†
631
HR 4520 EAS
such person’s exercise of an option to which this part
applies, and
‘‘(2) such share is disposed of by such person
pursuant to a certificate of divestiture (as defined in
section 1043(b)(2)),
such disposition shall be treated as meeting the require-
ments of section 422(a)(1) or 423(a)(1), whichever is appli-
cable.’’
(b) EFFECTIVE DATE.—The amendment made by this
section shall apply to sales after the date of the enactment
of this Act.
SEC. 675. APPLICATION OF BASIS RULES TO EMPLOYER
AND EMPLOYEE CONTRIBUTIONS ON BEHALF
OF NONRESIDENT ALIENS.
(a) IN GENERAL.—Section 72 (relating to annuities
and certain proceeds of endowment and life insurance con-
tracts) is amended by redesignating subsection (w) as sub-
section (x) and by inserting after subsection (v) the fol-
lowing new subsection:
‘‘(w) APPLICATION OF BASIS RULES TO EMPLOYER
AND EMPLOYEE CONTRIBUTIONS MADE ON BEHALF OF
NONRESIDENT ALIENS.—
‘‘(1) IN GENERAL.—Notwithstanding any other
provision of this section, for purposes of determining
the portion of any distribution which is includible in
†
632
HR 4520 EAS
gross income of a distributee who is a citizen or resi-
dent of the United States, the investment in the con-
tract shall not include any applicable nontaxable con-
tributions.
‘‘(2) APPLICABLE NONTAXABLE CONTRIBUTION.—
For purposes of this subsection, the term ‘applicable
nontaxable contribution’ means any employer or em-
ployee contribution—
‘‘(A) which was made with respect to com-
pensation for labor or personal services by an
employee who, at the time the services were per-
formed, was a nonresident alien for purposes of
the laws of the United States in effect at such
time, but only if such compensation is treated as
from sources without the United States, and
‘‘(B) which was not subject to income tax
under the laws of the United States or any for-
eign country.
‘‘(3) REGULATIONS.—The Secretary shall pre-
scribe such regulations as may be necessary to carry
out the provisions of this subsection, including regula-
tions treating contributions as not subject to tax
under the laws of any foreign country where appro-
priate to carry out the purposes of this subsection.’’.
†
633
HR 4520 EAS
(b) EFFECTIVE DATE.—The amendments made by this
section shall apply to distributions on or after the date of
the enactment of this Act.
TITLE VII—EXTENSIONS OF
CERTAIN EXPIRING PROVISIONS
Subtitle A—Extensions
SEC. 701. PARITY IN THE APPLICATION OF CERTAIN LIMITS
TO MENTAL HEALTH BENEFITS.
(a) IN GENERAL.—Section 9812(f) is amended—
(1) by striking ‘‘and’’ at the end of paragraph
(1), and
(2) by striking paragraph (2) and inserting the
following new paragraphs:
‘‘(2) on or after January 1, 2004, and before the
date of the enactment of the Jumpstart Our Business
Strength (JOBS) Act, and
‘‘(3) after December 31, 2005.’’.
(b) ERISA.—Section 712(f) of the Employee Retire-
ment Income Security Act of 1974 (29 U.S.C. 1185a(f)) is
amended by striking ‘‘on or after December 31, 2004’’ and
inserting ‘‘after December 31, 2005’’.
(c) PHSA.—Section 2705(f) of the Public Health Serv-
ice Act (42 U.S.C. 300gg-5(f)) is amended by striking ‘‘on
or after December 31, 2004’’ and inserting ‘‘after December
31, 2005’’.
†
634
HR 4520 EAS
(d) EFFECTIVE DATES.—
(1) SUBSECTION (a).—The amendments made by
subsection (a) shall apply to benefits for services fur-
nished on or after December 31, 2003.
(2) SUBSECTIONS (b) AND (c).—The amendments
made by subsections (b) and (c) shall apply to bene-
fits for services furnished on or after December 31,
2004.
SEC. 702. MODIFICATIONS TO WORK OPPORTUNITY CREDIT
AND WELFARE-TO-WORK CREDIT.
(a) PERMANENT EXTENSION OF CREDIT.—
(1) IN GENERAL.—Section 51(c) is amended by
striking paragraph (4).
(2) LONG-TERM
FAMILY
ASSISTANCE
RECIPI-
ENTS.—
(A) IN GENERAL.—Section 51A is amended
by striking subsection (f).
(B) CONFORMING AMENDMENTS.—
(i) The heading for section 51A is
amended by striking ‘‘TEMPORARY’’.
(ii) The item relating to section 51A in
the table of sections for subpart F of part IV
of subchapter A of chapter 1 is amended by
striking ‘‘Temporary incentives’’ and insert-
ing ‘‘Incentives’’.
†
635
HR 4520 EAS
(b) ELIGIBILITY OF EX-FELONS DETERMINED WITH-
OUT REGARD TO FAMILY INCOME.—Paragraph (4) of sec-
tion 51(d) is amended by adding ‘‘and’’ at the end of sub-
paragraph (A), by striking ‘‘, and’’ at the end of subpara-
graph (B) and inserting a period, and by striking all that
follows subparagraph (B).
(c) INCREASE IN MAXIMUM AGE FOR ELIGIBILITY OF
FOOD
STAMP
RECIPIENTS.—Clause 
(i) 
of 
section
51(d)(8)(A) is amended by striking ‘‘25’’ and inserting
‘‘40’’.
(d) INCREASE IN MAXIMUM AGE FOR DESIGNATED
COMMUNITY RESIDENTS.—
(1) IN
GENERAL.—Paragraph (5) of section
51(d) is amended to read as follows:
‘‘(5) DESIGNATED COMMUNITY RESIDENTS.—
‘‘(A) IN
GENERAL.—The term ‘designated
community resident’ means any individual who
is certified by the designated local agency—
‘‘(i) as having attained age 18 but not
age 40 on the hiring date, and
‘‘(ii) as having his principal place of
abode within an empowerment zone, enter-
prise community, or renewal community.
‘‘(B) INDIVIDUAL MUST CONTINUE TO RE-
SIDE IN ZONE OR COMMUNITY.—In the case of a
†
636
HR 4520 EAS
designated community resident, the term ‘quali-
fied wages’ shall not include wages paid or in-
curred for services performed while the individ-
ual’s principal place of abode is outside an em-
powerment zone, enterprise community, or re-
newal community.’’
(2) CONFORMING
AMENDMENT.—Subparagraph
(D) of section 51(d)(1) is amended to read as follows:
‘‘(D) a designated community resident,’’.
(e) EFFECTIVE DATES.—
(1) EXTENSION OF CREDITS.—The amendments
made by subsection (a) shall apply to individuals who
begin work for the employer after December 31, 2003.
(2) MODIFICATIONS.—The amendments made by
subsections (b), (c), and (d) shall apply to individuals
who begin work for the employer after December 31,
2004.
SEC. 703. CONSOLIDATION OF WORK OPPORTUNITY CREDIT
WITH WELFARE-TO-WORK CREDIT.
(a) IN GENERAL.—Paragraph (1) of section 51(d) is
amended by striking ‘‘or’’ at the end of subparagraph (G),
by striking the period at the end of subparagraph (H) and
inserting ‘‘, or’’, and by adding at the end the following
new subparagraph:
†
637
HR 4520 EAS
‘‘(I) a long-term family assistance recipi-
ent.’’
(b) LONG-TERM FAMILY ASSISTANCE RECIPIENT.—
Subsection (d) of section 51 is amended by redesignating
paragraphs (10) through (12) as paragraphs (11) through
(13), respectively, and by inserting after paragraph (9) the
following new paragraph:
‘‘(10) LONG-TERM FAMILY ASSISTANCE RECIPI-
ENT.—The term ‘long-term family assistance recipi-
ent’ means any individual who is certified by the des-
ignated local agency—
‘‘(A) as being a member of a family receiv-
ing assistance under a IV–A program (as defined
in paragraph (2)(B)) for at least the 18-month
period ending on the hiring date,
‘‘(B)(i) as being a member of a family re-
ceiving such assistance for 18 months beginning
after August 5, 1997, and
‘‘(ii) as having a hiring date which is not
more than 2 years after the end of the earliest
such 18-month period, or
‘‘(C)(i) as being a member of a family
which ceased to be eligible for such assistance by
reason of any limitation imposed by Federal or
†
638
HR 4520 EAS
State law on the maximum period such assist-
ance is payable to a family, and
‘‘(ii) as having a hiring date which is not
more than 2 years after the date of such ces-
sation.’’
(c) INCREASED CREDIT FOR EMPLOYMENT OF LONG-
TERM FAMILY ASSISTANCE RECIPIENTS.—Section 51 is
amended by inserting after subsection (d) the following new
subsection:
‘‘(e) CREDIT FOR EMPLOYMENT OF LONG-TERM FAM-
ILY ASSISTANCE RECIPIENTS.—
‘‘(1) IN GENERAL.—With respect to the employ-
ment of a long-term family assistance recipient—
‘‘(A) the amount of the work opportunity
credit determined under this section for the tax-
able year shall include 50 percent of the qualified
second-year wages for such year, and
‘‘(B) in lieu of applying subsection (b)(3),
the amount of the qualified first-year wages, and
the amount of qualified second-year wages, which
may be taken into account with respect to such
a recipient shall not exceed $10,000 per year.
‘‘(2) QUALIFIED
SECOND-YEAR
WAGES.—For
purposes of this subsection, the term ‘qualified second-
year wages’ means qualified wages—
†
639
HR 4520 EAS
‘‘(A) which are paid to a long-term family
assistance recipient, and
‘‘(B) which are attributable to service ren-
dered during the 1-year period beginning on the
day after the last day of the 1-year period with
respect to such recipient determined under sub-
section (b)(2).
‘‘(3) SPECIAL RULES FOR AGRICULTURAL AND
RAILWAY LABOR.—If such recipient is an employee to
whom subparagraph (A) or (B) of subsection (h)(1)
applies, rules similar to the rules of such subpara-
graphs shall apply except that—
‘‘(A) such subparagraph (A) shall be ap-
plied by substituting ‘$10,000’ for ‘$6,000’, and
‘‘(B) such subparagraph (B) shall be ap-
plied by substituting ‘$833.33’ for ‘$500’.’’
(d) REPEAL OF SEPARATE WELFARE-TO-WORK CRED-
IT.—
(1) IN
GENERAL.—Section 51A is hereby re-
pealed.
(2) CLERICAL AMENDMENT.—The table of sec-
tions for subpart F of part IV of subchapter A of
chapter 1 is amended by striking the item relating to
section 51A.
†
640
HR 4520 EAS
(e) EFFECTIVE DATE.—The amendments made by this
section shall apply to individuals who begin work for the
employer after December 31, 2004.
SEC. 704. QUALIFIED ZONE ACADEMY BONDS.
(a) IN GENERAL.—Paragraph (1) of section 1397E(e)
is amended by striking ‘‘and 2003’’ and inserting ‘‘2003,
2004, and 2005’’.
(b) EFFECTIVE DATE.—The amendment made by sub-
section (a) shall apply to obligations issued after December
31, 2003.
SEC. 705. COVER OVER OF TAX ON DISTILLED SPIRITS.
(a) IN GENERAL.—Paragraph (1) of section 7652(f) is
amended by striking ‘‘January 1, 2004’’ and inserting
‘‘January 1, 2006’’.
(b) EFFECTIVE DATE.—The amendment made by sub-
section (a) shall apply to articles brought into the United
States after December 31, 2003.
SEC. 706. DEDUCTION FOR CORPORATE DONATIONS OF SCI-
ENTIFIC PROPERTY AND COMPUTER TECH-
NOLOGY.
(a) SCIENTIFIC PROPERTY USED FOR RESEARCH.—
(1) 
IN
GENERAL.—Clause 
(ii) 
of 
section
170(e)(4)(B) (defining qualified research contribu-
tions) is amended by inserting ‘‘or assembled’’ after
‘‘constructed’’.
†
641
HR 4520 EAS
(2) CONFORMING AMENDMENT.—Clause (iii) of
section 170(e)(4)(B) is amended by inserting ‘‘or as-
sembling’’ after ‘‘construction’’.
(b) COMPUTER TECHNOLOGY AND EQUIPMENT FOR
EDUCATIONAL PURPOSES.—
(1) 
IN
GENERAL.—Clause 
(ii) 
of 
section
170(e)(6)(B) is amended by inserting ‘‘or assembled’’
after ‘‘constructed’’ and ‘‘or assembling’’ after ‘‘con-
struction’’.
(2) 
SPECIAL
RULE
EXTENDED.—Section
170(e)(6)(G) is amended by striking ‘‘2003’’ and in-
serting ‘‘2005’’.
(3) CONFORMING AMENDMENTS.—Subparagraph
(D) of section 170(e)(6) is amended by inserting ‘‘or
assembled’’ after ‘‘constructed’’ and ‘‘or assembling’’
after ‘‘construction’’.
(c) EFFECTIVE DATE.—The amendments made by this
section shall apply to contributions made in taxable years
beginning after December 31, 2003.
SEC. 707. DEDUCTION FOR CERTAIN EXPENSES OF SCHOOL
TEACHERS.
(a) IN
GENERAL.—Subparagraph (D) of section
62(a)(2) is amended by striking ‘‘or 2003’’ and inserting
‘‘, 2003, 2004, or 2005’’.
†
642
HR 4520 EAS
(b) EFFECTIVE DATE.—The amendment made by sub-
section (a) shall apply to expenses paid or incurred in tax-
able years beginning after December 31, 2003.
SEC. 708. EXPENSING OF ENVIRONMENTAL REMEDIATION
COSTS.
(a) EXTENSION OF TERMINATION DATE.—Subsection
(h) of section 198 is amended by striking ‘‘December 31,
2003’’ and inserting ‘‘December 31, 2005’’.
(b) EFFECTIVE DATE.—The amendment made by sub-
section (a) shall apply to expenditures paid or incurred
after December 31, 2003.
SEC. 709. EXPANSION OF CERTAIN NEW YORK LIBERTY
ZONE BENEFITS.
(a) EXTENSION OF TAX-EXEMPT BOND FINANCING.—
Subparagraph (D) of section 1400L(d)(2) is amended by
striking ‘‘2005’’ and inserting ‘‘2006’’.
(b) CLARIFICATION OF BONDS ELIGIBLE FOR ADVANCE
REFUNDING.—Section 1400L(e)(2)(B) (relating to bonds
described) is amended by striking ‘‘, or’’ and inserting ‘‘or
the Municipal Assistance Corporation, or’’.
(c) ELECTION OUT TECHNICAL AMENDMENT.—Sub-
section (c) of section 1400L is amended by adding at the
end the following new paragraph:
†
643
HR 4520 EAS
‘‘(5) ELECTION OUT.—For purposes of this sub-
section, rules similar to the rules of section
168(k)(2)(C)(iii) shall apply.’’.
(d) EFFECTIVE DATE.—The amendments made by sub-
sections (b) and (c) shall take effect as if included in the
amendments made by section 301 of the Job Creation and
Worker Assistance Act of 2002.
SEC. 710. REPEAL OF REDUCTION OF DEDUCTIONS FOR MU-
TUAL LIFE INSURANCE COMPANIES.
(a) IN GENERAL.—Section 809 of the Internal Revenue
Code of 1986 (relating to reductions in certain deduction
of mutual life insurance companies) is hereby repealed.
(b) CONFORMING AMENDMENTS.—
(1) Subsections (a)(2)(B) and (b)(1)(B) of sec-
tion 807 of such Code are each amended by striking
‘‘the sum of (i)’’ and by striking ‘‘plus (ii) any excess
described in section 809(a)(2) for the taxable year,’’.
(2)(A) The last sentence of section 807(d)(1) of
such 
Code 
is 
amended 
by 
striking 
‘‘section
809(b)(4)(B)’’ and inserting ‘‘paragraph (6)’’.
(B) Subsection (d) of section 807 of such Code is
amended by adding at the end the following new
paragraph:
‘‘(6) STATUTORY RESERVES.—The term ‘statu-
tory reserves’ means the aggregate amount set forth in
†
644
HR 4520 EAS
the annual statement with respect to items described
in section 807(c). Such term shall not include any re-
serve attributable to a deferred and uncollected pre-
mium if the establishment of such reserve is not per-
mitted under section 811(c).’’
(3) Subsection (c) of section 808 of such Code is
amended to read as follows:
‘‘(c) AMOUNT OF DEDUCTION.—The deduction for pol-
icyholder dividends for any taxable year shall be an amount
equal to the policyholder dividends paid or accrued during
the taxable year.’’
(4) Subparagraph (A) of section 812(b)(3) of
such Code is amended by striking ‘‘sections 808 and
809’’ and inserting ‘‘section 808’’.
(5) Subsection (c) of section 817 of such Code is
amended by striking ‘‘(other than section 809)’’.
(6) Subsection (c) of section 842 of such Code is
amended by striking paragraph (3) and by redesig-
nating paragraph (4) as paragraph (3).
(7) The table of sections for subpart C of part I
of subchapter L of chapter 1 of such Code is amended
by striking the item relating to section 809.
(c) EFFECTIVE DATE.—The amendments made by this
section shall apply to taxable years beginning after Decem-
ber 31, 2003.
†
645
HR 4520 EAS
SEC. 711. TAX INCENTIVES FOR INVESTMENT IN THE DIS-
TRICT OF COLUMBIA.
(a) DESIGNATION OF ZONE.—Subsection (f) of section
1400 is amended by striking ‘‘December 31, 2003’’ both
places it appears and inserting ‘‘December 31, 2005’’.
(b) TAX-EXEMPT ECONOMIC DEVELOPMENT BONDS.—
Subsection (b) of section 1400A is amended by striking ‘‘De-
cember 31, 2003’’ and inserting ‘‘December 31, 2005’’.
(c) ZERO PERCENT CAPITAL GAINS RATE.—
(1) IN
GENERAL.—Subsection (b) of section
1400B is amended by striking ‘‘January 1, 2004’’
each place it appears and inserting ‘‘January 1,
2006’’.
(2) CONFORMING AMENDMENTS.—
(A) Section 1400B(e)(2) is amended—
(i) by striking ‘‘December 31, 2008’’
and inserting ‘‘December 31, 2010’’, and
(ii) by striking ‘‘2008’’ in the heading
and inserting ‘‘2010’’.
(B) Section 1400B(g)(2) is amended by
striking ‘‘December 31, 2008’’ and inserting ‘‘De-
cember 31, 2010’’.
(C) Section 1400F(d) is amended by strik-
ing ‘‘December 31, 2008’’ and inserting ‘‘Decem-
ber 31, 2010’’.
†
646
HR 4520 EAS
(d) FIRST-TIME HOMEBUYER CREDIT.—Subsection (i)
of section 1400C is amended by striking ‘‘January 1, 2004’’
and inserting ‘‘January 1, 2006’’.
(e) EFFECTIVE DATES.—
(1) IN GENERAL.—Except as provided in para-
graph (2), the amendments made by this section shall
take effect on January 1, 2004.
(2) 
TAX-EXEMPT
ECONOMIC
DEVELOPMENT
BONDS.—The amendment made by subsection (b)
shall apply to obligations issued after the date of the
enactment of this Act.
SEC. 712. DISCLOSURE OF TAX INFORMATION TO FACILI-
TATE COMBINED EMPLOYMENT TAX REPORT-
ING.
(a) IN GENERAL.—Paragraph (5) of section 6103(d)
(relating to disclosure to State tax officials and State and
local law enforcement agencies) is amended to read as fol-
lows:
‘‘(5) DISCLOSURE FOR COMBINED EMPLOYMENT
TAX REPORTING.—The Secretary may disclose tax-
payer identity information and signatures to any
agency, body, or commission of any State for the pur-
pose of carrying out with such agency, body, or com-
mission a combined Federal and State employment
tax reporting program approved by the Secretary.
†
647
HR 4520 EAS
Subsections (a)(2) and (p)(4) and sections 7213 and
7213A shall not apply with respect to disclosures or
inspections made pursuant to this paragraph.’’.
(b) EFFECTIVE DATE.—The amendment made by this
section shall take effect on the date of the enactment of this
Act.
SEC. 713. ALLOWANCE OF NONREFUNDABLE PERSONAL
CREDITS AGAINST REGULAR AND MINIMUM
TAX LIABILITY.
(a) IN GENERAL.—Paragraph (2) of section 26(a) is
amended—
(1) by striking ‘‘RULE FOR 2000, 2001, 2002, AND
2003.—’’ and inserting ‘‘RULE FOR TAXABLE YEARS
2000 THROUGH 2004.—’’, and
(2) by striking ‘‘or 2003’’ and inserting ‘‘2003,
or 2004’’.
(b) CONFORMING PROVISIONS.—
(1) Section 904(i), as redesignated by this Act,
is amended by striking ‘‘or 2003’’ and inserting
‘‘2003, or 2004’’.
(2) The amendments made by sections 201(b),
202(f), and 618(b) of the Economic Growth and Tax
Relief Reconciliation Act of 2001 shall not apply to
taxable years beginning during 2004.
†
648
HR 4520 EAS
(c) EFFECTIVE DATE.—The amendments made by this
section shall apply to taxable years beginning after Decem-
ber 31, 2003.
SEC. 714. CREDIT FOR ELECTRICITY PRODUCED FROM CER-
TAIN RENEWABLE RESOURCES.
(a) IN GENERAL.—Subparagraphs (A), (B), and (C)
of section 45(c)(3) are each amended by striking ‘‘January
1, 2004’’ and inserting ‘‘January 1, 2005’’.
(b) EFFECTIVE DATE.—The amendments made by sub-
section (a) shall apply to facilities placed in service after
December 31, 2003.
SEC. 715. TAXABLE INCOME LIMIT ON PERCENTAGE DEPLE-
TION FOR OIL AND NATURAL GAS PRODUCED
FROM MARGINAL PROPERTIES.
(a) IN
GENERAL.—Subparagraph (H) of section
613A(c)(6) is amended by striking ‘‘January 1, 2004’’ and
inserting ‘‘January 1, 2005’’.
(b) EFFECTIVE DATE.—The amendment made by sub-
section (a) shall apply to taxable years beginning after De-
cember 31, 2003.
SEC. 716. INDIAN EMPLOYMENT TAX CREDIT.
Section 45A(f) (relating to termination) is amended
by striking ‘‘December 31, 2004’’ and inserting ‘‘December
31, 2005’’.
†
649
HR 4520 EAS
SEC. 717. ACCELERATED DEPRECIATION FOR BUSINESS
PROPERTY ON INDIAN RESERVATION.
Section 168(j)(8) (relating to termination) is amended
by striking ‘‘December 31, 2004’’ and inserting ‘‘December
31, 2005’’.
SEC. 718. DISCLOSURE OF RETURN INFORMATION RELAT-
ING TO STUDENT LOANS.
Section 6103(l)(13)(D) (relating to termination) is
amended by striking ‘‘December 31, 2004’’ and inserting
‘‘December 31, 2005’’.
SEC. 719. EXTENSION OF TRANSFERS OF EXCESS PENSION
ASSETS TO RETIREE HEALTH ACCOUNTS.
(a) AMENDMENTS OF ERISA.—
(1) Section 101(e)(3) of the Employee Retirement
Income Security Act of 1974 (29 U.S.C. 1021(e)(3))
is amended by striking ‘‘Pension Funding Equity Act
of 2004’’ and inserting ‘‘Jumpstart Our Business
Strength (JOBS) Act’’.
(2) Section 403(c)(1) of such Act (29 U.S.C.
1103(c)(1)) is amended by striking ‘‘Pension Funding
Equity Act of 2004’’ and inserting ‘‘Jumpstart Our
Business Strength (JOBS) Act’’.
(3) Paragraph (13) of section 408(b) of such Act
(29 U.S.C. 1108(b)(3)) is amended by striking ‘‘Pen-
sion Funding Equity Act of 2004’’ and inserting
‘‘Jumpstart Our Business Strength (JOBS) Act’’.
†
650
HR 4520 EAS
(b) MINIMUM COST REQUIREMENTS.—
(1) 
IN
GENERAL.—Section 
420(c)(3)(E) 
is
amended by adding at the end the following new
clause:
‘‘(ii) INSIGNIFICANT COST REDUCTIONS
PERMITTED.—
‘‘(I) IN
GENERAL.—An eligible
employer shall not be treated as failing
to meet the requirements of this para-
graph for any taxable year if, in lieu
of any reduction of retiree health cov-
erage permitted under the regulations
prescribed under clause (i), the em-
ployer reduces applicable employer cost
by an amount not in excess of the re-
duction in costs which would have oc-
curred if the employer had made the
maximum permissible reduction in re-
tiree health coverage under such regu-
lations. In applying such regulations
to any subsequent taxable year, any re-
duction in applicable employer cost
under this clause shall be treated as if
it were an equivalent reduction in re-
tiree health coverage.
