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rules similar to the rules of subsection (d) of section 52 shall
1
apply.
2
‘‘(e) T
ERMINATION
.—This section shall not apply to
3
any fuel sold at retail after December 31, 2006.’’.
4
(b) C
REDIT
T
REATED AS
B
USINESS
C
REDIT
.—Section
5
38(b) (relating to current year business credit) is amended
6
by striking ‘‘plus’’ at the end of paragraph (14), by striking
7
the period at the end of paragraph (15) and inserting ‘‘,
8
plus’’, and by adding at the end the following new para-
9
graph:
10
‘‘(16) the alternative fuel retail sales credit deter-
11
mined under section 40A(a).’’.
12
(c) T
RANSITIONAL
R
ULE
.—Section 39(d) (relating to
13
transitional rules) is amended by adding at the end the fol-
14
lowing new paragraph:
15
‘‘(11) N
O CARRYBACK OF SECTION 40A CREDIT
16
BEFORE EFFECTIVE DATE
.—No portion of the unused
17
business credit for any taxable year which is attrib-
18
utable to the alternative fuel retail sales credit deter-
19
mined under section 40A(a) may be carried back to
20
a taxable year ending before January 1, 2002.’’.
21
(d) C
LERICAL
A
MENDMENT
.—The table of sections for
22
subpart D of part IV of subchapter A of chapter 1 is amend-
23
ed by inserting after the item relating to section 40 the fol-
24
lowing new item:
25
‘‘Sec. 40A. Credit for retail sale of alternative fuels as motor vehicle fuel.’’.
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HR 6 EAS1S/PP
(e) E
FFECTIVE
D
ATE
.—The amendments made by this
1
section shall apply to fuel sold at retail after September
2
30, 2002, in taxable years ending after such date.
3
SEC. 2005. SMALL ETHANOL PRODUCER CREDIT.
4
(a) A
LLOCATION OF
A
LCOHOL
F
UELS
C
REDIT TO
P
A
-
5
TRONS OF A
C
OOPERATIVE
.—Section 40(g) (relating to al-
6
cohol used as fuel) is amended by adding at the end the
7
following new paragraph:
8
‘‘(6) A
LLOCATION
OF
SMALL
ETHANOL
PRO
-
9
DUCER CREDIT TO PATRONS OF COOPERATIVE
.—
10
‘‘(A) E
LECTION TO ALLOCATE
.—
11
‘‘(i) I
N GENERAL
.—In the case of a co-
12
operative organization described in section
13
1381(a), any portion of the credit deter-
14
mined under subsection (a)(3) for the tax-
15
able year may, at the election of the organi-
16
zation, be apportioned pro rata among pa-
17
trons of the organization on the basis of the
18
quantity or value of business done with or
19
for such patrons for the taxable year.
20
‘‘(ii) F
ORM
AND
EFFECT
OF
ELEC
-
21
TION
.—An election under clause (i) for any
22
taxable year shall be made on a timely filed
23
return for such year. Such election, once
24
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HR 6 EAS1S/PP
made, shall be irrevocable for such taxable
1
year.
2
‘‘(B) T
REATMENT OF ORGANIZATIONS AND
3
PATRONS
.—The amount of the credit apportioned
4
to patrons under subparagraph (A)—
5
‘‘(i) shall not be included in the
6
amount determined under subsection (a)
7
with respect to the organization for the tax-
8
able year,
9
‘‘(ii) shall be included in the amount
10
determined under subsection (a) for the tax-
11
able year of each patron for which the pa-
12
tronage dividends for the taxable year de-
13
scribed in subparagraph (A) are included in
14
gross income, and
15
‘‘(iii) shall be included in gross income
16
of such patrons for the taxable year in the
17
manner and to the extent provided in sec-
18
tion 87.
19
‘‘(C) S
PECIAL
RULES
FOR
DECREASE
IN
20
CREDITS FOR TAXABLE YEAR
.—If the amount of
21
the credit of a cooperative organization deter-
22
mined under subsection (a)(3) for a taxable year
23
is less than the amount of such credit shown on
24
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HR 6 EAS1S/PP
the return of the cooperative organization for
1
such year, an amount equal to the excess of—
2
‘‘(i) such reduction, over
3
‘‘(ii) the amount not apportioned to
4
such patrons under subparagraph (A) for
5
the taxable year,
6
shall be treated as an increase in tax imposed by
7
this chapter on the organization. Such increase
8
shall not be treated as tax imposed by this chap-
9
ter for purposes of determining the amount of
10
any credit under this chapter or for purposes of
11
section 55.’’.
