[Congressional Bills 110th Congress]
[From the U.S. Government Publishing Office]
[S. 1617 Introduced in Senate (IS)]







110th CONGRESS
  1st Session
                                S. 1617

 To amend the Internal Revenue Code of 1986 to provide incentives for 
                 plug-in electric drive motor vehicles.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             June 14, 2007

    Mr. Hatch (for himself, Ms. Cantwell, Mr. Obama, Mr. Kerry, Ms. 
  Stabenow, and Mr. Salazar) 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 for 
                 plug-in electric drive motor vehicles.

    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 ``Fuel Reduction using Electrons to 
End Dependence On the Mid-East (FREEDOM) Act of 2007''.

SEC. 2. CREDIT FOR PLUG-IN ELECTRIC DRIVE MOTOR VEHICLES.

    (a) Plug-in Electric Drive Motor Vehicle Credit.--
            (1) In general.--Subpart B of part IV of subchapter A of 
        chapter 1 of the Internal Revenue Code of 1986 (relating to 
        other credits) is amended by adding at the end the following 
        new section:

``SEC. 30D. PLUG-IN ELECTRIC DRIVE MOTOR VEHICLE CREDIT.

    ``(a) Allowance of Credit.--
            ``(1) In general.--There shall be allowed as a credit 
        against the tax imposed by this chapter for the taxable year an 
        amount equal to the applicable amount with respect to each new 
        qualified plug-in electric drive motor vehicle placed in 
        service by the taxpayer during the taxable year.
            ``(2) Applicable amount.--For purposes of paragraph (1)--
                    ``(A) In general.--The applicable amount is sum 
                of--
                            ``(i) $2,000, plus
                            ``(ii) $400 for each kilowatt hour of 
                        traction batter capacity in excess of 2.5 
                        kilowatt hours.
                    ``(B) Additional credit for flexible fuel 
                vehicles.--In the case of a new qualified plug-in 
                electric drive motor vehicle which is a flexible fuel 
                motor vehicle, the applicable amount shall be increased 
                by $150.
    ``(b) Limitations.--
            ``(1) Limitation based on weight.--The amount of the credit 
        allowed under subsection (a) by reason of subsection (a)(2)(A) 
        shall not exceed--
                    ``(A) $7,500, in the case of any new qualified 
                plug-in electric drive motor vehicle with a gross 
                vehicle weight rating of not more than 10,000 pounds,
                    ``(B) $10,000, in the case of any new qualified 
                plug-in electric drive motor vehicle with a gross 
                vehicle weight rating of more than 10,000 pounds but 
                not more than 14,000 pounds,
                    ``(C) $15,000, in the case of any new qualified 
                plug-in electric drive motor vehicle with a gross 
                vehicle weight rating of more than 14,000 pounds but 
                not more than 26,000 pounds, and
                    ``(D) $20,000, in the case of any new qualified 
                plug-in electric drive motor vehicle with a gross 
                vehicle weight rating of more than 26,000 pounds.
            ``(2) Limitation based on amount of tax.--The credit 
        allowed under subsection (a) for any taxable year shall not 
        exceed the excess of--
                    ``(A) the sum of the regular tax liability (as 
                defined in section 26(b)) plus the tax imposed by 
                section 55, over
                    ``(B) the sum of the credits allowable under 
                subpart A and section 27 for the taxable year.
            ``(3) Limitation on number of passenger vehicles and light 
        trucks eligible for credit.--No credit shall be allowed under 
        subsection (a) for any new qualified plug-in electric drive 
        motor vehicle which is a passenger vehicle or light truck in 
        any calendar year following the calendar year which includes 
        the first date on which the total number of such new qualified 
        plug-in electric drive motor vehicles sold for use in the 
        United States after December 31, 2007, is at least 250,000.
    ``(c) New Qualified Plug-in Electric Drive Motor Vehicle.--For 
purposes of this section, the term `new qualified plug-in electric 
drive motor vehicle' means a motor vehicle--
            ``(1) which draws propulsion using one or more traction 
        batteries with an aggregate capacity of not less than 2.5 
        kilowatt hours,
            ``(2) which uses an offboard source of electricity to 
        recharge one or more such batteries,
            ``(3) which has received a certificate of conformity under 
        the Clean Air Act for that make and model year,
            ``(4) the original use of which commences with the 
        taxpayer,
            ``(5) which is acquired for use or lease by the taxpayer 
        and not for resale, and
            ``(6) which is made by a manufacturer.
    ``(d) Other Definitions and Special Rules.--For purposes of this 
section--
            ``(1) Motor vehicle.--The term `motor vehicle' has the 
        meaning given such term by section 30(c)(2).
            ``(2) Other terms.--The terms `passenger automobile', 
        `light truck', and `manufacturer' have the meanings given such 
        terms in regulations prescribed by the Administrator of the 
        Environmental Protection Agency for purposes of the 
        administration of title II of the Clean Air Act (42 U.S.C. 7521 
        et seq.).
            ``(3) Traction battery capacity.--Traction battery capacity 
