[Congressional Bills 107th Congress]
[From the U.S. Government Publishing Office]
[S. 207 Introduced in Senate (IS)]
107th CONGRESS
1st Session
S. 207
To amend the Internal Revenue Code of 1986 to provide incentives to
introduce new technologies to reduce energy consumption in buildings.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
January 30, 2001
Mr. Smith of New Hampshire (for himself, Mrs. Feinstein, Ms. Snowe, Ms.
Collins, Mr. Kerry, Mr. Helms, and Mr. Leahy) introduced the following
bill; which was read twice and referred to the Committee on Finance
_______________________________________________________________________
A BILL
To amend the Internal Revenue Code of 1986 to provide incentives to
introduce new technologies to reduce energy consumption in buildings.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. INCENTIVE FOR CERTAIN ENERGY EFFICIENT PROPERTY USED IN
BUSINESS.
(a) In General.--Part VI of subchapter B of chapter 1 of the
Internal Revenue Code of 1986 is amended by adding at the end the
following new section:
``SEC. 199. ENERGY PROPERTY DEDUCTION.
``(a) In General.--There shall be allowed as a deduction for the
taxable year an amount equal to the sum of--
``(1) the amount determined under subsection (b) for each
energy property of the taxpayer placed in service during such
taxable year, and
``(2) the energy efficient commercial building amount
determined under subsection (f).
``(b) Amount for Energy Property.--
``(1) In general.--The amount determined under this
subsection for the taxable year for each item of energy
property shall equal the amount specified for such property in
the following table:
------------------------------------------------------------------------
Description of property: Allowable amount is:
------------------------------------------------------------------------
Elected solar hot water property.. $1.00 per each kwh/year of
savings.
Photovoltaic property............. $4.50 per peak watt.
Natural gas heat pump described in $3,000.
subsection (d)(2)(C).
Tier 2 energy-efficient building $1,500.
property (other than a natural
gas heat pump).
Tier 1 energy-efficient building $750.
property.
------------------------------------------------------------------------
``(2) Elected solar hot water property.--In the case of
elected solar hot water property, the taxpayer may elect to
substitute `$21 per annual Therm of natural gas savings' for
`$1.00 per each kwh/year of savings' in the table contained in
paragraph (1).
``(c) Energy Property Defined.--
``(1) In general.--For purposes of this part, the term
`energy property' means any property--
``(A) which is--
``(i) solar energy property,
``(ii) Tier 2 energy-efficient building
property, or
``(iii) Tier 1 energy-efficient building
property,
``(B)(i) the construction, reconstruction, or
erection of which is completed by the taxpayer, or
``(ii) which is acquired by the taxpayer if the
original use of such property commences with the
taxpayer,
``(C) with respect to which depreciation (or
amortization in lieu of depreciation) is allowable, and
``(D) which meets the performance and quality
standards, and the certification requirements (if any),
which--
``(i) have been prescribed by the Secretary
by regulations (after consultation with the
Secretary of Energy or the Administrator of the
Environmental Protection Agency, as
appropriate),
``(ii) in the case of the energy efficiency
ratio (EER)--
``(I) require measurements to be
based on published data which is tested
by manufacturers at 95 degrees
Fahrenheit, and
``(II) do not require ratings to be
based on certified data of the Air
Conditioning and Refrigeration
Institute, and
``(iii) are in effect at the time of the
acquisition of the property.
``(2) Solar energy property.--In the case of--
``(A) elected solar hot water property, the
regulations under paragraph (1)(D) shall be based on
the OG-300 Standard for the Annual Performance of OG-
300 Certified Systems of the Solar Rating and
Certification Corporation, and
``(B) photovoltaics, such regulations shall be
based on the ASTM Standard E 1036 and E 1036M-96
Standard Test Method for Electric Performance of
Nonconcentrator Terrestrial Photovoltaic Modules and
Arrays Using Reference Cells,
to the extent the Secretary determines such standards carry out
the purposes of this section.
