I.R.C. § 41(a) General Rule —
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—
I.R.C. § 41(a)(1) —
20 percent of the excess (if any) of—
I.R.C. § 41(a)(1)(A) —
the qualified research expenses for the taxable year, over
I.R.C. § 41(a)(1)(B) —
the base amount,
I.R.C. § 41(a)(2) —
20 percent of the basic research payments determined under subsection (e)(1)(A), and
I.R.C. § 41(a)(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.
I.R.C. § 41(b) Qualified Research Expenses —
For purposes of this section—
I.R.C. § 41(b)(1) Qualified Research Expenses —
The term “qualified research expenses”
means the sum of the following amounts which are paid or incurred by the taxpayer
during the taxable year in carrying on any trade or business of the taxpayer—
I.R.C. § 41(b)(1)(A) —
in-house research expenses, and
I.R.C. § 41(b)(1)(B) —
contract research expenses.
I.R.C. § 41(b)(2) In-House Research Expenses
I.R.C. § 41(b)(2)(A) In General —
The term “in-house research expenses” means—
I.R.C. § 41(b)(2)(A)(i) —
any wages paid or incurred to an employee for qualified services performed by such
employee,
I.R.C. § 41(b)(2)(A)(ii) —
any amount paid or incurred for supplies used in the conduct of qualified research,
and
I.R.C. § 41(b)(2)(A)(iii) —
under regulations prescribed by the Secretary, any amount paid or incurred to another
person for the right to use computers in the conduct of qualified research.
Clause (iii) shall not apply to any amount to the extent that the taxpayer (or any person with
whom the taxpayer must aggregate expenditures under subsection (f)(1)) receives or accrues any amount from any other person for the right to use substantially
identical personal property.
I.R.C. § 41(b)(2)(B) Qualified Services —
The term “qualified services” means services consisting of—
I.R.C. § 41(b)(2)(B)(i) —
engaging in qualified research, or
I.R.C. § 41(b)(2)(B)(ii) —
engaging in the direct supervision or direct support of research activities which
constitute qualified research.
If substantially all of the services performed by an
individual for the taxpayer during the taxable year consists of services
meeting the requirements of clause (i) or (ii), the term “qualified
services” means all of the services performed by such individual for the taxpayer
during the taxable year.
I.R.C. § 41(b)(2)(C) Supplies —
The term “supplies” means any tangible property other than—
I.R.C. § 41(b)(2)(C)(i) —
land or improvements to land, and
I.R.C. § 41(b)(2)(C)(ii) —
property of a character subject to the allowance for depreciation.
I.R.C. § 41(b)(2)(D) Wages
I.R.C. § 41(b)(2)(D)(i) In General —
The term “wages” has the meaning given such term by section 3401(a).
I.R.C. § 41(b)(2)(D)(ii) Self-Employed Individuals And Owner-Employees —
I.R.C. § 41(b)(2)(D)(iii) Exclusion For Wages To Which Work Opportunity Credit Applies —
The term “wages” shall not include any amount taken into account in
determining the work opportunity credit under section 51(a).
I.R.C. § 41(b)(3) Contract Research Expenses
I.R.C. § 41(b)(3)(A) In General —
The term “contract research expenses” means 65 percent of any amount
paid or incurred by the taxpayer to any person (other than an employee of the taxpayer)
for qualified research.
I.R.C. § 41(b)(3)(B) Prepaid Amounts —
If any contract research expenses paid or incurred during any taxable year are attributable
to qualified research to be conducted after the close of such taxable year, such
amount shall be treated as paid or incurred during the period during which the qualified
research is conducted.
I.R.C. § 41(b)(3)(C) Amounts Paid To Certain Research Consortia
I.R.C. § 41(b)(3)(C)(i) In General —
Subparagraph (A) shall be applied by substituting “75 percent” for “65 percent”
with respect to amounts paid or incurred by the taxpayer to a qualified research
consortium for qualified research on behalf of the taxpayer and 1 or more unrelated
taxpayers. For purposes of the preceding sentence, all persons treated as a single
employer under subsection (a) or (b) of section 52 shall be treated as related taxpayers.
I.R.C. § 41(b)(3)(C)(ii) Qualified Research Consortium —
The term “qualified research consortium”
means any organization which—
I.R.C. § 41(b)(3)(C)(ii)(II) —
is organized and operated primarily to conduct scientific research, and
I.R.C. § 41(b)(3)(C)(ii)(III) —
is not a private foundation.
I.R.C. § 41(b)(3)(D) Amounts Paid To Eligible Small Businesses, Universities, And Federal Laboratories
I.R.C. § 41(b)(3)(D)(i) In General —
In the case of amounts paid by the taxpayer to—
I.R.C. § 41(b)(3)(D)(i)(I) —
an eligible small business,
I.R.C. § 41(b)(3)(D)(i)(II) —
an institution of higher education
(as defined in section 3304(f)),
or
I.R.C. § 41(b)(3)(D)(i)(III) —
an organization which is a Federal
laboratory, for qualified research which is energy research, subparagraph (A) shall be applied by
substituting “100 percent” for “65 percent”.
I.R.C. § 41(b)(3)(D)(ii) Eligible Small Business —
For purposes of this subparagraph, the term “eligible small business”
means a small business with respect to which the taxpayer does not own (within the
meaning of section 318) 50 percent or more of—
I.R.C. § 41(b)(3)(D)(ii)(I) —
in the case of a corporation, the outstanding stock of the corporation (either
by vote or value), and
I.R.C. § 41(b)(3)(D)(ii)(II) —
in the case of a small business which is not a corporation, the capital and profits
interests of the small business.
I.R.C. § 41(b)(3)(D)(iii) Small Business —
For purposes of this subparagraph—
I.R.C. § 41(b)(3)(D)(iii)(I) In General —
The term “small business” means, with respect to any calendar year, any
person if the annual average number of employees employed by such person during
either of the 2 preceding calendar years was 500 or fewer. For purposes of the preceding
sentence, a preceding calendar year may be taken into account only if the person
was in existence throughout the year.
I.R.C. § 41(b)(3)(D)(iii)(II) Startups, Controlled Groups, And Predecessors —
I.R.C. § 41(b)(3)(D)(iv) Federal Laboratory —
For purposes of this subparagraph, the term “Federal laboratory'” has
the meaning given such term by section 4(6)
of the Stevenson-Wydler Technology Innovation Act of 1980 (15 U.S.C. 3703(6)), as in effect on the date of the enactment of the Energy Tax Incentives Act of
2005.
I.R.C. § 41(b)(4) Trade Or Business Requirement Disregarded For In-House Research Expenses Of Certain
Startup Ventures —
In the case of in-house research expenses, a taxpayer shall be treated as meeting
the trade or business requirement of paragraph (1) if, at the time such in-house research expenses are paid or incurred, the principal
purpose of the taxpayer in making such expenditures is to use the results of the
research in the active conduct of a future trade or business—
I.R.C. § 41(b)(4)(A) —
of the taxpayer, or
I.R.C. § 41(b)(4)(B) —
of 1 or more other persons who with the taxpayer are treated as a single taxpayer
under subsection (f)(1).
I.R.C. § 41(c) Base Amount
I.R.C. § 41(c)(1) In General —
The term “base amount” means the product of—
I.R.C. § 41(c)(1)(A) —
the fixed-base percentage, and
I.R.C. § 41(c)(1)(B) —
the average annual gross receipts of the taxpayer for the 4 taxable years preceding
the taxable year for which the credit is being determined (hereinafter in this subsection
referred to as the “credit year”).
I.R.C. § 41(c)(2) Minimum Base Amount —
In no event shall the base amount be less than 50 percent of the qualified research
expenses for the credit year.
I.R.C. § 41(c)(3) Fixed-Base Percentage
I.R.C. § 41(c)(3)(A) In General —
Except as otherwise provided in this paragraph, the fixed-base percentage is the
percentage which the aggregate qualified research expenses of the taxpayer for taxable
years beginning after December 31, 1983, and before January 1, 1989, is of the aggregate
gross receipts of the taxpayer for such taxable years.
I.R.C. § 41(c)(3)(B) Start-Up Companies
I.R.C. § 41(c)(3)(B)(i) Taxpayers To Which Subparagraph Applies —
The fixed-base percentage shall be determined under this subparagraph if—
I.R.C. § 41(c)(3)(B)(i)(I) —
the first taxable year in which a taxpayer had both gross receipts and qualified
research expenses begins after December 31, 1983, or
I.R.C. § 41(c)(3)(B)(i)(II) —
there are fewer than 3 taxable years beginning after December 31, 1983, and before
January 1, 1989, in which the taxpayer had both gross receipts and qualified research
expenses.
I.R.C. § 41(c)(3)(B)(ii) Fixed-Base Percentage —
In a case to which this subparagraph applies, the fixed-base percentage is—
I.R.C. § 41(c)(3)(B)(ii)(I) —
3 percent for each of the taxpayer's 1st 5 taxable years beginning after December
31, 1993, for which the taxpayer has qualified research expenses,
I.R.C. § 41(c)(3)(B)(ii)(II) —
in the case of the taxpayer's 6th such taxable year, 1/6 of the percentage which
the aggregate qualified research expenses of the taxpayer for the 4th and 5th such
taxable years is of the aggregate gross receipts of the taxpayer for such years,
I.R.C. § 41(c)(3)(B)(ii)(III) —
in the case of the taxpayer's 7th such taxable year, 1/3 of the percentage which
the aggregate qualified research expenses of the taxpayer for the 5th and 6th such
taxable years is of the aggregate gross receipts of the taxpayer for such years,
I.R.C. § 41(c)(3)(B)(ii)(IV) —
in the case of the taxpayer's 8th such taxable year, 1/2 of the percentage which
the aggregate qualified research expenses of the taxpayer for the 5th, 6th, and 7th
such taxable years is of the aggregate gross receipts of the taxpayer for such years,
I.R.C. § 41(c)(3)(B)(ii)(V) —
in the case of the taxpayer's 9th such taxable year, 2/3 of the percentage which
the aggregate qualified research expenses of the taxpayer for the 5th, 6th, 7th,
and 8th such taxable years is of the aggregate gross receipts of the taxpayer for
such years,
I.R.C. § 41(c)(3)(B)(ii)(VI) —
in the case of the taxpayer's 10th such taxable year, 5/6 of the percentage which
the aggregate qualified research expenses of the taxpayer for the 5th, 6th, 7th,
8th, and 9th such taxable years is of the aggregate gross receipts of the taxpayer
for such years, and
I.R.C. § 41(c)(3)(B)(ii)(VII) —
for taxable years thereafter, the percentage which the aggregate qualified research
expenses for any 5 taxable years selected by the taxpayer from among the 5th through
the 10th such taxable years is of the aggregate gross receipts of the taxpayer for
such selected years.
I.R.C. § 41(c)(3)(B)(iii) Treatment Of De Minimis Amounts Of Gross Receipts And Qualified Research Expenses —
The Secretary may prescribe regulations providing that de minimis amounts of gross
receipts and qualified research expenses shall be disregarded under clauses (i) and (ii).
I.R.C. § 41(c)(3)(C) Maximum Fixed-Base Percentage —
In no event shall the fixed-base percentage exceed 16 percent.
I.R.C. § 41(c)(3)(D) Rounding —
The percentages determined under subparagraphs (A) and (B)(ii) shall be rounded to the nearest 1/100th of 1 percent.
I.R.C. § 41(c)(4) Election Of Alternative Simplified Credit
I.R.C. § 41(c)(4)(A) In General —
At the election of the taxpayer, the credit determined under subsection (a)(1) shall be equal to 14 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.
