The IRS has issued proposed regulations that provide guidance regarding the implementation of The Advanced Manufacturing Investment Credit, established by the Creating Helpful Incentives to Produce Semiconductors Act of 2022, commonly known as the CHIPS Act.
This credit will incentivize the manufacture of semiconductors and semiconductor manufacturing equipment within the United States. The credit is available to taxpayers that meet certain eligibility requirements, and taxpayers can choose to receive the credit as an elective payment. An elective payment will be treated as a payment against the tax liability that is equal to the amount of the credit. A partnership or S corporation can make an elect to receive a payment instead of claiming the credit.
The advanced manufacturing investment credit for any taxable year is generally equal to 25% of an eligible taxpayer's qualified investment in an advanced manufacturing facility. An eligible taxpayer's qualified investment equals its basis in any qualified property placed in service during the taxable year. The qualified property must be integral to the operation of the advanced manufacturing facility. The credit is generally available for qualified property placed in service after Dec. 31, 2022.
The proposed regulations issued today address the eligibility requirements, including defining what constitutes an eligible taxpayer, qualified property and an advanced manufacturing facility. The proposed regulations also provide information on how to claim the credit.
The Department of the Treasury and the IRS welcome public comments on these proposed regulations. For details on submitting comments, see the proposed regulations.