includible in 

6 the individual’s gross income for such taxable 

7 year. 

8 ‘‘(2) The trustee is a bank (as defined in sec9 tion 408(n)) or such other person who demonstrates 

10 to the satisfaction of the Secretary that the manner 

11 in which such other person will administer the trust 

12 will be consistent with the requirements of this sec13 tion. 

14 ‘‘(3) No part of the trust funds will be invested 

15 in life insurance contracts. 

16 ‘‘(4) The assets of the trust will not be commin17 gled with other property except in a common trust 

18 fund or common investment fund. 

19 ‘‘(c) QUALIFIED START-UP EXPENDITURES.—For 

20 purposes of this section— 

21 ‘‘(1) IN GENERAL.—The term ‘qualified start22 up expenditures’ has the meaning given such term 

23 by section 195. 

24 ‘‘(2) SPECIAL RULE FOR CORPORATION OR

25 PARTNERSHIP INTERESTS.—Such term includes the 


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1 taxpayer’s allocable share of qualified start-up ex2 penditures of an entity in which the taxpayer di3 rectly holds stock or a capital or profits interest. 

4 ‘‘(3) EXCEPTION.—Such term shall not apply 

5 to any expenditures paid or incurred in a taxable 

6 year in connection with a trade or business if there 

7 is any day during the taxable year on which the 

8 number of full-time employees of the trade or busi9 ness exceeds 50. 

10 ‘‘(d) TAX TREATMENT OF DISTRIBUTIONS.— 

11 ‘‘(1) IN GENERAL.—Any distribution shall be 

12 includible in the gross income of the distributee in 

13 the manner as provided in section 72. 

14 ‘‘(2) DISTRIBUTIONS FOR QUALIFIED START-UP

15 EXPENDITURES.— 

16 ‘‘(A) IN GENERAL.—No amount shall be 

17 includible in gross income under paragraph (1) 

18 if the qualified start-up expenditures of the in19 dividual during the taxable year are not less 

20 than the aggregate distributions during the tax21 able year. 

22 ‘‘(B) DISTRIBUTIONS IN EXCESS OF EX23 PENSES.—If such aggregate distributions ex24 ceed such expenses during the taxable year, the 

25 amount otherwise includible in gross income 


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1 under paragraph (1) shall be reduced by the 

2 amount which bears the same ratio to the 

3 amount which would be includible in gross in4 come under paragraph (1) (without regard to 

5 this subparagraph) as the qualified start-up ex6 penditures bear to such aggregate distributions. 

7 ‘‘(C) DISALLOWANCE OF EXCLUDED

8 AMOUNTS AS DEDUCTION, CREDIT, OR EXCLU9 SION.—No deduction, credit, or exclusion shall 

10 be allowed to the taxpayer under any other sec11 tion of this chapter for any qualified start-up 

12 expenditure to the extent taken into account in 

13 determining the amount of the exclusion under 

14 this paragraph. 

15 ‘‘(3) EXCESS CONTRIBUTIONS RETURNED BE16 FORE DUE DATE OF RETURN.— 

17 ‘‘(A) IN GENERAL.—If any excess con18 tribution is contributed for a taxable year to 

19 any small business start-up savings account of 

20 an individual, paragraph (1) shall not apply to 

21 distributions from the small business start-up 

22 savings accounts of such individual (to the ex23 tent such distributions do not exceed the aggre24 gate excess contributions to all such accounts of 

25 such individual for such year) if— 


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1 ‘‘(i) such distribution is received by 

2 the individual on or before the last day 

3 prescribed by law (including extensions of 

4 time) for filing such individual’s return for 

5 such taxable year, and 

6 ‘‘(ii) such distribution is accompanied 

7 by the amount of net income attributable 

8 to such excess contribution. 

9 ‘‘(B) EXCESS CONTRIBUTION.—For pur10 poses of subparagraph (A), the term ‘excess 

11 contribution’ means any contribution (other 

12 than a rollover contribution described in para13 graph (4)) which when added to all previous 

14 contributions for the taxable year exceeds the 

15 amount allowable as a contribution under sub16 section (b)(1). 

17 ‘‘(4) ROLLOVER CONTRIBUTION.—Paragraph 

18 (1) shall not apply to any amount paid or distrib19 uted from a small business start-up savings account 

20 to the account beneficiary to the extent the amount 

21 received is paid into a small business start-up sav22 ings account for the benefit of such beneficiary not 

23 later than the 60th day after the day on which the 

24 beneficiary receives the payment or distribution. For 


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1 purposes of this paragraph, rules similar to the rules 

2 of section 408(d)(3)(D) shall apply. 

