Par. 4. Sections 1.45W-0 through 1.45W-5 are added to read as follows:
(a) In general. To qualify as a qualified commercial clean vehicle for purposes of section 45W of the Code, a vehicle must meet the requirements of section 45W(c) and paragraphs (b) through (d) of this section.
(b) Acquired for use or lease and not for resale by the taxpayer —(1) In general. Under section 45W(c)(1), a qualified commercial clean vehicle must be acquired for use or lease and not for resale by the taxpayer. For purposes of section 45W(c)(1), a taxpayer that is not a tax-exempt entity described in section 168(h)(2)(A)(i), (ii), or (iv) of the Code acquires a vehicle for use or lease if the taxpayer acquires the vehicle for use or lease in a trade or business of the taxpayer.
(2) Recharacterization of lease. If a lease of a qualified commercial clean vehicle would be treated as a sale rather than a lease for purposes of subtitle A, such lease will not be respected for purposes of section 45W(c)(1). In such case, the lessor will be treated as having acquired the vehicle for resale, and no credit will be allowed to such lessor under section 45W with respect to the vehicle. To the extent the lessor has claimed a section 45W credit (defined in § 1.45W-1(a)) with respect to such vehicle, the recapture rules in § 1.45W-4(c) apply.
(c) Type of vehicle —(1) In general. Under section 45W(c)(2), a qualified commercial clean vehicle must be either an on-road vehicle, as described in section 45W(c)(2)(A) and paragraph (c)(2) of this section, or mobile machinery, as described in section 45W(c)(2)(B) and paragraph (c)(3) of this section. Some vehicles, such as a digger derrick truck, may qualify as both an on-road vehicle and mobile machinery.
(2) On-road vehicle. An on-road vehicle is a vehicle that meets the requirements of section 30D(d)(1)(D) of the Code (that is, the vehicle is treated as a motor vehicle for purposes of title II of the Clean Air Act), is manufactured primarily for use on public streets, roads, and highways (not including a vehicle operated exclusively on a rail or rails).
(3) Mobile machinery. Mobile machinery has the meaning provided in section 4053(8) of the Code.
(d) Electric motor and battery requirements —(1) In general. Under section 45W(c)(3), a qualified commercial clean vehicle must be propelled to a significant extent by an electric motor that draws electricity from a battery that has a capacity of not less than 15 kilowatt hours (or, in the case of a vehicle that has a gross vehicle weight rating of less than 14,000 pounds, 7 kilowatt hours) and is capable of being recharged from an external source of electricity, or is a motor vehicle that satisfies the requirements under section 30B(b)(3)(A) and (B).
(2) Battery capable of being recharged from an external source of electricity. For purposes of section 45W(c)(3)(A), a battery is capable of being recharged from an external source of electricity if such source of electricity is not an integral part of the vehicle. For example, a regenerative braking system, in which the kinetic energy generated by the motion of the vehicle is used to recharge a battery, is not an external source of electricity for purposes of section 45W(c)(3)(A) and this paragraph (d)(2).
(e) Applicability date. This section applies to taxable years ending after [date of publication of the final regulations in the Federal Register ].