H.R. 5813 — Introduced in House

I 115th CONGRESS 2d Session H. R. 5813 IN THE HOUSE OF REPRESENTATIVES May 15, 2018Mr. Barr (for himself, Mr. Wenstrup, Mr. Reichert, and Mr. Bishop of Michigan) introduced the following bill; which was referred to the Committee on Ways and Means A BILL To amend the Internal Revenue Code of 1986 to exclude from the definition of personal holding company income certain royalties and rents derived in the active conduct of a trade or business. 1. Short title This Act may be cited as the Removing Onerous Obstacles in the Tax code for Mainstreet Businesses Act of 2018 or as the ROOT for Mainstreet Businesses Act of 2018. 2. Certain royalties and rents derived in the active conduct of a trade or business not treated as personal holding company income (a) Royalties (1) In general Section 543(a)(1) of the Internal Revenue Code of 1986 is amended by striking and at the end of subparagraph (D), by striking the period at the end of subparagraph (E) and inserting , and, and by adding at the end the following new subparagraph: (F) royalties derived in the active conduct of a trade or business which are received from a person other than a related person (within the meaning of section 267). . (2) Copyright royalties Section 543(a)(4) of such Code is amended by inserting or to any amount derived in the active conduct of a trade or business which are received from a person other than a related person (within the meaning of section 267) after active business computer software royalties in the last sentence thereof. (b) Rents (1) In general Section 543(b)(3) of such Code is amended by striking or at the end of subparagraph (D), by striking the period at the end of subparagraph (E) and inserting , or, and by adding at the end the following new subparagraph: (F) amounts derived in the active conduct of a trade or business which are received from a person other than a related person (within the meaning of section 267). . (2) Produced film rents Section 543(a)(5)(B) of such Code is amended by adding at the end the following: Such term shall not include any amount derived in the active conduct of a trade or business which are received from a person other than a related person (within the meaning of section 267). (c) Regulations Section 543 of such Code is amended by adding at the end the following new subsection: (e) Determination of whether royalties and rents are derived in the active conduct of a trade or business The Secretary shall prescribe regulations or other guidance providing for the treatment of rents, royalties, and other amounts described in subsections (a)(1)(F), (a)(4), (a)(5)(B), and (b)(3)(F) as being derived in the active conduct of a trade or business consistent with the regulations and other guidance providing for such treatment for purposes of section 954(c)(2)(A). . (d) Effective date The amendments made by this section shall apply to taxable years ending on or after the date of the enactment of this Act.