[Congressional Bills 111th Congress]
[From the U.S. Government Publishing Office]
[S. 3749 Introduced in Senate (IS)]

111th CONGRESS
  2d Session
                                S. 3749

  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

                             August 5, 2010

Mr. Conrad (for himself and Mr. Ensign) 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 2010''.

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. 45S. 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) 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 (or in the case 
                of bridges and tunnels, any eligible bridge or tunnel 
                replacement or expansion pursuant to paragraph (2)) of 
                which is completed after the effective date 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 
        qualified freight rail infrastructure property if the 
        replacement 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, whether or not 
                owned by a railroad, 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 clause 
                        shall not apply to any property described in 
                        section 168(g)(4).
    ``(c) Qualified Locomotive Property.--
            ``(1) In general.--For purposes of this section, the term 
        `qualified locomotive property' means a locomotive, whether or 
        not owned by a railroad, which--
                    ``(A) is acquired by the taxpayer after the 
                effective date of this section, but only if the 
                original use of such property commences with the 
                taxpayer,
                    ``(B) is owned by, or leased to, a taxpayer which 
                meets the capacity expansion requirement of paragraph 
                (2) for the taxable year in which the locomotive is 
                placed in service, and
                    ``(C) meets the Environmental Protection Agency's 
                emission standards for locomotives and locomotive 
                engines as in effect on December 31, 2006.
            ``(2) Capacity expansion requirement.--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.
            ``(3) Special rule for the leasing of locomotives.--In the 
        case of the leasing of locomotives, total horsepower under 
        paragraph (2) 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 effective date 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 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 locomotive property that 
        is sold by and subsequently leased back to the taxpayer.
    ``(e) Termination.--This section shall not apply to any property 
placed in service after December 31, 2015.''.
    (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 (35), 
by striking the period at the end of paragraph (36) and inserting ``, 
plus'', and by adding at the end the following new paragraph:
            ``(37) the freight rail capacity expansion credit 
        determined under section 45S.''.
    (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 (viii), by striking the period at the end of clause (ix) and 
inserting ``, and'', and by adding at the end the following new clause:
                            ``(x) for taxable years ending after the 
                        effective date of this clause, the credit 
                        determined under section 45S.''.
    (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 45R the 
following new item:

``Sec. 45S. Freight rail capacity expansion credit.''.
    (e) Effective Date.--The amendments made by this section shall 
apply to property placed in service after December 31, 2010.

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 45S(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 
        45S(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 
45S.
    ``(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, 2015.''
    (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 subtitle A 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.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to property placed in service after December 31, 2010.
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