,i  #aaf? ,,congress  #b;d ,session  ,h4
 ,r4 #aa  ,,9 ,,! ,,h\se ,,(            
,,repres5tatives  ,octob] #i1 #bjbj,mr4 
,brady introduc$ ! foll[+ bill2 :i* 0   
ref]r$ to ! ,committee on ,ways & ,means
  ,a ,,bill  ,to am5d ! ,int]nal ,rev5ue
 ,code ( #aihf to enc\rage inve/m5t to  
r5ew1 re/ore1 & rebuild ! ,am]ican      
economy = our work]s1 families1 & small 
bus9esses1 maximize innovation ?r\gh    
rese>* & developm5t1 & secure ,am]ica's 
m$ical supplies4  #a4 ,%ort title2 table
 ( cont5ts  7a7 ,%ort title ,?is ,act   
may be cit$ z ! ,commitm5t to ,am]ican  
,gr[?1 ,r5ewal1 & ,opportunities =      
,work]s1 ,te*nology1 & ,heal? ,act or z 
! ,commitm5t to ,am]ican ,,gr[? ,act4   
7b7 ,table ( cont5ts ,! table ( cont5ts 
( ?is ,act is z foll[s3 ,sec4 #a4 ,%ort 
title2 table ( cont5ts4,title ,i--,gr[? 
9 ,bus9ess ,inve/m5t to ,boo/ ,am]ican  
,wages & ,jobs,sec4 #aja4 ,p]man5t full 
exp5s+ = qualifi$ prop]ty4,sec4 #ajb4   
,limitation on bus9ess int]e/ p]man5tly 
appli$ )\t reg>d to d$uctions =         

depreciation1 amortization1 &           
depletion4,title ,,ii--,gr[? 9 ,rese>* 9
 ,america,sec4 #bja4 ,repeal            
amortization ( rese>* & exp]im5tal      
exp5ditures4,sec4 #bjb4 ,d\bl+ ! rese>* 
& exp]im5tal tax cr$it & bett] access to
 cr$its = />tups4,sec4 #bjc4 ,special   
rules = transf]s ( intangible prop]ty f 
controll$ =eign corporations to ,unit$  
,/ates %>ehold]s4,title ,,iii--,gr[? 9  
,am]ica's ,m$ical ,independence,sec4    
#cja4 ,dome/ic m$ical & drug manufactur+
 cr$it4,sec4 #cjb4 ,qualify+ advanc$    
m$ical manufactur+ equipm5t cr$it4,sec4 
#cjc4 ,new m$ical rese>* exp5diture     
compon5t ( cr$it = increas+ rese>*      
activities4,sec4 #cjd4 ,refundable      
portion ( rese>* cr$it = small bus9esses
 engag+ 9 specifi$ m$ical rese>*4,sec4  
#cje4 ,exception f passive loss rules = 
inve/m5ts 9 specifi$ m$ical rese>* small
 bus9ess pass-?ru entities4,title       
,,iv--,gr[? 9 ,innovation & ,te*nology  
,breakthroughs,sec4 #dja4               
,simplification & expansion ( d$uction =

 />t-up & organizational                
exp5ditures4,sec4 #djb4 ,pres]vation (  
/>t-up net op]at+ losses & tax cr$its   
aft] own]%ip *ange4  ,i ,gr[? 9 ,bus9ess
 ,inve/m5t to ,boo/ ,am]ican ,wages &   
,jobs  #aja4 ,p]man5t full exp5s+ =     
qualifi$ prop]ty  7a7 ,9 g5]al ,p>agraph
 7#f7 ( section #afh7k7 ( ! ,int]nal    
,rev5ue ,code ( #aihf is am5d$ to read z
 foll[s3  7#f7 ,applicable p]c5tage ,=  
purposes ( ?is subsection1 ! t]m        
applicable p]c5tage means1 9 ! case (   
prop]ty plac$ 9 s]vice 7or1 9 ! case ( a
 specifi$ plant describ$ 9 p>agraph     
7#e71 a plant :i* is plant$ or graft$7  
aft] ,septemb] #bg1 #bjag1 #ajj p]c5t4  
4  7b7 ,con=m+ am5dm5ts  7#a7 ,section  
#afh7k7 ( ! ,int]nal ,rev5ue ,code (    
#aihf is am5d$-- 7,a7 9 p>agraph 7#b7-- 
7i7 9 subp>agraph 7,a7-- 7,i7 9 clause  
7i77,v71 by ins]t+ & at ! end2  7,,ii7 9
 clause 7ii71 by /rik+ clause 7ii7 (    
subp>agraph 7,e71 & & ins]t+ clause 7i7 
( subp>agraph 7,e742 &  7,,iii7 by /rik+
 clause 7iii72  7ii7 9 subp>agraph      

7,b7-- 7,i7 9 clause 7i7-- 7aa7 by /rik+
 subclauses 7,,ii7 & 7,,iii72 &  7bb7 by
 r$esignat+ subclauses 7,,iv7 ?r\gh     
7,,vi7 z subclauses 7,,ii7 ?r\gh 7,,iv71
 respectively2  7,,ii7 by /rik+ clause  
7ii72 &  7,,iii7 by r$esignat+ clauses  
7iii7 & 7iv7 z clauses 7ii7 & 7iii71    
respectively2  7iii7 9 subp>agraph      
7,c7-- 7,i7 9 clause 7i71 by /rik+ &    
subclauses 7,,ii7 & 7,,iii7 (           
subp>agraph 7,b77i72 &  7,,ii7 9 clause 
7ii71 by /rik+ subp>agraph 7,b77iii7 &  
ins]t+ subp>agraph 7,b77ii72 &  7iv7 9  
subp>agraph 7,e7-- 7,i7 by /rik+ clause 
7i72 &  7,,ii7 by r$esignat+ clauses    
7ii7 & 7iii7 z clauses 7i7 & 7ii71      
respectively2 &  7,b7 9 p>agraph        
7#e77;,a71 by /rik+ plant$ be=e ,janu>y 
#a1 #bjbg1 or is graft$ be=e su* date to
 a plant t has already be5 plant$1 &    
ins]t+ plant$ or graft$4  7#b7 ,section 
#dfj7;c77#f77;,b7 ( su* ,code is am5d$  
by /rik+ :i* & all t foll[s ?r\gh !     
p]iod & ins]t+ :i* has a recov]y p]iod (
 #g ye>s or less44  7c7 ,effective date 

,! am5dm5ts made by ?is section %all    
take effect z if includ$ 9 section      
#acbja ( ,public ,law #aae-ig4  #ajb4   
,limitation on bus9ess int]e/ p]man5tly 
appli$ )\t reg>d to d$uctions =         
depreciation1 amortization1 & depletion 
7a7 ,9 g5]al ,section                   
#afc7;j77#h77;,a77v7 ( ! ,int]nal       
,rev5ue ,code ( #aihf is am5d$ by /rik+ 
9 ! case ( taxable ye>s beg9n+ be=e     
,janu>y #a1 #bjbb4  7b7 ,effective date 
,! am5dm5t made by ?is section %all     
apply to taxable ye>s beg9n+ aft]       
,decemb] #ca1 #bjba4  ,,ii ,gr[? 9      
,rese>* 9 ,am]ica  #bja4 ,repeal        
amortization ( rese>* & exp]im5tal      
exp5ditures  7a7 ,9 g5]al ,section #agd 
is am5d$ to read z foll[s3  #agd4       
,rese>* & exp]im5tal exp5ditures  7a7   
,treatm5t z ,exp5ses  7#a7 ,9 g5]al ,a  
taxpay] may treat rese>* or exp]im5tal  
exp5ditures :i* are paid or incurr$ by  
him dur+ ! taxable ye> 9 connection ) 8 
trade or bus9ess z exp5ses :i* are n    
*>geable to capital acc\nt4 ,!          

