115 HR 11 IH: Commitment to American Growth, Renewal, and Opportunities for Workers, Technology, and Health Act
U.S. House of Representatives
2020-10-09
text/xml
EN
Pursuant to Title 17 Section 105 of the United States Code, this file is not subject to copyright protection and is in the public domain.
1.Short title; table of contents(a)This Act may be cited as the Commitment to American Growth, Renewal, and Opportunities for Workers, Technology, and Health Act
or as the Commitment to American GROWTH Act
.(b)The table of contents of this Act is as follows:Sec. 1. Short title; table of contents.Title I—Growth in Business Investment to Boost American Wages and JobsSec. 101. Permanent full expensing for qualified property.Sec. 102. Limitation on business interest permanently applied without regard to deductions for depreciation, amortization, and depletion.Title II—Growth in Research in AmericaSec. 201. Repeal amortization of research and experimental expenditures.Sec. 202. Doubling the research and experimental tax credit and better access to credits for startups.Sec. 203. Special rules for transfers of intangible property from controlled foreign corporations to United States shareholders.Title III—Growth in America’s Medical IndependenceSec. 301. Domestic medical and drug manufacturing credit.Sec. 302. Qualifying advanced medical manufacturing equipment credit.Sec. 303. New medical research expenditure component of credit for increasing research activities.Sec. 304. Refundable portion of research credit for small businesses engaging in specified medical research.Sec. 305. Exception from passive loss rules for investments in specified medical research small business pass-thru entities.Title IV—Growth in Innovation and Technology BreakthroughsSec. 401. Simplification and expansion of deduction for start-up and organizational expenditures.Sec. 402. Preservation of start-up net operating losses and tax credits after ownership change.<enum>I</enum><header>Growth in Business Investment to Boost American Wages and Jobs</header><section id="H0A967D86726B45ABB0F1AF674151907C" section-type="subsequent-section"><enum>101.</enum><header>Permanent full expensing for qualified property</header><subsection id="HD1CC79EA92364BD39583D68F0AB67B28"><enum>(a)</enum><header>In general</header><text>Paragraph (6) of <external-xref legal-doc="usc" parsable-cite="usc/26/168">section 168(k)</external-xref> of the Internal Revenue Code of 1986 is amended to read as follows:</text><quoted-block display-inline="no-display-inline" id="H29B1B147B0BA44A89174633C5BABBD77" style="OLC"><paragraph id="H51B40C2023CF4DDBB01216C84CAFAAC5"><enum>(6)</enum><header>Applicable percentage</header><text>For purposes of this subsection, the term <term>applicable percentage</term> means, in the case of property placed in service (or, in the case of a specified plant described in paragraph (5), a plant which is planted or grafted) after September 27, 2017, 100 percent.</text></paragraph><after-quoted-block>.</after-quoted-block></quoted-block></subsection><subsection id="H1295DD0F225F4D00A6C840E6218407AA"><enum>(b)</enum><header>Conforming amendments</header><paragraph id="H27FA6DA4D2EF40BEAC94BED18BE973D0"><enum>(1)</enum><text><external-xref legal-doc="usc" parsable-cite="usc/26/168">Section 168(k)</external-xref> of the Internal Revenue Code of 1986 is amended—</text><subparagraph id="H892C50EAE6D94462BDC7B20C302A169D"><enum>(A)</enum><text>in paragraph (2)—</text><clause id="HAEA4E639E10246E3A66AF38D1B819603"><enum>(i)</enum><text>in subparagraph (A)—</text><subclause id="H33D4799D0E604A158BE4430FE7A82DD5"><enum>(I)</enum><text>in clause (i)(V), by inserting <quote>and</quote> at the end;</text></subclause><subclause id="H9604C1DC85894120AADDDE48F00301C0"><enum>(II)</enum><text>in clause (ii), by striking <quote>clause (ii) of subparagraph (E), and</quote> and inserting <quote>clause (i) of subparagraph (E).</quote>; and</text></subclause><subclause id="H53702C396CD64D7ABD4946D41AE92039"><enum>(III)</enum><text>by striking clause (iii);</text></subclause></clause><clause id="HE6DBAF0C8EDB4A95834E0DAAE2CF9003"><enum>(ii)</enum><text>in subparagraph (B)—</text><subclause id="HAE1BE6114D574F5A8BCCE87C29D0D092"><enum>(I)</enum><text>in clause (i)—</text><item id="H502B85437BA34B8FAE1598044E08B02E"><enum>(aa)</enum><text>by striking subclauses (II) and (III); and</text></item><item id="HD1ACC586376D41AC998A7D2717055B42"><enum>(bb)</enum><text>by redesignating subclauses (IV) through (VI) as subclauses (II) through (IV), respectively;</text></item></subclause><subclause id="H337E184C487F432C9AC079C2F7860CDC"><enum>(II)</enum><text>by striking clause (ii); and</text></subclause><subclause id="HA43F05ADBD274AC1B1634BDF23DB2663"><enum>(III)</enum><text>by redesignating clauses (iii) and (iv) as clauses (ii) and (iii), respectively;</text></subclause></clause><clause id="HE48C377ED60048CCBFE3BCE9783DB5F1"><enum>(iii)</enum><text>in subparagraph (C)—</text><subclause id="HEA71AD1045244CACA6040C4B4B1CCA7B"><enum>(I)</enum><text>in clause (i), by striking <quote>and subclauses (II) and (III) of subparagraph (B)(i)</quote>; and</text></subclause><subclause id="H340998124DE9486D95249F5C4EF44B67"><enum>(II)</enum><text>in clause (ii), by striking <quote>subparagraph (B)(iii)</quote> and inserting <quote>subparagraph (B)(ii)</quote>; and</text></subclause></clause><clause id="H16E96782BCE54B7D92A735097ABCEF1A"><enum>(iv)</enum><text>in subparagraph (E)—</text><subclause id="H74376FC6422E40858BC6260C1C30FEFF"><enum>(I)</enum><text>by striking clause (i); and</text></subclause><subclause id="H74F088BD2C004FD4BC27EBBA2A93CE59"><enum>(II)</enum><text>by redesignating clauses (ii) and (iii) as clauses (i) and (ii), respectively; and</text></subclause></clause></subparagraph><subparagraph id="HAFB0BEC455B04BFA84C4121466CD2988"><enum>(B)</enum><text>in paragraph (5)(A), by striking <quote>planted before January 1, 2027, or is grafted before such date to a plant that has already been planted,</quote> and inserting <quote>planted or grafted</quote>.</text></subparagraph></paragraph><paragraph id="H084BC66696FF423CBB56297BE2128098"><enum>(2)</enum><text>Section 460(c)(6)(B) of such Code is amended by striking <quote>which</quote> and all that follows through the period and inserting <quote>which has a recovery period of 7 years or less.</quote>.</text></paragraph></subsection><subsection id="H1B73245762E64C538E6035D089A7F600"><enum>(c)</enum><header>Effective date</header><text>The amendments made by this section shall take effect as if included in section 13201 of <external-xref legal-doc="public-law" parsable-cite="pl/115/97">Public Law 115–97</external-xref>.</text></subsection></section><section id="H48EB441AB8064F539CC3294969925E5D" section-type="subsequent-section"><enum>102.</enum><header>Limitation on business interest permanently applied without regard to deductions for depreciation, amortization, and depletion</header><subsection id="H6F3962A4D1954908BCDE1817611805C5"><enum>(a)</enum><header>In general</header><text display-inline="yes-display-inline"><external-xref legal-doc="usc" parsable-cite="usc/26/163">Section 163(j)(8)(A)(v)</external-xref> of the Internal Revenue Code of 1986 is amended by striking <quote>in the case of taxable years beginning before January 1, 2022</quote>.</text></subsection><subsection id="H672A2137863D49809C89C6A1052D813D"><enum>(b)</enum><header>Effective date</header><text>The amendment made by this section shall apply to taxable years beginning after December 31, 2021.</text></subsection></section><enum>II</enum><header>Growth in Research in America</header><section id="H4891D391B1634236A979D1D4F2EB2028"><enum>201.</enum><header>Repeal amortization of research and experimental expenditures</header><subsection id="H849ACEFFABE34E5E9FB9930F20C66642"><enum>(a)</enum><header>In general</header><text display-inline="yes-display-inline">Section 174 is amended to read as follows:</text><quoted-block display-inline="no-display-inline" id="HB6295DE0087C440E9B1F7D5301DADF69" style="OLC"><section id="H455EDC7B26AC474A9FD47BADA346084B"><enum>174.</enum><header>Research and experimental expenditures</header><subsection id="H7F72960B880940549D8CCD289459DCA0"><enum>(a)</enum><header>Treatment as Expenses</header><paragraph id="H3E2104C37DE847CBADD614616F6ED26D"><enum>(1)</enum><header>In general</header><text display-inline="yes-display-inline">A taxpayer may treat research or experimental expenditures which are paid or incurred by him during the taxable year in connection with his trade or business as expenses which are not chargeable to capital account. The expenditures so treated shall be allowed as a deduction.</text></paragraph><paragraph id="H5A87B993B7DE4F68B613058BD89C53B8"><enum>(2)</enum><header>When method may be adopted</header><subparagraph id="H8E74868D609748C9A9DBF5A00F9B18EB"><enum>(A)</enum><header>Without consent</header><text display-inline="yes-display-inline">A taxpayer may, without the consent of the Secretary, adopt the method provided in this subsection for his first taxable year for which expenditures described in paragraph (1) are paid or incurred.</text></subparagraph><subparagraph id="HF264DB2EB08445C9A309476D68B18CA1"><enum>(B)</enum><header>With consent</header><text display-inline="yes-display-inline">A taxpayer may, with the consent of the Secretary, adopt at any time the method provided in this subsection.</text></subparagraph></paragraph><paragraph id="H313F6CE1F4A6498E9C360E8C6C5DC47A"><enum>(3)</enum><header>Scope</header><text display-inline="yes-display-inline">The method adopted under this subsection shall apply to all expenditures described in paragraph (1). The method adopted shall be adhered to in computing taxable income for the taxable year and for all subsequent taxable years unless, with the approval of the Secretary, a change to a different method is authorized with respect to part or all of such expenditures.</text></paragraph></subsection><subsection id="H6C0B3CD5B4B8492CA5BB0A96FE209DBC"><enum>(b)</enum><header>Amortization of Certain Research and Experimental Expenditures</header><paragraph id="H456D3B7B65C5498C973A85527B871F9B"><enum>(1)</enum><header>In general</header><text>At the election of the taxpayer, made in accordance with regulations prescribed by the Secretary, research or experimental expenditures which are—</text><subparagraph id="H9846F5D1BD4B4E48BA709EE271C35EBE"><enum>(A)</enum><text>paid or incurred by the taxpayer in connection with his trade or business,</text></subparagraph><subparagraph id="H6A998CC2B601459FA4F4CA997456E67C"><enum>(B)</enum><text>not treated as expenses under subsection (a), and</text></subparagraph><subparagraph id="HFD3E9AB8046A4989A61CFF24449CC21A"><enum>(C)</enum><text>chargeable to capital account but not chargeable to property of a character which is subject to the allowance under section 167 (relating to allowance for depreciation, etc.) or section 611 (relating to allowance for depletion),</text></subparagraph><continuation-text continuation-text-level="paragraph">may be treated as deferred expenses. In computing taxable income, such deferred expenses shall be allowed as a deduction ratably over such period of not less than 60 months as may be selected by the taxpayer (beginning with the month in which the taxpayer first realizes benefits from such expenditures). Such deferred expenses are expenditures properly chargeable to capital account for purposes of section 1016(a)(1) (relating to adjustments to basis of property). </continuation-text></paragraph><paragraph id="H6129C321054C487EB3113316D162CA50"><enum>(2)</enum><header>Time for and scope of election</header><text>The election provided by paragraph (1) may be made for any taxable year, but only if made not later than the time prescribed by law for filing the return for such taxable year (including extensions thereof). The method so elected, and the period selected by the taxpayer, shall be adhered to in computing taxable income for the taxable year for which the election is made and for all subsequent taxable years unless, with the approval of the Secretary, a change to a different method (or to a different period) is authorized with respect to part or all of such expenditures. The election shall not apply to any expenditure paid or incurred during any taxable year before the taxable year for which the taxpayer makes the election.