Build It in America Act

IB Union Calendar No. 99 118TH CONGRESS 1ST SESSION H. R. 3938 [Report No. 118–127] To amend the Internal Revenue Code of 1986 to encourage economic growth. IN THE HOUSE OF REPRESENTATIVES JUNE 9, 2023 Mr. SMITH of Missouri introduced the following bill; which was referred to the Committee on Ways and Means JUNE 30, 2023 Reported with an amendment, committed to the Committee of the Whole House on the State of the Union, and ordered to be printed [Strike out all after the enacting clause and insert the part printed in italic] [For text of introduced bill, see copy of bill as introduced on June 9, 2023] VerDate Sep 11 2014 23:45 Jun 30, 2023 Jkt 039200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6652 E:\BILLS\H3938.RH H3938 kjohnson on DSK79L0C42PROD with BILLS 2 •HR 3938 RH A BILL To amend the Internal Revenue Code of 1986 to encourage economic growth. VerDate Sep 11 2014 23:45 Jun 30, 2023 Jkt 039200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6652 E:\BILLS\H3938.RH H3938 kjohnson on DSK79L0C42PROD with BILLS 3 •HR 3938 RH Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE; TABLE OF CONTENTS, ETC. 3 (a) SHORT TITLE.—This Act may be cited as the 4 ‘‘Build It in America Act’’. 5 (b) AMENDMENT OF 1986 CODE.—Except as otherwise 6 expressly provided, whenever in this Act an amendment or 7 repeal is expressed in terms of an amendment to, or repeal 8 of, a section or other provision, the reference shall be consid- 9 ered to be made to a section or other provision of the Inter- 10 nal Revenue Code of 1986. 11 (c) TABLE OF CONTENTS.—The table of contents for 12 this Act is as follows: 13 Sec. 1. Short title; table of contents, etc. TITLE I—INVESTMENT IN AMERICA Sec. 101. Deduction for research and experimental expenditures. Sec. 102. Extension of allowance for depreciation, amortization, or depletion in determining the limitation on business interest. Sec. 103. Extension of 100 percent bonus depreciation. TITLE II—SUPPLY CHAIN SECURITY Sec. 201. Termination of Hazardous Substance Superfund financing rate. Sec. 202. Election to determine foreign income taxes paid or accrued to certain Western Hemisphere countries without regard to certain regula- tions. Sec. 203. Imposition of tax on the acquisition of United States agricultural inter- ests by disqualified persons. TITLE III—REPEAL OF SPECIAL INTEREST TAX PROVISIONS Sec. 301. Repeal of clean electricity production credit. Sec. 302. Repeal of clean electricity investment credit. Sec. 303. Modification of clean vehicle credit. Sec. 304. Repeal of credit for previously-owned clean vehicles. Sec. 305. Repeal of credit for qualified commercial clean vehicles. VerDate Sep 11 2014 23:45 Jun 30, 2023 Jkt 039200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6213 E:\BILLS\H3938.RH H3938 kjohnson on DSK79L0C42PROD with BILLS 4 •HR 3938 RH TITLE I—INVESTMENT IN 1 AMERICA 2 SEC. 101. DEDUCTION FOR RESEARCH AND EXPERIMENTAL 3 EXPENDITURES. 4 (a) DELAY OF AMORTIZATION OF RESEARCH AND EX- 5 PERIMENTAL EXPENDITURES.—Section 174 is amended by 6 adding at the end the following new subsection: 7 ‘‘(e) SUSPENSION OF APPLICATION.—This section shall 8 apply to amounts paid or incurred in taxable years begin- 9 ning after December 31, 2025 (and shall not apply to 10 amounts paid or incurred in taxable years beginning on 11 or before such date).’’. 12 (b) REINSTATEMENT OF EXPENSING FOR RESEARCH 13 AND EXPERIMENTAL EXPENDITURES.—Part VI of sub- 14 chapter B of chapter 1 is amended by inserting after section 15 174 the following new section: 16 ‘‘SEC. 174A. TEMPORARY RULES FOR RESEARCH AND EX- 17 PERIMENTAL EXPENDITURES. 18 ‘‘(a) TREATMENT AS EXPENSES.