I 
109TH CONGRESS 
1ST SESSION 
H. R. 206 
To amend the Internal Revenue Code of 1986 to provide a business credit 
relating to the use of clean-fuel vehicles by businesses within areas 
designated as nonattainment areas under the Clean Air Act. 
IN THE HOUSE OF REPRESENTATIVES 
JANUARY 4, 2005 
Mr. SERRANO introduced the following bill; which was referred to the 
Committee on Ways and Means 
A BILL 
To amend the Internal Revenue Code of 1986 to provide 
a business credit relating to the use of clean-fuel vehicles 
by businesses within areas designated as nonattainment 
areas under the Clean Air Act. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. CLEAN-FUEL CREDIT WITH RESPECT TO BUSI-
NESSES 
LOCATED 
IN 
NONATTAINMENT 
AREAS. 
(a) IN GENERAL.—Subpart D of part IV of sub-
chapter A of chapter 1 of the Internal Revenue Code of
1986 (relating to business-related credits) is amended by 
adding at the end the following new section: 
‘‘SEC. 45J. CLEAN-FUEL CREDIT WITH RESPECT TO BUSI-
NESSES 
LOCATED 
IN 
NONATTAINMENT 
AREAS. 
‘‘(a) IN GENERAL.—For purposes of section 38, in 
the case of an eligible business the clean-fuel credit deter-
mined under this section for the taxable year is the sum 
of— 
‘‘(1) the clean-fuel property credit, plus 
‘‘(2) the clean-burning fuel use credit. 
‘‘(b) CLEAN-FUEL PROPERTY CREDIT.— 
‘‘(1) IN
GENERAL.—The clean-fuel property 
credit is the sum of— 
‘‘(A) qualified vehicle property costs, plus 
‘‘(B) qualified refueling property costs. 
‘‘(2) QUALIFIED VEHICLE PROPERTY COSTS.— 
‘‘(A) IN GENERAL.—For purposes of para-
graph (1), the term ‘qualified vehicle property 
costs’ means the amount paid or incurred by 
the eligible business for qualified clean-fuel ve-
hicle property which is placed in service during 
the taxable year by the eligible business and 
substantially all of the use of which is in a non-
attainment area.
‘‘(B) LIMITATION.—The amount which 
may be taken into account under subparagraph 
(A) with respect to any motor vehicle shall not 
exceed— 
‘‘(i) $2,000 in the case of a motor ve-
hicle not described in clause (ii) or (iii), 
‘‘(ii) $5,000 in the case of any truck 
or van with a gross vehicle weight rating 
greater than 10,000 pounds but not great-
er than 26,000 pounds, or 
‘‘(iii) $50,000 in the case of— 
‘‘(I) a truck or van with a gross 
vehicle weight rating greater than 
26,000 pounds, or 
‘‘(II) any bus which has a seating 
capacity of at least 20 adults (not in-
cluding the driver). 
‘‘(C) QUALIFIED
CLEAN-FUEL
VEHICLE 
PROPERTY.—The term ‘qualified clean-fuel ve-
hicle property’ shall have the meaning given to 
such term by section 179A(c) (without regard 
to paragraph (3) thereof), except that such 
term does not include property that is a motor 
vehicle propelled by a fuel that is not a clean- 
burning fuel.
‘‘(3) 
QUALIFIED
REFUELING
PROPERTY 
COSTS.— 
‘‘(A) IN GENERAL.—For purposes of para-
graph (1), the term ‘qualified refueling property 
costs’ means amounts paid or incurred by the 
eligible business for qualified clean-fuel vehicle 
refueling property (as defined by section 
179A(d)) which is placed in service in a non-
attainment area during the taxable year by the 
eligible business. 
‘‘(B) LIMITATION.— 
‘‘(i) IN
GENERAL.—The aggregate 
cost which may be taken into account 
under subparagraph (A) with respect to 
qualified clean-fuel vehicle refueling prop-
erty placed in service by the eligible busi-
ness during the taxable year at a location 
shall not exceed the lesser of— 
‘‘(I) $100,000, or 
‘‘(II) the cost of such property 
reduced by the amount described in 
clause (ii). 
‘‘(ii) REDUCTION FOR AMOUNTS PRE-
VIOUSLY TAKEN INTO ACCOUNT.—For pur-
poses of clause (i)(II), the amount de-
scribed in this clause is the sum of— 
‘‘(I) the aggregate amount taken 
into account under paragraph (1)(B) 
for all preceding taxable years, and 
‘‘(II) the aggregate amount taken 
into 
account 
under 
section 
179A(a)(1)(B) by the taxpayer (or 
any related person or predecessor) 
with respect to property placed in 
service at such location for all pre-
ceding taxable years. 
‘‘(iii) SPECIAL RULES.—For purposes 
of this subparagraph, the provisions of 
subparagraphs (B) and (C) of section 
179A(b)(2) shall apply. 
‘‘(c) CLEAN-BURNING FUEL USE CREDIT.— 
‘‘(1) IN GENERAL.—For purposes of subsection 
(a), the clean-burning fuel use credit is the amount 
equal to 50 cents for each gasoline gallon equivalent 
of clean-burning fuel used by an eligible business 
during the taxable year to propel qualified clean-fuel 
vehicle property. 
