Incentivize Growth Now In Tomorrow's Entrepreneurs Act of 2013 - Amends the Internal Revenue Code to establish tax-exempt small business start-up accounts to provide for expenditures related to the creation or acquisition of an active trade or business. Limits the annual amount that may be contributed to such accounts to the lesser of $10,000 or the taxpayer's compensation that is includible in gross income. Sets forth reporting requirements for the trustee of a small business start-up account. Makes the tax penalties for prohibited transactions and excess contributions applicable to small business start-up savings accounts.
[Congressional Bills 113th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2558 Introduced in House (IH)]
113th CONGRESS
1st Session
H. R. 2558
To amend the Internal Revenue Code of 1986 to provide for the tax
treatment of small business start-up savings accounts.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
June 27, 2013
Mr. Maffei 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 for the tax
treatment of small business start-up savings accounts.
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 ``Incentivize Growth Now In Tomorrow's
Entrepreneurs Act of 2013''.
SEC. 2. SMALL BUSINESS START-UP SAVINGS ACCOUNTS.
(a) In General.--Subchapter F of chapter 1 of the Internal Revenue
Code of 1986 is amended by adding at the end the following new part:
``PART IX--SMALL BUSINESS START-UP SAVINGS ACCOUNTS
``Sec. 530A. Small Business Start-up Savings Accounts.
``SEC. 530A. SMALL BUSINESS START-UP SAVINGS ACCOUNTS.
``(a) General Rule.--A small business start-up savings account
shall be exempt from taxation under this subtitle. Notwithstanding the
preceding sentence, the small business start-up savings account shall
be subject to the taxes imposed by section 511 (relating to imposition
of tax on unrelated business income of charitable organizations).
``(b) Small Business Start-Up Savings Account.--The term `small
business start-up savings account' means a trust created or organized
in the United States exclusively for the purpose of making qualified
start-up expenditures of the individual who is the designated
beneficiary of the trust (and designated as a small business start-up
savings account at the time created or organized), but only if the
written governing instrument creating the trust meets the following
requirements:
``(1) Except in the case of a rollover contribution
described in subsection (d)(4), no contribution will be
accepted unless it is in cash, and contributions will not be
accepted if such contribution would result in aggregate
contributions for the taxable year not exceeding the lesser
of--
``(A) $10,000, or
``(B) an amount equal to the compensation (as
defined in section 219(f)(1)) includible in the
individual's gross income for such taxable year.
``(2) The trustee is a bank (as defined in section 408(n))
or such other person who demonstrates to the satisfaction of
the Secretary that the manner in which such other person will
administer the trust will be consistent with the requirements
of this section.
``(3) No part of the trust funds will be invested in life
insurance contracts.
``(4) The assets of the trust will not be commingled with
other property except in a common trust fund or common
investment fund.
``(c) Qualified Start-Up Expenditures.--For purposes of this
section--
``(1) In general.--The term `qualified start-up
expenditures' has the meaning given such term by section 195.
``(2) Special rule for corporation or partnership
interests.--Such term includes the taxpayer's allocable share
of qualified start-up expenditures of an entity in which the
taxpayer directly holds stock or a capital or profits interest.
``(3) Exception.--Such term shall not apply to any
expenditures paid or incurred in a taxable year in connection
with a trade or business if there is any day during the taxable
year on which the number of full-time employees of the trade or
business exceeds 50.
``(d) Tax Treatment of Distributions.--
``(1) In general.--Any distribution shall be includible in
the gross income of the distributee in the manner as provided
in section 72.
``(2) Distributions for qualified start-up expenditures.--
``(A) In general.--No amount shall be includible in
gross income under paragraph (1) if the qualified
start-up expenditures of the individual during the
taxable year are not less than the aggregate
distributions during the taxable year.
``(B) Distributions in excess of expenses.--If such
aggregate distributions exceed such expenses during the
taxable year, the amount otherwise includible in gross
income under paragraph (1) shall be reduced by the
amount which bears the same ratio to the amount which
would be includible in gross income under paragraph (1)
(without regard to this subparagraph) as the qualified
start-up expenditures bear to such aggregate
distributions.
