I 
110TH CONGRESS 
2D SESSION 
H. R. 6049 
To amend the Internal Revenue Code of 1986 to provide incentives for 
energy production and conservation, to extend certain expiring provisions, 
to provide individual income tax relief, and for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
MAY 14, 2008 
Mr. RANGEL (for himself, Mr. MCDERMOTT, Mr. LEWIS of Georgia, Mr. 
NEAL of Massachusetts, Mr. POMEROY, Mr. LARSON of Connecticut, Mr. 
BLUMENAUER, Mr. CROWLEY, Mr. VAN HOLLEN, Mr. MEEK of Florida, 
Mr. DAVIS of Alabama, Mr. ARCURI, Ms. GIFFORDS, Mr. HALL of New 
York, Mr. HODES, Mr. MCNERNEY, Ms. SHEA-PORTER, and Mr. WELCH 
of Vermont) introduced the following bill; which was referred to the Com-
mittee on Ways and Means 
A BILL 
To amend the Internal Revenue Code of 1986 to provide 
incentives for energy production and conservation, to ex-
tend certain expiring provisions, to provide individual 
income tax relief, and for other purposes. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE, ETC. 
(a) SHORT TITLE.—This Act may be cited as the 
‘‘Energy and Tax Extenders Act of 2008’’. 
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(b) REFERENCE.—Except as otherwise expressly pro-
vided, whenever in this Act an amendment or repeal is 
expressed in terms of an amendment to, or repeal of, a 
section or other provision, the reference shall be consid-
ered to be made to a section or other provision of the In-
ternal Revenue Code of 1986. 
(c) TABLE OF CONTENTS.—The table of contents for 
this Act is as follows: 
Sec. 1. Short title, etc. 
TITLE I—ENERGY TAX INCENTIVES 
Subtitle A—Energy Production Incentives 
PART I—RENEWABLE ENERGY INCENTIVES 
Sec. 101. Renewable energy credit. 
Sec. 102. Production credit for electricity produced from marine renewables. 
Sec. 103. Energy credit. 
Sec. 104. Credit for residential energy efficient property. 
Sec. 105. Special rule to implement FERC and State electric restructuring pol-
icy. 
Sec. 106. New clean renewable energy bonds. 
PART II—CARBON MITIGATION PROVISIONS 
Sec. 111. Expansion and modification of advanced coal project investment cred-
it. 
Sec. 112. Expansion and modification of coal gasification investment credit. 
Sec. 113. Temporary increase in coal excise tax. 
Sec. 114. Special rules for refund of the coal excise tax to certain coal pro-
ducers and exporters. 
Sec. 115. Carbon audit of the tax code. 
Subtitle B—Transportation and Domestic Fuel Security Provisions 
Sec. 121. Credit for production of cellulosic biofuel. 
Sec. 122. Inclusion of cellulosic biofuel in bonus depreciation for biomass eth-
anol plant property. 
Sec. 123. Credits for biodiesel and renewable diesel. 
Sec. 124. Modification of alcohol credit. 
Sec. 125. Calculation of volume of alcohol for fuel credits. 
Sec. 126. Clarification that credits for fuel are designed to provide an incentive 
for United States production. 
Sec. 127. Credit for new qualified plug-in electric drive motor vehicles. 
Sec. 128. Exclusion from heavy truck tax for idling reduction units and ad-
vanced insulation. 
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Sec. 129. Restructuring of New York Liberty Zone tax credits. 
Sec. 130. Transportation fringe benefit to bicycle commuters. 
Sec. 131. Alternative fuel vehicle refueling property credit. 
Sec. 132. Comprehensive study of biofuels. 
Subtitle C—Energy Conservation and Efficiency Provisions 
Sec. 141. Qualified energy conservation bonds. 
Sec. 142. Credit for nonbusiness energy property. 
Sec. 143. Energy efficient commercial buildings deduction. 
Sec. 144. Modifications of energy efficient appliance credit for appliances pro-
duced after 2007. 
Sec. 145. Accelerated recovery period for depreciation of smart meters and 
smart grid systems. 
Sec. 146. Qualified green building and sustainable design projects. 
TITLE II—ONE-YEAR EXTENSION OF TEMPORARY PROVISIONS 
Subtitle A—Extensions Primarily Affecting Individuals 
Sec. 201. Deduction for State and local sales taxes. 
Sec. 202. Deduction of qualified tuition and related expenses. 
Sec. 203. Treatment of certain dividends of regulated investment companies. 
Sec. 204. Qualified conservation contributions. 
Sec. 205. Tax-free distributions from individual retirement plans for charitable 
purposes. 
Sec. 206. Deduction for certain expenses of elementary and secondary school 
teachers. 
Sec. 207. Election to include combat pay as earned income for purposes of 
earned income tax credit. 
Sec. 208. Modification of mortgage revenue bonds for veterans. 
Sec. 209. Distributions from retirement plans to individuals called to active 
duty. 
Sec. 210. Stock in RIC for purposes of determining estates of nonresidents not 
citizens. 
Sec. 211. Qualified investment entities. 
Sec. 212. Exclusion of amounts received under qualified group legal services 
plans. 
Subtitle B—Extensions Primarily Affecting Businesses 
Sec. 221. Research credit. 
Sec. 222. Indian employment credit. 
Sec. 223. New markets tax credit. 
Sec. 224. Railroad track maintenance. 
Sec. 225. Fifteen-year straight-line cost recovery for qualified leasehold im-
provements and qualified restaurant property. 
Sec. 226. Seven-year cost recovery period for motorsports racing track facility. 
Sec. 227. Accelerated depreciation for business property on Indian reservation. 
Sec. 228. Expensing of environmental remediation costs. 
Sec. 229. Deduction allowable with respect to income attributable to domestic 
production activities in Puerto Rico. 
Sec. 230. Modification of tax treatment of certain payments to controlling ex-
empt organizations. 
Sec. 231. Qualified zone academy bonds. 
Sec. 232. Tax incentives for investment in the District of Columbia. 
Sec. 233. Economic development credit for American Samoa. 
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Sec. 234. Enhanced charitable deduction for contributions of food inventory. 
Sec. 235. Enhanced charitable deduction for contributions of book inventory to 
public schools. 
Sec. 236. Enhanced deduction for qualified computer contributions. 
Sec. 237. Basis adjustment to stock of S corporations making charitable con-
tributions of property. 
Sec. 238. Work opportunity tax credit for Hurricane Katrina employees. 
Sec. 239. Subpart F exception for active financing income. 
Sec. 240. Look-thru rule for related controlled foreign corporations. 
Sec. 241. Expensing for certain qualified film and television productions. 
Subtitle C—Other Extensions 
Sec. 251. Authority to disclose information related to terrorist activities made 
permanent. 
Sec. 252. Authority for undercover operations made permanent. 
Sec. 253. Authority to disclose return information for certain veterans pro-
grams made permanent. 
Sec. 254. Increase in limit on cover over of rum excise tax to Puerto Rico and 
the Virgin Islands. 
TITLE III—ADDITIONAL TAX RELIEF 
Subtitle A—Individual Tax Relief 
Sec. 301. Additional standard deduction for real property taxes for non-
itemizers. 
Sec. 302. Refundable child credit. 
Sec. 303. Increase of AMT refundable credit amount for individuals with long- 
term unused credits for prior year minimum tax liability, etc. 
Subtitle B—Business Related Provisions 
Sec. 311. Uniform treatment of attorney-advanced expenses and court costs in 
contingency fee cases. 
Sec. 312. Provisions related to film and television productions. 
Subtitle C—Modification of Penalty on Understatement of Taxpayer’s 
Liability by Tax Return Preparer 
Sec. 321. Modification of penalty on understatement of taxpayer’s liability by 
tax return preparer. 
Subtitle D—Extension and Expansion of Certain GO Zone Incentives 
Sec. 331. Certain GO Zone incentives. 
TITLE IV—REVENUE PROVISIONS 
Sec. 401. Nonqualified deferred compensation from certain tax indifferent par-
ties. 
Sec. 402. Delay in application of worldwide allocation of interest. 
Sec. 403. Time for payment of corporate estimated taxes. 
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TITLE I—ENERGY TAX 
INCENTIVES 
Subtitle A—Energy Production 
Incentives 
PART I—RENEWABLE ENERGY INCENTIVES 
SEC. 101. RENEWABLE ENERGY CREDIT. 
(a) EXTENSION OF CREDIT.— 
(1) 1-YEAR
EXTENSION
FOR
WIND
FACILI-
TIES.—Paragraph (1) of section 45(d) is amended 
by striking ‘‘January 1, 2009’’ and inserting ‘‘Janu-
ary 1, 2010’’. 
(2) 3-YEAR EXTENSION FOR CERTAIN OTHER 
FACILITIES.—Each of the following provisions of 
section 45(d) is amended by striking ‘‘January 1, 
2009’’ and inserting ‘‘January 1, 2012’’: 
(A) Clauses (i) and (ii) of paragraph 
(2)(A). 
(B) Clauses (i)(I) and (ii) of paragraph 
(3)(A). 
(C) Paragraph (4). 
(D) Paragraph (5). 
(E) Paragraph (6). 
(F) Paragraph (7). 
(G) Subparagraphs (A) and (B) of para-
graph (9). 
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(b) MODIFICATION OF CREDIT PHASEOUT.— 
(1) REPEAL OF PHASEOUT.—Subsection (b) of 
section 45 is amended— 
(A) by striking paragraph (1), and 
(B) by striking ‘‘the 8 cent amount in 
paragraph (1),’’ in paragraph (2) thereof. 
(2) LIMITATION BASED ON INVESTMENT IN FA-
CILITY.—Subsection (b) of section 45 is amended by 
inserting before paragraph (2) the following new 
paragraph: 
‘‘(1) LIMITATION
BASED
ON
INVESTMENT
IN 
FACILITY.— 
‘‘(A) IN
GENERAL.—In the case of any 
qualified facility originally placed in service 
after December 31, 2009, the amount of the 
credit determined under subsection (a) for any 
taxable year with respect to electricity produced 
at such facility shall not exceed the product 
of— 
‘‘(i) the applicable percentage with re-
spect to such facility, multiplied by 
‘‘(ii) the eligible basis of such facility. 
‘‘(B) CARRYFORWARD OF UNUSED LIMITA-
TION AND EXCESS CREDIT.— 
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‘‘(i) UNUSED
LIMITATION.—If the 
limitation imposed under subparagraph (A) 
with respect to any facility for any taxable 
year exceeds the prelimitation credit for 
such facility for such taxable year, the lim-
itation imposed under subparagraph (A) 
with respect to such facility for the suc-
ceeding taxable year shall be increased by 
the amount of such excess. 
‘‘(ii) 
EXCESS
CREDIT.—If 
the 
prelimitation credit with respect to any fa-
cility for any taxable year exceeds the limi-
tation imposed under subparagraph (A) 
with respect to such facility for such tax-
able year, the credit determined under sub-
section (a) with respect to such facility for 
the succeeding taxable year (determined 
before the application of subparagraph (A) 
for such succeeding taxable year) shall be 
increased by the amount of such excess. 
With respect to any facility, no amount 
may be carried forward under this clause 
to any taxable year beginning after the 10- 
year 
period 
described 
in 
subsection 
(a)(2)(A)(ii) with respect to such facility. 
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‘‘(iii) METHOD
OF
DISCOUNTING.— 
The present value under clause (ii) shall be 
determined— 
‘‘(I) as of the last day of the 1st 
year of the 10-year period referred to 
in clause (ii), 
‘‘(II) by using a discount rate 
equal to the greater of 110 percent of 
the Federal long-term rate as in effect 
under section 1274(d) for the month 
preceding the month for which the ap-
plicable percentage is being pre-
scribed, or 4.5 percent, and 
‘‘(III) by taking into account the 
limitation under subparagraph (A) for 
any year on the last day of such year. 
‘‘(D) ELIGIBLE
BASIS.—For purposes of 
this paragraph— 
‘‘(i) IN GENERAL.—The term ‘eligible 
basis’ means, with respect to any facility, 
the sum of— 
‘‘(I) the basis of such facility de-
termined as of the time that such fa-
cility is originally placed in service, 
and 
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‘‘(II) the portion of the basis of 
any shared qualified property which is 
properly allocable to such facility 
under clause (ii). 
‘‘(ii) RULES FOR ALLOCATION.—For 
purposes of subclause (II) of clause (i), the 
basis of shared qualified property shall be 
allocated among all qualified facilities 
which are projected to be placed in service 
and which require utilization of such prop-
erty in proportion to projected generation 
from such facilities. 
‘‘(iii) 
SHARED
QUALIFIED
PROP-
ERTY.—For purposes of this paragraph, 
the term ‘shared qualified property’ means, 
with respect to any facility, any property 
described in section 168(e)(3)(B)(vi)— 
‘‘(I) which a qualified facility will 
require for utilization of such facility, 
and 
‘‘(II) which is not a qualified fa-
cility. 
‘‘(iv) SPECIAL
RULE
RELATING
TO 
GEOTHERMAL FACILITIES.—In the case of 
any qualified facility using geothermal en-
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ergy to produce electricity, the basis of 
such facility for purposes of this paragraph 
shall be determined as though intangible 
drilling and development costs described in 
section 263(c) were capitalized rather than 
expensed. 
‘‘(E) SPECIAL RULE FOR FIRST AND LAST 
YEAR OF CREDIT PERIOD.—In the case of any 
taxable year any portion of which is not within 
the 10-year period described in subsection 
(a)(2)(A)(ii) with respect to any facility, the 
amount of the limitation under subparagraph 
(A) with respect to such facility shall be re-
duced by an amount which bears the same ratio 
to the amount of such limitation (determined 
without regard to this subparagraph) as such 
portion of the taxable year which is not within 
such period bears to the entire taxable year. 
‘‘(F) ELECTION TO TREAT ALL FACILITIES 
PLACED IN SERVICE IN A YEAR AS 1 FACIL-
ITY.—At the election of the taxpayer, all quali-
fied facilities which are part of the same project 
and which are placed in service during the same 
calendar year shall be treated for purposes of 
this section as 1 facility which is placed in serv-
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ice at the mid-point of such year or the first 
day of the following calendar year.’’. 
(c) TRASH FACILITY CLARIFICATION.—Paragraph 
(7) of section 45(d) is amended— 
(1) by striking ‘‘facility which burns’’ and in-
serting ‘‘facility (other than a facility described in 
paragraph (6)) which uses’’, and 
(2) by striking ‘‘COMBUSTION’’. 
(d) EXPANSION OF BIOMASS FACILITIES.— 
(1) OPEN-LOOP
BIOMASS
FACILITIES.—Para-
graph (3) of section 45(d) is amended by redesig-
nating subparagraph (B) as subparagraph (C) and 
by inserting after subparagraph (A) the following 
new subparagraph: 
‘‘(B) EXPANSION
OF
FACILITY.—Such 
term shall include a new unit placed in service 
after the date of the enactment of this subpara-
graph in connection with a facility described in 
subparagraph (A), but only to the extent of the 
increased amount of electricity produced at the 
facility by reason of such new unit.’’. 
(2) CLOSED-LOOP BIOMASS FACILITIES.—Para-
graph (2) of section 45(d) is amended by redesig-
nating subparagraph (B) as subparagraph (C) and 
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inserting after subparagraph (A) the following new 
subparagraph: 
‘‘(B) EXPANSION
OF
FACILITY.—Such 
term shall include a new unit placed in service 
after the date of the enactment of this subpara-
graph in connection with a facility described in 
subparagraph (A)(i), but only to the extent of 
the increased amount of electricity produced at 
the facility by reason of such new unit.’’. 
(e) SALES OF NET ELECTRICITY TO REGULATED 
PUBLIC UTILITIES TREATED AS SALES TO UNRELATED 
PERSONS.—Paragraph (4) of section 45(e) is amended by 
adding at the end the following new sentence: ‘‘The net 
amount of electricity sold by any taxpayer to a regulated 
public utility (as defined in section 7701(a)(33)) shall be 
treated as sold to an unrelated person.’’. 
(f) MODIFICATION
OF RULES
FOR HYDROPOWER 
PRODUCTION.—Subparagraph (C) of section 45(c)(8) is 
amended to read as follows: 
‘‘(C) NONHYDROELECTRIC DAM.—For pur-
poses of subparagraph (A), a facility is de-
scribed in this subparagraph if— 
‘‘(i) the hydroelectric project installed 
on the nonhydroelectric dam is licensed by 
the Federal Energy Regulatory Commis-
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sion and meets all other applicable environ-
mental, licensing, and regulatory require-
ments, 
‘‘(ii) the nonhydroelectric dam was 
placed in service before the date of the en-
actment of this paragraph and operated 
for flood control, navigation, or water sup-
ply purposes and did not produce hydro-
electric power on the date of the enactment 
of this paragraph, and 
‘‘(iii) the hydroelectric project is oper-
ated so that the water surface elevation at 
any given location and time that would 
have occurred in the absence of the hydro-
electric project is maintained, subject to 
any license requirements imposed under 
applicable law that change the water sur-
face elevation for the purpose of improving 
environmental quality of the affected wa-
terway. 
The Secretary, in consultation with the Federal 
Energy Regulatory Commission, shall certify if 
a hydroelectric project licensed at a nonhydro-
electric dam meets the criteria in clause (iii). 
Nothing in this section shall affect the stand-
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ards under which the Federal Energy Regu-
latory Commission issues licenses for and regu-
lates hydropower projects under part I of the 
Federal Power Act.’’. 
(g) EFFECTIVE DATE.— 
(1) IN
GENERAL.—Except as otherwise pro-
vided in this subsection, the amendments made by 
this section shall apply to property originally placed 
in service after December 31, 2008. 
(2) REPEAL
OF
CREDIT
PHASEOUT.—The 
amendments made by subsection (b)(1) shall apply 
to taxable years ending after December 31, 2008. 
(3) LIMITATION BASED ON INVESTMENT IN FA-
CILITY.—The amendment made by subsection (b)(2) 
shall apply to property originally placed in service 
after December 31, 2009. 
(4) TRASH FACILITY CLARIFICATION; SALES TO 
RELATED
REGULATED
PUBLIC
UTILITIES.—The 
amendments made by subsections (c) and (e) shall 
apply to electricity produced and sold after the date 
of the enactment of this Act. 
(5) EXPANSION OF BIOMASS FACILITIES.—The 
amendments made by subsection (d) shall apply to 
property placed in service after the date of the en-
actment of this Act. 
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SEC. 102. PRODUCTION CREDIT FOR ELECTRICITY PRO-
DUCED FROM MARINE RENEWABLES. 
(a) IN GENERAL.—Paragraph (1) of section 45(c) is 
amended by striking ‘‘and’’ at the end of subparagraph 
(G), by striking the period at the end of subparagraph 
(H) and inserting ‘‘, and’’, and by adding at the end the 
following new subparagraph: 
‘‘(I) marine and hydrokinetic renewable en-
ergy.’’. 
(b) MARINE RENEWABLES.—Subsection (c) of sec-
tion 45 is amended by adding at the end the following 
new paragraph: 
‘‘(10) MARINE
AND
HYDROKINETIC
RENEW-
ABLE ENERGY.— 
‘‘(A) IN GENERAL.—The term ‘marine and 
hydrokinetic renewable energy’ means energy 
derived from— 
‘‘(i) waves, tides, and currents in 
oceans, estuaries, and tidal areas, 
‘‘(ii) free flowing water in rivers, 
lakes, and streams, 
‘‘(iii) free flowing water in an irriga-
tion system, canal, or other man-made 
channel, including projects that utilize non-
mechanical structures to accelerate the 
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flow of water for electric power production 
purposes, or 
‘‘(iv) differentials in ocean tempera-
ture (ocean thermal energy conversion). 
‘‘(B) EXCEPTIONS.—Such term shall not 
include any energy which is derived from any 
source which utilizes a dam, diversionary struc-
ture (except as provided in subparagraph 
(A)(iii)), or impoundment for electric power 
production purposes.’’. 
(c) DEFINITION
OF FACILITY.—Subsection (d) of 
section 45 is amended by adding at the end the following 
new paragraph: 
‘‘(11) MARINE
AND
HYDROKINETIC
RENEW-
ABLE ENERGY FACILITIES.—In the case of a facility 
producing electricity from marine and hydrokinetic 
renewable energy, the term ‘qualified facility’ means 
any facility owned by the taxpayer— 
‘‘(A) which has a nameplate capacity rat-
ing of at least 150 kilowatts, and 
‘‘(B) which is originally placed in service 
on or after the date of the enactment of this 
paragraph and before January 1, 2012.’’. 
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(d) CREDIT RATE.—Subparagraph (A) of section 
45(b)(4) is amended by striking ‘‘or (9)’’ and inserting 
‘‘(9), or (11)’’. 
(e) 
COORDINATION
WITH
SMALL
IRRIGATION 
POWER.—Paragraph (5) of section 45(d), as amended by 
section 101, is amended by striking ‘‘January 1, 2012’’ 
and inserting ‘‘the date of the enactment of paragraph 
(11)’’. 
(f) EFFECTIVE DATE.—The amendments made by 
this section shall apply to electricity produced and sold 
after the date of the enactment of this Act, in taxable 
years ending after such date. 
SEC. 103. ENERGY CREDIT. 
(a) EXTENSION OF CREDIT.— 
(1) SOLAR
ENERGY
PROPERTY.—Paragraphs 
(2)(A)(i)(II) and (3)(A)(ii) of section 48(a) are each 
amended by striking ‘‘January 1, 2009’’ and insert-
ing ‘‘January 1, 2015’’. 
(2) FUEL CELL PROPERTY.—Subparagraph (E) 
of section 48(c)(1) is amended by striking ‘‘Decem-
ber 31, 2008’’ and inserting ‘‘December 31, 2014’’. 
(3) MICROTURBINE PROPERTY.—Subparagraph 
(E) of section 48(c)(2) is amended by striking ‘‘De-
cember 31, 2008’’ and inserting ‘‘December 31, 
2014’’. 
