II 

118TH CONGRESS 

1ST SESSION S. 2823 

To amend the Internal Revenue Code of 1986 to safeguard beneficial tax 

treatment on certain expenses from bolstering the research and development sectors in foreign entities of concern. 

IN THE SENATE OF THE UNITED STATES 

SEPTEMBER 14, 2023 

Mr. RUBIO 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 safeguard 

beneficial tax treatment on certain expenses from bolstering the research and development sectors in foreign 

entities of concern. 

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 ‘‘Securing America’s 

5 R&D Advantage Act’’. 


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1 SEC. 2. RESTORING IMMEDIATE EXPENSING FOR RE2 SEARCH AND DEVELOPMENT INVESTMENTS. 

3 (a) IN GENERAL.—Section 174 of the Internal Rev4 enue Code of 1986 is amended to read as follows: 

5 ‘‘SEC. 174. RESEARCH AND EXPERIMENTAL EXPENDITURES. 

6 ‘‘(a) TREATMENT AS EXPENSES.— 

7 ‘‘(1) IN GENERAL.—A taxpayer may treat re8 search or experimental expenditures which are paid 

9 or incurred by him during the taxable year in con10 nection with his trade or business as expenses which 

11 are not chargeable to capital account. The expendi12 tures so treated shall be allowed as a deduction. 

13 ‘‘(2) WHEN METHOD MAY BE ADOPTED.— 

14 ‘‘(A) WITHOUT CONSENT.—A taxpayer 

15 may, without the consent of the Secretary, 

16 adopt the method provided in this subsection 

17 for his first taxable year for which expenditures 

18 described in paragraph (1) are paid or incurred. 

19 ‘‘(B) WITH CONSENT.—A taxpayer may, 

20 with the consent of the Secretary, adopt at any 

21 time the method provided in this subsection. 

22 ‘‘(3) SCOPE.—The method adopted under this 

23 subsection shall apply to all expenditures described 

24 in paragraph (1). The method adopted shall be ad25 hered to in computing taxable income for the taxable 

26 year and for all subsequent taxable years unless, 


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1 with the approval of the Secretary, a change to a 

2 different method is authorized with respect to part 

3 or all of such expenditures. 

4 ‘‘(b) AMORTIZATION OF CERTAIN RESEARCH AND

5 EXPERIMENTAL EXPENDITURES.— 

6 ‘‘(1) IN GENERAL.—At the election of the tax7 payer, made in accordance with regulations pre8 scribed by the Secretary, research or experimental 

9 expenditures which are— 

10 ‘‘(A) paid or incurred by the taxpayer in 

11 connection with his trade or business, 

12 ‘‘(B) not treated as expenses under sub13 section (a), and 

14 ‘‘(C) chargeable to capital account but not 

15 chargeable to property of a character which is 

16 subject to the allowance under section 167 (re17 lating to allowance for depreciation, etc.) or sec18 tion 611 (relating to allowance for depletion), 

19 may be treated as deferred expenses. In computing 

20 taxable income, such deferred expenses shall be al21 lowed as a deduction ratably over such period of not 

22 less than 60 months as may be selected by the tax23 payer (beginning with the month in which the tax24 payer first realizes benefits from such expenditures). 

25 Such deferred expenses are expenditures properly 


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1 chargeable to capital account for purposes of section 

2 1016(a)(1) (relating to adjustments to basis of prop3 erty). 

4 ‘‘(2) TIME FOR AND SCOPE OF ELECTION.—The 

5 election provided by paragraph (1) may be made for 

6 any taxable year, but only if made not later than the 

7 time prescribed by law for filing the return for such 

8 taxable year (including extensions thereof). The 

9 method so elected, and the period selected by the 

10 taxpayer, shall be adhered to in computing taxable 

11 income for the taxable year for which the election is 

12 made and for all subsequent taxable years unless, 

13 with the approval of the Secretary, a change to a 

14 different method (or to a different period) is author15 ized with respect to part or all of such expenditures. 

