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ENERGY TAX ACT OF 1978

ENERGY TAX ACT OF 1978

AN ACT To provide tax incentives for the production and conservation of energy, and for other purposes.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That (a) item 912.05 of the Appendix to the Tariff Schedules of the United States (19 U.S.C. 1202) is amended

(1) by inserting ", and parts thereof" immediately after "Generator lighting sets for bicycles"; and

(2) by striking out "12/31/76" and inserting in lieu thereof "6/30/80".

SECTION 1. SHORT TITLE; ETC.

(a) SHORT TITLE.-This Act may be cited as the "Energy Tax Act of 1978".

(b) AMENDMENT OF 1954 CODE.-Except as otherwise expressly provided, whenever in this Act an amendment or repeal is expressed in terms of an amendment to, or repeal of, a section or other provision, the reference shall be considered to be made to a section or other provision of the Internal Revenue Code of 1954. (c) TABLE OF CONTENTS.—

Sec. 1. Short title; etc.

TITLE I-RESIDENTIAL ENERGY CREDIT

Sec. 101. Residential energy credit.

TITLE II-TRANSPORTATION

PART I-GAS GUZZLER TAX

Sec. 201. Gas guzzler tax.

PART II-MOTOR FUELS

Sec. 221. Exemption from motor fuels excise taxes for certain alcohol fuels. Sec. 222. Denial of credit or refund for nonbusiness nonhighway use of gasoline, special motor fuels, and lubricating oil.

PART III-PROVISIONS RELATED TO BUSES

Sec. 231. Removal of excise tax on buses.

Sec. 232. Removal of excise tax on bus parts.

Sec. 233. Removal of excise tax on fuel, oil, and tires used in connection with intercity, local, and school buses.

PART IV-INCENTIVES FOR VAN POOLING

Sec. 241. Full investment credit for certain commuter vehicles.

Sec. 242. Exclusion from gross income of value of qualified transportation provided by employer.

TITLE III-CHANGES IN BUSINESS INVESTMENT CREDIT TO ENCOURAGE CONSERVATION OF, OR CONVERSION FROM, OIL AND GAS OR TO ENCOURAGE NEW ENERGY TECHNOLOGY

Sec. 301. Changes in business investment credit.

TITLE IV-MISCELLANEOUS PROVISIONS

Sec. 401. Treatment of intangible drilling costs for purposes of the minimum tax. Sec. 402. Option to deduct intangible drilling costs in the case of geothermal depos

its.

Sec. 403. Depletion for geothermal deposits and natural gas from geopressurized

brine.

Sec. 404. Rerefined lubricating oil.

TITLE I-RESIDENTIAL ENERGY CREDIT

SEC. 101. RESIDENTIAL ENERGY CREDIT.

(a) GENERAL RULE.-Subpart A of part IV of subchapter A of chapter 1 (relating to credits allowable) is amended by inserting after section 44B the following new section:

"SEC. 44C. RESIDENTIAL ENERGY CREDIT.

"(a) GENERAL RULE.-In the case of an individual, there shall be allowed as a credit against the tax imposed by this chapter for the taxable year an amount equal to the sum of—

"(1) the qualified energy conservation expenditures, plus "(2) the qualified renewable energy source expenditures. "(b) QUALIFIED EXPENDITURES.-For purposes of subsection (a)— "(1) ENERGY CONSERVATION.-In the case of any dwelling unit, the qualified energy conservation expenditures are 15 percent of so much of the energy conservation expenditures made by the taxpayer during the taxable year with respect to such unit as does not exceed $2,000.

"(2) RENEWABLE ENERGY SOURCE.-In the case of any dwelling unit, the qualified renewable energy source expenditures are the following percentages of the renewable energy source expenditures made by the taxpayer during the taxable year with respect to such unit:

"(A) 30 percent of so much of such expenditures as does not exceed $2,000, plus

"(B) 20 percent of so much of such expenditures as exceeds $2,000 but does not exceed $10,000.

"(3) PRIOR EXPENDITURES BY TAXPAYER ON SAME RESIDENCE TAKEN INTO ACCOUNT.-If for any prior year a credit was allowed to the taxpayer under this section with respect to any dwelling unit by reason of energy conservation expenditures or renewable energy source expenditures (1) or (2) (whichever is appropriate) shall be applied for the taxable year with respect to such dwelling unit by reducing each dollar amount contained in such paragraph by the prior year expenditures taken into account under such paragraph.

"(4) MINIMUM DOLLAR AMOUNT.-No credit shall be allowed under this section with respect to any return for any taxable year if the amount which would (but for this paragraph) be allowed with respect to such return is less than $10.

“(5) APPLICATION WITH OTHER CREDITS.-The credit allowed by subsection (a) shall not exceed the tax imposed by this chapter for the taxable year, reduced by the sum of the credits allowable under a section of this subpart having a lower number or letter designation than this section, other than credits allowable by sections 31, 39, and 43.

"(6) CARRYOVER OF UNUSED CREDIT.

"(A) IN GENERAL.-If the credit allowable under subsection (a) for any taxable year exceeds the limitation imposed by paragraph (5) for such taxable year, such excess shall be carried to the succeeding taxable year and added to the credit allowable under subsection (a) for such succeeding taxable year.

"(B) NO CARRYOVER TO TAXABLE YEARS BEGINNING AFTER DECEMBER 31, 1987.-No amount may be carried under subparagrah (A) to any taxable year beginning after December 31, 1987.

"(c) DEFINITIONS AND SPECIAL RULES.-For purposes of this section

"(1) ENERGY CONSERVATION EXPENDITURES.-The term 'energy conservation expenditure' means an expenditure made on or after April 20, 1977, by the taxpayer for insulation or any other energy-conserving component (or for the original installation of such insulation or other component) installed in or on a dwelling unit

“(A) which is located in the United States,

"(B) which is used by the taxpayer as his principal residence, and

"(C) the construction of which was substantially completed before April 20, 1977.

"(2) RENEWABLE ENERGY SOURCE EXPENDITURE.—

"(A) IN GENERAL.-The term 'renewable energy source expenditure' means an expenditure made on or after April 20, 1977, by the taxpayer for renewable energy source property installed in connection with a dwelling unit

"(i) which is located in the United States, and

"(ii) which is used by the taxpayer as his principal residence.

"(B) CERTAIN LABOR COSTS INCLUDED.-The term 'renewable energy source expenditure' includes expenditures for labor costs properly allocable to the onsite preparation assembly, or original installation of renewable energy source property.

MING

"(C) SWIMMING POOL, ETC., USED AS STORAGE MEDIUM.The term 'renewable energy source expenditure' does not include any expenditure properly allocable to a swimming pool used as an energy storage medium or to any other energy storage medium which has a primary function other than the function of such storage. "(3) INSULATION.-The term 'insulation' means any item—

"(A) which is specifically and primarily designed to reduce when installed in or on a dwelling (or water heater) the heat loss or gain of such dwelling (or water heater),

"(B) the original use of which begins with the taxpayer, "(C) which can reasonably be expected to remain in operation for at least 3 years, and

"(D) which meets the performance and quality standards (if any) which

"(i) have been prescribed by the Secretary by regulations, and

"(ii) are in effect at the time of the acquisition of the item.

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