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H.R. 1199

U.S. House•In House Committee

Summary

H.R. 1199, the Small Business Investment Act of 2025, was introduced in the House on Feb 11, 2025 by Rep. David Kustoff (R). It was referred to Ways And Means, and last saw action on Feb 11, 2025: Referred to the House Committee on Ways and Means.

Record

Text

H.R. 1199 has no co-sponsors and has not gone to a roll call.

hb1199/introduced-in-house.txt
119 HR 1199 IH: Small Business Investment Act of 2025
 U.S. House of Representatives
 2025-02-11
 text/xml
 EN
 Pursuant to Title 17 Section 105 of the United States Code, this file is not subject to copyright protection and is in the public domain.
 I  119th CONGRESS  1st Session  H. R. 1199  IN THE HOUSE OF REPRESENTATIVES   February 11, 2025   Mr. Kustoff  introduced the following bill; which was referred to the  Committee on Ways and Means    A BILL
To amend the Internal Revenue Code of 1986 to modify the exclusion for gain from qualified small business stock.
1.
Short title
This Act may be cited as the   Small Business Investment Act of 2025  .
2.
Phased increase in exclusion for gain from qualified small business stock
(a)
In general
 Section 1202(a)(1)  of the Internal Revenue Code of 1986 is amended—
(1)
by striking  50 percent  and inserting  the applicable percentage , and
(2)
by striking  held for more than 5 years  and inserting  held for at least 3 years .
(b)
Applicable percentage
Section 1202(a) of such Code is amended by adding at the end the following new paragraph:
(5)
Applicable percentage
Except as provided in paragraphs (3) and (4), the applicable percentage under paragraph (1) shall be determined under the following table:
   Years stock held:    Applicable percentage:
  3 years  50%
  4 years  75%
  5 years or more  100%
 .
(c)
Continued treatment as not item of tax preference
(1)
In general
Section 57(a)(7) of such Code is amended by striking  An amount  and inserting  In the case of stock acquired on or before the date of the enactment of the Creating Small Business Jobs Act of 2010, an amount .
(2)
Conforming amendment
Section 1202(a)(4) of such Code is amended—
(A)
by striking  , and  at the end of subparagraph (B) and inserting a period, and
(B)
by striking subparagraph (C).
(d)
Other conforming amendments
(1)
Section 1202(a)(4) of such Code is amended by inserting  and before the date of the enactment of the  Small Business Investment Act of 2025   after  Act of 2010 .
(2)
Paragraphs (3) and (4) of section 1202(a) of such Code are each amended by inserting  held for more than 5 years and  after  In the case of qualified small business stock .
(3)
Section 1202(a)(3)(A) of such Code is amended to read as follows:
(A)
the applicable percentage under paragraph (1) shall be 75 percent, and
 ,
(4)
Section 1202(a)(4)(A) of such Code is amended to read as follows:
(A)
the applicable percentage under paragraph (1) shall be 100 percent, and
 .
(5)
Section 1202(b)(2) of such Code is amended by striking  more than 5 years  and inserting  at least 3 years .
(6)
Section 1202(g)(2)(A) of such Code is amended by striking  more than 5 years  and inserting  at least 3 years .
(7)
Section 1202(j)(1)(A) of such Code is amended by striking  more than 5 years  and inserting  at least 3 years .
(e)
Effective date
(1)
In general
Except as provided in paragraph (2), the amendments made by this section shall apply to stock acquired after the date of the enactment of this Act.
(2)
Continued treatment as not item of tax preference
The amendment made by subsection (c) shall take effect as if included in the enactment of section 2011 the Creating Small Business Jobs Act of 2010.
3.
Tacking holding period of convertible debt instruments
(a)
In general
 Section 1202(f)  of the Internal Revenue Code of 1986 is amended—
(1)
by redesignating paragraphs (1) and (2) as subparagraphs (A) and (B) and moving such subparagraphs (as so redesignated) 2 ems to the right,
(2)
by striking
conversion of other stock .—If any stock  and inserting the following:
conversion.—
(1)
Other stock
If any stock
 , and
(3)
by adding at the end the following new paragraph:
(2)
Convertible debt instruments
(A)
In general
If any stock in a corporation is acquired by the taxpayer, without recognition of gain, solely through the conversion of a qualified convertible debt instrument—
(i)
the stock so acquired shall be treated as qualified small business stock in the hands of the taxpayer, and
(ii)
the stock so acquired shall be treated as having been held during the period during which the qualified convertible debt instrument was held.
(B)
Qualified convertible debt instrument
For purposes of this paragraph, the term  qualified convertible debt instrument  means any bond or other evidence of indebtedness—
(i)
which is originally issued by the corporation to the taxpayer,
(ii)
the issuer of which—
(I)
from issuance until conversion, is a qualified small business, and
(II)
during substantially all of the taxpayer’s holding period of such bond or evidence of indebtedness, the corporation meets the active business requirements of subsection (e), and
(iii)
which is convertible into stock in the corporation.
 .
(b)
Effective date
The amendments made by this section shall apply to debt instruments originally issued after the date of the enactment of this Act.
4.
Gain exclusion allowed with respect to qualified small business stock in corporation
(a)
In general
 Section 1202(c)  of the Internal Revenue Code of 1986 is amended—
(1)
by striking  C corporation  in paragraphs (1) and inserting  corporation , and
(2)
by striking  and such corporation is a C corporation  in paragraph (2)(A).
(b)
Qualified small business definition
Section 1202(d)(1) of such Code is amended by striking  which is a C corporation .
(c)
Clarification of aggregation rules applicable to
S  corporations
Section 1202(d)(3) of such Code is amended by adding at the end the following new subparagraph:
(C)
Clarification with respect to
S  corporations
Any determination of the members of a controlled group of corporations under this paragraph shall include taking into account any stock ownership in an S corporation.
 .
(d)
Treatment of passive losses
Section 469(g)(1) of such Code is amended by adding at the end the following new subparagraph:
(D)
Certain dispositions of small business stock
In the case a disposition any gain from which is excluded from gross income under section 1202, subparagraph (A) shall not apply.
 .
(e)
Special rules relating to
S  corporations
Section 1202(e) of such Code is amended by adding at the end the following new paragraph:
(9)
Applied at
S  corporation level
In the case of an S corporation, the requirements of this subsection shall be applied at the corporate level.
 .
(f)
Effective date
The amendments made by this section shall apply to stock acquired after the date of the enactment of this Act.

