SECTION 1. SHORT TITLE, ETC. 
(a) SHORT TITLE.—This Act may be cited as the 
‘‘Renewable Energy and Job Creation Tax Act of 2008’’. 
(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 1—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. 
PART 2—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. Inclusion of cellulosic biofuel in bonus depreciation for biomass eth-
anol plant property. 
Sec. 122. Credits for biodiesel and renewable diesel. 
Sec. 123. Clarification that credits for fuel are designed to provide an incentive 
for United States production. 
Sec. 124. Credit for new qualified plug-in electric drive motor vehicles.
Sec. 125. Exclusion from heavy truck tax for idling reduction units and ad-
vanced insulation. 
Sec. 126. Transportation fringe benefit to bicycle commuters. 
Sec. 127. Alternative fuel vehicle refueling property credit. 
Sec. 128. Certain income and gains relating to alcohol fuels and mixtures, bio-
diesel fuels and mixtures, and alternative fuels and mixtures 
treated as qualifying income for publicly traded partnerships. 
Subtitle C—Energy Conservation and Efficiency Provisions 
Sec. 131. Credit for nonbusiness energy property. 
Sec. 132. Energy efficient commercial buildings deduction. 
Sec. 133. Modifications of energy efficient appliance credit for appliances pro-
duced after 2007. 
Sec. 134. Accelerated recovery period for depreciation of smart meters and 
smart grid systems. 
Sec. 135. Qualified green building and sustainable design projects. 
TITLE II—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. Tax-free distributions from individual retirement plans for charitable 
purposes. 
Sec. 205. Deduction for certain expenses of elementary and secondary school 
teachers. 
Sec. 206. Stock in RIC for purposes of determining estates of nonresidents not 
citizens. 
Sec. 207. Qualified investment entities. 
Sec. 208. Real property tax standard deduction. 
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. 
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. Increase in limit on cover over of rum excise tax to Puerto Rico and 
the Virgin Islands. 
TITLE III—ADDITIONAL TAX RELIEF AND OTHER PROVISIONS 
Sec. 301. Refundable child credit. 
Sec. 302. Provisions related to film and television productions. 
Sec. 303. Exemption from excise tax for certain arrows designed for use by 
children. 
Sec. 304. Modification of penalty on understatement of taxpayer’s liability by 
tax return preparer. 
TITLE IV—REVENUE PROVISIONS 
Sec. 401. Limitation of deduction for income attributable to domestic produc-
tion of oil, gas, or primary products thereof. 
Sec. 402. Elimination of the different treatment of foreign oil and gas extrac-
tion income and foreign oil related income for purposes of the 
foreign tax credit. 
Sec. 403. Broker reporting of customer’s basis in securities transactions. 
Sec. 404. 0.2 percent FUTA surtax. 
Sec. 405. Increase and extension of Oil Spill Liability Trust Fund tax. 
Sec. 406. Nonqualified deferred compensation from certain tax indifferent par-
ties. 
Sec. 407. Delay in application of worldwide allocation of interest. 
Sec. 408. Time for payment of corporate estimated taxes. 
TITLE I—ENERGY TAX 
INCENTIVES 
Subtitle A—Energy Production 
Incentives 
PART 1—RENEWABLE ENERGY INCENTIVES 
SEC. 101. RENEWABLE ENERGY CREDIT. 
(a) EXTENSION OF CREDIT.—
(1) WIND FACILITIES.—Paragraph (1) of sec-
tion 45(d) is amended by striking ‘‘January 1, 
2009’’ and inserting ‘‘January 1, 2010’’. 
(2) OTHER FACILITIES.—Each of the following 
provisions of section 45(d) is amended by striking 
‘‘January 1, 2009’’ and inserting ‘‘October 1, 
2011’’: 
(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). 
(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.— 
‘‘(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. 
‘‘(iii) PRELIMITATION
CREDIT.—The 
term ‘prelimitation credit’ with respect to 
any facility for a taxable year means the 
credit determined under subsection (a) 
with respect to such facility for such tax-
able year, determined without regard to 
subparagraph (A) and after taking into ac-
count any increase for such taxable year 
under clause (ii).
‘‘(C) 
APPLICABLE
PERCENTAGE.—For 
purposes of this paragraph— 
‘‘(i) IN GENERAL.—The term ‘applica-
ble percentage’ means, with respect to any 
facility, the appropriate percentage pre-
scribed by the Secretary for the month in 
which such facility is originally placed in 
service. 
‘‘(ii) METHOD
OF
PRESCRIBING
AP-
PLICABLE
PERCENTAGE.—The applicable 
percentage prescribed by the Secretary for 
any month under clause (i) shall be the 
percentage which yields over a 10-year pe-
riod amounts of limitation under subpara-
graph (A) which have a present value 
equal to 35 percent of the eligible basis of 
the facility. 
‘‘(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 
‘‘(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-
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 originally placed in service dur-
ing the same calendar year shall be treated for 
purposes of this section as 1 facility which is 
originally placed in service at the mid-point of 
such year or the first day of the following cal-
endar 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 
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
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-
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.’’. 
(f) 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.—The 
amendments made by subsection (c) 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. 
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 
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 October 1, 2011.’’. 
(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 ‘‘October 1, 2011’’ 
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, 2017’’. 
(2) FUEL CELL PROPERTY.—Subparagraph (E) 
of section 48(c)(1) is amended by striking ‘‘Decem-
ber 31, 2008’’ and inserting ‘‘December 31, 2016’’. 
(3) MICROTURBINE PROPERTY.—Subparagraph 
(E) of section 48(c)(2) is amended by striking ‘‘De-
cember 31, 2008’’ and inserting ‘‘December 31, 
2016’’. 
(b) ALLOWANCE OF ENERGY CREDIT AGAINST AL-
TERNATIVE MINIMUM TAX.— 
(1) IN GENERAL.—Subparagraph (B) of section 
38(c)(4) is amended by redesignating clause (vi) as 
clause (vii), by striking ‘‘and’’ at the end of clause 
(v), and by inserting after clause (v) the following 
new clause: 
‘‘(vi) 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’’. 
(2) TECHNICAL
AMENDMENT.—Clause (v) of 
section 38(c)(4)(B) is amended by striking ‘‘section 
47 to the extent attributable to’’ and inserting ‘‘sec-
tion 46 to the extent that such credit is attributable 
to the rehabilitation credit under section 47, but 
only with respect to’’. 
(c) ENERGY CREDIT
FOR COMBINED HEAT
AND 
POWER SYSTEM PROPERTY.— 
(1) IN
GENERAL.—Section 48(a)(3)(A) 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.—Subsection (c) of section 48 is amend-
ed— 
(A) by striking ‘‘QUALIFIED FUEL CELL 
PROPERTY; QUALIFIED MICROTURBINE PROP-
ERTY’’ in the heading and inserting ‘‘DEFINI-
TIONS’’, and 
(B) by adding at the end the following new 
paragraph: 
‘‘(3) COMBINED
HEAT
AND
POWER
SYSTEM 
PROPERTY.— 
‘‘(A) COMBINED HEAT AND POWER SYS-
TEM PROPERTY.—The term ‘combined heat and
power system property’ means property com-
prising a system— 
‘‘(i) 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), 
‘‘(ii) which produces— 
‘‘(I) at least 20 percent of its 
total useful energy in the form of 
thermal energy 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 elec-
trical or mechanical power (or com-
bination thereof), 
‘‘(iii) the energy efficiency percentage 
of which exceeds 60 percent, and 
‘‘(iv) which is placed in service before 
January 1, 2017. 
‘‘(B) LIMITATION.—
‘‘(i) IN
GENERAL.—In the case of 
combined heat and power system property 
with an electrical capacity in excess of the 
applicable capacity placed in service during 
the taxable year, the credit under sub-
section (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 prop-
erty. 
‘‘(ii) 
APPLICABLE
CAPACITY.—For 
purposes of clause (i), the term ‘applicable 
capacity’ means 15 megawatts or a me-
chanical energy capacity of more than 
20,000 horsepower or an equivalent com-
bination of electrical and mechanical en-
ergy capacities. 
‘‘(iii) MAXIMUM CAPACITY.—The term 
‘combined heat and power system property’ 
shall not include any property comprising a 
system if such system has a capacity in ex-
cess of 50 megawatts or a mechanical en-
ergy capacity in excess of 67,000 horse-
power or an equivalent combination of elec-
trical and mechanical energy capacities. 
‘‘(C) SPECIAL RULES.— 
‘‘(i) ENERGY
EFFICIENCY
PERCENT-
AGE.—For purposes of this paragraph, the 
energy efficiency percentage of a system is 
the fraction— 
‘‘(I) the numerator of which is 
the total useful electrical, thermal, 
and mechanical 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. 
‘‘(ii) DETERMINATIONS MADE ON BTU 
BASIS.—The energy efficiency percentage 
and the percentages under subparagraph 
(A)(ii) shall be determined on a Btu basis. 
‘‘(iii) INPUT AND OUTPUT PROPERTY 
NOT INCLUDED.—The term ‘combined heat 
and power system property’ does not in-
clude property used to transport the en-
ergy source to the facility or to distribute 
energy produced by the facility. 
