HR 6800 Heroes Act

[bernorange 8348]

This passed the House, but may not survive the Senate (at least not without modification) or get signed.  Have you seen what's in this bill?  Summary posted here:

https://appropriations.house.gov/sites/democrats.appropriations.house.gov/files/documents/Heroes Act Summary.pdf

The Economic Stimulus section is ... very generous IMO.  I've read this section several times and am still confused as to what it's saying:

Quote

SUBTITLE B – TAX CREDITS TO PREVENT BUSINESS INTERUPTION

Sec. 20213. Business interruption credit for the self-employed.
Provides a 90% refundable individual income tax credit for certain self-employed individuals who have experienced a significant loss of income.  The credit may be claimed on “qualified self-employment income” which is the loss in gross income for self-employment that exceeds a 10% reduction from 2019 to 2020, scaled using the ratio of net earnings from self-employment to gross income from self-employment in 2019. The amount of qualified self-employment income taken into account cannot exceed the reduction in adjusted gross income from 2019 to 2020, and is capped at $45,000. The credit phases out starting at $60,000 of adjusted gross income ($120,000 for married filing jointly) at a rate of $50 for every $100 of income.

 

[elfenix 34171]

     BUSINESS INTERRUPTION CREDIT FOR CERTAIN SELF-EMPLOYED INDIVIDUALS

Sec. 20213.

(a) Credit against tax.—In the case of an eligible self-employed individual, there shall be allowed as a credit against the tax imposed by chapter 1 of subtitle A of the Internal Revenue Code of 1986 for the taxpayer’s first taxable year beginning in 2020 an amount equal to 90 percent of the eligible self-employed individual’s qualified self-employment income.

(b) Limitations.—

(1) OVERALL LIMITATION.—The amount of qualified self-employment income taken into account under subsection (a) with respect to any eligible self-employed individual shall not exceed $45,000.

(2) LIMITATION BASED ON MODIFIED ADJUSTED GROSS INCOME.—

(A) IN GENERAL.—The amount of the credit allowed by subsection (a) (after application of paragraph (1)) shall be reduced (but not below zero) by 50 percent of so much of the taxpayer’s modified adjusted gross income for the taxpayer’s first taxable year beginning in 2020 as exceeds $60,000 ($120,000 in the case of a joint return).

(B) MODIFIED ADJUSTED GROSS INCOME.—For purposes of this section the term “modified adjusted gross income” means adjusted gross income determined without regard to sections 911, 931, and 933 of such Code.

(c) Eligible self-employed individual.—For purposes of this section, the term “eligible self-employed individual” means an individual—

(1) who—

(A) regularly carries on one or more trades or businesses within the meaning of section 1402 of such Code, or

(B) is allocated income or loss described in section 702(a)(8) of such Code from any trade or business carried on by a partnership which is not excluded under section 1402 of such Code, and

(2) for whom gross self-employment income during the first taxable year beginning in 2020 is less than 90 percent of such individual’s gross self-employment income during the first taxable year beginning in 2019.

(d) Qualified self-employment income.—For purposes of this section—

(1) IN GENERAL.—The term “qualified self-employment income” means the product of—

(A) the specified gross self-employment income reduction for the first taxable year beginning in 2020, multiplied by

(B) the ratio of—

(i) self-employment income (as determined under section 1402(b) of such Code, but not below zero) for the first taxable year beginning in 2019, divided by

(ii) gross self-employment income for the first taxable year beginning in 2019.

(2) LIMITATION BASED ON MODIFIED ADJUSTED GROSS INCOME.—In the case of any taxpayer, qualified self-employment income shall not exceed the excess (if any) of—

(A) modified adjusted gross income for the first taxable year beginning in 2019, over

(B) modified adjusted gross income for the first taxable year beginning in 2020.

(3) SPECIFIED GROSS SELF-EMPLOYMENT INCOME REDUCTION.—For purposes of paragraph (1), the term “specified gross self-employment income reduction” means, with respect to a taxable year, the excess (if any) of—

(A) 90 percent of gross self-employment income for the taxable year preceding such taxable year, over

(B) gross self-employment income for such taxable year.

(e) Gross self-employment income.—For purposes of this section, the term “gross self-employment income” means, with respect to any taxable year, the sum of—

(1) the eligible self-employed individuals’ gross income derived from all trades or business carried on by such individual for purposes of determining net earnings from self-employment under section 1402 of such Code for such taxable year, and

(2) the eligible individual’s distributive share of gross income (as determined under section 702(c) of such Code) from any trade or business carried on by a partnership for purposes of determining net earnings from self-employment under section 1402 of such Code (and which is not excluded under such section) for such taxable year.

(f) Special rules.—

(1) CREDIT REFUNDABLE.—

(A) IN GENERAL.—The credit determined under this section shall be treated as a credit allowed to the taxpayer under subpart C of part IV of subchapter A of chapter 1 of such Code.

