Credit for corrosion prevention and mitigation measures for energy-related 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:

45R.

Corrosion prevention and mitigation measures for energy-related property

(a)

In general

For purposes of section 38, the corrosion prevention and mitigation credit determined under this section for the taxable year is an amount equal to 50 percent of the excess of— (1)qualified corrosion prevention and mitigation expenditures with respect to qualified energy-related property, over (2)the amount such expenditures would have been, taking into account— (A)amounts paid or incurred to satisfy Federal, State, or local requirements, and (B)amounts paid for corrosion prevention practices, as certified by a person certified pursuant to subsection (b)(2). (b)

Qualified corrosion prevention and mitigation expenditures

For purposes of this section— (1)

In general

The term qualified corrosion prevention and mitigation expenditures means amounts paid or incurred by the taxpayer during the taxable year for engineering design, materials, and application and installation of corrosion prevention and mitigation technology. (2)

Certification may be required

The Secretary shall require by regulation that no amount be taken into account under paragraph (1) for any design, material, application, or installation unless such design, material, application, or installation meets such certification requirements. Such requirements shall provide for accreditation of certifying persons by an independent entity with expertise in corrosion prevention and mitigation technology. (3)

Corrosion prevention and mitigation technology

Corrosion prevention and mitigation technology includes a system comprised of at least one of the following: a corrosion-protective coating or paint; chemical treatment; corrosion-resistant metals; and cathodic protection. The Secretary from time to time by regulations or other guidance may modify the list contained in the preceding sentence to reflect changes in corrosion prevention and mitigation technology. (4)

Qualified energy-related property

The term qualified energy-related property means property which is— (A)comprised primarily of a metal susceptible to corrosion, (B)used in— (i)the exploration, production, refining, or transportation of oil, natural gas, coal, or any product thereof, or (ii)the generation, transmission, or distribution of electricity or any other form of energy, (C)of a character subject to the allowance for depreciation, (D)originally placed in service or owned by the taxpayer, and (E)located in the United States. (c)

Recapture of credit

(1)

In general

If, as of the close of any taxable year, there is a recapture event with respect to any qualified energy-related property for which a credit was allowed under subsection (a), the tax of the taxpayer under this chapter for such taxable year shall be increased by an amount equal to the product of— (A)the applicable recapture percentage, and (B)the aggregate decrease in the credits allowed under section 38 for all prior taxable years which would have resulted if the qualified corrosion prevention and mitigation expenditures of the taxpayer with respect to such property had been zero. (2)

Applicable recapture percentage

(A)

In general

For purposes of this subsection, the applicable recapture percentage shall be determined from the following table: If the property ceases to beThe recapture qualified energy-related property within:percentage is: (i) One full year after placed in service100 (ii) One full year after the close of the period described in clause (i) 80 (iii) One full year after the close of the period described in clause (ii)60 (iv) One full year after the close of the period described in clause (iii) 40 (v) One full year after the close of the period described in clause (iv) 20.

(B)

Recapture event defined

For purposes of this subsection, the term recapture event means— (i)

Cessation of use

The cessation of use of the qualified energy-related property. (ii)

Change in ownership

(I)

In general

Except as provided in subclause (II), the disposition of a taxpayer’s interest in the qualified energy-related property with respect to which the credit described in subsection (a) was allowable. (II)

Agreement to assume recapture liability

Subclause (I) shall not apply if the person acquiring the qualified energy-related property agrees in writing to assume the recapture liability of the person disposing of the qualified energy-related property. In the event of such an assumption, the person acquiring the qualified energy-related property shall be treated as the taxpayer for purposes of assessing any recapture liability (computed as if there had been no change in ownership). (III)

special rule for tax exempt entities

Subclause (II) shall not apply to any tax exempt entity (as defined in section 168(h)(2)). (iii)

Special rules

(I)

Tax benefit rule

The tax for the taxable year shall be increased under paragraph (1) only with respect to credits allowed by reason of this section which were used to reduce tax liability. In the case of credits not so used to reduce tax liability, the carryforwards and carrybacks under section 39 shall be appropriately adjusted. (II)

No credits against tax

Any increase in tax under this subsection shall not be treated as a tax imposed by this chapter for purposes of determining the amount of any credit under this chapter or for purposes of section 55. (III)

No recapture by reason of casualty loss

The increase in tax under this subsection shall not apply to a cessation of operation of the property as qualified energy-related property by reason of a casualty loss to the extent such loss is restored by reconstruction or replacement within a reasonable period established by the Secretary. (d)

Denial of double benefit

For purposes of this subtitle— (1)

Basis adjustments

(A)

In general

If a credit is determined under this section for any expenditure with respect to any property, the increase in the basis of such property which would (but for this subsection) result from such expenditure shall be reduced by the amount of the credit so allowed. (B)

Certain dispositions

If, during any taxable year, there is a recapture amount determined with respect to any property the basis of which was reduced under subparagraph (A), the basis of such property (immediately before the event resulting in such recapture) shall be increased by an amount equal to such recapture amount. For purposes of the preceding sentence, the term recapture amount means any increase in tax (or adjustment in carrybacks or carryovers) determined under subsection (c). (2)

Other deductions and credits

No deduction or credit shall be allowed under this chapter for any expense taken into account under this section. (e)

Regulations

The Secretary shall prescribe such regulations as may be appropriate to carry out this section. (f)

Application of section

This section shall apply to taxable years beginning during the 2-year period beginning on the date of the enactment of this section.

(b)

Credit made part of general business credit

Subsection (b) of section 38 of such Code (relating to current year business credit) is amended by striking plus at the end of paragraph (34), by striking the period at the end of paragraph (35) and inserting , plus, and by adding at the end thereof the following new paragraph:

(36)the corrosion prevention and mitigation credit determined under section 45R(a).

(c)

Clerical Amendment

The table of sections for subpart D of part IV of subchapter A of chapter 1 of such Code is amended by inserting after the item relating to section 45Q the following new item:

Sec. 45R. Corrosion prevention and mitigation measures for energy-related property.

(d)

Effective Date

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