§ 38. General business credit
(a)
Allowance of credit
There shall be allowed as a credit against the tax imposed by this chapter for the taxable year an amount equal to the sum of—
(b)
Current year business credit
For purposes of this subpart, the amount of the current year business credit is the sum of the following credits determined for the taxable year:
(7)
in the case of an eligible small business (as defined in section
44
(b)), the disabled access credit determined under section
44
(a),
(14)
in the case of an eligible employer (as defined in section
45E
(c)), the small employer pension plan startup cost credit determined under section
45E
(a),
(26)
the portion of the alternative fuel vehicle refueling property credit to which section
30C
(d)(1) applies,
(32)
in the case of an eligible agricultural business (as defined in section
45O
(e)), the agricultural chemicals security credit determined under section
45O
(a),
(c)
Limitation based on amount of tax
(1)
In general
The credit allowed under subsection (a) for any taxable year shall not exceed the excess (if any) of the taxpayer’s net income tax over the greater of—
For purposes of the preceding sentence, the term “net income tax” means the sum of the regular tax liability and the tax imposed by section
55, reduced by the credits allowable under subparts A and B of this part, and the term “net regular tax liability” means the regular tax liability reduced by the sum of the credits allowable under subparts A and B of this part.
(2)
Empowerment zone employment credit may offset 25 percent of minimum tax
(A)
In general
In the case of the empowerment zone employment credit credit—
(ii)
for purposes of applying paragraph (1) to such credit—
(I)
75 percent of the tentative minimum tax shall be substituted for the tentative minimum tax under subparagraph (A) thereof, and
(II)
the limitation under paragraph (1) (as modified by subclause (I)) shall be reduced by the credit allowed under subsection (a) for the taxable year (other than the empowerment zone employment credit, the New York Liberty Zone business employee credit, the eligible small business credits, and the specified credits).
(B)
Empowerment zone employment credit
For purposes of this paragraph, the term “empowerment zone employment credit” means the portion of the credit under subsection (a) which is attributable to the credit determined under section
1396 (relating to empowerment zone employment credit).
(3)
Special rules for New York Liberty Zone business employee credit
(4)
Special rules for specified credits
(B)
Specified credits
For purposes of this subsection, the term “specified credits” means—
(ii)
the credit determined under section
42 to the extent attributable to buildings placed in service after December 31, 2007,
(iii)
the credit determined under section
45 to the extent that such credit is attributable to electricity or refined coal produced—
(vii)
the credit determined under section
46 to the extent that such credit is attributable to the energy credit determined under section
48,
(5)
Special rules for eligible small business credits in 2010
(A)
In general
In the case of eligible small business credits determined in taxable years beginning in 2010—
(B)
Eligible small business credits
For purposes of this subsection, the term “eligible small business credits” means the sum of the credits listed in subsection (b) which are determined for the taxable year with respect to an eligible small business. Such credits shall not be taken into account under paragraph (2), (3), or (4).
(C)
Eligible small business
For purposes of this subsection, the term “eligible small business” means, with respect to any taxable year—
if the average annual gross receipts of such corporation, partnership, or sole proprietorship for the 3-taxable-year period preceding such taxable year does not exceed $50,000,000. For purposes of applying the test under the preceding sentence, rules similar to the rules of paragraphs (2) and (3) of section
448
(c) shall apply.
(D)
Treatment of partners and S corporation shareholders
Credits determined with respect to a partnership or S corporation shall not be treated as eligible small business credits by any partner or shareholder unless such partner or shareholder meets the gross receipts test under subparagraph (C) for the taxable year in which such credits are treated as current year business credits.
(6)
Special rules
(A)
Married individuals
In the case of a husband or wife who files a separate return, the amount specified under subparagraph (B) of paragraph (1) shall be $12,500 in lieu of $25,000. This subparagraph shall not apply if the spouse of the taxpayer has no business credit carryforward or carryback to, and has no current year business credit for, the taxable year of such spouse which ends within or with the taxpayer’s taxable year.
(B)
Controlled groups
In the case of a controlled group, the $25,000 amount specified under subparagraph (B) of paragraph (1) shall be reduced for each component member of such group by apportioning $25,000 among the component members of such group in such manner as the Secretary shall by regulations prescribe. For purposes of the preceding sentence, the term “controlled group” has the meaning given to such term by section
1563
(a).
(C)
Limitations with respect to certain persons
In the case of a person described in subparagraph (A) or (B) of section
46
(e)(1) (as in effect on the day before the date of the enactment of the Revenue Reconciliation Act of 1990), the $25,000 amount specified under subparagraph (B) of paragraph (1) shall equal such person’s ratable share (as determined under section
46
(e)(2) (as so in effect) of such amount.
(D)
Estates and trusts
In the case of an estate or trust, the $25,000 amount specified under subparagraph (B) of paragraph (1) shall be reduced to an amount which bears the same ratio to $25,000 as the portion of the income of the estate or trust which is not allocated to beneficiaries bears to the total income of the estate or trust.
(d)
Ordering rules
For purposes of any provision of this title where it is necessary to ascertain the extent to which the credits determined under any section referred to in subsection (b) are used in a taxable year or as a carryback or carryforward—
(1)
In general
The order in which such credits are used shall be determined on the basis of the order in which they are listed in subsection (b) as of the close of the taxable year in which the credit is used.
(2)
Components of investment credit
The order in which the credits listed in section
46 are used shall be determined on the basis of the order in which such credits are listed in section 46 as of the close of the taxable year in which the credit is used.
(3)
Credits no longer listed
For purposes of this subsection—
(A)
the credit allowable by section
40, as in effect on the day before the date of the enactment of the Tax Reform Act of 1984, (relating to expenses of work incentive programs) and the credit allowable by section
41
(a), as in effect on the day before the date of the enactment of the Tax Reform Act of 1986, (relating to employee stock ownership credit) shall be treated as referred to in that order after the last paragraph of subsection (b), and
(B)
the credit determined under section
46—
[1] So in original. Probably should be followed by a comma.