determining the amount of the credit allowed to 
a taxpayer with respect to any dwelling unit 
under this section, the dollar amounts under 
clauses (i) and (ii) of subparagraph (A) with re-
spect to each type of property described in such 
clauses shall be reduced by the credit allowed to 
the taxpayer under this section with respect to 
such type of property for all preceding taxable 
years with respect to such dwelling unit. 
‘‘(2) PROPERTY STANDARDS.—No credit shall be 
allowed under this section for an item of property un-
less—
‘‘(A) the original use of such property com-
mences with the taxpayer, 
‘‘(B) such property can be reasonably 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) in the case of solar water heating 
property, such property is certified for perform-
ance by the non-profit Solar Rating and Certifi-
cation Corporation or a comparable entity en-
dorsed by the government of the State in which 
such property is installed, and 
‘‘(E) in the case of fuel cell property, 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 Energy). 
‘‘(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 expenditure 
for property which uses solar energy to heat water for 
use in a dwelling unit. 
‘‘(2) QUALIFIED PHOTOVOLTAIC PROPERTY EX-
PENDITURE.—The term ‘qualified photovoltaic prop-
erty expenditure’ means an expenditure for property 
which uses solar energy to generate electricity for use 
in a dwelling unit and which is not described in 
paragraph (1). 
‘‘(3) QUALIFIED FUEL CELL PROPERTY EXPENDI-
TURE.—The term ‘qualified fuel cell property expend-
iture’ means an expenditure for any qualified fuel cell 
property (as defined in section 48(b)(1)). 
‘‘(d) SPECIAL RULES.—For purposes of this section—
‘‘(1) 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 property de-
scribed in paragraph (1) or (2) of subsection (c) solely 
because it constitutes a structural component of the 
structure on which it is installed. 
‘‘(2) SWIMMING POOLS, ETC., USED AS STORAGE 
MEDIUM.—Expenditures which are properly allocable 
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 ac-
count for purposes of this section. 
‘‘(3) DOLLAR AMOUNTS IN CASE OF JOINT OCCU-
PANCY.—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 
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 individuals, 
a credit under subsection (a) for the taxable year 
in which such calendar year ends in an amount 
which bears the same ratio to the amount deter-
mined under subparagraph (A) as the amount of 
such expenditures made by such individual dur-
ing such calendar year bears to the aggregate of 
such expenditures made by all of such individ-
uals during such calendar year. 
‘‘(C) Subparagraphs (A) and (B) shall be 
applied separately with respect to expenditures 
described in paragraphs (1), (2), and (3) of sub-
section (c). 
‘‘(4) 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 de-
fined in such section), such individual shall be treated 
as having made the individual’s tenant-stockholder’s 
proportionate share (as defined in section 216(b)(3)) 
of any expenditures of such corporation. 
‘‘(5) 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 ASSOCIA-
TION.—For purposes of this paragraph, the term 
‘condominium management association’ means 
an organization which meets the requirements of 
paragraph (1) of section 528(c) (other than sub-
paragraph (E) thereof) with respect to a condo-
minium project substantially all of the units of 
which are used as residences. 
‘‘(6) 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. 
‘‘(7) 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 con-
structed or reconstructed structure by the tax-
payer begins. 
‘‘(C) AMOUNT.—The amount of any expend-
iture shall be the cost thereof. 
‘‘(8) 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 sub-
title, if a credit is allowed under this section for any ex-
penditure with respect to 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 allowed. 
‘‘(f) TERMINATION.—The credit allowed under this sec-
tion shall not apply to taxable years beginning after Decem-
ber 31, 2007.’’.
(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 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 is amended by inserting 
after the item relating to section 25B the following 
new item:
‘‘Sec. 25C. Residential energy efficient property.’’.
(c) EFFECTIVE DATE.—The amendments made by this 
section shall apply to expenditures made after the date of 
the enactment of this Act. 
SEC. 202. CREDIT FOR BUSINESS INSTALLATION OF QUALI-
FIED FUEL CELLS. 
(a) IN GENERAL.—Section 48(a)(3)(A) (defining en-
ergy property) is amended by striking ‘‘or’’ at the end of 
clause (i), by adding ‘‘or’’ at the end of clause (ii), and 
by inserting after clause (ii) the following new clause: 
‘‘(iii) qualified fuel cell property,’’.
