[Senate Report 114-29]
[From the U.S. Government Publishing Office]
Calendar No. 52
114th Congress } { Report
SENATE
1st Session } { 114-29
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A BILL TO EXCLUDE FROM GROSS INCOME CERTAIN CLEAN COAL POWER GRANTS
_______
April 14, 2015.--Ordered to be printed
_______
Mr. Hatch, from the Committee on Finance,
submitted the following
R E P O R T
[To accompany S. 919]
The Committee on Finance, having considered an original
bill, S. 919, to exclude from gross income certain clean coal
power grants to non-corporate taxpayers, having considered the
same, reports favorably thereon without amendment and
recommends that the bill do pass.
CONTENTS
Page
I. LEGISLATIVE BACKGROUND............................................1
II. EXPLANATION OF THE BILL...........................................2
A. Exclusion from Gross Income of Certain Clean Coal
Power Grants (sec. 1 of the bill).................... 2
III.BUDGET EFFECTS OF THE BILL........................................3
IV. VOTES OF THE COMMITTEE............................................3
V. REGULATORY IMPACT AND OTHER MATTERS...............................5
VI. CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED.............5
I. LEGISLATIVE BACKGROUND
The Committee on Finance, having considered S. 919, a bill
to exclude from gross income certain clean coal power grants to
non-corporate taxpayers, reports favorably thereon without
amendment and recommends that the bill do pass.
Background and need for legislative action
Background.--Based on a proposal recommended by Senator
Cornyn, the Committee on Finance marked up original legislation
(a bill to amend the Internal Revenue Code of 1986 to exclude
from gross income certain clean coal power grants) on February
11, 2015, and, with a majority present, ordered the bill
favorably reported.
Need for legislative action.--Section 402 of the Energy
Policy Act of 2005 provides criteria for Federal financial
assistance under the Clean Coal Power Initiative. To the extent
this financial assistance comes in the form of a grant, award,
or allowance, it must generally be included in income.
Corporate taxpayers may be eligible to exclude such financial
assistance from gross income as a contribution of capital under
section 118 of the Code, but this exclusion is not available to
non-corporate taxpayers. Federal financial assistance under the
Clean Coal Power Initiative should be excludable from the
income of investors, regardless of whether they operate as a
corporation, in order to make such assistance as effective as
possible in encouraging clean coal power.
II. EXPLANATION OF THE BILL
A. Exclusion From Gross Income of Certain Clean Coal Power Grants (sec.
1 of the bill)
PRESENT LAW
Section 402 of the Energy Policy Act of 2005 provides
criteria for Federal financial assistance under the Clean Coal
Power Initiative. To the extent this financial assistance comes
in the form of a grant, award, or allowance, it must generally
be included in income under section 61 of the Internal Revenue
Code (the ``Code'').
Corporate taxpayers may be eligible to exclude such
financial assistance from gross income as a contribution of
capital under section 118 of the Code. The basis of any
property acquired by reason of such a contribution of capital
must be reduced by the amount of the contribution. This
exclusion is not available to non-corporate taxpayers.
REASONS FOR CHANGE
The Committee believes that Federal financial assistance
under the Clean Coal Power Initiative should be excludable from
the income of investors in order to make such assistance as
effective as possible in encouraging clean coal power. In
addition, the Committee believes that a corresponding basis
reduction is necessary in all cases to prevent any unintended
double benefit under the incentive.
EXPLANATION OF PROVISION
With respect to eligible non-corporate recipients, the
proposal excludes from gross income and alternative minimum
taxable income any grant, award, or allowance made pursuant to
section 402 of the Energy Policy Act of 2005. The proposal
requires that, to the extent the grant, award or allowance is
related to depreciable property, the adjusted basis is reduced
by the amount excluded from income under the proposal. The
proposal requires eligible non-corporate recipients to pay an
upfront payment to the Federal government equal to 1.18 percent
of the value of the grant, award, or allowance.
