Commitment to American GROWTH Act

I 116TH CONGRESS 2D SESSION H. R. 11 To amend the Internal Revenue Code of 1986 to encourage investment to renew, restore, and rebuild the American economy for our workers, fami- lies, and small businesses, maximize innovation through research and development, and secure America’s medical supplies. IN THE HOUSE OF REPRESENTATIVES OCTOBER 9, 2020 Mr. BRADY introduced the following bill; which was referred to the Committee on Ways and Means A BILL To amend the Internal Revenue Code of 1986 to encourage investment to renew, restore, and rebuild the American economy for our workers, families, and small businesses, maximize innovation through research and development, and secure America’s medical supplies. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE; TABLE OF CONTENTS. 3 (a) SHORT TITLE.—This Act may be cited as the 4 ‘‘Commitment to American Growth, Renewal, and Oppor- 5 tunities for Workers, Technology, and Health Act’’ or as 6 the ‘‘Commitment to American GROWTH Act’’. 7 VerDate Sep 11 2014 23:08 Oct 10, 2020 Jkt 019200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H11.IH H11 pbinns on DSKJLVW7X2PROD with BILLS 2 •HR 11 IH (b) TABLE OF CONTENTS.—The table of contents of 1 this Act is as follows: 2 Sec. 1. Short title; table of contents. TITLE I—GROWTH IN BUSINESS INVESTMENT TO BOOST AMERICAN WAGES AND JOBS Sec. 101. Permanent full expensing for qualified property. Sec. 102. Limitation on business interest permanently applied without regard to deductions for depreciation, amortization, and depletion. TITLE II—GROWTH IN RESEARCH IN AMERICA Sec. 201. Repeal amortization of research and experimental expenditures. Sec. 202. Doubling the research and experimental tax credit and better access to credits for startups. Sec. 203. Special rules for transfers of intangible property from controlled for- eign corporations to United States shareholders. TITLE III—GROWTH IN AMERICA’S MEDICAL INDEPENDENCE Sec. 301. Domestic medical and drug manufacturing credit. Sec. 302. Qualifying advanced medical manufacturing equipment credit. Sec. 303. New medical research expenditure component of credit for increasing research activities. Sec. 304. Refundable portion of research credit for small businesses engaging in specified medical research. Sec. 305. Exception from passive loss rules for investments in specified medical research small business pass-thru entities. TITLE IV—GROWTH IN INNOVATION AND TECHNOLOGY BREAKTHROUGHS Sec. 401. Simplification and expansion of deduction for start-up and organiza- tional expenditures. Sec. 402. Preservation of start-up net operating losses and tax credits after ownership change. TITLE I—GROWTH IN BUSINESS 3 INVESTMENT TO BOOST 4 AMERICAN WAGES AND JOBS 5 SEC. 101. PERMANENT FULL EXPENSING FOR QUALIFIED 6 PROPERTY. 7 (a) IN GENERAL.—Paragraph (6) of section 168(k) 8 of the Internal Revenue Code of 1986 is amended to read 9 as follows: 10 VerDate Sep 11 2014 23:08 Oct 10, 2020 Jkt 019200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H11.IH H11 pbinns on DSKJLVW7X2PROD with BILLS 3 •HR 11 IH ‘‘(6) APPLICABLE PERCENTAGE.—For purposes 1 of this subsection, the term ‘applicable percentage’ 2 means, in the case of property placed in service (or, 3 in the case of a specified plant described in para- 4 graph (5), a plant which is planted or grafted) after 5 September 27, 2017, 100 percent.’’. 6 (b) CONFORMING AMENDMENTS.