IB 
Union Calendar No. 79 
114TH CONGRESS 
1ST SESSION 
H. R. 880 
[Report No. 114–113] 
To amend the Internal Revenue Code of 1986 to simplify and make 
permanent the research credit. 
IN THE HOUSE OF REPRESENTATIVES 
FEBRUARY 11, 2015 
Mr. BRADY of Texas (for himself, Mr. LARSON of Connecticut, Mr. SAM 
JOHNSON of Texas, Mr. SCHOCK, Mr. MCCAUL, and Mr. NEAL) intro-
duced the following bill; which was referred to the Committee on Ways 
and Means 
MAY 14, 2015 
Additional sponsors: Mr. MARCHANT, Mr. YOUNG of Indiana, Mr. REED, Mrs. 
COMSTOCK, Mr. BLUM, Mr. PAULSEN, Mrs. MIMI WALTERS of Cali-
fornia, Ms. SINEMA, Mr. POLIQUIN, Mr. COSTELLO of Pennsylvania, Mr. 
ROUZER, Mr. JONES, Mr. ABRAHAM, Mr. GROTHMAN, Mr. TROTT, Mr. 
MOONEY of West Virginia, Mr. CURBELO of Florida, Mr. EMMER of Min-
nesota, Mr. MACARTHUR, Mr. KNIGHT, Mr. DOLD, Mrs. WAGNER, Mr. 
CARTER of Georgia, Mr. NUNES, Mr. TIBERI, Mr. VALADAO, and Mr. 
SMITH of Missouri 
MAY 14, 2015 
Reported with an amendment, committed to the Committee of the Whole 
House on the State of the Union, and ordered to be printed 
[Strike out all after the enacting clause and insert the part printed in italic] 
[For text of introduced bill, see copy of bill as introduced on February 11, 2015] 
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A BILL 
To amend the Internal Revenue Code of 1986 to simplify 
and make permanent the research credit. 
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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 ‘‘American Research and 
Competitiveness Act of 2015’’. 
SEC. 2. RESEARCH CREDIT SIMPLIFIED AND MADE PERMA-
NENT. 
(a) IN GENERAL.—Section 41(a) of the Internal Rev-
enue Code of 1986 is amended to read as follows: 
‘‘(a) IN GENERAL.—For purposes of section 38, the re-
search credit determined under this section for the taxable 
year shall be an amount equal to the sum of— 
‘‘(1) 20 percent of so much of the qualified re-
search expenses for the taxable year as exceeds 50 per-
cent of the average qualified research expenses for the 
3 taxable years preceding the taxable year for which 
the credit is being determined, 
‘‘(2) 20 percent of so much of the basic research 
payments for the taxable year as exceeds 50 percent 
of the average basic research payments for the 3 tax-
able years preceding the taxable year for which the 
credit is being determined, plus 
‘‘(3) 20 percent of the amounts paid or incurred 
by the taxpayer in carrying on any trade or business 
of the taxpayer during the taxable year (including as 
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contributions) to an energy research consortium for 
energy research.’’. 
(b) REPEAL OF TERMINATION.—Section 41 of such 
Code is amended by striking subsection (h). 
(c) CREDIT ALLOWED AGAINST ALTERNATIVE MIN-
IMUM TAX IN CASE OF ELIGIBLE SMALL BUSINESS.—Sec-
tion 38(c)(4)(B) of such Code is amended by redesignating 
clauses (ii) through (ix) as clauses (iii) through (x), respec-
tively, and by inserting after clause (i) the following new 
clause: 
‘‘(ii) the credit determined under sec-
tion 41 for the taxable year with respect to 
an eligible small business (as defined in 
paragraph (5)(C), after application of rules 
similar to the rules of paragraph (5)(D)),’’. 
(d) CONFORMING AMENDMENTS.— 
(1) Section 41(c) of such Code is amended to 
read as follows: 
‘‘(c) DETERMINATION OF AVERAGE RESEARCH EX-
PENSES FOR PRIOR YEARS.— 
‘‘(1) SPECIAL RULE IN CASE OF NO QUALIFIED 
RESEARCH EXPENDITURES IN ANY OF 3 PRECEDING 
TAXABLE YEARS.—In any case in which the taxpayer 
has no qualified research expenses in any one of the 
3 taxable years preceding the taxable year for which 
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the credit is being determined, the amount determined 
under subsection (a)(1) for such taxable year shall be 
equal to 10 percent of the qualified research expenses 
for the taxable year. 
‘‘(2) CONSISTENT TREATMENT OF EXPENSES.— 
‘‘(A) IN GENERAL.—Notwithstanding wheth-
er the period for filing a claim for credit or re-
fund has expired for any taxable year taken into 
account in determining the average qualified re-
search expenses, or average basic research pay-
ments, taken into account under subsection (a), 
the qualified research expenses and basic research 
payments taken into account in determining 
such averages shall be determined on a basis con-
sistent with the determination of qualified re-
search expenses and basic research payments, re-
spectively, for the credit year. 
