I 

111TH CONGRESS 

1ST SESSION H. R. 4244 

To amend the Internal Revenue Code of 1986 to provide a simplified research 

tax credit for small businesses. 

IN THE HOUSE OF REPRESENTATIVES 

DECEMBER 8, 2009 

Mr. SCHOCK (for himself and Mr. NYE) 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 provide 

a simplified research tax credit for small businesses. 

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 ‘‘Small Business Re5 search and Experimentation Simplification Act of 2009’’. 

6 SEC. 2. RESEARCH TAX CREDIT. 

7 (a) IN GENERAL.—Subpart B of part IV of sub8 chapter A of chapter 1 of the Internal Revenue Code of 

9 1986 is amended by adding at the end the following new 

10 section: 


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1 ‘‘SEC. 30E. SIMPLIFIED SMALL BUSINESS RESEARCH CRED2 IT. 

3 ‘‘(a) IN GENERAL.—In the case of an eligible small 

4 business, there shall be allowed as a credit against the tax 

5 imposed by this chapter for the taxable year an amount 

6 equal to 20 percent of the qualified research expenses of 

7 the taxpayer for the taxable year. 

8 ‘‘(b) QUALIFIED RESEARCH EXPENDITURES.—For 

9 purposes of this section, the term ‘qualified research ex10 penses’ has the meaning given such term by section 41(b), 

11 except that in lieu of applying paragraph (2)(C) thereof 

12 (defining supplies) the term ‘supplies’ means any tangible 

13 property other than land. 

14 ‘‘(c) ELIGIBLE SMALL BUSINESS.—For purposes of 

15 this section— 

16 ‘‘(1) IN GENERAL.—The term ‘eligible small 

17 business’ means with respect to any taxable year be18 ginning in a calendar year, any employer if such em19 ployer employed an average of 500 or fewer employ20 ees on business days during the preceding calendar 

21 year. For purposes of the preceding sentence, a pre22 ceding calendar year may be taken into account only 

23 if the employer was in existence throughout such 

24 year. 

25 ‘‘(2) EMPLOYERS NOT IN EXISTENCE IN PRE26 CEDING YEAR.—In the case of an employer which 


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1 was not in existence throughout the preceding cal2 endar year, the determination under paragraph (1) 

3 shall be based on the average number of employees 

4 that it is reasonably expected such employer will em5 ploy on business days in the current calendar year. 

6 ‘‘(d) LIMITATION BASED ON AMOUNT OF TAX.—In 

7 the case of a taxable year to which section 26(a)(2) does 

8 not apply, the credit allowed under subsection (a) for any 

9 taxable year shall not exceed the excess of— 

10 ‘‘(1) the sum of the regular tax liability (as de11 fined in section 26(b)) plus the tax imposed by sec12 tion 55, over 

13 ‘‘(2) the sum of the credits allowable under this 

14 subpart (other than this section and sections 23, 

15 25D, 30, 30B, and 30D) and section 27 for the tax16 able year. 

17 ‘‘(e) PORTION OF CREDIT REFUNDABLE.— 

18 ‘‘(1) IN GENERAL.—The aggregate credits al19 lowed to a taxpayer under subpart C shall be in20 creased by an amount equal to 25 percent of the ex21 cess (if any) of— 

22 ‘‘(A) the sum of the regular tax liability 

23 (as defined in section 26(b)) plus the tax im24 posed by section 55, over 


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1 ‘‘(B) the amount of the credit allowable 

2 under subsection (a) (determined without re3 gard to this subsection and section 26(a) or 

4 subsection (d), as the case may be). 

5 The amount of the credit allowed under this sub6 section shall not be treated as a credit allowed under 

7 this subpart and shall reduce the amount of credit 

8 otherwise allowable under subsection (a) without re9 gard to section 26(a)(2) or subsection (d), as the 

10 case may be. 

11 ‘‘(2) APPLICATION OF SUBSECTION.—This sub12 section shall apply only with respect to the first 5 

13 taxable years of an eligible small business (including 

14 the taxable years of any predecessor in interest). 

