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•AMDT. NO. 2786 
lowed under section 168(k), 1400L(b)(1), or 
1400N(d)(1). 
‘‘(B) DEDUCTIONS.—No deduction under 
this subtitle shall be allowed for the portion of 
the expenses otherwise allowable as a deduction 
taken into account in determining the credit 
under this section for the taxable year which is 
equal to the amount of the credit determined 
for such taxable year under subsection (a) at-
tributable to such portion. This subparagraph 
shall not apply to expenses related to property 
of a character subject to an allowance for de-
preciation the basis of which is reduced under 
paragraph (1), or which are described in section 
280C(g). 
‘‘(C) CREDIT
FOR
RESEARCH
ACTIVI-
TIES.— 
‘‘(i) IN
GENERAL.—Except as pro-
vided in clause (ii), any expenses taken 
into account under this section for a tax-
able year shall not be taken into account 
for purposes of determining the credit al-
lowable under section 41 or 45C for such 
taxable year. 
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•AMDT. NO. 2786 
‘‘(ii) EXPENSES INCLUDED IN DETER-
MINING
BASE
PERIOD
RESEARCH
EX-
PENSES.—Any expenses for any taxable 
year which are qualified research expenses 
(within the meaning of section 41(b)) shall 
be taken into account in determining base 
period research expenses for purposes of 
applying section 41 to subsequent taxable 
years. 
‘‘(f) COORDINATION WITH DEPARTMENT OF TREAS-
URY GRANTS.—In the case of any investment with respect 
to which the Secretary makes a grant under section 
9023(e) of the Patient Protection and Affordable Care Act 
of 2009— 
‘‘(1) DENIAL OF CREDIT.—No credit shall be 
determined under this section with respect to such 
investment for the taxable year in which such grant 
is made or any subsequent taxable year. 
‘‘(2) RECAPTURE OF CREDITS FOR PROGRESS 
EXPENDITURES MADE BEFORE GRANT.—If a credit 
was determined under this section with respect to 
such investment for any taxable year ending before 
such grant is made— 
‘‘(A) the tax imposed under subtitle A on 
the taxpayer for the taxable year in which such 
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•AMDT. NO. 2786 
grant is made shall be increased by so much of 
such credit as was allowed under section 38, 
‘‘(B) the general business carryforwards 
under section 39 shall be adjusted so as to re-
capture the portion of such credit which was 
not so allowed, and 
‘‘(C) the amount of such grant shall be de-
termined without regard to any reduction in the 
basis of any property of a character subject to 
an allowance for depreciation by reason of such 
credit. 
‘‘(3) TREATMENT OF GRANTS.—Any such grant 
shall not be includible in the gross income of the 
taxpayer.’’. 
(b) INCLUSION AS PART OF INVESTMENT CREDIT.— 
Section 46 of the Internal Revenue Code of 1986 is 
amended— 
(1) by adding a comma at the end of paragraph 
(2), 
(2) by striking the period at the end of para-
graph (5) and inserting ‘‘, and’’, and 
(3) by adding at the end the following new 
paragraph: 
‘‘(6) the qualifying therapeutic discovery project 
credit.’’. 
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2067 
•AMDT. NO. 2786 
(c) CONFORMING AMENDMENTS.— 
(1) Section 49(a)(1)(C) of the Internal Revenue 
Code of 1986 is amended— 
(A) by striking ‘‘and’’ at the end of clause 
(iv), 
(B) by striking the period at the end of 
clause (v) and inserting ‘‘, and’’, and 
(C) by adding at the end the following new 
clause: 
‘‘(vi) the basis of any property to 
which paragraph (1) of section 48D(e) ap-
plies which is part of a qualifying thera-
peutic discovery project under such section 
48D.’’. 
(2) Section 280C of such Code is amended by 
adding at the end the following new subsection: 
‘‘(g) 
QUALIFYING
THERAPEUTIC
DISCOVERY 
PROJECT CREDIT.— 
‘‘(1) IN GENERAL.—No deduction shall be al-
lowed for that portion of the qualified investment (as 
defined in section 48D(b)) otherwise allowable as a 
deduction for the taxable year which— 
‘‘(A) would be qualified research expenses 
(as defined in section 41(b)), basic research ex-
penses (as defined in section 41(e)(2)), or quali-
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2068 
•AMDT. NO. 2786 
fied clinical testing expenses (as defined in sec-
tion 45C(b)) if the credit under section 41 or 
section 45C were allowed with respect to such 
expenses for such taxable year, and 
‘‘(B) is equal to the amount of the credit 
determined for such taxable year under section 
48D(a), reduced by— 
‘‘(i) the amount disallowed as a de-
duction by reason of section 48D(e)(2)(B), 
and 
‘‘(ii) the amount of any basis reduc-
tion under section 48D(e)(1). 
‘‘(2) SIMILAR
RULE
WHERE
TAXPAYER
CAP-
ITALIZES RATHER THAN DEDUCTS EXPENSES.—In 
the case of expenses described in paragraph (1)(A) 
taken into account in determining the credit under 
section 48D for the taxable year, if— 
‘‘(A) the amount of the portion of the 
credit determined under such section with re-
spect to such expenses, exceeds 
‘‘(B) the amount allowable as a deduction 
for such taxable year for such expenses (deter-
mined without regard to paragraph (1)), 
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•AMDT. NO. 2786 
the amount chargeable to capital account for the 
taxable year for such expenses shall be reduced by 
the amount of such excess. 