— 7 (1) Section 168(k) of the Internal Revenue 8 Code of 1986 is amended— 9 (A) in paragraph (2)— 10 (i) in subparagraph (A)— 11 (I) in clause (i)(V), by inserting 12 ‘‘and’’ at the end; 13 (II) in clause (ii), by striking 14 ‘‘clause (ii) of subparagraph (E), 15 and’’ and inserting ‘‘clause (i) of sub- 16 paragraph (E).’’; and 17 (III) by striking clause (iii); 18 (ii) in subparagraph (B)— 19 (I) in clause (i)— 20 (aa) by striking subclauses 21 (II) and (III); and 22 (bb) by redesignating sub- 23 clauses (IV) through (VI) as sub- 24 VerDate Sep 11 2014 23:08 Oct 10, 2020 Jkt 019200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H11.IH H11 pbinns on DSKJLVW7X2PROD with BILLS 4 •HR 11 IH clauses (II) through (IV), respec- 1 tively; 2 (II) by striking clause (ii); and 3 (III) by redesignating clauses 4 (iii) and (iv) as clauses (ii) and (iii), 5 respectively; 6 (iii) in subparagraph (C)— 7 (I) in clause (i), by striking ‘‘and 8 subclauses (II) and (III) of subpara- 9 graph (B)(i)’’; and 10 (II) in clause (ii), by striking 11 ‘‘subparagraph (B)(iii)’’ and inserting 12 ‘‘subparagraph (B)(ii)’’; and 13 (iv) in subparagraph (E)— 14 (I) by striking clause (i); and 15 (II) by redesignating clauses (ii) 16 and (iii) as clauses (i) and (ii), respec- 17 tively; and 18 (B) in paragraph (5)(A), by striking 19 ‘‘planted before January 1, 2027, or is grafted 20 before such date to a plant that has already 21 been planted,’’ and inserting ‘‘planted or graft- 22 ed’’. 23 (2) Section 460(c)(6)(B) of such Code is 24 amended by striking ‘‘which’’ and all that follows 25 VerDate Sep 11 2014 23:08 Oct 10, 2020 Jkt 019200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H11.IH H11 pbinns on DSKJLVW7X2PROD with BILLS 5 •HR 11 IH through the period and inserting ‘‘which has a recov- 1 ery period of 7 years or less.’’. 2 (c) EFFECTIVE DATE.—The amendments made by 3 this section shall take effect as if included in section 4 13201 of Public Law 115–97. 5 SEC. 102. LIMITATION ON BUSINESS INTEREST PERMA- 6 NENTLY APPLIED WITHOUT REGARD TO DE- 7 DUCTIONS FOR DEPRECIATION, AMORTIZA- 8 TION, AND DEPLETION. 9 (a) IN GENERAL.—Section 163(j)(8)(A)(v) of the In- 10 ternal Revenue Code of 1986 is amended by striking ‘‘in 11 the case of taxable years beginning before January 1, 12 2022’’. 13 (b) EFFECTIVE DATE.—The amendment made by 14 this section shall apply to taxable years beginning after 15 December 31, 2021. 16 TITLE II—GROWTH IN 17 RESEARCH IN AMERICA 18 SEC. 201. REPEAL AMORTIZATION OF RESEARCH AND EX- 19 PERIMENTAL EXPENDITURES. 20 (a) IN GENERAL.—Section 174 is amended to read 21 as follows: 22 ‘‘SEC. 174. RESEARCH AND EXPERIMENTAL EXPENDITURES. 23 ‘‘(a) TREATMENT AS EXPENSES.— 24 VerDate Sep 11 2014 23:08 Oct 10, 2020 Jkt 019200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H11.IH H11 pbinns on DSKJLVW7X2PROD with BILLS 6 •HR 11 IH ‘‘(1) IN GENERAL.—A taxpayer may treat re- 1 search or experimental expenditures which are paid 2 or incurred by him during the taxable year in con- 3 nection with his trade or business as expenses which 4 are not chargeable to capital account. The expendi- 5 tures so treated shall be allowed as a deduction. 6 ‘‘(2) WHEN METHOD MAY BE ADOPTED.— 7 ‘‘(A) WITHOUT CONSENT.—A taxpayer 8 may, without the consent of the Secretary, 9 adopt the method provided in this subsection 10 for his first taxable year for which expenditures 11 described in paragraph (1) are paid or incurred. 12 ‘‘(B) WITH CONSENT.—A taxpayer may, 13 with the consent of the Secretary, adopt at any 14 time the method provided in this subsection. 15 ‘‘(3) SCOPE.—The method adopted under this 16 subsection shall apply to all expenditures described 17 in paragraph (1). The method adopted shall be ad- 18 hered to in computing taxable income for the taxable 19 year and for all subsequent taxable years unless, 20 with the approval of the Secretary, a change to a 21 different method is authorized with respect to part 22 or all of such expenditures. 