Sec. 234. Tax benefits for apparel and home textile products
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Part III of subchapter B of chapter 1 of the Internal Revenue Code of 1986 is amended by inserting after section 139I the following new sections: In the case of a corporation, gross income shall not include any income from the qualifying domestic sale of qualified finished textile products. For purposes of this section— The term qualifying domestic sale means any sale or exchange within the United States. Such term shall not include any sale to a related person. For purposes of subparagraph (A), a person shall be treated as related to another person if such persons are treated as a single employer under subsection
(a)or
(b)of section 52 or subsection
(m)or
(o)of section 414, except that determinations under subsections
(a)and
(b)of section 52 shall be made without regard to section 1563(b). For purposes of this section— The term qualified finished textile products means any inventory property (as defined in section 865(i)(1)) which— is a finished textile product, and is— an originating good under section 202(c) of the United States-Mexico-Canada Agreement Implementation Act ( 19 U.S.C. 4531 ), section 203(b) of the Dominican Republic-Central America-United States Free Trade Agreement Implementation Act ( 19 U.S.C. 4033(b) ), or a comparable provision of an Act to implement a free trade agreement between the United States and a qualifying Western Hemisphere country, or an eligible article under section 213 of the Caribbean Basin Economic Recovery Act ( 19 U.S.C. 2703 ). The term finished textile product means a product put up for retail sale that is classifiable under chapters 50 through 63 of the Harmonized Tariff Schedule of the United States. The term qualifying Western Hemisphere country means any country— which is located in the Western Hemisphere, and with which the United States has a free trade agreement in effect. In the case of a corporation, gross income shall not include any income from the qualifying foreign sale of any qualified textile fiber product. For purposes of this section— The term qualifying foreign sale means any sale or exchange which the taxpayer establishes to the satisfaction of the Secretary is for any use, disposition, or consumption within a qualifying Western Hemisphere country (as defined in section 139J). For purposes of this subsection, rules similar to the rules of subparagraphs (B)(i) and (C)(i) of section 250(b)(5) shall apply. For purposes of this section— The term qualifying textile fiber product means any textile fiber product which— was manufactured, produced, or grown by the taxpayer in whole within the United States, or is an originating good under section 202(c) of the United States-Mexico-Canada Agreement Implementation Act ( 19 U.S.C. 4531 ), section 203(b) of the Dominican Republic-Central America-United States Free Trade Agreement Implementation Act ( 19 U.S.C. 4033(b) ), or a comparable provision of an Act to implement a free trade agreement between the United States and a qualifying Western Hemisphere country (as defined in section 139J). The term textile fiber product means— any manufactured fiber, whether in the finished or unfinished state, used or intended for use in household or industrial textile articles, any yarn or fabric, whether in the finished or unfinished state, used or intended for use in apparel, household, or industrial textile articles, and any household or industrial textile article made in whole or in part of fiber, yarn, or fabric. . Section 172(d) of the Internal Revenue Code of 1986 is amended by adding at the end the following new paragraph: Gross income shall be determined without regard to section 139J and 139K. . The table of sections for part III of subchapter B of chapter 1 of such Code is amended by inserting after the item relating to section 139I the following new items: Sec. 139J. Sales of finished textile products imported from qualifying Western Hemisphere countries. Sec. 139K. Textile fiber products exported to qualifying Western Hemisphere countries. . The amendments made by this subsection shall apply to taxable years beginning after the date of the enactment of this Act. Part VIII of subchapter B of chapter 1 of the Internal Revenue Code of 1986 is amended by adding at the end the following new section: In the case of a corporation, there shall be allowed as a deduction an amount equal to 9 percent of the lesser of— the qualified textile production activities income of the taxpayer for the taxable year, or taxable income (determined without regard to this section) for the taxable year. The amount of the deduction allowable under subsection
(a)for any taxable year shall not exceed 50 percent of the W–2 wages of the taxpayer for the taxable year. 2 wages For purposes of this section— The term W–2 wages means, with respect to any person for any taxable year of such person, the sum of the amounts described in paragraphs
(3)and
