includes any equity investment which would (but for 
paragraph (1)(A)) be a qualified equity investment 
in the hands of the taxpayer if such investment was 
a qualified equity investment in the hands of a prior 
holder. 
‘‘(4) REDEMPTIONS.—A rule similar to the rule 
of section 1202(c)(3) shall apply for purposes of this 
subsection. 
‘‘(5) EQUITY INVESTMENT.—The term ‘equity 
investment’ means any stock (other than non-
qualified preferred stock as defined in section 
351(g)(2)) in an entity which is a corporation. 
‘‘(c) QUALIFIED COUNTERMEASURES COMPANY.— 
For purposes of this section— 
‘‘(1) IN GENERAL.—The term ‘qualified coun-
termeasures company’ means any domestic bio-
medical research corporation (as defined in section 
328(l)(9)(B)) that the Secretary of Health and 
Human Services determines has significant potential 
to lead to the development of a covered counter-
measure. 
‘‘(2) COVERED COUNTERMEASURE.—The term 
‘covered countermeasure’ has the meaning given 
such term in division C of the Department of De-
fense, Emergency Supplemental Appropriations to 
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Address Hurricanes in the Gulf of Mexico, and Pan-
demic Influenza Act, 2006. 
‘‘(d) NATIONAL LIMITATION ON AMOUNT OF INVEST-
MENTS DESIGNATED.— 
‘‘(1) IN GENERAL.—There is a qualified coun-
termeasures 
equity 
tax 
credit 
limitation 
of 
$150,000,000 for each taxable year. 
‘‘(2) ALLOCATION OF LIMITATION.—The limita-
tion under paragraph (1) shall be allocated by the 
Secretary among qualified countermeasures compa-
nies selected by the Secretary. In making allocations 
under the preceding sentence, the Secretary shall 
give priority to the extent to which it is reasonably 
anticipated that a qualified countermeasures com-
pany would have insufficient taxable income and tax 
liability to utilize research tax credits and other tax 
incentives provided by section 106 of the U.S. 
Healthcare Technologies Competitiveness Act of 
2006. 
‘‘(3) CARRYOVER OF UNUSED LIMITATION.—If 
the qualified countermeasures equity tax credit limi-
tation for any taxable year exceeds the aggregate 
amount allocated under paragraph (2) for such year, 
such limitation for the succeeding taxable year shall 
be increased by the amount of such excess. 
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‘‘(e) DENIAL OF DOUBLE BENEFIT.—With respect to 
a qualified countermeasures equity investment in a quali-
fied countermeasures company, the countermeasures eq-
uity tax credit described in subsection (a) shall not apply 
in the case of a taxable year in which such qualified coun-
termeasures company elects to apply a tax incentive de-
scribed in section 106 of the U.S. Healthcare Technologies 
Competitiveness Act of 2006. 
‘‘(f) RECAPTURE OF CREDIT IN CERTAIN CASES.— 
‘‘(1) IN GENERAL.—If, at any time during the 
4-year period beginning on the date of the original 
issue of a qualified countermeasures equity invest-
ment in a qualified countermeasures company, there 
is a recapture event with respect to such investment, 
then the tax imposed by this chapter for the taxable 
year in which such event occurs shall be increased 
by the credit recapture amount. 
‘‘(2) CREDIT RECAPTURE AMOUNT.—For pur-
poses of paragraph (1), the credit recapture amount 
is an amount equal to the sum of— 
‘‘(A) the aggregate decrease in the credits 
allowed to the taxpayer under section 38 for all 
prior taxable years which would have resulted if 
no credit had been determined under this sec-
tion with respect to such investment, plus 
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‘‘(B) interest at the underpayment rate es-
tablished under section 6621 on the amount de-
termined under subparagraph (A) for each 
prior taxable year for the period beginning on 
the due date for filing the return for the prior 
taxable year involved. 
No deduction shall be allowed under this chapter for 
interest described in subparagraph (B). 
