Excludes from gross income certain gain from the sale of such housing.
Makes the rehabilitation credit applicable to buildings, other than certified historic structures, that are at least 50 years old. (Current law requires a building to have been placed in service before 1936.)
[Congressional Bills 107th Congress]
[From the U.S. Government Publishing Office]
[S. 1081 Introduced in Senate (IS)]
107th CONGRESS
1st Session
S. 1081
To amend the Internal Revenue Code of 1986 to allow a business credit
for the development of low-to-moderate income housing for home
ownership, and for other purposes.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
June 21, 2001
Mr. Torricelli (for himself and Mr. Dayton) introduced the following
bill; which was read twice and referred to the Committee on Finance
_______________________________________________________________________
A BILL
To amend the Internal Revenue Code of 1986 to allow a business credit
for the development of low-to-moderate income housing for home
ownership, and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE; ETC.
(a) Short Title.--This Act may be cited as the ``Low-to-Moderate
Income Home Ownership Tax Credit Act''.
(b) Table of Contents.--The table of contents for this Act is as
follows:
Sec. 1. Short title; etc.
Sec. 2. Credit for low-to-moderate income housing for home ownership.
Sec. 3. Partial exclusion of gain from sale of low-to-moderate income
housing.
Sec. 4. Expansion of rehabilitation credit.
SEC. 2. CREDIT FOR LOW-TO-MODERATE INCOME HOUSING FOR HOME OWNERSHIP.
(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:
``SEC. 42A. LOW-TO-MODERATE INCOME HOME OWNERSHIP CREDIT.
``(a) In General.--For purposes of section 38, the amount of the
home ownership credit determined under this section for any taxable
year in the credit period shall be an amount equal to the applicable
percentage of the qualified basis of each qualified low-to-moderate
income building.
``(b) Applicable Percentage: 70 Percent Present Value Credit for
New Buildings; 30 Percent Present Value Credit for Existing
Buildings.--For purposes of this section--
``(1) In general.--The term `applicable percentage' means
the appropriate percentage prescribed by the Secretary for the
earlier of--
``(A) the first month of the credit period with
respect to a low-to-moderate income building, or
``(B) at the election of the taxpayer, the month in
which the taxpayer and the housing credit agency enter
into an agreement with respect to such building (which
is binding on such agency, the taxpayer, and all
successors in interest) as to the housing credit dollar
amount to be allocated to such building.
A month may be elected under subparagraph (B) only if the
election is made not later than the 5th day after the close of
such month. Such an election, once made, shall be irrevocable.
``(2) Method of prescribing percentages.--The percentages
prescribed by the Secretary for any month shall be percentages
which will yield over a 10-year period amounts of credit under
subsection (a) which have a present value equal to--
``(A) 70 percent of the qualified basis of a new
building, and
``(B) 30 percent of the qualified basis of an
existing building.
``(3) Method of discounting.--The present value under
paragraph (2) shall be determined--
``(A) as of the last day of the 1st year of the 10-
year period referred to in paragraph (2),
``(B) by using a discount rate equal to 72 percent
of the average of the annual Federal mid-term rate and
the annual Federal long-term rate applicable under
section 1274(d)(1) to the month applicable under
subparagraph (A) or (B) of paragraph (1) and compounded
annually, and
``(C) by assuming that the credit allowable under
this section for any year is received on the last day
of such year.
``(c) Qualified Basis; Eligible Basis; Qualified Low-to-Moderate
Income Building.--For purposes of this section--
``(1) Qualified basis.--
``(A) Determination.--The qualified basis of any
qualified low-to-moderate income building for any
taxable year is an amount equal to--
``(i) the applicable fraction (determined
as of the close of such taxable year) of
``(ii) the eligible basis of such building.
``(B) Applicable fraction.--
``(i) In general.--For purposes of
subparagraph (A), the term `applicable
fraction' means the smaller of the unit
fraction or the floor space fraction.
