IB 

Union Calendar No. 79 

114TH CONGRESS 

1ST SESSION H. R. 880 

[Report No. 114–113] 

To amend the Internal Revenue Code of 1986 to simplify and make 

permanent the research credit. 

IN THE HOUSE OF REPRESENTATIVES 

FEBRUARY 11, 2015 

Mr. BRADY of Texas (for himself, Mr. LARSON of Connecticut, Mr. SAM

JOHNSON of Texas, Mr. SCHOCK, Mr. MCCAUL, and Mr. NEAL) introduced the following bill; which was referred to the Committee on Ways 

and Means 

MAY 14, 2015 

Additional sponsors: Mr. MARCHANT, Mr. YOUNG of Indiana, Mr. REED, Mrs. 

COMSTOCK, Mr. BLUM, Mr. PAULSEN, Mrs. MIMI WALTERS of California, Ms. SINEMA, Mr. POLIQUIN, Mr. COSTELLO of Pennsylvania, Mr. 

ROUZER, Mr. JONES, Mr. ABRAHAM, Mr. GROTHMAN, Mr. TROTT, Mr. 

MOONEY of West Virginia, Mr. CURBELO of Florida, Mr. EMMER of Minnesota, Mr. MACARTHUR, Mr. KNIGHT, Mr. DOLD, Mrs. WAGNER, Mr. 

CARTER of Georgia, Mr. NUNES, Mr. TIBERI, Mr. VALADAO, and Mr. 

SMITH of Missouri 

MAY 14, 2015 

Reported with an amendment, committed to the Committee of the Whole 

House on the State of the Union, and ordered to be printed 

[Strike out all after the enacting clause and insert the part printed in italic] 

[For text of introduced bill, see copy of bill as introduced on February 11, 2015] 

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A BILL 

To amend the Internal Revenue Code of 1986 to simplify 

and make permanent the research credit. 

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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 ‘‘American Research and 

5 Competitiveness Act of 2015’’. 

6 SEC. 2. RESEARCH CREDIT SIMPLIFIED AND MADE PERMA7 NENT. 

8 (a) IN GENERAL.—Section 41(a) of the Internal Rev9 enue Code of 1986 is amended to read as follows: 

10 ‘‘(a) IN GENERAL.—For purposes of section 38, the re11 search credit determined under this section for the taxable 

12 year shall be an amount equal to the sum of— 

13 ‘‘(1) 20 percent of so much of the qualified re14 search expenses for the taxable year as exceeds 50 per15 cent of the average qualified research expenses for the 

16 3 taxable years preceding the taxable year for which 

17 the credit is being determined, 

18 ‘‘(2) 20 percent of so much of the basic research 

19 payments for the taxable year as exceeds 50 percent 

20 of the average basic research payments for the 3 tax21 able years preceding the taxable year for which the 

22 credit is being determined, plus 

23 ‘‘(3) 20 percent of the amounts paid or incurred 

24 by the taxpayer in carrying on any trade or business 

25 of the taxpayer during the taxable year (including as 

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1 contributions) to an energy research consortium for 

2 energy research.’’. 

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

4 Code is amended by striking subsection (h). 

5 (c) CREDIT ALLOWED AGAINST ALTERNATIVE MIN6 IMUM TAX IN CASE OF ELIGIBLE SMALL BUSINESS.—Sec7 tion 38(c)(4)(B) of such Code is amended by redesignating 

8 clauses (ii) through (ix) as clauses (iii) through (x), respec9 tively, and by inserting after clause (i) the following new 

10 clause: 

11 ‘‘(ii) the credit determined under sec12 tion 41 for the taxable year with respect to 

13 an eligible small business (as defined in 

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

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

16 (d) CONFORMING AMENDMENTS.— 

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

18 read as follows: 

19 ‘‘(c) DETERMINATION OF AVERAGE RESEARCH EX20 PENSES FOR PRIOR YEARS.— 

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

22 RESEARCH EXPENDITURES IN ANY OF 3 PRECEDING

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

24 has no qualified research expenses in any one of the 

25 3 taxable years preceding the taxable year for which 

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1 the credit is being determined, the amount determined 

2 under subsection (a)(1) for such taxable year shall be 

3 equal to 10 percent of the qualified research expenses 

4 for the taxable year. 

5 ‘‘(2) CONSISTENT TREATMENT OF EXPENSES.— 

6 ‘‘(A) IN GENERAL.—Notwithstanding wheth7 er the period for filing a claim for credit or re8 fund has expired for any taxable year taken into 

9 account in determining the average qualified re10 search expenses, or average basic research pay11 ments, taken into account under subsection (a), 

12 the qualified research expenses and basic research 

13 payments taken into account in determining 

14 such averages shall be determined on a basis con15 sistent with the determination of qualified re16 search expenses and basic research payments, re17 spectively, for the credit year. 

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

19 Secretary may prescribe regulations to prevent 

20 distortions in calculating a taxpayer’s qualified 

21 research expenses or basic research payments 

22 caused by a change in accounting methods used 

23 by such taxpayer between the current year and 

24 a year taken into account in determining the av25 erage qualified research expenses or average basic 

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1 research payments taken into account under sub2 section (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 written 

14 agreement between such corporation and such 

15 qualified organization, and 

16 ‘‘(B) such basic research is to be performed 

17 by such qualified organization. 

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

20 the case of a qualified organization described in sub21 paragraph (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, by 

2 striking subparagraphs (B) and (C) and by re3 designating subparagraphs (D) and (E) as sub4 paragraphs (B) and (C), respectively. 

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

6 (A)(i) by striking ‘‘, and the gross receipts’’ 

7 in subparagraph (A)(i) and all that follows 

8 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) (as 

19 so redesignated) and inserting a period, and by 

20 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) (as 

3 so redesignated), 

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

5 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 subparagraph 

13 (A) and (B) shall apply.’’. 

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

15 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 amended— 

20 (A) by striking ‘‘base period research ex21 penses’’ and inserting ‘‘average qualified re22 search expenses’’, and 

23 (B) by striking ‘‘BASE PERIOD RESEARCH

24 EXPENSES’’ in the heading and inserting ‘‘AVER25 AGE QUALIFIED RESEARCH EXPENSES’’. 

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

2 (A) by striking ‘‘basic research expenses (as 

3 defined in section 41(e)(2))’’ in paragraph (1) 

4 and inserting ‘‘basic research payments (as de5 fined in section 41(e)(1))’’, and 

6 (B) by striking ‘‘basic research expenses’’ in 

7 paragraph (2)(B) and inserting ‘‘basic research 

8 payments’’. 

9 (e) EFFECTIVE DATE.— 

10 (1) IN GENERAL.—Except as provided in para11 graph (2), the amendments made by this section shall 

12 apply to taxable years beginning after December 31, 

13 2014. 

14 (2) SUBSECTION (b).—The amendment made by 

15 subsection (b) shall apply to amounts paid or in16 curred after December 31, 2014. 

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Union Calendar No. 79 

114TH CONGRESS 

1ST SESSION H. R. 880 

[Report No. 114–113] 

A BILL 

To amend the Internal Revenue Code of 1986 to 

simplify and make permanent the research credit. 

MAY 14, 2015 

Reported with an amendment, committed to the Comand ordered to be printed mittee of the Whole House on the State of the Union, 

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