I.R.C. § 41(c)(4)(B) Special Rule In Case Of No Qualified Research Expenses In Any Of 3 Preceding Taxable
Years
I.R.C. § 41(c)(4)(B)(i) Taxpayers To Which Subparagraph Applies —
The credit under this paragraph shall be determined under this subparagraph if
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.
I.R.C. § 41(c)(4)(B)(ii) Credit Rate —
The credit determined under this subparagraph shall
be equal to 6 percent of the qualified research expenses for the taxable year.
I.R.C. § 41(c)(4)(C) Election —
An election under this paragraph shall apply to the taxable year for which made
and all succeeding taxable years unless revoked with the consent of the Secretary.
I.R.C. § 41(c)(5) Consistent Treatment Of Expenses Required
I.R.C. § 41(c)(5)(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 fixed-base percentage,
the qualified research expenses taken into account in computing such percentage shall
be determined on a basis consistent with the determination of qualified research
expenses for the credit year.
I.R.C. § 41(c)(5)(B) Prevention Of Distortions —
The Secretary may prescribe regulations to prevent distortions in calculating a
taxpayer's qualified research expenses or gross receipts caused by a change in accounting
methods used by such taxpayer between the current year and a year taken into account
in computing such taxpayer's fixed-base percentage.
I.R.C. § 41(c)(6) Gross Receipts —
For purposes of this subsection, gross receipts for any taxable year shall be reduced
by returns and allowances made during the taxable year. In the case of a foreign
corporation, there shall be taken into account only gross receipts which are effectively
connected with the conduct of a trade or business within the United States, the Commonwealth
of Puerto Rico, or any possession of the United States.
I.R.C. § 41(d) Qualified Research Defined —
For purposes of this section—
I.R.C. § 41(d)(1) In General —
The term “qualified research” means research—
I.R.C. § 41(d)(1)(A) —
with respect to which expenditures may be treated as specified research or experimental
expenditures under section 174,
I.R.C. § 41(d)(1)(B) —
which is undertaken for the purpose of discovering information—
I.R.C. § 41(d)(1)(B)(i) —
which is technological in nature, and
I.R.C. § 41(d)(1)(B)(ii) —
the application of which is intended to be useful in the development of a new or
improved business component of the taxpayer, and
I.R.C. § 41(d)(1)(C) —
substantially all of the activities of which constitute elements of a process of
experimentation for a purpose described in paragraph (3).
Such term does not include any activity described in
paragraph (4).
I.R.C. § 41(d)(2) Tests To Be Applied Separately To Each Business Component —
For purposes of this subsection—
I.R.C. § 41(d)(2)(A) In General —
Paragraph (1) shall be applied separately with respect to each business component of
the taxpayer.
I.R.C. § 41(d)(2)(B) Business Component Defined —
The term “business component” means any product, process, computer software,
technique, formula, or invention which is to be—
I.R.C. § 41(d)(2)(B)(i) —
held for sale, lease, or license, or
I.R.C. § 41(d)(2)(B)(ii) —
used by the taxpayer in a trade or business of the taxpayer.
I.R.C. § 41(d)(2)(C) Special Rule For Production Processes —
Any plant process, machinery, or technique for commercial production of a business
component shall be treated as a separate business component (and not as part of the
business component being produced).
I.R.C. § 41(d)(3) Purposes For Which Research May Qualify For Credit —
For purposes of paragraph (1)(C)—
I.R.C. § 41(d)(3)(A) In General —
Research shall be treated as conducted for a purpose described in this paragraph
if it relates to—
I.R.C. § 41(d)(3)(A)(i) —
a new or improved function,
I.R.C. § 41(d)(3)(A)(ii) —
performance, or
I.R.C. § 41(d)(3)(A)(iii) —
reliability or quality.
I.R.C. § 41(d)(3)(B) Certain Purposes Not Qualified —
Research shall in no event be treated as conducted for a purpose described in this
paragraph if it relates to style, taste, cosmetic, or seasonal design factors.
I.R.C. § 41(d)(4) Activities For Which Credit Not Allowed —
The term “qualified research” shall not include any of the following:
I.R.C. § 41(d)(4)(A) Research After Commercial Production —
Any research conducted after the beginning of commercial production of the business
component.
I.R.C. § 41(d)(4)(B) Adaptation Of Existing Business Components —
Any research related to the adaptation of an existing business component to a particular
customer's requirement or need.
I.R.C. § 41(d)(4)(C) Duplication Of Existing Business Component —
Any research related to the reproduction of an existing business component (in whole
or in part) from a physical examination of the business component itself or from
plans, blueprints, detailed specifications, or publicly available information with
respect to such business component.
I.R.C. § 41(d)(4)(D) Surveys, Studies, Etc. —
Any—
I.R.C. § 41(d)(4)(D)(i) —
efficiency survey,
I.R.C. § 41(d)(4)(D)(ii) —
activity relating to management function or technique,
I.R.C. § 41(d)(4)(D)(iii) —
market research, testing, or development
(including advertising or promotions),
I.R.C. § 41(d)(4)(D)(iv) —
routine data collection, or
I.R.C. § 41(d)(4)(D)(v) —
routine or ordinary testing or inspection for quality control.
I.R.C. § 41(d)(4)(E) Computer Software —
Except to the extent provided in regulations, any research with respect to computer
software which is developed by (or for the benefit of) the taxpayer primarily for
internal use by the taxpayer, other than for use in—
I.R.C. § 41(d)(4)(E)(i) —
an activity which constitutes qualified research (determined with regard to this
subparagraph), or
I.R.C. § 41(d)(4)(E)(ii) —
a production process with respect to which the requirements of paragraph (1) are met.
I.R.C. § 41(d)(4)(F) Foreign Research —
Any research conducted outside the United States, the Commonwealth of Puerto Rico,
or any possession of the United States.
I.R.C. § 41(d)(4)(G) Social Sciences, Etc. —
Any research in the social sciences, arts, or humanities.
I.R.C. § 41(d)(4)(H) Funded Research —
Any research to the extent funded by any grant, contract, or otherwise by another
person (or governmental entity).
I.R.C. § 41(e) Credit Allowable With Respect To Certain Payments To Qualified Organizations For Basic
Research —
For purposes of this section—
I.R.C. § 41(e)(1) In General —
In the case of any taxpayer who makes basic research payments for any taxable year—
I.R.C. § 41(e)(1)(A) —
the amount of basic research payments taken into account under subsection (a)(2) shall be equal to the excess of—
I.R.C. § 41(e)(1)(A)(i) —
such basic research payments, over
I.R.C. § 41(e)(1)(A)(ii) —
the qualified organization base period amount, and
I.R.C. § 41(e)(1)(B) —
that portion of such basic research payments which does not exceed the qualified
organization base period amount shall be treated as contract research expenses for
purposes of subsection (a)(1).
I.R.C. § 41(e)(2) Basic Research Payments Defined —
For purposes of this subsection—
I.R.C. § 41(e)(2)(A) 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—
I.R.C. § 41(e)(2)(A)(i) —
such payment is pursuant to a written agreement between such corporation and such
qualified organization, and
I.R.C. § 41(e)(2)(A)(ii) —
such basic research is to be performed by such qualified organization.
I.R.C. § 41(e)(2)(B) 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 (6), clause (ii) of subparagraph (A) shall not apply.
I.R.C. § 41(e)(3) Qualified Organization Base Period Amount —
For purposes of this subsection, the term “qualified organization base period
amount” means an amount equal to the sum of—
I.R.C. § 41(e)(3)(A) —
the minimum basic research amount, plus
I.R.C. § 41(e)(3)(B) —
the maintenance-of-effort amount.
I.R.C. § 41(e)(4) Minimum Basic Research Amount —
For purposes of this subsection—
I.R.C. § 41(e)(4)(A) In General —
The term “minimum basic research amount”
means an amount equal to the greater of—
I.R.C. § 41(e)(4)(A)(i) —
1 percent of the average of the sum of amounts paid or incurred during the base
period for—
I.R.C. § 41(e)(4)(A)(i)(I) —
any in-house research expenses, and
I.R.C. § 41(e)(4)(A)(i)(II) —
any contract research expenses, or
I.R.C. § 41(e)(4)(A)(ii) —
the amounts treated as contract research expenses during the base period by reason
of this subsection (as in effect during the base period).
I.R.C. § 41(e)(4)(B) Floor Amount —
Except in the case of a taxpayer which was in existence during a taxable year (other
than a short taxable year) in the base period, the minimum basic research amount
for any base period shall not be less than 50 percent of the basic research payments
for the taxable year for which a determination is being made under this subsection.
I.R.C. § 41(e)(5) Maintenance-Of-Effort Amount —
For purposes of this subsection—
I.R.C. § 41(e)(5)(A) In General —
The term “maintenance-of-effort amount”
means, with respect to any taxable year, an amount equal to the excess
(if any) of—
I.R.C. § 41(e)(5)(A)(i) —
an amount equal to—
I.R.C. § 41(e)(5)(A)(i)(I) —
the average of the nondesignated university contributions paid by the taxpayer during
the base period, multiplied by
I.R.C. § 41(e)(5)(A)(i)(II) —
the cost-of-living adjustment for the calendar year in which such taxable year begins,
over
I.R.C. § 41(e)(5)(A)(ii) —
the amount of nondesignated university contributions paid by the taxpayer during
such taxable year.
I.R.C. § 41(e)(5)(B) Nondesignated University Contributions —
For purposes of this paragraph, the term “nondesignated university contribution”
means any amount paid by a taxpayer to any qualified organization described in paragraph
(6)(A)—
I.R.C. § 41(e)(5)(B)(i) —
for which a deduction was allowable under section 170, and
I.R.C. § 41(e)(5)(B)(ii) —
which was not taken into account—
I.R.C. § 41(e)(5)(B)(ii)(I) —
in computing the amount of the credit under this section (as in effect during the
base period) during any taxable year in the base period, or
I.R.C. § 41(e)(5)(B)(ii)(II) —
as a basic research payment for purposes of this section.
I.R.C. § 41(e)(5)(C) Cost-Of-Living Adjustment Defined
I.R.C. § 41(e)(5)(C)(i) In General —
I.R.C. § 41(e)(5)(C)(ii) Special Rule Where Base Period Ends In A Calendar Year Other Than 1983 Or 1984 —
If the base period of any taxpayer does not end in 1983 or 1984, section 1(f)(3)(A)(ii) shall, for purposes of this paragraph, be applied by substituting the calendar year
in which such base period ends for 2016. Such substitution shall be in lieu of the
substitution under clause (i).
I.R.C. § 41(e)(6) Qualified Organization —
For purposes of this subsection, the term “qualified organization” means
any of the following organizations:
I.R.C. § 41(e)(6)(A) Educational Institutions —
Any educational organization which—
I.R.C. § 41(e)(6)(A)(i) —
is an institution of higher education
(within the meaning of section 3304(f)),
and
I.R.C. § 41(e)(6)(A)(ii) —
is described in section 170(b)(1)(A)(ii).
I.R.C. § 41(e)(6)(B) Certain Scientific Research Organizations —
Any organization not described in subparagraph (A) which—
I.R.C. § 41(e)(6)(B)(ii) —
is organized and operated primarily to conduct scientific research, and
I.R.C. § 41(e)(6)(B)(iii) —
is not a private foundation.
