[Congressional Bills 112th Congress]
[From the U.S. Government Publishing Office]
[S. 1410 Introduced in Senate (IS)]

112th CONGRESS
  1st Session
                                S. 1410

 To amend the Internal Revenue Code of 1986 to provide incentives for 
                        life sciences research.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             July 25, 2011

   Mr. Casey 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 provide incentives for 
                        life sciences research.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Life Sciences Jobs and Investment 
Act of 2011''.

SEC. 2. INCREASED CREDIT FOR INITIAL LIFE SCIENCES RESEARCH.

    (a) In General.--Section 41 of the Internal Revenue Code of 1986 is 
amended by redesignating subsection (h) as subsection (i) and inserting 
after subsection (g) the following new subsection:
    ``(h) Special Rules for Increased Initial Life Sciences Research.--
            ``(1) In general.--In the case of qualified initial life 
        sciences research expenses for any taxable year with respect to 
        which the taxpayer elects the application of this subsection--
                    ``(A) Increased credit.--Subsection (a) shall be 
                applied by substituting `40 percent' for `20 percent'.
                    ``(B) Amounts paid with respect to qualified life 
                sciences research to certain research consortia, 
                eligible small businesses, universities, and federal 
                laboratories.--Subsection (b)(3)(A) shall be applied by 
                substituting `100 percent' for `65 percent', in the 
                case of amounts paid or incurred to persons described 
                in subclauses (I) and (III) of subsection (b)(3)(C)(ii) 
                or subclause (I), (II), or (III) of subsection 
                (b)(3)(D)(i), with respect to qualified life sciences 
                research.
                    ``(C) Alternative simplified credit in case of 
                qualified initial life science research.--Paragraph (5) 
                of subsection (c) shall be applied--
                            ``(i) by substituting `28 percent' for `14 
                        percent' in subparagraph (A), and
                            ``(ii) by substituting `12 percent' for `6 
                        percent' in subparagraph (B)(ii).
            ``(2) Definitions.--For purposes of this subsection--
                    ``(A) Qualified initial life sciences research 
                expenses.--
                            ``(i) In general.--The term `qualified 
                        initial life sciences research expenses' means 
                        so much of the amounts taken into account under 
                        subsection (a) as--
                                    ``(I) are attributable to qualified 
                                life sciences research, and
                                    ``(II) do not exceed $150,000,000.
                            ``(ii) Excluded expenses.--Such term does 
                        not include any amount paid or incurred by the 
                        taxpayer to compensate any covered employee (as 
                        defined in section 162(m)(3)) for services, to 
                        pay dividends to the shareholders of the 
                        taxpayer, or to pay interest or principal on 
                        any debt security of the taxpayer.
                            ``(iii) Substantiation of compliance.--
                                    ``(I) In general.--The taxpayer 
                                must substantiate its compliance with 
                                clause (ii) with written documents and 
                                such other credible evidence as the 
                                Secretary may reasonably require, and 
                                shall bear the burden of proof with 
                                respect to such substantiation.
                                    ``(II) Certification.--The chief 
                                executive officer and the independent 
                                director serving as head of the audit 
                                committee of the taxpayer, or 
                                comparable entity officials, shall 
                                attest in writing to the taxpayer's 
                                compliance with the requirements of 
                                clause (ii).
                    ``(B) Qualified life sciences research.--
                            ``(i) In general.--The term `qualified life 
                        sciences research' means any qualified 
                        research--
                                    ``(I) with respect to the branch of 
                                knowledge or study of biology, 
                                biochemistry, biophysics, 
                                bioengineering, biotechnology, 
                                microbiology, genetics, or physiology 
                                (in each case as such knowledge or 
                                study relates to human beings), and
                                    ``(II) that is considered 
                                scientific research and development for 
                                purposes of North American Industry 
                                Classification System code 5417.
                            ``(ii) Exceptions.--Such term does not 
                        include sociology or psychology.
            ``(3) Coordination with 965A.--This subsection shall not 
        apply with respect to any taxpayer for any taxable year for 
        which an election is in effect under section 965A (relating to 
        limited deduction for life sciences jobs and investment in 
        United States).
            ``(4) Election.--Any election under this subsection shall 
        be made in such manner as may be prescribed by the Secretary, 
        and shall be made with respect to a taxable year not later than 
        the due date (including extensions of time) for filing the 
        taxpayer's return for such taxable year.
            ``(5) Termination.--This subsection shall not apply to any 
        taxable year beginning after December 31, 2016.''.
    (b) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after the date of the enactment of 
this Act.