``(3) Exception.--Such term shall not include any property
which is public utility property (as defined in section
46(f)(5) as in effect on the day before the date of the
enactment of the Revenue Reconciliation Act of 1990).
``(d) Definitions Relating to Types of Energy Property.--For
purposes of this section--
``(1) Solar energy property.--
``(A) In general.--The term `solar energy property'
means equipment which uses solar energy--
``(i) to generate electricity, or
``(ii) to provide hot water for use in a
structure.
``(B) Elected solar hot water property.--
``(i) In general.--The term `elected solar
hot water property' means property which is
solar energy property by reason of subparagraph
(A)(ii) and for which an election under this subparagraph is in effect.
``(ii) Election.--For purposes of clause
(i), a taxpayer may elect to treat property
described in clause (i) as elected solar hot
water property.
``(C) Photovoltaic property.--The term
`photovoltaic property' means solar energy property
which uses a solar photovoltaic process to generate electricity.
``(D) Swimming pools, etc., used as storage
medium.--The term `solar energy property' shall not
include a swimming pool, hot tub, or any other energy
storage medium which has a function other than the
function of such storage.
``(E) Solar panels.--No solar panel or other
property installed as a roof (or portion thereof) shall
fail to be treated as solar energy property solely
because it constitutes a structural component of the
structure on which it is installed.
``(2) Tier 2 energy-efficient building property.--The term
`Tier 2 energy-efficient building property' means--
``(A) an electric heat pump water heater that
yields an energy factor of 1.7 or greater,
``(B) an electric heat pump that has a heating
seasonal performance factor (HSPF) of 9 or greater and
a seasonal energy efficiency ratio (SEER) of 15 or
greater and an energy efficiency ratio (EER) of 12.5 or
greater,
``(C) a natural gas heat pump that has a
coefficient of performance of not less than 1.25 for
heating and not less than 0.70 for cooling,
``(D) a central air conditioner that has a seasonal
energy efficiency ratio (SEER) of 15 or greater and a
EER of 12.5 or greater, and
``(E) a natural gas water heater that has an energy
factor of at least 0.80.
``(3) Tier 1 energy-efficient building property.--The term
`Tier 1 energy-efficient building property' means--
``(A) an electric heat pump that has a heating
system performance factor (HSPF) of 7.5 or greater and
a cooling seasonal energy efficiency ratio (SEER) of
13.5 or greater and an energy efficiency ratio (EER) of
11.5 or greater,
``(B) a central air conditioner that has a cooling
seasonal energy efficiency ratio (SEER) of 13.5 or
greater and an EER of 11.5 or greater, and
``(C) a natural gas water heater that has an energy
factor of at least 0.65.
``(e) Special Rules.--For purposes of this section--
``(1) Basis reduction.--For purposes of this subtitle, if a
deduction is allowed under this section with respect to any
energy property, the basis of such property shall be reduced by
the amount of the deduction so allowed.
``(2) Double benefit.--Property which would, but for this
paragraph, be eligible for deduction under more than one
provision of this section shall be eligible only under one such
provision, the provision specified by the taxpayer.
``(f) Energy Efficient Commercial Building Property Deduction.--
``(1) Deduction allowed.--For purposes of subsection (a)--
``(A) In general.--The energy efficient commercial
building property deduction determined under this
subsection is an amount equal to energy efficient
commercial building property expenditures made by a
taxpayer for the taxable year.
``(B) Maximum amount of deduction.--The amount of
energy efficient commercial building property
expenditures taken into account under subparagraph (A)
shall not exceed an amount equal to the product of--
``(i) $2.25, and
``(ii) the square footage of the building
with respect to which the expenditures are
made.
``(C) Year deduction allowed.--The deduction under
subparagraph (A) shall be allowed in the taxable year
in which the construction of the building is completed.
