payment’ means, with respect to any per-
son, any amount which— 
‘‘(I) is described in paragraph (1) 
or (3) of section 1385(a), 
‘‘(II) is received by such person 
from a specified agricultural or horti-
cultural cooperative, and 
‘‘(III) is attributable to patent 
box profits with respect to which a de-
duction is allowed to such cooperative 
under subsection (a). 
‘‘(vi) SPECIFIED
AGRICULTURAL
OR 
HORTICULTURAL COOPERATIVE.—For pur-
poses of this paragraph, the term ‘specified 
agricultural or horticultural cooperative’ 
means an organization to which part I of 
subchapter T applies which is the owner 
of, or the holder of an exclusive license to 
exploit, a qualified patent. 
‘‘(E) REGULATIONS.—The Secretary may 
prescribe rules requiring or restricting the allo-
cation of items under this paragraph and may 
prescribe such reporting requirements as the 
Secretary determines appropriate. 
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‘‘(2) 
SPECIAL
RULE
FOR
AFFILIATED 
GROUPS.— 
‘‘(A) IN GENERAL.—All members of an ex-
panded affiliated group shall be treated as a 
single corporation for purposes of this section. 
‘‘(B) EXPANDED
AFFILIATED
GROUP.— 
For purposes of this section, the term ‘ex-
panded affiliated group’ means an affiliated 
group as defined in section 1504(a), deter-
mined— 
‘‘(i) by substituting ‘more than 50 
percent’ for ‘at least 80 percent’ each place 
it appears, and 
‘‘(ii) without regard to paragraphs (2) 
and (4) of section 1504(b). 
‘‘(C) ALLOCATION
OF
DEDUCTION.—Ex-
cept as provided in regulations, the deduction 
under subsection (a) shall be allocated among 
the members of the expanded affiliated group in 
proportion to each member’s respective amount 
(if any) of patent box profit. 
‘‘(3) COORDINATION WITH MINIMUM TAX.—For 
purposes of determining alternative minimum tax-
able income under section 55— 
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‘‘(A) patent box profit shall be determined 
without regard to any adjustments under sec-
tions 56 through 59, and 
‘‘(B) in the case of a corporation, sub-
section (a)(2) shall be applied by substituting 
‘alternative minimum taxable income’ for ‘tax-
able income’. 
‘‘(4) COORDINATION WITH DOMESTIC PRODUC-
TION ACTIVITIES DEDUCTION.—This section shall be 
applied without regard to the deduction allowed 
under section 199. 
‘‘(5) UNRELATED
BUSINESS
TAXABLE
IN-
COME.—For purposes of determining the tax im-
posed by section 511, subsection (a)(2) shall be ap-
plied by substituting ‘unrelated business taxable in-
come’ for ‘taxable income’. 
‘‘(6) ACQUISITIONS
AND
DISPOSITIONS.—The 
Secretary shall provide for the application of this 
subsection in cases where the taxpayer acquires, or 
disposes of, the major portion of a trade or business 
or the major portion of a separate unit of a trade 
or business during the taxable year. 
‘‘(7) UNITED
STATES.—The term ‘United 
States’ includes the District of Columbia, Puerto 
Rico, the Virgin Islands, Guam, American Samoa, 
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the Commonwealth of the Northern Mariana Is-
lands, the Federated States of Micronesia, the Re-
public of the Marshall Islands, and Palau. 
‘‘(e) ELECTION.— 
‘‘(1) IN GENERAL.—The taxpayer may make an 
election to have this section apply for any taxable 
year. 
‘‘(2) PASS-THRU ENTITIES.—In the case of a 
pass-thru entity, the election shall be made at the 
partner or shareholder level. 
‘‘(3) REVOCATION.—An election under para-
graph (1), once made, may be revoked only with the 
consent of the Secretary. 
‘‘(f) REGULATIONS.—The Secretary shall prescribe 
such regulations as may be appropriate to carry out this 
section, including regulations which prevent the abuse of 
the purposes of this section.’’. 
(b) CONFORMING AMENDMENTS.— 
(1) Section 56(d)(1)(A) of such Code is amend-
ed by striking ‘‘deduction under section 199’’ both 
places it appears and inserting ‘‘deductions under 
sections 199 and 200’’. 
(2) Section 56(g)(4)(C) of such Code is amend-
ed by adding at the end the following new clause: 
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‘‘(vii) DEDUCTION
FOR
DOMESTIC 
BUSINESS
INCOME.—Clause (i) shall not 
apply to any amount allowable as a deduc-
tion under section 200.’’. 
(3) The following provisions of such Code are 
each amended by inserting ‘‘200,’’ after ‘‘199,’’. 
(A) Section 86(b)(2)(A). 
(B) Section 135(c)(4)(A). 
(C) Section 137(b)(3)(A). 
(D) Section 219(g)(3)(A)(ii). 
(E) Section 221(b)(2)(C)(i). 
(F) Section 222 (b)(2)(C)(i). 
(G) Section 246(b)(1). 
(H) Section 469(i)(3)(F)(iii). 
(4) Section 163(j)(6)(A)(i) of such Code is 
amended by striking ‘‘and’’ at the end of subclause 
(III) and by inserting after subclause (IV) the fol-
lowing new subclause: 
‘‘(V) any deduction allowable 
under section 200, and’’. 
(5) Section 170(b)(2)(C) of such Code is 
amended by striking ‘‘and’’ at the end of clause (iv), 
by striking the period at the end of clause (v) and 
inserting ‘‘, and’’, and by inserting after clause (v) 
the following new clause: 
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‘‘(vi) section 200.’’. 
(6) Section 172(d) of such Code is amended by 
adding at the end the following new paragraph: 
‘‘(8) DOMESTIC
BUSINESS
INCOME.—The de-
duction under section 200 shall not be allowed.’’. 
(7) Section 199(c) of such Code is amended by 
adding at the end the following new paragraph: 
‘‘(8) COORDINATION WITH PATENT BOX PROF-
ITS DEDUCTION.—Qualified production activities in-
come, taxable income, and domestic production gross 
receipts shall be determined without regard to sec-
tion 200.’’. 
(8) Section 199(d)(2)(B) of such Code is 
amended by striking ‘‘this section’’ and inserting 
‘‘this section and section 200’’. 
(9) Section 613(a) of such Code is amended by 
striking ‘‘deduction under section 199’’ and insert-
ing ‘‘deductions under sections 199 and 200’’. 
(10) Section 613A(d)(1) of such Code is 
amended by redesignating subparagraphs (C), (D), 
and (E) as subparagraphs (D), (E), and (F), respec-
tively, and by inserting after subparagraph (B) the 
following new subparagraph: 
‘‘(C) any deduction allowable under section 
200,’’. 
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