(8)of section 6051(a) paid by such person with respect to employment of employees by such person during the calendar year ending during such taxable year. Such term shall not include any amount which is not properly allocable to domestic textile production gross receipts for purposes of subsection (c)(1). Such term shall not include any amount which is not properly included in a return filed with the Social Security Administration on or before the 60th day after the due date (including extensions) for such return. The Secretary shall provide for the application of this subsection in cases of a short taxable year or where the taxpayer acquires, or disposes of, the major portion of a trade or business or the major portion of a separate unit of a trade or business during the taxable year. For purposes of this section— The term qualified textile production activities income for any taxable year means an amount equal to the excess (if any) of— the taxpayer's domestic textile production gross receipts for such taxable year, over the sum of— the cost of goods sold that are allocable to such receipts, and other expenses, losses, or deductions (other than the deduction allowed under this section), which are properly allocable to such receipts. The Secretary shall prescribe rules for the proper allocation of items described in paragraph
(1)for purposes of determining qualified textile production activities income. Such rules shall provide for the proper allocation of items whether or not such items are directly allocable to domestic textile production gross receipts. For purposes of determining costs under clause
(i)of paragraph (1)(B), any item or service brought into the United States shall be treated as acquired by purchase, and its cost shall be treated as not less than its value immediately after it entered the United States. A similar rule shall apply in determining the adjusted basis of leased or rented property where the lease or rental gives rise to domestic textile production gross receipts. In the case of any property described in subparagraph
(A)that had been exported by the taxpayer for further manufacture, the increase in cost or adjusted basis under subparagraph
(A)shall not exceed the difference between the value of the property when exported and the value of the property when brought back into the United States after the further manufacture. The term domestic textile production gross receipts means the gross receipts of the taxpayer which are derived from any lease, rental, license, sale, exchange, or other disposition of textile fiber product (as defined in section 139K) which was manufactured, produced, or grown by the taxpayer in whole or in significant part within the United States. Such term shall not include any gross receipts— from the qualifying foreign sale (as defined in section 139K) of qualifying textile fiber products (as defined in such section), or from activities described in section 199B(b)(1)(A). Gross receipts derived from the manufacture or production of any property described in subparagraph
(A)shall be treated as meeting the requirements of subparagraph
(A)if— such property is manufactured or produced by the taxpayer pursuant to a contract with the Federal Government, and the Federal Acquisition Regulation requires that title or risk of loss with respect to such property be transferred to the Federal Government before the manufacture or production of such property is complete. For purposes of this paragraph, if all of the interests in the capital and profits of a partnership are owned by members of a single expanded affiliated group at all times during the taxable year of such partnership, the partnership and all members of such group shall be treated as a single taxpayer during such period. The term domestic textile production gross receipts shall not include any gross receipts of the taxpayer derived from property leased, licensed, or rented by the taxpayer for use by any related person. For purposes of subparagraph (A), a person shall be treated as related to another person if such persons are treated as a single employer under subsection
(a)or
(b)of section 52 or subsection
(m)or
(o)of section 414, except that determinations under subsections
(a)and
(b)of section 52 shall be made without regard to section 1563(b). All members of an expanded affiliated group shall be treated as a single corporation for purposes of this section. For purposes of this section, the term expanded affiliated group means an affiliated group as defined in section 1504(a), determined— by substituting more than 50 percent for at least 80 percent each place it appears, and without regard to paragraphs
(2)and
(4)of section 1504(b). Except as provided in regulations, the deduction under subsection
