,,ii  #aaf? ,,congress  #a/ ,session    
,s4 #bgch  ,,9 ,,! ,,s5ate ,,( ,,!      
,,unit$ ,,/ates  ,octob] #cj1 #bjai,mr4 
,wyd5 introduc$ ! foll[+ bill2 :i* 0    
read twice & ref]r$ to ! ,committee on  
,f9ance  ,a ,,bill  ,to am5d ! ,int]nal 
,rev5ue ,code ( #aihf to provide a tax  
cr$it = angel inve/ors 9 />t-up         
bus9esses1 to provide a cr$it = wages   
paid by />t-up bus9esses to _! fir/     
employees1 & = o!r purposes4  #a4 ,%ort 
title ,?is ,act may be cit$ z ! ,provid+
 ,real ,opportunities = ,gr[? to ,ris+  
,entrepr5eurs = ,su/a9$ ,success        
7,,progress7 ,act4  #b4 ,angel ,inve/or 
,tax ,cr$it  7a7 ,9 g5]al ,subp>t ,d (  
"p ,,iv ( sub*apt] ,a ( *apt] #a ( !    
,int]nal ,rev5ue ,code ( #aihf is am5d$ 
by add+ at ! end ! foll[+ new section3  
#de,t4 ,angel ,inve/or ,tax ,cr$it  7a7 
,g5]al ,rule ,= purposes ( section #ch1 
! angel inve/or cr$it det]m9$ "u ?is    
section = any taxable ye> is an am\nt   
equal to ! sum ( ! cr$it am\nts det]m9$ 
= ! taxable ye> = all qualifi$ inve/m5ts

 ( ! taxpay]4  7b7 ,cr$it am\nt ,=      
purposes ( ?is section-- 7#a7 ,9 g5]al  
,! t]m cr$it am\nt means1 ) respect to  
any qualifi$ inve/m5t 9 a qualify+      
bus9ess entity1 ! less] (--  7,a7 #aj   
p]c5t ( ! am\nt ( ! qualifi$ inve/m5t   
det]m9$ "u subsection 7c77#c7 = !       
taxable ye>1 or  7,b7 an am\nt equal    
to-- 7i7 #ej p]c5t ( su* qualifi$       
inve/m5t1 r$uc$ 7b n bel[ z]o7 by  7ii7 
! am\nt ( ! cr$it det]m9$ "u ?is section
 ) respect to su* qualifi$ inve/m5t ( ! 
taxpay] = all prec$+ taxable ye>s4  7#b7
 ,ov]all doll> limitation  7,a7 ,9 g5]al
 ,! cr$it am\nt det]m9$ "u p>agraph 7#a7
 ) respect to any qualifi$ inve/m5t ( a 
taxpay] 9 a qualify+ bus9ess entity =   
any taxable ye> %all n exce$ ! less] (--
  7i7 #aj1jjj 7z increas$ = ! taxable   
ye> by ! co/-(-liv+ adju/m5t "u         
subsection 7e77#b771 or  7ii7 an am\nt  
equal to-- 7,i7 an am\nt equal to #e    
times ! am\nt "u clause 7i7 = ! taxable 
ye>1 r$uc$ 7b n bel[ z]o7 by  7,,ii7 !  
am\nt ( ! cr$it det]m9$ "u ?is section )

 respect to su* qualifi$ inve/m5t ( !   
taxpay] = all prec$+ taxable ye>s4  7,b7
 ,no cr$it am\nt by reason ( co/-(-liv+ 
adju/m5t aft] ov]all limit fir/ rea*$   
,no cr$it am\nt %all be det]m9$ "u ?is  
section ) respect to any qualifi$       
inve/m5t ( a taxpay] 9 a qualify+       
bus9ess entity = any taxable ye> aft] ! 
fir/ taxable ye> = :i* ! am\nt det]m9$  
"u subclause 7,,ii7 ( subp>agraph       
7,a77ii7 equals or exce$s ! am\nt       
det]m9$ "u subclause 7,i7 ( su*         
subp>agraph4  7#c7 ,r$uction 9 cr$it    
am\nt :]e loan rate exce$s prime rate   
7,a7 ,9 g5]al ,if-- 7i7 ! rate ( int]e/ 
7express$ z an annual p]c5tage rate7 on 
a qualifi$ inve/m5t :i* is a qualify+   
loan1 exce$s  7ii7 ! bank prime rate z (
 ! fir/ day ( ! mon? 9 :i* ! loan is    
ent]$ into 7or su* o!r "t z ! ,secret>y 
may specify71  !n ea* ( ! am\nts det]m9$
 "u subp>agraphs 7,a7 & 7,b77i7 (       
p>agraph 7#a7 %all be r$uc$ 7b n bel[   
z]o7 by ! am\nt :i* be>s ! same ratio to
 su* am\nt z ! numb] ( full p]c5tage    

