IN THE SENATE OF THE UNITED STATES
September 8, 2011
Mrs. Gillibrand (for herself and Mr. Johanns) introduced the following bill; which was read twice and referred to the Committee on Finance
To amend the Internal Revenue Code of 1986 to provide a tax incentive for the installation and maintenance of mechanical insulation property.
This Act may be cited as the
Mechanical Insulation Installation
Incentive Act of 2011.
Expensing of mechanical insulation property
Part VI of subchapter B of chapter 1 of subtitle A of the Internal Revenue Code of 1986 is amended by inserting after section 179E the following new section:
Mechanical insulation property
Treatment as expenses
In addition to any other deduction in this subtitle, there shall be allowed as a deduction an amount equal to the applicable percentage of the cost of mechanical insulation property placed in service during the taxable year.
For purposes of subsection (a)—
The term applicable percentage means the lesser of—
30 percent, and
the reduction in energy loss (expressed as a percentage) from the installed mechanical insulation property compared to reference mechanical insulation property which meets the minimum requirements of ASHRAE standard 90.1–2007.
Special rule relating to maintenance
In the case of mechanical insulation property placed in service as a replacement for insulation property—
paragraph (1)(B) shall not apply, and
the cost of such property shall be treated as an expense for which a deduction is allowed under section 162 instead of being treated as depreciable for purposes of the deduction provided by section 167.
For purposes of this section—
Mechanical insulation property
The term mechanical insulation property means insulation materials, facings, and accessory products—
placed in service in connection with a mechanical system which—
is located in the United States, and
is of a character subject to an allowance for depreciation, and
utilized for thermal requirements for mechanical piping and equipment, hot and cold applications, and heating, venting and air conditioning applications which can be used in a variety of facilities.
The cost of mechanical insulation property includes—
the amounts paid or incurred for the installation of such property for that incremental portion above the minimums in ASHRAE standard 90.1–2007 and the total insulation cost for maintenance applications,
in the case of removal and disposal of the old mechanical insulation property, 10 percent of the cost of the new mechanical insulation property (determined without regard to this subparagraph), and
expenditures for labor costs properly allocable to the preparation, assembly, and installation of mechanical insulation property.
Subsection (a) shall not apply to the cost of mechanical insulation property which is taken into account under section 179D or which, but for subsection (b) of section 179D, would be taken into account under such section.
Allocation of deduction for tax-Exempt property
In the case of mechanical insulation property installed on or in property owned by an entity described in paragraph (3) or (4) of section 50(b), the person who is the primary contractor for the installation of such property shall be treated as the taxpayer that placed such property in service.
For purposes of this section, energy savings shall be certified under regulations or other guidance provided by the Secretary, in consultation with the Secretary of Energy.
This section shall not apply to any property placed in service after the end of the 5-year period beginning on the date of the enactment of this section.
Deduction for capital expenditures
Section 263(a)(1) of the Internal Revenue
Code of 1986 is amended by striking
or at the end of
subparagraph (K), by striking the period at the end of paragraph (L) and
, or, and by adding at the end the following new
expenditures for which a deduction is allowed under section 179F.
Technical and clerical amendments
312(k)(3)(B) of the Internal Revenue Code of 1986 is amended by striking
or 179E each place it appears in the text or heading thereof and
179E, or 179F.
and (3)(C) of section 1245(a) of such Code are each amended by inserting
The table of sections for part VI of subchapter B of chapter 1 of subtitle A of such Code is amended by inserting after the item relating to section 179E the following new item:
Sec. 179F. Mechanical insulation property.
The amendments made by this section shall apply to property placed in service after the date of enactment of this Act.