,i #aacth ,,congress #b;d ,session ,h4 ,r4 #ecdf ,,in ,,the ,,house ,,of ,,representatives ,july #ca1 #bjad ,mr4 ,kind 7for himself and ,mr4 ,reed7 introduced the following bill2 which was referred to the ,committee on ,ways and ,means ,a ,,bill ,to amend the ,internal ,revenue ,code of #aihf to allow a business credit for investments in rural microbusinesses4 #a4 ,short title ,this ,act may be cited as the ,rural ,microbusiness ,investment ,credit ,act of #bjad4 #b4 ,rural microbusiness investment credit 7a7 ,in general ,subpart ,d of part ,,iv of subchapter ,a of chapter #a of the ,internal ,revenue ,code of #aihf 7relating to business related credits7 is amended by adding at the end the following new section3 #de,s4 ,rural microbusiness investment credit 7a7 ,in general ,for purposes of section #ch1 the amount of the rural microbusiness investment credit determined under this section for any taxable year with respect to a rural microbusiness is equal to #ce percent of the qualified new investments in the rural microbusiness for the taxable year4 7b7 ,limitations 7#a7 ,per business limitations ,the amount allowed as a credit under subsection 7a7 with respect to any rural microbusiness for a taxable year shall not exceed-- 7,a7 #aj1jjj1 reduced 7but not below zero7 by 7,b7 the amount allowed under subsection 7a7 to the rural microbusiness for all preceding taxable years4 7#b7 ,per taxpayer limitations ,the amount allowed as a credit under subsection 7a7 with respect to any taxpayer with respect to all rural microbusinesses of the taxpayer for a taxable year shall not exceed-- 7,a7 #aj1jjj1 reduced 7but not below zero7 by 7,b7 the amount allowed under subsection 7a7 to the taxpayer with respect to rural microbusinesses for all preceding taxable years4 7c7 ,definitions ,for purposes of this section-- 7#a7 ,qualified new investment ,the term qualified new investment means the excess of-- 7,a7 qualified expenditures paid or incurred for the taxable year1 over 7,b7 the greater of-- 7i7 qualified expenditures paid or incurred for the preceding taxable year1 or 7ii7 the average annual qualified expenditures paid or incurred over the preceding three taxable years4 ,if the rural microbusiness was not in existence for the entire #c-year period referred to in clause 7ii7 of subparagraph 7,b71 subparagraph 7,b7 shall be applied without regard to so much of such subparagraph as precedes such clause 7ii7 and any taxable years during such #c-year period for which the rural microbusiness was not in existence shall be taken into account as taxable years during which there were no qualified expenditures4 7#b7 ,qualified expenditures 7,a7 ,in general ,the term qualified expenditures means any amount which is paid or incurred with respect to a rural microbusiness4 ,such term includes costs for capital plant and equipment1 inventory expenses1 and wages4 7,b7 ,exception ,such term does not include-- 7i7 any interest cost1 7ii7 the cost of any vehicle which is not a qualified nonpersonal use vehicle 7as defined in section #bgd7;i771 and 7iii7 the cost of any compensation or benefits to the taxpayer claiming the credit1 including the taxpayer's spouse and dependents4 7#c7 ,rural microbusiness 7,a7 ,in general ,the term rural microbusiness means any trade or business if-- 7i7 such trade or business is operated as a proprietorship1 partnership1 trust 7to the extent that the trust is a pass-thru entity71 ,s corporation1 or other pass-thru entity1 7ii7 each of the owners of such trade or business1 with respect to the taxable year for which the credit is claimed-- 7,i7 materially participates 7as determined under rules similar to the rules of section #dfi7;h77 in such trade or business1 and 7,,ii7 in the case of any trade or business substantially all of the activity of which is in agricultural production1 is a first-time farmer 7as defined in section #adg7;c77#b77;,c771 7iii7 such trade or business is carried on1 and physically located1 in a distressed rural area during the taxable year for which the credit is claimed1 7iv7 such trade or business employs not more than #e full time 7or full-time equivalent7 employees during the taxable year for which the credit is claimed1 and 7v7 which meets the gross revenue test under subparagraph 7,d7 for the first taxable year in which the credit under subsection 7a7 is allowable with respect to the trade or business4 7,b7 ,exceptions ,such term shall not include-- 7i7 any trade or business which includes1 in whole or in part1 any private or commercial golf course1 country club1 massage parlor1 hot tub facility1 suntan facility1 racetrack or other facility used for gambling1 or any store the principal business of which is the sale of alcoholic beverages for consumption off premises1 or 7ii7 any trade or business with respect to which records are required under section #bbeg of title #ah1 ,united ,states ,code1 to be maintained with respect to any performer4 7,c7 ,gross revenue test 7i7 ,in general ,a trade or business meets the gross revenue test of this subparagraph for any taxable year if the average annual gross revenue of the trade or business for the #c-taxable year period ending with the taxable year does not exceed #a1jjj1jjj4 7ii7 ,aggregation rules ,all persons treated as a single employer under subsection 7a7 or 7b7 or section #eb or subsection 7m7 or 7o7 of section #dad shall be treated as a trade or business for purposes of clause 