Title: Commitment to American GROWTH Act
Policy area: Taxation

Summary:
Commitment to American Growth, Renewal, and Opportunities for Workers, Technology, and Health Act or the Commitment to American GROWTH Act
This bill provides tax incentives for economic growth, research and development, and small business start-ups.
Specifically, the bill

[Congressional Bills 116th Congress]
[From the U.S. Government Publishing Office]
[H.R. 11 Introduced in House (IH)]

<DOC>






116th CONGRESS
  2d Session
                                 H. R. 11

 To amend the Internal Revenue Code of 1986 to encourage investment to 
   renew, restore, and rebuild the American economy for our workers, 
 families, and small businesses, maximize innovation through research 
        and development, and secure America's medical supplies.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                            October 9, 2020

  Mr. Brady introduced the following bill; which was referred to the 
                      Committee on Ways and Means

_______________________________________________________________________

                                 A BILL


 
 To amend the Internal Revenue Code of 1986 to encourage investment to 
   renew, restore, and rebuild the American economy for our workers, 
 families, and small businesses, maximize innovation through research 
        and development, and secure America's medical supplies.

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

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Commitment to 
American Growth, Renewal, and Opportunities for Workers, Technology, 
and Health Act'' or as the ``Commitment to American GROWTH Act''.
    (b) Table of Contents.--The table of contents of this Act is as 
follows:

Sec. 1. Short title; table of contents.
TITLE I--GROWTH IN BUSINESS INVESTMENT TO BOOST AMERICAN WAGES AND JOBS

Sec. 101. Permanent full expensing for qualified property.
Sec. 102. Limitation on business interest permanently applied without 
                            regard to deductions for depreciation, 
                            amortization, and depletion.
                TITLE II--GROWTH IN RESEARCH IN AMERICA

Sec. 201. Repeal amortization of research and experimental 
                            expenditures.
Sec. 202. Doubling the research and experimental tax credit and better 
                            access to credits for startups.
Sec. 203. Special rules for transfers of intangible property from 
                            controlled foreign corporations to United 
                            States shareholders.
          TITLE III--GROWTH IN AMERICA'S MEDICAL INDEPENDENCE

Sec. 301. Domestic medical and drug manufacturing credit.
Sec. 302. Qualifying advanced medical manufacturing equipment credit.
Sec. 303. New medical research expenditure component of credit for 
                            increasing research activities.
Sec. 304. Refundable portion of research credit for small businesses 
                            engaging in specified medical research.
Sec. 305. Exception from passive loss rules for investments in 
                            specified medical research small business 
                            pass-thru entities.
      TITLE IV--GROWTH IN INNOVATION AND TECHNOLOGY BREAKTHROUGHS

Sec. 401. Simplification and expansion of deduction for start-up and 
                            organizational expenditures.
Sec. 402. Preservation of start-up net operating losses and tax credits 
                            after ownership change.

TITLE I--GROWTH IN BUSINESS INVESTMENT TO BOOST AMERICAN WAGES AND JOBS

SEC. 101. PERMANENT FULL EXPENSING FOR QUALIFIED PROPERTY.

    (a) In General.--Paragraph (6) of section 168(k) of the Internal 
Revenue Code of 1986 is amended to read as follows:
            ``(6) Applicable percentage.--For purposes of this 
        subsection, the term `applicable percentage' means, in the case 
        of property placed in service (or, in the case of a specified 
        plant described in paragraph (5), a plant which is planted or 
        grafted) after September 27, 2017, 100 percent.''.
    (b) Conforming Amendments.--
            (1) Section 168(k) of the Internal Revenue Code of 1986 is 
        amended--
                    (A) in paragraph (2)--
                            (i) in subparagraph (A)--
                                    (I) in clause (i)(V), by inserting 
                                ``and'' at the end;
                                    (II) in clause (ii), by striking 
                                ``clause (ii) of subparagraph (E), 
                                and'' and inserting ``clause (i) of 
                                subparagraph (E).''; and
                                    (III) by striking clause (iii);
                            (ii) in subparagraph (B)--
                                    (I) in clause (i)--
                                            (aa) by striking subclauses 
                                        (II) and (III); and
                                            (bb) by redesignating 
                                        subclauses (IV) through (VI) as 
                                        subclauses (II) through (IV), 
                                        respectively;
                                    (II) by striking clause (ii); and
                                    (III) by redesignating clauses 
                                (iii) and (iv) as clauses (ii) and 
                                (iii), respectively;
                            (iii) in subparagraph (C)--
                                    (I) in clause (i), by striking 
                                ``and subclauses (II) and (III) of 
                                subparagraph (B)(i)''; and
                                    (II) in clause (ii), by striking 
                                ``subparagraph (B)(iii)'' and inserting 
                                ``subparagraph (B)(ii)''; and
                            (iv) in subparagraph (E)--
                                    (I) by striking clause (i); and
                                    (II) by redesignating clauses (ii) 
                                and (iii) as clauses (i) and (ii), 
                                respectively; and
                    (B) in paragraph (5)(A), by striking ``planted 
                before January 1, 2027, or is grafted before such date 
                to a plant that has already been planted,'' and 
                inserting ``planted or grafted''.
            (2) Section 460(c)(6)(B) of such Code is amended by 
        striking ``which'' and all that follows through the period and 
        inserting ``which has a recovery period of 7 years or less.''.
    (c) Effective Date.--The amendments made by this section shall take 
effect as if included in section 13201 of Public Law 115-97.

SEC. 102. LIMITATION ON BUSINESS INTEREST PERMANENTLY APPLIED WITHOUT 
              REGARD TO DEDUCTIONS FOR DEPRECIATION, AMORTIZATION, AND 
              DEPLETION.

    (a) In General.--Section 163(j)(8)(A)(v) of the Internal Revenue 
Code of 1986 is amended by striking ``in the case of taxable years 
beginning before January 1, 2022''.
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after December 31, 2021.

                TITLE II--GROWTH IN RESEARCH IN AMERICA

SEC. 201. REPEAL AMORTIZATION OF RESEARCH AND EXPERIMENTAL 
              EXPENDITURES.

