BIG (Built-In Gains) Day – Continued
Building on the oral testimony of Congressman Dave Reichert (R-WA) at the member’s hearing on tax extenders held by the Ways and Means Revenues subcommittee, Congressman Ron Kind (D-WI) also weighed in to support extending built-in gains relief this year.
An original author of the S Corporation Modernization Act, Kind, in his written comments to the subcommittee writes:
A provision of chief importance is the provision reducing the holding period for Built-In Gains from 10 years to five years for those small businesses known as S corporations. This provision allows our business community to create jobs in the United States. Unlike public companies, these closely –held businesses have little or no access to the public capital markets, and must be able to access their own capital in a timely manner in order to grow their businesses, create jobs, and remain competitive. The S Corporation Modernization Act (HR 1478) that I co-authored with Dave Reichert (R-WA) extends the five-year holding period, and ensures that S-corporations will continue to spur job growth.
Unless Congress extends the five-year holding period, it will revert back to 10-years, and S corporations will be forced to wait an entire decade to access their own capital without penalty.
Meanwhile, the business community has come out in strong support of legislation extending important small business tax provisions, including a shorter Built-In Gains (BIG) holding period. The bill, S. 2050, the Small Business Tax Extenders Act of 2012, is sponsored by Senators Olympia Snowe (R-ME) and Mary Landrieu (D-LA) and features a permanent extension of the 5-year BIG holding period. As stated in the letter:
The bill grants much needed relief to S corporations, by increasing their ability to access capital. It does so by reducing the built-in gains holding period for S corporations. When businesses convert from a C corporation to an S corporation, they have been required to hold their appreciated assets for up to a decade or else face a punitive level of double taxation.
The letter was signed by the U.S. Chamber of Commerce, the National Federation of Independent Businesses (NFIB), the S Corporation Association and 23 other business groups. Main Street businesses know that these days growing our businesses is about access to capital – that’s what this bill is all about, and that’s why the business community applauds the leadership of Senators Snowe and Landrieu.
As always, we appreciate Congressman Kind and Congressman Reichert’s steady support for the critical Built-In Gain provision, as well as the willingness of Senators Landrieu and Snowe to feature the BIG holding period in their small business extender bill. These are the pieces that set the stage for tax conversations on the immediate horizon, so their contributions are invaluable!