``(2) Energy efficient commercial building property
expenditures.--For purposes of this subsection, the term
`energy efficient commercial building property expenditures'
means an amount paid or incurred for energy efficient
commercial building property installed on or in connection with
new construction or reconstruction of property--
``(A) for which depreciation is allowable under
section 167,
``(B) which is located in the United States, and
``(C) the construction or erection of which is
completed by the taxpayer.
Such property includes all residential rental property,
including low-rise multifamily structures and single family
housing property which is not within the scope of Standard
90.1-1999 (described in paragraph (3)). Such term includes
expenditures for labor costs properly allocable to the onsite
preparation, assembly, or original installation of the
property.
``(3) Energy efficient commercial building property.--For
purposes of paragraph (2)--
``(A) In general.--The term `energy efficient
commercial building property' means any property which
reduces total annual energy and power costs with
respect to the lighting, heating, cooling, ventilation,
and hot water supply systems of the building by 50
percent or more in comparison to a reference building
which meets the requirements of Standard 90.1-1999 of
the American Society of Heating, Refrigerating, and Air Conditioning
Engineers and the Illuminating Engineering Society of North America
using methods of calculation under subparagraph (B) and certified by
qualified professionals as provided under paragraph (6).
``(B) Methods of calculation.--The Secretary, in
consultation with the Secretary of Energy, shall
promulgate regulations which describe in detail methods
for calculating and verifying energy and power
consumption and cost, taking into consideration the
provisions of the 1998 California Nonresidential ACM
Manual. These procedures shall meet the following
requirements:
``(i) In calculating tradeoffs and energy
performance, the regulations shall prescribe
the costs per unit of energy and power, such as
kilowatt hour, kilowatt, gallon of fuel oil,
and cubic foot or Btu of natural gas, which may
be dependent on time of usage.
``(ii) The calculational methodology shall
require that compliance be demonstrated for a
whole building. If some systems of the
building, such as lighting, are designed later
than other systems of the building, the method
shall provide that either--
``(I) the expenses taken into
account under paragraph (1) shall not
occur until the date designs for all
energy-using systems of the building
are completed,
``(II) the energy performance of
all systems and components not yet
designed shall be assumed to comply
minimally with the requirements of such
Standard 90.1-1999, or
``(III) the expenses taken into
account under paragraph (1) shall be a
fraction of such expenses based on the
performance of less than all energy-
using systems in accordance with clause
(iii).
``(iii) The expenditures in connection with
the design of subsystems in the building, such
as the envelope, the heating, ventilation, air
conditioning and water heating system, and the
lighting system shall be allocated to the
appropriate building subsystem based on system-
specific energy cost savings targets in
regulations promulgated by the Secretary of
Energy which are equivalent, using the
calculation methodology, to the whole building
requirement of 50 percent savings.
``(iv) The calculational methods under this
subparagraph need not comply fully with section
11 of such Standard 90.1-1999.
``(v) The calculational methods shall be
fuel neutral, such that the same energy
efficiency features shall qualify a building
for the deduction under this subsection
regardless of whether the heating source is a
gas or oil furnace or an electric heat pump.
``(vi) The calculational methods shall
provide appropriate calculated energy savings
for design methods and technologies not
otherwise credited in either such Standard
90.1-1999 or in the 1998 California
Nonresidential ACM Manual, including the
following:
``(I) Natural ventilation.
``(II) Evaporative cooling.
``(III) Automatic lighting controls
such as occupancy sensors, photocells,
and timeclocks.
``(IV) Daylighting.
``(V) Designs utilizing semi-
conditioned spaces that maintain
adequate comfort conditions without air
conditioning or without heating.
``(VI) Improved fan system
efficiency, including reductions in
static pressure.
``(VII) Advanced unloading
mechanisms for mechanical cooling, such
as multiple or variable speed
compressors.
``(VIII) The calculational methods
may take into account the extent of
commissioning in the building, and
allow the taxpayer to take into account
measured performance that exceeds
typical performance.
``(C) Computer software.--
``(i) In general.--Any calculation under
this paragraph shall be prepared by qualified
computer software.
