[Congressional Bills 107th Congress]
[From the U.S. Government Publishing Office]
[S. 765 Introduced in Senate (IS)]







107th CONGRESS
  1st Session
                                 S. 765

    To amend the Internal Revenue Code of 1986 to provide a carbon 
      sequestration investment tax credit, and for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             April 24, 2001

   Mr. Brownback (for himself, Mr. Reid, Mr. Lugar, and Mr. DeWine) 
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 provide a carbon 
      sequestration investment tax credit, 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. SHORT TITLE.

    This Act may be cited as the ``Carbon Sequestration Investment Tax 
Credit Act''.

SEC. 2. CARBON SEQUESTRATION INVESTMENT TAX
              CREDIT.

    (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. 45E. CARBON SEQUESTRATION INVESTMENT CREDIT.

    ``(a) Allowance of Credit.--
            ``(1) In general.--For purposes of section 38, in the case 
        of an eligible taxpayer's investment in a carbon sequestration 
        project approved by the implementing panel under section 2 of 
        the International Carbon Conservation Act, the carbon 
        sequestration investment credit determined under this section 
        for the taxable year is an amount equal to--
                    ``(A) $2.50, multiplied by
                    ``(B) the number of tons of carbon the implementing 
                panel determines was sequestrated in such project 
                during the calendar year ending with or within such 
                taxable year, multiplied by
                    ``(C) the percentage of the total investment in 
                such project which is represented by the investment in 
                such project which is attributable, directly or 
                indirectly, to the eligible taxpayer, as determined by 
                the implementing panel.
            ``(2) Aggregate dollar limitation.--The credit determined 
        under paragraph (1) for any taxable year, when added to any 
        credit allowed to the eligible taxpayer with respect to the 
        such project in any preceding taxable year, shall not exceed 50 
        percent of the investment attributable to the eligible taxpayer 
        with respect to such project through such taxable year.
    ``(b) Annual Limitation on Aggregate Credit Allowable.--
            ``(1) In general.--The amount of the carbon sequestration 
        investment credit determined under subsection (a) for any 
        taxable year, when added to all such credits allowed to all 
        eligible taxpayers with respect to the such project for such 
        taxable year shall not exceed the credit dollar amount 
        allocated to such project under this subsection by the 
        implementing panel for the calendar year ending with or within 
        such taxable year.
            ``(2) Time for making allocation.--An allocation shall be 
        taken into account under paragraph (1) only if it is made not 
        later than the close of the calendar year in which the carbon 
        sequestration project proposal with respect to such project is 
        approved by the implementing panel under section 2 of the 
        International Carbon Conservation Act.
            ``(3) Aggregate credit dollar amount.--The aggregate credit 
        dollar amount which the implementing panel may allocate for any 
        calendar year is equal to $200,000,000.
    ``(e) Eligible Taxpayer; Implementing Panel.--For purposes of this 
section--
            ``(1) Eligible taxpayer.--A taxpayer is eligible for the 
        credit under this section with respect to a carbon 
        sequestration project if such taxpayer has not elected the 
        application of sections 3 and 4 of the International Carbon 
        Conservation Act with respect to such project.
            ``(2) Implementing panel.--The term `implementing panel' 
        means the implementing panel established under section 2 of 
        such Act.
    ``(f) Recapture of Credit in Certain Cases.--
            ``(1) In general.--If, at any time during the 30-year 
        period of a carbon sequestration project, there is a recapture 
        event with respect to such project, then the tax imposed by 
        this chapter for the taxable year in which such event occurs 
        shall be increased by the credit recapture amount.
            ``(2) Credit recapture amount.--For purposes of paragraph 
        (1)--
                    ``(A) In general.--The credit recapture amount is 
                an amount equal to the recapture percentage of all 
                carbon sequestration investment credits previously 
                allowable to an eligible taxpayer with respect to any 
                investment in such project that is attributable to such 
                taxpayer.
                    ``(B) Recapture percentage.--The recapture 
                percentage shall be 100 percent if the recapture event 
                occurs during the first 10 years of the project, 66\2/
                3\ percent if the recapture event occurs during the 
                second 10 years of the project, 33\1/3\ percent if the 
                recapture event occurs during the third 10 years of the 
                project, and 0 percent if the recapture event occurs at 
                any time after the 30th year of the project.
            ``(3) Recapture event.--For purposes of paragraph (1), 
        there is a recapture event with respect to a carbon 
