COMPARISON OF TITLE XIII OF H.R. 6, 

THE “ENHANCED ENERGY INFRASTRUCTURE 

AND TECHNOLOGY TAX ACT OF 2005,” 

AS PASSED BY THE HOUSE OF REPRESENTATIVES 

AND 

TITLE XV OF H.R. 6, 

THE “ENERGY POLICY TAX INCENTIVES ACT OF 2005,” 

AS AMENDED BY THE SENATE 

Prepared by the Staff of the 

JOINT COMMITTEE ON TAXATION 

July 19, 2005 

JCX-52-05
ii

CONTENTS 

INTRODUCTION .....................................................................................................................................................

A. Energy Infrastructure Tax Incentives...............................................................................................................

1. Natural gas gathering lines treated as 7-year property (sec. 1301 of the House bill) .................................2. Recovery period for natural gas distribution lines (sec. 1302 of the House bill and sec. 1515 of the Sena3. Recovery period for electric transmission property (sec. 1303 of the House bill) .....................................4. Amortization of atmospheric pollution control facilities (sec. 1304 of the House bill) .............................5. Modification of credit for producing fuel from a non-conventional source (sec. 1305 of the House bill).6. Special rules for nuclear decommissioning costs (sec. 1306 of the House bill).........................................7. Arbitrage rules not to apply to prepayments for natural gas (sec. 1307 of the House bill) ........................8. Small refiner exception for percentage depletion deduction (sec. 1308 of the House bill)........................9. Extension and modification of renewable electricity production tax credit (secs. 1501 through 1503 of t

amendment).................................................................................................................................................

10. Clean Renewable Energy Bonds (sec. 1504 of the Senate amendment) ....................................................11. Treatment of certain electric cooperatives (sec. 1505 of the Senate amendment)......................................12. Dispositions of transmission property to implement FERC restructuring policy (sec. 1506 of the Senate 

13. Credit for production from advanced nuclear power facilities (sec. 1507 of the Senate amendment).......

14. Credit for investment in clean coal facilities (sec. 1508 of the Senate amendment)..................................15. Clean energy coal bonds (sec. 1509 of the Senate amendment).................................................................16. Credit for investment in clean coke/cogeneration manufacturing facilities (sec. 1511 of the Senate amen17. Temporary expensing for equipment used in the refining of liquid fuels (sec. 1512 of the Senate amendm18. Pass through to patrons of deduction for capital costs incurred by small refiner cooperatives in complyin

regulations (sec. 1513 of the Senate amendment) ......................................................................................

19. Modification of enhanced oil recovery credit (sec. 1514 of the Senate amendment).................................

B. Miscellaneous Energy Tax Incentives ..............................................................................................................
iii 

1. Residential solar hot water heating, photovoltaic, and fuel cell credit (sec. 1311 of the House bill and se

of the Senate amendment)...........................................................................................................................

2. Business fuel cell credit (sec. 1312 of the House bill and sec. 1528 of the Senate amendment) ...............3. Business solar investment tax credit (sec. 1529 of the Senate amendment)...............................................4. Reduced motor fuel excise tax rate for diesel fuel blended with water (sec. 1313 of the House bill) .......5. Amortization of delay rental payments (sec. 1314 of the House bill) ........................................................6. Amortization of geological and geophysical expenditures (sec. 1315 of the House bill) ..........................7. Alternative technology motor vehicle credit (sec. 1316 of the House bill and sec. 1531 of the Senate am8. Electric vehicle credit (sec. 1532 of the Senate amendment) .....................................................................9. Alternative fuel refueling property credit (sec. 1533 of the Senate amendment).......................................10. Credit for retail sale of and imposition of tax on alternative fuels (sec. 1534 of the Senate amendment).11. Extension of excise tax provisions and income tax credit for biodiesel (sec. 1535 of the Senate amendm12. Credit for energy efficiency improvements to existing homes (sec. 1317 of the House bill and sec. 1524 

amendment).................................................................................................................................................

13. Energy efficient commercial building deduction (sec. 1521 of the Senate amendment) ...........................14. Deduction for business energy property (sec. 1523 of the Senate amendment).........................................15. Energy efficient new homes (sec. 1522 of the Senate amendment) ...........................................................16. Energy credit for combined heat and power system property (sec. 1525 of the Senate amendment)........17. Energy efficient appliances (sec. 1526 of the Senate amendment) ............................................................

C. Alternative Minimum Tax Relief......................................................................................................................

1. Allow personal energy credits against the alternative minimum tax (sec. 1321 of the House bill) ...........2. Allow certain business energy credits against the alternative minimum tax (sec. 1322 of the House bill a

of the Senate amendment)...........................................................................................................................

D. Additional Energy Tax Incentives ...................................................................................................................

1. 10-year recovery period for underground natural gas storage facility property (sec. 1541 of the Senate a

2. Modify research credit for research relating to energy (sec. 1542 of the Senate amendment)...................

3. Small agri-biodiesel producer credit (sec. 1543 of the Senate amendment)...............................................4. Small ethanol producer credit (sec. 1544 of the Senate amendment).........................................................5. Qualified recycling equipment credit (sec. 1545 of the Senate amendment) .............................................6. Five-year net operating loss carryback period for electric utilities (sec. 1546 of the Senate amendment) 
iv 

7. Credit for qualifying pollution control equipment (sec. 1547 of the Senate amendment) .........................8. Credit for production of coal owned by Indian tribes (sec. 1548 of the Senate amendment) ....................9. Replacement stoves meeting environmental standards in non-attainment areas (sec. 1549 of the Senate a10. Exemption of bulk beds for farm crops from the Federal excise tax on heavy trucks and trailers 

(sec. 1550 of the Senate amendment) .........................................................................................................

11. National Academy of Sciences study (sec. 1551 of the Senate amendment) .............................................12. Income tax exclusion for employer-provided reimbursement for certain fuel costs of rural carpoolers 

(sec. 1552 of the Senate amendment) .........................................................................................................

13. Three-year applicable recovery period for depreciation of qualified energy management devices 

(sec. 1553 of the Senate amendment) .........................................................................................................

14. Exception from volume cap for certain cooling facilities (sec. 1554 of the Senate amendment) ..............

E. Revenue Raising Provisions .............................................................................................................................

1. Treatment of kerosene for use in aviation (sec. 1561 of the Senate amendment) ......................................

2. Repeal of ultimate vendor refund claims with respect to farming (sec. 1562 of the Senate amendment) .3. Refunds of excise taxes on exempt sales of taxable fuel by credit card (sec. 1563 of the Senate amendm4. Recertification of exempt status (sec. 1564 of the Senate amendment) .....................................................5. Reregistration in event of change in ownership (sec. 1565 of the Senate amendment) .............................6. Treatment of deep draft vessels (sec. 1566 of the Senate amendment)......................................................7. Reconciliation of on-loaded cargo to entered cargo (sec. 1567 of the Senate amendment).......................8. Taxation of gasoline blendstocks and kerosene (sec. 1568 of the Senate amendment) .............................9. Nonapplication of export exemption to delivery of fuel to motor vehicles removed from United States 

(sec. 1569 of the Senate amendment) .........................................................................................................

10. Impose assessable penalty on dealers of adulterated fuel (sec. 1570 of the Senate amendment)...............11. Oil Spill Liability Trust Fund (sec. 1571 of the Senate amendment) .........................................................12. Extension of leaking underground storage tank trust fund financing rate (sec. 1572 of the Senate amend13. Tire excise tax modification (sec. 1573 of the Senate amendment) ...........................................................
1 

INTRODUCTION 

This document,1 prepared by the staff of the Joint Committee on Taxation, presents in side-by-side forma

Title XIII of H.R. 6, the “Enhanced Energy Infrastructure and Technology Tax Act of 2005,” as passed by the HoRepresentatives on April 21, 2005, and Title XV of H.R. 6, the “Energy Policy Tax Incentives Act of 2005,” as aSenate on June 28, 2005. In a related publication, the staff of the Joint Committee on Taxation presents the estim

effects of the proposals described herein.2

1 This document may be cited as follows, Joint Committee on Taxation, Comparison of Title XIII of H.R. 6, The “

Infrastructure and Technology Tax Act of 2005,” as Passed by the House of Representatives and Title XV of H.R. 6, The “E

Incentives Act of 2005” as Amended by the Senate (JCX-52-05), July 19, 2005. 

