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‘‘(A) the name and address of the indi-
vidual from whom the interest described in sub-
section (a)(2) was received, 
‘‘(B) the amount of such interest received 
for the calendar year, and 
‘‘(C) such other information as the Sec-
retary may prescribe. 
‘‘(c) APPLICATION TO GOVERNMENTAL UNITS.—For 
purposes of subsection (a)— 
‘‘(1) TREATED AS PERSONS.—The term ‘person’ 
includes any governmental unit (and any agency or 
instrumentality thereof). 
‘‘(2) SPECIAL RULES.—In the case of a govern-
mental unit or any agency or instrumentality there-
of— 
‘‘(A) subsection (a) shall be applied without 
regard to the trade or business requirement con-
tained therein, and 
‘‘(B) any return required under subsection 
(a) shall be made by the officer or employee ap-
propriately designated for the purpose of making 
such return. 
‘‘(d) STATEMENTS TO BE FURNISHED TO INDIVID-
UALS WITH RESPECT TO WHOM INFORMATION IS RE-
QUIRED.—Every person required to make a return under 
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subsection (a) shall furnish to each individual whose name 
is required to be set forth in such return a written statement 
showing— 
‘‘(1) the name, address, and phone number of the 
information contact of the person required to make 
such return, and 
‘‘(2) the aggregate amount of interest described 
in subsection (a)(2) received by the person required to 
make such return from the individual to whom the 
statement is required to be furnished. 
The written statement required under the preceding sen-
tence shall be furnished on or before January 31 of the year 
following the calendar year for which the return under sub-
section (a) was required to be made. 
‘‘(e) RETURNS WHICH WOULD BE REQUIRED TO BE 
MADE BY 2 OR MORE PERSONS.—Except to the extent pro-
vided in regulations prescribed by the Secretary, in the case 
of interest received by any person on behalf of another per-
son, only the person first receiving such interest shall be 
required to make the return under subsection (a).’’. 
(2) AMENDMENTS RELATING TO PENALTIES.— 
(A) Section 6721(e)(2)(A) of such Code is 
amended by striking ‘‘or 6050L’’ and inserting 
‘‘6050L, or 6050X’’. 
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(B) Section 6722(c)(1)(A) of such Code is 
amended by striking ‘‘or 6050L(c)’’ and insert-
ing ‘‘6050L(c), or 6050X(d)’’. 
(C) Subparagraph (B) of section 6724(d)(1) 
of such Code is amended by redesignating clauses 
(xvi) through (xxii) as clauses (xvii) through 
(xxiii), respectively, and by inserting after clause 
(xii) the following new clause: 
‘‘(xvi) section 6050X (relating to re-
turns relating to qualified motor vehicle in-
terest received in trade or business from in-
dividuals),’’. 
(D) Paragraph (2) of section 6724(d) of 
such Code is amended by striking the period at 
the end of subparagraph (DD) and inserting ‘‘, 
or’’ and by inserting after subparagraph (DD) 
the following new subparagraph: 
‘‘(EE) section 6050X(d) (relating to returns 
relating to qualified motor vehicle interest re-
ceived in trade or business from individuals).’’. 
(3) CLERICAL AMENDMENT.—The table of sec-
tions for subpart B of part III of subchapter A of 
chapter 61 of such Code is amended by inserting after 
the item relating to section 6050W the following new 
item: 
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‘‘Sec. 6050X. Returns relating to qualified motor vehicle interest received in trade 
or business from individuals.’’. 
(e) EFFECTIVE DATE.—The amendments made by this 
section shall apply to taxable years beginning after Decem-
ber 31, 2008. 
SEC. 1009. ABOVE-THE-LINE DEDUCTION FOR STATE SALES 
TAX AND EXCISE TAX ON THE PURCHASE OF 
CERTAIN MOTOR VEHICLES. 
(a) IN GENERAL.—Subsection (a) of section 164 of the 
Internal Revenue Code of 1986 is amended by inserting 
after paragraph (5) the following new paragraph: 
‘‘(6) Qualified motor vehicle taxes.’’. 
(b) QUALIFIED MOTOR VEHICLE TAXES.—Subsection 
(b) of section 164 of the Internal Revenue Code of 1986 is 
amended by adding at the end the following new paragraph: 
‘‘(6) QUALIFIED MOTOR VEHICLE TAXES.— 
‘‘(A) IN
GENERAL.—For purposes of this 
section, the term ‘qualified motor vehicle taxes’ 
means any State or local sales or excise tax im-
posed on the purchase of a qualified motor vehi-
cle (as defined in section 163(h)(5)(D)). 
‘‘(B) DOLLAR
LIMITATION.—The amount 
taken into account under subparagraph (A) for 
any taxable year shall not exceed $49,500 
($24,750 in the case of a separate return by a 
married individual). 
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‘‘(C) INCOME
LIMITATION.—The amount 
otherwise taken into account under subpara-
graph (A) (after the application of subparagraph 
(B)) for any taxable year shall be reduced (but 
not below zero) by the amount which bears the 
same ratio to the amount which is so treated 
as— 
‘‘(i) the excess (if any) of— 
‘‘(I) the taxpayer’s modified ad-
justed gross income for such taxable 
year, over 
‘‘(II) $125,000 ($250,000 in the 
case of a joint return), bears to 
‘‘(ii) $10,000. 
For purposes of the preceding sentence, the term 
‘modified adjusted gross income’ means the ad-
justed gross income of the taxpayer for the tax-
able year increased by any amount excluded 
from gross income under section 911, 931, or 
933. 
‘‘(D) QUALIFIED
MOTOR
VEHICLE
TAXES 
NOT
INCLUDED
IN
COST
OF
ACQUIRED
PROP-
ERTY.—The last sentence of subsection (a) shall 
not apply to any qualified motor vehicle taxes. 
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‘‘(E) COORDINATION WITH GENERAL SALES 
TAX.—This paragraph shall not apply in the 
case of a taxpayer who makes an election under 
paragraph (5) for the taxable year.’’. 
(c) CONFORMING AMENDMENTS.—Paragraph (5) of 
section 163(h) of the Internal Revenue Code of 1986, as 
added by section 1, is amended— 
(1) by adding at the end the following new sub-
paragraph: 
‘‘(E) EXCLUSION.—If the indebtedness de-
scribed in subparagraph (A) includes the 
amounts of any State or local sales or excise 
taxes paid or accrued by the taxpayer in connec-
tion with the acquisition of a qualified motor ve-
hicle, the aggregate amount of such indebtedness 
taken into account under such subparagraph 
shall be reduced, but not below zero, by the 
amount of any such taxes for which a deduction 
is allowed under section 164(a) by reason of 
paragraph (6) thereof.’’, and 
(2) by inserting ‘‘, after the application of sub-
paragraph (E),’’ after ‘‘for any period’’ in subpara-
graph (B). 
(d) DEDUCTION ALLOWED ABOVE-THE-LINE.—Section 
62(a) of the Internal Revenue Code of 1986, as amended 
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(2) by striking ‘‘2011’’ each place it appears in 
paragraphs (2), (3), (4), (6), (7) and (9) and insert-
ing ‘‘2014’’, and 
(3) by striking ‘‘2012’’ in paragraph (11)(B) 
and inserting ‘‘2014’’. 
(b) TECHNICAL AMENDMENT.—Paragraph (5) of sec-
tion 45(d) is amended by striking ‘‘and before’’ and all that 
follows and inserting ‘‘ and before October 3, 2008.’’. 
(c) EFFECTIVE DATE.— 
(1) IN
GENERAL.—The amendments made by 
subsection (a) shall apply to property placed in serv-
ice after the date of the enactment of this Act. 
(2) TECHNICAL AMENDMENT.—The amendment 
made by subsection (b) shall take effect as if included 
in section 102 of the Energy Improvement and Exten-
sion Act of 2008. 
SEC. 1102. ELECTION OF INVESTMENT CREDIT IN LIEU OF 
PRODUCTION CREDIT. 
(a) IN GENERAL.—Subsection (a) of section 48 is 
amended by adding at the end the following new paragraph: 
‘‘(5) ELECTION TO TREAT QUALIFIED FACILITIES 
AS ENERGY PROPERTY.— 
‘‘(A) IN
GENERAL.—In the case of any 
qualified investment credit facility— 
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‘‘(i) such facility shall be treated as en-
ergy property for purposes of this section, 
and 
‘‘(ii) the energy percentage with respect 
to such property shall be 30 percent. 
‘‘(B) DENIAL OF PRODUCTION CREDIT.—No 
credit shall be allowed under section 45 for any 
taxable year with respect to any qualified invest-
ment credit facility. 
