,,ii  #aac? ,,congress  #a/ ,session    
,s4 #afeh  ,,9 ,,! ,,s5ate ,,( ,,!      
,,unit$ ,,/ates  ,novemb] #f1 #bjac ,mr4
 ,toomey 7= himself & ,mr4 ,m55dez7     
introduc$ ! foll[+ bill2 :i* 0 read     
twice & ref]r$ to ! ,committee on       
,f9ance  ,a ,,bill  ,to am5d ! ,int]nal 
,rev5ue ,code ( #aihf to make p]man5t   
c]ta9 small bus9ess tax provisions1 & = 
o!r purposes4  #a4 ,%ort title ,?is ,act
 may be cit$ z ! ,/>t-up ,jobs &        
,innovation ,act4  #b4 ,p]man5t ext5sion
 ( increas$ exp5s+ limitation  7a7      
,doll> limitation ,section #agi7;b77#a7 
( ! ,int]nal ,rev5ue ,code ( #aihf is   
am5d$ by /rik+ %all n exce$ & all t     
foll[s & ins]t+ %all n exce$ #ejj1jjj44 
7b7 ,r$uction 9 limitation ,section     
#agi7;b77#b7 ( ! ,int]nal ,rev5ue ,code 
( #aihf is am5d$--  7#a7 by /rik+       
subp>agraph 7,c71  7#b7 by /rik+ 1 & at 
! end ( subp>agraph 7,b7 & ins]t+ a     
p]iod1  7#c7 by /rik+ ! comma at ! end (
 subp>agraph 7,a7 & ins]t+ 1 &1 &  7#d7 
by ins]t+ beg9n+ be=e #bjad aft] ,!     

limitation "u p>agraph 7#a7 = any       
taxable ye>4  7c7 ,adju/m5t = inflation 
,subsection 7b7 ( section #agi ( !      
,int]nal ,rev5ue ,code ( #aihf is am5d$ 
by add+ at ! end ! foll[+ new p>agraph3 
7#f7 ,adju/m5t = inflation ,9 ! case (  
any taxable ye> beg9n+ aft] ,decemb]    
#ca1 #bjad1 ! #ejj1jjj am\nt 9 p>agraph 
7#a7 %all be increas$ by an am\nt equal 
to--  7,a7 su* doll> am\nt1 multipli$ by
  7,b7 ! co/-(-liv+ adju/m5t det]m9$ "u 
section #a7;f77#c7 = ! cal5d> ye> 9 :i* 
! taxable ye> beg9s1 by sub/itut+ cal5d>
 ye> #bjac = cal5d> ye> #aiib 9         
subp>agraph 7,b7 !re(4  ,if any am\nt z 
increas$ "u ! prec$+ s5t5ce is n a      
multiple ( #a1jjj1 su* am\nt %all be    
r\nd$ to ! ne>e/ multiple ( #a1jjj4  4  
7d7 ,comput] s(tw>e ,section            
#agi7;d77#a77;,a77ii7 ( ! ,int]nal      
,rev5ue ,code ( #aihf is am5d$ by /rik+ 
& be=e #bjad4  7e7 ,election ,section   
#agi7;c77#b7 ( ! ,int]nal ,rev5ue ,code 
( #aihf is am5d$ by /rik+ & be=e #bjad4 
7f7 ,special rules = treatm5t ( qualifi$

