[Congressional Record Volume 151, Number 29 (Friday, March 11, 2005)]
[Senate]
[Pages S2523-S2524]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. TALENT (for himself, Mrs. Lincoln, Mr. Thune, Mr. Johnson, 
        Mr. Coleman, Mr. Salazar, Mr. Harkin, Mr. Hagel, and Mr. Bond):
  S. 610. A bill to amend the Internal Revenue Code of 1986 to provide 
for a small agri-biodiesel producer credit and to improve the small 
ethanol producer credit; to the Committee on Finance.
  Mr. TALENT. Mr. President, 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. 610

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SMALL AGRI-BIODIESEL PRODUCER CREDIT.

       (a) In General.--Subsection (a) of section 40A of the 
     Internal Revenue Code of 1986 (relating to biodiesel used as 
     a fuel) is amended to read as follows:
       ``(a) General Rule.--For purposes of section 38, the 
     biodiesel fuels credit determined under this section for the 
     taxable year is an amount equal to the sum of--
       ``(1) the biodiesel mixture credit, plus
       ``(2) the biodiesel credit, plus
       ``(3) in the case of an eligible small agri-biodiesel 
     producer, the small agri-biodiesel producer credit.''.
       (b) Small Agri-biodiesel Producer Credit Defined.--Section 
     40A(b) of the Internal Revenue Code of 1986 (relating to 
     definition of biodiesel mixture credit and biodiesel credit) 
     is amended by adding at the end the following new paragraph:
       ``(5) Small agri-biodiesel producer credit.--
       ``(A) In general.--The small agri-biodiesel producer credit 
     of any eligible small agri-biodiesel producer for any taxable 
     year is 10 cents for each gallon of qualified agri-biodiesel 
     production of such producer.
       ``(B) Qualified agri-biodiesel production.--For purposes of 
     this paragraph, the term `qualified agri-biodiesel 
     production' means any agri-biodiesel which is produced by an 
     eligible small agri-biodiesel producer, and which during the 
     taxable year--
       ``(i) is sold by such producer to another person--

       ``(I) for use by such other person in the production of a 
     qualified biodiesel mixture in such other person's trade or 
     business (other than casual off-farm production),
       ``(II) for use by such other person as a fuel in a trade or 
     business, or
       ``(III) who sells such agri-biodiesel at retail to another 
     person and places such agri-biodiesel in the fuel tank of 
     such other person, or

       ``(ii) is used or sold by such producer for any purpose 
     described in clause (i).
       ``(C) Limitation.--The qualified agri-biodiesel production 
     of any producer for any taxable year shall not exceed 
     15,000,000 gallons.''.
       (c) Definitions and Special Rules.--Section 40A of the 
     Internal Revenue Code of 1986 is amended by redesignating 
     subsection (e) as subsection (f) and by inserting after 
     subsection (d) the following new subsection:
       ``(e) Definitions and Special Rules for Small Agri-
     biodiesel Producer Credit.--For purposes of this section--
       ``(1) Eligible small agri-biodiesel producer.--The term 
     `eligible small agri-biodiesel producer' means a person who, 
     at all times during the taxable year, has a productive 
     capacity for agri-biodiesel not in excess of 60,000,000 
     gallons.
       ``(2) Aggregation rule.--For purposes of the 15,000,000 
     gallon limitation under subsection (b)(5)(C) and the 
     60,000,000 gallon limitation under paragraph (1), all members 
     of the same controlled group of corporations (within the 
     meaning of section 267(f)) and all persons under common 
     control (within the meaning of section 52(b) but determined 
     by treating an interest of more than 50 percent as a 
     controlling interest) shall be treated as 1 person.
       ``(3) Partnership, s corporation, and other pass-thru 
     entities.--In the case of a partnership, trust, S 
     corporation, or other pass-thru entity, the limitations 
     contained in subsection (b)(5)(C) and paragraph (1) shall be 
     applied at the entity level and at the partner or similar 
     level.
       ``(4) Allocation.--For purposes of this subsection, in the 
     case of a facility in which more than 1 person has an 
     interest, productive capacity shall be allocated among such 
     persons in such manner as the Secretary may prescribe.
       ``(5) Regulations.--The Secretary may prescribe such 
     regulations as may be necessary--
       ``(A) to prevent the credit provided for in subsection 
     (a)(3) from directly or indirectly benefiting any person with 
     a direct or indirect productive capacity of more than 
     60,000,000 gallons of agri-biodiesel during the taxable year, 
     or
       ``(B) to prevent any person from directly or indirectly 
     benefiting with respect to more than 15,000,000 gallons 
     during the taxable year.
       ``(6) Allocation of small agri-biodiesel credit to patrons 
     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)(3) for the taxable 
     year may, at the election of the organization, be apportioned 
     pro rata among patrons of the organization on the basis of 
     the quantity or value of business done with or for such 
     patrons for the taxable year.
       ``(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.--
       ``(i) Organizations.--The amount of the credit not 
     apportioned to patrons pursuant to subparagraph (A) shall be 
     included in the amount determined under subsection (a)(3) for 
     the taxable year of the organization.
       ``(ii) Patrons.--The amount of the credit apportioned to 
     patrons pursuant to subparagraph (A) shall be included in the 
     amount determined under such subsection for the first taxable 
     year of each patron ending on or after the last day of the 
     payment period (as defined in section 1382(d)) for the 
     taxable year of the organization or, if earlier, for the 
     taxable year of each patron ending on or after the date on 
     which the patron receives notice from the cooperative of the 
     apportionment.
       ``(iii) Special rules for decrease in credits for taxable 
     year.--If the amount of the credit of the organization 
     determined under such subsection for a taxable year is less 
     than the amount of such credit shown on the return of the 
     organization for such year, an amount equal to the excess 
     of--

       ``(I) such reduction, over

[[Page S2524]]

       ``(II) the amount not apportioned to such patrons 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 chapter or 
     for purposes of section 55.''.
       (d) Small Agri-biodiesel Credit Not a Passive Activity 
     Credit.--Clause (i) of section 469(d)(2)(A) of the Internal 
     Revenue Code of 1986, as amended by section 2, is amended by 
     striking ``section 40(a)(3)'' and inserting ``sections 
     40(a)(3) and 40A(a)(3)''.
       (e) Small Agri-biodiesel Producer Credit Not Added Back to 
     Income Under Section 87.--Section 87 of the Internal Revenue 
     Code of 1986, as amended by section 2, is amended by striking 
     ``and'' at the end of paragraph (2) and by striking paragraph 
     (3) and inserting the following new paragraphs:
       ``(3) the biodiesel mixture credit determined with respect 
     to the taxpayer for the taxable year under section 40A(a)(1), 
     and
       ``(4) the biodiesel credit determined with respect to the 
     taxpayer for the taxable year under section 40A(a)(2).''.
       (f) Conforming Amendments.--
       (1) Paragraph (4) of section 40A(b) of the Internal Revenue 
     Code of 1986 is amended by striking ``this section'' and 
     inserting ``paragraph (1) or (2) of subsection (a)''.
       (2) The heading of subsection (b) of section 40A of such 
     Code is amended by striking ``and Biodiesel Credit'' and 
     inserting ``, Biodiesel Credit, and Small Agri-biodiesel 
     Producer Credit''.
       (3) Paragraph (3) of section 40A(d) of such Code is amended 
     by redesignating subparagraph (C) as subparagraph (D) and by 
     inserting after subparagraph (B) the following new 
     subparagraph:
       ``(C) Producer credit.--If--
       ``(i) any credit was determined under subsection (a)(3), 
     and
       ``(ii) any person does not use such fuel for a purpose 
     described in subsection (b)(5)(B),

     then there is hereby imposed on such person a tax equal to 10 
     cents a gallon for each gallon of such agri-biodiesel.''.
       (g) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after the date of the 
     enactment of this Act.

     SEC. 2. IMPROVEMENTS TO SMALL ETHANOL PRODUCER CREDIT.

       (a) Definition of Small Ethanol Producer.--Section 40(g) of 
     the Internal Revenue Code of 1986 (relating to definitions 
     and special rules for eligible small ethanol producer credit) 
     is amended by striking ``30,000,000'' each place it appears 
     and inserting ``60,000,000''.
       (b) Small Ethanol Producer Credit Not a Passive Activity 
     Credit.--Clause (i) of section 469(d)(2)(A) of the Internal 
     Revenue Code of 1986 is amended by striking ``subpart D'' and 
     inserting ``subpart D, other than section 40(a)(3),''.
       (c) Small Ethanol Producer Credit Not Added Back to Income 
     Under Section 87.--Section 87 of the Internal Revenue Code of 
     1986 (relating to income inclusion of alcohol and biodiesel 
     fuels credits) is amended by redesignating paragraph (2) as 
     paragraph (3) and by striking paragraph (1) and inserting the 
     following:
       ``(1) the amount of the alcohol mixture credit determined 
     with respect to the taxpayer for the taxable year under 
     section 40(a)(1),
       ``(2) the alcohol credit determined with respect to the 
     taxpayer for the taxable year under section 40(a)(2), and''.
       (d) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after the date of the 
     enactment of this Act.

                          ____________________