‘‘(C) QUALIFIED INVESTMENT CREDIT FA-
CILITY.—For purposes of this paragraph, the 
term ‘qualified investment credit facility’ means 
any of the following facilities if no credit has 
been allowed under section 45 with respect to 
such facility and the taxpayer makes an irrev-
ocable election to have this paragraph apply to 
such facility: 
‘‘(i) WIND
FACILITIES.—Any facility 
described in paragraph (1) of section 45(d) 
if such facility is placed in service in 2009, 
2010, 2011, or 2012. 
‘‘(ii) OTHER FACILITIES.—Any facility 
described in paragraph (2), (3), (4), (6), 
(7), (9), or (11) of section 45(d) if such fa-
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cility is placed in service in 2009, 2010, 
2011, 2012, or 2013.’’. 
(b) EFFECTIVE DATE.—The amendments made by this 
section shall apply to facilities placed in service after De-
cember 31, 2008. 
SEC. 1103. REPEAL OF CERTAIN LIMITATIONS ON CREDIT 
FOR RENEWABLE ENERGY PROPERTY. 
(a) REPEAL OF LIMITATION ON CREDIT FOR QUALI-
FIED SMALL WIND ENERGY PROPERTY.—Paragraph (4) of 
section 48(c) is amended by striking subparagraph (B) and 
by redesignating subparagraphs (C) and (D) as subpara-
graphs (B) and (C). 
(b) REPEAL OF LIMITATION ON PROPERTY FINANCED 
BY SUBSIDIZED ENERGY FINANCING.— 
(1) IN GENERAL.—Section 48(a)(4) is amended 
by adding at the end the following new subparagraph: 
‘‘(D) TERMINATION.—This paragraph shall 
not apply to periods after December 31, 2008, 
under rules similar to the rules of section 48(m) 
(as in effect on the day before the date of the en-
actment of the Revenue Reconciliation Act of 
1990).’’. 
(2) CONFORMING AMENDMENTS.— 
(A) Section 25C(e)(1) is amended by strik-
ing ‘‘(8), and (9)’’ and inserting ‘‘and (8)’’. 
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(B) Section 25D(e) is amended by striking 
paragraph (9). 
(C) Section 48A(b)(2) is amended by insert-
ing ‘‘(without regard to subparagraph (D) there-
of)’’ after ‘‘section 48(a)(4)’’. 
(D) Section 48B(b)(2) is amended by in-
serting ‘‘(without regard to subparagraph (D) 
thereof)’’ after ‘‘section 48(a)(4)’’. 
(c) EFFECTIVE DATE.— 
(1) IN GENERAL.—Except as provided in para-
graph (2), the amendment made by this section shall 
apply to periods after December 31, 2008, under rules 
similar to the rules of section 48(m) of the Internal 
Revenue Code of 1986 (as in effect on the day before 
the date of the enactment of the Revenue Reconcili-
ation Act of 1990). 
(2) CONFORMING
AMENDMENTS.—The amend-
ments made by subsection (b)(2) shall apply to tax-
able years beginning after December 31, 2008. 
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PART 
II—INCREASED 
ALLOCATIONS 
OF 
NEW 
CLEAN RENEWABLE ENERGY BONDS AND 
QUALIFIED ENERGY CONSERVATION BONDS 
SEC. 1111. INCREASED LIMITATION ON ISSUANCE OF NEW 
CLEAN RENEWABLE ENERGY BONDS. 
Subsection (c) of section 54C is amended by adding 
at the end the following new paragraph: 
‘‘(4) ADDITIONAL
LIMITATION.—The national 
new clean renewable energy bond limitation shall be 
increased by $1,600,000,000. Such increase shall be 
allocated by the Secretary consistent with the rules of 
paragraphs (2) and (3).’’. 
SEC. 1112. INCREASED LIMITATION ON ISSUANCE OF 
QUALIFIED ENERGY CONSERVATION BONDS. 
(a) IN GENERAL.—Section 54D(d) is amended by 
striking ‘‘800,000,000’’ and inserting ‘‘$3,200,000,000’’. 
(b) CLARIFICATION WITH RESPECT TO GREEN COM-
MUNITY PROGRAMS.—Clause (ii) of section 54D(f)(1)(A) is 
amended by inserting ‘‘(including the use of loans, grants, 
or other repayment mechanisms to implement such pro-
grams)’’ after ‘‘green community programs’’. 
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PART III—ENERGY CONSERVATION INCENTIVES 
SEC. 1121. EXTENSION AND MODIFICATION OF CREDIT FOR 
NONBUSINESS ENERGY PROPERTY. 
(a) IN GENERAL.—Section 25C is amended by striking 
subsections (a) and (b) and inserting the following new sub-
sections: 
‘‘(a) ALLOWANCE OF CREDIT.—In the case of an indi-
vidual, there shall be allowed as a credit against the tax 
imposed by this chapter for the taxable year an amount 
equal to 30 percent of the sum of— 
‘‘(1) the amount paid or incurred by the tax-
payer during such taxable year for qualified energy 
efficiency improvements, and 
‘‘(2) the amount of the residential energy prop-
erty expenditures paid or incurred by the taxpayer 
during such taxable year. 
‘‘(b) LIMITATION.—The aggregate amount of the cred-
its allowed under this section for taxable years beginning 
in 2009 and 2010 with respect to any taxpayer shall not 
exceed $1,500.’’. 
(b) MODIFICATIONS OF STANDARDS FOR ENERGY-EF-
FICIENT BUILDING PROPERTY.— 
(1) ELECTRIC HEAT PUMPS.—Subparagraph (B) 
of section 25C(d)(3) is amended to read as follows: 
‘‘(B) an electric heat pump which achieves 
the highest efficiency tier established by the Con-
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‘‘(ii) any qualified natural gas fur-
nace, qualified propane furnace, qualified 
oil furnace, qualified natural gas hot water 
boiler, qualified propane hot water boiler, or 
qualified oil hot water boiler, or’’. 
(d) MODIFICATIONS OF STANDARDS FOR QUALIFIED 
ENERGY EFFICIENCY IMPROVEMENTS.— 
(1) QUALIFICATIONS FOR EXTERIOR WINDOWS, 
DOORS, AND SKYLIGHTS.—Subsection (c) of section 
25C is amended by adding at the end the following 
new paragraph: 
‘‘(4) QUALIFICATIONS FOR EXTERIOR WINDOWS, 
DOORS, AND SKYLIGHTS.—Such term shall not in-
clude any component described in subparagraph (B) 
or (C) of paragraph (2) unless such component is 
equal to or below a U factor of 0.30 and SHGC of 
0.30.’’. 
(2) ADDITIONAL
QUALIFICATION
FOR
INSULA-
TION.—Subparagraph (A) of section 25C(c)(2) is 
amended by inserting ‘‘and meets the prescriptive cri-
teria for such material or system established by the 
2009 International Energy Conservation Code, as 
such Code (including supplements) is in effect on the 
date of the enactment of the American Recovery and 
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Reinvestment Tax Act of 2009’’ after ‘‘such dwelling 
unit’’. 
(e) EXTENSION.—Section 25C(g)(2) is amended by 
striking ‘‘December 31, 2009’’ and inserting ‘‘December 31, 
2010’’. 
(f) EFFECTIVE DATES.— 
(1) IN GENERAL.—Except as provided in para-
graph (2), the amendments made by this section shall 
apply to taxable years beginning after December 31, 
2008. 
(2) EFFICIENCY STANDARDS.—The amendments 
made by paragraphs (1), (2), and (3) of subsection 
(b) and subsections (c) and (d) shall apply to prop-
erty placed in service after December 31, 2009. 
SEC. 1122. MODIFICATION OF CREDIT FOR RESIDENTIAL 
ENERGY EFFICIENT PROPERTY. 
(a) REMOVAL OF CREDIT LIMITATION FOR PROPERTY 
PLACED IN SERVICE.— 
(1) IN
GENERAL.—Paragraph (1) of section 
25D(b) is amended to read as follows: 
‘‘(1) MAXIMUM CREDIT FOR FUEL CELLS.—In 
the case of any qualified fuel cell property expendi-
ture, the credit allowed under subsection (a) (deter-
mined without regard to subsection (c)) for any tax-
able year shall not exceed $500 with respect to each 
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half kilowatt of capacity of the qualified fuel cell 
property (as defined in section 48(c)(1)) to which 
such expenditure relates.’’. 
(2) CONFORMING AMENDMENT.—Paragraph (4) 
of section 25D(e) is amended— 
(A) by striking all that precedes subpara-
graph (B) and inserting the following: 
‘‘(4) FUEL CELL EXPENDITURE LIMITATIONS IN 
CASE
OF
JOINT
OCCUPANCY.—In the case of any 
dwelling unit with respect to which qualified fuel cell 
property expenditures are made and which is jointly 
occupied and used during any calendar year as a res-
idence by two or more individuals the following rules 
shall apply: 
‘‘(A) MAXIMUM EXPENDITURES FOR FUEL 
CELLS.—The maximum amount of such expendi-
tures which may be taken into account under 
subsection (a) by all such individuals with re-
spect to such dwelling unit during such calendar 
year shall be $1,667 in the case of each half kilo-
watt of capacity of qualified fuel cell property 
(as defined in section 48(c)(1)) with respect to 
which such expenditures relate.’’, and 
(B) by striking subparagraph (C). 