po9ts by :i* su* rate ( int]e/ exce$s   
su* bank prime rate be>s to #be4  7,b7  
,special rules :]e qualify+ loans treat$
 z "p ( s+le inve/m5t ,if #a or m       
qualify+ loans to :i* subp>agraph 7,a7  
applies are treat$ z "p ( a s+le        
qualifi$ inve/m5t "u subsection 7c77#a71
 !n1 = purposes ( ?is subsection--  7i7 
! cr$it am\nt "u p>agraph 7#a7 = su*    
s+le qualifi$ inve/m5t %all be ! sum (  
su* cr$it am\nts comput$ sep>ately = ea*
 su* qualify+ loan & su* cr$it am\nt    
comput$ = all o!r qualifi$ inve/m5ts    
treat$ z "p ( su* s+le qualifi$         
inve/m5t1 &  7ii7 ! limitation "u       
p>agraph 7#b7 %all be appli$ to su* sum4
  7,c7 ,rules relat+ to int]e/ rates    
7i7 ,annual p]c5tage rate ,! ,secret>y  
%all prescribe guidance or regulations =
 ! calculation ( ! annual p]c5tage rate 
( int]e/ on a loan = purposes (         
subp>agraph 7,a77i71 includ+ rules :i*  
provide =--  7,i7 ! calculation ( !     
annual p]c5tage rate 9 cases :]e !re is 
a v>iable rate ( int]e/1  7,,ii7 !      

recalculation ( ! annual p]c5tage rate  
:]e ! t]ms ( ! loan are modifi$ aft] !  
loan is ent]$ into1 &  7,,iii7 ! prop]  
tak+ into acc\nt ( lump sum paym5ts1    
ori5tation & application fees1 clos+    
fees1 invoice disc\nt+ fees1 & any o!r  
loan fees4  7ii7 ,bank prime rate ,=    
purposes ( subp>agraph 7,a77ii71 ! t]m  
bank prime rate means ! av]age pr$om9ant
 prime rate quot$ by comm]cial banks to 
l>ge bus9esses1 z det]m9$ by ! ,bo>d (  
,gov]nors ( ! ,f$]al ,res]ve ,sy/em4    
7#d7 ,special rules = pass-?ru entities 
,= purposes ( ?is subsection1 if a      
qualifi$ inve/m5t 9 a qualify+ bus9ess  
entity is made by a p>tn]%ip1 tru/1 ,s  
corporation1 or o!r pass-?ru entity1 !  
limitations "u ?is subsection ) respect 
to ! qualifi$ inve/m5t %all apply at !  
p>tn]%ip or o!r entity level & n at !   
p>tn] or simil> level4  7c7 ,qualifi$   
inve/m5t ,= purposes ( ?is section--    
7#a7 ,9 g5]al ,! t]m qualifi$ inve/m5t  
means1 ) respect to any qualify+ bus9ess
 entity1 ei!r ( ! foll[+ ( ! taxpay]3   

7,a7 ,! direct or indirect acquisition (
 /ock1 or a capital int]e/1 9 ! entity  
at its orig9al issue solely 9 ex*ange = 
ca%4  7,b7 ,a qualify+ loan made to !   
entity4  ,if a taxpay] has or _h m ?an  
#a qualifi$ inve/m5t 9 any qualify+     
bus9ess entity = ! taxable ye> or any   
prior taxable ye>1 all su* inve/m5ts    
%all be treat$ z a s+le qualifi$        
inve/m5t = purposes ( apply+ ?is        
section4  7#b7 ,exception = inve/m5ts   
made by qualifi$ active inve/ors &      
relat$ p]sons ,su* t]m %all n include   
any acquisition or loan made by a       
taxpay] :o1 imm$iately be=e !           
acquisition or loan1 is a qualifi$      
active inve/or 9 ! qualify+ bus9ess     
entity or is relat$ to any qualifi$     
active inve/or4  7#c7 ,am\nt ( qualifi$ 
inve/m5t ,! am\nt ( a taxpay]'s qualifi$
 inve/m5t ) respect to any qualify+     
bus9ess entity = any taxable ye> %all be
 ! mon?ly av]age = mon?s end+ )9 !      
taxable ye> (--  7,a7 ! taxpay]'s       
aggregate unadju/$ bases 9 all /ock or  

int]e/s describ$ 9 p>agraph 7#a77;,a7 z 
( ! close ( ea* su* mon?1 &  7,b7 !     
aggregate out/&+ pr9cipal am\nt ( all   
qualifi$ loans describ$ 9 p>agraph      
7#a77;,b7 z ( ! close ( ea* su* mon?4   
7#d7 ,special rules = transf]s (        
qualify+ loans  7,a7 ,9 g5]al ,if a     
taxpay] sells1 ex*anges1 or o!rwise     
transf]s all or any portion ( a qualify+
 loan :i* is a qualifi$ inve/m5t 9 a    
qualify+ bus9ess entity1 su* inve/m5t   
%all be treat$ z a qualifi$ inve/m5t 9 !
 h&s ( ! transf]ee 7& n ( ! transf]or7 =
 p]iods aft] ! transf]4 ,?is p>agraph   
%all also apply to any subsequ5t transf]
 ( su* int]e/4  7,b7 ,coord9ation (     
limits ,9 apply+ subsection 7b7 to any  
qualify+ loan treat$ z a qualifi$       
inve/m5t ( a transf]ee "u ?is p>agraph--
  7i7 all cr$its det]m9$ "u ?is section 
= any p]iods be=e ! transf] ) respect to
 ! qualifi$ inve/m5t ( any prior hold] (
 su* inve/m5t %all be tak5 into acc\nt  
"u p>agraphs 7#a77;,b77ii7 &            
7#b77;,a77ii77,,ii7 ( su* subsection 9 !