16 The election shall not apply to any expenditure paid 

17 or incurred during any taxable year before the tax18 able year for which the taxpayer makes the election. 

19 ‘‘(c) LAND AND OTHER PROPERTY.—This section 

20 shall not apply to any expenditure for the acquisition or 

21 improvement of land, or for the acquisition or improve22 ment of property to be used in connection with the re23 search or experimentation and of a character which is sub24 ject to the allowance under section 167 (relating to allow25 ance for depreciation, etc.) or section 611 (relating to alVerDate Sep 11 2014 05:11 Sep 15, 2023 Jkt 039200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S2823.IS S2823

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1 lowance for depletion); but for purposes of this section al2 lowances under section 167, and allowances under section 

3 611, shall be considered as expenditures. 

4 ‘‘(d) EXPLORATION EXPENDITURES.—This section 

5 shall not apply to any expenditure paid or incurred for 

6 the purpose of ascertaining the existence, location, extent, 

7 or quality of any deposit of ore or other mineral (including 

8 oil and gas). 

9 ‘‘(e) FOREIGN ADVERSARIES.—This section shall not 

10 apply to any expenditure which is attributable to research 

11 or experimentation conducted in any covered nation (as 

12 defined in section 4872(d)(2) of title 10, United States 

13 Code). 

14 ‘‘(f) ONLY REASONABLE RESEARCH EXPENDITURES

15 ELIGIBLE.—This section shall apply to a research or ex16 perimental expenditure only to the extent that the amount 

17 thereof is reasonable under the circumstances. 

18 ‘‘(g) CROSS REFERENCES.— 

19 ‘‘(1) For adjustments to basis of property for 

20 amounts allowed as deductions as deferred expenses 

21 under subsection (b), see section 1016(a)(14). 

22 ‘‘(2) For election of 10-year amortization of ex23 penditures allowable as a deduction under subsection 

24 (a), see section 59(e).’’. 


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

2 for part VI of subchapter B of chapter 1 is amended by 

3 striking the item relating to section 174 and inserting the 

4 following new item: 

‘‘Sec. 174. Research and experimental expenditures’’. 

5 (c) CONFORMING AMENDMENTS.— 

6 (1) Section 41(d)(1)(A) is amended by striking 

7 ‘‘specified research or experimental expenditures 

8 under section 174’’ and inserting ‘‘expenses under 

9 section 174’’. 

10 (2) Section 280C(c) is amended to read as fol11 lows: 

12 ‘‘(c) CREDIT FOR INCREASING RESEARCH ACTIVI13 TIES.— 

14 ‘‘(1) IN GENERAL.—No deduction shall be al15 lowed for that portion of the qualified research ex16 penses (as defined in section 41(b)) or basic re17 search expenses (as defined in section 41(e)(2)) oth18 erwise allowable as a deduction for the taxable year 

19 which is equal to the amount of the credit deter20 mined for such taxable year under section 41(a). 

21 ‘‘(2) SIMILAR RULE WHERE TAXPAYER CAP22 ITALIZES RATHER THAN DEDUCTS EXPENSES.—If— 

23 ‘‘(A) the amount of the credit determined 

24 for the taxable year under section 41(a)(1), ex25 ceeds 


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1 ‘‘(B) the amount allowable as a deduction 

2 for such taxable year for qualified research ex3 penses or basic research expenses (determined 

4 without regard to paragraph (1)), 

5 the amount chargeable to capital account for the 

6 taxable year for such expenses shall be reduced by 

7 the amount of such excess. 

8 ‘‘(3) ELECTION OF REDUCED CREDIT.— 

9 ‘‘(A) IN GENERAL.—In the case of any 

10 taxable year for which an election is made 

11 under this paragraph— 

12 ‘‘(i) paragraphs (1) and (2) shall not 

13 apply, and 

14 ‘‘(ii) the amount of the credit under 

15 section 41(a) shall be the amount deter16 mined under subparagraph (B). 

