House Ways & Means Committee Issues Report on Taxpayer Certainty & Disaster Tax Relief Act (Part 2 of 6)
Continued from Part 1
EXPLANATION OF PROVISION
The provision extends the special treatment for qualified film, television, and live theatrical productions under section 181 for three years to qualified productions commencing prior to
EFFECTIVE DATE
The provision applies to productions commencing after
7. EMPOWERMENT ZONE TAX INCENTIVES (
PRESENT LAW
The Omnibus Budget Reconciliation Act of 1993 ("OBRA 93")/96/ authorized the designation of nine empowerment zones ("Round I empowerment zones") to provide tax incentives for businesses to locate within certain targeted areas/97/ designated by the Secretaries of the
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/96/Pub. L. No. 103-66.
/97/The targeted areas are those that have pervasive poverty, high unemployment, and general economic distress, and that satisfy certain eligibility criteria, including specified poverty rates and population and geographic size limitations.
/98/Sec. 1391(b)(1).
/99/Enterprise communities were eligible for only one tax benefit: tax-exempt bond financing. For tax purposes, the areas designated as enterprise communities continued as such for the ten-year period starting 1995 and ending at the end of 2004. However, after 2004 the enterprise communities may still be eligible for other Federal benefits (e.g., grants and preferences).
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The Taxpayer Relief Act of 1997/100/ authorized the designation of two additional urban Round I empowerment zones, and 20 additional empowerment zones ("Round II empowerment zones"). The Community Renewal Tax Relief Act of 2000 ("2000 Community Renewal Act")/101/ authorized a total of 10 new empowerment zones ("Round III empowerment zones"), bringing the total number of authorized, and not relinquished, empowerment zones to 41./102/ In addition, the 2000 Community Renewal Act conformed the tax incentives that are available to businesses in the Round I, Round II, and Round III empowerment zones, and extended the empowerment zone incentives through
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/100/Pub. L. No. 105-34.
/101/Pub. L. No. 106-554. The 2000 Community Renewal Act also authorized the designation of 40 "renewal communities" within which special tax incentives were available. The tax incentives were generally available through
/102/The urban part of the program is administered by HUD and the rural part of the program is administered by the
/103/Pub. L. No. 111-312, sec. 753 (2010); Pub. L. No. 112-240, sec. 327(a) (2013); Pub. L. No. 113-295, sec. 139 (2014); Pub. L. No. 114-113, Div. Q, sec. 171(a) (2015); and Pub. L. No. 115-123, sec. 40311 (2018). The empowerment zone tax incentives may expire earlier than
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The tax incentives available within the designated empowerment zones include a Federal income tax credit for employers who hire qualifying employees (the "wage credit"), increased expensing of qualifying depreciable property, tax- exempt bond financing, and deferral of capital gains tax on the sale of qualified assets sold and replaced.
The following is a description of the empowerment zone tax incentives as in effect through 2017.
Wage credit A 20-percent wage credit is available to employers for the first
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/104/Sec. 1396. The
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The wage credit rate applies to qualifying wages paid before
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/105/However, the wage credit is not available for wages paid in connection with certain business activities described in section 144(c)(6)(B), including a golf course, country club, massage parlor, hot tub facility, suntan facility, racetrack, liquor store, or certain farming activities. In addition, wages are not eligible for the wage credit if paid to: (1) a person who owns more than five percent of the stock (or capital or profits interests) of the employer, (2) certain relatives of the employer, or (3) if the employer is a corporation or partnership, certain relatives of a person who owns more than 50 percent of the business.
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An employer's deduction otherwise allowed for wages paid is reduced by the amount of wage credit claimed for that taxable year./106/ Wages are not to be taken into account for purposes of the wage credit if taken into account in determining the employer's work opportunity tax credit under section 51./107/ In addition, the
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/106/Sec. 280C(a).
/107/Sec. 1396(c)(3)(A).
