To amend the Internal Revenue Code of 1986 to provide a credit for investment in new or expanding small businesses.

Amends the Internal Revenue Code to allow individual taxpayers a tax credit for 20% of their qualified small business investments. Defines "qualified small business investment" as any stock in a domestic corporation acquired at its original issue or any capital or profits interest in a domestic partnership if: (1) such stock or interest was acquired solely in exchange for cash; and either (2) such corporation or partnership has been in existence less than 2 years as of the date of such acquisition or such corporation or partnership had at least a 10% growth rate for each of the 2 years preceding such acquisition.

[Congressional Bills 111th Congress]
[From the U.S. Government Publishing Office]
[H.R. 5691 Introduced in House (IH)]

111th CONGRESS
  2d Session
                                H. R. 5691

  To amend the Internal Revenue Code of 1986 to provide a credit for 
            investment in new or expanding small businesses.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                              July 1, 2010

 Mr. Hoekstra 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 provide a credit for 
            investment in new or expanding small businesses.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. CREDIT FOR QUALIFIED SMALL BUSINESS INVESTMENTS.

    (a) In General.--Subpart A of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986 is amended by inserting after 
section 25D the following new section:

``SEC. 25E. QUALIFIED SMALL BUSINESS INVESTMENTS.

    ``(a) In General.--In the case of an individual, there shall be 
allowed as a credit against the tax imposed by this subtitle an amount 
equal to 20 percent of the amount paid or incurred for qualified small 
business investments during the taxable year.
    ``(b) Qualified Small Business Investment.--For purposes of this 
section--
            ``(1) In general.--The term `qualified small business 
        investment' means any stock in a domestic corporation acquired 
        by the taxpayer at its original issue (directly or through an 
        underwriter) or any capital or profits interest in a domestic 
        partnership acquired by the taxpayer from the partnership if--
                    ``(A) such stock or interest was is acquired solely 
                in exchange for cash,
                    ``(B) either--
                            ``(i) such corporation or partnership 
                        (including any predecessor thereof) has been in 
                        existence of less than 2 years as of such 
                        acquisition, or
                            ``(ii) such corporation or partnership had 
                        at least a 10 percent growth rate for each of 2 
                        taxable years of the corporation or partnership 
                        preceding the taxable year in which acquisition 
                        occurs, and
                    ``(C) the corporation or partnership satisfies the 
                requirements of subparagraphs (A) and (B) of section 
                1202(d)(1) with respect to such issuance (determined by 
                substituting `corporation or partnership' for 
                `corporation' therein).
            ``(2) Growth rate.--For purposes of paragraph (1)(B)(ii), 
        the growth rate of any corporation or partnership for any 
        taxable year is the ratio (expressed as a percentage) of--
                    ``(A) the excess of--
                            ``(i) the gross receipts of such 
                        corporation or partnership for such taxable 
                        year, over
                            ``(ii) the gross receipts of such 
                        corporation or partnership for the preceding 
                        taxable year, divided by
                    ``(B) the amount described in subparagraph (A)(ii).
    ``(c) Recapture of Credit in Case of Failure To Satisfy Holding 
Period Requirement.--In the case of the disposition of any qualified 
small business investment during the 7-year period beginning on the 
date that such investment is acquired by the taxpayer, the tax imposed 
under this subtitle with respect to the taxpayer for the taxable year 
in which such disposition occurs shall be increased by the amount of 
the credit allowed under this section with respect to such investment 
plus interest determined at the underpayment rate.''.
    (b) Clerical Amendment.--The table of sections of such subpart is 
amended by inserting after the item relating to section 25D the 
following new item:

``Sec. 25E. Qualified small business investments.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to amounts paid or incurred after the date of the enactment of 
this Act.
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