Facilitating American-Built Semiconductors Act or the FABS Act
This bill allows a new tax credit through 2032 for investment in any semiconductor manufacturing facility and for semiconductor design expenditures.
[Congressional Bills 117th Congress]
[From the U.S. Government Publishing Office]
[H.R. 7104 Introduced in House (IH)]
<DOC>
117th CONGRESS
2d Session
H. R. 7104
To amend the Internal Revenue Code of 1986 to establish the
semiconductor manufacturing investment credit.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
March 16, 2022
Mr. McCaul (for himself, Ms. Matsui, Mr. Kelly of Pennsylvania, Ms.
DelBene, Ms. Stefanik, Mr. Kildee, Mr. Katko, Ms. Slotkin, and Mr.
Meijer) introduced the following bill; which was referred to the
Committee on Ways and Means
_______________________________________________________________________
A BILL
To amend the Internal Revenue Code of 1986 to establish the
semiconductor manufacturing investment credit.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Facilitating American-Built
Semiconductors Act'' or the ``FABS Act''.
SEC. 2. SEMICONDUCTOR 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. SEMICONDUCTOR MANUFACTURING INVESTMENT CREDIT.
``(a) In General.--For purposes of section 46, the semiconductor
manufacturing investment credit for any taxable year is an amount equal
to the sum of--
``(1) 25 percent of the qualified investment for such
taxable year with respect to any semiconductor manufacturing
facility property, and
``(2) 25 percent of the qualified semiconductor design
expenditures paid or incurred during the taxable year.
``(b) Qualified Investment With Respect to Semiconductor
Manufacturing Facility Property.--
``(1) In general.--For purposes of subsection (a)(1), the
qualified investment with respect to any semiconductor
manufacturing facility property 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 any
semiconductor manufacturing facility property.
``(2) Qualified property.--For purposes of this subsection,
the term `qualified property' means property--
``(A) which is tangible property (including a
building or its structural components) which is an
integral part of any semiconductor manufacturing
facility property,
``(B) with respect to which depreciation (or
amortization in lieu of depreciation) is allowable,
``(C) 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
``(D) the primary purpose of which is to
manufacture or process, or perform research with
respect to, semiconductors or semiconductor tooling
equipment.
``(3) Semiconductor manufacturing facility property.--For
purposes of this subpart, the term `semiconductor manufacturing
facility property' means a facility for which the primary
purpose is the fabrication, assembly, testing and packaging of
semiconductor chips; semiconductor manufacturing equipment used
in these and related processes such as material-handling and
photomasking; or associated metrology, material-handling and
other related tools.
``(4) Coordination with rehabilitation credit.--The
qualified investment with respect to any semiconductor
manufacturing facility property 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)).
``(c) Qualified Semiconductor Design Expenditures.--For purposes of
this section--
``(1) In general.--Except as otherwise provided in this
subsection, the term `qualified semiconductor design
expenditures' means the amounts which are paid or incurred by
the taxpayer during the taxable year which would be described
in subsection (b) of section 41 if such subsection were applied
with the modifications set forth in paragraph (3).
``(2) Exclusion for amounts funded by grants, etc.--The
term `qualified semiconductor design expenditures' shall not
include any amount to the extent such amount is funded by any
grant, contract, or otherwise by another person (or any
governmental entity).
``(3) Modifications.--For purposes of paragraph (1),
subsection (b) of section 41 shall be applied--
``(A) by substituting `semiconductor research' for
`qualified research' each place it appears in
paragraphs (2) and (3) of each subsection,
``(B) by substituting `100 percent' for `65
percent' in paragraph (3)(A) of such subsection, and
``(C) by substituting `100 percent' for `75
percent' in paragraph (3)(C)(i) of such subsection.
``(4) Semiconductor research.--The term `semiconductor
research' means any research related to designing or developing
a semiconductor product, including qualified semiconductor
manufacturing property, that is at least one generation beyond
the taxpayer's most advanced commercially available product (or
the first generation if no such product exists).
``(d) Coordination With Credit for Increasing Research
Expenditures.--
``(1) In general.--Except as provided in paragraph (2), any
qualified semiconductor design expenditures for which a credit
is allowed under this section shall not be taken into account
for purposes of determining the credit allowable under section
41 for such taxable year.
``(2) Expenditures included in determining increase to
research activities.--Any qualified semiconductor design
expenditures for any taxable year which are qualified research
expenses (within the meaning of section 41(b)) shall be taken
into account in determining the base amount or the average
qualified research expenses, whichever is applicable, for
purposes of applying section 41 to subsequent taxable years.
Such qualified semiconductor design expenditures shall not be
taken into account for purposes of section 41(f)(3).
``(e) Special Rules.--
``(1) 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).
``(2) Aggregation and allocation of expenditures.--Rules
similar to the rules of paragraphs (1) and (2) of section 41(f)
shall apply for purposes of this section.