(b) ENERGY PERCENTAGE.—Subparagraph (A) of sec-
tion 48(a)(2) (relating to energy percentage) is amended to 
read as follows: 
‘‘(A) IN GENERAL.—The energy percentage 
is—
‘‘(i) in the case of qualified fuel cell 
property, 15 percent, and 
‘‘(ii) in the case of any other energy 
property, 10 percent.’’. 
(c) QUALIFIED FUEL CELL PROPERTY.—Section 48 
(relating to energy credit) is amended—
(1) by redesignating subsection (b) as paragraph 
(5) of subsection (a), 
(2) by striking ‘‘subsection (a)’’ in paragraph 
(5) of subsection (a), as redesignated by paragraph 
(1), and inserting ‘‘this subsection’’, and 
(3) by adding at the end the following new sub-
section: 
‘‘(b) 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—
‘‘(A) generates at least 0.5 kilowatt of elec-
tricity using an electrochemical process, and
‘‘(B) has an electricity-only generation effi-
ciency greater than 30 percent. 
‘‘(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, com-
prised of a fuel cell stack assembly and associated bal-
ance 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, 2007.’’. 
(d) CONFORMING AMENDMENT.—Section 48(a)(1) is 
amended by inserting ‘‘except as provided in subsection 
(b)(2),’’ before ‘‘the energy’’ the first place it appears. 
(e) EFFECTIVE DATE.—The amendments made by this 
section shall apply to property placed in service after April 
11, 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 Rec-
onciliation Act of 1990).
SEC. 203. REDUCED MOTOR FUEL EXCISE TAX ON CERTAIN 
MIXTURES OF DIESEL FUEL. 
(a) IN GENERAL.—Paragraph (2) of section 4081(a) 
is amended by adding at the end the following: 
‘‘(D) DIESEL-WATER FUEL EMULSION.—In 
the case of diesel-water fuel emulsion at least 
16.9 percent of which is water and with respect 
to which the emulsion additive is registered by a 
United States manufacturer with the Environ-
mental Protection Agency pursuant to section 
211 of the Clean Air Act (as in effect on March 
31, 2003), subparagraph (A)(iii) shall be applied 
by substituting ‘19.7 cents’ for ‘24.3 cents’.’’. 
(b) SPECIAL RULES FOR DIESEL-WATER FUEL EMUL-
SIONS.—
(1) REFUNDS FOR TAX-PAID PURCHASES.—Sec-
tion 6427 is amended by redesignating subsections 
(m) through (p) as subsections (n) through (q), respec-
tively, and by inserting after subsection (l) the fol-
lowing new subsection: 
‘‘(m) DIESEL FUEL USED TO PRODUCE EMULSION.—
‘‘(1) IN GENERAL.—Except as provided in sub-
section (k), if any diesel fuel on which tax was im-
posed by section 4081 at the regular tax rate is used 
by any person in producing an emulsion described in 
section 4081(a)(2)(D) which is sold or used in such
person’s trade or business, the Secretary shall pay 
(without interest) to such person an amount equal to 
the excess of the regular tax rate over the incentive 
tax rate with respect to such fuel. 
‘‘(2) DEFINITIONS.—For purposes of paragraph 
(1)—
‘‘(A) REGULAR TAX RATE.—The term ‘reg-
ular tax rate’ means the aggregate rate of tax 
imposed by section 4081 determined without re-
gard to section 4081(a)(2)(D). 
‘‘(B) INCENTIVE TAX RATE.—The term ‘in-
centive tax rate’ means the aggregate rate of tax 
imposed by section 4081 determined with regard 
to section 4081(a)(2)(D).’’. 
(2) LATER SEPARATION OF FUEL.—Section 4081 
(relating to imposition of tax) is amended by insert-
ing after subsection (b) the following new subsection: 
‘‘(c) LATER SEPARATION OF FUEL FROM DIESEL-
WATER FUEL EMULSION.—If any person separates the tax-
able fuel from a diesel-water fuel emulsion on which tax 
was imposed under subsection (a) at a rate determined 
under subsection (a)(2)(D) (or with respect to which a cred-
it or payment was allowed or made by reason of section 
6427), such person shall be treated as the refiner of such 
taxable fuel. The amount of tax imposed on any removal
of such fuel by such person shall be reduced by the amount 
of tax imposed (and not credited or refunded) on any prior 
removal or entry of such fuel.’’. 
