Page:United States Statutes at Large Volume 102 Part 4.djvu/682

 102 STAT. 3652

PUBLIC LAW 100-647—NOV. 10, 1988

SEC. 4006. EXTENSION OF CERTAIN BUSINESS ENERGY CREDITS.

Each of the following provisions in the table under section 46(b)(2)(A) of the 1986 Code are amended by striking out "December 31, 1988" and inserting in lieu thereof "December 31, 1989": (1) The item relating to the 10 percent credit in clause (viii). (2) The item relating to the 10 percent credit in clause (ix). (3) Clause (x). SEC. 4007. EXTENSION OF CREDIT FOR INCREASING RESEARCH ACTIVITIES.

(a) EXTENSION.—Subsection (h) of section 41 of the 1986 Code (relating to credit for increasing research activities) is amended— (1) by striking out "December 31, 1988" each place it appears and inserting in lieu thereof "December 31, 1989", and (2) by striking out "January 1, 1989" each place it appears and inserting in lieu thereof "January 1, 1990". 26 USC 41 note.

(b) GAO STUDY.—

(1) IN GENERAL.—The Comptroller General of the United States shall conduct a study of the credit provided by section 41 of the 1986 Code. (2) REPORT.—The report of the study under paragraph (1) shall be submitted not later than December 31, 1989, to the Committee on Ways and Means of the House of Representatives and the Committee on Finance of the Senate. SEC. 4008. DENIAL OF DEDUCTION FOR 50 PERCENT AMOUNTS ALLOWED AS A RESEARCH CREDIT.

(a) IN GENERAL.—Section 280C of the 1986 Code (relating to certain expenses for which credits are allowable) is amended by adding at the end thereof the following new subsection: "(c) CREDIT FOR INCREASING RESEARCH ACTIVITIES.— "(1) IN GENERAL.—NO deduction shall be allowed for that

portion of the qualified research expenses (as defined in section 41(b)) or basic research expenses (as defined in section 41(e)(2) otherwise allowable as a deduction for the taxable year which is equal to 50 percent of the amount of the credit determined for such taxable year under section 41(a). "(2) SIMILAR RULE WHERE TAXPAYER CAPITAUZES RATHER THAN DEDUCTS EXPENSES.—IF—

"(A) 50 percent of the amount of the credit determined for the taxable year under section 41(a)(l), exceeds "(B) the amount allowable as a deduction for such taxable year for qualified research expenses or basic research expenses (determined without regard to paragraph (1)), the amount chargeable to capital account for the taxable year for such expenses shall be reduced by the amount of such excess. "(3) CONTROLLED GROUPS.—Paragraph (3) of subsection (b) shall apply for purposes of this subsection." (b) RESEARCH CREDIT TO B E ELECTIVE.—

(1) IN GENERAL.—Section 41 of the 1986 Code is amended by redesignating subsection (h) as subsection (i) and by inserting after subsection (g) the following new subsection: "(h) ELECTION TO HAVE RESEARCH CJREDIT NOT APPLY.—

"(1) IN GENERAL.—A taxpayer may elect to have this section not apply for any taxable year.

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