,,ii  #aai? ,,congress  #a/ ,session    
,s4 #fie  ,,9 ,,! ,,s5ate ,,( ,,!       
,,unit$ ,,/ates  ,febru>y #bd1 #bjbe,mr4
 ,cornyn introduc$ ! foll[+ bill2 :i* 0 
read twice & ref]r$ to ! ,committee on  
,f9ance  ,a ,,bill  ,to am5d ! ,int]nal 
,rev5ue ,code ( #aihf to modify !       
exclusion = ga9 f qualifi$ small bus9ess
 /ock4  #a4 ,%ort title ,?is ,act may be
 cit$ z ! ,small ,bus9ess ,inve/m5t ,act
 ( #bjbe4  #b4 ,phas$ increase 9        
exclusion = ga9 f qualifi$ small bus9ess
 /ock  7a7 ,9 g5]al ,section            
#abjb7;a77#a7 ( ! ,int]nal ,rev5ue ,code
 ( #aihf is am5d$-- 7#a7 by /rik+ #ej   
p]c5t & ins]t+ ! applicable p]c5tage1 & 
7#b7 by /rik+ held = m ?an #e ye>s &    
ins]t+ held = at lea/ #c ye>s4  7b7     
,applicable p]c5tage ,section #abjb7;a7 
( su* ,code is am5d$ by add+ at ! end ! 
foll[+ new p>agraph3  7#e7 ,applicable  
p]c5tage ,except z provid$ 9 p>agraphs  
7#c7 & 7#d71 ! applicable p]c5tage "u   
p>agraph 7#a7 %all be det]m9$ "u !      
foll[+ table3 ,ye>s /ock                

held3,applicable p]c5tage3#c ye>s#ejd   
ye>s#gee ye>s or m#ajj  4  7c7 ,cont9u$ 
treatm5t z n item ( tax pref]5ce  7#a7  
,9 g5]al ,section #eg7;a77#g7 ( su*     
,code is am5d$ by /rik+ ,an am\nt &     
ins]t+ ,9 ! case ( /ock acquir$ on or   
be=e ! date ( ! enactm5t ( ! ,creat+    
,small ,bus9ess ,jobs ,act ( #bjaj1 an  
am\nt4  7#b7 ,con=m+ am5dm5t ,section   
#abjb7;a77#d7 ( su* ,code is am5d$--    
7,a7 by /rik+ 1 & at ! end ( subp>agraph
 7,b7 & ins]t+ a p]iod1 &  7,b7 by /rik+
 subp>agraph 7,c74  7d7 ,o!r con=m+     
am5dm5ts  7#a7 ,section #abjb7;a77#d7 ( 
su* ,code is am5d$ by ins]t+ & be=e !   
date ( ! enactm5t ( ! ,small ,bus9ess   
,inve/m5t ,act ( #bjbe aft] ,act (      
#bjaj4  7#b7 ,p>agraphs 7#c7 & 7#d7 (   
section #abjb7;a7 ( su* ,code are ea*   
am5d$ by ins]t+ held = m ?an #e ye>s &  
aft] ,9 ! case ( qualifi$ small bus9ess 
/ock4  7#c7 ,section #abjb7;a77#c77;,a7 
( su* ,code is am5d$ to read z foll[s3  
7,a7 ! applicable p]c5tage "u p>agraph  
7#a7 %all be #ge p]c5t1 &  4  7#d7      

,section #abjb7;a77#d77;,a7 ( su* ,code 
is am5d$ to read z foll[s3  7,a7 !      
applicable p]c5tage "u p>agraph 7#a7    
%all be #ajj p]c5t1 &  4  7#e7 ,section 
#abjb7;b77#b7 ( su* ,code is am5d$ by   
/rik+ m ?an #e ye>s & ins]t+ at lea/ #c 
ye>s4  7#f7 ,section #abjb7;g77#b77;,a7 
( su* ,code is am5d$ by /rik+ m ?an #e  
ye>s & ins]t+ at lea/ #c ye>s4  7#g7    
,section #abjb7;j77#a77;,a7 ( su* ,code 
is am5d$ by /rik+ m ?an #e ye>s & ins]t+
 at lea/ #c ye>s4  7e7 ,effective date  
7#a7 ,9 g5]al ,except z provid$ 9       
p>agraph 7#b71 ! am5dm5ts made by ?is   
section %all apply to /ock acquir$ aft] 
! date ( ! enactm5t ( ?is ,act4  7#b7   
,cont9u$ treatm5t z n item ( tax        
pref]5ce ,! am5dm5t made by subsection  
7c7 %all take effect z if includ$ 9 !   
enactm5t ( section #bjaa ( ! ,creat+    
,small ,bus9ess ,jobs ,act ( #bjaj4  #c4
 ,tack+ hold+ p]iod ( conv]tible debt   
in/rum5ts  7a7 ,9 g5]al ,section        
#abjb7;f7 ( ! ,int]nal ,rev5ue ,code (  
#aihf is am5d$-- 7#a7 by r$esignat+     

