[Congressional Bills 107th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2303 Introduced in House (IH)]
107th CONGRESS
1st Session
H. R. 2303
To amend the Internal Revenue Code of 1986 to provide incentives to
increase the sale and use of certain ethanol and biodiesel fuels.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
June 25, 2001
Mr. Lewis of Kentucky 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 provide incentives to
increase the sale and use of certain ethanol and biodiesel fuels.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Ethanol and Biodiesel Promotion Act
of 2001''.
SEC. 2. CREDIT FOR PROPERTY USED IN THE RETAIL SALE, OR BUSINESS USE,
OF E85 ETHANOL AND NEAT BIODIESEL.
(a) In General.--Subpart D of part IV of subchapter A of chapter 1
of the Internal Revenue Code of 1986 (relating to business related
credits) is amended by adding at the end the following new section:
``SEC. 45G. PROPERTY USED IN THE RETAIL SALE, OR BUSINESS USE, OF E85
ETHANOL AND NEAT BIODIESEL.
``(a) General Rule.--For purposes of section 38, the E85 ethanol
and biodiesel credit is an amount equal to 50 percent of the basis of
qualified fuel property placed in service by the taxpayer during the
taxable year.
``(b) Limitation.--The credit allowed by subsection (a) for any
taxable year shall not exceed $50,000.
``(c) Definitions.--For purposes of this section--
``(1) Qualified fuel property.--The term `qualified fuel
property' means--
``(A) qualified vehicle refueling property, and
``(B) qualified business use property.
``(2) Qualified vehicle refueling property.--The term
`qualified vehicle refueling property' means any property which
would be qualified clean-fuel vehicle refueling property, as
defined in section 179A(d), if the only clean-burning fuel
referred to in such section were E85 ethanol and neat
biodiesel.
``(3) Qualified business use property.--The term `qualified
business use property' means any property (not including a
building and its structural components) if--
``(A) such property is of a character subject to
the allowance for depreciation,
``(B) the original use of such property begins with
the taxpayer, and
``(C) such property is used by the taxpayer in the
consumption of E85 ethanol or neat biodiesel in a trade
of business of the taxpayer.
``(4) E85 ethanol.--The term `E85 ethanol' means any fuel
at least 85 percent of which is ethanol.
``(5) Neat biodiesel.--The term `neat biodiesel' means
diesel fuel at least 85 percent of which is produced from a
substance other than petroleum.
``(d) Termination.--This section shall not apply to any property
placed in service after December 31, 2007.''.
(b) Conforming Amendments.--
(1) Section 38(b) of such Code is amended by striking
``plus'' at the end of paragraph (14), by striking the period
at the end of paragraph (15) and inserting ``, plus'', and by
adding at the end the following:
``(16) the E85 ethanol and biodiesel credit determined
under section 45G.''.
(2) Section 39(d) of such Code (relating to transitional
rules) is amended by adding at the end the following:
``(11) No carryback of section 45g credit before effective
date.--No portion of the unused business credit for any taxable
year which is attributable to the credit determined under
section 45G(a) may be carried back to a taxable year ending
before January 1, 2001.''.
(3) The table of sections for subpart D of part IV of
subchapter A of chapter 1 of such Code is amended by adding at
the end the following:
``Sec. 45G. Property used in the retail
sale, or business use, of E85
ethanol and neat biodiesel.''.
(c) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2001.
SEC. 3. CREDIT FOR RETAIL SALE OF E85 ETHANOL AND NEAT BIODIESEL AS
MOTOR VEHICLE FUEL.
(a) In General.--Subpart D of part IV of subchapter A of chapter 1
of the Internal Revenue Code of 1986 (relating to business related
credits) is amended by adding at the end the following new section:
``SEC. 45H. RETAIL SALE OF E85 ETHANOL AND NEAT BIODIESEL AS MOTOR
VEHICLE FUEL.
``(a) General Rule.--For purposes of section 38, the E85 ethanol
and biodiesel retail sales credit of any taxpayer for any taxable year
is the credit amount for each gasoline gallon equivalent of E85 ethanol
and neat biodiesel sold at retail by the taxpayer during such year as a
fuel to propel any qualified motor vehicle.
