I 
116TH CONGRESS 
1ST SESSION H. R. 4922 
To amend the Internal Revenue Code of 1986 to provide a tax credit for 
angel investors in start-up businesses, to provide a credit for wages 
paid by start-up businesses to their first employees, and for other pur-
poses. 
IN THE HOUSE OF REPRESENTATIVES 
OCTOBER 30, 2019 
Ms. JUDY CHU of California (for herself and Mr. BLUMENAUER) 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 provide 
a tax credit for angel investors in start-up businesses, 
to provide a credit for wages paid by start-up businesses 
to their first employees, and for other purposes. 
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 ‘‘Providing Real Oppor-
tunities for Growth to Rising Entrepreneurs for Sustained 
Success (PROGRESS) Act’’. 
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SEC. 2. ANGEL INVESTOR TAX CREDIT. 
(a) IN GENERAL.—Subpart D of part IV of sub-
chapter A of chapter 1 of the Internal Revenue Code of 
1986 is amended by adding at the end the following new 
section: 
‘‘SEC. 45T. ANGEL INVESTOR TAX CREDIT. 
‘‘(a) GENERAL RULE.—For purposes of section 38, 
the angel investor credit determined under this section for 
any taxable year is an amount equal to the sum of the 
credit amounts determined for the taxable year for all 
qualified investments of the taxpayer. 
‘‘(b) CREDIT AMOUNT.—For purposes of this sec-
tion— 
‘‘(1) IN GENERAL.—The term ‘credit amount’ 
means, with respect to any qualified investment in a 
qualifying business entity, the lesser of— 
‘‘(A) 10 percent of the amount of the 
qualified investment determined under sub-
section (c)(3) for the taxable year, or 
‘‘(B) an amount equal to— 
‘‘(i) 50 percent of such qualified in-
vestment, reduced (but not below zero) by 
‘‘(ii) the amount of the credit deter-
mined under this section with respect to 
such qualified investment of the taxpayer 
for all preceding taxable years. 
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‘‘(2) OVERALL DOLLAR LIMITATION.— 
‘‘(A) IN GENERAL.—The credit amount de-
termined under paragraph (1) with respect to 
any qualified investment of a taxpayer in a 
qualifying business entity for any taxable year 
shall not exceed the lesser of— 
‘‘(i) $10,000 (as increased for the tax-
able year by the cost-of-living adjustment 
under subsection (e)(2)), or 
‘‘(ii) an amount equal to— 
‘‘(I) an amount equal to 5 times 
the amount under clause (i) for the 
taxable year, reduced (but not below 
zero) by 
‘‘(II) the amount of the credit 
determined under this section with re-
spect to such qualified investment of 
the taxpayer for all preceding taxable 
years. 
‘‘(B) NO CREDIT AMOUNT BY REASON OF 
COST-OF-LIVING ADJUSTMENT AFTER OVERALL 
LIMIT
FIRST
REACHED.—No credit amount 
shall be determined under this section with re-
spect to any qualified investment of a taxpayer 
in a qualifying business entity for any taxable 
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year after the first taxable year for which the 
amount determined under subclause (II) of sub-
paragraph (A)(ii) equals or exceeds the amount 
determined under subclause (I) of such sub-
paragraph. 
‘‘(3) REDUCTION IN CREDIT AMOUNT WHERE 
LOAN RATE EXCEEDS PRIME RATE.— 
‘‘(A) IN GENERAL.—If— 
‘‘(i) the rate of interest (expressed as 
an annual percentage rate) on a qualified 
investment which is a qualifying loan, ex-
ceeds 
‘‘(ii) the bank prime rate as of the 
first day of the month in which the loan is 
entered into (or such other time as the 
Secretary may specify), 
then each of the amounts determined under 
subparagraphs (A) and (B)(i) of paragraph (1) 
shall be reduced (but not below zero) by the 
amount which bears the same ratio to such 
amount as the number of full percentage points 
by which such rate of interest exceeds such 
bank prime rate bears to 25. 
