Title VII — Finance

“SEC. 174A. DOMESTIC RESEARCH OR EXPERIMENTAL EXPENDITURES.

“(a) Treatment as Expenses.—Notwithstanding section 263, there shall be allowed as a deduction any domestic research or experimental expenditures which are paid or incurred by the taxpayer during the taxable year.

“(b) Domestic Research or Experimental Expenditures.—For purposes of this section, the term ‘domestic research or experimental expenditures’ means research or experimental expenditures paid or incurred by the taxpayer in connection with the taxpayer’s trade or business other than such expenditures which are attributable to foreign research (within the meaning of section 41(d)(4)(F)).

“(c) Amortization of Certain Domestic Research or Experimental Expenditures.—

“(1) In general.—At the election of the taxpayer, made in accordance with regulations or other guidance provided by the Secretary, in the case of domestic research or experimental expenditures which would (but for subsection (a)) be chargeable to capital account but not chargeable to property of a character which is subject to the allowance under section 167 (relating to allowance for depreciation, etc.) or section 611 (relating to allowance for depletion), subsection (a) shall not apply and the taxpayer shall—

“(A) charge such expenditures to capital account, and

“(B) be allowed an amortization deduction of such expenditures ratably over such period of not less than 60 months as may be selected by the taxpayer (beginning with the month in which the taxpayer first realizes benefits from such expenditures).

“(2) Time for and scope of election.—The election provided by paragraph (1) may be made for any taxable year, but only if made not later than the time prescribed by law for filing the return for such taxable year (including extensions thereof). The method so elected, and the period selected by the taxpayer, shall be adhered to in computing taxable income for the taxable year for which the election is made and for all subsequent taxable years unless, with the approval of the Secretary, a change to a different method (or to a different period) is authorized with respect to part or all of such expenditures. The election shall not apply to any expenditure paid or incurred during any taxable year before the taxable year for which the taxpayer makes the election.

“(d) Special Rules.—

“(1) Land and other property.—This section shall not apply to any expenditure for the acquisition or improvement of land, or for the acquisition or improvement of property to be used in connection with the research or experimentation and of a character which is subject to the allowance under section 167 (relating to allowance for depreciation, etc.) or section 611 (relating to allowance for depletion); but for purposes of this section allowances under section 167, and allowances under section 611, shall be considered as expenditures.

“(2) Exploration expenditures.—This section shall not apply to any expenditure paid or incurred for the purpose of ascertaining the existence, location, extent, or quality of any deposit of ore or other mineral (including oil and gas).

“(3) Software development.—For purposes of this section, any amount paid or incurred in connection with the development of any software shall be treated as a research or experimental expenditure.”

“Sec. 174A. Domestic research or experimental expenditures.”.

“(v) provided—

“(I) on a fishing vessel, fish processing vessel, or fish tender vessel (as such terms are defined in section 2101 of title 46, United States Code), or

“(II) at a facility for the processing of fish for commercial use or consumption which—

“(aa) is located in the United States north of 50 degrees north latitude, and

“(bb) is not located in a metropolitan statistical area (within the meaning of section 143(k)(2)(B)), or”

“(n) Special Allowance for Qualified Production Property.—

“(1) In general.—In the case of any qualified production property of a taxpayer making an election under this subsection—

“(A) the depreciation deduction provided by section 167(a) for the taxable year in which such property is placed in service shall include an allowance equal to 100 percent of the adjusted basis of the qualified production property, and

“(B) the adjusted basis of the qualified production property shall be reduced by the amount of such deduction before computing the amount otherwise allowable as a depreciation deduction under this chapter for such taxable year and any subsequent taxable year.

“(2) Qualified production property.—For purposes of this subsection—

“(A) In general.—The term ‘qualified production property’ means that portion of any nonresidential real property—

“(i) to which this section applies,

“(ii) which is used by the taxpayer as an integral part of a qualified production activity,

“(iii) which is placed in service in the United States or any possession of the United States,

“(iv) the original use of which commences with the taxpayer,

“(v) the construction of which begins after January 19, 2025, and before January 1, 2029,

“(vi) which is designated by the taxpayer in the election made under this subsection, and

“(vii) which is placed in service before January 1, 2031.

“(B) Special rule for certain property not previously used in qualified production activities.—

“(i) In general.—In the case of property acquired by the taxpayer during the period described in subparagraph (A)(v), the requirements of clauses (iv) and (v) of subparagraph (A) shall be treated as satisfied if—

“(I) such property was not used in a qualified production activity (determined without regard to the second sentence of subparagraph (D)) by any person at any time during the period beginning on January 1, 2021, and ending on May 12, 2025,

“(II) such property was not used by the taxpayer at any time prior to such acquisition, and

“(III) the acquisition of such property meets the requirements of paragraphs (2)(A), (2)(B), (2)(C), and (3) of section 179(d).

“(ii) Written binding contracts.—For purposes of determining under clause (i)—

“(I) whether such property is acquired before the period described in subparagraph (A)(v), such property shall be treated as acquired not later than the date on which the taxpayer enters into a written binding contract for such acquisition, and

“(II) whether such property is acquired after such period, such property shall be treated as acquired not earlier than such date.

“(C) Exclusion of office space, etc.—The term ‘qualified production property’ shall not include that portion of any nonresidential real property which is used for offices, administrative services, lodging, parking, sales activities, research activities, software development or engineering activities, or other functions unrelated to the manufacturing, production, or refining of tangible personal property.

“(D) Qualified production activity.—The term ‘qualified production activity’ means the manufacturing, production, or refining of a qualified product. The activities of any taxpayer do not constitute manufacturing, production, or refining of a qualified product unless the activities of such taxpayer result in a substantial transformation of the property comprising the product.

“(E) Production.—The term ‘production’ shall not include activities other than agricultural production and chemical production.

“(F) Qualified product.—The term ‘qualified product’ means any tangible personal property if such property is not a food or beverage prepared in the same building as a retail establishment in which such property is sold.

“(G) Syndication.—For purposes of subparagraph (A)(iv), rules similar to the rules of subsection (k)(2)(E)(iii) shall apply.

“(H) Extension of placed in service date under certain circumstances.—The Secretary may extend the date under subparagraph (A)(vii) with respect to any property that meets the requirements of clauses (i) through (vi) of subparagraph (A) if the Secretary determines that an act of God (as defined in section 101(1) of the Comprehensive Environmental Response, Compensation, and Liability Act of 1980) prevents the taxpayer from placing such property in service before such date.

“(3) Deduction allowed in computing minimum tax.—For purposes of determining alternative minimum taxable income under section 55, the deduction under section 167 for qualified production property shall be determined under this section without regard to any adjustment under section 56.

“(4) Coordination with certain other provisions.—

“(A) Other special depreciation allowances.—For purposes of subsections (k)(7), (l)(3)(D), and (m)(2)(B)(iii)—

“(i) qualified production property shall be treated as a separate class of property, and

“(ii) the taxpayer shall be treated as having made an election under such subsections with respect to such class.

