< Back to H.R. 7201 (110th Congress, 2007–2009)

Text of the Energy Improvement and Extension Act of 2008

This bill was introduced on September 28, 2008, in a previous session of Congress, but was not enacted. The text of the bill below is as of Sep 28, 2008 (Introduced).

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I

110th CONGRESS

2d Session

H. R. 7201

IN THE HOUSE OF REPRESENTATIVES

September 28, 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 incentives for energy production and conservation, and for other purposes.

1.

Short title, etc

(a)

Short title

This Act may be cited as the Energy Improvement and Extension Act of 2008.

(b)

Reference

Except as otherwise expressly provided, whenever in this Act an amendment or repeal is expressed in terms of an amendment to, or repeal of, a section or other provision, the reference shall be considered to be made to a section or other provision of the Internal Revenue Code of 1986.

(c)

Table of contents

The table of contents for this Act is as follows:

Sec. 1. Short title, etc.

Title I—Energy Tax Incentives

Subtitle A—Energy production incentives

Part 1—Renewable energy incentives

Sec. 101. Renewable energy credit.

Sec. 102. Production credit for electricity produced from marine renewables.

Sec. 103. Energy credit.

Sec. 104. Credit for residential energy efficient property.

Sec. 105. Special rule to implement FERC and State electric restructuring policy.

Part 2—Carbon mitigation provisions

Sec. 111. Expansion and modification of advanced coal project investment credit.

Sec. 112. Expansion and modification of coal gasification investment credit.

Sec. 113. Temporary increase in coal excise tax.

Sec. 114. Special rules for refund of the coal excise tax to certain coal producers and exporters.

Sec. 115. Carbon audit of the tax code.

Subtitle B—Transportation and domestic fuel security provisions

Sec. 121. Inclusion of cellulosic biofuel in bonus depreciation for biomass ethanol plant property.

Sec. 122. Credits for biodiesel and renewable diesel.

Sec. 123. Clarification that credits for fuel are designed to provide an incentive for United States production.

Sec. 124. Credit for new qualified plug-in electric drive motor vehicles.

Sec. 125. Exclusion from heavy truck tax for idling reduction units and advanced insulation.

Sec. 126. Transportation fringe benefit to bicycle commuters.

Sec. 127. Alternative fuel vehicle refueling property credit.

Sec. 128. Certain income and gains relating to alcohol fuels and mixtures, biodiesel fuels and mixtures, and alternative fuels and mixtures treated as qualifying income for publicly traded partnerships.

Subtitle C—Energy conservation and efficiency provisions

Sec. 131. Credit for nonbusiness energy property.

Sec. 132. Energy efficient commercial buildings deduction.

Sec. 133. Modifications of energy efficient appliance credit for appliances produced after 2007.

Sec. 134. Accelerated recovery period for depreciation of smart meters and smart grid systems.

Sec. 135. Qualified green building and sustainable design projects.

Title II—Revenue provisions

Sec. 201. Limitation of deduction for income attributable to domestic production of oil, gas, or primary products thereof.

Sec. 202. Elimination of the different treatment of foreign oil and gas extraction income and foreign oil related income for purposes of the foreign tax credit.

Sec. 203. Broker reporting of customer’s basis in securities transactions.

Sec. 204. Increase and extension of Oil Spill Liability Trust Fund tax.

Sec. 205. Time for payment of corporate estimated taxes.

I

Energy Tax Incentives

A

Energy production incentives

1

Renewable energy incentives

101.

Renewable energy credit

(a)

Extension of credit

(1)

Wind facilities

Paragraph (1) of section 45(d) is amended by striking January 1, 2009 and inserting January 1, 2010.

(2)

Other facilities

Each of the following provisions of section 45(d) is amended by striking January 1, 2009 and inserting October 1, 2011:

(A)

Clauses (i) and (ii) of paragraph (2)(A).

(B)

Clauses (i)(I) and (ii) of paragraph (3)(A).

(C)

Paragraph (4).

(D)

Paragraph (5).

(E)

Paragraph (6).

(F)

Paragraph (7).

(G)

Subparagraphs (A) and (B) of paragraph (9).

(b)

Modification of Credit Phaseout

(1)

Repeal of phaseout

Subsection (b) of section 45 is amended—

(A)

by striking paragraph (1), and

(B)

by striking the 8 cent amount in paragraph (1), in paragraph (2) thereof.

(2)

Limitation based on investment in facility

Subsection (b) of section 45 is amended by inserting before paragraph (2) the following new paragraph:

(1)

Limitation based on investment in facility

(A)

In general

In the case of any qualified facility originally placed in service after December 31, 2009, the amount of the credit determined under subsection (a) for any taxable year with respect to electricity produced at such facility shall not exceed the product of—

(i)

the applicable percentage with respect to such facility, multiplied by

(ii)

the eligible basis of such facility.

(B)

Carryforward of unused limitation and excess credit

(i)

Unused limitation

If the limitation imposed under subparagraph (A) with respect to any facility for any taxable year exceeds the prelimitation credit for such facility for such taxable year, the limitation imposed under subparagraph (A) with respect to such facility for the succeeding taxable year shall be increased by the amount of such excess.

(ii)

Excess credit

If the prelimitation credit with respect to any facility for any taxable year exceeds the limitation imposed under subparagraph (A) with respect to such facility for such taxable year, the credit determined under subsection (a) with respect to such facility for the succeeding taxable year (determined before the application of subparagraph (A) for such succeeding taxable year) shall be increased by the amount of such excess. With respect to any facility, no amount may be carried forward under this clause to any taxable year beginning after the 10-year period described in subsection (a)(2)(A)(ii) with respect to such facility.

(iii)

Prelimitation credit

The term prelimitation credit with respect to any facility for a taxable year means the credit determined under subsection (a) with respect to such facility for such taxable year, determined without regard to subparagraph (A) and after taking into account any increase for such taxable year under clause (ii).

(C)

Applicable percentage

For purposes of this paragraph—

(i)

In general

The term applicable percentage means, with respect to any facility, the appropriate percentage prescribed by the Secretary for the month in which such facility is originally placed in service.

(ii)

Method of prescribing applicable percentage

The applicable percentage prescribed by the Secretary for any month under clause (i) shall be the percentage which yields over a 10-year period amounts of limitation under subparagraph (A) which have a present value equal to 35 percent of the eligible basis of the facility.

(iii)

Method of discounting

The present value under clause (ii) shall be determined—

(I)

as of the last day of the 1st year of the 10-year period referred to in clause (ii),

(II)

by using a discount rate equal to the greater of 110 percent of the Federal long-term rate as in effect under section 1274(d) for the month preceding the month for which the applicable percentage is being prescribed, or 4.5 percent, and

(III)

by taking into account the limitation under subparagraph (A) for any year on the last day of such year.

(D)

Eligible basis

For purposes of this paragraph—

(i)

In general

The term eligible basis means, with respect to any facility, the sum of—

(I)

the basis of such facility determined as of the time that such facility is originally placed in service, and

(II)

the portion of the basis of any shared qualified property which is properly allocable to such facility under clause (ii).

(ii)

Rules for allocation

For purposes of subclause (II) of clause (i), the basis of shared qualified property shall be allocated among all qualified facilities which are projected to be placed in service and which require utilization of such property in proportion to projected generation from such facilities.

(iii)

Shared qualified property

For purposes of this paragraph, the term shared qualified property means, with respect to any facility, any property described in section 168(e)(3)(B)(vi)—

(I)

which a qualified facility will require for utilization of such facility, and

(II)

which is not a qualified facility.

(iv)

Special rule relating to geothermal facilities

In the case of any qualified facility using geothermal energy to produce electricity, the basis of such facility for purposes of this paragraph shall be determined as though intangible drilling and development costs described in section 263(c) were capitalized rather than expensed.

(E)

Special rule for first and last year of credit period

In the case of any taxable year any portion of which is not within the 10-year period described in subsection (a)(2)(A)(ii) with respect to any facility, the amount of the limitation under subparagraph (A) with respect to such facility shall be reduced by an amount which bears the same ratio to the amount of such limitation (determined without regard to this subparagraph) as such portion of the taxable year which is not within such period bears to the entire taxable year.

(F)

Election to treat all facilities placed in service in a year as 1 facility

At the election of the taxpayer, all qualified facilities which are part of the same project and which are originally placed in service during the same calendar year shall be treated for purposes of this section as 1 facility which is originally placed in service at the mid-point of such year or the first day of the following calendar year.

.

(c)

Trash facility clarification

Paragraph (7) of section 45(d) is amended—

(1)

by striking facility which burns and inserting facility (other than a facility described in paragraph (6)) which uses, and

(2)

by striking combustion.

(d)

Expansion of biomass facilities

(1)

Open-loop biomass facilities

Paragraph (3) of section 45(d) is amended by redesignating subparagraph (B) as subparagraph (C) and by inserting after subparagraph (A) the following new subparagraph:

(B)

Expansion of facility

Such term shall include a new unit placed in service after the date of the enactment of this subparagraph in connection with a facility described in subparagraph (A), but only to the extent of the increased amount of electricity produced at the facility by reason of such new unit.

.

(2)

Closed-loop biomass facilities

Paragraph (2) of section 45(d) is amended by redesignating subparagraph (B) as subparagraph (C) and inserting after subparagraph (A) the following new subparagraph:

(B)

Expansion of facility

Such term shall include a new unit placed in service after the date of the enactment of this subparagraph in connection with a facility described in subparagraph (A)(i), but only to the extent of the increased amount of electricity produced at the facility by reason of such new unit.

.

(e)

Modification of rules for hydropower production

Subparagraph (C) of section 45(c)(8) is amended to read as follows:

(C)

Nonhydroelectric dam

For purposes of subparagraph (A), a facility is described in this subparagraph if—

(i)

the hydroelectric project installed on the nonhydroelectric dam is licensed by the Federal Energy Regulatory Commission and meets all other applicable environmental, licensing, and regulatory requirements,

(ii)

the nonhydroelectric dam was placed in service before the date of the enactment of this paragraph and operated for flood control, navigation, or water supply purposes and did not produce hydroelectric power on the date of the enactment of this paragraph, and

(iii)

the hydroelectric project is operated so that the water surface elevation at any given location and time that would have occurred in the absence of the hydroelectric project is maintained, subject to any license requirements imposed under applicable law that change the water surface elevation for the purpose of improving environmental quality of the affected waterway.

The Secretary, in consultation with the Federal Energy Regulatory Commission, shall certify if a hydroelectric project licensed at a nonhydroelectric dam meets the criteria in clause (iii). Nothing in this section shall affect the standards under which the Federal Energy Regulatory Commission issues licenses for and regulates hydropower projects under part I of the Federal Power Act.

.

(f)

Effective date

(1)

In general

Except as otherwise provided in this subsection, the amendments made by this section shall apply to property originally placed in service after December 31, 2008.

(2)

Repeal of credit phaseout

The amendments made by subsection (b)(1) shall apply to taxable years ending after December 31, 2008.

(3)

Limitation based on investment in facility

The amendment made by subsection (b)(2) shall apply to property originally placed in service after December 31, 2009.

(4)

Trash facility clarification

The amendments made by subsection (c) shall apply to electricity produced and sold after the date of the enactment of this Act.

