I 
114TH CONGRESS 
2D SESSION 
H. R. 4377 
To amend the Internal Revenue Code of 1986 to tax business income on 
a cash flow basis, and for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
JANUARY 13, 2016 
Mr. NUNES (for himself, Mr. TIBERI, Mr. BOUSTANY, Mr. MARCHANT, Mr. 
HOLDING, Mr. PITTENGER, Mr. PALMER, Mr. RUSSELL, Mr. SIMPSON, 
Mr. FRANKS of Arizona, Mr. STEWART, Mr. CALVERT, Mr. KNIGHT, Mrs. 
MIMI WALTERS of California, Mr. VALADAO, Mr. ISSA, Mr. AMODEI, Mr. 
YOHO, Mr. HARDY, Mr. COLE, Mr. POMPEO, Mr. ROE of Tennessee, Mr. 
FLEISCHMANN, Mr. EMMER of Minnesota, Mr. LONG, Mr. BRAT, and Mr. 
ROUZER) 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 tax business 
income on a cash flow basis, 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, ETC. 
(a) SHORT TITLE.—This Act may be cited as the 
‘‘American Business Competitiveness Act of 2015’’. 
(b) AMENDMENT OF 1986 CODE.—Except as other-
wise expressly provided, whenever in this Act an amend-
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ment or repeal is expressed in terms of an amendment 
to, or repeal of, a section or other provision, the reference 
shall be considered to be made to a section or other provi-
sion of the Internal Revenue Code of 1986. 
(c) TABLE OF CONTENTS.—The table of contents is 
as follows: 
Sec. 1. Short title, etc. 
Sec. 2. Congressional findings. 
Sec. 3. Maximum tax rate for net business income. 
Sec. 4. Definition of net business income tax base. 
Sec. 5. Allowance of transition basis deduction. 
Sec. 6. Interest income of individuals taxed in same manner as dividend in-
come; reduced by interest expense. 
Sec. 7. Repeal of depreciation, international, and other tax provisions. 
Sec. 8. Expanded relief for net operating losses. 
Sec. 9. Repeal of corporate AMT and individual AMT preferences and adjust-
ments that pertain to capital cost recovery. 
Sec. 10. Repeal of business tax credits. 
Sec. 11. Disallowance of interest expense deduction, except qualified residence 
interest. 
Sec. 12. Cash method of accounting. 
SEC. 2. CONGRESSIONAL FINDINGS. 
(a) FINDINGS RELATING
TO
THE DEPRECIATION 
SYSTEM OF FEDERAL BUSINESS TAXATION.—Congress 
finds the depreciation system— 
(1) is rife with outdated asset classifications, 
inaccurate depreciation schedules, targeted credits 
and deductions, and targeted expensing provisions; 
(2) rewards some business activities over oth-
ers; 
(3) reduces savings and investment in the 
United States by increasing the rate of return that 
is required for investments to be viable; and 
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(4) creates complexity for both the Internal 
Revenue Service and businesses. 
(b) FINDINGS RELATING TO THE DEDUCTION OF 
BUSINESS INTEREST.—Congress finds that the business 
interest deduction— 
(1) encourages businesses to finance their oper-
ations with debt; 
(2) results in negative effective tax rates for 
some investments; and 
(3) heightens bankruptcy risk during periods of 
economic distress. 
(c) FINDINGS RELATING TO THE EXPENSING OF IN-
VESTMENT.—Congress finds that allowing businesses to 
expense their investments— 
(1) will make more investment opportunities 
profitable for businesses to undertake; 
(2) will promote investment in the United 
States; 
(3) will limit the Government’s ability to reward 
specific business activities through the tax code; and 
(4) will simplify business taxation. 
SEC. 3. MAXIMUM TAX RATE FOR NET BUSINESS INCOME. 
(a) INDIVIDUAL NET BUSINESS INCOME.— 
(1) MAXIMUM
RATE
OF
PERCENT.—Para-
graph (1) of section 1(h) is amended— 
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(A) in subparagraph (A)— 
(i) by striking ‘‘the net capital gain’’ 
in clause (i) and inserting ‘‘the sum of the 
net capital gain and the net business in-
come’’; and 
(ii) by striking ‘‘the adjusted net cap-
ital gain’’ in clause (ii)(II) and inserting 
‘‘the sum of the adjusted net capital gain 
and the net business income’’; and 
(B) in subparagraph (E)(i) by striking 
‘‘unrecaptured section 1250 gain’’ and inserting 
‘‘25-percent rate gain’’. 
