I 

112TH CONGRESS 

1ST SESSION H. R. 2091 

To amend the Internal Revenue Code of 1986 to provide incentives to encourage investment in the expansion of freight rail infrastructure capacity 

and to enhance modal tax equity. 

IN THE HOUSE OF REPRESENTATIVES 

JUNE 2, 2011 

Mr. BOSWELL 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 provide 

incentives to encourage investment in the expansion of 

freight rail infrastructure capacity and to enhance modal 

tax equity. 

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 ‘‘Freight Rail Infra5 structure Capacity Expansion Act of 2011’’. 


emcdonald on DSK2BSOYB1PROD with BILLS
2 

•HR 2091 IH

1 SEC. 2. CREDIT FOR FREIGHT RAIL INFRASTRUCTURE CA2 PACITY EXPANSION PROPERTY. 

3 (a) IN GENERAL.—Subpart D of part IV of sub4 chapter A of chapter 1 of the Internal Revenue Code of 

5 1986 (relating to business-related credits) is amended by 

6 adding at the end the following new section: 

7 ‘‘SEC. 45S. FREIGHT RAIL CAPACITY EXPANSION CREDIT. 

8 ‘‘(a) GENERAL RULE.—For purposes of section 38, 

9 the freight rail capacity expansion credit determined under 

10 this section for the taxable year is an amount equal to 

11 25 percent of the cost of the following property placed in 

12 service during the taxable year: 

13 ‘‘(1) New qualified freight rail infrastructure 

14 property. 

15 ‘‘(2) Qualified locomotive property. 

16 ‘‘(b) NEW QUALIFIED FREIGHT RAIL INFRASTRUC17 TURE PROPERTY.—For purposes of this section— 

18 ‘‘(1) IN GENERAL.—The term ‘new qualified 

19 freight rail infrastructure property’ means qualified 

20 freight rail infrastructure property— 

21 ‘‘(A) the construction or erection (or in the 

22 case of bridges and tunnels, any eligible bridge 

23 or tunnel replacement or expansion pursuant to 

24 paragraph (2)) of which is completed after the 

25 effective date of this section, or 


emcdonald on DSK2BSOYB1PROD with BILLS
3 

•HR 2091 IH

1 ‘‘(B) which is acquired by the taxpayer 

2 after such date, but only if the original use of 

3 such property commences with the taxpayer. 

4 ‘‘(2) EXCEPTION FOR PROPERTY REPLACING

5 PROPERTY AT EXISTING LOCATION.—The term ‘new 

6 qualified freight rail infrastructure property’ does 

7 not include property which is replacing existing 

8 qualified freight rail infrastructure property if the 

9 replacement property is located at the site of the ex10 isting property. The preceding sentence shall not 

11 apply to the replacement or expansion of a bridge or 

12 tunnel to allow for additional clearance, track, or 

13 other capacity enhancement where such clearance, 

14 track, or other capacity enhancement did not pre15 viously exist. 

16 ‘‘(3) QUALIFIED FREIGHT RAIL INFRASTRUC17 TURE PROPERTY.— 

18 ‘‘(A) IN GENERAL.—The term ‘qualified 

19 freight rail infrastructure property’ means 

20 property, whether or not owned by a railroad, 

21 used in the movement of freight by rail— 

22 ‘‘(i) the cost of which is chargeable to 

23 capital account (determined without regard 

24 to section 179F), and 

25 ‘‘(ii) which constitutes— 


emcdonald on DSK2BSOYB1PROD with BILLS
4 

•HR 2091 IH

1 ‘‘(I) railroad grading or tunnel 

2 bore (as defined in section 168(e)(4)), 

3 ‘‘(II) tunnels or subways, 

4 ‘‘(III) track, including ties, rails, 

5 ballast, or other track material, 

6 ‘‘(IV) bridges, trestles, culverts, 

7 or other elevated or submerged struc8 tures, 

9 ‘‘(V) terminals, yards, roadway 

10 buildings, fuel stations, or railroad 

11 wharves or docks, including fixtures 

12 attached thereto, and equipment used 

13 exclusively therein, 

14 ‘‘(VI) railroad signal, commu15 nication, or other operating systems, 

16 including components of such systems 

17 that must be installed on locomotives 

18 or other rolling stock, or 

19 ‘‘(VII) intermodal transfer or 

20 transload facilities or terminals, in21 cluding fixtures attached thereto, and 

22 equipment used exclusively therein. 

