ADVANCED MANUFACTURING INVESTMENT CREDIT.

SEC. 107. ADVANCED MANUFACTURING INVESTMENT CREDIT. (a) In General.—Subpart E of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 is amended by inserting after section 48C the following new section: “SEC. 48D. [26 U.S.C. 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) 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.” . (b) Recapture in Connection With Certain Expansions.— (1) [26 U.S.C. 50] In general.—Section 50(a) of the Internal Revenue Code of 1986 is amendedredesignating paragraphs (3) through (5) as paragraphs (4) through (6), respectively, and by inserting after paragraph (2) the following new paragraph: “(3) Certain expansions in connection with advanced manufacturing facilities.— “(A) In general.—If there is a an applicable transaction by an applicable taxpayer before the close of the 10-year period beginning on the date such taxpayer placed in service investment credit property which is eligible for the advanced manufacturing investment credit under section 48D(a), then the tax under this chapter for the taxable year in which such transaction occurs shall be increased by 100 percent of the aggregate decrease in the credits allowed under section 38 for all prior taxable years which would have resulted solely from reducing to zero any credit determined under section 46 which is attributable to the advanced manufacturing investment credit under section 48D(a) with respect to such property. “(B) Exception.—Subparagraph (A) shall not apply if the applicable taxpayer demonstrates to the satisfaction of the Secretary that the applicable transaction has been ceased or abandoned within 45 days of a determination and notice by the Secretary. “(C) Regulations and guidance.—The Secretary shall issue such regulations or other guidance as the Secretary determines necessary or appropriate to carry out the purposes of this paragraph, including regulations or other guidance which provide for requirements for recordkeeping or information reporting for purposes of administering the requirements of this paragraph.” . (2) Applicable transaction; applicable taxpayer.—Section 50(a)(6) of the Internal Revenue Code of 1986, as redesignated by paragraph (1), is amendedadding at the end the following new subparagraphs: “(D) Applicable transaction.—For purposes of this subsection— “(i) In general.—The term ‘applicable transaction’ means, with respect to any applicable taxpayer, any significant transaction (as determined by the Secretary, in coordination with the Secretary of Commerce and the Secretary of Defense) involving the material expansion of semiconductor manufacturing capacity of such applicable taxpayer in the People’s Republic of China or a foreign country of concern (as defined in section 9901(7) of the William M. (Mac) Thornberry National Defense Authorization Act for Fiscal Year 2021). “(ii) Exception.—Such term shall not include a transaction which primarily involves the expansion of manufacturing capacity for legacy semiconductors (as defined in section 9902(a)(6) of the William M. (Mac) Thornberry National Defense Authorization Act for Fiscal Year 2021). “(E) Applicable taxpayer.—For purposes of this subsection, the term ‘applicable taxpayer’ means any taxpayer who has been allowed a credit under section 48D(a) for any prior taxable year.” . (3) Conforming amendments.— (A) Section 50(a)(4) of the Internal Revenue Code of 1986, as redesignated by paragraph (1), is amended— (i) by inserting “, or any applicable transaction to which paragraph (3)(A) applies” after “paragraphs (1) and (2)”, and (ii) by inserting “or applicable transaction” after “such cessation”. (B) Section 50(a)(6)(C) of such Code, as redesignated by paragraph (1), is amended by striking “paragraph (1) or (2)” and inserting “paragraph (1), (2), or (3)”. (C) Section 1371(d)(1) of such Code is amended by striking “section 50(a)(4)” and inserting “section 50(a)(5)”. (c) Exemption of Elective Payments From Sequestration.—Subsection (d) of section 255 of the Balanced Budget and Emergency Deficit Control Act of 1985 (2 U.S.C. 905) is amended to read as follows: “(d) Refundable Income Tax Credits and Certain Elective Payments.— “(1) Refundable income tax credits.—Payments to individuals made pursuant to provisions of the Internal Revenue Code of 1986 establishing refundable tax credits shall be exempt from reduction under any order issued under this part. “(2) Certain elective payments.—Payments made to taxpayers pursuant to elections under subsection (d) of section 48D of the Internal Revenue Code of 1986, or amounts treated as payments which are made by taxpayers under paragraph (1) of such subsection, shall be exempt from reduction under any order issued under this part.” . (d) Conforming Amendments.— (1) [26 U.S.C. 46] Paragraph (6) of section 46 of the Internal Revenue Code of 1986 is amended to read as follows: “(6) the advanced manufacturing investment credit.” . (2) Section 49(a)(1)(C) of such Code is amended— (A) by striking “and” at the end of clause (iv), (B) by striking the period at the end of clause (v) and inserting “, and”, and (C) by adding at the end the following new clause: “(vi) the basis of any qualified property (as defined in subsection (b)(2) of section 48D) which is part of an advanced manufacturing facility (as defined in subsection (b)(3) of such section).” . (3) [26 U.S.C. 50] Section 50(a)(2)(E) of such Code is amended by striking “or 48C(b)(2)” and inserting “48C(b)(2), or 48D(b)(5)”. (4) [26 U.S.C. 46] The table of sections for subpart E of part IV of subchapter A of chapter 1 of such Code is amended by inserting after the item relating to section 48C the following new item: “Sec. 48D. Advanced manufacturing investment credit.” . (e) Budgetary Effects.— (1) Statutory paygo scorecards.—The budgetary effects of this section shall not be entered on either PAYGO scorecard maintained pursuant to section 4(d) of the Statutory Pay-As-You-Go Act of 2010 (2 U.S.C. 933(d)). (2) Senate paygo scorecards.—The budgetary effects of this section shall not be entered on any PAYGO scorecard maintained for purposes of section 4106 of H. Con. Res. 71 (115th Congress). (3) Classification of budgetary effects.—Notwithstanding Rule 3 of the Budget Scorekeeping Guidelines set forth in the joint explanatory statement of the committee of conference accompanying Conference Report 105-217 and section 250(c)(8) of the Balanced Budget and Emergency Deficit Control Act of 1985, the budgetary effects of this section shall not be estimated— (A) for purposes of section 251 of such Act; (B) for purposes of an allocation to the Committee on Appropriations pursuant to section 302(a) of the Congressional Budget Act of 1974; and (C) for purposes of paragraph (4)(C) of section 3 of the Statutory Pay-As-You-Go Act of 2010 as being included in an appropriation Act. (f) [2 U.S.C. 905 note] Effective Date.— (1) In general.—Except as provided in paragraph (2), the amendments made by this section shall apply to property placed in service after December 31, 2022, and, for any property the construction of which begins prior to January 1, 2023, only to the extent of the basis thereof attributable to the construction, reconstruction, or erection after the date of enactment of this Act. (2) Exemption of elective payments from sequestration.—The amendment made by subsection (c) shall apply to any sequestration order issued under the Balanced Budget and Emergency Deficit Control Act of 1985 (2 U.S.C. 900 et seq.) on or after December 31, 2022.