II

106TH CONGRESS

1ST SESSION S. 1634

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

solar energy property.

IN THE SENATE OF THE UNITED STATES

SEPTEMBER 24, 1999

Mr. ALLARD 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 allow a

credit for residential solar energy 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 ‘‘Residential Solar En5 ergy Tax Credit Act’’.

6 SEC. 2. CREDIT FOR RESIDENTIAL SOLAR ENERGY PROP7 ERTY.

8 (a) IN GENERAL.—Subpart A of part IV of sub9 chapter A of chapter 1 of the Internal Revenue Code of

10 1986 (relating to nonrefundable personal credits) is
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1 amended by inserting after section 25A the following new

2 section:

3 ‘‘SEC. 25B. RESIDENTIAL SOLAR ENERGY PROPERTY.

4 ‘‘(a) ALLOWANCE OF CREDIT.—In the case of an in5 dividual, there shall be allowed as a credit against the tax

6 imposed by this chapter for the taxable year an amount

7 equal to the sum of—

8 ‘‘(1) 15 percent of the qualified photovoltaic

9 property expenditures made by the taxpayer during

10 such year, and

11 ‘‘(2) 15 percent of the qualified solar water

12 heating property expenditures made by the taxpayer

13 during the taxable year.

14 ‘‘(b) LIMITATIONS.—

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

16 under subsection (a)(2) shall not exceed $2,000 for

17 each system of solar energy property.

18 ‘‘(2) TYPE OF PROPERTY.—No expenditure may

19 be taken into account under this section unless such

20 expenditure is made by the taxpayer for property in21 stalled on or in connection with a dwelling unit

22 which is located in the United States and which is

23 used as a residence.
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1 ‘‘(3) SAFETY CERTIFICATIONS.—No credit shall

2 be allowed under this section for an item of property

3 unless—

4 ‘‘(A) in the case of solar water heating

5 equipment, such equipment is certified for per6 formance and safety by the non-profit Solar

7 Rating Certification Corporation or a com8 parable entity endorsed by the government of

9 the State in which such property is installed,

10 and

11 ‘‘(B) in the case of a photovoltaic system,

12 such system meets appropriate fire and electric

13 code requirements.

14 ‘‘(c) DEFINITIONS.—For purposes of this section—

15 ‘‘(1) QUALIFIED SOLAR WATER HEATING PROP16 ERTY EXPENDITURE.—The term ‘qualified solar

17 water heating property expenditure’ means an ex18 penditure for property that uses solar energy to heat

19 water for use in a dwelling unit with respect to

20 which a majority of the energy is derived from the

21 sun.

22 ‘‘(2) QUALIFIED PHOTOVOLTAIC PROPERTY EX23 PENDITURE.—The term ‘qualified photovoltaic prop24 erty expenditure’ means an expenditure for property
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1 that uses solar energy to generate electricity for use

2 in a dwelling unit.

3 ‘‘(3) SOLAR PANELS.—No expenditure relating

4 to a solar panel or other property installed as a roof

5 (or portion thereof) shall fail to be treated as prop6 erty described in paragraph (1) or (2) solely because

7 it constitutes a structural component of the struc8 ture on which it is installed.

9 ‘‘(4) LABOR COSTS.—Expenditures for labor

10 costs properly allocable to the onsite preparation, as11 sembly, or original installation of the property de12 scribed in paragraph (1) or (2) and for piping or

13 wiring to interconnect such property to the dwelling

14 unit shall be taken into account for purposes of this

15 section.

16 ‘‘(5) SWIMMING POOLS, ETC., USED AS STOR17 AGE MEDIUM.—Expenditures which are properly al18 locable to a swimming pool, hot tub, or any other

19 energy storage medium which has a function other

20 than the function of such storage shall not be taken

21 into account for purposes of this section.

22 ‘‘(d) SPECIAL RULES.—For purposes of this

23 section—

24 ‘‘(1) DOLLAR AMOUNTS IN CASE OF JOINT OC25 CUPANCY.—In the case of any dwelling unit which is
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1 jointly occupied and used during any calendar year

2 as a residence by 2 or more individuals the following

3 shall apply:

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

5 under subsection (a) by reason of expenditures

6 (as the case may be) made during such cal7 endar year by any of such individuals with re8 spect to such dwelling unit shall be determined

9 by treating all of such individuals as 1 taxpayer

10 whose taxable year is such calendar year.

