erty were originally placed in service by such 
persons, and 
‘‘(C) the return required to be made by 
such partnership or S corporation under section 
6031 or 6037 (as the case may be) shall be 
treated as a return of tax for purposes of sub-
section (a). 
For purposes of subparagraph (B), rules similar to 
the rules of section 168(h)(6) (other than subpara-
graph (F) thereof) shall apply. 
‘‘(d) COORDINATION WITH PRODUCTION
AND IN-
VESTMENT CREDITS.—In the case of any property with 
respect to which an election is made under this section— 
‘‘(1) DENIAL
OF
PRODUCTION
AND
INVEST-
MENT
CREDITS.—No credit shall be determined 
under section 40 or 48 with respect to such property 
for the taxable year in which such property is origi-
nally placed in service or any subsequent taxable 
year. 
‘‘(2) REDUCTION OF PAYMENT BY PROGRESS 
EXPENDITURES ALREADY TAKEN INTO ACCOUNT.— 
The amount of the payment treated as made under 
subsection (a) with respect to such property shall be 
reduced by the aggregate amount of credits deter-
mined under section 48 with respect to such prop-
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erty for all taxable years preceding the taxable year 
in which such property is originally placed in service. 
‘‘(e) OTHER DEFINITIONS AND SPECIAL RULES.— 
For purposes of this section— 
‘‘(1) OTHER DEFINITIONS.—Terms used in this 
section which are also used in section 48 shall have 
the same meaning for purposes of this section as 
when used in such section. 
‘‘(2) APPLICATION
OF
RECAPTURE
RULES, 
ETC.—Except as otherwise provided by the Sec-
retary— 
‘‘(A) IN GENERAL.—Except as otherwise 
provided in this paragraph, rules similar to the 
rules of section 50 shall apply. 
‘‘(B) EXCEPTION TO LIMITATION ON REAL 
ESTATE
INVESTMENT
TRUSTS, 
ETC.—Para-
graph (1) of section 50(d) shall not apply. 
‘‘(3) PROVISION OF INFORMATION.—A person 
shall not be treated as having elected the application 
of this section unless the taxpayer provides such in-
formation as the Secretary (in consultation with the 
Secretary of Energy) may require for purposes of 
verifying the proper amount to be treated as a pay-
ment under subsection (a) and evaluating the effec-
tiveness of this section. 
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‘‘(4) EXCLUSION FROM GROSS INCOME.—Any 
credit or refund allowed or made by reason of this 
section shall not be includible in gross income or al-
ternative minimum taxable income.’’. 
(b) CONFORMING AMENDMENTS.— 
(1) Subparagraph (A) of section 6211(b)(4)(A) 
of such Code is amended by inserting ‘‘and sub-
chapter C of chapter 65 (including any payment 
treated as made under such subchapter)’’ after 
‘‘6431’’. 
(2) Subparagraph (B) of section 6425(c)(1) of 
such Code is amended— 
(A) by striking ‘‘the credits’’ and inserting 
‘‘the sum of— 
‘‘(i) the credits’’, 
(B) by striking the period at the end of 
clause (i) thereof (as amended by this para-
graph) and inserting ‘‘, plus’’, and 
(C) by adding at the end the following new 
clause: 
‘‘(ii) the payments treated as made 
under subchapter C of chapter 65.’’. 
(3) Paragraph (4) of section 6654(f) of such 
Code is amended— 
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(A) by striking ‘‘the credits’’ and inserting 
‘‘the sum of— 
‘‘(A) the credits’’, 
(B) by striking the period at the end of 
subparagraph (A) thereof (as amended by this 
paragraph) and inserting ‘‘, and’’, and 
(C) by adding at the end the following new 
subparagraph: 
‘‘(B) the payments treated as made under 
subchapter C of chapter 65.’’. 
(4) Subparagraph (B) of section 6655(g)(1) of 
such Code is amended— 
(A) by striking ‘‘the credits’’ and inserting 
‘‘the sum of— 
‘‘(i) the credits’’, 
(B) by striking the period at the end of 
clause (i) thereof (as amended by this para-
graph) and inserting ‘‘, plus’’, and 
(C) by adding at the end the following new 
clause: 
‘‘(ii) the payments treated as made 
under subchapter C of chapter 65.’’. 
(5) Paragraph (2) of section 1324(b) of title 
31, United States Code, is amended by inserting ‘‘, 
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or from the provisions of subchapter C of chapter 65 
of such Code’’ before the period at the end. 
(6) The table of subchapters for chapter 65 of 
the Internal Revenue Code of 1986 is amended by 
adding at the end the following new item: 
‘‘SUBCHAPTER C. DIRECT PAYMENT PROVISIONS.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to property originally placed in 
service after the date of the enactment of this Act. 
Æ 
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