ENERGY EFFICIENT COMMERCIAL BUILDINGS DEDUCTION.

SEC. 13303. ENERGY EFFICIENT COMMERCIAL BUILDINGS DEDUCTION.(a) In General.—(1) Maximum amount of deduction.—Subsection (b) of section 179D is amended to read as follows:“(b) Maximum Amount of Deduction.—“(1) In general.—The deduction under subsection (a) with respect to any building for any taxable year shall not exceed the excess (if any) of—“(A) the product of—“(i) the applicable dollar value, and “(ii) the square footage of the building, over “(B) the aggregate amount of the deductions under subsections (a) and (f) with respect to the building for the 3 taxable years immediately preceding such taxable year (or, in the case of any such deduction allowable to a person other than the taxpayer, for any taxable year ending during the 4-taxable-year period ending with such taxable year). “(2) Applicable dollar value.—For purposes of paragraph (1)(A)(i), the applicable dollar value shall be an amount equal to $0.50 increased (but not above $1.00) by $0.02 for each percentage point by which the total annual energy and power costs for the building are certified to be reduced by a percentage greater than 25 percent. “(3) Increased deduction amount for certain property.—136 STAT. 1948 “(A) In general.—In the case of any property which satisfies the requirements of subparagraph (B), paragraph (2) shall be applied by substituting ‘$2.50’ for ‘$0.50’, ‘$.10’ for ‘$.02’, and ‘$5.00’ for ‘$1.00’. “(B) Property requirements.—In the case of any energy efficient commercial building property, energy efficient building retrofit property, or property installed pursuant to a qualified retrofit plan, such property shall meet the requirements of this subparagraph if —“(i) installation of such property begins prior to the date that is 60 days after the Secretary publishes guidance with respect to the requirements of paragraphs (4)(A) and (5), or “(ii) installation of such property satisfies the requirements of paragraphs (4)(A) and (5). “(4) Prevailing wage requirements.—“(A) In general.—The requirements described in this subparagraph with respect to any property are that the taxpayer shall ensure that any laborers and mechanics employed by the taxpayer or any contractor or subcontractor in the installation of any property shall be paid wages at rates not less than the prevailing rates for construction, alteration, or repair of a similar character in the locality in which such property is located as most recently determined by the Secretary of Labor, in accordance with subchapter IV of chapter 31 of title 40, United States Code. “(B) Correction and penalty related to failure to satisfy wage requirements.—Rules similar to the rules of section 45(b)(7)(B) shall apply. “(5) Apprenticeship requirements.—Rules similar to the rules of section 45(b)(8) shall apply. “(6) Regulations.—The Secretary shall issue such regulations or other guidance as the Secretary determines necessary to carry out the purposes of this subsection, including regulations or other guidance which provides for requirements for recordkeeping or information reporting for purposes of administering the requirements of this subsection.” . (2) Modification of efficiency standard.—Section 179D(c)(1)(D) is amended by striking “50 percent” and inserting “25 percent”. (3) Reference standard.—Section 179D(c)(2) is amended by striking “the most recent” and inserting the following: “the more recent of—“(A) Standard 90.1-2007 published by the American Society of Heating, Refrigerating, and Air Conditioning Engineers and the Illuminating Engineering Society of North America, or “(B) the most recent” . (4) Final determination; extension of period; placed in service deadline.—Subparagraph (B) of section 179D(c)(2), as amended by paragraph (3), is amended—(A) by inserting “for which the Department of Energy has issued a final determination and” before “which has been affirmed”, (B) by striking “2 years” and inserting “4 years”, and136 STAT. 1949 (C) by striking “that construction of such property begins” and inserting “such property is placed in service”. (5) Elimination of partial allowance.—(A) In general.—Section 179D(d) is amended—(i) by striking paragraph (1), and (ii) by redesignating paragraphs (2) through (6) as paragraphs (1) through (5), respectively. (B) Conforming amendments.—(i) Section 179D(c)(1)(D) is amended—(I) by striking “subsection (d)(6)” and inserting “subsection (d)(5)”, and (II) by striking “subsection (d)(2)” and inserting “subsection (d)(1)”. (ii) Paragraph (2)(A) of section 179D(d), as redesignated by subparagraph (A), is amended by striking “paragraph (2)” and inserting “paragraph (1)”. (iii) Paragraph (4) of section 179D(d), as redesignated by subparagraph (A), is amended by striking “paragraph (3)(B)(iii)” and inserting “paragraph (2)(B)(iii)”. (iv) Section 179D is amended by striking subsection (f). (v) Section 179D(h) is amended by striking “or (d)(1)(A)”. (6) Allocation of deduction by certain tax-exempt entities.—Paragraph (3) of section 179D(d), as redesignated by paragraph (5)(A), is amended to read as follows:“(3) Allocation of deduction by certain tax-exempt entities.—“(A) In general.—In the case of energy efficient commercial building property installed on or in property owned by a specified tax-exempt entity, the Secretary shall promulgate regulations or guidance to allow the allocation of the deduction to the person primarily responsible for designing the property in lieu of the owner of such property. Such person shall be treated as the taxpayer for purposes of this section. “(B) Specified tax-exempt entity.—For purposes of this paragraph, the term ‘specified tax-exempt entity’ means—“(i) the United States, any State or political subdivision thereof, any possession of the United States, or any agency or instrumentality of any of the foregoing, “(ii) an Indian tribal government (as defined in section 30D(g)(9)) or Alaska Native Corporation (as defined in section 3 of the Alaska Native Claims Settlement Act (43 U.S.C. 1602(m)), and “(iii) any organization exempt from tax imposed by this chapter.” . (7) Alternative deduction for energy efficient building retrofit property.—Section 179D, as amended by the preceding provisions of this section, is amended by inserting after subsection (e) the following new subsection:“(f) Alternative Deduction for Energy Efficient Building Retrofit Property.—136 STAT. 1950 “(1) In general.