IB 
Union Calendar No. 745 
115TH CONGRESS 
2D SESSION 
H. R. 6756 
[Report No. 115–957] 
To amend the Internal Revenue Code of 1986 to promote new business 
innovation, and for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
SEPTEMBER 10, 2018 
Mr. BUCHANAN (for himself, Mr. BRADY of Texas, Mr. SAM JOHNSON of 
Texas, Mr. NUNES, Mr. REICHERT, Mr. ROSKAM, Mr. SMITH of Ne-
braska, Ms. JENKINS of Kansas, Mr. PAULSEN, Mr. MARCHANT, Mrs. 
BLACK, Mr. REED, Mr. RENACCI, Mr. KELLY of Pennsylvania, Mrs. 
NOEM, Mr. HOLDING, Mr. SMITH of Missouri, Mr. RICE of South Caro-
lina, Mr. SCHWEIKERT, Mrs. WALORSKI, Mr. CURBELO of Florida, Mr. 
BISHOP of Michigan, Mr. LAHOOD, and Mr. WENSTRUP) introduced the 
following bill; which was referred to the Committee on Ways and Means 
SEPTEMBER 24, 2018 
Additional sponsors: Mrs. BLACKBURN, Mr. MITCHELL, and Mr. ESTES of 
Kansas 
SEPTEMBER 24, 2018 
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] 
[For text of introduced bill, see copy of bill as introduced on September 10, 2018] 
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A BILL 
To amend the Internal Revenue Code of 1986 to promote 
new business innovation, and for other purposes. 
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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. SHORT TITLE. 
This Act may be cited as the ‘‘American Innovation 
Act of 2018’’. 
SEC. 2. SIMPLIFICATION AND EXPANSION OF DEDUCTION 
FOR START-UP AND ORGANIZATIONAL EX-
PENDITURES. 
(a) IN GENERAL.—Section 195 of the Internal Revenue 
Code of 1986 is amended by redesignating subsections (c) 
and (d) as subsections (d) and (e), respectively, and by 
striking all that precedes subsection (d) (as so redesignated) 
and inserting the following: 
‘‘SEC. 195. START-UP AND ORGANIZATIONAL EXPENDI-
TURES. 
‘‘(a) CAPITALIZATION OF EXPENDITURES.—Except as 
otherwise provided in this section, no deduction shall be al-
lowed for start-up or organizational expenditures. 
‘‘(b) ELECTION TO DEDUCT.— 
‘‘(1) IN GENERAL.—If a taxpayer elects the ap-
plication of this subsection with respect to any active 
trade or business— 
‘‘(A) the taxpayer shall be allowed a deduc-
tion for the taxable year in which such active 
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trade or business begins in an amount equal to 
the lesser of— 
‘‘(i) the aggregate amount of start-up 
and organizational expenditures paid or in-
curred in connection with such active trade 
or business, or 
‘‘(ii) $20,000, reduced (but not below 
zero) by the amount by which such aggre-
gate amount exceeds $120,000, and 
‘‘(B) the remainder of such start-up and or-
ganizational expenditures shall be charged to 
capital account and allowed as an amortization 
deduction determined by amortizing such ex-
penditures ratably over the 180-month period be-
ginning with the month in which the active 
trade or business begins. 
‘‘(2) APPLICATION TO ORGANIZATIONAL EXPEND-
ITURES.—In the case of organizational expenditures 
with respect to any corporation or partnership, the 
active trade or business referred to in paragraph (1) 
means the first active trade or business carried on by 
such corporation or partnership. 
‘‘(3) INFLATION
ADJUSTMENT.—In the case of 
any taxable year beginning after December 31, 2019, 
the $20,000 and $120,000 amounts in paragraph 
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(1)(A)(ii) shall each be increased by an amount equal 
to— 
‘‘(A) such dollar amount, multiplied by 
‘‘(B) the cost-of-living adjustment deter-
mined under section 1(f)(3) for the calendar year 
in which the taxable year begins, determined by 
substituting ‘calendar year 2018’ for ‘calendar 
year 2016’ in subparagraph (A)(ii) thereof. 
If any amount as increased under the preceding sen-
tence is not a multiple of $1,000, such amount shall 
be rounded to the nearest multiple of $1,000. 