(5)

Expansion of biomass facilities

The amendments made by subsection (d) shall apply to property placed in service after the date of the enactment of this Act.

102.

Production credit for electricity produced from marine renewables

(a)

In general

Paragraph (1) of section 45(c) is amended by striking and at the end of subparagraph (G), by striking the period at the end of subparagraph (H) and inserting , and, and by adding at the end the following new subparagraph:

(I)

marine and hydrokinetic renewable energy.

.

(b)

Marine renewables

Subsection (c) of section 45 is amended by adding at the end the following new paragraph:

(10)

Marine and hydrokinetic renewable energy

(A)

In general

The term marine and hydrokinetic renewable energy means energy derived from—

(i)

waves, tides, and currents in oceans, estuaries, and tidal areas,

(ii)

free flowing water in rivers, lakes, and streams,

(iii)

free flowing water in an irrigation system, canal, or other man-made channel, including projects that utilize nonmechanical structures to accelerate the flow of water for electric power production purposes, or

(iv)

differentials in ocean temperature (ocean thermal energy conversion).

(B)

Exceptions

Such term shall not include any energy which is derived from any source which utilizes a dam, diversionary structure (except as provided in subparagraph (A)(iii)), or impoundment for electric power production purposes.

.

(c)

Definition of facility

Subsection (d) of section 45 is amended by adding at the end the following new paragraph:

(11)

Marine and hydrokinetic renewable energy facilities

In the case of a facility producing electricity from marine and hydrokinetic renewable energy, the term qualified facility means any facility owned by the taxpayer—

(A)

which has a nameplate capacity rating of at least 150 kilowatts, and

(B)

which is originally placed in service on or after the date of the enactment of this paragraph and before October 1, 2011.

.

(d)

Credit rate

Subparagraph (A) of section 45(b)(4) is amended by striking or (9) and inserting (9), or (11).

(e)

Coordination with small irrigation power

Paragraph (5) of section 45(d), as amended by section 101, is amended by striking October 1, 2011 and inserting the date of the enactment of paragraph (11).

(f)

Effective date

The amendments made by this section shall apply to electricity produced and sold after the date of the enactment of this Act, in taxable years ending after such date.

103.

Energy credit

(a)

Extension of credit

(1)

Solar energy property

Paragraphs (2)(A)(i)(II) and (3)(A)(ii) of section 48(a) are each amended by striking January 1, 2009 and inserting January 1, 2017.

(2)

Fuel cell property

Subparagraph (E) of section 48(c)(1) is amended by striking December 31, 2008 and inserting December 31, 2016.

(3)

Microturbine property

Subparagraph (E) of section 48(c)(2) is amended by striking December 31, 2008 and inserting December 31, 2016.

(b)

Allowance of energy credit against alternative minimum tax

(1)

In general

Subparagraph (B) of section 38(c)(4) is amended by redesignating clause (vi) as clause (vii), by striking and at the end of clause (v), and by inserting after clause (v) the following new clause:

(vi)

the credit determined under section 46 to the extent that such credit is attributable to the energy credit determined under section 48, and

.

(2)

Technical amendment

Clause (v) of section 38(c)(4)(B) is amended by striking section 47 to the extent attributable to and inserting section 46 to the extent that such credit is attributable to the rehabilitation credit under section 47, but only with respect to.

(c)

Energy credit for combined heat and power system property

(1)

In general

Section 48(a)(3)(A) is amended by striking or at the end of clause (iii), by inserting or at the end of clause (iv), and by adding at the end the following new clause:

(v)

combined heat and power system property,

.

(2)

Combined Heat and Power System Property

Subsection (c) of section 48 is amended—

(A)

by striking Qualified fuel cell property; qualified microturbine property in the heading and inserting Definitions, and

(B)

by adding at the end the following new paragraph:

(3)

Combined Heat and Power System Property

(A)

Combined heat and power system property

The term combined heat and power system property means property comprising a system—

(i)

which uses the same energy source for the simultaneous or sequential generation of electrical power, mechanical shaft power, or both, in combination with the generation of steam or other forms of useful thermal energy (including heating and cooling applications),

(ii)

which produces—

(I)

at least 20 percent of its total useful energy in the form of thermal energy which is not used to produce electrical or mechanical power (or combination thereof), and

(II)

at least 20 percent of its total useful energy in the form of electrical or mechanical power (or combination thereof),

(iii)

the energy efficiency percentage of which exceeds 60 percent, and

(iv)

which is placed in service before January 1, 2017.

(B)

Limitation

(i)

In general

In the case of combined heat and power system property with an electrical capacity in excess of the applicable capacity placed in service during the taxable year, the credit under subsection (a)(1) (determined without regard to this paragraph) for such year shall be equal to the amount which bears the same ratio to such credit as the applicable capacity bears to the capacity of such property.

(ii)

Applicable capacity

For purposes of clause (i), the term applicable capacity means 15 megawatts or a mechanical energy capacity of more than 20,000 horsepower or an equivalent combination of electrical and mechanical energy capacities.

(iii)

Maximum capacity

The term combined heat and power system property shall not include any property comprising a system if such system has a capacity in excess of 50 megawatts or a mechanical energy capacity in excess of 67,000 horsepower or an equivalent combination of electrical and mechanical energy capacities.

(C)

Special rules

(i)

Energy efficiency percentage

For purposes of this paragraph, the energy efficiency percentage of a system is the fraction—

(I)

the numerator of which is the total useful electrical, thermal, and mechanical power produced by the system 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 sources for the system.

(ii)

Determinations made on btu basis

The energy efficiency percentage and the percentages under subparagraph (A)(ii) shall be determined on a Btu basis.

(iii)

Input and output property not included

The term combined heat and power system property does not include property used to transport the energy source to the facility or to distribute energy produced by the facility.

(D)

Systems using biomass

If a system is designed to use biomass (within the meaning of paragraphs (2) and (3) of section 45(c) without regard to the last sentence of paragraph (3)(A)) for at least 90 percent of the energy source—

(i)

subparagraph (A)(iii) shall not apply, but

(ii)

the amount of credit determined under subsection (a) with respect to such system shall not exceed the amount which bears the same ratio to such amount of credit (determined without regard to this subparagraph) as the energy efficiency percentage of such system bears to 60 percent.

.

(3)

Conforming amendment

Section 48(a)(1) is amended by striking paragraphs (1)(B) and (2)(B) and inserting paragraphs (1)(B), (2)(B), and (3)(B).

(d)

Increase of credit limitation for fuel cell property

Subparagraph (B) of section 48(c)(1) is amended by striking $500 and inserting $1,500.

(e)

Public utility property taken into account

(1)

In general

Paragraph (3) of section 48(a) is amended by striking the second sentence thereof.

(2)

Conforming amendments

(A)

Paragraph (1) of section 48(c) is amended by striking subparagraph (D) and redesignating subparagraph (E) as subparagraph (D).

(B)

Paragraph (2) of section 48(c) is amended by striking subparagraph (D) and redesignating subparagraph (E) as subparagraph (D).

(f)

Effective date

(1)

In general

Except as otherwise provided in this subsection, the amendments made by this section shall take effect on the date of the enactment of this Act.

(2)

Allowance against alternative minimum tax

The amendments made by subsection (b) shall apply to credits determined under section 46 of the Internal Revenue Code of 1986 in taxable years beginning after the date of the enactment of this Act and to carrybacks of such credits.

(3)

Combined heat and power and fuel cell property

The amendments made by subsections (c) and (d) shall apply to periods after the date of the enactment of this Act, in taxable years ending after such date, 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).

(4)

Public utility property

The amendments made by subsection (e) shall apply to periods after February 13, 2008, in taxable years ending after such date, 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).

104.

Credit for residential energy efficient property

(a)

Extension

Section 25D(g) is amended by striking December 31, 2008 and inserting December 31, 2016.

(b)

Removal of limitation for solar electric property

(1)

In general

Section 25D(b)(1), as amended by subsections (c) and (d), is amended—

(A)

by striking subparagraph (A), and

(B)

by redesignating subparagraphs (B) through (E) as subparagraphs (A) through and (D), respectively.

(2)

Conforming amendment

Section 25D(e)(4)(A), as amended by subsections (c) and (d), is amended—

(A)

by striking clause (i), and

(B)

by redesignating clauses (ii) through (v) as clauses (i) and (iv), respectively.

(c)

Credit for residential wind property

(1)

In general

Section 25D(a) is amended by striking and at the end of paragraph (2), by striking the period at the end of paragraph (3) and inserting , and, and by adding at the end the following new paragraph:

(4)

30 percent of the qualified small wind energy property expenditures made by the taxpayer during such year.

.

(2)

Limitation

Section 25D(b)(1) is amended by striking and at the end of subparagraph (B), by striking the period at the end of subparagraph (C) and inserting , and, and by adding at the end the following new subparagraph:

(D)

$500 with respect to each half kilowatt of capacity (not to exceed $4,000) of wind turbines for which qualified small wind energy property expenditures are made.

.

(3)

Qualified small wind energy property expenditures

(A)

In general

Section 25D(d) is amended by adding at the end the following new paragraph:

(4)

Qualified small wind energy property expenditure

The term qualified small wind energy property expenditure means an expenditure for property which uses a wind turbine to generate electricity for use in connection with a dwelling unit located in the United States and used as a residence by the taxpayer.

.

(B)

No double benefit

Section 45(d)(1) is amended by adding at the end the following new sentence: Such term shall not include any facility with respect to which any qualified small wind energy property expenditure (as defined in subsection (d)(4) of section 25D) is taken into account in determining the credit under such section..

(4)

Maximum expenditures in case of joint occupancy

Section 25D(e)(4)(A) is amended by striking and at the end of clause (ii), by striking the period at the end of clause (iii) and inserting , and, and by adding at the end the following new clause:

(iv)

$1,667 in the case of each half kilowatt of capacity (not to exceed $13,333) of wind turbines for which qualified small wind energy property expenditures are made.

.

(d)

Credit for geothermal heat Pump systems

(1)

In general

Section 25D(a), as amended by subsection (c), is amended by striking and at the end of paragraph (3), by striking the period at the end of paragraph (4) and inserting , and, and by adding at the end the following new paragraph:

(5)

30 percent of the qualified geothermal heat pump property expenditures made by the taxpayer during such year.

.

(2)

Limitation

Section 25D(b)(1), as amended by subsection (c), is amended by striking and at the end of subparagraph (C), by striking the period at the end of subparagraph (D) and inserting , and, and by adding at the end the following new subparagraph:

(E)

$2,000 with respect to any qualified geothermal heat pump property expenditures.

.

(3)

Qualified geothermal heat pump property expenditure

Section 25D(d), as amended by subsection (c), is amended by adding at the end the following new paragraph:

(5)

Qualified geothermal heat pump property expenditure

(A)

In general

The term qualified geothermal heat pump property expenditure means an expenditure for qualified geothermal heat pump property installed on or in connection with a dwelling unit located in the United States and used as a residence by the taxpayer.

(B)

Qualified geothermal heat pump property

The term qualified geothermal heat pump property means any equipment which—

(i)

uses the ground or ground water as a thermal energy source to heat the dwelling unit referred to in subparagraph (A) or as a thermal energy sink to cool such dwelling unit, and

(ii)

meets the requirements of the Energy Star program which are in effect at the time that the expenditure for such equipment is made.

