American Research and Competitiveness Act of 2015

Summary: American Research and Competitiveness Act of 2015 (Sec. 2) This bill revises and makes permanent after 2014 the research tax credit. The rate of such credit is modified to equal the sum of 20% of so much of the qualified research expenses for the taxable year as exceeds 50% of the average qualified research expenses for the three preceding taxable years, 20% of so much of the basic research payments for the taxable year as exceeds 50% of the average basic research payments for the three preceding taxable years, plus 20% of amounts paid by a business taxpayer to an energy research consortium for energy research. If a taxpayer has no qualified research expenses in any of the three preceding taxable years, the rate of the tax credit is reduced to 10% of current research expenses. The bill also provides that in the case of an eligible small business (i.e., a corporation whose stock is not publicly traded, a partnership, or a sole proprietorship with annual gross receipts not exceeding $50 million in a three-year period), the research credit may offset alternative minimum tax liability. (Sec. 3) The bill prohibits the entry of the budgetary effects of this Act on either PAYCO scorecard under the Statutory Pay-As-You-Go Act of 2010. 

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``American Research and 
Competitiveness Act of 2015''.

SEC. 2. RESEARCH CREDIT SIMPLIFIED AND MADE PERMANENT.

    (a) In General.--Section 41(a) of the Internal Revenue Code of 1986 
is amended to read as follows:
    ``(a) In General.--For purposes of section 38, the research credit 
determined under this section for the taxable year shall be an amount 
equal to the sum of--
            ``(1) 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,
            ``(2) 20 percent of so much of the basic research payments 
        for the taxable year as exceeds 50 percent of the average basic 
        research payments for the 3 taxable years preceding the taxable 
        year for which the credit is being determined, plus
            ``(3) 20 percent of the amounts paid or incurred by the 
        taxpayer in carrying on any trade or business of the taxpayer 
        during the taxable year (including as contributions) to an 
        energy research consortium for energy research.''.
    (b) Repeal of Termination.--Section 41 of such Code is amended by 
striking subsection (h).
    (c) Credit Allowed Against Alternative Minimum Tax in Case of 
Eligible Small Business.--Section 38(c)(4)(B) of such Code is amended 
by redesignating clauses (ii) through (ix) as clauses (iii) through 
(x), respectively, and by inserting after clause (i) the following new 
clause:
                            ``(ii) the credit determined under section 
                        41 for the taxable year with respect to an 
                        eligible small business (as defined in 
                        paragraph (5)(C), after application of rules 
                        similar to the rules of paragraph (5)(D)),''.
    (d) Conforming Amendments.--
            (1) Section 41(c) of such Code is amended to read as 
        follows:
    ``(c) Determination of Average Research Expenses for Prior Years.--
            ``(1) Special rule in case of no qualified research 
        expenditures in any of 3 preceding taxable years.--In any case 
        in which the taxpayer has no qualified research expenses in any 
        one of the 3 taxable years preceding the taxable year for which 
        the credit is being determined, the amount determined under 
        subsection (a)(1) for such taxable year shall be equal to 10 
        percent of the qualified research expenses for the taxable 
        year.
            ``(2) Consistent treatment of expenses.--
                    ``(A) In general.--Notwithstanding whether the 
                period for filing a claim for credit or refund has 
                expired for any taxable year taken into account in 
                determining the average qualified research expenses, or 
                average basic research payments, taken into account 
                under subsection (a), the qualified research expenses 
                and basic research payments taken into account in 
                determining such averages shall be determined on a 
                basis consistent with the determination of qualified 
                research expenses and basic research payments, 
                respectively, for the credit year.
                    ``(B) Prevention of distortions.--The Secretary may 
                prescribe regulations to prevent distortions in 
                calculating a taxpayer's qualified research expenses or 
                basic research payments caused by a change in 
                accounting methods used by such taxpayer between the 
                current year and a year taken into account in 
                determining the average qualified research expenses or 
                average basic research payments taken into account 
                under subsection (a).''.
            (2) Section 41(e) of such Code is amended--
