Short title

This Act may be cited as the

Commercial Space Jobs and Investment Act of 2010

Commercial space capital formation credit

(a)

In general

Subpart B of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 is amended by inserting after section 30D the following new section:

30E.

Commercial space capital formation credit

(a)

Allowance of credit

There shall be allowed as a credit against the tax imposed by this chapter for the taxable year an amount equal to 20 percent of the qualified equity investment paid by the taxpayer during the taxable year. (b)

Qualified equity investment

For purposes of this section— (1)

In general

The term qualified equity investment means any equity investment in a qualified commercial space entity if— (A)such investment is acquired by the taxpayer at its original issue (directly or through an underwriter) in exchange for cash, and (B)such investment is designated for purposes of this section by the qualified commercial space entity. (2)

Treatment of subsequent purchasers

The term qualified equity investment includes any equity investment which would (but for paragraph (1)(A)) be a qualified equity investment in the hands of the taxpayer if such investment was a qualified equity investment in the hands of a prior holder. (3)

Redemptions

A rule similar to the rule of section 1202(c)(3) shall apply for purposes of this subsection. (4)

Equity investment

The term equity investment means— (A)any stock (other than nonqualified preferred stock as defined in section 351(g)(2)) in an entity which is a corporation, and (B)any capital interest in an entity which is a partnership. (c)

Qualified commercial space entity

For purposes of this section— (1)

In general

The term qualified commercial space entity means any domestic corporation or partnership the principal trade or business of which is the commercial development of space and the principal place of business is located in a Commercial Space Enterprise Zone designated under subsection (g). (2)

Commercial development of space

The term commercial development of space means— (A)the development of private space launch vehicles, reentry vehicles, and related equipment, (B)the development, provision, and operation of private space launching, reentry, and related services, and (C)other specific activities identified by the Secretary in rules, regulations, or formal guidance consistent with the purposes of this section. (d)

Recapture of credit

If— (1)the taxpayer fails to hold the qualified equity investment the 5-year period beginning on the date such investment was acquired by the taxpayer, or (2)during such 5-year period, the entity ceases to be qualified commercial space entity,

then notwithstanding any other provision of this subtitle, the tax imposed by this chapter on the taxpayer for the taxable year beginning in the calendar year in which such cessation occurred shall be increased by the amount of credit allowed under subsection (a) to the taxpayer with respect to such investment.

(e)

Basis adjustments

For purposes of this subtitle, if a credit is allowed under this section for the acquisition of any investment— (1)the increase in the basis of such investment which would (but for this subsection) result from such acquisition shall be reduced by the amount of the credit so allowed, and (2)the basis of such investment shall be increased by the amount of any increase in tax by reason of subsection (d). (f)

Application with other credits

(1)

Business credit treated as part of general business credit

Except with respect to a taxpayer described in paragraph (2), the credit allowed under subsection (a) for any taxable year shall be treated as a credit listed in section 38(b) for such taxable year (and not allowed under subsection (a)). (2)

Personal credit

(A)

In general

For purposes of this title, the credit allowed under subsection (a) for any taxable year to a taxpayer other than a corporation shall be treated as a credit allowable under subpart A for such taxable year. (B)

Limitation based on amount of tax

In the case of a taxable year to which section 26(a)(2) does not apply, the credit allowed under subsection (a) for any taxable year by reason of the application of subparagraph (A) shall not exceed the excess of— (i)the sum of the regular tax liability (as defined in section 26(b)) plus the tax imposed by section 55, over (ii)the sum of the credits allowable under subpart A (other than this section and sections 23, 25D, 30, and 30D) and section 27 for the taxable year. (g)

Designation of Commercial Space Enterprise Zones

(1)

In general

From among the areas nominated for designation under this subsection, the Secretary of Commerce shall designate not more than 5 Commercial Space Enterprise Zones. (2)

Limitations on designation

No area may be designated under paragraph (1) unless— (A)the area is nominated by a State, (B)the State provides written assurances and other documentation satisfactory to the Secretary of Commerce that— (i)the nominated area has a presence of high unemployment and economic dislocation in public sector, space-related jobs, (ii)the nominated area has a presence of well-developed human and capital infrastructure and the capacity to effectively use Federal tax incentives to promote progress in commercial space capability, including crew and cargo transportation systems, research and technology development, and other potential activities in low-Earth orbit, and (iii)State and local officials, business community, and local population have developed a unified, feasible, and effective strategy for contributing to, and increasing, United States competitiveness in the commercial space sector, and (C)the Secretary of Commerce determines that any information furnished is reasonably accurate. (3)