exp5ditures s treat$ %all be all[$ z a  
d$uction4  7#b7 ,:5 me?od may be adopt$ 
7,a7 ,)\t cons5t ,a taxpay] may1 )\t !  
cons5t ( ! ,secret>y1 adopt ! me?od     
provid$ 9 ?is subsection = 8 fir/       
taxable ye> = :i* exp5ditures describ$ 9
 p>agraph 7#a7 are paid or incurr$4     
7,b7 ,) cons5t ,a taxpay] may1 ) !      
cons5t ( ! ,secret>y1 adopt at any "t ! 
me?od provid$ 9 ?is subsection4  7#c7   
,scope ,! me?od adopt$ "u ?is subsection
 %all apply to all exp5ditures describ$ 
9 p>agraph 7#a74 ,! me?od adopt$ %all be
 adh]$ to 9 comput+ taxable income = !  
taxable ye> & = all subsequ5t taxable   
ye>s unless1 ) ! approval ( ! ,secret>y1
 a *ange to a diff]5t me?od is au?oriz$ 
) respect to "p or all ( su*            
exp5ditures4  7b7 ,amortization ( ,c]ta9
 ,rese>* & ,exp]im5tal ,exp5ditures     
7#a7 ,9 g5]al ,at ! election ( !        
taxpay]1 made 9 accordance ) regulations
 prescrib$ by ! ,secret>y1 rese>* or    
exp]im5tal exp5ditures :i* are-- 7,a7   
paid or incurr$ by ! taxpay] 9          

connection ) 8 trade or bus9ess1  7,b7 n
 treat$ z exp5ses "u subsection 7a71 &  
7,c7 *>geable to capital acc\nt b n     
*>geable to prop]ty ( a "* :i* is       
subject to ! all[ance "u section #afg   
7relat+ to all[ance = depreciation1     
etc47 or section #faa 7relat+ to        
all[ance = depletion71  may be treat$ z 
def]r$ exp5ses4 ,9 comput+ taxable      
income1 su* def]r$ exp5ses %all be all[$
 z a d$uction ratably ov] su* p]iod ( n 
less ?an #fj mon?s z may be select$ by !
 taxpay] 7beg9n+ ) ! mon? 9 :i* !       
taxpay] fir/ realizes b5efits f su*     
exp5ditures74 ,su* def]r$ exp5ses are   
exp5ditures prop]ly *>geable to capital 
acc\nt = purposes ( section             
#ajaf7;a77#a7 7relat+ to adju/m5ts to   
basis ( prop]ty74  7#b7 ,"t = & scope ( 
election ,! election provid$ by p>agraph
 7#a7 may be made = any taxable ye>1 b  
only if made n lat] ?an ! "t prescrib$  
by law = fil+ ! return = su* taxable ye>
 7includ+ ext5sions !re(74 ,! me?od s   
elect$1 & ! p]iod select$ by ! taxpay]1 

%all be adh]$ to 9 comput+ taxable      
income = ! taxable ye> = :i* ! election 
is made & = all subsequ5t taxable ye>s  
unless1 ) ! approval ( ! ,secret>y1 a   
*ange to a diff]5t me?od 7or to a       
diff]5t p]iod7 is au?oriz$ ) respect to 
"p or all ( su* exp5ditures4 ,! election
 %all n apply to any exp5diture paid or 
incurr$ dur+ any taxable ye> be=e !     
taxable ye> = :i* ! taxpay] makes !     
election4  7c7 ,l& & ,o!r ,prop]ty ,?is 
section %all n apply to any exp5diture =
 ! acquisition or improvem5t ( l&1 or = 
! acquisition or improvem5t ( prop]ty to
 be us$ 9 connection ) ! rese>* or      
exp]im5tation & ( a "* :i* is subject to
 ! all[ance "u section #afg 7relat+ to  
all[ance = depreciation1 etc47 or       
section #faa 7relat+ to all[ance =      
depletion72 b = purposes ( ?is section  
all[ances "u section #afg1 & all[ances  
"u section #faa1 %all be consid]$ z     
exp5ditures4  7d7 ,exploration          
,exp5ditures ,?is section %all n apply  
to any exp5diture paid or incurr$ = !   

purpose ( asc]ta9+ ! exi/5ce1 location1 
ext5t1 or quality ( any deposit ( ore or
 o!r m9]al 7includ+ oil & gas74  7e7    
,only ,reasonable ,rese>* ,exp5ditures  
,eligible ,?is section %all apply to a  
rese>* or exp]im5tal exp5diture only to 
! ext5t t ! am\nt !re( is reasonable "u 
! circum/ances4  4  7b7 ,cl]ical        
,am5dm5t ,! table ( sections = "p ,,vi (
 sub*apt] ,b ( *apt] #a is am5d$ by     
/rik+ ! item relat+ to section #agd &   
ins]t+ ! foll[+ new item3  ,sec4 #agd4  
,rese>* & exp]im5tal exp5ditures  4  7c7
 ,con=m+ ,am5dm5ts  7#a7 ,section       
#da7;d77#a77;,a7 is am5d$ by /rik+      
specifi$ rese>* or exp]im5tal           
exp5ditures "u section #agd & ins]t+    
exp5ses "u section #agd4  7#b7 ,section 
#bhj;,c7c7 is am5d$ to read z foll[s3   
7c7 ,cr$it = ,increas+ ,rese>*          
,activities  7#a7 ,9 g5]al ,no d$uction 
%all be all[$ = t portion ( ! qualifi$  
rese>* exp5ses 7z def9$ 9 section       
#da7;b77 or basic rese>* exp5ses 7z     
def9$ 9 section #da7;e77#b77 o!rwise    

all[able z a d$uction = ! taxable ye>   
:i* is equal to ! am\nt ( ! cr$it       
det]m9$ = su* taxable ye> "u section    
#da7;a74  7#b7 ,simil> rule :]e taxpay] 
capitalizes r ?an d$ucts exp5ses ,if--  
7,a7 ! am\nt ( ! cr$it det]m9$ = !      
taxable ye> "u section #da7;a77#a71     
exce$s  7,b7 ! am\nt all[able z a       
d$uction = su* taxable ye> = qualifi$   
rese>* exp5ses or basic rese>* exp5ses  
7det]m9$ )\t reg>d to p>agraph 7#a771  !
 am\nt *>geable to capital acc\nt = !   
taxable ye> = su* exp5ses %all be r$uc$ 
by ! am\nt ( su* excess4  7#c7 ,election
 ( r$uc$ cr$it  7,a7 ,9 g5]al ,9 ! case 
( any taxable ye> = :i* an election is  
made "u ?is p>agraph-- 7i7 p>agraphs    
7#a7 & 7#b7 %all n apply1 &  7ii7 !     
am\nt ( ! cr$it "u section #da7;a7 %all 
be ! am\nt det]m9$ "u subp>agraph 7,b74 
7,b7 ,am\nt ( r$uc$ cr$it ,! am\nt (    
cr$it det]m9$ "u ?is subp>agraph = any  
taxable ye> %all be ! am\nt equal to !  
excess (-- 7i7 ! am\nt ( cr$it det]m9$  
"u section #da7;a7 )\t reg>d to ?is     

p>agraph1 ov]  7ii7 ! product (-- 7,i7 !
 am\nt describ$ 9 clause 7i71 &  7,,ii7 
! rate ( tax "u section #aa7;b74  7,c7  
,election ,an election "u ?is p>agraph =
 any taxable ye> %all be made n lat] ?an
 ! "t = fil+ ! return ( tax = su* ye>   
7includ+ ext5sions71 %all be made on su*
 return1 & %all be made 9 su* mann] z ! 
,secret>y may prescribe4 ,su* an        
election1 once made1 %all be            
irrevocable4  7#d7 ,controll$ gr\ps     
,p>agraph 7#c7 ( subsection 7b7 %all    
apply = purposes ( ?is subsection4  4   
7d7 ,effective date ,! am5dm5ts made by 
?is section %all apply to am\nts paid or
 incurr$ 9 taxable ye>s beg9n+ aft]     
,decemb] #ca1 #bjba4  #bjb4 ,d\bl+ !    
rese>* & exp]im5tal tax cr$it & bett]   
access to cr$its = />tups  7a7 ,cr$it   
rate increase  7#a7 ,9 g5]al ,section   
#da7;a7 ( ! ,int]nal ,rev5ue ,code (    
#aihf is am5d$ by /rik+ #bj p]c5t &     
ins]t+ #dj p]c5t4  7#b7 ,alt]native     
simplifi$ cr$it ,section                
#da7;c77#d77;,a7 ( su* ,code is am5d$ by

 /rik+ #ad p]c5t & ins]t+ #bh p]c5t4    
7#c7 ,cr$it rate 9 case ( no rese>*     
exp5ses 9 #c prec$+ ye>s ,section       
#da7;c77#d77;,b77ii7 ( su* ,code is     
am5d$ by /rik+ #f p]c5t & ins]t+ #a_/b !
 cr$it p]c5tage 9 effect "u subp>agraph 
7,a74  7b7 ,modification ( small bus9ess
 portion all[$ aga9/ payroll tax  7#a7  
,increase 9 limitation ,p>agraphs       
7#d77;,b77i7 & 7#e77;,b77ii7 ( section  
#da7;h7 ( su* ,code are ea* am5d$ by    
/rik+ #bej1jjj & ins]t+ #ejj1jjj4  7#b7 
,qualifi$ small bus9ess gross receipts  
?re%old ,section #da7;h77#c77;,a77i77,i7
 ( su* ,code is am5d$ by /rik+          
#e1jjj1jjj & ins]t+ ! doll> am\nt 9     
effect = ! taxable ye> "u section       
#ddh7;c77#a74  7c7 ,effective dates     
7#a7 ,subsection 7a7 ,! am5dm5ts made by
 subsection 7a7 %all apply to taxable   
ye>s beg9n+ aft] ,decemb] #ca1 #bjbj4   
7#b7 ,subsection 7b7 ,! am5dm5ts made by
 subsection 7b7 %all apply to taxable   
ye>s beg9n+ aft] ,decemb] #ca1 #bjai4   
#bjc4 ,special rules = transf]s (       

