[Congressional Bills 110th Congress]
[From the U.S. Government Publishing Office]
[H.R. 5858 Introduced in House (IH)]
110th CONGRESS
2d Session
H. R. 5858
To amend the Internal Revenue Code of 1986 to provide incentives for
carbon sequestration.
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IN THE HOUSE OF REPRESENTATIVES
April 22, 2008
Mr. Boswell 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 provide incentives for
carbon sequestration.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Combating Climate Change Through
Individual Action Act of 2008''.
SEC. 2. FINDINGS.
Congress finds the following:
(1) Agricultural, grassland, and forestry practices play an
essential role in capturing atmospheric carbon and sequestering
it as soil organic matter.
(2) Released carbon can be captured through improved
grassland management, tree planting, forest preservation, and
enhanced agronomic and irrigation practices.
(3) Promoting increased natural carbon sinks could have a
significant impact on the world's projected carbon emissions
from the burning of fossil fuels.
(4) Certain agricultural and forestry practices can reduce
greenhouse gases: (A) avoiding emissions by maintaining
existing carbon storage in trees and soils; (B) increasing
carbon storage by, e.g., tree planting, conversion from
conventional to conservation tillage practices on agricultural
lands;
(5) The large potentials exist through known cropping and
land management practices such as adoption of no-till, reduced
fallow and use of cover crops, and conservation set-asides with
perennial grasses and trees.
SEC. 3. CARBON SEQUESTRATION AND SOIL CONSERVATION CREDIT.
(a) 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:
``SEC. 45O. CARBON SEQUESTRATION AND SOIL CONSERVATION.
``(a) In General.--For purposes of section 38, in the case of a
taxpayer engaged in the business of farming, the credit determined
under this section for the taxable year is an amount equal to 30
percent of the qualified carbon sequestration and soil conservation
expenditures for the taxable year which are paid or incurred with
respect to the land used in such farming.
``(b) Limitation.--The credit allowed with respect to a taxpayer
under this section for a taxable year shall not exceed an amount equal
to $10,000, reduced by the sum of the credits allowed with respect to
the taxpayer under subsection (a) for all preceding taxable years.
``(c) Qualified Carbon Sequestration and Soil Conservation
Expenses.--For purposes of this section--
``(1) In general.--The term `qualified carbon sequestration
and soil conservation expenditures' means amounts paid or
incurred to sequester carbon and conserve soil, including--
``(A) expenditures described in section 175(c),
``(B) conservation tillage expenditures,
``(C) cover cropping expenditures,
``(D) amounts paid or incurred to increase the
nitrogen use efficiency (other than use of nitrogen
fertilizers) of land used in farming, and
``(E) amounts paid or incurred for multiple year
rotations, including introduction of a perennial that
reduces carbon loss and tillage, builds soil tilth, and
increases carbon capture capacity.
``(2) Conservation tillage expenditures.--The term
`conservation tillage expenditures' means any expenditures paid
or incurred for a tilling and planting method in which at least
30 percent of the previous crop residue remains on the soil
after planting the current crop. Such term includes the
following tilling practices: no till, ridge till, minimum till,
and mulch till.
``(3) Cover cropping expenditures.--The term `cover
cropping expenditures' means expenditures paid or incurred for
the preparation and seeding of land for any grass, legume, or
small grain--
``(A) which is not the primary crop of the
taxpayer,
``(B) the primary purpose of which is to achieve
one or more of the following: reduction in erosion;
maintenance or improvement in soil fertility, tilth,
and structure,
``(C) a purpose of which may be interruption of
pest cycles or conservation of water.
``(d) Per Acre Credit Alternative.--
``(1) In general.--Not later than 180 days after the date
of the enactment of this section, the Secretary shall, in
consultation with the Secretary of Agriculture, establish an
alternative procedure for determining the credit under
subsection (a), which, at the election of the taxpayer, shall
be treated as the amount determined under subsection (a).
``(2) Procedure described.--(A) The Secretary shall
establish credit amounts to apply to land used in farming on a
per acre basis with respect to each method of carbon
sequestration and soil conservation described in subsection
(c)(1).
``(B) Such credit amounts shall be based on the efficacy of
the method in sequestering carbon and preventing soil erosion.
``(C) No such credit amount may exceed $15 per acre.
