American Research and Competitiveness Act of 2014

Bill: 113-hr-4438
Sponsor: full_name: Rep. Brady, Kevin [R-TX-8]
Introduced: 2014-04-09
Policy area: Taxation
Subjects: Business expenses

Income tax credits

Research and development
Latest action: action_date: 2014-05-12
text: Received in the Senate.

Summaries:
action_date: 2014-04-09
action_desc: Introduced in House
text: <p>American Research and Competitiveness Act of 2014 - Amends the Internal Revenue Code to revise the formula for calculating the&nbsp;amount of the reseach tax credit and make such revised credit permanent. </p>

action_date: 2014-05-02
action_desc: Reported to House with amendment(s)
text: <p>American Research and Competitiveness Act of 2014 - Amends the Internal Revenue Code to establish a permanent research tax credit that allows for: (1) 20% of the qualified or basic research expenses that exceed 50% of the average qualified or basic research expenses for the 3 preceding taxable years, and (2) 20% of amounts paid to an energy research consortium for energy research. Reduces such credit rate to 10% if a taxpayer has no qualified research expenses in any one of the 3 preceding taxable years. </p>

action_date: 2014-05-09
action_desc: Passed House amended
text: <p>American Research and Competitiveness Act of 2014 - Amends the Internal Revenue Code to establish a permanent research tax credit that allows for: (1) 20% of the qualified or basic research expenses that exceed 50% of the average qualified or basic research expenses for the 3 preceding taxable years, and (2) 20% of amounts paid to an energy research consortium for energy research. Reduces such credit rate to 10% if a taxpayer has no qualified research expenses in any one of the 3 preceding taxable years. </p> <p>Prohibits the entry of the budgetary effects of this Act on any PAYGO scorecard.</p>

tv_txt: I 113th CONGRESS 2d Session H. R. 4438 IN THE HOUSE OF REPRESENTATIVES April 9, 2014 Mr. Brady of Texas (for himself, Mr. Larson of Connecticut , Mr. Paulsen , Ms. Eshoo , Mr. McCaul , Ms. Matsui , Mr. Sam Johnson of Texas , Mr. Neal , and Mr. Schock ) 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 simplify and make permanent the research credit.

1. Short title This Act may be cited as the American Research and Competitiveness Act of 2014 . 2. Research credit simplified and made permanent (a) In general Subsection (a) of section 41 of the Internal Revenue Code of 1986 is amended to read as follows: (a) In general For purposes of section 38, the research credit determined under this section for the taxable year shall be an amount equal to the sum of— (1) 20 percent of so much of the qualified research expenses for the taxable year as exceeds 50 percent of the average qualified research expenses for the 3 taxable years preceding the taxable year for which the credit is being determined, (2) 20 percent of so much of the basic research payments for the taxable year as exceeds 50 percent of the average basic research payments for the 3 taxable years preceding the taxable year for which the credit is being determined, plus (3) 20 percent of the amounts paid or incurred by the taxpayer in carrying on any trade or business of the taxpayer during the taxable year (including as contributions) to an energy research consortium for energy research. . (b) Repeal of termination Section 41 of such Code is amended by striking subsection (h). (c) Conforming amendments (1) Subsection (c) of section 41 of such Code is amended to read as follows: (c) Determination of average research expenses for prior years (1) Special rule in case of no qualified research expenditures in any of 3 preceding taxable years In any case in which the taxpayer has no qualified research expenses in