†
651
HR 4520 EAS
‘‘(II) ELIGIBLE EMPLOYER.—For
purposes of subclause (I), an employer
shall be treated as an eligible employer
for any taxable year if, for the pre-
ceding taxable year, the qualified cur-
rent retiree health liabilities of the em-
ployer were at least 5 percent of the
gross receipts of the employer. For pur-
poses of this subclause, the rules of
paragraphs (2), (3)(B), and (3)(C) of
section 448(c) shall apply in deter-
mining the amount of an employer’s
gross receipts.’’.
(2) 
CONFORMING
AMENDMENT.—Section
420(c)(3)(E) is amended by striking ‘‘The Secretary’’
and inserting:
‘‘(i) IN GENERAL.—The Secretary’’.
(3) EFFECTIVE DATE.—The amendments made
by this subsection shall apply to taxable years ending
after the date of the enactment of this Act.
SEC. 720. ELIMINATION OF PHASEOUT OF CREDIT FOR
QUALIFIED ELECTRIC VEHICLES.
(a) IN GENERAL.—Section 30(b) is amended by strik-
ing paragraph (2) and by redesignating paragraph (3) as
paragraph (2).
†
652
HR 4520 EAS
(b) CONFORMING AMENDMENTS.—
(1) Section 53(d)(1)(B)(iii) is amended by strik-
ing ‘‘section 30(b)(3)(B)’’ and inserting ‘‘section
30(b)(2)(B)’’.
(2) Section 55(c)(2) is amended by striking
‘‘30(b)(3)’’ and inserting ‘‘30(b)(2)’’.
(c) EFFECTIVE DATE.—The amendments made by this
section shall apply to property placed in service after De-
cember 31, 2003.
SEC. 721. ELIMINATION OF PHASEOUT FOR DEDUCTION
FOR CLEAN-FUEL VEHICLE PROPERTY.
(a) IN GENERAL.—Paragraph (1) of section 179A(b)
is amended to read as follows:
‘‘(1) QUALIFIED
CLEAN-FUEL
VEHICLE
PROP-
ERTY.—The cost which may be taken into account
under subsection (a)(1)(A) with respect to any motor
vehicle shall not exceed—
‘‘(A) in the case of a motor vehicle not de-
scribed in subparagraph (B) or (C), $2,000,
‘‘(B) in the case of any truck or van with
a gross vehicle weight rating greater than 10,000
pounds but not greater than 26,000 pounds,
$5,000, or
‘‘(C) $50,000 in the case of—
†
653
HR 4520 EAS
‘‘(i) a truck or van with a gross vehicle
weight rating greater than 26,000 pounds,
or
‘‘(ii) any bus which has a seating ca-
pacity of at least 20 adults (not including
the driver).’’.
(b) EFFECTIVE DATE.—The amendment made by sub-
section (a) shall apply to property placed in service after
December 31, 2003.
Subtitle B—Revenue Provisions
SEC. 731. DONATIONS OF MOTOR VEHICLES, BOATS, AND
AIRPLANES.
(a) IN GENERAL.—Subsection (f) of section 170 (relat-
ing to disallowance of deduction in certain cases and spe-
cial rules) is amended by adding at the end the following
new paragraph:
‘‘(11) CONTRIBUTIONS
OF
USED
MOTOR
VEHI-
CLES, BOATS, AND AIRPLANES.—
‘‘(A) IN GENERAL.—In the case of a con-
tribution of a qualified vehicle in excess of
$500—
‘‘(i) paragraph (8) shall not apply and
no deduction shall be allowed under sub-
section (a) for such contribution unless the
taxpayer substantiates the contribution by a
†
654
HR 4520 EAS
contemporaneous written acknowledgement
of the contribution by the donee organiza-
tion that meets the requirements of subpara-
graph (B) and includes the acknowledge-
ment with the taxpayer’s return of tax
which includes the deduction, and
‘‘(ii) if the organization sells the vehi-
cle without any significant intervening use
or material improvement of such vehicle by
the organization, the amount of the deduc-
tion allowed under subsection (a) shall not
exceed the gross proceeds received from such
sale.
‘‘(B) CONTENT
OF
ACKNOWLEDGEMENT.—
An acknowledgement meets the requirements of
this subparagraph if it includes the following in-
formation:
‘‘(i) The name and taxpayer identi-
fication number of the donor.
‘‘(ii) The vehicle identification number
or similar number.
‘‘(iii) In the case of a qualified vehicle
to which subparagraph (A)(ii) applies and
which is sold by the donee organization—
†
655
HR 4520 EAS
‘‘(I) a certification that the vehi-
cle was sold in an arm’s length trans-
action between unrelated parties,
‘‘(II) the gross proceeds from the
sale, and
‘‘(III) that the deductible amount
may not exceed the amount of such
gross proceeds.
‘‘(iv) In the case of a qualified vehicle
to which subparagraph (A)(ii) does not
apply—
‘‘(I) a certification of the intended
use or material improvement of the ve-
hicle and the intended duration of such
use, and
‘‘(II) a certification that the vehi-
cle would not be transferred in ex-
change for money, other property, or
services before completion of such use
or improvement.
‘‘(C) CONTEMPORANEOUS.—For purposes of
subparagraph (A), an acknowledgement shall be
considered to be contemporaneous if the donee or-
ganization provides it within 30 days of—
‘‘(i) the sale of the qualified vehicle, or
†
656
HR 4520 EAS
‘‘(ii) in the case of an acknowledge-
ment including a certification described in
subparagraph (B)(iv), the contribution of
the qualified vehicle.
‘‘(D) INFORMATION
TO
SECRETARY.—A
donee organization required to provide an ac-
knowledgement under this paragraph shall pro-
vide to the Secretary the information contained
in the acknowledgement. Such information shall
be provided at such time and in such manner as
the Secretary may prescribe.
‘‘(E) QUALIFIED VEHICLE.—For purposes of
this paragraph, the term ‘qualified vehicle’
means any—
‘‘(i) self-propelled vehicle manufactured
primarily for use on public streets, roads,
and highways,
‘‘(ii) boat, or
‘‘(iii) airplane.
Such term shall not include any property which
is described in section 1221(a)(1).
‘‘(F) REGULATIONS OR OTHER GUIDANCE.—
The Secretary shall prescribe such regulations or
other guidance as may be necessary to carry out
the purposes of this paragraph.’’.
†
657
HR 4520 EAS
(b) 
PENALTY
FOR
FRAUDULENT
ACKNOWLEDG-
MENTS.—
(1) IN GENERAL.—Part I of subchapter B of
chapter 68 (relating to assessable penalities), as
amended by section 882(c) of this Act, is amended
adding at the end the following new section:
‘‘SEC. 6720A. FRAUDULENT ACKNOWLEDGMENTS WITH RE-
SPECT TO DONATIONS OF MOTOR VEHICLES,
BOATS, AND AIRPLANES.
‘‘Any donee organization required under section
170(f)(11)(A) to furnish a contemporaneous written ac-
knowledgment to a donor which knowingly furnishes a false
or fraudulent acknowledgment, or which knowingly fails to
furnish such acknowledgment in the manner, at the time,
and showing the information required under section
170(f)(11), or regulations prescribed thereunder, shall for
each such act, or for each such failure, be subject to a pen-
alty equal to—
‘‘(1) in the case of an acknowledgment with re-
spect to a qualified vehicle to which section
170(f)(11)(A)(ii) applies, the greater of the value of
the tax benefit to the donor or the gross proceeds from
the sale of such vehicle, and
‘‘(2) in the case of an acknowledgment with re-
spect to any other qualified vehicle to which section
†
658
HR 4520 EAS
170(f)(11) applies, the greater of the value of the tax
benefit to the donor or $5,000.’’.
(2) CONFORMING AMENDMENT.—The table of sec-
tions for part I of subchapter B of chapter 68, as
amended by section 882(c) of this Act, is amended by
adding at the end the following new item:
‘‘Sec. 6720A. Fraudulent acknowledgments with respect to dona-
tions of motor vehicles, boats, and airplanes.’’.
(c) EFFECTIVE DATE.—The amendments made by this
section shall apply to contributions after June 30, 2004.
SEC. 732. ADDITION OF VACCINES AGAINST INFLUENZA TO
LIST OF TAXABLE VACCINES.
(a) IN GENERAL.—Section 4132(a)(1) (defining tax-
able vaccine), as amended by this Act, is amended adding
at the end the following new subparagraph:
‘‘(N) Any trivalent vaccine against influ-
enza.’’.
(b) EFFECTIVE DATE.—
(1) SALES, ETC.—The amendment made by this
section shall apply to sales and uses on or after the
later of—
(A) the first day of the first month which
begins more than 4 weeks after the date of the en-
actment of this Act, or
(B) the date on which the Secretary of
Health and Human Services lists any vaccine
†
659
HR 4520 EAS
against influenza for purposes of compensation
for any vaccine-related injury or death through
the Vaccine Injury Compensation Trust Fund.
(2) DELIVERIES.—For purposes of paragraph
(1) and section 4131 of the Internal Revenue Code of
1986, in the case of sales on or before the effective date
described in such paragraph for which delivery is
made after such date, the delivery date shall be con-
sidered the sale date.
SEC. 733. TREATMENT OF CONTINGENT PAYMENT CON-
VERTIBLE DEBT INSTRUMENTS.
(a) IN GENERAL.—Section 1275(d) (relating to regula-
tion authority) is amended—
(1) by striking ‘‘The Secretary’’ and inserting
the following:
‘‘(1) IN GENERAL.—The Secretary’’, and
(2) by adding at the end the following new para-
graph:
‘‘(2) TREATMENT OF CONTINGENT PAYMENT CON-
VERTIBLE DEBT.—
‘‘(A) IN GENERAL.—In the case of a debt in-
strument which—
‘‘(i) is convertible into stock of the
issuing corporation, into stock or debt of a
related party (within the meaning of section
†
660
HR 4520 EAS
267(b) or 707(b)(1)), or into cash or other
property in an amount equal to the approx-
imate value of such stock or debt, and
‘‘(ii) provides for contingent payments,
any regulations which require original issue dis-
count to be determined by reference to the com-
parable yield of a noncontingent fixed rate debt
instrument shall be applied as requiring that
such comparable yield be determined by reference
to a noncontingent fixed rate debt instrument
which is convertible into stock.
‘‘(B) SPECIAL RULE.—For purposes of sub-
paragraph (A), the comparable yield shall be de-
termined without taking into account the yield
resulting from the conversion of a debt instru-
ment into stock.’’.
(b) CROSS REFERENCE.—Section 163(e)(6) (relating
to cross references) is amended by adding at the end the
following:
‘‘For the treatment of contingent payment con-
vertible debt, see section 1275(d)(2).’’.
(c) EFFECTIVE DATE.—The amendments made by this
section shall apply to debt instruments issued after the date
of the enactment of this Act.
†
661
HR 4520 EAS
SEC. 734. MODIFICATION OF CONTINUING LEVY ON PAY-
MENTS TO FEDERAL VENDERS.
(a) IN GENERAL.—Section 6331(h) (relating to con-
tinuing levy on certain payments) is amended by adding
at the end the following new paragraph:
‘‘(3) INCREASE
IN
LEVY
FOR
CERTAIN
PAY-
MENTS.—Paragraph (1) shall be applied by sub-
stituting ‘100 percent’ for ‘15 percent’ in the case of
any specified payment due to a vendor of goods or
services sold or leased to the Federal Government.’’.
(b) EFFECTIVE DATE.—The amendment made by this
section shall take effect on the date of the enactment of this
Act.
TITLE VIII—ENERGY TAX
INCENTIVES
SEC. 800. SHORT TITLE.
This title may be cited as the ‘‘Energy Tax Incentives
Act’’.
Subtitle A—Renewable Electricity
Production Tax Credit
SEC. 801. EXTENSION AND EXPANSION OF CREDIT FOR
ELECTRICITY PRODUCED FROM CERTAIN RE-
NEWABLE RESOURCES.
(a) 
EXPANSION
OF
QUALIFIED
ENERGY
RE-
SOURCES.—Subsection (c) of section 45 (relating to elec-
†
662
HR 4520 EAS
tricity produced from certain renewable resources) is
amended to read as follows:
‘‘(c) QUALIFIED ENERGY RESOURCES.—For purposes
of this section—
‘‘(1) IN GENERAL.—The term ‘qualified energy
resources’ means—
‘‘(A) wind,
‘‘(B) closed-loop biomass,
‘‘(C) open-loop biomass,
‘‘(D) geothermal energy,
‘‘(E) solar energy,
‘‘(F) small irrigation power,
‘‘(G) biosolids and sludge, and
‘‘(H) municipal solid waste.
‘‘(2) CLOSED-LOOP BIOMASS.—The term ‘closed-
loop biomass’ means any organic material from a
plant which is planted exclusively for purposes of
being used at a qualified facility to produce elec-
tricity.
‘‘(3) OPEN-LOOP BIOMASS.—
‘‘(A) IN
GENERAL.—The term ‘open-loop
biomass’ means—
‘‘(i) any agricultural livestock waste
nutrients, or
†
663
HR 4520 EAS
‘‘(ii) any solid, nonhazardous, cel-
lulosic waste material which is segregated
from other waste materials and which is de-
rived from—
‘‘(I) any of the following forest-re-
lated resources: mill and harvesting
residues, 
precommercial 
thinnings,
slash, and brush; but not including
spent chemicals from pulp manufac-
turing,
‘‘(II) solid wood waste materials,
including 
waste 
pallets, 
crates,
dunnage, manufacturing and construc-
tion wood wastes (other than pressure-
treated, chemically-treated, or painted
wood wastes), and landscape or right-
of-way tree trimmings, but not includ-
ing municipal solid waste, gas derived
from the biodegradation of solid waste,
or paper which is commonly recycled,
or
‘‘(III) agriculture sources, includ-
ing orchard tree crops, vineyard,
grain, legumes, sugar, and other crop
by-products or residues.
†
664
HR 4520 EAS
‘‘(B) AGRICULTURAL LIVESTOCK WASTE NU-
TRIENTS.—
‘‘(i) IN GENERAL.—The term ‘agricul-
tural livestock waste nutrients’ means agri-
cultural livestock manure and litter, includ-
ing wood shavings, straw, rice hulls, and
other bedding material for the disposition of
manure.
‘‘(ii) AGRICULTURAL LIVESTOCK.—The
term ‘agricultural livestock’ includes bovine,
swine, poultry, and sheep.
‘‘(C) EXCEPTIONS.—The term ‘open-loop
biomass’ does not include—
‘‘(i) closed-loop biomass, or
‘‘(ii) biomass burned in conjunction
with fossil fuel (cofiring) beyond such fossil
fuel required for startup and flame sta-
bilization.
‘‘(4) GEOTHERMAL
ENERGY.—The term ‘geo-
thermal energy’ means energy derived from a geo-
thermal deposit (within the meaning of section
613(e)(2)).
‘‘(5) SMALL
IRRIGATION
POWER.—The term
‘small irrigation power’ means power—
†
665
HR 4520 EAS
‘‘(A) generated without any dam or im-
poundment of water through an irrigation sys-
tem canal or ditch, and
‘‘(B) the installed capacity of which is less
than 5 megawatts.
‘‘(6) BIOSOLIDS AND SLUDGE.—The term ‘bio-
solids and sludge’ means the residue or solids removed
in the treatment of commercial, industrial, or munic-
ipal wastewater.
‘‘(7) MUNICIPAL SOLID WASTE.—The term ‘mu-
nicipal solid waste’ has the meaning given the term
‘solid waste’ under section 2(27) of the Solid Waste
Disposal Act (42 U.S.C. 6903).’’.
(b) EXTENSION AND EXPANSION OF QUALIFIED FA-
CILITIES.—
(1) IN GENERAL.—Section 45 is amended by re-
designating subsection (d) as subsection (e) and by
inserting after subsection (c) the following new sub-
section:
‘‘(d) QUALIFIED FACILITIES.—For purposes of this
section—
‘‘(1) WIND FACILITY.—In the case of a facility
using wind to produce electricity, the term ‘qualified
facility’ means any facility owned by the taxpayer
†
666
HR 4520 EAS
which is originally placed in service after December
31, 1993, and before January 1, 2007.
‘‘(2) CLOSED-LOOP BIOMASS FACILITY.—
‘‘(A) IN GENERAL.—In the case of a facility
using closed-loop biomass to produce electricity,
the term ‘qualified facility’ means any facility—
‘‘(i) owned by the taxpayer which is
originally placed in service after December
31, 1992, and before January 1, 2007, or
‘‘(ii) owned by the taxpayer which be-
fore January 1, 2007, is originally placed
in service and modified to use closed-loop
biomass to co-fire with coal, with other bio-
mass, or with both, but only if the modifica-
tion is approved under the Biomass Power
for Rural Development Programs or is part
of a pilot project of the Commodity Credit
Corporation as described in 65 Fed. Reg.
63052.
‘‘(B) SPECIAL
RULES.—In the case of a
qualified facility described in subparagraph
(A)(ii)—
‘‘(i) the 10-year period referred to in
subsection (a) shall be treated as beginning
no earlier than January 1, 2005,
†
667
HR 4520 EAS
‘‘(ii) the amount of the credit deter-
mined under subsection (a) with respect to
the facility shall be an amount equal to the
amount determined without regard to this
clause multiplied by the ratio of the thermal
content of the closed-loop biomass used in
such facility to the thermal content of all
fuels used in such facility, and
‘‘(iii) if the owner of such facility is
not the producer of the electricity, the per-
son eligible for the credit allowable under
subsection (a) shall be the lessee or the oper-
ator of such facility.
‘‘(3) OPEN-LOOP BIOMASS FACILITY.—
‘‘(A) IN GENERAL.—In the case of a facility
using open-loop biomass to produce electricity
for grid sale in excess of its internal require-
ments, the term ‘qualified facility’ means any fa-
cility owned by the taxpayer which—
‘‘(i) in the case of a facility using agri-
cultural livestock waste nutrients, is origi-
nally placed in service after December 31,
2004, and before January 1, 2007, and
†
668
HR 4520 EAS
‘‘(ii) in the case of any other facility,
is originally placed in service before Janu-
ary 1, 2005.
‘‘(B) SPECIAL
RULES
FOR
PREEFFECTIVE
DATE FACILITIES.—In the case of any facility
described in subparagraph (A)(ii) which is
placed in service before January 1, 2005—
‘‘(i) subsection (a)(1) shall be applied
by substituting ‘1.2 cents’ for ‘1.5 cents’,
and
‘‘(ii) the 5-year period beginning on
January 1, 2005, shall be substituted for the
10-year period in subsection (a)(2)(A)(ii).
‘‘(C) CREDIT ELIGIBILITY.—In the case of
any facility described in subparagraph (A), if
the owner of such facility is not the producer of
the electricity, the person eligible for the credit
allowable under subsection (a) shall be the lessee
or the operator of such facility.
‘‘(4) GEOTHERMAL
OR
SOLAR
ENERGY
FACIL-
ITY.—In the case of a facility using geothermal or
solar energy to produce electricity, the term ‘qualified
facility’ means any facility owned by the taxpayer
which is originally placed in service after December
31, 2004, and before January 1, 2007. Such term
†
669
HR 4520 EAS
shall not include any property described in section
48(a)(3) the basis of which is taken into account by
the taxpayer for purposes of determining the energy
credit under section 48.
‘‘(5) SMALL IRRIGATION POWER FACILITY.—In
the case of a facility using small irrigation power to
produce electricity, the term ‘qualified facility’ means
any facility owned by the taxpayer which is origi-
nally placed in service after December 31, 2004, and
before January 1, 2007.
‘‘(6) BIOSOLIDS AND SLUDGE FACILITY.—In the
case of a facility using waste heat from the inciner-
ation of biosolids and sludge to produce electricity,
the term ‘qualified facility’ means any facility owned
by the taxpayer which is originally placed in service
after December 31, 2004, and before January 1, 2007.
Such term shall not include any property described in
section 48(a)(3) the basis of which is taken into ac-
count for purposes of the energy credit under section
46.
‘‘(7) MUNICIPAL SOLID WASTE FACILITY.—
‘‘(A) IN GENERAL.—In the case of a facility
or unit incinerating municipal solid waste to
produce electricity, the term ‘qualified facility’
means any facility or unit owned by the tax-
†
670
HR 4520 EAS
payer which is originally placed in service after
December 31, 2004, and before January 1, 2007.
‘‘(B) SPECIAL RULE.—In the case of any fa-
cility or unit described in subparagraph (A), the
5-year period beginning on the date the facility
or unit was originally placed in service shall be
substituted for the 10-year period in subsection
(a)(2)(A)(ii).
‘‘(C) CREDIT ELIGIBILITY.—In the case of
any qualified facility described in subparagraph
(A), if the owner of such facility is not the pro-
ducer of the electricity, the person eligible for the
credit allowable under subsection (a) shall be the
lessee or the operator of such facility.’’.
(2) NO CREDIT FOR CERTAIN PRODUCTION.—Sec-
tion 45(e) (relating to definitions and special rules),
as redesignated by paragraph (1), is amended by
striking paragraph (6) and inserting the following
new paragraph:
‘‘(6) OPERATIONS
INCONSISTENT
WITH
SOLID
WASTE DISPOSAL ACT.—In the case of a qualified fa-
cility described in subsection (d)(6)(A), subsection (a)
shall not apply to electricity produced at such facility
during any taxable year if, during a portion of such
year, there is a certification in effect by the Adminis-
†
671
HR 4520 EAS
trator of the Environmental Protection Agency that
such facility was permitted to operate in a manner
inconsistent with section 4003(d) of the Solid Waste
Disposal Act (42 U.S.C. 6943(d)).’’.
(3) CONFORMING
AMENDMENT.—Section 45(e),
as so redesignated, is amended by striking ‘‘subsection
(c)(3)(A)’’ in paragraph (7)(A)(i) and inserting ‘‘sub-
section (d)(1)’’.
(c) CREDIT RATE FOR ELECTRICITY PRODUCED FROM
NEW FACILITIES.—
(1) IN GENERAL.—Section 45(a) is amended by
adding at the end the following new flush sentence:
‘‘In the case of electricity produced after December 31, 2004,
at any qualified facility originally placed in service after
such date, paragraph (1) shall be applied by substituting
‘1.8 cents’ for ‘1.5 cents’.’’.
(2) NEW RATE NOT SUBJECT TO INFLATION AD-
JUSTMENT.—Section 45(b)(2) (relating to credit and
phaseout adjustment based on inflation) is amended
by adding at the end the following new sentence:
‘‘This paragraph shall not apply to any amount
which is substituted for the 1.5 cent amount in sub-
section (a) by reason of any provision of this sec-
tion.’’.
†
672
HR 4520 EAS
(d) ELIMINATION
OF
CERTAIN
CREDIT
REDUC-
TIONS.—Section 45(b)(3)(A) (relating to credit reduced for
grants, tax-exempt bonds, subsidized energy financing, and
other credits) is amended—
(1) by striking clause (ii),
(2) by redesignating clauses (iii) and (iv) as
clauses (ii) and (iii),
(3) by inserting ‘‘(other than proceeds of an issue
of State or local government obligations the interest
on which is exempt from tax under section 103, or
any loan, debt, or other obligation incurred under
subchapter I of chapter 31 of title 7 of the Rural Elec-
trification Act of 1936 (7 U.S.C. 901 et seq.), as in
effect on the date of the enactment of the Energy Tax
Incentives Act)’’ after ‘‘project’’ in clause (ii) (as so
redesignated),
(4) by adding at the end the following new sen-
tence: ‘‘This paragraph shall not apply with respect
to any facility described in subsection (d)(2)(A)(ii).’’,
and
(5) by striking ‘‘TAX-EXEMPT
BONDS,’’ in the
heading and inserting ‘‘CERTAIN’’.
