26 U.S.C. § 48D — Advanced manufacturing investment credit

(a) Establishment of credit. Your advanced manufacturing investment credit for the year is 35 percent of your qualified investment in an advanced manufacturing facility — but only if you're an "eligible taxpayer." (b) Qualified investment. This is the basis of "qualified property" placed in service that year as part of the facility. Qualified property is tangible, depreciable property that's either newly built/reconstructed by the taxpayer or newly acquired (original use starting with the taxpayer), and that's integral to running the facility. It includes buildings and their structural parts — but not the parts used for offices, administration, or anything unrelated to manufacturing. An "advanced manufacturing facility" is one whose main purpose is manufacturing semiconductors or semiconductor manufacturing equipment. The qualified investment doesn't include costs already counted as rehabilitation expenditures under section 47. Rules like the pre-1990 section 46 progress-expenditure rules apply for property paid for in stages. (c) Eligible taxpayer. You only qualify if you're not a "foreign entity of concern" (as defined in the 2021 defense authorization act) and you haven't made an "applicable transaction" (as defined in section 50(a)) during the tax year. (d) Elective payment. Instead of just claiming the credit against taxes, a taxpayer can elect to treat it as a direct payment of tax — the credit amount counts as a tax payment for that year. If the property is owned by a partnership or S corporation, that entity (not its partners or shareholders) makes the election; if it does, the Treasury pays the entity the credit amount directly, and the payment is treated as tax-exempt income split among the partners or shareholders in proportion to their normal share of the credit — no individual partner or shareholder can separately elect. The election must be made by the tax return's due date (with extensions), but never earlier than 270 days after this section's enactment, and once made, it's irrevocable. The payment counts as made on the later of the return's original due date or its actual filing date. For Treasury's own refund-appropriation purposes, these payments to partnerships and S corporations are treated like other refundable-credit payments. The Secretary can require extra information or registration to prevent fraud, duplication, or overpayment. If the Secretary later finds a payment was "excessive" — bigger than the credit the taxpayer or entity actually earned — the taxpayer's tax for that year goes up by the excess amount, plus a 20 percent penalty, unless the taxpayer shows the overpayment had reasonable cause. Making this election reduces the underlying credit to zero (though, for other tax purposes, the credit is treated as if it had still been allowed). For U.S. territories with a "mirror code" tax system, this elective-payment rule doesn't automatically become part of that territory's tax law unless the territory chooses to adopt it. Rules like section 50(a) and (c) — on recapture and basis reduction — apply to amounts paid or deemed paid under this election. The Secretary must issue regulations covering how partners' shares of the tax-exempt income are figured, and making sure payments match the credit that would otherwise be allowed. (e) Termination. This credit doesn't apply to property whose construction begins after December 31, 2026.