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(b) EFFECTIVE DATE.—The amendments made by this 
section shall apply to taxable years beginning after Decem-
ber 31, 2008. 
SEC. 1123. TEMPORARY INCREASE IN CREDIT FOR ALTER-
NATIVE FUEL VEHICLE REFUELING PROP-
ERTY. 
(a) IN GENERAL.—Section 30C(e) is amended by add-
ing at the end the following new paragraph: 
‘‘(6) SPECIAL RULE FOR PROPERTY PLACED IN 
SERVICE DURING 2009 AND 2010.—In the case of prop-
erty placed in service in taxable years beginning after 
December 31, 2008, and before January 1, 2011— 
‘‘(A) in the case of any such property which 
does not relate to hydrogen— 
‘‘(i) subsection (a) shall be applied by 
substituting ‘50 percent’ for ‘30 percent’, 
‘‘(ii) subsection (b)(1) shall be applied 
by substituting ‘$50,000’ for ‘$30,000’, and 
‘‘(iii) subsection (b)(2) shall be applied 
by substituting ‘$2,000’ for ‘$1,000’, and 
‘‘(B) in the case of any such property which 
relates to hydrogen, subsection (b)(1) shall be ap-
plied by substituting ‘$200,000’ for ‘$30,000’.’’. 
(b) ENSURING CONSUMER ACCESSIBILITY TO ALTER-
NATIVE FUEL VEHICLE REFUELING PROPERTY
IN
THE 
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CASE OF ELECTRICITY.—Section 179(d)(3) is amended by 
striking subparagraph (B) and inserting the following: 
‘‘(B) for the recharging of motor vehicles 
propelled by electricity, but only if— 
‘‘(i) the property complies with the So-
ciety of Automotive Engineers’ connection 
standards, 
‘‘(ii) the property provides for non-re-
strictive access for charging and for pay-
ment interoperability with other systems, 
and 
‘‘(iii) the property— 
‘‘(I) is located on property owned 
by the taxpayer, or 
‘‘(II) is located on property owned 
by another person, is placed in service 
with the permission of such other per-
son, and is fully maintained by the 
taxpayer.’’. 
(c) EFFECTIVE DATE.—The amendments made by this 
section shall apply to taxable years beginning after Decem-
ber 31, 2008. 
SEC. 1124. RECOVERY PERIOD FOR DEPRECIATION OF 
SMART METERS. 
(a) TEMPORARY 5-YEAR RECOVERY PERIOD.— 
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(1) IN GENERAL.—Subparagraph (B) of section 
168(e)(3) is amended by striking ‘‘and’’ at the end of 
clause (vi), by striking the period at the end of clause 
(vii) and inserting ‘‘, and’’, and by adding at the end 
the following new clause: 
‘‘(viii) any qualified smart electric 
meter which is placed in service before Jan-
uary 1, 2011.’’. 
(2) CONFORMING AMENDMENT.—Clause (iii) of 
section 168(e)(3)(D) is amended by inserting ‘‘which 
is placed in service after December 31, 2010’’ after 
‘‘electric meter’’. 
(b) 
TECHNICAL
AMENDMENTS.—Paragraphs 
(18)(A)(ii) and (19)(A)(ii) of section 168(i) are each 
amended by striking ‘‘16 years’’ and inserting ‘‘10 years’’. 
(c) EFFECTIVE DATES.— 
(1) IN GENERAL.—Except as provided in para-
graph (2), the amendments made by this section shall 
apply to property placed in service after the date of 
the enactment of this Act. 
(2) TECHNICAL AMENDMENT.—The amendments 
made by subsection (b) shall take effect as if included 
in section 306 of the Energy Improvement and Exten-
sion Act of 2008. 
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PART IV—ENERGY RESEARCH INCENTIVES 
SEC. 1131. INCREASED RESEARCH CREDIT FOR ENERGY RE-
SEARCH. 
(a) IN GENERAL.—Section 41 is amended by redesig-
nating subsection (h) as subsection (i) and by inserting 
after subsection (g) the following new subsection: 
‘‘(h) ENERGY RESEARCH CREDIT.—In the case of any 
taxable year beginning in 2009 or 2010— 
‘‘(1) IN GENERAL.—The credit determined under 
subsection (a)(1) shall be increased by 20 percent of 
the qualified energy research expenses for the taxable 
year. 
‘‘(2) 
QUALIFIED
ENERGY
RESEARCH
EX-
PENSES.—For purposes of this subsection— 
‘‘(A) IN GENERAL.—The term ‘qualified en-
ergy research expenses’ means so much of the 
taxpayer’s qualified research expenses as are re-
lated to the fields of fuel cells and battery tech-
nology, renewable energy and renewable fuels, 
energy conservation technology, efficient trans-
mission and distribution of electricity, and car-
bon capture and sequestration. 
‘‘(B) COORDINATION WITH QUALIFYING AD-
VANCED ENERGY PROJECT CREDIT.—Such term 
shall not include expenditures taken into account 
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in determining the amount of the credit under 
section 48 or 48C. 
‘‘(3) COORDINATION
WITH
OTHER
RESEARCH 
CREDITS.— 
‘‘(A) IN GENERAL.—The amount of quali-
fied energy research expenses taken into account 
under subsection (a)(1)(A) shall not exceed the 
base amount. 
‘‘(B) ALTERNATIVE SIMPLIFIED CREDIT.— 
For purposes of subsection (c)(5), the amount of 
qualified energy research expenses taken into ac-
count for the taxable year for which the credit is 
being determined shall not exceed— 
‘‘(i) in the case of subsection (c)(5)(A), 
50 percent of the average qualified research 
expenses for the 3 taxable years preceding 
the taxable year for which the credit is 
being determined, and 
‘‘(ii) 
in 
the 
case 
of 
subsection 
(c)(5)(B)(ii), zero. 
‘‘(C) BASIC
RESEARCH
AND
ENERGY
RE-
SEARCH CONSORTIUM PAYMENTS.—Any amount 
taken into account under paragraph (1) shall 
not be taken into account under paragraph (2) 
or (3) of subsection (a).’’. 
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(b) CONFORMING AMENDMENT.—Subparagraph (B) of 
section 41(i)(1)(B), as redesignated by subsection (a), is 
amended by inserting ‘‘(in the case of the increase in the 
credit determined under subsection (h), December 31, 
2010)’’ after ‘‘December 31, 2009’’. 
(c) EFFECTIVE DATE.—The amendments made by this 
section shall apply to taxable years beginning after Decem-
ber 31, 2008. 
PART V—MODIFICATION OF CREDIT FOR CARBON 
DIOXIDE SEQUESTRATION 
SEC. 1141. APPLICATION OF MONITORING REQUIREMENTS 
TO CARBON DIOXIDE USED AS A TERTIARY 
INJECTANT. 
(a) IN GENERAL.—Section 45Q(a)(2) is amended by 
striking ‘‘and’’ at the end of subparagraph (A), by striking 
the period at the end of subparagraph (B) and inserting 
‘‘, and’’, and by adding at the end the following new sub-
paragraph: 
‘‘(C) disposed of by the taxpayer in secure 
geological storage.’’. 
(b) CONFORMING AMENDMENTS.— 
(1) Section 45Q(d)(2) is amended— 
(A) by striking ‘‘subsection (a)(1)(B)’’ and 
inserting ‘‘paragraph (1)(B) or (2)(C) of sub-
section (a)’’, 
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(B) by striking ‘‘and unminable coal seems’’ 
and inserting ‘‘, oil and gas reservoirs, and 
unminable coal seams’’, and 
(C) by inserting ‘‘the Secretary of Energy, 
and the Secretary of the Interior,’’ after ‘‘Envi-
ronmental Protection Agency’’. 
(2) Section 45Q(e) is amended by striking ‘‘cap-
tured and disposed of or used as a tertiary injectant’’ 
and inserting ‘‘taken into account in accordance with 
subsection (a)’’. 
(c) EFFECTIVE DATE.—The amendments made by this 
section shall apply to carbon dioxide captured after the date 
of the enactment of this Act. 
PART VI—PLUG-IN ELECTRIC DRIVE MOTOR 
VEHICLES 
SEC. 1151. MODIFICATION OF CREDIT FOR QUALIFIED 
PLUG-IN ELECTRIC MOTOR VEHICLES. 
(a) INCREASE IN VEHICLES ELIGIBLE FOR CREDIT.— 
Section 30D(b)(2)(B) is amended by striking ‘‘250,000’’ 
and inserting ‘‘500,000’’. 
