I
106TH CONGRESS
1ST SESSION
H. R. 1465
To amend the Internal Revenue Code of 1986 to allow a credit for residential
solar energy property.
IN THE HOUSE OF REPRESENTATIVES
APRIL 15, 1999
Mr. SALMON introduced the following bill; which was referred to the
Committee on Ways and Means
A BILL
To amend the Internal Revenue Code of 1986 to allow a
credit for residential solar energy property.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘Residential Solar En-
ergy Tax Credit Act’’.
SEC. 2. CREDIT FOR RESIDENTIAL SOLAR ENERGY PROP-
ERTY.
(a) IN GENERAL.—Subpart A of part IV of sub-
chapter A of chapter 1 of the Internal Revenue Code of
1986 (relating to nonrefundable personal credits) is
amended by inserting after section 25A the following new
section:
‘‘SEC. 25B. RESIDENTIAL SOLAR ENERGY PROPERTY.
‘‘(a) ALLOWANCE OF CREDIT.—In the case of an in-
dividual, there shall be allowed as a credit against the tax
imposed by this chapter for the taxable year an amount
equal to the sum of—
‘‘(1) 15 percent of the qualified photovoltaic
property expenditures made by the taxpayer during
such year, and
‘‘(2) 15 percent of the qualified solar water
heating property expenditures made by the taxpayer
during the taxable year.
‘‘(b) LIMITATIONS.—
‘‘(1) MAXIMUM
CREDIT.—The credit allowed
under subsection (a)(2) shall not exceed $2,000 for
each system of solar energy property.
‘‘(2) TYPE OF PROPERTY.—No expenditure may
be taken into account under this section unless such
expenditure is made by the taxpayer for property in-
stalled on or in connection with a dwelling unit
which is located in the United States and which is
used as a residence.
‘‘(3) SAFETY CERTIFICATIONS.—No credit shall
be allowed under this section for an item of property
unless—
‘‘(A) in the case of solar water heating
equipment, such equipment is certified for per-
formance and safety by the non-profit Solar
Rating Certification Corporation or a com-
parable entity endorsed by the government of
the State in which such property is installed,
and
‘‘(B) in the case of a photovoltaic system,
such system meets appropriate fire and electric
code requirements.
‘‘(c) DEFINITIONS.—For purposes of this section—
‘‘(1) QUALIFIED SOLAR WATER HEATING PROP-
ERTY
EXPENDITURE.—The term ‘qualified solar
water heating property expenditure’ means an ex-
penditure for property that uses solar energy to heat
water for use in a dwelling unit with respect to
which a majority of the energy is derived from the
sun.
‘‘(2) QUALIFIED PHOTOVOLTAIC PROPERTY EX-
PENDITURE.—The term ‘qualified photovoltaic prop-
erty expenditure’ means an expenditure for property
that uses solar energy to generate electricity for use
in a dwelling unit.
‘‘(3) SOLAR PANELS.—No expenditure relating
to a solar panel or other property installed as a roof
(or portion thereof) shall fail to be treated as prop-
erty described in paragraph (1) or (2) solely because
it constitutes a structural component of the struc-
ture on which it is installed.
‘‘(4) LABOR
COSTS.—Expenditures for labor
costs properly allocable to the onsite preparation, as-
sembly, or original installation of the property de-
scribed in paragraph (1) or (2) and for piping or
wiring to interconnect such property to the dwelling
unit shall be taken into account for purposes of this
section.
‘‘(5) SWIMMING POOLS, ETC., USED AS STOR-
AGE MEDIUM.—Expenditures which are properly al-
locable to a swimming pool, hot tub, or any other
energy storage medium which has a function other
than the function of such storage shall not be taken
into account for purposes of this section.
‘‘(d) SPECIAL
RULES.—For purposes of this
section—
‘‘(1) DOLLAR AMOUNTS IN CASE OF JOINT OC-
CUPANCY.—In the case of any dwelling unit which is
jointly occupied and used during any calendar year
as a residence by 2 or more individuals the following
shall apply:
‘‘(A) The amount of the credit allowable
under subsection (a) by reason of expenditures
(as the case may be) made during such cal-
endar year by any of such individuals with re-
spect to such dwelling unit shall be determined
by treating all of such individuals as 1 taxpayer
whose taxable year is such calendar year.
