,i  #aaeth ,,congress  #ast ,session    
,h4 ,r4 #daff  ,,in ,,the ,,house ,,of  
,,representatives  ,october #bg1        
#bjag,mr4 ,smith of ,nebraska 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 all    
employees of a firm to be counted as a  
single shareholder toward the           
shareholder limit of an ,s corporation4 
#a4 ,employees of a firm counted as a   
single shareholder toward shareholder   
limit of ,s corporation  7a7 ,in general
 ,subsection 7c7 of section #acfa of the
 ,internal ,revenue ,code of #aihf is   
amended by adding at the end the        
following3  7#g7 ,employees treated as  
one shareholder  7,a7 ,in general ,for  
purposes of subsection 7b77#a77;,a71 in 
the case of a corporation which has only
 employee shareholders1 there shall be  
treated as one shareholder all employees
 7and their estates7 of a corporation   
and any wholly owned business entities  

7as determined by the ,secretary7 of    
such corporation4  7,b7 ,employee       
defined ,for purposes of this           
paragraph-- 7i7 ,in general ,the term   
8employee0 means any individual 7whether
 a resident alien1 nonresident alien1 or
 citizen7 that would be an employee     
described under section #caba7;d7 7#a7  
or 7#b74  7ii7 ,certain determinations  
with respect to spouse disregarded ,in  
making the determination whether a      
corporation has only employee           
shareholders1 any current ownership in  
stock by a spouse of an employee by     
reason of a ,state community property   
law or other similar ,federal1 ,state1  
or foreign country law1 shall be        
disregarded4  4  7b7 ,exception to      
nonresident shareholder prohibition     
,subparagraph 7,c7 of section           
#acfa7;b77#a7 of such ,code is amended  
to read as follows3  7,c7 have a        
nonresident alien as a shareholder      
7except for a nonresident alien that is 
a shareholder by reason of subsection   

7c77#g7 or a nonresident alien spouse of
 an employee which is a shareholder in a
 corporation described in subsection    
7c77#g771 and  4  7c7 ,withholding with 
respect to nonresident aliens ,section  
#acgc of such ,code is amended by adding
 at the end the following3  7c7         
,withholding with respect to nonresident
 aliens ,the principles of sections     
#adda and #addf shall apply to income   
allocable to1 and distributions to1 a   
nonresident alien shareholder of an ,s  
corporation 7allowed by reason of       
section #acfa7;b77#a77;,c774 ,the       
,secretary may prescribe regulations to 
carry out the purposes of this          
subsection4  4  7d7 ,defining items of  
income for purposes of withholding tax  
on nonresident aliens ,subsection 7b7 of
 section #adda of such ,code is amended 
by inserting before the period at the   
end of the first sentence the following3
 1 and any items of income described in 
section #acff7;a7 allocable to a        
nonresident alien that is an ,s         

,corporation shareholder by reason of   
section #acfa7;c77#g74  7e7 ,effective  
date ,the amendments made by this       
section shall apply to taxable years    
beginning after the date of the         
enactment of this ,act4