Small Business Prosperity Act of 2023

I 118TH CONGRESS 1ST SESSION H. R. 108 To amend the Internal Revenue Code of 1986 to expand the deduction for qualified business income, and for other purposes. IN THE HOUSE OF REPRESENTATIVES JANUARY 9, 2023 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 expand the deduction for qualified business income, and for other purposes. 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 ‘‘Small Business Pros- 4 perity Act of 2023’’. 5 SEC. 2. INCREASE AND EXPANSION OF DEDUCTION FOR 6 QUALIFIED BUSINESS INCOME. 7 (a) DEDUCTION MADE PERMANENT.—Section 199A 8 of the Internal Revenue Code of 1986 is amended by strik- 9 ing subsection (i). 10 VerDate Sep 11 2014 04:14 Jan 14, 2023 Jkt 039200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H108.IH H108 pbinns on DSKJLVW7X2PROD with $$_JOB 2 •HR 108 IH (b) DEDUCTION TO ACHIEVE A TOP RATE ON 1 QUALIFIED BUSINESS INCOME OF 21 PERCENT.—Sub- 2 sections (a)(2) and (b)(1)(B) of section 199A of such Code 3 are each amended by striking ‘‘20 percent’’ and inserting 4 ‘‘43 percent (47 percent in the case of any taxable year 5 beginning after December 31, 2025)’’. 6 (c) REPEAL OF LIMITATION BASED ON W–2 WAGES 7 PAID WITH RESPECT TO THE TRADE OR BUSINESS, TOP 8 RATE ON QUALIFIED BUSINESS INCOME.—Section 9 199A(b)(2) of such Code is amended to read as follows: 10 ‘‘(2) DETERMINATION OF DEDUCTIBLE 11 AMOUNT FOR EACH TRADE OR BUSINESS.—The 12 amount determined under this paragraph with re- 13 spect to any qualified trade or business is 43 percent 14 (47 percent in the case of any taxable year begin- 15 ning after December 31, 2025) of the taxpayer’s 16 qualified business income with respect to the quali- 17 fied trade or business.’’. 18 (d) REPEAL OF EXCLUSION OF SPECIFIED SERVICE 19 TRADES OR BUSINESSES.—Section 199A(d) of such Code 20 is amended to read as follows: 21 ‘‘(d) QUALIFIED TRADE OR BUSINESS.—For pur- 22 poses of this section, the term ‘qualified trade or business’ 23 means any trade or business other than the trade or busi- 24 ness of performing services as an employee.’’. 25 VerDate Sep 11 2014 04:14 Jan 14, 2023 Jkt 039200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H108.IH H108 pbinns on DSKJLVW7X2PROD with $$_JOB 3 •HR 108 IH (e) CONFORMING AMENDMENTS.— 1 (1) Section 199A(b) of such Code is amended— 2 (A) by striking paragraphs (3), (4), and 3 (6), and redesignating paragraphs (5) and (7) 4 as paragraphs (3) and (4), respectively, and 5 (B) by striking ‘‘the lesser of—’’ and all 6 that follows in paragraph (4) (as so redesig- 7 nated) and inserting ‘‘9 percent of so much of 8 the qualified business income with respect to 9 such trade or business as is properly allocable 10 to qualified payments received from such coop- 11 erative’’. 12 (2) Section 199A(e) of such Code is amended 13 by striking paragraph (2). 14 (3) Section 199A(f)(1) of such Code is amended 15 to read as follows: 16 ‘‘(1) APPLICATION TO PARTNERSHIPS AND S 17 CORPORATIONS.— 18 ‘‘(A) IN GENERAL.—In the case of a part- 19 nership or S corporation— 20 ‘‘(i) this section shall be applied at the 21 partner or shareholder level, and 22 ‘‘(ii) each partner or shareholder shall 23 take into account such person’s allocable 24 VerDate Sep 11 2014 04:14 Jan 14, 2023 Jkt 039200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H108.IH H108 pbinns on DSKJLVW7X2PROD with $$_JOB 4 •HR 108 IH share of each qualified item of income, 1 gain, deduction, and loss. 2 For purposes of this subparagraph, in the case 3 of an S corporation, an allocable share shall be 4 the shareholder’s pro rata share of an item. 5 ‘‘(B) TREATMENT OF TRADES OR BUSI- 6 NESS IN PUERTO RICO.—In the case of any tax- 7 payer with qualified business income from 8 sources within the commonwealth of Puerto 9 Rico, if all such income is taxable under section 10 1 for such taxable year, then for purposes of 11 determining the qualified business income of 12 such taxpayer for such taxable year, the term 13 ‘United States’ shall include the Commonwealth 14 of Puerto Rico.’’. 15 (4) Section 199A(f)(4)(A) of such Code is 16 amended by striking ‘‘and wages’’. 17 (5) Section 199A(g)(1) of such Code is amend- 18 ed by striking subparagraph (B) and redesignating 19 subparagraph (C) as subparagraph (B). 20 (6) Section 199A of such Code is amended by 21 striking subsection (h). 22 (f) EFFECTIVE DATE.—The amendments made by 23 this section shall apply to taxable years beginning after 24 December 31, 2022. 25 VerDate Sep 11 2014 04:14 Jan 14, 2023 Jkt 039200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H108.IH H108 pbinns on DSKJLVW7X2PROD with $$_JOB 5 •HR 108 IH SEC. 3. NO TAXABLE EVENT FOR CHANGE OF CORPORATE 1 FORM. 2 Notwithstanding any provision of the Internal Rev- 3 enue Code of 1986, a change in the organizational struc- 4 ture of a corporation, however organized, into another or- 5 ganizational structure is not a taxable event for the pur- 6 poses of such Code if there is no change among the own- 7 ers, their ownership interests, or the assets of the organi- 8 zation (other than a de minimis change in such assets). 9 The preceding sentence shall apply to changes in organiza- 10 tional structure occurring after December 31, 2022. 11 SEC. 4. REPEAL OF ESTATE TAX AND RETENTION OF BASIS 12 STEP-UP. 13 Effective for estates of decedents dying after Decem- 14 ber 31, 2022, chapter 11 of the Internal Revenue Code 15 of 1986 is repealed. 16 Æ VerDate Sep 11 2014 04:14 Jan 14, 2023 Jkt 039200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6301 E:\BILLS\H108.IH H108 pbinns on DSKJLVW7X2PROD with $$_JOB