26 U.S.C. § 179D : US Code - Section 179D: Energy efficient commercial buildings deduction

Search 26 U.S.C. § 179D : US Code - Section 179D: Energy efficient commercial buildings deduction

(a) In general
There shall be allowed as a deduction an amount equal to the cost
of energy efficient commercial building property placed in service
during the taxable year.
(b) Maximum amount of deduction
The deduction under subsection (a) with respect to any building
for any taxable year shall not exceed the excess (if any) of -
(1) the product of -
(A) $1.80, and
(B) the square footage of the building, over
(2) the aggregate amount of the deductions under subsection (a)
with respect to the building for all prior taxable years.
(c) Definitions
For purposes of this section -
(1) Energy efficient commercial building property
The term "energy efficient commercial building property" means
property -
(A) with respect to which depreciation (or amortization in
lieu of depreciation) is allowable,
(B) which is installed on or in any building which is -
(i) located in the United States, and
(ii) within the scope of Standard 90.1-2001,
(C) which is installed as part of -
(i) the interior lighting systems,
(ii) the heating, cooling, ventilation, and hot water
systems, or
(iii) the building envelope, and
(D) which is certified in accordance with subsection (d)(6)
as being installed as part of a plan designed to reduce the
total annual energy and power costs with respect to the
interior lighting systems, heating, cooling, ventilation, and
hot water systems of the building by 50 percent or more in
comparison to a reference building which meets the minimum
requirements of Standard 90.1-2001 using methods of calculation
under subsection (d)(2).
(2) Standard 90.1-2001
The term "Standard 90.1-2001" means Standard 90.1-2001 of the
American Society of Heating, Refrigerating, and Air Conditioning
Engineers and the Illuminating Engineering Society of North
America (as in effect on April 2, 2003).
(d) Special rules
(1) Partial allowance
(A) In general
Except as provided in subsection (f), if -
(i) the requirement of subsection (c)(1)(D) is not met, but
(ii) there is a certification in accordance with paragraph
(6) that any system referred to in subsection (c)(1)(C)
satisfies the energy-savings targets established by the
Secretary under subparagraph (B) with respect to such system,
then the requirement of subsection (c)(1)(D) shall be treated
as met with respect to such system, and the deduction under
subsection (a) shall be allowed with respect to energy
efficient commercial building property installed as part of
such system and as part of a plan to meet such targets, except
that subsection (b) shall be applied to such property by
substituting "$.60" for "$1.80".
(B) Regulations
The Secretary, after consultation with the Secretary of
Energy, shall establish a target for each system described in
subsection (c)(1)(C) which, if such targets were met for all
such systems, the building (!1) would meet the requirements of
subsection (c)(1)(D).
(2) Methods of calculation
The Secretary, after consultation with the Secretary of Energy,
shall promulgate regulations which describe in detail methods for
calculating and verifying energy and power consumption and cost,
based on the provisions of the 2005 California Nonresidential
Alternative Calculation Method Approval Manual.
(3) Computer software
(A) In general
Any calculation under paragraph (2) shall be prepared by
qualified computer software.
(B) Qualified computer software
For purposes of this paragraph, the term "qualified computer
software" means software -
(i) for which the software designer has certified that the
software meets all procedures and detailed methods for
calculating energy and power consumption and costs as
required by the Secretary,
(ii) which provides such forms as required to be filed by
the Secretary in connection with energy efficiency of
property and the deduction allowed under this section, and
(iii) which provides a notice form which documents the
energy efficiency features of the building and its projected
annual energy costs.
(4) Allocation of deduction for public property
In the case of energy efficient commercial building property
installed on or in property owned by a Federal, State, or local
government or a political subdivision thereof, the Secretary
shall promulgate a regulation to allow the allocation of the
deduction to the person primarily responsible for designing the
property in lieu of the owner of such property. Such person shall
be treated as the taxpayer for purposes of this section.
(5) Notice to owner
Each certification required under this section shall include an
explanation to the building owner regarding the energy efficiency
features of the building and its projected annual energy costs as
provided in the notice under paragraph (3)(B)(iii).
(6) Certification
(A) In general
The Secretary shall prescribe the manner and method for the
making of certifications under this section.
(B) Procedures
The Secretary shall include as part of the certification
process procedures for inspection and testing by qualified
individuals described in subparagraph (C) to ensure compliance
of buildings with energy-savings plans and targets. Such
procedures shall be comparable, given the difference between
commercial and residential buildings, to the requirements in
the Mortgage Industry National Accreditation Procedures for
Home Energy Rating Systems.
(C) Qualified individuals
Individuals qualified to determine compliance shall be only
those individuals who are recognized by an organization
certified by the Secretary for such purposes.
(e) Basis reduction
For purposes of this subtitle, if a deduction is allowed under
this section with respect to any energy efficient commercial
building property, the basis of such property shall be reduced by
the amount of the deduction so allowed.
(f) Interim rules for lighting systems
Until such time as the Secretary issues final regulations under
subsection (d)(1)(B) with respect to property which is part of a
lighting system -
(1) In general
The lighting system target under subsection (d)(1)(A)(ii) shall
be a reduction in lighting power density of 25 percent (50
percent in the case of a warehouse) of the minimum requirements
in Table 9.3.1.1 or Table 9.3.1.2 (not including additional
interior lighting power allowances) of Standard 90.1-2001.
(2) Reduction in deduction if reduction less than 40 percent
(A) In general
If, with respect to the lighting system of any building other
than a warehouse, the reduction in lighting power density of
the lighting system is not at least 40 percent, only the
applicable percentage of the amount of deduction otherwise
allowable under this section with respect to such property
shall be allowed.
(B) Applicable percentage
For purposes of subparagraph (A), the applicable percentage
is the number of percentage points (not greater than 100) equal
to the sum of -
(i) 50, and
(ii) the amount which bears the same ratio to 50 as the
excess of the reduction of lighting power density of the
lighting system over 25 percentage points bears to 15.
(C) Exceptions
This subsection shall not apply to any system -
(i) the controls and circuiting of which do not comply
fully with the mandatory and prescriptive requirements of
Standard 90.1-2001 and which do not include provision for
bilevel switching in all occupancies except hotel and motel
guest rooms, store rooms, restrooms, and public lobbies, or
(ii) which does not meet the minimum requirements for
calculated lighting levels as set forth in the Illuminating
Engineering Society of North America Lighting Handbook,
Performance and Application, Ninth Edition, 2000.
(g) Regulations
The Secretary shall promulgate such regulations as necessary -
(1) to take into account new technologies regarding energy
efficiency and renewable energy for purposes of determining
energy efficiency and savings under this section, and
(2) to provide for a recapture of the deduction allowed under
this section if the plan described in subsection (c)(1)(D) or
(d)(1)(A) is not fully implemented.
(h) Termination
This section shall not apply with respect to property placed in
service after December 31, 2007.