110 STAT. 1774 PUBLIC LAW 104-188—AUG. 20, 1996 "(i) TAXPAYERS TO WHICH SUBPARAGRAPH APPLIES.—The fixed-base percentage shall be determined under this subparagraph if— "(I) the first taxable year in which a taxpayer had both gross receipts and qualified research expenses begins after December 31, 1983, or "(II) 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.". (c) ELECTION OF ALTERNATIVE INCREMENTAL CREDIT. —Subsection (c) of section 41 is amended by redesignating paragraphs (4) and (5) as paragraphs (5) and (6), respectively, and by inserting after paragraph (3) the following new paragraph: " (4) ELECTION OF ALTERNATIVE INCREMENTAL CREDIT.— "(A) IN GENERAL.—At the election of the taxpayer, the credit determined under subsection (a)(1) shall be equal to the sum of— "(i) 1.65 percent of so much of the qualified research expenses for the taxable year as exceeds 1 percent of the average described in subsection (c)(1)(B) but does not exceed 1.5 percent of such average, "(ii) 2.2 percent of so much of such expenses as exceeds 1.5 percent of such average but does not exceed 2 percent of such average, and "(iii) 2.75 percent of so much of such expenses as exceeds 2 percent of such average. "(B) ELECTION.—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.". (d) INCREASED CREDIT FOR CONTRACT RESEARCH EXPENSES WITH RESPECT TO CERTAIN RESEARCH CONSORTIA.—Paragraph (3) of section 41(b) is amended by adding at the end the following new subparagraph: " (C) AMOUNTS PAID TO CERTAIN RESEARCH CONSORTIA. — "(i) IN GENERAL.— Subparagraph (A) shall be applied by substituting *75 percent' for *65 percent' with respect to amounts paid or incurred by the taxpayer to a qualified research consortium for qualified research on behalf of the taxpayer and 1 or more unrelated taxpayers. For purposes of the preceding sentence, all persons treated as a single employer under subsection (a) or (b) of section 52 shall be treated as related taxpayers. "(ii) QUALIFIED RESEARCH CONSORTIUM.—The term 'qualified research consortium' means any organization which— "(I) is described in section 501(c)(3) or 501(c)(6) and is exempt from tax under section 501(a), "(II) is organized and operated primarily to conduct scientific research, and "(III) is not a private foundation.".