CARES Windfall for the Wealthiest Repeal Act

I 117TH CONGRESS 1ST SESSION H. R. 696 To amend the Internal Revenue Code of 1986 to impose a limitation on excess business losses of non-corporate taxpayers and to modify the carryback of net operating losses for certain taxable years. IN THE HOUSE OF REPRESENTATIVES FEBRUARY 2, 2021 Mr. DOGGETT (for himself, Ms. DELAURO, Mr. COHEN, Mr. BEYER, Mr. BLUMENAUER, Ms. BONAMICI, Mr. CASTEN, Ms. CHU, Mr. CICILLINE, Mr. CONNOLLY, Mr. DEFAZIO, Ms. DEGETTE, Ms. ESHOO, Mr. GARCI´A of Illinois, Ms. GARCIA of Texas, Mr. GRIJALVA, Mrs. HAYES, Ms. KAP- TUR, Mr. LANGEVIN, Mr. LIEU, Mr. MCGOVERN, Mr. NADLER, Ms. NOR- TON, Ms. PINGREE, Mr. POCAN, Mr. RYAN, Mr. SARBANES, Ms. SCAN- LON, Ms. SCHAKOWSKY, Mr. TONKO, Mrs. WATSON COLEMAN, and Mr. WELCH) introduced the following bill; which was referred to the Com- mittee on Ways and Means A BILL To amend the Internal Revenue Code of 1986 to impose a limitation on excess business losses of non-corporate taxpayers and to modify the carryback of net operating losses for certain taxable years. 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 ‘‘CARES Windfall for 4 the Wealthiest Repeal Act’’. 5 VerDate Sep 11 2014 20:35 Feb 22, 2021 Jkt 019200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H696.IH H696 pamtmann on DSKBC07HB2PROD with BILLS 2 •HR 696 IH SEC. 2. LIMITATION ON EXCESS BUSINESS LOSSES OF NON- 1 CORPORATE TAXPAYERS RESTORED AND 2 MADE PERMANENT. 3 (a) IN GENERAL.—Section 461(l)(1) of the Internal 4 Revenue Code of 1986 is amended to read as follows: 5 ‘‘(1) LIMITATION.—In the case of a taxpayer 6 other than a corporation, any excess business loss of 7 the taxpayer shall not be allowed.’’. 8 (b) FARMING LOSSES.—Section 461 of such Code is 9 amended by striking subsection (j). 10 (c) EFFECTIVE DATE.—The amendments made by 11 this section shall apply to taxable years beginning after 12 December 31, 2017. 13 SEC. 3. CERTAIN TAXPAYERS ALLOWED CARRYBACK OF 14 NET OPERATING LOSSES ARISING IN 2019 15 AND 2020. 16 (a) CARRYBACK OF LOSSES ARISING IN 2019 AND 17 2020.— 18 (1) IN GENERAL.—Section 172(b)(1)(D)(i) of 19 the Internal Revenue Code of 1986 is amended to 20 read as follows: 21 ‘‘(i) IN GENERAL.—In the case of any 22 net operating loss arising in a taxable year 23 beginning after December 31, 2018, and 24 before January 1, 2021, and to which sub- 25 paragraphs (B) and (C)(i) do not apply, 26 VerDate Sep 11 2014 20:35 Feb 22, 2021 Jkt 019200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H696.IH H696 pamtmann on DSKBC07HB2PROD with BILLS 3 •HR 696 IH such loss shall be a net operating loss 1 carryback to each taxable year preceding 2 the taxable year of such loss, but not to 3 any taxable year beginning before January 4 1, 2018.’’. 5 (2) CONFORMING AMENDMENTS.— 6 (A) The heading for section 172(b)(1)(D) 7 of such Code is amended by striking ‘‘2018, 8 2019, AND’’ and inserting ‘‘2019 AND’’. 9 (B) Section 172(b)(1)(D) of such Code is 10 amended by striking clause (iii) and by redesig- 11 nating clauses (iv) and (v) as clauses (iii) and 12 (iv), respectively. 