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‘‘(2) REDUCTION IN DEDUCTION IF REDUCTION 
LESS THAN 40 PERCENT.— 
‘‘(A) IN GENERAL.—If, with respect to the 
lighting system of any building other than a 
warehouse, the reduction in lighting power den-
sity of the lighting system is not at least 40 per-
cent, only the applicable percentage of the 
amount of deduction otherwise allowable under 
this section with respect to such property shall be 
allowed. 
‘‘(B) APPLICABLE PERCENTAGE.—For pur-
poses of subparagraph (A), the applicable per-
centage is the number of percentage points (not 
greater than 100) equal to the sum of— 
‘‘(i) 50, and 
‘‘(ii) the amount which bears the same 
ratio to 50 as the excess of the reduction of 
lighting power density of the lighting sys-
tem over 25 percentage points bears to 15. 
‘‘(C) EXCEPTIONS.—This subsection shall 
not apply to any system— 
‘‘(i) the controls and circuiting of 
which do not comply fully with the manda-
tory 
and 
prescriptive 
requirements 
of 
Standard 90.1–2001 and which do not in-
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clude provision for bilevel switching in all 
occupancies except hotel and motel guest 
rooms, store rooms, restrooms, and public 
lobbies, or 
‘‘(ii) which does not meet the min-
imum requirements for calculated lighting 
levels as set forth in the Illuminating Engi-
neering Society of North America Lighting 
Handbook, Performance and Application, 
Ninth Edition, 2000. 
‘‘(g) COORDINATION WITH OTHER TAX BENEFITS.— 
In any case in which a deduction under section 200 or a 
credit under section 25C has been allowed with respect to 
property in connection with a building for which a deduc-
tion is allowable under subsection (a)— 
‘‘(1) the annual energy and power costs of the 
reference building referred to in subsection (c)(1)(D) 
shall be determined assuming such reference building 
contains the property for which such deduction or 
credit has been allowed, and 
‘‘(2) any cost of such property taken into ac-
count under such sections shall not be taken into ac-
count under this section. 
‘‘(h) REGULATIONS.—The Secretary shall promulgate 
such regulations as necessary—
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‘‘(1) to take into account new technologies re-
garding energy efficiency and renewable energy for 
purposes of determining energy efficiency and savings 
under this section, and 
‘‘(2) to provide for a recapture of the deduction 
allowed under this section if the plan described in 
subsection (c)(1)(D) or (d)(1)(A) is not fully imple-
mented. 
‘‘(i) TERMINATION.—This section shall not apply with 
respect to property placed in service after December 31, 
2009.’’. 
(b) CONFORMING AMENDMENTS.— 
(1) Section 1016(a) 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 following new 
paragraph: 
‘‘(32) to the extent provided in section 179D(e).’’. 
(2) Section 1245(a), as amended by this Act, is 
amended by inserting ‘‘179D,’’ after ‘‘179C,’’ both 
places it appears in paragraphs (2)(C) and (3)(C). 
(3) Section 1250(b)(3) is amended by inserting 
before the period at the end of the first sentence ‘‘or 
by section 179D’’.
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(4) Section 263(a)(1), as amended by this Act, is 
amended by striking ‘‘or’’ at the end of subparagraph 
(I), by striking the period at the end of subparagraph 
(J) and inserting ‘‘, or’’, and by inserting after sub-
paragraph (J) the following new subparagraph: 
‘‘(K) expenditures for which a deduction is 
allowed under section 179D.’’. 
(5) Section 312(k)(3)(B), as amended by this 
Act, is amended by striking ‘‘179, 179A, 179B, or 
179C’’ each place it appears in the heading and text 
and inserting ‘‘179, 179A, 179B, 179C, or 179D’’. 
(c) CLERICAL AMENDMENT.—The table of sections for 
part VI of subchapter B of chapter 1, as amended by this 
Act, is amended by inserting after section 179C the fol-
lowing new item: 
‘‘Sec. 179D. Energy efficient commercial buildings deduction.’’. 
(d) EFFECTIVE DATE.—The amendments made by this 
section shall apply to property placed in service after the 
date of the enactment of this Act in taxable years ending 
after such date. 