2 Joint Committee on Taxation, Comparison of the Revenue Effects of the Tax Provisions of H.R. 6 as Passed by th

Amended by the Senate (JCX-53-05), July 19, 2005. 
2 

Provision Present Law House Bill 

A. Energy Infrastructure Tax 

Incentives 

1. Natural gas gathering lines treated as 7-year property (sec. 1301 of the House bill)

Rev. Proc. 87-56 includes two asset classes that could describe natural gas gathering lines owned by nonproducers of natural gas. Asset class 46.0, describing pipeline transportation, provides a recovery period of 15 years. Asset class 13.2, describing assets used in the exploration for and production of petroleum and natural gas deposits, provides a recovery period of seven years. In each of three recent cases, courts have held that natural gas gathering lines owned by nonproducers fall within the scope of Asset class 13.2 (i.e., seven-year recovery period). The IRS has not yet indicated whether it acquiesces in the result in these three appellate decisions in cases arising in other circuits. 

Establishes a statutory seven-year recovery period for natural gas gathering lines. In addition, the provision provides that there would be no adjustment to the allowable amount of depreciation for purposes of computing a taxpayer’s alternative minimum taxable income with respect to such property. Effective date.–Effective for 

property placed in service after April 11, 2005. 

No pr

2. Recovery period for natural gas distribution lines (sec. 1302 of the House bill and sec. 1515 of the Senate amendment)

Rev. Proc. 87-56 provides that natural gas distribution pipelines are assigned a 20-year recovery period. 

Establishes a statutory 15-year recovery period for natural gas distribution lines. Effective date.–Effective for 

property placed in service after April 11, 2005. 

SimilaoriginexpireEffectproperdate oapply bindin
3 

Provision Present Law House Bill 

constr2005. 

3. Recovery period for electric transmission property (sec. 1303 of the House bill)

Rev. Proc. 87-56 provides that assets used in the transmission and distribution of electricity for sale and related land improvements are assigned a 20-year recovery period. 

Establishes a statutory 15-year recovery period for property used in the transmission of electricity for sale at 69 kilovolts and above. Effective date.–Effective for 

property placed in service after April 11, 2005, the original use of which commences with the taxpayer after such date. 

No pr

4. Amortization of atmospheric pollution control facilities (sec. 1304 of the House bill)

In general, a taxpayer may recover the cost of a pollution control facility over a period of 60 months if it is a new, identifiable treatment facility which (1) is used in an existing plant in operation before January 1, 1976; and (2) does not lead to a significant increase in output or capacity, a significant extension of useful life, a significant reduction in total operating costs for such plant or other property (or any unit thereof), or a significant alteration in the nature of a manufacturing production process or facility. For a pollution control facility with a useful life greater than 15 years, 

Expands the ability to recover the cost of certain certified air pollution control facilities (but not water pollution control facilities) over 60 months by repealing the requirement that only certified pollution control facilities used in connection with a plant in operation before January 1, 1976 qualify. The facility must be (1) used in connection with an electric generation plant which is primarily coal fired, and (2) placed in service after April 11, 2005. The provision does not apply to water pollution control facilities. 

No pr
4 

Provision Present Law House Bill 

only the basis attributable to the first 15 years is eligible to be amortized over a 5-year period. 

Effective date.–Effective for air 

pollution control facilities placed in service after April 11, 2005. 

5. Modification of credit for producing fuel from a nonconventional source (sec. 1305 of the House bill)

Certain fuels produced domestically from “nonconventional sources” and sold to unrelated parties are eligible for an income tax credit equal to $3 (generally adjusted for inflation and equal to $6.56 per barrel of oil equivalent in 2004) per barrel or BTU oil barrel equivalent (“section 29 credit”). Qualified fuels include (1) oil produced from shale and tar sands; (2) gas produced from geopressured brine, Devonian shale, coal seams, tight formations, or biomass; and (3) liquid, gaseous, or solid synthetic fuels produced from coal (including lignite). Generally the credit has expired, except for certain biomass gas and synthetic fuels sold before January 1, 2008. The section 29 credit may not exceed the excess of the regular tax liability over the tentative minimum tax. Unused section 29 credits may not be carried forward or carried back to other taxable 

Makes the credit for producing fuel from a non-conventional source part of the general business credit. Thus, the credit for producing fuel from a non-conventional source will be subject to the limitations applicable to the general business credit. Any unused credits may be carried back one year and forward 20 years. Makes certain clerical changes in cross-references to the Natural Gas Policy Act of 1978, which has been repealed. Effective date.–Applies to credits 

determined for taxable years ending after December 31, 2005 (but credits may not be carried back to a taxable year ending before January 1, 2006). Clerical changes are effective on the date of enactment. 

No pr
5 

Provision Present Law House Bill 

years. However, to the extent the section 29 credit is disallowed because of the tentative minimum tax, the minimum tax credit allowable in future years is increased by the amount so disallowed. Generally, the general business credit may not exceed the excess of the taxpayer’s net income tax over the greater of the taxpayer's tentative minimum tax or 25 percent of so much of the taxpayer's net regular tax liability as exceeds $25,000. General business credits in excess of this limitation may be carried back one year and forward up to 20 years. The section 29 credit is not part of the general business credit. The section 29 credit includes definitional cross-references and a credit limitation relating to the Natural Gas Policy Act of 1978. The Natural Gas Policy Act of 1978 has been repealed. 
6 

Provision Present Law House Bill 

6. Special rules for nuclear decommissioning costs (sec. 1306 of the House bill)

A qualified nuclear decommissioning fund (a “qualified fund”) is a segregated fund established by a taxpayer that is used for the payment of decommissioning costs. Contributions to a qualified fund are deductible in the year made to the extent that these amounts were collected as part of the cost of service to ratepayers (the “cost of service requirement”). Accumulations in a qualified fund generally are limited to the amount required to fund post-1984 decommissioning costs of a nuclear powerplant. 

Repeals the cost of service requirement for deductible contributions to a qualified fund. Permits a qualified fund to accumulate an amount sufficient to pay for all decommissioning costs. Permits an exception to ratable funding for decommissioning costs that, under present law, are not permitted to be accumulated in a qualified fund (generally pre-1984 decommissioning costs). Amount transferred under this special rule is allowed as a deduction over the remaining useful life of the nuclear powerplant. If a qualified fund that has received amounts under this rule is transferred to another person, the transferor will be permitted a deduction for any remaining deductible amounts at the time of transfer. Effective date.–Effective for 

taxable years beginning after December 31, 2005. 

No pr

7. Arbitrage rules not to apply to prepayments for natural gas (sec. 1307 of the House bill)

Restrictions are imposed on the ability of States or local governments to invest the proceeds of tax-exempt bonds for profit (the “arbitrage restrictions”). One such restriction limits the use of bond 

Creates a safe harbor exception to the general rule that tax-exempt bond-financed prepayments violate the arbitrage restrictions. The term “investment type property” does not include a prepayment by a 

No pr
7 

Provision Present Law House Bill 

proceeds to acquire “investmenttype property.” The term investment-type property includes the acquisition of property in a transaction involving a prepayment. A prepayment can produce prohibited arbitrage profits when the discount received for prepaying the costs exceeds the yield on the tax-exempt bonds. In general, prohibited prepayments include all prepayments that are not customary in an industry by both beneficiaries of tax-exempt bonds and other persons using taxable financing for the same type of transaction. On August 4, 2003, the Treasury Department issued final regulations deeming to be customary, and not in violation of the arbitrage rules, certain prepayments for natural gas and electricity. Generally, a qualified prepayment under the regulations requires that 90 percent of the natural gas or electricity purchased with the prepayment be used for a qualifying use. Generally, natural gas is used for a qualifying use if it is to be (1) furnished to retail gas customers of the issuing municipal utility who 

governmental gas utility under a qualified natural gas supply contract. Also provides that such prepayments are not treated as private loans for purposes of the private business tests. A contract is a qualified natural gas supply contract if the volume of natural gas secured for any year covered by the prepayment does not exceed the sum of (1) the average annual natural gas purchased (other than for resale) by customers of the utility within the service area of the utility (“retail natural gas consumption”) during the testing period, and (2) the amount of natural gas that is needed to fuel transportation of the natural gas to the governmental utility. The testing period is the five-calendar-year period immediately preceding the calendar year in which the bonds are issued. Natural gas used to generate electricity by a governmental utility is counted as retail natural gas consumption if the electricity was sold to retail customers within the service area of the governmental electric utility. 
8 

Provision Present Law House Bill 

are located in the natural gas service area of the issuing municipal utility, however, gas used to produce electricity for sale is not included under this provision, (2) used by the issuing municipal utility to produce electricity that will be furnished to retail electric service area customers of the issuing utility, (3) used by the issuing municipal utility to produce electricity that will be sold to a utility owned by a governmental person and furnished to the service area retail electric customers of the purchaser, (4) sold to a utility that is owned by a governmental person if the requirements of (1), (2) or (3) are satisfied by the purchasing utility (treating the purchaser as the issuing utility) or (5) used to fuel the pipeline transportation of the prepaid gas supply. Electricity is used for a qualifying use if it is to be (1) furnished to retail service area electric customers of the issuing municipal utility or (2) sold to a municipal utility and furnished to retail electric customers of the purchaser who are located in the electricity service area of the purchaser. 

