US Government Tax Credits
                 Energy Policy Act of 2005 . . .

H.R.6
Energy Policy Act of 2005 (Enrolled as Agreed to or Passed by Both House and Senate) and signed into law by President George W. Bush on August 8, 2005.

SEC. 25D. RESIDENTIAL ENERGY EFFICIENT 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) 30 percent of the qualified photovoltaic property expenditures made by the taxpayer during such year,
(2) 30 percent of the qualified solar water heating property expenditures made by the taxpayer during such year, and
(3) 30 percent of the qualified fuel cell property expenditures made by the taxpayer during such year.
(b) Limitations--
(1) MAXIMUM CREDIT- The credit allowed under subsection (a) for any taxable year shall not exceed--
(A) $2,000 with respect to any qualified photovoltaic property expenditures,
(B) $2,000 with respect to any qualified solar water heating property expenditures, and
(C) $500 with respect to each half kilowatt of capacity of qualified fuel cell property (as defined in section 48(c)(1)) for which qualified fuel cell property expenditures are made.
(2) CERTIFICATION OF SOLAR WATER HEATING PROPERTY- No credit shall be allowed under this section for an item of property described in subsection (d)(1) unless such property is certified for performance by the non-profit Solar Rating Certification Corporation or a comparable entity endorsed by the government of the State in which such property is installed.
(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) Definitions- For purposes of this section--
(1) QUALIFIED SOLAR WATER HEATING PROPERTY EXPENDITURE- The term `qualified solar water heating property expenditure' means an expenditure for property to heat water for use in a dwelling unit located in the United States and used as a residence by the taxpayer if at least half of the energy used by such property for such purpose is derived from the sun.
(2) QUALIFIED PHOTOVOLTAIC PROPERTY EXPENDITURE- The term `qualified photovoltaic property expenditure' means an expenditure for property which uses solar energy to generate electricity for use in a dwelling unit located in the United States and used as a residence by the taxpayer.
(3) QUALIFIED FUEL CELL PROPERTY EXPENDITURE- The term `qualified fuel cell property expenditure' means an expenditure for qualified fuel cell property (as defined in section 48(c)(1)) installed on or in connection with a dwelling unit located in the United States and used as a principal residence (within the meaning of section 121) by the taxpayer.
(e) Special Rules- For purposes of this section--
(1) LABOR COSTS- Expenditures for labor costs properly allocable to the onsite preparation, assembly, or original installation of the property described in subsection (d) and for piping or wiring to interconnect such property to the dwelling unit shall be taken into account for purposes of this section.
(2) SOLAR PANELS- No expenditure relating to a solar panel or other property installed as a roof (or portion thereof) shall fail to be treated as property described in paragraph (1) or (2) of subsection (d) solely because it constitutes a structural component of the structure on which it is installed.
(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 such storage shall not be taken into account for purposes of this section.
(4) 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 two or more individuals the following rules 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.
(C) Subparagraphs (A) and (B) shall be applied separately with respect to expenditures described in paragraphs (1), (2), and (3) of subsection (d).
(5) 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.
(6) 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.
(7) 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.
(8) 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 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.
(9) 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)(4)(C)).
(f) 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.
(g) Termination- The credit allowed under this section shall not apply to property placed in service after December 31, 2008.'.
(b) Conforming Amendments-
(1) Section 23(c) is amended by striking `this section and section 1400C' and inserting `this section, section 25D, and section 1400C'.
(2) Section 25(e)(1)(C) is amended by striking `this section and sections 23 and 1400C' and inserting `other than this section, section 23, section 25D, and section 1400C'.
(3) Section 1400C(d) is amended by striking `this section' and inserting `this section and section 25D'.
(4) Section 1016(a), as amended by this Act, is amended by striking `and' at the end of paragraph (33), by striking the period at the end of paragraph
(34) and inserting `, and', and by adding at the end the following new paragraph:
(35) to the extent provided in section 25D(f), in the case of amounts with respect to which a credit has been allowed under section 25D.'.
(5) The table of sections for subpart A of part IV of subchapter A of chapter 1, as amended by this Act, is amended by inserting after the item relating to section 25C the following new item: `Sec. 25D. Residential energy efficient property.'.
(c) Effective Dates- The amendments made by this section shall apply to property placed in service after December 31, 2005, in taxable years ending after such date.

