IB 
Union Calendar No. 317 
113TH CONGRESS 
2D SESSION 
H. R. 4453 
[Report No. 113–429] 
To amend the Internal Revenue Code of 1986 to make permanent the reduced 
recognition period for built-in gains of S corporations. 
IN THE HOUSE OF REPRESENTATIVES 
APRIL 10, 2014 
Mr. REICHERT (for himself and Mr. KIND) introduced the following bill; which 
was referred to the Committee on Ways and Means 
MAY 2, 2014 
Additional sponsor: Mr. REED 
MAY 2, 2014 
Reported with an amendment, committed to the Committee of the Whole 
House on the State of the Union, and ordered to be printed 
[Strike out all after the enacting clause and insert the part printed in italic] 
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A BILL 
To amend the Internal Revenue Code of 1986 to make 
permanent the reduced recognition period for built-in 
gains of S corporations. 
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Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. REDUCED RECOGNITION PERIOD FOR BUILT-IN 
GAINS OF S CORPORATIONS MADE PERMA-
NENT. 
(a) IN GENERAL.—Paragraph (7) of section 1374(d) 
of the Internal Revenue Code of 1986 is amended to read 
as follows: 
‘‘(7) RECOGNITION PERIOD.— 
‘‘(A) IN GENERAL.—The term ‘recognition 
period’ means the 5-year period beginning with 
the 1st day of the 1st taxable year for which 
the corporation was an S corporation. For pur-
poses of applying this section to any amount in-
cludible in income by reason of distributions to 
shareholders pursuant to section 593(e), the 
preceding sentence shall be applied without re-
gard to the phrase ‘5-year’. 
‘‘(B) INSTALLMENT SALES.—If an S cor-
poration sells an asset and reports the income 
from the sale using the installment method 
under section 453, the treatment of all pay-
ments received shall be governed by the provi-
sions of this paragraph applicable to the taxable 
year in which such sale was made.’’. 
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(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to taxable years beginning after 
December 31, 2013. 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Permanent S Corpora-
tion Built-in Gains Recognition Period Act of 2014’’. 
SEC. 2. REDUCED RECOGNITION PERIOD FOR BUILT-IN 
GAINS OF S CORPORATIONS MADE PERMA-
NENT. 
(a) IN GENERAL.—Paragraph (7) of section 1374(d) 
of the Internal Revenue Code of 1986 is amended to read 
as follows: 
‘‘(7) RECOGNITION PERIOD.— 
‘‘(A) IN GENERAL.—The term ‘recognition 
period’ means the 5-year period beginning with 
the 1st day of the 1st taxable year for which the 
corporation was an S corporation. For purposes 
of applying this section to any amount includ-
ible in income by reason of distributions to 
shareholders pursuant to section 593(e), the pre-
ceding sentence shall be applied without regard 
to the phrase ‘5-year’. 
‘‘(B) INSTALLMENT SALES.—If an S cor-
poration sells an asset and reports the income 
from the sale using the installment method under 
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section 453, the treatment of all payments re-
ceived shall be governed by the provisions of this 
paragraph applicable to the taxable year in 
which such sale was made.’’. 
(b) EFFECTIVE DATE.—The amendment made by this 
section shall apply to taxable years beginning after Decem-
ber 31, 2013. 
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