—In the case of a taxpayer which elects (at such time and in such manner as the Secretary may provide) the application of this subsection with respect to any qualified building, there shall be allowed as a deduction for the taxable year which includes the date of the qualifying final certification with respect to the qualified retrofit plan of such building, an amount equal to the lesser of—“(A) the excess described in subsection (b) (determined by substituting ‘energy use intensity’ for ‘total annual energy and power costs’ in paragraph (2) thereof), or “(B) the aggregate adjusted basis (determined after taking into account all adjustments with respect to such taxable year other than the reduction under subsection (e)) of energy efficient building retrofit property placed in service by the taxpayer pursuant to such qualified retrofit plan. “(2) Qualified retrofit plan.—For purposes of this subsection, the term ‘qualified retrofit plan’ means a written plan prepared by a qualified professional which specifies modifications to a building which, in the aggregate, are expected to reduce such building’s energy use intensity by 25 percent or more in comparison to the baseline energy use intensity of such building. Such plan shall provide for a qualified professional to—“(A) as of any date during the 1-year period ending on the date on which the property installed pursuant to such plan is placed in service, certify the energy use intensity of such building as of such date, “(B) certify the status of property installed pursuant to such plan as meeting the requirements of subparagraphs (B) and (C) of paragraph (3), and “(C) as of any date that is more than 1 year after the date on which the property installed pursuant to such plan is placed in service, certify the energy use intensity of such building as of such date. “(3) Energy efficient building retrofit property.—For purposes of this subsection, the term ‘energy efficient building retrofit property’ means property—“(A) with respect to which depreciation (or amortization in lieu of depreciation) is allowable, “(B) which is installed on or in any qualified building, “(C) which is installed as part of—“(i) the interior lighting systems, “(ii) the heating, cooling, ventilation, and hot water systems, or “(iii) the building envelope, and “(D) which is certified in accordance with paragraph (2)(B) as meeting the requirements of subparagraphs (B) and (C). “(4) Qualified building.—For purposes of this subsection, the term ‘qualified building’ means any building which—“(A) is located in the United States, and “(B) was originally placed in service not less than 5 years before the establishment of the qualified retrofit plan with respect to such building. “(5) Qualifying final certification.—For purposes of this subsection, the term ‘qualifying final certification’ means, 136 STAT. 1951 with respect to any qualified retrofit plan, the certification described in paragraph (2)(C) if the energy use intensity certified in such certification is not more than 75 percent of the baseline energy use intensity of the building. “(6) Baseline energy use intensity.—“(A) In general.—For purposes of this subsection, the term ‘baseline energy use intensity’ means the energy use intensity certified under paragraph (2)(A), as adjusted to take into account weather. “(B) Determination of adjustment.—For purposes of subparagraph (A), the adjustments described in such subparagraph shall be determined in such manner as the Secretary may provide. “(7) Other definitions.—For purposes of this subsection—“(A) Energy use intensity.—The term ‘energy use intensity’ means the annualized, measured site energy use intensity determined in accordance with such regulations or other guidance as the Secretary may provide and measured in British thermal units. “(B) Qualified professional.—The term ‘qualified professional’ means an individual who is a licensed architect or a licensed engineer and meets such other requirements as the Secretary may provide. “(8) Coordination with deduction otherwise allowed under subsection (a).—“(A) In general.—In the case of any building with respect to which an election is made under paragraph (1), the term ‘energy efficient commercial building property’ shall not include any energy efficient building retrofit property with respect to which a deduction is allowable under this subsection. “(B) Certain rules not applicable.—“(i) In general.—Except as provided in clause (ii), subsection (d) shall not apply for purposes of this subsection. “(ii) Allocation of deduction by certain tax-exempt entities.—Rules similar to subsection (d)(3) shall apply for purposes of this subsection.” . (8) Inflation adjustment.—Section 179D(g) is amended—(A) by striking “2020” and inserting “2022”, (B) by striking “or subsection (d)(1)(A)”, and (C) by striking “2019” and inserting “2021”. (b) Application to Real Estate Investment Trust Earnings and Profits.—Section 312(k)(3)(B) is amended—(1) by striking “For purposes of computing the earnings and profits of a corporation” and inserting the following:“(i) In general.—For purposes of computing the earnings and profits of a corporation, except as provided in clause (ii)” , and (2) by adding at the end the following new clause:“(ii) Special rule.—In the case of a corporation that is a real estate investment trust, any amount deductible under section 179D shall be allowed in the year in which the property giving rise to such deduction is placed in service (or, in the case of energy efficient building retrofit property, the year in which the qualifying final certification is made).” .136 STAT. 1952 (c) Conforming Amendment.—Paragraph (1) of section 179D(d), as redesignated by subsection (a)(5)(A), is amended by striking “not later than the date that is 2 years before the date that construction of such property begins” and inserting “not later than the date that is 4 years before the date such property is placed in service”. (d) Effective Date.—(1) In general.—Except as otherwise provided in this subsection, the amendments made by this section shall apply to taxable years beginning after December 31, 2022. (2) Alternative deduction for energy efficient building retrofit property.—Subsection (f) of section 179D of the Internal Revenue Code of 1986 (as amended by this section), and any other provision of such section solely for purposes of applying such subsection, shall apply to property placed in service after December 31, 2022 (in taxable years ending after such date) if such property is placed in service pursuant to qualified retrofit plan (within the meaning of such section) established after such date.