‘‘(i) land, 
‘‘(ii) rolling stock, including loco-
motives, or 
‘‘(iii) property used predominantly 
outside the United States, except that this 
clause shall not apply to any property de-
scribed in section 168(g)(4). 
‘‘(c) QUALIFIED LOCOMOTIVE PROPERTY.— 
‘‘(1) IN GENERAL.—For purposes of this sec-
tion, the term ‘qualified locomotive property’ means 
a locomotive, whether or not owned by a railroad, 
which— 
‘‘(A) is acquired by the taxpayer after the 
effective date of this section, but only if the 
original use of such property commences with 
the taxpayer, 
‘‘(B) is owned by, or leased to, a taxpayer 
which meets the capacity expansion requirement 
of paragraph (2) for the taxable year in which 
the locomotive is placed in service, and 
‘‘(C) meets the Environmental Protection 
Agency’s emission standards for locomotives 
and locomotive engines as in effect on Decem-
ber 31, 2006. 
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‘‘(2) CAPACITY EXPANSION REQUIREMENT.—A 
taxpayer meets the requirements of this paragraph 
with respect to any locomotive only if, on the last 
day of the taxable year in which such locomotive is 
placed in service, the total horsepower of all loco-
motives owned by, or leased to, the taxpayer exceeds 
the total horsepower of all locomotives owned by, or 
leased to, the taxpayer on the last day of the pre-
ceding taxable year. A determination under this 
paragraph shall be made pursuant to such reports as 
the Secretary, in consultation with the Surface 
Transportation Board, may prescribe. 
‘‘(3) SPECIAL RULE FOR THE LEASING OF LO-
COMOTIVES.—In the case of the leasing of loco-
motives, total horsepower under paragraph (2) shall 
be determined with respect to all locomotives owned 
by, or leased to, the lessee. 
‘‘(d) OTHER DEFINITIONS AND SPECIAL RULES.— 
‘‘(1) DEFINITIONS.—For purposes of this sec-
tion— 
‘‘(A) RAILROAD SIGNAL, COMMUNICATION, 
OR
OTHER
OPERATING
SYSTEM.—The term 
‘railroad signal, communication, or other oper-
ating system’ means an appliance, method, de-
vice, or system (including hardware and soft-
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ware) which is used to operate a railroad or to 
improve safety or capacity of railroad oper-
ations, including a signal, an interlocker, an 
automatic train stop, or a train control or cab- 
signal device. 
‘‘(B) 
INTERMODAL
TRANSFER
OR 
TRANSLOAD
FACILITY
OR
TERMINAL.—The 
term ‘intermodal transfer or transload facility 
or terminal’ means a facility or terminal pri-
marily utilized in the transfer of freight be-
tween rail and any other mode of transpor-
tation. 
‘‘(2) COORDINATION WITH OTHER CREDITS.— 
The cost of any property taken into account in de-
termining the credit under this section may not be 
taken into account in determining a credit under any 
other provision of this title. 
‘‘(3) BASIS ADJUSTMENT.—If a credit is deter-
mined under this section with respect to the cost of 
any qualified freight rail infrastructure property or 
qualified locomotive property, the basis of such prop-
erty shall be reduced by the amount of the credit so 
determined. 
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‘‘(4) SALE-LEASEBACKS.—If qualified freight 
rail infrastructure property or qualified locomotive 
property is— 
‘‘(A) originally placed in service by a per-
son after December 31, 2011, and 
‘‘(B) sold and leased back by such person 
within 3 months after the property is originally 
placed in service (or, in the case of multiple 
units of property subject to the same lease, 
within 3 months after the date the final unit is 
placed in service, so long as the period between 
the time the first unit is placed in service and 
the time the last unit is placed in service does 
not exceed 12 months), 
such property shall be treated as originally placed in 
service not earlier than the date on which such prop-
erty is used under the lease referred to in subpara-
graph (B). 
‘‘(5) RECAPTURE.—The benefit of any credit 
allowable under subsection (a) shall, under regula-
tions prescribed by the Secretary, be recaptured with 
respect to any qualified locomotive property that is 
sold or otherwise disposed of by the taxpayer during 
the 5-year period beginning on the date on which 
such property is originally placed in service. The 
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preceding sentence shall not apply to locomotive 
property that is sold by and subsequently leased 
back to the taxpayer. 
‘‘(e) TERMINATION.—This section shall not apply to 
any property placed in service after December 31, 2016.’’. 
(b) CREDIT ALLOWED AS BUSINESS CREDIT.—Sec-
tion 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 (35), by striking the period 
at the end of paragraph (36) and inserting ‘‘, plus’’, and 
by adding at the end the following new paragraph: 
‘‘(37) the freight rail capacity expansion credit 
determined under section 45S.’’. 
