‘‘(ii) without regard to this section. 
‘‘(D) 
AGRICULTURAL
AND
HORTI-
CULTURAL COOPERATIVES.— 
‘‘(i) DEDUCTION
ALLOWED
TO
PA-
TRONS.—Any person who receives a quali-
fied payment from a specified agricultural 
or horticultural cooperative shall be al-
lowed for the taxable year in which such 
payment is received a deduction under sub-
section (a) equal to the portion of the de-
duction allowed under subsection (a) to 
such cooperative which is— 
‘‘(I) allowed with respect to the 
portion of the patent box profit to 
which such payment is attributable, 
and 
‘‘(II) identified by such coopera-
tive in a written notice mailed to such 
person during the payment period de-
scribed in section 1382(d). 
‘‘(ii) COOPERATIVE
DENIED
DEDUC-
TION
FOR
PORTION
OF
QUALIFIED
PAY-
MENTS.—The taxable income of a specified 
agricultural or horticultural cooperative 
shall not be reduced under section 1382 by 
VerDate Mar 15 2010 
03:26 Aug 16, 2012
Jkt 019200
PO 00000
Frm 00017
Fmt 6652
Sfmt 6201
E:\BILLS\H6353.IH
H6353
jbell on DSK7SPTVN1PROD with BILLS
reason of that portion of any qualified pay-
ment as does not exceed the deduction al-
lowable under clause (i) with respect to 
such payment. 
‘‘(iii) TAXABLE INCOME OF COOPERA-
TIVES DETERMINED WITHOUT REGARD TO 
CERTAIN
DEDUCTIONS.—For purposes of 
this section, the taxable income of a speci-
fied agricultural or horticultural coopera-
tive shall be computed without regard to 
any deduction allowable under subsection 
(b) or (c) of section 1382 (relating to pa-
tronage dividends, per-unit retain alloca-
tions, and nonpatronage distributions). 
‘‘(iv) SPECIAL RULE FOR MARKETING 
COOPERATIVES.—For purposes of this sec-
tion, a specified agricultural or horti-
cultural cooperative described in clause 
(vi)(II) shall be treated as having manufac-
tured, produced, grown, or extracted in 
whole or significant part any qualifying 
production property marketed by the orga-
nization which its patrons have so manu-
factured, produced, grown, or extracted. 
VerDate Mar 15 2010 
03:26 Aug 16, 2012
Jkt 019200
PO 00000
Frm 00018
Fmt 6652
Sfmt 6201
E:\BILLS\H6353.IH
H6353
jbell on DSK7SPTVN1PROD with BILLS
‘‘(v) QUALIFIED PAYMENT.—For pur-
poses of this paragraph, the term ‘qualified 
payment’ means, with respect to any per-
son, any amount which— 
‘‘(I) is described in paragraph (1) 
or (3) of section 1385(a), 
‘‘(II) is received by such person 
from a specified agricultural or horti-
cultural cooperative, and 
‘‘(III) is attributable to patent 
box profits with respect to which a de-
duction is allowed to such cooperative 
under subsection (a). 
‘‘(vi) SPECIFIED
AGRICULTURAL
OR 
HORTICULTURAL COOPERATIVE.—For pur-
poses of this paragraph, the term ‘specified 
agricultural or horticultural cooperative’ 
means an organization to which part I of 
subchapter T applies which is the owner 
of, or theholder of an exclusive license to 
exploit, a qualified patent. 
‘‘(E) REGULATIONS.—The Secretary may 
prescribe rules requiring or restricting the allo-
cation of items under this paragraph and may 
VerDate Mar 15 2010 
03:26 Aug 16, 2012
Jkt 019200
PO 00000
Frm 00019
Fmt 6652
Sfmt 6201
E:\BILLS\H6353.IH
H6353
jbell on DSK7SPTVN1PROD with BILLS
prescribe such reporting requirements as the 
Secretary determines appropriate. 
‘‘(2) 
SPECIAL
RULE
FOR
AFFILIATED 
GROUPS.— 
‘‘(A) IN GENERAL.—All members of an ex-
panded affiliated group shall be treated as a 
single corporation for purposes of this section. 
‘‘(B) EXPANDED
AFFILIATED
GROUP.— 
For purposes of this section, the term ‘ex-
panded affiliated group’ means an affiliated 
group as defined in section 1504(a), deter-
mined— 
‘‘(i) by substituting ‘more than 50 
percent’ for ‘at least 80 percent’ each place 
it appears, and 
‘‘(ii) without regard to paragraphs (2) 
and (4) of section 1504(b). 