‘‘(D) SYSTEMS USING BIOMASS.—If a sys-
tem is designed to use biomass (within the 
meaning of paragraphs (2) and (3) of section 
45(c) without regard to the last sentence of 
paragraph (3)(A)) for at least 90 percent of the 
energy source— 
‘‘(i) subparagraph (A)(iii) shall not 
apply, but 
‘‘(ii) the amount of credit determined 
under subsection (a) with respect to such 
system shall not exceed the amount which 
bears the same ratio to such amount of 
credit (determined without regard to this 
subparagraph) as the energy efficiency per-
centage of such system bears to 60 per-
cent.’’. 
(3) 
CONFORMING
AMENDMENT.—Section 
48(a)(1) is amended by striking ‘‘paragraphs (1)(B) 
and (2)(B)’’ and inserting ‘‘paragraphs (1)(B), 
(2)(B), and (3)(B)’’. 
(d) INCREASE OF CREDIT LIMITATION FOR FUEL 
CELL PROPERTY.—Subparagraph (B) of section 48(c)(1) 
is amended by striking ‘‘$500’’ and inserting ‘‘$1,500’’.
(e) PUBLIC UTILITY PROPERTY TAKEN INTO AC-
COUNT.— 
(1) IN
GENERAL.—Paragraph (3) of section 
48(a) is amended by striking the second sentence 
thereof. 
(2) CONFORMING AMENDMENTS.— 
(A) Paragraph (1) of section 48(c) is 
amended by striking subparagraph (D) and re-
designating subparagraph (E) as subparagraph 
(D). 
(B) Paragraph (2) of section 48(c) is 
amended by striking subparagraph (D) and re-
designating subparagraph (E) as subparagraph 
(D). 
(f) EFFECTIVE DATE.— 
(1) IN
GENERAL.—Except as otherwise pro-
vided in this subsection, the amendments made by 
this section shall take effect on the date of the en-
actment of this Act. 
(2) ALLOWANCE AGAINST ALTERNATIVE MIN-
IMUM TAX.—The amendments made by subsection 
(b) shall apply to credits determined under section 
46 of the Internal Revenue Code of 1986 in taxable 
years beginning after the date of the enactment of 
this Act and to carrybacks of such credits.
(3) COMBINED HEAT AND POWER AND FUEL 
CELL PROPERTY.—The amendments made by sub-
sections (c) and (d) shall apply to periods after the 
date of the enactment of this Act, in taxable years 
ending after such date, under rules similar to the 
rules of section 48(m) of the Internal Revenue Code 
of 1986 (as in effect on the day before the date of 
the enactment of the Revenue Reconciliation Act of 
1990). 
(4) PUBLIC UTILITY PROPERTY.—The amend-
ments made by subsection (e) shall apply to periods 
after February 13, 2008, in taxable years ending 
after such date, under rules similar to the rules of 
section 48(m) of the Internal Revenue Code of 1986 
(as in effect on the day before the date of the enact-
ment of the Revenue Reconciliation Act of 1990). 
SEC. 104. CREDIT FOR RESIDENTIAL ENERGY EFFICIENT 
PROPERTY. 
(a) EXTENSION.—Section 25D(g) is amended by 
striking ‘‘December 31, 2008’’ and inserting ‘‘December 
31, 2016’’. 
(b) REMOVAL OF LIMITATION FOR SOLAR ELECTRIC 
PROPERTY.— 
(1) 
IN
GENERAL.—Section 
25D(b)(1), 
as 
amended by subsections (c) and (d), is amended—
(A) by striking subparagraph (A), and 
(B) by redesignating subparagraphs (B) 
through (E) as subparagraphs (A) through and 
(D), respectively. 
(2) 
CONFORMING
AMENDMENT.—Section 
25D(e)(4)(A), as amended by subsections (c) and 
(d), is amended— 
(A) by striking clause (i), and 
(B) by redesignating clauses (ii) through 
(v) as clauses (i) and (iv), respectively. 
(c) CREDIT FOR RESIDENTIAL WIND PROPERTY.— 
(1) IN GENERAL.—Section 25D(a) is amended 
by striking ‘‘and’’ at the end of paragraph (2), by 
striking the period at the end of paragraph (3) and 
inserting ‘‘, and’’, and by adding at the end the fol-
lowing new paragraph: 
‘‘(4) 30 percent of the qualified small wind en-
ergy property expenditures made by the taxpayer 
during such year.’’. 
(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 
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.’’. 
(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— 
‘‘(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.— 
‘‘(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. 
‘‘(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.—Except as provided in para-
graph (2), the amendments made by this section 
shall apply to taxable years beginning after Decem-
ber 31, 2007. 
(2) SOLAR ELECTRIC PROPERTY LIMITATION.— 
The amendments made by subsection (b) shall apply 
to property placed in service after the date of the en-
actment of this Act, in taxable years ending after 
such date.
(3) 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—
‘‘(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.—
(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) $950,000,000 for advanced coal- 
based generation technology projects the 
application for which is submitted during 
the 
period 
described 
in 
paragraph 
(2)(A)(ii).’’. 
(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 
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: 
‘‘(i) 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) DISCLOSURE OF ALLOCATIONS.—Section 48A(d) 
is amended by adding at the end the following new para-
graph: 
‘‘(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.’’. 
(e) 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) 
DISCLOSURE
OF
ALLOCATIONS.—The 
amendment made by subsection (d) shall apply to 
certifications made after the date of the enactment 
of this Act. 
(3) 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) $150,000,000 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) 
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 
(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, 
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). 
(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— 
(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-
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 
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.
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 2009 and 2010. 
Subtitle B—Transportation and 
Domestic Fuel Security Provisions 
SEC. 121. 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’’. 
(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. 122. 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: 
‘‘(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: 
‘‘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.—Sub-
section (f) of section 40A (relating to renewable diesel) 
is amended by adding at the end the following new para-
graph: 
‘‘(4) CERTAIN AVIATION FUEL.— 
‘‘(A) IN GENERAL.—Except as provided in 
the last three sentences of paragraph (3), the 
term ‘renewable diesel’ shall include fuel derived 
from biomass which meets the requirements of
a Department of Defense specification for mili-
tary jet fuel or an American Society of Testing 
and Materials specification for aviation turbine 
fuel. 
‘‘(B) APPLICATION
OF
MIXTURE
CRED-
ITS.—In the case of fuel which is treated as re-
newable diesel solely by reason of subparagraph 
(A), subsection (b)(1) and section 6426(c) shall 
be applied with respect to such fuel by treating 
kerosene as though it were diesel 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 
made by subsection (c) shall apply to fuel produced, 
and sold or used, after February 13, 2008. 
SEC. 123. 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:
‘‘(7) 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: 
‘‘(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.’’. 
(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. 124. CREDIT FOR NEW QUALIFIED PLUG-IN ELECTRIC 
DRIVE MOTOR VEHICLES. 
(a) IN GENERAL.—Section 30 is amended to read as 
follows: 
‘‘SEC. 30. 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-
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 
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— 
‘‘(1) IN
GENERAL.—The term ‘new qualified 
plug-in electric drive motor vehicle’ means a motor 
vehicle— 
‘‘(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. 
‘‘(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) MOTOR VEHICLE.—The term ‘motor vehi-
cle’ means any vehicle which is manufactured pri-
marily for use on public streets, roads, and highways 
(not including a vehicle operated exclusively on a rail 
or rails) and which has at least 4 wheels. 
‘‘(4) 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.). 
‘‘(5) 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 
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-
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: 
‘‘(D) EXCLUSION OF PLUG-IN VEHICLES.— 
Any vehicle with respect to which a credit is al-
lowable under section 30 (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 by striking ‘‘plus’’ at 
the end of paragraph (32), by striking the period at the 
end of paragraph (33) and inserting ‘‘, plus’’, and by add-
ing at the end the following new paragraph:
‘‘(34) the portion of the new qualified plug-in 
electric drive motor vehicle credit to which section 
30(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 30’’. 
(B) Section 25(e)(1)(C)(ii) is amended by in-
serting ‘‘30,’’ after ‘‘25D,’’. 
(C) Section 25B(g)(2), as amended by section 
104, is amended by striking ‘‘and 25D’’ and insert-
ing ‘‘, 25D, and 30’’. 
(D) Section 26(a)(1), as amended by section 
104, is amended by striking ‘‘and 25D’’ and insert-
ing ‘‘25D, and 30’’. 
(E) Section 1400C(d)(2) is amended by striking 
‘‘and 25D’’ and inserting ‘‘25D, and 30’’. 
(2) Section 30B(h)(1) is amended by striking 
‘‘section 30(c)(2)’’ and inserting ‘‘section 30(d)(3)’’. 
(3)(A) Section 53(d)(1)(B) is amended by strik-
ing clause (iii) and redesignating clause (iv) as 
clause (iii). 
(B) Subclause (II) of section 53(d)(1)(B)(iii), 
as so redesignated, is amended by striking ‘‘in-
creased in the manner provided in clause (iii)’’.
(4) Section 55(c)(3) is amended by striking 
‘‘30(b)(3),’’. 
(5) Section 1016(a)(25) is amended by striking 
‘‘section 30(d)(1)’’ and inserting ‘‘section 30(f)(1)’’. 
(6) Section 6501(m) is amended by striking 
‘‘section 30(d)(4)’’ and inserting ‘‘section 30(f)(4)’’. 
(7) The item in the table of sections for subpart 
B of part IV of subchapter A of chapter 1 is amend-
ed to read as follows: 
‘‘Sec. 30. New qualified plug-in electric drive motor vehicles.’’. 
(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 
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 ‘‘section 27’’. 
(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. 
SEC. 125. 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 
or truck, and 
‘‘(B) is determined by the Administrator of 
the Environmental Protection Agency, in con-
sultation with the Secretary of Energy 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. 
SEC. 126. 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-
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-
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. 127. 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’’, 
(2) by striking ‘‘$30,000’’ in subsection (b)(1) 
and inserting ‘‘$50,000’’, and 
(3) by striking ‘‘$1,000’’ in subsection (b)(2) 
and inserting ‘‘$2,000’’. 
(b) EXTENSION OF CREDIT.—Subsection (g) of sec-
tion 30C is amended to read as follows: 
‘‘(g) TERMINATION.—This section shall not apply to 
any property placed in service after— 
‘‘(1) December 31 2017, in the case of property 
relating to natural gas, compressed natural gas, or 
liquified natural gas, and which is not of a character 
subject to an allowance for depreciation, 
‘‘(2) December 31, 2014, in the case of— 
‘‘(A) property relating to hydrogen, and 
‘‘(B) property relating to natural gas, com-
pressed natural gas, or liquified natural gas, 
and which is of a character subject to an allow-
ance for depreciation, and 
‘‘(3) December 31, 2010, in any other case.’’. 
(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. 128. CERTAIN INCOME AND GAINS RELATING TO AL-
COHOL FUELS AND MIXTURES, BIODIESEL 
FUELS AND MIXTURES, AND ALTERNATIVE 
FUELS AND MIXTURES TREATED AS QUALI-
FYING 
INCOME 
FOR 
PUBLICLY 
TRADED 
PARTNERSHIPS. 
(a) IN GENERAL.—Subparagraph (E) of section 
7704(d)(1) is amended by inserting ‘‘, or the transpor-
tation or storage of any fuel described in subsection (b), 
(c), (d), or (e) of section 6426, or any alcohol fuel defined 
in section 6426(b)(4)(A) or any biodiesel fuel as defined 
in section 40A(d)(1)’’ after ‘‘timber)’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to taxable years beginning after 
the date of the enactment of this Act. 
Subtitle C—Energy Conservation 
and Efficiency Provisions 
SEC. 131. CREDIT FOR NONBUSINESS ENERGY PROPERTY. 
(a) EXTENSION
OF CREDIT.—Section 25C(g) is 
amended by striking ‘‘placed in service after December 31, 
2007’’ and inserting ‘‘placed in service— 
‘‘(1) after December 31, 2007, and before Jan-
uary 1, 2009, or 
‘‘(2) after December 31, 2009.’’. 
(b) QUALIFIED BIOMASS FUEL PROPERTY.—
(1) IN GENERAL.—Section 25C(d)(3) is amend-
ed— 
(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), as amended by subsection (b), is amended 
by striking subparagraph (C) and by redesignating 
subparagraphs (D), (E), and (F) as subparagraphs 
(C), (D), and (E), 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 by 
this section shall apply to expenditures made after Decem-
ber 31, 2008. 
SEC. 132. 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. 133. 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— 
‘‘(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 
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), 
(B) by striking ‘‘(1) IN GENERAL’’ and all 
that follows through ‘‘the eligible’’ and inserting 
‘‘The eligible’’, 
(C) by moving the text of such subsection 
in line with the subsection heading, and 
(D) by redesignating subparagraphs (A) 
and (B) as paragraphs (1) and (2), respectively, 
and by moving such paragraphs 2 ems to the 
left. 
(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: 
‘‘(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), 
‘‘(B) any clothes washer described in sub-
section (b)(2), and 
‘‘(C) any refrigerator described in sub-
section (b)(3).’’. 
(2) CLOTHES WASHER.—Section 45M(f)(3) is 
amended by inserting ‘‘commercial’’ before ‘‘residen-
tial’’ the second place it appears. 
(3) TOP-LOADING
CLOTHES
WASHER.—Sub-
section (f) of section 45M is amended by redesig-
nating paragraphs (4), (5), (6), and (7) as para-
graphs (5), (6), (7), and (8), respectively, and by in-
serting after paragraph (3) the following new para-
graph: 
‘‘(4) TOP-LOADING
CLOTHES
WASHER.—The 
term ‘top-loading clothes washer’ means a clothes 
washer which has the clothes container compartment
access located on the top of the machine and which 
operates on a vertical axis.’’. 
(4) REPLACEMENT OF ENERGY FACTOR.—Sec-
tion 45M(f)(6), as redesignated by paragraph (3), is 
amended to read as follows: 
‘‘(6) MODIFIED
ENERGY
FACTOR.—The term 
‘modified energy factor’ means the modified energy 
factor established by the Department of Energy for 
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. 134. 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 a comma, 
and by inserting after clause (ii) the following new clauses: 
‘‘(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 
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, 
‘‘(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. 
SEC. 135. 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—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, 2010’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to taxable years beginning after 
December 31, 2007. 
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, 2009’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to taxable years beginning after 
December 31, 2007. 
(c) TEMPORARY COORDINATION WITH HOPE AND 
LIFETIME LEARNING CREDIT.—In the case of any tax-
payer for any taxable year beginning in 2008 or 2009, 
no deduction shall be allowed under section 222 of the In-
ternal Revenue Code of 1986 if—
(1) the taxpayer’s net Federal income tax re-
duction which would be attributable to such deduc-
tion for such taxable year, is less than 
(2) the credit which would be allowed to the 
taxpayer for such taxable year under section 25A of 
such Code (determined without regard to sections 
25A(e) and 26 of such Code). 
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, 2009’’. 
(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, 2009’’. 
(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. TAX-FREE DISTRIBUTIONS FROM INDIVIDUAL RE-
TIREMENT PLANS FOR CHARITABLE PUR-
POSES. 
(a) IN GENERAL.—Subparagraph (F) of section 
408(d)(8) is amended by striking ‘‘December 31, 2007’’ 
and inserting ‘‘December 31, 2009’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to distributions made in taxable 
years beginning after December 31, 2007. 
SEC. 205. DEDUCTION FOR CERTAIN EXPENSES OF ELE-
MENTARY AND SECONDARY SCHOOL TEACH-
ERS. 
(a) IN GENERAL.—Subparagraph (D) of section 
62(a)(2) is amended by striking ‘‘or 2007’’ and inserting 
‘‘2007, 2008, or 2009’’. 
(b) EFFECTIVE DATE.—The amendment made by 
subsection (a) shall apply to taxable years beginning after 
December 31, 2007. 
SEC. 206. 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, 2009’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to decedents dying after December 
31, 2007.
SEC. 207. 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, 2009’’. 
(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. 
SEC. 208. REAL PROPERTY TAX STANDARD DEDUCTION. 
(a) IN GENERAL.—Subparagraph (C) of section 
63(c)(1) is amended by inserting ‘‘or 2009’’ after ‘‘2008’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to taxable years beginning after 
December 31, 2008. 
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, 2009’’. 
(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 
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 
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, 2009’’. 
(d) EFFECTIVE DATE.— 
(1) IN GENERAL.—Except as provided in para-
graph (2), the amendments made by this section 
shall apply to amounts paid or incurred after De-
cember 31, 2007. 
(2) COMPUTATION
OF
CREDIT
FOR
TAXABLE 
YEAR IN WHICH CREDIT BEGINS.—The amendment 
made by subsection (b) shall apply to taxable years 
beginning 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, 2009’’.
(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, 2010’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to expenditures paid or incurred 
during taxable years beginning after December 31, 2007. 
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, 2010’’. 
(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, 2009’’. 
(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, 2009’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to property placed in service after 
December 31, 2007. 
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, 2009’’. 
(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 4 taxable years’’, and 
(2) by striking ‘‘January 1, 2008’’ and insert-
ing ‘‘January 1, 2010’’. 
(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, 2009’’. 
(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 is amended by adding at the end 
the following new section:
‘‘SEC. 54C. 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-
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 2009, and, except as provided in para-
graph (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 
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. 
‘‘(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— 
‘‘(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- 
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— 
‘‘(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
100 
‘‘(E) any other property or service speci-
fied by the eligible local education agency.’’. 
(b) CONFORMING AMENDMENTS.— 
(1) Paragraph (1) of section 54A(d) is amended 
to read as follows: 
‘‘(1) QUALIFIED TAX CREDIT BOND.—The term 
‘qualified tax credit bond’ means— 
‘‘(A) a qualified forestry conservation 
bond, or 
‘‘(B) a qualified zone academy bond, 
which is part of an issue that meets the require-
ments of paragraphs (2), (3), (4), (5), and (6).’’. 
