,,ii  #aag? ,,congress  #a/ ,session    
,s4 #bchg  ,,9 ,,! ,,s5ate ,,( ,,!      
,,unit$ ,,/ates  ,july #bj1 #bjba,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 improve !      
d$uction = qualifi$ bus9ess income4  #a4
 ,%ort title ,?is ,act may be cit$ z !  
,small ,bus9ess ,tax ,fairness ,act4    
#b4 ,modifications to d$uction =        
qualifi$ bus9ess income  7a7 ,9 g5]al   
7#a7 ,eligibility  7,a7 ,d$uction limit$
 to individuals  7i7 ,9 g5]al ,section  
#aii;,a7a7 ( ! ,int]nal ,rev5ue ,code ( 
#aihf is am5d$ by /rik+ ,9 ! case ( a   
taxpay] o!r ?an a corporation & ins]t+  
,9 ! case ( an individual4  7ii7        
,application to tru/s & e/ates ,section 
( su* ,code is am5d$ by add+ at ! end ! 
foll[+ new subsection3  7j7 ,d$uction = 
qualifi$ bus9ess income ,no d$uction    
%all be all[$ "u section #aii;,a to an  
e/ate or tru/4  4  7,b7 ,m>ri$ taxpay]s 
mu/ file jo9t return ,section #aii;,a7f7

 ( su* ,code is am5d$ by r$esignat+     
p>agraph 7#d7 z p>agraph 7#e7 & by      
ins]t+ aft] p>agraph 7#c7 ! foll[+ new  
p>agraph3  7#d7 ,no d$uction = m>ri$    
individuals fil+ sep>ate returns ,if !  
taxpay] is a m>ri$ individual 7)9 !     
mean+ ( section #ggjc71 ?is section %all
 apply only if ! taxpay] & ! taxpay]'s  
sp\se file a jo9t return = ! taxable    
ye>4  4  7#b7 ,am\nt ( d$uction  7,a7   
,det]m9ation ( am\nt ,subsection 7a7 (  
section #aii;,a ( ! ,int]nal ,rev5ue    
,code ( #aihf is am5d$ by /rik+ an am\nt
 equal to ! less] ( & all t foll[s &    
ins]t+ an am\nt equal to #bj p]c5t ( !  
lea/ (-- 7#a7 ! qualifi$ bus9ess income 
( ! taxpay]1  7#b7 ! ?re%old am\nt1 or  
7#c7 ! taxable income ( ! taxpay] = !   
taxable ye> r$uc$ by ! net capital ga9  
7z def9$ 9 section #a7;h77 ( ! taxpay] =
 su* taxable ye>4  4  7,b7 ,modification
 ( ?re%old am\nt  7i7 ,9 g5]al ,section 
#aii;,a7e77#b7 ( ! ,int]nal ,rev5ue     
,code ( #aihf is am5d$ to read z foll[s3
  7#b7 ,?re%old am\nt ,! t]m ?re%old    

am\nt means #djj1jjj4  4  7,c7          
,limitations ,subsection 7b7 ( section  
#aii;,a ( su* ,code is am5d$ to read z  
foll[s3  7b7 ,limitations  7#a7         
,limitation bas$ on taxable income ,!   
am\nt ( ! d$uction all[$ "u subsection  
7a7 7det]m9$ )\t reg>d to ?is p>agraph7 
%all be r$uc$ 7b n bel[ z]o7 by an am\nt
 :i* be>s ! same ratio to su* am\nt z-- 
7,a7 ! excess ( ! taxpay]'s taxable     
income ov] ! ?re%old am\nt1 be>s to     
7,b7 #ajj1jjj4  7#b7 ,special rules )   
respect to income receiv$ f coop]atives 
,9 ! case ( any qualifi$ trade or       
bus9ess ( a patron ( a specifi$         
agricultural or horticultural           
coop]ative1 ! am\nt ( qualifi$ bus9ess  
income tak5 into acc\nt "u subsection   
7a77#a7 ) respect to su* trade or       
bus9ess %all be r$uc$ by ! less] (--    
7,a7 #i p]c5t ( s mu* ( ! qualifi$      
bus9ess income ) respect to su* trade or
 bus9ess z is prop]ly allocable to      
qualifi$ paym5ts receiv$ f su*          
coop]ative1 or  7,b7 #ej p]c5t ( s mu* (

