American Recovery and Reinvestment Act of 2009/Division B/Title I/Subtitle B

by United States Congress

Subtitle B—Energy Incentives

PART I—RENEWABLE ENERGY INCENTIVES

SEC. 1101. EXTENSION OF CREDIT FOR ELECTRICITY PRODUCED FROM CERTAIN RENEWABLE RESOURCES.

(a) In General.—

Subsection (d) of section 45 is amended—

(1) by striking "2010" in paragraph (1) and inserting "2013",

(2) by striking "2011" each place it appears in paragraphs (2), (3), (4), (6), (7) and (9) and inserting "2014", and

(3) by striking "2012" in paragraph (11)(B) and inserting "2014".

(b) Technical Amendment.—

Paragraph (5) of section 45(d) is amended by striking "and before" and all that follows and inserting " and before October 3, 2008.".

(c) Effective Date.—

(1) In general.—

The amendments made by subsection (a) shall apply to property placed in service after the date of the enactment of this Act.

(2) Technical amendment.—

The amendment made by subsection (b) shall take effect as if included in section 102 of the Energy Improvement and Extension Act of 2008.

SEC. 1102. ELECTION OF INVESTMENT CREDIT IN LIEU OF PRODUCTION CREDIT.

(a) In General.—

Subsection (a) of section 48 is amended by adding at the end the following new paragraph:

"(5) Election to treat qualified facilities as energy property.—

"(A) In general.—In the case of any qualified property which is part of a qualified investment credit facility—

"(i) such property shall be treated as energy property for purposes of this section, and

"(ii) the energy percentage with respect to such property shall be 30 percent.

"(B) Denial of production credit.—No credit shall be allowed under section 45 for any taxable year with respect to any qualified investment credit facility.

"(C) Qualified investment credit facility.—For purposes of this paragraph, the term `qualified investment credit facility' means any of the following facilities if no credit has been allowed under section 45 with respect to such facility and the taxpayer makes an irrevocable election to have this paragraph apply to such facility:

"(i) Wind facilities.—Any qualified facility (within the meaning of section 45) described in paragraph (1) of section 45(d) if such facility is placed in service in 2009, 2010, 2011, or 2012.

"(ii) Other facilities.—Any qualified facility (within the meaning of section 45) described in paragraph (2), (3), (4), (6), (7), (9), or (11) of section 45(d) if such facility is placed in service in 2009, 2010, 2011, 2012, or 2013.

"(D) Qualified property.—For purposes of this paragraph, the term `qualified property' means property—

"(i) which is—

"(I) tangible personal property, or

"(II) other tangible property (not including a building or its structural components), but only if such property is used as an integral part of the qualified investment credit facility, and

"(ii) with respect to which depreciation (or amortization in lieu of depreciation) is allowable.".

(b) Effective Date.—

The amendments made by this section shall apply to facilities placed in service after December 31, 2008.

SEC. 1103. REPEAL OF CERTAIN LIMITATIONS ON CREDIT FOR RENEWABLE ENERGY PROPERTY.

(a) Repeal of Limitation on Credit for Qualified Small Wind Energy Property.—

Paragraph (4) of section 48(c) is amended by striking subparagraph (B) and by redesignating subparagraphs (C) and (D) as subparagraphs (B) and (C).

(b) Repeal of Limitation on Property Financed by Subsidized Energy Financing.—

(1) In general.—

Section 48(a)(4) is amended by adding at the end the following new subparagraph:

"(D) Termination.—This paragraph shall not apply to periods after December 31, 2008, under rules similar to the rules of section 48(m) (as in effect on the day before the date of the enactment of the Revenue Reconciliation Act of 1990).".

(2) Conforming amendments.—

(A) Section 25C(e)(1) is amended by striking "(8), and (9)" and inserting "and (8)".

(B) Section 25D(e) is amended by striking paragraph (9).

(C) Section 48A(b)(2) is amended by inserting "(without regard to subparagraph (D) thereof)" after "section 48(a)(4)".

(D) Section 48B(b)(2) is amended by inserting "(without regard to subparagraph (D) thereof)" after "section 48(a)(4)".