‘‘(3) RECAPTURE
EVENT.—For purposes of 
paragraph (1), there is a recapture event with re-
spect to a qualified countermeasures equity invest-
ment in a qualified countermeasures company if— 
‘‘(A) such company ceases to be a qualified 
countermeasures company, or 
‘‘(B) such investment is redeemed by such 
company. 
‘‘(4) SPECIAL RULES.— 
‘‘(A) TAX
BENEFIT
RULE.—The tax for 
the taxable year shall be increased under para-
graph (1) only with respect to credits allowed 
by reason of this section which were used to re-
duce tax liability. In the case of credits not so 
used to reduce tax liability, the carryforwards 
and carrybacks under section 39 shall be appro-
priately adjusted. 
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‘‘(B) NO CREDITS AGAINST TAX.—Any in-
crease in tax under this subsection shall not be 
treated as a tax imposed by this chapter for 
purposes of determining the amount of any 
credit under this chapter or for purposes of sec-
tion 55. 
‘‘(g) BASIS REDUCTION.—The basis of any qualified 
countermeasures equity investment shall be reduced by the 
amount of any credit determined under this section with 
respect to such investment. This subsection shall not apply 
for purposes of sections 1202, 1400B, and 1400F. 
‘‘(h) REGULATIONS.—The Secretary shall prescribe 
such regulations as may be appropriate to carry out this 
section, including regulations which— 
‘‘(1) prevent the abuse of the purposes of this 
section, 
‘‘(2) impose appropriate reporting require-
ments, and 
‘‘(3) apply the provisions of this section to 
newly formed entities.’’. 
(b) CREDIT TO BE PART OF GENERAL BUSINESS 
CREDIT.—Section 38(b) (as amended by this Act) is fur-
ther amended by striking ‘‘and’’ at the end of paragraph 
(31), by striking the period at the end of paragraph (32) 
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and inserting ‘‘, and’’, and by adding at the end the fol-
lowing: 
‘‘(33) the countermeasures equity investment 
credit determined under section 45O(a).’’. 
(c) DEDUCTION FOR UNUSED PORTION OF CRED-
IT.—Section 196(c) (as amended by this Act) is further 
amended by striking ‘‘and’’ at the end of paragraph (14), 
by striking the period at the end of paragraph (15) and 
inserting ‘‘, and’’, and by adding at the end the following 
new paragraph: 
‘‘(16) the countermeasures equity investment 
credit determined under section 45O(a),’’. 
(d) CLERICAL AMENDMENT.—The table of sections 
for subpart D of part IV of subchapter A of chapter 1 
(as amended by this Act) is further amended by adding 
after the item relating to section 45N the following: 
‘‘Sec. 45O. Countermeasures equity tax credit.’’. 
(e) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2006. 
SEC. 108. BIOTECHNOLOGY SCIENCE PARKS. 
(a) EXPENSING.— 
(1) IN GENERAL.—Section 179(d) (relating to 
definitions and special rules) is amended by adding 
at the end the following new paragraph: 
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‘‘(11) APPLICATION OF SECTION TO PROPERTY 
PLACED IN SERVICE IN BIOTECHNOLOGY SCIENCE 
PARKS.— 
‘‘(A) IN GENERAL.—In the case of any sec-
tion 179 property placed in service in any bio-
technology science park, this section shall be 
applied without regard to paragraphs (1) and 
(2) of subsection (b). 
‘‘(B) BIOTECHNOLOGY SCIENCE PARK.— 
‘‘(i) IN
GENERAL.—The term ‘bio-
technology science park’ means a group of 
interrelated companies and institutions, in-
cluding suppliers, service providers, institu-
tions of higher education, start-up incuba-
tors, and trade associations, that— 
‘‘(I) cooperates and competes in 
the field of biomedical research and 
medical devices, 
‘‘(II) is located in the United 
States, 
‘‘(III) promotes real estate devel-
opment, 
technology 
transfer, 
and 
partnerships between such companies 
and institutions, and 
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‘‘(IV) is not a business or indus-
trial park. 