/108/Sec. 1396(c)(3)(B).
/109/Sec. 38(c)(2). The corporate alternative minimum tax is repealed for taxable years beginning after
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Increased section 179 expensing limitation An enterprise zone business/110/ is allowed up to an additional
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/110/Sec. 1397C. The term "enterprise zone business" is separate and distinct from the term "enterprise community." Enterprise community, for purposes of the Code, means the areas designated as such under section 1391. Sec. 1393(b). Note, however, that for purposes of section 1394 relating to tax-exempt enterprise zone facility bonds, references to empowerment zones shall be treated as including references to enterprise communities. Sec. 1394(b)(3).
/111/Sec. 1397A. Note that an Act to Provide for Reconciliation Pursuant to Titles II and V of the Concurrent Resolution on the Budget for Fiscal Year 2018 provides 100-percent bonus depreciation for qualified property acquired and placed in service after
/112/
/113/For taxable years beginning in 2017, the relevant dollar amount is
/114/Sec. 1397A(a)(2). For example, assume that during 2017 a calendar year taxpayer in an enterprise zone business purchased and placed in service
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The term "qualified zone property" is defined as depreciable tangible property (including buildings) provided that (i) the property is acquired by the taxpayer by purchase (from an unrelated party) after the date on which the designation of the empowerment zone took effect, (ii) the original use of the property in an empowerment zone commences with the taxpayer, and (iii) substantially all of the use of the property is in an empowerment zone in the active conduct of a qualified trade or business by the taxpayer in such zone./115/ Special rules are provided in the case of property that is substantially renovated by the taxpayer./116/
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/115/Sec. 1397D(a)(1). Note, however, that to be eligible for the increased section 179 expensing, the qualified zone property has to also meet the definition of section 179 property (e.g., building property would only qualify if it constitutes qualified real property under section 179(f) (prior to amendments by Pub.
/116/Sec. 1397D(a)(2).
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An enterprise zone business means any qualified business entity and any qualified proprietorship. A qualified business entity means any corporation or partnership if for such year: (1) every trade or business of such entity is the active conduct of a qualified business within an empowerment zone; (2) at least 50 percent of the total gross income of such entity is derived from the active conduct of such business; (3) a substantial portion of the use of the tangible property of such entity (whether owned or leased) is within an empowerment zone; (4) a substantial portion of the intangible property of such entity is used in the active conduct of any such business; (5) a substantial portion of the services performed for such entity by its employees are performed in an empowerment zone; (6) at least 35 percent of its employees are residents of an empowerment zone; (7) less than five percent of the average of the aggregate unadjusted bases of the property of such entity is attributable to collectibles other than collectibles that are held primarily for sale to customers in the ordinary course of such business; and (8) less than five percent of the average of the aggregate unadjusted bases of the property of such entity is attributable to nonqualified financial property./117/
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/117/Sec. 1397C(b).
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A qualified proprietorship is any qualified business carried on by an individual as a proprietorship if for such year: (1) at least 50 percent of the total gross income of such individual from such business is derived from the active conduct of such business in an empowerment zone; (2) a substantial portion of the use of the tangible property of such individual in such business (whether owned or leased) is within an empowerment zone; (3) a substantial portion of the intangible property of such business is used in the active conduct of such business; (4) a substantial portion of the services performed for such individual in such business by employees of such business are performed in an empowerment zone; (5) at least 35 percent of such employees are residents of an empowerment zone; (6) less than five percent of the average of the aggregate unadjusted bases of the property of such individual which is used in such business is attributable to collectibles other than collectibles that are held primarily for sale to customers in the ordinary course of such business; and (7) less than five percent of the average of the aggregate unadjusted bases of the property of such individual which is used in such business is attributable to nonqualified financial property./118/
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/118/Sec. 1397C(c). For these purposes, the term "employee" includes the proprietor.