(2) Subparagraph (C) of section 54A(d)(2) is 
amended to read as follows: 
‘‘(C) QUALIFIED PURPOSE.—For purposes 
of this paragraph, the term ‘qualified purpose’ 
means— 
‘‘(i) in the case of a qualified forestry 
conservation bond, a purpose specified in 
section 54B(e), and 
‘‘(ii) in the case of a qualified zone 
academy bond, a purpose specified in sec-
tion 54C(a)(1).’’. 
(3) Section 1397E is amended by adding at the 
end the following new subsection:
101 
‘‘(m) TERMINATION.—This section shall not apply to 
any obligation issued after the date of the enactment of 
this subsection.’’. 
(4) The table of sections for subpart I of part 
IV of subchapter A of chapter 1 is amended by add-
ing at the end the following new item: 
‘‘Sec. 54C. Qualified zone academy bonds.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to obligations issued after the date 
of the enactment of this Act. 
SEC. 232. TAX INCENTIVES FOR INVESTMENT IN THE DIS-
TRICT OF COLUMBIA. 
(a) DESIGNATION OF ZONE.— 
(1) IN
GENERAL.—Subsection (f) of section 
1400 is amended by striking ‘‘2007’’ both places it 
appears and inserting ‘‘2009’’. 
(2) EFFECTIVE DATE.—The amendments made 
by this subsection shall apply to periods beginning 
after December 31, 2007. 
(b) 
TAX-EXEMPT
ECONOMIC
DEVELOPMENT 
BONDS.— 
(1) IN
GENERAL.—Subsection (b) of section 
1400A is amended by striking ‘‘2007’’ and inserting 
‘‘2009’’.
102 
(2) EFFECTIVE DATE.—The amendment made 
by this subsection shall apply to bonds issued after 
December 31, 2007. 
(c) ZERO PERCENT CAPITAL GAINS RATE.— 
(1) IN
GENERAL.—Subsection (b) of section 
1400B is amended by striking ‘‘2008’’ each place it 
appears and inserting ‘‘2010’’. 
(2) CONFORMING AMENDMENTS.— 
(A) Section 1400B(e)(2) is amended— 
(i) by striking ‘‘2012’’ and inserting 
‘‘2014’’, and 
(ii) by striking ‘‘2012’’ in the heading 
thereof and inserting ‘‘2014’’. 
(B) Section 1400B(g)(2) is amended by 
striking ‘‘2012’’ and inserting ‘‘2014’’. 
(C) Section 1400F(d) is amended by strik-
ing ‘‘2012’’ and inserting ‘‘2014’’. 
(3) EFFECTIVE DATES.— 
(A) EXTENSION.—The amendments made 
by paragraph (1) shall apply to acquisitions 
after December 31, 2007. 
(B) 
CONFORMING
AMENDMENTS.—The 
amendments made by paragraph (2) shall take 
effect on the date of the enactment of this Act. 
(d) FIRST-TIME HOMEBUYER CREDIT.—
103 
(1) IN
GENERAL.—Subsection (i) of section 
1400C is amended by striking ‘‘2008’’ and inserting 
‘‘2010’’. 
(2) EFFECTIVE DATE.—The amendment made 
by this subsection shall apply to property purchased 
after December 31, 2007. 
SEC. 233. ECONOMIC DEVELOPMENT CREDIT FOR AMER-
ICAN SAMOA. 
(a) IN GENERAL.—Subsection (d) of section 119 of 
division A of the Tax Relief and Health Care Act of 2006 
is amended— 
(1) by striking ‘‘first two taxable years’’ and in-
serting ‘‘first 4 taxable years’’, and 
(2) by striking ‘‘January 1, 2008’’ and insert-
ing ‘‘January 1, 2010’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to taxable years beginning after 
December 31, 2007. 
SEC. 234. ENHANCED CHARITABLE DEDUCTION FOR CON-
TRIBUTIONS OF FOOD INVENTORY. 
(a) 
IN
GENERAL.—Clause 
(iv) 
of 
section 
170(e)(3)(C) is amended by striking ‘‘December 31, 
2007’’ and inserting ‘‘December 31, 2009’’.
104 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to contributions made after De-
cember 31, 2007. 
SEC. 235. ENHANCED CHARITABLE DEDUCTION FOR CON-
TRIBUTIONS OF BOOK INVENTORY TO PUB-
LIC SCHOOLS. 
(a) 
IN
GENERAL.—Clause 
(iv) 
of 
section 
170(e)(3)(D) is amended by striking ‘‘December 31, 
2007’’ and inserting ‘‘December 31, 2009’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to contributions made after De-
cember 31, 2007. 
SEC. 236. ENHANCED DEDUCTION FOR QUALIFIED COM-
PUTER CONTRIBUTIONS. 
(a) IN GENERAL.—Subparagraph (G) of section 
170(e)(6) is amended by striking ‘‘December 31, 2007’’ 
and inserting ‘‘December 31, 2009’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to contributions made during tax-
able years beginning after December 31, 2007.
105 
SEC. 237. BASIS ADJUSTMENT TO STOCK OF S CORPORA-
TIONS 
MAKING 
CHARITABLE 
CONTRIBU-
TIONS OF PROPERTY. 
(a) IN GENERAL.—The last sentence of section 
1367(a)(2) is amended by striking ‘‘December 31, 2007’’ 
and inserting ‘‘December 31, 2009’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to contributions made in taxable 
years beginning after December 31, 2007. 
SEC. 238. WORK OPPORTUNITY TAX CREDIT FOR HURRI-
CANE KATRINA EMPLOYEES. 
(a) IN GENERAL.—Paragraph (1) of section 201(b) 
of the Katrina Emergency Tax Relief Act of 2005 is 
amended by striking ‘‘2-year’’ and inserting ‘‘4-year’’. 
(b) EFFECTIVE DATE.—The amendment made by 
subsection (a) shall apply to individuals hired after August 
27, 2007. 
SEC. 239. SUBPART F EXCEPTION FOR ACTIVE FINANCING 
INCOME. 
(a) EXEMPT INSURANCE INCOME.—Paragraph (10) 
of section 953(e) (relating to application) is amended— 
(1) by striking ‘‘January 1, 2009’’ and insert-
ing ‘‘January 1, 2010’’, and 
(2) by striking ‘‘December 31, 2008’’ and in-
serting ‘‘December 31, 2009’’.
106 
(b) EXCEPTION TO TREATMENT AS FOREIGN PER-
SONAL HOLDING COMPANY INCOME.—Paragraph (9) of 
section 954(h) (relating to application) is amended by 
striking ‘‘January 1, 2009’’ and inserting ‘‘January 1, 
2010’’. 
SEC. 240. LOOK-THRU RULE FOR RELATED CONTROLLED 
FOREIGN CORPORATIONS. 
(a) IN GENERAL.—Subparagraph (C) of section 
954(c)(6) (relating to application) is amended by striking 
‘‘January 1, 2009’’ and inserting ‘‘January 1, 2010’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to taxable years of foreign corpora-
tions beginning after December 31, 2008, and to taxable 
years of United States shareholders with or within which 
such taxable years of foreign corporations end. 
SEC. 241. EXPENSING FOR CERTAIN QUALIFIED FILM AND 
TELEVISION PRODUCTIONS. 
(a) IN GENERAL.—Subsection (f) of section 181 is 
amended by striking ‘‘December 31, 2008’’ and inserting 
‘‘December 31, 2009’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to productions commencing after 
December 31, 2008.
107 
Subtitle C—Other Extensions 
SEC. 251. AUTHORITY TO DISCLOSE INFORMATION RE-
LATED TO TERRORIST ACTIVITIES MADE 
PERMANENT. 
(a) IN GENERAL.—Subparagraph (C) of section 
6103(i)(3) is amended by striking clause (iv). 
(b) DISCLOSURE ON REQUEST.—Paragraph (7) of 
section 6103(i) is amended by striking subparagraph (E). 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to disclosures after the date of the 
enactment of this Act. 
SEC. 252. AUTHORITY FOR UNDERCOVER OPERATIONS 
MADE PERMANENT. 
(a) IN GENERAL.—Subsection (c) of section 7608 is 
amended by striking paragraph (6). 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall take effect on January 1, 2008. 
SEC. 253. 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, 2010’’.
108 
(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 RE-
LIEF 
AND 
OTHER 
PROVI-
SIONS 
SEC. 301. 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 2009)’’ 
after ‘‘$10,000’’. 
(b) EFFECTIVE DATE.—The amendment made by 
subsection (a) shall apply to taxable years beginning after 
December 31, 2008. 
SEC. 302. 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.—
109 
(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 
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
110 
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) 
CONFORMING
AMENDMENT.—Section 
181(d)(3)(A) is amended by striking ‘‘actors’’ and all that 
follows and inserting ‘‘actors, production personnel, direc-
tors, and producers.’’. 
(d) 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, 2007. 
(2) EXPENSING.—The amendments made by 
subsection (a) shall apply to qualified film and tele-
vision productions commencing after December 31, 
2007.
111 
SEC. 303. EXEMPTION FROM EXCISE TAX FOR CERTAIN AR-
ROWS DESIGNED FOR USE BY CHILDREN. 
