II 

114TH CONGRESS 

1ST SESSION H. R. 880 

IN THE SENATE OF THE UNITED STATES 

MAY 21, 2015 

Received 

AN ACT 

To amend the Internal Revenue Code of 1986 to simplify 

and make permanent the research credit. 

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


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1 SECTION 1. SHORT TITLE. 

2 This Act may be cited as the ‘‘American Research 

3 and Competitiveness Act of 2015’’. 

4 SEC. 2. RESEARCH CREDIT SIMPLIFIED AND MADE PERMA5 NENT. 

6 (a) IN GENERAL.—Section 41(a) of the Internal Rev7 enue Code of 1986 is amended to read as follows: 

8 ‘‘(a) IN GENERAL.—For purposes of section 38, the 

9 research credit determined under this section for the tax10 able year shall be an amount equal to the sum of— 

11 ‘‘(1) 20 percent of so much of the qualified re12 search expenses for the taxable year as exceeds 50 

13 percent of the average qualified research expenses 

14 for the 3 taxable years preceding the taxable year 

15 for which the credit is being determined, 

16 ‘‘(2) 20 percent of so much of the basic re17 search payments for the taxable year as exceeds 50 

18 percent of the average basic research payments for 

19 the 3 taxable years preceding the taxable year for 

20 which the credit is being determined, plus 

21 ‘‘(3) 20 percent of the amounts paid or in22 curred by the taxpayer in carrying on any trade or 

23 business of the taxpayer during the taxable year (in24 cluding as contributions) to an energy research con25 sortium for energy research.’’. 


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1 (b) REPEAL OF TERMINATION.—Section 41 of such 

2 Code is amended by striking subsection (h). 

3 (c) CREDIT ALLOWED AGAINST ALTERNATIVE MIN4 IMUM TAX IN CASE OF ELIGIBLE SMALL BUSINESS.— 

5 Section 38(c)(4)(B) of such Code is amended by redesig6 nating clauses (ii) through (ix) as clauses (iii) through (x), 

7 respectively, and by inserting after clause (i) the following 

8 new clause: 

9 ‘‘(ii) the credit determined under sec10 tion 41 for the taxable year with respect to 

11 an eligible small business (as defined in 

12 paragraph (5)(C), after application of rules 

13 similar to the rules of paragraph (5)(D)),’’. 

14 (d) CONFORMING AMENDMENTS.— 

15 (1) Section 41(c) of such Code is amended to 

16 read as follows: 

17 ‘‘(c) DETERMINATION OF AVERAGE RESEARCH EX18 PENSES FOR PRIOR YEARS.— 

19 ‘‘(1) SPECIAL RULE IN CASE OF NO QUALIFIED

20 RESEARCH EXPENDITURES IN ANY OF 3 PRECEDING

21 TAXABLE YEARS.—In any case in which the taxpayer 

22 has no qualified research expenses in any one of the 

23 3 taxable years preceding the taxable year for which 

24 the credit is being determined, the amount deter25 mined under subsection (a)(1) for such taxable year 


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1 shall be equal to 10 percent of the qualified research 

2 expenses for the taxable year. 

3 ‘‘(2) CONSISTENT TREATMENT OF EX4 PENSES.— 

5 ‘‘(A) IN GENERAL.—Notwithstanding 

6 whether the period for filing a claim for credit 

7 or refund has expired for any taxable year 

8 taken into account in determining the average 

9 qualified research expenses, or average basic re10 search payments, taken into account under sub11 section (a), the qualified research expenses and 

12 basic research payments taken into account in 

13 determining such averages shall be determined 

14 on a basis consistent with the determination of 

15 qualified research expenses and basic research 

16 payments, respectively, for the credit year. 

17 ‘‘(B) PREVENTION OF DISTORTIONS.—The 

18 Secretary may prescribe regulations to prevent 

19 distortions in calculating a taxpayer’s qualified 

20 research expenses or basic research payments 

21 caused by a change in accounting methods used 

22 by such taxpayer between the current year and 

23 a year taken into account in determining the 

24 average qualified research expenses or average 


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1 basic research payments taken into account 

2 under subsection (a).’’. 

3 (2) Section 41(e) of such Code is amended— 

4 (A) by striking all that precedes paragraph 

5 (6) and inserting the following: 

6 ‘‘(e) BASIC RESEARCH PAYMENTS.—For purposes of 

7 this section— 

8 ‘‘(1) IN GENERAL.—The term ‘basic research 

9 payment’ means, with respect to any taxable year, 

10 any amount paid in cash during such taxable year 

11 by a corporation to any qualified organization for 

12 basic research but only if— 

13 ‘‘(A) such payment is pursuant to a writ14 ten agreement between such corporation and 

15 such qualified organization, and 

16 ‘‘(B) such basic research is to be per17 formed by such qualified organization. 

