{
  "id": "RL32254",
  "type": "CRS Report",
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      "title": "Small Business Tax Benefits: Current Law",
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      "title": "Small Business Tax Benefits: Current Law",
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      "id": 584979,
      "date": "2018-07-05",
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      "title": "Small Business Tax Benefits: Current Law and Arguments For and Against Them",
      "summary": "The federal tax burden on small firms and its effects on their formation and growth have long been matters of legislative concern for Congress. This abiding interest has helped pave the way for the enactment of a series of tax laws in recent years that included targeted tax relief for a number of small businesses.\nThis report describes the main federal tax preferences that benefit small firms and examines the main arguments for and against government support for small firms in general and for tax benefits targeted at such firms in particular. It addresses the tax preferences that can be claimed only by small firms in a wide range of industries and excludes those targeted at small firms in specific industries, such as the special deduction for small life insurance companies under Section 806 of the federal tax code. The small business tax preferences discussed here reflect the changes in the tax code under P.L. 115-97.\nThe following small business tax benefits are examined here: \nExpensing allowance for machinery and equipment under Section 179 of the Internal Revenue Code; \nCash-basis accounting under Section 446; \nTax credit for a portion of the costs incurred by small firms in establishing pension funds for employees under Section 45E; \nTax credit for costs incurred by small firms in complying with the Americans with Disabilities Act under Section 44; \nFull exclusion from the capital gains tax on the sale or exchange of qualified small business stock under Section 1202; \nExemption from the limitation on the deduction for business interest expenses under Section 163;\nTax credit for small firms that offer qualified health insurance coverage to employees under Section 45R; \nSimplified dollar-value last-in-last-out accounting under Section 474;\nDeduction for and amortization of business start-up expenses under Section 195;\nOrdinary income treatment of losses on the sale of certain small business stock under Section 1244;\nTreating losses on the sale of Small Business Investment Company stock as ordinary losses under Section 1242;\nExemption from the uniform capitalization rule under Section 263A; and\nUse of research tax credit to reduce payroll tax for certain small firms under Section 41.\nWhile available information does not allow for an estimate of the federal revenue cost of the small business tax preferences examined here, a recent estimate by the Joint Committee on Taxation suggests that the cost might exceed $17 billion in FY2018.\nTax preferences for small businesses raise several policy issues. For some, a key question is whether they can be justified on economic grounds. In the absence of such a justification, small business tax benefits, while promoting the survival and growth of firms that can take advantage of them, may cause more economic harm than good by distorting the allocation of domestic economic resources.",
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      "topics": [
        {
          "source": "IBCList",
          "id": 4804,
          "name": "Business & Corporate Taxation"
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        {
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          "id": 4832,
          "name": "Small Business"
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    {
      "source": "EveryCRSReport.com",
      "id": 419325,
      "date": "2013-04-03",
      "retrieved": "2016-04-06T21:16:22.124920",
      "title": "Small Business Tax Benefits: Current Law and Main Arguments For and Against Them",
      "summary": "The federal tax burden on small firms and its effects on their formation and growth have long been issues of legislative concern for Congress. This interest helped pave the way for the enactment during the 111th and 112th Congresses of several laws intended, in part, to reduce this burden or keep it in check. The American Recovery and Reinvestment Act of 2009 (P.L. 111-5), the Small Business Jobs Act of 2010, the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 (P.L. 111-240), and the American Taxpayer Relief Act of 2012 (P.L. 112-240) each contained provisions offering tax benefits to small companies.\nThis report describes the main federal tax preferences that benefit small firms and examines the main arguments for and against them. It addresses tax preferences that can be claimed by qualified small firms in a wide range of industries and excludes those targeted at small firms in specific industries, such as the special deduction for small life insurance companies under Section 806 of the federal tax code. The following small business tax benefits have a broad reach outside agriculture and are among the tax preferences examined here: \nthe taxation of small firms as passthrough entities; \nthe graduated rate structure for the corporate income tax; \nthe expensing allowance for machinery and equipment under Section 179 of the Internal Revenue Code; \nthe exemption of some small corporations from the corporate alternative minimum tax; \ncash-basis accounting; \na tax credit for a portion of the costs incurred by small firms in establishing pension funds for employees; \na tax credit for costs incurred by small firms in complying with the Americans with Disabilities Act; \nthe partial exclusion from the capital gains tax on the sale or exchange of qualified small business stock; and \na tax credit for small firms that offer qualified health insurance coverage to employees.\nWhile available information does not allow for an estimate of the federal revenue cost of all the small business tax preferences examined here, estimates by the Joint Committee on Taxation and the Treasury Department\u2019s Office of Tax Analysis suggest that it may exceed $11 billion in FY2013.\nTax preferences for small businesses raise several policy issues. For some, a key question is whether or not they can be justified on economic grounds. In the absence of such a justification, small business tax benefits may create more economic harm than good.",
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      "topics": [
        {
          "source": "IBCList",
          "id": 2636,
          "name": "Small Business Policy"
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        {
          "source": "IBCList",
          "id": 571,
          "name": "Business Taxation"
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      "sourceLink": "https://digital.library.unt.edu/ark:/67531/metadc808047/",
      "id": "RL32254_2009Mar26",
      "date": "2009-03-26",
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      "id": "RL32254_2008Mar03",
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      "id": "RL32254 2004-03-03",
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