Sec. 201. Credit for pharmaceutical and medical device production activities in distressed zones
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Subpart D of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 is amended by adding at the end the following new section: For purposes of section 38, the distressed zone pharmaceutical and medical device production credit for the taxable year shall be an amount equal to 30 percent of the qualified production activity expenditures of the taxpayer for the taxable year. For purposes of this section— The term qualified production activity expenditures means— wages paid or incurred to an employee of the taxpayer for services performed by such employee in the conduct of a qualified pharmaceutical or diagnostic medical device production business in a distressed zone (but only if the employee’s principal place of employment is in a distressed zone), or amounts paid or incurred for any tangible personal property (whether or not otherwise properly chargeable to capital account) used in the conduct of a qualified pharmaceutical or medical device production business in a distressed zone (but only if the primary use of such property is in a distressed zone).
The term qualified pharmaceutical or medical device production business means the trade or business of producing pharmaceuticals, excipients, active pharmaceutical ingredients, medical diagnostic devices, or personal protective equipment. The term active pharmaceutical ingredients has the meaning given to such term in section 207.1 of title 21, Code of Federal Regulations (and any successor regulations). The term excipient — means any inactive ingredient that is intentionally added to a pharmaceutical that is not intended to exert therapeutic effects at the intended dosage, other than by acting to improve product delivery; and includes any such filler, extenders, diluent, wetting agent, solvent, emulsifier, preservative, flavor, absorption enhancer, sustained release matrix, and coloring agent.
The term medical diagnostic device means any device (as defined in section 201(h) of the Federal Food, Drug, and Cosmetic Act) intended for use in the diagnosis of disease or other conditions. The term personal protective equipment means— any device (as defined in section 201(h) of the Federal Food, Drug, and Cosmetic Act) that is a face mask, filtering facepiece respirator, face shield, surgical mask, gown, other apparel, or glove that is intended for a medical purpose; and any particulate filtering air purifying respiratory protective device that is approved by the National Institute for Occupational Safety and Health under part 84 of title 42, Code of Federal Regulations (or successor regulations).
The term pharmaceutical — means any drug (as defined in section 201 of the Federal Food, Drug, and Cosmetic Act); and includes a biological product (as defined in section 351 of the Public Health Service Act). For purposes of paragraph (1), the term wages shall include so much of the eligible employer’s qualified health plan expenses as are properly allocable to such wages. For purposes of this paragraph, the term qualified health plan expenses means amounts paid or incurred by the eligible employer to provide and maintain a group health plan (as defined in section 5000(b)(1)), but only to the extent that such amounts are excluded from the gross income of employees by reason of section 106(a) of such Code.
For purposes of this paragraph, qualified health plan expenses shall be allocated to qualified wages in such manner as the Secretary may prescribe. Except as otherwise provided by the Secretary, such allocation shall be treated as properly made if made on the basis of being pro rata among employees and pro rata on the basis of periods of coverage (relative to the periods to which such wages relate). The term distressed zone means a population census tract— which has been designated as a qualified opportunity zone under section 1400Z–1, and which has a poverty rate in excess of 30 percent for the calendar year prior to the calendar year that includes the date of enactment of this section.
If a credit is determined under this section with respect to any property by reason of any qualified production activity expenditures described in subsection (b)(1)(B), the basis of such property shall be reduced by the amount of the credit so determined. Any qualified production activity expenditures taken into account in determining the amount of the credit under subsection
(a)shall not be taken into account in determining a credit under any other provision of this chapter. The amount of wages taken into account under subsection
(a)with respect to any employee shall not exceed an amount equal to the contribution and benefit base in effect under section 230 of the Social Security Act for the calendar year in which the taxable year begins. . Section 38(c)(4)(B) of such Code is amended by redesignating clauses (x), (xi), and
(xii)as clauses (xi), (xii), and (xiii), respectively and by inserting after clause
(ix)the following new clause: the credit determined under section 45U, . Section 960(d) of such Code is amended by adding at the end the following new paragraph: The amount of foreign taxes deemed paid by a domestic corporation under paragraph
(1)(determined without regard to this paragraph) shall be increased by an amount equal to the lesser of— the excess of— the amount calculated with respect to such corporation under paragraph
(1)(determined without regard to this paragraph and by substituting 100 percent for 80 percent ), over the amount calculated with respect to such corporation under paragraph
(1)(determined without regard to this paragraph), or an amount equal to 15 percent of the qualified production activity expenditures (as defined in section 45U(b)(1)) of the controlled foreign corporation for the taxable year of the foreign corporation ending in or with the taxable year of the domestic corporation. . Section 280C of such Code is amended by adding at the end the following new subsection: No deduction shall be allowed for that portion of the qualified production activity expenditures (as defined in section 45U(b)) otherwise allowable as a deduction for the taxable year which is equal to the amount of the distressed zone pharmaceutical and medical device production credit determined for such taxable year under section 45U(a). . Section 38(b) of such Code is amended by striking plus at the end of paragraph (32), by striking the period at the end of paragraph
(33)and inserting , plus , and by adding at the end the following new paragraph: the distressed zone pharmaceutical and medical device production credit determined under section 45U(a). . The table of sections for subpart D of part IV of subchapter A of chapter 1 is amended by adding at the end the following new item: Sec. 45U. Distressed zone pharmaceutical and medical device production credit. . The amendments made by this section shall apply to amounts paid or incurred after the date of the enactment of this Act.