II 

117TH CONGRESS 

1ST SESSION S. 2107 

To amend the Internal Revenue Code of 1986 to establish the semiconductor 

manufacturing investment credit. 

IN THE SENATE OF THE UNITED STATES 

JUNE 17, 2021 

Mr. WYDEN (for himself, Mr. CRAPO, Mr. WARNER, Mr. CORNYN, Ms. STABENOW, and Mr. DAINES) introduced the following bill; which was read 

twice and referred to the Committee on Finance 

A BILL 

To amend the Internal Revenue Code of 1986 to establish 

the semiconductor manufacturing investment credit. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Facilitating American5 Built Semiconductors Act’’ or the ‘‘FABS Act’’. 

6 SEC. 2. SEMICONDUCTOR MANUFACTURING INVESTMENT 

7 CREDIT. 

8 (a) IN GENERAL.—Subpart E of part IV of sub9 chapter A of chapter 1 of the Internal Revenue Code of 


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1 1986 is amended by inserting after section 48C the fol2 lowing new section: 

3 ‘‘SEC. 48D. SEMICONDUCTOR MANUFACTURING INVEST4 MENT CREDIT. 

5 ‘‘(a) IN GENERAL.—For purposes of section 46, the 

6 semiconductor manufacturing investment credit for any 

7 taxable year is an amount equal to the sum of— 

8 ‘‘(1) 25 percent of the qualified investment for 

9 such taxable year with respect to any semiconductor 

10 manufacturing facility, and 

11 ‘‘(2) 25 percent of the qualified investment for 

12 such taxable year with respect to any semiconductor 

13 manufacturing property. 

14 ‘‘(b) QUALIFIED INVESTMENT WITH RESPECT TO

15 SEMICONDUCTOR MANUFACTURING FACILITIES.— 

16 ‘‘(1) IN GENERAL.—For purposes of subsection 

17 (a)(1), the qualified investment with respect to any 

18 semiconductor manufacturing facility for any taxable 

19 year is the basis of any qualified property placed in 

20 service by the taxpayer during such taxable year 

21 which is part of a semiconductor manufacturing fa22 cility. 

23 ‘‘(2) QUALIFIED PROPERTY.—For purposes of 

24 this subsection, the term ‘qualified property’ means 

25 property— 


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1 ‘‘(A) which is tangible property (including 

2 a building or its structural components) which 

3 is an integral part of a semiconductor manufac4 turing facility, 

5 ‘‘(B) with respect to which depreciation (or 

6 amortization in lieu of depreciation) is allow7 able, 

8 ‘‘(C) which is— 

9 ‘‘(i) constructed, reconstructed, or 

10 erected by the taxpayer, or 

11 ‘‘(ii) acquired by the taxpayer if the 

12 original use of such property commences 

13 with the taxpayer, and 

14 ‘‘(D) which is necessary for the manufac15 turing or processing of, or performing research 

16 with respect to, semiconductors or semicon17 ductor tooling equipment. 

18 ‘‘(3) SEMICONDUCTOR MANUFACTURING FACIL19 ITY.—For purposes of this subpart, the term ‘semi20 conductor manufacturing facility’ means a facility 

21 for which the primary purpose is the manufacturing 

22 or processing of, or performing research with respect 

23 to, semiconductors or semiconductor tooling equip24 ment. 


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1 ‘‘(4) COORDINATION WITH REHABILITATION

2 CREDIT AND SEMICONDUCTOR MANUFACTURING

3 PROPERTY.—The qualified investment with respect 

4 to any semiconductor manufacturing facility for any 

5 taxable year shall not include that portion of the 

6 basis of any property which is— 

7 ‘‘(A) attributable to qualified rehabilitation 

8 expenditures (as defined in section 47(c)(2)), or 

9 ‘‘(B) semiconductor manufacturing prop10 erty (as defined in subsection (c)(2)). 

11 ‘‘(c) QUALIFIED INVESTMENT WITH RESPECT TO

12 SEMICONDUCTOR MANUFACTURING PROPERTY.— 

13 ‘‘(1) IN GENERAL.—For purposes of subsection 

14 (a)(2), the qualified investment with respect to semi15 conductor manufacturing property for any taxable 

16 year is the basis of any semiconductor manufac17 turing property placed in service by the taxpayer 

18 during such taxable year. 

19 ‘‘(2) SEMICONDUCTOR MANUFACTURING PROP20 ERTY.—For purposes of this subpart, the term 

21 ‘semiconductor manufacturing property’ means tan22 gible property— 

23 ‘‘(A) for which the primary purpose is to 

24 manufacture or process, or perform research 


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1 with respect to, semiconductors or semicon2 ductor tooling equipment, 

3 ‘‘(B) with respect to which depreciation (or 

4 amortization in lieu of depreciation) is allow5 able, and 

6 ‘‘(C) which is— 

7 ‘‘(i) constructed, reconstructed, or 

8 erected by the taxpayer, or 

9 ‘‘(ii) acquired by the taxpayer if the 

10 original use of such property commences 

11 with the taxpayer. 

12 ‘‘(d) CERTAIN PROGRESS EXPENDITURE RULES

13 MADE APPLICABLE.—Rules similar to the rules of sub14 sections (c)(4) and (d) of section 46 (as in effect on the 

15 day before the date of the enactment of the Revenue Rec16 onciliation Act of 1990) shall apply for purposes of sub17 section (a). 

