I 
111TH CONGRESS 
1ST SESSION 
H. R. 272 
To amend the Internal Revenue Code of 1986 to provide incentives to encour-
age investment in the expansion of freight rail infrastructure capacity 
and to enhance modal tax equity. 
IN THE HOUSE OF REPRESENTATIVES 
JANUARY 7, 2009 
Mr. MEEK of Florida (for himself and Mr. CANTOR) introduced the following 
bill; which was referred to the Committee on Ways and Means 
A BILL 
To amend the Internal Revenue Code of 1986 to provide 
incentives to encourage investment in the expansion of 
freight rail infrastructure capacity and to enhance modal 
tax equity. 
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 ‘‘Freight Rail Infra-
structure Capacity Expansion Act of 2009’’. 
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SEC. 2. CREDIT FOR FREIGHT RAIL INFRASTRUCTURE CA-
PACITY EXPANSION PROPERTY. 
(a) IN GENERAL.—Subpart D of part IV of sub-
chapter A of chapter 1 of subtitle A of the Internal Rev-
enue Code of 1986 (relating to business-related credits) 
is amended by adding at the end the following new section: 
‘‘SEC. 45R. FREIGHT RAIL CAPACITY EXPANSION CREDIT. 
‘‘(a) GENERAL RULE.—For purposes of section 38, 
the freight rail capacity expansion credit determined under 
this section for the taxable year is an amount equal to 
25 percent of the cost of the following property placed in 
service during the taxable year: 
‘‘(1) New qualified freight rail infrastructure 
property. 
‘‘(2) Qualified locomotive property. 
‘‘(b) NEW QUALIFIED FREIGHT RAIL INFRASTRUC-
TURE PROPERTY.—For purposes of this section— 
‘‘(1) IN
GENERAL.—The term ‘new qualified 
freight rail infrastructure property’ means qualified 
freight rail infrastructure property— 
‘‘(A) the construction, erection, or eligible 
bridge or tunnel replacement or expansion (pur-
suant to paragraph (2)) of which is completed 
by the taxpayer after the date of enactment of 
this section, or 
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‘‘(B) which is acquired by the taxpayer 
after such date, but only if the original use of 
such property commences with the taxpayer. 
‘‘(2) EXCEPTION
FOR
PROPERTY
REPLACING 
PROPERTY AT EXISTING LOCATION.—The term ‘new 
qualified freight rail infrastructure property’ does 
not include property which is replacing existing 
qualified freight rail infrastructure property if the 
replacement property is located at the site of the ex-
isting property. The preceding sentence shall not 
apply to the replacement or expansion of a bridge or 
tunnel to allow for additional clearance, track, or 
other capacity enhancement where such clearance, 
track, or other capacity enhancement did not pre-
viously exist. 
‘‘(3) QUALIFIED
FREIGHT
RAIL
INFRASTRUC-
TURE PROPERTY.— 
‘‘(A) IN
GENERAL.—The term ‘qualified 
freight rail infrastructure property’ means 
property used in the movement of freight by 
rail— 
‘‘(i) the cost of which is chargeable to 
capital account (determined without regard 
to section 179F), and 
‘‘(ii) which constitutes— 
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‘‘(I) railroad grading or tunnel 
bore (as defined in section 168(e)(4)), 
‘‘(II) tunnels or subways, 
‘‘(III) track, including ties, rails, 
ballast, or other track material, 
‘‘(IV) bridges, trestles, culverts, 
or other elevated or submerged struc-
tures, 
‘‘(V) terminals, yards, roadway 
buildings, fuel stations, or railroad 
wharves or docks, including fixtures 
attached thereto, and equipment used 
exclusively therein, 
‘‘(VI) railroad signal, commu-
nication, or other operating systems, 
including components of such systems 
that must be installed on locomotives 
or other rolling stock, or 
‘‘(VII) intermodal transfer or 
transload facilities or terminals, in-
cluding fixtures attached thereto, and 
equipment used exclusively therein. 