        shall be measured in kilowatt hours from a 100 percent state of 
        charge to a zero percent state of charge.
            ``(4) Flexible fuel motor vehicle.--The term `flexible fuel 
        motor vehicle' means a motor vehicle warranted by the 
        manufacturer as capable of operating on each of the following 
        fuels:
                    ``(A) Gasoline.
                    ``(B) A blend containing 85 percent ethanol and 15 
                percent gasoline by volume.
                    ``(C) A blend containing 85 percent methanol and 15 
                percent gasoline by volume.
                    ``(D) Biodiesel.
            ``(5) Reduction in basis.--For purposes of this subtitle, 
        the basis of any property for which a credit is allowable under 
        subsection (a) shall be reduced by the amount of such credit so 
        allowed.
            ``(6) No double benefit.--The amount of any deduction or 
        other credit allowable under this chapter for a new qualified 
        plug-in electric drive motor vehicle shall be reduced by the 
        amount of credit allowed under subsection (a) for such vehicle 
        for the taxable year.
            ``(7) Property used by tax-exempt entity.--In the case of a 
        vehicle 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 vehicle to the person or entity using such 
        vehicle shall be treated as the taxpayer that placed such 
        vehicle 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 vehicle 
        (determined without regard to subsection (b)(2)).
            ``(8) 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.
            ``(9) Recapture.--The Secretary shall, by regulations, 
        provide for recapturing the benefit of any credit allowable 
        under subsection (a) with respect to any property which ceases 
        to be property eligible for such credit (including recapture in 
        the case of a lease period of less than the economic life of a 
        vehicle).
            ``(10) Election to not take credit.--No credit shall be 
        allowed under subsection (a) for any vehicle if the taxpayer 
        elects not to have this section apply to such vehicle.
            ``(11) Interaction with air quality and motor vehicle 
        safety standards.--Unless otherwise provided in this section, a 
        motor vehicle shall not be considered eligible for a credit 
        under this section unless such vehicle is in compliance with--
                    ``(A) the applicable provisions of the Clean Air 
                Act for the applicable make and model year of the 
                vehicle (or applicable air quality provisions of State 
                law in the case of a State which has adopted such 
                provision under a waiver under section 209(b) of the 
                Clean Air Act), and
                    ``(B) the motor vehicle safety provisions of 
                sections 30101 through 30169 of title 49, United States 
                Code.
    ``(e) Regulations.--
            ``(1) In general.--Except as provided in paragraph (2), the 
        Secretary shall promulgate such regulations as necessary to 
        carry out the provisions of this section.
            ``(2) Coordination in prescription of certain 
        regulations.--The Secretary of the Treasury, in coordination 
        with the Secretary of Transportation and the Administrator of 
        the Environmental Protection Agency, shall prescribe such 
        regulations as necessary to determine whether a motor vehicle 
        meets the requirements to be eligible for a credit under this 
        section.
    ``(f) Termination.--This section shall not apply to property 
purchased after December 31, 2014.''.
            (2) Coordination with other motor vehicle credits.--
                    (A) Electric drive motor vehicles.--Paragraph (1) 
                of section 30(c) of the Internal Revenue Code of 1986 
                is amended by adding at the end the following new flush 
                sentence:
        ``Such term shall not include any motor vehicle which is a new 
        qualified plug-in electric drive motor vehicle (as defined by 
        section 30D(c)).''.
                    (B) New qualified fuel cell motor vehicles.--
                Paragraph (3) of section 30B(b) of such Code is amended 
                by adding at the end the following new flush sentence:
        ``Such term shall not include any motor vehicle which is a new 
        qualified plug-in electric drive motor vehicle (as defined by 
        section 30D(c)).''.
                    (C) New qualified hybrid motor vehicles.--Paragraph 
                (3) of section 30B(d) of such Code is amended by adding 
                at the end the following new flush sentence:
        ``Such term shall not include any motor vehicle which is a new 
        qualified plug-in electric drive motor vehicle (as defined by 
        section 30D(c)).''.
            (3) Conforming amendments.--
                    (A) Section 1016(a) of the Internal Revenue Code of 
                1986 is amended by striking ``and'' at the end of 
                paragraph (36), by striking the period at the end of 
                paragraph (37) and inserting ``, and'', and by adding 
                at the end the following new paragraph:
            ``(38) to the extent provided in section 30D(d)(5).''.
                    (B) Section 6501(m) of such Code is amended by 
                inserting ``30D(d)(10)'' after ``30C(e)(5)''.
                    (C) The table of sections for subpart B of part IV 
                of such Code is amended by adding at the end the 
                following new item:

