I 
109TH CONGRESS 
2D SESSION 
H. R. 4960 
To amend the Internal Revenue Code of 1986 to allow 5-year amortization 
of goodwill and other section 197 intangibles that are acquired from 
a small business. 
IN THE HOUSE OF REPRESENTATIVES 
MARCH 15, 2006 
Mr. CANTOR (for himself and Mr. POMEROY) 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 5- 
year amortization of goodwill and other section 197 in-
tangibles that are acquired from a small business. 
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 ‘‘Tax Fairness for Small 
Business Act of 2006’’. 
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SEC. 2. 5-YEAR AMORTIZATION OF CERTAIN INTANGIBLES 
ACQUIRED FROM ELIGIBLE SMALL BUSI-
NESSES AFTER DECEMBER 31, 2005. 
(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) 5-YEAR AMORTIZATION OF INTANGIBLES AC-
QUIRED FROM ELIGIBLE SMALL BUSINESSES AFTER DE-
CEMBER 31, 2005.— 
‘‘(1) IN GENERAL.—In the case of any qualified 
amortizable section 197 intangible, subsection (a) 
shall be applied by substituting ‘5-year period’ for 
‘15-year period’. 
‘‘(2) QUALIFIED AMORTIZABLE SECTION 197 IN-
TANGIBLE.—For purposes of this subsection, the 
term ‘qualified amortizable section 197 intangible’ 
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, 2005. 
‘‘(3) MAXIMUM AMOUNT PER BUSINESS.— 
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‘‘(A) IN
GENERAL.—The aggregate ad-
justed basis of qualified amortizable section 197 
intangibles of each eligible small business which 
the taxpayer may amortize under paragraph (1) 
shall not exceed $5,000,000. 
‘‘(B) ALLOCATION OF DOLLAR AMOUNT.— 
‘‘(i) CONTROLLED GROUP.—For pur-
poses of applying the dollar limitations in 
subparagraph (A)— 
‘‘(I) all component members of a 
controlled group shall be treated as 
one taxpayer, and 
‘‘(II) such dollar limitations shall 
be allocated among the component 
members of such controlled group in 
such manner as the Secretary pre-
scribes. 
For purposes of the preceding sentence, 
the term ‘controlled group’ has the mean-
ing given to such term by section 1563(a), 
except that ‘more than 50 percent’ shall be 
substituted for ‘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 
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dollar limitations in subparagraph (A) 
shall apply with respect to the partnership 
and with respect to each partner. A similar 
rule shall apply in the case of an S cor-
poration 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 in the manner 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 acquisitions of qualified amortiz-
able section 197 intangibles (as defined in section 
197(g)(2) of the Internal Revenue Code of 1986, as added 
by this section) after December 31, 2005. 
Æ 
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