``(ii) Qualified computer software.--For
purposes of this subparagraph, the term
`qualified computer software' means software--
``(I) for which the software
designer has certified that the
software meets all procedures and
detailed methods for calculating energy
and power consumption and costs as
required by the Secretary,
``(II) which provides such forms as
required to be filed by the Secretary
in connection with energy efficiency of
property and the deduction allowed
under this subsection, and
``(III) which provides a notice
form which summarizes the energy
efficiency features of the building and
its projected annual energy costs.
``(4) Allocation of deduction for public property.--In the
case of energy efficient commercial building property installed
on or in public property, the Secretary shall promulgate a
regulation to allow the allocation of the deduction to the
person primarily responsible for designing the property in lieu
of the public entity which is the owner of such property. Such
person shall be treated as the tax payer for purposes of this
subsection.
``(5) Notice to owner.--The qualified individual shall
provide an explanation to the owner of the building regarding
the energy efficiency features of the building and its
projected annual energy costs as provided in the notice under
paragraph (3)(C)(ii)(III).
``(6) Certification.--
``(A) In general.--Except as provided in this
paragraph, the Secretary, in consultation with the
Secretary of Energy, shall establish requirements for
certification and compliance procedures similar to the
procedures under section 25B(c)(7).
``(B) Qualified individuals.--Individuals qualified
to determine compliance shall be only those individuals
who are recognized by an organization certified by the
Secretary for such purposes.
``(C) Proficiency of qualified individuals.--The
Secretary shall consult with nonprofit organizations
and State agencies with expertise in energy efficiency
calculations and inspections to develop proficiency
tests and training programs to qualify individuals to
determine compliance.
``(g) Regulations.--The Secretary shall promulgate such regulations
as necessary to take into account new technologies regarding energy
efficiency and renewable energy for purposes of determining energy
efficiency and savings under this section.
``(h) Termination.--This section shall not apply with respect to--
``(1) any energy property placed in service after December
31, 2007, and
``(2) any energy efficient commercial building property
expenditures in connection with property--
``(A) the plans for which are not certified under
subsection (f)(6) on or before December 31, 2007, and
``(B) the construction of which is not completed on
or before December 31, 2009.''.
(b) Conforming Amendments.--
(1) Section 48(a)(3)(A) of such Code is amended to read as
follows:
``(A) which is equipment used to produce,
distribute, or use energy derived from a geothermal
deposit (within the meaning of section 613(e)(2)), but
only, in the case of electricity generated by
geothermal power, up to (but not including) the
electrical transmission stage,''.
(2) Subparagraph (B) of section 168(e)(3) of such Code is
amended--
(A) in clause (vi)(I)--
(i) by striking ``section 48(a)(3)'' and
inserting ``section 199(d)(1)'', and
(ii) by striking ``clause (i)'' and
inserting ``such subparagraph (A)'', and
(B) in the last sentence, by striking ``section
48(a)(3)'' and inserting ``section 199(c)(3)''.
(3) Section 1016(a) of such Code is amended by striking
``and'' at the end of paragraph (26), by striking the period at
the end of paragraph (27) and inserting ``, and'', and by
inserting the following new paragraph:
``(28) for amounts allowed as a deduction under section
199(a).''.
(c) Clerical Amendment.--The table of sections for part VI of
subchapter B of chapter 1 of such Code is amended by adding at the end
the following new item:
``Sec. 199. Energy property deduction.''.
(d) Authorization of Appropriations.--There are authorized to be
appropriated to the Department of Energy out of amounts not already
appropriated such sums as necessary to carry out this section.
(e) Effective Dates.--
(1) In general.--Except as provided in paragraph (2), the
amendments made by this section shall apply to taxable years
beginning after December 31, 2000.
(2) Energy efficient commercial building property.--In the
case of energy efficient commercial building property, as
defined in section 199(f)(3) of the Internal Revenue Code of
1986, as added by subsection (a), the amendments made by this
section shall apply to taxable years beginning after September
30, 2001.