 real prop]ty  7#a7 ,9 g5]al ,section   
#agi7;f77#a7 ( ! ,int]nal ,rev5ue ,code 
( #aihf is am5d$ by /rik+ beg9n+ 9      
#bjaj1 #bjaa1 #bjab1 or #bjac & ins]t+  
beg9n+ aft] #bjji4  7#b7 ,repeal (      
limitation ,section #agi7;f7 ( su* ,code
 is am5d$ by /rik+ p>agraph 7#c74  7#c7 
,con=m+ am5dm5t ,section #agi7;f7 ( su* 
,code is am5d$ by /rik+ p>agraph 7#d74  
7g7 ,effective date ,! am5dm5ts made by 
?is section %all apply to prop]ty plac$ 
9 s]vice 9 taxable ye>s beg9n+ aft]     
,decemb] #ca1 #bjac4  #c4 ,p]man5t full 
exclusion applicable to qualifi$ small  
bus9ess /ock  7a7 ,9 g5]al ,p>agraph    
7#d7 ( section #abjb7;a7 ( ! ,int]nal   
,rev5ue ,code ( #aihf is am5d$--  7#a7  
by /rik+ & be=e ,janu>y #a1 #bjad1 &    
7#b7 by /rik+ c]ta9 p]iods 9 #bjaj1     
#bjaa1 #bjab1 & #bjac 9 ! head+ & ins]t+
 c]ta9 p]iods aft] #bjji4  7b7 ,con=m+  
am5dm5ts  7#a7 ,! head+ = section #abjb 
( ! ,int]nal ,rev5ue ,code ( #aihf is   
am5d$ by /rik+ p>tial4  7#b7 ,! item    
relat+ to section #abjb 9 ! table (     

sections = "p ,i ( sub*apt] ,p ( *apt]  
#a ( su* ,code is am5d$ by /rik+ ,p>tial
 exclusion & ins]t+ ,exclusion4  7#c7   
,section #abbc7ac7 ( su* ,code is am5d$ 
by /rik+ #abjb7;a77#b714  7c7 ,increase 
9 gross asset ?re%old  7#a7 ,9 g5]al    
,p>agraph 7#a7 ( section #abjb7;d7 ( !  
,int]nal ,rev5ue ,code ( #aihf is am5d$ 
by /rik+ #ej1jjj1jjj ea* place x appe>s 
& ins]t+ #aej1jjj1jjj4  7#b7 ,adju/m5t =
 inflation ,subsection 7d7 ( section    
#abjb ( su* ,code is am5d$ by add+ at ! 
end ! foll[+ new p>agraph3  7#d7        
,adju/m5t = inflation ,9 ! case ( any   
taxable ye> beg9n+ aft] ,decemb] #ca1   
#bjad1 ! #aej1jjj1jjj am\nt 9           
subp>agraphs 7,a7 & 7,b7 ( p>agraph 7#a7
 %all be increas$ by an am\nt equal to--
  7,a7 su* doll> am\nt1 multipli$ by    
7,b7 ! co/-(-liv+ adju/m5t det]m9$ "u   
section #a7;f77#c7 = ! cal5d> ye> 9 :i* 
! taxable ye> beg9s1 by sub/itut+ cal5d>
 ye> #bjac = cal5d> ye> #aiib 9         
subp>agraph 7,b7 !re(4  ,if any am\nt z 
increas$ "u ! prec$+ s5t5ce is n a      

multiple ( #a1jjj1 su* am\nt %all be    
r\nd$ to ! ne>e/ multiple ( #a1jjj4  4  
7d7 ,effective date ,! am5dm5ts made by 
?is section %all apply to /ock acquir$  
aft] ,decemb] #ca1 #bjac4  #d4          
,unification ( d$uction = />t-up &      
organizational exp5ditures  7a7 ,9 g5]al
 ,subsection 7a7 ( section #aie ( !     
,int]nal ,rev5ue ,code ( #aihf is am5d$ 
by ins]t+ & organizational aft] />t-up4 
7b7 ,organizational exp5ditures         
,subsection 7c7 ( section #aie ( !      
,int]nal ,rev5ue ,code ( #aihf is am5d$ 
by add+ at ! end ! foll[+ new p>agraph3 
7#c7 ,organizational exp5ditures ,! t]m 
organizational exp5ditures means any    
exp5diture :i*--  7,a7 is incid5t to !  
creation ( a corporation or a p>tn]%ip1 
7,b7 is *>geable to capital acc\nt1 &   
7,c7 is ( a "* :i*1 if exp5d$ incid5t to
 ! creation ( a corporation or a        
p>tn]%ip hav+ a limit$ life1 w\ld be    
amortizable ov] su* life4  4  7c7 ,doll>
 am\nts ,clause 7ii7 ( section          
#aie7;b77#a77;,a7 ( ! ,int]nal ,rev5ue  