 same mann] z if su* cr$its 7 det]m9$ = 
! transf]ee = prior taxable ye>s1 &     
7ii7 if only a portion ( ! qualifi$     
inve/m5t 0 transf]r$1 ! am\nt tak5 into 
acc\nt "u su* p>agraphs by reason (     
clause 7i7 %all be ratably r$uc$ to     
reflect only ! portion s transf]r$4  7d7
 ,qualify+ bus9ess entity ,= purposes ( 
?is section-- 7#a7 ,def9ition  7,a7 ,9  
g5]al ,! t]m qualify+ bus9ess entity    
means1 ) respect to any qualifi$        
inve/m5t1 any entity :i* is engag$ 9 !  
active conduct ( #a or m trades or      
bus9esses & ) respect to :i*--  7i7 !   
qualifi$ active inve/or own]%ip         
requirem5ts ( p>agraph 7#b7 are met     
imm$iately be=e & aft] ! qualifi$       
inve/m5t1  7ii7 ! wage requirem5ts (    
p>agraph 7#c7 are met1 &  7iii7 !       
c]tification requirem5ts ( p>agraph 7#d7
 are met4  7,b7 ,entities "u common     
control ,= purposes ( ?is section1 all  
qualify+ bus9ess entities treat$ z a    
s+le employ] "u subsection 7a7 or 7b7 ( 
section #eb or subsection 7m7 or 7o7 (  

section #dad %all be treat$ z a s+le    
qualify+ bus9ess entity4  7#b7 ,qualifi$
 active inve/or own]%ip requirem5ts ,!  
requirem5ts ( ?is p>agraph are met )    
respect to any entity if qualifi$ active
 inve/ors own directly or indirectly--  
7,a7 9 ! case ( a corporation1 m ?an #ej
 p]c5t 7by vote & value7 ( ! /ock 9 !   
corporation1 &  7,b7 9 ! case ( any o!r 
entity1 m ?an #ej p]c5t ( ! capital or  
pr(its int]e/s 9 ! entity4  7#c7 ,wage  
requirem5ts  7,a7 ,9 g5]al ,!           
requirem5ts ( ?is p>agraph are met )    
respect to any entity if ! entity1 dur+ 
! taxable ye> ( ! entity prec$+ !       
taxable ye> 9 :i* ! qualifi$ inve/m5t is
 made--  7i7 employ$ at lea/ #a full-"t 
employee1 or employees con/itut+ a      
full-"t equival5t employee1 9 #a or m   
trades or bus9esses actively conduct$ by
 ! entity1 &  7ii7 paid ,w-#b wages to  
su* employee or employees ) respect to  
su* employm5t4  7,b7 ,c]ta9 wages n tak5
 into acc\nt ,w-#b wages %all n be tak5 
into acc\nt "u subp>agraph 7,a7 if paid 

by an entity to an employee1 & su*      
employee %all n be tak5 into acc\nt "u  
subp>agraph 7,a77i71 dur+ any p]iod !   
employee is--  7i7 a qualifi$ active    
inve/or1 or  7ii7 an employee o!r ?an a 
qualifi$ active inve/or :o is a #e-p]c5t
 own] 7z def9$ 9 section                
#daf7;i77#a77;,b77i77 ( ! entity4  7,c7 
,w-#b wages ,! t]m ,w-#b wages means1 ) 
respect to any entity1 ! am\nts describ$
 9 p>agraphs 7#c7 & 7#h7 ( section      
#fjea7;a7 paid by ! entity ) respect to 
employm5t ( employees by ! entity4 ,su* 
t]m %all n include any am\nt :i* is n   
prop]ly includ$ 9 a return fil$ ) !     
,social ,security ,adm9i/ration on or   
be=e ! #fj? day aft] ! due date 7includ+
 ext5sions7 = su* return4  7,d7 ,full-"t
 employees & equival5ts ,= purposes (   
?is p>agraph-- 7i7 ! t]m full-"t        
employee has ! mean+ giv5 to su* t]m by 
section #dihj;,h7c77#d71 &  7ii7 !      
det]m9ation ( ! numb] ( employees       
con/itut+ a full-"t equival5t %all be   
made 9 ! same mann] z "u section        

