I 

111TH CONGRESS 

2D SESSION H. R. 6165 

To amend the Internal Revenue Code of 1986 to provide incentives for 

life sciences research. 

IN THE HOUSE OF REPRESENTATIVES 

SEPTEMBER 22, 2010 

Ms. SCHWARTZ (for herself, Mr. PASCRELL, Mr. BRADY of Texas, and Mr. 

NUNES) 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 

incentives for life sciences research. 

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 ‘‘Life Sciences Jobs and 

5 Investment Act of 2010’’. 

6 SEC. 2. INCREASED CREDIT FOR INITIAL LIFE SCIENCES 

7 RESEARCH. 

8 (a) IN GENERAL.—Subsection (h) of section 41 of the 

9 Internal Revenue Code of 1986 is amended by redesigVerDate Mar 15 2010 04:30 Sep 23, 2010 Jkt 089200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H6165.IH H6165

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1 nating subsection (h) as subsection (i) and inserting after 

2 subsection (g) the following new subsection: 

3 ‘‘(h) SPECIAL RULES FOR INCREASED INITIAL LIFE

4 SCIENCES RESEARCH.— 

5 ‘‘(1) IN GENERAL.—In the case of qualified ini6 tial life sciences research expenses for any taxable 

7 year with respect to which the taxpayer elects the 

8 application of this subsection— 

9 ‘‘(A) INCREASED CREDIT.—Subsection (a) 

10 shall be applied by substituting ‘40 percent’ for 

11 ‘20 percent’. 

12 ‘‘(B) AMOUNTS PAID FOR QUALIFIED LIFE

13 SCIENCES RESEARCH TO CERTAIN RESEARCH

14 INCUBATORS, ELIGIBLE SMALL BUSINESSES, 

15 UNIVERSITIES, AND FEDERAL LABORA16 TORIES.—Subsection (b)(3)(A) shall be applied 

17 by substituting ‘100 percent’ for ‘65 percent’, 

18 in the case of amounts paid or incurred to a 

19 qualified research incubator, or to persons de20 scribed in subclause (I), (II), or (III) of sub21 section (b)(3)(D)(i), for qualified life sciences 

22 research. 

23 ‘‘(C) ALTERNATIVE SIMPLIFIED CREDIT IN

24 CASE OF INITIAL QUALIFIED LIFE SCIENCE RE25 SEARCH.— 


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1 ‘‘(i) Subsection (c)(5)(A) shall be ap2 plied by substituting ‘28 percent’ for ‘14 

3 percent’, and 

4 ‘‘(ii) subsection (c)(5)(B) shall be ap5 plied by substituting ‘12 percent’ for ‘6 

6 percent’. 

7 ‘‘(2) DEFINITIONS.—For purposes of this sub8 section— 

9 ‘‘(A) QUALIFIED INITIAL LIFE SCIENCES

10 RESEARCH EXPENSES.—The term ‘qualified ini11 tial life sciences research expenses’ means so 

12 much of the amounts taken into account under 

13 subsection (a) as are attributable to qualified 

14 life sciences research and do not exceed 

15 $150,000,000. 

16 ‘‘(B) QUALIFIED LIFE SCIENCES RE17 SEARCH.—The term ‘qualified life sciences re18 search’ means any qualified research with re19 spect to the branch of knowledge or study of bi20 ology, biochemistry, biophysics, bioengineering, 

21 microbiology, genetics, or physiology (in each 

22 case as such knowledge or study relates to 

23 human beings), except that the term does not 

24 include sociology or psychology. 


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1 ‘‘(C) QUALIFIED RESEARCH INCUBATOR.— 

2 The term ‘qualified research incubator’ means 

3 any entity created by and operated under State 

4 law exclusively to conduct qualified life sciences 

5 research on behalf of the taxpayer and 1 or 

6 more unrelated taxpayers. 

7 ‘‘(3) COORDINATION WITH 965A.—This sub8 section shall not apply with respect to any taxpayer 

9 for any taxable year for which an election is in effect 

10 under section 965A (relating to limited deduction for 

11 life sciences jobs and investment in United States). 

