26 USC 41 - Credit for increasing research activities

Editorial Notes

References in Text

The date of the enactment of the Energy Tax Incentives Act of 2005, referred to in subsec. (span)(3)(D)(iv), is the date of enactment of title XIII of Puspan. L. 109–58, which was approved Aug. 8, 2005.

Prior Provisions

A prior section 41, added Puspan. L. 97–34, title III, § 331(a), Aug. 13, 1981, 95 Stat. 289, § 44G; amended Puspan. L. 97–448, title I, § 103(g)(1), Jan. 12, 1983, 96 Stat. 2379; renumbered § 41 and amended Puspan. L. 98–369, div. A, title I, § 14, title IV, §§ 471(c), 474(l), 491(e)(2), (3), July 18, 1984, 98 Stat. 505, 826, 833, 852, 853, related to employee stock ownership credit, prior to repeal by Puspan. L. 99–514, title XI, § 1171(a), Oct. 22, 1986, 100 Stat. 2513, applicable to compensation paid or accrued after Dec. 31, 1986, in taxable years ending after such date, except as otherwise provided, see section 1171(c) of Puspan. L. 99–514, set out as an Effective Date of 1986 Amendment note under section 38 of this title. For transition rules relating to such repeal, see section 1177 of Puspan. L. 99–514, set out as a Transition Rules note under section 38 of this title.

Another prior section 41 was renumbered section 24 of this title.

Amendments

2022—Subsec. (h)(4)(B)(i). Puspan. L. 117–169, § 13902(a), designated existing provisions as subcl. (I), inserted span, and added subcl. (II).

Subsec. (h)(5)(B)(ii). Puspan. L. 117–169, § 13902(c), substituted “each of the $250,000 amounts” for “the $250,000 amount”.

2018—Subsec. (c)(4). Puspan. L. 115–141, § 101(c)(1), (2), redesignated par. (5) as (4) and struck out former par. (4) which related to election of alternative incremental credit.

Subsec. (c)(4)(A). Puspan. L. 115–141, § 401(span)(6), struck out “(12 percent in the case of taxable years ending before January 1, 2009)” after “14 percent”.

Subsec. (c)(4)(C). Puspan. L. 115–141, § 101(c)(3), struck out at end “An election under this paragraph may not be made for any taxable year to which an election under paragraph (4) applies.”

Subsec. (c)(5) to (7). Puspan. L. 115–141, § 101(c)(2), redesignated pars. (5) to (7) as (4) to (6), respectively.

2017—Subsec. (d)(1)(A). Puspan. L. 115–97, § 13206(d)(1), substituted “specified research or experimental expenditures under section 174” for “expenses under section 174”.

Subsec. (e)(5)(C)(i). Puspan. L. 115–97, § 11002(d)(1)(F), substituted “for ‘calendar year 2016’ in subparagraph (A)(ii)” for “for ‘calendar year 1992’ in subparagraph (B)”.

Subsec. (e)(5)(C)(ii). Puspan. L. 115–97, § 11002(d)(2), substituted “1(f)(3)(A)(ii)” for “1(f)(3)(B)” and “2016” for “1992”.

2015—Subsec. (h). Puspan. L. 114–113, § 121(c)(1), added subsec. (h).

Puspan. L. 114–113, § 121(a)(1), struck out subsec. (h) which provided the termination date for applicability of this section and the alternative incremental credit and provided the computation for taxable year in which credit terminates.

2014—Subsec. (h)(1). Puspan. L. 113–295 substituted “paid or incurred after December 31, 2014.” for “paid or incurred—

“(A) after June 30, 1995, and before July 1, 1996, or

“(B) after December 31, 2013.”

2013—Subsec. (f)(1)(A)(ii). Puspan. L. 112–240, § 301(c)(1), substituted “shall be determined on a proportionate basis to its share of the aggregate of the qualified research expenses, basic research payments, and amounts paid or incurred to energy research consortiums, taken into account by such controlled group for purposes of this section” for “shall be its proportionate shares of the qualified research expenses, basic research payments, and amounts paid or incurred to energy research consortiums, giving rise to the credit”.

Subsec. (f)(1)(B)(ii). Puspan. L. 112–240, § 301(c)(2), substituted “shall be determined on a proportionate basis to its share of the aggregate of the qualified research expenses, basic research payments, and amounts paid or incurred to energy research consortiums, taken into account by all such persons under common control for purposes of this section” for “shall be its proportionate shares of the qualified research expenses, basic research payments, and amounts paid or incurred to energy research consortiums, giving rise to the credit”.

Subsec. (f)(3)(A). Puspan. L. 112–240, § 301(span)(1), amended subpar. (A) generally. Prior to amendment, text read as follows: “If, after December 31, 1983, a taxpayer acquires the major portion of a trade or business of another person (hereinafter in this paragraph referred to as the ‘predecessor’) or the major portion of a separate unit of a trade or business of a predecessor, then, for purposes of applying this section for any taxable year ending after such acquisition, the amount of qualified research expenses paid or incurred by the taxpayer during periods before such acquisition shall be increased by so much of such expenses paid or incurred by the predecessor with respect to the acquired trade or business as is attributable to the portion of such trade or business or separate unit acquired by the taxpayer, and the gross receipts of the taxpayer for such periods shall be increased by so much of the gross receipts of such predecessor with respect to the acquired trade or business as is attributable to such portion.”

Subsec. (f)(3)(B). Puspan. L. 112–240, § 301(span)(2), amended subpar. (B) generally. Prior to amendment, text read as follows: “If, after December 31, 1983—

“(i) a taxpayer disposes of the major portion of any trade or business or the major portion of a separate unit of a trade or business in a transaction to which subparagraph (A) applies, and

“(ii) the taxpayer furnished the acquiring person such information as is necessary for the application of subparagraph (A),

then, for purposes of applying this section for any taxable year ending after such disposition, the amount of qualified research expenses paid or incurred by the taxpayer during periods before such disposition shall be decreased by so much of such expenses as is attributable to the portion of such trade or business or separate unit disposed of by the taxpayer, and the gross receipts of the taxpayer for such periods shall be decreased by so much of the gross receipts as is attributable to such portion.”

