,i #aaf? ,,congress #a/ ,session ,h4 ,r4 #dedi ,,9 ,,! ,,h\se ,,( ,,repres5tatives ,septemb] #bg1 #bjai,mr4 ,l>son ( ,connecticut 7= himself & ,mr4 ,e/es7 introduc$ ! foll[+ bill2 :i* 0 ref]r$ to ! ,committee on ,ways & ,means ,a ,,bill ,to am5d ! ,int]nal ,rev5ue ,code ( #aihf to re/ore ! d$uction = rese>* & exp]im5tal exp5ditures4 #a4 ,%ort title ,?is ,act may be cit$ z ! ,am]ican ,innovation & ,competitiv5ess ,act ( #bjai or ! ,,aica ,act ( #bjai4 #b4 ,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