[Congressional Bills 116th Congress]
[From the U.S. Government Publishing Office]
[H.R. 7767 Introduced in House (IH)]
<DOC>
116th CONGRESS
2d Session
H. R. 7767
To amend the Internal Revenue Code of 1986 to provide for credits
against tax for domestic medical and drug manufacturing and advanced
medical manufacturing equipment.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
July 23, 2020
Mr. Wenstrup (for himself and Mr. Arrington) 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 for credits
against tax for domestic medical and drug manufacturing and advanced
medical manufacturing equipment.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. DOMESTIC MEDICAL AND DRUG MANUFACTURING CREDIT.
(a) In General.--Subpart D of part IV of subchapter A of chapter 1
of the Internal Revenue Code of 1986 is amended by adding at the end
the following new section:
``SEC. 45U. DOMESTIC MEDICAL AND DRUG MANUFACTURING CREDIT.
``(a) In General.--For purposes of section 38, the domestic medical
and drug manufacturing credit determined under this section for any
taxable year is an amount equal to 10.5 percent of the lesser of--
``(1) the qualified medical and drug manufacturing income
of the taxpayer for the taxable year, or
``(2) taxable income of the taxpayer for the taxable year.
``(b) Credit Limited to Wages Paid.--
``(1) In general.--The amount of the credit allowable under
subsection (a) for any taxable year shall not exceed 50 percent
of the W-2 wages of the taxpayer for the taxable year.
``(2) W-2 wages.--For purposes of this section--
``(A) In general.--The term `W-2 wages' means, with
respect to any person for any taxable year of such
person, the sum of the amounts described in paragraphs
(3) and (8) of section 6051(a) paid by such person with
respect to employment of employees by such person
during the calendar year ending during such taxable
year.
``(B) Limitation to wages attributable to domestic
production.--Such term shall not include any amount
which is not properly allocable to domestic medical and
drug manufacturing gross receipts for purposes of
subsection (c)(1).
``(C) Return requirement.--Such term shall not
include any amount which is not properly included in a
return filed with the Social Security Administration on
or before the 60th day after the due date (including
extensions) for such return.
``(3) Acquisitions, dispositions, and short taxable
years.--The Secretary shall provide for the application of this
subsection in cases of a short taxable year or where the
taxpayer acquires, or disposes of, the major portion of a trade
or business or the major portion of a separate unit of a trade
or business during the taxable year.
``(c) Qualified Medical and Drug Manufacturing Income.--For
purposes of this section--
``(1) In general.--The term `qualified medical and drug
manufacturing income' for any taxable year means an amount
equal to the excess (if any) of--
``(A) the taxpayer's domestic medical and drug
manufacturing gross receipts for the taxable year, over
``(B) the sum of--
``(i) the cost of goods sold that are
allocable to such receipts, and
``(ii) other expenses, losses, or
deductions which are properly allocable to such
receipts.
``(2) Allocation method.--The Secretary shall prescribe
rules for the proper allocation of items described in paragraph
(1)(B) for purposes of determining qualified medical and drug
manufacturing income. Such rules shall provide for the proper
allocation of items whether or not such items are directly
allocable to domestic medical and drug manufacturing gross
receipts.
``(3) Special rules for determining costs.--
``(A) In general.--For purposes of determining
costs under clause (i) of paragraph (1)(B), any item or
service brought into the United States shall be treated
as acquired by purchase, and its cost shall be treated
as not less than its value immediately after it entered
the United States.
``(B) Exports for further manufacture.--In the case
of any property described in subparagraph (A) that had
been exported by the taxpayer for further manufacture,
the increase in cost or adjusted basis under
subparagraph (A) shall not exceed the difference
between the value of the property when exported and the
value of the property when brought back into the United
States after the further manufacture.
``(4) Domestic medical and drug manufacturing gross
receipts.--
``(A) In general.--The term `domestic medical and
drug manufacturing gross receipts' means the gross
receipts of the taxpayer which are derived from any
sale, exchange, or other disposition of--
``(i) any active pharmaceutical ingredient,
or
``(ii) any qualified countermeasure,
which was manufactured or produced by the taxpayer in
whole or in significant part within the United States.
``(B) Active pharmaceutical ingredient.--The term
`active pharmaceutical ingredient' means any substance
or mixture of substances intended to be used in the
manufacture of a drug product and (when so used)
becomes an active ingredient in the drug product.
``(C) Qualified countermeasure.--The term
`qualified countermeasure' has the meaning given such
term in section 319F-1(a)(2) of the Public Health
Service Act (42 U.S.C. 247d-6a(a)(2)).''
