measures (as defined in section 319F–1(a)(2) 
of the Public Health Service Act (42 U.S.C. 
247d–6a(a)(2))). 
‘‘(E) 
SPECIFIED
MEDICAL
RESEARCH 
SMALL
BUSINESS
PASS-THRU
ENTITY.—For 
purposes of this paragraph, the term ‘specified 
medical research small business pass-thru enti-
ty’ means any domestic pass-thru entity for any 
taxable year if— 
‘‘(i) more than 80 percent of such en-
tity’s expenditures on qualified research for 
such taxable year are paid or incurred in 
connection with qualified medical research 
activities, and 
‘‘(ii) the gross receipts (as determined 
under the rules of section 41(h)(3)) of 
such entity for the taxable year (and each 
preceding taxable year) is less than 
$1,000,000. 
‘‘(F) CAPITAL EXPENDITURES TAKEN INTO 
ACCOUNT FOR EXPENDITURES TEST.—An ex-
penditure shall not fail to be taken into account 
under subparagraph (E)(i) merely because such 
expenditure is chargeable to capital account. 
VerDate Sep 11 2014 
23:08 Oct 10, 2020
Jkt 019200
PO 00000
Frm 00037
Fmt 6652
Sfmt 6201
E:\BILLS\H11.IH
H11
pbinns on DSKJLVW7X2PROD with BILLS
‘‘(G) PASS-THRU
ENTITY.—For purposes 
of this paragraph, the term ‘pass-thru entity’ 
means any partnership, S corporation, or other 
entity identified by the Secretary as a pass-thru 
entity for purposes of this paragraph. 
‘‘(H) AGGREGATION RULES.— 
‘‘(i) IN GENERAL.—All persons treat-
ed as a single employer under subsection 
(a) or (b) of section 52, or subsection (m) 
or (o) of section 414, shall be treated as a 
single entity for purposes of subparagraphs 
(E) and (F)(iii). 
‘‘(ii) 
LIMITATION
WHERE
ENTITY 
WOULD NOT QUALIFY.—No entity shall be 
treated as a specified medical research 
small business pass-thru entity unless such 
entity qualifies as such both with and with-
out the application of clause (i).’’. 
(b) MATERIAL PARTICIPATION NOT REQUIRED.— 
Paragraph (5) of section 469(c) of the Internal Revenue 
Code of 1986, as redesignated by subsection (a), is amend-
ed by striking ‘‘and (3)’’ in the heading and text and in-
serting ‘‘, (3), and (4)’’. 
(c) CERTAIN RESEARCH-RELATED DEDUCTIONS AND 
CREDITS
OF SPECIFIED MEDICAL RESEARCH SMALL 
VerDate Sep 11 2014 
23:08 Oct 10, 2020
Jkt 019200
PO 00000
Frm 00038
Fmt 6652
Sfmt 6201
E:\BILLS\H11.IH
H11
pbinns on DSKJLVW7X2PROD with BILLS
BUSINESS PASS-THRU ENTITIES ALLOWED
FOR PUR-
POSES OF DETERMINING ALTERNATIVE MINIMUM TAX.— 
(1) DEDUCTION FOR RESEARCH AND EXPERI-
MENTAL EXPENDITURES.—Paragraph (2) of section 
56(b) of the Internal Revenue Code of 1986 is 
amended by adding at the end the following new 
subparagraph: 
‘‘(E) EXCEPTION FOR SPECIFIED MEDICAL 
RESEARCH SMALL BUSINESS PASS-THRU ENTI-
TIES.—In the case of a specified medical re-
search small business pass-thru entity (as de-
fined in section 469(c)(4)), this paragraph shall 
not apply to any amount allowable as a deduc-
tion under section 174(a).’’. 
(2) ALLOWANCE
OF
CERTAIN
RESEARCH-RE-
LATED
CREDITS.—Subparagraph (B) of section 
38(c)(4) of such Code is amended by redesignating 
clauses (ii) through (ix) as clauses (iii) through (x), 
respectively, and by inserting after clause (i) the fol-
lowing new clause: 
‘‘(ii) the credit of an individual tax-
payer determined under section 41 to the 
extent attributable to a specified medical 
research small business pass-thru entity 
(as defined in section 469(c)(4)),’’. 
