IB 

Union Calendar No. 317 

113TH CONGRESS 

2D SESSION H. R. 4453 

[Report No. 113–429] 

To amend the Internal Revenue Code of 1986 to make permanent the reduced 

recognition period for built-in gains of S corporations. 

IN THE HOUSE OF REPRESENTATIVES 

APRIL 10, 2014 

Mr. REICHERT (for himself and Mr. KIND) introduced the following bill; which 

was referred to the Committee on Ways and Means 

MAY 2, 2014 

Additional sponsor: Mr. REED

MAY 2, 2014 

Reported with an amendment, committed to the Committee of the Whole 

House on the State of the Union, and ordered to be printed 

[Strike out all after the enacting clause and insert the part printed in italic] 


tkelley on DSK3SPTVN1PROD with BILLS
2 

•HR 4453 RH

A BILL 

To amend the Internal Revenue Code of 1986 to make 

permanent the reduced recognition period for built-in 

gains of S corporations. 


tkelley on DSK3SPTVN1PROD with BILLS
3 

•HR 4453 RH

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

3 SECTION 1. REDUCED RECOGNITION PERIOD FOR BUILT-IN 

4 GAINS OF S CORPORATIONS MADE PERMA5 NENT. 

6 (a) IN GENERAL.—Paragraph (7) of section 1374(d) 

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

8 as follows: 

9 ‘‘(7) RECOGNITION PERIOD.— 

10 ‘‘(A) IN GENERAL.—The term ‘recognition 

11 period’ means the 5-year period beginning with 

12 the 1st day of the 1st taxable year for which 

13 the corporation was an S corporation. For pur14 poses of applying this section to any amount in15 cludible in income by reason of distributions to 

16 shareholders pursuant to section 593(e), the 

17 preceding sentence shall be applied without re18 gard to the phrase ‘5-year’. 

19 ‘‘(B) INSTALLMENT SALES.—If an S cor20 poration sells an asset and reports the income 

21 from the sale using the installment method 

22 under section 453, the treatment of all pay23 ments received shall be governed by the provi24 sions of this paragraph applicable to the taxable 

25 year in which such sale was made.’’. 


tkelley on DSK3SPTVN1PROD with BILLS
4 

•HR 4453 RH

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

2 this section shall apply to taxable years beginning after 

3 December 31, 2013. 

4 SECTION 1. SHORT TITLE. 

5 This Act may be cited as the ‘‘Permanent S Corpora6 tion Built-in Gains Recognition Period Act of 2014’’. 

7 SEC. 2. REDUCED RECOGNITION PERIOD FOR BUILT-IN 

8 GAINS OF S CORPORATIONS MADE PERMA9 NENT. 

10 (a) IN GENERAL.—Paragraph (7) of section 1374(d) 

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

12 as follows: 

13 ‘‘(7) RECOGNITION PERIOD.— 

14 ‘‘(A) IN GENERAL.—The term ‘recognition 

15 period’ means the 5-year period beginning with 

16 the 1st day of the 1st taxable year for which the 

17 corporation was an S corporation. For purposes 

18 of applying this section to any amount includ19 ible in income by reason of distributions to 

20 shareholders pursuant to section 593(e), the pre21 ceding sentence shall be applied without regard 

22 to the phrase ‘5-year’. 

23 ‘‘(B) INSTALLMENT SALES.—If an S cor24 poration sells an asset and reports the income 

25 from the sale using the installment method under 


tkelley on DSK3SPTVN1PROD with BILLS
5 

•HR 4453 RH

1 section 453, the treatment of all payments re2 ceived shall be governed by the provisions of this 

3 paragraph applicable to the taxable year in 

4 which such sale was made.’’. 

5 (b) EFFECTIVE DATE.—The amendment made by this 

6 section shall apply to taxable years beginning after Decem7 ber 31, 2013. 


tkelley on DSK3SPTVN1PROD with BILLS
Union Calendar No. 317 

113TH CONGRESS 

2D SESSION H. R. 4453 

[Report No. 113–429] 

A BILL 

To amend the Internal Revenue Code of 1986 to 

for built-in gains of S corporations. make permanent the reduced recognition period 

MAY 2, 2014 

Reported with an amendment, committed to the Comand ordered to be printed mittee of the Whole House on the State of the Union, 


tkelley on DSK3SPTVN1PROD with BILLS