Alternative Energy Production Tax Incentive Act of 1979

Alternative Energy Production Tax Incentive Act of 1979 - Amends the Internal Revenue Code to allow a nonrefundable income tax credit equal to: (1) $3 for each barrel of petroleum substitute produced by converting coal or tar sands into synthetic liquid fuel; (2) $3 for each unit of petroleum substitute containing 5.8 million British thermal units produced by converting coal or tar sands into synthetic solid fuel; (3) $3 for each unit of fuel containing 5.8 million British thermal units produced by converting biomass into fuel or into steam, electricity, or hot water; and (4) $.005 for each kilowatt hour of electrical power generated from a hydrothermal or hot dry rock geothermal resource. Requires a reduction in the amount of such credit for Federal payments made to acquire equipment, facilities, and reserves used to produce energy. Requires, as a condition of eligibility for the credit, that energy production take place within the territorial limits of the United States.