S 1577 ISCommentsClose CommentsPermalink

112th CONGRESSCommentsClose CommentsPermalink

1st SessionCommentsClose CommentsPermalink

S. 1577CommentsClose CommentsPermalink

To amend the Internal Revenue Code of 1986 to increase and make permanent the alternative simplified research credit, and for other purposes.CommentsClose CommentsPermalink

IN THE SENATE OF THE UNITED STATESCommentsClose CommentsPermalink

September 19, 2011CommentsClose CommentsPermalink

Mr. BAUCUS (for himself, Mr. HATCH, Mr. KERRY, Ms. SNOWE, Mr. WYDEN, Mr. CRAPO, Ms. STABENOW, Mr. CORNYN, Ms. CANTWELL, and Mr. MENENDEZ) introduced the following bill; which was read twice and referred to the Committee on FinanceCommentsClose CommentsPermalink

A BILLCommentsClose CommentsPermalink

To amend the Internal Revenue Code of 1986 to increase and make permanent the alternative simplified research credit, and for other purposes.CommentsClose CommentsPermalink

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,CommentsClose CommentsPermalink

SECTION 1. SHORT TITLE; AMENDMENT OF 1986 CODE.

(a) Short Title- This Act may be cited as the ‘Greater Research Opportunities With Tax Help Act’ or ‘GROWTH Act’.CommentsClose CommentsPermalink





(b) Amendment of 1986 Code- Except as otherwise expressly provided, whenever in this Act an amendment or repeal is expressed in terms of an amendment to, or repeal of, a section or other provision, the reference shall be considered to be made to a section or other provision of the Internal Revenue Code of 1986.CommentsClose CommentsPermalink

SEC. 2. PERMANENT EXTENSION AND MODIFICATION OF RESEARCH CREDIT.

(a) Simplified Credit for Qualified Research Expenses- Subsection (a) of section 41 is amended to read as follows:CommentsClose CommentsPermalink





‘(a) General Rule- For purposes of section 38, the research credit determined under this section for the taxable year shall be an amount equal to 20 percent of so much of the qualified research expenses for the taxable year as exceeds 50 percent of the average qualified research expenses for the 3 taxable years preceding the taxable year for which the credit is being determined.’.CommentsClose CommentsPermalink





(b) Special Rules and Termination of Base Amount Calculation-CommentsClose CommentsPermalink





(1) IN GENERAL- Subsection (c) of section 41 is amended to read as follows:CommentsClose CommentsPermalink





‘(c) Special Rule in Case of No Qualified Research Expenses in Any of 3 Preceding Taxable Years-CommentsClose CommentsPermalink





‘(1) TAXPAYERS TO WHICH SUBSECTION APPLIES- The credit under this section shall be determined under this subsection, and not under subsection (a), if, in any one of the 3 taxable years preceding the taxable year for which the credit is being determined, the taxpayer has no qualified research expenses.CommentsClose CommentsPermalink





‘(2) CREDIT RATE- The credit determined under this subsection shall be equal to 10 percent of the qualified research expenses for the taxable year.’.CommentsClose CommentsPermalink





(2) CONSISTENT TREATMENT OF EXPENSES- Subsection (b) of section 41 is amended by adding at the end the following new paragraph:CommentsClose CommentsPermalink





‘(5) CONSISTENT TREATMENT OF EXPENSES REQUIRED-CommentsClose CommentsPermalink





‘(A) IN GENERAL- Notwithstanding whether the period for filing a claim for credit or refund has expired for any taxable year in the 3-taxable-year period taken into account under subsection (a), the qualified research expenses taken into account for such year shall be determined on a basis consistent with the determination of qualified research expenses for the credit year.CommentsClose CommentsPermalink





‘(B) PREVENTION OF DISTORTIONS- The Secretary may prescribe regulations to prevent distortions in calculating a taxpayer’s qualified research expenses caused by a change in accounting methods used by such taxpayer between the credit year and a year in such 3-taxable-year period.’.CommentsClose CommentsPermalink





(c) Inclusion of Qualified Research Expenses of an Acquired Person-CommentsClose CommentsPermalink





(1) PARTIAL INCLUSION OF PRE-ACQUISITION QUALIFIED RESEARCH EXPENSES- Subparagraph (A) of section 41(f)(3) is amended to read as follows:CommentsClose CommentsPermalink





‘(A) ACQUISITIONS-CommentsClose CommentsPermalink





‘(i) IN GENERAL- If a person acquires the major portion of a trade or business of another person (hereinafter in this paragraph referred to as the ‘predecessor’) or the major portion of a separate unit of a trade or business of a predecessor, then the amount of qualified research expenses paid or incurred by the acquiring person during the 3 taxable years preceding the taxable year in which the credit under this section is determined shall be increased by--CommentsClose CommentsPermalink





