I 

111TH CONGRESS 

2D SESSION H. R. 4424 

To increase the energy credit for equipment used to generate electricity 

by geothermal power, to extend the grants for specified energy property, 

and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

JANUARY 12, 2010 

Mr. SESTAK introduced the following bill; which was referred to the Committee on Ways and Means, and in addition to the Committee on Energy 

and Commerce, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned 

A BILL 

To increase the energy credit for equipment used to generate 

electricity by geothermal power, to extend the grants 

for specified energy property, and for other purposes. 

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 ‘‘Enhancing Renewable 

5 Energy Investment Act’’. 


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1 SEC. 2. INCREASE OF ENERGY CREDIT FOR EQUIPMENT 

2 USED TO GENERATE ELECTRICITY BY GEO3 THERMAL POWER. 

4 (a) IN GENERAL.—Clause (i) of section 48(a)(2)(A) 

5 of the Internal Revenue Code of 1986 is amended— 

6 (1) in subclause (III), by striking ‘‘and’’; and 

7 (2) by adding at the end the following: 

8 ‘‘(V) energy property described in 

9 paragraph (3)(A)(iii), but only with 

10 respect to periods ending before Janu11 ary 1, 2017, and’’. 

12 (b) EFFECTIVE DATE.—The amendments made by 

13 this section shall apply to property placed in service after 

14 the date of the enactment of this Act. 

15 SEC. 3. EXTENSION OF SPECIFIED ENERGY PROPERTY 

16 GRANTS IN LIEU OF CREDIT. 

17 (a) IN GENERAL.—Subsection (a) of section 1603 of 

18 the American Recovery and Reinvestment Tax Act of 2009 

19 is amended by striking ‘‘unless such property—’’ and all 

20 that follows through the period at the end and inserting 

21 the following: ‘‘unless such property is placed in service 

22 before the credit termination date with respect to such 

23 property.’’. 

24 (b) EFFECTIVE DATE.—The amendment made by 

25 this section shall apply to grants made after the date of 

26 the enactment of this Act. 


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1 SEC. 4. NONQUALIFIED DEFERRED COMPENSATION FROM 

2 CERTAIN TAX INDIFFERENT PARTIES. 

3 (a) IN GENERAL.—Subpart B of part II of sub4 chapter E of chapter 1 of the Internal Revenue Code of 

5 1986 is amended by inserting after section 457 the fol6 lowing new section: 

7 ‘‘SEC. 457A. NONQUALIFIED DEFERRED COMPENSATION 

8 FROM CERTAIN TAX INDIFFERENT PARTIES. 

9 ‘‘(a) IN GENERAL.—Any compensation which is de10 ferred under a nonqualified deferred compensation plan of 

11 a nonqualified entity shall be includible in gross income 

12 when there is no substantial risk of forfeiture of the rights 

13 to such compensation. 

14 ‘‘(b) NONQUALIFIED ENTITY.—For purposes of this 

15 section, the term ‘nonqualified entity’ means— 

16 ‘‘(1) any foreign corporation unless substan17 tially all of its income is— 

18 ‘‘(A) effectively connected with the conduct 

19 of a trade or business in the United States, or 

20 ‘‘(B) subject to a comprehensive foreign in21 come tax, and 

22 ‘‘(2) any partnership unless substantially all of 

23 its income is allocated to persons other than— 

24 ‘‘(A) foreign persons with respect to whom 

25 such income is not subject to a comprehensive 

26 foreign income tax, and 


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1 ‘‘(B) organizations which are exempt from 

2 tax under this title. 

3 ‘‘(c) DETERMINABILITY OF AMOUNTS OF COMPENSA4 TION.— 

5 ‘‘(1) IN GENERAL.—If the amount of any com6 pensation is not determinable at the time that such 

7 compensation is otherwise includible in gross income 

8 under subsection (a)— 

9 ‘‘(A) such amount shall be so includible in 

10 gross income when determinable, and 

11 ‘‘(B) the tax imposed under this chapter 

12 for the taxable year in which such compensation 

13 is includible in gross income shall be increased 

14 by the sum of— 

15 ‘‘(i) the amount of interest determined 

16 under paragraph (2), and 

17 ‘‘(ii) an amount equal to 20 percent of 

18 the amount of such compensation. 