(c) Effective Date.—

(1) In general.—

Except as provided in paragraph (2), the amendment made by this section shall apply to periods after December 31, 2008, under rules similar to the rules of section 48(m) of the Internal Revenue Code of 1986 (as in effect on the day before the date of the enactment of the Revenue Reconciliation Act of 1990).

(2) Conforming amendments.—

The amendments made by subparagraphs (A) and (B) of subsection (b)(2) shall apply to taxable years beginning after December 31, 2008.

SEC. 1104. COORDINATION WITH RENEWABLE ENERGY GRANTS.

Section 48 is amended by adding at the end the following new subsection:

"(d) Coordination With Department of Treasury Grants.—In the case of any property with respect to which the Secretary makes a grant under section 1603 of the American Recovery and Reinvestment Tax Act of 2009—

"(1) Denial of production and investment credits.—No credit shall be determined under this section or section 45 with respect to such property for the taxable year in which such grant is made or any subsequent taxable year.

"(2) Recapture of credits for progress expenditures made before grant.—If a credit was determined under this section with respect to such property for any taxable year ending before such grant is made—

"(A) the tax imposed under subtitle A on the taxpayer for the taxable year in which such grant is made shall be increased by so much of such credit as was allowed under section 38,

"(B) the general business carryforwards under section 39 shall be adjusted so as to recapture the portion of such credit which was not so allowed, and

"(C) the amount of such grant shall be determined without regard to any reduction in the basis of such property by reason of such credit.

"(3) Treatment of grants.—Any such grant shall—

"(A) not be includible in the gross income of the taxpayer, but

"(B) shall be taken into account in determining the basis of the property to which such grant relates, except that the basis of such property shall be reduced under section 50(c) in the same manner as a credit allowed under subsection (a).".

PART II—INCREASED ALLOCATIONS OF NEW CLEAN RENEWABLE ENERGY BONDS AND QUALIFIED ENERGY CONSERVATION BONDS

SEC. 1111. INCREASED LIMITATION ON ISSUANCE OF NEW CLEAN RENEWABLE ENERGY BONDS.

Subsection (c) of section 54C is amended by adding at the end the following new paragraph:

"(4) Additional limitation.—The national new clean renewable energy bond limitation shall be increased by $1,600,000,000. Such increase shall be allocated by the Secretary consistent with the rules of paragraphs (2) and (3).".

SEC. 1112. INCREASED LIMITATION ON ISSUANCE OF QUALIFIED ENERGY CONSERVATION BONDS.

(a) In General.—

Section 54D(d) is amended by striking "$800,000,000" and inserting "$3,200,000,000".

(b) Clarification With Respect to Green Community Programs.—

(1) In general.—

Clause (ii) of section 54D(f)(1)(A) is amended by inserting "(including the use of loans, grants, or other repayment mechanisms to implement such programs)" after "green community programs".

(2) Special rules for bonds for implementing green community programs.—

Subsection (e) of section 54D is amended by adding at the end the following new paragraph:

"(4) Special rules for bonds to implement green community programs.—In the case of any bond issued for the purpose of providing loans, grants, or other repayment mechanisms for capital expenditures to implement green community programs, such bond shall not be treated as a private activity bond for purposes of paragraph (3).".

PART III—ENERGY CONSERVATION INCENTIVES

SEC. 1121. EXTENSION AND MODIFICATION OF CREDIT FOR NONBUSINESS ENERGY PROPERTY.

(a) In General.—

Section 25C is amended by striking subsections (a) and (b) and inserting the following new subsections:

"(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 sum of—

"(1) the amount paid or incurred by the taxpayer during such taxable year for qualified energy efficiency improvements, and

"(2) the amount of the residential energy property expenditures paid or incurred by the taxpayer during such taxable year.

"(b) Limitation.—The aggregate amount of the credits allowed under this section for taxable years beginning in 2009 and 2010 with respect to any taxpayer shall not exceed $1,500.".

(b) Modifications of Standards for Energy-Efficient Building Property.—

(1) Electric heat pumps.—

Subparagraph (B) of section 25C(d)(3) is amended to read as follows:

"(B) an electric heat pump which achieves the highest efficiency tier established by the Consortium for Energy Efficiency, as in effect on January 1, 2009.".

