II 

113TH CONGRESS 

2D SESSION H. R. 4438 

IN THE SENATE OF THE UNITED STATES 

MAY 12, 2014 

Received 

AN ACT 

To amend the Internal Revenue Code of 1986 to simplify 

and make permanent the research credit. 

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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1 SECTION 1. SHORT TITLE. 

2 This Act may be cited as the ‘‘American Research 

3 and Competitiveness Act of 2014’’. 

4 SEC. 2. RESEARCH CREDIT SIMPLIFIED AND MADE PERMA5 NENT. 

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

7 Internal Revenue Code of 1986 is amended to read as fol8 lows: 

9 ‘‘(a) IN GENERAL.—For purposes of section 38, the 

10 research credit determined under this section for the tax11 able year shall be an amount equal to the sum of— 

12 ‘‘(1) 20 percent of so much of the qualified re13 search expenses for the taxable year as exceeds 50 

14 percent of the average qualified research expenses 

15 for the 3 taxable years preceding the taxable year 

16 for which the credit is being determined, 

17 ‘‘(2) 20 percent of so much of the basic re18 search payments for the taxable year as exceeds 50 

19 percent of the average basic research payments for 

20 the 3 taxable years preceding the taxable year for 

21 which the credit is being determined, plus 

22 ‘‘(3) 20 percent of the amounts paid or in23 curred by the taxpayer in carrying on any trade or 

24 business of the taxpayer during the taxable year (in25 cluding as contributions) to an energy research con26 sortium for energy research.’’. 


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1 (b) REPEAL OF TERMINATION.—Section 41 of such 

2 Code is amended by striking subsection (h). 

3 (c) CONFORMING AMENDMENTS.— 

4 (1) Subsection (c) of section 41 of such Code 

5 is amended to read as follows: 

6 ‘‘(c) DETERMINATION OF AVERAGE RESEARCH EX7 PENSES FOR PRIOR YEARS.— 

8 ‘‘(1) SPECIAL RULE IN CASE OF NO QUALIFIED

9 RESEARCH EXPENDITURES IN ANY OF 3 PRECEDING

10 TAXABLE YEARS.—In any case in which the taxpayer 

11 has no qualified research expenses in any one of the 

12 3 taxable years preceding the taxable year for which 

13 the credit is being determined, the amount deter14 mined under subsection (a)(1) for such taxable year 

15 shall be equal to 10 percent of the qualified research 

16 expenses for the taxable year. 

17 ‘‘(2) CONSISTENT TREATMENT OF EX18 PENSES.— 

19 ‘‘(A) IN GENERAL.—Notwithstanding 

20 whether the period for filing a claim for credit 

21 or refund has expired for any taxable year 

22 taken into account in determining the average 

23 qualified research expenses, or average basic re24 search payments, taken into account under sub25 section (a), the qualified research expenses and 


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1 basic research payments taken into account in 

2 determining such averages shall be determined 

3 on a basis consistent with the determination of 

4 qualified research expenses and basic research 

5 payments, respectively, for the credit year. 

6 ‘‘(B) PREVENTION OF DISTORTIONS.—The 

7 Secretary may prescribe regulations to prevent 

8 distortions in calculating a taxpayer’s qualified 

9 research expenses or basic research payments 

10 caused by a change in accounting methods used 

11 by such taxpayer between the current year and 

12 a year taken into account in determining the 

13 average qualified research expenses or average 

14 basic research payments taken into account 

15 under subsection (a).’’. 

16 (2) Section 41(e) of such Code is amended— 

17 (A) by striking all that precedes paragraph 

18 (6) and inserting the following: 

19 ‘‘(e) BASIC RESEARCH PAYMENTS.—For purposes of 

20 this section— 

21 ‘‘(1) IN GENERAL.—The term ‘basic research 

22 payment’ means, with respect to any taxable year, 

23 any amount paid in cash during such taxable year 

24 by a corporation to any qualified organization for 

25 basic research but only if— 


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1 ‘‘(A) such payment is pursuant to a writ2 ten agreement between such corporation and 

3 such qualified organization, and 

4 ‘‘(B) such basic research is to be per5 formed by such qualified organization. 

6 ‘‘(2) EXCEPTION TO REQUIREMENT THAT RE7 SEARCH BE PERFORMED BY THE ORGANIZATION.— 

8 In the case of a qualified organization described in 

9 subparagraph (C) or (D) of paragraph (3), subpara10 graph (B) of paragraph (1) shall not apply.’’, 

11 (B) by redesignating paragraphs (6) and 

12 (7) as paragraphs (3) and (4), respectively, and 

13 (C) in paragraph (4) as so redesignated, 

14 by striking subparagraphs (B) and (C) and by 

15 redesignating subparagraphs (D) and (E) as 

16 subparagraphs (B) and (C), respectively. 

17 (3) Section 41(f)(3) of such Code is amended— 

18 (A)(i) by striking ‘‘, and the gross re19 ceipts’’ in subparagraph (A)(i) and all that fol20 lows through ‘‘determined under clause (iii)’’, 

21 (ii) by striking clause (iii) of subparagraph 

22 (A) and redesignating clauses (iv), (v), and (vi), 

23 thereof, as clauses (iii), (iv), and (v), respec24 tively, 


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1 (iii) by striking ‘‘and (iv)’’ each place it 

2 appears in subparagraph (A)(iv) (as so redesig3 nated) and inserting ‘‘and (iii)’’, 

4 (iv) by striking subclause (IV) of subpara5 graph (A)(iv) (as so redesignated), by striking 

6 ‘‘, and’’ at the end of subparagraph (A)(iv)(III) 

7 (as so redesignated) and inserting a period, and 

8 by adding ‘‘and’’ at the end of subparagraph 

9 (A)(iv)(II) (as so redesignated), 

10 (v) by striking ‘‘(A)(vi)’’ in subparagraph 

11 (B) and inserting ‘‘(A)(v)’’, and 

12 (vi) by striking ‘‘(A)(iv)(II)’’ in subpara13 graph (B)(i)(II) and inserting ‘‘(A)(iii)(II)’’, 

14 (B) by striking ‘‘, and the gross receipts of 

15 the predecessor,’’ in subparagraph (A)(iv)(II) 

16 (as so redesignated), 

17 (C) by striking ‘‘, and the gross receipts 

18 of,’’ in subparagraph (B), 

19 (D) by striking ‘‘, or gross receipts of,’’ in 

20 subparagraph (B)(i)(I), and 

21 (E) by striking subparagraph (C). 

22 (d) EFFECTIVE DATE.— 

23 (1) IN GENERAL.—Except as provided in para24 graph (2), the amendments made by this section 


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1 shall apply to taxable years beginning after Decem2 ber 31, 2013. 

3 (2) SUBSECTION (b).—The amendment made 

4 by subsection (b) shall apply to amounts paid or in5 curred after December 31, 2013. 

6 SEC. 3. PAYGO SCORECARD. 

7 (a) PAYGO SCORECARD.—The budgetary effects of 

8 this Act shall not be entered on either PAYGO scorecard 

9 maintained pursuant to section 4(d) of the Statutory Pay10 As-You-Go Act of 2010. 

11 (b) SENATE PAYGO SCORECARD.—The budgetary ef12 fects of this Act shall not be entered on any PAYGO score13 card maintained for purposes of section 201 of S. Con. 

14 Res. 21 (110th Congress). 

Passed the House of Representatives May 9, 2014. 

Attest: KAREN L. HAAS, 

Clerk. 


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