I.R.C. § 41(e)(6)(C) Scientific Tax-Exempt Organizations —
Any organization which—
I.R.C. § 41(e)(6)(C)(i) —
is described in—
I.R.C. § 41(e)(6)(C)(i)(I) —
section 501(c)(3) (other than a private foundation), or
I.R.C. § 41(e)(6)(C)(i)(II) —
section 501(c)(6),
I.R.C. § 41(e)(6)(C)(ii) —
is exempt from tax under section 501(a),
I.R.C. § 41(e)(6)(C)(iii) —
is organized and operated primarily to promote scientific research by qualified
organizations described in subparagraph (A) pursuant to written research agreements, and
I.R.C. § 41(e)(6)(C)(iv) —
currently expends—
I.R.C. § 41(e)(6)(C)(iv)(I) —
substantially all of its funds, or
I.R.C. § 41(e)(6)(C)(iv)(II) —
substantially all of the basic research payments received by it, for grants to, or
contracts for basic research with, an organization described in subparagraph (A).
I.R.C. § 41(e)(6)(D) Certain Grant Organizations —
Any organization not described in subparagraph (B) or (C) which—
I.R.C. § 41(e)(6)(D)(ii) —
is established and maintained by an organization established before July 10, 1981,
which meets the requirements of clause (i),
I.R.C. § 41(e)(6)(D)(iii) —
is organized and operated exclusively for the purpose of making grants to organizations
described in subparagraph
(A) pursuant to written research agreements for purposes of basic research, and
I.R.C. § 41(e)(6)(D)(iv) —
makes an election, revocable only with the consent of the Secretary, to be treated
as a private foundation for purposes of this title (other than section 4940, relating to excise tax based on investment income).
I.R.C. § 41(e)(7) Definitions And Special Rules —
For purposes of this subsection—
I.R.C. § 41(e)(7)(A) Basic Research —
The term “basic research” means any original investigation for the advancement
of scientific knowledge not having a specific commercial objective, except that such
term shall not include—
I.R.C. § 41(e)(7)(A)(i) —
basic research conducted outside of the United States, and
I.R.C. § 41(e)(7)(A)(ii) —
basic research in the social sciences, arts, or humanities.
I.R.C. § 41(e)(7)(B) Base Period —
The term “base period” means the 3-taxable-year period ending with the
taxable year immediately preceding the 1st taxable year of the taxpayer beginning
after December 31, 1983.
I.R.C. § 41(e)(7)(C) Exclusion From Incremental Credit Calculation —
For purposes of determining the amount of credit allowable under subsection (a)(1) for any taxable year, the amount of the basic research payments taken into account
under subsection (a)(2)—
I.R.C. § 41(e)(7)(C)(i) —
shall not be treated as qualified research expenses under subsection (a)(1)(A),
and
I.R.C. § 41(e)(7)(C)(ii) —
shall not be included in the computation of base amount under subsection (a)(1)(B).
I.R.C. § 41(e)(7)(D) Trade Or Business Qualification —
For purposes of applying subsection (b)(1) to this subsection, any basic research payments shall be treated as an amount paid
in carrying on a trade or business of the taxpayer in the taxable year in which it
is paid (without regard to the provisions of subsection (b)(3)(B)).
I.R.C. § 41(e)(7)(E) Certain Corporations Not Eligible —
The term “corporation” shall not include—
I.R.C. § 41(e)(7)(E)(i) —
an S corporation,
I.R.C. § 41(e)(7)(E)(ii) —
a personal holding company (as defined in section 542), or
I.R.C. § 41(e)(7)(E)(iii) —
a service organization (as defined in section 414(m)(3)).
I.R.C. § 41(f) Special Rules —
For purposes of this section—
I.R.C. § 41(f)(1) Aggregation Of Expenditures
I.R.C. § 41(f)(1)(A) Controlled Group Of Corporations —
In determining the amount of the credit under this section—
I.R.C. § 41(f)(1)(A)(i) —
all members of the same controlled group of corporations shall be treated as a single
taxpayer, and
I.R.C. § 41(f)(1)(A)(ii) —
the credit (if any) allowable by this section to each such member shall be determined
on a proportionate basis to its share of the aggregate of the qualified research expenses,
basic research payments, and amounts paid or incurred to energy research consortiums,
taken into account by such controlled group for purposes of this section.
I.R.C. § 41(f)(1)(B) Common Control —
Under regulations prescribed by the Secretary, in determining the amount of the
credit under this section—
I.R.C. § 41(f)(1)(B)(i) —
all trades or businesses (whether or not incorporated) which are under common control
shall be treated as a single taxpayer, and
I.R.C. § 41(f)(1)(B)(ii) —
the credit (if any) allowable by this section to each such person shall be determined
on a proportionate basis to its share of the aggregate of the qualified research expenses,
basic research payments, and amounts paid or incurred to energy research consortiums,
taken into account by all such persons under common control for purposes of this section.
The regulations prescribed under this subparagraph shall
be based on principles similar to the principles which apply in the case of subparagraph
(A).
I.R.C. § 41(f)(2) Allocations
I.R.C. § 41(f)(2)(A) Pass-Thru In The Case Of Estates And Trusts —
I.R.C. § 41(f)(2)(B) Allocation In The Case Of Partnerships —
In the case of partnerships, the credit shall be allocated among partners under
regulations prescribed by the Secretary.
I.R.C. § 41(f)(3) Adjustments For Certain Acquisitions, Etc. —
Under regulations prescribed by the Secretary—
I.R.C. § 41(f)(3)(A) Acquisitions
I.R.C. § 41(f)(3)(A)(i) In General —
If a person acquires the major portion of either a trade or business or a separate
unit of a trade or business (hereinafter in this paragraph referred to as the “acquired
business”)
of another person (hereinafter in this paragraph referred to as the “predecessor”),
then the amount of qualified research expenses paid or incurred by the acquiring person
during the measurement period shall be increased by the amount determined under clause
(ii), and the gross receipts of the acquiring person for such period shall be increased
by the amount determined under clause (iii).
I.R.C. § 41(f)(3)(A)(ii) Amount Determined With Respect To Qualified Research Expenses —
The amount determined under this clause is—
I.R.C. § 41(f)(3)(A)(ii)(I) —
for purposes of applying this section for the taxable year in which such acquisition
is made, the acquisition year amount, and
I.R.C. § 41(f)(3)(A)(ii)(II) —
for purposes of applying this section for any taxable year after the taxable year
in which such acquisition is made, the qualified research expenses paid or incurred
by the predecessor with respect to the acquired business during the measurement period.
I.R.C. § 41(f)(3)(A)(iii) Amount Determined With Respect To Gross Receipts —
The amount determined under this clause is the amount which would be determined under
clause (ii) if “the gross receipts of” were substituted for “the qualified
research expenses paid or incurred by” each place it appears in clauses (ii) and (iv).
I.R.C. § 41(f)(3)(A)(iv) Acquisition Year Amount —
For purposes of clause (ii), the acquisition year amount is the amount equal to the product of—
I.R.C. § 41(f)(3)(A)(iv)(I) —
the qualified research expenses paid or incurred by the predecessor with respect to
the acquired business during the measurement period, and
I.R.C. § 41(f)(3)(A)(iv)(II) —
the number of days in the period beginning on the date of the acquisition and ending
on the last day of the taxable year in which the acquisition is made,
divided by the number of days in the acquiring person's taxable year.
I.R.C. § 41(f)(3)(A)(v) Special Rules For Coordinating Taxable Years —
In the case of an acquiring person and a predecessor whose taxable years do not begin
on the same date—
I.R.C. § 41(f)(3)(A)(v)(I) —
each reference to a taxable year in clauses (ii) and (iv) shall refer to the appropriate taxable year of the acquiring person,
I.R.C. § 41(f)(3)(A)(v)(II) —
the qualified research expenses paid or incurred by the predecessor, and the gross
receipts of the predecessor, during each taxable year of the predecessor any portion
of which is part of the measurement period shall be allocated equally among the days
of such taxable year,
I.R.C. § 41(f)(3)(A)(v)(III) —
the amount of such qualified research expenses taken into account under clauses (ii) and (iv) with respect to a taxable year of the acquiring person shall be equal to the total
of the expenses attributable under subclause (II) to the days occurring during such taxable year, and
I.R.C. § 41(f)(3)(A)(v)(IV) —
the amount of such gross receipts taken into account under clause (iii) with respect to a taxable year of the acquiring person shall be equal to the total
of the gross receipts attributable under subclause (II) to the days occurring during such taxable year.
I.R.C. § 41(f)(3)(A)(vi) Measurement Period —
For purposes of this subparagraph, the term “measurement period” means,
with respect to the taxable year of the acquiring person for which the credit is determined,
any period of the acquiring person preceding such taxable year which is taken into
account for purposes of determining the credit for such year.
I.R.C. § 41(f)(3)(B) Dispositions —
If the predecessor furnished to the acquiring person such information as is necessary
for the application of subparagraph (A), then, for purposes of applying this section for any taxable year ending after such
disposition, the amount of qualified research expenses paid or incurred by, and the
gross receipts of, the predecessor during the measurement period
(as defined in subparagraph (A)(vi), determined by substituting “predecessor” for “acquiring person”
each place it appears) shall be reduced by
I.R.C. § 41(f)(3)(B)(i) —
in the case of the taxable year in which such disposition is made, an amount equal
to the product of—
I.R.C. § 41(f)(3)(B)(i)(I) —
the qualified research expenses paid or incurred by, or gross receipts of, the predecessor
with respect to the acquired business during the measurement period (as so defined
and so determined), and
I.R.C. § 41(f)(3)(B)(i)(II) —
the number of days in the period beginning on the date of acquisition (as determined
for purposes of subparagraph
(A)(iv)(II)) and ending on the last day of the taxable year of the predecessor in
which the disposition is made,
divided by the number of days in the taxable year of the predecessor, and
I.R.C. § 41(f)(3)(B)(ii) —
in the case of any taxable year ending after the taxable year in which such disposition
is made, the amount described in clause (i)(I).
I.R.C. § 41(f)(3)(C) Certain Reimbursements Taken Into Account In Determining Fixed-Base Percentage —
If during any of the 3 taxable years following the taxable year in which a disposition
to which subparagraph (B) applies occurs, the disposing taxpayer (or a person with whom the taxpayer is required
to aggregate expenditures under paragraph (1)) reimburses the acquiring person (or a person required to so aggregate expenditures
with such person) for research on behalf of the taxpayer, then the amount of qualified
research expenses of the taxpayer for the taxable years taken into account in computing
the fixed-base percentage shall be increased by the lesser of—
I.R.C. § 41(f)(3)(C)(i) —
the amount of the decrease under subparagraph (B) which is allocable to taxable years so taken into account, or
I.R.C. § 41(f)(3)(C)(ii) —
the product of the number of taxable years so taken into account, multiplied by
the amount of the reimbursement described in this subparagraph.
I.R.C. § 41(f)(4) Short Taxable Years —
In the case of any short taxable year, qualified research expenses and gross receipts
shall be annualized in such circumstances and under such methods as the Secretary
may prescribe by regulation.
I.R.C. § 41(f)(5) Controlled Group Of Corporations —
The term “controlled group of corporations”
has the same meaning given to such term by section 1563(a), except that—
I.R.C. § 41(f)(5)(A) —
“more than 50 percent”
shall be substituted for “at least 80 percent” each place
it appears in section 1563(a)(1), and
I.R.C. § 41(f)(6) Energy Research Consortium
I.R.C. § 41(f)(6)(A) In General —
The term “energy research consortium” means any organization—
I.R.C. § 41(f)(6)(A)(i) —
which is—
I.R.C. § 41(f)(6)(A)(i)(II) —
organized and operated primarily to conduct energy research in the public interest
(within the meaning of section 501(c)(3)),
I.R.C. § 41(f)(6)(A)(ii) —
which is not a private foundation,
I.R.C. § 41(f)(6)(A)(iii) —
to which at least 5 unrelated persons paid or incurred during the calendar year
in which the taxable year of the organization begins amounts (including as contributions)
to such organization for energy research, and
I.R.C. § 41(f)(6)(A)(iv) —
to which no single person paid or incurred (including as contributions) during such
calendar year an amount equal to more than 50 percent of the total amounts received
by such organization during such calendar year for energy research.
