search payments shall be treated as an 
amount paid in carrying on a trade or 
business of the taxpayer in the taxable 
year in which it is paid (without regard to 
the provisions of paragraph (3)(B)). 
‘‘(iii) CERTAIN
CORPORATIONS
NOT 
ELIGIBLE.—The term ‘corporation’ shall 
not include— 
‘‘(I) an S corporation, 
‘‘(II) a personal holding company 
(as defined in section 542), or 
‘‘(III) a service organization (as 
defined in section 414(m)(3)).’’. 
(3) CONFORMING AMENDMENTS.— 
(A) Section 41 of such Code is amended by 
striking subsection (e). 
(B) Section 41(f) of such Code is amended 
by striking paragraph (6). 
(C) Section 45C(b)(1(B)(ii) of such Code 
is amended by striking ‘‘65 percent’’ and insert-
ing ‘‘80 percent’’. 
(d) PERMANENT EXTENSION OF CREDIT.— 
(1) IN GENERAL.—Section 41 of the Internal 
Revenue Code of 1986 is amended by striking sub-
section (h). 
VerDate Aug 31 2005 
23:28 Apr 04, 2008
Jkt 069200
PO 00000
Frm 00009
Fmt 6652
Sfmt 6201
E:\BILLS\H5681.IH
H5681
hsrobinson on PROD1PC76 with BILLS
(2) CONFORMING AMENDMENT.—Paragraph (1) 
of section 45C(b) of such Code is amended by strik-
ing subparagraph (D). 
(3) EFFECTIVE DATE.—The amendments made 
by this subsection shall apply to taxable years begin-
ning after December 31, 2006. 
(e) CONFORMING AMENDMENTS.— 
(1) Section 41 of the Internal Revenue Code of 
1986 is amended by redesignating subsections (d), 
(f), and (g) as subsections (c), (d), and (e), respec-
tively. 
(2) Paragraphs (2)(A) and (5) (as redesignated 
by subsection (b)(2)) of section 41(b) of such Code 
are each amended by striking ‘‘subsection (f)(1)’’ 
and inserting ‘‘subsection (d)(1)’’. 
(3) 
Sections 
45C(d)(3), 
45G(e)(2), 
and 
936(h)(5)(C)(i)(IV)(c) of such Code are each 
amended by striking ‘‘section 41(f)’’ and inserting 
‘‘section 41(d)’’. 
(4) Section 54(l)(3)(A) of such Code is amend-
ed by striking ‘‘section 41(g)’’ and inserting ‘‘section 
41(e)’’. 
(5) Section 170(e)(4)(B)(i) of such Code is 
amended by striking ‘‘subparagraph (A) or subpara-
VerDate Aug 31 2005 
23:28 Apr 04, 2008
Jkt 069200
PO 00000
Frm 00010
Fmt 6652
Sfmt 6201
E:\BILLS\H5681.IH
H5681
hsrobinson on PROD1PC76 with BILLS
graph (B) of section 41(e)(6)’’ and inserting ‘‘clause 
(i) or (ii) of section 41(b)(4)(C)’’. 
(6) Sections 197(f)(1)(C), 197(f)(9)(C)(i)(II), 
and 280C(b)(3) of such Code are each amended by 
striking ‘‘section 41(f)(1)’’ and inserting ‘‘section 
41(d)(1)’’. 
(7) Section 280C(b)(3) of such Code is amend-
ed by striking ‘‘section 41(f)(5)’’ and inserting ‘‘sec-
tion 41(d)(5)’’. 
(8) Section 280C(b)(3) of such Code is amend-
ed by striking ‘‘section 41(f)(1)(B)’’ and inserting 
‘‘section 41(d)(1)(B)’’. 
(9) Section 280C(c)(1) of such Code is amend-
ed by striking ‘‘section 41(e)(2)’’ and inserting ‘‘sec-
tion 41(b)(4)(B)’’. 
(10) Section 280C(c)(2)(A) of such Code is 
amended by striking ‘‘section 41(a)(1)’’ and insert-
ing ‘‘section 41(a)’’. 
(11) Sections 936(j)(5)(D) and 965(c)(2)(C)(i) 
of such Code are each amended by striking ‘‘section 
41(f)(3)’’ and inserting ‘‘section 41(d)(3)’’. 
(f) EFFECTIVE DATE.—Except as otherwise provided 
in this section, the amendments made by this section shall 
apply to taxable years beginning after December 31, 2009. 
VerDate Aug 31 2005 
23:28 Apr 04, 2008
Jkt 069200
PO 00000
Frm 00011
Fmt 6652
Sfmt 6201
E:\BILLS\H5681.IH
H5681
hsrobinson on PROD1PC76 with BILLS
(g) STUDY OF COMPLIANCE WITH SUBSTANTIATION 
REQUIREMENTS.—The Secretary of the Treasury or his 
delegate shall, not later than 1 year after the date of the 
enactment of this Act, conduct a study of taxpayer compli-
ance with the substantiation requirements for claiming the 
credit allowed under section 41 of the Internal Revenue 
Code of 1986, including a study of— 
(1) whether taxpayers maintain adequate record 
keeping to determine eligibility for, and correct 
amount of, the credit, 
(2) the impact of failure to comply with such 
requirements on the oversight and enforcement re-
sponsibilities of the Internal Revenue Service, and 
(3) the burdens imposed on other taxpayers by 
failure to comply with such requirements. 
The Secretary shall report the results of such study to 
the Committee on Ways and Means of the House of Rep-
resentatives and the Committee on Finance of the Senate, 
including any recommendations for administrative or leg-
islative actions which could be taken to improve compli-
ance with such requirements. 
Æ 
VerDate Aug 31 2005 
23:28 Apr 04, 2008
Jkt 069200
PO 00000
Frm 00012
Fmt 6652
Sfmt 6301
E:\BILLS\H5681.IH
H5681
hsrobinson on PROD1PC76 with BILLS