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A qualified business is defined as any trade or business other than a trade or business that consists predominantly of the development or holding of intangibles for sale or license or any business prohibited in connection with the empowerment zone employment credit./119/ In addition, the leasing of real property that is located within the empowerment zone is treated as a qualified business only if (1) the leased property is not residential rental property, and (2) at least 50 percent of the gross rental income from the real property is from enterprise zone businesses. The rental of tangible personal property is not a qualified business unless at least 50 percent of the rental of such property is by enterprise zone businesses or by residents of an empowerment zone.
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/119/Sec. 1397C(d). Excluded businesses include any private or commercial golf course, country club, massage parlor, hot tub facility, sun tan facility, racetrack or other facility used for gambling, or any store the principal business of which is the sale of alcoholic beverages for off-premises consumption. Sec. 144(c)(6). Also, a qualified business does not include certain large farms. Sec. 1397C(d)(5)(B).
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Expanded tax-exempt financing for certain zone facilities States or local governments can issue enterprise zone facility bonds to raise funds to provide an enterprise zone business with qualified zone property./120/ These bonds can be used in areas designated enterprise communities as well as areas designated empowerment zones. To qualify, 95 percent (or more) of the net proceeds from the bond issue must be used to finance: (1) qualified zone property whose principal user is an enterprise zone business, and (2) certain land functionally related and subordinate to such property.
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/120/Sec. 1394.
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The term enterprise zone business is the same as that used for purposes of the increased section 179 deduction limitation (discussed above) with certain modifications for start-up businesses. First, an employee is considered a resident of an empowerment zone for purposes of the 35-percent in-zone employment requirement if they are a resident of an empowerment zone, an enterprise community, or a qualified low-income community within an applicable nominating jurisdiction./121/ The applicable nominating jurisdiction means, with respect to any empowerment zone or enterprise community, any local government that nominated such community for designation under section 1391. The definition of a qualified low-income community is similar to the definition of a low income community provided in section 45D(e) (concerning eligibility for the new markets tax credit). A "qualified low-income community" is a population census tract with either (1) a poverty rate of at least 20 percent, or (2) median family income which does not exceed 80 percent of the greater of metropolitan area median family income or statewide median family income (for a nonmetropolitan census tract, does not exceed 80 percent of statewide median family income). In the case of a population census tract located within a high migration rural county, low-income is defined by reference to 85 percent (as opposed to 80 percent) of statewide median family income. For this purpose, a high migration rural county is any county that, during the 20-year period ending with the year in which the most recent census was conducted, has a net out-migration of inhabitants from the county of at least 10 percent of the population of the county at the beginning of such period.
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/121/Pub. L. No. 114-113, Div. Q, sec. 171 (2015) (effective for bonds issued after 2015).
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The Secretary is authorized to designate "targeted populations" as qualified low-income communities. For this purpose, a "targeted population" is defined by reference to section 103(20) of the
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/122/Pub. L. No. 103-325.
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Second, a business will be treated as an enterprise zone business during a start-up period if (1) at the beginning of the period, it is reasonable to expect the business to be an enterprise zone business by the end of the start-up period, and (2) the business makes bona fide efforts to be an enterprise zone business. The start-up period is the period that ends with the start of the first tax year beginning more than two years after the later of (1) the issue date of the bond issue financing the qualified zone property, and (2) the date this property is first placed in service (or, if earlier, the date that is three years after the issue date)./123/
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/123/Sec. 1394(b)(3).
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Third, a business that qualifies as an enterprise zone business at the end of the start-up period must continue to qualify during a testing period that ends three tax years after the start-up period ends. After the three-year testing period, a business will continue to be treated as an enterprise zone business as long as 35 percent of its employees are residents of an empowerment zone, enterprise community, or a qualified low-income community within an applicable nominating jurisdiction.
