I 

111TH CONGRESS 

1ST SESSION H. R. 272 

To amend the Internal Revenue Code of 1986 to provide incentives to encourage investment in the expansion of freight rail infrastructure capacity 

and to enhance modal tax equity. 

IN THE HOUSE OF REPRESENTATIVES 

JANUARY 7, 2009 

Mr. MEEK of Florida (for himself and Mr. CANTOR) 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 

incentives to encourage investment in the expansion of 

freight rail infrastructure capacity and to enhance modal 

tax equity. 

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 ‘‘Freight Rail Infra5 structure Capacity Expansion Act of 2009’’. 


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1 SEC. 2. CREDIT FOR FREIGHT RAIL INFRASTRUCTURE CA2 PACITY EXPANSION PROPERTY. 

3 (a) IN GENERAL.—Subpart D of part IV of sub4 chapter A of chapter 1 of subtitle A of the Internal Rev5 enue Code of 1986 (relating to business-related credits) 

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

7 ‘‘SEC. 45R. FREIGHT RAIL CAPACITY EXPANSION CREDIT. 

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

9 the freight rail capacity expansion credit determined under 

10 this section for the taxable year is an amount equal to 

11 25 percent of the cost of the following property placed in 

12 service during the taxable year: 

13 ‘‘(1) New qualified freight rail infrastructure 

14 property. 

15 ‘‘(2) Qualified locomotive property. 

16 ‘‘(b) NEW QUALIFIED FREIGHT RAIL INFRASTRUC17 TURE PROPERTY.—For purposes of this section— 

18 ‘‘(1) IN GENERAL.—The term ‘new qualified 

19 freight rail infrastructure property’ means qualified 

20 freight rail infrastructure property— 

21 ‘‘(A) the construction, erection, or eligible 

22 bridge or tunnel replacement or expansion (pur23 suant to paragraph (2)) of which is completed 

24 by the taxpayer after the date of enactment of 

25 this section, or 


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1 ‘‘(B) which is acquired by the taxpayer 

2 after such date, but only if the original use of 

3 such property commences with the taxpayer. 

4 ‘‘(2) EXCEPTION FOR PROPERTY REPLACING

5 PROPERTY AT EXISTING LOCATION.—The term ‘new 

6 qualified freight rail infrastructure property’ does 

7 not include property which is replacing existing 

8 qualified freight rail infrastructure property if the 

9 replacement property is located at the site of the ex10 isting property. The preceding sentence shall not 

11 apply to the replacement or expansion of a bridge or 

12 tunnel to allow for additional clearance, track, or 

13 other capacity enhancement where such clearance, 

14 track, or other capacity enhancement did not pre15 viously exist. 

16 ‘‘(3) QUALIFIED FREIGHT RAIL INFRASTRUC17 TURE PROPERTY.— 

18 ‘‘(A) IN GENERAL.—The term ‘qualified 

19 freight rail infrastructure property’ means 

20 property used in the movement of freight by 

21 rail— 

22 ‘‘(i) the cost of which is chargeable to 

23 capital account (determined without regard 

24 to section 179F), and 

25 ‘‘(ii) which constitutes— 


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1 ‘‘(I) railroad grading or tunnel 

2 bore (as defined in section 168(e)(4)), 

3 ‘‘(II) tunnels or subways, 

4 ‘‘(III) track, including ties, rails, 

5 ballast, or other track material, 

6 ‘‘(IV) bridges, trestles, culverts, 

7 or other elevated or submerged struc8 tures, 

9 ‘‘(V) terminals, yards, roadway 

10 buildings, fuel stations, or railroad 

11 wharves or docks, including fixtures 

12 attached thereto, and equipment used 

13 exclusively therein, 

14 ‘‘(VI) railroad signal, commu15 nication, or other operating systems, 

16 including components of such systems 

17 that must be installed on locomotives 

18 or other rolling stock, or 

19 ‘‘(VII) intermodal transfer or 

20 transload facilities or terminals, in21 cluding fixtures attached thereto, and 

22 equipment used exclusively therein. 

23 ‘‘(B) EXCLUSIONS.—The term ‘qualified 

24 freight rail infrastructure property’ shall not in25 clude— 


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1 ‘‘(i) land, 

2 ‘‘(ii) rolling stock, including loco3 motives, or 

4 ‘‘(iii) property used predominantly 

5 outside the United States, 

6 except that this subparagraph shall not apply to 

7 any property described in section 168(g)(4). 

8 ‘‘(c) QUALIFIED LOCOMOTIVE PROPERTY.— 

9 ‘‘(1) IN GENERAL.—For purposes of this sec10 tion, the term ‘qualified locomotive property’ means 

11 a locomotive which— 

12 ‘‘(A) is acquired by the taxpayer after the 

13 date of enactment of this section, but only if 

14 the original use of such property commences 

15 with the taxpayer, 

16 ‘‘(B) is owned by, or leased to, a taxpayer 

17 which meets the capacity expansion requirement 

18 of paragraph (2) for the taxable year in which 

19 the locomotive is placed in service, and 

20 ‘‘(C) meets the Environmental Protection 

21 Agency’s emission standards for locomotives 

22 and locomotive engines as in effect on Decem23 ber 31, 2006. 

