I

107TH CONGRESS

1ST SESSION H. R. 1636

To amend the Internal Revenue Code of 1986 to allow allocation of small

ethanol producer credit to patrons of cooperative, and for other purposes.

IN THE HOUSE OF REPRESENTATIVES

APRIL 26, 2001

Mr. THUNE (for himself, Mr. POMEROY, Mrs. EMERSON, Mr. JOHNSON of Illinois, Mr. KENNEDY of Minnesota, Mr. GRAVES, Mr. SHIMKUS, Mrs.

CLAYTON, and Mr. MORAN of Kansas) 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 allocation of small ethanol producer credit to patrons of cooperative, and for other purposes.

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

3 SECTION 1. SMALL ETHANOL PRODUCER CREDIT.

4 (a) ALLOCATION OF ALCOHOL FUELS CREDIT TO

5 PATRONS OF A COOPERATIVE.—Section 40(g) Internal

6 Revenue Code of 1986 (relating to definitions and special

7 rules for eligible small ethanol producer credit) is amended

8 by adding at the end the following:
2

•HR 1636 IH

1 ‘‘(6) ALLOCATION OF SMALL ETHANOL PRO2 DUCER CREDIT TO PATRONS OF COOPERATIVE.—

3 ‘‘(A) ELECTION TO ALLOCATE.—

4 ‘‘(i) IN GENERAL.—Notwithstanding

5 paragraph (4), in the case of a cooperative

6 organization described in section 1381(a),

7 any portion of the credit determined under

8 subsection (a)(3) for the taxable year may,

9 at the election of the organization, be ap10 portioned pro rata among patrons of the

11 organization on the basis of the quantity

12 or value of business done with or for such

13 patrons for the taxable year.

14 ‘‘(ii) FORM AND EFFECT OF ELEC15 TION.—An election under clause (i) for any

16 taxable year shall be made on a timely

17 filed return for such year. Such election,

18 once made, shall be irrevocable for such

19 taxable year.

20 ‘‘(iii) SPECIAL RULE FOR TAXABLE

21 YEARS PRIOR TO ENACTMENT OF PARA22 GRAPH.—Notwithstanding clause (ii), an

23 election for any taxable year ending prior

24 to the date of the enactment of this para25 graph may be made at any time before the
3

•HR 1636 IH

1 expiration of the 3-year period beginning

2 on the last date prescribed by law for filing

3 the return of the taxpayer for such taxable

4 year (determined without regard to exten5 sions) by filing an amended return for

6 such year.

7 ‘‘(B) TREATMENT OF ORGANIZATIONS AND

8 PATRONS.—The amount of the credit appor9 tioned to patrons under subparagraph (A)—

10 ‘‘(i) shall not be included in the

11 amount determined under subsection (a)

12 with respect to the organization for the

13 taxable year,

14 ‘‘(ii) shall be included in the amount

15 determined under subsection (a) for the

16 taxable year of each patron for which the

17 patronage dividends for the taxable year

18 described in subparagraph (A) are included

19 in gross income, and

20 ‘‘(iii) shall be included in gross income

21 of such patrons for the taxable year in the

22 manner and to the extent provided in sec23 tion 87.

24 ‘‘(C) SPECIAL RULES FOR DECREASE IN

25 CREDITS FOR TAXABLE YEAR.—If the amount
4

•HR 1636 IH

1 of the credit of a cooperative organization (as

2 so defined) determined under subsection (a)(3)

3 for a taxable year is less than the amount of

4 such credit shown on the return of the coopera5 tive organization for such year, an amount

6 equal to the excess of—

7 ‘‘(i) such reduction, over

8 ‘‘(ii) the amount not apportioned to

9 such patrons under subparagraph (A) for

10 the taxable year,

11 shall be treated as an increase in tax imposed

12 by this chapter on the organization. Such in13 crease shall not be treated as tax imposed by

14 this chapter for purposes of determining the

15 amount of any credit under this subpart or sub16 part A, B, E, or G.’’.