#dihj;,h7c77#b77;,e74  7#d7             
,c]tification requirem5ts  7,a7 ,9 g5]al
 ,! requirem5ts ( ?is p>agraph are met )
 respect to any entity if ! entity      
c]tifies1 9 su* =m & mann] & at su* "t z
 ! ,secret>y may prescribe1 t1 at ! "t (
 ! qualifi$ inve/m5t1 ! entity--  7i7 is
 engag$ 9 ! active conduct ( #a or m    
trades or bus9esses1 &  7ii7 meets !    
requirem5ts ( p>agraphs 7#b7 & 7#c7 to  
be treat$ z a qualify+ bus9ess entity4  
7,b7 ,c]tification provid$ to inve/ors &
 ,secret>y ,an entity %all-- 7i7 provide
 ! c]tification "u subp>agraph 7,a7 to !
 p]son mak+ ! qualifi$ inve/m5t at ! "t 
su* inve/m5t is made1 &  7ii7 include   
su* c]tification1 & ! names1 addresses1 
& taxpay] id5tification numb]s ( !      
entity's qualifi$ active inve/ors & !   
p]sons mak+ ! qualifi$ inve/m5t1 ) its  
return ( tax = ! taxable ye> :i*        
includes ! date ( ! qualifi$ inve/m5t4  
7,c7 ,c]tification includ$ ) return     
claim+ cr$it ,no cr$it %all be det]m9$  
"u subsection 7a7 ) respect to any      

taxpay] mak+ a qualifi$ inve/m5t 9 a    
qualify+ bus9ess entity unless ! taxpay]
 includes ! c]tification "u subp>agraph 
7,a7 ) respect to ! inve/m5t ) its      
return ( tax = any taxable ye> = :i* su*
 cr$it is be+ claim$4  7,d7 ,timely fil$
 return requir$ ,! requirem5ts (        
subp>agraph 7,b77ii7 or 7,c7 %all be    
treat$ z met only if ! return describ$ 9
 su* subp>agraph is fil$ on or be=e its 
due date 7includ+ ext5sions74  7#e7     
,qualifi$ active inve/or  7,a7 ,9 g5]al 
,! t]m qualifi$ active inve/or means1 ) 
respect to any entity1 an individual    
:o-- 7i7 is a citiz5 or resid5t ( !     
,unit$ ,/ates1  7ii7 mat]ially          
p>ticipates 7)9 ! mean+ ( section       
#dfi7;h77 9 #a or m trades or bus9esses 
actively conduct$ by ! entity1  7iii7   
holds /ock1 or a capital or pr(its      
int]e/1 9 ! entity1 &  7iv7 meets !     
income requirem5ts ( subp>agraph 7,b74  
7,b7 ,income requirem5ts ,! requirem5ts 
( ?is subp>agraph are met ) respect to  
an individual if ! av]age annual taxable

 income ( ! individual = ! #c taxable   
ye>s ( ! individual imm$iately prec$+ ! 
taxable ye> 9 :i* ! qualifi$ inve/m5t is
 made does n exce$ ! applicable am\nt4  
7,c7 ,applicable am\nt ,= purposes ( ?is
 p>agraph1 ! t]m applicable am\nt means1
 ) respect to any taxable ye> 9 :i* a   
qualifi$ inve/m5t is made-- 7i7 9 ! case
 ( an individual n describ$ 9 clause    
7ii71 #ajj1jjj 7z increas$ = ! taxable  
ye> by ! co/-(-liv+ adju/m5t "u         
subsection 7e77#b771 &  7ii7 9 ! case ( 
an individual :o is a m>ri$ individual  
fil+ a jo9t return or :o is a head (    
h\sehold 7z def9$ 9 section #b7;b77 = ! 
taxable ye>1 an am\nt equal to #b times 
! am\nt 9 effect "u clause 7i7 = !      
taxable ye>4  7,d7 ,rules = det]m9+     
av]age taxable income ,= purposes ( ?is 
p>agraph-- 7i7 a m>ri$ individual fil+ a
 sep>ate return ( tax = any taxable ye> 
%all include ! taxable income ( _! sp\se
 9 comput+ ! individual's av]age taxable
 income = any p]iod unless ! ,secret>y  
det]m9es t ! sp\se's in=mation is n     

available to ! individual1 &  7ii7 !    
,secret>y %all prescribe rules = !      
det]m9ation ( av]age taxable income 9   
cases :]e ! individual _h diff]5t fil+  
/atuses = ! #c taxable ye>s describ$ 9  
subp>agraph 7,b74  7e7 ,def9itions &    
special rules ,= purposes ( ?is         
section-- 7#a7 ,relat$ p]sons ,a p]son  
%all be treat$ z relat$ to ano!r p]son  
if ! p]son be>s a relation%ip to su* o!r
 p]son describ$ 9 section #bfg7;b71     
except t section #bfg7;b7 %all be appli$
 by sub/itut+ #e p]c5t = #ej p]c5t ea*  
place x appe>s4  7#b7 ,co/-(-liv+       
adju/m5ts ,9 ! case ( any taxable ye>   
beg9n+ aft] #bjbj1 ! #aj1jjj am\nt "u   
subsection 7b77#b77;,a77i7 & ! #ajj1jjj 
am\nt "u subsection 7d77#e77;,c77i7 %all
 ea* be increas$ by an am\nt equal to-- 
7,a7 su* doll> am\nt1 multipli$ by  7,b7
 ! co/-(-liv+ adju/m5t "u section       
#a7;f77#c7 = ! cal5d> ye> 9 :i* !       
taxable ye> beg9s1 det]m9$ by sub/itut+ 
#bjai = #bjaf 9 subp>agraph 7,a77ii7    
!re(4  ,if any increase 9 su* #aj1jjj   

