[Congressional Bills 112th Congress]
[From the U.S. Government Publishing Office]
[S. 1577 Introduced in Senate (IS)]

112th CONGRESS
  1st Session
                                S. 1577

    To amend the Internal Revenue Code of 1986 to increase and make 
  permanent the alternative simplified research credit, and for other 
                               purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                           September 19, 2011

 Mr. Baucus (for himself, Mr. Hatch, Mr. Kerry, Ms. Snowe, Mr. Wyden, 
 Mr. Crapo, Ms. Stabenow, Mr. Cornyn, Ms. Cantwell, and Mr. Menendez) 
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 increase and make 
  permanent the alternative simplified research credit, 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. SHORT TITLE; AMENDMENT OF 1986 CODE.

    (a) Short Title.--This Act may be cited as the ``Greater Research 
Opportunities With Tax Help Act'' or ``GROWTH Act''.
    (b) Amendment of 1986 Code.--Except as otherwise expressly 
provided, whenever in this Act an amendment or repeal is expressed in 
terms of an amendment to, or repeal of, a section or other provision, 
the reference shall be considered to be made to a section or other 
provision of the Internal Revenue Code of 1986.

SEC. 2. PERMANENT EXTENSION AND MODIFICATION OF RESEARCH CREDIT.

    (a) Simplified Credit for Qualified Research Expenses.--Subsection 
(a) of section 41 is amended to read as follows:
    ``(a) General Rule.--For purposes of section 38, the research 
credit determined under this section for the taxable year shall be an 
amount equal to 20 percent of so much of the qualified research 
expenses for the taxable year as exceeds 50 percent of the average 
qualified research expenses for the 3 taxable years preceding the 
taxable year for which the credit is being determined.''.
    (b) Special Rules and Termination of Base Amount Calculation.--
            (1) In general.--Subsection (c) of section 41 is amended to 
        read as follows:
    ``(c) Special Rule in Case of No Qualified Research Expenses in Any 
of 3 Preceding Taxable Years.--
            ``(1) Taxpayers to which subsection applies.--The credit 
        under this section shall be determined under this subsection, 
        and not under subsection (a), if, in any one of the 3 taxable 
        years preceding the taxable year for which the credit is being 
        determined, the taxpayer has no qualified research expenses.
            ``(2) Credit rate.--The credit determined under this 
        subsection shall be equal to 10 percent of the qualified 
        research expenses for the taxable year.''.
            (2) Consistent treatment of expenses.--Subsection (b) of 
        section 41 is amended by adding at the end the following new 
        paragraph:
            ``(5) Consistent treatment of expenses required.--
                    ``(A) In general.--Notwithstanding whether the 
                period for filing a claim for credit or refund has 
                expired for any taxable year in the 3-taxable-year 
                period taken into account under subsection (a), the 
                qualified research expenses taken into account for such 
                year shall be determined on a basis consistent with the 
                determination of qualified research expenses for the 
                credit year.
                    ``(B) Prevention of distortions.--The Secretary may 
                prescribe regulations to prevent distortions in 
                calculating a taxpayer's qualified research expenses 
                caused by a change in accounting methods used by such 
                taxpayer between the credit year and a year in such 3-
                taxable-year period.''.
    (c) Inclusion of Qualified Research Expenses of an Acquired 
Person.--
            (1) Partial inclusion of pre-acquisition qualified research 
        expenses.--Subparagraph (A) of section 41(f)(3) is amended to 
        read as follows:
                    ``(A) Acquisitions.--
                            ``(i) In general.--If a person acquires the 
                        major portion of a trade or business of another 
                        person (hereinafter in this paragraph referred 
                        to as the `predecessor') or the major portion 
                        of a separate unit of a trade or business of a 
                        predecessor, then the amount of qualified 
                        research expenses paid or incurred by the 
                        acquiring person during the 3 taxable years 
                        preceding the taxable year in which the credit 
                        under this section is determined shall be 
                        increased by--
                                    ``(I) for purposes of applying this 
                                section for the taxable year in which 
                                such acquisition is made, the amount 
                                determined under clause (ii), and
                                    ``(II) for purposes of applying 
                                this section for any taxable year after 
                                the taxable year in which such 
                                acquisition is made, so much of the 
                                qualified research expenses paid or 
                                incurred by the predecessor with 
