Title: Support Our Start-Ups Act
Policy area: Taxation

Summary:
Support Our Start-Ups Act
This bill amends the Internal Revenue Code to extend the tax deduction for new business expenditures to organizational expenditures, generally defined as expenditures incident to the creation of a corporation or a partnership.
The bill also increases the maximum deduction amount for start-up and organizational expenditures from $5,000 to $20,000 and increases from $50,000 to $120,000 the threshold amount after which the maximum deduction amount for such expenditures is reduced.

[Congressional Bills 116th Congress]
[From the U.S. Government Publishing Office]
[S. 2841 Introduced in Senate (IS)]

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116th CONGRESS
  1st Session
                                S. 2841

To amend the Internal Revenue Code of 1986 to increase the limitations 
for deductible new business expenditures and to consolidate provisions 
             for start-up and organizational expenditures.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                           November 13, 2019

Ms. Baldwin (for herself and Mr. Hoeven) introduced the following bill; 
     which was read twice and referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL


 
To amend the Internal Revenue Code of 1986 to increase the limitations 
for deductible new business expenditures and to consolidate provisions 
             for start-up and organizational expenditures.

    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 ``Support Our Start-Ups Act''.

SEC. 2. NEW BUSINESS EXPENDITURES.

    (a) In General.--Subsections (a) and (b) of section 195 of the 
Internal Revenue Code of 1986 are both amended by inserting ``and 
organizational'' after ``start-up'' each place it appears.
    (b) Organizational Expenditures.--Subsection (c) of section 195 of 
the Internal Revenue Code of 1986 is amended by adding at the end the 
following new paragraph:
            ``(3) Organizational expenditures.--The term 
        `organizational expenditures' means any expenditure which--
                    ``(A) is incident to the creation of a corporation, 
                S corporation, or partnership,
                    ``(B) is chargeable to capital account, and
                    ``(C) is of a character which, if expended incident 
                to the creation of a corporation, S corporation, or 
                partnership having a limited life, would be amortizable 
                over such life.''.
    (c) Dollar Amounts.--
            (1) In general.--Clause (ii) of section 195(b)(1)(A) of the 
        Internal Revenue Code of 1986 is amended--
                    (A) by striking ``$5,000'' and inserting 
                ``$20,000''; and
                    (B) by striking ``$50,000'' and inserting 
                ``$120,000''.
            (2) Adjustment for inflation.--Subsection (b) of section 
        195 of such Code is amended by adding at the end the following 
        new paragraph:
            ``(4) Adjustment for inflation.--In the case of a taxable 
        year beginning after December 31, 2020, the $20,000 and 
        $120,000 amounts in paragraph (1)(A)(ii) shall each be 
        increased by an amount equal to--
                    ``(A) such amount, multiplied by
                    ``(B) the cost-of-living adjustment determined 
                under section 1(f)(3) for the calendar year in which 
                the taxable year begins, determined by substituting 
                `calendar year 2019' for `calendar year 2016' in 
                subparagraph (A)(ii) thereof.
        If any increase determined under the preceding sentence is not 
        a multiple of $1,000, such amount shall be rounded to the 
        nearest multiple of $1,000.''.
    (d) Amortization Treatment.--Subparagraph (B) of section 195(b)(1) 
of the Internal Revenue Code of 1986, as amended by subsection (a), is 
amended to read as follows:
                    ``(B) the remainder of such start-up and 
                organizational expenditures shall be charged to capital 
                account and allowed as an amortization deduction 
                determined by amortizing such expenditures ratably over 
                the 15-year period beginning with the midpoint of the 
                taxable year in which the active trade or business 
                begins.''.
    (e) Application to Disregarded Entities.--Subsection (c) of section 
195 of the Internal Revenue Code of 1986, as amended by subsection (b), 
is amended by adding at the end the following new paragraph:
            ``(4) Application to disregarded entities.--In the case of 
        any entity with a single owner which is disregarded as an 
        entity separate from its owner, this section shall be applied 