``(C) Disallowance of excluded amounts as
deduction, credit, or exclusion.--No deduction, credit,
or exclusion shall be allowed to the taxpayer under any
other section of this chapter for any qualified start-
up expenditure to the extent taken into account in
determining the amount of the exclusion under this
paragraph.
``(3) Excess contributions returned before due date of
return.--
``(A) In general.--If any excess contribution is
contributed for a taxable year to any small business
start-up savings account of an individual, paragraph
(1) shall not apply to distributions from the small
business start-up savings accounts of such individual
(to the extent such distributions do not exceed the
aggregate excess contributions to all such accounts of
such individual for such year) if--
``(i) such distribution is received by the
individual on or before the last day prescribed
by law (including extensions of time) for
filing such individual's return for such
taxable year, and
``(ii) such distribution is accompanied by
the amount of net income attributable to such
excess contribution.
``(B) Excess contribution.--For purposes of
subparagraph (A), the term `excess contribution' means
any contribution (other than a rollover contribution
described in paragraph (4)) which when added to all
previous contributions for the taxable year exceeds the
amount allowable as a contribution under subsection
(b)(1).
``(4) Rollover contribution.--Paragraph (1) shall not apply
to any amount paid or distributed from a small business start-
up savings account to the account beneficiary to the extent the
amount received is paid into a small business start-up savings
account for the benefit of such beneficiary not later than the
60th day after the day on which the beneficiary receives the
payment or distribution. For purposes of this paragraph, rules
similar to the rules of section 408(d)(3)(D) shall apply.
``(5) Transfer of account incident to divorce.--The
transfer of an individual's interest in a small business start-
up savings account to an individual's spouse or former spouse
under a divorce or separation instrument described in
subparagraph (A) of section 71(b)(2) shall not be considered a
taxable transfer made by such individual notwithstanding any
other provision of this subtitle, and such interest shall,
after such transfer, be treated as a small business start-up
savings account with respect to which such spouse is the
account beneficiary.
``(6) Treatment after death of account beneficiary.--
``(A) Treatment if designated beneficiary is
spouse.--If the account beneficiary's surviving spouse
acquires such beneficiary's interest in a small
business start-up savings account by reason of being
the designated beneficiary of such account at the death
of the account beneficiary, such account shall be
treated as if the spouse were the account beneficiary.
``(B) Other cases.--
``(i) In general.--If, by reason of the
death of the account beneficiary, any person
acquires the account beneficiary's interest in
a small business start-up savings account in a
case to which subparagraph (A) does not apply--
``(I) such account shall cease to
be a small business start-up savings
account as of the date of death, and
``(II) an amount equal to the fair
market value of the assets in such
account on such date shall be
includible if such person is not the
estate of such beneficiary, in such
person's gross income for the taxable
year which includes such date, or if
such person is the estate of such
beneficiary, in such beneficiary's
gross income for the last taxable year
of such beneficiary.
``(ii) Special rules.--
``(I) Reduction of inclusion for
predeath expenses.--The amount
includible in gross income under clause
(i) by any person (other than the
estate) shall be reduced by the amount
of qualified start-up expenditures
which were incurred by the decedent
before the date of the decedent's death
and paid by such person within 1 year
after such date.
``(II) Deduction for estate
taxes.--An appropriate deduction shall
be allowed under section 691(c) to any
person (other than the decedent or the
decedent's spouse) with respect to
amounts included in gross income under
clause (i) by such person.
``(e) Community Property Laws.--This section shall be applied
without regard to any community property laws.
``(f) Custodial Accounts.--For purposes of this section, a
custodial account shall be treated as a trust if the assets of such
account are held by a bank (as defined in subsection (n)) or another
person who demonstrates, to the satisfaction of the Secretary, that the
manner in which he will administer the account will be consistent with
the requirements of this section, and if the custodial account would,
except for the fact that it is not a trust, constitute a small business
start-up account described in subsection (a). For purposes of this
title, in the case of a custodial account treated as a trust by reason
of the preceding sentence, the custodian of such account shall be
treated as the trustee thereof.
