[Congressional Bills 117th Congress]
[From the U.S. Government Publishing Office]
[H.R. 7515 Introduced in House (IH)]
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117th CONGRESS
2d Session
H. R. 7515
To amend the Internal Revenue Code of 1986 to provide an exception from
the passive loss rules for investments in specified medical research
small business pass-thru entities.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
April 14, 2022
Mr. Kelly of Pennsylvania (for himself, Mr. Buchanan, and Mr. Wenstrup)
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 provide an exception from
the passive loss rules for investments in specified medical research
small business pass-thru entities.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Infectious Disease Therapies
Research and Innovation Act of 2022''.
SEC. 2. EXCEPTION FROM PASSIVE LOSS RULES FOR INVESTMENTS IN SPECIFIED
MEDICAL RESEARCH SMALL BUSINESS PASS-THRU ENTITIES.
(a) In General.--Subsection (c) of section 469 of the Internal
Revenue Code of 1986 is amended by redesignating paragraphs (4) through
(7) as paragraphs (5) through (8), respectively, and by inserting after
paragraph (3) the following new paragraph:
``(4) Specified medical research activities.--
``(A) 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 entity.
``(B) Treatment of losses and deductions.--
``(i) 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
deductions, respectively, from a passive
activity except as provided in clause (ii) and
subparagraph (C).
``(ii) Limitation.--Clause (i) 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--
``(I) in exchange for such
ownership interest, and
``(II) specifically for use in
connection with qualified medical
research activities.
For purposes of the preceding sentence, 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 752(a) as a contribution of
money.
``(C) Treatment of carryovers.--Subparagraph (B)(i)
shall not apply to the portion of any loss or deduction
that is carried over under subsection (b) into a
taxable year other than the taxable year in which such
loss or deduction arose.
``(D) Qualified medical research activity.--For
purposes of this paragraph, the term `qualified medical
research activity' means any qualified research (within
the meaning of section 41(d)) with respect to qualified
countermeasures (as defined in section 319F-1(a)(2) of
the Public Health Service Act (42 U.S.C. 247d-
6a(a)(2)).
``(E) Specified medical research small business
pass-thru entity.--For purposes of this paragraph, the
term `specified medical research small business pass-
thru entity' means any domestic pass-thru entity for
any taxable year if--
``(i) more than 80 percent of such entity's
expenditures on qualified research for such
taxable year are paid or incurred in connection
with qualified medical research activities, and
``(ii) the gross receipts (as determined
under the rules of section 41(h)(3)) of such
entity for the taxable year (and each preceding
taxable year) is less than $1,000,000.
``(F) Capital expenditures taken into account for
expenditures test.--An expenditure shall not fail to be
taken into account under subparagraph (E)(i) merely
because such expenditure is chargeable to capital
account.
``(G) Pass-thru entity.--For purposes of this
paragraph, the term `pass-thru entity' means any
partnership, S corporation, or other entity identified
by the Secretary as a pass-thru entity for purposes of
this paragraph.
``(H) Aggregation rules.--
``(i) In general.--All persons treated as a
single employer under subsection (a) or (b) of
section 52, or subsection (m) or (o) of section
414, shall be treated as a single entity for
purposes of subparagraphs (E) and (F)(iii).
``(ii) 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 (i).''.
(b) Material Participation Not Required.--Paragraph (5) of section
469(c) of the Internal Revenue Code of 1986, as redesignated by
subsection (a), is amended by striking ``and (3)'' in the heading and
text and inserting ``, (3), and (4)''.
(c) Certain Research-Related Deductions and Credits of Specified
Medical Research Small Business Pass-Thru Entities Allowed for Purposes
of Determining Alternative Minimum Tax.--
(1) Deduction for research and experimental expenditures.--
Paragraph (2) of section 56(b) of the Internal Revenue Code of
1986 is amended by adding at the end the following new
subparagraph:
``(D) Exception for specified medical research
small business pass-thru entities.--In the case of a
specified medical research small business pass-thru
entity (as defined in section 469(c)(4)), this
paragraph shall not apply to any amount allowable as a
deduction under section 174(a).''.
(2) Allowance of certain research-related credits.--
Subparagraph (B) of section 38(c)(4) of such Code is amended by
redesignating clauses (ii) through (xii) as clauses (iii)
through (xiii), respectively, and by inserting after clause (i)
the following new clause:
``(ii) the credit of an individual taxpayer
determined under section 41 to the extent
attributable to a specified medical research
small business pass-thru entity (as defined in
section 469(c)(4)),''.
(d) Exception to Limitation on Pass-Thru of Research Credit.--
Subsection (g) of section 41 of such Code is amended by adding at the
end the following: ``Paragraphs (2) and (4) shall not apply with
respect to any specified medical research small business pass-thru
entity (as defined in section 469(c)(4)).''.
(e) Effective Date.--The amendments made by this section shall
apply to losses and credits arising in taxable years beginning after
December 31, 2022.
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