(c) EFFECTIVE DATE.—The amendments made by this 
section shall take effect on January 1, 2006. 
SEC. 204. AMORTIZATION OF DELAY RENTAL PAYMENTS. 
(a) IN GENERAL.—Section 167 (relating to deprecia-
tion) is amended by redesignating subsection (h) as sub-
section (i) and by inserting after subsection (g) the fol-
lowing new subsection: 
‘‘(h) AMORTIZATION OF DELAY RENTAL PAYMENTS 
FOR DOMESTIC OIL AND GAS WELLS.—
‘‘(1) IN GENERAL.—Any delay rental payment 
paid or incurred in connection with the development 
of oil or gas wells within the United States (as de-
fined in section 638) shall be allowed as a deduction 
ratably over the 24-month period beginning on the 
date that such payment was paid or incurred. 
‘‘(2) HALF-YEAR CONVENTION.—For purposes of 
paragraph (1), any payment paid or incurred during 
the taxable year shall be treated as paid or incurred 
on the mid-point of such taxable year. 
‘‘(3) EXCLUSIVE METHOD.—Except as provided 
in this subsection, no depreciation or amortization
deduction shall be allowed with respect to such pay-
ments. 
‘‘(4) TREATMENT UPON ABANDONMENT.—If any 
property to which a delay rental payment relates is 
retired or abandoned during the 24-month period de-
scribed in paragraph (1), no deduction shall be al-
lowed on account of such retirement or abandonment 
and the amortization deduction under this subsection 
shall continue with respect to such payment. 
‘‘(5) DELAY RENTAL PAYMENTS.—For purposes 
of this subsection, the term ‘delay rental payment’ 
means an amount paid for the privilege of deferring 
development of an oil or gas well under an oil or gas 
lease.’’. 
(b) EFFECTIVE DATE.—The amendments made by this 
section shall apply to amounts paid or incurred in taxable 
years beginning after the date of the enactment of this Act. 
SEC. 205. AMORTIZATION OF GEOLOGICAL AND GEO-
PHYSICAL EXPENDITURES. 
(a) IN GENERAL.—Section 167 (relating to deprecia-
tion), as amended by section 204 of this Act, is amended 
by redesignating subsection (i) as subsection (j) and by in-
serting after subsection (h) the following new subsection: 
‘‘(i) AMORTIZATION
OF
GEOLOGICAL
AND
GEO-
PHYSICAL EXPENDITURES.—
‘‘(1) IN
GENERAL.—Any geological and geo-
physical expenses paid or incurred in connection with 
the exploration for, or development of, oil or gas with-
in the United States (as defined in section 638) shall 
be allowed as a deduction ratably over the 24-month 
period beginning on the date that such expense was 
paid or incurred. 
‘‘(2) SPECIAL RULES.—For purposes of this sub-
section, rules similar to the rules of paragraphs (2), 
(3), and (4) of subsection (h) shall apply.’’. 
(b) CONFORMING AMENDMENT.—Section 263A(c)(3) is 
amended by inserting ‘‘167(h), 167(i),’’ after ‘‘under sec-
tion’’. 
(c) EFFECTIVE DATE.—The amendments made by this 
section shall apply to amounts paid or incurred in taxable 
years beginning after the date of the enactment of this Act. 
SEC. 206. ADVANCED LEAN BURN TECHNOLOGY MOTOR VE-
HICLE CREDIT. 
(a) IN GENERAL.—Subpart B of part IV of subchapter 
A of chapter 1 (relating to other credits) is amended by 
adding at the end the following: 
‘‘SEC. 30B. ADVANCED LEAN BURN TECHNOLOGY MOTOR 
VEHICLE CREDIT. 
‘‘(a) ALLOWANCE OF CREDIT.—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 the credit 
amounts determined under subsection (b) with respect to 
each qualified advanced lean burn technology motor vehicle 
placed in service by the taxpayer during the taxable year. 
