S 1425 IS

To amend the Internal Revenue Code of 1986 to provide a 10 percent biotechnology investment tax credit and to reauthorize the Research and Development tax credit for ten years.

July 22, 1999

Mr. SPECTER introduced the following bill; which was read twice and referred to the Committee on Finance

To amend the Internal Revenue Code of 1986 to provide a 10 percent biotechnology investment tax credit and to reauthorize the Research and Development tax credit for ten years.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

This Act may be cited as the `Biotechnology Tax Credit Act of 1999'.

SEC. 2. TEN YEAR EXTENSION OF THE RESEARCH AND DEVELOPMENT TAX CREDIT.

(a) IN GENERAL- Section 41 of the Internal Revenue Code of 1986 (relating to credit for increasing research activities) is amended by striking subsection (h) and in its place, insert the following new section:

`(h) IN GENERAL- This section shall not apply to any amount paid or incurred after June 30, 2009.'

(b) CONFORMING AMENDMENT- Paragraph (1) of section 45C(b) of such Code is amended by striking subparagraph (D).

SEC. 3. BIOTECHNOLOGY INVESTMENT TAX CREDIT.

(a) ALLOWANCE OF CREDIT- Section 46(a) of the Internal Revenue Code of 1986 (relating to amount of investment credit) is amended by striking `and' at the end of paragraph (2), by striking the period at the end of paragraph (3) and inserting `, and', and by adding at the end thereof the following new paragraph:

`(4) the biotechnology investment credit.'

(b) AMOUNT OF CREDIT- Section 48 of such Code is amended by adding at the end thereof the following new subsection:

`(c) Biotechnology Investment Credit-

`(1) IN GENERAL- For purposes of section 46, the biotechnology investment credit for any taxable year is an amount equal to 10 percent of the qualified investment for such taxable year.

`(2) Qualified investment-

`(A) IN GENERAL- For purposes of paragraph (1), the qualified investment for any taxable year is the aggregate of--

`(i) the applicable percentage of the basis of each new biotechnology property placed in service by the taxpayer during such taxable year; plus

`(ii) the applicable percentage of the cost of each used biotechnology property placed in service by the taxpayer during such taxable year.

`(B) APPLICABLE PERCENTAGE- For purposes of subparagraph (A), the

applicable percentage for any property shall be determined under paragraphs (2) and (7) of section 46(c) (as in effect on the day before the date of the enactment of the Revenue Reconciliation Act of 1990).

`(C) CERTAIN RULES MADE APPLICABLE- The provisions of subsections (b) and (c) of section 48 (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 paragraph.

`(3) DEFINITIONS- For purposes of this section:

`(A) `Biotechnology Property' means capital equipment, instruments and supplies used in a laboratory setting by a biotechnology company. These items would include but would not be limited to microscopes, various laboratory machines, glassware, chemical reagents, and technical books and manuals purchased by a manufacturer for research purposes. Also included are computers and software used primarily to develop data for research and development.

`(B) `Biotechnology Company' is an organization that deals with the application of technologies, such as recombinant DNA techniques, biochemistry, molecular and cellular biology, genetics and genetic engineering, biological cell fusion techniques, and new bioprocesses, using living organisms, or parts of organisms, to produce or modify products, to develop microorganisms for specific uses, to identify targets for small molecule pharmaceutical development, to transform biological systems into useful processes and products or to develop microorganisms for specific uses. Potential endpoints for these products, developments and uses shall be for societal benefit through improving human healthcare.

`(4) COORDINATION WITH OTHER CREDITS- This subsection shall not apply to any property to which the energy credit or rehabilitation credit would apply unless the taxpayer elects to waive the application of such credits to such property.

`(5) CERTAIN PROGRESS EXPENDITURE RULES MADE APPLICABLE- Rules similar to rules of subsection (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 subsection.'

(c) TECHNICAL AMENDMENTS-

(1) Subparagraph (C) of section 49(a)(1) of such Code is amended by striking `and' at the end of clause (ii), by striking the period at the end of clause (iii) and inserting `, and', and by adding at the end thereof the following new clause:

`(iv) the basis of any new biotechnology property and the cost of any used biotechnology property.'

(2) Subparagraph (E) of section 50(a)(2) of such Code is amended by striking `section 48(a)(5)(A)' and inserting `section 48(a)(5) or 48(c)(5)'.

(3) Paragraph (5) of section 50(a) of such Code is amended by adding at the end thereof the following new subparagraph:

`(D) SPECIAL RULES FOR CERTAIN PROPERTY- In the case of any biotechnology property which is 3-year property (within the meaning of section 168(e))--

`(i) the percentage set forth in clause (ii) of the table contained in paragraph (1)(B) shall be 66 percent;

`(ii) the percentage set forth in clause (iii) of such table shall be 33 percent; and

`(iii) clauses (iv) and (v) of such table shall not apply.'

(4)(A) The section heading for section 48 of such Code is amended to read as follows:

`SEC. 48. OTHER CREDITS.'

(B) The table of sections for subpart E of part IV of subchapter A of chapter 1 of such Code is amended by striking the item relating to section 48 and inserting the following:

`Sec. 48. Other Credits.'

SEC. 4. EFFECTIVE DATE.

The amendments made by this bill shall apply to amounts paid or incurred after June 30, 1999.

END