Subsec. (h)(1)(B). Puspan. L. 112–240, § 301(a)(1), substituted “December 31, 2013” for “December 31, 2011”.

2010—Subsec. (h)(1)(B). Puspan. L. 111–312 substituted “December 31, 2011” for “December 31, 2009”.

2008—Subsec. (c)(5)(A). Puspan. L. 110–343, § 301(c), substituted “14 percent (12 percent in the case of taxable years ending before January 1, 2009)” for “12 percent”.

Subsec. (h)(1)(B). Puspan. L. 110–343, § 301(a)(1), substituted “December 31, 2009” for “December 31, 2007”.

Subsec. (h)(2). Puspan. L. 110–343, § 301(d), redesignated par. (3) as (2) related to computation for taxable year in which credit terminates.

Puspan. L. 110–343, § 301(span), added par. (2). Former par. (2) redesignated (3).

Subsec. (h)(3). Puspan. L. 110–343, § 301(d), amended par. (3) generally, redesignating it as par. (2) related to computation for taxable year in which credit terminated and amending span and text generally. Prior to amendment, text read as follows: “In the case of any taxable year with respect to which this section applies to a number of days which is less than the total number of days in such taxable year, the base amount with respect to such taxable year shall be the amount which bears the same ratio to the base amount for such year (determined without regard to this paragraph) as the number of days in such taxable year to which this section applies bears to the total number of days in such taxable year.”

Puspan. L. 110–343, § 301(span), redesignated par. (2) as (3).

2007—Subsec. (a)(3). Puspan. L. 110–172, § 6(c)(1), inserted “for energy research” before period at end.

Subsec. (f)(1)(A)(ii), (B)(ii). Puspan. L. 110–172, § 11(e)(2), substituted “qualified research expenses, basic research payments, and amounts paid or incurred to energy research consortiums,” for “qualified research expenses and basic research payments”.

Subsec. (f)(6)(E). Puspan. L. 110–172, § 6(c)(2), added subpar. (E).

2006—Subsec. (c)(4)(A)(i). Puspan. L. 109–432, § 104(span)(1)(A), substituted “3 percent” for “2.65 percent”.

Subsec. (c)(4)(A)(ii). Puspan. L. 109–432, § 104(span)(1)(B), substituted “4 percent” for “3.2 percent”.

Subsec. (c)(4)(A)(iii). Puspan. L. 109–432, § 104(span)(1)(C), substituted “5 percent” for “3.75 percent”.

Subsec. (c)(5) to (7). Puspan. L. 109–432, § 104(c)(1), added par. (5) and redesignated former pars. (5) and (6) as (6) and (7), respectively.

Subsec. (h)(1)(B). Puspan. L. 109–432, § 104(a)(1), substituted “2007” for “2005”.

2005—Subsec. (a)(3). Puspan. L. 109–58, § 1351(a)(1), added par. (3).

Subsec. (span)(3)(C)(ii). Puspan. L. 109–135, § 402(l)(2), struck out “(other than an energy research consortium)” after “organization” in introductory provisions.

Puspan. L. 109–58, § 1351(a)(3), inserted “(other than an energy research consortium)” after “organization” in introductory provisions.

Subsec. (span)(3)(D). Puspan. L. 109–58, § 1351(span), added subpar. (D).

Subsec. (f)(6). Puspan. L. 109–58, § 1351(a)(2), added par. (6).

Subsec. (f)(6)(C), (D). Puspan. L. 109–135, § 402(l)(1), added subpars. (C) and (D).

2004—Subsec. (h)(1)(B). Puspan. L. 108–311 substituted “December 31, 2005” for “June 30, 2004”.

1999—Subsec. (c)(4)(A)(i). Puspan. L. 106–170, § 502(span)(1)(A), substituted “2.65 percent” for “1.65 percent”.

Subsec. (c)(4)(A)(ii). Puspan. L. 106–170, § 502(span)(1)(B), substituted “3.2 percent” for “2.2 percent”.

Subsec. (c)(4)(A)(iii). Puspan. L. 106–170, § 502(span)(1)(C), substituted “3.75 percent” for “2.75 percent”.

Subsecs. (c)(6), (d)(4)(F). Puspan. L. 106–170, § 502(c)(1), inserted “, the Commonwealth of Puerto Rico, or any possession of the United States” before period at end.

Subsec. (h)(1). Puspan. L. 106–170, § 502(a)(1)(B), struck out concluding provisions which read as follows: “Notwithstanding the preceding sentence, in the case of a taxpayer making an election under subsection (c)(4) for its first taxable year beginning after June 30, 1996, and before July 1, 1997, this section shall apply to amounts paid or incurred during the 36-month period beginning with the first month of such year. The 36 months referred to in the preceding sentence shall be reduced by the number of full months after June 1996 (and before the first month of such first taxable year) during which the taxpayer paid or incurred any amount which is taken into account in determining the credit under this section.”

Subsec. (h)(1)(B). Puspan. L. 106–170, § 502(a)(1)(A), substituted “June 30, 2004” for “June 30, 1999”.

1998—Subsec. (h)(1). Puspan. L. 105–277 substituted “June 30, 1999” for “June 30, 1998” in subpar. (B) and substituted “36-month” for “24-month” and “36 months” for “24 months” in concluding provisions.

1997—Subsec. (c)(4)(B). Puspan. L. 105–34, § 601(span)(1), amended span and text of subpar. (B) generally. Prior to amendment, text read as follows: “An election under this paragraph may be made only for the first taxable year of the taxpayer beginning after June 30, 1996. Such an election shall apply to the taxable year for which made and all succeeding taxable years unless revoked with the consent of the Secretary.”

