[Congressional Bills 103th Congress]
[From the U.S. Government Publishing Office]
[S. 465 Introduced in Senate (IS)]

103d CONGRESS
  1st Session
                                 S. 465

To amend the Internal Revenue Code of 1986 to encourage the production 
    of biodiesel and certain ethanol fuels, and for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

             February 25 (legislative day, January 5), 1993

  Mr. Daschle introduced the following bill; which was read twice and 
                  referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL


 
To amend the Internal Revenue Code of 1986 to encourage the production 
    of biodiesel and certain ethanol fuels, and for other purposes.

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

SECTION 1. ALCOHOL FUELS CREDIT MAY OFFSET MINIMUM TAX.

    (a) In General.--Subsection (c) of section 38 of the Internal 
Revenue Code of 1986 (relating to limitation based on amount of tax) is 
amended by adding at the end the following new paragraph:
            ``(3) Alcohol fuels credit may offset minimum tax.--
                    ``(A) In general.--The amount determined under 
                paragraph (1)(A) shall be reduced by the lesser of--
                            ``(i) the portion of the alcohol fuels 
                        credit determined under section 40(a) not used 
                        against the normal limitation, or
                            ``(ii) 50 percent of the taxpayer's 
                        tentative minimum tax for the taxable year.
                    ``(B) Portion of the alcohol fuels credit not used 
                against normal limitation.--For purposes of 
                subparagraph (A), the portion of the alcohol fuels 
                credit determined under section 40(a) not used against 
                the normal limitation is the excess (if any) of--
                            ``(i) the portion of the credit under 
                        subsection (a) which is attributable to such 
                        alcohol fuels credit, over
                            ``(ii) the limitation of paragraph (1) 
                        (without regard to this paragraph), reduced by 
                        the portion of the credit under subsection (a) 
                        which is not so attributable.''.
    (b) Effective Date.--
            (1) In general.--The amendment made by this section shall 
        apply to taxable years beginning after September 30, 1992.
            (2) Exception.--The amendment made by this section shall 
        not apply to--
                    (A) any credit which was determined in a taxable 
                year, or
                    (B) the portion of any credit which is carried back 
                to a taxable year,
        beginning on or before September 30, 1992.

SEC. 2. TAX CREDIT FOR BIODIESEL FUELS.

    (a) In General.--Section 40 of the Internal Revenue Code of 1986 
(relating to credit for alcohol used as a fuel) is amended by adding at 
the end the following new subsection:
    ``(i) Special Rules for Biodiesel.--
            ``(1) In general.--In the case of biodiesel used as a 
        component of, or replacement for, diesel fuel (as defined in 
        section 4092(a))--
                    ``(A) the biodiesel shall be treated in the same 
                manner as alcohol for purposes of this section, and
                    ``(B) subsection (h) shall apply in computing the 
                amount of any credit under this section with respect to 
                the biodiesel.
            ``(2) Biodiesel.--For purposes of this subsection, the term 
        `biodiesel' means a liquid derived from biological materials 
        (other than alcohol) for use in compression ignition 
        engines.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to biodiesel produced, and sold or used, in taxable years beginning 
after December 31, 1992.

SEC. 3. REPEAL OF ALCOHOL FUEL CREDIT INCOME INCLUSION FOR BIODIESEL 
              AND CERTAIN ALCOHOLS.

    (a) In General.--Section 87 of the Internal Revenue Code of 1986 
(relating to inclusion in income of the alcohol fuels credit) is 
amended by adding at the end the following new subsection:
    ``(b) Exception for Biodiesel and Certain Alcohol-Based Ethers.--
Subsection (a) shall not apply to any portion of the alcohol fuel 
credit determined for the taxable year under section 40(a) which is 
attributable to--
            ``(1) biodiesel (as defined in section 40(i)(2)),
            ``(2) ethanol which is used to produce ethyl tertiary butyl 
        ether, or
            ``(3) alcohol which is used to produce any ether derived 
        from alcohol in a chemical reaction in which there is no 
        significant loss in the energy content of the alcohol.''
    (b) Conforming Amendment.--Section 87 of such Code is amended by 
striking ``Gross'' and inserting:
    ``(a) In General.--Gross''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 1992.

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