(b) EXCLUSION OF NEIGHBORHOOD ELECTRIC VEHI-
CLES FROM EXISTING CREDIT.—Section 30D(e)(1) is 
amended to read as follows: 
‘‘(1) MOTOR VEHICLE.—The term ‘motor vehicle’ 
means a motor vehicle (as defined in section 
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30(c)(2)), which is treated as a motor vehicle for pur-
poses of title II of the Clean Air Act.’’. 
(c) CREDIT FOR CERTAIN OTHER VEHICLES.—Section 
30D is amended— 
(1) by redesignating subsections (f) and (g) as 
subsections (g) and (h), respectively, and 
(2) by inserting after subsection (e) the following 
new subsection: 
‘‘(f) CREDIT FOR CERTAIN OTHER VEHICLES.—For 
purposes of this section— 
‘‘(1) IN GENERAL.—In the case of a specified ve-
hicle, this section shall be applied with the following 
modifications: 
‘‘(A) For purposes of subsection (a)(1), in 
lieu of the applicable amount determined under 
subsection (a)(2), the applicable amount shall be 
10 percent of so much of the cost of the specified 
vehicle as does not exceed $40,000. 
‘‘(B) Subsection (b) shall not apply and no 
specified vehicle shall be taken into account 
under subsection (b)(2). 
‘‘(C) In the case of a specified vehicle which 
is a 2-or 3-wheeled motor vehicle, subsection 
(c)(1) shall be applied by substituting ‘2.5 kilo-
watt hours’ for ‘4 kilowatt hours’. 
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‘‘(D) In the case of a specified vehicle which 
is a low-speed motor vehicle, subsection (c)(3) 
shall not apply. 
‘‘(2) SPECIFIED VEHICLE.—For purposes of this 
subsection— 
‘‘(A) IN GENERAL.—The term ‘specified ve-
hicle’ means— 
‘‘(i) any 2- or 3- wheeled motor vehicle, 
or 
‘‘(ii) any low-speed motor vehicle, 
which is placed in service after December 31, 
2009, and before January 1, 2012. 
‘‘(B) 2- OR 3-WHEELED MOTOR VEHICLE.— 
The term ‘2- or 3-wheeled motor vehicle’ means 
any vehicle— 
‘‘(i) which would be described in sec-
tion 30(c)(2) except that it has 2 or 3 
wheels, 
‘‘(ii) with motive power having a seat 
or saddle for the use of the rider and de-
signed to travel on not more than 3 wheels 
in contact with the ground, 
‘‘(iii) which has an electric motor that 
produces in excess of 5-brake horsepower, 
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‘‘(iv) which draws propulsion from 1 
or more traction batteries, and 
‘‘(v) which has been certified to the De-
partment of Transportation pursuant to 
section 567 of title 49, Code of Federal Reg-
ulations, as conforming to all applicable 
Federal motor vehicle safety standards in 
effect on the date of the manufacture of the 
vehicle. 
‘‘(C) LOW-SPEED
MOTOR
VEHICLE.—The 
term ‘low-speed motor vehicle’ means a motor ve-
hicle (as defined in section 30(c)(2)) which— 
‘‘(i) is placed in service after December 
31, 2009, and 
‘‘(ii) meets the requirements of section 
571.500 of title 49, Code of Federal Regula-
tions.’’. 
(d) EFFECTIVE DATES.— 
(1) IN GENERAL.—The amendment made by sub-
sections (a) and (c) shall take effect on the date of the 
enactment of this Act. 
(2) OTHER
MODIFICATIONS.—The amendments 
made by subsection (b) shall apply to property placed 
in service after December 31, 2009, in taxable years 
beginning after such date. 
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SEC. 1152. CONVERSION KITS. 
(a) IN GENERAL.—Section 30B (relating to alternative 
motor vehicle credit) is amended by redesignating sub-
sections (i) and (j) as subsections (j) and (k), respectively, 
and by inserting after subsection (h) the following new sub-
section: 
‘‘(i) PLUG-IN CONVERSION CREDIT.— 
‘‘(1) IN GENERAL.—For purposes of subsection 
(a), the plug-in conversion credit determined under 
this subsection with respect to any motor vehicle 
which is converted to a qualified plug-in electric drive 
motor vehicle is 10 percent of so much of the cost of 
the converting such vehicle as does not exceed $40,000. 
‘‘(2) DEFINITIONS
AND
SPECIAL
RULES.—For 
purposes of this subsection— 
‘‘(A) QUALIFIED PLUG-IN ELECTRIC DRIVE 
MOTOR VEHICLE.—The term ‘qualified plug-in 
electric drive motor vehicle’ means any new 
qualified plug-in electric drive motor vehicle (as 
defined in section 30D(c), determined without re-
gard to paragraphs (4) and (6) thereof). 
‘‘(B) PLUG-IN
TRACTION
BATTERY
MOD-
ULE.—The term ‘plug-in traction battery mod-
ule’ means an electro-chemical energy storage de-
vice which— 
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‘‘(i) which has a traction battery ca-
pacity of not less than 2.5 kilowatt hours, 
‘‘(ii) which is equipped with an elec-
trical plug by means of which it can be en-
ergized and recharged when plugged into an 
external source of electric power, 
‘‘(iii) which consists of a standardized 
configuration and is mass produced, 
‘‘(iv) which has been tested and ap-
proved by the National Highway Transpor-
tation Safety Administration as compliant 
with applicable motor vehicle and motor ve-
hicle equipment safety standards when in-
stalled by a mechanic with standardized 
training in protocols established by the bat-
tery manufacturer as part of a nationwide 
distribution program, 
‘‘(v) which complies with the require-
ments of section 32918 of title 49, United 
States Code, and 
‘‘(vi) which is certified by a battery 
manufacturer as meeting the requirements 
of clauses (i) through (v). 
‘‘(C) CREDIT ALLOWED TO LESSOR OF BAT-
TERY MODULE.—In the case of a plug-in traction 
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battery module which is leased to the taxpayer, 
the credit allowed under this subsection shall be 
allowed to the lessor of the plug-in traction bat-
tery module. 
‘‘(D) CREDIT
ALLOWED
IN
ADDITION
TO 
OTHER CREDITS.—The credit allowed under this 
subsection shall be allowed with respect to a 
motor vehicle notwithstanding whether a credit 
has been allowed with respect to such motor vehi-
cle under this section (other than this subsection) 
in any preceding taxable year. 
‘‘(3) TERMINATION.—This subsection shall not 
apply to conversions made after December 31, 2012.’’. 
(b) CREDIT TREATED
AS PART
OF ALTERNATIVE 
MOTOR VEHICLE CREDIT.—Section 30B(a) is amended by 
striking ‘‘and’’ at the end of paragraph (3), by striking the 
period at the end of paragraph (4) and inserting ‘‘, and’’, 
and by adding at the end the following new paragraph: 
‘‘(5) the plug-in conversion credit determined 
under subsection (i).’’. 
(c) NO RECAPTURE FOR VEHICLES CONVERTED TO 
QUALIFIED
PLUG-IN
ELECTRIC
DRIVE
MOTOR
VEHI-
CLES.—Paragraph (8) of section 30B(h) is amended by 
adding at the end the following: ‘‘, except that no benefit 
shall be recaptured if such property ceases to be eligible for 
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such credit by reason of conversion to a qualified plug-in 
electric drive motor vehicle.’’. 
(d) EFFECTIVE DATE.—The amendments made by this 
section shall apply to property placed in service after De-
cember 31, 2008, in taxable years beginning after such date. 
Subtitle C—Tax Incentives for 
Business 
PART I—TEMPORARY INVESTMENT INCENTIVES 
SEC. 1201. SPECIAL ALLOWANCE FOR CERTAIN PROPERTY 
ACQUIRED DURING 2009. 
(a) EXTENSION OF SPECIAL ALLOWANCE.— 
(1) IN
GENERAL.—Paragraph (2) of section 
168(k) is amended— 
(A) by striking ‘‘January 1, 2010’’ and in-
serting ‘‘January 1, 2011’’, and 
(B) by striking ‘‘January 1, 2009’’ each 
place it appears and inserting ‘‘January 1, 
2010’’. 
(2) CONFORMING AMENDMENTS.— 
(A) The heading for subsection (k) of section 
168 is amended by striking ‘‘JANUARY 1, 2009’’ 
and inserting ‘‘JANUARY 1, 2010’’. 
(B) The heading for clause (ii) of section 
168(k)(2)(B) is amended by striking ‘‘PRE-JANU-
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ARY
1, 2009’’ and inserting ‘‘PRE-JANUARY
1, 
2010’’. 
(C) Subparagraph (B) of section 168(l)(5) 
is amended by striking ‘‘January 1, 2009’’ and 
inserting ‘‘January 1, 2010’’. 
(D) Subparagraph (C) of section 168(n)(2) 
is amended by striking ‘‘January 1, 2009’’ and 
inserting ‘‘January 1, 2010’’. 
