II 

112TH CONGRESS 

1ST SESSION S. 1410 

To amend the Internal Revenue Code of 1986 to provide incentives for 

life sciences research. 

IN THE SENATE OF THE UNITED STATES 

JULY 25, 2011 

Mr. CASEY introduced the following bill; which was read twice and referred 

to the Committee on Finance 

A BILL 

To amend the Internal Revenue Code of 1986 to provide 

incentives for life sciences research. 

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

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Life Sciences Jobs and 

5 Investment Act of 2011’’. 

6 SEC. 2. INCREASED CREDIT FOR INITIAL LIFE SCIENCES 

7 RESEARCH. 

8 (a) IN GENERAL.—Section 41 of the Internal Rev9 enue Code of 1986 is amended by redesignating subsection 


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1 (h) as subsection (i) and inserting after subsection (g) the 

2 following new subsection: 

3 ‘‘(h) SPECIAL RULES FOR INCREASED INITIAL LIFE

4 SCIENCES RESEARCH.— 

5 ‘‘(1) IN GENERAL.—In the case of qualified ini6 tial life sciences research expenses for any taxable 

7 year with respect to which the taxpayer elects the 

8 application of this subsection— 

9 ‘‘(A) INCREASED CREDIT.—Subsection (a) 

10 shall be applied by substituting ‘40 percent’ for 

11 ‘20 percent’. 

12 ‘‘(B) AMOUNTS PAID WITH RESPECT TO

13 QUALIFIED LIFE SCIENCES RESEARCH TO CER14 TAIN RESEARCH CONSORTIA, ELIGIBLE SMALL

15 BUSINESSES, UNIVERSITIES, AND FEDERAL

16 LABORATORIES.—Subsection (b)(3)(A) shall be 

17 applied by substituting ‘100 percent’ for ‘65 

18 percent’, in the case of amounts paid or in19 curred to persons described in subclauses (I) 

20 and (III) of subsection (b)(3)(C)(ii) or sub21 clause (I), (II), or (III) of subsection 

22 (b)(3)(D)(i), with respect to qualified life 

23 sciences research. 

24 ‘‘(C) ALTERNATIVE SIMPLIFIED CREDIT IN

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1 SEARCH.—Paragraph (5) of subsection (c) shall 

2 be applied— 

3 ‘‘(i) by substituting ‘28 percent’ for 

4 ‘14 percent’ in subparagraph (A), and 

5 ‘‘(ii) by substituting ‘12 percent’ for 

6 ‘6 percent’ in subparagraph (B)(ii). 

7 ‘‘(2) DEFINITIONS.—For purposes of this sub8 section— 

9 ‘‘(A) QUALIFIED INITIAL LIFE SCIENCES

10 RESEARCH EXPENSES.— 

11 ‘‘(i) IN GENERAL.—The term ‘quali12 fied initial life sciences research expenses’ 

13 means so much of the amounts taken into 

14 account under subsection (a) as— 

15 ‘‘(I) are attributable to qualified 

16 life sciences research, and 

17 ‘‘(II) do not exceed 

18 $150,000,000. 

19 ‘‘(ii) EXCLUDED EXPENSES.—Such 

20 term does not include any amount paid or 

21 incurred by the taxpayer to compensate 

22 any covered employee (as defined in section 

23 162(m)(3)) for services, to pay dividends 

24 to the shareholders of the taxpayer, or to 


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1 pay interest or principal on any debt secu2 rity of the taxpayer. 

3 ‘‘(iii) SUBSTANTIATION OF COMPLI4 ANCE.— 

5 ‘‘(I) IN GENERAL.—The taxpayer 

6 must substantiate its compliance with 

7 clause (ii) with written documents and 

8 such other credible evidence as the 

9 Secretary may reasonably require, and 

10 shall bear the burden of proof with re11 spect to such substantiation. 

12 ‘‘(II) CERTIFICATION.—The chief 

13 executive officer and the independent 

14 director serving as head of the audit 

15 committee of the taxpayer, or com16 parable entity officials, shall attest in 

17 writing to the taxpayer’s compliance 

18 with the requirements of clause (ii). 

