I 

109TH CONGRESS 

2D SESSION H. R. 4913 

To amend the Internal Revenue Code of 1986 to encourage the use of 

corrosion prevention and mitigation measures in the construction and 

maintenance of business property. 

IN THE HOUSE OF REPRESENTATIVES 

MARCH 9, 2006 

Mr. FITZPATRICK of Pennsylvania (for himself and Mr. AL GREEN of Texas) 

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 encourage 

the use of corrosion prevention and mitigation measures 

in the construction and maintenance of business 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 ‘‘Corrosion Prevention 

5 Act of 2006’’. 


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1 SEC. 2. CREDIT FOR CORROSION PREVENTION AND MITI2 GATION MEASURES. 

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. 45N. CORROSION PREVENTION AND MITIGATION 

8 MEASURES. 

9 ‘‘(a) IN GENERAL.—For purposes of section 38, the 

10 corrosion prevention and mitigation credit determined 

11 under this section for the taxable year is an amount equal 

12 to 50 percent of the excess of— 

13 ‘‘(1) qualified corrosion prevention and mitiga14 tion expenditures with respect to qualified property, 

15 over 

16 ‘‘(2) the amount such expenditures would have 

17 been, taking into account amounts paid or incurred 

18 to satisfy Federal, State, or local requirements. 

19 ‘‘(b) QUALIFIED CORROSION PREVENTION AND MITI20 GATION EXPENDITURES.—For purposes of this section— 

21 ‘‘(1) IN GENERAL.—The term ‘qualified corro22 sion prevention and mitigation expenditures’ means 

23 amounts paid or incurred by the taxpayer during the 

24 taxable year for engineering design, materials, and 

25 application and installation of corrosion prevention 

26 and mitigation technology. 


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1 ‘‘(2) CERTIFICATION MAY BE REQUIRED.—The 

2 Secretary shall require by regulation that no amount 

3 be taken into account under paragraph (1) for any 

4 design, material, application, or installation unless 

5 such design, material, application, or installation 

6 meets such certification requirements as the Sec7 retary shall require. Such requirements shall provide 

8 for accreditation of certifying persons by an inde9 pendent entity with expertise in corrosion prevention 

10 and mitigation technology. 

11 ‘‘(3) CORROSION PREVENTION AND MITIGATION

12 TECHNOLOGY.—Corrosion prevention and mitigation 

13 technology includes a system comprised of at least 

14 one of the following: a corrosion-protective coating 

15 or paint; chemical treatment; corrosion-resistant 

16 metals; and cathodic protection. The Secretary from 

17 time to time by regulations or other guidance modify 

18 the list contained in the predecing sentence to reflect 

19 changes in corrosion prevention and mitigation tech20 nology. 

21 ‘‘(4) QUALIFIED PROPERTY.—The term ‘quali22 fied property’ means property which is— 

23 ‘‘(A) comprised primarily of a metal sus24 ceptible to corrosion, 


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1 ‘‘(B) of a character subject to the allow2 ance for depreciation, 

3 ‘‘(C) originally placed in service by the tax4 payer, and 

5 ‘‘(D) located in the United States. 

6 ‘‘(c) RECAPTURE OF CREDIT.— 

7 ‘‘(1) IN GENERAL.—If, as of the close of any 

8 taxable year, there is a recapture event with respect 

9 to any qualified property for which a credit was al10 lowed under subsection (a), the tax of the taxpayer 

11 under this chapter for such taxable year shall be in12 creased by an amount equal to the product of— 

13 ‘‘(A) the applicable recapture percentage, 

14 and 

15 ‘‘(B) the aggregate decrease in the credits 

16 allowed under section 38 for all prior taxable 

17 years which would have resulted if the qualified 

18 corrosion prevention and mitigation expendi19 tures of the taxpayer with respect to such prop20 erty had been zero. 

21 ‘‘(2) APPLICABLE RECAPTURE PERCENTAGE.— 

22 ‘‘(A) IN GENERAL.—For purposes of this 

23 subsection, the applicable recapture percentage 

24 shall be determined from the following table: 


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‘‘If the property ceases to be qualified property within: The recapture 

percentage is: 

(i) One full year after placed in service ....... 100

(ii) One full year after the close of the period described in clause (i) ....................... 80

(iii) One full year after the close of the period described in clause (ii) ...................... 60

(iv) One full year after the close of the period described in clause (iii) ..................... 40

(v) One full year after the close of the period described in clause (iv) ..................... 20.

