Financial Executives International has written to House and Senate Leaders urging lawmakers to consider relief for small and closely held business in the event of any future stimulus packages.
Mark Smetana, chairman of FEI's Committee on Private Companies, asked that small and midsized businesses receive relief from the Section 1374 built-in gains, or BIG, tax on Subchapter S corporations.
Under BIG, companies are required to hold these assets for at least 10 years or become subject to the highest corporate tax rate of 35 percent exclusive of all other applicable federal, state and local taxes.
Requiring companies to hold on to appreciated assets for a decade restricts the redeployment of valuable assets by closely held businesses, which have fewer options for raising capital than their competitors.
FEI said that reducing the holding period from 10 to 7 years for BIG assets "would provide access to additional capital for many small businesses, which is significant considering the challenges that currently exist in U.S. lending markets."
The 15,000-member FEI said that S corporations comprise more than 60 percent of all corporations.
