I 
118TH CONGRESS 
1ST SESSION H. R. 3937 
To amend the Internal Revenue Code of 1986 to promote the establishment 
and growth of small businesses. 
IN THE HOUSE OF REPRESENTATIVES 
JUNE 9, 2023 
Mr. SMITH of Missouri 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 promote 
the establishment and growth of small businesses. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE; TABLE OF CONTENTS, ETC. 
(a) SHORT TITLE.—This Act may be cited as the 
‘‘Small Business Jobs Act’’. 
(b) AMENDMENT OF 1986 CODE.—Except as other-
wise expressly provided, whenever in this Act an amend-
ment or repeal is expressed in terms of an amendment 
to, or repeal of, a section or other provision, the reference 
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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 for 
this Act is as follows: 
Sec. 1. Short title; table of contents, etc. 
Sec. 2. Increase in threshold for requiring information reporting with respect 
to certain payees. 
Sec. 3. Restoration of reporting rule for third party network transactions. 
Sec. 4. Modifications to exclusion for gain from qualified small business stock. 
Sec. 5. Increase in limitations on expensing of depreciable business assets. 
Sec. 6. Establishment of special rules for capital gains invested in rural oppor-
tunity zones. 
Sec. 7. Reporting on qualified opportunity funds and qualified rural oppor-
tunity funds. 
SEC. 2. INCREASE IN THRESHOLD FOR REQUIRING INFOR-
MATION REPORTING WITH RESPECT TO CER-
TAIN PAYEES. 
(a) IN GENERAL.—Sections 6041(a) is amended by 
striking ‘‘$600’’ and inserting ‘‘$5,000’’. 
(b) INFLATION
ADJUSTMENT.—Section 6041 is 
amended by adding at the end the following new sub-
section: 
‘‘(h) INFLATION ADJUSTMENT.—In the case of any 
calendar year after 2024, the dollar amount in subsection 
(a) shall be increased by an amount equal to— 
‘‘(1) such dollar amount, multiplied by 
‘‘(2) the cost-of-living adjustment determined 
under section 1(f)(3) for such calendar year, deter-
mined by substituting ‘calendar year 2023’ for ‘cal-
endar year 2016’ in subparagraph (A)(ii) thereof. 
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If any increase under the preceding sentence is not a mul-
tiple of $100, such increase shall be rounded to the nearest 
multiple of $100.’’. 
(c) APPLICATION TO REPORTING ON REMUNERATION 
FOR SERVICES AND DIRECT SALES.—Section 6041A is 
amended— 
(1) in subsection (a)(2), by striking ‘‘is $600 or 
more’’ and inserting ‘‘equals or exceeds the dollar 
amount in effect for such calendar year under sec-
tion 6041(a)’’, and 
(2) in subsection (b)(1)(B), by striking ‘‘is 
$5,000 or more’’ and inserting ‘‘equals or exceeds 
the dollar amount in effect for such calendar year 
under section 6041(a)’’. 
(d) APPLICATION TO BACKUP WITHHOLDING.—Sec-
tion 3406(b)(6) is amended— 
(1) by striking ‘‘$600’’ in subparagraph (A) 
and inserting ‘‘the dollar amount in effect for such 
calendar year under section 6041(a)’’, and 
(2) by striking ‘‘ONLY WHERE AGGREGATE FOR 
CALENDAR YEAR IS $600 OR MORE’’ in the heading 
and inserting ‘‘ONLY IF IN EXCESS OF THRESHOLD’’. 
(e) CONFORMING AMENDMENTS.— 
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(1) The heading of section 6041(a) is amended 
by striking ‘‘OF $600 OR MORE’’ and inserting ‘‘EX-
CEEDING THRESHOLD’’. 
(2) Section 6041(a) is amended by striking 
‘‘taxable year’’ and inserting ‘‘calendar year’’. 
