A bill to amend the Internal Revenue Code of 1986 to encourage investment in facilities using wind to produce electricity, and for other purposes.

Summary: Wind Power Tax Incentives Act of 2005 - Amends the Internal Revenue Code to permit: (1) individual taxpayers with adjusted gross incomes (taxable incomes in the case of corporate taxpayers) of $1 million or less to offset passive activity losses and credits from energy-producing wind facilities against regular income; and (2) tax-exempt cooperative organizations (including farmers' cooperatives) to apportion pro rata among their shareholders tax credits received for investment in energy-producing wind facilities.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Wind Power Tax Incentives Act of 
2005''.

SEC. 2. OFFSET OF PASSIVE ACTIVITY LOSSES AND CREDITS OF AN ELIGIBLE 
              TAXPAYER FROM WIND ENERGY FACILITIES.

    (a) In General.--Section 469 of the Internal Revenue Code of 1986 
(relating to passive activity losses and credits limited) is amended--
            (1) by redesignating subsections (l) and (m) as subsections 
        (m) and (n), respectively; and
            (2) by inserting after subsection (k) the following:
    ``(l) Offset of Passive Activity Losses and Credits From Wind 
Energy Facilities.--
            ``(1) In general.--Subsection (a) shall not apply to the 
        portion of the passive activity loss, or the deduction 
        equivalent (within the meaning of subsection (j)(5)) of the 
        portion of the passive activity credit, for any taxable year 
        which is attributable to all interests of an eligible taxpayer 
        in qualified facilities described in section 45(d)(1).
            ``(2) Eligible taxpayer.--For purposes of this subsection--
                    ``(A) In general.--The term `eligible taxpayer' 
                means, with respect to any taxable year, a taxpayer the 
                adjusted gross income (taxable income in the case of a 
                corporation) of which does not exceed $1,000,000.
                    ``(B) Rules for computing adjusted gross income.--
                Adjusted gross income shall be computed in the same 
                manner as under subsection (i)(3)(F).
                    ``(C) Aggregation rules.--All persons treated as a 
                single employer under subsection (a) or (b) of section 
                52 shall be treated as a single taxpayer for purposes 
                of this paragraph.
                    ``(D) Pass-thru entities.--In the case of a pass-
                thru entity, this paragraph shall be applied at the 
                level of the person to which the credit is allocated by 
                the entity.''.
    (b) Effective Date.--The amendments made by this section shall 
apply to facilities placed in service after the date of the enactment 
of this Act.

SEC. 3. APPLICATION OF CREDIT TO COOPERATIVES.

    (a) In General.--Section 45(e) of the Internal Revenue Code of 1986 
(relating to definitions and special rules) is amended by adding at the 
end the following:
            ``(10) Allocation of credit to shareholders of 
        cooperative.--
                    ``(A) Election to allocate.--
                            ``(i) In general.--In the case of a 
                        cooperative organization described in section 
                        1381(a), any portion of the credit determined 
                        under subsection (a) for the taxable year may, 
                        at the election of the organization, be 
                        apportioned pro rata among shareholders of the 
                        organization on the basis of the capital 
                        contributions of the shareholders to the 
                        organization.
                            ``(ii) Form and effect of election.--An 
                        election under clause (i) for any taxable year 
                        shall be made on a timely filed return for such 
                        year. Such election, once made, shall be 
                        irrevocable for such taxable year.
                    ``(B) Treatment of organizations and patrons.--The 
                amount of the credit apportioned to any shareholders 
                under subparagraph (A)--
                            ``(i) shall not be included in the amount 
                        determined under subsection (a) with respect to 
                        the organization for the taxable year, and
                            ``(ii) shall be included in the amount 
                        determined under subsection (a) for the taxable 
                        year of the shareholder with or within which 
                        the taxable year of the organization ends.
                    ``(C) Special rules for decrease in credits for 
                taxable year.--If the amount of the credit of a 
                cooperative organization determined under subsection 
                (a) for a taxable year is less than the amount of such 
                credit shown on the return of the cooperative 
                organization for such year, an amount equal to the 
                excess of--
                            ``(i) such reduction, over
                            ``(ii) the amount not apportioned to such 
                        shareholders under subparagraph (A) for the 
                        taxable year, shall be treated as an increase 
                        in tax imposed by this chapter on the 
                        organization. Such increase shall not be 
                        treated as tax imposed by this chapter for 
                        purposes of determining the amount of any 
                        credit under this subpart or subpart A, B, E, 
                        or G.''.
    (b) Effective Date.--The amendments made by this section shall 
apply to taxable years ending after the date of the enactment of this 
Act.