S.Amdt. 3062

1. Adds Subpart B--Certain Provisions Made Permanent SEC. 142. PERMANENT EXTENSION AND MODIFICATION OF RESEARCH CREDIT at the end of part II of subtitle A of title I

   Adds a section

   Inserted: Subpart B--Certain Provisions Made Permanent SEC. 142. PERMANENT EXTENSION AND MODIFICATION OF RESEARCH CREDIT.

   Inserted: (a) Simplified Credit for Qualified Research Expenses.--Subsection (a) of section 41 is amended to read as follows:

   Inserted: "(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 20 percent of so much of the qualified research expenses for the taxable year as exceeds 50 percent of the average qualified research expenses for the 3 taxable years preceding the taxable year for which the credit is being determined.".

   Inserted: (b) Special Rules and Termination of Base Amount Calculation.--

   Inserted: (1) In general.--Subsection (c) of section 41 is amended to read as follows:

   Inserted: "(c) Special Rule in Case of No Qualified Research Expenses in Any of 3 Preceding Taxable Years.--

   Inserted: "(1) Taxpayers to which subsection applies.--The credit under this section shall be determined under this subsection, and not under subsection (a), if, in any one of the 3 taxable years preceding the taxable year for which the credit is being determined, the taxpayer has no qualified research expenses.

   Inserted: "(2) Credit rate.--The credit determined under this subsection shall be equal to 10 percent of the qualified research expenses for the taxable year.".

   Inserted: (2) Consistent treatment of expenses.--Subsection (b) of section 41 is amended by adding at the end the following new paragraph:

   Inserted: "(5) Consistent treatment of expenses required.--

   Inserted: "(A) In general.--Notwithstanding whether the period for filing a claim for credit or refund has expired for any taxable year in the 3-taxable-year period taken into account under subsection (a), the qualified research expenses taken into account for such year shall be determined on a basis consistent with the determination of qualified research expenses for the credit year.

   Inserted: "(B) Prevention of distortions.--The Secretary may prescribe regulations to prevent distortions in calculating a taxpayer's qualified research expenses caused by a change in accounting methods used by such taxpayer between the credit year and a year in such 3-taxable-year period.".

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   Inserted: (c) Inclusion of Qualified Research Expenses of an Acquired Person.--

   Inserted: (1) Partial inclusion of pre-acquisition qualified research expenses.--Subparagraph (A) of section 41(f)(3) is amended to read as follows:

   Inserted: "(A) Acquisitions.--

   Inserted: "(i) In general.--If a person 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 the amount of qualified research expenses paid or incurred by the acquiring person during the 3 taxable years preceding the taxable year in which the credit under this section is determined shall be increased by--

   Inserted: "(I) for purposes of applying this section for the taxable year in which such acquisition is made, the amount determined under clause (ii), and

   Inserted: "(II) for purposes of applying this section for any taxable year after the taxable year in which such acquisition is made, so much of the qualified research expenses paid or incurred by the predecessor with respect to the acquired trade or business during the portion of the measurement period that is part of the 3-taxable-year period preceding the taxable year for which the credit is determined as is attributable to the portion of such trade or business or separate unit acquired by such person.

   Inserted: "(ii) Amount determined.--The amount determined under this clause is the amount equal to the product of--

   Inserted: "(I) so much of the qualified research expenses paid or incurred by the predecessor with respect to the acquired trade or business during the 3 taxable years before the taxable year in which the acquisition is made as is attributable to the portion of such trade or business or separate unit acquired by the acquiring person, and

   Inserted: "(II) the number of months 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 12.

   Inserted: "(iii) 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--

   Inserted: "(I) each reference to a taxable year in clauses (i) and (ii) shall refer to the appropriate taxable year of the acquiring person,

   Inserted: "(II) the qualified research expenses paid or incurred by 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 months of such taxable year, and

   Inserted: "(III) the amount of such qualified research expenses taken into account under clauses (i) and (ii) 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 months occurring during such taxable year.

   Inserted: "(iv) Measurement period.--For purposes of this subparagraph, the term 'measurement period' means the taxable year of the acquiring person in which the acquisition is made and the 3 taxable years of the acquiring person preceding such taxable year.".

