II 

110TH CONGRESS 

1ST SESSION S. 41 

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

America’s research competitiveness, and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

JANUARY 4, 2007 

Mr. BAUCUS 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 provide 

incentives to improve America’s research competitiveness, 

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, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Research Competitive5 ness Act of 2007’’. 

6 SEC. 2. SIMPLIFICATION OF RESEARCH AND DEVELOP7 MENT CREDIT. 

8 (a) SIMPLIFIED CREDIT FOR QUALIFIED RESEARCH

9 EXPENSES.— 


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1 (1) IN GENERAL.—Subsection (a) of section 41 

2 of the Internal Revenue Code of 1986 (relating to 

3 credit for increasing research activities) is amended 

4 to read as follows: 

5 ‘‘(a) DETERMINATION OF CREDIT.— 

6 ‘‘(1) IN GENERAL.—For purposes of section 38, 

7 the research credit determined under this section for 

8 the taxable year shall be equal to 20 percent of so 

9 much of the qualified research expenses for such 

10 taxable year as exceeds 50 percent of the average 

11 qualified research expenses for the 3 taxable years 

12 preceding the taxable year for which the credit is 

13 being determined. 

14 ‘‘(2) SPECIAL RULE IN CASE OF NO QUALIFIED

15 RESEARCH EXPENSES IN ANY OF 3 PRECEDING TAX16 ABLE YEARS.— 

17 ‘‘(A) TAXPAYERS TO WHICH PARAGRAPH

18 APPLIES.—The credit under this section shall 

19 be determined under this paragraph if the tax20 payer has no qualified research expenses in at 

21 least 1 of the 3 taxable years preceding the tax22 able year for which the credit is being deter23 mined. 

24 ‘‘(B) CREDIT RATE.—The credit deter25 mined under this paragraph shall be equal to 


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1 10 percent of the qualified research expenses 

2 for the taxable year.’’. 

3 (2) CONFORMING AMENDMENT.—Section 41 of 

4 such Code, as amended by section 104 of division A 

5 of the Tax Relief and Health Care Act of 2006, is 

6 amended by striking subsection (c). 

7 (b) UNIFORM REIMBURSEMENT RATES FOR ALL

8 CONTRACT RESEARCH EXPENSES OTHER THAN

9 AMOUNTS PAID FOR BASIC RESEARCH.— 

10 (1) IN GENERAL.—Section 41(b)(3) of the In11 ternal Revenue Code of 1986 (relating to contract 

12 research expenses) is amended— 

13 (A) by striking ‘‘65 percent’’ and inserting 

14 ‘‘80 percent’’, and 

15 (B) by striking subparagraphs (C) and 

16 (D). 

17 (2) BASIC RESEARCH PAYMENTS.—Section 

18 41(b) of such Code is amended by redesignating 

19 paragraph (4) as paragraph (5) and by inserting 

20 after paragraph (3) the following new paragraph: 

21 ‘‘(4) BASIC RESEARCH PAYMENTS.— 

22 ‘‘(A) IN GENERAL.—In the case of basic 

23 research payments by the taxpayer, paragraph 

24 (3)(A) shall be applied by substituting ‘100 per25 cent’ for ‘80 percent’. 


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1 ‘‘(B) BASIC RESEARCH PAYMENTS DE2 FINED.—For purposes of this paragraph— 

3 ‘‘(i) IN GENERAL.—The term ‘basic 

4 research payment’ means, with respect to 

5 any taxable year, any amount paid in cash 

6 during such taxable year by a corporation 

7 to any qualified organization for basic re8 search but only if— 

9 ‘‘(I) such payment is pursuant to 

10 a written agreement between such cor11 poration and such qualified organiza12 tion, and 

13 ‘‘(II) such basic research is to be 

14 performed by such qualified organiza15 tion. 

16 ‘‘(ii) EXCEPTION TO REQUIREMENT

17 THAT RESEARCH BE PERFORMED BY THE

18 ORGANIZATION.—In the case of a qualified 

19 organization described in clause (iii) or (iv) 

20 of subparagraph (C), subclause (II) of 

21 clause (i) shall not apply. 

22 ‘‘(C) QUALIFIED ORGANIZATION.—For 

23 purposes of this paragraph, the term ‘qualified 

24 organization’ means any of the following orga25 nizations: 


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1 ‘‘(i) EDUCATIONAL INSTITUTIONS.— 

2 Any educational organization which— 

3 ‘‘(I) is an institution of higher 

4 education (within the meaning of sec5 tion 3304(f)), and 

6 ‘‘(II) is described in section 

7 170(b)(1)(A)(ii). 

