years (or, if shorter, the period specified by
the utility), and
‘‘(v) the loan is made under a pro-
gram of the utility that—
‘‘(I) specifies an approved list of
photovoltaic cell equipment and in-
stallers, and
‘‘(II) contains other safeguards
to ensure that the loan is used for its
intended purpose.
‘‘(B) 
QUALIFIED
UTILITY.—The 
term
‘qualified utility’ means any entity (including a
governmental unit) engaged in the sale of elec-
trical energy at retail in the United States
‘‘(C) 
QUALIFIED
RESIDENTIAL
PROP-
ERTY.—The term ‘qualified residential prop-
erty’ means any single-family or multi-family
residence.
‘‘(d) LIMITATION
ON AMOUNT
OF BONDS DES-
IGNATED.—
‘‘(1) IN
GENERAL.—The maximum aggregate
face amount of bonds which may be designated
under subsection (c)(1) by any qualified utility shall
not exceed the limitation amount allocated to such
utility under paragraph (3).
‘‘(2) NATIONAL
LIMITATION
ON
AMOUNT
OF
BONDS DESIGNATED.—There is a national Residen-
tial 
Solar 
Energy 
Bond 
limitation 
of
$24,000,000,000.
‘‘(3) ALLOCATION OF LIMITATION AMONG UTIL-
ITIES.—
‘‘(A) IN GENERAL.—The national Residen-
tial Solar Energy Bond limitation shall be allo-
cated by the Secretary of Energy during 2002,
2003, 2004, and 2005 to qualified utilities. In
making such allocations, such Secretary shall
give priorities to qualified utilities which provide
subsidies (other than through the use of such
Bonds) for the purchase and installation by res-
idential customers of photovoltaic cells on their
residences.
‘‘(B) UNUSED ALLOCATIONS.—Any alloca-
tion made to a qualified utility which is not
used within 6 months after the date of the allo-
cation may be reallocated by the Secretary of
Energy.
‘‘(e) 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 part IV of subchapter A (other than sub-
part C thereof, relating to refundable credits).
‘‘(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
subsection (a) for such taxable year.
‘‘(f) OTHER DEFINITIONS.—For purposes of this
section—
‘‘(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.
‘‘(g) CREDIT INCLUDED IN GROSS INCOME.—Gross
income includes the amount of the credit allowed to the
taxpayer under this section (determined without regard to
subsection (e)) and the amount so included shall be treat-
ed as interest income.
‘‘(h) SPECIAL RULES RELATING TO ARBITRAGE.—
‘‘(1) IN GENERAL.—A bond shall not be treated
as failing to meet the requirements of subsection
(c)(1) solely by reason of the fact that the proceeds
of the issue of which such bond is a part are in-
vested for a reasonable temporary period until such
proceeds are used in making qualified solar energy
loans.
‘‘(2) EARNINGS ON PROCEEDS.—Any earnings
on proceeds during the temporary period shall be
treated as proceeds of the issue for purposes of ap-
plying subsection (c)(1) and paragraph (1) of this
subsection.
‘‘(3) TREATMENT
OF
LOAN
REPAYMENTS.—
Principal repayments received during any calendar
quarter shall not be treated as failing to meet the
requirements of subsection (c)(1) if, before the end
of the following calendar quarter, the amount of
such repayments is used to make qualified solar en-
ergy loans, to redeem residential solar energy bonds,
or to acquire zero interest State and local govern-
ment series bonds. The term of a loan made from
such repayments may extend beyond the last day
that any bond issued as part of the issue financing
the loan being repaid is outstanding; and, if so, the
requirement that a loan be without interest shall not
apply to the period after such last day.
‘‘(i) OTHER SPECIAL RULES.—
‘‘(1) BONDS
HELD
BY
REGULATED
INVEST-
MENT COMPANIES.—If any Residential Solar Energy
Bond is held by a regulated investment company,
the credit determined under subsection (a) shall be
allowed to shareholders of such company under pro-
cedures prescribed by the Secretary.
‘‘(2) CREDITS MAY BE STRIPPED.—Under regu-
lations prescribed by the Secretary—
‘‘(A) IN GENERAL.—There may be a sepa-
ration (including at issuance) of the ownership
of a Residential Solar Energy Bond and the en-
titlement to the credit under this section with
respect to such bond. In case of any such sepa-
ration, the credit under this section shall be al-
lowed to the person who on the credit allowance
date holds the instrument evidencing the enti-
tlement to the credit and not to the holder of
the bond.
‘‘(B) CERTAIN RULES TO APPLY.—In the
case of a separation described in subparagraph
(A), the rules of section 1286 shall apply to the
Residential Solar Energy Bond as if it were a
stripped bond and to the credit under this sec-
tion as if it were a stripped coupon.
‘‘(3) TREATMENT FOR ESTIMATED TAX PUR-
POSES.—Solely for purposes of sections 6654 and
6655, the credit allowed by this section to a tax-
payer by reason of holding a Residential Solar En-
ergy Bond on a credit allowance date shall be treat-
ed as if it were a payment of estimated tax made by
the taxpayer on such date.
‘‘(4) CREDIT MAY BE TRANSFERRED.—Nothing
in any law or rule of law shall be construed to limit
the transferability of the credit allowed by this sec-
tion through sale and repurchase agreements.
‘‘(5) REPORTING.—Issuers of Residential Solar
Energy Bonds shall submit reports similar to the re-
ports required under section 149(e).
‘‘(j) RECAPTURE OF PORTION OF CREDIT WHERE
CESSATION OF QUALIFIED USE.—