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H.R. 2821 (115th): REACH Act

The text of the bill below is as of Jun 7, 2017 (Introduced).


I

115th CONGRESS

1st Session

H. R. 2821

IN THE HOUSE OF REPRESENTATIVES

June 7, 2017

(for himself and Mr. Larson of Connecticut) introduced the following bill; which was referred to the Committee on Ways and Means

A BILL

To amend the Internal Revenue Code of 1986 to reform the credit for increasing research activities, and for other purposes.

1.

Short title

This Act may be cited as the Research and Experimentation Advances Competitiveness at Home Act or as the REACH Act.

2.

Increase of alternative simplified credit

(a)

In general

Subparagraph (A) of section 41(c)(5) of the Internal Revenue Code of 1986 is amended by striking 14 percent (12 percent in the case of taxable years ending before January 1, 2009) and inserting 20 percent.

(b)

Conforming amendment

Clause (ii) of section 41(c)(5)(B) of the Internal Revenue Code of 1986 is amended by striking 6 percent and inserting 10 percent.

(c)

Effective date

The amendments made by this section shall apply to taxable years beginning after December 31, 2016.

3.

Allocation of research expenses among business components

(a)

In general

Subparagraph (A) of section 41(d)(2) of the Internal Revenue Code of 1986 is amended by inserting , and may be applied using a method that relies on reasonable estimation techniques in lieu of contemporaneous accounting to measure employee hours per business component before the period.

(b)

Effective date

The amendment made by this section shall apply to taxable years beginning after December 31, 2016.

4.

Inclusion of qualified upper-level employees in research expense calculation

(a)

In general

Clause (ii) of section 41(b)(2)(B) of the Internal Revenue Code of 1986 is amended by inserting , without regard to the employee's position or management level before the period.

(b)

Effective date

The amendment made by this section shall apply to taxable years beginning after December 31, 2016.

5.

Repeal of exclusion of adaptive research

(a)

In general

Paragraph (4) of section 41(d) of the Internal Revenue Code of 1986 is amended by striking subparagraph (B) and by redesignating subparagraphs (C), (D), (E), (F), (G), and (H) as subparagraphs (B), (C), (D), (E), (F), and (G), respectively.

(b)

Effective date

The amendments made by this section shall apply to taxable years beginning after December 31, 2016.

6.

Inclusion of cost reduction research

(a)

In general

Subparagraph (A) of section 41(d)(3) of the Internal Revenue Code of 1986 is amended—

(1)

by striking or at the end of clause (ii);

(2)

by striking the period at the end of clause (iii) and inserting , or; and

(3)

by adding at the end the following new clause:

(iv)

reduction of costs associated with—

(I)

a business component of the taxpayer, or

(II)

research relating to a purpose described in clause (i), (ii), or (iii).

.

(b)

Effective date

The amendments made by this section shall apply to taxable years beginning after December 31, 2016.

7.

Inclusion of obsolescence mitigation

(a)

In general

Clause (iv) of section 41(d)(3)(A) of the Internal Revenue Code of 1986, as added by section 5, is amended by inserting or obsolescence mitigation after reduction of costs.

(b)

Effective date

The amendment made by this section shall apply to taxable years beginning after December 31, 2016.

8.

Election of reduced credit may be made on amended return

(a)

In general

Subparagraph (C) of section 280C(c)(3) of the Internal Revenue Code of 1986 is amended to read as follows:

(C)

Election

An election under this paragraph shall made in such manner as the Secretary may prescribe and, once made with respect to a taxable year, shall be irrevocable. Such election may be made on the return of tax for the taxable year to which it applies or on an amended return.

.

(b)

Effective date

The amendment made by this section shall apply to amended returns which are permitted to be filed under the applicable provisions of the Internal Revenue Code of 1986 after the date of the enactment of this Act.