Sec. 201 Small business rebate
“6429. Small business rebate
“(a) Allowance of credit
“(1) In general—In the case of a qualifying taxpayer, there shall be allowed as a credit against the tax imposed by subtitle A for the first taxable year beginning in 2020 an amount equal to the lesser of—
“(A) 30 percent of qualified gross profits of such qualifying taxpayer for the applicable taxable year, or
“(B) $75,000.
“(2) Phase-out for individuals—In the case of a qualifying taxpayer that is a qualified individual, the amount of the credit determined under paragraph (1) (determined without regard to this paragraph) shall be reduced (but not below zero) by the amount which bears the same ratio to such credit (as so determined) as—
“(A) the excess of—
“(i) the taxpayer's adjusted gross income for the applicable taxable year, over
“(ii) $100,000 ($200,000 in the case of a joint return), bears to
“(B) $50,000 ($100,000 in the case of a joint return).
“(3) Reduction for qualified organizations
“(A) In general—In the case of a qualifying taxpayer that is a qualified organization, the amount of the credit determined under paragraph (1) (determined without regard to this paragraph) shall be reduced by the total expenditures of the organization described in section 162(e)(1) (other than expenditures described in section 6033(e)(1)(B)(ii)).
“(B) Exception—This paragraph shall not apply to any organization described in section 501(c)(3).
“(b) Qualifying taxpayer—For purposes of this section—
“(1) In general—The term qualifying taxpayer means any taxpayer that is a domestic C corporation, a qualified organization, or a qualified individual that meets the gross profits test under paragraph (4) for the applicable taxable year.
“(2) Qualified organization—The term qualified organization means any organization which is described in section 501(c) and exempt from tax under section 501(a).
“(3) Qualified individual—The term qualified individual means any individual who—
“(A) is a United States citizen or resident, and
“(B) materially participates (within the meaning of section 469(h)) in one or more trades or businesses (other than any trade or business consisting of the performance of services by the taxpayer as an employee (within the meaning of section 62(a)(1))).
“(4) Gross profits test
“(A) In general—A taxpayer meets the gross profits test under this section if the qualified gross profits of the taxpayer for the applicable taxable year are not more than $1,000,000.
“(B) Aggregation rules
“(i) In general—All qualifying taxpayers that are domestic C corporations or qualified organizations and that are treated as a single employer under subsection (a) or (b) of section 52 or subsection (m) or (o) of section 414 shall be treated as a single person for purposes of subparagraph (A).
“(ii) Qualifying individuals—All trades or businesses in which a qualified individual materially participates (within the meaning of section 469(h)) shall be treated as a single trade or business for purposes of subparagraph (A).
“(c) Qualified gross profits—For purposes of this section—
“(1) In general—Except as otherwise provided in this subsection, the term qualified gross profits means the excess of—
“(A) the gross receipts of the taxpayer as reported on the return of tax for the applicable taxable year, reduced by
“(B) returns and allowances and cost of goods sold as reported on the return of tax for the applicable taxable year.
“(2) Application to qualified organizations—In the case of a qualified organization—
“(A) paragraph (1) shall be applied—
“(i) by treating the reference to gross receipts as a reference to gross receipts within the meaning of section 6033, and
“(ii) without regard to subparagraph (B) thereof, and
“(B) in the case of an organization which, for all applicable taxable years, is exempt from filing a return pursuant to section 6033(a) or which is not required to include in such return the information necessary to determine the amount qualified gross receipts, such organization may submit to the Secretary (in such form and manner as is deemed appropriate by the Secretary) any information required for purposes of determining the amount of such gross receipts.
“(3) Application to qualified individuals
“(A) In general—In the case of a qualified individual—
“(i) gross receipts, returns and allowances, and cost of goods sold taken into account under paragraph (1) shall only include gross receipts from trades or businesses described in subsection (b)(3) in which the qualified individual materially participated, and
“(ii) wages received from any such trade or business by the qualified individual shall not be taken into account under paragraph (1)(A).
“(B) Treatment of amounts from partnerships and S corporations—In the case of any qualified individual who materially participates (within the meaning of section 469(h)) in a trade or business of a partnership or S corporation in which such individual is a partner or shareholder, the amount determined under paragraph (1) with respect to such trade or business shall be determined using—
“(i) in the case of a partnership, the partner's distributive share of non-separately stated income, as reported on the return of tax for the applicable taxable year, and
“(ii) in the case of an S corporation, the shareholder's pro rata share of non-separately stated income, as reported on the return of tax for the applicable taxable year.
