I

107TH CONGRESS

1ST SESSION H. R. 1304

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

income tax for recycling or remanufacturing equipment.

IN THE HOUSE OF REPRESENTATIVES

MARCH 29, 2001

Mr. ENGLISH (for himself, Mr. TANNER, Mr. MCHUGH, Mrs. THURMAN, Mr.

ABERCROMBIE, and Mr. FROST) 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 recycling or remanufacturing equipment.

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 RECYCLING OR REMANUFAC4 TURING EQUIPMENT.

5 (a) IN GENERAL.—Section 46 of the Internal Rev6 enue Code of 1986 (relating to amount of investment cred7 it) is amended by striking ‘‘and’’ at the end of paragraph

8 (2), by striking the period at the end of paragraph (3)
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1 and inserting ‘‘, and’’, and by adding at the end the fol2 lowing new paragraph:

3 ‘‘(4) the reclamation credit.’’

4 (b) RECLAMATION CREDIT.—Section 48 of such Code

5 (relating to energy credit and reforestation credit) is

6 amended by adding at the end the following new sub7 section:

8 ‘‘(c) RECLAMATION CREDIT.—

9 ‘‘(1) IN GENERAL.—For purposes of section 46,

10 the reclamation credit for any taxable year is 20

11 percent of the basis of each qualified reclamation

12 property placed in service during the taxable year.

13 ‘‘(2) QUALIFIED RECLAMATION PROPERTY.—

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

15 section, the term ‘qualified reclamation prop16 erty’ means property—

17 ‘‘(i) which is qualified recycling prop18 erty or qualified remanufacturing property,

19 ‘‘(ii) which is tangible property (not

20 including a building and its structural

21 components),

22 ‘‘(iii) with respect to which deprecia23 tion (or amortization in lieu of deprecia24 tion) is allowable,
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1 ‘‘(iv) which has a useful life of at least

2 5 years, and

3 ‘‘(v) which is—

4 ‘‘(I) acquired by purchase (as de5 fined in section 179(d)(2)) by the tax6 payer if the original use of such prop7 erty commences with the taxpayer, or

8 ‘‘(II) constructed by or for the

9 taxpayer.

10 ‘‘(B) DOLLAR LIMITATION.—

11 ‘‘(i) IN GENERAL.—The basis of quali12 fied reclamation property taken into ac13 count under paragraph (1) for any taxable

14 year shall not exceed $10,000,000 for a

15 taxpayer.

16 ‘‘(ii) TREATMENT OF CONTROLLED

17 GROUP.—For purposes of clause (i)—

18 ‘‘(I) all component members of a

19 controlled group shall be treated as

20 one taxpayer, and

21 ‘‘(II) the Secretary shall appor22 tion the dollar limitation in such

23 clause among the component members

24 of such controlled group in such man-
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1 ner as he shall by regulation pre2 scribe.

3 ‘‘(iii) TREATMENT OF PARTNERSHIPS

4 AND S CORPORATIONS.—In the case of a

5 partnership, the dollar limitation in clause

6 (i) shall apply with respect to the partner7 ship and with respect to each partner. A

8 similar rule shall apply in the case of an

9 S corporation and its shareholders.

10 ‘‘(iv) CONTROLLED GROUP DE11 FINED.—For purposes of clause (ii), the

12 term ‘controlled group’ has the meaning

13 given such term by section 1563(a), except

14 that ‘more than 50 percent’ shall be sub15 stituted for ‘at least 80 percent’ each place

16 it appears in section 1563(a)(1).

17 ‘‘(3) CERTAIN PROGRESS EXPENDITURE RULES

18 MADE APPLICABLE.—Rules similar to the rules of

19 subsections (c)(4) and (d) of section 46 (as in effect

20 on the day before the date of the enactment of the

21 Revenue Reconciliation Act of 1990) shall apply for

22 purposes of this subsection.

23 ‘‘(4) DEFINITIONS.—For purposes of this

24 subsection—
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1 ‘‘(A) QUALIFIED RECYCLING PROPERTY.—

2 The term ‘qualified recycling property’ means

3 equipment used exclusively to collect, distribute,

4 or sort used ferrous or nonferrous metals. The

5 term does not include equipment used to collect,

6 distribute, or sort precious metals such as gold,

7 silver, or platinum unless such use is coinci8 dental to the collection, distribution, or sorting

9 of other used ferrous or nonferrous metals.

10 ‘‘(B) QUALIFIED REMANUFACTURING

11 PROPERTY.—The term ‘qualified remanufac12 turing property’ means equipment used pri13 marily by the taxpayer in the business of re14 building or remanufacturing a used product or

15 part, but only if—

16 ‘‘(i) the rebuilt or remanufactured

17 product or part includes 50 percent or less

18 virgin material, and

19 ‘‘(ii) the equipment is not used pri20 marily in a process occurring after the

21 product or part is rebuilt or remanufac22 tured.

23 ‘‘(5) COORDINATION WITH REHABILITATION

24 AND ENERGY CREDITS.—For purposes of this

25 section—
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1 ‘‘(A) the basis of any qualified reclamation

2 property shall be reduced by that portion of the

3 basis of any property which is attributable to

4 qualified rehabilitation expenditures (as defined

5 in section 47(c)(2)) or to the energy percentage

6 of energy property (as determined under section

7 48(a)), and

8 ‘‘(B) expenditures taken into account

9 under either section 47 or 48(a) shall not be

10 taken into account under this section.’’.

11 (c) SPECIAL BASIS ADJUSTMENT RULE.—Paragraph

12 (3) of section 50(c) of such Code (relating to basis adjust13 ment to investment credit property) is amended by strik14 ing ‘‘energy credit or reforestation credit’’ and inserting

15 ‘‘energy credit, reforestation credit, or reclamation cred16 it’’.

17 (d) CLERICAL AMENDMENTS.—

18 (1) The section heading for section 48 of such

19 Code is amended to read as follows:

20 ‘‘SEC. 48. ENERGY CREDIT; REFORESTATION CREDIT; REC21 LAMATION CREDIT.’’

22 (2) The item relating to section 48 in the table

23 of sections for subpart E of part IV of subchapter

24 A of chapter 1 of such Code is amended to read as

25 follows:

‘‘Sec. 48. Energy credit; reforestation credit; reclamation credit.’’
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1 (e) EFFECTIVE DATE.—The amendments made by

2 this section shall apply to property placed in service on

3 or after January 1, 2002.

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