I 

108TH CONGRESS 

1ST SESSION H. R. 3138

To amend the Internal Revenue Code of 1986 to allow a refundable credit 

for expenditures for renewable energy property. 

IN THE HOUSE OF REPRESENTATIVES 

SEPTEMBER 18, 2003

Mrs. DAVIS of California introduced the following bill; which was referred to 

the Committee on Ways and Means 

A BILL

To amend the Internal Revenue Code of 1986 to allow a 

refundable credit for expenditures for renewable energy 

property.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Renewable Energy Act 

5 for Credit on Taxes’’. 

6 SEC. 2. REFUNDABLE CREDIT FOR RENEWABLE ENERGY 

7 PROPERTY. 

8 (a) IN GENERAL.—Subpart C of part IV of sub9 chapter A of chapter 1 of the Internal Revenue Code of 

10 1986 (relating to refundable credits) is amended by redes-
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1 ignating section 36 as section 37 and by inserting after 

2 section 35 the following new section: 

3 ‘‘SEC. 36. RENEWABLE ENERGY PROPERTY. 

4 ‘‘(a) ALLOWANCE OF CREDIT.—In the case of an in5 dividual, there shall be allowed as a credit against the tax 

6 imposed by this chapter for the taxable year an amount 

7 equal to 35 percent of the expenditures for renewable en8 ergy property made by the taxpayer during the taxable 

9 year. 

10 ‘‘(b) LIMITATION.—

11 ‘‘(1) MAXIMUM CREDIT.—The credit allowed 

12 under subsection (a) shall not exceed the lesser of—

13 ‘‘(A) $6,000 ($50,000 in the case of re14 newable energy property used for nonresidential 

15 business purposes) for each system of renewable 

16 energy property, or 

17 ‘‘(B) $4.50 per watt of rated system elec18 tricity output or equivalent. 

19 ‘‘(2) LOCATION OF STRUCTURE.—No expendi20 ture may be taken into account under this section 

21 unless such expenditure is made by the taxpayer for 

22 property installed on or in connection with a struc23 ture which is located in the United States. 
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1 ‘‘(3) RATING SYSTEM ELECTRICITY OUTPUT.—

2 For purposes of paragraph (1)(B), the rated system 

3 electricity output or equivalent for—

4 ‘‘(A) solar water heating property shall be 

5 the output determined by the Secretary on the 

6 basis of evidence acceptable to the Secretary 

7 which is submitted by manufacturers of such 

8 property and which includes information relat9 ing to one year of reliable operation of such 

10 property, 

11 ‘‘(B) photovoltaic property shall be the 

12 output certified by a nationally recognized test13 ing laboratory as meeting the requirements of 

14 the Underwriters Laboratory Standard 1703, 

15 ‘‘(C) wind energy property shall be the 

16 output—

17 ‘‘(i) certified as meeting the require18 ments of a small wind turbine-specific safe19 ty or performance standard adopted by a 

20 national or international standards setting 

21 body, including International Electric Code 

22 61400–2, or 

23 ‘‘(ii) determined by the Secretary on 

24 the basis of evidence acceptable to the Sec25 retary which is submitted by manufactur-
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1 ers of such property and which includes in2 formation relating to one year of reliable 

3 operation of such property at a site with 

4 average annual wind speeds of at least 12 

5 miles per hour, and 

6 ‘‘(D) fuel cell property shall be the output 

7 certified as meeting the requirements specified 

8 by the American Gas Association in document 

9 entitled ‘AGA Requirements for Fuel Cell 

10 Power Plants’, No. 8–90. 

11 The Secretary shall determine who makes the certifi12 cations for purposes of subparagraphs (C)(i) and 

13 (D). 