1 ‘‘(B) RECAPTURE EVENT DEFINED.—For 

2 purposes of this subsection, the term ‘recapture 

3 event’ means— 

4 ‘‘(i) CESSATION OF USE.—The ces5 sation of use of the qualified property. 

6 ‘‘(ii) CHANGE IN OWNERSHIP.— 

7 ‘‘(I) IN GENERAL.—Except as 

8 provided in subclauses (II), the dis9 position of a taxpayer’s interest in the 

10 qualified property with respect to 

11 which the credit described in sub12 section (a) was allowable. 

13 ‘‘(II) AGREEMENT TO ASSUME

14 RECAPTURE LIABILITY.—Subclause 

15 (I) shall not apply if the person ac16 quiring the qualified property agrees 

17 in writing to assume the recapture li18 ability of the person disposing of the 

19 qualified property. In the event of 

20 such an assumption, the person acVerDate Aug 31 2005 02:51 Mar 10, 2006 Jkt 049200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H4913.IH H4913

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1 quiring the qualified property shall be 

2 treated as the taxpayer for purposes 

3 of assessing any recapture liability 

4 (computed as if there had been no 

5 change in ownership). 

6 ‘‘(III) SPECIAL RULE FOR TAX

7 EXEMPT ENTITIES.—Subclause (II) 

8 shall not apply to any tax exempt en9 tity (as defined in section 168(h)(2)). 

10 ‘‘(iii) SPECIAL RULES.— 

11 ‘‘(I) TAX BENEFIT RULE.—The 

12 tax for the taxable year shall be in13 creased under paragraph (1) only with 

14 respect to credits allowed by reason of 

15 this section which were used to reduce 

16 tax liability. In the case of credits not 

17 so used to reduce tax liability, the 

18 carryforwards and carrybacks under 

19 section 39 shall be appropriately ad20 justed. 

21 ‘‘(II) NO CREDITS AGAINST

22 TAX.—Any increase in tax under this 

23 subsection shall not be treated as a 

24 tax imposed by this chapter for pur25 poses of determining the amount of 


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1 any credit under this chapter or for 

2 purposes of section 55. 

3 ‘‘(III) NO RECAPTURE BY REA4 SON OF CASUALTY LOSS.—The in5 crease in tax under this subsection 

6 shall not apply to a cessation of oper7 ation of the property as qualified 

8 property by reason of a casualty loss 

9 to the extent such loss is restored by 

10 reconstruction or replacement within a 

11 reasonable period established by the 

12 Secretary. 

13 ‘‘(d) DENIAL OF DOUBLE BENEFIT.—For purposes 

14 of this subtitle— 

15 ‘‘(1) BASIS ADJUSTMENTS.— 

16 ‘‘(A) IN GENERAL.—If a credit is deter17 mined under this section for any expenditure 

18 with respect to any property, the increase in the 

19 basis of such property which would (but for this 

20 subsection) result from such expenditure shall 

21 be reduced by the amount of the credit so al22 lowed. 

23 ‘‘(B) CERTAIN DISPOSITIONS.—If, during 

24 any taxable year, there is a recapture amount 

25 determined with respect to any property the 


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1 basis of which was reduced under subparagraph 

2 (A), the basis of such property (immediately be3 fore the event resulting in such recapture) shall 

4 be increased by an amount equal to such recap5 ture amount. For purposes of the preceding 

6 sentence, the term ‘recapture amount’ means 

7 any increase in tax (or adjustment in 

8 carrybacks or carryovers) determined under 

9 subsection (c). 

10 ‘‘(2) OTHER DEDUCTIONS AND CREDITS.—No 

11 deduction or credit shall be allowed under this chap12 ter for any expense taken into account under this 

13 section. 

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

15 such regulations as may be appropriate to carry out this 

16 section.’’. 

17 (b) CREDIT MADE PART OF GENERAL BUSINESS

18 CREDIT.—Subsection (b) of section 38 of such Code (re19 lating to current year business credit) is amended by strik20 ing ‘‘plus’’ at the end of paragraph (29), by striking the 

21 period at the end of paragraph (30) and inserting ‘‘, plus’’, 

22 and by adding at the end thereof the following new para23 graph: 

24 ‘‘(31) Corrosion prevention and mitigation cred25 it determined under section 45N(a).’’. 


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

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

3 of such Code is amended by inserting after the item relat4 ing to section 45M the following new item: 

‘‘Sec. 45N. Corrosion prevention and mitigation measures.’’. 

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

6 this section shall apply to taxable years beginning after 

7 the date of the enactment of this Act. 

Æ 


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