I 
109TH CONGRESS 
1ST SESSION H. R. 1397 
To amend the Internal Revenue Code of 1986 to allow a credit against 
income tax for certain energy-efficient property. 
IN THE HOUSE OF REPRESENTATIVES 
MARCH 17, 2005 
Mrs. JOHNSON of Connecticut (for herself, Mr. MCNULTY, and Mr. LARSON 
of Connecticut) 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 against income tax for certain energy-efficient 
property. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. CREDIT FOR BUSINESS INSTALLATION OF 
QUALIFIED FUEL CELLS. 
(a) IN GENERAL.—Section 48(a)(3)(A) of the Inter-
nal Revenue Code of 1986 (defining energy property) is 
amended by striking ‘‘or’’ at the end of clause (i), by add-
ing ‘‘or’’ at the end of clause (ii), and by inserting after 
clause (ii) the following new clause:
‘‘(iii) qualified fuel cell property,’’. 
(b) QUALIFIED FUEL CELL PROPERTY.—Section 48 
of such Code (relating to energy credit) is amended by 
adding at the end the following new subsection: 
‘‘(c) QUALIFIED FUEL CELL PROPERTY.—For pur-
poses of subsection (a)(3)(A)(iii)— 
‘‘(1) IN
GENERAL.—The term ‘qualified fuel 
cell property’ means a fuel cell power plant which 
generates at least 0.5 kilowatt of electricity using an 
electrochemical process. 
‘‘(2) LIMITATION.—The energy credit with re-
spect to any qualified fuel cell property shall not ex-
ceed an amount equal to $500 for each 0.5 kilowatt 
of capacity of such property. 
‘‘(3) FUEL
CELL
POWER
PLANT.—The term 
‘fuel cell power plant’ means an integrated system, 
comprised of a fuel cell stack assembly and associ-
ated balance of plant components, which converts a 
fuel into electricity using electrochemical means. 
‘‘(4) TERMINATION.—The term ‘qualified fuel 
cell property’ shall not include any property placed 
in service after December 31, 2009.’’. 
(c) ENERGY PERCENTAGE.—Subparagraph (A) of 
section 48(a)(2) of such Code (relating to energy percent-
age) is amended to read as follows:
‘‘(A) IN GENERAL.—The energy percent-
age is— 
‘‘(i) in the case of qualified fuel cell 
property, 30 percent, and 
‘‘(ii) in the case of any other energy 
property, 10 percent.’’. 
(d) CONFORMING AMENDMENT.—Section 48(a)(1) of 
such Code is amended by inserting ‘‘except as provided 
in subsection (c)(2),’’ before ‘‘the energy’’. 
(e) EFFECTIVE DATE.—The amendments made by 
this section shall apply to periods after December 31, 
2004, 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 Rec-
onciliation Act of 1990). 
SEC. 2. CREDIT FOR NONBUSINESS INSTALLATION OF 
QUALIFIED FUEL CELLS. 
(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 25B the following new 
section:
‘‘SEC. 25C. NONBUSINESS INSTALLATION OF QUALIFIED 
FUEL CELLS. 
‘‘(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 30 percent of the qualified fuel cell 
property expenditures made by the taxpayer during such 
year. 
‘‘(b) LIMITATIONS.— 
‘‘(1) MAXIMUM
CREDIT.—The credit allowed 
under subsection (a) shall not exceed $500 for each 
0.5 kilowatt of capacity of qualified fuel cell prop-
erty. 
‘‘(2) PROPERTY STANDARDS.—No credit shall 
be allowed under this section for an item of property 
unless— 
‘‘(A) the original use of such property com-
mences with the taxpayer, 
‘‘(B) such property reasonably can be ex-
pected to remain in use for at least 5 years, 
‘‘(C) such property is installed on or in 
connection with a dwelling unit located in the 
United States and used as a residence by the 
taxpayer, 
‘‘(D) such property meets the performance 
and quality standards (if any) which have been
prescribed by the Secretary by regulations 
(after consultation with the Secretary of En-
ergy), and 
‘‘(E) such property meets appropriate fire 
and electric code requirements. 
‘‘(c) QUALIFIED FUEL CELL PROPERTY EXPENDI-
TURE.—For purposes of this section, the term ‘qualified 
fuel cell property expenditure’ means an expenditure for 
any qualified fuel cell property (as defined in section 
48(c)(1)). 
‘‘(d) SPECIAL RULES.—For purposes of this sec-
tion— 
‘‘(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 fol-
lowing rules shall apply: 
‘‘(A) The amount of the credit allowable 
under subsection (a) by reason of expenditures 
made during such calendar year by any of such 
individuals with respect to such dwelling unit 
shall be determined by treating all of such indi-
viduals 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 the individual’s tenant-stock-
holder’s proportionate 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 the individual owns, such indi-
vidual shall be treated as having made the indi-
vidual’s 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) ALLOCATION IN CERTAIN CASES.—If less 
than 80 percent of the use of an item is for nonbusi-
ness purposes, only that portion of the expenditures 
for such item which is properly allocable to use for 
nonbusiness purposes shall be taken into account. 
‘‘(5) 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. 
‘‘(6) PROPERTY FINANCED BY SUBSIDIZED EN-
ERGY FINANCING.—For purposes of determining the 
amount of expenditures made by any individual with 
respect to any dwelling unit, there shall not be taken 
into account expenditures which are made from sub-
sidized energy financing (as defined in section 
48(a)(4)(C)). 
‘‘(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. 
‘‘(f) TERMINATION.—The credit allowed under this 
section shall not apply to taxable years beginning after 
December 31, 2009.’’. 
(b) CONFORMING AMENDMENTS.— 
(1) Section 1016(a) of such Code is amended 
by striking ‘‘and’’ at the end of paragraph (30), by 
striking the period at the end of paragraph (31) and
inserting ‘‘, and’’, and by adding at the end the fol-
lowing new paragraph: 
‘‘(32) to the extent provided in section 25C(e), 
in the case of amounts with respect to which a credit 
has been allowed under section 25C.’’. 
(2) The table of sections for subpart A of part 
IV of subchapter A of chapter 1 of such Code is 
amended by inserting after the item relating to sec-
tion 25B the following new item: 
‘‘Sec. 25C. Nonbusiness installation of qualified fuel cells.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years ending after De-
cember 31, 2004. 
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