am\nt is n a multiple ( #ajj1 su*       
increase %all be r\nd$ to ! next l[e/   
multiple ( #ajj & if any increase 9 su* 
#ajj1jjj am\nt is n a multiple ( #a1jjj1
 su* increase %all be r\nd$ to ! next   
l[e/ multiple ( #a1jjj4  7#c7 ,rules    
relat+ to entities  7,a7 ,sole          
proprietor%ips ,if a taxpay] c>ries on  
#a or m trades or bus9esses z sole      
proprietor%ips1 all su* trades or       
bus9esses %all be treat$ z a s+le entity
 = purposes ( apply+ ?is section4  7,b7 
,application to disreg>d$ entities ,9 ! 
case ( any entity ) a s+le own] :i* is  
disreg>d$ z an entity sep>ate f its own]
 = purposes ( ?is title1 ?is section    
%all be appli$ 9 ! same mann] z if su*  
entity 7 a corporation4  7f7            
,regulations ,! ,secret>y %all prescribe
 su* regulations or o!r guidance z may  
be necess>y to c>ry out ! provisions (  
?is section4  4  7b7 ,cr$it ,to be "p ( 
g5]al bus9ess cr$it ,section #ch7;b7 (  
su* ,code is am5d$ by /rik+ plus at !   
end ( p>agraph 7#ca71 by /rik+ ! p]iod  

at ! end ( p>agraph 7#cb7 & ins]t+ 1    
plus1 & by add+ at ! end ! foll[+ new   
p>agraph3  7#cc7 ! angel inve/or cr$it  
det]m9$ "u section #de,t7a74  4  7c7    
,cr$it all[$ aga9/ alt]native m9imum tax
 ,section #ch7;c77#d77;,b7 ( su* ,code  
is am5d$ by r$esignat+ clauses 7x71     
7xi71 & 7xii7 z clauses 7xi71 7xii71 &  
7xiii71 respectively1 & by ins]t+ aft]  
clause 7ix7 ! foll[+ new clause3  7x7 ! 
cr$it det]m9$ "u section #de,t1  4  7d7 
,cl]ical am5dm5t ,! table ( sections =  
subp>t ,d ( "p ,,iv ( sub*apt] ,a (     
*apt] #a ( su* ,code is am5d$ by add+ at
 ! end ! foll[+ new item3  ,sec4 #de,t4 
,angel inve/or tax cr$it4  4  7e7       
,effective date ,! am5dm5ts made by ?is 
section %all apply to qualifi$ inve/m5ts
 made 9 taxable ye>s beg9n+ aft]        
,decemb] #ca1 #bjai4  #c4 ,fir/         
,employee ,bus9ess ,wage ,cr$it  7a7    
,all[ance ( cr$it  7#a7 ,9 g5]al ,subp>t
 ,d ( "p ,,iv ( sub*apt] ,a ( *apt] #a (
 ! ,int]nal ,rev5ue ,code ( #aihf1 z    
am5d$ by section #b1 is am5d$ by add+ at

 ! end ! foll[+ new section3  #de,u4    
,fir/ ,employee ,bus9ess ,wage ,cr$it   
7a7 ,g5]al ,rule ,= purposes ( section  
#ch1 9 ! case ( a qualify+ bus9ess      
entity1 ! fir/ employee bus9ess wage    
cr$it det]m9$ "u ?is section = any      
taxable ye> is an am\nt equal to #be    
p]c5t ( ! qualifi$ wages ( ! entity = ! 
taxable ye>4  7b7 ,doll> limitations    
7#a7 ,9 g5]al ,! am\nt ( ! cr$it det]m9$
 "u subsection 7a7 ) respect to any     
qualify+ bus9ess entity = any taxable   
ye> %all n exce$ ! less] (--  7,a7      
#aj1jjj 7z increas$ = ! taxable ye> by !
 co/-(-liv+ adju/m5t "u subsection 7f771
 or  7,b7 ! excess 7if any7 (-- 7i7 an  
am\nt equal to #d times ! am\nt "u      
subp>agraph 7,a7 = ! taxable ye>1 ov]   
7ii7 ! am\nt ( ! cr$it det]m9$ "u ?is   
section ) respect to su* entity = all   
prec$+ taxable ye>s4  7#b7 ,no cr$it by 
reason ( co/-(-liv+ adju/m5t aft] ov]all
 limit fir/ rea*$ ,no cr$it %all be     
det]m9$ "u ?is section ) respect to any 
qualify+ bus9ess entity = any taxable   

