ALLOCATION OF RESEARCH AND EXPERIMENTAL EXPENDITURES.

SEC. 13234. ALLOCATION OF RESEARCH AND EXPERIMENTAL EXPENDITURES. (a) General Rule.— Subparagraph (B) of section 864(f)(1) (relating to allocation of research and experimental expenditures) is amended by striking “64 percent” each place it appears and inserting “50 percent”. (b) Conforming Amendments.— (1) Subsection (f) of section 864 is amended by striking paragraph (5) and inserting the following new paragraphs: “(5) Regulations.— The Secretary shall prescribe such regulations as may be appropriate to carry out the purposes of this subsection, including regulations relating to the determination of whether any expenses are attributable to activities conducted in the United States or outside the United States and regulations providing such adjustments to the provisions of this subsection as may be appropriate in the case of cost-sharing arrangements and contract research. “(6) Applicability.— This subsection shall apply to the tax-payer's first taxable year (beginning on or before August 1, 1994) following the taxpayer’s last taxable year to which Revenue Procedure 92–56 applies or would apply if the taxpayer elected the benefits of such Revenue Procedure.” (2) Subparagraph (D) of section 864(f)(4) is amended by striking “subparagraph (C)” and inserting “subparagraph (B) or (C)”.