,code ( #aihf is am5d$--  7#a7 by /rik+ 
#e1jjj & ins]t+ #aj1jjj1 &  7#b7 by     
/rik+ #ej1jjj & ins]t+ #fj1jjj4  7d7    
,adju/m5t = inflation ,p>agraph 7#c7 (  
section #aie7;b7 is am5d$ to read z     
foll[s3  7#c7 ,adju/m5t = inflation ,9 !
 case ( any taxable ye> beg9n+ aft]     
,decemb] #ca1 #bjad1 ! #aj1jjj & #fj1jjj
 am\nts 9 p>agraph 7#a77;,a77ii7 %all   
ea* be increas$ by an am\nt equal to--  
7,a7 su* doll> am\nt1 multipli$ by  7,b7
 ! co/-(-liv+ adju/m5t det]m9$ "u       
section #a7;f77#c7 = ! cal5d> ye> 9 :i* 
! taxable ye> beg9s1 by sub/itut+ cal5d>
 ye> #bjac = cal5d> ye> #aiib 9         
subp>agraph 7,b7 !re(4  ,if any am\nt z 
increas$ "u ! prec$+ s5t5ce is n a      
multiple ( #a1jjj1 su* am\nt %all be    
r\nd$ to ! ne>e/ multiple ( #a1jjj4  4  
7e7 ,con=m+ am5dm5ts  7#a7 ,section     
#aie7;b77#a7 ( ! ,int]nal ,rev5ue ,code 
( #aihf is am5d$--  7,a7 by ins]t+ 7or1 
9 ! case ( a p>tn]%ip1 ! p>tn]%ip       
elects7 aft] ,if a taxpay] elects1  7,b7
 by ins]t+ 7or ! p>tn]%ip1 z ! case may 

be7 aft] ! taxpay] 9 subp>agraph 7,a71 &
  7,c7 by ins]t+ or organizational aft] 
/>t-up ea* place x appe>s4  7#b7        
,section #aie7;b77#b7 ( su* ,code is    
am5d$--  7,a7 by /rik+ amortization     
p]iod4--,9 any case & ins]t+            
amortization p]iod4--  7,a7 ,9 g5]al ,9 
any case  1 &  7,b7 by add+ at ! end !  
foll[+ new subp>agraph3  7,b7 ,special  
p>tn]%ip rule ,9 ! case ( a p>tn]%ip1   
subp>agraph 7,a7 %all be appli$ at !    
p>tn]%ip level4  4  7#c7  7,a7 ,"p      
,,viii ( sub*apt] ,b ( *apt] #a ( su*   
,code is am5d$ by /rik+ section #bdh4   
7,b7 ,section #agj7;b77#b77;,c77ii7 (   
su* ,code is am5d$ by /rik+ 7except     
section #bdh74  7,c7 ,section           
#cab7n77#c7 ( su* ,code is am5d$ by     
/rik+ ,sections #agc & #bdh & ins]t+    
,section #agc4  7,d7 ,section           
#ece7;b77#c7 ( su* ,code is am5d$ by    
/rik+ 7except section #bdh74  7,e7      
,section #ede7;b77#c7 ( su* ,code is    
am5d$ by /rik+ 7except section #bdh74   
7,f7 ,section #hcd7;c77#g7 ( su* ,code  

is am5d$ by /rik+ 7except section #bdh74
  7,g7 ,section #heb7;b77#b77;,c7 ( su* 
,code is am5d$ by /rik+ 7except section 
#bdh74  7,h7 ,section #heg7;b77#b77;,a7 
( su* ,code is am5d$ by /rik+ 7except   
section #bdh74  7,i7 ,section #acfc7;b7 
( su* ,code is am5d$ by ins]t+ & at !   
end ( p>agraph 7#b71 by /rik+ p>agraph  
7#c71 & by r$esignat+ p>agraph 7#d7 z   
p>agraph 7#c74  7,j7 ,section           
#acge7;b77#a77;,b77i7 ( su* ,code is    
am5d$ by /rik+ 7o!r ?an ! d$uction all[$
 by section #bdh1 relat+ to organization
 exp5ditures74  7,k7 ,! table ( sections
 = "p ,,viii ( sub*apt] ,b ( *apt] #a ( 
su* ,code is am5d$ by /rik+ ! item      
relat+ to section #bdh4  7#d7 ,"p ,i (  
sub*apt] ,k ( *apt] #a ( su* ,code is   
am5d$ by /rik+ section #gji4  7#e7 ,!   
table ( sections = "p ,i ( sub*apt] ,k (
 *apt] #a ( su* ,code is am5d$ by /rik+ 
! item relat+ to section #gji4  7f7     
,cl]ical am5dm5ts  7#a7 ,! head+ (      
section #aie ( ! ,int]nal ,rev5ue ,code 
( #aihf is am5d$ by /rik+ exp5ditures & 

