[Congressional Bills 110th Congress]
[From the U.S. Government Publishing Office]
[H.R. 6601 Introduced in House (IH)]
110th CONGRESS
2d Session
H. R. 6601
To amend the Internal Revenue Code of 1986 to simplify the deduction
for business use of the home and to make other changes affecting small
businesses.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
July 24, 2008
Ms. Velazquez 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 simplify the deduction
for business use of the home and to make other changes affecting small
businesses.
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 ``Small Business Tax Modernization Act
of 2008''.
SEC. 2. STANDARD DEDUCTION FOR BUSINESS USE OF HOME.
(a) In General.--Subsection (c) of section 280A of the Internal
Revenue Code of 1986 (relating to disallowance of certain expenses in
connection with business use of home, rental of vacation homes, etc.)
is amended by adding at the end the following new paragraph:
``(7) Standard home office deduction.--
``(A) In general.--In the case of an individual who
is allowed a deduction for the use of a home office
because of a use described in paragraphs (1), (2), or
(4) of this subsection, notwithstanding the limitations
of paragraph (5), if such individual elects the
application of this paragraph for the taxable year,
such individual shall be allowed a deduction equal to
the standard home office deduction for the taxable year
in lieu of the deductions otherwise allowable under
this chapter for such taxable year by reason of being
attributed to such use.
``(B) Standard home office deduction.--For purposes
of this paragraph, the standard home office deduction
is the lesser of--
``(i) $2,000, or
``(ii) the gross income derived from the
individual's trade or business for which such
use occurs.
``(C) Inflation adjustment.--In the case of any
taxable year beginning in a calendar year after 2008,
the dollar amount in subparagraph (B)(i) shall be
increased by an amount equal to--
``(i) such dollar amount, multiplied by
``(ii) the cost-of-living adjustment
determined under section 1(f)(3) for the
calendar year in which the taxable year begins,
determined by substituting `2007' for `1992' in
subparagraph (B) thereof.
Any increase determined under the preceding sentence
shall be rounded to the nearest multiple of $100.''.
(b) Effective Date.--The amendment made by this section shall apply
to taxable years beginning after December 31, 2007.
SEC. 3. DE MINIMIS EXCEPTION TO EXCLUSIVE USE REQUIREMENT.
(a) In General.--Subsection (c) of section 280A of the Internal
Revenue Code of 1986 (relating to disallowance of certain expenses in
connection with business use of home, rental of vacation homes, etc.)
is amended by redesignating paragraphs (5) and (6) as paragraphs (6)
and (7), respectively, and by inserting after paragraph (4) the
following new paragraph:
``(5) De minimis nonbusiness use.--In applying paragraph
(1), personal use shall not be taken into account if such use
is so small as to make accounting for it unreasonable or
administratively impracticable.''.
(b) Conforming Amendment.--Subparagraph (A) of section 280A(d)(4)
of such Code is amended by striking ``subsection (c)(5)'' and inserting
``subsection (c)(6)''.
(c) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2007.
SEC. 4. REMOVAL OF CELLULAR TELEPHONES AND SIMILAR TELECOMMUNICATIONS
EQUIPMENT FROM LISTED PROPERTY.
(a) In General.--Subparagraph (A) of section 280F(d)(4) of the
Internal Revenue Code of 1986 (defining listed property) is amended by
adding ``and'' at the end of clause (iv), by striking clause (v), and
by redesignating clause (vi) as clause (v).
(b) Effective Date.--The amendment made by this section shall apply
to property placed in service after December 31, 2007.
SEC. 5. NONRESIDENT ALIENS PERMITTED TO BE S CORPORATION SHAREHOLDERS.
(a) In General.--Paragraph (1) of section 1361(b) of the Internal
Revenue Code of 1986 (defining an S corporation) is amended by adding
``and'' at the end of subparagraph (B), by striking subparagraph (C),
and by redesignating subparagraph (D) as subparagraph (C).
(b) Effective Date.--The amendment made by this section shall apply
to taxable years beginning after the date of the enactment of this Act.