I.R.C. § 41(f)(6)(B) Treatment Of Persons —
I.R.C. § 41(f)(6)(C) Foreign Research —
For purposes of subsection (a)(3), amounts paid or incurred for any energy research conducted outside the United
States, the
Commonwealth of Puerto Rico, or any possession of the United States shall not be
taken into account.
I.R.C. § 41(f)(6)(D) Denial Of Double Benefit —
Any amount taken into account under subsection (a)(3) shall not be taken into account under paragraph (1) or
(2) of subsection
(a).
I.R.C. § 41(f)(6)(E) Energy Research —
The term “energy research” does not include any research which is not
qualified research.
I.R.C. § 41(g) Special Rule For Pass-Thru Of Credit —
In the case of an individual who—
I.R.C. § 41(g)(1) —
owns an interest in an unincorporated trade or business,
I.R.C. § 41(g)(2) —
is a partner in a partnership,
I.R.C. § 41(g)(3) —
is a beneficiary of an estate or trust, or
I.R.C. § 41(g)(4) —
is a shareholder in an S corporation,
the amount determined under subsection (a) for any taxable year shall not exceed an amount (separately computed with respect
to such person's interest in such trade or business
or entity) equal to the amount of tax attributable to that portion of a person's
taxable income which is allocable or apportionable to the person's interest in such
trade or business or entity. If the amount determined under subsection (a) for any taxable year exceeds the limitation of the preceding sentence, such amount
may be carried to other taxable years under the rules of section 39; except that the limitation of
the preceding sentence shall be taken into account in lieu of the
limitation of section 38(c) in applying section 39.
I.R.C. § 41(h) Treatment Of Credit For Qualified Small Businesses
I.R.C. § 41(h)(1) In General —
At the election of a qualified small business for any taxable year, section 3111(f) shall apply to the payroll tax credit portion of the credit otherwise determined
under subsection (a) for the taxable year and such portion shall not be treated (other than for purposes
of section 280C)
as a credit determined under subsection (a).
I.R.C. § 41(h)(2) Payroll Tax Credit Portion —
For purposes of this subsection, the payroll tax credit portion of the credit determined
under subsection (a) with respect to any qualified small business for any taxable year is the least of—
I.R.C. § 41(h)(2)(A) —
the amount specified in the election made under this subsection,
I.R.C. § 41(h)(2)(B) —
the credit determined under subsection (a) for the taxable year (determined before the application of this subsection), or
I.R.C. § 41(h)(2)(C) —
in the case of a qualified small business other than a partnership or S corporation,
the amount of the business credit carryforward under section 39 carried from the taxable year (determined before the application of this subsection
to the taxable year).
I.R.C. § 41(h)(3) Qualified Small Business —
For purposes of this subsection—
I.R.C. § 41(h)(3)(A) In General —
The term “qualified small business”
means, with respect to any taxable year—
I.R.C. § 41(h)(3)(A)(i) —
a corporation or partnership, if—
I.R.C. § 41(h)(3)(A)(i)(I) —
the gross receipts (as determined under the rules of section 448(c)(3), without regard to subparagraph (A) thereof)
of such entity for the taxable year is less than $5,000,000, and
I.R.C. § 41(h)(3)(A)(i)(II) —
such entity did not have gross receipts (as so determined)
for any taxable year preceding the 5-taxable-year period ending with such taxable
year, and
I.R.C. § 41(h)(3)(A)(ii) —
any person (other than a corporation or partnership)
who meets the requirements of subclauses (I) and (II) of clause (i), determined—
I.R.C. § 41(h)(3)(A)(ii)(I) —
by substituting “person” for “entity”
each place it appears, and
I.R.C. § 41(h)(3)(A)(ii)(II) —
by only taking into account the aggregate gross receipts received by such person in
carrying on all trades or businesses of such person.
I.R.C. § 41(h)(3)(B) Limitation —
Such term shall not include an organization which is exempt from taxation under section 501.
I.R.C. § 41(h)(4) Election
I.R.C. § 41(h)(4)(A) In General —
Any election under this subsection for any taxable year—
I.R.C. § 41(h)(4)(A)(i) —
shall specify the amount of the credit to which such election applies,
I.R.C. § 41(h)(4)(A)(ii) —
shall be made on or before the due date (including extensions) of—
I.R.C. § 41(h)(4)(A)(ii)(I) —
in the case of a qualified small business which is a partnership, the return required
to be filed under section 6031,
I.R.C. § 41(h)(4)(A)(ii)(II) —
in the case of a qualified small business which is an S corporation, the return required
to be filed under section 6037, and
I.R.C. § 41(h)(4)(A)(ii)(III) —
in the case of any other qualified small business, the return of tax for the taxable
year, and
I.R.C. § 41(h)(4)(A)(iii) —
may be revoked only with the consent of the Secretary.
I.R.C. § 41(h)(4)(B) Limitations
I.R.C. § 41(h)(4)(B)(i) Amount —
The amount specified in any election made under this subsection shall not exceed $250,000.
I.R.C. § 41(h)(4)(B)(ii) Number Of Taxable Years —
A person may not make an election under this subsection if such person (or any other
person treated as a single taxpayer with
such person under paragraph (5)(A))
has made an election under this subsection for 5 or more preceding taxable years.
I.R.C. § 41(h)(4)(C) Special Rule For Partnerships And S Corporations —
In the case of a qualified small business which is a partnership or S corporation,
the election made under this subsection shall be made at the entity level.
I.R.C. § 41(h)(5) Aggregation Rules
I.R.C. § 41(h)(5)(A) In General —
Except as provided in subparagraph (B), all persons or entities treated as a single taxpayer under subsection (f)(1) shall be treated as a single taxpayer for purposes of this subsection.
I.R.C. § 41(h)(5)(B) Special Rules —
For purposes of this subsection and section 3111(f)—
I.R.C. § 41(h)(5)(B)(i) —
each of the persons treated as a single taxpayer under subparagraph (A) may separately make the election under paragraph (1) for any taxable year, and
I.R.C. § 41(h)(5)(B)(ii) —
the $250,000 amount under paragraph (4)(B)(i) shall be allocated among all persons treated as a single taxpayer under subparagraph
(A) in the same manner as under subparagraph (A)(ii) or (B)(ii) of subsection (f)(1), whichever is applicable.
I.R.C. § 41(h)(6) Regulations —
The Secretary shall prescribe such regulations as may be necessary to carry out the
purposes of this subsection, including—
I.R.C. § 41(h)(6)(A) —
regulations to prevent the avoidance of the purposes of the limitations and aggregation
rules under this subsection through the use of successor companies or other means,
I.R.C. § 41(h)(6)(B) —
regulations to minimize compliance and record-keeping burdens under this subsection,
and
I.R.C. § 41(h)(6)(C) —
regulations for recapturing the benefit of credits determined under section 3111(f) in cases where there is a subsequent adjustment to the payroll tax credit portion
of the credit determined under subsection (a), including requiring amended income tax returns in the cases where there is such
an adjustment.
(Added by Pub. L. 97-34, title II, Sec. 221(a), Aug. 13, 1981, 95 Stat. 241, Sec. 44F, and amended Pub. L. 97-354, Sec. 5(a)(3), Oct. 19, 1982, 96 Stat. 1692; Pub. L. 97-448, title I, Sec. 102(b)(2),
Jan. 12, 1983, 96 Stat. 2372; renumbered Sec. 30 and amended Pub. L. 98-369, div. A, title IV, Sec. 471(c), 474(i)(1), title VI, Sec. 612(e)(1), July 18, 1984,
98 Stat. 826, 831, 912; renumbered Sec. 41 and amended Pub. L. 99-514, title II, Sec. 231(a)(1),
(b), (c), (d)(2), (3)(C)(ii), (e), title XVIII, Sec. 1847(b)(1), Oct. 22, 1986, 100 Stat. 2173, 2175, 2178-2180, 2856; Pub. L. 100-647, title I, Sec. 1002(h)(1),
title IV, Sec. 4007(a), 4008(b)(1), Nov. 10, 1988, 102 Stat. 3370, 3652; Pub. L. 101-239, title VII, Sec. 7110(a)(1), (b), (b)((c)), 7814(e)(2)(C), Dec. 19, 1989, 103 Stat. 2322, 2323, 2325, 2414; Pub. L. 101-508, title XI, Sec. 11101(d)(1)(C), 11402(a), Nov. 5, 1990, 104 Stat. 1388-405, 1388-473; Pub. L. 102-227, title I, Sec. 102(a), Dec. 11, 1991, 105 Stat. 1686; Pub. L. 103-66, Sec. 13111(a)(1),
13112(a), (b), 13201(b)(3)(C), Aug. 10, 1993, 107 Stat. 312; Pub. L. 104-188, Sec. 1201, 1204, Aug. 20, 1996, 110 Stat. 1755; Pub. L. 105-34, title VI, Sec. 601, Aug. 5, 1997, 111 Stat 788; Pub. L. 105-277, title I, Sec. 1001(a), Oct. 21, 1998, 112 Stat 2681; Pub. L. 106-170, title V, Sec. 502, Dec. 17, 1999, 113 Stat. 1860; Pub. L. 108-311, title III, Sec. 301(a), Oct. 4, 2004, 118 Stat. 1166; Pub. L. 109-58, title XIII, Sec. 1351, Aug. 8, 2005, 119 Stat. 594; Pub. L. 109-135, title IV, Sec. 402(l), Dec. 21, 2005, 119 Stat. 2257; Pub. L. 109-432, div. A, title I, Sec. 104, Dec. 20, 2006, 120 Stat. 2922; Pub. L. 110-172, Sec. 6(c), 11(e)(2), Dec. 29, 2007, 121 Stat. 2473; Pub. L. 110-343, Div. C, Sec. 301, Oct. 3, 2008, 122 Stat. 3765; Pub. L. 111-312, Sec. 731(a), Dec. 17, 2010, 124 Stat. 3296; Pub. L. 112-240, title III, Sec. 301, Jan. 2, 2013, 126 Stat. 2313; Pub. L. 113-295, Div. A, title I, Sec. 111(a), Dec. 19, 2014, 128 Stat. 4010; Pub. L. 114-113, Div. Q, title I, Sec. 121, Dec. 18, 2015; Pub. L. 115-97, title I, Sec. 11002(d)(1)(F),
(d)(2), 13206(d)(1), Dec. 22, 2017, 131 Stat. 2054; Pub. L. 115-141, Div. U, title I, Sec. 101(c), title IV, Sec. 401(b)(6), Mar. 23, 2018, 132 Stat. 348.)
BACKGROUND NOTES
AMENDMENTS
2018 — Subsec. (c)(4)(A). Pub. L. 115-141, Div. U, Sec. 401(b)(6), amended subpara. (A) by striking “(12 percent in the
case of taxable years ending before January 1, 2009)”.
Subsec. (c)(4)-(7). Pub. L. 115-141, Div. U, Sec. 101(c)(1)-(2), amended subsec.
(c) by striking par. (4) and by redesignating par. (5)-(7) as (4)-(6), respectively.
Before being struck, par. (4) read as follows:
“(4) Election Of Alternative Incremental Credit
“(A) In General.—At the election of the taxpayer, the credit determined
under subsection (a)(1) shall be equal to the sum of—
“(i) 3 percent of so much of the qualified research expenses for the taxable
year as exceeds 1 percent of the average described in subsection (c)(1)(B) but does
not exceed 1.5 percent of such average,
“(ii) 4 percent of so much of such expenses as exceeds 1.5 percent of such
average but does not exceed 2 percent of such average, and
“(iii) 5 percent of so much of such expenses as exceeds 2 percent of such
average.