19 ‘‘(B) QUALIFIED LIFE SCIENCES RE20 SEARCH.— 

21 ‘‘(i) IN GENERAL.—The term ‘quali22 fied life sciences research’ means any 

23 qualified research— 

24 ‘‘(I) with respect to the branch of 

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1 chemistry, biophysics, bioengineering, 

2 biotechnology, microbiology, genetics, 

3 or physiology (in each case as such 

4 knowledge or study relates to human 

5 beings), and 

6 ‘‘(II) that is considered scientific 

7 research and development for pur8 poses of North American Industry 

9 Classification System code 5417. 

10 ‘‘(ii) EXCEPTIONS.—Such term does 

11 not include sociology or psychology. 

12 ‘‘(3) COORDINATION WITH 965A.—This sub13 section shall not apply with respect to any taxpayer 

14 for any taxable year for which an election is in effect 

15 under section 965A (relating to limited deduction for 

16 life sciences jobs and investment in United States). 

17 ‘‘(4) ELECTION.—Any election under this sub18 section shall be made in such manner as may be pre19 scribed by the Secretary, and shall be made with re20 spect to a taxable year not later than the due date 

21 (including extensions of time) for filing the tax22 payer’s return for such taxable year. 

23 ‘‘(5) TERMINATION.—This subsection shall not 

24 apply to any taxable year beginning after December 

25 31, 2016.’’. 


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1 (b) EFFECTIVE DATE.—The amendments made by 

2 this section shall apply to taxable years beginning after 

3 the date of the enactment of this Act. 

4 SEC. 3. INCENTIVES TO INVEST IN LIFE SCIENCES JOBS, 

5 RESEARCH, AND FACILITIES. 

6 (a) IN GENERAL.—Subpart F of part III of sub7 chapter N of chapter 1 of the Internal Revenue Code of 

8 1986 is amended by adding at the end the following new 

9 section: 

10 ‘‘SEC. 965A. LIMITED DEDUCTION FOR LIFE SCIENCES JOBS 

11 AND INVESTMENT IN UNITED STATES. 

12 ‘‘(a) DEDUCTION.— 

13 ‘‘(1) IN GENERAL.—In the case of a corpora14 tion which is a United States shareholder and for 

15 which the election under this section is in effect for 

16 the taxable year, there shall be allowed as a deduc17 tion an amount equal to 85 percent of the cash divi18 dends which are received during such taxable year 

19 by such shareholder from controlled foreign corpora20 tions. 

21 ‘‘(2) DIVIDENDS PAID INDIRECTLY FROM CON22 TROLLED FOREIGN CORPORATIONS.—If, within the 

23 taxable year for which the election under this section 

24 is in effect, a United States shareholder receives a 

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1 tion which is excluded from gross income under sec2 tion 959(a), such distribution shall be treated for 

3 purposes of this section as a cash dividend to the ex4 tent of any amount included in income by such 

5 United States shareholder under section 

6 951(a)(1)(A), including as a result of any cash divi7 dend during such taxable year to— 

8 ‘‘(A) such controlled foreign corporation 

9 from another controlled foreign corporation that 

10 is in a chain of ownership described in section 

11 958(a), or 

12 ‘‘(B) any other controlled foreign corpora13 tion in such chain of ownership from another 

14 controlled foreign corporation in such chain of 

15 ownership, but only to the extent of cash dis16 tributions described in section 959(b) which are 

17 made during such taxable year to the controlled 

18 foreign corporation from which such United 

19 States shareholder received such distribution. 

20 ‘‘(b) LIMITATIONS.— 

21 ‘‘(1) IN GENERAL.—The amount of dividends 

22 taken into account under subsection (a) shall not ex23 ceed the lesser of— 

24 ‘‘(A) $150,000,000, or 


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1 ‘‘(B) the amount shown on the applicable 

2 financial statement as earnings permanently re3 invested outside the United States. 

4 The amounts described in subparagraph (B) shall be 

5 treated as being zero if there is no such statement 

6 or such statement fails to show a specific amount of 

7 such earnings. 

