Title: ROOT for Mainstreet Businesses Act of 2018
Policy area: Taxation

Summary:
Removing Onerous Obstacles in the Tax code for Mainstreet Businesses Act of 2018 or the ROOT for Mainstreet Businesses Act of 2018
This bill amends the Internal Revenue Code to exclude from personal holding company income certain rents and royalties that are derived in the active conduct of a trade or business and are not received from a related person.

[Congressional Bills 115th Congress]
[From the U.S. Government Publishing Office]
[H.R. 5813 Introduced in House (IH)]

<DOC>






115th CONGRESS
  2d Session
                                H. R. 5813

    To amend the Internal Revenue Code of 1986 to exclude from the 
  definition of personal holding company income certain royalties and 
      rents derived in the active conduct of a trade or business.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                              May 15, 2018

 Mr. Barr (for himself, Mr. Wenstrup, Mr. Reichert, and Mr. Bishop of 
  Michigan) 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 exclude from the 
  definition of personal holding company income certain royalties and 
      rents derived in the active conduct of a trade or business.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Removing Onerous Obstacles in the 
Tax code for Mainstreet Businesses Act of 2018'' or as the ``ROOT for 
Mainstreet Businesses Act of 2018''.

SEC. 2. CERTAIN ROYALTIES AND RENTS DERIVED IN THE ACTIVE CONDUCT OF A 
              TRADE OR BUSINESS NOT TREATED AS PERSONAL HOLDING COMPANY 
              INCOME.

    (a) Royalties.--
            (1) In general.--Section 543(a)(1) of the Internal Revenue 
        Code of 1986 is amended by striking ``and'' at the end of 
        subparagraph (D), by striking the period at the end of 
        subparagraph (E) and inserting ``, and'', and by adding at the 
        end the following new subparagraph:
                    ``(F) royalties derived in the active conduct of a 
                trade or business which are received from a person 
                other than a related person (within the meaning of 
                section 267).''.
            (2) Copyright royalties.--Section 543(a)(4) of such Code is 
        amended by inserting ``or to any amount derived in the active 
        conduct of a trade or business which are received from a person 
        other than a related person (within the meaning of section 
        267)'' after ``active business computer software royalties'' in 
        the last sentence thereof.
    (b) Rents.--
            (1) In general.--Section 543(b)(3) of such Code is amended 
        by striking ``or'' at the end of subparagraph (D), by striking 
        the period at the end of subparagraph (E) and inserting ``, 
        or'', and by adding at the end the following new subparagraph:
                    ``(F) amounts derived in the active conduct of a 
                trade or business which are received from a person 
                other than a related person (within the meaning of 
                section 267).''.
            (2) Produced film rents.--Section 543(a)(5)(B) of such Code 
        is amended by adding at the end the following: ``Such term 
        shall not include any amount derived in the active conduct of a 
        trade or business which are received from a person other than a 
        related person (within the meaning of section 267).''
    (c) Regulations.--Section 543 of such Code is amended by adding at 
the end the following new subsection:
    ``(e) Determination of Whether Royalties and Rents Are Derived in 
the Active Conduct of a Trade or Business.--The Secretary shall 
prescribe regulations or other guidance providing for the treatment of 
rents, royalties, and other amounts described in subsections (a)(1)(F), 
(a)(4), (a)(5)(B), and (b)(3)(F) as being derived in the active conduct 
of a trade or business consistent with the regulations and other 
guidance providing for such treatment for purposes of section 
954(c)(2)(A).''.
    (d) Effective Date.--The amendments made by this section shall 
apply to taxable years ending on or after the date of the enactment of 
this Act.
                                 <all>