[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[S. 2884 Introduced in Senate (IS)]







106th CONGRESS
  2d Session
                                S. 2884

To amend the Internal Revenue Code of 1986 to allow allocation of small 
   ethanol producer credit to patrons of cooperative, and for other 
                               purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             July 18, 2000

   Mr. Grams 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 allow allocation of small 
   ethanol producer credit to patrons of cooperative, 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. SMALL ETHANOL PRODUCER CREDIT.

    (a) Allocation of Alcohol Fuels Credit to Patrons of a 
Cooperative.--Section 40(g) Internal Revenue Code of 1986 (relating to 
definitions and special rules for eligible small ethanol producer 
credit) is amended by adding at the end the following:
            ``(6) Allocation of small ethanol producer credit to 
        patrons of cooperative.--
                    ``(A) Election to allocate.--
                            ``(i) In general.--Notwithstanding 
                        paragraph (4), in the case of a cooperative 
                        organization described in section 1381(a), any 
                        portion of the credit determined under 
                        subsection (a)(3) for the taxable year may, at 
                        the election of the organization, be 
                        apportioned pro rata among patrons of the 
                        organization on the basis of the quantity or 
                        value of business done with or for such patrons 
                        for the taxable year.
                            ``(ii) Form and effect of election.--An 
                        election under clause (i) for any taxable year 
                        shall be made on a timely filed return for such 
                        year. Such election, once made, shall be 
                        irrevocable for such taxable year.
                            ``(iii) Special rule for 1998 and 1999.--
                        Notwithstanding clause (ii), an election for 
                        any taxable year ending prior to the date of 
                        the enactment of this paragraph may be made at 
                        any time before the expiration of the 3-year 
                        period beginning on the last date prescribed by 
                        law for filing the return of the taxpayer for 
                        such taxable year (determined without regard to 
                        extensions) by filing an amended return for 
                        such year.
                    ``(B) Treatment of organizations and patrons.--The 
                amount of the credit apportioned to patrons under 
                subparagraph (A)--
                            ``(i) shall not be included in the amount 
                        determined under subsection (a) with respect to 
                        the organization for the taxable year,
                            ``(ii) shall be included in the amount 
                        determined under subsection (a) for the taxable 
                        year of each patron for which the patronage 
                        dividends for the taxable year described in 
                        subparagraph (A) are included in gross income, 
                        and
                            ``(iii) shall be included in gross income 
                        of such patrons for the taxable year in the 
                        manner and to the extent provided in section 
                        87.
                    ``(C) Special rules for decrease in credits for 
                taxable year.--If the amount of the credit of a 
                cooperative organization (as so defined) determined 
                under subsection (a)(3) for a taxable year is less than 
                the amount of such credit shown on the return of the 
                cooperative organization for such year, an amount equal 
                to the excess of--
                            ``(i) such reduction, over
                            ``(ii) the amount not apportioned to such 
                        patrons under subparagraph (A) for the taxable 
                        year,
                shall be treated as an increase in tax imposed by this 
                chapter on the organization. Such increase shall not be 
                treated as tax imposed by this chapter for purposes of 
                determining the amount of any credit under this subpart 
                or subpart A, B, E, or G.''.
    (b) Definition of Small Ethanol Producer; Improvements to Small 
Ethanol Producer Credit.--
            (1) Definition of small ethanol producer.--Section 40(g)(1) 
        of the Internal Revenue Code of 1986 (relating to eligible 
        small ethanol producer) is amended by striking ``30,000,000'' 
        and inserting ``60,000,000''.
            (2) Small ethanol producer credit not a passive activity 
        credit.--Clause (i) of section 469(d)(2)(A) of such Code 
        (relating to passive activity credit) is amended by striking 
        ``subpart D'' and inserting ``subpart D, other than section 
        40(a)(3),''.
            (3) Allowing credit against minimum tax.--
                    (A) In general.--Subsection (c) of section 38 of 
                such Code (relating to limitation based on amount of 
                tax) is amended by redesignating paragraph (3) as 
                paragraph (4) and by inserting after paragraph (2) the 
                following:
            ``(3) Special rules for small ethanol producer credit.--
                    ``(A) In general.--In the case of the small ethanol 
                producer credit--
                            ``(i) this section and section 39 shall be 
                        applied separately with respect to the credit, 
                        and
                            ``(ii) in applying paragraph (1) to the 
                        credit--
                                    ``(I) subparagraphs (A) and (B) 
                                thereof shall not apply, and
                                    ``(II) the limitation under 
                                paragraph (1) (as modified by subclause 
                                (I)) shall be reduced by the credit 
                                allowed under subsection (a) for the 
                                taxable year (other than the small 
                                ethanol producer credit).
                    ``(B) Small ethanol producer credit.--For purposes 
                of this subsection, the term `small ethanol producer 
                credit' means the credit allowable under subsection (a) 
                by reason of section 40(a)(3).''.
                    (B) Conforming amendment.--Subclause (II) of 
                section 38(c)(2)(A)(ii) of such Code is amended by 
                inserting ``or the small ethanol producer credit'' 
                after ``employment credit''.
            (4) Small ethanol producer credit not added back to income 
        under section 87.--Section 87 of such Code (relating to income 
        inclusion of alcohol fuel credit is amended to read as follows:

``SEC. 87. ALCOHOL FUEL CREDIT.

    ``Gross income includes an amount equal to the sum of--
            ``(1) the amount of the alcohol mixture credit determined 
        with respect to the taxpayer for the taxable year under section 
        40(a)(1), and
            ``(2) the alcohol credit determined with respect to the 
        taxpayer for the taxable year under section 40(a)(2).''.
    (c) Conforming Amendment.--Section 1388 of the Internal Revenue 
Code of 1986 (relating to definitions and special rules for cooperative 
organizations) is amended by adding at the end the following:
    ``(k) Cross Reference.--For provisions relating to the 
apportionment of the alcohol fuels credit between cooperative 
organizations and their patrons, see section 40(d) (6).''
    (d) Effective Dates.--
            (1) In general.--Except as provided in paragraph (2), the 
        amendments made by this section shall apply to taxable years 
        beginning after December 31, 1997.
            (2) Certain provisions.--The amendments made by paragraphs 
        (1) and (4) of subsection (b) shall apply to taxable years 
        ending after the date of the enactment of this Act.
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