II 

109TH CONGRESS 

1ST SESSION S. 542 

To amend the Internal Revenue Code of 1986 to extend for 5 years the 

credit for electricity produced from certain renewable resources, and 

for other purposes. 

IN THE SENATE OF THE UNITED STATES 

MARCH 7, 2005 

Mr. DORGAN (for himself, Mr. SMITH, Mrs. MURRAY, Ms. CANTWELL, Mr. 

JOHNSON, and Mr. HARKIN) 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 extend 

for 5 years the credit for electricity produced from certain renewable resources, 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. EXTENSION OF RENEWABLE ENERGY CREDIT. 

4 Section 45(d) of the Internal Revenue Code of 1986 

5 (relating to qualified facilities) is amended by striking 

6 ‘‘January 1, 2006’’ each place it appears and inserting 

7 ‘‘January 1, 2011’’. 
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1 SEC. 2. TREATMENT OF PERSONS NOT ABLE TO USE EN2 TIRE CREDIT. 

3 (a) IN GENERAL.—Section 45(e) of the Internal Rev4 enue Code of 1986 (relating to definitions and special 

5 rules) is amended by adding at the end the following new 

6 paragraph: 

7 ‘‘(10) TREATMENT OF PERSONS NOT ABLE TO

8 USE ENTIRE CREDIT.— 

9 ‘‘(A) ALLOWANCE OF CREDIT.— 

10 ‘‘(i) IN GENERAL.—Except as other11 wise provided in this subsection— 

12 ‘‘(I) any credit allowable under 

13 subsection (a) with respect to a quali14 fied facility owned by a person de15 scribed in clause (ii) may be trans16 ferred or used as provided in this 

17 paragraph, and 

18 ‘‘(II) the determination as to 

19 whether the credit is allowable shall 

20 be made without regard to the tax-ex21 empt status of the person. 

22 ‘‘(ii) PERSONS DESCRIBED.—A person 

23 is described in this clause if the person 

24 is— 
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1 ‘‘(I) an organization described in 

2 section 501(c)(12)(C) and exempt 

3 from tax under section 501(a), 

4 ‘‘(II) an organization described 

5 in section 1381(a)(2)(C), 

6 ‘‘(III) a public utility (as defined 

7 in section 136(c)(2)(B)), which is ex8 empt from income tax under this sub9 title, 

10 ‘‘(IV) any State or political sub11 division thereof, the District of Co12 lumbia, any possession of the United 

13 States, or any agency or instrumen14 tality of any of the foregoing, or 

15 ‘‘(V) any Indian tribal govern16 ment (within the meaning of section 

17 7871) or any agency or instrumen18 tality thereof. 

19 ‘‘(B) TRANSFER OF CREDIT.— 

20 ‘‘(i) IN GENERAL.—A person de21 scribed in subparagraph (A)(ii) may trans22 fer any credit to which subparagraph 

23 (A)(i) applies through an assignment to 

24 any other person not described in subpara25 graph (A)(ii). Such transfer may be re-
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1 voked only with the consent of the Sec2 retary. 

3 ‘‘(ii) REGULATIONS.—The Secretary 

4 shall prescribe such regulations as nec5 essary to ensure that any credit described 

6 in clause (i) is assigned once and not reas7 signed by such other person. 

8 ‘‘(iii) TRANSFER PROCEEDS TREATED

9 AS ARISING FROM ESSENTIAL GOVERN10 MENT FUNCTION.—Any proceeds derived 

11 by a person described in subclause (III), 

12 (IV), or (V) of subparagraph (A)(ii) from 

13 the transfer of any credit under clause (i) 

14 shall be treated as arising from the exer15 cise of an essential government function. 

16 ‘‘(C) USE OF CREDIT AS AN OFFSET.— 

17 Notwithstanding any other provision of law, in 

18 the case of a person described in subclause (I), 

19 (II), or (V) of subparagraph (A)(ii), any credit 

20 to which subparagraph (A)(i) applies may be 

21 applied by such person, to the extent provided 

22 by the Secretary of Agriculture, as a prepay23 ment of any loan, debt, or other obligation the 

24 entity has incurred under subchapter I of chap25 ter 31 of title 7 of the Rural Electrification Act 
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1 of 1936 (7 U.S.C. 901 et seq.), as in effect on 

2 the date of the enactment of the Energy Tax 

3 Incentives Act. 

4 ‘‘(D) CREDIT NOT INCOME.—Any transfer 

5 under subparagraph (B) or use under subpara6 graph (C) of any credit to which subparagraph 

7 (A)(i) applies shall not be treated as income for 

8 purposes of section 501(c)(12). 

9 ‘‘(E) TREATMENT OF UNRELATED PER10 SONS.—For purposes of subsection (a)(2)(B), 

11 sales of electricity among and between persons 

12 described in subparagraph (A)(ii) shall be treat13 ed as sales between unrelated parties.’’. 

14 (b) EFFECTIVE DATE.—The amendment made by 

15 this section shall apply to shall apply to electricity pro16 duced and sold after the date of the enactment of this 

17 Act, in taxable years ending after such date. 

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