Effective date.–Bonds issued after 

date of enactment. 
9 

Provision Present Law House Bill 

Both governmental gas and electric utilities may take advantage of this regulatory provision. 

8. Small refiner exception for percentage depletion deduction (sec. 1308 of the House bill)

Present law classifies oil and gas producers as independent producers or integrated companies. The Code allows independent producers to claim percentage depletion deductions rather than deducting the costs of their asset, a producing well, based on actual production from the well (i.e., cost depletion). An independent producer may not have refining operations the runs from which exceed 50,000 barrels on any day in the taxable year during which independent producer status is claimed (sec. 613A(d)(4)). 

Allows refiners with average daily refinery runs for the taxable year that do not exceed 75,000 barrels to qualify as independent producers. Effective date.–Taxable years 

ending after the date of enactment. 

No pr

9. Extension and modification of renewable electricity production tax credit (secs. 1501 through 1503 of the Senate amendment)

An income tax credit is allowed for the production of electricity from qualified facilities sold by the taxpayer to an unrelated person (sec. 45). Expiration of “placed in service 

date.”−Except for refined coal 

facilities, to be a qualified facility the facility must be placed in service by December 31, 2005. A 

No provision. 

Expiradate.”the “pDecemqualiffacilit
10 

Provision Present Law House Bill 

refined coal facility must be placed in service by December 31, 2008. Qualified facilities.−Qualified facilities comprise wind energy facilities, closed-loop biomass facilities, open-loop biomass (including agricultural livestock waste nutrients) facilities, geothermal energy facilities, solar energy facilities, small irrigation power facilities, landfill gas facilities, and trash combustion facilities. In addition, an income tax credit is allowed for the production of refined coal. Credit amount.−In general, the 

amount of the credit is 1.9 cents per kilowatt-hour for 2005. This amount is indexed for inflation. In the case of open-loop biomass facilities (including agricultural livestock waste nutrient facilities), small irrigation power facilities, landfill gas facilities, and trash combustion facilities, the otherwise allowable credit amount is one-half of the otherwise allowable amount (0.9 cents per kilowatt-hour for 2005). Credit period.−In general, 

taxpayers’ may claim credit for 

Qualifnew qfuel cecurrenenergytrash cnew uprodutrash cCredit amouncell anocean per kione-haamounhour fhydroCredit 

credit 
11 

Provision Present Law House Bill 

production for the 10-year period following the date the facility is placed in service. In the case of open-loop biomass facilities (including agricultural livestock waste nutrient facilities), geothermal energy facilities, solar energy facilities, small irrigation power facilities, landfill gas facilities, and trash combustion facilities, the 10-year credit period is reduced to five years. Treatment of co-ops.−Although coops may claim the credit, there is 

no provision in the Code that permits cooperatives to pass the income tax credit for electricity production through to their patrons. 

facilitTreatm

eligiblapport45 creorganiamounpatronAn elias a cois ownagricuowned Effect

For fufacilitDecem
12 

Provision Present Law House Bill 

10. Clean renewable energy bonds (sec. 1504 of the Senate amendment)

Interest on State and local governmental bonds generally is excluded from gross income for Federal income tax purposes if the proceeds of the bonds are used to finance direct activities of these governmental units or if the bonds are repaid with revenues of the governmental units. Restrictions are imposed on the ability of States or local governments to invest the proceeds of tax-exempt bonds for profit (the “arbitrage restrictions”). As an alternative to traditional taxexempt bonds, States and local governments may issue qualified zone academy bonds (“QZABs”) for the purpose of renovating, providing equipment to, developing course materials for use at, or training teachers and other school personnel with respect to certain educational facilities. Financial institutions that hold QZABs are entitled to a nonrefundable tax credit in an amount equal to a credit rate multiplied by the face amount of the bond. The Treasury Department sets the credit rate at a rate estimated to 

No provision. The pr

categoRenew(“CREQZABCREBwould that caincomminimcredit are deas QZCREBissued additiodiscusmore are reato finaincurrfacilitcredit projecplacedof that “QualgovernIndian Tennemutua
13 

Provision Present Law House Bill 

allow issuance of QZABs at neither discount nor premium. The credit is includable in gross income, and may be claimed against regular income tax and AMT liability. The arbitrage restrictions that apply to traditional tax-exempt bonds do not apply to QZABs. There is an annual limitation of $400 million on the amount of QZABs that may be issued in calendar years 1998 through 2005. 

compabond llender is ownloans electriexisteThe teinclud(inclugovernAuthocoopeCREBrestrictax-expercenCREBprojecthat beunless the Seare usbondsThere billion may aqualifissue C2008. 
14 

Provision Present Law House Bill 

Effectissued 

11. Treatment of certain electric cooperatives (sec. 1505 of the Senate amendment)

Section 501(c)(12) provides an income tax exemption for rural electric cooperatives if at least 85 percent of the cooperative's income consists of amounts collected from members for the sole purpose of meeting losses and expenses of providing service to its members. The 85-percent test is determined without taking into account any income from: (1) qualified pole rentals; (2) open access electric energy transmission services; (3) open access electric energy distribution services; (4) any nuclear decommissioning transaction; (5) any asset exchange or conversion transaction. The exclusion for income from open access, nuclear decommissioning, and asset exchange or conversion transactions does not apply to taxable years beginning after December 31, 2006. Under present law, income received or accrued by a taxexempt rural electric cooperative from a “load loss transaction” is treated as income collected from members for the sole purpose of 

No provision. Elimin

rules eaccrueelectriaccess or distdecomany astransapercen501(c)Also ethe ruloss trmembwhethsatisfiEliminrule pcoopeaccruatransapatroncoopeEffect
15 

Provision Present Law House Bill 

meeting losses and expenses of providing service to its members. Thus, income from load loss transactions is treated as member income in determining whether a rural electric cooperative satisfies the 85-percent test. This rule does not apply to taxable years beginning after December 31, 2006. For taxable electric cooperatives, the receipt or accrual of income from load loss transactions is treated as income from patrons who are members of the cooperative. Thus, income from a load loss transaction is excludible from the taxable income of a taxable electric cooperative if the cooperative distributes such income pursuant to a pre-existing contract to distribute the income to a patron who is not a member of the cooperative. This rule does not apply to taxable years beginning after December 31, 2006. 

12. Dispositions of transmission property to implement FERC restructuring policy (sec. 1506 of the Senate amendment)

A taxpayer may elect to recognize gain from qualifying electric transmission transactions ratably over an eight-year period beginning in the year of sale, to the extent proceeds are used to 

No provision. Exten

sales oindepeprior t
16 

Provision Present Law House Bill 

purchase exempt utility property within the four years. A qualifying electric transmission transaction is the sale or other disposition of property used by the taxpayer in the trade or business of providing electric transmission services, or an ownership interest in such an entity, to an independent transmission company prior to January 1, 2007. 

Effecttransadate o

13. Credit for production from advanced nuclear power facilities (sec. 1507 of the Senate amendment)

Present law does not provide a credit for electricity produced at advanced nuclear power facilities. However, an income tax credit is allowed for the production of electricity at wind, open and closed loop biomass, geothermal, solar, small irrigation power, landfill gas, and trash combustion facilities. 

No provision. Provid

hour cat quapower period is placamounlimitacapaciThe S6,000 taxpay$125 m1,000 capaciEffect

produbeginnenactm
17 

Provision Present Law House Bill 

14. Credit for investment in clean coal facilities (sec. 1508 of the Senate amendment)

Present law does not provide an investment credit for electricity production facilities property that uses coal as a fuel or for the gasification of coal or other materials. However, a 10-percent investment tax credit is allowed for the cost of new property that is equipment (1) that uses solar energy to generate electricity, to heat or cool a structure, or to provide solar process heat, or (2) that is used to produce, distribute, or use energy derived from a geothermal deposit, but only, in the case of electricity generated by geothermal power, up to the electric transmission stage (sec. 48). 

