I 

111TH CONGRESS 

2D SESSION H. R. 6168 

To amend the Internal Revenue Code of 1986 to allow a deduction for 

certain small business income. 

IN THE HOUSE OF REPRESENTATIVES 

SEPTEMBER 22, 2010 

Mr. CAMP (for himself and Mr. CANTOR) 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 allow a 

deduction for certain small business income. 

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

3 SECTION 1. DEDUCTION FOR QUALIFIED SMALL BUSINESS 

4 INCOME. 

5 (a) IN GENERAL.—Paragraph (1) of section 199(a) 

6 of the Internal Revenue Code of 1986 is amended to read 

7 as follows: 

8 ‘‘(1) IN GENERAL.—There shall be allowed as a 

9 deduction an amount equal to the sum of— 

10 ‘‘(A) 9 percent of the lesser of— 


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1 ‘‘(i) the qualified production activities 

2 income of the taxpayer for the taxable 

3 year, or 

4 ‘‘(ii) taxable income (determined with5 out regard to this section) for the taxable 

6 year, and 

7 ‘‘(B) in the case of a qualified small busi8 ness for a taxable year beginning in 2010 or 

9 2011, 20 percent of the lesser of— 

10 ‘‘(i) the qualified small business in11 come of the taxpayer for the taxable year, 

12 or 

13 ‘‘(ii) taxable income (determined with14 out regard to this section) for the taxable 

15 year.’’. 

16 (b) QUALIFIED SMALL BUSINESS; QUALIFIED SMALL

17 BUSINESS INCOME.—Section 199 of such Code is amend18 ed by adding at the end the following new subsection: 

19 ‘‘(e) QUALIFIED SMALL BUSINESS; QUALIFIED

20 SMALL BUSINESS INCOME.— 

21 ‘‘(1) QUALIFIED SMALL BUSINESS.— 

22 ‘‘(A) IN GENERAL.—For purposes of this 

23 section, the term ‘qualified small business’ 

24 means any taxpayer for any taxable year if the 

25 annual average number of employees employed 


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1 by such taxpayer during such taxable year was 

2 500 or fewer. 

3 ‘‘(B) AGGREGATION RULE.—For purposes 

4 of subparagraph (A), any person treated as a 

5 single employer under subsection (a) or (b) of 

6 section 52 (applied without regard to section 

7 1563(b)) or subsection (m) or (o) of section 

8 414 shall be treated as 1 taxpayer for purposes 

9 of this subsection. 

10 ‘‘(C) SPECIAL RULE.—If a taxpayer is 

11 treated as a qualified small business for any 

12 taxable year, the taxpayer shall not fail to be 

13 treated as a qualified small business for any 

14 subsequent taxable year solely because the num15 ber of employees employed by such taxpayer 

16 during such subsequent taxable year exceeds 

17 500. The preceding sentence shall cease to 

18 apply to such taxpayer in the first taxable year 

19 in which there is an ownership change (as de20 fined by section 382(g) in respect of a corpora21 tion, or by applying principles analogous to 

22 such ownership change in the case of a tax23 payer that is a partnership) with respect to the 

24 stock (or partnership interests) of the taxpayer. 

25 ‘‘(2) QUALIFIED SMALL BUSINESS INCOME.— 


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1 ‘‘(A) IN GENERAL.—For purposes of this 

2 section, the term ‘qualified small business in3 come’ means the excess of— 

4 ‘‘(i) the income of the qualified small 

5 business which— 

6 ‘‘(I) is attributable to the actual 

7 conduct of a trade or business, 

8 ‘‘(II) is income from sources 

9 within the United States (within the 

10 meaning of section 861), and 

11 ‘‘(III) is not passive income (as 

12 defined in section 904(d)(2)(B)), over 

13 ‘‘(ii) the sum of— 

14 ‘‘(I) the cost of goods sold that 

15 are allocable to such income, and 

16 ‘‘(II) other expenses, losses, or 

17 deductions (other than the deduction 

18 allowed under this section), which are 

19 properly allocable to such income. 

20 ‘‘(B) EXCEPTIONS.—The following shall 

21 not be treated as income of a qualified small 

22 business for purposes of subparagraph (A): 

23 ‘‘(i) Any income which is attributable 

24 to any property described in section 

25 1400N(p)(3). 


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1 ‘‘(ii) Any income which is attributable 

2 to the ownership or management of any 

3 professional sports team. 

4 ‘‘(iii) Any income which is attributable 

5 to a trade or business described in sub6 paragraph (B) of section 1202(e)(3). 

7 ‘‘(iv) Any income which is attributable 

8 to any property with respect to which 

9 records are required to be maintained 

10 under section 2257 of title 18, United 

11 States Code. 

12 ‘‘(C) ALLOCATION RULES, ETC.—Rules 

13 similar to the rules of paragraphs (2), (3), 

14 (4)(D), and (7) of subsection (c) shall apply for 

15 purposes of this paragraph. 

16 ‘‘(3) SPECIAL RULES.—Except as otherwise 

17 provided by the Secretary, rules similar to the rules 

18 of subsection (d) shall apply for purposes of this 

19 subsection.’’. 

20 (c) CONFORMING AMENDMENTS.— 

21 (1) Section 199(a)(2) of such Code is amended 

22 by striking ‘‘paragraph (1)’’ and inserting ‘‘para23 graph (1)(A)’’. 


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1 (2) The following provisions of section 199 of 

2 such Code are each amended by striking ‘‘(a)(1)(B)’’ 

3 and inserting ‘‘(a)(1)(A)(ii)’’: 

4 (A) Subsection (d)(2). 

5 (B) Subsection (d)(6)(B). 

6 (C) Subsection (d)(7). 

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

8 this section shall apply to taxable years beginning after 

9 December 31, 2009. 

Æ 


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