14 ‘‘(c) DEFINITIONS.—For purposes of this section—

15 ‘‘(1) RENEWABLE ENERGY PROPERTY.—The 

16 term ‘renewable energy property’ means property 

17 which is—

18 ‘‘(A) qualified solar water heating prop19 erty, 

20 ‘‘(B) qualified photovoltaic property, 

21 ‘‘(C) qualified wind energy property, or 

22 ‘‘(D) qualified fuel cell property. 

23 ‘‘(2) QUALIFIED SOLAR WATER HEATING PROP24 ERTY.—The term ‘qualified solar water heating 

25 property’ means property that uses solar energy to 
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1 heat water for use in a structure with respect to 

2 which a majority of the energy is derived from the 

3 sun. 

4 ‘‘(3) QUALIFIED PHOTOVOLTAIC PROPERTY.—

5 The term ‘qualified photovoltaic property’ means 

6 property that uses solar energy to generate elec7 tricity for use in a structure. 

8 ‘‘(4) SOLAR PANELS.—No expenditure relating 

9 to a solar panel or other property installed as a roof 

10 (or portion thereof) shall fail to be treated as prop11 erty described in paragraph (2) or (3) solely because 

12 it constitutes a structural component of the struc13 ture on which it is installed. 

14 ‘‘(5) QUALIFIED WIND ENERGY PROPERTY.—

15 The term ‘qualified wind energy property’ means 

16 property which uses wind energy to generate elec17 tricity for use in a structure. 

18 ‘‘(6) QUALIFIED FUEL CELL PROPERTY.—The 

19 term ‘qualified fuel cell property’ means property 

20 which uses an electrochemical process to generate 

21 electricity for use in a structure.

22 ‘‘(7) LABOR COSTS.—Expenditures for labor 

23 costs properly allocable to the onsite preparation, as24 sembly, or original installation of the property de25 scribed in paragraph (2), (3), (5), or (6) and for 
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1 piping or wiring to interconnect such property to the 

2 dwelling unit shall be taken into account for pur3 poses of this section. 

4 ‘‘(d) SPECIAL RULES.—For purposes of this sec5 tion—

6 ‘‘(1) DOLLAR AMOUNTS IN CASE OF JOINT OC7 CUPANCY.—In the case of any structure which is 

8 jointly occupied and used during any calendar year 

9 by 2 or more persons the following shall apply: 

10 ‘‘(A) The amount of the credit allowable 

11 under subsection (a) by reason of expenditures 

12 (as the case may be) made during such cal13 endar year by any of such persons with respect 

14 to such structure shall be determined by treat15 ing all of such persons as 1 taxpayer whose tax16 able year is such calendar year. 

17 ‘‘(B) There shall be allowable with respect 

18 to such expenditures to each of such person, a 

19 credit under subsection (a) for the taxable year 

20 in which such calendar year ends in an amount 

21 which bears the same ratio to the amount de22 termined under subparagraph (A) as the 

23 amount of such expenditures made by such per24 son during such calendar year bears to the ag-
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1 gregate of such expenditures made by all of 

2 such persons during such calendar year. 

3 ‘‘(2) TENANT-STOCKHOLDER IN COOPERATIVE

4 HOUSING CORPORATION.—In the case of an indi5 vidual who is a tenant-stockholder (as defined in sec6 tion 216) in a cooperative housing corporation (as 

7 defined in such section), such individual shall be 

8 treated as having made his tenant-stockholder’s pro9 portionate share (as defined in section 216(b)(3)) of 

10 any expenditures of such corporation. 

11 ‘‘(3) CONDOMINIUMS.—

12 ‘‘(A) IN GENERAL.—In the case of an indi13 vidual who is a member of a condominium man14 agement association with respect to a condo15 minium which he owns, such individual shall be 

16 treated as having made his proportionate share 

17 of any expenditures of such association. 

