I 
112TH CONGRESS 
1ST SESSION H. R. 2632 
To amend the Internal Revenue Code of 1986 to provide incentives for 
life sciences research. 
IN THE HOUSE OF REPRESENTATIVES 
JULY 25, 2011 
Mr. NUNES (for himself, Ms. SCHWARTZ, Mr. MEEHAN, Mr. PASCRELL, Mr. 
GERLACH, Mr. ALTMIRE, Mr. DENT, and Mr. FATTAH) 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 provide 
incentives for life sciences research. 
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 ‘‘Life Sciences Jobs and 
Investment Act of 2011’’. 
SEC. 2. INCREASED CREDIT FOR INITIAL LIFE SCIENCES 
RESEARCH. 
(a) IN GENERAL.—Section 41 of the Internal Rev-
enue Code of 1986 is amended by redesignating subsection 
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(h) as subsection (i) and inserting after subsection (g) the 
following new subsection: 
‘‘(h) SPECIAL RULES FOR INCREASED INITIAL LIFE 
SCIENCES RESEARCH.— 
‘‘(1) IN GENERAL.—In the case of qualified ini-
tial life sciences research expenses for any taxable 
year with respect to which the taxpayer elects the 
application of this subsection— 
‘‘(A) INCREASED CREDIT.—Subsection (a) 
shall be applied by substituting ‘40 percent’ for 
‘20 percent’. 
‘‘(B) AMOUNTS PAID WITH RESPECT TO 
QUALIFIED LIFE SCIENCES RESEARCH TO CER-
TAIN RESEARCH CONSORTIA, ELIGIBLE SMALL 
BUSINESSES, 
UNIVERSITIES, 
AND
FEDERAL 
LABORATORIES.—Subsection (b)(3)(A) shall be 
applied by substituting ‘100 percent’ for ‘65 
percent’, in the case of amounts paid or in-
curred to persons described in subclauses (I) 
and (III) of subsection (b)(3)(C)(ii) or sub-
clause 
(I), 
(II), 
or 
(III) 
of 
subsection 
(b)(3)(D)(i), with respect to qualified life 
sciences research. 
‘‘(C) ALTERNATIVE SIMPLIFIED CREDIT IN 
CASE OF QUALIFIED INITIAL LIFE SCIENCE RE-
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pay interest or principal on any debt secu-
rity of the taxpayer. 
‘‘(iii) SUBSTANTIATION
OF
COMPLI-
ANCE.— 
‘‘(I) IN GENERAL.—The taxpayer 
must substantiate its compliance with 
clause (ii) with written documents and 
such other credible evidence as the 
Secretary may reasonably require, and 
shall bear the burden of proof with re-
spect to such substantiation. 
‘‘(II) CERTIFICATION.—The chief 
executive officer and the independent 
director serving as head of the audit 
committee of the taxpayer, or com-
parable entity officials, shall attest in 
writing to the taxpayer’s compliance 
with the requirements of clause (ii). 
‘‘(B) QUALIFIED
LIFE
SCIENCES
RE-
SEARCH.— 
‘‘(i) IN GENERAL.—The term ‘quali-
fied life sciences research’ means any 
qualified research— 
‘‘(I) with respect to the branch of 
knowledge or study of biology, bio-
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chemistry, biophysics, bioengineering, 
biotechnology, microbiology, genetics, 
or physiology (in each case as such 
knowledge or study relates to human 
beings), and 
‘‘(II) that is considered scientific 
research and development for pur-
poses of North American Industry 
Classification System code 5417. 
‘‘(ii) EXCEPTIONS.—Such term does 
not include sociology or psychology. 
‘‘(3) COORDINATION
WITH 965A.—This sub-
section shall not apply with respect to any taxpayer 
for any taxable year for which an election is in effect 
under section 965A (relating to limited deduction for 
life sciences jobs and investment in United States). 
‘‘(4) ELECTION.—Any election under this sub-
section shall be made in such manner as may be pre-
scribed by the Secretary, and shall be made with re-
spect to a taxable year not later than the due date 
(including extensions of time) for filing the tax-
payer’s return for such taxable year. 
‘‘(5) TERMINATION.—This subsection shall not 
apply to any taxable year beginning after December 
31, 2016.’’. 
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(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
the date of the enactment of this Act. 
SEC. 3. INCENTIVES TO INVEST IN LIFE SCIENCES JOBS, 
RESEARCH, AND FACILITIES. 
(a) IN GENERAL.—Subpart F of part III of sub-
chapter N of chapter 1 of the Internal Revenue Code of 
1986 is amended by adding at the end the following new 
section: 
‘‘SEC. 965A. LIMITED DEDUCTION FOR LIFE SCIENCES JOBS 
AND INVESTMENT IN UNITED STATES. 
