Short title, etc

(a)

Short title

This Act may be cited as the

Alternative Fuel Utilization and Infrastructure Development Incentives Act of 2005

. (b)

Amendment of 1986 Code

Except as otherwise expressly provided, whenever in this division an amendment or repeal is expressed in terms of an amendment to, or repeal of, a section or other provision, the reference shall be considered to be made to a section or other provision of the Internal Revenue Code of 1986. (c)

Table of contents

The table of contents for this Act is as follows:

Sec. 1. Short title, etc.

Sec. 2. Purpose.

Sec. 3. Findings.

Sec. 4. Incentives for the installation of alternative fuel refueling stations.

Sec. 5. Incentives for the retail sale of alternative fuels as motor vehicle fuel.

Purpose

The purpose of this Act is to decrease the dependence of the United States on foreign oil by increasing the use of high ratio blends of gasoline with a minimum 85 percent domestically derived ethanol content (E–85) as an alternative fuel and providing greater access to this fuel for American motorists.

Findings

Congress finds the following: (1)The growing United States reliance on foreign produced petroleum and the recent escalation of crude oil prices demands that all prudent measures be undertaken to increase United States refining capacity, domestic oil production, and expanded utilization of alternative forms of transportation fuels and infrastructure. (2)Recent studies confirm the environmental and overall energy security benefits of high ratio blends of gasoline with a minimum 85 percent domestically derived ethanol content (E–85), especially with regard to the reduction of greenhouse gas emissions from the national on-road passenger car vehicle fleet. (3)The market penetration of E–85 capable Flexible Fuel Vehicles (FFVs) now exceeds 5,000,000 with an additional 1,000,000 or more FFVs expected to be added annually as automakers continue to respond positively to congressionally provided production incentives. (4)It is further recognized that actual implementation of the use of E–85 fuel has been significantly underutilized due primarily to the lack of E–85 refueling infrastructure availability and promotion and that such utilization rate will continue to lag unless resources are provided to substantially accelerate national refueling infrastructure development. (5)Additionally, incentives in the form of tax credits can serve to stimulate infrastructure development and E–85 fuel utilization.

Incentives for the installation of alternative fuel refueling stations

(a)

In general

Subpart B of part IV of subchapter A of chapter 1 (relating to foreign tax credit, etc.) is amended by adding at the end the following new section:

30B.

Alternative fuel vehicle refueling property credit

(a)

Credit allowed

There shall be allowed as a credit against the tax imposed by this chapter for the taxable year an amount equal to 50 percent of the cost of any qualified alternative fuel vehicle refueling property placed in service by the taxpayer during the taxable year. (b)

Limitation

(1)

In general

The credit allowed under subsection (a) with respect to any alternative fuel vehicle refueling property shall not exceed— (A)$30,000 in the case of a property of a character subject to an allowance for depreciation, and (B)$1,000 in any other case. (2)

Phaseout

In the case of any qualified alternative fuel vehicle refueling property placed in service after December 31, 2010, the limit otherwise applicable under paragraph (1) shall be reduced by— (A)25 percent in the case of any alternative fuel vehicle refueling property placed in service in calendar year 2011, and (B)50 percent in the case of any alternative fuel vehicle refueling property placed in service in calendar year 2012. (c)

Definitions

For purposes of this section— (1)

Qualified alternative fuel vehicle refueling property

Except as provided in paragraph (2), the term qualified alternative fuel vehicle refueling property has the meaning given to such term by section 179A(d), but only with respect to any fuel at least 85 percent of the volume of which consists of ethanol. (2)

Residential property

In the case of any property installed on property which is used as the principal residence (within the meaning of section 121) of the taxpayer, paragraph (1) of section 179A(d) shall not apply. (d)

Application with other credits

The credit allowed under subsection (a) for any taxable year shall not exceed the excess (if any) of— (1)the regular tax for the taxable year reduced by the sum of the credits allowable under subpart A and sections 27, 29, and 30, over (2)the tentative minimum tax for the taxable year. (e)

Carryforward allowed

(1)

In General

If the credit amount allowable under subsection (a) for a taxable year exceeds the amount of the limitation under subsection (d) for such taxable year, such excess shall be allowed as a credit carryforward for each of the 20 taxable years following the unused credit year. (2)