19 ‘‘(2) INTEREST.—For purposes of paragraph 

20 (1)(B)(i), the interest determined under this para21 graph for any taxable year is the amount of interest 

22 at the underpayment rate under section 6621 plus 

23 1 percentage point on the underpayments that would 

24 have occurred had the deferred compensation been 

25 includible in gross income for the taxable year in 


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1 which first deferred or, if later, the first taxable year 

2 in which such deferred compensation is not subject 

3 to a substantial risk of forfeiture. 

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

5 For purposes of this section— 

6 ‘‘(1) SUBSTANTIAL RISK OF FORFEITURE.— 

7 ‘‘(A) IN GENERAL.—The rights of a person 

8 to compensation shall be treated as subject to 

9 a substantial risk of forfeiture only if such per10 son’s rights to such compensation are condi11 tioned upon the future performance of substan12 tial services by any individual. 

13 ‘‘(B) EXCEPTION FOR COMPENSATION

14 BASED ON GAIN RECOGNIZED ON AN INVEST15 MENT ASSET.— 

16 ‘‘(i) IN GENERAL.—To the extent pro17 vided in regulations prescribed by the Sec18 retary, if compensation is determined solely 

19 by reference to the amount of gain recog20 nized on the disposition of an investment 

21 asset, such compensation shall be treated 

22 as subject to a substantial risk of for23 feiture until the date of such disposition. 

24 ‘‘(ii) INVESTMENT ASSET.—For pur25 poses of clause (i), the term ‘investment 


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1 asset’ means any single asset (other than 

2 an investment fund or similar entity)— 

3 ‘‘(I) acquired directly by an in4 vestment fund or similar entity, 

5 ‘‘(II) with respect to which such 

6 entity does not (nor does any person 

7 related to such entity) participate in 

8 the active management of such asset 

9 (or if such asset is an interest in an 

10 entity, in the active management of 

11 the activities of such entity), and 

12 ‘‘(III) substantially all of any 

13 gain on the disposition of which (other 

14 than such deferred compensation) is 

15 allocated to investors in such entity. 

16 ‘‘(iii) COORDINATION WITH SPECIAL

17 RULE.—Paragraph (3)(B) shall not apply 

18 to any compensation to which clause (i) 

19 applies. 

20 ‘‘(2) COMPREHENSIVE FOREIGN INCOME TAX.— 

21 The term ‘comprehensive foreign income tax’ means, 

22 with respect to any foreign person, the income tax 

23 of a foreign country if— 


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1 ‘‘(A) such person is eligible for the benefits 

2 of a comprehensive income tax treaty between 

3 such foreign country and the United States, or 

4 ‘‘(B) such person demonstrates to the sat5 isfaction of the Secretary that such foreign 

6 country has a comprehensive income tax. 

7 ‘‘(3) NONQUALIFIED DEFERRED COMPENSA8 TION PLAN.— 

9 ‘‘(A) IN GENERAL.—The term ‘non10 qualified deferred compensation plan’ has the 

11 meaning given such term under section 

12 409A(d), except that such term shall include 

13 any plan that provides a right to compensation 

14 based on the appreciation in value of a specified 

15 number of equity units of the service recipient. 

16 ‘‘(B) EXCEPTION.—Compensation shall 

17 not be treated as deferred for purposes of this 

18 section if the service provider receives payment 

19 of such compensation not later than 12 months 

20 after the end of the taxable year of the service 

21 recipient during which the right to the payment 

22 of such compensation is no longer subject to a 

23 substantial risk of forfeiture. 

