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Statutory Text

SEC. 9023. QUALIFYING THERAPEUTIC DISCOVERY PROJECT CREDIT.
(a) IN GENERAL.—Subpart E of part IV of subchapter A of
chapter 1 of the Internal Revenue Code of 1986 is amended by inserting
after section 48C the following new section:
‘‘SEC. 48D. QUALIFYING THERAPEUTIC DISCOVERY PROJECT CREDIT.
‘‘(a) IN GENERAL.—For purposes of section 46, the qualifying
therapeutic discovery project credit for any taxable year is an
amount equal to 50 percent of the qualified investment for such
taxable year with respect to any qualifying therapeutic discovery
project of an eligible taxpayer.
‘‘(b) QUALIFIED INVESTMENT.—
‘‘(1) IN GENERAL.—For purposes of subsection (a), the
qualified investment for any taxable year is the aggregate
amount of the costs paid or incurred in such taxable year for
expenses necessary for and directly related to the conduct of a
qualifying therapeutic discovery project.
‘‘(2) LIMITATION.—The amount which is treated as qualified
investment for all taxable years with respect to any qualifying
therapeutic discovery project shall not exceed the amount
certified by the Secretary as eligible for the credit under this
section.
‘‘(3) EXCLUSIONS.—The qualified investment for any taxable
year with respect to any qualifying therapeutic discovery
project shall not take into account any cost—
‘‘(A) for remuneration for an employee described in
section 162(m)(3),
‘‘(B) for interest expenses,
‘‘(C) for facility maintenance expenses,
‘‘(D) which is identified as a service cost under section
1.263A–1(e)(4) of title 26, Code of Federal Regulations, or
‘‘(E) for any other expense as determined by the Secretary
as appropriate to carry out the purposes of this section.
‘‘(4) CERTAIN PROGRESS EXPENDITURE RULES MADE APPLICABLE.—
In the case of costs described in paragraph (1) that are
paid for property of a character subject to an allowance for depreciation,
rules similar to the rules of subsections (c)(4) and
(d) of section 46 (as in effect on the day before the date of the
enactment of the Revenue Reconciliation Act of 1990) shall
apply for purposes of this section.
‘‘(5) APPLICATION OF SUBSECTION.—An investment shall be
considered a qualified investment under this subsection only if
such investment is made in a taxable year beginning in 2009
or 2010.
‘‘(c) DEFINITIONS.—
‘‘(1) QUALIFYING THERAPEUTIC DISCOVERY PROJECT.—The
term ‘qualifying therapeutic discovery project’ means a project
which is designed—
‘‘(A) to treat or prevent diseases or conditions by conducting
pre-clinical activities, clinical trials, and clinical
studies, or carrying out research protocols, for the purpose
of securing approval of a product under section 505(b) of
the Federal Food, Drug, and Cosmetic Act or section 351(a)
of the Public Health Service Act,
‘‘(B) to diagnose diseases or conditions or to determine
molecular factors related to diseases or conditions by developing
molecular diagnostics to guide therapeutic decisions,
or
‘‘(C) to develop a product, process, or technology to further
the delivery or administration of therapeutics.
‘‘(2) ELIGIBLE TAXPAYER.—
‘‘(A) IN GENERAL.—The term ‘eligible taxpayer’ means
a taxpayer which employs not more than 250 employees in
all businesses of the taxpayer at the time of the submission
of the application under subsection (d)(2).
‘‘(B) AGGREGATION RULES.—All persons treated as a
single employer under subsection (a) or (b) of section 52,
or subsection (m) or (o) of section 414, shall be so treated
for purposes of this paragraph.
‘‘(3) FACILITY MAINTENANCE EXPENSES.—The term ‘facility
maintenance expenses’ means costs paid or incurred to maintain
a facility, including—
‘‘(A) mortgage or rent payments,
‘‘(B) insurance payments,
‘‘(C) utility and maintenance costs, and
‘‘(D) costs of employment of maintenance personnel.
‘‘(d) QUALIFYING THERAPEUTIC DISCOVERY PROJECT PROGRAM.—
‘‘(1) ESTABLISHMENT.—
‘‘(A) IN GENERAL.—Not later than 60 days after the
date of the enactment of this section, the Secretary, in consultation
with the Secretary of Health and Human Services,
shall establish a qualifying therapeutic discovery
project program to consider and award certifications for
qualified investments eligible for credits under this section
to qualifying therapeutic discovery project sponsors.