        in the same manner as if such entity were a corporation.''.
    (f) Allowance of Deduction Upon Liquidation or Disposition.--
Section 195 of the Internal Revenue Code of 1986 is amended by adding 
at the end the following new subsection:
    ``(e) Allowance of Deduction Upon Liquidation or Disposition.--
            ``(1) Liquidation of a business entity.--In the case of a 
        complete liquidation by the taxpayer of any corporation, S 
        corporation, or partnership, any start-up and organizational 
        expenditures paid or incurred in connection with such 
        partnership, S corporation, or corporation which were not 
        allowed as a deduction by reason of this section shall be 
        allowed as a loss to the extent provided under section 165.
            ``(2) Disposition of trade or business.--In the case of a 
        complete disposition by the taxpayer of any trade or business, 
        any start-up and organizational expenditures paid or incurred 
        in connection with such trade or business which were not 
        allowed as a deduction by reason of this section (and which are 
        not taken into account under paragraph (1)) shall be allowed as 
        a loss to the extent provided under section 165.''.
    (g) Conforming Amendments.--
            (1) Section 195(b)(1) of the Internal Revenue Code of 1986 
        is amended--
                    (A) by inserting ``(or, in the case of a 
                partnership or S corporation, the entity elects)'' 
                after ``If a taxpayer elects'',
                    (B) by inserting ``(or the entity, as the case may 
                be)'' after ``the taxpayer'' in subparagraph (A), and
                    (C) by adding at the end the following flush 
                sentence:
        ``In the case of a partnership or S corporation, the election 
        under the preceding sentence shall be made at the entity 
        level.''.
            (2) Section 195(b)(2) of such Code is amended--
                    (A) by striking ``amortization period.--In any 
                case'' and inserting the following: ``amortization 
                period.--
                    ``(A) In general.--In any case''; and
                    (B) by adding at the end the following new 
                subparagraph:
                    ``(B) Special rule.--In the case of a partnership 
                or S corporation, subparagraph (A) shall be applied at 
                the entity level.''.
            (3) Section 195(b) of such Code is amended by striking 
        paragraph (3).
            (4)(A) Part VIII of subchapter B of chapter 1 of such Code 
        is amended by striking section 248 (and by striking the item 
        relating to such section in the table of sections for such 
        part).
            (B) Section 56(g)(4)(D)(ii) of such Code is amended by 
        striking ``Sections 173 and 248'' and inserting ``Section 
        173''.
            (C) Section 170(b)(2)(C)(ii) of such Code is amended by 
        striking ``(except section 248)''.
            (D) Section 312(n)(3) of such Code is amended by striking 
        ``Sections 173 and 248'' and inserting ``Section 173''.
            (E) Section 535(b)(3) of such Code is amended by striking 
        ``(except section 248)''.
            (F) Section 545(b)(3) of such Code is amended by striking 
        ``(except section 248)''.
            (G) Section 834(c)(7) of such Code is amended by striking 
        ``(except section 248)''.
            (H) Section 852(b)(2)(C) of such Code is amended by 
        striking ``(except section 248)''.
            (I) Section 857(b)(2)(A) of such Code is amended by 
        striking ``(except section 248)''.
            (J) Section 1363(b) of such Code is amended by inserting 
        ``and'' at the end of paragraph (2), by striking paragraph (3), 
        and by redesignating paragraph (4) as paragraph (3).
            (K) Section 1375(b)(1)(B)(i) of such Code is amended by 
        striking ``(other than the deduction allowed by section 248, 
        relating to organization expenditures)''.
            (5) Part I of subchapter K of chapter 1 of such Code is 
        amended by striking section 709 (and by striking the item 
        relating to such section in the table of sections for such 
        part).
            (6) The heading of section 195 of such Code (and the item 
        relating to such section in the table of sections for part VI 
        of subchapter B of chapter 1 of such Code) are each amended by 
        inserting ``and organizational'' after ``Start-up''.
    (h) Effective Date.--The amendments made by this section shall 
apply to expenses paid or incurred in taxable years beginning after 
December 31, 2019.
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