Small Business Prosperity Act of 2023

Subjects: Taxation, Corporate finance and management, Income tax deductions, Small business, Tax administration and collection, taxpayers, Transfer and inheritance taxes

Summary:  <p><strong>Small Business Prosperity Act of 2023</strong></p> <p>This bill modifies the tax deduction for qualified business income to (1) make such deduction permanent, (2) limit to 21% the top tax rate on qualified business income, (3) repeal the limitation on the deduction based on amount of wages paid, and (4) revise the definition of <em>qualified trade or business</em> to mean any trade or business other than the trade of business of performing services as an employee. </p> <p>The bill provides that a change in the organizational structure of a corporation is not a taxable event if there is no change among the owners, their ownership interests, or the assets of the organization, </p> <p>The bill repeals the estate tax&nbsp;after 2022.</p>

<html><body><pre>[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[H.R. 108 Introduced in House (IH)]

&lt;DOC&gt;






118th CONGRESS
  1st Session
                                H. R. 108

To amend the Internal Revenue Code of 1986 to expand the deduction for 
           qualified business income, and for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                            January 9, 2023

  Mr. Biggs 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 expand the deduction for 
           qualified business income, and for other purposes.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Small Business Prosperity Act of 
2023''.

SEC. 2. INCREASE AND EXPANSION OF DEDUCTION FOR QUALIFIED BUSINESS 
              INCOME.

    (a) Deduction Made Permanent.--Section 199A of the Internal Revenue 
Code of 1986 is amended by striking subsection (i).
    (b) Deduction To Achieve a Top Rate on Qualified Business Income of 
21 Percent.--Subsections (a)(2) and (b)(1)(B) of section 199A of such 
Code are each amended by striking ``20 percent'' and inserting ``43 
percent (47 percent in the case of any taxable year beginning after 
December 31, 2025)''.
    (c) Repeal of Limitation Based on W-2 Wages Paid With Respect to 
the Trade or Business, Top Rate on Qualified Business Income.--Section 
199A(b)(2) of such Code is amended to read as follows:
            ``(2) Determination of deductible amount for each trade or 
        business.--The amount determined under this paragraph with 
        respect to any qualified trade or business is 43 percent (47 
        percent in the case of any taxable year beginning after 
        December 31, 2025) of the taxpayer's qualified business income 
        with respect to the qualified trade or business.''.
    (d) Repeal of Exclusion of Specified Service Trades or 
Businesses.--Section 199A(d) of such Code is amended to read as 
follows:
    ``(d) Qualified Trade or Business.--For purposes of this section, 
the term `qualified trade or business' means any trade or business 
other than the trade or business of performing services as an 
employee.''.
    (e) Conforming Amendments.--
            (1) Section 199A(b) of such Code is amended--
                    (A) by striking paragraphs (3), (4), and (6), and 
                redesignating paragraphs (5) and (7) as paragraphs (3) 
                and (4), respectively, and
                    (B) by striking ``the lesser of--'' and all that 
                follows in paragraph (4) (as so redesignated) and 
                inserting ``9 percent of so much of the qualified 
                business income with respect to such trade or business 
                as is properly allocable to qualified payments received 
                from such cooperative''.
            (2) Section 199A(e) of such Code is amended by striking 
        paragraph (2).
            (3) Section 199A(f)(1) of such Code is amended to read as 
        follows:
            ``(1) Application to partnerships and s corporations.--
                    ``(A) In general.--In the case of a partnership or 
                S corporation--
                            ``(i) this section shall be applied at the 
                        partner or shareholder level, and
                            ``(ii) each partner or shareholder shall 
                        take into account such person's allocable share 
                        of each qualified item of income, gain, 
                        deduction, and loss.
                For purposes of this subparagraph, in the case of an S 
                corporation, an allocable share shall be the 
                shareholder's pro rata share of an item.
                    ``(B) Treatment of trades or business in puerto 
                rico.--In the case of any taxpayer with qualified 
                business income from sources within the commonwealth of 
                Puerto Rico, if all such income is taxable under 
                section 1 for such taxable year, then for purposes of 
                determining the qualified business income of such 
                taxpayer for such taxable year, the term `United 
                States' shall include the Commonwealth of Puerto 
                Rico.''.
            (4) Section 199A(f)(4)(A) of such Code is amended by 
        striking ``and wages''.
            (5) Section 199A(g)(1) of such Code is amended by striking 
        subparagraph (B) and redesignating subparagraph (C) as 
        subparagraph (B).
            (6) Section 199A of such Code is amended by striking 
        subsection (h).
    (f) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2022.

SEC. 3. NO TAXABLE EVENT FOR CHANGE OF CORPORATE FORM.

    Notwithstanding any provision of the Internal Revenue Code of 1986, 
a change in the organizational structure of a corporation, however 
organized, into another organizational structure is not a taxable event 
for the purposes of such Code if there is no change among the owners, 
their ownership interests, or the assets of the organization (other 
than a de minimis change in such assets). The preceding sentence shall 
apply to changes in organizational structure occurring after December 
31, 2022.

SEC. 4. REPEAL OF ESTATE TAX AND RETENTION OF BASIS STEP-UP.

    Effective for estates of decedents dying after December 31, 2022, 
chapter 11 of the Internal Revenue Code of 1986 is repealed.
                                 &lt;all&gt;
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