any one of the 3 taxable years preceding the taxable year for which the credit is being determined, the amount determined under subsection (a)(1) for such taxable year shall be equal to 10 percent of the qualified research expenses for the taxable year. (2) Consistent treatment of expenses (A) In general Notwithstanding whether the period for filing a claim for credit or refund has expired for any taxable year taken into account in determining the average qualified research expenses, or average basic research payments, taken into account under subsection (a), the qualified research expenses and basic research payments taken into account in determining such averages shall be determined on a basis consistent with the determination of qualified research expenses and basic research payments, respectively, for the credit year. (B) Prevention of distortions The Secretary may prescribe regulations to prevent distortions in calculating a taxpayer’s qualified research expenses or basic research payments caused by a change in accounting methods used by such taxpayer between the current year and a year taken into account in determining the average qualified research expenses or average basic research payments taken into account under subsection (a). . (2) Section 41(e) of such Code is amended— (A) by striking all that precedes paragraph (6) and inserting the following: (e) Basic research payments For purposes of this section— (1) In general The term basic research payment means, with respect to any taxable year, any amount paid in cash during such taxable year by a corporation to any qualified organization for basic research but only if— (A) such payment is pursuant to a written agreement between such corporation and such qualified organization, and (B) such basic research is to be performed by such qualified organization. (2) Exception to requirement that research be performed by the organization In the case of a qualified organization described in subparagraph (C) or (D) of paragraph (3), subparagraph (B) of paragraph (1) shall not apply. , (B) by redesignating paragraphs (6) and (7) as paragraphs (3) and (4), respectively, and (C) in paragraph (4) as so redesignated, by striking subparagraphs (B) and (C) and by redesignating subparagraphs (D) and (E) as subparagraphs (B) and (C), respectively. (3) Section 41(f)(3) of such Code is amended— (A) (i) by striking , and the gross receipts in subparagraph (A)(i) and all that follows through determined under clause (iii) , (ii) by striking clause (iii) of subparagraph (A) and redesignating clauses (iv), (v), and (vi), thereof, as clauses (iii), (iv), and (v), respectively, (iii) by striking and (iv) each place it appears in subparagraph (A)(iv) (as so redesignated) and inserting and (iii) , (iv) by striking subclause (IV) of subparagraph (A)(iv) (as so redesignated), by striking , and at the end of subparagraph (A)(iv)(III) (as so redesignated) and inserting a period, and by adding and at the end of subparagraph (A)(v)(II) (as so redesignated), (v) by striking (A)(vi) in subparagraph (B) and inserting (A)(v) , and (vi) by striking (A)(iv)(II) in subparagraph (B)(i)(II) and inserting (A)(iii)(II) , (B) by striking , and the gross receipts of the predecessor, in subparagraph (A)(iv)(II) (as so redesignated), (C) by striking , and the gross receipts of, in subparagraph (B), (D) by striking , or gross receipts of, in subparagraph (B)(i)(I), and (E) by striking subparagraph (C). (d) Effective date (1) In general Except as provided in paragraph (2), the amendments made by this subsection shall apply to taxable years beginning after December 31, 2013. (2) Subsection (b) The amendment made by subsection (b) shall apply to amounts paid or incurred after December 31, 2013.