23 ‘‘(B) EXCLUSIONS.—The term ‘qualified 

24 freight rail infrastructure property’ shall not in25 clude— 


emcdonald on DSK2BSOYB1PROD with BILLS
5 

•HR 2091 IH

1 ‘‘(i) land, 

2 ‘‘(ii) rolling stock, including loco3 motives, or 

4 ‘‘(iii) property used predominantly 

5 outside the United States, except that this 

6 clause shall not apply to any property de7 scribed in section 168(g)(4). 

8 ‘‘(c) QUALIFIED LOCOMOTIVE PROPERTY.— 

9 ‘‘(1) IN GENERAL.—For purposes of this sec10 tion, the term ‘qualified locomotive property’ means 

11 a locomotive, whether or not owned by a railroad, 

12 which— 

13 ‘‘(A) is acquired by the taxpayer after the 

14 effective date of this section, but only if the 

15 original use of such property commences with 

16 the taxpayer, 

17 ‘‘(B) is owned by, or leased to, a taxpayer 

18 which meets the capacity expansion requirement 

19 of paragraph (2) for the taxable year in which 

20 the locomotive is placed in service, and 

21 ‘‘(C) meets the Environmental Protection 

22 Agency’s emission standards for locomotives 

23 and locomotive engines as in effect on Decem24 ber 31, 2006. 


emcdonald on DSK2BSOYB1PROD with BILLS
6 

•HR 2091 IH

1 ‘‘(2) CAPACITY EXPANSION REQUIREMENT.—A 

2 taxpayer meets the requirements of this paragraph 

3 with respect to any locomotive only if, on the last 

4 day of the taxable year in which such locomotive is 

5 placed in service, the total horsepower of all loco6 motives owned by, or leased to, the taxpayer exceeds 

7 the total horsepower of all locomotives owned by, or 

8 leased to, the taxpayer on the last day of the pre9 ceding taxable year. A determination under this 

10 paragraph shall be made pursuant to such reports as 

11 the Secretary, in consultation with the Surface 

12 Transportation Board, may prescribe. 

13 ‘‘(3) SPECIAL RULE FOR THE LEASING OF LO14 COMOTIVES.—In the case of the leasing of loco15 motives, total horsepower under paragraph (2) shall 

16 be determined with respect to all locomotives owned 

17 by, or leased to, the lessee. 

18 ‘‘(d) OTHER DEFINITIONS AND SPECIAL RULES.— 

19 ‘‘(1) DEFINITIONS.—For purposes of this sec20 tion— 

21 ‘‘(A) RAILROAD SIGNAL, COMMUNICATION, 

22 OR OTHER OPERATING SYSTEM.—The term 

23 ‘railroad signal, communication, or other oper24 ating system’ means an appliance, method, de25 vice, or system (including hardware and softVerDate Mar 15 2010 23:01 Jun 07, 2011 Jkt 099200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H2091.IH H2091

emcdonald on DSK2BSOYB1PROD with BILLS
7 

•HR 2091 IH

1 ware) which is used to operate a railroad or to 

2 improve safety or capacity of railroad oper3 ations, including a signal, an interlocker, an 

4 automatic train stop, or a train control or cab5 signal device. 

6 ‘‘(B) INTERMODAL TRANSFER OR

7 TRANSLOAD FACILITY OR TERMINAL.—The 

8 term ‘intermodal transfer or transload facility 

9 or terminal’ means a facility or terminal pri10 marily utilized in the transfer of freight be11 tween rail and any other mode of transpor12 tation. 

13 ‘‘(2) COORDINATION WITH OTHER CREDITS.— 

14 The cost of any property taken into account in de15 termining the credit under this section may not be 

16 taken into account in determining a credit under any 

17 other provision of this title. 

