USC Subpart E

in effect

26 U.S.C. § 46 Amount of credit

For purposes of section 38, the amount of the investment credit determined under this section for any taxable year shall be the sum of— (1) the rehabilitation credit, (2) the energy credit, (3) the qualifying advanced coal project credit, (4) the qualifying gasification project credit, (5) the qualifying advanced energy project credit, (6) the advanced manufacturing investment credit, and (7) the clean electricity investment credit.

26 U.S.C. § 47 Rehabilitation credit

(a) General rule(1) In generalFor purposes of section 46, for any taxable year during the 5-year period beginning in the taxable year in which a qualified rehabilitated building is placed in service, the rehabilitation credit for such year is an amount equal to the ratable share for such year. (2) Ratable shareFor purposes of paragraph (1), the ratable share for any taxable year during the period described in such paragraph is the amount equal to 20 percent of the qualified rehabilitation expenditures with respect to the qualified rehabilitated building, as allocated ratably to each year during such period. (b) When expenditures taken into account(1) In generalQualified rehabilitation expenditures with respect to any qualified rehabilitated building shall be taken into account for the taxable year in which such qualified rehabilitated building is placed in service. (2) Coordination with subsection (d)The amount which would (but for this paragraph) be taken into account under paragraph (1) with respect to any qualified rehabilitated building shall be reduced (but not below zero) by any amount of qualified rehabilitation expenditures taken into account under subsection (d) by the taxpayer or a predecessor of the taxpayer (or, in the case of a sale and leaseback described in section 50(a)(2)(C), by the lessee), to the extent any amount so taken into account has not been required to be recaptured under section 50(a). (c) DefinitionsFor purposes of this section—(1) Qualified rehabilitated building(A) In generalThe term “qualified rehabilitated building” means any building (and its structural components) if—(i) such building has been substantially rehabilitated, (ii) such building was placed in service before the beginning of the rehabilitation, (iii) such building is a certified historic structure, and (iv) depreciation (or amortization in lieu of depreciation) is allowable with respect to such building. (B) Substantially rehabilitated defined(i) In generalFor purposes of subparagraph (A)(i), a building shall be treated as having been substantially rehabilitated only if the qualified rehabilitation expenditures during the 24-month period selected by the taxpayer (at the time and in the manner prescribed by regulation) and ending with or within the taxable year exceed the greater of—(I) the adjusted basis of such building (and its structural components), or (II) $5,000. The adjusted basis of the building (and its structural components) shall be determined as of the beginning of the 1st day of such 24-month period, or of the holding period of the building, whichever is later. For purposes of the preceding sentence, the determination of the beginning of the holding period shall be made without regard to any reconstruction by the taxpayer in connection with the rehabilitation. (ii) Special rule for phased rehabilitationIn the case of any rehabilitation which may reasonably be expected to be completed in phases set forth in architectural plans and specifications completed before the rehabilitation begins, clause (i) shall be applied by substituting “60-month period” for “24-month period”. (iii) LesseesThe Secretary shall prescribe by regulation rules for applying this subparagraph to lessees. (C) ReconstructionRehabilitation includes reconstruction. (2) Qualified rehabilitation expenditure defined(A) In generalThe term “qualified rehabilitation expenditure” means any amount properly chargeable to capital account—(i) for property for which depreciation is allowable under section 168 and which is—(I) nonresidential real property, (II) residential rental property, (III) real property which has a class life of more than 12.5 years, or (IV) an addition or improvement to property described in subclause (I), (II), or (III), and (ii) in connection with the rehabilitation of a qualified rehabilitated building. (B) Certain expenditures not includedThe term “qualified rehabilitation expenditure” does not include—(i) Straight line depreciation must be usedAny expenditure with respect to which the taxpayer does not use the straight line method over a recovery period determined under subsection (c) or (g) of section 168. The preceding sentence shall not apply to any expenditure to the extent the alternative depreciation system of section 168(g) applies to such expenditure by reason of subparagraph (B) or (C) of section 168(g)(1). (ii) Cost of acquisitionThe cost of acquiring any building or interest therein. (iii) EnlargementsAny expenditure attributable to the enlargement of an existing building. (iv) Certified historic structureAny expenditure attributable to the rehabilitation of a qualified rehabilitated building unless the rehabilitation is a certified rehabilitation (within the meaning of subparagraph (C)). (v) Tax-exempt use property(I) In generalAny expenditure in connection with the rehabilitation of a building which is allocable to the portion of such property which is (or may reasonably be expected to be) tax-exempt use property (within the meaning of section 168(h), except that “50 percent” shall be substituted for “35 percent” in paragraph (1)(B)(iii) thereof). (II) Clause not to apply for purposes of paragraph (1)(C)This clause shall not apply for purposes of determining under paragraph (1)(C) whether a building has been substantially rehabilitated. (vi) Expenditures of lesseeAny expenditure of a lessee of a building if, on the date the rehabilitation is completed, the remaining term of the lease (determined without regard to any renewal periods) is less than the recovery period determined under section 168(c). (C) Certified rehabilitationFor purposes of subparagraph (B), the term “certified rehabilitation” means any rehabilitation of a certified historic structure which the Secretary of the Interior has certified to the Secretary as being consistent with the historic character of such property or the district in which such property is located. (D) Nonresidential real property; residential rental property; class lifeFor purposes of subparagraph (A), the terms “nonresidential real property,” “residential rental property,” and “class life” have the respective meanings given such terms by section 168. (3) Certified historic structure defined(A) In generalThe term “certified historic structure” means any building (and its structural components) which—(i) is listed in the National Register, or (ii) is located in a registered historic district and is certified by the Secretary of the Interior to the Secretary as being of historic significance to the district. (B) Registered historic districtThe term “registered historic district” means—(i) any district listed in the National Register, and (ii) any district—(I) which is designated under a statute of the appropriate State or local government, if such statute is certified by the Secretary of the Interior to the Secretary as containing criteria which will substantially achieve the purpose of preserving and rehabilitating buildings of historic significance to the district, and (II) which is certified by the Secretary of the Interior to the Secretary as meeting substantially all of the requirements for the listing of districts in the National Register. (d) Progress expenditures(1) In generalIn the case of any building to which this subsection applies, except as provided in paragraph (3)—(A) if such building is self-rehabilitated property, any qualified rehabilitation expenditure with respect to such building shall be taken into account for the taxable year for which such expenditure is properly chargeable to capital account with respect to such building, and (B) if such building is not self-rehabilitated property, any qualified rehabilitation expenditure with respect to such building shall be taken into account for the taxable year in which paid. (2) Property to which subsection applies(A) In generalThis subsection shall apply to any building which is being rehabilitated by or for the taxpayer if—(i) the normal rehabilitation period for such building is 2 years or more, and (ii) it is reasonable to expect that such building will be a qualified rehabilitated building in the hands of the taxpayer when it is placed in service. Clauses (i) and (ii) shall be applied on the basis of facts known as of the close of the taxable year of the taxpayer in which the rehabilitation begins (or, if later, at the close of the first taxable year to which an election under this subsection applies). (B) Normal rehabilitation periodFor purposes of subparagraph (A), the term “normal rehabilitation period” means the period reasonably expected to be required for the rehabilitation of the building—(i) beginning with the date on which physical work on the rehabilitation begins (or, if later, the first day of the first taxable year to which an election under this subsection applies), and (ii) ending on the date on which it is expected that the property will be available for placing in service. (3) Special rules for applying paragraph (1)For purposes of paragraph (1)—(A) Component parts, etc.Property which is to be a component part of, or is otherwise to be included in, any building to which this subsection applies shall be taken into account—(i) at a time not earlier than the time at which it becomes irrevocably devoted to use in the building, and (ii) as if (at the time referred to in clause (i)) the taxpayer had expended an amount equal to that portion of the cost to the taxpayer of such component or other property which, for purposes of this subpart, is properly chargeable (during such taxable year) to capital account with respect to such building. (B) Certain borrowing disregardedAny amount borrowed directly or indirectly by the taxpayer from the person rehabilitating the property for him shall not be treated as an amount expended for such rehabilitation. (C) Limitation for buildings which are not self-rehabilitated(i) In generalIn the case of a building which is not self-rehabilitated, the amount taken into account under paragraph (1)(B) for any taxable year shall not exceed the amount which represents the portion of the overall cost to the taxpayer of the rehabilitation which is properly attributable to the portion of the rehabilitation which is completed during such taxable year. (ii) Carryover of certain amountsIn the case of a building which is not a self-rehabilitated building, if for the taxable year—(I) the amount which (but for clause (i)) would have been taken into account under paragraph (1)(B) exceeds the limitation of clause (i), then the amount of such excess shall be taken into account under paragraph (1)(B) for the succeeding taxable year, or (II) the limitation of clause (i) exceeds the amount taken into account under paragraph (1)(B), then the amount of such excess shall increase the limitation of clause (i) for the succeeding taxable year. (D) Determination of percentage of completionThe determination under subparagraph (C)(i) of the portion of the overall cost to the taxpayer of the rehabilitation which is properly attributable to rehabilitation completed during any taxable year shall be made, under regulations prescribed by the Secretary, on the basis of engineering or architectural estimates or on the basis of cost accounting records. Unless the taxpayer establishes otherwise by clear and convincing evidence, the rehabilitation shall be deemed to be completed not more rapidly than ratably over the normal rehabilitation period. (E) No progress expenditures for certain prior periodsNo qualified rehabilitation expenditures shall be taken into account under this subsection for any period before the first day of the first taxable year to which an election under this subsection applies. (F) No progress expenditures for property for year it is placed in service, etc.In the case of any building, no qualified rehabilitation expenditures shall be taken into account under this subsection for the earlier of—(i) the taxable year in which the building is placed in service, or (ii) the first taxable year for which recapture is required under section 50(a)(2) with respect to such property, or for any taxable year thereafter. (4) Self-rehabilitated buildingFor purposes of this subsection, the term “self-rehabilitated building” means any building if it is reasonable to believe that more than half of the qualified rehabilitation expenditures for such building will be made directly by the taxpayer. (5) ElectionThis subsection shall apply to any taxpayer only if such taxpayer has made an election under this paragraph. Such an election shall apply to the taxable year for which made and all subsequent taxable years. Such an election, once made, may be revoked only with the consent of the Secretary.