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(b) ALLOWANCE OF ENERGY CREDIT AGAINST AL-
TERNATIVE MINIMUM TAX.—Subparagraph (B) of section 
38(c)(4) is amended by striking ‘‘and’’ at the end of clause 
(iii), by redesignating clause (iv) as clause (v), and by in-
serting after clause (iii) the following new clause: 
‘‘(iv) the credit determined under sec-
tion 46 to the extent that such credit is at-
tributable to the energy credit determined 
under section 48, and’’. 
(c) ENERGY CREDIT
FOR COMBINED HEAT
AND 
POWER SYSTEM PROPERTY.— 
(1) IN GENERAL.—Section 48(a)(3)(A) (defin-
ing energy property) is amended by striking ‘‘or’’ at 
the end of clause (iii), by inserting ‘‘or’’ at the end 
of clause (iv), and by adding at the end the following 
new clause: 
‘‘(v) combined heat and power system 
property,’’. 
(2) COMBINED
HEAT
AND
POWER
SYSTEM 
PROPERTY.—Section 48 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)(v)— 
‘‘(1) COMBINED
HEAT
AND
POWER
SYSTEM 
PROPERTY.—The term ‘combined heat and power 
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system property’ means property comprising a sys-
tem— 
‘‘(A) which uses the same energy source 
for the simultaneous or sequential generation of 
electrical 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 produces— 
‘‘(i) at least 20 percent of its total 
useful energy in the form of thermal en-
ergy 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 
mechanical power (or combination thereof), 
‘‘(C) the energy efficiency percentage of 
which exceeds 60 percent, and 
‘‘(D) which is placed in service before Jan-
uary 1, 2015. 
‘‘(2) LIMITATION.— 
‘‘(A) IN GENERAL.—In the case of com-
bined heat and power system property with an 
electrical capacity in excess of the applicable ca-
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pacity placed in service during the taxable year, 
the credit under subsection (a)(1) (determined 
without regard to this paragraph) for such year 
shall be equal to the amount which bears the 
same ratio to such credit as the applicable ca-
pacity bears to the capacity of such property. 
‘‘(B) APPLICABLE
CAPACITY.—For pur-
poses of subparagraph (A), the term ‘applicable 
capacity’ means 15 megawatts or a mechanical 
energy capacity of more than 20,000 horse-
power or an equivalent combination of electrical 
and mechanical energy capacities. 
‘‘(C) 
MAXIMUM
CAPACITY.—The 
term 
‘combined heat and power system property’ 
shall not include any property comprising a sys-
tem if such system has a capacity in excess of 
50 megawatts or a mechanical energy capacity 
in excess of 67,000 horsepower or an equivalent 
combination of electrical and mechanical energy 
capacities. 
‘‘(3) SPECIAL RULES.— 
‘‘(A) 
ENERGY
EFFICIENCY
PERCENT-
AGE.—For purposes of this subsection, the en-
ergy efficiency percentage of a system is the 
fraction— 
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‘‘(i) the numerator of which is the 
total useful electrical, thermal, and me-
chanical power produced by the system at 
normal operating rates, and expected to be 
consumed 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)(B) shall 
be determined on a Btu basis. 
‘‘(C) INPUT AND OUTPUT PROPERTY NOT 
INCLUDED.—The term ‘combined heat and 
power system property’ does not include prop-
erty used to transport the energy source to the 
facility or to distribute energy produced by the 
facility. 
‘‘(4) SYSTEMS USING BIOMASS.—If a system is 
designed to use biomass (within the meaning of 
paragraphs (2) and (3) of section 45(c) without re-
gard to the last sentence of paragraph (3)(A)) for at 
least 90 percent of the energy source— 
‘‘(A) paragraph (1)(C) shall not apply, but 
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(2) LIMITATION.—Section 25D(b)(1) is amend-
ed by striking ‘‘and’’ at the end of subparagraph 
(B), by striking the period at the end of subpara-
graph (C) and inserting ‘‘, and’’, and by adding at 
the end the following new subparagraph: 
‘‘(D) $500 with respect to each half kilo-
watt of capacity (not to exceed $4,000) of wind 
turbines for which qualified small wind energy 
property expenditures are made.’’. 
(3) QUALIFIED
SMALL
WIND
ENERGY
PROP-
ERTY EXPENDITURES.— 
(A) IN
GENERAL.—Section 25D(d) is 
amended by adding at the end the following 
new paragraph: 
‘‘(4) QUALIFIED SMALL WIND ENERGY PROP-
ERTY
EXPENDITURE.—The term ‘qualified small 
wind energy property expenditure’ means an expend-
iture for property which uses a wind turbine to gen-
erate electricity for use in connection with a dwelling 
unit located in the United States and used as a resi-
dence by the taxpayer.’’. 
(B) 
NO
DOUBLE
BENEFIT.—Section 
45(d)(1) is amended by adding at the end the 
following new sentence: ‘‘Such term shall not 
include any facility with respect to which any 
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qualified small wind energy property expendi-
ture (as defined in subsection (d)(4) of section 
25D) is taken into account in determining the 
credit under such section.’’. 
(4) MAXIMUM
EXPENDITURES
IN
CASE
OF 
JOINT
OCCUPANCY.—Section 
25D(e)(4)(A) 
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 fol-
lowing new clause: 
‘‘(iv) $1,667 in the case of each half 
kilowatt 
of 
capacity 
(not 
to 
exceed 
$13,333) of wind turbines for which quali-
fied small wind energy property expendi-
tures are made.’’. 
(d) CREDIT FOR GEOTHERMAL HEAT PUMP SYS-
TEMS.— 
(1) IN GENERAL.—Section 25D(a), as amended 
by subsection (c), is amended by striking ‘‘and’’ at 
the end of paragraph (3), by striking the period at 
the end of paragraph (4) and inserting ‘‘, and’’, and 
by adding at the end the following new paragraph: 
‘‘(5) 30 percent of the qualified geothermal 
heat pump property expenditures made by the tax-
payer during such year.’’. 
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(2) 
LIMITATION.—Section 
25D(b)(1), 
as 
amended by subsection (c), is amended by striking 
‘‘and’’ at the end of subparagraph (C), by striking 
the period at the end of subparagraph (D) and in-
serting ‘‘, and’’, and by adding at the end the fol-
lowing new subparagraph: 
‘‘(E) $2,000 with respect to any qualified 
geothermal heat pump property expenditures.’’. 
(3) QUALIFIED
GEOTHERMAL
HEAT
PUMP 
PROPERTY
EXPENDITURE.—Section 
25D(d), 
as 
amended by subsection (c), is amended by adding at 
the end the following new paragraph: 
‘‘(5) QUALIFIED
GEOTHERMAL
HEAT
PUMP 
PROPERTY EXPENDITURE.— 
‘‘(A) IN
GENERAL.—The term ‘qualified 
geothermal heat pump property expenditure’ 
means an expenditure for qualified geothermal 
heat pump property installed on or in connec-
tion with a dwelling unit located in the United 
States and used as a residence by the taxpayer. 
‘‘(B) 
QUALIFIED
GEOTHERMAL
HEAT 
PUMP
PROPERTY.—The term ‘qualified geo-
thermal heat pump property’ means any equip-
ment which— 
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‘‘(i) uses the ground or ground water 
as a thermal energy source to heat the 
dwelling unit referred to in subparagraph 
(A) or as a thermal energy sink to cool 
such dwelling unit, and 
‘‘(ii) meets the requirements of the 
Energy Star program which are in effect 
at the time that the expenditure for such 
equipment is made.’’. 
(4) MAXIMUM
EXPENDITURES
IN
CASE
OF 
JOINT
OCCUPANCY.—Section 
25D(e)(4)(A), 
as 
amended by subsection (c), is amended by striking 
‘‘and’’ at the end of clause (iii), by striking the pe-
riod at the end of clause (iv) and inserting ‘‘, and’’, 
and by adding at the end the following new clause: 
‘‘(v) $6,667 in the case of any quali-
fied geothermal heat pump property ex-
penditures.’’. 
(e) CREDIT ALLOWED AGAINST ALTERNATIVE MIN-
IMUM TAX.— 
(1) IN
GENERAL.—Subsection (c) of section 
25D is amended to read as follows: 
‘‘(c) LIMITATION BASED
ON AMOUNT
OF TAX; 
CARRYFORWARD OF UNUSED CREDIT.— 
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‘‘(1) LIMITATION
BASED
ON
AMOUNT
OF 
TAX.—In the case of a taxable year to which section 
26(a)(2) does not apply, the credit allowed under 
subsection (a) for the taxable year shall not exceed 
the excess of— 
‘‘(A) the sum of the regular tax liability 
(as defined in section 26(b)) plus the tax im-
posed 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) CARRYFORWARD OF UNUSED CREDIT.— 
‘‘(A) RULE
FOR
YEARS
IN
WHICH
ALL 
PERSONAL
CREDITS
ALLOWED
AGAINST
REG-
ULAR
AND
ALTERNATIVE
MINIMUM
TAX.—In 
the case of a taxable year to which section 
26(a)(2) applies, if the credit allowable under 
subsection (a) exceeds the limitation imposed by 
section 26(a)(2) for such taxable year reduced 
by the sum of the credits allowable under this 
subpart (other than this section), such excess 
shall be carried to the succeeding taxable year 
and added to the credit allowable under sub-
section (a) for such succeeding taxable year. 
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‘‘(B) RULE
FOR
OTHER
YEARS.—In the 
case of a taxable year to which section 26(a)(2) 
does not apply, if the credit allowable under 
subsection (a) exceeds the limitation imposed by 
paragraph (1) for such taxable year, such ex-
cess shall be carried to the succeeding taxable 
year and added to the credit allowable under 
subsection (a) for such succeeding taxable 
year.’’. 
(2) CONFORMING AMENDMENTS.— 
(A) Section 23(b)(4)(B) is amended by in-
serting ‘‘and section 25D’’ after ‘‘this section’’. 
(B) Section 24(b)(3)(B) is amended by 
striking ‘‘and 25B’’ and inserting ‘‘, 25B, and 
25D’’. 
(C) Section 25B(g)(2) is amended by strik-
ing ‘‘section 23’’ and inserting ‘‘sections 23 and 
25D’’. 
(D) Section 26(a)(1) is amended by strik-
ing ‘‘and 25B’’ and inserting ‘‘25B, and 25D’’. 
(f) EFFECTIVE DATE.— 
(1) IN GENERAL.—The amendments made by 
this section shall apply to taxable years beginning 
after December 31, 2007. 
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(2) APPLICATION
OF
EGTRRA
SUNSET.—The 
amendments made by subparagraphs (A) and (B) of 
subsection (e)(2) shall be subject to title IX of the 
Economic Growth and Tax Relief Reconciliation Act 
of 2001 in the same manner as the provisions of 
such Act to which such amendments relate. 
SEC. 105. SPECIAL RULE TO IMPLEMENT FERC AND STATE 
ELECTRIC RESTRUCTURING POLICY. 
(a) EXTENSION FOR QUALIFIED ELECTRIC UTILI-
TIES.— 
(1) IN
GENERAL.—Paragraph (3) of section 
451(i) is amended by inserting ‘‘(before January 1, 
2010, in the case of a qualified electric utility)’’ 
after ‘‘January 1, 2008’’. 
(2) QUALIFIED ELECTRIC UTILITY.—Subsection 
(i) of section 451 is amended by redesignating para-
graphs (6) through (10) as paragraphs (7) through 
(11), respectively, and by inserting after paragraph 
(5) the following new paragraph: 
‘‘(6) QUALIFIED ELECTRIC UTILITY.—For pur-
poses of this subsection, the term ‘qualified electric 
utility’ means a person that, as of the date of the 
qualifying 
electric 
transmission 
transaction, 
is 
vertically integrated, in that it is both— 
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‘‘(A) a transmitting utility (as defined in 
section 3(23) of the Federal Power Act (16 
U.S.C. 796(23))) with respect to the trans-
mission facilities to which the election under 
this subsection applies, and 
‘‘(B) an electric utility (as defined in sec-
tion 3(22) of the Federal Power Act (16 U.S.C. 
796(22))).’’. 
(b) EXTENSION
OF PERIOD
FOR TRANSFER
OF 
OPERATIONAL
CONTROL
AUTHORIZED
BY
FERC.— 
Clause (ii) of section 451(i)(4)(B) is amended by striking 
‘‘December 31, 2007’’ and inserting ‘‘the date which is 
4 years after the close of the taxable year in which the 
transaction occurs’’. 
(c) PROPERTY LOCATED OUTSIDE
THE UNITED 
STATES NOT TREATED
AS EXEMPT UTILITY PROP-
ERTY.—Paragraph (5) of section 451(i) is amended by 
adding at the end the following new subparagraph: 
‘‘(C) EXCEPTION FOR PROPERTY LOCATED 
OUTSIDE THE UNITED STATES.—The term ‘ex-
empt utility property’ shall not include any 
property which is located outside the United 
States.’’. 
(d) EFFECTIVE DATES.— 
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(1) EXTENSION.—The amendments made by 
subsection (a) shall apply to transactions after De-
cember 31, 2007. 
(2) TRANSFERS OF OPERATIONAL CONTROL.— 
The amendment made by subsection (b) shall take 
effect as if included in section 909 of the American 
Jobs Creation Act of 2004. 
(3) EXCEPTION FOR PROPERTY LOCATED OUT-
SIDE THE UNITED STATES.—The amendment made 
by subsection (c) shall apply to transactions after 
the date of the enactment of this Act. 
SEC. 106. NEW CLEAN RENEWABLE ENERGY BONDS. 
(a) IN GENERAL.—Part IV of subchapter A of chap-
ter 1 is amended by adding at the end the following new 
subpart: 
‘‘Subpart I—Qualified Tax Credit Bonds 
‘‘Sec. 54A. Credit to holders of qualified tax credit bonds. 
‘‘Sec. 54B. New clean renewable energy bonds. 
‘‘SEC. 54A. CREDIT TO HOLDERS OF QUALIFIED TAX CRED-
IT BONDS. 
‘‘(a) ALLOWANCE OF CREDIT.—If a taxpayer holds 
a qualified tax credit bond on one or more credit allowance 
dates of the bond during any taxable year, there shall be 
allowed as a credit against the tax imposed by this chapter 
for the taxable year an amount equal to the sum of the 
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credits determined under subsection (b) with respect to 
such dates. 
‘‘(b) AMOUNT OF CREDIT.— 
‘‘(1) IN GENERAL.—The amount of the credit 
determined under this subsection with respect to any 
credit allowance date for a qualified tax credit bond 
is 25 percent of the annual credit determined with 
respect to such bond. 
‘‘(2) ANNUAL CREDIT.—The annual credit de-
termined with respect to any qualified tax credit 
bond is the product of— 
‘‘(A) the applicable credit rate, multiplied 
by 
‘‘(B) the outstanding face amount of the 
bond. 
‘‘(3) APPLICABLE CREDIT RATE.—For purposes 
of paragraph (2), the applicable credit rate is the 
rate which the Secretary estimates will permit the 
issuance of qualified tax credit bonds with a speci-
fied maturity or redemption date without discount 
and without interest cost to the qualified issuer. The 
applicable credit rate with respect to any qualified 
tax credit bond shall be determined as of the first 
day on which there is a binding, written contract for 
the sale or exchange of the bond. 
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‘‘(4) SPECIAL RULE FOR ISSUANCE AND RE-
DEMPTION.—In the case of a bond which is issued 
during the 3-month period ending on a credit allow-
ance date, the amount of the credit determined 
under this subsection with respect to such credit al-
lowance date shall be a ratable portion of the credit 
otherwise determined based on the portion of the 3- 
month period during which the bond is outstanding. 
A similar rule shall apply when the bond is redeemed 
or matures. 
‘‘(c) LIMITATION BASED ON AMOUNT OF TAX.— 
‘‘(1) IN GENERAL.—The credit allowed under 
subsection (a) for any taxable year shall not exceed 
the excess of— 
‘‘(A) the sum of the regular tax liability 
(as defined in section 26(b)) plus the tax im-
posed by section 55, over 
‘‘(B) the sum of the credits allowable 
under this part (other than subpart C and this 
subpart). 
‘‘(2) CARRYOVER OF UNUSED CREDIT.—If the 
credit allowable under subsection (a) exceeds the 
limitation imposed by paragraph (1) for such taxable 
year, such excess shall be carried to the succeeding 
taxable year and added to the credit allowable under 
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subsection (a) for such taxable year (determined be-
fore the application of paragraph (1) for such suc-
ceeding taxable year). 
‘‘(d) QUALIFIED TAX CREDIT BOND.—For purposes 
of this section— 
‘‘(1) QUALIFIED TAX CREDIT BOND.—The term 
‘qualified tax credit bond’ means a new clean renew-
able energy bond which is part of an issue that 
meets the requirements of paragraphs (2), (3), (4), 
(5), and (6). 
‘‘(2) SPECIAL RULES RELATING TO EXPENDI-
TURES.— 
‘‘(A) IN
GENERAL.—An issue shall be 
treated as meeting the requirements of this 
paragraph if, as of the date of issuance, the 
issuer reasonably expects— 
‘‘(i) 100 percent or more of the avail-
able project proceeds to be spent for 1 or 
more qualified purposes within the 3-year 
period beginning on such date of issuance, 
and 
‘‘(ii) a binding commitment with a 
third party to spend at least 10 percent of 
such available project proceeds will be in-
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curred within the 6-month period begin-
ning on such date of issuance. 
‘‘(B) 
FAILURE
TO
SPEND
REQUIRED 
AMOUNT
OF
BOND
PROCEEDS
WITHIN
YEARS.— 
‘‘(i) IN GENERAL.—To the extent that 
less than 100 percent of the available 
project proceeds of the issue are expended 
by the close of the expenditure period for 
1 or more qualified purposes, the issuer 
shall redeem all of the nonqualified bonds 
within 90 days after the end of such pe-
riod. For purposes of this paragraph, the 
amount of the nonqualified bonds required 
to be redeemed shall be determined in the 
same manner as under section 142. 
‘‘(ii) 
EXPENDITURE
PERIOD.—For 
purposes of this subpart, the term ‘expend-
iture period’ means, with respect to any 
issue, the 3-year period beginning on the 
date of issuance. Such term shall include 
any extension of such period under clause 
(iii). 
‘‘(iii) EXTENSION OF PERIOD.—Upon 
submission of a request prior to the expira-
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tion of the expenditure period (determined 
without regard to any extension under this 
clause), the Secretary may extend such pe-
riod if the issuer establishes that the fail-
ure to expend the proceeds within the 
original expenditure period is due to rea-
sonable cause and the expenditures for 
qualified purposes will continue to proceed 
with due diligence. 
‘‘(C) QUALIFIED PURPOSE.—For purposes 
of this paragraph, the term ‘qualified purpose’ 
means a purpose specified in section 54B(a)(1). 
‘‘(D) REIMBURSEMENT.—For purposes of 
this subtitle, available project proceeds of an 
issue shall be treated as spent for a qualified 
purpose if such proceeds are used to reimburse 
the issuer for amounts paid for a qualified pur-
pose after the date that the Secretary makes an 
allocation of bond limitation with respect to 
such issue, but only if— 
‘‘(i) prior to the payment of the origi-
nal expenditure, the issuer declared its in-
tent to reimburse such expenditure with 
the proceeds of a qualified tax credit bond, 
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‘‘(ii) not later than 60 days after pay-
ment of the original expenditure, the issuer 
adopts an official intent to reimburse the 
original expenditure with such proceeds, 
and 
‘‘(iii) the reimbursement is made not 
later than 18 months after the date the 
original expenditure is paid. 
‘‘(3) REPORTING.—An issue shall be treated as 
meeting the requirements of this paragraph if the 
issuer of qualified tax credit bonds submits reports 
similar to the reports required under section 149(e). 
‘‘(4) SPECIAL
RULES
RELATING
TO
ARBI-
TRAGE.— 
‘‘(A) IN
GENERAL.—An issue shall be 
treated as meeting the requirements of this 
paragraph if the issuer satisfies the require-
ments of section 148 with respect to the pro-
ceeds of the issue. 
‘‘(B) SPECIAL
RULE
FOR
INVESTMENTS 
DURING EXPENDITURE PERIOD.—An issue shall 
not be treated as failing to meet the require-
ments of subparagraph (A) by reason of any in-
vestment of available project proceeds during 
the expenditure period. 
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‘‘(C) 
SPECIAL
RULE
FOR
RESERVE 
FUNDS.—An issue shall not be treated as fail-
ing to meet the requirements of subparagraph 
(A) by reason of any fund which is expected to 
be used to repay such issue if— 
‘‘(i) such fund is funded at a rate not 
more rapid than equal annual installments, 
‘‘(ii) such fund is funded in a manner 
reasonably expected to result in an amount 
not greater than an amount necessary to 
repay the issue, and 
‘‘(iii) the yield on such fund is not 
greater than the discount rate determined 
under paragraph (5)(B) with respect to the 
issue. 
‘‘(5) MATURITY LIMITATION.— 
‘‘(A) IN GENERAL.—An issue shall not be 
treated as meeting the requirements of this 
paragraph if the maturity of any bond which is 
part of such issue exceeds the maximum term 
determined by the Secretary under subpara-
graph (B). 
‘‘(B) MAXIMUM TERM.—During each cal-
endar month, the Secretary shall determine the 
maximum term permitted under this paragraph 
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for bonds issued during the following calendar 
month. Such maximum term shall be the term 
which the Secretary estimates will result in the 
present value of the obligation to repay the 
principal on the bond being equal to 50 percent 
of the face amount of such bond. Such present 
value shall be determined using as a discount 
rate the average annual interest rate of tax-ex-
empt obligations having a term of 10 years or 
more which are issued during the month. If the 
term as so determined is not a multiple of a 
whole year, such term shall be rounded to the 
next highest whole year. 
‘‘(6) PROHIBITION
ON
FINANCIAL
CONFLICTS 
OF INTEREST.—An issue shall be treated as meeting 
the requirements of this paragraph if the issuer cer-
tifies that— 
‘‘(A) applicable State and local law re-
quirements governing conflicts of interest are 
satisfied with respect to such issue, and 
‘‘(B) if the Secretary prescribes additional 
conflicts of interest rules governing the appro-
priate Members of Congress, Federal, State, 
and local officials, and their spouses, such addi-
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tional rules are satisfied with respect to such 
issue. 