“(B) Election.—An election under this paragraph shall apply to the taxable
year for which made and all succeeding taxable years unless revoked with the consent
of the Secretary.”
Subsec. (c)(4)(C). Pub. L. 115-141, Div. U, Sec. 101(c)(3), amended subpar. (C)
by striking the last sentence. Before being struck it read as follows:
“An election under this paragraph may not be made for any taxable year to which
an election under paragraph
(4) applies.”
2017 — Subsec. (d)(1)(A). Pub. L. 115-97, Sec. 13206(d)(1), amended subpar. (A) by substituting ‘‘specified research or experimental
expenditures under section 174” for ‘‘expenses under section 174’’.
Subsec. (e)(5)(C)(i). Pub. L. 115-97, Sec. 11002(d)(1)(F), amended clause (i) by substituting “for ‘calendar year 2016’ in
subparagraph (A)(ii)” for ‘‘for ‘calendar year 1992’
in subparagraph (B)’.
Subsec. (e)(5)(C)(ii). Pub. L. 115-97, Sec. 11002(d)(2), amended clause (ii) by substituting “(f)(3)(A)(ii)” for “1(f)(3)(B)”,
and substituting “2016” for “1992”.
2015 - Subsec. (h). Pub. L. 114-113, Div. Q, Sec. 121(a)(1), struck subsec. (h). Before being struck, it read as follows:
“(h) Termination
“(1) In General.—This section shall not apply to any amount paid or incurred
after December 31, 2014.
“(2) Termination Of Alternative Incremental Credit.—No election under
subsection (c)(4) shall apply to taxable years beginning after December 31, 2008.
“(3) Computation For Taxable Year In Which Credit Terminates.—In the case
of any taxable year with respect to which this section applies to a number of days
which is less than the total number of days in such taxable year—
“(A) the amount determined under subsection
(c)(1)(B) with respect to such taxable year shall be the amount which bears the same
ratio to such amount (determined without regard to this paragraph) as the number of
days in such taxable year to which this section applies bears to the total number
of days in such taxable year, and
“(B) for purposes of subsection (c)(5), the average qualified research expenses
for the preceding 3 taxable years shall be the amount which bears the same ratio to
such average qualified research expenses (determined without regard to this paragraph)
as the number of days in such taxable year to which this section applies bears to
the total number of days in such taxable year.”
Subsec. (h). Pub. L. 114-113, Div. Q, Sec. 121(c)(1), added a new subsec. (h).
2014 - Subsec. (h)(1). Pub. L. 113-295, Div. A, Sec. 111(a), amended par. (1)
by substituting “paid or incurred after December 31, 2014”
for “paid or incurred—(A) after June 30, 1995, and before July 1, 1996,
or (B) after December 31, 2013”.
2013 - Subsec. (f)(1)(A)(ii). Pub. L. 112-240, Sec. 301(c)(1), amended clause (ii) by substituting “shall be determined on a proportionate
basis to its share of the aggregate of the qualified research expenses, basic research
payments, and amounts paid or incurred to energy research consortiums, taken into
account by such controlled group for purposes of this section” for “shall
be its proportionate shares of the qualified research expenses, basic research payments,
and amounts paid or incurred to energy research consortiums, giving rise to the credit”.
Subsec. (f)(1)(B)(ii). Pub. L. 112-240, Sec. 301(c)(2), amended clause (ii) by substituting ‘’shall be determined on a proportionate
basis to its share of the aggregate of the qualified research expenses, basic research
payments, and amounts paid or incurred to energy research consortiums, taken into
account by all such persons under common control for purposes of this section”
for ‘’shall be its proportionate shares of the qualified research expenses,
basic research payments, and amounts paid or incurred to energy research consortiums,
giving rise to the credit”.
Subsec. (f)(3)(A). Pub. L. 112-240, Sec. 301(b)(1), amended subpar. (A). Before amendment, it read as follows:
“(A) Acquisitions.—If, after December 31, 1983, a taxpayer acquires the
major portion of a trade or business of another person (hereinafter in this paragraph
referred to as the
“predecessor”) or the major portion of a separate unit of a trade
or business of a predecessor, then, for purposes of applying this section for any
taxable year ending after such acquisition, the amount of qualified research expenses
paid or incurred by the taxpayer during
periods before such acquisition shall be increased by so much of such expenses paid
or incurred by the predecessor with respect to the acquired trade or business as
is attributable to the portion of such trade or business or separate unit acquired
by the taxpayer, and the gross receipts of the taxpayer for such periods shall be
increased by so much of the gross receipts of such predecessor with respect to the
acquired trade or business as is attributable to such portion.”
Subsec. (f)(3)(B). Pub. L. 112-240, Sec. 301(b)(2), amended subpar (B). Before amendment, it read as follows:
“(B) Dispositions.—If, after December 31, 1983—(i) a taxpayer
disposes of the major portion of any trade or business or the major portion of a
separate unit of a trade or business in a transaction to which subparagraph (A) applies,
and
(ii) the taxpayer furnished the acquiring person such information as is necessary
for the application of subparagraph (A), then, for purposes of applying this section
for any taxable year ending after such disposition, the amount of qualified research
expenses paid or incurred by the taxpayer during periods before such disposition
shall be decreased by so much of such expenses as is attributable to the portion
of such trade or business or separate unit disposed of by the taxpayer, and the gross
receipts of the taxpayer for such periods shall be decreased by so much of the gross
receipts of such predecessor with respect to the acquired trade or business as is
attributable to such portion.”
Subsec. (h)(1)(B). Pub. L. 112-240, Sec. 301(a)(1), amended subpar. (B) by substituting “December 31, 2013”
for “December 31, 2011”.
2010 - Subsec. (h)(1)(B). Pub. L. 111-312, Sec. 731(a), amended subpar. (B) by substituting “December 31, 2011”
for “December 31, 2009”.
2008 - Subsec. (c)(5)(A). Pub. L. 110-343, Div. C, Sec. 301(c), amended subpar. (A) by substituting “14 percent (12 percent
in the case of taxable years ending before January 1, 2009)”
for “12 percent”.
Subsec. (h)(1)(B). Pub. L. 110-343, Div. C, Sec. 301(a)(1), amended subpar.
(B) by substituting “December 31, 2009” for “December 31, 2007”.
Subsec. (h). Pub. L. 110-343, Div. C, Sec. 301(b), amended subsec.
(h) by redesignating par. (2) as par. (3) and by adding par. (2).
Subsec. (h)(3). Pub. L. 110-343, Div. C, Sec. 301(d), amended subsec.
(h) by amending par. (3), as redesignated. Before amendment, it read as follows:
“(3) Computation Of Base Amount.-- In the case of any taxable year with respect
to which this section applies to a number of days which is less than the total number
of days in such taxable year, the base amount with respect to such taxable year shall
be the amount which bears the same ratio to the base amount for such year (determined
without regard to this paragraph) as the number of days in such taxable year to which
this section applies bears to the total number of days in such taxable year.”
2007 - Subsec. (a)(2). Pub. L. 110-172, Sec. 6(c)(1), amended par. (2) by inserting “for energy research” before the period
at the end.
Subsec. (f)(1)(A)(ii). Pub. L. 110-172, Sec. 11(e)(2), amended clause (ii) by substituting “qualified research expenses, basic research
payments, and amounts paid or incurred to energy research consortiums,” for
“qualified research expenses and basic research payments”.
Subsec. (f)(1)(B)(ii). Pub. L. 110-172, Sec. 11(e)(2), amended clause (ii) by substituting “qualified research expenses, basic research
payments, and amounts paid or incurred to energy research consortiums,” for
“qualified research expenses and basic research payments”.
Subsec. (f)(6)(E). Pub. L. 110-172, Sec. 6(c)(2), amended par. (6) by adding subpar. (E).
2006 — Subsec. (c)(4)(A). Pub. L. 109-432, Sec. 104(b)(1), amended subpar. (A) by substituting “3 percent” for “2.65 percent”;
“4 percent” for “3.2 percent”; and “5 percent”
for “3.75 percent”.
Subsec. (c)(5)-(6). Pub. L. 109-432, Sec. 104(c)(1), amended subsec. (c) by redesignating par. (5) and (6) as par. (6)
and (7), respectively, and by adding new par. (5).
Subsec. (h)(1)(B). Pub. L. 109-432, Sec. 104(a)(1), amended subpar. (B) by substituting “2007” for “2005”.
2005 — Subsec. (b)(3)(C)(ii). Pub. L. 109-135, Sec. 402(l)(2), amended clause (ii) by striking “(other than an energy research consortium)"
after “organization”.
Subsec. (f)(6)(C)-(D). Pub. L. 109-135, Sec. 402(l)(1), added subpar. (C) and (D).
Subsec. (a). Pub. L. 109-58, Sec. 1351(a)(1), amended subsec. (a) by striking “and” at the end of par. (1); by substituting
“, and” for the period at the end of par. (2); and by adding par.
(3).
Subsec. (b)(3)(C). Pub. L. 109-58, Sec. 1351(a)(3), amended subpar. (C) by inserting “(other than an energy research consortium)"
after “organization”.
Subsec. (b)(3)(D). Pub. L. 109-58, Sec. 1351(b), added subpar. (D).
Subsec. (f)(6). Pub. L. 109-58, Sec. 1351(a)(2), added par. (6).
2004 - Subsec. (h)(1)(B). Pub. L. 108-311, Sec. 301(a)(1), amended subpar. (B) by substituting “December 31, 2005” for “June
30, 2004”.
1999 - Subsec. (c)(4)(A). Pub. L. 106-170, Sec. 502(b)(1), amended subpar. (A) by substituting “2.65 percent” for “1.65 percent”,
“3.2 percent” for “2.2 percent”, and “3.75 percent”
for “2.75 percent”.
Subsec. (c)(6). Pub. L. 106-170, Sec. 502(c)(1), amended par. (6) by inserting the language following “United States”.
Subsec. (d)(4)(F). Pub. L. 106-170, Sec. 502(c)(1), amended subpar. (F) by inserting the language following “United States”.
Subsec. (h)(1). Pub. L. 106-170, Sec. 502(a)(1)(A), amended par. (1) by substituting “June 30, 2004” for “June 30,
1999"
and be striking the material following subpar. (B). Before being striken, it read
as follows:
“Notwithstanding the preceding sentence, in the case of a taxpayer making an
election under subsection
(c)(4) for its first taxable year beginning after June 30, 1996, and before July 1,
1997, this section shall apply to amounts paid or incurred
during the 36-month period beginning with the first month of such year. The 36 months
referred to in the preceding sentence shall be reduced by the number of full months
after June 1996 (and before the first month of such first taxable year) during which
the taxpayer paid or incurred any amount which is taken into account in determining
the credit under this section.”
1998 - Subsec. (h)(1). Pub. L. 105-277, Sec. 1001(a), amended par. (1) by substituting “June 30, 1999” for “June 30,
1998”;
“36-month” for “24-month”; and “36 months” for
“24 months”.
1997 - Subsec. (c)(4)(B). Pub. L. 105-34, Sec. 601(b)(1), amended subpar. (B). Prior to amendment it read as follows:
“(B) Election.--
An election under this paragraph may be made only for the first taxable year of the
taxpayer beginning after June 30, 1996. Such an election shall apply to the taxable
year for which made and all succeeding taxable years unless revoked with the consent
of the Secretary.”
Subsec. (h)(1). Pub. L. 105-34, Sec. 601(a), substituted “June 30, 1998"
for “May 31, 1997”; and struck “during the first 11 months of such
taxable year.” in the last sentence and inserted “during the 24-month
period beginning with the first month of such year. The 24 months referred to in the
preceding sentence shall be reduced by the number of full months after June 1996 (and
before the first month of such first taxable year) during which the taxpayer paid
or incurred any amount which is taken into account in determining the credit under
this section.”