26 U.S.C. § 48 Energy credit

(a) Energy credit(1) In generalFor purposes of section 46, except as provided in paragraphs (1)(B), (2)(B), and (3)(B) of subsection (c), the energy credit for any taxable year is the energy percentage of the basis of each energy property placed in service during such taxable year. (2) Energy percentage(A) In generalExcept as provided in paragraphs (6) and (7), the energy percentage is—(i) 6 percent in the case of—(I) qualified fuel cell property, (II) energy property described in clause (i) or (iii) of paragraph (3)(A) but only with respect to property the construction of which begins before January 1, 2025, (III) energy property described in paragraph (3)(A)(ii), (IV) qualified small wind energy property, (V) waste energy recovery property, (VI) energy storage technology, (VII) qualified biogas property, (VIII) microgrid controllers, and (IX) energy property described in clauses (v) and (vii) of paragraph (3)(A), and (ii) in the case of any energy property to which clause (i) does not apply, 0 percent. (B) Coordination with rehabilitation creditThe energy percentage shall not apply to that portion of the basis of any property which is attributable to qualified rehabilitation expenditures. (C) Nonapplication of increases to energy percentageFor purposes of energy property described in subparagraph (A)(ii), the energy percentage applicable to such property pursuant to such subparagraph shall not be increased or otherwise adjusted by any provision of this section. (3) Energy propertyFor purposes of this subpart, the term “energy property” means any property—(A) which is—(i) equipment which uses solar energy to generate electricity, to heat or cool (or provide hot water for use in) a structure, or to provide solar process heat, excepting property used to generate energy for the purposes of heating a swimming pool, (ii) equipment which uses solar energy to illuminate the inside of a structure using fiber-optic distributed sunlight, or electrochromic glass which uses electricity to change its light transmittance properties in order to heat or cool a structure, but only with respect to property the construction of which begins before January 1, 2025, (iii) equipment used to produce, distribute, or use energy derived from a geothermal deposit (within the meaning of section 613(e)(2)), but only, in the case of electricity generated by geothermal power, up to (but not including) the electrical transmission stage, (iv) qualified fuel cell property or qualified microturbine property, (v) combined heat and power system property, (vi) qualified small wind energy property, (vii) equipment which uses the ground or ground water as a thermal energy source to heat a structure or as a thermal energy sink to cool a structure, but only with respect to property the construction of which begins before January 1, 2035, (viii) waste energy recovery property, (ix) energy storage technology, (x) qualified biogas property, or (xi) microgrid controllers, (B)(i) the construction, reconstruction, or erection of which is completed by the taxpayer, or (ii) which is acquired by the taxpayer if the original use of such property commences with the taxpayer, (C) with respect to which depreciation (or amortization in lieu of depreciation) is allowable, and (D) which meets the performance and quality standards (if any) which—(i) have been prescribed by the Secretary by regulations (after consultation with the Secretary of Energy), and (ii) are in effect at the time of the acquisition of the property. Such term shall not include any property which is part of a facility the production from which is allowed as a credit under section 45 for the taxable year or any prior taxable year. (4) Special rule for property financed by tax-exempt bondsRules similar to the rule under section 45(b)(3) shall apply for purposes of this section. (5) Election to treat qualified facilities as energy property(A) In generalIn the case of any qualified property which is part of a qualified investment credit facility—(i) such property shall be treated as energy property for purposes of this section, and (ii) the energy percentage with respect to such property shall be 6 percent. (B) Denial of production creditNo credit shall be allowed under section 45 for any taxable year with respect to any qualified investment credit facility. (C) Qualified investment credit facilityFor purposes of this paragraph, the term “qualified investment credit facility” means any facility—(i) which is a qualified facility (within the meaning of section 45) described in paragraph (1), (2), (3), (4), (6), (7), (9), or (11) of section 45(d), (ii) which is placed in service after 2008 and the construction of which begins before January 1, 2025, and (iii) with respect to which—(I) no credit has been allowed under section 45, and (II) the taxpayer makes an irrevocable election to have this paragraph apply. (D) Qualified propertyFor purposes of this paragraph, the term “qualified property” means property—(i) which is—(I) tangible personal property, or (II) other tangible property (not including a building or its structural components), but only if such property is used as an integral part of the qualified investment credit facility, (ii) with respect to which depreciation (or amortization in lieu of depreciation) is allowable, (iii) which is constructed, reconstructed, erected, or acquired by the taxpayer, and (iv) the original use of which commences with the taxpayer. (E) Phaseout of credit for wind facilitiesIn the case of any facility using wind to produce electricity which is placed in service before January 1, 2022, and treated as energy property by reason of this paragraph, the amount of the credit determined under this section (determined after the application of paragraphs (1) and (2) and without regard to this subparagraph) shall be reduced by—(i) in the case of any facility the construction of which begins after December 31, 2016, and before January 1, 2018, 20 percent, (ii) in the case of any facility the construction of which begins after December 31, 2017, and before January 1, 2019, 40 percent, (iii) in the case of any facility the construction of which begins after December 31, 2018, and before January 1, 2020, 60 percent, and (iv) in the case of any facility the construction of which begins after December 31, 2019, and before January 1, 2022, 40 percent. (F) Qualified offshore wind facilities(i) In generalIn the case of any qualified offshore wind facility, subparagraph (E) shall not apply. (ii) Qualified offshore wind facilityFor purposes of this subparagraph, the term “qualified offshore wind facility” means a qualified facility (within the meaning of section 45) described in paragraph (1) of section 45(d) (determined without regard to any date by which the construction of the facility is required to begin) which is located in the inland navigable waters of the United States or in the coastal waters of the United States. (6) Phaseout for certain energy propertyIn the case of any qualified fuel cell property, qualified small wind property, or energy property described in clause (i) or clause (ii) of paragraph (3)(A) the construction of which begins after December 31, 2019, and which is placed in service before January 1, 2022, the energy percentage determined under paragraph (2) shall be equal to 26 percent. (7) Phaseout for certain energy propertyIn the case of any energy property described in clause (vii) of paragraph (3)(A), the energy percentage determined under paragraph (2) shall be equal to—(A) in the case of any property the construction of which begins before January 1, 2033, and which is placed in service after December 31, 2021, 6 percent, (B) in the case of any property the construction of which begins after December 31, 2032, and before January 1, 2034, 5.2 percent, and (C) in the case of any property the construction of which begins after December 31, 2033, and before January 1, 2035, 4.4 percent. (8) Interconnection property(A) In generalFor purposes of determining the credit under subsection (a), energy property shall include amounts paid or incurred by the taxpayer for qualified interconnection property in connection with the installation of energy property (as defined in paragraph (3)) which has a maximum net output of not greater than 5 megawatts (as measured in alternating current), to provide for the transmission or distribution of the electricity produced or stored by such property, and which are properly chargeable to the capital account of the taxpayer. (B) Qualified interconnection propertyThe term “qualified interconnection property” means, with respect to an energy project which is not a microgrid controller, any tangible property—(i) which is part of an addition, modification, or upgrade to a transmission or distribution system which is required at or beyond the point at which the energy project interconnects to such transmission or distribution system in order to accommodate such interconnection, (ii) either—(I) which is constructed, reconstructed, or erected by the taxpayer, or (II) for which the cost with respect to the construction, reconstruction, or erection of such property is paid or incurred by such taxpayer, and (iii) the original use of which, pursuant to an interconnection agreement, commences with a utility. (C) Interconnection agreementThe term “interconnection agreement” means an agreement with a utility for the purposes of interconnecting the energy property owned by such taxpayer to the transmission or distribution system of such utility. (D) UtilityFor purposes of this paragraph, the term “utility” means the owner or operator of an electrical transmission or distribution system which is subject to the regulatory authority of a State or political subdivision thereof, any agency or instrumentality of the United States, a public service or public utility commission or other similar body of any State or political subdivision thereof, or the governing or ratemaking body of an electric cooperative. (E) Special rule for interconnection propertyIn the case of expenses paid or incurred for interconnection property, amounts otherwise chargeable to capital account with respect to such expenses shall be reduced under rules similar to the rules of section 50(c). (9) Increased credit amount for energy projects(A) In general(i) RuleIn the case of any energy project which satisfies the requirements of subparagraph (B), the amount of the credit determined under this subsection (determined after the application of paragraphs (1) through (8) and paragraph (15) and without regard to this clause) shall be equal to such amount multiplied by 5. (ii) Energy project definedFor purposes of this subsection, the term “energy project” means a project consisting of one or more energy properties that are part of a single project. (B) Project requirementsA project meets the requirements of this subparagraph if it is one of the following:(i) A project with a maximum net output of less than 1 megawatt of electrical (as measured in alternating current) or thermal energy. (ii) A project the construction of which begins before the date that is 60 days after the Secretary publishes guidance with respect to the requirements of paragraphs (10)(A) and (11). (iii) A project which satisfies the requirements of paragraphs (10)(A) and (11). (10) Prevailing wage requirements(A) In generalThe requirements described in this subparagraph with respect to any energy project are that the taxpayer shall ensure that any laborers and mechanics employed by the taxpayer or any contractor or subcontractor in—(i) the construction of such energy project, and (ii) for the 5-year period beginning on the date such project is originally placed in service, the alteration or repair of such project, shall be paid wages at rates not less than the prevailing rates for construction, alteration, or repair of a similar character in the locality in which such project is located as most recently determined by the Secretary of Labor, in accordance with subchapter IV of chapter 31 of title 40, United States Code. Subject to subparagraph (C), for purposes of any determination under paragraph (9)(A)(i) for the taxable year in which the energy project is placed in service, the taxpayer shall be deemed to satisfy the requirement under clause (ii) at the time such project is placed in service. (B) Correction and penalty related to failure to satisfy wage requirementsRules similar to the rules of section 45(b)(7)(B) shall apply. (C) RecaptureThe Secretary shall, by regulations or other guidance, provide for recapturing the benefit of any increase in the credit allowed under this subsection by reason of this paragraph with respect to any project which does not satisfy the requirements under subparagraph (A) (after application of subparagraph (B)) for the period described in clause (ii) of subparagraph (A) (but which does not cease to be investment credit property within the meaning of section 50(a)). The period and percentage of such recapture shall be determined under rules similar to the rules of section 50(a). (11) Apprenticeship requirementsRules similar to the rules of section 45(b)(8) shall apply. (12) Domestic content bonus credit amount(A) In generalIn the case of any energy project which satisfies the requirement under subparagraph (B), for purposes of applying paragraph (2) with respect to such property, the energy percentage shall be increased by the applicable credit rate increase. (B) RequirementRules similar to the rules of section 45(b)(9)(B) shall apply. (C) Applicable credit rate increaseFor purposes of subparagraph (A), the applicable credit rate increase shall be—(i) in the case of an energy project which does not satisfy the requirements of paragraph (9)(B), 2 percentage points, and (ii) in the case of an energy project which satisfies the requirements of paragraph (9)(B), 10 percentage points. (13) Phaseout for elective paymentIn the case of a taxpayer making an election under section 6417 with respect to a credit under this section, rules similar to the rules of section 45(b)(10) shall apply. (14) Increase in credit rate for energy communities(A) In generalIn the case of any energy project that is placed in service within an energy community (as defined in section 45(b)(11)(B), as applied by substituting “energy project” for “qualified facility” each place it appears), for purposes of applying paragraph (2) with respect to energy property which is part of such project, the energy percentage shall be increased by the applicable credit rate increase. (B) Applicable credit rate increaseFor purposes of subparagraph (A), the applicable credit rate increase shall be equal to—(i) in the case of any energy project which does not satisfy the requirements of paragraph (9)(B), 2 percentage points, and (ii) in the case of any energy project which satisfies the requirements of paragraph (9)(B), 10 percentage points. (15) Election to treat clean hydrogen production facilities as energy property(A) In generalIn the case of any qualified property (as defined in paragraph (5)(D)) which is part of a specified clean hydrogen production facility—(i) such property shall be treated as energy property for purposes of this section, and (ii) the energy percentage with respect to such property is—(I) in the case of a facility which is designed and reasonably expected to produce qualified clean hydrogen which is described in a subparagraph (A) of section 45V(b)(2), 1.2 percent, (II) in the case of a facility which is designed and reasonably expected to produce qualified clean hydrogen which is described in a subparagraph (B) of such section, 1.5 percent, (III) in the case of a facility which is designed and reasonably expected to produce qualified clean hydrogen which is described in a subparagraph (C) of such section, 2 percent, and (IV) in the case of a facility which is designed and reasonably expected to produce qualified clean hydrogen which is described in subparagraph (D) of such section, 6 percent. (B) Denial of production creditNo credit shall be allowed under section 45V or section 45Q for any taxable year with respect to any specified clean hydrogen production facility or any carbon capture equipment included at such facility. (C) Specified clean hydrogen production facilityFor purposes of this paragraph, the term “specified clean hydrogen production facility” means any qualified clean hydrogen production facility (as defined in section 45V(c)(3))—(i) which is placed in service after December 31, 2022, (ii) with respect to which—(I) no credit has been allowed under section 45V or 45Q, and (II) the taxpayer makes an irrevocable election to have this paragraph apply, and (iii) for which an unrelated third party has verified (in such form or manner as the Secretary may prescribe) that such facility produces hydrogen through a process which results in lifecycle greenhouse gas emissions which are consistent with the hydrogen that such facility was designed and expected to produce under subparagraph (A)(ii). (D) Qualified clean hydrogenFor purposes of this paragraph, the term “qualified clean hydrogen” has the meaning given such term by section 45V(c)(2). (E) RegulationsThe Secretary shall issue such regulations or other guidance as the Secretary determines necessary to carry out the purposes of this section, including regulations or other guidance which recaptures so much of any credit allowed under this section as exceeds the amount of the credit which would have been allowed if the expected production were consistent with the actual verified production (or all of the credit so allowed in the absence of such verification). (16) Regulations and guidanceThe Secretary shall issue such regulations or other guidance as the Secretary determines necessary to carry out the purposes of this subsection, including regulations or other guidance which provides for requirements for recordkeeping or information reporting for purposes of administering the requirements of this subsection. (b) Certain progress expenditure rules made applicableRules 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). (c) DefinitionsFor purposes of this section—(1) Qualified fuel cell property(A) In generalThe term “qualified fuel cell property” means a fuel cell power plant which—(i) has a nameplate capacity of at least 0.5 kilowatt (1 kilowatt in the case of a fuel cell power plant with a linear generator assembly) of electricity using an electrochemical or electromechanical process, and (ii) has an electricity-only generation efficiency greater than 30 percent. (B) LimitationIn the case of qualified fuel cell property placed in service during the taxable year, the credit otherwise determined under subsection (a) for such year with respect to such property shall not exceed an amount equal to $1,500 for each 0.5 kilowatt of capacity of such property. (C) Fuel cell power plantThe term “fuel