I 

113TH CONGRESS 

1ST SESSION H. R. 616 

To amend the Internal Revenue Code of 1986 to allow a credit against 

tax for qualified manufacturing facility construction costs. 

IN THE HOUSE OF REPRESENTATIVES 

FEBRUARY 12, 2013 

Mr. HONDA (for himself and Mr. CARNEY) 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 allow a 

credit against tax for qualified manufacturing facility 

construction costs. 

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 ‘‘Scaling Up Manufac5 turing Act of 2013’’. 

6 SEC. 2. CREDIT FOR MANUFACTURING FACILITY COSTS. 

7 (a) IN GENERAL.—Subpart D of part IV of sub8 chapter A of chapter 1 of the Internal Revenue Code of 

9 1986 is amended by adding at the end the following new 

10 section: 


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1 ‘‘SEC. 45S. MANUFACTURING FACILITY EXPENDITURES. 

2 ‘‘(a) GENERAL RULE.—For purposes of section 38, 

3 in the case of an eligible business, the manufacturing facil4 ity expenditure credit for any taxable year is an amount 

5 equal to 25 percent of the qualified facility construction 

6 expenditures of the taxpayer for the taxable year. 

7 ‘‘(b) ELIGIBLE BUSINESS.—For purposes of this sec8 tion, the term ‘eligible business’ means any corporation 

9 or partnership— 

10 ‘‘(1) which is engaged in an active trade or 

11 business, 

12 ‘‘(2) which is headquartered in the United 

13 States, 

14 ‘‘(3) substantially all of the management or ad15 ministrative activities of which are performed in the 

16 United States, 

17 ‘‘(4) which has not (prior to placing into service 

18 the manufacturing facility designated for purposes 

19 of this section) placed in service a dedicated com20 mercial manufacturing facility, 

21 ‘‘(5) with respect to which all debt obligations 

22 issued by, and equity interests in, have a rating of 

23 B minus (or its substantial equivalent) or higher 

24 from a credit rating agency registered with the Secu25 rities and Exchange Commission as a nationally rec26 ognized statistical rating organization (as defined in 


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1 section 3(a) of the Securities Exchange Act of 

2 1934). 

3 ‘‘(c) QUALIFIED FACILITY CONSTRUCTION EXPENDI4 TURES.—For purposes of this section— 

5 ‘‘(1) IN GENERAL.—The term ‘qualified facility 

6 construction expenditures’ means amounts paid or 

7 incurred by the taxpayer— 

8 ‘‘(A) for the construction of a facility (des9 ignated for purposes of this section by the tax10 payer at such time and in such form and man11 ner as the Secretary shall prescribe) in the 

12 United States to manufacture a qualified prod13 uct (including amounts for professional services 

14 necessary for the planning of such construc15 tion), and 

16 ‘‘(B) for the purchase of specialized equip17 ment for use at such facility and required for 

18 the manufacture of such product. 

19 ‘‘(2) QUALIFIED PRODUCT.—The term ‘quali20 fied product’ means any product which, prior to con21 struction of the facility with respect to which a cred22 it is allowed under this section, the taxpayer has 

23 produced and sold to a bona fide purchaser, and 

24 such purchaser has placed such product in service. 


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1 ‘‘(d) SPECIAL RULES.—For purposes of this sec2 tion— 

3 ‘‘(1) RECAPTURE.— 

4 ‘‘(A) IN GENERAL.—If, as of the close of 

5 any taxable year, there is a recapture event 

6 with respect to any facility of the taxpayer with 

7 respect to which a credit was allowed under this 

8 section, then the tax of the taxpayer under this 

9 chapter for such taxable year shall be increased 

10 by an amount equal to the product of— 

11 ‘‘(i) the applicable recapture percent12 age, and 

13 ‘‘(ii) the aggregate decrease in the 

14 credits allowed under section 38 for all 

15 prior taxable years which would have re16 sulted if the qualified facility construction 

17 expenditures of the taxpayer described in 

18 subsection (c)(1) with respect to such facil19 ity had been zero. 

20 ‘‘(B) APPLICABLE RECAPTURE PERCENT21 AGE.— 

22 ‘‘(i) IN GENERAL.—For purposes of 

23 this subsection, the applicable recapture 

24 percentage shall be determined in accord25 ance with the following table: 


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‘‘If the recapture event 

occurs in: 

The applicable recapture 

percentage is: 

Year 1 .......................................................................................... 100

Year 2 .......................................................................................... 80

Year 3 .......................................................................................... 60

Year 4 .......................................................................................... 40

Year 5 .......................................................................................... 20

Years 6 and thereafter ................................................................. 0. 