‘‘(B) SPECIAL RULES WHERE QUALIFYING 
LOANS TREATED AS PART OF SINGLE INVEST-
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MENT.—If 1 or more qualifying loans to which 
subparagraph (A) applies are treated as part of 
a single qualified investment under subsection 
(c)(1), then, for purposes of this subsection— 
‘‘(i) the credit amount under para-
graph (1) for such single qualified invest-
ment shall be the sum of such credit 
amounts computed separately for each 
such qualifying loan and such credit 
amount computed for all other qualified in-
vestments treated as part of such single 
qualified investment, and 
‘‘(ii) the limitation under paragraph 
(2) shall be applied to such sum. 
‘‘(C) RULES
RELATING
TO
INTEREST 
RATES.— 
‘‘(i) ANNUAL
PERCENTAGE
RATE.— 
The Secretary shall prescribe guidance or 
regulations for the calculation of the an-
nual percentage rate of interest on a loan 
for purposes of subparagraph (A)(i), in-
cluding rules which provide for— 
‘‘(I) the calculation of the annual 
percentage rate in cases where there 
is a variable rate of interest, 
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‘‘(II) the recalculation of the an-
nual percentage rate where the terms 
of the loan are modified after the loan 
is entered into, and 
‘‘(III) the proper taking into ac-
count of lump sum payments, orienta-
tion and application fees, closing fees, 
invoice discounting fees, and any 
other loan fees. 
‘‘(ii) BANK
PRIME
RATE.—For pur-
poses of subparagraph (A)(ii), the term 
‘bank prime rate’ means the average pre-
dominant prime rate quoted by commercial 
banks to large businesses, as determined 
by the Board of Governors of the Federal 
Reserve System. 
‘‘(4) SPECIAL
RULES
FOR
PASS-THRU
ENTI-
TIES.—For purposes of this subsection, if a qualified 
investment in a qualifying business entity is made by 
a partnership, trust, S corporation, or other pass- 
thru entity, the limitations under this subsection 
with respect to the qualified investment shall apply 
at the partnership or other entity level and not at 
the partner or similar level. 
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‘‘(c) QUALIFIED INVESTMENT.—For purposes of this 
section— 
‘‘(1) IN GENERAL.—The term ‘qualified invest-
ment’ means, with respect to any qualifying business 
entity, either of the following of the taxpayer: 
‘‘(A) The direct or indirect acquisition of 
stock, or a capital interest, in the entity at its 
original issue solely in exchange for cash. 
‘‘(B) A qualifying loan made to the entity. 
If a taxpayer has or had more than 1 qualified in-
vestment in any qualifying business entity for the 
taxable year or any prior taxable year, all such in-
vestments shall be treated as a single qualified in-
vestment for purposes of applying this section. 
‘‘(2) EXCEPTION FOR INVESTMENTS MADE BY 
QUALIFIED ACTIVE INVESTORS AND RELATED PER-
SONS.—Such term shall not include any acquisition 
or loan made by a taxpayer who, immediately before 
the acquisition or loan, is a qualified active investor 
in the qualifying business entity or is related to any 
qualified active investor. 
‘‘(3) AMOUNT OF QUALIFIED INVESTMENT.— 
The amount of a taxpayer’s qualified investment 
with respect to any qualifying business entity for 
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‘‘(i) all credits determined under this 
section for any periods before the transfer 
with respect to the qualified investment of 
any prior holder of such investment shall 
be taken into account under paragraphs 
(1)(B)(ii) and (2)(A)(ii)(II) of such sub-
section in the same manner as if such 
credits were determined for the transferee 
for prior taxable years, and 
‘‘(ii) if only a portion of the qualified 
investment was transferred, the amount 
taken into account under such paragraphs 
by reason of clause (i) shall be ratably re-
duced to reflect only the portion so trans-
ferred. 
