I 
111TH CONGRESS 
2D SESSION 
H. R. 6168 
To amend the Internal Revenue Code of 1986 to allow a deduction for 
certain small business income. 
IN THE HOUSE OF REPRESENTATIVES 
SEPTEMBER 22, 2010 
Mr. CAMP (for himself and Mr. CANTOR) 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 allow a 
deduction for certain small business income. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. DEDUCTION FOR QUALIFIED SMALL BUSINESS 
INCOME. 
(a) IN GENERAL.—Paragraph (1) of section 199(a) 
of the Internal Revenue Code of 1986 is amended to read 
as follows: 
‘‘(1) IN GENERAL.—There shall be allowed as a 
deduction an amount equal to the sum of— 
‘‘(A) 9 percent of the lesser of— 
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‘‘(i) the qualified production activities 
income of the taxpayer for the taxable 
year, or 
‘‘(ii) taxable income (determined with-
out regard to this section) for the taxable 
year, and 
‘‘(B) in the case of a qualified small busi-
ness for a taxable year beginning in 2010 or 
2011, 20 percent of the lesser of— 
‘‘(i) the qualified small business in-
come of the taxpayer for the taxable year, 
or 
‘‘(ii) taxable income (determined with-
out regard to this section) for the taxable 
year.’’. 
(b) QUALIFIED SMALL BUSINESS; QUALIFIED SMALL 
BUSINESS INCOME.—Section 199 of such Code is amend-
ed by adding at the end the following new subsection: 
‘‘(e) QUALIFIED
SMALL
BUSINESS; QUALIFIED 
SMALL BUSINESS INCOME.— 
‘‘(1) QUALIFIED SMALL BUSINESS.— 
‘‘(A) IN GENERAL.—For purposes of this 
section, the term ‘qualified small business’ 
means any taxpayer for any taxable year if the 
annual average number of employees employed 
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by such taxpayer during such taxable year was 
500 or fewer. 
‘‘(B) AGGREGATION RULE.—For purposes 
of subparagraph (A), any person treated as a 
single employer under subsection (a) or (b) of 
section 52 (applied without regard to section 
1563(b)) or subsection (m) or (o) of section 
414 shall be treated as 1 taxpayer for purposes 
of this subsection. 
‘‘(C) SPECIAL
RULE.—If a taxpayer is 
treated as a qualified small business for any 
taxable year, the taxpayer shall not fail to be 
treated as a qualified small business for any 
subsequent taxable year solely because the num-
ber of employees employed by such taxpayer 
during such subsequent taxable year exceeds 
500. The preceding sentence shall cease to 
apply to such taxpayer in the first taxable year 
in which there is an ownership change (as de-
fined by section 382(g) in respect of a corpora-
tion, or by applying principles analogous to 
such ownership change in the case of a tax-
payer that is a partnership) with respect to the 
stock (or partnership interests) of the taxpayer. 
‘‘(2) QUALIFIED SMALL BUSINESS INCOME.— 
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‘‘(A) IN GENERAL.—For purposes of this 
section, the term ‘qualified small business in-
come’ means the excess of— 
‘‘(i) the income of the qualified small 
business which— 
‘‘(I) is attributable to the actual 
conduct of a trade or business, 
‘‘(II) is income from sources 
within the United States (within the 
meaning of section 861), and 
‘‘(III) is not passive income (as 
defined in section 904(d)(2)(B)), over 
‘‘(ii) the sum of— 
‘‘(I) the cost of goods sold that 
are allocable to such income, and 
‘‘(II) other expenses, losses, or 
deductions (other than the deduction 
allowed under this section), which are 
properly allocable to such income. 
‘‘(B) EXCEPTIONS.—The following shall 
not be treated as income of a qualified small 
business for purposes of subparagraph (A): 
‘‘(i) Any income which is attributable 
to any property described in section 
1400N(p)(3). 
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‘‘(ii) Any income which is attributable 
to the ownership or management of any 
professional sports team. 
‘‘(iii) Any income which is attributable 
to a trade or business described in sub-
paragraph (B) of section 1202(e)(3). 
‘‘(iv) Any income which is attributable 
to any property with respect to which 
records are required to be maintained 
under section 2257 of title 18, United 
States Code. 
‘‘(C) ALLOCATION
RULES, 
ETC.—Rules 
similar to the rules of paragraphs (2), (3), 
(4)(D), and (7) of subsection (c) shall apply for 
purposes of this paragraph. 
‘‘(3) SPECIAL
RULES.—Except as otherwise 
provided by the Secretary, rules similar to the rules 
of subsection (d) shall apply for purposes of this 
subsection.’’. 
(c) CONFORMING AMENDMENTS.— 
(1) Section 199(a)(2) of such Code is amended 
by striking ‘‘paragraph (1)’’ and inserting ‘‘para-
graph (1)(A)’’. 
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(2) The following provisions of section 199 of 
such Code are each amended by striking ‘‘(a)(1)(B)’’ 
and inserting ‘‘(a)(1)(A)(ii)’’: 
(A) Subsection (d)(2). 
(B) Subsection (d)(6)(B). 
(C) Subsection (d)(7). 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2009. 
Æ 
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