‘‘(e) OTHER DEFINITIONS.—For purposes of this 
subchapter— 
‘‘(1) CREDIT
ALLOWANCE
DATE.—The term 
‘credit allowance date’ means— 
‘‘(A) March 15, 
‘‘(B) June 15, 
‘‘(C) September 15, and 
‘‘(D) December 15. 
Such term includes the last day on which the bond 
is outstanding. 
‘‘(2) BOND.—The term ‘bond’ includes any ob-
ligation. 
‘‘(3) STATE.—The term ‘State’ includes the 
District of Columbia and any possession of the 
United States. 
‘‘(4) AVAILABLE
PROJECT
PROCEEDS.—The 
term ‘available project proceeds’ means— 
‘‘(A) the excess of— 
‘‘(i) the proceeds from the sale of an 
issue, over 
‘‘(ii) the issuance costs financed by 
the issue (to the extent that such costs do 
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not exceed 2 percent of such proceeds), 
and 
‘‘(B) the proceeds from any investment of 
the excess described in subparagraph (A). 
‘‘(f) CREDIT TREATED AS INTEREST.—For purposes 
of this subtitle, the credit determined under subsection (a) 
shall be treated as interest which is includible in gross in-
come. 
‘‘(g) S CORPORATIONS AND PARTNERSHIPS.—In the 
case of a tax credit bond held by an S corporation or part-
nership, the allocation of the credit allowed by this section 
to the shareholders of such corporation or partners of such 
partnership shall be treated as a distribution. 
‘‘(h) BONDS HELD
BY REGULATED INVESTMENT 
COMPANIES AND REAL ESTATE INVESTMENT TRUSTS.— 
If any qualified tax credit bond is held by a regulated in-
vestment company or a real estate investment trust, the 
credit determined under subsection (a) shall be allowed to 
shareholders of such company or beneficiaries of such 
trust (and any gross income included under subsection (f) 
with respect to such credit shall be treated as distributed 
to such shareholders or beneficiaries) under procedures 
prescribed by the Secretary. 
‘‘(i) CREDITS MAY BE STRIPPED.—Under regula-
tions prescribed by the Secretary— 
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‘‘(1) IN GENERAL.—There may be a separation 
(including at issuance) of the ownership of a quali-
fied tax credit bond and the entitlement to the credit 
under this section with respect to such bond. In case 
of any such separation, the credit under this section 
shall be allowed to the person who on the credit al-
lowance date holds the instrument evidencing the en-
titlement to the credit and not to the holder of the 
bond. 
‘‘(2) CERTAIN RULES TO APPLY.—In the case 
of a separation described in paragraph (1), the rules 
of section 1286 shall apply to the qualified tax credit 
bond as if it were a stripped bond and to the credit 
under this section as if it were a stripped coupon. 
‘‘SEC. 54B. NEW CLEAN RENEWABLE ENERGY BONDS. 
‘‘(a) NEW CLEAN RENEWABLE ENERGY BOND.—For 
purposes of this subpart, the term ‘new clean renewable 
energy bond’ means any bond issued as part of an issue 
if— 
‘‘(1) 100 percent of the available project pro-
ceeds of such issue are to be used for capital expend-
itures incurred by public power providers or coopera-
tive electric companies for one or more qualified re-
newable energy facilities, 
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‘‘(2) the bond is issued by a qualified issuer, 
and 
‘‘(3) the issuer designates such bond for pur-
poses of this section. 
‘‘(b) REDUCED CREDIT AMOUNT.—The annual credit 
determined under section 54A(b) with respect to any new 
clean renewable energy bond shall be 70 percent of the 
amount so determined without regard to this subsection. 
‘‘(c) LIMITATION
ON AMOUNT
OF BONDS DES-
IGNATED.— 
‘‘(1) IN
GENERAL.—The maximum aggregate 
face amount of bonds which may be designated 
under subsection (a) by any issuer shall not exceed 
the limitation amount allocated under this sub-
section to such issuer. 
‘‘(2) NATIONAL
LIMITATION
ON
AMOUNT
OF 
BONDS DESIGNATED.—There is a national new clean 
renewable energy bond limitation of $2,000,000,000 
which shall be allocated by the Secretary as provided 
in paragraph (3), except that— 
‘‘(A) not more than 331⁄3 percent thereof 
may be allocated to qualified projects of public 
power providers, 
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‘‘(B) not more than 331⁄3 percent thereof 
may be allocated to qualified projects of govern-
mental bodies, and 
‘‘(C) not more than 331⁄3 percent thereof 
may be allocated to qualified projects of cooper-
ative electric companies. 
‘‘(3) METHOD OF ALLOCATION.— 
‘‘(A) ALLOCATION AMONG PUBLIC POWER 
PROVIDERS.—After the Secretary determines 
the qualified projects of public power providers 
which are appropriate for receiving an alloca-
tion of the national new clean renewable energy 
bond limitation, the Secretary shall, to the max-
imum extent practicable, make allocations 
among such projects in such manner that the 
amount allocated to each such project bears the 
same ratio to the cost of such project as the 
limitation under paragraph (2)(A) bears to the 
cost of all such projects. 
‘‘(B) ALLOCATION AMONG GOVERNMENTAL 
BODIES AND COOPERATIVE ELECTRIC COMPA-
NIES.—The Secretary shall make allocations of 
the amount of the national new clean renewable 
energy bond limitation described in paragraphs 
(2)(B) and (2)(C) among qualified projects of 
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governmental bodies and cooperative electric 
companies, respectively, in such manner as the 
Secretary determines appropriate. 
‘‘(d) DEFINITIONS.—For purposes of this section— 
‘‘(1) QUALIFIED RENEWABLE ENERGY FACIL-
ITY.—The term ‘qualified renewable energy facility’ 
means a qualified facility (as determined under sec-
tion 45(d) without regard to paragraphs (8) and 
(10) thereof and to any placed in service date) 
owned by a public power provider, a governmental 
body, or a cooperative electric company. 
‘‘(2) PUBLIC
POWER
PROVIDER.—The term 
‘public power provider’ means a State utility with a 
service obligation, as such terms are defined in sec-
tion 217 of the Federal Power Act (as in effect on 
the date of the enactment of this paragraph). 
‘‘(3) GOVERNMENTAL BODY.—The term ‘gov-
ernmental body’ means any State or Indian tribal 
government, or any political subdivision thereof. 
‘‘(4) COOPERATIVE ELECTRIC COMPANY.—The 
term ‘cooperative electric company’ means a mutual 
or cooperative electric company described in section 
501(c)(12) or section 1381(a)(2)(C). 
‘‘(5) CLEAN RENEWABLE ENERGY BOND LEND-
ER.—The term ‘clean renewable energy bond lender’ 
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means a lender which is a cooperative which is 
owned by, or has outstanding loans to, 100 or more 
cooperative electric companies and is in existence on 
February 1, 2002, and shall include any affiliated 
entity which is controlled by such lender. 
‘‘(6) QUALIFIED ISSUER.—The term ‘qualified 
issuer’ means a public power provider, a cooperative 
electric company, a governmental body, a clean re-
newable energy bond lender, or a not-for-profit elec-
tric utility which has received a loan or loan guar-
antee under the Rural Electrification Act.’’. 
(b) REPORTING.—Subsection (d) of section 6049 is 
amended by adding at the end the following new para-
graph: 
‘‘(9) REPORTING
OF
CREDIT
ON
QUALIFIED 
TAX CREDIT BONDS.— 
‘‘(A) IN GENERAL.—For purposes of sub-
section (a), the term ‘interest’ includes amounts 
includible in gross income under section 54A 
and such amounts shall be treated as paid on 
the credit allowance date (as defined in section 
54A(e)(1)). 
‘‘(B) 
REPORTING
TO
CORPORATIONS, 
ETC.—Except as otherwise provided in regula-
tions, in the case of any interest described in 
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subparagraph (A) of this paragraph, subsection 
(b)(4) of this section shall be applied without 
regard to subparagraphs (A), (H), (I), (J), (K), 
and (L)(i). 
‘‘(C) REGULATORY AUTHORITY.—The Sec-
retary may prescribe such regulations as are 
necessary or appropriate to carry out the pur-
poses of this paragraph, including regulations 
which require more frequent or more detailed 
reporting.’’. 
(c) CONFORMING AMENDMENTS.— 
(1) Sections 54(c)(2) and 1400N(l)(3)(B) are 
each amended by striking ‘‘subpart C’’ and inserting 
‘‘subparts C and I’’. 
(2) Section 1397E(c)(2) is amended by striking 
‘‘subpart H’’ and inserting ‘‘subparts H and I’’. 
(3) Section 6401(b)(1) is amended by striking 
‘‘and H’’ and inserting ‘‘H, and I’’. 
(4) The heading of subpart H of part IV of 
subchapter A of chapter 1 is amended by striking 
‘‘Certain Bonds’’ and inserting ‘‘Clean Re-
newable Energy Bonds’’. 
(5) The table of subparts for part IV of sub-
chapter A of chapter 1 is amended by striking the 
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item relating to subpart H and inserting the fol-
lowing new items: 
‘‘SUBPART H. NONREFUNDABLE CREDIT TO HOLDERS OF CLEAN RENEWABLE 
ENERGY BONDS. 
‘‘SUBPART I. QUALIFIED TAX CREDIT BONDS.’’. 
(d) APPLICATION OF CERTAIN LABOR STANDARDS 
ON PROJECTS FINANCED UNDER TAX CREDIT BONDS.— 
Subchapter IV of chapter 31 of title 40, United States 
Code, shall apply to projects financed with the proceeds 
of any tax credit bond (as defined in section 54A of the 
Internal Revenue Code of 1986). 
(e) EFFECTIVE DATES.—The amendments made by 
this section shall apply to obligations issued after the date 
of the enactment of this Act. 
PART II—CARBON MITIGATION PROVISIONS 
SEC. 111. EXPANSION AND MODIFICATION OF ADVANCED 
COAL PROJECT INVESTMENT CREDIT. 
(a) MODIFICATION
OF CREDIT AMOUNT.—Section 
48A(a) is amended by striking ‘‘and’’ at the end of para-
graph (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) 30 percent of the qualified investment for 
such taxable year in the case of projects described 
in clause (iii) of subsection (d)(3)(B).’’. 
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(b) EXPANSION OF AGGREGATE CREDITS.—Section 
48A(d)(3)(A) is amended by striking ‘‘$1,300,000,000’’ 
and inserting ‘‘$2,550,000,000’’. 
(c) AUTHORIZATION OF ADDITIONAL PROJECTS.— 
(1) IN GENERAL.—Subparagraph (B) of section 
48A(d)(3) is amended to read as follows: 
‘‘(B) PARTICULAR PROJECTS.—Of the dol-
lar amount in subparagraph (A), the Secretary 
is authorized to certify— 
‘‘(i) $800,000,000 for integrated gas-
ification combined cycle projects the appli-
cation for which is submitted during the 
period described in paragraph (2)(A)(i), 
‘‘(ii) $500,000,000 for projects which 
use other advanced coal-based generation 
technologies the application for which is 
submitted during the period described in 
paragraph (2)(A)(i), and 
‘‘(iii) $1,250,000,000 for advanced 
coal-based generation technology projects 
the application for which is submitted dur-
ing the period described in paragraph 
(2)(A)(ii).’’. 
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(2) APPLICATION
PERIOD
FOR
ADDITIONAL 
PROJECTS.—Subparagraph (A) of section 48A(d)(2) 
is amended to read as follows: 
‘‘(A) APPLICATION PERIOD.—Each appli-
cant for certification under this paragraph shall 
submit an application meeting the requirements 
of subparagraph (B). An applicant may only 
submit an application— 
‘‘(i) for an allocation from the dollar 
amount specified in clause (i) or (ii) of 
paragraph (3)(B) during the 3-year period 
beginning on the date the Secretary estab-
lishes the program under paragraph (1), 
and 
‘‘(ii) for an allocation from the dollar 
amount specified in paragraph (3)(B)(iii) 
during the 3-year period beginning at the 
earlier of the termination of the period de-
scribed in clause (i) or the date prescribed 
by the Secretary.’’. 
(3) CAPTURE AND SEQUESTRATION OF CARBON 
DIOXIDE EMISSIONS REQUIREMENT.— 
(A) IN
GENERAL.—Section 48A(e)(1) is 
amended by striking ‘‘and’’ at the end of sub-
paragraph (E), by striking the period at the 
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end of subparagraph (F) and inserting ‘‘; and’’, 
and by adding at the end the following new sub-
paragraph: 
‘‘(G) in the case of any project the applica-
tion for which is submitted during the period 
described in subsection (d)(2)(A)(ii), the project 
includes equipment which separates and seques-
ters at least 65 percent (70 percent in the case 
of an application for reallocated credits under 
subsection (d)(4)) of such project’s total carbon 
dioxide emissions.’’. 
(B) HIGHEST
PRIORITY
FOR
PROJECTS 
WHICH
SEQUESTER
CARBON
DIOXIDE
EMIS-
SIONS.—Section 48A(e)(3) is amended by strik-
ing ‘‘and’’ at the end of subparagraph (A)(iii), 
by striking the period at the end of subpara-
graph (B)(iii) and inserting ‘‘, and’’, and by 
adding at the end the following new subpara-
graph: 
‘‘(C) give highest priority to projects with 
the greatest separation and sequestration per-
centage of total carbon dioxide emissions.’’. 
(C) RECAPTURE OF CREDIT FOR FAILURE 
TO SEQUESTER.—Section 48A is amended by 
adding at the end the following new subsection: 
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‘‘(h) RECAPTURE OF CREDIT FOR FAILURE TO SE-
QUESTER.—The Secretary shall provide for recapturing 
the benefit of any credit allowable under subsection (a) 
with respect to any project which fails to attain or main-
tain the separation and sequestration requirements of sub-
section (e)(1)(G).’’. 
(4) ADDITIONAL
PRIORITY
FOR
RESEARCH 
PARTNERSHIPS.—Section 48A(e)(3)(B), as amended 
by paragraph (3)(B), is amended— 
(A) by striking ‘‘and’’ at the end of clause 
(ii), 
(B) by redesignating clause (iii) as clause 
(iv), and 
(C) by inserting after clause (ii) the fol-
lowing new clause: 
‘‘(iii) applicant participants who have 
a research partnership with an eligible edu-
cational institution (as defined in section 
529(e)(5)), and’’. 
(5) CLERICAL AMENDMENT.—Section 48A(e)(3) 
is amended by striking ‘‘INTEGRATED GASIFICATION 
COMBINED
CYCLE’’ in the heading and inserting 
‘‘CERTAIN’’. 
(d) COMPETITIVE CERTIFICATION AWARDS MODI-
FICATION AUTHORITY.—Section 48A, as amended by sub-
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section (c)(3), is amended by adding at the end the fol-
lowing new subsection: 
‘‘(i) COMPETITIVE CERTIFICATION AWARDS MODI-
FICATION AUTHORITY.—In implementing this section or 
section 48B, the Secretary is directed to modify the terms 
of any competitive certification award and any associated 
closing agreement where such modification— 
‘‘(1) is consistent with the objectives of such 
section, 
‘‘(2) is requested by the recipient of the com-
petitive certification award, and 
‘‘(3) involves moving the project site to improve 
the potential to capture and sequester carbon dioxide 
emissions, reduce costs of transporting feedstock, 
and serve a broader customer base, 
unless the Secretary determines that the dollar amount 
of tax credits available to the taxpayer under such section 
would increase as a result of the modification or such 
modification would result in such project not being origi-
nally certified. In considering any such modification, the 
Secretary shall consult with other relevant Federal agen-
cies, including the Department of Energy.’’. 
(e) DISCLOSURE OF ALLOCATIONS.—Section 48A(d) 
is amended by adding at the end the following new para-
graph: 
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‘‘(5) DISCLOSURE OF ALLOCATIONS.—The Sec-
retary shall, upon making a certification under this 
subsection or section 48B(d), publicly disclose the 
identity of the applicant and the amount of the cred-
it certified with respect to such applicant.’’. 
(f) EFFECTIVE DATES.— 
(1) IN
GENERAL.—Except as otherwise pro-
vided in this subsection, the amendments made by 
this section shall apply to credits the application for 
which is submitted during the period described in 
section 48A(d)(2)(A)(ii) of the Internal Revenue 
Code of 1986 and which are allocated or reallocated 
after the date of the enactment of this Act. 
(2) 
COMPETITIVE
CERTIFICATION
AWARDS 
MODIFICATION AUTHORITY.—The amendment made 
by subsection (d) shall take effect on the date of the 
enactment of this Act and is applicable to all com-
petitive certification awards entered into under sec-
tion 48A or 48B of the Internal Revenue Code of 
1986, whether such awards were issued before, on, 
or after such date of enactment. 
(3) 
DISCLOSURE
OF
ALLOCATIONS.—The 
amendment made by subsection (e) shall apply to 
certifications made after the date of the enactment 
of this Act. 
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(4) CLERICAL AMENDMENT.—The amendment 
made by subsection (c)(5) shall take effect as if in-
cluded in the amendment made by section 1307(b) 
of the Energy Tax Incentives Act of 2005. 
SEC. 112. EXPANSION AND MODIFICATION OF COAL GASIFI-
CATION INVESTMENT CREDIT. 
(a) MODIFICATION
OF CREDIT AMOUNT.—Section 
48B(a) is amended by inserting ‘‘(30 percent in the case 
of credits allocated under subsection (d)(1)(B))’’ after ‘‘20 
percent’’. 
(b) EXPANSION OF AGGREGATE CREDITS.—Section 
48B(d)(1) is amended by striking ‘‘shall not exceed 
$350,000,000’’ and all that follows and inserting ‘‘shall 
not exceed— 
‘‘(A) $350,000,000, plus 
‘‘(B) $250,000,000 for qualifying gasifi-
cation projects that include equipment which 
separates and sequesters at least 75 percent of 
such project’s total carbon dioxide emissions.’’. 
(c) RECAPTURE OF CREDIT FOR FAILURE TO SE-
QUESTER.—Section 48B is amended by adding at the end 
the following new subsection: 
‘‘(f) RECAPTURE OF CREDIT FOR FAILURE TO SE-
QUESTER.—The Secretary shall provide for recapturing 
the benefit of any credit allowable under subsection (a) 
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with respect to any project which fails to attain or main-
tain the separation and sequestration requirements for 
such project under subsection (d)(1).’’. 
(d) SELECTION
PRIORITIES.—Section 48B(d) is 
amended by adding at the end the following new para-
graph: 
‘‘(4) SELECTION PRIORITIES.—In determining 
which qualifying gasification projects to certify 
under this section, the Secretary shall— 
‘‘(A) give highest priority to projects with 
the greatest separation and sequestration per-
centage of total carbon dioxide emissions, and 
‘‘(B) give high priority to applicant partici-
pants who have a research partnership with an 
eligible educational institution (as defined in 
section 529(e)(5)).’’. 
(e) EFFECTIVE DATE.—The amendments made by 
this section shall apply to credits described in section 
48B(d)(1)(B) of the Internal Revenue Code of 1986 which 
are allocated or reallocated after the date of the enactment 
of this Act. 
SEC. 113. TEMPORARY INCREASE IN COAL EXCISE TAX. 
Paragraph (2) of section 4121(e) is amended— 
(1) by striking ‘‘January 1, 2014’’ in subpara-
graph (A) and inserting ‘‘December 31, 2018’’, and 
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(2) by striking ‘‘January 1 after 1981’’ in sub-
paragraph (B) and inserting ‘‘December 31 after 
2007’’. 
SEC. 114. SPECIAL RULES FOR REFUND OF THE COAL EX-
CISE TAX TO CERTAIN COAL PRODUCERS 
AND EXPORTERS. 
(a) REFUND.— 
(1) COAL PRODUCERS.— 
(A) IN
GENERAL.—Notwithstanding sub-
sections (a)(1) and (c) of section 6416 and sec-
tion 6511 of the Internal Revenue Code of 
1986, if— 
(i) a coal producer establishes that 
such coal producer, or a party related to 
such coal producer, exported coal produced 
by such coal producer to a foreign country 
or shipped coal produced by such coal pro-
ducer to a possession of the United States, 
or caused such coal to be exported or 
shipped, the export or shipment of which 
was other than through an exporter who 
meets the requirements of paragraph (2), 
(ii) such coal producer filed an excise 
tax return on or after October 1, 1990, 
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and on or before the date of the enactment 
of this Act, and 
(iii) such coal producer files a claim 
for refund with the Secretary not later 
than the close of the 30-day period begin-
ning on the date of the enactment of this 
Act, 
then the Secretary shall pay to such coal pro-
ducer an amount equal to the tax paid under 
section 4121 of such Code on such coal ex-
ported or shipped by the coal producer or a 
party related to such coal producer, or caused 
by the coal producer or a party related to such 
coal producer to be exported or shipped. 
(B) SPECIAL
RULES
FOR
CERTAIN
TAX-
PAYERS.—For purposes of this section— 
(i) IN GENERAL.—If a coal producer 
or a party related to a coal producer has 
received a judgment described in clause 
(iii), such coal producer shall be deemed to 
have established the export of coal to a for-
eign country or shipment of coal to a pos-
session of the United States under sub-
paragraph (A)(i). 
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(ii) AMOUNT OF PAYMENT.—If a tax-
payer described in clause (i) is entitled to 
a payment under subparagraph (A), the 
amount of such payment shall be reduced 
by any amount paid pursuant to the judg-
ment described in clause (iii). 
(iii) JUDGMENT DESCRIBED.—A judg-
ment is described in this subparagraph if 
such judgment— 
(I) is made by a court of com-
petent jurisdiction within the United 
States, 
(II) relates to the constitu-
tionality of any tax paid on exported 
coal under section 4121 of the Inter-
nal Revenue Code of 1986, and 
(III) is in favor of the coal pro-
ducer or the party related to the coal 
producer. 
