‘‘SEC. 7529. SMALL BUSINESS START-UP SAVINGS AC-
COUNTS. 
‘‘(a) IN GENERAL.—An individual or an eligible small 
business may enter into an agreement with the Secretary 
to establish a small business start-up savings account. 
‘‘(b) SMALL BUSINESS START-UP SAVINGS AC-
COUNT.—For purposes of this section, the term ‘small 
business start-up savings account’ means a trust created 
or organized in the United States for the benefit of the 
account beneficiary, but only if the written governing in-
strument creating the trust meets the following require-
ments: 
‘‘(1) Except as provided in subsection (d)(3) in 
the case of a rollover contribution, no contribution 
will be accepted unless it is in cash, and contribu-
tions will not be accepted for the taxable year on be-
half of any account beneficiary in excess of the 
amount in effect for such taxable year under sub-
section (d)(2). 
‘‘(2) The trustee is a bank (as defined in sec-
tion 408(n)) or such other person who demonstrates 
to the satisfaction of the Secretary that the manner 
in which such other person will administer the trust 
will be consistent with the requirements of this sec-
tion. 
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‘‘(3) No part of the trust funds will be invested 
in life insurance contracts. 
‘‘(4) The interest of an individual in the bal-
ance of his account is nonforfeitable. 
‘‘(5) The assets of the trust will not be commin-
gled with other property except in a common trust 
fund or common investment fund. 
‘‘(c) ELIGIBLE SMALL BUSINESS.—For purposes of 
this section, the term ‘eligible small business’ means, with 
respect to any taxable year, any person engaged in a trade 
or business if the average number of employees employed 
by such person on business days during the taxable year 
was 500 or fewer. 
‘‘(d) TREATMENT OF CONTRIBUTIONS.— 
‘‘(1) IN GENERAL.—There shall be allowed as a 
deduction for the taxable year an amount equal to 
so much of the account beneficiary’s contributions 
for the taxable year to all small business start-up 
savings accounts maintained for the benefit of such 
beneficiary as do not exceed the contribution limita-
tions in effect for the taxable year under paragraph 
(2). 
‘‘(2) CONTRIBUTION LIMITATION.— 
‘‘(A) IN GENERAL.—The amount allowable 
as a deduction under paragraph (1) with re-
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spect to all small business start-up savings ac-
counts maintained for the benefit of any person 
shall not exceed the lesser of— 
‘‘(i) $10,000, or 
‘‘(ii) $150,000, reduced by the aggre-
gate contributions by such person for all 
taxable years with respect to all small busi-
ness start-up savings accounts of the tax-
payer. 
‘‘(B) COST OF LIVING ADJUSTMENT.— 
‘‘(i) IN GENERAL.—In the case of a 
taxable year beginning after 2011, the 
$10,000 amount in subparagraph (A) shall 
be increased by an amount equal to— 
‘‘(I) such dollar amount, multi-
plied by 
‘‘(II) the cost-of-living adjust-
ment determined under section 1(f)(3) 
for the calendar year in which the tax-
able year begins, determined by sub-
stituting ‘calendar year 2010’ for ‘cal-
endar year 1992’ in subparagraph (B) 
thereof. 
‘‘(ii) ROUNDING.—If any amount as 
adjusted under clause (i) is not a multiple 
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of $500, such amount shall be rounded to 
the next lowest multiple of $500. 
‘‘(3) ROLLOVERS
FROM
RETIREMENT
PLANS 
NOT
ALLOWED.—Under regulations prescribed by 
the Secretary, a person may make a rollover con-
tribution to a small business start-up savings ac-
count only in the case of a rollover from another 
small business start-up savings account. 
‘‘(4) TREATED
AS
DEDUCTION
FOR
INDIVID-
UALS AND CORPORATIONS.—For purposes of chapter 
1, the deduction allowed under paragraph (1) shall 
be treated as a deduction specified in part VI of sub-
chapter B of chapter 1 (relating to itemized deduc-
tions for individuals and corporations). 
‘‘(e) TREATMENT OF DISTRIBUTIONS.— 
‘‘(1) TAX TREATMENT.— 
‘‘(A) EXCLUSION OF QUALIFIED DISTRIBU-
TIONS.—Any qualified distribution from a small 
business start-up savings account shall not be 
includible in gross income. 
‘‘(B) INCLUSION
OF
OTHER
DISTRIBU-
TIONS.—Any distribution from a small business 
start-up savings account which is not a quali-
fied distribution shall be included in gross in-
come. 