(2) Central air conditioners.—

Subparagraph (C) of section 25C(d)(3) is amended by striking "2006" and inserting "2009".

(3) Water heaters.—

Subparagraph (D) of section 25C(d)(3) is amended to read as follows:

"(D) a natural gas, propane, or oil water heater which has either an energy factor of at least 0.82 or a thermal efficiency of at least 90 percent.".

(4) Wood stoves.—

Subparagraph (E) of section 25C(d)(3) is amended by inserting ", as measured using a lower heating value" after "75 percent".

(c) Modifications of Standards for Oil Furnaces and Hot Water Boilers.—

(1) In general.—

Paragraph (4) of section 25C(d) is amended to read as follows:

"(4) Qualified natural gas, propane, and oil furnaces and hot water boilers.—

"(A) Qualified natural gas furnace.—The term `qualified natural gas furnace' means any natural gas furnace which achieves an annual fuel utilization efficiency rate of not less than 95.

"(B) Qualified natural gas hot water boiler.—The term `qualified natural gas hot water boiler' means any natural gas hot water boiler which achieves an annual fuel utilization efficiency rate of not less than 90.

"(C) Qualified propane furnace.—The term `qualified propane furnace' means any propane furnace which achieves an annual fuel utilization efficiency rate of not less than 95.

"(D) Qualified propane hot water boiler.—The term `qualified propane hot water boiler' means any propane hot water boiler which achieves an annual fuel utilization efficiency rate of not less than 90.

"(E) Qualified oil furnaces.—The term `qualified oil furnace' means any oil furnace which achieves an annual fuel utilization efficiency rate of not less than 90.

"(F) Qualified oil hot water boiler.—The term `qualified oil hot water boiler' means any oil hot water boiler which achieves an annual fuel utilization efficiency rate of not less than 90.".

(2) Conforming amendment.—Clause (ii) of section 25C(d)(2)(A) is amended to read as follows:

"(ii) any qualified natural gas furnace, qualified propane furnace, qualified oil furnace, qualified natural gas hot water boiler, qualified propane hot water boiler, or qualified oil hot water boiler, or".

(d) Modifications of Standards for Qualified Energy Efficiency Improvements.—

(1) Qualifications for exterior windows, doors, and skylights.—

Subsection (c) of section 25C is amended by adding at the end the following new paragraph:

"(4) Qualifications for exterior windows, doors, and skylights.—Such term shall not include any component described in subparagraph (B) or (C) of paragraph (2) unless such component is equal to or below a U factor of 0.30 and SHGC of 0.30.".

(2) Additional qualification for insulation.—

Subparagraph (A) of section 25C(c)(2) is amended by inserting "and meets the prescriptive criteria for such material or system established by the 2009 International Energy Conservation Code, as such Code (including supplements) is in effect on the date of the enactment of the American Recovery and Reinvestment Tax Act of 2009" after "such dwelling unit".

(e) Extension.—

Section 25C(g)(2) is amended by striking "December 31, 2009" and inserting "December 31, 2010".

(f) 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, 2008.

(2) Efficiency standards.—

The amendments made by paragraphs (1), (2), and (3) of subsection (b) and subsections (c) and (d) shall apply to property placed in service after the date of the enactment of this Act.

SEC. 1122. MODIFICATION OF CREDIT FOR RESIDENTIAL ENERGY EFFICIENT PROPERTY.

(a) Removal of Credit Limitation for Property Placed in Service.—

(1) In general.—

Paragraph (1) of section 25D(b) is amended to read as follows:

"(1) Maximum credit for fuel cells.—In the case of any qualified fuel cell property expenditure, the credit allowed under subsection (a) (determined without regard to subsection (c)) for any taxable year shall not exceed $500 with respect to each half kilowatt of capacity of the qualified fuel cell property (as defined in section 48(c)(1)) to which such expenditure relates.".

