local government loans, loan guarantees, or tax and
regulatory relief.
(b) SPECIAL CONSIDERATION.—The advisory panel
and the Secretary shall give special consideration and pri-
ority to applications—
(1) that would enhance the ability of small busi-
nesses to incorporate technological developments;
(2) that would assist disadvantaged urban areas
and communities impacted by reductions in Federal
defense spending through the creation of new oppor-
tunities for employment and worker skill upgrading
in those communities;
(3) that would create or enhance an applied re-
search facility at a university;
(4) that would target assistance to universities
with a history of substantial Federal research fund-
ing and experience; and
(5) if the applicant, or one of the participants
in a group applicant, is a university that has pre-
viously submitted a proposal that was selected, or
has been one of the participants in a group that sub-
mitted a proposal that was selected, as a University
Technology Development Program or as a Univer-
sity-Industry Technology Partnership.
(c) EQUAL SELECTION.—To the extent possible, tak-
ing into consideration the number and nature of applica-
tions received under sections 7 and 8, the Secretary and
the advisory panel shall attempt to select an equal number
of University Technology Development Programs and Uni-
versity-Industry Technology Partnerships each year.
SEC. 11. SELECTION.
(a) SELECTION.—The Secretary shall annually select
no fewer than 10 but no more than 25 meritorious propos-
als, from among those recommended by the advisory panel
under section 9(b), as University Technology Development
Programs or University-Industry Technology Partnerships
eligible to receive assistance under section 12.
(b) EXPLANATION BY SECRETARY.—Each applicant
whose proposal is recommended by the advisory panel
under section 9(b) but not selected under this section may
request an explanation from the Secretary for the decision
not to select its proposal. The Secretary shall provide such
applicant a description of changes to the application that
the Secretary would consider significant during any recon-
sideration of such application. Applicants may resubmit
an application, with or without modification, in any subse-
quent year in which the Secretary is authorized to select
University Technology Development Programs and Uni-
versity-Industry Technology Partnerships.
SEC. 12. DIRECT ASSISTANCE.
The Secretary shall, to the extent appropriations are
available for such purpose, provide financial assistance, in
the form of a grant, loan, or loan guarantee, and appro-
priate technical assistance, to University Technology De-
velopment Programs and to University-Industry Tech-
nology Partnerships selected under section 11. Assistance
under this section shall not exceed 50 percent of the total
cost of the activities proposed, and no applicant shall re-
ceive more than $5,000,000 under this section.
SEC. 13. REQUIRED CONTRIBUTION.
(a) PRIVATE ENTERPRISES.—The private business
entities participating in a University-Industry Technology
Partnership shall contribute a minimum of 50 percent of
the capital requirements of the University-Industry Tech-
nology Partnership. Such contribution may be met
through approved financing mechanisms, as defined by the
Secretary by regulation, including available private and
public equity and debt financing and State and Federal
small business assistance programs.
(b) UNIVERSITIES.—The university or universities
participating in a University Technology Development
Program shall contribute minimum of 25 percent of the
capital requirements of the program. Such contribution
may be met through approved financing mechanisms, as
defined by the Secretary by regulation.
SEC. 14. TECHNOLOGY PARTNERSHIP ACCOUNTS; ALTER-
NATIVE INVESTMENT TAX CREDIT.
(a) TECHNOLOGY PARTNERSHIP ACCOUNTS.—
(1) IN GENERAL.—Chapter 77 of the Internal
Revenue Code of 1986 (relating to miscellaneous
provisions) is amended by adding at the end thereof
the following new section:
‘‘SEC. 7524. TECHNOLOGY PARTNERSHIP ACCOUNTS.
‘‘(a) AGREEMENT RULES.—Any University-Industry
Technology Partnership selected under section 11(a) of
the University-Industry Technology Development Act may
enter into an agreement with the Secretary under, and as
provided in, this section to establish a technology partner-
ship account (hereafter in this section referred to as the
‘account’). Any agreement entered into under this section
shall be for the purpose of accomplishing the goals of such
partnership in accordance with the actions proposed by
such partnership in its application under section 8 of the
University-Industry Technology Development Act, and
shall provide for the deposit in the account of the amounts
agreed upon as necessary or appropriate to provide for
qualified withdrawals under subsection (f). The deposits
in the account, and all withdrawals from the account,
whether qualified or nonqualified, shall be subject to such
conditions and requirements as the Secretary may by reg-
ulations prescribe or as set forth in such agreement.
‘‘(b) CEILING ON DEPOSITS.—
‘‘(1) LIMIT
DURING
FIRST
YEARS.—The
amount deposited under subsection (a) in the ac-
count for any of the first 5 taxable years following
the taxable year in which an agreement was entered
into shall not exceed the average of the sum of the
following amounts for the 5 taxable years preceding
the taxable year for which the determination is being
made:
‘‘(A) The amount allowable as a deduction
under section 167 for such taxable year.
‘‘(B) The net proceeds from—
‘‘(i) the sale or other disposition of
any property of a character subject to the
allowance for depreciation, or
‘‘(ii) insurance or indemnity attrib-
utable to any such property.
‘‘(C) The receipts from the investment or
reinvestment of amounts held in such account.
‘‘(2) LIMIT AFTER 5 YEARS.—The amount de-
posited under subsection (a) in the account for any
taxable year after such 5th taxable year shall not ex-
ceed the amount specified in paragraph (1)(C).
