SECTION 9. SPECIAL RULES FOR

CREDITS AND GRANTS IN LIEU OF TAX CREDITS

.01 Section 48D(e)(1) of the Code provides that if a credit is allowed for an expenditure related to property of a character

subject to an allowance for depreciation, the basis of the property must be reduced by the amount of the credit.

.02 Section 48D(e)(2)(A) of the Code provides that a credit will not be allowed for any investment for which bonus depreciation is allowed under § 168(k), § 1400L(b)(1), or § 1400N(d)(1).

.03 Section 48D(e)(2)(B) of the Code provides that no deduction will be allowed for the portion of the expenses otherwise allowable as a deduction taken into account in determining the credit for the taxable year which is equal to the amount of the credit determined for the taxable year attributable to that portion. This rule does not apply to expenses related to property of a character subject to an allowance for depreciation the basis of which is reduced under § 48D(e)(1), or which are described in § 280C(g).

.04 Section 48D(e)(2)(C)(i) of the Code provides that, except as provided in § 48D(e)(2)(C)(ii), any expenses taken into account for a taxable year must not be taken into account for purposes of determining the credit allowable under § 41 or § 45C for the taxable year.

.05 Section 48D(e)(2)(C)(ii) of the Code provides that any expenses for any taxable year which are qualified research expenses (within the meaning of § 41(b)) must be taken into account in determining base period research expenses for purposes of applying § 41 to subsequent taxable years.

.06 Section 280C(g)(1) of the Code provides that, in general, no deduction will be allowed for that portion of the qualified investment (as defined in § 48D(b)) otherwise allowable as a deduction for the taxable year which (A) would be qualified research expenses (as defined in § 41(b)), basic research expenses (as defined in § 41(e)(2)), or qualified clinical testing expenses (as defined in § 45C(b)) if the credit under § 41 or § 45C were allowed with respect to the expenses for the taxable year, and (B) is equal to the amount of the credit determined for the taxable year under § 48D(a), reduced by (i) the amount disallowed as a deduction by reason of § 48D(e)(2)(B), and (ii) the amount of any basis reduction under § 48D(e)(1).

.07 Section 280C(g)(2) of the Code provides that, in the case of expenses described in § 280C(g)(1) taken into account in determining the credit under § 48D

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ery project credit or grant. The collection of information is required to obtain benefit. The likely respondents are business or other for-profit institutions.

The estimated total annual reporting burden is 14,544 hours.

The estimated annual burden per respondent varies, depending on the individual circumstances, with an estimated average of 12 hours, 7 minutes. The estimated number of respondents is 1,200.

The estimated annual frequency of responses is on occasion.

Books or records relating to a collection of information must be retained as long as the contents may become material in the administration of any internal revenue law. Generally, tax returns and return information are confidential, as required by 26 U.S.C. § 6103.