Latest on the CHIPS Act
This week, the House and Senate are expected to take up votes on the Creating Helpful Incentives to Produce Semiconductors For America Fund (CHIPS Act). This bill would provide approximately $52 billion in subsidies for semiconductor companies to increase U.S. manufacturing. Some of the last minute negotiations include a late push by some senators to include a fix to the requirement to amortize R&D expenditures starting in 2022.
The Tax Cuts and Jobs Act (TCJA) of 2017 included a budgetary provision that required amortization of R&D expenditures starting in 2022. Fixing this amortization requirement has strong bipartisan support, so even if the CHIPS Act does not include a fix to this provision, it is expected that Congress will fix this by the end of the year either through a funding bill or an extenders package after midterms.
Even if the R&D provision does not make it into this bill, this expansive package includes many provisions that CPAs and their clients need to be aware of. These include grants for the semiconductor industry, a 25% investment tax credit for building new equipment and facilities, and other provisions. Over the coming days the team at McGuire Sponsel will be monitoring the progression of this bill and will be ready to provide updates on opportunities created under this legislation if passed.