Small Business Innovation Act of 1981

Small Business Innovation Act of 1981- Title I: Amendments to the Small Business Act - Amends the Small Business Act to direct each Federal agency to target at least 15 percent of its research and development budget for prime contract awards, both direct and indirect, to small business concerns in each fiscal year. Requires that agencies achieve such target by increasing annually such awards by one percent, beginning in fiscal year 1981.

Requires each Federal agency having a research and development budget of at least $100,000,000 to initiate and conduct a small business innovation research competitive solicitation program (SBIR) to stimulate technological innovation in the small business sector. Directs each such agency to award at least 50 percent of its annual target for prime contracts.

Directs each agency to conduct its SBIR in accordance with regulations established by the Small Business Administration (SBA) with the advice of the National Science Foundation and the Office of Federal Procurement Policy.

Requires these regulations to include: (1) specific categories of research and development projects to be reserved exclusively for small business; (2) a simplified standardized acquisition process; and (3) solicitation release schedules for notifying small business of contract opportunities.

Directs the Office of Federal Procurement Policy, in developing Federal Acquisition Regulations under current law, to provide maximum opportunity for small businesses to perform federally funded research and development contracts.

Requires all Federal agencies in promulgating regulations to impose the least amount of regulatory burden on small businesses.

Directs the Securities and Exchange Commission to review at least annually its regulations which may have the effect of restricting small businesses from access to securities markets and to report the results to the congressional small business committees.

Title II: Amendments to the Internal Revenue Code of 1954 - Amends the Internal Revenue Code to permit the nonrecognition of gain on the sale of an equity interest in a "small business" (as defined) if the proceeds of the sale are invested in another small business within 18 months. Requires a reduction of the basis of the replacement property by the amount of gain not recognized.

Permits a small business to deduct an amount equal to the cash contribution to a reserve which provides for the payment of research and experimental expenditures. Limits such deduction to $50,000 or ten percent of gross income and sets a ceiling of $150,000 for the reserve.

Increases the number of shareholders in subchapter S corporations from 15 to 100 and allows corporations to be shareholders.

Makes the following changes with respect to "qualified" small businesses, defined as any small business which has spent at least three percent of its income on research and development for three consecutive years or six percent in any one year.

Restores for such small businesses prior law for qualified stock options and permits such options to be exercised within ten years.

Reduces the capital gains tax rate by one-half for such small businesses, if the investment is held for at least five years.

Extends from five to ten years the period during which certain capital losses may be carried forward and deducted.

Removes the dollar limitation on the amount of losses which may be deducted as a result of investment in "qualified" small business stock.

Permits such small businesses to deduct as research and development expenditures the costs of otherwise depreciable research and development equipment and facilities.

Title III: Patents and Inventions - Directs the Commissioner of Patents and Trademarks to establish regulations permitting a reexamination of patents in the light of prior art patents or publications.

Permits any person to file such a request accompanied by a statement of the relation of the prior art to the claim involved and a material reason for the reexamination.

Directs the Commissioner to determine whether a substantial new question of patentability affecting any patent claim is raised. Requires that a reexamination proceeding be conducted upon an affirmative determination.

Requires that the patent owner be provided an opportunity to amend the patent claim in order to distinguish the prior art, and grants such owner the right of appeal.

Requires that the Commissioner issue a certificate of patentability or unpatentability following any such reexamination.

Title IV: Effective Date - Makes this Act effective on October 1, 1981.