(2) 25-PERCENT RATE GAIN.—Subsection (h) of 
section 1 is amended by adding at the end the fol-
lowing: 
‘‘(12) 25-PERCENT RATE GAIN.—For purposes 
of this subsection— 
‘‘(A) unrecaptured section 1250 gain, plus 
‘‘(B) net business income.’’. 
(b) CORPORATE INCOME TAX RATE REDUCTION; 
TAX IMPOSED ONLY ON CORPORATION’S NET BUSINESS 
INCOME.— 
(1) IN GENERAL.—Section 11 is amended to 
read as follows: 
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‘‘SEC. 11. TAX IMPOSED. 
‘‘(a) CORPORATIONS IN GENERAL.—A tax is hereby 
imposed for each taxable year on the net business income 
of every corporation. 
‘‘(b) AMOUNT OF TAX.—The amount of the tax im-
posed by subsection (a) shall be the sum of— 
‘‘(1) 15 percent of so much of the net business 
income as does not exceed $50,000, and 
‘‘(2) 25 percent of so much of the net business 
income as exceeds $50,000. 
In the case of a corporation which has net business income 
in excess of $100,000 for any taxable year, the amount 
of tax determined under the preceding sentence for such 
taxable year shall be increased by the lesser of (i) 5 per-
cent of such excess, or (ii) $5,000.’’. 
(2) CONFORMING
AMENDMENT.—Paragraphs 
(1) and (2) of section 1445(e) are each amended by 
striking ‘‘35 percent’’ and inserting ‘‘25 percent’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning on or 
after January 1, 2015. 
SEC. 4. DEFINITION OF NET BUSINESS INCOME TAX BASE. 
(a) IN GENERAL.—Subtitle A is amended by insert-
ing after chapter 2A the following new chapter: 
‘‘CHAPTER 2B—BUSINESS INCOME 
‘‘SUBCHAPTER A. BASIC RULES 
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‘‘SUBCHAPTER B. CAPITAL CONTRIBUTIONS, MERGERS, ACQUISITIONS, AND 
DISTRIBUTIONS 
‘‘SUBCHAPTER C. INTERNATIONAL PROVISIONS 
‘‘SUBCHAPTER D. FINANCIAL INSTITUTIONS 
‘‘SUBCHAPTER E. OTHER DEFINITIONS 
‘‘Subchapter A—Basic Rules 
‘‘Sec. 1421. Net business income. 
‘‘SEC. 1421. NET BUSINESS INCOME. 
‘‘(a) IN GENERAL.—For purposes of this title, the 
term ‘net business income’ means, for a taxable year with 
respect to a business entity, the amount by which the tax-
able receipts of the business entity for the taxable year 
exceed the deductible amounts for the business entity for 
the taxable year. 
‘‘(b) TAXABLE RECEIPTS.— 
‘‘(1) IN GENERAL.—The term ‘taxable receipts’ 
means all receipts from the sale of property, use of 
property, and performance of services. 
‘‘(2) GAMES
OF
CHANCE.—Amounts received 
for playing games of chance by business entities en-
gaging in the activity of providing such games shall 
be treated as receipts from the sale of property or 
services. 
‘‘(3) IN-KIND RECEIPTS.—The taxable receipts 
attributable to the receipt of property, use of prop-
erty or services in whole or partial exchange for 
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property, use of property or services equal the fair 
market value of the services or property received. 
‘‘(4) TAXES.—The term ‘taxable receipts’ does 
not include any excise tax, sales tax, custom duty, 
or other separately stated levy imposed by a Federal, 
State, or local government received by a business en-
tity in connection with the sale of property or serv-
ices or the use of property. 
‘‘(5) FINANCIAL RECEIPTS.— 
‘‘(A) IN GENERAL.—The term ‘taxable re-
ceipts’ does not include financial receipts. 
‘‘(B) FINANCIAL RECEIPTS.—The term ‘fi-
nancial receipts’ includes— 
‘‘(i) interest, 
‘‘(ii) dividends and other distributions 
by a business entity, 
‘‘(iii) proceeds from the sale of stock, 
other ownership interests in business enti-
ties, or other financial instruments, 
‘‘(iv) proceeds from life insurance 
policies, 
‘‘(v) proceeds from annuities, 
‘‘(vi) proceeds from currency hedging 
or exchanges, and 
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