Under the proposal, eligible non-corporate recipients are
defined as (1) any recipient (other than a corporation) of any
grant, award, or allowance made pursuant to Section 402 of the
Energy Policy Act of 2005 that (2) makes the upfront 1.18-
percent payment, where (3) the grant, award, or allowance would
have been excludable from income by reason of Code section 118
if the taxpayer had been a corporation. In the case of a
partnership, the eligible non-corporate recipients are the
partners.
EFFECTIVE DATE
The proposal is effective for payments received in taxable
years beginning after December 31, 2011.
III. BUDGET EFFECTS OF THE BILL
A. Committee Estimates
In compliance with paragraph 11(a) of rule XXVI of the
Standing Rules of the Senate and section 308(a)(1) of the
Congressional Budget and Impoundment Control Act of 1974, as
amended (the ``Budget Act''), the following statement is made
concerning the estimated budget effects of the revenue
provisions of the bill as reported.
The bill is estimated to alter Federal fiscal year budget
receipts by the following amounts for the period 2015-2025:
FISCAL YEARS
[Millions of Dollars]
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2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2015-20 2015-25
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-96 52 -25 8 41 48 34 24 17 8 2 -79 6
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NOTE: Details do not add to totals due to rounding.
B. Budget Authority and Tax Expenditures
Budget authority
In compliance with section 308(a)(1) of the Budget Act, the
Committee states that no provisions of the bill as reported
involve new or increased budget authority.
Tax expenditures
In compliance with section 308(a)(1) of the Budget Act, the
Committee states that certain provisions of the bill as
reported affect the levels of tax expenditures (see revenue
table in part A., above).
C. Consultation With Congressional Budget Office
In accordance with section 402 of the Budget Act, the
Committee advises that the Congressional Budget Office has not
submitted a statement on the bill. The letter from the
Congressional Budget Office will be provided separately.
IV. VOTES OF THE COMMITTEE
In compliance with paragraph 7(b) of rule XXVI of the
Standing Rules of the Senate, the Committee states that, with a
majority present, the bill was ordered favorably reported by
voice vote on February 11, 2015.
V. REGULATORY IMPACT AND OTHER MATTERS
A. Regulatory Impact
Pursuant to paragraph 11(b) of rule XXVI of the Standing
Rules of the Senate, the Committee makes the following
statement concerning the regulatory impact that might be
incurred in carrying out the provisions of the bill.
Impact on individuals and businesses, personal privacy and paperwork
The bill excludes from gross income certain clean coal
power grants. The provisions of the bill are not expected to
impose additional administrative requirements or regulatory
burdens on individuals or businesses.
The provisions of the bill do not impact personal privacy.
B. Unfunded Mandates Statement
This information is provided in accordance with section 423
of the Unfunded Mandates Reform Act of 1995 (Pub. L. No. 104-
4).
The Committee has determined that the tax provisions of the
reported bill do not contain Federal private sector mandates or
Federal intergovernmental mandates on State, local, or tribal
governments within the meaning of Public Law 104-4, the
Unfunded Mandates Reform Act of 1995.
C. Tax Complexity Analysis
Section 4022(b) of the Internal Revenue Service Reform and
Restructuring Act of 1998 (``IRS Reform Act'') requires the
staff of the Joint Committee on Taxation (in consultation with
the Internal Revenue Service and the Treasury Department) to
provide a tax complexity analysis. The complexity analysis is
required for all legislation reported by the Senate Committee
on Finance, the House Committee on Ways and Means, or any
committee of conference if the legislation includes a provision
that directly or indirectly amends the Internal Revenue Code
and has widespread applicability to individuals or small
businesses. The staff of the Joint Committee on Taxation has
determined that there are no provisions that are of widespread
applicability to individuals or small businesses.
VI. CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED
In the opinion of the Committee, it is necessary in order
to expedite the business of the Senate, to dispense with the
requirements of paragraph 12 of rule XXVI of the Standing Rules
of the Senate (relating to the showing of changes in existing
law made by the bill as reported by the Committee).
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