‘‘(d) QUALIFYING BUSINESS ENTITY.—For purposes 
of this section— 
‘‘(1) DEFINITION.— 
‘‘(A) IN GENERAL.—The term ‘qualifying 
business entity’ means, with respect to any 
qualified investment, any entity which is en-
gaged in the active conduct of 1 or more trades 
or businesses and with respect to which— 
‘‘(i) the qualified active investor own-
ership requirements of paragraph (2) are 
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met immediately before and after the 
qualified investment, 
‘‘(ii) the wage requirements of para-
graph (3) are met, and 
‘‘(iii) the certification requirements of 
paragraph (4) are met. 
‘‘(B) ENTITIES
UNDER
COMMON
CON-
TROL.—For purposes of this section, all quali-
fying business entities treated as a single em-
ployer under subsection (a) or (b) of section 52 
or subsection (m) or (o) of section 414 shall be 
treated as a single qualifying business entity. 
‘‘(2) QUALIFIED ACTIVE INVESTOR OWNERSHIP 
REQUIREMENTS.—The requirements of this para-
graph are met with respect to any entity if qualified 
active investors own directly or indirectly— 
‘‘(A) in the case of a corporation, more 
than 50 percent (by vote and value) of the 
stock in the corporation, and 
‘‘(B) in the case of any other entity, more 
than 50 percent of the capital or profits inter-
ests in the entity. 
‘‘(3) WAGE REQUIREMENTS.— 
‘‘(A) IN GENERAL.—The requirements of 
this paragraph are met with respect to any enti-
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ty if the entity, during the taxable year of the 
entity preceding the taxable year in which the 
qualified investment is made— 
‘‘(i) employed at least 1 full-time em-
ployee, or employees constituting a full- 
time equivalent employee, in 1 or more 
trades or businesses actively conducted by 
the entity, and 
‘‘(ii) paid W–2 wages to such em-
ployee or employees with respect to such 
employment. 
‘‘(B) CERTAIN WAGES NOT TAKEN INTO 
ACCOUNT.—W–2 wages shall not be taken into 
account under subparagraph (A) if paid by an 
entity to an employee, and such employee shall 
not be taken into account under subparagraph 
(A)(i), during any period the employee is— 
‘‘(i) a qualified active investor, or 
‘‘(ii) an employee other than a quali-
fied active investor who is a 5-percent 
owner 
(as 
defined 
in 
section 
416(i)(1)(B)(i)) of the entity. 
‘‘(C) W–2 WAGES.—The term ‘W–2 wages’ 
means, with respect to any entity, the amounts 
described in paragraphs (3) and (8) of section 
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6051(a) paid by the entity with respect to em-
ployment of employees by the entity. Such term 
shall not include any amount which is not prop-
erly included in a return filed with the Social 
Security Administration on or before the 60th 
day after the due date (including extensions) 
for such return. 
‘‘(D) 
FULL-TIME
EMPLOYEES
AND 
EQUIVALENTS.—For purposes of this para-
graph— 
‘‘(i) the term ‘full-time employee’ has 
the meaning given to such term by section 
4980H(c)(4), and 
‘‘(ii) the determination of the number 
of employees constituting a full-time equiv-
alent shall be made in the same manner as 
under section 4980H(c)(2)(E). 
‘‘(4) CERTIFICATION REQUIREMENTS.— 
‘‘(A) IN GENERAL.—The requirements of 
this paragraph are met with respect to any enti-
ty if the entity certifies, in such form and man-
ner and at such time as the Secretary may pre-
scribe, that, at the time of the qualified invest-
ment, the entity— 
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‘‘(i) is engaged in the active conduct 
of 1 or more trades or businesses, and 
‘‘(ii) meets the requirements of para-
graphs (2) and (3) to be treated as a 
qualifying business entity. 
‘‘(B) CERTIFICATION PROVIDED TO INVES-
TORS AND SECRETARY.—An entity shall— 
‘‘(i) provide the certification under 
subparagraph (A) to the person making 
the qualified investment at the time such 
investment is made, and 
‘‘(ii) include such certification, and 
the names, addresses, and taxpayer identi-
fication numbers of the entity’s qualified 
active investors and the persons making 
the qualified investment, with its return of 
tax for the taxable year which includes the 
date of the qualified investment. 
