,,ii  #aaf? ,,congress  #b;d ,session   
,s4 #dhbb  ,,9 ,,! ,,s5ate ,,( ,,!      
,,unit$ ,,/ates  ,octob] #bj            
7legislative day1 ,octob] #ai71         
#bjbj,ms4 ,hassan 7= h]self & ,mr4 ,"y7 
introduc$ ! foll[+ bill2 :i* 0 read     
twice & ref]r$ to ! ,committee on       
,f9ance  ,a ,,bill  ,to am5d ! ,int]nal 
,rev5ue ,code ( #aihf to enhance tax    
b5efits = rese>* activities4  #a4 ,%ort 
title ,?is ,act may be cit$ z ! ,am]ican
 ,innovation & ,jobs ,act4  #b4 ,re/or+ 
imm$iate exp5s+ = rese>* & developm5t   
inve/m5ts  7a7 ,9 g5]al ,section #agd ( 
! ,int]nal ,rev5ue ,code ( #aihf is     
am5d$ 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  7f7 ,cross ref]5ces    
7#a7 ,= adju/m5ts to basis ( prop]ty =  
am\nts all[$ z d$uctions z def]r$       
exp5ses "u subsection 7b71 see section  
#ajaf7;a77#ad74  7#b7 ,= election (     
#aj-ye> amortization ( exp5ditures      
all[able z a d$uction "u subsection 7a71
 see section #ei7;e74  4  7b7 ,cl]ical  
am5dm5t ,! table ( sections = "p ,,vi ( 
sub*apt] ,b ( *apt] #a is am5d$ by /rik+
 ! item relat+ to section #agd & ins]t+ 
! foll[+ new item3  ,sec4 #agd4 ,rese>* 
& exp]im5tal exp5ditures4  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  #c4 ,exp&+        
refundable rese>* cr$it = new & small   
bus9esses  7a7 ,increas+ cap on         
refundable cr$it  7#a7 ,9 g5]al ,clause 

7i7 ( section #da7;h77#d77;,b7 ( !      
,int]nal ,rev5ue ,code ( #aihf is am5d$ 
by /rik+ #bej1jjj & ins]t+ ! applicable 
am\nt4  7#b7 ,applicable am\nt ,section 
#da7;h77#d77;,b7 ( su* ,code is am5d$ by
 add+ at ! end ! foll[+ new clause3     
7ii7 ,applicable am\nt ,= purposes (    
clause 7i71 ! applicable am\nt is-- 7,i7
 9 ! case ( any taxable ye> beg9n+ aft] 
,decemb] #ca1 #bjbj1 & be=e ,janu>y #a1 
#bjbb1 #ejj1jjj1  7,,ii7 9 ! case ( any 
taxable ye> beg9n+ aft] ,decemb] #ca1   
#bjba1 & be=e ,janu>y #a1 #bjbc1        
#ebe1jjj1  7,,iii7 9 ! case ( any       
taxable ye> beg9n+ aft] ,decemb] #ca1   
#bjbb1 & be=e ,janu>y #a1 #bjbd1        
#eej1jjj1  7,,iv7 9 ! case ( any taxable
 ye> beg9n+ aft] ,decemb] #ca1 #bjbc1 & 
be=e ,janu>y #a1 #bjbe1 #ege1jjj1  7,v7 
9 ! case ( any taxable ye> beg9n+ aft]  
,decemb] #ca1 #bjbd1 & be=e ,janu>y #a1 
#bjbf1 #fjj1jjj1  7,,vi7 9 ! case ( any 
taxable ye> beg9n+ aft] ,decemb] #ca1   
#bjbe1 & be=e ,janu>y #a1 #bjbg1        
#fbe1jjj1  7,,vii7 9 ! case ( any       

taxable ye> beg9n+ aft] ,decemb] #ca1   
#bjbf1 & be=e ,janu>y #a1 #bjbh1        
#fej1jjj1  7,,viii7 9 ! case ( any      
taxable ye> beg9n+ aft] ,decemb] #ca1   
#bjbg1 & be=e ,janu>y #a1 #bjbi1        
#fge1jjj1  7,,ix7 9 ! case ( any taxable
 ye> beg9n+ aft] ,decemb] #ca1 #bjbh1 & 
be=e ,janu>y #a1 #bjcj1 #gjj1jjj1  7,x7 
9 ! case ( any taxable ye> beg9n+ aft]  
,decemb] #ca1 #bjbi1 & be=e ,janu>y #a1 
#bjca1 #gbe1jjj1 &  7,,xi7 9 ! case (   
any taxable ye> beg9n+ aft] ,decemb]    
#ca1 #bjcj1 #gej1jjj4  4  7#c7 ,con=m+  
am5dm5t ,clause 7ii7 ( section          
#da7;h77#e77;,b7 ( su* ,code is am5d$ by
 /rik+ ! #bej1jjj am\nt & ins]t+ !      
applicable am\nt4  7b7 ,ext5sion (      
eligibility & applicability ( election  
7#a7 ,/>tup date ,subclause 7,,ii7 (    
section #da7;h77#c77;,a77i7 ( ! ,int]nal
 ,rev5ue ,code ( #aihf is am5d$ by /rik+
 #e-taxable-ye> p]iod & ins]t+          
#h-taxable-ye> p]iod4  7#b7 ,ext5sion ( 
limitation on election ,clause 7ii7 (   
section #da7;h77#d77;,b7 ( su* ,code is 

am5d$ by /rik+ #e or m & ins]t+ #h or m4
  7c7 ,gross receipts te/ ,clause 7i7 ( 
section #da7;h77#c77;,a7 ( ! ,int]nal   
,rev5ue ,code ( #aihf is am5d$-- 7#a7 by
 /rik+ #e1jjj1jjj 9 subclause 7,i7 &    
ins]t+ #ae1jjj1jjj1 &  7#b7 by /rik+    
gross receipts 9 subclause 7,,ii7 &     
ins]t+ gross receipts 9 excess (        
#be1jjj4  7d7 ,effective date ,!        
am5dm5ts made by ?is section %all apply 
to taxable ye>s beg9n+ aft] ,decemb]    
#ca1 #bjbj4  #d4 ,increas+ access to !  
rese>* cr$it = />tups  7a7 ,9 g5]al     
,p>agraph 7#d7 ( section #da7;c7 ( !    
,int]nal ,rev5ue ,code ( #aihf is am5d$ 
by add+ at ! end ! foll[+ new           
subp>agraph3  7,d7 ,special rules =     
qualifi$ small bus9esses ,9 ! case ( a  
qualifi$ small bus9ess 7z def9$ 9       
subsection 7h77#c77-- 7i7 subp>agraph   
7,a7 %all be appli$ by sub/itut+ #bj    
p]c5t = #ad p]c5t1 &  7ii7 if           
subp>agraph 7,b7 applies to su* taxpay]1
 at ! election ( ! taxpay]-- 7,i7       
subp>agraph 7,b77ii7 %all be appli$ by  

sub/itut+ #aj p]c5t = #f p]c5t1 or      
7,,ii7 9 lieu ( apply+ subp>agraph 7,b71
 ! av]age "u subp>agraph 7,a7 %all be   
det]m9$ by disreg>d+ any taxable ye> 9 !
 #c-ye> p]iod describ$ 9 su* subp>agraph
 9 :i* !re 7 no qualifi$ rese>* exp5ses4
  4  7b7 ,effective date ,! am5dm5t made
 by ?is section %all apply to taxable   
ye>s beg9n+ aft] ! date ( ! enactm5t (  
?is ,act4