I 
111TH CONGRESS 
2D SESSION 
H. R. 5318 
To amend the Internal Revenue Code of 1986 to waive the 10-percent penalty 
on early distributions from individual retirement plans for small business 
investments. 
IN THE HOUSE OF REPRESENTATIVES 
MAY 14, 2010 
Mr. GINGREY of Georgia (for himself, Mr. PENCE, Mr. BARTLETT, Mr. 
BISHOP of Utah, Mrs. BLACKBURN, Mr. FRANKS of Arizona, Ms. GRANG-
ER, Mr. HALL of Texas, Mrs. LUMMIS, Mr. MARCHANT, Mr. MCCLIN-
TOCK, Mr. PITTS, and Mr. POSEY) 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 waive 
the 10-percent penalty on early distributions from indi-
vidual retirement plans for small business investments. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Small Business Invest-
ment Penalty Relief Act of 2010’’. 
SEC. 2. FINDINGS. 
Congress finds the following: 
VerDate Mar 15 2010 
21:49 May 14, 2010
Jkt 089200
PO 00000
Frm 00001
Fmt 6652
Sfmt 6201
E:\BILLS\H5318.IH
H5318
srobinson on DSKHWCL6B1PROD with BILLS
(1) In March 2010, the Department of Labor 
reported approximately 15 million people out of 
work, thereby making the national unemployment 
rate at 9.7 percent. 
(2) Small businesses account for approximately 
25 million, or 99.7 percent, of employers in the 
United States. 
(3) In the last 15 years, small businesses have 
accounted for approximately 22 million new jobs, or 
roughly 93 percent of the net new jobs created. 
(4) Since the commencement of the financial 
crisis, small businesses have been denied loans, seen 
credit lines curtailed, and have lost access to venture 
capital and securities markets. 
SEC. 3. WAIVER OF 10-PERCENT PENALTY ON SMALL BUSI-
NESS DISTRIBUTIONS. 
Paragraph (2) of section 72(t) of the Internal Rev-
enue Code of 1986 is amended by adding at the end the 
following new subparagraph: 
‘‘(H) SMALL BUSINESS DISTRIBUTIONS.— 
‘‘(i) IN GENERAL.—Any payment or 
distribution to the individual during 2010 
or 2011 to the extent that for the taxable 
year such amount does not exceed the less-
er of— 
VerDate Mar 15 2010 
21:49 May 14, 2010
Jkt 089200
PO 00000
Frm 00002
Fmt 6652
Sfmt 6201
E:\BILLS\H5318.IH
H5318
srobinson on DSKHWCL6B1PROD with BILLS
‘‘(I) the small business invest-
ment of the individual for the taxable 
year, or 
‘‘(II) the lesser of $10,000, or 25 
percent of the nonforefeitable value of 
the plan at the beginning of the tax-
able year. 
‘‘(ii) 
SMALL
BUSINESS
INVEST-
MENT.—For purposes of this subpara-
graph, the term ‘small business invest-
ment’ means, with respect to a qualified 
small business, an amount equal to the 
basis of property which— 
‘‘(I) is placed in service during 
the taxable year, 
‘‘(II) is used in the trade or busi-
ness of the taxpayer, and 
‘‘(III) is subject to the allowance 
for depreciation provided in section 
167 or is real property used in such 
trade or business. 
‘‘(iii) QUALIFIED SMALL BUSINESS.— 
For purposes of this subparagraph— 
‘‘(I) IN
GENERAL.—The term 
‘qualified small business’ means any 
VerDate Mar 15 2010 
21:49 May 14, 2010
Jkt 089200
PO 00000
Frm 00003
Fmt 6652
Sfmt 6201
E:\BILLS\H5318.IH
H5318
srobinson on DSKHWCL6B1PROD with BILLS
trade or business the gross receipts of 
which for the preceding taxable year 
did not exceed $20,000,000 or which 
employed not more than 50 full-time 
employees during the preceding tax-
able year. 
‘‘(II) FULL-TIME.—An employee 
shall be considered full-time if such 
employee is employed at least 30 
hours per week for 20 or more cal-
endar weeks in the taxable year. 
‘‘(III) CONTROLLED
GROUPS.— 
For purposes of subclause (I), all per-
sons treated as a single employer 
under subsection (a) or (b) of section 
52 or subsection (m) or (o) of section 
414 shall be treated as a single trade 
or business. 
‘‘(iv) RELATED PERSONS.—A person 
shall be treated as related to another per-
son if the relationship between such per-
sons would result in the disallowance of 
losses under section 267 or 707(b).’’. 
Æ 
VerDate Mar 15 2010 
21:49 May 14, 2010
Jkt 089200
PO 00000
Frm 00004
Fmt 6652
Sfmt 6301
E:\BILLS\H5318.IH
H5318
srobinson on DSKHWCL6B1PROD with BILLS