PUBLIC LAW 97-34—AUG. 13, 1981
95 STAT. 245
taxpayer, then the amount of qualified research expenses of the tfi«payer for the base period for such taxable year shall be increased by the lesser of— "(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. "(4) SHORT TAXABLE YEARS.—In the case of any short taxable year, qualified research expenses shall be annualized in such circumstances and under such methods as the Secretary may prescribe by regulation. "(5) CONTROLLED GROUP OF CORPORATIONS.—The term 'controlled group of corporations' has the same meaning given to such term by section 1563(a), except that— 26 USC 1563. "(A) more than 50 percent* shall be substituted for 'at least 80 percent' each place it appears in section 1563(a)(1), and "(B) the determination shall be made without regard to subsections (a)(4) and (e)(3)(C) of section 1563. "(g) LIMITATION BASED ON AMOUNT OF TAX.— "(1) LIABILITY FOR TAX.—
"(A) IN GENERAL.—Except as provided in subparagraph (B), the credit allowed by subsection (a) for any taxable year 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). "(B) SPECIAL RULE FOR PASSTHROUGH OF CREDIT.—In the
case of an individual who— "(i) owns an interest in an unincorporated trade or business, "(ii) is a partner in a partnership, "(iii) is a beneficiary of an estate or trust, or "(iv) is a shareholder in an electing small business corporation (within the meaning of section 1371(b)), the credit allowed by subsection (a) for any taxable year shall not exceed the lesser of the amount determined under subparagraph (A) for the taxable year or an amount (separately computed with respect to such person's interest in such trade or business or entity) equal to the amount of tax attributable to that portion of a person's taxable income which is allocable or apportionable to the person's interest in such trade or business or entity. "(2) CARRYBACK AND CARRYOVER OP UNUSED cREorr."(A) ALLOWANCE OF CREDIT.—If the amount of the credit determined under this section for any taxable year exceeds the limitation provided by paragraph (1) for such taxable year (hereinafter in this paragraph referred to as the unused credit year'), such excess shall be— "(i) a research credit carryback to each'of the 3 taxable years preceding the unused credit year, and "(ii) a research credit carryover to each of the 15 taxable years following the unused credit year.
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