23 ‘‘(b) AMORTIZATION OF CERTAIN RESEARCH AND 24 EXPERIMENTAL EXPENDITURES.— 25 VerDate Sep 11 2014 23:08 Oct 10, 2020 Jkt 019200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H11.IH H11 pbinns on DSKJLVW7X2PROD with BILLS 7 •HR 11 IH ‘‘(1) IN GENERAL.—At the election of the tax- 1 payer, made in accordance with regulations pre- 2 scribed by the Secretary, research or experimental 3 expenditures which are— 4 ‘‘(A) paid or incurred by the taxpayer in 5 connection with his trade or business, 6 ‘‘(B) not treated as expenses under sub- 7 section (a), and 8 ‘‘(C) chargeable to capital account but not 9 chargeable to property of a character which is 10 subject to the allowance under section 167 (re- 11 lating to allowance for depreciation, etc.) or sec- 12 tion 611 (relating to allowance for depletion), 13 may be treated as deferred expenses. In computing 14 taxable income, such deferred expenses shall be al- 15 lowed as a deduction ratably over such period of not 16 less than 60 months as may be selected by the tax- 17 payer (beginning with the month in which the tax- 18 payer first realizes benefits from such expenditures). 19 Such deferred expenses are expenditures properly 20 chargeable to capital account for purposes of section 21 1016(a)(1) (relating to adjustments to basis of prop- 22 erty). 23 ‘‘(2) TIME FOR AND SCOPE OF ELECTION.—The 24 election provided by paragraph (1) may be made for 25 VerDate Sep 11 2014 23:08 Oct 10, 2020 Jkt 019200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H11.IH H11 pbinns on DSKJLVW7X2PROD with BILLS 8 •HR 11 IH any taxable year, but only if made not later than the 1 time prescribed by law for filing the return for such 2 taxable year (including extensions thereof). The 3 method so elected, and the period selected by the 4 taxpayer, shall be adhered to in computing taxable 5 income for the taxable year for which the election is 6 made and for all subsequent taxable years unless, 7 with the approval of the Secretary, a change to a 8 different method (or to a different period) is author- 9 ized with respect to part or all of such expenditures. 10 The election shall not apply to any expenditure paid 11 or incurred during any taxable year before the tax- 12 able year for which the taxpayer makes the election. 13 ‘‘(c) LAND AND OTHER PROPERTY.—This section 14 shall not apply to any expenditure for the acquisition or 15 improvement of land, or for the acquisition or improve- 16 ment of property to be used in connection with the re- 17 search or experimentation and of a character which is sub- 18 ject to the allowance under section 167 (relating to allow- 19 ance for depreciation, etc.) or section 611 (relating to al- 20 lowance for depletion); but for purposes of this section al- 21 lowances under section 167, and allowances under section 22 611, shall be considered as expenditures. 23 ‘‘(d) EXPLORATION EXPENDITURES.—This section 24 shall not apply to any expenditure paid or incurred for 25 VerDate Sep 11 2014 23:08 Oct 10, 2020 Jkt 019200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\H11.IH H11 pbinns on DSKJLVW7X2PROD with BILLS 9 •HR 11 IH the purpose of ascertaining the existence, location, extent, 1 or quality of any deposit of ore or other mineral (including 2 oil and gas). 3 ‘‘(e) ONLY REASONABLE RESEARCH EXPENDITURES 4 ELIGIBLE.—This section shall apply to a research or ex- 5 perimental expenditure only to the extent that the amount 6 thereof is reasonable under the circumstances.’’. 7 (b) CLERICAL AMENDMENT.—The table of sections 8 for part VI of subchapter B of chapter 1 is amended by 9 striking the item relating to section 174 and inserting the 10 following new item: 11 ‘‘Sec. 174. Research and experimental expenditures’’. (c) CONFORMING AMENDMENTS.