No provision. Provid

investcoal acertificredit produgeneraintegrcycle advan(3,375 gasificprojecallocarelativusing subbitprimaThe sebillion certificonvebiomarecovefeedstsynthemonox
18 

Provision Present Law House Bill 

Effect

periodunder sectioits rep

15. Clean energy coal bonds (sec. 1509 of the Senate amendment)

Interest on State and local governmental bonds generally is excluded from gross income for Federal income tax purposes if the proceeds of the bonds are used to finance direct activities of these governmental units or if the bonds are repaid with revenues of the governmental units. Restrictions are imposed on the ability of States or local governments to invest the proceeds of tax-exempt bonds for profit (the “arbitrage restrictions”). As an alternative to traditional taxexempt bonds, States and local governments may issue qualified zone academy bonds (“QZABs”) for the purpose of renovating, providing equipment to, developing course materials for use at, or training teachers and other school personnel with respect to certain educational facilities. 

No provision. The pr

categoEnergAs witaxpaycredit entitleclaimeliabilitax liacredit determQZABClECoissued additiodiscusmore are reato finaincurr“certifas any qualifcertifi
19 

Provision Present Law House Bill 

Financial institutions that hold QZABs are entitled to a nonrefundable tax credit in an amount equal to a credit rate multiplied by the face amount of the bond. The Treasury Department sets the credit rate at a rate estimated to allow issuance of QZABs at neither discount nor premium. The credit is includable in gross income, and may be claimed against regular income tax and AMT liability. The arbitrage restrictions that apply to traditional tax-exempt bonds do not apply to QZABs. There is an annual limitation of $400 million on the amount of QZABs that may be issued in calendar years 1998 through 2005. 

“QualgovernIndian Tennemutuacompabond llender is ownloans electriexisteThe teinclud(inclugovernAuthocoopeClECorestrictax-expercenClECoprojecthat beunless the Seare usbonds
20 

Provision Present Law House Bill 

There billion may acertifiThe auexpireEffect

issued 

16. Credit for investment in clean coke/cogeneration manufacturing facilities (sec. 1511 of the Senate amendment)

No provision. No provision. Provid

tax credeprecUnited emissithe macoke oor elecgenerametallEffect

Decemsimilasectioits rep

17. Temporary expensing for equipment used in the refining of liquid fuels (sec. 1512 of the Senate amendment)

Petroleum refining assets are depreciated for regular tax purposes over a 10-year recovery period. A special expensing rule exists for small refiners for capital 

No provision. Provid

assets fuels: constrbindin
21 

Provision Present Law House Bill 

costs incurred in complying with Environmental Protection Agency sulfur regulations. 

2008; servicwhich existinpercenqualifpercenapplicAlso athrougpermiproperrefinewith TEffect

properdate oof whprovidto a biconstr

18. Pass through to patrons of deduction for capital costs incurred by small refiner cooperatives in complying with sulfur regulations (sec. 1513 of the Senate amendment)

The Code permits small business refiners to currently deduct up to 75 percent of the costs paid or incurred for the purpose of complying with the Highway Diesel Fuel Sulfur Control Requirements of the Environmental Protection Agency (“EPA”). A 

No provision. Allow

througpermifor the the EnAgencSulfur the ex
22 

Provision Present Law House Bill 

small business refiner is a taxpayer who is within the business of refining petroleum products, employs not more than 1,500 employees directly in refining, and has less than 205,000 barrels per day (average) of total refinery capacity. To qualify for the deduction, costs must be paid or incurred during the period beginning on January 1, 2003, and ending on the earlier of the date that is one year after the date on which the taxpayer must comply with the applicable EPA regulations or December 31, 2009. The Code also provides that a small business refiner may claim credit equal to five cents per gallon for each gallon of low sulfur diesel fuel produced during the taxable year that is in compliance with the Highway Diesel Fuel Sulfur Control Requirements. The total production credit claimed by the taxpayer is limited to 25 percent of the capital costs incurred to come into compliance with the EPA diesel fuel requirements. 

througis denotherwto coswith thSulfur Effect

includby secJobs CNo. 10
23 

Provision Present Law House Bill 

In the case of a qualifying small business refiner that is owned by a cooperative, the cooperative is allowed to elect to pass any production credits to patrons of the organization. Present law does not permit cooperatives to pass through to members the deduction permitted for the costs paid or incurred for the purpose of complying with the Highway Diesel Fuel Sulfur Control Requirements. 

19. Modification of enhanced oil recovery credit (sec. 1514 of the Senate amendment)

Taxpayers may claim a credit equal to 15 percent of enhanced oil recovery (“EOR”) costs (sec. 43). Qualified EOR costs include the following costs associated with an EOR project: (1) amounts paid for depreciable tangible property; (2) intangible drilling and development expenses; (3) tertiary injectant expenses; and (4) construction costs for certain Alaskan natural gas treatment facilities. The EOR credit is ratably reduced over a $6 phase-out range when the reference price for domestic crude oil exceeds $28 per barrel (adjusted for inflation after 1991). 

No provision. The pr

credit respecEOR pDecemtertiarcarbon The prdefiniprojecgas wEffect

incurrafter Dterminincurr
24 

Provision Present Law House Bill 

B. Miscellaneous Energy Tax 

Incentives 

1. Residential solar hot water heating, photovoltaic, and fuel cell credit (sec. 1311 of the House bill and sec. 1527 of the Senate amendment)

No provision. Provides a personal tax credit for 

the purchase of qualified photovoltaic property and qualified solar water heating property that is used exclusively for purposes other than heating swimming pools and hot tubs. The credit is equal to 15 percent of qualified investment up 

to a maximum credit of $2,000 for each solar water heating property and photovoltaic property. Also provides a 15-percent personal tax credit for the purchase of qualified fuel cell power plants. The credit may not exceed $500 for each 0.5 kilowatt of capacity. The credit is nonrefundable. Effective date.–Effective for property placed in service after the date of enactment in taxable years beginning before January 1, 2008. 

SimilamouLaboare qfor thThe cforwayear. Effec

to proDeceJanua

2. Business fuel cell credit (sec. 1312 of the House bill and sec. 1528 of the Senate amendment)

A 10-percent business energy investment tax credit is allowed for the cost of new property that is equipment (1) that uses solar energy to generate electricity, to heat or cool a structure, or to 

Provides a 15-percent credit for the purchase of qualified fuel cell power plants for businesses. The credit is part of the business energy investment tax credit. A qualified fuel cell power plant must have an 

Similis 30 Addicredistatio
25 

Provision Present Law House Bill 

provide solar process heat, or (2) that is used to produce, distribute, or use energy derived from a geothermal deposit, but only, in the case of electricity generated by geothermal power, up to the electric transmission stage. Public utility property is not eligible for the credit. 

electricity-only generation efficiency of greater than 30 percent. The credit may not exceed $500 for each 0.5 kilowatt of capacity. The taxpayer’s basis in the property is reduced by the amount of the credit claimed. Effective date.–Effective for property placed in service after April 11, 2005, and before January 1, 2008, under rules similar to rules of section 48(m) as in effect before its repeal. 

plantmicrohave efficiperceOrgacapackilowthe leof the kilowAddifuel cand otelecoprovisectioprevecompcrediutilitiEffec

to peand b(Janumicroin serafter rules 48(m
26 

Provision Present Law House Bill 

3. Business solar investment tax credit (sec. 1529 of the Senate amendment)

A nonrefundable, 10-percent business energy credit is allowed for the cost of new property that is equipment (1) that uses solar energy to generate electricity, to heat or cool a structure, or to 

provide solar process heat, or (2) used to produce, distribute, or use energy derived from a geothermal deposit, but only, in the case of electricity generated by geothermal power, up to the electric transmission stage. 

No provision. Incre

30 peenergequipdistrithe inenergperceEffecto peand bpropetaxabDecesimilin eff

4. Reduced motor fuel excise tax rate for diesel fuel blended with water (sec. 1313 of the House bill)

A 24.3 cents per gallon excise tax is imposed on diesel fuel to finance the Highway Trust Fund. Gasoline and most special motor fuels are subject to tax at 18.3 cents per gallon for that trust Fund. The statutory rate for certain special motor fuels is determined on an energy equivalent basis, as follows: liquefied petroleum gas (propane) (13.6 cents per gallon); liquefied natural gas (11.9 cents per gallon); methanol derived from petroleum or natural gas (9.15 cents per 

A special tax rate of 19.7 cents per gallon is provided for diesel-water fuel emulsions (containing at least 16.9 percent water) to reflect the reduced Btu content per gallon resulting from the water. Effective date.–January 1, 2006. 