(2) Conforming amendment.—

Paragraph (4) of section 25D(e) is amended—

(A) by striking all that precedes subparagraph (B) and inserting the following:

"(4) Fuel cell expenditure limitations in case of joint occupancy.—In the case of any dwelling unit with respect to which qualified fuel cell property expenditures are made and which is jointly occupied and used during any calendar year as a residence by two or more individuals, the following rules shall apply:

"(A) Maximum expenditures for fuel cells.—The maximum amount of such expenditures which may be taken into account under subsection (a) by all such individuals with respect to such dwelling unit during such calendar year shall be $1,667 in the case of each half kilowatt of capacity of qualified fuel cell property (as defined in section 48(c)(1)) with respect to which such expenditures relate.", and

(B) by striking subparagraph (C).

(b) Effective Date.—

The amendments made by this section shall apply to taxable years beginning after December 31, 2008.

SEC. 1123. TEMPORARY INCREASE IN CREDIT FOR ALTERNATIVE FUEL VEHICLE REFUELING PROPERTY.

(a) In General.—

Section 30C(e) is amended by adding at the end the following new paragraph:

"(6) Special rule for property placed in service during 2009 and 2010.—In the case of property placed in service in taxable years beginning after December 31, 2008, and before January 1, 2011—

"(A) in the case of any such property which does not relate to hydrogen—

"(i) subsection (a) shall be applied by substituting `50 percent' for `30 percent',

"(ii) subsection (b)(1) shall be applied by substituting `$50,000' for `$30,000', and

"(iii) subsection (b)(2) shall be applied by substituting `$2,000' for `$1,000', and

"(B) in the case of any such property which relates to hydrogen, subsection (b)(1) shall be applied by substituting `$200,000' for `$30,000'.".

(b) Effective Date.—The amendment made by this section shall apply to taxable years beginning after December 31, 2008.

PART IV—MODIFICATION OF CREDIT FOR CARBON DIOXIDE SEQUESTRATION

SEC. 1131. APPLICATION OF MONITORING REQUIREMENTS TO CARBON DIOXIDE USED AS A TERTIARY INJECTANT.

(a) In General.—

Section 45Q(a)(2) is amended by striking "and" at the end of subparagraph (A), by striking the period at the end of subparagraph (B) and inserting ", and", and by adding at the end the following new subparagraph:

"(C) disposed of by the taxpayer in secure geological storage.".

(b) Conforming Amendments.—

(1) Section 45Q(d)(2) is amended—

(A) by striking "subsection (a)(1)(B)" and inserting "paragraph (1)(B) or (2)(C) of subsection (a)",

(B) by striking "and unminable coal seems" and inserting ", oil and gas reservoirs, and unminable coal seams", and

(C) by inserting "the Secretary of Energy, and the Secretary of the Interior," after "Environmental Protection Agency".

(2) Section 45Q(a)(1)(B) is amended by inserting "and not used by the taxpayer as described in paragraph (2)(B)" after "storage".

(3) Section 45Q(e) is amended by striking "captured and disposed of or used as a tertiary injectant" and inserting "taken into account in accordance with subsection (a)".

(c) Effective Date.—

The amendments made by this section shall apply to carbon dioxide captured after the date of the enactment of this Act.

PART V—PLUG-IN ELECTRIC DRIVE MOTOR VEHICLES

SEC. 1141. CREDIT FOR NEW QUALIFIED PLUG-IN ELECTRIC DRIVE MOTOR VEHICLES.

(a) In General.—

Section 30D is amended to read as follows:

"SEC. 30D. NEW QUALIFIED PLUG-IN ELECTRIC DRIVE MOTOR 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 the sum of the credit amounts determined under subsection (b) with respect to each new qualified plug-in electric drive motor vehicle placed in service by the taxpayer during the taxable year.

"(b) Per Vehicle Dollar Limitation.—

"(1) In general.—The amount determined under this subsection with respect to any new qualified plug-in electric drive motor vehicle is the sum of the amounts determined under paragraphs (2) and (3) with respect to such vehicle.

"(2) Base amount.—The amount determined under this paragraph is $2,500.

"(3) Battery capacity.—In the case of a vehicle which draws propulsion energy from a battery with not less than 5 kilowatt hours of capacity, the amount determined under this paragraph is $417, plus $417 for each kilowatt hour of capacity in excess of 5 kilowatt hours. The amount determined under this paragraph shall not exceed $5,000.