‘(I) for purposes of applying this section for the taxable year in which such acquisition is made, the amount determined under clause (ii), andCommentsClose CommentsPermalink





‘(II) for purposes of applying this section for any taxable year after the taxable year in which such acquisition is made, so much of the qualified research expenses paid or incurred by the predecessor with respect to the acquired trade or business during the portion of the measurement period that is part of the 3-taxable-year period preceding the taxable year for which the credit is determined as is attributable to the portion of such trade or business or separate unit acquired by such person.CommentsClose CommentsPermalink





‘(ii) AMOUNT DETERMINED- The amount determined under this clause is the amount equal to the product of--CommentsClose CommentsPermalink





‘(I) so much of the qualified research expenses paid or incurred by the predecessor with respect to the acquired trade or business during the 3 taxable years before the taxable year in which the acquisition is made as is attributable to the portion of such trade or business or separate unit acquired by the acquiring person, andCommentsClose CommentsPermalink





‘(II) the number of months in the period beginning on the date of the acquisition and ending on the last day of the taxable year in which the acquisition is made,CommentsClose CommentsPermalink





divided by 12.CommentsClose CommentsPermalink





‘(iii) SPECIAL RULES FOR COORDINATING TAXABLE YEARS- In the case of an acquiring person and a predecessor whose taxable years do not begin on the same date--CommentsClose CommentsPermalink





‘(I) each reference to a taxable year in clauses (i) and (ii) shall refer to the appropriate taxable year of the acquiring person,CommentsClose CommentsPermalink





‘(II) the qualified research expenses paid or incurred by the predecessor during each taxable year of the predecessor any portion of which is part of the measurement period shall be allocated equally among the months of such taxable year, andCommentsClose CommentsPermalink





‘(III) the amount of such qualified research expenses taken into account under clauses (i) and (ii) with respect to a taxable year of the acquiring person shall be equal to the total of the expenses attributable under subclause (II) to the months occurring during such taxable year.CommentsClose CommentsPermalink





‘(iv) MEASUREMENT PERIOD- For purposes of this subparagraph, the term ‘measurement period’ means the taxable year of the acquiring person in which the acquisition is made and the 3 taxable years of the acquiring person preceding such taxable year.’.CommentsClose CommentsPermalink





(2) EXPENSES OF A DISPOSING PERSON- Subparagraph (B) of section 41(f)(3) is amended to read as follows:CommentsClose CommentsPermalink





‘(B) DISPOSITIONS- If a person disposes of the major portion of any trade or business or the major portion of a separate unit of a trade or business in a transaction to which subparagraph (A) applies, and the disposing person furnished to the acquiring person such information as is necessary for the application of subparagraph (A), then, for purposes of applying this section for any taxable year ending after such disposition, the amount of qualified research expenses paid or incurred by the disposing person during the 3 taxable years preceding such taxable year shall be decreased by the amount of the increase determined under subparagraph (A) with respect to the acquiring person for such taxable year.’.CommentsClose CommentsPermalink





(d) Aggregation of Expenditures- Paragraph (1) of section 41(f) is amended--CommentsClose CommentsPermalink





(1) by striking ‘shall be its proportionate shares of the qualified research expenses, basic research payments, and amounts paid or incurred to energy research consortiums, giving rise to the credit’ in subparagraph (A)(ii) and inserting ‘shall be determined on a proportionate basis to its share of the aggregate qualified research expenses taken into account by such controlled group for purposes of this section’, andCommentsClose CommentsPermalink





(2) by striking ‘shall be its proportionate shares of the qualified research expenses, basic research payments, and amounts paid or incurred to energy research consortiums, giving rise to the credit’ in subparagraph (B)(ii) and inserting ‘shall be determined on a proportionate basis to its share of the aggregate qualified research expenses taken into account by all such persons under common control for purposes of this section’.CommentsClose CommentsPermalink





(e) Permanent Extension-CommentsClose CommentsPermalink





(1) Section 41 is amended by striking subsection (h).CommentsClose CommentsPermalink





(2) Paragraph (1) of section 45C(b) is amended by striking subparagraph (D).CommentsClose CommentsPermalink





(f) Conforming Amendments-CommentsClose CommentsPermalink





(1) TERMINATION OF BASIC RESEARCH PAYMENT CALCULATION- Section 41 is amended--CommentsClose CommentsPermalink





(A) by striking subsection (e),CommentsClose CommentsPermalink





(B) by redesignating subsection (g) as subsection (e), andCommentsClose CommentsPermalink