tv_txt: IB 113th CONGRESS 2d Session H. R. 4438 IN THE HOUSE OF REPRESENTATIVES AN ACT To amend the Internal Revenue Code of 1986 to simplify and make permanent the research credit.

1. Short title This Act may be cited as the American Research and Competitiveness Act of 2014 . 2. Research credit simplified and made permanent (a) In general Subsection (a) of section 41 of the Internal Revenue Code of 1986 is amended to read as follows: (a) In general For purposes of section 38, the research credit determined under this section for the taxable year shall be an amount equal to the sum of— (1) 20 percent of so much of the qualified research expenses for the taxable year as exceeds 50 percent of the average qualified research expenses for the 3 taxable years preceding the taxable year for which the credit is being determined, (2) 20 percent of so much of the basic research payments for the taxable year as exceeds 50 percent of the average basic research payments for the 3 taxable years preceding the taxable year for which the credit is being determined, plus (3) 20 percent of the amounts paid or incurred by the taxpayer in carrying on any trade or business of the taxpayer during the taxable year (including as contributions) to an energy research consortium for energy research. . (b) Repeal of termination Section 41 of such Code is amended by striking subsection (h). (c) Conforming amendments (1) Subsection (c) of section 41 of such Code is amended to read as follows: (c) Determination of average research expenses for prior years (1) Special rule in case of no qualified research expenditures in any of 3 preceding taxable years In any case in which the taxpayer has no qualified research expenses in any one of the 3 taxable years preceding the taxable year for which the credit is being determined, the amount determined under subsection (a)(1) for such taxable year shall be equal to 10 percent of the qualified research expenses for the taxable year. (2) Consistent treatment of expenses (A) In general Notwithstanding whether the period for filing a claim for credit or refund has expired for any taxable year taken into account in determining the average qualified research expenses, or average basic research payments, taken into account under subsection (a), the qualified research expenses and basic research payments taken into account in determining such averages shall be determined on a basis consistent with the determination of qualified research expenses and basic research payments, respectively, for the credit year. (B) Prevention of distortions The Secretary may prescribe regulations to prevent distortions in calculating a taxpayer’s qualified research expenses or basic research payments caused by a change in accounting methods used by such taxpayer between the current year and a year taken into account in determining the average qualified research expenses or average basic research payments taken into account under subsection (a). . (2) Section 41(e) of such Code is amended— (A) by striking all that precedes paragraph (6) and inserting the following: (e) Basic research payments For purposes of this section— (1) In general The term basic research payment means, with respect to any taxable year, any amount paid in cash during such taxable year by a corporation to any qualified organization for basic research but only if— (A) such payment is pursuant to a written agreement between such corporation and such qualified organization, and (B) such basic research is to be performed by such qualified organization. (2) Exception to requirement that research be performed by the organization In the case of a qualified organization described in subparagraph (C) or (D) of paragraph (3), subparagraph (B) of paragraph (1) shall not apply. , (B) by redesignating paragraphs (6) and (7) as paragraphs (3) and (4), respectively, and (C) in paragraph (4) as so redesignated, by striking subparagraphs (B) and (C) and by redesignating subparagraphs (D) and (E) as subparagraphs (B) and (C), respectively. (3) Section 41(f)(3) of such Code is amended— (A) (i) by striking , and the gross receipts in subparagraph (A)(i) and all that follows through determined under clause (iii) , (ii) by striking clause (iii) of subparagraph (A) and redesignating clauses (iv), (v), and (vi), thereof, as clauses (iii), (iv), and (v), respectively, (iii) by striking and (iv) each place it appears in subparagraph (A)(iv) (as so redesignated) and inserting and (iii) , (iv) by striking subclause (IV) of subparagraph (A)(iv) (as so redesignated), by striking , and at the end of subparagraph (A)(iv)(III) (as so redesignated) and inserting a period, and by adding and at the end of subparagraph (A)(iv)(II) (as so redesignated), (v) by striking (A)(vi) in subparagraph (B) and inserting (A)(v) , and (vi) by striking (A)(iv)(II) in subparagraph (B)(i)(II) and inserting (A)(iii)(II) , (B) by striking , and the gross receipts of the predecessor, in subparagraph (A)(iv)(II) (as so redesignated), (C) by striking , and the gross receipts of, in subparagraph (B), (D) by striking , or gross receipts of, in subparagraph (B)(i)(I), and (E) by striking subparagraph (C). (d) Effective date (1) In general Except as provided in paragraph (2), the amendments made by this section shall apply to taxable years beginning after December 31, 2013. (2) Subsection (b) The amendment made by subsection (b) shall apply to amounts paid or incurred after December 31, 2013. 3. PAYGO Scorecard (a) Paygo Scorecard The budgetary effects of this Act shall not be entered on either PAYGO scorecard maintained pursuant to section 4(d) of the Statutory Pay-As-You-Go Act of 2010. (b) Senate Paygo Scorecard The budgetary effects of this Act shall not be entered on any PAYGO scorecard maintained for purposes of section 201 of S. Con. Res. 21 (110th Congress).

Passed the House of Representatives May 9, 2014. Karen L. Haas, Clerk.

tv_txt: II 113th CONGRESS 2d Session H. R. 4438 IN THE SENATE OF THE UNITED STATES May 12, 2014 Received AN ACT To amend the Internal Revenue Code of 1986 to simplify and make permanent the research credit.

