165
account as the basis of such property shall 
not exceed the amount which (but for this 
subparagraph) would be so taken into ac-
count multiplied by the fraction deter-
mined under subparagraph (B). 
‘‘(B) DETERMINATION OF FRACTION.—For 
purposes of subparagraph (A), the fraction de-
termined under this subparagraph is 1 reduced 
by a fraction—
‘‘(i) the numerator of which is that 
portion of the basis of the property which 
is allocable to such financing or proceeds, 
and 
‘‘(ii) the denominator of which is the 
basis of the property. 
‘‘(C) SUBSIDIZED
ENERGY
FINANCING.—
For purposes of subparagraph (A), the term 
‘subsidized energy financing’ means financing 
provided under a Federal, State, or local pro-
gram a principal purpose of which is to provide 
subsidized financing for projects designed to 
conserve or produce energy. 
‘‘(2) CERTAIN PROGRESS EXPENDITURE RULES 
MADE APPLICABLE.—Rules similar to the rules of 
subsections (c)(4) and (d) of section 46 (as in effect
166
on the day before the date of the enactment of the 
Revenue Reconciliation Act of 1990) shall apply for 
purposes of this section. 
‘‘(g) APPLICATION OF SECTION.—This section shall 
apply to property placed in service after December 31, 
2005, and before January 1, 2011.’’. 
(b) CONFORMING AMENDMENTS.—
(1) Section 48 is repealed. 
(2) Section 280C is amended by adding after 
subsection (e) the following: 
‘‘(f) CREDIT FOR ENERGY PROPERTY EXPENSES.—
‘‘(1) IN GENERAL.—No deduction shall be al-
lowed for that portion of the expenses for energy 
property (as defined in section 48A(c)) otherwise al-
lowable as a deduction for the taxable year which is 
equal to the amount of the credit determined for 
such taxable year under section 48A(a). 
‘‘(2) SIMILAR
RULE
WHERE
TAXPAYER
CAP-
ITALIZES RATHER THAN DEDUCTS EXPENSES.—If—
‘‘(A) the amount of the credit allowable for 
the taxable year under section 48A (determined 
without regard to section 38(c)), exceeds 
‘‘(B) the amount allowable as a deduction 
for the taxable year for expenses for energy 
property (determined without regard to para-
167
graph (1)), the amount chargeable to capital 
account for the taxable year for such expenses 
shall be reduced by the amount of such excess. 
‘‘(3) CONTROLLED GROUPS.—Paragraph (3) of 
subsection (b) shall apply for purposes of this sub-
section.’’. 
(3) Section 29(b)(3)(A)(i)(III) is amended by 
striking ‘‘section 48(a)(4)(C)’’ and inserting ‘‘section 
48A(e)(1)(C)’’. 
(4) Section 50(a)(2)(E) is amended by striking 
‘‘section 
48(a)(5)’’ 
and 
inserting 
‘‘section 
48A(e)(2)’’. 
(5) Section 168(e)(3)(B) is amended—
(A) by striking clause (vi)(I) and inserting 
the following: 
‘‘(I) is described in paragraph (1) 
or (2) of section 48A(d) (or would be 
so described if ‘solar and wind’ were 
substituted for ‘solar’ in paragraph 
(1)(B)),’’, and 
(B) in the last sentence by striking ‘‘sec-
tion 
48(a)(3)’’ 
and 
inserting 
‘‘section 
48A(c)(2)(A)’’. 
(6) The table of sections for subpart E of part 
IV of subchapter A of chapter 1 is amended by
168
striking the item relating to section 48 and inserting 
the following:
‘‘Sec. 48A. Energy credit.’’.
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to property placed in service after 
December 31, 2005, 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 Reconciliation Act of 1990). 
SEC. 326. CREDIT FOR ENERGY EFFICIENT RECYCLING OR 
REMANUFACTURING EQUIPMENT. 
(a) IN GENERAL.—Section 46 (relating to amount of 
investment credit) is amended by striking ‘‘and’’ at the 
end of paragraph (1), by striking the period at the end 
of paragraph (2) and inserting ‘‘, and’’, and by adding 
at the end the following new paragraph: 
‘‘(3) the reclamation credit.’’. 
(b) RECLAMATION CREDIT.—Subpart E of part IV 
of subchapter A of chapter 1 is amended by inserting be-
fore section 48A, as added by this Act, the following new 
section: 
‘‘SEC. 48. RECLAMATION CREDIT. 
‘‘(a) IN GENERAL.—For purposes of section 46, the 
reclamation credit for any taxable year is 20 percent of 
the basis of each qualified reclamation property placed in 
service during the taxable year.
169
‘‘(b) QUALIFIED RECLAMATION PROPERTY.—
‘‘(1) IN GENERAL.—For purposes of this sec-
tion, the term ‘qualified reclamation property’ means 
property—
‘‘(A) which is qualified recycling property 
or qualified remanufacturing property, 
‘‘(B) which is tangible property (not in-
cluding a building and its structural compo-
nents), 
‘‘(C) with respect to which depreciation (or 
amortization in lieu of depreciation) is allow-
able, 
‘‘(D) which has a useful life of at least 5 
years, and 
‘‘(E) which is—
‘‘(i) acquired by purchase (as defined 
in section 179(d)(2)) by the taxpayer if the 
original use of such property commences 
with the taxpayer, or 
‘‘(ii) constructed by or for the tax-
payer. 
‘‘(2) DOLLAR LIMITATION.—
‘‘(A) IN GENERAL.—The basis of qualified 
reclamation property taken into account under