II 

115TH CONGRESS 

1ST SESSION S. 1540 

To amend the Internal Revenue Code of 1986 to allow a credit against 

tax for investments in qualified production facilities. 

IN THE SENATE OF THE UNITED STATES 

JULY 12, 2017 

Ms. STABENOW (for herself, Mr. BROWN, and Mr. PETERS) introduced the 

following bill; which was read twice and referred to the Committee on Finance 

A BILL 

To amend the Internal Revenue Code of 1986 to allow a 

credit against tax for investments in qualified production 

facilities. 

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 ‘‘Growing Small Busi5 nesses Act’’. 

6 SEC. 2. CREDIT FOR QUALIFYING PRODUCTION FACILITIES. 

7 (a) INCOME TAX CREDIT.— 

8 (1) IN GENERAL.—Section 46 of the Internal 

9 Revenue Code of 1986 is amended— 

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1 (A) by striking ‘‘and’’ at the end of para2 graph (5); 

3 (B) by striking the period at the end of 

4 paragraph (6) and inserting ‘‘, and’’; and 

5 (C) by adding at the end the following new 

6 paragraph: 

7 ‘‘(7) the qualifying production facility credit.’’. 

8 (2) AMOUNT OF CREDIT.—Subpart E of part 

9 IV of subchapter A of chapter 1 of the Internal Rev10 enue Code of 1986 is amended by inserting after 

11 section 48D the following new section: 

12 ‘‘SEC. 48E. CREDIT FOR QUALIFYING PRODUCTION FACILI13 TIES. 

14 ‘‘(a) IN GENERAL.—For purposes of section 46, in 

15 the case of an eligible employer, the qualifying production 

16 facility credit for any taxable year is an amount equal to 

17 25 percent of the basis of eligible property placed in serv18 ice during the taxable year. 

19 ‘‘(b) ELIGIBLE EMPLOYER.—For purposes of this 

20 section— 

21 ‘‘(1) IN GENERAL.—The term ‘eligible em22 ployer’ means any employer— 

23 ‘‘(A) which has no more than 50 full-time 

24 equivalent employees (within the meaning of 

25 section 45R(d)(2)) for the taxable year, and 

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1 ‘‘(B) which has not (prior to placing in 

2 service the production facility designated for 

3 purposes of this section) placed in service a 

4 dedicated facility for the production of goods 

5 for sale. 

6 ‘‘(2) SAFE HARBOR.— 

7 ‘‘(A) IN GENERAL.—An employer shall not 

8 be treated as having previously placed in service 

9 a facility described in paragraph (1)(B) if— 

10 ‘‘(i) a credit under this section has 

11 not previously been allowed to the em12 ployer, and 

13 ‘‘(ii) the cost of applicable property 

14 placed into service by the employer for 

15 each taxable year during the 5-taxable-year 

16 period ending immediately before the tax17 able year did not exceed $7,500. 

18 ‘‘(B) APPLICABLE PROPERTY.—For pur19 poses of subparagraph (A), the term ‘applicable 

20 property’ means personal property which would 

21 have qualified as eligible property under sub22 section (c)(1)(B) if such property were placed 

23 in service by an eligible employer at a qualified 

24 production facility after enactment of this Act 

25 for the production of a qualifying product. 

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1 ‘‘(3) SELF-EMPLOYED INDIVIDUAL TREATED AS

2 EMPLOYEE.—For purposes of paragraph (1)(A), the 

3 term employee includes an individual described in 

4 section 401(c)(1). 

5 ‘‘(c) ELIGIBLE PROPERTY.—For purposes of this sec6 tion— 

7 ‘‘(1) IN GENERAL.—The term ‘eligible property’ 

8 means— 

9 ‘‘(A) any qualifying production facility— 

10 ‘‘(i)(I) the construction, reconstruc11 tion, or erection of which is completed by 

12 the taxpayer, or 

13 ‘‘(II) which is acquired by the tax14 payer by purchase (as defined in section 

15 179(d)(2)), and 

16 ‘‘(ii) for which a deduction is allow17 able under section 167, and 

18 ‘‘(B) any personal property— 

19 ‘‘(i) which is placed in service within 

20 12 months of the date on which a quali21 fying production facility for which a credit 

22 is allowed under subsection (a) is placed in 

23 service, 

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1 ‘‘(ii) which is used exclusively at such 

2 qualifying production facility primarily for 

3 the production of a qualifying product, and 

4 ‘‘(iii) for which a deduction is allow5 able under section 167. 

6 ‘‘(2) SPECIAL RULE FOR LEASED FACILITIES.— 

7 In the case of any of a qualifying production facility 

8 which is leased by the taxpayer, paragraph (1)(B) 

9 shall be applied by substituting ‘the date on which 

10 the qualifying production facility was first leased by 

11 the taxpayer’ for ‘the date on which a qualifying 

12 production facility for which a credit is allowed 

13 under subsection (a) is placed in service’ in clause 

14 (i). 

