To amend the Internal Revenue Code of 1986 to allow a credit against income tax for recycling or remanufacturing equipment, and for other purposes.

Summary: Amends the Internal Revenue Code to allow a tax credit for investment in qualified reclamation property. Defines "qualified reclamation property" as tangible depreciable recycling or remanufacturing property with a useful life of at least five years. Limits the amount of such credit to 20 percent of the basis (not exceeding $10 million) of qualified reclamation property placed in service during a taxable year.

Directs the Secretary of Transportation to study the performance and safety of recycled, non-deployed airbags used in automobiles.

SECTION 1. CREDIT FOR RECYCLING OR REMANUFACTURING EQUIPMENT.

    (a) In General.--Section 46 of the Internal Revenue Code of 1986 
(relating to amount of investment credit) is amended by striking 
``and'' at the end of paragraph (1), by striking the period at the end 
of paragraph (2) and inserting ``, and'', and by adding at the end the 
following new paragraph:
            ``(3) the reclamation credit.''
    (b) Reclamation Credit.--Section 48 of such Code (relating to 
energy credit) is amended by adding at the end the following new 
subsection:
    ``(c) Reclamation Credit.--
            ``(1) In general.--For purposes of section 46, the 
        reclamation credit for any taxable year is 20 percent of the 
        basis of each qualified reclamation property placed in service 
        during the taxable year.
            ``(2) Qualified reclamation property.--
                    ``(A) In general.--For purposes of this subsection, 
                the term `qualified reclamation property' means 
                property--
                            ``(i) which is qualified recycling property 
                        or qualified remanufacturing property,
                            ``(ii) which is tangible property (not 
                        including a building and its structural 
                        components),
                            ``(iii) with respect to which depreciation 
                        (or amortization in lieu of depreciation) is 
                        allowable,
                            ``(iv) which has a useful life of at least 
                        5 years, and
                            ``(v) which is--
                                    ``(I) acquired by purchase (as 
                                defined in section 179(d)(2)) by the 
                                taxpayer if the original use of such 
                                property commences with the taxpayer, 
                                or
                                    ``(II) constructed by or for the 
                                taxpayer.
                    ``(B) Dollar limitation.--
                            ``(i) In general.--The basis of qualified 
                        reclamation property taken into account under 
                        paragraph (1) for any taxable year shall not 
                        exceed $10,000,000 for a taxpayer.
                            ``(ii) Treatment of controlled group.--For 
                        purposes of clause (i)--
                                    ``(I) all component members of a 
                                controlled group shall be treated as 
                                one taxpayer, and
                                    ``(II) the Secretary shall 
                                apportion the dollar limitation in such 
                                clause among the component members of 
                                such controlled group in such manner as 
                                he shall by regulation prescribe.
                            ``(iii) Treatment of partnerships and s 
                        corporations.--In the case of a partnership, 
                        the dollar limitation in clause (i) shall apply 
                        with respect to the partnership and with 
                        respect to each partner. A similar rule shall 
                        apply in the case of an S corporation and its 
                        shareholders.
                            ``(iv) Controlled group defined.--For 
                        purposes of clause (ii), the term `controlled 
                        group' has the meaning given such term by 
                        section 1563(a), except that `more than 50 
                        percent' shall be substituted for `at least 80 
                        percent' each place it appears in section 
                        1563(a)(1).
            ``(3) Certain progress expenditure rules made applicable.--
        Rules similar to the rules of subsections (c)(4) and (d) of 
        section 46 (as in effect on the day before the date of the 
        enactment of the Revenue Reconciliation Act of 1990) shall 
        apply for purposes of this subsection.
            ``(4) Definitions.--For purposes of this subsection--
                    ``(A) Qualified recycling property.--The term 
                `qualified recycling property' means equipment used 
                exclusively to collect, distribute, or sort used 
                ferrous or nonferrous metals. The term does not include 
                equipment used to collect, distribute, or sort precious 
                metals such as gold, silver, or platinum unless such 
                use is coincidental to the collection, distribution, or 
                sorting of other used ferrous or nonferrous metals.
                    ``(B) Qualified remanufacturing property.--The term 
                `qualified remanufacturing property' means equipment 
                used primarily by the taxpayer in the business of 
                rebuilding or remanufacturing a used product or part, 
                but only if--
                            ``(i) the rebuilt or remanufactured product 
                        or part includes 50 percent or less virgin 
                        material, and
                            ``(ii) the equipment is not used primarily 
                        in a process occurring after the product or 
                        part is rebuilt or remanufactured.
            ``(5) Coordination with rehabilitation and energy 
        credits.--For purposes of this section--
                    ``(A) the basis of any qualified reclamation 
                property shall be reduced by that portion of the basis 
                of any property which is attributable to qualified 
                rehabilitation expenditures (as defined in section 
                47(c)(2)) or to the energy percentage of energy 
                property (as determined under section 48(a)), and
                    ``(B) expenditures taken into account under either 
                section 47 or 48(a) shall not be taken into account 
                under this section.''.
    (c) Special Basis Adjustment Rule.--Paragraph (3) of section 50(c) 
of such Code (relating to basis adjustment to investment credit 
property) is amended by inserting ``or reclamation credit'' after 
``energy credit''.
    (d) Clerical Amendments.--
            (1) The section heading for section 48 of such Code is 
        amended to read as follows:

``SEC. 48. ENERGY CREDIT; RECLAMATION CREDIT.''

            (2) The item relating to section 48 in the table of 
        sections for subpart E of part IV of subchapter A of chapter 1 
        of such Code is amended to read as follows:

``Sec. 48. Energy credit; reclamation credit.''.
    (e) Effective Date.--The amendments made by this section shall 
apply to property placed in service on or after January 1, 2006.

SEC. 2. STUDY ON EFFECTIVENESS OF RECYCLED AUTOMOBILE AIRBAGS.

    (a) Study.--The Secretary of Transportation, through the 
appropriate agency, shall conduct a study on the performance and safety 
of recycled, non-deployed original equipment manufacturer airbags and 
airbag modules compared to new, original equipment manufacturer airbags 
and airbag modules used in automobiles.
    (b) Report.--Not later than 1 year after the date of enactment of 
this Act, the Secretary of Transportation shall transmit to Congress a 
report on the results of the study conducted pursuant to subsection 
(a).