VerDate Sep 11 2014 
23:08 Oct 10, 2020
Jkt 019200
PO 00000
Frm 00039
Fmt 6652
Sfmt 6201
E:\BILLS\H11.IH
H11
pbinns on DSKJLVW7X2PROD with BILLS
(d) EXCEPTION TO LIMITATION ON PASS-THRU OF 
RESEARCH CREDIT.—Subsection (g) of section 41 of such 
Code is amended by adding at the end the following: 
‘‘Paragraphs (2) and (4) shall not apply with respect to 
any specified medical research small business pass-thru 
entity (as defined in section 469(c)(4)).’’. 
(e) EFFECTIVE DATE.—The amendments made by 
this section shall apply to losses and credits arising in tax-
able years beginning after December 31, 2020. 
TITLE IV—GROWTH IN INNOVA-
TION 
AND 
TECHNOLOGY 
BREAKTHROUGHS 
SEC. 401. SIMPLIFICATION AND EXPANSION OF DEDUCTION 
FOR START-UP AND ORGANIZATIONAL EX-
PENDITURES. 
(a) IN GENERAL.—Section 195 of the Internal Rev-
enue Code of 1986 is amended by redesignating sub-
sections (c) and (d) as subsections (d) and (e), respec-
tively, and by striking all that precedes subsection (d) (as 
so redesignated) and inserting the following: 
‘‘SEC. 195. START-UP AND ORGANIZATIONAL EXPENDI-
TURES. 
‘‘(a) CAPITALIZATION OF EXPENDITURES.—Except 
as otherwise provided in this section, no deduction shall 
be allowed for start-up or organizational expenditures. 
VerDate Sep 11 2014 
23:08 Oct 10, 2020
Jkt 019200
PO 00000
Frm 00040
Fmt 6652
Sfmt 6201
E:\BILLS\H11.IH
H11
pbinns on DSKJLVW7X2PROD with BILLS
‘‘(b) ELECTION TO DEDUCT.— 
‘‘(1) IN GENERAL.—If a taxpayer elects the ap-
plication of this subsection with respect to any active 
trade or business— 
‘‘(A) the taxpayer shall be allowed a deduc-
tion for the taxable year in which such active 
trade or business begins in an amount equal to 
the lesser of— 
‘‘(i) the aggregate amount of start-up 
and organizational expenditures paid or in-
curred in connection with such active trade 
or business, or 
‘‘(ii) $20,000, reduced (but not below 
zero) by the amount by which such aggre-
gate amount exceeds $120,000, and 
‘‘(B) the remainder of such start-up and 
organizational expenditures shall be charged to 
capital account and allowed as an amortization 
deduction determined by amortizing such ex-
penditures ratably over the 180-month period 
beginning with the month in which the active 
trade or business begins. 
‘‘(2) APPLICATION
TO
ORGANIZATIONAL
EX-
PENDITURES.—In the case of organizational expend-
itures with respect to any corporation or partner-
VerDate Sep 11 2014 
23:08 Oct 10, 2020
Jkt 019200
PO 00000
Frm 00041
Fmt 6652
Sfmt 6201
E:\BILLS\H11.IH
H11
pbinns on DSKJLVW7X2PROD with BILLS
ship, the active trade or business referred to in para-
graph (1) means the first active trade or business 
carried on by such corporation or partnership. 
‘‘(3) INFLATION ADJUSTMENT.—In the case of 
any taxable year beginning after December 31, 
2020, the $20,000 and $120,000 amounts in para-
graph (1)(A)(ii) shall each be increased by an 
amount equal to— 
‘‘(A) such dollar amount, multiplied by 
‘‘(B) the cost-of-living adjustment deter-
mined under section 1(f)(3) for the calendar 
year in which the taxable year begins, deter-
mined by substituting ‘calendar year 2019’ for 
‘calendar year 2016’ in subparagraph (A)(ii) 
thereof. 