8 ‘‘(ii) CERTAIN SCIENTIFIC RESEARCH

9 ORGANIZATIONS.—Any organization not 

10 described in clause (i) which— 

11 ‘‘(I) is described in section 

12 501(c)(3) and is exempt from tax 

13 under section 501(a), 

14 ‘‘(II) is organized and operated 

15 primarily to conduct scientific re16 search, and 

17 ‘‘(III) is not a private founda18 tion. 

19 ‘‘(iii) SCIENTIFIC TAX-EXEMPT ORGA20 NIZATIONS.—Any organization which— 

21 ‘‘(I) is described in section 

22 501(c)(3) (other than a private foun23 dation) or section 501(c)(6), 

24 ‘‘(II) is exempt from tax under 

25 section 501(a), 


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1 ‘‘(III) is organized and operated 

2 primarily to promote scientific re3 search by qualified organizations de4 scribed in clause (i) pursuant to writ5 ten research agreements, and 

6 ‘‘(IV) currently expends substan7 tially all of its funds or substantially 

8 all of the basic research payments re9 ceived by it for grants to, or contracts 

10 for basic research with, an organiza11 tion described in clause (i). 

12 ‘‘(iv) CERTAIN GRANT ORGANIZA13 TIONS.—Any organization not described in 

14 clause (ii) or (iii) which— 

15 ‘‘(I) is described in section 

16 501(c)(3) and is exempt from tax 

17 under section 501(a) (other than a 

18 private foundation), 

19 ‘‘(II) is established and main20 tained by an organization established 

21 before July 10, 1981, which meets the 

22 requirements of subclause (I), 

23 ‘‘(III) is organized and operated 

24 exclusively for the purpose of making 

25 grants to organizations described in 


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1 clause (i) pursuant to written research 

2 agreements for purposes of basic re3 search, and 

4 ‘‘(IV) makes an election, rev5 ocable only with the consent of the 

6 Secretary, to be treated as a private 

7 foundation for purposes of this title 

8 (other than section 4940, relating to 

9 excise tax based on investment in10 come). 

11 ‘‘(D) DEFINITIONS AND SPECIAL RULES.— 

12 For purposes of this paragraph— 

13 ‘‘(i) BASIC RESEARCH.—The term 

14 ‘basic research’ means any original inves15 tigation for the advancement of scientific 

16 knowledge not having a specific commercial 

17 objective, except that such term shall not 

18 include— 

19 ‘‘(I) basic research conducted 

20 outside of the United States, and 

21 ‘‘(II) basic research in the social 

22 sciences, arts, or humanities. 

23 ‘‘(ii) TRADE OR BUSINESS QUALIFICA24 TION.—For purposes of applying para25 graph (1) to this paragraph, any basic reVerDate Aug 31 2005 23:27 Jan 09, 2007 Jkt 059200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\S41.IS S41

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1 search payments shall be treated as an 

2 amount paid in carrying on a trade or 

3 business of the taxpayer in the taxable 

4 year in which it is paid (without regard to 

5 the provisions of paragraph (3)(B)). 

6 ‘‘(iii) CERTAIN CORPORATIONS NOT

7 ELIGIBLE.—The term ‘corporation’ shall 

8 not include— 

9 ‘‘(I) an S corporation, 

10 ‘‘(II) a personal holding company 

11 (as defined in section 542), or 

12 ‘‘(III) a service organization (as 

13 defined in section 414(m)(3)).’’. 

14 (3) CONFORMING AMENDMENTS.— 

15 (A) Section 41 of such Code is amended by 

16 striking subsection (e). 

17 (B) Section 41(f) of such Code is amended 

18 by striking paragraph (6). 

19 (c) PERMANENT EXTENSION OF CREDIT.— 

20 (1) IN GENERAL.—Section 41 of the Internal 

21 Revenue Code of 1986 is amended by striking sub22 section (h). 

23 (2) CONFORMING AMENDMENT.—Paragraph (1) 

24 of section 45C(b) of such Code is amended by strik25 ing subparagraph (D). 


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1 (d) CONFORMING AMENDMENTS.— 

2 (1) Section 41 of the Internal Revenue Code of 

3 1986 is amended by redesignating subsections (d), 

4 (f), and (g) as subsections (c), (d), and (e), respec5 tively. 