(e) TREATMENT OF PERSONS NOT ABLE TO USE EN-
TIRE CREDIT.—Section 45(e) (relating to definitions and
†
673
HR 4520 EAS
special rules), as redesignated by subsection (b)(1), is
amended by adding at the end the following new paragraph:
‘‘(8) TREATMENT OF PERSONS NOT ABLE TO USE
ENTIRE CREDIT.—
‘‘(A) ALLOWANCE OF CREDIT.—
‘‘(i) IN GENERAL.—Except as otherwise
provided in this subsection—
‘‘(I) any credit allowable under
subsection (a) with respect to a quali-
fied facility owned by a person de-
scribed in clause (ii) may be trans-
ferred or used as provided in this
paragraph, and
‘‘(II) the determination as to
whether the credit is allowable shall be
made without regard to the tax-exempt
status of the person.
‘‘(ii) PERSONS DESCRIBED.—A person
is described in this clause if the person is—
‘‘(I) an organization described in
section 501(c)(12)(C) and exempt from
tax under section 501(a),
‘‘(II) an organization described in
section 1381(a)(2)(C),
†
674
HR 4520 EAS
‘‘(III) a public utility (as defined
in section 136(c)(2)(B)), which is ex-
empt from income tax under this sub-
title,
‘‘(IV) any State or political sub-
division thereof, the District of Colum-
bia, any possession of the United
States, or any agency or instrumen-
tality of any of the foregoing,
‘‘(V) any Indian tribal govern-
ment (within the meaning of section
7871) or any agency or instrumen-
tality thereof, or
‘‘(VI) the Tennessee Valley Au-
thority.
‘‘(B) TRANSFER OF CREDIT.—
‘‘(i) IN GENERAL.—A person described
in subclause (I), (II), (III), (IV), or (V) of
subparagraph (A)(ii) may transfer any
credit to which subparagraph (A)(i) applies
through an assignment to any other person
not described in subparagraph (A)(ii). Such
transfer may be revoked only with the con-
sent of the Secretary.
†
675
HR 4520 EAS
‘‘(ii) REGULATIONS.—The Secretary
shall prescribe such regulations as necessary
to ensure that any credit described in clause
(i) is assigned once and not reassigned by
such other person.
‘‘(iii) TRANSFER PROCEEDS TREATED
AS ARISING FROM ESSENTIAL GOVERNMENT
FUNCTION.—Any proceeds derived by a per-
son described in subclause (III), (IV), or (V)
of subparagraph (A)(ii) from the transfer of
any credit under clause (i) shall be treated
as arising from the exercise of an essential
government function.
‘‘(C) USE OF CREDIT AS AN OFFSET.—Not-
withstanding any other provision of law, in the
case of a person described in subclause (I), (II),
or (V) of subparagraph (A)(ii), any credit to
which subparagraph (A)(i) applies may be ap-
plied by such person, to the extent provided by
the Secretary of Agriculture, as a prepayment of
any loan, debt, or other obligation the entity has
incurred under subchapter I of chapter 31 of title
7 of the Rural Electrification Act of 1936 (7
U.S.C. 901 et seq.), as in effect on the date of the
enactment of the Energy Tax Incentives Act.
†
676
HR 4520 EAS
‘‘(D) USE BY TVA.—
‘‘(i) IN
GENERAL.—Notwithstanding
any other provision of law, in the case of a
person 
described 
in 
subparagraph
(A)(ii)(VI), any credit to which subpara-
graph (A)(i) applies may be applied as a
credit against the payments required to be
made in any fiscal year under section
15d(e) of the Tennessee Valley Authority Act
of 1933 (16 U.S.C. 831n–4(e)) as an annual
return on the appropriations investment
and an annual repayment sum.
‘‘(ii) TREATMENT
OF
CREDITS.—The
aggregate amount of credits described in
subparagraph (A)(i) with respect to such
person shall be treated in the same manner
and to the same extent as if such credits
were a payment in cash and shall be ap-
plied first against the annual return on the
appropriations investment.
‘‘(iii) CREDIT CARRYOVER.—With re-
spect to any fiscal year, if the aggregate
amount of credits described subparagraph
(A)(i) with respect to such person exceeds
the aggregate amount of payment obliga-
†
677
HR 4520 EAS
tions described in clause (i), the excess
amount shall remain available for applica-
tion as credits against the amounts of such
payment obligations in succeeding fiscal
years in the same manner as described in
this subparagraph.
‘‘(E) CREDIT NOT INCOME.—Any transfer
under subparagraph (B) or use under subpara-
graph (C) of any credit to which subparagraph
(A)(i) applies shall not be treated as income for
purposes of section 501(c)(12).
‘‘(F) TREATMENT
OF
UNRELATED
PER-
SONS.—For purposes of subsection (a)(2)(B),
sales of electricity among and between persons
described in subparagraph (A)(ii) shall be treat-
ed as sales between unrelated parties.’’.
(f) EFFECTIVE DATES.—
(1) IN GENERAL.—Except as otherwise provided
in this subsection, the amendments made by this sec-
tion shall apply to electricity produced and sold after
December 31, 2004, in taxable years ending after such
date.
(2) CERTAIN BIOMASS FACILITIES.—With respect
to any facility described in section 45(d)(3)(A)(ii) of
the Internal Revenue Code of 1986, as added by sub-
†
678
HR 4520 EAS
section (b)(1), which is placed in service before the
date of the enactment of this Act, the amendments
made by this section shall apply to electricity pro-
duced and sold after December 31, 2004, in taxable
years ending after such date.
(3) CREDIT
RATE
FOR
NEW
FACILITIES.—The
amendments made by subsection (c) shall apply to
electricity produced and sold after December 31, 2004,
in taxable years ending after such date.
(4) 
NONAPPLICATION
OF
AMENDMENTS
TO
PREEFFECTIVE DATE POULTRY WASTE FACILITIES.—
The amendments made by this section shall not apply
with respect to any poultry waste facility (within the
meaning of section 45(c)(3)(C), as in effect on Decem-
ber 31, 2004) placed in service on or before such date.
Subtitle B—Alternative Motor
Vehicles and Fuels Incentives
SEC. 811. ALTERNATIVE MOTOR VEHICLE CREDIT.
(a) IN GENERAL.—Subpart B of part IV of subchapter
A of chapter 1 (relating to foreign tax credit, etc.), as
amended by this Act, is amended by adding at the end the
following new section:
†
679
HR 4520 EAS
‘‘SEC. 30C. ALTERNATIVE 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—
‘‘(1) the new qualified fuel cell motor vehicle
credit determined under subsection (b),
‘‘(2) the new qualified hybrid motor vehicle cred-
it determined under subsection (c), and
‘‘(3) the new qualified alternative fuel motor ve-
hicle credit determined under subsection (d).
‘‘(b) NEW QUALIFIED FUEL CELL MOTOR VEHICLE
CREDIT.—
‘‘(1) IN GENERAL.—For purposes of subsection
(a), the new qualified fuel cell motor vehicle credit de-
termined under this subsection with respect to a new
qualified fuel cell motor vehicle placed in service by
the taxpayer during the taxable year is—
‘‘(A) $4,000, if such vehicle has a gross ve-
hicle weight rating of not more than 8,500
pounds,
‘‘(B) $10,000, if such vehicle has a gross ve-
hicle weight rating of more than 8,500 pounds
but not more than 14,000 pounds,
‘‘(C) $20,000, if such vehicle has a gross ve-
hicle weight rating of more than 14,000 pounds
but not more than 26,000 pounds, and
†
680
HR 4520 EAS
‘‘(D) $40,000, if such vehicle has a gross ve-
hicle weight rating of more than 26,000 pounds.
‘‘(2) INCREASE FOR FUEL EFFICIENCY.—
‘‘(A) IN GENERAL.—The amount determined
under paragraph (1)(A) with respect to a new
qualified fuel cell motor vehicle which is a pas-
senger automobile or light truck shall be in-
creased by—
‘‘(i) $1,000, if such vehicle achieves at
least 150 percent but less than 175 percent
of the 2002 model year city fuel economy,
‘‘(ii) $1,500, if such vehicle achieves at
least 175 percent but less than 200 percent
of the 2002 model year city fuel economy,
‘‘(iii) $2,000, if such vehicle achieves
at least 200 percent but less than 225 per-
cent of the 2002 model year city fuel econ-
omy,
‘‘(iv) $2,500, if such vehicle achieves at
least 225 percent but less than 250 percent
of the 2002 model year city fuel economy,
‘‘(v) $3,000, if such vehicle achieves at
least 250 percent but less than 275 percent
of the 2002 model year city fuel economy,
†
681
HR 4520 EAS
‘‘(vi) $3,500, if such vehicle achieves at
least 275 percent but less than 300 percent
of the 2002 model year city fuel economy,
and
‘‘(vii) $4,000, if such vehicle achieves
at least 300 percent of the 2002 model year
city fuel economy.
‘‘(B) 2002 MODEL YEAR CITY FUEL ECON-
OMY.—For purposes of subparagraph (A), the
2002 model year city fuel economy with respect
to a vehicle shall be determined in accordance
with the following tables:
‘‘(i) In the case of a passenger auto-
mobile:
The 2002 model year city
‘‘If vehicle inertia weight class is:
fuel economy is:
1,500 or 1,750 lbs ..........................................................................
45.2 mpg
2,000 lbs ..........................................................................................
39.6 mpg
2,250 lbs ..........................................................................................
35.2 mpg
2,500 lbs ..........................................................................................
31.7 mpg
2,750 lbs ..........................................................................................
28.8 mpg
3,000 lbs ..........................................................................................
26.4 mpg
3,500 lbs ..........................................................................................
22.6 mpg
4,000 lbs ..........................................................................................
19.8 mpg
4,500 lbs ..........................................................................................
17.6 mpg
5,000 lbs ..........................................................................................
15.9 mpg
5,500 lbs ..........................................................................................
14.4 mpg
6,000 lbs ..........................................................................................
13.2 mpg
6,500 lbs ..........................................................................................
12.2 mpg
7,000 to 8,500 lbs ...........................................................................
11.3 mpg.
‘‘(ii) In the case of a light truck:
The 2002 model year city
‘‘If vehicle inertia weight class is:
fuel economy is:
1,500 or 1,750 lbs ..........................................................................
39.4 mpg
2,000 lbs ..........................................................................................
35.2 mpg
2,250 lbs ..........................................................................................
31.8 mpg
2,500 lbs ..........................................................................................
29.0 mpg
†
682
HR 4520 EAS
The 2002 model year city
‘‘If vehicle inertia weight class is:
fuel economy is:
2,750 lbs ..........................................................................................
26.8 mpg
3,000 lbs ..........................................................................................
24.9 mpg
3,500 lbs ..........................................................................................
21.8 mpg
4,000 lbs ..........................................................................................
19.4 mpg
4,500 lbs ..........................................................................................
17.6 mpg
5,000 lbs ..........................................................................................
16.1 mpg
5,500 lbs ..........................................................................................
14.8 mpg
6,000 lbs ..........................................................................................
13.7 mpg
6,500 lbs ..........................................................................................
12.8 mpg
7,000 to 8,500 lbs ...........................................................................
12.1 mpg.
‘‘(C) VEHICLE INERTIA WEIGHT CLASS.—
For purposes of subparagraph (B), the term ‘ve-
hicle inertia weight class’ has the same meaning
as when defined in regulations prescribed 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.).
‘‘(3) NEW QUALIFIED FUEL CELL MOTOR VEHI-
CLE.—For purposes of this subsection, the term ‘new
qualified fuel cell motor vehicle’ means a motor
vehicle—
‘‘(A) which is propelled by power derived
from 1 or more cells which convert chemical en-
ergy directly into electricity by combining oxy-
gen with hydrogen fuel which is stored on board
the vehicle in any form and may or may not re-
quire reformation prior to use,
‘‘(B) which, in the case of a passenger auto-
mobile or light truck—
†
683
HR 4520 EAS
‘‘(i) for 2002 and later model vehicles,
has received a certificate of conformity
under the Clean Air Act and meets or ex-
ceeds the equivalent qualifying California
low emission vehicle standard under section
243(e)(2) of the Clean Air Act for that make
and model year, and
‘‘(ii) for 2004 and later model vehicles,
has received a certificate that such vehicle
meets or exceeds the Bin 5 Tier II emission
level established in regulations prescribed by
the Administrator of the Environmental
Protection Agency under section 202(i) of
the Clean Air Act for that make and model
year vehicle,
‘‘(C) the original use of which commences
with the taxpayer,
‘‘(D) which is acquired for use or lease by
the taxpayer and not for resale, and
‘‘(E) which is made by a manufacturer.
‘‘(c) NEW QUALIFIED HYBRID MOTOR VEHICLE CRED-
IT.—
‘‘(1) IN GENERAL.—For purposes of subsection
(a), the new qualified hybrid motor vehicle credit de-
termined under this subsection with respect to a new
†
684
HR 4520 EAS
qualified hybrid motor vehicle placed in service by the
taxpayer during the taxable year is the credit amount
determined under paragraph (2).
‘‘(2) CREDIT AMOUNT.—
‘‘(A) IN GENERAL.—The credit amount de-
termined under this paragraph shall be deter-
mined in accordance with the following tables:
‘‘(i) In the case of a new qualified hy-
brid motor vehicle which is a passenger
automobile, medium duty passenger vehicle,
or light truck and which provides the fol-
lowing percentage of the maximum avail-
able power:
‘‘If percentage of the maximum
available power is:
The credit amount is:
At least 4 percent but less than 10 percent .................................
$250
At least 10 percent but less than 20 percent ...............................
$500
At least 20 percent but less than 30 percent ...............................
$750
At least 30 percent .........................................................................
$1,000.
‘‘(ii) In the case of a new qualified hy-
brid motor vehicle which is a heavy duty
hybrid motor vehicle and which provides the
following percentage of the maximum avail-
able power:
‘‘(I) If such vehicle has a gross ve-
hicle weight rating of not more than
14,000 pounds:
‘‘If percentage of the maximum
available power is:
The credit amount is:
At least 20 percent but less than 30 percent ...............................
$1,000
†
685
HR 4520 EAS
‘‘If percentage of the maximum
available power is:
The credit amount is:
At least 30 percent but less than 40 percent ...............................
$1,750
At least 40 percent but less than 50 percent ...............................
$2,000
At least 50 percent but less than 60 percent ...............................
$2,250
At least 60 percent .........................................................................
$2,500.
‘‘(II) If such vehicle has a gross
vehicle weight rating of more than
14,000 but not more than 26,000
pounds:
‘‘If percentage of the maximum
available power is:
The credit amount is:
At least 20 percent but less than 30 percent ...............................
$4,000
At least 30 percent but less than 40 percent ...............................
$4,500
At least 40 percent but less than 50 percent ...............................
$5,000
At least 50 percent but less than 60 percent ...............................
$5,500
At least 60 percent .........................................................................
$6,000.
‘‘(III) If such vehicle has a gross
vehicle weight rating of more than
26,000 pounds:
‘‘If percentage of the maximum
available power is:
The credit amount is:
At least 20 percent but less than 30 percent ...............................
$6,000
At least 30 percent but less than 40 percent ...............................
$7,000
At least 40 percent but less than 50 percent ...............................
$8,000
At least 50 percent but less than 60 percent ...............................
$9,000
At least 60 percent .........................................................................
$10,000.
‘‘(B) INCREASE FOR FUEL EFFICIENCY.—
‘‘(i) AMOUNT.—The amount deter-
mined under subparagraph (A)(i) with re-
spect to a new qualified hybrid motor vehi-
cle which is a passenger automobile or light
truck shall be increased by—
‘‘(I) $500, if such vehicle achieves
at least 125 percent but less than 150
†
686
HR 4520 EAS
percent of the 2002 model year city
fuel economy,
‘‘(II) 
$1,000, 
if 
such 
vehicle
achieves at least 150 percent but less
than 175 percent of the 2002 model
year city fuel economy,
‘‘(III) $1,500, if such vehicle
achieves at least 175 percent but less
than 200 percent of the 2002 model
year city fuel economy,
‘‘(IV) $2,000, if such vehicle
achieves at least 200 percent but less
than 225 percent of the 2002 model
year city fuel economy,
‘‘(V) 
$2,500, 
if 
such 
vehicle
achieves at least 225 percent but less
than 250 percent of the 2002 model
year city fuel economy, and
‘‘(VI) $3,000, if such vehicle
achieves at least 250 percent of the
2002 model year city fuel economy.
‘‘(ii) 2002 MODEL
YEAR
CITY
FUEL
ECONOMY.—For purposes of clause (i), the
2002 model year city fuel economy with re-
spect to a vehicle shall be determined on a
†
687
HR 4520 EAS
gasoline gallon equivalent basis as deter-
mined by the Administrator of the Environ-
mental Protection Agency using the tables
provided in subsection (b)(2)(B) with re-
spect to such vehicle.
‘‘(C) INCREASE
FOR
ACCELERATED
EMIS-
SIONS PERFORMANCE.—The amount determined
under subparagraph (A)(ii) with respect to an
applicable heavy duty hybrid motor vehicle shall
be increased by the increased credit amount de-
termined in accordance with the following tables:
‘‘(i) In the case of a vehicle which has
a gross vehicle weight rating of not more
than 14,000 pounds:
‘‘If the model year is:
The increased credit amount is:
2004 ................................................................................................
$2,500
2005 ................................................................................................
$2,000
2006 ................................................................................................
$1,500.
‘‘(ii) In the case of a vehicle which has
a gross vehicle weight rating of more than
14,000 pounds but not more than 26,000
pounds:
‘‘If the model year is:
The increased credit amount is:
2004 ................................................................................................
$6,500
2005 ................................................................................................
$5,250
2006 ................................................................................................
$4,000.
‘‘(iii) In the case of a vehicle which has
a gross vehicle weight rating of more than
26,000 pounds:
†
688
HR 4520 EAS
‘‘If the model year is:
The increased credit amount is:
2004 ................................................................................................
$10,000
2005 ................................................................................................
$8,000
2006 ................................................................................................
$6,000.
‘‘(D) DEFINITIONS
RELATING
TO
CREDIT
AMOUNT.—
‘‘(i) APPLICABLE HEAVY DUTY HYBRID
MOTOR VEHICLE.—For purposes of subpara-
graph (C), the term ‘applicable heavy duty
hybrid motor vehicle’ means a heavy duty
hybrid motor vehicle which is powered by
an internal combustion or heat engine
which is certified as meeting the emission
standards set in the regulations prescribed
by the Administrator of the Environmental
Protection Agency for 2007 and later model
year diesel heavy duty engines, or for 2008
and later model year ottocycle heavy duty
engines, as applicable.
‘‘(ii) MAXIMUM AVAILABLE POWER.—
‘‘(I) 
PASSENGER
AUTOMOBILE,
MEDIUM
DUTY
PASSENGER
VEHICLE,
OR
LIGHT
TRUCK.—For purposes of
subparagraph (A)(i), the term ‘max-
imum available power’ means the max-
imum power available from the re-
chargeable energy storage system, dur-
†
689
HR 4520 EAS
ing a standard 10 second pulse power
or equivalent test, divided by such
maximum power and the SAE net
power of the heat engine.
‘‘(II) HEAVY DUTY HYBRID MOTOR
VEHICLE.—For purposes of subpara-
graph (A)(ii), the term ‘maximum
available power’ means the maximum
power available from the rechargeable
energy storage system, during a stand-
ard 10 second pulse power or equiva-
lent test, divided by the vehicle’s total
traction power. The term ‘total trac-
tion power’ means the sum of the peak
power from the rechargeable energy
storage system and the heat engine
peak power of the vehicle, except that if
such storage system is the sole means
by which the vehicle can be driven, the
total traction power is the peak power
of such storage system.
‘‘(3) NEW
QUALIFIED
HYBRID
MOTOR
VEHI-
CLE.—For purposes of this subsection—
‘‘(A) IN GENERAL.—The term ‘new qualified
hybrid motor vehicle’ means a motor vehicle—
†
690
HR 4520 EAS
‘‘(i) which draws propulsion energy
from onboard sources of stored energy which
are both—
‘‘(I) an internal combustion or
heat engine using consumable fuel, and
‘‘(II) a rechargeable energy stor-
age system,
‘‘(ii) which, in the case of a passenger
automobile, medium duty passenger vehicle,
or light truck—
‘‘(I) for 2002 and later model ve-
hicles, has received a certificate of con-
formity under the Clean Air Act and
meets or exceeds the equivalent quali-
fying California low emission vehicle
standard under section 243(e)(2) of the
Clean Air Act for that make and model
year, and
‘‘(II) for 2004 and later model ve-
hicles, has received a certificate that
such vehicle meets or exceeds the Bin 5
Tier II emission level established in
regulations prescribed by the Adminis-
trator of the Environmental Protection
Agency under section 202(i) of the
†
691
HR 4520 EAS
Clean Air Act for that make and model
year vehicle,
‘‘(iii) which, in the case of a heavy
duty hybrid motor vehicle, has an internal
combustion or heat engine which has re-
ceived a certificate of conformity under the
Clean Air Act as meeting the emission
standards set in the regulations prescribed
by the Administrator of the Environmental
Protection Agency for 2004 through 2007
model year diesel heavy duty engines or
ottocycle heavy duty engines, as applicable,
‘‘(iv) the original use of which com-
mences with the taxpayer,
‘‘(v) which is acquired for use or lease
by the taxpayer and not for resale, and
‘‘(vi) which is made by a manufac-
turer.
‘‘(B) CONSUMABLE FUEL.—For purposes of
subparagraph (A)(i)(I), the term ‘consumable
fuel’ means any solid, liquid, or gaseous matter
which releases energy when consumed by an aux-
iliary power unit.
‘‘(4) HEAVY DUTY HYBRID MOTOR VEHICLE.—
For purposes of this subsection, the term ‘heavy duty
†
692
HR 4520 EAS
hybrid motor vehicle’ means a new qualified hybrid
motor vehicle which has a gross vehicle weight rating
of more than 8,500 pounds. Such term does not in-
clude a medium duty passenger vehicle.
‘‘(d) NEW QUALIFIED ALTERNATIVE FUEL MOTOR VE-
HICLE CREDIT.—
‘‘(1) ALLOWANCE OF CREDIT.—Except as pro-
vided in paragraph (5), the new qualified alternative
fuel motor vehicle credit determined under this sub-
section is an amount equal to the applicable percent-
age of the incremental cost of any new qualified alter-
native fuel motor vehicle placed in service by the tax-
payer during the taxable year.
‘‘(2) APPLICABLE
PERCENTAGE.—For purposes
of paragraph (1), the applicable percentage with re-
spect to any new qualified alternative fuel motor vehi-
cle is—
‘‘(A) 40 percent, plus
‘‘(B) 30 percent, if such vehicle—
‘‘(i) has received a certificate of con-
formity under the Clean Air Act and meets
or exceeds the most stringent standard
available for certification under the Clean
Air Act for that make and model year vehi-
cle (other than a zero emission standard), or
†
693
HR 4520 EAS
‘‘(ii) has received an order certifying
the vehicle as meeting the same require-
ments as vehicles which may be sold or
leased in California and meets or exceeds
the most stringent standard available for
certification under the State laws of Cali-
fornia (enacted in accordance with a waiver
granted under section 209(b) of the Clean
Air Act) for that make and model year vehi-
cle (other than a zero emission standard).
For purposes of the preceding sentence, in the case of
any new qualified alternative fuel motor vehicle
which weighs more than 14,000 pounds gross vehicle
weight rating, the most stringent standard available
shall be such standard available for certification on
the date of the enactment of the Energy Tax Incen-
tives Act.
‘‘(3) INCREMENTAL COST.—For purposes of this
subsection, the incremental cost of any new qualified
alternative fuel motor vehicle is equal to the amount
of the excess of the manufacturer’s suggested retail
price for such vehicle over such price for a gasoline
or diesel fuel motor vehicle of the same model, to the
extent such amount does not exceed—
†
694
HR 4520 EAS
‘‘(A) $5,000, if such vehicle has a gross ve-
hicle weight rating of not more than 8,500
pounds,
‘‘(B) $10,000, if such vehicle has a gross ve-
hicle weight rating of more than 8,500 pounds
but not more than 14,000 pounds,
‘‘(C) $25,000, if such vehicle has a gross ve-
hicle weight rating of more than 14,000 pounds
but not more than 26,000 pounds, and
‘‘(D) $40,000, if such vehicle has a gross ve-
hicle weight rating of more than 26,000 pounds.
‘‘(4) NEW QUALIFIED ALTERNATIVE FUEL MOTOR
VEHICLE.—For purposes of this subsection—
‘‘(A) IN GENERAL.—The term ‘new qualified
alternative fuel motor vehicle’ means any motor
vehicle—
‘‘(i) which is only capable of operating
on an alternative fuel,
‘‘(ii) the original use of which com-
mences with the taxpayer,
‘‘(iii) which is acquired by the tax-
payer for use or lease, but not for resale,
and
‘‘(iv) which is made by a manufac-
turer.