SEC. 6. INCREASED DEDUCTION OF BUSINESS MEALS AND ENTERTAINMENT
EXPENSES FOR QUALIFIED SMALL BUSINESSES.
(a) In General.--Subsection (n) of section 274 of the Internal
Revenue Code of 1986 (relating to only 50 percent of meal and
entertainment expenses allowed as deduction) is amended by adding at
the end the following new paragraph:
``(4) Special rule for small businesses.--
``(A) In general.--In the case of a qualified small
business, paragraph (1) shall be applied--
``(i) by substituting `75 percent' for `50
percent' in the case of taxable years beginning
in 2008, and
``(ii) by substituting `80 percent' for `50
percent' in the case of taxable years beginning
after 2008.
``(B) Qualified small business.--For purposes of
subparagraph (A), the term `qualified small business'
means, with respect to any taxable year--
``(i) any corporation or partnership which
meets the gross receipts test of section 448(c)
for the preceding taxable year, and
``(ii) any sole proprietorship which would
meet such test if such proprietorship were a
corporation.''.
(b) Effective Date.--The amendment made by this section shall apply
to taxable years beginning after December 31, 2007.
SEC. 7. RECOVERY PERIOD FOR DEPRECIATION OF CERTAIN SYSTEMS INSTALLED
IN NONRESIDENTIAL AND RESIDENTIAL RENTAL BUILDINGS.
(a) 20-Year Recovery Period for Highly Efficient HVAC&R
Equipment.--Subparagraph (F) of section 168(e)(3) of the Internal
Revenue Code of 1986 (relating to 20-year property) is amended to read
as follows:
``(F) 20-year property.--The term `20-year
property' means--
``(i) initial clearing and grading land
improvements with respect to any electric
utility transmission and distribution plant,
and
``(ii) any property--
``(I) which is part of a heating,
ventilation, air conditioning, or
commercial refrigeration system,
``(II) which exceeds by at least 10
percent the applicable minimum
performance standard for such system or
component under the National Appliance
Energy Conservation Act of 1987, the
Energy Policy Act of 2005, or the
American Society of Heating,
Refrigerating and Air-conditioning
Engineers Standard 90.1,
``(III) which is installed on or in
a building which is nonresidential real
property or residential rental
property,
``(IV) the original use of which
commences with the taxpayer (the owner
or lessor in the case of residential
rental property), and
``(V) which is placed in service
before January 1, 2012.''.
(b) 25-Year Recovery Period for Certain Other HVAC&R Equipment.--
Section 168(e)(3) of such Code is amended by inserting after
subparagraph (F) the following new subparagraph:
``(G) 25-year property.--The term `25-year
property' means any property--
``(i) which is part of a heating,
ventilation, air conditioning, or commercial
refrigeration system,
``(ii) which is not described in
subparagraph (F),
``(iii) which is installed on or in a
building which is nonresidential real property
or residential rental property,
``(iv) the original use of which commences
with the taxpayer (the owner or lessor in the
case of residential rental property), and
``(v) which is placed in service before
January 1, 2012.''.
(c) Conforming Amendments.--
(1) The table contained in section 168(c) of such Code is
amended by inserting after the item relating to 20-year
property the following new item:
``25-year property........................... 25 years''.
(2) The table contained in section 467(e)(3)(A) of such
Code is amended by inserting after the item relating to
residential rental property and nonresidential real property
the following new item:
``25-year property........................... 25 years''.
(d) Requirement To Use Straight Line Method.--Paragraph (3) of
section 168(b) of such Code (relating to property to which straight
line method applies) is amended by redesignating subparagraphs (F),
(G), and (H) as subparagraphs (G), (H), and (I), respectively, and by
inserting after subparagraph (E) the following new subparagraph:
``(F) Property described in subsection (e)(3)(F)(ii) and
subsection (e)(3)(G).''.
(e) Alternative System.--The table contained in section
168(g)(3)(B) of such Code is amended by striking the item relating to
subparagraph (F) and inserting the following new items:
``(F)(i)..................................... 25
(F)(ii)...................................... 20
(G).......................................... 25''.
(f) Effective Date.--The amendments made by this section shall
apply to property placed in service after December 31, 2007.
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