11 ‘‘(B) There shall be allowable with respect

12 to such expenditures to each of such individ13 uals, a credit under subsection (a) for the tax14 able year in which such calendar year ends in

15 an amount which bears the same ratio to the

16 amount determined under subparagraph (A) as

17 the amount of such expenditures made by such

18 individual during such calendar year bears to

19 the aggregate of such expenditures made by all

20 of such individuals during such calendar year.

21 ‘‘(2) TENANT-STOCKHOLDER IN COOPERATIVE

22 HOUSING CORPORATION.—In the case of an indi23 vidual who is a tenant-stockholder (as defined in sec24 tion 216) in a cooperative housing corporation (as

25 defined in such section), such individual shall be
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1 treated as having made his tenant-stockholder’s pro2 portionate share (as defined in section 216(b)(3)) of

3 any expenditures of such corporation.

4 ‘‘(3) CONDOMINIUMS.—

5 ‘‘(A) IN GENERAL.—In the case of an indi6 vidual who is a member of a condominium man7 agement association with respect to a condo8 minium which he owns, such individual shall be

9 treated as having made his proportionate share

10 of any expenditures of such association.

11 ‘‘(B) CONDOMINIUM MANAGEMENT ASSO12 CIATION.—For purposes of this paragraph, the

13 term ‘condominium management association’

14 means an organization which meets the require15 ments of paragraph (1) of section 528(c) (other

16 than subparagraph (E) thereof) with respect to

17 a condominium project substantially all of the

18 units of which are used as residences.

19 ‘‘(4) JOINT OWNERSHIP OF ITEMS OF SOLAR

20 ENERGY PROPERTY.—

21 ‘‘(A) IN GENERAL.—Any expenditure oth22 erwise qualifying as an expenditure described in

23 paragraph (1) or (2) of subsection (c) shall not

24 be treated as failing to so qualify merely be-
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1 cause such expenditure was made with respect

2 to 2 or more dwelling units.

3 ‘‘(B) LIMITS APPLIED SEPARATELY.—In

4 the case of any expenditure described in sub5 paragraph (A), the amount of the credit allow6 able under subsection (a) shall (subject to para7 graph (1)) be computed separately with respect

8 to the amount of the expenditure made for each

9 dwelling unit.

10 ‘‘(5) ALLOCATION IN CERTAIN CASES.—If less

11 than 80 percent of the use of an item is for nonbusi12 ness residential purposes, only that portion of the

13 expenditures for such item which is properly allo14 cable to use for nonbusiness residential purposes

15 shall be taken into account. For purposes of this

16 paragraph, use for a swimming pool shall be treated

17 as use which is not for residential purposes.

18 ‘‘(6) WHEN EXPENDITURE MADE; AMOUNT OF

19 EXPENDITURE.—

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

21 subparagraph (B), an expenditure with respect

22 to an item shall be treated as made when the

23 original installation of the item is completed.

24 ‘‘(B) EXPENDITURES PART OF BUILDING

25 CONSTRUCTION.—In the case of an expenditure
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1 in connection with the construction or recon2 struction of a structure, such expenditure shall

3 be treated as made when the original use of the

4 constructed or reconstructed structure by the

5 taxpayer begins.

6 ‘‘(C) AMOUNT.—The amount of any ex7 penditure shall be the cost thereof.

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

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

10 expenditure with respect to any property, the increase in

11 the basis of such property which would (but for this sub12 section) result from such expenditure shall be reduced by

13 the amount of the credit so allowed.’’.

14 (b) CONFORMING AMENDMENTS.—

15 (1) Subsection (a) of section 1016 of such Code

16 is amended by striking ‘‘and’’ at the end of para17 graph (26), by striking the period at the end of

18 paragraph (27) and inserting ‘‘; and’’, and by add19 ing at the end the following new paragraph:

20 ‘‘(28) to the extent provided in section 25B(e),

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

22 has been allowed under section 25B.’’.

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

24 IV of subchapter A of chapter 1 of such Code is
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1 amended by inserting after the item relating to sec2 tion 25A the following new item:

‘‘Sec. 25B. Residential solar energy property.’’.

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

4 this section shall apply to taxable years ending after De5 cember 31, 1999.

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