“(C) Treatment of amounts from farming businesses—In the case of a qualified individual who materially participates (within the meaning of section 469(h)) in a farming business (as defined in section 263A(e)(4)), the amount of determined under paragraph (1) shall be the gross income derived from such business, as reported on the return of tax for the applicable taxable year.
“(d) Applicable taxable year—For purposes of this section, the term applicable taxable year means—
“(1) the first taxable year beginning in 2019, or
“(2) in any case in which the qualifying taxpayer did not file a tax return for the taxable year described in paragraph (1), the first taxable year beginning in 2018.
“(e) Treatment of credit
“(1) In general—The credit allowed by subsection (a) shall be treated as allowed by subpart C of part IV of subchapter A of chapter 1.
“(2) Credit included in gross income
“(A) In general—Except as provided in subparagraph (B), for purposes of subtitle A, the amount of any credit allowed under this section shall be included in gross income.
“(B) Amounts not taken into account for purposes of premium tax credit
“(i) In general—For purposes of determining modified adjusted gross income under section 36B(d)(2)(B), adjusted gross income shall not include any amount treated as income by reason of subparagraph (A).
“(ii) Exception—Paragraph (1) shall not apply to the extent such reduction results in an amount of household income (as defined in section 36B(d)(2)(A)) of a taxpayer that is less than 100 percent of the poverty line (as defined in section 36B(d)(3)) for a family of the size involved (as determined under the rules of section 36B(d)(1)).
“(f) Coordination with advance refunds and credit for employer operating expenses
“(1) Coordination with advance refunds of credit—The amount of credit which would (but for this subsection) be allowable under this section shall be reduced (but not below zero) by the aggregate refunds and credits made or allowed to the taxpayer under subsection (g). Any failure to so reduce the credit shall be treated as arising out of a mathematical or clerical error and assessed according to section 6213(b)(1).
“(2) Coordination with credit for employer operating expenses—The amount of the credit allowed under this section (determined without regard to this subsection) shall be reduced (but not below zero) by the amount of any credit allowed under section 102 of the Paycheck Security Act during the taxable year.
“(3) Special rule for recapture of advanced refunds and credits
“(A) In general—In the case of any qualifying taxpayer who received a refund or credit by reason of subsection (g) and who was allowed a credit under section 102 of the Paycheck Security Act for any quarter ending on or before the last day of the taxpayer's first taxable year beginning in 2020, the tax imposed by chapter 1 on the taxpayer to whom such refund or credit was made or allowed shall be increased for the taxable year by the lessor of—
“(i) the refund or credit made or allowed to such taxpayer by reason of subsection (g), or
“(ii) the amount of the credit allowed under section 102 of the Paycheck Security Act.
“(B) Application to partnerships and S corporations—For purposes of applying subparagraph (A), in the case of any partnership or S corporation which was allowed a credit under section 102 of the Paycheck Security Act, each partner of such partnership shall be treated as having been allowed a credit under such section equal to such partner's distributive share of such credit and each shareholder of such S corporation shall be treated as having been allowed a credit equal to such shareholder's pro rata share of such credit.
“(C) Return requirement—If the tax imposed by chapter 1 for the taxable year is increased under this paragraph, the taxpayer shall, notwithstanding section 6012, be required to file a return with respect to the taxes imposed under subtitle A.
“(g) Advance refunds and credits
“(1) In general—Any person which was a qualifying taxpayer for such person’s last taxable year ending before January 1, 2020, shall be treated as having made a payment against the tax imposed by chapter 1 for such taxable year in an amount equal to the advance refund amount for such taxable year, regardless of whether such tax would have been imposed on such person.
“(2) Advance refund amount—For purposes of paragraph (1), the advance refund amount is the amount that would have been allowed as a credit under this section for such taxable year if this section (other than subsection (f) and this subsection) had applied to such taxable year.
“(3) Timing of payments—The Secretary shall, subject to the provisions of this title, refund or credit any overpayment attributable to this section as rapidly as possible. No refund or credit shall be made or allowed under this subsection after December 31, 2020.
“(4) No interest—No interest shall be allowed on any overpayment attributable to this section.
“(h) Regulations and guidance—The Secretary shall issue such forms, instructions, regulations, and guidance as are necessary, including guidance with respect to the application of subsection (f)(3)(B) to partners and partnerships with differing taxable years.”