II 

109TH CONGRESS 

1ST SESSION S. 671 

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

income tax for certain fuel cell property. 

IN THE SENATE OF THE UNITED STATES 

MARCH 17, 2005 

Mr. LIEBERMAN (for himself, Ms. SNOWE, Mr. SMITH, and Mr. AKAKA) 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 against income tax for certain fuel cell 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. CREDIT FOR CERTAIN ENERGY-EFFICIENT 

4 PROPERTY. 

5 (a) BUSINESS PROPERTY.— 

6 (1) IN GENERAL.—Subparagraph (A) of section 

7 48(a)(3) of the Internal Revenue Code of 1986 (de8 fining energy property) is amended by striking ‘‘or’’ 

9 at the end of clause (i), by adding ‘‘or’’ at the end 
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1 of clause (ii), and by inserting after clause (ii) the 

2 following new clause: 

3 ‘‘(iii) energy-efficient building prop4 erty,’’. 

5 (2) ENERGY-EFFICIENT BUILDING PROP6 ERTY.—Subsection (a) of section 48 of such Code is 

7 amended by redesignating paragraph (4) as para8 graph (5) and by inserting after paragraph (3) the 

9 following new paragraph: 

10 ‘‘(4) ENERGY-EFFICIENT BUILDING PROP11 ERTY.—For purposes of this subsection— 

12 ‘‘(A) IN GENERAL.—The term ‘energy-effi13 cient building property’ means a fuel cell power 

14 plant that— 

15 ‘‘(i) generates electricity using an 

16 electrochemical process, and 

17 ‘‘(ii) generates at least 0.5 kilowatt of 

18 electricity using an electrochemical process. 

19 ‘‘(B) LIMITATION.—In the case of energy20 efficient building property placed in service dur21 ing the taxable year, the credit determined 

22 under paragraph (1) for such year with respect 

23 to such property shall not exceed an amount 

24 equal to the lesser of— 
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1 ‘‘(i) 30 percent of the basis of such 

2 property, including expenditures for labor 

3 costs properly allocable to the onsite prepa4 ration, assembly, or original installation of 

5 the property and for piping or wiring to 

6 interconnect such property, or 

7 ‘‘(ii) $1,000 for each kilowatt of ca8 pacity of such property. 

9 ‘‘(C) FUEL CELL POWER PLANT.—The 

10 term ‘fuel cell power plant’ means an integrated 

11 system comprised of a fuel cell stack assembly 

12 and associated balance of plant components 

13 that converts a fuel into electricity using elec14 trochemical means. 

15 ‘‘(D) TERMINATION.—Such term shall not 

16 include any property placed in service after De17 cember 31, 2009.’’. 

18 (3) LIMITATION.—Section 48(a)(2)(A) of such 

19 Code (relating to energy percentage) is amended to 

20 read as follows: 

21 ‘‘(A) IN GENERAL.—The energy percent22 age is— 

23 ‘‘(i) in the case of energy-efficient 

24 building property, 30 percent, and 
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1 ‘‘(ii) in the case of any other energy 

2 property, 10 percent.’’. 

3 (4) CONFORMING AMENDMENTS.— 

4 (A) Section 29(b)(3)(A)(i)(III) of such 

5 Code is amended by striking ‘‘section 

6 48(a)(4)(C)’’ and inserting ‘‘section 

7 48(a)(5)(C)’’. 

8 (B) Section 48(a)(1) of such Code is 

9 amended by inserting ‘‘except as provided in 

10 paragraph (4)(B),’’ before ‘‘the energy’’. 

11 (5) EFFECTIVE DATE.—The amendments made 

12 by this subsection shall apply to property placed in 

13 service after December 31, 2004, under rules similar 

14 to the rules of section 48(m) of the Internal Revenue 

15 Code of 1986 (as in effect on the day before the 

16 date of the enactment of the Revenue Reconciliation 

17 Act of 1990). 

18 (b) NONBUSINESS PROPERTY.— 

19 (1) IN GENERAL.—Subpart A of part IV of sub20 chapter A of chapter 1 of the Internal Revenue Code 

21 of 1986 (relating to nonrefundable personal credits) 

22 is amended by inserting after section 25B the fol23 lowing new section: 
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1 ‘‘SEC. 25C. NONBUSINESS ENERGY-EFFICIENT BUILDING 

2 PROPERTY. 

3 ‘‘(a) CREDIT ALLOWED.— 

4 ‘‘(1) IN GENERAL.—In the case of an indi5 vidual, there shall be allowed as a credit against the 

6 tax imposed by this chapter for the taxable year an 

7 amount equal to the nonbusiness energy-efficient 

8 building property expenditures which are paid or in9 curred during such year. 

10 ‘‘(2) LIMITATION.—The credit allowed under 

11 paragraph (1) with respect to property placed in 

12 service by the taxpayer during the taxable year shall 

13 not exceed an amount equal to the lesser of— 

14 ‘‘(A) 30 percent of the basis of such prop15 erty, or 

16 ‘‘(B) $1,000 for each kilowatt of capacity 

17 of such property. 

18 ‘‘(b) NONBUSINESS ENERGY-EFFICIENT BUILDING

19 PROPERTY EXPENDITURES.—For purposes of this sec20 tion— 

21 ‘‘(1) IN GENERAL.—The term ‘nonbusiness en22 ergy-efficient building property expenditures’ means 

23 expenditures made by the taxpayer for nonbusiness 

24 energy-efficient building property installed on or in 

25 connection with a dwelling unit— 
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1 ‘‘(A) which is located in the United States, 

2 and 

3 ‘‘(B) which is used by the taxpayer as a 

4 residence. 