cell power plant” means an integrated system comprised of a fuel cell stack assembly, or linear generator assembly, and associated balance of plant components which converts a fuel into electricity using electrochemical or electromechanical means. (D) Linear generator assemblyThe term “linear generator assembly” does not include any assembly which contains rotating parts. (E) TerminationThe term “qualified fuel cell property” shall not include any property the construction of which does not begin before January 1, 2025. (2) Qualified microturbine property(A) In generalThe term “qualified microturbine property” means a stationary microturbine power plant which—(i) has a nameplate capacity of less than 2,000 kilowatts, and (ii) has an electricity-only generation efficiency of not less than 26 percent at International Standard Organization conditions. (B) LimitationIn the case of qualified microturbine property placed in service during the taxable year, the credit otherwise determined under subsection (a) for such year with respect to such property shall not exceed an amount equal to $200 for each kilowatt of capacity of such property. (C) Stationary microturbine power plantThe term “stationary microturbine power plant” means an integrated system comprised of a gas turbine engine, a combustor, a recuperator or regenerator, a generator or alternator, and associated balance of plant components which converts a fuel into electricity and thermal energy. Such term also includes all secondary components located between the existing infrastructure for fuel delivery and the existing infrastructure for power distribution, including equipment and controls for meeting relevant power standards, such as voltage, frequency, and power factors. (D) TerminationThe term “qualified microturbine property” shall not include any property the construction of which does not begin before January 1, 2025. (3) Combined heat and power system property(A) Combined heat and power system propertyThe term “combined heat and power system property” means property comprising a system—(i) which uses the same energy source for the simultaneous or sequential generation of electrical power, mechanical shaft power, or both, in combination with the generation of steam or other forms of useful thermal energy (including heating and cooling applications), (ii) which produces—(I) at least 20 percent of its total useful energy in the form of thermal energy which is not used to produce electrical or mechanical power (or combination thereof), and (II) at least 20 percent of its total useful energy in the form of electrical or mechanical power (or combination thereof), (iii) the energy efficiency percentage of which exceeds 60 percent, and (iv) the construction of which begins before January 1, 2025. (B) Limitation(i) In generalIn the case of combined heat and power system property with an electrical capacity in excess of the applicable capacity placed in service during the taxable year, the credit under subsection (a)(1) (determined without regard to this paragraph) for such year shall be equal to the amount which bears the same ratio to such credit as the applicable capacity bears to the capacity of such property. (ii) Applicable capacityFor purposes of clause (i), the term “applicable capacity” means 15 megawatts or a mechanical energy capacity of more than 20,000 horsepower or an equivalent combination of electrical and mechanical energy capacities. (iii) Maximum capacityThe term “combined heat and power system property” shall not include any property comprising a system if such system has a capacity in excess of 50 megawatts or a mechanical energy capacity in excess of 67,000 horsepower or an equivalent combination of electrical and mechanical energy capacities. (C) Special rules(i) Energy efficiency percentageFor purposes of this paragraph, the energy efficiency percentage of a system is the fraction—(I) the numerator of which is the total useful electrical, thermal, and mechanical power produced by the system at normal operating rates, and expected to be consumed in its normal application, and (II) the denominator of which is the lower heating value of the fuel sources for the system. (ii) Determinations made on Btu basisThe energy efficiency percentage and the percentages under subparagraph (A)(ii) shall be determined on a Btu basis. (iii) Input and output property not includedThe term “combined heat and power system property” does not include property used to transport the energy source to the facility or to distribute energy produced by the facility. (D) Systems using biomassIf a system is designed to use biomass (within the meaning of paragraphs (2) and (3) of section 45(c) without regard to the last sentence of paragraph (3)(A)) for at least 90 percent of the energy source—(i) subparagraph (A)(iii) shall not apply, but (ii) the amount of credit determined under subsection (a) with respect to such system shall not exceed the amount which bears the same ratio to such amount of credit (determined without regard to this subparagraph) as the energy efficiency percentage of such system bears to 60 percent. (4) Qualified small wind energy property(A) In generalThe term “qualified small wind energy property” means property which uses a qualifying small wind turbine to generate electricity. (B) Qualifying small wind turbineThe term “qualifying small wind turbine” means a wind turbine which has a nameplate capacity of not more than 100 kilowatts. (C) TerminationThe term “qualified small wind energy property” shall not include any property the construction of which does not begin before January 1, 2025. (5) Waste energy recovery property(A) In generalThe term “waste energy recovery property” means property that generates electricity solely from heat from buildings or equipment if the primary purpose of such building or equipment is not the generation of electricity. (B) Capacity limitationThe term “waste energy recovery property” shall not include any property which has a capacity in excess of 50 megawatts. (C) No double benefitAny waste energy recovery property (determined without regard to this subparagraph) which is part of a system which is a combined heat and power system property shall not be treated as waste energy recovery property for purposes of this section unless the taxpayer elects to not treat such system as a combined heat and power system property for purposes of this section. (D) TerminationThe term “waste energy recovery property” shall not include any property the construction of which does not begin before January 1, 2025. (6) Energy storage technology(A) In generalThe term “energy storage technology” means—(i) property (other than property primarily used in the transportation of goods or individuals and not for the production of electricity) which receives, stores, and delivers energy for conversion to electricity (or, in the case of hydrogen, which stores energy), and has a nameplate capacity of not less than 5 kilowatt hours, and (ii) thermal energy storage property. (B) Modifications of certain propertyIn the case of any property which either—(i) was placed in service before the date of enactment of this section 11 See References in Text note below. and would be described in subparagraph (A)(i), except that such property has a capacity of less than 5 kilowatt hours and is modified in a manner that such property (after such modification) has a nameplate capacity of not less than 5 kilowatt hours, or (ii) is described in subparagraph (A)(i) and is modified in a manner that such property (after such modification) has an increase in nameplate capacity of not less than 5 kilowatt hours, such property shall be treated as described in subparagraph (A)(i) except that the basis of any existing property prior to such modification shall not be taken into account for purposes of this section. In the case of any property to which this subparagraph applies, subparagraph (D) shall be applied by substituting “modification” for “construction”. (C) Thermal energy storage property(i) In generalSubject to clause (ii), for purposes of this paragraph, the term “thermal energy storage property” means property comprising a system which—(I) is directly connected to a heating, ventilation, or air conditioning system, (II) removes heat from, or adds heat to, a storage medium for subsequent use, and (III) provides energy for the heating or cooling of the interior of a residential or commercial building. (ii) ExclusionThe term “thermal energy storage property” shall not include—(I) a swimming pool, (II) combined heat and power system property, or (III) a building or its structural components. (D) TerminationThe term “energy storage technology” shall not include any property the construction of which begins after December 31, 2024. (7) Qualified biogas property(A) In generalThe term “qualified biogas property” means property comprising a system which—(i) converts biomass (as defined in section 45K(c)(3), as in effect on the date of enactment of this paragraph) into a gas which—(I) consists of not less than 52 percent methane by volume, or (II) is concentrated by such system into a gas which consists of not less than 52 percent methane, and (ii) captures such gas for sale or productive use, and not for disposal via combustion. (B) Inclusion of cleaning and conditioning propertyThe term “qualified biogas property” includes any property which is part of such system which cleans or conditions such gas. (C) TerminationThe term “qualified biogas property” shall not include any property the construction of which begins after December 31, 2024. (8) Microgrid controller(A) In generalThe term “microgrid controller” means equipment which is—(i) part of a qualified microgrid, and (ii) designed and used to monitor and control the energy resources and loads on such microgrid. (B) Qualified microgridThe term “qualified microgrid” means an electrical system which—(i) includes equipment which is capable of generating not less than 4 kilowatts and not greater than 20 megawatts of electricity, (ii) is capable of operating—(I) in connection with the electrical grid and as a single controllable entity with respect to such grid, and (II) independently (and disconnected) from such grid, and (iii) is not part of a bulk-power system (as defined in section 215 of the Federal Power Act (16 U.S.C. 824o)). (C) TerminationThe term “microgrid controller” shall not include any property the construction of which begins after December 31, 2024. (d) Coordination with Department of Treasury grantsIn the case of any property with respect to which the Secretary makes a grant under section 1603 of the American Recovery and Reinvestment Tax Act of 2009—(1) Denial of production and investment creditsNo credit shall be determined under this section or section 45 with respect to such property for the taxable year in which such grant is made or any subsequent taxable year. (2) Recapture of credits for progress expenditures made before grantIf a credit was determined under this section with respect to such property for any taxable year ending before such grant is made—(A) the tax imposed under subtitle A on the taxpayer for the taxable year in which such grant is made shall be increased by so much of such credit as was allowed under section 38, (B) the general business carryforwards under section 39 shall be adjusted so as to recapture the portion of such credit which was not so allowed, and (C) the amount of such grant shall be determined without regard to any reduction in the basis of such property by reason of such credit. (3) Treatment of grantsAny such grant—(A) shall not be includible in the gross income or alternative minimum taxable income of the taxpayer, but (B) shall be taken into account in determining the basis of the property to which such grant relates, except that the basis of such property shall be reduced under section 50(c) in the same manner as a credit allowed under subsection (a). (e) Special rules for certain solar and wind facilities placed in service in connection with low-income communities(1) In generalIn the case of any qualified solar and wind facility with respect to which the Secretary makes an allocation of environmental justice solar and wind capacity limitation under paragraph (4)—(A) the energy percentage otherwise determined under paragraph (2) or (5) of subsection (a) with respect to any eligible property which is part of such facility shall be increased by—(i) in the case of a facility described in subclause (I) of paragraph (2)(A)(iii) and not described in subclause (II) of such paragraph, 10 percentage points, and (ii) in the case of a facility described in subclause (II) of paragraph (2)(A)(iii), 20 percentage points, and (B) the increase in the credit determined under subsection (a) by reason of this subsection for any taxable year with respect to all property which is part of such facility shall not exceed the amount which bears the same ratio to the amount of such increase (determined without regard to this subparagraph) as—(i) the environmental justice solar and wind capacity limitation allocated to such facility, bears to (ii) the total megawatt nameplate capacity of such facility, as measured in direct current. (2) Qualified solar and wind facilityFor purposes of this subsection—(A) In generalThe term “qualified solar and wind facility” means any facility—(i) which generates electricity solely from property described in section 45(d)(1) or in clause (i) or (vi) of subsection (a)(3)(A), (ii) which has a maximum net output of less than 5 megawatts (as measured in alternating current), and (iii) which—(I) is located in a low-income community (as defined in section 45D(e)) or on Indian land (as defined in section 2601(2) of the Energy Policy Act of 1992 (25 U.S.C. 3501(2))), or (II) is part of a qualified low-income residential building project or a qualified low-income economic benefit project. (B) Qualified low-income residential building projectA facility shall be treated as part of a qualified low-income residential building project if—(i) such facility is installed on a residential rental building which participates in a covered housing program (as defined in section 41411(a) of the Violence Against Women Act of 1994 (34 U.S.C. 12491(a)(3)),22 So in original. Another closing parenthesis probably should precede the comma. a housing assistance program administered by the Department of Agriculture under title V of the Housing Act of 1949, a housing program administered by a tribally designated housing entity (as defined in section 4(22) of the Native American Housing Assistance and Self-Determination Act of 1996 (25 U.S.C. 4103(22))) or such other affordable housing programs as the Secretary may provide, and (ii) the financial benefits of the electricity produced by such facility are allocated equitably among the occupants of the dwelling units of such building. (C) Qualified low-income economic benefit projectA facility shall be treated as part of a qualified low-income economic benefit project if at least 50 percent of the financial benefits of the electricity produced by such facility are provided to households with income of—(i) less than 200 percent of the poverty line (as defined in section 36B(d)(3)(A)) applicable to a family of the size involved, or (ii) less than 80 percent of area median gross income (as determined under section 142(d)(2)(B)). (D) Financial benefitFor purposes of subparagraphs (B) and (C), electricity acquired at a below-market rate shall not fail to be taken into account as a financial benefit. (3) Eligible propertyFor purposes of this section, the term “eligible property” means energy property which—(A) is part of a facility described in section 45(d)(1) for which an election was made under subsection (a)(5), or (B) is described in clause (i) or (vi) of subsection (a)(3)(A), including energy storage technology (as described in subsection (a)(3)(A)(ix)) installed in connection with such energy property. (4) Allocations(A) In generalNot later than 180 days after the date of enactment of this subsection, the Secretary shall establish a program to allocate amounts of environmental justice solar and wind capacity limitation to qualified solar and wind facilities. In establishing such program and to carry out the purposes of this subsection, the Secretary shall provide procedures to allow for an efficient allocation process, including, when determined appropriate, consideration of multiple projects in a single application if such projects will be placed in service by a single taxpayer. (B) LimitationThe amount of environmental justice solar and wind capacity limitation allocated by the Secretary under subparagraph (A) during any calendar year shall not exceed the annual capacity limitation with respect to such year. (C) Annual capacity limitationFor purposes of this paragraph, the term “annual capacity limitation” means 1.8 gigawatts of direct current capacity for each of calendar years 2023 and 2024, and zero thereafter. (D) Carryover of unused limitationIf the annual capacity limitation for any calendar year exceeds the aggregate amount allocated for such year under this paragraph, such limitation for the succeeding calendar year shall be increased by the amount of such excess. No amount may be carried under the preceding sentence to any calendar year after 2024 except as provided in section 48E(h)(4)(D)(ii). (E) Placed in service deadline(i) In generalParagraph (1) shall not apply with respect to any property which is placed in service after the date that is 4 years after the date of the allocation with respect to the facility of which such property is a part. (ii) Application of carryoverAny amount of environmental justice solar and wind capacity limitation which expires under clause (i) during any calendar year shall be taken into account as an excess described in subparagraph (D) (or as an increase in such excess) for such calendar year, subject to the limitation imposed by the last sentence of such subparagraph. (5) RecaptureThe Secretary shall, by regulations or other guidance, provide for recapturing the benefit of any increase in the credit allowed under subsection (a) by reason of this subsection with respect to any property which ceases to be property eligible for such increase (but which does not cease to be investment credit property within the meaning of section 50(a)). The period and percentage of such recapture shall be determined under rules similar to the rules of section 50(a). To the extent provided by the Secretary, such recapture may not apply with respect to any property if, within 12 months after the date the taxpayer becomes aware (or reasonably should have become aware) of such property ceasing to be property eligible for such increase, the eligibility of such property for such increase is restored. The preceding sentence shall not apply more than once with respect to any facility.