‘‘(2) CLEAN-BURNING FUEL.—For purposes of 
paragraph (1), the term ‘clean-burning fuel’ has the
meaning given to such term by section 179A, except 
that such term includes compressed natural gas and 
biodiesel (as defined by section 40A(d)(1)). 
‘‘(3) GASOLINE
GALLON
EQUIVALENT.—For 
purposes of paragraph (1), the term ‘gasoline gallon 
equivalent’ means, with respect to any clean burning 
fuel, the amount (determined by the Secretary) of 
such fuel having a Btu content of 114,000. 
‘‘(d) OTHER DEFINITIONS.—For purposes of this 
section— 
‘‘(1) ELIGIBLE BUSINESS.—The term ‘eligible 
business’ means— 
‘‘(A) a qualified business entity or a quali-
fied proprietorship (as such terms are defined 
by section 1397C, determined by substituting 
‘nonattainment area’ for ‘empowerment zone’ 
and ‘enterprise zone’ each place it appears), 
and 
‘‘(B) a trade or business located outside of 
a nonattainment area, but only with respect to 
qualified clean-fuel vehicle property used sub-
stantially within a nonattainment area. 
‘‘(2) NONATTAINMENT AREA.—The term ‘non-
attainment area’ shall have the meaning given to
such term by section 171 of the Clean Air Act (42 
U.S.C. 7501). 
‘‘(e) DENIAL OF DOUBLE BENEFIT.—No credit shall 
be allowed under subsection (a) for any expense for which 
a deduction or credit is allowed under any other provision 
of this chapter.’’. 
(b) CREDIT MADE PART OF GENERAL BUSINESS 
CREDIT.—Subsection (b) of section 38 of such Code (re-
lating to current year business credit) is amended by strik-
ing ‘‘plus’’ at the end of paragraph (18), by striking the 
period at the end of paragraph (19) and inserting ‘‘, plus’’, 
and by adding at the end thereof the following new para-
graph: 
‘‘(20) the clean-fuel credit determined under 
section 45J.’’. 
(c) DENIAL OF DOUBLE BENEFIT.—Section 280C of 
such Code (relating to certain expenses for which credits 
are allowable) is amended by adding at the end thereof 
the following new subsection: 
‘‘(e) ZONE CLEAN FUELS EXPENSES.—No deduction 
shall be allowed for that portion of expenses for clean- 
burning fuel 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 45J.’’.
(d) CREDIT ALLOWED AGAINST REGULAR AND MIN-
IMUM TAX.— 
(1) IN GENERAL.—Subsection (c) of section 38 
of such Code (relating to limitation based on amount 
of tax) is amended by redesignating paragraph (5) 
as paragraph (6) and by inserting after paragraph 
(4) the following new paragraph: 
‘‘(5) SPECIAL RULES FOR CLEAN FUELS CRED-
IT.— 
‘‘(A) IN
GENERAL.—In the case of the 
clean fuels credit— 
‘‘(i) this section and section 39 shall 
be applied separately with respect to the 
credit, and 
‘‘(ii) in applying paragraph (1) to the 
credit— 
‘‘(I) subparagraph (A) thereof 
shall not apply, and 
‘‘(II) the limitation under para-
graph (1) (as modified by subclause 
(I)) shall be reduced by the credit al-
lowed under subsection (a) for the 
taxable year (other than the clean 
fuels credit).
‘‘(B) CLEAN
FUELS
CREDIT.—For pur-
poses of this subsection, the term ‘clean fuels 
credit’ means the credit allowable under sub-
section (a) by reason of section 45J.’’. 
(2) CONFORMING AMENDMENTS.— 
(A) 
Subclause 
(II) 
of 
section 
38(c)(2)(A)(ii) of such Code is amended by 
striking ‘‘or the New York Liberty Zone busi-
ness employee credit’’ and inserting ‘‘, the New 
York Liberty Zone business employee credit, or 
the clean fuels credit’’. 
(B) 
Subclause 
(II) 
of 
section 
38(c)(3)(A)(ii) of such Code is amended by in-
serting ‘‘or the clean fuels credit’’ after ‘‘em-
ployee credit’’. 
(C) 
Subclause 
(II) 
of 
section 
38(c)(4)(A)(ii) of such Code is amended by in-
serting ‘‘or the clean fuels credit’’ after ‘‘speci-
fied credits’’. 
(e) DEDUCTION FOR CERTAIN UNUSED BUSINESS 
CREDITS.—Subsection (c) of section 196 of such Code is 
amended by striking ‘‘and’’ at the end of paragraph (11), 
by striking the period at the end of paragraph (12) and 
inserting ‘‘, and’’, and by adding after paragraph (12) the 
following new paragraph:
‘‘(13) the clean fuels credit determined under 
section 45J.’’. 
(f) CONFORMING AMENDMENT.—The table of sec-
tions for subpart D of part IV of subchapter A of chapter 
1 of such Code is amended by inserting after the item 
relating to section 45I the following new item: 
‘‘Sec. 45J. Clean-fuel credit with respect to businesses located in nonattainment 
areas.’’. 
(g) EFFECTIVE DATE.—The amendments made by 
this section shall apply to property placed in service after 
December 31, 2004. 
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