article: SECTION 1. SHORT TITLE. This Act may be cited as the ``Animal Agriculture Environmental Incentives Act of 1998''. SEC. 2. ALLOWANCE OF CREDIT FOR NUTRIENT MANAGEMENT COSTS OF ANIMAL FEEDING OPERATIONS. (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. 45D. ANIMAL FEEDING OPERATION EQUIPMENT CREDIT. ``(a) In General.--For purposes of section 38, the animal feeding operation equipment credit determined under this section for the taxable year is an amount equal to 25 percent of the eligible nutrient management costs of a taxpayer for the taxable year. ``(b) Eligible Nutrient Management Costs.--For purposes of this section-- ``(1) In general.--The term `eligible nutrient management costs' means amounts paid or incurred by a taxpayer to purchase a calibrated manure spreader or eligible processing equipment for use at an animal feeding operation owned by the taxpayer. ``(2) Calibrated manure spreader.--The term `calibrated manure spreader' means equipment (including any associated geostationary positioning satellite equipment) which is used by the taxpayer exclusively for the precision application of manure to land in accordance with a comprehensive nutrient management plan. ``(3) Eligible processing equipment.-- ``(A) In general.--The term `eligible processing equipment' means equipment or structures used by the taxpayer exclusively for processing manure. ``(B) Exclusion.--The term `eligible processing equipment' does not include equipment used exclusively for the simple containment or transportation of manure. ``(c) Other Definitions.--For purposes of this section-- ``(1) Animal feeding operation.--The term `animal feeding operation' means a facility for the milking of dairy cows or the raising of livestock or poultry (including egg production) for commercial sale. ``(2) Application.--The term `application' means laying, spreading on, irrigating, injecting, or otherwise placing manure on land by any means. ``(3) Comprehensive nutrient management plan.--The term `comprehensive nutrient management plan' means a written plan prepared in accordance with applicable Federal and State laws and regulations. ``(4) Manure.--The term `manure' means-- ``(A) the excreta of an animal or other organic byproduct of an animal feeding operation, including litter, bedding, dead animals, composted animal carcasses, milk house waste, or other residual organic matter, and ``(B) water or any other material mixed with such excreta or byproduct for purposes of collection, handling, containment, or processing of such excreta or byproduct. ``(5) Precision application.--The term `precision application' means the controlled application of manure to land in a manner which distributes a specified amount of manure, as determined by the nitrogen or phosphorous content of the manure, across a specified area of land. ``(6) Processing.--The term `processing' means any mechanical, physical, or chemical treatment which-- ``(A) alters the concentration of nitrogen, phosphorous, water, or other constituents in manure to facilitate-- ``(i) manure application on land covered by the requirements of a comprehensive nutrient management plan, or ``(ii) use of manure or processed manure for commercial purposes other than land application on land owned or controlled by the taxpayer, ``(B) enhances the value of manure as a plant fertilizer or soil amendment, or ``(C) utilizes manure as an energy source. ``(d) Special Rules.-- ``(1) Reduction in basis.--For purposes of this subtitle, if a credit is determined under this section with respect to any property, the basis of such property shall be reduced by the amount of the credit so determined. ``(2) Pass-thru in the case of estates and trusts.--For purposes of this section, under regulations prescribed by the Secretary, rules similar to the rules of subsection (d) of section 52 shall apply. ``(3) Allocation in the case of partnerships.--For purposes of this section, in the case of partnerships, the credit shall be allocated among partners under regulations prescribed by the Secretary.'' (b) Conforming Amendments.-- (1) Section 38(b) of the Internal Revenue Code of 1986 is amended-- (A) by striking ``plus'' at the end of paragraph (11), (B) by striking the period at the end of paragraph (12), and inserting ``, plus'', and (C) by adding at the end the following new paragraph: ``(13) the animal feeding operation equipment credit determined under section 45D.'' (2) The table of sections for subpart D of part IV of subchapter A of chapter 1 is amended by adding at the end the following new item: ``Sec. 45D. Animal feeding operation equipment credit.'' (c) Effective Date.--The amendments made by this section shall apply to taxable years beginning after December 31, 1998.
summary: Animal Agriculture Environmental Incentives Act of 1998 - Amends the Internal Revenue Code to allow a limited tax credit for the nutrient management costs of animal feeding operations.