— 12 (1) Section 41(d)(1)(A) is amended by striking 13 ‘‘specified research or experimental expenditures 14 under section 174’’ and inserting ‘‘expenses under 15 section 174’’. 16 (2) Section 280C(c) is amended to read as fol- 17 lows: 18 ‘‘(c) CREDIT FOR INCREASING RESEARCH ACTIVI- 19 TIES.— 20 ‘‘(1) IN GENERAL.—No deduction shall be al- 21 lowed for that portion of the qualified research ex- 22 penses (as defined in section 41(b)) or basic re- 23 search expenses (as defined in section 41(e)(2)) oth- 24 erwise allowable as a deduction for the taxable year 25 VerDate Sep 11 2014 23:08 Oct 10, 2020 Jkt 019200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\H11.IH H11 pbinns on DSKJLVW7X2PROD with BILLS 10 •HR 11 IH which is equal to the amount of the credit deter- 1 mined for such taxable year under section 41(a). 2 ‘‘(2) SIMILAR RULE WHERE TAXPAYER CAP- 3 ITALIZES RATHER THAN DEDUCTS EXPENSES.—If— 4 ‘‘(A) the amount of the credit determined 5 for the taxable year under section 41(a)(1), ex- 6 ceeds 7 ‘‘(B) the amount allowable as a deduction 8 for such taxable year for qualified research ex- 9 penses or basic research expenses (determined 10 without regard to paragraph (1)), 11 the amount chargeable to capital account for the 12 taxable year for such expenses shall be reduced by 13 the amount of such excess. 14 ‘‘(3) ELECTION OF REDUCED CREDIT.— 15 ‘‘(A) IN GENERAL.—In the case of any 16 taxable year for which an election is made 17 under this paragraph— 18 ‘‘(i) paragraphs (1) and (2) shall not 19 apply, and 20 ‘‘(ii) the amount of the credit under 21 section 41(a) shall be the amount deter- 22 mined under subparagraph (B). 23 ‘‘(B) AMOUNT OF REDUCED CREDIT.—The 24 amount of credit determined under this sub- 25 VerDate Sep 11 2014 23:08 Oct 10, 2020 Jkt 019200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\H11.IH H11 pbinns on DSKJLVW7X2PROD with BILLS 11 •HR 11 IH paragraph for any taxable year shall be the 1 amount equal to the excess of— 2 ‘‘(i) the amount of credit determined 3 under section 41(a) without regard to this 4 paragraph, over 5 ‘‘(ii) the product of— 6 ‘‘(I) the amount described in 7 clause (i), and 8 ‘‘(II) the rate of tax under sec- 9 tion 11(b). 10 ‘‘(C) ELECTION.—An election under this 11 paragraph for any taxable year shall be made 12 not later than the time for filing the return of 13 tax for such year (including extensions), shall 14 be made on such return, and shall be made in 15 such manner as the Secretary may prescribe. 16 Such an election, once made, shall be irrev- 17 ocable. 18 ‘‘(4) CONTROLLED GROUPS.—Paragraph (3) of 19 subsection (b) shall apply for purposes of this sub- 20 section.’’. 21 (d) EFFECTIVE DATE.—The amendments made by 22 this section shall apply to amounts paid or incurred in tax- 23 able years beginning after December 31, 2021. 24 VerDate Sep 11 2014 23:08 Oct 10, 2020 Jkt 019200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\H11.IH H11 pbinns on DSKJLVW7X2PROD with BILLS 12 •HR 11 IH SEC. 202. DOUBLING THE RESEARCH AND EXPERIMENTAL 1 TAX CREDIT AND BETTER ACCESS TO CRED- 2 ITS FOR STARTUPS. 3 (a) CREDIT RATE INCREASE.— 4 (1) IN GENERAL.—Section 41(a) of the Internal 5 Revenue Code of 1986 is amended by striking ‘‘20 6 percent’’ and inserting ‘‘40 percent’’. 7 (2) ALTERNATIVE SIMPLIFIED CREDIT.—Sec- 8 tion 41(c)(4)(A) of such Code is amended by strik- 9 ing ‘‘14 percent’’ and inserting ‘‘28 percent’’. 10 (3) CREDIT RATE IN CASE OF NO RESEARCH 11 EXPENSES IN 3 PRECEDING YEARS.—Section 12 41(c)(4)(B)(ii) of such C [Text truncated for display. Full text available on Congress.gov.]