‘‘(b) CREDIT AMOUNT.—For purposes of subsection 
(a)—
‘‘(1) FUEL
EFFICIENCY.—The credit amount 
with respect to any vehicle shall be—
‘‘(A) $500, if the city fuel economy of such 
vehicle is at least 125 percent but less than 150 
percent of the 2000 model year city fuel economy 
for a vehicle in the same inertia weight class, 
‘‘(B) $1,000, if the city fuel economy of such 
vehicle is at least 150 percent but less than 175 
percent of the 2000 model year city fuel economy 
for a vehicle in the same inertia weight class, 
‘‘(C) $1,500, if the city fuel economy of such 
vehicle is at least 175 percent but less than 200 
percent of the 2000 model year city fuel economy 
for a vehicle in the same inertia weight class, 
‘‘(D) $2,000, if the city fuel economy of such 
vehicle is at least 200 percent but less than 225 
percent of the 2000 model year city fuel economy 
for a vehicle in the same inertia weight class,
‘‘(E) $2,500, if the city fuel economy of such 
vehicle is at least 225 percent but less than 250 
percent of the 2000 model year city fuel economy 
for a vehicle in the same inertia weight class, 
and 
‘‘(F) $3,000, if the city fuel economy of such 
vehicle is at least 250 percent of the 2000 model 
year city fuel economy for a vehicle in the same 
inertia weight class. 
‘‘(2) CONSERVATION.—The credit amount deter-
mined under paragraph (1) with respect to any vehi-
cle shall be increased by—
‘‘(A) $250, if the lifetime fuel savings of 
such vehicle is at least 1,500 gallons of motor 
fuel but less than 2,500 gallons of motor fuel, 
and 
‘‘(B) $500, if the lifetime fuel savings of 
such vehicle is at least 2,500 gallons of motor 
fuel. 
‘‘(c) LIMITATION BASED ON AMOUNT OF TAX.—The 
credit allowed under subsection (a) for the taxable year shall 
not exceed the excess of—
‘‘(1) the sum of the regular tax liability (as de-
fined in section 26(b)) plus the tax imposed by section 
55, over
‘‘(2) the sum of the credits allowable under sub-
part A and sections 27 and 30A for the taxable year. 
‘‘(d) DEFINITIONS.—For purposes of this section—
‘‘(1) QUALIFIED ADVANCED LEAN BURN TECH-
NOLOGY MOTOR VEHICLE.—The term ‘qualified ad-
vanced lean burn technology motor vehicle’ means a 
motor vehicle—
‘‘(A) the original use of which commences 
with the taxpayer, 
‘‘(B) powered by an internal combustion en-
gine that—
‘‘(i) is designed to operate primarily 
using more air than is necessary for com-
plete combustion of the fuel, and 
‘‘(ii) incorporates direct injection, 
‘‘(C) that only uses diesel fuel (as defined in 
section 4083(a)(3)), 
‘‘(D) the city fuel economy of which is at 
least 125 percent of the 2000 model year city fuel 
economy for a vehicle in the same inertia weight 
class, and 
‘‘(E) that has received a certificate that 
such vehicle meets or exceeds the Bin 8 Tier II 
emission level established in regulations pre-
scribed by the Administrator of the Environ-
mental Protection Agency under section 202(i) of 
the Clean Air Act. 
‘‘(2) LIFETIME FUEL SAVINGS.—The term ‘life-
time fuel savings’ means, with respect to a qualified 
advanced lean burn technology motor vehicle, an 
amount equal to the excess (if any) of—
‘‘(A) 120,000 divided by the 2000 model 
year city fuel economy for the vehicle inertia 
weight class, over 
‘‘(B) 120,000 divided by the city fuel econ-
omy for such vehicle. 
‘‘(3) 2000 MODEL YEAR CITY FUEL ECONOMY.—
The 2000 model year city fuel economy with respect 
to a vehicle shall be determined in accordance with 
the following tables: 
‘‘(A) In the case of a passenger automobile:
‘‘If 
vehicle 
inertia 
weight 
class is: 
The 2000 model year city fuel 
economy is: 
1,500 or 1,750 lbs ..........................................................................
43.7 mpg 
2,000 lbs ..........................................................................................
38.3 mpg 
2,250 lbs ..........................................................................................
34.1 mpg 
2,500 lbs ..........................................................................................