‘‘(B) EXCLUSIONS.—The term ‘qualified 
freight rail infrastructure property’ shall not in-
clude— 
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‘‘(i) land, 
‘‘(ii) rolling stock, including loco-
motives, or 
‘‘(iii) property used predominantly 
outside the United States, 
except that this subparagraph shall not apply to 
any property described in section 168(g)(4). 
‘‘(c) QUALIFIED LOCOMOTIVE PROPERTY.— 
‘‘(1) IN GENERAL.—For purposes of this sec-
tion, the term ‘qualified locomotive property’ means 
a locomotive which— 
‘‘(A) is acquired by the taxpayer after the 
date of enactment of this section, but only if 
the original use of such property commences 
with the taxpayer, 
‘‘(B) is owned by, or leased to, a taxpayer 
which meets the capacity expansion requirement 
of paragraph (2) for the taxable year in which 
the locomotive is placed in service, and 
‘‘(C) meets the Environmental Protection 
Agency’s emission standards for locomotives 
and locomotive engines as in effect on Decem-
ber 31, 2006. 
‘‘(2) CAPACITY EXPANSION REQUIREMENT.—A 
taxpayer meets the requirements of this paragraph 
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with respect to any locomotive only if, on the last 
day of the taxable year in which such locomotive is 
placed in service, the total horsepower of all loco-
motives owned by, or leased to, the taxpayer exceeds 
the total horsepower of all locomotives owned by, or 
leased to, the taxpayer on the last day of the pre-
ceding taxable year. A determination under this 
paragraph shall be made pursuant to such reports as 
the Secretary, in consultation with the Surface 
Transportation Board, may prescribe. 
‘‘(3) SPECIAL RULE FOR THE LEASING OF LO-
COMOTIVES.—In the case of the leasing of loco-
motives, total horsepower under paragraph (2) shall 
be determined with respect to all locomotives owned 
by, or leased to, the lessee. 
‘‘(d) OTHER DEFINITIONS AND SPECIAL RULES.— 
‘‘(1) DEFINITIONS.—For purposes of this sec-
tion— 
‘‘(A) RAILROAD SIGNAL, COMMUNICATION, 
OR
OTHER
OPERATING
SYSTEM.—The term 
‘railroad signal, communication, or other oper-
ating system’ means an appliance, method, de-
vice, or system (including hardware and soft-
ware) which is used to operate a railroad or to 
improve safety or capacity of railroad oper-
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ations, including a signal, an interlocker, an 
automatic train stop, or a train control or cab- 
signal device. 
‘‘(B) 
INTERMODAL
TRANSFER
OR 
TRANSLOAD
FACILITY
OR
TERMINAL.—The 
term ‘intermodal transfer or transload facility 
or terminal’ means a facility or terminal pri-
marily utilized in the transfer of freight be-
tween rail and any other mode of transpor-
tation. 
‘‘(2) COORDINATION WITH OTHER CREDITS.— 
The cost of any property taken into account in de-
termining the credit under this section may not be 
taken into account in determining a credit under any 
other provision of this title. 
‘‘(3) BASIS ADJUSTMENT.—If a credit is deter-
mined under this section with respect to the cost of 
any qualified freight rail infrastructure property or 
qualified locomotive property, the basis of such prop-
erty shall be reduced by the amount of the credit so 
determined. 
‘‘(4) SALE-LEASEBACKS.—If qualified freight 
rail infrastructure property or qualified locomotive 
property is— 
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‘‘(A) originally placed in service by a per-
son after the date of enactment of this section, 
and 
‘‘(B) sold and leased back by such person 
within 3 months after the property is originally 
placed in service (or, in the case of multiple 
units of property subject to the same lease, 
within 3 months after the date the final unit is 
placed in service, so long as the period between 
the time the first unit is placed in service and 
the time the last unit is placed in service does 
not exceed 12 months), 
such property shall be treated as originally placed in 
service not earlier than the date on which such prop-
erty is used under the lease referred to in subpara-
graph (B). 