intangible prop]ty f controll$ =eign    
corporations to ,unit$ ,/ates %>ehold]s 
7a7 ,9 g5]al ,subp>t ,f ( "p ,,iii (    
sub*apt] ,n ( *apt] #a ( ! ,int]nal     
,rev5ue ,code ( #aihf is am5d$ by add+  
at ! end ! foll[+ new section3  #iff4   
,transf]s ( intangible prop]ty to ,unit$
 ,/ates %>ehold]s  7a7 ,9 g5]al ,if a   
controll$ =eign corporation holds       
intangible prop]ty on ! date ( !        
enactm5t ( ?is section & !reaft]        
di/ributes su* prop]ty to a dome/ic     
corporation :i* is a ,unit$ ,/ates      
%>ehold] ) respect to su* controll$     
=eign corporation-- 7#a7 = purposes ( "p
 ,i ( sub*apt] ,c & any o!r provision ( 
?is title specifi$ by ! ,secret>y1 !    
fair m>ket value ( su* prop]ty on ! date
 ( su* di/ribution %all be treat$ z n   
exce$+ ! adju/$ basis ( su* prop]ty     
imm$iately be=e su* di/ribution1 &  7#b7
 if any portion ( su* di/ribution is n a
 divid5d-- 7,a7 no ga9 %all be recogniz$
 by su* ,unit$ ,/ates %>ehold] ) respect
 to su* di/ribution1 &  7,b7 ! adju/$   

basis ( su* prop]ty 9 ! h&s ( su* ,unit$
 ,/ates %>ehold] imm$iately aft] su*    
di/ribution %all be ! adju/$ basis ( su*
 prop]ty 9 ! h&s ( su* controll$ =eign  
corporation imm$iately be=e su*         
di/ribution r$uc$ by ! am\nt 7if any7 ( 
ga9 n recogniz$ by reason ( subp>agraph 
7,a7 7det]m9$ aft] ! application (      
p>agraph 7#a774  7b7 ,intangible prop]ty
 ,= purposes ( ?is section1 ! t]m       
intangible prop]ty means any-- 7#a7     
pat5t1 copyright1 lic5se1 inv5tion1     
=mula1 process1 design1 patt]n1 "k-h[1  
or =mat1  7#b7 me?od1 program1 sy/em1   
proc$ure1 campaign1 survey1 /udy1 =eca/1
 e/imate1 or te*nical data1  7#c7       
comput] s(tw>e 7z def9$ 9 section       
#aig7;e77#c77;,b771 or  7#d7 any simil> 
item1 :i* has sub/antial value indep5d5t
 ( ! s]vices ( any individual4  4  7b7  
,con=m+ am5dm5ts  7#a7 ,section         
#aig7;f77#b77;,b77i7 ( su* ,code is     
am5d$ by ins]t+ #iff7;a71 aft] #gca14   
7#b7 ,! table ( sections = subp>t ,f (  
"p ,,iii ( sub*apt] ,n ( *apt] #a ( su* 

,code is am5d$ by add+ at ! end ! foll[+
 new item3  ,sec4 #iff4 ,transf]s (     
intangible prop]ty to ,unit$ ,/ates     
%>ehold]s4  4  7c7 ,effective date ,!   
am5dm5ts made by ?is section %all apply 
to di/ributions made 9 taxable ye>s (   
=eign corporations beg9n+ aft] ,decemb] 
#ca1 #bjbj1 & to taxable ye>s ( ,unit$  
,/ates %>ehold]s 9 :i* or ) :i* su*     
taxable ye>s ( =eign corporations end4  
,,iii ,gr[? 9 ,am]ica's ,m$ical         
,indep5d5ce  #cja4 ,dome/ic m$ical &    
drug manufactur+ cr$it  7a7 ,9 g5]al    
,subp>t ,d ( "p ,,iv ( sub*apt] ,a (    
*apt] #a ( ! ,int]nal ,rev5ue ,code (   
#aihf is am5d$ by add+ at ! end ! foll[+
 new section3  #de,u4 ,dome/ic m$ical & 
drug manufactur+ cr$it  7a7 ,9 g5]al ,= 
purposes ( section #ch1 ! dome/ic m$ical
 & drug manufactur+ cr$it det]m9$ "u ?is
 section = any taxable ye> is an am\nt  
equal to #aj4e p]c5t ( ! less] (-- 7#a7 
! qualifi$ m$ical & drug manufactur+    
income ( ! taxpay] = ! taxable ye>1 or  
7#b7 taxable income ( ! taxpay] = !     

taxable ye>4  7b7 ,cr$it limit$ to wages
 paid  7#a7 ,9 g5]al ,! am\nt ( ! cr$it 
all[able "u subsection 7a7 = any taxable
 ye> %all n exce$ #ej p]c5t ( ! ,w-#b   
wages ( ! taxpay] = ! taxable ye>4  7#b7
 ,w-#b wages ,= purposes ( ?is section--
 7,a7 ,9 g5]al ,! t]m ,w-#b wages means1
 ) respect to any p]son = any taxable   
ye> ( su* p]son1 ! sum ( ! am\nts       
describ$ 9 p>agraphs 7#c7 & 7#h7 (      
section #fjea7;a7 paid by su* p]son )   
respect to employm5t ( employees by su* 
p]son dur+ ! cal5d> ye> end+ dur+ su*   
taxable ye>4  7,b7 ,limitation to wages 
attributable to dome/ic production ,su* 
t]m %all n include any am\nt :i* is n   
prop]ly allocable to dome/ic m$ical &   
drug manufactur+ gross receipts =       
purposes ( subsection 7c77#a74  7,c7    
,return requirem5t ,su* t]m %all n      
include any am\nt :i* is n prop]ly      
includ$ 9 a return fil$ ) ! ,social     
,security ,adm9i/ration on or be=e !    
#fj? day aft] ! due date 7includ+       
ext5sions7 = su* return4  7#c7          

,acquisitions1 dispositions1 & %ort     
taxable ye>s ,! ,secret>y %all provide =
 ! application ( ?is subsection 9 cases 
( a %ort taxable ye> or :]e ! taxpay]   
acquires1 or disposes (1 ! major portion
 ( a trade or bus9ess or ! major portion
 ( a sep>ate unit ( a trade or bus9ess  
dur+ ! taxable ye>4  7c7 ,qualifi$      
m$ical & drug manufactur+ income ,=     
purposes ( ?is section-- 7#a7 ,9 g5]al  
,! t]m qualifi$ m$ical & drug           
manufactur+ income = any taxable ye>    
means an am\nt equal to ! excess 7if    
any7 (-- 7,a7 ! taxpay]'s dome/ic m$ical
 & drug manufactur+ gross receipts = !  
taxable ye>1 ov]  7,b7 ! sum (-- 7i7 !  
co/ ( goods sold t are allocable to su* 
receipts1 &  7ii7 o!r exp5ses1 losses1  
or d$uctions :i* are prop]ly allocable  
to su* receipts4  7#b7 ,allocation me?od
 ,! ,secret>y %all prescribe rules = !  
prop] allocation ( items describ$ 9     
p>agraph 7#a77;,b7 = purposes ( det]m9+ 
qualifi$ m$ical & drug manufactur+      
income4 ,su* rules %all provide = !     

prop] allocation ( items :e!r or n su*  
items are directly allocable to dome/ic 
m$ical & drug manufactur+ gross         
receipts4  7#c7 ,special rules = det]m9+
 co/s  7,a7 ,9 g5]al ,= purposes (      
det]m9+ co/s "u clause 7i7 ( p>agraph   
7#a77;,b71 any item or s]vice br\ght    
into ! ,unit$ ,/ates %all be treat$ z   
acquir$ by pur*ase1 & its co/ %all be   
treat$ z n less ?an its value imm$iately
 aft] x ent]$ ! ,unit$ ,/ates4  7,b7    
,exports = fur!r manufacture ,9 ! case (
 any prop]ty describ$ 9 subp>agraph 7,a7
 t _h be5 export$ by ! taxpay] = fur!r  
manufacture1 ! increase 9 co/ or adju/$ 
basis "u subp>agraph 7,a7 %all n exce$ !
 diff]5ce betwe5 ! value ( ! prop]ty :5 
export$ & ! value ( ! prop]ty :5 br\ght 
back into ! ,unit$ ,/ates aft] ! fur!r  
manufacture4  7#d7 ,dome/ic m$ical &    
drug manufactur+ gross receipts  7,a7 ,9
 g5]al ,! t]m dome/ic m$ical & drug     
manufactur+ gross receipts means ! gross
 receipts ( ! taxpay] :i* are d]iv$ f   
any sale1 ex*ange1 or o!r disposition   