3 ‘‘(5) TRANSFER OF ACCOUNT INCIDENT TO DI4 VORCE.—The transfer of an individual’s interest in 

5 a small business start-up savings account to an indi6 vidual’s spouse or former spouse under a divorce or 

7 separation instrument described in subparagraph 

8 (A) of section 71(b)(2) shall not be considered a tax9 able transfer made by such individual notwith10 standing any other provision of this subtitle, and 

11 such interest shall, after such transfer, be treated as 

12 a small business start-up savings account with re13 spect to which such spouse is the account bene14 ficiary. 

15 ‘‘(6) TREATMENT AFTER DEATH OF ACCOUNT

16 BENEFICIARY.— 

17 ‘‘(A) TREATMENT IF DESIGNATED BENE18 FICIARY IS SPOUSE.—If the account bene19 ficiary’s surviving spouse acquires such bene20 ficiary’s interest in a small business start-up 

21 savings account by reason of being the des22 ignated beneficiary of such account at the death 

23 of the account beneficiary, such account shall 

24 be treated as if the spouse were the account 

25 beneficiary. 


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1 ‘‘(B) OTHER CASES.— 

2 ‘‘(i) IN GENERAL.—If, by reason of 

3 the death of the account beneficiary, any 

4 person acquires the account beneficiary’s 

5 interest in a small business start-up sav6 ings account in a case to which subpara7 graph (A) does not apply— 

8 ‘‘(I) such account shall cease to 

9 be a small business start-up savings 

10 account as of the date of death, and 

11 ‘‘(II) an amount equal to the fair 

12 market value of the assets in such ac13 count on such date shall be includible 

14 if such person is not the estate of 

15 such beneficiary, in such person’s 

16 gross income for the taxable year 

17 which includes such date, or if such 

18 person is the estate of such bene19 ficiary, in such beneficiary’s gross in20 come for the last taxable year of such 

21 beneficiary. 

22 ‘‘(ii) SPECIAL RULES.— 

23 ‘‘(I) REDUCTION OF INCLUSION

24 FOR PREDEATH EXPENSES.—The 

25 amount includible in gross income 


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1 under clause (i) by any person (other 

2 than the estate) shall be reduced by 

3 the amount of qualified start-up ex4 penditures which were incurred by the 

5 decedent before the date of the dece6 dent’s death and paid by such person 

7 within 1 year after such date. 

8 ‘‘(II) DEDUCTION FOR ESTATE

9 TAXES.—An appropriate deduction 

10 shall be allowed under section 691(c) 

11 to any person (other than the dece12 dent or the decedent’s spouse) with 

13 respect to amounts included in gross 

14 income under clause (i) by such per15 son. 

16 ‘‘(e) COMMUNITY PROPERTY LAWS.—This section 

17 shall be applied without regard to any community property 

18 laws. 

19 ‘‘(f) CUSTODIAL ACCOUNTS.—For purposes of this 

20 section, a custodial account shall be treated as a trust if 

21 the assets of such account are held by a bank (as defined 

22 in subsection (n)) or another person who demonstrates, 

23 to the satisfaction of the Secretary, that the manner in 

24 which he will administer the account will be consistent 

25 with the requirements of this section, and if the custodial 


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1 account would, except for the fact that it is not a trust, 

2 constitute a small business start-up account described in 

3 subsection (a). For purposes of this title, in the case of 

4 a custodial account treated as a trust by reason of the 

5 preceding sentence, the custodian of such account shall be 

6 treated as the trustee thereof. 

7 ‘‘(g) ADJUSTMENT FOR INFLATION.—In the case of 

8 a taxable year beginning after December 31, 2014, the 

9 dollar amount in subsection (b)(1) shall be increased by 

10 an amount equal to— 

11 ‘‘(1) such dollar amount, multiplied by 

12 ‘‘(2) the cost-of-living adjustment determined 

13 under section 1(f)(3) for the calendar year in which 

14 the taxable year begins, determined by substituting 

15 ‘calendar year 2013’ for ‘calendar year 1992’ in sub16 paragraph (B) thereof. 

17 If any amount as increased under the preceding sentence 

18 is not a multiple of $100, such amount shall be rounded 

19 to the nearest multiple of $100. 