ins]t+ & organizational exp5ditures4    
7#b7 ,! item relat+ to section #aie 9 ! 
table ( cont5ts ( "p ,,vi ( sub*apt] ,b 
( *apt] #a ( su* ,code is am5d$ to read 
z foll[s3  ,sec4 #aie4 ,/>t-up &        
organizational exp5ditures4  4  7g7     
,effective date ,! am5dm5ts made by ?is 
section %all apply to exp5ses paid or   
incurr$ aft] ,decemb] #ca1 #bjac4  #e4  
,expansion ( gross receipts te/  7a7 ,9 
g5]al ,p>agraph 7#a7 ( section #ddh7;c7 
( ! ,int]nal ,rev5ue ,code ( #aihf is   
am5d$--  7#a7 by /rik+ ! #e1jjj1jjj     
gross receipts te/ & ins]t+ ! gross     
receipts te/1 &  7#b7 by /rik+ does n   
exce$ #e1jjj1jjj & ins]t+ does n exce$  
#aj1jjj1jjj4  7b7 ,adju/m5t = inflation 
,subsection 7c7 ( section #ddh ( !      
,int]nal ,rev5ue ,code ( #aihf is am5d$ 
by add+ at ! end ! foll[+ new p>agraph3 
7#d7 ,adju/m5t = inflation ,9 ! case (  
any taxable ye> beg9n+ aft] ,decemb]    
#ca1 #bjad1 ! #aj1jjj1jjj am\nt 9       
p>agraph 7#a7 %all be increas$ by an    
am\nt equal to--  7,a7 su* doll> am\nt1 

multipli$ by  7,b7 ! co/-(-liv+ adju/m5t
 det]m9$ "u section #a7;f77#c7 = !      
cal5d> ye> 9 :i* ! taxable ye> beg9s1 by
 sub/itut+ cal5d> ye> #bjac = cal5d> ye>
 #aiib 9 subp>agraph 7,b7 !re(4  ,if any
 am\nt z increas$ "u ! prec$+ s5t5ce is 
n a multiple ( #a1jjj1 su* am\nt %all be
 r\nd$ to ! ne>e/ multiple ( #a1jjj4  4 
7c7 ,con=m+ am5dm5ts  7#a7 ,p>agraph    
7#c7 ( section #ddh7;b7 ( ! ,int]nal    
,rev5ue ,code ( #aihf is am5d$ by /rik+ 
! #e1jjj1jjj gross receipts te/ & ins]t+
 ! gross receipts te/4  7#b7 ,! head+ = 
p>agraph 7#c7 ( section #ddh7;b7 ( su*  
,code is am5d$ by /rik+ ) gross receipts
 ( n m ?an #e1jjj1jjj & ins]t+ t pass   
gross receipts te/4  7#c7 ,! head+ =    
subsection 7c7 ( section #ddh ( su*     
,code is am5d$ by /rik+ #e1jjj1jjj gross
 & ins]t+ ,gross4  7#d7 ,clause 7iii7 ( 
section #agb7;b77#a77;,f7 ( su* ,code is
 am5d$ by ins]t+ 1 appli$ by sub/itut+  
#e1jjj1jjj = #aj1jjj1jjj ea* place x    
appe>s1 aft] section #ddh7;c74  7#e7    
,subclause 7,,ii7 ( section             