Tracker

The tracker indicates the progress of this legislation as it moves through the legislative process.

  1. Introduced2025-02-11
  2. Passed House
  3. Passed Senate
  4. Conference
  5. To President
  6. Became Law

CRS Summary

The summaries are the Congressional Research Service’s, one per stage. Read them in full.

Introduced in House Feb 11, 2025

hb1199/introduced-in-house.md

Shown Here:
Introduced in House (02/11/2025)

Small Business Investment Act of 2025

This bill reduces the time period a noncorporate taxpayer is required to hold qualified small business stock (QSBS) before a percentage of the gain on the sale or exchange of such stock may be excluded from gross income. (Limitations apply.) The bill also expands QSBS to include qualified debt instruments and certain corporate stock.

Under current law, a noncorporate taxpayer may exclude from gross income 100% of the gain from the sale or exchange of QSBS acquired after September 27, 2010 (or a smaller percentage if acquired on or before such date) and held for more than five years. Further, under current law, QSBS must be C corporation stock. (Exclusions and other requirements apply.)

The bill allows a noncorporate taxpayer to exclude from gross income

  • 50% of the gain on the sale or exchange of QSBS (purchased after the enactment date of the bill) held for three years,
  • 75% of the gain on the sale or exchange of such stock held for four years, and
  • 100% of the gain on the sale or exchange of such stock held for five years.

Further, the bill expands QSBS to include stock acquired through the conversion of a qualified convertible debt instrument (e.g., bond converted into stock). Under the bill, the holding period of such stock includes the time period during which the qualified convertible debt instrument is held.

Finally, the bill expands QSBS to include corporate stock, not just C corporation stock. (Limitations apply.).

Sponsors

Rep. David Kustoff (R) sponsors H.R. 1199 alone.