 ! ,w-#b wages 7z def9$ 9 subsection    
7g77#a77 ) respect to su* trade or      
bus9ess z are s allocable4  4  7#c7     
,treatm5t ( qualifi$ ,,reit divid5ds    
7,a7 ,9 g5]al ,section #aii;,a7c7 ( su* 
,code is am5d$-- 7i7 by /rik+ ! la/     
s5t5ce 9 p>agraph 7#a7 & ins]t+ ,su* t]m
 %all include qualifi$ ,,reit divid5ds41
 &  7ii7 by ins]t+ 7o!r ?an a qualifi$  
,,reit divid5d7 aft] ,any divid5d 9     
p>agraph 7#c77;,b77ii74  7,b7 ,te*nical 
am5dm5t ,section #aii;,a7e77#c7 ( su*   
,code is am5d$ by add+ at ! end ! foll[+
 new flu% s5t5ce3 ,su* t]m %all n       
include any divid5d on any %>e ( /ock ) 
respect to :i* ! hold+ p]iod requirem5ts
 ( section #bdf7;c7 are n met or to !   
ext5t t ! taxpay] is "u an obligation   
7:e!r pursuant to a %ort sale or        
o!rwise7 to make relat$ paym5ts )       
respect to positions 9 sub/antially     
simil> or relat$ prop]ty4 4  7#d7       
,con=m+ am5dm5ts  7,a7 ,section         
#aii;,a7c77#a7 ( ! ,int]nal ,rev5ue     
,code ( #aihf is am5d$ by /rik+ any     

qualifi$ trade or bus9ess & ins]t+ all  
qualifi$ trades or bus9esses4  7,b7     
,section #aii;,a7e7 ( su* ,code is am5d$
 by /rik+ p>agraph 7#d74  7,c7 ,section 
#aii;,a7f7 ( su* ,code1 z am5d$ by      
p>agraph 7#a71 is am5d$-- 7i7 by        
r$esignat+ p>agraphs 7#b7 ?r\gh 7#e7 z  
p>agraphs 7#c7 ?r\gh 7#f71 respectively1
 &  7ii7 by /rik+ p>agraph 7#a7 & ins]t+
 ! foll[+3  7#a7 ,application to        
p>tn]%ips & ,s corporations ,9 ! case ( 
a p>tn]%ip or ,s corporation-- 7,a7 ?is 
section %all be appli$ at ! p>tn] or    
%>ehold] level1 &  7,b7 ea* p>tn] or    
%>ehold] %all take into acc\nt su*      
p]son's allocable %>e ( ea* qualifi$    
item ( income1 ga91 d$uction1 & loss4   
,= purposes ( ?is p>agraph1 9 ! case (  
an ,s corporation1 an allocable %>e %all
 be ! %>ehold]'s pro rata %>e ( an item4
  7#b7 ,treatm5t ( trades or bus9esses 9
 ,pu]to ,rico ,9 ! case ( any taxpay] ) 
qualifi$ bus9ess income f s\rces )9 !   
commonweal? ( ,pu]to ,rico1 if all su*  
income is taxable "u section #a = su*   

taxable ye>1 !n = purposes ( det]m9+ !  
qualifi$ bus9ess income ( su* taxpay] = 
su* taxable ye>1 ! t]m ,unit$ ,/ates    
%all include ! ,commonweal? ( ,pu]to    
,rico4  4  7,d7 ,section                
#aii;,a7f77#f77;,a7 ( su* ,code1 z      
r$esignat$ by p>agraph 7#a7 &           
subp>agraph 7,c71 is am5d$ by /rik+ &   
wages4  7,e7 ,section                   
#aii;,a7g77#a77;,b77ii7 ( su* ,code is  
am5d$ to read z foll[s3  7ii7 ,w-#b     
wages ,= purposes ( ?is subp>agraph--   
7,i7 ,9 g5]al ,! t]m ,w-#b wages means1 
) respect to any p]son = any taxable ye>
 ( su* p]son1 ! am\nts describ$ 9       
p>agraphs 7#c7 & 7#h7 ( section         
#fjea7;a7 paid by su* p]son ) respect to
 employm5t ( employees by su* p]son dur+
 ! cal5d> ye> end+ dur+ su* taxable ye>4
 ,su* am\nts %all be det]m9$ aft]       
application ( subsection 7b74  7,,ii7   
,return requirem5t ,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,,iii7 ,wages
 mu/ be allocable to dome/ic production 
gross receipts ,su* t]m %all n include  
any am\nt :i* is n prop]ly allocable to 
dome/ic production gross receipts =     
purposes ( p>agraph 7#c77;,a74  4  7,f7 
,section #aii;,a7g77#e77;,b7 ( su* ,code
 is am5d$ by ins]t+ & ! det]m9ation (   
,w-#b wages ) respect to any qualifi$   
trade or bus9ess conduc$ 9 ,pu]to ,rico 
%all be made )\t reg>d to any exclusion 
"u section #cdja7;a77#h7 = remun]ation  
paid = s]vices 9 ,pu]to ,rico aft] ?is  
subsection4  7,g7 ,section #aii;,a ( su*
 ,code is am5d$ by /rik+ subsection 7h7 
& by r$esignat+ subsection 7i7 z        
subsection 7h74  7b7 ,modification (    
def9ition ( qualifi$ trade or bus9ess   
,section #aii;,a7d7 ( ! ,int]nal ,rev5ue
 ,code ( #aihf is am5d$ to read z       
foll[s3  7d7 ,qualifi$ trade or bus9ess 
,= purposes ( ?is section1 ! t]m        
qualifi$ trade or bus9ess means any     
trade or bus9ess o!r ?an ! trade or     