Application and designation timing

(A)

Issuance of applications

The Secretary of Commerce shall issue Commercial Space Enterprise Zone nomination applications and instructions not later than the date which is 45 days after the date of the enactment of the Commercial Space Jobs and Investment Act of 2010. (B)

Submission of applications

A State shall submit a Commercial Space Enterprise Zone nomination application not later than the date which is 4 months after such applications are issued under subparagraph (A). (C)

Designations

The Secretary of Commerce shall make Commercial Space Enterprise Zone designations not later than the date which is 3 months after the application deadline under subparagraph (B). (h)

Termination

This section shall not apply to investments acquired after December 31, 2019.

(b)

Conforming amendments

(1)Section 38(b) of the Internal Revenue Code of 1986 is amended by striking plus at the end of paragraph (35), by striking the period at the end of paragraph (36) and inserting , plus, and by adding at the end the following new paragraph:

(37)the portion of the commercial space capital formation credit to which section 30E(f)(1) applies.

(2)Section 1016(a) of such Code is amended by striking and at the end of paragraph (36), by striking the period at the end of paragraph (37) and inserting , and, and by adding at the end the following new paragraph:

(38)to the extent provided in section 30E(e)(1).

(3)The table of sections for subpart B of part IV of subchapter A of chapter 1 of such Code is amended by inserting after the item relating to section 30D the following new item:

Sec. 30E. Commercial space capital formation credit.

(c)

Effective date

The amendments made by this section shall apply to investments acquired after the date of the enactment of this Act.

Commercial space research credit

(a)

In general

Section 41(b) of the Internal Revenue Code of 1986 is amended by adding at the end the following new paragraph:

(5)

Commercial space research

(A)

Enhanced credit

In the case of any taxable year in which the qualified research expenses of the taxpayer include qualified commercial space research expenses, subsection (a)(1)— (i)shall be applied by first taking into account such qualified research expenses which are not qualified commercial space research expenses, and (ii)shall be applied by substituting 30 percent for 20 percent in the case of such qualified commercial space research expenses. (B)

Qualified commercial space research expenses

For purposes of this paragraph, the term qualified commercial space research expenses means qualified research expenses attributable to research undertaken in a Commercial Space Enterprise Zone designated under section 30E(g) for the purpose of discovering information— (i)which is technological in nature, and (ii)the application of which is intended to be useful in the commercial development of space (as defined in section 30E(c)(2)). (C)

Termination

This paragraph shall not apply to research expenses incurred after December 31, 2019.

(b)

Effective date

The amendment made by this section shall apply to research expenses incurred after the date of the enactment of this Act.

Special depreciation allowance for commercial space property

(a)

In general

Section 168 of the Internal Revenue Code of 1986 is amended by adding at the end the following new subsection:

(o)

Special allowance for commercial space property

(1)

Additional allowance

(A)

In general

In the case of any qualified commercial space property to which this subparagraph applies— (i)the depreciation deduction provided by section 167(a) for the taxable year in which such property is placed in service shall include an allowance equal to 50 percent of the adjusted basis of the qualified commercial space property, and (ii)the adjusted basis of the qualified commercial space property shall be reduced by the amount of such deduction before computing the amount otherwise allowable as a depreciation deduction under this chapter for such taxable year and any subsequent taxable year. (B)

Application

Subparagraph (A) applies to qualified commercial space property placed in service on or after the date of the enactment of the Commercial Space Jobs and Investment Act of 2010 and before January 1, 2020, which is— (i)acquired by the taxpayer on or after such date of enactment and before January 1, 2020, but only if no written binding contract for the acquisition was in effect before such date of enactment, or (ii)acquired by the taxpayer pursuant to a written binding contract which was entered into on or after such date of enactment and before January 1, 2020. (2)

Qualified commercial space property

For purposes of this subsection— (A)