``(g) Adjustment for Inflation.--In the case of a taxable year
beginning after December 31, 2014, the dollar amount in subsection
(b)(1) shall be increased by an amount equal to--
``(1) such dollar amount, multiplied by
``(2) the cost-of-living adjustment determined under
section 1(f)(3) for the calendar year in which the taxable year
begins, determined by substituting `calendar year 2013' for
`calendar year 1992' in subparagraph (B) thereof.
If any amount as increased under the preceding sentence is not a
multiple of $100, such amount shall be rounded to the nearest multiple
of $100.
``(h) Reports.--The trustee of a small business start-up savings
account shall make such reports regarding such account to the Secretary
and to the individual for whom the account is, or is to be, maintained
with respect to contributions (and the years to which they relate),
distributions, aggregating $10 or more in any calendar year, and such
other matters as the Secretary may require. The reports required by
this subsection--
``(1) shall be filed at such time and in such manner as the
Secretary prescribes, and
``(2) shall be furnished to individuals--
``(A) not later than January 31 of the calendar
year following the calendar year to which such reports
relate, and
``(B) in such manner as the Secretary prescribes.
``(i) Regulations.--The Secretary shall issue such regulations or
other guidance as may be necessary to carry out this section, including
for purposes of subsection (c)(2) the making reports by regarding
qualified start-up expenditures of an entity in which the taxpayer
directly holds stock or a capital or profits interest.''.
(b) Tax on Prohibited Transactions.--
(1) In general.--Paragraph (1) of section 4975(e) of such
Code (relating to prohibited transactions) is amended by
striking ``or'' at the end of subparagraph (F), by
redesignating subparagraph (G) as subparagraph (H), and by
inserting after subparagraph (F) the following new
subparagraph:
``(G) a small business start-up savings account
described in section 530A, or''.
(2) Special rule.--Subsection (c) of section 4975 of such
Code is amended by adding at the end of subsection (c) the
following new paragraph:
``(7) Special rule for small business start-up savings
accounts.--An individual for whose benefit a small business
start-up savings account is established and any contributor to
such account shall be exempt from the tax imposed by this
section with respect to any transaction concerning such account
(which would otherwise be taxable under this section) if
section 530A(d)(1) applies with respect to such transaction or
if such transaction is a qualified start-up expenditure (as
defined in section 530A(c)).''.
(c) Failure To Provide Reports on Small Business Start-Up Savings
Accounts.--Paragraph (2) of section 6693(a) of such Code is amended by
striking ``and'' at the end of subparagraph (D), by striking the period
at the end of subparagraph (E) and inserting ``, and'', and by adding
at the end the following new subparagraph:
``(F) section 530A(h) (relating to small business
start-up savings accounts).''.
(d) Excess Contributions.--Section 4973(b) of such Code is amended
by adding at the end the following new subsection:
``(h) Excess Contributions to Small Business Start-Up Savings
Accounts.--For purposes of this section, in the case of contributions
to a small business start-up savings account (within the meaning of
section 530A(b)), the term `excess contributions' means the sum of--
``(1) the excess (if any) of--
``(A) the amount contributed for the taxable year
to such accounts (other than a rollover contribution
described in section 530A(d)(4)), over
``(B) the amount allowable as a contribution under
section 530A(b)(1), and
``(2) the amount determined under this subsection for the
preceding taxable year, reduced by the sum of--
``(A) the distributions out of the accounts for the
taxable year, and
``(B) the excess (if any) of the maximum amount
allowable as a contribution under sections 530A(b)(1)
for the taxable year over the amount contributed to the
accounts for the taxable year.
For purposes of this subsection, any contribution which is
distributed from a small business start-up savings account in a
distribution described in section 530A(d)(3) shall be treated
as an amount not contributed.''.
(e) Clerical Amendment.--The table of contents for subchapter F of
chapter 1 of such Code is amended by adding at the end the following
new item:
``Part IX. Small Business Start-up Savings Accounts''.
(f) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2013.
<all>
Introduced in House
Introduced in House
Referred to the House Committee on Ways and Means.
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