5 Such term includes expenditures for labor costs 

6 properly allocable to the onsite preparation, assem7 bly, or original installation of the property. 

8 ‘‘(2) NONBUSINESS ENERGY-EFFICIENT BUILD9 ING PROPERTY.—The term ‘nonbusiness energy-effi10 cient building property’ means energy-efficient build11 ing property (as defined in section 48(a)(4)) if— 

12 ‘‘(A) the original use of such property com13 mences with the taxpayer, and 

14 ‘‘(B) such property meets the standards (if 

15 any) applicable to such property under section 

16 48(a)(3). 

17 ‘‘(c) SPECIAL RULES.—For purposes of this sec18 tion— 

19 ‘‘(1) DOLLAR AMOUNTS IN CASE OF JOINT OC20 CUPANCY.—In the case of any dwelling unit which is 

21 jointly occupied and used during any calendar year 

22 as a residence by 2 or more individuals the following 

23 shall apply: 

24 ‘‘(A) The amount of the credit allowable, 

25 under subsection (a) by reason of expenditures 
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1 (as the case may be) made during such cal2 endar year by any of such individuals with re3 spect to such dwelling unit shall be determined 

4 by treating all of such individuals as 1 taxpayer 

5 whose taxable year is such calendar year. 

6 ‘‘(B) There shall be allowable, with respect 

7 to such expenditures to each of such individ8 uals, a credit under subsection (a) for the tax9 able year in which such calendar year ends in 

10 an amount which bears the same ratio to the 

11 amount determined under subparagraph (A) as 

12 the amount of such expenditures made by such 

13 individual during such calendar year bears to 

14 the aggregate of such expenditures made by all 

15 of such individuals during such calendar year. 

16 ‘‘(2) TENANT-STOCKHOLDER IN COOPERATIVE

17 HOUSING CORPORATION.—In the case of an indi18 vidual who is a tenant-stockholder (as defined in sec19 tion 216) in a cooperative housing corporation (as 

20 defined in such section), such individual shall be 

21 treated as having made his tenant-stockholder’s pro22 portionate share (as defined in section 216(b)(3)) of 

23 any expenditures of such corporation. 

24 ‘‘(3) CONDOMINIUMS.— 
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1 ‘‘(A) IN GENERAL.—In the case of an indi2 vidual who is a member of a condominium man3 agement association with respect to a condo4 minium which the individual owns, such indi5 vidual shall be treated as having made his pro6 portionate share of any expenditures of such as7 sociation. 

8 ‘‘(B) CONDOMINIUM MANAGEMENT ASSO9 CIATION.—For purposes of this paragraph, the 

10 term ‘condominium management association’ 

11 means an organization which meets the require12 ments of paragraph (1) of section 528(c) (other 

13 than subparagraph (E) thereof) with respect to 

14 a condominium project substantially all of the 

15 units of which are used as residences. 

16 ‘‘(4) ALLOCATION IN CERTAIN CASES.—If less 

17 than 80 percent of the use of an item is for nonbusi18 ness purposes, only that portion of the expenditures 

19 for such item which is properly allocable to use for 

20 nonbusiness purposes shall be taken into account. 

21 ‘‘(5) WHEN EXPENDITURE MADE; AMOUNT OF

22 EXPENDITURE.— 

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

24 subparagraph (B), an expenditure with respect 
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1 to an item shall be treated as made when the 

2 original installation of the item is completed. 

3 ‘‘(B) EXPENDITURES PART OF BUILDING

4 CONSTRUCTION.—In the case of an expenditure 

5 in connection with the construction or recon6 struction of a structure, such expenditure shall 

7 be treated as made when the original use of the 

8 constructed or reconstructed structure by the 

9 taxpayer begins. 

10 ‘‘(C) AMOUNT.—The amount of any ex11 penditure shall be the cost thereof. 

12 ‘‘(6) PROPERTY FINANCED BY SUBSIDIZED EN13 ERGY FINANCING.—For purposes of determining the 

14 amount of nonbusiness energy-efficient building 

15 property expenditures made by any individual with 

16 respect to any dwelling unit, there shall not be taken 

17 into account expenditures which are made from sub18 sidized energy financing (as defined in section 

19 48(a)(5)(C)). 

20 ‘‘(d) BASIS ADJUSTMENTS.—For purposes of this 

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

22 expenditure with respect to any property, the increase in 

23 the basis of such property which would (but for this sub24 section) result from such expenditure shall be reduced by 

25 the amount of the credit so allowed. 
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1 ‘‘(e) TERMINATION.—This section shall not apply to 

2 any expenditure made after December 31, 2009.’’. 

3 (2) CONFORMING AMENDMENTS.— 

4 (A) Subsection (a) of section 1016 of such 

5 Code is amended by striking ‘‘and’’ at the end 

6 of paragraph (30), by striking the period at the 

7 end of paragraph (31) and inserting ‘‘; and’’, 

8 and by adding at the end the following new 

9 paragraph: 

10 ‘‘(32) to the extent provided in section 25C(d), 

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

12 has been allowed under section 25C.’’. 

13 (B) The table of sections for subpart A of 

14 part IV of subchapter A of chapter 1 of such 

15 Code is amended by inserting after the item re16 lating to section 25B the following new item:

‘‘Sec. 25C. Nonbusiness energy-efficient building property.’’.

17 (3) EFFECTIVE DATE.—The amendments made 

18 by this subsection shall apply to expenditures made 

19 after December 31, 2004.

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