I 
112TH CONGRESS 
2D SESSION 
H. R. 6353 
To amend the Internal Revenue Code of 1986 to allow a deduction for 
patent box profit from the use of United States patents. 
IN THE HOUSE OF REPRESENTATIVES 
AUGUST 2, 2012 
Ms. SCHWARTZ (for herself and Mr. BOUSTANY) 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 allow a 
deduction for patent box profit from the use of United 
States patents. 
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 ‘‘Manufacturing Amer-
ican Innovation Act of 2012’’. 
SEC. 2. DEDUCTION FOR PATENT BOX PROFITS. 
(a) IN GENERAL.—Part VI of subchapter B of chap-
ter 1 of the Internal Revenue Code of 1986 is amended 
by adding at the end the following new section: 
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‘‘SEC. 200. PATENT BOX PROFITS. 
‘‘(a) ALLOWANCE OF DEDUCTION.—If the taxpayer 
elects the application of this section, there shall be allowed 
as a deduction an amount equal to 71 percent of the lesser 
of— 
‘‘(1) the patent box profit of the taxpayer for 
the taxable year, or 
‘‘(2) taxable income (determined without regard 
to this section) for the taxable year. 
‘‘(b) PATENT BOX PROFIT.—For purposes of this 
section— 
‘‘(1) IN
GENERAL.—Except as provided by 
paragraph (9), the term ‘patent box profit’ means, 
with respect to a taxable year, IP profit multiplied 
by the ratio— 
‘‘(A) the numerator of which is the 5-year 
research and development expenditures of the 
taxpayer with respect to the taxable year, and 
‘‘(B) the denominator of which is the 5- 
year total costs of the taxpayer with respect to 
the taxable year. 
‘‘(2) IP PROFIT.—The term ‘IP profit’ means 
the excess (if any) of— 
‘‘(A) patent gross receipts, over 
‘‘(B) the sum of— 
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‘‘(i) the taxpayer’s cost of goods sold 
for the taxable year that are properly allo-
cable to patent gross receipts, 
‘‘(ii) other expenses, losses, or deduc-
tions (other than the deduction allowed 
under this section), which are properly al-
locable to patent gross receipts, as deter-
mined by the Secretary, plus 
‘‘(iii) routine profit. 
‘‘(3) ROUTINE
PROFIT.—The term ‘routine 
profit’ means— 
‘‘(A) the taxpayer’s cost of goods sold for 
the taxable year properly allocable to patent 
gross receipts reduced by the sum of cost of 
raw materials, cost of items purchased for re-
sale, and amounts incurred for intangible prop-
erty rights (including royalties and amortiza-
tion), multiplied by 
‘‘(B) 15 percent. 
‘‘(4) ALLOCATION
METHOD.—The Secretary 
shall prescribe rules for the proper allocation of 
items described in this paragraph for purposes of de-
termining patent box profit. Such rules shall provide 
for the proper allocation of items whether or not 
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