I 
108TH CONGRESS 
2D SESSION 
H. R. 5319
To provide incentives for investment in renewable energy facilities. 
IN THE HOUSE OF REPRESENTATIVES 
OCTOBER 8, 2004
Ms. HERSETH introduced the following bill; which was referred to the 
Committee on Ways and Means 
A BILL 
To provide incentives for investment in renewable energy 
facilities.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Renewable Energy Fi-
nancing Incentive Act of 2004’’. 
SEC. 2. NONRECOGNITION OF GAIN FROM SALE OF REAL 
PROPERTY UPON SUBSEQUENT PURCHASE 
OF RENEWABLE ENERGY PROPERTY. 
(a) IN GENERAL.—Part III of subchapter O of chap-
ter 1 of the Internal Revenue Code of 1986 (relating to
common nontaxable exchanges) is amended by adding at 
the end the following new section: 
‘‘SEC. 1046. NONRECOGNITION OF GAIN FROM SALE OF 
REAL PROPERTY UPON SUBSEQUENT PUR-
CHASE OF RENEWABLE ENERGY PROPERTY. 
‘‘(a) GENERAL RULE.—If—
‘‘(1) the taxpayer elects in such form as the 
Secretary may prescribe the application of this sec-
tion with respect to any sale of real property located 
in the United States, 
‘‘(2) such sale gives rise to gain, and 
‘‘(3) the seller of such property acquires renew-
able energy property within the replacement period, 
then, except as provided in subsections (b) and (e), no gain 
shall result to the taxpayer from the sale of such property. 
‘‘(b) AMOUNT OF GAIN RESULTING.—
‘‘(1) IN GENERAL.—In the case of an acquisi-
tion of renewable energy property to which sub-
section (a) applies, gain shall result from such acqui-
sition to the extent that the price for which such 
real property is sold exceeds the cost of the renew-
able energy property acquired. 
‘‘(2) GAIN RECOGNIZED.—Except as provided 
in this section, the gain determined under paragraph
(1) shall be recognized, notwithstanding any other 
provision of this subtitle. 
‘‘(c) DEFINITIONS AND SPECIAL RULES.—For pur-
poses of this section—
‘‘(1) RENEWABLE
ENERGY
PROPERTY.—The 
term ‘renewable energy property’ means a facility lo-
cated in the United States which uses renewable en-
ergy sources as a primary feedstock for the genera-
tion of electricity or the manufacture of motor vehi-
cle fuels. 
‘‘(2) SPECIAL RULE RELATING TO STOCK AND 
INTERESTS IN PARTNERSHIPS.—
‘‘(A) PARTNERSHIP INTEREST.—An inter-
est in a partnership shall be treated as an inter-
est in each of the assets of the partnership and 
not as an interest in the partnership. 
‘‘(B) STOCK IN CORPORATION.—Stock in a 
corporation the principal business of which is 
owning or operating renewable energy property 
shall be treated as such property. 
‘‘(C) COOPERATIVES.—Rules similar to the 
rules of subparagraph (A) or (B), as appro-
priate, shall apply in the case of an organiza-
tion which is subject to section 521 or to which 
part I of subchapter T applies.
‘‘(3) REPLACEMENT
PERIOD.—The term ‘re-
placement period’ means the 2-year period beginning 
on the date of the sale of real property with respect 
to which there is in effect an election under sub-
section (a). 
‘‘(4) REQUIREMENT THAT PROPERTY BE IDEN-
TIFIED.—For purposes of this section, any property 
received by the taxpayer shall be treated as property 
which is not like-kind property if such property is 
not identified as property to be received in the ex-
change on or before the day which is 180 days after 
the date on which the taxpayer transfers the prop-
erty relinquished in the exchange. 
‘‘(d) BASIS OF RENEWABLE ENERGY PROPERTY.—
The basis shall be the same as that of the property ex-
changed, decreased in the amount of any money received 
by the taxpayer and increased in the amount of gain or 
decreased in the amount of loss to the taxpayer that was 
recognized on such exchange. 
‘‘(e) RECAPTURE.—
‘‘(1) IN GENERAL.—If a taxpayer disposes of 
any renewable energy property, then, notwith-
standing any other provision of this title, gain (if 
any) shall be recognized to the extent of the gain 
which was not recognized under subsection (a) by
reason of the acquisition by such taxpayer of such 
renewable energy property. 
‘‘(2) CERTAIN DISPOSITIONS NOT TAKEN INTO 
ACCOUNT.—For purposes of paragraph (1), there 
shall not be taken into account any disposition—
‘‘(A) after the death of the taxpayer, 
‘‘(B) in a compulsory or involuntary con-
version (within the meaning of section 1033) if 
the exchange occurred before the threat or im-
minence of such conversion, or 
‘‘(C) with respect to which it is established 
to the satisfaction of the Secretary that such 
disposition had as one of its principal purposes 
the avoidance of Federal income tax. 
‘‘(f) STATUTE OF LIMITATIONS.—If any gain is real-
ized by the taxpayer on the sale or exchange of any renew-
able energy property and there is in effect an election 
under subsection (a) with respect to such gain, then—
‘‘(1) the statutory period for the assessment of 
any deficiency with respect to such gain shall not ex-
pire before the expiration of 3 years from the date 
the Secretary is notified by the taxpayer (in such 
manner as the Secretary may by regulations pre-
scribe) of—
‘‘(A) the taxpayer’s cost of purchasing re-
newable energy property which the taxpayer 
claims results in nonrecognition of any part of 
such gain, 
‘‘(B) the taxpayer’s intention not to pur-
chase renewable energy property within the re-
placement period, or 
‘‘(C) a failure to make such purchase with-
in the replacement period, and 
‘‘(2) such deficiency may be assessed before the 
expiration of such 3-year period notwithstanding the 
provisions of any other law or rule of law which 
would otherwise prevent such assessment.’’. 
(b) CONFORMING AMENDMENT.—Section 1016(a) of 
such Code is amended by striking ‘‘and’’ at the end of 
paragraph (27), by striking the period at the end of para-
graph (28) and inserting ‘‘, and’’, and by adding at the 
end the following new paragraph: 
‘‘(29) in the case of property the acquisition of 
which resulted under section 1046 in the non-
recognition of any part of the gain realized on the 
sale of other property, to the extent provided in sec-
tion 1046.’’.