In general

The term qualified commercial space property means any private space launch vehicle, reentry vehicle, launch support facilities, space recovery support facilities, and other space transportation infrastructure— (i)to which this section applies, (ii)the original use of which commences with the taxpayer on or after such date of enactment, and (iii)substantially all of the use of which occurs in a Commercial Space Enterprise Zone designated under section 30E(g) and in the active conduct of a trade or business by the taxpayer in such Zone. (B)

Exceptions

(i)

Bonus depreciation property under subsection (k)

The term qualified commercial space property shall not include any property to which subsection (k)(1) applies. (ii)

Alternative depreciation property

The term qualified commercial space property shall not include any property to which the alternative depreciation system under subsection (g) applies, determined without regard to paragraph (7) of subsection (g) (relating to election to have system apply). (iii)

Election out

If a taxpayer makes an election under this clause with respect to any class of property for any taxable year, this subsection shall not apply to all property in such class placed in service during such taxable year. (C)

Definitions

The terms launch vehicle, launch support facilities, space recovery support facilities, and space transportation infrastructure have the meanings given such terms under section 502 of the National Aeronautics and Space Administration Act, Fiscal Year 1993 (15 U.S.C. 5802). (3)

Special rule for self-constructed property

In the case of a taxpayer manufacturing, constructing, or producing property for the taxpayer’s own use, if the taxpayer begins manufacturing, constructing, or producing the property on or after such date of enactment and before January 1, 2020, the requirements of paragraph (1)(B) shall be treated as met. (4)

Deduction allowed in computing minimum tax

For purposes of determining alternative minimum taxable income under section 55, the deduction under subsection (a) for qualified commercial space property shall be determined under this section without regard to any adjustment under section 56.

(b)

Effective date

The amendment made by this section shall apply to property placed in service on or after the date of the enactment of this Act, in taxable years ending after such date.

Commercial space education and job training credit

(a)

In general

Subpart D of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 is amended by adding at the end the following:

45S.

Commercial space education and job training credit

(a)

In general

For the purposes of section 38, the commercial space education and job training credit determined under this section with respect to any eligible employer for the taxable year is an amount equal to the commercial space educational assistance program expenses for such taxable year. (b)

Dollar limitation

The credit allowed under subsection (a) in any taxable year shall not exceed $2,000 per employee of the employer that participates in a commercial space educational assistance program in such taxable year. (c)

Commercial space educational assistance program expenses; other definitions

For purposes of this section— (1)

In general

The term commercial space educational assistance program expenses means expenses paid or incurred by an eligible employer for a commercial space educational assistance program. (2)

Commercial space educational assistance program

The term commercial space educational assistance program means an educational assistance program which— (A)meets the requirements of section 127(b) (other than paragraph (5) thereof), and (B)provides to employees of the eligible employer educational assistance which seeks to enhance an employee's knowledge skills, and training applicable to the commercial development of space. (3)

Eligible employer

The term eligible employer means an employer which is a qualified commercial space entity (as defined in section 30E(c)(1)). (4)

Other definitions

(A)

In general

The terms employee, employer, and educational assistance have meanings given such terms under section 127(c). (B)

Commercial development of space

The term commercial development of space has the meaning given such term under section 30E(c)(2). (d)

Aggregation rule

For purposes of this section, all persons treated as a single employer under subsection (a) or (b) or section 52, or subsection (m) or (o) of section 414, shall be treated as one person. (e)

Denial of double benefit

No deduction or credit shall be allowed under any other provision of this chapter for any amount taken into account in determining the credit under this section. (f)

Election To have credit not apply

A taxpayer may elect (at such time and in such manner as the Secretary may by regulations prescribe) to have this section not apply for any taxable year.

(b)

Credit To be part of general business credit

Section 38(b) of the Internal Revenue Code of 1986, as amended by this Act, is amended by striking plus at the end of paragraph (36), by striking the period at the end of paragraph (37) and inserting , plus, and by adding at the end the following new paragraph:

(38)the commercial space education and job training credit determined under section 45S(a).

(c)

Conforming amendment

Section 6501(m) of the Internal Revenue Code of 1986 is amended by inserting 45S(f), before or 51(j). (d)

Clerical amendment

The table of sections for subpart D of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 is amended by adding at the end the following new item:

45S. Commercial space education and job training credit.

(e)

Effective date

The amendments made by this section shall apply to taxable years beginning after the date of the enactment of this Act.