26 U.S.C. § 48A Qualifying advanced coal project credit

(a) In generalFor purposes of section 46, the qualifying advanced coal project credit for any taxable year is an amount equal to—(1) 20 percent of the qualified investment for such taxable year in the case of projects described in subsection (d)(3)(B)(i), (2) 15 percent of the qualified investment for such taxable year in the case of projects described in subsection (d)(3)(B)(ii), and (3) 30 percent of the qualified investment for such taxable year in the case of projects described in clause (iii) of subsection (d)(3)(B). (b) Qualified investment(1) In generalFor purposes of subsection (a), the qualified investment for any taxable year is the basis of eligible property placed in service by the taxpayer during such taxable year which is part of a qualifying advanced coal project—(A)(i) the construction, reconstruction, or erection of which is completed by the taxpayer, or (ii) which is acquired by the taxpayer if the original use of such property commences with the taxpayer, and (B) with respect to which depreciation (or amortization in lieu of depreciation) is allowable. (2) Special rule for certain subsidized propertyRules similar to section 48(a)(4) (without regard to subparagraph (D) thereof) shall apply for purposes of this section. (3) Certain qualified progress expenditures rules made applicableRules similar to the rules of subsections (c)(4) and (d) of section 46 (as in effect on the day before the enactment of the Revenue Reconciliation Act of 1990) shall apply for purposes of this section. (c) DefinitionsFor purposes of this section—(1) Qualifying advanced coal projectThe term “qualifying advanced coal project” means a project which meets the requirements of subsection (e). (2) Advanced coal-based generation technologyThe term “advanced coal-based generation technology” means a technology which meets the requirements of subsection (f). (3) Eligible propertyThe term “eligible property” means—(A) in the case of any qualifying advanced coal project using an integrated gasification combined cycle, any property which is a part of such project and is necessary for the gasification of coal, including any coal handling and gas separation equipment, and (B) in the case of any other qualifying advanced coal project, any property which is a part of such project. (4) CoalThe term “coal” means anthracite, bituminous coal, subbituminous coal, lignite, and peat. (5) Greenhouse gas capture capabilityThe term “greenhouse gas capture capability” means an integrated gasification combined cycle technology facility capable of adding components which can capture, separate on a long-term basis, isolate, remove, and sequester greenhouse gases which result from the generation of electricity. (6) Electric generation unitThe term “electric generation unit” means any facility at least 50 percent of the total annual net output of which is electrical power, including an otherwise eligible facility which is used in an industrial application. (7) Integrated gasification combined cycleThe term “integrated gasification combined cycle” means an electric generation unit which produces electricity by converting coal to synthesis gas which is used to fuel a combined-cycle plant which produces electricity from both a combustion turbine (including a combustion turbine/fuel cell hybrid) and a steam turbine. (d) Qualifying advanced coal project program(1) EstablishmentNot later than 180 days after the date of enactment of this section, the Secretary, in consultation with the Secretary of Energy, shall establish a qualifying advanced coal project program for the deployment of advanced coal-based generation technologies. (2) Certification(A) Application periodEach applicant for certification under this paragraph shall submit an application meeting the requirements of subparagraph (B). An applicant may only submit an application—(i) for an allocation from the dollar amount specified in clause (i) or (ii) of paragraph (3)(B) during the 3-year period beginning on the date the Secretary establishes the program under paragraph (1), and (ii) for an allocation from the dollar amount specified in paragraph (3)(B)(iii) during the 3-year period beginning at the earlier of the termination of the period described in clause (i) or the date prescribed by the Secretary. (B) Requirements for applications for certificationAn application under subparagraph (A) shall contain such information as the Secretary may require in order to make a determination to accept or reject an application for certification as meeting the requirements under subsection (e)(1). Any information contained in the application shall be protected as provided in section 552(b)(4) of title 5, United States Code. (C) Time to act upon applications for certificationThe Secretary shall issue a determination as to whether an applicant has met the requirements under subsection (e)(1) within 60 days following the date of submittal of the application for certification. (D) Time to meet criteria for certificationEach applicant for certification shall have 2 years from the date of acceptance by the Secretary of the application during which to provide to the Secretary evidence that the criteria set forth in subsection (e)(2) have been met. (E) Period of issuanceAn applicant which receives a certification shall have 5 years from the date of issuance of the certification in order to place the project in service and if such project is not placed in service by that time period then the certification shall no longer be valid. (3) Aggregate credits(A) In generalThe aggregate credits allowed under subsection (a) for projects certified by the Secretary under paragraph (2) may not exceed $2,550,000,000. (B) Particular projectsOf the dollar amount in subparagraph (A), the Secretary is authorized to certify—(i) $800,000,000 for integrated gasification combined cycle projects the application for which is submitted during the period described in paragraph (2)(A)(i), (ii) $500,000,000 for projects which use other advanced coal-based generation technologies the application for which is submitted during the period described in paragraph (2)(A)(i), and (iii) $1,250,000,000 for advanced coal-based generation technology projects the application for which is submitted during the period described in paragraph (2)(A)(ii). (4) Review and redistribution(A) ReviewNot later than 6 years after the date of enactment of this section, the Secretary shall review the credits allocated under this section as of the date which is 6 years after the date of enactment of this section. (B) RedistributionThe Secretary may reallocate credits available under clauses (i) and (ii) of paragraph (3)(B) if the Secretary determines that—(i) there is an insufficient quantity of qualifying applications for certification pending at the time of the review, or (ii) any certification made pursuant to paragraph (2) has been revoked pursuant to paragraph (2)(D) because the project subject to the certification has been delayed as a result of third party opposition or litigation to the proposed project. (C) ReallocationIf the Secretary determines that credits under clause (i) or (ii) of paragraph (3)(B) are available for reallocation pursuant to the requirements set forth in paragraph (2), the Secretary is authorized to conduct an additional program for applications for certification. (5) Disclosure of allocationsThe Secretary shall, upon making a certification under this subsection or section 48B(d), publicly disclose the identity of the applicant and the amount of the credit certified with respect to such applicant. (e) Qualifying advanced coal projects(1) RequirementsFor purposes of subsection (c)(1), a project shall be considered a qualifying advanced coal project that the Secretary may certify under subsection (d)(2) if the Secretary determines that, at a minimum—(A) the project uses an advanced coal-based generation technology—(i) to power a new electric generation unit; or (ii) to retrofit or repower an existing electric generation unit (including an existing natural gas-fired combined cycle unit); (B) the fuel input for the project, when completed, is at least 75 percent coal; (C) the project, consisting of one or more electric generation units at one site, will have a total nameplate generating capacity of at least 400 megawatts; (D) the applicant provides evidence that a majority of the output of the project is reasonably expected to be acquired or utilized; (E) the applicant provides evidence of ownership or control of a site of sufficient size to allow the proposed project to be constructed and to operate on a long-term basis; (F) the project will be located in the United States; and (G) in the case of any project the application for which is submitted during the period described in subsection (d)(2)(A)(ii), the project includes equipment which separates and sequesters at least 65 percent (70 percent in the case of an application for reallocated credits under subsection (d)(4)) of such project’s total carbon dioxide emissions. (2) Requirements for certificationFor the purpose of subsection (d)(2)(D), a project shall be eligible for certification only if the Secretary determines that—(A) the applicant for certification has received all Federal and State environmental authorizations or reviews necessary to commence construction of the project; and (B) the applicant for certification, except in the case of a retrofit or repower of an existing electric generation unit, has purchased or entered into a binding contract for the purchase of the main steam turbine or turbines for the project, except that such contract may be contingent upon receipt of a certification under subsection (d)(2). (3) Priority for certain projectsIn determining which qualifying advanced coal projects to certify under subsection (d)(2), the Secretary shall—(A) certify capacity, in accordance with the procedures set forth in subsection (d), in relatively equal amounts to—(i) projects using bituminous coal as a primary feedstock, (ii) projects using subbituminous coal as a primary feedstock, and (iii) projects using lignite as a primary feedstock, (B) give high priority to projects which include, as determined by the Secretary—(i) greenhouse gas capture capability, (ii) increased by-product utilization, (iii) applicant participants who have a research partnership with an eligible educational institution (as defined in section 529(e)(5)), and (iv) other benefits, and (C) give highest priority to projects with the greatest separation and sequestration percentage of total carbon dioxide emissions. (f) Advanced coal-based generation technology(1) In generalFor the purpose of this section, an electric generation unit uses advanced coal-based generation technology if—(A) the unit—(i) uses integrated gasification combined cycle technology, or (ii) except as provided in paragraph (3), has a design net heat rate of 8530 Btu/kWh (40 percent efficiency), and (B) the unit is designed to meet the performance requirements in the following table: Performance characteristic:Design level for project: SO2 (percent removal)99 percent NOx (emissions)0.07 lbs/MMBTU PM* (emissions)0.015 lbs/MMBTU Hg (percent removal)90 percent For purposes of the performance requirement specified for the removal of SO2 in the table contained in subparagraph (B), the SO2 removal design level in the case of a unit designed for the use of feedstock substantially all of which is subbituminous coal shall be 99 percent SO2 removal or the achievement of an emission level of 0.04 pounds or less of SO2 per million Btu, determined on a 30-day average. (2) Design net heat rateFor purposes of this subsection, design net heat rate with respect to an electric generation unit shall—(A) be measured in Btu per kilowatt hour (higher heating value), (B) be based on the design annual heat input to the unit and the rated net electrical power, fuels, and chemicals output of the unit (determined without regard to the cogeneration of steam by the unit), (C) be adjusted for the heat content of the design coal to be used by the unit—(i) if the heat content is less than 13,500 Btu per pound, but greater than 7,000 Btu per pound, according to the following formula: design net heat rate = unit net heat rate x [1–[((13,500-design coal heat content, Btu per pound)/1,000)* 0.013]], and (ii) if the heat content is less than or equal to 7,000 Btu per pound, according to the following formula: design net heat rate = unit net heat rate x [1–[((13,500-design coal heat content, Btu per pound)/1,000)* 0.018]], and (D) be corrected for the site reference conditions of—(i) elevation above sea level of 500 feet, (ii) air pressure of 14.4 pounds per square inch absolute, (iii) temperature, dry bulb of 63°F, (iv) temperature, wet bulb of 54°F, and (v) relative humidity of 55 percent. (3) Existing unitsIn the case of any electric generation unit in existence on the date of the enactment of this section, such unit uses advanced coal-based generation technology if, in lieu of the requirements under paragraph (1)(A)(ii), such unit achieves a minimum efficiency of 35 percent and an overall thermal design efficiency improvement, compared to the efficiency of the unit as operated, of not less than—(A) 7 percentage points for coal of more than 9,000 Btu, (B) 6 percentage points for coal of 7,000 to 9,000 Btu, or (C) 4 percentage points for coal of less than 7,000 Btu. (g) ApplicabilityNo use of technology (or level of emission reduction solely by reason of the use of the technology), and no achievement of any emission reduction by the demonstration of any technology or performance level, by or at one or more facilities with respect to which a credit is allowed under this section, shall be considered to indicate that the technology or performance level is—(1) adequately demonstrated for purposes of section 111 of the Clean Air Act (42 U.S.C. 7411); (2) achievable for purposes of section 169 of that Act (42 U.S.C. 7479); or (3) achievable in practice for purposes of section 171 of such Act (42 U.S.C. 7501). (h) Competitive certification awards modification authorityIn implementing this section or section 48B, the Secretary is directed to modify the terms of any competitive certification award and any associated closing agreement where such modification—(1) is consistent with the objectives of such section, (2) is requested by the recipient of the competitive certification award, and (3) involves moving the project site to improve the potential to capture and sequester carbon dioxide emissions, reduce costs of transporting feedstock, and serve a broader customer base, unless the Secretary determines that the dollar amount of tax credits available to the taxpayer under such section would increase as a result of the modification or such modification would result in such project not being originally certified. In considering any such modification, the Secretary shall consult with other relevant Federal agencies, including the Department of Energy. (i) Recapture of credit for failure to sequesterThe Secretary shall provide for recapturing the benefit of any credit allowable under subsection (a) with respect to any project which fails to attain or maintain the separation and sequestration requirements of subsection (e)(1)(G).

26 U.S.C. § 48B Qualifying gasification project credit

(a) In generalFor purposes of section 46, the qualifying gasification project credit for any taxable year is an amount equal to 20 percent (30 percent in the case of credits allocated under subsection (d)(1)(B)) of the qualified investment for such taxable year. (b) Qualified investment(1) In generalFor purposes of subsection (a), the qualified investment for any taxable year is the basis of eligible property placed in service by the taxpayer during such taxable year which is part of a qualifying gasification project—(A)(i) the construction, reconstruction, or erection of which is completed by the taxpayer, or (ii) which is acquired by the taxpayer if the original use of such property commences with the taxpayer, and (B) with respect to which depreciation (or amortization in lieu of depreciation) is allowable. (2) Special rule for certain subsidized propertyRules similar to section 48(a)(4) (without regard to subparagraph (D) thereof) shall apply for purposes of this section. (3) Certain qualified progress expenditures rules made applicableRules similar to the rules of subsections (c)(4) and (d) of section 46 (as in effect on the day before the enactment of the Revenue Reconciliation Act of 1990) shall apply for purposes of this section. (c) DefinitionsFor purposes of this section—(1) Qualifying gasification projectThe term “qualifying gasification project” means any project which—(A) employs gasification technology, (B) will be carried out by an eligible entity, and (C) any portion of the qualified investment of which is certified under the qualifying gasification program as eligible for credit under this section in an amount (not to exceed $650,000,000) determined by the Secretary. (2) Gasification technologyThe term “gasification technology” means any process which converts a solid or liquid product from coal, petroleum residue, biomass, or other materials which are recovered for their energy or feedstock value into a synthesis gas composed primarily of carbon monoxide and hydrogen for direct use or subsequent chemical or physical conversion. (3) Eligible propertyThe term “eligible property” means any property which is a part of a qualifying gasification project and is necessary for the gasification technology of such project. (4) Biomass(A) In generalThe term “biomass” means any—(i) agricultural or plant waste, (ii) byproduct of wood or paper mill operations, including lignin in spent pulping liquors, and (iii) other products of forestry maintenance. (B) ExclusionThe term “biomass” does not include paper which is commonly recycled. (5) Carbon capture capabilityThe term “carbon capture capability” means a gasification plant design which is determined by the Secretary to reflect reasonable consideration for, and be capable of, accommodating the equipment likely to be necessary to capture carbon dioxide from the gaseous stream, for later use or sequestration, which would otherwise be emitted in the flue gas from a project which uses a nonrenewable fuel. (6) CoalThe term “coal” means anthracite, bituminous coal, subbituminous coal, lignite, and peat. (7) Eligible entityThe term “eligible entity” means any person whose application for certification is principally intended for use in a domestic project which employs domestic gasification applications related to—(A) chemicals, (B) fertilizers, (C) glass, (D) steel, (E) petroleum residues, (F) forest products, (G) agriculture, including feedlots and dairy operations, and (H) transportation grade liquid fuels. (8) Petroleum residueThe term “petroleum residue” means the carbonized product of high-boiling hydrocarbon fractions obtained in petroleum processing. (d) Qualifying gasification project program(1) In generalNot later than 180 days after the date of the enactment of this section, the Secretary, in consultation with the Secretary of Energy, shall establish a qualifying gasification project program to consider and award certifications for qualified investment eligible for credits under this section to qualifying gasification project sponsors under this section. The total amounts of credit that may be allocated under the program shall not exceed—(A) $350,000,000, plus (B) $250,000,000 for qualifying gasification projects that include equipment which separates and sequesters at least 75 percent of such project’s total carbon dioxide emissions. (2) Period of issuanceA certificate of eligibility under paragraph (1) may be issued only during the 10-fiscal year period beginning on October 1, 2005. (3) Selection criteriaThe Secretary shall not make a competitive certification award for qualified investment for credit eligibility under this section unless the recipient has documented to the satisfaction of the Secretary that—(A) the award recipient is financially viable without the receipt of additional Federal funding associated with the proposed project, (B) the recipient will provide sufficient information to the Secretary for the Secretary to ensure that the qualified investment is spent efficiently and effectively, (C) a market exists for the products of the proposed project as evidenced by contracts or written statements of intent from potential customers, (D) the fuels identified with respect to the gasification technology for such project will comprise at least 90 percent of the fuels required by the project for the production of chemical feedstocks, liquid transportation fuels, or coproduction of electricity, (E) the award recipient’s project team is competent in the construction and operation of the gasification technology proposed, with preference given to those recipients with experience which demonstrates successful and reliable operations of the technology on domestic fuels so identified, and (F) the award recipient has met other criteria established and published by the Secretary. (4) Selection prioritiesIn determining which qualifying gasification projects to certify under this section, the Secretary shall—(A) give highest priority to projects with the greatest separation and sequestration percentage of total carbon dioxide emissions, and (B) give high priority to applicant participants who have a research partnership with an eligible educational institution (as defined in section 529(e)(5)). (e) Denial of double benefitA credit shall not be allowed under this section for any qualified investment for which a credit is allowed under section 48A. (f) Recapture of credit for failure to sequesterThe Secretary shall provide for recapturing the benefit of any credit allowable under subsection (a) with respect to any project which fails to attain or maintain the separation and sequestration requirements for such project under subsection (d)(1).