(a) IN GENERAL.—Paragraph (2) of section 4161(b) 
(relating to arrows) is amended by redesignating subpara-
graph (B) as subparagraph (C) and by inserting after sub-
paragraph (A) the following new subparagraph: 
‘‘(B) EXEMPTION
FOR
CERTAIN
ARROW 
SHAFTS.—Subparagraph (A) shall not apply to 
any shaft measuring 5/16 of an inch or less in 
diameter and consisting of either— 
‘‘(i) all fiberglass and hollow, or 
‘‘(ii) all natural wood, 
with no laminations or artificial means of en-
hancing the spine of such shaft (whether sold 
separately or incorporated as part of a finished 
or unfinished product) of a type used in the 
manufacture of any arrow which after its as-
sembly is not suitable for use with a bow de-
scribed in paragraph (1)(A).’’. 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to shafts first sold after the date 
of enactment of this Act.
112 
SEC. 304. 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 
‘‘(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.
113 
‘‘(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) REPORTABLE TRANSACTIONS.—If the 
position is with respect to a reportable trans-
action to which section 6662A applies, the posi-
tion is described in this paragraph unless it is 
reasonable 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
114 
(2) in the case of a position described in such 
subparagraph (C), to returns prepared for taxable 
years beginning after the date of the enactment of 
this Act. 
TITLE IV—REVENUE 
PROVISIONS 
SEC. 401. LIMITATION OF DEDUCTION FOR INCOME AT-
TRIBUTABLE TO DOMESTIC PRODUCTION OF 
OIL, GAS, OR PRIMARY PRODUCTS THEREOF. 
(a) IN GENERAL.—Section 199(d) is amended by re-
designating paragraph (9) as paragraph (10) and by in-
serting after paragraph (8) the following new paragraph: 
‘‘(9) SPECIAL RULE FOR TAXPAYERS WITH OIL 
RELATED
QUALIFIED
PRODUCTION
ACTIVITIES
IN-
COME.— 
‘‘(A) IN GENERAL.—If a taxpayer has oil 
related qualified production activities income for 
any taxable year beginning after 2009, the 
amount otherwise allowable as a deduction 
under subsection (a) shall be reduced by 3 per-
cent of the least of— 
‘‘(i) the oil related qualified produc-
tion activities income of the taxpayer for 
the taxable year,
115 
‘‘(ii) the qualified production activities 
income of the taxpayer for the taxable 
year, or 
‘‘(iii) 
taxable 
income 
(determined 
without regard to this section). 
‘‘(B) OIL
RELATED
QUALIFIED
PRODUC-
TION
ACTIVITIES
INCOME.—For purposes of 
this paragraph, the term ‘oil related qualified 
production activities income’ means for any tax-
able year the qualified production activities in-
come which is attributable to the production, 
refining, processing, transportation, or distribu-
tion of oil, gas, or any primary product thereof 
during such taxable year. 
‘‘(C) PRIMARY PRODUCT.—For purposes of 
this paragraph, the term ‘primary product’ has 
the same meaning as when used in section 
927(a)(2)(C), as in effect before its repeal.’’. 
(b) CONFORMING AMENDMENT.—Section 199(d)(2) 
(relating to application to individuals) is amended by 
striking ‘‘subsection (a)(1)(B)’’ and inserting ‘‘subsections 
(a)(1)(B) and (d)(9)(A)(iii)’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2008.
116 
SEC. 402. ELIMINATION OF THE DIFFERENT TREATMENT 
OF FOREIGN OIL AND GAS EXTRACTION IN-
COME AND FOREIGN OIL RELATED INCOME 
FOR PURPOSES OF THE FOREIGN TAX CRED-
IT. 
(a) IN GENERAL.—Subsections (a) and (b) of section 
907 (relating to special rules in case of foreign oil and 
gas income) are amended to read as follows: 
‘‘(a) REDUCTION IN AMOUNT ALLOWED AS FOREIGN 
TAX UNDER SECTION 901.—In applying section 901, the 
amount of any foreign oil and gas taxes paid or accrued 
(or deemed to have been paid) during the taxable year 
which would (but for this subsection) be taken into ac-
count for purposes of section 901 shall be reduced by the 
amount (if any) by which the amount of such taxes ex-
ceeds the product of— 
‘‘(1) the amount of the combined foreign oil 
and gas income for the taxable year, 
‘‘(2) multiplied by— 
‘‘(A) in the case of a corporation, the per-
centage which is equal to the highest rate of tax 
specified under section 11(b), or 
‘‘(B) in the case of an individual, a frac-
tion the numerator of which is the tax against 
which the credit under section 901(a) is taken
117 
and the denominator of which is the taxpayer’s 
entire taxable income. 
‘‘(b) COMBINED FOREIGN OIL AND GAS INCOME; 
FOREIGN OIL AND GAS TAXES.—For purposes of this sec-
tion— 
‘‘(1) COMBINED
FOREIGN
OIL
AND
GAS
IN-
COME.—The term ‘combined foreign oil and gas in-
come’ means, with respect to any taxable year, the 
sum of— 
‘‘(A) foreign oil and gas extraction income, 
and 
‘‘(B) foreign oil related income. 
‘‘(2) FOREIGN OIL AND GAS TAXES.—The term 
‘foreign oil and gas taxes’ means, with respect to 
any taxable year, the sum of— 
‘‘(A) oil and gas extraction taxes, and 
‘‘(B) any income, war profits, and excess 
profits taxes paid or accrued (or deemed to 
have been paid or accrued under section 902 or 
960) during the taxable year with respect to 
foreign oil related income (determined without 
regard to subsection (c)(4)) or loss which would 
be taken into account for purposes of section 
901 without regard to this section.’’.
118 
(b) RECAPTURE
OF
FOREIGN
OIL
AND
GAS 
LOSSES.—Paragraph (4) of section 907(c) (relating to re-
capture of foreign oil and gas extraction losses by re-
characterizing later extraction income) is amended to read 
as follows: 
‘‘(4) RECAPTURE
OF
FOREIGN
OIL
AND
GAS 
LOSSES
BY
RECHARACTERIZING
LATER
COMBINED 
FOREIGN OIL AND GAS INCOME.— 
‘‘(A) IN GENERAL.—The combined foreign 
oil and gas income of a taxpayer for a taxable 
year (determined without regard to this para-
graph) shall be reduced— 
‘‘(i) first by the amount determined 
under subparagraph (B), and 
‘‘(ii) then by the amount determined 
under subparagraph (C). 
The aggregate amount of such reductions shall 
be treated as income (from sources without the 
United States) which is not combined foreign 
oil and gas income. 
‘‘(B) REDUCTION FOR PRE-2009 FOREIGN 
OIL
EXTRACTION
LOSSES.—The 
reduction 
under this paragraph shall be equal to the less-
er of—
119 
‘‘(i) the foreign oil and gas extraction 
income of the taxpayer for the taxable year 
(determined without regard to this para-
graph), or 
‘‘(ii) the excess of— 
‘‘(I) the aggregate amount of for-
eign oil extraction losses for preceding 
taxable years beginning after Decem-
ber 31, 1982, and before January 1, 
2009, over 
‘‘(II) so much of such aggregate 
amount as was recharacterized under 
this paragraph (as in effect before 
and after the date of the enactment of 
the Renewable Energy and Job Cre-
ation Tax Act of 2008) for preceding 
taxable years beginning after Decem-
ber 31, 1982. 
‘‘(C) REDUCTION FOR POST-2008 FOREIGN 
OIL
AND
GAS
LOSSES.—The reduction under 
this paragraph shall be equal to the lesser of— 
‘‘(i) the combined foreign oil and gas 
income of the taxpayer for the taxable year 
(determined without regard to this para-
graph), reduced by an amount equal to the
120 
reduction under subparagraph (A) for the 
taxable year, or 
‘‘(ii) the excess of— 
‘‘(I) the aggregate amount of for-
eign oil and gas losses for preceding 
taxable years beginning after Decem-
ber 31, 2008, over 
‘‘(II) so much of such aggregate 
amount as was recharacterized under 
this paragraph for preceding taxable 
years beginning after December 31, 
2008. 
‘‘(D) FOREIGN
OIL
AND
GAS
LOSS
DE-
FINED.— 
‘‘(i) IN
GENERAL.—For purposes of 
this paragraph, the term ‘foreign oil and 
gas loss’ means the amount by which— 
‘‘(I) the gross income for the tax-
able year from sources without the 
United States and its possessions 
(whether or not the taxpayer chooses 
the benefits of this subpart for such 
taxable year) taken into account in 
determining the combined foreign oil
121 
and gas income for such year, is ex-
ceeded by 
‘‘(II) the sum of the deductions 
properly 
apportioned 
or 
allocated 
thereto. 
‘‘(ii) NET
OPERATING
LOSS
DEDUC-
TION
NOT
TAKEN
INTO
ACCOUNT.—For 
purposes of clause (i), the net operating 
loss deduction allowable for the taxable 
year under section 172(a) shall not be 
taken into account. 
‘‘(iii) EXPROPRIATION AND CASUALTY 
LOSSES NOT TAKEN INTO ACCOUNT.—For 
purposes of clause (i), there shall not be 
taken into account— 
‘‘(I) any foreign expropriation 
loss (as defined in section 172(h) (as 
in effect on the day before the date of 
the enactment of the Revenue Rec-
onciliation Act of 1990)) for the tax-
able year, or 
‘‘(II) any loss for the taxable 
year which arises from fire, storm, 
shipwreck, or other casualty, or from 
theft,
122 
to the extent such loss is not compensated 
for by insurance or otherwise. 