1. Short title This Act may be cited as the American Research and Competitiveness Act of 2014 . 2. Research credit simplified and made permanent (a) In general Subsection (a) of section 41 of the Internal Revenue Code of 1986 is amended to read as follows: (a) In general For purposes of section 38, the research credit determined under this section for the taxable year shall be an amount equal to the sum of— (1) 20 percent of so much of the qualified research expenses for the taxable year as exceeds 50 percent of the average qualified research expenses for the 3 taxable years preceding the taxable year for which the credit is being determined, (2) 20 percent of so much of the basic research payments for the taxable year as exceeds 50 percent of the average basic research payments for the 3 taxable years preceding the taxable year for which the credit is being determined, plus (3) 20 percent of the amounts paid or incurred by the taxpayer in carrying on any trade or business of the taxpayer during the taxable year (including as contributions) to an energy research consortium for energy research. . (b) Repeal of termination Section 41 of such Code is amended by striking subsection (h). (c) Conforming amendments (1) Subsection (c) of section 41 of such Code is amended to read as follows: (c) Determination of average research expenses for prior years (1) Special rule in case of no qualified research expenditures in any of 3 preceding taxable years In any case in which the taxpayer has no qualified research expenses in any one of the 3 taxable years preceding the taxable year for which the credit is being determined, the amount determined under subsection (a)(1) for such taxable year shall be equal to 10 percent of the qualified research expenses for the taxable year. (2) Consistent treatment of expenses (A) In general Notwithstanding whether the period for filing a claim for credit or refund has expired for any taxable year taken into account in determining the average qualified research expenses, or average basic research payments, taken into account under subsection (a), the qualified research expenses and basic research payments taken into account in determining such averages shall be determined on a basis consistent with the determination of qualified research expenses and basic research payments, respectively, for the credit year. (B) Prevention of distortions The Secretary may prescribe regulations to prevent distortions in calculating a taxpayer’s qualified research expenses or basic research payments caused by a change in accounting methods used by such taxpayer between the current year and a year taken into account in determining the average qualified research expenses or average basic research payments taken into account under subsection (a). . (2) Section 41(e) of such Code is amended— (A) by striking all that precedes paragraph (6) and inserting the following: (e) Basic research payments For purposes of this section— (1) In general The term basic research payment means, with respect to any taxable year, any amount paid in cash during such taxable year by a corporation to any qualified organization for basic research but only if— (A) such payment is pursuant to a written agreement between such corporation and such qualified organization, and (B) such basic research is to be performed by such qualified organization. (2) Exception to requirement that research be performed by the organization In the case of a qualified organization described in subparagraph (C) or (D) of paragraph (3), subparagraph (B) of paragraph (1) shall not apply. , (B) by redesignating paragraphs (6) and (7) as paragraphs (3) and (4), respectively, and (C) in paragraph (4) as so redesignated, by striking subparagraphs (B) and (C) and by redesignating subparagraphs (D) and (E) as subparagraphs (B) and (C), respectively. (3) Section 41(f)(3) of such Code is amended— (A) (i) by striking , and the gross receipts in subparagraph (A)(i) and all that follows through determined under clause (iii) , (ii) by striking clause (iii) of subparagraph (A) and redesignating clauses (iv), (v), and (vi), thereof, as clauses (iii), (iv), and (v), respectively, (iii) by striking and (iv) each place it appears in subparagraph (A)(iv) (as so redesignated) and inserting and (iii) , (iv) by striking subclause (IV) of subparagraph (A)(iv) (as so redesignated), by striking , and at the end of subparagraph (A)(iv)(III) (as so redesignated) and inserting a period, and by adding and at the end of subparagraph (A)(iv)(II) (as so redesignated), (v) by striking (A)(vi) in subparagraph (B) and inserting (A)(v) , and (vi) by striking (A)(iv)(II) in subparagraph (B)(i)(II) and inserting (A)(iii)(II) , (B) by striking , and the gross receipts of the predecessor, in subparagraph (A)(iv)(II) (as so redesignated), (C) by striking , and the gross receipts of, in subparagraph (B), (D) by striking , or gross receipts of, in subparagraph (B)(i)(I), and (E) by striking subparagraph (C). (d) Effective date (1) In general Except as provided in paragraph (2), the amendments made by this section shall apply to taxable years beginning after December 31, 2013. (2) Subsection (b) The amendment made by subsection (b) shall apply to amounts paid or incurred after December 31, 2013. 3. PAYGO Scorecard (a) Paygo Scorecard The budgetary effects of this Act shall not be entered on either PAYGO scorecard maintained pursuant to section 4(d) of the Statutory Pay-As-You-Go Act of 2010. (b) Senate Paygo Scorecard The budgetary effects of this Act shall not be entered on any PAYGO scorecard maintained for purposes of section 201 of S. Con. Res. 21 (110th Congress).

Passed the House of Representatives May 9, 2014. Karen L. Haas, Clerk

tv_txt: IB Union Calendar No. 319 113th CONGRESS 2d Session H. R. 4438 [Report No. 113–431] IN THE HOUSE OF REPRESENTATIVES April 9, 2014 Mr. Brady of Texas (for himself, Mr. Larson of Connecticut , Mr. Paulsen , Ms. Eshoo , Mr. McCaul , Ms. Matsui , Mr. Sam Johnson of Texas , Mr. Neal , and Mr. Schock ) introduced the following bill; which was referred to the Committee on Ways and Means May 2, 2014 Additional sponsors: Mr. Ben Ray Luján of New Mexico , Ms. Jenkins , Mr. Reed , Ms. Linda T. Sánchez of California , Mr. Kelly of Pennsylvania , Mr. Boustany , Mr. Franks of Arizona , Mr. Young of Indiana , Mr. Marino , Mr. Honda , Mr. Griffin of Arkansas , Mr. Kind , Mr. Swalwell of California , Mr. Coffman , and Mr. Jones May 2, 2014 Reported with an amendment, committed to the Committee of the Whole House on the State of the Union, and ordered to be printed Strike out all after the enacting clause and insert the part printed in italic For text of introduced bill, see copy of bill as introduced on April 9, 2014 A BILL To amend the Internal Revenue Code of 1986 to simplify and make permanent the research credit.