The face amount of the bonds may not exceed
Elective rollover of capital gain from the sale or exchange of any qualified empowerment zone asset Taxpayers can elect to defer recognition of gain on the sale of a qualified empowerment zone asset held for more than one year and replaced within 60 days by another qualified empowerment zone asset in the same zone./124/ A qualified empowerment zone asset generally means stock or a partnership interest acquired at original issue for cash in an enterprise zone business, or tangible property originally used in an enterprise zone business by the taxpayer. The deferral is accomplished by reducing the basis of the replacement asset by the amount of the gain recognized on the sale of the asset.
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/124/Sec. 1397B.
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REASONS FOR CHANGE
To further encourage economic development within and expand employment opportunities in empowerment zones, the Committee believes that the empowerment zone tax incentives should be extended.
EXPLANATION OF PROVISION
The provision extends for three years, through
EFFECTIVE DATE
The provision applies to taxable years beginning after
8.
PRESENT LAW
Since 2006, certain domestic corporations have been entitled to an economic development credit with respect to operations in
For taxable years beginning before
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/125/For taxable years beginning before
To qualify for the possession tax credit for a taxable year, a domestic corporation was required to satisfy two conditions. First, the corporation was required to derive at least 80 percent of its gross income for the three-year period immediately preceding the close of the taxable year from sources within a possession. Second, the corporation was required to derive at least 75 percent of its gross income for that same period from the active conduct of a possession business. Sec. 936(a)(2). The section 936 credit generally expired for taxable years beginning after
/126/A corporation will qualify as an existing credit claimant if it acquired all the assets of a trade or business of a corporation that (1) actively conducted that trade or business in a possession on
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The amount of the credit allowed to a qualifying domestic corporation under the provision is equal to the sum of the amounts used in computing the corporation's economic activity- based limitation with respect to
The section 936(c) rule denying a credit or deduction for any possessions or foreign tax paid with respect to taxable income taken into account in computing the credit under section 936 does not apply with respect to the credit allowed by the provision.
For taxable years beginning after
In the case of a corporation that is an existing credit claimant with respect to
REASONS FOR CHANGE
To further encourage economic development in
EXPLANATION OF PROVISION
The provision extends the credit for three years to apply (a) in the case of a corporation that is an existing credit claimant with respect to
For purposes of this credit, the Code is applied without regard to the repeal of sections 30A and 936 in 2018,/127/ or the repeal of section 199 in 2017./128/
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/127/See The Consolidated Appropriations Act 2018, Pub. L. No. 115- 141, Division U, Title IV, at sec. 401(d)(1)(C) (the repeal of section 936) and sec. 401(d)(1)(D)(viii)(I) (definition of intangible property added to section 367(d)) (
/128/Pub. L. 115-97, section 13305(a).
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EFFECTIVE DATE
The provision is effective for taxable years beginning after
C. Incentives for Energy Production, Efficiency, and Green Economy Jobs 1. BIODIESEL AND RENEWABLE DIESEL (
PRESENT LAW
Biodiesel Present law provides an income tax credit for biodiesel fuels (the "biodiesel fuels credit"). The biodiesel fuels credit is the sum of three credits: (1) the biodiesel mixture credit, (2) the biodiesel credit, and (3) the small agri- biodiesel producer credit. The biodiesel fuels credit is treated as a general business credit. The amount of the biodiesel fuels credit is includible in gross income. The biodiesel fuels credit is coordinated to take into account benefits from the biodiesel excise tax credit and payment provisions discussed below. The credit does not apply to fuel sold or used after
Biodiesel is monoalkyl esters of long chain fatty acids derived from plant or animal matter that meet (1) the registration requirements established by the
Biodiesel may be taken into account for purposes of the credit only if the taxpayer obtains a certification (in such form and manner as prescribed by the Secretary) from the producer or importer of the biodiesel that identifies the product produced and the percentage of biodiesel and agri- biodiesel in the product.