15 ‘‘(d) OTHER DEFINITIONS.—For purposes of this 

16 section— 

17 ‘‘(1) QUALIFYING PRODUCTION FACILITY.—The 

18 term ‘qualifying production facility’ means any facil19 ity which— 

20 ‘‘(A) is used to produce qualifying prod21 ucts, and 

22 ‘‘(B) is designated by the taxpayer as a 

23 qualifying production facility for purposes of 

24 this section at such time and in such manner 

25 as the Secretary shall prescribe. 

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1 ‘‘(2) QUALIFYING PRODUCT.—The term ‘quali2 fying product’ means any of the following: 

3 ‘‘(A) Tangible personal property. 

4 ‘‘(B) Computer software (as defined in sec5 tion 167(f)(1)(B)). 

6 ‘‘(C) Property described in section 

7 168(f)(3). 

8 ‘‘(D) Property described in section 

9 168(f)(4). 

10 ‘‘(E) Food and beverages which are pre11 pared by the taxpayer but not primarily for 

12 consumption at property owned by the tax13 payer. 

14 ‘‘(e) SPECIAL RULES.—For purposes of this sec15 tion— 

16 ‘‘(1) CONTROLLED GROUP.—All members of the 

17 same controlled group of corporations (within the 

18 meaning of section 52(a)) and all persons under 

19 common control (within the meaning of section 

20 52(b)) shall be treated as 1 person for purposes of 

21 this section. 

22 ‘‘(2) PREDECESSOR.—Any reference in this sec23 tion to an employer shall include a reference to any 

24 predecessor of such employer. 

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1 ‘‘(3) CERTAIN QUALIFIED PROGRESS EXPENDI2 TURES RULES MADE APPLICABLE.—Rules similar to 

3 the rules of subsections (c)(4) and (d) of section 46 

4 (as in effect on the day before the enactment of the 

5 Revenue Reconciliation Act of 1990) shall apply for 

6 purposes of this section. 

7 ‘‘(f) ELECTION TO APPLY CREDIT AGAINST PAY8 ROLL TAXES.— 

9 ‘‘(1) IN GENERAL.—At the election of the eligi10 ble employer, section 3111(f) shall apply to the pay11 roll tax credit portion of the credit otherwise deter12 mined under subsection (a) for the taxable year and 

13 such portion shall not be treated (other than for 

14 purposes of section 50(c)) as a credit determined 

15 under subsection (a). 

16 ‘‘(2) PAYROLL TAX CREDIT PORTION.—For 

17 purposes of this subsection, the payroll tax credit 

18 portion of the credit determined under subsection 

19 (a) with respect to any qualified small business for 

20 any taxable year is the least of— 

21 ‘‘(A) the amount specified in the election 

22 made under this subsection, 

23 ‘‘(B) the credit determined under sub24 section (a) for the taxable year (determined be25 fore the application of this subsection), or 

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1 ‘‘(C) in the case of an eligible employer 

2 other than a partnership or S corporation, the 

3 amount of the business credit carryforward 

4 under section 39 carried from the taxable year 

5 (determined before the application of this sub6 section to the taxable year). 

7 ‘‘(3) ELECTION.— 

8 ‘‘(A) IN GENERAL.—Any election under 

9 this subsection for any taxable year— 

10 ‘‘(i) shall specify the amount of the 

11 credit to which such election applies, 

12 ‘‘(ii) shall be made on or before the 

13 due date (including extensions) of— 

14 ‘‘(I) in the case of an eligible em15 ployer which is a partnership, the re16 turn required to be filed under section 

17 6031, 

18 ‘‘(II) in the case of an eligible 

19 employer which is an S corporation, 

20 the return required to be filed under 

21 section 6037, and 

22 ‘‘(III) in the case of any other el23 igible employer, the return of tax for 

24 the taxable year, and 

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1 ‘‘(iii) may be revoked only with the 

2 consent of the Secretary. 

3 ‘‘(B) LIMITATIONS.—The amount specified 

4 in any election made under this subsection shall 

5 not exceed $250,000. 

6 ‘‘(C) SPECIAL RULE FOR PARTNERSHIPS

7 AND S CORPORATIONS.—In the case of an eligi8 ble employer which is a partnership or S cor9 poration, the election made under this sub10 section shall be made at the entity level. 

11 ‘‘(4) AGGREGATION RULES.— 

12 ‘‘(A) IN GENERAL.—Except as provided in 

13 subparagraph (B), all persons or entities treat14 ed as a single taxpayer under subsection (e)(1) 

15 shall be treated as a single taxpayer for pur16 poses of this subsection. 

17 ‘‘(B) SPECIAL RULES.—For purposes of 

18 this subsection and section 3111(g)— 

19 ‘‘(i) each of the persons treated as a 

20 single taxpayer under subparagraph (A) 

21 may separately make the election under 

22 paragraph (1) for any taxable year, and 

23 ‘‘(ii) the $250,000 amount under 

24 paragraph (3)(B)(i) shall be allocated 

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1 payer under subparagraph (A) in the man2 ner provided by the Secretary which is 

3 similar to the manner provided under sec4 tion 41(f)(1). 