ye> aft] ! fir/ taxable ye> = :i* !     
am\nt det]m9$ "u clause 7ii7 ( p>agraph 
7#a77;,b7 equals or exce$s ! am\nt      
det]m9$ "u clause 7i7 ( su* p>agraph4   
7#c7 ,pass-?ru entities ,if a qualify+  
bus9ess entity is a p>tn]%ip1 tru/1 ,s  
corporation1 or o!r pass-?ru entity1 !  
limitations "u ?is subsection %all apply
 at ! p>tn]%ip or o!r entity level & n  
at ! p>tn] or simil> level4  7c7        
,qualifi$ wages ,= purposes ( ?is       
section-- 7#a7 ,9 g5]al ,! t]m qualifi$ 
wages means1 ) respect to any qualify+  
bus9ess entity1 ! am\nt ( ,w-#b wages   
paid or incurr$ dur+ any eligible       
taxable ye> to employees = s]vices p]=m$
 9 connection ) ! active conduct ( a    
trade or bus9ess by ! entity4  7#b7     
,exception = qualifi$ active inve/ors & 
#e-p]c5t own]-employees ,w-#b wages %all
 n be tak5 into acc\nt "u p>agraph 7#a7 
if paid by an entity to an employee1 &  
su* employee %all n be tak5 into acc\nt 
"u p>agraph 7#c77;,a71 dur+ any p]iod ! 
employee is--  7,a7 a qualifi$ active   

inve/or1 or  7,b7 an employee o!r ?an a 
qualifi$ active inve/or :o is a #e-p]c5t
 own] 7z def9$ 9 section                
#daf7;i77#a77;,b77i77 ( ! entity4  7#c7 
,eligible taxable ye>  7,a7 ,9 g5]al ,! 
t]m eligible taxable ye> means any      
taxable ye> ( a qualify+ bus9ess        
entity-- 7i7 :i* occurs dur+ ! p]iod--  
7,i7 beg9n+ ) ! fir/ taxable ye> ( !    
entity 9 :i* ! entity employ$ at lea/ #a
 full-"t employee 7or employees         
con/itut+ a full-"t equival5t employee7 
9 #a or m trades or bus9esses actively  
conduct$ by ! entity dur+ ! taxable ye> 
& paid ,w-#b wages to su* employee or   
employees ) respect to su* employm5t1 & 
7,,ii7 end+ ) ! la/ taxable ye> = :i* a 
cr$it may be det]m9$ = ! entity "u ?is  
section by reason ( ! limitation "u     
subsection 7b77#b71 &  7ii7 9 ! case ( a
 taxable ye> o!r ?an ! fir/ taxable ye> 
describ$ 9 clause 7i77,i71 ) respect to 
:i* ! entity meets ! employm5t & wage   
requirem5ts ( su* clause4  ,su* t]m %all
 n include any taxable ye> dur+ su* a   

p]iod if ! fir/ taxable ye> describ$ 9  
clause 7i77,i7 ( ! entity 7or any       
pr$ecessor7 beg9s be=e ,janu>y #a1      
#bjbj4  7,b7 ,w-#b wages2 full-"t       
employees ,= purposes ( ?is subsection1 
,w-#b wages1 full-"t employees1 &       
full-"t employee equival5ts %all be     
det]m9$ 9 ! same mann] z "u section     
#de,t4  7d7 ,qualify+ bus9ess entity ,= 
purposes ( ?is section-- 7#a7 ,qualify+ 
bus9ess entity def9$  7,a7 ,9 g5]al ,!  
t]m qualify+ bus9ess entity means1 )    
respect to any taxable ye> = :i* a cr$it
 "u ?is section is be+ det]m9$1 any     
entity--  7i7 :i* is engag$ 9 ! active  
conduct ( #a or m trades or bus9esses1  
7ii7 ) respect to :i* ! qualifi$ active 
inve/or own]%ip requirem5ts ( p>agraph  
7#b7 ( section #de,t7d7 are met z ( !   
close ( su* taxable ye> 7r ?an          
imm$iately be=e & aft] ! qualifi$       
inve/m5t71 &  7iii7 ) respect to :i* !  
c]tification requirem5ts ( p>agraph 7#b7
 are met4  7,b7 ,entities "u common     
control ,= purposes ( ?is section-- 7i7 

,9 g5]al ,all qualify+ bus9ess entities 
treat$ z a s+le employ] "u subsection   
7a7 or 7b7 ( section #eb or subsection  
7m7 or 7o7 ( section #dad %all be treat$
 z a s+le qualify+ bus9ess entity4  7ii7
 ,allocation ( cr$it ,except z provid$ 9
 regulations1 ! cr$it "u ?is section    
%all be allocat$ among ! entities       
compris+ ! s+le entity describ$ 9 clause
 7i7 9 proportion to ! qualifi$ wages ( 
ea* su* entity tak5 into acc\nt "u      
subsection 7a74  7#b7 ,c]tification     
requirem5ts  7,a7 ,9 g5]al ,!           
requirem5ts ( ?is p>agraph are met )    
respect to any entity = any taxable ye> 
describ$ 9 p>agraph 7#a7 if ! entity    
c]tifies1 9 su* =m & mann] & at su* "t z
 ! ,secret>y may prescribe1 t ! entity  
meets ! requirem5ts describ$ 9 clauses  
7i7 & 7ii7 ( p>agraph 7#a77;,a74  7,b7  
,c]tification provid$ to ,secret>y ,an  
entity %all include ! c]tification "u   
subp>agraph 7,a71 & ! names1 addresses1 
& taxpay] id5tification numb]s ( !      
entity's qualifi$ active inve/ors 7&    