12
(b) I
MPROVEMENTS TO
S
MALL
E
THANOL
P
RODUCER
13
C
REDIT
.—
14
(1) D
EFINITION
OF
SMALL
ETHANOL
PRO
-
15
DUCER
.—Section 40(g) (relating to definitions and
16
special rules for eligible small ethanol producer cred-
17
it) is amended by striking ‘‘30,000,000’’ each place it
18
appears and inserting ‘‘60,000,000’’.
19
(2) S
MALL ETHANOL PRODUCER CREDIT NOT A
20
PASSIVE
ACTIVITY
CREDIT
.—Clause (i) of section
21
469(d)(2)(A) is amended by striking ‘‘subpart D’’ and
22
inserting ‘‘subpart D, other than section 40(a)(3),’’.
23
(3) A
LLOWING
CREDIT
AGAINST
ENTIRE
REG
-
24
ULAR TAX AND MINIMUM TAX
.—
25
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HR 6 EAS1S/PP
(A) I
N GENERAL
.—Subsection (c) of section
1
38 (relating to limitation based on amount of
2
tax), as amended by section 301(b) of the Job
3
Creation and Worker Assistance Act of 2002, is
4
amended by redesignating paragraph (4) as
5
paragraph (5) and by inserting after paragraph
6
(3) the following new paragraph:
7
‘‘(4) S
PECIAL RULES FOR SMALL ETHANOL PRO
-
8
DUCER CREDIT
.—
9
‘‘(A) I
N GENERAL
.—In the case of the small
10
ethanol producer credit—
11
‘‘(i) this section and section 39 shall be
12
applied separately with respect to the cred-
13
it, and
14
‘‘(ii) in applying paragraph (1) to the
15
credit—
16
‘‘(I) the amounts in subpara-
17
graphs (A) and (B) thereof shall be
18
treated as being zero, and
19
‘‘(II) the limitation under para-
20
graph (1) (as modified by subclause
21
(I)) shall be reduced by the credit al-
22
lowed under subsection (a) for the tax-
23
able year (other than the small ethanol
24
producer credit).
25
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HR 6 EAS1S/PP
‘‘(B) S
MALL
ETHANOL
PRODUCER
CRED
-
1
IT
.—For purposes of this subsection, the term
2
‘small ethanol producer credit’ means the credit
3
allowable under subsection (a) by reason of sec-
4
tion 40(a)(3).’’.
5
(B) C
ONFORMING AMENDMENTS
.—Subclause
6
(II) of section 38(c)(2)(A)(ii), as amended by
7
section 301(b)(2) of the Job Creation and Worker
8
Assistance Act of 2002, and subclause (II) of sec-
9
tion 38(c)(3)(A)(ii), as added by section
10
301(b)(1) of such Act, are each amended by in-
11
serting ‘‘or the small ethanol producer credit’’
12
after ‘‘employee credit’’.
13
(4) S
MALL
ETHANOL
PRODUCER
CREDIT
NOT
14
ADDED BACK TO INCOME UNDER SECTION 87
.—Sec-
15
tion 87 (relating to income inclusion of alcohol fuel
16
credit) is amended to read as follows:
17
‘‘SEC. 87. ALCOHOL FUEL CREDIT.
18
‘‘Gross income includes an amount equal to the sum
19
of—
20
‘‘(1) the amount of the alcohol mixture credit de-
21
termined with respect to the taxpayer for the taxable
22
year under section 40(a)(1), and
23
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HR 6 EAS1S/PP
‘‘(2) the alcohol credit determined with respect to
1
the taxpayer for the taxable year under section
2
40(a)(2).’’.
3
(c) C
ONFORMING
A
MENDMENT
.—Section 1388 (relat-
4
ing to definitions and special rules for cooperative organi-
5
zations) is amended by adding at the end the following new
6
subsection:
7
‘‘(k) C
ROSS
R
EFERENCE
.—For provisions relating to
8
the apportionment of the alcohol fuels credit between cooper-
9
ative organizations and their patrons, see section
10
40(g)(6).’’.
11
(d) E
FFECTIVE
D
ATE
.—The amendments made by this
12
section shall apply to taxable years beginning after the date
13
of the enactment of this Act.
14
SEC. 2006. ALL ALCOHOL FUELS TAXES TRANSFERRED TO
15
HIGHWAY TRUST FUND.
16
(a) I
N
G
ENERAL
.—Section 9503(b)(4) (relating to cer-
17
tain taxes not transferred to Highway Trust Fund) is
18
amended—
19
(1) by adding ‘‘or’’ at the end of subparagraph
20
(C),
21
(2) by striking the comma at the end of subpara-
22
graph (D)(iii) and inserting a period, and
23
(3) by striking subparagraphs (E) and (F).
