,i #aafth ,,congress #ast ,session ,h4 ,r4 #dedi ,,in ,,the ,,house ,,of ,,representatives ,september #bg1 #bjai,mr4 ,larson of ,connecticut 7for himself and ,mr4 ,estes7 introduced the following bill2 which was referred to the ,committee on ,ways and ,means ,a ,,bill ,to amend the ,internal ,revenue ,code of #aihf to restore the deduction for research and experimental expenditures4 #a4 ,short title ,this ,act may be cited as the ,american ,innovation and ,competitiveness ,act of #bjai or the ,,aica ,act of #bjai4 #b4 ,research and experimental expenditures 7a7 ,in general ,section #agd is amended to read as follows3 #agd4 ,research and experimental expenditures 7a7 ,treatment as ,expenses 7#a7 ,in general ,a taxpayer may treat research or experimental expenditures which are paid or incurred by him during the taxable year in connection with his trade or business as expenses which are not chargeable to capital account4 ,the expenditures so treated shall be allowed as a deduction4 7#b7 ,when method may be adopted 7,a7 ,without consent ,a taxpayer may1 without the consent of the ,secretary1 adopt the method provided in this subsection for his first taxable year for which expenditures described in paragraph 7#a7 are paid or incurred4 7,b7 ,with consent ,a taxpayer may1 with the consent of the ,secretary1 adopt at any time the method provided in this subsection4 7#c7 ,scope ,the method adopted under this subsection shall apply to all expenditures described in paragraph 7#a74 ,the method adopted shall be adhered to in computing taxable income for the taxable year and for all subsequent taxable years unless1 with the approval of the ,secretary1 a change to a different method is authorized with respect to part or all of such expenditures4 7b7 ,amortization of ,certain ,research and ,experimental ,expenditures 7#a7 ,in general ,at the election of the taxpayer1 made in accordance with regulations prescribed by the ,secretary1 research or experimental expenditures which are-- 7,a7 paid or incurred by the taxpayer in connection with his trade or business1 7,b7 not treated as expenses under subsection 7a71 and 7,c7 chargeable to capital account but not chargeable to property of a character which is subject to the allowance under section #afg 7relating to allowance for depreciation1 etc47 or section #faa 7relating to allowance for depletion71 may be treated as deferred expenses4 ,in computing taxable income1 such deferred expenses shall be allowed as a deduction ratably over such period of not less than #fj months as may be selected by the taxpayer 7beginning with the month in which the taxpayer first realizes benefits from such expenditures74 ,such deferred expenses are expenditures properly chargeable to capital account for purposes of section #ajaf7;a77#a7 7relating to adjustments to basis of property74 7#b7 ,time for and scope of election ,the election provided by paragraph 7#a7 may be made for any taxable year1 but only if made not later than the time prescribed by law for filing the return for such taxable year 7including extensions thereof74 ,the method so elected1 and the period selected by the taxpayer1 shall be adhered to in computing taxable income for the taxable year for which the election is made and for all subsequent taxable years unless1 with the approval of the ,secretary1 a change to a different method 7or to a different period7 is authorized with respect to part or all of such expenditures4 ,the election shall not apply to any expenditure paid or incurred during any taxable year before the taxable year for which the taxpayer makes the election4 7c7 ,land and ,other ,property ,this section shall not apply to any expenditure for the acquisition or improvement of land1 or for the acquisition or improvement of property to be used in connection with the research or experimentation and of a character which is subject to the allowance under section #afg 7relating to allowance for depreciation1 etc47 or section #faa 7relating to allowance for depletion72 but for purposes of this section allowances under section #afg1 and allowances under section #faa1 shall be considered as expenditures4 7d7 ,exploration ,expenditures ,this section shall not apply to any expenditure paid or incurred for the purpose of ascertaining the existence1 location1 extent1 or quality of any deposit of ore or other mineral 7including oil and gas74 7e7 ,only ,reasonable ,research ,expenditures ,eligible ,this section shall apply to a research or experimental expenditure only to the extent that the amount thereof is reasonable under the circumstances4 4 7b7 ,clerical ,amendment ,the table of sections for part ,,vi of subchapter ,b of chapter #a is amended by striking the item relating to section #agd and inserting the following new item3 ,sec4 #agd4 ,research and experimental expenditures 4 7c7 ,conforming ,amendments 7#a7 ,section #da7;d77#a77;,a7 is amended by striking specified research or experimental expenditures under section #agd and inserting expenses under section #agd4 7#b7 ,section #bhj;,c7c7 is amended to read as follows3 7c7 ,credit for ,increasing ,research ,activities 7#a7 ,in general ,no deduction shall be allowed for that portion of the qualified research expenses 7as defined in section #da7;b77 or basic research expenses 7as defined in section #da7;e77#b77 otherwise allowable as a deduction for the taxable year which is equal to the amount of the credit determined for such taxable year under section #da7;a74 7#b7 ,similar rule where taxpayer capitalizes rather than deducts expenses ,if-- 7,a7 the amount of the credit determined for the taxable year under section #da7;a77#a71 exceeds 7,b7 the amount allowable as a deduction for such taxable year for qualified research expenses or basic research expenses 7determined without regard to paragraph 7#a771 the amount chargeable to capital account for the taxable year for such expenses shall be reduced by the amount of such excess4 7#c7 ,election of reduced credit 7,a7 ,in general ,in the case of any taxable year for which an election is made under this paragraph-- 7i7 paragraphs 7#a7 and 7#b7 shall not apply1 and 7ii7 the amount of the credit under section #da7;a7 shall be the amount determined under subparagraph 7,b74 7,b7 ,amount of reduced credit ,the amount of credit determined under this subparagraph for any taxable year shall be the amount equal to the excess of-- 7i7 the amount of credit determined under section #da7;a7 without regard to this paragraph1 over 7ii7 the product of-- 7,i7 the amount described in clause 7i71 and 7,,ii7 the rate of tax under section #aa7;b74 7,c7 ,election ,an election under this paragraph for any taxable year shall be made not later than the time for filing the return of tax for such year 7including extensions71 shall be made on such return1 and shall be made in such manner as the ,secretary may prescribe4 ,such an election1 once made1 shall be irrevocable4 7#d7 ,controlled groups ,paragraph 7#c7 of subsection 7b7 shall apply for purposes of this subsection4 4 7d7 ,effective date ,the amendments made by this section shall apply to amounts paid or incurred in taxable years beginning after ,december #ca1 #bjba4