15 ‘‘(f) SPECIAL RULES.—For purposes of this sec16 tion— 

17 ‘‘(1) CONTROLLED GROUPS.—All persons treat18 ed as a single employer under subsection (a) or (b) 

19 of section 52 or subsection (m) or (o) of section 414 

20 shall be treated as a single person. 

21 ‘‘(2) DENIAL OF DOUBLE BENEFIT.— 

22 ‘‘(A) COORDINATION WITH OTHER PROVI23 SIONS.—Any amount taken into account under 

24 subsection (a) shall not be taken into account 


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1 in determining any deduction or other credit al2 lowed under this chapter. 

3 ‘‘(B) REDUCTION IN BASIS.—For purposes 

4 of this subtitle, the basis of any property for 

5 which a credit is allowable under subsection (a) 

6 shall be reduced by the amount of such credit 

7 so allowed and attributable to such property. 

8 ‘‘(3) SPECIAL RULE FOR PASS-THRU OF CRED9 IT.—In the case of an individual who— 

10 ‘‘(A) owns an interest in an unincorporated 

11 trade or business, 

12 ‘‘(B) is a partner in a partnership, 

13 ‘‘(C) is a beneficiary of an estate or trust, 

14 or 

15 ‘‘(D) is a shareholder in an S corporation, 

16 the amount determined under subsection (a) for any 

17 taxable year shall not exceed an amount (separately 

18 computed with respect to such person’s interest in 

19 such trade or business or entity) equal to the 

20 amount of tax attributable to that portion of a per21 son’s taxable income which is allocable or 

22 apportionable to the person’s interest in such trade 

23 or business or entity. 

24 ‘‘(g) TERMINATION.—Subsection (a) shall not apply 

25 to taxable years beginning after December 31, 2015.’’. 


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1 (b) CONFORMING AMENDMENTS.— 

2 (1) Section 24(b)(3)(B) of such Code is amend3 ed by striking ‘‘and 30D’’ and inserting ‘‘30D, and 

4 30E’’. 

5 (2) Section 25(e)(1)(C)(ii) of such Code is 

6 amended by inserting ‘‘30E,’’ after ‘‘30D,’’. 

7 (3) Section 25A(i)(5)(B) of such Code is 

8 amended by striking ‘‘and 30D’’ and inserting 

9 ‘‘30D, and 30E’’. 

10 (4) Section 25B(g)(2) of such Code is amended 

11 by striking ‘‘and 30D’’ and inserting ‘‘30D, and 

12 30E’’. 

13 (5) Section 26(a)(1) of such Code is amended 

14 by striking ‘‘and 30D’’ and inserting ‘‘30D, and 

15 30E’’. 

16 (6) Section 904(i) of such Code is amended by 

17 striking ‘‘and 30D’’ and inserting ‘‘30D, and 30E’’. 

18 (7) Section 1400C(d)(2) of such Code is 

19 amended by inserting ‘‘, and 30E’’ after ‘‘30D’’. 

20 (c) CLERICAL AMENDMENT.—The table of sections 

21 for subpart B of part IV of subchapter A of chapter 1 

22 of such Code is amended by adding at the end the fol23 lowing new item: 

‘‘Sec. 30E. Simplified small business research credit.’’. 


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

2 this section shall apply to taxable years beginning after 

3 December 31, 2009. 

4 SEC. 3. GAO STUDY ON SIMPLIFIED SMALL BUSINESS RE5 SEARCH CREDIT. 

6 Not later than June 30, 2015, the Comptroller Gen7 eral, in consultation with the Secretary of the Treasury, 

8 shall submit to the Committee on Small Business of the 

9 House of Representatives and the Committee on Small 

10 Business and Entrepreneurship of the Senate a report de11 tailing the Comptroller General’s analysis of the useful12 ness and effectiveness of, and any recommended changes 

13 with respect to, the simplified small business research 

14 credit determined under section 30E of the Internal Rev15 enue Code of 1986. 

Æ 


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