SEC. 2. REPEAL OF VOLUME LIMITATION ON VEHICLES ELI-
GIBLE FOR ALTERNATIVE MOTOR VEHICLE 
CREDIT. 
(a) IN GENERAL.—Section 30B of the Internal Rev-
enue Code of 1986 (relating to alternative motor vehicle 
credit) is amended by striking subsection (f). 
(b) EFFECTIVE DATE.—The amendment made by 
subsection (a) shall apply to cars manufactured after De-
cember 31, 2006. 
SEC. 3. CREDIT FOR MANUFACTURING NEW QUALIFIED HY-
BRID MOTOR VEHICLES. 
(a) IN GENERAL.—Subpart D of part IV of sub-
chapter 1 of the Internal Revenue Code of 1986 is amend-
ed by inserting after section 45N the following new sec-
tion: 
‘‘SEC. 45O. CREDIT FOR MANUFACTURING NEW QUALIFIED 
HYBRID MOTOR VEHICLES. 
‘‘(a) IN GENERAL.—For purposes of section 38, the 
new qualified hybrid motor vehicle manufacturing credit 
determined under this section for any taxable year is 
$1,000 for each new qualified hybrid motor vehicle manu-
factured by the taxpayer during the taxable year. 
‘‘(b) NEW QUALIFIED HYBRID MOTOR VEHICLE.— 
For purposes of this section, the term ‘new qualified hy-
brid motor vehicle’ means a motor vehicle described in sec-
tion 30B(d)(3) which— 
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‘‘(1) is made in the United States by a manu-
facturer, 
‘‘(2) is manufactured after the date of the en-
actment of this section, and 
‘‘(3) meets or exceeds the minimum fuel econ-
omy standards and conservation standards described 
in section 30B(d)(2)(A) for the vehicle model and 
weight class of such motor vehicle. 
‘‘(c) DEFINITIONS AND SPECIAL RULES.— 
‘‘(1) MOTOR VEHICLE.—The term ‘motor vehi-
cle’ has the meaning given such term by section 
30(c)(2). 
‘‘(2) BASIS
REDUCTION.—The basis of any 
property for which a credit is determined under sub-
section (a) shall be reduced by the amount of the 
credit so determined. 
‘‘(3) ELECTION
NOT
TO
TAKE
CREDIT.—No 
credit shall be determined under subsection (a) for 
any vehicle if the taxpayer elects not to have this 
section apply to such vehicle.’’. 
(b) DENIAL OF DOUBLE BENEFIT.—Section 280C of 
such Code is amended by adding at the end the following 
new subsection: 
‘‘(f) CREDIT FOR MANUFACTURING NEW QUALIFIED 
HYBRID MOTOR VEHICLES.—No deduction shall be al-
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lowed for that portion of the expenses otherwise allowable 
as a deduction for the taxable year which is equal to the 
amount of the credit determined for the taxable year 
under section 45O(a).’’. 
(c) CONFORMING AMENDMENTS.— 
(1) Section 38(b) of such Code is amended by 
striking ‘‘plus’’ at the end of paragraph (30), by 
striking the period at the end of paragraph (31) and 
inserting ‘‘, plus’’, and by adding at the end the fol-
lowing: 
‘‘(32) the new qualified hybrid motor vehicle 
manufacturing credit determined under section 
45O(a).’’. 
(2) Section 1016(a) of such Code is amended 
by striking ‘‘and’’ at the end of paragraph (37), by 
striking the period at the end of paragraph (38) and 
inserting ‘‘, and’’, and by adding at the end the fol-
lowing new paragraph: 
‘‘(38) to the extent provided in section 
30D(c)(2).’’. 
(3) Section 6501(m) of such Code is amended 
by inserting ‘‘30D(c)(3),’’ after ‘‘30C(e)(5),’’. 
(4) The table of sections for subpart D of part 
IV of subchapter A of chapter 1 of such Code is 
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