17 (b) DEFINITION OF SMALL ETHANOL PRODUCER;

18 IMPROVEMENTS TO SMALL ETHANOL PRODUCER

19 CREDIT.—

20 (1) DEFINITION OF SMALL ETHANOL PRO21 DUCER.—Section 40(g)(1) of the Internal Revenue

22 Code of 1986 (relating to eligible small ethanol pro23 ducer) is amended by striking ‘‘30,000,000’’ and in24 serting ‘‘60,000,000’’.
5

•HR 1636 IH

1 (2) SMALL ETHANOL PRODUCER CREDIT NOT A

2 PASSIVE ACTIVITY CREDIT.—Clause (i) of section

3 469(d)(2)(A) of such Code (relating to passive activ4 ity credit) is amended by striking ‘‘subpart D’’ and

5 inserting ‘‘subpart D, other than section 40(a)(3),’’.

6 (3) ALLOWING CREDIT AGAINST MINIMUM

7 TAX.—

8 (A) IN GENERAL.—Subsection (c) of sec9 tion 38 of such Code (relating to limitation

10 based on amount of tax) is amended by redesig11 nating paragraph (3) as paragraph (4) and by

12 inserting after paragraph (2) the following:

13 ‘‘(3) SPECIAL RULES FOR SMALL ETHANOL

14 PRODUCER CREDIT.—

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

16 small ethanol producer credit—

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

18 be applied separately with respect to the

19 credit, and

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

21 credit—

22 ‘‘(I) subparagraphs (A) and (B)

23 thereof shall not apply, and

24 ‘‘(II) the limitation under para25 graph (1) (as modified by subclause
6

•HR 1636 IH

1 (I)) shall be reduced by the credit al2 lowed under subsection (a) for the

3 taxable year (other than the small

4 ethanol producer credit).

5 ‘‘(B) SMALL ETHANOL PRODUCER CRED6 IT.—For purposes of this subsection, the term

7 ‘small ethanol producer credit’ means the credit

8 allowable under subsection (a) by reason of sec9 tion 40(a)(3).’’.

10 (B) CONFORMING AMENDMENT.—Sub11 clause (II) of section 38(c)(2)(A)(ii) of such

12 Code is amended by inserting ‘‘or the small eth13 anol producer credit’’ after ‘‘employment

14 credit’’.

15 (4) SMALL ETHANOL PRODUCER CREDIT NOT

16 ADDED BACK TO INCOME UNDER SECTION 87.—Sec17 tion 87 of such Code (relating to income inclusion

18 of alcohol fuel credit is amended to read as follows:

19 ‘‘SEC. 87. ALCOHOL FUEL CREDIT.

20 ‘‘Gross income includes an amount equal to the sum

21 of—

22 ‘‘(1) the amount of the alcohol mixture credit

23 determined with respect to the taxpayer for the tax24 able year under section 40(a)(1), and
7

•HR 1636 IH

1 ‘‘(2) the alcohol credit determined with respect

2 to the taxpayer for the taxable year under section

3 40(a)(2).’’.

4 (c) CONFORMING AMENDMENT.—Section 1388 of the

5 Internal Revenue Code of 1986 (relating to definitions and

6 special rules for cooperative organizations) is amended by

7 adding at the end the following:

8 ‘‘(k) CROSS REFERENCE.—For provisions relating to

9 the apportionment of the alcohol fuels credit between coop10 erative organizations and their patrons, see section 40(d)

11 (6).’’

12 (d) EFFECTIVE DATES.—

13 (1) IN GENERAL.—Except as provided in para14 graph (2), the amendments made by this section

15 shall apply to taxable years beginning after Decem16 ber 31, 1997.

17 (2) CERTAIN PROVISIONS.—The amendments

18 made by paragraphs (1) and (4) of subsection (b)

19 shall apply to taxable years ending after the date of

20 the enactment of this Act.

Æ