</text></paragraph></subsection><subsection id="H357279DDD4B546F48903BFBF9CD2D0A8"><enum>(c)</enum><header>Land and Other Property</header><text>This section shall not apply to any expenditure for the acquisition or improvement of land, or for the acquisition or improvement of property to be used in connection with the research or experimentation and of a character which is subject to the allowance under section 167 (relating to allowance for depreciation, etc.) or section 611 (relating to allowance for depletion); but for purposes of this section allowances under section 167, and allowances under section 611, shall be considered as expenditures.</text></subsection><subsection id="HD97051D248294C929D378B915EF9FB62"><enum>(d)</enum><header>Exploration Expenditures</header><text>This section shall not apply to any expenditure paid or incurred for the purpose of ascertaining the existence, location, extent, or quality of any deposit of ore or other mineral (including oil and gas).</text></subsection><subsection id="H3B505808F4D1474FAC3C0C3D5F9B1564"><enum>(e)</enum><header>Only Reasonable Research Expenditures Eligible</header><text>This section shall apply to a research or experimental expenditure only to the extent that the amount thereof is reasonable under the circumstances.</text></subsection></section><after-quoted-block>.</after-quoted-block></quoted-block></subsection><subsection id="H2D76007FD85C4379B629D65EEE649651"><enum>(b)</enum><header>Clerical Amendment</header><text>The table of sections for part VI of subchapter B of <external-xref legal-doc="usc-chapter" parsable-cite="usc-chapter/26/1">chapter 1</external-xref> is amended by striking the item relating to section 174 and inserting the following new item:</text><quoted-block display-inline="no-display-inline" id="HE9A152DE3AF04CA5932B608E77272A98" style="OLC"><toc regeneration="no-regeneration"><toc-entry level="section">Sec. 174. Research and experimental expenditures</toc-entry></toc><after-quoted-block>.</after-quoted-block></quoted-block></subsection><subsection id="H11462B2E0B1841138D2907A33FDCFF36"><enum>(c)</enum><header>Conforming Amendments</header><paragraph id="H2CEAEE0370744A22AA13D18CA22BAB32"><enum>(1)</enum><text><external-xref legal-doc="usc" parsable-cite="usc/26/41">Section 41(d)(1)(A)</external-xref> is amended by striking <quote>specified research or experimental expenditures under section 174</quote> and inserting <quote>expenses under section 174</quote>.</text></paragraph><paragraph id="H81E961737DFA49C6995216CC71540D4B"><enum>(2)</enum><text><external-xref legal-doc="usc" parsable-cite="usc/26/280C">Section 280C(c)</external-xref> is amended to read as follows:</text><quoted-block display-inline="no-display-inline" id="H3556E9721E364A76933E42D8E8E0DE35" style="OLC"><subsection id="H38AE37FB9B4947A3BEF95DC767D9CF4A"><enum>(c)</enum><header>Credit for Increasing Research Activities</header><paragraph id="H17A80BF025704525998F28532824639E"><enum>(1)</enum><header>In general</header><text>No deduction shall be allowed for that portion of the qualified research expenses (as defined in section 41(b)) or basic research expenses (as defined in section 41(e)(2)) otherwise allowable as a deduction for the taxable year which is equal to the amount of the credit determined for such taxable year under section 41(a).</text></paragraph><paragraph id="H8401AB80A0F34DF09FC2F7077D934EC8"><enum>(2)</enum><header>Similar rule where taxpayer capitalizes rather than deducts expenses</header><text>If—</text><subparagraph id="H37B62FB301364DB3A9FFC2146D0FB6EC"><enum>(A)</enum><text>the amount of the credit determined for the taxable year under section 41(a)(1), exceeds</text></subparagraph><subparagraph id="HC1B1EF71E2C042DCB18A1B8CE306FE1A"><enum>(B)</enum><text>the amount allowable as a deduction for such taxable year for qualified research expenses or basic research expenses (determined without regard to paragraph (1)),</text></subparagraph><continuation-text continuation-text-level="paragraph">the amount chargeable to capital account for the taxable year for such expenses shall be reduced by the amount of such excess. </continuation-text></paragraph><paragraph display-inline="no-display-inline" id="HB84F7609E281407AB88F250164D78F5C"><enum>(3)</enum><header>Election of reduced credit</header><subparagraph id="H077C3807B2C84A0FACECD5BAFCBDDE30"><enum>(A)</enum><header>In general</header><text>In the case of any taxable year for which an election is made under this paragraph—</text><clause id="H12091E8077F6411E813938A4C03A1EA7"><enum>(i)</enum><text>paragraphs (1) and (2) shall not apply, and</text></clause><clause id="H0115C499B75F468D8958E0B5C9AD3368"><enum>(ii)</enum><text>the amount of the credit under section 41(a) shall be the amount determined under subparagraph (B).</text></clause></subparagraph><subparagraph id="H2639846E735E4B828FB29BFDB8E63A0B"><enum>(B)</enum><header>Amount of reduced credit</header><text>The amount of credit determined under this subparagraph for any taxable year shall be the amount equal to the excess of—</text><clause id="H37FD9C787E6146ACACD48277B99CA438"><enum>(i)</enum><text>the amount of credit determined under section 41(a) without regard to this paragraph, over</text></clause><clause id="H6FAF9CF653E6411BB8DABD214F46118C"><enum>(ii)</enum><text>the product of—</text><subclause id="HE025771F981B4F24B57C997EB03C7EDD"><enum>(I)</enum><text>the amount described in clause (i), and</text></subclause><subclause id="HA961DB50CA2C49C6ACD31633D5A441A7"><enum>(II)</enum><text>the rate of tax under section 11(b).</text></subclause></clause></subparagraph><subparagraph id="HF9F15332754C4431827BFC2C3DA00DB9"><enum>(C)</enum><header>Election</header><text>An election under this paragraph for any taxable year shall be made not later than the time for filing the return of tax for such year (including extensions), shall be made on such return, and shall be made in such manner as the Secretary may prescribe. Such an election, once made, shall be irrevocable.</text></subparagraph></paragraph><paragraph display-inline="no-display-inline" id="H12F81F78DC054AD79BFC8B7B8EA3E1F6"><enum>(4)</enum><header>Controlled groups</header><text>Paragraph (3) of subsection (b) shall apply for purposes of this subsection.</text></paragraph></subsection><after-quoted-block>.</after-quoted-block></quoted-block></paragraph></subsection><subsection id="HC59BBFFFED3F4DF08B522A0C9B9FF070"><enum>(d)</enum><header>Effective date</header><text>The amendments made by this section shall apply to amounts paid or incurred in taxable years beginning after December 31, 2021.</text></subsection></section><section id="H9574E0CB8D0B402AA8D41307D34E72E1" section-type="subsequent-section"><enum>202.</enum><header>Doubling the research and experimental tax credit and better access to credits for startups</header><subsection id="HD3C38D1D45484C5E86D9D894A81E9274"><enum>(a)</enum><header>Credit rate increase</header><paragraph id="H6B29488295C74122AD936704FCDB339E"><enum>(1)</enum><header>In general</header><text display-inline="yes-display-inline"><external-xref legal-doc="usc" parsable-cite="usc/26/41">Section 41(a)</external-xref> of the Internal Revenue Code of 1986 is amended by striking <quote>20 percent</quote> and inserting <quote>40 percent</quote>.</text></paragraph><paragraph id="HE7DC6EC9738442E4AEAD53DE61F6A7A0"><enum>(2)</enum><header>Alternative simplified credit</header><text>Section 41(c)(4)(A) of such Code is amended by striking <quote>14 percent</quote> and inserting <quote>28 percent</quote>.</text></paragraph><paragraph id="HA6F2343680E146DD852D6F6526E13235"><enum>(3)</enum><header>Credit rate in case of no research expenses in 3 preceding years</header><text display-inline="yes-display-inline">Section 41(c)(4)(B)(ii) of such Code is amended by striking <quote>6 percent</quote> and inserting <quote><fraction>1/2</fraction> the credit percentage in effect under subparagraph (A)</quote>.</text></paragraph></subsection><subsection id="H23BF0A2982384B3F969DE050A8F6B1B4"><enum>(b)</enum><header>Modification of small business portion allowed against payroll tax</header><paragraph id="HC09F3BBFD3E84EB38218DA60FFE445EC"><enum>(1)</enum><header>Increase in limitation</header><text display-inline="yes-display-inline">Paragraphs (4)(B)(i) and (5)(B)(ii) of section 41(h) of such Code are each amended by striking <quote>$250,000</quote> and inserting <quote>$500,000</quote>.</text></paragraph><paragraph id="H866E221062514A65B167D0A3A8862CA5"><enum>(2)</enum><header>Qualified small business gross receipts threshold</header><text display-inline="yes-display-inline">Section 41(h)(3)(A)(i)(I) of such Code is amended by striking <quote>$5,000,000</quote> and inserting <quote>the dollar amount in effect for the taxable year under section 448(c)(1)</quote>.</text></paragraph></subsection><subsection id="H23B35A48A5754FF9AC9C185DD8B98044" commented="no"><enum>(c)</enum><header>Effective dates</header><paragraph id="HC3999392E1F6406E8C2A9FB09331EDDC"><enum>(1)</enum><header>Subsection <enum-in-header>(a)</enum-in-header></header><text>The amendments made by subsection (a) shall apply to taxable years beginning after December 31, 2020.</text></paragraph><paragraph id="H0B4B460633184BCCB24E50D7CDC06C71"><enum>(2)</enum><header>Subsection <enum-in-header>(b)</enum-in-header></header><text>The amendments made by subsection (b) shall apply to taxable years beginning after December 31, 2019.</text></paragraph></subsection></section><section id="H67C97251469F4E21B3E04162EE969CD7" section-type="subsequent-section"><enum>203.</enum><header>Special rules for transfers of intangible property from controlled foreign corporations to United States shareholders</header><subsection id="H9C08A8F45FC24B6A8B2380DBD4A99938"><enum>(a)</enum><header>In general</header><text display-inline="yes-display-inline">Subpart F of part III of subchapter N of <external-xref legal-doc="usc-chapter" parsable-cite="usc-chapter/26/1">chapter 1</external-xref> of the Internal Revenue Code of 1986 is amended by adding at the end the following new section:</text><quoted-block display-inline="no-display-inline" id="H34E4F3FC6EA741E9B7269590D9E1F62F" style="OLC"><section id="HA6230F393B3541C69C717F2E4EFFB9D0"><enum>966.