I 
114TH CONGRESS 
1ST SESSION 
H. R. 256 
To amend the Internal Revenue Code of 1986 to allow a credit against 
income tax for equity investments in research intensive small business 
concerns. 
IN THE HOUSE OF REPRESENTATIVES 
JANUARY 9, 2015 
Mr. HONDA 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 
credit against income tax for equity investments in re-
search intensive small business concerns. 
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 ‘‘Creating Jobs From 
Innovative Small Businesses Act of 2015’’. 
SEC. 2. CREDIT FOR INVESTMENTS IN SMALL TECHNOLOGY 
INNOVATION COMPANIES. 
(a) IN GENERAL.—Subpart D of part IV of sub-
chapter A of chapter 1 of the Internal Revenue Code of 
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1986 is amended by adding at the end the following new 
section: 
‘‘SEC. 45S. RESEARCH INTENSIVE INVESTMENT TAX CRED-
IT. 
‘‘(a) ALLOWANCE OF CREDIT.—For purposes of sec-
tion 38, the research intensive investment tax credit deter-
mined under this section for the taxable year is an amount 
equal to 20 percent of the amount paid by the taxpayer 
during such year to acquire a qualified equity investment 
in a qualified research intensive small business concern. 
‘‘(b) MAXIMUM CREDIT.— 
‘‘(1) IN GENERAL.—The taxpayer’s credit de-
termined under this section for the taxable year 
shall not exceed the excess (if any) of— 
‘‘(A) $100,000, over 
‘‘(B) the taxpayer’s (and any prede-
cessor’s) aggregate credit determined under this 
section for all prior taxable years. 
‘‘(2) RELATED PARTIES.— 
‘‘(A) IN GENERAL.—For purposes of para-
graph (1), all related persons shall be treated as 
1 person, and the dollar amount in paragraph 
(1)(A) shall be allocated among such persons 
under regulations prescribed by the Secretary. 
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‘‘(B) RELATED PERSONS.—A person shall 
be treated as related to another person if the 
relationship between such persons would result 
in the disallowance of losses under section 267 
or 707(b). 
‘‘(c) DEFINITIONS.—For purposes of this section— 
‘‘(1) QUALIFIED EQUITY INVESTMENT.— 
‘‘(A) IN
GENERAL.—The term ‘qualified 
equity investment’ means any equity investment 
in a qualified research intensive small business 
concern if— 
‘‘(i) such investment is acquired by 
the taxpayer at its original issue (directly 
or through an underwriter) solely in ex-
change for cash, and 
‘‘(ii) such investment is designated for 
purposes of this section by such concern. 
‘‘(B) EQUITY
INVESTMENT.—The term 
‘equity investment’ means— 
‘‘(i) any stock (other than non-
qualified preferred stock as defined in sec-
tion 351(g)(2)) in an entity which is a cor-
poration, and 
‘‘(ii) any capital interest in an entity 
which is a partnership. 
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‘‘(C) REDEMPTIONS.—A rule similar to the 
rule of section 1202(c)(3) shall apply for pur-
poses of this subsection. 
‘‘(2) QUALIFIED RESEARCH INTENSIVE SMALL 
BUSINESS CONCERN.—The term ‘qualified research 
intensive small business concern’ means, with re-
spect to any taxable year, any small business con-
cern (as defined in section 3 of the Small Business 
Act) if— 
‘‘(A) such concern employs an average of 
fewer than 500 employees on business days dur-
ing such year, and 
‘‘(B) at least 50 percent of the gross ex-
penditures of such entity for such year are re-
search or experimental expenditures under sec-
tion 174. 
‘‘(d) NATIONAL LIMITATION ON AMOUNT OF INVEST-
MENTS DESIGNATED.— 
‘‘(1) IN GENERAL.—There is a research inten-
sive investment tax credit limitation for each cal-
endar year. Such limitation is— 
‘‘(A) $500,000,000 for 2015, 
‘‘(B) $750,000,000 for 2016 and 2017, 
and 
‘‘(C) $1,000,000,000 for 2018 and 2019. 
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‘‘(2) ALLOCATION OF LIMITATION.—The limita-
tion under paragraph (1) shall be allocated by the 
Secretary among qualified research intensive small 
business concerns selected by the Secretary. 
‘‘(3) CARRYOVER OF UNUSED LIMITATION.—If 
the research intensive investment tax credit limita-
tion for any calendar year exceeds the aggregate 
amount allocated under paragraph (2) for such year, 
such limitation for the succeeding calendar year 
shall be increased by the amount of such excess. No 
amount may be carried under the preceding sentence 
to any calendar year after 2023. 
‘‘(e) CERTAIN TAXPAYERS NOT ELIGIBLE.—No cred-
it shall be determined under this section for any equity 
investment in any qualified research intensive small busi-
ness concern made by any individual who, at the time of 
the investment, is— 
‘‘(1) an employee of such concern, or 
‘‘(2) a member of the family (within the mean-
ing of section 267(c)(4)) of an employee of such con-
cern. 
‘‘(f) BASIS REDUCTION.—The basis of any qualified 
equity investment shall be reduced by the amount of any 
credit determined under this section with respect to such 
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investment. This subsection shall not apply for purposes 
of sections 1202, 1400B, and 1400F. 
‘‘(g) REGULATIONS.—The Secretary shall prescribe 
such regulations as may be appropriate to carry out this 
section, including regulations— 
‘‘(1) which prevent the abuse of the purposes of 
this section, 
‘‘(2) which impose appropriate reporting re-
quirements, and 
‘‘(3) which apply the provisions of this section 
to newly formed entities.’’. 
(b) CREDIT MADE PART OF GENERAL BUSINESS 
CREDIT.—Subsection (b) of section 38 of such Code (re-
lating to current year business credit) is amended by strik-
ing ‘‘plus’’ at the end of paragraph (35), by striking the 
period at the end of paragraph (36) and inserting ‘‘, plus’’, 
and by adding at the end the following new paragraph: 
‘‘(37) the research intensive investment tax 
credit determined under section 45S.’’. 
(c) CLERICAL AMENDMENT.—The table of sections 
for subpart D of part IV of subchapter A of chapter 1 
of such Code is amended by adding at the end the fol-
lowing new item: 
‘‘Sec. 45S. Research intensive investment tax credit.’’. 
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(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to investments made after Decem-
ber 31, 2014, in taxable years ending after such date. 
Æ 
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