†
695
HR 4520 EAS
‘‘(B) ALTERNATIVE FUEL.—The term ‘alter-
native fuel’ means compressed natural gas, lique-
fied natural gas, liquefied petroleum gas, hydro-
gen, and any liquid at least 85 percent of the
volume of which consists of methanol.
‘‘(5) CREDIT FOR MIXED-FUEL VEHICLES.—
‘‘(A) IN GENERAL.—In the case of a mixed-
fuel vehicle placed in service by the taxpayer
during the taxable year, the credit determined
under this subsection is an amount equal to—
‘‘(i) in the case of a 75/25 mixed-fuel
vehicle, 70 percent of the credit which would
have been allowed under this subsection if
such vehicle was a qualified alternative fuel
motor vehicle, and
‘‘(ii) in the case of a 90/10 mixed-fuel
vehicle, 90 percent of the credit which would
have been allowed under this subsection if
such vehicle was a qualified alternative fuel
motor vehicle.
‘‘(B) MIXED-FUEL VEHICLE.—For purposes
of this subsection, the term ‘mixed-fuel vehicle’
means any motor vehicle described in subpara-
graph (C) or (D) of paragraph (3), which—
†
696
HR 4520 EAS
‘‘(i) is certified by the manufacturer as
being able to perform efficiently in normal
operation on a combination of an alter-
native fuel and a petroleum-based fuel,
‘‘(ii) either—
‘‘(I) has received a certificate of
conformity under the Clean Air Act, or
‘‘(II) has received an order certi-
fying the vehicle as meeting the same
requirements as vehicles which may be
sold or leased in California and meets
or exceeds the low emission vehicle
standard under section 88.105–94 of
title 40, Code of Federal Regulations,
for that make and model year vehicle,
‘‘(iii) the original use of which com-
mences with the taxpayer,
‘‘(iv) which is acquired by the tax-
payer for use or lease, but not for resale,
and
‘‘(v) which is made by a manufacturer.
‘‘(C) 75/25 
MIXED-FUEL
VEHICLE.—For
purposes of this subsection, the term ‘75/25
mixed-fuel vehicle’ means a mixed-fuel vehicle
which operates using at least 75 percent alter-
†
697
HR 4520 EAS
native fuel and not more than 25 percent petro-
leum-based fuel.
‘‘(D) 90/10 
MIXED-FUEL
VEHICLE.—For
purposes of this subsection, the term ‘90/10
mixed-fuel vehicle’ means a mixed-fuel vehicle
which operates using at least 90 percent alter-
native fuel and not more than 10 percent petro-
leum-based fuel.
‘‘(e) APPLICATION WITH OTHER CREDITS.—The credit
allowed under subsection (a) for any taxable year shall not
exceed the excess (if any) of—
‘‘(1) the regular tax for the taxable year reduced
by the sum of the credits allowable under subpart A
and sections 27, 29, and 30, over
‘‘(2) the tentative minimum tax for the taxable
year.
‘‘(f) OTHER DEFINITIONS AND SPECIAL RULES.—For
purposes of this section—
‘‘(1) MOTOR VEHICLE.—The term ‘motor vehicle’
has the meaning given such term by section 30(c)(2).
‘‘(2) CITY FUEL ECONOMY.—The city fuel econ-
omy with respect to any vehicle shall be measured in
a manner which is substantially similar to the man-
ner city fuel economy is measured in accordance with
procedures under part 600 of subchapter Q of chapter
†
698
HR 4520 EAS
I of title 40, Code of Federal Regulations, as in effect
on the date of the enactment of this section.
‘‘(3) OTHER
TERMS.—The terms ‘automobile’,
‘passenger automobile’, ‘medium duty passenger vehi-
cle’, ‘light truck’, and ‘manufacturer’ have the mean-
ings given such terms in regulations prescribed by the
Administrator of the Environmental Protection Agen-
cy for purposes of the administration of title II of the
Clean Air Act (42 U.S.C. 7521 et seq.).
‘‘(4) REDUCTION IN BASIS.—For purposes of this
subtitle, the basis of any property for which a credit
is allowable under subsection (a) shall be reduced by
the amount of such credit so allowed (determined
without regard to subsection (e)).
‘‘(5) NO DOUBLE BENEFIT.—The amount of any
deduction or other credit allowable under this
chapter—
‘‘(A) for any incremental cost taken into ac-
count in computing the amount of the credit de-
termined under subsection (d) shall be reduced
by the amount of such credit attributable to such
cost, and
‘‘(B) with respect to a vehicle described
under subsection (b) or (c), shall be reduced by
†
699
HR 4520 EAS
the amount of credit allowed under subsection
(a) for such vehicle for the taxable year.
‘‘(6) PROPERTY
USED
BY
TAX-EXEMPT
ENTI-
TIES.—In the case of a credit amount which is allow-
able with respect to a motor vehicle which is acquired
by an entity exempt from tax under this chapter, the
person which sells or leases such vehicle to the entity
shall be treated as the taxpayer with respect to the ve-
hicle for purposes of this section and the credit shall
be allowed to such person, but only if the person
clearly discloses to the entity at the time of any sale
or lease the specific amount of any credit otherwise
allowable to the entity under this section.
‘‘(7) RECAPTURE.—The Secretary shall, by regu-
lations, provide for recapturing the benefit of any
credit allowable under subsection (a) with respect to
any property which ceases to be property eligible for
such credit (including recapture in the case of a lease
period of less than the economic life of a vehicle).
‘‘(8) PROPERTY USED OUTSIDE UNITED STATES,
ETC., NOT
QUALIFIED.—No credit shall be allowed
under subsection (a) with respect to any property re-
ferred to in section 50(b) or with respect to the por-
tion of the cost of any property taken into account
under section 179.
†
700
HR 4520 EAS
‘‘(9) ELECTION TO NOT TAKE CREDIT.—No credit
shall be allowed under subsection (a) for any vehicle
if the taxpayer elects to not have this section apply
to such vehicle.
‘‘(10) CARRYBACK
AND
CARRYFORWARD
AL-
LOWED.—
‘‘(A) IN GENERAL.—If the credit allowable
under subsection (a) for a taxable year exceeds
the amount of the limitation under subsection (e)
for such taxable year (in this paragraph referred
to as the ‘unused credit year’), such excess shall
be a credit carryback to each of the 3 taxable
years preceding the unused credit year and a
credit carryforward to each of the 20 taxable
years following the unused credit year, except
that no excess may be carried to a taxable year
beginning before January 1, 2005.
‘‘(B) RULES.—Rules similar to the rules of
section 39 shall apply with respect to the credit
carryback and credit carryforward under sub-
paragraph (A).
‘‘(11) INTERACTION
WITH
AIR
QUALITY
AND
MOTOR VEHICLE SAFETY STANDARDS.—Unless other-
wise provided in this section, a motor vehicle shall
†
701
HR 4520 EAS
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.—Except as provided in para-
graph (2), the Secretary shall promulgate such regula-
tions as necessary to carry out the provisions of this
section.
‘‘(2) COORDINATION IN PRESCRIPTION OF CER-
TAIN REGULATIONS.—The Secretary of the Treasury,
in coordination with the Secretary of Transportation
and the Administrator of the Environmental Protec-
tion Agency, shall prescribe such regulations as nec-
essary to determine whether a motor vehicle meets the
requirements to be eligible for a credit under this sec-
tion.
†
702
HR 4520 EAS
‘‘(h) TERMINATION.—This section shall not apply to
any property purchased after—
‘‘(1) in the case of a new qualified fuel cell motor
vehicle (as described in subsection (b)), December 31,
2011, and
‘‘(2) in the case of any other property, December
31, 2006.’’.
(b) CONFORMING AMENDMENTS.—
(1) Section 1016(a) 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:
‘‘(33) 
to 
the 
extent 
provided 
in 
section
30C(f)(4).’’.
(2) Section 55(c)(2), as amended by this Act, is
amended by inserting ‘‘30C(e),’’ after ‘‘30(b)(2),’’.
(3) Section 6501(m) is amended by inserting
‘‘30C(f)(9),’’ after ‘‘30(d)(4),’’.
(4) The table of sections for subpart B of part IV
of subchapter A of chapter 1, as amended by this Act,
is amended by inserting after the item relating to sec-
tion 30B the following new item:
‘‘Sec. 30C. Alternative motor vehicle credit.’’.
†
703
HR 4520 EAS
(c) EFFECTIVE DATE.—The amendments made by this
section shall apply to property placed in service after De-
cember 31, 2004, in taxable years ending after such date.
SEC. 812. MODIFICATION OF CREDIT FOR QUALIFIED ELEC-
TRIC VEHICLES.
(a) AMOUNT OF CREDIT.—
(1) IN GENERAL.—Section 30(a) (relating to al-
lowance of credit) is amended by striking ‘‘10 percent
of’’.
(2) LIMITATION OF CREDIT ACCORDING TO TYPE
OF VEHICLE.—Paragraph (1) of section 30(b) (relat-
ing to limitations) is amended to read as follows:
‘‘(1) LIMITATION ACCORDING TO TYPE OF VEHI-
CLE.—The amount of the credit allowed under sub-
section (a) for any vehicle shall not exceed the greatest
of the following amounts applicable to such vehicle:
‘‘(A) In the case of a vehicle with a gross
vehicle weight rating not exceeding 8,500
pounds—
‘‘(i) except as provided in clause (ii) or
(iii), $3,500,
‘‘(ii) $6,000, if such vehicle is—
‘‘(I) capable of a driving range of
at least 100 miles on a single charge of
the vehicle’s rechargeable batteries as
†
704
HR 4520 EAS
measured pursuant to the urban dyna-
mometer schedules under appendix I to
part 86 of title 40, Code of Federal
Regulations, or
‘‘(II) capable of a payload capac-
ity of at least 1,000 pounds, and
‘‘(iii) if such vehicle is a low-speed ve-
hicle which conforms to Standard 500 pre-
scribed by the Secretary of Transportation
(49 C.F.R. 571.500), as in effect on the date
of the enactment of the Energy Tax Incen-
tives Act, the lesser of—
‘‘(I) 10 percent of the manufactur-
er’s suggested retail price of the vehicle,
or
‘‘(II) $1,500.
‘‘(B) In the case of a vehicle with a gross
vehicle weight rating exceeding 8,500 but not ex-
ceeding 14,000 pounds, $10,000.
‘‘(C) In the case of a vehicle with a gross
vehicle weight rating exceeding 14,000 but not
exceeding 26,000 pounds, $20,000.
‘‘(D) In the case of a vehicle with a gross
vehicle weight rating exceeding 26,000 pounds,
$40,000.’’.
†
705
HR 4520 EAS
(b) QUALIFIED BATTERY ELECTRIC VEHICLE.—
(1) IN GENERAL.—Section 30(c)(1)(A) (defining
qualified electric vehicle) is amended to read as fol-
lows:
‘‘(A) which is—
‘‘(i) operated solely by use of a battery
or battery pack, or
‘‘(ii) powered primarily through the
use of an electric battery or battery pack
using a flywheel or capacitor which stores
energy produced by an electric motor
through regenerative braking to assist in ve-
hicle operation,’’.
(2) LEASED VEHICLES.—Section 30(c)(1)(C) is
amended by inserting ‘‘or lease’’ after ‘‘use’’.
(3) CONFORMING AMENDMENTS.—
(A) Subsections (a), (b)(2), and (c) of sec-
tion 30 are each amended by inserting ‘‘battery’’
after ‘‘qualified’’ each place it appears.
(B) The heading of subsection (c) of section
30 is amended by inserting ‘‘BATTERY’’ after
‘‘QUALIFIED’’.
(C) The heading of section 30 is amended
by inserting ‘‘BATTERY’’ after ‘‘QUALIFIED’’.
†
706
HR 4520 EAS
(D) The item relating to section 30 in the
table of sections for subpart B of part IV of sub-
chapter A of chapter 1 is amended by inserting
‘‘battery’’ after ‘‘qualified’’.
(E) Section 179A(c)(3) is amended by in-
serting ‘‘battery’’ before ‘‘electric’’.
(F) The heading of paragraph (3) of section
179A(c) is amended by inserting ‘‘BATTERY’’ be-
fore ‘‘ELECTRIC’’.
(c) ADDITIONAL SPECIAL RULES.—Section 30(d) (re-
lating to special rules) is amended by adding at the end
the following new paragraphs:
‘‘(5) NO DOUBLE BENEFIT.—The amount of any
deduction or other credit allowable under this chapter
for any cost taken into account in computing the
amount of the credit determined under subsection (a)
shall be reduced by the amount of such credit attrib-
utable to such cost.
‘‘(6) PROPERTY
USED
BY
TAX-EXEMPT
ENTI-
TIES.—In the case of a credit amount which is allow-
able with respect to a vehicle which is acquired by an
entity exempt from tax under this chapter, the person
which sells or leases such vehicle to the entity shall be
treated as the taxpayer with respect to the vehicle for
purposes of this section and the credit shall be allowed
†
707
HR 4520 EAS
to such person, but only if the person clearly discloses
to the entity at the time of any sale or lease the spe-
cific amount of any credit otherwise allowable to the
entity under this section.
‘‘(7) 
CARRYBACK
AND
CARRYFORWARD
AL-
LOWED.—
‘‘(A) IN GENERAL.—If the credit allowable
under subsection (a) for a taxable year exceeds
the amount of the limitation under subsection
(b)(2) for such taxable year (in this paragraph
referred to as the ‘unused credit year’), such ex-
cess shall be a credit carryback to each of the 3
taxable years preceding the unused credit year
and a credit carryforward to each of the 20 tax-
able years following the unused credit year, ex-
cept that no excess may be carried to a taxable
year beginning before January 1, 2005.
‘‘(B) RULES.—Rules similar to the rules of
section 39 shall apply with respect to the credit
carryback and credit carryforward under sub-
paragraph (A).’’.
(d) EFFECTIVE DATE.—The amendments made by this
section shall apply to property placed in service after De-
cember 31, 2004, in taxable years ending after such date.
†
708
HR 4520 EAS
SEC. 813. CREDIT FOR INSTALLATION OF ALTERNATIVE
FUELING STATIONS.
(a) IN GENERAL.—Subpart B of part IV of subchapter
A of chapter 1 (relating to foreign tax credit, etc.), as
amended by this Act, is amended by adding at the end the
following new section:
‘‘SEC. 30D. CLEAN-FUEL VEHICLE REFUELING PROPERTY
CREDIT.
‘‘(a) CREDIT ALLOWED.—There shall be allowed as a
credit against the tax imposed by this chapter for the tax-
able year an amount equal to 50 percent of the amount
paid or incurred by the taxpayer during the taxable year
for the installation of qualified clean-fuel vehicle refueling
property.
‘‘(b) LIMITATION.—The credit allowed under sub-
section (a)—
‘‘(1) with respect to any retail clean-fuel vehicle
refueling property, shall not exceed $30,000, and
‘‘(2) with respect to any residential clean-fuel ve-
hicle refueling property, shall not exceed $1,000.
‘‘(c) YEAR CREDIT ALLOWED.—Notwithstanding sub-
section (a), no credit shall be allowed under subsection (a)
with respect to any qualified clean-fuel vehicle refueling
property before the taxable year in which the property is
placed in service by the taxpayer.
‘‘(d) DEFINITIONS.—For purposes of this section—
†
709
HR 4520 EAS
‘‘(1) QUALIFIED CLEAN-FUEL VEHICLE REFUEL-
ING PROPERTY.—The term ‘qualified clean-fuel vehicle
refueling property’ has the same meaning given such
term by section 179A(d).
‘‘(2) RESIDENTIAL
CLEAN-FUEL
VEHICLE
RE-
FUELING PROPERTY.—The term ‘residential clean-fuel
vehicle refueling property’ means qualified clean-fuel
vehicle refueling property which is installed on prop-
erty which is used as the principal residence (within
the meaning of section 121) of the taxpayer.
‘‘(3) RETAIL CLEAN-FUEL VEHICLE REFUELING
PROPERTY.—The term ‘retail clean-fuel vehicle refuel-
ing property’ means qualified clean-fuel vehicle refuel-
ing property which is installed on property (other
than property described in paragraph (2)) used in a
trade or business of the taxpayer.
‘‘(e) APPLICATION WITH OTHER CREDITS.—The credit
allowed under subsection (a) for any taxable year shall not
exceed the excess (if any) of—
‘‘(1) the regular tax for the taxable year reduced
by the sum of the credits allowable under subpart A
and sections 27, 29, 30, and 30C, over
‘‘(2) the tentative minimum tax for the taxable
year.
†
710
HR 4520 EAS
‘‘(f) BASIS REDUCTION.—For purposes of this title, the
basis of any property shall be reduced by the portion of
the cost of such property taken into account under sub-
section (a).
‘‘(g) NO DOUBLE BENEFIT.—
‘‘(1) COORDINATION WITH OTHER DEDUCTIONS
AND CREDITS.—Except as provided in paragraph (2),
the amount of any deduction or other credit allowable
under this chapter for any cost taken into account in
computing the amount of the credit determined under
subsection (a) shall be reduced by the amount of such
credit attributable to such cost.
‘‘(2) NO DEDUCTION ALLOWED UNDER SECTION
179A.—No deduction shall be allowed under section
179A with respect to any property with respect to
which a credit is allowed under subsection (a).
‘‘(h) REFUELING PROPERTY INSTALLED FOR TAX-EX-
EMPT ENTITIES.—In the case of qualified clean-fuel vehicle
refueling property installed on property owned or used by
an entity exempt from tax under this chapter, the person
which installs such refueling property for the entity shall
be treated as the taxpayer with respect to the refueling prop-
erty for purposes of this section (and such refueling prop-
erty shall be treated as retail clean-fuel vehicle refueling
property) and the credit shall be allowed to such person,
†
711
HR 4520 EAS
but only if the person clearly discloses to the entity in any
installation contract the specific amount of the credit allow-
able under this section.
‘‘(i) CARRYFORWARD ALLOWED.—
‘‘(1) IN GENERAL.—If the credit allowable under
subsection (a) for a taxable year exceeds the amount
of the limitation under subsection (e) for such taxable
year, such excess shall be a credit carryforward to
each of the 20 taxable years following such taxable
year.
‘‘(2) RULES.—Rules similar to the rules of sec-
tion 39 shall apply with respect to the credit
carryforward under paragraph (1).
‘‘(j) SPECIAL RULES.—Rules similar to the rules of
paragraphs (4) and (5) of section 179A(e) shall apply.
‘‘(k) REGULATIONS.—The Secretary shall prescribe
such regulations as necessary to carry out the provisions
of this section.
‘‘(l) TERMINATION.—This section shall not apply to
any property placed in service—
‘‘(1) in the case of property relating to hydrogen,
after December 31, 2011, and
‘‘(2) in the case of any other property, after De-
cember 31, 2007.’’.
†
713
HR 4520 EAS
(2) Section 55(c)(2), as amended by this Act, is
amended by inserting ‘‘30D(e),’’ after ‘‘30C(e),’’.
(3) The table of sections for subpart B of part IV
of subchapter A of chapter 1, as amended by this Act,
is amended by inserting after the item relating to sec-
tion 30C the following new item:
‘‘Sec. 30D. Clean-fuel vehicle refueling property credit.’’.
(e) EFFECTIVE DATE.—The amendments made by this
section shall apply to property placed in service after De-
cember 31, 2004, in taxable years ending after such date.
SEC. 814. CREDIT FOR RETAIL SALE OF ALTERNATIVE
FUELS AS MOTOR VEHICLE FUEL.
(a) IN GENERAL.—Subpart D of part IV of subchapter
A of chapter 1 (relating to business related credits) is
amended by inserting after section 40 the following new sec-
tion:
‘‘SEC. 40A. CREDIT FOR RETAIL SALE OF ALTERNATIVE
FUELS AS MOTOR VEHICLE FUEL.
‘‘(a) GENERAL RULE.—For purposes of section 38, the
alternative fuel retail sales credit for any taxable year is
the applicable amount for each gasoline gallon equivalent
of alternative fuel sold at retail by the taxpayer during such
year as a fuel to propel any qualified motor vehicle.
‘‘(b) DEFINITIONS.—For purposes of this section—
†
714
HR 4520 EAS
‘‘(1) APPLICABLE AMOUNT.—The term ‘applica-
ble amount’ means the amount determined in accord-
ance with the following table:
‘‘In the case of any taxable year
ending in—
The applicable amount is—
2005 and 2006 ...............................................................................
50 cents.
‘‘(2) ALTERNATIVE FUEL.—The term ‘alternative
fuel’ means compressed natural gas, liquefied natural
gas, liquefied petroleum gas, hydrogen, or any liquid
at least 85 percent of the volume of which consists of
methanol or ethanol.
‘‘(3) GASOLINE GALLON EQUIVALENT.—The term
‘gasoline gallon equivalent’ means, with respect to
any alternative fuel, the amount (determined by the
Secretary) of such fuel having a Btu content of
114,000.
‘‘(4) QUALIFIED
MOTOR
VEHICLE.—The term
‘qualified motor vehicle’ means any motor vehicle (as
defined in section 30(c)(2)) which meets any applica-
ble Federal or State emissions standards with respect
to each fuel by which such vehicle is designed to be
propelled.
‘‘(5) SOLD AT RETAIL.—
‘‘(A) IN GENERAL.—The term ‘sold at retail’
means the sale, for a purpose other than resale,
after manufacture, production, or importation.
†
715
HR 4520 EAS
‘‘(B) USE TREATED AS SALE.—If any per-
son uses alternative fuel (including any use after
importation) as a fuel to propel any new quali-
fied alternative fuel motor vehicle (as defined in
section 30C(d)(4)) before such fuel is sold at re-
tail, then such use shall be treated in the same
manner as if such fuel were sold at retail as a
fuel to propel such a vehicle by such person.
‘‘(c) NO DOUBLE BENEFIT.—The amount of any de-
duction or other credit allowable under this chapter for any
fuel taken into account in computing the amount of the
credit determined under subsection (a) shall be reduced by
the amount of such credit attributable to such fuel.
‘‘(d) PASS-THRU
IN
THE CASE
OF ESTATES
AND
TRUSTS.—Under regulations prescribed by the Secretary,
rules similar to the rules of subsection (d) of section 52 shall
apply.
‘‘(e) TERMINATION.—This section shall not apply to
any fuel sold at retail after December 31, 2006.’’.
(b) CREDIT TREATED AS BUSINESS CREDIT.—Section
38(b) (relating to current year business credit) is amended
by striking ‘‘plus’’ at the end of paragraph (20), by striking
the period at the end of paragraph (21) and inserting ‘‘,
plus’’, and by adding at the end the following new para-
graph:
†
716
HR 4520 EAS
‘‘(22) the alternative fuel retail sales credit deter-
mined under section 40A(a).’’.
(c) LIMITATION ON CARRYBACK.—
(1) IN GENERAL.—Subsection (d) of section 39,
as amended by this Act, is amended to read as fol-
lows:
‘‘(d) TRANSITIONAL RULE.—No portion of the unused
business credit for any taxable year which is attributable
to a credit specified in section 38(b) may be carried back
to any taxable year before the first taxable year for which
such specified credit is allowable.’’.
(2) EFFECTIVE DATE.—The amendment made by
paragraph (1) shall apply with respect to taxable
years beginning after December 31, 2003.
(d) CLERICAL AMENDMENT.—The table of sections for
subpart D of part IV of subchapter A of chapter 1 is amend-
ed by inserting after the item relating to section 40 the fol-
lowing new item:
‘‘Sec. 40A. Credit for retail sale of alternative fuels as motor vehicle fuel.’’.
(e) EFFECTIVE DATE.—Except as otherwise provided,
the amendments made by this section shall apply to fuel
sold at retail after December 31, 2004, in taxable years end-
ing after such date.
SEC. 815. SMALL ETHANOL PRODUCER CREDIT.
(a) ALLOCATION OF ALCOHOL FUELS CREDIT TO PA-
TRONS OF A COOPERATIVE.—Section 40(g) (relating to defi-
†
717
HR 4520 EAS
nitions and special rules for eligible small ethanol producer
credit) is amended by adding at the end the following new
paragraph:
‘‘(6) ALLOCATION
OF
SMALL
ETHANOL
PRO-
DUCER CREDIT TO PATRONS OF COOPERATIVE.—
‘‘(A) ELECTION TO ALLOCATE.—
‘‘(i) IN GENERAL.—In the case of a co-
operative organization described in section
1381(a), any portion of the credit deter-
mined under subsection (a)(3) for the tax-
able year may, at the election of the organi-
zation, be apportioned pro rata among pa-
trons of the organization on the basis of the
quantity or value of business done with or
for such patrons for the taxable year.
