I

104TH CONGRESS

1ST SESSION H. R. 2514

To amend the Internal Revenue Code of 1986 to make the research credit

permanent and to allow such credit for expenses attributable to certain

collaborative research consortia.

IN THE HOUSE OF REPRESENTATIVES

OCTOBER 19, 1995

Mr. ZIMMER (for himself, Mr. LEVIN, and Mr. CAMP) 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 make

the research credit permanent and to allow such credit

for expenses attributable to certain collaborative research

consortia.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. RESEARCH CREDIT MADE PERMANENT;

4 CREDIT FOR EXPENSES ATTRIBUTABLE TO

5 CERTAIN COLLABORATIVE RESEARCH CON6 SORTIA.

7 (a) CREDIT MADE PERMANENT.—Section 41 of the

8 Internal Revenue Code of 1986 (relating to credit for in-
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1 creasing research activities) is amended by striking sub2 section (h).

3 (b) CREDIT FOR EXPENSES ATTRIBUTABLE TO CER4 TAIN COLLABORATIVE RESEARCH CONSORTIA.—

5 (1) IN GENERAL.—Subsection (a) of section 41

6 of such Code is amended by striking ‘‘and’’ at the

7 end of paragraph (1), by striking the period at the

8 end of paragraph (2) and inserting ‘‘, and’’, and by

9 adding at the end the following new paragraph:

10 ‘‘(3) 20 percent of the sum of—

11 ‘‘(A) the qualified consortia expenses (as

12 defined in subsection (f)) to the extent such ex13 penses do not exceed the amount described in

14 subparagraph (B), and

15 ‘‘(B) the amount paid in cash during the

16 taxable year to a qualified collaborative re17 search consortium for qualified collaborative re18 search (as defined in subsection (f)).’’

19 (2) RULES RELATING TO QUALIFIED RESEARCH

20 CONSORTIA.—Section 41 of such Code is amended

21 by redesignating subsections (f) and (g) as sub22 sections (g) and (h), respectively, and by inserting

23 after subsection (e) the following new subsection:

24 ‘‘(f) RULES RELATING TO QUALIFIED RESEARCH

25 CONSORTIA.—For purposes of subsection (a)(3)—
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1 ‘‘(1) IN GENERAL.—The term ‘qualified consor2 tia expenses’ means, with respect to any taxable

3 year, the sum of the following amounts which are

4 paid or incurred by the taxpayer during the taxable

5 year:

6 ‘‘(A) Any wages paid or incurred to an em7 ployee of the taxpayer for services performed by

8 such employee in qualified collaborative re9 search or in direct support of employees per10 forming qualified collaborative research.

11 ‘‘(B) Any amount paid or incurred for sup12 plies used in the conduct of qualified collabo13 rative research.

14 ‘‘(2) QUALIFIED COLLABORATIVE RESEARCH

15 CONSORTIUM.—The term ‘qualified collaborative re16 search consortium’ means any organization de17 scribed in subsection (e)(6)(B) if—

18 ‘‘(A) at least 15 unrelated taxpayers paid

19 (during the calendar year in which the taxable

20 year of the taxpayer begins) amounts to such

21 organization for qualified collaborative research,

22 ‘‘(B) no 3 persons paid during such cal23 endar year more than 50 percent of the total

24 amounts paid during such calendar year for

25 qualified collaborative research, and
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1 ‘‘(C) no person contributed more than 25

2 percent of such total amounts.

3 For purposes of subparagraph (A), all persons treat4 ed as a single employer under subsection (a) or (b)

5 of section 52 shall be treated as related taxpayers.

6 ‘‘(3) QUALIFIED COLLABORATIVE RESEARCH.—

7 The term ‘qualified collaborative research’ means

8 qualified research—

9 ‘‘(A) which is carried on in the public in10 terest and the results of which are made avail11 able to the public on a nondiscriminatory basis,

12 and

13 ‘‘(B) which is performed or supervised by

14 a qualified collaborative research consortium.

15 ‘‘(4) REDUCTION FOR AMOUNTS EXPENDED ON

16 INELIGIBLE RESEARCH.—The amount which, but for

17 this paragraph, would be taken into account under

18 subsection (a)(3)(B) by the taxpayer for any taxable

19 year shall be reduced by an amount which bears the

20 same ratio to such amount as—

21 ‘‘(A) the amount paid or incurred during

22 the calendar year in which such taxable year

23 begins by the consortia for research which is

24 not qualified research, bears to
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1 ‘‘(B) the total amount paid or incurred

2 during such calendar by the consortia for re3 search.

4 ‘‘(5) DENIAL OF DOUBLE BENEFIT.—Any

5 amount taken into account under subparagraph (A)

6 or (B) of subsection (a)(3) shall not be taken into

7 account under subparagraph (A) or (B) of para8 graph (1), or under paragraph (2), of subsection

9 (a).’’

10 (c) EFFECTIVE DATES.—

11 (1) CREDIT MADE PERMANENT.—The amend12 ment made by subsection (a) shall apply to amounts

13 paid or incurred after June 30, 1995, in taxable

14 years ending after such date.

15 (2) PAYMENTS TO CONSORTIA.—The amend16 ments made by subsection (b) shall apply to taxable

17 years beginning after the date of the enactment of

18 this Act.

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