1 ‘‘(ii) YEARS.—For purposes of clause 

2 (i), year 1 shall begin on the first day of 

3 the taxable year in which the facility with 

4 respect to which a credit was allowed 

5 under this subsection was placed in service. 

6 ‘‘(C) RECAPTURE EVENT.—For purposes 

7 of this paragraph— 

8 ‘‘(i) IN GENERAL.—A recapture event 

9 occurs with respect to any facility if— 

10 ‘‘(I) the taxpayer becomes insol11 vent, or 

12 ‘‘(II) the taxpayer disposes of the 

13 facility to another person who, at this 

14 time of the disposition, is not an eligi15 ble business. 

16 ‘‘(ii) SPECIAL RULE FOR FACILITIES

17 NOT PLACED IN SERVICE WITHIN 5

18 YEARS.—In the case of a facility with re19 spect to which a credit is allowed under 

20 this section which is not placed in service 

21 before the close of the 5th taxable year beVerDate Mar 15 2010 02:13 Feb 20, 2013 Jkt 029200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H616.IH H616

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1 ginning after the first taxable year for 

2 which the credit was so allowed, a recap3 ture event shall be treated as having oc4 curred with respect to such facility in year 

5 1. 

6 ‘‘(2) CREDIT MAY BE ASSIGNED.—The amount 

7 of qualified facility construction expenditures with 

8 respect to a facility which would (but for this para9 graph) be taken into account under subsection (a) 

10 for any taxable year by any person (hereafter in this 

11 paragraph referred to as the ‘initial taxpayer’)— 

12 ‘‘(A) may be taken into account by any 

13 other person to whom such expenditures are as14 signed by the initial taxpayer, and 

15 ‘‘(B) shall not be taken into account by 

16 initial taxpayer. 

17 Any person to whom such expenditures are assigned 

18 under subparagraph (A) shall be treated for pur19 poses of this title as the taxpayer with respect to 

20 such expenditures. 

21 ‘‘(3) CONTROLLED GROUP.—All members of the 

22 same controlled group of corporations (within the 

23 meaning of section 52(a)) and all persons under 

24 common control (within the meaning of section 


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1 52(b)) shall be treated as 1 person for purposes of 

2 this section. 

3 ‘‘(4) PREDECESSOR.—Any reference in this sec4 tion to a corporation or partnership shall include a 

5 reference to any predecessor of such corporation or 

6 partnership. 

7 ‘‘(5) DENIAL OF DOUBLE BENEFIT.—For pur8 poses of this subtitle, if a credit is allowed under 

9 this section in connection with any expenditure for 

10 any property, the basis of such property shall be re11 duced by the amount of the credit so allowed.’’. 

12 (b) DENIAL OF DOUBLE BENEFIT.—Section 280C of 

13 such Code is amended by inserting after subsection (h) 

14 the following new subsection: 

15 ‘‘(i) MANUFACTURING FACILITY EXPENDITURES.— 

16 No deduction shall be allowed for that portion of the ex17 penses otherwise allowable as a deduction taken into ac18 count in determining the credit under section 45S for the 

19 taxable year which is equal to the amount of the credit 

20 determined for such taxable year under section 45S(a).’’. 

21 (c) CREDIT TO BE PART OF GENERAL BUSINESS

22 CREDIT.—Subsection (b) of section 38 of such Code is 

23 amended by striking ‘‘plus’’ at the end of paragraph (35), 

24 by striking the period at the end of paragraph (36) and 


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1 inserting ‘‘, plus’’, and by inserting after paragraph (36) 

2 the following: 

3 ‘‘(37) manufacturing facility expenditure credit 

4 determined under section 45S(a).’’. 

5 (d) CONFORMING AMENDMENT.—Subsection (a) of 

6 section 1016 of such Code is amended by striking ‘‘and’’ 

7 at the end of paragraph (36), by striking the period at 

8 the end of paragraph (37) and inserting ‘‘, and’’, and by 

9 adding at the end the following new paragraph: 

10 ‘‘(38) to the extent provided in section 

11 45S(d)(2).’’. 

12 (e) EFFECTIVE DATE.—The amendments made by 

13 this section shall apply to amounts paid or incurred after 

14 the date of the enactment of this Act. 

Æ 


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