‘‘(ii) 
BUSINESS
OR
INDUSTRIAL 
PARK.—The term ‘business or industrial 
park’ means a for-profit real estate venture 
of businesses or industries which do not 
necessarily reinforce each other through 
supply chain or technology transfer mecha-
nisms.’’. 
(2) EFFECTIVE DATE.—The amendment made 
by this subsection shall apply with respect to prop-
erty placed in service after the date of the enactment 
of this Act. 
(b) TAX CREDIT FOR RESEARCH ACTIVITIES.— 
(1) IN GENERAL.—Section 41(a) (relating to 
credit for increasing research activities) is amended 
by striking ‘‘and’’ at the end of paragraph (2), by 
striking the period at the end of paragraph (3) and 
inserting ‘‘, and’’, and by adding at the end the fol-
lowing new paragraph: 
‘‘(4) 20 percent of the qualified research ex-
penses paid or incurred by the taxpayer in carrying 
on any trade or business located in a biotechnology 
science park during the taxable year.’’. 
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(2) BIOTECHNOLOGY SCIENCE PARK.—Section 
41(f) (relating to special rules) is amended by add-
ing at the end the following new paragraph: 
‘‘(7) BIOTECHNOLOGY SCIENCE PARK.— 
‘‘(A) 
IN
GENERAL.—The 
term 
‘bio-
technology science park’ means a group of 
interrelated companies and institutions, includ-
ing suppliers, service providers, institutions of 
higher education, start-up incubators, and trade 
associations, that— 
‘‘(i) cooperates and competes in the 
field of biomedical research and medical 
devices, 
‘‘(ii) is located in the United States, 
‘‘(iii) promotes real estate develop-
ment, technology transfer, and partner-
ships between such companies and institu-
tions, and 
‘‘(iv) is not a business or industrial 
park. 
‘‘(B) BUSINESS OR INDUSTRIAL PARK.— 
The term ‘business or industrial park’ means a 
for-profit real estate venture of businesses or 
industries which do not necessarily reinforce 
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each other through supply chain or technology 
transfer mechanisms.’’. 
(3) EFFECTIVE DATE.—The amendments made 
by this subsection shall apply to taxable years begin-
ning after December 31, 2006. 
(c) PRIVATE BUSINESS USE OF A BOND-FINANCED 
FACILITY.— 
(1) IN GENERAL.—Subparagraph (A) of section 
141(b)(6) (defining private business use) is amended 
by inserting ‘‘or use in the performance of research 
using, in whole or in part, funds of the United 
States or any agency or instrumentality thereof’’ be-
fore ‘‘shall not be taken into account’’. 
(2) EFFECTIVE DATE.— 
(A) IN GENERAL.—The amendment made 
by this subsection shall apply to any use on or 
after the date of the enactment of this Act. 
(B) NO
INFERENCE.—Nothing in the 
amendment made by this subsection shall be 
construed to create any inference with respect 
to the use of tax-exempt bond financed facilities 
before the effective date of such amendment. 
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SEC. 109. EXPENSING FOR QUALIFIED MEDICAL RESEARCH 
EQUIPMENT. 
(a) IN GENERAL.—Part VI of subchapter B of chap-
ter 1 (relating to itemized deductions for individuals and 
corporations) is amended by inserting after section 179D 
the following new section: 
‘‘SEC. 179E. ELECTION TO EXPENSE CERTAIN MEDICAL RE-
SEARCH EQUIPMENT. 
‘‘(a) TREATMENT AS EXPENSES.— A biomedical re-
search corporation (as defined in section 382(l)(9)(B)) 
may elect to treat the cost of any qualified medical re-
search property as an expense which is not chargeable to 
capital account. Any cost so treated shall be allowed as 
a deduction for the taxable year in which the qualified 
property is placed in service. 
‘‘(b) ELECTION.— 
‘‘(1) IN GENERAL.—An election under this sec-
tion for any taxable year shall be made on the tax-
payer’s return of the tax imposed by this chapter for 
the taxable year. Such election shall be made in such 
manner as the Secretary may by regulations pre-
scribe. 
