under this section in an amount (not to exceed 
$200,000,000) determined by the Secretary. 
‘‘(2) COAL.—The term ‘coal’ means any carbon-
ized or semicarbonized matter, including peat. 
‘‘(d) QUALIFYING COAL-TO-LIQUID FUELS PROJECT 
PROGRAM.— 
‘‘(1) IN GENERAL.—The Secretary, in consulta-
tion with the Secretary of Energy, shall establish a 
qualifying coal-to-liquid fuels project program to 
consider and award certifications for qualified in-
vestment eligible for credits under this section to 10 
qualifying coal-to-liquid fuels project sponsors under 
this section. The total qualified investment which 
may be awarded eligibility for credit under the pro-
gram shall not exceed $2,000,000,000. 
‘‘(2) PERIOD
OF
ISSUANCE.—A certificate of 
eligibility under paragraph (1) may be issued only 
during the 10-fiscal year period beginning on Octo-
ber 1, 2007. 
‘‘(3) SELECTION
CRITERIA.—The Secretary 
shall not make a competitive certification award for 
qualified investment for credit eligibility under this 
section unless the recipient has documented to the 
satisfaction of the Secretary that— 
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‘‘(A) the proposal of the award recipient is 
financially viable, 
‘‘(B) the recipient will provide sufficient 
information to the Secretary for the Secretary 
to ensure that the qualified investment is spent 
efficiently and effectively, 
‘‘(C) the fuels identified with respect to the 
gasification technology for such project will 
comprise at least 90 percent of the fuels re-
quired by the project for the production of 
transportation grade liquid fuels, 
‘‘(D) the award recipient’s project team is 
competent in the planning and construction of 
coal gasification facilities and familiar with op-
eration of the Fischer-Tropsch process, with 
preference given to those recipients with experi-
ence which demonstrates successful and reliable 
operations of such process, and 
‘‘(E) the award recipient has met other cri-
teria established and published by the Sec-
retary. 
‘‘(e) DENIAL OF DOUBLE BENEFIT.—No deduction 
or other credit shall be allowed with respect to the basis 
of any property taken into account in determining the 
credit allowed under this section.’’. 
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(c) CONFORMING AMENDMENTS.— 
(1) Section 49(a)(1)(C) is amended by striking 
‘‘and’’ at the end of clause (v), by striking the pe-
riod at the end of clause (vi) and inserting ‘‘, and’’, 
and by adding after clause (vi) the following new 
clause: 
‘‘(vii) the basis of any property which 
is part of a qualifying coal-to-liquid fuels 
project under section 48E.’’. 
(2) The table of sections for subpart E of part 
IV of subchapter A of chapter 1 is amended by in-
serting after the item relating to section 48D the 
following new item: 
‘‘Sec. 48E. Qualifying coal-to-liquid fuels project credit.’’. 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to periods after the date of the 
enactment of this Act, under rules similar to the rules of 
section 48(m) of the Internal Revenue Code of 1986 (as 
in effect on the day before the date of the enactment of 
the Revenue Reconciliation Act of 1990). 
SEC. 702. TEMPORARY EXPENSING FOR EQUIPMENT USED 
IN COAL-TO-LIQUID FUELS PROCESS. 
(a) IN GENERAL.—Part VI of subchapter B of chap-
ter 1 is amended by inserting after section 179F the fol-
lowing new section: 
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‘‘SEC. 179G. ELECTION TO EXPENSE CERTAIN COAL-TO-LIQ-
UID FUELS FACILITIES. 
‘‘(a) TREATMENT AS EXPENSES.—A taxpayer may 
elect to treat the cost of any qualified coal-to-liquid fuels 
process property as an expense which is not chargeable 
to capital account. Any cost so treated shall be allowed 
as a deduction for the taxable year in which the expense 
is incurred. 
‘‘(b) ELECTION.— 
‘‘(1) IN GENERAL.—An election under this sec-
tion for any taxable year shall be made on the tax-
payer’s return of the tax imposed by this chapter for 
the taxable year. Such election shall be made in such 
manner as the Secretary may by regulations pre-
scribe. 