24 ‘‘(2) CAPACITY EXPANSION REQUIREMENT.—A 

25 taxpayer meets the requirements of this paragraph 


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1 with respect to any locomotive only if, on the last 

2 day of the taxable year in which such locomotive is 

3 placed in service, the total horsepower of all loco4 motives owned by, or leased to, the taxpayer exceeds 

5 the total horsepower of all locomotives owned by, or 

6 leased to, the taxpayer on the last day of the pre7 ceding taxable year. A determination under this 

8 paragraph shall be made pursuant to such reports as 

9 the Secretary, in consultation with the Surface 

10 Transportation Board, may prescribe. 

11 ‘‘(3) SPECIAL RULE FOR THE LEASING OF LO12 COMOTIVES.—In the case of the leasing of loco13 motives, total horsepower under paragraph (2) shall 

14 be determined with respect to all locomotives owned 

15 by, or leased to, the lessee. 

16 ‘‘(d) OTHER DEFINITIONS AND SPECIAL RULES.— 

17 ‘‘(1) DEFINITIONS.—For purposes of this sec18 tion— 

19 ‘‘(A) RAILROAD SIGNAL, COMMUNICATION, 

20 OR OTHER OPERATING SYSTEM.—The term 

21 ‘railroad signal, communication, or other oper22 ating system’ means an appliance, method, de23 vice, or system (including hardware and soft24 ware) which is used to operate a railroad or to 

25 improve safety or capacity of railroad operVerDate Nov 24 2008 18:36 Jan 11, 2009 Jkt 079200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H272.IH H272

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1 ations, including a signal, an interlocker, an 

2 automatic train stop, or a train control or cab3 signal device. 

4 ‘‘(B) INTERMODAL TRANSFER OR

5 TRANSLOAD FACILITY OR TERMINAL.—The 

6 term ‘intermodal transfer or transload facility 

7 or terminal’ means a facility or terminal pri8 marily utilized in the transfer of freight be9 tween rail and any other mode of transpor10 tation. 

11 ‘‘(2) COORDINATION WITH OTHER CREDITS.— 

12 The cost of any property taken into account in de13 termining the credit under this section may not be 

14 taken into account in determining a credit under any 

15 other provision of this title. 

16 ‘‘(3) BASIS ADJUSTMENT.—If a credit is deter17 mined under this section with respect to the cost of 

18 any qualified freight rail infrastructure property or 

19 qualified locomotive property, the basis of such prop20 erty shall be reduced by the amount of the credit so 

21 determined. 

22 ‘‘(4) SALE-LEASEBACKS.—If qualified freight 

23 rail infrastructure property or qualified locomotive 

24 property is— 


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1 ‘‘(A) originally placed in service by a per2 son after the date of enactment of this section, 

3 and 

4 ‘‘(B) sold and leased back by such person 

5 within 3 months after the property is originally 

6 placed in service (or, in the case of multiple 

7 units of property subject to the same lease, 

8 within 3 months after the date the final unit is 

9 placed in service, so long as the period between 

10 the time the first unit is placed in service and 

11 the time the last unit is placed in service does 

12 not exceed 12 months), 

13 such property shall be treated as originally placed in 

14 service not earlier than the date on which such prop15 erty is used under the lease referred to in subpara16 graph (B). 

17 ‘‘(5) RECAPTURE.—The benefit of any credit 

18 allowable under subsection (a) shall, under regula19 tions prescribed by the Secretary, be recaptured with 

20 respect to any qualified locomotive property that is 

21 sold or otherwise disposed of by the taxpayer during 

22 the 5-year period beginning on the date on which 

23 such property is originally placed in service. The 

24 preceding sentence shall not apply to locomotive 


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1 property that is sold by and subsequently leased 

2 back to the taxpayer. 

3 ‘‘(e) TERMINATION.—This section shall not apply to 

4 any property placed in service after December 31, 2012.’’. 

5 (b) CREDIT ALLOWED AS BUSINESS CREDIT.—Sec6 tion 38(b) of the Internal Revenue Code of 1986 (relating 

7 to current year business credit) is amended by striking 

8 ‘‘plus’’ at the end of paragraph (34), by striking the period 

9 at the end of paragraph (35) and inserting ‘‘, plus’’, and 

10 by adding at the end the following new paragraph: 

11 ‘‘(36) the freight rail capacity expansion credit 

12 determined under section 45R.’’. 