(C) by relocating subsection (e), as so redesignated, immediately after subsection (d).CommentsClose CommentsPermalink





(2) SPECIAL RULES-CommentsClose CommentsPermalink





(A) Paragraph (4) of section 41(f) is amended by striking ‘and gross receipts’.CommentsClose CommentsPermalink





(B) Subsection (f) of section 41 is amended by striking paragraph (6).CommentsClose CommentsPermalink





(3) CROSS-REFERENCES-CommentsClose CommentsPermalink





(A) Paragraph (2) of section 45C(c) is amended by striking ‘base period research expenses’ and inserting ‘average qualified research expenses’.CommentsClose CommentsPermalink





(B) Subparagraph (A) of section 54(l)(3) is amended by striking ‘section 41(g)’ and inserting ‘section 41(e)’.CommentsClose CommentsPermalink





(C) Clause (i) of section 170(e)(4)(B) is amended to read as follows:CommentsClose CommentsPermalink





‘(i) the contribution is to a qualified organization,’.CommentsClose CommentsPermalink





(D) Paragraph (4) of section 170(e) is amended by adding at the end the following new subparagraph:CommentsClose CommentsPermalink





‘(E) QUALIFIED ORGANIZATION- For purposes of this paragraph, the term ‘qualified organization’ means--CommentsClose CommentsPermalink





‘(i) any educational organization which--CommentsClose CommentsPermalink





‘(I) is an institution of higher education (within the meaning of section 3304(f)), andCommentsClose CommentsPermalink





‘(II) is described in subsection (b)(1)(A)(ii), orCommentsClose CommentsPermalink





‘(ii) any organization not described in clause (i) which--CommentsClose CommentsPermalink





‘(I) is described in section 501(c)(3) and is exempt from tax under section 501(a),CommentsClose CommentsPermalink





‘(II) is organized and operated primarily to conduct scientific research, andCommentsClose CommentsPermalink





‘(III) is not a private foundation.’.CommentsClose CommentsPermalink





(E) Section 280C is amended--CommentsClose CommentsPermalink





(i) by striking ‘or basic research expenses (as defined in section 41(e)(2))’ in subsection (c)(1),CommentsClose CommentsPermalink





(ii) by striking ‘section 41(a)(1)’ in subsection (c)(2)(A) and inserting ‘section 41(a)’, andCommentsClose CommentsPermalink





(iii) by striking ‘or basic research expenses’ in subsection (c)(2)(B).CommentsClose CommentsPermalink





(F) Clause (i) of section 1400N(l)(7)(B) is amended by striking ‘section 41(g)’ and inserting ‘section 41(e)’.CommentsClose CommentsPermalink





(g) Technical Corrections- Section 409 is amended--CommentsClose CommentsPermalink





(1) by inserting ‘, as in effect before the enactment of the Tax Reform Act of 1984)’ after ‘section 41(c)(1)(B)’ in subsection (b)(1)(A),CommentsClose CommentsPermalink





(2) by inserting ‘, as in effect before the enactment of the Tax Reform Act of 1984’ after ‘relating to the employee stock ownership credit’ in subsection (b)(4),CommentsClose CommentsPermalink





(3) by inserting ‘(as in effect before the enactment of the Tax Reform Act of 1984)’ after ‘section 41(c)(1)(B)’ in subsection (i)(1)(A),CommentsClose CommentsPermalink





(4) by inserting ‘(as in effect before the enactment of the Tax Reform Act of 1984)’ after ‘section 41(c)(1)(B)’ in subsection (m),CommentsClose CommentsPermalink





(5) by inserting ‘(as so in effect)’ after ‘section 48(n)(1)’ in subsection (m),CommentsClose CommentsPermalink





(6) by inserting ‘(as in effect before the enactment of the Tax Reform Act of 1984)’ after ‘section 48(n)’ in subsection (q)(1), andCommentsClose CommentsPermalink





(7) by inserting ‘(as in effect before the enactment of the Tax Reform Act of 1984)’ after ‘section 41’ in subsection (q)(3).CommentsClose CommentsPermalink





(h) Effective Date-CommentsClose CommentsPermalink





(1) IN GENERAL- Except as provided in paragraphs (2) and (3), the amendments made by this section shall apply to taxable years beginning after December 31, 2011.CommentsClose CommentsPermalink





(2) PERMANENT EXTENSION- The amendments made by subsection (e) shall apply to amounts paid or incurred after December 31, 2011.CommentsClose CommentsPermalink





(3) TECHNICAL CORRECTIONS- The amendments made by subsection (g) shall take effect on the date of the enactment of this Act.CommentsClose CommentsPermalink