(-- 7i7 any active ph>maceutical +r$i5t1
 or  7ii7 any qualifi$ c\nt]measure1    
:i* 0 manufactur$ or produc$ by !       
taxpay] 9 :ole or 9 significant "p )9 ! 
,unit$ ,/ates4  7,b7 ,active            
ph>maceutical +r$i5t ,! t]m active      
ph>maceutical +r$i5t means any sub/ance 
or mixture ( sub/ances int5d$ to be us$ 
9 ! manufacture ( a drug product & 7:5 s
 us$7 becomes an active +r$i5t 9 ! drug 
product4  7,c7 ,qualifi$ c\nt]measure ,!
 t]m qualifi$ c\nt]measure has ! mean+  
giv5 su* t]m 9 section                  
#cai;,f-#a7;a77#b7 ( ! ,public ,heal?   
,s]vice ,act 7#db ,u4,s4,c4             
#bdg;d-#f;a7a77#b7740  7,d7 ,p>tn]%ips  
own$ by exp&$ affiliat$ gr\ps ,=        
purposes ( ?is p>agraph1 if all ( !     
int]e/s 9 ! capital & pr(its ( a        
p>tn]%ip are own$ by memb]s ( a s+le    
exp&$ affiliat$ gr\p at all times dur+ !
 taxable ye> ( su* p>tn]%ip1 ! p>tn]%ip 
& all memb]s ( su* gr\p %all be treat$ z
 a s+le taxpay] dur+ su* p]iod4  7d7    
,def9itions & ,special ,rules ,=        

purposes ( ?is section-- 7#a7           
,application ( section to pass-?ru      
entities  7,a7 ,p>tn]%ips & s           
corporations ,9 ! case ( a p>tn]%ip or  
,s corporation-- 7i7 ?is section %all be
 appli$ at ! p>tn] or %>ehold] level1   
7ii7 ea* p>tn] or %>ehold] %all take    
into acc\nt su* p]son's allocable %>e ( 
ea* item describ$ 9 subp>agraph 7,a7 or 
7,b7 ( subsection 7c77#a7 7det]m9$ )\t  
reg>d to :e!r ! items describ$ 9 su*    
subp>agraph 7,a7 exce$ ! items describ$ 
9 su* subp>agraph 7,b771 &  7iii7 ea*   
p>tn] or %>ehold] %all be treat$ =      
purposes ( subsection 7b7 z hav+ ,w-#b  
wages = ! taxable ye> 9 an am\nt equal  
to su* p]son's allocable %>e ( ! ,w-#b  
wages ( ! p>tn]%ip or ,s corporation = !
 taxable ye> 7z det]m9$ "u regulations  
prescrib$ by ! ,secret>y74  7,b7 ,tru/s 
& e/ates ,9 ! case ( a tru/ or e/ate--  
7i7 ! items ref]r$ to 9 subp>agraph     
7,a77ii7 7z det]m9$ !re97 & ! ,w-#b     
wages ( ! tru/ or e/ate = ! taxable ye>1
 %all be apportion$ betwe5 ! b5efici>ies

 & ! fiduci>y 7& among ! b5efici>ies7 "u
 regulations prescrib$ by ! ,secret>y1 &
  7ii7 = purposes ( p>agraph 7#b71      
adju/$ gross income ( ! tru/ or e/ate   
%all be det]m9$ z provid$ 9 section     
#fg7;e7 ) ! adju/m5ts describ$ 9 su*    
p>agraph4  7,c7 ,regulations ,!         
,secret>y may prescribe rules requir+ or
 re/rict+ ! allocation ( items & wages  
"u ?is p>agraph & may prescribe su*     
report+ requirem5ts z ! ,secret>y       
det]m9es appropriate4  7#b7 ,application
 to individuals ,9 ! case ( an          
individual1 subsection 7a77#b7 %all be  
appli$ by sub/itut+ adju/$ gross income 
= taxable income4 ,= purposes ( ! prec$+
 s5t5ce1 adju/$ gross income %all be    
det]m9$ aft] application ( sections #hf1
 #ace1 #acg1 #bai1 #bba1 #bbb1 & #dfi4  
7#c7 ,special rule = affiliat$ gr\ps    
7,a7 ,9 g5]al ,all memb]s ( an exp&$    
affiliat$ gr\p %all be treat$ z a s+le  
corporation = purposes ( ?is section4   
7,b7 ,exp&$ affiliat$ gr\p ,= purposes (
 ?is section1 ! t]m exp&$ affiliat$ gr\p

 means an affiliat$ gr\p z def9$ 9      
section #aejd7;a71 det]m9$-- 7i7 by     
sub/itut+ m ?an #ej p]c5t = at lea/ #hj 
p]c5t ea* place x appe>s1 &  7ii7 )\t   
reg>d to p>agraphs 7#b7 & 7#d7 ( section
 #aejd7;b74  7,c7 ,allocation ( cr$it   
,except z provid$ 9 regulations1 ! cr$it
 "u subsection 7a7 %all be allocat$     
among ! memb]s ( ! exp&$ affiliat$ gr\p 
9 proportion to ea* memb]'s respective  
am\nt 7if any7 ( qualifi$ m$ical & drug 
manufactur+ income4  7#d7 ,trade or     
bus9ess requirem5t ,?is section %all be 
appli$ by only tak+ into acc\nt items   
:i* are attributable to ! actual conduct
 ( a trade or bus9ess4  7#e7            
,coord9ation ) m9imum tax ,= purposes ( 
det]m9+ alt]native m9imum taxable income
 "u section #ee1 qualifi$ m$ical & drug 
manufactur+ income %all be det]m9$ )\t  
reg>d to any adju/m5ts "u sections #ef  
?r\gh #ei4  7#f7 ,unrelat$ bus9ess      
taxable income ,= purposes ( det]m9+ !  
tax impos$ by section #eaa1 subsection  
7a77#a77;,b7 %all be appli$ by sub/itut+

 unrelat$ bus9ess taxable income =      
taxable income4  7#g7 ,regulations ,!   
,secret>y %all prescribe su* regulations
 z are necess>y to c>ry out ! purposes (
 ?is section1 includ+ regulations :i*   
prev5t m ?an #a taxpay] f be+ all[$ a   
cr$it "u ?is section ) respect to any   
activity describ$ 9 subsection          
7c77#d77;,a74  4  7b7 ,treatm5t "u base 
erosion tax ,section                    
#ei;,a7b77#a77;,b77ii7 ( su* ,code is   
am5d$ by /rik+ plus at ! end ( subclause
 7,i71 by r$esignat+ subclause 7,,ii7 z 
subclause 7,,iii71 & by ins]t+ aft]     
subclause 7,i7 ! foll[+ new subclause3  
7,,ii7 ! cr$it all[$ "u section #ch = ! 
taxable ye> :i* is prop]ly allocable to 
! dome/ic m$ical & drug manufactur+     
cr$it det]m9$ "u section #de,u7a71 plus 
4  7c7 ,"p ( g5]al bus9ess cr$it        
,section #ch7;b7 ( su* ,code is am5d$ by
 /rik+ plus at ! end ( p>agraph 7#cb71  
by /rik+ ! p]iod at ! end ( p>agraph    
7#cc7 & ins]t+ 1 plus1 & by add+ at !   
end ! foll[+ new p>agraph3  7#cd7 !     

dome/ic m$ical & drug manufactur+ cr$it 
det]m9$ "u section #de,u7a74  4  7d7    
,cr$it all[$ aga9/ alt]native m9imum tax
 ,section #ch7;c77#d77;,b7 ( su* ,code  
is am5d$ by r$esignat+ clauses 7x7 ?r\gh
 7xii7 z clauses 7xi7 ?r\gh 7xiii71     
respectively1 & by ins]t+ aft] clause   
7ix7 ! foll[+ new clause3  7x7 ! cr$it  
det]m9$ "u section #de,u1  4  7e7       
,cl]ical am5dm5t ,! table ( sections =  
subp>t ,d ( "p ,,iv ( sub*apt] ,a (     
*apt] #a ( su* ,code is am5d$ by add+ at
 ! end ! foll[+ new item3  ,sec4 #de,u4 
,dome/ic m$ical & drug manufactur+      
cr$it4  4  7f7 ,effective date ,!       
am5dm5ts made by ?is section %all apply 
to taxable ye>s beg9n+ aft] ,decemb]    
#ca1 #bjbj4  #cjb4 ,qualify+ advanc$    
m$ical manufactur+ equipm5t cr$it  7a7  
,9 g5]al ,subp>t ,e ( "p ,,iv ( sub*apt]
 ,a ( *apt] #a ( ! ,int]nal ,rev5ue     
,code ( #aihf is am5d$ by add+ at ! end 
! foll[+ new section3  #dh;,d4 ,qualify+
 advanc$ m$ical manufactur+ equipm5t    
cr$it  7a7 ,9 g5]al ,= purposes (       

section #df1 ! qualify+ advanc$ m$ical  
manufactur+ equipm5t cr$it det]m9$ "u   
?is section = any taxable ye> is !      
applicable p]c5tage ( ! basis ( any     
qualify+ advanc$ m$ical manufactur+     
equipm5t plac$ 9 s]vice dur+ su* taxable
 ye>4  7b7 ,applicable p]c5tage ,=      
purposes ( subsection 7a71 ! applicable 
p]c5tage is-- 7#a7 #cj p]c5t 9 ! case ( 
equipm5t :i* is plac$ 9 s]vice be=e     
,janu>y #a1 #bjbh1  7#b7 #bj p]c5t 9 !  
case ( equipm5t :i* is plac$ 9 s]vice   
dur+ cal5d> ye> #bjbh1  7#c7 #aj p]c5t 9
 ! case ( equipm5t :i* is plac$ 9 s]vice
 dur+ cal5d> ye> #bjbi1 &  7#d7 #j p]c5t
 9 ! case ( equipm5t :i* is plac$ 9     
s]vice aft] ,decemb] #ca1 #bjbi4  7c7   
,qualify+ advanc$ m$ical manufactur+    
equipm5t ,= purposes ( ?is section1 !   
t]m qualify+ advanc$ m$ical manufactur+ 
equipm5t means prop]ty ( a "* subject to
 ! all[ance = depreciation-- 7#a7 :i* is
 ma*9]y or equipm5t t is design$ & us$  
to manufacture a-- 7,a7 drug 7z su* t]m 
is def9$ 9 section #bja7;g77#a7 ( !     

