A bill to amend the Internal Revenue Code of 1986 to modify the treatment of depreciation of refinery property.

Summary: Gas Price Reduction Through Increased Refinery Capacity Act of 2005 - Amends the Internal Revenue Code to allow taxpayers to elect to expense (i.e., deduct in the current taxable year) the cost of qualified refinery property placed in service before January 1, 2012, or under a binding construction contract before January 1, 2008. Requires that such refinery meet specified production levels and comply with all applicable environmental laws

Classifies petroleum refining property as five-year property for depreciation purposes.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Gas Price Reduction Through 
Increased Refinery Capacity Act of 2005''.

SEC. 2. INCENTIVES FOR INVESTMENT IN OIL REFINERIES.

    (a) Election to Expense Qualified Refineries.--
            (1) In general.--Part VI of subchapter B of chapter 1 of 
        the Internal Revenue Code of 1986 is amended by inserting after 
        section 179B the following new section:

``SEC. 179C. ELECTION TO EXPENSE CERTAIN REFINERIES.

    ``(a) Treatment as Expenses.--A taxpayer may elect to treat the 
cost of any qualified refinery property as an expense which is not 
chargeable to a capital account. Any cost so treated shall be allowed 
as a deduction for the taxable year in which the qualified refinery is 
placed in service.
    ``(b) Election.--
            ``(1) In general.--An election under this section for any 
        taxable year shall be made on the taxpayer's return of the tax 
        imposed by this chapter for the taxable year. Such election 
        shall be made in such manner as the Secretary may by 
        regulations prescribe.
            ``(2) Election irrevocable.--Any election made under this 
        section may not be revoked except with the consent of the 
        Secretary.
    ``(c) Qualified Refinery Property.--The term `qualified refinery 
property' means any refinery or portion of a refinery--
            ``(1) with respect to the construction of which there is a 
        binding construction contract before January 1, 2008,
            ``(2) which is placed in service by the taxpayer before 
        January 1, 2012,
            ``(3) in the case of any portion of a refinery, which meets 
        the requirements of subsection (d), and
            ``(4) which meets all applicable environmental laws in 
        effect on the date such refinery or portion thereof was placed 
        in service.
A waiver under the Clean Air Act shall not be taken into account in 
determining whether the requirements of paragraph (4) are met.
    ``(d) Production Capacity.--The requirements of this subsection are 
met if the portion of the refinery--
            ``(1) increases the rated capacity of the existing refinery 
        by 5 percent or more over the capacity of such refinery as 
        reported by the Energy Information Agency on January 1, 2005, 
        or
            ``(2) enables the existing refinery to process qualified 
        fuels (as defined in section 29(c)) at a rate which is equal to 
        or greater than 25 percent of the total throughput of such 
        refinery on an average daily basis.
    ``(e) Ineligible Refineries.--No deduction shall be allowed under 
subsection (a) for any qualified refinery property--
            ``(1) the primary purpose of which is for use as a topping 
        plant, asphalt plant, lube oil facility, crude or product 
        terminal, or blending facility, or
            ``(2) which is built solely to comply with Federally 
        mandated projects or consent decrees.''.
            (2) Conforming amendment.--The table of sections for part 
        VI of subchapter B of chapter 1 of the Internal Revenue Code of 
        1986 is amended by inserting after the item relating to section 
        179B the following new item:

        ``Sec. 179C. Election to expense certain refineries.''.
    (b) Class Life for Refineries.--
            (1) In general.--Subparagraph (B) of section 168(e)(3) of 
        the Internal Revenue Code of 1986 (relating to 5-year property) 
        is amended by striking ``and'' at the end of clause (v), by 
        striking the period at the end of clause (vi) and inserting ``, 
        and'', and by adding at the end the following new clause:
                            ``(vii) any petroleum refining property.''.
            (2) Petroleum refining asset.--Section 168(i) of such Code 
        is amended by adding at the end the following new paragraph:
            ``(17) Petroleum refining property.--
                    ``(A) In general.--The term `petroleum refining 
                property' means any asset for petroleum refining, 
                including assets used for the distillation, 
                fractionation, and catalytic cracking of crude 
                petroleum into gasoline and its other components.
                    ``(B) Asset must meet environmental laws.--Such 
                term shall not include any asset which does not meet 
                all applicable environmental laws in effect on the date 
                such asset was placed in service. For purposes of the 
                preceding sentence, a waiver under the Clean Air Act 
                shall not be taken into account in determining whether 
                the applicable environmental laws have been met.
                    ``(C) Special rule for mergers and acquisitions.--
                Such term shall not include any asset with respect to 
                which a deduction was taken under subsection (e)(3)(B) 
                by any other taxpayer in any preceding year.''.
    (c) Effective Date.--
            (1) In general.--The amendments made by this section shall 
        apply to refineries placed in service after the date of the 
        enactment of this Act.
            (2) Exception.--The amendments made by this section shall 
        not apply to any refinery with respect to which the taxpayer 
        has entered into a binding contract for the construction 
        thereof on or before the date of the enactment of this Act.