[Congressional Record Volume 149, Number 113 (Monday, July 28, 2003)]
[Senate]
[Pages S10069-S10070]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. HARKIN (for himself and Mr. Dayton):
  S. 1476. A bill to amend the Internal Revenue Code of 1986 to 
encourage investment in facilities using wind to produce electricity, 
and for other purposes; to the Committee on Finance.
  Mr. HARKIN. Mr. President, I am introducing today the Wind Power Tax 
Incentives Act of 2003. I am pleased to be joined by Senator Dayton. 
This legislation makes it easier for farmers and others around the 
country to invest in wind power for commercial electricity production. 
Wind power is a clean, economical, and reliable source of renewable 
energy abundant on farms and in rural areas in Iowa and elsewhere.
  With this legislation we can help farmers help themselves by 
developing a new source of income, and help the rest of the country in 
the production of renewable energy. Farmers are ready to take on this 
effort. A recent study found that 93 percent of corn producers support 
wind energy generally. They also strongly support the farm bill's 
historic energy title.
  This bill complements the farm bill's energy programs and other wind 
power initiatives currently being considered by this body. The bill 
would make changes to Federal tax law to make the section 45 wind 
production tax credit more widely available to farmers, farm 
cooperatives, and other investors. Section 45 of Federal tax law 
provides a tax credit, currently 1.8 cents per kiowatthour, for 
electricity actually produced and sold during the first ten years of 
the life of a wind turbine. The credit has been extraordinarily 
successful in spearheading the installation of new wind power capacity 
by utilities and in bringing down the cost of this sustainable energy 
source to consumers. However, certain barriers have prevented wide use 
by farmers and other investors.
  It's time to take the next step and help our family farmers and other 
investors benefit from the credit as well. Our legislation does this by 
making three changes to the tax code. First, under current tax law most 
losses, deductions, and credits from passive investments cannot be used 
to reduce taxes on wages or other income. So a farmer who passively 
invested in wind energy could not use the tax credits to offset taxes 
on farm income. This bill creates an exception to passive loss 
restrictions for an interest in a wind facility that qualifies for the 
section 45 credit. The wind facility's loss or tax credits could then 
offset the income or taxes on the taxpayer's farming business. Similar 
exceptions currently apply to oil and gas investments. To prevent 
potential abuse by wealthy taxpayers, the exception is limited to 
taxpayers with income under $1 million.
  Second, under current law individual and corporate taxpayers are 
subject to an alternative minimum tax (AMT) if their tax rates fall 
below certain levels. Taxpayers subject to an AMT cannot currently use 
the section 45 wind tax credit. This bill allows a farmer or other 
taxpayer who invests in a wind electric generating facility to use the 
resulting tax credit against the taxpayer's alternate minimum tax 
(AMT). Similar provisions already exist for several other tax credits. 
Again, this provision is limited to taxpayers with income under $1 
million.
  Third, the bill allows cooperatives to invest in qualified wind 
facilities and pass through the section 45 credits to cooperative 
members. This will allow farmers to join together and pool their 
resources in a cooperative and still take advantage of the credit.
  The benefits of this legislation are obvious. Increased renewable 
energy production lessens our dependence on foreign oil, provides 
environmental and public health gains, bolsters farm income, creates 
jobs and boosts economic growth, especially in rural areas. The Nation 
must move toward energy independence, and domestically produced wind 
power, along with other forms of renewable energy like biofuels, play 
an important part in this endeavor.
  I want to thank Senator Dayton for co-sponsoring this legislation 
with me. His leadership in this area will be instrumental to moving the 
bill forward. I am hopeful we can pass this legislation soon to help 
secure a brighter future for our Nation's farmers and fellow citizens.
  I ask unanimous consent that the text of the bill be printed in the 
Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 1476

       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 ``Wind Power Tax Incentives 
     Act of 2003 ''.

     SEC. 2. OFFSET OF PASSIVE ACTIVITY LOSSES AND CREDITS OF AN 
                   ELIGIBLE TAXPAYER FROM WIND ENERGY FACILITIES.