    (a) In General.--Section 174 is amended to read as follows:

``SEC. 174. RESEARCH AND EXPERIMENTAL EXPENDITURES.

    ``(a) Treatment as Expenses.--
            ``(1) In general.--A taxpayer may treat research or 
        experimental expenditures which are paid or incurred by him 
        during the taxable year in connection with his trade or 
        business as expenses which are not chargeable to capital 
        account. The expenditures so treated shall be allowed as a 
        deduction.
            ``(2) When method may be adopted.--
                    ``(A) Without consent.--A taxpayer may, without the 
                consent of the Secretary, adopt the method provided in 
                this subsection for his first taxable year for which 
                expenditures described in paragraph (1) are paid or 
                incurred.
                    ``(B) With consent.--A taxpayer may, with the 
                consent of the Secretary, adopt at any time the method 
                provided in this subsection.
            ``(3) Scope.--The method adopted under this subsection 
        shall apply to all expenditures described in paragraph (1). The 
        method adopted shall be adhered to in computing taxable income 
        for the taxable year and for all subsequent taxable years 
        unless, with the approval of the Secretary, a change to a 
        different method is authorized with respect to part or all of 
        such expenditures.
    ``(b) Amortization of Certain Research and Experimental 
Expenditures.--
            ``(1) In general.--At the election of the taxpayer, made in 
        accordance with regulations prescribed by the Secretary, 
        research or experimental expenditures which are--
                    ``(A) paid or incurred by the taxpayer in 
                connection with his trade or business,
                    ``(B) not treated as expenses under subsection (a), 
                and
                    ``(C) chargeable to capital account but not 
                chargeable to property of a character which is subject 
                to the allowance under section 167 (relating to 
                allowance for depreciation, etc.) or section 611 
                (relating to allowance for depletion),
        may be treated as deferred expenses. In computing taxable 
        income, such deferred expenses shall be allowed as a deduction 
        ratably over such period of not less than 60 months as may be 
        selected by the taxpayer (beginning with the month in which the 
        taxpayer first realizes benefits from such expenditures). Such 
        deferred expenses are expenditures properly chargeable to 
        capital account for purposes of section 1016(a)(1) (relating to 
        adjustments to basis of property).
            ``(2) Time for and scope of election.--The election 
        provided by paragraph (1) may be made for any taxable year, but 
        only if made not later than the time prescribed by law for 
        filing the return for such taxable year (including extensions 
        thereof). The method so elected, and the period selected by the 
        taxpayer, shall be adhered to in computing taxable income for 
        the taxable year for which the election is made and for all 
        subsequent taxable years unless, with the approval of the 
        Secretary, a change to a different method (or to a different 
        period) is authorized with respect to part or all of such 
        expenditures. The election shall not apply to any expenditure 
        paid or incurred during any taxable year before the taxable 
        year for which the taxpayer makes the election.
    ``(c) Land and Other Property.--This section shall not apply to any 
expenditure for the acquisition or improvement of land, or for the 
acquisition or improvement of property to be used in connection with 
the research or experimentation and of a character which is subject to 
the allowance under section 167 (relating to allowance for 
depreciation, etc.) or section 611 (relating to allowance for 
depletion); but for purposes of this section allowances under section 
167, and allowances under section 611, shall be considered as 
expenditures.
    ``(d) Exploration Expenditures.--This section shall not apply to 
any expenditure paid or incurred for the purpose of ascertaining the 
existence, location, extent, or quality of any deposit of ore or other 
mineral (including oil and gas).
    ``(e) Only Reasonable Research Expenditures Eligible.--This section 
shall apply to a research or experimental expenditure only to the 
extent that the amount thereof is reasonable under the 
circumstances.''.
    (b) Clerical Amendment.--The table of sections for part VI of 
subchapter B of chapter 1 is amended by striking the item relating to 
section 174 and inserting the following new item:

``Sec. 174. Research and experimental expenditures''.
    (c) Conforming Amendments.--
            (1) Section 41(d)(1)(A) is amended by striking ``specified 
        research or experimental expenditures under section 174'' and 
        inserting ``expenses under section 174''.
            (2) Section 280C(c) is amended to read as follows:
    ``(c) Credit for Increasing Research Activities.--
            ``(1) In general.--No deduction shall be allowed for that 
        portion of the qualified research expenses (as defined in 
        section 41(b)) or basic research expenses (as defined in 
        section 41(e)(2)) otherwise allowable as a deduction for the 
        taxable year which is equal to the amount of the credit 
        determined for such taxable year under section 41(a).
            ``(2) Similar rule where taxpayer capitalizes rather than 
        deducts expenses.--If--
                    ``(A) the amount of the credit determined for the 
                taxable year under section 41(a)(1), exceeds
                    ``(B) the amount allowable as a deduction for such 
                taxable year for qualified research expenses or basic 
                research expenses (determined without regard to 
                paragraph (1)),
        the amount chargeable to capital account for the taxable year 
        for such expenses shall be reduced by the amount of such 
        excess.
            ``(3) Election of reduced credit.--
                    ``(A) In general.--In the case of any taxable year 
                for which an election is made under this paragraph--
                            ``(i) paragraphs (1) and (2) shall not 
                        apply, and
                            ``(ii) the amount of the credit under 
                        section 41(a) shall be the amount determined 
                        under subparagraph (B).
                    ``(B) Amount of reduced credit.--The amount of 
                credit determined under this subparagraph for any 
                taxable year shall be the amount equal to the excess 
                of--
                            ``(i) the amount of credit determined under 
                        section 41(a) without regard to this paragraph, 
                        over
                            ``(ii) the product of--
                                    ``(I) the amount described in 
                                clause (i), and
                                    ``(II) the rate of tax under 
                                section 11(b).
                    ``(C) Election.--An election under this paragraph 
                for any taxable year shall be made not later than the 
                time for filing the return of tax for such year 
                (including extensions), shall be made on such return, 
                and shall be made in such manner as the Secretary may 
                prescribe. Such an election, once made, shall be 
                irrevocable.
            ``(4) Controlled groups.--Paragraph (3) of subsection (b) 
        shall apply for purposes of this subsection.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to amounts paid or incurred in taxable years beginning after 
December 31, 2021.

