[Congressional Bills 103th Congress]
[From the U.S. Government Publishing Office]
[S. 394 Introduced in Senate (IS)]

103d CONGRESS
  1st Session
                                 S. 394

   To amend the Internal Revenue Code of 1986 to allow a credit for 
       payments or contributions to certain cooperative research 
                 organizations, and for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

             February 18 (legislative day, January 5), 1993

 Mr. Lieberman introduced the following bill; which was read twice and 
                  referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL


 
   To amend the Internal Revenue Code of 1986 to allow a credit for 
       payments or contributions to certain cooperative research 
                 organizations, and for other purposes.

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

SECTION 1. CREDIT FOR PAYMENTS OR CONTRIBUTIONS TO CERTAIN COOPERATIVE 
              RESEARCH ORGANIZATIONS.

    (a) Allowance of Research Credit.--Section 41(a) of the Internal 
Revenue Code of 1986 (relating to credit for increasing research 
activities) is amended by striking ``and'' at the end of paragraph (1), 
by striking the period at the end of paragraph (2) and inserting ``, 
and'', and by adding at the end the following new paragraph:
            ``(3) 50 percent of the qualified cooperative research 
        expenditures (as defined in subsection (h)) for the taxable 
        year.
    (b) Qualified Cooperative Research Expenditures Defined.--Section 
41 of such Code is amended by redesignating subsection (h) as 
subsection (i) and by adding after subsection (g) the following new 
subsection:
    ``(h) Qualified Cooperative Research Expenditures.--For purposes of 
this section--
            ``(1) In general.--The term `qualified cooperative research 
        expenditures' means the aggregate amount of qualified 
        contributions to qualified cooperative research consortia for 
        qualified research.
            ``(2) Qualified contributions.--For purposes of this 
        subsection--
                    ``(A) In general.--Subject to the limitations of 
                subparagraphs (B), (C), and (D), the term `qualified 
                contributions' means all contributions to qualified 
                cooperative research consortia for qualified research 
                with respect to which the taxpayer elects to have this 
                subsection apply.
                    ``(B) Private source funding limitation.--
                            ``(i) In general.--Qualified contributions 
                        of a taxpayer shall not exceed the amount which 
                        bears the same ratio to qualified contributions 
                        (determined without regard to this 
                        subparagraph) as the private source funding 
                        ratio.
                            ``(ii) Private source funding ratio.--For 
                        purposes of clause (i), the private source 
                        funding ratio is the sum of--
                                    ``(I) 50 percent of the ratio which 
                                the gross receipts of the organization 
                                (not including the amount of any 
                                governmental support) for the preceding 
                                taxable year bears to the total gross 
                                receipts of the organization for such 
                                taxable year, plus
                                    ``(II) 30 percent of such ratio for 
                                the second preceding taxable year, plus
                                    ``(III) 20 percent of such ratio 
                                for the third preceding taxable year.
                    ``(C) Limitations.--For purposes of this 
                subsection, the following shall not be taken into 
                account in determining qualified contributions:
                            ``(i) Contributions representing costs 
                        allocated to services performed by a taxpayer's 
                        employees to the extent they exceed cash 
                        contributions.
                            ``(ii) Contributions representing overhead 
                        allocated to services performed by a taxpayer's 
                        employees to the extent such overhead exceeds 
                        25 percent of the salary and benefit amounts 
                        allocated to such services.
                            ``(iii) Contributions by a taxpayer to a 
                        qualified cooperative research consortium to 
                        the extent they exceed one-third of the 
                        consortium's total nongovernmental support for 
                        the consortium's taxable year with or within 
                        which the taxpayer's taxable year ends.
                    ``(D) Consortium with fewer than 5 participants.--
                If a qualified cooperative research consortium has less 
                than 5 persons making nongovernmental contributions, 
                the qualified contributions of each such person 
                (determined without regard to this subparagraph or 
                subparagraph (B)) shall be reduced--
                            ``(i) by 20 percent if there are 4 such 
                        persons, or
                            ``(ii) by 40 percent if there are 3 such 
                        persons.
            ``(3) Qualified cooperative research consortium.--The term 
        `qualified cooperative research consortium' means any 
        organization--
                    ``(A) which is registered under the National 
                Cooperative Research Act of 1984, but only if such 
                registration has been published (and is in effect) on 
                the last day of the organization's taxable year with or 
                within which the taxpayer's taxable year ends, and
                    ``(B) which during such taxable year--
                            ``(i) had at least 5 contributors, but only 
                        if--
                                    ``(I) no 3 members contributed more 
                                than 80 percent of total 
                                nongovernmental contributions, and
                                    ``(II) no single member contributed 
                                more than 50 percent of total 
                                nongovernmental contributions, or
                            ``(ii) had either 3 or 4 contributors, but 
                        only if--
                                    ``(I) no single member contributed 
                                more than 50 percent (and no 2 members 
                                contributed more than 85 percent) of 
                                the total nongovernmental 
                                contributions, and
                                    ``(II) the contributors are engaged 
                                in the same trade or business.
            ``(4) Special rules.--For purposes of this subsection--
                    ``(A) Noncash contributions.--Qualified 
                contributions other than cash (including services 
                provided by a taxpayer's employees) shall be taken into 
                account at their cost (or such other basis determined 
                under regulations).
                    ``(B) Overhead.--The cost of services provided by a 
                taxpayer's employees shall include overhead properly 
                allocable to such services.
            ``(5) No double benefit.--Amounts taken into account under 
        this subsection in computing qualified cooperative research 
        expenditures shall not be taken into account under subsection 
        (a) (1) or (2).
            ``(6) Prepaid amounts.--If any contributions paid or 
        incurred during the taxable year to qualified cooperative 
        research consortia are attributable to qualified research to be 
        conducted after the close of the taxable year, such amount 
        shall be treated as paid or incurred during the period which 
        the qualified research is conducted.
            ``(7) Reports.--Each qualified cooperative research 
        consortium shall provide to the Secretary a report containing--
                    ``(A) its certification as such an organization,
                    ``(B) its private source funding ratio, and
                    ``(C) such other information as the Secretary may 
                require.
        Each consortium shall provide a copy of the report to each 
        contributor.''
    (b) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after the date of enactment of this 
Act.

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