I 
115TH CONGRESS 
2D SESSION 
H. R. 5813 
To amend the Internal Revenue Code of 1986 to exclude from the definition 
of personal holding company income certain royalties and rents derived 
in the active conduct of a trade or business. 
IN THE HOUSE OF REPRESENTATIVES 
MAY 15, 2018 
Mr. BARR (for himself, Mr. WENSTRUP, Mr. REICHERT, and Mr. BISHOP of 
Michigan) introduced the following bill; which was referred to the Com-
mittee on Ways and Means 
A BILL 
To amend the Internal Revenue Code of 1986 to exclude 
from the definition of personal holding company income 
certain royalties and rents derived in the active conduct 
of a trade or business. 
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 ‘‘Removing Onerous Ob-
stacles in the Tax code for Mainstreet Businesses Act of 
2018’’ or as the ‘‘ROOT for Mainstreet Businesses Act 
of 2018’’. 
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SEC. 2. CERTAIN ROYALTIES AND RENTS DERIVED IN THE 
ACTIVE CONDUCT OF A TRADE OR BUSINESS 
NOT TREATED AS PERSONAL HOLDING COM-
PANY INCOME. 
(a) ROYALTIES.— 
(1) IN GENERAL.—Section 543(a)(1) of the In-
ternal Revenue Code of 1986 is amended by striking 
‘‘and’’ at the end of subparagraph (D), by striking 
the period at the end of subparagraph (E) and in-
serting ‘‘, and’’, and by adding at the end the fol-
lowing new subparagraph: 
‘‘(F) royalties derived in the active conduct 
of a trade or business which are received from 
a person other than a related person (within the 
meaning of section 267).’’. 
(2) COPYRIGHT ROYALTIES.—Section 543(a)(4) 
of such Code is amended by inserting ‘‘or to any 
amount derived in the active conduct of a trade or 
business which are received from a person other 
than a related person (within the meaning of section 
267)’’ after ‘‘active business computer software roy-
alties’’ in the last sentence thereof. 
(b) RENTS.— 
(1) IN GENERAL.—Section 543(b)(3) of such 
Code is amended by striking ‘‘or’’ at the end of sub-
paragraph (D), by striking the period at the end of 
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subparagraph (E) and inserting ‘‘, or’’, and by add-
ing at the end the following new subparagraph: 
‘‘(F) amounts derived in the active conduct 
of a trade or business which are received from 
a person other than a related person (within the 
meaning of section 267).’’. 
(2) 
PRODUCED
FILM
RENTS.—Section 
543(a)(5)(B) of such Code is amended by adding at 
the end the following: ‘‘Such term shall not include 
any amount derived in the active conduct of a trade 
or business which are received from a person other 
than a related person (within the meaning of section 
267).’’ 
(c) REGULATIONS.—Section 543 of such Code is 
amended by adding at the end the following new sub-
section: 
‘‘(e) DETERMINATION OF WHETHER ROYALTIES AND 
RENTS ARE DERIVED IN THE ACTIVE CONDUCT OF A 
TRADE OR BUSINESS.—The Secretary shall prescribe reg-
ulations or other guidance providing for the treatment of 
rents, royalties, and other amounts described in sub-
sections (a)(1)(F), (a)(4), (a)(5)(B), and (b)(3)(F) as 
being derived in the active conduct of a trade or business 
consistent with the regulations and other guidance pro-
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viding for such treatment for purposes of section 
954(c)(2)(A).’’. 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years ending on or after 
the date of the enactment of this Act. 
Æ 
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