``(ii) Unit fraction.--For purposes of
clause (i), the term `unit fraction' means the
fraction--
``(I) the numerator of which is the
number of low-to-moderate income units
in the building, and
``(II) the denominator of which is
the number of all units (whether or not
occupied) in such building.
``(iii) Floor space fraction.--For purposes
of clause (i), the term `floor space fraction'
means the fraction--
``(I) the numerator of which is the
total floor space of the low-to-
moderate income units in such building,
and
``(II) the denominator of which is
the total floor space of all units
(whether or not occupied) in such
building.
``(C) Eligible basis.--
``(i) In general.--The eligible basis of
any qualified low-to-moderate income building
for any taxable year shall be determined under
rules similar to the rules under section 42(d),
except that--
``(I) the determination of the
adjusted basis of any building shall be
made as of the beginning of the credit
period, and
``(II) such basis shall include
development costs properly attributable
to such building.
``(ii) Development costs.--For purposes of
clause (i)(II), the term `development costs'
includes--
``(I) site preparation costs,
``(II) State and local impact fees,
``(III) reasonable development
costs,
``(IV) professional fees related to
basis items,
``(V) construction financing costs
related to basis items other than land,
and
``(VI) on-site and adjacent
improvements required by State and
local governments.
``(2) Qualified low-to-moderate income building.--The term
`qualified low-to-moderate income building' means any building
which is part of a qualified low-to-moderate income development
project at all times during the period--
``(A) beginning on the 1st day in the compliance
period on which such building is part of such a
development project, and
``(B) ending on the last day of the compliance
period with respect to such building.
``(d) Rehabilitation Expenditures Treated as Separate New
Building.--Rehabilitation expenditures paid or incurred by the taxpayer
with respect to any building shall be treated for purposes of this
section as a separate new building under the rules of section 42(e).
``(e) Definition and Special Rules Relating to Credit Period.--
``(1) Credit period defined.--For purposes of this section,
the term `credit period' means, with respect to any building,
the period of 10 taxable years beginning with the taxable year
in which the building (or a low-to-moderate income unit in such
building) is first sold by the taxpayer to a low-to moderate
income individual after being placed in service.
``(2) Special rule for 1st year of credit period.--
``(A) In general.--The credit allowable under
subsection (a) with respect to any building for the 1st
taxable year of the credit period shall be determined
by substituting for the applicable fraction under
subsection (c)(1) the fraction--
``(i) the numerator of which is the sum of
the applicable fractions determined under
subsection (c)(1) as of the close of each full
month of such year during which such building
was in service, and
``(ii) the denominator of which is 12.
``(B) Disallowed 1st year credit allowed in 11th
year.--Any reduction by reason of subparagraph (A) in
the credit allowable (without regard to subparagraph
(A)) for the 1st taxable year of the credit period
shall be allowable under subsection (a) for the 1st
taxable year following the credit period.
``(3) Credit period for existing buildings not to begin
before rehabilitation credit allowed.--The credit period for an
existing building shall not begin before the 1st taxable year
of the credit period for rehabilitation expenditures with
respect to the building.
``(f) Qualified Low-to-Moderate Income Development Project.--For
purposes of this section--
``(1) In general.--The term `qualified low-to-moderate
income development project' means any development project of 1
or more for qualified low-to-moderate income buildings located
in an area if 40 percent or more of the residential units in
such development project are occupied and owned by individuals
whose income is 100 percent or less of area median gross
income.
``(2) Treatment of units occupied by individuals whose
incomes rise above limit.--Notwithstanding an increase in the
income of the occupants of a low-to-moderate income unit above
the income limitation applicable under paragraph (2) or (3),
such unit shall continue to be treated as a low-to-moderate
income unit if the income of such occupants initially met such
income limitation and such unit continues to be so restricted.
``(3) Certain rules made applicable.--Paragraphs (3), (5),
(7), and (8) of section 42(g) shall apply for purposes of
determining whether any development project is a qualified low-
to-moderate income development project.
