To amend the Internal Revenue Code of 1986 to allow a credit against tax for qualified manufacturing facility construction costs.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Scaling Up Manufacturing Act of 
2012''.

SEC. 2. 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:

``SEC. 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--
            ``(1) In general.--The term `eligible business' means any 
        corporation or partnership--
                    ``(A) which is engaged in an active trade or 
                business,
                    ``(B) which is headquartered in the United States,
                    ``(C) substantially all of the management or 
                administrative activities of which are performed in the 
                United States,
                    ``(D) which has not (prior to placing into service 
                the manufacturing facility designated for purposes of 
                this section) placed in service a manufacturing 
                facility,
                    ``(E) which is a start-up company, and
                    ``(F) 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).
            ``(2) Start-up company.--The term `start-up company' means 
        any corporation or partnership--
                    ``(A) which first has both gross receipts and 
                qualified research expenses (as defined in section 
                41(b)) in a taxable year beginning after December 31, 
                2012, or
                    ``(B) which has both gross receipts and qualified 
                research expenses (as so defined) in fewer than 3 
                taxable years beginning after December 31, 2012, and 
                before January 1, 2018.
    ``(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            The applicable recapture percentage 
  occurs in:                                                        is:
        Year 1.............................................        100 
        Year 2.............................................         80 
        Year 3.............................................         60 
        Year 4.............................................         40 
        Year 5.............................................         20 
        Years 6 and thereafter.............................          0.
                            ``(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.

Summary: Scaling Up Manufacturing Act of 2012 - Amends the Internal Revenue Code to allow certain start-up companies that are headquartered in the United States a tax credit for up to 25% of their costs for the construction of a manufacturing facility and for the purchase of specialized equipment for use at such facility.

Defines a "start-up company" as any corporation or partnership that: (1) first has both gross receipts and qualified research expenses in a taxable year beginning after December 31, 2012, or (2) has both gross receipts and qualified research expenses in fewer than three taxable years beginning after December 31, 2012, and before January 1, 2018.