[Congressional Bills 111th Congress]
[From the U.S. Government Publishing Office]
[S. 271 Introduced in Senate (IS)]

111th CONGRESS
  1st Session
                                 S. 271

  To amend the Internal Revenue Code of 1986 to provide incentives to 
accelerate the production and adoption of plug-in electric vehicles and 
                        related component parts.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                            January 15, 2009

  Ms. Cantwell (for herself, Mr. Hatch, Mr. Kerry, Mr. Alexander, Ms. 
  Stabenow, and Mr. Nelson of Florida) 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 
accelerate the production and adoption of plug-in electric vehicles and 
                        related component parts.

    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 2009''.

SEC. 2. 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. ELECTION TO EXPENSE 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, 2012, 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, 2011, 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 with 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:
    ``(g) 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, 
                2012, 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, 
                2011, 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) Clerical Amendment.--The table of sections for part VI of 
subchapter B of chapter 1 of the Internal Revenue Code of 1986 is 
amended by adding at the end the following new item:

``Sec. 179F. Election to expense manufacturing facilities producing 
                            plug-in electric drive motor vehicle and 
                            components.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after the date of the enactment of 
this Act.

SEC. 3. CONSUMER INCENTIVES FOR PLUG-IN ELECTRIC DRIVE MOTOR VEHICLES.

    (a) Increase in Number of Plug-In Electric Drive Motor Vehicles 
Eligible for Tax Credit.--
            (1) In general.--Subparagraph (B) of section 30D(b)(2) of 
        the Internal Revenue Code of 1986 is amended by striking 
        ``250,000'' and inserting ``500,000''.
            (2) Effective date.--The amendment made by this subsection 
        shall apply to taxable years beginning after December 31, 2008.
    (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) $1,250, plus
                            ``(ii) $100 for each half 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, 2012.''.
            (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 be eligible for such credit by reason 
        of conversion to a qualified plug-in electric drive motor 
        vehicle.''.
            (4) Effective date.--The amendments made by this subsection 
        shall apply to property placed in service after December 31, 
        2008, in taxable years beginning after such date.
    (c) Certain 2- or 3-Wheeled Motor Vehicles Eligible for Credit.--
            (1) In general.--Section 30D of the Internal Revenue Code 
        of 1986 is amended--
                    (A) by redesignating subsections (f) and (g) as 
                subsections (g) and (h), respectively, and
                    (B) by inserting after subsection (e) the following 
                new subsection:
    ``(f) 2- or 3-Wheeled Motor Vehicles.--For purposes of this 
section--
            ``(1) In general.--Except as provided in paragraph (2), 2- 
        or 3-wheeled motor vehicles shall be treated in the same manner 
        as motor vehicles.
            ``(2) Exceptions.--
                    ``(A) Applicable amount.--For purposes of this 
                subsection, the applicable amount shall be $1,250.
                    ``(B) Other exceptions.--
                            ``(i) Subparagraph (B) of subsection (a)(2) 
                        shall be applied with respect to 2- or 3-
                        wheeled motor vehicles by substituting `$100 
                        for each half kilowatt hour' for `$417 for each 
                        kilowatt hour'.
                            ``(ii) Subparagraph (A) of subsection 
                        (b)(1) shall be applied with respect to 2- or 
                        3-wheeled motor vehicles by substituting 
                        `$3,750' for `$7,500'.
                            ``(iii) Subsection (c)(1) shall be applied 
                        with respect to 2- or 3-wheeled motor vehicles 
                        by substituting `2.5 kilowatt hours' for `4 
                        kilowatt hours'.
                            ``(iv) Subsection (c)(3) shall not apply 
                        with respect to 2- or 3-wheeled motor vehicles.
            ``(3) Application of limitation.--The limitation provided 
        in subsection (b)(2) shall be applied separately with respect 
        to 2- or 3-wheeled vehicles and with respect to other motor 
        vehicles, and in applying such limitation to 2- or 3-wheeled 
        vehicles, `50,000' shall be substituted for `500,000'.
            ``(4) 2- or 3-wheeled motor vehicle.--The term `2- or 3-
        wheeled vehicle' means any vehicle--
                    ``(A) which would be described in section 30(c)(2) 
                except that it has 2 or 3 wheels,
                    ``(B) with motive power having a seat or saddle for 
                the use of the rider and designed to travel on not more 
                than 3 wheels in contact with the ground,
                    ``(C) which has an electric motor that produces in 
                excess of 5-brake horsepower,
                    ``(D) which draws propulsion from 1 or more 
                traction batteries, and
                    ``(E) which has been certified to the Department of 
                Transportation pursuant to section 567 of title 49, 
                Code of Federal Regulations, as conforming to all 
                applicable Federal motor vehicle safety standards in 
                effect on the date of the manufacture of the 
                vehicle.''.
            (2) Effective date.--The amendments made by this subsection 
        shall apply to property placed in service after December 31, 
        2008, in taxable years beginning after such date.
    (d) Credit With Respect to Low-Speed Vehicles.--
            (1) In general.--Subsection (e) of section 30D of the 
        Internal Revenue Code of 1986 is amended by adding at the end 
        the following new paragraph:
            ``(11) Special rules for low-speed vehicles.--In the case 
        of a low-speed vehicle which meets the requirements of section 
        571.500 of title 49, Code of Federal Regulations--
                    ``(A) subparagraph (A) of subsection (a)(2) shall 
                be applied with respect low-speed vehicles by 
                substituting `$1,250' for `$2,500',
                    ``(B) subparagraph (B) of subsection (a)(2) shall 
                be applied with respect to low-speed vehicles by 
                substituting `$100 for each half kilowatt hour' for 
                `$417 for each kilowatt hour',
                    ``(C) subparagraph (A) of subsection (b)(1) shall 
                be applied with respect to low-speed vehicles by 
                substituting `$3,750' for `$7,500',
                    ``(D) the limitation provided in subsection (b)(2) 
                shall be applied separately with respect to low-speed 
                vehicles and with respect to other motor vehicles, and 
                in applying such limitation to low-speed vehicles, 
                `50,000' shall be substituted for `500,000', and
                    ``(E) subsection (c)(3) shall not apply with 
                respect to low-speed vehicles.''.
            (2) Effective date.--The amendment made by this subsection 
        shall apply to property placed in service after December 31, 
        2008, in taxable years beginning after such date.