‘‘(c) ALLOWANCE OF DEDUCTION UPON LIQUIDATION 
OR DISPOSITION.— 
‘‘(1) LIQUIDATION
OF
PARTNERSHIP
OR
COR-
PORATION.—If any partnership or corporation is 
completely liquidated by the taxpayer, any start-up 
or organizational expenditures paid or incurred in 
connection with such partnership or corporation 
which were not allowed as a deduction by reason of 
this section may be deducted to the extent allowable 
under section 165. 
‘‘(2) DISPOSITION OF TRADE OR BUSINESS.—If 
any trade or business is completely disposed of or dis-
continued by the taxpayer, any start-up expenditures 
paid or incurred in connection with such trade or 
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business which were not allowed as a deduction by 
reason of this section (and not taken into account in 
connection with a liquidation to which paragraph (1) 
applies) may be deducted to the extent allowable 
under section 165. For purposes of this paragraph, in 
the case of any deduction allowed under subsection 
(b)(1) with respect to both start-up and organiza-
tional expenditures, the amount treated as so allowed 
with respect to start-up expenditures shall bear the 
same ratio to such deduction as the start-up expendi-
tures taken into account in determining such deduc-
tion bears to the aggregate of the start-up and organi-
zational expenditures so taken into account.’’. 
(b) 
ORGANIZATIONAL
EXPENDITURES.—Section 
195(d) of such Code, as redesignated by subsection (a), is 
amended by adding at the end the following new para-
graphs: 
‘‘(3) 
ORGANIZATIONAL
EXPENDITURES.—The 
term ‘organizational expenditures’ means any expend-
iture which— 
‘‘(A) is incident to the creation of a cor-
poration or a partnership, 
‘‘(B) is chargeable to capital account, and 
‘‘(C) is of a character which, if expended in-
cident to the creation of a corporation or a part-
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nership having an ascertainable life, would be 
amortizable over such life. 
‘‘(4) APPLICATION
TO
CERTAIN
DISREGARDED 
ENTITIES.—In the case of any entity with a single 
owner that is disregarded as an entity separate from 
its owner, this section shall be applied in the same 
manner as if such entity were a corporation.’’. 
(c) ELECTION.—Section 195(e)(2) of such Code, as re-
designated by subsection (a), is amended to read as follows: 
‘‘(2) PARTNERSHIPS AND S CORPORATIONS.—In 
the case of any partnership or S corporation, the elec-
tion under subsection (b) shall be made (and this sec-
tion shall be applied) at the entity level.’’. 
(d) CONFORMING AMENDMENTS.— 
(1)(A) Part VIII of subchapter B of chapter 1 is 
amended by striking section 248 of such Code (and by 
striking the item relating to such section in the table 
of sections of such part). 
(B) Section 170(b)(2)(D)(ii) of such Code is 
amended by striking ‘‘(except section 248)’’. 
(C) Section 312(n)(3) of such Code is amended 
by striking ‘‘Sections 173 and 248’’ and inserting 
‘‘Sections 173 and 195’’. 
(D) Section 535(b)(3) of such Code is amended 
by striking ‘‘(except section 248)’’. 
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(E) Section 545(b)(3) of such Code is amended 
by striking ‘‘(except section 248)’’. 
(F) Section 545(b)(4) of such Code is amended 
by striking ‘‘(except section 248)’’. 
(G) Section 834(c)(7) of such Code is amended 
by striking ‘‘(except section 248)’’. 
(H) Section 852(b)(2)(C) of such Code is amend-
ed by striking ‘‘(except section 248)’’. 
(I) Section 857(b)(2)(A) of such Code is amended 
by striking ‘‘(except section 248)’’. 
(J) Section 1363(b) of such Code is amended by 
adding ‘‘and’’ at the end of paragraph (2), by strik-
ing paragraph (3), and by redesignating paragraph 
(4) as paragraph (3). 
(K) Section 1375(b)(1)(B)(i) of such Code is 
amended by striking ‘‘(other than the deduction al-
lowed by section 248, relating to organization expend-
itures)’’. 
(2)(A) Section 709 of such Code is amended to 
read as follows: 
‘‘SEC. 709. TREATMENT OF SYNDICATION FEES. 
‘‘No deduction shall be allowed under this chapter to 
a partnership or to any partner of the partnership for any 
amounts paid or incurred to promote the sale of (or to sell) 
an interest in the partnership.’’. 
