II 

110TH CONGRESS 

2D SESSION S. 3316 

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 SENATE OF THE UNITED STATES 

JULY 23, 2008 

Mr. BROWN introduced the following bill; which was read twice and referred 

to the Committee on Finance 

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 2008’’. 


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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. 45Q. 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— 

18 ‘‘(A) amounts paid or incurred to satisfy 

19 Federal, State, or local requirements, and 

20 ‘‘(B) amounts paid for corrosion preven21 tion practices, as certified by a person certified 

22 pursuant to subsection (b)(2). 

23 ‘‘(b) QUALIFIED CORROSION PREVENTION AND MITI24 GATION EXPENDITURES.—For purposes of this section— 

25 ‘‘(1) IN GENERAL.—The term ‘qualified corro26 sion prevention and mitigation expenditures’ means 


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1 amounts paid or incurred by the taxpayer during the 

2 taxable year for engineering design, materials, and 

3 application and installation of corrosion prevention 

4 and mitigation technology. 

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

6 Secretary shall require by regulation that no amount 

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

8 design, material, application, or installation unless 

9 such design, material, application, or installation 

10 meets such certification requirements as the Sec11 retary may provide. Such requirements shall provide 

12 for accreditation of certifying persons by an inde13 pendent entity with expertise in corrosion prevention 

14 and mitigation technology. 

15 ‘‘(3) CORROSION PREVENTION AND MITIGATION

16 TECHNOLOGY.—Corrosion prevention and mitigation 

17 technology includes a system comprised of at least 

18 one of the following: a corrosion-protective coating 

19 or paint; chemical treatment; corrosion-resistant 

20 metals; and cathodic protection. The Secretary from 

21 time to time by regulations or other guidance may 

22 modify the list contained in the preceding sentence 

23 to reflect changes in corrosion prevention and miti24 gation technology. 


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1 ‘‘(4) QUALIFIED PROPERTY.—The term ‘quali2 fied property’ means property which is— 

3 ‘‘(A) comprised primarily of a metal sus4 ceptible to corrosion, 

5 ‘‘(B) of a character subject to the allow6 ance for depreciation, 

7 ‘‘(C) originally placed in service or owned 

8 by the taxpayer, and 

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

10 ‘‘(c) RECAPTURE OF CREDIT.— 

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

12 taxable year, there is a recapture event with respect 

13 to any qualified property for which a credit was al14 lowed under subsection (a), the tax of the taxpayer 

15 under this chapter for such taxable year shall be in16 creased by an amount equal to the product of— 

17 ‘‘(A) the applicable recapture percentage, 

18 and 

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

20 allowed under section 38 for all prior taxable 

21 years which would have resulted if the qualified 

22 corrosion prevention and mitigation expendi23 tures of the taxpayer with respect to such prop24 erty had been zero. 

25 ‘‘(2) APPLICABLE RECAPTURE PERCENTAGE.— 


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

2 subsection, the applicable recapture percentage 

3 shall be determined from the following table: 

‘‘If the property ceases to be The recapture 

qualified property within: percentage is: 

(i) One full year after such property is 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. 

4 ‘‘(B) RECAPTURE EVENT DEFINED.—For 

5 purposes of this subsection, the term ‘recapture 

6 event’ means— 

7 ‘‘(i) CESSATION OF USE.—The ces8 sation of use of the qualified property. 

9 ‘‘(ii) CHANGE IN OWNERSHIP.— 

10 ‘‘(I) IN GENERAL.—Except as 

11 provided in subclause (II), the disposi12 tion of a taxpayer’s interest in the 

13 qualified property with respect to 

14 which the credit described in sub15 section (a) was allowable. 

16 ‘‘(II) AGREEMENT TO ASSUME

17 RECAPTURE LIABILITY.—Subclause 

18 (I) shall not apply if the person ac19 quiring the qualified property agrees 

20 in writing to assume the recapture liVerDate Aug 31 2005 03:31 Jul 24, 2008 Jkt 069200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S3316.IS S3316

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1 ability of the person disposing of the 

2 qualified property. In the event of 

3 such an assumption, the person ac4 quiring the qualified property shall be 

5 treated as the taxpayer for purposes 

6 of assessing any recapture liability 

7 (computed as if there had been no 

8 change in ownership). 

9 ‘‘(III) SPECIAL RULE FOR TAX

10 EXEMPT ENTITIES.—Subclause (II) 

11 shall not apply to any tax exempt en12 tity (as defined in section 168(h)(2)). 

13 ‘‘(iii) SPECIAL RULES.— 

14 ‘‘(I) TAX BENEFIT RULE.—The 

15 tax for the taxable year shall be in16 creased under paragraph (1) only with 

17 respect to credits allowed by reason of 

18 this section which were used to reduce 

19 tax liability. In the case of credits not 

20 so used to reduce tax liability, the 

21 carryforwards and carrybacks under 

22 section 39 shall be appropriately ad23 justed. 

24 ‘‘(II) NO CREDITS AGAINST

25 TAX.—Any increase in tax under this 


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1 subsection shall not be treated as a 

2 tax imposed by this chapter for pur3 poses of determining the amount of 

4 any credit under this chapter or for 

5 purposes of section 55. 

6 ‘‘(III) NO RECAPTURE BY REA7 SON OF CASUALTY LOSS.—The in8 crease in tax under this subsection 

9 shall not apply to a cessation of oper10 ation of the property as qualified 

11 property by reason of a casualty loss 

12 to the extent such loss is restored by 

13 reconstruction or replacement within a 

14 reasonable period established by the 

15 Secretary. 

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

17 of this subtitle— 

18 ‘‘(1) BASIS ADJUSTMENTS.— 

19 ‘‘(A) IN GENERAL.—If a credit is deter20 mined under this section for any expenditure 

21 with respect to any property, the increase in the 

22 basis of such property which would (but for this 

23 subsection) result from such expenditure shall 

24 be reduced by the amount of the credit so al25 lowed. 


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

2 any taxable year, there is a recapture amount 

3 determined with respect to any property the 

4 basis of which was reduced under subparagraph 

5 (A), the basis of such property (immediately be6 fore the event resulting in such recapture) shall 

7 be increased by an amount equal to such recap8 ture amount. For purposes of the preceding 

9 sentence, the term ‘recapture amount’ means 

10 any increase in tax (or adjustment in 

11 carrybacks or carryovers) determined under 

12 subsection (c). 

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

14 deduction or credit shall be allowed under this chap15 ter for any expense taken into account under this 

16 section. 

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

18 such regulations as may be appropriate to carry out this 

19 section. 

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

21 any taxable year beginning after December 31, 2017.’’. 

22 (b) CREDIT MADE PART OF GENERAL BUSINESS

23 CREDIT.—Subsection (b) of section 38 of the Internal 

24 Revenue Code of 1986 (relating to current year business 

25 credit) is amended— 


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1 (1) by striking ‘‘plus’’ at the end of paragraph 

2 (31), 

3 (2) by striking the period at the end of para4 graph (32) and inserting ‘‘, plus’’, and 

5 (3) by adding at the end the following new 

6 paragraph: 

7 ‘‘(33) the corrosion prevention and mitigation 

8 credit determined under section 45Q(a).’’. 

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

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

11 of the Internal Revenue Code of 1986 is amended by in12 serting after the item relating to section 45P the following 

13 new item: 

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

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

15 this section shall apply to taxable years beginning after 

16 December 31, 2008. 

Æ 


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