I 

109TH CONGRESS 

1ST SESSION H. R. 206 

To amend the Internal Revenue Code of 1986 to provide a business credit 

relating to the use of clean-fuel vehicles by businesses within areas 

designated as nonattainment areas under the Clean Air Act. 

IN THE HOUSE OF REPRESENTATIVES 

JANUARY 4, 2005 

Mr. SERRANO 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 

a business credit relating to the use of clean-fuel vehicles 

by businesses within areas designated as nonattainment 

areas under the Clean Air Act. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. CLEAN-FUEL CREDIT WITH RESPECT TO BUSI4 NESSES LOCATED IN NONATTAINMENT 

5 AREAS. 

6 (a) IN GENERAL.—Subpart D of part IV of sub7 chapter A of chapter 1 of the Internal Revenue Code of 
2 

•HR 206 IH 

1 1986 (relating to business-related credits) is amended by 

2 adding at the end the following new section: 

3 ‘‘SEC. 45J. CLEAN-FUEL CREDIT WITH RESPECT TO BUSI4 NESSES LOCATED IN NONATTAINMENT 

5 AREAS. 

6 ‘‘(a) IN GENERAL.—For purposes of section 38, in 

7 the case of an eligible business the clean-fuel credit deter8 mined under this section for the taxable year is the sum 

9 of— 

10 ‘‘(1) the clean-fuel property credit, plus 

11 ‘‘(2) the clean-burning fuel use credit. 

12 ‘‘(b) CLEAN-FUEL PROPERTY CREDIT.— 

13 ‘‘(1) IN GENERAL.—The clean-fuel property 

14 credit is the sum of— 

15 ‘‘(A) qualified vehicle property costs, plus 

16 ‘‘(B) qualified refueling property costs. 

17 ‘‘(2) QUALIFIED VEHICLE PROPERTY COSTS.— 

18 ‘‘(A) IN GENERAL.—For purposes of para19 graph (1), the term ‘qualified vehicle property 

20 costs’ means the amount paid or incurred by 

21 the eligible business for qualified clean-fuel ve22 hicle property which is placed in service during 

23 the taxable year by the eligible business and 

24 substantially all of the use of which is in a non25 attainment area. 
3 

•HR 206 IH 

1 ‘‘(B) LIMITATION.—The amount which 

2 may be taken into account under subparagraph 

3 (A) with respect to any motor vehicle shall not 

4 exceed— 

5 ‘‘(i) $2,000 in the case of a motor ve6 hicle not described in clause (ii) or (iii), 

7 ‘‘(ii) $5,000 in the case of any truck 

8 or van with a gross vehicle weight rating 

9 greater than 10,000 pounds but not great10 er than 26,000 pounds, or 

11 ‘‘(iii) $50,000 in the case of— 

12 ‘‘(I) a truck or van with a gross 

13 vehicle weight rating greater than 

14 26,000 pounds, or 

15 ‘‘(II) any bus which has a seating 

16 capacity of at least 20 adults (not in17 cluding the driver). 

18 ‘‘(C) QUALIFIED CLEAN-FUEL VEHICLE

19 PROPERTY.—The term ‘qualified clean-fuel ve20 hicle property’ shall have the meaning given to 

21 such term by section 179A(c) (without regard 

22 to paragraph (3) thereof), except that such 

23 term does not include property that is a motor 

24 vehicle propelled by a fuel that is not a clean25 burning fuel. 
4 

•HR 206 IH 

1 ‘‘(3) QUALIFIED REFUELING PROPERTY

2 COSTS.— 

3 ‘‘(A) IN GENERAL.—For purposes of para4 graph (1), the term ‘qualified refueling property 

5 costs’ means amounts paid or incurred by the 

6 eligible business for qualified clean-fuel vehicle 

7 refueling property (as defined by section 

8 179A(d)) which is placed in service in a non9 attainment area during the taxable year by the 

10 eligible business. 

