I

103D CONGRESS

1ST SESSION H. R. 3237

To amend the Internal Revenue Code of 1986 to increase the expense treatment under section 179 of such Code for the first 3 years a business

is in existence and to allow an income tax credit for one-half of an

individual’s self-employment taxes.

IN THE HOUSE OF REPRESENTATIVES

OCTOBER 7, 1993

Mr. BONILLA (for himself, Mr. HALL of Texas, Mr. LIVINGSTON, Mr. MCCOLLUM, Mr. BARTON of Texas, Mr. POMBO, and Ms. DUNN) 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 increase

the expense treatment under section 179 of such Code

for the first 3 years a business is in existence and

to allow an income tax credit for one-half of an individual’s self-employment taxes.

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 ‘‘Small Business Devel5 opment Act of 1993’’.
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1 SEC. 2. INCREASE IN EXPENSE TREATMENT FOR STARTUP

2 BUSINESSES.

3 (a) IN GENERAL.—Paragraph (1) of section 179(b)

4 of the Internal Revenue Code of 1986 (relating to election

5 to expense certain depreciable assets) is amended to read

6 as follows:

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

8 subparagraph (B), the aggregate cost which

9 may be taken into account under subsection (a)

10 for any taxable year shall not exceed $17,500.

11 ‘‘(B) HIGHER LIMITATION FOR FIRST 3

12 YEARS TAXPAYER ENGAGED IN BUSINESS.—

13 ‘‘(i) IN GENERAL.—Subparagraph (A)

14 shall be applied by substituting ‘$30,000’

15 for ‘$17,500’ for the taxpayer’s startup

16 year and the following 2 taxable years.

17 ‘‘(ii) STARTUP YEAR.—For purposes

18 of clause (i), the term ‘startup year’ means

19 the first taxable year that the taxpayer is

20 engaged in an active trade or business

21 (within the meaning of section 195(c)).

22 ‘‘(iii) CONTROLLED GROUPS.—For

23 purposes of this subparagraph, if the tax24 payer is a member of a controlled group,

25 the taxpayer shall be treated as engaged in

26 an active trade or business beginning on
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1 the earliest date any member of such

2 group was engaged in an active trade or

3 business. For purposes of the preceding

4 sentence, the term ‘controlled group’

5 means all persons treated as a single em6 ployer under subsection (b) or (c) of sec7 tion 52.’’

8 (b) EFFECTIVE DATE.—The amendment made by

9 this section shall apply to taxable years beginning after

10 the date of the enactment of this Act.

11 SEC. 3. CREDIT FOR ONE-HALF OF SELF-EMPLOYMENT

12 TAXES.

13 (a) GENERAL RULE.—Subpart C of part IV of sub14 chapter A of chapter 1 of the Internal Revenue Code of

15 1986 (relating to refundable credits) is amended by redes16 ignating section 35 as section 36 and by inserting after

17 section 34 the following new section:

18 ‘‘SEC. 35. CREDIT FOR ONE-HALF OF SELF-EMPLOYMENT

19 TAXES.

20 ‘‘In the case of an individual, there shall be allowed

21 as a credit against the tax imposed by this subtitle for

22 the taxable year an amount equal to 50 percent of the

23 taxes imposed by section 1401 for the taxable year.’’

24 (b) REPEAL OF DEDUCTION.—
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1 (1) Section 164 of such Code is amended by

2 striking subsection (f) and by redesignating sub3 section (g) as subsection (f).

4 (2) Section 1402(a) of such Code is amended

5 by striking paragraph (12) and by redesignating

6 paragraphs (13), (14), and (15) as paragraphs (12),

7 (13), and (14), respectively.

8 (c) CLERICAL AMENDMENT.—The table of sections

9 for subpart C of part IV of subchapter A of chapter 1

10 of such Code is amended by striking the last item and

11 inserting the following new items:

‘‘Sec. 35. Credit for one-half of self-employment taxes.

‘‘Sec. 36. Overpayments of tax.’’

12 (d) EFFECTIVE DATE.—The amendments made by

13 this section shall apply to taxable years beginning after

14 the date of the enactment of this Act.

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