No p
27 

Provision Present Law House Bill 

gallon); and compressed natural gas (48.54 cents per MCF). 

5. Amortization of delay rental payments (sec. 1314 of the House bill)

Present law generally requires costs associated with inventory and property held for resale to be capitalized rather than currently deducted as they are incurred (sec. 263). Oil and gas producers typically contract for mineral production in exchange for royalty payments. If mineral production is delayed, these contracts provide for “delay rental payments” as a condition of their extension. The Internal Revenue Service has taken the position that the uniform capitalization rules of section 263A require delay rental payments to be capitalized. 

Allows delay rental payments incurred in connection with the development of oil or gas within the United States to be amortized over two years. In the case of abandoned property, remaining basis may no longer be recovered in the year of abandonment of a property as all basis is recovered over the two-year amortization period. Effective date.–Amounts paid or incurred in taxable years beginning after the date of enactment. 

No p

6. Amortization of geological and geophysical expenditures (sec. 1315 of the House bill)

Capital expenditures are not currently deductible as ordinary and necessary business expenses, but are allocated to the cost of the property. Courts have held that geological and geophysical costs are capital, and therefore, are allocable to the cost of the property acquired or retained. The costs attributable to such exploration are allocable to the cost of the property acquired or retained. 

Allows geological and geophysical amounts incurred in connection with oil and gas exploration in the United States to be amortized over two years. In the case of abandoned property, remaining basis may no longer be recovered in the year of abandonment of a property as all basis is recovered over the two-year amortization period. 

No p
28 

Provision Present Law House Bill 

Effective date.–Costs paid or 

incurred in taxable years beginning after the date of enactment. 

7. Alternative technology motor vehicle credit (sec. 1316 of the House bill and sec. 1531 of the Senate amendment)

Certain costs of qualified clean-fuel vehicle may be expensed and deducted when such property is placed in service (sec. 179A). Qualified clean-fuel vehicle property includes motor vehicles that use certain clean-burning fuels (natural gas, liquefied natural gas, liquefied petroleum gas, hydrogen, electricity and any other fuel at least 85 percent of which is methanol, ethanol, any other alcohol or ether). A hybrid-electric vehicle may qualify as a clean-fuel 

vehicle. The maximum amount of the deduction is $50,000 for a truck or van with a gross vehicle weight over 26,000 pounds or a bus with seating capacities of at least 20 adults; $5,000 in the case of a truck or van with a gross vehicle weight between 10,000 and 26,000 pounds; and $2,000 in the case of any other motor vehicle. The deduction is reduced to 25 percent of the otherwise allowable deduction in 

Provides a credit for each new qualified advanced lean-burn technology motor vehicle placed in service by the taxpayer. Advanced lean-burn motor 

vehicle.− The amount of the credit 

for any vehicle is the sum of an amount for fuel efficiency and an amount for conservation. The fuel efficiency credit is based on a comparison of the fuel efficiency (mpg) of the vehicle to a fuel efficiency of like vehicle. The fuel efficiency credit is $500 (125% ≤ mpg < 150%); $1,000 (150% ≤ mpg < 175%); $1,500 (175% ≤ mpg <200%); $2,000 (200% ≤ mpg < 225%); $2,500 (225% ≤ mpg < 250%); and $3,000 (250% ≤ mpg). The conservation credit is based on estimated lifetime fuel savings of a vehicle. If the vehicle achieves a 

Proviqualiqualieach motothe tayear. Advavehic
29 

Provision Present Law House Bill 

2006 and is unavailable for purchases after December 31, 2006.

lifetime motor fuel savings between 1,500 and 2,500 gallons of fuel, the credit amount is $250. If the vehicle achieves a lifetime fuel savings of at least 2,500 gallons of motor fuel, the credit amount is $500. Fuel cell vehicle.−No provision. Fuel 

purchdeterthat dof the automadditdepeneconoto a bThe bfor v$10,08,500 vehic26,00weigvehicpounDeceamouThe f(150% (175% (200% 
30 

Provision Present Law House Bill 

Hybrid motor vehicle.−No provision. 

(225% (250% (275% (300% Hybr

may of a qvehicdepenachieto a bautomamou≤ mpmpg mpg < 225250%For a vehicpoundeterincreincrevehicconvamoucost ffuel empg equal 
31 

Provision Present Law House Bill 

Alternative fuel motor vehicle.−No 

provision. 

cost ffuel empg is 40vehiceconoFor v≤ 14,increvehic26,00cost iweigmaxi$30,0Alter

vehiccredialternpercesuch perceemisslimitaallowvehicmaxi$5,008,500 maxi$10,014,00maxi
32 

Provision Present Law House Bill 

Vehicles purchased by exempt persons.−In the case of vehicles 

sold to a tax-exempt person, the taxpayer selling the vehicle may claim the credit. Fuel economy standards and 

emissions standards.−The amount 

for fuel efficiency is based on a comparison of the fuel efficiency (mpg) of the vehicle compared to the Environmental Protection 

$25,026,00increMixevehicfuel talternpercealternvehicfuel talternpercealternAltercompnaturgas, hthat iVehipersoFuel emisseconoyear vehicQual
33 

Provision Present Law House Bill 

Agency’s 2000 model year city fuel economy. Qualifying vehicles meet the Environmental Protection Agency’s Tier II bin 8 emissions standards. Effective date.–Property placed in 

service after the date of enactment and before January 1, 2008. 

gross pounemissEffec

serviand, cell m1, 20hybriJanuaqualivehic

8. Electric vehicle credit (sec. 1532 of the Senate amendment)

A 10-percent tax credit is provided for the cost of a qualified electric vehicle, up to a maximum credit of $4,000. The full amount of the credit is available for purchases prior to 2006. The credit is reduced to 25 percent of the otherwise allowable amount for purchases in 2006, and is unavailable for purchases after December 31, 2006. 

No provision. Repe

undeModia cre$1,50manuprice vehicVehiProvifor putruckThis the vrange singl
34 

Provision Present Law House Bill 

of a p1,000 For l$10,0$20,0or $4In the exemthe vEffec

serviand b

9. Alternative fuel refueling property credit (sec. 1533 of the Senate amendment)

Clean-fuel vehicle refueling property may be expensed and deducted when such property is placed in service (sec. 179A). Up to $100,000 of such property at each location owned by the taxpayer may be expensed with respect to that location. The deduction is unavailable for costs incurred after December 31, 2006. For the purpose of sec. 179A clean fuels comprise natural gas, liquefied natural gas, liquefied petroleum gas, hydrogen, electricity, and any other fuel at least 85 percent of which is methanol, ethanol, or any other alcohol or ether. 

No provision. Perm

perceinstalrefuetrade instalof the alternpropenot eresidrefuecrediAlterleast whicgas, clique
35 

Provision Present Law House Bill 

petroany mbiodiperceIn the instalby a taxpamay Effec

serviand b

10. Excise tax credit and imposition of tax on alternative fuels (sec. 1534 of the Senate amendment)

Under present law, a 24.3-centsper-gallon excise tax is imposed on diesel fuel to finance the Highway Trust Fund. Gasoline and most special motor fuels are subject to tax at 18.3 cents per gallon for the Trust Fund. The statutory rate for certain special motor fuels is determined on an energy equivalent basis, as follows: liquefied petroleum gas (propane) (13.6 cents per gallon); liquefied natural gas (11.9 cents per gallon); methanol derived from petroleum or natural gas (9.15 cents per gallon); and compressed natural gas (48.54 cents per MCF). No excise tax credit is provided for the sale or use of those fuels. 

No provision. Hydr

subjelique18.3 naturper egasolany land lfrom cents galloamoualternhydrovehicprodumixtuHow
36 

Provision Present Law House Bill 

are eproduTropsells alternSecrecents used dedicFund out ogener30, 2hydro31, 2Effec

sale, after 

11. Extension of excise tax provisions and income tax credit for biodiesel (sec. 1535 of the Senate amendment)

For biodiesel fuels, the Code provides an income tax credit for biodiesel and qualified biodiesel mixtures. An excise tax credit and payment provisions are also provided for biodiesel mixtures. The credit is generally 50 cents per gallon of biodiesel, however, in the case of agri-biodiesel, the credit is $1.00 per gallon. The provisions do not apply to fuel sold or used after December 31, 2006. 

