I 

108TH CONGRESS 

1ST SESSION H. R. 876

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

income tax for expenditures for the maintenance of railroad tracks of 

Class II and Class III railroads. 

IN THE HOUSE OF REPRESENTATIVES 

FEBRUARY 25, 2003

Mr. MORAN of Kansas (for himself, Mr. CAMP, and Mr. RAMSTAD) 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 provide 

a credit against income tax for expenditures for the 

maintenance of railroad tracks of Class II and Class 

III railroads.

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 ‘‘Local Railroad Reha5 bilitation and Investment Act of 2003’’. 

6 SEC. 2. CREDIT FOR MAINTENANCE OF RAILROAD TRACK. 

7 (a) IN GENERAL.—Subpart D of part IV of sub8 chapter A of chapter 1 of the Internal Revenue Code of 
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1 1986 (relating to business-related credits) is amended by 

2 adding at the end the following new section: 

3 ‘‘SEC. 45G. RAILROAD TRACK MAINTENANCE CREDIT. 

4 ‘‘(a) GENERAL RULE.—For purposes of section 38, 

5 the railroad track maintenance credit determined under 

6 this section for the taxable year is the amount of qualified 

7 railroad track maintenance expenditures paid or incurred 

8 by the taxpayer during the taxable year. 

9 ‘‘(b) LIMITATION.—The credit allowed under sub10 section (a) shall not exceed the product of—

11 ‘‘(1) $10,000, and 

12 ‘‘(2) the number of miles of railroad track 

13 owned or leased by the taxpayer as of the close of 

14 the taxable year. 

15 ‘‘(c) QUALIFIED RAILROAD TRACK MAINTENANCE

16 EXPENDITURES.—For purposes of this section, the term 

17 ‘qualified railroad track maintenance expenditures’ means 

18 expenditures (whether or not otherwise chargeable to cap19 ital account) for maintaining railroad track (including 

20 roadbed, bridges, and related track structures) owned or 

21 leased by the taxpayer of Class II or Class III railroads, 

22 but only if the appropriate State official (for the State 

23 in which such maintenance occurs) determines that such 

24 expenditures are for an essential rail upgrade. 
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1 ‘‘(d) CONTROLLED GROUPS.—For purposes of sub2 section (b), rules similar to the rules of paragraph (1) of 

3 section 41(f) shall apply for purposes of this subsection. 

4 ‘‘(e) BASIS ADJUSTMENT.—For purposes of this sub5 title, if a credit is allowed under this section with respect 

6 to any railroad track, the basis of such track shall be re7 duced by the amount of the credit so allowed. 

8 ‘‘(f) APPLICATION OF SECTION.—This section shall 

9 apply to qualified railroad track maintenance expenditures 

10 paid or incurred during taxable years beginning after De11 cember 31, 2003, and before January 1, 2009. 

12 ‘‘(g) CREDIT TRANSFERABILITY.—

13 ‘‘(1) IN GENERAL.—The taxpayer who would 

14 (but for this subsection) be allowed a credit under 

15 this section for any taxable year may transfer such 

16 credit to any eligible taxpayer. Any credit so trans17 ferred shall be allowed to the transferee, but the 

18 transferee may not assign such credit to any other 

19 person. 

20 ‘‘(2) ELIGIBLE TAXPAYER.—For purposes of 

21 this subsection, the term ‘eligible taxpayer’ means—

22 ‘‘(A) any person who transports property 

23 using the rail facilities of the taxpayer or who 

24 furnishes railroad-related property or services 

25 to the taxpayer, and 
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1 ‘‘(B) any Class II or Class III railroad. 

2 ‘‘(3) MINIMUM PRICE FOR TRANSFER.—Para3 graph (1) shall not apply unless the taxpayer re4 ceives compensation for the credit transfer equal to 

5 at least 50 percent of the amount of credit trans6 ferred. The excess of the amount of credit trans7 ferred over the compensation received by the tax8 payer for such transfer shall be included in the gross 

9 income of the transferee.’’

10 (b) LIMITATION ON CARRYBACK.—Section 39(d) of 

11 the Internal Revenue Code of 1986 (relating to transition 

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

13 paragraph: 

14 ‘‘(11) NO CARRYBACK OF RAILROAD TRACK

15 MAINTENANCE CREDIT BEFORE EFFECTIVE DATE.—

16 No portion of the unused business credit for any 

17 taxable year which is attributable to the railroad 

18 track maintenance credit determined under section 

19 45G may be carried to a taxable year beginning be20 fore January 1, 2004.’’. 

21 (c) CONFORMING AMENDMENTS.—

22 (1) Section 38(b) of the Internal Revenue Code 

23 of 1986 (relating to general business credit) is 

24 amended by striking ‘‘plus’’ at the end of paragraph 

25 (14), by striking the period at the end of paragraph 
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1 (15) and inserting ‘‘, plus’’, and by adding at the 

2 end the following new paragraph: 

3 ‘‘(16) the railroad track maintenance credit de4 termined under section 45G(a).’’. 

5 (2) Subsection (a) of section 1016 of such Code 

6 is amended by striking ‘‘and’’ at the end of para7 graph (27), by striking the period at the end of 

8 paragraph (28) and inserting ‘‘, and’’, and by add9 ing at the end the following new paragraph: 

10 ‘‘(29) in the case of railroad track with respect 

11 to which a credit was allowed under section 45G, to 

12 the extent provided in section 45G(e).’’. 

13 (d) CLERICAL AMENDMENT.—The table of sections 

14 for subpart D of part IV of subchapter A of chapter 1 

15 of the Internal Revenue Code of 1986 is amended by in16 serting after the item relating to section 45F the following 

17 new item:

‘‘Sec. 45G. Railroad track maintenance credit.’’.

18 (e) EFFECTIVE DATE.—The amendments made by 

19 this section shall apply to taxable years beginning after 

20 December 31, 2003.

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