   Inserted: (2) Expenses of a predecessor.--Subparagraph (B) of section 41(f)(3) is amended to read as follows:

   Inserted: "(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 the predecessor during the 3 taxable years preceding such taxable year shall be reduced--

   Inserted: "(i) in the case of the taxable year in which such disposition is made, by an amount equal to the product of--

   Inserted: "(I) the amount of qualified research expenses paid or incurred during such 3 taxable years with respect to the acquired business, and

   Inserted: "(II) the number of days in the period beginning on the date of acquisition (as determined for purposes of subparagraph (A)(ii)(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

   Inserted: "(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).".

   Inserted: (d) Aggregation of Expenditures.--Paragraph (1) of section 41(f), as amended by the American Taxpayer Relief Act of 2012, is amended--

   Inserted: (1) by striking "of the qualified research expenses, basic research payments, and amounts paid or incurred to energy research consortiums," in subparagraph (A)(ii) and inserting "qualified research expenses", and

   Inserted: (2) by striking "of the qualified research expenses, basic research payments, and amounts paid or incurred to energy research consortiums," in subparagraph (B)(ii) and inserting "qualified research expenses".

   Inserted: (e) Permanent Extension.--

   Inserted: (1) Section 41 is amended by striking subsection (h), as amended by this Act.

   Inserted: (2) Paragraph (1) of section 45C(b) is amended by striking subparagraph (D), as amended by this Act.

   Inserted: (f) Conforming Amendments.--

   Inserted: (1) Termination of basic research payment calculation.--Section 41 is amended--

   Inserted: (A) by striking subsection (e),

   Inserted: (B) by redesignating subsection (g) as subsection (e), and

   Inserted: (C) by relocating subsection (e), as so redesignated, immediately after subsection (d).

   Inserted: (2) Special rules.--

   Inserted: (A) Paragraph (4) of section 41(f) is amended by striking "and gross receipts".

   Inserted: (B) Subsection (f) of section 41 is amended by striking paragraph (6).

   Inserted: (3) Termination of certain 2014 and 2015 provisions.--

   Inserted: (A) Section 41 is amended by striking subsection (i), as added by this Act.

   Inserted: (B) Section 3111 is amended by striking subsection (f), as added by this Act.

   Inserted: (C) Subparagraph (B) of section 38(c)(4), as amended by this Act, is amended by striking clause (ii), as added by this Act, and by redesignating clauses (iii), (iv), (v), (vi), (vii), (viii), (ix), and (x) as clauses (ii), (iii), (iv), (v), (vi), (vii), (viii), and (ix), respectively.

   Inserted: (4) Cross-references.--

   Inserted: (A) Paragraph (2) of section 45C(c) is amended by striking "base period research expenses" and inserting "average qualified research expenses".

   Inserted: (B) Subparagraph (A) of section 54(l)(3) is amended by striking "section 41(g)" and inserting "section 41(e)".

   Inserted: (C) Clause (i) of section 170(e)(4)(B) is amended to read as follows:

   Inserted: "(i) the contribution is to a qualified organization,".

   Inserted: (D) Paragraph (4) of section 170(e) is amended by adding at the end the following new subparagraph:

   Inserted: "(E) Qualified organization.--For purposes of this paragraph, the term 'qualified organization' means--

   Inserted: "(i) any educational organization which--

   Inserted: "(I) is an institution of higher education (within the meaning of section 3304(f)), and

   Inserted: "(II) is described in subsection (b)(1)(A)(ii), or

   Inserted: "(ii) any organization not described in clause (i) which--

   Inserted: "(I) is described in section 501(c)(3) and is exempt from tax under section 501(a),

   Inserted: "(II) is organized and operated primarily to conduct scientific research, and

   Inserted: "(III) is not a private foundation.".

   Inserted: (E) Section 280C is amended--

   Inserted: (i) by striking "or basic research expenses (as defined in section 41(e)(2))" in subsection (c)(1),

   Inserted: (ii) by striking "section 41(a)(1)" in subsection (c)(2)(A) and inserting "section 41(a)", and

   Inserted: (iii) by striking "or basic research expenses" in subsection (c)(2)(B).

   Inserted: (F) Clause (i) of section 1400N(l)(7)(B) is amended by striking "section 41(g)" and inserting "section 41(e)".