‘‘(5) RECAPTURE.—The benefit of any credit 
allowable under subsection (a) shall, under regula-
tions prescribed by the Secretary, be recaptured with 
respect to any qualified locomotive property that is 
sold or otherwise disposed of by the taxpayer during 
the 5-year period beginning on the date on which 
such property is originally placed in service. The 
preceding sentence shall not apply to locomotive 
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property that is sold by and subsequently leased 
back to the taxpayer. 
‘‘(e) TERMINATION.—This section shall not apply to 
any property placed in service after December 31, 2012.’’. 
(b) CREDIT ALLOWED AS BUSINESS CREDIT.—Sec-
tion 38(b) of the Internal Revenue Code of 1986 (relating 
to current year business credit) is amended by striking 
‘‘plus’’ at the end of paragraph (34), by striking the period 
at the end of paragraph (35) and inserting ‘‘, plus’’, and 
by adding at the end the following new paragraph: 
‘‘(36) the freight rail capacity expansion credit 
determined under section 45R.’’. 
(c) COORDINATION
WITH
SECTION
55.—Section 
38(c)(4)(B) of the Internal Revenue Code of 1986 is 
amended by striking ‘‘and’’ at the end of clause (vii), by 
striking the period at the end of clause (viii) and inserting 
‘‘, and’’, and by adding at the end the following new 
clause: 
‘‘(ix) for taxable years beginning after 
the date of the enactment of this clause, 
the credit determined under section 45R.’’. 
(d) BASIS ADJUSTMENT.—Subsection (a) of section 
1016 of the Internal Revenue Code of 1986 is amended 
by striking ‘‘and’’ at the end of paragraph (36), by strik-
ing the period at the end of paragraph (37) and inserting 
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‘‘, and’’, and by inserting after paragraph (37) the fol-
lowing new paragraph: 
‘‘(38) to the extent provided in section 
45R(d)(3).’’. 
(e) CLERICAL AMENDMENT.—The table of sections 
for subpart D of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986 is amended by in-
serting after the item relating to section 45Q the following 
new item: 
‘‘Sec. 45R. Freight rail capacity expansion credit.’’. 
SEC. 3. EXPENSING OF FREIGHT RAIL INFRASTRUCTURE 
PROPERTY. 
(a) IN GENERAL.—Part VI of subchapter B of chap-
ter 1 of subtitle A of the Internal Revenue Code of 1986 
(relating to itemized deductions for individuals and cor-
porations) is amended by inserting after section 179E the 
following new section: 
‘‘SEC. 179F. ELECTION TO EXPENSE QUALIFIED FREIGHT 
RAIL INFRASTRUCTURE PROPERTY. 
‘‘(a) ALLOWANCE OF DEDUCTION.— 
‘‘(1) IN GENERAL.—A taxpayer may elect to 
treat any amount paid or incurred for the acquisi-
tion, construction, or erection of qualified freight rail 
infrastructure property (as defined in section 
45R(b)(3)) as an amount not chargeable to capital 
account. Any amount so treated shall be allowed as 
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a deduction for the taxable year in which such prop-
erty was placed in service. 
‘‘(2) 
COORDINATION
WITH
CREDIT.—The 
amount to which the election under paragraph (1) 
applies with respect to any property shall be reduced 
by an amount equal to the amount of any reduction 
in the basis of the property under section 45R(d)(3). 
‘‘(b) ELECTION.—An election under subsection (a) 
shall be made, with respect to each class of property for 
each taxable year, at such time and in such manner as 
the Secretary may prescribe by regulation. If a taxpayer 
makes such an election with respect to any class of prop-
erty for any taxable year, the election shall apply to all 
qualified freight rail infrastructure property in such class 
placed in service during such taxable year. An election 
under this section shall not affect the character of any 
property for the purposes of section 45R. 
‘‘(c) DEDUCTION ALLOWED IN COMPUTING MINIMUM 
TAX.—For purposes of determining alternative minimum 
taxable income under section 55, the deduction under sub-
section (a) for qualified freight rail infrastructure property 
shall be determined under this section without regard to 
any adjustment under section 56. 
‘‘(d) TERMINATION.—This section shall not apply to 
any property placed in service after December 31, 2012.’’. 
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