If any amount as increased under the preceding sen-
tence is not a multiple of $1,000, such amount shall 
be rounded to the nearest multiple of $1,000. 
‘‘(c) ALLOWANCE OF DEDUCTION UPON LIQUIDA-
TION OR DISPOSITION.— 
‘‘(1) LIQUIDATION OF PARTNERSHIP OR COR-
PORATION.—If any partnership or corporation is 
completely liquidated by the taxpayer, any start-up 
or organizational expenditures paid or incurred in 
connection with such partnership or corporation 
VerDate Sep 11 2014 
23:08 Oct 10, 2020
Jkt 019200
PO 00000
Frm 00042
Fmt 6652
Sfmt 6201
E:\BILLS\H11.IH
H11
pbinns on DSKJLVW7X2PROD with BILLS
which were not allowed as a deduction by reason of 
this section may be deducted to the extent allowable 
under section 165. 
‘‘(2) DISPOSITION OF TRADE OR BUSINESS.—If 
any trade or business is completely disposed of or 
discontinued by the taxpayer, any start-up expendi-
tures paid or incurred in connection with such trade 
or business which were not allowed as a deduction 
by reason of this section (and not taken into account 
in connection with a liquidation to which paragraph 
(1) applies) may be deducted to the extent allowable 
under section 165. For purposes of this paragraph, 
in the case of any deduction allowed under sub-
section (b)(1) with respect to both start-up and or-
ganizational expenditures, the amount treated as so 
allowed with respect to start-up expenditures shall 
bear the same ratio to such deduction as the start- 
up expenditures taken into account in determining 
such deduction bears to the aggregate of the start- 
up and organizational expenditures so taken into ac-
count.’’. 
(b) 
ORGANIZATIONAL
EXPENDITURES.—Section 
195(d) of such Code, as redesignated by subsection (a), 
is amended by adding at the end the following new para-
graphs: 
VerDate Sep 11 2014 
23:08 Oct 10, 2020
Jkt 019200
PO 00000
Frm 00043
Fmt 6652
Sfmt 6201
E:\BILLS\H11.IH
H11
pbinns on DSKJLVW7X2PROD with BILLS
‘‘(3) ORGANIZATIONAL
EXPENDITURES.—The 
term ‘organizational expenditures’ means any ex-
penditure which— 
‘‘(A) is incident to the creation of a cor-
poration or a partnership, 
‘‘(B) is chargeable to capital account, and 
‘‘(C) is of a character which, if expended 
incident to the creation of a corporation or a 
partnership having an ascertainable life, would 
be amortizable over such life. 
‘‘(4) APPLICATION TO CERTAIN DISREGARDED 
ENTITIES.—In the case of any entity with a single 
owner that is disregarded as an entity separate from 
its owner, this section shall be applied in the same 
manner as if such entity were a corporation.’’. 
(c) ELECTION.—Section 195(e)(2) of such Code, as 
redesignated by subsection (a), is amended to read as fol-
lows: 
‘‘(2) PARTNERSHIPS AND S CORPORATIONS.—In 
the case of any partnership or S corporation, the 
election under subsection (b) shall be made (and this 
section shall be applied) at the entity level.’’. 
(d) CONFORMING AMENDMENTS.— 
(1)(A) Part VIII of subchapter B of chapter 1 
is amended by striking section 248 of such Code 
VerDate Sep 11 2014 
23:08 Oct 10, 2020
Jkt 019200
PO 00000
Frm 00044
Fmt 6652
Sfmt 6201
E:\BILLS\H11.IH
H11
pbinns on DSKJLVW7X2PROD with BILLS
(and by striking the item relating to such section in 
the table of sections of such part). 
(B) Section 170(b)(2)(D)(ii) of such Code is 
amended by striking ‘‘(except section 248)’’. 
(C) Section 312(n)(3) of such Code is amended 
by striking ‘‘Sections 173 and 248’’ and inserting 
‘‘Sections 173 and 195’’. 
(D) Section 535(b)(3) of such Code is amended 
by striking ‘‘(except section 248)’’. 
