Daily Tax Report Quotes Brandon Morris on CHIPS Act Tax Credit

For its article “Chips Bill Tax Perk Opens Timing Eligibility Questions for Pros,” Akin Gump tax partner Brandon Morris was quoted by Daily Tax Report on a 25% tax credit for research and manufacturing of semiconductor chips included in the CHIPS and Science Act, signed into law by President Joe Biden on August 9.

Said Morris, “I think this is a much needed and appreciated benefit. This is a very capital-intensive industry, and building these facilities requires a lot of capital outlay upfront. So this helps mitigate some of those investment costs to the companies and encourages them to make investments in the United States.”

The article notes, however, that questions remain as to implementation and timing of the tax credit, including regarding a provision whereby any qualified property must be placed in service—a term that, the periodical notes, is not well defined. Morris said that defining “placed in service” will be become increasingly important as companies approach the sunset of the credit in 2026, in order that they can know when to place the property in service in order to qualify for the credit before the deadline date.

Morris also noted that taxpayers will want additional clarity on what constitutes being integral to the operations of manufacturing facility—one of four parts in the test for what constitutes qualified property. He added that more specific guidance concerning the tax credit and pass-through entities would be helpful.