‘‘(ii) FORM
AND
EFFECT
OF
ELEC-
TION.—An election under clause (i) for any
taxable year shall be made on a timely filed
return for such year. Such election, once
made, shall be irrevocable for such taxable
year.
‘‘(B) TREATMENT OF ORGANIZATIONS AND
PATRONS.—The amount of the credit apportioned
to patrons under subparagraph (A)—
†
718
HR 4520 EAS
‘‘(i) shall not be included in the
amount determined under subsection (a)
with respect to the organization for the tax-
able year, and
‘‘(ii) shall be included in the amount
determined under subsection (a) for the tax-
able year of each patron for which the pa-
tronage dividends for the taxable year de-
scribed in subparagraph (A) are included in
gross income.
‘‘(C) SPECIAL
RULES
FOR
DECREASE
IN
CREDITS FOR TAXABLE YEAR.—If the amount of
the credit of a cooperative organization deter-
mined under subsection (a)(3) for a taxable year
is less than the amount of such credit shown on
the return of the cooperative organization for
such year, an amount equal to the excess of—
‘‘(i) such reduction, over
‘‘(ii) the amount not apportioned to
such patrons under subparagraph (A) for
the taxable year,
shall be treated as an increase in tax imposed by
this chapter on the organization. Such increase
shall not be treated as tax imposed by this chap-
ter for purposes of determining the amount of
†
719
HR 4520 EAS
any credit under this chapter or for purposes of
section 55.’’.
(b) IMPROVEMENTS TO SMALL ETHANOL PRODUCER
CREDIT.—
(1) DEFINITION
OF
SMALL
ETHANOL
PRO-
DUCER.—Section 40(g) (relating to definitions and
special rules for eligible small ethanol producer cred-
it) is amended by striking ‘‘30,000,000’’ each place it
appears and inserting ‘‘60,000,000’’.
(2) SMALL ETHANOL PRODUCER CREDIT NOT A
PASSIVE
ACTIVITY
CREDIT.—Clause (i) of section
469(d)(2)(A) is amended by striking ‘‘subpart D’’ and
inserting ‘‘subpart D, other than section 40(a)(3),’’.
(3) SMALL
ETHANOL
PRODUCER
CREDIT
NOT
ADDED BACK TO INCOME UNDER SECTION 87.—Sec-
tion 87 (relating to income inclusion of alcohol fuel
credit) is amended to read as follows:
‘‘SEC. 87. ALCOHOL FUEL CREDIT.
‘‘Gross income includes an amount equal to the sum
of—
‘‘(1) the amount of the alcohol mixture credit de-
termined with respect to the taxpayer for the taxable
year under section 40(a)(1), and
†
720
HR 4520 EAS
‘‘(2) the alcohol credit determined with respect to
the taxpayer for the taxable year under section
40(a)(2).’’.
(c) CONFORMING AMENDMENT.—Section 1388 (relat-
ing to definitions and special rules for cooperative organi-
zations), as amended by this Act, is amended by adding
at the end the following new subsection:
‘‘(l) CROSS REFERENCE.—For provisions relating to
the apportionment of the alcohol fuels credit between cooper-
ative organizations and their patrons, see section
40(g)(6).’’.
(d) EFFECTIVE DATE.—The amendments made by this
section shall apply to taxable years ending after the date
of the enactment of this Act.
Subtitle C—Conservation and
Energy Efficiency Provisions
SEC. 821. CREDIT FOR CONSTRUCTION OF NEW ENERGY EF-
FICIENT HOME.
(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:
‘‘SEC. 45K. NEW ENERGY EFFICIENT HOME CREDIT.
‘‘(a) IN GENERAL.—For purposes of section 38, in the
case of an eligible contractor, the credit determined under
†
721
HR 4520 EAS
this section for the taxable year is an amount equal to the
aggregate adjusted bases of all energy efficient property in-
stalled in a qualifying new home during construction of
such home.
‘‘(b) LIMITATIONS.—
‘‘(1) MAXIMUM CREDIT.—
‘‘(A) IN GENERAL.—The credit allowed by
this section with respect to a qualifying new
home shall not exceed—
‘‘(i) in the case of a 30-percent home,
$1,000, and
‘‘(ii) in the case of a 50-percent home,
$2,000.
‘‘(B) 30- OR 50-PERCENT HOME.—For pur-
poses of subparagraph (A)—
‘‘(i) 30-PERCENT
HOME.—The term
‘30-percent home’ means—
‘‘(I) a qualifying new home which
is certified to have a projected level of
annual heating and cooling energy
consumption, measured in terms of av-
erage annual energy cost to the home-
owner, which is at least 30 percent less
than the annual level of heating and
cooling energy consumption of a quali-
†
722
HR 4520 EAS
fying new home constructed in accord-
ance with the latest standards of chap-
ter 4 of the International Energy Con-
servation Code approved by the De-
partment of Energy before the con-
struction of such qualifying new home
and any applicable Federal minimum
efficiency standards for equipment, or
‘‘(II) in the case of a qualifying
new home which is a manufactured
home, a home which meets the applica-
ble standards required by the Adminis-
trator of the Environmental Protection
Agency under the Energy Star Labeled
Homes program.
‘‘(ii) 50-PERCENT
HOME.—The term
‘50-percent home’ means a qualifying new
home which would be described in clause
(i)(I) if 50 percent were substituted for 30
percent.
‘‘(C) PRIOR
CREDIT
AMOUNTS
ON
SAME
HOME TAKEN INTO ACCOUNT.—The amount of
the credit otherwise allowable for the taxable
year with respect to a qualifying new home
under clause (i) or (ii) of subparagraph (A) shall
†
723
HR 4520 EAS
be reduced by the sum of the credits allowed
under subsection (a) to any taxpayer with re-
spect to the home for all preceding taxable years.
‘‘(2) COORDINATION WITH CERTAIN CREDITS.—
For purposes of this section—
‘‘(A) the basis of any property referred to in
subsection (a) shall be reduced by that portion of
the basis of any property which is attributable to
the rehabilitation credit (as determined under
section 47(a)) or to the energy credit (as deter-
mined under section 48(a)), and
‘‘(B) expenditures taken into account under
section 25D, 47, or 48(a) shall not be taken into
account under this section.
‘‘(3) PROVIDER LIMITATION.—Any eligible con-
tractor who directly or indirectly provides the guar-
antee of energy savings under a guarantee-based
method of certification described in subsection
(d)(1)(D) shall not be eligible to receive the credit al-
lowed by this section.
‘‘(c) DEFINITIONS.—For purposes of this section—
‘‘(1) ELIGIBLE CONTRACTOR.—The term ‘eligible
contractor’ means—
‘‘(A) the person who constructed the quali-
fying new home, or
†
724
HR 4520 EAS
‘‘(B) in the case of a qualifying new home
which is a manufactured home, the manufac-
tured home producer of such home.
If more than 1 person is described in subparagraph
(A) or (B) with respect to any qualifying new home,
such term means the person designated as such by the
owner of such home.
‘‘(2) ENERGY EFFICIENT PROPERTY.—The term
‘energy efficient property’ means any energy efficient
building envelope component, and any energy effi-
cient heating or cooling equipment or system which
can, individually or in combination with other com-
ponents, meet the requirements of this section.
‘‘(3) QUALIFYING NEW HOME.—
‘‘(A) IN
GENERAL.—The term ‘qualifying
new home’ means a dwelling—
‘‘(i) located in the United States,
‘‘(ii) the construction of which is sub-
stantially completed after December 31,
2004, and
‘‘(iii) the first use of which after con-
struction is as a principal residence (within
the meaning of section 121).
‘‘(B) MANUFACTURED HOME INCLUDED.—
The term ‘qualifying new home’ includes a man-
†
725
HR 4520 EAS
ufactured home conforming to Federal Manufac-
tured Home Construction and Safety Standards
(24 C.F.R. 3280).
‘‘(4) CONSTRUCTION.—The term ‘construction’
includes reconstruction and rehabilitation.
‘‘(5) 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 qualifying new
home when installed in or on such home,
‘‘(B) exterior windows (including skylights),
and
‘‘(C) exterior doors.
‘‘(d) CERTIFICATION.—
‘‘(1) METHOD OF CERTIFICATION.—
‘‘(A) IN
GENERAL.—A certification de-
scribed in subsection (b)(1)(B) shall be deter-
mined either by a component-based method, a
performance-based method, or a guarantee-based
method, or, in the case of a qualifying new home
which is a manufactured home, by a method pre-
scribed by the Administrator of the Environ-
mental Protection Agency under the Energy Star
Labeled Homes program.
†
726
HR 4520 EAS
‘‘(B) COMPONENT-BASED METHOD.—A com-
ponent-based method is a method which uses the
applicable technical energy efficiency specifica-
tions or ratings (including product labeling re-
quirements) for the energy efficient building en-
velope component or energy efficient heating or
cooling equipment. The Secretary shall, in con-
sultation with the Administrator of the Environ-
mental Protection Agency, develop prescriptive
component-based packages which are equivalent
in energy performance to properties which qual-
ify under subparagraph (C).
‘‘(C) PERFORMANCE-BASED METHOD.—
‘‘(i) IN
GENERAL.—A performance-
based method is a method which calculates
projected energy usage and cost reductions
in the qualifying new home in relation to a
new home—
‘‘(I) heated by the same fuel type,
and
‘‘(II) constructed in accordance
with the latest standards of chapter 4
of the International Energy Conserva-
tion Code approved by the Department
of Energy before the construction of
†
727
HR 4520 EAS
such qualifying new home and any ap-
plicable Federal minimum efficiency
standards for equipment.
‘‘(ii) 
COMPUTER
SOFTWARE.—Com-
puter software shall be used in support of a
performance-based 
method 
certification
under clause (i). Such software shall meet
procedures and methods for calculating en-
ergy and cost savings in regulations pro-
mulgated by the Secretary of Energy.
‘‘(D) GUARANTEE-BASED METHOD.—
‘‘(i) IN GENERAL.—A guarantee-based
method is a method which guarantees in
writing to the homeowner energy savings of
either 30 percent or 50 percent over the
2000 International Energy Conservation
Code for heating and cooling costs. The
guarantee shall be provided for a minimum
of 2 years and shall fully reimburse the
homeowner any heating and cooling costs in
excess of the guaranteed amount.
‘‘(ii) 
COMPUTER
SOFTWARE.—Com-
puter software shall be selected by the pro-
vider to support the guarantee-based method
certification under clause (i). Such software
†
728
HR 4520 EAS
shall meet procedures and methods for cal-
culating energy and cost savings in regula-
tions promulgated by the Secretary of En-
ergy.
‘‘(2) PROVIDER.—A certification described in
subsection (b)(1)(B) shall be provided by—
‘‘(A) in the case of a component-based meth-
od, a local building regulatory authority, a util-
ity, or a home energy rating organization,
‘‘(B) in the case of a performance-based
method or a guarantee-based method, an indi-
vidual recognized by an organization designated
by the Secretary for such purposes, or
‘‘(C) in the case of a qualifying new home
which is a manufactured home, a manufactured
home primary inspection agency.
‘‘(3) FORM.—
‘‘(A) IN
GENERAL.—A certification de-
scribed in subsection (b)(1)(B) shall be made in
writing in a manner which specifies in readily
verifiable fashion the energy efficient building
envelope components and energy efficient heating
or cooling equipment installed and their respec-
tive rated energy efficiency performance, and
†
729
HR 4520 EAS
‘‘(i) in the case of a performance-based
method, accompanied by a written analysis
documenting the proper application of a
permissible energy performance calculation
method to the specific circumstances of such
qualifying new home, and
‘‘(ii) in the case of a qualifying new
home which is a manufactured home, ac-
companied by such documentation as re-
quired by the Administrator of the Environ-
mental Protection Agency under the Energy
Star Labeled Homes program.
‘‘(B) FORM PROVIDED TO BUYER.—A form
documenting the energy efficient building enve-
lope components and energy efficient heating or
cooling equipment installed and their rated en-
ergy efficiency performance shall be provided to
the buyer of the qualifying new home. The form
shall include labeled R-value for insulation prod-
ucts, NFRC-labeled U-factor and solar heat gain
coefficient for windows, skylights, and doors, la-
beled annual fuel utilization efficiency (AFUE)
ratings for furnaces and boilers, labeled heating
seasonal performance factor (HSPF) ratings for
electric heat pumps, and labeled seasonal energy
†
730
HR 4520 EAS
efficiency ratio (SEER) ratings for air condi-
tioners.
‘‘(C) RATINGS LABEL AFFIXED IN DWELL-
ING.—A permanent label documenting the rat-
ings in subparagraph (B) shall be affixed to the
front of the electrical distribution panel of the
qualifying new home, or shall be otherwise per-
manently displayed in a readily inspectable lo-
cation in such home.
‘‘(4) REGULATIONS.—
‘‘(A) IN GENERAL.—In prescribing regula-
tions under this subsection for performance-based
and guarantee-based certification methods, the
Secretary shall prescribe procedures for calcu-
lating annual energy usage and cost reductions
for heating and cooling and for the reporting of
the results. Such regulations shall—
‘‘(i) provide that any calculation pro-
cedures be fuel neutral such that the same
energy efficiency measures allow a quali-
fying new home to be eligible for the credit
under this section regardless of whether such
home uses a gas or oil furnace or boiler or
an electric heat pump, and
†
731
HR 4520 EAS
‘‘(ii) require that any computer soft-
ware allow for the printing of the Federal
tax forms necessary for the credit under this
section and for the printing of forms for
disclosure to the homebuyer.
‘‘(B) PROVIDERS.—For purposes of para-
graph (2)(B), the Secretary shall establish re-
quirements for the designation of individuals
based on the requirements for energy consultants
and home energy raters specified by the Mort-
gage Industry National Home Energy Rating
Standards.
‘‘(e) APPLICATION.—Subsection (a) shall apply to
qualifying new homes the construction of which is substan-
tially completed after December 31, 2004, and purchased
during the period beginning on such date and ending on—
‘‘(1) in the case of any 30-percent home, Decem-
ber 31, 2005, and
‘‘(2) in the case of any 50-percent home, Decem-
ber 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 (21), by striking the period
†
732
HR 4520 EAS
at the end of paragraph (22) and inserting ‘‘, plus’’, and
by adding at the end the following new paragraph:
‘‘(23) the new energy efficient home credit deter-
mined under section 45K(a).’’.
(c) DENIAL OF DOUBLE BENEFIT.—Section 280C (re-
lating to certain expenses for which credits are allowable)
is amended by adding at the end the following new sub-
section:
‘‘(d) NEW ENERGY EFFICIENT HOME EXPENSES.—No
deduction shall be allowed for that portion of expenses for
a qualifying new home otherwise allowable as a deduction
for the taxable year which is equal to the amount of the
credit determined for such taxable year under section
45K(a).’’.
(d) DEDUCTION
FOR CERTAIN UNUSED BUSINESS
CREDITS.—Section 196(c) (defining qualified business cred-
its), as amended by this Act, is amended by striking ‘‘and’’
at the end of paragraph (10), by striking the period at the
end of paragraph (11) and inserting ‘‘, and’’, and by add-
ing after paragraph (11) the following new paragraph:
‘‘(12) 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
†
733
HR 4520 EAS
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 homes the construction of which is
substantially completed after December 31, 2004.
SEC. 822. CREDIT FOR ENERGY EFFICIENT APPLIANCES.
(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:
‘‘SEC. 45L. ENERGY EFFICIENT APPLIANCE CREDIT.
‘‘(a) ALLOWANCE OF CREDIT.—
‘‘(1) IN GENERAL.—For purposes of section 38,
the energy efficient appliance credit determined under
this section for the taxable year is an amount equal
to the sum of the amounts determined under para-
graph (2) for qualified energy efficient appliances
produced by the taxpayer during the calendar year
ending with or within the taxable year.
‘‘(2) AMOUNT.—The amount determined under
this paragraph for any category described in sub-
section (b)(2)(B) shall be the product of the applicable
amount for appliances in the category and the eligible
production for the category.
†
734
HR 4520 EAS
‘‘(b) APPLICABLE AMOUNT; ELIGIBLE PRODUCTION.—
For purposes of subsection (a)—
‘‘(1) 
APPLICABLE
AMOUNT.—The 
applicable
amount is—
‘‘(A) $50, in the case of—
‘‘(i) a clothes washer which is manu-
factured with at least a 1.42 MEF, or
‘‘(ii) a refrigerator which consumes at
least 10 percent less kilowatt hours per year
than the energy conservation standards for
refrigerators promulgated by the Depart-
ment of Energy and effective on July 1,
2001,
‘‘(B) $100, in the case of—
‘‘(i) a clothes washer which is manu-
factured with at least a 1.50 MEF, or
‘‘(ii) a refrigerator which consumes at
least 15 percent (20 percent in the case of
a refrigerator manufactured after 2006) less
kilowatt hours per year than such energy
conservation standards, and
‘‘(C) $150, in the case of a refrigerator
manufactured before 2007 which consumes at
least 20 percent less kilowatt hours per year than
such energy conservation standards.
†
735
HR 4520 EAS
‘‘(2) ELIGIBLE PRODUCTION.—
‘‘(A) IN GENERAL.—The eligible production
of each category of qualified energy efficient ap-
pliances is the excess of—
‘‘(i) the number of appliances in such
category which are produced by the tax-
payer during such calendar year, over
‘‘(ii) the average number of appliances
in such category which were produced by
the taxpayer during calendar years 2001,
2002, and 2003.
‘‘(B) CATEGORIES.—For purposes of sub-
paragraph (A), the categories are—
‘‘(i) clothes washers described in para-
graph (1)(A)(i),
‘‘(ii) clothes washers described in para-
graph (1)(B)(i),
‘‘(iii) refrigerators described in para-
graph (1)(A)(ii),
‘‘(iv) refrigerators described in para-
graph (1)(B)(ii), and
‘‘(v) refrigerators described in para-
graph (1)(C).
‘‘(c) LIMITATION ON MAXIMUM CREDIT.—
†
736
HR 4520 EAS
‘‘(1) IN
GENERAL.—The amount of credit al-
lowed under subsection (a) with respect to a taxpayer
for all taxable years shall not exceed $60,000,000, of
which not more than $30,000,000 may be allowed
with respect to the credit determined by using the ap-
plicable amount under subsection (b)(1)(A).
‘‘(2) LIMITATION BASED ON GROSS RECEIPTS.—
The credit allowed under subsection (a) with respect
to a taxpayer for the taxable year shall not exceed an
amount equal to 2 percent of the average annual gross
receipts of the taxpayer for the 3 taxable years pre-
ceding the taxable year in which the credit is deter-
mined.
‘‘(3) GROSS
RECEIPTS.—For purposes of this
subsection, the rules of paragraphs (2) and (3) of sec-
tion 448(c) shall apply.
‘‘(d) DEFINITIONS.—For purposes of this section—
‘‘(1) QUALIFIED
ENERGY
EFFICIENT
APPLI-
ANCE.—The term ‘qualified energy efficient appliance’
means—
‘‘(A) a clothes washer described in subpara-
graph (A)(i) or (B)(i) of subsection (b)(1), or
‘‘(B) a refrigerator described in subpara-
graph (A)(ii), (B)(ii), or (C) of subsection (b)(1).
†
737
HR 4520 EAS
‘‘(2) CLOTHES
WASHER.—The term ‘clothes
washer’ means a residential clothes washer, including
a residential style coin operated washer.
‘‘(3) REFRIGERATOR.—The term ‘refrigerator’
means an automatic defrost refrigerator-freezer which
has an internal volume of at least 16.5 cubic feet.
‘‘(4) MEF.—The term ‘MEF’ means Modified
Energy Factor (as determined by the Secretary of En-
ergy).
‘‘(e) SPECIAL RULES.—
‘‘(1) IN GENERAL.—Rules similar to the rules of
subsections (c), (d), and (e) of section 52 shall apply
for purposes of this section.
‘‘(2) AGGREGATION RULES.—All persons treated
as a single employer under subsection (a) or (b) of
section 52 or subsection (m) or (o) of section 414 shall
be treated as 1 person for purposes of subsection (a).
‘‘(f) VERIFICATION.—The taxpayer shall submit such
information or certification as the Secretary, in consulta-
tion with the Secretary of Energy, determines necessary to
claim the credit amount under subsection (a).
‘‘(g) TERMINATION.—This section shall not apply—
‘‘(1) with respect to refrigerators described in
subsection (b)(1)(A)(ii) produced after December 31,
2005, and
†
738
HR 4520 EAS
‘‘(2) with respect to all other qualified energy ef-
ficient appliances produced after 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 (22), by striking the period
at the end of paragraph (23) and inserting ‘‘, plus’’, and
by adding at the end the following new paragraph:
‘‘(24) the energy efficient appliance credit deter-
mined under section 45L(a).’’.
(c) 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. 45L. Energy efficient appliance credit.’’.
(d) EFFECTIVE DATE.—The amendments made by this
section shall apply to appliances produced after December
31, 2004, in taxable years ending after such date.
SEC. 823. CREDIT FOR RESIDENTIAL ENERGY EFFICIENT
PROPERTY.
(a) IN GENERAL.—Subpart A of part IV of subchapter
A of chapter 1 (relating to nonrefundable personal credits)
is amended by inserting after section 25B the following new
section:
†
739
HR 4520 EAS
‘‘SEC. 25C. RESIDENTIAL ENERGY EFFICIENT PROPERTY.
‘‘(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 the sum of—
‘‘(1) 15 percent of the qualified photovoltaic
property expenditures made by the taxpayer during
such year,
‘‘(2) 15 percent of the qualified solar water heat-
ing property expenditures made by the taxpayer dur-
ing such year,
‘‘(3) 30 percent of the qualified fuel cell property
expenditures made by the taxpayer during such year,
‘‘(4) 30 percent of the qualified wind energy
property expenditures made by the taxpayer during
such year, and
‘‘(5) the sum of the qualified Tier 2 energy effi-
cient building property expenditures made by the tax-
payer during such year.
‘‘(b) LIMITATIONS.—
‘‘(1) MAXIMUM
CREDIT.—The credit allowed
under subsection (a) shall not exceed—
‘‘(A) $2,000 for property described in para-
graph (1), (2), or (5) of subsection (d),
‘‘(B) $500 for each 0.5 kilowatt of capacity
of property described in subsection (d)(4), and
†
740
HR 4520 EAS
‘‘(C) for property described in subsection
(d)(6)—
‘‘(i) $150 for each electric heat pump
water heater,
‘‘(ii) $125 for each advanced natural
gas, oil, propane furnace, or hot water boil-
er,
‘‘(iii) $150 for each advanced natural
gas, oil, or propane water heater,
‘‘(iv) $50 for each natural gas, oil, or
propane water heater,
‘‘(v) $50 for an advanced main air cir-
culating fan,
‘‘(vi) $150 for each advanced combina-
tion space and water heating system,
‘‘(vii) $50 for each combination space
and water heating system, and
‘‘(viii) $250 for each geothermal heat
pump.
‘‘(2) SAFETY CERTIFICATIONS.—No credit shall
be allowed under this section for an item of property
unless—
‘‘(A) in the case of solar water heating
property, such property is certified for perform-
ance and safety by the non-profit Solar Rating
†
741
HR 4520 EAS
Certification Corporation or a comparable entity
endorsed by the government of the State in which
such property is installed,
‘‘(B) in the case of a photovoltaic property,
a fuel cell property, or a wind energy property,
such property meets appropriate fire and electric
code requirements, and
‘‘(C) in the case of property described in
subsection (d)(6), such property meets the per-
formance and quality standards, and the certifi-
cation requirements (if any), which—
‘‘(i) have been prescribed by the Sec-
retary by regulations (after consultation
with the Secretary of Energy or the Admin-
istrator of the Environmental Protection
Agency, as appropriate),
‘‘(ii) in the case of the energy efficiency
ratio (EER) for property described in sub-
section (d)(6)(B)(viii)—
‘‘(I) require measurements to be
based on published data which is tested
by manufacturers at 95 degrees Fahr-
enheit, and
‘‘(II) do not require ratings to be
based on certified data of the Air Con-
†
742
HR 4520 EAS
ditioning and Refrigeration Institute,
and
‘‘(iii) are in effect at the time of the
acquisition of the property.