Biodiesel mixture credit The biodiesel mixture credit is
Per
Biodiesel credit (B-100) The biodiesel credit is
Small agri-biodiesel producer credit The Code provides a small agri-biodiesel producer income tax credit, in addition to the biodiesel and biodiesel mixture credits. The credit is
Biodiesel mixture excise tax credit The Code also provides an excise tax credit for biodiesel mixtures. The credit is
The credit is not available for any sale or use for any period after
Payments with respect to biodiesel fuel mixtures If any person produces a biodiesel fuel mixture in such person's trade or business, the Secretary is to pay such person an amount equal to the biodiesel mixture credit. The biodiesel fuel mixture credit must first be taken against tax liability for taxable fuels. To the extent the biodiesel fuel mixture credit exceeds such tax liability, the excess may be received as a payment. Thus, if the person has no section 4081 liability, the credit is refundable. The Secretary is not required to make payments with respect to biodiesel fuel mixtures sold or used after
Renewable diesel Renewable diesel is liquid fuel that (1) is derived from biomass (as defined in section 45K(c)(3)), (2) meets the registration requirements for fuels and fuel additives established by the
For purposes of the Code, renewable diesel is generally treated the same as biodiesel. In the case of renewable diesel that is aviation fuel, kerosene is treated as though it were diesel fuel for purposes of a qualified renewable diesel mixture. Like biodiesel, the incentive may be taken as an income tax credit, an excise tax credit, or as a payment from the Secretary. The incentive for renewable diesel is
REASONS FOR CHANGE
To encourage the domestic production of biodiesel fuel, the Committee believes that the income tax credit, excise tax credit, and payment provisions for biodiesel and renewable diesel should be extended.
EXPLANATION OF PROVISION
The provision extends the present-law income tax credit, excise tax credit and payment provisions for biodiesel and renewable diesel through
EFFECTIVE DATE
The provision applies to fuel sold or used after
2. SECOND GENERATION BIOFUEL PRODUCER CREDIT (
PRESENT LAW
The second generation biofuel producer credit is a nonrefundable income tax credit that a producer may claim for each gallon of qualified second generation biofuel production for the taxable year. The amount of the credit per gallon is
"Qualified second generation biofuel production" is any second generation biofuel which is produced by the taxpayer and which, during the taxable year, is: (1) sold by the taxpayer to another person (a) for use by such other person in the production of a qualified second generation biofuel mixture in such person's trade or business (other than casual off-farm production), (b) for use by such other person as a fuel in a trade or business, or (c) who sells such second generation biofuel at retail to another person and places such cellulosic biofuel in the fuel tank of such other person; or (2) used by the producer for any purpose described in (1)(a), (b), or (c)./129/ Special rules apply for fuel derived from algae.
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/129/In addition, for fuels derived from algae, cyanobacterial or lemna, a special rule provides that qualified second generation biofuel includes fuel that is sold by the taxpayer to another person for refining by such other person into a fuel that meets the registration requirements for fuels and fuel additives under section 211 of the Clean Air Act.
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"Second generation biofuel" means any liquid fuel that (1) is produced in
The second generation biofuel producer credit cannot be claimed unless the taxpayer is registered by the
Because it is a credit under section 40(a), the second generation biofuel producer credit is part of the general business credits in section 38. However, the credit can only be carried forward three taxable years after the termination of the credit. The credit is also allowable against the alternative minimum tax. Under section 87, the credit is included in gross income.
REASONS FOR CHANGE
To further encourage the domestic production of second generation biofuels, the Committee believes that the second generation biofuel producer credit should be extended.
EXPLANATION OF PROVISION
The provision extends the credit for three years, through
EFFECTIVE DATE
The provision applies to qualified second generation biofuel production after
3. NONBUSINESS ENERGY PROPERTY (
PRESENT LAW
A 10-percent credit is available for the purchase of qualified energy efficiency improvements to existing homes./130/ A qualified energy efficiency improvement is any energy efficient building envelope component (1) that is installed in or on a dwelling located in
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/130/Sec. 25C.