``Sec. 30D. Plug-in electric drive motor vehicle credit.''.
    (b) Conversion Kits.--
            (1) In general.--Section 30B of the Internal Revenue Code 
        of 1986 (relating to alternative motor vehicle credit) is 
        amended by redesignating subsections (i) and (j) as subsections 
        (j) and (k), respectively, and by inserting after subsection 
        (h) the following new subsection:
    ``(i) Plug-in Conversion Credit.--
            ``(1) In general.--For purposes of subsection (a), the 
        plug-in conversion credit determined under this subsection with 
        respect to any motor vehicle which is converted to a qualified 
        plug-in electric drive motor vehicle is the lesser of--
                    ``(A) an amount equal to--
                            ``(i) $2,000, plus
                            ``(ii) $400 for each kilowatt hour of 
                        capacity of the plug-in traction battery module 
                        installed in such vehicle in excess of 2.5 
                        kilowatt hours, or
                    ``(B) 50 percent of the cost of the plug-in 
                traction battery module installed in such vehicle as 
                part of such conversion.
            ``(2) Limitations.--The amount of the credit allowed under 
        this subsection shall not exceed $4,000 with respect to the 
        conversion of any motor vehicle.
            ``(3) Definitions and special rules.--For purposes of this 
        subsection--
                    ``(A) Qualified plug-in electric drive motor 
                vehicle.--The term `qualified plug-in electric drive 
                motor vehicle' means any new qualified plug-in electric 
                drive motor vehicle (as defined in section 30D(c), 
                determined without regard to paragraphs (4) and (6) 
                thereof).
                    ``(B) Plug-in traction battery module.--The term 
                `plug-in traction battery module' means an electro-
                chemical energy storage device which--
                            ``(i) has a traction battery capacity of 
                        not less than 2.5 kilowatt hours,
                            ``(ii) is equipped with an electrical plug 
                        by means of which it can be energized and 
                        recharged when plugged into an external source 
                        of electric power,
                            ``(iii) consists of a standardized 
                        configuration and is mass produced,
                            ``(iv) has been tested and approved by the 
                        National Highway Transportation Safety 
                        Administration as compliant with applicable 
                        motor vehicle and motor vehicle equipment 
                        safety standards when installed by a mechanic 
                        with standardized training in protocols 
                        established by the battery manufacturer as part 
                        of a nationwide distribution program, and
                            ``(v) is certified by a battery 
                        manufacturer as meeting the requirements of 
                        clauses (i) through (iv).
                    ``(C) Credit allowed to lessor of battery module.--
                In the case of a plug-in traction battery module which 
                is leased to the taxpayer, the credit allowed under 
                this subsection shall be allowed to the lessor of the 
                plug-in traction battery module.
                    ``(D) Credit allowed in addition to other 
                credits.--The credit allowed under this subsection 
                shall be allowed with respect to a motor vehicle 
                notwithstanding whether a credit has been allowed with 
                respect to such motor vehicle under this section (other 
                than this subsection) in any preceding taxable year.
            ``(4) Termination.--This subsection shall not apply to 
        conversions made after December 31, 2010.''.
            (2) Credit treated as part of alternative motor vehicle 
        credit.--Section 30B(a) of such Code is amended by striking 
        ``and'' at the end of paragraph (3), by striking the period at 
        the end of paragraph (4) and inserting ``, and'', and by adding 
        at the end the following new paragraph:
            ``(5) the plug-in conversion credit determined under 
        subsection (i).''.
            (3) No recapture for vehicles converted to qualified plug-
        in electric drive motor vehicles.--Paragraph (8) of section 
        30B(h) of such Code is amended by adding at the end the 
        following: ``, except that no benefit shall be recaptured if 
        such property ceases to eligible for such credit by reason of 
        conversion to a qualified plug-in electric drive motor 
        vehicle.''
    (c) Effective Date.--The amendments made by this section shall 
apply to property placed in service after December 31, 2007, in taxable 
years beginning after such date.

