1. Short title
This Act may be cited as the “Veteran Entrepreneurs Act of 2018”.
Veteran Entrepreneurs Act of 2018
A BILL
To amend the Internal Revenue Code of 1986 to allow credits for the establishment of franchises by veterans.
2. Veterans franchise fee credit
In general— Subpart D of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 is amended by adding at the end the following new section:
“45T. Veterans franchise fee credit
“(a) Veterans franchise fee credit
“(1) In general—For purposes of section 38, the veterans franchise fee credit determined under this section for the taxable year is an amount equal to 25 percent of the qualified franchise fees paid or incurred by a veteran during the taxable year.
“(2) Limitation—The amount allowed as a credit under paragraph (1) with respect to the purchase of any franchise shall not exceed $100,000.
“(b) Reduction where franchise not 100 percent veteran-Owned—In the case of any franchise in which veterans do not own 100 percent of the stock or of the capital or profits interests of the franchise, the credit under subsection (a) shall be the credit amount determined under such subsection, multiplied by the same ratio as—
“(1) the stock or capital or profits interests of the franchise held by veterans, bears
“(2) to the total stock or capital or profits interests of the franchisee.
“(c) Qualified franchise fee—For purposes of this section, the term qualified franchise fee means any initial fee required by the franchisor when entering into a franchise agreement with a veteran as the franchisee.
“(d) Other definitions—For purposes of this section, the terms franchise, franchisee, franchisor, and initial fee have the meanings given such terms in part 436 of title 16, Code of Federal Regulations (as in effect on January 1, 2018).
“(e) Veteran—The term veteran has the meaning given such term by section 101 of title 38, United States Code.
“(f) Transfer of credit
“(1) In general—With respect to the credit allowed under subsection (a) for any taxable year, in the case of a veteran who—
“(A) has received a reduction in the amount of the qualified franchise fee otherwise required by the franchisor, and
“(B) elects application of this subsection for such taxable year with respect to any portion of such credit which is commensurate with the amount of the reduction described in subparagraph (A),
“(2) Prohibition—A franchisor may not require a veteran to elect application of this subsection as a condition for entering into a franchise agreement.
“(g) Election—This section shall not apply to a taxpayer for any taxable year if such taxpayer elects to have this section not apply for such taxable year.”
Credit To be part of general business credit— Section 38(b) of the Internal Revenue Code of 1986 is amended by striking “plus” at the end of paragraph (36), by striking the period at the end of paragraph (37) and inserting “, plus”, and by adding at the end the following new paragraph:
“(38) the veterans franchise fee credit determined under section 45T(a).”
Clerical amendment— The table of sections for subpart D of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 is amended by adding at the end the following new item:
Effective date— The amendments made by this section shall apply to taxable years ending after December 31, 2018.
3. Publication of information by Department of Veterans Affairs and Small Business Administration
The Administrator of the Small Business Administration and the Secretary of Veterans Affairs shall publicize in mailings and brochures sent to veterans service organizations and veteran advocacy groups information regarding discounted franchise fees under section 45T of the Internal Revenue Code of 1986 and other information about the program established under amendments made by this Act.