18 ‘‘(3) BASIS ADJUSTMENT.—If a credit is deter19 mined under this section with respect to the cost of 

20 any qualified freight rail infrastructure property or 

21 qualified locomotive property, the basis of such prop22 erty shall be reduced by the amount of the credit so 

23 determined. 


emcdonald on DSK2BSOYB1PROD with BILLS
8 

•HR 2091 IH

1 ‘‘(4) SALE-LEASEBACKS.—If qualified freight 

2 rail infrastructure property or qualified locomotive 

3 property is— 

4 ‘‘(A) originally placed in service by a per5 son after December 31, 2011, and 

6 ‘‘(B) sold and leased back by such person 

7 within 3 months after the property is originally 

8 placed in service (or, in the case of multiple 

9 units of property subject to the same lease, 

10 within 3 months after the date the final unit is 

11 placed in service, so long as the period between 

12 the time the first unit is placed in service and 

13 the time the last unit is placed in service does 

14 not exceed 12 months), 

15 such property shall be treated as originally placed in 

16 service not earlier than the date on which such prop17 erty is used under the lease referred to in subpara18 graph (B). 

19 ‘‘(5) RECAPTURE.—The benefit of any credit 

20 allowable under subsection (a) shall, under regula21 tions prescribed by the Secretary, be recaptured with 

22 respect to any qualified locomotive property that is 

23 sold or otherwise disposed of by the taxpayer during 

24 the 5-year period beginning on the date on which 

25 such property is originally placed in service. The 


emcdonald on DSK2BSOYB1PROD with BILLS
9 

•HR 2091 IH

1 preceding sentence shall not apply to locomotive 

2 property that is sold by and subsequently leased 

3 back to the taxpayer. 

4 ‘‘(e) TERMINATION.—This section shall not apply to 

5 any property placed in service after December 31, 2016.’’. 

6 (b) CREDIT ALLOWED AS BUSINESS CREDIT.—Sec7 tion 38(b) of the Internal Revenue Code of 1986 (relating 

8 to current year business credit) is amended by striking 

9 ‘‘plus’’ at the end of paragraph (35), by striking the period 

10 at the end of paragraph (36) and inserting ‘‘, plus’’, and 

11 by adding at the end the following new paragraph: 

12 ‘‘(37) the freight rail capacity expansion credit 

13 determined under section 45S.’’. 

14 (c) COORDINATION WITH SECTION 55.—Section 

15 38(c)(4)(B) of the Internal Revenue Code of 1986 is 

16 amended by striking ‘‘and’’ at the end of clause (viii), by 

17 striking the period at the end of clause (ix) and inserting 

18 ‘‘, and’’, and by adding at the end the following new 

19 clause: 

20 ‘‘(x) for taxable years ending after the 

21 effective date of this clause, the credit de22 termined under section 45S.’’. 

23 (d) CLERICAL AMENDMENT.—The table of sections 

24 for subpart D of part IV of subchapter A of chapter 1 

25 of the Internal Revenue Code of 1986 is amended by inVerDate Mar 15 2010 23:01 Jun 07, 2011 Jkt 099200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\H2091.IH H2091

emcdonald on DSK2BSOYB1PROD with BILLS
10 

•HR 2091 IH

1 serting after the item relating to section 45R the following 

2 new item: 

‘‘Sec. 45S. Freight rail capacity expansion credit.’’. 

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

4 this section shall apply to property placed in service after 

5 December 31, 2011. 

6 SEC. 3. EXPENSING OF FREIGHT RAIL INFRASTRUCTURE 

7 PROPERTY. 

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

10 itemized deductions for individuals and corporations) is 

11 amended by inserting after section 179E the following new 

12 section: 

13 ‘‘SEC. 179F. ELECTION TO EXPENSE QUALIFIED FREIGHT 

14 RAIL INFRASTRUCTURE PROPERTY. 

15 ‘‘(a) ALLOWANCE OF DEDUCTION.— 

16 ‘‘(1) IN GENERAL.—A taxpayer may elect to 

17 treat any amount paid or incurred for the acquisi18 tion, construction, or erection of qualified freight rail 

19 infrastructure property (as defined in section 

20 45S(b)(3)) as an amount not chargeable to capital 

21 account. Any amount so treated shall be allowed as 

22 a deduction for the taxable year in which such prop23 erty was placed in service. 