12 ‘‘(4) ELECTION.—Any election under this sub13 section shall be made in such manner as may be pre14 scribed by the Secretary, and shall be made with re15 spect to a taxable year not later than the due date 

16 (including extensions of time) for filing the tax17 payer’s return for such taxable year. 

18 ‘‘(5) TERMINATION.—This subsection shall not 

19 apply to any taxable year beginning after December 

20 31, 2015.’’. 

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

22 this section shall apply to taxable years beginning after 

23 the date of the enactment of this Act. 


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1 SEC. 3. INCENTIVES TO INVEST IN LIFE SCIENCES JOBS, 

2 RESEARCH, AND FACILITIES. 

3 (a) IN GENERAL.—Subpart F of part III of sub4 chapter N of chapter 1 of the Internal Revenue Code of 

5 1986 (relating to controlled foreign corporations) is 

6 amended by adding at the end the following new section: 

7 ‘‘SEC. 965A. LIMITED DEDUCTION FOR LIFE SCIENCES JOBS 

8 AND INVESTMENT IN UNITED STATES. 

9 ‘‘(a) DEDUCTION.— 

10 ‘‘(1) IN GENERAL.—In the case of a corpora11 tion which is a United States shareholder and for 

12 which the election under this section is in effect for 

13 the taxable year, there shall be allowed as a deduc14 tion an amount equal to 100 percent of the cash 

15 dividends which are received during such taxable 

16 year by such shareholder from controlled foreign cor17 porations. 

18 ‘‘(2) DIVIDENDS PAID INDIRECTLY FROM CON19 TROLLED FOREIGN CORPORATIONS.—If, within the 

20 taxable year for which the election under this section 

21 is in effect, a United States shareholder receives a 

22 cash distribution from a controlled foreign corpora23 tion which is excluded from gross income under sec24 tion 959(a), such distribution shall be treated for 

25 purposes of this section as a cash dividend to the ex26 tent of any amount included in income by such 


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1 United States shareholder under section 

2 951(a)(1)(A), including as a result of any cash divi3 dend during such taxable year to— 

4 ‘‘(A) such controlled foreign corporation 

5 from another controlled foreign corporation that 

6 is in a chain of ownership described in section 

7 958(a), or 

8 ‘‘(B) any other controlled foreign corpora9 tion in such chain of ownership from another 

10 controlled foreign corporation in such chain of 

11 ownership, but only to the extent of cash dis12 tributions described in section 959(b) which are 

13 made during such taxable year to the controlled 

14 foreign corporation from which such United 

15 States shareholder received such distribution. 

16 ‘‘(b) LIMITATIONS.— 

17 ‘‘(1) IN GENERAL.—The amount of dividends 

18 taken into account under subsection (a) shall not ex19 ceed the lesser of— 

20 ‘‘(A) $150,000,000, or 

21 ‘‘(B) the amount shown on the applicable 

22 financial statement as earnings permanently re23 invested outside the United States. 

24 The amounts described in subparagraph (B) shall be 

25 treated as being zero if there is no such statement 


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1 or such statement fails to show a specific amount of 

2 such earnings. 

3 ‘‘(2) REQUIREMENT TO INVEST IN LIFE

4 SCIENCES.—Subsection (a) shall not apply to any 

5 dividend received by a United States shareholder un6 less the amount of the dividend is invested solely in 

7 the United States and solely for the purpose of— 

8 ‘‘(A) the new hiring of additional sci9 entists, researchers, and comparable personnel 

10 engaged in qualified life sciences research, 

11 ‘‘(B) payments to universities, qualified re12 search incubators, and other qualified organiza13 tions which are used by such organizations to 

14 conduct qualified life sciences research, or 

15 ‘‘(C) the building or leasing of new facili16 ties to be used in the conduct of qualified life 

17 sciences research. 

