26 U.S.C. § 196: Deduction for certain unused business credits

If any portion of the qualified business credits determined for any taxable year has not, after the application of section 38(c), been allowed to the taxpayer as a credit under section 38 for any taxable year, an amount equal to the credit not so allowed shall be allowed to the taxpayer as a deduction for the first taxable year following the last taxable year for which such credit could, under section 39, have been allowed as a credit. If a taxpayer dies or ceases to exist before the first taxable year following the last taxable year for which the qualified business credits could, under section 39, have been allowed as a credit, the amount described in subsection (a) (or the proper portion thereof) shall, under regulations prescribed by the Secretary, be allowed to the taxpayer as a deduction for the taxable year in which such death or cessation occurs. the investment credit determined under section 46 (but only to the extent attributable to property the basis of which is reduced by section 50(c)), the work opportunity credit determined under section 51(a), the alcohol fuels credit determined under section 40(a), the research credit determined under section 41(a) (other than such credit determined under section 280C(c)(3)) 1 for taxable years beginning after 1 See References in Text note below. December 31, 1988 , the enhanced oil recovery credit determined under section 43(a), the empowerment zone employment credit determined under section 1396(a), the Indian employment credit determined under section 45A(a), the employer Social Security credit determined under section 45B(a), the new markets tax credit determined under section 45D(a), the small employer pension plan startup cost credit determined under section 45E(a), the biodiesel fuels credit determined under section 40A(a), the low sulfur diesel fuel production credit determined under section 45H(a), the new energy efficient home credit determined under section 45L(a), and the small employer health insurance credit determined under section 45R(a). Subsection (a) shall be applied by substituting “an amount equal to 50 percent of” for “an amount equal to” in the case of the investment credit determined under section 46 (other than the rehabilitation credit). Except as otherwise provided in this paragraph, the amendments made by subsection (a) [enacting this section and amending sections 48, 312, and 1016 of this title] shall apply to periods after December 31, 1982 , under rules similar to the rules of section 48(m) of the Internal Revenue Code of 1986 [formerly I.R.C. 1954]. is constructed, reconstructed, erected, or acquired pursuant to a contract which was entered into after August 13, 1981 , and was, on July 1, 1982 , and at all times thereafter, binding on the taxpayer, is placed in service after December 31, 1982 , and before January 1, 1986 , with respect to which an election under section 168(f)(8)(A) of such Code is not in effect at any time, and is not described in section 167( l )(3)(A) of such Code. the on-site construction of the facility began before July 1, 1982 , and during the period beginning after August 13, 1981 , and ending on July 1, 1982 , the taxpayer constructed (or entered into binding contracts for the construction of) more than 20 percent of the cost of such facility. located on a single site, for the manufacture of 1 or more manufactured products from raw materials by the application of 2 or more integrated manufacturing processes. In the case of any certified historic structure (as defined in section 48(g)(3) of the Internal Revenue Code of 1986), clause (i) of subparagraph (B) shall be applied by substituting ‘ December 31, 1980 ’ for ‘ August 13, 1981 .’ if the rehabilitation begins after December 31, 1980 , and before July 1, 1982 , or before July 1, 1982 , a public offering with respect to interests in such property was registered with the Securities and Exchange Commission, before such date an application with respect to such property was filed under section 8 of the United States Housing Act of 1937 [ section 1437f of Title 42 , The Public Health and Welfare], and such property is placed in service before July 1, 1984 .”