the amount taken into account as the basis of
such property shall not exceed the amount
which (but for this subparagraph) would be so
taken into account multiplied by the fraction
determined 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
on the day before the date of the enactment of the
Revenue Reconciliation Act of 1990) shall apply for
purposes of this section.’’.
(b) CONFORMING AMENDMENTS.—
(1) Section 48 of such Code is amended to read
as follows:
‘‘SEC. 48. REFORESTATION CREDIT.
‘‘(a) IN GENERAL.—For purposes of section 46, the
reforestation credit for any taxable year is 10 percent of
the portion of the amortizable basis of any qualified timber
property which was acquired during such taxable year and
which is taken into account under section 194 (after the
application of section 194(b)(1)).
‘‘(b) DEFINITIONS.—For purposes of this subpart,
the terms ‘amortizable basis’ and ‘qualified timber prop-
erty’ have the respective meanings given to such terms by
section 194.’’.
(2) Subsection (d) of section 39 of such Code
is amended by adding at the end the following new
paragraph:
‘‘(9) NO CARRYBACK OF ENERGY CREDIT BE-
FORE EFFECTIVE DATE.—No portion of the unused
business credit for any taxable year which is attrib-
utable to the energy credit determined under section
48A may be carried back to a taxable year ending
before the date of the enactment of section 48A.’’.
(3) Paragraph (3) of section 50(c) of such Code
is amended by adding at the end the following flush
sentence:
‘‘In the case of the energy credit, the preceding sen-
tence shall apply only to so much of such credit as
relates to solar energy property and geothermal
property (as such terms are defined in section
48A(e)).’’.
(4) Subclause (III) of section 29(b)(3)(A)(i) of
such 
Code 
is 
amended 
by 
striking 
‘‘section
48(a)(4)(C)’’ and inserting ‘‘section 48A(g)(1)(C)’’.
(5) Subparagraph (E) of section 50(a)(2) of
such Code is amended by striking ‘‘section 48(a)(5)’’
and inserting ‘‘section 48A(g)(2)’’.
(6) Subparagraph (B) of section 168(e)(3) of
such Code is amended—
(A) in clause (vi)(I) by striking ‘‘section
48(a)(3)’’ and inserting ‘‘paragraphs (1) and
(2) of section 48A(e)’’, and
(B) in the last sentence by striking ‘‘sec-
tion 
48(a)(3)’’ 
and 
inserting 
‘‘section
48A(d)(2)’’.
(7) Subparagraph (E) of section 168(e)(3) of
such Code is amended by striking ‘‘and’’ at the end
of clause (ii), by striking the period at the end of
clause (iii) and inserting ‘‘, and’’, and by inserting
after clause (iii) the following new clause:
‘‘(iv) any combined heat and power
system property (as defined in section
48A(e)(4)) for which a credit is allowed
under section 48A and which, but for this
clause, would have a recovery period of less
than 15 years.’’.
(8) The table contained in subparagraph (B) of
section 168(g)(3) of such Code is amended by add-
ing at the end the following:
‘‘(E)(iv) ......................................................................................
22’’.
(c) CLERICAL AMENDMENT.—The table of sections
for subpart E of part IV of subchapter A of chapter 1
of such Code is amended by striking the item relating to
section 48 and inserting the following new items:
‘‘Sec. 48. Reforestation credit.
‘‘Sec. 48A. Energy credit.’’.
(d) EFFECTIVE DATE.—The amendments made by
this section shall apply to periods after December 31,
1998, 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. 3. CREDIT FOR CERTAIN NONBUSINESS ENERGY
PROPERTY.
(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. NONBUSINESS ENERGY PROPERTY.
‘‘(a) ALLOWANCE OF CREDIT.—
‘‘(1) IN GENERAL.—In the case of an individ-
ual, 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—
‘‘(A) the applicable percentage of residen-
tial energy property expenditures made by the
taxpayer during such year, and
‘‘(B) the credit amount (determined under
section 48A(f)) for each vehicle purchased dur-
ing the taxable year which would be a highly ef-
ficient passenger vehicle as defined in section
48A(f)(2) but for subparagraph (B) thereof.
‘‘(2) APPLICABLE PERCENTAGE.—For purposes
of paragraph (1), the term ‘applicable percentage’
means—
‘‘(A) 20 percent in the case of energy-effi-
cient building property,
‘‘(B) 15 percent in the case of solar water
heating property and photovoltaic property, and
‘‘(C) 1 percent in the case of a new, highly
energy-efficient principal residence.
‘‘(b) MAXIMUM CREDIT.—
‘‘(1) IN GENERAL.—The amount of the credit
allowed under subsection (a)(1)(A) with respect to
each dwelling unit for the taxable year shall not ex-
ceed—
‘‘(A) $500 in the case of expenditures at-
tributable to each item of energy-efficient build-
ing property (other than a fuel cell or natural
gas heat pump),
‘‘(B) $500 for each kilowatt of capacity in
the case of a fuel cell,
‘‘(C) $1,000 in the case of expenditures at-
tributable to each natural gas heat pump,
‘‘(D) $1,000 in the case of expenditures
attributable to each item of solar water heating
property,
‘‘(E) $2,000 in the case of expenditures at-
tributable to each item of photovoltaic property,
and
‘‘(F) $2,000 in the case of expenditures at-
tributable to the acquisition of a new, highly en-
ergy-efficient principal residence ($1,000 in the
case of an acquisition after December 31, 2003,
and before January 1, 2006).