17 ‘‘(B) AMOUNT OF REDUCED CREDIT.—The 

18 amount of credit determined under this sub19 paragraph for any taxable year shall be the 

20 amount equal to the excess of— 

21 ‘‘(i) the amount of credit determined 

22 under section 41(a) without regard to this 

23 paragraph, over 

24 ‘‘(ii) the product of— 


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1 ‘‘(I) the amount described in 

2 clause (i), and 

3 ‘‘(II) the rate of tax under sec4 tion 11(b). 

5 ‘‘(C) ELECTION.—An election under this 

6 paragraph for any taxable year shall be made 

7 not later than the time for filing the return of 

8 tax for such year (including extensions), shall 

9 be made on such return, and shall be made in 

10 such manner as the Secretary may prescribe. 

11 Such an election, once made, shall be irrev12 ocable. 

13 ‘‘(4) CONTROLLED GROUPS.—Paragraph (3) of 

14 subsection (b) shall apply for purposes of this sub15 section.’’. 

16 (d) EFFECTIVE DATE.—The amendments made by 

17 this section shall apply to amounts paid or incurred in tax18 able years beginning after the date of enactment of this 

19 Act. 

20 SEC. 3. EXPANDING REFUNDABLE RESEARCH CREDIT FOR 

21 NEW AND SMALL BUSINESSES. 

22 (a) INCREASING CAP ON REFUNDABLE CREDIT.— 

23 (1) IN GENERAL.—Subclause (I) of section 

24 41(h)(4)(B)(i) of the Internal Revenue Code of 1986 


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1 is amended by striking ‘‘$250,000’’ and inserting 

2 ‘‘the applicable amount’’. 

3 (2) APPLICABLE AMOUNT.—Subclause (II) of 

4 section 41(h)(4)(B)(i) of such Code is amended to 

5 read as follows: 

6 ‘‘(II) APPLICABLE AMOUNT.— 

7 For purposes of subclause (I), the ap8 plicable amount is— 

9 ‘‘(aa) in the case of any tax10 able year beginning after Decem11 ber 31, 2022, and before Janu12 ary 1, 2024, $500,000, 

13 ‘‘(bb) in the case of any tax14 able year beginning after Decem15 ber 31, 2023, and before Janu16 ary 1, 2025, $525,000, 

17 ‘‘(cc) in the case of any tax18 able year beginning after Decem19 ber 31, 2024, and before Janu20 ary 1, 2026, $550,000, 

21 ‘‘(dd) in the case of any tax22 able year beginning after Decem23 ber 31, 2025, and before Janu24 ary 1, 2027, $575,000, 


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1 ‘‘(ee) in the case of any tax2 able year beginning after Decem3 ber 31, 2026, and before Janu4 ary 1, 2028, $600,000, 

5 ‘‘(ff) in the case of any tax6 able year beginning after Decem7 ber 31, 2027, and before Janu8 ary 1, 2029, $625,000, 

9 ‘‘(gg) in the case of any tax10 able year beginning after Decem11 ber 31, 2028, and before Janu12 ary 1, 2030, $650,000, 

13 ‘‘(hh) in the case of any tax14 able year beginning after Decem15 ber 31, 2029, and before Janu16 ary 1, 2031, $675,000, 

17 ‘‘(ii) in the case of any tax18 able year beginning after Decem19 ber 31, 2030, and before Janu20 ary 1, 2032, $700,000, 

21 ‘‘(jj) in the case of any tax22 able year beginning after Decem23 ber 31, 2031, and before Janu24 ary 1, 2033, $725,000, and 


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1 ‘‘(kk) in the case of any tax2 able year beginning after Decem3 ber 31, 2032, $750,000.’’. 