SEC. 3. INCENTIVES TO INVEST IN LIFE SCIENCES JOBS, RESEARCH, AND 
              FACILITIES.

    (a) In General.--Subpart F of part III of subchapter N of chapter 1 
of the Internal Revenue Code of 1986 is amended by adding at the end 
the following new section:

``SEC. 965A. LIMITED DEDUCTION FOR LIFE SCIENCES JOBS AND INVESTMENT IN 
              UNITED STATES.

    ``(a) Deduction.--
            ``(1) In general.--In the case of a corporation which is a 
        United States shareholder and for which the election under this 
        section is in effect for the taxable year, there shall be 
        allowed as a deduction an amount equal to 85 percent of the 
        cash dividends which are received during such taxable year by 
        such shareholder from controlled foreign corporations.
            ``(2) Dividends paid indirectly from controlled foreign 
        corporations.--If, within the taxable year for which the 
        election under this section is in effect, a United States 
        shareholder receives a cash distribution from a controlled 
        foreign corporation which is excluded from gross income under 
        section 959(a), such distribution shall be treated for purposes 
        of this section as a cash dividend to the extent of any amount 
        included in income by such United States shareholder under 
        section 951(a)(1)(A), including as a result of any cash 
        dividend during such taxable year to--
                    ``(A) such controlled foreign corporation from 
                another controlled foreign corporation that is in a 
                chain of ownership described in section 958(a), or
                    ``(B) any other controlled foreign corporation in 
                such chain of ownership from another controlled foreign 
                corporation in such chain of ownership, but only to the 
                extent of cash distributions described in section 
                959(b) which are made during such taxable year to the 
                controlled foreign corporation from which such United 
                States shareholder received such distribution.
    ``(b) Limitations.--
            ``(1) In general.--The amount of dividends taken into 
        account under subsection (a) shall not exceed the lesser of--
                    ``(A) $150,000,000, or
                    ``(B) the amount shown on the applicable financial 
                statement as earnings permanently reinvested outside 
                the United States.
        The amounts described in subparagraph (B) shall be treated as 
        being zero if there is no such statement or such statement 
        fails to show a specific amount of such earnings.
            ``(2) Dividends must be extraordinary.--The amount of 
        dividends taken into account under subsection (a) shall not 
        exceed the excess (if any) of--
                    ``(A) the cash dividends received during the 
                taxable year by such shareholder from controlled 
                foreign corporations, over
                    ``(B) the sum of--
                            ``(i) the dividends received during the 
                        base period year by such shareholder from 
                        controlled foreign corporations,
                            ``(ii) the amounts includible in such 
                        shareholder's gross income for the base period 
                        year under section 951(a)(1)(B) with respect to 
                        controlled foreign corporations, and
                            ``(iii) the amounts that would have been 
                        included for the base period year but for 
                        section 959(a) with respect to controlled 
                        foreign corporations.
                Amounts described in subparagraph (B) shall be such 
                amounts as shown on the most recent return filed for 
                the base period year; except that amended returns filed 
                after December 31, 2010, shall not be taken into 
                account.
            ``(3) Requirement to invest in life sciences.--Subsection 
        (a) shall not apply to any dividend received by a United States 
        shareholder unless the amount of the dividend is invested 
        solely in the United States and solely for the purpose of--
                    ``(A) the new hiring of additional scientists, 
                researchers, and comparable personnel engaged in 
                qualified life sciences research,
                    ``(B) payments to persons described in section 
                41(h)(1)(B) and to other qualified organizations which 
                are used by such persons or organizations for qualified 
                life sciences research, or
                    ``(C) the building or leasing of new facilities to 
                be used primarily in the conduct of qualified life 
                sciences research.
            ``(4) Prohibited uses.--Subsection (a) shall not apply to 
        the amount of any dividend which is used by the taxpayer to pay 
        remuneration for services of any covered employee (as defined 
        in section 162(m)(3)), to pay dividends to the shareholders of 
        the taxpayer, or to pay interest or principal on any debt 
        security of the taxpayer.
            ``(5) No reserve.--Subsection (a) shall not apply to any 
        dividend if the taxpayer's compliance with this section is 
        uncertain and requires a provision or reserve on the taxpayer's 
        applicable financial statements.
            ``(6) Separate account.--Subsection (a) shall not apply to 
        any dividend unless the amount of the dividend is held in a 