6 (2) Paragraphs (2)(A) and (5) (as redesignated 

7 by subsection (b)(2)) of section 41(b) of such Code 

8 are each amended by striking ‘‘subsection (f)(1)’’ 

9 and inserting ‘‘subsection (d)(1)’’. 

10 (3) Sections 45C(d)(3), 45G(e)(2), and 

11 936(h)(5)(C)(i)(IV)(c) of such Code are each 

12 amended by striking ‘‘section 41(f)’’ and inserting 

13 ‘‘section 41(d)’’. 

14 (4) Section 54(l)(3)(A) of such Code is amend15 ed by striking ‘‘section 41(g)’’ and inserting ‘‘section 

16 41(e)’’. 

17 (5) Section 170(e)(4)(B)(i) of such Code is 

18 amended by striking ‘‘subparagraph (A) or subpara19 graph (B) of section 41(e)(6)’’ and inserting ‘‘clause 

20 (i) or (ii) of section 41(b)(4)(C)’’. 

21 (6) Sections 197(f)(1)(C), 197(f)(9)(C)(i)(II), 

22 and 280C(b)(3) of such Code are each amended by 

23 striking ‘‘section 41(f)(1)’’ and inserting ‘‘section 

24 41(d)(1)’’. 


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1 (7) Section 280C(b)(3) of such Code is amend2 ed by striking ‘‘section 41(f)(5)’’ and inserting ‘‘sec3 tion 41(d)(5)’’. 

4 (8) Section 280C(b)(3) of such Code is amend5 ed by striking ‘‘section 41(f)(1)(B)’’ and inserting 

6 ‘‘section 41(d)(1)(B)’’. 

7 (9) Section 280C(c)(1) of such Code is amend8 ed by striking ‘‘section 41(e)(2)’’ and inserting ‘‘sec9 tion 41(b)(4)(B)’’. 

10 (10) Section 280C(c)(2)(A) of such Code is 

11 amended by striking ‘‘section 41(a)(1)’’ and insert12 ing ‘‘section 41(a)’’. 

13 (11) Sections 936(j)(5)(D) and 965(c)(2)(C)(i) 

14 of such Code are each amended by striking ‘‘section 

15 41(f)(3)’’ and inserting ‘‘section 41(d)(3)’’. 

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

17 this section shall apply to taxable years beginning after 

18 December 31, 2007. 

19 (f) STUDY OF COMPLIANCE WITH SUBSTANTIATION

20 REQUIREMENTS.—The Secretary of the Treasury or his 

21 delegate shall, not later than 1 year after the date of the 

22 enactment of this Act, conduct a study of taxpayer compli23 ance with the substantiation requirements for claiming the 

24 credit allowed under section 41 of the Internal Revenue 

25 Code of 1986, including a study of— 


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1 (1) whether taxpayers maintain adequate record 

2 keeping to determine eligibility for, and correct 

3 amount of, the credit, 

4 (2) the impact of failure to comply with such 

5 requirements on the oversight and enforcement re6 sponsibilities of the Internal Revenue Service, and 

7 (3) the burdens imposed on other taxpayers by 

8 failure to comply with such requirements. 

9 The Secretary shall report the results of such study to 

10 the Committee on Ways and Means of the House of Rep11 resentatives and the Committee on Finance of the Senate, 

12 including any recommendations for administrative or leg13 islative actions which could be taken to improve compli14 ance with such requirements. 

15 SEC. 3. TAX CREDIT FOR INVESTMENTS IN SMALL TECH16 NOLOGY INNOVATION COMPANIES. 

17 (a) IN GENERAL.—Subpart D of part IV of sub18 chapter A of chapter 1 of the Internal Revenue Code of 

19 1986 is amended by adding at the end the following new 

20 section: 

21 ‘‘SEC. 45N. RESEARCH INVESTMENT TAX CREDIT. 

22 ‘‘(a) ALLOWANCE OF CREDIT.— 

23 ‘‘(1) IN GENERAL.—For purposes of section 38, 

24 in the case of a taxpayer who holds a qualified eq25 uity investment on a credit allowance date of such 


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1 investment which occurs during the taxable year, the 

2 research investment tax credit determined under this 

3 section for such taxable year is an amount equal to 

4 the 5 percent of the amount paid to the qualified re5 search entity for such investment at its original 

6 issue. 