‘‘(a) DEDUCTION.— 
‘‘(1) IN GENERAL.—In the case of a corpora-
tion which is a United States shareholder and for 
which the election under this section is in effect for 
the taxable year, there shall be allowed as a deduc-
tion an amount equal to 85 percent of the cash divi-
dends which are received during such taxable year 
by such shareholder from controlled foreign corpora-
tions. 
‘‘(2) DIVIDENDS PAID INDIRECTLY FROM CON-
TROLLED FOREIGN CORPORATIONS.—If, within the 
taxable year for which the election under this section 
is in effect, a United States shareholder receives a 
cash distribution from a controlled foreign corpora-
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tion which is excluded from gross income under sec-
tion 959(a), such distribution shall be treated for 
purposes of this section as a cash dividend to the ex-
tent of any amount included in income by such 
United 
States 
shareholder 
under 
section 
951(a)(1)(A), including as a result of any cash divi-
dend during such taxable year to— 
‘‘(A) such controlled foreign corporation 
from another controlled foreign corporation that 
is in a chain of ownership described in section 
958(a), or 
‘‘(B) any other controlled foreign corpora-
tion in such chain of ownership from another 
controlled foreign corporation in such chain of 
ownership, but only to the extent of cash dis-
tributions described in section 959(b) which are 
made during such taxable year to the controlled 
foreign corporation from which such United 
States shareholder received such distribution. 
‘‘(b) LIMITATIONS.— 
‘‘(1) IN GENERAL.—The amount of dividends 
taken into account under subsection (a) shall not ex-
ceed the lesser of— 
‘‘(A) $150,000,000, or 
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‘‘(B) the amount shown on the applicable 
financial statement as earnings permanently re-
invested outside the United States. 
The amounts described in subparagraph (B) shall be 
treated as being zero if there is no such statement 
or such statement fails to show a specific amount of 
such earnings. 
‘‘(2) DIVIDENDS MUST BE EXTRAORDINARY.— 
The amount of dividends taken into account under 
subsection (a) shall not exceed the excess (if any) 
of— 
‘‘(A) the cash dividends received during 
the taxable year by such shareholder from con-
trolled foreign corporations, over 
‘‘(B) the sum of— 
‘‘(i) the dividends received during the 
base period year by such shareholder from 
controlled foreign corporations, 
‘‘(ii) the amounts includible in such 
shareholder’s gross income for the base pe-
riod year under section 951(a)(1)(B) with 
respect to controlled foreign corporations, 
and 
‘‘(iii) the amounts that would have 
been included for the base period year but 
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for section 959(a) with respect to con-
trolled foreign corporations. 
Amounts described in subparagraph (B) shall 
be such amounts as shown on the most recent 
return filed for the base period year; except 
that amended returns filed after December 31, 
2010, shall not be taken into account. 
‘‘(3) REQUIREMENT
TO
INVEST
IN
LIFE 
SCIENCES.—Subsection (a) shall not apply to any 
dividend received by a United States shareholder un-
less the amount of the dividend is invested solely in 
the United States and solely for the purpose of— 
‘‘(A) the new hiring of additional sci-
entists, researchers, and comparable personnel 
engaged in qualified life sciences research, 
‘‘(B) payments to persons described in sec-
tion 41(h)(1)(B) and to other qualified organi-
zations which are used by such persons or orga-
nizations for qualified life sciences research, or 
‘‘(C) the building or leasing of new facili-
ties to be used primarily in the conduct of 
qualified life sciences research. 
‘‘(4) PROHIBITED USES.—Subsection (a) shall 
not apply to the amount of any dividend which is 
used by the taxpayer to pay remuneration for serv-
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ices of any covered employee (as defined in section 
162(m)(3)), to pay dividends to the shareholders of 
the taxpayer, or to pay interest or principal on any 
debt security of the taxpayer. 
‘‘(5) NO RESERVE.—Subsection (a) shall not 
apply to any dividend if the taxpayer’s compliance 
with this section is uncertain and requires a provi-
sion or reserve on the taxpayer’s applicable financial 
statements. 
‘‘(6) 
SEPARATE
ACCOUNT.—Subsection 
(a) 
shall not apply to any dividend unless the amount of 
the dividend is held in a separate account, trust, or 
other arrangement that segregates the amount from 
other funds of the taxpayer until the amount is used 
solely for the purposes described in paragraph (3). 
‘‘(c) SUBSTANTIATION OF COMPLIANCE.— 
‘‘(1) IN
GENERAL.—The taxpayer must sub-
stantiate its compliance with subsection (b) with 
written documents and such other credible evidence 
as the Secretary may reasonably require, and shall 
bear the burden of proof with respect to such sub-
stantiation. 
