26 U.S.C. § 48D

Current through P.L. 118-106 (published on www.congress.gov on 10/04/2024)

Section 48D - Advanced manufacturing investment credit

(a) Establishment of credit

For purposes of section 46, the advanced manufacturing investment credit for any taxable year is an amount equal to 25 percent of the qualified investment for such taxable year with respect to any advanced manufacturing facility of an eligible taxpayer.

(b) Qualified investment

(1) In general

For purposes of subsection (a), the qualified investment with respect to any advanced manufacturing facility for any taxable year is the basis of any qualified property placed in service by the taxpayer during such taxable year which is part of an advanced manufacturing facility.

(2) Qualified property

(A) In general

For purposes of this subsection, the term "qualified property" means property-

(i) which is tangible property,

(ii) with respect to which depreciation (or amortization in lieu of depreciation) is allowable,

(iii) which is-

(I) constructed, reconstructed, or erected by the taxpayer, or

(II) acquired by the taxpayer if the original use of such property commences with the taxpayer, and

(iv) which is integral to the operation of the advanced manufacturing facility.

(B) Buildings and structural components

(i) In general

The term "qualified property" includes any building or its structural components which otherwise satisfy the requirements under subparagraph (A).

(ii) Exception

Clause (i) shall not apply with respect to a building or portion of a building used for offices, administrative services, or other functions unrelated to manufacturing.

(3) Advanced manufacturing facility

For purposes of this section, the term "advanced manufacturing facility" means a facility for which the primary purpose is the manufacturing of semiconductors or semiconductor manufacturing equipment.

(4) Coordination with rehabilitation credit

The qualified investment with respect to any advanced manufacturing facility for any taxable year shall not include that portion of the basis of any property which is attributable to qualified rehabilitation expenditures (as defined in section 47(c)(2)).

(5) Certain progress expenditure rules made applicable

Rules similar to the rules of subsections (c)(4) and (d) of section 46 (as in effect on the day before the date of the enactment of the Revenue Reconciliation Act of 1990) shall apply for purposes of subsection (a).

(c) Eligible taxpayer

For purposes of this section, the term "eligible taxpayer" means any taxpayer which-

(1) is not a foreign entity of concern (as defined in section 9901(6) ¹ of the William M. (Mac) Thornberry National Defense Authorization Act for Fiscal Year 2021), and

(2) has not made an applicable transaction (as defined in section 50(a)) during the taxable year.

(d) Elective payment

(1) In general

Except as otherwise provided in paragraph (2)(A), in the case of a taxpayer making an election (at such time and in such manner as the Secretary may provide) under this subsection with respect to the credit determined under subsection (a) with respect to such taxpayer, such taxpayer shall be treated as making a payment against the tax imposed by subtitle A (for the taxable year with respect to which such credit was determined) equal to the amount of such credit.

(2) Special rules

For purposes of this subsection-

(A) Application to partnerships and s corporations

(i) In general

In the case of the credit determined under subsection (a) with respect to any property held directly by a partnership or S corporation, any election under paragraph (1) shall be made by such partnership or S corporation. If such partnership or S corporation makes an election under such paragraph (in such manner as the Secretary may provide) with respect to such credit-

(I) the Secretary shall make a payment to such partnership or S corporation equal to the amount of such credit,

(II) paragraph (3) shall be applied with respect to such credit before determining any partner's distributive share, or shareholder's pro rata share, of such credit,

(III) any amount with respect to which the election in paragraph (1) is made shall be treated as tax exempt income for purposes of sections 705 and 1366, and

(IV) a partner's distributive share of such tax exempt income shall be based on such partner's distributive share of the otherwise applicable credit for each taxable year.

(ii) Coordination with application at partner or shareholder level

In the case of any property held directly by a partnership or S corporation, no election by any partner or shareholder shall be allowed under paragraph (1) with respect to any credit determined under subsection (a) with respect to such property.

(B) Elections

Any election under paragraph (1) shall be made not later than the due date (including extensions of time) for the return of tax for the taxable year for which the election is made, but in no event earlier than 270 days after the date of the enactment of this section. Any such election, once made, shall be irrevocable. Except as otherwise provided in this subparagraph, any election under paragraph (1) shall apply with respect to any credit for the taxable year for which the election is made.

(C) Timing

The payment described in paragraph (1) shall be treated as made on the later of the due date (determined without regard to extensions) of the return of tax for the taxable year or the date on which such return is filed.

(D) Treatment of payments to partnerships and s corporations

For purposes of section 1324 of title 31, United States Code, the payments under subparagraph (A)(i)(I) shall be treated in the same manner as a refund due from a credit provision referred to in subsection (b)(2) of such section.

(E) Additional information

As a condition of, and prior to, any amount being treated as a payment which is made by the taxpayer under paragraph (1) or any payment being made pursuant to subparagraph (A), the Secretary may require such information or registration as the Secretary deems necessary or appropriate for purposes of preventing duplication, fraud, improper payments, or excessive payments under this section.