—Notwithstanding 19 section 263, there shall be allowed as a deduction any re- 20 search or experimental expenditures which are paid or in- 21 curred by the taxpayer during the taxable year in connec- 22 tion with the taxpayer’s trade or business. 23 ‘‘(b) AMORTIZATION OF CERTAIN RESEARCH AND EX- 24 PERIMENTAL EXPENDITURES.— 25 VerDate Sep 11 2014 23:45 Jun 30, 2023 Jkt 039200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6203 E:\BILLS\H3938.RH H3938 kjohnson on DSK79L0C42PROD with BILLS 5 •HR 3938 RH ‘‘(1) IN GENERAL.—At the election of the tax- 1 payer, made in accordance with regulations or other 2 guidance provided by the Secretary, research or exper- 3 imental expenditures which— 4 ‘‘(A) are paid or incurred by the taxpayer 5 in connection with his trade or business, and 6 ‘‘(B) would (but for subsection (a)) be 7 chargeable to capital account but not chargeable 8 to property of a character which is subject to the 9 allowance under section 167 (relating to allow- 10 ance for depreciation, etc.) or section 611 (relat- 11 ing to allowance for depletion), 12 may be treated as deferred expenses to which sub- 13 section (a) does not apply. In computing taxable in- 14 come, such deferred expenses shall be allowed as a de- 15 duction ratably over such period of not less than 60 16 months as may be selected by the taxpayer (beginning 17 with the month in which the taxpayer first realizes 18 benefits from such expenditures). Such deferred ex- 19 penses are expenditures properly chargeable to capital 20 account for purposes of section 1016(a)(1) (relating to 21 adjustments to basis of property). 22 ‘‘(2) TIME FOR AND SCOPE OF ELECTION.—The 23 election provided by paragraph (1) may be made for 24 any taxable year, but only if made not later than the 25 VerDate Sep 11 2014 23:45 Jun 30, 2023 Jkt 039200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6203 E:\BILLS\H3938.RH H3938 kjohnson on DSK79L0C42PROD with BILLS 6 •HR 3938 RH time prescribed by law for filing the return for such 1 taxable year (including extensions thereof). The meth- 2 od so elected, and the period selected by the taxpayer, 3 shall be adhered to in computing taxable income for 4 the taxable year for which the election is made and 5 for all subsequent taxable years unless, with the ap- 6 proval of the Secretary, a change to a different meth- 7 od (or to a different period) is authorized with respect 8 to part or all of such expenditures. The election shall 9 not apply to any expenditure paid or incurred during 10 any taxable year before the taxable year for which the 11 taxpayer makes the election. 12 ‘‘(c) ELECTION TO CAPITALIZE EXPENSES.—In the 13 case of a taxpayer which elects (at such time and in such 14 manner as the Secretary may provide) the application of 15 this subsection, subsections (a) and (b) shall not apply. 16 Such election shall not apply to any expenditure paid or 17 incurred during any taxable year before the taxable year 18 for which the taxpayer makes the election and may be made 19 with respect to part of the expenditures paid or incurred 20 during any taxable year only with the approval of the Sec- 21 retary. 22 ‘‘(d) LAND AND OTHER PROPERTY.—This section shall 23 not apply to any expenditure for the acquisition or im- 24 provement of land, or for the acquisition or improvement 25 VerDate Sep 11 2014 23:45 Jun 30, 2023 Jkt 039200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6203 E:\BILLS\H3938.RH H3938 kjohnson on DSK79L0C42PROD with BILLS 7 •HR 3938 RH of property to be used in connection with the research or 1 experimentation and of a character which is subject to the 2 allowance under section 167 (relating to allowance for de- 3 preciation, etc.) or section 611 (relating to allowance for 4 depletion); but for purposes of this section allowances under 5 section 167, and allowances under section 611, shall be con- 6 sidered as expenditures. 