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 123STA T . 312 PUBLIC LA W 111 –5—FE B.1 7, 2 0 0 9forpu rpo se sof d e t er min in g t h ee l igi b ilit y of su c h indi v idu a lor any other individual for benefits or assistance , or the amount or e x tent of benefits or assistance, under any F ederal program or under any S tate or local program financed in w hole or in part with Federal funds .( d )AUTHORI T YRELA TI NG TO C LERI C AL E RROR S . — Section 6213 (g)(2) is amended by stri k ing ‘ ‘and ’ ’ at the end of subparagraph ( L )(ii), by striking the period at the end of subparagraph ( M ) and inserting ‘‘, and’’, and by adding at the end the following new subparagraph ‘‘( N ) an omission of the reduction re q uired under sec - tion 36A(c) with respect to the credit allowed under section 36A or an omission of the correct social security account number required under section 36A(d)(1)( B ).’’. (e) CON F OR M ING AMEN D MENTS.— (1) Section 6211(b)( 4 )(A) is amended by inserting ‘‘36A,’’ after ‘‘36,’’. (2) Section 1324(b)(2) of title 31, U nited States Code, is amended by inserting ‘‘36A,’’ after ‘‘36,’’. (3) T he table of sections for subpart C of part IV of sub- chapter A of chapter 1 is amended by inserting after the item relating to section 36 the following new item: ‘ ‘ Sec.36A . Makingwor k p a y cre d i t . ’ ’. (f) EFFECTI V E D ATE.—This section, and the amendments made by this section, shall apply to taxable years beginning after December 31, 2 0 0 8 . SEC.10 0 2 . T E MPORA R YIN CREASE IN EARNE D INCOME TA X CREDIT. (a) IN G ENERAL.—Subsection (b) of section 32 is amended by adding at the end the following new paragraph: ‘‘(3) S P ECIAL RULES FOR 20 0 9 AND 20 1 0.—In the case of any taxable year beginning in 200 9 or 2010— ‘‘(A) INCREASED CREDIT PERCENTAGE FOR 3 OR MORE Q UALIFYING CHILDREN.—In the case of a taxpayer with 3 or more qualifying children, the credit percentage is 4 5 percent. ‘‘(B) REDUCTION OF MARRIAGE PENALTY.— ‘‘(i) IN GENERAL.—The dollar amount in effect under paragraph (2)(B) shall be $ 5,000. ‘‘(ii) INFLATION AD J USTMENT.—In the case of any taxable year beginning in 2010, the $5,000 amount in clause (i) shall be increased by an amount equal to— ‘‘(I) such dollar amount, multiplied by ‘‘(II) the cost of living ad j ustment determined under section 1(f)(3) for the calendar year in which the taxable year begins determined by substituting ‘calendar year 2008’ for ‘calendar year 1992’ in subparagraph (B) thereof. ‘‘(iii) ROUNDING.—Subparagraph (A) of subsection (j)(2) shall apply after taking into account any increase under clause (ii).’’. (b) EFFECTIVE DATE.—The amendments made by this section shall apply to taxable years beginning after December 31, 2008. 26USC3 2 note.Ap p licab ilit y . 26 USC 32. 26 USC 36A note. 26 USC 62 1 3.


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 123STA T . 313 PUBLIC LA W 111 –5—FE B.1 7, 2 0 0 9SEC.10 0 3 . T E MPORA R YIN CREASE O F REF U N D A BL E PORTION OF C H ILD CREDIT. (a)INGE NE RAL.—P a r a g ra ph ( 4 ) ofsecti o n2 4( d )isa m ended to read as fo l lo w s

‘(4) SP E CI ALR U LE FO R 20 0 9 AN D 20 1 0.— N otwithstanding paragraph ( 3 ) , in the case of an y ta x a b le year beginning in 2 0 0 9 or 20 1 0, the dollar amo u nt in effect for such taxable year under paragraph (1)( B )(i) shall be $ 3,000. ’ ’. (b) E FFEC T I V E D ATE.— T he amendments made by this section shall apply to taxable years beginning after December 31, 200 8 . SEC. 100 4 . AMERICAN OPPORTUNITY TA X CREDIT. (a) IN GENERAL.—Section 2 5A (relating to H ope scholarship credit) is amended by redesignating subsection (i) as subsection ( j ) and by inserting after subsection (h) the following new subsection: ‘‘(i) A M ERICAN O PPORTUNIT Y TA XC REDIT.—In the case of any taxable year beginning in 2009 or 2010— ‘‘(1) INCREA S E IN CREDIT.—The Hope Scholarship Credit shall be an amount e q ual to the sum of— ‘‘(A) 100 percent of so much of the qualified tuition and related expenses paid by the taxpayer during the tax - able year (for education furnished to the eligible student during any academic period beginning in such taxable year) as does not exceed $2,000, plus ‘‘(B) 25 percent of such expenses so paid as exceeds $2,000 but does not exceed $4,000. ‘‘(2) CREDIT ALLO W ED FOR FIRST 4 YEARS OF POST-SEC- ONDARY EDUCATION.—Subparagraphs (A) and (C) of subsection (b)(2) shall be applied by substituting ‘4’ for ‘2’. ‘‘(3) Q UALIFIED TUITION AND RELATED EXPENSES TO INCLUDE RE Q UIRED COURSE MATERIALS.—Subsection (f)(1)(A) shall be applied by substituting ‘tuition, fees, and course materials’ for ‘tuition and fees’. ‘‘(4) INCREASE IN A G I LIMITS FOR H OPE SCHOLARSHIP CREDIT.—In lieu of applying subsection (d) with respect to the Hope Scholarship Credit, such credit (determined without regard to this paragraph) shall be reduced (but not below z ero) by the amount which bears the same ratio to such credit (as so determined) as— ‘‘(A) the excess of— ‘‘(i) the taxpayer’s modified adjusted gross income (as defined in subsection (d)(3)) for such taxable year, o v er ‘‘(ii) $80,000 ($1 6 0,000 in the case of a joint return), bears to ‘‘(B) $10,000 ($20,000 in the case of a joint return). ‘‘(5) CREDIT ALLOWED AGAINST ALTERNATIVE MINIMUM TAX.—In the case of a taxable year to which section 26(a)(2) does not apply, so much of the credit allowed under subsection (a) as is attributable to the Hope Scholarship Credit shall not exceed the excess of— ‘‘(A) the sum of the regular tax liability (as defined in section 26(b)) plus the tax imposed by section 55, over ‘‘(B) the sum of the credits allowable under this subpart (other than this subsection and sections 23, 25D, and 30D) and section 2 7 for the taxable year. Ap p licab ili ty.26USC 2 4no t e . 26 USC 24.

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 123STA T . 31 4PUBLIC LA W 111 –5—FE B.1 7, 2 0 0 9Anyref eren c e i n th i s secti o n or section 24, 2 5 ,2 6 ,25 B , 90 4, or 1 400 C to a cre d ita l lo w a b le u nder this subsection shall be treated as a reference to so m uch of the credit allowable under subsection ( a ) as is attributable to the H o p e S cholarship Credit .‘ ‘(6) PORTI O N O FC R ED IT MA DE REF U NDA BL E. — 40 percent of so much of the credit allowed under subsection (a) as is attributable to the Hope Scholarship Credit (determined after application of para g raph (4) and without regard to this para - graph and section 26(a)(2) or paragraph (5), as the case may be) shall be treated as a credit allowable under subpart C (and not allowed under subsection (a)). T he preceding sentence shall not apply to any ta x payer for any taxable year if such taxpayer is a child to whom subsection (g) of section 1 applies for such taxable year. ‘‘( 7 ) COORDINATION W IT H MIDWE S TERN DISASTER AREA BENE- FITS.— I n the case of a taxpayer with respect to whom section 702(a)(1)(B) of the Heartland D isaster Tax R elief Act of 200 8 applies for any taxable year, such taxpayer may elect to wai v e the application of this subsection to such taxpayer for such taxable year. ’ ’. (b) CONFORMIN G AMENDMENTS.— (1) Section 24(b)( 3 )(B) is amended by inserting ‘‘25A(i),’’ after ‘‘23,’’. (2) Section 25(e)(1)(C)(ii) is amended by inserting ‘‘25A(i),’’ after ‘‘24,’’. (3) Section 26(a)(1) is amended by inserting ‘‘25A(i),’’ after ‘‘24,’’. (4) Section 25B(g)(2) is amended by inserting ‘‘25A(i),’’ after ‘‘23,’’. (5) Section 904(i) is amended by inserting ‘‘25A(i),’’ after ‘‘24,’’. (6) Section 1400C(d)(2) is amended by inserting ‘‘25A(i),’’ after ‘‘24,’’. (7) Section 6211(b)(4)(A) is amended by inserting ‘‘25A by reason of subsection (i)(6) thereof,’’ after ‘‘24(d),’’. (8) Section 1324(b)(2) of title 31, U nited States Code, is amended by inserting ‘‘25A,’’ before ‘‘35’’. (c) TREATMENT OF POSSESSIONS.— (1) PA Y MENTS TO P OSSESSIONS.— (A) M IRROR CODE POSSESSION.—The Secretary of the Treasury shall pay to each possession of the United States with a mirror code tax system amounts e q ual to the loss to that possession by reason of the application of section 25A(i)(6) of the Internal Revenue Code of 1986 (as added by this section) with respect to taxable years beginning in 2009 and 2010. Such amounts shall be determined by the Secretary of the Treasury based on information pro- vided by the government of the respective possession. (B) O THER POSSESSIONS.—The Secretary of the Treasury shall pay to each possession of the United States which does not have a mirror code tax system amounts estimated by the Secretary of the Treasury as being equal to the aggregate benefits that would have been provided to residents of such possession by reason of the application of section 25A(i)(6) of such Code (as so added) for taxable years beginning in 2009 and 2010 if a mirror code tax Ef f ectiv e da te s. Effective dates. 26USC 2 5Ano te. 26USC2 4.