(2) EXPORTERS.—Notwithstanding subsections 
(a)(1) and (c) of section 6416 and section 6511 of 
the Internal Revenue Code of 1986, and a judgment 
described in paragraph (1)(B)(iii) of this subsection, 
if— 
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(A) an exporter establishes that such ex-
porter exported coal to a foreign country or 
shipped coal to a possession of the United 
States, or caused such coal to be so exported or 
shipped, 
(B) such exporter filed a tax return on or 
after October 1, 1990, and on or before the 
date of the enactment of this Act, and 
(C) such exporter files a claim for refund 
with the Secretary not later than the close of 
the 30-day period beginning on the date of the 
enactment of this Act, 
then the Secretary shall pay to such exporter an 
amount equal to $0.825 per ton of such coal ex-
ported by the exporter or caused to be exported or 
shipped, or caused to be exported or shipped, by the 
exporter. 
(b) LIMITATIONS.—Subsection (a) shall not apply 
with respect to exported coal if a settlement with the Fed-
eral Government has been made with and accepted by, the 
coal producer, a party related to such coal producer, or 
the exporter, of such coal, as of the date that the claim 
is filed under this section with respect to such exported 
coal. For purposes of this subsection, the term ‘‘settlement 
with the Federal Government’’ shall not include any settle-
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ment or stipulation entered into as of the date of the en-
actment of this Act, the terms of which contemplate a 
judgment concerning which any party has reserved the 
right to file an appeal, or has filed an appeal. 
(c) SUBSEQUENT REFUND PROHIBITED.—No refund 
shall be made under this section to the extent that a credit 
or refund of such tax on such exported or shipped coal 
has been paid to any person. 
(d) DEFINITIONS.—For purposes of this section— 
(1) COAL
PRODUCER.—The term ‘‘coal pro-
ducer’’ means the person in whom is vested owner-
ship of the coal immediately after the coal is severed 
from the ground, without regard to the existence of 
any contractual arrangement for the sale or other 
disposition of the coal or the payment of any royal-
ties between the producer and third parties. The 
term includes any person who extracts coal from 
coal waste refuse piles or from the silt waste product 
which results from the wet washing (or similar proc-
essing) of coal. 
(2) EXPORTER.—The term ‘‘exporter’’ means a 
person, other than a coal producer, who does not 
have a contract, fee arrangement, or any other 
agreement with a producer or seller of such coal to 
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export or ship such coal to a third party on behalf 
of the producer or seller of such coal and— 
(A) is indicated in the shipper’s export 
declaration or other documentation as the ex-
porter of record, or 
(B) actually exported such coal to a for-
eign country or shipped such coal to a posses-
sion of the United States, or caused such coal 
to be so exported or shipped. 
(3) RELATED PARTY.—The term ‘‘a party re-
lated to such coal producer’’ means a person who— 
(A) is related to such coal producer 
through any degree of common management, 
stock ownership, or voting control, 
(B) is related (within the meaning of sec-
tion 144(a)(3) of the Internal Revenue Code of 
1986) to such coal producer, or 
(C) has a contract, fee arrangement, or 
any other agreement with such coal producer to 
sell such coal to a third party on behalf of such 
coal producer. 
(4) SECRETARY.—The term ‘‘Secretary’’ means 
the Secretary of Treasury or the Secretary’s des-
ignee. 
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(e) TIMING OF REFUND.—With respect to any claim 
for refund filed pursuant to this section, the Secretary 
shall determine whether the requirements of this section 
are met not later than 180 days after such claim is filed. 
If the Secretary determines that the requirements of this 
section are met, the claim for refund shall be paid not 
later than 180 days after the Secretary makes such deter-
mination. 
(f) INTEREST.—Any refund paid pursuant to this 
section shall be paid by the Secretary with interest from 
the date of overpayment determined by using the overpay-
ment rate and method under section 6621 of the Internal 
Revenue Code of 1986. 
(g) DENIAL OF DOUBLE BENEFIT.—The payment 
under subsection (a) with respect to any coal shall not ex-
ceed— 
(1) in the case of a payment to a coal producer, 
the amount of tax paid under section 4121 of the 
Internal Revenue Code of 1986 with respect to such 
coal by such coal producer or a party related to such 
coal producer, and 
(2) in the case of a payment to an exporter, an 
amount equal to $0.825 per ton with respect to such 
coal exported by the exporter or caused to be ex-
ported by the exporter. 
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(h) APPLICATION OF SECTION.—This section applies 
only to claims on coal exported or shipped on or after Oc-
tober 1, 1990, through the date of the enactment of this 
Act. 
(i) STANDING NOT CONFERRED.— 
(1) EXPORTERS.—With respect to exporters, 
this section shall not confer standing upon an ex-
porter to commence, or intervene in, any judicial or 
administrative proceeding concerning a claim for re-
fund by a coal producer of any Federal or State tax, 
fee, or royalty paid by the coal producer. 
(2) COAL PRODUCERS.—With respect to coal 
producers, this section shall not confer standing 
upon a coal producer to commence, or intervene in, 
any judicial or administrative proceeding concerning 
a claim for refund by an exporter of any Federal or 
State tax, fee, or royalty paid by the producer and 
alleged to have been passed on to an exporter. 
SEC. 115. CARBON AUDIT OF THE TAX CODE. 
(a) STUDY.—The Secretary of the Treasury shall 
enter into an agreement with the National Academy of 
Sciences to undertake a comprehensive review of the Inter-
nal Revenue Code of 1986 to identify the types of and 
specific tax provisions that have the largest effects on car-
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bon and other greenhouse gas emissions and to estimate 
the magnitude of those effects. 
(b) REPORT.—Not later than 2 years after the date 
of enactment of this Act, the National Academy of 
Sciences shall submit to Congress a report containing the 
results of study authorized under this section. 
(c) AUTHORIZATION OF APPROPRIATIONS.—There is 
authorized to be appropriated to carry out this section 
$1,500,000 for the period of fiscal years 2008 and 2009. 
Subtitle B—Transportation and 
Domestic Fuel Security Provisions 
SEC. 121. CREDIT FOR PRODUCTION OF CELLULOSIC 
BIOFUEL. 
(a) IN GENERAL.—Subsection (a) of section 40 is 
amended by striking ‘‘plus’’ at the end of paragraph (1), 
by striking ‘‘plus’’ at the end of paragraph (2), by striking 
the period at the end of paragraph (3) and inserting ‘‘, 
plus’’, and by adding at the end the following new para-
graph: 
‘‘(4) the cellulosic biofuel producer credit.’’. 
(b) CELLULOSIC BIOFUEL PRODUCER CREDIT.— 
(1) IN GENERAL.—Subsection (b) of section 40 
is amended by adding at the end the following new 
paragraph: 
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‘‘(6) CELLULOSIC BIOFUEL PRODUCER CRED-
IT.— 
‘‘(A) IN GENERAL.—The cellulosic biofuel 
producer credit of any taxpayer is an amount 
equal to the applicable amount for each gallon 
of qualified cellulosic biofuel production. 
‘‘(B) APPLICABLE AMOUNT.—For purposes 
of subparagraph (A), the applicable amount 
means $1.01, except that such amount shall, in 
the case of cellulosic biofuel which is alcohol, be 
reduced by the sum of— 
‘‘(i) the amount of the credit in effect 
for such alcohol under subsection (b)(1) 
(without regard to subsection (b)(3)) at 
the time of the qualified cellulosic biofuel 
production, plus 
‘‘(ii) in the case of ethanol, the 
amount of the credit in effect under sub-
section (b)(4) at the time of such produc-
tion. 
‘‘(C) QUALIFIED
CELLULOSIC
BIOFUEL 
PRODUCTION.—For purposes of this section, 
the term ‘qualified cellulosic biofuel production’ 
means any cellulosic biofuel which is produced 
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by the taxpayer, and which during the taxable 
year— 
‘‘(i) is sold by the taxpayer to another 
person— 
‘‘(I) for use by such other person 
in the production of a qualified cel-
lulosic biofuel mixture in such other 
person’s trade or business (other than 
casual off-farm production), 
‘‘(II) for use by such other per-
son as a fuel in a trade or business, 
or 
‘‘(III) who sells such cellulosic 
biofuel at retail to another person and 
places such cellulosic biofuel in the 
fuel tank of such other person, or 
‘‘(ii) is used or sold by the taxpayer 
for any purpose described in clause (i). 
The qualified cellulosic biofuel production of 
any taxpayer for any taxable year shall not in-
clude any alcohol which is purchased by the 
taxpayer and with respect to which such pro-
ducer increases the proof of the alcohol by addi-
tional distillation. 
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‘‘(D) QUALIFIED
CELLULOSIC
BIOFUEL 
MIXTURE.—For purposes of this paragraph, the 
term ‘qualified cellulosic biofuel mixture’ means 
a mixture of cellulosic biofuel and gasoline or of 
cellulosic biofuel and a special fuel which— 
‘‘(i) is sold by the person producing 
such mixture to any person for use as a 
fuel, or 
‘‘(ii) is used as a fuel by the person 
producing such mixture. 
‘‘(E) CELLULOSIC
BIOFUEL.—For pur-
poses of this paragraph— 
‘‘(i) IN
GENERAL.—The term ‘cel-
lulosic biofuel’ means any liquid fuel 
which— 
‘‘(I) 
is 
produced 
from 
any 
lignocellulosic or hemicellulosic matter 
that is available on a renewable or re-
curring basis, and 
‘‘(II) meets the registration re-
quirements for fuels and fuel additives 
established by the Environmental Pro-
tection Agency under section 211 of 
the Clean Air Act (42 U.S.C. 7545). 
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‘‘(ii) EXCLUSION OF LOW-PROOF AL-
COHOL.—Such term shall not include any 
alcohol with a proof of less than 150. The 
determination of the proof of any alcohol 
shall be made without regard to any added 
denaturants. 
‘‘(F) 
ALLOCATION
OF
CELLULOSIC 
BIOFUEL PRODUCER CREDIT TO PATRONS OF 
COOPERATIVE.—Rules similar to the rules 
under subsection (g)(6) shall apply for purposes 
of this paragraph. 
‘‘(G) REGISTRATION
REQUIREMENT.—No 
credit shall be determined under this paragraph 
with respect to any taxpayer unless such tax-
payer is registered with the Secretary as a pro-
ducer of cellulosic biofuel under section 4101. 
‘‘(H) APPLICATION OF PARAGRAPH.—This 
paragraph shall apply with respect to qualified 
cellulosic biofuel production after December 31, 
2008, and before January 1, 2016.’’. 
(2) TERMINATION DATE NOT TO APPLY.—Sub-
section (e) of section 40 is amended— 
(A) by inserting ‘‘or subsection (b)(6)(H)’’ 
after ‘‘by reason of paragraph (1)’’ in para-
graph (2), and 
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(B) by adding at the end the following new 
paragraph: 
‘‘(3) EXCEPTION
FOR
CELLULOSIC
BIOFUEL 
PRODUCER CREDIT.—Paragraph (1) shall not apply 
to the portion of the credit allowed under this sec-
tion by reason of subsection (a)(4).’’. 
(3) CONFORMING AMENDMENTS.— 
(A) Paragraph (1) of section 4101(a) is 
amended— 
(i) by striking ‘‘and every person’’ and 
inserting ‘‘, every person’’, and 
(ii) by inserting ‘‘, and every person 
producing cellulosic biofuel (as defined in 
section 
40(b)(6)(E))’’ 
after 
‘‘section 
6426(b)(4)(A))’’. 
(B) The heading of section 40, and the 
item relating to such section in the table of sec-
tions for subpart D of part IV of subchapter A 
of chapter 1, are each amended by inserting ‘‘, 
etc.,’’ after ‘‘Alcohol’’. 
(c) BIOFUEL NOT USED AS A FUEL, ETC.— 
(1) IN
GENERAL.—Paragraph (3) of section 
40(d) is amended by redesignating subparagraph 
(D) as subparagraph (E) and by inserting after sub-
paragraph (C) the following new subparagraph: 
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‘‘(D) CELLULOSIC
BIOFUEL
PRODUCER 
CREDIT.—If— 
‘‘(i) any credit is allowed under sub-
section (a)(4), and 
‘‘(ii) any person does not use such 
fuel for a purpose described in subsection 
(b)(6)(C), 
then there is hereby imposed on such person a 
tax equal to the applicable amount (as defined 
in subsection (b)(6)(B)) for each gallon of such 
cellulosic biofuel.’’. 
(2) CONFORMING AMENDMENTS.— 
(A) Subparagraph (C) of section 40(d)(3) 
is amended by striking ‘‘PRODUCER’’ in the 
heading and inserting ‘‘SMALL ETHANOL PRO-
DUCER’’. 
(B) Subparagraph (E) of section 40(d)(3), 
as redesignated by paragraph (1), is amended 
by striking ‘‘or (C)’’ and inserting ‘‘(C), or 
(D)’’. 
(d) BIOFUEL PRODUCED IN THE UNITED STATES.— 
Section 40(d) is amended by adding at the end the fol-
lowing new paragraph: 
‘‘(6) SPECIAL RULE FOR CELLULOSIC BIOFUEL 
PRODUCER CREDIT.—No cellulosic biofuel producer 
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credit shall be determined under subsection (a) with 
respect to any cellulosic biofuel unless such cellulosic 
biofuel is produced in the United States and used as 
a fuel in the United States. For purposes of this 
subsection, the term ‘United States’ includes any 
possession of the United States.’’. 
(e) WAIVER
OF CREDIT LIMIT
FOR CELLULOSIC 
BIOFUEL
PRODUCTION
BY
SMALL
ETHANOL
PRO-
DUCERS.—Section 40(b)(4)(C) is amended by inserting 
‘‘(determined without regard to any qualified cellulosic 
biofuel production)’’ after ‘‘15,000,000 gallons’’. 
(f) DENIAL OF DOUBLE BENEFIT.— 
(1) BIODIESEL.—Paragraph (1) of section 
40A(d) is amended by adding at the end the fol-
lowing new flush sentence: 
‘‘Such term shall not include any liquid with respect 
to which a credit may be determined under section 
40.’’. 
(2) RENEWABLE
DIESEL.—Paragraph (3) of 
section 40A(f) is amended by adding at the end the 
following new flush sentence: 
‘‘Such term shall not include any liquid with respect 
to which a credit may be determined under section 
40.’’. 
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(g) EFFECTIVE DATE.—The amendments made by 
this section shall apply to fuel produced after December 
31, 2008. 
SEC. 122. INCLUSION OF CELLULOSIC BIOFUEL IN BONUS 
DEPRECIATION 
FOR 
BIOMASS 
ETHANOL 
PLANT PROPERTY. 
(a) IN GENERAL.—Paragraph (3) of section 168(l) 
is amended to read as follows: 
‘‘(3) CELLULOSIC
BIOFUEL.—The term ‘cel-
lulosic biofuel’ means any liquid fuel which is pro-
duced from any lignocellulosic or hemicellulosic mat-
ter that is available on a renewable or recurring 
basis.’’. 
(b) CONFORMING AMENDMENTS.—Subsection (l) of 
section 168 is amended— 
(1) by striking ‘‘cellulosic biomass ethanol’’ 
each place it appears and inserting ‘‘cellulosic 
biofuel’’, 
(2) by striking ‘‘CELLULOSIC BIOMASS ETH-
ANOL’’ in the heading of such subsection and insert-
ing ‘‘CELLULOSIC BIOFUEL’’, and 
(3) by striking ‘‘CELLULOSIC
BIOMASS
ETH-
ANOL’’ in the heading of paragraph (2) thereof and 
inserting ‘‘CELLULOSIC BIOFUEL’’. 
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(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to property placed in service after 
the date of the enactment of this Act, in taxable years 
ending after such date. 
SEC. 123. CREDITS FOR BIODIESEL AND RENEWABLE DIE-
SEL. 
(a) IN GENERAL.—Sections 40A(g), 6426(c)(6), and 
6427(e)(5)(B) are each amended by striking ‘‘December 
31, 2008’’ and inserting ‘‘December 31, 2009’’. 
(b) INCREASE IN RATE OF CREDIT.— 
(1) INCOME TAX CREDIT.—Paragraphs (1)(A) 
and (2)(A) of section 40A(b) are each amended by 
striking ‘‘50 cents’’ and inserting ‘‘$1.00’’. 
(2) EXCISE
TAX
CREDIT.—Paragraph (2) of 
section 6426(c) is amended to read as follows: 
‘‘(2) APPLICABLE AMOUNT.—For purposes of 
this subsection, the applicable amount is $1.00.’’. 
(3) CONFORMING AMENDMENTS.— 
(A) Subsection (b) of section 40A is 
amended by striking paragraph (3) and by re-
designating paragraphs (4) and (5) as para-
graphs (3) and (4), respectively. 
(B) Paragraph (2) of section 40A(f) is 
amended to read as follows: 
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‘‘(2) EXCEPTION.—Subsection (b)(4) shall not 
apply with respect to renewable diesel.’’. 
(C) Paragraphs (2) and (3) of section 
40A(e) are each amended by striking ‘‘sub-
section (b)(5)(C)’’ and inserting ‘‘subsection 
(b)(4)(C)’’. 
(D) Clause (ii) of section 40A(d)(3)(C) is 
amended by striking ‘‘subsection (b)(5)(B)’’ 
and inserting ‘‘subsection (b)(4)(B)’’. 
(c) UNIFORM TREATMENT OF DIESEL PRODUCED 
FROM BIOMASS.—Paragraph (3) of section 40A(f) is 
amended— 
(1) by striking ‘‘diesel fuel’’ and inserting ‘‘liq-
uid fuel’’, 
(2) 
by 
striking 
‘‘using 
a 
thermal 
depolymerization process’’, and 
(3) by striking ‘‘or D396’’ in subparagraph (B) 
and inserting ‘‘, D396, or other equivalent standard 
approved by the Secretary’’. 
(d) COPRODUCTION OF RENEWABLE DIESEL WITH 
PETROLEUM FEEDSTOCK.— 
(1) IN
GENERAL.—Paragraph (3) of section 
40A(f) (defining renewable diesel) is amended by 
adding at the end the following flush sentence: 
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‘‘Such term does not include any fuel derived from 
coprocessing biomass with a feedstock which is not 
biomass. For purposes of this paragraph, the term 
‘biomass’ has the meaning given such term by sec-
tion 45K(c)(3).’’. 
(2) CONFORMING AMENDMENT.—Paragraph (3) 
of section 40A(f) is amended by striking ‘‘(as de-
fined in section 45K(c)(3))’’. 
(e) ELIGIBILITY
OF CERTAIN AVIATION FUEL.— 
Paragraph (3) of section 40A(f) (defining renewable die-
sel) is amended by adding at the end the following new 
flush sentence: 
‘‘The term ‘renewable diesel’ also means fuel derived 
from biomass which meets the requirements of a De-
partment of Defense specification for military jet 
fuel or an American Society of Testing and Mate-
rials specification for aviation turbine fuel.’’. 
(f) EFFECTIVE DATE.— 
(1) IN
GENERAL.—Except as otherwise pro-
vided in this subsection, the amendments made by 
this section shall apply to fuel produced, and sold or 
used, after December 31, 2008. 
(2) COPRODUCTION
OF
RENEWABLE
DIESEL 
WITH PETROLEUM FEEDSTOCK.—The amendments 
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made by subsection (c) shall apply to fuel produced, 
and sold or used, after February 13, 2008. 
SEC. 124. MODIFICATION OF ALCOHOL CREDIT. 
(a) INCOME TAX CREDIT.— 
(1) IN GENERAL.—The table in paragraph (2) 
of section 40(h) is amended— 
(A) by striking ‘‘through 2010’’ in the first 
column and inserting ‘‘, 2006, 2007, or 2008’’, 
(B) by striking the period at the end of the 
third row, and 
(C) by adding at the end the following new 
row: 
‘‘2009 through 2010 ......
45 cents .........................
33.33 cents.’’. 
(2) EXCEPTION.—Section 40(h) is amended by 
adding at the end the following new paragraph: 
‘‘(3) REDUCTION
DELAYED
UNTIL
ANNUAL 
PRODUCTION OR IMPORTATION OF 7,500,000,000 GAL-
LONS.— 
‘‘(A) IN GENERAL.—In the case of any cal-
endar year beginning after 2008, if the Sec-
retary makes a determination described in sub-
paragraph (B) with respect to all preceding cal-
endar years beginning after 2007, the last row 
in the table in paragraph (2) shall be applied 
by substituting ‘51 cents’ for ‘45 cents’. 
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‘‘(B) DETERMINATION.—A determination 
described in this subparagraph with respect to 
any calendar year is a determination, in con-
sultation with the Administrator of the Envi-
ronmental Protection Agency, that an amount 
less than 7,500,000,000 gallons of ethanol (in-
cluding cellulosic ethanol) has been produced in 
or imported into the United States in such 
year.’’. 
(b) EXCISE TAX CREDIT.— 
(1) IN GENERAL.—Subparagraph (A) of section 
6426(b)(2) (relating to alcohol fuel mixture credit) 
is amended by striking ‘‘the applicable amount is 51 
cents’’ and inserting ‘‘the applicable amount is— 
‘‘(i) in the case of calendar years be-
ginning before 2009, 51 cents, and 
‘‘(ii) in the case of calendar years be-
ginning after 2008, 45 cents.’’. 
(2) EXCEPTION.—Paragraph (2) of section 
6426(b) is amended by adding at the end the fol-
lowing new subparagraph: 
‘‘(C) REDUCTION DELAYED UNTIL ANNUAL 
PRODUCTION OR IMPORTATION OF 7,500,000,000 
GALLONS.—In the case of any calendar year be-
ginning after 2008, if the Secretary makes a 
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determination described in section 40(h)(3)(B) 
with respect to all preceding calendar years be-
ginning after 2007, subparagraph (A)(ii) shall 
be applied by substituting ‘51 cents’ for ‘45 
cents’.’’ 
(3) CONFORMING AMENDMENT.—Subparagraph 
(A) of section 6426(b)(2) is amended by striking 
‘‘subparagraph (B)’’ and inserting ‘‘subparagraphs 
(B) and (C)’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall take effect on the date of the enactment 
of this Act. 
SEC. 125. CALCULATION OF VOLUME OF ALCOHOL FOR 
FUEL CREDITS. 
(a) IN GENERAL.—Paragraph (4) of section 40(d) is 
amended by striking ‘‘5 percent’’ and inserting ‘‘2 per-
cent’’. 