.

(4)

Maximum expenditures in case of joint occupancy

Section 25D(e)(4)(A), as amended by subsection (c), is amended by striking and at the end of clause (iii), by striking the period at the end of clause (iv) and inserting , and, and by adding at the end the following new clause:

(v)

$6,667 in the case of any qualified geothermal heat pump property expenditures.

.

(e)

Credit allowed against alternative minimum tax

(1)

In general

Subsection (c) of section 25D is amended to read as follows:

(c)

Limitation based on amount of tax; carryforward of unused credit

(1)

Limitation based on amount of tax

In the case of a taxable year to which section 26(a)(2) does not apply, the credit allowed under subsection (a) for the taxable year shall not exceed the excess of—

(A)

the sum of the regular tax liability (as defined in section 26(b)) plus the tax imposed by section 55, over

(B)

the sum of the credits allowable under this subpart (other than this section) and section 27 for the taxable year.

(2)

Carryforward of unused credit

(A)

Rule for years in which all personal credits allowed against regular and alternative minimum tax

In the case of a taxable year to which section 26(a)(2) applies, if the credit allowable under subsection (a) exceeds the limitation imposed by section 26(a)(2) for such taxable year reduced by the sum of the credits allowable under this subpart (other than this section), such excess shall be carried to the succeeding taxable year and added to the credit allowable under subsection (a) for such succeeding taxable year.

(B)

Rule for other years

In the case of a taxable year to which section 26(a)(2) does not apply, if the credit allowable under subsection (a) exceeds the limitation imposed by paragraph (1) for such taxable year, such excess shall be carried to the succeeding taxable year and added to the credit allowable under subsection (a) for such succeeding taxable year.

.

(2)

Conforming amendments

(A)

Section 23(b)(4)(B) is amended by inserting and section 25D after this section.

(B)

Section 24(b)(3)(B) is amended by striking and 25B and inserting , 25B, and 25D.

(C)

Section 25B(g)(2) is amended by striking section 23 and inserting sections 23 and 25D.

(D)

Section 26(a)(1) is amended by striking and 25B and inserting 25B, and 25D.

(f)

Effective date

(1)

In general

Except as provided in paragraph (2), the amendments made by this section shall apply to taxable years beginning after December 31, 2007.

(2)

Solar electric property limitation

The amendments made by subsection (b) shall apply to property placed in service after the date of the enactment of this Act, in taxable years ending after such date.

(3)

Application of EGTRRA sunset

The amendments made by subparagraphs (A) and (B) of subsection (e)(2) shall be subject to title IX of the Economic Growth and Tax Relief Reconciliation Act of 2001 in the same manner as the provisions of such Act to which such amendments relate.

105.

Special rule to implement FERC and State electric restructuring policy

(a)

Extension for qualified electric utilities

(1)

In general

Paragraph (3) of section 451(i) is amended by inserting (before January 1, 2010, in the case of a qualified electric utility) after January 1, 2008.

(2)

Qualified electric utility

Subsection (i) of section 451 is amended by redesignating paragraphs (6) through (10) as paragraphs (7) through (11), respectively, and by inserting after paragraph (5) the following new paragraph:

(6)

Qualified electric utility

For purposes of this subsection, the term qualified electric utility means a person that, as of the date of the qualifying electric transmission transaction, is vertically integrated, in that it is both—

(A)

a transmitting utility (as defined in section 3(23) of the Federal Power Act (16 U.S.C. 796(23))) with respect to the transmission facilities to which the election under this subsection applies, and

(B)

an electric utility (as defined in section 3(22) of the Federal Power Act (16 U.S.C. 796(22))).

.

(b)

Extension of period for transfer of operational control authorized by FERC

Clause (ii) of section 451(i)(4)(B) is amended by striking December 31, 2007 and inserting the date which is 4 years after the close of the taxable year in which the transaction occurs.

(c)

Property located outside the united states not treated as exempt utility property

Paragraph (5) of section 451(i) is amended by adding at the end the following new subparagraph:

(C)

Exception for property located outside the united states

The term exempt utility property shall not include any property which is located outside the United States.

.

(d)

Effective Dates

(1)

Extension

The amendments made by subsection (a) shall apply to transactions after December 31, 2007.

(2)

Transfers of operational control

The amendment made by subsection (b) shall take effect as if included in section 909 of the American Jobs Creation Act of 2004.

(3)

Exception for property located outside the united states

The amendment made by subsection (c) shall apply to transactions after the date of the enactment of this Act.

2

Carbon mitigation provisions

111.

Expansion and modification of advanced coal project investment credit

(a)

Modification of credit amount

Section 48A(a) is amended by striking and at the end of paragraph (1), by striking the period at the end of paragraph (2) and inserting , and, and by adding at the end the following new paragraph:

(3)

30 percent of the qualified investment for such taxable year in the case of projects described in clause (iii) of subsection (d)(3)(B).

.

(b)

Expansion of aggregate credits

Section 48A(d)(3)(A) is amended by striking $1,300,000,000 and inserting $2,250,000,000.

(c)

Authorization of Additional Projects

(1)

In general

Subparagraph (B) of section 48A(d)(3) is amended to read as follows:

(B)

Particular projects

Of the dollar amount in subparagraph (A), the Secretary is authorized to certify—

(i)

$800,000,000 for integrated gasification combined cycle projects the application for which is submitted during the period described in paragraph (2)(A)(i),

(ii)

$500,000,000 for projects which use other advanced coal-based generation technologies the application for which is submitted during the period described in paragraph (2)(A)(i), and

(iii)

$950,000,000 for advanced coal-based generation technology projects the application for which is submitted during the period described in paragraph (2)(A)(ii).

.

(2)

Application period for additional projects

Subparagraph (A) of section 48A(d)(2) is amended to read as follows:

(A)

Application period

Each applicant for certification under this paragraph shall submit an application meeting the requirements of subparagraph (B). An applicant may only submit an application—

(i)

for an allocation from the dollar amount specified in clause (i) or (ii) of paragraph (3)(B) during the 3-year period beginning on the date the Secretary establishes the program under paragraph (1), and

(ii)

for an allocation from the dollar amount specified in paragraph (3)(B)(iii) during the 3-year period beginning at the earlier of the termination of the period described in clause (i) or the date prescribed by the Secretary.

.

(3)

Capture and sequestration of carbon dioxide emissions requirement

(A)

In general

Section 48A(e)(1) 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)

in the case of any project the application for which is submitted during the period described in subsection (d)(2)(A)(ii), the project includes equipment which separates and sequesters at least 65 percent (70 percent in the case of an application for reallocated credits under subsection (d)(4)) of such project's total carbon dioxide emissions.

.

(B)

Highest priority for projects which sequester carbon dioxide emissions

Section 48A(e)(3) is amended by striking and at the end of subparagraph (A)(iii), by striking the period at the end of subparagraph (B)(iii) and inserting , and, and by adding at the end the following new subparagraph:

(C)

give highest priority to projects with the greatest separation and sequestration percentage of total carbon dioxide emissions.

.

(C)

Recapture of credit for failure to sequester

Section 48A is amended by adding at the end the following new subsection:

(i)

Recapture of credit for failure To sequester

The Secretary shall provide for recapturing the benefit of any credit allowable under subsection (a) with respect to any project which fails to attain or maintain the separation and sequestration requirements of subsection (e)(1)(G).

.

(4)

Additional priority for research partnerships

Section 48A(e)(3)(B), as amended by paragraph (3)(B), is amended—

(A)

by striking and at the end of clause (ii),

(B)

by redesignating clause (iii) as clause (iv), and

(C)

by inserting after clause (ii) the following new clause:

(iii)

applicant participants who have a research partnership with an eligible educational institution (as defined in section 529(e)(5)), and

.

(5)

Clerical amendment

Section 48A(e)(3) is amended by striking integrated gasification combined cycle in the heading and inserting certain.

(d)

Disclosure of allocations

Section 48A(d) is amended by adding at the end the following new paragraph:

(5)

Disclosure of allocations

The Secretary shall, upon making a certification under this subsection or section 48B(d), publicly disclose the identity of the applicant and the amount of the credit certified with respect to such applicant.

.

(e)

Effective dates

(1)

In general

Except as otherwise provided in this subsection, the amendments made by this section shall apply to credits the application for which is submitted during the period described in section 48A(d)(2)(A)(ii) of the Internal Revenue Code of 1986 and which are allocated or reallocated after the date of the enactment of this Act.

(2)

Disclosure of allocations

The amendment made by subsection (d) shall apply to certifications made after the date of the enactment of this Act.

(3)

Clerical amendment

The amendment made by subsection (c)(5) shall take effect as if included in the amendment made by section 1307(b) of the Energy Tax Incentives Act of 2005.

112.

Expansion and modification of coal gasification investment credit

(a)

Modification of credit amount

Section 48B(a) is amended by inserting (30 percent in the case of credits allocated under subsection (d)(1)(B)) after 20 percent.

(b)

Expansion of aggregate credits

Section 48B(d)(1) is amended by striking shall not exceed $350,000,000 and all that follows and inserting

shall not exceed—

(A)

$350,000,000, plus

(B)

$150,000,000 for qualifying gasification projects that include equipment which separates and sequesters at least 75 percent of such project’s total carbon dioxide emissions.

.

(c)

Recapture of credit for failure To sequester

Section 48B is amended by adding at the end the following new subsection:

(f)

Recapture of credit for failure to sequester

The Secretary shall provide for recapturing the benefit of any credit allowable under subsection (a) with respect to any project which fails to attain or maintain the separation and sequestration requirements for such project under subsection (d)(1).

.

(d)

Selection priorities

Section 48B(d) is amended by adding at the end the following new paragraph:

(4)

Selection priorities

In determining which qualifying gasification projects to certify under this section, the Secretary shall—

(A)

give highest priority to projects with the greatest separation and sequestration percentage of total carbon dioxide emissions, and

(B)

give high priority to applicant participants who have a research partnership with an eligible educational institution (as defined in section 529(e)(5)).

.

(e)

Effective date

The amendments made by this section shall apply to credits described in section 48B(d)(1)(B) of the Internal Revenue Code of 1986 which are allocated or reallocated after the date of the enactment of this Act.

113.

Temporary increase in coal excise tax

Paragraph (2) of section 4121(e) is amended—

(1)

by striking January 1, 2014 in subparagraph (A) and inserting December 31, 2018, and

(2)

by striking January 1 after 1981 in subparagraph (B) and inserting December 31 after 2007.

114.