18 ‘‘(B) CONDOMINIUM MANAGEMENT ASSO19 CIATION.—For purposes of this paragraph, the 

20 term ‘condominium management association’ 

21 means an organization which meets the require22 ments of paragraph (1) of section 528(c) (other 

23 than subparagraph (E) thereof) with respect to 

24 a condominium project substantially all of the 

25 units of which are used as residences. 
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1 ‘‘(4) JOINT OWNERSHIP OF ITEMS OF RENEW2 ABLE ENERGY PROPERTY.—

3 ‘‘(A) IN GENERAL.—Any expenditure oth4 erwise qualifying as an expenditure described in 

5 paragraph (2), (3), (5), or (6) of subsection (c) 

6 shall not be treated as failing to so qualify 

7 merely because such expenditure was made with 

8 respect to 2 or more structures. 

9 ‘‘(B) LIMITS APPLIED SEPARATELY.—In 

10 the case of any expenditure described in sub11 paragraph (A), the amount of the credit allow12 able under subsection (a) shall (subject to para13 graph (1)) be computed separately with respect 

14 to the amount of the expenditure made for each 

15 structure. 

16 ‘‘(5) ALLOCATION IN CERTAIN CASES.—If 80 

17 percent or more of the use of an item is for residen18 tial purposes, then the item shall be treated as used 

19 only for residential purposes. 

20 ‘‘(6) WHEN EXPENDITURE MADE; AMOUNT OF

21 EXPENDITURE.—

22 ‘‘(A) IN GENERAL.—Except as provided in 

23 subparagraph (B), an expenditure with respect 

24 to an item shall be treated as made when the 

25 original installation of the item is completed. 
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1 ‘‘(B) EXPENDITURES PART OF BUILDING

2 CONSTRUCTION.—In the case of an expenditure 

3 in connection with the construction or recon4 struction of a structure, such expenditure shall 

5 be treated as made when the original use of the 

6 constructed or reconstructed structure by the 

7 taxpayer begins. 

8 ‘‘(C) AMOUNT.—The amount of any ex9 penditure shall be the cost thereof. 

10 ‘‘(7) REDUCTION OF CREDIT FOR GRANTS, TAX11 EXEMPT BONDS, AND SUBSIDIZED ENERGY FINANC12 ING.—The rules of section 29(b)(3) shall apply for 

13 purposes of this section. 

14 ‘‘(8) DENIAL OF DOUBLE BENEFIT.—No credit 

15 shall be allowed under subsection (a) for any ex16 pense for which a deduction or credit is allowed 

17 under any other provision of this chapter. 

18 ‘‘(e) BASIS ADJUSTMENTS.—For purposes of this 

19 subtitle, if a credit is allowed under this section for any 

20 expenditure with respect to any property, the increase in 

21 the basis of such property which would (but for this sub22 section) result from such expenditure shall be reduced by 

23 the amount of the credit so allowed. 
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1 ‘‘(f) TERMINATION.—The credit allowed under this 

2 section shall not apply to taxable years beginning after 

3 December 31, 2008.’’. 

4 (b) CONFORMING AND TECHNICAL AMENDMENTS.—

5 (1) Subsection (a) of section 1016 of such Code 

6 is amended by striking ‘‘and’’ at the end of para7 graph (27), by striking the period at the end of 

8 paragraph (28) and inserting ‘‘; and’’, and by add9 ing at the end the following new paragraph: 

10 ‘‘(29) to the extent provided in section 36(e), in 

11 the case of amounts with respect to which a credit 

12 has been allowed under section 36.’’

13 (2) Paragraph (2) of section 1324(b) of title 

14 31, United States Code, is amended by inserting ‘‘or 

15 from section 36 of such Code’’ before the period at 

16 the end. 

17 (3) The table of sections for such subpart C is 

18 amended by striking the item relating to section 36 

19 and inserting the following new items:

‘‘Sec. 36. Renewable energy property. 

‘‘Sec. 37. Overpayment of taxes.’’

20 (c) EFFECTIVE DATE.—The amendments made by 

21 this section shall apply to taxable years ending after De22 cember 31, 2003.

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