30.7 mpg 
2,750 lbs ..........................................................................................
27.9 mpg 
3,000 lbs ..........................................................................................
25.6 mpg 
3,500 lbs ..........................................................................................
22.0 mpg 
4,000 lbs ..........................................................................................
19.3 mpg 
4,500 lbs ..........................................................................................
17.2 mpg 
5,000 lbs ..........................................................................................
15.5 mpg 
5,500 lbs ..........................................................................................
14.1 mpg 
6,000 lbs ..........................................................................................
12.9 mpg 
6,500 lbs ..........................................................................................
11.9 mpg 
7,000 or 8,500 lbs ..........................................................................
11.1 mpg.
‘‘(B) In the case of a light truck:
‘‘If 
vehicle 
inertia 
weight 
class is: 
The 2000 model year city fuel 
economy is: 
1,500 or 1,750 lbs ..........................................................................
37.6 mpg 
2,000 lbs ..........................................................................................
33.7 mpg 
2,250 lbs ..........................................................................................
30.6 mpg 
2,500 lbs ..........................................................................................
28.0 mpg 
2,750 lbs ..........................................................................................
25.9 mpg 
3,000 lbs ..........................................................................................
24.1 mpg 
3,500 lbs ..........................................................................................
21.3 mpg 
4,000 lbs ..........................................................................................
19.0 mpg 
4,500 lbs ..........................................................................................
17.3 mpg 
5,000 lbs ..........................................................................................
15.8 mpg 
5,500 lbs ..........................................................................................
14.6 mpg 
6,000 lbs ..........................................................................................
13.6 mpg 
6,500 lbs ..........................................................................................
12.8 mpg 
7,000 or 8,500 lbs ..........................................................................
12.0 mpg.
‘‘(4) MOTOR VEHICLE.—The term ‘motor vehicle’ 
has the meaning given such term by section 30(c)(2). 
‘‘(5) CITY FUEL ECONOMY.—City fuel economy 
with respect to any vehicle shall be measured in ac-
cordance with testing and calculation procedures es-
tablished by the Administrator of the Environmental 
Protection Agency by regulations in effect on April 
11, 2005. 
‘‘(6) OTHER TERMS.—The terms ‘passenger auto-
mobile’, ‘light truck’, and ‘manufacturer’ shall have 
the meanings given such terms in regulations pre-
scribed by the Administrator of the Environmental 
Protection Agency for purposes of the administration 
of title II of the Clean Air Act (42 U.S.C. 7521 et 
seq.). 
‘‘(e) CARRYFORWARD ALLOWED.—
‘‘(1) IN GENERAL.—If the credit amount allow-
able under subsection (a) for a taxable year exceeds
the amount of the limitation under subsection (c) for 
such taxable year (referred to as the ‘unused credit 
year’ in this paragraph), such excess shall be allowed 
as a credit carryforward for each of the 20 taxable 
years following the unused credit year. 
‘‘(2) RULES.—Rules similar to the rules of sec-
tion 39 shall apply with respect to the credit 
carryforward under paragraph (1). 
‘‘(f) SPECIAL RULES.—For purposes of this section—
‘‘(1) REDUCTION IN BASIS.—The basis of any 
property for which a credit is allowable under sub-
section (a) shall be reduced by the amount of such 
credit (determined without regard to subsection (c)). 
‘‘(2) NO DOUBLE BENEFIT.—The amount of any 
deduction or credit allowable under this chapter 
(other than the credit allowable under subsection (a)), 
with respect to any vehicle shall be reduced by the 
amount of credit allowed under subsection (a) (deter-
mined without regard to subsection (c)) for such vehi-
cle for the taxable year. 
‘‘(3) PROPERTY USED BY TAX-EXEMPT ENTITY.—
In the case of a vehicle whose use is described in 
paragraph (3) or (4) of section 50(b) and which is 
not subject to a lease, the person who sold such vehicle 
to the person or entity using such vehicle shall be
treated as the taxpayer that placed such vehicle in 
service, but only if such person clearly discloses to 
such person or entity in a document the amount of 
any credit allowable under subsection (a) with respect 
to such vehicle (determined without regard to sub-
section (c)). 