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 123STA T . 31 5PUBLIC LA W 111 – 5 —FE B.1 7, 2 0 0 9sy s temhadb ee ni ne f fe c tins u ch po ssession .T hep r ecedin g sentence sha l l not apply w ith respect to any possession of the U nited S tates unless such possession has a plan , which has been appro v ed by the Secretary of the Treasury, under which such possession will promptly distribute such payments to the residents of such possession. (2)CO O RDINAT ION W IT HC R E DIT A L LOWED A G AIN S T U NITED STATES INCO M ETA X ES. — Section 2 5A (i)( 6 ) of such Code (as added by this section) shall not apply to a bona fide resident of any possession of the United States. ( 3 ) D E F INITIONS AND S P ECIAL RULES.— (A) P OSSESSION OF THE UNITED STATES.— F or purposes of this subsection, the term ‘ ‘possession of the United States ’ ’ includes the Commonwealth of Puerto R ico and the Commonwealth of the N orthern M ariana I slands. ( B ) MIRROR CODE TAX S Y STEM.—For purposes of this subsection, the term ‘‘mirror code ta x system’’ means, with respect to any possession of the United States, the income tax system of such possession if the income tax liability of the residents of such possession under such system is determined by reference to the income tax laws of the United States as if such possession were the United States. (C) TREATMENT OF PAYMENTS.—For purposes of section 1 32 4 (b)(2) of title 31, United States Code, the payments under this subsection shall be treated in the same manner as a refund due from the credit allowed under section 25A of the Internal Revenue Code of 1 98 6 by reason of subsection (i)(6) of such section (as added by this section). (d) E FFECTI V E DATE.—The amendments made by this section shall apply to taxable years beginning after December 31, 2 0 08. (e) APPLICATION OF E G TRRA SUNSET.—The amendment made by subsection (b)(1) shall be sub j ect to title I X 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. (f) TREASURY STUDIES REGARDING EDUCATION INCENTIVES.— (1) STUDY REGARDING COORDINATION WITH NON - TAX STU- DENT FINANCIAL ASSISTANCE.—The Secretary of the Treasury and the Secretary of Education, or their delegates, shall— (A) study how to coordinate the credit allowed under section 25A of the Internal Revenue Code of 1986 with the Federal Pell Grant program under section 401 of the H igher Education Act of 1965 to maximi z e their effective- ness at promoting college affordability, and (B) examine ways to expedite the delivery of the tax credit. (2) STUDY REGARDING INCLUSION OF COMMUNITY SERVICE RE Q UIREMENTS.—The Secretary of the Treasury and the Sec- retary of Education, or their delegates, shall study the feasi- bility of re q uiring including community service as a condition of ta k ing their tuition and related expenses into account under section 25A of the Internal Revenue Code of 1986. (3) REPORT.—Not later than 1 year after the date of the enactment of this Act, the Secretary of the Treasury, or the Secretary’s delegate, shall report to Congress on the results of the studies conducted under this paragraph. 26USC 2 4note. 26 USC 24 note.


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 123STA T . 31 6PUBLIC LA W 111 –5—FE B.1 7, 2 0 0 9SEC.10 0 5 .C OMPUT E R TEC HN O L O GYA N D E Q U I PMENT ALLO W ED AS A QUALI F IED HIGHER EDUCATION E X PENSE FOR SEC - TION 5 29 ACCOUNTS IN 2009 AND 2010. (a)INGE NE RAL.—Section529 (e)( 3 )( A )i s a m en d ed by st r i k in g‘ ‘and ’ ’att h eendo f c l a u se (i) , by striking the p eriod at the end of clause (ii), and by adding at the end the follo w ing ‘‘(iii) e x penses paid or incurred in 2 0 09or20 1 0 for the purchase of any computer technology or e q uip - ment (as defined in section 1 7 0(e)( 6 )( F )(i)) or Internet access and related ser v ices, if such technology, equip- ment, or services are to be used by the beneficiary and the beneficiary’s family during any of the years the beneficiary is enrolled at an eligible educational institution. C lause (iii) shall not include expenses for computer soft- ware designed for sports, games, or hobbies unless the software is predominantly educational in nature.’’. (b) EF FE CTIV E D ATE.— T he amendments made by this section shall apply to expenses paid or incurred after December 31, 200 8 . SEC. 100 6 . EXTENSION OF AND INCREASE IN FIRST-TIME HOME B UYER CREDIT WAI V ER OF REQUIREMENT TO REPAY. (a) E X TEN S I O N.— (1) IN G ENERAL.—Section 36(h) is amended by striking ‘‘ J uly 1, 2009’’ and inserting ‘‘December 1, 2009’’. (2) CONFOR M ING AMEN D MENT.—Section 36(g) is amended by striking ‘‘July 1, 2009’’ and inserting ‘‘December 1, 2009’’. (b) INCREASE.— (1) IN GENERAL.—Section 36(b) is amended by striking ‘‘ $ 7,500’’ each place it appears and inserting ‘‘$8,000’’. (2) CONFORMING AMENDMENT.—Section 36(b)(1)( B )is amended by striking ‘‘$3,750’’ and inserting ‘‘$ 4 ,000’’. (c) W AIVER OF R ECA P T U RE.— (1) IN GENERAL.— P aragraph (4) of section 36(f) is amended by adding at the end the following new subparagraph: ‘‘(D) WAIVER OF RECAPTURE FOR PURC H ASES IN 20 0 9 .— In the case of any credit allowed with respect to the pur- chase of a principal residence after December 31, 2008, and before December 1, 2009— ‘‘(i) paragraph (1) shall not apply, and ‘‘(ii) paragraph (2) shall apply only if the disposi- tion or cessation described in paragraph (2) with respect to such residence occurs during the 36-month period beginning on the date of the purchase of such residence by the taxpayer.’’. (2) CONFORMING AMENDMENT.—Subsection (g) of section 36 is amended by striking ‘‘subsection (c)’’ and inserting ‘‘sub- sections (c) and (f)(4)(D)’’. (d) COORDINATION WITH FIRST-TIME H OME B U Y ER CREDIT FOR DISTRICT OF COLUMBIA.— (1) IN GENERAL.—Subsection (e) of section 1400C is amended by adding at the end the following new paragraph: ‘‘(4) COORDINATION W ITH NATIONAL FIRST-TIME HOMEBUYERS CREDIT.— N o credit shall be allowed under this section to any taxpayer with respect to the purchase of a residence after December 31, 2008, and before December 1, 2009, if a credit Timep e r i od.A pp l i cab ili ty . Time period. 26USC5 2 9n ote. 26 USC 529.


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 123STA T . 31 7PUBLIC LA W 111 –5—FE B. 17 , 2 0 0 9unders e ctio n 36 is al lo w a b le to suc h ta xp a y er ( or the taxpayer ’ s spouse ) with respect to such purchase . ’’. ( 2 ) CONF O RMI N GA M E N D MEN T . —S ection 36(d) is a m ended by stri k in g paragraph ( 1 ). (e) R EMO V A L OF P RO H I B ITION ON F INAN C ING B YM ORTGAGE REV - EN U E B OND S .—Section 36(d) , as amended by subsection (c)(2), is amended by striking paragraph (2) and by redesignating paragraphs (3) and ( 4 ) as paragraphs (1) and (2), respecti v ely. ( f ) E FFECTIVE D ATE.— T he amendments made by this section shall apply to residences purchased after December 31, 2 0 0 8 . SEC.10 0 7 .S U S P E N S IO NO FTAX ON PO R TION OF UNE M P L O Y MENT COM - PENSATION. (a) I N G ENERAL.—Section 8 5 of the Internal Revenue Code of1 9 86 (relating to unemployment compensation) is amended by adding at the end the following new subsection

‘(c) S P ECIAL RULE FOR 2009.—In the case of any taxable year beginning in 2009, gross income shall not include so much of the unemployment compensation received by an individual as does not exceed $ 2,400.’’. (b) EFFECTIVE DATE.—The amendment made by this section shall apply to taxable years beginning after December 31, 2008. SEC. 100 8 . A D DITIONAL DEDUCTION FOR STATE SALES TAX AND EXCISE TAX ON T H E PURCHASE OF CERTAIN MOTOR V EHICLES. (a) IN GENERAL.—Subsection (a) of section 164 is amended by inserting after paragraph (5) the following new paragraph: ‘‘(6) Q ualified motor vehicle taxes.’’. (b) QUALIFIED MOTOR V EHICLE TA X ES.—Subsection (b) of sec- tion 164 is amended by adding at the end the following new para- graph: ‘‘(6) QUALIFIED MOTOR VEHICLE TAXES.— ‘‘( A ) IN GENERAL.—For purposes of this section, the term ‘ q ualified motor vehicle taxes’ means any State or local sales or excise tax imposed on the purchase of a qualified motor vehicle. ‘‘(B) L IMITATION BASED ON VEHICLE PRICE.—The amount of any State or local sales or excise tax imposed on the purchase of a qualified motor vehicle taken into account under subparagraph (A) shall not exceed the por- tion of such tax attributable to so much of the purchase price as does not exceed $49,500. ‘‘(C) INCOME LIMITATION.—The amount otherwise taken into account under subparagraph (A) (after the application of subparagraph (B)) for any taxable year shall be reduced (but not below z ero) by the amount which bears the same ratio to the amount which is so treated as— ‘‘(i) the excess (if any) of— ‘‘(I) the taxpayer’s modified ad j usted gross income for such taxable year, over ‘‘(II) $125,000 ($250,000 in the case of a joint return), bears to ‘‘(ii) $10,000. For purposes of the preceding sentence, the term ‘modified adjusted gross income’ means the adjusted gross income of the taxpayer for the taxable year (determined without regard to sections 911, 931, and 933). 26USC85note. 26 USC 3 6 note. 26 USC 36.


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 123STA T . 31 8PUBLIC LA W 111 –5—FE B.1 7, 2 0 0 9‘ ‘ (D)QUALIF I EDMOT O RV E H I C LE .—Forpu rpo se so fthi s p a ra g raph— ‘‘(i) ING ENERAL.— T he ter m ‘ q ua l ifie d motor v ehi c le ’ mea n s— ‘‘(I) a passenger automo b ile or light truc kw hich is treated as a motor vehicle for purposes of title II of the C lean A ir Act , the gross vehicle weight rating of which is not more than 8, 50 0 pounds, and the original use of which commences with the ta x pa y er, ‘‘(II) a motorcycle the gross vehicle weight rating of which is not more than 8,500 pounds and the original use of which commences with the taxpayer, and ‘‘(III) a motor home the original use of which commences with the taxpayer. ‘‘(ii) O THER TERM S .—The terms ‘motorcycle’ and ‘motor home’ have the meanings given such terms under section 5 71 . 3 of title 49, Code of Federal R egula - tions (as in effect on the date of the enactment of this paragraph). ‘‘( E ) QUALIFIED MOTOR VEHICLE TA X ES NOT INCLUDED IN COST OF AC Q UIRED P ROPERT Y .—The last sentence of sub- section (a) shall not apply to any qualified motor vehicle taxes. ‘‘(F) COORDINATION W ITH GENERAL SALES TAX.—This paragraph shall not apply in the case of a taxpayer who makes an election under paragraph (5) for the taxable year. ‘‘( G ) TERMINATION.—This paragraph shall not apply to purchases after December 31, 2 009.’’. (c) DEDUCTION ALLOWED TO N ONITEMI Z ERS.— (1) IN GENERAL.— P aragraph (1) of section 6 3(c) is amended by striking ‘‘and’’ at the end of subparagraph (C), by striking the period at the end of subparagraph (D) and inserting ‘‘, and’’, and by adding at the end the following new subparagraph ‘‘(E) the motor vehicle sales tax deduction.’’. (2) DEFINITION.— S ection 63(c) is amended by adding at the end the following new paragraph: ‘‘(9) M OTOR VEHICLE SALES TAX DEDUCTION.—For purposes of paragraph (1), the term ‘motor vehicle sales tax deduction’ means the amount allowable as a deduction under section 164(a)(6). Such term shall not include any amount taken into account under section 62(a).’’. (d) TREATMENT OF DEDUCTION U NDER ALTERNATIVE MINIMUM TAX.—The last sentence of section 56(b)(1)(E) is amended by striking ‘‘section 63(c)(1)(D)’’ and inserting ‘‘subparagraphs (D) and (E) of section 63(c)(1)’’. (e) EFFECTIVE DATE.—The amendments made by this section shall apply to purchases on or after the date of the enactment of this Act in taxable years ending after such date. 26USC5 6 note. 26USC6 3.