employees :o are #e-p]c5t own]s describ$
 9 subsection 7c77#b77;,b771 ) its      
return ( tax = ! taxable ye> to :i* !   
c]tification relates4 ,! requirem5t (   
?is subp>agraph is met only if su*      
return is fil$ be=e its due date        
7includ+ ext5sions74  7#c7 ,qualifi$    
active inve/or ,= purposes ( ?is section
 7includ+ apply+ ! requirem5ts (        
p>agraph 7#b7 ( section #de,t7d7 =      
purposes ( p>agraph 7#a77;,a77ii771 !   
t]m qualifi$ active inve/or has ! same  
mean+ giv5 su* t]m by section           
#de,t7d77#e71 except t su* section %all 
be appli$ sep>ately = ea* taxable ye>   
describ$ 9 p>agraph 7#a7 7r ?an !       
taxable ye> ( ! qualifi$ inve/m5t74  7e7
 ,election ,to apply cr$it aga9/ payroll
 taxes  7#a7 ,9 g5]al ,at ! election ( a
 qualify+ bus9ess entity1 section       
#caaa7;g7 %all apply to ! payroll tax   
cr$it portion ( ! cr$it o!rwise det]m9$ 
"u subsection 7a7 = ! taxable ye> & su* 
portion %all n be treat$ 7o!r ?an =     
purposes ( section #bhj;,c7 z a cr$it   

det]m9$ "u subsection 7a74  7#b7        
,payroll tax cr$it portion ,= purposes (
 ?is subsection1 ! payroll tax cr$it    
portion ( ! cr$it det]m9$ "u subsection 
7a7 ) respect to any qualify+ bus9ess   
entity = any taxable ye> is ! lea/ (--  
7,a7 ! am\nt specifi$ 9 ! election made 
"u ?is subsection1  7,b7 ! cr$it det]m9$
 "u subsection 7a7 = ! taxable ye>      
7det]m9$ be=e ! application ( ?is       
subsection71 or  7,c7 9 ! case ( a      
qualify+ bus9ess entity o!r ?an a       
p>tn]%ip1 e/ate1 ,s corporation or o!r  
pass-?ru entity1 ! am\nt ( ! bus9ess    
cr$it c>ry=w>d "u section #ci c>ri$ f ! 
taxable ye> 7det]m9$ be=e ! application 
( ?is subsection to ! taxable ye>74     
7#c7 ,election  7,a7 ,9 g5]al ,any      
election "u ?is subsection = any taxable
 ye>-- 7i7 %all specify ! am\nt ( !     
cr$it to :i* su* election applies1  7ii7
 %all be made on or be=e ! due date     
7includ+ ext5sions7 ( ! return = !      
taxable ye>1 &  7iii7 may be revok$ only
 ) ! cons5t ( ! ,secret>y4  7,b7        

,special rule = pass-?ru entities ,9 !  
case ( a p>tn]%ip1 e/ate1 ,s            
corporation1 or o!r pass-?ru entity1 !  
election made "u ?is subsection %all be 
made at ! entity level4  7f7 ,co/-(-liv+
 adju/m5ts ,9 ! case ( any taxable ye>  
beg9n+ aft] #bjbj1 ! #aj1jjj am\nt "u   
subsection 7b77#a77;,a7 %all be increas$
 by an am\nt equal to--  7#a7 su* doll> 
am\nt1 multipli$ by  7#b7 ! co/-(-liv+  
adju/m5t "u section #a7;f77#c7 = !      
cal5d> ye> 9 :i* ! taxable ye> beg9s1   
det]m9$ by sub/itut+ #bjai = #bjaf 9    
subp>agraph 7,a77ii7 !re(4  ,if any     
increase 9 su* am\nt is n a multiple (  
#ajj1 su* increase %all be r\nd$ to !   
next l[e/ multiple ( #ajj4  7g7 ,o!r    
rules ,= purposes ( ?is section-- 7#a7  
,rules relat+ to entities ,rules simil> 
to ! rules ( section #de,t7e77#c7 %all  
apply4  7#b7 ,election n to h cr$it     
apply  7,a7 ,9 g5]al ,a taxpay] may     
elect n to h ?is section apply = any    
taxable ye>4  7,b7 ,o!r rules ,rules    
simil> to ! rules ( p>agraphs 7#b7 &    

7#c7 ( section #ea7;j7 %all apply =     
purposes ( ?is p>agraph4  7#c7 ,c]ta9   
o!r rules made applicable ,rules simil> 
to ! rules ( subsections 7c71 7d71 & 7e7
 ( section #eb %all apply4  7h7         
,regulations ,! ,secret>y %all prescribe
 su* regulations or o!r guidance z may  
be necess>y to c>ry+ out ! provisions ( 
?is section1 includ+ regulations--  7#a7
 prev5t+ ! avoidance ( ! limitations "u 
?is section 9 cases 9 :i* !re is a      
successor or new qualifi$ bus9ess entity
 ) respect to ! same trade or bus9ess = 
:i* a pr$ecessor qualifi$ bus9ess entity
 already claim$ ! cr$it "u ?is section1 
7#b7 to m9imize compliance & recordkeep+
 burd5s "u ! provisions ( ?is section1 &
  7#c7 = recaptur+ ! b5efit ( cr$its    
det]m9$ "u section #caaa7;g7 9 cases :]e
 !re is a recapture or a subsequ5t      
adju/m5t to ! payroll tax cr$it portion 
( ! cr$it det]m9$ "u subsection 7a71    
includ+ requir+ am5d$ income tax returns
 9 ! cases :]e !re is su* an adju/m5t4  
4  7#b7 ,cr$it to be "p ( g5]al bus9ess 