"(c) Application With Other Credits.—

"(1) Business credit treated as part of general business credit.—So much of the credit which would be allowed under subsection (a) for any taxable year (determined without regard to this subsection) that is attributable to property of a character subject to an allowance for depreciation shall be treated as a credit listed in section 38(b) for such taxable year (and not allowed under subsection (a)).

"(2) Personal credit.—

"(A) In general.—For purposes of this title, the credit allowed under subsection (a) for any taxable year (determined after application of paragraph (1)) shall be treated as a credit allowable under subpart A for such taxable year.

"(B) Limitation based on amount of tax.—In the case of a taxable year to which section 26(a)(2) does not apply, the credit allowed under subsection (a) for any taxable year (determined after application of paragraph (1)) shall not exceed the excess of—

"(i) the sum of the regular tax liability (as defined in section 26(b)) plus the tax imposed by section 55, over

"(ii) the sum of the credits allowable under subpart A (other than this section and sections 23 and 25D) and section 27 for the taxable year.

"(d) New Qualified Plug-in Electric Drive Motor Vehicle.—For purposes of this section—

"(1) In general.—The term `new qualified plug-in electric drive motor vehicle' means a motor vehicle—

"(A) the original use of which commences with the taxpayer,

"(B) which is acquired for use or lease by the taxpayer and not for resale,

"(C) which is made by a manufacturer,

"(D) which is treated as a motor vehicle for purposes of title II of the Clean Air Act,

"(E) which has a gross vehicle weight rating of less than 14,000 pounds, and

"(F) which is propelled to a significant extent by an electric motor which draws electricity from a battery which—

"(i) has a capacity of not less than 4 kilowatt hours, and

"(ii) is capable of being recharged from an external source of electricity.

"(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) Manufacturer.—The term `manufacturer' has the meaning given such term in regulations prescribed by the Administrator of the Environmental Protection Agency for purposes of the administration of title II of the Clean Air Act (42 U.S.C. 7521 et seq.).

"(4) Battery capacity.—The term `capacity' means, with respect to any battery, the quantity of electricity which the battery is capable of storing, expressed in kilowatt hours, as measured from a 100 percent state of charge to a 0 percent state of charge.

"(e) Limitation on Number of New Qualified Plug-in Electric Drive Motor Vehicles Eligible for Credit.—

"(1) In general.—In the case of a new qualified plug-in electric drive motor vehicle sold during the phaseout period, only the applicable percentage of the credit otherwise allowable under subsection (a) shall be allowed.

"(2) Phaseout period.—For purposes of this subsection, the phaseout period is the period beginning with the second calendar quarter following the calendar quarter which includes the first date on which the number of new qualified plug-in electric drive motor vehicles manufactured by the manufacturer of the vehicle referred to in paragraph (1) sold for use in the United States after December 31, 2009, is at least 200,000.

"(3) Applicable percentage.—For purposes of paragraph (1), the applicable percentage is—

"(A) 50 percent for the first 2 calendar quarters of the phaseout period,

"(B) 25 percent for the 3d and 4th calendar quarters of the phaseout period, and

"(C) 0 percent for each calendar quarter thereafter.

"(4) Controlled groups.—Rules similar to the rules of section 30B(f)(4) shall apply for purposes of this subsection.

"(f) Special Rules.—

"(1) Basis reduction.—For purposes of this subtitle, the basis of any property for which a credit is allowable under subsection (a) shall be reduced by the amount of such credit so allowed.

"(2) No double benefit.—The amount of any deduction or other credit allowable under this chapter for a new qualified plug-in electric drive motor vehicle shall be reduced by the amount of credit allowed under subsection (a) for such vehicle.

"(3) Property used by tax-exempt entity.—In the case of a vehicle the use of which is described in paragraph (3) or (4) of section 50(b) and which is not subject to a lease, the person who sold such vehicle to the person or entity using such vehicle shall be treated as the taxpayer that placed such vehicle in service, but only if such person clearly discloses to such person or entity in a document the amount of any credit allowable under subsection (a) with respect to such vehicle (determined without regard to subsection (c)).