26 U.S.C. § 48C Qualifying advanced energy project credit

(a) In generalFor purposes of section 46, the qualifying advanced energy project credit for any taxable year is an amount equal to 30 percent of the qualified investment for such taxable year with respect to any qualifying advanced energy project of the taxpayer. (b) Qualified investment(1) In generalFor purposes of subsection (a), the qualified investment for any taxable year is the basis of eligible property placed in service by the taxpayer during such taxable year which is part of a qualifying advanced energy project. (2) Certain qualified progress expenditures rules made applicableRules similar to the rules of subsections (c)(4) and (d) of section 46 (as in effect on the day before the enactment of the Revenue Reconciliation Act of 1990) shall apply for purposes of this section. (3) LimitationThe amount which is treated as the qualified investment for all taxable years with respect to any qualifying advanced energy project shall not exceed the amount designated by the Secretary as eligible for the credit under this section. (c) Definitions(1) Qualifying advanced energy project(A) In generalThe term “qualifying advanced energy project” means a project, any portion of the qualified investment of which is certified by the Secretary under subsection (e) as eligible for a credit under this section—(i) which re-equips, expands, or establishes an industrial or manufacturing facility for the production or recycling of—(I) property designed to be used to produce energy from the sun, water, wind, geothermal deposits (within the meaning of section 613(e)(2)), or other renewable resources, (II) fuel cells, microturbines, or energy storage systems and components, (III) electric grid modernization equipment or components, (IV) property designed to capture, remove, use, or sequester carbon oxide emissions, (V) equipment designed to refine, electrolyze, or blend any fuel, chemical, or product which is—(aa) renewable, or (bb) low-carbon and low-emission, (VI) property designed to produce energy conservation technologies (including residential, commercial, and industrial applications), (VII) light-, medium-, or heavy-duty electric or fuel cell vehicles, as well as—(aa) technologies, components, or materials for such vehicles, and (bb) associated charging or refueling infrastructure, (VIII) hybrid vehicles with a gross vehicle weight rating of not less than 14,000 pounds, as well as technologies, components, or materials for such vehicles, or (IX) other advanced energy property designed to reduce greenhouse gas emissions as may be determined by the Secretary, (ii) which re-equips an industrial or manufacturing facility with equipment designed to reduce greenhouse gas emissions by at least 20 percent through the installation of—(I) low- or zero-carbon process heat systems, (II) carbon capture, transport, utilization and storage systems, (III) energy efficiency and reduction in waste from industrial processes, or (IV) any other industrial technology designed to reduce greenhouse gas emissions, as determined by the Secretary, or (iii) which re-equips, expands, or establishes an industrial facility for the processing, refining, or recycling of critical materials (as defined in section 7002(a) of the Energy Act of 2020 (30 U.S.C. 1606(a)) 11 So in original. Probably should be followed by a closing parenthesis.. (B) ExceptionSuch term shall not include any portion of a project for the production of any property which is used in the refining or blending of any transportation fuel (other than renewable fuels). (2) Eligible propertyThe term “eligible property” means any property—(A) which is necessary for—(i) the production or recycling of property described in clause (i) of paragraph (1)(A), (ii) re-equipping an industrial or manufacturing facility described in clause (ii) of such paragraph, or (iii) re-equipping, expanding, or establishing an industrial facility described in clause (iii) of such paragraph, (B) which is—(i) tangible personal property, or (ii) other tangible property (not including a building or its structural components), but only if such property is used as an integral part of the qualified investment credit facility, and (C) with respect to which depreciation (or amortization in lieu of depreciation) is allowable. (d) Qualifying advanced energy project program(1) Establishment(A) In generalNot later than 180 days after the date of enactment of this section, the Secretary, in consultation with the Secretary of Energy, shall establish a qualifying advanced energy project program to consider and award certifications for qualified investments eligible for credits under this section to qualifying advanced energy project sponsors. (B) LimitationThe total amount of credits that may be allocated under the program shall not exceed $2,300,000,000. (2) Certification(A) Application periodEach applicant for certification under this paragraph shall submit an application containing such information as the Secretary may require during the 2-year period beginning on the date the Secretary establishes the program under paragraph (1). (B) Time to meet criteria for certificationEach applicant for certification shall have 1 year from the date of acceptance by the Secretary of the application during which to provide to the Secretary evidence that the requirements of the certification have been met. (C) Period of issuanceAn applicant which receives a certification shall have 3 years from the date of issuance of the certification in order to place the project in service and if such project is not placed in service by that time period, then the certification shall no longer be valid. (3) Selection criteriaIn determining which qualifying advanced energy projects to certify under this section, the Secretary—(A) shall take into consideration only those projects where there is a reasonable expectation of commercial viability, and (B) shall take into consideration which projects—(i) will provide the greatest domestic job creation (both direct and indirect) during the credit period, (ii) will provide the greatest net impact in avoiding or reducing air pollutants or anthropogenic emissions of greenhouse gases, (iii) have the greatest potential for technological innovation and commercial deployment, (iv) have the lowest levelized cost of generated or stored energy, or of measured reduction in energy consumption or greenhouse gas emission (based on costs of the full supply chain), and (v) have the shortest project time from certification to completion. (4) Review and redistribution(A) ReviewNot later than 4 years after the date of enactment of this section, the Secretary shall review the credits allocated under this section as of such date. (B) RedistributionThe Secretary may reallocate credits awarded under this section if the Secretary determines that—(i) there is an insufficient quantity of qualifying applications for certification pending at the time of the review, or (ii) any certification made pursuant to paragraph (2) has been revoked pursuant to paragraph (2)(B) because the project subject to the certification has been delayed as a result of third party opposition or litigation to the proposed project. (C) ReallocationIf the Secretary determines that credits under this section are available for reallocation pursuant to the requirements set forth in paragraph (2), the Secretary is authorized to conduct an additional program for applications for certification. (5) Disclosure of allocationsThe Secretary shall, upon making a certification under this subsection, publicly disclose the identity of the applicant and the amount of the credit with respect to such applicant. (e) Additional allocations(1) In generalNot later than 180 days after the date of enactment of this subsection, the Secretary shall establish a program to consider and award certifications for qualified investments eligible for credits under this section to qualifying advanced energy project sponsors. (2) LimitationThe total amount of credits which may be allocated under the program established under paragraph (1) shall not exceed $10,000,000,000, of which not greater than $6,000,000,000 may be allocated to qualified investments which are not located within a census tract which—(A) is described in clause (iii) of section 45(b)(11)(B), and (B) prior to the date of enactment of this subsection, had no project which received a certification and allocation of credits under subsection (d). (3) Certifications(A) Application requirementEach applicant for certification under this subsection shall submit an application at such time and containing such information as the Secretary may require. (B) Time to meet criteria for certificationEach applicant for certification shall have 2 years from the date of acceptance by the Secretary of the application during which to provide to the Secretary evidence that the requirements of the certification have been met. (C) Period of issuanceAn applicant which receives a certification shall have 2 years from the date of issuance of the certification in order to place the project in service and to notify the Secretary that such project has been so placed in service, and if such project is not placed in service by that time period, then the certification shall no longer be valid. If any certification is revoked under this subparagraph, the amount of the limitation under paragraph (2) shall not be increased by the amount of the credit with respect to such revoked certification. (D) Location of projectIn the case of an applicant which receives a certification, if the Secretary determines that the project has been placed in service at a location which is materially different than the location specified in the application for such project, the certification shall no longer be valid. (4) Credit rate conditioned upon wage and apprenticeship requirements(A) Base rateFor purposes of allocations under this subsection, the amount of the credit determined under subsection (a) shall be determined by substituting “6 percent” for “30 percent”. (B) Alternative rateIn the case of any project which satisfies the requirements of paragraphs (5)(A) and (6), subparagraph (A) shall not apply. (5) Prevailing wage requirements(A) In generalThe requirements described in this subparagraph with respect to a project are that the taxpayer shall ensure that any laborers and mechanics employed by the taxpayer or any contractor or subcontractor in the re-equipping, expansion, or establishment of a manufacturing facility shall be paid wages at rates not less than the prevailing rates for construction, alteration, or repair of a similar character in the locality in which such project is located as most recently determined by the Secretary of Labor, in accordance with subchapter IV of chapter 31 of title 40, United States Code. (B) Correction and penalty related to failure to satisfy wage requirementsRules similar to the rules of section 45(b)(7)(B) shall apply. (6) Apprenticeship requirementsRules similar to the rules of section 45(b)(8) shall apply. (7) Disclosure of allocationsThe Secretary shall, upon making a certification under this subsection, publicly disclose the identity of the applicant and the amount of the credit with respect to such applicant. (f) Denial of double benefitA credit shall not be allowed under this section for any qualified investment for which a credit is allowed under section 48, 48A, 48B, 48E, 45Q, or 45V.