Special rules for refund of the coal excise tax to certain coal producers and exporters

(a)

Refund

(1)

Coal producers

(A)

In general

Notwithstanding subsections (a)(1) and (c) of section 6416 and section 6511 of the Internal Revenue Code of 1986, if—

(i)

a coal producer establishes that such coal producer, or a party related to such coal producer, exported coal produced by such coal producer to a foreign country or shipped coal produced by such coal producer to a possession of the United States, or caused such coal to be exported or shipped, the export or shipment of which was other than through an exporter who meets the requirements of paragraph (2),

(ii)

such coal producer filed an excise tax return on or after October 1, 1990, and on or before the date of the enactment of this Act, and

(iii)

such coal producer files a claim for refund with the Secretary not later than the close of the 30-day period beginning on the date of the enactment of this Act,

then the Secretary shall pay to such coal producer an amount equal to the tax paid under section 4121 of such Code on such coal exported or shipped by the coal producer or a party related to such coal producer, or caused by the coal producer or a party related to such coal producer to be exported or shipped.
(B)

Special rules for certain taxpayers

For purposes of this section—

(i)

In general

If a coal producer or a party related to a coal producer has received a judgment described in clause (iii), such coal producer shall be deemed to have established the export of coal to a foreign country or shipment of coal to a possession of the United States under subparagraph (A)(i).

(ii)

Amount of payment

If a taxpayer described in clause (i) is entitled to a payment under subparagraph (A), the amount of such payment shall be reduced by any amount paid pursuant to the judgment described in clause (iii).

(iii)

Judgment described

A judgment is described in this subparagraph if such judgment—

(I)

is made by a court of competent jurisdiction within the United States,

(II)

relates to the constitutionality of any tax paid on exported coal under section 4121 of the Internal Revenue Code of 1986, and

(III)

is in favor of the coal producer or the party related to the coal producer.

(2)

Exporters

Notwithstanding subsections (a)(1) and (c) of section 6416 and section 6511 of the Internal Revenue Code of 1986, and a judgment described in paragraph (1)(B)(iii) of this subsection, if—

(A)

an exporter establishes that such exporter exported coal to a foreign country or shipped coal to a possession of the United States, or caused such coal to be so exported or shipped,

(B)

such exporter filed a tax return on or after October 1, 1990, and on or before the date of the enactment of this Act, and

(C)

such exporter files a claim for refund with the Secretary not later than the close of the 30-day period beginning on the date of the enactment of this Act,

then the Secretary shall pay to such exporter an amount equal to $0.825 per ton of such coal exported by the exporter or caused to be exported or shipped, or caused to be exported or shipped, by the exporter.
(b)

Limitations

Subsection (a) shall not apply with respect to exported coal if a settlement with the Federal Government has been made with and accepted by, the coal producer, a party related to such coal producer, or the exporter, of such coal, as of the date that the claim is filed under this section with respect to such exported coal. For purposes of this subsection, the term settlement with the Federal Government shall not include any settlement or stipulation entered into as of the date of the enactment of this Act, the terms of which contemplate a judgment concerning which any party has reserved the right to file an appeal, or has filed an appeal.

(c)

Subsequent refund prohibited

No refund shall be made under this section to the extent that a credit or refund of such tax on such exported or shipped coal has been paid to any person.

(d)

Definitions

For purposes of this section—

(1)

Coal producer

The term coal producer means the person in whom is vested ownership of the coal immediately after the coal is severed from the ground, without regard to the existence of any contractual arrangement for the sale or other disposition of the coal or the payment of any royalties between the producer and third parties. The term includes any person who extracts coal from coal waste refuse piles or from the silt waste product which results from the wet washing (or similar processing) of coal.

(2)

Exporter

The term exporter means a person, other than a coal producer, who does not have a contract, fee arrangement, or any other agreement with a producer or seller of such coal to export or ship such coal to a third party on behalf of the producer or seller of such coal and—

(A)

is indicated in the shipper’s export declaration or other documentation as the exporter of record, or

(B)

actually exported such coal to a foreign country or shipped such coal to a possession of the United States, or caused such coal to be so exported or shipped.

(3)

Related party

The term a party related to such coal producer means a person who—

(A)

is related to such coal producer through any degree of common management, stock ownership, or voting control,

(B)

is related (within the meaning of section 144(a)(3) of the Internal Revenue Code of 1986) to such coal producer, or

(C)

has a contract, fee arrangement, or any other agreement with such coal producer to sell such coal to a third party on behalf of such coal producer.

(4)

Secretary

The term Secretary means the Secretary of Treasury or the Secretary's designee.

(e)

Timing of refund

With respect to any claim for refund filed pursuant to this section, the Secretary shall determine whether the requirements of this section are met not later than 180 days after such claim is filed. If the Secretary determines that the requirements of this section are met, the claim for refund shall be paid not later than 180 days after the Secretary makes such determination.

(f)

Interest

Any refund paid pursuant to this section shall be paid by the Secretary with interest from the date of overpayment determined by using the overpayment rate and method under section 6621 of the Internal Revenue Code of 1986.

(g)

Denial of double benefit

The payment under subsection (a) with respect to any coal shall not exceed—

(1)

in the case of a payment to a coal producer, the amount of tax paid under section 4121 of the Internal Revenue Code of 1986 with respect to such coal by such coal producer or a party related to such coal producer, and

(2)

in the case of a payment to an exporter, an amount equal to $0.825 per ton with respect to such coal exported by the exporter or caused to be exported by the exporter.

(h)

Application of section

This section applies only to claims on coal exported or shipped on or after October 1, 1990, through the date of the enactment of this Act.

115.

Carbon audit of the tax code

(a)

Study

The Secretary of the Treasury shall enter into an agreement with the National Academy of Sciences to undertake a comprehensive review of the Internal Revenue Code of 1986 to identify the types of and specific tax provisions that have the largest effects on carbon and other greenhouse gas emissions and to estimate the magnitude of those effects.

(b)

Report

Not later than 2 years after the date of enactment of this Act, the National Academy of Sciences shall submit to Congress a report containing the results of study authorized under this section.

(c)

Authorization of appropriations

There is authorized to be appropriated to carry out this section $1,500,000 for the period of fiscal years 2009 and 2010.

B

Transportation and domestic fuel security provisions

121.

Inclusion of cellulosic biofuel in bonus depreciation for biomass ethanol plant property

(a)

In general

Paragraph (3) of section 168(l) is amended to read as follows:

(3)

Cellulosic biofuel

The term cellulosic biofuel means any liquid fuel which is produced from any lignocellulosic or hemicellulosic matter that is available on a renewable or recurring basis.

.

(b)

Conforming amendments

Subsection (l) of section 168 is amended—

(1)

by striking cellulosic biomass ethanol each place it appears and inserting cellulosic biofuel,

(2)

by striking cellulosic biomass ethanol in the heading of such subsection and inserting cellulosic biofuel, and

(3)

by striking cellulosic biomass ethanol in the heading of paragraph (2) thereof and inserting cellulosic biofuel.

(c)

Effective date

The amendments made by this section shall apply to property placed in service after the date of the enactment of this Act, in taxable years ending after such date.

122.

Credits for biodiesel and renewable diesel

(a)

In general

Sections 40A(g), 6426(c)(6), and 6427(e)(5)(B) are each amended by striking December 31, 2008 and inserting December 31, 2009.

(b)

Increase in rate of credit

(1)

Income tax credit

Paragraphs (1)(A) and (2)(A) of section 40A(b) are each amended by striking 50 cents and inserting $1.00.

(2)

Excise tax credit

Paragraph (2) of section 6426(c) is amended to read as follows:

(2)

Applicable amount

For purposes of this subsection, the applicable amount is $1.00.

.

(3)

Conforming amendments

(A)

Subsection (b) of section 40A is amended by striking paragraph (3) and by redesignating paragraphs (4) and (5) as paragraphs (3) and (4), respectively.

(B)

Paragraph (2) of section 40A(f) is amended to read as follows:

(2)

Exception

Subsection (b)(4) shall not apply with respect to renewable diesel.

.

(C)

Paragraphs (2) and (3) of section 40A(e) are each amended by striking subsection (b)(5)(C) and inserting subsection (b)(4)(C).

(D)

Clause (ii) of section 40A(d)(3)(C) is amended by striking subsection (b)(5)(B) and inserting subsection (b)(4)(B).

(c)

Uniform treatment of diesel produced from biomass

Paragraph (3) of section 40A(f) is amended—

(1)

by striking diesel fuel and inserting liquid fuel,

(2)

by striking using a thermal depolymerization process, and

(3)

by striking or D396 in subparagraph (B) and inserting , D396, or other equivalent standard approved by the Secretary.

(d)

Coproduction of renewable diesel with petroleum feedstock

(1)

In general

Paragraph (3) of section 40A(f) (defining renewable diesel) is amended by adding at the end the following flush sentence:

Such term does not include any fuel derived from coprocessing biomass with a feedstock which is not biomass. For purposes of this paragraph, the term biomass has the meaning given such term by section 45K(c)(3).

.

(2)

Conforming amendment

Paragraph (3) of section 40A(f) is amended by striking (as defined in section 45K(c)(3)).

(e)

Eligibility of certain aviation fuel

Subsection (f) of section 40A (relating to renewable diesel) is amended by adding at the end the following new paragraph:

(4)

Certain aviation fuel

(A)

In general

Except as provided in the last three sentences of paragraph (3), the term renewable diesel shall include fuel derived from biomass which meets the requirements of a Department of Defense specification for military jet fuel or an American Society of Testing and Materials specification for aviation turbine fuel.

(B)

Application of mixture credits

In the case of fuel which is treated as renewable diesel solely by reason of subparagraph (A), subsection (b)(1) and section 6426(c) shall be applied with respect to such fuel by treating kerosene as though it were diesel fuel.

.

(f)

Effective date

(1)

In general

Except as otherwise provided in this subsection, the amendments made by this section shall apply to fuel produced, and sold or used, after December 31, 2008.

(2)

Coproduction of renewable diesel with petroleum feedstock

The amendments made by subsection (c) shall apply to fuel produced, and sold or used, after February 13, 2008.

123.

Clarification that credits for fuel are designed to provide an incentive for United States production

(a)

Alcohol fuels credit

Subsection (d) of section 40 is amended by adding at the end the following new paragraph:

(7)

Limitation to alcohol with connection to the United States

No credit shall be determined under this section with respect to any alcohol which is produced outside the United States for use as a fuel outside the United States. For purposes of this paragraph, the term United States includes any possession of the United States.

.

(b)

Biodiesel fuels credit

Subsection (d) of section 40A is amended by adding at the end the following new paragraph:

(5)

Limitation to biodiesel with connection to the United States

No credit shall be determined under this section with respect to any biodiesel which is produced outside the United States for use as a fuel outside the United States. For purposes of this paragraph, the term United States includes any possession of the United States.

.

(c)

Excise tax credit

(1)

In general

Section 6426 is amended by adding at the end the following new subsection:

(i)

Limitation to fuels with connection to the United States

(1)

Alcohol

No credit shall be determined under this section with respect to any alcohol which is produced outside the United States for use as a fuel outside the United States.

(2)

Biodiesel and alternative fuels

No credit shall be determined under this section with respect to any biodiesel or alternative fuel which is produced outside the United States for use as a fuel outside the United States.

For purposes of this subsection, the term United States includes any possession of the United States.

.

(2)

Conforming amendment

Subsection (e) of section 6427 is amended by redesignating paragraph (5) as paragraph (6) and by inserting after paragraph (4) the following new paragraph:

(5)

Limitation to fuels with connection to the United States

No amount shall be payable under paragraph (1) or (2) with respect to any mixture or alternative fuel if credit is not allowed with respect to such mixture or alternative fuel by reason of section 6426(i).