,f$]al ,food1 ,drug1 & ,cosmetic ,act71 
7,b7 device 7z su* t]m is def9$ 9       
section #bja7;h7 ( su* ,act71 or  7,c7  
biological product 7z su* t]m is def9$ 9
 section #cea7;i7 ( ! ,public ,heal?    
,s]vice ,act71  7#b7 :i* has be5        
id5tifi$ by ! ,secret>y 7aft]           
consultation ) ! ,secret>y ( ,heal? &   
,human ,s]vices7 z ma*9]y or equipm5t   
t-- 7,a7 incorporates novel te*nology or
 uses an e/abli%$ te*nique or te*nology 
9 a new or innovative way1 or  7,b7 t c 
improve m$ical product quality1 address 
%ortages ( m$ic9es1 & spe$ "t-to-m>ket1 
7#c7 :i* is plac$ 9 s]vice 9 ! ,unit$   
,/ates by ! taxpay]1 &  7#d7 ) respect  
to :i* depreciation is all[able4  7d7   
,c]ta9 qualifi$ progress exp5ditures    
rules made applicable ,rules simil> to !
 rules ( subsections 7c77#d7 & 7d7 (    
section #df 7z 9 effect on ! day be=e ! 
enactm5t ( ! ,rev5ue ,reconciliation    
,act ( #aiij7 %all apply = purposes (   
?is section4  7e7 ,regulations ,!       
,secret>y %all prescribe su* regulations

 or o!r guidance z may be necess>y to   
c>ry out ! purposes ( ?is section1      
includ+ regulations :i* prev5t abuse or 
fraud4  4  7b7 ,treatm5t "u base erosion
 tax ,section #ei;,a7b77#a77;,b77ii7 (  
su* ,code1 z am5d$ by section #g ( ?is  
,act1 is fur!r am5d$ by /rik+ plus at ! 
end ( subclause 7,,ii71 by r$esignat+   
subclause 7,,iii7 z subclause 7,,iv71 & 
by ins]t+ aft] subclause 7,,ii7 ! foll[+
 new subclause3  7,,iii7 ! cr$it all[$  
"u section #df = ! taxable ye> :i* is   
prop]ly allocable to ! qualify+ advanc$ 
m$ical manufactur+ equipm5t cr$it       
det]m9$ "u section #dh;,d7a71 plus  4   
7c7 ,"p ( inve/m5t cr$it ,section #df ( 
su* ,code is am5d$ by /rik+ & at ! end (
 p>agraph 7#e71 by /rik+ ! p]iod at !   
end ( p>agraph 7#f7 & ins]t+ 1 &1 & by  
add+ at ! end ! foll[+ new p>agraph3    
7#g7 ! qualify+ advanc$ m$ical          
manufactur+ equipm5t cr$it4  4  7d7     
,cl]ical am5dm5t ,! table ( sections =  
subp>t ,d ( "p ,,iv ( sub*apt] ,a (     
*apt] #a ( su* ,code is am5d$ by add+ at

 ! end ! foll[+ new item3  ,sec4 #dh;,d4
 ,qualify+ advanc$ m$ical manufactur+   
equipm5t cr$it4  4  7e7 ,effective date 
,! am5dm5ts made by ?is section %all    
apply to p]iods aft] ! date ( ! enactm5t
 ( ?is section "u rules simil> to !     
rules ( section #dh7m7 ( ! ,int]nal     
,rev5ue ,code ( #aihf 7z 9 effect on !  
date ( ! enactm5t fo ! ,rev5ue          
,reconciliation ,act ( #aiij74  #cjc4   
,new m$ical rese>* exp5diture compon5t (
 cr$it = increas+ rese>* activities  7a7
 ,9 g5]al ,section #da7;a7 ( ! ,int]nal 
,rev5ue ,code ( #aihf is am5d$ by /rik+ 
& at ! end ( p>agraph 7#b71 by /rik+ !  
p]iod at ! end ( p>agraph 7#c7 & ins]t+ 
1 &1 & by add+ at ! end ! foll[+ new    
p>agraph3  7#d7 #ad p]c5t ( specifi$    
m$ical rese>* exp5ditures4  4  7b7      
,specifi$ m$ical rese>* exp5ditures     
,section #da7;f7 ( su* ,code is am5d$ by
 add+ at ! end ! foll[+ new p>agraph3   
7#g7 ,specifi$ m$ical rese>* exp5ditures
  7,a7 ,9 g5]al ,! t]m specifi$ m$ical  
rese>* exp5ditures means am\nts paid or 

incurr$ = qualifi$ rese>* ) respect to  
any qualifi$ c\nt]measure4  7,b7        
,qualifi$ c\nt]measure ,! t]m qualifi$  
c\nt]measure has ! mean+ giv5 to su* t]m
 9 section #cai;,f-#a7;a77#b7 ( !       
,public ,heal? ,s]vice ,act 7#db        
,u4,s4,c4 #bdg;d-#f;a7a77#b774  4  7c7  
,d5ial ( d\ble b5efit  7#a7 ,taxable    
ye>s beg9n+ be=e ,janu>y #a1 #bjba ,9 ! 
case ( specifi$ m$ical rese>*           
exp5ditures 7z def9$ 9 section          
#da7;f77#g7 ( su* ,code 7z add$ by ?is  
section77 paid or incurr$ 9 taxable ye>s
 beg9n+ be=e ,janu>y #a1 #bjba-- 7,a7   
su* exp5ditures %all be treat$ 9 ! same 
mann] z qualifi$ rese>* exp5ses & basic 
rese>* exp5ses "u section #bhj;,c7c77#a7
 ( su* ,code 7z 9 effect on ! day be=e !
 enactm5t ( ! ,tax ,cuts & ,jobs ,act71 
&  7,b7 ! am\nt det]m9$ "u section      
#bhj;,c7c77#b77;,a7 7z 9 effect on su*  
day7 = ! taxable ye> %all be increas$ by
 ! am\nt ( cr$it det]m9$ = ! taxable ye>
 "u section #da7;a77#d7 7z add$ by ?is  
section74  7#b7 ,taxable ye>s beg9n+    

aft] ,decemb] #ca1 #bjbj ,section       
#bhj;,c7c77#a7 ( su* ,code is am5d$ by  
/rik+ section #da7;a77#a7 & ins]t+      
p>agraphs 7#a7 & 7#d7 ( section #da7;a74
  7d7 ,con=m+ am5dm5t ,section          
#da7;f77#a7 ( su* ,code is am5d$ by     
/rik+ & am\nts paid or incurr$ to en]gy 
rese>* consortiums ea* place x appe>s & 
ins]t+ 1 am\nts paid or incurr$ to en]gy
 rese>* consortiums1 & specifi$ m$ical  
rese>* exp5ditures4  7e7 ,effective date
 ,! am5dm5ts made by ?is section %all   
apply to am\nts paid or incurr$ aft] !  
date ( ! enactm5t ( ?is ,act1 9 taxable 
ye>s end+ aft] su* date4  #cjd4         
,refundable portion ( rese>* cr$it =    
small bus9esses engag+ 9 specifi$ m$ical
 rese>*  7a7 ,9 g5]al ,section #da ( !  
,int]nal ,rev5ue ,code ( #aihf is am5d$ 
by add+ at ! end ! foll[+ new           
subsection3  7i7 ,refundable portion =  
small bus9esses engag+ 9 specifi$ m$ical
 rese>*  7#a7 ,9 g5]al ,at ! election ( 
a m$ical rese>* small bus9ess1 ! portion
 ( ! cr$it det]m9$ "u ?is section = !   

taxable ye> :i* is prop]ly allocable to 
specifi$ m$ical rese>* %all be treat$   
7o!r ?an = purposes ( section #bhj;,c7 z
 a cr$it all[$ "u subp>t ,c 7& n ?is    
subp>t74  7#b7 ,m$ical rese>* small     
bus9ess ,= purposes ( ?is subsection1 ! 
t]m m$ical rese>* small bus9ess means   
any dome/ic ,c corporation-- 7,a7 :i*   
conducts any specifi$ m$ical rese>* dur+
 ! taxable ye>1 &  7,b7 ! gross receipts
 ( :i* 7det]m9$ "u ! rules ( subsection 
7c77 = ! taxable ye> d n exce$          
#a1jjj1jjj4  7#c7 ,specifi$ m$ical      
rese>* ,= purposes ( ?is subsection1 !  
t]m specifi$ m$ical rese>* means any    
qualifi$ rese>* ) respect to qualifi$   
c\nt]measures 7z def9$ 9 section        
#cai;,f-#a7;a77#b7 ( ! ,public ,heal?   
,s]vice ,act 7#db ,u4,s4,c4             
#bdg;d-#f;a7a77#b7774  7#d7 ,election   
,any election "u ?is subsection = any   
taxable ye>-- 7,a7 %all specify ! am\nt 
( ! cr$it to :i* su* election applies1  
7,b7 %all be made on or be=e ! due date 
7includ+ ext5sions7 ( ! return ( tax = !