``(g) Limitation on Aggregate Credit Allowable With Respect to
Development Projects Located in a State.--
``(1) Credit may not exceed credit amount allocated to
building.--The amount of the credit determined under this
section for any taxable year with respect to any building shall
not exceed the housing credit dollar amount allocated to such
building under rules similar to the rules of section 42(h)(1)
(determined without regard to subparagraph (D) thereof).
``(2) Allocated credit amount to apply to all taxable years
ending during or after credit allocation year.--Any housing
credit dollar amount allocated to any building for any calendar
year--
``(A) shall apply to such building for all taxable
years in the credit period ending during or after such
calendar year, and
``(B) shall reduce the aggregate housing credit
dollar amount of the allocating agency only for such
calendar year.
``(3) Housing credit dollar amount for agencies.--
``(A) In general.--The aggregate housing credit
dollar amount which a housing credit agency may
allocate for any calendar year is the portion of the
State housing credit ceiling allocated under this
paragraph for such calendar year to such agency.
``(B) State ceiling initially allocated to state
housing credit agencies.--Except as provided in
subparagraphs (D) and (E), the State housing credit
ceiling for each calendar year shall be allocated to
the housing credit agency of such State. If there is
more than 1 housing credit agency of a State, all such
agencies shall be treated as a single agency.
``(C) State housing credit ceiling.--The State
housing credit ceiling applicable to any State and any
calendar year shall be an amount equal to the sum of--
``(i) the unused State housing credit
ceiling (if any) of such State for the
preceding calendar year,
``(ii) the greater of--
``(I) $1.75 multiplied by the State
population, or
``(II) $2,000,000,
``(iii) the amount of State housing credit
ceiling returned in the calendar year, plus
``(iv) the amount (if any) allocated under
subparagraph (D) to such State by the
Secretary.
For purposes of clause (i), the unused State housing
credit ceiling for any calendar year is the excess (if
any) of the sum of the amounts described in clauses
(ii) through (iv) over the aggregate housing credit
dollar amount allocated for such year. For purposes of
clause (iii), the amount of State housing credit
ceiling returned in the calendar year equals the
housing credit dollar amount previously allocated
within the State to any development project which fails
to meet the 10 percent test under section
42(h)(1)(E)(ii) on a date after the close of the
calendar year in which the allocation was made or which
does not become a qualified low-to-moderate income
development project within the period required by this
section or the terms of the allocation or to any
development project with respect to which an allocation
is canceled by mutual consent of the housing credit
agency and the allocation recipient.
``(D) Unused housing credit carryovers allocated
among certain states.--
``(i) In general.--The unused housing
credit carryover of a State for any calendar
year shall be assigned to the Secretary for
allocation among qualified States for the
succeeding calendar year.
``(ii) Unused housing credit carryover.--
For purposes of this subparagraph, the unused
housing credit carryover of a State for any
calendar year is the excess (if any) of the
unused State housing credit ceiling for such
year (as defined in subparagraph (C)(i)) over
the excess (if any) of --
``(I) the unused State housing
credit ceiling for the year preceding
such year, over
``(II) the aggregate housing credit
dollar amount allocated for such year.
``(iii) Formula for allocation of unused
housing credit carryovers among qualified
states.--The amount allocated under this
subparagraph to a qualified State for any
calendar year shall be the amount determined by
the Secretary to bear the same ratio to the
aggregate unused housing credit carryovers of
all States for the preceding calendar year as
such State's population for the calendar year
bears to the population of all qualified States
for the calendar year. For purposes of the
preceding sentence, population shall be
determined in accordance with section 146(j).
``(iv) Qualified state.--For purposes of
this subparagraph, the term `qualified State'
means, with respect to a calendar year, any
State--
``(I) which allocated its entire
State housing credit ceiling for the
preceding calendar year, and
``(II) for which a request is made
(not later than May 1 of the calendar
year) to receive an allocation under
clause (iii).