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 123STA T . 31 9PUBLIC LA W 111 –5—FE B.1 7, 2 0 09 PARTI I — A L T E R N ATI V E M INIM U MTA X RELIE FSEC.10 11. E XT E N S IO NO FAL TE R NATI V E M INIM U M TAX RELIEF FOR NONREFUN D A B LE P ERSONAL CREDITS. (a)INGE NE RAL.—P a r a g ra ph ( 2 ) ofsecti o n 2 6 (a) (re l ating to special r u le for ta x a b le y ears 2 0 00 through 200 8 )isa m en d ed— ( 1 ) by stri k ing ‘ ‘or 2008 ’ ’ and inserting ‘‘2008 , or 200 9 ’’, and (2) by striking ‘‘ 20 0 8 ’’ in the heading thereof and inserting ‘‘200 9 ’’. (b) EF FE CTIV E D ATE.— T he amendments made by this section shall apply to taxable years beginning after December 3 1, 2008. SEC. 101 2 . EXTENSION OF INCREASED ALTERNATIVE MINIMUM TAX EXEMPTION AMOUNT. (a) IN GENERAL.—Paragraph (1) of section 5 5(d) (relating to exemption amount) is amended— (1) by striking ‘‘( $ 69,950 in the case of taxable years begin - ning in 2008)’’ in subparagraph ( A ) and inserting ‘‘($ 7 0,950 in the case of taxable years beginning in 2009)’’, and (2) by striking ‘‘($ 4 6,200 in the case of taxable years begin- ning in 2008)’’ in subparagraph ( B ) and inserting ‘‘($46,700 in the case of taxable years beginning in 2009)’’. (b) EFFECTIVE DATE.—The amendments made by this section shall apply to taxable years beginning after December 31, 2008. Subti t leB—En e rgyI n c enti v e s PART I—RENE W A B LE ENER GY IN C ENTIVE S SEC. 1101. EXTENSION OF CREDIT FOR ELECTRICIT Y PRODUCED FROM CERTAIN RENE W ABLE RESOURCES. (a) IN GENERAL.— S ubsection (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) TEC H NICAL A M EN D MENT.—Paragraph (5) of section 45(d) is amended by striking ‘‘and before’’ and all that follo w s and inserting ‘‘ and before O ctober 3, 2008.’’. (c) EFFECTIVE DATE.— (1) IN G ENERAL.—The amendments made by subsection (a) shall apply to property placed in ser v ice 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 PRODUC - TION CREDIT. (a) IN GENERAL.—Subsection (a) of section 48 is amended by adding at the end the following new paragraph ‘‘(5) ELECTI O N TO TREAT QU ALIFIED FACILITIE S AS ENERG YP ROPERTY.— ‘‘(A) IN GENERAL.—In the case of any q ualified property which is part of a qualified investment credit facility— 26USC45note. 26 USC 55 note. 26 USC 26 note. 26 USC 26.


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 123STA T . 32 0PUBLIC LA W 111 –5—FE B.1 7, 200 9‘ ‘ (i)suchpro p e r ty sh al l b e treate d ase n er g y prop - erty f or purposes of this section , and ‘‘(ii) the energy percentage w ith respect to such property shall be 30 percent . ‘‘( B ) DENIALOFPR O DUCT ION CREDIT. —N o credit shall be allowed under section 45 for any ta x able year with respect to any q ualified in v est m ent credit facility. ‘‘( C ) Q UALIFIED IN V E S T M ENT CREDIT FACILIT Y .— F or 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 ma k es an irrevocable election to have this paragraph apply to such facility ‘‘(i) W IND FACILITIES.— A ny qualified facility (within the meaning of section 45) described in para- graph ( 1 ) of section 45(d) if such facility is placed in service in 2 00 9, 2010, 2011, or 2012. ‘‘(ii) O T H ER FACILITIES.—Any qualified facility (within the meaning of section 45) described in para- graph (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 para- graph, 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 amorti z ation in lieu of depreciation) is allowable.’’. (b) E FFECTIVE DATE.— T he amendments made by this section shall apply to facilities placed in service after December 31, 200 8 . SEC.1 1 03 . R E P E ALOF CER T A IN LI M ITATIONS ON CRE D IT FOR RENE W- A B LE ENER GY PROPERTY. (a) R EPEAL OF L IMITATION ON CREDIT FOR QUALIFIED S MALL WIND ENER G Y P ROPERTY.—Paragraph (4) of section 48(c) is amended by striking subparagraph (B) and by redesignating sub- paragraphs (C) and (D) as subparagraphs (B) and (C). (b) REPEAL OF LIMITATION ON PROPERTY FINANCED B Y SUB- SIDI Z ED 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). 26USC48. 26 USC 48 note .


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 123STA T . 321 PUBLIC LA W 111 –5—FE B.1 7, 2 0 0 9(C)Section48A ( b )( 2 )i sam en d edb y inse r tin g‘ ‘( w it h o u t regard to sub p aragraph ( D ) thereo f ) ’ ’ after ‘‘section 48(a)(4)’’ . (D) Section 48 B (b)(2) is amended by inserting ‘‘(without regard to subparagraph (D) thereof)’’ after ‘‘section 48(a)(4)’’. (c) EF F ECTIV ED A TE. — ( 1 ) ING ENE R A L .—E x cept as pro v ided in paragraph (2) , the amendment made by this section sha l l apply to periods after December 3 1,2 0 08, under rules similar to the rules of section 48(m) of the Internal R evenue Code of 1 9 8 6 (as in effect on the day before the date of the enactment of the Revenue Rec - onciliation Act of 1990). (2) C O NFOR M ING AMEN D MENT S .— T he amendments made by subparagraphs (A) and (B) of subsection (b)(2) shall apply to taxable years beginning after December 31, 2008. SEC.1 1 04 .C O O RDINAT ION W IT H RENEWA BL E ENER GY GRANTS. Section 48 is amended by adding at the end the following new subsection ‘‘(d) COORDINATION W IT H DE P ARTMENT OF TREAS U R YG RANTS.— In the case of any property with respect to which the Secretary ma k es a grant under section 1603 of the American Recovery and Reinvestment Tax Act of 2009— ‘‘(1) DENIAL OF PRODUCTION AND INVESTMENT CREDITS.— N o credit shall be determined under this section or section 4 5 with respect to such property for the taxable year in which such grant is made or any subse q uent taxable year. ‘‘(2) RECAPTURE OF CREDITS FOR PROGRESS E X PENDITURES MADE B EFORE 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 ad j usted 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 prop- erty by reason of such credit. ‘‘(3) TREATMENT OF GRANTS.—Any such grant shall— ‘‘(A) not be includible in the gross income of the tax- payer, 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).’’. Ap p licab ili ty.26USC 2 5 C. 26 USC 48 A.


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 123STA T . 322 PUBLIC LA W 111 –5—FE B.1 7, 2 0 0 9PARTI I — I NC R E A S E D A L L O CATIONS O F NE W CLEAN RENEWA B LE ENER GY BONDS AND QU ALIFIED ENERGY CONSER V ATION BONDS SEC.1 111. IN C R E A SE DL I M I T ATI O NONISS U ANCE O F NE W CLEAN RENEWA B LE ENER GY BONDS. Subsection( c ) o f section 54C is am en d edb y addin g att h e end the fo l lo w ing new p a r agraph

‘(4) AD D IT I ONAL LI M ITATION .—T he national new clean renewable energy bond limitation shall be increased by $1,60 0,000,000. Such increase shall be allocated by the Sec - retary consistent with the rules of paragraphs ( 2 )and( 3 ). ’ ’. SEC. 111 2 . INCREASED LIMITATION ON ISSUANCE OF Q UALIFIED ENERGY CONSER V ATION BONDS. (a) I N GE NE R AL.—Section 54 D (d) is amended by stri k ing ‘‘$ 8 00,000,000’’ and inserting ‘‘$3,200,000,000’’. (b) CLARI F I C ATION W IT HR E SP ECT TO GREEN COMM U NIT YP RO- G RAMS.— (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 B ONDS 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 pro v iding loans, grants, or other repayment mechanisms for capital e x penditures 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. E X TENSION AND MODIFICATION OF CREDIT FOR NONBUSI - NESS ENERGY P ROPERTY. (a) IN GENERAL.—Section 25C is amended by striking sub- sections (a) and (b) and inserting the following new subsections: ‘‘(a) ALLO W ANCE 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 e q ual 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 expendi- tures paid or incurred by the taxpayer during such taxable year. ‘‘(b) L IMITATION.—The aggregate amount of the credits allowed under this section for taxable years beginning in 200 9 and 2010 with respect to any taxpayer shall not exceed $1,500.’’. (b) M ODIFICATIONS OF STANDARDS FOR E NERGY-EFFICIENT B UILDING PROPERTY.— 26USC54 C .


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 123STA T . 323 PUBLIC LA W 111 –5—FE B.1 7, 2 0 0 9(1)ELECTRI C H E A T PUM P S.—Subpar a g rap h ( B ) ofsecti o n25C ( d )( 3 )isa m ended to read as fo l lo w s

‘(B) an electric heat pump which achie v es the highest efficienc y tier established by the Consortium for Energy Efficiency , as in effect on J anuary 1, 2 0 0 9 . ’ ’. (2) CE N TRAL AIR C O N D ITIONERS.—Subparagraph (C) of sec - tion 25C(d)(3) is amended by stri k ing ‘‘200 6 ’’ and inserting ‘‘2009’’. (3) W ATER 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. 8 2 or a thermal efficiency of at least 90 percent.’’. ( 4 ) WOOD STO V ES.—Subparagraph (E) of section 25C(d)(3) is amended by inserting ‘‘, as measured using a lower heating value’’ after ‘‘ 7 5 percent’’. (c) M ODI F ICATIONS OF STANDARDS FOR O IL F URNACES AND H OT WATER BOILERS.— (1) I N G ENERAL.— P aragraph (4) of section 25C(d) is amended to read as follows: ‘‘(4) Q UALIFIED NATURAL GAS, PROPANE, AND OIL FURNACES AND HOT W ATER B OILERS.— ‘‘( A ) QUALIFIED NATURAL GAS FURNACE.— T he term ‘ q ualified natural gas furnace’ means any natural gas fur- nace which achieves an annual fuel utili z ation 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 ‘quali- fied 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 pro- pane hot water boiler which achieves an annual fuel utiliza- tion 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 ENERG Y EFFI- CIENCY IMPROVEMENTS.— (1) QUALIFICATIONS FOR E X TERIOR WINDOWS, DOORS, AND S K YLIGHTS.—Subsection (c) of section 25C is amended by adding at the end the following new paragraph: 26USC 2 5 C.