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Energy efficient building envelope components are building envelope components that meet (1) the applicable Energy Star program requirements, in the case of a roof or roof products, (2) version 6.0 Energy Star program requirements, in the case of an exterior window, a skylights, or an exterior door, and (3) the prescriptive criteria for such components established by the 2009 International Energy Conservation Code, as in effect on the date of enactment of the American Recovery and Reinvestment Tax Act of 2009, in the case of any other component.
Building envelope components are (1) insulation materials or systems which are specifically and primarily designed to reduce the heat loss or gain for a dwelling when installed in or on such dwelling unit, (2) exterior windows (including skylights), (3) exterior doors, and (4) metal or asphalt roofs installed on a dwelling unity, but only if such roof has appropriate pigmented coatings or cooling granules that are specifically and primarily designed to reduce the heat gain for a dwelling.
Additionally, credits are also available for the purchase of specific energy efficient property originally placed in service by the taxpayer during the taxable year. The allowable credit for the purchase of certain property is (1)
An advanced main air circulating fan is a fan used in a natural gas, propane, or oil furnace and which has an annual electricity use of no more than two percent of the total annual energy use of the furnace (as determined in the standard
A qualified natural gas, propane, or oil furnace or hot water boiler is a natural gas, propane, or oil furnace or hot water boiler with an annual fuel utilization efficiency rate of at least 95.
Energy-efficient building property is: (1) an electric heat pump water heater which yields an energy factor of at least 2.0 in the standard
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/131/These standards are a seasonal energy efficiency ratio ("SEER") greater than or equal to 15, an energy efficiency ratio ("EER") greater than or equal to 12.5, and heating seasonal performance factor ("HSPF") greater than or equal to 8.5 for split heat pumps, and SEER greater than or equal to 14, EER greater than or equal to 12, and HSPF greater than or equal to 8.0 for packaged heat pumps.
/132/These standards are a SEER greater than or equal to 16 and EER greater than or equal to 13 for split systems, and SEER greater than or equal to 14 and EER greater than or equal to 12 for packaged systems.
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Generally, the credit is available for property placed in service prior to
The taxpayer's basis in the property is reduced by the amount of the credit. Special proration rules apply in the case of jointly owned property, condominiums, and tenant- stockholders in cooperative housing corporations. If less than 80 percent of the property is used for nonbusiness purposes, only that portion of expenditures that is used for nonbusiness purposes is taken into account.
For purposes of determining the amount of expenditures made by any individual with respect to any dwelling unit, expenditures which are made from subsidized energy financing are not taken into account. The term "subsidized energy financing" means financing provided under a Federal, State, or local program a principal purpose of which is to provide subsidized financing for projects designed to conserve or produce energy.
REASONS FOR CHANGE
The Committee believes that it is in the national interest to conserve energy and that many existing homes continue to be inadequately insulated and have inefficient heating, ventilation, and cooling equipment. Therefore, the Committee believes that the nonbusiness energy efficient property credit should be extended.
EXPLANATION OF PROVISION
The provision extends the nonbusiness energy property credit for three years, through
EFFECTIVE DATE
The provision is effective for property placed in service after
4. QUALIFIED FUEL CELL MOTOR VEHICLES (
PRESENT LAW
A credit is available through 2017 for vehicles propelled by chemically combining oxygen with hydrogen and creating electricity ("fuel cell vehicles")./133/ The base credit is
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/133/Sec. 30B.
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REASONS FOR CHANGE
The Committee believes that further investments in advanced technology vehicles are necessary to transform automotive transportation in
EXPLANATION OF PROVISION
The provision extends the credit for fuel cell vehicles for three years, through
EFFECTIVE DATE
The provision applies to property purchased after
5. ALTERNATIVE FUEL REFUELING PROPERTY CREDIT (
PRESENT LAW
Taxpayers may claim a 30-percent credit for the cost of installing qualified clean-fuel vehicle refueling property to be used in a trade or business of the taxpayer or installed at the principal residence of the taxpayer./134/ The credit may not exceed
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/134/Sec. 30C.