24 ‘‘(4) EXCEPTION FOR CERTAIN COMPENSATION

25 WITH RESPECT TO EFFECTIVELY CONNECTED INVerDate Nov 24 2008 04:11 Jan 13, 2010 Jkt 089200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H4424.IH H4424

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1 COME.—In the case of a foreign corporation with in2 come which is taxable under section 882, this section 

3 shall not apply to compensation which, had such 

4 compensation had been paid in cash on the date that 

5 such compensation ceased to be subject to a sub6 stantial risk of forfeiture, would have been deduct7 ible by such foreign corporation against such income. 

8 ‘‘(5) APPLICATION OF RULES.—Rules similar to 

9 the rules of paragraphs (5) and (6) of section 

10 409A(d) shall apply. 

11 ‘‘(e) REGULATIONS.—The Secretary shall prescribe 

12 such regulations as may be necessary or appropriate to 

13 carry out the purposes of this section, including regula14 tions disregarding a substantial risk of forfeiture in cases 

15 where necessary to carry out the purposes of this sec16 tion.’’. 

17 (b) CONFORMING AMENDMENT.—Section 26(b)(2) of 

18 such Code is amended by striking ‘‘and’’ at the end of 

19 subparagraph (V), by striking the period at the end of 

20 subparagraph (W) and inserting ‘‘, and’’, and by adding 

21 at the end the following new subparagraph: 

22 ‘‘(X) section 457A(c)(1)(B) (relating to de23 terminability of amounts of compensation).’’. 

24 (c) CLERICAL AMENDMENT.—The table of sections 

25 of subpart B of part II of subchapter E of chapter 1 of 


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1 such Code is amended by inserting after the item relating 

2 to section 457 the following new item: 

‘‘Sec. 457A. Nonqualified deferred compensation from certain tax indifferent 

parties.’’. 

3 (d) EFFECTIVE DATE.— 

4 (1) IN GENERAL.—Except as otherwise pro5 vided in this subsection, the amendments made by 

6 this section shall apply to amounts deferred which 

7 are attributable to services performed after Decem8 ber 31, 2008. 

9 (2) APPLICATION TO EXISTING DEFERRALS.— 

10 In the case of any amount deferred to which the 

11 amendments made by this section do not apply solely 

12 by reason of the fact that the amount is attributable 

13 to services performed before January 1, 2009, to the 

14 extent such amount is not includible in gross income 

15 in a taxable year beginning before 2018, such 

16 amounts shall be includible in gross income in the 

17 later of— 

18 (A) the last taxable year beginning before 

19 2018, or 

20 (B) the taxable year in which there is no 

21 substantial risk of forfeiture of the rights to 

22 such compensation (determined in the same 

23 manner as determined for purposes of section 


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1 457A of the Internal Revenue Code of 1986, as 

2 added by this section). 

3 (3) ACCELERATED PAYMENTS.—No later than 

4 120 days after the date of the enactment of this Act, 

5 the Secretary shall issue guidance providing a lim6 ited period of time during which a nonqualified de7 ferred compensation arrangement attributable to 

8 services performed on or before December 31, 2008, 

9 may, without violating the requirements of section 

10 409A(a) of the Internal Revenue Code of 1986, be 

11 amended to conform the date of distribution to the 

12 date the amounts are required to be included in in13 come. 

14 (4) CERTAIN BACK-TO-BACK ARRANGEMENTS.— 

15 If the taxpayer is also a service recipient and main16 tains one or more nonqualified deferred compensa17 tion arrangements for its service providers under 

18 which any amount is attributable to services per19 formed on or before December 31, 2008, the guid20 ance issued under paragraph (4) shall permit such 

21 arrangements to be amended to conform the dates of 

22 distribution under such arrangement to the date 

23 amounts are required to be included in the income 

24 of such taxpayer under this subsection. 


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1 (5) ACCELERATED PAYMENT NOT TREATED AS

2 MATERIAL MODIFICATION.—Any amendment to a 

3 nonqualified deferred compensation arrangement 

4 made pursuant to paragraph (4) or (5) shall not be 

5 treated as a material modification of the arrange6 ment for purposes of section 409A of the Internal 

7 Revenue Code of 1986. 

Æ 


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