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

(a) Establishment of creditFor purposes of section 46, the advanced manufacturing investment credit for any taxable year is an amount equal to 35 percent of the qualified investment for such taxable year with respect to any advanced manufacturing facility of an eligible taxpayer. (b) Qualified investment(1) In generalFor purposes of subsection (a), the qualified investment with respect to any advanced 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 an advanced manufacturing facility. (2) Qualified property(A) In generalFor purposes of this subsection, the term “qualified property” means property—(i) which is tangible property, (ii) with respect to which depreciation (or amortization in lieu of depreciation) is allowable, (iii) 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 (iv) which is integral to the operation of the advanced manufacturing facility. (B) Buildings and structural components(i) In generalThe term “qualified property” includes any building or its structural components which otherwise satisfy the requirements under subparagraph (A). (ii) ExceptionClause (i) shall not apply with respect to a building or portion of a building used for offices, administrative services, or other functions unrelated to manufacturing. (3) Advanced manufacturing facilityFor purposes of this section, the term “advanced manufacturing facility” means a facility for which the primary purpose is the manufacturing of semiconductors or semiconductor manufacturing equipment. (4) Coordination with rehabilitation creditThe qualified investment with respect to any advanced manufacturing facility for any taxable year shall not include that portion of the basis of any property which is attributable to qualified rehabilitation expenditures (as defined in section 47(c)(2)). (5) Certain progress expenditure rules made applicableRules 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). (c) Eligible taxpayerFor purposes of this section, the term “eligible taxpayer” means any taxpayer which—(1) is not a foreign entity of concern (as defined in section 9901(6) 11 See References in Text note below. of the William M. (Mac) Thornberry National Defense Authorization Act for Fiscal Year 2021), and (2) has not made an applicable transaction (as defined in section 50(a)) during the taxable year. (d) Elective payment(1) In generalExcept as otherwise provided in paragraph (2)(A), in the case of a taxpayer making an election (at such time and in such manner as the Secretary may provide) under this subsection with respect to the credit determined under subsection (a) with respect to such taxpayer, such taxpayer shall be treated as making a payment against the tax imposed by subtitle A (for the taxable year with respect to which such credit was determined) equal to the amount of such credit. (2) Special rulesFor purposes of this subsection—(A) Application to partnerships and s corporations(i) In generalIn the case of the credit determined under subsection (a) with respect to any property held directly by a partnership or S corporation, any election under paragraph (1) shall be made by such partnership or S corporation. If such partnership or S corporation makes an election under such paragraph (in such manner as the Secretary may provide) with respect to such credit—(I) the Secretary shall make a payment to such partnership or S corporation equal to the amount of such credit, (II) paragraph (3) shall be applied with respect to such credit before determining any partner’s distributive share, or shareholder’s pro rata share, of such credit, (III) any amount with respect to which the election in paragraph (1) is made shall be treated as tax exempt income for purposes of sections 705 and 1366, and (IV) a partner’s distributive share of such tax exempt income shall be based on such partner’s distributive share of the otherwise applicable credit for each taxable year. (ii) Coordination with application at partner or shareholder levelIn the case of any property held directly by a partnership or S corporation, no election by any partner or shareholder shall be allowed under paragraph (1) with respect to any credit determined under subsection (a) with respect to such property. (B) ElectionsAny election under paragraph (1) shall be made not later than the due date (including extensions of time) for the return of tax for the taxable year for which the election is made, but in no event earlier than 270 days after the date of the enactment of this section. Any such election, once made, shall be irrevocable. Except as otherwise provided in this subparagraph, any election under paragraph (1) shall apply with respect to any credit for the taxable year for which the election is made. (C) TimingThe payment described in paragraph (1) shall be treated as made on the later of the due date (determined without regard to extensions) of the return of tax for the taxable year or the date on which such return is filed. (D) Treatment of payments to partnerships and s corporationsFor purposes of section 1324 of title 31, United States Code, the payments under subparagraph (A)(i)(I) shall be treated in the same manner as a refund due from a credit provision referred to in subsection (b)(2) of such section. (E) Additional informationAs a condition of, and prior to, any amount being treated as a payment which is made by the taxpayer under paragraph (1) or any payment being made pursuant to subparagraph (A), the Secretary may require such information or registration as the Secretary deems necessary or appropriate for purposes of preventing duplication, fraud, improper payments, or excessive payments under this section. (F) Excessive payment(i) In generalIn the case of any amount treated as a payment which is made by the taxpayer under paragraph (1), or any payment made pursuant to subparagraph (A), which the Secretary determines constitutes an excessive payment, the tax imposed on such taxpayer by chapter 1 for the taxable year in which such determination is made shall be increased by an amount equal to the sum of—(I) the amount of such excessive payment, plus (II) an amount equal to 20 percent of such excessive payment. (ii) Reasonable causeClause (i)(II) shall not apply if the taxpayer demonstrates to the satisfaction of the Secretary that the excessive payment resulted from reasonable cause. (iii) Excessive payment definedFor purposes of this subparagraph, the term “excessive payment” means, with respect to property for which an election is made under this subsection for any taxable year, an amount equal to the excess of—(I) the amount treated as a payment which is made by the taxpayer under paragraph (1), or the amount of the payment made pursuant to subparagraph (A), with respect to such property for such taxable year, over (II) the amount of the credit which, without application of this subsection, would be otherwise allowable (determined without regard to section 38(c)) under subsection (a) with respect to such property for such taxable year. (3) Denial of double benefitIn the case of a taxpayer making an election under this subsection with respect to the credit determined under subsection (a), such credit shall be reduced to zero and shall, for any other purposes under this title, be deemed to have been allowed to the taxpayer for such taxable year. (4) Mirror code possessionsIn the case of any possession of the United States with a mirror code tax system (as defined in section 24(k)), this subsection shall not be treated as part of the income tax laws of the United States for purposes of determining the income tax law of such possession unless such possession elects to have this subsection be so treated. (5) Basis reduction and recaptureRules similar to the rules of subsections (a) and (c) of section 50 shall apply with respect to—(A) any amount treated as a payment which is made by the taxpayer under paragraph (1), and (B) any payment made pursuant to paragraph (2)(A). (6) RegulationsThe Secretary shall issue such regulations or other guidance as may be necessary or appropriate to carry out the purposes of this subsection, including—(A) regulations or other guidance providing rules for determining a partner’s distributive share of the tax exempt income described in paragraph (2)(A)(i)(III), and (B) guidance to ensure that the amount of the payment or deemed payment made under this subsection is commensurate with the amount of the credit that would be otherwise allowable (determined without regard to section 38(c)). (e) Termination of creditThe credit allowed under this section shall not apply to property the construction of which begins after December 31, 2026.

26 U.S.C. § 48E Clean electricity investment credit

(a) Investment credit for qualified property(1) In generalFor purposes of section 46, the clean electricity investment credit for any taxable year is an amount equal to the applicable percentage of the qualified investment for such taxable year with respect to—(A) any qualified facility, and (B) any energy storage technology. (2) Applicable percentage(A) Qualified facilitiesSubject to paragraph (3)—(i) Base rateIn the case of any qualified facility which is not described in subclause (I) or (II) of clause (ii) and does not satisfy the requirements described in subclause (III) of such clause, the applicable percentage shall be 6 percent. (ii) Alternative rateIn the case of any qualified facility—(I) with a maximum net output of less than 1 megawatt (as measured in alternating current), (II) the construction of which begins prior to the date that is 60 days after the Secretary publishes guidance with respect to the requirements of paragraphs (3) and (4) of subsection (d), or (III) which—(aa) satisfies the requirements of subsection (d)(3), and (bb) with respect to the construction of such facility, satisfies the requirements of subsection (d)(4), the applicable percentage shall be 30 percent. (B) Energy storage technologySubject to paragraph (3)—(i) Base rateIn the case of any energy storage technology which is not described in subclause (I) or (II) of clause (ii) and does not satisfy the requirements described in subclause (III) of such clause, the applicable percentage shall be 6 percent. (ii) Alternative rateIn the case of any energy storage technology—(I) with a capacity of less than 1 megawatt, (II) the construction of which begins prior to the date that is 60 days after the Secretary publishes guidance with respect to the requirements of paragraphs (3) and (4) of subsection (d), or (III) which—(aa) satisfies the requirements of subsection (d)(3), and (bb) with respect to the construction of such property, satisfies the requirements of subsection (d)(4), the applicable percentage shall be 30 percent. (3) Increase in credit rate in certain cases(A) Energy communities(i) In generalIn the case of any qualified investment with respect to a qualified facility or with respect to energy storage technology which is placed in service within an energy community (as defined in section 45(b)(11)(B), as applied without regard to clause (iv) thereof), for purposes of applying paragraph (2) with respect to such property or investment, the applicable percentage shall be increased by the applicable credit rate increase. (ii) Applicable credit rate increaseFor purposes of clause (i), the applicable credit rate increase shall be an amount equal to—(I) in the case of any qualified investment with respect to a qualified facility described in paragraph (2)(A)(i) or with respect to energy storage technology described in paragraph (2)(B)(i), 2 percentage points, and (II) in the case of any qualified investment with respect to a qualified facility described in paragraph (2)(A)(ii) or with respect to energy storage technology described in paragraph (2)(B)(ii), 10 percentage points. (B) Domestic contentRules similar to the rules of section 48(a)(12) shall apply, except that, for purposes of subparagraph (B) of such section and the application of rules similar to the rules of section 45(b)(9)(B), the adjusted percentage (as determined under section 45(b)(9)(C)) shall be determined as follows:(i) In the case of any qualified investment with respect to any qualified facility or energy storage technology the construction of which begins before June 16, 2025, 40 percent (or, in the case of a qualified facility which is an offshore wind facility, 20 percent). (ii) In the case of any qualified investment with respect to any qualified facility or energy storage technology the construction of which begins on or after June 16, 2025, and before January 1, 2026, 45 percent (or, in the case of a qualified facility which is an offshore wind facility, 27.5 percent). (iii) In the case of any qualified investment with respect to any qualified facility or energy storage technology the construction of which begins during calendar year 2026, 50 percent (or, in the case of a qualified facility which is an offshore wind facility, 35 percent). (iv) In the case of any qualified investment with respect to any qualified facility or energy storage technology the construction of which begins after December 31, 2026, 55 percent. (b) Qualified investment with respect to a qualified facility(1) In generalFor purposes of subsection (a), the qualified investment with respect to any qualified facility for any taxable year is the sum of—(A) the basis of any qualified property placed in service by the taxpayer during such taxable year which is part of a qualified facility, plus (B) the amount of any expenditures which are—(i) paid or incurred by the taxpayer for qualified interconnection property—(I) in connection with a qualified facility which has a maximum net output of not greater than 5 megawatts (as measured in alternating current), and (II) placed in service during the taxable year of the taxpayer, and (ii) properly chargeable to capital account of the taxpayer. (2) Qualified propertyFor purposes of this section, the term “qualified property” means property—(A) which is—(i) tangible personal property, or (ii) other tangible property (not including a building or its structural components), but only if such property is used as an integral part of the qualified facility, (B) with respect to which depreciation (or amortization in lieu of depreciation) is allowable, and (C)(i) the construction, reconstruction, or erection of which is completed by the taxpayer, or (ii) which is acquired by the taxpayer if the original use of such property commences with the taxpayer. (3) Qualified facility(A) In generalFor purposes of this section, the term “qualified facility” means a facility—(i) which is used for the generation of electricity, (ii) which is placed in service after December 31, 2024, and (iii) for which the anticipated greenhouse gas emissions rate (as determined under subparagraph (B)(ii)) is not greater than zero. (B) Additional rules(i) Expansion of facility; incremental productionRules similar to the rules of section 45Y(b)(1)(C) shall apply for purposes of this paragraph. (ii) Greenhouse gas emissions rateRules similar to the rules of section 45Y(b)(2) shall apply for purposes of this paragraph. (C) ExclusionThe term “qualified facility” shall not include any facility for which—(i) a renewable electricity production credit determined under section 45, (ii) an advanced nuclear power facility production credit determined under section 45J, (iii) a carbon oxide sequestration credit determined under section 45Q, (iv) a zero-emission nuclear power production credit determined under section 45U, (v) a clean electricity production credit determined under section 45Y, (vi) an energy credit determined under section 48, or (vii) a qualifying advanced coal project credit under section 48A, is allowed under section 38 for the taxable year or any prior taxable year. (4) Qualified interconnection propertyFor purposes of this paragraph, the term “qualified interconnection property” has the meaning given such term in section 48(a)(8)(B). (5) Coordination with rehabilitation creditThe qualified investment with respect to any qualified facility for any taxable year shall not include that portion of the basis of any property which is attributable to qualified rehabilitation expenditures (as defined in section 47(c)(2)). (6) Material assistance from prohibited foreign entitiesThe terms “qualified facility” and “qualified interconnection property” shall not include any facility or property the construction, reconstruction, or erection of which begins after December 31, 2025, if the construction, reconstruction, or erection of such facility or property includes any material assistance from a prohibited foreign entity (as defined in section 7701(a)(52)). (7) DefinitionsFor purposes of this subsection, the terms “CO2e per KWh” and “greenhouse gas emissions rate” have the same meaning given such terms under section 45Y. (c) Qualified investment with respect to energy storage technology(1) Qualified investmentFor purposes of subsection (a), the qualified investment with respect to energy storage technology for any taxable year is the basis of any energy storage technology placed in service by the taxpayer during such taxable year. (2) Energy storage technologyFor purposes of this section, the term “energy storage technology” has the meaning given such term in section 48(c)(6) (except that subparagraph (D) of such section shall not apply). (3) Material assistance from prohibited foreign entitiesThe term “energy storage technology” shall not include any property the construction of which begins after December 31, 2025, if the construction of such property includes any material assistance from a prohibited foreign entity (as defined in section 7701(a)(52)). (d) Special rules(1) Certain progress expenditure rules made applicableRules 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). (2) Special rule for property financed by subsidized energy financing or private activity bondsRules similar to the rules of section 45(b)(3) shall apply. (3) Prevailing wage requirementsRules similar to the rules of section 48(a)(10) shall apply. (4) Apprenticeship requirementsRules similar to the rules of section 45(b)(8) shall apply. (5) Domestic content requirement for elective paymentIn the case of a taxpayer making an election under section 6417 with respect to a credit under this section, rules similar to the rules of section 45Y(g)(12) shall apply. (6) Restrictions relating to prohibited foreign entities(A) In generalNo credit shall be determined under subsection (a) for any taxable year if the taxpayer is—(i) a specified foreign entity (as defined in section 7701(a)(51)(B)), or (ii) a foreign-influenced entity (as defined in section 7701(a)(51)(D), without regard to clause (i)(II) thereof). (B) Effective controlIn the case of a taxpayer for which section 7701(a)(51)(D)(i)(II) is determined to apply for any taxable year, no credit shall be determined under subsection (a) for such taxable year if such determination relates to a qualified facility described in subsection (b)(3) or energy storage technology described in subsection (c)(2). (e) Credit phase-out(1) In generalSubject to paragraph (4), the amount of the clean electricity investment credit under subsection (a) for any qualified investment with respect to any qualified facility or energy storage technology the construction of which begins during a calendar year described in paragraph (2) shall be equal to the product of—(A) the amount of the credit determined under subsection (a) without regard to this subsection, multiplied by (B) the phase-out percentage under paragraph (2). (2) Phase-out percentageThe phase-out percentage under this paragraph is equal to—(A) for any qualified investment with respect to any qualified facility or energy storage technology the construction of which begins during the first calendar year following the applicable year, 100 percent, (B) for any qualified investment with respect to any qualified facility or energy storage technology the construction of which begins during the second calendar year following the applicable year, 75 percent, (C) for any qualified investment with respect to any qualified facility or energy storage technology the construction of which begins during the third calendar year following the applicable year, 50 percent, and (D) for any qualified investment with respect to any qualified facility or energy storage technology the construction of which begins during any calendar year subsequent to the calendar year described in subparagraph (C), 0 percent. (3) Applicable yearFor purposes of this subsection, the term “applicable year” has the same meaning given such term in section 45Y(d)(3). (4) Termination for wind and solar facilities(A) In generalThis section shall not apply to any qualified property placed in service by the taxpayer after December 31, 2027, which is part of an applicable facility. (B) Applicable facilityFor purposes of this paragraph, the term “applicable facility” means a qualified facility which—(i) uses wind to produce electricity (within the meaning of such term as used in section 45(d)(1), as determined without regard to any requirement under such section with respect to the date on which construction of property begins), or (ii) uses solar energy to produce electricity (within the meaning of such term as used in section 45(d)(4), as determined without regard to any requirement under such section with respect to the date on which construction of property begins). (C) ExceptionThis paragraph shall not apply with respect to any energy storage technology which is placed in service at any applicable facility. (f) Greenhouse gasIn this section, the term “greenhouse gas” has the same meaning given such term under section 45Y(e)(2). (g) Recapture of creditFor purposes of section 50, if the Secretary determines that the greenhouse gas emissions rate for a qualified facility is greater than 10 grams of CO2e per KWh, any property for which a credit was allowed under this section with respect to such facility shall cease to be investment credit property in the taxable year in which the determination is made. (h) Special rules for certain facilities placed in service in connection with low-income communities(1) In generalIn the case of any applicable facility with respect to which the Secretary makes an allocation of environmental justice capacity limitation under paragraph (4)—(A) the applicable percentage otherwise determined under subsection (a)(2) with respect to any eligible property which is part of such facility shall be increased by—(i) in the case of a facility described in subclause (I) of paragraph (2)(A)(iii) and not described in subclause (II) of such paragraph, 10 percentage points, and (ii) in the case of a facility described in subclause (II) of paragraph (2)(A)(iii), 20 percentage points, and (B) the increase in the credit determined under subsection (a) by reason of this subsection for any taxable year with respect to all property which is part of such facility shall not exceed the amount which bears the same ratio to the amount of such increase (determined without regard to this subparagraph) as—(i) the environmental justice capacity limitation allocated to such facility, bears to (ii) the total megawatt nameplate capacity of such facility, as measured in direct current. (2) Applicable facilityFor purposes of this subsection—(A) In generalThe term “applicable facility” means any qualified facility—(i) which is not described in section 45Y(b)(2)(B), (ii) which has a maximum net output of less than 5 megawatts (as measured in alternating current), and (iii) which—(I) is located in a low-income community (as defined in section 45D(e)) or on Indian land (as defined in section 2601(2) of the Energy Policy Act of 1992 (25 U.S.C. 3501(2))), or (II) is part of a qualified low-income residential building project or a qualified low-income economic benefit project. (B) Qualified low-income residential building projectA facility shall be treated as part of a qualified low-income residential building project if—(i) such facility is installed on a residential rental building which participates in a covered housing program (as defined in section 41411(a) of the Violence Against Women Act of 1994 (34 U.S.C. 12491(a)(3)),11 So in original. Another closing parenthesis probably should precede the comma. a housing assistance program administered by the Department of Agriculture under title V of the Housing Act of 1949, a housing program administered by a tribally designated housing entity (as defined in section 4(22) of the Native American Housing Assistance and Self-Determination Act of 1996 (25 U.S.C. 4103(22))) or such other affordable housing programs as the Secretary may provide, and (ii) the financial benefits of the electricity produced by such facility are allocated equitably among the occupants of the dwelling units of such building. (C) Qualified low-income economic benefit projectA facility shall be treated as part of a qualified low-income economic benefit project if at least 50 percent of the financial benefits of the electricity produced by such facility are provided to households with income of—(i) less than 200 percent of the poverty line (as defined in section 36B(d)(3)(A)) applicable to a family of the size involved, or (ii) less than 80 percent of area median gross income (as determined under section 142(d)(2)(B)). (D) Financial benefitFor purposes of subparagraphs (B) and (C), electricity acquired at a below-market rate shall not fail to be taken into account as a financial benefit. (3) Eligible propertyFor purposes of this subsection, the term “eligible property” means a qualified investment with respect to any applicable facility. (4) Allocations(A) In generalNot later than January 1, 2025, the Secretary shall establish a program to allocate amounts of environmental justice capacity limitation to applicable facilities. In establishing such program and to carry out the purposes of this subsection, the Secretary shall provide procedures to allow for an efficient allocation process, including, when determined appropriate, consideration of multiple projects in a single application if such projects will be placed in service by a single taxpayer. (B) LimitationThe amount of environmental justice capacity limitation allocated by the Secretary under subparagraph (A) during any calendar year shall not exceed the annual capacity limitation with respect to such year. (C) Annual capacity limitationFor purposes of this paragraph, the term “annual capacity limitation” means 1.8 gigawatts of direct current capacity for each calendar year during the period beginning on January 1, 2025, and ending on December 31 of the applicable year (as defined in section 45Y(d)(3)), and zero thereafter. (D) Carryover of unused limitation(i) In generalIf the annual capacity limitation for any calendar year exceeds the aggregate amount allocated for such year under this paragraph, such limitation for the succeeding calendar year shall be increased by the amount of such excess. No amount may be carried under the preceding sentence to any calendar year after the third calendar year following the applicable year (as defined in section 45Y(d)(3)). (ii) Carryover from section 48 for calendar year 2025If the annual capacity limitation for calendar year 2024 under section 48(e)(4)(D) exceeds the aggregate amount allocated for such year under such section, such excess amount may be carried over and applied to the annual capacity limitation under this subsection for calendar year 2025. The annual capacity limitation for calendar year 2025 shall be increased by the amount of such excess. (E) Placed in service deadline(i) In generalParagraph (1) shall not apply with respect to any property which is placed in service after the date that is 4 years after the date of the allocation with respect to the facility of which such property is a part. (ii) Application of carryoverAny amount of environmental justice capacity limitation which expires under clause (i) during any calendar year shall be taken into account as an excess described in subparagraph (D)(i) (or as an increase in such excess) for such calendar year, subject to the limitation imposed by the last sentence of such subparagraph. (5) RecaptureThe Secretary shall, by regulations or other guidance, provide for recapturing the benefit of any increase in the credit allowed under subsection (a) by reason of this subsection with respect to any property which ceases to be property eligible for such increase (but which does not cease to be investment credit property within the meaning of section 50(a)). The period and percentage of such recapture shall be determined under rules similar to the rules of section 50(a). To the extent provided by the Secretary, such recapture may not apply with respect to any property if, within 12 months after the date the taxpayer becomes aware (or reasonably should have become aware) of such property ceasing to be property eligible for such increase, the eligibility of such property for such increase is restored. The preceding sentence shall not apply more than once with respect to any facility. (i) Denial of credit for expenditures for wind and solar leasing arrangementsNo credit shall be determined under this section for any qualified investment during the taxable year with respect to property described in paragraph (1) or (4) of section 25D(d) (as applied by substituting “lessee” for “taxpayer”) if the taxpayer rents or leases such property to a third party during such taxable year. (j) Application to qualified fuel cell propertyFor purposes of this section, in the case of any qualified fuel cell property (as defined in section 48(c)(1), as applied without regard to subparagraph (E) thereof)—(1) subsection (b)(3)(A) shall be applied without regard to clause (iii) thereof, (2) for purposes of subsection (a)(1), the applicable percentage shall be 30 percent and such percentage shall not be increased or otherwise adjusted by any other provision of this section, and (3) subsection (g) shall not apply. (k) GuidanceNot later than January 1, 2025, the Secretary shall issue guidance regarding implementation of this section.

