To amend the Internal Revenue Code of 1986 to extend the research credit, to allow an alternative incremental research credit, and for other purposes.

Amends the Internal Revenue Code to extend through December 31, 1997, the credit for increasing research activities. Modifies the fixed-base percentage for start-up companies.

Allows an individual to elect an alternative incremental credit. Makes the election of such credit applicable to the taxable year in which the election is made and for all succeeding taxable years, unless it is revoked with the consent of the Secretary of the Treasury.

Increases from 65 percent to 80 percent the amount for contract research expenses with respect to amounts paid or incurred by the taxpayer to qualified research consortia for qualified research.