text: 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.
target: 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.
feat_title: Animal Agriculture Environmental Incentives Act of 1998