SEC. 4. RECOVERY PERIOD FOR DEPRECIATION OF SMART METERS AND SMART GRID 
              SYSTEMS.

    (a) 5-Year Recovery Period.--
            (1) In general.--Subparagraph (B) of section 168(e)(3) of 
        the Internal Revenue Code of 1986 is amended by striking 
        ``and'' at the end of clause (vi), by striking the period at 
        the end of clause (vii) and inserting ``, and'', and by adding 
        at the end the following new clauses:
                            ``(viii) any qualified smart electric 
                        meter, and
                            ``(ix) any qualified smart electric grid 
                        system.''.
            (2) Conforming amendments.--Subparagraph (D) of section 
        168(e)(3) of such Code is amended by inserting ``and'' at the 
        end of clause (i), by striking the comma at the end of clause 
        (ii) and inserting a period, and by striking clauses (iii) and 
        (iv).
    (b) Technical Amendments.--Paragraphs (18)(A)(ii) and (19)(A)(ii) 
of section 168(i) of the Internal Revenue Code of 1986 are each amended 
by striking ``16 years'' and inserting ``10 years''.
    (c) Effective Dates.--
            (1) In general.--Except as provided in paragraph (2), the 
        amendments made by this section shall apply to property placed 
        in service after the date of the enactment of this Act.
            (2) Technical amendment.--The amendments made by subsection 
        (b) shall take effect as if included in section 306 of the 
        Energy Improvement and Extension Act of 2008.

SEC. 5. EXPANSION AND EXTENSION OF ELECTRIC AND ALTERNATIVE FUEL 
              VEHICLE REFUELING PROPERTY CREDIT.

    (a) In General.--Section 30C of the Internal Revenue Code of 1986 
is amended--
            (1) by striking ``30 percent'' in subsection (a) and 
        inserting ``50 percent'', and
            (2) by striking ``$30,000'' in subsection (b)(1) and 
        inserting ``$50,000''.
    (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, in taxable years ending after such date.
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