Small Business Owner Tax Relief Act of 2022

To amend the Internal Revenue Code of 1986 to provide tax relief for certain small business owners, to impose a tax on the repurchase of corporate stock, and for other purposes. 1. Short title This Act may be cited as the Small Business Owner Tax Relief Act of 2022 2. Enhanced deduction for certain self-employed individuals (a) In general Section 164(f) (3) Enhanced deduction for lower-income individuals In the case of an individual with a gross income of less than $400,000 for the taxable year, paragraph (1) shall be applied by substituting three quarters of the taxes imposed one-half of the taxes imposed . (b) Effective date The amendment made by this section shall apply to taxable years beginning after December 31, 2021. 3. Excise tax on repurchase of corporate stock (a) In general Subtitle D is amended by inserting after chapter 36 the following new chapter: 37 Repurchase of corporate stock Sec. 4501. Repurchase of corporate stock. 4501. Repurchase of corporate stock (a) General rule There is hereby imposed on each covered corporation a tax equal to 0.8 percent of the fair market value of any stock of the corporation which is repurchased by such corporation during the taxable year. (b) Covered corporation For purposes of this section, the term covered corporation (c) Repurchase For purposes of this section— (1) In general The term repurchase (A) a redemption within the meaning of section 317(b) with regard to the stock of a covered corporation, and (B) any transaction determined by the Secretary to be economically similar to a transaction described in subparagraph (A). (2) Treatment of purchases by specified affiliates (A) In general The acquisition of stock of a covered corporation by a specified affiliate of such covered corporation, from a person who is not the covered corporation or a specified affiliate of such covered corporation, shall be treated as a repurchase of the stock of the covered corporation by such covered corporation. (B) Specified affiliate For purposes of this section, the term specified affiliate (i) any corporation more than 50 percent of the stock of which is owned (by vote or by value), directly or indirectly, by such corporation, and (ii) any partnership more than 50 percent of the capital interests or profits interests of which is held, directly or indirectly, by such corporation. (3) Adjustment The amount taken into account under subsection (a) with respect to any stock repurchased by a covered corporation shall be reduced by the fair market value of any stock issued by the covered corporation during the taxable year, including the fair market value of any stock issued to employees of such covered corporation or a specified affiliate of such covered corporation during the taxable year, whether or not such stock is issued in response to the exercise of an option to purchase such stock. (d) Special rules for acquisition of stock of certain foreign corporations (1) In general In the case of an acquisition of stock of an applicable foreign corporation by a specified affiliate of such corporation (other than a foreign corporation or a foreign partnership (unless such partnership has a domestic entity as a direct or indirect partner)) from a person who is not the applicable foreign corporation or a specified affiliate of such applicable foreign corporation, for purposes of this section— (A) such specified affiliate shall be treated as a covered corporation with respect to such acquisition, (B) such acquisition shall be treated as a repurchase of stock of a covered corporation by such covered corporation, and (C) the adjustment under subsection (c)(3) shall be determined only with respect to stock issued by such specified affiliate to employees of the specified affiliate. (2) Surrogate foreign corporations In the case of a repurchase of stock of a covered surrogate foreign corporation by such covered surrogate foreign corporation, or an acquisition of stock of a covered surrogate foreign corporation by a specified affiliate of such corporation, for purposes of this section— (A) the expatriated entity with respect to such covered surrogate foreign corporation shall be treated as a covered corporation with respect to such repurchase or acquisition, (B) such repurchase or acquisition shall be treated as a repurchase of stock of a covered corporation by such covered corporation, and (C) the adjustment under subsection (c)(3) shall be determined only with respect to stock issued by such expatriated entity to employees of the expatriated entity. (3) Definitions For purposes of this subsection— (A) Applicable foreign corporation The term applicable foreign corporation (B) Covered surrogate foreign corporation The term covered surrogate foreign corporation September 20, 2021 March 4, 2003 (C) Expatriated entity The term expatriated entity (e) Exceptions Subsection (a) shall not apply— (1) to the extent that the repurchase is part of a reorganization (within the meaning of section 368(a)) and no gain or loss is recognized on such repurchase by the shareholder under chapter 1 by reason of such reorganization, (2) in any case in which the stock repurchased is, or an amount of stock equal to the value of the stock repurchased is, contributed to an employer-sponsored retirement plan, employee stock ownership plan, or similar plan, (3) in any case in which the total value of the stock repurchased during the taxable year does not exceed $1,000,000, (4) under regulations prescribed by the Secretary, in cases in which the repurchase is by a dealer in securities in the ordinary course of business, (5) to repurchases by a regulated investment company (as defined in section 851) or a real estate investment trust, or (6) to the extent that the repurchase is treated as a dividend for purposes of this title. (f) Regulations and guidance The Secretary shall prescribe such regulations and other guidance as are necessary or appropriate to administer and to prevent the avoidance of the purposes of this section, including regulations and other guidance— (1) to prevent the abuse of the exceptions provided by subsection (e), (2) to address special classes of stock and preferred stock, and (3) for the application of the rules under subsection (d). . (b) Tax not deductible Paragraph (6) of section 275(a) is amended by inserting 37, 41 (c) Clerical amendment The table of chapters for subtitle D is amended by inserting after the item relating to chapter 36 the following new item: Chapter 37—Repurchase of corporate stock . (d) Effective date The amendments made by this section shall apply to repurchases (within the meaning of section 4501(c)

Summary: Small Business Owner Tax Relief Act of 2022 This bill increases the tax deduction for the payroll taxes of small businesses and imposes an excise tax on corporations for their stock repurchases. The bill allows self-employed taxpayers earning less than $400,000 in a taxable year to deduct three-quarters (currently, one-half) of their payroll taxes. The bill also imposes an excise tax of 0.8% on the fair market value of any stock of a publicly traded domestic corporation that is repurchased by the corporation during the taxable year.