,i #aafth ,,congress #b;d ,session ,h4 ,r4 #gecg ,,in ,,the ,,house ,,of ,,representatives ,july #i1 #bjbj,mr4 ,kelly of ,pennsylvania 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 provide an exception from the passive loss rules for investments in specified medical research small business pass-thru entities4 #a4 ,short title ,this ,act may be cited as the ,infectious ,disease ,therapies ,research and ,innovation ,act of #bjbj4 #b4 ,exception from passive loss rules for investments in specified medical research small business pass-thru entities 7a7 ,in general ,subsection 7c7 of section #dfi of the ,internal ,revenue ,code of #aihf is amended by redesignating paragraphs 7#d7 through 7#g7 as paragraphs 7#e7 through 7#h71 respectively1 and by inserting after paragraph 7#c7 the following new paragraph3 7#d7 ,specified medical research activities 7,a7 ,in general ,the term passive activity shall not include any qualified medical research activity of the taxpayer carried on by a specified medical research small business pass-thru entity4 7,b7 ,treatment of losses and deductions 7i7 ,in general ,losses or deductions of a taxpayer in connection with qualified medical research activities carried on by a specified medical research small business pass-thru entity shall not be treated as losses or deductions1 respectively1 from a passive activity except as provided in clause 7ii7 and subparagraph 7,c74 7ii7 ,limitation ,clause 7i7 shall apply to losses and deductions of a taxpayer in connection with a specified medical small business pass-thru entity for a taxable year only to the extent that the aggregate losses and deductions of the taxpayer in connection with qualified medical research activities of such entity for such taxable year do not exceed the portion of the taxpayer's adjusted basis in the taxpayer's ownership interest in such entity that is attributable to money or other property contributed-- 7,i7 in exchange for such ownership interest1 and 7,,ii7 specifically for use in connection with qualified medical research activities4 ,for purposes of the preceding sentence1 the taxpayer's basis shall not include any portion of such basis which is attributable to an increase in a partner's share of the liabilities of a partnership that is considered under section #geb7;a7 as a contribution of money4 7,c7 ,treatment of carryovers ,subparagraph 7,b77i7 shall not apply to the portion of any loss or deduction that is carried over under subsection 7b7 into a taxable year other than the taxable year in which such loss or deduction arose4 7,d7 ,qualified medical research activity ,for purposes of this paragraph1 the term qualified medical research activity means any qualified research 7within the meaning of section #da7;d77 with respect to qualified countermeasures 7as defined in section #cai;,f-#a7;a77#b7 of the ,public ,health ,service ,act 7#db ,u4,s4,c4 #bdg;d-#f;a7a77#b7774 7,e7 ,specified medical research small business pass-thru entity ,for purposes of this paragraph1 the term specified medical research small business pass-thru entity means any domestic pass-thru entity for any taxable year if-- 7i7 more than #hj percent of such entity's expenditures on qualified research for such taxable year are paid or incurred in connection with qualified medical research activities1 and 7ii7 the gross receipts 7as determined under the rules of section #da7;h77#c77 of such entity for the taxable year 7and each preceding taxable year7 is less than #a1jjj1jjj4 7,f7 ,capital expenditures taken into account for expenditures test ,an expenditure shall not fail to be taken into account under subparagraph 7,e77i7 merely because such expenditure is chargeable to capital account4 7,g7 ,pass-thru entity ,for purposes of this paragraph1 the term pass-thru entity means any partnership1 ,s corporation1 or other entity identified by the ,secretary as a pass-thru entity for purposes of this paragraph4 7,h7 ,aggregation rules 7i7 ,in general ,all persons treated as a single employer under subsection 7a7 or 7b7 of section #eb1 or subsection 7m7 or 7o7 of section #dad1 shall be treated as a single entity for purposes of subparagraphs 7,e7 and 7,f77iii74 7ii7 ,limitation where entity would not qualify ,no entity shall be treated as a specified medical research small business pass-thru entity unless such entity qualifies as such both with and without the application of clause 7i74 4 7b7 ,material participation not required ,paragraph 7#e7 of section #dfi7;c7 of the ,internal ,revenue ,code of #aihf1 as redesignated by subsection 7a71 is amended by striking and 7#c7 in the heading and text and inserting 1 7#c71 and 7#d74 7c7 ,certain research-,related deductions and credits of specified medical research small business pass-,thru entities allowed for purposes of determining alternative minimum tax 7#a7 ,deduction for research and experimental expenditures ,paragraph 7#b7 of section #ef7;b7 of the ,internal ,revenue ,code of #aihf is amended by adding at the end the following new subparagraph3 7,e7 ,exception for specified medical research small business pass-thru entities ,in the case of a specified medical research small business pass-thru entity 7as defined in section #dfi7;c77#d771 this paragraph shall not apply to any amount allowable as a deduction under section #agd7;a74 4 7#b7 ,allowance of certain research-related credits ,subparagraph 7,b7 of section #ch7;c77#d7 of such ,code is amended by redesignating clauses 7ii7 through 7ix7 as clauses 7iii7 through 7x71 respectively1 and by inserting after clause 7i7 the following new clause3 7ii7 the credit of an individual taxpayer determined under section #da to the extent attributable to a specified medical research small business pass-thru entity 7as defined in section #dfi7;c77#d771 4 7d7 ,exception to limitation on pass-,thru of research credit ,subsection 7g7 of section #da of such ,code is amended by adding at the end the following3 ,paragraphs 7#b7 and 7#d7 shall not apply with respect to any specified medical research small business pass-thru entity 7as defined in section #dfi7;c77#d7744 7e7 ,effective date ,the amendments made by this section shall apply to losses and credits arising in taxable years beginning after ,december #ca1 #bjbj4