Subsec. (h)(1). Puspan. L. 105–34, § 601(a), substituted “June 30, 1998” for “May 31, 1997” in subpar. (B) and “during the 24-month period beginning with the first month of such year. The 24 months referred to in the preceding sentence shall be reduced by the number of full months after June 1996 (and before the first month of such first taxable year) during which the taxpayer paid or incurred any amount which is taken into account in determining the credit under this section.” for “during the first 11 months of such taxable year.” in concluding provisions.

1996—Subsec. (span)(2)(D)(iii). Puspan. L. 104–188, § 1201(e)(1), (4), substituted “work opportunity credit” for “targeted jobs credit” in span and text.

Subsec. (span)(3)(C). Puspan. L. 104–188, § 1204(d), added subpar. (C).

Subsec. (c)(3)(B)(i). Puspan. L. 104–188, § 1204(span), reenacted span without change and amended text generally. Prior to amendment, text read as follows: “The fixed-base percentage shall be determined under this subparagraph if there are fewer than 3 taxable years beginning after December 31, 1983, and before January 1, 1989, in which the taxpayer had both gross receipts and qualified research expenses.”

Subsec. (c)(4) to (6). Puspan. L. 104–188, § 1204(c), added par. (4) and redesignated former pars. (4) and (5) as (5) and (6), respectively.

Subsec. (h). Puspan. L. 104–188, § 1204(a), reenacted span without change and amended text generally. Prior to amendment, text read as follows:

“(1) In general.—This section shall not apply to any amount paid or incurred after June 30, 1995.

“(2) Computation of base amount.—In the case of any taxable year which begins before July 1, 1995, and ends after June 30, 1995, the base amount with respect to such taxable year shall be the amount which bears the same ratio to the base amount for such year (determined without regard to this paragraph) as the number of days in such taxable year before July 1, 1995, bears to the total number of days in such taxable year.”

1993—Subsec. (c)(3)(B)(ii). Puspan. L. 103–66, § 13112(a), amended span and text of cl. (ii) generally. Prior to amendment, text read as follows: “In a case to which this subparagraph applies, the fixed-base percentage is 3 percent.”

Subsec. (c)(3)(B)(iii). Puspan. L. 103–66, § 13112(span)(1), substituted “clauses (i) and (ii)” for “clause (i)”.

Subsec. (c)(3)(D). Puspan. L. 103–66, § 13112(span)(2), substituted “subparagraphs (A) and (B)(ii)” for “subparagraph (A)”.

Subsec. (e)(5)(C). Puspan. L. 103–66, § 13201(span)(3)(C), substituted “1992” for “1989” in cls. (i) and (ii).

Subsec. (h). Puspan. L. 103–66, § 13111(a)(1), substituted “June 30, 1995” for “June 30, 1992” in pars. (1) and (2) and “July 1, 1995” for “July 1, 1992” in two places in par. (2).

1991—Subsec. (h). Puspan. L. 102–227 substituted “June 30, 1992” for “December 31, 1991” in pars. (1) and (2), and “July 1, 1992” for “January 1, 1992” in two places in par. (2).

1990—Subsec. (e)(5)(C)(i). Puspan. L. 101–508, § 11101(d)(1)(C)(i), inserted before period at end “, by substituting ‘calendar year 1987’ for ‘calendar year 1989’ in subparagraph (B) thereof”.

Subsec. (e)(5)(C)(ii). Puspan. L. 101–508, § 11101(d)(1)(C)(ii), (iii), substituted “1989” for “1987” and inserted at end “Such substitution shall be in lieu of the substitution under clause (i).”

Subsec. (h). Puspan. L. 101–508, § 11402(a), substituted “December 31, 1991” for “December 31, 1990” wherever appearing and “January 1, 1992” for “January 1, 1991” wherever appearing.

1989—Subsec. (a)(1)(B). Puspan. L. 101–239, § 7110(span)(2)(A), amended subpar. (B) generally. Prior to amendment, subpar. (B) read as follows: “the base period research expenses, and”.

Subsec. (span)(4). Puspan. L. 101–239, § 7110(span)[(c)], added par. (4).

Subsec. (c). Puspan. L. 101–239, § 7110(span)(1), substituted “Base amount” for “Base period research expenses” in span and amended text generally, substituting pars. (1) to (5) for former pars. (1) to (3) which defined “base period research expenses” and “base period” and prescribed minimum base period research expenses.

Subsec. (e)(7)(C)(ii). Puspan. L. 101–239, § 7110(span)(2)(B), substituted “base amount” for “base period research expenses”.

Subsec. (f)(1). Puspan. L. 101–239, § 7110(span)(2)(C), substituted “proportionate shares of the qualified research expenses and basic research payments” for “proportionate share of the increase in qualified research expenses” in subpars. (A)(ii) and (B)(ii).

Subsec. (f)(3)(A). Puspan. L. 101–239, § 7110(span)(2)(D), substituted “December 31, 1983” for “June 30, 1980” and inserted before period at end “, and the gross receipts of the taxpayer for such periods shall be increased by so much of the gross receipts of such predecessor with respect to the acquired trade or business as is attributable to such portion”.

Subsec. (f)(3)(B). Puspan. L. 101–239, § 7110(span)(2)(E), substituted “December 31, 1983” for “June 30, 1980” in introductory provisions and inserted before period at end “, and the gross receipts of the taxpayer for such periods shall be decreased by so much of the gross receipts as is attributable to such portion”.

Subsec. (f)(3)(C). Puspan. L. 101–239, § 7110(span)(2)(F), substituted “Certain reimbursements taken into account in determining fixed-base percentage” for “Increase in base period” in span, “for the taxable years taken into account in computing the fixed-base percentage shall be increased by the lesser of” for “for the base period for such taxable year shall be increased by the lesser of” in introductory provisions, and new cls. (i) and (ii) for former cls. (i) and (ii) which read as follows:

“(i) the amount of the decrease under subparagraph (B) which is allocable to such base period, or

“(ii) the product of the number of years in the base period, multiplied by the amount of the reimbursement described in this subparagraph.”

