ing the taxable year which would be described 
in subsection (b) of section 41 if such sub-
section were applied with the modifications set 
forth in subparagraph (B). 
‘‘(B) MODIFICATIONS; INCREASED INCEN-
TIVE FOR CONTRACT RESEARCH PAYMENTS.— 
For purposes of subparagraph (A), subsection 
(b) of section 41 shall be applied— 
‘‘(i) by substituting ‘vaccine research’ 
for ‘qualified research’ each place it ap-
pears in paragraphs (2) and (3) of such 
subsection, and 
‘‘(ii) by substituting ‘100 percent’ for 
‘65 percent’ in paragraph (3)(A) of such 
subsection. 
‘‘(C) EXCLUSION FOR AMOUNTS FUNDED 
BY GRANTS, ETC.—The term ‘qualified vaccine 
research expenses’ shall not include any amount 
to the extent such amount is funded by any 
grant, contract, or otherwise by another person 
(or any governmental entity). 
‘‘(2) VACCINE RESEARCH.—The term ‘vaccine 
research’ means research to develop vaccines and 
microbicides for—
‘‘(A) HIV/AIDS (as that term is defined in 
section 104A(g) of the Foreign Assistance Act 
of 1961 (22 U.S.C. 21516–2)), 
‘‘(B) malaria, 
‘‘(C) tuberculosis, or 
‘‘(D) any infectious disease (of a single eti-
ology) which, according to the World Health 
Organization, causes more than 1,000,000 
human deaths each year in developing coun-
tries. 
‘‘(c) COORDINATION WITH CREDIT FOR INCREASING 
RESEARCH EXPENDITURES.— 
‘‘(1) IN GENERAL.—Except as provided in para-
graph (2), any qualified vaccine research expenses 
for a taxable year to which an election under this 
section applies shall not be taken into account for 
purposes of determining the credit allowable under 
section 41 for such taxable year. 
‘‘(2) EXPENSES
INCLUDED
IN
DETERMINING 
BASE PERIOD RESEARCH EXPENSES.—Any qualified 
vaccine research expenses for any taxable year which 
are qualified research expenses (within the meaning 
of section 41(b)) shall be taken into account in de-
termining base period research expenses for pur-
poses of applying section 41 to subsequent taxable 
years. 
‘‘(d) SPECIAL RULES.— 
‘‘(1) LIMITATIONS ON FOREIGN TESTING.—No 
credit shall be allowed under this section with re-
spect to any vaccine research (other than human 
clinical testing) conducted outside the United States. 
‘‘(2) PRE-CLINICAL RESEARCH.—No credit shall 
be allowed under this section for pre-clinical re-
search unless such research is pursuant to a re-
search plan an abstract of which has been filed with 
the Secretary before the beginning of such year. The 
Secretary, in consultation with the Secretary of 
Health and Human Services, shall prescribe regula-
tions specifying the requirements for such plans and 
procedures for filing under this paragraph. 
‘‘(3) CERTAIN
RULES
MADE
APPLICABLE.— 
Rules similar to the rules of paragraphs (1) and (2) 
of section 41(f) shall apply for purposes of this sec-
tion. 
‘‘(4) ELECTION.—This section (other than sub-
section (e)) shall apply to any taxpayer for any tax-
able year only if such taxpayer elects to have this 
section apply for such taxable year.
‘‘(e) CREDIT TO BE REFUNDABLE FOR CERTAIN 
TAXPAYERS.— 
‘‘(1) IN GENERAL.—In the case of an electing 
qualified taxpayer— 
‘‘(A) the credit under this section shall be 
determined without regard to section 38(c), and 
‘‘(B) the credit so determined shall be al-
lowed as a credit under subpart C. 
‘‘(2) ELECTING
QUALIFIED
TAXPAYER.—For 
purposes of this subsection, the term ‘electing quali-
fied taxpayer’ means, with respect to any taxable 
year, any domestic C corporation if— 
‘‘(A) the aggregate gross assets of such 
corporation at any time during such taxable 
year are $500,000,000 or less, 
‘‘(B) the net income tax (as defined in sec-
tion 38(c)) of such corporation is zero for such 
taxable year and the 2 preceding taxable years, 
‘‘(C) as of the close of the taxable year, the 
corporation is not under the jurisdiction of a 
court in a title 11 or similar case (within the 
meaning of section 368(a)(3)(A)), 
‘‘(D) the corporation provides such assur-
ances as the Secretary requires that, not later 
than 2 taxable years after the taxable year in
which the taxpayer receives any refund of a 
credit under this subsection, the taxpayer will 
make an amount of qualified vaccine research 
expenses equal to the amount of such refund, 
and 
‘‘(E) the corporation elects the application 
of this subsection for such taxable year. 
‘‘(3) AGGREGATE
GROSS
ASSETS.—Aggregate 
gross assets shall be determined in the same manner 
as such assets are determined under section 
1202(d). 
‘‘(4) CONTROLLED
GROUPS.—A corporation 
shall be treated as meeting the requirement of para-
graph (2)(B) only if each person who is treated with 
such corporation as a single employer under sub-
sections (a) and (b) of section 52 also meets such re-
quirement. 
‘‘(5) SPECIAL RULES.— 
‘‘(A) RECAPTURE OF CREDIT.—The Sec-
retary shall promulgate such regulations as nec-
essary and appropriate to provide for the recap-
ture of any credit allowed under this subsection 
in cases where the taxpayer fails to make the 
expenditures described in paragraph (2)(D).