‘‘(iv) 
FOREIGN
OIL
EXTRACTION 
LOSS.—For 
purposes 
of 
subparagraph 
(B)(ii)(I), foreign oil extraction losses shall 
be determined under this paragraph as in 
effect on the day before the date of the en-
actment of the Renewable Energy and Job 
Creation Tax Act of 2008.’’. 
(c) CARRYBACK AND CARRYOVER OF DISALLOWED 
CREDITS.—Section 907(f) (relating to carryback and car-
ryover of disallowed credits) is amended— 
(1) by striking ‘‘oil and gas extraction taxes’’ 
each place it appears and inserting ‘‘foreign oil and 
gas taxes’’, and 
(2) by adding at the end the following new 
paragraph: 
‘‘(4) TRANSITION
RULES
FOR
PRE-2009
AND 
2009 DISALLOWED CREDITS.— 
‘‘(A) PRE-2009 CREDITS.—In the case of 
any unused credit year beginning before Janu-
ary 1, 2009, this subsection shall be applied to 
any unused oil and gas extraction taxes carried 
from such unused credit year to a year begin-
ning after December 31, 2008—
123 
‘‘(i) by substituting ‘oil and gas ex-
traction taxes’ for ‘foreign oil and gas 
taxes’ each place it appears in paragraphs 
(1), (2), and (3), and 
‘‘(ii) by computing, for purposes of 
paragraph (2)(A), the limitation under 
subparagraph (A) for the year to which 
such taxes are carried by substituting ‘for-
eign oil and gas extraction income’ for ‘for-
eign oil and gas income’ in subsection (a). 
‘‘(B) 2009 CREDITS.—In the case of any 
unused credit year beginning in 2009, the 
amendments made to this subsection by the Re-
newable Energy and Job Creation Tax Act of 
2008 shall be treated as being in effect for any 
preceding year beginning before January 1, 
2009, solely for purposes of determining how 
much of the unused foreign oil and gas taxes 
for such unused credit year may be deemed 
paid or accrued in such preceding year.’’. 
(d) CONFORMING AMENDMENT.—Section 6501(i) is 
amended by striking ‘‘oil and gas extraction taxes’’ and 
inserting ‘‘foreign oil and gas taxes’’.
124 
(e) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2008. 
SEC. 403. BROKER REPORTING OF CUSTOMER’S BASIS IN 
SECURITIES TRANSACTIONS. 
(a) IN GENERAL.— 
(1) BROKER
REPORTING
FOR
SECURITIES 
TRANSACTIONS.—Section 6045 is amended by add-
ing at the end the following new subsection: 
‘‘(g) ADDITIONAL INFORMATION REQUIRED IN THE 
CASE OF SECURITIES TRANSACTIONS, ETC.— 
‘‘(1) IN GENERAL.—If a broker is otherwise re-
quired to make a return under subsection (a) with 
respect to the gross proceeds of the sale of a covered 
security, the broker shall include in such return the 
information described in paragraph (2). 
‘‘(2) ADDITIONAL INFORMATION REQUIRED.— 
‘‘(A) IN GENERAL.—The information re-
quired under paragraph (1) to be shown on a 
return with respect to a covered security of a 
customer shall include the customer’s adjusted 
basis in such security and whether any gain or 
loss with respect to such security is long-term 
or short-term (within the meaning of section 
1222).
125 
‘‘(B) 
DETERMINATION
OF
ADJUSTED 
BASIS.—For purposes of subparagraph (A)— 
‘‘(i) IN
GENERAL.—The customer’s 
adjusted basis shall be determined— 
‘‘(I) in the case of any security 
(other than any stock for which an av-
erage basis method is permissible 
under section 1012), in accordance 
with the first-in first-out method un-
less the customer notifies the broker 
by means of making an adequate 
identification of the stock sold or 
transferred, and 
‘‘(II) in the case of any stock for 
which an average basis method is per-
missible under section 1012, in ac-
cordance with the broker’s default 
method unless the customer notifies 
the broker that he elects another ac-
ceptable method under section 1012 
with respect to the account in which 
such stock is held. 
‘‘(ii) EXCEPTION FOR WASH SALES.— 
Except as otherwise provided by the Sec-
retary, the customer’s adjusted basis shall
126 
be determined without regard to section 
1091 (relating to loss from wash sales of 
stock or securities) unless the transactions 
occur in the same account with respect to 
identical securities. 
‘‘(3) COVERED
SECURITY.—For purposes of 
this subsection— 
‘‘(A) IN GENERAL.—The term ‘covered se-
curity’ means any specified security acquired on 
or after the applicable date if such security— 
‘‘(i) was acquired through a trans-
action in the account in which such secu-
rity is held, or 
‘‘(ii) was transferred to such account 
from an account in which such security 
was a covered security, but only if the 
broker received a statement under section 
6045A with respect to the transfer. 
‘‘(B) SPECIFIED
SECURITY.—The term 
‘specified security’ means— 
‘‘(i) any share of stock in a corpora-
tion, 
‘‘(ii) any note, bond, debenture, or 
other evidence of indebtedness,
127 
‘‘(iii) any commodity, or contract or 
derivative with respect to such commodity, 
if the Secretary determines that adjusted 
basis reporting is appropriate for purposes 
of this subsection, and 
‘‘(iv) any other financial instrument 
with respect to which the Secretary deter-
mines that adjusted basis reporting is ap-
propriate for purposes of this subsection. 
‘‘(C) APPLICABLE DATE.—The term ‘appli-
cable date’ means— 
‘‘(i) January 1, 2011, in the case of 
any specified security which is stock in a 
corporation (other than any stock de-
scribed in clause (ii)), 
‘‘(ii) January 1, 2012, in the case of 
any stock for which an average basis meth-
od is permissible under section 1012, and 
‘‘(iii) January 1, 2013, or such later 
date determined by the Secretary in the 
case of any other specified security. 
‘‘(4) TREATMENT OF S CORPORATIONS.—In the 
case of the sale of a covered security acquired by an 
S corporation (other than a financial institution) 
after December 31, 2011, such S corporation shall
128 
be treated in the same manner as a partnership for 
purposes of this section. 
‘‘(5) SPECIAL RULES FOR SHORT SALES.—In 
the case of a short sale, reporting under this section 
shall be made for the year in which such sale is 
closed.’’. 
(2) BROKER INFORMATION REQUIRED WITH RE-
SPECT TO OPTIONS.—Section 6045, as amended by 
subsection (a), is amended by adding at the end the 
following new subsection: 
‘‘(h) APPLICATION TO OPTIONS ON SECURITIES.— 
‘‘(1) EXERCISE OF OPTION.—For purposes of 
this section, if a covered security is acquired or dis-
posed of pursuant to the exercise of an option that 
was granted or acquired in the same account as the 
covered security, the amount received with respect to 
the grant or paid with respect to the acquisition of 
such option shall be treated as an adjustment to 
gross proceeds or as an adjustment to basis, as the 
case may be. 
‘‘(2) LAPSE OR CLOSING TRANSACTION.—In the 
case of the lapse (or closing transaction (as defined 
in section 1234(b)(2)(A))) of an option on a speci-
fied security or the exercise of a cash-settled option 
on a specified security, reporting under subsections
129 
(a) and (g) with respect to such option shall be 
made for the calendar year which includes the date 
of such lapse, closing transaction, or exercise. 
‘‘(3) PROSPECTIVE APPLICATION.—Paragraphs 
(1) and (2) shall not apply to any option which is 
granted or acquired before January 1, 2013. 
‘‘(4) DEFINITIONS.—For purposes of this sub-
section, the terms ‘covered security’ and ‘specified 
security’ shall have the meanings given such terms 
in subsection (g)(3).’’. 
(3) EXTENSION OF PERIOD FOR STATEMENTS 
SENT TO CUSTOMERS.— 
(A) IN GENERAL.—Subsection (b) of sec-
tion 6045 is amended by striking ‘‘January 31’’ 
and inserting ‘‘February 15’’. 
(B) STATEMENTS
RELATED
TO
SUB-
STITUTE PAYMENTS.—Subsection (d) of section 
6045 is amended— 
(i) by striking ‘‘at such time and’’, 
and 
(ii) by inserting after ‘‘other item.’’ 
the following new sentence: ‘‘The written 
statement required under the preceding 
sentence shall be furnished on or before 
February 15 of the year following the cal-
130 
endar year in which the payment was 
made.’’. 
(C) OTHER STATEMENTS.—Subsection (b) 
of section 6045 is amended by adding at the 
end the following: ‘‘In the case of a consolidated 
reporting statement (as defined in regulations) 
with respect to any customer, any statement 
which would otherwise be required to be fur-
nished on or before January 31 of a calendar 
year with respect to any item reportable to the 
taxpayer shall instead be required to be fur-
nished on or before February 15 of such cal-
endar year if furnished with such consolidated 
reporting statement.’’. 
