the due date for filing the return for the prior 
taxable year involved. 
No deduction shall be allowed under this chapter for 
interest described in subparagraph (B). 
‘‘(3) RECAPTURE
EVENT.—For purposes of 
paragraph (1), there is a recapture event with re-
spect to a qualified equity investment if such invest-
ment is sold, transferred, or exchanged by the quali-
fied investor, but only to the extent that such sale, 
transfer, or exchange is not the direct result of a 
complete or partial liquidation of the qualified small 
business in which such qualified equity investment is 
made. 
‘‘(4) SPECIAL RULES.— 
‘‘(A) TAX
BENEFIT
RULE.—The tax for 
the taxable year shall be increased under para-
graph (1) only with respect to credits allowed 
by reason of this section which were used to re-
duce tax liability. In the case of credits not so 
used to reduce tax liability, the carryforwards 
and carrybacks under section 39 shall be appro-
priately adjusted. 
‘‘(B) NO CREDITS AGAINST TAX.—Any in-
crease in tax under this subsection shall not be 
treated as a tax imposed by this chapter for 
VerDate Aug 31 2005 
09:14 Apr 28, 2006
Jkt 049200
PO 00000
Frm 00011
Fmt 6652
Sfmt 6201
E:\BILLS\H5198.IH
H5198
cprice-sewell on PROD1PC66 with BILLS
purposes of determining the amount of any 
credit under this chapter or for purposes of sec-
tion 55. 
‘‘(h) BASIS REDUCTION.—The basis of any qualified 
equity investment shall be reduced by the amount of any 
credit determined under this section with respect to such 
investment. 
‘‘(i) REGULATIONS.— 
‘‘(1) IN
GENERAL.—The Secretary shall pre-
scribe such regulations as necessary to carry out the 
provisions of this section. 
‘‘(2) CERTIFICATION OF QUALIFIED EQUITY IN-
VESTMENT.—Such regulations shall require that a 
qualified investor— 
‘‘(A) certify that the small business in 
which the equity investment is made meets the 
requirements described in subsection (c)(3), and 
‘‘(B) include the name, address, and tax-
payer identification number of such small busi-
ness on the return claiming the credit under 
subsection (a). 
‘‘(j) TERMINATION.—This section shall not apply to 
qualified equity investments made in taxable years begin-
ning after December 31, 2011.’’. 
VerDate Aug 31 2005 
09:14 Apr 28, 2006
Jkt 049200
PO 00000
Frm 00012
Fmt 6652
Sfmt 6201
E:\BILLS\H5198.IH
H5198
cprice-sewell on PROD1PC66 with BILLS
(b) CREDIT MADE PART OF GENERAL BUSINESS 
CREDIT.—Subsection (b) of section 38 is amended by 
striking ‘‘and’’ at the end of paragraph (25), by striking 
the period at the end of paragraph (26) and inserting ‘‘, 
and’’, and by adding at the end the following new para-
graph: 
‘‘(27) in the case of a taxpayer, the equity in-
vestment in small business tax credit determined 
under section 45N(a).’’. 
(c) CLERICAL AMENDMENT.—The table of sections 
for subpart D of part IV of subchapter A of chapter 1 
of such Code is amended by adding at the end the fol-
lowing new item: 
‘‘Sec. 45N. Equity investment in small business tax credit.’’. 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to qualified equity investments 
made after December 31, 2006, in taxable years beginning 
after such date. 
Æ 
VerDate Aug 31 2005 
09:14 Apr 28, 2006
Jkt 049200
PO 00000
Frm 00013
Fmt 6652
Sfmt 6301
E:\BILLS\H5198.IH
H5198
cprice-sewell on PROD1PC66 with BILLS