,,ii #aaeth ,,congress #ast ,session ,s4 #baig ,,in ,,the ,,senate ,,of ,,the ,,united ,,states ,december #f1 #bjag,ms4 ,baldwin introduced the following bill2 which was read twice and referred to the ,committee on ,finance ,a ,,bill ,to amend the ,internal ,revenue ,code of #aihf to reform the credit for increasing research activities1 and for other purposes4 #a4 ,increase of alternative simplified credit 7a7 ,in general ,subparagraph 7,a7 of section #da7;c77#e7 of the ,internal ,revenue ,code of #aihf is amended by striking #ad percent 7#ab percent in the case of taxable years ending before ,january #a1 #bjji7 and inserting #bj percent4 7b7 ,conforming amendment ,clause 7ii7 of section #da7;c77#e77;,b7 of the ,internal ,revenue ,code of #aihf is amended by striking #f percent and inserting #aj percent4 7c7 ,effective date ,the amendments made by this section shall apply to taxable years beginning after ,december #ca1 #bjag4 #b4 ,allocation of research expenses among business components 7a7 ,in general ,subparagraph 7,a7 of section #da7;d77#b7 of the ,internal ,revenue ,code of #aihf is amended by inserting 1 and may be applied using a method that relies on reasonable estimation techniques in lieu of contemporaneous accounting to measure employee hours per business component before the period4 7b7 ,effective date ,the amendment made by this section shall apply to taxable years beginning after ,december #ca1 #bjag4 #c4 ,inclusion of qualified upper-level employees in research expense calculation 7a7 ,in general ,clause 7ii7 of section #da7;b77#b77;,b7 of the ,internal ,revenue ,code of #aihf is amended by inserting 1 without regard to the employee's position or management level before the period4 7b7 ,effective date ,the amendment made by this section shall apply to taxable years beginning after ,december #ca1 #bjag4 #d4 ,repeal of exclusion of adaptive research 7a7 ,in general ,paragraph 7#d7 of section #da7;d7 of the ,internal ,revenue ,code of #aihf is amended by striking subparagraph 7,b7 and by redesignating subparagraphs 7,c71 7,d71 7,e71 7,f71 7,g71 and 7,h7 as subparagraphs 7,b71 7,c71 7,d71 7,e71 7,f71 and 7,g71 respectively4 7b7 ,effective date ,the amendments made by this section shall apply to taxable years beginning after ,december #ca1 #bjag4 #e4 ,inclusion of cost reduction research 7a7 ,in general ,subparagraph 7,a7 of section #da7;d77#c7 of the ,internal ,revenue ,code of #aihf is amended-- 7#a7 by striking or at the end of clause 7ii72 7#b7 by striking the period at the end of clause 7iii7 and inserting 1 or2 and 7#c7 by adding at the end the following new clause3 7iv7 reduction of costs associated with-- 7,i7 a business component of the taxpayer1 or 7,,ii7 research relating to a purpose described in clause 7i71 7ii71 or 7iii74 4 7b7 ,effective date ,the amendments made by this section shall apply to taxable years beginning after ,december #ca1 #bjag4 #f4 ,inclusion of obsolescence mitigation 7a7 ,in general ,clause 7iv7 of section #da7;d77#c77;,a7 of the ,internal ,revenue ,code of #aihf1 as added by section #e1 is amended by inserting or obsolescence mitigation after reduction of costs4 7b7 ,effective date ,the amendment made by this section shall apply to taxable years beginning after ,december #ca1 #bjag4 #g4 ,election of reduced credit may be made on amended return 7a7 ,in general ,subparagraph 7,c7 of section #bhj;,c7c77#c7 of the ,internal ,revenue ,code of #aihf is amended to read as follows3 7,c7 ,election ,an election under this paragraph shall made in such manner as the ,secretary may prescribe and1 once made with respect to a taxable year1 shall be irrevocable4 ,such election may be made on the return of tax for the taxable year to which it applies or on an amended return4 4 7b7 ,effective date ,the amendment made by this section shall apply to amended returns which are permitted to be filed under the applicable provisions of the ,internal ,revenue ,code of #aihf after the date of the enactment of this ,act4 #h4 ,investment in connected manufacturing equipment 7a7 ,in general ,subpart ,d of part ,,iv of subchapter ,a of chapter #a of the ,internal ,revenue ,code of #aihf is amended by adding at the end the following new section3 #de,s4 ,connected manufacturing equipment 7a7 ,amount of credit ,for purposes of section #ch1 the connected manufacturing equipment credit for any taxable year is an amount equal to #aj percent of the qualified connected manufacturing equipment expenditures made by the taxpayer during such year4 7b7 ,qualified connected manufacturing equipment expenditures 7#a7 ,in general ,subject to paragraph 7#b71 for purposes of this section1 the term qualified connected manufacturing equipment expenditures means an expenditure relating to the purchase or installation of-- 7,a7 industrial equipment components which contain a microprocessor and can be connected to an electronic communication network1 and 7,b7 any software1 routing1 or local area network components necessary to connect components described in subparagraph 7,a7 to an electronic communication network4 7#b7 ,eligibility ,the ,secretary1 in consultation with the ,secretary of ,commerce1 shall identify the types of components described in paragraph 7#a7 which are eligible for the credit under this section4 7c7 ,basis adjustment ,for purposes of this subtitle1 if a credit is allowed under this section for any expenditure with respect to any property1 the increase in the basis of such property which would 7but for this subsection7 result from such expenditure shall be reduced by the amount of the credit so allowed4 4 7b7 ,conforming amendments 7#a7 ,section #ch7;b7 of the ,internal ,revenue ,code of #aihf is amended-- 7,a7 by striking plus at the end of paragraph 7#ce72 7,b7 by striking the period at the end of paragraph 7#cf7 and inserting 1 plus2 and 7,c7 by adding at the end the following new paragraph3 7#cg7 the connected manufacturing equipment credit determined under section #de,s7a74 4 7#b7 ,the table of sections for subpart ,d of part ,,iv of subchapter ,a of chapter #a of such ,code is amended by adding at the end the following new item3 ,sec4 #de,s4 ,connected manufacturing equipment credit4 4 7c7 ,effective date ,the amendments made by this section shall apply to taxable years beginning after ,december #ca1 #bjah4