7 ‘‘(2) CREDIT ALLOWANCE DATE.—For purposes 

8 of paragraph (1), the term ‘credit allowance date’ 

9 means, with respect to any qualified equity invest10 ment— 

11 ‘‘(A) the date on which such investment is 

12 initially made, and 

13 ‘‘(B) each of the 4 anniversary dates of 

14 such date thereafter. 

15 ‘‘(b) QUALIFIED EQUITY INVESTMENT.—For pur16 poses of this section— 

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

18 investment’ means any equity investment in a quali19 fied research entity if— 

20 ‘‘(A) such investment is acquired by the 

21 taxpayer at its original issue (directly or 

22 through an underwriter) solely in exchange for 

23 cash, 


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1 ‘‘(B) substantially all of such cash is used 

2 by the qualified research entity to make quali3 fied research investments, and 

4 ‘‘(C) such investment is designated for 

5 purposes of this section by the qualified re6 search entity. 

7 Such term shall not include any equity investment 

8 issued by a qualified research entity more than 5 

9 years after the date that such entity receives an allo10 cation under subsection (e). Any allocation not used 

11 within such 5-year period may be reallocated by the 

12 Secretary under subsection (e). 

13 ‘‘(2) LIMITATION.—The maximum amount of 

14 equity investments issued by a qualified research en15 tity which may be designated under paragraph 

16 (1)(C) by such entity shall not exceed the portion of 

17 the limitation amount allocated under subsection (f) 

18 to such entity. 

19 ‘‘(3) SAFE HARBOR FOR DETERMINING USE OF

20 CASH.—The requirement of paragraph (1)(B) shall 

21 be treated as met if at least 85 percent of the aggre22 gate gross assets of the qualified research entity are 

23 invested in qualified research investments. 

24 ‘‘(4) TREATMENT OF SUBSEQUENT PUR25 CHASERS.—The term ‘qualified research investment’ 


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1 includes any equity investment which would (but for 

2 paragraph (1)(A)) be a qualified equity investment 

3 in the hands of the taxpayer if such investment was 

4 a qualified equity investment in the hands of a prior 

5 holder. 

6 ‘‘(5) REDEMPTIONS.—A rule similar to the rule 

7 of section 1202(c)(3) shall apply for purposes of this 

8 subsection. 

9 ‘‘(6) EQUITY INVESTMENT.—The term ‘equity 

10 investment’ means— 

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

12 preferred stock as defined in section 351(g)(2)) 

13 in an entity which is a corporation, and 

14 ‘‘(B) any capital interest in an entity 

15 which is a partnership. 

16 ‘‘(c) QUALIFIED RESEARCH ENTITY.—For purposes 

17 of this section, the term ‘qualified research entity’ means 

18 any domestic corporation or partnership if— 

19 ‘‘(1) the primary mission of the entity is serv20 ing, or providing investment capital for, qualifying 

21 small business innovation companies, 

22 ‘‘(2) the entity maintains accountability to engi23 neers, scientists, and other research-related profes24 sionals through their representation on any govVerDate Aug 31 2005 23:27 Jan 09, 2007 Jkt 059200 PO 00000 Frm 00014 Fmt 6652 Sfmt 6201 E:\BILLS\S41.IS S41

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1 erning board of the entity or on any advisory board 

2 to the entity, and 

3 ‘‘(3) the entity is certified by the Secretary for 

4 purposes of this section as being a qualified research 

5 entity. 

6 ‘‘(d) QUALIFIED RESEARCH INVESTMENTS.—For 

7 purposes of this section— 

8 ‘‘(1) IN GENERAL.—The term ‘qualified re9 search investment’ means— 

10 ‘‘(A) any capital or equity investment in, 

11 or loan to, any qualifying small business inno12 vation company, which when added to any other 

13 such investment in or loan to such company 

14 taken into account for purposes of this section 

15 for any taxable year does not exceed 

16 $10,000,000, and 

17 ‘‘(B) the purchase from another qualified 

18 research entity of any loan made by such entity 

19 which is a qualified research investment. 

20 ‘‘(2) QUALIFYING SMALL BUSINESS INNOVA21 TION COMPANY.— 

22 ‘‘(A) IN GENERAL.—For purposes of para23 graph (1), the term ‘qualifying small business 

24 innovation company’ means, with respect to any 

25 taxable year, any corporation (including a nonVerDate Aug 31 2005 23:27 Jan 09, 2007 Jkt 059200 PO 00000 Frm 00015 Fmt 6652 Sfmt 6201 E:\BILLS\S41.IS S41

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1 profit corporation) or partnership if for such 

2 year— 

3 ‘‘(i) the gross receipts of such entity 

4 do not exceed $10,000,000, 

5 ‘‘(ii) the aggregate gross assets of 

6 such entity do not exceed $25,000,000, 

7 and 

8 ‘‘(iii) at least 50 percent of the gross 

9 expenditures of such entity would qualify 

10 as research or experimental expenditures 

11 under section 174. 