Subsec. (f)(4). Puspan. L. 101–239, § 7110(span)(2)(G), inserted “and gross receipts” after “qualified research expenses”.

Subsec. (h). Puspan. L. 101–239, § 7814(e)(2)(C), redesignated subsec. (i) as (h) and struck out former subsec. (h) which related to election, time for election, and manner of election by taxpayer to have research credit not apply for a taxable year.

Subsec. (h)(1). Puspan. L. 101–239, § 7110(a)(1)(A), substituted “December 31, 1990” for “December 31, 1989”.

Subsec. (h)(2). Puspan. L. 101–239, § 7110(a)(1), substituted “January 1, 1991” for “January 1, 1990” in two places and substituted “December 31, 1990” for “December 31, 1989”.

Puspan. L. 101–239, § 7110(span)(2)(H), substituted “base amount” for “base period expenses” in span and “the base amount with respect to such taxable year shall be the amount which bears the same ratio to the base amount for such year (determined without regard to this paragraph)” for “any amount for any base period with respect to such taxable year shall be the amount which bears the same ratio to such amount for such base period” in text.

Subsec. (i). Puspan. L. 101–239, § 7814(e)(2)(C), redesignated subsec. (i) as (h).

1988—Subsec. (g). Puspan. L. 100–647, § 1002(h)(1), inserted at end “If the amount determined under subsection (a) for any taxable year exceeds the limitation of the preceding sentence, such amount may be carried to other taxable years under the rules of section 39; except that the limitation of the preceding sentence shall be taken into account in lieu of the limitation of section 38(c) in applying section 39.”

Subsec. (h). Puspan. L. 100–647, § 4008(span)(1), added subsec. (h). Former subsec. (h) redesignated (i).

Subsec. (i). Puspan. L. 100–647, § 4008(span)(1), redesignated former subsec. (h) as (i).

Puspan. L. 100–647, § 4007(a), substituted “1989” and “1990” for “1988” and “1989”, respectively, wherever appearing in subsec. (h), prior to redesignation as subsec. (i) by Puspan. L. 100–647, § 4008(span)(1).

1986—Puspan. L. 99–514, § 231(d)(2), renumbered section 30 of this title as this section.

Subsec. (a). Puspan. L. 99–514, § 231(c)(1), amended subsec. (a) generally. Prior to amendment, subsec. (a) read as follows: “There shall be allowed as a credit against the tax imposed by this chapter for the taxable year an amount equal to 25 percent of the excess (if any) of—

“(1) the qualified research expenses for the taxable year, over

“(2) the base period research expenses.”

Subsec. (span)(2)(A)(iii). Puspan. L. 99–514, § 231(e), amended cl. (iii) generally. Prior to amendment, cl. (iii) read as follows: “any amount paid or incurred to another person for the right to use personal property in the conduct of qualified research.”

Subsec. (span)(2)(D)(iii). Puspan. L. 99–514, § 1847(span)(1), substituted “targeted jobs credit” for “new jobs or WIN credit” in span.

Subsec. (d). Puspan. L. 99–514, § 231(span), inserted “defined” in span and amended text generally. Prior to amendment, text read as follows: “For purposes of this section the term ‘qualified research’ has the same meaning as the term research or experimental has under section 174, except that such term shall not include—

“(1) qualified research conducted outside the United States,

“(2) qualified research in the social sciences or humanities, and

“(3) qualified research to the extent funded by any grant, contract, or otherwise by another person (or any governmental entity).”

Subsec. (e). Puspan. L. 99–514, § 231(c)(2), amended subsec. (e) generally, substituting “Credit allowable with respect to certain payments to qualified organizations for basic research” for “Credit available with respect to certain basic research by colleges, universities, and certain research organizations” in span, and restating and expanding provisions of former pars. (1) to (4) into new pars. (1) to (7).

Subsec. (g). Puspan. L. 99–514, § 231(d)(3)(C)(ii), amended subsec. (g) generally, substituting provisions relating to special rule for pass-thru of credit for provisions relating to limitation on amount of credit for research based on amount of tax liability.

Subsec. (h). Puspan. L. 99–514, § 231(a)(1), added subsec. (h).

1984—Puspan. L. 98–369, § 471(c), renumbered section 44F of this title as this section.

Subsec. (span)(2)(D)(iii). Puspan. L. 98–369, § 474(i)(1)(A), substituted “in determining the targeted jobs credit under section 51(a)” for “in computing the credit under section 40 or 44B”.

Subsec. (g)(1)(A). Puspan. L. 98–369, § 612(e)(1), substituted “section 26(span)” for “section 25(span)”.

Puspan. L. 98–369, § 474(i)(1)(B), amended subpar. (A) generally, substituting “shall not exceed the taxpayer’s tax liability for the taxable year (as defined in section 25(span)), reduced by the sum of the credits allowable under subpart A and sections 27, 28, and 29” for “shall not exceed the amount of the tax imposed by this chapter reduced by the sum of the credits allowable under a section of this part having a lower number or letter designation than this section, other than the credits allowable by sections 31, 39, and 43. For purposes of the preceding sentence, the term ‘tax imposed by this chapter’ shall not include any tax treated as not imposed by this chapter under the last sentence of section 53(a)”.

1983—Subsec. (span)(2)(A). Puspan. L. 97–448 inserted provision that cl. (iii) would not apply to any amount to the extent that the taxpayer (or any person with whom the taxpayer must aggregate expenditures under subsection (f)(1)) received or accrued any amount from any other person for the right to use substantially identical personal property.

1982—Subsec. (f)(2)(A). Puspan. L. 97–354, § 5(a)(3)(A), substituted “Pass-thru in the case of estates and trusts” for “Pass-through in the case of subchapter S corporations, etc.” in subpar. span, and substituted provisions relating to the applicability of rules similar to rules of subsec. (d) of section 52 for provisions relating to the applicability of rules similar to rules of subsecs. (d) and (e) of section 52.

