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104TH CONGRESS

1ST SESSION H. R. 1566

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

for clinical testing expenses for certain drugs for rare diseases or conditions and to provide for carryovers and carrybacks of unused credits.

IN THE HOUSE OF REPRESENTATIVES

MAY 3, 1995

Mrs. JOHNSON of Connecticut (for herself and Mr. MATSUI) 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

permanent the credit for clinical testing expenses for

certain drugs for rare diseases or conditions and to provide for carryovers and carrybacks of unused credits.

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

3 SECTION 1. CREDIT FOR CERTAIN CLINICAL TESTING EX4 PENSES MADE PERMANENT; CARRYOVER

5 AND CARRYBACK OF UNUSED CREDITS.

6 (a) CREDIT MADE PERMANENT.—Section 28 of the

7 Internal Revenue Code of 1986 (relating to clinical testing
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1 expenses for certain drugs for rare diseases or conditions)

2 is amended by striking subsection (e).

3 (b) CARRYOVER AND CARRYBACK OF UNUSED CRED4 ITS.—Paragraph (2) of section 28(d) of such Code is

5 amended by adding at the end the following flush sen6 tences:

7 ‘‘Rules similar to the rules of subsections (a), (b),

8 and (c) of section 39 shall apply to the credit under

9 this section. No credit under this section may be

10 carried under such rules to a taxable year beginning

11 before January 1, 1995.’’

12 (c) TECHNICAL AMENDMENTS RELATED TO CARRY13 OVER AND CARRYBACK OF CREDITS.—

14 (1) CARRYOVER OF CREDIT.—

15 (A) Subsection (c) of section 381 of such

16 Code (relating to items of the distributor or

17 transferor corporation) is amended by adding at

18 the end thereof the following new paragraph:

19 ‘‘(27) CREDIT UNDER SECTION 28.—The ac20 quiring corporation shall take into account (to the

21 extent proper to carry out the purposes of this sec22 tion and section 28, and under such regulations as

23 may be prescribed by the Secretary) the items re24 quired to be taken into account for purposes of sec-
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1 tion 28 in respect to the distributor or transferor

2 corporation.’’

3 (B) Paragraph (2) of section 383(a) of

4 such Code (relating to special limitations on

5 certain excess credits, etc.) is amended by re6 designating subparagraphs (A) and (B) as sub7 paragraphs (B) and (C), respectively, and by

8 inserting before subparagraph (B) (as so redes9 ignated) the following new subparagraph:

10 ‘‘(A) any unused clinical testing credit

11 under section 28,’’.

12 (2) CARRYBACK OF CREDIT.—

13 (A) Subparagraph (C) of section

14 6511(d)(4) of such Code (defining credit

15 carryback) is amended by inserting ‘‘any clini16 cal testing credit carryback under section 28

17 and’’ after ‘‘means’’.

18 (B) Subsection (a) of section 6411 of such

19 Code (relating to tentative carryback and re20 fund adjustments) is amended—

21 (i) by inserting ‘‘by a clinical testing

22 credit carryback under section 28,’’ after

23 ‘‘172(b),’’ in the first sentence, and

24 (ii) by striking ‘‘net capital loss’’ the

25 first place it appears in the second sen-
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1 tence and all that follows before ‘‘in the

2 manner and form’’ and inserting ‘‘net cap3 ital loss, unused clinical testing credit, or

4 unused business credit from which the

5 carryback results and within a period of 12

6 months after such taxable year or, with re7 spect to any portion of a clinical testing

8 credit carryback or business credit

9 carryback attributable to a net operating

10 loss carryback or a net capital loss

11 carryback from a subsequent taxable year,

12 within a period of 12 months from the end

13 of such subsequent taxable year or, with

14 respect to any portion of a business credit

15 carryback attributable to a clinical testing

16 credit carryback from a subsequent taxable

17 year within a period of 12 months from

18 the end of such subsequent taxable year,’’.

19 (C) Paragraph (1) of section 6411(a) of

20 such Code is amended by inserting ‘‘unused

21 clinical testing credit,’’ after ‘‘net capital loss,’’.

22 (d) EFFECTIVE DATE.—

23 (1) SUBSECTION (a).—The amendment made

24 by subsection (a) shall apply to amounts paid or in25 curred after December 31, 1994.
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1 (2) CARRYOVERS AND CARRYBACKS.—The

2 amendments made by subsections (b) and (c) shall

3 apply to taxable years beginning after December 31,

4 1994.

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