24
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HR 6 EAS1S/PP
(b) E
FFECTIVE
D
ATE
.—The amendments made by this
1
section shall apply to taxes imposed after September 30,
2
2003.
3
SEC. 2007. INCREASED FLEXIBILITY IN ALCOHOL FUELS
4
TAX CREDIT.
5
(a) A
LCOHOL
F
UELS
C
REDIT
M
AY
B
E
T
RANS
-
6
FERRED
.—Section 40 (relating to alcohol used as fuel) is
7
amended by adding at the end the following new subsection:
8
‘‘(i) C
REDIT
M
AY
B
E
T
RANSFERRED
.—
9
‘‘(1) I
N
GENERAL
.—A taxpayer may transfer
10
any credit allowable under paragraph (1) or (2) of
11
subsection (a) with respect to alcohol used in the pro-
12
duction of ethyl tertiary butyl ether through an as-
13
signment to a qualified assignee. Such transfer may
14
be revoked only with the consent of the Secretary.
15
‘‘(2) Q
UALIFIED
ASSIGNEE
.—For purposes of
16
this subsection, the term ‘qualified assignee’ means
17
any person who—
18
‘‘(A) is liable for taxes imposed under sec-
19
tion 4081,
20
‘‘(B) is required to register under section
21
4101, and
22
‘‘(C) obtains a certificate from the taxpayer
23
described in paragraph (1) which identifies the
24
amount of alcohol used in such production.
25
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HR 6 EAS1S/PP
‘‘(3) R
EGULATIONS
.—The Secretary shall pre-
1
scribe such regulations as necessary to insure that
2
any credit described in paragraph (1) is claimed once
3
and not reassigned by a qualified assignee.’’.
4
(b) A
LCOHOL
F
UELS
C
REDIT
M
AY
B
E
T
AKEN
A
GAINST
5
M
OTOR
F
UELS
T
AX
L
IABILITY
.—
6
(1) I
N GENERAL
.—Subpart C of part III of sub-
7
chapter A of chapter 32 (relating to special provisions
8
applicable to petroleum products) is amended by add-
9
ing at the end the following new section:
10
‘‘SEC. 4104. CREDIT AGAINST MOTOR FUELS TAXES.
11
‘‘(a) E
LECTION
T
O
U
SE
C
REDIT
A
GAINST
M
OTOR
12
F
UELS
T
AXES
.—There is hereby allowed as a credit against
13
the taxes imposed by section 4081, any credit allowed under
14
paragraph (1) or (2) of section 40(a) with respect to alcohol
15
used in the production of ethyl tertiary butyl ether to the
16
extent—
17
‘‘(1) such credit is not claimed by the taxpayer
18
or the qualified assignee under section 40(i) as a
19
credit under section 40, and
20
‘‘(2) the taxpayer or qualified assignee elects to
21
claim such credit under this section.
22
‘‘(b) E
LECTION
I
RREVOCABLE
.—Any election under
23
subsection (a) shall be irrevocable.
24
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HR 6 EAS1S/PP
‘‘(c) R
EQUIRED
S
TATEMENT
.—Any return claiming a
1
credit pursuant to an election under this section shall be
2
accompanied by a statement that the credit was not, and
3
will not, be claimed on an income tax return.
4
‘‘(d) R
EGULATIONS
.—The Secretary shall prescribe
5
such regulations as necessary to avoid the claiming of dou-
6
ble benefits and to prescribe the taxable periods with respect
7
to which the credit may be claimed.’’.
8
(2) C
ONFORMING AMENDMENT
.—Section 40(c) is
9
amended by striking ‘‘or section 4091(c)’’ and insert-
10
ing ‘‘section 4091(c), or section 4104’’.
11
(3) C
LERICAL AMENDMENT
.—The table of sec-
12
tions for subpart C of part III of subchapter A of
13
chapter 32 is amended by adding at the end the fol-
14
lowing new item:
15
‘‘Sec. 4104. Credit against motor fuels taxes.’’.
(c) E
FFECTIVE
D
ATE
.—The amendments made by this
16
section shall take effect on and after the date of the enact-
17
ment of this Act.
18
SEC. 2008. INCENTIVES FOR BIODIESEL.
19
(a) C
REDIT FOR
B
IODIESEL
U
SED AS A
F
UEL
.—
20
(1) I
N GENERAL
.—Subpart D of part IV of sub-
21
chapter A of chapter 1 (relating to business related
22
credits), as amended by this Act, is amended by in-
23
serting after section 40A the following new section:
24
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