the amount of the business credit carryforward 
under section 39 carried from the taxable year 
(determined before the application of this sub-
section to the taxable year). 
‘‘(3) QUALIFIED SMALL BUSINESS.—For pur-
poses of this subsection— 
‘‘(A) IN
GENERAL.—The term ‘qualified 
small business’ means, with respect to any tax-
able year— 
‘‘(i) a corporation or partnership, if— 
‘‘(I) the gross receipts (as deter-
mined under the rules of section 
448(c)(3), without regard to subpara-
graph (A) thereof) of such entity for 
the 
taxable 
year 
is 
less 
than 
$5,000,000, and 
‘‘(II) such entity did not have 
gross receipts (as so determined) for 
any taxable year preceding the 5-tax-
able-year period ending with such tax-
able year, and 
‘‘(ii) any person (other than a cor-
poration or partnership) who meets the re-
quirements of subclauses (I) and (II) of 
clause (i), determined— 
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‘‘(I) by substituting ‘person’ for 
‘entity’ each place it appears, and 
‘‘(II) by only taking into account 
the aggregate gross receipts received 
by such person in carrying on all 
trades or businesses of such person. 
‘‘(B) LIMITATION.—Such term shall not 
include an organization which is exempt from 
taxation under section 501. 
‘‘(4) ELECTION.— 
‘‘(A) IN
GENERAL.—Any election under 
this subsection for any taxable year— 
‘‘(i) shall specify the amount of the 
credit to which such election applies, 
‘‘(ii) shall be made on or before the 
due date (including extensions) of— 
‘‘(I) in the case of a qualified 
small business which is a partnership, 
the return required to be filed under 
section 6031, 
‘‘(II) in the case of a qualified 
small business which is an S corpora-
tion, the return required to be filed 
under section 6037, and 
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‘‘(III) in the case of any other 
qualified small business, the return of 
tax for the taxable year, and 
‘‘(iii) may be revoked only with the 
consent of the Secretary. 
‘‘(B) LIMITATIONS.— 
‘‘(i) AMOUNT.—The amount specified 
in any election made under this subsection 
shall not exceed $250,000. 
‘‘(ii) NUMBER OF TAXABLE YEARS.— 
A person may not make an election under 
this subsection if such person (or any other 
person treated as a single taxpayer with 
such person under paragraph (5)(A)) has 
made an election under this subsection for 
5 or more preceding taxable years. 
‘‘(C) SPECIAL
RULE
FOR
PARTNERSHIPS 
AND S CORPORATIONS.—In the case of a quali-
fied small business which is a partnership or S 
corporation, the election made under this sub-
section shall be made at the entity level. 
‘‘(5) AGGREGATION RULES.— 
‘‘(A) IN GENERAL.—Except as provided in 
subparagraph (B), all persons or entities treat-
ed as a single taxpayer under subsection (f)(1) 
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shall be treated as a single taxpayer for pur-
poses of this subsection. 
‘‘(B) SPECIAL
RULES.—For purposes of 
this subsection and section 3111(f)— 
‘‘(i) each of the persons treated as a 
single taxpayer under subparagraph (A) 
may separately make the election under 
paragraph (1) for any taxable year, and 
‘‘(ii) the $250,000 amount under 
paragraph (4)(B)(i) shall be allocated 
among all persons treated as a single tax-
payer under subparagraph (A) in the same 
manner as under subparagraph (A)(ii) or 
(B)(ii) of subsection (f)(1), whichever is 
applicable. 
‘‘(6) REGULATIONS.—The Secretary shall pre-
scribe such regulations as may be necessary to carry 
out the purposes of this subsection, including— 
‘‘(A) regulations to prevent the avoidance 
of the purposes of the limitations and aggrega-
tion rules under this subsection through the use 
of successor companies or other means, 
‘‘(B) regulations to minimize compliance 
and recordkeeping burdens under this sub-
section, and 
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‘‘(C) regulations for recapturing the ben-
efit of credits determined under section 3111(f) 
in cases where there is a subsequent adjustment 
to the payroll tax credit portion of the credit 
determined under subsection (a), including re-
quiring amended income tax returns in the 
cases where there is such an adjustment.’’. 
(b) CREDIT ALLOWED AGAINST FICA TAXES.—Sec-
tion 3111 of such Code is amended by adding at the end 
the following new subsection: 
‘‘(f) CREDIT
FOR RESEARCH EXPENDITURES
OF 
QUALIFIED SMALL BUSINESSES.— 
‘‘(1) IN GENERAL.—In the case of a taxpayer 
who has made an election under section 41(i) for a 
taxable year, there shall be allowed as a credit 
against the tax imposed by subsection (a) for the 
first calendar quarter which begins after the date on 
which the taxpayer files the return specified in sec-
tion 41(i)(4)(A)(ii) an amount equal to the payroll 
tax credit portion determined under section 41(i)(2). 
‘‘(2) LIMITATION.—The credit allowed by para-
graph (1) shall not exceed the tax imposed by sub-
section (a) for any calendar quarter on the wages 
paid with respect to the employment of all individ-
uals in the employ of the employer. 
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‘‘(3) CARRYOVER OF UNUSED CREDIT.—If the 
amount of the credit under paragraph (1) exceeds 
the limitation of paragraph (2) for any calendar 
quarter, such excess shall be carried to the suc-
ceeding calendar quarter and allowed as a credit 
under paragraph (1) for such quarter. 
‘‘(4) DEDUCTION
ALLOWED
FOR
CREDITED 
AMOUNTS.—The credit allowed under paragraph (1) 
shall not be taken into account for purposes of de-
termining the amount of any deduction allowed 
under chapter 1 for taxes imposed under subsection 
(a).’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to credits determined for taxable 
years beginning after December 31, 2013. 
Æ 
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