Clean-fuel credit with respect to businesses located in nonattainment areas

(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:

45J.

Clean-fuel credit with respect to businesses located in nonattainment areas

(a)

In general

For purposes of section 38, in the case of an eligible business the clean-fuel credit determined under this section for the taxable year is the sum of— (1)the clean-fuel property credit, plus (2)the clean-burning fuel use credit. (b)

Clean-fuel property credit

(1)

In general

The clean-fuel property credit is the sum of— (A)qualified vehicle property costs, plus (B)qualified refueling property costs. (2)

Qualified vehicle property costs

(A)

In general

For purposes of paragraph (1), the term qualified vehicle property costs means the amount paid or incurred by the eligible business for qualified clean-fuel vehicle property which is placed in service during the taxable year by the eligible business and substantially all of the use of which is in a nonattainment area. (B)

Limitation

The amount which may be taken into account under subparagraph (A) with respect to any motor vehicle shall not exceed— (i)$2,000 in the case of a motor vehicle not described in clause (ii) or (iii), (ii)$5,000 in the case of any truck or van with a gross vehicle weight rating greater than 10,000 pounds but not greater than 26,000 pounds, or (iii)$50,000 in the case of— (I)a truck or van with a gross vehicle weight rating greater than 26,000 pounds, or (II)any bus which has a seating capacity of at least 20 adults (not including the driver). (C)

Qualified clean-fuel vehicle property

The term qualified clean-fuel vehicle property shall have the meaning given to such term by section 179A(c) (without regard to paragraph (3) thereof), except that such term does not include property that is a motor vehicle propelled by a fuel that is not a clean-burning fuel. (3)

Qualified refueling property costs

(A)

In general

For purposes of paragraph (1), the term qualified refueling property costs means amounts paid or incurred by the eligible business for qualified clean-fuel vehicle refueling property (as defined by section 179A(d)) which is placed in service in a nonattainment area during the taxable year by the eligible business. (B)

Limitation

(i)

In general

The aggregate cost which may be taken into account under subparagraph (A) with respect to qualified clean-fuel vehicle refueling property placed in service by the eligible business during the taxable year at a location shall not exceed the lesser of— (I)$100,000, or (II)the cost of such property reduced by the amount described in clause (ii). (ii)

Reduction for amounts previously taken into account

For purposes of clause (i)(II), the amount described in this clause is the sum of— (I)the aggregate amount taken into account under paragraph (1)(B) for all preceding taxable years, and (II)the aggregate amount taken into account under section 179A(a)(1)(B) by the taxpayer (or any related person or predecessor) with respect to property placed in service at such location for all preceding taxable years. (iii)

Special rules

For purposes of this subparagraph, the provisions of subparagraphs (B) and (C) of section 179A(b)(2) shall apply. (c)

Clean-burning fuel use credit

(1)

In general

For purposes of subsection (a), the clean-burning fuel use credit is the amount equal to 50 cents for each gasoline gallon equivalent of clean-burning fuel used by an eligible business during the taxable year to propel qualified clean-fuel vehicle property. (2)

Clean-burning fuel

For purposes of paragraph (1), the term clean-burning fuel has the meaning given to such term by section 179A, except that such term includes compressed natural gas and biodiesel (as defined by section 40A(d)(1)). (3)

Gasoline gallon equivalent

For purposes of paragraph (1), the term gasoline gallon equivalent means, with respect to any clean burning fuel, the amount (determined by the Secretary) of such fuel having a Btu content of 114,000. (d)

Other definitions

For purposes of this section— (1)

Eligible business

The term eligible business means— (A)a qualified business entity or a qualified proprietorship (as such terms are defined by section 1397C, determined by substituting nonattainment area for empowerment zone and enterprise zone each place it appears), and (B)a trade or business located outside of a nonattainment area, but only with respect to qualified clean-fuel vehicle property used substantially within a nonattainment area. (2)

Nonattainment area

The term nonattainment area shall have the meaning given to such term by section 171 of the Clean Air Act (42 U.S.C. 7501). (e)

Denial of double benefit

No credit shall be allowed under subsection (a) for any expense for which a deduction or credit is allowed under any other provision of this chapter.

(b)

Credit made part of general business credit

Subsection (b) of section 38 of such Code (relating to current year business credit) is amended by striking plus at the end of paragraph (18), by striking the period at the end of paragraph (19) and inserting , plus, and by adding at the end thereof the following new paragraph:

(20)the clean-fuel credit determined under section 45J.

(c)

Denial of double benefit

Section 280C of such Code (relating to certain expenses for which credits are allowable) is amended by adding at the end thereof the following new subsection:

(e)

Zone clean fuels expenses

No deduction shall be allowed for that portion of expenses for clean-burning fuel otherwise allowable as a deduction for the taxable year which is equal to the amount of the credit determined for such taxable year under section 45J.

(d)

Credit allowed against regular and minimum tax

(1)

In general

Subsection (c) of section 38 of such Code (relating to limitation based on amount of tax) is amended by redesignating paragraph (5) as paragraph (6) and by inserting after paragraph (4) the following new paragraph:

(5)

Special rules for clean fuels credit

(A)

In general

In the case of the clean fuels 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)subparagraph (A) 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 clean fuels credit). (B)

Clean fuels credit

For purposes of this subsection, the term clean fuels credit means the credit allowable under subsection (a) by reason of section 45J.

(2)

Conforming amendments

(A)Subclause (II) of section 38(c)(2)(A)(ii) of such Code is amended by striking or the New York Liberty Zone business employee credit and inserting , the New York Liberty Zone business employee credit, or the clean fuels credit. (B)Subclause (II) of section 38(c)(3)(A)(ii) of such Code is amended by inserting or the clean fuels credit after employee credit. (C)Subclause (II) of section 38(c)(4)(A)(ii) of such Code is amended by inserting or the clean fuels credit after specified credits. (e)

Deduction for certain unused business credits

Subsection (c) of section 196 of such Code is amended by striking and at the end of paragraph (11), by striking the period at the end of paragraph (12) and inserting , and, and by adding after paragraph (12) the following new paragraph:

(13)the clean fuels credit determined under section 45J.

(f)

Conforming amendment

The table of sections for subpart D of part IV of subchapter A of chapter 1 of such Code is amended by inserting after the item relating to section 45I the following new item:

Sec. 45J. Clean-fuel credit with respect to businesses located in nonattainment areas

(g)

Effective date

The amendments made by this section shall apply to property placed in service after December 31, 2004.