I 

112TH CONGRESS 

1ST SESSION H. R. 2888 

To amend the Internal Revenue Code of 1986 to allow credits for the 

establishment of franchises with veterans. 

IN THE HOUSE OF REPRESENTATIVES 

SEPTEMBER 12, 2011 

Mr. SCHOCK (for himself and Mr. BOSWELL) 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 credits 

for the establishment of franchises with veterans. 

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 ‘‘Help Veterans Own 

5 Franchises Act’’. 

6 SEC. 2. VETERANS FRANCHISING CREDIT. 

7 (a) IN GENERAL.—Subpart D of part IV of sub8 chapter A of chapter 1 of the Internal Revenue Code of 

9 1986 (relating to business related credits) is amended by 

10 adding at the end the following new section: 


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1 ‘‘SEC. 45S. VETERANS FRANCHISING. 

2 ‘‘(a) VETERANS FRANCHISE FEE CREDIT.— 

3 ‘‘(1) IN GENERAL.—For purposes of section 38 

4 and subject to the limitation set forth in paragraph 

5 (2), the veterans franchise fee credit determined 

6 under this section for the taxable year is an amount 

7 equal to 25 percent of the qualified franchise fee 

8 paid or incurred by a qualified veteran in connection 

9 with the purchase of a franchise. 

10 ‘‘(2) LIMITATION.—The amount of qualified 

11 franchise fee taken into account under paragraph 

12 (1) shall not exceed $400,000. 

13 ‘‘(b) REDUCTION WHERE FRANCHISE NOT 100 PER14 CENT VETERAN-OWNED.—In the case of any franchise in 

15 which veterans do not own 100 percent of the stock or 

16 the capital or profits interests of the franchisee, the credit 

17 under subsection (a) shall be the amount which bears the 

18 same ration to the amount determined under subsection 

19 (a) (without regard to this subsection) as— 

20 ‘‘(1) the stock or capital or profits interests of 

21 the franchise held by veterans, bears to 

22 ‘‘(2) the total stock or capital or profits inter23 ests of the franchisee. 

24 For purposes of this subsection, the spouse of a veteran 

25 shall be treated as a veteran. 


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1 ‘‘(c) QUALIFIED FRANCHISE FEE.—For purposes of 

2 this section, the term ‘qualified franchise fee’ means any 

3 one-time fee required by the franchisor when entering into 

4 a franchise agreement with a veteran as the franchisee. 

5 ‘‘(d) OTHER DEFINITIONS.—For purposes of this 

6 section, the terms ‘franchise’, ‘franchisee’, ‘franchisor’, 

7 and ‘franchise fee’ have the meanings given such terms 

8 in part 436 of title 16, Code of Federal Regulations. 

9 ‘‘(e) VETERAN.—The term ‘veteran’ has the meaning 

10 given such term by section 101 of title 38, United States 

11 Code. 

12 ‘‘(f) ELECTION.—This section shall not apply to a 

13 taxpayer for any taxable year if such taxpayer elects to 

14 have this section not apply for such taxable year.’’. 

15 (b) CREDIT TO BE PART OF GENERAL BUSINESS

16 CREDIT.—Section 38(b) of such Code is amended by strik17 ing ‘‘plus’’ at the end of paragraph (35), by striking the 

18 period at the end of paragraph (36) and inserting ‘‘, plus’’, 

19 and by adding at the end the following new paragraph: 

20 ‘‘(37) the veterans franchise fee credit deter21 mined under section 45S(a).’’. 

22 (c) CLERICAL AMENDMENT.—The table of sections 

23 for subpart D of part IV of subchapter A of chapter 1 

24 of such Code is amended by adding at the end the fol25 lowing new item: 

‘‘Sec. 45S. Veterans franchising.’’. 


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

2 this section shall apply to taxable years beginning after 

3 December 31, 2011. 

4 SEC. 3. PUBLICATION OF INFORMATION BY DEPARTMENT 

5 OF VETERANS AFFAIRS AND SMALL BUSI6 NESS ADMINISTRATION. 

7 The Administrator of the Small Business Administra8 tion and the Secretary of Veterans Affairs shall publicize 

9 in mailings and brochures sent to veterans service organi10 zations and veteran advocacy groups information regard11 ing discounted franchise fees under section 45S of the In12 ternal Revenue Code of 1986 and other information about 

13 the program established under amendments made by this 

14 Act. 

Æ 


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