SEC. 2. CREDIT FOR CERTAIN NONBUSINESS ENERGY PROPERTY.
(a) In General.--Subpart A of part IV of subchapter A of chapter 1
of the Internal Revenue Code of 1986 (relating to nonrefundable
personal credits) is amended by inserting after section 25A the
following new section:
``SEC. 25B. NONBUSINESS ENERGY PROPERTY.
``(a) Allowance of Credit.--In the case of an individual, there
shall be allowed as a credit against the tax imposed by this chapter
for the taxable year an amount equal to the sum of--
``(1) the amount determined under subsection (b) for each
qualified energy property of the taxpayer placed in service
during such taxable year, and
``(2) the credit amount specified in the following table
for a new, highly energy-efficient principal residence:
``New, highly energy-efficient Credit amount:
principal residence:
30 percent property.................................... $750
50 percent property.................................... $2,000.
``(b) Amount for Qualified Energy Property.--
``(1) Residential energy property expenditures.--Except as
provided in paragraph (2), the amount determined under this
subsection for the taxable year for each item of qualified
energy property shall equal the amount of residential energy
property expenditures made by the taxpayer with respect to such
property during such taxable year.
``(2) Solar hot water property; photovoltaic property.--
``(A) In general.--In the case of solar hot water
property and photovoltaic property, the amount
determined under this subsection for the taxable year
shall equal the amount specified for such property in
the following table:
------------------------------------------------------------------------
Description of property: Allowable amount is:
------------------------------------------------------------------------
Elected solar hot water property.. 35 cents per each kwh/year of
savings.
Photovoltaic property............. $1.50 per peak watt.
------------------------------------------------------------------------
``(B) Elected solar hot water property.--In the
case of elected solar hot water property, the taxpayer
may elect to substitute `$7 per annual Therm of natural
gas savings' for `35 cents per each kwh/year of
savings' in the table contained in subparagraph (A).
``(3) Maximum amount.--In the case of property described in
the following table, the amount of expenditures taken into
account under paragraph (1) and the amount determined under
paragraph (2) for the taxable year for each item of qualified energy
property with respect to a dwelling unit shall not exceed the amount
specified for such property in such table:
------------------------------------------------------------------------
``Description of property item: Maximum allowable credit amount is:
------------------------------------------------------------------------
Tier 2 energy-efficient building $500.
property (other than a natural
gas heat pump).
Natural gas heat pump described in $1,000.
section 199(d)(2)(C).
Tier 1 energy-efficient building $ 250.
property.
Solar hot water property.......... $1,000.
Photovoltaic property............. $6,000.
------------------------------------------------------------------------
``(c) Definitions.--For purposes of this section--
``(1) Residential energy property expenditures.--The term
`residential energy property expenditures' means expenditures
made by the taxpayer for qualified energy property installed on
or in connection with a dwelling unit which--
``(A) is located in the United States, and
``(B) is used by the taxpayer as a residence.
Such term includes expenditures for labor costs properly
allocable to the onsite preparation, assembly, or original
installation of the property.
``(2) Qualified energy property.--
``(A) In general.--The term `qualified energy
property' means--
``(i) energy-efficient building property,
``(ii) solar hot water property, and
``(iii) photovoltaic property.
``(B) Swimming pool, etc., used as storage medium;
solar panels.--For purposes of this paragraph, the
provisions of subparagraphs (D) and (E) section
199(d)(1) shall apply.
``(C) Required standards.--Property described under
subparagraph (A) shall meet the performance and quality
standards and certification standards of paragraphs
(1)(D) and (2) of section 199(c).
``(3) Energy-efficient building property.--The term
`energy-efficient building property' has the same meaning given
the terms `Tier 2 energy-efficient property' and `Tier 1
energy-efficient property' in paragraphs (2) and (3) of section
199(d), respectively.
``(4) Solar hot water property.--The term `solar hot water
property' means property which, when installed in connection
with a structure, uses solar energy for the purpose of
providing hot water for use within such structure.