</enum><header>Transfers of intangible property to United States shareholders</header><subsection id="HE35B868BD2574FF5A1FF40A1C4864302"><enum>(a)</enum><header>In general</header><text display-inline="yes-display-inline">If a controlled foreign corporation holds intangible property on the date of the enactment of this section and thereafter distributes such property to a domestic corporation which is a United States shareholder with respect to such controlled foreign corporation—</text><paragraph id="H3FA613A4551842549128799F0D0F1F25"><enum>(1)</enum><text>for purposes of part I of subchapter C and any other provision of this title specified by the Secretary, the fair market value of such property on the date of such distribution shall be treated as not exceeding the adjusted basis of such property immediately before such distribution, and</text></paragraph><paragraph id="H1FE6290CECFD48D283B06CD10775C83A"><enum>(2)</enum><text>if any portion of such distribution is not a dividend—</text><subparagraph id="H4B7FB64E84ED41C187119AA3CB570424"><enum>(A)</enum><text>no gain shall be recognized by such United States shareholder with respect to such distribution, and</text></subparagraph><subparagraph id="HF88B41FFB56C4FDA98B58FAEEF61FE16"><enum>(B)</enum><text display-inline="yes-display-inline">the adjusted basis of such property in the hands of such United States shareholder immediately after such distribution shall be the adjusted basis of such property in the hands of such controlled foreign corporation immediately before such distribution reduced by the amount (if any) of gain not recognized by reason of subparagraph (A) (determined after the application of paragraph (1)).</text></subparagraph></paragraph></subsection><subsection id="H3389BDE4D1EB4E9FA74006A972437FAB"><enum>(b)</enum><header>Intangible property</header><text display-inline="yes-display-inline">For purposes of this section, the term <quote>intangible property</quote> means any—</text><paragraph id="H2A9C686E671C4BA6A129567D983308CA"><enum>(1)</enum><text>patent, copyright, license, invention, formula, process, design, pattern, know-how, or format,</text></paragraph><paragraph id="H454D35364C5B409499802AD03B5F75A0"><enum>(2)</enum><text>method, program, system, procedure, campaign, survey, study, forecast, estimate, or technical data,</text></paragraph><paragraph id="H86D1C1D9E6EE458096DBD5D8A0E1BD2C"><enum>(3)</enum><text display-inline="yes-display-inline">computer software (as defined in section 197(e)(3)(B)), or</text></paragraph><paragraph id="HBC8D0BE728F346D28F05C962CA3115BD"><enum>(4)</enum><text>any similar item, which has substantial value independent of the services of any individual.</text></paragraph></subsection></section><after-quoted-block>.</after-quoted-block></quoted-block></subsection><subsection id="HB95B1EE03D1740F79BD3589576087A56"><enum>(b)</enum><header>Conforming amendments</header><paragraph id="HBD4C0D29C118421FA0DF96D6BE92CCD7"><enum>(1)</enum><text>Section 197(f)(2)(B)(i) of such Code is amended by inserting <quote>966(a),</quote> after <quote>731,</quote>.</text></paragraph><paragraph id="HEBD730E9AA9B4A85BD6E132E6CEE4BF2"><enum>(2)</enum><text>The table of sections for subpart F of part III of subchapter N of chapter 1 of such Code is amended by adding at the end the following new item:</text><quoted-block display-inline="no-display-inline" id="H1C5592363402400DBC9E89593997CA24" style="OLC"><toc container-level="quoted-block-container" idref="H34E4F3FC6EA741E9B7269590D9E1F62F" lowest-bolded-level="division-lowest-bolded" lowest-level="section" quoted-block="no-quoted-block" regeneration="yes-regeneration"><toc-entry idref="HA6230F393B3541C69C717F2E4EFFB9D0" level="section">Sec. 966. Transfers of intangible property to United States shareholders.</toc-entry></toc><after-quoted-block>.</after-quoted-block></quoted-block></paragraph></subsection><subsection commented="no" display-inline="no-display-inline" id="H8E0F915AC1B54D44ABA67A50CDDF1A8F"><enum>(c)</enum><header>Effective date</header><text>The amendments made by this section shall apply to distributions made in taxable years of foreign corporations beginning after December 31, 2020, and to taxable years of United States shareholders in which or with which such taxable years of foreign corporations end.</text></subsection></section><enum>III</enum><header>Growth in America’s Medical Independence</header><section id="HDCEB8178F41E40178A4FADE0D984E082" section-type="subsequent-section"><enum>301.</enum><header>Domestic medical and drug manufacturing credit</header><subsection id="HFAC593341C634FB8A0638292DD63164B"><enum>(a)</enum><header>In general</header><text display-inline="yes-display-inline">Subpart D of part IV of subchapter A of <external-xref legal-doc="usc-chapter" parsable-cite="usc-chapter/26/1">chapter 1</external-xref> of the Internal Revenue Code of 1986 is amended by adding at the end the following new section:</text><quoted-block style="OLC" id="H88FC3C80E1094B02BBF47B50185A5816" display-inline="no-display-inline"><section id="H41F7C2594C824CC496B1A04432C38216"><enum>45U.</enum><header>Domestic medical and drug manufacturing credit</header><subsection id="HA17689BF45E14810873512E67D9E655F"><enum>(a)</enum><header>In general</header><text display-inline="yes-display-inline">For purposes of section 38, the domestic medical and drug manufacturing credit determined under this section for any taxable year is an amount equal to 10.5 percent of the lesser of—</text><paragraph id="H6AAB4666E1D641B79EE6340C57C257DE"><enum>(1)</enum><text>the qualified medical and drug manufacturing income of the taxpayer for the taxable year, or</text></paragraph><paragraph id="HBB80EBE403BA410BB234A8A510D2CBE6"><enum>(2)</enum><text display-inline="yes-display-inline">taxable income of the taxpayer for the taxable year.</text></paragraph></subsection><subsection id="HE04BC9B1984D4823A8E4FF4284EE53DB"><enum>(b)</enum><header>Credit limited to wages paid</header><paragraph id="HADBE933C3EAD43EBA6FA284D79456DE5"><enum>(1)</enum><header>In general</header><text>The amount of the credit 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.</text></paragraph><paragraph id="HD6636FE5B7BF455BA64AAA5D9E125E1C"><enum>(2)</enum><header>W–<enum-in-header>2</enum-in-header> wages</header><text>For purposes of this section—</text><subparagraph id="H0A13A385B9DD476D879E6F1248D3C86E"><enum>(A)</enum><header>In general</header><text>The term <term>W–2 wages</term> 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.</text></subparagraph><subparagraph id="HD98A767C1CFC49808EC9FF7D6DD5006F"><enum>(B)</enum><header>Limitation to wages attributable to domestic production</header><text display-inline="yes-display-inline">Such term shall not include any amount which is not properly allocable to domestic medical and drug manufacturing gross receipts for purposes of subsection (c)(1).</text></subparagraph><subparagraph id="HDDFF6D48428A4A389AAD3095ADF86213"><enum>(C)</enum><header>Return requirement</header><text>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.</text></subparagraph></paragraph><paragraph id="H767CD25A780C4472914EADB03F128B77"><enum>(3)</enum><header>Acquisitions, dispositions, and short taxable years</header><text>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.</text></paragraph></subsection><subsection id="HA9D0D480C9FF4978BB729A5FFC605A85"><enum>(c)</enum><header>Qualified medical and drug manufacturing income</header><text>For purposes of this section—</text><paragraph id="H56C823C7F2C5495FAE9D92EA688485E7"><enum>(1)</enum><header>In general</header><text>The term <term>qualified medical and drug manufacturing income</term> for any taxable year means an amount equal to the excess (if any) of—</text><subparagraph id="HF82916927FDE4A4F9D5F3C7B09FE4089"><enum>(A)</enum><text>the taxpayer’s domestic medical and drug manufacturing gross receipts for the taxable year, over</text></subparagraph><subparagraph id="HD5F85770B9BC4AB98DA61108E6B5AF0F"><enum>(B)</enum><text>the sum of—</text><clause id="H8C055C949064453F966BD93763317049"><enum>(i)</enum><text>the cost of goods sold that are allocable to such receipts, and</text></clause><clause id="HC35BAC23ABB3432F99AF9C1A7AD3D92D"><enum>(ii)</enum><text>other expenses, losses, or deductions which are properly allocable to such receipts.</text></clause></subparagraph></paragraph><paragraph id="HC84EF0BC662D4971AF288B47AD7D57A4"><enum>(2)</enum><header>Allocation method</header><text display-inline="yes-display-inline">The Secretary shall prescribe rules for the proper allocation of items described in paragraph (1)(B) for purposes of determining qualified medical and drug manufacturing income. Such rules shall provide for the proper allocation of items whether or not such items are directly allocable to domestic medical and drug manufacturing gross receipts.</text></paragraph><paragraph id="HCC3FA229C37D4BD1896B2CED37F194C6"><enum>(3)</enum><header>Special rules for determining costs</header><subparagraph id="HE03C13A5EE634DA59FEF8B9D1F00A091"><enum>(A)</enum><header>In general</header><text>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.</text></subparagraph><subparagraph id="HC8F56B8B59854710AE2280DD073AECA7"><enum>(B)</enum><header>Exports for further manufacture</header><text>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.</text></subparagraph></paragraph><paragraph id="H88390E0ACD6A4BE99F0E3F5825E0C939"><enum>(4)</enum><header>Domestic medical and drug manufacturing gross receipts</header><subparagraph id="H971EAF2CBF514055BB4D67E81A070351"><enum>(A)</enum><header>In general</header><text>The term <term>domestic medical and drug manufacturing gross receipts</term> means the gross receipts of the taxpayer which are derived from any sale, exchange, or other disposition of—</text><clause id="H977FD787DD254EE5A7D143646B129737"><enum>(i)</enum><text>any active pharmaceutical ingredient, or </text></clause><clause id="H3EE427DEF46C45669ABF2BC081DEFC09"><enum>(ii)</enum><text>any qualified countermeasure,</text></clause><continuation-text continuation-text-level="subparagraph">which was manufactured or produced by the taxpayer in whole or in significant part within the United States. </continuation-text></subparagraph><subparagraph id="HF5D344753FF14DC6983A66E54F8A6238"><enum>(B)</enum><header>Active pharmaceutical ingredient</header><text display-inline="yes-display-inline">The term <term>active pharmaceutical ingredient</term> means any substance or mixture of substances intended to be used in the manufacture of a drug product and (when so used) becomes an active ingredient in the drug product.</text></subparagraph><subparagraph id="H2776FE1EFF9B44A0A61DF5575C3BDFA2"><enum>(C)</enum><header>Qualified countermeasure</header><text display-inline="yes-display-inline">The term <term>qualified countermeasure</term> has the meaning given such term in section 319F–1(a)(2) of the Public Health Service Act (42 U.S.C. 247d–6a(a)(2)).”</text></subparagraph><subparagraph id="HC204F44C98CB4A85A88AA7FAC1CF5907"><enum>(D)</enum><header>Partnerships owned by expanded affiliated groups</header><text display-inline="yes-display-inline">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.</text></subparagraph></paragraph></subsection><subsection id="H7BD3D0F3CA0E4A5CB107C9B885A49923"><enum>(d)</enum><header>Definitions and Special Rules</header><text display-inline="yes-display-inline">For purposes of this section—</text><paragraph id="H18586A132F8C4815A2179E9162A9D297"><enum>(1)</enum><header>Application of section to pass-thru entities</header><subparagraph id="H6E5B0311A96C4240AF9E70CE710F7D34"><enum>(A)</enum><header>Partnerships and s corporations</header><text>In the case of a partnership or S corporation—</text><clause id="H525DE6FBF88A4B76AFCDB6097E3F8FBF"><enum>(i)</enum><text>this section shall be applied at the partner or shareholder level,</text></clause><clause id="H655921A1B1B543DCBCAAD9FFB9D0E018"><enum>(ii)</enum><text>each partner or shareholder shall take into account such person’s allocable share of each item described in subparagraph (A) or (B) of subsection (c)(1) (determined without regard to whether the items described in such subparagraph (A) exceed the items described in such subparagraph (B)), and</text></clause><clause id="H156C2673E78A4048B72F39E93EEA1F29"><enum>(iii)</enum><text>each partner or shareholder shall be treated for purposes of subsection (b) as having W–2 wages for the taxable year in an amount equal to such person’s allocable share of the W–2 wages of the partnership or S corporation for the taxable year (as determined under regulations prescribed by the Secretary).