Nov. 9, 1978 [H.R. 5263] Energy Tax Act of 1978 Bicycle parts, duty suspension. 19 USC 1202 app. 26 USC 1 note. 26 USC 1. 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 GAB GUZZLER TAX Sec. 201. Gas guzzler tax. PART II-MOTOR FUELS Sec. 221. Exemption from motor fuels excise taxes for certain alcohol fuels. 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 pro- TITLE III-CHANGES IN BUSINESS INVESTMENT CREDIT TO ENCOUR- Sec. 301. Changes in business investment credit. (65) TITLE IV-MISCELLANEOUS PROVISIONS Sec. 401. Treatment of intangible drilling costs for purposes of the minimum tax. deposits. 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, paragraph (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. 26 USC 44C. 26 USC 31, 39, 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 subparagraph (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 energyconserving 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. "(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. "(4) OTHER ENERGY-CONSERVING COMPONENT.-The term 'other energy-conserving component' means any item (other than insulation) "(A) which is "(i) a furnace replacement burner designed to achieve a reduction in the amount of fuel consumed as a result of increased combustion efficiency, "(ii) a device for modifying flue openings designed to increase the efficiency of operation of the heating system, "(iii) an electrical or mechanical furnace ignition system, which replaces a gas pilot light, "(iv) a storm or thermal window or door for the exterior of the dwelling, "(v) an automatic energy-saving setback thermostat, "(vi) caulking or weatherstripping of an exterior door or window, ог "(vii) a meter which displays the cost of energy usage, "(viii) an item of the kind which the Secretary specifies by regulations as increasing the energy efficiency of the dwelling, "(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. "(5) RENEWABLE ENERGY SOURCE PROPERTY.-The term 'renewable energy source property' means property "(A) which, when installed in connection with a dwelling, transmits or uses "(i) solar energy, energy derived from the geothermal deposits (as defined in section 613(e) (3)), or any other form of renewable energy which the Secretary specifies by regulations, for the purpose of heating or cooling such dwelling or providing hot water for use within such dwelling, or "(ii) wind energy for nonbusiness residential purposes, "(B) the original use of which begins with the taxpayer, (C) which can reasonably be expected to remain in operation for at least 5 years, and 66 "(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 property. "(6) REGULATIONS.— "(A) CRITERIA; CERTIFICATION PROCEDURES.- -The Secretary shall by regulations "(i) establish the criteria which are to be used in (I) prescribing performance and quality standards under paragraphs (3), (4), and (5), or (II) specifying any under paragraph (4) (4) (vii) or any form of renewable energy under paragraph (5) (A) (i), and |