``(b) Definitions.--For purposes of this section--
``(1) Credit amount.--The term `credit amount' means--
``(A) in the case of E85 ethanol, the excess of 60
cents over the blender amount applicable under section
40(h) for the calendar year in which the sale occurs,
and
``(B) in the case of neat biodiesel, 25 cents.
``(2) E85 ethanol and neat biodiesel.--The terms `E85
ethanol' and `neat biodiesel' have the respective meanings
given such terms by section 45G.
``(3) Gasoline gallon equivalent.--The term `gasoline
gallon equivalent' means, with respect to any alternative fuel,
the amount (determined by the Secretary) of such fuel having a Btu
content of 114,000.
``(4) Qualified motor vehicle.--The term `qualified motor
vehicle' means any motor vehicle (as defined in section
179A(e)(2)) which meets any applicable Federal or State
emissions standards with respect to each fuel by which such
vehicle is designed to be propelled.
``(5) Sold at retail.--
``(A) In general.--The term `sold at retail' means
the sale, for a purpose other than resale, after
manufacture, production, or importation.
``(B) Use treated as sale.--If any person uses E85
ethanol or neat biodiesel as a fuel to propel any
qualified motor vehicle (including any use after
importation) before such fuel is sold at retail, then
such use shall be treated in the same manner as if such
fuel were sold at retail as a fuel to propel such a
vehicle by such person.
``(c) No Double Benefit.--The amount of any deduction or credit
allowable under this chapter for any fuel taken into account in
computing the amount of the credit determined under subsection (a)
shall be reduced by the amount of such credit attributable to such
fuel.
``(d) Pass-Thru in the Case of Estates and Trusts.--Under
regulations prescribed by the Secretary, rules similar to the rules of
subsection (d) of section 52 shall apply.
``(e) Termination.--This section shall not apply to any fuel sold
at retail after December 31, 2007.''.
(b) Conforming Amendments.--
(1) Section 38(b) of such Code is amended by striking
``plus'' at the end of paragraph (15), by striking the period
at the end of paragraph (16) and inserting ``, plus'', and by
adding at the end the following:
``(17) the E85 ethanol and biodiesel retail sales credit
determined under section 45H.''.
(2) Section 39(d) of such Code (relating to transitional
rules) is amended by adding at the end the following:
``(12) No carryback of section 45h credit before effective
date.--No portion of the unused business credit for any taxable
year which is attributable to the credit determined under
section 45H(a) may be carried back to a taxable year ending
before January 1, 2001.''.
(3) The table of sections for subpart D of part IV of
subchapter A of chapter 1 of such Code is amended by adding at
the end the following:
``Sec. 45G. Retail sale of E85 ethanol
and neat biodiesel as motor
vehicle fuel.''.
(c) Effective Date.--The amendments made by this section shall
apply to fuel sold at retail after December 31, 2001, in taxable years
ending after such date.
SEC. 4. 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 taxable years
prior to enactment of paragraph.--
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 Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2001.
SEC. 5. EXTENSION OF EXPENSING OF VEHICLE REFUELING PROPERTY FOR E85
ETHANOL.
Subsection (f) of section 179A of the Internal Revenue Code of 1986
(relating to termination) is amended by inserting before the period
``(December 31, 2007, for property which is qualified clean-fuel
vehicle refueling property with respect to fuel at least 85 percent of
which is ethanol)''.
SEC. 6. REPEAL OF LIMITATION ON DEPOSITS INTO HIGHWAY TRUST FUND WITH
RESPECT TO ALCOHOL FUELS.
(a) In General.--Paragraph (4) of section 9503(b) of the Internal
Revenue Code of 1986 (relating to certain taxes not transferred to
Highway Trust Fund) is amended by adding ``and'' at the end of
subparagraph (C), by striking the comma at the end of subparagraph (D)
and inserting a period, and by striking subparagraphs (E) and (F).
(b) Effective Date.--The amendment made by subsection (a) shall
apply to taxes received in the Treasury after December 31, 2001.
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