‘‘(c) CARRYFORWARD
OF UNUSED CREDIT.—If the
credit allowable under subsection (a) exceeds the limitation
imposed by section 26(a) for such taxable year reduced by
the sum of the credits allowable under this subpart (other
than this section and section 25D), such excess shall be car-
ried to the succeeding taxable year and added to the credit
allowable under subsection (a) for such succeeding taxable
year.
‘‘(d) 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 to heat water for use in a dwelling unit
located in the United States and used as a residence
by the taxpayer if at least half of the energy used by
such property for such purpose is derived from the
sun.
‘‘(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
†
743
HR 4520 EAS
in a dwelling unit located in the United States and
used as a residence by the taxpayer.
‘‘(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 property de-
scribed in paragraph (1) or (2) solely because it con-
stitutes a structural component of the structure on
which it is installed.
‘‘(4) QUALIFIED FUEL CELL PROPERTY EXPENDI-
TURE.—The term ‘qualified fuel cell property expend-
iture’ means an expenditure for qualified fuel cell
property (as defined in section 48(a)(4)) installed on
or in connection with a dwelling unit located in the
United States and used as a principal residence
(within the meaning of section 121) by the taxpayer.
‘‘(5) QUALIFIED WIND ENERGY PROPERTY EX-
PENDITURE.—The term ‘qualified wind energy prop-
erty expenditure’ means an expenditure for property
which uses wind energy to generate electricity for use
in a dwelling unit located in the United States and
used as a residence by the taxpayer.
‘‘(6) QUALIFIED
TIER
ENERGY
EFFICIENT
BUILDING PROPERTY EXPENDITURE.—
‘‘(A) IN
GENERAL.—The term ‘qualified
Tier 2 energy efficient building property expend-
†
744
HR 4520 EAS
iture’ means an expenditure for any Tier 2 en-
ergy efficient building property.
‘‘(B) TIER 2 ENERGY EFFICIENT BUILDING
PROPERTY.—The term ‘Tier 2 energy efficient
building property’ means—
‘‘(i) an electric heat pump water heater
which yields an energy factor of at least 1.7
in the standard Department of Energy test
procedure,
‘‘(ii) an advanced natural gas, oil,
propane furnace, or hot water boiler which
achieves at least 95 percent annual fuel uti-
lization efficiency (AFUE),
‘‘(iii) an advanced natural gas, oil, or
propane water heater which has an energy
factor of at least 0.80 in the standard De-
partment of Energy test procedure,
‘‘(iv) a natural gas, oil, or propane
water heater which has an energy factor of
at least 0.65 but less than 0.80 in the stand-
ard Department of Energy test procedure,
‘‘(v) an advanced main air circulating
fan used in a new natural gas, propane, or
oil-fired furnace, including main air circu-
lating fans that use a brushless permanent
†
746
HR 4520 EAS
dwelling unit shall be taken into account for purposes
of this section.
‘‘(8) 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.
‘‘(e) SPECIAL RULES.—For purposes of this section—
‘‘(1) 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
(as the case may be) made during such calendar
year by any of such individuals with respect to
such dwelling unit shall be determined by treat-
ing 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 individuals,
a credit under subsection (a) for the taxable year
in which such calendar year ends in an amount
†
747
HR 4520 EAS
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.
‘‘(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 de-
fined in such section), such individual shall be treated
as having made his tenant-stockholder’s proportionate
share (as defined in section 216(b)(3)) of any expend-
itures 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 ASSOCIA-
TION.—For purposes of this paragraph, the term
‘condominium management association’ means
†
748
HR 4520 EAS
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.
‘‘(4) ALLOCATION IN CERTAIN CASES.—Except in
the case of qualified wind energy property expendi-
tures, if less than 80 percent of the use of an item is
for nonbusiness purposes, only that portion of the ex-
penditures for such item which is properly allocable
to use for nonbusiness purposes shall be taken into ac-
count.
‘‘(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 con-
structed or reconstructed structure by the tax-
payer begins.
†
749
HR 4520 EAS
‘‘(C) AMOUNT.—The amount of any expend-
iture 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)(5)(C)).
‘‘(f) 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.
‘‘(g) TERMINATION.—The credit allowed under this
section shall not apply to expenditures after December 31,
2007.’’.
(b) CREDIT ALLOWED AGAINST REGULAR TAX AND
ALTERNATIVE MINIMUM TAX.—
(1) IN GENERAL.—Section 25C(b), as added by
subsection (a), is amended by adding at the end the
following new paragraph:
†
750
HR 4520 EAS
‘‘(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
25D) and section 27 for the taxable year.’’.
(2) CONFORMING AMENDMENTS.—
(A) Section 25C(c), as added by subsection
(a), is amended by striking ‘‘section 26(a) for
such taxable year reduced by the sum of the cred-
its allowable under this subpart (other than this
section and section 25D)’’ and inserting ‘‘sub-
section (b)(3)’’.
(B) Section 23(b)(4)(B) is amended by in-
serting ‘‘and section 25C’’ after ‘‘this section’’.
(C) Section 24(b)(3)(B) is amended by
striking ‘‘23 and 25B’’ and inserting ‘‘23, 25B,
and 25C’’.
(D) Section 25(e)(1)(C) is amended by in-
serting ‘‘25C,’’ after ‘‘25B,’’.
†
751
HR 4520 EAS
(E) Section 25B(g)(2) is amended by strik-
ing ‘‘section 23’’ and inserting ‘‘sections 23 and
25C’’.
(F) Section 26(a)(1) is amended by striking
‘‘and 25B’’ and inserting ‘‘25B, and 25C’’.
(G) Section 904(i), as redesignated and
amended by this Act, is amended by striking
‘‘and 25B’’ and inserting ‘‘25B, and 25C’’.
(H) Section 1400C(d) is amended by strik-
ing ‘‘and 25B’’ and inserting ‘‘25B, and 25C’’.
(c) ADDITIONAL CONFORMING AMENDMENTS.—
(1) Section 1016(a), as amended by this Act, is
amended by striking ‘‘and’’ at the end of paragraph
(33), by striking the period at the end of paragraph
(34) and inserting ‘‘, and’’, and by adding at the end
the following new paragraph:
‘‘(35) to the extent provided in section 25C(f), 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.’’.
(d) EFFECTIVE DATES.—
†
752
HR 4520 EAS
(1) IN GENERAL.—Except as provided by para-
graph (2), the amendments made by this section shall
apply to expenditures after December 31, 2004, in
taxable years ending after such date.
(2) SUBSECTION (b).—The amendments made by
subsection (b) shall apply to taxable years beginning
after December 31, 2004.
SEC. 824. CREDIT FOR BUSINESS INSTALLATION OF QUALI-
FIED FUEL CELLS AND STATIONARY MICRO-
TURBINE POWER PLANTS.
(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 or
qualified microturbine property,’’.
(b) QUALIFIED FUEL CELL PROPERTY; QUALIFIED
MICROTURBINE PROPERTY.—Section 48(a) (relating to en-
ergy credit) is amended by redesignating paragraphs (4)
and (5) as paragraphs (5) and (6), respectively, and by
inserting after paragraph (3) the following new paragraph:
‘‘(4) QUALIFIED FUEL CELL PROPERTY; QUALI-
FIED
MICROTURBINE
PROPERTY.—For purposes of
this subsection—
‘‘(A) QUALIFIED FUEL CELL PROPERTY.—
†
753
HR 4520 EAS
‘‘(i) IN GENERAL.—The term ‘qualified
fuel cell property’ means a fuel cell power
plant which—
‘‘(I) generates at least 0.5 kilowatt
of electricity using an electrochemical
process, and
‘‘(II) has an electricity-only gen-
eration efficiency greater than 30 per-
cent.
‘‘(ii) LIMITATION.—In the case of
qualified fuel cell property placed in service
during the taxable year, the credit otherwise
determined under paragraph (1) for such
year with respect to such property shall not
exceed an amount equal to $500 for each 0.5
kilowatt of capacity of such property.
‘‘(iii) FUEL CELL POWER PLANT.—The
term ‘fuel cell power plant’ means an inte-
grated system comprised of a fuel cell stack
assembly and associated balance of plant
components which converts a fuel into elec-
tricity using electrochemical means.
‘‘(iv) TERMINATION.—The term ‘quali-
fied fuel cell property’ shall not include any
†
754
HR 4520 EAS
property placed in service after December
31, 2007.
‘‘(B) 
QUALIFIED
MICROTURBINE
PROP-
ERTY.—
‘‘(i) IN GENERAL.—The term ‘qualified
microturbine property’ means a stationary
microturbine power plant which—
‘‘(I) has a capacity of less than
2,000 kilowatts, and
‘‘(II) has an electricity-only gen-
eration efficiency of not less than 26
percent at International Standard Or-
ganization conditions.
‘‘(ii) LIMITATION.—In the case of
qualified microturbine property placed in
service during the taxable year, the credit
otherwise determined under paragraph (1)
for such year with respect to such property
shall not exceed an amount equal $200 for
each kilowatt of capacity of such property.
‘‘(iii) 
STATIONARY
MICROTURBINE
POWER
PLANT.—The 
term 
‘stationary
microturbine power plant’ means an inte-
grated system comprised of a gas turbine
engine, a combustor, a recuperator or regen-
†
755
HR 4520 EAS
erator, a generator or alternator, and asso-
ciated balance of plant components which
converts a fuel into electricity and thermal
energy. Such term also includes all sec-
ondary components located between the ex-
isting infrastructure for fuel delivery and
the existing infrastructure for power dis-
tribution, including equipment and controls
for meeting relevant power standards, such
as voltage, frequency, and power factors.
‘‘(iv) TERMINATION.—The term ‘quali-
fied microturbine property’ shall not in-
clude any property placed in service after
December 31, 2006.’’.
(c) ENERGY PERCENTAGE.—Section 48(a)(2)(A) (re-
lating 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, 30 percent, and
‘‘(ii) in the case of any other energy
property, 10 percent.’’.
(d) CONFORMING AMENDMENTS.—
†
756
HR 4520 EAS
(A) Section 29(b)(3)(A)(i)(III) is amended
by striking ‘‘section 48(a)(4)(C)’’ and inserting
‘‘section 48(a)(5)(C)’’.
(B) Section 48(a)(1) is amended by insert-
ing ‘‘except as provided in subparagraph (A)(ii)
or (B)(ii) of paragraph (4),’’ before ‘‘the energy’’.
(e) EFFECTIVE DATE.—The amendments made by this
section shall apply to property placed in service after De-
cember 31, 2004, in taxable years ending after such date,
under rules similar to the rules of section 48(m) of the In-
ternal Revenue Code of 1986 (as in effect on the day before
the date of the enactment of the Revenue Reconciliation Act
of 1990).
SEC. 825. ENERGY EFFICIENT COMMERCIAL BUILDINGS DE-
DUCTION.
(a) IN GENERAL.—Part VI of subchapter B of chapter
1 (relating to itemized deductions for individuals and cor-
porations) is amended by inserting after section 179A the
following new section:
‘‘SEC. 179B. ENERGY EFFICIENT COMMERCIAL BUILDINGS
DEDUCTION.
‘‘(a) IN GENERAL.—There shall be allowed as a deduc-
tion for the taxable year in which a building is placed in
service by a taxpayer, an amount equal to the energy effi-
cient commercial building property expenditures made by
†
757
HR 4520 EAS
such taxpayer with respect to the construction or recon-
struction of such building for the taxable year or any pre-
ceding taxable year.
‘‘(b) MAXIMUM AMOUNT OF DEDUCTION.—The amount
of energy efficient commercial building property expendi-
tures taken into account under subsection (a) shall not ex-
ceed an amount equal to the product of—
‘‘(1) $2.25, and
‘‘(2) the square footage of the building with re-
spect to which the expenditures are made.
‘‘(c) ENERGY
EFFICIENT
COMMERCIAL
BUILDING
PROPERTY EXPENDITURES.—For purposes of this section—
‘‘(1) IN GENERAL.—The term ‘energy efficient
commercial building property expenditures’ means
amounts paid or incurred for energy efficient prop-
erty installed on or in connection with the construc-
tion or reconstruction of a building—
‘‘(A) for which depreciation is allowable
under section 167,
‘‘(B) which is located in the United States,
and
‘‘(C) which is the type of structure to which
the Standard 90.1–2001 of the American Society
of Heating, Refrigerating, and Air Conditioning
†
758
HR 4520 EAS
Engineers and the Illuminating Engineering So-
ciety of North America is applicable.
Such term includes expenditures for labor costs prop-
erly allocable to the onsite preparation, assembly, or
original installation of the property.
‘‘(2) ENERGY EFFICIENT PROPERTY.—For pur-
poses of paragraph (1)—
‘‘(A) IN GENERAL.—The term ‘energy effi-
cient property’ means any property which re-
duces total annual energy and power costs with
respect to the lighting, heating, cooling, ventila-
tion, and hot water supply systems of the build-
ing by 50 percent or more in comparison to a
building which meets the minimum requirements
of Standard 90.1–2001 of the American Society
of Heating, Refrigerating, and Air Conditioning
Engineers and the Illuminating Engineering So-
ciety of North America, using methods of cal-
culation described in subparagraph (B) and cer-
tified by qualified individuals as provided under
paragraph (5).
‘‘(B) METHODS
OF
CALCULATION.—The
Secretary, in consultation with the Secretary of
Energy, shall promulgate regulations which de-
†
759
HR 4520 EAS
scribe in detail methods for calculating and
verifying energy and power costs.
‘‘(C) COMPUTER SOFTWARE.—
‘‘(i) IN GENERAL.—Any calculation de-
scribed in subparagraph (B) shall be pre-
pared by qualified computer software.
‘‘(ii) QUALIFIED
COMPUTER
SOFT-
WARE.—For purposes of this subparagraph,
the term ‘qualified computer software’
means software—
‘‘(I) for which the software de-
signer has certified that the software
meets all procedures and detailed meth-
ods for calculating energy and power
costs as required by the Secretary,
‘‘(II) which provides such forms
as required to be filed by the Secretary
in connection with energy efficiency of
property and the deduction allowed
under this section, and
‘‘(III) which provides a notice
form which summarizes the energy effi-
ciency features of the building and its
projected annual energy costs.
†
760
HR 4520 EAS
‘‘(3) ALLOCATION
OF
DEDUCTION
FOR
PUBLIC
PROPERTY.—In the case of energy efficient commer-
cial building property expenditures made by a public
entity with respect to the construction or reconstruc-
tion of a public building, the Secretary shall promul-
gate regulations under which the value of the deduc-
tion with respect to such expenditures which would be
allowable to the public entity under this section (de-
termined without regard to the tax-exempt status of
such entity) may be allocated to the person primarily
responsible for designing the energy efficient property.
Such person shall be treated as the taxpayer for pur-
poses of this section.
‘‘(4) NOTICE TO OWNER.—Any qualified indi-
vidual providing a certification under paragraph (5)
shall provide an explanation to the owner of the
building regarding the energy efficiency features of
the building and its projected annual energy costs as
provided 
in 
the 
notice 
under 
paragraph
(2)(C)(ii)(III).
‘‘(5) CERTIFICATION.—
‘‘(A) IN
GENERAL.—The Secretary shall
prescribe procedures for the inspection and test-
ing for compliance of buildings by qualified in-
†
761
HR 4520 EAS
dividuals described in subparagraph (B). Such
procedures shall be—
‘‘(i) comparable, given the difference
between commercial and residential build-
ings, to the requirements in the Mortgage
Industry National Home Energy Rating
Standards, and
‘‘(ii) fuel neutral such that the same
energy efficiency measures allow a building
to be eligible for the credit under this sec-
tion regardless of whether such building uses
a gas or oil furnace or boiler or an electric
heat pump.
‘‘(B) QUALIFIED
INDIVIDUALS.—Individ-
uals qualified to determine compliance shall be
only those individuals who are recognized by an
organization certified by the Secretary for such
purposes. The Secretary may qualify a home en-
ergy ratings organization, a local building regu-
latory authority, a State or local energy office,
a utility, or any other organization which meets
the requirements prescribed under this para-
graph.
‘‘(C) PROFICIENCY OF QUALIFIED INDIVID-
UALS.—The Secretary shall consult with non-
†
762
HR 4520 EAS
profit organizations and State agencies with ex-
pertise in energy efficiency calculations and in-
spections to develop proficiency tests and train-
ing programs to qualify individuals to determine
compliance.
‘‘(d) BASIS REDUCTION.—For purposes of this subtitle,
if a deduction is allowed under this section with respect
to any energy efficient property, the basis of such property
shall be reduced by the amount of the deduction so allowed.
‘‘(e) INTERIM RULES FOR LIGHTING SYSTEMS.—Until
such time as the Secretary issues final regulations under
subsection (c)(2)(B) with respect to property which is part
of a lighting system—
‘‘(1) IN GENERAL.—The lighting system target
under subsection (d)(1)(A)(ii) shall be a reduction in
lighting power density of 25 percent (50 percent in
the case of a warehouse) of the minimum require-
ments in Table 9.3.1.1 or Table 9.3.1.2 (not including
additional interior lighting power allowances) of
Standard 90.1–2001.
‘‘(2) REDUCTION IN CREDIT 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 of lighting power den-
†
763
HR 4520 EAS
sity of the lighting system is not at least 40 per-
cent, only the applicable percentage of the
amount of credit otherwise allowable under this
section with respect to such property shall be al-
lowed.
‘‘(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-
clude provision for bilevel switching in all
occupancies except hotel and motel guest
rooms, store rooms, restrooms, and public
lobbies, or
†
764
HR 4520 EAS
‘‘(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.
‘‘(f) REGULATIONS.—The Secretary shall promulgate
such regulations as necessary to take into account new tech-
nologies regarding energy efficiency and renewable energy
for purposes of determining energy efficiency and savings
under this section.
‘‘(g) TERMINATION.—This section shall not apply with
respect to any energy efficient commercial building prop-
erty expenditures in connection with a building the con-
struction of which is not completed on or before December
31, 2009.’’.
(b) CONFORMING AMENDMENTS.—
(1) Section 1016(a), as amended by this Act, is
amended by striking ‘‘and’’ at the end of paragraph
(34), by striking the period at the end of paragraph
(35) and inserting ‘‘, and’’, and by adding at the end
the following new paragraph:
‘‘(36) 
to 
the 
extent 
provided 
in 
section
179B(d).’’.
†
765
HR 4520 EAS
(2) Section 1245(a) is amended by inserting
‘‘179B,’’ after ‘‘179A,’’ 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 179B’’.
(4) Section 263(a)(1), as amended by this Act, is
amended by striking ‘‘or’’ at the end of subparagraph
(H), by striking the period at the end of subpara-
graph (I) and inserting ‘‘, or’’, and by inserting after
subparagraph (I) the following new subparagraph:
‘‘(J) expenditures for which a deduction is
allowed under section 179B.’’.
(5) Section 312(k)(3)(B) is amended by striking
‘‘or 179A’’ each place it appears in the heading and
text and inserting ‘‘, 179A, or 179B’’.
(c) CLERICAL AMENDMENT.—The table of sections for
part VI of subchapter B of chapter 1 is amended by insert-
ing after section 179A the following new item:
‘‘Sec. 179B. Energy efficient commercial buildings deduction.’’.
(d) EFFECTIVE DATE.—The amendments made by this
section shall apply to taxable years beginning after Decem-
ber 31, 2004.
†
766
HR 4520 EAS
SEC. 826. THREE-YEAR APPLICABLE RECOVERY PERIOD FOR
DEPRECIATION OF QUALIFIED ENERGY MAN-
AGEMENT DEVICES.
(a) IN GENERAL.—Section 168(e)(3)(A) (defining 3-
year property) 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 adding at the end the
following new clause:
‘‘(iv) any qualified energy manage-
ment device.’’.
(b) DEFINITION OF QUALIFIED ENERGY MANAGEMENT
DEVICE.—Section 168(i) (relating to definitions and spe-
cial rules), as amended by this Act, is amended by inserting
at the end the following new paragraph:
‘‘(17) QUALIFIED
ENERGY
MANAGEMENT
DE-
VICE.—
‘‘(A) IN GENERAL.—The term ‘qualified en-
ergy management device’ means any energy
management device which is placed in service be-
fore January 1, 2008, by a taxpayer who is a
supplier of electric energy or a provider of elec-
tric energy services.
‘‘(B) ENERGY MANAGEMENT DEVICE.—For
purposes of subparagraph (A), the term ‘energy
management device’ means any meter or meter-
ing device which is used by the taxpayer—
†
767
HR 4520 EAS
‘‘(i) to measure and record electricity
usage data on a time-differentiated basis in
at least 4 separate time segments per day,
and
‘‘(ii) to provide such data on at least
a monthly basis to both consumers and the
taxpayer.’’.
(c) ALTERNATIVE SYSTEM.—The table contained in
section 168(g)(3)(B) is amended by inserting after the item
relating to subparagraph (A)(iii) the following:
‘‘(A)(iv) ..............................................................................................................
20’’.
(d) EFFECTIVE DATE.—The amendments made by this
section shall apply to property placed in service after De-
cember 31, 2004, in taxable years ending after such date.
SEC. 827. THREE-YEAR APPLICABLE RECOVERY PERIOD FOR
DEPRECIATION OF QUALIFIED WATER SUB-
METERING DEVICES.
(a) IN GENERAL.—Section 168(e)(3)(A) (defining 3-
year property), as amended by this Act, is amended by
striking ‘‘and’’ at the end of clause (iii), by striking the
period at the end of clause (iv) and inserting ‘‘, and’’, and
by adding at the end the following new clause:
‘‘(v) any qualified water submetering
device.’’.
(b) DEFINITION OF QUALIFIED WATER SUBMETERING
DEVICE.—Section 168(i) (relating to definitions and spe-
†
768
HR 4520 EAS
cial rules), as amended by this Act, is amended by inserting
at the end the following new paragraph:
‘‘(16) QUALIFIED
WATER
SUBMETERING
DE-
VICE.—
‘‘(A) IN
GENERAL.—The term ‘qualified
water submetering device’ means any water sub-
metering device which is placed in service before
January 1, 2008, by a taxpayer who is an eligi-
ble resupplier with respect to the unit for which
the device is placed in service.
‘‘(B) WATER
SUBMETERING
DEVICE.—For
purposes of this paragraph, the term ‘water sub-
metering device’ means any submetering device
which is used by the taxpayer—
‘‘(i) to measure and record water usage
data, and
‘‘(ii) to provide such data on at least
a monthly basis to both consumers and the
taxpayer.
‘‘(C) ELIGIBLE RESUPPLIER.—For purposes
of subparagraph (A), the term ‘eligible resup-
plier’ means any taxpayer who purchases and
installs qualified water submetering devices in
every unit in any multi-unit property.’’.
†
769
HR 4520 EAS
(c) ALTERNATIVE SYSTEM.—The table contained in
section 168(g)(3)(B), as amended by this Act, is amended
by inserting after the item relating to subparagraph (A)(iv)
the following:
‘‘(A)(v) ...............................................................................................................
20’’.
(d) EFFECTIVE DATE.—The amendments made by this
section shall apply to property placed in service after De-
cember 31, 2004, in taxable years ending after such date.
SEC. 828. ENERGY CREDIT FOR COMBINED HEAT AND
POWER SYSTEM PROPERTY.
(a) IN GENERAL.—Section 48(a)(3)(A) (defining en-
ergy property), as amended by this Act, is amended by
striking ‘‘or’’ at the end of clause (ii), by adding ‘‘or’’ at
the end of clause (iii), and by inserting after clause (iii)
the following new clause:
‘‘(iv) combined heat and power system
property,’’.
(b) COMBINED HEAT
AND POWER SYSTEM PROP-
ERTY.—Section 48 (relating to energy credit; reforestation
credit), as amended by this Act, is amended by adding at
the end the following new subsection:
‘‘(d) COMBINED HEAT AND POWER SYSTEM PROP-
ERTY.—For purposes of subsection (a)(3)(A)(iv)—
‘‘(1) COMBINED HEAT AND POWER SYSTEM PROP-
ERTY.—The term ‘combined heat and power system
property’ means property comprising a system—
†
770
HR 4520 EAS
‘‘(A) which uses the same energy source for
the simultaneous or sequential generation of elec-
trical power, mechanical shaft power, or both, in
combination with the generation of steam or
other forms of useful thermal energy (including
heating and cooling applications),
‘‘(B) which has an electrical capacity of not
more than 15 megawatts or a mechanical energy
capacity of not more than 2,000 horsepower or
an equivalent combination of electrical and me-
chanical energy capacities,
‘‘(C) which produces—
‘‘(i) at least 20 percent of its total use-
ful energy in the form of thermal energy
which is not used to produce electrical or
mechanical power (or combination thereof),
and
‘‘(ii) at least 20 percent of its total
useful energy in the form of electrical or me-
chanical power (or combination thereof),
‘‘(D) the energy efficiency percentage of
which exceeds 60 percent, and
‘‘(E) which is placed in service before Janu-
ary 1, 2007.
