I 
108TH CONGRESS 
1ST SESSION H. R. 1222
To permit a special amortization deduction for intangible assets acquired 
from eligible small businesses to take account of the actual economic 
useful life of such assets and to encourage growth in industries for 
which intangible assets are an important source of revenue. 
IN THE HOUSE OF REPRESENTATIVES 
MARCH 12, 2003
Mr. FOLEY (for himself and Mr. SANDLIN) introduced the following bill; which 
was referred to the Committee on Ways and Means 
A BILL 
To permit a special amortization deduction for intangible 
assets acquired from eligible small businesses to take 
account of the actual economic useful life of such assets 
and to encourage growth in industries for which intan-
gible assets are an important source of revenue.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SPECIAL AMORTIZATION DEDUCTION FOR CER-
TAIN 
INTANGIBLE 
PROPERTY 
ACQUIRED 
FROM ELIGIBLE SMALL BUSINESSES AFTER 
DECEMBER 31, 2002. 
(a) IN GENERAL.—Section 197 of the Internal Rev-
enue Code of 1986 (relating to amortization of goodwill 
and certain other intangibles) is amended by redesignating 
subsection (g) as subsection (h) and inserting after sub-
section (f) the following new subsection: 
‘‘(g) SPECIAL DEDUCTION FOR CERTAIN PROPERTY 
ACQUIRED FROM ELIGIBLE SMALL BUSINESSES AFTER 
DECEMBER 31, 2002.—
‘‘(1) SPECIAL DEDUCTION.—In the case of any 
amortizable section 197 intangible—
‘‘(A) the amortization deduction provided 
by subsection (a) for the taxable year in which 
such property is acquired shall include an allow-
ance equal to 100 percent of the adjusted basis 
of the taxpayer’s qualified section 197 intan-
gible property, and 
‘‘(B) the adjusted basis of the qualified 
section 197 intangible property shall be reduced 
by the amount of such deduction before com-
puting the amount otherwise allowable as an 
amortization deduction under subsection (a) for
such taxable year and any subsequent taxable 
year. 
‘‘(2) QUALIFIED
SECTION
197
INTANGIBLE 
PROPERTY.—For purposes of this subsection, the 
term ‘qualified section 197 intangible property’ 
means any amortizable section 197 intangible which 
is acquired in a transaction (or series of trans-
actions) involving the acquisition of assets consti-
tuting a trade or business or substantial portion 
thereof from an eligible small business (as defined in 
section 474(c)) after December 31, 2002. 
‘‘(3) LIMITATIONS.—
‘‘(A) MAXIMUM
DOLLAR
AMOUNT.—The 
aggregate amount of adjusted basis of qualified 
section 197 intangible property which a tax-
payer may take into account under this sub-
section for any taxable year shall not exceed 
$5,000,000 ($2,500,000 in the case of a sepa-
rate return of a married individual (as defined 
in section 7703)). 
‘‘(B) ALLOCATION OF DOLLAR AMOUNT.—
‘‘(i) CONTROLLED GROUP.—For pur-
poses of applying the dollar limitation 
under subparagraph (A)—
‘‘(I) all component members of a 
controlled group shall be treated as 
one taxpayer, and 
‘‘(II) the Secretary shall, under 
regulations prescribed by him, appor-
tion such dollar limitation among the 
component members of such con-
trolled group. 
For purposes of the preceding sentence, 
the term ‘controlled group’ has the mean-
ing assigned to it by section 1563(a), ex-
cept that the phrase ‘more than 50 per-
cent’ shall be substituted for the phrase ‘at 
least 80 percent’ each place it appears in 
section 1563(a)(1). 
‘‘(ii) PARTNERSHIPS AND S CORPORA-
TIONS.—In the case of a partnership, the 
dollar limitation contained in subparagraph 
(A) shall apply with respect to the partner-
ship and with respect to each partner. A 
similar rule shall apply in the case of an 
S corporation and its shareholders. 
‘‘(C) SUBSECTION
NOT
TO
APPLY
TO 
TRUSTS.—This subsection shall not apply to 
trusts.
‘‘(D) ESTATES.—The benefit of the special 
deduction provided by this subsection shall be 
allowed to estates in the same manner as in the 
case of an individual. The allowable deduction 
shall be apportioned between the income bene-
ficiary and the fiduciary under regulations pre-
scribed by the Secretary. Any amount so appor-
tioned to a beneficiary shall be taken into ac-
count for purposes of determining the amount 
allowable as a deduction under this subsection 
to such beneficiary.’’
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to taxable years beginning after 
December 31, 2002.
Æ