I
107TH CONGRESS
2D SESSION
H. R. 5658
To amend the Internal Revenue Code of 1986 to provide an alternative
simplified credit for qualified research expenses.
IN THE HOUSE OF REPRESENTATIVES
OCTOBER 16, 2002
Mr. CAMP (for himself and Mr. CARDIN) 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 provide
an alternative simplified credit for qualified research ex-
penses.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. FINDINGS.
The Congress finds as follows:
(1) Research and development performed in the
United States results in quality jobs, better and
safer products, increased ownership of technology-
based intellectual property, and higher productivity
in the United States.
(2) The extent to which companies perform and
increase research and development activities in the
United States is in part dependent on Federal tax
policy.
(3) The Congress should make permanent a re-
search and development credit that provides a mean-
ingful incentive to all types of taxpayers.
SEC. 2. ALTERNATIVE SIMPLIFIED CREDIT FOR QUALIFIED
RESEARCH EXPENSES.
(a) IN GENERAL.—Subsection (c) of section 41 of the
Internal Revenue Code of 1986 (relating to base amount)
is amended by redesignating paragraphs (5) and (6) as
paragraphs (6) and (7), respectively, and by inserting
after paragraph (4) the following new paragraph:
‘‘(5) ELECTION OF ALTERNATIVE SIMPLIFIED
CREDIT.—
‘‘(A) IN GENERAL.—At the election of the
taxpayer, the credit determined under sub-
section (a)(1) shall be equal to 12 percent of so
much of the qualified research expenses for the
taxable year as exceeds 50 percent of the aver-
age qualified research expenses for the 3 tax-
able years preceding the taxable year for which
the credit is being determined.
‘‘(B) SPECIAL
RULE
IN
CASE
OF
NO
QUALIFIED RESEARCH EXPENSES IN ANY OF 3
PRECEDING TAXABLE YEARS.—
‘‘(i) TAXPAYERS TO WHICH SUBPARA-
GRAPH
APPLIES.—The credit under this
paragraph shall be determined under this
subparagraph if the taxpayer has no quali-
fied research expenses in any one of the 3
taxable years preceding the taxable year
for which the credit is being determined.
‘‘(ii) CREDIT RATE.—The credit de-
termined under this subparagraph shall be
equal to 6 percent of the qualified research
expenses for the taxable year.
‘‘(C) ELECTION.—An election under this
paragraph shall apply to the taxable year for
which made and all succeeding taxable years
unless revoked with the consent of the Sec-
retary. An election under this paragraph may
not be made for any taxable year to which an
election under paragraph (4) applies.’’.
(b) COORDINATION WITH ELECTION
OF ALTER-
NATIVE INCREMENTAL CREDIT.—
(1) IN GENERAL.—Section 41(c)(4)(B) of the
Internal Revenue Code of 1986 (relating to election)
is amended by adding at the end the following: ‘‘An
election under this paragraph may not be made for
any taxable year to which an election under para-
graph (5) applies.’’.
(2) TRANSITION RULE.—In the case of an elec-
tion under section 41(c)(4) of the Internal Revenue
Code of 1986 which applies to the taxable year
which includes the date of the enactment of this Act,
such election shall be treated as revoked with the
consent of the Secretary of the Treasury if the tax-
payer makes an election under section 41(c)(5) of
such Code (as added by subsection (a)) for such
year.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years ending after the
date of the enactment of this Act.
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