SEC. 1336. CREDIT FOR BUSINESS INSTALLATION OF QUALIFIED FUEL CELLS AND STATIONARY MICROTURBINE POWER PLANTS.

(a) In General- Section 48(a)(3)(A) (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 fuel cell property or qualified microturbine property,'.
(b) Qualified Fuel Cell Property; Qualified Microturbine Property- Section 48 (relating to energy credit) is amended by adding at the end the following new subsection:
(c) Qualified Fuel Cell Property; Qualified Microturbine Property- For purposes of this subsection--
(1) QUALIFIED FUEL CELL PROPERTY-
(A) IN GENERAL- The term `qualified fuel cell property' means a fuel cell power plant which--
(i) has a nameplate capacity of at least 0.5 kilowatt of electricity using an electrochemical process, and `(ii) has an electricity-only generation efficiency greater than 30 percent.
(B) LIMITATION- In the case of qualified fuel cell property placed in service during the taxable year, the credit otherwise determined under paragraph (1) for such year with respect to such property shall not exceed an amount equal to $500 for each 0.5 kilowatt of capacity of such property.
(C) FUEL CELL POWER PLANT- The term `fuel cell power plant' means an integrated system comprised of a fuel cell stack assembly and associated balance of plant components which converts a fuel into electricity using electrochemical means.
(D) SPECIAL RULE- The first sentence of the matter in subsection (a)(3) which follows subparagraph (D) thereof shall not apply to qualified fuel cell property which is used predominantly in the trade or business of the furnishing or sale of telephone service, telegraph service by means of domestic telegraph operations, or other telegraph services (other than international telegraph services).
(E) TERMINATION- The term `qualified fuel cell property' shall not include any property for any period after December 31, 2008.
(2) QUALIFIED MICROTURBINE PROPERTY-
(A) IN GENERAL- The term `qualified microturbine property' means a stationary microturbine power plant which--
(i) has a nameplate capacity of less than 2,000 kilowatts, and `(ii) has an electricity-only generation efficiency of not less than 26 percent at International Standard Organization conditions.
(B) LIMITATION- In the case of qualified microturbine property placed in service during the taxable year, the credit otherwise determined under paragraph (1) for such year with respect to such property shall not exceed an amount equal $200 for each kilowatt of capacity of such property.
(C) STATIONARY MICROTURBINE POWER PLANT- The term `stationary microturbine power plant' means an integrated system comprised of a gas turbine engine, a combustor, a recuperator or regenerator, a generator or alternator, and associated balance of plant components which converts a fuel into electricity and thermal energy. Such term also includes all secondary components located between the existing infrastructure for fuel delivery and the existing infrastructure for power distribution, including equipment and controls for meeting relevant power standards, such as voltage, frequency, and power factors.
(D) SPECIAL RULE- The first sentence of the matter in subsection (a)(3) which follows subparagraph (D) thereof shall not apply to qualified microturbine property which is used predominantly in the trade or business of the furnishing or sale of telephone service, telegraph service by means of domestic telegraph operations, or other telegraph services (other than international telegraph services).
(E) TERMINATION- The term `qualified microturbine property' shall not include any property for any period after December 31, 2008.'.
(c) Energy Percentage- Section 48(a)(2)(A) (relating to energy percentage) is amended to read as follows:
(A) IN GENERAL- The energy percentage is--
(i) in the case of qualified fuel cell property, 30 percent, and
(ii) in the case of any other energy property, 10 percent.'.
(d) Conforming Amendment- Section 48(a)(1) is amended by inserting `except as provided in paragraph (1)(B) or (2)(B) of subsection (d),' before `the energy'.
(e) Effective Date- The amendments made by this section shall apply to periods after December 31, 2005, in taxable years ending after such date, 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).