SEC. 202. DOUBLING THE RESEARCH AND EXPERIMENTAL TAX CREDIT AND BETTER 
              ACCESS TO CREDITS FOR STARTUPS.

    (a) Credit Rate Increase.--
            (1) In general.--Section 41(a) of the Internal Revenue Code 
        of 1986 is amended by striking ``20 percent'' and inserting 
        ``40 percent''.
            (2) Alternative simplified credit.--Section 41(c)(4)(A) of 
        such Code is amended by striking ``14 percent'' and inserting 
        ``28 percent''.
            (3) Credit rate in case of no research expenses in 3 
        preceding years.--Section 41(c)(4)(B)(ii) of such Code is 
        amended by striking ``6 percent'' and inserting ``\1/2\ the 
        credit percentage in effect under subparagraph (A)''.
    (b) Modification of Small Business Portion Allowed Against Payroll 
Tax.--
            (1) Increase in limitation.--Paragraphs (4)(B)(i) and 
        (5)(B)(ii) of section 41(h) of such Code are each amended by 
        striking ``$250,000'' and inserting ``$500,000''.
            (2) Qualified small business gross receipts threshold.--
        Section 41(h)(3)(A)(i)(I) of such Code is amended by striking 
        ``$5,000,000'' and inserting ``the dollar amount in effect for 
        the taxable year under section 448(c)(1)''.
    (c) Effective Dates.--
            (1) Subsection (a).--The amendments made by subsection (a) 
        shall apply to taxable years beginning after December 31, 2020.
            (2) Subsection (b).--The amendments made by subsection (b) 
        shall apply to taxable years beginning after December 31, 2019.

SEC. 203. SPECIAL RULES FOR TRANSFERS OF INTANGIBLE PROPERTY FROM 
              CONTROLLED FOREIGN CORPORATIONS TO UNITED STATES 
              SHAREHOLDERS.

    (a) In General.--Subpart F of part III of subchapter N of chapter 1 
of the Internal Revenue Code of 1986 is amended by adding at the end 
the following new section:

``SEC. 966. TRANSFERS OF INTANGIBLE PROPERTY TO UNITED STATES 
              SHAREHOLDERS.

    ``(a) In General.--If a controlled foreign corporation holds 
intangible property on the date of the enactment of this section and 
thereafter distributes such property to a domestic corporation which is 
a United States shareholder with respect to such controlled foreign 
corporation--
            ``(1) for purposes of part I of subchapter C and any other 
        provision of this title specified by the Secretary, the fair 
        market value of such property on the date of such distribution 
        shall be treated as not exceeding the adjusted basis of such 
        property immediately before such distribution, and
            ``(2) if any portion of such distribution is not a 
        dividend--
                    ``(A) no gain shall be recognized by such United 
                States shareholder with respect to such distribution, 
                and
                    ``(B) the adjusted basis of such property in the 
                hands of such United States shareholder immediately 
                after such distribution shall be the adjusted basis of 
                such property in the hands of such controlled foreign 
                corporation immediately before such distribution 
                reduced by the amount (if any) of gain not recognized 
                by reason of subparagraph (A) (determined after the 
                application of paragraph (1)).
    ``(b) Intangible Property.--For purposes of this section, the term 
`intangible property' means any--
            ``(1) patent, copyright, license, invention, formula, 
        process, design, pattern, know-how, or format,
            ``(2) method, program, system, procedure, campaign, survey, 
        study, forecast, estimate, or technical data,
            ``(3) computer software (as defined in section 
        197(e)(3)(B)), or
            ``(4) any similar item, which has substantial value 
        independent of the services of any individual.''.
    (b) Conforming Amendments.--
            (1) Section 197(f)(2)(B)(i) of such Code is amended by 
        inserting ``966(a),'' after ``731,''.
            (2) The table of sections for subpart F of part III of 
        subchapter N of chapter 1 of such Code is amended by adding at 
        the end the following new item:

``Sec. 966. Transfers of intangible property to United States 
                            shareholders.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to distributions made in taxable years of foreign corporations 
beginning after December 31, 2020, and to taxable years of United 
States shareholders in which or with which such taxable years of 
foreign corporations end.

          TITLE III--GROWTH IN AMERICA'S MEDICAL INDEPENDENCE

SEC. 301. DOMESTIC MEDICAL AND DRUG MANUFACTURING CREDIT.

    (a) In General.--Subpart D of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986 is amended by adding at the end 
the following new section:

``SEC. 45U. DOMESTIC MEDICAL AND DRUG MANUFACTURING CREDIT.