#agb7;b77#a77;,h77v7 ( su* ,code is     
am5d$ by /rik+ #e1jjj1jjj & ins]t+      
#aj1jjj1jjj4  7d7 ,effective date &     
special rules  7#a7 ,9 g5]al ,! am5dm5ts
 made by ?is section %all apply to      
taxable ye>s beg9n+ aft] ,decemb] #ca1  
#bjac4  7#b7 ,*ange 9 me?od ( acc\nt+ ,9
 ! case ( any taxpay] *ang+ ! taxpay]'s 
me?od ( acc\nt+ = any taxable ye> "u !  
am5dm5ts made by ?is section--  7,a7 su*
 *ange %all be treat$ z initiat$ by !   
taxpay]2 &  7,b7 su* *ange %all be      
treat$ z made ) ! cons5t ( ! ,secret>y (
 ! ,treasury4  #f4 ,cl>ification (      
inv5tory & acc\nt+ rules = small bus9ess
  7a7 ,ca% acc\nt+ p]mitt$ ,section #ddf
 ( ! ,int]nal ,rev5ue ,code ( #aihf is  
am5d$ by add+ at ! end ! foll[+ new     
subsection3  7g7 ,c]ta9 small bus9ess   
taxpay]s p]mitt$ ,to use ca% acc\nt+    
me?od )\t limitation  7#a7 ,9 g5]al ,)  
respect to an eligible taxpay] :o uses !
 ca% receipts & disbursem5ts me?od = any
 taxable ye>1 su* me?od %all be deem$ to
 cle>ly reflect income & ! taxpay] %all 

n be requir$ to use an accrual me?od4   
7#b7 ,eligible taxpay] ,= purposes ( ?is
 subsection1 a taxpay] is an eligible   
taxpay] ) respect to any taxable ye>    
if--  7,a7 = all prior taxable ye>s     
beg9n+ aft] ,decemb] #ca1 #bjac1 !      
taxpay] 7or any pr$ecessor7 met ! gross 
receipts te/ ( section #ddh7;c71 &  7,b7
 ! taxpay] is n subject to section #ddg 
or #ddh4  4  7b7 ,inv5tory rules  7#a7  
,9 g5]al ,section #dga ( ! ,int]nal     
,rev5ue ,code ( #aihf is am5d$ by       
r$esignat+ subsection 7c7 z subsection  
7d7 & by ins]t+ aft] subsection 7b7 !   
foll[+ new subsection3  7c7 ,small      
bus9ess taxpay]s n requir$ ,to use      
inv5tories  7#a7 ,9 g5]al ,a qualifi$   
taxpay] %all n be requir$ to use        
inv5tories "u ?is section = a taxable   
ye>4  7#b7 ,treatm5t ( taxpay]s n us+   
inv5tories ,if a qualifi$ taxpay] does n
 use inv5tories ) respect to any prop]ty
 = any taxable ye> beg9n+ aft] ,decemb] 
#ca1 #bjac1 su* prop]ty %all be treat$ z
 a mat]ial or supply :i* is n incid5tal4

  7#c7 ,qualifi$ taxpay] ,= purposes (  
?is subsection1 ! t]m qualifi$ taxpay]  
means--  7,a7 any eligible taxpay] 7z   
def9$ 9 section #ddf7;g77#b771 &  7,b7  
any taxpay] describ$ 9 section          
#ddh7;b77#c74  4  7#b7 ,increas$        
eligibility = simplifi$ doll>-value     
,,lifo me?od ,section #dgd7;c7 ( su*    
,code is am5d$ by /rik+ #e1jjj1jjj &    
ins]t+ #aj1jjj1jjj4  7#c7 ,con=m+       
am5dm5t ,subsection 7c7 ( section       
#bfc;,a ( su* ,code is am5d$ by add+ at 
! end ! foll[+ new p>agraph3  7#g7      
,exclusion f inv5tory rules ,no?+ 9 ?is 
section %all require ! use ( inv5tories 
= any taxable ye> by a qualifi$ taxpay] 
7)9 ! mean+ ( section #dga7;c77 :o is n 
requir$ to use inv5tories "u section    
#dga = su* taxable ye>4  4  7c7         
,effective date & special rules  7#a7 ,9
 g5]al ,! am5dm5ts made by ?is section  
%all apply to taxable ye>s beg9n+ aft]  
,decemb] #ca1 #bjac4  7#b7 ,*ange 9     
me?od ( acc\nt+ ,9 ! case ( any taxpay] 
*ang+ ! taxpay]'s me?od ( acc\nt+ = any 

