I 

111TH CONGRESS 

2D SESSION H. R. 5767 

To amend the Internal Revenue Code of 1986 to allow a credit for equity 

investments in high technology and biotechnology small business concerns 

developing innovative technologies that stimulate private sector job 

growth. 

IN THE HOUSE OF REPRESENTATIVES 

JULY 15, 2010 

Mr. VAN HOLLEN (for himself, Mr. RUPPERSBERGER, Mr. POLIS of Colorado, 

Ms. MCCOLLUM, and Ms. SCHWARTZ) 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 allow a 

credit for equity investments in high technology and biotechnology small business concerns developing innovative 

technologies that stimulate private sector job growth. 

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 ‘‘Innovative Tech5 nologies Investment Incentive Act of 2010’’. 


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1 SEC. 2. CREDIT FOR INVESTMENTS IN HIGH TECHNOLOGY 

2 AND BIOTECHNOLOGY BUSINESS CONCERNS 

3 DEVELOPING INNOVATIVE TECHNOLOGIES. 

4 (a) IN GENERAL.—Subpart B of part IV of sub5 chapter A of chapter 1 of the Internal Revenue Code of 

6 1986 is amended by adding after section 30D the fol7 lowing new section: 

8 ‘‘SEC. 30E. INVESTMENTS IN HIGH TECHNOLOGY AND BIO9 TECHNOLOGY BUSINESS CONCERNS DEVEL10 OPING INNOVATIVE TECHNOLOGIES. 

11 ‘‘(a) ALLOWANCE OF CREDIT.—There shall be al12 lowed as a credit against the tax imposed by this chapter 

13 for the taxable year an amount equal to 25 percent of the 

14 qualified equity investments made by the taxpayer during 

15 the taxable year. 

16 ‘‘(b) LIMITATIONS.— 

17 ‘‘(1) NATIONAL LIMITATION.— 

18 ‘‘(A) IN GENERAL.—There is a national in19 novative technology investment credit limitation 

20 of $500,000,000. 

21 ‘‘(B) ALLOCATION OF LIMITATION AND

22 ISSUANCE OF CERTIFICATE.—Under regula23 tions, the Administrator of the Small Business 

24 Administration shall make allocations of the na25 tional innovative technology investment credit 

26 limitation among qualified equity investments 


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1 and shall issue an innovative technology invest2 ment credit certificate for each such allocation. 

3 ‘‘(C) PER BUSINESS INVESTMENT LIMITA4 TION.—The amount of the national innovative 

5 technology investment credit limitation allocated 

6 to a qualified technology small business concern 

7 shall not exceed 50 percent of the total amount 

8 awarded to such concern under the Small Busi9 ness Innovation Research (SBIR) program 

10 under section 9 of the Small Business Act. 

11 ‘‘(D) CERTIFICATE REQUIRED FOR CREDIT

12 ELIGIBILITY.—The amount allowed as a credit 

13 under subsection (a) with respect to any quali14 fied equity investment shall not exceed the 

15 amount of the national innovative technology 

16 investment credit limitation allocated to such 

17 investment and shown on the innovative tech18 nology investment credit certificate pursuant to 

19 subparagraph (E)(ii). 

20 ‘‘(E) INNOVATIVE TECHNOLOGY INVEST21 MENT CREDIT CERTIFICATE.—For purposes of 

22 this subsection, an innovative technology invest23 ment credit certificate is a certificate which— 

24 ‘‘(i) certifies the amount of the quali25 fied equity investment, 


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1 ‘‘(ii) relates such investment to an 

2 award under the Small Business Innova3 tion Research (SBIR) program under sec4 tion 9 of the Small Business Act which 

5 qualifies for purposes of this section, and 

6 ‘‘(iii) contains such other information 

7 as the Administrator, in consultation with 

8 the Secretary, determines to be necessary 

9 or appropriate to carry out this section. 

10 The amount of any award under the Small 

11 Business Innovation Research program, once 

12 related under subparagraph (B) with a qualified 

13 equity investment, may not thereafter be avail14 able for purposes of this section. 

