II

106TH CONGRESS

1ST SESSION S. 1425

To amend the Internal Revenue Code of 1986 to provide a 10 percent

biotechnology investment tax credit and to reauthorize the Research

and Development tax credit for ten years.

IN THE SENATE OF THE UNITED STATES

JULY 22, 1999

Mr. SPECTER 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

a 10 percent biotechnology investment tax credit and

to reauthorize the Research and Development tax credit

for ten years.

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 ‘‘Biotechnology Tax

5 Credit Act of 1999’’.
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1 SEC. 2. TEN YEAR EXTENSION OF THE RESEARCH AND DE2 VELOPMENT TAX CREDIT.

3 (a) IN GENERAL.—Section 41 of the Internal Rev4 enue Code of 1986 (relating to credit for increasing re5 search activities) is amended by striking subsection (h)

6 and in its place, insert the following new section:

7 ‘‘(h) IN GENERAL.—This section shall not apply to

8 any amount paid or incurred after June 30, 2009.’’

9 (b) CONFORMING AMENDMENT.—Paragraph (1) of

10 section 45C(b) of such Code is amended by striking sub11 paragraph (D).

12 SEC. 3. BIOTECHNOLOGY INVESTMENT TAX CREDIT.

13 (a) ALLOWANCE OF CREDIT.—Section 46(a) of the

14 Internal Revenue Code of 1986 (relating to amount of in15 vestment credit) is amended by striking ‘‘and’’ at the end

16 of paragraph (2), by striking the period at the end of para17 graph (3) and inserting ‘‘, and’’, and by adding at the

18 end thereof the following new paragraph:

19 ‘‘(4) the biotechnology investment credit.’’

20 (b) AMOUNT OF CREDIT.—Section 48 of such Code

21 is amended by adding at the end thereof the following new

22 subsection:

23 ‘‘(c) BIOTECHNOLOGY INVESTMENT CREDIT.—

24 ‘‘(1) IN GENERAL.—For purposes of section 46,

25 the biotechnology investment credit for any taxable
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1 year is an amount equal to 10 percent of the quali2 fied investment for such taxable year.

3 ‘‘(2) QUALIFIED INVESTMENT.—

4 ‘‘(A) IN GENERAL.—For purposes of para5 graph (1), the qualified investment for any tax6 able year is the aggregate of—

7 ‘‘(i) the applicable percentage of the

8 basis of each new biotechnology property

9 placed in service by the taxpayer during

10 such taxable year; plus

11 ‘‘(ii) the applicable percentage of the

12 cost of each used biotechnology property

13 placed in service by the taxpayer during

14 such taxable year.

15 ‘‘(B) APPLICABLE PERCENTAGE.—For

16 purposes of subparagraph (A), the applicable

17 percentage for any property shall be determined

18 under paragraphs (2) and (7) of section 46(c)

19 (as in effect on the day before the date of the

20 enactment of the Revenue Reconciliation Act of

21 1990).

22 ‘‘(C) CERTAIN RULES MADE APPLICA23 BLE.—The provisions of subsections (b) and (c)

24 of section 48 (as in effect on the day before the

25 date of the enactment of the Revenue Reconcili-
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1 ation Act of 1990) shall apply for purposes of

2 this paragraph.

3 ‘‘(3) DEFINITIONS.—For purposes of this sec4 tion:

5 ‘‘(A) ‘Biotechnology Property’ means cap6 ital equipment, instruments and supplies used

7 in a laboratory setting by a biotechnology com8 pany. These items would include but would not

9 be limited to microscopes, various laboratory

10 machines, glassware, chemical reagents, and

11 technical books and manuals purchased by a

12 manufacturer for research purposes. Also in13 cluded are computers and software used pri14 marily to develop data for research and develop15 ment.

16 ‘‘(B) ‘Biotechnology Company’ is an orga17 nization that deals with the application of tech18 nologies, such as recombinant DNA techniques,

19 biochemistry, molecular and cellular biology, ge20 netics and genetic engineering, biological cell

21 fusion techniques, and new bioprocesses, using

22 living organisms, or parts of organisms, to

23 produce or modify products, to develop micro24 organisms for specific uses, to identify targets

25 for small molecule pharmaceutical development,
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1 to transform biological systems into useful proc2 esses and products or to develop microorga3 nisms for specific uses. Potential endpoints for

4 these products, developments and uses shall be

5 for societal benefit through improving human

6 healthcare.

7 ‘‘(4) COORDINATION WITH OTHER CREDITS.—

8 This subsection shall not apply to any property to

9 which the energy credit or rehabilitation credit

10 would apply unless the taxpayer elects to waive the

11 application of such credits to such property.

12 ‘‘(5) CERTAIN PROGRESS EXPENDITURE RULES

13 MADE APPLICABLE.—Rules similar to rules of sub14 section (c)(4) and (d) of section 46 (as in effect on

15 the day before the date of the enactment of the Rev16 enue Reconciliation Act of 1990) shall apply for pur17 poses of this subsection.’’

18 (c) TECHNICAL AMENDMENTS.—

19 (1) Subparagraph (C) of section 49(a)(1) of

20 such Code is amended by striking ‘‘and’’ at the end

21 of clause (ii), by striking the period at the end of

22 clause (iii) and inserting ‘‘, and’’, and by adding at

23 the end thereof the following new clause:
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1 ‘‘(iv) the basis of any new bio2 technology property and the cost of any

3 used biotechnology property.’’

4 (2) Subparagraph (E) of section 50(a)(2) of

5 such Code is amended by striking ‘‘section

6 48(a)(5)(A)’’ and inserting ‘‘section 48(a)(5) or

7 48(c)(5)’’.

8 (3) Paragraph (5) of section 50(a) of such Code

9 is amended by adding at the end thereof the fol10 lowing new subparagraph:

11 ‘‘(D) SPECIAL RULES FOR CERTAIN PROP12 ERTY.—In the case of any biotechnology prop13 erty which is 3-year property (within the mean14 ing of section 168(e))—

15 ‘‘(i) the percentage set forth in clause

16 (ii) of the table contained in paragraph

17 (1)(B) shall be 66 percent;

18 ‘‘(ii) the percentage set forth in clause

19 (iii) of such table shall be 33 percent; and

20 ‘‘(iii) clauses (iv) and (v) of such table

21 shall not apply.’’

22 (4)(A) The section heading for section 48 of

23 such Code is amended to read as follows:
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1 ‘‘SEC. 48. OTHER CREDITS.’’

2 (B) The table of sections for subpart E of part

3 IV of subchapter A of chapter 1 of such Code is

4 amended by striking the item relating to section 48

5 and inserting the following:

‘‘Sec. 48. Other Credits.’’

6 SEC. 4. EFFECTIVE DATE.

7 The amendments made by this bill shall apply to

8 amounts paid or incurred after June 30, 1999.

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