I 

109TH CONGRESS 

1ST SESSION H. R. 1397 

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

income tax for certain energy-efficient property. 

IN THE HOUSE OF REPRESENTATIVES 

MARCH 17, 2005 

Mrs. JOHNSON of Connecticut (for herself, Mr. MCNULTY, and Mr. LARSON

of Connecticut) 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 

credit against income tax for certain energy-efficient 

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. CREDIT FOR BUSINESS INSTALLATION OF 

4 QUALIFIED FUEL CELLS. 

5 (a) IN GENERAL.—Section 48(a)(3)(A) of the Inter6 nal Revenue Code of 1986 (defining energy property) is 

7 amended by striking ‘‘or’’ at the end of clause (i), by add8 ing ‘‘or’’ at the end of clause (ii), and by inserting after 

9 clause (ii) the following new clause: 
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1 ‘‘(iii) qualified fuel cell property,’’. 

2 (b) QUALIFIED FUEL CELL PROPERTY.—Section 48 

3 of such Code (relating to energy credit) is amended by 

4 adding at the end the following new subsection: 

5 ‘‘(c) QUALIFIED FUEL CELL PROPERTY.—For pur6 poses of subsection (a)(3)(A)(iii)— 

7 ‘‘(1) IN GENERAL.—The term ‘qualified fuel 

8 cell property’ means a fuel cell power plant which 

9 generates at least 0.5 kilowatt of electricity using an 

10 electrochemical process. 

11 ‘‘(2) LIMITATION.—The energy credit with re12 spect to any qualified fuel cell property shall not ex13 ceed an amount equal to $500 for each 0.5 kilowatt 

14 of capacity of such property. 

15 ‘‘(3) FUEL CELL POWER PLANT.—The term 

16 ‘fuel cell power plant’ means an integrated system, 

17 comprised of a fuel cell stack assembly and associ18 ated balance of plant components, which converts a 

19 fuel into electricity using electrochemical means. 

20 ‘‘(4) TERMINATION.—The term ‘qualified fuel 

21 cell property’ shall not include any property placed 

22 in service after December 31, 2009.’’. 

23 (c) ENERGY PERCENTAGE.—Subparagraph (A) of 

24 section 48(a)(2) of such Code (relating to energy percent25 age) is amended to read as follows: 
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1 ‘‘(A) IN GENERAL.—The energy percent2 age is— 

3 ‘‘(i) in the case of qualified fuel cell 

4 property, 30 percent, and 

5 ‘‘(ii) in the case of any other energy 

6 property, 10 percent.’’. 

7 (d) CONFORMING AMENDMENT.—Section 48(a)(1) of 

8 such Code is amended by inserting ‘‘except as provided 

9 in subsection (c)(2),’’ before ‘‘the energy’’. 

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

11 this section shall apply to periods after December 31, 

12 2004, under rules similar to the rules of section 48(m) 

13 of the Internal Revenue Code of 1986 (as in effect on the 

14 day before the date of the enactment of the Revenue Rec15 onciliation Act of 1990). 

16 SEC. 2. CREDIT FOR NONBUSINESS INSTALLATION OF 

17 QUALIFIED FUEL CELLS. 

18 (a) IN GENERAL.—Subpart A of part IV of sub19 chapter A of chapter 1 of the Internal Revenue Code of 

20 1986 (relating to nonrefundable personal credits) is 

21 amended by inserting after section 25B the following new 

22 section: 
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1 ‘‘SEC. 25C. NONBUSINESS INSTALLATION OF QUALIFIED 

2 FUEL CELLS. 

3 ‘‘(a) ALLOWANCE OF CREDIT.—In the case of an in4 dividual, there shall be allowed as a credit against the tax 

5 imposed by this chapter for the taxable year an amount 

6 equal to the sum of 30 percent of the qualified fuel cell 

7 property expenditures made by the taxpayer during such 

8 year. 

9 ‘‘(b) LIMITATIONS.— 

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

11 under subsection (a) shall not exceed $500 for each 

12 0.5 kilowatt of capacity of qualified fuel cell prop13 erty. 

14 ‘‘(2) PROPERTY STANDARDS.—No credit shall 

15 be allowed under this section for an item of property 

16 unless— 

17 ‘‘(A) the original use of such property com18 mences with the taxpayer, 

19 ‘‘(B) such property reasonably can be ex20 pected to remain in use for at least 5 years, 

21 ‘‘(C) such property is installed on or in 

22 connection with a dwelling unit located in the 

23 United States and used as a residence by the 

24 taxpayer, 

25 ‘‘(D) such property meets the performance 

26 and quality standards (if any) which have been 
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1 prescribed by the Secretary by regulations 

2 (after consultation with the Secretary of En3 ergy), and 

4 ‘‘(E) such property meets appropriate fire 

5 and electric code requirements. 