"(4) Property used outside united states not qualified.—No credit shall be allowable under subsection (a) with respect to any property referred to in section 50(b)(1).

"(5) 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.

"(6) Election not to take credit.—No credit shall be allowed under subsection (a) for any vehicle if the taxpayer elects to not have this section apply to such vehicle.

"(7) Interaction with air quality and motor vehicle safety standards.—A motor vehicle shall not be considered eligible for a credit under this section unless such vehicle is in compliance with—

"(A) the applicable provisions of the Clean Air Act for the applicable make and model year of the vehicle (or applicable air quality provisions of State law in the case of a State which has adopted such provision under a waiver under section 209(b) of the Clean Air Act), and

"(B) the motor vehicle safety provisions of sections 30101 through 30169 of title 49, United States Code.".

(b) Conforming Amendments.—

(1) Section 30B(d)(3)(D) is amended by striking "subsection (d) thereof" and inserting "subsection (c) thereof".

(2) Section 38(b)(35) is amended by striking "30D(d)(1)" and inserting "30D(c)(1)".

(3) Section 1016(a)(25) is amended by striking "section 30D(e)(4)" and inserting "section 30D(f)(1)".

(4) Section 6501(m) is amended by striking "section 30D(e)(9)" and inserting "section 30D(e)(4)".

(c) Effective Date.—

The amendments made by this section shall apply to vehicles acquired after December 31, 2009.

SEC. 1142. CREDIT FOR CERTAIN PLUG-IN ELECTRIC VEHICLES.

(a) In General.—

Section 30 is amended to read as follows:

"SEC. 30. CERTAIN PLUG-IN 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 plug-in electric vehicle placed in service by the taxpayer during the taxable year.

"(b) Per Vehicle Dollar Limitation.—The amount of the credit allowed under subsection (a) with respect to any vehicle shall not exceed $2,500.

"(c) Application With Other Credits.—

"(1) Business credit treated as part of general business credit.—So much of the credit which would be allowed under subsection (a) for any taxable year (determined without regard to this subsection) that is attributable to property of a character subject to an allowance for depreciation shall be treated as a credit listed in section 38(b) for such taxable year (and not allowed under subsection (a)).

"(2) Personal credit.—

"(A) In general.—For purposes of this title, the credit allowed under subsection (a) for any taxable year (determined after application of paragraph (1)) shall be treated as a credit allowable under subpart A for such taxable year.

"(B) Limitation based on amount of tax.—In the case of a taxable year to which section 26(a)(2) does not apply, the credit allowed under subsection (a) for any taxable year (determined after application of paragraph (1)) shall not exceed the excess of—

"(i) the sum of the regular tax liability (as defined in section 26(b)) plus the tax imposed by section 55, over

"(ii) the sum of the credits allowable under subpart A (other than this section and sections 23, 25D, and 30D) and section 27 for the taxable year.

"(d) Qualified Plug-in Electric Vehicle.—For purposes of this section—

"(1) In general.—The term `qualified plug-in electric vehicle' means a specified vehicle—

"(A) the original use of which commences with the taxpayer,

"(B) which is acquired for use or lease by the taxpayer and not for resale,

"(C) which is made by a manufacturer,

"(D) which is manufactured primarily for use on public streets, roads, and highways,

"(E) which has a gross vehicle weight rating of less than 14,000 pounds, and

"(F) which is propelled to a significant extent by an electric motor which draws electricity from a battery which—

"(i) has a capacity of not less than 4 kilowatt hours (2.5 kilowatt hours in the case of a vehicle with 2 or 3 wheels), and

"(ii) is capable of being recharged from an external source of electricity.

"(2) Specified vehicle.—The term `specified vehicle' means any vehicle which—

"(A) is a low speed vehicle within the meaning of section 571.3 of title 49, Code of Federal Regulations (as in effect on the date of the enactment of the American Recovery and Reinvestment Tax Act of 2009), or

"(B) has 2 or 3 wheels.

"(3) Manufacturer.—The term `manufacturer' has the meaning given such term in regulations prescribed by the Administrator of the Environmental Protection Agency for purposes of the administration of title II of the Clean Air Act (42 U.S.C. 7521 et seq.).