7i74 7iii7 ,special rules for entities not in existence for entire #c-year period1 etc ,rules similar to the rules of subparagraphs 7,a71 7,b71 and 7,d7 of section #ddh7;c77#c7 shall apply for purposes of this subparagraph4 7,d7 ,self-employed individuals ,for purposes of this paragraph1 if1 with respect to a trade or business1 an individual is treated as an employee under section #dja7;c71 such individual shall be treated as an employee of such trade or business for purposes of the preceding sentence4 7,e7 ,full-time equivalent employee ,for purposes of this paragraph-- 7i7 ,in general ,the term full-time equivalent employee means a number of employees equal to the number determined by dividing-- 7,i7 the total number of hours of service for which wages were paid by the employer to employees during the taxable year1 by 7,,ii7 #b1jhj4 ,such number shall be rounded to the next lowest whole number if not otherwise a whole number4 7ii7 ,excess hours not counted ,if an employee works in excess of #b1jhj hours of service during any taxable year1 such excess shall not be taken into account under clause 7i74 7iii7 ,hours of service ,the ,secretary1 in consultation with the ,secretary of ,labor1 shall prescribe such regulations1 rules1 and guidance as may be necessary to determine the hours of service of an employee1 including rules for the application of this paragraph to employees who are not compensated on an hourly basis4 7#d7 ,distressed rural area 7,a7 ,in general ,the term distressed rural area means any qualified area in the ,united ,states-- 7i7 that has lost at least #e percent of its population over the last #aj years1 7ii7 that lost at least #aj percent if its population over the last #bj years1 7iii7 that has median family income below #he percent of the national median family income1 7iv7 that has a poverty rate that exceeds #ab4e percent1 or 7v7 where average unemployment in the preceding year exceeds #abj percent of the national average4 7,b7 ,qualified area ,for purposes of subparagraph 7,a71 the term qualified area means-- 7i7 any area other than-- 7,i7 a city or town that has a population of greater than #ej1jjj inhabitants1 and 7,,ii7 any urbanized area contiguous and adjacent to a city or town described in subclause 7,i71 and 7ii7 any county in which-- 7,i7 there is no city or town that has a population of greater than #ajj1jjj inhabitants1 and 7,,ii7 there are no urbanized areas contiguous and adjacent to a city or town described in subclause 7,i74 7,c7 ,relevant sources of information ,in determining whether an area is a distressed rural area under this paragraph1 such determination shall be made in accordance with the most recent information from the ,bureau of the ,census1 the ,bureau of ,labor ,statistics1 or other government entity with relevant information4 7#e7 ,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 #bfg or #gjg7;b7 7but1 in applying section #bfg7;b7 and 7c7 for purposes of this section1 paragraph 7#d7 of section #bfg7;c7 shall be treated as providing that the family of an individual shall include only his spouse1 ancestors1 and lineal descendants74 7d7 ,denial of double benefit ,no deduction or credit shall be allowed under any other provision of this chapter for any amount taken into account in determining the credit under this section4 7e7 ,other rules 7#a7 ,married couple must file joint return ,rules similar to the rules of paragraphs 7#b71 7#c71 and 7#d7 of section #ba7;e7 shall apply for purposes of this section4 7#b7 ,denial of credit to dependents ,no credit shall be allowed under this section to any individual with respect to whom a deduction is allowed under section #aea is allowable to another taxpayer for a taxable year beginning in the calendar year in which such individual's calendar year begins4 4 7b7 ,credit allowed as part of general business credit ,section #ch7;b7 of such ,code 7defining current year business credit7 is amended by striking plus at the end of paragraph 7#ce71 by striking the period at the end of paragraph 7#cf7 and inserting 1 plus1 and by adding at the end the following new paragraph3 7#cg7 the rural microbusiness investment credit determined under section #de,s7a74 4 7c7 ,carryover of ,unused ,credit ,subsection 7a7 of section #ci of such ,code is amended by adding at the end the following new paragraph3 7#e7 #e-year carryback for rural microbusiness investment credit ,notwithstanding subsection 7d71 in the case of the rural microbusiness investment credit-- 7,a7 this section shall be applied separately from the business credit and the marginal oil and gas well production credit 7other than the rural microbusiness investment credit71 7,b7 paragraph 7#a7 shall be applied by substituting each of the #e taxable years for the taxable year in subparagraph 7,a7 thereof1 and 7,c7 paragraph 7#b7 shall be applied-- 7i7 by substituting #be taxable years for #ba taxable years in subparagraph 7,a7 thereof1 and 7ii7 by substituting #bd taxable years for #bj taxable years in subparagraph 7,b7 thereof4 4 7d7 ,conforming amendment ,the table of sections for subpart ,d of part ,,iv of subchapter ,a of chapter #a of such ,code is amended by adding at the end the following new item3 ,sec4 #de,s4 ,rural microbusiness investment credit4 4 7e7 ,effective date ,the amendments made by this section shall apply to expenditures made in taxable years beginning after the date of the enactment of this ,act4