7 ‘‘(e) EXPLORATION EXPENDITURES.—This section 8 shall not apply to any expenditure paid or incurred for 9 the purpose of ascertaining the existence, location, extent, 10 or quality of any deposit of ore or other mineral (including 11 oil and gas). 12 ‘‘(f) SOFTWARE DEVELOPMENT.—For purposes of this 13 section, any amount paid or incurred in connection with 14 the development of any software shall be treated as a re- 15 search or experimental expenditure. 16 ‘‘(g) ONLY REASONABLE RESEARCH EXPENDITURES 17 ELIGIBLE.—This section shall apply to a research or exper- 18 imental expenditure only to the extent that the amount 19 thereof is reasonable under the circumstances. 20 ‘‘(h) COORDINATION WITH RESEARCH CREDIT.— 21 ‘‘(1) IN GENERAL.—Section 41(d)(1)(A) shall be 22 applied by substituting ‘expenses under section 174A’ 23 for ‘specified research or experimental expenditures 24 under section 174’. 25 VerDate Sep 11 2014 23:45 Jun 30, 2023 Jkt 039200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6203 E:\BILLS\H3938.RH H3938 kjohnson on DSK79L0C42PROD with BILLS 8 •HR 3938 RH ‘‘(2) DENIAL OF DOUBLE BENEFIT.— 1 ‘‘(A) IN GENERAL.—Section 280C(c) shall 2 not apply and the amount taken into account 3 under this section as research or experimental 4 expenditures shall be reduced by the amount of 5 the credit allowable under section 41(a). 6 ‘‘(B) ELECTION OF REDUCED CREDIT.— 7 ‘‘(i) IN GENERAL.—In the case of any 8 taxable year for which an election is made 9 under this subparagraph— 10 ‘‘(I) subparagraph (A) shall not 11 apply, and 12 ‘‘(II) the amount of the credit 13 under section 41(a) shall be the 14 amount determined under clause (ii). 15 ‘‘(ii) AMOUNT OF REDUCED CREDIT.— 16 The amount of credit determined under this 17 clause for any taxable year shall be the 18 amount equal to the excess of— 19 ‘‘(I) the amount of credit deter- 20 mined under section 41(a) without re- 21 gard to this subparagraph, over 22 ‘‘(II) the product of the amount 23 described in subclause (I), multiplied 24 by the rate of tax under section 11(b). 25 VerDate Sep 11 2014 23:45 Jun 30, 2023 Jkt 039200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6203 E:\BILLS\H3938.RH H3938 kjohnson on DSK79L0C42PROD with BILLS 9 •HR 3938 RH ‘‘(iii) ELECTION.—An election under 1 this subparagraph for any taxable year 2 shall be made not later than the time for fil- 3 ing the return of tax for such year (includ- 4 ing extensions), shall be made on such re- 5 turn, and shall be made in such manner as 6 the Secretary may prescribe. Such an elec- 7 tion, once made, shall be irrevocable. 8 ‘‘(C) CONTROLLED GROUPS.—Paragraph 9 (3) of section 280C(b) shall apply for purposes of 10 this paragraph. 11 ‘‘(i) COORDINATION WITH LONG-TERM CONTRACT 12 RULES.—For purposes of determining percentage of com- 13 pletion under section 460(b)(1)(A), any research or experi- 14 mental expenditures paid or incurred by the taxpayer in 15 connection with the taxpayer’s trade or business shall be 16 taken into account as a cost allocated to the contract for 17 the taxable year in which so paid or incurred. 18 ‘‘(j) COORDINATION WITH CERTAIN OTHER PROVI- 19 SIONS.—A reference to the corresponding provision of this 20 section shall be treated as included in any reference to sec- 21 tion 174 in section 56(b), 59(e), 144(a), 168(i), 170(e), 22 195(c), 263(a), 263A(c), 469(c), 543(d), 864(g), 993(d), 23 1016(a)(14), 1202(a), or 1298(e). 24 ‘‘(k) TERMINATION.— 25 VerDate Sep 11 2014 23:45 Jun 30, 2023 Jkt 039200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6203 E:\BILLS\H3938.RH H3938 kjohnson on DSK79L0C42PROD with BILLS 10 •HR 3938 RH ‘‘(1) IN GENERAL.