,i #aafth ,,congress #b;d ,session ,h4 ,r4 #geje ,,in ,,the ,,house ,,of ,,representatives ,july #i1 #bjbj,mr4 ,buchanan introduced the following bill2 which was referred to the ,committee on ,ways and ,means1 and in addition to the ,committee on the ,budget1 for a period to be subsequently determined by the ,speaker1 in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned ,a ,,bill ,to amend the ,internal ,revenue ,code of #aihf to promote new business innovation1 and for other purposes4 #a4 ,short title ,this ,act may be cited as the ,american ,innovation ,act of #bjbj4 #b4 ,simplification and expansion of deduction for start-up and organizational expenditures 7a7 ,in general ,section #aie of the ,internal ,revenue ,code of #aihf is amended by redesignating subsections 7c7 and 7d7 as subsections 7d7 and 7e71 respectively1 and by striking all that precedes subsection 7d7 7as so redesignated7 and inserting the following3 #aie4 ,start-up and organizational expenditures 7a7 ,capitalization of expenditures ,except as otherwise provided in this section1 no deduction shall be allowed for start-up or organizational expenditures4 7b7 ,election ,to deduct 7#a7 ,in general ,if a taxpayer elects the application of this subsection with respect to any active trade or business-- 7,a7 the taxpayer shall be allowed a deduction for the taxable year in which such active trade or business begins in an amount equal to the lesser of-- 7i7 the aggregate amount of start-up and organizational expenditures paid or incurred in connection with such active trade or business1 or 7ii7 #bj1jjj1 reduced 7but not below zero7 by the amount by which such aggregate amount exceeds #abj1jjj1 and 7,b7 the remainder of such start-up and organizational expenditures shall be charged to capital account and allowed as an amortization deduction determined by amortizing such expenditures ratably over the #ahj-month period beginning with the month in which the active trade or business begins4 7#b7 ,application to organizational expenditures ,in the case of organizational expenditures with respect to any corporation or partnership1 the active trade or business referred to in paragraph 7#a7 means the first active trade or business carried on by such corporation or partnership4 7#c7 ,inflation adjustment ,in the case of any taxable year beginning after ,december #ca1 #bjbj1 the #bj1jjj and #abj1jjj amounts in paragraph 7#a77;,a77ii7 shall each be increased by an amount equal to-- 7,a7 such dollar amount1 multiplied by 7,b7 the cost-of-living adjustment determined under section #a7;f77#c7 for the calendar year in which the taxable year begins1 determined by substituting calendar year #bjai for calendar year #bjaf in subparagraph 7,a77ii7 thereof4 ,if any amount as increased under the preceding sentence is not a multiple of #a1jjj1 such amount shall be rounded to the nearest multiple of #a1jjj4 7c7 ,allowance of deduction upon liquidation or disposition 7#a7 ,liquidation of partnership or corporation ,if any partnership or corporation is completely liquidated by the taxpayer1 any start-up or organizational expenditures paid or incurred in connection with such partnership or corporation which were not allowed as a deduction by reason of this section may be deducted to the extent allowable under section #afe4 7#b7 ,disposition of trade or business ,if any trade or business is completely disposed of or discontinued by the taxpayer1 any start-up expenditures paid or incurred in connection with such trade or business which were not allowed as a deduction by reason of this section 7and not taken into account in connection with a liquidation to which paragraph 7#a7 applies7 may be deducted to the extent allowable under section #afe4 ,for purposes of this paragraph1 in the case of any deduction allowed under subsection 7b77#a7 with respect to both start-up and organizational expenditures1 the amount treated as so allowed with respect to start-up expenditures shall bear the same ratio to such deduction as the start-up expenditures taken into account in determining such deduction bears to the aggregate of the start-up and organizational expenditures so taken into account4 4 7b7 ,organizational expenditures ,section #aie7;d7 of such ,code1 as redesignated by subsection 7a71 is amended by adding at the end the following new paragraphs3 7#c7 ,organizational expenditures ,the term organizational expenditures means any expenditure which-- 7,a7 is incident to the creation of a corporation or a partnership1 7,b7 is chargeable to capital account1 and 7,c7 is of a character which1 if expended incident to the creation of a corporation or a partnership having an ascertainable life1 would be amortizable over such life4 7#d7 ,application to certain disregarded entities ,in the case of any entity with a single owner that is disregarded as an entity separate from its owner1 this section shall be applied in the same manner as if such entity were a corporation4 