``(D) The Secretary shall prescribe rules similar to the
rules of paragraphs (1) through (4) of subsection (e) to apply
for purposes of the procedure established under this
subsection.
``(3) Election.--An election to use such alternative method
shall be made in such form and manner as the Secretary may
prescribe, and shall apply to the taxable year for which made
and for all subsequent taxable years.
``(e) Definition and Special Rules.--
``(1) Land used in farming.--For purposes of this section,
land shall be treated as used in farming only if such land is
used (before or simultaneously with the expenditures described
in subsection (c)(1)) by the taxpayer or his tenant for the
production of crops, fruits, or other agricultural products or
for the sustenance of livestock.
``(2) Expenditures must be consistent with soil
conservation plan.--Notwithstanding any other provision of this
section, subsection (a) shall not apply to any expenditures
unless such expenditures are consistent with--
``(A) the plan (if any) approved by the Soil
Conservation Service of the Department of Agriculture
for the area in which the land is located, or
``(B) if there is no plan described in clause (i),
any soil conservation plan of a comparable State
agency.
``(3) Basis adjustment.--For purposes of this subtitle, 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 paragraph) result from such
expenditure shall be reduced by the amount of the credit so
determined.
``(4) Denial of double benefit.--No deduction or other
credit shall be allowed under this chapter for any amount taken
into account in determining the credit under this section.
``(f) Termination.--This section shall not apply to taxable years
beginning after December 31, 2013.''.
(b) 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 the following new paragraph:
``(32) the carbon sequestration and soil conservation
credit determined under section 45O(a).''.
(c) Conforming Amendments.--Subsection (a) of section 1016 of such
Code (relating to adjustments to basis) is amended by striking ``and''
at the end of paragraph (35), by striking the period at the end of
paragraph (36) and inserting ``and'', and by adding at the end the
following new paragraph:
``(37) to the extent provided in section 45O(e).''.
(d) Clerical Amendment.--The table of sections for subpart D of
part IV of subchapter A of chapter 1 of such Code is amended by adding
at the end the following new item:
``Sec. 45O. Carbon sequestration and soil conservation.''.
(e) Effective Date.--The amendments made by this section shall
apply to expenditures paid or incurred after December 31, 2008.
SEC. 4. QUALIFYING PLANTING EXPENDITURE CREDIT.
(a) In General.--Subpart B of part IV of subchapter A of chapter 1
of the Internal Revenue Code of 1986 (relating to other credits) is
amended by adding at the end the following new section:
``SEC. 30D. QUALIFIED PLANTING EXPENDITURE CREDIT.
``(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 qualified planting expenditures of the
taxpayer for the taxable year.
``(b) Limitations.--The amount taken into account under subsection
(a) for any taxable year shall not exceed--
``(1) in the case of expenditures paid or incurred by the
taxpayer with respect to an area which is included under
section 121 as part of the taxpayer's principal residence,
$5,000,
``(2) in the case of expenditures paid or incurred by the
taxpayer in the course of, or with respect to, a trade or
business carried on by the taxpayer, $50,000, and
``(3) in any other case, zero.
``(c) Qualified Planting Expenditures.--For purposes of this
section--
``(1) In general.--The term `qualifying planting
expenditures' means expenditures paid or incurred--
``(A) for the purchase and planting of any tree,
plant, shrub, or bush which meets the requirements of
paragraph (2), and
``(B) for the purchase and installation of a
vegetated roof system.
Such term shall not include expenditures relating to any
property which is held by the taxpayer for use in a trade or
business or for the production of income, or which is property
described in section 1221(a)(1) in the hands of the taxpayer.
``(2) Trees, plants, shrubs, or bushes.--A tree, plant,
shrub, or bush satisfies the requirements of the paragraph if
such tree, plant, shrub, or bush is certified, in accordance
with guidance prescribed by the Secretary (after consultation
with the Administrator of the Environmental Protection Agency
and the Secretary of Agriculture), to be quick-growing,
appropriate for the region in which it is planted, and
effective in capturing carbon.
``(3) Vegetated roof system.--The term `vegetated roof
system' means a system by which vegetation growing in a
substrate is integrated with the roof (or portion thereof) of a
building owned by the taxpayer.