   Inserted: (g) Technical Corrections.--Section 409 is amended--

   Inserted: (1) by inserting ", as in effect before the enactment of the Tax Reform Act of 1984)" after "section 41(c)(1)(B)" in subsection (b)(1)(A),

   Inserted: (2) by inserting ", as in effect before the enactment of the Tax Reform Act of 1984" after "relating to the employee stock ownership credit" in subsection (b)(4),

   Inserted: (3) by inserting "(as in effect before the enactment of the Tax Reform Act of 1984)" after "section 41(c)(1)(B)" in subsection (i)(1)(A),

   Inserted: (4) by inserting "(as in effect before the enactment of the Tax Reform Act of 1984)" after "section 41(c)(1)(B)" in subsection (m), and

   Inserted: (5) by inserting "(as so in effect)" after "section 48(n)(1)" in subsection (m).

   Inserted: (h) Effective Dates.--

   Inserted: (1) In general.--Except as provided in paragraphs (2), (3), and (4), the amendments made by this section shall apply to credits determined for taxable years beginning after December 31, 2015.

   Inserted: (2) Permanent extension.--The amendments made by subsection (e) shall apply to amounts paid or incurred after December 31, 2015.

   Inserted: (3) Termination of allowance of credit against alternative minimum tax.--The amendments made by subsection (f)(3)(C) shall apply to credits determined for taxable years beginning after December 31, 2015, and to carrybacks of such credits.

   Inserted: (4) Technical corrections.--The amendments made by subsection (k) shall take effect on the date of the enactment of this Act.

   Inserted: SEC. 143. PERMANENT EXTENSION OF RAILROAD TRACK MAINTENANCE CREDIT.

   Inserted: (a) In General.--Section 45G, as amended by this Act, is amended by striking subsection (f).

   Inserted: (b) Effective Date.--The amendment made by this section shall apply to taxable years beginning after December 31, 2015.

   Inserted: SEC. 144. PERMANENT EXTENSION OF 15-YEAR STRAIGHT-LINE COST RECOVERY FOR QUALIFIED LEASEHOLD IMPROVEMENTS, QUALIFIED RESTAURANT BUILDINGS AND IMPROVEMENTS, AND QUALIFIED RETAIL IMPROVEMENTS.

   Inserted: (a) In General.--Clauses (iv) and (v) of section 168(e)(3)(E), as amended by this Act, are each amended by striking "placed in service before January 1, 2016".

   Inserted: (b) Qualified Retail Improvement Property.--Clause (ix) of section 168(e)(3)(E), as amended by this Act, is amended by striking "placed in service after December 31, 2008, and before January 1, 2016".

   Inserted: (c) Effective Date.--The amendments made by this section shall apply to property placed in service after December 31, 2015.

   Inserted: SEC. 145. PERMANENT EXTENSION AND MODIFICATION OF INCREASED EXPENSING LIMITATIONS AND TREATMENT OF CERTAIN REAL PROPERTY AS SECTION 179 PROPERTY.

   Inserted: (a) In General.--

   Inserted: (1) Dollar limitation.--Paragraph (1) of section 179(b), as amended by this Act, is amended by striking "shall not exceed--" and all that follows and inserting "shall not exceed $500,000.".

   Inserted: (2) Reduction in limitation.--Paragraph (2) of section 179(b), as amended by this Act, is amended by striking "exceeds--" and all that follows and inserting "exceeds $2,000,000.".

   Inserted: (b) Computer Software.--Clause (ii) of section 179(d)(1)(A), as amended by this Act, is amended by striking ", to which section 167 applies, and which is placed in service in a taxable year beginning after 2002 and before 2016" and inserting "and to which section 167 applies".

   Inserted: (c) Election.--Paragraph (2) of section 179(c), as amended by this Act, is amended--

   Inserted: (1) by striking "may not be revoked" and all that follows through "and before 2016", and

   Inserted: (2) by striking "irrevocable" in the heading thereof.

   Inserted: (d) Air Conditioning and Heating Units.--The last sentence of section 179(d)(1) is amended by striking "and shall not include air conditioning or heating units".

   Inserted: (e) Qualified Real Property.--Subsection (f) of section 179, as amended by this Act, is amended--

   Inserted: (1) by striking "beginning after 2009 and before 2016" in paragraph (1), and

   Inserted: (2) by striking paragraphs (3) and (4).

