TREATMENT OF CLEAN-FUEL VEHICLES.

SEC. 1913. TREATMENT OF CLEAN-FUEL VEHICLES. (a) Deduction for Clean-Fuel Vehicles and Certain Refueling Property.— (1) In General.— Part VI of subchapter B of chapter 1 (relating to itemized deductions for individuals and corporations) is amended by adding after section 179 the following new section: “SEC. 179A. DEDUCTION FOR CLEAN-FUEL VEHICLES AND CERTAIN REFUELING PROPERTY. “(a) Allowance of Deduction.— “(1) In general.— There shall be allowed as a deduction an amount equal to the cost of— “(A) any qualified clean-fuel vehicle property, and “(B) any qualified clean-fuel vehicle refueling property. The deduction under the preceding sentence with respect to any property shall be allowed for the taxable year in which such property is placed in service. “(2) Incremental cost for certain vehicles.— If a vehicle may be propelled by both a clean-burning fuel and any other fuel, only the incremental cost of permitting the use of the clean-burning fuel shall be taken into account. “(b) Limitations.— “(1) Qualified clean-fuel vehicle property.— “(A) In general.— The cost which may be taken into account under subsection (a)(1)(A) with respect to any motor vehicle shall not exceed— “(i) in the case of a motor vehicle not described in clause (ii) or (iii), $2,000, “(ii) in the case of any truck or van with a gross vehicle weight rating greater than 10,000 pounds but not greater than 26,000 pounds, $5,000, or “(iii) $50,000 in the case of— “(I) a truck or van with a gross vehicle weight rating greater than 26,000 pounds, or “(II) any bus which has a seating capacity of at least 20 adults (not including the driver). “(B) Phaseout.— In the case of any qualified clean-fuel vehicle property placed in service after December 31, 2001, the limit otherwise applicable under subparagraph (A) shall be reduced by— “(i) 25 percent in the case of property placed in service in calendar year 2002, “(ii) 50 percent in the case of property placed in service in calendar year 2003, and “(iii) 75 percent in the case of property placed in service in calendar year 2004. 106 STAT. 3017 “(2) Qualified clean-fuel vehicle refueling property.— “(A) In general.— The aggregate cost which may be taken into account under subsection (a)(1)(B) with respect to qualified clean-fuel vehicle refueling property placed in service during the taxable year at a location shall not exceed the excess (if any) of— “(i) $100,000, over “(ii) the aggregate amount taken into account under subsection (a)(1)(B) by the taxpayer (or any related person or predecessor) with respect to property placed in service at such location for all preceding taxable years. “(B) Related person.— For purposes of this paragraph, a person shall be treated as related to another person if such person bears a relationship to such other person described in section 267(b) or 707(b)(1). “(C) Election.— If the limitation under subparagraph (A) applies for any taxable year, the taxpayer shall, on the return of tax for such taxable year, specify the items of property (and the portion of costs of such property) which are to be taken into account under subsection (a)(1)(B). “(c) Qualified Clean-Fuel Vehicle Property Defined.— For purposes of this section— “(1) In general.— The term ‘qualified clean-fuel vehicle property’ means property which is acquired for use by the taxpayer and not for resale, the original use of which commences with the taxpayer, with respect to which the environmental standards of paragraph (2) are met, and which is described in either of the following subparagraphs: “(A) Retrofit parts and components.— Any property installed on a motor vehicle which is propelled by a fuel which is not a clean-burning fuel for purposes of permitting such vehicle to be propelled by a clean-burning fuel— “(i) if the property is an engine (or modification thereof) which may use a clean-burning fuel, or “(ii) to the extent the property is used in the storage or delivery to the engine of such fuel, or the exhaust of gases from combustion of such fuel. “(B) Original equipment manufacturer’s vehicles.— A motor vehicle produced by an original equipment manufacturer and designed so that the vehicle may be propelled by a clean-burning fuel, but only to the extent of the portion of the basis of such vehicle which is attributable to an engine which may use such fuel, to the storage or delivery to the engine of such fuel, or to the exhaust of gases from combustion of such fuel. “(2) Environmental standards.— Property shall not be treated as qualified clean-fuel vehicle property unless— “(A) the motor vehicle of which it is a part meets any applicable Federal or State emissions standards with respect to each fuel by which such vehicle is designed to be propelled, or “(B) in the case of property described in paragraph (1)(A), such property meets applicable Federal and State 106 STAT. 3018emissions-related certification, testing, and warranty requirements. “(3) Exception for qualified electric vehicles.— The term ‘qualified clean-fuel vehicle property’ does not include any qualified electric vehicle (as defined in section 30(c)). “(d) Qualified Clean-Fuel Vehicle Refueling Property Defined.— For purposes of this section, the term ‘qualified clean-fuel vehicle refueling property’ means any property (not including a building and its structural components) if— “(1) such property is of a character subject to the allowance for depreciation, “(2) the original use of such property begins with the tax-payer, and “(3) such property is— “(A) for the storage or dispensing of a clean-burning fuel into the fuel tank of a motor vehicle propelled by such fuel, but only if the storage or dispensing of the fuel is at the point where such fuel is delivered into the fuel tank of the motor vehicle, or “(B) for the recharging of motor vehicles propelled by electricity, but only if the property is located at the point where the motor vehicles are recharged. “(e) Other Definitions and Special Rules.— For purposes of this section— “(1) Clean-burning fuel.— The term ‘clean-burning fuel’ means— “(A) natural gas, “(B) liquefied natural gas, “(C) liquefied petroleum gas, “(D) hydrogen, “(E) electricity, and “(F) any other fuel at least 85 percent of which is 1 or more of the following: methanol, ethanol, any other alcohol, or ether. “(2) Motor vehicle.