—This section shall not apply 1 to amounts paid or incurred in taxable years begin- 2 ning after December 31, 2025. 3 ‘‘(2) CHANGE IN METHOD OF ACCOUNTING.— 4 Paragraph (1) (and the corresponding application of 5 section 174) shall be treated as a change in method 6 of accounting for purposes of section 481 and— 7 ‘‘(A) such change shall be treated as initi- 8 ated by the taxpayer, 9 ‘‘(B) such change shall be treated as made 10 with the consent of the Secretary, and 11 ‘‘(C) such change shall be applied only on 12 a cut-off basis for any research or experimental 13 expenditures paid or incurred in taxable years 14 beginning after December 31, 2025, and no ad- 15 justment under section 481(a) shall be made.’’. 16 (c) COORDINATION OF AMORTIZATION WITH CERTAIN 17 OTHER PROVISIONS.—Section 174, as amended by sub- 18 section (a), is amended by redesignating subsection (e) as 19 subsection (f) and by inserting after subsection (d) the fol- 20 lowing new subsection: 21 ‘‘(e) COORDINATION WITH CERTAIN OTHER PROVI- 22 SIONS.— 23 ‘‘(1) COORDINATION WITH ALTERNATIVE MIN- 24 IMUM TAX.—Sections 56(b)(2) and 59(e)(2)(B) shall 25 VerDate Sep 11 2014 23:45 Jun 30, 2023 Jkt 039200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6203 E:\BILLS\H3938.RH H3938 kjohnson on DSK79L0C42PROD with BILLS 11 •HR 3938 RH not apply to specified research or experimental ex- 1 penditures to which this section applies. 2 ‘‘(2) COORDINATION WITH BASIS ADJUSTMENT 3 RULES.—Section 1016(a)(14) shall be applied by sub- 4 stituting ‘an amortization deduction under section 5 174(a)’ for ‘deductions as deferred expenses under sec- 6 tion 174(b)(1)’. 7 ‘‘(3) COORDINATION WITH LONG-TERM CONTRACT 8 RULES.—For purposes of determining percentage of 9 completion under section 460(b)(1)(A), the amortiza- 10 tion deduction under subsection (a) shall be taken 11 into account as a cost allocated to the contract.’’. 12 (d) CONFORMING AMENDMENTS.— 13 (1) Section 13206 of Public Law 115-97 is 14 amended by striking subsection (b) (relating to 15 change in method of accounting). 16 (2) The table of sections for part VI of sub- 17 chapter B of chapter 1 is amended by inserting after 18 the item relating to section 174 the following new 19 item: 20 ‘‘Sec. 174A. Temporary rules for research and experimental expenditures.’’. (e) EFFECTIVE DATE.— 21 (1) IN GENERAL.—Except as otherwise provided 22 in this subsection, the amendments made by this sec- 23 tion shall apply to amounts paid or incurred in tax- 24 able years beginning after December 31, 2021. 25 VerDate Sep 11 2014 23:45 Jun 30, 2023 Jkt 039200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6203 E:\BILLS\H3938.RH H3938 kjohnson on DSK79L0C42PROD with BILLS 12 •HR 3938 RH (2) REPEAL OF SUPERCEDED CHANGE IN METH- 1 OD OF ACCOUNTING RULES.—The amendment made 2 by subsection (d)(1) shall take effect as if included in 3 Public Law 115-97. 4 (f) TRANSITION RULES.— 5 (1) ELECTION REGARDING TREATMENT AS 6 CHANGE IN METHOD OF ACCOUNTING.—In the case of 7 any taxpayer which (as of the date of the enactment 8 of this Act) had adopted a method of accounting pro- 9 vided by section 174 of the Internal Revenue Code of 10 1986 (as in effect prior to the amendments made by 11 this section) for the taxpayer’s first taxable year be- 12 ginning after December 31, 2021, and elects the ap- 13 plication of this paragraph— 14 (A) the amendments made by this section 15 shall be treated as a change in method of ac- 16 counting for purposes of section 481 of such 17 Code, 18 (B) such change shall be treated as initiated 19 by the taxpayer for the taxpayer’s immediately 20 succeeding taxable year, 21 [Text truncated for display. Full text available on Congress.gov.]