‘‘(C) CERTIFICATION INCLUDED WITH RE-
TURN CLAIMING CREDIT.—No credit shall be 
determined under subsection (a) with respect to 
any taxpayer making a qualified investment in 
a qualifying business entity unless the taxpayer 
includes the certification under subparagraph 
(A) with respect to the investment with its re-
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turn of tax for any taxable year for which such 
credit is being claimed. 
‘‘(D) TIMELY FILED RETURN REQUIRED.— 
The requirements of subparagraph (B)(ii) or 
(C) shall be treated as met only if the return 
described in such subparagraph is filed on or 
before its due date (including extensions). 
‘‘(5) QUALIFIED ACTIVE INVESTOR.— 
‘‘(A) IN
GENERAL.—The term ‘qualified 
active investor’ means, with respect to any enti-
ty, an individual who— 
‘‘(i) is a citizen or resident of the 
United States, 
‘‘(ii) materially participates (within 
the meaning of section 469(h)) in 1 or 
more trades or businesses actively con-
ducted by the entity, 
‘‘(iii) holds stock, or a capital or prof-
its interest, in the entity, and 
‘‘(iv) meets the income requirements 
of subparagraph (B). 
‘‘(B) INCOME
REQUIREMENTS.—The re-
quirements of this subparagraph are met with 
respect to an individual if the average annual 
taxable income of the individual for the 3 tax-
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able years of the individual immediately pre-
ceding the taxable year in which the qualified 
investment is made does not exceed the applica-
ble amount. 
‘‘(C) APPLICABLE AMOUNT.—For purposes 
of this paragraph, the term ‘applicable amount’ 
means, with respect to any taxable year in 
which a qualified investment is made— 
‘‘(i) in the case of an individual not 
described in clause (ii), $100,000 (as in-
creased for the taxable year by the cost-of- 
living adjustment under subsection (e)(2)), 
and 
‘‘(ii) in the case of an individual who 
is a married individual filing a joint return 
or who is a head of household (as defined 
in section 2(b)) for the taxable year, an 
amount equal to 2 times the amount in ef-
fect under clause (i) for the taxable year. 
‘‘(D) RULES FOR DETERMINING AVERAGE 
TAXABLE INCOME.—For purposes of this para-
graph— 
‘‘(i) a married individual filing a sepa-
rate return of tax for any taxable year 
shall include the taxable income of their 
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spouse in computing the individual’s aver-
age taxable income for any period unless 
the Secretary determines that the spouse’s 
information is not available to the indi-
vidual, and 
‘‘(ii) the Secretary shall prescribe 
rules for the determination of average tax-
able income in cases where the individual 
had different filing statuses for the 3 tax-
able years described in subparagraph (B). 
‘‘(e) DEFINITIONS AND SPECIAL RULES.—For pur-
poses of this section— 
‘‘(1) RELATED
PERSONS.—A person shall be 
treated as related to another person if the person 
bears a relationship to such other person described 
in section 267(b), except that section 267(b) shall be 
applied by substituting ‘5 percent’ for ‘50 percent’ 
each place it appears. 
‘‘(2) COST-OF-LIVING
ADJUSTMENTS.—In the 
case of any taxable year beginning after 2020, the 
$10,000 amount under subsection (b)(2)(A)(i) and 
the $100,000 amount under subsection (d)(5)(C)(i) 
shall each be increased by an amount equal to— 
‘‘(A) such dollar amount, multiplied by 
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‘‘(B) the cost-of-living adjustment under 
section 1(f)(3) for the calendar year in which 
the taxable year begins, determined by sub-
stituting ‘2019’ for ‘2016’ in subparagraph 
(A)(ii) thereof. 
If any increase in such $10,000 amount is not a 
multiple of $100, such increase shall be rounded to 
the next lowest multiple of $100 and if any increase 
in such $100,000 amount is not a multiple of 
$1,000, such increase shall be rounded to the next 
lowest multiple of $1,000. 