13 (c) COORDINATION WITH SECTION 55.—Section 

14 38(c)(4)(B) of the Internal Revenue Code of 1986 is 

15 amended by striking ‘‘and’’ at the end of clause (vii), by 

16 striking the period at the end of clause (viii) and inserting 

17 ‘‘, and’’, and by adding at the end the following new 

18 clause: 

19 ‘‘(ix) for taxable years beginning after 

20 the date of the enactment of this clause, 

21 the credit determined under section 45R.’’. 

22 (d) BASIS ADJUSTMENT.—Subsection (a) of section 

23 1016 of the Internal Revenue Code of 1986 is amended 

24 by striking ‘‘and’’ at the end of paragraph (36), by strik25 ing the period at the end of paragraph (37) and inserting 


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1 ‘‘, and’’, and by inserting after paragraph (37) the fol2 lowing new paragraph: 

3 ‘‘(38) to the extent provided in section 

4 45R(d)(3).’’. 

5 (e) CLERICAL AMENDMENT.—The table of sections 

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

7 of the Internal Revenue Code of 1986 is amended by in8 serting after the item relating to section 45Q the following 

9 new item: 

‘‘Sec. 45R. Freight rail capacity expansion credit.’’. 

10 SEC. 3. EXPENSING OF FREIGHT RAIL INFRASTRUCTURE 

11 PROPERTY. 

12 (a) IN GENERAL.—Part VI of subchapter B of chap13 ter 1 of subtitle A of the Internal Revenue Code of 1986 

14 (relating to itemized deductions for individuals and cor15 porations) is amended by inserting after section 179E the 

16 following new section: 

17 ‘‘SEC. 179F. ELECTION TO EXPENSE QUALIFIED FREIGHT 

18 RAIL INFRASTRUCTURE PROPERTY. 

19 ‘‘(a) ALLOWANCE OF DEDUCTION.— 

20 ‘‘(1) IN GENERAL.—A taxpayer may elect to 

21 treat any amount paid or incurred for the acquisi22 tion, construction, or erection of qualified freight rail 

23 infrastructure property (as defined in section 

24 45R(b)(3)) as an amount not chargeable to capital 

25 account. Any amount so treated shall be allowed as 


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1 a deduction for the taxable year in which such prop2 erty was placed in service. 

3 ‘‘(2) COORDINATION WITH CREDIT.—The 

4 amount to which the election under paragraph (1) 

5 applies with respect to any property shall be reduced 

6 by an amount equal to the amount of any reduction 

7 in the basis of the property under section 45R(d)(3). 

8 ‘‘(b) ELECTION.—An election under subsection (a) 

9 shall be made, with respect to each class of property for 

10 each taxable year, at such time and in such manner as 

11 the Secretary may prescribe by regulation. If a taxpayer 

12 makes such an election with respect to any class of prop13 erty for any taxable year, the election shall apply to all 

14 qualified freight rail infrastructure property in such class 

15 placed in service during such taxable year. An election 

16 under this section shall not affect the character of any 

17 property for the purposes of section 45R. 

18 ‘‘(c) DEDUCTION ALLOWED IN COMPUTING MINIMUM

19 TAX.—For purposes of determining alternative minimum 

20 taxable income under section 55, the deduction under sub21 section (a) for qualified freight rail infrastructure property 

22 shall be determined under this section without regard to 

23 any adjustment under section 56. 

24 ‘‘(d) TERMINATION.—This section shall not apply to 

25 any property placed in service after December 31, 2012.’’. 


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1 (b) DEDUCTION FOR CAPITAL EXPENDITURES.— 

2 Section 263(a)(1) of the Internal Revenue Code of 1986 

3 (relating to capital expenditures) is amended by striking 

4 ‘‘or’’ at the end of subparagraph (K), by striking the pe5 riod at the end of paragraph (L) and inserting ‘‘, or’’, 

6 and by adding at the end the following new subparagraph: 

7 ‘‘(M) expenditures for which a deduction is 

8 allowed under section 179F.’’. 

9 (c) TECHNICAL AND CLERICAL AMENDMENTS.— 

10 (1) Section 312(k)(3)(B) of the Internal Rev11 enue Code of 1986 is amended by striking ‘‘or 

12 179E’’ each place it appears in the text or heading 

13 thereof and inserting ‘‘179E, or 179F’’. 

14 (2) Paragraphs (2)(C) and (3)(C) of section 

15 1245(a) of such Code are each amended by inserting 

16 ‘‘179F,’’ after ‘‘179E,’’. 

17 (3) The table of sections for part VI of sub18 chapter B of chapter 1 of subtitle A of such Code 

19 is amended by inserting after the item relating to 

20 section 179E the following new item: 

‘‘Sec. 179F. Election to expense qualified freight rail infrastructure property.’’. 

21 SEC. 4. EFFECTIVE DATE. 

22 The amendments made by sections 2 and 3 shall 

23 apply to property placed in service after December 31, 

24 2009. 

Æ 


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