1. Short title This Act may be cited as the American Research and Competitiveness Act of 2014 . 2. Research credit simplified and made permanent (a) In general Subsection (a) of section 41 of the Internal Revenue Code of 1986 is amended to read as follows: (a) In general For purposes of section 38, the research credit determined under this section for the taxable year shall be an amount equal to the sum of— (1) 20 percent of so much of the qualified research expenses for the taxable year as exceeds 50 percent of the average qualified research expenses for the 3 taxable years preceding the taxable year for which the credit is being determined, (2) 20 percent of so much of the basic research payments for the taxable year as exceeds 50 percent of the average basic research payments for the 3 taxable years preceding the taxable year for which the credit is being determined, plus (3) 20 percent of the amounts paid or incurred by the taxpayer in carrying on any trade or business of the taxpayer during the taxable year (including as contributions) to an energy research consortium for energy research. . (b) Repeal of termination Section 41 of such Code is amended by striking subsection (h). (c) Conforming amendments (1) Subsection (c) of section 41 of such Code is amended to read as follows: (c) Determination of average research expenses for prior years (1) Special rule in case of no qualified research expenditures in any of 3 preceding taxable years In any case in which the taxpayer has no qualified research expenses in any one of the 3 taxable years preceding the taxable year for which the credit is being determined, the amount determined under subsection (a)(1) for such taxable year shall be equal to 10 percent of the qualified research expenses for the taxable year. (2) Consistent treatment of expenses (A) In general Notwithstanding whether the period for filing a claim for credit or refund has expired for any taxable year taken into account in determining the average qualified research expenses, or average basic research payments, taken into account under subsection (a), the qualified research expenses and basic research payments taken into account in determining such averages shall be determined on a basis consistent with the determination of qualified research expenses and basic research payments, respectively, for the credit year. (B) Prevention of distortions The Secretary may prescribe regulations to prevent distortions in calculating a taxpayer’s qualified research expenses or basic research payments caused by a change in accounting methods used by such taxpayer between the current year and a year taken into account in determining the average qualified research expenses or average basic research payments taken into account under subsection (a). . (2) Section 41(e) of such Code is amended— (A) by striking all that precedes paragraph (6) and inserting the following: (e) Basic research payments For purposes of this section— (1) In general The term basic research payment means, with respect to any taxable year, any amount paid in cash during such taxable year by a corporation to any qualified organization for basic research but only if— (A) such payment is pursuant to a written agreement between such corporation and such qualified organization, and (B) such basic research is to be performed by such qualified organization. (2) Exception to requirement that research be performed by the organization In the case of a qualified organization described in subparagraph (C) or (D) of paragraph (3), subparagraph (B) of paragraph (1) shall not apply. , (B) by redesignating paragraphs (6) and (7) as paragraphs (3) and (4), respectively, and (C) in paragraph (4) as so redesignated, by striking subparagraphs (B) and (C) and by redesignating subparagraphs (D) and (E) as subparagraphs (B) and (C), respectively. (3) Section 41(f)(3) of such Code is amended— (A) (i) by striking , and the gross receipts in subparagraph (A)(i) and all that follows through determined under clause (iii) , (ii) by striking clause (iii) of subparagraph (A) and redesignating clauses (iv), (v), and (vi), thereof, as clauses (iii), (iv), and (v), respectively, (iii) by striking and (iv) each place it appears in subparagraph (A)(iv) (as so redesignated) and inserting and (iii) , (iv) by striking subclause (IV) of subparagraph (A)(iv) (as so redesignated), by striking , and at the end of subparagraph (A)(iv)(III) (as so redesignated) and inserting a period, and by adding and at the end of subparagraph (A)(iv)(II) (as so redesignated), (v) by striking (A)(vi) in subparagraph (B) and inserting (A)(v) , and (vi) by striking (A)(iv)(II) in subparagraph (B)(i)(II) and inserting (A)(iii)(II) , (B) by striking , and the gross receipts of the predecessor, in subparagraph (A)(iv)(II) (as so redesignated), (C) by striking , and the gross receipts of, in subparagraph (B), (D) by striking , or gross receipts of, in subparagraph (B)(i)(I), and (E) by striking subparagraph (C). (d) Effective date (1) In general Except as provided in paragraph (2), the amendments made by this section shall apply to taxable years beginning after December 31, 2013. (2) Subsection (b) The amendment made by subsection (b) shall apply to amounts paid or incurred after December 31, 2013.

May 2, 2014 Reported with an amendment, committed to the Committee of the Whole House on the State of the Union, and ordered to be printed