Entrepreneurship Tax Cut Act of 2011 - Amends the Internal Revenue Code to exclude from gross income amounts distributed from tax-exempt retirement plans, health savings accounts, Roth individual retirement accounts (IRAs), and qualified tuition programs to acquire an ownership interest (at least 40%) in an entity in connection with beginning an active trade or business.
[Congressional Bills 112th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2614 Introduced in House (IH)]
112th CONGRESS
1st Session
H. R. 2614
To amend the Internal Revenue Code of 1986 to allow distributions from
retirement accounts to start a business.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
July 21, 2011
Mr. Paul 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 distributions from
retirement accounts to start a business.
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 ``The Entrepreneurship Tax Cut Act of
2011''.
SEC. 2. EXCLUSION FROM GROSS INCOME OF QUALIFIED CAPITAL DISTRIBUTION
FROM TAX-FAVORED ACCOUNTS.
(a) In General.--Part III of subchapter B of chapter 1 of the
Internal Revenue Code is amended by inserting before section 140 the
following new section:
``SEC. 139F. QUALIFIED CAPITAL DISTRIBUTIONS.
``(a) In General.--Gross income shall not include any qualified
capital distribution from a tax-favored account.
``(b) Definitions.--For purposes of this section--
``(1) Qualified capital distribution.--
``(A) In general.--The term `qualified capital
distribution' means any distribution to an individual
from a tax-favored account of such individual to the
extent such distribution is used to acquire an eligible
interest in an entity in connection with beginning an
active trade or business.
``(B) Eligible interest.--For purposes of this
paragraph, the term `eligible interest' means, with
respect to any entity, an ownership interest in such
entity of at least 40 percent of the total combined
voting power of all classes of interests entitled to
vote, or at least 40 percent of the total value of all
ownership interests in the entity.
``(C) Sole proprietorships.--Any capital
contribution to a sole proprietorship shall be treated
as meeting the requirements of subparagraphs (A) and
(B) if such requirements would be met if such
proprietorship were a corporation.
``(D) Beginning of trade or business.--Rules
similar to the rules of section 195(c)(2) shall apply
for purposes of this paragraph.
``(2) Tax-favored account.--The term `tax-favored account'
means any of the following:
``(A) An eligible retirement plan (as defined in
section 402(c)(8)(B)).
``(B) A health savings account described in section
223.
``(C) A Roth IRA.
``(D) A qualified tuition program described in
section 529.
``(c) Amount Distributed Must Be Repaid.--
``(1) In general.--Any individual who receives a qualified
capital distribution may make one or more contributions in an
aggregate amount not to exceed the amount of such distribution
to a tax-favored account of which such individual is a
beneficiary and to which a rollover contribution of such
distribution could be made under section 402(c), 403(a)(4),
403(b)(8), 408(d)(3), or 457(e)(16), 223(f)(5),or 529(c)(3)(C),
as the case may be.
``(2) Treatment of repayments of distributions from
eligible retirement plans other than iras.--For purposes of
this title, if a contribution is made pursuant to paragraph (1)
with respect to a qualified capital distribution from an
eligible retirement plan other than an individual retirement
plan, then the taxpayer shall, to the extent of the amount of
the contribution, be treated as having received the qualified
capital distribution in an eligible rollover distribution (as
defined in section 402(c)(4)) and as having transferred the
amount to the eligible retirement plan in a direct trustee to
trustee transfer within 60 days of the distribution.
``(3) Treatment of repayments for distributions from
iras.--For purposes of this title, if a contribution is made
pursuant to paragraph (1) with respect to a qualified capital
distribution from an individual retirement plan, then, to the
extent of the amount of the contribution, the qualified capital
distribution shall be treated as a distribution described in
section 408(d)(3) and as having been transferred to the
eligible retirement plan in a direct trustee to trustee
transfer within 60 days of the distribution.
``(4) Other tax-favored accounts.--For purposes of this
title, if a contribution is made pursuant to paragraph (1) with
respect to a qualified capital distribution--
``(A) from a health savings account described in
section 223, or
``(B) from a qualified tuition program described in
section 529,
then, to the extent of the amount of the contribution, the
qualified capital distribution shall be treated as a
distribution described in section 529(c)(3)(C) or 223(f)(5), as
the case may be, and as having been transferred to such account
or program, as the case may be, within 60 days of the
distribution.
``(d) Denial of Double Benefit.--The basis in any ownership
interest with respect to the acquisition of which an amount was
excluded from gross income under subsection (a) shall be reduced by an
amount equal to the amount so excluded. The Secretary may prescribe
such regulations as may be necessary to carry out the purposes of this
subsection in the case of capital contributions to sole
proprietorships.''.
(b) Conforming Amendments.--
(1) Paragraph (2) of section 72(t) of such Code is amended
by adding at the end the following new subparagraph:
``(H) Qualified capital distributions.--Any
distribution excludable from gross income under section
139F (relating to qualified capital distributions).''.
(2) Subsection (a) of section 1016 of such Code is amended
by striking ``and'' at the end of paragraph (35), by striking
the period at the end of paragraph (36) and inserting ``,
and'', and by adding at the end the following new paragraph:
``(37) to the extent provided in section 139F(d).''.
(c) Clerical Amendment.--The table of sections for part III of
subchapter B of chapter 1 of such Code is amended by inserting before
the item relating to section 140 the following new section:
``Sec. 139F. Qualified capital distributions.''.
(d) Effective Date.--The amendments made by this section shall
apply to distributions made after the date of the enactment of this
Act.
<all>
Introduced in House
Introduced in House
Sponsor introductory remarks on measure. (CR E1384)
Referred to the House Committee on Ways and Means.
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