(a)shall be allocated among the members of the expanded affiliated group in proportion to each member's respective amount (if any) of qualified textile production activities income. This section shall be applied by only taking into account items which are attributable to the actual conduct of a trade or business. For purposes of determining the tax imposed by section 511, subsection (a)(1)(B) shall be applied by substituting unrelated business taxable income for taxable income . The Secretary shall prescribe such regulations as are necessary to carry out the purposes of this section, including regulations which prevent more than 1 taxpayer from being allowed a deduction under this section with respect to any activity described in subsection (c)(4)(A). . Section 74(d)(2)(B) of the Internal Revenue Code of 1986 is amended by inserting 251, after 221, . Section 246(b)(1) of such Code is amended by inserting 251, after 243(a)(1), . Section 469(i)(3)(E)(iii) of such Code is amended by inserting 251, after 250, . Section 170(b)(2)(D) of such Code is amended by striking the period at the end of clause
(v)and inserting , and and by adding at the end the following new clause: section 251. . Section 172(d) of such Code, as amended by this Act, is amended by adding at the end the following new paragraph: The deduction under section 251 shall not be allowed. . The table of sections for part VIII of subchapter B of chapter 1 of such Code is amended by adding at the end the following new item: Sec. 251. Income attributable to domestic textile production activities. . The amendments made by this subsection shall apply to taxable years beginning after the date of the enactment of this Act. Part VI of subchapter B of the Internal Revenue Code of 1986 is amended by adding at the end the following new section: There shall be allowed a deduction equal to 15 percent of the qualified textile reuse and recycling activity income of the taxpayer for the taxable year. For purposes of this section— The term qualified textile reuse and recycling activity income means the excess (if any) of— the gross income of the taxpayer derived in the course of a trade or business from— the resale, repair, rental, or remanufacturing of finished textile products, the transformation of otherwise unsalable textile fiber products into new finished or unfinished goods, the collection of textile fiber products, the sorting of finished textile products and textile fiber products for activities described in clause
(i)or (ii), and the preparation of textile fiber products for activities described in clause (ii), over the deductions (including taxes) properly allocable to such gross income. The term finished textile products has the meaning given such term under section 139J(c). The term textile fiber products has the meaning given such term under section 139K(c). In the case of a partnership or S corporation— this section shall be applied at the partner or shareholder level, and each partner or shareholder shall take into account such person's allocable share of each qualified item of income, gain, deduction, and loss. For purposes of determining alternative minimum taxable income under section 55, qualified textile reuse and recycling activity income shall be determined without regard to any adjustments under sections 56 through 59. . Section 199A(c)(3)(B) of the Internal Revenue Code of 1986 is amended by redesignating clause
(vii)as clause
(viii)and by inserting after clause
(vi)the following new clause: Any item of income, gain, deduction, or loss taken into account under section 199B(b)(1). . Section 74(d)(2)(B) of the Internal Revenue Code of 1986 is amended by inserting 199B, after 137, . Section 86(b)(2)(A) of such Code is amended by inserting 199B, after 137, . Section 135(c)(4)(A) of such Code is amended by inserting 199B, after 137, . Section 137(b)(3)(A) of such Code is amended by inserting 199B, before 221, . Section 219(g)(3)(A)(ii) of such Code is amended by inserting 199B, after 137, . Section 221(b)(2)(C)(i) of such Code is amended by inserting 199B, before 911, . Section 246(b)(1) of such Code is amended by inserting 199B, after 199A, . Section 469(i)(3)(E)(iii) of such Code is amended by inserting 199B, before 219, . Section 170(b)(2)(D) of such Code, as amended by subsection (b), is amended by striking the period at the end of clause
(vi)and inserting , and and by adding at the end the following new clause: section 199B. . Section 172(d) of such Code, as amended by subsection (b), is amended by adding at the end the following new paragraph: The deduction under section 199B shall not be allowed. . The table of sections for part VI of subchapter B of chapter 1 of such Code is amended by adding at the end the following new item: Sec. 199B. Textile reuse and recycling activity income. . The amendments made by this subsection shall apply to taxable years beginning after the date of the enactment of this Act.
Connections3 off-index
3 references not yet in our index
- 19 USC 4531
- 19 USC 4033(b)
- 19 USC 2703
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Sec. 234
Tax benefits for apparel and home textile products
Cite19 USC 4531
Cite19 USC 4033(b)
Cite19 USC 2703
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