``(E) Special rule for states with constitutional
home rule cities.--For purposes of this subsection--
``(i) In general.--The aggregate housing
credit dollar amount for any constitutional
home rule city for any calendar year shall be
an amount which bears the same ratio to the
State housing credit ceiling for such calendar
year as--
``(I) the population of such city,
bears to
``(II) the population of the entire
State.
``(ii) Coordination with other
allocations.--In the case of any State which
contains 1 or more constitutional home rule
cities, for purposes of applying this paragraph
with respect to housing credit agencies in such
State other than constitutional home rule cities, the State housing
credit ceiling for any calendar year shall be reduced by the aggregate
housing credit dollar amounts determined for such year for all
constitutional home rule cities in such State.
``(iii) Constitutional home rule city.--For
purposes of this paragraph, the term
`constitutional home rule city' has the meaning
given such term by section 146(d)(3)(C).
``(F) State may provide for different allocation.--
Rules similar to the rules of section 146(e) (other
than paragraph (2)(B) thereof) shall apply for purposes
of this paragraph.
``(G) Population.--For purposes of this paragraph,
population shall be determined in accordance with
section 146(j).
``(H) Cost-of-living adjustment.--
``(i) In general.--In the case of a
calendar year after 2002, the $2,000,000 and
$1.75 amounts in subparagraph (C) shall each be
increased by an amount equal to--
``(I) such dollar amount,
multiplied by
``(II) the cost-of-living
adjustment determined under section
1(f)(3) for such calendar year by
substituting `calendar year 2001' for
`calendar year 1992' in subparagraph
(B) thereof.
``(ii) Rounding.--
``(I) In the case of the $2,000,000
amount, any increase under clause (i)
which is not a multiple of $5,000 shall
be rounded to the next lowest multiple
of $5,000.
``(II) In the case of the $1.75
amount, any increase under clause (i)
which is not a multiple of 5 cents
shall be rounded to the next lowest
multiple of 5 cents.
``(4) Portion of state ceiling set-aside for certain
development projects involving qualified nonprofit
organizations.--
``(A) In general.--Not more than 90 percent of the
State housing credit ceiling for any State for any
calendar year shall be allocated to development
projects other than qualified low-to-moderate income
development projects described in subparagraph (B).
``(B) Development projects involving qualified
nonprofit organizations.--For purposes of subparagraph
(A), a qualified low-to-moderate income development
project is described in this subparagraph if a
qualified nonprofit organization is to materially
participate (within the meaning of section 469(h)) in
the development and operation of the development
project throughout the compliance period.
``(C) Qualified nonprofit organization.--For
purposes of this paragraph, the term `qualified
nonprofit organization' means any organization if--
``(i) such organization is described in
paragraph (3) or (4) of section 501(c) and is
exempt from tax under section 501(a),
``(ii) such organization is determined by
the State housing credit agency not to be
affiliated with or controlled by a for-profit
organization; and
``(iii) 1 of the exempt purposes of such
organization includes the fostering of low-to-
moderate income housing.
``(D) Treatment of certain subsidiaries.--
``(i) In general.--For purposes of this
paragraph, a qualified nonprofit organization
shall be treated as satisfying the ownership
and material participation test of subparagraph
(B) if any qualified corporation in which such
organization holds stock satisfies such test.
``(ii) Qualified corporation.--For purposes
of clause (i), the term `qualified corporation'
means any corporation if 100 percent of the
stock of such corporation is held by 1 or more
qualified nonprofit organizations at all times
during the period such corporation is in
existence.
``(E) State may not override set-aside.--Nothing in
subparagraph (F) of paragraph (3) shall be construed to
permit a State not to comply with subparagraph (A) of
this paragraph.