“(B) Alternative depreciation property.—The term ‘qualified production property’ shall not include any property to which the alternative depreciation system under subsection (g) applies. For purposes of subsection (g)(7)(A), qualified production property to which this subsection applies shall be treated as separate nonresidential real property.

“(5) Recapture.—If, at any time during the 10-year period beginning on the date that any qualified production property is placed in service by the taxpayer, such property ceases to be used as described in paragraph (2)(A)(ii) and is used by the taxpayer in a productive use not described in paragraph (2)(A)(ii)—

“(A) section 1245 shall be applied—

“(i) by treating such property as having been disposed of by the taxpayer as of the first time such property is so used in a productive use not described in paragraph (2)(A)(ii), and

“(ii) by treating the amount described in subparagraph (B) of section 1245(a)(1) with respect to such disposition as being not less than the amount described in subparagraph (A) of such section, and

“(B) the basis of the taxpayer in such property, and the taxpayer’s allowance for depreciation with respect to such property, shall be appropriately adjusted to take into account amounts recognized by reason of subparagraph (A).

“(6) Election.—

“(A) In general.—An election under this subsection for any taxable year shall—

“(i) specify the nonresidential real property subject to the election and the portion of such property designated under paragraph (2)(A)(vi), and

“(ii) except as otherwise provided by the Secretary, be made on the taxpayer’s return of the tax imposed by this chapter for the taxable year.

“(B) Election.—Any election made under this subsection, and any specification contained in any such election, may not be revoked except with the consent of the Secretary (and the Secretary shall provide such consent only in extraordinary circumstances).

“(7) Regulations.—The Secretary shall issue such regulations or other guidance as may be necessary or appropriate to carry out the purposes of this subsection, including regulations or other guidance—

“(A) providing rules for regarding what constitutes substantial transformation of property which are consistent with guidance provided under section 954(d), and

“(B) providing for the application of paragraph (5) with respect to a change in use described in such paragraph by a transferee following a fully or partially tax free transfer of qualified production property.”

“(G) any qualified production property (as defined in section 168(n)(2)).”

“(1) airports and spaceports,”

“(C) Special rule for spaceport ground leases.—For purposes of subparagraph (A), spaceport property located on land leased by a governmental unit from the United States shall not fail to be treated as owned by a governmental unit if the requirements of this paragraph are met by the lease and any subleases of the property.”

“(p) Spaceport.—

“(1) In general.—For purposes of subsection (a)(1), the term ‘spaceport’ means any facility located at or in close proximity to a launch site or reentry site used for—

“(A) manufacturing, assembling, or repairing spacecraft, space cargo, other facilities described in this paragraph, or any component of the foregoing,

“(B) flight control operations,

“(C) providing launch services and reentry services, or

“(D) transferring crew, spaceflight participants, or space cargo to or from spacecraft.

“(2) Additional terms.—For purposes of paragraph (1)—

“(A) Space cargo.—The term ‘space cargo’ includes satellites, scientific experiments, other property transported into space, and any other type of payload, whether or not such property returns from space.

“(B) Spacecraft.—The term ‘spacecraft’ means a launch vehicle or a reentry vehicle.

“(C) Other terms.—The terms ‘launch site’, ‘crew’, ‘space flight participant’, ‘launch services’, ‘launch vehicle’, ‘payload’, ‘reentry services’, ‘reentry site’, a ‘reentry vehicle’ shall have the respective meanings given to such terms by section 50902 of title 51, United States Code (as in effect on the date of enactment of this subsection).

“(3) Public use requirement.—A facility shall not be required to be available for use by the general public to be treated as a spaceport for purposes of this section.

“(4) Manufacturing facilities and industrial parks allowed.—With respect to spaceports, subsection (c)(2)(E) shall not apply to spaceport property described in paragraph (1)(A).”

“(F) Exception for spaceports.—A bond shall not be treated as federally guaranteed merely because of the payment of rent, user fees, or other charges by the United States (or any agency or instrumentality thereof) in exchange for the use of the spaceport by the United States (or any agency or instrumentality thereof).”

“(b) Dollar Limitation.—

“(1) In general.—The credit allowable under subsection (a) for any taxable year shall not exceed $500,000 ($600,000 in the case of an eligible small business).

“(2) Inflation adjustment.—In the case of any taxable year beginning after 2026, the $500,000 and $600,000 amounts in paragraph (1) shall each be increased by an amount equal to—

“(A) such dollar amount, multiplied by

“(B) the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which the taxable year begins, determined by substituting ‘calendar year 2025’ for ‘calendar year 2016’ in subparagraph (A)(ii) thereof.”

“(4) Eligible small business.—The term ‘eligible small business’ means a business that meets the gross receipts test of section 448(c), determined—

“(A) by substituting ‘5-taxable-year’ for ‘3-taxable-year’ in paragraph (1) thereof, and

“(B) by substituting ‘5-year’ for ‘3-year’ in paragraph (3)(A) thereof.”

“(C) Treatment of jointly owned or operated child care facility.—A facility shall not fail to be treated as a qualified child care facility of the taxpayer merely because such facility is jointly owned or operated by the taxpayer and other persons.”

“(g) Regulations and Guidance.—The Secretary shall issue such regulations or other guidance as may be necessary to carry out the purposes of this section, including guidance to carry out the purposes of paragraphs (1)(A)(iii) and (2)(C) of subsection (c).”

“(4) Portion of credit refundable.—So much of the credit allowed under paragraph (1) as does not exceed $5,000 shall be treated as a credit allowed under subpart C and not as a credit allowed under this subpart.”

“(h) Adjustments for Inflation.—

“(1) In general.—In the case of a taxable year beginning after December 31, 2002, each of the dollar amounts in paragraphs (3) and (4) of subsection (a) and paragraphs (1) and (2)(A)(i) of subsection (b) shall be increased by an amount equal to—

“(A) such dollar amount, multiplied by

“(B) the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which the taxable year begins, determined by substituting ‘calendar year 2001’ for ‘calendar year 2016’ in subparagraph (A)(ii) thereof.

“(2) Rounding.—If any amount as increased under paragraph (1) is not a multiple of $10, such amount shall be rounded to the nearest multiple of $10.

“(3) Special rule for refundable portion.—In the case of the dollar amount in subsection (a)(4), paragraph (1) shall be applied—

“(A) by substituting ‘2025’ for ‘2002’ in the matter preceding subparagraph (A), and

“(B) by substituting ‘calendar year 2024’ for ‘calendar year 2001’ in subparagraph (B) thereof.”

“(2) Applicable percentage defined.—For purposes of paragraph (1), the term ‘applicable percentage’ means 50 percent—

“(A) reduced (but not below 35 percent) by 1 percentage point for each $2,000 or fraction thereof by which the taxpayer’s adjusted gross income for the taxable year exceeds $15,000, and

“(B) further reduced (but not below 20 percent) by 1 percentage point for each $2,000 ($4,000 in the case of a joint return) or fraction thereof by which the taxpayer’s adjusted gross income for the taxable year exceeds $75,000 ($150,000 in the case of a joint return).”

