[Senate Report 114-29]
[From the U.S. Government Publishing Office]


                                                        Calendar No. 52
114th Congress     }                                   {         Report
                                 SENATE
 1st Session       }                                   {         114-29

======================================================================



 
  A BILL TO EXCLUDE FROM GROSS INCOME CERTAIN CLEAN COAL POWER GRANTS

                                _______
                                

                 April 14, 2015.--Ordered to be printed

                                _______
                                

               Mr. Hatch, from the Committee on Finance, 
                        submitted the following

                              R E P O R T

                         [To accompany S. 919]

    The Committee on Finance, having considered an original 
bill, S. 919, to exclude from gross income certain clean coal 
power grants to non-corporate taxpayers, having considered the 
same, reports favorably thereon without amendment and 
recommends that the bill do pass.

                                CONTENTS

                                                                   Page
 I. LEGISLATIVE BACKGROUND............................................1
II. EXPLANATION OF THE BILL...........................................2
        A. Exclusion from Gross Income of Certain Clean Coal 
            Power Grants (sec. 1 of the bill)....................     2
III.BUDGET EFFECTS OF THE BILL........................................3

IV. VOTES OF THE COMMITTEE............................................3
 V. REGULATORY IMPACT AND OTHER MATTERS...............................5
VI. CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED.............5

                       I. LEGISLATIVE BACKGROUND

    The Committee on Finance, having considered S. 919, a bill 
to exclude from gross income certain clean coal power grants to 
non-corporate taxpayers, reports favorably thereon without 
amendment and recommends that the bill do pass.

Background and need for legislative action

    Background.--Based on a proposal recommended by Senator 
Cornyn, the Committee on Finance marked up original legislation 
(a bill to amend the Internal Revenue Code of 1986 to exclude 
from gross income certain clean coal power grants) on February 
11, 2015, and, with a majority present, ordered the bill 
favorably reported.
    Need for legislative action.--Section 402 of the Energy 
Policy Act of 2005 provides criteria for Federal financial 
assistance under the Clean Coal Power Initiative. To the extent 
this financial assistance comes in the form of a grant, award, 
or allowance, it must generally be included in income. 
Corporate taxpayers may be eligible to exclude such financial 
assistance from gross income as a contribution of capital under 
section 118 of the Code, but this exclusion is not available to 
non-corporate taxpayers. Federal financial assistance under the 
Clean Coal Power Initiative should be excludable from the 
income of investors, regardless of whether they operate as a 
corporation, in order to make such assistance as effective as 
possible in encouraging clean coal power.

                      II. EXPLANATION OF THE BILL


A. Exclusion From Gross Income of Certain Clean Coal Power Grants (sec. 
                             1 of the bill)


                              PRESENT LAW

    Section 402 of the Energy Policy Act of 2005 provides 
criteria for Federal financial assistance under the Clean Coal 
Power Initiative. To the extent this financial assistance comes 
in the form of a grant, award, or allowance, it must generally 
be included in income under section 61 of the Internal Revenue 
Code (the ``Code'').
    Corporate taxpayers may be eligible to exclude such 
financial assistance from gross income as a contribution of 
capital under section 118 of the Code. The basis of any 
property acquired by reason of such a contribution of capital 
must be reduced by the amount of the contribution. This 
exclusion is not available to non-corporate taxpayers.

                           REASONS FOR CHANGE

    The Committee believes that Federal financial assistance 
under the Clean Coal Power Initiative should be excludable from 
the income of investors in order to make such assistance as 
effective as possible in encouraging clean coal power. In 
addition, the Committee believes that a corresponding basis 
reduction is necessary in all cases to prevent any unintended 
double benefit under the incentive.

                        EXPLANATION OF PROVISION

    With respect to eligible non-corporate recipients, the 
proposal excludes from gross income and alternative minimum 
taxable income any grant, award, or allowance made pursuant to 
section 402 of the Energy Policy Act of 2005. The proposal 
requires that, to the extent the grant, award or allowance is 
related to depreciable property, the adjusted basis is reduced 
by the amount excluded from income under the proposal. The 
proposal requires eligible non-corporate recipients to pay an 
upfront payment to the Federal government equal to 1.18 percent 
of the value of the grant, award, or allowance.
    Under the proposal, eligible non-corporate recipients are 
defined as (1) any recipient (other than a corporation) of any 
grant, award, or allowance made pursuant to Section 402 of the 
Energy Policy Act of 2005 that (2) makes the upfront 1.18-
percent payment, where (3) the grant, award, or allowance would 
have been excludable from income by reason of Code section 118 
if the taxpayer had been a corporation. In the case of a 
partnership, the eligible non-corporate recipients are the 
partners.