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(B) The item relating to section 709 in the table 
of sections for part I of subchapter K of chapter 1 of 
such Code is amended to read as follows: 
‘‘Sec. 709. Treatment of syndication fees.’’. 
(3) Section 1202(e)(2)(A) of such Code is amend-
ed by striking ‘‘section 195(c)(1)(A)’’ and inserting 
‘‘section 195(d)(1)(A)’’. 
(4) The item relating to section 195 in the table 
of contents of part VI of subchapter B of chapter 1 
of such Code is amended to read as follows: 
‘‘Sec. 195. Start-up and organizational expenditures.’’. 
(e) EFFECTIVE DATE.—The amendments made by this 
section shall apply to expenditures paid or incurred in con-
nection with active trades or businesses which begin in tax-
able years beginning after December 31, 2018. 
SEC. 3. PRESERVATION OF START-UP NET OPERATING 
LOSSES AND TAX CREDITS AFTER OWNER-
SHIP CHANGE. 
(a) APPLICATION TO NET OPERATING LOSSES.—Sec-
tion 382(d) of the Internal Revenue Code of 1986 is amend-
ed by adding at the end the following new paragraph: 
‘‘(4) EXCEPTION FOR START-UP LOSSES.— 
‘‘(A) IN GENERAL.—In the case of any net 
operating loss carryforward described in para-
graph (1)(A) which arose in a start-up period 
taxable year, the amount of such net operating 
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loss carryforward otherwise taken into account 
under such paragraph shall be reduced by the net 
start-up loss determined with respect to the trade 
or business referred to in subparagraph (B)(i) 
for such start-up period taxable year. 
‘‘(B) START-UP PERIOD TAXABLE YEAR.— 
The term ‘start-up period taxable year’ means 
any taxable year of the old loss corporation 
which— 
‘‘(i) begins before the close of the 3-year 
period beginning on the date on which any 
trade or business of such corporation begins 
as an active trade or business (as deter-
mined under section 195(d)(2) without re-
gard to subparagraph (B) thereof), and 
‘‘(ii) ends after September 10, 2018. 
‘‘(C) NET START-UP LOSS.— 
‘‘(i) IN
GENERAL.—The term ‘net 
start-up loss’ means, with respect to any 
trade or business referred to in subpara-
graph (B)(i) for any start-up period taxable 
year, the amount which bears the same 
ratio (but not greater than 1) to the net op-
erating loss carryforward which arose in 
such start-up period taxable year as— 
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‘‘(I) the net operating loss (if any) 
which would have been determined for 
such start-up period taxable year if 
only items of income, gain, deduction, 
and loss properly allocable to such 
trade or business were taken into ac-
count, bears to 
‘‘(II) the amount of the net oper-
ating loss determined for such start-up 
period taxable year. 
‘‘(ii) SPECIAL
RULE
FOR
LAST
TAX-
ABLE YEAR IN START-UP PERIOD.—In the 
case of any start-up period taxable year 
which ends after the close of the 3-year pe-
riod described in subparagraph (B)(i) with 
respect to any trade or business, the net 
start-up loss with respect to such trade or 
business for such start-up period taxable 
year shall be the same proportion of such 
loss (determined without regard to this 
clause) as the proportion of such start-up 
period taxable year which is on or before the 
last day of such period. 
‘‘(D) APPLICATION TO NET OPERATING LOSS 
ARISING IN YEAR OF OWNERSHIP CHANGE.—Sub-
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paragraph (A) shall apply to any net operating 
loss described in paragraph (1)(B) in the same 
manner as such subparagraph applies to net op-
erating loss carryforwards described in para-
graph (1)(A), but by only taking into account 
the amount of such net operating loss (and the 
amount of the net start-up loss) which is allo-
cable under paragraph (1)(B) to the period de-
scribed in such paragraph. Proper adjustment in 
the allocation of the net start-up loss under the 
preceding sentence shall be made in the case of 
a taxable year to which subparagraph (C)(ii) 
applies. 
‘‘(E) APPLICATION
TO
TAXABLE
YEARS 
WHICH ARE START-UP PERIOD TAXABLE YEARS 
WITH
RESPECT
TO
MORE
THAN
TRADE
OR 
BUSINESS.—In the case of any net operating loss 
carryforward which arose in a taxable year 
which is a start-up period taxable year with re-
spect to more than 1 trade or business— 
‘‘(i) this paragraph shall be applied 
separately with respect to each such trade or 
business, and 
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‘‘(ii) the aggregate reductions under 
subparagraph (A) shall not exceed such net 
operating loss carryforward. 
