Small Business Investment Company Tax Act

Small Business Investment Company Tax Act - Exempts small business investment companies from the passive investment income test as a condition of eligibility to elect not to be taxed as a corporation under the Internal Revenue Code.

Provides a tax deduction for investments made by small business investment companies in small business concerns.

Allows small business investment companies to be shareholders in subchapter "S" corporations (corporations electing to be taxed as partnerships).

Authorizes small business investment companies to add to their bad debt reserves at the close of a taxable year an amount sufficient to increase the reserve to 10 percent of the loans outstanding.

Provides a deduction for dividends paid on preferred stock to small business investment companies.