‘‘(B) PREVENTION
OF
DISTORTIONS.—The 
Secretary may prescribe regulations to prevent 
distortions in calculating a taxpayer’s qualified 
research expenses or basic research payments 
caused by a change in accounting methods used 
by such taxpayer between the current year and 
a year taken into account in determining the av-
erage qualified research expenses or average basic 
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research payments taken into account under sub-
section (a).’’. 
(2) Section 41(e) of such Code is amended— 
(A) by striking all that precedes paragraph 
(6) and inserting the following: 
‘‘(e) BASIC RESEARCH PAYMENTS.—For purposes of 
this section— 
‘‘(1) IN
GENERAL.—The term ‘basic research 
payment’ means, with respect to any taxable year, 
any amount paid in cash during such taxable year 
by a corporation to any qualified organization for 
basic research but only if— 
‘‘(A) such payment is pursuant to a written 
agreement between such corporation and such 
qualified organization, and 
‘‘(B) such basic research is to be performed 
by such qualified organization. 
‘‘(2) EXCEPTION
TO
REQUIREMENT
THAT
RE-
SEARCH BE PERFORMED BY THE ORGANIZATION.—In 
the case of a qualified organization described in sub-
paragraph (C) or (D) of paragraph (3), subpara-
graph (B) of paragraph (1) shall not apply.’’, 
(B) by redesignating paragraphs (6) and 
(7) as paragraphs (3) and (4), respectively, and 
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(C) in paragraph (4), as so redesignated, by 
striking subparagraphs (B) and (C) and by re-
designating subparagraphs (D) and (E) as sub-
paragraphs (B) and (C), respectively. 
(3) Section 41(f)(3) of such Code is amended— 
(A)(i) by striking ‘‘, and the gross receipts’’ 
in subparagraph (A)(i) and all that follows 
through ‘‘determined under clause (iii)’’, 
(ii) by striking clause (iii) of subparagraph 
(A) and redesignating clauses (iv), (v), and (vi), 
thereof, as clauses (iii), (iv), and (v), respec-
tively, 
(iii) by striking ‘‘and (iv)’’ each place it 
appears in subparagraph (A)(iv) (as so redesig-
nated) and inserting ‘‘and (iii)’’, 
(iv) by striking subclause (IV) of subpara-
graph (A)(iv) (as so redesignated), by striking ‘‘, 
and’’ at the end of subparagraph (A)(iv)(III) (as 
so redesignated) and inserting a period, and by 
adding ‘‘and’’ at the end of subparagraph 
(A)(iv)(II) (as so redesignated), 
(v) by striking ‘‘(A)(vi)’’ in subparagraph 
(B) and inserting ‘‘(A)(v)’’, 
(vi) by striking ‘‘(A)(iv)(II)’’ in subpara-
graph (B)(i)(II) and inserting ‘‘(A)(iii)(II)’’, 
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(B) by striking ‘‘, and the gross receipts of 
the predecessor,’’ in subparagraph (A)(iv)(II) (as 
so redesignated), 
(C) by striking ‘‘, and the gross receipts of,’’ 
in subparagraph (B), 
(D) by striking ‘‘, or gross receipts of,’’ in 
subparagraph (B)(i)(I), and 
(E) by striking subparagraph (C) and in-
serting the following new subparagraph: 
‘‘(C) ADJUSTMENTS FOR BASIC RESEARCH 
PAYMENTS.—In the case of basic research pay-
ments, rules similar to the rules of subparagraph 
(A) and (B) shall apply.’’. 
(4) Section 41(f)(4) of such Code is amended by 
striking ‘‘and gross receipts’’ and inserting ‘‘and 
basic research payments’’. 
(5) Section 45C(b)(1) of such Code is amended 
by striking subparagraph (D). 
(6) Section 45C(c)(2) of such Code is amended— 
(A) by striking ‘‘base period research ex-
penses’’ and inserting ‘‘average qualified re-
search expenses’’, and 
(B) by striking ‘‘BASE PERIOD RESEARCH 
EXPENSES’’ in the heading and inserting ‘‘AVER-
AGE QUALIFIED RESEARCH EXPENSES’’. 
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(7) Section 280C(c) of such Code is amended— 
(A) by striking ‘‘basic research expenses (as 
defined in section 41(e)(2))’’ in paragraph (1) 
and inserting ‘‘basic research payments (as de-
fined in section 41(e)(1))’’, and 
(B) by striking ‘‘basic research expenses’’ in 
paragraph (2)(B) and inserting ‘‘basic research 
payments’’. 
(e) EFFECTIVE DATE.— 
(1) IN GENERAL.—Except as provided in para-
graph (2), the amendments made by this section shall 
apply to taxable years beginning after December 31, 
2014. 
(2) SUBSECTION (b).—The amendment made by 
subsection (b) shall apply to amounts paid or in-
curred after December 31, 2014. 
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Union Calendar No. 79 
114TH CONGRESS 
1ST SESSION 
H. R. 880 
[Report No. 114–113] 
A BILL 
To amend the Internal Revenue Code of 1986 to 
simplify and make permanent the research credit. 
MAY 14, 2015 
Reported with an amendment, committed to the Com-
mittee of the Whole House on the State of the Union, 
and ordered to be printed 
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