(E) 
Subparagraph 
(B) 
of 
section 
1400N(d)(3) is amended by striking ‘‘January 1, 
2009’’ and inserting ‘‘January 1, 2010’’. 
(3) 
TECHNICAL
AMENDMENT.—Subparagraph 
(D) of section 168(k)(4) is amended— 
(A) by striking ‘‘and’’ at the end of clause 
(i), 
(B) by redesignating clause (ii) as clause 
(iii), and 
(C) by inserting after clause (i) the fol-
lowing new clause: 
‘‘(ii) ‘April 1, 2008’ shall be sub-
stituted for ‘January 1, 2008’ in subpara-
graph (A)(iii)(I) thereof, and’’. 
(b) EXTENSION OF ELECTION TO ACCELERATE THE 
AMT AND RESEARCH CREDITS IN LIEU OF BONUS DEPRE-
CIATION.—Section 168(k)(4) (relating to election to accel-
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erate the AMT and research credits in lieu of bonus depre-
ciation) is amended— 
(1) by striking ‘‘2009’’ and inserting ‘‘2010’’in 
subparagraph (D)(iii) (as redesignated by subsection 
(a)(3)), and 
(2) by adding at the end the following new sub-
paragraph: 
‘‘(H) SPECIAL
RULES
FOR
EXTENSION 
PROPERTY.— 
‘‘(i) TAXPAYERS
PREVIOUSLY
ELECT-
ING ACCELERATION.—In the case of a tax-
payer who made the election under subpara-
graph (A) for its first taxable year ending 
after March 31, 2008— 
‘‘(I) the taxpayer may elect not to 
have this paragraph apply to extension 
property, but 
‘‘(II) if the taxpayer does not 
make the election under subclause (I), 
in applying this paragraph to the tax-
payer a separate bonus depreciation 
amount, maximum amount, and max-
imum increase amount shall be com-
puted and applied to eligible qualified 
property which is extension property 
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and to eligible qualified property 
which is not extension property. 
‘‘(ii) TAXPAYERS
NOT
PREVIOUSLY 
ELECTING ACCELERATION.—In the case of a 
taxpayer who did not make the election 
under subparagraph (A) for its first taxable 
year ending after March 31, 2008— 
‘‘(I) the taxpayer may elect to 
have this paragraph apply to its first 
taxable year ending after December 31, 
2008, and each subsequent taxable 
year, and 
‘‘(II) if the taxpayer makes the 
election under subclause (I), this para-
graph shall only apply to eligible 
qualified property which is extension 
property. 
‘‘(iii) 
EXTENSION
PROPERTY.—For 
purposes of this subparagraph, the term ‘ex-
tension property’ means property which is 
eligible qualified property solely by reason 
of the extension of the application of the 
special allowance under paragraph (1) pur-
suant to the amendments made by section 
1201(a) of the American Recovery and Re-
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investment Tax Act of 2009 (and the appli-
cation of such extension to this paragraph 
pursuant to the amendment made by section 
1201(b)(1) of such Act).’’. 
(c) EFFECTIVE DATES.— 
(1) IN GENERAL.—Except as provided in para-
graph (2), the amendments made by this section shall 
apply to property placed in service after December 
31, 2008, in taxable years ending after such date. 
(2) TECHNICAL AMENDMENT.—The amendments 
made by subsection (a)(3) shall apply to taxable years 
ending after March 31, 2008. 
SEC. 1202. TEMPORARY INCREASE IN LIMITATIONS ON EX-
PENSING OF CERTAIN DEPRECIABLE BUSI-
NESS ASSETS. 
(a) IN GENERAL.—Paragraph (7) of section 179(b) is 
amended— 
(1) by striking ‘‘2008’’ and inserting ‘‘2008, or 
2009’’, and 
(2) by striking ‘‘2008’’ in the heading thereof and 
inserting ‘‘2008, AND 2009’’. 
(b) EFFECTIVE DATE.—The amendments made by this 
section shall apply to taxable years beginning after Decem-
ber 31, 2008. 
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PART II—5-YEAR CARRYBACK OF OPERATING 
LOSSES 
SEC. 1211. 5-YEAR CARRYBACK OF OPERATING LOSSES. 
(a) IN
GENERAL.—Subparagraph (H) of section 
172(b)(1) is amended to read as follows: 
‘‘(H) CARRYBACK FOR 2008 AND 2009 NET 
OPERATING LOSSES.— 
‘‘(i) IN GENERAL.—In the case of an 
applicable 2008 or 2009 net operating loss 
with respect to which the taxpayer has elect-
ed the application of this subparagraph— 
‘‘(I) subparagraph (A)(i) shall be 
applied by substituting any whole 
number elected by the taxpayer which 
is more than 2 and less than 6 for ‘2’, 
‘‘(II) subparagraph (E)(ii) shall 
be applied by substituting the whole 
number which is one less than the 
whole number substituted under sub-
clause (II) for ‘2’, and 
‘‘(III) subparagraph (F) shall not 
apply. 
‘‘(ii) APPLICABLE 2008 OR 2009 NET OP-
ERATING LOSS.—For purposes of this sub-
paragraph, the term ‘applicable 2008 or 
2009 net operating loss’ means— 
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‘‘(I) the taxpayer’s net operating 
loss for any taxable year ending in 
2008 or 2009, or 
‘‘(II) if the taxpayer elects to have 
this subclause apply in lieu of sub-
clause (I), the taxpayer’s net operating 
loss for any taxable year beginning in 
2008 or 2009. 
‘‘(iii) ELECTION.—Any election under 
this subparagraph shall be made in such 
manner as may be prescribed by the Sec-
retary, and shall be made by the due date 
(including extension of time) for filing the 
taxpayer’s return for the taxable year of the 
net operating loss. Any such election, once 
made, shall be irrevocable. 
‘‘(iv) COORDINATION
WITH
ALTER-
NATIVE TAX NET OPERATING LOSS DEDUC-
TION.—In the case of a taxpayer who elects 
to have clause (ii)(II) apply, section 
56(d)(1)(A)(ii) shall be applied by sub-
stituting ‘ending during 2001 or 2002 or 
beginning during 2008 or 2009’ for ‘ending 
during 2001, 2002, 2008, or 2009’.’’. 
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(b) ALTERNATIVE TAX NET OPERATING LOSS DEDUC-
TION.—Subclause (I) of section 56(d)(1)(A)(ii) is amended 
to read as follows: 
‘‘(I) the amount of such deduction 
attributable to the sum of carrybacks of 
net operating losses from taxable years 
ending during 2001, 2002, 2008, or 
2009 and carryovers of net operating 
losses to such taxable years, or’’. 
(c) LOSS FROM OPERATIONS
OF LIFE INSURANCE 
COMPANIES.—Subsection (b) of section 810 is amended by 
adding at the end the following new paragraph: 
‘‘(4) CARRYBACK FOR 2008 AND 2009 LOSSES.— 
‘‘(A) IN GENERAL.—In the case of an appli-
cable 2008 or 2009 loss from operations with re-
spect to which the taxpayer has elected the appli-
cation of this paragraph, paragraph (1)(A) shall 
be applied, at the election of the taxpayer, by 
substituting ‘5’ or ‘4’ for ‘3’. 
‘‘(B) APPLICABLE 2008 OR 2009 LOSS FROM 
OPERATIONS.—For purposes of this paragraph, 
the term ‘applicable 2008 or 2009 loss from oper-
ations’ means— 
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‘‘(i) the taxpayer’s loss from operations 
for any taxable year ending in 2008 or 
2009, or 
‘‘(ii) if the taxpayer elects to have this 
clause apply in lieu of clause (i), the tax-
payer’s loss from operations for any taxable 
year beginning in 2008 or 2009. 
‘‘(C) ELECTION.—Any election under this 
paragraph shall be made in such manner as may 
be prescribed by the Secretary, and shall be made 
by the due date (including extension of time) for 
filing the taxpayer’s return for the taxable year 
of the loss from operations. Any such election, 
once made, shall be irrevocable. 
‘‘(D) COORDINATION
WITH
ALTERNATIVE 
TAX NET OPERATING LOSS DEDUCTION.—In the 
case of a taxpayer who elects to have subpara-
graph (B)(ii) apply, section 56(d)(1)(A)(ii) shall 
be applied by substituting ‘ending during 2001 
or 2002 or beginning during 2008 or 2009’ for 
‘ending during 2001, 2002, 2008, or 2009’.’’. 
(d) CONFORMING
AMENDMENT.—Section 172 is 
amended by striking subsection (k) and by redesignating 
subsection (l) as subsection (k). 
(e) EFFECTIVE DATE.— 
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(1) IN GENERAL.—Except as otherwise provided 
in this subsection, the amendments made by this sec-
tion shall apply to net operating losses arising in tax-
able years ending after December 31, 2007. 