SEC. 3. INCENTIVES FOR MANUFACTURING FACILITIES PRODUCING PLUG-IN 
              ELECTRIC DRIVE MOTOR VEHICLE AND COMPONENTS.

    (a) Deduction for Manufacturing Facilities.--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. EXPENSING FOR MANUFACTURING FACILITIES PRODUCING PLUG-IN 
              ELECTRIC DRIVE MOTOR VEHICLE AND COMPONENTS.

    ``(a) Treatment as Expenses.--A taxpayer may elect to treat the 
applicable percentage of the cost of any qualified plug-in electric 
drive motor vehicle manufacturing facility property as an expense which 
is not chargeable to a capital account. Any cost so treated shall be 
allowed as a deduction for the taxable year in which the qualified 
manufacturing facility property is placed in service.
    ``(b) Applicable Percentage.--For purposes of subsection (a), the 
applicable percentage is--
            ``(1) 100 percent, in the case of qualified plug-in 
        electric drive motor vehicle manufacturing facility property 
        which is placed in service before January 1, 2013, and
            ``(2) 50 percent, in the case of qualified plug-in electric 
        drive motor vehicle manufacturing facility property which is 
        placed in service after December 31, 2012, and before January 
        1, 2015.
    ``(c) Election.--
            ``(1) In general.--An election under this section for any 
        taxable year shall be made on the taxpayer's return of the tax 
        imposed by this chapter for the taxable year. Such election 
        shall be made in such manner as the Secretary may by 
        regulations prescribe.
            ``(2) Election irrevocable.--Any election made under this 
        section may not be revoked except with the consent of the 
        Secretary.
    ``(d) Qualified Plug-in Electric Drive Motor Vehicle Manufacturing 
Facility Property.--For purposes of this section--
            ``(1) In general.--The term `qualified plug-in electric 
        drive motor vehicle manufacturing facility property' means any 
        qualified property--
                    ``(A) the original use of which commences with the 
                taxpayer,
                    ``(B) which is placed in service by the taxpayer 
                after the date of the enactment of this section and 
                before January 1, 2015, and
                    ``(C) no written binding contract for the 
                construction of which was in effect on or before the 
                date of the enactment of this section.
            ``(2) Qualified property.--
                    ``(A) In general.--The term `qualified property' 
                means any property which is a facility or a portion of 
                a facility used for the production of--
                            ``(i) any new qualified plug-in electric 
                        drive motor vehicle (as defined by section 
                        30D(c)), or
                            ``(ii) any eligible component.
                    ``(B) Eligible component.--The term `eligible 
                component' means any battery, any electric motor or 
                generator, or any power control unit which is designed 
                specifically for use in a new qualified plug-in 
                electric drive motor vehicle (as so defined).
    ``(e) Special Rule for Dual Use Property.--In the case of any 
qualified plug-in electric drive motor vehicle manufacturing facility 
property which is used to produce both qualified property and other 
property which is not qualified property, the amount of costs taken 
into account under subsection (a) shall be reduced by an amount equal 
to--
            ``(1) the total amount of such costs (determined before the 
        application of this subsection), multiplied by
            ``(2) the percentage of property expected to be produced 
        which is not qualified property.''.
    (b) Refund of Credit for Prior Year Minimum Tax Liability.--Section 
53 of the Internal Revenue Code of 1986 (relating to credit for prior 