``(d) Application With Other Credits.--The credit allowed under
subsection (a) for any taxable year shall not exceed the excess (if
any) of--
``(1) the regular tax liability (as defined in section
26(b)) reduced by the sum of the credits allowable under
subpart A and sections 27, 30, 30B, and 30C, over
``(2) the tentative minimum tax for the taxable year.
``(e) Definition and Special Rules.--For purposes of this section--
``(1) Principal residence.--The term `principal residence'
has the same meaning as when used in section 121, except that
no ownership requirement shall be imposed.
``(2) Joint occupancy, cooperative housing corporations,
and condominium management associations.--Rules similar to the
rules of paragraphs (4), (5), and (6) of section 25D(e) shall
apply.
``(3) Expenditures outside united states.--The credit under
this section shall not be allowed with respect to expenditures
paid or incurred for areas located outside the United States.
``(4) Basis adjustment.--For purposes of this subtitle, if
a credit is allowed under this section for an expenditure, the
increase in basis which would result (but for this subsection)
from such expenditure shall be reduced by the amount of credit
allowed under this section.
``(f) Termination.--This section shall not apply to taxable years
beginning after December 31, 2013.''.
(b) Conforming Amendments.--
(1) Subsection (a) of section 1016, as amended by section
3, is amended by striking ``and'' at the end of paragraph (36),
by striking the period at the end of paragraph (37) and
inserting ``and'', and by adding at the end the following new
paragraph:
``(38) to the extent provided in section 30D(e)(4).''.
(2) The table of sections for subpart B of part IV of
subchapter A of chapter 1 of such Code is amended by inserting
after the item relating to section 30C the following new item:
``Sec. 30D. Qualified planting expenditure credit.''.
(c) Effective Date.--The amendments made by this section shall
apply to expenditures paid or incurred after December 31, 2008.
SEC. 5. GRASSLAND, RANGELAND, AND FOREST CONSERVATION CREDIT.
(a) In General.--Not later than 180 days after the date of the
enactment of this Act, the Secretary of the Treasury, in consultation
with the Department of Agriculture, shall establish an appropriate tax
credit, with respect to land located in the United States, for--
(1) the conversion of cropland to pasture for grazing
purposes or to grassland or rangeland, and
(2) reforestation and afforestation of land--
(A) which is not held by the taxpayer for the
planting, cultivating, caring for, and cutting of trees
for sale or use in the commercial production of timber
products, and
(B) with trees which are not held by the taxpayer
for use in a trade or business or for the production of
income.
(b) Other Rules Relating to Credit.--
(1) Credit to be per acre.--The Secretary shall establish
credit amounts to apply to land on a per acre basis with
respect to each method of conservation described in subsection
(a).
(2) Pursuant to approved plan.--Such methods must be
pursuant to a plan submitted by the taxpayer and approved by
the Secretaries of the Treasury and Agriculture.
(3) Basis for credit amounts.--Credit amount shall be based
on--
(A) the efficacy of the method in sequestering
carbon and preventing soil erosion,
(B) the expenditures relating to such method, and
(C) the number of years the taxpayer certifies to
the Secretary or ensures (by conservation easement or
otherwise) that the applicable land will remain subject
to the approved plan.
(4) Recapture.--The Secretary shall provide for recapturing
the benefit of any credit allowed under this section with
respect to any property that ceases to be used in accordance
with the approved plan.
(5) Denial of double benefit and basis adjustment.--The
Secretary shall provide--
(A) an appropriate basis adjustment for property
with respect to which such credit is allowed, and
(B) rules disallowing such deductions and other
credits as may be appropriate to avoid allowing
additional tax benefits for the same conservation
method or expenses.
(c) Effective Date.--The credit established by the Secretary shall
apply to taxable years beginning after December 31, 2008.
SEC. 6. CARBON SEQUESTRATION CREDIT REPORT.
(a) In General.--In the case of any substantial change in the
carbon sequestration market (including the enactment into law of a
carbon cap and trade program), the Secretary of the Treasury shall, in
consultation with any appropriate Federal officers, study such change
and any effect of such change on the efficiency of, and need for, the
credits allowed under section 5 of this Act and sections 45O and 30D of
the Internal Revenue Code of 1986.
(b) Report.--As soon as practicable after sufficient opportunity to
observe the effect of such change in the carbon sequestration market,
the Secretary shall submit a report to Congress containing the results
of the study conducted under subsection (a) and any recommendations of
the Secretary for modifying such credits based on such results.
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