                    (A) by striking all that precedes paragraph (6) and 
                inserting the following:
    ``(e) Basic Research Payments.--For purposes of this section--
            ``(1) In general.--The term `basic research payment' means, 
        with respect to any taxable year, any amount paid in cash 
        during such taxable year by a corporation to any qualified 
        organization for basic research but only if--
                    ``(A) such payment is pursuant to a written 
                agreement between such corporation and such qualified 
                organization, and
                    ``(B) such basic research is to be performed by 
                such qualified organization.
            ``(2) Exception to requirement that research be performed 
        by the organization.--In the case of a qualified organization 
        described in subparagraph (C) or (D) of paragraph (3), 
        subparagraph (B) of paragraph (1) shall not apply.'',
                    (B) by redesignating paragraphs (6) and (7) as 
                paragraphs (3) and (4), respectively, and
                    (C) in paragraph (4), as so redesignated, by 
                striking subparagraphs (B) and (C) and by redesignating 
                subparagraphs (D) and (E) as subparagraphs (B) and (C), 
                respectively.
            (3) Section 41(f)(3) of such Code is amended--
                    (A)(i) by striking ``, and the gross receipts'' in 
                subparagraph (A)(i) and all that follows through 
                ``determined under clause (iii)'',
                    (ii) by striking clause (iii) of subparagraph (A) 
                and redesignating clauses (iv), (v), and (vi), thereof, 
                as clauses (iii), (iv), and (v), respectively,
                    (iii) by striking ``and (iv)'' each place it 
                appears in subparagraph (A)(iv) (as so redesignated) 
                and inserting ``and (iii)'',
                    (iv) by striking subclause (IV) of subparagraph 
                (A)(iv) (as so redesignated), by striking ``, and'' at 
                the end of subparagraph (A)(iv)(III) (as so 
                redesignated) and inserting a period, and by adding 
                ``and'' at the end of subparagraph (A)(iv)(II) (as so 
                redesignated),
                    (v) by striking ``(A)(vi)'' in subparagraph (B) and 
                inserting ``(A)(v)'',
                    (vi) by striking ``(A)(iv)(II)'' in subparagraph 
                (B)(i)(II) and inserting ``(A)(iii)(II)'',
                    (B) by striking ``, and the gross receipts of the 
                predecessor,'' in subparagraph (A)(iv)(II) (as so 
                redesignated),
                    (C) by striking ``, and the gross receipts of,'' in 
                subparagraph (B),
                    (D) by striking ``, or gross receipts of,'' in 
                subparagraph (B)(i)(I), and
                    (E) by striking subparagraph (C) and inserting the 
                following new subparagraph:
                    ``(C) Adjustments for basic research payments.--In 
                the case of basic research payments, rules similar to 
                the rules of subparagraph (A) and (B) shall apply.''.
            (4) Section 41(f)(4) of such Code is amended by striking 
        ``and gross receipts'' and inserting ``and basic research 
        payments''.
            (5) Section 45C(b)(1) of such Code is amended by striking 
        subparagraph (D).
            (6) Section 45C(c)(2) of such Code is amended--
                    (A) by striking ``base period research expenses'' 
                and inserting ``average qualified research expenses'', 
                and
                    (B) by striking ``base period research expenses'' 
                in the heading and inserting ``average qualified 
                research expenses''.
            (7) Section 280C(c) of such Code is amended--
                    (A) by striking ``basic research expenses (as 
                defined in section 41(e)(2))'' in paragraph (1) and 
                inserting ``basic research payments (as defined in 
                section 41(e)(1))'', and
                    (B) by striking ``basic research expenses'' in 
                paragraph (2)(B) and inserting ``basic research 
                payments''.
    (e) Effective Date.--
            (1) In general.--Except as provided in paragraph (2), the 
        amendments made by this section shall apply to taxable years 
        beginning after December 31, 2014.
            (2) Subsection (b).--The amendment made by subsection (b) 
        shall apply to amounts paid or incurred after December 31, 
        2014.

SEC. 3. BUDGETARY EFFECTS.

    The budgetary effects of this Act shall not be entered on either 
PAYGO scorecard maintained pursuant to section 4(d) of the Statutory 
Pay-As-You-Go Act of 2010.

            Passed the House of Representatives May 20, 2015.

            Attest:

                                                 KAREN L. HAAS,

                                                                 Clerk.