24 ‘‘(2) COORDINATION WITH CREDIT.—The 

25 amount to which the election under paragraph (1) 


emcdonald on DSK2BSOYB1PROD with BILLS
11 

•HR 2091 IH

1 applies with respect to any property shall be reduced 

2 by an amount equal to the amount of any reduction 

3 in the basis of the property under section 45S(d)(3). 

4 ‘‘(b) ELECTION.—An election under subsection (a) 

5 shall be made, with respect to each class of property for 

6 each taxable year, at such time and in such manner as 

7 the Secretary may prescribe by regulation. If a taxpayer 

8 makes such an election with respect to any class of prop9 erty for any taxable year, the election shall apply to all 

10 qualified freight rail infrastructure property in such class 

11 placed in service during such taxable year. An election 

12 under this section shall not affect the character of any 

13 property for the purposes of section 45S. 

14 ‘‘(c) DEDUCTION ALLOWED IN COMPUTING MINIMUM

15 TAX.—For purposes of determining alternative minimum 

16 taxable income under section 55, the deduction under sub17 section (a) for qualified freight rail infrastructure property 

18 shall be determined under this section without regard to 

19 any adjustment under section 56. 

20 ‘‘(d) TERMINATION.—This section shall not apply to 

21 any property placed in service after December 31, 2016.’’. 

22 (b) DEDUCTION FOR CAPITAL EXPENDITURES.— 

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

24 (relating to capital expenditures) is amended by striking 

25 ‘‘or’’ at the end of subparagraph (K), by striking the peVerDate Mar 15 2010 23:01 Jun 07, 2011 Jkt 099200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\H2091.IH H2091

emcdonald on DSK2BSOYB1PROD with BILLS
12 

•HR 2091 IH

1 riod at the end of subparagraph (L) and inserting ‘‘, or’’, 

2 and by adding at the end the following new subparagraph: 

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

4 allowed under section 179F.’’. 

5 (c) TECHNICAL AND CLERICAL AMENDMENTS.— 

6 (1) Section 312(k)(3)(B) of the Internal Rev7 enue Code of 1986 is amended by striking ‘‘or 

8 179E’’ each place it appears in the text or heading 

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

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

11 1245(a) of such Code are each amended by inserting 

12 ‘‘179F,’’ after ‘‘179E,’’. 

13 (3) The table of sections for part VI of sub14 chapter B of chapter 1 of subtitle A of such Code 

15 is amended by inserting after the item relating to 

16 section 179E the following new item: 

‘‘Sec. 179F. Election to expense qualified freight rail infrastructure property.’’. 

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

18 this section shall apply to property placed in service after 

19 December 31, 2011. 

20 SEC. 4. WAGE RATE REQUIREMENTS. 

21 The taxpayer shall not be allowed a credit under sec22 tion 45S of the Internal Revenue Code of 1986 (as added 

23 by section 2 of this Act) or a deduction under 

24 section 179F of such Code (as added by section 3 of this 

25 Act) until the taxpayer certifies in writing to the Secretary 


emcdonald on DSK2BSOYB1PROD with BILLS
13 

•HR 2091 IH

1 of the Treasury that all laborers and mechanics employed 

2 by contractors and subcontractors in construction, re3 placement, or expansion of new qualified freight rail infra4 structure property for which such credit or deduction (as 

5 the case may be) is claimed were paid wages at rates not 

6 less than those prevailing at the time the construction, re7 placement, or expansion work was performed on similar 

8 work in the locality as determined by the Secretary of 

9 Labor in accordance with subchapter IV of chapter 31 of 

10 part A of subtitle II of title 40, United States Code (com11 monly referred to as the ‘‘Davis-Bacon Act’’). 

Æ 


emcdonald on DSK2BSOYB1PROD with BILLS