FABS Act
Bill: S.2107 | Sponsor: Sen. Wyden, Ron (D-OR)
Policy area: Taxation

Summary:
Facilitating American-Built Semiconductors Act or the FABS Act
This bill allows a new tax credit for investment in a semiconductor manufacturing facility and semiconductor manufacturing property.

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, and
            ``(2) 25 percent of the qualified investment for such 
        taxable year with respect to any semiconductor manufacturing 
        property.
    ``(b) Qualified Investment With Respect to Semiconductor 
Manufacturing Facilities.--
            ``(1) In general.--For purposes of subsection (a)(1), the 
        qualified investment with respect to any semiconductor 
        manufacturing facility 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 a semiconductor 
        manufacturing facility.
            ``(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 a semiconductor manufacturing 
                facility,
                    ``(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) which is necessary for the manufacturing or 
                processing of, or performing research with respect to, 
                semiconductors or semiconductor tooling equipment.
            ``(3) Semiconductor manufacturing facility.--For purposes 
        of this subpart, the term `semiconductor manufacturing 
        facility' means a facility for which the primary purpose is the 
        manufacturing or processing of, or performing research with 
        respect to, semiconductors or semiconductor tooling equipment.
            ``(4) Coordination with rehabilitation credit and 
        semiconductor manufacturing property.--The qualified investment 
        with respect to any semiconductor manufacturing facility for 
        any taxable year shall not include that portion of the basis of 
        any property which is--
                    ``(A) attributable to qualified rehabilitation 
                expenditures (as defined in section 47(c)(2)), or
                    ``(B) semiconductor manufacturing property (as 
                defined in subsection (c)(2)).
    ``(c) Qualified Investment With Respect to Semiconductor 
Manufacturing Property.--
            ``(1) In general.--For purposes of subsection (a)(2), the 
        qualified investment with respect to semiconductor 
        manufacturing property for any taxable year is the basis of any 
        semiconductor manufacturing property placed in service by the 
        taxpayer during such taxable year.
            ``(2) Semiconductor manufacturing property.--For purposes 
        of this subpart, the term `semiconductor manufacturing 
        property' means tangible property--
                    ``(A) for which the primary purpose is to 
                manufacture or process, or perform research with 
                respect to, semiconductors or semiconductor tooling 
                equipment,
                    ``(B) with respect to which depreciation (or 
                amortization in lieu of depreciation) is allowable, and
                    ``(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.
    ``(d) 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).
    ``(e) 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, and
            ``(3) ensuring that such credit is not allowed to multiple 
        taxpayers.''.
    (b) Election for Direct Payment.--Section 48D of the Internal 
Revenue Code of 1986, as added by subsection (a), is amended by adding 
at the end the following:
    ``(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 (d) applied)), the amount of any credit 
        determined under subsection (a) with respect to such property 
        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 and in such manner as the Secretary may 
        prescribe. Such election, once made, shall--
                    ``(A) be irrevocable with respect to the qualified 
                property or semiconductor manufacturing property 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 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 or semiconductor manufacturing property 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.''.
    (c) 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(d)''.
            (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:

``48D. Semiconductor manufacturing investment credit.''.
    (d) Effective Date.--
            (1) In general.--Except as provided under paragraph (2), 
        the amendments made by this section shall apply to property 
        placed in service after December 31, 2021, 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).
            (2) Election for direct payment.--The amendments made by 
        subsection (b) shall be effective with respect to any election 
        made after December 31, 2021.
                                 <all>