(E) Section 545(b)(3) of such Code is amended 
by striking ‘‘(except section 248)’’. 
(F) Section 545(b)(4) of such Code is amended 
by striking ‘‘(except section 248)’’. 
(G) Section 834(c)(7) of such Code is amended 
by striking ‘‘(except section 248)’’. 
(H) Section 852(b)(2)(C) of such Code is 
amended by striking ‘‘(except section 248)’’. 
(I) Section 857(b)(2)(A) of such Code is 
amended by striking ‘‘(except section 248)’’. 
(J) Section 1363(b) of such Code is amended 
by adding ‘‘and’’ at the end of paragraph (2), by 
striking paragraph (3), and by redesignating para-
graph (4) as paragraph (3). 
(K) Section 1375(b)(1)(B)(i) of such Code is 
amended by striking ‘‘(other than the deduction al-
VerDate Sep 11 2014 
23:08 Oct 10, 2020
Jkt 019200
PO 00000
Frm 00045
Fmt 6652
Sfmt 6201
E:\BILLS\H11.IH
H11
pbinns on DSKJLVW7X2PROD with BILLS
lowed by section 248, relating to organization ex-
penditures)’’. 
(2)(A) Section 709 of such Code is amended to 
read as follows: 
‘‘SEC. 709. TREATMENT OF SYNDICATION FEES. 
‘‘No deduction shall be allowed under this chapter to 
a partnership or to any partner of the partnership for any 
amounts paid or incurred to promote the sale of (or to 
sell) an interest in the partnership.’’. 
(B) The item relating to section 709 in the 
table of sections for part I of subchapter K of chap-
ter 1 of such Code is amended to read as follows: 
‘‘Sec. 709. Treatment of syndication fees.’’. 
(3) Section 1202(e)(2)(A) of such Code is 
amended by striking ‘‘section 195(c)(1)(A)’’ and in-
serting ‘‘section 195(d)(1)(A)’’. 
(4) The item relating to section 195 in the table 
of contents of part VI of subchapter B of chapter 1 
of such Code is amended to read as follows: 
‘‘Sec. 195. Start-up and organizational expenditures.’’. 
(e) EFFECTIVE DATE.—The amendments made by 
this section shall apply to expenditures paid or incurred 
in connection with active trades or businesses which begin 
in taxable years beginning after December 31, 2019. 
VerDate Sep 11 2014 
23:08 Oct 10, 2020
Jkt 019200
PO 00000
Frm 00046
Fmt 6652
Sfmt 6201
E:\BILLS\H11.IH
H11
pbinns on DSKJLVW7X2PROD with BILLS
SEC. 402. PRESERVATION OF START-UP NET OPERATING 
LOSSES AND TAX CREDITS AFTER OWNER-
SHIP CHANGE. 
(a) APPLICATION TO NET OPERATING LOSSES.— 
Section 382(d) of the Internal Revenue Code of 1986 is 
amended by adding at the end the following new para-
graph: 
‘‘(4) EXCEPTION FOR START-UP LOSSES.— 
‘‘(A) IN GENERAL.—In the case of any net 
operating loss carryforward described in para-
graph (1)(A) which arose in a start-up period 
taxable year, the amount of such net operating 
loss carryforward otherwise taken into account 
under such paragraph shall be reduced by the 
net start-up loss determined with respect to the 
trade or business referred to in subparagraph 
(B)(i) for such start-up period taxable year. 
‘‘(B) START-UP PERIOD TAXABLE YEAR.— 
The term ‘start-up period taxable year’ means 
any taxable year of the old loss corporation 
which— 
‘‘(i) begins before the close of the 3- 
year period beginning on the date on which 
any trade or business of such corporation 
begins as an active trade or business (as 
determined under section 195(d)(2) with-
VerDate Sep 11 2014 
23:08 Oct 10, 2020
Jkt 019200
PO 00000
Frm 00047
Fmt 6652
Sfmt 6201
E:\BILLS\H11.IH
H11
pbinns on DSKJLVW7X2PROD with BILLS