(B) TREATMENT OF PAYMENTS.—For purposes of section 1324 of title 31, United States Code, any refund due from the credit allowed under this section shall be treated in the same manner as a refund due from a credit provision referred to in subsection (b)(2) of such section.

(2) DOCUMENTATION.—No credit shall be allowed under this section unless the taxpayer maintains such documentation as the Secretary of the Treasury (or the Secretary’s delegate) may prescribe to establish such individual as an eligible self-employed individual.

(3) DENIAL OF DOUBLE BENEFIT.—Qualified self-employment income shall be reduced by—

(A) the qualified sick leave equivalent amount for which a credit is allowed under section 7002(a) of the Families First Coronavirus Response Act and the qualified family leave equivalent amount for which a credit is allowed under section 7004(a) of such Act,

(B) the qualified wages for which a credit is allowed under section 2301 of the CARES Act,

(C) the amount of the credit allowed under section 6432 of the Internal Revenue Code of 1986 (as added by this Act), and

(D) except to the extent taken into account in determining gross self-employment income, amounts from a covered loan under section 7(a)(36) of the Small Business Act that are—

(i) forgiven pursuant to section 1106(b) of the CARES Act, and

(ii) paid or distributed to the eligible self-employed individual as payroll costs described in section 7(a)(36)(A)(viii)(I) of the Small Business Act.

(4) JOINT RETURNS.—

(A) IN GENERAL.—In the case of a joint return, the taxpayer shall be treated for purposes of this section as an eligible self-employed individual if either spouse is an eligible self-employed individual.

(B) APPLICATION OF MODIFIED ADJUSTED GROSS INCOME LIMITATION ON QUALIFIED SELF-EMPLOYMENT INCOME.—If the taxpayer filed a joint return for only one of the taxable years described in subsection (d)(2), such limitation shall apply in such manner as the Secretary of the Treasury (or the Secretary’s delegate) may provide.

(5) ELECTION NOT TO HAVE SECTION APPLY.—This section shall not apply with respect to any taxpayer for any taxable year if such taxpayer elects (at such time and in such manner as the Secretary of the Treasury, or the Secretary’s delegate, may prescribe) not to have this section apply.

(g) Application of credit in certain possessions.—

(1) PAYMENTS TO POSSESSIONS WITH MIRROR CODE TAX SYSTEMS.—The Secretary of the Treasury (or the Secretary’s delegate) shall pay to each possession of the United States which has a mirror code tax system amounts equal to the loss (if any) to that possession by reason of the application of the provisions of this section. Such amounts shall be determined by the Secretary of the Treasury (or the Secretary’s delegate) based on information provided by the government of the respective possession.

(2) PAYMENTS TO OTHER POSSESSIONS.—The Secretary of the Treasury (or the Secretary’s delegate) shall pay to each possession of the United States which does not have a mirror code tax system amounts estimated by the Secretary of the Treasury (or the Secretary’s delegate) as being equal to the aggregate benefits (if any) that would have been provided to residents of such possession by reason of the provisions of this section if a mirror code tax system had been in effect in such possession. The preceding sentence shall not apply unless the respective possession has a plan, which has been approved by the Secretary of the Treasury (or the Secretary’s delegate), under which such possession will promptly distribute such payments to its residents.

(3) MIRROR CODE TAX SYSTEM.—For purposes of this section, the term “mirror code tax system” means, with respect to any possession of the United States, the income tax system of such possession if the income tax liability of the residents of such possession under such system is determined by reference to the income tax laws of the United States as if such possession were the United States.

(4) TREATMENT OF PAYMENTS.—For purposes of section 1324 of title 31, United States Code, the payments under this section shall be treated in the same manner as a refund due from a credit provision referred to in subsection (b)(2) of such section.

(h) Certain terms.—Any term used in this section which is also used in chapter 2 of the Internal Revenue Code of 1986 shall have the same meaning as when used in such chapter.

(i) Regulations and guidance.—The Secretary of the Treasury (or the Secretary’s delegate) shall issue such forms, instructions, regulations, and guidance as are necessary or appropriate—

(1) to allow the advance payment of the credit under subsection (a) (including allowing use of the anticipated credit to offset estimated taxes) based on the taxpayer’s good faith estimates of gross self-employment income and qualified self-employment income for the first taxable year beginning in 2020 and such other information as the Secretary of the Treasury (or the Secretary’s delegate) shall require, subject to the limitations provided in this section,

(2) to provide for the reconciliation of such advance payment with the amount of the credit at the time of filing the return of tax for the taxpayer’s first taxable year beginning in 2020,

(3) to provide for the application of this section to partners in partnerships, and

(4) to implement the purposes of this section.

https://www.congress.gov/bill/116th-congress/house-bill/6800/text#HC7D9D89C63D442D7B3811D778162ABA9