I 

108TH CONGRESS 

2D SESSION H. R. 5319

To provide incentives for investment in renewable energy facilities. 

IN THE HOUSE OF REPRESENTATIVES 

OCTOBER 8, 2004

Ms. HERSETH introduced the following bill; which was referred to the 

Committee on Ways and Means 

A BILL

To provide incentives for investment in renewable energy 

facilities.

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 ‘‘Renewable Energy Fi5 nancing Incentive Act of 2004’’. 

6 SEC. 2. NONRECOGNITION OF GAIN FROM SALE OF REAL 

7 PROPERTY UPON SUBSEQUENT PURCHASE 

8 OF RENEWABLE ENERGY PROPERTY. 

9 (a) IN GENERAL.—Part III of subchapter O of chap10 ter 1 of the Internal Revenue Code of 1986 (relating to 
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1 common nontaxable exchanges) is amended by adding at 

2 the end the following new section: 

3 ‘‘SEC. 1046. NONRECOGNITION OF GAIN FROM SALE OF 

4 REAL PROPERTY UPON SUBSEQUENT PUR5 CHASE OF RENEWABLE ENERGY PROPERTY. 

6 ‘‘(a) GENERAL RULE.—If—

7 ‘‘(1) the taxpayer elects in such form as the 

8 Secretary may prescribe the application of this sec9 tion with respect to any sale of real property located 

10 in the United States, 

11 ‘‘(2) such sale gives rise to gain, and 

12 ‘‘(3) the seller of such property acquires renew13 able energy property within the replacement period, 

14 then, except as provided in subsections (b) and (e), no gain 

15 shall result to the taxpayer from the sale of such property. 

16 ‘‘(b) AMOUNT OF GAIN RESULTING.—

17 ‘‘(1) IN GENERAL.—In the case of an acquisi18 tion of renewable energy property to which sub19 section (a) applies, gain shall result from such acqui20 sition to the extent that the price for which such 

21 real property is sold exceeds the cost of the renew22 able energy property acquired. 

23 ‘‘(2) GAIN RECOGNIZED.—Except as provided 

24 in this section, the gain determined under paragraph 
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1 (1) shall be recognized, notwithstanding any other 

2 provision of this subtitle. 

3 ‘‘(c) DEFINITIONS AND SPECIAL RULES.—For pur4 poses of this section—

5 ‘‘(1) RENEWABLE ENERGY PROPERTY.—The 

6 term ‘renewable energy property’ means a facility lo7 cated in the United States which uses renewable en8 ergy sources as a primary feedstock for the genera9 tion of electricity or the manufacture of motor vehi10 cle fuels. 

11 ‘‘(2) SPECIAL RULE RELATING TO STOCK AND

12 INTERESTS IN PARTNERSHIPS.—

13 ‘‘(A) PARTNERSHIP INTEREST.—An inter14 est in a partnership shall be treated as an inter15 est in each of the assets of the partnership and 

16 not as an interest in the partnership. 

17 ‘‘(B) STOCK IN CORPORATION.—Stock in a 

18 corporation the principal business of which is 

19 owning or operating renewable energy property 

20 shall be treated as such property. 

21 ‘‘(C) COOPERATIVES.—Rules similar to the 

22 rules of subparagraph (A) or (B), as appro23 priate, shall apply in the case of an organiza24 tion which is subject to section 521 or to which 

25 part I of subchapter T applies. 
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1 ‘‘(3) REPLACEMENT PERIOD.—The term ‘re2 placement period’ means the 2-year period beginning 

3 on the date of the sale of real property with respect 

4 to which there is in effect an election under sub5 section (a). 

6 ‘‘(4) REQUIREMENT THAT PROPERTY BE IDEN7 TIFIED.—For purposes of this section, any property 

8 received by the taxpayer shall be treated as property 

9 which is not like-kind property if such property is 

10 not identified as property to be received in the ex11 change on or before the day which is 180 days after 

12 the date on which the taxpayer transfers the prop13 erty relinquished in the exchange. 

14 ‘‘(d) BASIS OF RENEWABLE ENERGY PROPERTY.—

15 The basis shall be the same as that of the property ex16 changed, decreased in the amount of any money received 

17 by the taxpayer and increased in the amount of gain or 

18 decreased in the amount of loss to the taxpayer that was 

19 recognized on such exchange. 

20 ‘‘(e) RECAPTURE.—

21 ‘‘(1) IN GENERAL.—If a taxpayer disposes of 

22 any renewable energy property, then, notwith23 standing any other provision of this title, gain (if 

24 any) shall be recognized to the extent of the gain 

25 which was not recognized under subsection (a) by 
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1 reason of the acquisition by such taxpayer of such 

2 renewable energy property. 

3 ‘‘(2) CERTAIN DISPOSITIONS NOT TAKEN INTO

4 ACCOUNT.—For purposes of paragraph (1), there 

5 shall not be taken into account any disposition—

6 ‘‘(A) after the death of the taxpayer, 

7 ‘‘(B) in a compulsory or involuntary con8 version (within the meaning of section 1033) if 

9 the exchange occurred before the threat or im10 minence of such conversion, or 

11 ‘‘(C) with respect to which it is established 

12 to the satisfaction of the Secretary that such 

13 disposition had as one of its principal purposes 

14 the avoidance of Federal income tax. 

15 ‘‘(f) STATUTE OF LIMITATIONS.—If any gain is real16 ized by the taxpayer on the sale or exchange of any renew17 able energy property and there is in effect an election 

18 under subsection (a) with respect to such gain, then—

19 ‘‘(1) the statutory period for the assessment of 

20 any deficiency with respect to such gain shall not ex21 pire before the expiration of 3 years from the date 

22 the Secretary is notified by the taxpayer (in such 

23 manner as the Secretary may by regulations pre24 scribe) of—
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1 ‘‘(A) the taxpayer’s cost of purchasing re2 newable energy property which the taxpayer 

3 claims results in nonrecognition of any part of 

4 such gain, 

5 ‘‘(B) the taxpayer’s intention not to pur6 chase renewable energy property within the re7 placement period, or 

8 ‘‘(C) a failure to make such purchase with9 in the replacement period, and 

10 ‘‘(2) such deficiency may be assessed before the 

11 expiration of such 3-year period notwithstanding the 

12 provisions of any other law or rule of law which 

13 would otherwise prevent such assessment.’’. 

14 (b) CONFORMING AMENDMENT.—Section 1016(a) of 

15 such Code is amended by striking ‘‘and’’ at the end of 

16 paragraph (27), by striking the period at the end of para17 graph (28) and inserting ‘‘, and’’, and by adding at the 

18 end the following new paragraph: 

19 ‘‘(29) in the case of property the acquisition of 

20 which resulted under section 1046 in the non21 recognition of any part of the gain realized on the 

22 sale of other property, to the extent provided in sec23 tion 1046.’’. 
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1 (c) CLERICAL AMENDMENT.—The table of sections 

2 for part III of subchapter O of chapter 1 of such Code 

3 is amended by adding at the end the following new item:

‘‘Sec. 1046. Nonrecognition of gain from sale of real property upon subsequent 

purchase of renewable energy property.’’.

4 (d) EFFECTIVE DATE.—The amendments made by 

5 this section shall apply with respect to real property sold 

6 after December 31, 2004.

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