    ``(a) In General.--For purposes of section 38, the domestic medical 
and drug manufacturing credit determined under this section for any 
taxable year is an amount equal to 10.5 percent of the lesser of--
            ``(1) the qualified medical and drug manufacturing income 
        of the taxpayer for the taxable year, or
            ``(2) taxable income of the taxpayer for the taxable year.
    ``(b) Credit Limited to Wages Paid.--
            ``(1) In general.--The amount of the credit allowable under 
        subsection (a) for any taxable year shall not exceed 50 percent 
        of the W-2 wages of the taxpayer for the taxable year.
            ``(2) W-2 wages.--For purposes of this section--
                    ``(A) In general.--The term `W-2 wages' means, with 
                respect to any person for any taxable year of such 
                person, the sum of the amounts described in paragraphs 
                (3) and (8) of section 6051(a) paid by such person with 
                respect to employment of employees by such person 
                during the calendar year ending during such taxable 
                year.
                    ``(B) Limitation to wages attributable to domestic 
                production.--Such term shall not include any amount 
                which is not properly allocable to domestic medical and 
                drug manufacturing gross receipts for purposes of 
                subsection (c)(1).
                    ``(C) Return requirement.--Such term shall not 
                include any amount which is not properly included in a 
                return filed with the Social Security Administration on 
                or before the 60th day after the due date (including 
                extensions) for such return.
            ``(3) Acquisitions, dispositions, and short taxable 
        years.--The Secretary shall provide for the application of this 
        subsection in cases of a short taxable year or where the 
        taxpayer acquires, or disposes of, the major portion of a trade 
        or business or the major portion of a separate unit of a trade 
        or business during the taxable year.
    ``(c) Qualified Medical and Drug Manufacturing Income.--For 
purposes of this section--
            ``(1) In general.--The term `qualified medical and drug 
        manufacturing income' for any taxable year means an amount 
        equal to the excess (if any) of--
                    ``(A) the taxpayer's domestic medical and drug 
                manufacturing gross receipts for the taxable year, over
                    ``(B) the sum of--
                            ``(i) the cost of goods sold that are 
                        allocable to such receipts, and
                            ``(ii) other expenses, losses, or 
                        deductions which are properly allocable to such 
                        receipts.
            ``(2) Allocation method.--The Secretary shall prescribe 
        rules for the proper allocation of items described in paragraph 
        (1)(B) for purposes of determining qualified medical and drug 
        manufacturing income. Such rules shall provide for the proper 
        allocation of items whether or not such items are directly 
        allocable to domestic medical and drug manufacturing gross 
        receipts.
            ``(3) Special rules for determining costs.--
                    ``(A) In general.--For purposes of determining 
                costs under clause (i) of paragraph (1)(B), any item or 
                service brought into the United States shall be treated 
                as acquired by purchase, and its cost shall be treated 
                as not less than its value immediately after it entered 
                the United States.
                    ``(B) Exports for further manufacture.--In the case 
                of any property described in subparagraph (A) that had 
                been exported by the taxpayer for further manufacture, 
                the increase in cost or adjusted basis under 
                subparagraph (A) shall not exceed the difference 
                between the value of the property when exported and the 
                value of the property when brought back into the United 
                States after the further manufacture.
            ``(4) Domestic medical and drug manufacturing gross 
        receipts.--
                    ``(A) In general.--The term `domestic medical and 
                drug manufacturing gross receipts' means the gross 
                receipts of the taxpayer which are derived from any 
                sale, exchange, or other disposition of--
                            ``(i) any active pharmaceutical ingredient, 
                        or
                            ``(ii) any qualified countermeasure,
                which was manufactured or produced by the taxpayer in 
                whole or in significant part within the United States.
                    ``(B) Active pharmaceutical ingredient.--The term 
                `active pharmaceutical ingredient' means any substance 
                or mixture of substances intended to be used in the 
                manufacture of a drug product and (when so used) 
                becomes an active ingredient in the drug product.
                    ``(C) Qualified countermeasure.--The term 
                `qualified countermeasure' has the meaning given such 
                term in section 319F-1(a)(2) of the Public Health 
                Service Act (42 U.S.C. 247d-6a(a)(2)).''
                    ``(D) Partnerships owned by expanded affiliated 
                groups.--For purposes of this paragraph, if all of the 
                interests in the capital and profits of a partnership 
                are owned by members of a single expanded affiliated 
                group at all times during the taxable year of such 
                partnership, the partnership and all members of such 
                group shall be treated as a single taxpayer during such 
                period.
    ``(d) Definitions and Special Rules.--For purposes of this 
section--
            ``(1) Application of section to pass-thru entities.--
                    ``(A) Partnerships and s corporations.--In the case 
                of a partnership or S corporation--
                            ``(i) this section shall be applied at the 
                        partner or shareholder level,
                            ``(ii) each partner or shareholder shall 
                        take into account such person's allocable share 
                        of each item described in subparagraph (A) or 
                        (B) of subsection (c)(1) (determined without 
                        regard to whether the items described in such 
                        subparagraph (A) exceed the items described in 
                        such subparagraph (B)), and
                            ``(iii) each partner or shareholder shall 
                        be treated for purposes of subsection (b) as 
                        having W-2 wages for the taxable year in an 
                        amount equal to such person's allocable share 
                        of the W-2 wages of the partnership or S 
                        corporation for the taxable year (as determined 
                        under regulations prescribed by the Secretary).
                    ``(B) Trusts and estates.--In the case of a trust 
                or estate--
                            ``(i) the items referred to in subparagraph 
                        (A)(ii) (as determined therein) and the W-2 
                        wages of the trust or estate for the taxable 
                        year, shall be apportioned between the 
                        beneficiaries and the fiduciary (and among the 
                        beneficiaries) under regulations prescribed by 
                        the Secretary, and
                            ``(ii) for purposes of paragraph (2), 
                        adjusted gross income of the trust or estate 
                        shall be determined as provided in section 
                        67(e) with the adjustments described in such 
                        paragraph.
                    ``(C) Regulations.--The Secretary may prescribe 
                rules requiring or restricting the allocation of items 
                and wages under this paragraph and may prescribe such 
                reporting requirements as the Secretary determines 
                appropriate.
            ``(2) Application to individuals.--In the case of an 
        individual, subsection (a)(2) shall be applied by substituting 
        `adjusted gross income' for `taxable income'. For purposes of 
        the preceding sentence, adjusted gross income shall be 
        determined after application of sections 86, 135, 137, 219, 
        221, 222, and 469.
            ``(3) Special rule for affiliated groups.--
                    ``(A) In general.--All members of an expanded 
                affiliated group shall be treated as a single 
                corporation for purposes of this section.
                    ``(B) Expanded affiliated group.--For purposes of 
                this section, the term `expanded affiliated group' 
                means an affiliated group as defined in section 
                1504(a), determined--
                            ``(i) by substituting `more than 50 
                        percent' for `at least 80 percent' each place 
                        it appears, and
                            ``(ii) without regard to paragraphs (2) and 
                        (4) of section 1504(b).
                    ``(C) Allocation of credit.--Except as provided in 
                regulations, the credit under subsection (a) shall be 
                allocated among the members of the expanded affiliated 
                group in proportion to each member's respective amount 
                (if any) of qualified medical and drug manufacturing 
                income.
            ``(4) Trade or business requirement.--This section shall be 
        applied by only taking into account items which are 
        attributable to the actual conduct of a trade or business.
            ``(5) Coordination with minimum tax.--For purposes of 
        determining alternative minimum taxable income under section 
        55, qualified medical and drug manufacturing income shall be 
        determined without regard to any adjustments under sections 56 
        through 59.
            ``(6) Unrelated business taxable income.--For purposes of 
        determining the tax imposed by section 511, subsection 
        (a)(1)(B) shall be applied by substituting `unrelated business 
        taxable income' for `taxable income'.
            ``(7) Regulations.--The Secretary shall prescribe such 
        regulations as are necessary to carry out the purposes of this 
        section, including regulations which prevent more than 1 
        taxpayer from being allowed a credit under this section with 
        respect to any activity described in subsection (c)(4)(A).''.
    (b) Treatment Under Base Erosion Tax.--Section 59A(b)(1)(B)(ii) of 
such Code is amended by striking ``plus'' at the end of subclause (I), 
by redesignating subclause (II) as subclause (III), and by inserting 
after subclause (I) the following new subclause:
                                    ``(II) the credit allowed under 
                                section 38 for the taxable year which 
                                is properly allocable to the domestic 
                                medical and drug manufacturing credit 
                                determined under section 45U(a), 
                                plus''.
    (c) Part of General Business Credit.--Section 38(b) of such Code is 
amended by striking ``plus'' at the end of paragraph (32), by striking 
the period at the end of paragraph (33) and inserting ``, plus'', and 
by adding at the end the following new paragraph:
            ``(34) the domestic medical and drug manufacturing credit 
        determined under section 45U(a).''.
    (d) Credit Allowed Against Alternative Minimum Tax.--Section 
38(c)(4)(B) of such Code is amended by redesignating clauses (x) 
through (xii) as clauses (xi) through (xiii), respectively, and by 
inserting after clause (ix) the following new clause:
                            ``(x) the credit determined under section 
                        45U,''.
    (e) Clerical Amendment.--The table of sections for subpart D of 
part IV of subchapter A of chapter 1 of such Code is amended by adding 
at the end the following new item:

