High Technology Research and Scientific Education Act of 1985

High Technology Research and Scientific Education Act of 1985 - Title I: The Credit for Increasing Research Activities - Amends the Internal Revenue Code to make permanent the tax credit for research and development (R&D) expenditures. Modifies the definition of qualified research for purposes of the R&D credit to narrow the category of eligible activities for which the credit is available.

Provides that all in-house and contract research expenses paid or incurred by a regular corporation shall constitute qualified R&D expenses for credit purposes if the corporation undertakes the research with the intention to use the results thereof in the active conduct of a present or future trade or business. Provides that in the case of research being conducted in the partnership form, the trade or business test is applied at the partnership level, and the credit is apportioned among the partners in accordance with general partnership rules.

Title II: Promotion of University Research and Scientific Education - Establishes a new income tax credit equal to 20 percent of that portion of a corporation's payments to universities (and other nonprofit, tax-exempt organizations for basic research) which exceeds a fixed, historical "minimum university basic research" floor. Defines the fixed "minimum university basic research" floor as one percent of the annual average of the corporate taxpayer's combined qualified in-house research expenses, contract research expenses, and university basic research payments for the base period composed of the period from 1981 through 1983.

Modifies the charitable contribution deduction of corporations for scientific and technical property to: (1) expand the eligible uses to which the property may be put to include direct education as well as research and research training; (2) make computer software eligible for the deduction; and (3) make state-of-the-art equipment used in the taxpayer's trade or business eligible for the deduction. Sets forth a formula for determining the amount of the allowable deduction for scientific equipment.

Provides for an income tax exclusion for the scholarships, fellowship grants, student loan forgiveness, or stipends of students who are enrolled in postgraduate study as degree candidates. Provides that such tax exclusion will not be forfeited merely because the student is required, as a condition of the scholarship or fellowship, to perform future service in teaching or research.