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108th CONGRESS
1st Session
S. 759
To amend the Internal Revenue Code of 1986 to provide a tax credit for
individuals and businesses for the installation of certain wind energy
property.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
April 1, 2003
Mr. Durbin (for himself, Mr. Allard, Mr. Conrad, Mr. Harkin, Mr.
Johnson, Mr. Leahy, Mr. Dorgan, and Mr. Jeffords) introduced
the following bill; which was read twice and referred to the
Committee on FinanceYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYY
_______________________________________________________________________
A BILL
To amend the Internal Revenue Code of 1986 to provide a tax credit for
individuals and businesses for the installation of certain wind energy
property.
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 ``Residential, Farm, Ranch, and Small
Business Wind Energy Systems Act of 2003'' or the ``Small Wind Energy
Systems Act of 2003''.
SEC. 2. CREDIT FOR RESIDENTIAL WIND 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 25B the
following new section:
``SEC. 25C. RESIDENTIAL SMALL WIND ENERGY SYSTEMS.
``(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 30 percent of the qualified
wind energy property expenditures made by the taxpayer during such
year.
``(b) Limitations.--
``(1) Maximum credit.--The credit allowed under subsection
(a) shall not exceed $1,000 for each kilowatt of capacity.
``(2) Safety certifications.--No credit shall be allowed
under this section for an item of property unless such property
meets appropriate fire and electric code requirements.
``(c) Carryforward of Unused Credit.--If the credit allowable under
subsection (a) exceeds the limitation imposed by section 26(a) for such
taxable year reduced by the sum of the credits allowable under this
subpart (other than this section), such excess shall be carried to the
succeeding taxable year and added to the credit allowable under
subsection (a) for such succeeding taxable year.
``(d) Qualified Wind Energy Property Expenditure.--For purposes of
this section--
``(1) Qualified wind energy property expenditure defined.--
``(A) In general.--The term `qualified wind energy
property expenditure' means an expenditure for
qualified wind energy property installed on or in
connection with a dwelling unit located in the United
States and used as a residence by the taxpayer,
including all necessary installation fees and charges.
``(B) Qualified wind energy property.--The term
`qualified wind energy property' means a qualifying
wind turbine--
``(i) the original use of which commences
with the taxpayer, and
``(ii) which carries at least a 5-year
limited warranty covering defects in design,
material, or workmanship, and, for any
qualifying wind turbine that is not installed
by the taxpayer, at least a 5-year limited
warranty covering defects in installation.
``(C) Qualifying wind turbine.--The term
`qualifying wind turbine' means a wind turbine of 75
kilowatts of rated capacity or less which at the time
of manufacture and not more than one year from the date
of purchase meets the latest performance rating
standards published by the American Wind Energy
Association or the International Electrotechnical
Commission and which is used to generate electricity.
``(2) Labor costs.--Expenditures for labor costs properly
allocable to the onsite preparation, assembly, or original
installation of qualified wind energy property and for piping
or wiring to interconnect such property to the dwelling unit or
to the local energy grid shall be taken into account for
purposes of this section.
``(3) Swimming pools, etc., used as storage medium.--
Expenditures which are properly allocable to a swimming pool,
hot tub, or any other energy storage medium which has a
function other than the function of storage shall not be taken
into account for purposes of this section.
``(e) Special Rules.--For purposes of this section--
``(1) Dollar amounts in case of joint occupancy.--In the
case of any dwelling unit which is jointly occupied and used
during any calendar year as a residence by 2 or more
individuals the following shall apply:
``(A) The amount of the credit allowable, under
subsection (a) by reason of expenditures (as the case
may be) 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.
``(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 the individual
owns, such individual shall be treated as having made
the individual's proportionate share of any
expenditures of such association.
``(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) Allocation in certain cases.--If less than 80 percent
of the use of a qualified wind energy property is for
nonbusiness purposes and for generation of energy to be sold to
others, only that portion of the expenditures for such property
which is properly allocable to use for nonbusiness purposes and
for generation of energy to be sold to others shall be taken
into account.
``(5) When expenditure made; amount of expenditure.--
``(A) In general.--Except as provided in
subparagraph (B), an expenditure with respect to any
qualified wind energy property shall be treated as made
when the original installation of such property is
completed and the property has begun to be used to
generate energy.
``(B) Expenditures part of building construction.--
In the case of an expenditure in connection with the
construction or reconstruction of a structure, such
expenditure shall be treated as made when the original
use of the constructed or reconstructed structure by
the taxpayer begins.
``(C) Amount.--The amount of any expenditure shall
be the cost thereof.
``(6) Property financed by subsidized energy financing.--
For purposes of determining the amount of 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 (as defined in section
48(a)(5)(C)).
``(f) Basis Adjustments.--For purposes of this subtitle, if a
credit is allowed under this section for any expenditure with respect
to any qualified wind energy 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.
