Summary: H.R.3202 — 97th Congress (1981-1982)All Information (Except Text)

There is one summary for H.R.3202. Bill summaries are authored by CRS.

Shown Here:
Introduced in House (04/09/1981)

Small Business Tax Incentives Act of 1981 - Title I: Amendment of Small Business Act - Amends the Small Business Act to define "small business," for Internal Revenue Code purposes, as an independently owned and operated business the gross revenue of which does not exceed $20,000,000 annually and the number of employees of which does not exceed 500.

Title II: Corporate Tax Rate Reduction - Amends the Internal Revenue Code to reduce corporate income tax rates.

Title III: Small Business Direct Expensing of Capital Items of Up to $25,000 Per Year - Allows a taxpayer to elect to treat expenditures paid or incurred by him during the taxable year (not to exceed an aggregate of $25,000, or $12,500 in the case of a married person filing a separate return) for depreciable tangible property as expenses not chargeable to capital account (thus deductible as current business expenses). Qualifies property with respect to which an election is made for the investment tax credit. Disqualifies property acquired from a related person or another component member of the same controlled group of companies.

Title IV: Increase in Amount of Used Property Eligible for Investment Tax Credit - Increases from $100,000 to $300,000 the allowable cost of used property eligible for the investment tax credit.

Title V: Allowable Subchapter S Corporation Shareholders Increased to 25 - Increases from 15 to 25 the permissible number of shareholders in a subchapter S corporation.

Title VI: Incentives for Investing in Small Business - Allows a deduction for cash amounts transferred to a small business solely in exchange for equity interest in the small business.

Increases the capital gains deduction. Reduces the alternative tax on capital gains on equity interests held for five years or more.

Title VII: Exclusion from Estate Tax for Small Business Property and Equity Investments - Permits the exclusion of small business property which comprises 60 percent or more of the adjusted value of the gross estate from the gross estate of a decedent who at the time of death was a U.S. citizen. Limits the amount of such exclusion to $2,000,000. Imposes an additional estate tax in the event any interest in such property is disposed of or the property ceases to qualify for such treatment.

Title VIII: Interest and Dividend Exclusion Increased to $2,000 - Increases from $200 to $2,000 (or from $400 to $4,000 in the case of married individuals filing jointly) the exclusion of interest and dividends from gross income. Makes such exclusion permanent.

Title IX: Inventory Simplification and Reform - Eliminates the qualification requirement for the last-in, first-out (LIFO) method of accounting that a taxpayer use no inventory method for financial reporting or credit purposes other than the LIFO method.

Allows a taxpayer who adopts the LIFO method to spread increases in taxable income attributable to such change over a ten-year period.

Allows an election by small businesses which use the dollar method of pricing inventories under the LIFO method and which have average annual receipts of $5,000,000 or less for the three taxable years ending with the year of election to use one inventory pool for any trade or business. Permits a wholesaler or retailer who uses such method to elect the use of inventory pools based on the applicable Government price index categories for all items of inventory. Allows the use of such index categories in the pricing of inventories under such dollar-value methods.

Allows an election to use a link chain or index method or compute the LIFO value of dollar-value pool without regard to suitability or practicality of any other method.

Repeals the requirement, with respect to liquidation plans adopted after December 31, 1981, that a corporation inventorying goods under the LIFO method treat the LIFO recapture amount with respect to distributed inventory assets as gain from the sale of such assets.

Allows an election by small businesses which are at least half-owned by active participants in the trade or business and which have average annual gross receipts of $1,500,000 or less for the three taxable years ending with the year of election to use the cash receipts and disbursements method of accounting without regard to any inventory requirements.

Permits a taxpayer to reduce the value of a portion of excess inventory items held for more than 12 months. Sets forth a schedule for such reductions.