(f) EFFECTIVE DATE.—The amendments made by 
this section shall apply with respect to payments made 
after December 31, 2023. 
SEC. 3. RESTORATION OF REPORTING RULE FOR THIRD 
PARTY NETWORK TRANSACTIONS. 
(a) DE MINIMIS EXCEPTION FOR THIRD PARTY SET-
TLEMENT ORGANIZATIONS.—Section 6050W(e) is amend-
ed to read as follows: 
‘‘(e) EXCEPTION FOR DE MINIMIS PAYMENTS BY 
THIRD PARTY SETTLEMENT ORGANIZATIONS.—A third 
party settlement organization shall be required to report 
any information under subsection (a) with respect to third 
party network transactions of any participating payee only 
if— 
‘‘(1) the amount which would otherwise be re-
ported under subsection (a)(2) with respect to such 
transactions exceeds $20,000, and 
‘‘(2) the aggregate number of such transactions 
exceeds 200.’’. 
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(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to returns for calendar years begin-
ning after December 31, 2021. 
SEC. 4. MODIFICATIONS TO EXCLUSION FOR GAIN FROM 
QUALIFIED SMALL BUSINESS STOCK. 
(a) PHASED INCREASE
IN EXCLUSION
FOR GAIN 
FROM QUALIFIED SMALL BUSINESS STOCK.— 
(1) 
IN
GENERAL.—Section 
1202(a)(1) 
is 
amended— 
(A) by striking ‘‘50 percent’’ and inserting 
‘‘the applicable percentage’’, and 
(B) by striking ‘‘held for more than 5 
years’’ and inserting ‘‘held for at least 3 years’’. 
(2) 
APPLICABLE
PERCENTAGE.—Section 
1202(a) is amended by adding at the end the fol-
lowing new paragraph: 
‘‘(5) APPLICABLE
PERCENTAGE.—Except as 
provided in paragraphs (3) and (4), the applicable 
percentage under paragraph (1) shall be determined 
under the following table: 
‘‘Years stock held: 
Applicable 
percentage: 
3 years ......................................................................................
50%
4 years ......................................................................................
75%
5 years or more ........................................................................
100%’’. 
(3) CONTINUED TREATMENT AS NOT ITEM OF 
TAX PREFERENCE.— 
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(A) IN
GENERAL.—Section 57(a)(7) is 
amended by striking ‘‘An amount’’ and insert-
ing ‘‘In the case of stock acquired on or before 
the date of the enactment of the Creating Small 
Business Jobs Act of 2010, an amount’’. 
(B) CONFORMING
AMENDMENT.—Section 
1202(a)(4) is amended— 
(i) by striking ‘‘, and’’ at the end of 
subparagraph (B) and inserting a period, 
and 
(ii) by striking subparagraph (C). 
(4) OTHER CONFORMING AMENDMENTS.— 
(A) Section 1202(a)(4) is amended by in-
serting ‘‘and before the date of the enactment 
of the Small Business Jobs Act’’ after ‘‘Act of 
2010’’. 
(B) Paragraphs (3) and (4) of section 
1202(a) are each amended by inserting ‘‘held 
for more than 5 years and’’ after ‘‘In the case 
of qualified small business stock’’. 
(C) Section 1202(a)(3)(A) of such Code is 
amended to read as follows: 
‘‘(A) the applicable percentage under para-
graph (1) shall be 75 percent, and’’, 
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(D) Section 1202(a)(4)(A) is amended to 
read as follows: 
‘‘(A) the applicable percentage under para-
graph (1) shall be 100 percent, and’’. 
(E) Section 1202(b)(2) is amended by 
striking ‘‘more than 5 years’’ and inserting ‘‘at 
least 3 years’’. 
(F) Section 1202(g)(2)(A) is amended by 
striking ‘‘more than 5 years’’ and inserting ‘‘at 
least 3 years’’. 
(G) Section 1202(j)(1)(A) is amended by 
striking ‘‘more than 5 years’’ and inserting ‘‘at 
least 3 years’’. 
