124 STAT. 880 PUBLIC LAW 111–148—MAR. 23, 2010 taxable year in which such grant is made or any subsequent taxable year. ‘‘(2) RECAPTURE OF CREDITS FOR PROGRESS EXPENDITURES MADE BEFORE GRANT.—If a credit was determined under this section with respect to such investment for any taxable year ending before such grant is made— ‘‘(A) the tax imposed under subtitle A on the taxpayer for the taxable year in which such grant is made shall be increased by so much of such credit as was allowed under section 38, ‘‘(B) the general business carryforwards under section 39 shall be adjusted so as to recapture the portion of such credit which was not so allowed, and ‘‘(C) the amount of such grant shall be determined without regard to any reduction in the basis of any property of a character subject to an allowance for depreciation by reason of such credit. ‘‘(3) TREATMENT OF GRANTS.—Any such grant shall not be includible in the gross income of the taxpayer.’’. (b) INCLUSION AS PART OF INVESTMENT CREDIT.—Section 46 of the Internal Revenue Code of 1986 is amended— (1) by adding a comma at the end of paragraph (2), (2) by striking the period at the end of paragraph (5) and inserting ‘‘, and’’, and (3) by adding at the end the following new paragraph: ‘‘(6) the qualifying therapeutic discovery project credit.’’. (c) CONFORMING AMENDMENTS.— (1) Section 49(a)(1)(C) of the Internal Revenue Code of 1986 is amended— (A) by striking ‘‘and’’ at the end of clause (iv), (B) by striking the period at the end of clause (v) and inserting ‘‘, and’’, and (C) by adding at the end the following new clause: ‘‘(vi) the basis of any property to which paragraph (1) of section 48D(e) applies which is part of a quali- fying therapeutic discovery project under such section 48D.’’. (2) Section 280C of such Code is amended by adding at the end the following new subsection: ‘‘(g) QUALIFYING THERAPEUTIC DISCOVERY PROJECT CREDIT.— ‘‘(1) IN GENERAL.—No deduction shall be allowed for that portion of the qualified investment (as defined in section 48D(b)) otherwise allowable as a deduction for the taxable year which— ‘‘(A) would be qualified research expenses (as defined in section 41(b)), basic research expenses (as defined in section 41(e)(2)), or qualified clinical testing expenses (as defined in section 45C(b)) if the credit under section 41 or section 45C were allowed with respect to such expenses for such taxable year, and ‘‘(B) is equal to the amount of the credit determined for such taxable year under section 48D(a), reduced by— ‘‘(i) the amount disallowed as a deduction by reason of section 48D(e)(2)(B), and ‘‘(ii) the amount of any basis reduction under sec- tion 48D(e)(1). ‘‘(2) SIMILAR RULE WHERE TAXPAYER CAPITALIZES RATHER THAN DEDUCTS EXPENSES.—In the case of expenses described 26 USC 280C. 26 USC 49. 26 USC 46.
