[Congressional Bills 113th Congress]
[From the U.S. Government Publishing Office]
[H.R. 5346 Introduced in House (IH)]
113th CONGRESS
2d Session
H. R. 5346
To amend the Internal Revenue Code of 1986 to allow a business credit
for investments in rural microbusinesses.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
July 31, 2014
Mr. Kind (for himself and Mr. Reed) 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 allow a business credit
for investments in rural microbusinesses.
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 ``Rural Microbusiness Investment
Credit Act of 2014''.
SEC. 2. RURAL MICROBUSINESS INVESTMENT CREDIT.
(a) In General.--Subpart D of part IV of subchapter A of chapter 1
of the Internal Revenue Code of 1986 (relating to business related
credits) is amended by adding at the end the following new section:
``SEC. 45S. RURAL MICROBUSINESS INVESTMENT CREDIT.
``(a) In General.--For purposes of section 38, the amount of the
rural microbusiness investment credit determined under this section for
any taxable year with respect to a rural microbusiness is equal to 35
percent of the qualified new investments in the rural microbusiness for
the taxable year.
``(b) Limitations.--
``(1) Per business limitations.--The amount allowed as a
credit under subsection (a) with respect to any rural
microbusiness for a taxable year shall not exceed--
``(A) $10,000, reduced (but not below zero) by
``(B) the amount allowed under subsection (a) to
the rural microbusiness for all preceding taxable
years.
``(2) Per taxpayer limitations.--The amount allowed as a
credit under subsection (a) with respect to any taxpayer with
respect to all rural microbusinesses of the taxpayer for a
taxable year shall not exceed--
``(A) $10,000, reduced (but not below zero) by
``(B) the amount allowed under subsection (a) to
the taxpayer with respect to rural microbusinesses for
all preceding taxable years.
``(c) Definitions.--For purposes of this section--
``(1) Qualified new investment.--The term `qualified new
investment' means the excess of--
``(A) qualified expenditures paid or incurred for
the taxable year, over
``(B) the greater of--
``(i) qualified expenditures paid or
incurred for the preceding taxable year, or
``(ii) the average annual qualified
expenditures paid or incurred over the
preceding three taxable years.
If the rural microbusiness was not in existence for the entire
3-year period referred to in clause (ii) of subparagraph (B),
subparagraph (B) shall be applied without regard to so much of
such subparagraph as precedes such clause (ii) and any taxable
years during such 3-year period for which the rural
microbusiness was not in existence shall be taken into account
as taxable years during which there were no qualified
expenditures.
``(2) Qualified expenditures.--
``(A) In general.--The term `qualified
expenditures' means any amount which is paid or
incurred with respect to a rural microbusiness. Such
term includes costs for capital plant and equipment,
inventory expenses, and wages.
``(B) Exception.--Such term does not include--
``(i) any interest cost,
``(ii) the cost of any vehicle which is not
a qualified nonpersonal use vehicle (as defined
in section 274(i)), and
``(iii) the cost of any compensation or
benefits to the taxpayer claiming the credit,
including the taxpayer's spouse and dependents.
``(3) Rural microbusiness.--
``(A) In general.--The term `rural microbusiness'
means any trade or business if--
``(i) such trade or business is operated as
a proprietorship, partnership, trust (to the
extent that the trust is a pass-thru entity), S
corporation, or other pass-thru entity,
``(ii) each of the owners of such trade or
business, with respect to the taxable year for
which the credit is claimed--
``(I) materially participates (as
determined under rules similar to the
rules of section 469(h)) in such trade
or business, and
``(II) in the case of any trade or
business substantially all of the
activity of which is in agricultural
production, is a first-time farmer (as
defined in section 147(c)(2)(C)),
``(iii) such trade or business is carried
on, and physically located, in a distressed
rural area during the taxable year for which
the credit is claimed,
``(iv) such trade or business employs not
more than 5 full time (or full-time equivalent)
employees during the taxable year for which the
credit is claimed, and
``(v) which meets the gross revenue test
under subparagraph (D) for the first taxable
year in which the credit under subsection (a)
is allowable with respect to the trade or
business.
``(B) Exceptions.--Such term shall not include--
``(i) any trade or business which includes,
in whole or in part, any private or commercial
golf course, country club, massage parlor, hot
tub facility, suntan facility, racetrack or
other facility used for gambling, or any store
the principal business of which is the sale of
alcoholic beverages for consumption off
premises, or
``(ii) any trade or business with respect
to which records are required under section
2257 of title 18, United States Code, to be
maintained with respect to any performer.
``(C) Gross revenue test.--
``(i) In general.--A trade or business
meets the gross revenue test of this
subparagraph for any taxable year if the
average annual gross revenue of the trade or
business for the 3-taxable year period ending
with the taxable year does not exceed
$1,000,000.
``(ii) Aggregation rules.--All persons
treated as a single employer under subsection
(a) or (b) or section 52 or subsection (m) or
(o) of section 414 shall be treated as a trade
or business for purposes of clause (i).
