To amend the Internal Revenue Code of 1986 to allow a credit against income tax for certain energy-efficient property.

April 1, 2003

Mr. LIEBERMAN (for himself Ms. SNOWE, Mr. DODD, Mr. ALLEN, Mrs. CLINTON, Mr. HARKIN, and Mr. AKAKA) introduced the following bill; which was read twice and referred to the Committee on Finance

To amend the Internal Revenue Code of 1986 to allow a credit against income tax for certain energy-efficient property.

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

SECTION 1. CREDIT FOR CERTAIN ENERGY-EFFICIENT PROPERTY.

(a) BUSINESS PROPERTY-

(1) IN GENERAL- Subparagraph (A) of section 48(a)(3) of the Internal Revenue Code of 1986 (defining energy property) is amended by striking `or' at the end of clause (i), by adding `or' at the end of clause (ii), and by inserting after clause (ii) the following new clause:

`(iii) energy-efficient building property,'.

(2) ENERGY-EFFICIENT BUILDING PROPERTY- Subsection (a) of section 48 of such Code is amended by redesignating paragraphs (4) and (5) as paragraphs (5) and (6), respectively, and by inserting after paragraph (3) the following new paragraph:

`(4) ENERGY-EFFICIENT BUILDING PROPERTY- For purposes of this subsection--

`(A) IN GENERAL- The term `energy-efficient building property' means a fuel cell power plant that--

`(i) generates electricity using an electrochemical process,

`(ii) has an electricity-only generation efficiency greater than 30 percent, and

`(iii) generates at least 0.5 kilowatt of electricity using an electrochemical process.

`(B) LIMITATION- In the case of energy-efficient building property placed in service during the taxable year, the credit determined under paragraph (1) for such year with respect to such property shall not exceed an amount equal to the lesser of--

`(i) 30 percent of the basis of such property, including expenditures for labor costs properly allocable to the onsite preparation, assembly, or original installation of the property and for piping or wiring to interconnect such property, or

`(ii) $1,000 for each kilowatt of capacity of such property.

`(C) SPECIAL RULES- For purposes of subparagraph (A)(ii)--

`(i) ELECTRICITY-ONLY GENERATION EFFICIENCY- The electricity-only generation efficiency percentage of a fuel cell power plant is the fraction--

`(I) the numerator of which is the total useful electrical power produced by such plant at normal operating rates, and expected to be consumed in its normal application, and

`(II) the denominator of which is the lower heating value of the fuel source for such plant.

`(ii) DETERMINATIONS MADE ON BTU BASIS- The electricity-only generation efficiency percentage shall be determined on a Btu basis.

`(D) FUEL CELL POWER PLANT- The term `fuel cell power plant' means an integrated system comprised of a fuel cell stack assembly and associated balance of plant components that converts a fuel into electricity using electrochemical means.

`(E) TERMINATION- Such term shall not include any property placed in service after December 31, 2008.'.

(3) LIMITATION- Section 48(a)(2)(A) of such Code (relating to energy percentage) is amended to read as follows:

`(A) IN GENERAL- The energy percentage is--

`(i) in the case of energy-efficient building property, 30 percent, and

`(ii) in the case of any other energy property, 10 percent.'.

(4) CONFORMING AMENDMENTS-

(A) Section 29(b)(3)(A)(i)(III) of such Code is amended by striking `section 48(a)(4)(C)' and inserting `section 48(a)(5)(C)'.

(B) Section 48(a)(1) of such Code is amended by inserting `except as provided in paragraph (4)(B),' before `the energy'.

(5) EFFECTIVE DATE- The amendments made by this subsection shall apply to property placed in service after December 31, 2003, under rules similar to the rules of section 48(m) of the Internal Revenue Code of 1986 (as in effect on the day before the date of the enactment of the Revenue Reconciliation Act of 1990).

(b) NONBUSINESS PROPERTY-

(1) IN GENERAL- Subpart A of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 (relating to nonrefundable personal credits) is amended by inserting after section 25B the following new section:

`SEC. 25C. NONBUSINESS ENERGY-EFFICIENT BUILDING PROPERTY.

`(a) CREDIT ALLOWED-

`(1) IN GENERAL- In the case of an individual, there shall be allowed as a credit against the tax imposed by this chapter for the taxable year an amount equal to the nonbusiness energy-efficient

building property expenditures which are paid or incurred during such year.

`(2) LIMITATION- The credit allowed under paragraph (1) with respect to property placed in service by the taxpayer during the taxable year shall not exceed an amount equal to the lesser of--

`(A) 30 percent of the basis of such property, or

`(B) $1,000 for each kilowatt of capacity of such property.