``(f) Election for Direct Payment.--
``(1) In general.--In the case of any qualified property or
semiconductor manufacturing property placed in service during
any taxable year (with the exception of any such property to
which subsection (g)(1) applied)), or in the case of any
qualified semiconductor design expenditures paid or incurred
during the taxable year, the amount of any credit determined
under subsection (a) with respect to such property or such
expenditures for such taxable year shall, at the election of
the taxpayer, be treated as a payment equal to such amount
which is made by the taxpayer against the tax imposed by
chapter 1 for such taxable year (regardless of whether such tax
would have been on such taxpayer).
``(2) Form and effect of election.--An election under
paragraph (1) shall be made prior to the date on which the
qualified property or semiconductor manufacturing property is
placed in service or the last day of the taxable year in which
the qualified semiconductor design expenditures are paid or
incurred and in such manner as the Secretary may prescribe.
Such election, once made, shall--
``(A) be irrevocable with respect to the qualified
property, semiconductor manufacturing property, or
qualified semiconductor design expenditures to which
such election applies, and
``(B) reduce the amount of the credit which would
(but for this subsection) be allowable under this
section with respect to such property or such
expenditures for the taxable year in which such
property is placed in service to zero.
``(3) Application to partnerships and s corporations.--In
the case of a partnership or S corporation which makes an
election under paragraph (1)--
``(A) such paragraph shall apply with respect to
such partnership or corporation without regard to the
fact that no tax is imposed by chapter 1 on such
partnership or corporation, and
``(B)(i) in the case of a partnership, each
partner's distributive share of the credit determined
under subsection (a) with respect to the qualified
property, semiconductor manufacturing property, or
qualified semiconductor design expenditures shall be
deemed to be zero, and
``(ii) in the case of a S corporation, each
shareholder's pro rata share of the credit determined
under subsection (a) with respect to such property
shall be deemed to be zero.
``(g) Recapture.--
``(1) In general.--If there is a recapture event with the
respect to the credits allowed under this section to any
taxpayer, the tax imposed on such taxpayer by this chapter for
the taxable year which includes the date of such recapture
event shall be increased by the amount of such credits.
``(2) Recapture event.--For purposes of this subsection,
the term `recapture event' means, with respect to the credits
allowed under this section to any taxpayer, the first date on
which any of the following has occurred:
``(A) Any semiconductor manufacturing facility
property with respect to which any such credit was
allowed is transferred to a foreign entity of concern
(as defined in section 9901 of the William M. (Mac)
Thornberry National Defense Authorization Act for
Fiscal Year 2021) or an entity under the influence,
control, or ownership of such a foreign entity of
concern.
``(B) Foreign entities of concern (as so defined)
or entities under the influence, control, or ownership
of such foreign entities of concern acquire a
controlling interest in the taxpayer.
``(h) Regulations and Guidance.--The Secretary shall prescribe such
regulations or other guidance as may be necessary or appropriate to
carry out the purposes of this section, including regulations or other
guidance with respect to--
``(1) determining the basis of qualified property and
semiconductor manufacturing property,
``(2) any such measures as are deemed appropriate to avoid
abuse or fraud with respect to the credit allowed under this
section,
``(3) ensuring that such credit is not allowed to multiple
taxpayers, and
``(4) carrying out the purposes of subsection (g),
including providing for the recapture of the credit allowed
under this section if the certification described in such
subsection is false.
``(i) Termination.--No credit shall be determined under this
section for any property placed in service, or any qualified
semiconductor design expenditures paid or incurred, after December 31,
2032.''.
(b) Conforming Amendments.--
(1) Section 46 of the Internal Revenue Code of 1986 is
amended--
(A) by striking ``and'' at the end of paragraph
(5),
(B) by striking the period at the end of paragraph
(6) and inserting ``, and'', and
(C) by adding at the end the following new
paragraph:
``(7) the semiconductor 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 a comma, and (C) by adding at the end the
following new clauses:
``(vi) the basis of any qualified property
(as defined in section 48D(b)(2)) which is part
of a semiconductor manufacturing facility, and
``(vii) the basis of any semiconductor
manufacturing property.''.
(3) Section 50(a)(2)(E) of such Code is amended by striking
``or 48C(b)(2)'' and inserting ``48C(b)(2), or 48D(f)(1)''.
(4) Section 59A(b)(1)(B)(ii) of such Code is amended--
(A) in subclause (I), by striking ``plus'',
(B) by redesignating subclause (II) as subclause
(III), and
(C) by inserting after subclause (I) the following:
``(II) the credit allowed under section 38 for the
taxable year which is properly allocable to the portion
of the investment credit determined under section 46
that is properly allocable to section 48D(a), plus''.
(5) 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. Semiconductor manufacturing investment credit.''.
(c) Effective Date.--The amendments made by this section shall
apply to property placed in service after December 31, 2022, and to
qualified semiconductor design expenditures paid or incurred after
December 31, 2022, under rules similar to the rules of section 48(m) of
the Internal Revenue Code of 1986 (as in effect on the day before the
date of the enactment of the Revenue Reconciliation Act of 1990).
<all>
Introduced in House
Introduced in House
Referred to the House Committee on Ways and Means.
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