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I
116TH CONGRESS
1ST SESSION H. R. 2971
To amend the Internal Revenue Code of 1986 to increase and expand the
deduction for qualified business income.
IN THE HOUSE OF REPRESENTATIVES
MAY 23, 2019
Mr. BIGGS 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 increase
and expand the deduction for qualified business income.
Be it enacted by the Senate and House of Representa-
1
tives of the United States of America in Congress assembled,
2
SECTION 1. SHORT TITLE.
3
This Act may be cited as the ‘‘Freedom for Small
4
Businesses Act of 2019’’.
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SEC. 2. INCREASE AND EXPANSION OF DEDUCTION FOR
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QUALIFIED BUSINESS INCOME.
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(a) DEDUCTION MADE PERMANENT.—Section 199A
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of the Internal Revenue Code of 1986 is amended by strik-
9
ing subsection (i).
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(b) DEDUCTION TO ACHIEVE
A TOP RATE
ON
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QUALIFIED BUSINESS INCOME OF 21 PERCENT.—Sub-
2
sections (a)(2), (b)(1)(B), and (b)(2)(A) of section 199A
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of such Code are each amended by striking ‘‘20 percent’’
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and inserting ‘‘43 percent (47 percent in the case of any
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taxable year beginning after December 31, 2025)’’.
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(c) REPEAL OF LIMITATION BASED ON W–2 WAGES
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PAID WITH RESPECT TO THE TRADE OR BUSINESS.—
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Section 199A(b)(2) of section 199A of such Code, as
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amended by subsection (a), is amended to read as follows:
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‘‘(2)
DETERMINATION
OF
DEDUCTIBLE
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AMOUNT
FOR
EACH
TRADE
OR
BUSINESS.—The
12
amount determined under this paragraph with re-
13
spect to any qualified trade or business is 43 percent
14
(47 percent in the case of any taxable year begin-
15
ning after December 31, 2025) of the taxpayer’s
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qualified business income with respect to the quali-
17
fied trade or business.’’.
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(d) REPEAL OF EXCLUSION OF SPECIFIED SERVICE
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TRADES OR BUSINESSES.—Section 199A(d) of such Code
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is amended to read as follows:
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‘‘(d) QUALIFIED TRADE OR BUSINESS.—For pur-
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poses of this section, the term ‘qualified trade or business’
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means any trade or business other than the trade or busi-
24
ness of performing services as an employee.’’.
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(e) CONFORMING AMENDMENTS.—
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(1) Section 199A(b) of such Code, as amended
2
by subsection (d), is amended—
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(A) by striking paragraphs (3), (4), and
4
(6), and redesignating paragraphs (5) and (7)
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as paragraphs (3) and (4), and
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(B) by ‘‘the lesser of—’’ and all that fol-
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lows in paragraph (4) (as so redesignated) and
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inserting ‘‘9 percent of so much of the qualified
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business income with respect to such trade or
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business as is properly allocable to qualified
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payments received from such cooperative’’.
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(2) Section 199A(e) of such Code is amended
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by striking paragraph (2).
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(3) Section 199A(f)(1) of such Code is amended
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to read as follows:
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‘‘(1) APPLICATION
TO
PARTNERSHIPS
AND
S
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CORPORATIONS.—
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‘‘(A) IN GENERAL.—In the case of a part-
19
nership or S corporation—
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‘‘(i) this section shall be applied at the
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partner or shareholder level, and
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‘‘(ii) each partner or shareholder shall
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take into account such person’s allocable
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•HR 2971 IH
share of each qualified item of income,
1
gain, deduction, and loss.
2
For purposes of this subparagraph, in the case
3
of an S corporation, an allocable share shall be
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the shareholder’s pro rata share of an item.
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‘‘(B) TREATMENT
OF
TRADES
OR
BUSI-
6
NESS IN PUERTO RICO.—In the case of any tax-
7
payer with qualified business income from
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sources within the commonwealth of Puerto
9
Rico, if all such income is taxable under section
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1 for such taxable year, then for purposes of
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determining the qualified business income of
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such taxpayer for such taxable year, the term
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‘United States’ shall include the Commonwealth
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of Puerto Rico.’’.
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(4) Section 199A(f)(4)(A) of such Code is
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amended by striking ‘‘and wages’’.
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(5) Section 199A(g)(1) of such Code is amend-
18
ed by striking subparagraph (B) and redesignating
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subparagraph (C) as subparagraph (B).
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(6) Section 199A of such Code is amended by
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striking subsection (h).
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(f) EFFECTIVE DATE.—The amendments made by
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this section shall apply to taxable years beginning after
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December 31, 2019.
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Æ
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