[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[H.R. 802 Introduced in House (IH)]
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119th CONGRESS
1st Session
H. R. 802
To amend the Internal Revenue Code of 1986 to add qualified
semiconductor design expenditures to the advanced manufacturing
investment credit.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
January 28, 2025
Mr. Moore of Utah (for himself, Ms. DelBene, Mr. McCaul, Ms. Matsui,
Mr. Moolenaar, Mr. Krishnamoorthi, Ms. Tenney, Mr. Khanna, Mr. Morelle,
Mr. Buchanan, Mr. Carson, Mr. Gottheimer, Ms. Sewell, and Mr. Panetta)
introduced the following bill; which was referred to the Committee on
Ways and Means
_______________________________________________________________________
A BILL
To amend the Internal Revenue Code of 1986 to add qualified
semiconductor design expenditures to the advanced manufacturing
investment credit.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Semiconductor Technology Advancement
and Research Act of 2025'' or the ``STAR Act of 2025''.
SEC. 2. QUALIFIED SEMICONDUCTOR DESIGN EXPENDITURES ADDED TO ADVANCED
MANUFACTURING INVESTMENT CREDIT.
(a) In General.--Section 48D of the Internal Revenue Code of 1986
is amended--
(1) in subsection (a), by striking ``an amount equal to''
and all that follows through the period and inserting ``, with
respect to an eligible taxpayer, an amount equal to the sum
of--
``(1) 25 percent of the qualified investment for such
taxable year with respect to any advanced manufacturing
facility of such taxpayer, and
``(2) 25 percent of the qualified semiconductor design
expenditures paid or incurred by such taxpayer during the
taxable year.'',
(2) by redesignating subsections (c), (d), and (e) as
subsections (e), (f), and (g), respectively,
(3) by inserting after subsection (b) the following new
subsections:
``(c) Qualified Semiconductor Design Expenditures.--
``(1) In general.--For purposes of subsection (a)(2), the
term `qualified semiconductor design expenditures' means the
sum of the following amounts which are paid or incurred by the
taxpayer during the taxable year in carrying on any trade or
business of the taxpayer for--
``(A) in-house semiconductor design expenses for
semiconductor design conducted in the United States,
and
``(B) contract design expenses for semiconductor
design conducted in the United States.
``(2) In-house semiconductor design expenses.--
``(A) In general.--The term `in-house semiconductor
design expenses' means--
``(i) any wages paid or incurred to an
employee for qualified services performed by
such employee,
``(ii) any amount paid or incurred for
supplies used in the conduct of qualified
semiconductor design, and
``(iii) under regulations prescribed by the
Secretary, any amount paid or incurred to
another person for the right to use computers
in the conduct of qualified semiconductor
design.
Clause (iii) shall not apply to any amount to the
extent that the taxpayer (or any person with whom the
taxpayer must aggregate expenditures under paragraph
(7) receives or accrues any amount from any other
person for the right to use substantially identical
personal property.
``(B) Qualified services.--The term `qualified
services' means services consisting of--
``(i) engaging in qualified semiconductor
design, or
``(ii) engaging in the direct supervision
or direct support of design activities which
constitute qualified semiconductor design.
If substantially all of the services performed by an
individual for the taxpayer during the taxable year
consists of services meeting the requirements of clause
(i) or (ii), the term ``qualified services'' means all
of the services performed by such individual for the
taxpayer during the taxable year.
``(C) Supplies.--The term `supplies' has the
meaning given such term in section 41(b)(2)(C).
``(D) Wages.--The term `wages' has the meaning
given such term in section 41(b)(2)(D).
``(3) Contract design expenses.--
``(A) In general.--The term `contract design
expenses' means 100 percent of any amount paid or
incurred by the taxpayer to any person (other than an
employee of the taxpayer) for qualified semiconductor
design.
``(B) Prepaid amounts.--If any contract design
expenses paid or incurred during any taxable year are
attributable to qualified semiconductor research to be
conducted after the close of such taxable year, such
amount shall be treated as paid or incurred during the
period during which the qualified semiconductor design
is conducted.
``(4) Trade or business requirement disregarded for in-
house design expenses of certain startup ventures.--In the case
of in-house semiconductor design expenses, a taxpayer shall be
treated as meeting the trade or business requirement of
paragraph (1) if, at the time such in-house semiconductor
design expenses are paid or incurred, the principal purpose of
the taxpayer in making such expenditures is to use the results
of the design in the active conduct of a future trade or
business--
``(A) of the taxpayer, or
``(B) of 1 or more persons who with the taxpayer
are treated as single taxpayer under paragraph (7).
``(5) Qualified semiconductor design.--
``(A) In general.--The term `qualified
semiconductor design'--
``(i) means the development (or direction
of the development) of product design, design
specifications, trade secrets, technology, or
other intellectual property for the purpose of
semiconductor manufacturing, substantially all
of the activities of which constitute elements
of a process of experimentation for a purpose
described in subparagraph (B)(i), and
``(ii) does not include any activity
described in subparagraph (B)(ii).
``(B) Purposes for which research may qualify for
credit.--For purposes of subparagraph (A)--
``(i) In general.--Semiconductor design
shall be treated as conducted for a purpose
described in this paragraph if it relates to--
``(I) a new or improved function,
``(II) performance, or
``(III) reliability or quality.
``(ii) Certain purposes not qualified.--
Semiconductor design shall in no event be
treated as conducted for a purpose described in
this paragraph if it is conducted for purposes
of--
``(I) style, taste, cosmetic, or
other design factors unrelated to a
purpose described in clause (i),
``(II) design after the
commencement of commercial production
of the semiconductor, unless such
design is related to firmware,
software, or manufacturing process
activities that would otherwise meet
the requirements of clause (i),
``(III) duplication of an existing
semiconductor product (in whole or in
part) from a physical examination of
the semiconductor itself or from plans,
blueprints, detailed specifications, or
publicly available information with
respect to such semiconductor, or
``(IV) surveys or studies related
to--
``(aa) efficiency,
``(bb) management function
or techniques,
``(cc) market research,
testing, or development,
including advertising and
promotions,
``(dd) routine data
collection, or
``(ee) routine or ordinary
testing or inspection for
quality control.
``(6) United states.--For purposes of this subsection, the
term `United States' includes the possessions of the United
States.
``(7) Aggregation of expenditures.--For purposes of this
subsection, in determining the amount of qualified
semiconductor design expenditures, rules similar to the rules
of section 41(f)(1) shall apply.
``(d) Coordination With Credit for Increasing Research
Expenditures.--Any qualified semiconductor design expenditures for
which a credit is allowed under this section shall not be taken into
account for purposes of determining the credit allowable under section
41 for such taxable year.'', and
(4) by amending subsection (g) (as so redesignated) to read
as follows:, by inserting ``or qualified semiconductor design
expenditures paid or incurred after December 31, 2026'' before
the period.
``(g) Termination of Credit.--The credit allowed under this section
shall not apply to--
``(1) property the construction of which begins after
December 31, 2036, or
``(2) qualified semiconductor design expenditures paid or
incurred after December 31, 2036.''.
(b) Conforming Amendment.--Section 56A(c)(9) of the Internal
Revenue Code of 1986 is amended by striking ``48D(d)'' and inserting
``48D(f)''.
(c) Effective Date.--The amendments made by this section shall
apply to amounts paid or incurred after the date of the enactment of
this Act.
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