[Congressional Bills 114th Congress]
[From the U.S. Government Publishing Office]
[H.R. 256 Introduced in House (IH)]

114th CONGRESS
  1st Session
                                H. R. 256

 To amend the Internal Revenue Code of 1986 to allow a credit against 
income tax for equity investments in research intensive small business 
                               concerns.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                            January 9, 2015

  Mr. Honda 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 allow a credit against 
income tax for equity investments in research intensive small business 
                               concerns.

    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 ``Creating Jobs From Innovative Small 
Businesses Act of 2015''.

SEC. 2. CREDIT FOR INVESTMENTS IN SMALL TECHNOLOGY INNOVATION 
              COMPANIES.

    (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 new section:

``SEC. 45S. RESEARCH INTENSIVE INVESTMENT TAX CREDIT.

    ``(a) Allowance of Credit.--For purposes of section 38, the 
research intensive investment tax credit determined under this section 
for the taxable year is an amount equal to 20 percent of the amount 
paid by the taxpayer during such year to acquire a qualified equity 
investment in a qualified research intensive small business concern.
    ``(b) Maximum Credit.--
            ``(1) In general.--The taxpayer's credit determined under 
        this section for the taxable year shall not exceed the excess 
        (if any) of--
                    ``(A) $100,000, over
                    ``(B) the taxpayer's (and any predecessor's) 
                aggregate credit determined under this section for all 
                prior taxable years.
            ``(2) Related parties.--
                    ``(A) In general.--For purposes of paragraph (1), 
                all related persons shall be treated as 1 person, and 
                the dollar amount in paragraph (1)(A) shall be 
                allocated among such persons under regulations 
                prescribed by the Secretary.
                    ``(B) Related persons.--A person shall be treated 
                as related to another person if the relationship 
                between such persons would result in the disallowance 
                of losses under section 267 or 707(b).
    ``(c) Definitions.--For purposes of this section--
            ``(1) Qualified equity investment.--
                    ``(A) In general.--The term `qualified equity 
                investment' means any equity investment in a qualified 
                research intensive small business concern if--
                            ``(i) such investment is acquired by the 
                        taxpayer at its original issue (directly or 
                        through an underwriter) solely in exchange for 
                        cash, and
                            ``(ii) such investment is designated for 
                        purposes of this section by such concern.
                    ``(B) Equity investment.--The term `equity 
                investment' means--
                            ``(i) any stock (other than nonqualified 
                        preferred stock as defined in section 
                        351(g)(2)) in an entity which is a corporation, 
                        and
                            ``(ii) any capital interest in an entity 
                        which is a partnership.
                    ``(C) Redemptions.--A rule similar to the rule of 
                section 1202(c)(3) shall apply for purposes of this 
                subsection.
            ``(2) Qualified research intensive small business 
        concern.--The term `qualified research intensive small business 
        concern' means, with respect to any taxable year, any small 
        business concern (as defined in section 3 of the Small Business 
        Act) if--
                    ``(A) such concern employs an average of fewer than 
                500 employees on business days during such year, and
                    ``(B) at least 50 percent of the gross expenditures 
                of such entity for such year are research or 
                experimental expenditures under section 174.
    ``(d) National Limitation on Amount of Investments Designated.--
            ``(1) In general.--There is a research intensive investment 
        tax credit limitation for each calendar year. Such limitation 
        is--
                    ``(A) $500,000,000 for 2015,
                    ``(B) $750,000,000 for 2016 and 2017, and
                    ``(C) $1,000,000,000 for 2018 and 2019.
            ``(2) Allocation of limitation.--The limitation under 
        paragraph (1) shall be allocated by the Secretary among 
        qualified research intensive small business concerns selected 
        by the Secretary.
            ``(3) Carryover of unused limitation.--If the research 
        intensive investment tax credit limitation for any calendar 
        year exceeds the aggregate amount allocated under paragraph (2) 
        for such year, such limitation for the succeeding calendar year 
        shall be increased by the amount of such excess. No amount may 
        be carried under the preceding sentence to any calendar year 
        after 2023.
    ``(e) Certain Taxpayers Not Eligible.--No credit shall be 
determined under this section for any equity investment in any 
qualified research intensive small business concern made by any 
individual who, at the time of the investment, is--
            ``(1) an employee of such concern, or
            ``(2) a member of the family (within the meaning of section 
        267(c)(4)) of an employee of such concern.
    ``(f) Basis Reduction.--The basis of any qualified equity 
investment shall be reduced by the amount of any credit determined 
under this section with respect to such investment. This subsection 
shall not apply for purposes of sections 1202, 1400B, and 1400F.
    ``(g) Regulations.--The Secretary shall prescribe such regulations 
as may be appropriate to carry out this section, including 
regulations--
            ``(1) which prevent the abuse of the purposes of this 
        section,
            ``(2) which impose appropriate reporting requirements, and
            ``(3) which apply the provisions of this section to newly 
        formed entities.''.
    (b) Credit Made Part of General Business Credit.--Subsection (b) of 
section 38 of such Code (relating to current year business credit) 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 research intensive investment tax credit 
        determined under section 45S.''.
    (c) Clerical Amendment.--The table of sections for subpart D of 
part IV of subchapter A of chapter 1 of such Code is amended by adding 
at the end the following new item:

``Sec. 45S. Research intensive investment tax credit.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to investments made after December 31, 2014, in taxable years 
ending after such date.
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