year minimum tax liability) is amended by adding at the end the 
following new subsection:
    ``(f) Election To Treat Amounts Attributable to Qualified 
Manufacturing Facility.--
            ``(1) In general.--In the case of an eligible taxpayer, the 
        amount determined under subsection (c) for the taxable year 
        (after the application of subsection (e)) shall be increased by 
        an amount equal to the applicable percentage of any qualified 
        plug-in electric drive motor vehicle manufacturing facility 
        property which is placed in service during the taxable year.
            ``(2) Applicable percentage.--For purposes of paragraph 
        (1), the applicable percentage is--
                    ``(A) 35 percent, in the case of qualified plug-in 
                electric drive motor vehicle manufacturing facility 
                property which is placed in service before January 1, 
                2013, and
                    ``(B) 17.5 percent, in the case of qualified plug-
                in electric drive motor vehicle manufacturing facility 
                property which is placed in service after December 31, 
                2012, and before January 1, 2015.
            ``(3) Eligible taxpayer.--For purposes of this subsection, 
        the term `eligible taxpayer' means any taxpayer--
                    ``(A) who places in service qualified plug-in 
                electric drive motor vehicle manufacturing facility 
                property during the taxable year,
                    ``(B) who does not make an election under section 
                179F(c), and
                    ``(C) who makes an election under this subsection.
            ``(4) Other definitions and special rules.--
                    ``(A) Qualified plug-in electric drive motor 
                vehicle manufacturing facility property.--The term 
                `qualified plug-in electric drive motor vehicle 
                manufacturing facility property' has the meaning given 
                such term under section 179F(d).
                    ``(B) Special rule for dual use property.--In the 
                case of any qualified plug-in electric drive motor 
                vehicle manufacturing facility property which is used 
                to produce both qualified property (as defined in 
                section 179F(d)) and other property which is not 
                qualified property, the amount of costs taken into 
                account under paragraph (1)shall be reduced by an 
                amount equal to--
                            ``(i) the total amount of such costs 
                        (determined before the application of this 
                        subparagraph), multiplied by
                            ``(ii) the percentage of property expected 
                        to be produced which is not qualified property.
                    ``(C) Election.--
                            ``(i) In general.--An election under this 
                        subsection for any taxable year shall be made 
                        on the taxpayer's return of the tax imposed by 
                        this chapter for the taxable year. Such 
                        election shall be made in such manner as the 
                        Secretary may by regulations prescribe.
                            ``(ii) Election irrevocable.--Any election 
                        made under this subsection may not be revoked 
                        except with the consent of the Secretary.
            ``(5) Credit refundable.--For purposes of this title (other 
        than this section), the credit allowed by reason of this 
        subsection shall be treated as if it were allowed under subpart 
        C.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after the date of the enactment of 
this Act.

SEC. 4. CREDIT FOR UTILITY REBATES FOR CUSTOMERS PURCHASING PLUG-IN 
              ELECTRIC DRIVE MOTOR VEHICLES.

    (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. UTILITY REBATE CREDIT.

