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SEC. 810. RESEARCH CREDIT.
(a) PERMANENT EXTENSION OF RESEARCH CREDIT.—
(1) IN GENERAL.—Section 41 (relating to credit
for increasing research activities) is amended by
striking subsection (h).
(2) CONFORMING AMENDMENT.—Paragraph (1)
of section 45C(b) is amended by striking subpara-
graph (D).
(3) EFFECTIVE DATE.—The amendments made
by this subsection shall apply to amounts paid or in-
curred after the date of the enactment of this Act.
(b) INCREASES IN RATES OF ALTERNATIVE INCRE-
MENTAL CREDIT.—
(1) IN GENERAL.—Subparagraph (A) of section
41(c)(4) (relating to election of alternative incre-
mental credit) is amended—
(A) by striking ‘‘2.65 percent’’ and insert-
ing ‘‘3 percent’’,
(B) by striking ‘‘3.2 percent’’ and inserting
‘‘4 percent’’, and
(C) by striking ‘‘3.75 percent’’ and insert-
ing ‘‘5 percent’’.
(2) EFFECTIVE DATE.—The amendments made
by this subsection shall apply to taxable years ending
after the date of the enactment of this Act.
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SEC. 811. CREDIT FOR MEDICAL RESEARCH RELATED TO
DEVELOPING 
VACCINES 
AGAINST 
WIDE-
SPREAD DISEASES.
(a) IN GENERAL.—Subpart D of part IV of subchapter
A of chapter 1 (relating to business related credits), as
amended by section 620, is amended by adding at the end
the following new section:
‘‘SEC. 45G. CREDIT FOR MEDICAL RESEARCH RELATED TO
DEVELOPING 
VACCINES 
AGAINST 
WIDE-
SPREAD DISEASES.
‘‘(a) GENERAL RULE.—For purposes of section 38, the
vaccine research credit determined under this section for the
taxable year is an amount equal to 30 percent of the quali-
fied vaccine research expenses for the taxable year.
‘‘(b) QUALIFIED VACCINE RESEARCH EXPENSES.—
For purposes of this section—
‘‘(1) 
QUALIFIED
VACCINE
RESEARCH
EX-
PENSES.—
‘‘(A) IN
GENERAL.—Except as otherwise
provided in this paragraph, the term ‘qualified
vaccine research expenses’ means the amounts
which are paid or incurred by the taxpayer dur-
ing the taxable year which would be described in
subsection (b) of section 41 if such subsection
were applied with the modifications set forth in
subparagraph (B).
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‘‘(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 appears
in paragraphs (2) and (3) of such sub-
section, 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 re-
search 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 re-
search’ means research to develop vaccines and
microbicides for—
‘‘(A) malaria,
‘‘(B) tuberculosis,
‘‘(C) HIV, or
‘‘(D) any infectious disease (of a single eti-
ology) which, according to the World Health Or-
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ganization, causes over 1,000,000 human deaths
annually.
‘‘(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 deter-
mining base period research expenses for purposes 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 respect
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 research
unless such research is pursuant to a research plan
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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 regulations speci-
fying 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 sec-
tion 41(f) shall apply for purposes of this section.
‘‘(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 sec-
tion apply for such taxable year.’’.
(b) INCLUSION IN GENERAL BUSINESS CREDIT.—
(1) IN GENERAL.—Section 38(b), as amended by
section 620, is amended by striking ‘‘plus’’ at the end
of paragraph (14), by striking the period at the end
of paragraph (15) and inserting ‘‘, plus’’, and by
adding at the end the following new paragraph:
‘‘(16) the vaccine research credit determined
under section 45G.’’.
(2) 
TRANSITION
RULE.—Section 
39(d), 
as
amended by section 620, is amended by adding at the
end the following new paragraph:
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‘‘(12) NO CARRYBACK OF SECTION 45G CREDIT
BEFORE ENACTMENT.—No portion of the unused busi-
ness credit for any taxable year which is attributable
to the vaccine research credit determined under sec-
tion 45G may be carried back to a taxable year end-
ing before the date of the enactment of section 45G.’’.
(c) DENIAL OF DOUBLE BENEFIT.—Section 280C is
amended by adding at the end the following new subsection:
‘‘(d) CREDIT FOR QUALIFIED VACCINE RESEARCH EX-
PENSES.—
‘‘(1) IN GENERAL.—No deduction shall be al-
lowed for that portion of the qualified vaccine re-
search expenses (as defined in section 45G(b)) other-
wise allowable as a deduction for the taxable year
which is equal to the amount of the credit determined
for such taxable year under section 45G(a).
‘‘(2) CERTAIN RULES TO APPLY.—Rules similar
to the rules of paragraphs (2), (3), and (4) of sub-
section (c) shall apply for purposes of this sub-
section.’’.
(d) DEDUCTION FOR UNUSED PORTION OF CREDIT.—
Section 196(c) (defining qualified business credits) is
amended by striking ‘‘and’’ at the end of paragraph (8),
by striking the period at the end of paragraph (9) and in-