(2) ALTERNATIVE TAX NET OPERATING LOSS DE-
DUCTION.—The amendment made by subsection (b) 
shall apply to taxable years ending after 1997. 
(3) LOSS FROM OPERATIONS OF LIFE INSURANCE 
COMPANIES.—The amendment made by subsection (d) 
shall apply to losses from operations arising in tax-
able years ending after December 31, 2007. 
(4) TRANSITIONAL RULE.—In the case of a net 
operating loss (or, in the case of a life insurance com-
pany, a loss from operations) for a taxable year end-
ing before the date of the enactment of this Act— 
(A) any election made under section 
172(b)(3) or 810(b)(3) of the Internal Revenue 
Code of 1986 with respect to such loss may (not-
withstanding such section) be revoked before the 
applicable date, 
(B) any election made under section 172(k) 
or 810(b)(4) of such Code with respect to such 
loss shall (notwithstanding such section) be treat-
ed as timely made if made before the applicable 
date, and 
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(C) any application under section 6411(a) 
of such Code with respect to such loss shall be 
treated as timely filed if filed before the applica-
ble date. 
For purposes of this paragraph, the term ‘‘applicable 
date’’ means the date which is 60 days after the date 
of the enactment of this Act. 
SEC. 1212. EXCEPTION FOR TARP RECIPIENTS. 
The amendments made by this part shall not apply 
to— 
(1) any taxpayer if— 
(A) the Federal Government acquires, at 
any time, an equity interest in the taxpayer 
pursuant to the Emergency Economic Stabiliza-
tion Act of 2008, or 
(B) the Federal Government acquires, at 
any time, any warrant (or other right) to ac-
quire any equity interest with respect to the tax-
payer pursuant to such Act, 
(2) the Federal National Mortgage Association 
and the Federal Home Loan Mortgage Corporation, 
and 
(3) any taxpayer which at any time in 2008 or 
2009 is a member of the same affiliated group (as de-
fined in section 1504 of the Internal Revenue Code of 
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1986, determined without regard to subsection (b) 
thereof) as a taxpayer described in paragraph (1) or 
(2). 
PART III—INCENTIVES FOR NEW JOBS 
SEC. 1221. INCENTIVES TO HIRE UNEMPLOYED VETERANS 
AND DISCONNECTED YOUTH. 
(a) IN GENERAL.—Subsection (d) of section 51 is 
amended by adding at the end the following new paragraph: 
‘‘(14) CREDIT ALLOWED FOR UNEMPLOYED VET-
ERANS AND DISCONNECTED YOUTH HIRED IN 2009 OR 
2010.— 
‘‘(A) IN GENERAL.—Any unemployed vet-
eran or disconnected youth who begins work for 
the employer during 2009 or 2010 shall be treat-
ed as a member of a targeted group for purposes 
of this subpart. 
‘‘(B) DEFINITIONS.—For purposes of this 
paragraph— 
‘‘(i) 
UNEMPLOYED
VETERAN.—The 
term ‘unemployed veteran’ means any vet-
eran (as defined in paragraph (3)(B), deter-
mined without regard to clause (ii) thereof) 
who is certified by the designated local 
agency as— 
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(I) having been discharged or re-
leased from active duty in the Armed 
Forces during the period beginning on 
September 1, 2001, and ending on De-
cember 31, 2010, and 
‘‘(II) being in receipt of unem-
ployment compensation under State or 
Federal law for not less than 4 weeks 
during the 1-year period ending on the 
hiring date. 
‘‘(ii) 
DISCONNECTED
YOUTH.—The 
term ‘disconnected youth’ means any indi-
vidual who is certified by the designated 
local agency— 
‘‘(I) as having attained age 16 
but not age 25 on the hiring date, 
‘‘(II) as not regularly attending 
any secondary, technical, or post-sec-
ondary school during the 6-month pe-
riod preceding the hiring date, 
‘‘(III) as not regularly employed 
during such 6-month period, and 
‘‘(IV) as not readily employable 
by reason of lacking a sufficient num-
ber of basic skills.’’. 
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(b) EFFECTIVE DATE.—The amendments made by this 
section shall apply to individuals who begin work for the 
employer after December 31, 2008. 
PART IV—CANCELLATION OF INDEBTEDNESS 
SEC. 1231. DEFERRAL AND RATABLE INCLUSION OF INCOME 
ARISING FROM INDEBTEDNESS DISCHARGED 
BY THE REPURCHASE OF A DEBT INSTRU-
MENT. 
(a) IN GENERAL.—Section 108 (relating to income 
from discharge of indebtedness) is amended by adding at 
the end the following new subsection: 
‘‘(i) DEFERRAL AND RATABLE INCLUSION OF INCOME 
ARISING FROM INDEBTEDNESS DISCHARGED BY THE RE-
PURCHASE OF A DEBT INSTRUMENT.— 
‘‘(1) IN GENERAL.—Notwithstanding section 61, 
income from the discharge of indebtedness in connec-
tion with the repurchase of a debt instrument after 
December 31, 2008, and before January 1, 2011, shall 
be includible in gross income ratably over the 8-tax-
able-year period beginning with— 
‘‘(A) in the case of a repurchase occurring 
in 2009, the second taxable year following the 
taxable year in which the repurchase occurs, and 
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‘‘(B) in the case of a repurchase occurring 
in 2010, the taxable year following the taxable 
year in which the repurchase occurs. 
‘‘(2) DEBT INSTRUMENT.—For purposes of this 
subsection, the term ‘debt instrument’ means a bond, 
debenture, note, certificate, or any other instrument 
or contractual arrangement constituting indebtedness 
(within the meaning of section 1275(a)(1)). 
‘‘(3) REPURCHASE.—For purposes of this sub-
section, the term ‘repurchase’ means, with respect to 
any debt instrument, a cash purchase of the debt in-
strument by— 
‘‘(A) the debtor which issued the debt in-
strument, or 
‘‘(B) any person related to such debtor. 
For purposes of subparagraph (B), the determination 
of whether a person is related to another person shall 
be made in the same manner as under subsection 
(e)(4). 
‘‘(4) AUTHORITY TO PRESCRIBE REGULATIONS.— 
The Secretary may prescribe such regulations as may 
be necessary or appropriate for purposes of applying 
this subsection.’’. 
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(b) EFFECTIVE DATE.—The amendments made by this 
section shall apply to discharges in taxable years ending 
after December 31, 2008. 
PART V—QUALIFIED SMALL BUSINESS STOCK 
SEC. 1241. SPECIAL RULES APPLICABLE TO QUALIFIED 
SMALL BUSINESS STOCK FOR 2009 AND 2010. 
(a) IN GENERAL.—Section 1202(a) is amended by 
adding at the end the following new paragraph: 
‘‘(3) SPECIAL RULES FOR 2009 AND 2010.—In the 
case of qualified small business stock acquired after 
the date of the enactment of this paragraph and before 
January 1, 2011— 
‘‘(A) paragraph (1) shall be applied by sub-
stituting ‘75 percent’ for ‘50 percent’, and 
‘‘(B) paragraph (2) shall not apply.’’. 
(b) EFFECTIVE DATE.—The amendment made by this 
section shall apply to stock acquired after the date of the 
enactment of this Act. 
PART VI—PARITY FOR TRANSPORTATION FRINGE 
BENEFITS 
SEC. 1251. INCREASED EXCLUSION AMOUNT FOR COM-
MUTER TRANSIT BENEFITS AND TRANSIT 
PASSES. 
(a) IN GENERAL.—Paragraph (2) of section 132(f) is 
amended by adding at the end the following flush sentence: 
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‘‘In the case of any month beginning on or after the 
date of the enactment of this sentence and before Jan-
uary 1, 2011, subparagraph (A) shall be applied as 
if the dollar amount therein were the same as the dol-
lar amount under subparagraph (B) (as in effect for 
such month).’’. 
(b) EFFECTIVE DATE.—The amendment made by this 
section shall apply to months beginning on or after the date 
of the enactment of this section. 
PART VII—S CORPORATIONS 
SEC. 1261. TEMPORARY REDUCTION IN RECOGNITION PE-
RIOD FOR BUILT-IN GAINS TAX. 
(a) IN GENERAL.—Paragraph (7) of section 1374(d) 
(relating to definitions and special rules) is amended to 
read as follows: 
‘‘(7) RECOGNITION PERIOD.— 
‘‘(A) IN GENERAL.—The term ‘recognition 
period’ means the 10-year period beginning with 
the 1st day of the 1st taxable year for which the 
corporation was an S corporation. 
‘‘(B) SPECIAL RULE FOR 2009 AND 2010.—In 
the case of any taxable year beginning in 2009 
or 2010, no tax shall be imposed on the net un-
recognized built-in gain of an S corporation if 
the 7th taxable year in the recognition period 
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preceded such taxable year. The preceding sen-
tence shall be applied separately with respect to 
any asset to which paragraph (8) applies. 
