26 U.S. Code § 179D - Energy efficient commercial buildings deduction
(a) In general
There shall be allowed as a deduction an amount equal to the cost of energy efficient commercial building property placed in service during the taxable year.
(b) Maximum amount of deduction
The deduction under subsection (a) with respect to any building for any taxable year shall not exceed the excess (if any) of—
For purposes of this section—
(1) Energy efficient commercial building property
The term “energy efficient commercial building property” means property—
(B) which is installed on or in any building which is—
(C) which is installed as part of—
(D) which is certified in accordance with subsection (d)(6) as being installed as part of a plan designed to reduce the total annual energy and power costs with respect to the interior lighting systems, heating, cooling, ventilation, and hot water systems of the building by 50 percent or more in comparison to a reference building which meets the minimum requirements of Standard 90.1–2001 using methods of calculation under subsection (d)(2).
(d) Special rules
(1) Partial allowance
(A) In general
Except as provided in subsection (f), if—
(ii) there is a certification in accordance with paragraph (6) that any system referred to in subsection (c)(1)(C) satisfies the energy-savings targets established by the Secretary under subparagraph (B) with respect to such system,
then the requirement of subsection (c)(1)(D) shall be treated as met with respect to such system, and the deduction under subsection (a) shall be allowed with respect to energy efficient commercial building property installed as part of such system and as part of a plan to meet such targets, except that subsection (b) shall be applied to such property by substituting “$.60” for “$1.80”.
The Secretary, after consultation with the Secretary of Energy, shall establish a target for each system described in subsection (c)(1)(C) which, if such targets were met for all such systems, the building  would meet the requirements of subsection (c)(1)(D).
(2) Methods of calculation
The Secretary, after consultation with the Secretary of Energy, shall promulgate regulations which describe in detail methods for calculating and verifying energy and power consumption and cost, based on the provisions of the 2005 California Nonresidential Alternative Calculation Method Approval Manual.
(3) Computer software
(A) In general
Any calculation under paragraph (2) shall be prepared by qualified computer software.
(B) Qualified computer software
For purposes of this paragraph, the term “qualified computer software” means software—
(i) for which the software designer has certified that the software meets all procedures and detailed methods for calculating energy and power consumption and costs as required by the Secretary,
(ii) which provides such forms as required to be filed by the Secretary in connection with energy efficiency of property and the deduction allowed under this section, and
(4) Allocation of deduction for public property
In the case of energy efficient commercial building property installed on or in property owned by a Federal, State, or local government or a political subdivision thereof, the Secretary shall promulgate a regulation to allow the allocation of the deduction to the person primarily responsible for designing the property in lieu of the owner of such property. Such person shall be treated as the taxpayer for purposes of this section.
(5) Notice to owner
Each certification required under this section shall include an explanation to the building owner regarding the energy efficiency features of the building and its projected annual energy costs as provided in the notice under paragraph (3)(B)(iii).
(A) In general
The Secretary shall prescribe the manner and method for the making of certifications under this section.
The Secretary shall include as part of the certification process procedures for inspection and testing by qualified individuals described in subparagraph (C) to ensure compliance of buildings with energy-savings plans and targets. Such procedures shall be comparable, given the difference between commercial and residential buildings, to the requirements in the Mortgage Industry National Accreditation Procedures for Home Energy Rating Systems.
(e) Basis reduction
For purposes of this subtitle, if a deduction is allowed under this section with respect to any energy efficient commercial building property, the basis of such property shall be reduced by the amount of the deduction so allowed.
(f) Interim rules for lighting systems
Until such time as the Secretary issues final regulations under subsection (d)(1)(B) with respect to property which is part of a lighting system—
(1) In general
The lighting system target under subsection (d)(1)(A)(ii) shall be a reduction in lighting power density of 25 percent (50 percent in the case of a warehouse) of the minimum requirements in Table 18.104.22.168 or Table 22.214.171.124 (not including additional interior lighting power allowances) of Standard 90.1–2001.
(2) Reduction in deduction if reduction less than 40 percent
(A) In general
If, with respect to the lighting system of any building other than a warehouse, the reduction in lighting power density of the lighting system is not at least 40 percent, only the applicable percentage of the amount of deduction otherwise allowable under this section with respect to such property shall be allowed.
(B) Applicable percentage
For purposes of subparagraph (A), the applicable percentage is the number of percentage points (not greater than 100) equal to the sum of—
This subsection shall not apply to any system—
(i) the controls and circuiting of which do not comply fully with the mandatory and prescriptive requirements of Standard 90.1–2001 and which do not include provision for bilevel switching in all occupancies except hotel and motel guest rooms, store rooms, restrooms, and public lobbies, or
The Secretary shall promulgate such regulations as necessary—
(1) to take into account new technologies regarding energy efficiency and renewable energy for purposes of determining energy efficiency and savings under this section, and
This section shall not apply with respect to property placed in service after December 31, 2013.
 So in original.
Source(Added Pub. L. 109–58, title XIII, § 1331(a),Aug. 8, 2005, 119 Stat. 1020; amended Pub. L. 109–432, div. A, title II, § 204,Dec. 20, 2006, 120 Stat. 2945; Pub. L. 110–343, div. B, title III, § 303,Oct. 3, 2008, 122 Stat. 3845.)
2008—Subsec. (h). Pub. L. 110–343substituted “December 31, 2013” for “December 31, 2008”.
2006—Subsec. (h). Pub. L. 109–432substituted “2008” for “2007”.