S 2511 — Revitalizing Downtowns Act

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.

(a) General rule (1) Certain nonrecourse financing excluded from credit base (A) Limitation The 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 applies This 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 defined For 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 general For 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 financing For 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 financing For 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 person For 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 person For 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 corporations For purposes of this paragrap...

(a) Recapture in case of dispositions, etc. Under regulations prescribed by the Secretary— (1) Early disposition, etc. (A) General rule If, 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 percentage For 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 recapture percentage is: (i) One full year after placed in service 100    (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 general If 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 recaptured Any 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 leasebacks Under 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 rules Rules 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 general If 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 f...