‘‘(2) SPECIAL RULES.—
†
771
HR 4520 EAS
‘‘(A) ENERGY EFFICIENCY PERCENTAGE.—
For purposes of this subsection, the energy effi-
ciency percentage of a system is the fraction—
‘‘(i) the numerator of which is the total
useful electrical, thermal, and mechanical
power produced by the system at normal
operating rates, and expected to be con-
sumed in its normal application, and
‘‘(ii) the denominator of which is the
lower heating value of the fuel sources for
the system.
‘‘(B) DETERMINATIONS
MADE
ON
BTU
BASIS.—The energy efficiency percentage and the
percentages under paragraph (1)(C) shall be de-
termined on a Btu basis.
‘‘(C) INPUT AND OUTPUT PROPERTY NOT IN-
CLUDED.—The term ‘combined heat and power
system property’ does not include property used
to transport the energy source to the facility or
to distribute energy produced by the facility.
‘‘(D) PUBLIC UTILITY PROPERTY.—
‘‘(i) ACCOUNTING
RULE
FOR
PUBLIC
UTILITY PROPERTY.—If the combined heat
and power system property is public utility
property (as defined in section 168(i)(10)),
†
772
HR 4520 EAS
the taxpayer may only claim the credit
under subsection (a) if, with respect to such
property, the taxpayer uses a normalization
method of accounting.
‘‘(ii) CERTAIN
EXCEPTION
NOT
TO
APPLY.—The matter in subsection (a)(3)
which follows subparagraph (D) thereof
shall not apply to combined heat and power
system property.
‘‘(3) SYSTEMS USING BAGASSE.—If a system is
designed to use bagasse for at least 90 percent of the
energy source—
‘‘(A) paragraph (1)(D) shall not apply, but
‘‘(B) the amount of credit determined under
subsection (a) with respect to such system shall
not exceed the amount which bears the same
ratio to such amount of credit (determined with-
out regard to this paragraph) as the energy effi-
ciency percentage of such system bears to 60 per-
cent.’’.
(c) EFFECTIVE DATE.—The amendments made by this
subsection shall apply to periods after December 31, 2004,
in taxable years ending after such date, under rules similar
to the rules of section 48(m) of the Internal Revenue Code
†
773
HR 4520 EAS
of 1986 (as in effect on the day before the date of the enact-
ment of the Revenue Reconciliation Act of 1990).
SEC. 829. 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 this Act, is amended by inserting after sec-
tion 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 10 percent of the amount paid or incurred by the
taxpayer for qualified energy efficiency improvements in-
stalled during such taxable year.
‘‘(b) LIMITATION.—The credit allowed by this section
with respect to a dwelling for any taxable year shall not
exceed $300, reduced (but not below zero) by the sum of
the credits allowed under subsection (a) to the taxpayer
with respect to the dwelling for all preceding taxable years.
‘‘(c) CARRYFORWARD
OF UNUSED CREDIT.—If the
credit allowable under subsection (a) exceeds the limitation
imposed by section 26(a) for such taxable year reduced by
the sum of the credits allowable under this subpart (other
†
774
HR 4520 EAS
than this section) for such taxable year, such excess shall
be carried to the succeeding taxable year and added to the
credit allowable under subsection (a) for such succeeding
taxable year.
‘‘(d) QUALIFIED
ENERGY
EFFICIENCY
IMPROVE-
MENTS.—For purposes of this section, the term ‘qualified
energy efficiency improvements’ means any energy efficient
building envelope component which is certified to meet or
exceed the latest prescriptive criteria for such component
in the International Energy Conservation Code approved
by the Department of Energy before the installation of such
component, or any combination of energy efficiency meas-
ures which are certified as achieving at least a 30 percent
reduction in heating and cooling energy usage for the dwell-
ing (as measured in terms of energy cost to the taxpayer),
if—
‘‘(1) such component or combination of measures
is installed in or on a dwelling which—
‘‘(A) is located in the United States,
‘‘(B) has not been treated as a qualifying
new home for purposes of any credit allowed
under section 45K, and
‘‘(C) is owned and used by the taxpayer as
the taxpayer’s principal residence (within the
meaning of section 121),
†
775
HR 4520 EAS
‘‘(2) the original use of such component or com-
bination of measures commences with the taxpayer,
and
‘‘(3) such component or combination of measures
reasonably can be expected to remain in use for at
least 5 years.
‘‘(e) CERTIFICATION.—
‘‘(1) METHODS OF CERTIFICATION.—
‘‘(A) 
COMPONENT-BASED
METHOD.—The
certification described in subsection (d) for any
component described in such subsection shall be
determined on the basis of applicable energy effi-
ciency ratings (including product labeling re-
quirements) for affected building envelope compo-
nents.
‘‘(B) PERFORMANCE-BASED METHOD.—
‘‘(i) IN
GENERAL.—The certification
described in subsection (d) for any combina-
tion of measures described in such sub-
section shall be—
‘‘(I) determined by comparing the
projected heating and cooling energy
usage for the dwelling to such usage for
such dwelling in its original condition,
and
†
776
HR 4520 EAS
‘‘(II) accompanied by a written
analysis documenting the proper ap-
plication of a permissible energy per-
formance calculation method to the
specific circumstances of such dwelling.
‘‘(ii) 
COMPUTER
SOFTWARE.—Com-
puter software shall be used in support of a
performance-based 
method 
certification
under clause (i). Such software shall meet
procedures and methods for calculating en-
ergy and cost savings in regulations pro-
mulgated by the Secretary of Energy.
‘‘(2) PROVIDER.—A certification described in
subsection (d) shall be provided by—
‘‘(A) in the case of the method described in
paragraph (1)(A), a third party, such as a local
building regulatory authority, a utility, a manu-
factured home primary inspection agency, or a
home energy rating organization, or
‘‘(B) in the case of the method described in
paragraph (1)(B), an individual recognized by
an organization designated by the Secretary for
such purposes.
‘‘(3) FORM.—A certification described in sub-
section (d) shall be made in writing on forms which
†
777
HR 4520 EAS
specify in readily inspectable fashion the energy effi-
cient components and other measures and their re-
spective efficiency ratings, and which include a per-
manent label affixed to the electrical distribution
panel of the dwelling.
‘‘(4) REGULATIONS.—
‘‘(A) IN GENERAL.—In prescribing regula-
tions under this subsection for certification meth-
ods described in paragraph (1)(B), the Secretary,
after examining the requirements for energy con-
sultants and home energy ratings providers spec-
ified by the Mortgage Industry National Home
Energy Rating Standards, shall prescribe proce-
dures for calculating annual energy usage and
cost reductions for heating and cooling and for
the reporting of the results. Such regulations
shall—
‘‘(i) provide that any calculation pro-
cedures be fuel neutral such that the same
energy efficiency measures allow a dwelling
to be eligible for the credit under this sec-
tion regardless of whether such dwelling uses
a gas or oil furnace or boiler or an electric
heat pump, and
†
778
HR 4520 EAS
‘‘(ii) require that any computer soft-
ware allow for the printing of the Federal
tax forms necessary for the credit under this
section and for the printing of forms for
disclosure to the owner of the dwelling.
‘‘(B) PROVIDERS.—For purposes of para-
graph (2)(B), the Secretary shall establish re-
quirements for the designation of individuals
based on the requirements for energy consultants
and home energy raters specified by the Mort-
gage Industry National Home Energy Rating
Standards.
‘‘(f) DEFINITIONS AND SPECIAL RULES.—For pur-
poses of this section—
‘‘(1) 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
for the qualified energy efficiency improvements
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-
†
779
HR 4520 EAS
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.
‘‘(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 de-
fined in such section), such individual shall be treated
as having paid his tenant-stockholder’s proportionate
share (as defined in section 216(b)(3)) of the cost of
qualified energy efficiency improvements made by
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-
†
780
HR 4520 EAS
minium which the individual owns, such indi-
vidual shall be treated as having paid the indi-
vidual’s proportionate share of the cost of quali-
fied energy efficiency improvements made by
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.
‘‘(4) 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 or a dwelling when
installed in or on such dwelling,
‘‘(B) exterior windows (including skylights),
and
‘‘(C) exterior doors.
‘‘(5) MANUFACTURED
HOMES
INCLUDED.—For
purposes of this section, the term ‘dwelling’ includes
a manufactured home which conforms to Federal
†
781
HR 4520 EAS
Manufactured Home Construction and Safety Stand-
ards (24 C.F.R. 3280).
‘‘(g) 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.
‘‘(h) TERMINATION.—Subsection (a) shall not apply to
qualified energy efficiency improvements installed after De-
cember 31, 2006.’’.
(b) CREDIT ALLOWED AGAINST REGULAR TAX AND
ALTERNATIVE MINIMUM TAX.—
(1) IN GENERAL.—Section 25D(b), as added by
subsection (a), is amended—
(A) by striking ‘‘The credit’’ and inserting
the following:
‘‘(1) DOLLAR AMOUNT.—The credit’’, and
(B) by adding at the end the following new
paragraph:
‘‘(2) LIMITATION BASED ON AMOUNT OF TAX.—
The credit allowed under subsection (a) for the tax-
able year shall not exceed the excess of—
†
782
HR 4520 EAS
‘‘(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) CONFORMING AMENDMENTS.—
(A) Section 25D(c), as added by subsection
(a), is amended by striking ‘‘section 26(a) for
such taxable year reduced by the sum of the cred-
its allowable under this subpart (other than this
section)’’ and inserting ‘‘subsection (b)(2)’’.
(B) Section 23(b)(4)(B), as amended by this
Act, is amended by striking ‘‘section 25C’’ and
inserting ‘‘sections 25C and 25D’’.
(C) Section 24(b)(3)(B), as amended by this
Act, is amended by striking ‘‘and 25C’’ and in-
serting ‘‘25C, and 25D’’.
(D) Section 25(e)(1)(C), as amended by this
Act, is amended by inserting ‘‘25D,’’ after
‘‘25C,’’.
(E) Section 25B(g)(2), as amended by this
Act, is amended by striking ‘‘23 and 25C’’ and
inserting ‘‘23, 25C, and 25D’’.
†
784
HR 4520 EAS
apply to property installed after December 31, 2004,
in taxable years ending after such date.
(2) SUBSECTION (b).—The amendments made by
subsection (b) shall apply to taxable years beginning
after December 31, 2004.
Subtitle D—Clean Coal Incentives
PART I—CREDIT FOR EMISSION REDUCTIONS
AND EFFICIENCY IMPROVEMENTS IN EXIST-
ING COAL-BASED ELECTRICITY GENERATION
FACILITIES
SEC. 831. CREDIT FOR PRODUCTION FROM A QUALIFYING
CLEAN COAL TECHNOLOGY UNIT.
(a) CREDIT FOR PRODUCTION FROM A QUALIFYING
CLEAN COAL TECHNOLOGY UNIT.—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:
‘‘SEC. 45M. CREDIT FOR PRODUCTION FROM A QUALIFYING
CLEAN COAL TECHNOLOGY UNIT.
‘‘(a) GENERAL RULE.—For purposes of section 38, the
qualifying clean coal technology production credit of any
taxpayer for any taxable year is equal to—
‘‘(1) the applicable amount of clean coal tech-
nology production credit, multiplied by
‘‘(2) the applicable percentage of the sum of—
†
785
HR 4520 EAS
‘‘(A) the kilowatt hours of electricity, plus
‘‘(B) each 3,413 Btu of fuels or chemicals,
produced by the taxpayer during such taxable year at
a qualifying clean coal technology unit, but only if
such production occurs during the 10-year period be-
ginning on the date the unit was returned to service
after becoming a qualifying clean coal technology
unit.
‘‘(b) APPLICABLE AMOUNT.—
‘‘(1) IN GENERAL.—For purposes of this section,
the applicable amount of clean coal technology pro-
duction credit is equal to $0.0034.
‘‘(2) INFLATION
ADJUSTMENT.—For calendar
years after 2005, the applicable amount of clean coal
technology production credit shall be adjusted by mul-
tiplying such amount by the inflation adjustment fac-
tor for the calendar year in which the amount is ap-
plied. If any amount as increased under the pre-
ceding sentence is not a multiple of 0.01 cent, such
amount shall be rounded to the nearest multiple of
0.01 cent.
‘‘(c) APPLICABLE PERCENTAGE.—For purposes of this
section, with respect to any qualifying clean coal technology
unit, the applicable percentage is the percentage equal to
the ratio which the portion of the national megawatt capac-
†
786
HR 4520 EAS
ity limitation allocated to the taxpayer with respect to such
unit under subsection (e) bears to the total megawatt capac-
ity of such unit.
‘‘(d) DEFINITIONS AND SPECIAL RULES.—For pur-
poses of this section—
‘‘(1) QUALIFYING
CLEAN
COAL
TECHNOLOGY
UNIT.—The term ‘qualifying clean coal technology
unit’ means a clean coal technology unit of the tax-
payer which—
‘‘(A) on January 1, 2005—
‘‘(i) was a coal-based electricity gener-
ating steam generator-turbine unit which
was not a clean coal technology unit, and
‘‘(ii) had a nameplate capacity rating
of not more than 300 megawatts,
‘‘(B) becomes a clean coal technology unit
as the result of the retrofitting, repowering, or
replacement of the unit with clean coal tech-
nology during the 10-year period beginning on
January 1, 2005,
‘‘(C) is not receiving nor is scheduled to re-
ceive funding under the Clean Coal Technology
Program, the Power Plant Improvement Initia-
tive, or the Clean Coal Power Initiative admin-
istered by the Secretary of Energy, and
†
787
HR 4520 EAS
‘‘(D) receives an allocation of a portion of
the national megawatt capacity limitation under
subsection (e).
‘‘(2) CLEAN COAL TECHNOLOGY UNIT.—The term
‘clean coal technology unit’ means a unit which—
‘‘(A) uses clean coal technology, including
advanced pulverized coal or atmospheric fluid-
ized bed combustion, pressurized fluidized bed
combustion, integrated gasification combined
cycle, or any other technology, for the production
of electricity,
‘‘(B) uses an input of at least 75 percent
coal to produce at least 50 percent of its thermal
output as electricity,
‘‘(C) has a design net heat rate of at least
500 less than that of such unit as described in
paragraph (1)(A),
‘‘(D) has a maximum design net heat rate
of not more than 9,500, and
‘‘(E) meets the pollution control require-
ments of paragraph (3).
‘‘(3) POLLUTION CONTROL REQUIREMENTS.—
‘‘(A) IN GENERAL.—A unit meets the re-
quirements of this paragraph if—
†
788
HR 4520 EAS
‘‘(i) its emissions of sulfur dioxide, ni-
trogen oxide, or particulates meet the lower
of the emission levels for each such emission
specified in—
‘‘(I) subparagraph (B), or
‘‘(II) the new source performance
standards of the Clean Air Act (42
U.S.C. 7411) which are in effect for the
category of source at the time of the
retrofitting, repowering, or replacement
of the unit, and
‘‘(ii) its emissions do not exceed any
relevant emission level specified by regula-
tion pursuant to the hazardous air pollut-
ant requirements of the Clean Air Act (42
U.S.C. 7412) in effect at the time of the ret-
rofitting, repowering, or replacement.
‘‘(B) SPECIFIC LEVELS.—The levels speci-
fied in this subparagraph are—
‘‘(i) in the case of sulfur dioxide emis-
sions, 50 percent of the sulfur dioxide emis-
sion levels specified in the new source per-
formance standards of the Clean Air Act
(42 U.S.C. 7411) in effect on the date of the
†
789
HR 4520 EAS
enactment of this section for the category of
source,
‘‘(ii) in the case of nitrogen oxide
emissions—
‘‘(I) 0.1 pound per million Btu of
heat input if the unit is not a cyclone-
fired boiler, and
‘‘(II) if the unit is a cyclone-fired
boiler, 15 percent of the uncontrolled
nitrogen oxide emissions from such
boilers, and
‘‘(iii) in the case of particulate emis-
sions, 0.02 pound per million Btu of heat
input.
‘‘(4) DESIGN NET HEAT RATE.—The design net
heat rate with respect to any unit, measured in Btu
per kilowatt hour (HHV)—
‘‘(A) shall be based on the design annual
heat input to and the design annual net elec-
trical power, fuels, and chemicals output from
such unit (determined without regard to such
unit’s co-generation of steam),
‘‘(B) shall be adjusted for the heat content
of the design coal to be used by the unit if it is
†
790
HR 4520 EAS
less than 12,000 Btu per pound according to the
following formula:
Design net heat rate = Unit net heat rate × [l¥
{((12,000-design coal heat content, Btu per pound)/
1,000) × 0.013}],
‘‘(C) shall be corrected for the site reference
conditions of—
‘‘(i) elevation above sea level of 500
feet,
‘‘(ii) air pressure of 14.4 pounds per
square inch absolute (psia),
‘‘(iii) temperature, dry bulb of 63°F,
‘‘(iv) temperature, wet bulb of 54°F,
and
‘‘(v) relative humidity of 55 percent,
and
‘‘(D) if carbon capture controls have been
installed with respect to any qualifying unit and
such controls remove at least 50 percent of the
unit’s carbon dioxide emissions, shall be adjusted
up to the design heat rate level which would have
resulted without the installation of such controls.
‘‘(5) HHV.—The term ‘HHV’ means higher
heating value.
†
791
HR 4520 EAS
‘‘(6) APPLICATION
OF
CERTAIN
RULES.—The
rules of paragraphs (3), (4), and (5) of section 45(e)
shall apply.
‘‘(7) INFLATION ADJUSTMENT FACTOR.—
‘‘(A) IN GENERAL.—The term ‘inflation ad-
justment factor’ means, with respect to a cal-
endar year, a fraction the numerator of which is
the GDP implicit price deflator for the preceding
calendar year and the denominator of which is
the GDP implicit price deflator for the calendar
year 2003.
‘‘(B) GDP IMPLICIT
PRICE
DEFLATOR.—
The term ‘GDP implicit price deflator’ means,
for any calendar year, the most recent revision
of the implicit price deflator for the gross domes-
tic product as of June 30 of such calendar year
as computed by the Department of Commerce be-
fore October 1 of such calendar year.
‘‘(8) NONCOMPLIANCE WITH POLLUTION LAWS.—
For purposes of this section, a unit which is not in
compliance with the applicable State and Federal pol-
lution prevention, control, and permit requirements
for any period of time shall not be considered to be
a qualifying clean coal technology unit during such
period.
†
792
HR 4520 EAS
‘‘(e) NATIONAL LIMITATION ON THE AGGREGATE CA-
PACITY
OF
QUALIFYING
CLEAN
COAL
TECHNOLOGY
UNITS.—
‘‘(1) IN GENERAL.—For purposes of this section,
the national megawatt capacity limitation for quali-
fying clean coal technology units is 4,000 megawatts.
‘‘(2) ALLOCATION
OF
LIMITATION.—The Sec-
retary shall allocate the national megawatt capacity
limitation for qualifying clean coal technology units
in such manner as the Secretary may prescribe under
the regulations under paragraph (3).
‘‘(3) REGULATIONS.—Not later than 6 months
after the date of the enactment of this section, the Sec-
retary shall prescribe such regulations as may be nec-
essary or appropriate—
‘‘(A) to carry out the purposes of this sub-
section,
‘‘(B) to limit the capacity of any qualifying
clean coal technology unit to which this section
applies so that the megawatt capacity allocated
to any unit under this subsection does not exceed
300 megawatts and the combined megawatt ca-
pacity allocated to all such units when all such
units are placed in service during the 10-year
†
793
HR 4520 EAS
period described in subsection (d)(1)(B), does not
exceed 4,000 megawatts,
‘‘(C) to provide a certification process under
which the Secretary, in consultation with the
Secretary of Energy, shall approve and allocate
the national megawatt capacity limitation—
‘‘(i) to encourage that units with the
highest thermal efficiencies, when adjusted
for the heat content of the design coal and
site reference conditions described in sub-
section (d)(4)(C), and environmental per-
formance, be placed in service as soon as
possible, and
‘‘(ii) to allocate capacity to taxpayers
which have a definite and credible plan for
placing into commercial operation a quali-
fying 
clean 
coal 
technology 
unit,
including—
‘‘(I) a site,
‘‘(II) contractual commitments for
procurement and construction or, in
the case of regulated utilities, the
agreement of the State utility commis-
sion,
†
794
HR 4520 EAS
‘‘(III) filings for all necessary
preconstruction approvals,
‘‘(IV) a demonstrated record of
having successfully completed com-
parable projects on a timely basis, and
‘‘(V) such other factors that the
Secretary determines are appropriate,
‘‘(D) to allocate the national megawatt ca-
pacity limitation to a portion of the capacity of
a qualifying clean coal technology unit if the
Secretary determines that such an allocation
would maximize the amount of efficient produc-
tion encouraged with the available tax credits,
‘‘(E) to set progress requirements and con-
ditional approvals so that capacity allocations
for clean coal technology units which become un-
likely to meet the necessary conditions for quali-
fying can be reallocated by the Secretary to other
clean coal technology units, and
‘‘(F) to provide taxpayers with opportuni-
ties to correct administrative errors and omis-
sions with respect to allocations and record keep-
ing within a reasonable period after discovery,
taking into account the availability of regula-
†
795
HR 4520 EAS
tions and other administrative guidance from
the Secretary.’’.
(b) CREDIT TREATED AS 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 (23), by striking the period at the end of para-
graph (24) and inserting ‘‘, plus’’, and by adding at the
end the following new paragraph:
‘‘(25) the qualifying clean coal technology pro-
duction credit determined under section 45M(a).’’.
(c) 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. 45M. Credit for production from a qualifying clean coal technology unit.’’.
(d) EFFECTIVE DATE.—The amendments made by this
section shall apply to production after December 31, 2004,
in taxable years ending after such date.
PART II—INCENTIVES FOR EARLY COMMERCIAL
APPLICATIONS OF ADVANCED CLEAN COAL
TECHNOLOGIES
SEC. 832. CREDIT FOR INVESTMENT IN QUALIFYING AD-
VANCED CLEAN COAL TECHNOLOGY.
(a) ALLOWANCE OF QUALIFYING ADVANCED CLEAN
COAL TECHNOLOGY UNIT CREDIT.—Section 46 (relating to
amount of credit), as amended by this Act, is amended by
†
796
HR 4520 EAS
striking ‘‘and’’ at the end of paragraph (1), by striking the
period at the end of paragraph (2) and inserting ‘‘, and’’,
and by adding at the end the following new paragraph:
‘‘(3) the qualifying advanced clean coal tech-
nology unit credit.’’.
(b) AMOUNT OF QUALIFYING ADVANCED CLEAN COAL
TECHNOLOGY UNIT CREDIT.—Subpart E of part IV of sub-
chapter A of chapter 1 (relating to rules for computing in-
vestment credit) is amended by inserting after section 48
the following new section:
‘‘SEC. 48A. QUALIFYING ADVANCED CLEAN COAL TECH-
NOLOGY UNIT CREDIT.
‘‘(a) IN GENERAL.—For purposes of section 46, the
qualifying advanced clean coal technology unit credit for
any taxable year is an amount equal to 10 percent of the
applicable percentage of the qualified investment in a quali-
fying advanced clean coal technology unit for such taxable
year.
‘‘(b) QUALIFYING ADVANCED CLEAN COAL TECH-
NOLOGY UNIT.—
‘‘(1) IN GENERAL.—For purposes of subsection
(a), the term ‘qualifying advanced clean coal tech-
nology unit’ means an advanced clean coal technology
unit of the taxpayer—
†
797
HR 4520 EAS
‘‘(A)(i) in the case of a unit first placed in
service after December 31, 2004, the original use
of which commences with the taxpayer, or
‘‘(ii) in the case of the retrofitting or
repowering of a unit first placed in service before
January 1, 2005, the retrofitting or repowering
of which is completed by the taxpayer after such
date, or
‘‘(B) which is depreciable under section 167,
‘‘(C) which has a useful life of not less than
4 years,
‘‘(D) which is located in the United States,
‘‘(E) which is not receiving nor is scheduled
to receive funding under the Clean Coal Tech-
nology Program, the Power Plant Improvement
Initiative, or the Clean Coal Power Initiative
administered by the Secretary of Energy,
‘‘(F) which is not a qualifying clean coal
technology unit, and
‘‘(G) which receives an allocation of a por-
tion of the national megawatt capacity limita-
tion under subsection (f).
