I 

111TH CONGRESS 

2D SESSION H. R. 5691 

To amend the Internal Revenue Code of 1986 to provide a credit for 

investment in new or expanding small businesses. 

IN THE HOUSE OF REPRESENTATIVES 

JULY 1, 2010 

Mr. HOEKSTRA 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 

a credit for investment in new or expanding small businesses. 

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

3 SECTION 1. CREDIT FOR QUALIFIED SMALL BUSINESS IN4 VESTMENTS. 

5 (a) IN GENERAL.—Subpart A of part IV of sub6 chapter A of chapter 1 of the Internal Revenue Code of 

7 1986 is amended by inserting after section 25D the fol8 lowing new section: 


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1 ‘‘SEC. 25E. QUALIFIED SMALL BUSINESS INVESTMENTS. 

2 ‘‘(a) IN GENERAL.—In the case of an individual, 

3 there shall be allowed as a credit against the tax imposed 

4 by this subtitle an amount equal to 20 percent of the 

5 amount paid or incurred for qualified small business in6 vestments during the taxable year. 

7 ‘‘(b) QUALIFIED SMALL BUSINESS INVESTMENT.— 

8 For purposes of this section— 

9 ‘‘(1) IN GENERAL.—The term ‘qualified small 

10 business investment’ means any stock in a domestic 

11 corporation acquired by the taxpayer at its original 

12 issue (directly or through an underwriter) or any 

13 capital or profits interest in a domestic partnership 

14 acquired by the taxpayer from the partnership if— 

15 ‘‘(A) such stock or interest was is acquired 

16 solely in exchange for cash, 

17 ‘‘(B) either— 

18 ‘‘(i) such corporation or partnership 

19 (including any predecessor thereof) has 

20 been in existence of less than 2 years as of 

21 such acquisition, or 

22 ‘‘(ii) such corporation or partnership 

23 had at least a 10 percent growth rate for 

24 each of 2 taxable years of the corporation 

25 or partnership preceding the taxable year 

26 in which acquisition occurs, and 


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1 ‘‘(C) the corporation or partnership satis2 fies the requirements of subparagraphs (A) and 

3 (B) of section 1202(d)(1) with respect to such 

4 issuance (determined by substituting ‘corpora5 tion or partnership’ for ‘corporation’ therein). 

6 ‘‘(2) GROWTH RATE.—For purposes of para7 graph (1)(B)(ii), the growth rate of any corporation 

8 or partnership for any taxable year is the ratio (ex9 pressed as a percentage) of— 

10 ‘‘(A) the excess of— 

11 ‘‘(i) the gross receipts of such cor12 poration or partnership for such taxable 

13 year, over 

14 ‘‘(ii) the gross receipts of such cor15 poration or partnership for the preceding 

16 taxable year, divided by 

17 ‘‘(B) the amount described in subpara18 graph (A)(ii). 

19 ‘‘(c) RECAPTURE OF CREDIT IN CASE OF FAILURE

20 TO SATISFY HOLDING PERIOD REQUIREMENT.—In the 

21 case of the disposition of any qualified small business in22 vestment during the 7-year period beginning on the date 

23 that such investment is acquired by the taxpayer, the tax 

24 imposed under this subtitle with respect to the taxpayer 

25 for the taxable year in which such disposition occurs shall 


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1 be increased by the amount of the credit allowed under 

2 this section with respect to such investment plus interest 

3 determined at the underpayment rate.’’. 

4 (b) CLERICAL AMENDMENT.—The table of sections 

5 of such subpart is amended by inserting after the item 

6 relating to section 25D the following new item: 

‘‘Sec. 25E. Qualified small business investments.’’. 

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

8 this section shall apply to amounts paid or incurred after 

9 the date of the enactment of this Act. 

Æ 


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