18 ‘‘(3) PROHIBITED USES.—Subsection (a) shall 

19 not apply to any dividend any amount of which is 

20 used by the taxpayer to pay remuneration for serv21 ices of any covered employee (as defined in section 

22 162(m)(3)), to pay dividends to the shareholders of 

23 the taxpayer, or to pay interest or principal on any 

24 debt security of the taxpayer. 


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1 ‘‘(4) NO RESERVE.—Subsection (a) shall not 

2 apply to any dividend if the taxpayer’s compliance 

3 with this section is uncertain and requires a provi4 sion or reserve on the taxpayer’s applicable financial 

5 statements. 

6 ‘‘(5) SEPARATE ACCOUNT.—Subsection (a) 

7 shall not apply to any dividend unless the amount of 

8 the dividend is held in a separate account, trust, or 

9 other arrangement that segregates the amount from 

10 other funds of the taxpayer until the amount is used 

11 solely for the purposes described in paragraph (2). 

12 ‘‘(c) SUBSTANTIATION OF COMPLIANCE.— 

13 ‘‘(1) IN GENERAL.—The taxpayer must sub14 stantiate its compliance with subsection (b) with 

15 written documents and such other credible evidence 

16 as the Secretary may reasonably require, and shall 

17 bear the burden of proof with respect to such sub18 stantiation. 

19 ‘‘(2) CERTIFICATION.—The chief executive offi20 cer and the independent director serving as head of 

21 the audit committee of the taxpayer, or comparable 

22 corporate officials, shall attest in writing to the tax23 payer’s compliance with each of the requirements of 

24 subsection (b). 


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1 ‘‘(d) DEFINITIONS AND SPECIAL RULES.—For pur2 poses of this section— 

3 ‘‘(1) QUALIFIED LIFE SCIENCES RESEARCH; 

4 QUALIFIED RESEARCH INCUBATOR.—The terms 

5 ‘qualified life sciences research’ and ‘qualified re6 search incubator’ shall have the respective meanings 

7 given such terms by section 41(d). 

8 ‘‘(2) The term ‘qualified organization’ means 

9 any organization described in subparagraph (A), 

10 (B), or (C) of section 41(e)(6). 

11 ‘‘(3) The term ‘applicable financial statement’ 

12 and ‘dividend’ shall have the respective meanings 

13 given such terms by section 965(c). 

14 ‘‘(4) Rules similar to the rules of paragraph (3) 

15 of section 965(b) shall apply for purposes of this 

16 section, except that such paragraph shall be applied 

17 by substituting ‘December 31, 2009’ for ‘October 3, 

18 2004’. 

19 ‘‘(5) Rules similar to the rules of paragraphs 

20 (4) and (5) of section 965(c) shall apply for pur21 poses of this section, except that such paragraph (5) 

22 shall be applied— 

23 ‘‘(A) by substituting ‘$150,000,000’ for 

24 ‘$500,000,000’, and 


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1 ‘‘(B) without regard to the reference to 

2 subparagraph (C) of section 965(b)(1). 

3 ‘‘(e) DENIAL OF FOREIGN TAX CREDIT.— 

4 ‘‘(1) No credit shall be allowed under section 

5 901 for any taxes paid or accrued (or treated as 

6 paid or accrued) with respect to any dividend with 

7 respect to which an election is in effect under this 

8 section and which is included in income under sec9 tion 951(a)(1)(A). 

10 ‘‘(2) No deduction shall be allowed under this 

11 chapter for any tax for which credit is not allowable 

12 by reason of paragraph (1). 

13 ‘‘(f) ELECTION.—Any election under this section 

14 shall be made in such manner as may be prescribed by 

15 the Secretary, and shall be made with respect to a taxable 

16 year not later than the due date (including extensions of 

17 time) for filing the taxpayer’s return for such taxable year. 

18 ‘‘(g) TERMINATION.—This section shall not apply to 

19 any taxable year beginning after December 31, 2015.’’. 

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

21 for subpart F of part III of subchapter N of chapter 1 

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

‘‘Sec. 965A. Limited deduction for life sciences jobs and investment in United 

States.’’. 


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

2 this section shall apply to taxable years beginning after 

3 the date of enactment. 

Æ 


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