       (a) In General.--Section 469 of the Internal Revenue Code 
     of 1986 (relating to passive activity losses and credits 
     limited) is amended by redesignating subsections (l) and (m) 
     as subsections (m) and (n) and by inserting after subsection 
     (k) the following new subsection:
       ``(l) Offset of Passive Activity Losses and Credits From 
     Wind Energy Facilities.--
       ``(1) In general.--Subsection (a) shall not apply to the 
     portion of the passive activity loss, or the deduction 
     equivalent (within the meaning of subsection (j)(5)) of the 
     portion of the passive activity credit, for any taxable year 
     which is attributable to all interests of an eligible 
     taxpayer in qualified facilities described in section 
     45(c)(3)(A).
       ``(2) Eligible taxpayer.--For purposes of this subsection--
       ``(A) In general.--The term `eligible taxpayer' means, with 
     respect to any taxable year, a taxpayer the adjusted gross 
     income (taxable income in the case of a corporation) of which 
     does not exceed $1,000,000.
       ``(B) Rules for computing adjusted gross income.--Adjusted 
     gross income shall be computed in the same manner as under 
     subsection (i)(3)(F).
       ``(C) Aggregation rules.--All persons treated as a single 
     employer under subsection (a) or (b) of section 52 shall be 
     treated as a single taxpayer for purposes of this paragraph.
       ``(D) Pass-thru entities.--In the case of a pass-thru 
     entity, this paragraph shall be applied at the level of the 
     person to which the credit is allocated by the entity.''
       (b) Effective Date.--The amendments made by this section 
     shall apply to facilities placed in service after the date of 
     the enactment of this Act.

     SEC. 3. CREDIT FOR WIND ENERGY FACILITIES OF AN ELIGIBLE 
                   TAXPAYER ALLOWED AGAINST MINIMUM TAX.

       (a) In General.--Section 38(c) of the Internal Revenue Code 
     of 1986 (relating to limitation based on amount of tax) is 
     amended by redesignating paragraph (4) as paragraph (5) and 
     by inserting after paragraph (3) the following new paragraph:
       ``(4) Special rules for wind energy credit.--
       ``(A) In general.--In the case of the wind energy credit of 
     an eligible taxpayer--
       ``(i) this section and section 39 shall be applied 
     separately with respect to such credit, and
       ``(ii) in applying paragraph (1) to the credit--

       ``(I) the tentative minimum tax shall be treated as being 
     zero, and
       ``(II) the limitation under paragraph (1) (as modified by 
     subclause (I)) shall be reduced by the credit allowed under 
     subsection (a) for the taxable year (other than the wind 
     energy credit).

       ``(B) Wind energy credit.--For purposes of this subsection, 
     the term `wind energy credit' means the portion of the 
     renewable electric production credit under section 45 
     determined with respect to a facility using wind to produce 
     electricity.
       ``(C) Eligible taxpayer.--For purposes of this paragraph, 
     the term `eligible taxpayer' has the meaning given such term 
     by section 469(l)(2).''
       (b) Conforming Amendments.--Paragraphs (2)(A)(ii)(II) and 
     (3)(A)(ii)(II) of section 38(c) of such Code are each amended 
     by inserting ``or wind energy credit'' after ``employee 
     credit''.

[[Page S10070]]

       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years ending after the date of the 
     enactment of this Act.

     SEC. 4. APPLICATION OF CREDIT TO COOPERATIVES.

       (a) In General.--Section 45(d) of the Internal Revenue Code 
     of 1986 (relating to definitions and special rules) is 
     amended by adding at the end the following new paragraph:
       ``(8) Allocation of credit to shareholders of 
     cooperative.--
       ``(A) Election to allocate.--
       ``(i) In general.--In the case of a cooperative 
     organization described in section 1381(a), any portion of the 
     credit determined under subsection (a) for the taxable year 
     may, at the election of the organization, be apportioned pro 
     rata among shareholders of the organization on the basis of 
     the capital contributions of the shareholders to the 
     organization.
       ``(ii) Form and effect of election.--An election under 
     clause (i) for any taxable year shall be made on a timely 
     filed return for such year. Such election, once made, shall 
     be irrevocable for such taxable year.
       ``(B) Treatment of organizations and patrons.--The amount 
     of the credit apportioned to any shareholders under 
     subparagraph (A)--
       ``(i) shall not be included in the amount determined under 
     subsection (a) with respect to the organization for the 
     taxable year, and
       ``(ii) shall be included in the amount determined under 
     subsection (a) for the taxable year of the shareholder with 
     or within which the taxable year of the organization ends.
       ``(C) Special rules for decrease in credits for taxable 
     year.--If the amount of the credit of a cooperative 
     organization determined under subsection (a) for a taxable 
     year is less than the amount of such credit shown on the 
     return of the cooperative organization for such year, an 
     amount equal to the excess of--
       ``(i) such reduction, over
       ``(ii) the amount not apportioned to such shareholders 
     under subparagraph (A) for the taxable year,

     shall be treated as an increase in tax imposed by this 
     chapter on the organization. Such increase shall not be 
     treated as tax imposed by this chapter for purposes of 
     determining the amount of any credit under this subpart or 
     subpart A, B, E, or G.''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to taxable years ending after the date of the 
     enactment of this Act.
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