“(C) Certain postsecondary credentialing expenses.—The term ‘qualified higher education expenses’ includes qualified postsecondary credentialing expenses (as defined in subsection (f)).”

“(f) Qualified Postsecondary Credentialing Expenses.—For purposes of this section—

“(1) In general.—The term ‘qualified postsecondary credentialing expenses’ means—

“(A) tuition, fees, books, supplies, and equipment required for the enrollment or attendance of a designated beneficiary in a recognized postsecondary credential program, or any other expense incurred in connection with enrollment in or attendance at a recognized postsecondary credential program if such expense would, if incurred in connection with enrollment or attendance at an eligible educational institution, be covered under subsection (e)(3)(A),

“(B) fees for testing if such testing is required to obtain or maintain a recognized postsecondary credential, and

“(C) fees for continuing education if such education is required to maintain a recognized postsecondary credential.

“(2) Recognized postsecondary credential program.—The term ‘recognized postsecondary credential program’ means any program to obtain a recognized postsecondary credential if—

“(A) such program is included on a State list prepared under section 122(d) of the Workforce Innovation and Opportunity Act (29 U.S.C. 3152(d)),

“(B) such program is listed in the public directory of the Web Enabled Approval Management System (WEAMS) of the Veterans Benefits Administration, or successor directory such program,

“(C) an examination (developed or administered by an organization widely recognized as providing reputable credentials in the occupation) is required to obtain or maintain such credential and such organization recognizes such program as providing training or education which prepares individuals to take such examination, or

“(D) such program is identified by the Secretary, after consultation with the Secretary of Labor, as being a reputable program for obtaining a recognized postsecondary credential for purposes of this subparagraph.

“(3) Recognized postsecondary credential.—The term ‘recognized postsecondary credential’ means—

“(A) any postsecondary employment credential that is industry recognized and is—

“(i) any postsecondary employment credential issued by a program that is accredited by the Institute for Credentialing Excellence, the National Commission on Certifying Agencies, or the American National Standards Institute,

“(ii) any postsecondary employment credential that is included in the Credentialing Opportunities On-Line (COOL) directory of credentialing programs (or successor directory) maintained by the Department of Defense or by any branch of the Armed Forces, or

“(iii) any postsecondary employment credential identified for purposes of this clause by the Secretary, after consultation with the Secretary of Labor, as being industry recognized,

“(B) any certificate of completion of an apprenticeship that is registered and certified with the Secretary of Labor under the Act of August 16, 1937 (commonly known as the ‘National Apprenticeship Act’; 50 Stat. 664, chapter 663; 29 U.S.C. 50 et seq.),

“(C) any occupational or professional license issued or recognized by a State or the Federal Government (and any certification that satisfies a condition for obtaining such a license), and

“(D) any recognized postsecondary credential as defined in section 3(52) of the Workforce Innovation and Opportunity Act (29 U.S.C. 3102(52)), provided through a program described in paragraph (2)(A).”

“SEC. 4968. EXCISE TAX BASED ON INVESTMENT INCOME OF PRIVATE COLLEGES AND UNIVERSITIES.

“(a) Tax Imposed.—There is hereby imposed on each applicable educational institution for the taxable year a tax equal to the applicable percentage of the net investment income of such institution for the taxable year.

“(b) Applicable Percentage.—For purposes of this section, the term ‘applicable percentage’ means—

“(1) 1.4 percent in the case of an institution with a student adjusted endowment of at least $500,000, and not in excess of $750,000,

“(2) 4 percent in the case of an institution with a student adjusted endowment in excess of $750,000, and not in excess of $2,000,000, and

“(3) 8 percent in the case of an institution with a student adjusted endowment in excess of $2,000,000.

“(c) Applicable Educational Institution.—For purposes of this subchapter, the term ‘applicable educational institution’ means an eligible educational institution (as defined in section 25A(f)(2))—

“(1) which had at least 3,000 tuition-paying students during the preceding taxable year,

“(2) more than 50 percent of the tuition-paying students of which are located in the United States,

“(3) the student adjusted endowment of which is at least $500,000, and

“(4) which is not described in the first sentence of section 511(a)(2)(B) (relating to State colleges and universities).

“(d) Student Adjusted Endowment.—For purposes of this section, the term ‘student adjusted endowment’ means, with respect to any institution for any taxable year—

“(1) the aggregate fair market value of the assets of such institution (determined as of the end of the preceding taxable year), other than those assets which are used directly in carrying out the institution’s exempt purpose, divided by

“(2) the number of students of such institution.

“(e) Determination of Number of Students.—For purposes of subsections (c) and (d), the number of students of an institution (including for purposes of determining the number of students at a particular location) shall be based on the daily average number of full-time students attending such institution (with part-time students taken into account on a full-time student equivalent basis).

“(f) Net Investment Income.—For purposes of this section—

“(1) In general.—Net investment income shall be determined under rules similar to the rules of section 4940(c).

“(2) Override of certain regulatory exceptions.—

“(A) Student loan interest.—Net investment income shall be determined by taking into account any interest income from a student loan made by the applicable educational institution (or any related organization) as gross investment income.

“(B) Federally-subsidized royalty income.—

“(i) In general.—Net investment income shall be determined by taking into account any Federally-subsidized royalty income as gross investment income.

“(ii) Federally-subsidized royalty income.—For purposes of this subparagraph—

“(I) In general.—The term ‘Federally-subsidized royalty income’ means any otherwise-regulatory-exempt royalty income if any Federal funds were used in the research, development, or creation of the patent, copyright, or other intellectual or intangible property from which such royalty income is derived.

“(II) Otherwise-regulatory-exempt royalty income.—For purposes of this subparagraph, the term ‘otherwise-regulatory-exempt royalty income’ means royalty income which (but for this subparagraph) would not be taken into account as gross investment income by reason of being derived from patents, copyrights, or other intellectual or intangible property which resulted from the work of students or faculty members in their capacities as such with the applicable educational institution.

“(III) Federal funds.—The term ‘Federal funds’ includes any grant made by, and any payment made under any contract with, any Federal agency to the applicable educational institution, any related organization, or any student or faculty member referred to in subclause (II).

“(g) Assets and Net Investment Income of Related Organizations.—

“(1) In general.—For purposes of subsections (d) and (f), assets and net investment income of any related organization with respect to an educational institution shall be treated as assets and net investment income, respectively, of the educational institution, except that—

“(A) no such amount shall be taken into account with respect to more than 1 educational institution, and

“(B) unless such organization is controlled by such institution or is described in section 509(a)(3) with respect to such institution for the taxable year, assets and net investment income which are not intended or available for the use or benefit of the educational institution shall not be taken into account.

