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USC Title 26 enacted through 2008

§ 45C. Clinical testing expenses for certain drugs for rare diseases or conditions

 
(a)
General rule
 
For purposes of section 38, the credit determined under this section for the taxable year is an amount equal to 50 percent of the qualified clinical testing expenses for the taxable year.
 
(b)
Qualified clinical testing expenses
 
For purposes of this section -
 
(1)
Qualified clinical testing expenses
 
(A)
In general
 
Except as otherwise provided in this paragraph, the term "qualified clinical testing expenses" means the amounts which are paid or incurred by the taxpayer during the taxable year which would be described in subsection (b) of section 41 if such subsection were applied with the modifications set forth in subparagraph (B).
 
(B)
Modifications
 
For purposes of subparagraph (A), subsection (b) of section 41 shall be applied -
 
(i)
by substituting "clinical testing" for "qualified research" each place it appears in paragraphs (2) and (3) of such subsection, and
 
(ii)
by substituting "100 percent" for "65 percent" in paragraph (3)(A) of such subsection.
 
(C)
Exclusion for amounts funded by grants, etc.
 
The term "qualified clinical testing expenses" shall not include any amount to the extent such amount is funded by any grant, contract, or otherwise by another person (or any governmental entity).
 
(D)
Special rule
 
For purposes of this paragraph, section 41 shall be deemed to remain in effect for periods after June 30, 1995, and before July 1, 1996, and periods after December 31, 2009.
 
(2)
Clinical testing
 
(A)
In general
 
The term "clinical testing" means any human clinical testing -
 
(i)
which is carried out under an exemption for a drug being tested for a rare disease or condition under section 505(i) of the Federal Food, Drug, and Cosmetic Act (or regulations issued under such section),
 
(ii)
which occurs -
 
(I)
after the date such drug is designated under section 526 of such Act, and
 
(II)
before the date on which an application with respect to such drug is approved under section 505(b) of such Act or, if the drug is a biological product, before the date on which a license for such drug is issued under section 351 of the Public Health Service Act;[FN 1] and
 
So in original. The semicolon probably should be a comma.
 
(iii)
which is conducted by or on behalf of the taxpayer to whom the designation under such section 526 applies.
 
(B)
Testing must be related to use for rare disease or condition
 
Human clinical testing shall be taken into account under subparagraph (A) only to the extent such testing is related to the use of a drug for the rare disease or condition for which it was designated under section 526 of the Federal Food, Drug, and Cosmetic Act.
 
(c)
Coordination with credit for increasing research expenditures
 
(1)
In general
 
Except as provided in paragraph (2), any qualified clinical testing expenses for a taxable year to which an election under this section applies shall not be taken into account for purposes of determining the credit allowable under section 41 for such taxable year.
 
(2)
Expenses included in determining base period research expenses
 
Any qualified clinical testing expenses for any taxable year which are qualified research expenses (within the meaning of section 41(b)) shall be taken into account in determining base period research expenses for purposes of applying section 41 to subsequent taxable years.
 
(d)
Definition and special rules
 
(1)
Rare disease or condition
 
For purposes of this section, the term "rare disease or condition" means any disease or condition which -
 
(A)
affects less than 200,000 persons in the United States, or
 
(B)
affects more than 200,000 persons in the United States but for which there is no reasonable expectation that the cost of developing and making available in the United States a drug for such disease or condition will be recovered from sales in the United States of such drug.
 
Determinations under the preceding sentence with respect to any drug shall be made on the basis of the facts and circumstances as of the date such drug is designated under section 526 of the Federal Food, Drug, and Cosmetic Act.
 
(2)
Special limitations on foreign testing
 
(A)
In general
 
No credit shall be allowed under this section with respect to any clinical testing conducted outside the United States unless -
 
(i)
such testing is conducted outside the United States because there is an insufficient testing population in the United States, and
 
(ii)
such testing is conducted by a United States person or by any other person who is not related to the taxpayer to whom the designation under section 526 of the Federal Food, Drug, and Cosmetic Act applies.
 
(B)
Special limitation for corporations to which section 936 applies
 
No credit shall be allowed under this section with respect to any clinical testing conducted by a corporation to which an election under section 936 applies.
 
(3)
Certain rules made applicable
 
Rules similar to the rules of paragraphs (1) and (2) of section 41(f) shall apply for purposes of this section.
 
(4)
Election
 
This section shall apply to any taxpayer for any taxable year only if such taxpayer elects (at such time and in such manner as the Secretary may by regulations prescribe) to have this section apply for such taxable year.








Tax Code (Internal Revenue Code) Section Index


U.S. GAAP by Codification Topic
 
105 GAAP Hierarchy
105 GAAP History

205 Presentation of Financial Statements
205-20 Discontinued Operations
210 Balance Sheet
210-20 Offsetting
220 Comprehensive Income
225 Income Statement
225-20 Extraordinary and Unusual Items
230 Statement of Cash Flows
250 Accounting Changes and Error Corrections
260 Earnings per Share
270 Interim Reporting

310 Impairment of a Loan
320 Investment Securities
320 Other-Than-Temporary Impairments, FSP FAS 115-2
320-10-05 Overview of Investments in Other Entities
320-10-35 Reclassification of Investments in Securities
323-10 Equity Method Investments
323-30 Investments in Partnerships and Joint Ventures
325-20 Cost Method Investments
330 Inventory

340-20 Capitalized Advertising Costs
350-20 Goodwill
350-30 Intangibles Other than Goodwill
350-40 Internal-Use Software
350-50 Website Development Costs
360 Property, Plant and Equipment
360-20 Real Estate Sales

410 Asset Retirement and Environmental Obligations
420 Exit or Disposal Cost Obligations
450 Contingencies
450-20 Loss Contingencies
450-30 Gain Contingencies
480 Redeemable Financial Instruments

505-20 Stock Dividends, Stock Splits
505-30 Treasury Stock

605 SEC Staff Accounting Bulletin, Topic 13
605-25 Revenue Recognition - Multiple Element Arrangements

715-30 Defined Benefit Plans - Pension
718 Share-Based Payment
730 Research and Development
730-20 Research and Development Arrangements

805 Business Combinations
810 Consolidation
810 Noncontrolling Interests
810 Consolidation of Variable Interest Entities, SFAS 167

815 Derivatives and Hedging Overview

820 Fair Value Measurements
820 Fair value when the markets are not active, FSP FAS 157-4
825 Fair Value Option

830 Foreign Currency Matters
830-20 Foreign Currency Transactions
830-30 Translation of Financial Statements
835 Interest
835-20 Capitalization of Interest
835-30 Imputation of Interest

840 Leases
840-20 Operating Leases
840-30 Capital Leases
840-40 Sale-Leaseback Transactions
845 Nonmonetary Transactions

855 Subsequent Events
860-20 Sale of Financial Assets, SFAS 166
860-50 Servicing Assets and Liabilities, SFAS 156

985-20 Costs of software to be sold


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