"(4) Battery capacity.—The term `capacity' means, with respect to any battery, the quantity of electricity which the battery is capable of storing, expressed in kilowatt hours, as measured from a 100 percent state of charge to a 0 percent state of charge.

"(e) Special Rules.—

"(1) Basis reduction.—For purposes of this subtitle, the basis of any property for which a credit is allowable under subsection (a) shall be reduced by the amount of such credit so allowed.

"(2) No double benefit.—The amount of any deduction or other credit allowable under this chapter for a new qualified plug-in electric drive motor vehicle shall be reduced by the amount of credit allowable under subsection (a) for such vehicle.

"(3) Property used by tax-exempt entity.—In the case of a vehicle the use of which is described in paragraph (3) or (4) of section 50(b) and which is not subject to a lease, the person who sold such vehicle to the person or entity using such vehicle shall be treated as the taxpayer that placed such vehicle in service, but only if such person clearly discloses to such person or entity in a document the amount of any credit allowable under subsection (a) with respect to such vehicle (determined without regard to subsection (c)).

"(4) Property used outside united states not qualified.—No credit shall be allowable under subsection (a) with respect to any property referred to in section 50(b)(1).

"(5) 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.

"(6) Election not to take credit.—No credit shall be allowed under subsection (a) for any vehicle if the taxpayer elects to not have this section apply to such vehicle.

"(f) Termination.—This section shall not apply to any vehicle acquired after December 31, 2011.".

(b) Conforming Amendments.—

(1)(A) Section 24(b)(3)(B) is amended by inserting "30," after "25D,".

(B) Section 25(e)(1)(C)(ii) is amended by inserting "30," after "25D,".

(C) Section 25B(g)(2) is amended by inserting "30," after "25D,".

(D) Section 26(a)(1) is amended by inserting "30," after "25D,".

(E) Section 904(i) is amended by striking "and 25B" and inserting "25B, 30, and 30D".

(F) Section 1400C(d)(2) is amended by striking "and 25D" and inserting "25D, and 30".

(2) Paragraph (1) of section 30B(h) is amended to read as follows:

"(1) 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) Section 30C(d)(2)(A) is amended by striking ", 30,".

(4)(A) Section 53(d)(1)(B) is amended by striking clause (iii) and redesignating clause (iv) as clause (iii).

(B) Subclause (II) of section 53(d)(1)(B)(iii), as so redesignated, is amended by striking "increased in the manner provided in clause (iii)".

(5) Section 55(c)(3) is amended by striking "30(b)(3),".

(6) Section 1016(a)(25) is amended by striking "section 30(d)(1)" and inserting "section 30(e)(1)".

(7) Section 6501(m) is amended by striking "section 30(d)(4)" and inserting "section 30(e)(6)".

(8) The item in the table of sections for subpart B of part IV of subchapter A of chapter 1 is amended to read as follows:

"Sec. 30. Certain plug-in electric vehicles.".

(c) Effective Date.—

The amendments made by this section shall apply to vehicles acquired after the date of the enactment of this Act.

(d) Transitional Rule.—

In the case of a vehicle acquired after the date of the enactment of this Act and before January 1, 2010, no credit shall be allowed under section 30 of the Internal Revenue Code of 1986, as added by this section, if credit is allowable under section 30D of such Code with respect to such vehicle.

(e) Application of EGTRRA Sunset.—

The amendment made by subsection (b)(1)(A) shall be subject to title IX of the Economic Growth and Tax Relief Reconciliation Act of 2001 in the same manner as the provision of such Act to which such amendment relates.

SEC. 1143. CONVERSION KITS.

(a) In General.—

Section 30B (relating to alternative motor vehicle credit) is amended by redesignating subsections (i) and (j) as subsections (j) and (k), respectively, and by inserting after subsection (h) the following new subsection:

"(i) Plug-in Conversion Credit.—

"(1) In general.—For purposes of subsection (a), the plug-in conversion credit determined under this subsection with respect to any motor vehicle which is converted to a qualified plug-in electric drive motor vehicle is 10 percent of so much of the cost of the converting such vehicle as does not exceed $40,000.