.

(d)

Effective date

The amendments made by this section shall apply to claims for credit or payment made on or after May 15, 2008.

124.

Credit for new qualified plug-in electric drive motor vehicles

(a)

In general

Section 30 is amended to read as follows:

30.

New qualified plug-in electric drive motor vehicles

(a)

Allowance of credit

There shall be allowed as a credit against the tax imposed by this chapter for the taxable year an amount equal to the sum of the credit amounts determined under subsection (b) with respect to each new qualified plug-in electric drive motor vehicle placed in service by the taxpayer during the taxable year.

(b)

Per vehicle dollar limitation

(1)

In general

The amount determined under this subsection with respect to any new qualified plug-in electric drive motor vehicle is the sum of the amounts determined under paragraphs (2) and (3) with respect to such vehicle.

(2)

Base amount

The amount determined under this paragraph is $3,000.

(3)

Battery capacity

In the case of a vehicle which draws propulsion energy from a battery with not less than 5 kilowatt hours of capacity, the amount determined under this paragraph is $200, plus $200 for each kilowatt hour of capacity in excess of 5 kilowatt hours. The amount determined under this paragraph shall not exceed $2,000.

(c)

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

(A)

In general

For purposes of this title, the credit allowed under subsection (a) for any taxable year (determined after application of paragraph (1)) shall be treated as a credit allowable under subpart A for such taxable year.

(B)

Limitation based on amount of tax

In the case of a taxable year to which section 26(a)(2) does not apply, the credit allowed under subsection (a) for any taxable year (determined after application of paragraph (1)) shall not exceed the excess of—

(i)

the sum of the regular tax liability (as defined in section 26(b)) plus the tax imposed by section 55, over

(ii)

the sum of the credits allowable under subpart A (other than this section and sections 23 and 25D) and section 27 for the taxable year.

(d)

New qualified plug-In electric drive motor vehicle

For purposes of this section—

(1)

In general

The term new qualified plug-in electric drive motor vehicle means a motor vehicle—

(A)

the original use of which commences with the taxpayer,

(B)

which is acquired for use or lease by the taxpayer and not for resale,

(C)

which is made by a manufacturer,

(D)

which has a gross vehicle weight rating of less than 14,000 pounds,

(E)

which has received a certificate of conformity under the Clean Air Act and meets or exceeds the Bin 5 Tier II emission standard established in regulations prescribed by the Administrator of the Environmental Protection Agency under section 202(i) of the Clean Air Act for that make and model year vehicle, and

(F)

which is propelled to a significant extent by an electric motor which draws electricity from a battery which—

(i)

has a capacity of not less than 4 kilowatt hours, and

(ii)

is capable of being recharged from an external source of electricity.

(2)

Exception

The term new qualified plug-in electric drive motor vehicle shall not include any vehicle which is not a passenger automobile or light truck if such vehicle has a gross vehicle weight rating of less than 8,500 pounds.

(3)

Motor vehicle

The term motor vehicle means any vehicle which is manufactured primarily for use on public streets, roads, and highways (not including a vehicle operated exclusively on a rail or rails) and which has at least 4 wheels.

(4)

Other terms

The terms passenger automobile, light truck, and manufacturer have the meanings given such terms 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.).

(5)

Battery capacity

The term capacity means, with respect to any battery, the quantity of electricity which the battery is capable of storing, expressed in kilowatt hours, as measured from a 100 percent state of charge to a 0 percent state of charge.

(e)

Limitation on number of new qualified plug-In electric drive motor vehicles eligible for credit

(1)

In general

In the case of a new qualified plug-in electric drive motor vehicle sold during the phaseout period, only the applicable percentage of the credit otherwise allowable under subsection (a) shall be allowed.

(2)

Phaseout period

For purposes of this subsection, the phaseout period is the period beginning with the second calendar quarter following the calendar quarter which includes the first date on which the number of new qualified plug-in electric drive motor vehicles manufactured by the manufacturer of the vehicle referred to in paragraph (1) sold for use in the United States after the date of the enactment of this section, is at least 60,000.

(3)

Applicable percentage

For purposes of paragraph (1), the applicable percentage is—

(A)

50 percent for the first 2 calendar quarters of the phaseout period,

(B)

25 percent for the 3d and 4th calendar quarters of the phaseout period, and

(C)

0 percent for each calendar quarter thereafter.

(4)

Controlled groups

Rules similar to the rules of section 30B(f)(4) shall apply for purposes of this subsection.

(f)

Special rules

(1)

Basis reduction

The basis of any property for which a credit is allowable under subsection (a) shall be reduced by the amount of such credit (determined without regard to subsection (c)).

(2)

Recapture

The Secretary shall, by regulations, provide for recapturing the benefit of any credit allowable under subsection (a) with respect to any property which ceases to be property eligible for such credit.

(3)

Property used outside United States, etc., not qualified

No credit shall be allowed under subsection (a) with respect to any property referred to in section 50(b)(1) or with respect to the portion of the cost of any property taken into account under section 179.

(4)

Election not to take credit

No credit shall be allowed under subsection (a) for any vehicle if the taxpayer elects to not have this section apply to such vehicle.

(5)

Property used by tax-exempt entity; interaction with air quality and motor vehicle safety standards

Rules similar to the rules of paragraphs (6) and (10) of section 30B(h) shall apply for purposes of this section.

.

(b)

Coordination with alternative motor vehicle credit

Section 30B(d)(3) is amended by adding at the end the following new subparagraph:

(D)

Exclusion of plug-in vehicles

Any vehicle with respect to which a credit is allowable under section 30 (determined without regard to subsection (c) thereof) shall not be taken into account under this section.

.

(c)

Credit made part of general business credit

Section 38(b) is amended by striking plus at the end of paragraph (32), by striking the period at the end of paragraph (33) and inserting ‘‘, plus’’, and by adding at the end the following new paragraph:

(34)

the portion of the new qualified plug-in electric drive motor vehicle credit to which section 30(c)(1) applies.

.

(d)

Conforming amendments

(1)
(A)

Section 24(b)(3)(B), as amended by section 104, is amended by striking and 25D and inserting 25D, and 30.

(B)

Section 25(e)(1)(C)(ii) is amended by inserting 30, after 25D,.

(C)

Section 25B(g)(2), as amended by section 104, is amended by striking and 25D and inserting , 25D, and 30.

(D)

Section 26(a)(1), as amended by section 104, is amended by striking and 25D and inserting 25D, and 30.

(E)

Section 1400C(d)(2) is amended by striking and 25D and inserting 25D, and 30.

(2)

Section 30B(h)(1) is amended by striking section 30(c)(2) and inserting section 30(d)(3).

(3)
(A)

Section 53(d)(1)(B) is amended by striking clause (iii) and redesignating clause (iv) as clause (iii).

(B)

Subclause (II) of section 53(d)(1)(B)(iii), as so redesignated, is amended by striking increased in the manner provided in clause (iii).

(4)

Section 55(c)(3) is amended by striking 30(b)(3),.

(5)

Section 1016(a)(25) is amended by striking section 30(d)(1) and inserting section 30(f)(1).

(6)

Section 6501(m) is amended by striking section 30(d)(4) and inserting section 30(f)(4).

(7)

The item in the table of sections for subpart B of part IV of subchapter A of chapter 1 is amended to read as follows:

Sec. 30. New qualified plug-in electric drive motor vehicles.

.

(e)

Treatment of alternative motor vehicle credit as a personal credit

(1)

In general

Paragraph (2) of section 30B(g) is amended to read as follows:

(2)

Personal credit

The credit allowed under subsection (a) for any taxable year (after application of paragraph (1)) shall be treated as a credit allowable under subpart A for such taxable year.

.

(2)

Conforming amendments

(A)

Subparagraph (A) of section 30C(d)(2) is amended by striking sections 27, 30, and 30B and inserting section 27.

(B)

Paragraph (3) of section 55(c) is amended by striking 30B(g)(2),.

(f)

Effective date

(1)

In general

Except as otherwise provided in this subsection, the amendments made by this section shall apply to taxable years beginning after December 31, 2008.

(2)

Treatment of alternative motor vehicle credit as personal credit

The amendments made by subsection (e) shall apply to taxable years beginning after December 31, 2007.

(g)

Application of EGTRRA sunset

The amendment made by subsection (d)(1)(A) shall be subject to title IX of the Economic Growth and Tax Relief Reconciliation Act of 2001 in the same manner as the provision of such Act to which such amendment relates.

125.

Exclusion from heavy truck tax for idling reduction units and advanced insulation

(a)

In general

Section 4053 is amended by adding at the end the following new paragraphs:

(9)

Idling reduction device

Any device or system of devices which—

(A)

is designed to provide to a vehicle those services (such as heat, air conditioning, or electricity) that would otherwise require the operation of the main drive engine while the vehicle is temporarily parked or remains stationary using one or more devices affixed to a tractor or truck, and

(B)

is determined by the Administrator of the Environmental Protection Agency, in consultation with the Secretary of Energy and the Secretary of Transportation, to reduce idling of such vehicle at a motor vehicle rest stop or other location where such vehicles are temporarily parked or remain stationary.

(10)

Advanced insulation

Any insulation that has an R value of not less than R35 per inch.

.

(b)

Effective date

The amendment made by this section shall apply to sales or installations after the date of the enactment of this Act.

126.

Transportation fringe benefit to bicycle commuters

(a)

In general

Paragraph (1) of section 132(f) is amended by adding at the end the following:

(D)

Any qualified bicycle commuting reimbursement.

.

(b)

Limitation on exclusion

Paragraph (2) of section 132(f) is amended by striking and at the end of subparagraph (A), by striking the period at the end of subparagraph (B) and inserting , and, and by adding at the end the following new subparagraph:

(C)

the applicable annual limitation in the case of any qualified bicycle commuting reimbursement.

.

(c)

Definitions

Paragraph (5) of section 132(f) is amended by adding at the end the following:

(F)

Definitions related to bicycle commuting reimbursement

(i)

Qualified bicycle commuting reimbursement

The term qualified bicycle commuting reimbursement means, with respect to any calendar year, any employer reimbursement during the 15-month period beginning with the first day of such calendar year for reasonable expenses incurred by the employee during such calendar year for the purchase of a bicycle and bicycle improvements, repair, and storage, if such bicycle is regularly used for travel between the employee’s residence and place of employment.

(ii)

Applicable annual limitation

The term applicable annual limitation means, with respect to any employee for any calendar year, the product of $20 multiplied by the number of qualified bicycle commuting months during such year.

(iii)

Qualified bicycle commuting month

The term qualified bicycle commuting month means, with respect to any employee, any month during which such employee—

(I)

regularly uses the bicycle for a substantial portion of the travel between the employee’s residence and place of employment, and

(II)

does not receive any benefit described in subparagraph (A), (B), or (C) of paragraph (1).

.

(d)

Constructive receipt of benefit

Paragraph (4) of section 132(f) is amended by inserting (other than a qualified bicycle commuting reimbursement) after qualified transportation fringe.

(e)

Effective date

The amendments made by this section shall apply to taxable years beginning after December 31, 2008.

127.