‘‘(F) CONTINUITY OF BUSINESS REQUIRE-
MENT.—If the new loss corporation does not con-
tinue the trade or business referred to in sub-
paragraph (B)(i) at all times during the 2-year 
period beginning on the change date, this para-
graph shall not apply with respect to such trade 
or business. 
‘‘(G) CERTAIN
TITLE
OR
SIMILAR 
CASES.— 
‘‘(i) 
MULTIPLE
OWNERSHIP 
CHANGES.—In the case of a 2nd ownership 
change to which subsection (l)(5)(D) ap-
plies, this paragraph shall not apply for 
purposes of determining the pre-change loss 
with respect to such 2nd ownership change. 
‘‘(ii) CERTAIN
INSOLVENCY
TRANS-
ACTIONS.—If subsection (l)(6) applies for 
purposes of determining the value of the old 
loss corporation under subsection (e), this 
paragraph shall not apply. 
‘‘(H) NOT APPLICABLE TO DISALLOWED IN-
TEREST.—This paragraph shall not apply for 
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purposes of applying the rules of paragraph (1) 
to the carryover of disallowed interest under 
paragraph (3). 
‘‘(I) TRANSITION
RULE.—This paragraph 
shall not apply with respect to any trade or 
business if the date on which such trade or busi-
ness begins as an active trade or business (as de-
termined under section 195(d)(2) without regard 
to subparagraph (B) thereof) is on or before Sep-
tember 10, 2018.’’. 
(b) APPLICATION TO EXCESS CREDITS.—Section 383 
of such Code is amended by redesignating subsection (e) as 
subsection (f) and by inserting after subsection (d) the fol-
lowing new subsection: 
‘‘(e) EXCEPTION FOR START-UP EXCESS CREDITS.— 
‘‘(1) IN GENERAL.—In the case of any unused 
general business credit of the corporation under sec-
tion 39 which arose in a start-up period taxable year, 
the amount of such unused general business credit 
otherwise taken into account under subsection 
(a)(2)(A) shall be reduced by the start-up excess credit 
determined with respect to any trade or business re-
ferred to in section 382(d)(4)(B)(i) for such start-up 
period taxable year. 
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‘‘(2) START-UP
PERIOD
TAXABLE
YEAR.—For 
purposes of this subsection, the term ‘start-up period 
taxable year’ has the meaning given such term in sec-
tion 382(d)(4)(B). 
‘‘(3) START-UP EXCESS CREDIT.—For purposes 
of this subsection, the term ‘start-up excess credit’ 
means, with respect to any trade or business referred 
to in section 382(d)(4)(B)(i) for any start-up period 
taxable year, the amount which bears the same ratio 
to the unused general business credit which arose in 
such start-up period taxable year as— 
‘‘(A) the amount of the general business 
credit which would have been determined for 
such start-up period taxable year if only credits 
properly allocable to such trade or business were 
taken into account, bears to 
‘‘(B) the amount of the general business 
credit determined for such start-up period tax-
able year. 
‘‘(4) APPLICATION OF CERTAIN RULES.—Rules 
similar to the rules of subparagraphs (C)(ii), (D), 
(E), and (F) of section 382(d)(4) shall apply for pur-
poses of this subsection. 
‘‘(5) TRANSITION RULE.—This subsection shall 
not apply with respect to any trade or business if the 
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date on which such trade or business begins as an ac-
tive trade or business (as determined under section 
195(d)(2) without regard to subparagraph (B) there-
of) is on or before September 10, 2018.’’. 
(c) EFFECTIVE DATE.—The amendments made by this 
section shall apply to taxable years ending after September 
10, 2018. 
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Union Calendar No. 745 
115TH CONGRESS 
2D SESSION 
H. R. 6756 
[Report No. 115–957] 
A BILL 
To amend the Internal Revenue Code of 1986 to 
promote new business innovation, and for other 
purposes. 
SEPTEMBER 24, 2018 
Reported with an amendment, committed to the Com-
mittee of the Whole House on the State of the Union, 
and ordered to be printed 
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