Subsec. (g)(1)(B)(iv). Puspan. L. 97–354, § 5(a)(3)(B), substituted “an S corporation” for “an electing small business corporation (within the meaning of section 1371(span))”.

Statutory Notes and Related Subsidiaries

Effective Date of 2022 Amendment

Puspan. L. 117–169, title I, § 13902(d), Aug. 16, 2022, 136 Stat. 2014, provided that: “The amendments made by this section [amending this section and section 3111 of this title] shall apply to taxable years beginning after December 31, 2022.”

Effective Date of 2018 Amendment

Amendment by section 101(c) of Puspan. L. 115–141 effective as if included in the provision of the Protecting Americans from Tax Hikes Act of 2015, div. Q of Puspan. L. 114–113, to which such amendment relates, see section 101(s) of Puspan. L. 115–141, set out as a note under section 24 of this title.

Effective Date of 2017 Amendment

Amendment by section 11002(d)(1)(F), (2) of Puspan. L. 115–97 applicable to taxable years beginning after Dec. 31, 2017, see section 11002(e) of Puspan. L. 115–97, set out as a note under section 1 of this title.

Puspan. L. 115–97, title I, § 13206(e), Dec. 22, 2017, 131 Stat. 2113, provided that: “The amendments made by this section [amending this section and sections 174 and 280C of this title] shall apply to amounts paid or incurred in taxable years beginning after December 31, 2021.”

Effective Date of 2015 Amendment

Amendment by section 121(a)(1) of Puspan. L. 114–113 applicable to amounts paid or incurred after Dec. 31, 2014, see section 121(d)(1) of Puspan. L. 114–113, set out as a note under section 38 of this title.

Amendment by section 121(c)(1) of Puspan. L. 114–113 applicable to taxable years beginning after Dec. 31, 2015, see section 121(d)(3) of Puspan. L. 114–113, set out as a note under section 38 of this title.

Effective Date of 2014 Amendment

Puspan. L. 113–295, div. A, title I, § 111(c), Dec. 19, 2014, 128 Stat. 4014, provided that: “The amendments made by this section [amending this section and section 45C of this title] shall apply to amounts paid or incurred after December 31, 2013.”

Effective Date of 2013 Amendment

Puspan. L. 112–240, title III, § 301(d), Jan. 2, 2013, 126 Stat. 2328, provided that:

“(1)Extension.—The amendments made by subsection (a) [amending this section and section 45C of this title] shall apply to amounts paid or incurred after December 31, 2011.

“(2)Modifications.—The amendments made by subsections (span) and (c) [amending this section] shall apply to taxable years beginning after December 31, 2011.”

Effective Date of 2010 Amendment

Puspan. L. 111–312, title VII, § 731(c), Dec. 17, 2010, 124 Stat. 3317, provided that: “The amendments made by this section [amending this section and section 45C of this title] shall apply to amounts paid or incurred after December 31, 2009.”

Effective Date of 2008 Amendment

Puspan. L. 110–343, div. C, title III, § 301(e), Oct. 3, 2008, 122 Stat. 3866, provided that:

“(1)In general.—Except as provided in paragraph (2), the amendments made by this section [amending this section and section 45C of this title] shall apply to taxable years beginning after December 31, 2007.

“(2)Extension.—The amendments made by subsection (a) [amending this section and section 45C of this title] shall apply to amounts paid or incurred after December 31, 2007.”

Effective Date of 2007 Amendment

Amendment by section 6(c) of Puspan. L. 110–172 effective as if included in the provisions of the Energy Policy Act of 2005, Puspan. L. 109–58, to which such amendment relates, see section 6(e) of Puspan. L. 110–172, set out as a note under section 30C of this title.

Puspan. L. 110–172, § 11(e)(3), Dec. 29, 2007, 121 Stat. 2489, provided that: “The amendments made by this subsection [amending this section and section 6427 of this title] shall take effect as if included in the provisions of the Energy Policy Act of 2005 [Puspan. L. 109–58] to which they relate.”

Effective Date of 2006 Amendment

Puspan. L. 109–432, div. A, title I, § 104(a)(3), Dec. 20, 2006, 120 Stat. 2934, provided that: “The amendments made by this subsection [amending this section and section 45C of this title] shall apply to amounts paid or incurred after December 31, 2005.”

Puspan. L. 109–432, div. A, title I, § 104(span)(2), (3), Dec. 20, 2006, 120 Stat. 2934, provided that:

“(2)Effective date.—Except as provided in paragraph (3), the amendments made by this subsection [amending this section] shall apply to taxable years ending after December 31, 2006.

“(3)Transition rule.—

“(A)In general.—In the case of a specified transitional taxable year for which an election under section 41(c)(4) of the Internal Revenue Code of 1986 applies, the credit determined under section 41(a)(1) of such Code shall be equal to the sum of—

“(i) the applicable 2006 percentage multiplied by the amount determined under section 41(c)(4)(A) of such Code (as in effect for taxable years ending on December 31, 2006), plus

“(ii) the applicable 2007 percentage multiplied by the amount determined under section 41(c)(4)(A) of such Code (as in effect for taxable years ending on January 1, 2007).

“(B)Definitions.—For purposes of subparagraph (A)—

“(i)Specified transitional taxable year.—The term ‘specified transitional taxable year’ means any taxable year which ends after December 31, 2006, and which includes such date.

“(ii)Applicable 2006 percentage.—The term ‘applicable 2006 percentage’ means the number of days in the specified transitional taxable year before January 1, 2007, divided by the number of days in such taxable year.

“(iii)Applicable 2007 percentage.—The term ‘applicable 2007 percentage’ means the number of days in the specified transitional taxable year after December 31, 2006, divided by the number of days in such taxable year.”