``(5) Buildings eligible for credit only if minimum long-
term commitment to low-to-moderate income housing.--
``(A) In general.--No credit shall be allowed by
reason of this section with respect to any building for
the taxable year unless a low-to-moderate income
housing commitment is in effect as of the end of such
taxable year.
``(B) Low-to-moderate income housing commitment.--
For purposes of this paragraph, the term `low-to-
moderate income housing commitment' means any agreement
between the taxpayer and the housing credit agency--
``(i) which requires that the applicable
fraction (as defined in subsection (c)(1)(B))
for the building for each taxable year in the
compliance period will not be less than the
applicable fraction specified in such
agreement,
``(ii) which allows individuals who meet
the income limitation applicable to the
building under subsection (f) (whether
prospective, present, or former occupants of
the building) the right to enforce in any State court the requirement
of clause (i),
``(iii) which allows the taxpayer the right
of first refusal to purchase the building from
the low-or-moderate income individual to whom
the taxpayer first sold the building,
``(iv) which is binding on all successors
of the taxpayer, and
``(v) which, with respect to the property,
is recorded pursuant to State law as a
restrictive covenant.
``(C) Allocation of credit may not exceed amount
necessary to support commitment.--The housing credit
dollar amount allocated to any building may not exceed
the amount necessary to support the applicable fraction
specified in the low-to-moderate income housing
commitment for such building.
``(D) Effect of noncompliance.--If, during a
taxable year, there is a determination that a low-to-
moderate income housing agreement was not in effect as
of the beginning of such year, such determination shall
not apply to any period before such year and
subparagraph (A) shall be applied without regard to
such determination if the failure is corrected within 1
year from the date of the determination.
``(E) Development projects which consist of more
than 1 building.--The application of this paragraph to
development projects which consist of more than 1
building shall be made under regulations prescribed by
the Secretary.
``(6) Special rules.--
``(A) Building must be located within jurisdiction
of credit agency.--A housing credit agency may allocate
its aggregate housing credit dollar amount only to
buildings located in the jurisdiction of the
governmental unit of which such agency is a part.
``(B) Agency allocations in excess of limit.--If
the aggregate housing credit dollar amounts allocated
by a housing credit agency for any calendar year exceed
the portion of the State housing credit ceiling
allocated to such agency for such calendar year, the
housing credit dollar amounts so allocated shall be
reduced (to the extent of such excess) for buildings in
the reverse of the order in which the allocations of
such amounts were made.
``(C) Credit reduced if allocated credit dollar
amount is less than credit which would be allowable
without regard to sales convention, etc.--
``(i) In general.--The amount of the credit
determined under this section with respect to
any building shall not exceed the clause (ii)
percentage of the amount of the credit which
would (but for this subparagraph) be determined
under this section with respect to such
building.
``(ii) Determination of percentage.--For
purposes of clause (i), the clause (ii)
percentage with respect to any building is the
percentage which--
``(I) the housing credit dollar
amount allocated to such building bears
to
``(II) the credit amount determined
in accordance with clause (iii).
``(iii) Determination of credit amount.--
The credit amount determined in accordance with
this clause is the amount of the credit which
would (but for this subparagraph) be determined
under this section with respect to the building
if this section were applied without regard to
paragraph (2)(A) of subsection (e).
``(D) Housing credit agency to specify applicable
percentage and maximum qualified basis.--In allocating
a housing credit dollar amount to any building, the
housing credit agency shall specify the applicable
percentage and the maximum qualified basis which may be
taken into account under this section with respect to
such building. The applicable percentage and maximum
qualified basis so specified shall not exceed the
applicable percentage and qualified basis determined
under this section without regard to this subsection.
``(7) Other definitions.--For purposes of this subsection--
``(A) Housing credit agency.--The term `housing
credit agency' means any agency authorized to carry out
this subsection.
``(B) Possessions treated as States.--The term
`State' includes a possession of the United States.
