Freight RAILCAR Act of 2023

Subjects: Taxation

Summary:  <p><strong>Freight Rail Assistance and Investment to Launch Coronavirus-Era Activity and Recovery Act of 2023 or the Freight RAILCAR Act of 2023</strong></p> <p>This bill provides a new tax credit through 2025 for 10% of freight railcar fleet modernization expenses (i.e., railcar replacement and modernization expenses for meeting fuel efficiency and performance standards). The bill provides that no more than 2,000 freight railcars per taxpayer may be taken into account for purposes of determining the credit in a taxable year. </p> <p>The Department of the Treasury must report to Congress on the credit to provide information on the number of times the credit was claimed and the number of railcars scrapped or built as a result of the credit.</p>

<html><body><pre>[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[H.R. 838 Introduced in House (IH)]

&lt;DOC&gt;






118th CONGRESS
  1st Session
                                H. R. 838

 To amend the Internal Revenue Code of 1986 to provide a tax credit to 
  encourage the replacement or modernization of inefficient, outdated 
               freight railcars, and for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                            February 6, 2023

   Mr. LaHood (for himself, Mr. Schneider, Mr. Bacon, Mr. Bishop of 
    Georgia, Mr. Banks, Mr. Blumenauer, Mr. Carl, Ms. Bonamici, Mr. 
   Crawford, Mr. Cuellar, Mr. Ellzey, Mr. Kildee, Mr. Ferguson, Mr. 
Panetta, Ms. Granger, Ms. Sanchez, Mr. Graves of Missouri, Ms. Sewell, 
   Mr. Tony Gonzales of Texas, Ms. Titus, Mr. Hudson, Ms. Davids of 
  Kansas, Mr. Hern, Mr. Hunt, Mr. McCaul, Mr. Moran, Mr. Murphy, Mr. 
Rogers of Alabama, Mr. Williams of Texas, and Ms. Van Duyne) 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 tax credit to 
  encourage the replacement or modernization of inefficient, outdated 
               freight railcars, and for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Freight Rail Assistance and 
Investment to Launch Coronavirus-era Activity and Recovery Act of 
2023'' or the ``Freight RAILCAR Act of 2023''.

SEC. 2. FREIGHT RAILCAR MODERNIZATION CREDIT.

    (a) In General.--Subpart D of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986 is amended by adding at the end 
the following new section:

``SEC. 45BB. FREIGHT RAILCAR MODERNIZATION CREDIT.