“(2) Related organization.—For purposes of this subsection, the term ‘related organization’ means, with respect to an educational institution, any organization which—

“(A) controls, or is controlled by, such institution,

“(B) is controlled by 1 or more persons which also control such institution, or

“(C) is a supported organization (as defined in section 509(f)(3)), or an organization described in section 509(a)(3), during the taxable year with respect to such institution.

“(h) Regulations.—The Secretary shall prescribe such regulations or other guidance as may be necessary to prevent avoidance of the tax under this section, including regulations or other guidance to prevent avoidance of such tax through the restructuring of endowment funds or other arrangements designed to reduce or eliminate the value of net investment income or assets subject to the tax imposed by this section.”

“(o) Requirement to Report Certain Information With Respect to Excise Tax Based on Investment Income of Private Colleges and Universities.—Each applicable educational institution described in section 4968(c) which is subject to the requirements of subsection (a) shall include on the return required under subsection (a)—

“(1) the number of tuition-paying students taken into account under section 4968(c), and

“(2) the number of students of such institution (determined under the rules of section 4968(e)).”

“(2) Covered employee.—For purposes of this section, the term ‘covered employee’ means any employee of an applicable tax-exempt organization (or any predecessor of such an organization) and any former employee of such an organization (or predecessor) who was such an employee during any taxable year beginning after December 31, 2016.”

“(A) In general.—Any charitable contribution otherwise allowable (without regard to this subparagraph) as a deduction under this section for any taxable year, other than any contribution to which subparagraph (B) or (C) applies, shall be allowed only to the extent that the aggregate of such contributions—

“(i) exceeds 1 percent of the taxpayer’s taxable income for the taxable year, and

“(ii) does not exceed 10 percent of the taxpayer’s taxable income for the taxable year.”

“(2) Corporations.—

“(A) In general.—Any charitable contribution taken into account under subsection (b)(2)(A) for any taxable year which is not allowed as a deduction by reason of clause (ii) thereof shall be taken into account as a charitable contribution for the succeeding taxable year, except that, for purposes of determining under this subparagraph whether such contribution is allowed in such succeeding taxable year, contributions in such succeeding taxable year (determined without regard to this paragraph) shall be taken into account under subsection (b)(2)(A) before any contribution taken into account by reason of this paragraph.

“(B) 5-year carryforward.—No charitable contribution may be carried forward under subparagraph (A) to any taxable year following the fifth taxable year after the taxable year in which the charitable contribution was first taken into account. For purposes of the preceding sentence, contributions shall be treated as allowed on a first-in first-out basis.

“(C) Contributions disallowed by 1-percent floor carried forward only from years in which 10 percent limitation is exceeded.—In the case of any taxable year from which a charitable contribution is carried forward under subparagraph (A) (determined without regard this subparagraph), subparagraph (A) shall be applied by substituting ‘clause (i) or (ii)’ for ‘clause (ii)’.

“(D) Special rule for net operating loss carryovers.—The amount of charitable contributions carried forward under subparagraph (A) shall be reduced to the extent that such carryfoward would (but for this subparagraph) reduce taxable income (as computed for purposes of the second sentence of section 172(b)(2)) and increase a net operating loss carryover under section 172 to a succeeding taxable year.”

“(1) $13.25, or”

“(h) Inflation Adjustment.—In the case of any calendar year after 2026, the dollar amount in subsection (a) shall be increased by an amount equal to—

“(1) such dollar amount, multiplied by

“(2) the cost-of-living adjustment determined under section 1(f)(3) for such calendar year, determined by substituting ‘calendar year 2025’ for ‘calendar year 2016’ in subparagraph (A)(ii) thereof.

“(C) Qualified sound recording production.—Paragraph (1) shall not apply to so much of the aggregate cost of any qualified sound recording production, or to so much of the aggregate, cumulative cost of all such qualified sound recording productions in the taxable year, as exceeds $150,000.”

“(f) Qualified Sound Recording Production.—For purposes of this section, the term ‘qualified sound recording production’ means a sound recording (as defined in section 101 of title 17, United States Code) produced and recorded in the United States.”

“SEC. 139L. INTEREST ON LOANS SECURED BY RURAL OR AGRICULTURAL REAL PROPERTY.

“(a) In General.—Gross income shall not include 25 percent of the interest received by a qualified lender on any qualified real estate loan.

“(b) Qualified Lender.—For purposes of this section, the term ‘qualified lender’ means—

“(1) any bank or savings association the deposits of which are insured under the Federal Deposit Insurance Act (12 U.S.C. 1811 et seq.),

“(2) any State- or federally-regulated insurance company,

“(3) any entity wholly owned, directly or indirectly, by a company that is treated as a bank holding company for purposes of section 8 of the International Banking Act of 1978 (12 U.S.C. 3106) if—

“(A) such entity is organized, incorporated, or established under the laws of the United States or any State, and

“(B) the principal place of business of such entity is in the United States (including any territory of the United States),

“(4) any entity wholly owned, directly or indirectly, by a company that is considered an insurance holding company under the laws of any State if such entity satisfies the requirements described in subparagraphs (A) and (B) of paragraph (3), and

“(5) with respect to interest received on a qualified real estate loan secured by real estate described in subsection (c)(3)(A), any federally chartered instrumentality of the United States established under section 8.1(a) of the Farm Credit Act of 1971 (12 U.S.C. 2279aa-1(a)).

“(c) Qualified Real Estate Loan.—For purposes of this section—

“(1) In general.—The term ‘qualified real estate loan’ means any loan—

“(A) secured by—

“(i) rural or agricultural real estate, or

“(ii) a leasehold mortgage (with a status as a lien) on rural or agricultural real estate,

“(B) made to a person other than a specified foreign entity (as defined in section 7701(a)(51)), and

“(C) made after the date of the enactment of this section.

“(2) Refinancings.—For purposes of subparagraphs (A) and (C) of paragraph (1), a loan shall not be treated as made after the date of the enactment of this section to the extent that the proceeds of such loan are used to refinance a loan which was made on or before the date of the enactment of this section (or, in the case of any series of refinancings, the original loan was made on or before such date).

“(3) Rural or agricultural real estate.—The term ‘rural or agricultural real estate’ means—

“(A) any real property which is substantially used for the production of one or more agricultural products,

“(B) any real property which is substantially used in the trade or business of fishing or seafood processing, and

“(C) any aquaculture facility.

“(4) Aquaculture facility.—The term ‘aquaculture facility’ means any land, structure, or other appurtenance that is used for aquaculture (including any hatchery, rearing pond, raceway, pen, or incubator).

“(d) Coordination With Section 265.—In the case of any qualified real estate loan, section 265 shall be applied—

“(1) by treating any qualified real estate loan for purposes of subsection (a)(2) thereof as an obligation the interest on which is wholly exempt from the taxes imposed by this subtitle,

“(2) by substituting ‘25 percent of the interest on indebtedness’ for ‘Interest on indebtedness’ in such subsection (a)(2),

“(3) by treating 25 percent of the adjusted basis of any qualified real estate loan as adjusted basis of a tax-exempt obligation described in subsection (b)(4)(B) thereof, and

“(4) by substituting ‘25 percent of the amount of such indebtedness’ for ‘the amount of such indebtedness’ in subsection (b)(6)(A)(a)(ii) thereof.”