No provision. Exten

throuEffec
37 

Provision Present Law House Bill 

12. Credit for energy efficiency improvements to existing homes (sec. 1317 of the House bill and sec. 1524 of the Senate amendment)

No provision. 20-percent credit for the purchase 

of qualified energy efficiency improvements to principal residences located in the United States. The maximum credit for a taxpayer with respect to the same dwelling for all taxable years is $2,000. A qualified energy efficiency improvement is any energy efficiency building envelope component that meets or exceeds the prescriptive criteria for such a component established by the 2000 International Energy Conservation Code as supplemented and as in effect on the date of enactment (or, in the case of metal roofs with appropriate pigmented coatings, meets the Energy Star program requirements). Building envelope components are: (1) insulation materials or systems which are specifically and primarily designed to reduce the heat loss or gain for a dwelling; (2) exterior windows (including skylights) and doors; and (3) metal roofs with appropriate pigmented coatings which are specifically and primarily designed to reduce the heat loss or gain for a dwelling. 

Provito the respeprincof the purch(1) Thighlresidresidreducthe obuildhomebuildconststandInternCode supplenactappliefficiare mresidin enperce$4,00reducthe cless t
38 

Provision Present Law House Bill 

In the case of expenditures that exceed $1,000, certain certification requirements must be met in order to qualify for the credit. The credit is nonrefundable. 

In orthe rebe debased accorby thrules use othe 2AlterAppr(2) T

purch$50 fcircuqualioil fu(3) $energAn afan is propaplacedurinhas amore annudeterDepaproceA quoil fu
39 

Provision Present Law House Bill 

naturor hofuel uleast Qualis: (1heatefacto

Depaprocepump perfoleast ratio energleast pump closeeffici14.1 perfo(ii) in produratio heati(COPcase produratio heati(COPair coseaso
40 

Provision Present Law House Bill 

Effective date.–Effective for 

qualified energy efficiency improvements installed after the date of enactment and before January 1, 2008. 

(SEEeffici13, aor oil energEffec

to proDeceJanua

13. Energy efficient commercial building deduction (sec. 1521 of the Senate amendment)

No provision. No provision. Provi

energbuildmade (1) inlocatwithi2001 HeatiCondIllumNorth (2) ininteriheatihot wbuildas bedesigenergrespesyste
41 

Provision Present Law House Bill 

ventiof the more buildrequi(as in deduequal the pexpenIn the not mrequisavinallowseparefficimeet savinSecresystethat wenergwholeach the syseparthe inheatiwater enveldedufor ea
42 

Provision Present Law House Bill 

interisystededuEffec

propedate Janua

14. Deduction for business energy property (sec. 1523 of the Senate amendment)

No provision. No provision. Provi

greatdeduefficipropeallowpurch(1) Tresperesidis $650 pecosts condcase origindeemstandwith consta buiin enperce$12,0
43 

Provision Present Law House Bill 

reducin the of lesIn ordedusavinto regSecreand penergbuildpropepromthe athe pdesigpropewhicprope(2) Tpurch$150 circuqualioil fu(3) $energAn afan is propa
44 

Provision Present Law House Bill 

placedurinhas amore annudeterDepaproceA quoil funaturor hofuel uleast Qualis: (1heatefactoDepaprocepump perfoleast ratio energleast pump closeeffici14.1 perfo(ii) in 
45 

Provision Present Law House Bill 

produratio heati(COPcase produratio heati(COPair coseaso(SEEeffici13, aor oil energEffec

to prothe dJanua

15. Energy efficient new homes (sec. 1522 of the Senate amendment)

No provision. No provision. Provi

contrqualihome projeand cthat ypercereduccompconst
46 

Provision Present Law House Bill 

standInternCode supplenactFedestandrespeperce30 pethe brespeperce50 pethe bThe cof a npercecase 50 pehomeprescthe EAgenLabeeligibEffec

to hosubstdate purchbegin
47 

Provision Present Law House Bill 

and e(Decthe $

16. Energy credit for combined heat and power system property (sec. 1525 of the Senate amendment)

A nonrefundable, 10-percent business energy credit is allowed for the cost of new property that is equipment (1) that uses solar energy to generate electricity, to heat or cool a structure, or to 

provide solar process heat, or (2) used to produce, distribute, or use energy derived from a geothermal deposit, but only, in the case of electricity generated by geothermal power, up to the electric transmission stage. 

No provision. Provi

purchCHP uses simugenermechcombsteam thermelectr15 menerg2000 at leaenergenergelectrprodutotal electrcombenergwhicAddiprovisourc
48 

Provision Present Law House Bill 

and tbut foefficia crepropothe syefficiEffec

to peenactafter propeJanuato rulInternin effof enReco

17. Energy efficient appliances (sec. 1526 of the Senate amendment)

No provision. No provision. Provi

produefficiwashDishw

dishwprodumeet 2007multiwhicstand
49 

Provision Present Law House Bill 

that ocredidishwCloth

clothcloth2005 facto$100 manumeet Energeffecor (3$10 mthe enperceStar sEnergwash2010 the Ein eff2010Refri

refrigsavinThe erelatistandDepaeffec
50 

Provision Present Law House Bill 

Refri20 peare mreceithat aenergcredi2007manuRefri25 pe(i) $12005manuCred

eligibthose amouprior categof refis properceproducalenapply produThe tin extaxabcrediwith 
51 

Provision Present Law House Bill 

eligibrefrigcrediincredescrproviof creapplieligibcrediall taEffec

to apdate Januain the 
52 

Provision Present Law House Bill 

C. Alternative Minimum Tax 

Relief 

1. Allow personal energy credits against the alternative minimum tax (sec. 1321 of the House bill)

Before 2006, personal credits are allowed against the alternative minimum tax (“AMT”). After 2005, personal credits (other than the child credit, adoption credit and savers credit) are not allowed against AMT. 

Allows personal energy credits added by the bill to offset AMT. These credits include the credit for residential energy efficient property, and the credit for energy efficient improvements to existing homes. Effective date.–Taxable years 

beginning after 2005. 

No pr

2. Allow certain business energy credits against the alternative minimum tax (sec. 1322 of the House bill and 1548(c) of the Senate amendment)

The general business tax credit is generally allowed only to the extent the regular tax exceeds the greater of (i) the tentative minimum tax or (ii) 25 percent of so much of the regular tax as exceeds $25,000. Excess amounts may be carried back one year and carried forward 20 years. For purposes of applying these rules to certain specified energy credits, the tentative minimum tax is treated as zero. 

In applying the tax liability limitation to the general business tax credit, treats the tentative minimum tax as zero with respect to−(1) the low sulphur diesel fuel production credit, (2) the marginal oil and gas well production credit, (3) the portion of the investment credit attributable to qualified fuel cells, and 

In applimitatax creminimto−

(1) the coal o
53 

Provision Present Law House Bill 

(4) for taxable years beginning in 2006 and 2007, the enhanced oil recovery credit. Effective date.−Credits determined 

for taxable years beginning after December 31, 2005, except in case of the credit for qualified fuel cells, taxable years ending after April 11, 2005. 

Effectthe pr
54 

Provision Present Law House Bill 

D. Additional Energy Tax 

Incentives 

1. 10-year recovery period for underground natural gas storage facility property (sec. 1541 of the Senate amendment)

Natural gas storage facilities and non-recoverable cushion gas are depreciated over 15 years. Recoverable cushion gas is not depreciable because it is not subject to exhaustion, wear, tear, or obsolescence. 

No provision. Reduc

undergfacilitcushioEffect

properdate oof whtaxpay

2. Modify research credit for research relating to energy (sec. 1542 of the Senate amendment)

A taxpayer may claim a research tax credit equal to 20 percent of the amount by which a taxpayer’s qualified research expenses for a taxable year exceed its base amount for that year. The research tax credit is scheduled to expire and generally will not apply to amounts paid or incurred after December 31, 2005.