12 All persons treated as a single employer under 

13 subsection (a) or (b) of section 52 or subsection 

14 (m) or (o) of section 414 shall be treated as one 

15 person for purposes of this subparagraph. 

16 ‘‘(B) AGGREGATE GROSS ASSETS.—For 

17 purposes of subparagraph (A)(ii), the term ‘ag18 gregate gross assets’ shall have meaning given 

19 such term by section 1202(d)(2), except such 

20 term shall not include intangibles and goodwill. 

21 ‘‘(e) NATIONAL LIMITATION ON AMOUNT OF INVEST22 MENTS DESIGNATED.— 

23 ‘‘(1) IN GENERAL.—There is a research invest24 ment tax credit limitation for each calendar year. 

25 Such limitation is— 


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1 ‘‘(A) $500,000,000 for 2007, 

2 ‘‘(B) $750,000,000 for 2008 and 2009, 

3 and 

4 ‘‘(C) $1,000,000,000 for 2010 and 2011. 

5 ‘‘(2) ALLOCATION OF LIMITATION.—The limita6 tion under paragraph (1) shall be allocated by the 

7 Secretary among qualified research entities selected 

8 by the Secretary, with not more than $25,000,000 

9 allocated to any 1 qualified research entity in any 

10 calendar year. In making allocations under the pre11 ceding sentence, the Secretary shall give priority to 

12 any entity— 

13 ‘‘(A) with a record of having successfully 

14 provided capital or technical assistance to quali15 fying small business innovation companies, or 

16 ‘‘(B) which intends to satisfy the require17 ment under subsection (b)(1)(B) by making 

18 qualified research investments in 1 or more 

19 companies in which persons unrelated to such 

20 entity (within the meaning of section 267(b) or 

21 707(b)(1)) hold the majority equity interest, 

22 and 

23 if more than 1 qualified research entity meets sub24 paragraph (A) or (B), the Secretary shall give pri25 ority to the entity with the earliest investment. If inVerDate Aug 31 2005 23:27 Jan 09, 2007 Jkt 059200 PO 00000 Frm 00017 Fmt 6652 Sfmt 6201 E:\BILLS\S41.IS S41

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1 sufficient allocations are available for all qualified 

2 applicants in any calendar year, the priorities estab3 lished for such applicants without allocations shall 

4 be carried over to the succeeding calendar year. 

5 ‘‘(3) CARRYOVER OF UNUSED LIMITATION.—If 

6 the research investment tax credit limitation for any 

7 calendar year exceeds the aggregate amount allo8 cated under paragraph (2) for such year, such limi9 tation for the succeeding calendar year shall be in10 creased by the amount of such excess. No amount 

11 may be carried under the preceding sentence to any 

12 calendar year after 2018. 

13 ‘‘(f) RECAPTURE OF CREDIT IN CERTAIN CASES.— 

14 ‘‘(1) IN GENERAL.—If, at any time during the 

15 7-year period beginning on the date of the original 

16 issue of a qualified equity investment in a qualified 

17 research entity, there is a recapture event with re18 spect to such investment, then the tax imposed by 

19 this chapter for the taxable year in which such event 

20 occurs shall be increased by the credit recapture 

21 amount. 

22 ‘‘(2) CREDIT RECAPTURE AMOUNT.—For pur23 poses of paragraph (1), the credit recapture amount 

24 is an amount equal to the sum of— 


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1 ‘‘(A) the aggregate decrease in the credits 

2 allowed to the taxpayer under section 38 for all 

3 prior taxable years which would have resulted if 

4 no credit had been determined under this sec5 tion with respect to such investment, plus 

6 ‘‘(B) interest at the underpayment rate es7 tablished under section 6621 on the amount de8 termined under subparagraph (A) for each 

9 prior taxable year for the period beginning on 

10 the due date for filing the return for the prior 

11 taxable year involved. 

12 No deduction shall be allowed under this chapter for 

13 interest described in subparagraph (B). 

