I 
109TH CONGRESS 
1ST SESSION H. R. 1736 
To amend the Internal Revenue Code of 1986 to permanently extend the 
research credit, to increase the rates of the alternative incremental credit, 
and to provide an alternative simplified credit for qualified research 
expenses. 
IN THE HOUSE OF REPRESENTATIVES 
APRIL 20, 2005 
Mrs. JOHNSON of Connecticut (for herself, Mr. CARDIN, Mr. SHAW, Mr. 
LEVIN, Mr. HERGER, Mr. CAMP, Mr. RAMSTAD, Mr. SAM JOHNSON of 
Texas, Mr. MCDERMOTT, Mr. NEAL of Massachusetts, Mr. ENGLISH of 
Pennsylvania, Mr. JEFFERSON, Mr. HAYWORTH, Mr. WELLER, Mr. 
HULSHOF, Mr. REYNOLDS, Mr. LEWIS of Kentucky, Mr. BECERRA, Mr. 
FOLEY, Mr. POMEROY, Mr. BRADY of Texas, Mr. CANTOR, Mrs. JONES 
of Ohio, Mr. CHOCOLA, Mr. LARSON of Connecticut, Ms. HART, Mr. 
BEAUPREZ, Mr. EMANUEL, Mr. SIMMONS, Mr. GORDON, Mr. SOUDER, 
Mr. UDALL of Colorado, Mr. EHLERS, Mr. KUHL of New York, Mr. 
JOHNSON of Illinois, Mr. MCHENRY, Mr. SESSIONS, Mr. FERGUSON, 
Miss MCMORRIS, Mr. LANTOS, Mr. BLUMENAUER, Mr. CROWLEY, Mr. 
WAXMAN, Mr. ETHERIDGE, Mr. RUPPERSBERGER, Mr. HASTINGS of 
Florida, Mr. MEEK of Florida, Mr. WESTMORELAND, Mr. SWEENEY, Mr. 
MENENDEZ, Mr. HAYES, Mr. PRICE of North Carolina, Mr. GOODLATTE, 
Mrs. MUSGRAVE, Mr. CANNON, Mr. HONDA, Mr. SHERMAN, and Mr. 
MORAN of Virginia) 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 permanently 
extend the research credit, to increase the rates of the 
alternative incremental credit, and to provide an alter-
native simplified credit for qualified research expenses.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Investment in America 
Act of 2005’’. 
SEC. 2. FINDINGS. 
The Congress finds as follows: 
(1) Research and development performed in the 
United States results in quality jobs, better and 
safer products, increased ownership of technology- 
based intellectual property, and higher productivity 
in the United States. 
(2) The extent to which companies perform and 
increase research and development activities in the 
United States is in part dependent on Federal tax 
policy. 
(3) The Congress should make permanent a re-
search and development credit that provides a mean-
ingful incentive to all types of taxpayers. 
SEC. 3. PERMANENT EXTENSION OF RESEARCH CREDIT. 
(a) IN GENERAL.—Section 41 of the Internal Rev-
enue Code of 1986 (relating to credit for increasing re-
search activities) is amended by striking subsection (h).
(b) CONFORMING AMENDMENT.—Paragraph (1) of 
section 45C(b) of such Code is amended by striking sub-
paragraph (D). 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to amounts paid or incurred after 
the date of the enactment of this Act. 
SEC. 4. INCREASE IN RATES OF ALTERNATIVE INCRE-
MENTAL CREDIT. 
(a) IN GENERAL.—Subparagraph (A) of section 
41(c)(4) of the Internal Revenue Code of 1986 (relating 
to election of alternative incremental credit) is amended— 
(1) by striking ‘‘2.65 percent’’ and inserting ‘‘3 
percent’’, 
(2) by striking ‘‘3.2 percent’’ and inserting ‘‘4 
percent’’, and 
(3) by striking ‘‘3.75 percent’’ and inserting ‘‘5 
percent’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to taxable years ending after the 
date of the enactment of this Act. 
SEC. 5. ALTERNATIVE SIMPLIFIED CREDIT FOR QUALIFIED 
RESEARCH EXPENSES. 
(a) IN GENERAL.—Subsection (c) of section 41 of the 
Internal Revenue Code of 1986 (relating to base amount) 
is amended by redesignating paragraphs (5) and (6) as
paragraphs (6) and (7), respectively, and by inserting 
after paragraph (4) the following new paragraph: 
‘‘(5) ELECTION OF ALTERNATIVE SIMPLIFIED 
CREDIT.— 
‘‘(A) IN GENERAL.—At the election of the 
taxpayer, the credit determined under sub-
section (a)(1) shall be equal to 12 percent of so 
much of the qualified research expenses for the 
taxable year as exceeds 50 percent of the aver-
age qualified research expenses for the 3 tax-
able years preceding the taxable year for which 
the credit is being determined. 
‘‘(B) SPECIAL
RULE
IN
CASE
OF
NO 
QUALIFIED RESEARCH EXPENSES IN ANY OF 3 
PRECEDING TAXABLE YEARS.— 
‘‘(i) TAXPAYERS TO WHICH SUBPARA-
GRAPH
APPLIES.—The credit under this 
paragraph shall be determined under this 
subparagraph if the taxpayer has no quali-
fied research expenses in any one of the 3 
taxable years preceding the taxable year 
for which the credit is being determined. 
‘‘(ii) CREDIT RATE.—The credit de-
termined under this subparagraph shall be
equal to 6 percent of the qualified research 
expenses for the taxable year. 
‘‘(C) ELECTION.—An election under this 
paragraph shall apply to the taxable year for 
which made and all succeeding taxable years 
unless revoked with the consent of the Sec-
retary. An election under this paragraph may 
not be made for any taxable year to which an 
election under paragraph (4) applies.’’. 
(b) COORDINATION WITH ELECTION
OF ALTER-
NATIVE INCREMENTAL CREDIT.— 
(1) IN GENERAL.—Section 41(c)(4)(B) of such 
Code (relating to election) is amended by adding at 
the end the following: ‘‘An election under this para-
graph may not be made for any taxable year to 
which an election under paragraph (5) applies.’’. 
(2) TRANSITION RULE.—In the case of an elec-
tion under section 41(c)(4) of the Internal Revenue 
Code of 1986 which applies to the taxable year 
which includes the date of the enactment of this Act, 
such election shall be treated as revoked with the 
consent of the Secretary of the Treasury if the tax-
payer makes an election under section 41(c)(5) of 
such Code (as added by subsection (a)) for such 
year.