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‘‘(2) QUALIFIED DISTRIBUTION.—For purposes 
of this subsection, the term ‘qualified distribution’ 
means, with respect to any taxable year, any pay-
ment or distribution from a small business start-up 
savings account— 
‘‘(A) to the extent the amount of such pay-
ment or distribution does not exceed the sum 
of— 
‘‘(i) the aggregate amounts paid or in-
curred by the taxpayer for such taxable 
year with respect to the taxpayer’s trade or 
business for the purchase of equipment or 
facilities, marketing, training, incorpora-
tion, and accounting fees, and 
‘‘(ii) the aggregate capital contribu-
tions of the taxpayer with respect to an eli-
gible small business for the taxable year 
(but only to the extent such amounts are 
used by such small business for purposes 
described in clause (i)), and 
‘‘(B) which, in the case of a payment or 
distribution subsequent to the first payment or 
distribution from such account (or any prede-
cessor to such account)— 
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‘‘(i) is made not later than the close 
of the 5th taxable year beginning after the 
date of such first payment or distribution, 
and 
‘‘(ii) is made with respect to the same 
eligible small business with respect to 
which such first payment or distribution 
was made. 
‘‘(3) TREATMENT AFTER DEATH OF ACCOUNT 
BENEFICIARY.— 
‘‘(A) IN GENERAL.—If, by reason of the 
death of the account beneficiary, any person ac-
quires the account beneficiary’s interest in a 
small business start-up savings account— 
‘‘(i) such account shall cease to be a 
small business start-up savings account as 
of the date of death, and 
‘‘(ii) an amount equal to the fair mar-
ket value of the assets in such account on 
such date shall be includible— 
‘‘(I) in the case of a person who 
is not the estate of such beneficiary, 
in such person’s gross income for the 
taxable year which includes such date, 
or 
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‘‘(II) in the case of a person who 
is the estate of such beneficiary, in 
such beneficiary’s gross income for 
the last taxable year of such bene-
ficiary. 
‘‘(B) SPECIAL RULES.— 
‘‘(i) REDUCTION OF INCLUSION FOR 
PREDEATH
EXPENSES.—The amount in-
cludible in gross income under subpara-
graph (A) shall be reduced by the amounts 
described in paragraph (2) which were in-
curred by the decedent before the date of 
the decedent’s death and paid by such per-
son within 1 year after such date. 
‘‘(ii) 
DEDUCTION
FOR
ESTATE 
TAXES.—An appropriate deduction shall be 
allowed under section 691(c) to any person 
(other than the decedent) with respect to 
amounts included in gross income under 
subparagraph (A)(ii)(I) by such person. 
‘‘(4) TREATMENT FOR FAILURE TO BE TREAT-
ED AS ELIGIBLE SMALL BUSINESS.—If for any tax-
able year a taxpayer which holds a small business 
start-up savings account as an eligible small busi-
ness ceases to be an eligible small business— 
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‘‘(A) such account shall cease to be a small 
business start-up savings account, and 
‘‘(B) the balance of such account shall be 
treated as paid out for such taxable year in a 
distribution which is not a qualified distribu-
tion. 
‘‘(f) SPECIAL RULES.— 
‘‘(1) DENIAL OF DOUBLE BENEFIT.—Any de-
duction or credit otherwise allowed for the taxable 
year with respect to amounts described in subsection 
(e)(2)(A) shall be reduced by an amount equal to 
the qualified distributions attributable to such 
amounts. The adjusted basis of any property placed 
in service for the taxable year shall be reduced by 
the amount of any qualified distributions attrib-
utable to such property. For purposes of this para-
graph, qualified distributions shall first be treated as 
attributable to amounts described in subsection 
(e)(2)(A), then to property placed in service for the 
taxable year. 
‘‘(2) AGGREGATION
RULE.—For purposes of 
this section, all persons treated as a single employer 
under subsection (a) or (b) of section 52, or sub-
section (m) or (o) of section 414, shall be treated as 
one person.’’. 
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(b) EXCISE TAX ON EXCESS CONTRIBUTIONS AND 
NONQUALIFIED DISTRIBUTIONS.—Subtitle D of the Inter-
nal Revenue Code of 1986 is amended by adding at the 
end the following new chapter: 
‘‘CHAPTER 50—SMALL BUSINESS START- 
UP SAVINGS ACCOUNTS 
‘‘Sec. 5000C. Tax on excess contributions to small business start-up savings ac-
counts. 
‘‘Sec. 5000D. Tax on nonqualified distributions from small business start-up 
savings accounts. 
‘‘SEC. 5000C. TAX ON EXCESS CONTRIBUTIONS TO SMALL 
BUSINESS START-UP SAVINGS ACCOUNTS. 