Alternative fuel vehicle refueling property credit

(a)

Increase in credit amount

Section 30C is amended—

(1)

by striking 30 percent in subsection (a) and inserting 50 percent,

(2)

by striking $30,000 in subsection (b)(1) and inserting $50,000, and

(3)

by striking $1,000 in subsection (b)(2) and inserting $2,000.

(b)

Extension of credit

Subsection (g) of section 30C is amended to read as follows:

(g)

Termination

This section shall not apply to any property placed in service after—

(1)

December 31 2017, in the case of property relating to natural gas, compressed natural gas, or liquified natural gas, and which is not of a character subject to an allowance for depreciation,

(2)

December 31, 2014, in the case of—

(A)

property relating to hydrogen, and

(B)

property relating to natural gas, compressed natural gas, or liquified natural gas, and which is of a character subject to an allowance for depreciation, and

(3)

December 31, 2010, in any other case.

.

(c)

Effective date

The amendments made by this section shall apply to property placed in service after the date of the enactment of this Act, in taxable years ending after such date.

128.

Certain income and gains relating to alcohol fuels and mixtures, biodiesel fuels and mixtures, and alternative fuels and mixtures treated as qualifying income for publicly traded partnerships

(a)

In general

Subparagraph (E) of section 7704(d)(1) is amended by inserting , or the transportation or storage of any fuel described in subsection (b), (c), (d), or (e) of section 6426, or any alcohol fuel defined in section 6426(b)(4)(A) or any biodiesel fuel as defined in section 40A(d)(1) after timber).

(b)

Effective date

The amendment made by this section shall apply to taxable years beginning after the date of the enactment of this Act.

C

Energy conservation and efficiency provisions

131.

Credit for nonbusiness energy property

(a)

Extension of credit

Section 25C(g) is amended by striking placed in service after December 31, 2007 and inserting

placed in service—

(1)

after December 31, 2007, and before January 1, 2009, or

(2)

after December 31, 2009.

.

(b)

Qualified biomass fuel property

(1)

In general

Section 25C(d)(3) is amended—

(A)

by striking and at the end of subparagraph (D),

(B)

by striking the period at the end of subparagraph (E) and inserting , and, and

(C)

by adding at the end the following new subparagraph:

(F)

a stove which uses the burning of biomass fuel to heat a dwelling unit located in the United States and used as a residence by the taxpayer, or to heat water for use in such a dwelling unit, and which has a thermal efficiency rating of at least 75 percent.

.

(2)

Biomass fuel

Section 25C(d) is amended by adding at the end the following new paragraph:

(6)

Biomass fuel

The term biomass fuel means any plant-derived fuel available on a renewable or recurring basis, including agricultural crops and trees, wood and wood waste and residues (including wood pellets), plants (including aquatic plants), grasses, residues, and fibers.

.

(c)

Coordination with credit for qualified geothermal heat Pump property expenditures

(1)

In general

Paragraph (3) of section 25C(d), as amended by subsection (b), is amended by striking subparagraph (C) and by redesignating subparagraphs (D), (E), and (F) as subparagraphs (C), (D), and (E), respectively.

(2)

Conforming amendment

Subparagraph (C) of section 25C(d)(2) is amended to read as follows:

(C)

Requirements and standards for air conditioners and heat pumps

The standards and requirements prescribed by the Secretary under subparagraph (B) with respect to the energy efficiency ratio (EER) for central air conditioners and electric heat pumps—

(i)

shall require measurements to be based on published data which is tested by manufacturers at 95 degrees Fahrenheit, and

(ii)

may be based on the certified data of the Air Conditioning and Refrigeration Institute that are prepared in partnership with the Consortium for Energy Efficiency.

.

(d)

Effective date

The amendments made by this section shall apply to expenditures made after December 31, 2008.

132.

Energy efficient commercial buildings deduction

Subsection (h) of section 179D is amended by striking December 31, 2008 and inserting December 31, 2013.

133.

Modifications of energy efficient appliance credit for appliances produced after 2007

(a)

In general

Subsection (b) of section 45M is amended to read as follows:

(b)

Applicable amount

For purposes of subsection (a)—

(1)

Dishwashers

The applicable amount is—

(A)

$45 in the case of a dishwasher which is manufactured in calendar year 2008 or 2009 and which uses no more than 324 kilowatt hours per year and 5.8 gallons per cycle, and

(B)

$75 in the case of a dishwasher which is manufactured in calendar year 2008, 2009, or 2010 and which uses no more than 307 kilowatt hours per year and 5.0 gallons per cycle (5.5 gallons per cycle for dishwashers designed for greater than 12 place settings).

(2)

Clothes washers

The applicable amount is—

(A)

$75 in the case of a residential top-loading clothes washer manufactured in calendar year 2008 which meets or exceeds a 1.72 modified energy factor and does not exceed a 8.0 water consumption factor,

(B)

$125 in the case of a residential top-loading clothes washer manufactured in calendar year 2008 or 2009 which meets or exceeds a 1.8 modified energy factor and does not exceed a 7.5 water consumption factor,

(C)

$150 in the case of a residential or commercial clothes washer manufactured in calendar year 2008, 2009, or 2010 which meets or exceeds 2.0 modified energy factor and does not exceed a 6.0 water consumption factor, and

(D)

$250 in the case of a residential or commercial clothes washer manufactured in calendar year 2008, 2009, or 2010 which meets or exceeds 2.2 modified energy factor and does not exceed a 4.5 water consumption factor.

(3)

Refrigerators

The applicable amount is—

(A)

$50 in the case of a refrigerator which is manufactured in calendar year 2008, and consumes at least 20 percent but not more than 22.9 percent less kilowatt hours per year than the 2001 energy conservation standards,

(B)

$75 in the case of a refrigerator which is manufactured in calendar year 2008 or 2009, and consumes at least 23 percent but no more than 24.9 percent less kilowatt hours per year than the 2001 energy conservation standards,

(C)

$100 in the case of a refrigerator which is manufactured in calendar year 2008, 2009, or 2010, and consumes at least 25 percent but not more than 29.9 percent less kilowatt hours per year than the 2001 energy conservation standards, and

(D)

$200 in the case of a refrigerator manufactured in calendar year 2008, 2009, or 2010 and which consumes at least 30 percent less energy than the 2001 energy conservation standards.

.

(b)

Eligible production

(1)

Similar treatment for all appliances

Subsection (c) of section 45M is amended—

(A)

by striking paragraph (2),

(B)

by striking (1) In general and all that follows through the eligible and inserting The eligible,

(C)

by moving the text of such subsection in line with the subsection heading, and

(D)

by redesignating subparagraphs (A) and (B) as paragraphs (1) and (2), respectively, and by moving such paragraphs 2 ems to the left.

(2)

Modification of base period

Paragraph (2) of section 45M(c), as amended by paragraph (1), is amended by striking 3-calendar year and inserting 2-calendar year.

(c)

Types of energy efficient appliances

Subsection (d) of section 45M (defining types of energy efficient appliances) is amended to read as follows:

(d)

Types of energy efficient appliance

For purposes of this section, the types of energy efficient appliances are—

(1)

dishwashers described in subsection (b)(1),

(2)

clothes washers described in subsection (b)(2), and

(3)

refrigerators described in subsection (b)(3).

.

(d)

Aggregate credit amount allowed

(1)

Increase in limit

Paragraph (1) of section 45M(e) is amended to read as follows:

(1)

Aggregate credit amount allowed

The aggregate amount of credit allowed under subsection (a) with respect to a taxpayer for any taxable year shall not exceed $75,000,000 reduced by the amount of the credit allowed under subsection (a) to the taxpayer (or any predecessor) for all prior taxable years beginning after December 31, 2007.

.

(2)

Exception for certain refrigerator and clothes washers

Paragraph (2) of section 45M(e) is amended to read as follows:

(2)

Amount allowed for certain refrigerators and clothes washers

Refrigerators described in subsection (b)(3)(D) and clothes washers described in subsection (b)(2)(D) shall not be taken into account under paragraph (1).

.

(e)

Qualified energy efficient appliances

(1)

In general

Paragraph (1) of section 45M(f) (defining qualified energy efficient appliance) is amended to read as follows:

(1)

Qualified energy efficient appliance

The term qualified energy efficient appliance means—

(A)

any dishwasher described in subsection (b)(1),

(B)

any clothes washer described in subsection (b)(2), and

(C)

any refrigerator described in subsection (b)(3).

.

(2)

Clothes washer

Section 45M(f)(3) is amended by inserting commercial before residential the second place it appears.

(3)

Top-loading clothes washer

Subsection (f) of section 45M is amended by redesignating paragraphs (4), (5), (6), and (7) as paragraphs (5), (6), (7), and (8), respectively, and by inserting after paragraph (3) the following new paragraph:

(4)

Top-loading clothes washer

The term top-loading clothes washer means a clothes washer which has the clothes container compartment access located on the top of the machine and which operates on a vertical axis.

.

(4)

Replacement of energy factor

Section 45M(f)(6), as redesignated by paragraph (3), is amended to read as follows:

(6)

Modified energy factor

The term modified energy factor means the modified energy factor established by the Department of Energy for compliance with the Federal energy conservation standard.

.

(5)

Gallons per cycle; water consumption factor

Section 45M(f), as amended by paragraph (3), is amended by adding at the end the following:

(9)

Gallons per cycle

The term gallons per cycle means, with respect to a dishwasher, the amount of water, expressed in gallons, required to complete a normal cycle of a dishwasher.

(10)

Water consumption factor

The term water consumption factor means, with respect to a clothes washer, the quotient of the total weighted per-cycle water consumption divided by the cubic foot (or liter) capacity of the clothes washer.

.

(f)

Effective date

The amendments made by this section shall apply to appliances produced after December 31, 2007.

134.

Accelerated recovery period for depreciation of smart meters and smart grid systems

(a)

In general

Section 168(e)(3)(D) is amended by striking and at the end of clause (i), by striking the period at the end of clause (ii) and inserting a comma, and by inserting after clause (ii) the following new clauses:

(iii)

any qualified smart electric meter, and

(iv)

any qualified smart electric grid system.

.

(b)

Definitions

Section 168(i) is amended by inserting at the end the following new paragraph:

(18)

Qualified smart electric meters

(A)

In general

The term qualified smart electric meter means any smart electric meter which is placed in service by a taxpayer who is a supplier of electric energy or a provider of electric energy services.

(B)

Smart electric meter

For purposes of subparagraph (A), the term smart electric meter means any time-based meter and related communication equipment which is capable of being used by the taxpayer as part of a system that—

(i)

measures and records electricity usage data on a time-differentiated basis in at least 24 separate time segments per day,

(ii)

provides for the exchange of information between supplier or provider and the customer’s electric meter in support of time-based rates or other forms of demand response,

(iii)

provides data to such supplier or provider so that the supplier or provider can provide energy usage information to customers electronically, and

(iv)

provides net metering.

(19)

Qualified smart electric grid systems

(A)

In general

The term qualified smart electric grid system means any smart grid property used as part of a system for electric distribution grid communications, monitoring, and management placed in service by a taxpayer who is a supplier of electric energy or a provider of electric energy services.