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 123STA T . 32 4PUBLIC LA W 111 –5—FE B.1 7, 2 0 0 9‘ ‘ (4)QUALIF I C A T I ONS FO REX TERIOR W IN D OWS , DOORS, AND S KY LI GH TS .—Suchterms h al l no t i nclu d ean y com p onent descri b ed in subpara g raph ( B )or( C )o f paragraph ( 2 ) unless such component is e q ual to or belo w a U factor of 0 . 3 0 and S HG C of 0.30. ’ ’. (2) A DDITIONAL Q UALIFICATION FOR INSULATION.—Subpara - graph (A) of section 2 5 C(c)(2) is amended by inserting ‘‘and meets the prescripti v e criteria for such material or system established by the 200 9I nternational E nergy Conservation Code, as such Code (including supplements) is in effect on the date of the enactment of the American R ecovery and Reinvestment T a x Act of 2009’’ after ‘‘such dwelling unit’’. (e) EXTENSION.—Section 25C(g)(2) is amended by stri k ing ‘‘ D ecember 3 1, 2009’’ and inserting ‘‘December 31, 2010’’. (f) EFFECTI V E 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, 200 8 . (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.1 1 2 2. MODIF IC AT IO N OFC R EDIT FOR RESIDENTIA L ENER GY EFFI - CIENT P ROPERTY. (a) RE M OVAL OF CREDIT L IMITATION FOR P RO P ERTY PLACED IN SERVICE.— (1) IN GENERAL.—Paragraph (1) of section 25D(b) is amended to read as follows ‘‘(1) M AXIMUM 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 prop- erty (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) F UEL CELL EXPENDITURE LIMITATIONS IN CASE OF J OINT OCCUPANCY.—In the case of any dwelling unit with respect to which qualified fuel cell property expenditures are made and which is j ointly 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 individ- uals with respect to such dwelling unit during such cal- endar year shall be $1, 6 6 7 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. 26USC 2 5Dnote.R e gula t i on s . Ap pli c a b ilit y . Applicability. 26 USC 25C note. 26 USC 25C.


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 123STA T . 32 5PUBLIC LA W 111 – 5 —FE B.1 7, 2 0 0 9SEC.1 1 23 . T E MPORA R YIN CREASE IN CRE D IT F ORA L TERNATI V EF U EL VE H ICLE REFUELIN G PROPERTY. (a)INGE NE RAL.—Section30C (e) i s a m en d ed by addin g att h e end the f o l lo w ing new p a r agraph

‘( 6 )S P E CI ALR U LE FO R PROPER TY PLACE D IN S ER V ICE DURIN G20 0 9 AND 20 1 0.—In the case of property placed in ser v ice in ta x able years beginning after D ecember 3 1,2 00 8, and before J an u ary 1, 2011— ‘‘( A ) in the case of any such property which does not relate to hydrogen— ‘‘(i) subsection (a) shall be applied by substituting ‘ 5 0 percent ’ for ‘30 percent’, ‘‘(ii) subsection (b)(1) shall be applied by sub - stituting ‘ $ 50,000’ for ‘$30,000’, and ‘‘(iii) subsection (b)(2) shall be applied by sub- stituting ‘$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 sub- stituting ‘$200,000’ for ‘$30,000’.’’. (b) E FFECTIVE DATE.— T he amendment made by this section shall apply to taxable years beginning after December 31, 2008. PARTIV—MOD I F I C ATIO N OF CR E DIT FOR CAR B ON DIO X IDE S E QU ESTRATION SEC. 1131. APPLICATION OF MONITORING RE Q UIREMENTS TO CAR B ON DIO X IDE USED AS A TERTIARY IN J ECTANT. (a) IN GENERAL.—Section 4 5 Q (a)(2) is amended by stri k ing ‘‘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) CONFOR M ING 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 P rotection 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 in j ectant’’ 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 enact- ment of this Act. 26USC45Qnote. 26 USC 30 C note. Ap p licab ilit y . 26 USC 30C.


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 123STA T . 32 6PUBLIC LA W 111 –5—FE B.1 7, 2 0 0 9PARTV— P LUG-INE LE C TRIC D RIVE MO TOR VE H ICLE SSEC.1 1 4 1.C R E DITFO R N E WQUAL IFIED P LU G- IN ELECTRIC DRI V E M OTOR VE H ICLES. (a)INGE NE RAL.—Section30D i s a m en d ed to r ead as f o l lo w s

‘SEC. 30 D. NEW QUALIFIED PLUG-IN ELECTRIC DRIVE MOTOR VEHICLES. ‘ ‘(a) A LL OW AN C EO FC RE DIT .— Th ere shall b e allowed as a credit a g ainst the ta x im p osed b y this chapter for the taxable year an amo u nte q ual to the sum of the credit amounts determined under subsection (b) with respect to each new qualified plug - in electric dri v e motor vehicle placed in service by the taxpayer during the taxable year. ‘‘(b) P ER V E H ICLE DOLLAR L I M ITATION.— ‘‘( 1 )IN G ENERAL.—The amount determined under this sub- section 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) B A S E AMO U NT.—The amount determined under this paragraph is $ 2 ,5 00. ‘‘(3) BATTER Y CA P ACITY.—In the case of a vehicle which draws propulsion energy from a battery with not less than 5 k ilowatt hours of capacity, the amount determined under this paragraph is $ 4 1 7, 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 W ITH O THER CREDITS.— ‘‘(1) BUSINESS CREDIT TREATED AS PART OF GENERAL B USI- NESS 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 sub j ect to an allowance for depreciation shall be treated as a credit listed in section 3 8 (b) for such taxable year (and not allowed under subsection (a)). ‘‘(2) PERSONAL CREDIT.— ‘‘(A) IN GENERAL.— F or purposes of this title, the credit allowed under subsection (a) for any taxable year (deter- mined 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 TA X .—In the case of a taxable year to which section 2 6 (a)(2) does not apply, the credit allowed under subsection (a) for any tax- able 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) N EW Q UALIFIED PLUG-IN E LECTRIC DRI V E M OTOR VEHICLE.—For purposes of this section— ‘‘(1) IN GENERAL.—The term ‘new qualified plug-in electric drive motor vehicle ’ means a motor vehicle— 26USC30D.


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 123STA T . 32 7PUBLIC LA W 111 –5—FE B. 17 , 2 0 0 9‘ ‘ (A)theorig i nalus eo fw hi c hco m mences with the ta xp a y er , ‘‘( B ) which is ac q uire d for use or lease b y the taxpayer and not for resale, ‘‘( C ) which is made by a manufacturer, ‘‘( D ) which is treated as a motor v ehicle for purposes of title I I of the Clean Air Act, ‘‘( E ) which has a gross vehicle weight rating of less than 14, 0 00 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 k ilowatt hours, and ‘‘(ii) is capable of being recharged from an external source of electricity . ‘‘( 2 ) MOT O RVEHICL E.— T he 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 )M ANUF ACTURER.—The term ‘manufacturer’ has the meaning given such term in regulations prescribed by the Administrator of the Environmental P rotection Agency for pur - poses of the administration of title II of the Clean Air Act (42 U . S .C. 75 21 et seq.). ‘‘(4) BATTER Y CA P ACITY.—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) L I M ITATION ON N UM B EROFNE WQ UALIFIE D PLU G -IN ELEC- TRIC DRIVE MOTOR V EHICLE S 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 manufac- turer of the vehicle referred to in paragraph (1) sold for use in the United States after December 31, 200 9, 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.— R ules 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 Regulations.Ap pli c a b ilit y .


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 123STA T . 32 8PUBLIC LA W 111 –5—FE B.1 7, 2 0 0 9sub s ection(a) s h a l lbe r e d uced b y the a m ount o f such credit so allo w ed .‘ ‘( 2 ) NOD O UBLE BE N E FIT . —T he amount of any deduction or other credit allowable under this cha p ter for a new q ualified plu g- in electric dri v e motor vehicle shall be reduced by the amount of credit allowed under subsection (a) for such vehicle. ‘‘( 3 ) PR O P ERT Y U S EDBYT AX -EXE M PT ENTITY.— I n the case of a vehicle the use of which is described in paragraph (3) or( 4 ) of section 50 (b) and which is not sub j ect to a lease , the person who sold such vehicle to the person or entity using such vehicle shall be treated as the ta x payer 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 Q UALI- FIED.—No credit shall be allowable under subsection (a) with respect to any property referred to in section 50(b)( 1 ). ‘‘(5) R E C APTURE.—The S ecretary shall, by regulations, pro- vide 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 ) E LECTION NOT TO TA K E 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 W IT H AIR QUALITY AND MOTOR V EHICLE 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 C lean Air Act for the applicable ma k e 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 20 9 (b) of the Clean Air Act), and ‘‘( B ) the motor vehicle safety provisions of sections 30101 through 30169 of title 49, U nited States Code. ’ ’. (b) CONFORMIN G AMENDMENTS.— (1) Section 30B(d)(3)( D ) is amended by striking ‘‘subsection (d) thereof’’ and inserting ‘‘subsection (c) thereof’’. (2) Section 3 8 (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.1 1 42 .C R E DITFO R CERT A I NPLUG- IN ELECTRIC V E H ICLES. (a) IN G ENERAL.—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. 26USC30Bnote. 26 USC 30B. R e gula t i on s .


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 123STA T . 32 9PUBLIC LA W 111 –5—FE B.1 7, 2 0 09 ‘ ‘ (b)PERV E HICL E DO LL A R L I M I T ATIO N.—Theamount o f the cr e di ta l lo w ed under s ubsection (a) with res p ect to an yv ehicle shall not e x ceed $2,50 0. ‘‘(c) AP PLICATION W ITH O THER C RE D IT S .— ‘‘( 1 ) BU SINESS CREDIT TREATED AS PART O FG ENERAL B USI - NESS CREDIT.— S o much of the credit which would be allowed under subsection (a) for any taxable year (determined without re g ard to this subsection) that is attributable to property of a character sub j ect 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) I N GENERAL.— F or purposes of this title, the credit allowed under subsection (a) for any taxable year (deter- mined 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 TA X .—In the case of a taxable year to which section 2 6 (a)(2) does not apply, the credit allowed under subsection (a) for any tax- able 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 2 7 for the taxable year. ‘‘(d) Q UALIFIED PLUG-IN E LECTRIC VEHICLE.—For purposes of this section— ‘‘(1) IN GENERAL.—The term ‘ q ualified 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 1 4 ,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 k ilowatt 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 V EHICLE.—The term ‘specified vehicle’ means any vehicle which— ‘‘(A) is a low speed vehicle within the meaning of section 571.3 of title 4 9, Code of Federal R egulations (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.