A 20-percent research tax credit also applies to the excess of (1) 100 percent of corporate cash expenses paid for basic research conducted by universities (and certain nonprofit scientific research organizations) over (2) the sum of (a) the greater of 

No provision. Provid

claim of the on quaundertconsoexcess An ena qualas undorganito condeveloand to unrelaincurrorganiyear. 
55 

Provision Present Law House Bill 

two minimum basic research floors plus (b) an amount reflecting any decrease in nonresearch giving to universities by the corporation as compared to such giving during a fixed base period, as adjusted for inflation.

qualifconsopay or of the the resthe caAlso pamountaxpaybusineFederaenergy qualifcontrathan 6researunder An elibusinedoes ngreatehas emfewer precedEffectincurrtaxabldate. 
56 

Provision Present Law House Bill 

3. Small agri-biodiesel producer credit (sec. 1543 of the Senate amendment)

For biodiesel fuels, the Code provides an income tax credit for biodiesel and qualified biodiesel mixtures. An excise tax credit and payment provisions are also provided for biodiesel mixtures. The credit is generally 50 cents per gallon of biodiesel, however, in the case of agri-biodiesel, the credit is $1.00 per gallon. The provisions do not apply to fuel sold or used after December 31, 2006. 

No provision. Create

producents-millioprodudefineproduexceed Allowcredit Consiincent1535 osmall sunsetEffectending 

4. Small ethanol producer credit (sec. 1544 of the Senate amendment)

In the case of ethanol, the Code provides a 10-cents-per-gallon credit for up to 15 million gallons of ethanol produced by small producers, defined generally as persons whose production capacity does not exceed 30 million gallons per year. 

No provision. Increa

capaciproduto 60 m
57 

Provision Present Law House Bill 

5. Qualified recycling equipment credit (sec. 1545 of the Senate amendment)

No provision. No provision. Provid

credit recyclservicQualifequipmpipingsorting and corecyclpackawhich or alumindivipurpomateritangibincludprimaand prwastetube, fvideo size grmeasuprocesFor threcyclequipmcommincludcenter
58 

Provision Present Law House Bill 

utilizerecyclpurpoFor thcost oexceedcreditEffectto amothe taxrecyclservicbeginn2005. 

6. Five-year net operating loss carryback period for electric utilities (sec. 1546 of the Senate amendment)

In general, an NOL may be carried back two years and carried forward 20 years. The Job Creation and Worker Assistance Act of 2002 provided a temporary extension of the general NOL carryback period to five years (from two years) for NOLs arising in taxable years ending in 2001 and 2002. A taxpayer can elect to forgo the fiveyear carryback period. 

No provision. Exten

to five electritaxabland 20from tcan be year e2005, Refuntax yecompatransmcontrotax yefive-y
59 

Provision Present Law House Bill 

electio2009. Effectclaims generain 200

7. Credit for qualifying pollution control equipment (sec. 1547 of the Senate amendment)

There is no tax credit for investment in pollution control equipment. An investment credit is available for investment in certain energy property. 

No provision. Provid

qualifequipmqualiftaxablcontrotechnoa qualemissiregulaProtecAir Afacilit1,000,the taxpurpopollutbe redvalue Effect

date osimila(as in 
60 

Provision Present Law House Bill 

8. Credit for production of coal owned by Indian tribes (sec. 1548 of the Senate amendment)

No provision. No provision. Establ

coal” Indian produon JunFederaIndianUnited membequals in 200per ton The crafter 2businealloweminimEffectcoal sand be

9. Replacement stoves meeting environmental standards in non-attainment areas (sec. 1549 of the Senate amendment)

No tax provision. Stoves produced after June 30, 1992 must comply with EPA’s Standards of Performance for Residential Wood Heaters. 

No provision. Provid

replacwood burninEPA estandacomplstove 1992. for repdesign
61 

Provision Present Law House Bill 

nonattmatter diameparticumicroEffectto solipurchaenactm2009. 

10. Exemption of bulk beds for farm crops from the Federal excise tax on heavy trucks and trailers (sec. 1550 of the Senate amendment)

The Code imposes a 12-percent excise tax on the first retail sale of heavy trucks and trailers. The Code provides an exemption for any body primarily designed to haul feed, seed or fertilizer to and on farms. 

No provision. Exemp

transpfarms retail EffectSeptem

11. National Academy of Sciences study (sec. 1551 of the Senate amendment)

Present law does not provide for a study of the health, environmental, security, and infrastructure external costs that may be associated with the use and production of energy. 

No provision. Provid

Nationdefine enviroinfrastbenefiand conot or incorpactivitfee or measu
62 

Provision Present Law House Bill 

Effect

12. Income tax exclusion for employer-provided reimbursement for certain fuel costs of rural carpoolers (sec. 1552 of the Senate amendment)

Under present law, qualified transportation fringe benefits are excluded from gross income and wages for employment tax purposes. Qualified transportation fringe benefits are employerprovided parking, transit and vanpooling. 

No provision. Establ

transpEmplocertain monthrural cexcludincomqualifbenefibenefireside eligiblbenefi(3) uswhen emploemplopercentravelmore emplopremilocateaccessEffectexpendate oJanuar
63 

Provision Present Law House Bill 

13. Three-year applicable recovery period for depreciation of qualified energy management devices (sec. 1553 of the Senate amendment)

No provision. No provision. Provid

period managservicsuppliprovidservicmanagmeteritaxpayelectridiffereseparaand (2least a consuAdditienergy commthe pubindininto afEffect

qualifdeviceDecemJanuar
64 

Provision Present Law House Bill 

14. Exception from volume cap for certain cooling facilities (sec. 1554 of the Senate amendment)

Interest on certain State and local private activity bonds is excluded from income when a governmental unit incurs this debt as a conduit to provide financing for private parties, if the financed activities are specified as tax exempt in the Internal Revenue Code (“qualified private activity bonds”). Activities eligible for financing with qualified private activity bonds include “local district heating or cooling facilities.” The volume of most qualified private activity bonds that State and local governments may issue in each calendar year, including bonds issued for local district heating or cooling facilities, is generally restricted by State volume caps. These volume caps are indexed for inflation. For calendar year 2005, the State volume cap is the greater of $80 per resident or $239 million. 

No provision. Provid

volumactivitlocal dfacilitdeep wbuildiexcepaggregissued not mEffectprojecdate o1, 200
65 

Provision Present Law House Bill 

E. Revenue Raising Provisions 

1. Treatment of kerosene for use in aviation (sec. 1561 of the Senate amendment)

In general, aviation-grade kerosene is subject to tax at 21.8 cents per gallon. The rate is 4.3 cents per gallon for commercial aviation, and zero cents per gallon for specified exempt uses. The rate of tax on other kerosene is 24.3 cents per gallon. In general, the tax on aviationgrade kerosene is imposed upon the removal of such kerosene from a refinery, terminal, or upon entry into the United States. In general, tax is imposed at the 21.8 centsper-gallon rate and a refund or credit is available if a reduced rate 

applies. Aviation-grade kerosene may be removed at the applicable reduced rate if such kerosene is removed from a refinery or terminal directly into the fuel tank of an aircraft for use in commercial aviation or for an exempt use. Certain refueler trucks, tankers, and tank wagons are treated as part of a terminal for purposes of this rule. Revenues from the tax on aviation-grade kerosene are credited to the Airport and Airway Trust Fund. 

No provision. Taxes 

the ratProvidthe exaviatiopaymeunder for nocents zero cuses). noncoclaimevendoProvid21.8 cfrom a tankerregard requirfuelinsecureClarifrefuelwagon kerosean aircProvidFund 
66 

Provision Present Law House Bill 

taxes gallon HighwAirpoamounreceivkerosepaymeEffectremovSeptem

2. Repeal of ultimate vendor refund claims with respect to farming (sec. 1562 of the Senate amendment)

If diesel fuel or kerosene on which tax has been imposed is used by any person in a nontaxable use, the Secretary is to refund (without interest) the amount of tax imposed. The refund is made to the ultimate purchaser of the taxed fuel. However, in the case of diesel fuel or kerosene used on a farm for farming purposes or by a State or local government, refund payments are paid to the ultimate, registered vendors (“ultimate vendors”) of such fuels. 

No provision. The pr

vendodiesel farm fEffect

nontax2005.

