Credit for recycling or remanufacturing equipment

(a)

In general

Section 46 of the Internal Revenue Code of 1986 (relating to amount of investment credit) is amended by striking and at the end of paragraph (1), by striking the period at the end of paragraph (2) and inserting , and, and by adding at the end the following new paragraph:

(3)the reclamation credit.

(b)

Reclamation credit

Section 48 of such Code (relating to energy credit) is amended by adding at the end the following new subsection:

(c)

Reclamation credit

(1)

In general

For purposes of section 46, the reclamation credit for any taxable year is 20 percent of the basis of each qualified reclamation property placed in service during the taxable year. (2)

Qualified reclamation property

(A)

In general

For purposes of this subsection, the term qualified reclamation property means property— (i)which is qualified recycling property or qualified remanufacturing property, (ii)which is tangible property (not including a building and its structural components), (iii)with respect to which depreciation (or amortization in lieu of depreciation) is allowable, (iv)which has a useful life of at least 5 years, and (v)which is— (I)acquired by purchase (as defined in section 179(d)(2)) by the taxpayer if the original use of such property commences with the taxpayer, or (II)constructed by or for the taxpayer. (B)

Dollar limitation

(i)

In general

The basis of qualified reclamation property taken into account under paragraph (1) for any taxable year shall not exceed $10,000,000 for a taxpayer. (ii)

Treatment of controlled group

For purposes of clause (i)— (I)all component members of a controlled group shall be treated as one taxpayer, and (II)the Secretary shall apportion the dollar limitation in such clause among the component members of such controlled group in such manner as he shall by regulation prescribe. (iii)

Treatment of partnerships and s corporations

In the case of a partnership, the dollar limitation in clause (i) shall apply with respect to the partnership and with respect to each partner. A similar rule shall apply in the case of an S corporation and its shareholders. (iv)

Controlled group defined

For purposes of clause (ii), the term controlled group has the meaning given such term by section 1563(a), except that more than 50 percent shall be substituted for at least 80 percent each place it appears in section 1563(a)(1). (3)

Certain progress expenditure rules made applicable

Rules similar to the rules of subsections (c)(4) and (d) of section 46 (as in effect on the day before the date of the enactment of the Revenue Reconciliation Act of 1990) shall apply for purposes of this subsection. (4)

Definitions

For purposes of this subsection— (A)

Qualified recycling property

The term qualified recycling property means equipment used exclusively to collect, distribute, or sort used ferrous or nonferrous metals. The term does not include equipment used to collect, distribute, or sort precious metals such as gold, silver, or platinum unless such use is coincidental to the collection, distribution, or sorting of other used ferrous or nonferrous metals. (B)

Qualified remanufacturing property

The term qualified remanufacturing property means equipment used primarily by the taxpayer in the business of rebuilding or remanufacturing a used product or part, but only if— (i)the rebuilt or remanufactured product or part includes 50 percent or less virgin material, and (ii)the equipment is not used primarily in a process occurring after the product or part is rebuilt or remanufactured. (5)

Coordination with rehabilitation and energy credits

For purposes of this section— (A)the basis of any qualified reclamation property shall be reduced by that portion of the basis of any property which is attributable to qualified rehabilitation expenditures (as defined in section 47(c)(2)) or to the energy percentage of energy property (as determined under section 48(a)), and (B)expenditures taken into account under either section 47 or 48(a) shall not be taken into account under this section.

(c)

Special basis adjustment rule

Paragraph (3) of section 50(c) of such Code (relating to basis adjustment to investment credit property) is amended by inserting or reclamation credit after energy credit. (d)

Clerical amendments

(1)The section heading for section 48 of such Code is amended to read as follows:

48.

Energy credit; reclamation credit

(2)The item relating to section 48 in the table of sections for subpart E of part IV of subchapter A of chapter 1 of such Code is amended to read as follows:

Sec. 48. Energy credit; reclamation credit

(e)

Effective date

The amendments made by this section shall apply to property placed in service on or after January 1, 2006.