(b) TACKING HOLDING PERIOD OF CONVERTIBLE 
DEBT INSTRUMENTS.— 
(1) IN GENERAL.—Section 1202(f) is amend-
ed— 
(A) by redesignating paragraphs (1) and 
(2) as subparagraphs (A) and (B) and moving 
such subparagraphs (as so redesignated) 2 ems 
to the right, 
(B) by striking ‘‘CONVERSION OF OTHER 
STOCK.—If any stock’’ and inserting the fol-
lowing: ‘‘CONVERSION.— 
‘‘(1) OTHER STOCK.—If any stock’’, and 
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‘‘(II) during substantially all of 
the taxpayer’s holding period of such 
bond or evidence of indebtedness, the 
corporation meets the active business 
requirements of subsection (e), and 
‘‘(iii) which is convertible into stock in 
the corporation.’’. 
(c) GAIN EXCLUSION ALLOWED WITH RESPECT TO 
QUALIFIED SMALL BUSINESS STOCK IN CORPORATION.— 
(1) IN GENERAL.—Section 1202(c) is amend-
ed— 
(A) by striking ‘‘C corporation’’ in para-
graphs (1) and inserting ‘‘corporation’’, and 
(B) by striking ‘‘and such corporation is a 
C corporation’’ in paragraph (2)(A). 
(2) QUALIFIED
SMALL
BUSINESS
DEFINI-
TION.—Section 1202(d)(1) is amended by striking 
‘‘which is a C corporation’’. 
(3) CLARIFICATION
OF
AGGREGATION
RULES 
APPLICABLE
TO
S 
CORPORATIONS.—Section 
1202(d)(3) is amended by adding at the end the fol-
lowing new subparagraph: 
‘‘(C) CLARIFICATION WITH RESPECT TO S 
CORPORATIONS.—Any determination of the 
members of a controlled group of corporations 
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under this paragraph shall include taking into 
account any stock ownership in an S corpora-
tion.’’. 
(4) TREATMENT OF PASSIVE LOSSES.—Section 
469(g)(1) is amended by adding at the end the fol-
lowing new subparagraph: 
‘‘(D) CERTAIN
DISPOSITIONS
OF
SMALL 
BUSINESS
STOCK.—In the case a disposition 
any gain from which is excluded from gross in-
come under section 1202, subparagraph (A) 
shall not apply.’’. 
(5) SPECIAL RULES RELATING TO S CORPORA-
TIONS.—Section 1202(e) is amended by adding at 
the end the following new paragraph: 
‘‘(9) APPLIED AT S CORPORATION LEVEL.—In 
the case of an S corporation, the requirements of 
this subsection shall be applied at the corporate 
level.’’. 
(d) EFFECTIVE DATES.— 
(1) IN
GENERAL.—Except as otherwise pro-
vided in this subsection, the amendments made by 
this section shall apply to stock acquired after the 
date of the enactment of this Act. 
(2) CONTINUED TREATMENT AS NOT ITEM OF 
TAX PREFERENCE.—The amendments made by sub-
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section (a)(3) shall take effect as if included in the 
enactment of section 2011 the Creating Small Busi-
ness Jobs Act of 2010. 
(3) TACKING HOLDING PERIOD OF CONVERT-
IBLE DEBT INSTRUMENTS.—The amendments made 
by subsection (b) shall apply to debt instruments 
originally issued after the date of the enactment of 
this Act. 
SEC. 5. INCREASE IN LIMITATIONS ON EXPENSING OF DE-
PRECIABLE BUSINESS ASSETS. 
(a) IN GENERAL.—Section 179(b) is amended— 
(1) by striking ‘‘$1,000,000’’ in paragraph (1) 
and inserting ‘‘$2,500,000’’, and 
(2) by striking ‘‘$2,500,000’’ in paragraph (2) 
and inserting ‘‘$4,000,000’’. 
