Alternate Energy Production Tax Act of 1985

Alternate Energy Production Tax Act of 1985 - Amends the Internal Revenue Code to extend the residential energy income tax credit for solar energy property for five years (from 1985 to 1990). Phases out the percentage of expenditures which may be taken into account for such credit between the years 1986 and 1990.

Limits to $6,000 the maximum amount of expenditures for solar hot water systems which may be taken into account for purposes of such credit. Specifies additional standards which solar hot water systems and active space heating systems must meet in order to qualify for such credit.

Allows an income tax credit for the production of alternate energy which is sold by the taxpayer to an unrelated person during the taxable year. Allows such credit for alternate energy produced by: (1) solar equipment; (2) photovoltaic equipment; (3) wind equipment; (4) geothermal equipment; (5) ocean thermal energy or tidal power equipment; and (6) biomass equipment. Sets the amount of such credit based upon the type of equipment used to produce such energy. Sets forth certain limitations and adjustments to such credit.