``(D) Partnerships owned by expanded affiliated
groups.--For purposes of this paragraph, if all of the
interests in the capital and profits of a partnership
are owned by members of a single expanded affiliated
group at all times during the taxable year of such
partnership, the partnership and all members of such
group shall be treated as a single taxpayer during such
period.
``(d) Definitions and Special Rules.--For purposes of this
section--
``(1) Application of section to pass-thru entities.--
``(A) Partnerships and s corporations.--In the case
of a partnership or S corporation--
``(i) this section shall be applied at the
partner or shareholder level,
``(ii) each partner or shareholder shall
take into account such person's allocable share
of each item described in subparagraph (A) or
(B) of subsection (c)(1) (determined without
regard to whether the items described in such
subparagraph (A) exceed the items described in
such subparagraph (B)), and
``(iii) each partner or shareholder shall
be treated for purposes of subsection (b) as
having W-2 wages for the taxable year in an
amount equal to such person's allocable share
of the W-2 wages of the partnership or S
corporation for the taxable year (as determined
under regulations prescribed by the Secretary).
``(B) Trusts and estates.--In the case of a trust
or estate--
``(i) the items referred to in subparagraph
(A)(ii) (as determined therein) and the W-2
wages of the trust or estate for the taxable
year, shall be apportioned between the
beneficiaries and the fiduciary (and among the
beneficiaries) under regulations prescribed by
the Secretary, and
``(ii) for purposes of paragraph (2),
adjusted gross income of the trust or estate
shall be determined as provided in section
67(e) with the adjustments described in such
paragraph.
``(C) Regulations.--The Secretary may prescribe
rules requiring or restricting the allocation of items
and wages under this paragraph and may prescribe such
reporting requirements as the Secretary determines
appropriate.
``(2) Application to individuals.--In the case of an
individual, subsection (a)(2) shall be applied by substituting
`adjusted gross income' for `taxable income'. For purposes of
the preceding sentence, adjusted gross income shall be
determined after application of sections 86, 135, 137, 219,
221, 222, and 469.
``(3) Special rule for affiliated groups.--
``(A) In general.--All members of an expanded
affiliated group shall be treated as a single
corporation for purposes of this section.
``(B) Expanded affiliated group.--For purposes of
this section, the term `expanded affiliated group'
means an affiliated group as defined in section
1504(a), determined--
``(i) by substituting `more than 50
percent' for `at least 80 percent' each place
it appears, and
``(ii) without regard to paragraphs (2) and
(4) of section 1504(b).
``(C) Allocation of credit.--Except as provided in
regulations, the credit under subsection (a) shall be
allocated among the members of the expanded affiliated
group in proportion to each member's respective amount
(if any) of qualified medical and drug manufacturing
income.
``(4) Trade or business requirement.--This section shall be
applied by only taking into account items which are
attributable to the actual conduct of a trade or business.
``(5) Coordination with minimum tax.--For purposes of
determining alternative minimum taxable income under section
55, qualified medical and drug manufacturing income shall be
determined without regard to any adjustments under sections 56
through 59.
``(6) Unrelated business taxable income.--For purposes of
determining the tax imposed by section 511, subsection
(a)(1)(B) shall be applied by substituting `unrelated business
taxable income' for `taxable income'.
``(7) Regulations.--The Secretary shall prescribe such
regulations as are necessary to carry out the purposes of this
section, including regulations which prevent more than 1
taxpayer from being allowed a credit under this section with
respect to any activity described in subsection (c)(4)(A).''.
(b) Treatment Under Base Erosion Tax.--Section 59A(b)(1)(B)(ii) of
such Code is amended by striking ``plus'' at the end of subclause (I),
by redesignating subclause (II) as subclause (III), and by inserting
after subclause (I) the following new subclause:
``(II) the credit allowed under
section 38 for the taxable year which
is properly allocable to the domestic
medical and drug manufacturing credit
determined under section 45U(a),
plus''.
(c) Part of General Business Credit.--Section 38(b) of such Code is
amended by striking ``plus'' at the end of paragraph (32), by striking
the period at the end of paragraph (33) and inserting ``, plus'', and
by adding at the end the following new paragraph:
``(34) the domestic medical and drug manufacturing credit
determined under section 45U(a).''.
(d) Credit Allowed Against Alternative Minimum Tax.--Section
38(c)(4)(B) of such Code is amended by redesignating clauses (x)
through (xii) as clauses (xi) through (xiii), respectively, and by
inserting after clause (ix) the following new clause:
``(x) the credit determined under section
45U,''.