‘‘(3) RULES RELATING TO ENTITIES.— 
‘‘(A) SOLE PROPRIETORSHIPS.—If a tax-
payer carries on 1 or more trades or businesses 
as sole proprietorships, all such trades or busi-
nesses shall be treated as a single entity for 
purposes of applying this section. 
‘‘(B) APPLICATION TO DISREGARDED EN-
TITIES.—In the case of any entity with a single 
owner which is disregarded as an entity sepa-
rate from its owner for purposes of this title, 
this section shall be applied in the same manner 
as if such entity were a corporation. 
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‘‘(f) REGULATIONS.—The Secretary shall prescribe 
such regulations or other guidance as may be necessary 
to carry out the provisions of this section.’’. 
(b) CREDIT TO BE PART OF GENERAL BUSINESS 
CREDIT.—Section 38(b) of such Code is amended by strik-
ing ‘‘plus’’ at the end of paragraph (31), by striking the 
period at the end of paragraph (32) and inserting ‘‘, plus’’, 
and by adding at the end the following new paragraph: 
‘‘(33) the angel investor credit determined 
under section 45T(a).’’. 
(c) CREDIT ALLOWED AGAINST ALTERNATIVE MIN-
IMUM TAX.—Section 38(c)(4)(B) of such Code is amended 
by redesignating clauses (x), (xi), and (xii) as clauses (xi), 
(xii), and (xiii), respectively, and by inserting after clause 
(ix) the following new clause: 
‘‘(x) the credit determined under sec-
tion 45T,’’. 
(d) 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. 45T. Angel investor tax credit.’’. 
(e) EFFECTIVE DATE.—The amendments made by 
this section shall apply to qualified investments made in 
taxable years beginning after December 31, 2019. 
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SEC. 3. FIRST EMPLOYEE BUSINESS WAGE CREDIT. 
(a) ALLOWANCE OF CREDIT.— 
(1) IN GENERAL.—Subpart D of part IV of 
subchapter A of chapter 1 of the Internal Revenue 
Code of 1986, as amended by section 2, is amended 
by adding at the end the following new section: 
‘‘SEC. 45U. FIRST EMPLOYEE BUSINESS WAGE CREDIT. 
‘‘(a) GENERAL RULE.—For purposes of section 38, 
in the case of a qualifying business entity, the first em-
ployee business wage credit determined under this section 
for any taxable year is an amount equal to 25 percent 
of the qualified wages of the entity for the taxable year. 
‘‘(b) DOLLAR LIMITATIONS.— 
‘‘(1) IN GENERAL.—The amount of the credit 
determined under subsection (a) with respect to any 
qualifying business entity for any taxable year shall 
not exceed the lesser of— 
‘‘(A) $10,000 (as increased for the taxable 
year by the cost-of-living adjustment under sub-
section (f)), or 
‘‘(B) the excess (if any) of— 
‘‘(i) an amount equal to 4 times the 
amount under subparagraph (A) for the 
taxable year, over 
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‘‘(ii) the amount of the credit deter-
mined under this section with respect to 
such entity for all preceding taxable years. 
‘‘(2) NO CREDIT BY REASON OF COST-OF-LIV-
ING
ADJUSTMENT
AFTER
OVERALL
LIMIT
FIRST 
REACHED.—No credit shall be determined under this 
section with respect to any qualifying business entity 
for any taxable year after the first taxable year for 
which the amount determined under clause (ii) of 
paragraph (1)(B) equals or exceeds the amount de-
termined under clause (i) of such paragraph. 
‘‘(3) PASS-THRU
ENTITIES.—If a qualifying 
business entity is a partnership, trust, S corporation, 
or other pass-thru entity, the limitations under this 
subsection shall apply at the partnership or other 
entity level and not at the partner or similar level. 