``(g) Termination.--This section shall not apply to property
installed in taxable years beginning after December 31, 2008.''.
(b) Credit Allowed Against Regular Tax and Alternative Minimum
Tax.--
(1) In general.--Section 25C(b) of the Internal Revenue
Code of 1986, as added by subsection (a), is amended by adding
at the end the following new paragraph:
``(3) Limitation based on amount of tax.--The credit
allowed under subsection (a) for the taxable year shall not
exceed the excess of--
``(A) the sum of the regular tax liability (as
defined in section 26(b)) plus the tax imposed by
section 55, over
``(B) the sum of the credits allowable under this
subpart (other than this section) and section 27 for
the taxable year.''.
(2) Conforming amendments.--
(A) Section 25C(c) of such Code, as added by
subsection (a), is amended by striking ``section 26(a)
for such taxable year reduced by the sum of the credits
allowable under this subpart (other than this
section)'' and inserting ``subsection (b)(3)''.
(B) Section 23(b)(4)(B) of such Code is amended by
inserting ``and section 25C'' after ``this section''.
(C) Section 24(b)(3)(B) of such Code is amended by
striking ``23 and 25B'' and inserting ``23, 25B, and
25C''.
(D) Section 25(e)(1)(C) of such Code is amended by
inserting ``25C,'' after ``25B,''.
(E) Section 25B(g)(2) of such Code is amended by
striking ``section 23'' and inserting ``sections 23 and
25C''.
(F) Section 26(a)(1) of such Code is amended by
striking ``and 25B'' and inserting ``25B, and 25C''.
(G) Section 904(h) of such Code is amended by
striking ``and 25B'' and inserting ``25B, and 25C''.
(H) Section 1400C(d) of such Code is amended by
striking ``and 25B'' and inserting ``25B, and 25C''.
(c) Additional Conforming Amendments.--
(1) Section 23(c) of the Internal Revenue Code of 1986, as
in effect for taxable years beginning before January 1, 2004,
is amended by striking ``section 1400C'' and inserting
``sections 25C and 1400C''.
(2) Section 25(e)(1)(C) of such Code, as in effect for
taxable years beginning before January 1, 2004, is amended by
inserting ``, 25C,'' after ``sections 23''.
(3) Subsection (a) of section 1016 of such Code 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 25C(f), in the
case of amounts with respect to which a credit has been allowed
under section 25C.''.
(4) Section 1400C(d) of such Code, as in effect for taxable
years beginning before January 1, 2004, is amended by inserting
``and section 25C'' after ``this section''.
(5) 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 25B the following new item:
``Sec. 25C. Residential wind energy
property.''.
(d) Effective Dates.--
(1) In general.--Except as provided by paragraph (2), the
amendments made by this section shall apply to expenditures
after December 31, 2002, in taxable years ending after such
date.
(2) Subsection (b).--The amendments made by subsection (b)
shall apply to taxable years beginning after December 31, 2003.
SEC. 3. CREDIT FOR BUSINESS INSTALLATION OF SMALL WIND ENERGY PROPERTY.
(a) In General.--Subparagraph (A) of section 48(a)(3) of the
Internal Revenue Code of 1986 (defining energy property) is amended by
striking ``or'' at the end of clause (i), by adding ``or'' at the end
of clause (ii), and by inserting after clause (ii) the following new
clause:
``(iii) qualified wind energy property
installed before January 1, 2009,''.
(b) Qualified Wind Energy Property.--Subsection (a) of section 48
is amended by redesignating paragraphs (4) and (5) as paragraphs (5)
and (6), respectively, and by inserting after paragraph (3) the
following new paragraph:
``(4) Qualified wind energy property.--For purposes of this
subsection--
``(A) In general.--The term `qualified wind energy
property' means a qualifying wind turbine--
``(i) installed on or in connection with a
farm (as defined in section 6420(c)), a ranch,
or an establishment of an eligible small
business (as defined in section 44(b)) which is
located in the United States and which is owned
and used by the taxpayer,
``(ii) the original use of which commences
with the taxpayer, and
``(iii) which carries at least a 5-year
limited warranty covering defects in design,
material, or workmanship, and, for any
qualifying wind turbine that is not installed
by the taxpayer, at least a 5-year limited
warranty covering defects in installation.
``(B) Limitation.--In the case of any qualified
wind energy property placed in service during the
taxable year, the credit determined under paragraph (1)
for such year with respect to such property shall not
exceed an amount equal to the lesser of--
``(i) 30 percent of the basis of such
property, including all necessary installation
fees and charges, or
``(ii) $1,000 for each kilowatt of capacity
of such property.
``(C) Qualifying wind turbine.--For purposes of
this paragraph the term `qualifying wind turbine' means
a wind turbine of 75 kilowatts of rated capacity or
less which at the time of manufacture and not more than
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