 taxable ye>1  7,c7 may n be made = any 
taxable ye> ) respect to any portion ( !
 cr$it det]m9$ "u ?is section ) respect 
to :i* an election is made "u subsection
 7h71 &  7,d7 may be revok$ only ) !    
cons5t ( ! ,secret>y4  7#e7 ,regulations
 ,! ,secret>y %all prescribe su*        
regulations = purposes ( ?is subsection 
z may be necess>y or appropriate =      
det]m9+ prop] allocation to specifi$    
m$ical rese>* ( ! portion ( any cr$it   
all[$ to a taxpay] = a taxable ye> "u   
?is section4  4  7b7 ,con=m+ am5dm5t    
,section #acbd7;b7 ( title #ca1 ,unit$  
,/ates ,code1 is am5d$ by ins]t+        
#da7;i71 aft] #fdbh14  7c7 ,effective   
date ,! am5dm5ts made by ?is section    
%all apply to taxable ye>s beg9n+ aft]  
,decemb] #ca1 #bjbj4  #cje4 ,exception f
 passive loss rules = inve/m5ts 9       
specifi$ m$ical rese>* small bus9ess    
pass-?ru entities  7a7 ,9 g5]al         
,subsection 7c7 ( section #dfi ( !      
,int]nal ,rev5ue ,code ( #aihf is am5d$ 
by r$esignat+ p>agraphs 7#d7 ?r\gh 7#g7 

z p>agraphs 7#e7 ?r\gh 7#h71            
respectively1 & by ins]t+ aft] p>agraph 
7#c7 ! foll[+ new p>agraph3  7#d7       
,specifi$ m$ical rese>* activities  7,a7
 ,9 g5]al ,! t]m passive activity %all n
 include any qualifi$ m$ical rese>*     
activity ( ! taxpay] c>ri$ on by a      
specifi$ m$ical rese>* small bus9ess    
pass-?ru entity4  7,b7 ,treatm5t (      
losses & d$uctions  7i7 ,9 g5]al ,losses
 or d$uctions ( a taxpay] 9 connection )
 qualifi$ m$ical rese>* activities c>ri$
 on by a specifi$ m$ical rese>* small   
bus9ess pass-?ru entity %all n be treat$
 z losses or d$uctions1 respectively1 f 
a passive activity except z provid$ 9   
clause 7ii7 & subp>agraph 7,c74  7ii7   
,limitation ,clause 7i7 %all apply to   
losses & d$uctions ( a taxpay] 9        
connection ) a specifi$ m$ical small    
bus9ess pass-?ru entity = a taxable ye> 
only to ! ext5t t ! aggregate losses &  
d$uctions ( ! taxpay] 9 connection )    
qualifi$ m$ical rese>* activities ( su* 
entity = su* taxable ye> d n exce$ !    

portion ( ! taxpay]'s adju/$ basis 9 !  
taxpay]'s own]%ip int]e/ 9 su* entity t 
is attributable to money or o!r prop]ty 
contribut$-- 7,i7 9 ex*ange = su*       
own]%ip int]e/1 &  7,,ii7 specifically =
 use 9 connection ) qualifi$ m$ical     
rese>* activities4  ,= purposes ( !     
prec$+ s5t5ce1 ! taxpay]'s basis %all n 
include any portion ( su* basis :i* is  
attributable to an increase 9 a p>tn]'s 
%>e ( ! liabilities ( a p>tn]%ip t is   
consid]$ "u section #geb7;a7 z a        
contribution ( money4  7,c7 ,treatm5t ( 
c>ryov]s ,subp>agraph 7,b77i7 %all n    
apply to ! portion ( any loss or        
d$uction t is c>ri$ ov] "u subsection   
7b7 into a taxable ye> o!r ?an ! taxable
 ye> 9 :i* su* loss or d$uction arose4  
7,d7 ,qualifi$ m$ical rese>* activity ,=
 purposes ( ?is p>agraph1 ! t]m qualifi$
 m$ical rese>* activity means any       
qualifi$ rese>* 7)9 ! mean+ ( section   
#da7;d77 ) respect to qualifi$          
c\nt]measures 7z def9$ 9 section        
#cai;,f-#a7;a77#b7 ( ! ,public ,heal?   

,s]vice ,act 7#db ,u4,s4,c4             
#bdg;d-#f;a7a77#b7774  7,e7 ,specifi$   
m$ical rese>* small bus9ess pass-?ru    
entity ,= purposes ( ?is p>agraph1 ! t]m
 specifi$ m$ical rese>* small bus9ess   
pass-?ru entity means any dome/ic       
pass-?ru entity = any taxable ye> if--  
7i7 m ?an #hj p]c5t ( su* entity's      
exp5ditures on qualifi$ rese>* = su*    
taxable ye> are paid or incurr$ 9       
connection ) qualifi$ m$ical rese>*     
activities1 &  7ii7 ! gross receipts 7z 
det]m9$ "u ! rules ( section            
#da7;h77#c77 ( su* entity = ! taxable   
ye> 7& ea* prec$+ taxable ye>7 is less  
?an #a1jjj1jjj4  7,f7 ,capital          
exp5ditures tak5 into acc\nt =          
exp5ditures te/ ,an exp5diture %all n   
fail to be tak5 into acc\nt "u          
subp>agraph 7,e77i7 m]ely because su*   
exp5diture is *>geable to capital       
acc\nt4  7,g7 ,pass-?ru entity ,=       
purposes ( ?is p>agraph1 ! t]m pass-?ru 
entity means any p>tn]%ip1 ,s           
corporation1 or o!r entity id5tifi$ by !

 ,secret>y z a pass-?ru entity =        
purposes ( ?is p>agraph4  7,h7          
,aggregation rules  7i7 ,9 g5]al ,all   
p]sons treat$ z a s+le employ] "u       
subsection 7a7 or 7b7 ( section #eb1 or 
subsection 7m7 or 7o7 ( section #dad1   
%all be treat$ z a s+le entity =        
purposes ( subp>agraphs 7,e7 &          
7,f77iii74  7ii7 ,limitation :]e entity 
w\ld n qualify ,no entity %all be treat$
 z a specifi$ m$ical rese>* small       
bus9ess pass-?ru entity unless su*      
entity qualifies z su* bo? ) & )\t !    
application ( clause 7i74  4  7b7       
,mat]ial p>ticipation n requir$         
,p>agraph 7#e7 ( section #dfi7;c7 ( !   
,int]nal ,rev5ue ,code ( #aihf1 z       
r$esignat$ by subsection 7a71 is am5d$  
by /rik+ & 7#c7 9 ! head+ & text &      
ins]t+ 1 7#c71 & 7#d74  7c7 ,c]ta9      
rese>*-,relat$ d$uctions & cr$its (     
specifi$ m$ical rese>* small bus9ess    
pass-,?ru entities all[$ = purposes (   
det]m9+ alt]native m9imum tax  7#a7     
,d$uction = rese>* & exp]im5tal         

exp5ditures ,p>agraph 7#b7 ( section    
#ef7;b7 ( ! ,int]nal ,rev5ue ,code (    
#aihf is am5d$ by add+ at ! end ! foll[+
 new subp>agraph3  7,e7 ,exception =    
specifi$ m$ical rese>* small bus9ess    
pass-?ru entities ,9 ! case ( a specifi$
 m$ical rese>* small bus9ess pass-?ru   
entity 7z def9$ 9 section #dfi7;c77#d771
 ?is p>agraph %all n apply to any am\nt 
all[able z a d$uction "u section        
#agd7;a74  4  7#b7 ,all[ance ( c]ta9    
rese>*-relat$ cr$its ,subp>agraph 7,b7 (
 section #ch7;c77#d7 ( su* ,code is     
am5d$ by r$esignat+ clauses 7ii7 ?r\gh  
7ix7 z clauses 7iii7 ?r\gh 7x71         
respectively1 & by ins]t+ aft] clause   
7i7 ! foll[+ new clause3  7ii7 ! cr$it (
 an individual taxpay] det]m9$ "u       
section #da to ! ext5t attributable to a
 specifi$ m$ical rese>* small bus9ess   
pass-?ru entity 7z def9$ 9 section      
#dfi7;c77#d771  4  7d7 ,exception to    
limitation on pass-,?ru ( rese>* cr$it  
,subsection 7g7 ( section #da ( su*     
,code is am5d$ by add+ at ! end !       