15 ‘‘(2) LIMITATION BASED ON PERCENTAGE OWN16 ERSHIP.—The amount of the credit under subsection 

17 (a) allowed to the taxpayer with respect to a quali18 fied equity investment in a qualified technology 

19 small business concern shall be zero if, after such in20 vestment, the taxpayer owns (within the meaning of 

21 section 318) 50 percent or more of— 

22 ‘‘(A) in the case that such concern is a 

23 corporation, the outstanding stock of the cor24 poration (either by vote or value), and 


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1 ‘‘(B) in the case that such concern is not 

2 a corporation, the capital and profits interests 

3 of such concern. 

4 ‘‘(c) QUALIFIED EQUITY INVESTMENT.—For pur5 poses of this section— 

6 ‘‘(1) IN GENERAL.—The term ‘qualified equity 

7 investment’ means any equity investment in a quali8 fied technology small business concern made during 

9 the investment period if such investment is acquired 

10 by the taxpayer at its original issue (directly or 

11 through an underwriter) solely in exchange for cash. 

12 ‘‘(2) EQUITY INVESTMENT.—The term ‘equity 

13 investment’ means— 

14 ‘‘(A) any stock (other than nonqualified 

15 preferred stock, as defined in section 351(g)(2)) 

16 in an entity which is a corporation, and 

17 ‘‘(B) any capital or profits interest in an 

18 entity which is not a corporation. 

19 ‘‘(3) QUALIFIED TECHNOLOGY SMALL BUSINESS

20 CONCERN.—The term ‘qualified technology small 

21 business concern’ means, with respect to any taxable 

22 year, any small business concern (as defined in sec23 tion 3 of the Small Business Act) if such concern— 

24 ‘‘(A) is engaged in a high technology or 

25 biotechnology trade or business, and 


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1 ‘‘(B) employs an average of fewer than 

2 500 employees on business days during such 

3 year. 

4 ‘‘(4) INVESTMENT PERIOD.—The term ‘invest5 ment period’ means the period— 

6 ‘‘(A) beginning on the date the qualified 

7 technology small business concern first receives 

8 funds pursuant to a funding agreement under 

9 the Small Business Innovation Research 

10 (SBIR) program under section 9 of the Small 

11 Business Act, and 

12 ‘‘(B) ending on the last day of the 18- 

13 month period beginning on the date on which 

14 such funding agreement ceases to be in effect. 

15 ‘‘(d) APPLICATION WITH OTHER CREDITS.— 

16 ‘‘(1) BUSINESS CREDIT TREATED AS PART OF

17 GENERAL BUSINESS CREDIT.—Except as provided in 

18 paragraph (2), the credit which would be allowed 

19 under subsection (a) for any taxable year (deter20 mined without regard to this subsection) shall be 

21 treated as a credit listed in section 38(b) for such 

22 taxable year (and not allowed under subsection (a)). 

23 ‘‘(2) PERSONAL CREDIT.— 

24 ‘‘(A) IN GENERAL.—In the case of an indi25 vidual who elects the application of this paraVerDate Mar 15 2010 02:39 Jul 17, 2010 Jkt 089200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H5767.IH H5767

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1 graph, for purposes of this title, the credit al2 lowed under subsection (a) for any taxable year 

3 (determined after application of paragraph (1)) 

4 shall be treated as a credit allowable under sub5 part A for such taxable year. 

6 ‘‘(B) LIMITATION BASED ON AMOUNT OF

7 TAX.—In the case of a taxable year to which 

8 section 26(a)(2) does not apply, the credit al9 lowed under subpart A for any taxable year (de10 termined after application of paragraph (1)) by 

11 reason of subparagraph (A) shall not exceed the 

12 excess of— 

13 ‘‘(i) the sum of the regular tax liabil14 ity (as defined in section 26(b)) plus the 

15 tax imposed by section 55, over 

16 ‘‘(ii) the sum of the credits allowable 

17 under subpart A (other than this section) 

18 and section 27 for the taxable year. 

19 ‘‘(C) CARRYFORWARD OF UNUSED CRED20 IT.—If the credit allowable under subsection (a) 

21 by reason of subparagraph (A) exceeds the limi22 tation imposed by section 26(a)(1) or subpara23 graph (B), whichever is applicable, for such tax24 able year, reduced by the sum of the credits al25 lowable under subpart A (other than this secVerDate Mar 15 2010 02:39 Jul 17, 2010 Jkt 089200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H5767.IH H5767

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1 tion) for such taxable year, such excess shall be 

2 carried to each of the succeeding 20 taxable 

3 years to the extent that such unused credit may 

4 not be taken into account under subsection (a) 

5 by reason of subparagraph (A) for a prior tax6 able year because of such limitation. 