taxable ye> "u ! am5dm5ts made by ?is   
section--  7,a7 su* *ange %all be treat$
 z initiat$ by ! taxpay]2 &  7,b7 su*   
*ange %all be treat$ z made ) ! cons5t (
 ! ,secret>y ( ! ,treasury4  #g4        
,exception f passive loss rules =       
inve/m5ts 9 high te*nology rese>* small 
bus9ess pass-?ru entities  7a7 ,9 g5]al 
,subsection 7c7 ( section #dfi is am5d$ 
by r$esignat+ p>agraphs 7#d7 ?r\gh 7#g7 
z p>agraphs 7#e7 ?r\gh 7#h71            
respectively1 & by ins]t+ aft] p>agraph 
7#c7 ! foll[+ new p>agraph3  7#d7 ,high 
te*nology rese>* activities  7,a7 ,9    
g5]al ,! t]m passive activity %all n    
include any qualifi$ rese>* activity ( !
 taxpay] c>ri$ on by a high te*nology   
rese>* small bus9ess pass-?ru entity4   
7,b7 ,treatm5t ( losses & d$uctions  7i7
 ,9 g5]al ,losses or d$uctions ( a      
taxpay] relat+ to qualifi$ rese>*       
activities c>ri$ on by a high te*nology 
rese>* small bus9ess pass-?ru entity    
%all n be treat$ z losses or d$uctions1 
respectively1 f a passive activity      

except z provid$ 9 clause 7ii7 &        
subp>agraph 7,c74  7ii7 ,limitation     
,clause 7i7 %all apply to losses &      
d$uctions ( a taxpay] relat+ to a high  
te*nology small bus9ess pass-?ru entity 
= a taxable ye> only to ! ext5t t !     
aggregate losses & d$uctions ( ! taxpay]
 relat+ to qualifi$ rese>* activities ( 
su* entity = su* taxable ye> d n exce$ !
 portion ( ! taxpay]'s adju/$ basis 9 ! 
taxpay]'s own]%ip int]e/ 9 su* entity t 
is attributable to money or o!r prop]ty 
contribut$--  7,i7 9 ex*ange = su*      
own]%ip int]e/1 &  7,,ii7 specifically =
 use 9 connection ) qualifi$ rese>*     
activities4  ,= purposes ( ! prec$+     
s5t5ce1 ! taxpay]'s basis %all n include
 any portion ( su* basis :i* is         
attributable to an increase 9 a p>tn]'s 
%>e ( ! liabilities ( a p>tn]%ip t is   
consid]$ "u section #geb7;a7 z a        
contribution ( money4  7,c7 ,treatm5t ( 
c>ryov]s ,subp>agraph 7,b77i7 %all n    
apply to ! portion ( any loss or        
d$uction t is c>ri$ ov] "u subsection   

7b7 into a taxable ye> o!r ?an ! taxable
 ye> 9 :i* su* loss or d$uction arose4  
7,d7 ,qualifi$ rese>* activity ,=       
purposes ( ?is p>agraph1 ! t]m qualifi$ 
rese>* activity means any activity      
con/itut+ qualifi$ rese>* 7)9 ! mean+ ( 
section #da7;d77#a77;,b7 & tak+ into    
acc\nt p>agraphs 7#c7 & 7#d7 ( section  
#da7;d77 :i* involves a process (       
exp]im5tation4  7,e7 ,high te*nology    
rese>* small bus9ess pass-?ru entity ,= 
purposes ( ?is p>agraph1 ! t]m high     
te*nology rese>* small bus9ess pass-?ru 
entity means any dome/ic pass-?ru entity
 = any taxable ye> if--  7i7 ei!r--     
7,i7 m ?an #ge p]c5t ( ! entity's       
exp5ditures 7includ+ sal>ies1 r5t &     
ov]head7 = su* taxable ye> are paid or  
incurr$ 9 connection ) qualifi$ rese>*  
7)9 ! mean+ ( section #da7;d77#a77;,b71 
tak+ into acc\nt p>agraphs 7#c7 & 7#d7 (
 section #da7;d77 t involves a process (
 exp]im5tation conduct$ by ! entity1 or 
7,,ii7 m ?an #ej p]c5t ( ! entity's     
exp5ditures = su* taxable ye> con/itute 