SEC. 1337. BUSINESS SOLAR INVESTMENT TAX CREDIT.

(a) Increase in Energy Percentage- Section 48(a)(2)(A) (relating to energy percentage), as amended by this Act, is amended to read as follows:
(A) IN GENERAL- The energy percentage is--
(i) 30 percent in the case of--
(I) qualified fuel cell property,
(II) energy property described in paragraph (3)(A)(i) but only with respect to periods ending before January 1, 2008, and
(III) energy property described in paragraph (3)(A)(ii), and
(ii) in the case of any energy property to which clause (i) does not apply, 10 percent.'.
(b) Hybrid Solar Lighting Systems- Subparagraph (A) of section 48(a)(3) is amended by striking `or' at the end of clause (i), by redesignating clause
(ii) as clause (iii), and by inserting after clause (i) the following new clause:
(ii) equipment which uses solar energy to illuminate the inside of a structure using fiber-optic distributed sunlight but only with respect to periods ending before January 1, 2008, or'.
(c) Limitation on Use of Solar Energy to Heat Swimming Pools- Clause (i) of section 48(a)(3)(A) is amended by inserting `excepting property used to generate energy for the purposes of heating a swimming pool,' after `solar process heat,'.
(d) Effective Date- The amendments made by this section shall apply to periods after December 31, 2005, in taxable years ending after such date, 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).
Subtitle D--Alternative Motor Vehicles and Fuels Incentives
SEC. 1341. ALTERNATIVE MOTOR VEHICLE CREDIT.
(a) In General- Subpart B of part IV of subchapter A of chapter 1 (relating to foreign tax credit, etc.) is amended by adding at the end the following new section:
SEC. 30B. ALTERNATIVE MOTOR VEHICLE CREDIT.
(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--
(1) the new qualified fuel cell motor vehicle credit determined under subsection (b),
(2) the new advanced lean burn technology motor vehicle credit determined under subsection (c),
(3) the new qualified hybrid motor vehicle credit determined under subsection (d), and
(4) the new qualified alternative fuel motor vehicle credit determined under subsection (e).
(b) New Qualified Fuel Cell Motor Vehicle Credit-
(1) IN GENERAL- For purposes of subsection (a), the new qualified fuel cell motor vehicle credit determined under this subsection with respect to a new qualified fuel cell motor vehicle placed in service by the taxpayer during the taxable year is--
(A) $8,000 ($4,000 in the case of a vehicle placed in service after December 31, 2009), if such vehicle has a gross vehicle weight rating of not more than 8,500 pounds,
(B) $10,000, if such vehicle has a gross vehicle weight rating of more than 8,500 pounds but not more than 14,000 pounds,
(C) $20,000, if such vehicle has a gross vehicle weight rating of more than 14,000 pounds but not more than 26,000 pounds, and
(D) $40,000, if such vehicle has a gross vehicle weight rating of more than 26,000 pounds.
(2) INCREASE FOR FUEL EFFICIENCY-
(A) IN GENERAL- The amount determined under paragraph (1)(A) with respect to a new qualified fuel cell motor vehicle which is a passenger automobile or light truck shall be increased by--
(i) $1,000, if such vehicle achieves at least 150 percent but less than 175 percent of the 2002 model year city fuel economy,
(ii) $1,500, if such vehicle achieves at least 175 percent but less than 200 percent of the 2002 model year city fuel economy,
(iii) $2,000, if such vehicle achieves at least 200 percent but less than 225 percent of the 2002 model year city fuel economy,
(iv) $2,500, if such vehicle achieves at least 225 percent but less than 250 percent of the 2002 model year city fuel economy,
(v) $3,000, if such vehicle achieves at least 250 percent but less than 275 percent of the 2002 model year city fuel economy.