3. Refunds of excise taxes on exempt sales of taxable fuel by credit card (sec. 1563 of the Senate amendment)

A registered ultimate vendor may claim a credit or refund of the tax on gasoline sold to a State or local government or to a nonprofit educational organization. In 

No provision. If a St

purchanonprpurchacard, t
67 

Provision Present Law House Bill 

addition, such an ultimate vendor may file refund claims for any period of at least one week for which $200 or more is payable, and is entitled to interest on any refund claims unpaid after 45 days (20 days if filed electronically). Under a special, longstanding, administrative procedure for certain credit card sales, the oil company which paid the tax on the gasoline to the IRS is treated as the only person eligible to make the refund claim if it reimburses the ultimate vendor for the tax. In the case of diesel fuel or kerosene used in a nontaxable use, the ultimate purchaser is generally the proper excise tax refund claimant. However, in the case of diesel fuel or kerosene used by a State or local government, a registered ultimate vendor may generally claim the refund. 

registeentitlerefund follow(1) sucollecfrom tthe wrpurchacredit registeor agrthe tax obtainultimathe creotherwdirectlultimareimbIf the registeor (2) ultimathen threquirto the purchaultimacredit 
68 

Provision Present Law House Bill 

An unthat doequal entity penaltThe prtiming vendofor elerefundthe prThe prpresenthe neEffectDecem

4. Recertification of exempt status (sec. 1564 of the Senate amendment) 

In order to claim a refund of Federal excise taxes on taxable fuel (and on other articles subject to manufacturers excise taxes under Chapter 32 of the Code) sold to a State or local government or to a nonprofit educational organization, a claimant must submit a statement indicating that it possesses evidence of the exempt use. 

No provision. In add

documorder governexempcovereto claiupon tgovernpurcha
69 

Provision Present Law House Bill 

Treasury Regulations specify the required evidence, part of which generally consists of certificates from the ultimate purchaser. A State or local government includes any political subdivision of a State, or the District of Columbia. A nonprofit educational organization means an educational organization which normally maintains a regular faculty and curriculum and normally has a regularly enrolled body of pupils or students in attendance at the place where its educational activities are regularly carried on, and which is exempt from income tax. 

State msold to entity State ocase ovoluntmust sIn ordorganifrom tany perefund upon tstatus in whiprovidmust cis in gThe prexcise use as fuels)(excepbuses trucks for tirbuses)cover of coa(bows equipmvaccin
70 

Provision Present Law House Bill 

EffectDecem

5. Reregistration in event of change in ownership (sec. 1565 of the Senate amendment)

Certain persons must register with the Secretary for purposes of fuels excise taxes. Civil and criminal penalties apply to a failure to register. Treasury regulations require registrants to notify the Secretary if there is a change in ownership of the registrant. 

No provision. Impos

changregistrreregiFailurthe prfailure does ncompaEffect

to act 

6. Treatment of deep draft vessels (sec. 1566 of the Senate amendment)

Vessel operators, other than operators of deep-draft vessels, must register with the Secretary for purposes of fuels excise taxes. A deep-draft vessel is a vessel that is designed primarily for use on the high seas that has a draft of more than 12 feet. Civil and criminal penalties apply to a failure to register. The transfer of taxable fuel in bulk to a vessel operated by an unregistered vessel operator who is required to register is subject to tax, i.e., such transfers are not 

No provision. Requi

draft vSecretuses senter tStatesProvidexemptransfedeep-dunregisuch tUnited Effect
71 

Provision Present Law House Bill 

eligible for the bulk transfer exemption. 

7. Reconciliation of on-loaded cargo to entered cargo (sec. 1567 of the Senate amendment)

Final Customs regulations require the advance and accurate presentation of certain manifest information prior to lading at the foreign port and encourage the presentation of this information electronically. Customs generally must receive from the carrier the vessel’s Cargo Declaration (Customs Form 1302) or the electronic equivalent within 24 hours before such cargo is laden aboard the vessel at the foreign port. However, carriers of bulk cargo, such as oil, are required to file cargo declaration data 24 hours prior to arrival in the United States 

No provision. Provid

year aSecrettogethTreasuelectrothrougtransmpertainfuels telectroFor thyear afilers for suprovidCustoelectroEffect

8. Taxation of gasoline blendstocks and kerosene (sec. 1568 of the Senate amendment)

Under the Treasury regulations, if certain conditions are met, the removal, entry, or sale of gasoline blend stocks is not taxable. 

No provision. With r

removrequirall non
72 

Provision Present Law House Bill 

Generally, the exemption from tax applies if a gasoline blend stock (1) is not used to produce finished gasoline, (2) is received at an approved terminal or refinery, or (3) in bulk transfer to an industrial user. Treasury regulations provide that kerosene does not include any liquid that is an excluded liquid. An “excluded liquid” is (1) any liquid that contains less than four percent normal paraffins, or (2) any liquid that has a distillation range of 125 degrees Fahrenheit or less, sulfur content of 10 ppm or less, and minimum color of +27 Saybolt. These liquids are commonly known as “mineral spirits” and are obtained by distillation of crude oil. 

gasoliwhethprodureceivrefineexcluddefiniprovisexempregisteEffect

9. Nonapplication of export exemption to delivery of fuel to motor vehicles removed from United States (sec. 1569 of the Senate amendment)

Special provisions under the Code provide for a refund of tax to any person who sells gasoline to another for exportation. It is the long-standing administrative position of the IRS that the exemption from excise tax by reason of exportation does not apply to the sale of motor fuel 

No provision. Reaffi

restatethe Coexcludfuel invehiclout of 
73 

Provision Present Law House Bill 

pumped into a fuel tank of a vehicle that is to be driven, or shipped, directly out of the United States. 

Imposfuel at unless removEffect

made 

10. Impose assessable penalty on dealers of adulterated fuel (sec. 1570 of the Senate amendment)

Diesel fuel is defined as (1) any 

liquid (other than gasoline) which is suitable for use as a fuel in a diesel-powered highway vehicle or a diesel powered train, (2) transmix, and (3) diesel fuel blend stocks identified by the Secretary. Some taxpayers have contended that certain diesel fuel mixtures or 

additives do not meet the requirements of (1) above because they are not approved as additives or mixtures by the EPA. In addition, under present law, untaxed fuel additives, including certain contaminants, may displace taxed diesel fuel in a mixture. 

No provision. Any p

who ksells fresale highwliquid EPA rassesseach sout foon sucwho k(other liquidassessholdinthe tax The pHighwEffector holoccurrenactm
74 

Provision Present Law House Bill 

11. Oil Spill Liability Trust Fund (sec. 1571 of the Senate amendment)

In general, a five-cent-per-barrel tax was imposed on crude oil received at a United States refinery, imported petroleum products received for consumption, use, or warehousing, and any domestically produced crude oil that was used in or exported from the United States if no tax was imposed on the crude oil before use or exportation. The tax was credited to the Oil Spill Liability Trust Fund. The Fund’s tax applied after December 31, 1989, and before January 1, 1995. The tax was effective only if the unobligated balance in the Fund was less than $1 billion. 

No provision. Reinst

Trust after Alast dawhich as of tunobliLiabilbillionThe tacalendestimaprecedunobliLiabilbillionThe ta31, 20Effect

12. Extension of leaking underground storage tank trust fund financing rate (sec. 1572 of the Senate amendment)

The Code imposes an excise tax, generally at a rate of 0.1 cents per gallon, on gasoline, diesel, kerosene, and special motor fuels (other than liquefied petroleum gas and liquefied natural gas). The 

No provision. Exten

at the Septemfuel, iLUST exportpayme
75 

Provision Present Law House Bill 

taxes are deposited in the Leaking Underground Storage Tank (“LUST”) Trust Fund. The tax expires on October 1, 2005. Although the American Jobs Creation Act of 2004 repealed, over a prescribed period, the deficit reduction tax rate of 4.3-cent-pergallon on diesel fuel used in dieselpowered trains, and in barges operating on inland waterways, such fuel remains subject to LUST Fund rate of 0.1 cents per gallon. Diesel fuel and kerosene that is to be used for a nontaxable purpose will not be taxed upon removal from the terminal if it is dyed to indicate its nontaxable purpose. The Code requires the LUST Trust Fund to reimburse the General Fund for certain refund and credit claims related to the nontaxable use of fuel (only to the extent attributable to the LUST Trust fund financing rate). 

nontaxsuch fthat threimbclaims nontaxEffect
76 

Provision Present Law House Bill 

13. Tire excise tax modification (sec. 1573 of the Senate amendment)

The Code imposes an excise tax on highway tires with a rated load capacity exceeding 3,500 pounds, generally at a rate of 9.45 cents per 10 pounds of excess. Biasply tires and super single tires are taxed at a rate of 4.725 cents per each 10 pounds of rated load capacity exceeding 3,500 pounds. A super single tire is a single tire greater 

than 13 inches in cross section width designed to replace two tires in a dual fitment. 

No provision. Subjec

of 8 cerated lpoundto be a inches designdual fEffect

Septem