“Sec. 139L. Interest on loans secured by rural or agricultural real property.”.

“(a) Rate.—There shall be levied, collected, and paid on firearms transferred a tax at the rate of—

“(1) $200 for each firearm transferred in the case of a machinegun or a destructive device, and

“(2) $0 for any firearm transferred which is not described in paragraph (1).”

“(a) Rate.—There shall be levied, collected, and paid upon the making of a firearm a tax at the rate of—

“(1) $200 for each firearm made in the case of a machinegun or a destructive device, and

“(2) $0 for any firearm made which is not described in paragraph (1).”

“SEC. 1062. GAIN FROM THE SALE OR EXCHANGE OF QUALIFIED FARMLAND PROPERTY TO QUALIFIED FARMERS.

“(a) Election to Pay Tax in Installments.—In the case of gain from the sale or exchange of qualified farmland property to a qualified farmer, at the election of the taxpayer, the portion of the net income tax of such taxpayer for the taxable year of the sale or exchange which is equal to the applicable net tax liability shall be paid in 4 equal installments.

“(b) Rules Relating to Installment Payments.—

“(1) Date for payment of installments.—If an election is made under subsection (a), the first installment shall be paid on the due date (determined without regard to any extension of time for filing the return) for the return of tax for the taxable year in which the sale or exchange occurs and each succeeding installment shall be paid on the due date (as so determined) for the return of tax for the taxable year following the taxable year with respect to which the preceding installment was made.

“(2) Acceleration of payment.—

“(A) In general.—If there is an addition to tax for failure to timely pay any installment required under this section, then the unpaid portion of all remaining installments shall be due on the date of such failure.

“(B) Individuals.—In the case of an individual, if the individual dies, then the unpaid portion of all remaining installment shall be paid on the due date for the return of tax for the taxable year in which the taxpayer dies.

“(C) C corporations.—In the case of a taxpayer which is a C corporation, trust, or estate, if there is a liquidation or sale of substantially all the assets of the taxpayer (including in a title 11 or similar case), a cessation of business by the taxpayer (in the case of a C corporation), or any similar circumstance, then the unpaid portion of all remaining installments shall be due on the date of such event (or in the case of a title 11 or similar case, the day before the petition is filed). The preceding sentence shall not apply to the sale of substantially all the assets of a taxpayer to a buyer if such buyer enters into an agreement with the Secretary under which such buyer is liable for the remaining installments due under this subsection in the same manner as if such buyer were the taxpayer.

“(3) Proration of deficiency to installments.—If an election is made under subsection (a) to pay the applicable net tax liability in installments and a deficiency has been assessed with respect to such applicable net tax liability, the deficiency shall be prorated to the installments payable under subsection (a). The part of the deficiency so prorated to any installment the date for payment of which has not arrived shall be collected at the same time as, and as a part of, such installment. The part of the deficiency so prorated to any installment the date for payment of which has arrived shall be paid upon notice and demand from the Secretary. This section shall not apply if the deficiency is due to negligence, to intentional disregard of rules and regulations, or to fraud with intent to evade tax.

“(c) Election.—

“(1) In general.—Any election under subsection (a) shall be made not later than the due date for the return of tax for the taxable year described in subsection (a).

“(2) Partnerships and s corporations.—In the case of a sale or exchange described in subsection (a) by a partnership or S corporation, the election under subsection (a) shall be made at the partner or shareholder level. The Secretary may prescribe such regulations or other guidance as necessary to carry out the purposes of this paragraph.

“(d) Definitions.—For purposes of this section—

“(1) Applicable net tax liability.—

“(A) In general.—The applicable net tax liability with respect to the sale or exchange of any property described in subsection (a) is the excess (if any) of—

“(i) such taxpayer’s net income tax for the taxable year, over

“(ii) such taxpayer’s net income tax for such taxable year determined without regard to any gain recognized from the sale or exchange of such property.

“(B) Net income tax.—The term ‘net income tax’ means the regular tax liability reduced by the credits allowed under subparts A, B, and D of part IV of subchapter A.

“(2) Qualified farmland property.—

“(A) In general.—The term ‘qualified farmland property’ means real property located in the United States—

“(i) which—

“(I) has been used by the taxpayer as a farm for farming purposes, or

“(II) leased by the taxpayer to a qualified farmer for farming purposes,

“(ii) which is subject to a covenant or other legally enforceable restriction which prohibits the use of such property other than as a farm for farming purposes for any period before the date that is 10 years after the date of the sale or exchange described in subsection (a).

“(B) Farm; farming purposes.—The terms ‘farm’ and ‘farming purposes’ have the respective meanings given such terms under section 2032A(e).

“(3) Qualified farmer.—The term ‘qualified farmer’ means any individual who is actively engaged in farming (within the meaning of subsections (b) and (c) of section 1001 of the Food Security Act of 1986 (7 U.S.C. 1308–1(b) and (c))).

“(e) Return Requirement.—A taxpayer making an election under subsection (a) shall include with the return for the taxable year of the sale or exchange described in subsection (a) a copy of the covenant or other legally enforceable restriction described in subsection (d)(2)(A)(ii).”

“Sec. 1062. Gain from the sale or exchange of qualified farmland property to qualified farmers.”.

“(C) Any oil furnace or hot water boiler which—

“(i) meets or exceeds 2021 Energy Star efficiency criteria, and

“(ii) is rated by the manufacturer for use with fuel blends at least 20 percent of the volume of which consists of an eligible fuel.”

“(3) Restrictions relating to prohibited foreign entities.—

“(A) In general.—No credit shall be determined under subsection (a) for any taxable year beginning after the date of enactment of this paragraph if the taxpayer is a specified foreign entity (as defined in section 7701(a)(51)(B)).

“(B) Other prohibited foreign entities.—No credit shall be determined under subsection (a) for any taxable year beginning after the date which is 2 years after the date of enactment of this paragraph if the taxpayer is a foreign-influenced entity (as defined in section 7701(a)(51)(D), without regard to clause (i)(II) thereof).”

“(51) Prohibited foreign entity.—

“(A) In general.—

“(i) Definition.—The term ‘prohibited foreign entity’ means a specified foreign entity or a foreign-influenced entity.

“(ii) Determination.—

“(I) In general.—Subject to subclause (II), for any taxable year, the determination as to whether an entity is a specified foreign entity or foreign-influenced entity shall be made as of the last day of such taxable year.

“(II) Initial taxable year.—For purposes of the first taxable year beginning after the date of enactment of this paragraph, the determination as to whether an entity is a specified foreign entity described in clauses (i) through (iv) of subparagraph (B) shall be made as of the first day of such taxable year.