SEC. 1522. CREDIT FOR CONSTRUCTION OF NEW ENERGY 
EFFICIENT HOMES. 
(a) IN GENERAL.—Subpart D of part IV of subchapter 
A of chapter 1 (relating to business related credits), as 
amended by this Act, is amended by adding at the end the 
following new section:
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‘‘SEC. 45K. NEW ENERGY EFFICIENT HOME CREDIT. 
‘‘(a) ALLOWANCE OF CREDIT.— 
‘‘(1) IN GENERAL.—For purposes of section 38, 
in the case of an eligible contractor, the new energy 
efficient home credit for the taxable year is the appli-
cable amount for each qualified new energy efficient 
home which is— 
‘‘(A) constructed by the eligible contractor, 
and 
‘‘(B) acquired by a person from such eligi-
ble contractor for use as a residence during the 
taxable year. 
‘‘(2) APPLICABLE
AMOUNT.—For purposes of 
paragraph (1), the applicable amount is an amount 
equal to— 
‘‘(i) in the case of a dwelling unit de-
scribed in paragraph (1) or (3) of sub-
section (c), $1,000, and 
‘‘(ii) in the case of a dwelling unit de-
scribed in paragraph (2) or (4) of sub-
section (c), $2,000. 
‘‘(b) DEFINITIONS.—For purposes of this section— 
‘‘(1) ELIGIBLE CONTRACTOR.—The term ‘eligible 
contractor’ means— 
‘‘(A) the person who constructed the quali-
fied new energy efficient home, or
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‘‘(B) in the case of a qualified new energy 
efficient home which is a manufactured home, 
the manufactured home producer of such home. 
‘‘(2) 
QUALIFIED
NEW
ENERGY
EFFICIENT 
HOME.—The term ‘qualified new energy efficient 
home’ means a dwelling unit— 
‘‘(A) located in the United States, 
‘‘(B) the construction of which is substan-
tially completed after the date of the enactment 
of this section, and 
‘‘(C) which meets the energy saving require-
ments of subsection (c). 
‘‘(3) CONSTRUCTION.—The term ‘construction’ 
includes substantial reconstruction and rehabilitation. 
‘‘(4) ACQUIRE.—The term ‘acquire’ includes pur-
chase. 
‘‘(c) ENERGY SAVING REQUIREMENTS.—A dwelling 
unit meets the energy saving requirements of this subsection 
if such unit is— 
‘‘(1) certified— 
‘‘(A) to have a level of annual heating and 
cooling energy consumption which is at least 30 
percent below the annual level of heating and 
cooling energy consumption of a comparable 
dwelling unit—
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‘‘(i) which is constructed in accordance 
with the standards of chapter 4 of the 2003 
International Energy Conservation Code, as 
such Code (including supplements) is in ef-
fect on the date of the enactment of this sec-
tion, and 
‘‘(ii) for which the heating and cooling 
equipment efficiencies correspond to the 
minimum allowed under the regulations es-
tablished by the Department of Energy pur-
suant to the National Appliance Energy 
Conservation Act of 1987 and in effect at 
the time of construction, and 
‘‘(B) to have building envelope component 
improvements account for at least 1⁄3 of such 30 
percent, 
‘‘(2) certified— 
‘‘(A) to have a level of annual heating and 
cooling energy consumption which is at least 50 
percent below such annual level, and 
‘‘(B) to have building envelope component 
improvements account for at least 1⁄5 of such 50 
percent, 
‘‘(3) a manufactured home which conforms to 
Federal Manufactured Home Construction and Safety
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Standards (section 3280 of title 24, Code of Federal 
Regulations) and which— 
‘‘(A) meets the requirements of clause (i), or 
‘‘(B) meets the requirements established by 
the Administrator of the Environmental Protec-
tion Agency under the Energy Star Labeled 
Homes program, or 
‘‘(4) a manufactured home which conforms to 
Federal Manufactured Home Construction and Safety 
Standards (section 3280 of title 24, Code of Federal 
Regulations) and which meets the requirements of 
clause (ii). 