‘‘(B) LIMITATION.—The total amount of credits that
may be allocated under the program shall not exceed
$1,000,000,000 for the 2-year period beginning with 2009.
‘‘(2) CERTIFICATION.—
‘‘(A) APPLICATION PERIOD.—Each applicant for certification
under this paragraph shall submit an application
containing such information as the Secretary may require
during the period beginning on the date the Secretary establishes
the program under paragraph (1).
‘‘(B) TIME FOR REVIEW OF APPLICATIONS.—The Secretary
shall take action to approve or deny any application
under subparagraph (A) within 30 days of the submission
of such application.
‘‘(C) MULTI-YEAR APPLICATIONS.—An application for
certification under subparagraph (A) may include a request
for an allocation of credits for more than 1 of the
years described in paragraph (1)(B).
‘‘(3) SELECTION CRITERIA.—In determining the qualifying
therapeutic discovery projects with respect to which qualified
investments may be certified under this section, the Secretary—
‘‘(A) shall take into consideration only those projects
that show reasonable potential—
‘‘(i) to result in new therapies—
‘‘(I) to treat areas of unmet medical need, or
‘‘(II) to prevent, detect, or treat chronic or
acute diseases and conditions,
‘‘(ii) to reduce long-term health care costs in the
United States, or
‘‘(iii) to significantly advance the goal of curing
cancer within the 30-year period beginning on the date
the Secretary establishes the program under paragraph
(1), and
‘‘(B) shall take into consideration which projects have
the greatest potential—
‘‘(i) to create and sustain (directly or indirectly)
high quality, high-paying jobs in the United States,
and
‘‘(ii) to advance United States competitiveness in
the fields of life, biological, and medical sciences.
‘‘(4) DISCLOSURE OF ALLOCATIONS.—The Secretary shall,
upon making a certification under this subsection, publicly disclose
the identity of the applicant and the amount of the credit
with respect to such applicant.
‘‘(e) SPECIAL RULES.—
‘‘(1) BASIS ADJUSTMENT.—For purposes of this subtitle, if a
credit is allowed under this section for an expenditure related
to property of a character subject to an allowance for depreciation,
the basis of such property shall be reduced by the amount
of such credit.
‘‘(2) DENIAL OF DOUBLE BENEFIT.—
‘‘(A) BONUS DEPRECIATION.—A credit shall not be allowed
under this section for any investment for which
bonus depreciation is allowed under section 168(k),
1400L(b)(1), or 1400N(d)(1).
‘‘(B) DEDUCTIONS.—No deduction under this subtitle
shall be allowed for the portion of the expenses otherwise
allowable as a deduction taken into account in determining
the credit under this section for the taxable year which is
equal to the amount of the credit determined for such taxable
year under subsection (a) attributable to such portion.
This subparagraph shall not apply to expenses related to
property of a character subject to an allowance for depreciation
the basis of which is reduced under paragraph (1),
or which are described in section 280C(g).
‘‘(C) CREDIT FOR RESEARCH ACTIVITIES.—
‘‘(i) IN GENERAL.—Except as provided in clause (ii),
any expenses taken into account under this section for
a taxable year shall not be taken into account for purposes
of determining the credit allowable under section
41 or 45C for such taxable year.
‘‘(ii) EXPENSES INCLUDED IN DETERMINING BASE PERIOD
RESEARCH EXPENSES.—Any expenses for any taxable
year which are qualified research expenses (within
the meaning of section 41(b)) shall be taken into account
in determining base period research expenses
for purposes of applying section 41 to subsequent taxable
years.
‘‘(f) COORDINATION WITH DEPARTMENT OF TREASURY GRANTS.—
In the case of any investment with respect to which the Secretary
makes a grant under section 9023(e) of the Patient Protection and
Affordable Care Act of 2009—
‘‘(1) DENIAL OF CREDIT.—No credit shall be determined
under this section with respect to such investment for the taxable
year in which such grant is made or any subsequent taxable
year.
‘‘(2) RECAPTURE OF CREDITS FOR PROGRESS EXPENDITURES
MADE BEFORE GRANT.—If a credit was determined under this
section with respect to such investment for any taxable year
ending before such grant is made—
‘‘(A) the tax imposed under subtitle A on the taxpayer
for the taxable year in which such grant is made shall be
increased by so much of such credit as was allowed under
section 38,
‘‘(B) the general business carryforwards under section
39 shall be adjusted so as to recapture the portion of such
credit which was not so allowed, and
‘‘(C) the amount of such grant shall be determined
without regard to any reduction in the basis of any property
of a character subject to an allowance for depreciation
by reason of such credit.