``(h) Definitions and Special Rules.--For purposes of this
section--
``(1) Compliance period.--The term `compliance period'
means, with respect to any building, the period of 5 taxable
years beginning with the 1st taxable year of the credit period
with respect thereto.
``(2) New building.--The term `new building' means a
building the original use of which begins with the taxpayer.
``(3) Existing building.--The term `existing building'
means any building which is not a new building.
``(4) Application to estates and trusts.--In the case of an
estate or trust, the amount of the credit determined under
subsection (a) and any increase in tax under subsection (j)
shall be apportioned between the estate or trust and the
beneficiaries on the basis of the income of the estate or trust
allocable to each.
``(i) Recapture of Credit.--If--
``(1) as of the close of any taxable year in the compliance
period, the amount of the qualified basis of any building with
respect to the taxpayer is less than
``(2) the amount of such basis as of the close of the
preceding taxable year,
then the taxpayer's tax under this chapter for the taxable year
shall be increased by the credit recapture amount determined
under rules similar to the rules of section 42(j).
``(j) Application of At-Risk Rules.--For purposes of this section,
rules similar to the rules of section 42(k) shall apply.
``(k) Certifications and Other Reports to Secretary.--
``(1) Certification with respect to 1st year of credit
period.--Following the close of the 1st taxable year in the
credit period with respect to any qualified low-to-moderate
income building, the taxpayer shall certify to the Secretary
(at such time and in such form and in such manner as the
Secretary prescribes)--
``(A) the taxable year, and calendar year, in which
such building was first sold after being placed in
service,
``(B) the adjusted basis and eligible basis of such
building as of the beginning of the credit period,
``(C) the maximum applicable percentage and
qualified basis permitted to be taken into account by
the appropriate housing credit agency under subsection
(g),
``(D) the election made under subsection (f) with
respect to the qualified low-to-moderate income housing
development project of which such building is a part,
and
``(E) such other information as the Secretary may
require.
In the case of a failure to make the certification required by
the preceding sentence on the date prescribed therefor, unless
it is shown that such failure is due to reasonable cause and
not to willful neglect, no credit shall be allowable by reason
of subsection (a) with respect to such building for any taxable
year ending before such certification is made.
``(2) Annual reports to the Secretary.--The Secretary may
require taxpayers to submit an information return (at such time
and in such form and manner as the Secretary prescribes) for
each taxable year setting forth--
``(A) the qualified basis for the taxable year of
each qualified low-to-moderate income building of the
taxpayer,
``(B) the information described in paragraph (1)(C)
for the taxable year, and
``(C) such other information as the Secretary may
require.
The penalty under section 6652(j) shall apply to any failure to
submit the return required by the Secretary under the preceding
sentence on the date prescribed therefor.
``(3) Annual reports from housing credit agencies.--Each
agency which allocates any housing credit amount to any
building for any calendar year shall submit to the Secretary
(at such time and in such manner as the Secretary shall
prescribe) an annual report specifying--
``(A) the amount of housing credit amount allocated
to each building for such year,
``(B) sufficient information to identify each such
building and the taxpayer with respect thereto, and
``(C) such other information as the Secretary may
require.
The penalty under section 6652(j) shall apply to any failure to
submit the report required by the preceding sentence on the
date prescribed therefor.
``(l) Responsibilities of Housing Credit Agencies.--
``(1) Plans for allocation of credit among development
projects.--
``(A) In general.--Notwithstanding any other
provision of this section, the housing credit dollar
amount with respect to any building shall be zero
unless--
``(i) such amount was allocated pursuant to
a qualified allocation plan of the housing
credit agency which is approved by the
governmental unit (in accordance with rules
similar to the rules of section 147(f)(2)
(other than subparagraph (B)(ii) thereof)) of
which such agency is a part,
``(ii) such agency notifies the chief
executive officer (or the equivalent) of the
local jurisdiction within which the building is
located of such development project and
provides such individual a reasonable
opportunity to comment on the development
project,
``(iii) a comprehensive market study of the
housing needs of low- and moderate-income
individuals in the area to be served by the
development project is conducted before the
credit allocation is made and at the
developer's expense by a disinterested party
who is approved by such agency, and
``(iv) a written explanation is available
to the general public for any allocation of a
housing credit dollar amount which is not made
in accordance with established priorities and
selection criteria of the housing credit
agency.