‘‘(2) CERTIFICATION.—The chief executive offi-
cer and the independent director serving as head of 
the audit committee of the taxpayer, or comparable 
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entity officials, shall attest in writing to the tax-
payer’s compliance with each of the requirements of 
subsection (b). 
‘‘(d) DEFINITIONS.—For purposes of this section— 
‘‘(1) QUALIFIED LIFE SCIENCES RESEARCH.— 
The term ‘qualified life sciences research’ shall have 
the meaning given such term by section 41(h). 
‘‘(2) QUALIFIED
ORGANIZATION.—The term 
‘qualified organization’ means any organization de-
scribed in subparagraph (A), (B), or (C) of section 
41(e)(6). 
‘‘(3) BASE PERIOD YEAR.—The term ‘base pe-
riod year’ means the taxable year which— 
‘‘(A) is among the 3 most recent taxable 
years ending on or before December 31, 2010, 
and 
‘‘(B) results in the determination of the 
highest amount under subsection (b)(2)(B). 
Rules similar to the rules of subparagraph (C) of 
section 965(c)(2) shall apply for purposes of this 
paragraph. 
‘‘(4) APPLICABLE
FINANCIAL
STATEMENT.— 
The term ‘applicable financial statement’ has the 
meaning given such term by section 965(c)(1), ap-
plied by substituting ‘the last day of the taxable year 
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with respect to which the deduction under section 
965A is determined’ for ‘June 30, 2003’ each place 
it appears. 
‘‘(5) DIVIDEND.—The term ‘dividend’ has the 
meaning given such term by section 965(c)(3). 
‘‘(e) SPECIAL RULES.—For purposes of this sec-
tion— 
‘‘(1) rules similar to the rules of paragraph (3) 
of section 965(b) shall apply, except that such para-
graph shall be applied by substituting ‘December 31, 
2010’ for ‘October 3, 2004’, and 
‘‘(2) rules similar to the rules of paragraphs (4) 
and (5) of section 965(c) shall apply, except that 
such paragraph (5) shall be applied— 
‘‘(A) by substituting ‘$150,000,000’ for 
‘$500,000,000’, and 
‘‘(B) without regard to the reference to 
subparagraph (C) of section 965(b)(1). 
‘‘(f) DENIAL OF FOREIGN TAX CREDIT.— 
‘‘(1) IN GENERAL.—No credit shall be allowed 
under section 901 for any taxes paid or accrued (or 
treated as paid or accrued) with respect to the de-
ductible portion of— 
‘‘(A) any dividend, or 
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‘‘(B) any amount described in subsection 
(a)(2) which is included in income under section 
951(a)(1)(A). 
No deduction shall be allowed under this chapter for 
any tax for which credit is not allowable by reason 
of the preceding sentence. 
‘‘(2) EXPENSES.—No deduction shall be al-
lowed for expenses directly allocable to the deduct-
ible portion described in paragraph (1). 
‘‘(3) DEDUCTIBLE PORTION.—For purposes of 
paragraph (1), unless the taxpayer otherwise speci-
fies, the deductible portion of any dividend or other 
amount is the amount which bears the same ratio to 
the amount of such dividend or other amount as the 
amount allowed as a deduction under subsection (a) 
for the taxable year bears to the amount described 
in subsection (b)(2)(A) for such year. 
‘‘(4) COORDINATION WITH SECTION 78.—Sec-
tion 78 shall not apply to any tax which is not allow-
able as a credit under section 901 by reason of this 
subsection. 
‘‘(g) ELECTION.—Any election under this section 
shall be made in such manner as may be prescribed by 
the Secretary, and shall be made with respect to a taxable 
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year not later than the due date (including extensions of 
time) for filing the taxpayer’s return for such taxable year. 
‘‘(h) TERMINATION.—This section shall not apply to 
any taxable year beginning after December 31, 2016.’’. 
(b) CLERICAL AMENDMENT.—The table of sections 
for subpart F of part III of subchapter N of chapter 1 
of the Internal Revenue Code of 1986 is amended by add-
ing at the end the following new section: 
‘‘Sec. 965A. Limited deduction for life sciences jobs and investment in United 
States.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
the date of the enactment of this Act. 
SEC. 4. COMPLIANCE AND REPORT TO CONGRESS. 
The Commissioner of Internal Revenue shall take 
such steps as are necessary to ensure full compliance with 
the provisions under section 41(h) and section 965A of 
the Internal Revenue Code of 1986 (as added by this Act). 
The Commissioner of Internal Revenue shall provide re-
ports to Congress on the status of such compliance and 
related enforcement not later than 90 days following the 
final due date of tax filings for the first taxable year in 
which an entity may elect application of section 41(h) or 
of section 965A of the Internal Revenue Code of 1986 (as 
so added). 
Æ 
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