4 7c7 ,election ,section #aie7;e77#b7 of such ,code1 as redesignated by subsection 7a71 is amended to read as follows3 7#b7 ,partnerships and ,s corporations ,in the case of any partnership or ,s corporation1 the election under subsection 7b7 shall be made 7and this section shall be applied7 at the entity level4 4 7d7 ,conforming amendments 7#a7 7,a7 ,part ,,viii of subchapter ,b of chapter #a is amended by striking section #bdh of such ,code 7and by striking the item relating to such section in the table of sections of such part74 7,b7 ,section #agj7;b77#b77;,d77ii7 of such ,code is amended by striking 7except section #bdh74 7,c7 ,section #cab7n77#c7 of such ,code is amended by striking ,sections #agc and #bdh and inserting ,sections #agc and #aie4 7,d7 ,section #ece7;b77#c7 of such ,code is amended by striking 7except section #bdh74 7,e7 ,section #ede7;b77#c7 of such ,code is amended by striking 7except section #bdh74 7,f7 ,section #ede7;b77#d7 of such ,code is amended by striking 7except section #bdh74 7,g7 ,section #hcd7;c77#g7 of such ,code is amended by striking 7except section #bdh74 7,h7 ,section #heb7;b77#b77;,c7 of such ,code is amended by striking 7except section #bdh74 7,i7 ,section #heg7;b77#b77;,a7 of such ,code is amended by striking 7except section #bdh74 7,j7 ,section #acfc7;b7 of such ,code is amended by adding and at the end of paragraph 7#b71 by striking paragraph 7#c71 and by redesignating paragraph 7#d7 as paragraph 7#c74 7,k7 ,section #acge7;b77#a77;,b77i7 of such ,code is amended by striking 7other than the deduction allowed by section #bdh1 relating to organization expenditures74 7#b7 7,a7 ,section #gji of such ,code is amended to read as follows3 #gji4 ,treatment of syndication fees ,no deduction shall be allowed under this chapter to a partnership or to any partner of the partnership for any amounts paid or incurred to promote the sale of 7or to sell7 an interest in the partnership4 4 7,b7 ,the item relating to section #gji in the table of sections for part ,i of subchapter ,k of chapter #a of such ,code is amended to read as follows3 ,sec4 #gji4 ,treatment of syndication fees4 4 7#c7 ,section #abjb7;e77#b77;,a7 of such ,code is amended by striking section #aie7;c77#a77;,a7 and inserting section #aie7;d77#a77;,a74 7#d7 ,the item relating to section #aie in the table of contents of part ,,vi of subchapter ,b of chapter #a of such ,code is amended to read as follows3 ,sec4 #aie4 ,start-up and organizational expenditures4 4 7e7 ,effective date ,the amendments made by this section shall apply to expenditures paid or incurred in connection with active trades or businesses which begin in taxable years beginning after ,december #ca1 #bjai4 #c4 ,preservation of start-up net operating losses and tax credits after ownership change 7a7 ,application to net operating losses ,section #chb7;d7 of the ,internal ,revenue ,code of #aihf is amended by adding at the end the following new paragraph3 7#d7 ,exception for start-up losses 7,a7 ,in general ,in the case of any net operating loss carryforward described in paragraph 7#a77;,a7 which arose in a start-up period taxable year1 the amount of such net operating loss carryforward otherwise taken into account under such paragraph shall be reduced by the net start-up loss determined with respect to the trade or business referred to in subparagraph 7,b77i7 for such start-up period taxable year4 7,b7 ,start-up period taxable year ,the term start-up period taxable year means any taxable year of the old loss corporation which-- 7i7 begins before the close of the #c-year period beginning on the date on which any trade or business of such corporation begins as an active trade or business 7as determined under section #aie7;d77#b7 without regard to subparagraph 7,b7 thereof71 and 7ii7 ends after ,may #ca1 #bjbj4 7,c7 ,net start-up loss 7i7 ,in general ,the term net start-up loss means1 with respect to any trade or business referred to in subparagraph 7,b77i7 for any start-up period taxable year1 the amount which bears the same ratio 7but not greater than #a7 to the net operating loss carryforward which arose in such start-up period taxable year as-- 7,i7 the net operating loss 7if any7 which would have been determined for such start-up period taxable year if only items of income1 gain1 deduction1 and loss properly allocable to such trade or business were taken into account1 bears to 7,,ii7 the amount of the net operating loss determined for such start-up period taxable year4 7ii7 ,special rule for last taxable year in start-up period ,in the case of any start-up period taxable year which ends after the close of the #c-year period described in subparagraph 7,b77i7 with respect to any trade or business1 the net start-up loss with respect to such trade or business for such start-up period taxable year shall be the same proportion of such loss 7determined without regard to this clause7 as the proportion of such start-up period taxable year