with respect to the organization for the
taxable year,
‘‘(ii) shall be included in the amount
determined under subsection (a) for the
taxable year of each patron for which the
patronage dividends for the taxable year
described in subparagraph (A) are included
in gross income, and
‘‘(iii) shall be included in gross income
of such patrons for the taxable year in the
manner and to the extent provided in sec-
tion 87.
‘‘(C) SPECIAL RULES FOR DECREASE IN
CREDITS FOR TAXABLE YEAR.—If the amount
of the credit of a cooperative organization (as
so defined) determined under subsection (a)(3)
for a taxable year is less than the amount of
such credit shown on the return of the coopera-
tive organization for such year, an amount
equal to the excess of—
‘‘(i) such reduction, over
‘‘(ii) the amount not apportioned to
such patrons under subparagraph (A) for
the taxable year,
shall be treated as an increase in tax imposed
by this chapter on the organization. Such in-
crease shall not be treated as tax imposed by
this chapter for purposes of determining the
amount of any credit under this subpart or sub-
part A, B, E, or G.’’.
(b) DEFINITION OF SMALL ETHANOL PRODUCER;
IMPROVEMENTS
TO
SMALL
ETHANOL
PRODUCER
CREDIT.—
(1) DEFINITION
OF
SMALL
ETHANOL
PRO-
DUCER.—Section 40(g)(1) of the Internal Revenue
Code of 1986 (relating to eligible small ethanol pro-
ducer) is amended by striking ‘‘30,000,000’’ and in-
serting ‘‘60,000,000’’.
(2) SMALL ETHANOL PRODUCER CREDIT NOT A
PASSIVE
ACTIVITY
CREDIT.—Clause (i) of section
469(d)(2)(A) of such Code (relating to passive activ-
ity credit) is amended by striking ‘‘subpart D’’ and
inserting ‘‘subpart D, other than section 40(a)(3),’’.
(3) ALLOWING
CREDIT
AGAINST
MINIMUM
TAX.—
(A) IN GENERAL.—Subsection (c) of sec-
tion 38 of such Code (relating to limitation
based on amount of tax) is amended by redesig-
nating paragraph (3) as paragraph (4) and by
inserting after paragraph (2) the following:
‘‘(3) SPECIAL
RULES
FOR
SMALL
ETHANOL
PRODUCER CREDIT.—
‘‘(A) IN
GENERAL.—In the case of the
small ethanol producer credit—
‘‘(i) this section and section 39 shall
be applied separately with respect to the
credit, and
‘‘(ii) in applying paragraph (1) to the
credit—
‘‘(I) subparagraphs (A) and (B)
thereof shall not apply, and
‘‘(II) the limitation under para-
graph (1) (as modified by subclause
(I)) shall be reduced by the credit al-
lowed under subsection (a) for the
taxable year (other than the small
ethanol producer credit).
‘‘(B) SMALL ETHANOL PRODUCER CRED-
IT.—For purposes of this subsection, the term
‘small ethanol producer credit’ means the credit
allowable under subsection (a) by reason of sec-
tion 40(a)(3).’’.
(B) 
CONFORMING
AMENDMENT.—Sub-
clause (II) of section 38(c)(2)(A)(ii) of such
Code is amended by inserting ‘‘or the small eth-
anol producer credit’’ after ‘‘employment cred-
it’’.
(4) SMALL ETHANOL PRODUCER CREDIT NOT
ADDED BACK TO INCOME UNDER SECTION 87.—Sec-
tion 87 of such Code (relating to income inclusion
of alcohol fuel credit is amended to read as follows:
‘‘SEC. 87. ALCOHOL FUEL CREDIT.
‘‘Gross income includes an amount equal to the sum
of—
‘‘(1) the amount of the alcohol mixture credit
determined with respect to the taxpayer for the tax-
able year under section 40(a)(1), and
‘‘(2) the alcohol credit determined with respect
to the taxpayer for the taxable year under section
40(a)(2).’’.
(c) CONFORMING AMENDMENT.—Section 1388 of the
Internal Revenue Code of 1986 (relating to definitions and
special rules for cooperative organizations) is amended by
adding at the end the following:
‘‘(k) CROSS REFERENCE.—For provisions relating to
the apportionment of the alcohol fuels credit between coop-
erative organizations and their patrons, see section
40(d)(6).’’
(d) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
December 31, 2001.
SEC. 5. EXTENSION OF EXPENSING OF VEHICLE REFUEL-
ING PROPERTY FOR E85 ETHANOL.
Subsection (f) of section 179A of the Internal Rev-
enue Code of 1986 (relating to termination) is amended
by inserting before the period ‘‘(December 31, 2007, for
property which is qualified clean-fuel vehicle refueling
property with respect to fuel at least 85 percent of which
is ethanol)’’.
SEC. 6. REPEAL OF LIMITATION ON DEPOSITS INTO HIGH-
WAY TRUST FUND WITH RESPECT TO ALCO-
HOL FUELS.
(a) IN GENERAL.—Paragraph (4) of section 9503(b)
of the Internal Revenue Code of 1986 (relating to certain
taxes not transferred to Highway Trust Fund) is amended
by adding ‘‘and’’ at the end of subparagraph (C), by strik-
ing the comma at the end of subparagraph (D) and insert-
ing a period, and by striking subparagraphs (E) and (F).
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall apply to taxes received in the Treasury
after December 31, 2001.
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