5 ‘‘(5) REGULATIONS.—The Secretary shall pre6 scribe such regulations as may be necessary to carry 

7 out the purposes of this subsection, including— 

8 ‘‘(A) regulations to prevent the avoidance 

9 of the purposes of the limitations and aggrega10 tion rules under this subsection, 

11 ‘‘(B) regulations to minimize compliance 

12 and recordkeeping burdens under this sub13 section, and 

14 ‘‘(C) regulations for recapturing the ben15 efit of credits determined under section 3111(g) 

16 in cases where there is a recapture or a subse17 quent adjustment to the payroll tax credit por18 tion of the credit determined under subsection 

19 (a), including requiring amended income tax re20 turns in the cases where there is such an ad21 justment.’’. 

22 (3) SPECIAL RULES RELATING TO RECAP23 TURE.— 

24 (A) CERTAIN RELATED PARTY TRANS25 ACTION.—Paragraph (4) of section 50(a) of the 

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1 Internal Revenue Code of 1986 is amended by 

2 adding at the end the following new sentence: 

3 ‘‘Subparagraph (B) shall not apply to invest4 ment credit property described in section 48E 

5 in any case in which the transaction is a trans6 action between related persons.’’. 

7 (B) LOSS OF ELIGIBLE EMPLOYER STA8 TUS.—Paragraph (5) of section 50(a) of such 

9 Code is amended by adding at the end the fol10 lowing new paragraph: 

11 ‘‘(D) TREATMENT OF ELIGIBLE EMPLOYER

12 STATUS FOR QUALIFYING PRODUCTION FACIL13 ITY CREDIT.—Paragraphs (1) and (2) shall not 

14 apply with respect to any credit allowed under 

15 section 48E solely because the taxpayer has 

16 ceased to be an eligible employer (as defined in 

17 section 48E(b)) in any taxable year after the 

18 year in which the credit is allowed.’’. 

19 (4) CONFORMING AMENDMENTS.— 

20 (A) Section 49(a)(1)(C) of the Internal 

21 Revenue Code of 1986 is amended— 

22 (i) by striking ‘‘and’’ at the end of 

23 clause (v); 

24 (ii) by striking the period at the end 

25 of clause (vi) and inserting ‘‘, and’’; and 

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1 (iii) by adding after clause (vi) the 

2 following new clause: 

3 ‘‘(vii) the basis of any eligible prop4 erty under section 48E.’’. 

5 (B) The table of sections for subpart E of 

6 part IV of subchapter A of chapter 1 of the In7 ternal Revenue Code of 1986 is amended by in8 serting after the item relating to section 48D 

9 the following new item: 

‘‘Sec. 48E. Credit for qualifying production facilities.’’. 

10 (b) PAYROLL TAX CREDIT.—Section 3111 of the In11 ternal Revenue Code of 1986 is amended by adding at the 

12 end the following new subsection: 

13 ‘‘(g) CREDIT FOR QUALIFYING PRODUCTION FACILI14 TIES.— 

15 ‘‘(1) IN GENERAL.—In the case of a taxpayer 

16 who has made an election under section 48E(f) for 

17 a taxable year, there shall be allowed as a credit 

18 against the tax imposed by subsection (a) for the 

19 first calendar quarter which begins after the date on 

20 which the taxpayer files the return specified in sec21 tion 48E(f)(3)(A)(ii) an amount equal to the payroll 

22 tax credit portion determined under section 

23 48E(f)(2). 

24 ‘‘(2) LIMITATION.—The credit allowed by para25 graph (1) shall not exceed the tax imposed by submstockstill on DSK30JT082PROD with BILLS

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1 section (a) for any calendar quarter on the wages 

2 paid with respect to the employment of all individ3 uals in the employ of the employer. 

4 ‘‘(3) CARRYOVER OF UNUSED CREDIT.—If the 

5 amount of the credit under paragraph (1) exceeds 

6 the limitation of paragraph (2) for any calendar 

7 quarter, such excess shall be carried to the suc8 ceeding calendar quarter and allowed as a credit 

9 under paragraph (1) for such quarter. 

10 ‘‘(4) DEDUCTION ALLOWED FOR CREDITED

11 AMOUNTS.—The credit allowed under paragraph (1) 

12 shall not be taken into account for purposes of de13 termining the amount of any deduction allowed 

14 under chapter 1 for taxes imposed under subsection 

15 (a).’’. 

16 (c) EFFECTIVE DATE.—The amendments made by 

17 this section shall apply to periods after the date of the 

18 enactment of this Act, under rules similar to the rules of 

19 section 48(m) of the Internal Revenue Code of 1986 (as 

20 in effect on the day before the date of the enactment of 

21 the Revenue Reconciliation Act of 1990). 

Æ 

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