‘‘(B) There shall be allowable with respect
to such expenditures to each of such individ-
uals, a credit under subsection (a) for the tax-
able year in which such calendar year ends in
an amount which bears the same ratio to the
amount determined under subparagraph (A) as
the amount of such expenditures made by such
individual during such calendar year bears to
the aggregate of such expenditures made by all
of such individuals during such calendar year.
‘‘(2) TENANT-STOCKHOLDER IN COOPERATIVE
HOUSING
CORPORATION.—In the case of an indi-
vidual who is a tenant-stockholder (as defined in sec-
tion 216) in a cooperative housing corporation (as
defined in such section), such individual shall be
treated as having made his tenant-stockholder’s pro-
portionate share (as defined in section 216(b)(3)) of
any expenditures of such corporation.
‘‘(3) CONDOMINIUMS.—
‘‘(A) IN GENERAL.—In the case of an indi-
vidual who is a member of a condominium man-
agement association with respect to a condo-
minium which he owns, such individual shall be
treated as having made his proportionate share
of any expenditures of such association.
‘‘(B) CONDOMINIUM
MANAGEMENT
ASSO-
CIATION.—For purposes of this paragraph, the
term ‘condominium management association’
means an organization which meets the require-
ments of paragraph (1) of section 528(c) (other
than subparagraph (E) thereof) with respect to
a condominium project substantially all of the
units of which are used as residences.
‘‘(4) JOINT OWNERSHIP OF ITEMS OF SOLAR
ENERGY PROPERTY.—
‘‘(A) IN GENERAL.—Any expenditure oth-
erwise qualifying as an expenditure described in
paragraph (1) or (2) of subsection (c) shall not
be treated as failing to so qualify merely be-
cause such expenditure was made with respect
to 2 or more dwelling units.
‘‘(B) LIMITS
APPLIED
SEPARATELY.—In
the case of any expenditure described in sub-
paragraph (A), the amount of the credit allow-
able under subsection (a) shall (subject to para-
graph (1)) be computed separately with respect
to the amount of the expenditure made for each
dwelling unit.
‘‘(5) ALLOCATION IN CERTAIN CASES.—If less
than 80 percent of the use of an item is for nonbusi-
ness residential purposes, only that portion of the
expenditures for such item which is properly allo-
cable to use for nonbusiness residential purposes
shall be taken into account. For purposes of this
paragraph, use for a swimming pool shall be treated
as use which is not for residential purposes.
‘‘(6) WHEN EXPENDITURE MADE; AMOUNT OF
EXPENDITURE.—
‘‘(A) IN GENERAL.—Except as provided in
subparagraph (B), an expenditure with respect
to an item shall be treated as made when the
original installation of the item is completed.
‘‘(B) EXPENDITURES PART OF BUILDING
CONSTRUCTION.—In the case of an expenditure
in connection with the construction or recon-
struction of a structure, such expenditure shall
be treated as made when the original use of the
constructed or reconstructed structure by the
taxpayer begins.
‘‘(C) AMOUNT.—The amount of any ex-
penditure shall be the cost thereof.
‘‘(e) BASIS ADJUSTMENTS.—For purposes of this
subtitle, if a credit is allowed under this section for any
expenditure with respect to any property, the increase in
the basis of such property which would (but for this sub-
section) result from such expenditure shall be reduced by
the amount of the credit so allowed.’’.
(b) CONFORMING AMENDMENTS.—
(1) Subsection (a) of section 1016 of such Code
is amended by striking ‘‘and’’ at the end of para-
graph (26), by striking the period at the end of
paragraph (27) and inserting ‘‘; and’’, and by add-
ing at the end the following new paragraph:
‘‘(28) to the extent provided in section 25B(e),
in the case of amounts with respect to which a credit
has been allowed under section 25B.’’.
(2) The table of sections for subpart A of part
IV of subchapter A of chapter 1 of such Code is