1996 - Subsec. (b)(2)(D)(iii). Pub. L. 104-188, Sec. 1201(e)(1), substituted “work opportunity credit” for “targeted jobs credit”.
Subsec. (b)(2)(D)(iii). Pub. L. 104-188, Sec. 1201(e)(4), substituted “Work Opportunity Credit” for “Targeted Jobs Credit”
in the heading.
Subsec. (b)(3)(C). Pub. L. 104-188, Sec. 1204(d), added subpar. (C).
Subsec. (c)(3)(B). Pub. L. 104-188, Sec. 1204(b), amended clause (i). Before amendment, clause (i) read as follows:
“(i) Taxpayers to which Subparagraph Applies. -- The fixed-base percentage shall
be determined under this subparagraph if there are fewer than 3 taxable years beginning
after December 31, 1983, and before January 1, 1989, in which the taxpayer had both
gross receipts and qualified research expenses.”
Subsec. (c)(4). Pub. L. 104-188, Sec. 1204(c), redesignated pars. (4) and (5) as pars. (5) and (6), respectively, and added a new
par. (4).
Subsec. (h). Pub. L. 104-188, Sec. 1204(a) amended subsec. (h). Before amendment, subsec. (h) read as follows:
“(h) Termination.--
(1) In general.--This section shall not apply to any amount paid or incurred after
June 30, 1995.
(2) Computation of base amount.--In the case of any taxable year which begins before
July 1, 1995, and ends after June 30, 1995, the base amount with respect to such taxable
year shall be the amount which bears the same ratio to the base amount for such year
(determined without regard to this paragraph) as the number of days in such taxable
year before July 1, 1995, bears to the total number of days in such taxable year.”
1993 - Subsec. (c)(3)(B)(ii). Pub. L. 103-66, Section 13112(a)
amended clause (ii) of section 41(c)(3)(B). Clause (ii) formerly read:
‘(ii) Fixed-Base Percentage.
-- In a case to which this subparagraph applies, the fixed-base percentage is 3 percent.’
Subsec. (c)(3)(B)(iii). Pub. L. 103-66, Section 13112(b)(1)
amended clause (iii) by striking “clause (i)” and inserting “clauses
(i) and (ii)”.
Subsec. (c)(3)(D). Pub. L. 103-66, Section 13112(b)(2)
amended subparagraph (D) by striking “subparagraph (A)” and inserting
“subparagraphs (A) and (B)(ii)”.
Subsec. (e)(5)(C). Pub. L. 103-66, Section 13201(b)(3)(C) amended subparagraph (C) by striking “1989” each place it appeared and
inserting
“1992”.
Subsec. (h). Pub. L. 103-66, Section 13111(a)(1)
amended subsection (h) by striking “June 30, 1992” each place it appeared
and inserting “June 30, 1995”, and by striking “July 1, 1992”
each place it appeared and inserting “July 1, 1995”.
1991 - Subsec. (h). Pub. L. 102-227, Sec. 102(a), substituted “June 30, 1992” for “December 31, 1991” each
place it appeared, and substituted “July 1, 1992” for “January 1,
1992” each place it appeared.
1990 - Subsec. (e)(5)(C)(i). Pub. L. 101-508, Sec. 11101(d)(1)(C)(i), inserted before period at end ‘, by substituting ‘calendar year 1987’
for ‘calendar year 1989’ in subparagraph (B) thereof'.
Subsec. (e)(5)(C)(ii). Pub. L. 101-508, Sec. 11101(d)(1)(C)(ii),
(iii), substituted ‘1989’ for ‘1987’ and inserted at end ‘Such
substitution shall be in lieu of the substitution under clause (i).’
Subsec. (h). Pub. L. 101-508, Sec. 11402(a), substituted ‘December 31, 1991’ for ‘December 31, 1990’
wherever appearing and ‘January 1, 1992’ for ‘January 1, 1991’
wherever appearing.
1989 - Subsec. (a)(1)(B). Pub. L. 101-239, Sec. 7110(b)(2)(A), amended subpar. (B) generally. Prior to amendment, subpar. (B) read as follows:
‘the base period research expenses, and’.
Subsec. (b)(4). Pub. L. 101-239, Sec. 7110(b)((c)), added par. (4).
Subsec. (c). Pub. L. 101-239, Sec. 7110(b)(1), substituted ‘Base amount’ for ‘Base period research expenses’
in heading and amended text generally, substituting pars. (1) to (5) for former pars.
(1) to (3) which defined ‘base period research expenses’ and
‘base period’ and prescribed minimum base period research expenses.
Subsec. (e)(7)(C)(ii). Pub. L. 101-239, Sec. 7110(b)(2)(B), substituted ‘base amount’ for ‘base period research expenses’.
Subsec. (f)(1). Pub. L. 101-239, Sec. 7110(b)(2)(C), substituted ‘proportionate shares of the qualified research expenses and basic
research payments’ for ‘proportionate share of the increase in qualified
research expenses’ in subpars. (A)(ii) and (B)(ii).
Subsec. (f)(3)(A). Pub. L. 101-239, Sec. 7110(b)(2)(D), substituted ‘December 31, 1983’ for ‘June 30, 1980’ and
inserted before period at end ‘, and the gross receipts of the taxpayer for
such periods shall be increased by so much of the gross receipts of such predecessor
with respect to the acquired trade or business as is attributable to such portion’.
Subsec. (f)(3)(B). Pub. L. 101-239, Sec. 7110(b)(2)(E), substituted ‘December 31, 1983’ for ‘June 30, 1980’ in introductory
provisions and inserted before period at end ‘, and the gross receipts of the
taxpayer for such periods shall be decreased by so much of the gross receipts as is
attributable to such portion’.
Subsec. (f)(3)(C). Pub. L. 101-239, Sec. 7110(b)(2)(F), substituted ‘Certain reimbursements taken into account in determining fixed-base
percentage’ for ‘Increase in base period’ in heading, ‘for
the taxable years taken into account in computing the fixed-base percentage shall
be increased by the lesser of’ for ‘for the base period for such taxable
year shall be increased by the lesser of’ in introductory provisions, and new
cls. (i) and (ii) for former cls. (i) and (ii)
which read as follows:
‘(i) the amount of the decrease under subparagraph
(B) which is allocable to such base period, or
‘(ii) the product of the number of years in the base period, multiplied by the
amount of the reimbursement described in this subparagraph.’
Subsec. (f)(4). Pub. L. 101-239, Sec. 7110(b)(2)(G), inserted ‘and gross receipts’ after ‘qualified research expenses’.
Subsec. (h). Pub. L. 101-239, Sec. 7814(e)(2)(C), redesignated subsec. (i) as (h) and struck out former subsec. (h)
which related to election, time for election, and manner of election by taxpayer to
have research credit not apply for a taxable year.
Subsec. (h)(1). Pub. L. 101-239, Sec. 7110(a)(1)(A), substituted ‘December 31, 1990’ for ‘December 31, 1989’.
Subsec. (h)(2). Pub. L. 101-239, Sec. 7110(a)(1), substituted ‘January 1, 1991’ for ‘January 1, 1990’ in two
places and substituted ‘December 31, 1990’ for ‘December 31, 1989’.
Pub. L. 101-239, Sec. 7110(b)(2)(H), substituted ‘base amount’ for ‘base period expenses’ in
heading and ‘the base amount with respect to such taxable year shall be the
amount which bears the same ratio to the base amount for such year (determined without
regard to this paragraph)’ for ‘any amount for any base period with respect
to such taxable year shall be the amount which bears the same ratio to such amount
for such base period’ in text.
Subsec. (i). Pub. L. 101-239, Sec. 7814(e)(2)(C), redesignated subsec. (i) as (h).
1988 - Subsec. (g). Pub. L. 100-647, Sec. 1002(h)(1), inserted at end ‘If the amount determined under subsection (a) for any taxable
year exceeds the limitation of the preceding sentence, such amount may be carried
to other taxable years under the rules of section 39; except that the limitation of
the preceding sentence shall be taken into account in lieu of the limitation of section
38(c)
in applying section 39.’
Subsec. (h). Pub. L. 100-647, Sec. 4008(b)(1), added subsec. (h).
Former subsec. (h) redesignated (i).
Subsec. (i). Pub. L. 100-647, Sec. 4008(b)(1), redesignated former subsec. (h) as (i).
Pub. L. 100-647, Sec. 4007(a), substituted ‘1989’ and ‘1990’
for ‘1988’ and ‘1989’, respectively, wherever appearing in
subsec.
(h), prior to redesignation as subsec. (i) by Pub. L. 100-647, Sec. 4008(b)(1).
1986 - Pub. L. 99-514, Sec. 231(d)(2), renumbered section 30 of this title as this section.
Subsec. (a). Pub. L. 99-514, Sec. 231(c)(1), amended subsec. (a) generally. Prior to amendment, subsec. (a) read as follows:
‘There shall be allowed as a credit against the tax imposed by this chapter
for the taxable year an amount equal to 25 percent of the excess (if any) of -
‘(1) the qualified research expenses for the taxable year, over
‘(2) the base period research expenses.’
Subsec. (b)(2)(A)(iii). Pub. L. 99-514, Sec. 231(e), amended cl. (iii) generally. Prior to amendment, cl. (iii) read as follows: ‘any
amount paid or incurred to another person for the right to use personal property in
the conduct of qualified research.’
Subsec. (b)(2)(D)(iii). Pub. L. 99-514, Sec. 1847(b)(1), substituted ‘targeted jobs credit’ for ‘new jobs or WIN credit’
in heading.
Subsec. (d). Pub. L. 99-514, Sec. 231(b), inserted ‘defined’ in heading and amended text generally. Prior to amendment,
text read as follows:
‘For purposes of this section the term ‘qualified research’ has
the same meaning as the term research or experimental has under section 174, except
that such term shall not include -
‘(1) qualified research conducted outside the United States,
‘(2) qualified research in the social sciences or humanities, and
‘(3) qualified research to the extent funded by any grant, contract, or otherwise
by another person
(or any governmental entity).’
Subsec. (e). Pub. L. 99-514, Sec. 231(c)(2), amended subsec. (e) generally, substituting ‘Credit allowable with respect
to certain payments to qualified organizations for basic research’ for ‘Credit
available with respect to certain basic research by colleges, universities, and certain
research organizations’ in heading, and restating and expanding provisions of
former pars. (1) to (4) into new pars. (1)
to (7).
Subsec. (g). Pub. L. 99-514, Sec. 231(d)(3)(C)(ii), amended subsec. (g) generally, substituting provisions relating to special rule
for pass-thru of credit for provisions relating to limitation on amount of credit
for research based on amount of tax liability.
Subsec. (h). Pub. L. 99-514, Sec. 231(a)(1), added subsec. (h).
1984 - Pub. L. 98-369, Sec. 471(c), renumbered section 44F of this title as this section.
Subsec. (b)(2)(D)(iii). Pub. L. 98-369, Sec. 474(i)(1)(A), substituted ‘in determining the targeted jobs credit under section 51(a)’
for ‘in computing the credit under section 40 or 44B’.
Subsec. (g)(1)(A). Pub. L. 98-369, Sec. 612(e)(1), substituted ‘section 26(b)’ for ‘section 25(b)’.
