To amend the Internal Revenue Code of 1986 to provide an incentive to encourage the replacement of inefficient, outdated freight railcars with greener, more fuel efficient vehicles.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Green Railcar Enhancement Act of 
2010''.

SEC. 2. CREDIT FOR FREIGHT RAILCAR REPLACEMENT OR MODERNIZATION.

    (a) In General.--Subpart D of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986 is amended by adding at the end 
the following new section:

``SEC. 45R. FREIGHT RAILCAR REPLACEMENT OR MODERNIZATION CREDIT.

    ``(a) General Rule.--For purposes of section 38, the freight 
railcar replacement or modernization credit determined under this 
section for the taxable year is an amount equal to 25 percent of the 
sum of--
            ``(1) the basis of any qualified freight railcar placed in 
        service by the taxpayer during the taxable year, plus
            ``(2) the qualified freight railcar rebuild expenditures of 
        the taxpayer for the taxable year.
    ``(b) Qualified Freight Railcar.--
            ``(1) In general.--For purposes of this section, the term 
        `qualified freight railcar' means a freight railcar which--
                    ``(A) is acquired or rebuilt by the taxpayer 
                pursuant to a binding agreement entered into after the 
                date of the enactment of this section, and
                    ``(B) meets the capacity or fuel efficiency 
                improvement requirements of paragraph (2).
            ``(2) Capacity or fuel efficiency requirements.--
                    ``(A) In general.--A freight railcar shall be 
                treated as meeting the capacity or fuel efficiency 
                requirements of this paragraph if--
                            ``(i) in the case of a freight railcar 
                        which is acquired by the taxpayer during the 
                        taxable year (`replacement railcar'), the 
                        taxpayer identifies another railcar (although 
                        not necessarily one being used for an identical 
                        purpose) which the taxpayer certifies--
                                    ``(I) was removed permanently from 
                                service as a freight railcar during the 
                                taxable year, or
                                    ``(II) is being rebuilt in such a 
                                manner as to achieve a significant 
                                improvement in capacity or fuel 
                                efficiency, or
                            ``(ii) in the case of a freight railcar 
                        rebuilt by the taxpayer, such rebuilding 
                        results in a significant improvement in 
                        capacity or fuel efficiency.
                    ``(B) Ownership not required.--For purposes of 
                subparagraph (A)(i), such other railcar may be one 
                owned by the taxpayer or one owned by another taxpayer, 
                so long as there exists a binding agreement to so 
                remove or rebuild the railcar.
                    ``(C) Significant improvement.--For purposes of 
                subparagraph (A), an improvement in capacity or fuel 
                efficiency with respect to a freight railcar shall be 
                treated as significant if such capacity or fuel 
                efficiency, as the case may be, is increased by at 
                least 8 percent.
    ``(c) Qualified Freight Railcar Rebuild Expenditure.--For purposes 
of this section, the term `qualified freight railcar rebuild 
expenditure' means any amount paid or incurred--
            ``(1) in connection with the modification of a freight 
        railcar resulting in such railcar being a qualified freight 
        railcar, and
            ``(2) which is properly chargeable to a capital account 
        with respect to such freight railcar.
    ``(d) Other Special Rules.--
            ``(1) Coordination with other credits.--Any amount taken 
        into account in determining the credit under this section may 
        not be taken into account in determining a credit under any 
        other provision of this title.
            ``(2) Basis adjustment.--For purposes of this subtitle, if 
        a credit is allowed under subsection (a) with respect to any 
        qualified freight railcar, the basis of such railcar shall be 
        reduced by the amount of the credit so allowed.
            ``(3) Sale-leaseback.--For purposes of subsection (a)(1), 
        if any qualified freight railcar is--
                    ``(A) originally placed in service by a person 
                after [the date of the enactment of this section], and
                    ``(B) sold and leased back by such person within 3 
                months after the railcars are originally placed in 
                service (or, in the case of more than 1 railcar subject 
                to the same lease, within 3 months after the date the 
                final railcar is placed in service, so long as the 
                period between the time the first railcar is placed in 
                service and the time the last railcar is placed in 
                service does not exceed 12 months),
        such railcars shall be treated as originally placed in service 
        not earlier than the date on which such railcars are used under 
        the leaseback referred to in subparagraph (B).
            ``(4) Syndication.--For purposes of subsection (a)(1), if--
                    ``(A) any qualified freight railcar is originally 
                placed in service after the date of enactment of this 
                section by the lessor of such railcar,
                    ``(B) such railcar is sold by such lessor or any 
                subsequent purchaser within 3 months after the date 
                such railcar was originally placed in service (or, in 
                the case of more than 1 railcar subject to the same 
                lease, within 3 months after the date the final railcar 
                is placed in service and the time the last railcar is 
                placed in service does not exceed 12 months), and
                    ``(C) the user of such railcar after the last sale 
                during such 3-month period remains the same as when 
                such railcar was originally placed in service,
        such railcars shall be treated as originally placed in service 
        not earlier than the date of such last sale.
            ``(5) Recapture.--The benefit of any credit allowable under 
        subsection (a) shall, under regulations prescribed by the 
        Secretary, be recaptured with respect to any qualified freight 
        railcar that is sold or otherwise disposed of by the taxpayer 
        during the 5-year period beginning on the date on which such 
        railcar is originally placed in service. The preceding sentence 
        shall not apply to a qualified freight railcar that is sold by 
        and subsequently leased back to the taxpayer.
            ``(6) Reporting requirements.--The Secretary, in 
        consultation with the Surface Transportation Board, may develop 
        appropriate reporting requirements for taxpayers utilizing this 
        credit.
    ``(e) Termination.--This section shall not apply to any freight 
railcars acquired, or with respect to which at least 50 percent of the 
rebuilding is completed, after December 31, 2011.''.
    (b) Credit Allowed as Business Credit.--Section 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 railcar replacement or modernization 
        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) the credit determined under section 
                        45R.''.
    (d) 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 inserting after the item relating to section 45Q the 
following new item:

``Sec. 45R. Freight railcar replacement or modernization credit.''.
    (e) Effective Date.--The amendments made by this section shall 
apply to property placed in service, and amounts paid or incurred, 
after December 31, 2009.

Summary: Green Railcar Enhancement Act of 2010 - Amends the Internal Revenue Code to allow, through 2011, a new business-related tax credit for 25% of the cost of acquiring or rebuilding freight railcars which achieve an increase in capacity or fuel efficiency of at least 8%.