SEC. 2. CREDIT FOR RESEARCH ACTIVITIES MADE PERMA-
NENT; INCREASED CREDIT FOR BUSINESSES 
MANUFACTURING IN THE UNITED STATES; 
CREDIT MADE REFUNDABLE FOR SMALL 
BUSINESSES. 
(a) RESEARCH CREDIT MADE PERMANENT.— 
(1) IN GENERAL.—Section 41 of the Internal 
Revenue Code of 1986 is amended by striking sub-
section (h). 
(2) CONFORMING AMENDMENTS.— 
(A) Subsection (c) of section 41 of such 
Code is amended by striking paragraph (4). 
(B) Paragraph (1) of section 45C(b) of 
such Code is amended by striking subparagraph 
(D). 
(3) EFFECTIVE DATE.—The amendments made 
by this subsection shall apply to amounts paid or in-
curred after December 31, 2011. 
(b) ENHANCED RESEARCH CREDIT FOR DOMESTIC 
MANUFACTURERS.— 
(1) IN GENERAL.—Section 41 of such Code, as 
amended by subsection (a), is amended by inserting 
after subsection (g) the following new subsection: 
‘‘(h) ENHANCED CREDIT FOR DOMESTIC MANUFAC-
TURERS.— 
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‘‘(1) IN GENERAL.—In the case of a qualified 
domestic manufacturer, this section shall be applied 
by increasing the 20 percent amount in subsection 
(a)(1) by the bonus amount. 
‘‘(2) QUALIFIED DOMESTIC MANUFACTURER.— 
For purposes of this subsection— 
‘‘(A) IN
GENERAL.—The term ‘qualified 
domestic manufacturer’ means any taxpayer 
who has a domestic production percentage of 
more than 50 percent. 
‘‘(B) DOMESTIC
PRODUCTION
PERCENT-
AGE.—The term ‘domestic production percent-
age’ means, with respect to any taxable year, 
the percentage determined by dividing— 
‘‘(i) the taxpayer’s domestic produc-
tion gross receipts (as defined in para-
graph (4) of section 199(c)) for such tax-
able year, by 
‘‘(ii) the amount which would be de-
termined under such paragraph with re-
spect to the taxpayer for such taxable year 
if the activities described in such para-
graph were taken into account without re-
gard to whether they occurred in the 
United States. 
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‘‘(3) BONUS AMOUNT.—For purposes of para-
graph (1), the bonus amount shall be determined as 
follows: 
‘‘If the domestic production 
The bonus 
percentage is: 
amount is: 
More than 50 percent but not more than 60 percent ...
2 percentage points 
More than 60 percent but not more than 70 percent ...
4 percentage points 
More than 70 percent but not more than 80 percent ...
6 percentage points 
More than 80 percent but not more than 90 percent ...
8 percentage points 
More than 90 percent ...................................................
10 percentage points’’. 
(2) EFFECTIVE DATE.—The amendment made 
by this section shall apply to expenditures paid or 
incurred in taxable years beginning after December 
31, 2011. 
(c) CREDIT MADE REFUNDABLE FOR SMALL BUSI-
NESSES.— 
(1) IN GENERAL.—Section 41 of such Code is 
amended by adding at the end the following new 
subsection: 
‘‘(i) CREDIT
REFUNDABLE
FOR
SMALL
BUSI-
NESSES.— 
‘‘(1) IN GENERAL.—In the case of a small busi-
ness (as defined in subsection (b)(3)(D)(iii)), 100 
percent of the credit determined under this section 
shall be treated as a credit allowable under subpart 
C (and not allowable under this subpart). 
‘‘(2) BUSINESSES WITH MORE THAN 500 EM-
PLOYEES BUT LESS THAN 800 EMPLOYEES.—If any 
person (not otherwise a small business (as so de-
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fined)) would be treated as such a small business if 
‘less than 800’ were substituted for ‘500 or fewer’ 
in subsection (b)(3)(D)(iii), such person shall be 
treated as a small business for purposes of this sub-
section but the applicable percentage determined in 
accordance with the following table shall be sub-
stituted for ‘100 percent’ in paragraph (1). 
‘‘If the annual number of 
The applicable 
employees is: 
percentage is: 
More than 500 but not more than 600 ............................
More than 600 but not more than 700 ............................
More than 700 but not more than 800 ............................
40’’. 
(2) EFFECTIVE DATE.—The amendment made 
by this subsection shall apply to taxable years begin-
ning after December 31, 2011. 
Æ 
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