   Inserted: (f) Inflation Adjustment.--Paragraph (6) of section 179(b), as added by this Act, is amended--

   Inserted: (1) by striking "the $500,000 amount in paragraph (1)(B) and the $2,000,000 amount in paragraph (2)(B)" in subparagraph (A) and inserting "the dollar amounts in paragraphs (1) and (2)", and

   Inserted: (2) in subparagraph (B)--

   Inserted: (A) by striking "paragraph (1)(B)" in clause (i) and inserting "paragraph (1)", and

   Inserted: (B) by striking "paragraph (2)(B)" in clause (ii) and inserting "paragraph (2)".

   Inserted: (g) Effective Date.--The amendments made by this section shall apply to taxable years beginning after December 31, 2015.

   Inserted: SEC. 146. PERMANENT SUBPART F EXEMPTION FOR ACTIVE FINANCING INCOME.

   Inserted: (a) Banking, Financing, or Similar Businesses.--Subsection (h) of section 954, as amended by this Act, is amended by striking paragraph (9).

   Inserted: (b) Insurance Businesses.--Subsection (e) of section 953, as amended by this Act, is amended by striking paragraph (10) and by redesignating paragraph (11) as paragraph (10).

   Inserted: (c) Effective Date.--The amendments made by this section shall apply to taxable years of a foreign corporation beginning after December 31, 2015, and to taxable years of United States shareholders with or within which such taxable years of such foreign corporation end.

   Inserted: SEC. 147. PERMANENT EXTENSION OF LOOK-THRU TREATMENT OF PAYMENTS BETWEEN RELATED CONTROLLED FOREIGN CORPORATIONS UNDER FOREIGN PERSONAL HOLDING COMPANY RULES.

   Inserted: (a) In General.--Section 954(c)(6), as amended by this Act, is amended by striking subparagraph (C).

   Inserted: (b) Effective Date.--The amendment made by this section shall apply to taxable years of foreign corporations beginning after December 31, 2015, and to taxable years of United States shareholders with or within which such taxable years of foreign corporations end.

   Inserted: SEC. 148. PERMANENT FULL EXCLUSION APPLICABLE TO QUALIFIED SMALL BUSINESS STOCK.

   Inserted: (a) In General.--Paragraph (4) of section 1202(a), as amended by this Act, is amended--

   Inserted: (1) by striking "and before January 1, 2016", and

   Inserted: (2) by striking "certain periods in 2010, 2011, 2012, 2013, 2014,and 2015" in the heading and inserting "certain periods after 2009".

   Inserted: (b) Conforming Amendments.--

   Inserted: (1) The heading for section 1202 is amended by striking "partial".

   Inserted: (2) The item relating to section 1202 in the table of sections for part I of subchapter P of chapter 1 is amended by striking "Partial exclusion" and inserting "Exclusion".

   Inserted: (3) Section 1223(13) is amended by striking "1202(a)(2),".

   Inserted: (c) Effective Date.--The amendments made by this section apply to stock acquired after December 31, 2015.

   Inserted: SEC. 149. REDUCED RECOGNITION PERIOD FOR BUILT-IN GAINS MADE PERMANENT.

   Inserted: (a) In General.--Paragraph (7) of section 1374(d), as amended by this Act, is amended--

   Inserted: (1) by striking subparagraphs (A), (B), (C), and (D),

   Inserted: (2) by redesignating subparagraph (E) as subparagraph (B), and

   Inserted: (3) by inserting before subparagraph (B) (as so redesignated) the following new subparagraph:

   Inserted: "(A) In general.--The term 'recognition period' means the 5-year period beginning with the 1st day of the 1st taxable year for which the corporation was an S corporation. For purposes of applying this section to any amount includible in income by reason of distributions to shareholders pursuant to section 593(e), the preceding sentence shall be applied without regard to the phrase '5-year'.".

   Inserted: (b) Effective Date.--The amendment made by this section shall apply to taxable years beginning after December 31, 2015.

   Inserted: SEC. 150. EXTENSION OF TEMPORARY INCREASE IN LIMIT ON COVER OVER OF RUM EXCISE TAXES TO PUERTO RICO AND THE VIRGIN ISLANDS.

   Inserted: (a) In General.--Paragraph (1) of section 7652(f), as amended by this Act, is amended to read as follows:

   Inserted: "(1) $13.25, or".

   Inserted: (b) Effective Date.--The amendment made by this section shall apply to distilled spirits brought into the United States after December 31, 2015.

   Original wording

   At the end of part II of subtitle A of title I, insert the following:

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As printed