— The term ‘motor vehicle’ means any vehicle which is manufactured primarily for use on public streets, roads, and highways (not including a vehicle operated exclusively on a rail or rails) and which has at least 4 wheels. “(3) Cost of retrofit parts includes cost of installation.— The cost of any qualified clean-fuel vehicle property referred to in subsection (c)(1)(A) shall include the cost of the original installation of such property. “(4) Recapture.— The Secretary shall, by regulations, provide for recapturing the benefit of any deduction allowable under subsection (a) with respect to any property which ceases to be property eligible for such deduction. “(5) Property used outside united states, etc., not qualified.— No deduction shall be allowed under subsection (a) with respect to any property referred to in section 50(b) or with respect to the portion of the cost of any property taken into account under section 179. “(6) Basis reduction.— “(A) In general.— For purposes of this title, the basis of any property shall be reduced by the portion of the cost of such property taken into account under subsection (a). 106 STAT. 3019 “(B) Ordinary income recapture.— For purposes of section 1245, the amount of the deduction allowable under subsection (a) with respect to any property which is of a character subject to the allowance for depreciation shall be treated as a deduction allowed for depreciation under section 167. “(g) Termination.— This section shall not apply to any property placed in service after December 31, 2004.” (2) Deduction from gross income.— Section 62(a) is amended by inserting after paragraph (13) the following new paragraph: “(14) Deduction for clean-fuel vehicles and certain refueling property.— The deduction allowed by section 179A” (3) Conforming amendments.— (A) Section 1016(a) is amended by striking “and” at the end of paragraph (23), by striking the period at the end of paragraph (24) and inserting “, and”, and by adding at the end thereof the following new paragraph: “(25) to the extent provided in section 179A(e)(6)(A).” (B) The table of sections for part VI of subchapter B of chapter 1 is amended by inserting after the item relating to section 179 the following new item “Sec. 179A. Deduction for clean-fuel vehicles and certain refueling property.” : (b) Credit for Qualified Electric Vehicles.— (1) In general.— Subpart B of part IV of subchapter A of chapter 1 is amended by inserting after section 29 the following new section: “SEC. 30. CREDIT FOR QUALIFIED ELECTRIC VEHICLES. “(a) Allowance of Credit.— There shall be allowed as a credit against the tax imposed by this chapter for the taxable year an amount equal to 10 percent of the cost of any qualified electric vehicle placed in service by the taxpayer during the taxable year. “(b) Limitations.— “(1) Limitation per vehicle.— The amount of the credit allowed under subsection (a) for any vehicle shall not exceed $4,000. “(2) Phaseout.— In the case of any qualified electric vehicle placed in service after December 31, 2001, the credit otherwise allowable under subsection (a) (determined after the application of paragraph (1)) shall be reduced by— “(A) 25 percent in the case of property placed in service in calendar year 2002, “(B) 50 percent in the case of property placed in service in calendar year 2003, and “(C) 75 percent in the case of property placed in service in calendar year 2004. “(3) Application with other credits.— The credit allowed by subsection (a) for any taxable year shall not exceed the excess (if any) of— “(A) the regular tax for the taxable year reduced by the sum of the credits allowable under subpart A and sections 27, 28, and 29, over— “(B) the tentative minimum tax for the taxable year. “(c) Qualified Electric Vehicle.— For purposes of this section— 106 STAT. 3020 “(1) In general.— The term ‘qualified electric vehicle’ means any motor vehicle— “(A) which is powered primarily by an electric motor drawing current from rechargeable batteries, fuel cells, or other portable sources of electrical current, “(B) the original use of which commences with the taxpayer, and “(C) which is acquired for use by the taxpayer and not for resale. “(2) Motor vehicle.— For purposes of paragraph (1), the term ‘motor vehicle’ means any vehicle which is manufactured primarily for use on public streets, roads, and highways (not including a vehicle operated exclusively on a rail or rails) and which has at least 4 wheels. “(d) Special Rules.— “(1) Basis reduction.— The basis of any property for which a credit is allowable under subsection (a) shall be reduced by the amount of such credit. “(2) Recapture.— The Secretary shall, by regulations, provide for recapturing the benefit of any credit allowable under subsection (a) with respect to any property which ceases to be property eligible for such credit. “(3) Property used outside united states, etc., not qualified.— No credit shall be allowed under subsection (a) with respect to any property referred to in section 50(b) or with respect to the portion of the cost of any property taken into account under section 179. “(e) Termination.— This section shall not apply to any property placed in service after December 31, 2004.” (2) Conforming amendments.— (A) The table of sections for subpart B of part IV of subchapter A of chapter 1 is amended by adding after the item relating to section 29 the following new item: “Sec. 30. Credit for qualified electric vehicles.” (B) Section 1016(a), as amended by subsection (a)(3), is amended by striking “and” at the end of paragraph (24), by striking the period at the end of paragraph (25) and inserting “, and”, and by adding at the end thereof the following new paragraph: “(26) to the extent provided in section 30(d)(1).” (C) Section 53(d)(1)(B)(iii) is amended— (i) by striking “section 29(b)(5)(B) or” and inserting “section 29(b)(6)(B),”, and (ii) by inserting “, or not allowed under section 30 solely by reason of the application of section 3(XbX3XB)” before the period. (D) Section 55(c)(2) is amended by striking “29(b)(5),” and inserting “29(b)(6), 30(b)(3),”. (c) Effective Date.— The amendments made by this section shall apply to property placed in service after June 30, 1993.