6 ‘‘(c) QUALIFIED FUEL CELL PROPERTY EXPENDI7 TURE.—For purposes of this section, the term ‘qualified 

8 fuel cell property expenditure’ means an expenditure for 

9 any qualified fuel cell property (as defined in section 

10 48(c)(1)). 

11 ‘‘(d) SPECIAL RULES.—For purposes of this sec12 tion— 

13 ‘‘(1) DOLLAR AMOUNTS IN CASE OF JOINT OC14 CUPANCY.—In the case of any dwelling unit which is 

15 jointly occupied and used during any calendar year 

16 as a residence by 2 or more individuals, the fol17 lowing rules shall apply: 

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

19 under subsection (a) by reason of expenditures 

20 made during such calendar year by any of such 

21 individuals with respect to such dwelling unit 

22 shall be determined by treating all of such indi23 viduals as 1 taxpayer whose taxable year is 

24 such calendar year. 
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1 ‘‘(B) There shall be allowable, with respect 

2 to such expenditures to each of such individ3 uals, a credit under subsection (a) for the tax4 able year in which such calendar year ends in 

5 an amount which bears the same ratio to the 

6 amount determined under subparagraph (A) as 

7 the amount of such expenditures made by such 

8 individual during such calendar year bears to 

9 the aggregate of such expenditures made by all 

10 of such individuals during such calendar year. 

11 ‘‘(2) TENANT-STOCKHOLDER IN COOPERATIVE

12 HOUSING CORPORATION.—In the case of an indi13 vidual who is a tenant-stockholder (as defined in sec14 tion 216) in a cooperative housing corporation (as 

15 defined in such section), such individual shall be 

16 treated as having made the individual’s tenant-stock17 holder’s proportionate share (as defined in section 

18 216(b)(3)) of any expenditures of such corporation. 

19 ‘‘(3) CONDOMINIUMS.— 

20 ‘‘(A) IN GENERAL.—In the case of an indi21 vidual who is a member of a condominium man22 agement association with respect to a condo23 minium which the individual owns, such indi24 vidual shall be treated as having made the indi-
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1 vidual’s proportionate share of any expenditures 

2 of such association. 

3 ‘‘(B) CONDOMINIUM MANAGEMENT ASSO4 CIATION.—For purposes of this paragraph, the 

5 term ‘condominium management association’ 

6 means an organization which meets the require7 ments of paragraph (1) of section 528(c) (other 

8 than subparagraph (E) thereof) with respect to 

9 a condominium project substantially all of the 

10 units of which are used as residences. 

11 ‘‘(4) ALLOCATION IN CERTAIN CASES.—If less 

12 than 80 percent of the use of an item is for nonbusi13 ness purposes, only that portion of the expenditures 

14 for such item which is properly allocable to use for 

15 nonbusiness purposes shall be taken into account. 

16 ‘‘(5) WHEN EXPENDITURE MADE; AMOUNT OF

17 EXPENDITURE.— 

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

19 subparagraph (B), an expenditure with respect 

20 to an item shall be treated as made when the 

21 original installation of the item is completed. 

22 ‘‘(B) EXPENDITURES PART OF BUILDING

23 CONSTRUCTION.—In the case of an expenditure 

24 in connection with the construction or recon25 struction of a structure, such expenditure shall 
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1 be treated as made when the original use of the 

2 constructed or reconstructed structure by the 

3 taxpayer begins. 

4 ‘‘(C) AMOUNT.—The amount of any ex5 penditure shall be the cost thereof. 

6 ‘‘(6) PROPERTY FINANCED BY SUBSIDIZED EN7 ERGY FINANCING.—For purposes of determining the 

8 amount of expenditures made by any individual with 

9 respect to any dwelling unit, there shall not be taken 

10 into account expenditures which are made from sub11 sidized energy financing (as defined in section 

12 48(a)(4)(C)). 

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

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

15 expenditure with respect to any property, the increase in 

16 the basis of such property which would (but for this sub17 section) result from such expenditure shall be reduced by 

18 the amount of the credit so allowed. 

19 ‘‘(f) TERMINATION.—The credit allowed under this 

20 section shall not apply to taxable years beginning after 

21 December 31, 2009.’’. 

22 (b) CONFORMING AMENDMENTS.— 

23 (1) Section 1016(a) of such Code is amended 

24 by striking ‘‘and’’ at the end of paragraph (30), by 

25 striking the period at the end of paragraph (31) and 
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1 inserting ‘‘, and’’, and by adding at the end the fol2 lowing new paragraph: 

3 ‘‘(32) to the extent provided in section 25C(e), 

4 in the case of amounts with respect to which a credit 

5 has been allowed under section 25C.’’. 

6 (2) The table of sections for subpart A of part 

7 IV of subchapter A of chapter 1 of such Code is 

8 amended by inserting after the item relating to sec9 tion 25B the following new item: 

‘‘Sec. 25C. Nonbusiness installation of qualified fuel cells.’’. 

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

11 this section shall apply to taxable years ending after De12 cember 31, 2004. 

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