Text: H.R.5318 — 111th Congress (2009-2010)All Information (Except Text)

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Introduced in House (05/14/2010)

2d Session
H. R. 5318

To amend the Internal Revenue Code of 1986 to waive the 10-percent penalty on early distributions from individual retirement plans for small business investments.


May 14, 2010

Mr. Gingrey of Georgia (for himself, Mr. Pence, Mr. Bartlett, Mr. Bishop of Utah, Mrs. Blackburn, Mr. Franks of Arizona, Ms. Granger, Mr. Hall of Texas, Mrs. Lummis, Mr. Marchant, Mr. McClintock, Mr. Pitts, and Mr. Posey) introduced the following bill; which was referred to the Committee on Ways and Means


To amend the Internal Revenue Code of 1986 to waive the 10-percent penalty on early distributions from individual retirement plans for small business investments.

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 “Small Business Investment Penalty Relief Act of 2010”.

SEC. 2. Findings.

Congress finds the following:

(1) In March 2010, the Department of Labor reported approximately 15 million people out of work, thereby making the national unemployment rate at 9.7 percent.

(2) Small businesses account for approximately 25 million, or 99.7 percent, of employers in the United States.

(3) In the last 15 years, small businesses have accounted for approximately 22 million new jobs, or roughly 93 percent of the net new jobs created.

(4) Since the commencement of the financial crisis, small businesses have been denied loans, seen credit lines curtailed, and have lost access to venture capital and securities markets.

SEC. 3. Waiver of 10-percent penalty on small business distributions.

Paragraph (2) of section 72(t) of the Internal Revenue Code of 1986 is amended by adding at the end the following new subparagraph:


“(i) IN GENERAL.—Any payment or distribution to the individual during 2010 or 2011 to the extent that for the taxable year such amount does not exceed the lesser of—

“(I) the small business investment of the individual for the taxable year, or

“(II) the lesser of $10,000, or 25 percent of the nonforefeitable value of the plan at the beginning of the taxable year.

“(ii) SMALL BUSINESS INVESTMENT.—For purposes of this subparagraph, the term ‘small business investment’ means, with respect to a qualified small business, an amount equal to the basis of property which—

“(I) is placed in service during the taxable year,

“(II) is used in the trade or business of the taxpayer, and

“(III) is subject to the allowance for depreciation provided in section 167 or is real property used in such trade or business.

“(iii) QUALIFIED SMALL BUSINESS.—For purposes of this subparagraph—

“(I) IN GENERAL.—The term ‘qualified small business’ means any trade or business the gross receipts of which for the preceding taxable year did not exceed $20,000,000 or which employed not more than 50 full-time employees during the preceding taxable year.

“(II) FULL-TIME.—An employee shall be considered full-time if such employee is employed at least 30 hours per week for 20 or more calendar weeks in the taxable year.

“(III) CONTROLLED GROUPS.—For purposes of subclause (I), all persons treated as a single employer under subsection (a) or (b) of section 52 or subsection (m) or (o) of section 414 shall be treated as a single trade or business.

“(iv) 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).”.