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 123STA T . 33 0PUBLIC LA W 111 –5—FE B.1 7, 200 9‘ ‘ (3)MANUF A CT U RE R .—Thet e rm ‘m anuf a c turer ’ ha s the mean i n g gi v en such term in regu l ati o ns p rescri b e d b y the A dministrator of the E nvironmental P rotection Agency for pur - poses of the administration of title I Iofthe C lean Air Act ( 42U . S .C. 75 2 1 et se q .). ‘‘(4) B ATTER Y CA P AC I TY.—The term ‘capacity’ means ,w ith respect to any battery, the quantity of electricity which the battery is capable of storing, e x pressed in k ilowatt hours, as measured from a 1 0 0 percent state of charge to a 0 percent state of charge. ‘‘(e) SPECIA LR ULE S .— ‘‘(1) BASIS RE D UCTI O N.— F or 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) N O DOU B LE 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 TA X -EXE M PT 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 sub j ect 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 Q UALI- FIED.—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, pro- vide 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 TA K E 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 D ecember 31, 2011.’’. (b) CONFORMIN G 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 9 04(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 V E H ICLE.—The term ‘motor vehicle’ means any vehicle which is manufactured primarily for use on public 26USC 2 4.Regulations .


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 123STA T . 331 PUBLIC LA W 111 –5—FE B.1 7, 2 0 0 9stre ets , r oad s,a n d hig h w a y s ( not in clu ding a v ehicle o p erated e x clusively on a rail or rails ) and which has at least 4 wheels .’ ’. ( 3 ) S ection 3 0C (d)( 2 )( A )isa m ended b y stri k ing ‘ ‘, 30,’’. (4)(A) Section 5 3(d)( 1 )( B ) is amended by striking clause (iii) and redesignating clause (iv) as clause (iii). (B) Subclause ( I I)o f section 53(d)(1)(B)(iii), as so redesig - nated, is amended by striking ‘‘increased in the manner pro- vided 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 ) T he item in the table of sections for subpart B of part I V of subchapter A of chapter 1 is amended to read as follows

‘ Sec.30 . C e rtainplug- in electric v e h icle s . ’ ’. (c) EF F ECTIV E DA TE. — The amendments made by this section shall apply to vehicles ac q uired after the date of the enactment of this Act. (d) T R A NS ITI O NA LRU LE.—In the case of a vehicle acquired after the date of the enactment of this Act and before J anuary 1, 2010, no credit shall be allowed under section 30 of the Internal Revenue Code of 1 9 86, as added by this section, if credit is allowable under section 30D of such Code with respect to such vehicle. (e) A P PLICATION OF E G TRRA SUNSET.—The amendment made by subsection (b)(1)(A) shall be sub j ect to title I X 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.1 1 43 .C ONV E R S I ON K I T S. (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) P LU G -IN CONVERSION CRE D IT.— ‘‘(1) IN GENERAL.— F or 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) Q UALIFIED PLUG-IN ELECTRIC DRIVE M OTOR VE H ICLE.— 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, deter- mined 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 ALLO W ED 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 tax- able year. 26USC 2 4note.Tim e p e r io d . 26 USC 30 note. 26 USC 24 note. 26 USC 30C.


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 123STA T . 332 PUBLIC LA W 111 –5—FE B.1 7, 2 0 0 9‘ ‘ (4)TERMINAT I O N .— T his s ub s ect i on sh al lnota p pl y to con v e r sions m a d ea f ter D ecember 31,20 11. ’ ’. (b) C RE D IT TREATED A SP ART O FAL TERNATI V E M OTOR V E H I C LE CREDIT.— S ection 30 B (a) is amended by stri k in g ‘‘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 follo w ing new paragraph ‘‘( 5 ) the plug - in conversion credit determined under sub- section (i).’’. (c) N O R ECA P T U RE FOR VEHICLES CONVERTED TO Q UALIFIED PLU G -IN E LECTRIC DRIVE MOTOR VEHICLES.—Paragraph ( 8 ) of sec- tion 30B(h) is amended by adding at the end the following: ‘‘, e x cept that no benefit shall be recaptured if such property ceases to be eligible for such credit by reason of conversion to a q ualified 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.1 1 4 4. TR E A T M E N T OF A L TERNAT IV E MOTOR VE H ICLE CRE D IT ASA P ERSONAL CREDIT ALLO W EDA G AINST AMT. (a) I N G ENERAL.—Paragraph (2) of section 30B(g) is amended to read as follows: ‘‘(2) PERSONAL CREDIT.— ‘‘(A) IN GENERAL.— F or purposes of this title, the credit allowed under subsection (a) for any taxable year (deter- mined after application of paragraph (1)) shall be treated as a credit allowable under subpart A for such taxable year. ‘‘(B) L IMITATION B ASED ON AMOUNT OF TA X .—In the case of a taxable year to which section 2 6 (a)(2) does not apply, the credit allowed under subsection (a) for any tax- able 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 2 7 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 9 04(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 ‘‘sec- tion 27’’. (3) Section 55(c)(3) is amended by striking ‘‘30B(g)(2),’’. 26USC30Bnote. 26 USC 30B.


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 123STA T . 333 PUBLIC LA W 111 –5—FE B.1 7, 2 0 0 9(c)EF F ECTIV E DA TE .—Theam e nd men ts made by th i s secti o n sha l la p ply to ta x able yea r sbe g inning a f ter December 31,20 0 8 . (d) AP P L ICATI ON OFE G T R RA SU N S ET.—The amendment made bys u bsection (b)(1)(A) shall be sub j ect to title IX of the Economic Gro w th and Tax Relief Reconciliation Act of 2001 in the same manner as the pro v ision of such Act to which such amendment relates. PARTVI— PARIT YFO R TRA NS PORTATION FRIN GEB ENEFITS SEC.1 1 5 1. IN C R E A SE D E X C LU SI O NA M OUN TF OR COMMUTER TRANSIT B ENEFITS AND TRANSIT P ASSES. (a) IN GENE R AL.— P aragraph (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 J anuary 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 enact - ment of this section. Subti t leC—TaxInc enti v e sforB usiness PART I—TE M PORARY INVESTMENT IN C ENTIVES SEC. 1 20 1. SPECIAL ALLO W ANCE FOR CERTAIN PROPERT Y AC Q UIRED DURIN G 200 9 . (a) E X TENSION OF SPECIAL ALLO W ANCE.— (1) IN G ENERAL.—Paragraph (2) of section 1 6 8( k )is amended— (A) by striking ‘‘January 1, 2010’’ and inserting ‘‘January 1, 2011’’, and (B) by striking ‘‘January 1, 200 9 ’’ each place it appears and inserting ‘‘January 1, 2010’’. (2) C ONFOR M ING AMEN D MENTS.— (A) The heading for subsection (k) of section 168 is amended by striking ‘‘JANUAR Y 1, 2009’’ and inserting ‘‘JANUARY 1, 2010’’. (B) The heading for clause (ii) of section 168(k)(2)(B) is amended by striking ‘‘PRE- J ANUARY 1, 20 0 9 ’’ and inserting ‘‘PRE-JANUARY 1, 2010’’. (C) Subparagraph (B) of section 168(l)( 5 ) is amended by striking ‘‘January 1, 2009’’ and inserting ‘‘January 1, 2010’’. (D) Subparagraph (C) of section 168(n)(2) is amended by striking ‘‘January 1, 2009’’ and inserting ‘‘January 1, 2010’’. (E) Subparagraph (B) of section 1 4 00 N (d)(3) is amended by striking ‘‘January 1, 2009’’ and inserting ‘‘January 1, 2010’’. (3) TEC H NICAL AMENDMENTS.— (A) Subparagraph (D) of section 168(k)(4) is amended— 26USC13 2 note.Ap p licab ilit y . 26 USC 132. 26USC2 4 note. 26 USC 24 note.


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 123STA T . 33 4PUBLIC LA W 111 –5—FE B.1 7, 2 0 0 9(i)bystr i k i ng‘ ‘ a n d’ ’att he end ofcl a u se (i) , (ii) by redesignating clause (ii) as clause (iii), and (iii) by inserting after clause (i) the follo w ing new clause ‘‘(ii) ‘ Ap ril 1, 20 0 8 ’ shall be substituted for ‘ J anuary 1, 2008’ in subparagraph (A)(iii)( I ) thereof, and’’ . ( B ) S ubparagraph (A) of section 6 211(b)( 4 )isa m ended by inserting ‘‘168(k)(4),’’ after ‘‘ 53 (e),’’. (b) EXTENSIO NO F E L E C TION TO ACCELE RA TET H EA M TAN DR ESEARCH C REDITS IN L IE U OF BONUS D E P RECIATION. — (1) IN G ENERAL.—Section 168(k)(4) (relating to election to accelerate the A MT and research credits in lieu of bonus depre - ciation) is amended— (A) by striking ‘‘200 9 ’’ and inserting ‘‘2010’’in subpara- graph (D)(iii) (as redesignated by subsection (a)(3)), and (B) by adding at the end the following new subpara- graph: ‘‘( H ) SPECIAL RULES FOR EXTENSION PROPERT Y .— ‘‘(i) TAXPAYERS PRE V IOUSLY ELECTING ACCELERA- TION.—In the case of a ta x payer who made the election under subparagraph (A) for its first taxable year ending after March 31, 2008— ‘‘(I) the taxpayer may elect not to ha v e this paragraph apply to extension property, but ‘‘(II) if the taxpayer does not make the election under subclause (I), in applying this paragraph to the taxpayer a separate bonus depreciation amount, maximum amount, and maximum increase amount shall be computed and applied to eligible q ualified property which is extension property and to eligible qualified property which is not extension property. ‘‘(ii) TAXPAYERS NOT PREVIOUSLY ELECTING ACCEL- ERATION.—In the case of a taxpayer who did not make the election under subparagraph (A) for its first taxable year ending after March 31, 2008— ‘‘(I) the taxpayer may elect to have this para- graph apply to its first taxable year ending after December 31, 2008, and each subsequent taxable year, and ‘‘(II) if the taxpayer makes the election under subclause (I), this paragraph shall only apply to eligible qualified property which is extension prop- erty. ‘‘(iii) EXTENSION PROPERTY.— F or purposes of this subparagraph, the term ‘extension property’ means property which is eligible qualified property solely by reason of the extension of the application of the special allowance under paragraph (1) pursuant to the amend- ments made by section 1201(a) of the American Recovery and Reinvestment Tax Act of 2009 (and the application of such extension to this paragraph pursu- ant to the amendment made by section 1201(b)(1) of such Act).’’. (2) TECHNICAL AMENDMENT.—Section 6211(b)(4)(A) is amended by inserting ‘‘168(k)(4),’’ after ‘‘53(e),’’. (c) EFFECTIVE DATES.— Ap p licab ili ty.26USC1 6 8no t e . 26 USC 6211.