26 U.S.C. § 49 At-risk rules

(a) General rule(1) Certain nonrecourse financing excluded from credit base(A) LimitationThe credit base of any property to which this paragraph applies shall be reduced by the nonqualified nonrecourse financing with respect to such credit base (as of the close of the taxable year in which placed in service). (B) Property to which paragraph appliesThis paragraph applies to any property which—(i) is placed in service during the taxable year by a taxpayer described in section 465(a)(1), and (ii) is used in connection with an activity with respect to which any loss is subject to limitation under section 465. (C) Credit base definedFor purposes of this paragraph, the term “credit base” means—(i) the portion of the basis of any qualified rehabilitated building attributable to qualified rehabilitation expenditures, (ii) the basis of any energy property, (iii) the basis of any property which is part of a qualifying advanced coal project under section 48A, (iv) the basis of any property which is part of a qualifying gasification project under section 48B, (v) the basis of any property which is part of a qualifying advanced energy project under section 48C, (vi) the basis of any qualified property (as defined in subsection (b)(2) of section 48D) which is part of an advanced manufacturing facility (as defined in subsection (b)(3) of such section), (vii) the basis of any qualified property which is part of a qualified facility under section 48E, and (viii) the basis of any energy storage technology under section 48E. (D) Nonqualified nonrecourse financing(i) In generalFor purposes of this paragraph and paragraph (2), the term “nonqualified nonrecourse financing” means any nonrecourse financing which is not qualified commercial financing. (ii) Qualified commercial financingFor purposes of this paragraph, the term “qualified commercial financing” means any financing with respect to any property if—(I) such property is acquired by the taxpayer from a person who is not a related person, (II) the amount of the nonrecourse financing with respect to such property does not exceed 80 percent of the credit base of such property, and (III) such financing is borrowed from a qualified person or represents a loan from any Federal, State, or local government or instrumentality thereof, or is guaranteed by any Federal, State, or local government. Such term shall not include any convertible debt. (iii) Nonrecourse financingFor purposes of this subparagraph, the term “nonrecourse financing” includes—(I) any amount with respect to which the taxpayer is protected against loss through guarantees, stop-loss agreements, or other similar arrangements, and (II) except to the extent provided in regulations, any amount borrowed from a person who has an interest (other than as a creditor) in the activity in which the property is used or from a related person to a person (other than the taxpayer) having such an interest. In the case of amounts borrowed by a corporation from a shareholder, subclause (II) shall not apply to an interest as a shareholder. (iv) Qualified personFor purposes of this paragraph, the term “qualified person” means any person which is actively and regularly engaged in the business of lending money and which is not—(I) a related person with respect to the taxpayer, (II) a person from which the taxpayer acquired the property (or a related person to such person), or (III) a person who receives a fee with respect to the taxpayer’s investment in the property (or a related person to such person). (v) Related personFor purposes of this subparagraph, the term “related person” has the meaning given such term by section 465(b)(3)(C). Except as otherwise provided in regulations prescribed by the Secretary, the determination of whether a person is a related person shall be made as of the close of the taxable year in which the property is placed in service. (E) Application to partnerships and S corporationsFor purposes of this paragraph and paragraph (2)—(i) In generalExcept as otherwise provided in this subparagraph, in the case of any partnership or S corporation, the determination of whether a partner’s or shareholder’s allocable share of any financing is nonqualified nonrecourse financing shall be made at the partner or shareholder level. (ii) Special rule for certain recourse financing of S corporationA shareholder of an S corporation shall be treated as liable for his allocable share of any financing provided by a qualified person to such corporation if—(I) such financing is recourse financing (determined at the corporate level), and (II) such financing is provided with respect to qualified business property of such corporation. (iii) Qualified business propertyFor purposes of clause (ii), the term “qualified business property” means any property if—(I) such property is used by the corporation in the active conduct of a trade or business, (II) during the entire 12-month period ending on the last day of the taxable year, such corporation had at least 3 full-time employees who were not owner-employees (as defined in section 465(c)(7)(E)(i)) and substantially all the services of whom were services directly related to such trade or business, and (III) during the entire 12-month period ending on the last day of such taxable year, such corporation had at least 1 full-time employee substantially all of the services of whom were in the active management of the trade or business. (iv) Determination of allocable shareThe determination of any partner’s or shareholder’s allocable share of any financing shall be made in the same manner as the credit allowable by section 38 with respect to such property. (F) Special rules for energy propertyRules similar to the rules of subparagraph (F) of section 46(c)(8) (as in effect on the day before the date of the enactment of the Revenue Reconciliation Act of 1990) shall apply for purposes of this paragraph. (2) Subsequent decreases in nonqualified nonrecourse financing with respect to the property(A) In generalIf, at the close of a taxable year following the taxable year in which the property was placed in service, there is a net decrease in the amount of nonqualified nonrecourse financing with respect to such property, such net decrease shall be taken into account as an increase in the credit base for such property in accordance with subparagraph (C). (B) Certain transactions not taken into accountFor purposes of this paragraph, nonqualified nonrecourse financing shall not be treated as decreased through the surrender or other use of property financed by nonqualified nonrecourse financing. (C) Manner in which taken into account(i) Credit determined by reference to taxable year property placed in serviceFor purposes of determining the amount of credit allowable under section 38 and the amount of credit subject to the early disposition or cessation rules under section 50(a), any increase in a taxpayer’s credit base for any property by reason of this paragraph shall be taken into account as if it were property placed in service by the taxpayer in the taxable year in which the property referred to in subparagraph (A) was first placed in service. (ii) Credit allowed for year of decrease in nonqualified nonrecourse financingAny credit allowable under this subpart for any increase in qualified investment by reason of this paragraph shall be treated as earned during the taxable year of the decrease in the amount of nonqualified nonrecourse financing. (b) Increases in nonqualified nonrecourse financing(1) In generalIf, as of the close of the taxable year, there is a net increase with respect to the taxpayer in the amount of nonqualified nonrecourse financing (within the meaning of subsection (a)(1)) with respect to any property to which subsection (a)(1) applied, then the tax under this chapter for such taxable year shall be increased by an amount equal to the aggregate decrease in credits allowed under section 38 for all prior taxable years which would have resulted from reducing the credit base (as defined in subsection (a)(1)(C)) taken into account with respect to such property by the amount of such net increase. For purposes of determining the amount of credit subject to the early disposition or cessation rules of section 50(a), the net increase in the amount of the nonqualified nonrecourse financing with respect to the property shall be treated as reducing the property’s credit base in the year in which the property was first placed in service. (2) Transfers of debt more than 1 year after initial borrowing not treated as increasing nonqualified nonrecourse financingFor purposes of paragraph (1), the amount of nonqualified nonrecourse financing (within the meaning of subsection (a)(1)(D)) with respect to the taxpayer shall not be treated as increased by reason of a transfer of (or agreement to transfer) any evidence of any indebtedness if such transfer occurs (or such agreement is entered into) more than 1 year after the date such indebtedness was incurred. (3) Special rules for certain energy propertyRules similar to the rules of section 47(d)(3) (as in effect on the day before the date of the enactment of the Revenue Reconciliation Act of 1990) shall apply for purposes of this subsection. (4) Special ruleAny increase in tax under paragraph (1) shall not be treated as tax imposed by this chapter for purposes of determining the amount of any credit allowable under this chapter.