``(B) Qualified allocation plan.--For purposes of
this paragraph, the term `qualified allocation plan'
means any plan--
``(i) which sets forth selection criteria
to be used to determine housing priorities of
the housing credit agency which are appropriate
to local conditions,
``(ii) which also gives preference in
allocating housing credit dollar amounts among
selected development projects to--
``(I) development projects serving
the lowest income owners, and
``(II) development projects which
are located in qualified census tracts
(as defined in section 42(d)(5)(C)) and
the development of which contributes to a concerted community
revitalization plan, and
``(iii) which provides a procedure that the
agency (or an agent or other private contractor
of such agency) will follow in monitoring for
noncompliance with the provisions of this
section and in notifying the Internal Revenue
Service of such noncompliance which such agency
becomes aware of and in monitoring for
noncompliance with habitability standards
through regular site visits.
``(C) Certain selection criteria must be used.--The
selection criteria set forth in a qualified allocation
plan must include--
``(i) development project location,
``(ii) housing needs characteristics,
``(iii) development project
characteristics, including whether the
development project includes the use of
existing housing as part of a community
revitalization plan,
``(iv) populations with special housing
needs,
``(v) low-to-moderate income housing
waiting lists, and
``(vi) populations of individuals with
children.
``(2) Credit allocated to building not to exceed amount
necessary to assure development project feasibility.--
``(A) In general.--The housing credit dollar amount
allocated to a development project shall not exceed the
amount the housing credit agency determines is
necessary for the financial feasibility of the
development project and its viability as a qualified
low-to-moderate income development project throughout
the compliance period.
``(B) Agency evaluation.--In making the
determination under subparagraph (A), the housing
credit agency shall consider--
``(i) the sources and uses of funds and the
total financing planned for the development
project,
``(ii) any proceeds or receipts expected to
be generated by reason of tax benefits,
``(iii) the percentage of the housing
credit dollar amount used for development
project costs other than the cost of
intermediaries, and
``(iv) the reasonableness of the
developmental and operational costs of the
development project.
Clause (iii) shall not be applied so as to impede the
development of development projects in hard-to-develop
areas.
``(C) Determination made when credit amount applied
for and when building sold.--
``(i) In general.--A determination under
subparagraph (A) shall be made as of each of
the following times:
``(I) The application for the
housing credit dollar amount.
``(II) The allocation of the
housing credit dollar amount.
``(III) The date the building is
first sold after having been placed in
service.
``(ii) Certification as to amount of other
subsidies.--Prior to each determination under
clause (i), the taxpayer shall certify to the
housing credit agency the full extent of all
Federal, State, and local subsidies which apply
(or which the taxpayer expects to apply) with
respect to the building.
``(m) Regulations.--The Secretary shall prescribe such regulations
as may be necessary or appropriate to carry out the purposes of this
section, including regulations--
``(1) dealing with--
``(A) development projects which include more than
1 building or only a portion of a building,
``(B) buildings which are sold in portions,
``(2) providing for the application of this section to
short taxable years,
``(3) preventing the avoidance of the rules of this
section, and
``(4) providing the opportunity for housing credit agencies
to correct administrative errors and omissions with respect to
allocations and record keeping within a reasonable period after
their discovery, taking into account the availability of
regulations and other administrative guidance from the
Secretary.
``(n) Termination.--Clause (ii) of subsection (g)(3)(C) shall not
apply to any amount allocated after December 31, 2004.''.
