Sec. 12. Credit for qualified wildfire mitigation expenditures
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Subpart B of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 is amended by inserting after section 27 the following new section: There shall be allowed as a credit against the tax imposed by this chapter for the taxable year an amount equal to 30 percent of the qualified wildfire mitigation expenditures paid or incurred by the taxpayer during such taxable year with respect to real property owned or leased by the taxpayer. For purposes of this section— The term qualified wildfire mitigation expenditures means any specified wildfire mitigation expenditure made pursuant to a qualified State wildfire mitigation program of a State which requires expenditures for wildfire mitigation to be paid both by the taxpayer and such State.
Such term shall not include any item of expenditure unless the ratio of the State’s expenditure for such item to the sum of the State’s and taxpayer’s expenditures for such item is not less than 25 percent. The term specified wildfire mitigation expenditure means, with respect to any real property owned or leased by the taxpayer, any amount paid or incurred to reduce the risk of wildfire by removing accumulations of vegetation (including establishing, expanding, or maintaining fuel breaks to serve as fire breaks) on such real property.
The term qualified State wildfire mitigation program means any program of a State the primary purpose of which is to mitigate the risk of wildfires in such State. Any amount originally paid or incurred by the taxpayer which is reimbursed by a State under a qualified wildfire mitigation program of such State shall be treated as paid by such State (and not by such taxpayer). So much of the credit which would be allowed under subsection
(a)for any taxable year (determined without regard to this subsection) that is attributable to expenditures made in the ordinary course of the taxpayer’s trade or business (or, in the case of expenditures made by a State, would have been expenditures made in the ordinary course of the taxpayer’s trade or business if made by the taxpayer) shall be treated as a credit listed in section 38(b) for taxable year (and not allowed under subsection (a)). For purposes of this title, the credit allowed under subsection
(a)for any taxable year (determined after application of paragraph (1)) shall be treated as a credit allowable under subpart A for such taxable year. If the expenditure percentage with respect to any item of qualified wildfire mitigation expenditure is less than 30 percent, subsection
(a)shall be applied by substituting the expenditure percentage for 30 percent with respect to such item of expenditure. For purposes of this section, the term expenditure percentage means, with respect to any item of qualified wildfire mitigation expenditure any portion of which is paid or incurred by a State, the ratio (expressed as a percentage) of— the taxpayer’s expenditure for such item, divided by the sum of the taxpayer’s and such State’s expenditures for such item. An expenditure shall not be taken into account for purposes of this section (whether made by the taxpayer or a State pursuant to a qualified State wildfire mitigation program of such State) if such expenditure is properly allocable to timber which is sold or exchanged by the taxpayer. The preceding sentence shall not apply to the extent that such amount exceeds the gain on such sale or exchange. For purposes of this subtitle, if the basis of any property would (but for this paragraph) be determined by taking into account any qualified wildfire mitigation expenditure, the basis of such property shall be reduced by the amount of the credit allowed under subsection
(a)with respect to such expenditure (determined without regard to subsection (c)). The amount of any deduction or other credit allowable under this chapter for any expenditure for which a credit is allowable under subsection
(a)shall be reduced by the amount of credit allowed under such subsection for such expenditure (determined without regard to subsection (c)). . Section 38(b) of such Code is amended by striking plus at the end of paragraph (32), by striking the period at the end of paragraph
(33)and inserting , plus , and by adding at the end the following new paragraph: the portion of the qualified wildfire mitigation expenditures credit to which section 28(c)(1) applies. . Section 1016(a) of such Code is amended by redesignating paragraphs
(35)through
(38)as paragraphs
(36)through (39), respectively, and by inserting after paragraph
(34)the following new paragraph: to the extent provided in section 28(e)(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 27 the following new item: Sec. 28. Qualified wildfire mitigation expenditures. . The amendments made by this section shall apply to expenditures paid or incurred after the date of the enactment of this Act, in taxable years ending after such date.