Title: Mechanical Insulation Installation Incentive Act of 2017
Policy area: Taxation

Summary:
Mechanical Insulation Installation Incentive Act of 2017
This bill amends the Internal Revenue Code to allow an additional tax deduction for the cost of installing mechanical insulation property. The bill: (1) limits the amount of such deduction to the lesser of 30% of the cost or the reduction in energy loss from the installed mechanical insulation property compared to property that meets the minimum requirements of American Society of Heating, Refrigerating and Air-Conditioning Engineers (ASHRAE) standard 90.1-2007; and (2) allows the cost of mechanical insulation property that is placed in service to replace insulation property to be treated as a deductible business expense in the current taxable year.
The bill defines "mechanical insulation property" as insulation materials, facings, and accessory products: (1) placed in service in connection with a mechanical system which is located in the United States and of a character subject to an allowance for depreciation; and (2) utilized for thermal requirements for mechanical piping and equipment, hot and cold applications, and heating, venting and air conditioning applications which can be used in a variety of facilities.
The bill also allows a tax deduction for capital expenditures related to mechanical insulation property.

[Congressional Bills 115th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3349 Introduced in House (IH)]

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115th CONGRESS
  1st Session
                                H. R. 3349

 To amend the Internal Revenue Code of 1986 to provide a tax incentive 
for the installation and maintenance of mechanical insulation property.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             July 20, 2017

 Ms. Sanchez (for herself, Mr. Reed, Mr. Ryan of Ohio, and Mr. Meehan) 
 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 a tax incentive 
for the installation and maintenance of mechanical insulation property.

    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 ``Mechanical Insulation Installation 
Incentive Act of 2017''.

SEC. 2. EXPENSING OF MECHANICAL INSULATION PROPERTY.

    (a) In General.--Part VI of subchapter B of chapter 1 of the 
Internal Revenue Code of 1986 (relating to itemized deductions for 
individuals and corporations) is amended by inserting after section 
179E the following new section:

``SEC. 179F. MECHANICAL INSULATION PROPERTY.

    ``(a) Treatment as Expenses.--In addition to any other deduction in 
this subtitle, there shall be allowed as a deduction an amount equal to 
the applicable percentage of the cost of mechanical insulation property 
placed in service during the taxable year.
    ``(b) Applicable Percentage.--For purposes of subsection (a)--
            ``(1) In general.--The term `applicable percentage' means 
        the lesser of--
                    ``(A) 30 percent, and
                    ``(B) the reduction in energy loss (expressed as a 
                percentage) from the installed mechanical insulation 
                property compared to reference mechanical insulation 
                property which meets the minimum requirements of ASHRAE 
                standard 90.1-2007.
            ``(2) Special rule relating to maintenance.--In the case of 
        mechanical insulation property placed in service as a 
        replacement for insulation property--
                    ``(A) paragraph (1)(B) shall not apply, and
                    ``(B) the cost of such property shall be treated as 
                an expense for which a deduction is allowed under 
                section 162 instead of being treated as depreciable for 
                purposes of the deduction provided by section 167.
    ``(c) Definitions.--For purposes of this section--
            ``(1) Mechanical insulation property.--The term `mechanical 
        insulation property' means insulation materials, facings, and 
        accessory products--
                    ``(A) placed in service in connection with a 
                mechanical system which--
                            ``(i) is located in the United States, and
                            ``(ii) is of a character subject to an 
                        allowance for depreciation, and
                    ``(B) utilized for thermal requirements for 
                mechanical piping and equipment, hot and cold 
                applications, and heating, venting and air conditioning 
                applications which can be used in a variety of 
                facilities.
            ``(2) Cost.--The cost of mechanical insulation property 
        includes--
                    ``(A) the amounts paid or incurred for the 
                installation of such property for that incremental 
                portion above the minimums in ASHRAE standard 90.1-2007 
                and the total insulation cost for maintenance 
                applications,
                    ``(B) in the case of removal and disposal of the 
                old mechanical insulation property, 10 percent of the 
                cost of the new mechanical insulation property 
                (determined without regard to this subparagraph), and
                    ``(C) expenditures for labor costs properly 
                allocable to the preparation, assembly, and 
                installation of mechanical insulation property.
    ``(d) Coordination.--Subsection (a) shall not apply to the cost of 
mechanical insulation property which is taken into account under 
section 179D or which, but for subsection (b) of section 179D, would be 
taken into account under such section.
    ``(e) Allocation of Deduction for Tax-Exempt Property.--In the case 
of mechanical insulation property installed on or in property owned by 
an entity described in paragraph (3) or (4) of section 50(b), the 
person who is the primary contractor for the installation of such 
property shall be treated as the taxpayer that placed such property in 
service.
    ``(f) Certification.--For purposes of this section, energy savings 
shall be certified under regulations or other guidance provided by the 
Secretary, in consultation with the Secretary of Energy.
    ``(g) Termination.--This section shall not apply to any property 
placed in service after the end of the 5-year period beginning on the 
date of the enactment of this section.''.
    (b) Deduction for Capital Expenditures.--Section 263(a)(1) of such 
Code (relating to capital expenditures) is amended by striking ``or'' 
at the end of subparagraph (K), by striking the period at the end of 
paragraph (L) and inserting ``, or'', and by adding at the end the 
following new subparagraph:
                    ``(M) expenditures for which a deduction is allowed 
                under section 179F.''.
    (c) Technical and Clerical Amendments.--
            (1) Section 312(k)(3)(B) of such Code is amended by 
        striking ``or 179E'' each place it appears in the text or 
        heading thereof and inserting ``179E, or 179F''.
            (2) Paragraphs (2)(C) and (3)(C) of section 1245(a) of such 
        Code are each amended by inserting ``179F,'' after ``179E,''.
            (3) The table of sections for part VI of subchapter B of 
        chapter 1 of such Code is amended by inserting after the item 
        relating to section 179E the following new item:

``Sec. 179F. Mechanical insulation property.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to property placed in service after the date of enactment of this 
Act.
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