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Qualified refueling property is property (not including a building or its structural components) for the storage or dispensing of a clean-burning fuel or electricity into the fuel tank or battery of a motor vehicle propelled by such fuel or electricity, but only if the storage or dispensing of the fuel or electricity is at the point of delivery into the fuel tank or battery of the motor vehicle. The original use of such property must begin with the taxpayer.
Clean-burning fuels are any fuel at least 85 percent of the volume of which consists of ethanol, natural gas, compressed natural gas, liquefied natural gas, liquefied petroleum gas, or hydrogen. In addition, any mixture of biodiesel and diesel fuel, determined without regard to any use of kerosene and containing at least 20 percent biodiesel, qualifies as a clean fuel.
Credits for qualified refueling property used in a trade or business are part of the general business credit and may be carried back for one year and forward for 20 years. Credits for residential qualified refueling property cannot exceed for any taxable year the difference between the taxpayer's regular tax (reduced by certain other credits) and the taxpayer's tentative minimum tax. Generally, in the case of qualified refueling property sold to a tax-exempt entity, the taxpayer selling the property may claim the credit.
A taxpayer's basis in qualified refueling property is reduced by the amount of the credit. In addition, no credit is available for property used outside
The credit is available for property placed in service before
REASONS FOR CHANGE
The Committee believes that further investments in advanced technology vehicles and related infrastructure are necessary to transform automotive transportation in
EXPLANATION OF PROVISION
The provision extends for three years the 30-percent credit for alternative fuel refueling property, through
EFFECTIVE DATE
The provision applies to property placed in service after
6. EXTENSION OF CREDIT FOR ELECTRIC MOTORCYCLES (
PRESENT LAW
In general, for vehicles acquired before 2018, a 10-percent credit is available for qualifying plug-in electric motorcycles./135/ Qualifying electric motorcycles must have a battery capacity of at least 2.5 kilowatt-hours, be manufactured primarily for use on public streets, roads, and highways, and be capable of achieving speeds of at least 45 miles per hour. The maximum credit for any qualifying vehicle is
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/135/Sec. 30D(g). The credit lapsed and was not available for vehicles placed in service in calendar year 2014. Before 2014, the credit was also available for qualified vehicles having 3-wheels.
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REASONS FOR CHANGE
The Committee believes that further investments in advanced technology vehicles are necessary to transform automotive transportation in
EXPLANATION OF PROVISION
The provision extends the electric motorcycles credit for three years, through
EFFECTIVE DATE
The provision applies to vehicles acquired after
7. CREDIT FOR ELECTRICITY PRODUCED FROM CERTAIN RENEWABLE RESOURCES (
PRESENT LAW
Renewable electricity production credit An income tax credit is allowed for the production of electricity from qualified energy resources at qualified facilities (the "renewable electricity production credit")./136/ Qualified energy resources comprise wind, closed-loop biomass, open-loop biomass, geothermal energy, municipal solid waste, qualified hydropower production, and marine and hydrokinetic renewable energy. Qualified facilities are, generally, facilities that generate electricity using qualified energy resources. To be eligible for the credit, electricity produced from qualified energy resources at qualified facilities must be sold by the taxpayer to an unrelated person.
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/136/Sec. 45. In addition to the renewable electricity production credit, section 45 also provides income tax credits for the production of Indian coal and refined coal at qualified facilities.
SUMMARY OF CREDIT FOR ELECTRICITY PRODUCED FROM CERTAIN RENEWABLE RESOURCES View table at https://www.congress.gov/congressional-report/116th-congress/house-report/379/1?s=1&r=4 /1/In general, the credit is available for electricity produced during the first 10 years after a facility has been placed in service. For wind facilities, the credit is reduced by 20 percent for facilities the construction of which begins in calendar year 2017, by 40 percent for facilities the construction of which begins in calendar year 2018, and by 60 percent for facilities the construction of which begins in calendar year 2019.