(c) COORDINATION
WITH
SECTION
55.—Section 
38(c)(4)(B) of the Internal Revenue Code of 1986 is 
amended by striking ‘‘and’’ at the end of clause (viii), by 
striking the period at the end of clause (ix) and inserting 
‘‘, and’’, and by adding at the end the following new 
clause: 
‘‘(x) for taxable years ending after the 
effective date of this clause, the credit de-
termined under section 45S.’’. 
(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 in-
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emcdonald on DSK2BSOYB1PROD with BILLS
serting after the item relating to section 45R the following 
new item: 
‘‘Sec. 45S. Freight rail capacity expansion credit.’’. 
(e) EFFECTIVE DATE.—The amendments made by 
this section shall apply to property placed in service after 
December 31, 2011. 
SEC. 3. EXPENSING OF FREIGHT RAIL INFRASTRUCTURE 
PROPERTY. 
(a) IN GENERAL.—Part VI of subchapter B of chap-
ter 1 of the Internal Revenue Code of 1986 (relating to 
itemized deductions for individuals and corporations) is 
amended by inserting after section 179E the following new 
section: 
‘‘SEC. 179F. ELECTION TO EXPENSE QUALIFIED FREIGHT 
RAIL INFRASTRUCTURE PROPERTY. 
‘‘(a) ALLOWANCE OF DEDUCTION.— 
‘‘(1) IN GENERAL.—A taxpayer may elect to 
treat any amount paid or incurred for the acquisi-
tion, construction, or erection of qualified freight rail 
infrastructure property (as defined in section 
45S(b)(3)) as an amount not chargeable to capital 
account. Any amount so treated shall be allowed as 
a deduction for the taxable year in which such prop-
erty was placed in service. 
‘‘(2) 
COORDINATION
WITH
CREDIT.—The 
amount to which the election under paragraph (1) 
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applies with respect to any property shall be reduced 
by an amount equal to the amount of any reduction 
in the basis of the property under section 45S(d)(3). 
‘‘(b) ELECTION.—An election under subsection (a) 
shall be made, with respect to each class of property for 
each taxable year, at such time and in such manner as 
the Secretary may prescribe by regulation. If a taxpayer 
makes such an election with respect to any class of prop-
erty for any taxable year, the election shall apply to all 
qualified freight rail infrastructure property in such class 
placed in service during such taxable year. An election 
under this section shall not affect the character of any 
property for the purposes of section 45S. 
‘‘(c) DEDUCTION ALLOWED IN COMPUTING MINIMUM 
TAX.—For purposes of determining alternative minimum 
taxable income under section 55, the deduction under sub-
section (a) for qualified freight rail infrastructure property 
shall be determined under this section without regard to 
any adjustment under section 56. 
‘‘(d) TERMINATION.—This section shall not apply to 
any property placed in service after December 31, 2016.’’. 
(b) DEDUCTION
FOR CAPITAL EXPENDITURES.— 
Section 263(a)(1) of the Internal Revenue Code of 1986 
(relating to capital expenditures) is amended by striking 
‘‘or’’ at the end of subparagraph (K), by striking the pe-
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riod at the end of subparagraph (L) and inserting ‘‘, or’’, 
and by adding at the end the following new subparagraph: 
‘‘(M) expenditures for which a deduction is 
allowed under section 179F.’’. 
(c) TECHNICAL AND CLERICAL AMENDMENTS.— 
(1) Section 312(k)(3)(B) of the Internal Rev-
enue Code of 1986 is amended by striking ‘‘or 
179E’’ each place it appears in the text or heading 
thereof and inserting ‘‘179E, or 179F’’. 
(2) Paragraphs (2)(C) and (3)(C) of section 
1245(a) of such Code are each amended by inserting 
‘‘179F,’’ after ‘‘179E,’’. 
(3) The table of sections for part VI of sub-
chapter B of chapter 1 of subtitle A of such Code 
is amended by inserting after the item relating to 
section 179E the following new item: 
‘‘Sec. 179F. Election to expense qualified freight rail infrastructure property.’’. 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to property placed in service after 
December 31, 2011. 
SEC. 4. WAGE RATE REQUIREMENTS. 
The taxpayer shall not be allowed a credit under sec-
tion 45S of the Internal Revenue Code of 1986 (as added 
by section 2 of this Act) or a deduction under 
section 179F of such Code (as added by section 3 of this 
Act) until the taxpayer certifies in writing to the Secretary 
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of the Treasury that all laborers and mechanics employed 
by contractors and subcontractors in construction, re-
placement, or expansion of new qualified freight rail infra-
structure property for which such credit or deduction (as 
the case may be) is claimed were paid wages at rates not 
less than those prevailing at the time the construction, re-
placement, or expansion work was performed on similar 
work in the locality as determined by the Secretary of 
Labor in accordance with subchapter IV of chapter 31 of 
part A of subtitle II of title 40, United States Code (com-
monly referred to as the ‘‘Davis-Bacon Act’’). 
Æ 
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