``(5) Photovoltaic property.--The term `photovoltaic
property' has the same meaning given such term in section
199(d)(1)(C).
``(6) Residence.--For purposes of paragraph (1)(B)--
``(A) In general.--The term `residence' has the
same meaning as when the term `principal residence' is
used in section 121, except no ownership requirement
shall be imposed.
``(B) Manufactured housing.--The term `residence'
shall include a dwelling unit which is manufactured
housing.
``(7) Highly energy-efficient principal residence.--
``(A) In general.--Property is a highly energy-
efficient principal residence if--
``(i) such property is located in the
United States,
``(ii) the use of such property commences
with the taxpayer and is, at the time of such
use, the principal residence of the taxpayer,
and
``(iii) such property is certified before
such use commences as being 50 percent property
or 30 percent property.
``(B) 50 or 30 percent property.--
``(i) In general.--For purposes of
subparagraph (A), property is 50
percent property or 30 percent property if the projected heating and
cooling energy usage of such property, measured in terms of average
annual energy cost to taxpayer, is reduced by 50 percent, or 30
percent, respectively, in comparison to the energy usage of the
standard design reference house as determined using the procedures
under clause (iv).
``(ii) Standard design reference house.--
For purposes of this paragraph, the term
`standard design reference house' means a
dwelling which conforms with the standards of
chapter 4 of the 2000 International Energy
Conservation Code of the International Code
Council and the minimum equipment efficiency
standards promulgated by the Department of
Energy under the National Appliance Energy
Conservation Act.
``(iii) Energy efficient reference house.--
For purposes of this paragraph, the term
`energy efficient reference house' means a
design of a dwelling which uses the same heating fuel type as the
proposed design and which uses minimum standards equipment, as required
by the Department of Energy under the National Appliance Energy
Conservation Act and which achieves, on average over fuel type and
house geometry, the required 30 percent or 50 percent reductions in
annual energy cost as calculated using the procedures under clause
(iv).
``(iv) Procedures.--
``(I) In general.--For purposes of
clause (i), energy usage shall be
demonstrated either by a component-
based approach or a performance-based
approach.
``(II) Component approach.--
Compliance by the component approach is
achieved when all of the components of
the house comply with the requirements
of prescriptive packages established by
the Secretary of Energy, in
consultation with the Administrator of
the Environmental Protection Agency,
such that they are equivalent, for the
strong majority of houses which can use
this method, to the results of using
the performance-based approach of
subclause (III) to achieve the required
reduction in energy usage.
``(III) Performance-based
approach.--Performance-based compliance
shall be demonstrated in terms of
equivalent or less energy usage when
compared to the energy efficient
reference house of the same heating
fuel type as the taxpayer's house or
through an alternate method prescribed
by the Secretary which yields
equivalent results.
``(IV) Computer software.--Computer
software shall be used in support of
performance-based compliance under
subclause (III) and such software shall
meet all of the procedures and methods
for calculating energy savings
reductions that are promulgated by the
Secretary of Energy. Such regulations
on the specifications for software and
verification protocols shall be based
on the 1998 California Residential
Alternative Calculation Method Approval
Manual.
``(V) Fuel parity.--In the case of
both the component and the performance-
based approaches, and any software used
in support of such approach, the
Secretary shall assure fuel parity by
requiring both the energy efficient
reference house and the prescriptive
package under subclause (II) to employ
the same envelope energy efficiency
measures for a house heated by a gas
furnace as for a house heated by an
electric air source heat pump or by an
oil furnace or boiler; and, for
equipment efficiency, to employ
electric, oil, or gas equipment
efficiency of corresponding efficiency
improvement. Such determination of
corresponding efficiency improvement
shall be made on a linear scale between
the minimum standard equipment
efficiency and the best available
marketplace technology efficiency as
determined by the Secretary after
considering the information provided by
the Air Conditioning and Refrigeration
Institute (ARI) and the Gas Appliance
Manufacturers Association (GAMA) guides
for the respective electric, oil, and
natural gas equipment of such type
(such as heating and cooling).
