[Congressional Bills 108th Congress]
[From the U.S. Government Publishing Office]
[S. 759 Introduced in Senate (IS)]






108th CONGRESS
  1st Session
                                 S. 759

To amend the Internal Revenue Code of 1986 to provide a tax credit for 
individuals and businesses for the installation of certain wind energy 
                               property.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             April 1, 2003

 Mr. Durbin (for himself, Mr. Allard, Mr. Conrad, Mr. Harkin, Mr. 
        Johnson, Mr. Leahy, Mr. Dorgan, and Mr. Jeffords) introduced 
        the following bill; which was read twice and referred to the 
        Committee on FinanceYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYY

_______________________________________________________________________

                                 A BILL


 
To amend the Internal Revenue Code of 1986 to provide a tax credit for 
individuals and businesses for the installation of certain wind energy 
                               property.

    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 ``Residential, Farm, Ranch, and Small 
Business Wind Energy Systems Act of 2003'' or the ``Small Wind Energy 
Systems Act of 2003''.

SEC. 2. CREDIT FOR RESIDENTIAL WIND ENERGY PROPERTY.

    (a) In General.--Subpart A of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986 (relating to nonrefundable 
personal credits) is amended by inserting after section 25B the 
following new section:

``SEC. 25C. RESIDENTIAL SMALL WIND ENERGY SYSTEMS.