    ``(a) In General.--For purposes of section 38, the freight railcar 
modernization credit determined under this section for the taxable year 
is an amount equal to 10 percent of the taxpayer's freight railcar 
fleet modernization expenses.
    ``(b) Limitation.--No more than 2,000 qualified freight railcars 
per taxpayer may be taken into account for purposes of determining the 
credit under subsection (a) with respect to a taxable year.
    ``(c) Definitions.--For purposes of this section--
            ``(1) Freight railcar fleet modernization expenses.--The 
        term `freight railcar fleet modernization expenses' means the 
        sum of the qualifying railcar replacement and modernization 
        amount.
            ``(2) Qualifying railcar replacement and modernization 
        amount.--The term `qualifying railcar replacement and 
        modernization amount' means--
                    ``(A) the basis of any qualified newly built 
                replacement railcar placed in service by the taxpayer 
                during the taxable year, plus
                    ``(B) the qualified railcar modernization 
                expenditures of the taxpayer for the taxable year.
            ``(3) Qualified newly built replacement railcar.--The term 
        `qualified newly built replacement railcar' means a qualified 
        freight railcar which--
                    ``(A) is built after the date of the enactment of 
                this section,
                    ``(B) is ordered or originally placed in service 
                before the date that is three years after the date of 
                the enactment of this section, and
                    ``(C) replaces two freight railcars owned by the 
                taxpayer that--
                            ``(i) were in service within the 48 months 
                        preceding the beginning of the taxable year, 
                        and
                            ``(ii) which were both scrapped and 
                        permanently removed from the AAR Umler System 
                        master file during such taxable year.
            ``(4) Qualified freight railcar.--
                    ``(A) In general.--The term `qualified freight 
                railcar' means a freight railcar that--
                            ``(i) is either acquired or modernized by 
                        the taxpayer after the date of the enactment of 
                        this section,
                            ``(ii) meets the significant improvement 
                        requirements for capacity, fuel efficiency, or 
                        performance of subparagraph (B),
                            ``(iii) was built in a qualified facility, 
                        and
                            ``(iv) with respect to which no credit 
                        under this section was previously claimed by 
                        any taxpayer.
                    ``(B) Significant improvement.--For purposes of 
                this paragraph, an improvement in capacity or fuel 
                efficiency and performance with respect to a modernized 
                freight railcar is a significant improvement if--
                            ``(i) such capacity or fuel efficiency, as 
                        the case may be, is increased by at least 8 
                        percent, or
                            ``(ii) in the case of performance, the 
                        qualified freight railcar meets the 
                        requirements of the Association of American 
                        Railroads Standard S-286 or is modernized to 
                        meet the design standards set forth in final 
                        rule HM-251 of the Pipeline and Hazardous 
                        Materials Safety Administration (as amended by 
                        HM-251C).
                    ``(C) Modernized.--The term `modernized' means 
                modified, retrofitted, converted or rebuilt for the 
                purpose of meeting the significant improvement criteria 
                of subparagraph (B).
            ``(5) Qualified railcar modernization expenditure.--The 
        term `qualified railcar modernization expenditure' means any 
        amount paid or incurred--
                    ``(A) in connection with the modernization of a 
                freight railcar resulting in such railcar being 
                designated a qualified freight railcar, and
                    ``(B) which is properly chargeable to a capital 
                account with respect to such freight railcar.
            ``(6) Qualified facility.--The term `qualified facility' 
        means a facility that is not owned or leased by an entity that 
        would be ineligible for an award of a contract or subcontract 
        under 49 U.S.C. 5323(u).
    ``(d) Special Rules.--
            ``(1) Denial of double benefit.--No credit shall be allowed 
        under subsection (a) for any expense for which a deduction or 
        credit is allowed under any other provision of this chapter.
            ``(2) Basis adjustment.--For purposes of this subtitle, if 
        a credit is allowed under subsection (a) with respect to any 
        qualified freight railcar, the basis of such railcar shall be 
        reduced by the amount of the credit so allowed.
            ``(3) Sale-leaseback.--For purposes of subsection (a), if 
        any qualified freight railcar is--
                    ``(A) originally placed in service by a person 
                after the date of the enactment of this section, and
                    ``(B) sold and leased back by such person within 3 
                months after such railcar is originally placed in 
                service (or, in the case of more than one railcar 
                subject to the same lease, within 3 months after the 
                date the final railcar is placed in service, so long as 
                the period between the time the first railcar is placed 
                in service and the time the last railcar is placed in 
                service does not exceed 24 months), such railcar shall 
                be treated as originally placed in service not earlier 
                than the date on which such railcar is used under the 
                leaseback referred to in this paragraph.
            ``(4) Syndication.--For purposes of subsection (a), if--
                    ``(A) any qualified freight railcar is originally 
                placed in service after the date of enactment of this 
                section by the lessor of such railcar,
                    ``(B) such railcar is sold by such lessor or any 
                subsequent purchaser within 3 months after the date 
                such railcar was originally placed in service (or, in 
                the case of more than one railcar subject to the same 
                lease, within 3 months after the date the final railcar 
                is placed in service and the time the last railcar is 
                placed in service does not exceed 12 months), and
                    ``(C) the user of such railcar after the last sale 
                during such 3-month period remains the same as when 
                such railcar was originally placed in service, such 
                railcars shall be treated as originally placed in 
                service not earlier than the date of such last sale.
            ``(5) Entities owned or controlled by state-owned 
        enterprises ineligible.--No credit under subsection (a) shall 
        be allowed to any taxpayer that would be ineligible for an 
        award of a contract or subcontract under 49 U.S.C. 5323(u).
    ``(e) Termination.--This section shall not apply to any qualifying 
railcar replacement and modernization amount after the date that is 
three years after the date of the enactment of this section.''.
    (b) Credit Allowed as Business Credit.--Section 38(b) of the 
Internal Revenue Code of 1986 (relating to current year business 
credit) is amended by striking ``plus'' at the end of paragraph (40), 
by striking the period at the end of paragraph (41) and inserting ``, 
plus'' and by inserting at the end thereof the following new paragraph:
            ``(42) the freight railcar modernization credit determined 
        under section 45BB.''.
    (c) Coordination With Section 55.--Section 38(c)(4)(B) of the 
Internal Revenue Code of 1986 is amended by redesignating clauses (x), 
(xi), and (xii) as clauses (xi), (xii), and (xiii), respectively, and 
by inserting after clause (ix) the following new clause:
                            ``(x) the freight railcar modernization 
                        credit determined under section 45BB,''.
    (d) Clerical Amendment.--The table of sections for subpart D of 
part IV of subchapter A of chapter 1 of the Internal Revenue Code of 
1986 is amended by inserting after the item relating to section 45AA 
the following new item:

``Sec. 45BB. Freight railcar modernization credit.''.
    (e) Effective Date.--The amendments made by this section shall 
apply to property placed in service, and amounts paid or incurred, 
after December 31, 2022.

SEC. 3. REPORT ON THE FREIGHT RAILCAR MODERNIZATION CREDIT.

    (a) In General.--Not later than 3 years after the date of the 
enactment of this Act, the Secretary of the Treasury (or the 
Secretary's delegate), shall submit to the Committee on Ways and Means 
of the House of Representatives and the Committee on Finance of the 
Senate a report on activity with respect to the qualified freight 
railcar credit under section 45BB of the Internal Revenue Code of 1986.
    (b) Report Contents.--The report submitted under subsection (a) 
shall contain information with respect to the following:
            (1) The number of times the credit was claimed.
            (2) The number of railcars scrapped as a result of the 
        credit.
            (3) The number of new railcars entered into contract as a 
        result of the credit.
            (4) The number of new railcars built as a result of the 
        credit.
                                 &lt;all&gt;
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