‘‘(c) QUALIFIED WAGES.—For purposes of this sec-
tion— 
‘‘(1) IN GENERAL.—The term ‘qualified wages’ 
means, with respect to any qualifying business enti-
ty, the amount of W–2 wages paid or incurred dur-
ing any eligible taxable year to employees for serv-
ices performed in connection with the active conduct 
of a trade or business by the entity. 
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‘‘(2) EXCEPTION FOR QUALIFIED ACTIVE IN-
VESTORS AND 5-PERCENT OWNER-EMPLOYEES.—W– 
2 wages shall not be taken into account under para-
graph (1) if paid by an entity to an employee, and 
such employee shall not be taken into account under 
paragraph (3)(A), during any period the employee 
is— 
‘‘(A) a qualified active investor, or 
‘‘(B) an employee other than a qualified 
active investor who is a 5-percent owner (as de-
fined in section 416(i)(1)(B)(i)) of the entity. 
‘‘(3) ELIGIBLE TAXABLE YEAR.— 
‘‘(A) IN GENERAL.—The term ‘eligible tax-
able year’ means any taxable year of a quali-
fying business entity— 
‘‘(i) which occurs during the period— 
‘‘(I) beginning with the first tax-
able year of the entity in which the 
entity employed at least 1 full-time 
employee (or employees constituting a 
full-time equivalent employee) in 1 or 
more trades or businesses actively 
conducted by the entity during the 
taxable year and paid W–2 wages to 
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such employee or employees with re-
spect to such employment, and 
‘‘(II) ending with the last taxable 
year for which a credit may be deter-
mined for the entity under this section 
by reason of the limitation under sub-
section (b)(2), and 
‘‘(ii) in the case of a taxable year 
other than the first taxable year described 
in clause (i)(I), with respect to which the 
entity meets the employment and wage re-
quirements of such clause. 
Such term shall not include any taxable year 
during such a period if the first taxable year 
described in clause (i)(I) of the entity (or any 
predecessor) begins before January 1, 2020. 
‘‘(B) W–2 WAGES; FULL-TIME
EMPLOY-
EES.—For purposes of this subsection, W–2 
wages, full-time employees, and full-time em-
ployee equivalents shall be determined in the 
same manner as under section 45T. 
‘‘(d) QUALIFYING BUSINESS ENTITY.—For purposes 
of this section— 
‘‘(1) 
QUALIFYING
BUSINESS
ENTITY
DE-
FINED.— 
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‘‘(A) IN GENERAL.—The term ‘qualifying 
business entity’ means, with respect to any tax-
able year for which a credit under this section 
is being determined, any entity— 
‘‘(i) which is engaged in the active 
conduct of 1 or more trades or businesses, 
‘‘(ii) with respect to which the quali-
fied active investor ownership requirements 
of paragraph (2) of section 45T(d) are met 
as of the close of such taxable year (rather 
than immediately before and after the 
qualified investment), and 
‘‘(iii) with respect to which the certifi-
cation requirements of paragraph (2) are 
met. 
‘‘(B) ENTITIES
UNDER
COMMON
CON-
TROL.—For purposes of this section— 
‘‘(i) IN
GENERAL.—All qualifying 
business entities treated as a single em-
ployer under subsection (a) or (b) of sec-
tion 52 or subsection (m) or (o) of section 
414 shall be treated as a single qualifying 
business entity. 
‘‘(ii) ALLOCATION
OF
CREDIT.—Ex-
cept as provided in regulations, the credit 
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under this section shall be allocated among 
the entities comprising the single entity de-
scribed in clause (i) in proportion to the 
qualified wages of each such entity taken 
into account under subsection (a). 
‘‘(2) CERTIFICATION REQUIREMENTS.— 
‘‘(A) IN GENERAL.—The requirements of 
this paragraph are met with respect to any enti-
ty for any taxable year described in paragraph 
(1) if the entity certifies, in such form and 
manner and at such time as the Secretary may 
prescribe, that the entity meets the require-
ments described in clauses (i) and (ii) of para-
graph (1)(A). 