‘‘(2) ELECTION
IRREVOCABLE.—Any election 
made under this section may not be revoked except 
with the consent of the Secretary. 
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‘‘(c) QUALIFIED MEDICAL RESEARCH PROPERTY.— 
The term ‘qualified medical research property’ means any 
property— 
‘‘(1) the original use of which commences with 
the taxpayer, 
‘‘(2) that is placed in service by the taxpayer 
after the date of the enactment of this section, 
‘‘(3) that is customary in the bioscience re-
search industry, and 
‘‘(4) that is required for the taxpayer’s ad-
vanced biomedical research.’’. 
(b) CONFORMING AMENDMENTS.— 
(1) Section 1245(a) is amended by inserting 
‘‘179E,’’ after ‘‘179D,’’ both places it appears in 
paragraphs (2)(C) and (3)(C). 
(2) Section 263(a)(1) is amended by striking 
‘‘or’’ at the end of subparagraph (J), by striking the 
period at the end of subparagraph (K) and inserting 
‘‘, or’’, and by inserting after subparagraph (K) the 
following new subparagraph: 
‘‘(L) expenditures for which a deduction is 
allowed under section 179E.’’. 
(3) Section 312(k)(3)(B) is amended by strik-
ing ‘‘or 179D’’ each place it appears in the heading 
and text and inserting ‘‘179D, or 179E’’. 
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(4) The table of sections for part VI of sub-
chapter B of chapter 1 of such Code is amended by 
inserting after the item relating to section 179D the 
following new item: 
‘‘Sec. 179E. Election to expense certain medical research equipment.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to properties placed in service after 
the date of the enactment of this Act. 
TITLE 
II—PROVISIONS 
RELAT-
ING TO INVESTOR TAX INCEN-
TIVES 
SEC. 201. CAPITAL GAINS ROLLOVER. 
(a) IN GENERAL.— 
(1) Section 1045(a) is amended by inserting 
‘‘or biomedical research corporation stock’’ after 
‘‘qualified small business stock’’ each place it ap-
pears herein. 
(2) Section 1045(b) is amended by redesig-
nating paragraphs (2), (3), (4), and (5) as para-
graphs (3), (4), (5), and (6), respectively, and by in-
serting after paragraph (1) the following new para-
graph: 
‘‘(2) BIOMEDICAL RESEARCH CORPORATION.— 
The term ‘biomedical research corporation’ has the 
meaning 
given 
to 
such 
term 
in 
section 
382(l)(9)(B).’’. 
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(b) CONFORMING AMENDMENTS.— 
(1) The heading for section 1045 is amended by 
inserting ‘‘OR
BIOMEDICAL
RESEARCH’’ after 
‘‘SMALL BUSINESS’’ each time it appears. 
(2) The item relating to section 1045 in the 
table of sections for part III of subchapter O of 
chapter 1 is amended by inserting ‘‘or biomedical re-
search’’ after ‘‘small business’’ each time it appears. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2006. 
SEC. 202. TREATMENT OF ORDINARY LOSSES. 
(a) IN GENERAL.— 
(1) Section 1244(a) and (d) are amended by in-
serting ‘‘or biomedical research corporation stock’’ 
after ‘‘1244 stock.’’ 
(2) Section 1244 is amended by redesignating 
subsection (d) as subsection (e) and by inserting 
after subsection (c) the following new subsection: 
‘‘(d) BIOMEDICAL RESEARCH CORPORATION STOCK 
DEFINED.—For purposes of this section— 
‘‘(1) IN GENERAL.—The term ‘biomedical re-
search corporation stock’ means stock in a domestic 
corporation if— 
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‘‘(A) at the time such stock is issued, such 
corporation was a biomedical research corpora-
tion, and 
‘‘(B) such stock was issued by such cor-
poration for money or other property (other 
than stock or securities). 
