[Congressional Record Volume 151, Number 38 (Wednesday, April 6, 2005)]
[Senate]
[Pages S3281-S3282]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. HARKIN (for himself, Mr. Dayton, Mr. Durbin, and Mr. 
        Lautenberg):
  S. 715. 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 2005. I am pleased to be joined by Senators Dayton, 
Durbin and Lautenburg. 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 of 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 
challenge. A recent study found that 93 percent of corn producers 
support wind energy. They also strongly support the 2002 farm bill's 
historic energy title.
  This regulation complements the farm bill's energy programs and other 
wind power initiatives currently being

[[Page S3282]]

considered by this body, and is strongly supported by the American Wind 
Energy Association and John Deere. Our bill changes 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 the 
Federal tax code provides a tax credit, currently 1.8 cents per 
kilowatt-hour, for electricity produced and sold during the first ten 
years of the life of a wind turbine. The credit has been 
extraordinarily successful in spurring greater installation of new wind 
power capacity, making this sustainable energy source economically 
feasible. However, certain barriers have prevented many farmers and 
other investors from qualifying for the credit, thus impeding their 
participation.
  It is time to allow full participation by farmers and other investors 
in this important tax incentive. Our legislation removes barriers by 
making two important changes to the tax code.
  First, under current tax law most losses, deductions, and credits 
from passive investments cannot affect wages or other income or reduce 
taxes on such income. So a farmer who passively invests in wind energy 
could not use the 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 
arising from the taxpayer's farming business. Existing law provides an 
even broader exception for oil and gas investments, but in contrast to 
existing law, our proposed exception for wind investment applies only 
to those with income under $1 million, in order to avoid potential 
windfalls or abuse.
  Second, 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.
  When we first introduced this bill in the 108th Congress, it also 
contained a measure providing alternative minimum tax (AMT) relief. 
This important piece of the equation was incorporated late last year in 
the American Jobs Creation Act, and passed into law. But there's more 
to be done.
  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 security, and domestically produced wind power, 
along with other forms of renewable energy like biofuels, plays an 
important part in this endeavor.
  I want to thank Senators Dayton, Durbin and Lautenburg for co-
sponsoring this legislation with me. Their 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 renewable energy future 
for our Nation's farmers and all 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. 715

       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 2005''.

     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--
       (1) by redesignating subsections (l) and (m) as subsections 
     (m) and (n), respectively; and
       (2) by inserting after subsection (k) the following:
       ``(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(d)(1).
       ``(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. APPLICATION OF CREDIT TO COOPERATIVES.

       (a) In General.--Section 45(e) of the Internal Revenue Code 
     of 1986 (relating to definitions and special rules) is 
     amended by adding at the end the following:
       ``(10) 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.
                                 ______