[Congressional Bills 103th Congress]
[From the U.S. Government Publishing Office]
[S. 895 Introduced in Senate (IS)]

103d CONGRESS
  1st Session
                                 S. 895

    To amend the Internal Revenue Code of 1986 with respect to the 
   treatment of the rehabilitation credit under the passive activity 
              limitation and the alternative minimum tax.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                May 5 (legislative day, April 19), 1993

  Mr. Pryor (for himself, Mr. Danforth, Mr. Boren, and Mr. Johnston) 
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 with respect to the 
   treatment of the rehabilitation credit under the passive activity 
              limitation and the alternative minimum tax.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Historic Rehabilitation Tax Credit 
Expansion Act of 1993''.

SEC. 2. TREATMENT OF REHABILITATION CREDIT UNDER PASSIVE ACTIVITY 
              LIMITATIONS.

    (a) General Rule.--Paragraphs (2) and (3) of section 469(i) of the 
Internal Revenue Code of 1986 (relating to $25,000 offset for rental 
real estate activities) are amended to read as follows:
            ``(2) Dollar limitations.--
                    ``(A) In general.--Except as otherwise provided in 
                this paragraph, the aggregate amount to which paragraph 
                (1) applies for any taxable year shall not exceed 
                $25,000 reduced (but not below zero) by 50 percent of 
                the amount (if any) by which the adjusted gross income 
                of the taxpayer for the taxable year exceeds $100,000.
                    ``(B) Phaseout not applicable to low-income housing 
                credit.--In the case of the portion of the passive 
                activity credit for any taxable year which is 
                attributable to any credit determined under section 
                42--
                            ``(i) subparagraph (A) shall not apply, and
                            ``(ii) paragraph (1) shall not apply to the 
                        extent that the deduction equivalent of such 
                        portion exceeds--
                                    ``(I) $25,000, reduced by
                                    ``(II) the aggregate amount of the 
                                passive activity loss (and the 
                                deduction equivalent of any passive 
                                activity credit which is not so 
                                attributable and is not attributable to 
                                the rehabilitation credit determined 
                                under section 47) to which paragraph 
                                (1) applies after the application of 
                                subparagraph (A).
                    ``(C) $55,500 limit for rehabilitation credits.--In 
                the case of the portion of the passive activity credit 
                for any taxable year which is attributable to the 
                rehabilitation credit determined under section 47--
                            ``(i) subparagraph (A) shall not apply, and
                            ``(ii) paragraph (1) shall not apply to the 
                        extent that the deduction equivalent of such 
                        portion exceeds--
                                    ``(I) $55,500, reduced by
                                    ``(II) the aggregate amount of the 
                                passive activity loss (and the 
                                deduction equivalent of any passive 
                                activity credit which is not so 
                                attributable) to which paragraph (1) 
                                applies for the taxable year after the 
                                application of subparagraphs (A) and 
                                (B).
            ``(3) Adjusted gross income.--For purposes of paragraph 
        (2)(A), adjusted gross income shall be determined without 
        regard to--
                    ``(A) any amount includable in gross income under 
                section 86,
                    ``(B) any amount excludable from gross income under 
                section 135,
                    ``(C) any amount allowable as a deduction under 
                section 219, and
                    ``(D) any passive activity loss.''.
    (b) Conforming Amendments.--
            (1) Subparagraph (B) of section 469(i)(4) of such Code is 
        amended to read as follows:
                    ``(B) Reduction for surviving spouse's exemption.--
                For purposes of subparagraph (A), the $25,000 amounts 
                under paragraph (2)(A) and (2)(B)(ii) and the $55,500 
                amount under paragraph (2)(C)(ii) shall each be reduced 
                by the amount of the exemption under paragraph (1) 
                (determined without regard to the reduction contained 
                in paragraph (2)(A)) which is allowable to the 
                surviving spouse of the decedent for the taxable year 
                ending with or within the taxable year of the 
                estate.''.
            (2) Subparagraph (A) of section 469(i)(5) of such Code is 
        amended by striking clauses (i), (ii), and (iii) and inserting 
        the following:
                            ``(i) `$12,500' for `$25,000' in 
                        subparagraphs (A) and (B)(ii) of paragraph (2),
                            ``(ii) `$50,000' for `$100,000' in 
                        paragraph (2)(A)'', and
                            ``(iii) `$27,750' for `$55,500' in 
                        paragraph (2)(C)(ii).''.
            (3) The subsection heading for subsection (i) of section 
        469 of such Code is amended by striking ``$25,000''.
    (c) Effective Date.--The amendments made by this section shall 
apply to property placed in service on or after May 5, 1993, in taxable 
years ending on or after such date.

SEC. 3. REHABILITATION CREDIT ALLOWED TO OFFSET PORTION OF ALTERNATIVE 
              MINIMUM TAX.

    (a) In General.--Section 38(c) of the Internal Revenue Code of 1986 
(relating to limitation based on amount of tax) is amended by 
redesignating paragraph (2) as paragraph (3) and by inserting after 
paragraph (1) the following new paragraph:
            ``(2) Rehabilitation investment credit may offset portion 
        of minimum tax.--
                    ``(A) In general.--In the case of the 
                rehabilitation investment tax credit--
                            ``(i) this section and section 39 shall be 
                        applied separately with respect to such credit, 
                        and
                            ``(ii) for purposes of applying paragraph 
                        (1) to such credit--
                                    ``(I) the tentative minimum tax 
                                under subparagraph (A) thereof shall be 
                                reduced by the minimum tax offset 
                                amount determined under subparagraph 
                                (B) of this paragraph, and
                                    ``(II) the limitation under 
                                paragraph (1) (as modified by subclause 
                                (I)) shall be reduced by the credit 
                                allowed under subsection (a) for the 
                                taxable year (other than the 
                                rehabilitation investment tax credit).
                    ``(B) Minimum tax offset amount.--For purposes of 
                subparagraph (A)(ii)(I), the minimum tax offset amount 
                is an amount equal to--
                            ``(i) in the case of a taxpayer not 
                        described in clause (ii), the lesser of--
                                    ``(I) 25 percent of the tentative 
                                minimum tax for the taxable year, or
                                    ``(II) $20,000, or
                            ``(ii) in the case of a C corporation other 
                        than a closely held C corporation (as defined 
                        in section 469(j)(1)), 5 percent of the 
                        tentative minimum tax for the taxable year.
                    ``(C) Rehabilitation investment tax credit.--For 
                purposes of this paragraph, the term `regular 
                investment tax credit' means the portion of the credit 
                under subsection (a) which is attributable to the 
                credit determined under section 47.''.
    (b) Conforming Amendment.--Section 38(d) (relating to components of 
investment credit) is amended by adding at the end the following new 
paragraph:
            ``(4) Special rule for rehabilitation credit.--
        Notwithstanding paragraphs (1) and (2), the rehabilitation 
        investment tax credit (as defined in subsection (c)(2)(C)) 
        shall be treated as used last.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 1992.

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