‘‘(d) CERTIFICATION.— 
‘‘(1) METHOD
OF
CERTIFICATION.—A certifi-
cation described in paragraphs (1) and (2) of sub-
section (c) shall be made in accordance with guidance 
prescribed by the Secretary, after consultation with 
the Secretary of Energy. Such guidance shall specify 
procedures and methods for calculating energy and 
cost savings. 
‘‘(2) FORM.—Any certification described in sub-
section (c) shall be made in writing in a manner 
which specifies in readily verifiable fashion the energy 
efficient building envelope components and energy ef-
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ficient heating or cooling equipment installed and 
their respective rated energy efficiency performance. 
‘‘(e) BASIS ADJUSTMENT.—For purposes of this sub-
title, if a credit is allowed under this section in connection 
with any expenditure for any property, the increase in the 
basis of such property which would (but for this subsection) 
result from such expenditure shall be reduced by the amount 
of the credit so determined. 
‘‘(f) COORDINATION WITH OTHER CREDITS AND DE-
DUCTIONS.— 
‘‘(1) SPECIAL RULE WITH RESPECT TO BUILD-
INGS
WITH
ENERGY
EFFICIENT
PROPERTY.—In the 
case of property which is described in section 200 
which is installed in connection with a dwelling unit, 
the level of annual heating and cooling energy con-
sumption of the comparable dwelling unit referred to 
in paragraphs (1) and (2) of subsection (c) shall be 
determined assuming such comparable dwelling unit 
contains the property for which such deduction or 
credit has been allowed. 
‘‘(2) COORDINATION
WITH
INVESTMENT
CRED-
IT.—For purposes of this section, expenditures taken 
into account under section 47 or 48(a) shall not be 
taken into account under this section. 
‘‘(g) APPLICATION OF SECTION.—
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‘‘(1) 50 PERCENT HOMES.—In the case of any 
dwelling unit described in paragraph (2) or (4) of 
subsection (c), subsection (a) shall apply to qualified 
new energy efficient homes acquired during the period 
beginning on the date of the enactment of this section 
and ending on December 31, 2009. 
‘‘(2) 30 PERCENT HOMES.—In the case of any 
dwelling unit described in paragraph (1) or (3) of 
subsection (c), subsection (a) shall apply to qualified 
new energy efficient homes acquired during the period 
beginning on the date of the enactment of this section 
and ending on December 31, 2007.’’. 
(b) CREDIT MADE PART
OF GENERAL BUSINESS 
CREDIT.—Section 38(b) (relating to current year business 
credit), as amended by this Act, is amended by striking 
‘‘plus’’ at the end of paragraph (19), by striking the period 
at the end of paragraph (20) and inserting ‘‘, plus’’, and 
by adding at the end the following new paragraph: 
‘‘(21) the new energy efficient home credit deter-
mined under section 45K(a).’’. 
(c) BASIS ADJUSTMENT.—Subsection (a) of section 
1016, as amended by this Act, is amended by striking 
‘‘and’’ at the end of paragraph (31), by striking the period 
at the end of paragraph (32) and inserting ‘‘, and’’, and 
by adding at the end the following new paragraph:
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‘‘(33) to the extent provided in section 45K(e), in 
the case of amounts with respect to which a credit has 
been allowed under section 45K.’’. 
(d) DEDUCTION
FOR CERTAIN UNUSED BUSINESS 
CREDITS.—Section 196(c) (defining qualified business cred-
its) is amended by striking ‘‘and’’ at the end of paragraph 
(11), by striking the period at the end of paragraph (12) 
and inserting ‘‘, and’’, and by adding after paragraph (12) 
the following new paragraph: 
‘‘(13) the new energy efficient home credit deter-
mined under section 45K(a).’’. 
(e) CLERICAL AMENDMENT.—The table of sections for 
subpart D of part IV of subchapter A of chapter 1, as 
amended by this Act, is amended by adding at the end the 
following new item: 
‘‘Sec. 45K. New energy efficient home credit.’’. 
(f) EFFECTIVE DATE.—The amendments made by this 
section shall apply to taxable years ending after the date 
of the enactment of this Act. 
SEC. 1523. DEDUCTION FOR BUSINESS ENERGY PROPERTY. 
(a) IN GENERAL.—Part VI of subchapter B of chapter 
1 is amended by adding at the end the following new sec-
tion: