[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.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                              June 6, 2001

Mr. McDermott 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 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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