‘‘(2) COORDINATION
OF
LIMITATIONS.—If a
credit is allowed to the taxpayer for any taxable year
by reason of an acquisition of a new, highly energy-
efficient principal residence, no other credit shall be
allowed under subsection (a)(1)(A) with respect to
such residence during the 1-taxable year period be-
ginning with such taxable year.
‘‘(c) RESIDENTIAL ENERGY PROPERTY EXPENDI-
TURES.—For purposes of this section—
‘‘(1) IN GENERAL.—The term ‘residential en-
ergy property expenditures’ means—
‘‘(A) expenditures made for the purchase
by the taxpayer of a new, highly energy-efficient
principal residence located in the United States,
and
‘‘(B) expenditures made by the taxpayer
for qualified energy property installed on or in
connection with a dwelling unit—
‘‘(i) which is located in the United
States, and
‘‘(ii) which is used by the taxpayer as
a residence.
Such term includes expenditures for labor costs
properly allocable to the onsite preparation, assem-
bly, or original installation of the property.
‘‘(2) QUALIFIED ENERGY PROPERTY.—
‘‘(A) IN
GENERAL.—The term ‘qualified
energy property’ means—
‘‘(i) energy-efficient building property,
‘‘(ii) solar water heating property, and
‘‘(iii) photovoltaic property.
‘‘(B) SWIMMING
POOL, ETC., USED
AS
STORAGE MEDIUM; SOLAR PANELS.—For pur-
poses of this paragraph, the provisions of sub-
paragraphs (D) and (E) section 48A(e)(1) shall
apply.
‘‘(3) 
ENERGY-EFFICIENT
BUILDING
PROP-
ERTY.—The term ‘energy-efficient building property’
has the meaning given to such term by section
48A(e)(3).
‘‘(4) SOLAR WATER HEATING PROPERTY.—The
term ‘solar water heating property’ means property
which, when installed in connection with a structure,
uses solar energy for the purpose of providing hot
water for use within such structure.
‘‘(5) PHOTOVOLTAIC
PROPERTY.—The term
‘photovoltaic property’ has the meaning given to
such term by section 48A(e)(1)(C).
‘‘(6) NEW, HIGHLY ENERGY-EFFICIENT PRIN-
CIPAL RESIDENCE.—
‘‘(A) IN
GENERAL.—Property is a new,
highly energy-efficient principal residence if—
‘‘(i) the original use of such property
commences with the taxpayer and is, at
the time of such use, the principal resi-
dence of the taxpayer, and
‘‘(ii) such property—
‘‘(I) exceeds by 50 percent or
more the energy efficiency standards
specified in the Model Energy Code,
1993 of the Council of American
Building Officials, and
‘‘(II) is certified before such use
commences as meeting the require-
ments of subclause (I).
‘‘(B) CERTIFICATION.—The certification
required by subparagraph (A)(ii)(II) shall be
made to the Secretary of Energy by an individ-
ual qualified to make such certifications (as de-
termined by the Secretary of Energy by regula-
tions prescribed in consultation with the Sec-
retary). Certifications made for the purposes of
this paragraph shall be filed with the Secretary
of Energy no less frequently than annually and
shall include the TIN of the certifier, the ad-
dress of the building certified, and the identity
of the person for whom such certification was
performed. Certifications filed with the Sec-
retary of Energy shall be available for inspec-
tion by the Secretary.
‘‘(C) PRINCIPAL
RESIDENCE.—The term
‘principal residence’ has the same meaning as
when used in section 121, except that the pe-
riod for which a building is treated as the prin-
cipal residence of the taxpayer shall also include
the 60-day period ending on the 1st day on
which it would (but for this subparagraph) first
be treated as his principal residence.
‘‘(d) SPECIAL RULES.—For purposes of this sec-
tion—
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
amended by inserting after the item relating to sec-
tion 25A the following new item:
‘‘Sec. 25B. Nonbusiness energy property.’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to expenditures after December 31,
1998.
SEC. 4. EQUALIZATION OF TREATMENT OF PARKING AND
TRANSIT FRINGE BENEFITS.
(a) INCREASE IN MONTHLY LIMIT FOR TRANSIT AND
COMMUTER HIGHWAY VEHICLES BENEFITS.—Subpara-
graph (A) of section 132(f)(2) of the Internal Revenue
Code of 1986 (relating to limitation on exclusion), as
amended by the Transportation Equity Act for the 21st
Century, is amended by striking ‘‘$65’’ and inserting
‘‘$175’’.
(b) CONFORMING AMENDMENT.—Subsection (c) of
section 9010 of the Transportation Equity Act for the
21st Century is repealed, and section 132 of the Internal