</text></clause></subparagraph><subparagraph id="HBD15E3DFD6DE4B6D879BFE2FE540EFED"><enum>(B)</enum><header>Trusts and estates</header><text>In the case of a trust or estate—</text><clause id="HED7FB1569C5A4C25B8C31A7D7C141D55"><enum>(i)</enum><text>the items referred to in subparagraph (A)(ii) (as determined therein) and the W–2 wages of the trust or estate for the taxable year, shall be apportioned between the beneficiaries and the fiduciary (and among the beneficiaries) under regulations prescribed by the Secretary, and</text></clause><clause id="HA43D14A1A5F24C779EC436D80745DD77"><enum>(ii)</enum><text>for purposes of paragraph (2), adjusted gross income of the trust or estate shall be determined as provided in section 67(e) with the adjustments described in such paragraph.</text></clause></subparagraph><subparagraph id="H48190CDAC2E844E0B5D95EE5BACEBB8D"><enum>(C)</enum><header>Regulations</header><text>The Secretary may prescribe rules requiring or restricting the allocation of items and wages under this paragraph and may prescribe such reporting requirements as the Secretary determines appropriate.</text></subparagraph></paragraph><paragraph id="H7D922FD8C2134393840AB616BC945D6C"><enum>(2)</enum><header>Application to individuals</header><text>In the case of an individual, subsection (a)(2) shall be applied by substituting <quote>adjusted gross income</quote> for <quote>taxable income</quote>. For purposes of the preceding sentence, adjusted gross income shall be determined after application of sections 86, 135, 137, 219, 221, 222, and 469.</text></paragraph><paragraph id="HB17A4874CDBA456CBE5CE507D5A4AB59"><enum>(3)</enum><header>Special rule for affiliated groups</header><subparagraph id="HCD59586A4C894F64B39239483DF5B1B5"><enum>(A)</enum><header>In general</header><text>All members of an expanded affiliated group shall be treated as a single corporation for purposes of this section.</text></subparagraph><subparagraph id="H00D832102D0C4712997350DEFFD03716"><enum>(B)</enum><header>Expanded affiliated group</header><text>For purposes of this section, the term <term>expanded affiliated group</term> means an affiliated group as defined in section 1504(a), determined—</text><clause id="H7D37B9478C574C92B3A7FE67CE142C4D"><enum>(i)</enum><text>by substituting <quote>more than 50 percent</quote> for <quote>at least 80 percent</quote> each place it appears, and</text></clause><clause id="HBB61425D5DD643AA8147E200FA38426E"><enum>(ii)</enum><text>without regard to paragraphs (2) and (4) of section 1504(b).</text></clause></subparagraph><subparagraph id="HF5BB3B5CC62C4D6194E988792FFF1989"><enum>(C)</enum><header>Allocation of credit</header><text display-inline="yes-display-inline">Except as provided in regulations, the credit 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 medical and drug manufacturing income.</text></subparagraph></paragraph><paragraph id="HEEB95723F61F4C97A02EA2F8622BD158"><enum>(4)</enum><header>Trade or business requirement</header><text>This section shall be applied by only taking into account items which are attributable to the actual conduct of a trade or business.</text></paragraph><paragraph id="H645A614E95E145BBBD5C492A386AB5A7"><enum>(5)</enum><header>Coordination with minimum tax</header><text display-inline="yes-display-inline">For purposes of determining alternative minimum taxable income under section 55, qualified medical and drug manufacturing income shall be determined without regard to any adjustments under sections 56 through 59.</text></paragraph><paragraph id="H26AF9CD790F84B1291EF4C35AC05676F"><enum>(6)</enum><header>Unrelated business taxable income</header><text>For purposes of determining the tax imposed by section 511, subsection (a)(1)(B) shall be applied by substituting <quote>unrelated business taxable income</quote> for <quote>taxable income</quote>.</text></paragraph><paragraph id="HA87C434FA88C483AAD24A8CB0838F874" commented="no"><enum>(7)</enum><header>Regulations</header><text display-inline="yes-display-inline">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 credit under this section with respect to any activity described in subsection (c)(4)(A).</text></paragraph></subsection></section><after-quoted-block>.</after-quoted-block></quoted-block></subsection><subsection id="H7E420F7A45A74B7EA120E87C6EC32437"><enum>(b)</enum><header>Treatment under base erosion tax</header><text>Section 59A(b)(1)(B)(ii) of such Code is amended by striking <quote>plus</quote> at the end of subclause (I), by redesignating subclause (II) as subclause (III), and by inserting after subclause (I) the following new subclause: </text><quoted-block style="OLC" id="H9334FD1120B945E7A2721F9BFC418867" display-inline="no-display-inline"><subclause id="H8FA0FBE9F93444EAB0A45319E004BC57"><enum>(II)</enum><text display-inline="yes-display-inline">the credit allowed under section 38 for the taxable year which is properly allocable to the domestic medical and drug manufacturing credit determined under section 45U(a), plus</text></subclause><after-quoted-block>.</after-quoted-block></quoted-block></subsection><subsection id="H5CFDE758D2EE4089A70C82D7F9384059"><enum>(c)</enum><header>Part of general business credit</header><text>Section 38(b) of such Code is amended by striking <quote>plus</quote> at the end of paragraph (32), by striking the period at the end of paragraph (33) and inserting <quote>, plus</quote>, and by adding at the end the following new paragraph:</text><quoted-block style="OLC" id="H31D02A8F4FF14B5C8F085D9D509809AF" display-inline="no-display-inline"><paragraph id="HCE62FBEE8F6E42BBA1D5D927131B9B1D"><enum>(34)</enum><text display-inline="yes-display-inline">the domestic medical and drug manufacturing credit determined under section 45U(a).</text></paragraph><after-quoted-block>.</after-quoted-block></quoted-block></subsection><subsection id="HBD818411AEDD46648A8A5EC3ABBD04CC"><enum>(d)</enum><header>Credit allowed against alternative minimum tax</header><text>Section 38(c)(4)(B) of such Code is amended by redesignating clauses (x) through (xii) as clauses (xi) through (xiii), respectively, and by inserting after clause (ix) the following new clause:</text><quoted-block style="OLC" id="HBA0747BC8D9347B593BDE03ABDB709BE" display-inline="no-display-inline"><clause id="H033CDD4E5BA343539F5AB2F0F5FC824D"><enum>(x)</enum><text display-inline="yes-display-inline">the credit determined under section 45U,</text></clause><after-quoted-block>.</after-quoted-block></quoted-block></subsection><subsection id="HBFCAA61F0E60449EACC9FF5B7D8AA3F4"><enum>(e)</enum><header>Clerical amendment</header><text display-inline="yes-display-inline">The table of sections for subpart D of part IV of subchapter A of chapter 1 of such Code is amended by adding at the end the following new item:</text><quoted-block style="OLC" id="HFA3BE219544740BBBD019693519A02CB" display-inline="no-display-inline"><toc regeneration="no-regeneration"><toc-entry level="section">Sec. 45U. Domestic medical and drug manufacturing credit.</toc-entry></toc><after-quoted-block>.</after-quoted-block></quoted-block></subsection><subsection id="HE346A71E24CC4CCA89C1CB82B6FFDDE6"><enum>(f)</enum><header>Effective date</header><text>The amendments made by this section shall apply to taxable years beginning after December 31, 2020. </text></subsection></section><section id="HFAE1E3489D4F499A9F15BC85CBBF538A" section-type="subsequent-section"><enum>302.</enum><header>Qualifying advanced medical manufacturing equipment credit</header><subsection id="HB2FA5C7EB02E456D960B316422C31409"><enum>(a)</enum><header>In general</header><text display-inline="yes-display-inline">Subpart E of part IV of subchapter A of <external-xref legal-doc="usc-chapter" parsable-cite="usc-chapter/26/1">chapter 1</external-xref> of the Internal Revenue Code of 1986 is amended by adding at the end the following new section: </text><quoted-block style="OLC" id="HFDAEDCB311F248CCBD6BC67E1AF1B5F7" display-inline="no-display-inline"><section id="HA82A435DBEB44D16B45DEB9E155CF172"><enum>48D.</enum><header>Qualifying advanced medical manufacturing equipment credit</header><subsection id="H9E39C123DC9D4A578D5C81FD8D625AE5"><enum>(a)</enum><header>In general</header><text display-inline="yes-display-inline">For purposes of section 46, the qualifying advanced medical manufacturing equipment credit determined under this section for any taxable year is the applicable percentage of the basis of any qualifying advanced medical manufacturing equipment placed in service during such taxable year.</text></subsection><subsection id="H879809F400D3427297DF07FE00BE377D"><enum>(b)</enum><header>Applicable percentage</header><text display-inline="yes-display-inline">For purposes of subsection (a), the applicable percentage is—</text><paragraph id="H35D1FBFACB574475B73F66B585CDEF9B"><enum>(1)</enum><text display-inline="yes-display-inline">30 percent in the case of equipment which is placed in service before January 1, 2028,</text></paragraph><paragraph id="H194E3BE75C4E4B01B8D6AC86C10A15C2"><enum>(2)</enum><text display-inline="yes-display-inline">20 percent in the case of equipment which is placed in service during calendar year 2028,</text></paragraph><paragraph id="HDCFBA8FBBC2E4E899D1EAA29B12804C7"><enum>(3)</enum><text display-inline="yes-display-inline">10 percent in the case of equipment which is placed in service during calendar year 2029, and </text></paragraph><paragraph id="H0D5D0CD40FD74B8DA197481266C6B3A7"><enum>(4)</enum><text>0 percent in the case of equipment which is placed in service after December 31, 2029.</text></paragraph></subsection><subsection id="H9EFEF004474343E1BF896633AC9D5B63"><enum>(c)</enum><header>Qualifying advanced medical manufacturing equipment</header><text display-inline="yes-display-inline">For purposes of this section, the term <term>qualifying advanced medical manufacturing equipment</term> means property of a character subject to the allowance for depreciation—</text><paragraph id="H6705048BE4B14BA589B8507E6B9787D4"><enum>(1)</enum><text display-inline="yes-display-inline">which is machinery or equipment that is designed and used to manufacture a—</text><subparagraph id="H7EA0AEB1DE8F4E468D62080AC4FABEC5"><enum>(A)</enum><text>drug (as such term is defined in section 201(g)(1) of the Federal Food, Drug, and Cosmetic Act),</text></subparagraph><subparagraph id="HF5008FA6942C4D82AE903F3E0CB99ED3"><enum>(B)</enum><text>device (as such term is defined in section 201(h) of such Act), or</text></subparagraph><subparagraph id="H603C2CAD24EF4AFAA3BAD9DAC91619A5"><enum>(C)</enum><text>biological product (as such term is defined in section 351(i) of the Public Health Service Act), </text></subparagraph></paragraph><paragraph id="HBD5593791EE44A63BA06B8382E576C79"><enum>(2)</enum><text display-inline="yes-display-inline">which has been identified by the Secretary (after consultation with the Secretary of Health and Human Services) as machinery or equipment that—</text><subparagraph id="H526EFF513FF745A28E8820FF16596E17"><enum>(A)</enum><text>incorporates novel technology or uses an established technique or technology in a new or innovative way, or</text></subparagraph><subparagraph id="HCADB9384DED241CF95A0EBA12A719E5C"><enum>(B)</enum><text>that can improve medical product quality, address shortages of medicines, and speed time-to-market,</text></subparagraph></paragraph><paragraph id="H9CFC9B5B151C4B84B9290B203269FB76"><enum>(3)</enum><text>which is placed in service in the United States by the taxpayer, and</text></paragraph><paragraph id="HDDAEA89EDECC44F2B109B47E5B858470"><enum>(4)</enum><text>with respect to which depreciation is allowable.