‘‘(2) ELECTION
IRREVOCABLE.—Any election 
made under this section may not be revoked except 
with the consent of the Secretary. 
‘‘(c) QUALIFIED COAL-TO-LIQUID FUELS PROCESS 
PROPERTY.—The term ‘qualified coal-to-liquid fuels proc-
ess property’ means any property located in the United 
States— 
‘‘(1) which employs the Fischer-Tropsch process 
to produce transportation grade liquid fuels from a 
feedstock that is primarily domestic coal (including 
any property which allows for the capture, transpor-
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tation, or sequestration of by-products resulting 
from such process, including carbon emissions), 
‘‘(2) the original use of which commences with 
the taxpayer, 
‘‘(3) the construction of which— 
‘‘(A) except as provided in subparagraph 
(B), is subject to a binding construction con-
tract entered into after the date of the enact-
ment of this section and before January 1, 
2011, but only if there was no written binding 
construction contract entered into on or before 
such date of enactment, or 
‘‘(B) in the case of self-constructed prop-
erty, began after the date of the enactment of 
this section and before January 1, 2011, and 
‘‘(4) which is placed in service by the taxpayer 
after the date of the enactment of this section and 
before January 1, 2016. 
‘‘(d) ELECTION TO ALLOCATE DEDUCTION TO COOP-
ERATIVE OWNER.—If— 
‘‘(1) a taxpayer to which subsection (a) applies 
is an organization to which part I of subchapter T 
applies, and 
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‘‘(2) one or more persons directly holding an 
ownership interest in the taxpayer are organizations 
to which part I of subchapter T apply, 
the taxpayer may elect to allocate all or a portion of the 
deduction allowable under subsection (a) to such persons. 
Such allocation shall be equal to the person’s ratable share 
of the total amount allocated, determined on the basis of 
the person’s ownership interest in the taxpayer. The tax-
able income of the taxpayer shall not be reduced under 
section 1382 by reason of any amount to which the pre-
ceding sentence applies. 
‘‘(e) BASIS REDUCTION.— 
‘‘(1) IN GENERAL.—For purposes of this title, 
if a deduction is allowed under this section with re-
spect to any qualified coal-to-liquid fuels process 
property, the basis of such property shall be reduced 
by the amount of the deduction so allowed. 
‘‘(2) ORDINARY
INCOME
RECAPTURE.—For 
purposes of section 1245, the amount of the deduc-
tion allowable under subsection (a) with respect to 
any property which is of a character subject to the 
allowance for depreciation shall be treated as a de-
duction allowed for depreciation under section 167. 
‘‘(f) APPLICATION WITH OTHER DEDUCTIONS AND 
CREDITS.— 
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‘‘(1) OTHER DEDUCTIONS.—No deduction shall 
be allowed under any other provision of this chapter 
with respect to any expenditure with respect to 
which a deduction is allowed under subsection (a) to 
the taxpayer. 
‘‘(2) CREDITS.—No credit shall be allowed 
under section 38 with respect to any amount for 
which a deduction is allowed under subsection (a). 
‘‘(g) REPORTING.—No deduction shall be allowed 
under subsection (a) to any taxpayer for any taxable year 
unless such taxpayer files with the Secretary a report con-
taining such information with respect to the operation of 
the property of the taxpayer as the Secretary shall re-
quire.’’. 
(b) CONFORMING AMENDMENTS.— 
(1) Section 1016(a) is amended by striking 
‘‘and’’ at the end of paragraph (38), by striking the 
period at the end of paragraph (39) and inserting ‘‘, 
and’’, and by adding at the end the following new 
paragraph: 
‘‘(40) to the extent provided in section 
179G(e)(1).’’. 
(2) Section 1245(a) is amended by inserting 
‘‘179G,’’ after ‘‘179F,’’ both places it appears in 
paragraphs (2)(C) and (3)(C). 