(B)

Smart grid property

For the purposes of subparagraph (A), the term smart grid property means electronics and related equipment that is capable of—

(i)

sensing, collecting, and monitoring data of or from all portions of a utility’s electric distribution grid,

(ii)

providing real-time, two-way communications to monitor or manage such grid, and

(iii)

providing real time analysis of and event prediction based upon collected data that can be used to improve electric distribution system reliability, quality, and performance.

.

(c)

Continued application of 150 percent declining balance method

Paragraph (2) of section 168(b) is amended by striking or at the end of subparagraph (B), by redesignating subparagraph (C) as subparagraph (D), and by inserting after subparagraph (B) the following new subparagraph:

(C)

any property (other than property described in paragraph (3)) which is a qualified smart electric meter or qualified smart electric grid system, or

.

(d)

Effective date

The amendments made by this section shall apply to property placed in service after the date of the enactment of this Act.

135.

Qualified green building and sustainable design projects

(a)

In general

Paragraph (8) of section 142(l) is amended by striking September 30, 2009 and inserting September 30, 2012.

(b)

Treatment of current refunding bonds

Paragraph (9) of section 142(l) is amended by striking October 1, 2009 and inserting October 1, 2012.

(c)

Accountability

The second sentence of section 701(d) of the American Jobs Creation Act of 2004 is amended by striking issuance, and inserting issuance of the last issue with respect to such project,.

II

Revenue provisions

201.

Limitation of deduction for income attributable to domestic production of oil, gas, or primary products thereof

(a)

In general

Section 199(d) is amended by redesignating paragraph (9) as paragraph (10) and by inserting after paragraph (8) the following new paragraph:

(9)

Special rule for taxpayers with oil related qualified production activities income

(A)

In general

If a taxpayer has oil related qualified production activities income for any taxable year beginning after 2009, the amount otherwise allowable as a deduction under subsection (a) shall be reduced by 3 percent of the least of—

(i)

the oil related qualified production activities income of the taxpayer for the taxable year,

(ii)

the qualified production activities income of the taxpayer for the taxable year, or

(iii)

taxable income (determined without regard to this section).

(B)

Oil related qualified production activities income

For purposes of this paragraph, the term oil related qualified production activities income means for any taxable year the qualified production activities income which is attributable to the production, refining, processing, transportation, or distribution of oil, gas, or any primary product thereof during such taxable year.

(C)

Primary product

For purposes of this paragraph, the term primary product has the same meaning as when used in section 927(a)(2)(C), as in effect before its repeal.

.

(b)

Conforming amendment

Section 199(d)(2) (relating to application to individuals) is amended by striking subsection (a)(1)(B) and inserting subsections (a)(1)(B) and (d)(9)(A)(iii).

(c)

Effective date

The amendments made by this section shall apply to taxable years beginning after December 31, 2008.

202.

Elimination of the different treatment of foreign oil and gas extraction income and foreign oil related income for purposes of the foreign tax credit

(a)

In general

Subsections (a) and (b) of section 907 (relating to special rules in case of foreign oil and gas income) are amended to read as follows:

(a)

Reduction in amount allowed as foreign tax under section 901

In applying section 901, the amount of any foreign oil and gas taxes paid or accrued (or deemed to have been paid) during the taxable year which would (but for this subsection) be taken into account for purposes of section 901 shall be reduced by the amount (if any) by which the amount of such taxes exceeds the product of—

(1)

the amount of the combined foreign oil and gas income for the taxable year,

(2)

multiplied by—

(A)

in the case of a corporation, the percentage which is equal to the highest rate of tax specified under section 11(b), or

(B)

in the case of an individual, a fraction the numerator of which is the tax against which the credit under section 901(a) is taken and the denominator of which is the taxpayer's entire taxable income.

(b)

Combined foreign oil and gas income; foreign oil and gas taxes

For purposes of this section—

(1)

Combined foreign oil and gas income

The term combined foreign oil and gas income means, with respect to any taxable year, the sum of—

(A)

foreign oil and gas extraction income, and

(B)

foreign oil related income.

(2)

Foreign oil and gas taxes

The term foreign oil and gas taxes means, with respect to any taxable year, the sum of—

(A)

oil and gas extraction taxes, and

(B)

any income, war profits, and excess profits taxes paid or accrued (or deemed to have been paid or accrued under section 902 or 960) during the taxable year with respect to foreign oil related income (determined without regard to subsection (c)(4)) or loss which would be taken into account for purposes of section 901 without regard to this section.

.

(b)

Recapture of foreign oil and gas losses

Paragraph (4) of section 907(c) (relating to recapture of foreign oil and gas extraction losses by recharacterizing later extraction income) is amended to read as follows:

(4)

Recapture of foreign oil and gas losses by recharacterizing later combined foreign oil and gas income

(A)

In general

The combined foreign oil and gas income of a taxpayer for a taxable year (determined without regard to this paragraph) shall be reduced—

(i)

first by the amount determined under subparagraph (B), and

(ii)

then by the amount determined under subparagraph (C).

The aggregate amount of such reductions shall be treated as income (from sources without the United States) which is not combined foreign oil and gas income.
(B)

Reduction for pre-2009 foreign oil extraction losses

The reduction under this paragraph shall be equal to the lesser of—

(i)

the foreign oil and gas extraction income of the taxpayer for the taxable year (determined without regard to this paragraph), or

(ii)

the excess of—

(I)

the aggregate amount of foreign oil extraction losses for preceding taxable years beginning after December 31, 1982, and before January 1, 2009, over

(II)

so much of such aggregate amount as was recharacterized under this paragraph (as in effect before and after the date of the enactment of the Energy Improvement and Extension Act of 2008) for preceding taxable years beginning after December 31, 1982.

(C)

Reduction for post-2008 foreign oil and gas losses

The reduction under this paragraph shall be equal to the lesser of—

(i)

the combined foreign oil and gas income of the taxpayer for the taxable year (determined without regard to this paragraph), reduced by an amount equal to the reduction under subparagraph (A) for the taxable year, or

(ii)

the excess of—

(I)

the aggregate amount of foreign oil and gas losses for preceding taxable years beginning after December 31, 2008, over

(II)

so much of such aggregate amount as was recharacterized under this paragraph for preceding taxable years beginning after December 31, 2008.

(D)

Foreign oil and gas loss defined

(i)

In general

For purposes of this paragraph, the term foreign oil and gas loss means the amount by which—

(I)

the gross income for the taxable year from sources without the United States and its possessions (whether or not the taxpayer chooses the benefits of this subpart for such taxable year) taken into account in determining the combined foreign oil and gas income for such year, is exceeded by

(II)

the sum of the deductions properly apportioned or allocated thereto.

(ii)

Net operating loss deduction not taken into account

For purposes of clause (i), the net operating loss deduction allowable for the taxable year under section 172(a) shall not be taken into account.

(iii)

Expropriation and casualty losses not taken into account

For purposes of clause (i), there shall not be taken into account—

(I)

any foreign expropriation loss (as defined in section 172(h) (as in effect on the day before the date of the enactment of the Revenue Reconciliation Act of 1990)) for the taxable year, or

(II)

any loss for the taxable year which arises from fire, storm, shipwreck, or other casualty, or from theft,

to the extent such loss is not compensated for by insurance or otherwise.
(iv)

Foreign oil extraction loss

For purposes of subparagraph (B)(ii)(I), foreign oil extraction losses shall be determined under this paragraph as in effect on the day before the date of the enactment of the Energy Improvement and Extension Act of 2008.

.

(c)

Carryback and carryover of disallowed credits

Section 907(f) (relating to carryback and carryover of disallowed credits) is amended—

(1)

by striking oil and gas extraction taxes each place it appears and inserting foreign oil and gas taxes, and

(2)

by adding at the end the following new paragraph:

(4)

Transition rules for pre-2009 and 2009 disallowed credits

(A)

Pre-2009 credits

In the case of any unused credit year beginning before January 1, 2009, this subsection shall be applied to any unused oil and gas extraction taxes carried from such unused credit year to a year beginning after December 31, 2008—

(i)

by substituting oil and gas extraction taxes for foreign oil and gas taxes each place it appears in paragraphs (1), (2), and (3), and

(ii)

by computing, for purposes of paragraph (2)(A), the limitation under subparagraph (A) for the year to which such taxes are carried by substituting foreign oil and gas extraction income for foreign oil and gas income in subsection (a).

(B)

2009 credits

In the case of any unused credit year beginning in 2009, the amendments made to this subsection by the Energy Improvement and Extension Act of 2008 shall be treated as being in effect for any preceding year beginning before January 1, 2009, solely for purposes of determining how much of the unused foreign oil and gas taxes for such unused credit year may be deemed paid or accrued in such preceding year.

.

(d)

Conforming amendment

Section 6501(i) is amended by striking oil and gas extraction taxes and inserting foreign oil and gas taxes.

(e)

Effective date

The amendments made by this section shall apply to taxable years beginning after December 31, 2008.

203.

Broker reporting of customer’s basis in securities transactions

(a)

In general

(1)

Broker reporting for securities transactions

Section 6045 is amended by adding at the end the following new subsection:

(g)

Additional information required in the case of securities transactions, etc

(1)

In general

If a broker is otherwise required to make a return under subsection (a) with respect to the gross proceeds of the sale of a covered security, the broker shall include in such return the information described in paragraph (2).

(2)

Additional information required

(A)

In general

The information required under paragraph (1) to be shown on a return with respect to a covered security of a customer shall include the customer’s adjusted basis in such security and whether any gain or loss with respect to such security is long-term or short-term (within the meaning of section 1222).

(B)

Determination of adjusted basis

For purposes of subparagraph (A)—

(i)

In general

The customer’s adjusted basis shall be determined—

(I)

in the case of any security (other than any stock for which an average basis method is permissible under section 1012), in accordance with the first-in first-out method unless the customer notifies the broker by means of making an adequate identification of the stock sold or transferred, and

(II)

in the case of any stock for which an average basis method is permissible under section 1012, in accordance with the broker’s default method unless the customer notifies the broker that he elects another acceptable method under section 1012 with respect to the account in which such stock is held.

(ii)

Exception for wash sales

Except as otherwise provided by the Secretary, the customer’s adjusted basis shall be determined without regard to section 1091 (relating to loss from wash sales of stock or securities) unless the transactions occur in the same account with respect to identical securities.

(3)

Covered security

For purposes of this subsection—

(A)

In general

The term covered security means any specified security acquired on or after the applicable date if such security—

(i)

was acquired through a transaction in the account in which such security is held, or

(ii)

was transferred to such account from an account in which such security was a covered security, but only if the broker received a statement under section 6045A with respect to the transfer.

(B)

Specified security

The term specified security means—

(i)

any share of stock in a corporation,

(ii)

any note, bond, debenture, or other evidence of indebtedness,

(iii)

any commodity, or contract or derivative with respect to such commodity, if the Secretary determines that adjusted basis reporting is appropriate for purposes of this subsection, and

(iv)

any other financial instrument with respect to which the Secretary determines that adjusted basis reporting is appropriate for purposes of this subsection.

(C)

Applicable date

The term applicable date means—

(i)

January 1, 2011, in the case of any specified security which is stock in a corporation (other than any stock described in clause (ii)),

(ii)

January 1, 2012, in the case of any stock for which an average basis method is permissible under section 1012, and

(iii)

January 1, 2013, or such later date determined by the Secretary in the case of any other specified security.

