SECTION 3. SECTION 48C AND

SECTION 45X FACILITIES

.01 Section 48C Facility . For purposes of § 48C, a “facility” is the eligible property that makes up the qualified investment that is part of the qualifying advanced energy project (§ 48C Facility). Section 48C(c)(2) defines the term “eligible property” to mean any property that—

(1) Is necessary for the production or recycling of property described in § 48C(c)(1)(A)(i), re-equipping an industrial or manufacturing facility described in § 48C(c)(1)(A)(ii), or re-equipping, expanding, or establishing an industrial facility described in § 48C(c)(1)(A)(iii),

(2) Is tangible personal property, or other tangible property (not including a building or its structural components), but only if such property is used as an integral part of the qualified investment credit facility, and

(3) With respect to which depreciation (or amortization in lieu of depreciation) is allowable.

.02 Section 45X Facility . For purposes of the § 38 general business credit, the advanced manufacturing production credit determined under § 45X(a) (§ 45X credit) for any taxable year is an amount equal to the sum of the credit amounts determined under § 45X(b) with respect to each eligible component (as defined in § 45X(c)(1)) that is produced by a taxpayer and, during the taxable year, sold by the taxpayer to an unrelated person. Section 45X(c)(1)(B) provides that the term “eligible component” does not include any property which is produced at a facility if the basis of any property which is part of such facility is taken into account for purposes of the credit allowed under § 48C after August 16, 2022 (the date of enactment of the IRA). For purposes of the § 45X credit, all tangible property that comprises an independently functioning production unit that produces one or more eligible components will be treated as a single facility (§ 45X Facility). The Treasury Department and the IRS intend to further define the term “production unit” for purposes of the § 45X credit in forthcoming guidance addressing various § 45X issues.

.03 Interaction between Sections 48C and 45X . For purposes of evaluating the interaction between §§ 48C and 45X, the eligible component is defined as provided in § 45X(c)(1). A § 45X Facility cannot produce an eligible component for purposes of the § 45X credit if such facility includes eligible property that has been taken into account for purposes of the credit allowed under § 48C after August 16, 2022. .04 Example . Taxpayer owns and operates a manufacturing site that contains Production Unit A and Production Unit B. Production Unit A manufactures photovoltaic wafers and Production Unit B manufactures photovoltaic cells. Production Unit A and Production Unit B are arranged in serial fashion, in that the wafer produced by Production Unit A is utilized in Production Unit B. Production Unit A and Production Unit B function independently and produce eligible components. Taxpayer was allocated a § 48C credit for Production Unit A under the § 48C(e) program and subsequently placed it in service

in taxable year 2024. Production Unit A is eligible property that is part of Taxpayer’s § 48C Facility and Taxpayer claimed a § 48C credit for Production Unit A in taxable year 2024. Therefore, Production Unit A fails to qualify as § 45X Facility under § 45X(c)(1)(B). Production Unit B is tangible property that comprises an independently functioning production unit that produces eligible components. Production Unit B can be treated as a § 45X Facility because the tangible property comprising Production Unit B is not eligible property that is part of a § 48C Facility.