‘‘(C) ALLOCATION
OF
DEDUCTION.—Ex-
cept as provided in regulations, the deduction 
under subsection (a) shall be allocated among 
the members of the expanded affiliated group in 
proportion to each member’s respective amount 
(if any) of patent box profit. 
VerDate Mar 15 2010 
03:26 Aug 16, 2012
Jkt 019200
PO 00000
Frm 00020
Fmt 6652
Sfmt 6201
E:\BILLS\H6353.IH
H6353
jbell on DSK7SPTVN1PROD with BILLS
‘‘(3) COORDINATION WITH MINIMUM TAX.—For 
purposes of determining alternative minimum tax-
able income under section 55— 
‘‘(A) patent box profit shall be determined 
without regard to any adjustments under sec-
tions 56 through 59, and 
‘‘(B) in the case of a corporation, sub-
section (a)(2) shall be applied by substituting 
‘alternative minimum taxable income’ for ‘tax-
able income’. 
‘‘(4) COORDINATION WITH DOMESTIC PRODUC-
TION ACTIVITIES DEDUCTION.—This section shall be 
applied without regard to section 199. 
‘‘(5) UNRELATED
BUSINESS
TAXABLE
IN-
COME.—For purposes of determining the tax im-
posed by section 511, subsection (a)(2) shall be ap-
plied by substituting ‘unrelated business taxable in-
come’ for ‘taxable income’. 
‘‘(6) ACQUISITIONS
AND
DISPOSITIONS.—The 
Secretary shall provide for the application of this 
subsection in cases where the taxpayer acquires, or 
disposes of, the major portion of a trade or business 
or the major portion of a separate unit of a trade 
or business during the taxable year. 
VerDate Mar 15 2010 
03:26 Aug 16, 2012
Jkt 019200
PO 00000
Frm 00021
Fmt 6652
Sfmt 6201
E:\BILLS\H6353.IH
H6353
jbell on DSK7SPTVN1PROD with BILLS
‘‘(7) UNITED
STATES.—The term ‘United 
States’ includes the District of Columbia, Puerto 
Rico, the Virgin Islands, Guam, American Samoa, 
the Commonwealth of the Northern Mariana Is-
lands, the Federated States of Micronesia, the Re-
public of the Marshall Islands, and Palau. 
‘‘(e) ELECTION.— 
‘‘(1) IN GENERAL.—The taxpayer may make an 
election to have this section apply for any taxable 
year. 
‘‘(2) PASS-THRU ENTITIES.—In the case of a 
pass-thru entity, the election shall be made at the 
partner or shareholder level. 
‘‘(3) REVOCATION.—An election under para-
graph (1), once made, may be revoked only with the 
consent of the Secretary. 
‘‘(f) REGULATIONS.—The Secretary shall prescribe 
such regulations as may be appropriate to carry out this 
section, including regulations which prevent the abuse of 
the purposes of this section.’’. 
(b) CONFORMING AMENDMENTS.— 
(1) Section 56(d)(1)(A) of such Code is amend-
ed by striking ‘‘deduction under section 199’’ both 
places it appears and inserting ‘‘deductions under 
sections 199 and 200’’. 
VerDate Mar 15 2010 
03:26 Aug 16, 2012
Jkt 019200
PO 00000
Frm 00022
Fmt 6652
Sfmt 6201
E:\BILLS\H6353.IH
H6353
jbell on DSK7SPTVN1PROD with BILLS
‘‘(C) any deduction allowable under section 
200,’’. 
(11) Section 1402(a) of such Code is amended 
by striking ‘‘and’’ at the end of paragraph (16), by 
redesignating paragraph (17) as paragraph (18), 
and by inserting after paragraph (16) the following 
new paragraph: 
‘‘(17) the deduction provided by section 200 
shall not be allowed; and’’. 
(c) CLERICAL AMENDMENT.—The table of sections 
for part VI of subchapter B of chapter 1 of such Code 
is amended by adding at the end the following new item: 
‘‘Sec. 200. Patent box profits.’’. 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
the date of the enactment of this Act. 
Æ 
VerDate Mar 15 2010 
03:26 Aug 16, 2012
Jkt 019200
PO 00000
Frm 00025
Fmt 6652
Sfmt 6301
E:\BILLS\H6353.IH
H6353
jbell on DSK7SPTVN1PROD with BILLS