H.R. 6441 (110th): Energy Efficient and Environmentally Friendly Automobile Tax Credit Act of 2008

110th Congress, 2007–2009. Text as of Jul 08, 2008 (Introduced).

Status & Summary | PDF | Source: GPO

I

110th CONGRESS

2d Session

H. R. 6441

IN THE HOUSE OF REPRESENTATIVES

July 8, 2008

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 tax incentives for replacing an automobile with a more fuel-efficient automobile.

1.

Short title

This Act may be cited as the Energy Efficient and Environmentally Friendly Automobile Tax Credit Act of 2008.

2.

Credit for replacing an automobile with a more fuel-efficient automobile

(a)

In general

Subpart B of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 is amended by inserting after section 30C the following new section:

30D.

Credit for replacing an automobile with a more fuel-efficient automobile

(a)

In general

In the case of an eligible purchase by an eligible taxpayer of a passenger automobile, there shall be allowed as a credit against the tax imposed by this chapter an amount equal to the lesser of—

(1)

the cost of the passenger automobile, or

(2)

$2,000.

(b)

Eligible purchase

For purposes of this section—

(1)

In general

The term eligible purchase means any purchase of a passenger automobile if—

(A)

the taxpayer sells another passenger automobile within a reasonable period surrounding such purchase, and

(B)

the average fuel economy of the purchased automobile is at least 20 percent better than the average fuel economy of the sold automobile.

(2)

Passenger automobile

The term passenger automobile has the meaning given such term in regulations prescribed by the Administrator of the Environmental Protection Agency for purposes of the administration of title II of the Clean Air Act (42 U.S.C. 7521 et seq.). Such term includes a light truck (within the meaning of such regulations).

(3)

Fuel economy

Average fuel economy shall be determined as provided in section 30B(h)(2).

(c)

Eligible taxpayer

For purposes of this section—

(1)

In general

The term eligible taxpayer means—

(A)

any individual, and

(B)

any qualified business.

(2)

Qualified business

The term qualified business means any sole proprietorship, partnership, or corporation if—

(A)

at least 40 percent of its total gross income for the taxable year is derived from the active conduct of transporting persons or property for hire, and

(B)

in the case of a partnership or corporation, all of the equity interests in which are held by 1 individual.

(3)

Aggregation rules

All persons treated as a single employer under subsection (a) or (b) of section 52, or subsection (m) or (o) of section 414, shall be treated as 1 person for purposes of paragraph (2).

(d)

Application with other credits

(1)

Business credit treated as part of general business credit

So much of the credit which would be allowed under subsection (a) for any taxable year (determined without regard to this subsection) that is attributable to property of a character subject to an allowance for depreciation shall be treated as a credit listed in section 38(b) for such taxable year (and not allowed under subsection (a)).

(2)

Personal credit

The credit allowed under subsection (a) (after the application of paragraph (1)) for any taxable year shall not exceed the excess (if any) of—

(A)

the regular tax liability (as defined in section 26(b)) reduced by the sum of the credits allowable under subpart A and sections 27, 30, 30B, and 30C, over

(B)

the tentative minimum tax for the taxable year.

(e)

Special rules

(1)

Exception for business vehicles

Except in the case of a qualified business, subsection (a) shall apply only to passenger automobiles substantially all of the use of which is for personal, nonbusiness purposes.

(2)

Limitation on vehicles being replaced

Except in the case of a qualified business, subsection (b)(1)(A) shall apply only to passenger vehicles which were substantially and regularly used by the taxpayer for personal, nonbusiness purposes.

(3)

Basis reduction

The basis of any passenger automobile for which credit is allowed under subsection (a) shall be reduced by the amount of such credit.

.

(b)

Technical amendments

(1)

Section 38(b) of such Code is amended by striking plus at the end of paragraph (31), by striking the period at the end of paragraph (32) and inserting , plus, and by adding at the end the following new paragraph:

(33)

the portion of the credit under section 30D (relating to credit for replacing an automobile with a more fuel-efficient automobile) to which section 30D(d)(1) applies.

.

(2)

Section 55(c)(2) of such Code is amended by inserting 30D(d)(2), after 30C(d)(2),.

(3)

The table of sections for subpart B of part IV of subchapter A of chapter 1 of such Code is amended by inserting after the item relating to section 30C the following new item:

Sec. 30D. Credit for replacing an automobile with a more fuel-efficient automobile..

3.

Deduction for state and local taxes imposed on purchase of more fuel-efficient automobiles

Subsection (a) of section 165 of the Internal Revenue Code of 1986 (relating to deduction for taxes) is amended by adding at the end the following new paragraph:

(6)

State and local taxes imposed on the purchase of any passenger automobile (as defined in section 30D(b)(2)) for which credit is allowed to the taxpayer under section 30D.

.

4.

Deduction for interest on loans used to purchase more fuel-efficient automobiles

Paragraph (2) of section 163(h) of the Internal Revenue Code of 1986 (defining personal interest) is amended by striking and at the end of subparagraph (E), by striking the period at the end of subparagraph (F) and inserting , and, and by adding at the end the following new subparagraph:

(G)

any interest paid or accrued on indebtedness incurred to purchase a passenger automobile (as defined in section 30D(b)(2)) for which credit is allowed to the taxpayer under section 30D.

.

5.

Effective date

The amendment made by this Act shall apply vehicles purchased after the date of the enactment of this Act in taxable years ending after such date.