(b) CONFORMING AMENDMENT
FOR EXCISE TAX 
CREDIT.—Section 6426(b) is amended by redesignating 
paragraph (5) as paragraph (6) and by inserting after 
paragraph (4) the following new paragraph: 
‘‘(5) VOLUME OF ALCOHOL.—For purposes of 
determining under subsection (a) the number of gal-
lons of alcohol with respect to which a credit is al-
lowable under subsection (a), the volume of alcohol 
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shall include the volume of any denaturant (includ-
ing gasoline) which is added under any formulas ap-
proved by the Secretary to the extent that such de-
naturants do not exceed 2 percent of the volume of 
such alcohol (including denaturants).’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to fuel sold or used after December 
31, 2008. 
SEC. 126. CLARIFICATION THAT CREDITS FOR FUEL ARE 
DESIGNED TO PROVIDE AN INCENTIVE FOR 
UNITED STATES PRODUCTION. 
(a) ALCOHOL FUELS CREDIT.—Subsection (d) of 
section 40 is amended by adding at the end the following 
new paragraph: 
‘‘(6) LIMITATION TO ALCOHOL WITH CONNEC-
TION TO THE UNITED STATES.—No credit shall be 
determined under this section with respect to any al-
cohol which is produced outside the United States 
for use as a fuel outside the United States. For pur-
poses of this paragraph, the term ‘United States’ in-
cludes any possession of the United States.’’. 
(b) BIODIESEL FUELS CREDIT.—Subsection (d) of 
section 40A is amended by adding at the end the following 
new paragraph: 
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‘‘(5) LIMITATION TO BIODIESEL WITH CONNEC-
TION TO THE UNITED STATES.—No credit shall be 
determined under this section with respect to any 
biodiesel which is produced outside the United 
States for use as a fuel outside the United States. 
For purposes of this paragraph, the term ‘United 
States’ includes any possession of the United 
States.’’. 
(c) EXCISE TAX CREDIT.— 
(1) IN GENERAL.—Section 6426 is amended by 
adding at the end the following new subsection: 
‘‘(i) LIMITATION TO FUELS WITH CONNECTION TO 
THE UNITED STATES.— 
‘‘(1) ALCOHOL.—No credit shall be determined 
under this section with respect to any alcohol which 
is produced outside the United States for use as a 
fuel outside the United States. 
‘‘(2) BIODIESEL AND ALTERNATIVE FUELS.— 
No credit shall be determined under this section 
with respect to any biodiesel or alternative fuel 
which is produced outside the United States for use 
as a fuel outside the United States. 
For purposes of this subsection, the term ‘United States’ 
includes any possession of the United States.’’. 
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(2) CONFORMING AMENDMENT.—Subsection (e) 
of section 6427 is amended by redesignating para-
graph (5) as paragraph (6) and by inserting after 
paragraph (4) the following new paragraph: 
‘‘(5) LIMITATION TO FUELS WITH CONNECTION 
TO THE UNITED STATES.—No amount shall be pay-
able under paragraph (1) or (2) with respect to any 
mixture or alternative fuel if credit is not allowed 
with respect to such mixture or alternative fuel by 
reason of section 6426(i).’’. 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to claims for credit or payment 
made on or after May 15, 2008. 
SEC. 127. CREDIT FOR NEW QUALIFIED PLUG-IN ELECTRIC 
DRIVE MOTOR VEHICLES. 
(a) IN GENERAL.—Subpart B of part IV of sub-
chapter A of chapter 1 is amended by adding at the end 
the following new section: 
‘‘SEC. 30D. NEW QUALIFIED PLUG-IN ELECTRIC DRIVE 
MOTOR VEHICLES. 
‘‘(a) ALLOWANCE OF CREDIT.—There shall be al-
lowed as a credit against the tax imposed by this chapter 
for the taxable year an amount equal to the sum of the 
credit amounts determined under subsection (b) with re-
spect to each new qualified plug-in electric drive motor ve-
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hicle placed in service by the taxpayer during the taxable 
year. 
‘‘(b) PER VEHICLE DOLLAR LIMITATION.— 
‘‘(1) IN
GENERAL.—The amount determined 
under this subsection with respect to any new quali-
fied plug-in electric drive motor vehicle is the sum 
of the amounts determined under paragraphs (2) 
and (3) with respect to such vehicle. 
‘‘(2) BASE AMOUNT.—The amount determined 
under this paragraph is $3,000. 
‘‘(3) BATTERY CAPACITY.—In the case of a ve-
hicle which draws propulsion energy from a battery 
with not less than 5 kilowatt hours of capacity, the 
amount determined under this paragraph is $200, 
plus $200 for each kilowatt hour of capacity in ex-
cess of 5 kilowatt hours. The amount determined 
under this paragraph shall not exceed $2,000. 
‘‘(c) APPLICATION WITH OTHER CREDITS.— 
‘‘(1) BUSINESS CREDIT TREATED AS PART OF 
GENERAL BUSINESS CREDIT.—So much of the credit 
which would be allowed under subsection (a) for any 
taxable year (determined without regard to this sub-
section) that is attributable to property of a char-
acter subject to an allowance for depreciation shall 
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be treated as a credit listed in section 38(b) for such 
taxable year (and not allowed under subsection (a)). 
‘‘(2) PERSONAL CREDIT.— 
‘‘(A) IN GENERAL.—For purposes of this 
title, the credit allowed under subsection (a) for 
any taxable year (determined after application 
of paragraph (1)) shall be treated as a credit 
allowable under subpart A for such taxable 
year. 
‘‘(B) LIMITATION BASED ON AMOUNT OF 
TAX.—In the case of a taxable year to which 
section 26(a)(2) does not apply, the credit al-
lowed under subsection (a) for any taxable year 
(determined after application of paragraph (1)) 
shall not exceed the excess of— 
‘‘(i) the sum of the regular tax liabil-
ity (as defined in section 26(b)) plus the 
tax imposed by section 55, over 
‘‘(ii) the sum of the credits allowable 
under subpart A (other than this section 
and sections 23 and 25D) and section 27 
for the taxable year. 
‘‘(d) NEW QUALIFIED PLUG-IN ELECTRIC DRIVE 
MOTOR VEHICLE.—For purposes of this section— 
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‘‘(1) IN
GENERAL.—The term ‘new qualified 
plug-in electric drive motor vehicle’ means a motor 
vehicle (as defined in section 30(c)(2))— 
‘‘(A) the original use of which commences 
with the taxpayer, 
‘‘(B) which is acquired for use or lease by 
the taxpayer and not for resale, 
‘‘(C) which is made by a manufacturer, 
‘‘(D) which has a gross vehicle weight rat-
ing of less than 14,000 pounds, 
‘‘(E) which has received a certificate of 
conformity under the Clean Air Act and meets 
or exceeds the Bin 5 Tier II emission standard 
established in regulations prescribed by the Ad-
ministrator of the Environmental Protection 
Agency under section 202(i) of the Clean Air 
Act for that make and model year vehicle, and 
‘‘(F) which is propelled to a significant ex-
tent by an electric motor which draws electricity 
from a battery which— 
‘‘(i) has a capacity of not less than 4 
kilowatt hours, and 
‘‘(ii) is capable of being recharged 
from an external source of electricity. 
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‘‘(2) EXCEPTION.—The term ‘new qualified 
plug-in electric drive motor vehicle’ shall not include 
any vehicle which is not a passenger automobile or 
light truck if such vehicle has a gross vehicle weight 
rating of less than 8,500 pounds. 
‘‘(3) OTHER
TERMS.—The terms ‘passenger 
automobile’, ‘light truck’, and ‘manufacturer’ have 
the meanings given such terms in regulations pre-
scribed by the Administrator of the Environmental 
Protection Agency for purposes of the administra-
tion of title II of the Clean Air Act (42 U.S.C. 7521 
et seq.). 
‘‘(4) BATTERY CAPACITY.—The term ‘capacity’ 
means, with respect to any battery, the quantity of 
electricity which the battery is capable of storing, ex-
pressed in kilowatt hours, as measured from a 100 
percent state of charge to a 0 percent state of 
charge. 
‘‘(e) LIMITATION ON NUMBER OF NEW QUALIFIED 
PLUG-IN ELECTRIC DRIVE MOTOR VEHICLES ELIGIBLE 
FOR CREDIT.— 
‘‘(1) IN GENERAL.—In the case of a new quali-
fied plug-in electric drive motor vehicle sold during 
the phaseout period, only the applicable percentage 
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of the credit otherwise allowable under subsection 
(a) shall be allowed. 
‘‘(2) PHASEOUT PERIOD.—For purposes of this 
subsection, the phaseout period is the period begin-
ning with the second calendar quarter following the 
calendar quarter which includes the first date on 
which the number of new qualified plug-in electric 
drive motor vehicles manufactured by the manufac-
turer of the vehicle referred to in paragraph (1) sold 
for use in the United States after the date of the en-
actment of this section, is at least 60,000. 
‘‘(3) APPLICABLE PERCENTAGE.—For purposes 
of paragraph (1), the applicable percentage is— 
‘‘(A) 50 percent for the first 2 calendar 
quarters of the phaseout period, 
‘‘(B) 25 percent for the 3d and 4th cal-
endar quarters of the phaseout period, and 
‘‘(C) 0 percent for each calendar quarter 
thereafter. 
‘‘(4) CONTROLLED GROUPS.—Rules similar to 
the rules of section 30B(f)(4) shall apply for pur-
poses of this subsection. 
‘‘(f) SPECIAL RULES.— 
‘‘(1) BASIS
REDUCTION.—The basis of any 
property for which a credit is allowable under sub-
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section (a) shall be reduced by the amount of such 
credit (determined without regard to subsection (c)). 
‘‘(2) 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. 
‘‘(3) 
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)(1) or with re-
spect to the portion of the cost of any property 
taken into account under section 179. 
‘‘(4) ELECTION
NOT
TO
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. 
‘‘(5) PROPERTY USED BY TAX-EXEMPT ENTITY; 
INTERACTION WITH AIR QUALITY AND MOTOR VEHI-
CLE SAFETY STANDARDS.—Rules similar to the rules 
of paragraphs (6) and (10) of section 30B(h) shall 
apply for purposes of this section.’’. 
(b) COORDINATION WITH ALTERNATIVE MOTOR VE-
HICLE CREDIT.—Section 30B(d)(3) is amended by adding 
at the end the following new subparagraph: 
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‘‘(D) EXCLUSION OF PLUG-IN VEHICLES.— 
Any vehicle with respect to which a credit is al-
lowable under section 30D (determined without 
regard to subsection (c) thereof) shall not be 
taken into account under this section.’’. 
(c) CREDIT MADE PART OF GENERAL BUSINESS 
CREDIT.—Section 38(b) is amended— 
(1) by striking ‘‘and’’ each place it appears at 
the end of any paragraph, 
(2) by striking ‘‘plus’’ each place it appears at 
the end of any paragraph, 
(3) by striking the period at the end of para-
graph (31) and inserting ‘‘, plus’’, and 
(4) by adding at the end the following new 
paragraph: 
‘‘(32) the portion of the new qualified plug-in 
electric drive motor vehicle credit to which section 
30D(c)(1) applies.’’. 
(d) CONFORMING AMENDMENTS.— 
(1)(A) Section 24(b)(3)(B), as amended by sec-
tion 104, is amended by striking ‘‘and 25D’’ and in-
serting ‘‘25D, and 30D’’. 
(B) Section 25(e)(1)(C)(ii) is amended by in-
serting ‘‘30D,’’ after ‘‘25D,’’. 
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(C) Section 25B(g)(2), as amended by section 
104, is amended by striking ‘‘and 25D’’ and insert-
ing ‘‘, 25D, and 30D’’. 
(D) Section 26(a)(1), as amended by section 
104, is amended by striking ‘‘and 25D’’ and insert-
ing ‘‘25D, and 30D’’. 
(E) Section 1400C(d)(2) is amended by striking 
‘‘and 25D’’ and inserting ‘‘25D, and 30D’’. 
(2) Section 1016(a) is amended by striking 
‘‘and’’ at the end of paragraph (36), by striking the 
period at the end of paragraph (37) and inserting ‘‘, 
and’’, and by adding at the end the following new 
paragraph: 
‘‘(38) to the extent provided in section 
30D(f)(1).’’. 
(3) Section 6501(m) is amended by inserting 
‘‘30D(f)(4),’’ after ‘‘30C(e)(5),’’. 
(e) TREATMENT OF ALTERNATIVE MOTOR VEHICLE 
CREDIT AS A PERSONAL CREDIT.— 
(1) IN
GENERAL.—Paragraph (2) of section 
30B(g) is amended to read as follows: 
‘‘(2) PERSONAL
CREDIT.—The credit allowed 
under subsection (a) for any taxable year (after ap-
plication of paragraph (1)) shall be treated as a 
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credit allowable under subpart A for such taxable 
year.’’. 
(2) CONFORMING AMENDMENTS.— 
(A) Subparagraph (A) of section 30C(d)(2) 
is amended by striking ‘‘sections 27, 30, and 
30B’’ and inserting ‘‘sections 27 and 30’’. 
(B) Paragraph (3) of section 55(c) is 
amended by striking ‘‘30B(g)(2),’’. 
(f) EFFECTIVE DATE.— 
(1) IN
GENERAL.—Except as otherwise pro-
vided in this subsection, the amendments made by 
this section shall apply to taxable years beginning 
after December 31, 2008. 
(2) TREATMENT OF ALTERNATIVE MOTOR VE-
HICLE CREDIT AS PERSONAL CREDIT.—The amend-
ments made by subsection (e) shall apply to taxable 
years beginning after December 31, 2007. 
(g) APPLICATION
OF
EGTRRA SUNSET.—The 
amendment made by subsection (d)(1)(A) shall be subject 
to title IX of the Economic Growth and Tax Relief Rec-
onciliation Act of 2001 in the same manner as the provi-
sion of such Act to which such amendment relates. 
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SEC. 128. EXCLUSION FROM HEAVY TRUCK TAX FOR IDLING 
REDUCTION UNITS AND ADVANCED INSULA-
TION. 
(a) IN GENERAL.—Section 4053 is amended by add-
ing at the end the following new paragraphs: 
‘‘(9) IDLING REDUCTION DEVICE.—Any device 
or system of devices which— 
‘‘(A) is designed to provide to a vehicle 
those services (such as heat, air conditioning, or 
electricity) that would otherwise require the op-
eration of the main drive engine while the vehi-
cle is temporarily parked or remains stationary 
using one or more devices affixed to a tractor, 
and 
‘‘(B) is certified by the Secretary of En-
ergy, in consultation with the Administrator of 
the Environmental Protection Agency and the 
Secretary of Transportation, to reduce idling of 
such vehicle at a motor vehicle rest stop or 
other location where such vehicles are tempo-
rarily parked or remain stationary. 
‘‘(10) ADVANCED INSULATION.—Any insulation 
that has an R value of not less than R35 per inch.’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to sales or installations after the 
date of the enactment of this Act. 
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SEC. 129. RESTRUCTURING OF NEW YORK LIBERTY ZONE 
TAX CREDITS. 
(a) IN GENERAL.—Part I of subchapter Y of chapter 
1 is amended by redesignating section 1400L as section 
1400K and by adding at the end the following new section: 
‘‘SEC. 1400L. NEW YORK LIBERTY ZONE TAX CREDITS. 
‘‘(a) IN GENERAL.—In the case of a New York Lib-
erty Zone governmental unit, there shall be allowed as a 
credit against any taxes imposed for any payroll period 
by section 3402 for which such governmental unit is liable 
under section 3403 an amount equal to so much of the 
portion of the qualifying project expenditure amount allo-
cated under subsection (b)(3) to such governmental unit 
for the calendar year as is allocated by such governmental 
unit to such period under subsection (b)(4). 
‘‘(b) 
QUALIFYING
PROJECT
EXPENDITURE 
AMOUNT.—For purposes of this section— 
‘‘(1) 
IN
GENERAL.—The 
term 
‘qualifying 
project expenditure amount’ means, with respect to 
any calendar year, the sum of— 
‘‘(A) the total expenditures paid or in-
curred during such calendar year by all New 
York Liberty Zone governmental units and the 
Port Authority of New York and New Jersey 
for any portion of qualifying projects located 
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wholly within the City of New York, New York, 
and 
‘‘(B) any such expenditures— 
‘‘(i) paid or incurred in any preceding 
calendar year which begins after the date 
of enactment of this section, and 
‘‘(ii) not previously allocated under 
paragraph (3). 
‘‘(2) QUALIFYING PROJECT.—The term ‘quali-
fying project’ means any transportation infrastruc-
ture project, including highways, mass transit sys-
tems, railroads, airports, ports, and waterways, in or 
connecting with the New York Liberty Zone (as de-
fined in section 1400K(h)), which is designated as a 
qualifying project under this section jointly by the 
Governor of the State of New York and the Mayor 
of the City of New York, New York. 
‘‘(3) GENERAL ALLOCATION.— 
‘‘(A) IN GENERAL.—The Governor of the 
State of New York and the Mayor of the City 
of New York, New York, shall jointly allocate to 
each New York Liberty Zone governmental unit 
the portion of the qualifying project expenditure 
amount which may be taken into account by 
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such governmental unit under subsection (a) for 
any calendar year in the credit period. 
‘‘(B) AGGREGATE LIMIT.—The aggregate 
amount which may be allocated under subpara-
graph (A) for all calendar years in the credit 
period shall not exceed $2,000,000,000. 
‘‘(C) 
ANNUAL
LIMIT.—The 
aggregate 
amount which may be allocated under subpara-
graph (A) for any calendar year in the credit 
period shall not exceed the sum of— 
‘‘(i) $115,000,000 ($425,000,000 in 
the case of the last 2 years in the credit 
period), plus 
‘‘(ii) the aggregate amount authorized 
to be allocated under this paragraph for all 
preceding calendar years in the credit pe-
riod which was not so allocated. 
‘‘(D) UNALLOCATED AMOUNTS AT END OF 
CREDIT PERIOD.—If, as of the close of the cred-
it period, the amount under subparagraph (B) 
exceeds the aggregate amount allocated under 
subparagraph (A) for all calendar years in the 
credit period, the Governor of the State of New 
York and the Mayor of the City of New York, 
New York, may jointly allocate to New York 
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Liberty Zone governmental units for any cal-
endar year in the 5-year period following the 
credit period an amount equal to— 
‘‘(i) the lesser of— 
‘‘(I) such excess, or 
‘‘(II) the qualifying project ex-
penditure amount for such calendar 
year, reduced by 
‘‘(ii) the aggregate amount allocated 
under this subparagraph for all preceding 
calendar years. 
‘‘(4) ALLOCATION
TO
PAYROLL
PERIODS.— 
Each New York Liberty Zone governmental unit 
which has been allocated a portion of the qualifying 
project expenditure amount under paragraph (3) for 
a calendar year may allocate such portion to payroll 
periods beginning in such calendar year as such gov-
ernmental unit determines appropriate. 
‘‘(c) CARRYOVER OF UNUSED ALLOCATIONS.— 
‘‘(1) IN GENERAL.—Except as provided in para-
graph (2), if the amount allocated under subsection 
(b)(3) to a New York Liberty Zone governmental 
unit for any calendar year exceeds the aggregate 
taxes imposed by section 3402 for which such gov-
ernmental unit is liable under section 3403 for peri-
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100 
ods beginning in such year, such excess shall be car-
ried to the succeeding calendar year and added to 
the allocation of such governmental unit for such 
succeeding calendar year. 
‘‘(2) REALLOCATION.—If a New York Liberty 
Zone governmental unit does not use an amount al-
located to it under subsection (b)(3) within the time 
prescribed by the Governor of the State of New York 
and the Mayor of the City of New York, New York, 
then such amount shall after such time be treated 
for purposes of subsection (b)(3) in the same man-
ner as if it had never been allocated. 
‘‘(d) DEFINITIONS AND SPECIAL RULES.—For pur-
poses of this section— 
‘‘(1) CREDIT PERIOD.—The term ‘credit period’ 
means the 12-year period beginning on January 1, 
2009. 
‘‘(2) NEW
YORK
LIBERTY
ZONE
GOVERN-
MENTAL UNIT.—The term ‘New York Liberty Zone 
governmental unit’ means— 
‘‘(A) the State of New York, 
‘‘(B) the City of New York, New York, and 
‘‘(C) any agency or instrumentality of such 
State or City. 
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101 
‘‘(3) TREATMENT OF FUNDS.—Any expenditure 
for a qualifying project taken into account for pur-
poses of the credit under this section shall be consid-
ered State and local funds for the purpose of any 
Federal program. 
‘‘(4) TREATMENT
OF
CREDIT
AMOUNTS
FOR 
PURPOSES OF WITHHOLDING TAXES.—For purposes 
of this title, a New York Liberty Zone governmental 
unit shall be treated as having paid to the Secretary, 
on the day on which wages are paid to employees, 
an amount equal to the amount of the credit allowed 
to such entity under subsection (a) with respect to 
such wages, but only if such governmental unit de-
ducts and withholds wages for such payroll period 
under section 3401 (relating to wage withholding). 
‘‘(e) REPORTING.—The Governor of the State of New 
York and the Mayor of the City of New York, New York, 
shall jointly submit to the Secretary an annual report— 
‘‘(1) which certifies— 
‘‘(A) the qualifying project expenditure 
amount for the calendar year, and 
‘‘(B) the amount allocated to each New 
York Liberty Zone governmental unit under 
subsection (b)(3) for the calendar year, and 
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102 
‘‘(2) includes such other information as the 
Secretary may require to carry out this section. 
‘‘(f) GUIDANCE.—The Secretary may prescribe such 
guidance as may be necessary or appropriate to ensure 
compliance with the purposes of this section.’’. 
(b) TERMINATION OF SPECIAL ALLOWANCE AND EX-
PENSING.—Subparagraph (A) of section 1400K(b)(2), as 
redesignated by subsection (a), is amended by striking the 
parenthetical therein and inserting ‘‘(in the case of non-
residential real property and residential rental property, 
the date of the enactment of the Energy and Tax Extend-
ers Act of 2008 or, if acquired pursuant to a binding con-
tract in effect on such enactment date, December 31, 
2009)’’. 
(c) CONFORMING AMENDMENTS.— 
(1) Section 38(c)(3)(B) is amended by striking 
‘‘section 
1400L(a)’’ 
and 
inserting 
‘‘section 
1400K(a)’’. 
