Section 1 Short title
This Act may be cited as the “Removing Onerous Obstacles in the Tax code for Mainstreet Businesses Act of 2018” or as the “ROOT for Mainstreet Businesses Act of 2018”.
Removing Onerous Obstacles in the Tax code for Mainstreet Businesses Act of 2018
A BILL
To amend the Internal Revenue Code of 1986 to exclude from the definition of personal holding company income certain royalties and rents derived in the active conduct of a trade or business.
Sec. 2 Certain royalties and rents derived in the active conduct of a trade or business not treated as personal holding company income
Royalties—
In general— Section 543(a)(1) of the Internal Revenue Code of 1986 is amended by striking “and” at the end of subparagraph (D), by striking the period at the end of subparagraph (E) and inserting “, and”, and by adding at the end the following new subparagraph:
“(F) royalties derived in the active conduct of a trade or business which are received from a person other than a related person (within the meaning of section 267).”
Copyright royalties— Section 543(a)(4) of such Code is amended by inserting “or to any amount derived in the active conduct of a trade or business which are received from a person other than a related person (within the meaning of section 267)” after “active business computer software royalties” in the last sentence thereof.
Rents—
In general— Section 543(b)(3) of such Code is amended by striking “or” at the end of subparagraph (D), by striking the period at the end of subparagraph (E) and inserting “, or”, and by adding at the end the following new subparagraph:
“(F) amounts derived in the active conduct of a trade or business which are received from a person other than a related person (within the meaning of section 267).”
Produced film rents— Section 543(a)(5)(B) of such Code is amended by adding at the end the following: “Such term shall not include any amount derived in the active conduct of a trade or business which are received from a person other than a related person (within the meaning of section 267).”
Regulations— Section 543 of such Code is amended by adding at the end the following new subsection:
“(e) Determination of whether royalties and rents are derived in the active conduct of a trade or business—The Secretary shall prescribe regulations or other guidance providing for the treatment of rents, royalties, and other amounts described in subsections (a)(1)(F), (a)(4), (a)(5)(B), and (b)(3)(F) as being derived in the active conduct of a trade or business consistent with the regulations and other guidance providing for such treatment for purposes of section 954(c)(2)(A).”
Effective date— The amendments made by this section shall apply to taxable years ending on or after the date of the enactment of this Act.