II 

112TH CONGRESS 

2D SESSION S. 3307 

To amend the Internal Revenue Code of 1986 to make permanent the credit 

for increasing research activities, to increase such credit for amounts 

paid or incurred for qualified research occurring in the United States, 

and to increase the domestic production activities deduction for the 

manufacture of property substantially all of the research and development 

of which occurred in the United States, and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

JUNE 18, 2012 

Mr. BROWN of Ohio (for himself and 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 make 

permanent the credit for increasing research activities, 

to increase such credit for amounts paid or incurred 

for qualified research occurring in the United States, 

and to increase the domestic production activities deduction for the manufacture of property substantially all 

of the research and development of which occurred in 

the United States, and for other purposes. 

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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•S 3307 IS

1 SECTION 1. SHORT TITLE. 

2 This Act may be cited as the ‘‘21st Century Invest3 ment Act of 2012’’. 

4 SEC. 2. RESEARCH CREDIT MADE PERMANENT. 

5 (a) IN GENERAL.—Section 41 of the Internal Rev6 enue Code of 1986 is amended by striking subsection (h). 

7 (b) CONFORMING AMENDMENT.—Paragraph (1) of 

8 section 45C(b) of such Code is amended by striking sub9 paragraph (D). 

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

11 this subsection shall apply to amounts paid or incurred 

12 after December 31, 2011. 

13 SEC. 3. INCREASE IN SIMPLIFIED RESEARCH CREDIT. 

14 (a) IN GENERAL.—Subparagraph (A) of section 

15 41(c)(5) of the Internal Revenue Code of 1986 is amended 

16 by striking ‘‘14 percent (12 percent in the case of taxable 

17 years ending before January 1, 2009)’’ and inserting ‘‘20 

18 percent’’. 

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

20 this section shall apply to taxable years beginning after 

21 December 31, 2011. 

22 SEC. 4. INCREASE IN RESEARCH CREDIT FOR RESEARCH 

23 WITH UNITED STATES BUSINESSES. 

24 (a) IN GENERAL.—Section 41 of the Internal Rev25 enue Code of 1986, as amended by section 2 of this Act, 

26 is amended by redesignating subsection (h) as subsection 


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•S 3307 IS

1 (i) and by inserting after subsection (g) the following new 

2 subsection: 

3 ‘‘(h) SPECIAL RULE FOR RESEARCH WITH UNITED

4 STATES MANUFACTURING BUSINESS.— 

5 ‘‘(1) IN GENERAL.—If the taxpayer elects the 

6 application of this subsection, subsection (a)(1) shall 

7 be applied by substituting ‘25 percent’ for ‘20 per8 cent’ with respect to qualified United States re9 search expenses. 

10 ‘‘(2) QUALIFIED UNITED STATES RESEARCH

11 EXPENSES.—For purposes of this subsection, the 

12 term ‘qualified United States research expenses’ 

13 means qualified research expenses for qualified re14 search, substantially all of which occurs in the 

15 United States. 

16 ‘‘(3) SEPARATE APPLICATION OF SECTION.—In 

17 the case of any election of the application of this 

18 subsection, this section shall be applied separately 

19 with respect to qualified United States research ex20 penses.’’. 

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

22 this section shall apply to amounts paid or incurred for 

23 taxable years beginning after the date of the enactment 

24 of this Act. 


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•S 3307 IS

1 SEC. 5. INCREASE IN DOMESTIC PRODUCTION ACTIVITIES 

2 DEDUCTION FOR MANUFACTURED PROP3 ERTY RESEARCHED AND DEVELOPED IN 

4 UNITED STATES. 

5 (a) IN GENERAL.—Subsection (d) of section 199 of 

6 the Internal Revenue Code of 1986 is amended by redesig7 nating paragraph (10) as paragraph (11) and by inserting 

8 after paragraph (9) the following new paragraph: 

9 ‘‘(10) SPECIAL RULE FOR CERTAIN MANUFAC10 TURING.— 

11 ‘‘(A) IN GENERAL.—In the case qualified 

12 production activities income attributable to the 

13 manufacture or production of qualifying pro14 duction property substantially all of the re15 search and development of which occurred in 

16 the United States, subsection (a) shall be ap17 plied by substituting ‘15 percent’ for ‘9 per18 cent’. 

19 ‘‘(B) SPECIAL RULE WHEN TAXABLE IN20 COME USED TO DETERMINE DEDUCTION.—In 

21 the case of any taxable year for which the tax22 payer’s qualified production activities income 

23 exceeds the taxpayer’s taxable income (deter24 mined without regard to this section), the 

25 amount of taxable income to which the 15 per26 cent amount in subparagraph (A) applies under 


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1 subsection (a)(1) shall be an amount equal to 

2 the amount which bears the same ratio to such 

3 taxable income (as so determined) as— 

4 ‘‘(i) the amount of qualified produc5 tion activities income of the taxpayer for 

6 the taxable year which is attributable to 

7 the manufacture or production of quali8 fying production property substantially all 

9 of the research and development with re10 spect to which occurred in the United 

11 States, bears to 

12 ‘‘(ii) all qualified production activities 

13 income of the taxpayer for the taxable 

14 year. 

15 ‘‘(C) TERMINATION.—This paragraph shall 

16 not apply to taxable years beginning after De17 cember 31, 2020.’’. 

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

19 this section shall apply to taxable years beginning after 

20 the date of the enactment of this Act. 

Æ 


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