``Sec. 45U. Domestic medical and drug manufacturing credit.''.
    (f) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2020.

SEC. 302. QUALIFYING ADVANCED MEDICAL MANUFACTURING EQUIPMENT CREDIT.

    (a) In General.--Subpart E of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986 is amended by adding at the end 
the following new section:

``SEC. 48D. QUALIFYING ADVANCED MEDICAL MANUFACTURING EQUIPMENT CREDIT.

    ``(a) In General.--For purposes of section 46, the qualifying 
advanced medical manufacturing equipment credit determined under this 
section for any taxable year is the applicable percentage of the basis 
of any qualifying advanced medical manufacturing equipment placed in 
service during such taxable year.
    ``(b) Applicable Percentage.--For purposes of subsection (a), the 
applicable percentage is--
            ``(1) 30 percent in the case of equipment which is placed 
        in service before January 1, 2028,
            ``(2) 20 percent in the case of equipment which is placed 
        in service during calendar year 2028,
            ``(3) 10 percent in the case of equipment which is placed 
        in service during calendar year 2029, and
            ``(4) 0 percent in the case of equipment which is placed in 
        service after December 31, 2029.
    ``(c) Qualifying Advanced Medical Manufacturing Equipment.--For 
purposes of this section, the term `qualifying advanced medical 
manufacturing equipment' means property of a character subject to the 
allowance for depreciation--
            ``(1) which is machinery or equipment that is designed and 
        used to manufacture a--
                    ``(A) drug (as such term is defined in section 
                201(g)(1) of the Federal Food, Drug, and Cosmetic Act),
                    ``(B) device (as such term is defined in section 
                201(h) of such Act), or
                    ``(C) biological product (as such term is defined 
                in section 351(i) of the Public Health Service Act),
            ``(2) which has been identified by the Secretary (after 
        consultation with the Secretary of Health and Human Services) 
        as machinery or equipment that--
                    ``(A) incorporates novel technology or uses an 
                established technique or technology in a new or 
                innovative way, or
                    ``(B) that can improve medical product quality, 
                address shortages of medicines, and speed time-to-
                market,
            ``(3) which is placed in service in the United States by 
        the taxpayer, and
            ``(4) with respect to which depreciation is allowable.
    ``(d) Certain Qualified Progress Expenditures Rules Made 
Applicable.--Rules similar to the rules of subsections (c)(4) and (d) 
of section 46 (as in effect on the day before the enactment of the 
Revenue Reconciliation Act of 1990) shall apply for purposes of this 
section.
    ``(e) Regulations.--The Secretary shall prescribe such regulations 
or other guidance as may be necessary to carry out the purposes of this 
section, including regulations which prevent abuse or fraud.''.
    (b) Treatment Under Base Erosion Tax.--Section 59A(b)(1)(B)(ii) of 
such Code, as amended by section 7 of this Act, is further amended by 
striking ``plus'' at the end of subclause (II), by redesignating 
subclause (III) as subclause (IV), and by inserting after subclause 
(II) the following new subclause:
                                    ``(III) the credit allowed under 
                                section 46 for the taxable year which 
                                is properly allocable to the qualifying 
                                advanced medical manufacturing 
                                equipment credit determined under 
                                section 48D(a), plus''.
    (c) Part of Investment Credit.--Section 46 of such Code is amended 
by striking ``and'' at the end of paragraph (5), by striking the period 
at the end of paragraph (6) and inserting ``, and'', and by adding at 
the end the following new paragraph:
            ``(7) the qualifying advanced medical manufacturing 
        equipment credit.''.
    (d) Clerical Amendment.--The table of sections for subpart D of 
part IV of subchapter A of chapter 1 of such Code is amended by adding 
at the end the following new item:

``Sec. 48D. Qualifying advanced medical manufacturing equipment 
                            credit.''.
    (e) Effective Date.--The amendments made by this section shall 
apply to periods after the date of the enactment of this section under 
rules similar to the rules of section 48(m) of the Internal Revenue 
Code of 1986 (as in effect on the date of the enactment fo the Revenue 
Reconciliation Act of 1990).