Pub. L. 98-369, Sec. 474(i)(1)(B), amended subpar. (A)
generally, substituting ‘shall not exceed the taxpayer's tax liability for the
taxable year (as defined in section 25(b)), reduced by the sum of the credits allowable
under subpart A and sections 27, 28, and 29' for ‘shall not exceed the amount
of the tax imposed by this chapter reduced by the sum of the credits allowable under
a section of this part having a lower number or letter designation than this section,
other than the credits allowable by sections 31, 39, and 43. For purposes of the preceding
sentence, the term ‘tax imposed by this chapter’ shall not include any
tax treated as not imposed by this chapter under the last sentence of section 53(a)'.
1983 - Subsec. (b)(2)(A). Pub. L. 97-448, Sec. 102(h)(2), inserted provision that cl. (iii) would not apply to any amount to the extent that
the taxpayer (or any person with whom the taxpayer must aggregate expenditures under
subsection (f)(1)) received or accrued any amount from any other person for the right
to use substantially identical personal property.
1982 - Subsec. (f)(2)(A). Pub. L. 97-354, Sec. 5(a)(3)(A), substituted ‘Pass-thru in the case of estates and trusts’ for ‘Pass-through
in the case of subchapter S corporations, etc.’ in subpar. heading, and substituted
provisions relating to the applicability of rules similar to rules of subsec. (d)
of section 52 for provisions relating to the applicability of rules similar to rules
of subsecs. (d) and
(e) of section 52.
Subsec. (g)(1)(B)(iv). Pub. L. 97-354, Sec. 5(a)(3)(B), substituted ‘an S corporation’ for ‘an electing small business
corporation
(within the meaning of section 1371(b))’.
EFFECTIVE DATE OF 2018 AMENDMENTS
Amendments by Pub. L. 115-141, Div. U, Sec. 101(c), effective as if included in the provisions of the Protecting
Americans from Tax Hikes Act of 2015 to which they relate [Pub. L. 114-113, Div. Q, Sec. 121, effective for taxable years beginning after Dec. 31, 2015].
Amendments by Pub. L. 115-141, Div. U, Sec. 401(b)(6), effective March 23, 2018.
Sec. 401(e) of Pub. L. 115-141, Div. U, provided the following savings provision:
“(e) General Savings Provision With Respect To Deadwood Provisions.—If—
“(1) any provision amended or repealed by the amendments made by subsection
(b) or (d)
applied to—
“(A) any transaction occurring before the date of the enactment of this Act,
“(B) any property acquired before such date of enactment, or
“(C) any item of income, loss, deduction, or credit taken into account before
such date of enactment, and
“(2) the treatment of such transaction, property, or item under such provision
would
(without regard to the amendments or repeals made by such subsection)
affect the liability for tax for periods ending after such date of enactment,
“nothing in the amendments or repeals made by this section shall be construed
to affect the treatment of such transaction, property, or item for purposes of determining
liability for tax for periods ending after such date of enactment.”
EFFECTIVE DATE OF 2017 AMENDMENTS
Amendment by Pub. L. 115-97, Sec. 11002(d)(1)(F), (d)(2), effective for taxable years beginning after December 31, 2017.
Amendment by Pub. L. 115-97, Sec. 13206(d)(1), effective for amounts paid or incurred in taxable years beginning after December
31, 2021.
EFFECTIVE DATE OF 2015 AMENDMENTS
Amendment by Pub. L. 114-113, Div. Q, Sec. 121(a)(1), effective for amounts paid or incurred after December 31,
2014.
Amendment by Pub. L. 114-113, Div. Q, Sec. 121(c)(1), effective for taxable years beginning after December 31,
2015.
EFFECTIVE DATE OF 2014 AMENDMENT
Amendment by Pub. L. 113-295, Div. A, Sec. 111(a), effective for amounts paid or incurred after December 31, 2013.
EFFECTIVE DATE OF 2013 AMENDMENTS
Amendments by Sec. 301(a)(1) of Pub. L. 112-240 effective for amounts paid or incurred after December 31, 2011.
Amendments by Sec. 301(b) and (c) of Pub. L. 112-240 effective for taxable years beginning after December 31, 2011.
EFFECTIVE DATE OF 2010 AMENDMENT
Amendment by Sec. 731(a) of Pub. L. 111-312 effective for amounts paid or incurred after December 31, 2009.
EFFECTIVE DATE OF 2008 AMENDMENTS
Amendment by Sec. 301(a) of Div. C of Pub. L. 110-343 effective for amounts paid or incurred after December 31, 2007.
Amendments by Sec. 301(b)-(d) of Div. C of Pub. L. 1110-343 effective for taxable years beginning after December 31, 2007.
EFFECTIVE DATE OF 2007 AMENDMENTS
Amendments by Sec. 6(c) and 11(e)(2) of Pub. L. 110-172 effective as if included in the provisions of the Energy Policy Act of 2005 [Pub. L. 109-58, Sec. 1351] to which they relate.
EFFECTIVE DATE OF 2006 AMENDMENTS
Amendment by Sec. 104(a)(1) of Pub. L. 109-432 effective for amounts paid or incurred after December 31, 2005.
Amendments by Sec. 104(b) of Pub. L. 109-432 effective for taxable years ending after December 31, 2006. Sec. 104(b)(3) of Pub. L. 109-432 provided the following transition rule:
“(3) TRANSITION RULE-
“(A) IN GENERAL- In the case of a specified transitional taxable year for which
an election under section 41(c)(4) of the Internal Revenue Code of 1986 applies, the credit determined under section 41(a)(1) of such Code shall
be equal to the sum of--
“(i) the applicable 2006 percentage multiplied by the amount determined under
section 41(c)(4)(A) of such Code
(as in effect for taxable years ending on December 31, 2006), plus
“(ii) the applicable 2007 percentage multiplied by the amount determined under
section 41(c)(4)(A) of such Code (as in effect for taxable years ending on January
1, 2007).
“(B) DEFINITIONS- For purposes of subparagraph
(A)--
“(i) SPECIFIED TRANSITIONAL TAXABLE YEAR- The term
‘specified transitional taxable year’ means any taxable year which ends
after December 31, 2006, and which includes such date.
“(ii) APPLICABLE 2006 PERCENTAGE- The term ‘applicable 2006 percentage’
means the number of days in the specified transitional taxable year before
January 1, 2007, divided by the number of days in such taxable year.
“(iii) APPLICABLE 2007 PERCENTAGE- The term ‘applicable 2007 percentage’
means the number of days in the specified transitional taxable year after
December 31, 2006, divided by the number of days in such taxable year.”
Amendments by Sec. 104(c)(1) of Pub. L. 109-432 effective for taxable years ending after December 31, 2006. Sec 104(c)(2) of Pub. L. 109-432 provided the following transition rule:
“(2) TRANSITION RULE FOR DEEMED REVOCATION OF ELECTION OF ALTERNATIVE INCREMENTAL
CREDIT- In the case of an election under section 41(c)(4) of the Internal Revenue Code of 1986 which applies to the taxable year which includes January 1, 2007, such
election shall be treated as revoked with the consent of the Secretary of the
Treasury if the taxpayer makes an election under section 41(c)(5) of such Code
(as added by this subsection) for such
year.”
Sec. 104(c)(4) of Pub. L. 109-432 provided the following transition rule:
“(4) TRANSITION RULE FOR NONCALENDAR TAXABLE YEARS-
“(A) IN GENERAL- In the case of a specified transitional taxable year for
which an election under section 41(c)(5) of the Internal Revenue Code of 1986 (as added by this subsection)
applies, the credit determined under section 41(a)(1) of such Code shall be
equal to the sum of--
“(i) the applicable 2006 percentage multiplied by the amount determined
under section 41(a)(1) of such Code
(as in effect for taxable years ending on December 31, 2006), plus
“(ii) the applicable 2007 percentage multiplied by the amount determined
under section 41(c)(5) of such Code
(as in effect for taxable years ending on January 1, 2007).
“(B) DEFINITIONS AND SPECIAL RULES- For purposes of subparagraph (A)--
“(i) DEFINITIONS- Terms used in this paragraph which are also used in
subsection (b)(3) shall have the respective meanings given such terms in
such subsection.
“(ii) DUAL ELECTIONS PERMITTED- Elections under paragraphs (4) and (5) of
section 41(c) of such Code may both apply for the specified transitional
taxable year.
“(iii) DEFERRAL OF DEEMED ELECTION REVOCATION-
Any election under section 41(c)(4) of the Internal Revenue Code of 1986 treated as revoked under paragraph (2) shall be treated as revoked
for the taxable year after the specified transitional taxable year.”
EFFECTIVE DATE OF 2005 AMENDMENTS
Amendments by Sec. 402 of Pub. L. 109-135 effective as if included in the provisions of the Energy Policy Act of 2005 [Pub. L. 109-58, Sec. 1351] to which they relate [Effective Aug. 8, 2005].
Amendments by Sec. 1351 of Pub. L. 109-58 effective for amounts paid or incurred after the date of the enactment of this Act
[Enacted:
Aug. 8, 2005], in taxable years ending after such date.
EFFECTIVE DATE OF 2004 AMENDMENT
Amendment by Sec. 401(a)(1) of Pub. L. 108-311 effective for amounts paid or incurred after June 30, 2004.
EFFECTIVE DATE OF 1999 AMENDMENTS
Amendments by Sec. 502(a) of Pub. L. 106-170 effective for amounts paid or incurred after June 30, 1999.
Amendments by Sec. 502(b) of Pub. L. 106-170 effective for taxable years beginning after June 30, 1999.
Amendments by Sec. 502(c) of Pub. L. 106-170 effective generally for amounts paid or incurred after June 30, 1999.
Sec. 502(d) of Pub. L. 106-170 provided that:
“(d) SPECIAL RULE.--
“(1) IN GENERAL.--For purposes of the Internal Revenue Code of 1986, the credit determined under section 41 of such Code which is otherwise
allowable under such Code--
“(A) shall not be taken into account prior to October
1, 2000, to the extent such credit is attributable to the first suspension period,
and
“(B) shall not be taken into account prior to October 1, 2001, to the extent
such credit is attributable to the second suspension period.
“On or after the earliest date that an amount of credit may be taken into account,
such amount may be taken into
account through the filing of an amended return, an application for expedited refund,
an adjustment of estimated taxes, or other means allowed by such Code.
“(2) SUSPENSION PERIODS.--For purposes of this
subsection--
“(A) the first suspension period is the period
beginning on July 1, 1999, and ending on September 30, 2000, and
“(B) the second suspension period is the period beginning on October 1, 2000,
and ending on September 30, 2001.
“(3) EXPEDITED REFUNDS.--
“(A) IN GENERAL.--If there is an overpayment of tax with respect to a taxable
year by reason of paragraph (1), the taxpayer may file an application for a tentative
refund of such overpayment. Such application shall be in such manner and form, and
contain such information, as the Secretary may prescribe.
“(B) DEADLINE FOR APPLICATIONS.--Subparagraph (A)
shall apply only to an application filed before the date which is 1 year after the
close of the suspension period to which the application relates.
“(C) ALLOWANCE OF ADJUSTMENTS.--Not later than 90 days after the date on which
an application is filed under this paragraph, the Secretary shall--
“(i) review the application,
“(ii) determine the amount of the overpayment, and
“(iii) apply, credit, or refund such overpayment, in a manner similar to
the manner provided in section 6411(b) of such Code.
“(D) CONSOLIDATED RETURNS.--The provisions of section 6411(c) of such Code
shall apply to an adjustment under this paragraph in such manner as the Secretary
may provide.
“(4) CREDIT ATTRIBUTABLE TO SUSPENSION PERIOD.--
“(A) IN GENERAL.--For purposes of this subsection, in the case of a taxable
year which includes a portion of the suspension period, the amount of credit determined
under section 41 of such Code for such taxable year which is attributable to such
period is the amount which bears the same ratio to the amount of credit determined
under such section 41 for such taxable year as the number of months in the suspension
period which are during such taxable year bears to the number of months in such taxable
year.