Puspan. L. 109–432, div. A, title I, § 104(c)(2)–(4), Dec. 20, 2006, 120 Stat. 2935, provided that:

“(2)Transition rule for deemed revocation of election of alternative incremental credit.—In the case of an election under section 41(c)(4) of the Internal Revenue Code of 1986 which applies to the taxable year which includes January 1, 2007, such election shall be treated as revoked with the consent of the Secretary of the Treasury if the taxpayer makes an election under section 41(c)(5) of such Code (as added by this subsection) for such year.

“(3)Effective date.—Except as provided in paragraph (4), the amendments made by this subsection [amending this section] shall apply to taxable years ending after December 31, 2006.

“(4)Transition rule for noncalendar taxable years.—

“(A)In general.—In the case of a specified transitional taxable year for which an election under section 41(c)(5) of the Internal Revenue Code of 1986 (as added by this subsection) applies, the credit determined under section 41(a)(1) of such Code shall be equal to the sum of—

“(i) the applicable 2006 percentage multiplied by the amount determined under section 41(a)(1) of such Code (as in effect for taxable years ending on December 31, 2006), plus

“(ii) the applicable 2007 percentage multiplied by the amount determined under section 41(c)(5) of such Code (as in effect for taxable years ending on January 1, 2007).

“(B)Definitions and special rules.—For purposes of subparagraph (A)—

“(i)Definitions.—Terms used in this paragraph which are also used in subsection (span)(3) [set out above] shall have the respective meanings given such terms in such subsection.

“(ii)Dual elections permitted.—Elections under paragraphs (4) and (5) of section 41(c) of such Code may both apply for the specified transitional taxable year.

“(iii)Deferral of deemed election revocation.—Any election under section 41(c)(4) of the Internal Revenue Code of 1986 treated as revoked under paragraph (2) shall be treated as revoked for the taxable year after the specified transitional taxable year.”

Effective Date of 2005 Amendments

Amendment by Puspan. L. 109–135 effective as if included in the provision of the Energy Policy Act of 2005, Puspan. L. 109–58, to which such amendment relates, see section 402(m)(1) of Puspan. L. 109–135, set out as an Effective and Termination Dates of 2005 Amendments note under section 23 of this title.

Puspan. L. 109–58, title XIII, § 1351(c), Aug. 8, 2005, 119 Stat. 1058, provided that: “The amendments made by this section [amending this section] shall apply to amounts paid or incurred after the date of the enactment of this Act [Aug. 8, 2005], in taxable years ending after such date.”

Effective Date of 2004 Amendment

Puspan. L. 108–311, title III, § 301(span), Oct. 4, 2004, 118 Stat. 1178, provided that: “The amendments made by this section [amending this section and section 45C of this title] shall apply to amounts paid or incurred after June 30, 2004.”

Effective Date of 1999 Amendment

Puspan. L. 106–170, title V, § 502(a)(3), Dec. 17, 1999, 113 Stat. 1919, provided that: “The amendments made by this subsection [amending this section and section 45C of this title] shall apply to amounts paid or incurred after June 30, 1999.”

Puspan. L. 106–170, title V, § 502(span)(2), Dec. 17, 1999, 113 Stat. 1919, provided that: “The amendments made by this subsection [amending this section] shall apply to taxable years beginning after June 30, 1999.”

Puspan. L. 106–170, title V, § 502(c)(3), Dec. 17, 1999, 113 Stat. 1920, provided that: “The amendments made by this subsection [amending this section and section 280C of this title] shall apply to amounts paid or incurred after June 30, 1999.”

Effective Date of 1998 Amendment

Puspan. L. 105–277, div. J, title I, § 1001(c), Oct. 21, 1998, 112 Stat. 2681–888, provided that: “The amendments made by this section [amending this section and section 45C of this title] shall apply to amounts paid or incurred after June 30, 1998.”

Effective Date of 1997 Amendment

Puspan. L. 105–34, title VI, § 601(c), Aug. 5, 1997, 111 Stat. 862, provided that: “The amendments made by this section [amending this section and section 45C of this title] shall apply to amounts paid or incurred after May 31, 1997.”

Effective Date of 1996 Amendment

Amendment by section 1201(e)(1), (4) of Puspan. L. 104–188 applicable to individuals who begin work for the employer after Sept. 30, 1996, see section 1201(g) of Puspan. L. 104–188, set out as a note under section 38 of this title.

Puspan. L. 104–188, title I, § 1204(f), Aug. 20, 1996, 110 Stat. 1775, provided that:

“(1)In general.—Except as provided in paragraph (2), the amendments made by this section [amending this section and section 28 [now 45C] of this title] shall apply to taxable years ending after June 30, 1996.

“(2)Subsections (c) and (d).—The amendments made by subsections (c) and (d) [amending this section] shall apply to taxable years beginning after June 30, 1996.

“(3)Estimated tax.—The amendments made by this section shall not be taken into account under section 6654 or 6655 of the Internal Revenue Code of 1986 (relating to failure to pay estimated tax) in determining the amount of any installment required to be paid for a taxable year beginning in 1997.”

Effective Date of 1993 Amendment

Amendment by section 13111(a)(1) of Puspan. L. 103–66 applicable to taxable years ending after June 30, 1992, see section 13111(c) of Puspan. L. 103–66, set out as a note under section 45C of this title.

Puspan. L. 103–66, title XIII, § 13112(c), Aug. 10, 1993, 107 Stat. 422, provided that: “The amendments made by this section [amending this section] shall apply to taxable years beginning after December 31, 1993.”

Amendment by section 13201(span)(3)(C) of Puspan. L. 103–66 applicable to taxable years beginning after Dec. 31, 1992, see section 13201(c) of Puspan. L. 103–66, set out as a note under section 1 of this title.

Effective Date of 1991 Amendment

Amendment by Puspan. L. 102–227 applicable to taxable years ending after Dec. 31, 1991, see section 102(c) of Puspan. L. 102–227, set out as a note under section 45C of this title.