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(3) Section 263(a)(1) is amended by striking 
‘‘or’’ at the end of subparagraph (L), by striking the 
period at the end of subparagraph (M) and inserting 
‘‘, or’’, and by inserting after subparagraph (M) the 
following new subparagraph: 
‘‘(N) expenditures for which a deduction is 
allowed under section 179G.’’. 
(4) Section 312(k)(3)(B) is amended by strik-
ing ‘‘or 179G’’ each place it appears in the heading 
and text and inserting ‘‘179F, or 179G’’. 
(5) The table of sections for part VI of sub-
chapter B of chapter 1 is amended by inserting after 
the item relating to section 179F the following new 
item: 
‘‘Sec. 179G. Election to expense certain coal-to-liquid fuels facilities.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to properties placed in service after 
the date of the enactment of this Act. 
SEC. 703. EXTENSION OF ALTERNATIVE FUEL CREDIT FOR 
FUEL DERIVED FROM COAL THROUGH THE 
FISCHER-TROPSCH PROCESS. 
(a) ALTERNATIVE FUEL CREDIT.—Paragraph (4) of 
section 6426(d) is amended to read as follows: 
‘‘(4) TERMINATION.—This subsection shall not 
apply to— 
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‘‘(A) any sale or use involving liquid fuel 
derived from a feedstock that is primarily do-
mestic coal (including peat) through the Fisch-
er-Tropsch process for any period after Sep-
tember 30, 2020, 
‘‘(B) any sale or use involving liquified hy-
drogen for any period after September 30, 
2014, and 
‘‘(C) any other sale or use for any period 
after September 30, 2009.’’. 
(b) PAYMENTS.— 
(1) IN
GENERAL.—Paragraph (5) of section 
6427(e) is amended by striking ‘‘and’’ and the end 
of subparagraph (C), by striking the period at the 
end of subparagraph (D) and inserting ‘‘, and’’, and 
by adding at the end the following new subpara-
graph: 
‘‘(E) any alternative fuel or alternative fuel 
mixture (as so defined) involving liquid fuel de-
rived from coal (including peat) through the 
Fischer-Tropsch process sold or used after Sep-
tember 30, 2020.’’. 
(2) 
CONFORMING
AMENDMENT.—Section 
6427(e)(5)(C) is amended by striking ‘‘subpara-
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graph (D)’’ and inserting ‘‘subparagraphs (D) and 
(E)’’. 
SEC. 704. MODIFICATIONS TO ENHANCED OIL RECOVERY 
CREDIT. 
(a) ENHANCED CREDIT FOR CARBON DIOXIDE IN-
JECTIONS.—Section 43 is amended by adding at the end 
the following new subsection: 
‘‘(f) ENHANCED CREDIT
FOR PROJECTS USING 
QUALIFIED CARBON DIOXIDE.— 
‘‘(1) IN GENERAL.—For purposes of this sec-
tion— 
‘‘(A) the term ‘qualified project’ includes a 
project described in paragraph (2), and 
‘‘(B) in the case of a project described in 
paragraph (2), subsection (a) shall be applied 
by substituting ‘50 percent’ for ‘15 percent’. 
‘‘(2) PROJECTS DESCRIBED.—A project is de-
scribed in this paragraph if it begins or is substan-
tially expanded after December 31, 2007, and 
‘‘(A) uses qualified carbon dioxide in an 
enhanced oil, natural gas, or coalbed methane 
recovery method, which involves flooding or in-
jection, or 
‘‘(B) enables the capture or sequestration 
of qualified carbon dioxide. 
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‘‘(3) DEFINITIONS.—For purposes of this sub-
section— 
‘‘(A) ENHANCED
OIL
RECOVERY.—The 
term ‘enhanced oil recovery’ means recovery of 
oil by injecting or flooding with qualified carbon 
dioxide. 
‘‘(B) ENHANCED
NATURAL
GAS
RECOV-
ERY.—The term ‘enhanced natural gas recov-
ery’ means recovery of natural gas by injecting 
or flooding with qualified carbon dioxide. 
