Title: Steel Industry Preservation Act
Policy area: Taxation

Summary:
Steel Industry Preservation Act
This bill amends the Internal Revenue Code to extend and modify the production tax credit for steel industry fuel.
(Under current law, steel industry fuel is a fuel which is: (1) produced through a process of liquefying coal waste sludge and distributing it on coal, and (2) used as a feedstock for the manufacture of coke.)
The bill modifies the tax credit for steel industry fuel to:
A taxpayer that produces steel industry fuel may elect to accept an increased tax credit in lieu of certain deductions for expenses in connection with the production of steel industry fuel.
The bill specifies the treatment of the credit for the purpose of the alternative minimum tax. It also exempts transactions related to steel industry fuel from rules that restrict deductions and other tax benefits for activities that are not engaged in for profit or that do not have economic substance.

[Congressional Bills 115th Congress]
[From the U.S. Government Publishing Office]
[S. 262 Introduced in Senate (IS)]

<DOC>






115th CONGRESS
  1st Session
                                 S. 262

  To amend the Internal Revenue Code of 1986 to extend and modify the 
 section 45 credit for refined coal from steel industry fuel, and for 
                            other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                            February 1, 2017

 Mrs. Capito (for herself, Mr. Brown, Mr. Portman, Mr. Casey, and Ms. 
   Stabenow) introduced the following bill; which was read twice and 
                  referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL


 
  To amend the Internal Revenue Code of 1986 to extend and modify the 
 section 45 credit for refined coal from steel industry fuel, and for 
                            other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Steel Industry Preservation Act''.

SEC. 2. EXTENSION AND MODIFICATION OF CREDIT FOR STEEL INDUSTRY FUEL.

