Research Tax Credit: Current Law, Legislation in the 112th Congress, and Policy Issues [March 7, 2012] [open pdf - 460KB]
"Technological innovation is a major driving force in long-term economic growth, and research and development (R&D) serves as the lifeblood of innovation. The federal government encourages business R&D in a variety of ways, including a tax credit for a company's increases in spending on qualified research above a base amount. This report describes the current status of the credit, summarizes its legislative history, discusses policy issues it raises, and describes legislation in the 112th Congress to modify or extend it. The report will be updated as warranted by developments affecting the credit. The research credit has never been a permanent provision of the federal tax code and expired at the end of 2011. Since its enactment in mid-1981, the credit has been extended 14 times and significantly modified five times. While the credit is usually assumed to be a single credit, it actually consists of four discrete credits: (1) a regular credit, (2) an alternative simplified credit (ASC), (3) a basic research credit, and (4) an energy research credit. A taxpayer may claim no more than either of the first two and each of the other two, provided it meets the requirements for each."
CRS Report for Congress, RL31181