‘‘(3) TREATMENT OF GRANTS.—Any such grant shall not be
includible in the gross income of the taxpayer.’’.
(b) INCLUSION AS PART OF INVESTMENT CREDIT.—Section 46 of
the Internal Revenue Code of 1986 is amended—
(1) by adding a comma at the end of paragraph (2),
(2) by striking the period at the end of paragraph (5) and
inserting ‘‘, and’’, and
(3) by adding at the end the following new paragraph:
‘‘(6) the qualifying therapeutic discovery project credit.’’.
(c) CONFORMING AMENDMENTS.—
(1) Section 49(a)(1)(C) of the Internal Revenue Code of
1986 is amended—
(A) by striking ‘‘and’’ at the end of clause (iv),
(B) by striking the period at the end of clause (v) and
inserting ‘‘, and’’, and
(C) by adding at the end the following new clause:
‘‘(vi) the basis of any property to which paragraph
(1) of section 48D(e) applies which is part of a qualifying
therapeutic discovery project under such section
48D.’’.
(2) Section 280C of such Code is amended by adding at the
end the following new subsection:
‘‘(g) QUALIFYING THERAPEUTIC DISCOVERY PROJECT CREDIT.—
‘‘(1) IN GENERAL.—No deduction shall be allowed for that
portion of the qualified investment (as defined in section
48D(b)) otherwise allowable as a deduction for the taxable year
which—
‘‘(A) would be qualified research expenses (as defined
in section 41(b)), basic research expenses (as defined in
section 41(e)(2)), or qualified clinical testing expenses (as
defined in section 45C(b)) if the credit under section 41 or
section 45C were allowed with respect to such expenses for
such taxable year, and
‘‘(B) is equal to the amount of the credit determined
for such taxable year under section 48D(a), reduced by—
‘‘(i) the amount disallowed as a deduction by reason
of section 48D(e)(2)(B), and
‘‘(ii) the amount of any basis reduction under section
48D(e)(1).
‘‘(2) SIMILAR RULE WHERE TAXPAYER CAPITALIZES RATHER
THAN DEDUCTS EXPENSES.—In the case of expenses described in
paragraph (1)(A) taken into account in determining the credit
under section 48D for the taxable year, if—
‘‘(A) the amount of the portion of the credit determined
under such section with respect to such expenses, exceeds
‘‘(B) the amount allowable as a deduction for such taxable
year for such expenses (determined without regard to
paragraph (1)),
the amount chargeable to capital account for the taxable year
for such expenses shall be reduced by the amount of such excess.
‘‘(3) CONTROLLED GROUPS.—Paragraph (3) of subsection (b)
shall apply for purposes of this subsection.’’.
(d) CLERICAL AMENDMENT.—The table of sections for subpart E
of part IV of subchapter A of chapter 1 of the Internal Revenue
Code of 1986 is amended by inserting after the item relating to section
48C the following new item:
‘‘Sec. 48D. Qualifying therapeutic discovery project credit.’’.
(e) GRANTS FOR QUALIFIED INVESTMENTS IN THERAPEUTIC DISCOVERY
PROJECTS IN LIEU OF TAX CREDITS.—
(1) IN GENERAL.—Upon application, the Secretary of the
Treasury shall, subject to the requirements of this subsection,
provide a grant to each person who makes a qualified investment
in a qualifying therapeutic discovery project in the
amount of 50 percent of such investment. No grant shall be
made under this subsection with respect to any investment unless
such investment is made during a taxable year beginning
in 2009 or 2010.
(2) APPLICATION.—
(A) IN GENERAL.—At the stated election of the applicant,
an application for certification under section
48D(d)(2) of the Internal Revenue Code of 1986 for a credit
under such section for the taxable year of the applicant
which begins in 2009 shall be considered to be an application
for a grant under paragraph (1) for such taxable year.
(B) TAXABLE YEARS BEGINNING IN 2010.—An application
for a grant under paragraph (1) for a taxable year beginning
in 2010 shall be submitted—
(i) not earlier than the day after the last day of
such taxable year, and
(ii) not later than the due date (including extensions)
for filing the return of tax for such taxable year.
(C) INFORMATION TO BE SUBMITTED.—An application
for a grant under paragraph (1) shall include such information
and be in such form as the Secretary may require
to state the amount of the credit allowable (but for the receipt
of a grant under this subsection) under section 48D
for the taxable year for the qualified investment with respect
to which such application is made.