(F) Excessive payment

(i) In general

In the case of any amount treated as a payment which is made by the taxpayer under paragraph (1), or any payment made pursuant to subparagraph (A), which the Secretary determines constitutes an excessive payment, the tax imposed on such taxpayer by chapter 1 for the taxable year in which such determination is made shall be increased by an amount equal to the sum of-

(I) the amount of such excessive payment, plus

(II) an amount equal to 20 percent of such excessive payment.

(ii) Reasonable cause

Clause (i)(II) shall not apply if the taxpayer demonstrates to the satisfaction of the Secretary that the excessive payment resulted from reasonable cause.

(iii) Excessive payment defined

For purposes of this subparagraph, the term "excessive payment" means, with respect to property for which an election is made under this subsection for any taxable year, an amount equal to the excess of-

(I) the amount treated as a payment which is made by the taxpayer under paragraph (1), or the amount of the payment made pursuant to subparagraph (A), with respect to such property for such taxable year, over

(II) the amount of the credit which, without application of this subsection, would be otherwise allowable (determined without regard to section 38(c)) under subsection (a) with respect to such property for such taxable year.

(3) Denial of double benefit

In the case of a taxpayer making an election under this subsection with respect to the credit determined under subsection (a), such credit shall be reduced to zero and shall, for any other purposes under this title, be deemed to have been allowed to the taxpayer for such taxable year.

(4) Mirror code possessions

In the case of any possession of the United States with a mirror code tax system (as defined in section 24(k)), this subsection shall not be treated as part of the income tax laws of the United States for purposes of determining the income tax law of such possession unless such possession elects to have this subsection be so treated.

(5) Basis reduction and recapture

Rules similar to the rules of subsections (a) and (c) of section 50 shall apply with respect to-

(A) any amount treated as a payment which is made by the taxpayer under paragraph (1), and

(B) any payment made pursuant to paragraph (2)(A).

(6) Regulations

The Secretary shall issue such regulations or other guidance as may be necessary or appropriate to carry out the purposes of this subsection, including-

(A) regulations or other guidance providing rules for determining a partner's distributive share of the tax exempt income described in paragraph (2)(A)(i)(III), and

(B) guidance to ensure that the amount of the payment or deemed payment made under this subsection is commensurate with the amount of the credit that would be otherwise allowable (determined without regard to section 38(c)).

(e) Termination of credit

The credit allowed under this section shall not apply to property the construction of which begins after December 31, 2026.

¹ See References in Text note below.

26 U.S.C. § 48D

Added Pub. L. 117-167, div. A, §107(a), Aug. 9, 2022, 136 Stat. 1393.

EDITORIAL NOTES

REFERENCES IN TEXTThe date of the enactment of the Revenue Reconciliation Act of 1990, referred to in subsec. (b)(5), is the date of enactment of Pub. L. 101-508, which was approved Nov. 5, 1990.Section 9901(6) of the William M. (Mac) Thornberry National Defense Authorization Act for Fiscal Year 2021, referred to in subsec. (c)(1), means section 9901(6) of Pub. L. 116-283, but probably should be a reference to section 9901(8) of the Act, which defines "foreign entity of concern" and which is classified to section 4651(8) of Title 15, Commerce and Trade.The date of the enactment of this section, referred to in subsec. (d)(2)(B), is the date of enactment of Pub. L. 117-167, which was approved Aug. 9. 2022.

PRIOR PROVISIONSA prior section 48D, added Pub. L. 111-148, §9023(a), Mar. 23, 2010, 124 Stat. 877, provided for a qualifying therapeutic discovery project credit, prior to repeal by Pub. L. 115-141, div. U, title IV, §401(d)(3)(A), Mar. 23, 2018, 132 Stat. 1209.

STATUTORY NOTES AND RELATED SUBSIDIARIES

EFFECTIVE DATESection applicable to property placed in service after Dec. 31, 2022, and, for any property the construction of which begins prior to Jan. 1, 2023, only to the extent of the basis thereof attributable to the construction, reconstruction, or erection after Aug. 9, 2022, see section 107(f) of Pub. L. 117-167, set out as an Effective Date of 2022 Amendment note under section 905 of Title 2, The Congress.

Secretary: The term "Secretary" means the Secretary of the Treasury or his delegate.
corporation: The term "corporation" includes associations, joint-stock companies, and insurance companies.
fiscal year: The term "fiscal year" means an accounting period of 12 months ending on the last day of any month other than December.
shareholder: The term "shareholder" includes a member in an association, joint-stock company, or insurance company.
taxable year: The term "taxable year" means the calendar year, or the fiscal year ending during such calendar year, upon the basis of which the taxable income is computed under subtitle A. "Taxable year" means, in the case of a return made for a fractional part of a year under the provisions of subtitle A or under regulations prescribed by the Secretary, the period for which such return is made.
taxpayer: The term "taxpayer" means any person subject to any internal revenue tax.
transaction: The term "transaction" includes a series of transactions.