                                respect to the acquired trade or 
                                business during the portion of the 
                                measurement period that is part of the 
                                3-taxable-year period preceding the 
                                taxable year for which the credit is 
                                determined as is attributable to the 
                                portion of such trade or business or 
                                separate unit acquired by such person.
                            ``(ii) Amount determined.--The amount 
                        determined under this clause is the amount 
                        equal to the product of--
                                    ``(I) so much of the qualified 
                                research expenses paid or incurred by 
                                the predecessor with respect to the 
                                acquired trade or business during the 3 
                                taxable years before the taxable year 
                                in which the acquisition is made as is 
                                attributable to the portion of such 
                                trade or business or separate unit 
                                acquired by the acquiring person, and
                                    ``(II) the number of months in the 
                                period beginning on the date of the 
                                acquisition and ending on the last day 
                                of the taxable year in which the 
                                acquisition is made,
                        divided by 12.
                            ``(iii) Special rules for coordinating 
                        taxable years.--In the case of an acquiring 
                        person and a predecessor whose taxable years do 
                        not begin on the same date--
                                    ``(I) each reference to a taxable 
                                year in clauses (i) and (ii) shall 
                                refer to the appropriate taxable year 
                                of the acquiring person,
                                    ``(II) the qualified research 
                                expenses paid or incurred by the 
                                predecessor during each taxable year of 
                                the predecessor any portion of which is 
                                part of the measurement period shall be 
                                allocated equally among the months of 
                                such taxable year, and
                                    ``(III) the amount of such 
                                qualified research expenses taken into 
                                account under clauses (i) and (ii) with 
                                respect to a taxable year of the 
                                acquiring person shall be equal to the 
                                total of the expenses attributable 
                                under subclause (II) to the months 
                                occurring during such taxable year.
                            ``(iv) Measurement period.--For purposes of 
                        this subparagraph, the term `measurement 
                        period' means the taxable year of the acquiring 
                        person in which the acquisition is made and the 
                        3 taxable years of the acquiring person 
                        preceding such taxable year.''.
            (2) Expenses of a disposing person.--Subparagraph (B) of 
        section 41(f)(3) is amended to read as follows:
                    ``(B) Dispositions.--If a person disposes of the 
                major portion of any trade or business or the major 
                portion of a separate unit of a trade or business in a 
                transaction to which subparagraph (A) applies, and the 
                disposing person furnished to the acquiring person such 
                information as is necessary for the application of 
                subparagraph (A), then, for purposes of applying this 
                section for any taxable year ending after such 
                disposition, the amount of qualified research expenses 
                paid or incurred by the disposing person during the 3 
                taxable years preceding such taxable year shall be 
                decreased by the amount of the increase determined 
                under subparagraph (A) with respect to the acquiring 
                person for such taxable year.''.
    (d) Aggregation of Expenditures.--Paragraph (1) of section 41(f) is 
amended--
            (1) by striking ``shall be its proportionate shares of the 
        qualified research expenses, basic research payments, and 
        amounts paid or incurred to energy research consortiums, giving 
        rise to the credit'' in subparagraph (A)(ii) and inserting 
        ``shall be determined on a proportionate basis to its share of 
        the aggregate qualified research expenses taken into account by 
        such controlled group for purposes of this section'', and
            (2) by striking ``shall be its proportionate shares of the 
        qualified research expenses, basic research payments, and 
        amounts paid or incurred to energy research consortiums, giving 