``(VI) Approval of software
submissions.--The Secretary shall
approve software submissions that
comply with the calculation
requirements of subclause (IV).
``(VII) Procedures for inspection
and testing of homes.--The Secretary
shall ensure that procedures for the
inspection and testing for compliance
comply with the calculation
requirements under subclause (IV).
``(C) Determinations of compliance.--A
determination of compliance made for the purposes of
this paragraph shall be filed with the Secretary within
1 year of the date of such determination and shall
include the TIN of the certifier, the address of the
building in compliance, and the identity of the person for whom such
determination was performed. Determinations of compliance filed with
the Secretary shall be available for inspection by the Secretary of
Energy.
``(D) Compliance.--
``(i) In general.--The Secretary, in
consultation with the Secretary of Energy shall
establish requirements for certification and
compliance procedures after examining the
requirements for energy consultants and home
energy ratings providers specified by the
Mortgage Industry National Accreditation
Procedures for Home Energy Rating Systems.
``(ii) Individuals qualified to determine
compliance.--Individuals qualified to determine
compliance shall be only those individuals who
are recognized by an organization certified by
the Secretary for such purposes. The Secretary
may qualify a Home Energy Rating Systems
Organization, a local building code agency, a
State or local energy office, a utility, or
other organizations which meet the requirements
prescribed under this section.
``(E) Principal residence.--For purposes of this
paragraph--
``(i) In general.--The term `principal
residence' has the same meaning as when used in
section 121, except that the period for which a
building is treated as the principal residence
of the taxpayer shall also include the 60-day
period ending on the 1st day on which it would
(but for this subparagraph) first be treated as
a principal residence.
``(ii) Manufactured housing.--The term
`residence' shall include a dwelling unit which
is manufactured housing.
``(d) Special Rules.--For purposes of this section--
``(1) Dollar amounts in case of joint occupancy.--In the
case of any dwelling unit which if jointly occupied and used
during any calendar year as a residence by 2 or more
individuals the following rules shall apply:
``(A) The amount of the credit allowable under
subsection (a) by reason of expenditures made during
such calendar year by any of such individuals with
respect to such dwelling unit shall be determined by
treating all of such individuals as 1 taxpayer whose
taxable year is such calendar year.
``(B) There shall be allowable with respect to such
expenditures to each of such individuals, a credit
under subsection (a) for the taxable year in which such
calendar year ends in an amount which bears the same
ratio to the amount determined under subparagraph (A)
as the amount of such expenditures made by such
individual during such calendar year bears to the
aggregate of such expenditures made by all of such
individuals during such calendar year.
``(2) Tenant-stockholder in cooperative housing
corporation.--In the case of an individual who is a tenant-
stockholder (as defined in section 216) in a cooperative
housing corporation (as defined in such section), such
individual shall be treated as having made his tenant-
stockholder's proportionate share (as defined in section
216(b)(3)) of any expenditures of such corporation and such
credit shall be allocated pro rata to such individual.
``(3) Condominiums.--
``(A) In general.--In the case of an individual who
is a member of a condominium management association
with respect to a condominium which he owns, such
individual shall be treated as having made his
proportionate share of any expenditures of such
association and any credit shall be allocated
appropriately.
``(B) Condominium management association.--For
purposes of this paragraph, the term `condominium
management association' means an organization which
meets the requirements of paragraph (1) of section
528(c) (other than subparagraph (E) thereof) with
respect to a condominium project substantially all of
the units of which are used as residences.
``(4) Joint ownership of energy items.--
``(A) In general.--Any expenditure otherwise
qualifying as a residential energy property expenditure
shall not be treated as failing to so qualify merely
because such expenditure was made with respect to 2 or
more dwelling units.
``(B) Limits applied separately.--In the case of
any expenditure described in subparagraph (A), the
amount of the credit allowable under subsection (a)
shall (subject to paragraph (1)) be computed separately
with respect to the amount of the expenditure made for
each dwelling unit.