</text></paragraph></subsection><subsection id="H67398D04E47A4E4BA3EBFBAAE6CB62FC"><enum>(d)</enum><header>Certain qualified progress expenditures rules made applicable</header><text display-inline="yes-display-inline">Rules similar to the rules of subsections (c)(4) and (d) of section 46 (as in effect on the day before the enactment of the Revenue Reconciliation Act of 1990) shall apply for purposes of this section.</text></subsection><subsection id="HA65E05F467B344AE9973F162C6FD9258"><enum>(e)</enum><header>Regulations</header><text display-inline="yes-display-inline">The Secretary shall prescribe such regulations or other guidance as may be necessary to carry out the purposes of this section, including regulations which prevent abuse or fraud.</text></subsection></section><after-quoted-block>.</after-quoted-block></quoted-block></subsection><subsection id="HAB3A1B28958842EF8DAA1E7ABF3AD4EC" display-inline="no-display-inline"><enum>(b)</enum><header>Treatment under base erosion tax</header><text>Section 59A(b)(1)(B)(ii) of such Code, as amended by section 7 of this Act, is further amended by striking <quote>plus</quote> at the end of subclause (II), by redesignating subclause (III) as subclause (IV), and by inserting after subclause (II) the following new subclause: </text><quoted-block style="OLC" id="H2CC8965554FC4DCFA1F3FF89E601017D" display-inline="no-display-inline"><subclause id="H4FAD200AD6774C338E14F13CDFBAD8DC"><enum>(III)</enum><text display-inline="yes-display-inline">the credit allowed under section 46 for the taxable year which is properly allocable to the qualifying advanced medical manufacturing equipment credit determined under section 48D(a), plus</text></subclause><after-quoted-block>.</after-quoted-block></quoted-block></subsection><subsection id="H5C4DEE4795FD4E858873A6734F337400"><enum>(c)</enum><header>Part of investment credit</header><text>Section 46 of such Code is amended by striking <quote>and</quote> at the end of paragraph (5), by striking the period at the end of paragraph (6) and inserting <quote>, and</quote>, and by adding at the end the following new paragraph:</text><quoted-block style="OLC" id="H5D7042E952D649E18F0B456C254C115B" display-inline="no-display-inline"><paragraph id="H12F34A122CB845D4ABC71A16BE1EAD74"><enum>(7)</enum><text display-inline="yes-display-inline">the qualifying advanced medical manufacturing equipment credit.</text></paragraph><after-quoted-block>.</after-quoted-block></quoted-block></subsection><subsection id="H96C1BEF8BF294BFAA2B580F237A43827"><enum>(d)</enum><header>Clerical amendment</header><text display-inline="yes-display-inline">The table of sections for subpart D of part IV of subchapter A of chapter 1 of such Code is amended by adding at the end the following new item:</text><quoted-block style="OLC" id="H2687D59D0D73477EBDEFC1413653A136" display-inline="no-display-inline"><toc regeneration="no-regeneration"><toc-entry level="section">Sec. 48D. Qualifying advanced medical manufacturing equipment credit.</toc-entry></toc><after-quoted-block>.</after-quoted-block></quoted-block></subsection><subsection id="HD98D923964494409BF18699770A16FEC"><enum>(e)</enum><header>Effective date</header><text>The amendments made by this section shall apply to periods after the date of the enactment of this section under rules similar to the rules of <external-xref legal-doc="usc" parsable-cite="usc/26/48">section 48(m)</external-xref> of the Internal Revenue Code of 1986 (as in effect on the date of the enactment fo the Revenue Reconciliation Act of 1990).</text></subsection></section><section id="HE086C08466E5472F85B3F398AB74B1FD" section-type="subsequent-section"><enum>303.</enum><header>New medical research expenditure component of credit for increasing research activities</header><subsection id="H6FC4B1CAA6D549CD97CD601365A8BD08"><enum>(a)</enum><header>In general</header><text display-inline="yes-display-inline"><external-xref legal-doc="usc" parsable-cite="usc/26/41">Section 41(a)</external-xref> of the Internal Revenue Code of 1986 is amended by striking <quote>and</quote> at the end of paragraph (2), by striking the period at the end of paragraph (3) and inserting <quote>, and</quote>, and by adding at the end the following new paragraph:</text><quoted-block style="OLC" id="HB803365A2C074F5588634FB2C6B86FBD" display-inline="no-display-inline"><paragraph id="HF6BD67C0D5BD4C2BACF80D4FEA68A952"><enum>(4)</enum><text display-inline="yes-display-inline">14 percent of specified medical research expenditures.</text></paragraph><after-quoted-block>.</after-quoted-block></quoted-block></subsection><subsection id="H3ACF7C8FFE8347F9AB1C84C67CE70E54"><enum>(b)</enum><header>Specified medical research expenditures</header><text>Section 41(f) of such Code is amended by adding at the end the following new paragraph:</text><quoted-block style="OLC" id="H7F2E55CCF2B14ACAA67079FFDF02B91C" display-inline="no-display-inline"><paragraph id="HB16786D0DF6B4F0380B45958BA952882"><enum>(7)</enum><header>Specified medical research expenditures</header><subparagraph id="H754A5502C97C4A5185B18D50D7A4E1A1"><enum>(A)</enum><header>In general</header><text display-inline="yes-display-inline">The term <quote>specified medical research expenditures</quote> means amounts paid or incurred for qualified research with respect to any qualified countermeasure.</text></subparagraph><subparagraph id="HB81255E54E5E46B6BF3255D9915DBD4B"><enum>(B)</enum><header>Qualified countermeasure</header><text display-inline="yes-display-inline">The term <quote>qualified countermeasure</quote> has the meaning given to such term in section 319F–1(a)(2) of the Public Health Service Act (42 U.S.C. 247d–6a(a)(2)).</text></subparagraph></paragraph><after-quoted-block>.</after-quoted-block></quoted-block></subsection><subsection id="H449126C0F2664275B97738E994E0582D"><enum>(c)</enum><header>Denial of double benefit</header><paragraph id="H848222530C504FB5AA295E1782C610A3"><enum>(1)</enum><header>Taxable years beginning before January <enum-in-header>1, 2021</enum-in-header></header><text display-inline="yes-display-inline">In the case of specified medical research expenditures (as defined in section 41(f)(7) of such Code (as added by this section)) paid or incurred in taxable years beginning before January 1, 2021—</text><subparagraph id="H755B9B3DEE0B4213B8A031471731F0ED"><enum>(A)</enum><text>such expenditures shall be treated in the same manner as qualified research expenses and basic research expenses under section 280C(c)(1) of such Code (as in effect on the day before the enactment of the Tax Cuts and Jobs Act), and</text></subparagraph><subparagraph id="HA8AB700ECDA54FB483A0ADEAD66C57F2"><enum>(B)</enum><text>the amount determined under section 280C(c)(2)(A) (as in effect on such day) for the taxable year shall be increased by the amount of credit determined for the taxable year under section 41(a)(4) (as added by this section).</text></subparagraph></paragraph><paragraph id="H2B79778C4AAC4804AD57FF7829B0F314"><enum>(2)</enum><header>Taxable years beginning after December <enum-in-header>31, 2020</enum-in-header></header><text display-inline="yes-display-inline">Section 280C(c)(1) of such Code is amended by striking <quote>section 41(a)(1)</quote> and inserting <quote>paragraphs (1) and (4) of section 41(a)</quote>. </text></paragraph></subsection><subsection id="H8EA09090D7D14A469790F06AFC3A222C"><enum>(d)</enum><header>Conforming amendment</header><text>Section 41(f)(1) of such Code is amended by striking <quote>and amounts paid or incurred to energy research consortiums</quote> each place it appears and inserting <quote>, amounts paid or incurred to energy research consortiums, and specified medical research expenditures</quote>.</text></subsection><subsection id="H7EDF19C2001D4DC0B23D3D90C96C4E07" commented="no"><enum>(e)</enum><header>Effective date</header><text>The amendments made by this section shall apply to amounts paid or incurred after the date of the enactment of this Act, in taxable years ending after such date.</text></subsection></section><section id="H21709FF143074AFF99D5226D928AA03D" section-type="subsequent-section"><enum>304.</enum><header>Refundable portion of research credit for small businesses engaging in specified medical research</header><subsection id="HE416FDD3F11C43B7A0226B52A6002742"><enum>(a)</enum><header>In general</header><text display-inline="yes-display-inline"><external-xref legal-doc="usc" parsable-cite="usc/26/41">Section 41</external-xref> of the Internal Revenue Code of 1986 is amended by adding at the end the following new subsection:</text><quoted-block style="OLC" id="H23EB116950CE4FE1A305D8B1A56A63B3" display-inline="no-display-inline"><subsection id="H98EE2546782F4EBD87DAAAE9CDB14ACA"><enum>(i)</enum><header>Refundable portion for small businesses engaging in specified medical research</header><paragraph id="H535854C0788C48B18E8C6178363ADDAD"><enum>(1)</enum><header>In general</header><text display-inline="yes-display-inline">At the election of a medical research small business, the portion of the credit determined under this section for the taxable year which is properly allocable to specified medical research shall be treated (other than for purposes of section 280C) as a credit allowed under subpart C (and not this subpart).</text></paragraph><paragraph id="H70589775DAD8444FAD0744BC2F09E230"><enum>(2)</enum><header>Medical research small business</header><text>For purposes of this subsection, the term <quote>medical research small business</quote> means any domestic C corporation—</text><subparagraph id="HAFA61C339E6B45F394B79CE8B8EC1B68"><enum>(A)</enum><text display-inline="yes-display-inline">which conducts any specified medical research during the taxable year, and</text></subparagraph><subparagraph id="HBC36739B58224EE79027A965E8E27DD8"><enum>(B)</enum><text>the gross receipts of which (determined under the rules of subsection (c)) for the taxable year do not exceed $1,000,000.</text></subparagraph></paragraph><paragraph id="HCF3408077F8140B2B215465C925F3366"><enum>(3)</enum><header>Specified medical research</header><text display-inline="yes-display-inline">For purposes of this subsection, the term <quote>specified medical research</quote> means any qualified research with respect to qualified countermeasures (as defined in section 319F–1(a)(2) of the Public Health Service Act (42 U.S.C. 247d–6a(a)(2))).</text></paragraph><paragraph id="H8D2FDF2F5803493094A868F117884670"><enum>(4)</enum><header>Election</header><text>Any election under this subsection for any taxable year—</text><subparagraph id="H5800710719124A8BA61E8987043239B7"><enum>(A)</enum><text>shall specify the amount of the credit to which such election applies,</text></subparagraph><subparagraph id="HF3D210F3C42E40D0BD16B9D260AE4D3A"><enum>(B)</enum><text display-inline="yes-display-inline">shall be made on or before the due date (including extensions) of the return of tax for the taxable year,</text></subparagraph><subparagraph id="H7C38F5908A1E4F3DA81D20B6252A1AD6"><enum>(C)</enum><text>may not be made for any taxable year with respect to any portion of the credit determined under this section with respect to which an election is made under subsection (h), and</text></subparagraph><subparagraph id="H1B88C59F75EF4BEC811409AABEE92089"><enum>(D)</enum><text>may be revoked only with the consent of the Secretary.