II 

113TH CONGRESS 

1ST SESSION S. 775 

To amend the Internal Revenue Code of 1986 to provide a tax incentive 

for the installation and maintenance of mechanical insulation property. 

IN THE SENATE OF THE UNITED STATES 

APRIL 22, 2013 

Mrs. GILLIBRAND (for herself and Mr. JOHANNS) introduced the following bill; 

which was read twice and referred to the Committee on Finance 

A BILL 

To amend the Internal Revenue Code of 1986 to provide 

a tax incentive for the installation and maintenance of 

mechanical insulation 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 ‘‘Mechanical Insulation 

5 Installation Incentive Act of 2013’’. 

6 SEC. 2. EXPENSING OF MECHANICAL INSULATION PROP7 ERTY. 

8 (a) IN GENERAL.—Part VI of subchapter B of chap9 ter 1 of subtitle A of the Internal Revenue Code of 1986 


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1 is amended by inserting after section 179E the following 

2 new section: 

3 ‘‘SEC. 179F. MECHANICAL INSULATION PROPERTY. 

4 ‘‘(a) TREATMENT AS EXPENSES.—In addition to any 

5 other deduction in this subtitle, there shall be allowed as 

6 a deduction an amount equal to the applicable percentage 

7 of the cost of mechanical insulation property placed in 

8 service during the taxable year. 

9 ‘‘(b) APPLICABLE PERCENTAGE.—For purposes of 

10 subsection (a)— 

11 ‘‘(1) IN GENERAL.—The term ‘applicable per12 centage’ means the lesser of— 

13 ‘‘(A) 30 percent, and 

14 ‘‘(B) the reduction in energy loss (ex15 pressed as a percentage) from the installed me16 chanical insulation property compared to ref17 erence mechanical insulation property which 

18 meets the minimum requirements of ASHRAE 

19 standard 90.1–2007. 

20 ‘‘(2) SPECIAL RULE RELATING TO MAINTE21 NANCE.—In the case of mechanical insulation prop22 erty placed in service as a replacement for insulation 

23 property— 

24 ‘‘(A) paragraph (1)(B) shall not apply, and 


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1 ‘‘(B) the cost of such property shall be 

2 treated as an expense for which a deduction is 

3 allowed under section 162 instead of being 

4 treated as depreciable for purposes of the de5 duction provided by section 167. 

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

7 ‘‘(1) MECHANICAL INSULATION PROPERTY.— 

8 The term ‘mechanical insulation property’ means in9 sulation materials, facings, and accessory products— 

10 ‘‘(A) placed in service in connection with a 

11 mechanical system which— 

12 ‘‘(i) is located in the United States, 

13 and 

14 ‘‘(ii) is of a character subject to an al15 lowance for depreciation, and 

16 ‘‘(B) utilized for thermal requirements for 

17 mechanical piping and equipment, hot and cold 

18 applications, and heating, venting and air con19 ditioning applications which can be used in a 

20 variety of facilities. 

21 ‘‘(2) COST.—The cost of mechanical insulation 

22 property includes— 

23 ‘‘(A) the amounts paid or incurred for the 

24 installation of such property for that incre25 mental portion above the minimums in 


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1 ASHRAE standard 90.1–2007 and the total in2 sulation cost for maintenance applications, 

3 ‘‘(B) in the case of removal and disposal of 

4 the old mechanical insulation property, 10 per5 cent of the cost of the new mechanical insula6 tion property (determined without regard to 

7 this subparagraph), and 

8 ‘‘(C) expenditures for labor costs properly 

9 allocable to the preparation, assembly, and in10 stallation of mechanical insulation property. 

11 ‘‘(d) COORDINATION.—Subsection (a) shall not apply 

12 to the cost of mechanical insulation property which is 

13 taken into account under section 179D or which, but for 

14 subsection (b) of section 179D, would be taken into ac15 count under such section. 

16 ‘‘(e) ALLOCATION OF DEDUCTION FOR TAX-EXEMPT

17 PROPERTY.—In the case of mechanical insulation prop18 erty installed on or in property owned by an entity de19 scribed in paragraph (3) or (4) of section 50(b), the per20 son who is the primary contractor for the installation of 

21 such property shall be treated as the taxpayer that placed 

22 such property in service. 

23 ‘‘(f) CERTIFICATION.—For purposes of this section, 

24 energy savings shall be certified under regulations or other 


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1 guidance provided by the Secretary, in consultation with 

2 the Secretary of Energy. 

3 ‘‘(g) TERMINATION.—This section shall not apply to 

4 any property placed in service after the end of the 5-year 

5 period beginning on the date of the enactment of this sec6 tion.’’. 

7 (b) DEDUCTION FOR CAPITAL EXPENDITURES.— 

8 Section 263(a)(1) of the Internal Revenue Code of 1986 

9 is amended by striking ‘‘or’’ at the end of subparagraph 

10 (K), by striking the period at the end of paragraph (L) 

11 and inserting ‘‘, or’’, and by adding at the end the fol12 lowing new subparagraph: 

13 ‘‘(M) expenditures for which a deduction is 

14 allowed under section 179F.’’. 

15 (c) TECHNICAL AND CLERICAL AMENDMENTS.— 

16 (1) Section 312(k)(3)(B) of the Internal Rev17 enue Code of 1986 is amended by striking ‘‘or 

18 179E’’ each place it appears in the text or heading 

19 thereof and inserting ‘‘179E, or 179F’’. 

20 (2) Paragraphs (2)(C) and (3)(C) of section 

21 1245(a) of such Code are each amended by inserting 

22 ‘‘179F,’’ after ‘‘179E,’’. 

23 (3) The table of sections for part VI of sub24 chapter B of chapter 1 of subtitle A of such Code 


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1 is amended by inserting after the item relating to 

2 section 179E the following new item: 

‘‘Sec. 179F. Mechanical insulation property.’’. 

3 (d) EFFECTIVE DATE.—The amendments made by 

4 this section shall apply to property placed in service after 

5 the date of enactment of this Act. 

Æ 


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