    ``(a) Allowance of Credit.--In the case of an individual, there 
shall be allowed as a credit against the tax imposed by this chapter 
for the taxable year an amount equal to 30 percent of the qualified 
wind energy property expenditures made by the taxpayer during such 
year.
    ``(b) Limitations.--
            ``(1) Maximum credit.--The credit allowed under subsection 
        (a) shall not exceed $1,000 for each kilowatt of capacity.
            ``(2) Safety certifications.--No credit shall be allowed 
        under this section for an item of property unless such property 
        meets appropriate fire and electric code requirements.
    ``(c) Carryforward of Unused Credit.--If the credit allowable under 
subsection (a) exceeds the limitation imposed by section 26(a) for such 
taxable year reduced by the sum of the credits allowable under this 
subpart (other than this section), such excess shall be carried to the 
succeeding taxable year and added to the credit allowable under 
subsection (a) for such succeeding taxable year.
    ``(d) Qualified Wind Energy Property Expenditure.--For purposes of 
this section--
            ``(1) Qualified wind energy property expenditure defined.--
                    ``(A) In general.--The term `qualified wind energy 
                property expenditure' means an expenditure for 
                qualified wind energy property installed on or in 
                connection with a dwelling unit located in the United 
                States and used as a residence by the taxpayer, 
                including all necessary installation fees and charges.
                    ``(B) Qualified wind energy property.--The term 
                `qualified wind energy property' means a qualifying 
                wind turbine--
                            ``(i) the original use of which commences 
                        with the taxpayer, and
                            ``(ii) which carries at least a 5-year 
                        limited warranty covering defects in design, 
                        material, or workmanship, and, for any 
                        qualifying wind turbine that is not installed 
                        by the taxpayer, at least a 5-year limited 
                        warranty covering defects in installation.
                    ``(C) Qualifying wind turbine.--The term 
                `qualifying wind turbine' means a wind turbine of 75 
                kilowatts of rated capacity or less which at the time 
                of manufacture and not more than one year from the date 
                of purchase meets the latest performance rating 
                standards published by the American Wind Energy 
                Association or the International Electrotechnical 
                Commission and which is used to generate electricity.
            ``(2) Labor costs.--Expenditures for labor costs properly 
        allocable to the onsite preparation, assembly, or original 
        installation of qualified wind energy property and for piping 
        or wiring to interconnect such property to the dwelling unit or 
        to the local energy grid shall be taken into account for 
        purposes of this section.
            ``(3) Swimming pools, etc., used as storage medium.--
        Expenditures which are properly allocable to a swimming pool, 
        hot tub, or any other energy storage medium which has a 
        function other than the function of storage shall not be taken 
        into account for purposes of this section.
    ``(e) Special Rules.--For purposes of this section--
            ``(1) Dollar amounts in case of joint occupancy.--In the 
        case of any dwelling unit which is jointly occupied and used 
        during any calendar year as a residence by 2 or more 
        individuals the following shall apply:
                    ``(A) The amount of the credit allowable, under 
                subsection (a) by reason of expenditures (as the case 
                may be) made during such calendar year by any of such 
                individuals with respect to such dwelling unit shall be 
                determined by treating all of such individuals as 1 
                taxpayer whose taxable year is such calendar year.
                    ``(B) There shall be allowable, with respect to 
                such expenditures to each of such individuals, a credit 
                under subsection (a) for the taxable year in which such 
                calendar year ends in an amount which bears the same 
                ratio to the amount determined under subparagraph (A) 
                as the amount of such expenditures made by such 
                individual during such calendar year bears to the 
                aggregate of such expenditures made by all of such 
                individuals during such calendar year.
            ``(2) Tenant-stockholder in cooperative housing 
        corporation.--In the case of an individual who is a tenant-
        stockholder (as defined in section 216) in a cooperative 
        housing corporation (as defined in such section), such 
        individual shall be treated as having made his tenant-
        stockholder's proportionate share (as defined in section 
        216(b)(3)) of any expenditures of such corporation.
            ``(3) Condominiums.--
                    ``(A) In general.--In the case of an individual who 
                is a member of a condominium management association 
                with respect to a condominium which the individual 
                owns, such individual shall be treated as having made 
                the individual's proportionate share of any 
                expenditures of such association.
                    ``(B) Condominium management association.--For 
                purposes of this paragraph, the term `condominium 
                management association' means an organization which 
                meets the requirements of paragraph (1) of section 
                528(c) (other than subparagraph (E) thereof) with 
                respect to a condominium project substantially all of 
                the units of which are used as residences.
            ``(4) Allocation in certain cases.--If less than 80 percent 
        of the use of a qualified wind energy property is for 
        nonbusiness purposes and for generation of energy to be sold to 
        others, only that portion of the expenditures for such property 
        which is properly allocable to use for nonbusiness purposes and 
        for generation of energy to be sold to others shall be taken 
        into account.
            ``(5) When expenditure made; amount of expenditure.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), an expenditure with respect to any 
                qualified wind energy property shall be treated as made 
                when the original installation of such property is 
                completed and the property has begun to be used to 
                generate energy.
                    ``(B) Expenditures part of building construction.--
                In the case of an expenditure in connection with the 
                construction or reconstruction of a structure, such 
                expenditure shall be treated as made when the original 
                use of the constructed or reconstructed structure by 
                the taxpayer begins.
                    ``(C) Amount.--The amount of any expenditure shall 
                be the cost thereof.
            ``(6) Property financed by subsidized energy financing.--
        For purposes of determining the amount of expenditures made by 
        any individual with respect to any dwelling unit, there shall 
        not be taken into account expenditures which are made from 
        subsidized energy financing (as defined in section 
        48(a)(5)(C)).
    ``(f) Basis Adjustments.--For purposes of this subtitle, if a 
credit is allowed under this section for any expenditure with respect 
to any qualified wind energy property, the increase in the basis of 
such property which would (but for this subsection) result from such 
expenditure shall be reduced by the amount of the credit so allowed.
    ``(g) Termination.--This section shall not apply to property 
installed in taxable years beginning after December 31, 2008.''.
    (b) Credit Allowed Against Regular Tax and Alternative Minimum 
Tax.--
            (1) In general.--Section 25C(b) of the Internal Revenue 
        Code of 1986, as added by subsection (a), is amended by adding 
        at the end the following new paragraph:
            ``(3) Limitation based on amount of tax.--The credit 
        allowed under subsection (a) for the taxable year shall not 
        exceed the excess of--
                    ``(A) the sum of the regular tax liability (as 
                defined in section 26(b)) plus the tax imposed by 
                section 55, over
                    ``(B) the sum of the credits allowable under this 
                subpart (other than this section) and section 27 for 
                the taxable year.''.
            (2) Conforming amendments.--
                    (A) Section 25C(c) of such Code, as added by 
                subsection (a), is amended by striking ``section 26(a) 
                for such taxable year reduced by the sum of the credits 
                allowable under this subpart (other than this 
                section)'' and inserting ``subsection (b)(3)''.
                    (B) Section 23(b)(4)(B) of such Code is amended by 
                inserting ``and section 25C'' after ``this section''.
                    (C) Section 24(b)(3)(B) of such Code is amended by 
                striking ``23 and 25B'' and inserting ``23, 25B, and 
                25C''.
                    (D) Section 25(e)(1)(C) of such Code is amended by 
                inserting ``25C,'' after ``25B,''.
                    (E) Section 25B(g)(2) of such Code is amended by 
                striking ``section 23'' and inserting ``sections 23 and 
                25C''.
                    (F) Section 26(a)(1) of such Code is amended by 
                striking ``and 25B'' and inserting ``25B, and 25C''.
                    (G) Section 904(h) of such Code is amended by 
                striking ``and 25B'' and inserting ``25B, and 25C''.
                    (H) Section 1400C(d) of such Code is amended by 
                striking ``and 25B'' and inserting ``25B, and 25C''.
    (c) Additional Conforming Amendments.--
            (1) Section 23(c) of the Internal Revenue Code of 1986, as 
        in effect for taxable years beginning before January 1, 2004, 
        is amended by striking ``section 1400C'' and inserting 
        ``sections 25C and 1400C''.
            (2) Section 25(e)(1)(C) of such Code, as in effect for 
        taxable years beginning before January 1, 2004, is amended by 
        inserting ``, 25C,'' after ``sections 23''.
            (3) Subsection (a) of section 1016 of such Code is amended 
        by striking ``and'' at the end of paragraph (27), by striking 
        the period at the end of paragraph (28) and inserting ``, 
        and'', and by adding at the end the following new paragraph:
            ``(29) to the extent provided in section 25C(f), in the 
        case of amounts with respect to which a credit has been allowed 
        under section 25C.''.
            (4) Section 1400C(d) of such Code, as in effect for taxable 
        years beginning before January 1, 2004, is amended by inserting 
        ``and section 25C'' after ``this section''.
            (5) The table of sections for subpart A of part IV of 
        subchapter A of chapter 1 of such Code is amended by inserting 
        after the item relating to section 25B the following new item:

                              ``Sec. 25C. Residential wind energy 
                                        property.''.
    (d) Effective Dates.--
            (1) In general.--Except as provided by paragraph (2), the 
        amendments made by this section shall apply to expenditures 
        after December 31, 2002, in taxable years ending after such 
        date.
            (2) Subsection (b).--The amendments made by subsection (b) 
        shall apply to taxable years beginning after December 31, 2003.

SEC. 3. CREDIT FOR BUSINESS INSTALLATION OF SMALL WIND ENERGY PROPERTY.

    (a) In General.--Subparagraph (A) of section 48(a)(3) of the 
Internal Revenue Code of 1986 (defining energy property) is amended by 
striking ``or'' at the end of clause (i), by adding ``or'' at the end 
of clause (ii), and by inserting after clause (ii) the following new 
clause:
                            ``(iii) qualified wind energy property 
                        installed before January 1, 2009,''.
    (b) Qualified Wind Energy Property.--Subsection (a) of section 48 
is amended by redesignating paragraphs (4) and (5) as paragraphs (5) 
and (6), respectively, and by inserting after paragraph (3) the 
following new paragraph:
            ``(4) Qualified wind energy property.--For purposes of this 
        subsection--
                    ``(A) In general.--The term `qualified wind energy 
                property' means a qualifying wind turbine--
                            ``(i) installed on or in connection with a 
                        farm (as defined in section 6420(c)), a ranch, 
                        or an establishment of an eligible small 
                        business (as defined in section 44(b)) which is 
                        located in the United States and which is owned 
                        and used by the taxpayer,
                            ``(ii) the original use of which commences 
                        with the taxpayer, and
                            ``(iii) which carries at least a 5-year 
                        limited warranty covering defects in design, 
                        material, or workmanship, and, for any 
                        qualifying wind turbine that is not installed 
                        by the taxpayer, at least a 5-year limited 
                        warranty covering defects in installation.
                    ``(B) Limitation.--In the case of any qualified 
                wind energy property placed in service during the 
                taxable year, the credit determined under paragraph (1) 
                for such year with respect to such property shall not 
                exceed an amount equal to the lesser of--
                            ``(i) 30 percent of the basis of such 
                        property, including all necessary installation 
                        fees and charges, or
                            ``(ii) $1,000 for each kilowatt of capacity 
                        of such property.
                    ``(C) Qualifying wind turbine.--For purposes of 
                this paragraph the term `qualifying wind turbine' means 
                a wind turbine of 75 kilowatts of rated capacity or 
                less which at the time of manufacture and not more than 
                one year from the date of purchase meets the latest 
                performance rating standards published by the American 
                Wind Energy Association or the International 
                Electrotechnical Commission and which is used to 
                generate electricity.
                    ``(D) Safety certifications.--No credit shall be 
                allowed under this section for any qualified wind 
                energy property unless such property meets appropriate 
                fire and electric code requirements.''.
    (c) Limitation.--Section 48(a)(2)(A) of the Internal Revenue Code 
of 1986 (relating to energy percentage) is amended to read as follows:
                    ``(A) In general.--The energy percentage is--
                            ``(i) in the case of qualified wind energy 
                        property, 30 percent, and
                            ``(ii) in the case of any other energy 
                        property, 10 percent.''.
    (d) Conforming Amendment.--Section 29(b)(3)(A)(i)(III) of the 
Internal Revenue Code of 1986 is amended by striking ``section 
48(a)(4)(C)'' and inserting ``section 48(a)(5)(C)''.
    (e) Effective Date.--The amendments made by this subsection shall 
apply to property placed in service after December 31, 2003, under 
rules similar to the rules of section 48(m) of the Internal Revenue 
Code of 1986 (as in effect on the day before the date of the enactment 
of the Revenue Reconciliation Act of 1990).
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