Small Business Tax Reform Act of 1985

[AI summary unavailable — showing source text] Small Business Tax Reform Act of 1985 - Amends the Internal Revenue Code to reduce the tax rates for corporations with taxable income below $125,000. Increases the dollar limitation with respect to the election to expense (current deduction) certain business assets. Permits a taxpayer who sells property to not recognize any gain realized on the sale to the extent that the amount realized from the sale is used to purchase a qualified small business investment within one year from the sale of the property. Requires the taxpayer to file an election for such treatment. Treats any exchange of property as a sale for purpose of the nonrecognition provision. Requires that the basis of the small business investment be reduced by the amount of the gain not recognized on the sale of the property. Extends the period of the statute of limitations with respect to assessment of tax relating to such sale or exchange. Permits an 80 percent capital gains deduction attributable to the sale of a small business equity investment held for at least four years. Permits the one-time of exclusion from income of gain from the sale of a substantial equity interest in a small business by an individual who has …