qualifi$ rese>* exp5ses 7z def9$ 9      
section #da7;b71 b det]m9$ )\t reg>d to 
! phrase #fe p]c5t ( 9 p>agraph         
7#c77;,a7 !re(71  7ii7 su* entity is a  
small bus9ess 7)9 ! mean+ ( section     
#da7;b77#c77;,d77iii71 appli$ by        
sub/itut+ #bej = #ejj 9 subclause 7,i7  
!re(71 &  7iii7 at no "t dur+ ! taxable 
ye> does ! entity h aggregate gross     
assets 9 excess ( #aej1jjj1jjj4  7,f7   
,provisions relat$ to aggregate gross   
assets limitation ,= purposes ( ?is     
p>agraph--  7i7 ,9 g5]al ,except z      
o!rwise provid$ 9 ?is subp>agraph1 ! t]m
 aggregate gross assets has ! mean+ giv5
 su* t]m 9 section #abjb7;d77#b74  7ii7 
,exception = c]ta9 intangibles ,any     
section #aig intangible 7z def9$ 9      
section #aig7;d7 & det]m9$ )\t reg>d to 
section #aig7;e77 :i* is us$ directly 9 
connection ) ! rese>* ref]r$ to 9       
subp>agraph 7,e77i7 %all n be tak5 into 
acc\nt 9 det]m9+ aggregate gross assets4
  7iii7 ,exception = c]ta9 foll[-on     
inve/m5ts ,ca% f a sale ( equity int]e/s

 %all n be tak5 into acc\nt 9 det]m9+   
aggregate gross assets if--  7,i7 !     
aggregate gross assets ( su* entity     
7det]m9$ imm$iately aft] su* sale & )\t 
reg>d to ?is clause7 d n exce$ ! sum (  
#aej1jjj1jjj1 plus #be p]c5t ( !        
aggregate gross assets ( su* entity     
7det]m9$ imm$iately be=e su* sale & )\t 
reg>d to ?is clause71 &  7,,ii7 !       
aggregate gross assets ( su* entity     
7det]m9$ imm$iately be=e su* sale & )\t 
reg>d to ?is clause7 d n exce$          
#aej1jjj1jjj4  ,sales ( equity int]e/s  
:i* are "p ( ! same plan or arrangem5t1 
or :i* are c>ri$ out ) ! pr9cipal       
purpose ( increas+ ! am\nt ( ca% to :i* 
?is clause applies 7det]m9$ )\t reg>d to
 ?is s5t5ce71 %all be treat$ z a s+le   
sale = purposes ( ?is clause4  7iv7     
,inflation adju/m5t ,9 ! case ( any     
taxable ye> beg9n+ aft] #bjad1 !        
#aej1jjj1jjj am\nt 9 subp>agraph        
7,e77iii7 & subclauses 7,i7 & 7,,ii7 (  
clause 7iii7 %all ea* be increas$ by an 
am\nt equal to--  7,i7 su* doll> am\nt1 

