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[Congressional Bills 111th Congress]
[From the U.S. Government Publishing Office]
[H.R. 5767 Introduced in House (IH)]

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.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Innovative Technologies Investment 
Incentive Act of 2010''.

SEC. 2. CREDIT FOR INVESTMENTS IN HIGH TECHNOLOGY AND BIOTECHNOLOGY 
              BUSINESS CONCERNS DEVELOPING INNOVATIVE TECHNOLOGIES.

    (a) In General.--Subpart B of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986 is amended by adding after section 
30D the following new section:

``SEC. 30E. INVESTMENTS IN HIGH TECHNOLOGY AND BIOTECHNOLOGY BUSINESS 
              CONCERNS DEVELOPING INNOVATIVE TECHNOLOGIES.

    ``(a) Allowance of Credit.--There shall be allowed as a credit 
against the tax imposed by this chapter for the taxable year an amount 
equal to 25 percent of the qualified equity investments made by the 
taxpayer during the taxable year.
    ``(b) Limitations.--
            ``(1) National limitation.--
                    ``(A) In general.--There is a national innovative 
                technology investment credit limitation of 
                $500,000,000.
                    ``(B) Allocation of limitation and issuance of 
                certificate.--Under regulations, the Administrator of 
                the Small Business Administration shall make 
                allocations of the national innovative technology 
                investment credit limitation among qualified equity 
                investments and shall issue an innovative technology 
                investment credit certificate for each such allocation.
                    ``(C) Per business investment limitation.--The 
                amount of the national innovative technology investment 
                credit limitation allocated to a qualified technology 
                small business concern shall not exceed 50 percent of 
                the total amount awarded to such concern under the 
                Small Business Innovation Research (SBIR) program under 
                section 9 of the Small Business Act.
                    ``(D) Certificate required for credit 
                eligibility.--The amount allowed as a credit under 
                subsection (a) with respect to any qualified equity 
                investment shall not exceed the amount of the national 
                innovative technology investment credit limitation 
                allocated to such investment and shown on the 
                innovative technology investment credit certificate 
                pursuant to subparagraph (E)(ii).
                    ``(E) Innovative technology investment credit 
                certificate.--For purposes of this subsection, an 
                innovative technology investment credit certificate is 
                a certificate which--
                            ``(i) certifies the amount of the qualified 
                        equity investment,
                            ``(ii) relates such investment to an award 
                        under the Small Business Innovation Research 
                        (SBIR) program under section 9 of the Small 
                        Business Act which qualifies for purposes of 
                        this section, and
                            ``(iii) contains such other information as 
                        the Administrator, in consultation with the 
                        Secretary, determines to be necessary or 
                        appropriate to carry out this section.
                The amount of any award under the Small Business 
                Innovation Research program, once related under 
                subparagraph (B) with a qualified equity investment, 
                may not thereafter be available for purposes of this 
                section.
            ``(2) Limitation based on percentage ownership.--The amount 
        of the credit under subsection (a) allowed to the taxpayer with 
        respect to a qualified equity investment in a qualified 
        technology small business concern shall be zero if, after such 
        investment, the taxpayer owns (within the meaning of section 
        318) 50 percent or more of--
                    ``(A) in the case that such concern is a 
                corporation, the outstanding stock of the corporation 
                (either by vote or value), and
                    ``(B) in the case that such concern is not a 
                corporation, the capital and profits interests of such 
                concern.
    ``(c) Qualified Equity Investment.--For purposes of this section--
            ``(1) In general.--The term `qualified equity investment' 
        means any equity investment in a qualified technology small 
        business concern made during the investment period if such 
        investment is acquired by the taxpayer at its original issue 
        (directly or through an underwriter) solely in exchange for 
        cash.
            ``(2) Equity investment.--The term `equity investment' 
        means--
                    ``(A) any stock (other than nonqualified preferred 
                stock, as defined in section 351(g)(2)) in an entity 
                which is a corporation, and
                    ``(B) any capital or profits interest in an entity 
                which is not a corporation.
            ``(3) Qualified technology small business concern.--The 
        term `qualified technology small business concern' means, with 
        respect to any taxable year, any small business concern (as 
        defined in section 3 of the Small Business Act) if such 
        concern--
                    ``(A) is engaged in a high technology or 
                biotechnology trade or business, and
                    ``(B) employs an average of fewer than 500 
                employees on business days during such year.
            ``(4) Investment period.--The term `investment period' 
        means the period--
                    ``(A) beginning on the date the qualified 
                technology small business concern first receives funds 
                pursuant to a funding agreement under the Small 
                Business Innovation Research (SBIR) program under 
                section 9 of the Small Business Act, and
                    ``(B) ending on the last day of the 18-month period 
                beginning on the date on which such funding agreement 
                ceases to be in effect.
    ``(d) Application With Other Credits.--
            ``(1) Business credit treated as part of general business 