13 (C) Section 172(b)(1)(D)(iii) of such Code, 14 as so redesignated, is amended by striking 15 ‘‘(i)(I)’’ and inserting ‘‘(i)’’. 16 (D) Section 172(b)(1)(D)(iv) of such Code, 17 as so redesignated, is amended— 18 (i) by striking ‘‘If the 5-year 19 carryback period under clause (i)(I)’’ in 20 subclause (I) and inserting ‘‘If the 21 carryback period under clause (i)’’, and 22 (ii) by striking ‘‘2018 or’’ in subclause 23 (II). 24 VerDate Sep 11 2014 20:35 Feb 22, 2021 Jkt 019200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H696.IH H696 pamtmann on DSKBC07HB2PROD with BILLS 4 •HR 696 IH (b) DISALLOWED FOR CERTAIN TAXPAYERS.—Sec- 1 tion 172(b)(1)(D) of such Code, as amended by the pre- 2 ceding provisions of this Act, is amended by adding at the 3 end the following new clauses: 4 ‘‘(v) CARRYBACK DISALLOWED FOR 5 CERTAIN TAXPAYERS.—Clause (i) shall not 6 apply with respect to any loss arising in a 7 taxable year in which— 8 ‘‘(I) the taxpayer (or any related 9 person) is not allowed a deduction 10 under this chapter for the taxable 11 year by reason of section 162(m) or 12 section 280G, or 13 ‘‘(II) the taxpayer (or any related 14 person) is a specified corporation for 15 the taxable year. 16 ‘‘(vi) SPECIFIED CORPORATION.—For 17 purposes of clause (v)— 18 ‘‘(I) IN GENERAL.—The term 19 ‘specified corporation’ means, with re- 20 spect to any taxable year, a corpora- 21 tion the aggregate distributions (in- 22 cluding redemptions) of which during 23 all taxable years ending after Decem- 24 ber 31, 2017, exceed the sum of appli- 25 VerDate Sep 11 2014 20:35 Feb 22, 2021 Jkt 019200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H696.IH H696 pamtmann on DSKBC07HB2PROD with BILLS 5 •HR 696 IH cable stock issued of such corporation 1 and 5 percent of the fair market value 2 of the stock of such corporation as of 3 the last day of the taxable year. 4 ‘‘(II) APPLICABLE STOCK 5 ISSUED.—The term ‘applicable stock 6 issued’ means, with respect to any 7 corporation, the aggregate fair market 8 value of stock (as of the issue date of 9 such stock) issued by the corporation 10 during all taxable years ending after 11 December 31, 2017, in exchange for 12 money or property other than stock in 13 such corporation. 14 ‘‘(III) CERTAIN PREFERRED 15 STOCK DISREGARDED.—For purposes 16 of subclause (I), stock described in 17 section 1504(a)(4), and distributions 18 (including redemptions) with respect 19 to such stock, shall be disregarded. 20 ‘‘(vii) RELATED PERSON.—For pur- 21 poses of clause (v), a person is a related 22 person to a taxpayer if the related person 23 bears a relationship to the taxpayer speci- 24 VerDate Sep 11 2014 20:35 Feb 22, 2021 Jkt 019200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H696.IH H696 pamtmann on DSKBC07HB2PROD with BILLS 6 •HR 696 IH fied in section 267(b) or section 1 707(b)(1).’’. 2 (c) EFFECTIVE DATE.—The amendments made by 3 this section shall take effect as if included in the enact- 4 ment of section 2303(b) of the Coronavirus Aid, Relief, 5 and Economic Security Act. 6 Æ VerDate Sep 11 2014 20:35 Feb 22, 2021 Jkt 019200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6301 E:\BILLS\H696.IH H696 pamtmann on DSKBC07HB2PROD with BILLS