which is on or before the last day of such period4 7,d7 ,application to net operating loss arising in year of ownership change ,subparagraph 7,a7 shall apply to any net operating loss described in paragraph 7#a77;,b7 in the same manner as such subparagraph applies to net operating loss carryforwards described in paragraph 7#a77;,a71 but by only taking into account the amount of such net operating loss 7and the amount of the net start-up loss7 which is allocable under paragraph 7#a77;,b7 to the period described in such paragraph4 ,proper adjustment in the allocation of the net start-up loss under the preceding sentence shall be made in the case of a taxable year to which subparagraph 7,c77ii7 applies4 7,e7 ,application to taxable years which are start-up period taxable years with respect to more than #a trade or business ,in the case of any net operating loss carryforward which arose in a taxable year which is a start-up period taxable year with respect to more than #a trade or business-- 7i7 this paragraph shall be applied separately with respect to each such trade or business1 and 7ii7 the aggregate reductions under subparagraph 7,a7 shall not exceed such net operating loss carryforward4 7,f7 ,continuity of business requirement ,if the new loss corporation does not continue the trade or business referred to in subparagraph 7,b77i7 at all times during the #b-year period beginning on the change date1 this paragraph shall not apply with respect to such trade or business4 7,g7 ,certain title #aa or similar cases 7i7 ,multiple ownership changes ,in the case of a #bnd ownership change to which subsection 7l77#e77;,d7 applies1 this paragraph shall not apply for purposes of determining the pre-change loss with respect to such #bnd ownership change4 7ii7 ,certain insolvency transactions ,if subsection 7l77#f7 applies for purposes of determining the value of the old loss corporation under subsection 7e71 this paragraph shall not apply4 7,h7 ,not applicable to disallowed interest ,this paragraph shall not apply for purposes of applying the rules of paragraph 7#a7 to the carryover of disallowed interest under paragraph 7#c74 7,i7 ,transition rule ,this paragraph shall not apply with respect to any trade or business if the date on which such trade or business begins as an active trade or business 7as determined under section #aie7;d77#b7 without regard to subparagraph 7,b7 thereof7 is on or before ,may #ca1 #bjbj4 4 7b7 ,application to excess credits ,section #chc of such ,code is amended by redesignating subsection 7e7 as subsection 7f7 and by inserting after subsection 7d7 the following new subsection3 7e7 ,exception for start-,up excess credits 7#a7 ,in general ,in the case of any unused general business credit of the corporation under section #ci which arose in a start-up period taxable year1 the amount of such unused general business credit otherwise taken into account under subsection 7a77#b77;,a7 shall be reduced by the start-up excess credit determined with respect to any trade or business referred to in section #chb7;d77#d77;,b77i7 for such start-up period taxable year4 7#b7 ,start-up period taxable year ,for purposes of this subsection1 the term start-up period taxable year has the meaning given such term in section #chb7;d77#d77;,b74 7#c7 ,start-up excess credit ,for purposes of this subsection1 the term start-up excess credit means1 with respect to any trade or business referred to in section #chb7;d77#d77;,b77i7 for any start-up period taxable year1 the amount which bears the same ratio to the unused general business credit which arose in such start-up period taxable year as-- 7,a7 the amount of the general business credit which would have been determined for such start-up period taxable year if only credits properly allocable to such trade or business were taken into account1 bears to 7,b7 the amount of the general business credit determined for such start-up period taxable year4 7#d7 ,application of certain rules ,rules similar to the rules of subparagraphs 7,c77ii71 7,d71 7,e71 and 7,f7 of section #chb7;d77#d7 shall apply for purposes of this subsection4 7#e7 ,transition rule ,this subsection shall not apply with respect to any trade or business if the date on which such trade or business begins as an active trade or business 7as determined under section #aie7;d77#b7 without regard to subparagraph 7,b7 thereof7 is on or before ,may #ca1 #bjbj4 4 7c7 ,effective date ,the amendments made by this section shall apply to taxable years ending after ,may #ca1 #bjbj4 #d4 ,budgetary effects 7a7 ,statutory ,,paygo scorecards ,the budgetary effects of this ,act shall not be entered on either ,,paygo scorecard maintained pursuant to section #d7;d7 of the ,statutory ,pay-,as-,you-,go ,act of #bjaj4 7b7 ,senate ,,paygo scorecards ,the budgetary effects of this ,act shall not be entered on any ,,paygo scorecard maintained for purposes of section #dajf of ,h4 ,con4 ,res4 #ga 7#aaeth ,congress74