‘‘(3) CONTROLLED GROUPS.—Paragraph (3) of 
subsection (b) shall apply for purposes of this sub-
section.’’. 
(d) CLERICAL AMENDMENT.—The table of sections 
for subpart E of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986 is amended by in-
serting after the item relating to section 48C the following 
new item: 
‘‘Sec. 48D. Qualifying therapeutic discovery project credit.’’. 
(e) GRANTS
FOR
QUALIFIED
INVESTMENTS
IN 
THERAPEUTIC DISCOVERY PROJECTS IN LIEU OF TAX 
CREDITS.— 
(1) IN GENERAL.—Upon application, the Sec-
retary of the Treasury shall, subject to the require-
ments of this subsection, provide a grant to each 
person who makes a qualified investment in a quali-
fying therapeutic discovery project in the amount of 
50 percent of such investment. No grant shall be 
made under this subsection with respect to any in-
vestment unless such investment is made during a 
taxable year beginning in 2009 or 2010. 
(2) APPLICATION.— 
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•AMDT. NO. 2786 
fied investment with respect to which such ap-
plication is made. 
(3) TIME FOR PAYMENT OF GRANT.— 
(A) IN GENERAL.—The Secretary of the 
Treasury shall make payment of the amount of 
any grant under paragraph (1) during the 30- 
day period beginning on the later of— 
(i) the date of the application for such 
grant, or 
(ii) the date the qualified investment 
for which the grant is being made is made. 
(B) REGULATIONS.—In the case of invest-
ments of an ongoing nature, the Secretary shall 
issue regulations to determine the date on 
which a qualified investment shall be deemed to 
have been made for purposes of this paragraph. 
(4) QUALIFIED INVESTMENT.—For purposes of 
this subsection, the term ‘‘qualified investment’’ 
means a qualified investment that is certified under 
section 48D(d) of the Internal Revenue Code of 
1986 for purposes of the credit under such section 
48D. 
(5) APPLICATION OF CERTAIN RULES.— 
(A) IN
GENERAL.—In making grants 
under this subsection, the Secretary of the 
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•AMDT. NO. 2786 
Treasury shall apply rules similar to the rules 
of section 50 of the Internal Revenue Code of 
1986. In applying such rules, any increase in 
tax under chapter 1 of such Code by reason of 
an investment ceasing to be a qualified invest-
ment shall be imposed on the person to whom 
the grant was made. 
(B) SPECIAL RULES.— 
(i) RECAPTURE OF EXCESSIVE GRANT 
AMOUNTS.—If the amount of a grant made 
under this subsection exceeds the amount 
allowable as a grant under this subsection, 
such excess shall be recaptured under sub-
paragraph (A) as if the investment to 
which such excess portion of the grant re-
lates had ceased to be a qualified invest-
ment immediately after such grant was 
made. 
(ii) GRANT INFORMATION NOT TREAT-
ED
AS
RETURN
INFORMATION.—In no 
event shall the amount of a grant made 
under paragraph (1), the identity of the 
person to whom such grant was made, or 
a description of the investment with re-
spect to which such grant was made be 
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•AMDT. NO. 2786 
treated as return information for purposes 
of section 6103 of the Internal Revenue 
Code of 1986. 
(6) 
EXCEPTION
FOR
CERTAIN
NON-TAX-
PAYERS.—The Secretary of the Treasury shall not 
make any grant under this subsection to— 
(A) any Federal, State, or local govern-
ment (or any political subdivision, agency, or 
instrumentality thereof), 
(B) any organization described in section 
501(c) of the Internal Revenue Code of 1986 
and exempt from tax under section 501(a) of 
such Code, 
(C) any entity referred to in paragraph (4) 
of section 54(j) of such Code, or 
(D) any partnership or other pass-thru en-
tity any partner (or other holder of an equity 
or profits interest) of which is described in sub-
paragraph (A), (B) or (C). 
In the case of a partnership or other pass-thru enti-
ty described in subparagraph (D), partners and 
other holders of any equity or profits interest shall 
provide to such partnership or entity such informa-
tion as the Secretary of the Treasury may require to 
carry out the purposes of this paragraph. 
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•AMDT. NO. 2786 
(7) SECRETARY.—Any reference in this sub-
section to the Secretary of the Treasury shall be 
treated as including the Secretary’s delegate. 
(8) OTHER TERMS.—Any term used in this sub-
section which is also used in section 48D of the In-
ternal Revenue Code of 1986 shall have the same 
meaning for purposes of this subsection as when 
used in such section. 
(9) DENIAL OF DOUBLE BENEFIT.—No credit 
shall be allowed under section 46(6) of the Internal 
Revenue Code of 1986 by reason of section 48D of 
such Code for any investment for which a grant is 
awarded under this subsection. 
(10) APPROPRIATIONS.—There is hereby appro-
priated to the Secretary of the Treasury such sums 
as may be necessary to carry out this subsection. 
(11) TERMINATION.—The Secretary of the 
Treasury shall not make any grant to any person 
under this subsection unless the application of such 
person for such grant is received before January 1, 
2013. 
(f) EFFECTIVE DATE.—The amendments made by 
subsections (a) through (d) of this section shall apply to 
amounts paid or incurred after December 31, 2008, in 
taxable years beginning after such date. 
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Amendment No. 2786 
H.R. 3590 
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