8 ‘‘(2) DIVIDENDS MUST BE EXTRAORDINARY.— 

9 The amount of dividends taken into account under 

10 subsection (a) shall not exceed the excess (if any) 

11 of— 

12 ‘‘(A) the cash dividends received during 

13 the taxable year by such shareholder from con14 trolled foreign corporations, over 

15 ‘‘(B) the sum of— 

16 ‘‘(i) the dividends received during the 

17 base period year by such shareholder from 

18 controlled foreign corporations, 

19 ‘‘(ii) the amounts includible in such 

20 shareholder’s gross income for the base pe21 riod year under section 951(a)(1)(B) with 

22 respect to controlled foreign corporations, 

23 and 

24 ‘‘(iii) the amounts that would have 

25 been included for the base period year but 


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1 for section 959(a) with respect to con2 trolled foreign corporations. 

3 Amounts described in subparagraph (B) shall 

4 be such amounts as shown on the most recent 

5 return filed for the base period year; except 

6 that amended returns filed after December 31, 

7 2010, shall not be taken into account. 

8 ‘‘(3) REQUIREMENT TO INVEST IN LIFE

9 SCIENCES.—Subsection (a) shall not apply to any 

10 dividend received by a United States shareholder un11 less the amount of the dividend is invested solely in 

12 the United States and solely for the purpose of— 

13 ‘‘(A) the new hiring of additional sci14 entists, researchers, and comparable personnel 

15 engaged in qualified life sciences research, 

16 ‘‘(B) payments to persons described in sec17 tion 41(h)(1)(B) and to other qualified organi18 zations which are used by such persons or orga19 nizations for qualified life sciences research, or 

20 ‘‘(C) the building or leasing of new facili21 ties to be used primarily in the conduct of 

22 qualified life sciences research. 

23 ‘‘(4) PROHIBITED USES.—Subsection (a) shall 

24 not apply to the amount of any dividend which is 

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1 ices of any covered employee (as defined in section 

2 162(m)(3)), to pay dividends to the shareholders of 

3 the taxpayer, or to pay interest or principal on any 

4 debt security of the taxpayer. 

5 ‘‘(5) NO RESERVE.—Subsection (a) shall not 

6 apply to any dividend if the taxpayer’s compliance 

7 with this section is uncertain and requires a provi8 sion or reserve on the taxpayer’s applicable financial 

9 statements. 

10 ‘‘(6) SEPARATE ACCOUNT.—Subsection (a) 

11 shall not apply to any dividend unless the amount of 

12 the dividend is held in a separate account, trust, or 

13 other arrangement that segregates the amount from 

14 other funds of the taxpayer until the amount is used 

15 solely for the purposes described in paragraph (3). 

16 ‘‘(c) SUBSTANTIATION OF COMPLIANCE.— 

17 ‘‘(1) IN GENERAL.—The taxpayer must sub18 stantiate its compliance with subsection (b) with 

19 written documents and such other credible evidence 

20 as the Secretary may reasonably require, and shall 

21 bear the burden of proof with respect to such sub22 stantiation. 

23 ‘‘(2) CERTIFICATION.—The chief executive offi24 cer and the independent director serving as head of 

25 the audit committee of the taxpayer, or comparable 


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1 entity officials, shall attest in writing to the tax2 payer’s compliance with each of the requirements of 

3 subsection (b). 

4 ‘‘(d) DEFINITIONS.—For purposes of this section— 

5 ‘‘(1) QUALIFIED LIFE SCIENCES RESEARCH.— 

6 The term ‘qualified life sciences research’ shall have 

7 the meaning given such term by section 41(h). 

8 ‘‘(2) QUALIFIED ORGANIZATION.—The term 

9 ‘qualified organization’ means any organization de10 scribed in subparagraph (A), (B), or (C) of section 

11 41(e)(6). 

12 ‘‘(3) BASE PERIOD YEAR.—The term ‘base pe13 riod year’ means the taxable year which— 

14 ‘‘(A) is among the 3 most recent taxable 

15 years ending on or before December 31, 2010, 

16 and 

17 ‘‘(B) results in the determination of the 

18 highest amount under subsection (b)(2)(B). 

19 Rules similar to the rules of subparagraph (C) of 

20 section 965(c)(2) shall apply for purposes of this 

21 paragraph. 