18 ‘‘(2) EXCEPTION TO REQUIREMENT THAT RE19 SEARCH BE PERFORMED BY THE ORGANIZATION.— 

20 In the case of a qualified organization described in 

21 subparagraph (C) or (D) of paragraph (3), subpara22 graph (B) of paragraph (1) shall not apply.’’, 

23 (B) by redesignating paragraphs (6) and 

24 (7) as paragraphs (3) and (4), respectively, and 


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1 (C) in paragraph (4), as so redesignated, 

2 by striking subparagraphs (B) and (C) and by 

3 redesignating subparagraphs (D) and (E) as 

4 subparagraphs (B) and (C), respectively. 

5 (3) Section 41(f)(3) of such Code is amended— 

6 (A)(i) by striking ‘‘, and the gross re7 ceipts’’ in subparagraph (A)(i) and all that fol8 lows through ‘‘determined under clause (iii)’’, 

9 (ii) by striking clause (iii) of subparagraph 

10 (A) and redesignating clauses (iv), (v), and (vi), 

11 thereof, as clauses (iii), (iv), and (v), respec12 tively, 

13 (iii) by striking ‘‘and (iv)’’ each place it 

14 appears in subparagraph (A)(iv) (as so redesig15 nated) and inserting ‘‘and (iii)’’, 

16 (iv) by striking subclause (IV) of subpara17 graph (A)(iv) (as so redesignated), by striking 

18 ‘‘, and’’ at the end of subparagraph (A)(iv)(III) 

19 (as so redesignated) and inserting a period, and 

20 by adding ‘‘and’’ at the end of subparagraph 

21 (A)(iv)(II) (as so redesignated), 

22 (v) by striking ‘‘(A)(vi)’’ in subparagraph 

23 (B) and inserting ‘‘(A)(v)’’, 

24 (vi) by striking ‘‘(A)(iv)(II)’’ in subpara25 graph (B)(i)(II) and inserting ‘‘(A)(iii)(II)’’, 


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1 (B) by striking ‘‘, and the gross receipts of 

2 the predecessor,’’ in subparagraph (A)(iv)(II) 

3 (as so redesignated), 

4 (C) by striking ‘‘, and the gross receipts 

5 of,’’ in subparagraph (B), 

6 (D) by striking ‘‘, or gross receipts of,’’ in 

7 subparagraph (B)(i)(I), and 

8 (E) by striking subparagraph (C) and in9 serting the following new subparagraph: 

10 ‘‘(C) ADJUSTMENTS FOR BASIC RESEARCH

11 PAYMENTS.—In the case of basic research pay12 ments, rules similar to the rules of subpara13 graph (A) and (B) shall apply.’’. 

14 (4) Section 41(f)(4) of such Code is amended 

15 by striking ‘‘and gross receipts’’ and inserting ‘‘and 

16 basic research payments’’. 

17 (5) Section 45C(b)(1) of such Code is amended 

18 by striking subparagraph (D). 

19 (6) Section 45C(c)(2) of such Code is amend20 ed— 

21 (A) by striking ‘‘base period research ex22 penses’’ and inserting ‘‘average qualified re23 search expenses’’, and 


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1 (B) by striking ‘‘BASE PERIOD RESEARCH

2 EXPENSES’’ in the heading and inserting ‘‘AV3 ERAGE QUALIFIED RESEARCH EXPENSES’’. 

4 (7) Section 280C(c) of such Code is amended— 

5 (A) by striking ‘‘basic research expenses 

6 (as defined in section 41(e)(2))’’ in paragraph 

7 (1) and inserting ‘‘basic research payments (as 

8 defined in section 41(e)(1))’’, and 

9 (B) by striking ‘‘basic research expenses’’ 

10 in paragraph (2)(B) and inserting ‘‘basic re11 search payments’’. 

12 (e) EFFECTIVE DATE.— 

13 (1) IN GENERAL.—Except as provided in para14 graph (2), the amendments made by this section 

15 shall apply to taxable years beginning after Decem16 ber 31, 2014. 

17 (2) SUBSECTION (b).—The amendment made 

18 by subsection (b) shall apply to amounts paid or in19 curred after December 31, 2014. 


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1 SEC. 3. BUDGETARY EFFECTS. 

2 The budgetary effects of this Act shall not be entered 

3 on either PAYGO scorecard maintained pursuant to sec4 tion 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. 


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