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 123STA T . 33 5PUBLIC LA W 111 – 5 —FE B.1 7, 2 0 0 9(1)INGE NE RAL.—Exceptas p rovid edi n para g rap h ( 2 ), the a m endments made by this section sha l l apply to property placed in service a f ter D ecember 3 1,2 0 0 8, in taxable years ending after s u ch date. (2) T E CH N I CAL A M EN D MEN TS .—The amendments made by subsections (a)(3) and (b)(2) shall apply to taxable years ending after M arch 31, 2008. SEC.120 2. T E MPORA R YIN CREASE IN L IMITATIONS ON E X PENSIN G O F CERTAIN D EPRECIA B LEB U SINESS ASSETS. (a) IN G ENERAL.— P aragraph ( 7 ) of section 17 9 (b) is amended— (1) by stri k ing ‘ ‘2008 ’ ’ and inserting ‘‘2008, or 2009’’, and (2) by striking ‘‘ 20 0 8 ’’ in the heading thereof and inserting ‘‘2008, AND 200 9 ’’. (b) E F FECTI V E DATE.—The amendments made by this section shall apply to taxable years beginning after December 31, 2008. PARTI I —SM A L L BU SI NE SS PR OV ISIONS SEC. 1211. 5- YEAR CARRYBAC K OF OPERATING LOSSES OF SMALL BUSINESSES. (a) IN GENERAL.— S ubparagraph ( H ) of section 172(b)(1) is amended to read as follo w s ‘‘(H) C ARR YB AC K F O R2008NETO P ERATING LOSSES OF SMALL B U SINESSES.— ‘‘(i) IN GENERAL.—If an eligible small business elects the application of this subparagraph with respect to an applicable 2008 net operating loss— ‘‘(I) subparagraph ( A )(i) shall be applied by substituting any whole number elected by the tax - payer which is more than 2 and less than 6 for ‘2’, ‘‘(II) subparagraph (E)(ii) shall be applied by substituting the whole number which is one less than the whole number substituted under sub- clause (I) for ‘2’, and ‘‘(III) subparagraph ( F ) shall not apply. ‘‘(ii) APPLICABLE 2008 NET OPERATING LOSS.—For purposes of this subparagraph, the term ‘applicable 2008 net operating loss’ means— ‘‘(I) the taxpayer’s net operating loss for any taxable year ending in 2008, or ‘‘(II) if the taxpayer elects to have this sub- clause apply in lieu of subclause (I), the taxpayer’s net operating loss for any taxable year beginning in 2008. ‘‘(iii) ELECTION.—Any election under this subpara- graph shall be made in such manner as may be pre- scribed by the Secretary, and shall be made by the due date (including extension of time) for filing the taxpayer’s return for the taxable year of the net oper- ating loss. Any such election, once made, shall be irrev- ocable. Any election under this subparagraph may be made only with respect to 1 taxable year. ‘‘(iv) ELIGIBLE SMALL BUSINESS.—For purposes of this subparagraph, the term ‘eligible small business’ has the meaning given such term by subparagraph Ap p licab ili ty. Applicability. 26USC179no t e . 26 USC 179.


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 123STA T . 33 6PUBLIC LA W 111 –5—FE B.1 7, 2 0 0 9(F) ( i ii) ,exc e pt t ha ti n app ly in gsu ch su b pa r agraph, secti o n 4 4 8 (c) shall be applie d by substituting ‘$15, 0 00,000 ’f or ‘$5,000,000’ each place it appears . ’’. (b) CONF O RMI N GA M E N D MEN T . —S ection 1 72 isa m ended by stri k ing subsection (k) and by redesignating subsection (l) as sub - section (k). (c) ANTI-A BUS E R U L ES.— T he Secretary of Treasury or the Sec- retary’s designee shall prescribe such rules as are necessary to pre v ent the abuse of the purposes of the amendments made by this section, including anti-stuffing rules, anti-churning rules (including rules relating to sale-leasebacks), and rules similar to the rules under section 10 9 1 of the I nternal Revenue Code of 198 6 relating to losses from w ash sales. (d) E FFE C TI V E DA TE.— (1) IN GENERAL.—Except as otherwise provided in this sub- section, the amendments made by this section shall apply to net operating losses arising in taxable years ending after December 3 1, 2007. (2) TRANSITIONAL RULE.—In the case of a net operating loss for a taxable year ending before the date of the enactment of this Act— (A) any election made under section 172(b)(3) of the Internal Revenue Code of 1986 with respect to such loss may (notwithstanding such section) be revoked before the applicable date, ( B ) any election made under section 172(b)(1)( H )of such Code with respect to such loss shall (notwithstanding such section) be treated as timely made if made before the applicable date, and (C) any application under section 6411(a) of such Code with respect to such loss shall be treated as timely filed if filed before the applicable date. For purposes of this paragraph, the term ‘‘applicable date’’ means the date which is 60 days after the date of the enactment of this Act. SEC.12 12. D EC R E A SED RE QUI RED ES T I M ATED TA XP A Y ME N TSIN2 0 0 9FO R CERTAIN SMA L L B USINESSES. P aragraph (1) of section 6654(d) is amended by adding at the end the following new subparagraph ‘‘(D) S P ECIAL RULE FOR 20 0 9 .— ‘‘(i) IN GENERAL.— N otwithstanding subparagraph (C), in the case of any taxable year beginning in 2009, clause (ii) of subparagraph (B) shall be applied to any q ualified individual by substituting ‘90 percent’ for ‘100 percent’. ‘‘(ii) Q UALIFIED INDIVIDUAL.—For purposes of this subparagraph, the term ‘qualified individual’ means any individual if— ‘‘(I) the ad j usted gross income shown on the return of such individual for the preceding taxable year is less than $500,000, and ‘‘(II) such individual certifies that more than 50 percent of the gross income shown on the return of such individual for the preceding taxable year was income from a small business. Certif i ca ti on.Ap p l ica b ilit y . D efinition. Applicability. 26US C 17 2 note. 26 USC 172 note. 26 USC 172.


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 123STA T . 33 7PUBLIC LA W 111 –5—FE B. 17 , 2 0 0 9Acertif ic a ti onu n d er s u b c l ause (I I ) s h all be in such for m and manner and filed at such time as the S ec - retar y may by re g ulations p rescribe .‘ ‘(iii) I NCOMEFR OM AS MA L L BU S I NESS. —F or pur- poses of clause (ii) , income from a small business means, w ith respect to any indi v idual, income from a trade or business the average number of employees of which was less than 50 0 employees for the calendar year ending with or within the preceding ta x able year of the individual. ‘‘(iv) SE P ARA T E RETURNS.—In the case of a married individual (within the meaning of section 7 70 3 ) who files a separate return for the taxable year for which the amount of the installment is being determined, clause (ii)(I) shall be applied by substituting ‘ $2 50,000 ’ for ‘$500,000’. ‘‘(v) E STATES AN D TRUSTS.—In the case of an estate or trust, ad j usted gross income shall be determined as provided in section 6 7(e).’’. PARTI II — I NCE NTI V E SFO RNE WJ O B S SEC.12 21. IN CEN T I V EST OH I R E U NE MPL O Y E D VETER A NS AND DIS - CONNECTED YOUTH. (a) IN G ENERAL.—Subsection (d) of section 5 1 is amended by adding at the end the following new paragraph ‘‘(1 4 ) C REDIT ALLO W ED FOR UNEMPLO Y ED V ETERANS AND DISCONNECTED YOUT H HIRED IN 20 0 9 OR 20 1 0.— ‘‘(A) IN G ENERAL.—Any unemployed veteran or discon- nected youth who begins wor k for the employer during 200 9 or 2010 shall be treated as a member of a targeted group for purposes of this subpart. ‘‘( B ) D EFINITIONS.—For purposes of this paragraph— ‘‘(i) U NEMPLOYED VETERAN.— T he term ‘unemployed veteran’ means any veteran (as defined in paragraph (3)(B), determined without regard to clause (ii) thereof) who is certified by the designated local agency as— ‘‘(I) having been discharged or released from active duty in the Armed Forces at any time during the 5-year period ending on the hiring date, and ‘‘(II) being in receipt of unemployment com- pensation under State or Federal law for not less than 4 weeks during the 1-year period ending on the hiring date. ‘‘(ii) DISCONNECTED YOUTH.—The term ‘discon- nected youth’ means any individual who is certified by the designated local agency— ‘‘(I) as having attained age 16 but not age 25 on the hiring date, ‘‘(II) as not regularly attending any secondary, technical, or post-secondary school during the 6- month period preceding the hiring date, ‘‘(III) as not regularly employed during such 6-month period, and ‘‘(I V ) as not readily employable by reason of lacking a sufficient number of basic skills.’’. 26USC51.


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 123STA T . 33 8PUBLIC LA W 111 –5—FE B.1 7, 2 0 0 9(b)EF F ECTIV E DA TE .—Theam e nd men ts made b y th i sse c ti o n sha l la p ply to indi v id u als w ho be g in wo rkf or the employer after December 31,20 0 8 . PARTIV— R ULES RELATI NG T OD E B T INSTRU M ENTS SEC.123 1. D E F E R R AL A N DRA T A B LE I NCL U SI O N OF INCO M E ARISIN G FROM BUSINESS INDEBTEDNESS DISC H ARGED B Y THE REAC Q UISITION OF A DEBT INSTRUMENT. (a) ING ENE R A L .— S ection 108 (relating to income from dis - charge of indebtedness) is amended by adding at the end the fol- lowing new subsection

‘(i) DEFERRAL AN DR ATA B LE INCL US I O N OF INCO M E A RISIN GF ROM B USINESS INDEBTEDNESS DISC H ARGED B Y THE REAC Q UISITION OF A DEBT INSTRUMENT.— ‘‘(1) IN GENERAL.—At the election of the ta x payer, income from the discharge of indebtedness in connection with the reac q uisition after December 31, 2008, and before J anuary 1, 2011, of an applicable debt instrument shall be includible in gross income ratably over the 5 -taxable-year period beginning with— ‘‘(A) in the case of a reacquisition occurring in 200 9, the fifth taxable year following the taxable year in which the reacquisition occurs, and ‘‘(B) in the case of a reacquisition occurring in 2010, the fourth taxable year following the taxable year in which the reacquisition occurs. ‘‘(2) DEFERRAL OF DEDUCTION FOR ORIGINAL ISSUE DISCOUNT IN DEBT FOR DEBT E X CHANGES.— ‘‘(A) IN GENERAL.—If, as part of a reacquisition to which paragraph (1) applies, any debt instrument is issued for the applicable debt instrument being reacquired (or is treated as so issued under subsection (e)( 4 ) and the regulations thereunder) and there is any original issue discount determined under subpart A of part V of sub- chapter P of this chapter with respect to the debt instrument so issued— ‘‘(i) except as provided in clause (ii), no deduction otherwise allowable under this chapter shall be allowed to the issuer of such debt instrument with respect to the portion of such original issue discount which— ‘‘(I) accrues before the 1st taxable year in the 5-taxable-year period in which income from the discharge of indebtedness attributable to the reacquisition of the debt instrument is includible under paragraph (1), and ‘‘(II) does not exceed the income from the dis- charge of indebtedness with respect to the debt instrument being reacquired, and ‘‘(ii) the aggregate amount of deductions disallowed under clause (i) shall be allowed as a deduction ratably over the 5-taxable-year period described in clause (i)(I). If the amount of the original issue discount accruing before such 1st taxable year exceeds the income from the dis- charge of indebtedness with respect to the applicable debt Timep e r i ods.26USC108 .