‘‘(B) CERTIFICATION PROVIDED TO SEC-
RETARY.—An entity shall include the certifi-
cation under subparagraph (A), and the names, 
addresses, and taxpayer identification numbers 
of the entity’s qualified active investors (and 
employees who are 5-percent owners described 
in subsection (c)(2)(B)), with its return of tax 
for the taxable year to which the certification 
relates. The requirement of this subparagraph 
is met only if such return is filed before its due 
date (including extensions). 
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‘‘(3) QUALIFIED ACTIVE INVESTOR.—For pur-
poses of this section (including applying the require-
ments of paragraph (2) of section 45T(d) for pur-
poses of paragraph (1)(A)(ii)), the term ‘qualified 
active investor’ has the same meaning given such 
term by section 45T(d)(5), except that such section 
shall be applied separately for each taxable year de-
scribed in paragraph (1) (rather than the taxable 
year of the qualified investment). 
‘‘(e) ELECTION TO APPLY CREDIT AGAINST PAY-
ROLL TAXES.— 
‘‘(1) IN GENERAL.—At the election of a quali-
fying business entity, section 3111(g) shall apply to 
the payroll tax credit portion of the credit otherwise 
determined under subsection (a) for the taxable year 
and such portion shall not be treated (other than for 
purposes of section 280C) as a credit determined 
under subsection (a). 
‘‘(2) PAYROLL
TAX
CREDIT
PORTION.—For 
purposes of this subsection, the payroll tax credit 
portion of the credit determined under subsection 
(a) with respect to any qualifying business entity for 
any taxable year is the least of— 
‘‘(A) the amount specified in the election 
made under this subsection, 
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‘‘(B) the credit determined under sub-
section (a) for the taxable year (determined be-
fore the application of this subsection), or 
‘‘(C) in the case of a qualifying business 
entity other than a partnership, estate, S cor-
poration or other pass-thru entity, the amount 
of the business credit carryforward under sec-
tion 39 carried from the taxable year (deter-
mined before the application of this subsection 
to the taxable year). 
‘‘(3) ELECTION.— 
‘‘(A) IN
GENERAL.—Any election under 
this subsection for any taxable year— 
‘‘(i) shall specify the amount of the 
credit to which such election applies, 
‘‘(ii) shall be made on or before the 
due date (including extensions) of the re-
turn for the taxable year, and 
‘‘(iii) may be revoked only with the 
consent of the Secretary. 
‘‘(B) SPECIAL RULE FOR PASS-THRU ENTI-
TIES.—In the case of a partnership, estate, S 
corporation, or other pass-thru entity, the elec-
tion made under this subsection shall be made 
at the entity level. 
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‘‘(f) COST-OF-LIVING ADJUSTMENTS.—In the case of 
any taxable year beginning after 2020, the $10,000 
amount under subsection (b)(1)(A) shall be increased by 
an amount equal to— 
‘‘(1) such dollar amount, multiplied by 
‘‘(2) the cost-of-living adjustment under section 
1(f)(3) for the calendar year in which the taxable 
year begins, determined by substituting ‘2019’ for 
‘2016’ in subparagraph (A)(ii) thereof. 
If any increase in such amount is not a multiple of $100, 
such increase shall be rounded to the next lowest multiple 
of $100. 
‘‘(g) OTHER RULES.—For purposes of this section— 
‘‘(1) RULES
RELATING
TO
ENTITIES.—Rules 
similar to the rules of section 45T(e)(3) shall apply. 
‘‘(2) ELECTION NOT TO HAVE CREDIT APPLY.— 
‘‘(A) IN GENERAL.—A taxpayer may elect 
not to have this section apply for any taxable 
year. 
‘‘(B) OTHER RULES.—Rules similar to the 
rules of paragraphs (2) and (3) of section 51(j) 
shall apply for purposes of this paragraph. 
‘‘(3) CERTAIN OTHER RULES MADE APPLICA-
BLE.—Rules similar to the rules of subsections (c), 
(d), and (e) of section 52 shall apply. 
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