p>agraphs 7#a7 & 7#b7 z subp>agraphs    
7,a7 & 7,b7 & mov+ su* subp>agraphs 7z s
 r$esignat$7 #b ems to ! "r1  7#b7 by   
/rik+ conv]sion ( o!r /ock4--,if any    
/ock & ins]t+ ! foll[+3 conv]sion4--    
7#a7 ,o!r /ock ,if any /ock  1 &  7#c7  
by add+ at ! end ! foll[+ new p>agraph3 
7#b7 ,conv]tible debt in/rum5ts  7,a7 ,9
 g5]al ,if any /ock 9 a corporation is  
acquir$ by ! taxpay]1 )\t recognition ( 
ga91 solely ?r\gh ! conv]sion ( a       
qualifi$ conv]tible debt in/rum5t-- 7i7 
! /ock s acquir$ %all be treat$ z       
qualifi$ small bus9ess /ock 9 ! h&s ( ! 
taxpay]1 &  7ii7 ! /ock s acquir$ %all  
be treat$ z hav+ be5 held dur+ ! p]iod  
dur+ :i* ! qualifi$ conv]tible debt     
in/rum5t 0 held4  7,b7 ,qualifi$        
conv]tible debt in/rum5t ,= purposes (  
?is p>agraph1 ! t]m qualifi$ conv]tible 
debt in/rum5t means any bond or o!r     
evid5ce ( indebt$ness-- 7i7 :i* is      
orig9ally issu$ by ! corporation to !   
taxpay]1  7ii7 ! issu] ( :i*-- 7,i7 f   
issuance until conv]sion1 is a qualifi$ 

small bus9ess1 &  7,,ii7 dur+           
sub/antially all ( ! taxpay]'s hold+    
p]iod ( su* bond or evid5ce (           
indebt$ness1 ! corporation meets !      
active bus9ess requirem5ts ( subsection 
7e71 &  7iii7 :i* is conv]tible into    
/ock 9 ! corporation4  4  7b7 ,effective
 date ,! am5dm5ts made by ?is section   
%all apply to debt in/rum5ts orig9ally  
issu$ aft] ! date ( ! enactm5t ( ?is    
,act4  #d4 ,ga9 exclusion all[$ )       
respect to qualifi$ small bus9ess /ock 9
 corporation  7a7 ,9 g5]al ,section     
#abjb7;c7 ( ! ,int]nal ,rev5ue ,code (  
#aihf is am5d$-- 7#a7 by /rik+ ,c       
corporation 9 p>agraphs 7#a7 & ins]t+   
corporation1 &  7#b7 by /rik+ & su*     
corporation is a ,c corporation 9       
p>agraph 7#b77;,a74  7b7 ,qualifi$ small
 bus9ess def9ition ,section             
#abjb7;d77#a7 ( su* ,code is am5d$ by   
/rik+ :i* is a ,c corporation4  7c7     
,cl>ification ( aggregation rules       
applicable to ,s corporations ,section  
#abjb7;d77#c7 ( su* ,code is am5d$ by   

add+ at ! end ! foll[+ new subp>agraph3 
7,c7 ,cl>ification ) respect to s       
corporations ,any det]m9ation ( ! memb]s
 ( a controll$ gr\p ( corporations "u   
?is p>agraph %all include tak+ into     
acc\nt any /ock own]%ip 9 an ,s         
corporation4  4  7d7 ,treatm5t ( passive
 losses ,section #dfi7;g77#a7 ( su*     
,code is am5d$ by add+ at ! end ! foll[+
 new subp>agraph3  7,d7 ,c]ta9          
dispositions ( small bus9ess /ock ,9 !  
case ( a disposition any ga9 f :i* is   
exclud$ f gross income "u section #abjb1
 subp>agraph 7,a7 %all n apply4  4  7e7 
,special rules relat+ to ,s corporations
 ,section #abjb7;e7 ( su* ,code is am5d$
 by add+ at ! end ! foll[+ new p>agraph3
  7#i7 ,appli$ at s corporation level ,9
 ! case ( an ,s corporation1 !          
requirem5ts ( ?is subsection %all be    
appli$ at ! corporate level4  4  7f7    
,effective date ,! am5dm5ts made by ?is 
section %all apply to /ock acquir$ aft] 
! date ( ! enactm5t ( ?is ,act4