"(2) Qualified plug-in electric drive motor vehicle.—For purposes of this subsection, the term `qualified plug-in electric drive motor vehicle' means any new qualified plug-in electric drive motor vehicle (as defined in section 30D, determined without regard to whether such vehicle is made by a manufacturer or whether the original use of such vehicle commences with the taxpayer).

"(3) Credit allowed in addition to other credits.—The credit allowed under this subsection shall be allowed with respect to a motor vehicle notwithstanding whether a credit has been allowed with respect to such motor vehicle under this section (other than this subsection) in any preceding taxable year.

"(4) Termination.—This subsection shall not apply to conversions made after December 31, 2011.".

(b) Credit Treated as Part of Alternative Motor Vehicle Credit.—

Section 30B(a) is amended by striking "and" at the end of paragraph (3), by striking the period at the end of paragraph (4) and inserting ", and", and by adding at the end the following new paragraph:

"(5) the plug-in conversion credit determined under subsection (i).".

(c) No Recapture for Vehicles Converted to Qualified Plug-in Electric Drive Motor Vehicles.—

Paragraph (8) of section 30B(h) is amended by adding at the end the following: ", except that no benefit shall be recaptured if such property ceases to be eligible for such credit by reason of conversion to a qualified plug-in electric drive motor vehicle.".

(d) Effective Date.—

The amendments made by this section shall apply to property placed in service after the date of the enactment of this Act.

SEC. 1144. TREATMENT OF ALTERNATIVE MOTOR VEHICLE CREDIT AS A PERSONAL CREDIT ALLOWED AGAINST AMT.

(a) In General.—

Paragraph (2) of section 30B(g) is amended to read as follows:

"(2) Personal credit.—

"(A) In general.—For purposes of this title, the credit allowed under subsection (a) for any taxable year (determined after application of paragraph (1)) shall be treated as a credit allowable under subpart A for such taxable year.

"(B) Limitation based on amount of tax.—In the case of a taxable year to which section 26(a)(2) does not apply, the credit allowed under subsection (a) for any taxable year (determined after application of paragraph (1)) shall not exceed the excess of—

"(i) the sum of the regular tax liability (as defined in section 26(b)) plus the tax imposed by section 55, over

"(ii) the sum of the credits allowable under subpart A (other than this section and sections 23, 25D, 30, and 30D) and section 27 for the taxable year.".

(b) Conforming Amendments.—

(1)(A) Section 24(b)(3)(B), as amended by this Act, is amended by inserting "30B," after "30,".

(B) Section 25(e)(1)(C)(ii), as amended by this Act, is amended by inserting "30B," after "30,".

(C) Section 25B(g)(2), as amended by this Act, is amended by inserting "30B," after "30,".

(D) Section 26(a)(1), as amended by this Act, is amended by inserting "30B," after "30,".

(E) Section 904(i), as amended by this Act, is amended by inserting "30B," after "30".

(F) Section 1400C(d)(2), as amended by this Act, is amended by striking "and 30" and inserting "30, and 30B".

(2) Section 30C(d)(2)(A), as amended by this Act, is amended by striking "sections 27 and 30B" and inserting "section 27".

(3) Section 55(c)(3) is amended by striking "30B(g)(2),".

(c) Effective Date.—

The amendments made by this section shall apply to taxable years beginning after December 31, 2008.

(d) Application of EGTRRA Sunset.—

The amendment made by subsection (b)(1)(A) shall be subject to title IX of the Economic Growth and Tax Relief Reconciliation Act of 2001 in the same manner as the provision of such Act to which such amendment relates.

PART VI—PARITY FOR TRANSPORTATION FRINGE BENEFITS

SEC. 1151. INCREASED EXCLUSION AMOUNT FOR COMMUTER TRANSIT BENEFITS AND TRANSIT PASSES.

(a) In General.—

Paragraph (2) of section 132(f) is amended by adding at the end the following flush sentence:

"In the case of any month beginning on or after the date of the enactment of this sentence and before January 1, 2011, subparagraph (A) shall be applied as if the dollar amount therein were the same as the dollar amount in effect for such month under subparagraph (B).".

(b) Effective Date.—The amendment made by this section shall apply to months beginning on or after the date of the enactment of this section.