Topic: Domestic Commerce — Small Businesses
Subject: Taxation
Date: 2015-09-15 00:00:00

(This measure has not been amended since it was introduced. The summary has been expanded because action occurred on the measure.)

This bill amends provisions of the Internal Revenue Code relating to the taxation of small business entities.

TITLE I--SMALL BUSINESS TAX REFORM

(Sec. 101) Under current law a corporation or partnership may use the cash method of accounting and is exempt from the requirement to use inventories if such entity has gross receipts not exceeding $5 million. This bill increases that limitation to $25 million. This increased amount is adjusted annually for inflation in taxable years beginning in a calendar year after 2015.

(Sec. 102) The Department of the Treasury must modify Treasury Regulations relating to the expensing of depreciable property to increase the safe harbor limit for expensing from $500 to $2,500  for taxpayers without applicable financial statements.

(Sec. 103) This section eliminates restrictions on the depreciation of computers or peripheral equipment.

(Sec. 104) This section allows, after 2015, a permanent deduction of the health insurance costs of self-employed individuals in computing self-employment taxes.

(Sec. 105) This section eliminates: (1) the termination of partnerships after a sale or exchange of certain partnership interests, and (2) the termination of S corporation status due to excessive passive investment income.

TITLE II--PROVISIONS RELATED TO THE INTERNAL REVENUE SERVICE

(Sec. 201) This section requires an adjustment for inflation in taxable years beginning in a calendar year after 2015 to amounts of specified tax exclusions and deductions.

(Sec. 202) The Internal Revenue Service must submit to the House Committee on Ways and Means and the Senate Committees on Finance and Small Business and Entrepreneurship by June 30, 2016, a report on specific ways to improve customer service to small businesses, including objectively measurable goals for how to reduce response times.

(Sec. 203) This section changes tax return due dates for partnerships (from April 15 to March 15, with extensions until September 15), S corporations (from March 15 to March 31, with extensions until September 30), and C corporations (from March 15 to April 15, with extensions until October 15).

Treasury must modify regulations for returns for taxable years beginning after December 31, 2011, relating to the the due dates for extensions of tax returns for partnerships, estates, employee benefit plans, and tax-exempt organizations. The due date for the annual information return of a foreign trust with a U.S. owner and for the report of foreign bank and financial accounts is April 15 (with extensions until October 15).

The automatic extension for corporation income tax returns is  increased from three months to six months.

TITLE III--PROVISIONS RELATED TO START-UP BUSINESSES

(Sec. 301) The required holding period for qualified small business stock is reduced from 5 years to 3 years for purposes of determining capital gains tax treatment of such stock. The period for rolling over gain from the sale of such stock without tax consequences is extended from 60 days to 1 year.

TITLE IV--PROMOTION AND EXPANSION OF PRIVATE EMPLOYEE OWNERSHIP

Promotion and Expansion of Private Employee Ownership Act of 2015

(Sec. 403) This section extends to all domestic corporations, including S corporations, provisions allowing deferral of tax on the gain from the sale of employer securities to an S corporation-sponsored employer stock ownership plan (ESOP).

(Sec. 404) This section directs Treasury to establish the S Corporation Employee Ownership Assistance Office to foster increased employee ownership of S corporations. The Office shall provide: (1) education and outreach to inform companies and individuals about the possibilities and benefits of employee ownership of S corporations, and (2) technical assistance to assist S corporations in sponsoring employee stock ownership plans

(Sec. 405) This section amends the Small Business Act to define "ESOP business concern" and allow such a concern to continue to qualify for loans, preferences, and other programs under such Act.