‘‘(C) SPECIAL RULE FOR DISTRIBUTIONS TO 
SHAREHOLDERS.—For purposes of applying this 
section to any amount includible in income by 
reason of distributions to shareholders pursuant 
to section 593(e)— 
‘‘(i) subparagraph (A) shall be applied 
without regard to the phrase ‘10-year’, and 
‘‘(ii) subparagraph (B) shall not 
apply.’’. 
(b) EFFECTIVE DATE.—The amendment made by this 
section shall apply to taxable years beginning after Decem-
ber 31, 2008. 
PART VIII—BROADBAND INCENTIVES 
SEC. 1271. BROADBAND INTERNET ACCESS TAX CREDIT. 
(a) IN GENERAL.—Subpart E of part IV of chapter 
1 of the Internal Revenue Code of 1986 (relating to rules 
for computing investment credit), as amended by this Act, 
is amended by inserting after section 48C the following new 
section: 
‘‘SEC. 48D. BROADBAND INTERNET ACCESS CREDIT. 
‘‘(a) GENERAL RULE.—For purposes of section 46, the 
broadband credit for any taxable year is the sum of— 
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‘‘(1) the current generation broadband credit, 
plus 
‘‘(2) the next generation broadband credit. 
‘‘(b) CURRENT GENERATION BROADBAND CREDIT; 
NEXT GENERATION BROADBAND CREDIT.—For purposes of 
this section— 
‘‘(1) CURRENT GENERATION BROADBAND CRED-
IT.—The current generation broadband credit for any 
taxable year is equal to 10 percent (20 percent in the 
case of qualified subscribers which are unserved sub-
scribers) of the qualified broadband expenditures in-
curred with respect to qualified equipment providing 
current generation broadband services to qualified 
subscribers and taken into account with respect to 
such taxable year. 
‘‘(2) NEXT GENERATION BROADBAND CREDIT.— 
The next generation broadband credit for any taxable 
year is equal to 20 percent of the qualified broadband 
expenditures incurred with respect to qualified equip-
ment providing next generation broadband services to 
qualified subscribers and taken into account with re-
spect to such taxable year. 
‘‘(c) WHEN EXPENDITURES TAKEN INTO ACCOUNT.— 
For purposes of this section— 
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‘‘(1) IN GENERAL.—Qualified broadband expend-
itures with respect to qualified equipment shall be 
taken into account with respect to the first taxable 
year in which— 
‘‘(A) current generation broadband services 
are provided through such equipment to qualified 
subscribers, or 
‘‘(B) next generation broadband services are 
provided through such equipment to qualified 
subscribers. 
‘‘(2) LIMITATION.— 
‘‘(A) IN
GENERAL.—Qualified broadband 
expenditures shall be taken into account under 
paragraph (1) only with respect to qualified 
equipment— 
‘‘(i) the original use of which com-
mences with the taxpayer, and 
‘‘(ii) which is placed in service, after 
December 31, 2008, and before January 1, 
2011. 
‘‘(B) SALE-LEASEBACKS.—For purposes of 
subparagraph (A), if property— 
‘‘(i) is originally placed in service 
after December 31, 2008, by any person, 
and 
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‘‘(ii) sold and leased back by such per-
son within 3 months after the date such 
property was originally placed in service, 
such property shall be treated as originally 
placed in service not earlier than the date on 
which such property is used under the leaseback 
referred to in clause (ii). 
‘‘(d) SPECIAL ALLOCATION RULES
FOR CURRENT 
GENERATION BROADBAND SERVICES.—For purposes of de-
termining the current generation broadband credit under 
subsection (a)(1) with respect to qualified equipment 
through which current generation broadband services are 
provided, if the qualified equipment is capable of serving 
both qualified subscribers and other subscribers, the quali-
fied broadband expenditures shall be multiplied by a frac-
tion— 
‘‘(1) the numerator of which is the sum of the 
number of potential qualified subscribers within the 
rural areas and the underserved areas and the 
unserved areas which the equipment is capable of 
serving with current generation broadband services, 
and 
‘‘(2) the denominator of which is the total poten-
tial subscriber population of the area which the 
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equipment is capable of serving with current genera-
tion broadband services. 
‘‘(e) DEFINITIONS.—For purposes of this section— 
‘‘(1) ANTENNA.—The term ‘antenna’ means any 
device used to transmit or receive signals through the 
electromagnetic spectrum, including satellite equip-
ment. 
‘‘(2) CABLE OPERATOR.—The term ‘cable oper-
ator’ has the meaning given such term by section 
602(5) of the Communications Act of 1934 (47 U.S.C. 
522(5)). 
‘‘(3) COMMERCIAL MOBILE SERVICE CARRIER.— 
The term ‘commercial mobile service carrier’ means 
any person authorized to provide commercial mobile 
radio service as defined in section 20.3 of title 47, 
Code of Federal Regulations. 
‘‘(4) CURRENT GENERATION BROADBAND SERV-
ICE.—The term ‘current generation broadband serv-
ice’ means the transmission of signals at a rate of at 
least 5,000,000 bits per second to the subscriber and 
at least 1,000,000 bits per second from the subscriber 
(at least 3,000,000 bits per second to the subscriber 
and at least 768,000 bits per second from the sub-
scriber in the case of service through radio trans-
mission of energy). 
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‘‘(5) MULTIPLEXING OR DEMULTIPLEXING.—The 
term ‘multiplexing’ means the transmission of 2 or 
more signals over a single channel, and the term 
‘demultiplexing’ means the separation of 2 or more 
signals previously combined by compatible multi-
plexing equipment. 
‘‘(6) NEXT GENERATION BROADBAND SERVICE.— 
The term ‘next generation broadband service’ means 
the transmission of signals at a rate of at least 
100,000,000 bits per second to the subscriber (or its 
equivalent when the data rate is measured before 
being compressed for transmission) and at least 
20,000,000 bits per second from the subscriber (or its 
equivalent as so measured). 
‘‘(7) NONRESIDENTIAL SUBSCRIBER.—The term 
‘nonresidential subscriber’ means any person who 
purchases broadband services which are delivered to 
the permanent place of business of such person. 
‘‘(8) OPEN VIDEO SYSTEM OPERATOR.—The term 
‘open video system operator’ means any person au-
thorized to provide service under section 653 of the 
Communications Act of 1934 (47 U.S.C. 573). 
‘‘(9) OTHER
WIRELESS
CARRIER.—The term 
‘other wireless carrier’ means any person (other than 
a telecommunications carrier, commercial mobile 
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service carrier, cable operator, open video system op-
erator, or satellite carrier) providing current genera-
tion broadband services or next generation broadband 
service to subscribers through the radio transmission 
of energy. 
‘‘(10) PACKET
SWITCHING.—The term ‘packet 
switching’ means controlling or routing the path of a 
digitized transmission signal which is assembled into 
packets or cells. 
‘‘(11) PROVIDER.—The term ‘provider’ means, 
with respect to any qualified equipment any— 
‘‘(A) cable operator, 
‘‘(B) commercial mobile service carrier, 
‘‘(C) open video system operator, 
‘‘(D) satellite carrier, 
‘‘(E) telecommunications carrier, or 
‘‘(F) other wireless carrier, 
providing current generation broadband services or 
next generation broadband services to subscribers 
through such qualified equipment. 
‘‘(12) PROVISION
OF
SERVICES.—A provider 
shall be treated as providing services to 1 or more 
subscribers if— 
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‘‘(A) such a subscriber has been passed by 
the provider’s equipment and can be connected to 
such equipment for a standard connection fee, 
‘‘(B) the provider is physically able to de-
liver current generation broadband services or 
next generation broadband services, as applica-
ble, to such a subscriber without making more 
than an insignificant investment with respect to 
such subscriber, 
‘‘(C) the provider has made reasonable ef-
forts to make such subscribers aware of the avail-
ability of such services, 
‘‘(D) such services have been purchased by 
1 or more such subscribers, and 
‘‘(E) such services are made available to 
such subscribers at average prices comparable to 
those at which the provider makes available 
similar services in any areas in which the pro-
vider makes available such services. 
‘‘(13) QUALIFIED EQUIPMENT.— 
‘‘(A) IN
GENERAL.—The term ‘qualified 
equipment’ means property with respect to which 
depreciation (or amortization in lieu of depre-
ciation) is allowable and which provides current 
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generation broadband services or next generation 
broadband services— 
‘‘(i) at least a majority of the time 
during periods of maximum demand to 
each subscriber who is utilizing such serv-
ices, and 
‘‘(ii) in a manner substantially the 
same as such services are provided by the 
provider to subscribers through equipment 
with respect to which no credit is allowed 
under subsection (a)(1). 