Effective Date of 1990 Amendment

Amendment by section 11101(d)(1)(C) of Puspan. L. 101–508 applicable to taxable years beginning after Dec. 31, 1990, see section 11101(e) of Puspan. L. 101–508, set out as a note under section 1 of this title.

Amendment by section 11402(a) of Puspan. L. 101–508 applicable to taxable years beginning after Dec. 31, 1989, see section 11402(c) of Puspan. L. 101–508, set out as a note under section 45C of this title.

Effective Date of 1989 Amendment

Puspan. L. 101–239, title VII, § 7110(e), Dec. 19, 1989, 103 Stat. 2326, provided that: “The amendments made by this section [amending this section and sections 28, 174, 196, and 280C of this title] (other than subsection (a) [amending this section and section 28 of this title]) shall apply to taxable years beginning after December 31, 1989.”

Amendment by section 7814(e)(2)(C) of Puspan. L. 101–239 effective, except as otherwise provided, as if included in the provision of the Technical and Miscellaneous Revenue Act of 1988, Puspan. L. 100–647, to which such amendment relates, see section 7817 of Puspan. L. 101–239, set out as a note under section 1 of this title.

Effective Date of 1988 Amendment

Amendment by section 1002(h)(1) of Puspan. L. 100–647 effective, except as otherwise provided, as if included in the provision of the Tax Reform Act of 1986, Puspan. L. 99–514, to which such amendment relates, see section 1019(a) of Puspan. L. 100–647, set out as a note under section 1 of this title.

Puspan. L. 100–647, title IV, § 4008(d), Nov. 10, 1988, 102 Stat. 3653, provided that: “The amendments made by this section [amending this section and sections 28, 196, 280C, and 6501 of this title] shall apply to taxable years beginning after December 31, 1988.”

Effective Date of 1986 Amendment

Puspan. L. 99–514, title II, § 231(g), Oct. 22, 1986, 100 Stat. 2180, provided that:

“(1)In general.—Except as provided in this subsection (2), the amendments made by this section [amending this section and sections 28, 38, 39, 108, 170, 280C, 381, 936, 6411, and 6511 of this title, renumbering former section 30 of this title as this section, and enacting and amending provisions set out as notes under this section] shall apply to taxable years beginning after December 31, 1985.

“(2)Subsection (a).—The amendments made by subsection (a) [amending this section and provisions set out as a note under this section] shall apply to taxable years ending after December 31, 1985.

“(3)Basic research.—Section 41(a)(2) of the Internal Revenue Code of 1986 (as added by this section), and the amendments made by subsection (c)(2) [amending this section], shall apply to taxable years beginning after December 31, 1986.”

Amendment by section 1847(span)(1) of Puspan. L. 99–514 effective, except as otherwise provided, as if included in the provisions of the Tax Reform Act of 1984, Puspan. L. 98–369, div. A, to which such amendment relates, see section 1881 of Puspan. L. 99–514, set out as a note under section 48 of this title.

Effective Date of 1984 Amendment

Amendment by section 474(i)(1) of Puspan. L. 98–369 applicable to taxable years beginning after Dec. 31, 1983, and to carrybacks from such years, see section 475(a) of Puspan. L. 98–369, set out as a note under section 21 of this title.

Amendment by section 612(e)(1) of Puspan. L. 98–369 applicable to interest paid or accrued after Dec. 31, 1984, on indebtedness incurred after Dec. 31, 1984, see section 612(g) of Puspan. L. 98–369, set out as an Effective Date note under section 25 of this title.

Effective Date of 1983 Amendment

Puspan. L. 97–448, title I, § 102(h)(2), Jan. 12, 1983, 96 Stat. 2372, provided that the amendment made by that section is effective only with respect to amounts paid or incurred after March 31, 1982.

Effective Date of 1982 Amendment

Amendment by Puspan. L. 97–354 applicable to taxable years beginning after Dec. 31, 1982, see section 6(a) of Puspan. L. 97–354, set out as an Effective Date note under section 1361 of this title.

Effective Date

Puspan. L. 97–34, title II, § 221(d), Aug. 13, 1981, 95 Stat. 241, as amended by Puspan. L. 99–514, § 2, title II, § 231(a)(2), Oct. 22, 1986, 100 Stat. 2095, 2173, provided that:

“(1)In general.—The amendments made by this section [enacting this section and amending sections 55, 381, 383, 6096, 6411, and 6511 of this title] shall apply to amounts paid or incurred after June 30, 1981.

“(2)Transitional rule.—

“(A)In general.—If, with respect to the first taxable year to which the amendments made by this section apply and which ends in 1981 or 1982, the taxpayer may only take into account qualified research expenses paid or incurred during a portion of such taxable year, the amount of the qualified research expenses taken into account for the base period of such taxable year shall be the amount which bears the same ratio to the total qualified research expenses for such base period as the number of months in such portion of such taxable year bears to the total number of months in such taxable year.

“(B)Definitions.—For purposes of the preceding sentence, the terms ‘qualified research expenses’ and ‘base period’ have the meanings given to such terms by section 44F [now 41] of the Internal Revenue Code of 1986 [formerly I.R.C. 1954] (as added by this section).”

Savings Provision

For provisions that nothing in amendment by section 401(span)(6) of Puspan. L. 115–141 be construed to affect treatment of certain transactions occurring, property acquired, or items of income, loss, deduction, or credit taken into account prior to Mar. 23, 2018, for purposes of determining liability for tax for periods ending after Mar. 23, 2018, see section 401(e) of Puspan. L. 115–141, set out as a note under section 23 of this title.

Special Rule for Elections Under Expired Provisions

Puspan. L. 109–432, div. A, title I, § 123, Dec. 20, 2006, 120 Stat. 2944, provided that:

“(a)Research Credit Elections.—In the case of any taxable year ending after December 31, 2005, and before the date of the enactment of this Act [Dec. 20, 2006], any election under section 41(c)(4) or section 280C(c)(3)(C) [now 280C(c)(2)(C)] of the Internal Revenue Code of 1986 shall be treated as having been timely made for such taxable year if such election is made not later than the later of April 15, 2007, or such time as the Secretary of the Treasury, or his designee, may specify. Such election shall be made in the manner prescribed by such Secretary or designee.

