I 112th CONGRESS 1st Session H. R. 871 IN THE HOUSE OF REPRESENTATIVES March 2, 2011 Mr. Shuler (for himself, Mr. Hunter, Mr. Manzullo, Mr. Bishop of Georgia, Mr. Ribble, Mr. McKinley, and Mr. Lipinski) introduced the following bill; which was referred to the Committee on Ways and Means A BILL To amend the Internal Revenue Code of 1986 to make the credit for research activities permanent and to provide an increase in such credit for taxpayers whose gross receipts are predominantly from domestic production activities.

1.

Credit for research activities made permanent and increased for taxpayers with domestic production activities

(a)

Research credit made permanent

(1)

In general

Section 41 of the Internal Revenue Code of 1986 is amended by striking subsection (h). (2)

Conforming amendment

Subsection (c) of section 41 of such Code is amended by striking paragraph (4). (b)

Increased credit for taxpayers with domestic production activities

Section 41 of such Code (as amended by subsection (a)) is amended by adding at the end the following new subsection: (h)

Increased credit for taxpayers whose gross receipts are predominantly from domestic production activities

(1)

In general

In the case of any taxpayer whose domestic production activity percentage for any taxable year exceeds 50 percent, this section shall be applied for such taxable year by increasing each credit determination percentage by the bonus number of percentage points determined in accordance with the following table: In the case of a taxpayer whose domestic production activity percentage is:The bonus number of percentage points is: More than 50% but not more than 60%2 More than 60% but not more than 70%4 More than 70% but not more than 80%6 More than 80% but not more than 90%8 More than 90%10. (2)

Domestic production activity percentage

For purposes of this subsection, the term domestic production activity percentage means, with respect to any taxable year, the ratio (expressed as a percentage) determined by dividing— (A)the taxpayer’s domestic production gross receipts (as defined in paragraph (4) of section 199(c)) for such taxable year, by (B)the amount which would be determined under such paragraph with respect to the taxpayer for such taxable year if the activities described in such paragraph were taken into account without regard to whether they occurred in the United States. (3)

Credit determination percentage

For purposes of this subsection, the term credit determination percentage means— (A)each of the percentages appearing in subsection (a), and (B)the 14 percent appearing in subsection (c)(5)(A). . (c)

Effective date

The amendments made by this section shall apply to taxable years beginning after December 31, 2010.