</text></subparagraph></paragraph><paragraph id="H5991FCAD4D3046F5A577B2F4098E4809"><enum>(5)</enum><header>Regulations</header><text display-inline="yes-display-inline">The Secretary shall prescribe such regulations for purposes of this subsection as may be necessary or appropriate for determining proper allocation to specified medical research of the portion of any credit allowed to a taxpayer for a taxable year under this section.</text></paragraph></subsection><after-quoted-block>.</after-quoted-block></quoted-block></subsection><subsection id="HC218B8ACE9F749F580FC6552AEE4F20C"><enum>(b)</enum><header>Conforming amendment</header><text>Section 1324(b) of title 31, United States Code, is amended by inserting <quote>41(i),</quote> after <quote>6428,</quote>.</text></subsection><subsection id="HC3843E88287E46A18ACDD03D7B09BB4C"><enum>(c)</enum><header>Effective date</header><text>The amendments made by this section shall apply to taxable years beginning after December 31, 2020.</text></subsection></section><section id="H655AF027734C4B3E9F788FD45BE12561" section-type="subsequent-section"><enum>305.</enum><header>Exception from passive loss rules for investments in specified medical research small business pass-thru entities</header><subsection id="H9A0030B4512942F3A611E7AD454CBD49"><enum>(a)</enum><header>In general</header><text>Subsection (c) of <external-xref legal-doc="usc" parsable-cite="usc/26/469">section 469</external-xref> of the Internal Revenue Code of 1986 is amended by redesignating paragraphs (4) through (7) as paragraphs (5) through (8), respectively, and by inserting after paragraph (3) the following new paragraph:</text><quoted-block id="H824D7F95B0B740A9B61C789CEBF09031" style="OLC"><paragraph id="HC44D961253564920A099F5EF93CACB64"><enum>(4)</enum><header>Specified medical research activities</header><subparagraph id="H09ED7DC13CF0412EA87E05DF489B9DF9"><enum>(A)</enum><header>In general</header><text>The term <term>passive activity</term> shall not include any qualified medical research activity of the taxpayer carried on by a specified medical research small business pass-thru entity.</text></subparagraph><subparagraph id="H5A46A627FD52482582E7E5BCB75FB605"><enum>(B)</enum><header>Treatment of losses and deductions</header><clause id="H28961DD2DC4E47DBBA2311C6E84B5780"><enum>(i)</enum><header>In general</header><text>Losses or deductions of a taxpayer in connection with qualified medical research activities carried on by a specified medical research small business pass-thru entity shall not be treated as losses or deductions, respectively, from a passive activity except as provided in clause (ii) and subparagraph (C).</text></clause><clause id="H5B3F704D122B4229BDCD16BDE9E6B4FB"><enum>(ii)</enum><header>Limitation</header><text display-inline="yes-display-inline">Clause (i) shall apply to losses and deductions of a taxpayer in connection with a specified medical small business pass-thru entity for a taxable year only to the extent that the aggregate losses and deductions of the taxpayer in connection with qualified medical research activities of such entity for such taxable year do not exceed the portion of the taxpayer’s adjusted basis in the taxpayer’s ownership interest in such entity that is attributable to money or other property contributed—</text><subclause id="H8E3FCA561CC443C19F6C538C8B3A9CF7"><enum>(I)</enum><text>in exchange for such ownership interest, and</text></subclause><subclause id="H4FCD9E528BCB4877885F2AEC68D9991A"><enum>(II)</enum><text>specifically for use in connection with qualified medical research activities.</text></subclause><continuation-text continuation-text-level="clause">For purposes of the preceding sentence, the taxpayer’s basis shall not include any portion of such basis which is attributable to an increase in a partner’s share of the liabilities of a partnership that is considered under section 752(a) as a contribution of money. </continuation-text></clause></subparagraph><subparagraph id="HB7EF39A2ED8E45C3834C01C6CA0439FF"><enum>(C)</enum><header>Treatment of carryovers</header><text>Subparagraph (B)(i) shall not apply to the portion of any loss or deduction that is carried over under subsection (b) into a taxable year other than the taxable year in which such loss or deduction arose.</text></subparagraph><subparagraph id="H0A905ECF2C5B4675A438C494DE6C97F5"><enum>(D)</enum><header>Qualified medical research activity</header><text display-inline="yes-display-inline">For purposes of this paragraph, the term <term>qualified medical research activity</term> means any qualified research (within the meaning of section 41(d)) with respect to qualified countermeasures (as defined in section 319F–1(a)(2) of the Public Health Service Act (42 U.S.C. 247d–6a(a)(2))). </text></subparagraph><subparagraph id="HE29D22A43D76406087F52EC6313455E1"><enum>(E)</enum><header>Specified medical research small business pass-thru entity</header><text>For purposes of this paragraph, the term <term>specified medical research small business pass-thru entity</term> means any domestic pass-thru entity for any taxable year if—</text><clause id="HA1A14A4EF01E4C21812CF911F21940B3"><enum>(i)</enum><text display-inline="yes-display-inline">more than 80 percent of such entity’s expenditures on qualified research for such taxable year are paid or incurred in connection with qualified medical research activities, and</text></clause><clause id="H9330D77B3D7B43A5BF23578359EE4C14"><enum>(ii)</enum><text>the gross receipts (as determined under the rules of section 41(h)(3)) of such entity for the taxable year (and each preceding taxable year) is less than $1,000,000. </text></clause></subparagraph><subparagraph id="HA7BBD6F303134E7C957C898F11F67F1B"><enum>(F)</enum><header>Capital expenditures taken into account for expenditures test</header><text>An expenditure shall not fail to be taken into account under subparagraph (E)(i) merely because such expenditure is chargeable to capital account.</text></subparagraph><subparagraph id="HB469C84396454F6D890AA7D03B4D3B67"><enum>(G)</enum><header>Pass-thru entity</header><text>For purposes of this paragraph, the term <term>pass-thru entity</term> means any partnership, S corporation, or other entity identified by the Secretary as a pass-thru entity for purposes of this paragraph.</text></subparagraph><subparagraph id="H2580D5106181403C8C17405861561C1B"><enum>(H)</enum><header>Aggregation rules</header><clause id="HC0B05CB2EAF846FEBB1A77FC05A71FF5"><enum>(i)</enum><header>In general</header><text>All persons treated as a single employer under subsection (a) or (b) of section 52, or subsection (m) or (o) of section 414, shall be treated as a single entity for purposes of subparagraphs (E) and (F)(iii).</text></clause><clause id="HDAECAD1857554499BCB2C31EFC441D0D"><enum>(ii)</enum><header>Limitation where entity would not qualify</header><text display-inline="yes-display-inline">No entity shall be treated as a specified medical research small business pass-thru entity unless such entity qualifies as such both with and without the application of clause (i).</text></clause></subparagraph></paragraph><after-quoted-block>.</after-quoted-block></quoted-block></subsection><subsection id="H5FFBFBF4B7B44932B16D0A24E6BFD905"><enum>(b)</enum><header>Material participation not required</header><text>Paragraph (5) of <external-xref legal-doc="usc" parsable-cite="usc/26/469">section 469(c)</external-xref> of the Internal Revenue Code of 1986, as redesignated by subsection (a), is amended by striking <quote>and (3)</quote> in the heading and text and inserting <quote>, (3), and (4)</quote>.</text></subsection><subsection id="HBD12F3427A43489C93D50065479F81DE"><enum>(c)</enum><header>Certain research-Related deductions and credits of specified medical research small business pass-Thru entities allowed for purposes of determining alternative minimum tax</header><paragraph id="H423F5ED295CC4F609F6554CE89FFEF12"><enum>(1)</enum><header>Deduction for research and experimental expenditures</header><text>Paragraph (2) of <external-xref legal-doc="usc" parsable-cite="usc/26/56">section 56(b)</external-xref> of the Internal Revenue Code of 1986 is amended by adding at the end the following new subparagraph:</text><quoted-block id="H8A99731BB17E4E15803B3892E5B50219" style="OLC"><subparagraph id="H7C43CD4BB1E747D084A1D3D3B17D6436"><enum>(E)</enum><header>Exception for specified medical research small business pass-thru entities</header><text display-inline="yes-display-inline">In the case of a specified medical research small business pass-thru entity (as defined in section 469(c)(4)), this paragraph shall not apply to any amount allowable as a deduction under section 174(a).</text></subparagraph><after-quoted-block>.</after-quoted-block></quoted-block></paragraph><paragraph id="H6ACF93F422744CA6A2AF56BFA27B24C7"><enum>(2)</enum><header>Allowance of certain research-related credits</header><text>Subparagraph (B) of section 38(c)(4) of such Code is amended by redesignating clauses (ii) through (ix) as clauses (iii) through (x), respectively, and by inserting after clause (i) the following new clause:</text><quoted-block id="HAD0E966185A04B3CA65F41F5054D087A" style="OLC"><clause id="H317CD09284444A1B87A5AE6A997D43B5"><enum>(ii)</enum><text>the credit of an individual taxpayer determined under section 41 to the extent attributable to a specified medical research small business pass-thru entity (as defined in section 469(c)(4)),</text></clause><after-quoted-block>.</after-quoted-block></quoted-block></paragraph></subsection><subsection id="HB368660F8B674B999FF9130777535D81"><enum>(d)</enum><header>Exception to limitation on pass-Thru of research credit</header><text>Subsection (g) of section 41 of such Code is amended by adding at the end the following: <quote>Paragraphs (2) and (4) shall not apply with respect to any specified medical research small business pass-thru entity (as defined in section 469(c)(4)).</quote>.</text></subsection><subsection id="HACCFD0A18D024C15B56C4B0992A2A3C2"><enum>(e)</enum><header>Effective date</header><text>The amendments made by this section shall apply to losses and credits arising in taxable years beginning after December 31, 2020.</text></subsection></section><enum>IV</enum><header>Growth in Innovation and Technology Breakthroughs</header><section id="H4AD300146704455FA21CE8A10C33988D"><enum>401.</enum><header>Simplification and expansion of deduction for start-up and organizational expenditures</header><subsection id="H6B3D665804FA415EA49CE505B026DBAD"><enum>(a)</enum><header>In general</header><text display-inline="yes-display-inline"><external-xref legal-doc="usc" parsable-cite="usc/26/195">Section 195</external-xref> of the Internal Revenue Code of 1986 is amended by redesignating subsections (c) and (d) as subsections (d) and (e), respectively, and by striking all that precedes subsection (d) (as so redesignated) and inserting the following:</text><quoted-block display-inline="no-display-inline" id="H11568FAE97A94F64A3A18788D8460CD6" style="OLC"><section id="H9D00517CE4634194AC63D2C820417AB4"><enum>195.</enum><header>Start-up and organizational expenditures</header><subsection id="H4226FD01EF81441A922EEF141ED7AC4B"><enum>(a)</enum><header>Capitalization of expenditures</header><text display-inline="yes-display-inline">Except as otherwise provided in this section, no deduction shall be allowed for start-up or organizational expenditures.