Infectious Disease Therapies Research and Innovation Act of 2022
Bill: H.R.7515 | Sponsor: Rep. Kelly, Mike (R-PA)
Policy area: Taxation

Summary:
Infectious Disease Therapies Research and Innovation Act of 2022
This bill exempts from the definition of passive activity, for purposes of the passive loss tax rules, any qualified medical research activity of a specified medical research small business pass-thru entity.
The bill defines specified medical research small business pass-thru entity as any domestic pass-thru entity if more than 80% of such entity's expenditures on research are paid or incurred in connection with qualified medical research activities and the gross receipts of such entity for the taxable year are less than $1 million.

To amend the Internal Revenue Code of 1986 to provide an exception from 
 the passive loss rules for investments in specified medical research 
                   small business pass-thru entities.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Infectious Disease Therapies 
Research and Innovation Act of 2022''.

SEC. 2. EXCEPTION FROM PASSIVE LOSS RULES FOR INVESTMENTS IN SPECIFIED 
              MEDICAL RESEARCH SMALL BUSINESS PASS-THRU ENTITIES.

    (a) In General.--Subsection (c) of section 469 of the Internal 
Revenue Code of 1986 is amended by redesignating paragraphs (4) through 
(7) as paragraphs (5) through (8), respectively, and by inserting after 
paragraph (3) the following new paragraph:
            ``(4) Specified medical research activities.--
                    ``(A) In general.--The term `passive activity' 
                shall not include any qualified medical research 
                activity of the taxpayer carried on by a specified 
                medical research small business pass-thru entity.
                    ``(B) Treatment of losses and deductions.--
                            ``(i) In general.--Losses or deductions of 
                        a taxpayer in connection with qualified medical 
                        research activities carried on by a specified 
                        medical research small business pass-thru 
                        entity shall not be treated as losses or 
                        deductions, respectively, from a passive 
                        activity except as provided in clause (ii) and 
                        subparagraph (C).
                            ``(ii) Limitation.--Clause (i) shall apply 
                        to losses and deductions of a taxpayer in 
                        connection with a specified medical small 
                        business pass-thru entity for a taxable year 
                        only to the extent that the aggregate losses 
                        and deductions of the taxpayer in connection 
                        with qualified medical research activities of 
                        such entity for such taxable year do not exceed 
                        the portion of the taxpayer's adjusted basis in 
                        the taxpayer's ownership interest in such 
                        entity that is attributable to money or other 
                        property contributed--
                                    ``(I) in exchange for such 
                                ownership interest, and
                                    ``(II) specifically for use in 
                                connection with qualified medical 
                                research activities.
                        For purposes of the preceding sentence, the 
                        taxpayer's basis shall not include any portion 
                        of such basis which is attributable to an 
                        increase in a partner's share of the 
                        liabilities of a partnership that is considered 
                        under section 752(a) as a contribution of 
                        money.
                    ``(C) Treatment of carryovers.--Subparagraph (B)(i) 
                shall not apply to the portion of any loss or deduction 
                that is carried over under subsection (b) into a 
                taxable year other than the taxable year in which such 
                loss or deduction arose.
                    ``(D) Qualified medical research activity.--For 
                purposes of this paragraph, the term `qualified medical 
                research activity' means any qualified research (within 
                the meaning of section 41(d)) with respect to qualified 
                countermeasures (as defined in section 319F-1(a)(2) of 
                the Public Health Service Act (42 U.S.C. 247d-
                6a(a)(2)).
                    ``(E) Specified medical research small business 
                pass-thru entity.--For purposes of this paragraph, the 
                term `specified medical research small business pass-
                thru entity' means any domestic pass-thru entity for 
                any taxable year if--
                            ``(i) more than 80 percent of such entity's 
                        expenditures on qualified research for such 
                        taxable year are paid or incurred in connection 
                        with qualified medical research activities, and
                            ``(ii) the gross receipts (as determined 
                        under the rules of section 41(h)(3)) of such 
                        entity for the taxable year (and each preceding 
                        taxable year) is less than $1,000,000.
                    ``(F) Capital expenditures taken into account for 
                expenditures test.--An expenditure shall not fail to be 
                taken into account under subparagraph (E)(i) merely 
                because such expenditure is chargeable to capital 
                account.
                    ``(G) Pass-thru entity.--For purposes of this 
                paragraph, the term `pass-thru entity' means any 
                partnership, S corporation, or other entity identified 
                by the Secretary as a pass-thru entity for purposes of 
                this paragraph.
                    ``(H) Aggregation rules.--
                            ``(i) In general.--All persons treated as a 
                        single employer under subsection (a) or (b) of 
                        section 52, or subsection (m) or (o) of section 
                        414, shall be treated as a single entity for 
                        purposes of subparagraphs (E) and (F)(iii).
                            ``(ii) Limitation where entity would not 
                        qualify.--No entity shall be treated as a 
                        specified medical research small business pass-
                        thru entity unless such entity qualifies as 
                        such both with and without the application of 
                        clause (i).''.
    (b) Material Participation Not Required.--Paragraph (5) of section 
469(c) of the Internal Revenue Code of 1986, as redesignated by 
subsection (a), is amended by striking ``and (3)'' in the heading and 
text and inserting ``, (3), and (4)''.
    (c) Certain Research-Related Deductions and Credits of Specified 
Medical Research Small Business Pass-Thru Entities Allowed for Purposes 
of Determining Alternative Minimum Tax.--
            (1) Deduction for research and experimental expenditures.--
        Paragraph (2) of section 56(b) of the Internal Revenue Code of 
        1986 is amended by adding at the end the following new 
        subparagraph:
                    ``(D) Exception for specified medical research 
                small business pass-thru entities.--In the case of a 
                specified medical research small business pass-thru 
                entity (as defined in section 469(c)(4)), this 
                paragraph shall not apply to any amount allowable as a 
                deduction under section 174(a).''.
            (2) Allowance of certain research-related credits.--
        Subparagraph (B) of section 38(c)(4) of such Code is amended by 
        redesignating clauses (ii) through (xii) as clauses (iii) 
        through (xiii), respectively, and by inserting after clause (i) 
        the following new clause:
                            ``(ii) the credit of an individual taxpayer 
                        determined under section 41 to the extent 
                        attributable to a specified medical research 
                        small business pass-thru entity (as defined in 
                        section 469(c)(4)),''.
    (d) Exception to Limitation on Pass-Thru of Research Credit.--
Subsection (g) of section 41 of such Code is amended by adding at the 
end the following: ``Paragraphs (2) and (4) shall not apply with 
respect to any specified medical research small business pass-thru 
entity (as defined in section 469(c)(4)).''.
    (e) Effective Date.--The amendments made by this section shall 
apply to losses and credits arising in taxable years beginning after 
December 31, 2022.
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