foll[+3 ,p>agraphs 7#b7 & 7#d7 %all n   
apply ) respect to any specifi$ m$ical  
rese>* small bus9ess pass-?ru entity 7z 
def9$ 9 section #dfi7;c77#d7744  7e7    
,effective date ,! am5dm5ts made by ?is 
section %all apply to losses & cr$its   
aris+ 9 taxable ye>s beg9n+ aft]        
,decemb] #ca1 #bjbj4  ,,iv ,gr[? 9      
,innovation & ,te*nology ,break?r\ghs   
#dja4 ,simplification & expansion (     
d$uction = />t-up & organizational      
exp5ditures  7a7 ,9 g5]al ,section #aie 
( ! ,int]nal ,rev5ue ,code ( #aihf is   
am5d$ by r$esignat+ subsections 7c7 &   
7d7 z subsections 7d7 & 7e71            
respectively1 & by /rik+ all t prec$es  
subsection 7d7 7z s r$esignat$7 & ins]t+
 ! foll[+3  #aie4 ,/>t-up &             
organizational exp5ditures  7a7         
,capitalization ( exp5ditures ,except z 
o!rwise provid$ 9 ?is section1 no       
d$uction %all be all[$ = />t-up or      
organizational exp5ditures4  7b7        
,election ,to d$uct  7#a7 ,9 g5]al ,if a
 taxpay] elects ! application ( ?is     

subsection ) respect to any active trade
 or bus9ess-- 7,a7 ! taxpay] %all be    
all[$ a d$uction = ! taxable ye> 9 :i*  
su* active trade or bus9ess beg9s 9 an  
am\nt equal to ! less] (-- 7i7 !        
aggregate am\nt ( />t-up &              
organizational exp5ditures paid or      
incurr$ 9 connection ) su* active trade 
or bus9ess1 or  7ii7 #bj1jjj1 r$uc$ 7b n
 bel[ z]o7 by ! am\nt by :i* su*        
aggregate am\nt exce$s #abj1jjj1 &  7,b7
 ! rema9d] ( su* />t-up & organizational
 exp5ditures %all be *>g$ to capital    
acc\nt & all[$ z an amortization        
d$uction det]m9$ by amortiz+ su*        
exp5ditures ratably ov] ! #ahj-mon?     
p]iod beg9n+ ) ! mon? 9 :i* ! active    
trade or bus9ess beg9s4  7#b7           
,application to organizational          
exp5ditures ,9 ! case ( organizational  
exp5ditures ) respect to any corporation
 or p>tn]%ip1 ! active trade or bus9ess 
ref]r$ to 9 p>agraph 7#a7 means ! fir/  
active trade or bus9ess c>ri$ on by su* 
corporation or p>tn]%ip4  7#c7          

,inflation adju/m5t ,9 ! case ( any     
taxable ye> beg9n+ aft] ,decemb] #ca1   
#bjbj1 ! #bj1jjj & #abj1jjj am\nts 9    
p>agraph 7#a77;,a77ii7 %all ea* be      
increas$ by an am\nt equal to-- 7,a7 su*
 doll> am\nt1 multipli$ by  7,b7 !      
co/-(-liv+ adju/m5t det]m9$ "u section  
#a7;f77#c7 = ! cal5d> ye> 9 :i* !       
taxable ye> beg9s1 det]m9$ by sub/itut+ 
cal5d> ye> #bjai = cal5d> ye> #bjaf 9   
subp>agraph 7,a77ii7 !re(4  ,if any     
am\nt z increas$ "u ! prec$+ s5t5ce is n
 a multiple ( #a1jjj1 su* am\nt %all be 
r\nd$ to ! ne>e/ multiple ( #a1jjj4  7c7
 ,all[ance ( d$uction ^u liquidation or 
disposition  7#a7 ,liquidation (        
p>tn]%ip or corporation ,if any p>tn]%ip
 or corporation is completely liquidat$ 
by ! taxpay]1 any />t-up or             
organizational exp5ditures paid or      
incurr$ 9 connection ) su* p>tn]%ip or  
corporation :i* 7 n all[$ z a d$uction  
by reason ( ?is section may be d$uct$ to
 ! ext5t all[able "u section #afe4  7#b7
 ,disposition ( trade or bus9ess ,if any

 trade or bus9ess is completely dispos$ 
( or discont9u$ by ! taxpay]1 any />t-up
 exp5ditures paid or incurr$ 9          
connection ) su* trade or bus9ess :i* 7 
n all[$ z a d$uction by reason ( ?is    
section 7& n tak5 into acc\nt 9         
connection ) a liquidation to :i*       
p>agraph 7#a7 applies7 may be d$uct$ to 
! ext5t all[able "u section #afe4 ,=    
purposes ( ?is p>agraph1 9 ! case ( any 
d$uction all[$ "u subsection 7b77#a7 )  
respect to bo? />t-up & organizational  
exp5ditures1 ! am\nt treat$ z s all[$ ) 
respect to />t-up exp5ditures %all be> !
 same ratio to su* d$uction z ! />t-up  
exp5ditures tak5 into acc\nt 9 det]m9+  
su* d$uction be>s to ! aggregate ( !    
/>t-up & organizational exp5ditures s   
tak5 into acc\nt4  4  7b7               
,organizational exp5ditures ,section    
#aie7;d7 ( su* ,code1 z r$esignat$ by   
subsection 7a71 is am5d$ by add+ at !   
end ! foll[+ new p>agraphs3  7#c7       
,organizational exp5ditures ,! t]m      
organizational exp5ditures means any    

exp5diture :i*-- 7,a7 is incid5t to !   
creation ( a corporation or a p>tn]%ip1 
7,b7 is *>geable to capital acc\nt1 &   
7,c7 is ( a "* :i*1 if exp5d$ incid5t to
 ! creation ( a corporation or a        
p>tn]%ip hav+ an asc]ta9able life1 w\ld 
be amortizable ov] su* life4  7#d7      
,application to c]ta9 disreg>d$ entities
 ,9 ! case ( any entity ) a s+le own] t 
is disreg>d$ z an entity sep>ate f its  
own]1 ?is section %all be appli$ 9 !    
same mann] z if su* entity 7 a          
corporation4  4  7c7 ,election ,section 
#aie7;e77#b7 ( su* ,code1 z r$esignat$  
by subsection 7a71 is am5d$ to read z   
foll[s3  7#b7 ,p>tn]%ips & ,s           
corporations ,9 ! case ( any p>tn]%ip or
 ,s corporation1 ! election "u          
subsection 7b7 %all be made 7& ?is      
section %all be appli$7 at ! entity     
level4  4  7d7 ,con=m+ am5dm5ts  7#a7   
7,a7 ,"p ,,viii ( sub*apt] ,b ( *apt] #a
 is am5d$ by /rik+ section #bdh ( su*   
,code 7& by /rik+ ! item relat+ to su*  
section 9 ! table ( sections ( su* "p74 

7,b7 ,section #agj7;b77#b77;,d77ii7 (   
su* ,code is am5d$ by /rik+ 7except     
section #bdh74  7,c7 ,section           
#cab7n77#c7 ( su* ,code is am5d$ by     
/rik+ ,sections #agc & #bdh & ins]t+    
,sections #agc & #aie4  7,d7 ,section   
#ece7;b77#c7 ( su* ,code is am5d$ by    
/rik+ 7except section #bdh74  7,e7      
,section #ede7;b77#c7 ( su* ,code is    
am5d$ by /rik+ 7except section #bdh74   
7,f7 ,section #ede7;b77#d7 ( su* ,code  
is am5d$ by /rik+ 7except section #bdh74
  7,g7 ,section #hcd7;c77#g7 ( su* ,code
 is am5d$ by /rik+ 7except section      
#bdh74  7,h7 ,section #heb7;b77#b77;,c7 
( su* ,code is am5d$ by /rik+ 7except   
section #bdh74  7,i7 ,section           
#heg7;b77#b77;,a7 ( su* ,code is am5d$  
by /rik+ 7except section #bdh74  7,j7   
,section #acfc7;b7 ( su* ,code is am5d$ 
by add+ & at ! end ( p>agraph 7#b71 by  
/rik+ p>agraph 7#c71 & by r$esignat+    
p>agraph 7#d7 z p>agraph 7#c74  7,k7    
,section #acge7;b77#a77;,b77i7 ( su*    
,code is am5d$ by /rik+ 7o!r ?an !      

d$uction all[$ by section #bdh1 relat+  
to organization exp5ditures74  7#b7 7,a7
 ,section #gji ( su* ,code is am5d$ to  
read z foll[s3  #gji4 ,treatm5t (       
syndication fees ,no d$uction %all be   
all[$ "u ?is *apt] to a p>tn]%ip or to  
any p>tn] ( ! p>tn]%ip = any am\nts paid
 or incurr$ to promote ! sale ( 7or to  
sell7 an int]e/ 9 ! p>tn]%ip4  4  7,b7  
,! item relat+ to section #gji 9 ! table
 ( sections = "p ,i ( sub*apt] ,k (     
*apt] #a ( su* ,code is am5d$ to read z 
foll[s3  ,sec4 #gji4 ,treatm5t (        
syndication fees4  4  7#c7 ,section     
#abjb7;e77#b77;,a7 ( su* ,code is am5d$ 
by /rik+ section #aie7;c77#a77;,a7 &    
ins]t+ section #aie7;d77#a77;,a74  7#d7 
,! item relat+ to section #aie 9 ! table
 ( cont5ts ( "p ,,vi ( sub*apt] ,b (    
*apt] #a ( su* ,code is am5d$ to read z 
foll[s3  ,sec4 #aie4 ,/>t-up &          
organizational exp5ditures4  4  7e7     
,effective date ,! am5dm5ts made by ?is 
section %all apply to exp5ditures paid  
or incurr$ 9 connection ) active trades 