        sequestration project if--
                    ``(A) the eligible taxpayer violates a term or 
                condition of the approval of the project by the 
                implementing panel at any time,
                    ``(B) the eligible taxpayer adopts a practice which 
                the implementing panel has specified in its approval of 
                the project as a practice which would tend to defeat 
                the purposes of the carbon sequestration program, or
                    ``(C) the eligible taxpayer disposes of any 
                ownership interest arising out of its investment that 
the implementing panel has determined is attributable to the project, 
unless the implementing panel determines that such disposition will not 
have any adverse effect on the carbon sequestration project.
        If an event which otherwise would be a recapture event is 
        outside the control of the eligible taxpayer, as determined by 
        the implementing panel, such event shall not be treated as a 
        recapture event with respect to such taxpayer.
            ``(4) Special rules.--
                    ``(A) Tax benefit rule.--The tax for the taxable 
                year shall be increased under paragraph (1) only with 
                respect to credits allowed by reason of this section 
                which were used to reduce tax liability. In the case of 
                credits not so used to reduce tax liability, the 
                carryforwards and carrybacks under section 39 shall be 
                appropriately adjusted.
                    ``(B) No credits against tax.--Any increase in tax 
                under this subsection shall not be treated as a tax 
                imposed by this chapter for purposes of determining the 
                amount of any credit under this chapter or for purposes 
                of section 55.
    ``(g) Disallowance of Double Benefit.--
            ``(1) Basis reduction.--The basis of any investment in a 
        carbon sequestration project shall be reduced by the amount of 
        any credit determined under this section with respect to such 
        investment.
            ``(2) Charitable deduction disallowed.--No deduction shall 
        be allowed to an eligible taxpayer under section 170 with 
        respect to any contribution which the implementing panel 
        certifies pursuant to section 2 of the International Carbon 
        Conservation Act to the Secretary constitutes an investment in 
        a carbon sequestration project that is attributable to such 
        taxpayer.
    ``(h) Certification to Secretary.--The implementing panel shall 
certify to the Secretary before January 31 of each year with respect to 
each eligible taxpayer which has made an investment in a carbon 
sequestration project--
            ``(1) the amount of the carbon sequestration investment 
        credit allowable to such taxpayer for the preceding calendar 
        year,
            ``(2) whether a recapture event occurred with respect to 
        such taxpayer during the preceding calendar year, and
            ``(3) the credit recapture amount, if any, with respect to 
        such taxpayer for the preceding calendar year.
    ``(i) Regulations.--The Secretary shall prescribe such regulations 
as may be appropriate to carry out this section, including 
regulations--
            ``(1) which limit the credit for investments which are 
        directly or indirectly subsidized by other Federal benefits,
            ``(2) which prevent the abuse of the provisions of this 
        section through the use of related parties, and
            ``(3) which impose appropriate reporting requirements.''.
    (b) Credit Made Part of General Business Credit.--
            (1) In general.--Subsection (b) of section 38 of the 
        Internal Revenue Code of 1986 is amended by striking ``plus'' 
        at the end of paragraph (12), by striking the period at the end 
        of paragraph (13) and inserting ``, plus'', and by adding at 
        the end the following new paragraph:
            ``(14) the carbon sequestration investment credit 
        determined under section 45E(a).''.
            (2) Limitation on carryback.--Subsection (d) of section 39 
        of such Code is amended by adding at the end the following new 
        paragraph:
            ``(10) No carryback of carbon sequestration investment 
        credit before january 1, 2002.--No portion of the unused 
        business credit for any taxable year which is attributable to 
        the credit under section 45E may be carried back to a taxable 
        year ending before January 1, 2002.''.
    (c) Deduction for Unused Credit.--Subsection (c) of section 196 of 
the Internal Revenue Code of 1986 is amended by striking ``and'' at the 
end of paragraph (7), by striking the period at the end of paragraph 
(8) and inserting ``, and'', and by adding at the end the following new 
paragraph:
            ``(9) the carbon sequestration investment credit determined 
        under section 45E(a).''.
    (d) Clerical Amendment.--The table of sections for subpart D of 
part IV of subchapter A of chapter 1 of the Internal Revenue Code of 
1986 is amended by adding at the end the following new item:

                              ``Sec. 45E. Carbon sequestration 
                                        investment credit.''.
    (e) Effective Date.--The amendments made by this section shall 
apply to investments made after December 31, 2001.
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