11 ‘‘(B) LIMITATION.— 

12 ‘‘(i) IN GENERAL.—The aggregate 

13 cost which may be taken into account 

14 under subparagraph (A) with respect to 

15 qualified clean-fuel vehicle refueling prop16 erty placed in service by the eligible busi17 ness during the taxable year at a location 

18 shall not exceed the lesser of— 

19 ‘‘(I) $100,000, or 

20 ‘‘(II) the cost of such property 

21 reduced by the amount described in 

22 clause (ii). 

23 ‘‘(ii) REDUCTION FOR AMOUNTS PRE24 VIOUSLY TAKEN INTO ACCOUNT.—For pur-
5 

•HR 206 IH 

1 poses of clause (i)(II), the amount de2 scribed in this clause is the sum of— 

3 ‘‘(I) the aggregate amount taken 

4 into account under paragraph (1)(B) 

5 for all preceding taxable years, and 

6 ‘‘(II) the aggregate amount taken 

7 into account under section 

8 179A(a)(1)(B) by the taxpayer (or 

9 any related person or predecessor) 

10 with respect to property placed in 

11 service at such location for all pre12 ceding taxable years. 

13 ‘‘(iii) SPECIAL RULES.—For purposes 

14 of this subparagraph, the provisions of 

15 subparagraphs (B) and (C) of section 

16 179A(b)(2) shall apply. 

17 ‘‘(c) CLEAN-BURNING FUEL USE CREDIT.— 

18 ‘‘(1) IN GENERAL.—For purposes of subsection 

19 (a), the clean-burning fuel use credit is the amount 

20 equal to 50 cents for each gasoline gallon equivalent 

21 of clean-burning fuel used by an eligible business 

22 during the taxable year to propel qualified clean-fuel 

23 vehicle property. 

24 ‘‘(2) CLEAN-BURNING FUEL.—For purposes of 

25 paragraph (1), the term ‘clean-burning fuel’ has the 
6 

•HR 206 IH 

1 meaning given to such term by section 179A, except 

2 that such term includes compressed natural gas and 

3 biodiesel (as defined by section 40A(d)(1)). 

4 ‘‘(3) GASOLINE GALLON EQUIVALENT.—For 

5 purposes of paragraph (1), the term ‘gasoline gallon 

6 equivalent’ means, with respect to any clean burning 

7 fuel, the amount (determined by the Secretary) of 

8 such fuel having a Btu content of 114,000. 

9 ‘‘(d) OTHER DEFINITIONS.—For purposes of this 

10 section— 

11 ‘‘(1) ELIGIBLE BUSINESS.—The term ‘eligible 

12 business’ means— 

13 ‘‘(A) a qualified business entity or a quali14 fied proprietorship (as such terms are defined 

15 by section 1397C, determined by substituting 

16 ‘nonattainment area’ for ‘empowerment zone’ 

17 and ‘enterprise zone’ each place it appears), 

18 and 

19 ‘‘(B) a trade or business located outside of 

20 a nonattainment area, but only with respect to 

21 qualified clean-fuel vehicle property used sub22 stantially within a nonattainment area. 

23 ‘‘(2) NONATTAINMENT AREA.—The term ‘non24 attainment area’ shall have the meaning given to 
7 

•HR 206 IH 

1 such term by section 171 of the Clean Air Act (42 

2 U.S.C. 7501). 

3 ‘‘(e) DENIAL OF DOUBLE BENEFIT.—No credit shall 

4 be allowed under subsection (a) for any expense for which 

5 a deduction or credit is allowed under any other provision 

6 of this chapter.’’. 

7 (b) CREDIT MADE PART OF GENERAL BUSINESS

8 CREDIT.—Subsection (b) of section 38 of such Code (re9 lating to current year business credit) is amended by strik10 ing ‘‘plus’’ at the end of paragraph (18), by striking the 

11 period at the end of paragraph (19) and inserting ‘‘, plus’’, 

12 and by adding at the end thereof the following new para13 graph: 

14 ‘‘(20) the clean-fuel credit determined under 

15 section 45J.’’. 