20 ‘‘(h) REPORTS.—The trustee of a small business 

21 start-up savings account shall make such reports regard22 ing such account to the Secretary and to the individual 

23 for whom the account is, or is to be, maintained with re24 spect to contributions (and the years to which they relate), 

25 distributions, aggregating $10 or more in any calendar 


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1 year, and such other matters as the Secretary may re2 quire. The reports required by this subsection— 

3 ‘‘(1) shall be filed at such time and in such 

4 manner as the Secretary prescribes, and 

5 ‘‘(2) shall be furnished to individuals— 

6 ‘‘(A) not later than January 31 of the cal7 endar year following the calendar year to which 

8 such reports relate, and 

9 ‘‘(B) in such manner as the Secretary pre10 scribes. 

11 ‘‘(i) REGULATIONS.—The Secretary shall issue such 

12 regulations or other guidance as may be necessary to carry 

13 out this section, including for purposes of subsection 

14 (c)(2) the making reports by regarding qualified start-up 

15 expenditures of an entity in which the taxpayer directly 

16 holds stock or a capital or profits interest.’’. 

17 (b) TAX ON PROHIBITED TRANSACTIONS.— 

18 (1) IN GENERAL.—Paragraph (1) of section 

19 4975(e) of such Code (relating to prohibited trans20 actions) is amended by striking ‘‘or’’ at the end of 

21 subparagraph (F), by redesignating subparagraph 

22 (G) as subparagraph (H), and by inserting after 

23 subparagraph (F) the following new subparagraph: 

24 ‘‘(G) a small business start-up savings ac25 count described in section 530A, or’’. 


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1 (2) SPECIAL RULE.—Subsection (c) of section 

2 4975 of such Code is amended by adding at the end 

3 of subsection (c) the following new paragraph: 

4 ‘‘(7) SPECIAL RULE FOR SMALL BUSINESS

5 START-UP SAVINGS ACCOUNTS.—An individual for 

6 whose benefit a small business start-up savings ac7 count is established and any contributor to such ac8 count shall be exempt from the tax imposed by this 

9 section with respect to any transaction concerning 

10 such account (which would otherwise be taxable 

11 under this section) if section 530A(d)(1) applies 

12 with respect to such transaction or if such trans13 action is a qualified start-up expenditure (as defined 

14 in section 530A(c)).’’. 

15 (c) FAILURE TO PROVIDE REPORTS ON SMALL BUSI16 NESS START-UP SAVINGS ACCOUNTS.—Paragraph (2) of 

17 section 6693(a) of such Code is amended by striking 

18 ‘‘and’’ at the end of subparagraph (D), by striking the 

19 period at the end of subparagraph (E) and inserting ‘‘, 

20 and’’, and by adding at the end the following new subpara21 graph: 

22 ‘‘(F) section 530A(h) (relating to small 

23 business start-up savings accounts).’’. 


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1 (d) EXCESS CONTRIBUTIONS.—Section 4973(b) of 

2 such Code is amended by adding at the end the following 

3 new subsection: 

4 ‘‘(h) EXCESS CONTRIBUTIONS TO SMALL BUSINESS

5 START-UP SAVINGS ACCOUNTS.—For purposes of this 

6 section, in the case of contributions to a small business 

7 start-up savings account (within the meaning of section 

8 530A(b)), the term ‘excess contributions’ means the sum 

9 of— 

10 ‘‘(1) the excess (if any) of— 

11 ‘‘(A) the amount contributed for the tax12 able year to such accounts (other than a roll13 over contribution described in section 

14 530A(d)(4)), over 

15 ‘‘(B) the amount allowable as a contribu16 tion under section 530A(b)(1), and 

17 ‘‘(2) the amount determined under this sub18 section for the preceding taxable year, reduced by 

19 the sum of— 

20 ‘‘(A) the distributions out of the accounts 

21 for the taxable year, and 

22 ‘‘(B) the excess (if any) of the maximum 

23 amount allowable as a contribution under sec24 tions 530A(b)(1) for the taxable year over the 


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1 amount contributed to the accounts for the tax2 able year. 

3 For purposes of this subsection, any contribution 

4 which is distributed from a small business start-up 

5 savings account in a distribution described in section 

6 530A(d)(3) shall be treated as an amount not con7 tributed.’’. 

8 (e) CLERICAL AMENDMENT.—The table of contents 

9 for subchapter F of chapter 1 of such Code is amended 

10 by adding at the end the following new item: 

‘‘PART IX. SMALL BUSINESS START-UP SAVINGS ACCOUNTS’’. 

11 (f) EFFECTIVE DATE.—The amendments made by 

12 this section shall apply to taxable years beginning after 

13 December 31, 2013. 

Æ 


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