    ``(a) In General.--For purposes of section 38, in the case of an 
eligible taxpayer, the utility rebate credit for any taxable year is an 
amount equal to 50 percent of the sum of the qualified rebates paid or 
accrued by the eligible taxpayer during the taxable year.
    ``(b) Limitation.--
            ``(1) In general.--The amount of the credit allowed under 
        subsection (a) with respect to any qualified rebate paid or 
        accrued in any taxable year shall not exceed--
                    ``(A) $1,000, in the case of an eligible taxpayer 
                ranked in the first quartile in the greenhouse gas 
                emissions rankings published by the Secretary under 
                paragraph (2),
                    ``(B) $800, in the case of an eligible taxpayer 
                ranked in the second quartile of such rankings,
                    ``(C) $600, in the case of an eligible taxpayer 
                ranked in the third quartile of such rankings, and
                    ``(D) $400, in the case of an eligible taxpayer 
                ranked in the fourth quartile of such rankings.
            ``(2) Ranking of greenhouse gas emissions.--
                    ``(A) In general.--The Secretary, in consultation 
                with the Administrator of the Environmental Protection 
                Agency, shall publish, on an annual basis, a ranking of 
                electric utilities based on the rate of greenhouse 
                gasses emitted by each such utility. Such publication 
                shall list the ranking of each utility by quartile, 
                with the utilities emitting the lowest rate of 
                greenhouse gasses in the first quartile.
                    ``(B) Greenhouse gas.--For purposes of subparagraph 
                (A), the term `greenhouse gas' means--
                            ``(i) carbon dioxide;
                            ``(ii) methane;
                            ``(iii) nitrous oxide;
                            ``(iv) hydrofluorocarbons;
                            ``(v) perfluorocarbons; and
                            ``(vi) sulfur hexafluoride.
            ``(3) Determination of ranking.--The ranking of an eligible 
        taxpayer in the greenhouse gas emissions rankings published by 
        the Secretary under paragraph (2) for any taxable year shall be 
        determined by using the most recent such rank of such eligible 
        taxpayer at the end of such taxable year.
    ``(c) Eligible Taxpayer.--For purposes of this section, the term 
`eligible taxpayer' means a electric utility which is included on the 
list of rankings for emissions of greenhouse gases published by the 
Secretary under subsection (b)(2).
    ``(d) Qualified Rebate.--For purposes of this section, the term 
`qualified rebate' means a rebate with respect to amounts owed by a 
customer of an eligible taxpayer for the cost of electricity or any 
service connected with supply of electricity if such rebate is paid or 
accrued on account of--
            ``(1) the purchase by the customer of a new qualified plug-
        in electric drive motor vehicle (as defined by section 30D(c)) 
        or a qualified plug-in electric drive motor vehicle (as defined 
        by section 30B(i)(3)), or
            ``(2) the conversion by the customer of a motor vehicle to 
        a qualified plug-in electric drive motor vehicle (as so 
        defined).
    ``(e) Special Rule for Certain Tax-Exempt Utilities.--
            ``(1) In general.--In the case of an eligible taxpayer 
        which is exempt from tax under this chapter, the aggregate 
        credits allowed to the eligible taxpayer under subpart C shall 
        be increased by the lesser of--
                    ``(A) the credit which would be allowed under this 
                section without regard to this subsection, or
                    ``(B) the amount of the payroll taxes imposed on 
                the eligible taxpayer during the calendar year in which 
                the taxable year begins.
            ``(2) Payroll taxes.--For purposes of this subsection--
                    ``(A) In general.--The term `payroll taxes' means 
                the taxes imposed by--
                            ``(i) section 3111, and
                            ``(ii) sections 3211(a) and 3221(a) 
                        (determined at a rate equal to the rates under 
                        section 3111).
                    ``(B) Special rule.--A rule similar to the rule of 
                section 24(d)(2)(C) shall apply for purposes of 
                subparagraph (A).''.
    (b) Credit Treated as Part of General Business Credit.--Section 
38(b) of the Internal Revenue Code of 1986 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 utility rebate credit determined under section 
        45O(a).''.
    (c) No Double Benefit.--Section 280C of the Internal Revenue Code 
of 1986 is amended by adding at the end the following new subsection:
    ``(f) Utility Rebate Credit.--No deduction shall be allowed for 
that portion of any amount otherwise allowable as a deduction for the 
taxable year which is equal to the amount of the credit determined for 
the taxable year under section 45O(a).''.
    (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 adding at the end the following new item:

``Sec. 45O. Utility rebate credit.''.
    (e) Effective Date.--The amendments made by this section shall 
apply to rebates paid or accrued in taxable years beginning after the 
date of the enactment of this Act.
                                 <all>