Page:United States Statutes at Large Volume 95.djvu/269

 PUBLIC LAW 97-34—AUG. 13, 1981

95 STAT. 243

incurred pursuant to a written research agreement between the corporation and the qualified organization. "(2) QuAUFiED ORGANIZATION.—For purposes of this subsection, the term 'qualifled organization' means— "(A) any educational organization which is described in section 170(b)(l)(A)(ii) and which is an institution of higher 26 USC 170. education (as defined in section 3304(f)), and "(B) any other organization which— "(i) is described in section 501(c)(3) and exempt from tax under section 501(a), "(ii) is organized and operated primarily to conduct scientific research, and "(iii) is not a private foundation. "(3) BASIC RESEARCH.—The term 'basic research' means any original investigation for the advancement of scientific knowledge not having a specific commercial objective, except that such term shall not include— "(A) basic research conducted outside the United States, and "(B) basic research in the social sciences or humanities. "(4) SPECIAL RULES FOR GRANTS TO CERTAIN FUNDS.—

"(A) IN GENERAL.—For purposes of this subsection, a qualified fund shall be treated as a qualified organization and the requirements of paragraph (1) that the basic research be performed by the qualified organization shall not apply. "(B) QUALIFIED FUND.—For purposes of subparagraph (A), the term 'qualified fund' means any organization which— "(i) is described in section 501(c)(3) and exempt from tax under section 501(a) and is not a private foundation, "(ii) is established and maintained by an organization established before July 10, 1981, which meets the requirements of clause (i), "(iii) is organized and operated exclusively for purposes of m ^ i n g grants pursuant to written research agreements to orgEUiizations described in paragraph (2)(A) for purposes of basic research, and "(iv) makes an election under this paragraph. "(C) EFFECT OF ELECTION.—

"(i) IN GENERAL.—Any organization which makes an election under this paragraph shall be treated as a private foundation for purposes of this title (other than section 4940, relating to excise tax based on investment income). "(ii) ELECTION REVOCABLE ONLY WITH CONSENT.—An

election under this paragraph, once made, may be revoked only with the consent of the Secretary. "(f) SPECIAL RULES.—For purposes of this section— "(1) AGGREGATION OF EXPENDITURES.— "(A) CONTROLLED GROUP OF CORPORATIONS.—In

determin-

ing the amount of the credit under this section— "(i) all members of the same controlled group of corporations shall be treated as a single taxpayer, and "(ii) the credit (if any) allowable by this section to each such member shall be its proportionate share of the increase in qualified research expenses giving rise to the credit.

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