22 ‘‘(4) APPLICABLE FINANCIAL STATEMENT.— 

23 The term ‘applicable financial statement’ has the 

24 meaning given such term by section 965(c)(1), ap25 plied by substituting ‘the last day of the taxable year 


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1 with respect to which the deduction under section 

2 965A is determined’ for ‘June 30, 2003’ each place 

3 it appears. 

4 ‘‘(5) DIVIDEND.—The term ‘dividend’ has the 

5 meaning given such term by section 965(c)(3). 

6 ‘‘(e) SPECIAL RULES.—For purposes of this sec7 tion— 

8 ‘‘(1) rules similar to the rules of paragraph (3) 

9 of section 965(b) shall apply, except that such para10 graph shall be applied by substituting ‘December 31, 

11 2010’ for ‘October 3, 2004’, and 

12 ‘‘(2) rules similar to the rules of paragraphs (4) 

13 and (5) of section 965(c) shall apply, except that 

14 such paragraph (5) shall be applied— 

15 ‘‘(A) by substituting ‘$150,000,000’ for 

16 ‘$500,000,000’, and 

17 ‘‘(B) without regard to the reference to 

18 subparagraph (C) of section 965(b)(1). 

19 ‘‘(f) DENIAL OF FOREIGN TAX CREDIT.— 

20 ‘‘(1) IN GENERAL.—No credit shall be allowed 

21 under section 901 for any taxes paid or accrued (or 

22 treated as paid or accrued) with respect to the de23 ductible portion of— 

24 ‘‘(A) any dividend, or 


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1 ‘‘(B) any amount described in subsection 

2 (a)(2) which is included in income under section 

3 951(a)(1)(A). 

4 No deduction shall be allowed under this chapter for 

5 any tax for which credit is not allowable by reason 

6 of the preceding sentence. 

7 ‘‘(2) EXPENSES.—No deduction shall be al8 lowed for expenses directly allocable to the deduct9 ible portion described in paragraph (1). 

10 ‘‘(3) DEDUCTIBLE PORTION.—For purposes of 

11 paragraph (1), unless the taxpayer otherwise speci12 fies, the deductible portion of any dividend or other 

13 amount is the amount which bears the same ratio to 

14 the amount of such dividend or other amount as the 

15 amount allowed as a deduction under subsection (a) 

16 for the taxable year bears to the amount described 

17 in subsection (b)(2)(A) for such year. 

18 ‘‘(4) COORDINATION WITH SECTION 78.—Sec19 tion 78 shall not apply to any tax which is not allow20 able as a credit under section 901 by reason of this 

21 subsection. 

22 ‘‘(g) ELECTION.—Any election under this section 

23 shall be made in such manner as may be prescribed by 

24 the Secretary, and shall be made with respect to a taxable 


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1 year not later than the due date (including extensions of 

2 time) for filing the taxpayer’s return for such taxable year. 

3 ‘‘(h) TERMINATION.—This section shall not apply to 

4 any taxable year beginning after December 31, 2016.’’. 

5 (b) CLERICAL AMENDMENT.—The table of sections 

6 for subpart F of part III of subchapter N of chapter 1 

7 of the Internal Revenue Code of 1986 is amended by add8 ing at the end the following new section: 

‘‘Sec. 965A. Limited deduction for life sciences jobs and investment in United 

States.’’. 

9 (c) EFFECTIVE DATE.—The amendments made by 

10 this section shall apply to taxable years beginning after 

11 the date of the enactment of this Act. 

12 SEC. 4. COMPLIANCE AND REPORT TO CONGRESS. 

13 The Commissioner of Internal Revenue shall take 

14 such steps as are necessary to ensure full compliance with 

15 the provisions under section 41(h) and section 965A of 

16 the Internal Revenue Code of 1986 (as added by this Act). 

17 The Commissioner of Internal Revenue shall provide re18 ports to Congress on the status of such compliance and 

19 related enforcement not later than 90 days following the 

20 final due date of tax filings for the first taxable year in 

21 which an entity may elect application of section 41(h) or 

22 of section 965A of the Internal Revenue Code of 1986 (as 

23 so added). 

Æ 


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