‘‘(2) SPECIAL RULE FOR SALE-LEASEBACKS.—
For purposes of subparagraph (A) of paragraph (1),
in the case of a unit which—
†
798
HR 4520 EAS
‘‘(A) is originally placed in service by a
person, and
‘‘(B) is sold and leased back by such person,
or is leased to such person, within 3 months after
the date such unit was originally placed in serv-
ice, for a period of not less than 12 years,
such unit shall be treated as originally placed in serv-
ice not earlier than the date on which such unit is
used under the leaseback (or lease) referred to in sub-
paragraph (B). The preceding sentence shall not
apply to any property if the lessee and lessor of such
property make an election under this sentence. Such
an election, once made, may be revoked only with the
consent of the Secretary.
‘‘(3) NONCOMPLIANCE WITH POLLUTION LAWS.—
For purposes of this subsection, a unit which is not
in compliance with the applicable State and Federal
pollution prevention, control, and permit require-
ments for any period of time shall not be considered
to be a qualifying advanced clean coal technology
unit during such period.
‘‘(c) APPLICABLE PERCENTAGE.—For purposes of this
section, with respect to any qualifying advanced clean coal
technology unit, the applicable percentage is the percentage
equal to the ratio which the portion of the national mega-
†
799
HR 4520 EAS
watt capacity limitation allocated to the taxpayer with re-
spect to such unit under subsection (f) bears to the total
megawatt capacity of such unit.
‘‘(d) ADVANCED CLEAN COAL TECHNOLOGY UNIT.—
For purposes of this section—
‘‘(1) IN
GENERAL.—The term ‘advanced clean
coal technology unit’ means a new, retrofit, or
repowering unit of the taxpayer which—
‘‘(A) is—
‘‘(i) an eligible advanced pulverized
coal or atmospheric fluidized bed combus-
tion technology unit,
‘‘(ii) an eligible pressurized fluidized
bed combustion technology unit,
‘‘(iii) an eligible integrated gasifi-
cation combined cycle technology unit, or
‘‘(iv) an eligible other technology unit,
and
‘‘(B) meets the carbon emission rate require-
ments of paragraph (6).
‘‘(2) ELIGIBLE ADVANCED PULVERIZED COAL OR
ATMOSPHERIC
FLUIDIZED
BED
COMBUSTION
TECH-
NOLOGY UNIT.—The term ‘eligible advanced pulver-
ized coal or atmospheric fluidized bed combustion
technology unit’ means a clean coal technology unit
†
800
HR 4520 EAS
using advanced pulverized coal or atmospheric fluid-
ized bed combustion technology which—
‘‘(A) is placed in service after December 31,
2004, and before January 1, 2013, and
‘‘(B) has a design net heat rate of not more
than 8,500 (8,900 in the case of units placed in
service before 2009).
‘‘(3) ELIGIBLE
PRESSURIZED
FLUIDIZED
BED
COMBUSTION TECHNOLOGY UNIT.—The term ‘eligible
pressurized fluidized bed combustion technology unit’
means a clean coal technology unit using pressurized
fluidized bed combustion technology which—
‘‘(A) is placed in service after December 31,
2004, and before January 1, 2017, and
‘‘(B) has a design net heat rate of not more
than 7,720 (8,900 in the case of units placed in
service before 2009, and 8,500 in the case of
units placed in service after 2008 and before
2013).
‘‘(4) ELIGIBLE INTEGRATED GASIFICATION COM-
BINED CYCLE TECHNOLOGY UNIT.—The term ‘eligible
integrated gasification combined cycle technology
unit’ means a clean coal technology unit using inte-
grated gasification combined cycle technology, with or
without fuel or chemical co-production, which—
†
802
HR 4520 EAS
rate is less than 0.60 pound of carbon per
kilowatt hour, and
‘‘(ii) in the case of a unit using design
coal with a heat content of more than 9,000
Btu per pound, the carbon emission rate is
less than 0.54 pound of carbon per kilowatt
hour.
‘‘(B) 
ELIGIBLE
OTHER
TECHNOLOGY
UNIT.—In the case of an eligible other technology
unit, subparagraph (A) shall be applied by sub-
stituting ‘0.51’ and ‘0.459’ for ‘0.60’ and ‘0.54’,
respectively.
‘‘(e) GENERAL DEFINITIONS.—Any term used in this
section which is also used in section 45M shall have the
meaning given such term in section 45M.
‘‘(f) NATIONAL LIMITATION ON THE AGGREGATE CA-
PACITY OF ADVANCED CLEAN COAL TECHNOLOGY UNITS.—
‘‘(1) IN GENERAL.—For purposes of subsection
(b)(1)(G), the national megawatt capacity limitation
is—
‘‘(A) for qualifying advanced clean coal
technology units using advanced pulverized coal
or atmospheric fluidized bed combustion tech-
nology, not more than 1,000 megawatts (not
†
803
HR 4520 EAS
more than 500 megawatts in the case of units
placed in service before 2009),
‘‘(B) for such units using pressurized fluid-
ized bed combustion technology, not more than
500 megawatts (not more than 250 megawatts in
the case of units placed in service before 2009),
‘‘(C) for such units using integrated gasifi-
cation combined cycle technology, with or with-
out fuel or chemical co-production, not more
than 2,000 megawatts (not more than 1,000
megawatts in the case of units placed in service
before 2009), and
‘‘(D) for such units using other technology
for the production of electricity, not more than
500 megawatts (not more than 250 megawatts in
the case of units placed in service before 2009).
‘‘(2) ALLOCATION
OF
LIMITATION.—The Sec-
retary shall allocate the national megawatt capacity
limitation for qualifying advanced clean coal tech-
nology units in such manner as the Secretary may
prescribe under the regulations under paragraph (3).
‘‘(3) REGULATIONS.—Not later than 6 months
after the date of the enactment of this section, the Sec-
retary shall prescribe such regulations as may be nec-
essary or appropriate—
†
804
HR 4520 EAS
‘‘(A) to carry out the purposes of this sub-
section and section 45N,
‘‘(B) to limit the capacity of any qualifying
advanced clean coal technology unit to which
this section applies so that the combined mega-
watt capacity of all such units to which this sec-
tion applies does not exceed 4,000 megawatts,
‘‘(C) to provide a certification process de-
scribed in section 45M(e)(3)(C),
‘‘(D) to carry out the purposes described in
subparagraphs (D), (E), and (F) of section
45M(e)(3), and
‘‘(E) to reallocate capacity which is not al-
located to any technology described in subpara-
graphs (A) through (D) of paragraph (1) because
an insufficient number of qualifying units re-
quest an allocation for such technology, to an-
other technology described in such subparagraphs
in order to maximize the amount of energy effi-
cient production encouraged with the available
tax credits.
‘‘(4) SELECTION CRITERIA.—For purposes of this
subsection, the selection criteria for allocating the na-
tional megawatt capacity limitation to qualifying ad-
vanced clean coal technology units—
†
805
HR 4520 EAS
‘‘(A) shall be established by the Secretary of
Energy as part of a competitive solicitation,
‘‘(B) shall include primary criteria of min-
imum design net heat rate, maximum design
thermal efficiency, environmental performance,
and lowest cost to the Government, and
‘‘(C) shall include supplemental criteria as
determined appropriate by the Secretary of En-
ergy.
‘‘(g) QUALIFIED INVESTMENT.—For purposes of sub-
section (a), the term ‘qualified investment’ means, with re-
spect to any taxable year, the basis of a qualifying advanced
clean coal technology unit placed in service by the taxpayer
during such taxable year (in the case of a unit described
in subsection (b)(1)(A)(ii), only that portion of the basis
of such unit which is properly attributable to the retro-
fitting or repowering of such unit).
‘‘(h) QUALIFIED PROGRESS EXPENDITURES.—
‘‘(1) INCREASE IN QUALIFIED INVESTMENT.—In
the case of a taxpayer who has made an election
under paragraph (5), the amount of the qualified in-
vestment of such taxpayer for the taxable year (deter-
mined under subsection (g) without regard to this
subsection) shall be increased by an amount equal to
the aggregate of each qualified progress expenditure
†
806
HR 4520 EAS
for the taxable year with respect to progress expendi-
ture property.
‘‘(2) PROGRESS
EXPENDITURE
PROPERTY
DE-
FINED.—For purposes of this subsection, the term
‘progress expenditure property’ means any property
being constructed by or for the taxpayer and which it
is reasonable to believe will qualify as a qualifying
advanced clean coal technology unit which is being
constructed by or for the taxpayer when it is placed
in service.
‘‘(3) QUALIFIED PROGRESS EXPENDITURES DE-
FINED.—For purposes of this subsection—
‘‘(A) SELF-CONSTRUCTED
PROPERTY.—In
the case of any self-constructed property, the
term ‘qualified progress expenditures’ means the
amount which, for purposes of this subpart, is
properly chargeable (during such taxable year)
to capital account with respect to such property.
‘‘(B) NONSELF-CONSTRUCTED PROPERTY.—
In the case of nonself-constructed property, the
term ‘qualified progress expenditures’ means the
amount paid during the taxable year to another
person for the construction of such property.
‘‘(4) OTHER DEFINITIONS.—For purposes of this
subsection—
†
807
HR 4520 EAS
‘‘(A) SELF-CONSTRUCTED PROPERTY.—The
term ‘self-constructed property’ means property
for which it is reasonable to believe that more
than half of the construction expenditures will be
made directly by the taxpayer.
‘‘(B) NONSELF-CONSTRUCTED PROPERTY.—
The term ‘nonself-constructed property’ means
property which is not self-constructed property.
‘‘(C) CONSTRUCTION, ETC.—The term ‘con-
struction’ includes reconstruction and erection,
and the term ‘constructed’ includes reconstructed
and erected.
‘‘(D) ONLY CONSTRUCTION OF QUALIFYING
ADVANCED CLEAN COAL TECHNOLOGY UNIT TO
BE TAKEN INTO ACCOUNT.—Construction shall be
taken into account only if, for purposes of this
subpart, expenditures therefor are properly
chargeable to capital account with respect to the
property.
‘‘(5) ELECTION.—An election under this sub-
section may be made at such time and in such man-
ner as the Secretary may by regulations prescribe.
Such an election shall apply to the taxable year for
which made and to all subsequent taxable years. Such
†
808
HR 4520 EAS
an election, once made, may not be revoked except
with the consent of the Secretary.
‘‘(i) COORDINATION WITH OTHER CREDITS.—This
section shall not apply to any property with respect to
which the rehabilitation credit under section 47 or the en-
ergy credit under section 48 is allowed unless the taxpayer
elects to waive the application of such credit to such prop-
erty.’’.
(c) RECAPTURE.—Section 50(a) (relating to other spe-
cial rules) is amended by adding at the end the following
new paragraph:
‘‘(6) SPECIAL RULES RELATING TO QUALIFYING
ADVANCED
CLEAN
COAL
TECHNOLOGY
UNIT.—For
purposes of applying this subsection in the case of
any credit allowable by reason of section 48A, the fol-
lowing rules shall apply:
‘‘(A) GENERAL
RULE.—In lieu of the
amount of the increase in tax under paragraph
(1), the increase in tax shall be an amount equal
to the investment tax credit allowed under sec-
tion 38 for all prior taxable years with respect
to a qualifying advanced clean coal technology
unit (as defined by section 48A(b)(1)) multiplied
by a fraction the numerator of which is the num-
ber of years remaining to fully depreciate under
†
809
HR 4520 EAS
this title the qualifying advanced clean coal tech-
nology unit disposed of, and the denominator of
which is the total number of years over which
such unit would otherwise have been subject to
depreciation. For purposes of the preceding sen-
tence, the year of disposition of the qualifying
advanced clean coal technology unit shall be
treated as a year of remaining depreciation.
‘‘(B) PROPERTY CEASES TO QUALIFY FOR
PROGRESS EXPENDITURES.—Rules similar to the
rules of paragraph (2) shall apply in the case of
qualified progress expenditures for a qualifying
advanced clean coal technology unit under sec-
tion 48A, except that the amount of the increase
in tax under subparagraph (A) of this para-
graph shall be substituted for the amount de-
scribed in such paragraph (2).
‘‘(C) APPLICATION
OF
PARAGRAPH.—This
paragraph shall be applied separately with re-
spect to the credit allowed under section 38 re-
garding a qualifying advanced clean coal tech-
nology unit.’’.
(d) TECHNICAL AMENDMENTS.—
(1) Section 49(a)(1)(C) is amended by striking
‘‘and’’ at the end of clause (ii), by striking the period
†
810
HR 4520 EAS
at the end of clause (iii) and inserting ‘‘, and’’, and
by adding at the end the following new clause:
‘‘(iv) the portion of the basis of any
qualifying advanced clean coal technology
unit attributable to any qualified invest-
ment (as defined by section 48A(g)).’’.
(2) Section 50(a)(4) is amended by striking
‘‘and (2)’’ and inserting ‘‘, (2), and (6)’’.
(3) Section 50(c) is amended by adding at the
end the following new paragraph:
‘‘(6) NONAPPLICATION.—Paragraphs (1) and (2)
shall not apply to any qualifying advanced clean coal
technology unit credit under section 48A.’’.
(4) The table of sections for subpart E of part IV
of subchapter A of chapter 1 is amended by inserting
after the item relating to section 48 the following new
item:
‘‘Sec. 48A. Qualifying advanced clean coal technology unit credit.’’.
(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 In-
ternal Revenue Code of 1986 (as in effect on the day before
the date of the enactment of the Revenue Reconciliation Act
of 1990).
†
811
HR 4520 EAS
SEC. 833. CREDIT FOR PRODUCTION FROM A QUALIFYING
ADVANCED CLEAN COAL TECHNOLOGY UNIT.
(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:
‘‘SEC. 45N. CREDIT FOR PRODUCTION FROM A QUALIFYING
ADVANCED CLEAN COAL TECHNOLOGY UNIT.
‘‘(a) GENERAL RULE.—For purposes of section 38, the
qualifying advanced clean coal technology production credit
of any taxpayer for any taxable year is equal to—
‘‘(1) the applicable amount of advanced clean
coal technology production credit, multiplied by
‘‘(2) the applicable percentage (as determined
under section 48A(c)) of the sum of—
‘‘(A) the kilowatt hours of electricity, plus
‘‘(B) each 3,413 Btu of fuels or chemicals,
produced by the taxpayer during such taxable year at
a qualifying advanced clean coal technology unit, but
only if such production occurs during the 10-year pe-
riod beginning on the date the unit was originally
placed in service (or returned to service after becom-
ing a qualifying advanced clean coal technology
unit).
‘‘(b) APPLICABLE AMOUNT.—For purposes of this
section—
†
812
HR 4520 EAS
‘‘(1) IN GENERAL.—Except as provided in para-
graph (2), the applicable amount of advanced clean
coal technology production credit with respect to pro-
duction from a qualifying advanced clean coal tech-
nology unit shall be determined as follows:
‘‘(A) If the qualifying advanced clean coal
technology unit is producing electricity only:
‘‘(i) In the case of a unit originally
placed in service before 2009, if—
‘‘The design net heat rate is:
The applicable amount is:
For 1st 5
years of such
service
For 2d 5
years of such
service
Not more than 8,500 .................................................................................
$.0060
$.0038
More than 8,500 but not more than 8,750 ..............................................
$.0025
$.0010
More than 8,750 but less than 8,900 .......................................................
$.0010
$.0010.
‘‘(ii) In the case of a unit originally
placed in service after 2008 and before
2013, if—
‘‘The design net heat rate is:
The applicable amount is:
For 1st 5
years of such
service
For 2d 5
years of such
service
Not more than 7,770 .................................................................................
$.0105
$.0090
More than 7,770 but not more than 8,125 ..............................................
$.0085
$.0068
More than 8,125 but less than 8,500 .......................................................
$.0075
$.0055.
‘‘(iii) In the case of a unit originally
placed in service after 2012 and before
2017, if—
‘‘The design net heat rate is:
The applicable amount is:
For 1st 5
years of such
service
For 2d 5
years of such
service
Not more than 7,380 .................................................................................
$.0140
$.0115
More than 7,380 but not more than 7,720 ..............................................
$.0120
$.0090.
†
813
HR 4520 EAS
‘‘(B) If the qualifying advanced clean coal
technology unit is producing fuel or chemicals:
‘‘(i) In the case of a unit originally
placed in service before 2009, if—
‘‘The unit design net thermal efficiency (HHV) is:
The applicable amount is:
For 1st 5
years of such
service
For 2d 5
years of such
service
Not less than 40.2 percent ........................................................................
$.0060
$.0038
Less than 40.2 but not less than 39 percent ...........................................
$.0025
$.0010
Less than 39 but not less than 38.4 percent ...........................................
$.0010
$.0010.
‘‘(ii) In the case of a unit originally
placed in service after 2008 and before
2013, if—
‘‘The unit design net thermal efficiency (HHV) is:
The applicable amount is:
For 1st 5
years of such
service
For 2d 5
years of such
service
Not less than 43.9 percent ........................................................................
$.0105
$.0090
Less than 43.9 but not less than 42 percent ...........................................
$.0085
$.0068
Less than 42 but not less than 40.2 percent ...........................................
$.0075
$.0055.
‘‘(iii) In the case of a unit originally
placed in service after 2012 and before
2017, if—
‘‘The unit design net thermal efficiency (HHV) is:
The applicable amount is:
For 1st 5
years of such
service
For 2d 5
years of such
service
Not less than 46.3 percent ........................................................................
$.0140
$.0115
Less than 46.3 but not less than 44.2 percent ........................................
$.0120
$.0090.
‘‘(2) SPECIAL RULE FOR UNITS QUALIFYING FOR
GREATER
APPLICABLE
AMOUNT
WHEN
PLACED
IN
SERVICE.—If, at the time a qualifying advanced clean
coal technology unit is placed in service, production
†
814
HR 4520 EAS
from the unit would be entitled to a greater applica-
ble amount if such unit had been placed in service at
a later date, the applicable amount for such unit shall
be such greater amount.
‘‘(c) INFLATION ADJUSTMENT.—For calendar years
after 2005, each dollar amount in subsection (b)(1) shall
be adjusted by multiplying such amount by the inflation
adjustment factor for the calendar year in which the
amount is applied. If any amount as increased under the
preceding sentence is not a multiple of 0.01 cent, such
amount shall be rounded to the nearest multiple of 0.01
cent.
‘‘(d) DEFINITIONS AND SPECIAL RULES.—For pur-
poses of this section—
‘‘(1) IN GENERAL.—Any term used in this sec-
tion which is also used in section 45M or 48A shall
have the meaning given such term in such section.
‘‘(2) APPLICABLE
RULES.—The rules of para-
graphs (3), (4), and (5) of section 45(e) shall apply.’’.
(b) CREDIT TREATED AS 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 (24), by striking the period at the end of para-
graph (25) and inserting ‘‘, plus’’, and by adding at the
end the following new paragraph:
†
815
HR 4520 EAS
‘‘(26) the qualifying advanced clean coal tech-
nology production credit determined under section
45N(a).’’.
(c) DENIAL OF DOUBLE BENEFIT.—Section 29(d) (re-
lating to other definitions and special rules) is amended
by adding at the end the following new paragraph:
‘‘(9) DENIAL OF DOUBLE BENEFIT.—This section
shall not apply with respect to any qualified fuel the
production of which may be taken into account for
purposes of determining the credit under section
45N.’’.
(d) 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. 45N. Credit for production from a qualifying advanced clean coal technology
unit.’’.
(e) EFFECTIVE DATE.—The amendments made by this
section shall apply to production after December 31, 2004,
in taxable years ending after such date.
†
816
HR 4520 EAS
PART III—TREATMENT OF PERSONS NOT ABLE
TO USE ENTIRE CREDIT
SEC. 834. TREATMENT OF PERSONS NOT ABLE TO USE EN-
TIRE CREDIT.
(a) IN GENERAL.—Section 45M, as added by this Act,
is amended by adding at the end the following new sub-
section:
‘‘(f) TREATMENT OF PERSON NOT ABLE TO USE EN-
TIRE CREDIT.—
‘‘(1) ALLOWANCE OF CREDITS.—
‘‘(A) IN
GENERAL.—Any credit allowable
under this section, section 45N, or section 48A
with respect to a facility owned by a person de-
scribed in subparagraph (B) may be transferred
or used as provided in this subsection, and the
determination as to whether the credit is allow-
able shall be made without regard to the tax-ex-
empt status of the person.
‘‘(B) PERSONS
DESCRIBED.—A person is
described in this subparagraph if the person is—
‘‘(i) an organization described in sec-
tion 501(c)(12)(C) and exempt from tax
under section 501(a),
‘‘(ii) an organization described in sec-
tion 1381(a)(2)(C),
†
817
HR 4520 EAS
‘‘(iii) a public utility (as defined in
section 136(c)(2)(B)),
‘‘(iv) any State or political subdivision
thereof, the District of Columbia, or any
agency or instrumentality of any of the
foregoing,
‘‘(v) any Indian tribal government
(within the meaning of section 7871) or any
agency or instrumentality thereof, or
‘‘(vi) the Tennessee Valley Authority.
‘‘(2) TRANSFER OF CREDIT.—
‘‘(A) IN GENERAL.—A person described in
clause (i), (ii), (iii), (iv), or (v) of paragraph
(1)(B) may transfer any credit to which para-
graph (1)(A) applies through an assignment to
any other person not described in paragraph
(1)(B). Such transfer may be revoked only with
the consent of the Secretary.
‘‘(B) REGULATIONS.—The Secretary shall
prescribe such regulations as necessary to ensure
that any credit described in subparagraph (A) is
claimed once and not reassigned by such other
person.
‘‘(C) TRANSFER
PROCEEDS
TREATED
AS
ARISING FROM ESSENTIAL GOVERNMENT FUNC-
†
818
HR 4520 EAS
TION.—Any proceeds derived by a person de-
scribed in clause (iii), (iv), or (v) of paragraph
(1)(B) from the transfer of any credit under sub-
paragraph (A) shall be treated as arising from
the exercise of an essential government function.
‘‘(3) USE OF CREDIT AS AN OFFSET.—Notwith-
standing any other provision of law, in the case of a
person described in clause (i), (ii), or (v) of para-
graph (1)(B), any credit to which paragraph (1)(A)
applies may be applied by such person, to the extent
provided by the Secretary of Agriculture, as a pre-
payment of any loan, debt, or other obligation the en-
tity has incurred under subchapter I of chapter 31 of
title 7 of the Rural Electrification Act of 1936 (7
U.S.C. 901 et seq.), as in effect on the date of the en-
actment of this section.
‘‘(4) USE BY TVA.—
‘‘(A) IN
GENERAL.—Notwithstanding any
other provision of law, in the case of a person de-
scribed in paragraph (1)(B)(vi), any credit to
which paragraph (1)(A) applies may be applied
as a credit against the payments required to be
made in any fiscal year under section 15d(e) of
the Tennessee Valley Authority Act of 1933 (16
U.S.C. 831n–4(e)) as an annual return on the
†
819
HR 4520 EAS
appropriations investment and an annual re-
payment sum.
‘‘(B) TREATMENT OF CREDITS.—The aggre-
gate amount of credits described in paragraph
(1)(A) with respect to such person shall be treat-
ed in the same manner and to the same extent
as if such credits were a payment in cash and
shall be applied first against the annual return
on the appropriations investment.
‘‘(C) CREDIT CARRYOVER.—With respect to
any fiscal year, if the aggregate amount of cred-
its described paragraph (1)(A) with respect to
such person exceeds the aggregate amount of pay-
ment obligations described in subparagraph (A),
the excess amount shall remain available for ap-
plication as credits against the amounts of such
payment obligations in succeeding fiscal years in
the same manner as described in this paragraph.
‘‘(5) CREDIT NOT INCOME.—Any transfer under
paragraph (2) or use under paragraph (3) of any
credit to which paragraph (1)(A) applies shall not be
treated as income for purposes of section 501(c)(12).
‘‘(6) TREATMENT
OF
UNRELATED
PERSONS.—
For purposes of this subsection, transfers among and
between persons described in clauses (i), (ii), (iii),