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H.R.2776

Sec. 206

Renewable Energy and Energy Conservation Tax Act of 2007 (Reported in House)

SEC. 206. MODIFICATION OF LIMITATION ON AUTOMOBILE DEPRECIATION.

(a) In General- Paragraph (5) of section 280F(d) of the Internal Revenue Code of 1986 (defining passenger automobile) is amended to read as follows:

`(5) PASSENGER AUTOMOBILE-

`(A) IN GENERAL- Except as provided in subparagraph (B), the term `passenger automobile' means any 4-wheeled vehicle--

`(i) which is primarily designed or which can be used to carry passengers over public streets, roads, or highways (except any vehicle operated exclusively on a rail or rails), and

`(ii) which is rated at not more than 14,000 pounds gross vehicle weight.

`(B) EXCEPTIONS- The term `passenger automobile' shall not include--

`(i) any exempt-design vehicle, and

`(ii) any exempt-use vehicle.

`(C) EXEMPT-DESIGN VEHICLE- The term `exempt-design vehicle' means--

`(i) any vehicle which, by reason of its nature or design, is not likely to be used more than a de minimis amount for personal purposes, and

`(ii) any vehicle--

`(I) which is designed to have a seating capacity of more than 9 persons behind the driver's seat,

`(II) which is equipped with a cargo area of at least 5 feet in interior length which is an open area or is designed for use as an open area but is enclosed by a cap and is not readily accessible directly from the passenger compartment, or

`(III) has an integral enclosure, fully enclosing the driver compartment and load carrying device, does not have seating rearward of the driver's seat, and has no body section protruding more than 30 inches ahead of the leading edge of the windshield.

`(D) EXEMPT-USE VEHICLE- The term `exempt-use vehicle' means--

`(i) any ambulance, hearse, or combination ambulance-hearse used by the taxpayer directly in a trade or business,

`(ii) any vehicle used by the taxpayer directly in the trade or business of transporting persons or property for compensation or hire, and

`(iii) any truck or van if substantially all of the use of such vehicle by the taxpayer is directly in--

`(I) a farming business (within the meaning of section 263A(e)(4)),

`(II) the transportation of a substantial amount of equipment, supplies, or inventory, or

`(III) the moving or delivery of property which requires substantial cargo capacity.

`(E) RECAPTURE- In the case of any vehicle which is not a passenger automobile by reason of being an exempt-use vehicle, if such vehicle ceases to be an exempt-use vehicle in any taxable year after the taxable year in which such vehicle is placed in service, a rule similar to the rule of subsection (b) shall apply.'.

(b) Conforming Amendment- Section 179(b) of such Code (relating to limitations) is amended by striking paragraph (6).

(c) Effective Date- The amendments made by this section shall apply to property placed in service after December 31, 2007.