Rules

Rules similar to the rules of section 39 shall apply with respect to the credit carryforward under paragraph (1). (f)

Special rules

For purposes of this section— (1)

Basis reduction

The basis of any property shall be reduced by the portion of the cost of such property taken into account under subsection (a). (2)

No double benefit

No deduction shall be allowed under section 179A with respect to any property with respect to which a credit is allowed under subsection (a). (3)

Property used by Tax-Exempt entity

In the case of any qualified alternative fuel vehicle refueling property the use of which is described in paragraph (3) or (4) of section 50(b) and which is not subject to a lease, the person who sold such property to the person or entity using such property shall be treated as the taxpayer that placed such property in service, but only if such person clearly discloses to such person or entity in a document the amount of any credit allowable under subsection (a) with respect to such property (determined without regard to subsection (d)). (4)

Property used outside United States, etc., not qualified

No credit shall be allowable under subsection (a) with respect to any property referred to in section 50(b)(1) or with respect to the portion of the cost of any property taken into account under section 179. (5)

Election not to take credit

No credit shall be allowed under subsection (a) for any property if the taxpayer elects not to have this section apply to such property. (6)

Recapture rules

Rules similar to the rules of section 179A(e)(4) shall apply. (g)

Regulations

The Secretary shall prescribe such regulations as necessary to carry out the provisions of this section. (h)

Termination

This section shall not apply to any property placed in service after December 31, 2013.

(b)

Conforming amendments

(1)Section 1016(a) is amended by striking and at the end of paragraph (30), by striking the period at the end of paragraph (31) and inserting , and, and by adding at the end the following new paragraph:

(32)to the extent provided in section 30B(f)(1).

(2)Section 55(c)(2) is amended by inserting 30B(e), after 30(b)(3),. (3)Section 6501(m) is amended by inserting 30B(f)(5), after 30(d)(4),. (4)The table of sections for subpart B of part IV of subchapter A of chapter 1 is amended by inserting after the item relating to section 30A the following new item:

Sec. 30B. Alternative fuel vehicle refueling property credit.

(c)

Effective date

The amendments made by this section shall apply to property placed in service after the date of the enactment of this Act, in taxable years ending after such date.

Incentives for the retail sale of alternative fuels as motor vehicle fuel

(a)

In general

Subpart D of part IV of subchapter A of chapter 1 (relating to business related credits) is amended by inserting after section 40A the following new section:

40B.

Credit for retail sale of alternative fuels as motor vehicle fuel

(a)

General rule

The alternative fuel retail sales credit for any taxable year is 35 cents for each gallon of alternative fuel sold at retail by the taxpayer during such year. (b)

Definitions

For purposes of this section— (1)

Alternative fuel

The term alternative fuel means any fuel at least 85 percent of the volume of which consists of ethanol. (2)

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 alternative fuel (including any use after importation) as a fuel to propel any qualified alternative fuel motor vehicle (as defined in this section) 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. (3)

Qualified alternative fuel motor vehicle

The term new qualified alternative fuel motor vehicle means any motor vehicle— (A)which is capable of operating on an alternative fuel, (B)the original use of which commences with the taxpayer, (C)which is acquired by the taxpayer for use or lease, but not for resale, and (D)which is made by a manufacturer. (c)

Election To pass credit

A person which sells alternative fuel at retail may elect to pass the credit allowable under this section to the purchaser of such fuel or, in the event the purchaser is a tax-exempt entity or otherwise declines to accept such credit, to the person which supplied such fuel, under rules established by the Secretary. (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, 2010.

(b)

Credit treated as business credit

Section 38(b) (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 the following new paragraph:

(20)the alternative fuel retail sales credit determined under section 40B(a).

(c)

Clerical amendment

The table of sections for subpart D of part IV of subchapter A of chapter 1 is amended by inserting after the item relating to section 40A the following new item:

Sec. 40B. Credit for retail sale of alternative fuels as motor vehicle fuel.

(d)

Effective date

The amendments made by this section shall apply to fuel sold at retail after the date of the enactment of this Act, in taxable years ending after such date.