[Congressional Bills 105th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2765 Introduced in House (IH)]







105th CONGRESS
  1st Session
                                H. R. 2765

     To amend the Internal Revenue Code of 1986 to specify certain 
 circumstances that give rise to affiliation or control of a nonprofit 
   organization by a for-profit organization for purposes of denying 
           eligibility for the low-income housing tax credit.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                            October 29, 1997

 Mr. Hilliard introduced the following bill; which was referred to the 
                      Committee on Ways and Means

_______________________________________________________________________

                                 A BILL


 
     To amend the Internal Revenue Code of 1986 to specify certain 
 circumstances that give rise to affiliation or control of a nonprofit 
   organization by a for-profit organization for purposes of denying 
           eligibility for the low-income housing tax credit.

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

SECTION 1. AFFILIATION OR CONTROL OF A NONPROFIT ORGANIZATION BY A FOR-
              PROFIT ORGANIZATION.

    (a) In General.--Paragraph (5) of section 42(h) of the Internal 
Revenue Code of 1986 (relating to portion of State ceiling set-aside 
for certain projects involving qualified nonprofit organizations) is 
amended by redesignating subparagraph (E) as subparagraph (F) and 
inserting after subparagraph (D) the following new subparagraph:
                    ``(E) Certain actions determinative of affiliation 
                or control.--
                            ``(i) In general.--For purposes of 
                        subparagraph (C)(ii), an organization shall be 
                        treated as controlled by a for-profit 
                        organization if the organization is described 
                        in clause (ii).
                            ``(ii) An organization is described in this 
                        clause if the organization--
                                    ``(I) guarantees to a for-profit 
                                organization any form of economic or 
                                financial benefit,
                                    ``(II) guarantees to a for-profit 
                                organization the return of capital 
                                contribution made by such for-profit 
                                organization to the partnership or 
                                venture or is otherwise required to 
                                fund operating deficits of the 
                                partnership or venture, or
                                    ``(III) can be removed as a general 
                                partner from the partnership or venture 
                                by a for-profit organization for 
                                reasons other than fraud or gross 
                                negligence.''
    (b) Effective Date.--
            (1) In general.--The amendment made by subsection (a) shall 
        apply to State housing credit ceilings for calendar years after 
        1997.
            (2) Period in which nonprofit organization may terminate 
        affiliation or control by for-profit organization.--If, with 
        respect to any building that has been allocated a housing 
        credit dollar amount under section 42(h)(5) of the Internal 
        Revenue Code of 1986 as of the date of enactment of this Act, a 
        nonprofit organization is determined to be affiliated with or 
        controlled by a for-profit organization under clause (ii) of 
        section 42(h)(5)(C) of the Internal Revenue Code of 1986 by 
        reason of the amendment made by subsection (a), then--
                    (A) after December 31, 1997, such building shall 
                cease to be a qualified low income housing project, 
                unless
                    (B) before January 1, 1998, such nonprofit 
                organization is determined by the State housing credit 
                agency to be not so affiliated or controlled.
                                 <all>