Credit for manufacturing facility costs

(a)

In general

Subpart D of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 is amended by adding at the end the following new section:

45S.

Manufacturing facility expenditures

(a)

General rule

For purposes of section 38, in the case of an eligible business, the manufacturing facility expenditure credit for any taxable year is an amount equal to 25 percent of the qualified facility construction expenditures of the taxpayer for the taxable year. (b)

Eligible business

For purposes of this section, the term eligible business means any corporation or partnership— (1)which is engaged in an active trade or business, (2)which is headquartered in the United States, (3)substantially all of the management or administrative activities of which are performed in the United States, (4)which has not (prior to placing into service the manufacturing facility designated for purposes of this section) placed in service a dedicated commercial manufacturing facility, (5)with respect to which all debt obligations issued by, and equity interests in, have a rating of B minus (or its substantial equivalent) or higher from a credit rating agency registered with the Securities and Exchange Commission as a nationally recognized statistical rating organization (as defined in section 3(a) of the Securities Exchange Act of 1934). (c)

Qualified facility construction expenditures

For purposes of this section— (1)

In general

The term qualified facility construction expenditures means amounts paid or incurred by the taxpayer— (A)for the construction of a facility (designated for purposes of this section by the taxpayer at such time and in such form and manner as the Secretary shall prescribe) in the United States to manufacture a qualified product (including amounts for professional services necessary for the planning of such construction), and (B)for the purchase of specialized equipment for use at such facility and required for the manufacture of such product. (2)

Qualified product

The term qualified product means any product which, prior to construction of the facility with respect to which a credit is allowed under this section, the taxpayer has produced and sold to a bona fide purchaser, and such purchaser has placed such product in service. (d)

Special rules

For purposes of this section— (1)

Recapture

(A)

In general

If, as of the close of any taxable year, there is a recapture event with respect to any facility of the taxpayer with respect to which a credit was allowed under this section, then the tax of the taxpayer under this chapter for such taxable year shall be increased by an amount equal to the product of— (i)the applicable recapture percentage, and (ii)the aggregate decrease in the credits allowed under section 38 for all prior taxable years which would have resulted if the qualified facility construction expenditures of the taxpayer described in subsection (c)(1) with respect to such facility had been zero. (B)

Applicable recapture percentage

(i)

In general

For purposes of this subsection, the applicable recapture percentage shall be determined in accordance with the following table: If the recapture event occurs in:The applicable recapture percentage is: Year 1100 Year 280 Year 360 Year 440 Year 520 Years 6 and thereafter0.

(ii)

Years

For purposes of clause (i), year 1 shall begin on the first day of the taxable year in which the facility with respect to which a credit was allowed under this subsection was placed in service. (C)

Recapture event

For purposes of this paragraph— (i)

In general

A recapture event occurs with respect to any facility if— (I)the taxpayer becomes insolvent, or (II)the taxpayer disposes of the facility to another person who, at this time of the disposition, is not an eligible business. (ii)

Special rule for facilities not placed in service within 5 years

In the case of a facility with respect to which a credit is allowed under this section which is not placed in service before the close of the 5th taxable year beginning after the first taxable year for which the credit was so allowed, a recapture event shall be treated as having occurred with respect to such facility in year 1. (2)

Credit may be assigned

The amount of qualified facility construction expenditures with respect to a facility which would (but for this paragraph) be taken into account under subsection (a) for any taxable year by any person (hereafter in this paragraph referred to as the initial taxpayer)— (A)may be taken into account by any other person to whom such expenditures are assigned by the initial taxpayer, and (B)shall not be taken into account by initial taxpayer.

Any person to whom such expenditures are assigned under subparagraph (A) shall be treated for purposes of this title as the taxpayer with respect to such expenditures.

(3)

Controlled group

All members of the same controlled group of corporations (within the meaning of section 52(a)) and all persons under common control (within the meaning of section 52(b)) shall be treated as 1 person for purposes of this section. (4)

Predecessor

Any reference in this section to a corporation or partnership shall include a reference to any predecessor of such corporation or partnership. (5)

Denial of double benefit

For purposes of this subtitle, if a credit is allowed under this section in connection with any expenditure for any property, the basis of such property shall be reduced by the amount of the credit so allowed.

(b)

Denial of double benefit

Section 280C of such Code is amended by inserting after subsection (h) the following new subsection:

(i)

Manufacturing facility expenditures

No deduction shall be allowed for that portion of the expenses otherwise allowable as a deduction taken into account in determining the credit under section 45S for the taxable year which is equal to the amount of the credit determined for such taxable year under section 45S(a).

(c)

Credit To be part of general business credit

Subsection (b) of section 38 of such Code is amended by striking plus at the end of paragraph (35), by striking the period at the end of paragraph (36) and inserting , plus, and by inserting after paragraph (36) the following:

(37)manufacturing facility expenditure credit determined under section 45S(a).

(d)

Conforming amendment

Subsection (a) of section 1016 of such Code is amended by striking and at the end of paragraph (36), by striking the period at the end of paragraph (37) and inserting , and, and by adding at the end the following new paragraph:

(38)to the extent provided in section 45S(d)(2).

(e)

Effective date

The amendments made by this section shall apply to amounts paid or incurred after the date of the enactment of this Act.