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SECTION 1. SHORT TITLE.

This Act may be cited as the ''Creating Jobs From Innovative Small
Businesses Act of 2010''.

SEC. 2. CREDIT FOR INVESTMENTS IN SMALL TECHNOLOGY INNOVATION
COMPANIES.

(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 after section
45Q the following new section:

''SEC. 45R. HIGH TECHNOLOGY INVESTMENT TAX CREDIT.

''(a) Allowance of Credit.--For purposes of section 38, the high
technology investment tax credit determined under this section for the
taxable year is an amount equal to 20 percent of the amount paid by the
taxpayer during such year to acquire a qualified equity investment in a
qualified high technology small business concern.
''(b) Maximum Credit.--
''(1) In general.--The taxpayer's credit determined under
this section for the taxable year shall not exceed the excess
(if any) of--
''(A) $100,000, over
''(B) the taxpayer's (and any predecessor's)
aggregate credit determined under this section for all
prior taxable years.
''(2) Related parties.--
''(A) In general.--For purposes of paragraph (1),
all related persons shall be treated as 1 person, and
the dollar amount in paragraph (1)(A) shall be
allocated among such persons under regulations
prescribed by the Secretary.
''(B) Related persons.--A person shall be treated
as related to another person if the relationship
between such persons would result in the disallowance
of losses under section 267 or 707(b).
''(c) Definitions.--For purposes of this section--
''(1) Qualified equity investment.--
''(A) In general.--The term 'qualified equity
investment' means any equity investment in a qualified
high technology small business concern if--
''(i) such investment is acquired by the
taxpayer at its original issue (directly or
through an underwriter) solely in exchange for
cash, and
''(ii) such investment is designated for
purposes of this section by such concern.
''(B) Equity investment.--The term 'equity
investment' means--
''(i) any stock (other than nonqualified
preferred stock as defined in section
351(g)(2)) in an entity which is a corporation,
and
''(ii) any capital interest in an entity
which is a partnership.
''(C) Redemptions.--A rule similar to the rule of
section 1202(c)(3) shall apply for purposes of this
subsection.
''(2) Qualified high technology small business concern.--
The term 'qualified high technology small business concern'
means, with respect to any taxable year, any small business
concern (as defined in section 3 of the Small Business Act)
if--
''(A) such concern employs an average of fewer than
500 employees on business days during such year, and
''(B) at least 50 percent of the gross expenditures
of such entity for such year are research or
experimental expenditures under section 174.
''(d) National Limitation on Amount of Investments Designated.--
''(1) In general.--There is a high technology investment
tax credit limitation for each calendar year. Such limitation
is--
''(A) $500,000,000 for 2010,
''(B) $750,000,000 for 2011 and 2012, and
''(C) $1,000,000,000 for 2013 and 2014.
''(2) Allocation of limitation.--The limitation under
paragraph (1) shall be allocated by the Secretary among
qualified high technology small business concerns selected by
the Secretary.
''(3) Carryover of unused limitation.--If the high
technology investment tax credit limitation for any calendar
year exceeds the aggregate amount allocated under paragraph (2)
for such year, such limitation for the succeeding calendar year
shall be increased by the amount of such excess. No amount may
be carried under the preceding sentence to any calendar year
after 2020.
''(e) Certain Taxpayers Not Eligible.--No credit shall be
determined under this section for any equity investment in any
qualified high technology small business concern made by any individual
who, at the time of the investment, is--
''(1) an employee of such concern, or
''(2) a member of the family (within the meaning of section
267(c)(4)) of an employee of such concern.
''(f) Basis Reduction.--The basis of any qualified equity
investment shall be reduced by the amount of any credit determined
under this section with respect to such investment. This subsection
shall not apply for purposes of sections 1202, 1400B, and 1400F.
''(g) Regulations.--The Secretary shall prescribe such regulations
as may be appropriate to carry out this section, including
regulations--
''(1) which prevent the abuse of the purposes of this
section,
''(2) which impose appropriate reporting requirements, and
''(3) which apply the provisions of this section to newly
formed entities.''.
(b) Credit Made Part of General Business Credit.--Subsection (b) of
section 38 of such Code (relating to current year business credit) is
amended by striking ''plus'' at the end of paragraph (34), by striking
the period at the end of paragraph (35) and inserting '', plus'', and
by adding at the end the following new paragraph:
''(36) the high technology investment tax credit determined
under section 45R.''.
(c) Clerical Amendment.--The table of sections for subpart D of
part IV of subchapter A of chapter 1 of such Code is amended by
inserting after the item relating to section 45Q the following new
item:

''Sec. 45R. High technology investment tax credit.''.
(d) Effective Date.--The amendments made by this section shall
apply to investments made after December 31, 2009, in taxable years
ending after such date.
Creating Jobs From Innovative Small Businesses Act of 2010 - Amends the Internal Revenue Code to allow a general business tax credit of 20% of the amount paid to acquire an equity investment in a qualified high technology small business concern. Defines "qualified high technology small business concern" as a small business concern that employs an average of fewer than 500 employees during a year and devotes at least 50% of its gross expenditures to research and experimentation.