II 110th CONGRESS 1st Session S. 2314 IN THE SENATE OF THE UNITED STATES November 6, 2007 Mr. Salazar (for himself, Mr. Inhofe, and Mr. Tester) 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 make geothermal heat pump systems eligible for the energy credit and the residential energy efficient property credit, and for other purposes.

1.

Short title

This Act may be cited as the Geothermal Heat Pump Development Act of 2007.

2.

Energy credit for geothermal heat pump systems

(a)

In general

Subparagraph (A) of section 48(a)(3) of the Internal Revenue Code of 1986 is amended by striking or at the end of clause (iii), by inserting or at the end of clause (iv), and by adding at the end the following new clause: (v)equipment which uses the ground or ground water as a thermal energy source to heat a structure or as a thermal energy sink to cool a structure, . (b)

Effective date

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

3.

Residential energy efficient property credit for geothermal heat pump systems

(a)

In general

Subsection (a) of section 25D of the Internal Revenue Code of 1986 is amended by striking and at the end of paragraph (2), by striking the period at the end of paragraph (3) and inserting , and, and by adding at the end the following new paragraph: (4)30 percent of the qualified geothermal heat pump property expenditures made by the taxpayer during the taxable year. . (b)

Qualified geothermal heat Pump property expenditures

Subsection (d) of section 25D of such Code is amended by adding at the end the following new paragraph: (4)

Qualified geothermal heat pump property expenditures

(A)

In general

The term qualified geothermal heat pump property expenditures means an expenditure for qualified geothermal heat pump property installed on or in connection with a dwelling unit located in the United States and used as a principal residence (within the meaning of section 121) by the taxpayer. (B)

Qualified geothermal heat pump property

The term qualified geothermal heat pump property means any equipment which— (i)uses the ground or ground water as a thermal energy source to heat the dwelling unit referred to in subparagraph (A) or as a thermal energy sink to cool such dwelling unit, and (ii)meets the requirements of the Energy Star program which are in effect at the time that the expenditure for such equipment is made. . (c)

Maximum credit limitation

Paragraph (1) of section 25D(b) of such Code is amended by striking and at the end of subparagraph (B), by striking the period at the end of subparagraph (C) and inserting , and, and by adding at the end the following new subparagraph: (D)$2,000 with respect to any qualified geothermal heat pump property expenditures. . (d)

Coordination with credit for nonbusiness energy property

Subsection (b) of section 25D of such Code is amended by adding at the end the following new paragraph: (3)

Denial of double benefit for geothermal heat pumps

The credit allowed under subsection (a) (determined without regard to this paragraph and subsection (c)) with respect to any qualified geothermal heat pump property expenditures shall be reduced by the amount of any credit allowed under section 25C with respect to such expenditures. . (e)

Credit allowed against alternative minimum tax

(1)

In general

Section 25D(b) of such Code, as amended by subsection (c), is amended by adding at the end the following new paragraph: (3)

Qualified geothermal heat pump property expenditure credit allowed against alternative minimum tax

In the case of a taxable year to which section 26(b)(2) does not apply, the credit allowed under subsection (a)(4) for the 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 this subpart (other than subsection (a)(4)) and section 27 for the taxable year. . (2)

Conforming amendments

(A)Subsection (c) of section 25D of such Code is amended— (i)by inserting paragraphs (1), (2), and (3) of before subsection (a) both places it appears in paragraph (2), and (ii)by adding at the end the following new paragraph: (3)

Carryforward of unused qualified geothermal heat pump property expenditure credit

In the case of a taxable year to which section 26(b)(2) does not apply, if the credit allowable under subsection (a)(4) for any taxable year exceeds the limitation imposed by subsection (b)(3) for such taxable year, such excess shall be carried to the succeeding taxable year and added to the credit allowable under subsection (a)(4) for such succeeding taxable year. . (B)Section 23(b)(4)(B) of such Code is amended by inserting and section 25D(a)(4) after this section. (C)Section 24(b)(3)(B) of such Code is amended by striking sections 23 and 25B and inserting sections 23, 25B, and 25D(a)(4). (D)Section 26(a)(1) of such Code is amended by striking and 25B and inserting 25B, and 25D(a)(4). (f)

Effective date

The amendments made by this section shall apply to expenditures made after the date of the enactment of this Act.

4.

3-year accelerated depreciation period for geothermal heat pump systems

(a)

In general

Subparagraph (A) of section 168(e)(3) of the Internal Revenue Code of 1986 is amended by striking and at the end of clause (ii), by striking the period at the end of clause (iii) and inserting , and, and by adding at the end the following new clause: (iv)any property which is described in clause (v) of section 48(a)(3)(A). . (b)

Conforming amendment

Subclause (I) of section 168(e)(3)(B)(vi) of such Code is amended by inserting clause (i), (ii), (iii), or (iv) of before subparagraph (A). (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.