‘‘(B) ONLY
CERTAIN
INVESTMENT
TAKEN 
INTO ACCOUNT.—Except as provided in subpara-
graph (C) or (D), equipment shall be taken into 
account under subparagraph (A) only to the ex-
tent it— 
‘‘(i) extends from the last point of 
switching to the outside of the unit, build-
ing, dwelling, or office owned or leased by 
a subscriber in the case of a telecommuni-
cations carrier or broadband-over-powerline 
operator, 
‘‘(ii) extends from the customer side of 
the mobile telephone switching office to a 
transmission/receive 
antenna 
(including 
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such antenna) owned or leased by a sub-
scriber in the case of a commercial mobile 
service carrier, 
‘‘(iii) extends from the customer side of 
the headend to the outside of the unit, build-
ing, dwelling, or office owned or leased by 
a subscriber in the case of a cable operator 
or open video system operator, or 
‘‘(iv) extends from a transmission/re-
ceive antenna (including such antenna) 
which transmits and receives signals to or 
from multiple subscribers, to a trans-
mission/receive antenna (including such an-
tenna) on the outside of the unit, building, 
dwelling, or office owned or leased by a sub-
scriber in the case of a satellite carrier or 
other wireless carrier, unless such other 
wireless carrier is also a telecommuni-
cations carrier. 
‘‘(C) PACKET
SWITCHING
EQUIPMENT.— 
Packet switching equipment, regardless of loca-
tion, shall be taken into account under subpara-
graph (A) only if it is deployed in connection 
with equipment described in subparagraph (B) 
and is uniquely designed to perform the function 
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of packet switching for current generation 
broadband services or next generation broadband 
services, but only if such packet switching is the 
last in a series of such functions performed in 
the transmission of a signal to a subscriber or 
the first in a series of such functions performed 
in the transmission of a signal from a sub-
scriber. 
‘‘(D) MULTIPLEXING AND DEMULTIPLEXING 
EQUIPMENT.—Multiplexing and demultiplexing 
equipment shall be taken into account under sub-
paragraph (A) only to the extent it is deployed 
in connection with equipment described in sub-
paragraph (B) and is uniquely designed to per-
form 
the 
function 
of 
multiplexing 
and 
demultiplexing packets or cells of data and mak-
ing associated application adaptions, but only if 
such multiplexing or demultiplexing equipment 
is located between packet switching equipment 
described in subparagraph (C) and the sub-
scriber’s premises. 
‘‘(14) QUALIFIED BROADBAND EXPENDITURE.— 
‘‘(A) IN
GENERAL.—The term ‘qualified 
broadband expenditure’ means any amount— 
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‘‘(i) chargeable to capital account with 
respect to the purchase and installation of 
qualified equipment (including any up-
grades thereto) for which depreciation is al-
lowable under section 168, and 
‘‘(ii) incurred after December 31, 2008, 
and before January 1, 2011. 
‘‘(B) CERTAIN
SATELLITE
EXPENDITURES 
EXCLUDED.—Such term shall not include any 
expenditure with respect to the launching of any 
satellite equipment. 
‘‘(C) LEASED EQUIPMENT.—Such term shall 
include so much of the purchase price paid by 
the lessor of equipment subject to a lease de-
scribed in subsection (c)(2)(B) as is attributable 
to expenditures incurred by the lessee which 
would otherwise be described in subparagraph 
(A). 
‘‘(15) 
QUALIFIED
SUBSCRIBER.—The 
term 
‘qualified subscriber’ means— 
‘‘(A) with respect to the provision of current 
generation broadband services— 
‘‘(i) 
any 
nonresidential 
subscriber 
maintaining a permanent place of business 
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in a rural area, an underserved area, or an 
unserved area, or 
‘‘(ii) any residential subscriber resid-
ing in a dwelling located in a rural area, 
an underserved area, or an unserved area 
which is not a saturated market, and 
‘‘(B) with respect to the provision of next 
generation broadband services— 
‘‘(i) 
any 
nonresidential 
subscriber 
maintaining a permanent place of business 
in a rural area, an underserved area, or an 
unserved area , or 
‘‘(ii) any residential subscriber. 
‘‘(16) RESIDENTIAL
SUBSCRIBER.—The term 
‘residential subscriber’ means any individual who 
purchases broadband services which are delivered to 
such individual’s dwelling. 
‘‘(17) RURAL
AREA.—The term ‘rural area’ 
means any census tract which— 
‘‘(A) is not within 10 miles of any incor-
porated or census designated place containing 
more than 25,000 people, and 
‘‘(B) is not within a county or county 
equivalent which has an overall population den-
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sity of more than 500 people per square mile of 
land. 
‘‘(18) RURAL
SUBSCRIBER.—The term ‘rural 
subscriber’ means any residential subscriber residing 
in a dwelling located in a rural area or nonresiden-
tial subscriber maintaining a permanent place of 
business located in a rural area. 
‘‘(19) SATELLITE CARRIER.—The term ‘satellite 
carrier’ means any person using the facilities of a 
satellite or satellite service licensed by the Federal 
Communications Commission and operating in the 
Fixed-Satellite Service under part 25 of title 47 of the 
Code of Federal Regulations or the Direct Broadcast 
Satellite Service under part 100 of title 47 of such 
Code to establish and operate a channel of commu-
nications for distribution of signals, and owning or 
leasing a capacity or service on a satellite in order 
to provide such point-to-multipoint distribution. 
‘‘(20) SATURATED
MARKET.—The term ‘satu-
rated market’ means any census tract in which, as of 
the date of the enactment of this section— 
‘‘(A) current generation broadband services 
have been provided by a single provider to 85 
percent or more of the total number of potential 
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residential subscribers residing in dwellings lo-
cated within such census tract, and 
‘‘(B) such services can be utilized— 
‘‘(i) at least a majority of the time 
during periods of maximum demand by 
each such subscriber who is utilizing such 
services, and 
‘‘(ii) in a manner substantially the 
same as such services are provided by the 
provider to subscribers through equipment 
with respect to which no credit is allowed 
under subsection (a)(1). 
‘‘(21) 
SUBSCRIBER.—The 
term 
‘subscriber’ 
means any person who purchases current generation 
broadband services or next generation broadband serv-
ices. 
‘‘(22) 
TELECOMMUNICATIONS
CARRIER.—The 
term ‘telecommunications carrier’ has the meaning 
given such term by section 3(44) of the Communica-
tions Act of 1934 (47 U.S.C. 153(44)), but— 
‘‘(A) includes all members of an affiliated 
group of which a telecommunications carrier is 
a member, and 
‘‘(B) does not include any commercial mo-
bile service carrier. 
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‘‘(23) TOTAL
POTENTIAL
SUBSCRIBER
POPU-
LATION.—The term ‘total potential subscriber popu-
lation’ means, with respect to any area and based on 
the most recent census data, the total number of po-
tential residential subscribers residing in dwellings 
located in such area and potential nonresidential sub-
scribers maintaining permanent places of business lo-
cated in such area. 
‘‘(24) UNDERSERVED AREA.—The term ‘under-
served area’ means any census tract which is located 
in— 
‘‘(A) an empowerment zone or enterprise 
community designated under section 1391, 
‘‘(B) the District of Columbia Enterprise 
Zone established under section 1400, 
‘‘(C) a renewal community designated 
under section 1400E, or 
‘‘(D) a low-income community designated 
under section 45D. 
‘‘(25) UNDERSERVED
SUBSCRIBER.—The term 
‘underserved subscriber’ means any residential sub-
scriber residing in a dwelling located in an under-
served area or nonresidential subscriber maintaining 
a permanent place of business located in an under-
served area. 
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HR 1 PP 
‘‘(26) UNSERVED
AREA.—The term ‘unserved 
area’ means any census tract in which no current 
generation broadband services are provided, as cer-
tified by the State in which such tract is located not 
later than September 30, 2009. 
‘‘(27) 
UNSERVED
SUBSCRIBER.—The 
term 
‘unserved subscriber’ means any residential subscriber 
residing in a dwelling located in an unserved area or 
nonresidential subscriber maintaining a permanent 
place of business located in an unserved area.’’. 
(b) CREDIT TO BE PART OF INVESTMENT CREDIT.— 
Section 46 (relating to the amount of investment credit), 
as amended by this Act, is amended by striking ‘‘and’’ at 
the end of paragraph (4), by striking the period at the end 
of paragraph (5) and inserting ‘‘, and’’, and by adding at 
the end the following: 
‘‘(6) the broadband Internet access credit.’’ 
(c) SPECIAL RULE FOR MUTUAL OR COOPERATIVE 
TELEPHONE COMPANIES.—Section 501(c)(12)(B) (relating 
to list of exempt organizations) is amended by striking ‘‘or’’ 
at the end of clause (iii), by striking the period at the end 
of clause (iv) and inserting ‘‘, or’’, and by adding at the 
end the following new clause: 
‘‘(v) from the sale of property subject to 
a lease described in section 48D(c)(2)(B), 
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