``(5) Allocation in certain cases.--If less than 80 percent
of the use of an item is for nonbusiness purposes, only that
portion of the expenditures for such item which is properly
allocable to use for nonbusiness purposes shall be taken into
account. For purposes of this paragraph, use for a swimming
pool shall be treated as use which is not for nonbusiness
purposes.
``(6) Coordination with other credits.--Property which
would, but for this paragraph, be eligible for credit under
more than one provision of this section shall be eligible only
under one such provision, the provision specified by the
taxpayer.
``(7) When expenditure made; amount of expenditure.--
``(A) In general.--Except as provided in
subparagraph (B), an expenditure with respect to an
item shall be treated as made when the original
installation of the item is completed.
``(B) Expenditures part of building construction.--
In the case of an expenditure in connection with the
construction of a structure, such expenditure shall be treated as made
when the original use of the constructed structure by the taxpayer
begins.
``(8) Property financed by subsidized energy financing.--
``(A) Reduction of expenditures.--
``(i) In general.--Except as provided in
subparagraph (C), for purposes of determining
the amount of residential energy property
expenditures made by any individual with
respect to any dwelling unit, there shall not
be taken into account expenditures which are
made from subsidized energy financing.
``(ii) Subsidized energy financing.--For
purposes of clause (i), the term `subsidized
energy financing' has the same meaning given
such term in section 48(a)(4)(C).
``(B) Dollar limits reduced.--The dollar amounts in
the table contained in subsection (b)(1) with respect
to each property purchased for such dwelling unit for
any taxable year of such taxpayer shall be reduced
proportionately by an amount equal to the sum of--
``(i) the amount of the expenditures made
by the taxpayer during such taxable year with
respect to such dwelling unit and not taken
into account by reason of subparagraph (A), and
``(ii) the amount of any Federal, State, or
local grant received by the taxpayer during
such taxable year which is used to make
residential energy property expenditures with
respect to the dwelling unit and is not
included in the gross income of such taxpayer.
``(C) Exception for state programs.--Subparagraphs
(A) and (B) shall not apply to expenditures made with
respect to property for which the taxpayer has received
a loan, State tax credit, or grant under any State
energy program.
``(e) Basis Adjustments.--For purposes of this subtitle, if a
credit is allowed under this section for any expenditure with respect
to any property, the increase in the basis of such property which would
(but for this subsection) result from such expenditure shall be reduced
by the amount of the credit so allowed.
``(f) Regulations.--The Secretary shall promulgate such regulations
as necessary to take into account new technologies regarding energy
efficiency and renewable energy for purposes of determining energy
efficiency and savings under this section.
``(g) Termination.--This section shall not apply with respect to
any taxable years beginning after December 31, 2007.''.
(b) Conforming Amendments.--
(1) Subsection (a) of section 1016 of the Internal Revenue
Code of 1986 as amended by section 1(b)(3), is amended by
striking ``and'' at the end of paragraph (27), by striking the
period at the end of paragraph (28) and inserting ``, and'',
and by adding at the end the following new paragraph:
``(29) to the extent provided in section 25B(e), in the
case of amounts with respect to which a credit has been allowed
under section 25B.''.
(2) The table of sections for subpart A of part IV of
subchapter A of chapter 1 of such Code is amended by inserting
after the item relating to section 25A the following new item:
``Sec. 25B. Nonbusiness energy
property.''.
(c) Effective Dates.--
(1) In general.--Except as provided in paragraph (2), the
amendments made by this section shall apply to expenditures
made after December 31, 2000.
(2) Energy efficient building property used in a principal
residence.--In the case of energy efficient building property,
as defined in section 25B(c) of the Internal Revenue Code of
1986, as added by subsection (a), the amendments made by this
section shall apply to expenditures made after September 30,
2001.
<all>
Introduced in Senate
Read twice and referred to the Committee on Finance.
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