(b) Current Year Business Credit Calculation.--Section 38(b) of the
Internal Revenue Code of 1986 (relating to current year business
credit) is amended by striking ``plus'' at the end of paragraph (12),
by striking the period at the end of paragraph (13) and inserting ``,
plus'', and by adding at the end the following:
``(14) the home ownership credit determined under section
42A(a).''.
(c) Limitation on Carryback.--Subsection (d) of section 39 of the
Internal Revenue Code of 1986 (relating to carryback and carryforward
of unused credits) is amended by adding at the end the following:
``(10) No carryback of home ownership credit before
effective date.--No amount of unused business credit available
under section 42A may be carried back to a taxable year
beginning on or before the date of the enactment of this
paragraph.''.
(d) Conforming Amendments.--
(1) Section 55(c)(1) of the Internal Revenue Code of 1986
is amended by inserting ``or subsection (i) or (j) of section
42A'' after ``section 42''.
(2) Subsections (i)(c)(3), (i)(c)(6)(B)(i), and (k)(1) of
section 469 of such Code are each amended by inserting ``or
42A'' after ``section 42''.
(3) Section 772(a) of such Code is amended by striking
``and'' at the end of paragraph (10), by redesignating
paragraph (11) as paragraph (12), and by inserting after
paragraph (10) the following:
``(11) the home ownership credit determined under section
42A, and''.
(4) Section 774(b)(4) of such Code is amended by inserting
``, 42A(i),'' after ``section 42(j)''.
(e) Clerical Amendment.--The table of sections for subpart D of
part IV of subchapter A of chapter 1 of the Internal Revenue Code of
1986 is amended by inserting after the item relating to section 42 the
following:
``Sec. 42A. Low-to-moderate income home
ownership credit.''.
(f) Effective Date.--The amendments made by this section shall
apply to expenditures made in taxable years beginning after the date of
the enactment of this Act.
SEC. 3. PARTIAL EXCLUSION OF GAIN FROM SALE OF LOW-TO-MODERATE INCOME
HOUSING.
(a) In General.--Part III of subchapter B of chapter 1 of the
Internal Revenue Code of 1986 (relating to items specifically excluded
from gross income) is amended by redesignating section 139 as section
140 and inserting after section 138 the following new section:
``SEC. 139. CERTAIN GAIN FROM SALE OF LOW-TO-MODERATE INCOME HOUSING.
``(a) In General.--Gross income shall not include the gain from the
sale of any low-to-moderate income building made during the taxable
year and with respect to which the taxpayer is allowed a credit under
section 42A.
``(b) Limitation.--The amount of gain which may be taken into
account under subsection (a) with respect to the sale of a low-to-
moderate income building shall not exceed $10,000 for each low-to-
moderate income unit in such building.''.
(b) Conforming Amendment.--The table of sections for part III of
subchapter B of chapter 1 of such Code is amended by striking the item
relating to section 139 and inserting the following new items:
``Sec. 139. Certain gain from sale of low-to-moderate income housing.
``Sec. 140. Cross references to other Acts.''.
(c) Effective Date.--The amendments made by this section shall
apply sales in taxable years beginning after the date of the enactment
of this Act.
SEC. 4. EXPANSION OF REHABILITATION CREDIT.
(a) Credit Applicable to Buildings at Least 50 Years Old.--
Subparagraph (B) of section 47(c)(1) of the Internal Revenue Code of
1986 (relating to qualified rehabilitated building is amended to read
as follows:
``(B) Building must be at least 50 years old.--In
the case of a building other than a certified historic
structure, a building shall not be a qualified
rehabilitated building unless the building was first
placed in service before the date which is at least 50
years before the date such building is placed in
service for purposes of the credit under this
section.''.
(b) Effective Date.--The amendment made by this section shall apply
to property placed in service after the date of the enactment of this
Act.
<all>
Introduced in Senate
Sponsor introductory remarks on measure. (CR S6612)
Read twice and referred to the Committee on Finance. (text of measure as introduced: CR S6612-6616)
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