26 U.S.C. § 50 Other special rules

(a) Recapture in case of dispositions, etc.Under regulations prescribed by the Secretary—(1) Early disposition, etc.(A) General ruleIf, during any taxable year, investment credit property is disposed of, or otherwise ceases to be investment credit property with respect to the taxpayer, before the close of the recapture period, then the tax under this chapter for such taxable year shall be increased by the recapture percentage of the aggregate decrease in the credits allowed under section 38 for all prior taxable years which would have resulted solely from reducing to zero any credit determined under this subpart with respect to such property. (B) Recapture percentageFor purposes of subparagraph (A), the recapture percentage shall be determined in accordance with the following table: If the property ceases to be investment credit property within—The recapturepercentage is: (i) One full year after placed in service100 (ii) One full year after the close of the period described in clause (i)80 (iii) One full year after the close of the period described in clause (ii)60 (iv) One full year after the close of the period described in clause (iii)40 (v) One full year after the close of the period described in clause (iv)20 (2) Property ceases to qualify for progress expenditures(A) In generalIf during any taxable year any building to which section 47(d) applied ceases (by reason of sale or other disposition, cancellation or abandonment of contract, or otherwise) to be, with respect to the taxpayer, property which, when placed in service, will be a qualified rehabilitated building, then the tax under this chapter for such taxable year shall be increased by an amount equal to the aggregate decrease in the credits allowed under section 38 for all prior taxable years which would have resulted solely from reducing to zero the credit determined under this subpart with respect to such building. (B) Certain excess credit recapturedAny amount which would have been applied as a reduction under paragraph (2) of section 47(b) but for the fact that a reduction under such paragraph cannot reduce the amount taken into account under section 47(b)(1) below zero shall be treated as an amount required to be recaptured under subparagraph (A) for the taxable year during which the building is placed in service. (C) Certain sales and leasebacksUnder regulations prescribed by the Secretary, a sale by, and leaseback to, a taxpayer who, when the property is placed in service, will be a lessee to whom the rules referred to in subsection (d)(5) apply shall not be treated as a cessation described in subparagraph (A) to the extent that the amount which will be passed through to the lessee under such rules with respect to such property is not less than the qualified rehabilitation expenditures properly taken into account by the lessee under section 47(d) with respect to such property. (D) Coordination with paragraph (1)If, after property is placed in service, there is a disposition or other cessation described in paragraph (1), then paragraph (1) shall be applied as if any credit which was allowable by reason of section 47(d) and which has not been required to be recaptured before such disposition, cessation, or change in use were allowable for the taxable year the property was placed in service. (E) Special rulesRules similar to the rules of this paragraph shall apply in cases where qualified progress expenditures were taken into account under the rules referred to in section 48(b), 48A(b)(3), 48B(b)(3), 48C(b)(2), 48D(b)(5), or 48E(e). (3) Certain expansions in connection with advanced manufacturing facilities(A) In generalIf there is a an applicable transaction by an applicable taxpayer before the close of the 10-year period beginning on the date such taxpayer placed in service investment credit property which is eligible for the advanced manufacturing investment credit under section 48D(a), then the tax under this chapter for the taxable year in which such transaction occurs shall be increased by 100 percent of the aggregate decrease in the credits allowed under section 38 for all prior taxable years which would have resulted solely from reducing to zero any credit determined under section 46 which is attributable to the advanced manufacturing investment credit under section 48D(a) with respect to such property. (B) ExceptionSubparagraph (A) shall not apply if the applicable taxpayer demonstrates to the satisfaction of the Secretary that the applicable transaction has been ceased or abandoned within 45 days of a determination and notice by the Secretary. (C) Regulations and guidanceThe Secretary shall issue such regulations or other guidance as the Secretary determines necessary or appropriate to carry out the purposes of this paragraph, including regulations or other guidance which provide for requirements for recordkeeping or information reporting for purposes of administering the requirements of this paragraph. (4) Payments to prohibited foreign entities(A) In generalIf there is an applicable payment made by a specified taxpayer before the close of the 10-year period beginning on the date such taxpayer placed in service investment credit property which is eligible for the clean electricity investment credit under section 48E(a), then the tax under this chapter for the taxable year in which such applicable payment occurs shall be increased by 100 percent of the aggregate decrease in the credits allowed under section 38 for all prior taxable years which would have resulted solely from reducing to zero any credit determined under section 46 which is attributable to the clean electricity investment credit under section 48E(a) with respect to such property. (B) Applicable paymentFor purposes of this paragraph, the term “applicable payment” means, with respect to any taxable year, a payment or payments described in section 7701(a)(51)(D)(i)(II). (C) Specified taxpayerFor purposes of this paragraph, the term “specified taxpayer” means any taxpayer who has been allowed a credit under section 48E(a) for any taxable year beginning after the date which is 2 years after the date of enactment of this paragraph. (5) Carrybacks and carryovers adjustedIn the case of any cessation described in paragraph (1) or (2), any applicable transaction to which paragraph (3)(A) applies, or any applicable payment to which paragraph (4)(A) applies, the carrybacks and carryovers under section 39 shall be adjusted by reason of such cessation or applicable transaction. (6) Subsection not to apply in certain casesParagraphs (1) and (2) shall not apply to—(A) a transfer by reason of death, or (B) a transaction to which section 381(a) applies. For purposes of this subsection, property shall not be treated as ceasing to be investment credit property with respect to the taxpayer by reason of a mere change in the form of conducting the trade or business so long as the property is retained in such trade or business as investment credit property and the taxpayer retains a substantial interest in such trade or business. (7) Definitions and special rules(A) Investment credit propertyFor purposes of this subsection, the term “investment credit property” means any property eligible for a credit determined under this subpart. (B) Transfer between spouses or incident to divorceIn the case of any transfer described in subsection (a) of section 1041—(i) the foregoing provisions of this subsection shall not apply, and (ii) the same tax treatment under this subsection with respect to the transferred property shall apply to the transferee as would have applied to the transferor. (C) Special ruleAny increase in tax under paragraph (1), (2), (3), or (4) shall not be treated as tax imposed by this chapter for purposes of determining the amount of any credit allowable under this chapter. (D) Applicable transactionFor purposes of this subsection—(i) In generalThe term “applicable transaction” means, with respect to any applicable taxpayer, any significant transaction (as determined by the Secretary, in coordination with the Secretary of Commerce and the Secretary of Defense) involving the material expansion of semiconductor manufacturing capacity of such applicable taxpayer in the People’s Republic of China or a foreign country of concern (as defined in section 9901(7) of the William M. (Mac) Thornberry National Defense Authorization Act for Fiscal Year 2021). (ii) ExceptionSuch term shall not include a transaction which primarily involves the expansion of manufacturing capacity for legacy semiconductors (as defined in section 9902(a)(6) of the William M. (Mac) Thornberry National Defense Authorization Act for Fiscal Year 2021). (E) Applicable taxpayerFor purposes of this subsection, the term “applicable taxpayer” means any taxpayer who has been allowed a credit under section 48D(a) for any prior taxable year. (b) Certain property not eligibleNo credit shall be determined under this subpart with respect to—(1) Property used outside United States(A) In generalExcept as provided in subparagraph (B), no credit shall be determined under this subpart with respect to any property which is used predominantly outside the United States. (B) ExceptionsSubparagraph (A) shall not apply to any property described in section 168(g)(4). (2) Property used for lodgingNo credit shall be determined under this subpart with respect to any property which is used predominantly to furnish lodging or in connection with the furnishing of lodging. The preceding sentence shall not apply to—(A) nonlodging commercial facilities which are available to persons not using the lodging facilities on the same basis as they are available to persons using the lodging facilities; (B) property used by a hotel or motel in connection with the trade or business of furnishing lodging where the predominant portion of the accommodations is used by transients; (C) a certified historic structure to the extent of that portion of the basis which is attributable to qualified rehabilitation expenditures; and (D) any energy property. (3) Property used by certain tax-exempt organizationNo credit shall be determined under this subpart with respect to any property used by an organization (other than a cooperative described in section 521) which is exempt from the tax imposed by this chapter unless such property is used predominantly in an unrelated trade or business the income of which is subject to tax under section 511. If the property is debt-financed property (as defined in section 514(b)), the amount taken into account for purposes of determining the amount of the credit under this subpart with respect to such property shall be that percentage of the amount (which but for this paragraph would be so taken into account) which is the same percentage as is used under section 514(a), for the year the property is placed in service, in computing the amount of gross income to be taken into account during such taxable year with respect to such property. If any qualified rehabilitated building is used by the tax-exempt organization pursuant to a lease, this paragraph shall not apply for purposes of determining the amount of the rehabilitation credit. (4) Property used by governmental units or foreign persons or entities(A) In generalNo credit shall be determined under this subpart with respect to any property used—(i) by the United States, any State or political subdivision thereof, any possession of the United States, or any agency or instrumentality of any of the foregoing, or (ii) by any foreign person or entity (as defined in section 168(h)(2)(C)), but only with respect to property to which section 168(h)(2)(A)(iii) applies (determined after the application of section 168(h)(2)(B)). (B) Exception for short-term leasesThis paragraph and paragraph (3) shall not apply to any property by reason of use under a lease with a term of less than 6 months (determined under section 168(i)(3)). (C) Exception for qualified rehabilitated buildings leased to governments, etc.If any qualified rehabilitated building is leased to a governmental unit (or a foreign person or entity) this paragraph shall not apply for purposes of determining the rehabilitation credit with respect to such building. (D) Special rules for partnerships, etc.For purposes of this paragraph and paragraph (3), rules similar to the rules of paragraphs (5) and (6) of section 168(h) shall apply. (E) Cross referenceFor special rules for the application of this paragraph and paragraph (3), see section 168(h). (c) Basis adjustment to investment credit property(1) In generalFor purposes of this subtitle, if a credit is determined under this subpart with respect to any property, the basis of such property shall be reduced by the amount of the credit so determined. (2) Certain dispositionsIf during any taxable year there is a recapture amount determined with respect to any property the basis of which was reduced under paragraph (1), the basis of such property (immediately before the event resulting in such recapture) shall be increased by an amount equal to such recapture amount. For purposes of the preceding sentence, the term “recapture amount” means any increase in tax (or adjustment in carrybacks or carryovers) determined under subsection (a). (3) Special ruleIn the case of any energy credit or clean electricity investment credit—(A) only 50 percent of such credit shall be taken into account under paragraph (1), (B) only 50 percent of any recapture amount attributable to such credit shall be taken into account under paragraph (2), and (C) paragraph (1) shall not apply for purposes of determining eligible basis under section 42. (4) Recapture of reductions(A) In generalFor purposes of sections 1245 and 1250, any reduction under this subsection shall be treated as a deduction allowed for depreciation. (B) Special rule for section 1250For purposes of section 1250(b), the determination of what would have been the depreciation adjustments under the straight line method shall be made as if there had been no reduction under this section. (5) Adjustment in basis of interest in partnership or S corporationThe adjusted basis of—(A) a partner’s interest in a partnership, and (B) stock in an S corporation, shall be appropriately adjusted to take into account adjustments made under this subsection in the basis of property held by the partnership or S corporation (as the case may be). (d) Certain rules made applicableFor purposes of this subpart, rules similar to the rules of the following provisions (as in effect on the day before the date of the enactment of the Revenue Reconciliation Act of 1990) shall apply:(1) Section 46(e) (relating to limitations with respect to certain persons). (2) Section 46(f) (relating to limitation in case of certain regulated companies). At the election of a taxpayer, this paragraph shall not apply to any energy storage technology (as defined in section 48(c)(6)), provided—(A) no election under this paragraph shall be permitted if the making of such election is prohibited by a State or political subdivision thereof, by any agency or instrumentality of the United States, or by a public service or public utility commission or other similar body of any State or political subdivision that regulates public utilities as described in section 7701(a)(33)(A), (B) an election under this paragraph shall be made separately with respect to each energy storage technology by the due date (including extensions) of the Federal tax return for the taxable year in which the energy storage technology is placed in service by the taxpayer, and once made, may be revoked only with the consent of the Secretary, and (C) an election shall not apply with respect to any energy storage technology if such energy storage technology has a maximum capacity equal to or less than 500 kilowatt hours. (3) Section 46(h) (relating to special rules for cooperatives). (4) Paragraphs (2) and (3) of section 48(b) (relating to special rule for sale-leasebacks). (5) Section 48(d) (relating to certain leased property). (6) Section 48(f) (relating to estates and trusts). (7) Section 48(r) (relating to certain 501(d) organizations). Paragraphs (1)(A), (2)(A), and (4) of the section 46(e) referred to in paragraph (1) of this subsection shall not apply to any taxable year beginning after December 31, 1995. In the case of a real estate investment trust making an election under section 6418, paragraphs (1)(B) and (2)(B) of the section 46(e) referred to in paragraph (1) of this subsection shall not apply to any investment credit property of such real estate investment trust to which such election applies. (e) Rules for geothermal heat pumpsFor purposes of this section and section 168, the ownership of energy property described in section 48(a)(3)(A)(vii) shall be determined without regard to whether such property is readily usable by a person other than the lessee or service recipient.