`(b) NONBUSINESS ENERGY-EFFICIENT BUILDING PROPERTY EXPENDITURES- For purposes of this section--

`(1) IN GENERAL- The term `nonbusiness energy-efficient building property expenditures' means expenditures made by the taxpayer for nonbusiness energy-efficient building property installed on or in connection with a dwelling unit--

`(A) which is located in the United States, and

`(B) which is used by the taxpayer as a residence.

Such term includes expenditures for labor costs properly allocable to the onsite preparation, assembly, or original installation of the property.

`(2) NONBUSINESS ENERGY-EFFICIENT BUILDING PROPERTY- The term `nonbusiness energy-efficient building property' means energy-efficient building property (as defined in section 48(a)(4)) if--

`(A) the original use of such property commences with the taxpayer, and

`(B) such property meets the standards (if any) applicable to such property under section 48(a)(3).

`(c) SPECIAL RULES- For purposes of this section--

`(1) DOLLAR AMOUNTS IN CASE OF JOINT OCCUPANCY- In the case of any dwelling unit which is jointly occupied and used during any calendar year as a residence by 2 or more individuals the following shall apply:

`(A) The amount of the credit allowable, under subsection (a) by reason of expenditures (as the case may be) made during such calendar year by any of such individuals with respect to such dwelling unit shall be determined by treating all of such individuals as 1 taxpayer whose taxable year is such calendar year.

`(B) There shall be allowable, with respect to such expenditures to each of such individuals, a credit under subsection (a) for the taxable year in which such calendar year ends in an amount which bears the same ratio to the amount determined under subparagraph (A) as the amount of such expenditures made by such individual during such calendar year bears to the aggregate of such expenditures made by all of such individuals during such calendar year.

`(2) TENANT-STOCKHOLDER IN COOPERATIVE HOUSING CORPORATION- In the case of an individual who is a tenant-stockholder (as defined in section 216) in a cooperative housing corporation (as defined in such section), such individual shall be treated as having made his tenant-stockholder's proportionate share (as defined in section 216(b)(3)) of any expenditures of such corporation.

`(3) CONDOMINIUMS-

`(A) IN GENERAL- In the case of an individual who is a member of a condominium management association with respect to a condominium which the individual owns, such individual shall be treated as having made his proportionate share of any expenditures of such association.

`(B) CONDOMINIUM MANAGEMENT ASSOCIATION- For purposes of this paragraph, the term `condominium management association' means an organization which meets the requirements of paragraph (1) of section 528(c) (other than subparagraph (E) thereof) with respect to a condominium project substantially all of the units of which are used as residences.

`(4) ALLOCATION IN CERTAIN CASES- If less than 80 percent of the use of an item is for nonbusiness purposes, only that portion of the expenditures for such item which is properly allocable to use for nonbusiness purposes shall be taken into account.

`(5) WHEN EXPENDITURE MADE; AMOUNT OF EXPENDITURE-

`(A) IN GENERAL- Except as provided in subparagraph (B), an expenditure with respect to an item shall be treated as made when the original installation of the item is completed.

`(B) EXPENDITURES PART OF BUILDING CONSTRUCTION- In the case of an expenditure in connection with the construction or reconstruction of a structure, such expenditure shall be treated as made when the original use of the constructed or reconstructed structure by the taxpayer begins.

`(C) AMOUNT- The amount of any expenditure shall be the cost thereof.

`(6) PROPERTY FINANCED BY SUBSIDIZED ENERGY FINANCING- For purposes of determining the amount of nonbusiness energy-efficient building property expenditures made by any individual with respect to any dwelling unit, there shall not be taken into account expenditures which are made from subsidized energy financing (as defined in section 48(a)(5)(C)).

`(d) BASIS ADJUSTMENTS- For purposes of this subtitle, if a credit is allowed under this section for any expenditure with respect to any property, the increase in the basis of such property which would (but for this subsection) result from such expenditure shall be reduced by the amount of the credit so allowed.

`(e) TERMINATION- This section shall not apply to any expenditure made after December 31, 2008.'.

(2) CONFORMING AMENDMENTS-

(A) Subsection (a) of section 1016 of such Code is amended by striking `and' at the end of paragraph (27), by striking the period at the end of paragraph (28) and inserting `; and', and by adding at the end the following new paragraph:

`(29) to the extent provided in section 25C(d), in the case of amounts with respect to which a credit has been allowed under section 25C.'.

(B) The table of sections for subpart A of part IV of subchapter A of chapter 1 of such Code is amended by inserting after the item relating to section 25B the following new item:

`Sec. 25C. Nonbusiness energy-efficient building property.'.

(3) EFFECTIVE DATE- The amendments made by this subsection shall apply to expenditures made after December 31, 2003.

END