                             EFFECTIVE DATE

    The proposal is effective for payments received in taxable 
years beginning after December 31, 2011.

                    III. BUDGET EFFECTS OF THE BILL


                         A. Committee Estimates

    In compliance with paragraph 11(a) of rule XXVI of the 
Standing Rules of the Senate and section 308(a)(1) of the 
Congressional Budget and Impoundment Control Act of 1974, as 
amended (the ``Budget Act''), the following statement is made 
concerning the estimated budget effects of the revenue 
provisions of the bill as reported.
    The bill is estimated to alter Federal fiscal year budget 
receipts by the following amounts for the period 2015-2025:

                                                                      FISCAL YEARS
                                                                  [Millions of Dollars]
--------------------------------------------------------------------------------------------------------------------------------------------------------
   2015       2016       2017        2018       2019       2020       2021       2022       2023       2024       2025      2015-20     2015-25
------------------------------------------------------------------------------------------------------------------------------------------------
    -96         52         -25          8         41         48         34         24         17          8          2        -79            6
--------------------------------------------------------------------------------------------------------------------------------------------------------
NOTE: Details do not add to totals due to rounding.

                B. Budget Authority and Tax Expenditures


Budget authority

    In compliance with section 308(a)(1) of the Budget Act, the 
Committee states that no provisions of the bill as reported 
involve new or increased budget authority.

Tax expenditures

    In compliance with section 308(a)(1) of the Budget Act, the 
Committee states that certain provisions of the bill as 
reported affect the levels of tax expenditures (see revenue 
table in part A., above).

            C. Consultation With Congressional Budget Office

    In accordance with section 402 of the Budget Act, the 
Committee advises that the Congressional Budget Office has not 
submitted a statement on the bill. The letter from the 
Congressional Budget Office will be provided separately.

                       IV. VOTES OF THE COMMITTEE

    In compliance with paragraph 7(b) of rule XXVI of the 
Standing Rules of the Senate, the Committee states that, with a 
majority present, the bill was ordered favorably reported by 
voice vote on February 11, 2015.

                 V. REGULATORY IMPACT AND OTHER MATTERS


                          A. Regulatory Impact

    Pursuant to paragraph 11(b) of rule XXVI of the Standing 
Rules of the Senate, the Committee makes the following 
statement concerning the regulatory impact that might be 
incurred in carrying out the provisions of the bill.

Impact on individuals and businesses, personal privacy and paperwork

    The bill excludes from gross income certain clean coal 
power grants. The provisions of the bill are not expected to 
impose additional administrative requirements or regulatory 
burdens on individuals or businesses.
    The provisions of the bill do not impact personal privacy.

                     B. Unfunded Mandates Statement

    This information is provided in accordance with section 423 
of the Unfunded Mandates Reform Act of 1995 (Pub. L. No. 104-
4).
    The Committee has determined that the tax provisions of the 
reported bill do not contain Federal private sector mandates or 
Federal intergovernmental mandates on State, local, or tribal 
governments within the meaning of Public Law 104-4, the 
Unfunded Mandates Reform Act of 1995.

                       C. Tax Complexity Analysis

    Section 4022(b) of the Internal Revenue Service Reform and 
Restructuring Act of 1998 (``IRS Reform Act'') requires the 
staff of the Joint Committee on Taxation (in consultation with 
the Internal Revenue Service and the Treasury Department) to 
provide a tax complexity analysis. The complexity analysis is 
required for all legislation reported by the Senate Committee 
on Finance, the House Committee on Ways and Means, or any 
committee of conference if the legislation includes a provision 
that directly or indirectly amends the Internal Revenue Code 
and has widespread applicability to individuals or small 
businesses. The staff of the Joint Committee on Taxation has 
determined that there are no provisions that are of widespread 
applicability to individuals or small businesses.

       VI. CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED

    In the opinion of the Committee, it is necessary in order 
to expedite the business of the Senate, to dispense with the 
requirements of paragraph 12 of rule XXVI of the Standing Rules 
of the Senate (relating to the showing of changes in existing 
law made by the bill as reported by the Committee).

                                  [all]