II 

113TH CONGRESS 

2D SESSION S. 2237 

To amend the Internal Revenue Code of 1986 to provide an elective safe 

harbor for the expensing by small businesses of the costs of acquiring 

or producing tangible property. 

IN THE SENATE OF THE UNITED STATES 

APRIL 10, 2014 

Mr. HOEVEN (for himself and Ms. CANTWELL) introduced the following bill; 

which was read twice and referred to the Committee on Finance 

A BILL 

To amend the Internal Revenue Code of 1986 to provide 

an elective safe harbor for the expensing by small businesses of the costs of acquiring or producing tangible 

property. 

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 ‘‘Farm and Small Busi5 ness Expensing Tax Relief Act’’. 


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1 SEC. 2. SAFE HARBOR FOR EXPENSING BY SMALL BUSI2 NESSES OF ACQUISITION OR PRODUCTION 

3 COSTS OF TANGIBLE PROPERTY. 

4 (a) IN GENERAL.—Section 263 of the Internal Rev5 enue Code of 1986 is amended by adding at the end the 

6 following: 

7 ‘‘(j) ELECTION FOR SMALL BUSINESSES TO EX8 PENSE CERTAIN ACQUISITION AND PRODUCTION

9 COSTS.— 

10 ‘‘(1) IN GENERAL.—If the amount paid or in11 curred by an eligible taxpayer to acquire or produce 

12 any item of tangible property does not exceed 

13 $5,000 (or such higher amount as the Secretary may 

14 prescribe by regulations), then, notwithstanding sub15 section (a), the taxpayer may elect to treat such 

16 amount as an expense which is not chargeable to 

17 capital account nor treated as a material or supply. 

18 Any amount so treated shall be allowed as a deduc19 tion for the taxable year in which the property is ac20 quired or produced. 

21 ‘‘(2) ELIGIBLE TAXPAYER.—For purposes of 

22 this subsection— 

23 ‘‘(A) IN GENERAL.—The term ‘eligible tax24 payer’ means, with respect to any taxable year, 

25 a taxpayer— 


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1 ‘‘(i) who meets the gross receipts test 

2 of subparagraph (B) for the taxable year, 

3 and 

4 ‘‘(ii) who, as of the beginning of the 

5 taxable year, has in effect written account6 ing procedures meeting such requirements 

7 as the Secretary may prescribe with re8 spect to the expensing of amounts de9 scribed in paragraph (1). 

10 ‘‘(B) GROSS RECEIPTS TEST.—A taxpayer 

11 meets the gross receipts test of this subpara12 graph for any taxable year if the average an13 nual gross receipts of such taxpayer for the 3- 

14 taxable-year period ending with the taxable year 

15 which precedes such taxable year does not ex16 ceed $10,000,000. 

17 ‘‘(C) RULES RELATING TO GROSS RE18 CEIPTS TEST.—For purposes of subparagraph 

19 (B)— 

20 ‘‘(i) the rules of paragraphs (2) and 

21 (3) of section 448(c) shall apply, and 

22 ‘‘(ii) in the case of a partnership, S 

23 corporation, trust, estate, or other pass24 thru entity, the gross receipts test shall 

25 apply at the entity level. 


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1 ‘‘(3) ELECTION.—Any election under this sub2 section for any taxable year shall— 

3 ‘‘(A) specify the items of tangible property 

4 to which the election applies, and 

5 ‘‘(B) be made, in such manner as the Sec6 retary may prescribe, on the taxpayer’s return 

7 of the tax imposed by this chapter for the tax8 able year. 

9 Any election made under this subsection, and any 

10 specification made in any such election, may not be 

11 revoked except with the consent of the Secretary. 

12 ‘‘(4) COORDINATION WITH SECTION 179.—This 

13 subsection shall be applied before section 179. 

14 ‘‘(5) REGULATIONS.—The Secretary shall pre15 scribe such regulations as are necessary to carry out 

16 the purposes of this subsection, including regulations 

17 providing for— 

18 ‘‘(A) exceptions for property which is in19 ventory or land or for which the taxpayer 

20 makes an election for optional treatment under 

21 section 162; and 

22 ‘‘(B) the aggregation of all amounts paid 

23 or incurred with respect to any item of tangible 

24 property. 


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1 ‘‘(6) RULE OF CONSTRUCTION.—If, for any tax2 able year, a taxpayer is not an eligible taxpayer (or 

3 is an eligible taxpayer who does not elect to have 

4 this subsection apply), nothing in this subsection 

5 shall be construed as prohibiting the expensing of 

6 any amount paid or incurred during the taxable year 

7 to acquire or produce any item of tangible property 

8 if such expensing is permitted under any safe harbor 

9 or other provision of the regulations prescribed 

10 under this section. 

11 ‘‘(7) CROSS REFERENCE.—For capitalization of 

12 certain expenses where a taxpayer produces property 

13 or acquires property for resale, see section 263A.’’. 

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

15 this section shall apply to amounts paid or incurred in tax16 able years beginning after December 31, 2013. 

Æ 


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