I
110th CONGRESS
1st Session
H. R. 1770
IN THE HOUSE OF REPRESENTATIVES
March 29, 2007
Mr. Conaway (for himself, Mrs. Jones of Ohio, Mr. Culberson, Mr. Rogers of Michigan, and Mr. Bartlett of Maryland) introduced the following bill; which was referred to the Committee on Ways and Means
A BILL
To amend the Internal Revenue Code of 1986 to encourage the use of corrosion prevention and mitigation measures in the construction and maintenance of business property.
Short title
This Act may be cited as the
Corrosion Prevention Act of
2007
.
Credit for corrosion prevention and mitigation measures
In General
Subpart D of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 (relating to business-related credits) is amended by adding at the end the following new section:
Corrosion prevention and mitigation measures
In general
For purposes of section 38, the corrosion prevention and mitigation credit determined under this section for the taxable year is an amount equal to 50 percent of the excess of—
qualified corrosion prevention and mitigation expenditures with respect to qualified property, over
the amount such expenditures would have been, taking into account—
amounts paid or incurred to satisfy Federal, State, or local requirements, and
amounts paid for corrosion prevention practices, as certified by a person certified pursuant to subsection (b)(2).
Qualified corrosion prevention and mitigation expenditures
For purposes of this section—
In general
The term qualified corrosion prevention and mitigation expenditures means amounts paid or incurred by the taxpayer during the taxable year for engineering design, materials, and application and installation of corrosion prevention and mitigation technology.
Certification may be required
The Secretary shall require by regulation that no amount be taken into account under paragraph (1) for any design, material, application, or installation unless such design, material, application, or installation meets such certification requirements. Such requirements shall provide for accreditation of certifying persons by an independent entity with expertise in corrosion prevention and mitigation technology.
Corrosion prevention and mitigation technology
Corrosion prevention and mitigation technology includes a system comprised of at least one of the following: a corrosion-protective coating or paint; chemical treatment; corrosion-resistant metals; and cathodic protection. The Secretary from time to time by regulations or other guidance may modify the list contained in the preceding sentence to reflect changes in corrosion prevention and mitigation technology.
Qualified property
The term qualified property means property which is—
comprised primarily of a metal susceptible to corrosion,
of a character subject to the allowance for depreciation,
originally placed in service or owned by the taxpayer, and
located in the United States.
Recapture of credit
In general
If, as of the close of any taxable year, there is a recapture event with respect to any qualified property for which a credit was allowed under subsection (a), the tax of the taxpayer under this chapter for such taxable year shall be increased by an amount equal to the product of—
the applicable recapture percentage, and
the aggregate decrease in the credits allowed under section 38 for all prior taxable years which would have resulted if the qualified corrosion prevention and mitigation expenditures of the taxpayer with respect to such property had been zero.
Applicable recapture percentage
In general
For purposes of this subsection, the applicable recapture percentage shall be determined from the following table:
| If the property ceases to be | The recapture |
| qualified property within: | percentage is: |
| (i) One full year after placed in service | 100 |
| (ii) One full year after the close of the period described in clause (i) | 80 |
| (iii) One full year after the close of the period described in clause (ii) | 60 |
| (iv) One full year after the close of the period described in clause (iii) | 40 |
| (v) One full year after the close of the period described in clause (iv) | 20. |
Recapture event defined
For purposes of this subsection, the term recapture event means—
Cessation of use
The cessation of use of the qualified property.
Change in ownership
In general
Except as provided in subclause (II), the disposition of a taxpayer’s interest in the qualified property with respect to which the credit described in subsection (a) was allowable.
Agreement to assume recapture liability
Subclause (I) shall not apply if the person acquiring the qualified property agrees in writing to assume the recapture liability of the person disposing of the qualified property. In the event of such an assumption, the person acquiring the qualified property shall be treated as the taxpayer for purposes of assessing any recapture liability (computed as if there had been no change in ownership).
special rule for tax exempt entities
Subclause (II) shall not apply to any tax exempt entity (as defined in section 168(h)(2)).
Special rules
Tax benefit rule
The tax for the taxable year shall be increased under paragraph (1) only with respect to credits allowed by reason of this section which were used to reduce tax liability. In the case of credits not so used to reduce tax liability, the carryforwards and carrybacks under section 39 shall be appropriately adjusted.
No credits against tax
Any increase in tax under this subsection shall not be treated as a tax imposed by this chapter for purposes of determining the amount of any credit under this chapter or for purposes of section 55.
No recapture by reason of casualty loss
The increase in tax under this subsection shall not apply to a cessation of operation of the property as qualified property by reason of a casualty loss to the extent such loss is restored by reconstruction or replacement within a reasonable period established by the Secretary.
Denial of double benefit
For purposes of this subtitle—
Basis adjustments
In general
If a credit is determined under this section for any expenditure with respect to any property, the increase in the basis of such property which would (but for this subsection) result from such expenditure shall be reduced by the amount of the credit so allowed.
Certain dispositions
If, during any taxable year, there is a recapture amount determined with respect to any property the basis of which was reduced under subparagraph (A), the basis of such property (immediately before the event resulting in such recapture) shall be increased by an amount equal to such recapture amount. For purposes of the preceding sentence, the term recapture amount means any increase in tax (or adjustment in carrybacks or carryovers) determined under subsection (c).
Other deductions and credits
No deduction or credit shall be allowed under this chapter for any expense taken into account under this section.
Regulations
The Secretary shall prescribe such regulations as may be appropriate to carry out this section.
Termination
This section shall not apply to any taxable year beginning after December 31, 2017.
.
Credit made part of general business credit
Subsection (b) of section 38 of such
Code (relating to current year business credit) is amended by striking
plus
at the end of paragraph (30), by striking the period at the
end of paragraph (31) and inserting , plus
, and by adding at the
end thereof the following new paragraph:
Corrosion prevention and mitigation credit determined under section 45O(a).
.
Clerical Amendment
The table of sections for subpart D of part IV of subchapter A of chapter 1 of such Code is amended by inserting after the item relating to section 45N the following new item:
Sec. 45O. Corrosion prevention and mitigation measures.
.
Effective Date
The amendments made by this section shall apply to taxable years beginning after December 31, 2007.