``(iii) Special rules for entities not in
existence for entire 3-year period, etc.--Rules
similar to the rules of subparagraphs (A), (B),
and (D) of section 448(c)(3) shall apply for
purposes of this subparagraph.
``(D) Self-employed individuals.--For purposes of
this paragraph, if, with respect to a trade or
business, an individual is treated as an employee under
section 401(c), such individual shall be treated as an
employee of such trade or business for purposes of the
preceding sentence.
``(E) Full-time equivalent employee.--For purposes
of this paragraph--
``(i) In general.--The term `full-time
equivalent employee' means a number of
employees equal to the number determined by
dividing--
``(I) the total number of hours of
service for which wages were paid by
the employer to employees during the
taxable year, by
``(II) 2,080.
Such number shall be rounded to the next lowest
whole number if not otherwise a whole number.
``(ii) Excess hours not counted.--If an
employee works in excess of 2,080 hours of
service during any taxable year, such excess
shall not be taken into account under clause
(i).
``(iii) Hours of service.--The Secretary,
in consultation with the Secretary of Labor,
shall prescribe such regulations, rules, and
guidance as may be necessary to determine the
hours of service of an employee, including
rules for the application of this paragraph to
employees who are not compensated on an hourly
basis.
``(4) Distressed rural area.--
``(A) In general.--The term `distressed rural area'
means any qualified area in the United States--
``(i) that has lost at least 5 percent of
its population over the last 10 years,
``(ii) that lost at least 10 percent if its
population over the last 20 years,
``(iii) that has median family income below
85 percent of the national median family
income,
``(iv) that has a poverty rate that exceeds
12.5 percent, or
``(v) where average unemployment in the
preceding year exceeds 120 percent of the
national average.
``(B) Qualified area.--For purposes of subparagraph
(A), the term `qualified area' means--
``(i) any area other than--
``(I) a city or town that has a
population of greater than 50,000
inhabitants, and
``(II) any urbanized area
contiguous and adjacent to a city or
town described in subclause (I), and
``(ii) any county in which--
``(I) there is no city or town that
has a population of greater than
100,000 inhabitants, and
``(II) there are no urbanized areas
contiguous and adjacent to a city or
town described in subclause (I).
``(C) Relevant sources of information.--In
determining whether an area is a distressed rural area
under this paragraph, such determination shall be made
in accordance with the most recent information from the
Bureau of the Census, the Bureau of Labor Statistics,
or other government entity with relevant information.
``(5) Related persons.--A person shall be treated as
related to another person if the relationship between such
persons would result in the disallowance of losses under
section 267 or 707(b) (but, in applying section 267(b) and (c)
for purposes of this section, paragraph (4) of section 267(c)
shall be treated as providing that the family of an individual
shall include only his spouse, ancestors, and lineal
descendants).
``(d) Denial of Double Benefit.--No deduction or credit shall be
allowed under any other provision of this chapter for any amount taken
into account in determining the credit under this section.
``(e) Other Rules.--
``(1) Married couple must file joint return.--Rules similar
to the rules of paragraphs (2), (3), and (4) of section 21(e)
shall apply for purposes of this section.
``(2) Denial of credit to dependents.--No credit shall be
allowed under this section to any individual with respect to
whom a deduction is allowed under section 151 is allowable to
another taxpayer for a taxable year beginning in the calendar
year in which such individual's calendar year begins.''.
(b) Credit Allowed as Part of General Business Credit.--Section
38(b) of such Code (defining current year business credit) is amended
by striking ``plus'' at the end of paragraph (35), by striking the
period at the end of paragraph (36) and inserting ``, plus'', and by
adding at the end the following new paragraph:
``(37) the rural microbusiness investment credit determined
under section 45S(a).''.
(c) Carryover of Unused Credit.--Subsection (a) of section 39 of
such Code is amended by adding at the end the following new paragraph:
``(5) 5-year carryback for rural microbusiness investment
credit.--Notwithstanding subsection (d), in the case of the
rural microbusiness investment credit--
``(A) this section shall be applied separately from
the business credit and the marginal oil and gas well
production credit (other than the rural microbusiness
investment credit),
``(B) paragraph (1) shall be applied by
substituting `each of the 5 taxable years' for `the
taxable year' in subparagraph (A) thereof, and
``(C) paragraph (2) shall be applied--
``(i) by substituting `25 taxable years'
for `21 taxable years' in subparagraph (A)
thereof, and
``(ii) by substituting `24 taxable years'
for `20 taxable years' in subparagraph (B)
thereof.''.
(d) Conforming Amendment.--The table of sections for subpart D of
part IV of subchapter A of chapter 1 of such Code is amended by adding
at the end the following new item:
``Sec. 45S. Rural microbusiness investment credit.''.
(e) Effective Date.--The amendments made by this section shall
apply to expenditures made in taxable years beginning after the date of
the enactment of this Act.
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