[Congressional Bills 110th Congress]
[From the U.S. Government Publishing Office]
[S. 1125 Introduced in Senate (IS)]







110th CONGRESS
  1st Session
                                S. 1125

  To amend the Internal Revenue Code of 1986 to provide incentives to 
 encourage investment in the expansion of freight rail infrastructure 
               capacity and to enhance modal tax equity.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             April 17, 2007

 Mr. Lott (for himself, Mr. Conrad, Mr. Smith, Mr. Cochran, Mr. Nelson 
   of Nebraska, Mr. Graham, Mr. Isakson, Mr. Stevens, Mr. Hagel, Ms. 
Landrieu, and Mr. Crapo) 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 provide incentives to 
 encourage investment in the expansion of freight rail infrastructure 
               capacity and to enhance modal tax equity.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Freight Rail Infrastructure Capacity 
Expansion Act of 2007''.

SEC. 2. CREDIT FOR FREIGHT RAIL INFRASTRUCTURE CAPACITY EXPANSION 
              PROPERTY.

    (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:

``SEC. 45O. FREIGHT RAIL CAPACITY EXPANSION CREDIT.

    ``(a) General Rule.--For purposes of section 38, the freight rail 
capacity expansion credit determined under this section for the taxable 
year is an amount equal to 25 percent of the cost of the following 
property placed in service during the taxable year:
            ``(1) New qualified freight rail infrastructure property.
            ``(2) New qualified locomotive property.
    ``(b) New Qualified Freight Rail Infrastructure Property.--For 
purposes of this section--
            ``(1) In general.--The term `new qualified freight rail 
        infrastructure property' means qualified freight rail 
        infrastructure property--
                    ``(A) the construction or erection of which is 
                completed by the taxpayer after the date of the 
                enactment of this section, or
                    ``(B) which is acquired by the taxpayer after such 
                date, but only if the original use of such property 
                commences with the taxpayer.
            ``(2) Exception for property replacing property at existing 
        location.--The term `new qualified freight rail infrastructure 
        property' does not include property which is replacing existing 
        property if the property is located at the site of the existing 
        property. The preceding sentence shall not apply to the 
        replacement or expansion of a bridge or tunnel to allow for 
        additional clearance, track, or other capacity enhancement 
        where such clearance, track, or other capacity enhancement did 
        not previously exist.
            ``(3) Qualified freight rail infrastructure property.--
                    ``(A) In general.--The term `qualified freight rail 
                infrastructure property' means property used in the 
                movement of freight by rail--
                            ``(i) the cost of which is chargeable to 
                        capital account (determined without regard to 
                        section 179F), and
                            ``(ii) which constitutes--
                                    ``(I) railroad grading or tunnel 
                                bore (as defined in section 168(e)(4)),
                                    ``(II) tunnels or subways,
                                    ``(III) track, including ties, 
                                rails, ballast, or other track 
                                material,
                                    ``(IV) bridges, trestles, culverts, 
                                or other elevated or submerged 
                                structures,
                                    ``(V) terminals, yards, roadway 
                                buildings, fuel stations, or railroad 
                                wharves or docks, including fixtures 
                                attached thereto, and equipment used 
                                exclusively therein,
                                    ``(VI) railroad signal, 
                                communication, or other operating 
                                systems, including components of such 
                                systems that must be installed on 
                                locomotives or other rolling stock, or
                                    ``(VII) intermodal transfer or 
                                transload facilities or terminals, 
                                including fixtures attached thereto, 
                                and equipment used exclusively therein.
                    ``(B) Exclusions.--The term `qualified freight rail 
                infrastructure property' shall not include--
                            ``(i) land,
                            ``(ii) rolling stock, including 
                        locomotives, or
                            ``(iii) property used predominantly outside 
                        the United States, except that this 
                        subparagraph shall not apply to any property 
                        described in section 168(g)(4).
    ``(c) New Qualified Locomotive Property.--For purposes of this 
section--
            ``(1) In general.--The term `new qualified locomotive 
        property' means qualified locomotive property which is acquired 
        by the taxpayer after the date of the enactment of this 
        section, but only if the original use of such property 
        commences with the taxpayer.
            ``(2) Qualified locomotive property.--The term `qualified 
        locomotive property' means a locomotive which--
                    ``(A) is owned by, or leased to, a taxpayer which 
                meets the capacity expansion requirement of paragraph 
                (3) for the taxable year in which the locomotive is 
                placed in service, and
                    ``(B) meets the Environmental Protection Agency's 
                emission standards for locomotives and locomotive 
                engines (as in effect on December 31, 2006).
            ``(3) Capacity expansion requirement.--
                    ``(A) In general.--A taxpayer meets the 
                requirements of this paragraph with respect to any 
                locomotive only if, on the last day of the taxable year 
                in which such locomotive is placed in service, the 
                total horsepower of all locomotives owned by, or leased 
                to, the taxpayer exceeds the total horsepower of all 
                locomotives owned by, or leased to, the taxpayer on the 
                last day of the preceding taxable year. A determination 
                under this paragraph shall be made pursuant to such 
                reports as the Secretary, in consultation with the 
                Surface Transportation Board, may prescribe.
                    ``(B) Special rule for the leasing of 
                locomotives.--In the case of the leasing of 
                locomotives, total horsepower under subparagraph (A) 
                shall be determined with respect to all locomotives 
                owned by, or leased to, the lessee.
    ``(d) Other Definitions and Special Rules.--
            ``(1) Definitions.--For purposes of this section--
                    ``(A) Railroad signal, communication, or other 
                operating system.--The term `railroad signal, 
                communication, or other operating system' means an 
                appliance, method, device, or system (including 
                hardware and software) which is used to operate a 
                railroad or to improve safety or capacity of railroad 
                operations, including a signal, an interlocker, an 
                automatic train stop, or a train control or cab-signal 
                device.
                    ``(B) Intermodal transfer or transload facility or 
                terminal.--The term `intermodal transfer or transload 
                facility or terminal' means a facility or terminal 
                primarily utilized in the transfer of freight between 
                rail and any other mode of transportation.
            ``(2) Coordination with other credits.--The cost of any 
        property taken into account in determining the credit under 
        this section may not be taken into account in determining a 
        credit under any other provision of this title.
            ``(3) Basis adjustment.--If a credit is determined under 
        this section with respect to the cost of any qualified freight 
        rail infrastructure property or qualified locomotive property, 
        the basis of such property shall be reduced by the amount of 
        the credit so determined.
            ``(4) Sale-leasebacks.--If qualified freight rail 
        infrastructure property or qualified locomotive property is--
                    ``(A) originally placed in service by a person 
                after the date of enactment of this section, and
                    ``(B) sold and leased back by such person within 3 
                months after the property is originally placed in 
                service (or, in the case of multiple units of property 
                subject to the same lease, within 3 months after the 
                date the final unit is placed in service, so long as 
                the period between the time the first unit is placed in 
                service and the time the last unit is placed in service 
                does not exceed 12 months),
        such property shall be treated as originally placed in service 
        not earlier than the date on which such property is used under 
        the lease referred to in subparagraph (B).
            ``(5) Recapture.--The benefit of any credit allowable under 
        subsection (a) shall, under regulations prescribed by the 
        Secretary, be recaptured with respect to any new qualified 
        locomotive property that is sold or otherwise disposed of by 
        the taxpayer during the 5-year period beginning on the date on 
        which such property is originally placed in service. The 
        preceding sentence shall not apply to property that is sold by 
        and subsequently leased back to the taxpayer under paragraph 
        (4).
    ``(e) Termination.--This section shall not apply to any property 
placed in service after December 31, 2012.''.
    (b) Credit Allowed as Business Credit.--Section 38(b) of the 
Internal Revenue Code of 1986 (relating to current year business 
credit) is amended by striking ``plus'' at the end of paragraph (30), 
by striking the period at the end of paragraph (31) and inserting ``, 
plus'', and by adding at the end the following new paragraph:
            ``(32) the freight rail capacity expansion credit 
        determined under section 45O.''.
    (c) Coordination With Section 55.--Section 38(c)(4)(B) of the 
Internal Revenue Code of 1986 is amended by striking ``and'' at the end 
of clause (i), by striking the period at the end of clause (ii)(II) and 
inserting ``, and'', and by adding at the end the following new clause:
                            ``(iii) for taxable years beginning after 
                        the date of the enactment of this clause, the 
                        credit determined under section 45O.''.
    (d) Clerical Amendment.--The table of sections for subpart D of 
part IV of subchapter A of chapter 1 of the Internal Revenue Code of 
1986 is amended by inserting after the item relating to section 45N the 
following new item:

``Sec. 45O. Freight rail capacity expansion credit.''.

SEC. 3. EXPENSING OF FREIGHT RAIL INFRASTRUCTURE PROPERTY.

    (a) In General.--Part VI of subchapter B of chapter 1 of the 
Internal Revenue Code of 1986 (relating to itemized deductions for 
individuals and corporations) is amended by inserting after section 
179E the following new section:

``SEC. 179F. ELECTION TO EXPENSE QUALIFIED FREIGHT RAIL INFRASTRUCTURE 
              PROPERTY.

    ``(a) Allowance of Deduction.--
            ``(1) In general.--A taxpayer may elect to treat any amount 
        paid or incurred for the acquisition, construction, or erection 
        of qualified freight rail infrastructure property (as defined 
        in section 45O(b)(3)) as an amount not chargeable to capital 
        account. Any amount so treated shall be allowed as a deduction 
        for the taxable year in which such property was placed in 
        service.
            ``(2) Coordination with credit.--The amount to which the 
        election under paragraph (1) applies with respect to any 
        property shall be reduced by an amount equal to the amount of 
        any reduction in the basis of the property under section 
        45O(d)(3).
    ``(b) Election.--An election under subsection (a) shall be made, 
with respect to each class of property for each taxable year, at such 
time and in such manner as the Secretary may prescribe by regulation. 
If a taxpayer makes such an election with respect to any class of 
property for any taxable year, the election shall apply to all 
qualified freight rail infrastructure property in such class placed in 
service during such taxable year. An election under this section shall 
not affect the character of any property for the purposes of section 
45O.
    ``(c) Deduction Allowed in Computing Minimum Tax.--For purposes of 
determining alternative minimum taxable income under section 55, the 
deduction under subsection (a) for qualified freight rail 
infrastructure property shall be determined under this section without 
regard to any adjustment under section 56.
    ``(d) Termination.--This section shall not apply to any property 
placed in service after December 31, 2012.''.
    (b) Deduction for Capital Expenditures.--Section 263(a)(1) of the 
Internal Revenue Code of 1986 (relating to capital expenditures) is 
amended by striking ``or'' at the end of subparagraph (K), by striking 
the period at the end of subparagraph (L) and inserting ``, or'' and by 
adding at the end the following new subparagraph:
                    ``(M) expenditures for which a deduction is allowed 
                under section 179F.''.
    (c) Technical and Clerical Amendments.--
            (1) Section 312(k)(3)(B) of the Internal Revenue Code of 
        1986 is amended by striking ``or 179E'' each place it appears 
        in the text or heading thereof and inserting ``179E, or 179F''.
            (2) Paragraphs (2)(C) and (3)(C) of section 1245(a) of such 
        Code are each amended by inserting ``179F,'' after ``179E,''.
            (3) The table of sections for part VI of subchapter B of 
        chapter 1 of such Code is amended by inserting after the item 
        relating to section 179E the following new item:

``Sec. 179F. Election to expense qualified freight rail infrastructure 
                            property.''.

SEC. 4. EFFECTIVE DATE.

    The amendments made by sections 2 and 3 shall apply to property 
placed in service after December 31, 2007.
                                 <all>