SEC. 303. NEW MEDICAL RESEARCH EXPENDITURE COMPONENT OF CREDIT FOR 
              INCREASING RESEARCH ACTIVITIES.

    (a) In General.--Section 41(a) of the Internal Revenue Code of 1986 
is amended by striking ``and'' at the end of paragraph (2), by striking 
the period at the end of paragraph (3) and inserting ``, and'', and by 
adding at the end the following new paragraph:
            ``(4) 14 percent of specified medical research 
        expenditures.''.
    (b) Specified Medical Research Expenditures.--Section 41(f) of such 
Code is amended by adding at the end the following new paragraph:
            ``(7) Specified medical research expenditures.--
                    ``(A) In general.--The term `specified medical 
                research expenditures' means amounts paid or incurred 
                for qualified research with respect to any qualified 
                countermeasure.
                    ``(B) Qualified countermeasure.--The term 
                `qualified countermeasure' has the meaning given to 
                such term in section 319F-1(a)(2) of the Public Health 
                Service Act (42 U.S.C. 247d-6a(a)(2)).''.
    (c) Denial of Double Benefit.--
            (1) Taxable years beginning before january 1, 2021.--In the 
        case of specified medical research expenditures (as defined in 
        section 41(f)(7) of such Code (as added by this section)) paid 
        or incurred in taxable years beginning before January 1, 2021--
                    (A) such expenditures shall be treated in the same 
                manner as qualified research expenses and basic 
                research expenses under section 280C(c)(1) of such Code 
                (as in effect on the day before the enactment of the 
                Tax Cuts and Jobs Act), and
                    (B) the amount determined under section 
                280C(c)(2)(A) (as in effect on such day) for the 
                taxable year shall be increased by the amount of credit 
                determined for the taxable year under section 41(a)(4) 
                (as added by this section).
            (2) Taxable years beginning after december 31, 2020.--
        Section 280C(c)(1) of such Code is amended by striking 
        ``section 41(a)(1)'' and inserting ``paragraphs (1) and (4) of 
        section 41(a)''.
    (d) Conforming Amendment.--Section 41(f)(1) of such Code is amended 
by striking ``and amounts paid or incurred to energy research 
consortiums'' each place it appears and inserting ``, amounts paid or 
incurred to energy research consortiums, and specified medical research 
expenditures''.
    (e) Effective Date.--The amendments made by this section shall 
apply to amounts paid or incurred after the date of the enactment of 
this Act, in taxable years ending after such date.

SEC. 304. REFUNDABLE PORTION OF RESEARCH CREDIT FOR SMALL BUSINESSES 
              ENGAGING IN SPECIFIED MEDICAL RESEARCH.

    (a) In General.--Section 41 of the Internal Revenue Code of 1986 is 
amended by adding at the end the following new subsection:
    ``(i) Refundable Portion for Small Businesses Engaging in Specified 
Medical Research.--
            ``(1) In general.--At the election of a medical research 
        small business, the portion of the credit determined under this 
        section for the taxable year which is properly allocable to 
        specified medical research shall be treated (other than for 
        purposes of section 280C) as a credit allowed under subpart C 
        (and not this subpart).
            ``(2) Medical research small business.--For purposes of 
        this subsection, the term `medical research small business' 
        means any domestic C corporation--
                    ``(A) which conducts any specified medical research 
                during the taxable year, and
                    ``(B) the gross receipts of which (determined under 
                the rules of subsection (c)) for the taxable year do 
                not exceed $1,000,000.
            ``(3) Specified medical research.--For purposes of this 
        subsection, the term `specified medical research' means any 
        qualified research 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))).
            ``(4) Election.--Any election under this subsection for any 
        taxable year--
                    ``(A) shall specify the amount of the credit to 
                which such election applies,
                    ``(B) shall be made on or before the due date 
                (including extensions) of the return of tax for the 
                taxable year,
                    ``(C) may not be made for any taxable year with 
                respect to any portion of the credit determined under 
                this section with respect to which an election is made 
                under subsection (h), and
                    ``(D) may be revoked only with the consent of the 
                Secretary.
            ``(5) Regulations.--The Secretary shall prescribe such 
        regulations for purposes of this subsection as may be necessary 
        or appropriate for determining proper allocation to specified 
        medical research of the portion of any credit allowed to a 
        taxpayer for a taxable year under this section.''.
    (b) Conforming Amendment.--Section 1324(b) of title 31, United 
States Code, is amended by inserting ``41(i),'' after ``6428,''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2020.

SEC. 305. 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:
                    ``(E) 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 (ix) as clauses (iii) 
        through (x), 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, 2020.

      TITLE IV--GROWTH IN INNOVATION AND TECHNOLOGY BREAKTHROUGHS

SEC. 401. SIMPLIFICATION AND EXPANSION OF DEDUCTION FOR START-UP AND 
              ORGANIZATIONAL EXPENDITURES.

    (a) In General.--Section 195 of the Internal Revenue Code of 1986 
is amended by redesignating subsections (c) and (d) as subsections (d) 
and (e), respectively, and by striking all that precedes subsection (d) 
(as so redesignated) and inserting the following:

``SEC. 195. START-UP AND ORGANIZATIONAL EXPENDITURES.

    ``(a) Capitalization of Expenditures.--Except as otherwise provided 
in this section, no deduction shall be allowed for start-up or 
organizational expenditures.
    ``(b) Election To Deduct.--
            ``(1) In general.--If a taxpayer elects the application of 
        this subsection with respect to any active trade or business--
                    ``(A) the taxpayer shall be allowed a deduction for 
                the taxable year in which such active trade or business 
                begins in an amount equal to the lesser of--
                            ``(i) the aggregate amount of start-up and 
                        organizational expenditures paid or incurred in 
                        connection with such active trade or business, 
                        or
                            ``(ii) $20,000, reduced (but not below 
                        zero) by the amount by which such aggregate 
                        amount exceeds $120,000, and
                    ``(B) the remainder of such start-up and 
                organizational expenditures shall be charged to capital 
                account and allowed as an amortization deduction 
                determined by amortizing such expenditures ratably over 
                the 180-month period beginning with the month in which 
                the active trade or business begins.
            ``(2) Application to organizational expenditures.--In the 
        case of organizational expenditures with respect to any 
        corporation or partnership, the active trade or business 
        referred to in paragraph (1) means the first active trade or 
        business carried on by such corporation or partnership.
            ``(3) Inflation adjustment.--In the case of any taxable 
        year beginning after December 31, 2020, the $20,000 and 
        $120,000 amounts in paragraph (1)(A)(ii) shall each be 
        increased by an amount equal to--
                    ``(A) such dollar amount, multiplied by
                    ``(B) the cost-of-living adjustment determined 
                under section 1(f)(3) for the calendar year in which 
                the taxable year begins, determined by substituting 
                `calendar year 2019' for `calendar year 2016' in 
                subparagraph (A)(ii) thereof.
        If any amount as increased under the preceding sentence is not 
        a multiple of $1,000, such amount shall be rounded to the 
        nearest multiple of $1,000.
    ``(c) Allowance of Deduction Upon Liquidation or Disposition.--
            ``(1) Liquidation of partnership or corporation.--If any 
        partnership or corporation is completely liquidated by the 
        taxpayer, any start-up or organizational expenditures paid or 
        incurred in connection with such partnership or corporation 
        which were not allowed as a deduction by reason of this section 
        may be deducted to the extent allowable under section 165.
            ``(2) Disposition of trade or business.--If any trade or 
        business is completely disposed of or discontinued by the 
        taxpayer, any start-up expenditures paid or incurred in 
        connection with such trade or business which were not allowed 
        as a deduction by reason of this section (and not taken into 
        account in connection with a liquidation to which paragraph (1) 
        applies) may be deducted to the extent allowable under section 
        165. For purposes of this paragraph, in the case of any 
        deduction allowed under subsection (b)(1) with respect to both 
        start-up and organizational expenditures, the amount treated as 
        so allowed with respect to start-up expenditures shall bear the 
        same ratio to such deduction as the start-up expenditures taken 
        into account in determining such deduction bears to the 
        aggregate of the start-up and organizational expenditures so 
        taken into account.''.
    (b) Organizational Expenditures.--Section 195(d) of such Code, as 
redesignated by subsection (a), is amended by adding at the end the 
following new paragraphs:
            ``(3) Organizational expenditures.--The term 
        `organizational expenditures' means any expenditure which--
                    ``(A) is incident to the creation of a corporation 
                or a partnership,
                    ``(B) is chargeable to capital account, and
                    ``(C) is of a character which, if expended incident 
                to the creation of a corporation or a partnership 
                having an ascertainable life, would be amortizable over 
                such life.
            ``(4) Application to certain disregarded entities.--In the 
        case of any entity with a single owner that is disregarded as 
        an entity separate from its owner, this section shall be 
        applied in the same manner as if such entity were a 
        corporation.''.
    (c) Election.--Section 195(e)(2) of such Code, as redesignated by 
subsection (a), is amended to read as follows:
            ``(2) Partnerships and s corporations.--In the case of any 
        partnership or S corporation, the election under subsection (b) 
        shall be made (and this section shall be applied) at the entity 
        level.''.
    (d) Conforming Amendments.--
            (1)(A) Part VIII of subchapter B of chapter 1 is amended by 
        striking section 248 of such Code (and by striking the item 
        relating to such section in the table of sections of such 
        part).
            (B) Section 170(b)(2)(D)(ii) of such Code is amended by 
        striking ``(except section 248)''.
            (C) Section 312(n)(3) of such Code is amended by striking 
        ``Sections 173 and 248'' and inserting ``Sections 173 and 
        195''.
            (D) Section 535(b)(3) of such Code is amended by striking 
        ``(except section 248)''.
            (E) Section 545(b)(3) of such Code is amended by striking 
        ``(except section 248)''.
            (F) Section 545(b)(4) of such Code is amended by striking 
        ``(except section 248)''.
            (G) Section 834(c)(7) of such Code is amended by striking 
        ``(except section 248)''.
            (H) Section 852(b)(2)(C) of such Code is amended by 
        striking ``(except section 248)''.
            (I) Section 857(b)(2)(A) of such Code is amended by 
        striking ``(except section 248)''.
            (J) Section 1363(b) of such Code is amended by adding 
        ``and'' at the end of paragraph (2), by striking paragraph (3), 
        and by redesignating paragraph (4) as paragraph (3).
            (K) Section 1375(b)(1)(B)(i) of such Code is amended by 
        striking ``(other than the deduction allowed by section 248, 
        relating to organization expenditures)''.
            (2)(A) Section 709 of such Code is amended to read as 
        follows:

``SEC. 709. TREATMENT OF SYNDICATION FEES.

    ``No deduction shall be allowed under this chapter to a partnership 
or to any partner of the partnership for any amounts paid or incurred 
to promote the sale of (or to sell) an interest in the partnership.''.
            (B) The item relating to section 709 in the table of 
        sections for part I of subchapter K of chapter 1 of such Code 
        is amended to read as follows:

``Sec. 709. Treatment of syndication fees.''.
            (3) Section 1202(e)(2)(A) of such Code is amended by 
        striking ``section 195(c)(1)(A)'' and inserting ``section 
        195(d)(1)(A)''.
            (4) The item relating to section 195 in the table of 
        contents of part VI of subchapter B of chapter 1 of such Code 
        is amended to read as follows:

``Sec. 195. Start-up and organizational expenditures.''.
    (e) Effective Date.--The amendments made by this section shall 
apply to expenditures paid or incurred in connection with active trades 
or businesses which begin in taxable years beginning after December 31, 
2019.

SEC. 402. PRESERVATION OF START-UP NET OPERATING LOSSES AND TAX CREDITS 
              AFTER OWNERSHIP CHANGE.

