Amends the Internal Revenue Code to allow a special amortization tax deduction for up to $5 million of the intangible property acquired from an eligible small business (i.e., gross receipts not exceeding $5 million for the three preceding taxable years) after December 31, 2005.
[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[S. 3974 Introduced in Senate (IS)]
109th CONGRESS
2d Session
S. 3974
To permit a special amortization deduction for intangible assets
acquired from eligible small businesses to take account of the actual
economic useful life of such assets and to encourage growth in
industries for which intangible assets are an important source of
revenue.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
September 28, 2006
Mr. Bunning (for himself and Mr. Conrad) introduced the following bill;
which was read twice and referred to the Committee on Finance
_______________________________________________________________________
A BILL
To permit a special amortization deduction for intangible assets
acquired from eligible small businesses to take account of the actual
economic useful life of such assets and to encourage growth in
industries for which intangible assets are an important source of
revenue.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SPECIAL AMORTIZATION DEDUCTION FOR CERTAIN INTANGIBLE
PROPERTY ACQUIRED FROM ELIGIBLE SMALL BUSINESSES AFTER
DECEMBER 31, 2005.
(a) In General.--Section 197 of the Internal Revenue Code of 1986
(relating to amortization of goodwill and certain other intangibles) is
amended by redesignating subsection (g) as subsection (h) and inserting
after subsection (f) the following new subsection:
``(g) Special Deduction for Certain Property Acquired From Eligible
Small Businesses After December 31, 2005.--
``(1) Special deduction.--In the case of any amortizable
section 197 intangible--
``(A) the amortization deduction provided by
subsection (a) for the taxable year in which such
property is acquired shall include an allowance equal
to 100 percent of the adjusted basis of the taxpayer's
qualified section 197 intangible property, and
``(B) the adjusted basis of the qualified section
197 intangible property shall be reduced by the amount
of such deduction before computing the amount otherwise
allowable as an amortization deduction under subsection
(a) for such taxable year and any subsequent taxable
year.
``(2) Qualified section 197 intangible property.--For
purposes of this subsection, the term `qualified section 197
intangible property' means any amortizable section 197
intangible which is acquired in a transaction (or series of
transactions) involving the acquisition of assets constituting
a trade or business or substantial portion thereof from an
eligible small business (as defined in section 474(c)) after
December 31, 2005.
``(3) Limitations.--
``(A) Maximum dollar amount.--The aggregate amount
of adjusted basis of qualified section 197 intangible
property which a taxpayer may take into account under
this subsection for any taxable year shall not exceed
$5,000,000 ($2,500,000 in the case of a separate return
of a married individual (as defined in section 7703)).
``(B) Allocation of dollar amount.--
``(i) Controlled group.--For purposes of
applying the dollar limitation under
subparagraph (A)--
``(I) all component members of a
controlled group shall be treated as
one taxpayer, and
``(II) the Secretary shall, under
regulations prescribed by him,
apportion such dollar limitation among
the component members of such
controlled group.
For purposes of the preceding sentence, the
term `controlled group' has the meaning
assigned to it by section 1563(a), except that
the phrase `more than 50 percent' shall be
substituted for the phrase `at least 80
percent' each place it appears in section
1563(a)(1).
``(ii) Partnerships and s corporations.--In
the case of a partnership, the dollar
limitation contained in subparagraph (A) shall
apply with respect to the partnership and with
respect to each partner. A similar rule shall
apply in the case of an S corporation and its
shareholders.
``(C) Subsection not to apply to trusts.--This
subsection shall not apply to trusts.
``(D) Estates.--The benefit of the special
deduction provided by this subsection shall be allowed
to estates in the same manner as in the case of an
individual. The allowable deduction shall be
apportioned between the income beneficiary and the
fiduciary under regulations prescribed by the
Secretary. Any amount so apportioned to a beneficiary
shall be taken into account for purposes of determining
the amount allowable as a deduction under this
subsection to such beneficiary.''.
(b) Effective Date.--The amendment made by this section shall apply
to taxable years beginning after December 31, 2005.
<all>
Introduced in Senate
Read twice and referred to the Committee on Finance.
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