‘‘(4) PROPERTY USED OUTSIDE UNITED STATES, 
ETC., NOT QUALIFIED.—No credit shall be allowable 
under subsection (a) with respect to any property re-
ferred to in section 50(b)(1) or with respect to the 
portion of the cost of any property taken into account 
under section 179. 
‘‘(5) ELECTION NOT TO TAKE CREDIT.—No credit 
shall be allowed under subsection (a) for any vehicle 
if the taxpayer elects not to have this section apply 
to such vehicle. 
‘‘(6) INTERACTION
WITH
AIR
QUALITY
AND 
MOTOR VEHICLE SAFETY STANDARDS.—Unless other-
wise provided in this section, a motor vehicle shall 
not be considered eligible for a credit under this sec-
tion unless such vehicle is in compliance with—
‘‘(A) the applicable provisions of the Clean 
Air Act for the applicable make and model year 
of the vehicle (or applicable air quality provi-
sions of State law in the case of a State which
has adopted such provision under a waiver 
under section 209(b) of the Clean Air Act), and 
‘‘(B) the motor vehicle safety provisions of 
sections 30101 through 30169 of title 49, United 
States Code. 
‘‘(g) REGULATIONS.—
‘‘(1) IN GENERAL.—The Secretary shall promul-
gate such regulations as necessary to carry out this 
section, including regulations to prevent the avoid-
ance of the purposes of this section through disposal 
of any motor vehicle or leasing of any motor vehicle 
for a lease period of less than the economic life of such 
vehicle. 
‘‘(2) DETERMINATION OF MOTOR VEHICLE ELIGI-
BILITY.—The Secretary, in coordination with the Sec-
retary of Transportation and the Administrator of the 
Environmental Protection Agency, shall prescribe 
such regulations as necessary to determine whether a 
motor vehicle meets the requirements to be eligible for 
a credit under this section. 
‘‘(h) TERMINATION.—This section shall not apply to 
any property placed in service after December 31, 2007.’’. 
(b) CONFORMING AMENDMENTS.—
(1) Section 1016(a), as amended by section 201 
of 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 add-
ing at the end the following: 
‘‘(33) 
to 
the 
extent 
provided 
in 
section 
30B(f)(1).’’. 
(2) Section 6501(m) is amended by inserting 
‘‘30B(f)(6),’’ after ‘‘30(d)(4),’’. 
(3) The table of sections for subpart B of part IV 
of subchapter A of chapter 1 is amended by inserting 
after the item relating to section 30A the following:
‘‘Sec. 30B. Advanced lean burn technology motor vehicle credit.’’.
(c) 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. 207. CREDIT FOR ENERGY EFFICIENCY IMPROVE-
MENTS TO EXISTING HOMES. 
(a) IN GENERAL.—Subpart A of part IV of subchapter 
A of chapter 1 (relating to nonrefundable personal credits), 
as amended by section 201, is amended by inserting after 
section 25C the following new section: 
‘‘SEC. 25D. ENERGY EFFICIENCY IMPROVEMENTS TO EXIST-
ING HOMES. 
‘‘(a) ALLOWANCE OF CREDIT.—In the case of an indi-
vidual, there shall be allowed as a credit against the tax 
imposed by this chapter for the taxable year an amount
equal to 20 percent of the amount paid or incurred by the 
taxpayer for qualified energy efficiency improvements in-
stalled during such taxable year. 
‘‘(b) LIMITATIONS.—
‘‘(1) MAXIMUM CREDIT.—The credit allowed by 
this section with respect to a dwelling unit shall not 
exceed $2,000. 
‘‘(2) PRIOR CREDIT AMOUNTS FOR TAXPAYER ON 
SAME DWELLING TAKEN INTO ACCOUNT.—If a credit 
was allowed to the taxpayer under subsection (a) with 
respect to a dwelling unit in 1 or more prior taxable 
years, the amount of the credit otherwise allowable for 
the taxable year with respect to that dwelling unit 
shall be reduced by the sum of the credits allowed 
under subsection (a) to the taxpayer with respect to 
the dwelling unit for all prior taxable years. 