‘‘(C) ENHANCED COALBED METHANE RE-
COVERY.—The term ‘enhanced coalbed methane 
recovery’ means recovery of coalbed methane by 
injecting or flooding with qualified carbon diox-
ide. 
‘‘(D) QUALIFIED CARBON DIOXIDE.—The 
term ‘qualified carbon dioxide’ means carbon di-
oxide which is produced from the gasification 
and subsequent refinement of a feedstock which 
is primarily domestic coal, at a facility which 
produces coal-to-liquid fuel. 
‘‘(E) CAPTURE OR SEQUESTRATION.—The 
term ‘capture or sequestration’ means any 
equipment or facility necessary to— 
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‘‘(i) capture or separate qualified car-
bon dioxide from other emissions, 
‘‘(ii) transport qualified carbon diox-
ide, or 
‘‘(iii) process and use qualified carbon 
dioxide in a qualified project. 
‘‘(4) TERMINATION.—This subsection shall not 
apply to costs paid or incurred for any qualified 
project after December 31, 2020.’’. 
(b) CONFORMING AMENDMENTS.— 
(1) Section 43 is amended— 
(A) by striking ‘‘enhanced oil recovery 
credit’’ in subsection (a) and inserting ‘‘en-
hanced oil, natural gas, and coalbed methane 
recovery, and capture and sequestration credit’’, 
(B) by striking ‘‘qualified enhanced oil re-
covery costs’’ each place it appears and insert-
ing ‘‘qualified costs’’, 
(C) by striking ‘‘qualified enhanced oil re-
covery project’’ each place it appears and in-
serting ‘‘qualified project’’, and 
(D) by striking the heading and inserting: 
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‘‘SEC. 43. ENHANCED OIL, NATURAL GAS, AND COALBED 
METHANE RECOVERY, AND CAPTURE AND SE-
QUESTRATION CREDIT.’’. 
(2) The item in the table of sections for subpart 
D of part IV of subchapter A of chapter 1 relating 
to section 43 is amended to read as follows: 
‘‘Sec. 43. Enhanced oil, natural gas, and coalbed methane recovery, and cap-
ture and sequestration credit.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to costs paid or incurred in taxable 
years ending after December 31, 2007. 
SEC. 705. ALLOWANCE OF ENHANCED OIL, NATURAL GAS, 
AND COALBED METHANE RECOVERY, AND 
CAPTURE 
AND 
SEQUESTRATION 
CREDIT 
AGAINST THE ALTERNATIVE MINIMUM TAX. 
(a) IN GENERAL.—Subsection (c) of section 38 (re-
lating to limitation based on amount of tax) 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) SPECIAL RULES FOR ENHANCED OIL, NAT-
URAL GAS, AND COALBED METHANE RECOVERY, AND 
CAPTURE
AND
SEQUESTRATION
CREDIT.—In the 
case of the enhanced oil, natural gas, and coalbed 
methane recovery, and capture and sequestration 
credit determined under section 43— 
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‘‘(A) this section and section 39 shall be 
applied separately with respect to such credit, 
and 
‘‘(B) in applying paragraph (1) to such 
credit— 
‘‘(i) the tentative minimum tax shall 
be treated as being zero, and 
‘‘(ii) the limitation under paragraph 
(1) (as modified by clause (i)) shall be re-
duced by the credit allowed under sub-
section (a) for the taxable year (other than 
the enhanced oil, natural gas, and coalbed 
methane recovery, and capture and seques-
tration credit and the specified credits).’’. 
(b) CONFORMING AMENDMENTS.— 
(1) Section 38(c)(2)(A)(ii)(II) is amended by 
inserting ‘‘the enhanced oil, natural gas, and coalbed 
methane recovery, and capture and sequestration 
credit,’’ after ‘‘employee credit,’’. 
(2) Section 38(c)(3)(A)(ii)(II) is amended by 
inserting ‘‘, the enhanced oil, natural gas, coalbed 
methane recovery, capture and sequestration credit,’’ 
after ‘‘employee credit’’. 
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(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years ending after De-
cember 31, 2007. 
Æ 
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