David Kustoff

Rep. · R–TN-8 · Sponsor

Committees

H.R. 1199 went before 1 committee: Ways and Means.

Ways and Means
Ways and Means
Referred To · Feb 11, 2025 · 1,160 Bills

Actions

H.R. 1199 has taken 2 actions since Feb 11, 2025.

ChamberAction
Feb 11, 2025
House
Introduced in House
Feb 11, 2025
House
Referred to the House Committee on Ways and Means.Ways and Means Committee

Votes

H.R. 1199 has not gone to a roll call.

1 bill is related to H.R. 1199.

Titles

H.R. 1199 goes by 3 titles, 1 of them short titles.

  • Small Business Investment Act of 2025 — Display Title
  • Small Business Investment Act of 2025 — Short Title(s) as Introduced
  • To amend the Internal Revenue Code of 1986 to modify the exclusion for gain from qualified small business stock. — Official Title as Introduced

Lobbying

6 clients hired 6 firms and 123 registered lobbyists who named H.R. 1199 in 37 quarterly filings, 2025 to 2026. Reported under the Lobbying Disclosure Act; a filing’s income covers everything its registrant worked that quarter, so the amounts below are the filings’, not this bill’s.

Filed under Health Issues, Taxation/Internal Revenue Code, Budget/Appropriations, Financial Institutions/Investments/Securities, Small Business, Trade (domestic/foreign), Labor Issues/Antitrust/Workplace, Education.

Clients

Who paid to be heard, by how many filings named the bill.

ClientBusinessStateFirmsFilingsReported
ALZHEIMER'S ASSOCIATION—District of Columbia110—
JOB CREATORS NETWORKadvocacy organization for small businessTexas19$55.5K
ANGEL CAPITAL ASSOCIATIONPrivate investor and angel group trade association.Kansas16$88K
NATIONAL VENTURE CAPITAL ASSOCIATION—District of Columbia15—
CHAMBER OF COMMERCE OF THE U.S.A.—District of Columbia14—
ESHARES, INC. D/B/A CARTA, INC.—California13—

Firms

Registrants who filed on the bill, by filings.

RegistrantClientsFilingsReported
ALZHEIMER'S ASSOCIATION110—
HARNED STRATEGIES LLC19$55.5K
GRAYROBINSON PA16$88K
NATIONAL VENTURE CAPITAL ASSOCIATION15—
CHAMBER OF COMMERCE OF THE U.S.A.14—
ESHARES, INC. D/B/A CARTA, INC.13—

Lobbyists

Named on the filings that cite the bill. The 20 named most often, of 123.

LobbyistFirmsClientsFilings
AMY HEATH1110
JENNIFER POLLACK1110
LAURA THORNHILL1110
MARY GERMILLER1110
RACHEL CONANT1110
SARAH OSUNA1110
ZOE SALZBERG1110
KAREN HARNED119
BLAIR HANCOCK116
CHRISTOPHER MCCANNELL116
JENNIFER HARPER116
ASHLYN ROBERTS115
BOBBY FRANKLIN115
CAROLINE SCHELLHAS115
CHRISTINA MARTIN115
DIEM-MI LU115
ABELARDO TORRES114
ANDREA PORWOLL114
ASHLEY GUM114
BRADLEY WATTS114

Filings

The documents themselves, on the Senate’s Lobbying Disclosure site, largest reported first.

ClientRegistrantPeriodReportedDocument
CHAMBER OF COMMERCE OF THE U.S.A.CHAMBER OF COMMERCE OF THE U.S.A.2025 second_quarter$19.3M2nd Quarter - Report
CHAMBER OF COMMERCE OF THE U.S.A.CHAMBER OF COMMERCE OF THE U.S.A.2025 first_quarter$19.3M1st Quarter - Report
CHAMBER OF COMMERCE OF THE U.S.A.CHAMBER OF COMMERCE OF THE U.S.A.2025 fourth_quarter$18M4th Quarter - Report
CHAMBER OF COMMERCE OF THE U.S.A.CHAMBER OF COMMERCE OF THE U.S.A.2025 third_quarter$13.7M3rd Quarter - Report
ALZHEIMER'S ASSOCIATIONALZHEIMER'S ASSOCIATION2026 second_quarter$1.8M2nd Quarter - Report
ALZHEIMER'S ASSOCIATIONALZHEIMER'S ASSOCIATION2025 second_quarter$1.8M2nd Quarter - Amendme…
ALZHEIMER'S ASSOCIATIONALZHEIMER'S ASSOCIATION2025 second_quarter$1.8M2nd Quarter - Report
NATIONAL VENTURE CAPITAL ASSOCIATIONNATIONAL VENTURE CAPITAL ASSOCIATION2026 second_quarter$1.2M2nd Quarter - Report
ALZHEIMER'S ASSOCIATIONALZHEIMER'S ASSOCIATION2025 third_quarter$1.1M3rd Quarter - Report
NATIONAL VENTURE CAPITAL ASSOCIATIONNATIONAL VENTURE CAPITAL ASSOCIATION2025 second_quarter$882.9K2nd Quarter - Report
NATIONAL VENTURE CAPITAL ASSOCIATIONNATIONAL VENTURE CAPITAL ASSOCIATION2025 fourth_quarter$722.9K4th Quarter - Report
NATIONAL VENTURE CAPITAL ASSOCIATIONNATIONAL VENTURE CAPITAL ASSOCIATION2025 third_quarter$648.1K3rd Quarter - Report
ALZHEIMER'S ASSOCIATIONALZHEIMER'S ASSOCIATION2025 first_quarter$560K1st Quarter - Amendme…
ALZHEIMER'S ASSOCIATIONALZHEIMER'S ASSOCIATION2025 fourth_quarter$560K4th Quarter - Amendme…
ALZHEIMER'S ASSOCIATIONALZHEIMER'S ASSOCIATION2025 first_quarter$530K1st Quarter - Report
ALZHEIMER'S ASSOCIATIONALZHEIMER'S ASSOCIATION2025 fourth_quarter$520K4th Quarter - Amendme…
ALZHEIMER'S ASSOCIATIONALZHEIMER'S ASSOCIATION2025 fourth_quarter$520K4th Quarter - Report
ALZHEIMER'S ASSOCIATIONALZHEIMER'S ASSOCIATION2026 first_quarter$490K1st Quarter - Report
NATIONAL VENTURE CAPITAL ASSOCIATIONNATIONAL VENTURE CAPITAL ASSOCIATION2026 first_quarter$464.3K1st Quarter - Report
ESHARES, INC. D/B/A CARTA, INC.ESHARES, INC. D/B/A CARTA, INC.2025 second_quarter$140K2nd Quarter - Report

Classification

The Congressional Research Service files H.R. 1199 under Taxation, one of its 31 policy areas.

CRS Subjects

CRS assigns every bill one policy area from its 31; H.R. 1199’s is Taxation.

hr1199/policy-areas.txt
TaxationAgriculture and FoodAnimalsArmed Forces and National SecurityArts, Culture, ReligionCivil Rights and Liberties, Minority IssuesCommerceCongressCrime and Law EnforcementEconomics and Public FinanceEducationEmergency ManagementEnergyEnvironmental ProtectionFamiliesFinance and Financial SectorForeign Trade and International FinanceGovernment Operations and PoliticsHealthHousing and Community DevelopmentImmigrationInternational AffairsLabor and EmploymentLawNative AmericansPublic Lands and Natural ResourcesScience, Technology, CommunicationsSocial WelfareSports and RecreationTransportation and Public WorksWater Resources Development

Constitutional authority

The clause the sponsor cites as Congress’s power to enact H.R. 1199, as entered in the Congressional Record.

[Congressional Record Volume 171, Number 28 (Tuesday, February 11, 2025)][House]From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]By Mr. KUSTOFF:H.R. 1199.Congress has the power to enact this legislation pursuantto the following:Under Article I, Section 8, the Necessary and ProperClause. Congress shall have power to make all laws whichshall be necessary and proper for carrying into Execution theforegoing powers and all Powers vested by this Constitutionin the Government of the United States, or in any Departmentof Officer thereof.[Page H645]

Source: congress.gov · legiscan.com