‘‘(c) QUALIFIED
ENERGY
EFFICIENCY
IMPROVE-
MENTS.—For purposes of this section, the term ‘qualified 
energy efficiency improvements’ means any energy efficient 
building envelope component which meets the prescriptive 
criteria for such component established by the 2000 Inter-
national Energy Conservation Code, as such Code (includ-
ing supplements) is in effect on the date of the enactment 
of the Enhanced Energy Infrastructure and Technology Tax 
Act of 2005 (or, in the case of a metal roof with appropriate
pigmented coatings which meet the Energy Star program 
requirements), if—
‘‘(1) such component is installed in or on a 
dwelling unit located in the United States and owned 
and used by the taxpayer as the taxpayer’s principal 
residence (within the meaning of section 121), 
‘‘(2) the original use of such component com-
mences with the taxpayer, and 
‘‘(3) such component reasonably can be expected 
to remain in use for at least 5 years. 
If the aggregate cost of such components with respect to any 
dwelling unit exceeds $1,000, such components shall be 
treated as qualified energy efficiency improvements only if 
such components are also certified in accordance with sub-
section (d) as meeting such prescriptive criteria. 
‘‘(d) CERTIFICATION.—The certification described in 
subsection (c) shall be—
‘‘(1) determined on the basis of the technical 
specifications or applicable ratings (including prod-
uct labeling requirements) for the measurement of en-
ergy efficiency (based upon energy use or building en-
velope component performance) for the energy efficient 
building envelope component, 
‘‘(2) provided by a local building regulatory au-
thority, a utility, a manufactured home production
inspection primary inspection agency (IPIA), or an 
accredited home energy rating system provider who is 
accredited by or otherwise authorized to use approved 
energy performance measurement methods by the Res-
idential Energy Services Network (RESNET), and 
‘‘(3) made in writing in a manner which speci-
fies in readily verifiable fashion the energy efficient 
building envelope components installed and their re-
spective energy efficiency levels. 
‘‘(e) DEFINITIONS AND SPECIAL RULES.—For pur-
poses of this section—
‘‘(1) BUILDING
ENVELOPE
COMPONENT.—The 
term ‘building envelope component’ means—
‘‘(A) any insulation material or system 
which is specifically and primarily designed to 
reduce the heat loss or gain of a dwelling unit 
when installed in or on such dwelling unit, 
‘‘(B) exterior windows (including skylights), 
‘‘(C) exterior doors, and 
‘‘(D) any metal roof installed on a dwelling 
unit, but only if such roof has appropriate pig-
mented coatings which are specifically and pri-
marily designed to reduce the heat gain of such 
dwelling unit.
‘‘(2) MANUFACTURED
HOMES
INCLUDED.—The 
term ‘dwelling unit’ includes a manufactured home 
which conforms to Federal Manufactured Home Con-
struction and Safety Standards (section 3280 of title 
24, Code of Federal Regulations). 
‘‘(3) APPLICATION OF RULES.—Rules similar to 
the rules under paragraphs (3), (4), and (5) of section 
25C(d) shall apply. 
‘‘(f) BASIS ADJUSTMENT.—For purposes of this sub-
title, if a credit is allowed under this section for any ex-
penditure with respect to 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 allowed. 
‘‘(g) APPLICATION OF SECTION.—This section shall 
apply to qualified energy efficiency improvements installed 
after the date of the enactment of the Enhanced Energy In-
frastructure and Technology Tax Act of 2005, and before 
January 1, 2008.’’. 
(b) CONFORMING AMENDMENTS.—
(1) Subsection (a) of section 1016, as amended 
by section 206 of this Act, is amended by striking 
‘‘and’’ at the end of paragraph (32), by striking the 
period at the end of paragraph (33) and inserting ‘‘,
and’’, and by adding at the end the following new 
paragraph: 
‘‘(34) to the extent provided in section 25D(f), in 
the case of amounts with respect to which a credit has 
been allowed under section 25D.’’. 
(2) The table of sections for subpart A of part IV 
of subchapter A of chapter 1, as amended by section 
201, is amended by inserting after the item relating 
to section 25C the following new item:
‘‘Sec. 25D. Energy efficiency improvements to existing homes.’’.
(c) EFFECTIVE DATE.—The amendments made by this 
section shall apply to improvements installed after the date 
of the enactment of this Act in taxable years ending after 
such date. 