/2/Expires for property the construction of which begins after this date.
Election to claim energy credit in lieu of renewable electricity production credit A taxpayer may make an irrevocable election to have certain property which is part of a qualified renewable electricity production facility be treated as energy property eligible for a 30 percent investment credit under section 48. For wind facilities, the credit is reduced by 20 percent for facilities the construction of which begins in calendar year 2017, by 40 percent for facilities the construction of which begins in calendar year 2018, and by 60 percent for facilities the construction of which begins in calendar year 2019. For purposes of the investment credit, qualified facilities are facilities otherwise eligible for the renewable electricity production credit with respect to which no credit under section 45 has been allowed. A taxpayer electing to treat a facility as energy property may not claim the renewable electricity production credit. The eligible basis for the investment credit for taxpayers making this election is the basis of the depreciable (or amortizable) property that is part of a facility capable of generating electricity eligible for the renewable electricity production credit.
REASONS FOR CHANGE
The Committee believes that extending the existing incentives for the production of electricity from renewable resources will help limit the environmental consequences of continued reliance on power generated using fossil fuels.
EXPLANATION OF PROVISION
For renewable power facilities, the provision extends for three years (one year in the case of wind facilities), through
EFFECTIVE DATE
The provision takes effect
8. ENERGY-EFFICIENT HOMES CREDIT (
PRESENT LAW
A credit is available to an eligible contractor for each qualified new energy-efficient home that is constructed by the eligible contractor and acquired by a person from such eligible contractor for use as a residence during the taxable year. To qualify as a new energy-efficient home, the home must be: (1) a dwelling located in
Manufactured homes that conform to Federal manufactured home construction and safety standards are eligible for the credit provided all the criteria for the credit are met. The eligible contractor is the person who constructed the home, or in the case of a manufactured home, the producer of such home.
The credit equals
In lieu of meeting the standards of chapter 4 of the 2006 International Energy Conservation Code, manufactured homes certified by a method prescribed by the Administrator of the
The credit applies to homes that are purchased prior to
REASONS FOR CHANGE
The Committee believes that it is in the national interest to conserve energy. The Committee further recognizes that residential energy use for heating and cooling represents a significant share of national energy consumption and accordingly believes that measures to reduce heating and cooling energy requirements have the potential to reduce national energy consumption. The Committee also recognizes that the most cost-effective time to achieve home energy efficiency is when the home is under construction. Therefore, the Committee believes the credit for energy-efficient homes should be extended.
Continues with Part 3 of 6
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- USAA Earns No. 1 Ranking in JD Power Individual Annuity Study for the Third Consecutive Year
- How flexible annuities fit today’s retirement portfolios
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- NYC public hospitals brace for coverage crisis as federal Medicaid work requirements loom
- MDHS announces open enrollment assistance for eligible families through SHIP
- Findings in Health Policy and Planning Reported from University of Kentucky (The Enrolment Paradox: Qualitative Evidence on Gendered Barriers to National Health Insurance for Ghana’s Poorest Households): Health and Medicine – Health Policy and Planning
- It's ACA open enrollment time. Here are the changes for health insurance shoppers
- Gottheimer joins North Jersey families helped with military pension back pay, health insurance coverage, IRS refunds and more
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- Corebridge Financial Announces Third Quarter 2026 Results
- MassMutual announces record $3.3 billion policyowner dividend for 2027
- Protective Completes Acquisition of Obsidian, Establishing Specialty Property and Casualty Business Line
- Jackson Announces New Annuity Offering for AARP Members
- Open Enrollment Starts November 1: Tampa Broker Ryan Michalek Urges Families and the Self-Employed to Check 2027 Costs Before They Auto-Renew
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