(e) Clerical Amendment.--The table of sections for subpart D of
part IV of subchapter A of chapter 1 of such Code is amended by adding
at the end the following new item:
``Sec. 45U. Domestic medical and drug manufacturing credit.''.
(f) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2020.
SEC. 2. QUALIFYING ADVANCED MEDICAL MANUFACTURING EQUIPMENT CREDIT.
(a) In General.--Subpart E of part IV of subchapter A of chapter 1
of the Internal Revenue Code of 1986 is amended by adding at the end
the following new section:
``SEC. 48D. QUALIFYING ADVANCED MEDICAL MANUFACTURING EQUIPMENT CREDIT.
``(a) In General.--For purposes of section 46, the qualifying
advanced medical manufacturing equipment credit determined under this
section for any taxable year is the applicable percentage of the basis
of any qualifying advanced medical manufacturing equipment placed in
service during such taxable year.
``(b) Applicable Percentage.--For purposes of subsection (a), the
applicable percentage is--
``(1) 30 percent in the case of equipment which is placed
in service before January 1, 2028,
``(2) 20 percent in the case of equipment which is placed
in service during calendar year 2028,
``(3) 10 percent in the case of equipment which is placed
in service during calendar year 2029, and
``(4) 0 percent in the case of equipment which is placed in
service after December 31, 2029.
``(c) Qualifying Advanced Medical Manufacturing Equipment.--For
purposes of this section, the term `qualifying advanced medical
manufacturing equipment' means property of a character subject to the
allowance for depreciation--
``(1) which is machinery or equipment that is designed and
used to manufacture a--
``(A) drug (as such term is defined in section
201(g)(1) of the Federal Food, Drug, and Cosmetic Act),
``(B) device (as such term is defined in section
201(h) of such Act), or
``(C) biological product (as such term is defined
in section 351(i) of the Public Health Service Act),
``(2) which has been identified by the Secretary (after
consultation with the Secretary of Health and Human Services)
as machinery or equipment that--
``(A) incorporates novel technology or uses an
established technique or technology in a new or
innovative way, or
``(B) that can improve medical product quality,
address shortages of medicines, and speed time-to-
market,
``(3) which is placed in service in the United States by
the taxpayer, and
``(4) with respect to which depreciation is allowable.
``(d) Certain Qualified Progress Expenditures Rules Made
Applicable.--Rules similar to the rules of subsections (c)(4) and (d)
of section 46 (as in effect on the day before the enactment of the
Revenue Reconciliation Act of 1990) shall apply for purposes of this
section.
``(e) Regulations.--The Secretary shall prescribe such regulations
or other guidance as may be necessary to carry out the purposes of this
section, including regulations which prevent abuse or fraud.''.
(b) Treatment Under Base Erosion Tax.--Section 59A(b)(1)(B)(ii) of
such Code, as amended under section 1 of this Act, is further amended
by striking ``plus'' at the end of subclause (II), by redesignating
subclause (III) as subclause (IV), and by inserting after subclause
(II) the following new subclause:
``(III) the credit allowed under
section 46 for the taxable year which
is properly allocable to the qualifying
advanced medical manufacturing
equipment credit determined under
section 48D(a), plus''.
(c) Part of Investment Credit.--Section 46 of such Code is amended
by striking ``and'' at the end of paragraph (5), by striking the period
at the end of paragraph (6) and inserting ``, and'', and by adding at
the end the following new paragraph:
``(7) the qualifying advanced medical manufacturing
equipment credit.''.
(d) Clerical Amendment.--The table of sections for subpart D of
part IV of subchapter A of chapter 1 of such Code is amended by adding
at the end the following new item:
``Sec. 48D. Qualifying advanced medical manufacturing equipment
credit.''.
(e) Effective Date.--The amendments made by this section shall
apply to periods after the date of the enactment of this section under
rules similar to the rules of section 48(m) of the Internal Revenue
Code of 1986 (as in effect on the date of the enactment fo the Revenue
Reconciliation Act of 1990).
<all>
To amend the Internal Revenue Code of 1986 to provide for credits against tax for domestic medical and drug manufacturing and advanced medical manufacturing equipment.
#7767 | HR Congress #116
Policy Area: Taxation
Subjects: Advanced technology and technological innovationsHealth technology, devices, suppliesIncome tax creditsIncome tax ratesIndustrial policy and productivityInflation and pricesManufacturingPrescription drugsSales and excise taxesTrade restrictionsU.S. and foreign investmentsWages and earnings
Last Action: Referred to the Subcommittee on Select Revenue Measures. (7/23/2020)
Bill Text Source: Congress.gov
Summary and Impacts
Original Text