(2) Section 168(k)(2)(D)(ii) is amended by 
striking ‘‘section 1400L(c)(2)’’ and inserting ‘‘sec-
tion 1400K(c)(2)’’. 
(3) The table of sections for part I of sub-
chapter Y of chapter 1 is amended by redesignating 
the item relating to section 1400L as an item relat-
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103 
ing to section 1400K and by inserting after such 
item the following new item: 
‘‘Sec. 1400L. New York Liberty Zone tax credits.’’. 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall take effect on the date of the enactment 
of this Act. 
SEC. 130. TRANSPORTATION FRINGE BENEFIT TO BICYCLE 
COMMUTERS. 
(a) IN GENERAL.—Paragraph (1) of section 132(f) 
is amended by adding at the end the following: 
‘‘(D) Any qualified bicycle commuting re-
imbursement.’’. 
(b) LIMITATION ON EXCLUSION.—Paragraph (2) of 
section 132(f) is amended by striking ‘‘and’’ at the end 
of subparagraph (A), by striking the period at the end 
of subparagraph (B) and inserting ‘‘, and’’, and by adding 
at the end the following new subparagraph: 
‘‘(C) the applicable annual limitation in 
the case of any qualified bicycle commuting re-
imbursement.’’. 
(c) DEFINITIONS.—Paragraph (5) of section 132(f) 
is amended by adding at the end the following: 
‘‘(F) DEFINITIONS RELATED TO BICYCLE 
COMMUTING REIMBURSEMENT.— 
‘‘(i) QUALIFIED BICYCLE COMMUTING 
REIMBURSEMENT.—The term ‘qualified bi-
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104 
cycle commuting reimbursement’ means, 
with respect to any calendar year, any em-
ployer reimbursement during the 15-month 
period beginning with the first day of such 
calendar year for reasonable expenses in-
curred by the employee during such cal-
endar year for the purchase of a bicycle 
and bicycle improvements, repair, and stor-
age, if such bicycle is regularly used for 
travel between the employee’s residence 
and place of employment. 
‘‘(ii) APPLICABLE
ANNUAL
LIMITA-
TION.—The term ‘applicable annual limita-
tion’ means, with respect to any employee 
for any calendar year, the product of $20 
multiplied by the number of qualified bicy-
cle commuting months during such year. 
‘‘(iii) 
QUALIFIED
BICYCLE
COM-
MUTING MONTH.—The term ‘qualified bi-
cycle commuting month’ means, with re-
spect to any employee, any month during 
which such employee— 
‘‘(I) regularly uses the bicycle for 
a substantial portion of the travel be-
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105 
tween the employee’s residence and 
place of employment, and 
‘‘(II) does not receive any benefit 
described in subparagraph (A), (B), 
or (C) of paragraph (1).’’. 
(d) CONSTRUCTIVE RECEIPT OF BENEFIT.—Para-
graph (4) of section 132(f) is amended by inserting 
‘‘(other than a qualified bicycle commuting reimburse-
ment)’’ after ‘‘qualified transportation fringe’’. 
(e) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2008. 
SEC. 131. ALTERNATIVE FUEL VEHICLE REFUELING PROP-
ERTY CREDIT. 
(a) INCREASE IN CREDIT AMOUNT.—Section 30C is 
amended— 
(1) by striking ‘‘30 percent’’ in subsection (a) 
and inserting ‘‘50 percent’’, and 
(2) by striking ‘‘$30,000’’ in subsection (b)(1) 
and inserting ‘‘$50,000’’. 
(b) EXTENSION OF CREDIT.—Paragraph (2) of sec-
tion 30C(g) is amended by striking ‘‘December 31, 2009’’ 
and inserting ‘‘December 31, 2010’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to property placed in service after 
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the date of the enactment of this Act, in taxable years 
ending after such date. 
SEC. 132. COMPREHENSIVE STUDY OF BIOFUELS. 
(a) STUDY.—The Secretary of the Treasury, in con-
sultation with the Secretary of Agriculture, the Secretary 
of Energy, and the Administrator of the Environmental 
Protection Agency, shall enter into an agreement with the 
National Academy of Sciences to produce an analysis of 
current scientific findings to determine— 
(1) current biofuels production, as well as pro-
jections for future production, 
(2) the maximum amount of biofuels production 
capable in United States forests and farmlands, in-
cluding the current quantities and character of the 
feedstocks and including such information as re-
gional forest inventories that are commercially avail-
able, used in the production of biofuels, 
(3) the domestic effects of an increase in 
biofuels production levels, including the effects of 
such levels on— 
(A) the price of fuel, 
(B) the price of land in rural and subur-
ban communities, 
(C) crop acreage, forest acreage, and other 
land use, 
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(D) the environment, due to changes in 
crop acreage, fertilizer use, runoff, water use, 
emissions from vehicles utilizing biofuels, and 
other factors, 
(E) the price of feed, 
(F) the selling price of grain crops and un-
processed forest products, 
(G) exports and imports of grains and un-
processed forest products, 
(H) taxpayers, through cost or savings to 
commodity crop payments, and 
(I) the expansion of refinery capacity, 
(4) the ability to convert corn ethanol plants for 
other uses, such as cellulosic ethanol or biodiesel, 
(5) a comparative analysis of corn ethanol 
versus other biofuels and renewable energy sources, 
considering cost, energy output, and ease of imple-
mentation, 
(6) the impact of the tax credit established by 
section 121 of this Act on the regional agricultural 
and silvicultural capabilities of commercially avail-
able forest inventories, and 
(7) the need for additional scientific inquiry, 
and specific areas of interest for future research. 
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(b) REPORT.—The Secretary of the Treasury shall 
submit an initial report of the findings of the study re-
quired under subsection (a) to Congress not later than 6 
months after the date of the enactment of this Act (36 
months after such date in the case of the information re-
quired by subsection (a)(6)), and a final report not later 
than 12 months after such date (42 months after such 
date in the case of the information required by subsection 
(a)(6)). 
Subtitle C—Energy Conservation 
and Efficiency Provisions 
SEC. 141. QUALIFIED ENERGY CONSERVATION BONDS. 
(a) IN GENERAL.—Subpart I of part IV of sub-
chapter A of chapter 1, as added by section 106, is amend-
ed by adding at the end the following new section: 
‘‘SEC. 54C. QUALIFIED ENERGY CONSERVATION BONDS. 
‘‘(a) QUALIFIED ENERGY CONSERVATION BOND.— 
For purposes of this subchapter, the term ‘qualified en-
ergy conservation bond’ means any bond issued as part 
of an issue if— 
‘‘(1) 100 percent of the available project pro-
ceeds of such issue are to be used for one or more 
qualified conservation purposes, 
‘‘(2) the bond is issued by a State or local gov-
ernment, and 
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‘‘(3) the issuer designates such bond for pur-
poses of this section. 
‘‘(b) REDUCED CREDIT AMOUNT.—The annual credit 
determined under section 54A(b) with respect to any 
qualified energy conservation bond shall be 70 percent of 
the amount so determined without regard to this sub-
section. 
‘‘(c) LIMITATION
ON AMOUNT
OF BONDS DES-
IGNATED.—The maximum aggregate face amount of 
bonds which may be designated under subsection (a) by 
any issuer shall not exceed the limitation amount allocated 
to such issuer under subsection (e). 
‘‘(d) NATIONAL LIMITATION ON AMOUNT OF BONDS 
DESIGNATED.—There is a national qualified energy con-
servation bond limitation of $3,000,000,000. 
‘‘(e) ALLOCATIONS.— 
‘‘(1) IN
GENERAL.—The limitation applicable 
under subsection (d) shall be allocated by the Sec-
retary among the States in proportion to the popu-
lation of the States. 
‘‘(2) ALLOCATIONS
TO
LARGEST
LOCAL
GOV-
ERNMENTS.— 
‘‘(A) IN
GENERAL.—In the case of any 
State in which there is a large local govern-
ment, each such local government shall be allo-
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cated a portion of such State’s allocation which 
bears the same ratio to the State’s allocation 
(determined without regard to this subpara-
graph) as the population of such large local 
government bears to the population of such 
State. 
‘‘(B) ALLOCATION OF UNUSED LIMITATION 
TO STATE.—The amount allocated under this 
subsection to a large local government may be 
reallocated by such local government to the 
State in which such local government is located. 
‘‘(C) LARGE
LOCAL
GOVERNMENT.—For 
purposes of this section, the term ‘large local 
government’ means any municipality or county 
if such municipality or county has a population 
of 100,000 or more. 
‘‘(3) ALLOCATION
TO
ISSUERS; RESTRICTION 
ON
PRIVATE
ACTIVITY
BONDS.—Any allocation 
under this subsection to a State or large local gov-
ernment shall be allocated by such State or large 
local government to issuers within the State in a 
manner that results in not less than 70 percent of 
the allocation to such State or large local govern-
ment being used to designate bonds which are not 
private activity bonds. 
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‘‘(f) QUALIFIED
CONSERVATION
PURPOSE.—For 
purposes of this section— 
‘‘(1) IN
GENERAL.—The term ‘qualified con-
servation purpose’ means any of the following: 
‘‘(A) Capital expenditures incurred for 
purposes of— 
‘‘(i) reducing energy consumption in 
publicly-owned buildings by at least 20 
percent, 
‘‘(ii) implementing green community 
programs, 
‘‘(iii) rural development involving the 
production of electricity from renewable 
energy resources, or 
‘‘(iv) any qualified facility (as deter-
mined under section 45(d) without regard 
to paragraphs (8) and (10) thereof and 
without regard to any placed in service 
date). 
‘‘(B) Expenditures with respect to research 
facilities, and research grants, to support re-
search in— 
‘‘(i) development of cellulosic ethanol 
or other nonfossil fuels, 
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‘‘(ii) technologies for the capture and 
sequestration of carbon dioxide produced 
through the use of fossil fuels, 
‘‘(iii) increasing the efficiency of exist-
ing technologies for producing nonfossil 
fuels, 
‘‘(iv) automobile battery technologies 
and other technologies to reduce fossil fuel 
consumption in transportation, or 
‘‘(v) technologies to reduce energy use 
in buildings. 
‘‘(C) Mass commuting facilities and related 
facilities that reduce the consumption of energy, 
including expenditures to reduce pollution from 
vehicles used for mass commuting. 
‘‘(D) Demonstration projects designed to 
promote the commercialization of— 
‘‘(i) green building technology, 
‘‘(ii) conversion of agricultural waste 
for use in the production of fuel or other-
wise, 
‘‘(iii) advanced battery manufacturing 
technologies, 
‘‘(iv) technologies to reduce peak use 
of electricity, or 
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‘‘(v) technologies for the capture and 
sequestration of carbon dioxide emitted 
from combusting fossil fuels in order to 
produce electricity. 
‘‘(E) Public education campaigns to pro-
mote energy efficiency. 
‘‘(2) SPECIAL
RULES
FOR
PRIVATE
ACTIVITY 
BONDS.—For purposes of this section, in the case of 
any private activity bond, the term ‘qualified con-
servation purposes’ shall not include any expenditure 
which is not a capital expenditure. 
‘‘(g) POPULATION.— 
‘‘(1) IN
GENERAL.—The population of any 
State or local government shall be determined for 
purposes of this section as provided in section 146(j) 
for the calendar year which includes the date of the 
enactment of this section. 
‘‘(2) SPECIAL RULE FOR COUNTIES.—In deter-
mining the population of any county for purposes of 
this section, any population of such county which is 
taken into account in determining the population of 
any municipality which is a large local government 
shall not be taken into account in determining the 
population of such county. 
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‘‘(h) APPLICATION
TO INDIAN TRIBAL GOVERN-
MENTS.—An Indian tribal government shall be treated for 
purposes of this section in the same manner as a large 
local government, except that— 
‘‘(1) an Indian tribal government shall be treat-
ed for purposes of subsection (e) as located within 
a State to the extent of so much of the population 
of such government as resides within such State, 
and 
‘‘(2) any bond issued by an Indian tribal gov-
ernment shall be treated as a qualified energy con-
servation bond only if issued as part of an issue the 
available project proceeds of which are used for pur-
poses for which such Indian tribal government could 
issue bonds to which section 103(a) applies.’’. 
(b) CONFORMING AMENDMENTS.— 
(1) Paragraph (1) of section 54A(d), as added 
by section 106, is amended to read as follows: 
‘‘(1) QUALIFIED TAX CREDIT BOND.—The term 
‘qualified tax credit bond’ means— 
‘‘(A) a new clean renewable energy bond, 
or 
‘‘(B) a qualified energy conservation bond, 
which is part of an issue that meets requirements of 
paragraphs (2), (3), (4), (5), and (6).’’. 
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(A) by striking ‘‘and’’ at the end of sub-
paragraph (D), 
(B) by striking the period at the end of 
subparagraph (E) and inserting ‘‘, and’’, and 
(C) by adding at the end the following new 
subparagraph: 
‘‘(F) a stove which uses the burning of bio-
mass fuel to heat a dwelling unit located in the 
United States and used as a residence by the 
taxpayer, or to heat water for use in such a 
dwelling unit, and which has a thermal effi-
ciency rating of at least 75 percent.’’. 
(2) BIOMASS FUEL.—Section 25C(d) is amend-
ed by adding at the end the following new para-
graph: 
‘‘(6) BIOMASS FUEL.—The term ‘biomass fuel’ 
means any plant-derived fuel available on a renew-
able or recurring basis, including agricultural crops 
and trees, wood and wood waste and residues (in-
cluding wood pellets), plants (including aquatic 
plants), grasses, residues, and fibers.’’. 
(c) COORDINATION WITH CREDIT FOR QUALIFIED 
GEOTHERMAL HEAT PUMP PROPERTY EXPENDITURES.— 
(1) IN
GENERAL.—Paragraph (3) of section 
25C(d) is amended by striking subparagraph (C) 
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and by redesignating subparagraphs (D) and (E) as 
subparagraphs (C) and (D), respectively. 
(2) CONFORMING AMENDMENT.—Subparagraph 
(C) of section 25C(d)(2) is amended to read as fol-
lows: 
‘‘(C) REQUIREMENTS
AND
STANDARDS 
FOR AIR CONDITIONERS AND HEAT PUMPS.— 
The standards and requirements prescribed by 
the Secretary under subparagraph (B) with re-
spect to the energy efficiency ratio (EER) for 
central air conditioners and electric heat 
pumps— 
‘‘(i) shall require measurements to be 
based on published data which is tested by 
manufacturers at 95 degrees Fahrenheit, 
and 
‘‘(ii) may be based on the certified 
data of the Air Conditioning and Refrig-
eration Institute that are prepared in part-
nership with the Consortium for Energy 
Efficiency.’’. 
(d) EFFECTIVE DATE.—The amendments made this 
section shall apply to expenditures made after December 
31, 2007. 
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SEC. 143. ENERGY EFFICIENT COMMERCIAL BUILDINGS DE-
DUCTION. 
Subsection (h) of section 179D is amended by strik-
ing ‘‘December 31, 2008’’ and inserting ‘‘December 31, 
2013’’. 
SEC. 144. MODIFICATIONS OF ENERGY EFFICIENT APPLI-
ANCE CREDIT FOR APPLIANCES PRODUCED 
AFTER 2007. 
(a) IN GENERAL.—Subsection (b) of section 45M is 
amended to read as follows: 
‘‘(b) APPLICABLE AMOUNT.—For purposes of sub-
section (a)— 
‘‘(1) DISHWASHERS.—The applicable amount 
is— 
‘‘(A) $45 in the case of a dishwasher which 
is manufactured in calendar year 2008 or 2009 
and which uses no more than 324 kilowatt 
hours per year and 5.8 gallons per cycle, and 
‘‘(B) $75 in the case of a dishwasher 
which is manufactured in calendar year 2008, 
2009, or 2010 and which uses no more than 
307 kilowatt hours per year and 5.0 gallons per 
cycle (5.5 gallons per cycle for dishwashers de-
signed for greater than 12 place settings). 
‘‘(2) 
CLOTHES
WASHERS.—The 
applicable 
amount is— 
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‘‘(A) $75 in the case of a residential top- 
loading clothes washer manufactured in cal-
endar year 2008 which meets or exceeds a 1.72 
modified energy factor and does not exceed a 
8.0 water consumption factor, 
‘‘(B) $125 in the case of a residential top- 
loading clothes washer manufactured in cal-
endar year 2008 or 2009 which meets or ex-
ceeds a 1.8 modified energy factor and does not 
exceed a 7.5 water consumption factor, 
‘‘(C) $150 in the case of a residential or 
commercial clothes washer manufactured in cal-
endar year 2008, 2009, or 2010 which meets or 
exceeds 2.0 modified energy factor and does not 
exceed a 6.0 water consumption factor, and 
‘‘(D) $250 in the case of a residential or 
commercial clothes washer manufactured in cal-
endar year 2008, 2009, or 2010 which meets or 
exceeds 2.2 modified energy factor and does not 
exceed a 4.5 water consumption factor. 
‘‘(3) REFRIGERATORS.—The applicable amount 
is— 
‘‘(A) $50 in the case of a refrigerator 
which is manufactured in calendar year 2008, 
and consumes at least 20 percent but not more 
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than 22.9 percent less kilowatt hours per year 
than the 2001 energy conservation standards, 
‘‘(B) $75 in the case of a refrigerator 
which is manufactured in calendar year 2008 or 
2009, and consumes at least 23 percent but no 
more than 24.9 percent less kilowatt hours per 
year than the 2001 energy conservation stand-
ards, 
‘‘(C) $100 in the case of a refrigerator 
which is manufactured in calendar year 2008, 
2009, or 2010, and consumes at least 25 per-
cent but not more than 29.9 percent less kilo-
watt hours per year than the 2001 energy con-
servation standards, and 
‘‘(D) $200 in the case of a refrigerator 
manufactured in calendar year 2008, 2009, or 
2010 and which consumes at least 30 percent 
less energy than the 2001 energy conservation 
standards.’’. 
(b) ELIGIBLE PRODUCTION.— 
(1) SIMILAR
TREATMENT
FOR
ALL
APPLI-
ANCES.—Subsection (c) of section 45M is amend-
ed— 
(A) by striking paragraph (2), 
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(B) by striking ‘‘(1) IN GENERAL’’ and all 
that follows through ‘‘the eligible’’ and inserting 
‘‘The eligible’’, and 
(C) by moving the text of such subsection 
in line with the subsection heading and redesig-
nating subparagraphs (A) and (B) as para-
graphs (1) and (2), respectively. 
(2) MODIFICATION
OF
BASE
PERIOD.—Para-
graph (2) of section 45M(c), as amended by para-
graph (1), is amended by striking ‘‘3-calendar year’’ 
and inserting ‘‘2-calendar year’’. 
(c) TYPES OF ENERGY EFFICIENT APPLIANCES.— 
Subsection (d) of section 45M (defining types of energy 
efficient appliances) is amended to read as follows: 
‘‘(d) TYPES OF ENERGY EFFICIENT APPLIANCE.— 
For purposes of this section, the types of energy efficient 
appliances are— 
‘‘(1) dishwashers described in subsection (b)(1), 
‘‘(2) clothes washers described in subsection 
(b)(2), and 
‘‘(3) 
refrigerators 
described 
in 
subsection 
(b)(3).’’. 
(d) AGGREGATE CREDIT AMOUNT ALLOWED.— 
(1) INCREASE IN LIMIT.—Paragraph (1) of sec-
tion 45M(e) is amended to read as follows: 
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‘‘(1) AGGREGATE CREDIT AMOUNT ALLOWED.— 
The aggregate amount of credit allowed under sub-
section (a) with respect to a taxpayer for any tax-
able year shall not exceed $75,000,000 reduced by 
the amount of the credit allowed under subsection 
(a) to the taxpayer (or any predecessor) for all prior 
taxable years beginning after December 31, 2007.’’. 
(2) EXCEPTION FOR CERTAIN REFRIGERATOR 
AND CLOTHES WASHERS.—Paragraph (2) of section 
45M(e) is amended to read as follows: 
‘‘(2) AMOUNT ALLOWED FOR CERTAIN REFRIG-
ERATORS
AND
CLOTHES
WASHERS.—Refrigerators 
described in subsection (b)(3)(D) and clothes wash-
ers described in subsection (b)(2)(D) shall not be 
taken into account under paragraph (1).’’. 
(e) QUALIFIED ENERGY EFFICIENT APPLIANCES.— 
(1) IN
GENERAL.—Paragraph (1) of section 
45M(f) (defining qualified energy efficient appliance) 
is amended to read as follows: 
‘‘(1) QUALIFIED
ENERGY
EFFICIENT
APPLI-
ANCE.—The term ‘qualified energy efficient appli-
ance’ means— 
‘‘(A) any dishwasher described in sub-
section (b)(1), 
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compliance with the Federal energy conservation 
standard.’’. 
(5) GALLONS
PER
CYCLE; WATER
CONSUMP-
TION
FACTOR.—Section 45M(f), as amended by 
paragraph (3), is amended by adding at the end the 
following: 
‘‘(9) GALLONS PER CYCLE.—The term ‘gallons 
per cycle’ means, with respect to a dishwasher, the 
amount of water, expressed in gallons, required to 
complete a normal cycle of a dishwasher. 
‘‘(10) WATER
CONSUMPTION
FACTOR.—The 
term ‘water consumption factor’ means, with respect 
to a clothes washer, the quotient of the total weight-
ed per-cycle water consumption divided by the cubic 
foot (or liter) capacity of the clothes washer.’’. 
(f) EFFECTIVE DATE.—The amendments made by 
this section shall apply to appliances produced after De-
cember 31, 2007. 
SEC. 145. ACCELERATED RECOVERY PERIOD FOR DEPRE-
CIATION OF SMART METERS AND SMART 
GRID SYSTEMS. 
(a) IN GENERAL.—Section 168(e)(3)(D) is amended 
by striking ‘‘and’’ at the end of clause (i), by striking the 
period at the end of clause (ii) and inserting ‘‘, and’’, and 
by inserting after clause (ii) the following new clauses: 
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‘‘(iii) any qualified smart electric 
meter, and 
‘‘(iv) any qualified smart electric grid 
system.’’. 
