I 

115TH CONGRESS 

2D SESSION H. R. 5813 

To amend the Internal Revenue Code of 1986 to exclude from the definition 

of personal holding company income certain royalties and rents derived 

in the active conduct of a trade or business. 

IN THE HOUSE OF REPRESENTATIVES 

MAY 15, 2018 

Mr. BARR (for himself, Mr. WENSTRUP, Mr. REICHERT, and Mr. BISHOP of 

Michigan) 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 exclude 

from the definition of personal holding company income 

certain royalties and rents derived in the active conduct 

of a trade or business. 

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 ‘‘Removing Onerous Ob5 stacles in the Tax code for Mainstreet Businesses Act of 

6 2018’’ or as the ‘‘ROOT for Mainstreet Businesses Act 

7 of 2018’’. 


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1 SEC. 2. CERTAIN ROYALTIES AND RENTS DERIVED IN THE 

2 ACTIVE CONDUCT OF A TRADE OR BUSINESS 

3 NOT TREATED AS PERSONAL HOLDING COM4 PANY INCOME. 

5 (a) ROYALTIES.— 

6 (1) IN GENERAL.—Section 543(a)(1) of the In7 ternal Revenue Code of 1986 is amended by striking 

8 ‘‘and’’ at the end of subparagraph (D), by striking 

9 the period at the end of subparagraph (E) and in10 serting ‘‘, and’’, and by adding at the end the fol11 lowing new subparagraph: 

12 ‘‘(F) royalties derived in the active conduct 

13 of a trade or business which are received from 

14 a person other than a related person (within the 

15 meaning of section 267).’’. 

16 (2) COPYRIGHT ROYALTIES.—Section 543(a)(4) 

17 of such Code is amended by inserting ‘‘or to any 

18 amount derived in the active conduct of a trade or 

19 business which are received from a person other 

20 than a related person (within the meaning of section 

21 267)’’ after ‘‘active business computer software roy22 alties’’ in the last sentence thereof. 

23 (b) RENTS.— 

24 (1) IN GENERAL.—Section 543(b)(3) of such 

25 Code is amended by striking ‘‘or’’ at the end of sub26 paragraph (D), by striking the period at the end of 


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1 subparagraph (E) and inserting ‘‘, or’’, and by add2 ing at the end the following new subparagraph: 

3 ‘‘(F) amounts derived in the active conduct 

4 of a trade or business which are received from 

5 a person other than a related person (within the 

6 meaning of section 267).’’. 

7 (2) PRODUCED FILM RENTS.—Section 

8 543(a)(5)(B) of such Code is amended by adding at 

9 the end the following: ‘‘Such term shall not include 

10 any amount derived in the active conduct of a trade 

11 or business which are received from a person other 

12 than a related person (within the meaning of section 

13 267).’’ 

14 (c) REGULATIONS.—Section 543 of such Code is 

15 amended by adding at the end the following new sub16 section: 

17 ‘‘(e) DETERMINATION OF WHETHER ROYALTIES AND

18 RENTS ARE DERIVED IN THE ACTIVE CONDUCT OF A

19 TRADE OR BUSINESS.—The Secretary shall prescribe reg20 ulations or other guidance providing for the treatment of 

21 rents, royalties, and other amounts described in sub22 sections (a)(1)(F), (a)(4), (a)(5)(B), and (b)(3)(F) as 

23 being derived in the active conduct of a trade or business 

24 consistent with the regulations and other guidance proVerDate Sep 11 2014 01:05 May 31, 2018 Jkt 079200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H5813.IH H5813

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1 viding for such treatment for purposes of section 

2 954(c)(2)(A).’’. 

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

4 this section shall apply to taxable years ending on or after 

5 the date of the enactment of this Act. 

Æ 


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