A payment to a barred foreign entity within ten years claws the credit back
What the document says“then the tax under this chapter for the taxable year in which such applicable payment occurs shall be increased by 100 percent of the aggregate decrease in the credits allowed under section 38 for all prior taxable years”
The section adds a new paragraph (4) to section 50(a) of the Internal Revenue Code of 1986 so that where a specified taxpayer makes an applicable payment within ten years of placing the property in service, the tax for the year of that payment rises by the full amount the credits allowed in earlier years would have fallen had the clean electricity investment credit for that property been reduced to zero. An applicable payment is one described in section 7701(a)(51)(D)(i)(II), and a specified taxpayer is one allowed the credit for a taxable year beginning more than two years after enactment. Conforming cross reference changes follow.
What the document actually says“then the tax under this chapter for the taxable year in which such applicable payment occurs shall be increased by 100 percent of the aggregate decrease in the credits allowed under section 38 for all prior taxable years”
The tax for that year goes up. It rises by the full amount of credit already taken.
The clock runs for ten years from when the gear is put to use. A payment to a barred foreign body triggers it. The whole credit is then paid back.
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