(b) DETERMINATION OF BASIS OF CERTAIN SECURI-
TIES
ON ACCOUNT
BY ACCOUNT
OR AVERAGE BASIS 
METHOD.—Section 1012 is amended— 
(1) by striking ‘‘The basis of property’’ and in-
serting the following: 
‘‘(a) IN GENERAL.—The basis of property’’, 
(2) by striking ‘‘The cost of real property’’ and 
inserting the following: 
‘‘(b) SPECIAL RULE FOR APPORTIONED REAL ES-
TATE TAXES.—The cost of real property’’, and
131 
(3) by adding at the end the following new sub-
sections: 
‘‘(c) DETERMINATIONS BY ACCOUNT.— 
‘‘(1) IN GENERAL.—In the case of the sale, ex-
change, or other disposition of a specified security 
on or after the applicable date, the conventions pre-
scribed by regulations under this section shall be ap-
plied on an account by account basis. 
‘‘(2) APPLICATION TO CERTAIN REGULATED IN-
VESTMENT COMPANIES.— 
‘‘(A) IN GENERAL.—Except as provided in 
subparagraph (B), any stock for which an aver-
age basis method is permissible under section 
1012 which is acquired before January 1, 2012, 
shall be treated as a separate account from any 
such stock acquired on or after such date. 
‘‘(B) ELECTION FOR TREATMENT AS SIN-
GLE ACCOUNT.—If a regulated investment com-
pany elects to have this subparagraph apply 
with respect to one or more of its stock-
holders— 
‘‘(i) subparagraph (A) shall not apply 
with respect to any stock in such company 
held by such stockholders, and
132 
‘‘(ii) all stock in such company which 
is held by such stockholders shall be treat-
ed as covered securities described in sec-
tion 6045(g)(3) without regard to the date 
of the acquisition of such stock. 
A rule similar to the rule of the preceding sen-
tence shall apply with respect to a broker hold-
ing such stock as a nominee. 
‘‘(3) DEFINITIONS.—For purposes of this sec-
tion, the terms ‘specified security’ and ‘applicable 
date’ shall have the meaning given such terms in 
section 6045(g). 
‘‘(d) AVERAGE BASIS FOR STOCK ACQUIRED PURSU-
ANT TO A PERIODIC STOCK INVESTMENT PLAN.— 
‘‘(1) IN GENERAL.—In the case of any stock ac-
quired after December 31, 2010, in connection with 
a periodic stock investment plan, the basis of such 
stock while held as part of such plan shall be deter-
mined using one of the methods which may be used 
for determining the basis of stock in a regulated in-
vestment company. 
‘‘(2) TREATMENT
AFTER
TRANSFER.—In the 
case of the transfer to another account of stock to 
which paragraph (1) applies, such stock shall have 
a cost basis in such other account equal to its basis
133 
in the periodic stock investment plan immediately 
before such transfer (properly adjusted for any fees 
or other charges taken into account in connection 
with such transfer). 
‘‘(3) SEPARATE
ACCOUNTS; 
ELECTION
FOR 
TREATMENT AS SINGLE ACCOUNT.—Rules similar to 
the rules of subsection (c)(2) shall apply for pur-
poses of this subsection. 
‘‘(4) PERIODIC
STOCK
INVESTMENT
PLAN.— 
For purposes of this subsection— 
‘‘(A) IN
GENERAL.—The term ‘periodic 
stock investment plan’ means— 
‘‘(i) any stock purchase plan, and 
‘‘(ii) any dividend reinvestment plan. 
‘‘(B) STOCK PURCHASE PLAN.—The term 
‘stock purchase plan’ means any arrangement 
under which identical stock is periodically pur-
chased pursuant to a written plan. 
‘‘(C) DIVIDEND REINVESTMENT PLAN.— 
‘‘(i) IN
GENERAL.—The term ‘divi-
dend reinvestment plan’ means any ar-
rangement under which dividends on any 
stock are reinvested in stock identical to 
the stock with respect to which the divi-
dends are paid.
134 
‘‘(ii) INITIAL
STOCK
ACQUISITION 
TREATED
AS
ACQUIRED
IN
CONNECTION 
WITH PLAN.—Stock shall be treated as ac-
quired in connection with a dividend rein-
vestment plan if such stock is acquired 
pursuant to such plan or if the dividends 
paid on such stock are subject to such 
plan.’’. 
(c) INFORMATION BY TRANSFERORS TO AID BRO-
KERS.— 
(1) IN GENERAL.—Subpart B of part III of 
subchapter A of chapter 61 is amended by inserting 
after section 6045 the following new section: 
‘‘SEC. 6045A. INFORMATION REQUIRED IN CONNECTION 
WITH TRANSFERS OF COVERED SECURITIES 
TO BROKERS. 
‘‘(a) FURNISHING OF INFORMATION.—Every applica-
ble person which transfers to a broker (as defined in sec-
tion 6045(c)(1)) a security which is a covered security (as 
defined in section 6045(g)(3)) in the hands of such appli-
cable person shall furnish to such broker a written state-
ment in such manner and setting forth such information 
as the Secretary may by regulations prescribe for purposes 
of enabling such broker to meet the requirements of sec-
tion 6045(g).
135 
‘‘(b) APPLICABLE PERSON.—For purposes of sub-
section (a), the term ‘applicable person’ means— 
‘‘(1) any broker (as defined in section 
6045(c)(1)), and 
‘‘(2) any other person as provided by the Sec-
retary in regulations. 
‘‘(c) TIME FOR FURNISHING STATEMENT.—Except 
as otherwise provided by the Secretary, any statement re-
quired by subsection (a) shall be furnished not later than 
15 days after the date of the transfer described in such 
subsection.’’. 
(2) ASSESSABLE
PENALTIES.—Paragraph (2) 
of section 6724(d) is amended by redesignating sub-
paragraphs (I) through (DD) as subparagraphs (J) 
through (EE), respectively, and by inserting after 
subparagraph (H) the following new subparagraph: 
‘‘(I) section 6045A (relating to information 
required in connection with transfers of covered 
securities to brokers),’’. 
(3) CLERICAL AMENDMENT.—The table of sec-
tions for subpart B of part III of subchapter A of 
chapter 61 is amended by inserting after the item 
relating to section 6045 the following new item: 
‘‘Sec. 6045A. Information required in connection with transfers of covered se-
curities to brokers.’’.
136 
(d) ADDITIONAL ISSUER INFORMATION TO AID BRO-
KERS.— 
(1) IN GENERAL.—Subpart B of part III of 
subchapter A of chapter 61, as amended by sub-
section (b), is amended by inserting after section 
6045A the following new section: 
‘‘SEC. 6045B. RETURNS RELATING TO ACTIONS AFFECTING 
BASIS OF SPECIFIED SECURITIES. 
‘‘(a) IN GENERAL.—According to the forms or regu-
lations prescribed by the Secretary, any issuer of a speci-
fied security shall make a return setting forth— 
‘‘(1) a description of any organizational action 
which affects the basis of such specified security of 
such issuer, 
‘‘(2) the quantitative effect on the basis of such 
specified security resulting from such action, and 
‘‘(3) such other information as the Secretary 
may prescribe. 
‘‘(b) TIME FOR FILING RETURN.—Any return re-
quired by subsection (a) shall be filed not later than the 
earlier of— 
‘‘(1) 45 days after the date of the action de-
scribed in subsection (a), or 
‘‘(2) January 15 of the year following the cal-
endar year during which such action occurred.
137 
‘‘(c) STATEMENTS TO BE FURNISHED TO HOLDERS 
OF SPECIFIED SECURITIES OR THEIR NOMINEES.—Ac-
cording to the forms or regulations prescribed by the Sec-
retary, every person required to make a return under sub-
section (a) with respect to a specified security shall furnish 
to the nominee with respect to the specified security (or 
certificate holder if there is no nominee) a written state-
ment showing— 
‘‘(1) the name, address, and phone number of 
the information contact of the person required to 
make such return, 
‘‘(2) the information required to be shown on 
such return with respect to such security, and 
‘‘(3) such other information as the Secretary 
may prescribe. 
The written statement required under the preceding sen-
tence shall be furnished to the holder on or before January 
15 of the year following the calendar year during which 
the action described in subsection (a) occurred. 
‘‘(d) SPECIFIED SECURITY.—For purposes of this 
section, the term ‘specified security’ has the meaning given 
such term by section 6045(g)(3)(B). No return shall be 
required under this section with respect to actions de-
scribed in subsection (a) with respect to a specified secu-
138 
rity which occur before the applicable date (as defined in 
section 6045(g)(3)(C)) with respect to such security. 
‘‘(e) PUBLIC REPORTING IN LIEU OF RETURN.—The 
Secretary may waive the requirements under subsections 
(a) and (c) with respect to a specified security, if the per-
son required to make the return under subsection (a) 
makes publicly available, in such form and manner as the 
Secretary determines necessary to carry out the purposes 
of this section— 
‘‘(1) the name, address, phone number, and 
email address of the information contact of such 
person, and 
‘‘(2) the information described in paragraphs 
(1), (2), and (3) of subsection (a).’’. 