</text></subsection><subsection id="HF615EB8F8D0D47A4B358F2CF5A208C0E"><enum>(b)</enum><header>Election To deduct</header><paragraph id="H3E937F9745084509951C037890254334"><enum>(1)</enum><header>In general</header><text display-inline="yes-display-inline">If a taxpayer elects the application of this subsection with respect to any active trade or business—</text><subparagraph id="H755D15F23D2741188C3816E50A71BCB5"><enum>(A)</enum><text>the taxpayer shall be allowed a deduction for the taxable year in which such active trade or business begins in an amount equal to the lesser of—</text><clause id="H2924DF15B8AA43D0B7EDA8C4AEAB0DD3"><enum>(i)</enum><text>the aggregate amount of start-up and organizational expenditures paid or incurred in connection with such active trade or business, or</text></clause><clause id="H4D1CFD0002D743F89B3A0D521ECBBE62"><enum>(ii)</enum><text>$20,000, reduced (but not below zero) by the amount by which such aggregate amount exceeds $120,000, and</text></clause></subparagraph><subparagraph id="H0CD0753E8A3648D1BD182DE34E9B4610"><enum>(B)</enum><text>the remainder of such start-up and organizational expenditures shall be charged to capital account and allowed as an amortization deduction determined by amortizing such expenditures ratably over the 180-month period beginning with the month in which the active trade or business begins.</text></subparagraph></paragraph><paragraph id="H1AF14CA5928B436C90CBBBB4B106CBF1"><enum>(2)</enum><header>Application to organizational expenditures</header><text>In the case of organizational expenditures with respect to any corporation or partnership, the active trade or business referred to in paragraph (1) means the first active trade or business carried on by such corporation or partnership.</text></paragraph><paragraph id="HBD9DCF34A8E94E09AD91AD8C3D511E42"><enum>(3)</enum><header>Inflation adjustment</header><text>In the case of any taxable year beginning after December 31, 2020, the $20,000 and $120,000 amounts in paragraph (1)(A)(ii) shall each be increased by an amount equal to—</text><subparagraph id="H07F5B4AF6E8241D8987DF3F7450C0DE6"><enum>(A)</enum><text>such dollar amount, multiplied by</text></subparagraph><subparagraph id="H71036F0E4AC04288B03732A982A8A263"><enum>(B)</enum><text display-inline="yes-display-inline">the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which the taxable year begins, determined by substituting <quote>calendar year 2019</quote> for <quote>calendar year 2016</quote> in subparagraph (A)(ii) thereof.</text></subparagraph><continuation-text commented="no" continuation-text-level="paragraph">If any amount as increased under the preceding sentence is not a multiple of $1,000, such amount shall be rounded to the nearest multiple of $1,000. </continuation-text></paragraph></subsection><subsection id="H02E7024B902D4684ADA7AD4D193C97F8"><enum>(c)</enum><header>Allowance of deduction upon liquidation or disposition</header><paragraph id="H4B06CBC2FBA04ADAA5D548E5B79A57A5"><enum>(1)</enum><header>Liquidation of partnership or corporation</header><text display-inline="yes-display-inline">If any partnership or corporation is completely liquidated by the taxpayer, any start-up or organizational expenditures paid or incurred in connection with such partnership or corporation which were not allowed as a deduction by reason of this section may be deducted to the extent allowable under section 165.</text></paragraph><paragraph id="H7883FBA4B1EA4C1295216E21429FDDCC"><enum>(2)</enum><header>Disposition of trade or business</header><text display-inline="yes-display-inline">If any trade or business is completely disposed of or discontinued by the taxpayer, any start-up expenditures paid or incurred in connection with such trade or business which were not allowed as a deduction by reason of this section (and not taken into account in connection with a liquidation to which paragraph (1) applies) may be deducted to the extent allowable under section 165. For purposes of this paragraph, in the case of any deduction allowed under subsection (b)(1) with respect to both start-up and organizational expenditures, the amount treated as so allowed with respect to start-up expenditures shall bear the same ratio to such deduction as the start-up expenditures taken into account in determining such deduction bears to the aggregate of the start-up and organizational expenditures so taken into account.</text></paragraph></subsection></section><after-quoted-block>.</after-quoted-block></quoted-block></subsection><subsection id="H43C81CF7390242B4ADEFD5C9C1D05300"><enum>(b)</enum><header>Organizational expenditures</header><text>Section 195(d) of such Code, as redesignated by subsection (a), is amended by adding at the end the following new paragraphs:</text><quoted-block display-inline="no-display-inline" id="H0FE1539A9AA24000920109D2CDDA2E85" style="OLC"><paragraph id="H82B924C123A8491DB4EC811C805C3144"><enum>(3)</enum><header>Organizational expenditures</header><text display-inline="yes-display-inline">The term <quote>organizational expenditures</quote> means any expenditure which—</text><subparagraph id="H6870594D6B164051A5A1741734B79667"><enum>(A)</enum><text>is incident to the creation of a corporation or a partnership,</text></subparagraph><subparagraph id="H9C50BF3FB2D04F78814D51D58B77CFE0"><enum>(B)</enum><text>is chargeable to capital account, and</text></subparagraph><subparagraph id="HCA490DD1DCA647558BF3C570FB5E7E18"><enum>(C)</enum><text>is of a character which, if expended incident to the creation of a corporation or a partnership having an ascertainable life, would be amortizable over such life.</text></subparagraph></paragraph><paragraph id="HC3615E724872463C9BDA3778E711F60D"><enum>(4)</enum><header>Application to certain disregarded entities</header><text display-inline="yes-display-inline">In the case of any entity with a single owner that is disregarded as an entity separate from its owner, this section shall be applied in the same manner as if such entity were a corporation.</text></paragraph><after-quoted-block>.</after-quoted-block></quoted-block></subsection><subsection id="H9D338B4D131942BDAAE12B71CB1AAF46"><enum>(c)</enum><header>Election</header><text>Section 195(e)(2) of such Code, as redesignated by subsection (a), is amended to read as follows:</text><quoted-block display-inline="no-display-inline" id="HDB0A258D950D4E8D90B192607FF7DE83" style="OLC"><paragraph id="H3A8062CE3EB04593A507AACE53E9A4B2"><enum>(2)</enum><header>Partnerships and S corporations</header><text display-inline="yes-display-inline">In the case of any partnership or S corporation, the election under subsection (b) shall be made (and this section shall be applied) at the entity level.</text></paragraph><after-quoted-block>.</after-quoted-block></quoted-block></subsection><subsection id="H3CA27FDAE0424B538AC4ED55DBE96A2C"><enum>(d)</enum><header>Conforming amendments</header><paragraph id="HD398CA5AB6CD4F2AA7F22110FAF8E01D"><enum>(1)</enum><subparagraph commented="no" display-inline="yes-display-inline" id="HA57B3F2C595246A3915B1842E68105BD"><enum>(A)</enum><text>Part VIII of subchapter B of <external-xref legal-doc="usc-chapter" parsable-cite="usc-chapter/26/1">chapter 1</external-xref> is amended by striking section 248 of such Code (and by striking the item relating to such section in the table of sections of such part).</text></subparagraph><subparagraph id="H25E540C0CD814582AADA53AC9342BC11" indent="up1"><enum>(B)</enum><text display-inline="yes-display-inline">Section 170(b)(2)(D)(ii) of such Code is amended by striking <quote>(except section 248)</quote>.</text></subparagraph><subparagraph id="H17A7C4E3377A48D98FD41E6D31C0811C" indent="up1"><enum>(C)</enum><text display-inline="yes-display-inline">Section 312(n)(3) of such Code is amended by striking <quote>Sections 173 and 248</quote> and inserting <quote>Sections 173 and 195</quote>.</text></subparagraph><subparagraph id="HE9E9170CCEF54541B0192561785A4A44" indent="up1"><enum>(D)</enum><text display-inline="yes-display-inline">Section 535(b)(3) of such Code is amended by striking <quote>(except section 248)</quote>.</text></subparagraph><subparagraph id="HFA478EF048DF4F54B88ABDFE1975A105" indent="up1"><enum>(E)</enum><text display-inline="yes-display-inline">Section 545(b)(3) of such Code is amended by striking <quote>(except section 248)</quote>.</text></subparagraph><subparagraph id="H2DAE1623C0E64D69B0947B2B94F3D5DD" indent="up1"><enum>(F)</enum><text display-inline="yes-display-inline">Section 545(b)(4) of such Code is amended by striking <quote>(except section 248)</quote>.</text></subparagraph><subparagraph id="H047D1A2B58D440668FA324BF80306CF7" indent="up1"><enum>(G)</enum><text display-inline="yes-display-inline">Section 834(c)(7) of such Code is amended by striking <quote>(except section 248)</quote>.</text></subparagraph><subparagraph id="H72C604986A0649AD9990F807EA0A8BA5" indent="up1"><enum>(H)</enum><text display-inline="yes-display-inline">Section 852(b)(2)(C) of such Code is amended by striking <quote>(except section 248)</quote>.</text></subparagraph><subparagraph id="HE184E2CC73E44415B78B459E2EEBA4B7" indent="up1"><enum>(I)</enum><text display-inline="yes-display-inline">Section 857(b)(2)(A) of such Code is amended by striking <quote>(except section 248)</quote>.</text></subparagraph><subparagraph id="H5D4D6D2FDB6A4BD59D1BD1FF147B8978" indent="up1"><enum>(J)</enum><text display-inline="yes-display-inline">Section 1363(b) of such Code is amended by adding <quote>and</quote> at the end of paragraph (2), by striking paragraph (3), and by redesignating paragraph (4) as paragraph (3).</text></subparagraph><subparagraph id="HB8A3ECDD77794A4CAEBDF1B9EB87AAD4" indent="up1"><enum>(K)</enum><text display-inline="yes-display-inline">Section 1375(b)(1)(B)(i) of such Code is amended by striking <quote>(other than the deduction allowed by section 248, relating to organization expenditures)</quote>.</text></subparagraph></paragraph><paragraph id="HAEC1B032B66048BE80080086FF355EC2"><enum>(2)</enum><subparagraph commented="no" display-inline="yes-display-inline" id="H5CD007CF40554E169595033D4F3DBCAA"><enum>(A)</enum><text display-inline="yes-display-inline">Section 709 of such Code is amended to read as follows:</text><quoted-block display-inline="no-display-inline" id="HD4DFA92FA9CA4760B9D1F87824C6C73C" style="OLC"><section id="HBD939CA6B7F340528B94555A08FC44A4"><enum>709.</enum><header>Treatment of syndication fees</header><text display-inline="no-display-inline">No deduction shall be allowed under this chapter to a partnership or to any partner of the partnership for any amounts paid or incurred to promote the sale of (or to sell) an interest in the partnership.</text></section><after-quoted-block>.</after-quoted-block></quoted-block></subparagraph><subparagraph id="H000C7C96D3AB4997B06F2CDC39692B7D" indent="up1"><enum>(B)</enum><text display-inline="yes-display-inline">The item relating to section 709 in the table of sections for part I of subchapter K of chapter 1 of such Code is amended to read as follows:</text><quoted-block display-inline="no-display-inline" id="HA68E1AD55E0940D6825ECAB790C64972" style="OLC"><toc container-level="quoted-block-container" idref="HD4DFA92FA9CA4760B9D1F87824C6C73C" lowest-bolded-level="division-lowest-bolded" lowest-level="section" quoted-block="no-quoted-block" regeneration="yes-regeneration"><toc-entry idref="HBD939CA6B7F340528B94555A08FC44A4" level="section">Sec. 709. Treatment of syndication fees.