“(B) Specified foreign entity.—For purposes of this paragraph, the term ‘specified foreign entity’ means—

“(i) a foreign entity of concern described in subparagraph (A), (B), (D), or (E) of section 9901(8) of the William M. (Mac) Thornberry National Defense Authorization Act for Fiscal Year 2021 (Public Law 116–283; 15 U.S.C. 4651),

“(ii) an entity identified as a Chinese military company operating in the United States in accordance with section 1260H of the William M. (Mac) Thornberry National Defense Authorization Act for Fiscal Year 2021 (Public Law 116–283; 10 U.S.C. 113 note),

“(iii) an entity included on a list required by clause (i), (ii), (iv), or (v) of section 2(d)(2)(B) of Public Law 117–78 (135 Stat. 1527),

“(iv) an entity specified under section 154(b) of the National Defense Authorization Act for Fiscal Year 2024 (Public Law 118–31; 10 U.S.C. note prec. 4651), or

“(v) a foreign-controlled entity.

“(C) Foreign-controlled entity.—For purposes of subparagraph (B), the term ‘foreign-controlled entity’ means—

“(i) the government (including any level of government below the national level) of a covered nation,

“(ii) an agency or instrumentality of a government described in clause (i),

“(iii) a person who is a citizen or national of a covered nation, provided that such person is not an individual who is a citizen, national, or lawful permanent resident of the United States,

“(iv) an entity or a qualified business unit (as defined in section 989(a)) incorporated or organized under the laws of, or having its principal place of business in, a covered nation, or

“(v) an entity (including subsidiary entities) controlled (as determined under subparagraph (G)) by an entity described in clause (i), (ii), (iii), or (iv).

“(D) Foreign-influenced entity.—

“(i) In general.—For purposes of subparagraph (A), the term ‘foreign-influenced entity’ means an entity—

“(I) with respect to which, during the taxable year—

“(aa) a specified foreign entity has the direct authority to appoint a covered officer of such entity,

“(bb) a single specified foreign entity owns at least 25 percent of such entity,

“(cc) one or more specified foreign entities own in the aggregate at least 40 percent of such entity, or

“(dd) at least 15 percent of the debt of such entity has been issued, in the aggregate, to 1 or more specified foreign entities, or

“(II) which, during the previous taxable year, made a payment to a specified foreign entity pursuant to a contract, agreement, or other arrangement which entitles such specified foreign entity (or an entity related to such specified foreign entity) to exercise effective control over—

“(aa) any qualified facility or energy storage technology of the taxpayer (or any person related to the taxpayer), or

“(bb) with respect to any eligible component produced by the taxpayer (or any person related to the taxpayer)—

“(AA) the extraction, processing, or recycling of any applicable critical mineral, or

“(BB) the production of an eligible component which is not an applicable critical mineral.

“(ii) Effective control.—

“(I) In general.—

“(aa) General rule.—Subject to subclause (II), for purposes of clause (i)(II), the term ‘effective control’ means 1 or more agreements or arrangements similar to those described in subclauses (II) and (III) which provide 1 or more contractual counterparties of a taxpayer with specific authority over key aspects of the production of eligible components, energy generation in a qualified facility, or energy storage which are not included in the measures of control through authority, ownership, or debt held which are described in clause (i)(I).

“(bb) Guidance.—The Secretary shall issue such guidance as is necessary to carry out the purposes of this clause, including the establishment of rules to prevent entities from evading, circumventing, or abusing the application of the restrictions described subparagraph (C) and subclauses (II) and (III) of this clause through a contract, agreement, or other arrangement.

“(II) Application of rules prior to issuance of guidance.—During any period prior to the date that the guidance described in subclause (I)(bb) is issued by the Secretary, for purposes of clause (i)(II), the term ‘effective control’ means the unrestricted contractual right of a contractual counterparty to—

“(aa) determine the quantity or timing of production of an eligible component produced by the taxpayer,

“(bb) determine the amount or timing of activities related to the production of electricity undertaken at a qualified facility of the taxpayer or the storage of electrical energy in energy storage technology of the taxpayer,

“(cc) determine which entity may purchase or use the output of a production unit of the taxpayer that produces eligible components,

“(dd) determine which entity may purchase or use the output of a qualified facility of the taxpayer,

“(ee) restrict access to data critical to production or storage of energy undertaken at a qualified facility of the taxpayer, or to the site of production or any part of a qualified facility or energy storage technology of the taxpayer, to the personnel or agents of such contractual counterparty, or

“(ff) on an exclusive basis, maintain, repair, or operate any plant or equipment which is necessary to the production by the taxpayer of eligible components or electricity.

“(III) Licensing and other agreements.—

“(aa) In general.—In addition to subclause (II), for purposes of clause (i)(II), the term ‘effective control’ means, with respect to a licensing agreement for the provision of intellectual property (or any other contract, agreement or other arrangement entered into with a contractual counterparty related to such licensing agreement) with respect to a qualified facility, energy storage technology, or the production of an eligible component, any of the following:

“(AA) A contractual right retained by the contractual counterparty to specify or otherwise direct 1 or more sources of components, subcomponents, or applicable critical minerals utilized in a qualified facility, energy storage technology, or in the production of an eligible component.

“(BB) A contractual right retained by the contractual counterparty to direct the operation of any qualified facility, any energy storage technology, or any production unit that produces an eligible component.

“(CC) A contractual right retained by the contractual counterparty to limit the taxpayer’s utilization of intellectual property related to the operation of a qualified facility or energy storage technology, or in the production of an eligible component.

“(DD) A contractual right retained by the contractual counterparty to receive royalties under the licensing agreement or any similar agreement (or payments under any related agreement) beyond the 10th year of the agreement (including modifications or extensions thereof).

“(EE) A contractual right retained by the contractual counterparty to direct or otherwise require the taxpayer to enter into an agreement for the provision of services for a duration longer than 2 years (including any modifications or extensions thereof).

“(FF) Such contract, agreement, or other arrangement does not provide the licensee with all the technical data, information, and know-how necessary to enable the licensee to produce the eligible component or components subject to the contract, agreement, or other arrangement without further involvement from the contractual counterparty or a specified foreign entity.

“(GG) Such contract, agreement, or other arrangement was entered into (or modified) on or after the date of enactment of this paragraph.

“(bb) Exception.—

“(AA) In general.—Item (aa) shall not apply in the case of a bona fide purchase or sale of intellectual property.

“(BB) Bona fide purchase or sale.—For purposes of item (aa), any purchase or sale of intellectual property where the agreement provides that ownership of the intellectual property reverts to the contractual counterparty after a period of time shall not be considered a bona-fide purchase or sale.

“(IV) Persons related to the taxpayer.—For purposes of subclauses (I), (II), and (III), the term ‘taxpayer’ shall include any person related to the taxpayer.

“(V) Contractual counterparty.—For purposes of this clause, the term ‘contractual counterparty’ means an entity with which the taxpayer has entered into a contract, agreement, or other arrangement.