18 ‘‘(e) REGULATIONS AND GUIDANCE.—The Secretary 

19 shall prescribe such regulations or other guidance as may 

20 be necessary or appropriate to carry out the purposes of 

21 this section, including regulations or other guidance with 

22 respect to— 

23 ‘‘(1) determining the basis of qualified property 

24 and semiconductor manufacturing property, 


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1 ‘‘(2) any such measures as are deemed appro2 priate to avoid abuse or fraud with respect to the 

3 credit allowed under this section, and 

4 ‘‘(3) ensuring that such credit is not allowed to 

5 multiple taxpayers.’’. 

6 (b) ELECTION FOR DIRECT PAYMENT.—Section 48D 

7 of the Internal Revenue Code of 1986, as added by sub8 section (a), is amended by adding at the end the following: 

9 ‘‘(f) ELECTION FOR DIRECT PAYMENT.— 

10 ‘‘(1) IN GENERAL.—In the case of any qualified 

11 property or semiconductor manufacturing property 

12 placed in service during any taxable year (with the 

13 exception of any such property to which subsection 

14 (d) applied)), the amount of any credit determined 

15 under subsection (a) with respect to such property 

16 for such taxable year shall, at the election of the tax17 payer, be treated as a payment equal to such 

18 amount which is made by the taxpayer against the 

19 tax imposed by chapter 1 for such taxable year (re20 gardless of whether such tax would have been on 

21 such taxpayer). 

22 ‘‘(2) FORM AND EFFECT OF ELECTION.—An 

23 election under paragraph (1) shall be made prior to 

24 the date on which the qualified property or semicon25 ductor manufacturing property is placed in service 


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1 and in such manner as the Secretary may prescribe. 

2 Such election, once made, shall— 

3 ‘‘(A) be irrevocable with respect to the 

4 qualified property or semiconductor manufac5 turing property to which such election applies, 

6 and 

7 ‘‘(B) reduce the amount of the credit 

8 which would (but for this subsection) be allow9 able under this section with respect to such 

10 property for the taxable year in which such 

11 property is placed in service to zero. 

12 ‘‘(3) APPLICATION TO PARTNERSHIPS AND S

13 CORPORATIONS.—In the case of a partnership or S 

14 corporation which makes an election under para15 graph (1)— 

16 ‘‘(A) such paragraph shall apply with re17 spect to such partnership or corporation with18 out regard to the fact that no tax is imposed 

19 by chapter 1 on such partnership or corpora20 tion, and 

21 ‘‘(B)(i) in the case of a partnership, each 

22 partner’s distributive share of the credit deter23 mined under subsection (a) with respect to the 

24 qualified property or semiconductor manufac25 turing property shall be deemed to be zero, and 


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1 ‘‘(ii) in the case of a S corporation, each 

2 shareholder’s pro rata share of the credit deter3 mined under subsection (a) with respect to such 

4 property shall be deemed to be zero.’’. 

5 (c) CONFORMING AMENDMENTS.— 

6 (1) Section 46 of the Internal Revenue Code of 

7 1986 is amended— 

8 (A) by striking ‘‘and’’ at the end of para9 graph (5), 

10 (B) by striking the period at the end of 

11 paragraph (6) and inserting ‘‘, and’’, and 

12 (C) by adding at the end the following new 

13 paragraph: 

14 ‘‘(7) the semiconductor manufacturing invest15 ment credit.’’. 

16 (2) Section 49(a)(1)(C) of such Code is amend17 ed— 

18 (A) by striking ‘‘and’’ at the end of clause 

19 (iv), 

20 (B) by striking the period at the end of 

21 clause (v) and inserting a comma, and 

22 (C) by adding at the end the following new 

23 clauses: 

24 ‘‘(vi) the basis of any qualified prop25 erty (as defined in section 48D(b)(2)) 


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1 which is part of a semiconductor manufac2 turing facility, and 

3 ‘‘(vii) the basis of any semiconductor 

4 manufacturing property.’’. 

5 (3) Section 50(a)(2)(E) of such Code is amend6 ed by striking ‘‘or 48C(b)(2)’’ and inserting 

7 ‘‘48C(b)(2), or 48D(d)’’. 

8 (4) Section 59A(b)(1)(B)(ii) of such Code is 

9 amended— 

10 (A) in subclause (I), by striking ‘‘plus’’, 

11 (B) by redesignating subclause (II) as sub12 clause (III), and 

13 (C) by inserting after subclause (I) the fol14 lowing: 

15 ‘‘(II) the credit allowed under 

16 section 38 for the taxable year which 

17 is properly allocable to the portion of 

18 the investment credit determined 

19 under section 46 that is properly allo20 cable to section 48D(a), plus’’. 

21 (5) The table of sections for subpart E of part 

22 IV of subchapter A of chapter 1 of such Code is 

23 amended by inserting after the item relating to sec24 tion 48C the following new item: 

‘‘48D. Semiconductor manufacturing investment credit.’’. 

25 (d) EFFECTIVE DATE.— 


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1 (1) IN GENERAL.—Except as provided under 

2 paragraph (2), the amendments made by this section 

3 shall apply to property placed in service after De4 cember 31, 2021, under rules similar to the rules of 

5 section 48(m) of the Internal Revenue Code of 1986 

6 (as in effect on the day before the date of the enact7 ment of the Revenue Reconciliation Act of 1990). 

8 (2) ELECTION FOR DIRECT PAYMENT.—The 

9 amendments made by subsection (b) shall be effec10 tive with respect to any election made after Decem11 ber 31, 2021. 

Æ 


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