‘‘(c) REQUIREMENTS AS TO INVESTMENTS.—
‘‘(1) IN GENERAL.—Amounts in any account
established under this section shall be kept in the
depository or depositories specified in the agreement
and shall be subject to such trustee and other fidu-
ciary requirements as may be specified by the Sec-
retary.
‘‘(2) 
LIMITATION
OF
ACCOUNT
INVEST-
MENTS.—Amounts in an account may be invested
only in interest-bearing securities approved by the
Secretary; except that, if the Secretary consents
thereto, an agreed percentage (not in excess of 60
percent) of the assets of the account may be invested
in the stock of domestic corporations. Such stock
must be currently fully listed and registered on an
exchange registered with the Securities and Ex-
change Commission or a national securities exchange
and must be stock which would be acquired by pru-
dent men of discretion and intelligence in such mat-
ters who are seeking a reasonable income and the
preservation of capital. If at any time the fair mar-
ket value of the stock in the account is more than
the agreed percentage of the assets in the account,
any subsequent investment of withdrawal from the
account, shall be made in such a way as to tend to
restore the account to a situation in which the fair
market value of the stock does not exceed such
agreed percentage.
‘‘(3) INVESTMENT
IN
CERTAIN
PREFERRED
STOCK
PERMITTED.—For purposes of this sub-
section, if the common stock of a corporation meets
the requirements of this subsection and if the pre-
ferred stock of such corporation would meet such re-
quirements but for the fact that it cannot be listed
and registered as required because it is nonvoting
stock, such preferred stock shall be treated as meet-
ing the requirements of this subsection.
‘‘(d) NONTAXABILITY OF DEPOSITS.—
‘‘(1) IN GENERAL.—For purposes of this title—
‘‘(A) gain from a transaction referred to in
subsection (b)(1)(B) shall not be taken into ac-
count if an amount equal to the net proceeds
from such transaction is deposited in the ac-
count,
‘‘(B) the earnings (including gains and
losses) from the investment and reinvestment of
amounts held in the account shall not be taken
into account,
‘‘(C) the earnings and profits of any cor-
poration (within the meaning of section 316)
shall be determined without regard to this sec-
tion and section 7518, and
‘‘(D) in applying the tax imposed by sec-
tion 531 (relating to the accumulated earnings
tax), amounts while held in the account shall
not be taken into account.
‘‘(2) ONLY QUALIFIED DEPOSITS ELIGIBLE FOR
TREATMENT.—Paragraph (1) shall apply with re-
spect to any amount only if such amount is depos-
ited in the account pursuant to the agreement and
not later than the time provided in regulations.
‘‘(e) ESTABLISHMENT OF SUBACCOUNTS.—
‘‘(1) IN GENERAL.—Within the account estab-
lished pursuant to this section 3 subaccounts shall
be maintained—
‘‘(A) the capital subaccount,
‘‘(B) the capital gain subaccount, and
‘‘(C) the ordinary income subaccount.
‘‘(2) CAPITAL SUBACCOUNT.—The capital sub-
account shall consist of—
‘‘(A) amounts referred to in subsection
(b)(1)(A),
‘‘(B) amounts referred to in subsection
(b)(1)(B) other than that portion thereof which
represents gain not taken into account by rea-
son of subsection (d)(1)(A),
‘‘(C) the percentage applicable under sec-
tion 243(a)(1) of any dividend received by the
account with respect to which the person main-
taining the account would (but for subsection
(d)(1)(B)) be allowed a deduction under section
243, and
‘‘(D) interest income exempt from taxation
under section 103.
‘‘(3) CAPITAL GAIN SUBACCOUNT.—The capital
gain subaccount shall consist of—
‘‘(A) amounts representing capital gains on
assets held for more than 1 year and referred
to in subsection (b)(1)(B) or (b)(1)(C), reduced
by
‘‘(B) amounts representing capital losses
on assets held in the account for more than 1
year.
‘‘(4) ORDINARY
INCOME
SUBACCOUNT.—The
ordinary income subaccount shall consist of—
‘‘(A)(i) amounts representing capital gains
on assets held for 1 year or less and referred
to in subsection (b)(1)(B) or (b)(1)(C), reduced
by
‘‘(ii) amounts representing capital losses
on assets held in the account for 1 year or less,
‘‘(B) interest (not including any tax-ex-
empt interest referred to in paragraph (2)(D))
and other ordinary income (not including any
dividend referred to in subparagraph (D) of this
paragraph) received on assets held in the ac-
count,
‘‘(C) ordinary income from a transaction
described in subsection (b)(1)(B), and
‘‘(D) the portion of any dividend referred
to in paragraph (2)(C) not taken into account
under such paragraph.
‘‘(5) CAPITAL LOSSES ONLY ALLOWED TO OFF-
SET CERTAIN GAINS.—Except on termination of an
account, capital losses referred to in paragraph
(3)(B) or in paragraph (4)(A)(ii) shall be allowed
only as an offset to gains referred to in paragraph
(3)(A) or (4)(A)(i), respective.
‘‘(f) PURPOSES OF QUALIFIED WITHDRAWALS.—
‘‘(1) IN
GENERAL.—A qualified withdrawal
from the account is one made in accordance with the
terms of the agreement under subsection (a).
‘‘(2) PENALTY FOR FAILING TO FULFILL ANY
SUBSTANTIAL
OBLIGATION.—Under joint regula-