(4)

Treatment of S corporations

In the case of the sale of a covered security acquired by an S corporation (other than a financial institution) after December 31, 2011, such S corporation shall be treated in the same manner as a partnership for purposes of this section.

(5)

Special rules for short sales

In the case of a short sale, reporting under this section shall be made for the year in which such sale is closed.

.

(2)

Broker information required with respect to options

Section 6045, as amended by subsection (a), is amended by adding at the end the following new subsection:

(h)

Application to options on securities

(1)

Exercise of option

For purposes of this section, if a covered security is acquired or disposed of pursuant to the exercise of an option that was granted or acquired in the same account as the covered security, the amount received with respect to the grant or paid with respect to the acquisition of such option shall be treated as an adjustment to gross proceeds or as an adjustment to basis, as the case may be.

(2)

Lapse or closing transaction

In the case of the lapse (or closing transaction (as defined in section 1234(b)(2)(A))) of an option on a specified security or the exercise of a cash-settled option on a specified security, reporting under subsections (a) and (g) with respect to such option shall be made for the calendar year which includes the date of such lapse, closing transaction, or exercise.

(3)

Prospective application

Paragraphs (1) and (2) shall not apply to any option which is granted or acquired before January 1, 2013.

(4)

Definitions

For purposes of this subsection, the terms covered security and specified security shall have the meanings given such terms in subsection (g)(3).

.

(3)

Extension of period for statements sent to customers

(A)

In general

Subsection (b) of section 6045 is amended by striking January 31 and inserting February 15.

(B)

Statements related to substitute payments

Subsection (d) of section 6045 is amended—

(i)

by striking at such time and, and

(ii)

by inserting after other item. the following new sentence: The written statement required under the preceding sentence shall be furnished on or before February 15 of the year following the calendar year in which the payment was made..

(C)

Other statements

Subsection (b) of section 6045 is amended by adding at the end the following: In the case of a consolidated reporting statement (as defined in regulations) with respect to any customer, any statement which would otherwise be required to be furnished on or before January 31 of a calendar year with respect to any item reportable to the taxpayer shall instead be required to be furnished on or before February 15 of such calendar year if furnished with such consolidated reporting statement..

(b)

Determination of basis of certain securities on account by account or average basis method

Section 1012 is amended—

(1)

by striking The basis of property and inserting the following:

(a)

In general

The basis of property

,

(2)

by striking The cost of real property and inserting the following:

(b)

Special rule for apportioned real estate taxes

The cost of real property

, and

(3)

by adding at the end the following new subsections:

(c)

Determinations by account

(1)

In general

In the case of the sale, exchange, or other disposition of a specified security on or after the applicable date, the conventions prescribed by regulations under this section shall be applied on an account by account basis.

(2)

Application to certain regulated investment companies

(A)

In general

Except as provided in subparagraph (B), any stock for which an average basis method is permissible under section 1012 which is acquired before January 1, 2012, shall be treated as a separate account from any such stock acquired on or after such date.

(B)

Election for treatment as single account

If a regulated investment company elects to have this subparagraph apply with respect to one or more of its stockholders—

(i)

subparagraph (A) shall not apply with respect to any stock in such company held by such stockholders, and

(ii)

all stock in such company which is held by such stockholders shall be treated as covered securities described in section 6045(g)(3) without regard to the date of the acquisition of such stock.

A rule similar to the rule of the preceding sentence shall apply with respect to a broker holding such stock as a nominee.
(3)

Definitions

For purposes of this section, the terms specified security and applicable date shall have the meaning given such terms in section 6045(g).

(d)

Average basis for stock acquired pursuant to a periodic stock investment plan

(1)

In general

In the case of any stock acquired after December 31, 2010, in connection with a periodic stock investment plan, the basis of such stock while held as part of such plan shall be determined using one of the methods which may be used for determining the basis of stock in a regulated investment company.

(2)

Treatment after transfer

In the case of the transfer to another account of stock to which paragraph (1) applies, such stock shall have a cost basis in such other account equal to its basis in the periodic stock investment plan immediately before such transfer (properly adjusted for any fees or other charges taken into account in connection with such transfer).

(3)

Separate accounts; election for treatment as single account

Rules similar to the rules of subsection (c)(2) shall apply for purposes of this subsection.

(4)

Periodic stock investment plan

For purposes of this subsection—

(A)

In general

The term periodic stock investment plan means—

(i)

any stock purchase plan, and

(ii)

any dividend reinvestment plan.

(B)

Stock purchase plan

The term stock purchase plan means any arrangement under which identical stock is periodically purchased pursuant to a written plan.

(C)

Dividend reinvestment plan

(i)

In general

The term dividend reinvestment plan means any arrangement under which dividends on any stock are reinvested in stock identical to the stock with respect to which the dividends are paid.

(ii)

Initial stock acquisition treated as acquired in connection with plan

Stock shall be treated as acquired in connection with a dividend reinvestment plan if such stock is acquired pursuant to such plan or if the dividends paid on such stock are subject to such plan.

.

(c)

Information by transferors to aid brokers

(1)

In general

Subpart B of part III of subchapter A of chapter 61 is amended by inserting after section 6045 the following new section:

6045A.

Information required in connection with transfers of covered securities to brokers

(a)

Furnishing of information

Every applicable person which transfers to a broker (as defined in section 6045(c)(1)) a security which is a covered security (as defined in section 6045(g)(3)) in the hands of such applicable person shall furnish to such broker a written statement in such manner and setting forth such information as the Secretary may by regulations prescribe for purposes of enabling such broker to meet the requirements of section 6045(g).

(b)

Applicable person

For purposes of subsection (a), the term applicable person means—

(1)

any broker (as defined in section 6045(c)(1)), and

(2)

any other person as provided by the Secretary in regulations.

(c)

Time for furnishing statement

Except as otherwise provided by the Secretary, any statement required by subsection (a) shall be furnished not later than 15 days after the date of the transfer described in such subsection.

.

(2)

Assessable penalties

Paragraph (2) of section 6724(d) is amended by redesignating subparagraphs (I) through (DD) as subparagraphs (J) through (EE), respectively, and by inserting after subparagraph (H) the following new subparagraph:

(I)

section 6045A (relating to information required in connection with transfers of covered securities to brokers),

.

(3)

Clerical amendment

The table of sections for subpart B of part III of subchapter A of chapter 61 is amended by inserting after the item relating to section 6045 the following new item:

Sec. 6045A. Information required in connection with transfers of covered securities to brokers.

.

(d)

Additional issuer information To aid brokers

(1)

In general

Subpart B of part III of subchapter A of chapter 61, as amended by subsection (b), is amended by inserting after section 6045A the following new section:

6045B.

Returns relating to actions affecting basis of specified securities

(a)

In general

According to the forms or regulations prescribed by the Secretary, any issuer of a specified security shall make a return setting forth—

(1)

a description of any organizational action which affects the basis of such specified security of such issuer,

(2)

the quantitative effect on the basis of such specified security resulting from such action, and

(3)

such other information as the Secretary may prescribe.

(b)

Time for filing return

Any return required by subsection (a) shall be filed not later than the earlier of—

(1)

45 days after the date of the action described in subsection (a), or

(2)

January 15 of the year following the calendar year during which such action occurred.

(c)

Statements To be furnished to holders of specified securities or their nominees

According to the forms or regulations prescribed by the Secretary, every person required to make a return under subsection (a) with respect to a specified security shall furnish to the nominee with respect to the specified security (or certificate holder if there is no nominee) a written statement showing—

(1)

the name, address, and phone number of the information contact of the person required to make such return,

(2)

the information required to be shown on such return with respect to such security, and

(3)

such other information as the Secretary may prescribe.

The written statement required under the preceding sentence shall be furnished to the holder on or before January 15 of the year following the calendar year during which the action described in subsection (a) occurred.
(d)

Specified security

For purposes of this section, the term specified security has the meaning given such term by section 6045(g)(3)(B). No return shall be required under this section with respect to actions described in subsection (a) with respect to a specified security which occur before the applicable date (as defined in section 6045(g)(3)(C)) with respect to such security.

(e)

Public reporting in lieu of return

The Secretary may waive the requirements under subsections (a) and (c) with respect to a specified security, if the person required to make the return under subsection (a) makes publicly available, in such form and manner as the Secretary determines necessary to carry out the purposes of this section—

(1)

the name, address, phone number, and email address of the information contact of such person, and

(2)

the information described in paragraphs (1), (2), and (3) of subsection (a).

.

(2)

Assessable penalties

(A)

Subparagraph (B) of section 6724(d)(1) is amended by redesignating clause (iv) and each of the clauses which follow as clauses (v) through (xxiii), respectively, and by inserting after clause (iii) the following new clause:

(iv)

section 6045B(a) (relating to returns relating to actions affecting basis of specified securities),

.

(B)

Paragraph (2) of section 6724(d), as amended by subsection (c)(2), is amended by redesignating subparagraphs (J) through (EE) as subparagraphs (K) through (FF), respectively, and by inserting after subparagraph (I) the following new subparagraph:

(J)

subsections (c) and (e) of section 6045B (relating to returns relating to actions affecting basis of specified securities),

.

(3)

Clerical amendment

The table of sections for subpart B of part III of subchapter A of chapter 61, as amended by subsection (b)(3), is amended by inserting after the item relating to section 6045A the following new item:

Sec. 6045B. Returns relating to actions affecting basis of specified securities.

.

(e)

Effective date

(1)

In general

Except as otherwise provided in this subsection, the amendments made by this section shall take effect on January 1, 2011.

(2)

Extension of period for statements sent to customers

The amendments made by subsection (a)(3) shall apply to statements required to be furnished after December 31, 2008.

204.

Increase and extension of Oil Spill Liability Trust Fund tax

(a)

Increase in rate

(1)

Increase in rate

Section 4611(c) is amended by adding at the end the following new paragraph:

(3)

Increase in Oil Spill Liability Trust Fund financing rate

For purposes of this subsection, the Oil Spill Liability Trust Fund financing rate is increased (in addition to any other increase under this subsection) by—

(A)

in the case of crude oil received or petroleum products entered before January 1, 2011, 0.5 cent a barrel, and

(B)

in the case of crude oil received or petroleum products entered after December 31, 2010, 1 cent a barrel.

.

(2)

Effective date

The amendment made by this subsection shall apply on and after the first day of the first calendar quarter beginning more than 60 days after the date of the enactment of this Act.

(b)

Extension

(1)

In general

Section 4611(f) (relating to application of Oil Spill Liability Trust Fund financing rate) is amended by striking paragraphs (2) and (3) and inserting the following new paragraph:

(2)

Termination

The Oil Spill Liability Trust Fund financing rate shall not apply after December 31, 2017.

.

(2)

Conforming amendment

Section 4611(f)(1) is amended by striking paragraphs (2) and (3) and inserting paragraph (2).

(3)

Effective date

The amendments made by this subsection shall take effect on the date of the enactment of this Act.

205.

Time for payment of corporate estimated taxes

The percentage under subparagraph (C) of section 401(1) of the Tax Increase Prevention and Reconciliation Act of 2005 in effect on the date of the enactment of this Act is increased by 10.5 percentage points.