(b) DEFINITIONS.—Section 168(i) is amended by in-
serting at the end the following new paragraph: 
‘‘(18) QUALIFIED SMART ELECTRIC METERS.— 
‘‘(A) IN
GENERAL.—The term ‘qualified 
smart electric meter’ means any smart electric 
meter which is placed in service by a taxpayer 
who is a supplier of electric energy or a pro-
vider of electric energy services. 
‘‘(B) SMART ELECTRIC METER.—For pur-
poses of subparagraph (A), the term ‘smart 
electric meter’ means any time-based meter and 
related communication equipment which is ca-
pable of being used by the taxpayer as part of 
a system that— 
‘‘(i) measures and records electricity 
usage data on a time-differentiated basis 
in at least 24 separate time segments per 
day, 
‘‘(ii) provides for the exchange of in-
formation between supplier or provider and 
the customer’s electric meter in support of 
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time-based rates or other forms of demand 
response, 
‘‘(iii) provides data to such supplier or 
provider so that the supplier or provider 
can provide energy usage information to 
customers electronically, and 
‘‘(iv) provides net metering. 
‘‘(19) QUALIFIED SMART ELECTRIC GRID SYS-
TEMS.— 
‘‘(A) IN
GENERAL.—The term ‘qualified 
smart electric grid system’ means any smart 
grid property used as part of a system for elec-
tric distribution grid communications, moni-
toring, and management placed in service by a 
taxpayer who is a supplier of electric energy or 
a provider of electric energy services. 
‘‘(B) SMART
GRID
PROPERTY.—For the 
purposes of subparagraph (A), the term ‘smart 
grid property’ means electronics and related 
equipment that is capable of— 
‘‘(i) sensing, collecting, and moni-
toring data of or from all portions of a 
utility’s electric distribution grid, 
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‘‘(ii) providing real-time, two-way 
communications to monitor or manage 
such grid, and 
‘‘(iii) providing real time analysis of 
and event prediction based upon collected 
data that can be used to improve electric 
distribution system reliability, quality, and 
performance.’’. 
(c) CONTINUED APPLICATION OF 150 PERCENT DE-
CLINING BALANCE METHOD.—Paragraph (2) of section 
168(b) is amended by striking ‘‘or’’ at the end of subpara-
graph (B), by redesignating subparagraph (C) as subpara-
graph (D), and by inserting after subparagraph (B) the 
following new subparagraph: 
‘‘(C) any property (other than property de-
scribed in paragraph (3)) which is a qualified 
smart electric meter or qualified smart electric 
grid system, or’’. 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to property placed in service after 
the date of the enactment of this Act. 
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SEC. 146. QUALIFIED GREEN BUILDING AND SUSTAINABLE 
DESIGN PROJECTS. 
(a) IN GENERAL.—Paragraph (8) of section 142(l) 
is amended by striking ‘‘September 30, 2009’’ and insert-
ing ‘‘September 30, 2012’’. 
(b) 
TREATMENT
OF
CURRENT
REFUNDING 
BONDS.—Paragraph (9) of section 142(l) is amended by 
striking ‘‘October 1, 2009’’ and inserting ‘‘October 1, 
2012’’. 
(c) ACCOUNTABILITY.—The second sentence of sec-
tion 701(d) of the American Jobs Creation Act of 2004 
is amended by striking ‘‘issuance,’’ and inserting 
‘‘issuance of the last issue with respect to such project,’’. 
TITLE II—ONE-YEAR EXTENSION 
OF TEMPORARY PROVISIONS 
Subtitle A—Extensions Primarily 
Affecting Individuals 
SEC. 201. DEDUCTION FOR STATE AND LOCAL SALES 
TAXES. 
(a) IN
GENERAL.—Subparagraph (I) of section 
164(b)(5) is amended by striking ‘‘January 1, 2008’’ and 
inserting ‘‘January 1, 2009’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to taxable years beginning after 
December 31, 2007. 
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SEC. 202. DEDUCTION OF QUALIFIED TUITION AND RE-
LATED EXPENSES. 
(a) IN GENERAL.—Subsection (e) of section 222 is 
amended by striking ‘‘December 31, 2007’’ and inserting 
‘‘December 31, 2008’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to taxable years beginning after 
December 31, 2007. 
SEC. 203. TREATMENT OF CERTAIN DIVIDENDS OF REGU-
LATED INVESTMENT COMPANIES. 
(a) 
INTEREST-RELATED
DIVIDENDS.—Subpara-
graph (C) of section 871(k)(1) (defining interest-related 
dividend) is amended by striking ‘‘December 31, 2007’’ 
and inserting ‘‘December 31, 2008’’. 
(b) SHORT-TERM CAPITAL GAIN DIVIDENDS.—Sub-
paragraph (C) of section 871(k)(2) (defining short-term 
capital gain dividend) is amended by striking ‘‘December 
31, 2007’’ and inserting ‘‘December 31, 2008’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to dividends with respect to taxable 
years of regulated investment companies beginning after 
December 31, 2007. 
SEC. 204. QUALIFIED CONSERVATION CONTRIBUTIONS. 
(a) IN
GENERAL.—Paragraphs (1)(E)(vi) and 
(2)(B)(iii) of section 170(b) are each amended by striking 
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SEC. 209. DISTRIBUTIONS FROM RETIREMENT PLANS TO 
INDIVIDUALS CALLED TO ACTIVE DUTY. 
(a) IN GENERAL.—Clause (iv) of section 72(t)(2)(G) 
is amended by striking ‘‘December 31, 2007’’ and insert-
ing ‘‘January 1, 2009’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to individuals ordered or called to 
active duty on or after December 31, 2007. 
SEC. 210. STOCK IN RIC FOR PURPOSES OF DETERMINING 
ESTATES OF NONRESIDENTS NOT CITIZENS. 
(a) IN GENERAL.—Paragraph (3) of section 2105(d) 
is amended by striking ‘‘December 31, 2007’’ and insert-
ing ‘‘December 31, 2008’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to decedents dying after December 
31, 2007. 
SEC. 211. QUALIFIED INVESTMENT ENTITIES. 
(a) 
IN
GENERAL.—Clause 
(ii) 
of 
section 
897(h)(4)(A) is amended by striking ‘‘December 31, 
2007’’ and inserting ‘‘December 31, 2008’’. 
(b) EFFECTIVE DATE.—The amendment made by 
subsection (a) shall take effect on January 1, 2008, except 
that such amendment shall not apply to the application 
of withholding requirements with respect to any payment 
made on or before the date of the enactment of this Act. 
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SEC. 212. EXCLUSION OF AMOUNTS RECEIVED UNDER 
QUALIFIED GROUP LEGAL SERVICES PLANS. 
(a) IN GENERAL.—Subsection (e) of section 120 is 
amended by striking ‘‘shall not apply to taxable years be-
ginning after June 30, 1992’’ and inserting ‘‘shall apply 
to taxable years beginning after December 31, 2007, and 
before January 1, 2009’’. 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2007. 
Subtitle B—Extensions Primarily 
Affecting Businesses 
SEC. 221. RESEARCH CREDIT. 
(a) IN GENERAL.—Subparagraph (B) of section 
41(h)(1) is amended by striking ‘‘December 31, 2007’’ 
and inserting ‘‘December 31, 2008’’. 
(b) COMPUTATION OF CREDIT FOR TAXABLE YEAR 
IN WHICH CREDIT TERMINATES.—Paragraph (2) of sec-
tion 41(h) is amended to read as follows: 
‘‘(2) COMPUTATION OF CREDIT FOR TAXABLE 
YEAR IN WHICH CREDIT TERMINATES.— 
‘‘(A) IN
GENERAL.—In the case of any 
taxable year with respect to which this section 
applies to a number of days which is less than 
the total number of days in such taxable year, 
the applicable base amount with respect to such 
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taxable year shall be the amount which bears 
the same ratio to such applicable amount (de-
termined without regard to this paragraph) as 
the number of days in such taxable year to 
which this section applies bears to the total 
number of days in such taxable year. 
‘‘(B) APPLICABLE
BASE
AMOUNT.—For 
purposes of subparagraph (A), the term ‘appli-
cable base amount’ means, with respect to any 
taxable year— 
‘‘(i) except as otherwise provided in 
this subparagraph, the base amount for 
the taxable year, 
‘‘(ii) in the case of a taxable year with 
respect to which an election under sub-
section (c)(4) (relating to election of alter-
native incremental credit) is in effect, the 
average described in subsection (c)(1)(B) 
for the taxable year, and 
‘‘(iii) in the case of a taxable year 
with respect to which an election under 
subsection (c)(5) (relating to election of al-
ternative simplified credit) is in effect, the 
average qualified research expenses for the 
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3 taxable years preceding the taxable 
year.’’. 
(c) CONFORMING AMENDMENT.—Subparagraph (D) 
of section 45C(b)(1) is amended by striking ‘‘December 
31, 2007’’ and inserting ‘‘December 31, 2008’’. 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to amounts paid or incurred after 
December 31, 2007. 
SEC. 222. INDIAN EMPLOYMENT CREDIT. 
(a) IN GENERAL.—Subsection (f) of section 45A is 
amended by striking ‘‘December 31, 2007’’ and inserting 
‘‘December 31, 2008’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to taxable years beginning after 
December 31, 2007. 
SEC. 223. NEW MARKETS TAX CREDIT. 
Subparagraph (D) of section 45D(f)(1) is amended 
by striking ‘‘and 2008’’ and inserting ‘‘2008, and 2009’’. 
SEC. 224. RAILROAD TRACK MAINTENANCE. 
(a) IN GENERAL.—Subsection (f) of section 45G is 
amended by striking ‘‘January 1, 2008’’ and inserting 
‘‘January 1, 2009’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to expenditures paid or incurred 
during taxable years beginning after December 31, 2007. 
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SEC. 225. FIFTEEN-YEAR STRAIGHT-LINE COST RECOVERY 
FOR QUALIFIED LEASEHOLD IMPROVEMENTS 
AND QUALIFIED RESTAURANT PROPERTY. 
(a) IN GENERAL.—Clauses (iv) and (v) of section 
168(e)(3)(E) are each amended by striking ‘‘January 1, 
2008’’ and inserting ‘‘January 1, 2009’’. 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to property placed in service after 
December 31, 2007. 
SEC. 226. SEVEN-YEAR COST RECOVERY PERIOD FOR MO-
TORSPORTS RACING TRACK FACILITY. 
(a) IN GENERAL.—Subparagraph (D) of section 
168(i)(15) is amended by striking ‘‘December 31, 2007’’ 
and inserting ‘‘December 31, 2008’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to property placed in service after 
December 31, 2007. 
SEC. 227. ACCELERATED DEPRECIATION FOR BUSINESS 
PROPERTY ON INDIAN RESERVATION. 
(a) IN GENERAL.—Paragraph (8) of section 168(j) 
is amended by striking ‘‘December 31, 2007’’ and insert-
ing ‘‘December 31, 2008’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to property placed in service after 
December 31, 2007. 
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SEC. 228. EXPENSING OF ENVIRONMENTAL REMEDIATION 
COSTS. 
(a) IN GENERAL.—Subsection (h) of section 198 is 
amended by striking ‘‘December 31, 2007’’ and inserting 
‘‘December 31, 2008’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to expenditures paid or incurred 
after December 31, 2007. 
SEC. 229. DEDUCTION ALLOWABLE WITH RESPECT TO IN-
COME ATTRIBUTABLE TO DOMESTIC PRO-
DUCTION ACTIVITIES IN PUERTO RICO. 
(a) IN GENERAL.—Subparagraph (C) of section 
199(d)(8) is amended— 
(1) by striking ‘‘first 2 taxable years’’ and in-
serting ‘‘first 3 taxable years’’, and 
(2) by striking ‘‘January 1, 2008’’ and insert-
ing ‘‘January 1, 2009’’. 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2007. 
SEC. 230. MODIFICATION OF TAX TREATMENT OF CERTAIN 
PAYMENTS TO CONTROLLING EXEMPT ORGA-
NIZATIONS. 
(a) 
IN
GENERAL.—Clause 
(iv) 
of 
section 
512(b)(13)(E) is amended by striking ‘‘December 31, 
2007’’ and inserting ‘‘December 31, 2008’’. 
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(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to payments received or accrued 
after December 31, 2007. 
SEC. 231. QUALIFIED ZONE ACADEMY BONDS. 
(a) IN GENERAL.—Subpart I of part IV of sub-
chapter A of chapter 1, as amended by sections 106 and 
141, is amended by adding at the end the following new 
section: 
‘‘SEC. 54D. QUALIFIED ZONE ACADEMY BONDS. 
‘‘(a) QUALIFIED ZONE ACADEMY BONDS.—For pur-
poses of this subchapter, the term ‘qualified zone academy 
bond’ means any bond issued as part of an issue if— 
‘‘(1) 100 percent of the available project pro-
ceeds of such issue are to be used for a qualified 
purpose with respect to a qualified zone academy es-
tablished by an eligible local education agency, 
‘‘(2) the bond is issued by a State or local gov-
ernment within the jurisdiction of which such acad-
emy is located, and 
‘‘(3) the issuer— 
‘‘(A) designates such bond for purposes of 
this section, 
‘‘(B) certifies that it has written assur-
ances that the private business contribution re-
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quirement of subsection (b) will be met with re-
spect to such academy, and 
‘‘(C) certifies that it has the written ap-
proval of the eligible local education agency for 
such bond issuance. 
‘‘(b) PRIVATE BUSINESS CONTRIBUTION REQUIRE-
MENT.—For purposes of subsection (a), the private busi-
ness contribution requirement of this subsection is met 
with respect to any issue if the eligible local education 
agency that established the qualified zone academy has 
written commitments from private entities to make quali-
fied contributions having a present value (as of the date 
of issuance of the issue) of not less than 10 percent of 
the proceeds of the issue. 
‘‘(c) LIMITATION
ON AMOUNT
OF BONDS DES-
IGNATED.— 
‘‘(1) NATIONAL LIMITATION.—There is a na-
tional zone academy bond limitation for each cal-
endar year. Such limitation is $400,000,000 for 
2008, and, except as provided in paragraph (4), zero 
thereafter. 
‘‘(2) ALLOCATION
OF
LIMITATION.—The na-
tional zone academy bond limitation for a calendar 
year shall be allocated by the Secretary among the 
States on the basis of their respective populations of 
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individuals below the poverty line (as defined by the 
Office of Management and Budget). The limitation 
amount allocated to a State under the preceding 
sentence shall be allocated by the State education 
agency to qualified zone academies within such 
State. 
‘‘(3) DESIGNATION
SUBJECT
TO
LIMITATION 
AMOUNT.—The maximum aggregate face amount of 
bonds issued during any calendar year which may be 
designated under subsection (a) with respect to any 
qualified zone academy shall not exceed the limita-
tion amount allocated to such academy under para-
graph (2) for such calendar year. 
‘‘(4) CARRYOVER OF UNUSED LIMITATION.— 
‘‘(A) IN
GENERAL.—If for any calendar 
year— 
‘‘(i) the limitation amount for any 
State, exceeds 
‘‘(ii) the amount of bonds issued dur-
ing such year which are designated under 
subsection (a) with respect to qualified 
zone academies within such State, 
the limitation amount for such State for the fol-
lowing calendar year shall be increased by the 
amount of such excess. 
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‘‘(B) LIMITATION
ON
CARRYOVER.—Any 
carryforward of a limitation amount may be 
carried only to the first 2 years following the 
unused limitation year. For purposes of the pre-
ceding sentence, a limitation amount shall be 
treated as used on a first-in first-out basis. 
‘‘(C) 
COORDINATION
WITH
SECTION 
1397E.—Any carryover determined under sec-
tion 1397E(e)(4) (relating to carryover of un-
used limitation) with respect to any State to 
calendar year 2008 shall be treated for pur-
poses of this section as a carryover with respect 
to such State for such calendar year under sub-
paragraph (A), and the limitation of subpara-
graph (B) shall apply to such carryover taking 
into account the calendar years to which such 
carryover relates. 
‘‘(d) DEFINITIONS.—For purposes of this section— 
‘‘(1) QUALIFIED
ZONE
ACADEMY.—The term 
‘qualified zone academy’ means any public school (or 
academic program within a public school) which is 
established by and operated under the supervision of 
an eligible local education agency to provide edu-
cation or training below the postsecondary level if— 
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‘‘(A) such public school or program (as the 
case may be) is designed in cooperation with 
business to enhance the academic curriculum, 
increase graduation and employment rates, and 
better prepare students for the rigors of college 
and the increasingly complex workforce, 
‘‘(B) students in such public school or pro-
gram (as the case may be) will be subject to the 
same academic standards and assessments as 
other students educated by the eligible local 
education agency, 
‘‘(C) the comprehensive education plan of 
such public school or program is approved by 
the eligible local education agency, and 
‘‘(D)(i) such public school is located in an 
empowerment zone or enterprise community 
(including any such zone or community des-
ignated after the date of the enactment of this 
section), or 
‘‘(ii) there is a reasonable expectation (as 
of the date of issuance of the bonds) that at 
least 35 percent of the students attending such 
school or participating in such program (as the 
case may be) will be eligible for free or reduced- 
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cost lunches under the school lunch program es-
tablished under the National School Lunch Act. 
‘‘(2) ELIGIBLE LOCAL EDUCATION AGENCY.— 
For purposes of this section, the term ‘eligible local 
education agency’ means any local educational agen-
cy as defined in section 9101 of the Elementary and 
Secondary Education Act of 1965. 
‘‘(3) QUALIFIED PURPOSE.—The term ‘quali-
fied purpose’ means, with respect to any qualified 
zone academy— 
‘‘(A) rehabilitating or repairing the public 
school facility in which the academy is estab-
lished, 
‘‘(B) providing equipment for use at such 
academy, 
‘‘(C) developing course materials for edu-
cation to be provided at such academy, and 
‘‘(D) training teachers and other school 
personnel in such academy. 
‘‘(4) QUALIFIED
CONTRIBUTIONS.—The term 
‘qualified contribution’ means any contribution (of a 
type and quality acceptable to the eligible local edu-
cation agency) of— 
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‘‘(A) equipment for use in the qualified 
zone academy (including state-of-the-art tech-
nology and vocational equipment), 
‘‘(B) technical assistance in developing 
curriculum or in training teachers in order to 
promote appropriate market driven technology 
in the classroom, 
‘‘(C) services of employees as volunteer 
mentors, 
‘‘(D) internships, field trips, or other edu-
cational opportunities outside the academy for 
students, or 
‘‘(E) any other property or service speci-
fied by the eligible local education agency.’’. 
(b) CONFORMING AMENDMENTS.— 
(1) Paragraph (1) of section 54A(d), as amend-
ed by sections 106 and 141, is amended by striking 
‘‘or’’ at the end of subparagraph (A), by inserting 
‘‘or’’ at the end of subparagraph (B), and by insert-
ing after subparagraph (B) the following new sub-
paragraph: 
‘‘(C) a qualified zone academy bond,’’. 
(2) Subparagraph (C) of section 54A(d)(2), as 
amended by sections 106 and 141, is amended by 
striking ‘‘and’’ at the end of clause (i), by striking 
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(b) 
CONFORMING
AMENDMENT.—Section 
6103(l)(7)(D)(viii)(III) is amended by striking ‘‘sections 
1710(a)(1)(I), 1710(a)(2), 1710(b), and 1712(a)(2)(B)’’ 
and inserting ‘‘sections 1710(a)(2)(G), 1710(a)(3), and 
1710(b)’’. 
(c) EFFECTIVE DATE.—The amendment made by 
subsection (a) shall apply to requests made after Sep-
tember 30, 2008. 
SEC. 254. INCREASE IN LIMIT ON COVER OVER OF RUM EX-
CISE TAX TO PUERTO RICO AND THE VIRGIN 
ISLANDS. 
(a) IN GENERAL.—Paragraph (1) of section 7652(f) 
is amended by striking ‘‘January 1, 2008’’ and inserting 
‘‘January 1, 2009’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to distilled spirits brought into the 
United States after December 31, 2007. 
TITLE III—ADDITIONAL TAX 
RELIEF 
Subtitle A—Individual Tax Relief 
SEC. 301. ADDITIONAL STANDARD DEDUCTION FOR REAL 
PROPERTY TAXES FOR NONITEMIZERS. 
(a) IN GENERAL.—Section 63(c)(1) (defining stand-
ard deduction) is amended by striking ‘‘and’’ at the end 
of subparagraph (A), by striking the period at the end 
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of subparagraph (B) and inserting ‘‘, and’’, and by adding 
at the end the following new subparagraph: 
‘‘(C) in the case of any taxable year begin-
ning in 2008, the real property tax deduction.’’. 
(b) DEFINITION.—Section 63(c) is amended by add-
ing at the end the following new paragraph: 
‘‘(7) REAL PROPERTY TAX DEDUCTION.—For 
purposes of paragraph (1), the real property tax de-
duction is the lesser of— 
‘‘(A) the amount allowable as a deduction 
under this chapter for State and local taxes de-
scribed in section 164(a)(1), or 
‘‘(B) $350 ($700 in the case of a joint re-
turn). 
Any taxes taken into account under section 62(a) 
shall not be taken into account under this para-
graph.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2007. 
SEC. 302. REFUNDABLE CHILD CREDIT. 
(a) MODIFICATION
OF
THRESHOLD
AMOUNT.— 
Clause (i) of section 24(d)(1)(B) is amended by inserting 
‘‘($8,500 in the case of taxable years beginning in 2008)’’ 
after ‘‘$10,000’’. 
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(b) EFFECTIVE DATE.—The amendment made by 
subsection (a) shall apply to taxable years beginning after 
December 31, 2007. 
SEC. 
303. 
INCREASE 
OF 
AMT 
REFUNDABLE 
CREDIT 
AMOUNT 
FOR 
INDIVIDUALS 
WITH 
LONG- 
TERM UNUSED CREDITS FOR PRIOR YEAR 
MINIMUM TAX LIABILITY, ETC. 