or bus9esses :i* beg9 9 taxable ye>s    
beg9n+ aft] ,decemb] #ca1 #bjai4  #djb4 
,pres]vation ( />t-up net op]at+ losses 
& tax cr$its aft] own]%ip *ange  7a7    
,application to net op]at+ losses       
,section #chb7;d7 ( ! ,int]nal ,rev5ue  
,code ( #aihf is am5d$ by add+ at ! end 
! foll[+ new p>agraph3  7#d7 ,exception 
= />t-up losses  7,a7 ,9 g5]al ,9 ! case
 ( any net op]at+ loss c>ry=w>d describ$
 9 p>agraph 7#a77;,a7 :i* arose 9 a     
/>t-up p]iod taxable ye>1 ! am\nt ( su* 
net op]at+ loss c>ry=w>d o!rwise tak5   
into acc\nt "u su* p>agraph %all be     
r$uc$ by ! net />t-up loss det]m9$ )    
respect to ! trade or bus9ess ref]r$ to 
9 subp>agraph 7,b77i7 = su* />t-up p]iod
 taxable ye>4  7,b7 ,/>t-up p]iod       
taxable ye> ,! t]m />t-up p]iod taxable 
ye> means any taxable ye> ( ! old loss  
corporation :i*-- 7i7 beg9s be=e ! close
 ( ! #c-ye> p]iod beg9n+ on ! date on   
:i* any trade or bus9ess ( su*          
corporation beg9s z an active trade or  
bus9ess 7z det]m9$ "u section           

#aie7;d77#b7 )\t reg>d to subp>agraph   
7,b7 !re(71 &  7ii7 ends aft] ,may #ca1 
#bjbj4  7,c7 ,net />t-up loss  7i7 ,9   
g5]al ,! t]m net />t-up loss means1 )   
respect to any trade or bus9ess ref]r$  
to 9 subp>agraph 7,b77i7 = any />t-up   
p]iod taxable ye>1 ! am\nt :i* be>s !   
same ratio 7b n great] ?an #a7 to ! net 
op]at+ loss c>ry=w>d :i* arose 9 su*    
/>t-up p]iod taxable ye> z-- 7,i7 ! net 
op]at+ loss 7if any7 :i* w\ld h be5     
det]m9$ = su* />t-up p]iod taxable ye>  
if only items ( income1 ga91 d$uction1 &
 loss prop]ly allocable to su* trade or 
bus9ess 7 tak5 into acc\nt1 be>s to     
7,,ii7 ! am\nt ( ! net op]at+ loss      
det]m9$ = su* />t-up p]iod taxable ye>4 
7ii7 ,special rule = la/ taxable ye> 9  
/>t-up p]iod ,9 ! case ( any />t-up     
p]iod taxable ye> :i* ends aft] ! close 
( ! #c-ye> p]iod describ$ 9 subp>agraph 
7,b77i7 ) respect to any trade or       
bus9ess1 ! net />t-up loss ) respect to 
su* trade or bus9ess = su* />t-up p]iod 
taxable ye> %all be ! same proportion ( 

su* loss 7det]m9$ )\t reg>d to ?is      
clause7 z ! proportion ( su* />t-up     
p]iod taxable ye> :i* is on or be=e !   
la/ day ( su* p]iod4  7,d7 ,application 
to net op]at+ loss aris+ 9 ye> ( own]%ip
 *ange ,subp>agraph 7,a7 %all apply to  
any net op]at+ loss describ$ 9 p>agraph 
7#a77;,b7 9 ! same mann] z su*          
subp>agraph applies to net op]at+ loss  
c>ry=w>ds describ$ 9 p>agraph 7#a77;,a71
 b by only tak+ into acc\nt ! am\nt (   
su* net op]at+ loss 7& ! am\nt ( ! net  
/>t-up loss7 :i* is allocable "u        
p>agraph 7#a77;,b7 to ! p]iod describ$ 9
 su* p>agraph4 ,prop] adju/m5t 9 !      
allocation ( ! net />t-up loss "u !     
prec$+ s5t5ce %all be made 9 ! case ( a 
taxable ye> to :i* subp>agraph 7,c77ii7 
applies4  7,e7 ,application to taxable  
ye>s :i* are />t-up p]iod taxable ye>s )
 respect to m ?an #a trade or bus9ess ,9
 ! case ( any net op]at+ loss c>ry=w>d  
:i* arose 9 a taxable ye> :i* is a      
/>t-up p]iod taxable ye> ) respect to m 
?an #a trade or bus9ess-- 7i7 ?is       

p>agraph %all be appli$ sep>ately )     
respect to ea* su* trade or bus9ess1 &  
7ii7 ! aggregate r$uctions "u           
subp>agraph 7,a7 %all n exce$ su* net   
op]at+ loss c>ry=w>d4  7,f7 ,cont9uity (
 bus9ess requirem5t ,if ! new loss      
corporation does n cont9ue ! trade or   
bus9ess ref]r$ to 9 subp>agraph 7,b77i7 
at all times dur+ ! #b-ye> p]iod beg9n+ 
on ! *ange date1 ?is p>agraph %all n    
apply ) respect to su* trade or bus9ess4
  7,g7 ,c]ta9 title #aa or simil> cases 
7i7 ,multiple own]%ip *anges ,9 ! case (
 a #bnd own]%ip *ange to :i* subsection 
7l77#e77;,d7 applies1 ?is p>agraph %all 
n apply = purposes ( det]m9+ ! pre-*ange
 loss ) respect to su* #bnd own]%ip     
*ange4  7ii7 ,c]ta9 insolv5cy           
transactions ,if subsection 7l77#f7     
applies = purposes ( det]m9+ ! value ( !
 old loss corporation "u subsection 7e71
 ?is p>agraph %all n apply4  7,h7 ,n    
applicable to disall[$ int]e/ ,?is      
p>agraph %all n apply = purposes (      
apply+ ! rules ( p>agraph 7#a7 to !     

c>ryov] ( disall[$ int]e/ "u p>agraph   
7#c74  7,i7 ,transition rule ,?is       
p>agraph %all n apply ) respect to any  
trade or bus9ess if ! date on :i* su*   
trade or bus9ess beg9s z an active trade
 or bus9ess 7z det]m9$ "u section       
#aie7;d77#b7 )\t reg>d to subp>agraph   
7,b7 !re(7 is on or be=e ,may #ca1      
#bjbj4  4  7b7 ,application to excess   
cr$its ,section #chc ( su* ,code is     
am5d$ by r$esignat+ subsection 7e7 z    
subsection 7f7 & by ins]t+ aft]         
subsection 7d7 ! foll[+ new subsection3 
7e7 ,exception = />t-,up excess cr$its  
7#a7 ,9 g5]al ,9 ! case ( any unus$     
g5]al bus9ess cr$it ( ! corporation "u  
section #ci :i* arose 9 a />t-up p]iod  
taxable ye>1 ! am\nt ( su* unus$ g5]al  
bus9ess cr$it o!rwise tak5 into acc\nt  
"u subsection 7a77#b77;,a7 %all be r$uc$
 by ! />t-up excess cr$it det]m9$ )     
respect to any trade or bus9ess ref]r$  
to 9 section #chb7;d77#d77;,b77i7 = su* 
/>t-up p]iod taxable ye>4  7#b7 ,/>t-up 
p]iod taxable ye> ,= purposes ( ?is     

subsection1 ! t]m />t-up p]iod taxable  
ye> has ! mean+ giv5 su* t]m 9 section  
#chb7;d77#d77;,b74  7#c7 ,/>t-up excess 
cr$it ,= purposes ( ?is subsection1 !   
t]m />t-up excess cr$it means1 ) respect
 to any trade or bus9ess ref]r$ to 9    
section #chb7;d77#d77;,b77i7 = any      
/>t-up p]iod taxable ye>1 ! am\nt :i*   
be>s ! same ratio to ! unus$ g5]al      
bus9ess cr$it :i* arose 9 su* />t-up    
p]iod taxable ye> z-- 7,a7 ! am\nt ( !  
g5]al bus9ess cr$it :i* w\ld h be5      
det]m9$ = su* />t-up p]iod taxable ye>  
if only cr$its prop]ly allocable to su* 
trade or bus9ess 7 tak5 into acc\nt1    
be>s to  7,b7 ! am\nt ( ! g5]al bus9ess 
cr$it det]m9$ = su* />t-up p]iod taxable
 ye>4  7#d7 ,application ( c]ta9 rules  
,rules simil> to ! rules ( subp>agraphs 
7,c77ii71 7,d71 7,e71 & 7,f7 ( section  
#chb7;d77#d7 %all apply = purposes ( ?is
 subsection4  7#e7 ,transition rule ,?is
 subsection %all n apply ) respect to   
any trade or bus9ess if ! date on :i*   
su* trade or bus9ess beg9s z an active  

trade or bus9ess 7z det]m9$ "u section  
#aie7;d77#b7 )\t reg>d to subp>agraph   
7,b7 !re(7 is on or be=e ,may #ca1      
#bjbj4  4  7c7 ,effective date ,!       
am5dm5ts made by ?is section %all apply 
to taxable ye>s end+ aft] ,may #ca1     
#bjbj4