4 (3) CONFORMING AMENDMENTS.— 

5 (A) Clause (ii) of section 41(h)(5)(B) of 

6 such Code is amended by striking ‘‘each of the 

7 $250,000 amounts’’ and inserting ‘‘the applica8 ble amount’’. 

9 (B) Section 3111(f) of such Code is 

10 amended— 

11 (i) in paragraph (1)— 

12 (I) by striking ‘‘(applied without 

13 regard to subclause (II) thereof), 

14 and’’ and inserting a period, 

15 (II) by striking subparagraph 

16 (B), and 

17 (III) by striking ‘‘for a taxable 

18 year’’ and all that follows through ‘‘al19 lowed as a credit’’ and inserting ‘‘for 

20 a taxable year, there shall be allowed 

21 as a credit’’, 

22 (ii) in paragraph (2)— 

23 (I) by striking ‘‘paragraph 

24 (1)(A)’’ and inserting ‘‘paragraph 

25 (1)’’, and 


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1 (II) by striking ‘‘, and the credit 

2 allowed by paragraph (1)(B) shall not 

3 exceed the tax imposed by subsection 

4 (b) for any calendar quarter,’’, and 

5 (iii) in paragraph (4)— 

6 (I) by striking ‘‘credits’’ and in7 serting ‘‘credit’’, and 

8 (II) by striking ‘‘or (b)’’. 

9 (b) EXTENSION OF ELIGIBILITY AND APPLICABILITY

10 OF ELECTION.— 

11 (1) STARTUP DATE.—Subclause (II) of section 

12 41(h)(3)(A)(i) of the Internal Revenue Code of 1986 

13 is amended by striking ‘‘5-taxable-year period’’ and 

14 inserting ‘‘8-taxable-year period’’. 

15 (2) EXTENSION OF LIMITATION ON ELEC16 TION.—Clause (ii) of section 41(h)(4)(B) of such 

17 Code is amended by striking ‘‘5 or more’’ and in18 serting ‘‘8 or more’’. 

19 (c) GROSS RECEIPTS TEST.—Clause (i) of section 

20 41(h)(3)(A) of the Internal Revenue Code of 1986 is 

21 amended— 

22 (1) by striking ‘‘$5,000,000’’ in subclause (I) 

23 and inserting ‘‘$15,000,000’’, and 


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1 (2) by striking ‘‘gross receipts’’ in subclause 

2 (II) and inserting ‘‘gross receipts in excess of 

3 $25,000’’. 

4 (d) EFFECTIVE DATE.—The amendments made by 

5 this section shall apply to taxable years beginning after 

6 December 31, 2022. 

7 SEC. 4. INCREASING ACCESS TO THE RESEARCH CREDIT 

8 FOR STARTUPS. 

9 (a) IN GENERAL.—Paragraph (4) of section 41(c) of 

10 the Internal Revenue Code of 1986 is amended by adding 

11 at the end the following new subparagraph: 

12 ‘‘(D) SPECIAL RULES FOR QUALIFIED

13 SMALL BUSINESSES.—In the case of a qualified 

14 small business (as defined in subsection 

15 (h)(3))— 

16 ‘‘(i) subparagraph (A) shall be applied 

17 by substituting ‘20 percent’ for ‘14 per18 cent’, and 

19 ‘‘(ii) if subparagraph (B) applies to 

20 such taxpayer, at the election of the tax21 payer— 

22 ‘‘(I) subparagraph (B)(ii) shall 

23 be applied by substituting ‘10 percent’ 

24 for ‘6 percent’, or 


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1 ‘‘(II) in lieu of applying subpara2 graph (B), the average under sub3 paragraph (A) shall be determined by 

4 disregarding any taxable year in the 

5 3-year period described in such sub6 paragraph in which there were no 

7 qualified research expenses.’’. 

8 (b) EFFECTIVE DATE.—The amendment made by 

9 this section shall apply to taxable years beginning after 

10 the date of the enactment of this Act. 

Æ 


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