</toc-entry></toc><after-quoted-block>.</after-quoted-block></quoted-block></subparagraph></paragraph><paragraph id="H3F81A6468F2F4C06B64B7B095050D918"><enum>(3)</enum><text>Section 1202(e)(2)(A) of such Code is amended by striking <quote>section 195(c)(1)(A)</quote> and inserting <quote>section 195(d)(1)(A)</quote>.</text></paragraph><paragraph id="H0AF40BC4C37640E8BBC73A6F25D1F23A"><enum>(4)</enum><text display-inline="yes-display-inline">The item relating to section 195 in the table of contents of part VI of subchapter B of chapter 1 of such Code is amended to read as follows:</text><quoted-block display-inline="no-display-inline" id="HB80410ECE8BA463791A69102F959A9FD" style="OLC"><toc><toc-entry bold="off" level="section">Sec. 195. Start-up and organizational expenditures.</toc-entry></toc><after-quoted-block>.</after-quoted-block></quoted-block></paragraph></subsection><subsection id="H9004A8C10F0242E19A53D91B4A8842D5"><enum>(e)</enum><header>Effective date</header><text display-inline="yes-display-inline">The amendments made by this section shall apply to expenditures paid or incurred in connection with active trades or businesses which begin in taxable years beginning after December 31, 2019.</text></subsection></section><section id="HDE7FE06466914EF5A680D3141DCD0369"><enum>402.</enum><header>Preservation of start-up net operating losses and tax credits after ownership change</header><subsection id="HC8B6FDD8F1054EA9972A5EA0E4666DD9"><enum>(a)</enum><header>Application to net operating losses</header><text><external-xref legal-doc="usc" parsable-cite="usc/26/382">Section 382(d)</external-xref> of the Internal Revenue Code of 1986 is amended by adding at the end the following new paragraph:</text><quoted-block display-inline="no-display-inline" id="H6263041F565F46AD99A2C359E6323982" style="OLC"><paragraph id="H532002E2978E484E82D65C13E78AF84C"><enum>(4)</enum><header>Exception for start-up losses</header><subparagraph id="H215A11D44D6944CCB0ADEE18D35353AC"><enum>(A)</enum><header>In general</header><text display-inline="yes-display-inline">In the case of any net operating loss carryforward described in paragraph (1)(A) which arose in a start-up period taxable year, the amount of such net operating loss carryforward otherwise taken into account under such paragraph shall be reduced by the net start-up loss determined with respect to the trade or business referred to in subparagraph (B)(i) for such start-up period taxable year.</text></subparagraph><subparagraph id="HFED5EFB65D6A4A07AF2E874ED5CDD4ED"><enum>(B)</enum><header>Start-up period taxable year</header><text>The term <quote>start-up period taxable year</quote> means any taxable year of the old loss corporation which—</text><clause id="HA6118172D2F04F30990107E52F775E7A"><enum>(i)</enum><text>begins before the close of the 3-year period beginning on the date on which any trade or business of such corporation begins as an active trade or business (as determined under section 195(d)(2) without regard to subparagraph (B) thereof), and</text></clause><clause id="H56F2E42BE5234D90AA27AD2CAE59E584"><enum>(ii)</enum><text>ends after May 31, 2020.</text></clause></subparagraph><subparagraph id="H7EB51507FC29477E9B767A10D6D8CA89"><enum>(C)</enum><header>Net start-up loss</header><clause id="H8DCB3BF32A5E495CB639C59A52FFFEDE"><enum>(i)</enum><header>In general</header><text>The term <quote>net start-up loss</quote> means, with respect to any trade or business referred to in subparagraph (B)(i) for any start-up period taxable year, the amount which bears the same ratio (but not greater than 1) to the net operating loss carryforward which arose in such start-up period taxable year as—</text><subclause id="H532986A9AD1C4689B47B1844E86263CF"><enum>(I)</enum><text>the net operating loss (if any) which would have been determined for such start-up period taxable year if only items of income, gain, deduction, and loss properly allocable to such trade or business were taken into account, bears to</text></subclause><subclause id="HCA189F35E11B4E51B9863A0B8791A930"><enum>(II)</enum><text>the amount of the net operating loss determined for such start-up period taxable year.</text></subclause></clause><clause commented="no" id="HF3D44B0132CF48A3B4723705BB353C09"><enum>(ii)</enum><header>Special rule for last taxable year in start-up period</header><text>In the case of any start-up period taxable year which ends after the close of the 3-year period described in subparagraph (B)(i) with respect to any trade or business, the net start-up loss with respect to such trade or business for such start-up period taxable year shall be the same proportion of such loss (determined without regard to this clause) as the proportion of such start-up period taxable year which is on or before the last day of such period.</text></clause></subparagraph><subparagraph id="H691816FB932B469BA419B2CF7D6DAF13"><enum>(D)</enum><header>Application to net operating loss arising in year of ownership change</header><text>Subparagraph (A) shall apply to any net operating loss described in paragraph (1)(B) in the same manner as such subparagraph applies to net operating loss carryforwards described in paragraph (1)(A), but by only taking into account the amount of such net operating loss (and the amount of the net start-up loss) which is allocable under paragraph (1)(B) to the period described in such paragraph. Proper adjustment in the allocation of the net start-up loss under the preceding sentence shall be made in the case of a taxable year to which subparagraph (C)(ii) applies.</text></subparagraph><subparagraph id="HAB5A8EC1815441FA967DB93589FABAF0"><enum>(E)</enum><header>Application to taxable years which are start-up period taxable years with respect to more than 1 trade or business</header><text>In the case of any net operating loss carryforward which arose in a taxable year which is a start-up period taxable year with respect to more than 1 trade or business—</text><clause id="HAC6998517D6544C38D5812BFCAF446C4"><enum>(i)</enum><text>this paragraph shall be applied separately with respect to each such trade or business, and</text></clause><clause id="H1A308C78A52D47DCA4F5AD619EAC15D8"><enum>(ii)</enum><text>the aggregate reductions under subparagraph (A) shall not exceed such net operating loss carryforward.</text></clause></subparagraph><subparagraph commented="no" id="HB511F0CDCD87417DAE079C4B43F40406"><enum>(F)</enum><header>Continuity of business requirement</header><text>If the new loss corporation does not continue the trade or business referred to in subparagraph (B)(i) at all times during the 2-year period beginning on the change date, this paragraph shall not apply with respect to such trade or business.</text></subparagraph><subparagraph commented="no" id="H131A8DECEC3C44D79D398832D8B3387F"><enum>(G)</enum><header>Certain title 11 or similar cases</header><clause id="H8EC3C92429D74D849EEF4A641E19D564"><enum>(i)</enum><header>Multiple ownership changes</header><text>In the case of a 2nd ownership change to which subsection (l)(5)(D) applies, this paragraph shall not apply for purposes of determining the pre-change loss with respect to such 2nd ownership change.</text></clause><clause id="H1C99FD209C104DC58D5B26A521E08ADC"><enum>(ii)</enum><header>Certain insolvency transactions</header><text>If subsection (l)(6) applies for purposes of determining the value of the old loss corporation under subsection (e), this paragraph shall not apply.</text></clause></subparagraph><subparagraph commented="no" id="HF36A88276FD44BD7869D65D4F6B64E63"><enum>(H)</enum><header>Not applicable to disallowed interest</header><text>This paragraph shall not apply for purposes of applying the rules of paragraph (1) to the carryover of disallowed interest under paragraph (3).</text></subparagraph><subparagraph commented="no" id="HEE01A722D77A4B27932F694665C8F02D"><enum>(I)</enum><header>Transition rule</header><text display-inline="yes-display-inline">This paragraph shall not apply with respect to any trade or business if the date on which such trade or business begins as an active trade or business (as determined under section 195(d)(2) without regard to subparagraph (B) thereof) is on or before May 31, 2020.</text></subparagraph></paragraph><after-quoted-block>.</after-quoted-block></quoted-block></subsection><subsection id="HECE518AE950B424E9BE3B11CFC0539AA"><enum>(b)</enum><header>Application to excess credits</header><text>Section 383 of such Code is amended by redesignating subsection (e) as subsection (f) and by inserting after subsection (d) the following new subsection:</text><quoted-block display-inline="no-display-inline" id="HCCB2ABD221E64EC58B95B1AF26E3994C" style="OLC"><subsection id="H1BC386A6ED3643729EAC2527BFF3CC15"><enum>(e)</enum><header>Exception for start-Up excess credits</header><paragraph id="H5B5B0E548A1B4E6DA60F89D93BFDD644"><enum>(1)</enum><header>In general</header><text>In the case of any unused general business credit of the corporation under section 39 which arose in a start-up period taxable year, the amount of such unused general business credit otherwise taken into account under subsection (a)(2)(A) shall be reduced by the start-up excess credit determined with respect to any trade or business referred to in section 382(d)(4)(B)(i) for such start-up period taxable year.</text></paragraph><paragraph id="HC1FA2AACA98343CF84D1D91FA5EB282F"><enum>(2)</enum><header>Start-up period taxable year</header><text>For purposes of this subsection, the term <quote>start-up period taxable year</quote> has the meaning given such term in section 382(d)(4)(B).</text></paragraph><paragraph id="H464167C73DBB4B02BFC455E499339C41"><enum>(3)</enum><header>Start-up excess credit</header><text display-inline="yes-display-inline">For purposes of this subsection, the term <quote>start-up excess credit</quote> means, with respect to any trade or business referred to in section 382(d)(4)(B)(i) for any start-up period taxable year, the amount which bears the same ratio to the unused general business credit which arose in such start-up period taxable year as—</text><subparagraph id="HE08A0FB714D34FF78123A05EB5A4AD3C"><enum>(A)</enum><text>the amount of the general business credit which would have been determined for such start-up period taxable year if only credits properly allocable to such trade or business were taken into account, bears to</text></subparagraph><subparagraph id="HFE529CF1E1764040AB612E32CE7A7306"><enum>(B)</enum><text>the amount of the general business credit determined for such start-up period taxable year.</text></subparagraph></paragraph><paragraph id="H9080E37C9B5D47D0B02608F1485E94B9"><enum>(4)</enum><header>Application of certain rules</header><text>Rules similar to the rules of subparagraphs (C)(ii), (D), (E), and (F) of section 382(d)(4) shall apply for purposes of this subsection.</text></paragraph><paragraph commented="no" id="H4AD5B08D9D3843FFB3F4335248A4F657"><enum>(5)</enum><header>Transition rule</header><text display-inline="yes-display-inline">This subsection shall not apply with respect to any trade or business if the date on which such trade or business begins as an active trade or business (as determined under section 195(d)(2) without regard to subparagraph (B) thereof) is on or before May 31, 2020.</text></paragraph></subsection><after-quoted-block>.</after-quoted-block></quoted-block></subsection><subsection id="HDA7999CA9A694E4C9AB46BF5CEE1D365"><enum>(c)</enum><header>Effective date</header><text>The amendments made by this section shall apply to taxable years ending after May 31, 2020.</text></subsection></section>