14 ‘‘(3) RECAPTURE EVENT.—For purposes of 

15 paragraph (1), there is a recapture event with re16 spect to an equity investment in a qualified research 

17 entity if— 

18 ‘‘(A) such entity ceases to be a qualified 

19 research entity, 

20 ‘‘(B) the proceeds of the investment cease 

21 to be used as required of subsection (b)(1)(B), 

22 or 

23 ‘‘(C) such investment is redeemed by such 

24 entity. 

25 ‘‘(4) SPECIAL RULES.— 


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1 ‘‘(A) TAX BENEFIT RULE.—The tax for 

2 the taxable year shall be increased under para3 graph (1) only with respect to credits allowed 

4 by reason of this section which were used to re5 duce tax liability. In the case of credits not so 

6 used to reduce tax liability, the carryforwards 

7 and carrybacks under section 39 shall be appro8 priately adjusted. 

9 ‘‘(B) NO CREDITS AGAINST TAX.—Any in10 crease in tax under this subsection shall not be 

11 treated as a tax imposed by this chapter for 

12 purposes of determining the amount of any 

13 credit under this chapter or for purposes of sec14 tion 55. 

15 ‘‘(g) REGULATIONS.—The Secretary shall prescribe 

16 such regulations as may be appropriate to carry out this 

17 section, including regulations— 

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

19 this section, 

20 ‘‘(2) which provide rules for determining wheth21 er the requirement of subsection (b)(1)(B) is treated 

22 as met, 

23 ‘‘(3) which impose appropriate reporting re24 quirements, and 


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1 ‘‘(4) which apply the provisions of this section 

2 to newly formed entities.’’. 

3 (b) CREDIT TREATED AS BUSINESS CREDIT.—Sec4 tion 38(b) of the Internal Revenue Code of 1986 (relating 

5 to current year business credit) is amended by striking 

6 ‘‘and’’ at the end of paragraph (29), by striking the period 

7 at the end of paragraph (30) and inserting ‘‘, plus’’, and 

8 by adding at the end the following new paragraph: 

9 ‘‘(31) the credit determined under section 

10 45N(a).’’. 

11 (c) CONFORMING AMENDMENT.—The table of sec12 tions for subpart D of part IV of subchapter A of chapter 

13 1 of the Internal Revenue Code of 1986 is amended by 

14 adding at the end the following new item: 

‘‘Sec. 45N. Research investment tax credit.’’. 

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

16 this section shall apply to investments made after Decem17 ber 31, 2006. 

18 SEC. 4. TAX-EXEMPT FINANCING OF RESEARCH PARK FA19 CILITIES. 

20 (a) IN GENERAL.—Subsection (a) of section 142 is 

21 amended— 

22 (1) by striking ‘‘or’’ at the end of paragraph 

23 (14), 

24 (2) by striking the period at the end of para25 graph (15) and inserting ‘‘, or’’, and 


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1 (3) by inserting at the end the following new 

2 paragraph: 

3 ‘‘(16) research park facility.’’. 

4 (b) DEFINITION.—Section 142 is amended by insert5 ing at the end the following new subsection: 

6 ‘‘(n) RESEARCH PARK FACILITY.—For purposes of 

7 subsection (a)(16), the term ‘research park facility’ means 

8 a facility (including buildings, land, or other structures) 

9 which is used in connection with research and experimen10 tation (as defined in section 168(i)(11)). For purposes of 

11 the preceding sentence, such term includes facilities which 

12 are directly related and ancillary to a research park facil13 ity (determined without regard to this sentence) if— 

14 ‘‘(1) such facilities are located on the same site 

15 as the research park facility, and 

16 ‘‘(2) not more than 25 percent of the net pro17 ceeds of the issue are used to provide such facili18 ties.’’. 

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

20 this section shall apply with respect to bonds issued on 

21 or after the date of the enactment of this Act. 


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1 SEC. 5. CLARIFICATION OF APPLICATION OF PRIVATE AC2 TIVITY BOND RULES WITH RESPECT TO 

3 FUNDING OF FEDERAL RESEARCH AGREE4 MENTS. 

5 Not later than June 30, 2007, the Secretary of the 

6 Treasury shall prescribe guidance identifying the cir7 cumstances, if any, in which the rights of the Federal Gov8 ernment granted under chapter 18 of title 35, United 

9 States Code (commonly known as the Bayh-Dole Act 

10 (Pub. Law No. 96–517)) constitute private business use 

11 under the private activity bond rules in section 141 of the 

12 Internal Revenue Code of 1986. 

Æ 


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