“(iii) Guidance.—Not later than December 31, 2026, the Secretary shall issue such guidance as is necessary to carry out the purposes of this subparagraph, including establishment of rules to prevent entities from evading, circumventing, or abusing the application of the restrictions against impermissible technology licensing arrangements with specified foreign entities, such as through temporary transfers of intellectual property, retention by a specified foreign entity of a reversionary interest in transferred intellectual property, or otherwise.

“(E) Publicly traded entities.—

“(i) In general.—

“(I) Nonapplication of certain foreign-controlled entity rules.—Subparagraph (C)(v) shall not apply in the case of any entity the securities of which are regularly traded on—

“(aa) a national securities exchange which is registered with the Securities and Exchange Commission,

“(bb) the national market system established pursuant to section 11A of the Securities and Exchange Act of 1934, or

“(cc) any other exchange or other market which the Secretary has determined in guidance issued under section 1296(e)(1)(A)(ii) has rules adequate to carry out the purposes of part VI of subchapter P of chapter 1 of subtitle A.

“(II) Nonapplication of certain foreign-influenced entity rules.—Subparagraph (D)(i)(I) shall not apply in the case of any entity—

“(aa) the securities of which are regularly traded in a manner described in subclause (I), or

“(bb) for which not less than 80 percent of the equity securities of such entity are owned directly or indirectly by an entity which is described in item (aa).

“(III) Exclusion of exchanges or markets in covered nations.—Subclause (I)(cc) shall not apply with respect to any exchange or market which—

“(aa) is incorporated or organized under the laws of a covered nation, or

“(bb) has its principal place of business in a covered nation.

“(ii) Additional foreign-controlled entity requirements for publicly traded companies.—In the case of an entity described in clause (i)(I), such entity shall be deemed to be a foreign-controlled entity under subparagraph (C)(v) if such entity is controlled (as determined under subparagraph (G)) by—

“(I) 1 or more specified foreign entities (as determined without regard to subparagraph (B)(v)) that are each required to report their beneficial ownership pursuant to a rule described in clause (iii)(I)(bb), or

“(II) 1 or more foreign-controlled entities (as determined without regard to subparagraph (C)(v)) that are each required to report their beneficial ownership pursuant to a rule described in such clause.

“(iii) Additional foreign-influenced entity requirements for publicly traded companies.—In the case of an entity described in clause (i)(II), such entity shall be deemed to be a foreign-influenced entity under subparagraph (D)(i)(I) if—

“(I) during the taxable year—

“(aa) a specified foreign entity has the authority to appoint a covered officer of such entity,

“(bb) a single specified foreign entity required to report its beneficial ownership under Rule 13d-3 of the Securities and Exchange Act of 1934 (or, in the case of an exchange or market described in clause (i)(I)(cc), an equivalent rule) owns not less than 25 percent of such entity, or

“(cc) 1 or more specified foreign entities that are each required to report their beneficial ownership under Rule 13d-3 of the Securities and Exchange Act of 1934 own, in the aggregate, not less than 40 percent of such entity, or

“(II) such entity has issued debt, as part of an original issuance, in excess of 15 percent of its publicly-traded debt to 1 or more specified foreign entities.

“(F) Covered officer.—For purposes of this paragraph, the term ‘covered officer’ means, with respect to an entity—

“(i) a member of the board of directors, board of supervisors, or equivalent governing body,

“(ii) an executive-level officer, including the president, chief executive officer, chief operating officer, chief financial officer, general counsel, or senior vice president, or

“(iii) an individual having powers or responsibilities similar to those of officers or members described in clause (i) or (ii).

“(G) Determination of control.—For purposes of subparagraph (C)(v), the term ‘control’ means—

“(i) in the case of a corporation, ownership (by vote or value) of more than 50 percent of the stock in such corporation,

“(ii) in the case of a partnership, ownership of more than 50 percent of the profits interests or capital interests in such partnership, or

“(iii) in any other case, ownership of more than 50 percent of the beneficial interests in the entity.

“(H) Determination of ownership.—For purposes of this paragraph, section 318(a)(2) shall apply for purposes of determining ownership of stock in a corporation. Similar principles shall apply for purposes of determining ownership of interests in any other entity.

“(I) Other definitions.—For purposes of this paragraph—

“(i) Applicable critical mineral.—The term ‘applicable critical mineral’ has the same meaning given such term under section 45X(c)(6).

“(ii) Covered nation.—The term ‘covered nation’ has the same meaning given such term under section 4872(f)(2) of title 10, United States Code.

“(iii) Eligible component.—The term ‘eligible component’ has the same meaning given such term under section 45X(c)(1).

“(iv) Energy storage technology.—The term ‘energy storage technology’ has the same meaning given such term under section 48E(c)(2).

“(v) Qualified facility.—The term ‘qualified facility’ means—

“(I) a qualified facility, as defined in section 45Y(b)(1), and

“(II) a qualified facility, as defined in section 48E(b)(3).

“(vi) Related.—The term ‘related’ shall have the same meaning given such term under sections 267(b) and 707(b).

“(J) Beginning of construction.—For purposes of applying any provision under this paragraph, the beginning of construction with respect to any property shall be determined pursuant to rules similar to the rules under Internal Revenue Service Notice 2013–29 and Internal Revenue Service Notice 2018-59 (as well as any subsequently issued guidance clarifying, modifying, or updating either such Notice), as in effect on January 1, 2025.

“(K) Regulations and guidance.—The Secretary may prescribe such regulations and guidance as may be necessary or appropriate to carry out the provisions of this paragraph, including rules to prevent the circumvention of any rules or restrictions with respect to prohibited foreign entities.

“(52) Material assistance from a prohibited foreign entity.—

“(A) In general.—The term ‘material assistance from a prohibited foreign entity’ means—

“(i) with respect to any qualified facility or energy storage technology, a material assistance cost ratio which is less than the threshold percentage applicable under subparagraph (B), or

“(ii) with respect to any facility which produces eligible components, a material assistance cost ratio which is less than the threshold percentage applicable under subparagraph (C).

“(B) Threshold percentage for qualified facilities and energy storage technology.—For purposes of subparagraph (A)(i), the threshold percentage shall be—

“(i) in the case of a qualified facility the construction of which begins—

“(I) during calendar year 2026, 40 percent,

“(II) during calendar year 2027, 45 percent,

“(III) during calendar year 2028, 50 percent,

“(IV) during calendar year 2029, 55 percent, and

“(V) after December 31, 2029, 60 percent, and

“(ii) in the case of energy storage technology the construction of which begins—

“(I) during calendar year 2026, 55 percent,

“(II) during calendar year 2027, 60 percent,

“(III) during calendar year 2028, 65 percent,

“(IV) during calendar year 2029, 70 percent, and

“(V) after December 31, 2029, 75 percent.