(2) ASSESSABLE PENALTIES.— 
(A) 
Subparagraph 
(B) 
of 
section 
6724(d)(1) is amended by redesignating clause 
(iv) and each of the clauses which follow as 
clauses (v) through (xxiii), respectively, and by 
inserting after clause (iii) the following new 
clause: 
‘‘(iv) section 6045B(a) (relating to re-
turns relating to actions affecting basis of 
specified securities),’’.
139 
(B) Paragraph (2) of section 6724(d), as 
amended by subsection (c)(2), is amended by 
redesignating subparagraphs (J) through (EE) 
as subparagraphs (K) through (FF), respec-
tively, and by inserting after subparagraph (I) 
the following new subparagraph: 
‘‘(J) subsections (c) and (e) of section 
6045B (relating to returns relating to actions 
affecting basis of specified securities),’’. 
(3) CLERICAL AMENDMENT.—The table of sec-
tions for subpart B of part III of subchapter A of 
chapter 61, as amended by subsection (b)(3), is 
amended by inserting after the item relating to sec-
tion 6045A the following new item: 
‘‘Sec. 6045B. Returns relating to actions affecting basis of specified securi-
ties.’’. 
(e) EFFECTIVE DATE.— 
(1) IN
GENERAL.—Except as otherwise pro-
vided in this subsection, the amendments made by 
this section shall take effect on January 1, 2011. 
(2) EXTENSION OF PERIOD FOR STATEMENTS 
SENT TO CUSTOMERS.—The amendments made by 
subsection (a)(3) shall apply to statements required 
to be furnished after December 31, 2008.
140 
SEC. 404. 0.2 PERCENT FUTA SURTAX. 
(a) IN GENERAL.—Section 3301 (relating to rate of 
tax) is amended— 
(1) by striking ‘‘through 2008’’ in paragraph 
(1) and inserting ‘‘through 2009’’, and 
(2) by striking ‘‘calendar year 2009’’ in para-
graph (2) and inserting ‘‘calendar year 2010’’. 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to wages paid after December 31, 
2008. 
SEC. 405. INCREASE AND EXTENSION OF OIL SPILL LIABIL-
ITY TRUST FUND TAX. 
(a) INCREASE IN RATE.— 
(1) IN GENERAL.—Section 4611(c)(2)(B) (re-
lating to rates) is amended by striking ‘‘is 5 cents 
a barrel.’’ and inserting ‘‘is— 
‘‘(i) in the case of crude oil received 
or petroleum products entered before Jan-
uary 1, 2017, 8 cents a barrel, and 
‘‘(ii) in the case of crude oil received 
or petroleum products entered after De-
cember 31, 2016, 9 cents a barrel.’’. 
(2) EFFECTIVE DATE.—The amendment made 
by this subsection shall apply on and after the first 
day of the first calendar quarter beginning more
141 
than 60 days after the date of the enactment of this 
Act. 
(b) EXTENSION.— 
(1) IN GENERAL.—Section 4611(f) (relating to 
application of Oil Spill Liability Trust Fund financ-
ing rate) is amended by striking paragraphs (2) and 
(3) and inserting the following new paragraph: 
‘‘(2) TERMINATION.—The Oil Spill Liability 
Trust Fund financing rate shall not apply after De-
cember 31, 2017.’’. 
(2) 
CONFORMING
AMENDMENT.—Section 
4611(f)(1) is amended by striking ‘‘paragraphs (2) 
and (3)’’ and inserting ‘‘paragraph (2)’’. 
(3) EFFECTIVE DATE.—The amendments made 
by this subsection shall take effect on the date of the 
enactment of this Act. 
SEC. 
406. 
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 of a service 
provider which is deferred under a nonqualified deferred
142 
compensation plan of a nonqualified entity shall be includ-
ible 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— 
‘‘(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, directly or indirectly, allocated to— 
‘‘(A) United States persons (other than 
persons exempt from tax under this title), 
‘‘(B) foreign persons with respect to whom 
such income is subject to a comprehensive for-
eign income tax, 
‘‘(C) foreign persons with respect to 
whom— 
‘‘(i) such income is effectively con-
nected with the conduct of a trade or busi-
ness within the United States, and
143 
‘‘(ii) a withholding tax is paid under 
section 1446 with respect to such income, 
or 
‘‘(D) organizations which are exempt from 
tax under this title if such income is unrelated 
business taxable income (as defined in section 
512) with respect to such organization. 
‘‘(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— 
‘‘(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-
144 
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. 
‘‘(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 of a service pro-
vider is determined solely by reference to 
the amount of gain recognized on the dis-
145 
position of an investment asset, such com-
pensation shall be treated as subject to a 
substantial risk of forfeiture 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 
‘‘(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.
146 
‘‘(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 
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
147 
of such compensation is no longer subject to a 
substantial risk of forfeiture. 
‘‘(4) SERVICE
PROVIDER.—The term ‘service 
provider’ has the meaning given such term in the 
regulations under section 409A, determined without 
regard to method of accounting. 
‘‘(5) EXCEPTION FOR CERTAIN COMPENSATION 
WITH
RESPECT
TO
EFFECTIVELY
CONNECTED
IN-
COME.—In the case of a foreign corporation with in-
come which is taxable under section 882, this section 
shall not apply to compensation payable by such for-
eign corporation which, had such compensation been 
paid in cash on the date that such compensation 
ceased to be subject to a substantial risk of for-
feiture, would have been deductible by such foreign 
corporation against such income. 
‘‘(6) EXCEPTION WITH RESPECT TO EMPLOY-
EES OF CERTAIN SUBSIDIARIES.—This section shall 
not apply to compensation deferred under a non-
qualified deferred compensation plan of a non-
qualified entity if— 
‘‘(A) such compensation is payable to an 
employee of a domestic subsidiary of such enti-
ty, and
148 
‘‘(B) such compensation is reasonably ex-
pected to be deductible by such subsidiary 
under section 404(a)(5) when such compensa-
tion is includible in income by such employee. 
‘‘(7) 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-
tions— 
‘‘(1) disregarding a substantial risk of for-
feiture in cases where necessary to carry out the 
purposes of this section, and 
‘‘(2) providing appropriate treatment where an 
individual who was employed by an employer which 
is not a nonqualified entity is temporarily employed 
by a nonqualified entity which is related to such em-
ployer.’’. 
(b) CONFORMING AMENDMENT.—Section 26(b)(2) is 
amended by striking ‘‘and’’ at the end of subparagraph 
(V), by striking the period at the end of subparagraph 
(W) and inserting ‘‘, and’’, and by adding at the end the 
following new subparagraph:
149 
‘‘(X) section 457A(c)(1)(B) (relating to de-
terminability 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 
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
150 
(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) 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-
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. 
(4) 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
151 
distribution under such arrangement to the date 
amounts are required to be included in the income 
of such taxpayer under this subsection. 
(5) 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. 
(6) CERTAIN PREEXISTING ARRANGEMENTS.— 
If, pursuant to a written binding contract entered 
into on or before December 31, 2007, any portion of 
compensation payable under such contract for a pe-
riod is determined as a portion of the amount of 
gain recognized on the disposition during such pe-
riod of a specified asset, the amendments made by 
this section shall not apply to the portion of com-
pensation attributable to such disposition notwith-
standing the fact that such portion of compensation 
may be reduced by realized losses or depreciation in 
the value of other assets during such period or a 
prior period or be attributable in part to services 
performed after December 31, 2008, but only if—
152 
(A) payment of such portion of compensa-
tion is received by the service provider and in-
cluded in its gross income no later than the ear-
lier of— 
(i) 12 months after the end of the 
taxable year of the service recipient during 
which the disposition of the specified asset 
occurs, or 
(ii) the last taxable year of the service 
provider beginning before January 1, 
2018; and 
(B) the specified asset is held by the serv-
ice recipient on the date of the enactment of 
this section. 
SEC. 407. 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, 
2010’’ and inserting ‘‘December 31, 2016’’. 
(b) TRANSITION.—Paragraph (7) of section 864(f) is 
amended by striking ‘‘30 percent’’ and inserting ‘‘55 per-
cent’’. 
(c) COORDINATION WITH OTHER LEGISLATION.—If 
H.R. 6983 of the 110th Congress is enacted into law—
153 
(1) such law shall be treated, solely for pur-
poses of carrying out the amendments made by this 
section, as having been enacted immediately before 
the enactment of this Act, and 
(2) in lieu of the amendments made by sub-
sections (a) and (b): 
(A) Paragraphs (5)(D) and (6) of section 
864(f), as amended by such law, are each 
amended by striking ‘‘December 31, 2012’’ and 
inserting ‘‘December 31, 2018’’. 
(B) Subsection (f) of section 864, as 
amended by such law, is amended by striking 
paragraph (7). 
SEC. 408. TIME FOR PAYMENT OF CORPORATE ESTIMATED 
TAXES. 
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 58 percentage points. 
Passed the House of Representatives September 26, 
2008. 
Attest: 
Clerk.
110TH CONGRESS 
2D SESSION 
H. R. 7060 
AN ACT 
To amend the Internal Revenue Code of 1986 to 
provide incentives for energy production and con-
servation, to extend certain expiring provisions, 
to provide individual income tax relief, and for 
other purposes.