II 109th CONGRESS 1st Session S. 542 IN THE SENATE OF THE UNITED STATES March 7, 2005 Mr. Dorgan (for himself, Mr. Smith, Mrs. Murray, Ms. Cantwell, Mr. Johnson, and Mr. Harkin) introduced the following bill; which was read twice and referred to the Committee on Finance A BILL To amend the Internal Revenue Code of 1986 to extend for 5 years the credit for electricity produced from certain renewable resources, and for other purposes.

1.

Extension of renewable energy credit

Section 45(d) of the Internal Revenue Code of 1986 (relating to qualified facilities) is amended by striking January 1, 2006 each place it appears and inserting January 1, 2011.

2.

Treatment of persons not able to use entire credit

(a)

In general

Section 45(e) of the Internal Revenue Code of 1986 (relating to definitions and special rules) is amended by adding at the end the following new paragraph: (10)

Treatment of persons not able to use entire credit

(A)

Allowance of credit

(i)

In general

Except as otherwise provided in this subsection— (I) any credit allowable under subsection (a) with respect to a qualified facility owned by a person described in clause (ii) may be transferred or used as provided in this paragraph, and (II) the determination as to whether the credit is allowable shall be made without regard to the tax-exempt status of the person. (ii)

Persons described

A person is described in this clause if the person is— (I) an organization described in section 501(c)(12)(C) and exempt from tax under section 501(a), (II) an organization described in section 1381(a)(2)(C), (III) a public utility (as defined in section 136(c)(2)(B)), which is exempt from income tax under this subtitle, (IV) any State or political subdivision thereof, the District of Columbia, any possession of the United States, or any agency or instrumentality of any of the foregoing, or (V) any Indian tribal government (within the meaning of section 7871) or any agency or instrumentality thereof. (B)

Transfer of credit

(i)

In general

A person described in subparagraph (A)(ii) may transfer any credit to which subparagraph (A)(i) applies through an assignment to any other person not described in subparagraph (A)(ii). Such transfer may be revoked only with the consent of the Secretary. (ii)

Regulations

The Secretary shall prescribe such regulations as necessary to ensure that any credit described in clause (i) is assigned once and not reassigned by such other person. (iii)

Transfer proceeds treated as arising from essential government function

Any proceeds derived by a person described in subclause (III), (IV), or (V) of subparagraph (A)(ii) from the transfer of any credit under clause (i) shall be treated as arising from the exercise of an essential government function. (C)

Use of credit as an offset

Notwithstanding any other provision of law, in the case of a person described in subclause (I), (II), or (V) of subparagraph (A)(ii), any credit to which subparagraph (A)(i) applies may be applied by such person, to the extent provided by the Secretary of Agriculture, as a prepayment of any loan, debt, or other obligation the entity has incurred under subchapter I of chapter 31 of title 7 of the Rural Electrification Act of 1936 (7 U.S.C. 901 et seq.), as in effect on the date of the enactment of the Energy Tax Incentives Act. (D)

Credit not income

Any transfer under subparagraph (B) or use under subparagraph (C) of any credit to which subparagraph (A)(i) applies shall not be treated as income for purposes of section 501(c)(12). (E)

Treatment of unrelated persons

For purposes of subsection (a)(2)(B), sales of electricity among and between persons described in subparagraph (A)(ii) shall be treated as sales between unrelated parties. . (b)

Effective date

The amendment made by this section shall apply to shall apply to electricity produced and sold after the date of the enactment of this Act, in taxable years ending after such date.