    (a) Application to Net Operating Losses.--Section 382(d) of the 
Internal Revenue Code of 1986 is amended by adding at the end the 
following new paragraph:
            ``(4) Exception for start-up losses.--
                    ``(A) In general.--In the case of any net operating 
                loss carryforward described in paragraph (1)(A) which 
                arose in a start-up period taxable year, the amount of 
                such net operating loss carryforward otherwise taken 
                into account under such paragraph shall be reduced by 
                the net start-up loss determined with respect to the 
                trade or business referred to in subparagraph (B)(i) 
                for such start-up period taxable year.
                    ``(B) Start-up period taxable year.--The term 
                `start-up period taxable year' means any taxable year 
                of the old loss corporation which--
                            ``(i) begins before the close of the 3-year 
                        period beginning on the date on which any trade 
                        or business of such corporation begins as an 
                        active trade or business (as determined under 
                        section 195(d)(2) without regard to 
                        subparagraph (B) thereof), and
                            ``(ii) ends after May 31, 2020.
                    ``(C) Net start-up loss.--
                            ``(i) In general.--The term `net start-up 
                        loss' means, with respect to any trade or 
                        business referred to in subparagraph (B)(i) for 
                        any start-up period taxable year, the amount 
                        which bears the same ratio (but not greater 
                        than 1) to the net operating loss carryforward 
                        which arose in such start-up period taxable 
                        year as--
                                    ``(I) the net operating loss (if 
                                any) which would have been determined 
                                for such start-up period taxable year 
                                if only items of income, gain, 
                                deduction, and loss properly allocable 
                                to such trade or business were taken 
                                into account, bears to
                                    ``(II) the amount of the net 
                                operating loss determined for such 
                                start-up period taxable year.
                            ``(ii) Special rule for last taxable year 
                        in start-up period.--In the case of any start-
                        up period taxable year which ends after the 
                        close of the 3-year period described in 
                        subparagraph (B)(i) with respect to any trade 
                        or business, the net start-up loss with respect 
                        to such trade or business for such start-up 
                        period taxable year shall be the same 
                        proportion of such loss (determined without 
                        regard to this clause) as the proportion of 
                        such start-up period taxable year which is on 
                        or before the last day of such period.
                    ``(D) Application to net operating loss arising in 
                year of ownership change.--Subparagraph (A) shall apply 
                to any net operating loss described in paragraph (1)(B) 
                in the same manner as such subparagraph applies to net 
                operating loss carryforwards described in paragraph 
                (1)(A), but by only taking into account the amount of 
                such net operating loss (and the amount of the net 
                start-up loss) which is allocable under paragraph 
                (1)(B) to the period described in such paragraph. 
                Proper adjustment in the allocation of the net start-up 
                loss under the preceding sentence shall be made in the 
                case of a taxable year to which subparagraph (C)(ii) 
                applies.
                    ``(E) Application to taxable years which are start-
                up period taxable years with respect to more than 1 
                trade or business.--In the case of any net operating 
                loss carryforward which arose in a taxable year which 
                is a start-up period taxable year with respect to more 
                than 1 trade or business--
                            ``(i) this paragraph shall be applied 
                        separately with respect to each such trade or 
                        business, and
                            ``(ii) the aggregate reductions under 
                        subparagraph (A) shall not exceed such net 
                        operating loss carryforward.
                    ``(F) Continuity of business requirement.--If the 
                new loss corporation does not continue the trade or 
                business referred to in subparagraph (B)(i) at all 
                times during the 2-year period beginning on the change 
                date, this paragraph shall not apply with respect to 
                such trade or business.
                    ``(G) Certain title 11 or similar cases.--
                            ``(i) Multiple ownership changes.--In the 
                        case of a 2nd ownership change to which 
                        subsection (l)(5)(D) applies, this paragraph 
                        shall not apply for purposes of determining the 
                        pre-change loss with respect to such 2nd 
                        ownership change.
                            ``(ii) Certain insolvency transactions.--If 
                        subsection (l)(6) applies for purposes of 
                        determining the value of the old loss 
                        corporation under subsection (e), this 
                        paragraph shall not apply.
                    ``(H) Not applicable to disallowed interest.--This 
                paragraph shall not apply for purposes of applying the 
                rules of paragraph (1) to the carryover of disallowed 
                interest under paragraph (3).
                    ``(I) Transition rule.--This paragraph shall not 
                apply with respect to any trade or business if the date 
                on which such trade or business begins as an active 
                trade or business (as determined under section 
                195(d)(2) without regard to subparagraph (B) thereof) 
                is on or before May 31, 2020.''.
    (b) Application to Excess Credits.--Section 383 of such Code is 
amended by redesignating subsection (e) as subsection (f) and by 
inserting after subsection (d) the following new subsection:
    ``(e) Exception for Start-Up Excess Credits.--
            ``(1) In general.--In the case of any unused general 
        business credit of the corporation under section 39 which arose 
        in a start-up period taxable year, the amount of such unused 
        general business credit otherwise taken into account under 
        subsection (a)(2)(A) shall be reduced by the start-up excess 
        credit determined with respect to any trade or business 
        referred to in section 382(d)(4)(B)(i) for such start-up period 
        taxable year.
            ``(2) Start-up period taxable year.--For purposes of this 
        subsection, the term `start-up period taxable year' has the 
        meaning given such term in section 382(d)(4)(B).
            ``(3) Start-up excess credit.--For purposes of this 
        subsection, the term `start-up excess credit' means, with 
        respect to any trade or business referred to in section 
        382(d)(4)(B)(i) for any start-up period taxable year, the 
        amount which bears the same ratio to the unused general 
        business credit which arose in such start-up period taxable 
        year as--
                    ``(A) the amount of the general business credit 
                which would have been determined for such start-up 
                period taxable year if only credits properly allocable 
                to such trade or business were taken into account, 
                bears to
                    ``(B) the amount of the general business credit 
                determined for such start-up period taxable year.
            ``(4) Application of certain rules.--Rules similar to the 
        rules of subparagraphs (C)(ii), (D), (E), and (F) of section 
        382(d)(4) shall apply for purposes of this subsection.
            ``(5) Transition rule.--This subsection shall not apply 
        with respect to any trade or business if the date on which such 
        trade or business begins as an active trade or business (as 
        determined under section 195(d)(2) without regard to 
        subparagraph (B) thereof) is on or before May 31, 2020.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years ending after May 31, 2020.
                                 <all>