109 HR 5950 IH: To repeal certain tax subsidies enacted by the Energy U.S. House of Representatives 2006-07-27 text/xml EN Pursuant to Title 17 Section 105 of the United States Code, this file is not subject to copyright protection and is in the public domain.

I 109th CONGRESS 2d Session H. R. 5950 IN THE HOUSE OF REPRESENTATIVES July 27, 2006 Mr. Udall of New Mexico introduced the following bill; which was referred to the Committee on Ways and Means A BILL To repeal certain tax subsidies enacted by the Energy Policy Act of 2005 for oil and gas, to allow a credit against income tax for farm diesel expenses, and to allow a credit to farmers who produce biodiesel and agri-biodiesel.

1.

Short title

This Act may be cited as the Family Farm Energy Relief Act of 2006.

2.

Repeal of tax subsidies enacted by the Energy Policy Act of 2005 for oil and gas

(a)

Repeal

The following provisions, and amendments made by such provisions, of the Energy Policy Act of 2005 are hereby repealed: (1)Section 1323 (relating to temporary expensing for equipment used in refining of liquid fuels). (2)Section 1324 (relating to pass through to owners of deduction for capital costs incurred by small refiner cooperatives in complying with Environmental Protection Agency sulfur regulations). (3)Section 1325 (relating to natural gas distribution lines treated as 15-year property). (4)Section 1326 (relating to natural gas gathering lines treated as 7-year property). (5)Section 1328 (relating to determination of small refiner exception to oil depletion deduction). (6)Section 1329 (relating to amortization of geological and geophysical expenditures). (b)

Administration of Internal Revenue Code of 1986

The Internal Revenue Code of 1986 shall be applied and administered as if the provisions, and amendments, specified in subsection (a) had never been enacted.

3.

Farm diesel purchases credit

(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 25D the following new section:

25E.

Farm diesel expenses credit

(a)

Allowance of credit

In the case of a qualified farmer, there shall be allowed as a credit against the tax imposed by this chapter for the taxable year an amount equal to 10 percent of the farm diesel expenses paid or incurred by the qualified farmer during the taxable year. (b)

Qualified farmer

For purposes of this section, with respect to a taxable year, the term qualified farmer means an individual— (1)who is actively engaged in farming, (2)whose contributions to a farming operation during the taxable year are at least commensurate with the individual’s claimed share of the profits or losses of the farming operation, and (3)whose gross income from farming for the taxable year is at least 75 percent of the individual’s total gross income from all sources for the taxable year. (c)

Farm diesel expenses

For purposes of this section, the term farm diesel expenses means amounts paid or incurred for the purchase of diesel fuel that is described in section 4082(a) and is intended to be used for farming purposes. (d)

Termination

This section shall not apply with respect to farm diesel expenses paid or incurred in taxable years beginning after December 31, 2009.

. (b)

Clerical amendment

The table of items 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 25D the following new item: Sec. 25E. Farm diesel expenses credit. . (c)

Effective date

The amendments made by this section shall apply to farm diesel expenses paid or incurred in taxable years beginning after the date of the enactment of this Act.

4.

Increase in small agri-biodiesel producer credit for qualified farmers

(a)

In general

Paragraph (5) of section 40A(b) of the Internal Revenue Code of 1986 (relating to small agri-biodiesel producer credit) is amended by adding at the end the following new subparagraph: (D)

Increase for qualified farmers

In the case of an eligible small agri-biodiesel producer who is a qualified farmer, subparagraph (A) shall be applied by substituting 20 cents for 10 cents. . (b)

Qualified farmer

Subsection (e) of section 40A of such Code (relating to definitions and special rules for small agri-biodiesel producer credit) is amended by adding at the end the following new paragraph: (7)

Qualified farmer

With respect to a taxable year, the term qualified farmer means an individual— (A)who is actively engaged in farming, (B)whose contributions to a farming operation during the taxable year are at least commensurate with the individual’s claimed share of the profits or losses of the farming operation, and (C)whose gross income from farming for the taxable year is at least 75 percent of the individual’s total gross income from all sources for the taxable year. . (c)

Effective date

The amendments by this section shall apply to qualified agri-biodiesel production after December 31, 2006, in taxable years beginning after such date.

5.

Allowance of small biodiesel producer credit for qualified farmers

(a)

In general

Section 40A of the Internal Revenue Code of 1986 (relating to biodiesel and renewable diesel used as fuel) is amended— (1)in subsection (a), by striking the period at the end of paragraph (3) and inserting , plus and by adding at the end the following new paragraph: (4)in the case of an eligible small biodiesel producer, the small biodiesel producer credit. , (2)in subsection (b), by adding at the end the following new paragraph: (6)

Small biodiesel producer credit

(A)

In general

The small biodiesel producer credit of any eligible small biodiesel producer for any taxable year is 10 cents for each gallon of qualified biodiesel production of such producer. (B)

Qualified biodiesel production

For purposes of this paragraph, the term “qualified biodiesel production” means any biodiesel which is produced by an eligible small biodiesel producer, and which during the taxable year— (i)is sold by such producer to another person— (I)for use by such other person in the production of a qualified biodiesel mixture in such other person’s trade or business (other than casual off-farm production), (II)for use by such other person as a fuel in a trade or business, or (III)who sells such biodiesel at retail to another person and places such biodiesel in the fuel tank of such other person, or (ii)is used or sold by such producer for any purpose described in clause (i). (C)

Limitation

The qualified biodiesel production of any producer for any taxable year shall not exceed 15,000,000 gallons. , and (3)by redesignating subsections (f) and (g) as subsections (g) and (h), respectively, and by inserting after subsection (e) the following new subsection: (f)

Definitions and special rules for small biodiesel producer credit

For purposes of this section— (1)

Eligible small biodiesel producer

(A)

In general

The term “eligible small biodiesel producer” means a qualified farmer who, at all times during the taxable year, has a productive capacity for biodiesel not in excess of 60,000,000 gallons. (B)

Qualified farmer

With respect to a taxable year, the term qualified farmer means an individual— (i)who is actively engaged in farming, (ii)whose contributions to a farming operation during the taxable year are at least commensurate with the individual’s claimed share of the profits or losses of the farming operation, and (iii)whose gross income from farming for the taxable year is at least 75 percent of the individual’s total gross income from all sources for the taxable year. (2)

Special rules

Rules similar to the rules of paragraphs (2), (3), (4), (5), and (6) of subsection (e) shall apply to the small biodiesel producer credit. . (b)

Effective date

The amendments made by this section shall apply qualified biodiesel production beginning after December 31, 2006, in taxable years beginning after such date.