I 117th CONGRESS 2d Session H. R. 7795 IN THE HOUSE OF REPRESENTATIVES May 17, 2022 Mr. Biggs 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 expand the deduction for qualified business income, and for other purposes.

1. Short title This Act may be cited as the Small Business Prosperity Act of 2022 . 2. Increase and expansion of deduction for qualified business income (a) Deduction made permanent Section 199A of the Internal Revenue Code of 1986 is amended by striking subsection (i). (b) Deduction To achieve a top rate on qualified business income of 21 percent Subsections (a)(2) and (b)(1)(B) of section 199A of such Code are each amended by striking 20 percent and inserting 43 percent (47 percent in the case of any taxable year beginning after December 31, 2025) . (c) Repeal of limitation based on W–2 wages paid with respect to the trade or business, top rate on qualified business income Section 199A(b)(2) of such Code is amended to read as follows: (2) Determination of deductible amount for each trade or business The amount determined under this paragraph with respect to any qualified trade or business is 43 percent (47 percent in the case of any taxable year beginning after December 31, 2025) of the taxpayer’s qualified business income with respect to the qualified trade or business. . (d) Repeal of exclusion of specified service trades or businesses Section 199A(d) of such Code is amended to read as follows: (d) Qualified trade or business For purposes of this section, the term qualified trade or business means any trade or business other than the trade or business of performing services as an employee. . (e) Conforming amendments (1) Section 199A(b) of such Code is amended— (A) by striking paragraphs (3), (4), and (6), and redesignating paragraphs (5) and (7) as paragraphs (3) and (4), respectively, and (B) by striking the lesser of— and all that follows in paragraph (4) (as so redesignated) and inserting 9 percent of so much of the qualified business income with respect to such trade or business as is properly allocable to qualified payments received from such cooperative . (2) Section 199A(e) of such Code is amended by striking paragraph (2). (3) Section 199A(f)(1) of such Code is amended to read as follows: (1) Application to partnerships and S corporations (A) In general In the case of a partnership or S corporation— (i) this section shall be applied at the partner or shareholder level, and (ii) each partner or shareholder shall take into account such person's allocable share of each qualified item of income, gain, deduction, and loss. For purposes of this subparagraph, in the case of an S corporation, an allocable share shall be the shareholder’s pro rata share of an item. (B) Treatment of trades or business in Puerto Rico In the case of any taxpayer with qualified business income from sources within the commonwealth of Puerto Rico, if all such income is taxable under section 1 for such taxable year, then for purposes of determining the qualified business income of such taxpayer for such taxable year, the term United States shall include the Commonwealth of Puerto Rico. . (4) Section 199A(f)(4)(A) of such Code is amended by striking and wages . (5) Section 199A(g)(1) of such Code is amended by striking subparagraph (B) and redesignating subparagraph (C) as subparagraph (B). (6) Section 199A of such Code is amended by striking subsection (h). (f) Effective date The amendments made by this section shall apply to taxable years beginning after December 31, 2022. 3. No taxable event for change of corporate form Notwithstanding any provision of the Internal Revenue Code of 1986, a change in the organizational structure of a corporation, however organized, into another organizational structure is not a taxable event for the purposes of such Code if there is no change among the owners, their ownership interests, or the assets of the organization (other than a de minimis change in such assets). The preceding sentence shall apply to changes in organizational structure occurring after December 31, 2022. 4. Repeal of estate tax and retention of basis step-up Effective for estates of decedents dying after December 31, 2022, chapter 11 of the Internal Revenue Code of 1986 is repealed.