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 123STA T . 33 9PUBLIC LA W 111 –5—FE B.1 7, 2 0 09 instrume nt b ein g re acq uire d, t h e deducti o ns sha l lbedis - allo w ed in the order in which the original issue discount is accrued .‘ ‘ (B)DE E M E D DE BTFOR DEBT E XCHANG E S . —F or p ur- poses o f subparagraph ( A ),ifan y debt instrument is issued by an issuer and the proceeds of such debt instrument are used directly or indirectly by the issuer to reacquire an applicable debt instrument of the issuer, the debt instrument so issued shall be treated as issued for the debt instrument being reacquired. I f only a portion of the proceeds from a debt instrument are so used, the rules of subparagraph (A) shall apply to the portion of any original issue discount on the newly issued debt instrument which is equal to the portion of the proceeds from such instrument used to reacquire the outstanding instrument. ‘‘( 3 )A P P LI CABLE DEBT INSTR U MENT.—For purposes of this subsection— ‘‘(A) APPLICABLE DEBT INSTRUMENT.— T he term ‘applicable debt instrument ’ means any debt instrument which was issued by— ‘‘(i) a C corporation, or ‘‘(ii) any other person in connection with the con- duct of a trade or business by such person. ‘‘(B) DEBT INSTRUMENT.—The term ‘debt instrument’ means a bond, debenture, note, certificate, or any other instrument or contractual arrangement constituting indebt- edness (within the meaning of section 1275 (a)(1)). ‘‘( 4 ) R EAC Q UISITION.—For purposes of this subsection— ‘‘(A) IN GENERAL.—The term ‘reacquisition’ means, with respect to any applicable debt instrument, any acquisition of the debt instrument by— ‘‘(i) the debtor which issued (or is otherwise the obligor under) the debt instrument, or ‘‘(ii) a related person to such debtor. ‘‘(B) ACQUISITION.—The term ‘acquisition’ shall, with respect to any applicable debt instrument, include an acquisition of the debt instrument for cash, the e x change of the debt instrument for another debt instrument (including an exchange resulting from a modification of the debt instrument), the exchange of the debt instrument for corporate stoc k or a partnership interest, and the con- tribution of the debt instrument to capital. S uch term shall also include the complete forgi v eness of the indebted- ness by the holder of the debt instrument. ‘‘(5) O THER DEFINITIONS AND RULES.—For purposes of this subsection— ‘‘(A) RELATED PERSON.—The determination of whether a person is related to another person shall be made in the same manner as under subsection (e)(4). ‘‘(B) E LECTION.— ‘‘(i) IN GENERAL.—An election under this subsection with respect to any applicable debt instrument shall be made by including with the return of tax imposed by chapter 1 for the taxable year in which the reacquisition of the debt instrument occurs a statement which— ‘‘(I) clearly identifies such instrument, and Regulations.Ap pli c a b ilit y .


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 123STA T . 3 40PUBLIC LA W 111 –5—FE B.1 7, 200 9‘ ‘ (I I )includesth e amo unt o f income to w hich p a r a g raph ( 1 ) applies and such other information as the S ecretar y may prescri b e . ‘‘(ii) ELECTION I R RE V OC AB LE. — Such election , once made, is irre v ocable. ‘‘(iii) P A S S - T H R U ENTITIES.—In the case of a part- nership, S corporation, or other pass-thru entity, the election under this subsection shall be made by the partnership, the S corporation, or other entity involved. ‘‘( C ) COOR D INATION W ITH OTHER E X CLUSIONS.—If a ta x - payer elects to have this subsection apply to an applicable debt instrument, subparagraphs ( A ),( B ), (C), and ( D )of subsection (a)(1) shall not apply to the income from the discharge of such indebtedness for the taxable year of the election or any subse q uent taxable year. ‘‘(D) ACCELERATION O F DEFERRED ITE M S.— ‘‘(i) IN G ENERAL.—In the case of the death of the taxpayer, the liquidation or sale of substantially all the assets of the taxpayer (including in a title 11 or similar case), the cessation of business by the tax- payer, or similar circumstances, any item of income or deduction which is deferred under this subsection (and has not previously been ta k en into account) shall be taken into account in the taxable year in which such event occurs (or in the case of a title 11 or similar case, the day before the petition is filed). ‘‘(ii) S P ECIAL RULE FOR PASS-THRU ENTITIES.— T he rule of clause (i) shall also apply in the case of the sale or exchange or redemption of an interest in a partnership, S corporation, or other pass- thru entity by a partner, shareholder, or other person holding an ownership interest in such entity. ‘‘( 6 ) SPECIAL RULE FOR PARTNERSHIPS.—In the case of a partnership, any income deferred under this subsection shall be allocated to the partners in the partnership immediately before the discharge in the manner such amounts would have been included in the distributive shares of such partners under section 704 if such income were recogni z ed at such time. Any decrease in a partner ’ s share of partnership liabilities as a result of such discharge shall not be taken into account for purposes of section 7 52 at the time of the discharge to the extent it would cause the partner to recognize gain under section 7 3 1. Any decrease in partnership liabilities deferred under the preceding sentence shall be taken into account by such partner at the same time, and to the extent remaining in the same amount, as income deferred under this subsection is recognized. ‘‘(7) SECRETARIAL AUTHORIT Y .—The Secretary may pre- scribe such regulations, rules, or other guidance as may be necessary or appropriate for purposes of applying this sub- section, including— ‘‘(A) extending the application of the rules of paragraph (5)(D) to other circumstances where appropriate, ‘‘(B) requiring reporting of the election (and such other information as the Secretary may require) on returns of tax for subsequent taxable years, and Ap p licab ili ty.


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 123STA T . 3 4 1 PUBLIC LA W 111 –5—FE B.1 7, 2 0 0 9‘ ‘ (C)rulesfo r th e ap pl ic atio n of this su b section to part - nerships ,S corporations, an d other pass-thru entities, includin g for the allocation of deferred deductions .’ ’. (b) EF F ECTIV E DA TE. —T hea m endments made b y this section shall apply to discharges in ta x able years ending after December 31, 20 0 8 . SEC.123 2. MODIF IC AT IO N SOF RUL ES FOR ORI G INAL ISSUE DISCOUNT ON CERTAIN H IGH Y IELD O B LIGATIONS. (a) S USP E N SI O N OF SPECIA LR ULES.—Section 1 6 3(e)( 5 ) (relating to special rules for original issue discount on certain high yield obligations) is amended by redesignating subparagraph ( F )as subparagraph ( G ) and by inserting after subparagraph (E) the follo w ing new subparagraph ‘‘(F) SUSPENSION OF APPLICATION OF PA R A G RAP H .— ‘‘(i) TE M PORAR Y SUSPENSION.—This paragraph shall not apply to any applicable high yield discount obligation issued during the period beginning on Sep- tember 1, 2008, and ending on December 31, 200 9, in exchange (including an exchange resulting from a modification of the debt instrument) for an obligation which is not an applicable high yield discount obliga- tion and the issuer (or obligor) of which is the same as the issuer (or obligor) of such applicable high yield discount obligation. The preceding sentence shall not apply to any obligation the interest on which is interest described in section 8 7 1(h)( 4 ) (without regard to subparagraph (D) thereof) or to any obligation issued to a related person (within the meaning of section 108(e)(4)). ‘‘(ii) SUCCESSIVE APPLICATION.— A ny obligation to which clause (i) applies shall not be treated as an applicable high yield discount obligation for purposes of applying this subparagraph to any other obligation issued in exchange for such obligation. ‘‘(iii) SECRETARIAL AUTHORITY TO SUSPEN D APPLICA- TION.—The Secretary may apply this paragraph with respect to debt instruments issued in periods following the period described in clause (i) if the Secretary deter- mines that such application is appropriate in light of distressed conditions in the debt capital mar k ets.’’. (b) I NTEREST RATE U SED IN DETERMINING H IGH Y IELD OB LIGA- TIONS.—The last sentence of section 163(i)(1) is amended— (1) by inserting ‘‘(i)’’ after ‘‘regulation’’, and (2) by inserting ‘‘, or (ii) permit, on a temporary basis, a rate to be used with respect to any debt instrument which is higher than the applicable Federal rate if the Secretary determines that such rate is appropriate in light of distressed conditions in the debt capital markets’’ before the period at the end. (c) EFFECTIVE DATE.— (1) SUSPENSION.—The amendments made by subsection (a) shall apply to obligations issued after August 31, 2008, in taxable years ending after such date. (2) INTEREST RATE AUTHORITY.—The amendments made by subsection (b) shall apply to obligations issued after December 31, 2009, in taxable years ending after such date. 26USC1 6 3note.Tim e p e r io d . 26 USC 163. 26USC1 08 note.


