[Congressional Bills 107th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2080 Introduced in House (IH)]
107th CONGRESS
1st Session
H. R. 2080
To amend the Internal Revenue Code of 1986 to deny accelerated
depreciation for electric generating facilities having excess profits
in order to prevent taxpayers operating such facilities from having
both excess profits and tax incentives.
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IN THE HOUSE OF REPRESENTATIVES
June 6, 2001
Mr. McDermott introduced the following bill; which was referred to the
Committee on Ways and Means
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A BILL
To amend the Internal Revenue Code of 1986 to deny accelerated
depreciation for electric generating facilities having excess profits
in order to prevent taxpayers operating such facilities from having
both excess profits and tax incentives.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. DENIAL OF ACCELERATED DEPRECIATION FOR ELECTRIC GENERATING
FACILITIES HAVING EXCESS PROFITS.
(a) In General.--Section 168 of the Internal Revenue Code of 1986
(relating to accelerated cost recovery system) is amended by adding at
the end the following new subsection:
``(k) Denial of Accelerated Depreciation for Certain Electric
Generating Facilities.--
``(1) In general.--If there are excess profits with respect
to an electric generating facility for any taxable year--
``(A) the depreciation deduction provided by
section 167(a) for such taxable year with respect to
any property which is part of such facility shall be
determined under the alternative depreciation system of
subsection (g) (as if such system applied to such
property for all previous taxable years), and
``(B) any previously allowed accelerated benefits
with respect to any such property shall be recaptured
by including the amount of such benefits in the gross
income of the taxpayer for such taxable year.
``(2) Excess profits.--There are excess profits with
respect to an electric generating facility for any taxable year
if the facility has a pretax rate of return for such taxable
year in excess of 15 percent.
``(3) Pretax rate of return.--The pretax rate of return for
any taxable year with respect to any electric generating
facility is the percentage obtained by dividing--
``(A) the taxpayer's net income from such facility
for such taxable year, by
``(B) the average of the taxpayer's net investment
in the facility as of the beginning of each month in
the taxable year.
``(4) Net investment.--The net investment in any facility
is the excess of the aggregate adjusted bases of the property
which is part of such facility over the taxpayer's indebtedness
allocable to such facility. For purposes of the preceding
sentence, indebtedness that is incurred to construct, improve,
or acquire property, and that is secured by an interest in such
property shall be allocated to such property. All other
indebtedness of the taxpayer shall be allocated among the items
of property held by the taxpayer based on their respective
adjusted bases.
``(5) Net income.--
``(A) In general.--The net income of the taxpayer
from the operation of an electric generating facility
is the excess of--
``(i) gross income from the sale of
electricity produced at such facility, over
``(ii) the deductions allowable by this
subtitle which are directly allocable to the
operations of such facility.
``(B) Sales to related persons.--If a sale of
electricity is to a related person (within the meaning
of section 482), the sale shall be treated for purposes
of this paragraph as being made at the price at which
the electricity is first sold to a person who is not a
related person (as so defined), minus transmission
costs.
``(C) Determination adjusted basis, etc.--For
purposes of this paragraph and paragraph (4), adjusted
bases and depreciation deductions shall be determined
as if the alternative system of subsection (g) applied
to the facility for all taxable years and only interest
on indebtedness allocable to the facility shall be
taken into account.
``(6) Previously allowed accelerated benefits.--The
previously allowed accelerated benefits with respect to
property are the excess of--
``(A) depreciation deduction allowable under
section 167(a) with respect to such property for all
prior taxable years, over
``(B) the amount that would have been so allowable
if such deductions had been determined under the
alternative depreciation system of subsection (g) for
all prior taxable years.
``(7) Treatment of recaptured amount.--The adjusted basis
of any property with respect to which there is an amount
included in gross income under paragraph (1)(B) shall be
increased by the amount so included.
``(8) Exemptions for facilities using renewable energy.--
This subsection shall not apply to any facility producing
electricity from renewable sources. For purposes of the
preceding sentence, renewable sources are wind, sun, or water
power.''
(b) Effective Date.--The amendment made by this section shall apply
to taxable years beginning after December 31, 2000.
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