S. 3605 — Disaster Zone Energy Affordability and Investment Act

This section treats carryforwards to taxable years beginning after December 31, 2023, of the investment tax credit (under IRC §46) and research tax credit (under IRC §41)—components of the general business credit under IRC §38—as transferable credits under IRC §6418, up to the amount of eligible expenditures made by the taxpayer. Eligible expenditures are amounts paid or incurred to carry on a trade or business in a qualified disaster area (i.e., an area subject to a presidential major disaster declaration under the Stafford Act or a state-declared disaster after December 31, 2023) on or before the last day of the second calendar year following the declaration. (Thus, affected taxpayers may sell unused prior-year credits to unrelated parties to offset disaster recovery costs.) The provision treats all members of a consolidated group as one taxpayer, applies to taxable years ending after enactment, and waives registration requirements until the Treasury's online tool is updated.