‘‘(2) BIOMEDICAL RESEARCH CORPORATION.— 
‘‘(A) IN GENERAL.— The term ‘biomedical 
research corporation’ means a corporation 
that— 
‘‘(i) is subject to tax under this sub-
chapter at the time such stock is issued, 
‘‘(ii) is not in bankruptcy, 
‘‘(iii) holds the rights to a drug or 
biologic for which an investigational new 
drug application is in effect under section 
505 of the Federal Food, Drug, and Cos-
metic Act or holds the rights to a device 
for which an investigational device exemp-
tion is approved under section 520(g) of 
such Act, 
‘‘(iv) certifies that, as of the time of 
such stock issuance, the drug, biologic, or 
device is, or in the 6-month period begin-
ning 3 months before such closing has 
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been, under study pursuant to an active in-
vestigational new drug or device applica-
tion approved by the Commissioner of the 
Food and Drug Administration, 
‘‘(v) has aggregate gross assets before 
and after the issuance that do not exceed 
$50,000,000, and 
‘‘(vi) agrees to submit such reports to 
the Secretary and to shareholders as the 
Secretary may require to carry out the 
purposes of this section.’’. 
(b) CONFORMING AMENDMENTS.— 
(1) The heading for section 1244 is amended by 
inserting ‘‘OR
BIOMEDICAL
RESEARCH’’ before 
‘‘STOCK’’. 
(2) The item relating to section 1244 in the 
table of sections for part IV of subchapter P of 
chapter 1 is amended by inserting ‘‘or biomedical re-
search’’ before ‘‘stock.’’ 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to stock issued after December 31, 
2006. 
SEC. 203. EQUITY CREDIT FOR INCUBATIONAL FIRMS. 
(a) IN GENERAL.—Subpart D of part IV of sub-
chapter A of chapter 1 (as amended by this Act) is amend-
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ed by inserting after section 45O the following new sec-
tion: 
‘‘SEC. 45P. INCUBATIONAL EQUITY TAX CREDIT. 
‘‘(a) ALLOWANCE OF CREDIT.— 
‘‘(1) GENERAL RULE.—For purposes of section 
38, in the case of a taxpayer who makes a qualified 
incubational equity investment during the taxable 
year, the incubational equity tax credit determined 
under this section for such taxable year is an 
amount equal to the applicable percentage of the 
amount paid to the qualified incubational company 
solely in exchange for its stock at original issue. 
‘‘(2) APPLICABLE PERCENTAGE.—For purposes 
of paragraph (1), the applicable percentage is 40 
percent. 
‘‘(b) QUALIFIED INCUBATIONAL EQUITY INVEST-
MENT.—For purposes of this section— 
‘‘(1) IN GENERAL.—The term ‘qualified incuba-
tional equity investment’ means any equity invest-
ment in a qualified incubational company if— 
‘‘(A) such investment is acquired by the 
taxpayer at its original issue (directly or 
through an underwriter) solely in exchange for 
cash, 
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‘‘(B) not less than 1⁄2 of such cash is used 
by the qualified incubational company with re-
spect to qualifying research under section 41, 
and 
‘‘(C) such investment is designated for 
purposes of this section by the qualified incuba-
tional company. 
Such term shall not include any equity investment 
issued by a qualified incubational company more 
than 5 years after the date that such company re-
ceives an allocation under subsection (d). Any alloca-
tion not used within such 5-year period may be re-
allocated by the Secretary under subsection (d). 
‘‘(2) LIMITATION.—The maximum amount of 
equity investments issued by a qualified incubational 
company which may be designated under paragraph 
(1)(C) by such company shall not exceed the portion 
of the limitation amount allocated under subsection 
(f) to such company. 
‘‘(3) 
TREATMENT
OF
SUBSEQUENT
PUR-
CHASERS.—The term ‘qualified equity investment’ 
includes any equity investment which would (but for 
paragraph (1)(A)) be a qualified equity investment 
in the hands of the taxpayer if such investment was 
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