(b) INFLATION ADJUSTMENT.—Section 179(b)(6) is 
amended— 
(1) by striking ‘‘2018’’ and inserting ‘‘2024 
(2018 in the case of the dollar amount in paragraph 
(5)(A))’’, and 
(2) by striking ‘‘calendar year 2017’’ and in-
serting ‘‘ ‘calendar year 2024’ (‘calendar year 2017’ 
in the case of the dollar amount in paragraph 
(5)(A))’’. 
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(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to property placed in service in 
taxable years beginning after December 31, 2023. 
SEC. 6. ESTABLISHMENT OF SPECIAL RULES FOR CAPITAL 
GAINS INVESTED IN RURAL OPPORTUNITY 
ZONES. 
(a) IN GENERAL.—Subchapter Z of chapter 1 is 
amended by adding at the end the following new section: 
‘‘SEC. 1400Z–3. SPECIAL RULES FOR CAPITAL GAINS IN-
VESTED IN RURAL OPPORTUNITY ZONES. 
‘‘(a) IN GENERAL.— 
‘‘(1) TREATMENT OF GAINS.—In the case of 
capital gain from the sale to, or exchange with, an 
unrelated person of any property held by the tax-
payer, at the election of the taxpayer— 
‘‘(A) gross income for the taxable year 
shall not include so much of such gain as does 
not exceed the aggregate amount invested by 
the taxpayer in a qualified rural opportunity 
fund during the 180-day period beginning on 
the date of such sale or exchange, 
‘‘(B) the amount of gain excluded by sub-
paragraph (A) shall be included in gross income 
as provided by subsection (b), and 
‘‘(C) subsection (c) shall apply. 
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‘‘(2) ELECTION.—No election may be made 
under paragraph (1)— 
‘‘(A) with respect to a sale or exchange if 
an election previously made with respect to such 
sale or exchange is in effect, or 
‘‘(B) with respect to any sale or exchange 
after December 31, 2032. 
‘‘(b) DEFERRAL OF GAIN INVESTED IN QUALIFIED 
RURAL OPPORTUNITY ZONE PROPERTY.— 
‘‘(1) YEAR OF INCLUSION.—Gain to which sub-
section (a)(1)(B) applies shall be included in income 
in the taxable year which includes the earlier of— 
‘‘(A) the date on which such investment is 
sold or exchanged, or 
‘‘(B) December 31, 2032. 
‘‘(2) AMOUNT INCLUDIBLE.— 
‘‘(A) IN GENERAL.—The amount of gain 
included in gross income under subsection 
(a)(1)(A) shall be the excess of— 
‘‘(i) the lesser of the amount of gain 
excluded under paragraph (1) or the fair 
market value of the investment as deter-
mined as of the date described in para-
graph (1), over 
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‘‘(ii) the taxpayer’s basis in the in-
vestment. 
‘‘(B) DETERMINATION
OF
BASIS
QUALI-
FIED RURAL OPPORTUNITY ZONE PROPERTY.— 
‘‘(i) IN GENERAL.—Except as other-
wise provided in this clause or subsection 
(c), the taxpayer’s basis in the investment 
shall be zero. 
‘‘(ii) INCREASE
FOR
GAIN
RECOG-
NIZED UNDER SUBSECTION (A)(1)(B).—The 
basis in the investment shall be increased 
by the amount of gain recognized by rea-
son of subsection (a)(1)(B) with respect to 
such property. 
‘‘(iii) INVESTMENTS
HELD
FOR
YEARS.—In the case of any investment 
held for at least 5 years, the basis of such 
investment shall be increased by an 
amount equal to 10 percent of the amount 
of gain deferred by reason of subsection 
(a)(1)(A). 
‘‘(iv) INVESTMENTS
HELD
FOR
YEARS.—In the case of any investment 
held by the taxpayer for at least 7 years, 
in addition to any adjustment made under 
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