(3) TIME FOR PAYMENT OF GRANT.—
(A) IN GENERAL.—The Secretary of the Treasury shall
make payment of the amount of any grant under paragraph
(1) during the 30-day period beginning on the later
of—
(i) the date of the application for such grant, or
(ii) the date the qualified investment for which the
grant is being made is made.
(B) REGULATIONS.—In the case of investments of an
ongoing nature, the Secretary shall issue regulations to determine
the date on which a qualified investment shall be
deemed to have been made for purposes of this paragraph.
(4) QUALIFIED INVESTMENT.—For purposes of this subsection,
the term ‘‘qualified investment’’ means a qualified investment
that is certified under section 48D(d) of the Internal
Revenue Code of 1986 for purposes of the credit under such
section 48D.
(5) APPLICATION OF CERTAIN RULES.—
(A) IN GENERAL.—In making grants under this subsection,
the Secretary of the Treasury shall apply rules
similar to the rules of section 50 of the Internal Revenue
Code of 1986. In applying such rules, any increase in tax
under chapter 1 of such Code by reason of an investment
ceasing to be a qualified investment shall be imposed on
the person to whom the grant was made.
(B) SPECIAL RULES.—
(i) RECAPTURE OF EXCESSIVE GRANT AMOUNTS.—If
the amount of a grant made under this subsection exceeds
the amount allowable as a grant under this subsection,
such excess shall be recaptured under subparagraph
(A) as if the investment to which such excess
portion of the grant relates had ceased to be a
qualified investment immediately after such grant was
made.
(ii) GRANT INFORMATION NOT TREATED AS RETURN
INFORMATION.—In no event shall the amount of a
grant made under paragraph (1), the identity of the
person to whom such grant was made, or a description
of the investment with respect to which such grant
was made be treated as return information for purposes
of section 6103 of the Internal Revenue Code of
1986.
(6) EXCEPTION FOR CERTAIN NON-TAXPAYERS.—The Secretary
of the Treasury shall not make any grant under this
subsection to—
(A) any Federal, State, or local government (or any political
subdivision, agency, or instrumentality thereof),
(B) any organization described in section 501(c) of the
Internal Revenue Code of 1986 and exempt from tax under
section 501(a) of such Code,
(C) any entity referred to in paragraph (4) of section
54(j) of such Code, or
(D) any partnership or other pass-thru entity any
partner (or other holder of an equity or profits interest) of
which is described in subparagraph (A), (B) or (C).
In the case of a partnership or other pass-thru entity described
in subparagraph (D), partners and other holders of any equity
or profits interest shall provide to such partnership or entity
such information as the Secretary of the Treasury may require
to carry out the purposes of this paragraph.
(7) SECRETARY.—Any reference in this subsection to the
Secretary of the Treasury shall be treated as including the Secretary’s
delegate.
(8) OTHER TERMS.—Any term used in this subsection which
is also used in section 48D of the Internal Revenue Code of
1986 shall have the same meaning for purposes of this subsection
as when used in such section.
(9) DENIAL OF DOUBLE BENEFIT.—No credit shall be allowed
under section 46(6) of the Internal Revenue Code of 1986
by reason of section 48D of such Code for any investment for
which a grant is awarded under this subsection.
(10) APPROPRIATIONS.—There is hereby appropriated to the
Secretary of the Treasury such sums as may be necessary to
carry out this subsection.
(11) TERMINATION.—The Secretary of the Treasury shall
not make any grant to any person under this subsection unless
the application of such person for such grant is received before
January 1, 2013.
(12) PROTECTING MIDDLE CLASS FAMILIES FROM TAX INCREASES.—
It is the sense of the Senate that the Senate should
reject any procedural maneuver that would raise taxes on middle
class families, such as a motion to commit the pending legislation
to the Committee on Finance, which is designed to kill
legislation that provides tax cuts for American workers and
families, including the affordability tax credit and the small
business tax credit.
(f) EFFECTIVE DATE.—The amendments made by subsections
(a) through (d) of this section shall apply to amounts paid or incurred
after December 31, 2008, in taxable years beginning after
such date.
Section 10908, p. 923, provided an exclusion for assistance
provided to participants in State student loan repayment programs
for certain health professionals
Note: Amendments made by title X to provisions in titles I-IX
have been incorporated into the provisions above and the text of the
amendments are not repeated below. For any section in title X for
which all of the provisions are so incorporated, the notation
‘‘[amendments fully incorporated above]’’