        rise to the credit'' in subparagraph (B)(ii) and inserting 
        ``shall be determined on a proportionate basis to its share of 
        the aggregate qualified research expenses taken into account by 
        all such persons under common control for purposes of this 
        section''.
    (e) Permanent Extension.--
            (1) Section 41 is amended by striking subsection (h).
            (2) Paragraph (1) of section 45C(b) is amended by striking 
        subparagraph (D).
    (f) Conforming Amendments.--
            (1) Termination of basic research payment calculation.--
        Section 41 is amended--
                    (A) by striking subsection (e),
                    (B) by redesignating subsection (g) as subsection 
                (e), and
                    (C) by relocating subsection (e), as so 
                redesignated, immediately after subsection (d).
            (2) Special rules.--
                    (A) Paragraph (4) of section 41(f) is amended by 
                striking ``and gross receipts''.
                    (B) Subsection (f) of section 41 is amended by 
                striking paragraph (6).
            (3) Cross-references.--
                    (A) Paragraph (2) of section 45C(c) is amended by 
                striking ``base period research expenses'' and 
                inserting ``average qualified research expenses''.
                    (B) Subparagraph (A) of section 54(l)(3) is amended 
                by striking ``section 41(g)'' and inserting ``section 
                41(e)''.
                    (C) Clause (i) of section 170(e)(4)(B) is amended 
                to read as follows:
                            ``(i) the contribution is to a qualified 
                        organization,''.
                    (D) Paragraph (4) of section 170(e) is amended by 
                adding at the end the following new subparagraph:
                    ``(E) Qualified organization.--For purposes of this 
                paragraph, the term `qualified organization' means--
                            ``(i) any educational organization which--
                                    ``(I) is an institution of higher 
                                education (within the meaning of 
                                section 3304(f)), and
                                    ``(II) is described in subsection 
                                (b)(1)(A)(ii), or
                            ``(ii) any organization not described in 
                        clause (i) which--
                                    ``(I) is described in section 
                                501(c)(3) and is exempt from tax under 
                                section 501(a),
                                    ``(II) is organized and operated 
                                primarily to conduct scientific 
                                research, and
                                    ``(III) is not a private 
                                foundation.''.
                    (E) Section 280C is amended--
                            (i) by striking ``or basic research 
                        expenses (as defined in section 41(e)(2))'' in 
                        subsection (c)(1),
                            (ii) by striking ``section 41(a)(1)'' in 
                        subsection (c)(2)(A) and inserting ``section 
                        41(a)'', and
                            (iii) by striking ``or basic research 
                        expenses'' in subsection (c)(2)(B).
                    (F) Clause (i) of section 1400N(l)(7)(B) is amended 
                by striking ``section 41(g)'' and inserting ``section 
                41(e)''.
    (g) Technical Corrections.--Section 409 is amended--
            (1) by inserting ``, as in effect before the enactment of 
        the Tax Reform Act of 1984)'' after ``section 41(c)(1)(B)'' in 
        subsection (b)(1)(A),
            (2) by inserting ``, as in effect before the enactment of 
        the Tax Reform Act of 1984'' after ``relating to the employee 
        stock ownership credit'' in subsection (b)(4),
            (3) by inserting ``(as in effect before the enactment of 
        the Tax Reform Act of 1984)'' after ``section 41(c)(1)(B)'' in 
        subsection (i)(1)(A),
            (4) by inserting ``(as in effect before the enactment of 
        the Tax Reform Act of 1984)'' after ``section 41(c)(1)(B)'' in 
        subsection (m),
            (5) by inserting ``(as so in effect)'' after ``section 
        48(n)(1)'' in subsection (m),
            (6) by inserting ``(as in effect before the enactment of 
        the Tax Reform Act of 1984)'' after ``section 48(n)'' in 
        subsection (q)(1), and
            (7) by inserting ``(as in effect before the enactment of 
        the Tax Reform Act of 1984)'' after ``section 41'' in 
        subsection (q)(3).
    (h) Effective Date.--
            (1) In general.--Except as provided in paragraphs (2) and 
        (3), the amendments made by this section shall apply to taxable 
        years beginning after December 31, 2011.
            (2) Permanent extension.--The amendments made by subsection 
        (e) shall apply to amounts paid or incurred after December 31, 
        2011.
            (3) Technical corrections.--The amendments made by 
        subsection (g) shall take effect on the date of the enactment 
        of this Act.
                                 <all>