“(span)Other Elections.—Except as otherwise provided by such Secretary or designee, a rule similar to the rule of subsection (a) shall apply with respect to elections under any other expired provision of the Internal Revenue Code of 1986 the applicability of which is extended by reason of the amendments made by this title [amending this section and sections 32, 45A, 45C, 45D, 51, 54, 62, 164, 168, 170, 198, 220, 222, 613A, 1397E, 1400, 1400A to 1400C, 1400F, 1400N, 6103, 7608, 7652, and 9812 of this title, section 1185a of Title 29, Labor, and section 300gg–5 of Title 42, The Public Health and Welfare, and repealing section 51A of this title].”

Special Rule for Credit Attributable to Suspension Periods

Puspan. L. 106–170, title V, § 502(d), Dec. 17, 1999, 113 Stat. 1920, provided that:

“(1)In general.—For purposes of the Internal Revenue Code of 1986, the credit determined under section 41 of such Code which is otherwise allowable under such Code—

“(A) shall not be taken into account prior to October 1, 2000, to the extent such credit is attributable to the first suspension period; and

“(B) shall not be taken into account prior to October 1, 2001, to the extent such credit is attributable to the second suspension period.

On or after the earliest date that an amount of credit may be taken into account, such amount may be taken into account through the filing of an amended return, an application for expedited refund, an adjustment of estimated taxes, or other means allowed by such Code.

“(2)Suspension periods.—For purposes of this subsection—

“(A) the first suspension period is the period beginning on July 1, 1999, and ending on September 30, 2000; and

“(B) the second suspension period is the period beginning on October 1, 2000, and ending on September 30, 2001.

“(3)Expedited refunds.—

“(A)In general.—If there is an overpayment of tax with respect to a taxable year by reason of paragraph (1), the taxpayer may file an application for a tentative refund of such overpayment. Such application shall be in such manner and form, and contain such information, as the Secretary may prescribe.

“(B)Deadline for applications.—Subparagraph (A) shall apply only to an application filed before the date which is 1 year after the close of the suspension period to which the application relates.

“(C)Allowance of adjustments.—Not later than 90 days after the date on which an application is filed under this paragraph, the Secretary shall—

“(i) review the application;

“(ii) determine the amount of the overpayment; and

“(iii) apply, credit, or refund such overpayment,

in a manner similar to the manner provided in section 6411(span) of such Code.

“(D)Consolidated returns.—The provisions of section 6411(c) of such Code shall apply to an adjustment under this paragraph in such manner as the Secretary may provide.

“(4)Credit attributable to suspension period.—

“(A)In general.—For purposes of this subsection, in the case of a taxable year which includes a portion of the suspension period, the amount of credit determined under section 41 of such Code for such taxable year which is attributable to such period is the amount which bears the same ratio to the amount of credit determined under such section 41 for such taxable year as the number of months in the suspension period which are during such taxable year bears to the number of months in such taxable year.

“(B)Waiver of estimated tax penalties.—No addition to tax shall be made under section 6654 or 6655 of such Code for any period before July 1, 1999, with respect to any underpayment of tax imposed by such Code to the extent such underpayment was created or increased by reason of subparagraph (A).

“(5)Secretary.—For purposes of this subsection, the term ‘Secretary’ means the Secretary of the Treasury (or such Secretary’s delegate).”

Special Rules for Taxable Years Beginning Before Oct. 1, 1990, and Ending After Sept. 30, 1990

Puspan. L. 101–239, title VII, § 7110(a)(2), Dec. 19, 1989, 103 Stat. 2323, which set forth the method of determining the amount treated as qualified research expenses for taxable years beginning before Oct. 1, 1990, and ending after Sept. 30, 1990, was repealed by Puspan. L. 101–508, title XI, § 11402(span)(1), Nov. 5, 1990, 104 Stat. 1388–473.

[Puspan. L. 104–188, title I, § 1702(d)(1), Aug. 20, 1996, 110 Stat. 1870, provided that: “Notwithstanding section 11402(c) of the Revenue Reconciliation Act of 1990 [Puspan. L. 101–508, set out as a note under section 45C of this title], the amendment made by section 11402(span)(1) of such Act [repealing section 7110(a)(2) of Puspan. L. 101–239, formerly set out as a note above] shall apply to taxable years ending after December 31, 1989.”]

Study and Report on Credit Provided by This Section

Puspan. L. 100–647, title IV, § 4007(span), Nov. 10, 1988, 102 Stat. 3652, directed Comptroller General of United States to conduct a study of credit provided by 26 U.S.C. 41 and submit a report of the study not later than Dec. 31, 1989, to Committee on Ways and Means of House of Representatives and Committee on Finance of Senate.

Plan Amendments Not Required Until January 1, 1989

For provisions directing that if any amendments made by subtitle A or subtitle C of title XI [§§ 1101–1147 and 1171–1177] or title XVIII [§§ 1800–1899A] of Puspan. L. 99–514 require an amendment to any plan, such plan amendment shall not be required to be made before the first plan year beginning on or after Jan. 1, 1989, see section 1140 of Puspan. L. 99–514, as amended, set out as a note under section 401 of this title.

New Section 41 Treated as Continuation of Old Section 44F

Puspan. L. 98–369, div. A, title IV, § 474(i)(2), July 18, 1984, 98 Stat. 832, provided that:

“For purposes of determining—

“(A) whether any excess credit under old section 44F [now 41] for a taxable year beginning before January 1, 1984, is allowable as a carryover under new section 30 [now 41], and

“(B) the period during which new section 30 [now 41] is in effect,

new section 30 [now 41] shall be treated as a continuation of old section 44F (and shall apply only to the extent old section 44F would have applied).”