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United States · Law · HR

H.R. 3448 (104th)

Small Business Job Protection Act of 1996

enactedUnited States· United States Congress· EN

Introduced

14 May 1996

Last action

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Status

Became Public Law No: 104-188.

Sponsors

—

Subjects

Discovery layer

Source updated

7 April 2025

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Summary

TABLE OF CONTENTS: Title I: Small Business and Other Tax Provisions Subtitle A: Expensing; Etc. Subtitle B: Extension of Certain Expiring Provisions Subtitle C: Provisions Relating to S Corporations Subtitle D: Pension Simplification Subtitle E: Foreign Simplification Subtitle F: Revenue Offsets Subtitle G: Technical Corrections Small Business Job Protection Act of 1996 - Title I: Small Business and Other Tax Provisions - States that no addition to any underpayment of a tax installment required to be paid before enactment shall be made to the extent such underpayment was created by this title. Subtitle A: Expensing; Etc. - Amends the Internal Revenue Code to incrementally increase to $25,000 by the year 2003 the amount which a small business may expense. Revises provisions concerning employee tips. Subtitle B: Extension of Certain Expiring Provisions - Decreases from 40 to 35 percent the work opportunity credit. Extends and makes other revisions to such credit, including redefining members of targeted groups. Extends: (1) employer provided educational assistance programs; and (2) permanently, the Federal Unemployment Tax exemption for alien agricultural workers. Subtitle C: Provisions Relating to S Corporations - Increases from 35 to 75 the number of S corporation shareholders permitted. Permits an electing small business trust as a shareholder. Permits financial institutions to hold safe harbor debt. Revises S corporation provisions concerning: (1) the post-death qualification period; (2) the rules relating to inadvertent terminations and invalid elections; (3) an agreement to terminate the taxable year; (4) the post-termination transition period; and (5) the treatment of distributions during loss years. Provides: (1) subject to exception, for the application of Subchapter C rules to an S corporation and its shareholders; (2) for the elimination certain earnings and profits; (3) for the carryover of disallowed losses and deductions under at-risk rules; and (4) adjustments to the basis of inherited S stock to reflect certain items of income. Makes applicable to S corporations the rules applicable to individuals with respect to real property subdivided for sale. Subtitle D: Pension Simplification - Repeals: (1) five-year income averaging for lump sum distributions; and (2) the $5,000 exclusion of employees' death benefits. (Sec. 1403) Revises provisions concerning: (1) taxing annuity distributions under certain employer plans; and (2) the present requirement of beginning distributions on April 1 of the calendar year following a participant's attainment of the age 70 and one-half. (Sec. 1421) Establishes a simple retirement account matching plan for employees of businesses with 100 or fewer employees. Permits a simple plan under a 401(k) plan. (Sec. 1426) Permits 401(k) plans for tax-exempt organizations. (Sec. 1431) Revises the definition of a highly compensated employee. Repeals the family aggregation rules. Modifies additional participation requirements. Provides alternative methods of meeting nondiscrimination requirements. (Sec. 1442) Provides for the applicability of the special vesting rules for multiemployer plans to other qualified plans. (Sec. 1443) Provides for the treatment of: (1) distributions under rural cooperative plans; and (2) qualified governmental excess benefit arrangements. (Sec. 1445) Provides: (1) for the treatment of the social security retirement age as a uniform retirement age; and (2) that subsidized early retirement benefits and joint and survivor annuities shall not be treated as being unavailable to employees on the same terms merely because such benefits are based on an employees social security retirement age. (Sec. 1446) Provides for the treatment of: (1) contributions on behalf of disabled employees; (2) deferred compensation plans of State and local governments and tax-exempt organizations. (Sec. 1448) Requires governmental plans to hold deferred amounts in trusts. Revises provisions concerning the treatment of Indian tribal government annuities. (Sec. 1450) Permits multiple salary reduction agreements. (Sec. 1452) Repeals the limitation in the case of a defined benefit plan and a defined contribution plan for the same employee. (Sec. 1453) Increases the five percent tax on prohibited transactions to ten percent. (Sec. 1454) Revises the definition of a leased employee. (Sec. 1455) Applies failure to file information report penalties to pension payments. (Sec. 1456) Exempts the retirement benefits of ministers, including the rental value of a parsonage, received under a church plan from the tax on net earnings from self-employment. Subtitle E: Foreign Simplification - Repeals the inclusion in gross income of certain earnings invested in excess passive assets. Subtitle F: Revenue Offsets - Terminates, subject to exception, the Puerto Rico and possessions tax credit after December 31, 1995. Adds a Puerto Rican economic activity credit. (Sec. 1602) Repeals the exclusion for interest on loans used to acquire employer securities. (Sec. 1603) Provides for the treatment of certain amounts derived from foreign corporations as unrelated business taxable income. (Sec. 1604) Revises provisions concerning depreciation under the income forecast method. (Sec. 1605) Revises provisions concerning the exclusion of damages received because of personal injuries or sickness. (Sec. 1606) Repeals the advance repayment of the diesel fuel tax to original purchasers of diesel-powered automobiles and light trucks. Subtitle G: Technical Corrections - Amends the Internal Revenue Code, the Revenue Reconciliation Act of 1990, the Revenue Reconciliation Act of 1993, the Employee Retirement Income Security Act of 1974, the Public Health Service Act, and other legislation to make technical corrections.

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