Phase-out and restrictions on advanced manufacturing production credit

(a) Phase-out Section 45X(b)(3) is amended— (1) in subparagraph (B)— (A) in clause (ii), by adding and at the end, (B) in clause (iii), by striking during calendar year 2032, 25 percent, and inserting after December 31, 2031, 0 percent., and (C) by striking clause (iv), and (2) by striking subparagraph (C) and inserting the following: (C) Termination for wind energy components This section shall not apply to wind energy components sold after December 31, 2027.. (b) Restrictions relating to prohibited foreign entities Section 45X is amended— (1) in subsection (c)(1), by adding at the end the following new subparagraph: (C) Material assistance from prohibited foreign entities In the case of taxable years beginning after the date which is 2 years after the date of enactment of this subparagraph, the term eligible component shall not include any property which— (i) includes any material assistance from a prohibited foreign entity (as defined in section 7701(a)(52)), or (ii) is produced subject to a licensing agreement with a prohibited foreign entity (as defined in section 7701(a)(51)) for which the value of such agreement is in excess of $1,000,000., and (2) in subsection (d), by adding at the end the following new paragraph: (5) Restrictions relating to prohibited foreign entities (A) In general No credit determined under subsection (a) shall be allowed under section 38 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 determined under subsection (a) shall be allowed under section 38 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)). (C) Payments to prohibited foreign entities (i) In general If, for any taxable year beginning after the date that is 2 years after the date of the enactment of this paragraph, a taxpayer is described in clause (ii) for such taxable year with respect to any eligible component category, no credit shall be determined under subsection (a) for eligible components in such eligible component category for such taxable year. (ii) Taxpayer described A taxpayer is described in this clause for a taxable year with respect to any eligible component category if such taxpayer— (I) makes a payment of dividends, interest, compensation for services, rentals or royalties, guarantees or any other fixed, determinable, annual, or periodic amount to a prohibited foreign entity (as defined in section 7701(a)(51)) in an amount which is equal to or greater than 5 percent of the total of such payments made by such taxpayer during such taxable year which are related to the production of eligible components included within such eligible component category, or (II) makes payments described in subclause (I) to more than 1 prohibited foreign entity (as so defined) in an amount which, in the aggregate, is equal to or greater than 15 percent of such payments made by such taxpayer during such taxable year which are related to the production of eligible components included within such eligible component category. (iii) Eligible component category For purposes of this subparagraph, the term eligible component category means eligible components which are included within each respective clause under subsection (c)(1)(A).. (c) Repeal of transferability Section 6418, as amended by sections 112010, 112011, and 112012 is amended— (1) in subsection (f)(1)— (A) in subparagraph (A)— (i) by striking clause (vi), and (ii) by redesignating clauses (iv), (v), (vii), (ix), (x), and (xi) as clauses (iii), (iv), (v), (vi), (vii), and (viii), respectively, and (B) in subparagraph (B), by striking clause (ii) or (v) and inserting clause (ii) or (iv), and (2) in subsection (g)(3), by striking clause (ix) or (x) and inserting clause (vi) or (vii). (d) Effective dates (1) In general Except as provided in paragraph (2), the amendments made by this section shall apply to taxable years beginning after the date of enactment of this Act. (2) Repeal of transferability The amendments made by subsection (c) shall apply to components sold after December 31, 2027.