bus9ess ( p]=m+ s]vices z an employee4  
4  7c7 ,exclusion ( m>k to m>ket ga9 or 
loss ( trad]s 9 securities & commodities
 f qualifi$ bus9ess income ,section     
#aii;,a7c77#c77;,b7 ( ! ,int]nal ,rev5ue
 ,code ( #aihf is am5d$ by r$esignat+   
clause 7vii7 z clause 7viii7 & by ins]t+
 aft] clause 7vi7 ! foll[+ new clause3  
7vii7 ,any ga9 or loss tak5 into acc\nt 
"u section #dge7;f74  4  7d7 ,treatm5t (
 qualifi$ bus9ess income di/ribut$ by   
,r,i,cs  7#a7 ,9 g5]al ,section #heb7;b7
 ( ! ,int]nal ,rev5ue ,code ( #aihf is  
am5d$ by add+ at ! end ! foll[+ new     
p>agraph3  7#aj7 ,treatm5t by %>ehold]s 
( qualifi$ bus9ess income  7,a7 ,9 g5]al
 ,9 any case 9 :i*-- 7i7 a divid5d is   
receiv$ f a regulat$ inve/m5t company1 &
  7ii7 su* company meets ! requirem5ts (
 subsection 7a7 = ! taxable ye> dur+ :i*
 x paid su* divid5d1  !n e %>ehold] (   
su* company %all treat z qualifi$       
bus9ess income "u section #aii;,a7c7 t  
portion ( su* divid5d report$ by su*    
company z eligible = su* treatm5t 9     

writt5 /atem5ts furni%$ to its          
%>ehold]s4  7,b7 ,limitation ,= purposes
 ( subp>agraph 7,a71 ! aggregate am\nt  
:i* may be report$ z divid5ds eligible  
to be treat$ z qualifi$ bus9ess income  
"u section #aii;,a7c7 %all n exce$ ! sum
 (-- 7i7 ! qualifi$ ,,reit divid5ds 7z  
def9$ 9 section #aii;,a7e77 receiv$ by !
 company = ! taxable ye>1 plus  7ii7 !  
net am\nt ( ! company's allocable %>e = 
! taxable ye> ( ea* qualifi$ item (     
income1 ga91 d$uction1 & loss 7z def9$ 9
 subsection 7c77#c7 ( section #aii;,a1  
det]m9$ aft] ! application ( subsection 
7c77#d7 !re(7 f a publicly trad$        
p>tn]%ip 7z def9$ 9 section #ggjd7;b77  
:i* is n treat$ z a corporation "u      
section #ggjd7;a74  4  7#b7 ,con=m+     
am5dm5t ,section #aii;,a7c7 ( su* ,code 
is am5d$ by add+ at ! end ! foll[+ new  
p>agraph3  7#e7 ,treatm5t ( c]ta9       
divid5ds receiv$ f regulat$ inve/m5t    
companies ,= ! treatm5t "u p>agraph 7#a7
 ( c]ta9 divid5ds receiv$ f regulat$    
inve/m5t companies1 see section         

#heb7;b77#aj74  4  7e7 ,effective date  
,! am5dm5ts made by ?is section %all    
apply to taxable ye>s beg9n+ aft] ! date
 ( ! enactm5t ( ?is ,act4