multipli$ by  7,,ii7 ! co/-(-liv+       
adju/m5t det]m9$ "u section #a7;f77#c7 =
 ! cal5d> ye> 9 :i* ! taxable ye> beg9s 
det]m9$ by sub/itut+ cal5d> ye> #bjac = 
cal5d> ye> #aiib 9 subp>agraph 7,b7     
!re(4  ,any increase det]m9$ "u ! prec$+
 s5t5ce %all be r\nd$ to ! ne>e/        
#ajj1jjj4  7,g7 ,capital exp5ditures    
tak5 into acc\nt = exp5ditures te/ ,an  
exp5diture %all n fail to be tak5 into  
acc\nt "u subp>agraph 7,e77i7 m]ely     
because su* exp5diture is *>geable to   
capital acc\nt4  7,h7 ,pass-?ru entity  
,= purposes ( ?is p>agraph1 ! t]m       
pass-?ru entity means any p>tn]%ip1 ,s  
corporation1 or o!r entity id5tifi$ by !
 ,secret>y z a pass-?ru entity =        
purposes ( ?is p>agraph4  7,i7          
,aggregation rules  7i7 ,9 g5]al ,all   
p]sons treat$ z a s+le employ] "u       
subsection 7a7 or 7b7 ( section #eb1 or 
subsection 7m7 or 7o7 ( section #dad1   
%all be treat$ z a s+le entity =        
purposes ( subp>agraphs 7,e7 &          
7,f77iii74  7ii7 ,limitation :]e entity 

w\ld n qualify ,no entity %all be treat$
 z a high te*nology rese>* small bus9ess
 pass-?ru entity unless su* entity      
qualifies z su* bo? ) & )\t !           
application ( clause 7i74  7,j7         
,activities n engag$ 9 = pr(it &        
economic sub/ance rules ,section #ahc & 
! economic sub/ance rules ( section     
#ggja7o7 %all n apply to disall[ !      
losses1 d$uctions1 & cr$its ( a high    
te*nology rese>* small bus9ess pass-?ru 
entity solely z a result ( losses       
incurr$ by su* entity4  4  7b7 ,mat]ial 
p>ticipation n requir$ ,p>agraph 7#e7 ( 
section #dfi7;c7 ( su* ,code1 z         
r$esignat$ by subsection 7a71 is am5d$  
by /rik+ & 7#c7 9 ! head+ & text &      
ins]t+ 1 7#c71 & 7#d74  7c7 ,c]ta9      
rese>*-,relat$ d$uctions & cr$its ( high
 te*nology rese>* small bus9ess         
pass-,?ru entities all[$ = purposes (   
det]m9+ alt]native m9imum tax  7#a7     
,d$uction = rese>* & exp]im5tal         
exp5ditures ,p>agraph 7#b7 ( section    
#ef7;b7 ( su* ,code is am5d$ by add+ at 

! end ! foll[+ new subp>agraph3  7,e7   
,exception = high te*nology rese>* small
 bus9ess pass-?ru entities ,9 ! case ( a
 high te*nology rese>* small bus9ess    
pass-?ru entity 7z def9$ 9 section      
#dfi7;c77#d771 ?is p>agraph %all n apply
 to any am\nt all[able z a d$uction "u  
section #agd7;a74  4  7#b7 ,all[ance (  
c]ta9 rese>*-relat$ cr$its ,subp>agraph 
7,b7 ( section #ch7;c77#d7 ( su* ,code  
is am5d$ by r$esignat+ clauses 7ii7     
?r\gh 7ix7 z clauses 7iii7 ?r\gh 7x71   
respectively1 & by ins]t+ aft] clause   
7i7 ! foll[+ new clause3  7ii7 ! cr$its 
( an individual taxpay] det]m9$ "u      
sections #da & #dh;,d to ! ext5t        
attributable to a high te*nology rese>* 
small bus9ess pass-?ru entity 7z def9$ 9
 section #dfi7;c77#d771  4  7d7         
,exception to limitation on pass-,?ru ( 
rese>* cr$it ,subsection 7g7 ( section  
#da ( su* ,code is am5d$ by add+ at !   
end ! foll[+3 ,p>agraphs 7#b7 & 7#d7    
%all n apply ) respect to any high      
te*nology rese>* small bus9ess pass-?ru 

entity 7z def9$ 9 section #dfi7;c77#d774
  7e7 ,effective date ,! am5dm5ts made  
by ?is section %all apply to losses &   
cr$its aris+ 9 taxable ye>s beg9n+ on or
 aft] ! date ( ! enactm5t ( ?is ,act4