SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Home and Farm Wind Energy Systems 
Act of 2001''.

SEC. 2. CREDIT FOR WIND ENERGY PROPERTY INSTALLED IN RESIDENCES AND 
              BUSINESSES.

    (a) In General.--Subpart B of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986 is amended by inserting after 
section 30A the following new section:

``SEC. 30B. WIND ENERGY PROPERTY.

    ``(a) Allowance of Credit.--There shall be allowed as a credit 
against the tax imposed by this chapter for the taxable year an amount 
equal to 30 percent (10 percent after December 31, 2011) of the amount 
paid or incurred by the taxpayer for qualified wind energy property 
placed in service or installed during such taxable year.
    ``(b) Limitation.--No credit shall be allowed under subsection (a) 
unless at least 50 percent of the energy produced annually by the 
qualified wind energy property is consumed on the site on which the 
property is placed in service or installed.
    ``(c) Qualified Wind Energy Property.--For purposes of this 
section, the term `qualified wind energy property' means a qualifying 
wind turbine if--
            ``(1) in the case of an individual, the property is 
        installed on or in connection with a dwelling unit which is 
        located in the United States and which is owned and used as the 
        taxpayer's principal residence,
            ``(2) the original use of which commences with the 
        taxpayer, and
            ``(3) the property carries at least a 5-year limited 
        warranty covering defects in design, material, or workmanship, 
        and, for property that is not installed by the taxpayer, at 
        least a 5-year limited warranty covering defects in 
        installation.
    ``(d) Other Definitions.--For purposes of this section--
            ``(1) Qualifying wind turbine.--The term `qualifying wind 
        turbine' means a wind turbine of 75 kilowatts of rated capacity 
        or less which meets the latest performance rating standards 
        published by the American Wind Energy Association or the 
        International Electrotechnical Commission and which is used to 
        generate electricity.
            ``(2) Principal residence.--The term `principal residence' 
        shall have the same meaning as when used in section 121.
    ``(e) Limitation Based on Amount of Tax.--
            ``(1) In general.--The credit allowed under subsection (a) 
        for any taxable year shall not exceed the excess of--
                    ``(A) the sum of the regular tax liability (as 
                defined in section 26(b)) plus the tax imposed by 
                section 55, over
                    ``(B) the sum of the credits allowable under this 
                part (other than under this section and subpart C 
                thereof, relating to refundable credits) and section 
                1397E.
            ``(2) Carryover of unused credit.--If the credit allowable 
        under subsection (a) exceeds the limitation imposed by 
        paragraph (1) for such taxable year, such excess shall be 
        carried to the succeeding taxable year and added to the credit 
        allowable under subsection (a) for such taxable year.
    ``(f) Special Rules.--For purposes of this section--
            ``(1) Tenant-stockholder in cooperative housing 
        corporation.--In the case of an individual who is a tenant-
        stockholder (as defined in section 216(b)(2)) in a cooperative 
        housing corporation (as defined in section 216(b)(1)), such 
        individual shall be treated as having paid his tenant-
        stockholder's proportionate share (as defined in section 
        216(b)(3)) of any expenditures paid or incurred for qualified 
        wind energy property by such corporation, and such credit shall 
        be allocated appropriately to such individual.
            ``(2) Condominiums.--
                    ``(A) In general.--In the case of an individual who 
                is a member of a condominium management association 
                with respect to a condominium which he owns, such 
                individual shall be treated as having paid his 
                proportionate share of expenditures paid or incurred 
                for qualified wind energy property by such association, 
                and such credit shall be allocated appropriately to 
                such individual.
                    ``(B) Condominium management association.--For 
                purposes of this paragraph, the term `condominium 
                management association' means an organization which 
                meets the requirements of section 528(c)(2) with 
                respect to a condominium project of which substantially 
                all of the units are used by individuals as residences.
    ``(g) Basis Adjustment.--For purposes of this subtitle, if a credit 
is allowed under this section for any expenditure with respect to a 
residence or other property, the basis of such residence or other 
property shall be reduced by the amount of the credit so allowed.
    ``(h) Application of Credit.--The credit allowed under this section 
shall apply to property placed in service or installed after December 
31, 2001.''.
    (b) Conforming Amendment.--Subsection (a) of section 1016 of such 
Code (relating to general rule for adjustments to basis) is amended by 
striking ``and'' at the end of paragraph (27), by striking the period 
at the end of paragraph (28) and inserting ``, and'', and by adding at 
the end the following new paragraph:
            ``(29) in the case of a residence or other property with 
        respect to which a credit was allowed under section 30B, to the 
        extent provided in section 30B(g).''.
    (c) Clerical Amendment.--The table of sections for subpart B of 
part IV of subchapter A of chapter 1 of such Code is amended by 
inserting after the item relating to section 30A the following new 
item:

                              ``Sec. 30B. Wind energy property.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to property placed in service or installed after December 31, 
2001, in taxable years ending after such date.
Home and Farm Wind Energy Systems Act of 2001 - Amends the Internal Revenue Code to allow a limited credit for amounts paid for qualified wind energy property from which at least 50 percent of the energy produced is consumed on site.
A bill to amend the Internal Revenue Code of 1986 to provide credits for individuals and businesses for the installations of certain wind energy property.