Extension and modification of credit for steel industry fuel

(a)

Credit period

(1)

In general

Section 45(e)(8)(D)(ii)(II) of the Internal Revenue Code of 1986 is amended to read as follows:

(II)

Credit period

In lieu of the 10-year period referred to in clauses (i) and (ii)(II) of subparagraph (A), the credit period shall be the period beginning on the first date that the facility first produces steel industry fuel that is sold to an unrelated person after the date of the enactment of the Steel Industry Preservation Act, and ending 10 years after such first date.

(2)

Conforming amendment

Section 45(e)(8)(D) of such Code is amended by striking clause (iii) and by redesignating clause (iv) as clause (iii).(b)

Extension of placed-in-Service date

Section 45(d)(8)(A) of such Code is amended—(1)by striking (or any modification to a facility);(2)by striking placed in service before and inserting

placed in service—(i)before

;

(3)by striking and at the end and inserting or; and(4)by adding at the end the following new clause:

(ii)after the date of the enactment of this clause and before the date that is 18 months after such date, and

(c)

Clarifications

(1)

Steel industry fuel

Section 45(c)(7)(C)(i)(I) of such Code is amended by inserting , or a blend of coal and petroleum coke, or other coke feedstock after on coal.(2)

Ownership interest

Section 45(d)(8) of such Code is amended by adding at the end the following new flush sentence:

With respect to a facility producing steel industry fuel, no person (including a ground lessor, customer, supplier, or technology licensor) shall be treated as having an ownership interest in the facility or as otherwise entitled to the credit allowable under this section with respect to such facility solely because such person’s rent, license fee, or other entitlement to net payments from the owner of such facility is measured by a fixed dollar amount or a fixed amount per ton, or otherwise determined without regard to the profit or loss of such facility.

(3)

Production and sale

Section 45(e)(8)(D) of such Code, as amended by subsection (a)(2), is amended by redesignating clause (iii) as clause (iv) and by inserting after clause (ii) the following new clause:

(iii)

Production and sale

The owner of a facility producing steel industry fuel shall be treated as producing and selling steel industry fuel where that owner manufactures such steel industry fuel from coal, a blend of coal and petroleum coke, or other coke feedstock to which it has title. The sale of such steel industry fuel by the owner of the facility to a person who is not the owner of the facility shall not fail to qualify as a sale to an unrelated person solely because such purchaser may also be a ground lessor, supplier, or customer.

(d)

Election To increase credit in lieu of steel industry fuel deductions

Section 45(e)(8) of such Code is amended by adding at the end the following new subparagraph:

(E)

Election for increased credit in lieu of deductions for steel industry fuel

In the case of a taxpayer who produces steel industry fuel—(i)

In general

At the election of the taxpayer—(I)no deduction shall be allowed with respect to expenses made in connection with the production and sale of steel industry fuel for such taxable year which are otherwise deductible under this chapter (determined without regard to this subparagraph),(II)no expense made in connection with the production of and sale of steel industry fuel which is otherwise chargeable to capital account in such taxable year shall be so charged, and(III)the credit determined under this section (without regard to this subparagraph) for such taxable year shall be increased by an amount equal to the product of the sum of the amounts to which subclauses (I) and (II) apply and the maximum rate of tax applicable under section 1 or 11(b), as applicable to the taxpayer in such taxable year.(ii)

Application to partnerships and S corporations

In the case of a partnership or S corporation, the election shall be made at the partnership or S corporation level.(iii)

Election

An election under this subparagraph for any taxable year shall be made not later than the time for filing the return of tax for such year (including extensions), in such manner as the Secretary may prescribe. Such an election, once made, shall be irrevocable.

(e)

Specified credit for purposes of alternative minimum tax exclusion

Section 38(c)(4)(B)(iv)(II) of such Code is amended by inserting (in the case of a refined coal production facility producing steel industry fuel, during the credit period set forth in section 45(e)(8)(D)(ii)(II)) after service.(f)

Application of certain rules to steel industry fuel

(1)

Activity not engaged in for profit

Section 183 of such Code is amended by adding at the end the following new subsection:

(f)

Exception

This section shall not apply to any deduction with respect to the production of steel industry fuel (as defined in section 45(c)(7)(C)).

(2)

Application of economic substance doctrine

(A)

In general

Section 7701(o) of such Code is amended by adding at the end the following new paragraph:

(6)

Non-application to steel industry fuel

The economic substance doctrine shall not apply to any transaction to the extent such transaction relates to steel industry fuel (as defined in section 45(c)(7)(C)).

(B)

Conforming amendment

Section 7701(o)(5)(C) of such Code is amended by striking The determination and inserting Except as provided in paragraph (6), the determination.(g)

Effective dates

(1)

In general

Except as provided in paragraph (2), the amendments made by this section shall apply to fuel produced and sold after the date of the enactment of this Act, in taxable years ending after such date.(2)

Application of economic substance rules

The amendments made by subsection (f)(2) shall apply to transactions entered into after the date of the enactment of this Act.