cr$it ,section #ch7;b7 ( su* ,code1 z   
am5d$ by section #b1 is am5d$ by /rik+  
plus at ! end ( p>agraph 7#cb71 by /rik+
 ! p]iod at ! end ( p>agraph 7#cc7 &    
ins]t+ 1 plus1 & by add+ at ! end !     
foll[+ new p>agraph3  7#cd7 ! fir/      
employee bus9ess wage cr$it det]m9$ "u  
section #de,u7a74  4  7#c7 ,cr$it all[$ 
aga9/ alt]native m9imum tax ,section    
#ch7;c77#d77;,b7 ( su* ,code1 z am5d$ by
 section #b1 is am5d$ by r$esignat+     
clauses 7xi71 7xii71 & 7xiii7 z clauses 
7xii71 7xiii71 & 7xiv71 respectively1 & 
by ins]t+ aft] clause 7x7 ! foll[+ new  
clause3  7xi7 ! cr$it det]m9$ "u section
 #de,u1  4  7#d7 ,cl]ical am5dm5t ,!    
table ( sections = subp>t ,d ( "p ,,iv (
 sub*apt] ,a ( *apt] #a ( su* ,code1 z  
am5d$ by section #b1 is am5d$ by add+ at
 ! end ! foll[+ new item3  ,sec4 #de,u4 
,fir/ employee bus9ess wage cr$it4  4   
7b7 ,payroll tax cr$it ,section #caaa ( 
! ,int]nal ,rev5ue ,code ( #aihf is     
am5d$ by add+ at ! end ! foll[+ new     
subsection3  7g7 ,cr$it = fir/ employee 

bus9ess wage exp5ses  7#a7 ,9 g5]al ,9 !
 case ( a taxpay] :o has made an        
election "u section #de,u7e7 = a taxable
 ye>1 !re %all be all[$ z a cr$it aga9/ 
! tax impos$ by subsection 7a7 = ! fir/ 
cal5d> qu>t] :i* beg9s aft] ! date on   
:i* ! taxpay] files ! return = ! taxable
 ye> an am\nt equal to ! payroll tax    
cr$it portion det]m9$ "u section        
#de,u7e77#b74  7#b7 ,limitation ,! cr$it
 all[$ by p>agraph 7#a7 %all n exce$ !  
tax impos$ by subsection 7a7 = any      
cal5d> qu>t] on ! wages paid ) respect  
to ! employm5t ( all individuals 9 !    
employ ( ! employ]4  7#c7 ,c>ryov] (    
unus$ cr$it ,if ! am\nt ( ! cr$it "u    
p>agraph 7#a7 exce$s ! limitation (     
p>agraph 7#b7 = any cal5d> qu>t]1 su*   
excess %all be c>ri$ to ! succe$+ cal5d>
 qu>t] & all[$ z a cr$it "u p>agraph    
7#a7 = su* qu>t]4  7#d7 ,d$uction all[$ 
= cr$it$ am\nts ,not)/&+ section        
#bhj;,c7a71 ! cr$it all[$ "u p>agraph   
7#a7 %all n be tak5 into acc\nt =       
purposes ( det]m9+ ! am\nt ( any        

d$uction all[$ "u *apt] #a = taxes      
impos$ "u subsection 7a74  4  7c7       
,coord9ation ) d$uctions & o!r cr$its   
7#a7 ,d$uctions ,section #bhj;,c7a7 ( ! 
,int]nal ,rev5ue ,code ( #aihf is am5d$ 
by ins]t+ #de,u7a71 aft] #de,s7a714     
7#b7 ,o!r cr$its  7,a7 ,section         
#da7;b77#b77;,d7 ( su* ,code is am5d$ by
 add+ at ! end ! foll[+3  7iv7          
,exclusion = wages to :i* fir/ employee 
wage cr$it applies ,! t]m wages %all n  
include any am\nt tak5 into acc\nt 9    
det]m9+ ! cr$it "u section #de,u4  4    
7,b7 ,section #de;,a7b77#a7 ( su* ,code 
is am5d$ by add+ at ! end ! foll[+3     
7,c7 ,coord9ation ) fir/ employee wage  
cr$it ,! t]m qualifi$ wages %all n      
include wages if any portion ( su* wages
 is tak5 into acc\nt 9 det]m9+ ! cr$it  
"u section #de,u4  4  7,c7 ,section     
#acif7;c77#c7 ( su* ,code is am5d$-- 7i7
 by /rik+ section #ea ea* place x appe>s
 & ins]t+ section #de,u or #ea1 &  7ii7 
by ins]t+ & fir/ employee wage aft]     
opportunity 9 ! head+ !re(4  7d7        

,effective date ,! am5dm5ts made by ?is 
section %all apply to taxable ye>s      
beg9n+ aft] ,decemb] #ca1 #bjai4