16 (c) DENIAL OF DOUBLE BENEFIT.—Section 280C of 

17 such Code (relating to certain expenses for which credits 

18 are allowable) is amended by adding at the end thereof 

19 the following new subsection: 

20 ‘‘(e) ZONE CLEAN FUELS EXPENSES.—No deduction 

21 shall be allowed for that portion of expenses for clean22 burning fuel otherwise allowable as a deduction for the 

23 taxable year which is equal to the amount of the credit 

24 determined for such taxable year under section 45J.’’. 
8 

•HR 206 IH 

1 (d) CREDIT ALLOWED AGAINST REGULAR AND MIN2 IMUM TAX.— 

3 (1) IN GENERAL.—Subsection (c) of section 38 

4 of such Code (relating to limitation based on amount 

5 of tax) is amended by redesignating paragraph (5) 

6 as paragraph (6) and by inserting after paragraph 

7 (4) the following new paragraph: 

8 ‘‘(5) SPECIAL RULES FOR CLEAN FUELS CRED9 IT.— 

10 ‘‘(A) IN GENERAL.—In the case of the 

11 clean fuels credit— 

12 ‘‘(i) this section and section 39 shall 

13 be applied separately with respect to the 

14 credit, and 

15 ‘‘(ii) in applying paragraph (1) to the 

16 credit— 

17 ‘‘(I) subparagraph (A) thereof 

18 shall not apply, and 

19 ‘‘(II) the limitation under para20 graph (1) (as modified by subclause 

21 (I)) shall be reduced by the credit al22 lowed under subsection (a) for the 

23 taxable year (other than the clean 

24 fuels credit). 
9 

•HR 206 IH 

1 ‘‘(B) CLEAN FUELS CREDIT.—For pur2 poses of this subsection, the term ‘clean fuels 

3 credit’ means the credit allowable under sub4 section (a) by reason of section 45J.’’. 

5 (2) CONFORMING AMENDMENTS.— 

6 (A) Subclause (II) of section 

7 38(c)(2)(A)(ii) of such Code is amended by 

8 striking ‘‘or the New York Liberty Zone busi9 ness employee credit’’ and inserting ‘‘, the New 

10 York Liberty Zone business employee credit, or 

11 the clean fuels credit’’. 

12 (B) Subclause (II) of section 

13 38(c)(3)(A)(ii) of such Code is amended by in14 serting ‘‘or the clean fuels credit’’ after ‘‘em15 ployee credit’’. 

16 (C) Subclause (II) of section 

17 38(c)(4)(A)(ii) of such Code is amended by in18 serting ‘‘or the clean fuels credit’’ after ‘‘speci19 fied credits’’. 

20 (e) DEDUCTION FOR CERTAIN UNUSED BUSINESS

21 CREDITS.—Subsection (c) of section 196 of such Code is 

22 amended by striking ‘‘and’’ at the end of paragraph (11), 

23 by striking the period at the end of paragraph (12) and 

24 inserting ‘‘, and’’, and by adding after paragraph (12) the 

25 following new paragraph: 
10 

•HR 206 IH 

1 ‘‘(13) the clean fuels credit determined under 

2 section 45J.’’. 

3 (f) CONFORMING AMENDMENT.—The table of sec4 tions for subpart D of part IV of subchapter A of chapter 

5 1 of such Code is amended by inserting after the item 

6 relating to section 45I the following new item: 

‘‘Sec. 45J. Clean-fuel credit with respect to businesses located in nonattainment 

areas.’’. 

7 (g) EFFECTIVE DATE.—The amendments made by 

8 this section shall apply to property placed in service after 

9 December 31, 2004. 

Æ