(a) IN GENERAL.—Paragraph (2) of section 53(e) is 
amended to read as follows: 
‘‘(2) AMT REFUNDABLE
CREDIT
AMOUNT.— 
For purposes of paragraph (1), the term ‘AMT re-
fundable credit amount’ means, with respect to any 
taxable year, the amount (not in excess of the long- 
term unused minimum tax credit for such taxable 
year) equal to the greater of— 
‘‘(A) 50 percent of the long-term unused 
minimum tax credit for such taxable year, or 
‘‘(B) the amount (if any) of the AMT re-
fundable credit amount for the taxpayer’s pre-
ceding taxable year (determined without regard 
to subsection (f)(2)).’’. 
(b) TREATMENT OF CERTAIN UNDERPAYMENTS, IN-
TEREST, AND PENALTIES ATTRIBUTABLE TO THE TREAT-
MENT OF INCENTIVE STOCK OPTIONS.—Section 53 is 
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amended by adding at the end the following new sub-
section: 
‘‘(f) TREATMENT OF CERTAIN UNDERPAYMENTS, IN-
TEREST, AND PENALTIES ATTRIBUTABLE TO THE TREAT-
MENT OF INCENTIVE STOCK OPTIONS.— 
‘‘(1) ABATEMENT.—Any underpayment of tax 
outstanding on the date of the enactment of this 
subsection which is attributable to the application of 
section 56(b)(3) for any taxable year ending before 
January 1, 2008 (and any interest or penalty with 
respect to such underpayment which is outstanding 
on such date of enactment), is hereby abated. The 
amount determined under subsection (b)(1) shall not 
include any tax abated under the preceding sentence. 
‘‘(2) INCREASE IN CREDIT FOR CERTAIN INTER-
EST AND PENALTIES ALREADY PAID.—The AMT re-
fundable credit amount for the taxpayer’s first 2 
taxable years beginning after December 31, 2007, 
shall each be increased by 50 percent of the aggre-
gate amount of the interest and penalties which were 
paid by the taxpayer before the date of the enact-
ment of this subsection and which would (but for 
such payment) have been abated under paragraph 
(1).’’. 
(c) EFFECTIVE DATE.— 
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(1) IN GENERAL.—Except as provided in para-
graph (2), the amendment made by this section shall 
apply to taxable years beginning after December 31, 
2007. 
(2) ABATEMENT.—Section 53(f)(1) of the In-
ternal Revenue Code of 1986, as added by sub-
section (b), shall take effect on the date of the en-
actment of this Act. 
Subtitle B—Business Related 
Provisions 
SEC. 311. UNIFORM TREATMENT OF ATTORNEY-ADVANCED 
EXPENSES AND COURT COSTS IN CONTIN-
GENCY FEE CASES. 
(a) IN GENERAL.—Section 162 is amended by redes-
ignating subsection (q) as subsection (r) and by inserting 
after subsection (p) the following new subsection: 
‘‘(q) ATTORNEY-ADVANCED EXPENSES AND COURT 
COSTS IN CONTINGENCY FEE CASES.—In the case of any 
expense or court cost which is paid or incurred in the 
course of the trade or business of practicing law and the 
repayment of which is contingent on a recovery by judg-
ment or settlement in the action to which such expense 
or cost relates, the deduction under subsection (a) shall 
be determined as if such expense or cost was not subject 
to repayment.’’. 
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(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to expenses and costs paid or in-
curred in taxable years beginning after the date of the en-
actment of this Act. 
SEC. 312. PROVISIONS RELATED TO FILM AND TELEVISION 
PRODUCTIONS. 
(a) MODIFICATION
OF LIMITATION
ON EXPENS-
ING.—Subparagraph (A) of section 181(a)(2) is amended 
to read as follows: 
‘‘(A) IN
GENERAL.—Paragraph (1) shall 
not apply to so much of the aggregate cost of 
any qualified film or television production as ex-
ceeds $15,000,000.’’. 
(b) MODIFICATIONS TO DEDUCTION FOR DOMESTIC 
ACTIVITIES.— 
(1) DETERMINATION
OF
W–2
WAGES.—Para-
graph (2) of section 199(b) is amended by adding at 
the end the following new subparagraph: 
‘‘(D) SPECIAL
RULE
FOR
QUALIFIED 
FILM.—In the case of a qualified film, such 
term shall include compensation for services 
performed in the United States by actors, pro-
duction personnel, directors, and producers.’’. 
(2) DEFINITION
OF
QUALIFIED
FILM.—Para-
graph (6) of section 199(c) is amended by adding at 
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the end the following: ‘‘A qualified film shall include 
any copyrights, trademarks, or other intangibles 
with respect to such film. The methods and means 
of distributing a qualified film shall not affect the 
availability of the deduction under this section.’’. 
(3) PARTNERSHIPS.—Subparagraph (A) of sec-
tion 199(d)(1) 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) in the case of each partner of a 
partnership, or shareholder of an S cor-
poration, who owns (directly or indirectly) 
at least 20 percent of the capital interests 
in such partnership or of the stock of such 
S corporation— 
‘‘(I) such partner or shareholder 
shall be treated as having engaged di-
rectly in any film produced by such 
partnership or S corporation, and 
‘‘(II) such partnership or S cor-
poration shall be treated as having en-
gaged directly in any film produced by 
such partner or shareholder.’’. 
(c) EFFECTIVE DATE.— 
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(1) IN
GENERAL.—Except as otherwise pro-
vided in this subsection, the amendments made by 
this section shall apply to taxable years beginning 
after December 31, 2007. 
(2) EXPENSING.—The amendments made by 
subsection (a) shall apply to qualified film and tele-
vision productions commencing after December 31, 
2007. 
Subtitle C—Modification of Penalty 
on 
Understatement 
of 
Tax-
payer’s Liability by Tax Return 
Preparer 
SEC. 321. MODIFICATION OF PENALTY ON UNDERSTATE-
MENT OF TAXPAYER’S LIABILITY BY TAX RE-
TURN PREPARER. 
(a) IN GENERAL.—Subsection (a) of section 6694 
(relating to understatement due to unreasonable positions) 
is amended to read as follows: 
‘‘(a) UNDERSTATEMENT DUE
TO UNREASONABLE 
POSITIONS.— 
‘‘(1) IN GENERAL.—If a tax return preparer— 
‘‘(A) prepares any return or claim of re-
fund with respect to which any part of an un-
derstatement of liability is due to a position de-
scribed in paragraph (2), and 
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160 
‘‘(B) knew (or reasonably should have 
known) of the position, 
such tax return preparer shall pay a penalty with re-
spect to each such return or claim in an amount 
equal to the greater of $1,000 or 50 percent of the 
income derived (or to be derived) by the tax return 
preparer with respect to the return or claim. 
‘‘(2) UNREASONABLE POSITION.— 
‘‘(A) IN GENERAL.—Except as otherwise 
provided in this paragraph, a position is de-
scribed in this paragraph unless there is or was 
substantial authority for the position. 
‘‘(B) DISCLOSED POSITIONS.—If the posi-
tion was disclosed as provided in section 
6662(d)(2)(B)(ii)(I) and is not a position to 
which subparagraph (C) applies, the position is 
described in this paragraph unless there is a 
reasonable basis for the position. 
‘‘(C) TAX
SHELTERS
AND
REPORTABLE 
TRANSACTIONS.—If the position is with respect 
to a tax shelter (as defined in section 
6662(d)(2)(C)(ii)) or a reportable transaction 
to which section 6662A applies, the position is 
described in this paragraph unless it is reason-
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161 
able to believe that the position would more 
likely than not be sustained on its merits. 
‘‘(3) REASONABLE
CAUSE
EXCEPTION.—No 
penalty shall be imposed under this subsection if it 
is shown that there is reasonable cause for the un-
derstatement and the tax return preparer acted in 
good faith.’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply— 
(1) in the case of a position other than a posi-
tion described in subparagraph (C) of section 
6694(a)(2) of the Internal Revenue Code of 1986 
(as amended by this section), to returns prepared 
after May 25, 2007, and 
(2) in the case of a position described in such 
subparagraph (C), to returns prepared for taxable 
years ending after the date of the enactment of this 
Act. 
Subtitle D—Extension and Expan-
sion of Certain GO Zone Incen-
tives 
SEC. 331. CERTAIN GO ZONE INCENTIVES. 
(a) USE OF AMENDED INCOME TAX RETURNS TO 
TAKE INTO ACCOUNT RECEIPT OF CERTAIN HURRICANE- 
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162 
RELATED CASUALTY LOSS GRANTS
BY DISALLOWING 
PREVIOUSLY TAKEN CASUALTY LOSS DEDUCTIONS.— 
(1) IN GENERAL.—Notwithstanding any other 
provision of the Internal Revenue Code of 1986, if 
a taxpayer claims a deduction for any taxable year 
with respect to a casualty loss to a principal resi-
dence (within the meaning of section 121 of such 
Code) resulting from Hurricane Katrina, Hurricane 
Rita, or Hurricane Wilma and in a subsequent tax-
able year receives a grant under Public Law 109– 
148, 109–234, or 110–116 as reimbursement for 
such loss, such taxpayer may elect to file an amend-
ed income tax return for the taxable year in which 
such deduction was allowed (and for any taxable 
year to which such deduction is carried) and reduce 
(but not below zero) the amount of such deduction 
by the amount of such reimbursement. 
(2) TIME
OF
FILING
AMENDED
RETURN.— 
Paragraph (1) shall apply with respect to any grant 
only if any amended income tax returns with respect 
to such grant are filed not later than the later of— 
(A) the due date for filing the tax return 
for the taxable year in which the taxpayer re-
ceives such grant, or 
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(B) the date which is 1 year after the date 
of the enactment of this Act. 
(3) WAIVER OF PENALTIES AND INTEREST.— 
Any underpayment of tax resulting from the reduc-
tion under paragraph (1) of the amount otherwise 
allowable as a deduction shall not be subject to any 
penalty or interest under such Code if such tax is 
paid not later than 1 year after the filing of the 
amended return to which such reduction relates. 
(b) WAIVER OF DEADLINE ON CONSTRUCTION OF 
GO ZONE PROPERTY ELIGIBLE FOR BONUS DEPRECIA-
TION.— 
(1) IN GENERAL.—Subparagraph (B) of section 
1400N(d)(3) is amended to read as follows: 
‘‘(B) without regard to ‘and before Janu-
ary 1, 2009’ in clause (i) thereof,’’. 
(2) EFFECTIVE DATE.—The amendment made 
by this subsection shall apply to property placed in 
service after December 31, 2007. 
(c) INCLUSION OF CERTAIN COUNTIES IN GULF OP-
PORTUNITY ZONE FOR PURPOSES OF TAX-EXEMPT BOND 
FINANCING.— 
(1) IN
GENERAL.—Subsection (a) of section 
1400N is amended by adding at the end the fol-
lowing new paragraph: 
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164 
‘‘(8) INCLUSION OF CERTAIN COUNTIES.—For 
purposes of this subsection, the Gulf Opportunity 
Zone includes Colbert County, Alabama and Dallas 
County, Alabama.’’. 
(2) EFFECTIVE DATE.—The amendment made 
by this subsection shall take effect as if included in 
the provisions of the Gulf Opportunity Zone Act of 
2005 to which it relates. 
TITLE IV—REVENUE 
PROVISIONS 
SEC. 
401. 
NONQUALIFIED 
DEFERRED 
COMPENSATION 
FROM CERTAIN TAX INDIFFERENT PARTIES. 
(a) IN GENERAL.—Subpart B of part II of sub-
chapter E of chapter 1 is amended by inserting after sec-
tion 457 the following new section: 
‘‘SEC. 457A. NONQUALIFIED DEFERRED COMPENSATION 
FROM CERTAIN TAX INDIFFERENT PARTIES. 
‘‘(a) IN GENERAL.—Any compensation which is de-
ferred under a nonqualified deferred compensation plan of 
a nonqualified entity shall be includible in gross income 
when there is no substantial risk of forfeiture of the rights 
to such compensation. 
‘‘(b) NONQUALIFIED ENTITY.—For purposes of this 
section, the term ‘nonqualified entity’ means— 
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‘‘(1) any foreign corporation unless substan-
tially all of its income is— 
‘‘(A) effectively connected with the conduct 
of a trade or business in the United States, or 
‘‘(B) subject to a comprehensive foreign in-
come tax, and 
‘‘(2) any partnership unless substantially all of 
its income is allocated to persons other than— 
‘‘(A) foreign persons with respect to whom 
such income is not subject to a comprehensive 
foreign income tax, and 
‘‘(B) organizations which are exempt from 
tax under this title. 
‘‘(c) DETERMINABILITY OF AMOUNTS OF COMPENSA-
TION.— 
‘‘(1) IN GENERAL.—If the amount of any com-
pensation is not determinable at the time that such 
compensation is otherwise includible in gross income 
under subsection (a)— 
‘‘(A) such amount shall be so includible in 
gross income when determinable, and 
‘‘(B) the tax imposed under this chapter 
for the taxable year in which such compensation 
is includible in gross income shall be increased 
by the sum of— 
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‘‘(i) the amount of interest determined 
under paragraph (2), and 
‘‘(ii) an amount equal to 20 percent of 
the amount of such compensation. 
‘‘(2) INTEREST.—For purposes of paragraph 
(1)(B)(i), the interest determined under this para-
graph for any taxable year is the amount of interest 
at the underpayment rate under section 6621 plus 
1 percentage point on the underpayments that would 
have occurred had the deferred compensation been 
includible in gross income for the taxable year in 
which first deferred or, if later, the first taxable year 
in which such deferred compensation is not subject 
to a substantial risk of forfeiture. 
‘‘(d) OTHER DEFINITIONS AND SPECIAL RULES.— 
For purposes of this section— 
‘‘(1) SUBSTANTIAL RISK OF FORFEITURE.— 
‘‘(A) IN GENERAL.—The rights of a person 
to compensation shall be treated as subject to 
a substantial risk of forfeiture only if such per-
son’s rights to such compensation are condi-
tioned upon the future performance of substan-
tial services by any individual. 
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‘‘(B) 
EXCEPTION
FOR
COMPENSATION 
BASED ON GAIN RECOGNIZED ON AN INVEST-
MENT ASSET.— 
‘‘(i) IN GENERAL.—To the extent pro-
vided in regulations prescribed by the Sec-
retary, if compensation is determined solely 
by reference to the amount of gain recog-
nized on the disposition of an investment 
asset, such compensation shall be treated 
as subject to a substantial risk of for-
feiture until the date of such disposition. 
‘‘(ii) INVESTMENT ASSET.—For pur-
poses of clause (i), the term ‘investment 
asset’ means any single asset (other than 
an investment fund or similar entity)— 
‘‘(I) acquired directly by an in-
vestment fund or similar entity, 
‘‘(II) with respect to which such 
entity does not (nor does any person 
related to such entity) participate in 
the active management of such asset 
(or if such asset is an interest in an 
entity, in the active management of 
the activities of such entity), and 
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‘‘(III) substantially all of any 
gain on the disposition of which (other 
than such deferred compensation) is 
allocated to investors in such entity. 
‘‘(iii) COORDINATION
WITH
SPECIAL 
RULE.—Paragraph (3)(B) shall not apply 
to any compensation to which clause (i) 
applies. 
‘‘(2) COMPREHENSIVE FOREIGN INCOME TAX.— 
The term ‘comprehensive foreign income tax’ means, 
with respect to any foreign person, the income tax 
of a foreign country if— 
‘‘(A) such person is eligible for the benefits 
of a comprehensive income tax treaty between 
such foreign country and the United States, or 
‘‘(B) such person demonstrates to the sat-
isfaction of the Secretary that such foreign 
country has a comprehensive income tax. 
‘‘(3) NONQUALIFIED
DEFERRED
COMPENSA-
TION PLAN.— 
‘‘(A) 
IN
GENERAL.—The 
term 
‘non-
qualified deferred compensation plan’ has the 
meaning 
given 
such 
term 
under 
section 
409A(d), except that such term shall include 
any plan that provides a right to compensation 
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169 
based on the appreciation in value of a specified 
number of equity units of the service recipient. 
‘‘(B) 
EXCEPTION.—Compensation 
shall 
not be treated as deferred for purposes of this 
section if the service provider receives payment 
of such compensation not later than 12 months 
after the end of the taxable year of the service 
recipient during which the right to the payment 
of such compensation is no longer subject to a 
substantial risk of forfeiture. 
‘‘(4) EXCEPTION FOR CERTAIN COMPENSATION 
WITH
RESPECT
TO
EFFECTIVELY
CONNECTED
IN-
COME.—In the case a foreign corporation with in-
come which is taxable under section 882, this section 
shall not apply to compensation which, had such 
compensation had been paid in cash on the date that 
such compensation ceased to be subject to a sub-
stantial risk of forfeiture, would have been deduct-
ible by such foreign corporation against such income. 
‘‘(5) APPLICATION OF RULES.—Rules similar to 
the rules of paragraphs (5) and (6) of section 
409A(d) shall apply. 
‘‘(e) REGULATIONS.—The Secretary shall prescribe 
such regulations as may be necessary or appropriate to 
carry out the purposes of this section, including regula-
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tions disregarding a substantial risk of forfeiture in cases 
where necessary to carry out the purposes of this sec-
tion.’’. 
(b) CONFORMING AMENDMENT.—Section 26(b)(2) is 
amended by striking ‘‘and’’ at the end of subparagraph 
(U), by striking the period at the end of subparagraph 
(V) and inserting ‘‘, and’’, and by adding at the end the 
following new subparagraph: 
‘‘(W) section 457A(c)(1)(B) (relating to 
determinability of amounts of compensation).’’. 
(c) CLERICAL AMENDMENT.—The table of sections 
of subpart B of part II of subchapter E of chapter 1 is 
amended by inserting after the item relating to section 
457 the following new item: 
‘‘Sec. 457A. Nonqualified deferred compensation from certain tax indifferent 
parties.’’. 
(d) EFFECTIVE DATE.— 
(1) IN
GENERAL.—Except as otherwise pro-
vided in this subsection, the amendments made by 
this section shall apply to amounts deferred which 
are attributable to services performed after Decem-
ber 31, 2008. 
(2) APPLICATION TO EXISTING DEFERRALS.— 
In the case of any amount deferred to which the 
amendments made by this section do not apply solely 
by reason of the fact that the amount is attributable 
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to services performed before January 1, 2009, to the 
extent such amount is not includible in gross income 
in a taxable year beginning before 2018, such 
amounts shall be includible in gross income in the 
later of— 
(A) the last taxable year beginning before 
2018, or 
(B) the taxable year in which there is no 
substantial risk of forfeiture of the rights to 
such compensation (determined in the same 
manner as determined for purposes of section 
457A of the Internal Revenue Code of 1986, as 
added by this section). 
(3) CHARITABLE CONTRIBUTIONS OF EXISTING 
DEFERRALS PERMITTED.— 
(A) IN
GENERAL.—Notwithstanding sec-
tion 170(b) of the Internal Revenue Code of 
1986, any qualified contribution shall be al-
lowed as a deduction under section 170 of such 
Code for the taxpayer’s last taxable year begin-
ning before 2018 to the extent the aggregate of 
such contributions made during such taxable 
year does not exceed the excess of the qualified 
inclusion amount over the amount of the deduc-
tion for all other charitable contributions allow-
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able under section 170 of such Code for such 
taxable year. Proper adjustments shall be made 
under section 170(d) to take account of the pre-
ceding sentence. 
(B) QUALIFIED CONTRIBUTION.—For pur-
poses of this paragraph, the term ‘‘qualified 
contribution’’ means any charitable contribution 
(as defined in section 170(c) of such Code) 
made during taxpayer’s last taxable year begin-
ning before 2018 if such contribution is paid in 
cash to an organization described in section 
170(b)(1)(A) of such Code (other than any or-
ganization described in section 509(a)(3) of 
such Code or any fund or account described in 
section 4966(d)(2) of such Code). 
(C) QUALIFIED INCLUSION AMOUNT.—For 
purposes of this paragraph, the term ‘‘qualified 
inclusion amount’’ means the amount includible 
in the taxpayer’s gross income for the last tax-
able year beginning before 2018 by reason of 
paragraph (2). 
(4) ACCELERATED PAYMENTS.—No later than 
120 days after the date of the enactment of this Act, 
the Secretary shall issue guidance providing a lim-
ited period of time during which a nonqualified de-
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173 
ferred compensation arrangement attributable to 
services performed on or before December 31, 2008, 
may, without violating the requirements of section 
409A(a) of the Internal Revenue Code of 1986, be 
amended to conform the date of distribution to the 
date the amounts are required to be included in in-
come. 
(5) CERTAIN BACK-TO-BACK ARRANGEMENTS.— 
If the taxpayer is also a service recipient and main-
tains one or more nonqualified deferred compensa-
tion arrangements for its service providers under 
which any amount is attributable to services per-
formed on or before December 31, 2008, the guid-
ance issued under paragraph (4) shall permit such 
arrangements to be amended to conform the dates of 
distribution under such arrangement to the date 
amounts are required to be included in the income 
of such taxpayer under this subsection. 
(6) ACCELERATED PAYMENT NOT TREATED AS 
MATERIAL
MODIFICATION.—Any amendment to a 
nonqualified deferred compensation arrangement 
made pursuant to paragraph (4) or (5) shall not be 
treated as a material modification of the arrange-
ment for purposes of section 409A of the Internal 
Revenue Code of 1986. 
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SEC. 402. DELAY IN APPLICATION OF WORLDWIDE ALLOCA-
TION OF INTEREST. 
(a) IN GENERAL.—Paragraphs (5)(D) and (6) of sec-
tion 864(f) are each amended by striking ‘‘December 31, 
2008’’ and inserting ‘‘December 31, 2018’’. 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2008. 
SEC. 403. TIME FOR PAYMENT OF CORPORATE ESTIMATED 
TAXES. 
(a) REPEAL OF ADJUSTMENT FOR 2012.—Subpara-
graph (B) of section 401(1) of the Tax Increase Preven-
tion and Reconciliation Act of 2005 is amended by striking 
the percentage contained therein and inserting ‘‘100 per-
cent’’. 
(b) MODIFICATION OF ADJUSTMENT FOR 2013.— 
The percentage under subparagraph (C) of section 401(1) 
of the Tax Increase Prevention and Reconciliation Act of 
2005 in effect on the date of the enactment of this Act 
is increased by 36.75 percentage points. 
Æ 
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