TITLE III—ALTERNATIVE 
MINIMUM TAX RELIEF 
SEC. 301. NEW NONREFUNDABLE PERSONAL CREDITS AL-
LOWED AGAINST REGULAR AND MINIMUM 
TAXES. 
(a) IN GENERAL.—
(1) SECTION 25C.—Section 25C(b), as added by 
section 201 of this Act, is amended by adding at the 
end the following new paragraph: 
‘‘(3) LIMITATION BASED ON AMOUNT OF TAX.—
The credit allowed under subsection (a) for the tax-
able year shall not exceed the excess of—
‘‘(A) the sum of the regular tax liability (as 
defined in section 26(b)) plus the tax imposed by 
section 55, over 
‘‘(B) the sum of the credits allowable under 
this subpart (other than this section) and section 
27 for the taxable year.’’. 
(2) SECTION 25D.—Section 25D(b), as added by 
section 207 of this Act, is amended by adding at the 
end the following new paragraph: 
‘‘(3) LIMITATION BASED ON AMOUNT OF TAX.—
The credit allowed under subsection (a) for the tax-
able year shall not exceed the excess of—
‘‘(A) the sum of the regular tax liability (as 
defined in section 26(b)) plus the tax imposed by 
section 55, over 
‘‘(B) the sum of the credits allowable under 
this subpart (other than this section) and section 
27 for the taxable year.’’. 
(b) CONFORMING AMENDMENTS.—
(1) Section 23(b)(4)(B) is amended by inserting 
‘‘and sections 25C and 25D’’ after ‘‘this section’’. 
(2) Section 24(b)(3)(B) is amended by striking 
‘‘and 25B’’ and inserting ‘‘, 25B, 25C, and 25D’’. 
(3) Section 25(e)(1)(C) is amended by inserting 
‘‘25C, and 25D’’ after ‘‘25B,’’.
(4) Section 25B(g)(2) is amended by striking 
‘‘section 23’’ and inserting ‘‘sections 23, 25C, and 
25D’’. 
(5) Section 26(a)(1) is amended by striking 
‘‘and 25B’’ and inserting ‘‘25B, 25C, and 25D’’. 
(6) Section 904(h) is amended by striking ‘‘and 
25B’’ and inserting ‘‘25B, 25C, and 25D’’. 
(7) Section 1400C(d) is amended by striking 
‘‘and 25B’’ and inserting ‘‘25B, 25C, and 25D’’. 
(c) EFFECTIVE DATE.—The amendments made by this 
section shall apply to taxable years beginning after Decem-
ber 31, 2005. 
SEC. 302. CERTAIN BUSINESS ENERGY CREDITS ALLOWED 
AGAINST REGULAR AND MINIMUM TAXES. 
(a) IN
GENERAL.—Subparagraph (B) of section 
38(c)(4) (relating to specified credits) is amended by redes-
ignating clause (ii) as clause (iv) and by striking clause 
(i) and inserting the following new clauses: 
‘‘(i) the credits determined under sec-
tions 40, 45H, and 45I, 
‘‘(ii) so much of the credit determined 
under section 46 as is attributable to section 
48(a)(3)(A)(iii), 
‘‘(iii) for taxable years beginning after 
December 31, 2005, and before January 1,
2008, the credit determined under section 
43, and’’. 
(b) EFFECTIVE DATES.—
(1) IN GENERAL.—Except as provided by para-
graph (2), the amendment made by subsection (a) 
shall apply to credits determined under the Internal 
Revenue Code of 1986 for taxable years beginning 
after December 31, 2005. 
(2) 
FUEL
CELLS.—Clause 
(ii) 
of 
section 
38(c)(4)(B) of the Internal Revenue Code of 1986, as 
amended by subsection (a) of this section, shall apply 
to credits determined under the Internal Revenue 
Code of 1986 for taxable years ending after April 11, 
2005.
Union Calendar No. 25
109TH CONGRESS 
1ST SESSION 
H. R. 1541
[Report No. 109–45] 
A BILL 
To amend the Internal Revenue Code of 1986 to 
enhance energy infrastructure properties in the 
United States and to encourage the use of cer-
tain energy technologies, and for other purposes. 
APRIL 18, 2005
Reported with an amendment, committed to the Com-
mittee of the Whole House on the State of the Union, 
and ordered to be printed