        credit.--Except as provided in paragraph (2), the credit which 
        would be allowed under subsection (a) for any taxable year 
        (determined without regard to this subsection) shall be treated 
        as a credit listed in section 38(b) for such taxable year (and 
        not allowed under subsection (a)).
            ``(2) Personal credit.--
                    ``(A) In general.--In the case of an individual who 
                elects the application of this paragraph, for purposes 
                of this title, the credit allowed under subsection (a) 
                for any taxable year (determined after application of 
                paragraph (1)) shall be treated as a credit allowable 
                under subpart A for such taxable year.
                    ``(B) Limitation based on amount of tax.--In the 
                case of a taxable year to which section 26(a)(2) does 
                not apply, the credit allowed under subpart A for any 
                taxable year (determined after application of paragraph 
                (1)) by reason of subparagraph (A) shall not exceed the 
                excess of--
                            ``(i) the sum of the regular tax liability 
                        (as defined in section 26(b)) plus the tax 
                        imposed by section 55, over
                            ``(ii) the sum of the credits allowable 
                        under subpart A (other than this section) and 
                        section 27 for the taxable year.
                    ``(C) Carryforward of unused credit.--If the credit 
                allowable under subsection (a) by reason of 
                subparagraph (A) exceeds the limitation imposed by 
                section 26(a)(1) or subparagraph (B), whichever is 
                applicable, for such taxable year, reduced by the sum 
                of the credits allowable under subpart A (other than 
                this section) for such taxable year, such excess shall 
                be carried to each of the succeeding 20 taxable years 
                to the extent that such unused credit may not be taken 
                into account under subsection (a) by reason of 
                subparagraph (A) for a prior taxable year because of 
                such limitation.
    ``(e) Special Rules.--
            ``(1) Related parties.--For purposes of this section--
                    ``(A) In general.--All related persons shall be 
                treated as 1 person.
                    ``(B) Related persons.--A person shall be treated 
                as related to another person if the relationship 
                between such persons would result in the disallowance 
                of losses under section 267 or 707(b).
            ``(2) Basis.--For purposes of this subtitle, the basis of 
        any investment with respect to which a credit is allowable 
        under this section shall be reduced by the amount of such 
        credit so allowed.
            ``(3) Recapture.--The Secretary shall, by regulations, 
        provide for recapturing the benefit of any credit allowable 
        under subsection (a) with respect to any qualified equity 
        investment which is held by the taxpayer less than 3 years, 
        except that no benefit shall be recaptured in the case of--
                    ``(A) transfer of such investment by reason of the 
                death of the taxpayer,
                    ``(B) transfer between spouses, or
                    ``(C) transfer incident to the divorce (as defined 
                in section 1041) of such taxpayer.
    ``(f) Regulations.--The Secretary shall prescribe such regulations 
as may be appropriate to carry out this section, including 
regulations--
            ``(1) which prevent the abuse of the purposes of this 
        section, and
            ``(2) which impose appropriate reporting requirements.''.
    (b) Credit Made Part of General Business Credit.--Subsection (b) of 
section 38 of such Code (relating to current year business credit) is 
amended by striking ``plus'' at the end of paragraph (35), by striking 
the period at the end of paragraph (36) and inserting ``, plus'', and 
by adding at the end the following new paragraph:
            ``(37) the portion of the qualified equity investment 
        credit to which section 30E(d)(1) applies.''.
    (c) Conforming Amendments.--
            (1) Section 1016(a) of such Code is amended by striking 
        ``and'' at the end of paragraph (36), by striking the period at 
        the end of paragraph (37) and inserting ``, and'', and by 
        inserting after paragraph (37) the following new paragraph:
            ``(38) to the extent provided in section 30E(d)(2).''.
            (2) Section 24(b)(3)(B) of such Code is amended by striking 
        ``and 30D'' and inserting ``30D, and 30E''.
            (3) Section 25(e)(1)(C)(ii) of such Code is amended by 
        inserting ``30E,'' after ``30D,''.
            (4) Section 25A(i)(5)(B) of such Code is amended by 
        striking ``and 30D'' and inserting ``, 30D, and 30E''.
            (5) Section 25A(i)(5) of such Code is amended by inserting 
        ``30E,'' after ``30D,''.
            (6) Section 25B(g)(2) of such Code is amended by striking 
        ``and 30D'' and inserting ``30D, and 30E''.
            (7) Section 26(a)(1) of such Code is amended by striking 
        ``and 30D'' and inserting ``30D, and 30E''.
            (8) Section 30(c)(2)(B)(ii) of such Code is amended by 
        striking ``and 30D'' and inserting ``, 30D, and 30E''.
            (9) Section 30B(g)(2)(B)(ii) of such Code is amended by 
        striking ``and 30D'' and inserting ``30D, and 30E''.
            (10) Section 30D(d)(2)(B)(ii) of such Code is amended by 
        striking ``and 25D'' and inserting ``, 25D, and 30E''.
            (11) Section 904(i) of such Code is amended by striking 
        ``and 30D'' and inserting ``30D, and 30E''.
            (12) Section 1400C(d)(2) of such Code is amended by 
        striking ``and 30D'' and inserting ``30D, and 30E''.
    (d) Clerical Amendment.--The table of sections for subpart B of 
part IV of subchapter A of chapter 1 of such Code is amended by 
inserting after the item relating to section 30D the following new 
item:

``Sec. 30E. Investments in high technology and biotechnology business 
                            concerns developing innovative 
                            technologies.''.
    (e) Effective Date.--The amendments made by this section shall 
apply to investments made after December 31, 2009, in taxable years 
ending after such date.
                                 <all>
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