        separate account, trust, or other arrangement that segregates 
        the amount from other funds of the taxpayer until the amount is 
        used solely for the purposes described in paragraph (3).
    ``(c) Substantiation of Compliance.--
            ``(1) In general.--The taxpayer must substantiate its 
        compliance with subsection (b) with written documents and such 
        other credible evidence as the Secretary may reasonably 
        require, and shall bear the burden of proof with respect to 
        such substantiation.
            ``(2) Certification.--The chief executive officer and the 
        independent director serving as head of the audit committee of 
        the taxpayer, or comparable entity officials, shall attest in 
        writing to the taxpayer's compliance with each of the 
        requirements of subsection (b).
    ``(d) Definitions.--For purposes of this section--
            ``(1) Qualified life sciences research.--The term 
        `qualified life sciences research' shall have the meaning given 
        such term by section 41(h).
            ``(2) Qualified organization.--The term `qualified 
        organization' means any organization described in subparagraph 
        (A), (B), or (C) of section 41(e)(6).
            ``(3) Base period year.--The term `base period year' means 
        the taxable year which--
                    ``(A) is among the 3 most recent taxable years 
                ending on or before December 31, 2010, and
                    ``(B) results in the determination of the highest 
                amount under subsection (b)(2)(B).
        Rules similar to the rules of subparagraph (C) of section 
        965(c)(2) shall apply for purposes of this paragraph.
            ``(4) Applicable financial statement.--The term `applicable 
        financial statement' has the meaning given such term by section 
        965(c)(1), applied by substituting `the last day of the taxable 
        year with respect to which the deduction under section 965A is 
        determined' for `June 30, 2003' each place it appears.
            ``(5) Dividend.--The term `dividend' has the meaning given 
        such term by section 965(c)(3).
    ``(e) Special Rules.--For purposes of this section--
            ``(1) rules similar to the rules of paragraph (3) of 
        section 965(b) shall apply, except that such paragraph shall be 
        applied by substituting `December 31, 2010' for `October 3, 
        2004', and
            ``(2) rules similar to the rules of paragraphs (4) and (5) 
        of section 965(c) shall apply, except that such paragraph (5) 
        shall be applied--
                    ``(A) by substituting `$150,000,000' for 
                `$500,000,000', and
                    ``(B) without regard to the reference to 
                subparagraph (C) of section 965(b)(1).
    ``(f) Denial of Foreign Tax Credit.--
            ``(1) In general.--No credit shall be allowed under section 
        901 for any taxes paid or accrued (or treated as paid or 
        accrued) with respect to the deductible portion of--
                    ``(A) any dividend, or
                    ``(B) any amount described in subsection (a)(2) 
                which is included in income under section 951(a)(1)(A).
        No deduction shall be allowed under this chapter for any tax 
        for which credit is not allowable by reason of the preceding 
        sentence.
            ``(2) Expenses.--No deduction shall be allowed for expenses 
        directly allocable to the deductible portion described in 
        paragraph (1).
            ``(3) Deductible portion.--For purposes of paragraph (1), 
        unless the taxpayer otherwise specifies, the deductible portion 
        of any dividend or other amount is the amount which bears the 
        same ratio to the amount of such dividend or other amount as 
        the amount allowed as a deduction under subsection (a) for the 
        taxable year bears to the amount described in subsection 
        (b)(2)(A) for such year.
            ``(4) Coordination with section 78.--Section 78 shall not 
        apply to any tax which is not allowable as a credit under 
        section 901 by reason of this subsection.
    ``(g) Election.--Any election under this section shall be made in 
such manner as may be prescribed by the Secretary, and shall be made 
with respect to a taxable year not later than the due date (including 
extensions of time) for filing the taxpayer's return for such taxable 
year.
    ``(h) Termination.--This section shall not apply to any taxable 
year beginning after December 31, 2016.''.
    (b) Clerical Amendment.--The table of sections for subpart F of 
part III of subchapter N of chapter 1 of the Internal Revenue Code of 
1986 is amended by adding at the end the following new section:

``Sec. 965A. Limited deduction for life sciences jobs and investment in 
                            United States.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after the date of the enactment of 
this Act.

SEC. 4. COMPLIANCE AND REPORT TO CONGRESS.

    The Commissioner of Internal Revenue shall take such steps as are 
necessary to ensure full compliance with the provisions under section 
41(h) and section 965A of the Internal Revenue Code of 1986 (as added 
by this Act). The Commissioner of Internal Revenue shall provide 
reports to Congress on the status of such compliance and related 
enforcement not later than 90 days following the final due date of tax 
filings for the first taxable year in which an entity may elect 
application of section 41(h) or of section 965A of the Internal Revenue 
Code of 1986 (as so added).
                                 <all>