1.Short title; amendment of
1986 Code
(a)This Act may be cited
as the Greater Research Opportunities
With Tax Help Act
or GROWTH Act
.
(b)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.
2.Permanent
extension and modification of research credit
(a)Simplified
credit for qualified research expensesSubsection (a) of section
41 is amended to read as follows:
(a)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)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 appliesThe 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)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 expensesSubsection (b) of section 41 is amended by
adding at the end the following new paragraph:
(5)Consistent treatment of expenses
required
(A)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
distortionsThe 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
expensesSubparagraph (A) of section 41(f)(3) is amended to read
as follows:
(A)
(i)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)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 yearsIn 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)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 personSubparagraph (B) of section 41(f)(3) is amended
to read as follows:
(B)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
expendituresParagraph (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)
(1)Section 41 is
amended by striking subsection (h).
(2)Paragraph (1) of
section 45C(b) is amended by striking subparagraph (D).
(f)
(1)Termination of
basic research payment calculationSection 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)
(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)
(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)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)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)
(1)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)The amendments made by subsection (e) shall apply to
amounts paid or incurred after December 31, 2011.
(3)The amendments made by subsection (g) shall take
effect on the date of the enactment of this Act.