“(C) Threshold percentage for eligible components.—

“(i) In general.—For purposes of subparagraph (A)(ii), the threshold percentage shall be—

“(I) in the case of any solar energy component (as such term is defined in section 45X(c)(3)(A)) which is sold—

“(aa) during calendar year 2026, 50 percent,

“(bb) during calendar year 2027, 60 percent,

“(cc) during calendar year 2028, 70 percent,

“(dd) during calendar year 2029, 80 percent, and

“(ee) after December 31, 2029, 85 percent,

“(II) in the case of any wind energy component (as such term is defined in section 45X(c)(4)(A)) which is sold—

“(aa) during calendar year 2026, 85 percent, and

“(bb) during calendar year 2027, 90 percent,

“(III) in the case of any inverter described in subparagraphs (B) through (G) of section 45X(c)(2) which is sold—

“(aa) during calendar year 2026, 50 percent,

“(bb) during calendar year 2027, 55 percent,

“(cc) during calendar year 2028, 60 percent,

“(dd) during calendar year 2029, 65 percent, and

“(ee) after December 31, 2029, 70 percent,

“(IV) in the case of any qualifying battery component (as such term is defined in section 45X(c)(5)(A)) which is sold—

“(aa) during calendar year 2026, 60 percent,

“(bb) during calendar year 2027, 65 percent,

“(cc) during calendar year 2028, 70 percent,

“(dd) during calendar year 2029, 80 percent, and

“(ee) after December 31, 2029, 85 percent, and

“(V) subject to clause (ii), in the case of any applicable critical mineral (as such term is defined in section 45X(c)(6)) which is sold—

“(aa) after December 31, 2025, and before January 1, 2030, 0 percent,

“(bb) during calendar year 2030, 25 percent,

“(cc) during calendar year 2031, 30 percent,

“(dd) during calendar year 2032, 40 percent, and

“(ee) after December 31, 2032, 50 percent.

“(ii) Adjusted threshold percentage for applicable critical minerals.—Not later than December 31, 2027, the Secretary shall issue threshold percentages for each of the applicable critical minerals described in section 45X(c)(6)), which shall—

“(I) apply in lieu of the threshold percentage determined under clause (i)(V) for each calendar year, and

“(II) equal or exceed the threshold percentage which would otherwise apply with respect to such applicable critical mineral under such clause for such calendar year, taking into account—

“(aa) domestic geographic availability,

“(bb) supply chain constraints,

“(cc) domestic processing capacity needs, and

“(dd) national security concerns.

“(D) Material assistance cost ratio.—

“(i) Qualified facilities and energy storage technology.—For purposes of subparagraph (A)(i), the term ‘material assistance cost ratio’ means the amount (expressed as a percentage) equal to the quotient of—

“(I) an amount equal to—

“(aa) the total direct costs to the taxpayer attributable to all manufactured products (including components) which are incorporated into the qualified facility or energy storage technology upon completion of construction, minus

“(bb) the total direct costs to the taxpayer attributable to all manufactured products (including components) which are—

“(AA) incorporated into the qualified facility or energy storage technology upon completion of construction, and

“(BB) mined, produced, or manufactured by a prohibited foreign entity, divided by

“(II) the amount described in subclause (I)(aa).

“(ii) Eligible components.—For purposes of subparagraph (A)(ii), the term ‘material assistance cost ratio’ means the amount (expressed as a percentage) equal to the quotient of—

“(I) an amount equal to—

“(aa) with respect to an eligible component, the total direct material costs that are paid or incurred (within the meaning of section 461 and any regulations issued under section 263A) by the taxpayer for production of such eligible component, minus

“(bb) with respect to an eligible component, the total direct material costs that are paid or incurred (within the meaning of section 461 and any regulations issued under section 263A) by the taxpayer for production of such eligible component that are mined, produced, or manufactured by a prohibited foreign entity, divided by

“(II) the amount described in subclause (I)(aa).

“(iii) Safe harbor tables.—

“(I) In general.—Not later than December 31, 2026, the Secretary shall issue safe harbor tables (and such other guidance as deemed necessary) to—

“(aa) identify the percentage of total direct costs of any manufactured product which is attributable to a prohibited foreign entity,

“(bb) identify the percentage of total direct material costs of any eligible component which is attributable to a prohibited foreign entity, and

“(cc) provide all rules necessary to determine the amount of a taxpayer’s material assistance from a prohibited foreign entity within the meaning of this paragraph.

“(II) Safe harbors prior to issuance.—For purposes of this paragraph, prior to the date on which the Secretary issues the safe harbor tables described in subclause (I), and for construction of a qualified facility or energy storage technology which begins on or before the date which is 60 days after the date of issuance of such tables, a taxpayer may—

“(aa) use the tables included in Internal Revenue Service Notice 2025–08 to establish the percentage of the total direct costs of any listed eligible component and any manufactured product, and

“(bb) rely on a certification by the supplier of the manufactured product, eligible component, or constituent element, material, or subcomponent of an eligible component—

“(AA) of the total direct costs or the total direct material costs, as applicable, of such product or component that was not produced or manufactured by a prohibited foreign entity, or

“(BB) that such product or component was not produced or manufactured by a prohibited foreign entity.

“(III) Exception.—Notwithstanding subclauses (I) and (II)—

“(aa) if the taxpayer knows (or has reason to know) that a manufactured product or eligible component was produced or manufactured by a prohibited foreign entity, the taxpayer shall treat all direct costs with respect to such manufactured product, or all direct material costs with respect to such eligible component, as attributable to a prohibited foreign entity, and

“(bb) if the taxpayer knows (or has reason to know) that the certification referred to in subclause (II)(bb) pertaining to a manufactured product or eligible component is inaccurate, the taxpayer may not rely on such certification.

“(IV) Certification requirement.—In a manner consistent with Treasury Regulation section 1.45X–4(c)(4)(i) (as in effect on the date of enactment of this paragraph), the certification referred to in subclause (II)(bb) shall—

“(aa) include—

“(AA) the supplier’s employer identification number, or

“(BB) any such similar identification number issued by a foreign government,

“(bb) be signed under penalties of perjury,

“(cc) be retained by the supplier and the taxpayer for a period of not less than 6 years and shall be provided to the Secretary upon request, and

“(dd) be from the supplier from which the taxpayer purchased any manufactured product, eligible component, or constituent elements, materials, or subcomponents of an eligible component, stating—

“(AA) that such property was not produced or manufactured by a prohibited foreign entity and that the supplier does not know (or have reason to know) that any prior supplier in the chain of production of that property is a prohibited foreign entity,

“(BB) for purposes of section 45X, the total direct material costs for each component, constituent element, material, or subcomponent that were not produced or manufactured by a prohibited foreign entity, or

“(CC) for purposes of section 45Y or section 48E, the total direct costs attributable to all manufactured products that were not produced or manufactured by a prohibited foreign entity.

“(iv) Existing contract.—Upon the election of the taxpayer (in such form and manner as the Secretary shall designate), in the case of any manufactured product, eligible component, or constituent element, material, or subcomponent of an eligible component which is—