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 123STA T . 3 4 2 PUBLIC LA W 111 –5—FE B.1 7, 2 0 0 9PARTV—QU A LIF I EDSM ALL B USI N ESS ST OCKSEC.124 1.S P EC IALRU LES APPLICA B LE TOQ UALI F IE D S M ALL BUSI -N ESS STOC K FOR 2 0 0 9 AND 2010. (a)INGE NE RAL.—Section120 2(a) i s a m en d ed by addin g at t h e end the f o l lo w ing new p a r agraph

‘( 3 )S P E CI ALR U LE SFO R 20 0 9 AN D 20 1 0.—In the case of qu alified small business stoc k acquired after the date of the enactment of this paragraph and before J anuary 1 , 2011— ‘‘( A ) paragraph (1) shall be applied by substituting ‘ 75 percent ’ for ‘50 percent’, and ‘‘( B ) paragraph (2) shall not apply.’’. (b) E FFEC T I V E D ATE.— T he amendment made by this section shall apply to stock acquired after the date of the enactment of this Act. PART VI—S CORPORATIONS SEC. 12 5 1. TEMPORAR Y REDUCTION IN RECO G NITION PERIOD FOR BUILT-IN GAINS TA X. (a) IN GENERAL.— P aragraph (7) of section 137 4 (d) (relating to definitions and special rules) is amended to read as follows: ‘‘(7) R ECO G NITION PERIOD.— ‘‘(A) IN GENERAL.—The term ‘recognition period’ means the 10 - year period beginning with the 1st day of the 1st ta x able year for which the corporation was an S corpora- tion. ‘‘(B) SPECIAL RULE FOR 2009 AND 2010.—In the case of any taxable year beginning in 200 9 or 2010, no tax shall be imposed on the net recogni z ed built-in gain of an S corporation if the 7th taxable year in the recognition period preceded such taxable year. The preceding sentence shall be applied separately with respect to any asset to which paragraph ( 8 ) applies. ‘‘( C ) SPECIAL RULE FOR DISTRI B UTIONS TO S H ARE- HOLDERS.— F or purposes of applying this section to any amount includible in income by reason of distributions to shareholders pursuant to section 593(e)— ‘‘(i) subparagraph (A) shall be applied without regard to the phrase ‘10-year’, and ‘‘(ii) subparagraph (B) shall not apply.’’. (b) EFFECTIVE DATE.—The amendment made by this section shall apply to taxable years beginning after December 31, 2008. PART VII—RULES RELATIN G TOO W NERS H IP CHANGES SEC. 12 6 1. CLARIFICATION OF REGULATIONS RELATED TO LIMITA- TIONS ON CERTAIN BUILT-IN LOSSES FOLLO W ING AN OWNERS H IP CHANGE. (a) FINDINGS.—Congress finds as follows: (1) The delegation of authority to the Secretary of the Treasury under section 382(m) of the Internal Re v enue Code of 198 6 does not authorize the Secretary to provide exemptions or special rules that are restricted to particular industries or classes of taxpayers. 26USC38 2 note. 26 USC 1 3 74 note. Ap p licab ilit y . Applicability. 26 USC 1374. 26 USC 12 0 2 note.


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 123STA T . 3 4 3 PUBLIC LA W 111 –5—FE B.1 7, 2 0 0 9(2)Inter n alR e v en u e S erv ic e No tice 2 0 0 8– 8 3 i s inconsistent w it h the con g ressional intent in enacting such section 382( m ) . (3) T he legal authorit y to p rescri b e Internal Revenue Service Notice 2008–83 is d oubt f ul. ( 4 ) H owever , as ta x payers should generally be able to rely on guidance issued by the Secretary of the Treasury legislation is necessary to clarify the force and effect of Internal Revenue Service Notice 2008–83 and restore the proper application under the Internal Revenue C ode of 19 8 6 of the limitation on built - in losses following an ownership change of a ban k . (b) DET E RMINA TI O NO FF OR C EAN DE FFECT OF INTERNA L RE V - EN U E SERVICE NOTICE 2008–83 E X EM P TIN GB AN KS FROM L IMITA- TION ON CERTAIN BUILT–IN LOSSES FOLLO W ING O WNERS H IP CHANGE. — (1) IN GENERAL.—Internal Revenue Service Notice 2008– 83— ( A ) shall be deemed to have the force and effect of law with respect to any ownership change (as defined in section 382(g) of the Internal Revenue Code of 1986) occur- ring on or before J anuary 16, 2009, and (B) shall have no force or effect with respect to any ownership change after such date. (2) BINDING CONTRACTS.—Notwithstanding paragraph (1), Internal Revenue Service Notice 2008–83 shall have the force and effect of law with respect to any ownership change (as so defined) which occurs after January 16, 2009, if such change— (A) is pursuant to a written binding contract entered into on or before such date, or (B) is pursuant to a written agreement entered into on or before such date and such agreement was described on or before such date in a public announcement or in a filing with the Securities and Exchange Commission re q uired by reason of such ownership change. SEC.126 2. TR E A T M E N T OF CERTA I NO W NERS H I P CHAN G ESFORP U R - POSES OF L IMITATIONS ON NET OPERATING LOSS CARR Y FORWAR D S AND CERTAIN B UILT-IN LOSSES. (a) IN G ENERAL.—Section 382 is amended by adding at the end the following new subsection

‘(n) SPECIAL RULE FOR CERTAIN OWNERSHIP CHANGES.— ‘‘(1) IN GENERAL.—The limitation contained in subsection (a) shall not apply in the case of an ownership change which is pursuant to a restructuring plan of a taxpayer which— ‘‘(A) is required under a loan agreement or a commit- ment for a line of credit entered into with the Department of the Treasury under the Emergency Economic Stabili z a- tion Act of 2008, and ‘‘(B) is intended to result in a rationalization of the costs, capitalization, and capacity with respect to the manu- facturing workforce of, and suppliers to, the taxpayer and its subsidiaries. ‘‘(2) SU B SE Q UENT ACQUISITIONS.— P aragraph (1) shall not apply in the case of any subsequent ownership change unless such ownership change is described in such paragraph. ‘‘(3) LIMITATION BASED ON CONTROL IN CORPORATION.— 26USC38 2.


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 123STA T . 3 4 4 PUBLIC LA W 111 –5—FE B.1 7, 2 0 0 9‘ ‘ (A)INGE NE RAL.—Par a g ra ph ( 1 ) s ha l l not appl yi n th ec ase o f any o w nership change if , i m me d iately after s u ch ownership change, any person (other than a v oluntary employees ’b eneficiary association under section 50 1(c)( 9 )) owns stoc k of the new loss corporation possessing 50 per - cent or more of the total combined voting power of all classes of stock entitled to vote, or of the total value of the stock of such corporation. ‘‘( B ) T REA TM ENT OF RELATE DP ER S ONS.— ‘‘(i) IN GENERAL.— R elated persons shall be treated as a single person for purposes of this paragraph. ‘‘(ii) RELATED PERSONS.— F or purposes of clause (i), a person shall be treated as related to another person if— ‘‘(I) such person bears a relationship to such other person described in section 267 (b) or 707(b), or ‘‘(II) such persons are members of a group of persons acting in concert.’’. (b) E FFE C T IV E D ATE.—The amendment made by this section shall apply to ownership changes after the date of the enactment of this Act. Subti t leD—Man u f a c tu r in gR ec ov er yP rovi s ions SEC.130 1. T E MPORA R Y E X PA N S I ONO F A V AI L A B ILITY OF IN DU STRIAL DEVELOPMENT BONDS TO FACILITIES MANUFACTURIN G INTANGIBLE PROPERTY. (a) IN G ENERAL.— S ubparagraph ( C ) of section 1 4 4(a)(12) is amended— (1) by striking ‘‘For purposes of this paragraph, the term’’ and inserting ‘‘For purposes of this paragraph— ‘‘(i) IN GENERAL.—The term’’, and (2) by striking the last sentence and inserting the following new clauses ‘‘(ii) CERTAIN FACILITIES INCL U DED.—Such term includes facilities which are directly related and ancillary to a manufacturing facility (determined with- out regard to this clause) if— ‘‘(I) such facilities are located on the same site as the manufacturing facility, and ‘‘(II) not more than 25 percent of the net pro- ceeds of the issue are used to provide such facili- ties. ‘‘(iii) SPECIAL RULES FOR B ONDS ISSUED IN 20 0 9 AND 20 1 0.—In the case of any issue made after the date of enactment of this clause and before J anuary 1, 2011, clause (ii) shall not apply and the net proceeds from a bond shall be considered to be used to provide a manufacturing facility if such proceeds are used to provide— ‘‘(I) a facility which is used in the creation or production of intangible property which is described in section 197(d)(1)(C)(iii), or 26USC14 4 . 26 USC 38 2 note .


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 123STA T . 3 45PUBLIC LA W 111 – 5 —FE B.1 7, 2 0 0 9‘ ‘ (I I )af a cil i tywh ich i s f un cti o nally re late d and su b ordinate to a m anufacturin g facility (deter - mined without regard to this subclause) if such facility is located on the same site as the manufac- turing facility .’ ’. (b) EF F ECTIV E DA TE. —T he amendments made by this section shall a p ply to obligations issued after the date of the enactment of this A ct. SEC.1302 .C R E DITFO RI NV EST M ENT IN A DVANCED ENER GY FACI L I - TIES. (a) I NG ENE R A L .— S ection 46 (relating to amount of credit) is amended by stri k ing ‘‘and’’ at the end of paragraph ( 3 ) , by striking the period at the end of paragraph (4), and by adding at the end the following new paragraph ‘‘( 5 ) the q ualifying ad v anced energy pro j ect credit.’’. (b) A MOU NT OF C RE D IT.—Subpart E of part I V of subchapter A of chapter 1 (relating to rules for computing investment credit) is amended by inserting after section 4 8B the following new section: ‘ ‘SEC. 48 C. QU ALIFYING ADVANCED ENERGY P RO J ECT CREDIT. ‘‘(a) IN GENERAL.— F or purposes of section 46, the qualifying advanced energy project credit for any ta x able year is an amount equal to 3 0 percent of the qualified investment for such taxable year with respect to any qualifying advanced energy project of the taxpayer. ‘‘(b) Q UALIFIED INVE S TMENT.— ‘‘(1) IN G ENERAL.—For purposes of subsection (a), the quali- fied investment for any taxable year is the basis of eligible property placed in service by the taxpayer during such taxable year which is part of a qualifying advanced energy project. ‘‘( 2 ) CERTAIN Q UALIFIED P ROGRESS E X PENDITURES RULES MADE APPLICA B LE.— R ules similar to the rules of subsections (c)(4) and (d) of section 46 (as in effect on the day before the enactment of the Revenue Reconciliation Act of 1 9 90) shall apply for purposes of this section. ‘‘(3) L IMITATION.—The amount which is treated for all tax- able years with respect to any qualifying advanced energy project shall not exceed the amount designated by the Secretary as eligible for the credit under this section. ‘‘(c) DEFINITIONS.— ‘‘(1) QUALIF Y ING ADVANCED ENERGY PRO J ECT.— ‘‘(A) IN GENERAL.—The term ‘qualifying advanced energy project’ means a project— ‘‘(i) which re-equips, expands, or establishes a manufacturing facility for the production of— ‘‘(I) property designed to be used to produce energy from the sun, wind, geothermal deposits (within the meaning of section 613(e)(2)), or other renewable resources, ‘‘(II) fuel cells, microturbines, or an energy storage system for use with electric or hybrid- electric motor vehicles, ‘‘(III) electric grids to support the transmission of intermittent sources of renewable energy, including storage of such energy, ‘‘(IV) property designed to capture and sequester carbon dioxide emissions, 26USC4 6 . 26 USC 1 44 note .