‘‘(a) IN GENERAL.—In the case of a small business 
start-up savings account (within the meaning of section 
7529) there is imposed for each taxable year a tax in an 
amount equal to 6 percent of the amount of the excess 
contributions to such taxpayer’s account (determined as 
of the close of the taxable year). 
‘‘(b) LIMITATION.—The amount of tax imposed by 
subsection (a) shall not exceed 6 percent of the value of 
the account (determined as of the close of the taxable 
year). 
‘‘(c) EXCESS CONTRIBUTIONS.—For purposes of this 
section, in the case of contributions to all small business 
start-up savings accounts maintained for the benefit of a 
person, the term ‘excess contributions’ means the sum 
of— 
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‘‘(1) the excess (if any) of— 
‘‘(A) the amount contributed to such ac-
counts for the taxable year, over 
‘‘(B) the amount allowable as a contribu-
tion under section 7529(d)(2)(A) for such tax-
able year, and 
‘‘(2) the amount determined under this sub-
section for the preceding taxable year, reduced by 
the sum of— 
‘‘(A) the distributions out of the accounts 
for the taxable year, and 
‘‘(B) the excess (if any) of— 
‘‘(i) the maximum amount allowable 
as 
a 
contribution 
under 
section 
7529(d)(2)(A) for such taxable year, over 
‘‘(ii) the amount contributed to such 
accounts for such taxable year. 
‘‘SEC. 5000D. TAX ON NONQUALIFIED DISTRIBUTIONS FROM 
SMALL BUSINESS START-UP SAVINGS AC-
COUNTS. 
‘‘(a) IN GENERAL.—If for any taxable year an 
amount is paid or distributed out of a taxpayer’s small 
business start-up savings account, there is imposed for 
such taxable year a tax in an amount equal to 10 percent 
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of the portion of such amount which is includible in the 
gross income of the taxpayer. 
‘‘(b) EXCEPTION FOR DISABILITY OR DEATH.—Sub-
section (a) shall not apply if the payment or distribution 
is made after the account beneficiary becomes disabled 
within the meaning of section 72(m)(7) (but only if such 
beneficiary’s account was created before becoming so dis-
abled) or dies. 
‘‘SEC. 5000E. CROSS REFERENCE. 
‘‘For prohibited transactions, see section 4975.’’. 
(c) PROHIBITED TRANSACTIONS.— 
(1) IN
GENERAL.—Paragraph (1) of section 
4975(e) of such Code is amended by striking ‘‘or’’ 
at the end of subparagraph (F), by striking the pe-
riod at the end of subparagraph and inserting ‘‘, 
or’’, and by adding at the end the following new sub-
paragraph: 
‘‘(H) a small business start-up savings ac-
count (within the meaning of section 7529).’’. 
(2) SPECIAL
RULE
FOR
CEASING
TO
BE
A 
SMALL
BUSINESS
START-UP
SAVINGS
ACCOUNT.— 
Section 4975(d) of such Code (relating to tax on 
prohibited transactions) is amended by adding at the 
end the following new paragraph: 
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‘‘(7) SPECIAL
RULE
FOR
SMALL
BUSINESS 
START-UP
SAVINGS
ACCOUNT.—An individual for 
whose benefit a small business start-up savings ac-
count (within the meaning of section 7529) is estab-
lished shall be exempt from the tax imposed by this 
section with respect to any transaction concerning 
such account (which would otherwise be taxable 
under this section) if, with respect to such trans-
action, the account ceases to be a small business 
start-up savings account by reason of the application 
of paragraph (3) or (4) of section 7529(e) to such 
account.’’. 
(d) DEDUCTION ALLOWED WHETHER OR NOT INDI-
VIDUAL ITEMIZES.—Subsection (a) of section 62 of such 
Code is amended by adding at the end the following new 
paragraph: 
‘‘(22) CONTRIBUTIONS
TO
SMALL
BUSINESS 
START-UP SAVINGS ACCOUNTS.—The deduction al-
lowed by section 7529(d)(1)(A).’’. 
(e) CONFORMING AMENDMENTS.— 
(1) The table of chapters for subtitle D such 
Code is amended by adding at the end the following 
new item: 
‘‘CHAPTER 50. SMALL BUSINESS START-UP SAVINGS ACCOUNTS’’. 
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(2) The table of sections for chapter 77 of such 
Code is amended by inserting after the item relating 
to section 7528 the following new item: 
‘‘Sec. 7529. Small Business Start-Up Savings Accounts.’’. 
(f) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2010. 
Æ 
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