“(B) WAIVER OF ESTIMATED TAX PENALTIES.--No addition to tax shall be made under
section 6654 or 6655 of such Code for any period before July 1, 1999, with respect
to any underpayment of tax imposed by such Code to the extent such underpayment was
created or increased by reason of subparagraph (A).
“(5) SECRETARY.--For purposes of this subsection, the term “Secretary”
means the Secretary of the Treasury (or such Secretary's delegate).”
EFFECTIVE DATE OF 1998 AMENDMENTS
Amendments by Sec. 1001(a) of Pub. L. 105-277 effective for amounts paid or incurred after June 30, 1998.
EFFECTIVE DATE OF 1997 AMENDMENTS
Amendments by Sec. 601 of Pub. L. 105-34 effective for amounts paid or incurred after May 31, 1997.
EFFECTIVE DATE OF 1996 AMENDMENT
Sec. 1201(g) of Pub. L. 104-188, provided that: “The amendments made by this section shall apply to individuals
who begin work for the employer after September 30, 1996.”
Sec. 1204(f) of Pub. L. 104-188, provided that: “Except as provided in paragraph (2), the amendments made by
this section shall apply to taxable years ending after June 30, 1996.
“(2) Subsections (c) and (d).--The amendments made by subsections (c) and (d)
shall apply to taxable years beginning after June 30, 1996.
“(3) Estimated tax.--The amendments made by this section shall not be taken
into account under section 6654 or 6655 of the Internal Revenue Code of 1986 (relating to failure to pay estimated tax) in determining the amount of any
installment required to be paid for a taxable year beginning in 1997.”
EFFECTIVE DATE OF 1993 AMENDMENT
The amendments made by sections 13112 and 13201 of Pub. L. 103-66 shall apply to taxable years beginning after December 31, 1993.
Amendment by section 13111 of Pub. L. 103-66 shall apply to taxable years ending after June 30, 1992.
EFFECTIVE DATE OF 1991 AMENDMENT
Amendment by section 102 of Pub. L. 102-227 applicable to taxable years ending after December 31, 1991.
EFFECTIVE DATE OF 1990 AMENDMENT
Amendment by section 11101(d)(1)(C) of Pub. L. 101-508 applicable to taxable years beginning after Dec. 31, 1990, see section 11101(e) of
Pub. L. 101-508, set out as a note under section 1 of this title.
Amendment by section 11402(a) of Pub. L. 101-508 applicable to taxable years beginning after Dec. 31, 1989, see section 11402(c) of
Pub. L. 101-508, set out as a note under section 28 of this title.
EFFECTIVE DATE OF 1989 AMENDMENT
Section 7110(e) of Pub. L. 101-239 provided that: ‘The amendments made by this section (amending this section
and sections 28, 174, 196, and 280C of this title) (other than subsection (a) (amending
this section and section 28 of this title)) shall apply to taxable years beginning
after December 31, 1989.’
Amendment by section 7814(e)(2)(C) of Pub. L. 101-239 effective, except as otherwise provided, as if included in the provision of the Technical
and Miscellaneous Revenue Act of 1988, Pub. L. 100-647, to which such amendment relates, see section 7817 of Pub. L. 101-239, set out as a note under section 1 of this title.
EFFECTIVE DATE OF 1988 AMENDMENT
Amendment by section 1002(h)(1) of Pub. L. 100-647 effective, except as otherwise provided, as if included in the provision of the Tax
Reform Act of 1986, Pub. L. 99-514, to which such amendment relates, see section 1019(a) of Pub. L. 100-647, set out as a note under section 1 of this title.
Section 4008(d) of Pub. L. 100-647 provided that: ‘The amendments made by this section (amending this section
and sections 28, 196, 280C, and 6501 of this title) shall apply to taxable years beginning
after December 31, 1988.’
EFFECTIVE DATE OF 1986 AMENDMENT
Section 231(g) of Pub. L. 99-514 provided that:
‘(1) In general. - Except as provided in this subsection
(2), the amendments made by this section (amending this section and sections 28, 38,
39, 108, 170, 280C, 381, 936, 6411, and 6511 of this title, renumbering former section
30 of this title as this section, and enacting and amending provisions set out as
notes under this section)
shall apply to taxable years beginning after December 31, 1985.
‘(2) Subsection (a). - The amendments made by subsection
(a) (amending this section and provisions set out as a note under this section) shall
apply to taxable years ending after December 31, 1985.
‘(3) Basic research. - Section 41(a)(2) of the Internal Revenue Code of 1986 (as added by this section), and the amendments made by subsection (c)(2)
(amending this section), shall apply to taxable years beginning after December 31,
1986.’
Amendment by section 1847(b)(1) of Pub. L. 99-514 effective, except as otherwise provided, as if included in the provisions of the
Tax Reform Act of 1984, Pub. L. 98-369, div. A, to which such amendment relates, see section 1881 of Pub. L. 99-514, set out as a note under section 48 of this title.
EFFECTIVE DATE OF 1984 AMENDMENT
Amendment by section 474(i)(1) of Pub. L. 98-369 applicable to taxable years beginning after Dec. 31, 1983, and to carrybacks from
such years, see section 475(a) of Pub. L. 98-369, set out as a note under section 21 of this title.
Amendment by section 612(e)(1) of Pub. L. 98-369 applicable to interest paid or accrued after Dec. 31, 1984, on indebtedness incurred
after Dec. 31, 1984, see section 612(g) of Pub. L. 98-369, set out as an Effective Date note under section 25 of this title.
Section 474(I)(2) of Pub. L. 98-369 provided that “(2) New Section 30 treated As Continuation of Old Section 44F.
For purposes of determining
(A) whether any excess credit under old section 44F for a taxable year beginning before
January 1, 1984, is allowable as a caryover under new section 30, and (B) the period
during which new section 30 is in effect, new section 30 shall be treated as a continuation
of old section 44F (and shall apply only to the extent old section 44F would have
applied).”
EFFECTIVE DATE OF 1983 AMENDMENT
Section 102(h)(2) of Pub. L. 97-448 provided that the amendment made by that section is effective only with respect to
amounts paid or incurred after March 31, 1982.
EFFECTIVE DATE OF 1982 AMENDMENT
Amendment by Pub. L. 97-354 applicable to taxable years beginning after Dec. 31, 1982, see section 6(a) of Pub. L. 97-354, set out as an Effective Date note under section 1361 of this title.
EFFECTIVE DATE
Section 221(d) of Pub. L. 97-34, as amended by Pub. L. 99-514, Sec. 2, title II, Sec. 231(a)(2), Oct. 22, 1986, 100 Stat. 2095, 2173, provided that:
‘(1) In general. - The amendments made by this section (enacting this section
of amending sections 55, 381, 383, 6096, 6411, and 6511 of this title) shall apply
to amounts paid or incurred after June 30, 1981.
‘(2) Transitional rule. -
‘(A) In general. - If, with respect to the first taxable year to which the amendments
made by this section apply and which ends in 1981 or 1982, the taxpayer may only take
into account qualified research expenses paid or incurred during a portion of such
taxable year, the amount of the qualified research expenses taken into account for
the base period of such taxable year shall be the amount which bears the same ratio
to the total qualified research expenses for such base period as the number of months
in such portion of such taxable year bears to the total number of months in such taxable
year.
‘(B) Definitions. - For purposes of the preceding sentence, the terms ‘qualified
research expenses’
and ‘base period’ have the meanings given to such terms by section 44F
(now 41) of the Internal Revenue Code of 1986 (formerly I.R.C. 1954) (as added by this section).'
RESEARCH CREDIT ELECTIONS
Section 123 of Pub. L. 109-432 provided that:
“(a) Research Credit Elections- In the case of any taxable year ending after
December 31, 2005, and before the date of the enactment of this Act, any election
under section 41(c)(4)
or section 280C(c)(3)(C) of the Internal Revenue Code of 1986 shall be treated as having been timely made for such taxable year if such
election is made not later than the later of April 15, 2007, or such time as the
Secretary of the Treasury, or his designee, may
specify. Such election shall be made in the manner prescribed by such Secretary
or designee.
“(b) Other Elections- Except as otherwise provided by such Secretary or designee,
a rule similar to the rule of subsection
(a) shall apply with respect to elections under any other expired provision of
the Internal Revenue Code of 1986 the applicability of which is extended by reason of the amendments made
by this title.”
SPECIAL RULES FOR TAXABLE YEARS BEGINNING BEFORE OCT. 1, 1990, AND ENDING AFTER SEPT.
30, 1990
Section 7110(a)(2) of Pub. L. 101-239, which set forth the method of determining the amount treated as qualified research
expenses for taxable years beginning before Oct. 1, 1990, and ending after Sept. 30,
1990, was repealed by Pub. L. 101-508, title XI, Sec. 11402(b)(1), Nov. 5, 1990, 104 Stat. 1388-473, as amended
by Pub. L. 104-188, Sec. 1702(d)(1), Aug. 20, 1996, 110 Stat. 1755, effective for taxable years ending after Dec. 31, 1989.
STUDY AND REPORT ON CREDIT PROVIDED BY THIS SECTION
Section 4007(b) of Pub. L. 100-647 provided that:
‘(1) In general. - The Comptroller General of the United States shall conduct
a study of the credit provided by section 41 of the 1986 Code.
‘(2) Report. - The report of the study under paragraph
(1) shall be submitted not later than December 31, 1989, to the Committee on Ways
and Means of the House of Representatives and the Committee on Finance of the Senate.’
PLAN AMENDMENTS NOT REQUIRED UNTIL JANUARY 1, 1989
For provisions directing that if any amendments made by subtitle A or subtitle C of
title XI (Sec. 1101-1147 and 1171-1177)
or title XVIII (Sec. 1800-1899A) of Pub. L. 99-514 require an amendment to any plan, such plan amendment shall not be required to be
made before the first plan year beginning on or after Jan. 1, 1989, see section 1140
of Pub. L. 99-514, as amended, set out as a note under section 401 of this title.
NEW SECTION 41 TREATED AS CONTINUATION OF OLD SECTION 44F
Section 474(i)(2) of Pub. L. 98-369 provided that: ‘For purposes of determining
-
‘(A) whether any excess credit under old section 44F (now 41) for a taxable
year beginning before January 1, 1984, is allowable as a carryover under new section
30
(now 41), and
‘(B) the period during which new section 30 (now 41) is in effect, new section
30 (now 41) shall be treated as a continuation of old section 44F (and shall apply
only to the extent old section 44F would have applied).’
PRIOR PROVISIONS
A prior section 41, added Pub. L. 97-34, title III, Sec. 331(a), Aug. 13, 1981, 95 Stat. 289, Sec. 44G; amended Pub. L. 97-448, title I, Sec. 103(g)(1), Jan. 12, 1983, 96 Stat. 2379; renumbered Sec. 41 and amended Pub. L. 98-369, div. A, title I, Sec. 14, title IV, Sec. 471(c), 474(l), 491(e)(2), (3), July 18,
1984, 98 Stat. 505, 826, 833, 852, 853, which related to employee stock ownership credit, was repealed
by Pub. L. 99-514, title XI, Sec. 1171(a), Oct. 22, 1986, 100 Stat. 2513, applicable to compensation paid or accrued after Dec. 31, 1986, in taxable years
ending after such date, except as otherwise provided, see section 1171(c) of Pub. L. 99-514, set out as an Effective Date of 1986 Amendment note under section 38 of this title.
For transition rules relating to such repeal, see section 1177 of Pub. L. 99-514, set out as a Transition Rules note under section 38 of this title.
Another prior section 41 was renumbered section 24 of this title.