7 ‘‘(e) SPECIAL RULES.— 

8 ‘‘(1) RELATED PARTIES.—For purposes of this 

9 section— 

10 ‘‘(A) IN GENERAL.—All related persons 

11 shall be treated as 1 person. 

12 ‘‘(B) RELATED PERSONS.—A person shall 

13 be treated as related to another person if the 

14 relationship between such persons would result 

15 in the disallowance of losses under section 267 

16 or 707(b). 

17 ‘‘(2) BASIS.—For purposes of this subtitle, the 

18 basis of any investment with respect to which a cred19 it is allowable under this section shall be reduced by 

20 the amount of such credit so allowed. 

21 ‘‘(3) RECAPTURE.—The Secretary shall, by reg22 ulations, provide for recapturing the benefit of any 

23 credit allowable under subsection (a) with respect to 

24 any qualified equity investment which is held by the 


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1 taxpayer less than 3 years, except that no benefit 

2 shall be recaptured in the case of— 

3 ‘‘(A) transfer of such investment by reason 

4 of the death of the taxpayer, 

5 ‘‘(B) transfer between spouses, or 

6 ‘‘(C) transfer incident to the divorce (as 

7 defined in section 1041) of such taxpayer. 

8 ‘‘(f) REGULATIONS.—The Secretary shall prescribe 

9 such regulations as may be appropriate to carry out this 

10 section, including regulations— 

11 ‘‘(1) which prevent the abuse of the purposes of 

12 this section, and 

13 ‘‘(2) which impose appropriate reporting re14 quirements.’’. 

15 (b) CREDIT MADE PART OF GENERAL BUSINESS

16 CREDIT.—Subsection (b) of section 38 of such Code (re17 lating to current year business credit) is amended by strik18 ing ‘‘plus’’ at the end of paragraph (35), by striking the 

19 period at the end of paragraph (36) and inserting ‘‘, plus’’, 

20 and by adding at the end the following new paragraph: 

21 ‘‘(37) the portion of the qualified equity invest22 ment credit to which section 30E(d)(1) applies.’’. 

23 (c) CONFORMING AMENDMENTS.— 

24 (1) Section 1016(a) of such Code is amended 

25 by striking ‘‘and’’ at the end of paragraph (36), by 


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1 striking the period at the end of paragraph (37) and 

2 inserting ‘‘, and’’, and by inserting after paragraph 

3 (37) the following new paragraph: 

4 ‘‘(38) to the extent provided in section 

5 30E(d)(2).’’. 

6 (2) Section 24(b)(3)(B) of such Code is amend7 ed by striking ‘‘and 30D’’ and inserting ‘‘30D, and 

8 30E’’. 

9 (3) Section 25(e)(1)(C)(ii) of such Code is 

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

11 (4) Section 25A(i)(5)(B) of such Code is 

12 amended by striking ‘‘and 30D’’ and inserting ‘‘, 

13 30D, and 30E’’. 

14 (5) Section 25A(i)(5) of such Code is amended 

15 by inserting ‘‘30E,’’ after ‘‘30D,’’. 

16 (6) Section 25B(g)(2) of such Code is amended 

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

18 30E’’. 

19 (7) Section 26(a)(1) of such Code is amended 

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

21 30E’’. 

22 (8) Section 30(c)(2)(B)(ii) of such Code is 

23 amended by striking ‘‘and 30D’’ and inserting ‘‘, 

24 30D, and 30E’’. 


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1 (9) Section 30B(g)(2)(B)(ii) of such Code is 

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

3 ‘‘30D, and 30E’’. 

4 (10) Section 30D(d)(2)(B)(ii) of such Code is 

5 amended by striking ‘‘and 25D’’ and inserting ‘‘, 

6 25D, and 30E’’. 

7 (11) Section 904(i) of such Code is amended by 

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

9 (12) Section 1400C(d)(2) of such Code is 

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

11 ‘‘30D, and 30E’’. 

12 (d) CLERICAL AMENDMENT.—The table of sections 

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

14 of such Code is amended by inserting after the item relat15 ing to section 30D the following new item: 

‘‘Sec. 30E. Investments in high technology and biotechnology business concerns 

developing innovative technologies.’’. 

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

17 this section shall apply to investments made after Decem18 ber 31, 2009, in taxable years ending after such date. 

Æ 


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