    (a) Credit Period.--
            (1) In general.--Subclause (II) of section 45(e)(8)(D)(ii) 
        of the Internal Revenue Code of 1986 is amended to read as 
        follows:
                                    ``(II) Credit period.--In lieu of 
                                the 10-year period referred to in 
                                clauses (i) and (ii)(II) of 
                                subparagraph (A), the credit period 
                                shall be the period beginning on the 
                                first date that the facility first 
                                produces steel industry fuel that is 
                                sold to an unrelated person after the 
                                date of the enactment of the Steel 
                                Industry Preservation Act, and ending 
                                10 years after such first date.''.
            (2) Conforming amendment.--Section 45(e)(8)(D) of such Code 
        is amended by striking clause (iii) and by redesignating clause 
        (iv) as clause (iii).
    (b) Extension of Placed-in-Service Date.--Subparagraph (A) of 
section 45(d)(8) of the Internal Revenue Code of 1986 is amended--
            (1) by striking ``(or any modification to a facility)'';
            (2) by striking ``placed in service before'' and inserting 
        ``placed in service--
                            ``(i) before'';
            (3) by striking ``and'' at the end and inserting ``or''; 
        and
            (4) by adding at the end the following new clause:
                            ``(ii) after the date of the enactment of 
                        this clause and before January 1, 2019, and''.
    (c) Clarifications.--
            (1) Steel industry fuel.--Subclause (I) of section 
        45(c)(7)(C)(i) of the Internal Revenue Code of 1986 is amended 
        by inserting ``, or a blend of coal and petroleum coke, or 
        other coke feedstock'' after ``on coal''.
            (2) Ownership interest.--Section 45(d)(8) of such Code is 
        amended by adding at the end the following new flush sentence:
        ``With respect to a facility producing steel industry fuel, no 
        person (including a ground lessor, customer, supplier, or 
        technology licensor) shall be treated as having an ownership 
        interest in the facility or as otherwise entitled to the credit 
        allowable under this section with respect to such facility if 
        such person's rent, license fee, or other entitlement to net 
        payments from the owner of such facility is measured by a fixed 
        dollar amount or a fixed amount per ton, or otherwise 
        determined without regard to the profit or loss of such 
        facility.''.
            (3) Production and sale.--Subparagraph (D) of section 
        45(e)(8) of such Code, as amended by subsection (a)(2), is 
        amended by redesignating clause (iii) as clause (iv) and by 
        inserting after clause (ii) the following new clause:
                            ``(iii) Production and sale.--The owner of 
                        a facility producing steel industry fuel shall 
                        be treated as producing and selling steel 
                        industry fuel where that owner manufactures 
                        such steel industry fuel from coal, a blend of 
                        coal and petroleum coke, or other coke 
                        feedstock to which it has title. The sale of 
                        such steel industry fuel by the owner of the 
                        facility to a person who is not the owner of 
                        the facility shall not fail to qualify as a 
                        sale to an unrelated person solely because such 
                        purchaser may also be a ground lessor, 
                        supplier, or customer.''.
    (d) Election To Increase Credit in Lieu of Steel Industry Fuel 
Deductions.--Paragraph (8) of section 45(e) is amended by adding at the 
end the following new subparagraph:
                    ``(E) Election for increased credit in lieu of 
                deductions for steel industry fuel.--In the case of a 
                taxpayer who produces steel industry fuel--
                            ``(i) In general.--At the election of the 
                        taxpayer--
                                    ``(I) no deduction shall be allowed 
                                with respect to expenses made in 
                                connection with the production and sale 
                                of steel industry for such taxable year 
                                which are otherwise deductible under 
                                this chapter (determined without regard 
                                to this subparagraph),
                                    ``(II) no expense made in 
                                connection with the production of and 
                                sale of steel industry fuel which is 
                                otherwise chargeable to capital account 
                                in such taxable year shall be so 
                                charged, and
                                    ``(III) the credit determined under 
                                this section (without regard to this 
                                subparagraph) for such taxable year 
                                shall be increased by an amount equal 
                                to the product of the sum of the 
                                amounts to which subclauses (I) and 
                                (II) apply and the maximum rate of tax 
                                applicable under section 1 or 11(b)(1), 
                                as applicable to the taxpayer in such 
                                taxable year.
                            ``(ii) Application to partnerships and s 
                        corporations.--In the case of a partnership or 
                        S corporation, the election shall be made at 
                        the partnership or S corporation level.
                            ``(iii) Election.--An election under this 
                        subparagraph for any taxable year shall be made 
                        not later than the time for filing the return 
                        of tax for such year (including extensions), in 
                        such manner as the Secretary may prescribe. 
                        Such an election, once made, shall be 
                        irrevocable.''.
    (e) Specified Credit for Purposes of Alternative Minimum Tax 
Exclusion.--Subclause (II) of section 38(c)(4)(B)(iv) of the Internal 
Revenue Code of 1986 is amended by inserting ``(in the case of a 
refined coal production facility producing steel industry fuel, during 
the credit period set forth in section 45(e)(8)(D)(ii)(II))'' after 
``service''.
    (f) Application of Certain Rules to Steel Industry Fuel.--
            (1) Activity not engaged in for profit.--Section 183 of the 
        Internal Revenue Code of 1986 is amended by adding at the end 
        the following new subsection:
    ``(f) Exception.--This section shall not apply to any deduction 
with respect to the production of steel industry fuel (as defined in 
section 45(c)(7)(C)).''.
            (2) Application of economic substance doctrine.--
                    (A) In general.--Subsection (o) of section 7701 of 
                the Internal Revenue Code of 1986 is amended by adding 
                at the end the following new paragraph:
            ``(6) Non-application to steel industry fuel.--The economic 
        substance doctrine shall not apply to any transaction to the 
        extent such transaction relates to steel industry fuel (as 
        defined in section 45(c)(7)(C)).''.
                    (B) Conforming amendment.--Paragraph (5)(C) of 
                section 7701(o) of such Code is amended by striking 
                ``The determination'' and inserting ``Except as 
                provided in paragraph (6), the determination''.
    (g) Effective Dates.--
            (1) In general.--Except as provided in paragraph (2), the 
        amendments made by this section shall apply to fuel produced 
        and sold after the date of the enactment of this Act, in 
        taxable years ending after such date.
            (2) Application of economic substance rules.--The 
        amendments made by subsection (f)(2) shall apply to 
        transactions entered into after the date of the enactment of 
        this Act.
                                 <all>