111 
‘‘(5) NO
DOUBLE
BENEFIT.—The amount of 
any deduction or other credit allowable under this 
chapter— 
‘‘(A) for any incremental cost taken into 
account in computing the amount of the credit 
determined under subsection (d) shall be re-
duced 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 
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 al-
lowable with respect to a motor vehicle which is ac-
quired 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 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.
112 
‘‘(7) RECAPTURE.—The Secretary shall, by reg-
ulations, 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 vehi-
cle). 
‘‘(8) 
PROPERTY
USED
OUTSIDE
UNITED 
STATES, ETC., NOT QUALIFIED.—No credit shall be 
allowed under subsection (a) with respect to any 
property referred to in section 50(b) or with respect 
to the portion of the cost of any property taken into 
account under section 179. 
‘‘(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 re-
ferred to as the ‘unused credit year’), such ex-
cess shall be a credit carryback to each of the
113 
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 oth-
erwise provided in this section, a motor vehicle shall 
not be considered eligible for a credit under this sec-
tion unless such vehicle is in compliance with— 
‘‘(A) the applicable provisions of the Clean 
Air Act for the applicable make and model year 
of the vehicle (or applicable air quality provi-
sions of State law in the case of a State which 
has adopted such provision under a waiver 
under section 209(b) of the Clean Air Act), and 
‘‘(B) the motor vehicle safety provisions of 
sections 30101 through 30169 of title 49, 
United States Code. 
‘‘(g) REGULATIONS.—
114 
‘‘(1) IN GENERAL.—Except as provided in para-
graph (2), the Secretary shall promulgate such regu-
lations as necessary to carry out the provisions of 
this section. 
‘‘(2) COORDINATION IN PRESCRIPTION OF CER-
TAIN REGULATIONS.—The Secretary of the Treas-
ury, in coordination with the Secretary of Transpor-
tation and the Administrator of the Environmental 
Protection Agency, shall prescribe such regulations 
as necessary to determine whether a motor vehicle 
meets the requirements to be eligible for a credit 
under this section.’’. 
(b) CONFORMING AMENDMENTS.— 
(1) Section 1016(a) of such Code is amended 
by striking ‘‘and’’ at the end of paragraph (28), by 
striking the period at the end of paragraph (29) and 
inserting ‘‘, and’’, and by adding at the end the fol-
lowing new paragraph: 
‘‘(30) to the extent provided in section 
30B(f)(4).’’. 
(2) Section 55(c)(2) of such Code is amended 
by inserting ‘‘30B(e),’’ after ‘‘30(b)(2),’’. 
(3) Section 6501(m) of such Code is amended 
by inserting ‘‘30B(f)(9),’’ after ‘‘30(d)(4),’’.
115 
(4) The table of sections for subpart B of part 
IV of subchapter A of chapter 1 of such Code is 
amended by inserting after the item relating to sec-
tion 30A the following new item: 
‘‘30B. Alternative motor vehicle credit.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to property placed in service after 
December 31, 2004, in taxable years ending after such 
date. 
SEC. 212. CREDIT FOR ENGINES COMPLYING WITH TIER 2, 
3, OR 4 EMISSION LEVELS. 
(a) IN GENERAL.—Subpart D of part IV of sub-
chapter A of chapter 1 (relating to business-related cred-
its) is amended by adding after section 45H the following 
new section: 
‘‘SEC. 45I. CREDIT FOR ENGINES COMPLYING WITH TIER 2, 
3, OR 4 EMISSIONS LEVELS. 
‘‘(a) ALLOWANCE OF CREDIT.—For purposes of sec-
tion 38, the emissions compliant engine credit determined 
under this section for the taxable year is, for each emis-
sions compliant engine incorporated into a product manu-
factured by the taxpayer during the taxable year, an 
amount equal to— 
‘‘(1) $100 for each such engine which is an 
emissions compliant engine with respect to the Tier 
2 emissions level established in regulations pre-
116 
scribed by the Administrator of the Environmental 
Protection Agency under section 213 of the Clean 
Air Act, 
‘‘(2) $150 for each such engine which is an 
emissions compliant engine with respect to the Tier 
3 emissions level so established, and 
‘‘(3) $200 for each such engine which is an 
emissions compliant engine with respect to the Tier 
4 emissions level so established. 
‘‘(b) EMISSIONS COMPLIANT ENGINE.—For purposes 
of this section, the term ‘emissions compliant engine’ 
means any engine— 
‘‘(1) which is required to meet the Tier 2, 3 or 
4 emissions level established in regulations pre-
scribed by the Administrator of the Environmental 
Protection Agency under section 213 of the Clean 
Air Act, and 
‘‘(2) which meets such requirement.’’. 
(b) CREDIT MADE PART OF GENERAL BUSINESS 
CREDIT.—Section 38(b) of such Code (relating to current 
year business credit), as previously amended by this Act, 
is amended by striking ‘‘plus’’ at the end of paragraph 
(17), by striking the period at the end of paragraph (18) 
and inserting ‘‘, plus’’, and by adding at the end of the 
following new paragraph: