[Congressional Bills 107th Congress]
[From the U.S. Government Publishing Office]
[S. 1886 Introduced in Senate (IS)]
107th CONGRESS
1st Session
S. 1886
To amend the Internal Revenue Code of 1986 to allow a business credit
for supported elderly housing.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
December 20 (legislative day, December 18), 2001
Mr. Dodd 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 supported elderly housing.
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 ``Assisted Living Tax Credit Act''.
SEC. 2. SUPPORTED ELDERLY HOUSING CREDIT.
(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. SUPPORTED ELDERLY HOUSING CREDIT.
``(a) Amount of Credit.--For purposes of section 38, the amount of
the supported elderly housing credit determined under this section for
any taxable year in the credit period shall be an amount equal to the
sum of--
``(1) 9 percent of the qualified basis of each qualified
supported elderly building, plus
``(2) 4 percent of such qualified basis with respect to any
qualified supported elderly building providing qualified
supported elderly services.
``(b) Qualified Basis; Qualified Supported Elderly Building; Credit
Period.--For purposes of this section--
``(1) Qualified basis.--
``(A) Determination.--The qualified basis of any
qualified supported elderly 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
(determined under rules similar to the rules
under section 42(d)).
``(B) Applicable fraction.--For purposes of
subparagraph (A), the term `applicable
fraction' means the smaller of the unit fraction or the
floor space fraction.
``(C) Unit fraction.--For purposes of subparagraph
(B), the term `unit fraction' means the fraction--
``(i) the numerator of which is the number
of supported elderly units in the building, and
``(ii) the denominator of which is the
number of residential rental units (whether or
not occupied) in such building.
``(D) Floor space fraction.--For purposes of
subparagraph (B), the term `floor space fraction' means
the fraction--
``(i) the numerator of which is the total
floor space of the supported elderly units in
such building, and
``(ii) the denominator of which is the
total floor space of the residential rental
units (whether or not occupied) in such
building.
``(E) Qualified basis to include portion of
building used to provide qualified supported elderly
services.--In the case of a qualified supported elderly
building described in subsection (a)(2), the qualified
basis of such building for any taxable year shall be
increased by the lesser of--
``(i) so much of the eligible basis of such
building as is used throughout the year to
provide qualified supported elderly services,
or
``(ii) 20 percent of the qualified basis of
such building (determined without regard to
this subparagraph).
``(2) Qualified supported elderly building.--The term
`qualified supported elderly building' means any building which
is part of a qualified supported elderly housing 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
project, and
``(B) ending on the last day of the compliance
period with respect to such building.
Such term does not include any building with respect to which
moderate rehabilitation assistance is provided, at any time
during the compliance period, under section 8(e)(2) of the
United States Housing Act of 1937 (other than assistance under
the Stewart B. McKinney Homeless Assistance Act (as in effect
on the date of the enactment of this sentence)).
``(3) Credit period.--The term `credit period' means, with
respect to any building, the period of 10 taxable years
beginning with--
``(A) the taxable year in which the building is
placed in service, or
``(B) at the election of the taxpayer, the
succeeding taxable year,
but only if the building is a qualified supported elderly
building as of the close of the 1st year of such period. The
election under subparagraph (B), once made, shall be
irrevocable.
``(4) Applicable rules.--
``(A) For treatment of certain rehabilitation
expenditures as separate new buildings, subsection (e)
of section 42 shall apply.
``(B) For rules regarding the application of the
credit period, paragraphs (2) through (5) of section
42(f) shall apply.
``(c) Qualified Supported Elderly Housing Project.--For purposes of
this section--
``(1) In general.--The term `qualified supported elderly
housing project' means any project for residential rental
property if the project meets the requirements of subparagraph
(A) or (B) whichever is elected by the taxpayer:
``(A) 20-50 test.--The project meets the
requirements of this subparagraph if 20 percent or more
of the residential units in such project are both rent-
restricted and occupied by individuals whose income is
50 percent or less of area median gross income.
``(B) 40-90 test.--The project meets the
requirements of this subparagraph if 40 percent or more
of the residential units in such project are both rent-
restricted and occupied by individuals whose income is
90 percent or less of area median gross income.
Any election under this paragraph, once made, shall be
irrevocable. For purposes of this paragraph, any property shall
not be treated as failing to be residential rental property
merely because part of the building in which such property is
located is used for purposes other than residential rental
purposes.
``(2) Rent-restricted units.--
``(A) In general.--For purposes of paragraph (1), a
residential unit is rent-restricted if the gross rent
with respect to such unit does not exceed 65 percent of
the imputed income limitation applicable to such unit.
For purposes of the preceding sentence, the amount of
the income limitation under paragraph (1) applicable
for any period shall not be less than such limitation
applicable for the earliest period the building (which
contains the unit) was included in the determination of
whether the project is a qualified supported elderly
housing project.
``(B) Gross rent.--For purposes of subparagraph
(A), gross rent--
``(i) includes any fee for a qualified
supported elderly service which is paid to the
owner of the unit (on the basis of the
supported elderly status of the tenant of the
unit) by any governmental program of assistance
(or by an organization described in section
501(c)(3) and exempt from tax under section
501(a)) if such program (or organization)
provides assistance for rent and the amount of
assistance provided for rent is not separable
from the amount of assistance provided for
supportive services,
``(ii) does not include any payment under
section 8 of the United States Housing Act of
1937 or any comparable rental assistance
program (with respect to such unit or occupants
thereof),
``(iii) includes any utility allowance
determined by the Secretary after taking into
account such determinations under section 8 of
the United States Housing Act of 1937, and
``(iv) does not include any rental payment
to the owner of the unit to the extent such
owner pays an equivalent amount to the Farmers'
Home Administration under section 515 of the
Housing Act of 1949.
``(C) Imputed income limitation applicable to
unit.--For purposes of this paragraph, the imputed
income limitation applicable to a unit is the income
limitation which would apply under paragraph (1) to
individuals occupying the unit if the number of
individuals occupying the unit were as follows:
``(i) In the case of a unit which does not
have a separate bedroom, 1 individual.
``(ii) In the case of a unit which has 1 or
more separate bedrooms, 1.5 individuals for
each separate bedroom.
In the case of a project with respect to which a credit
is allowable by reason of this section and for which
financing is provided by a bond described in section
142(a)(7), the imputed income limitation shall apply in
lieu of the otherwise applicable income limitation for
purposes of applying section 142(d)(4)(B)(ii).
``(D) Treatment of units occupied by individuals
whose incomes rise above limit.--
``(i) In general.--Except as provided in
clause (ii), notwithstanding an increase in the
income of the occupants of a supported elderly
unit above the income limitation applicable
under paragraph (1), such unit shall continue
to be treated as a supported elderly unit if
the income of such occupants initially met such
income limitation and such unit continues to be
rent restricted.
``(ii) Next available unit must be rented
to supported elderly tenant if income rises
above 140 percent of income limit.--If the
income of the occupants of the unit increases
above 140 percent of the income limitation
applicable under paragraph (1), clause (i)
shall cease to apply to such unit if any
residential rental unit in the building (of a
size comparable to, or smaller than, such unit)
is occupied by a new resident whose income
exceeds such income limitation. In the case of
a project described in section 142(d)(4)(B),
the preceding sentence shall be applied by
substituting `170 percent' for `140 percent'
and by substituting `any supported elderly unit
in the building is occupied by a new resident
whose income exceeds 40 percent of area median
gross income' for `any residential unit in the
building (of a size comparable to, or smaller
than, such unit) is occupied by a new resident
whose income exceeds such income limitation'.
``(E) Units where federal rental assistance is
reduced as tenant's income increases.--If the gross
rent with respect to a residential unit exceeds the
limitation under subparagraph (A) by reason of the fact
that the income of the occupants thereof exceeds the
income limitation applicable under paragraph (1), such
unit shall, nevertheless, be treated as a rent-
restricted unit for purposes of paragraph (1) if--
``(i) a Federal rental assistance payment
described in subparagraph (B)(i) is made with
respect to such unit or its occupants, and
``(ii) the sum of such payment and the
gross rent with respect to such unit does not
exceed the sum of the amount of such payment
which would be made and the gross rent which
would be payable with respect to such unit if--
``(I) the income of the occupants
thereof did not exceed the income
limitation applicable under paragraph
(1), and
``(II) such units were rent-
restricted within the meaning of
subparagraph (A).
The preceding sentence shall apply to any unit only if
the result described in clause (ii) is required by
Federal statute as of the date of the enactment of this
subparagraph and as of the date the Federal rental
assistance payment is made.
``(3) Qualified supported elderly service.--The term
`qualified supported elderly service' means any service
provided under a planned program of services designed to enable
residents of a residential rental property to remain
independent and avoid placement in a hospital, nursing home, or
intermediate care facility for the mentally or physically
handicapped. In the case of a single-room occupancy unit or a
building described in subsection (h)(2)(B)(iii), such term
includes any service provided to assist tenants in locating and
retaining permanent housing.
``(4) Date for meeting requirements.--
``(A) In general.--Except as otherwise provided in
this paragraph, a building shall be treated as a
qualified supported elderly building only if the
project (of which such building is a part) meets the
requirements of paragraph (1) not later than the close
of the 1st year of the credit period for such building.
``(B) Buildings which rely on later buildings for
qualification.--
``(i) In general.--In determining whether a
building (in this subparagraph referred to as
the `prior building') is a qualified supported
elderly building, the taxpayer may take into
account 1 or more additional buildings placed
in service during the 12-month period described
in subparagraph (A) with respect to the prior
building only if the taxpayer elects to apply
clause (ii) with respect to each additional
building taken into account.
``(ii) Treatment of elected buildings.--In
the case of a building which the taxpayer
elects to take into account under clause (i),
the period under subparagraph (A) for such
building shall end at the close of the 12-month
period applicable to the prior building.
``(iii) Date prior building is treated as
placed in service.--For purposes of determining
the credit period and the compliance period for
the prior building, the prior building shall be
treated for purposes of this section as placed
in service on the most recent date any
additional building elected by the taxpayer
(with respect to such prior building) was
placed in service.
``(C) Special rule.--A building--
``(i) other than the 1st building placed in
service as part of a project, and
``(ii) other than a building which is
placed in service during the 12-month period
described in subparagraph (A) with respect to a
prior building which becomes a qualified
supported elderly building,
shall in no event be treated as a qualified supported
elderly building unless the project is a qualified
supported elderly housing project (without regard to
such building) on the date such building is placed in
service.
``(D) Projects with more than 1 building must be
identified.--For purposes of this section, a project
shall be treated as consisting of only 1 building
unless, before the close of the 1st calendar year in
the project period (as defined in subsection
(d)(1)(F)(ii)), each building which is (or will be)
part of such project is identified in such form and
manner as the Secretary may provide.
``(5) Certain rules made applicable.--Paragraphs (2) (other
than subparagraph (A) thereof), (3), (4), (5), (6), and (7) of
section 142(d), and section 6652(j), shall apply for purposes
of determining whether any project is a qualified supported
elderly housing project and whether any unit is a supported
elderly unit; except that, in applying such provisions for such
purposes, the term `gross rent' shall have the meaning given
such term by paragraph (2)(B) of this subsection.
``(6) Election to treat building after compliance period as
not part of a project.--For purposes of this section, the
taxpayer may elect to treat any building as not part of a
qualified supported elderly housing project for any period
beginning after the compliance period for such building.
``(7) Special rule where de minimis equity contribution.--
Property shall not be treated as failing to be residential
rental property for purposes of this section merely because the
occupant of a residential unit in the project pays (on a
voluntary basis) to the lessor a de minimis amount to be held
toward the purchase by such occupant of a residential unit in
such project if--
``(A) all amounts so paid are refunded to the
occupant on the cessation of his occupancy of a unit in
the project, and
``(B) the purchase of the unit is not permitted
until after the close of the compliance period with
respect to the building in which the unit is located.
Any amount paid to the lessor as described in the preceding
sentence shall be included in gross rent under paragraph (2)
for purposes of determining whether the unit is rent-
restricted.
``(8) Scattered site projects.--Buildings which would (but
for their lack of proximity) be treated as a project for
purposes of this section shall be so treated if all of the
dwelling units in each of the buildings are rent-restricted
(within the meaning of paragraph (2)) residential rental units.
``(9) Waiver of certain de minimis errors and
recertifications.--On application by the taxpayer, the
Secretary may waive--
``(A) any recapture under subsection (i) in the
case of any de minimis error in complying with
paragraph (1), or
``(B) any annual recertification of tenant income
for purposes of this subsection, if the entire building
is occupied by supported elderly tenants.
``(d) Limitation on Aggregate Credit Allowable With Respect to
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 supported elderly housing credit dollar amount
allocated to such building under rules similar to the rules of
paragraph (1) of section 42(h).
``(2) Allocated credit amount to apply to all taxable years
ending during or after credit allocation year.--Any supported
elderly housing credit dollar amount allocated to any building
for any calendar year--
``(A) shall apply to such building for all taxable
years in the compliance period ending during or after
such calendar year, and
``(B) shall reduce the aggregate supported elderly
housing credit dollar amount of the allocating agency
only for such calendar year.
``(3) Supported elderly housing credit dollar amount for
agencies.--
``(A) In general.--The aggregate supported elderly
housing credit dollar amount which a supported elderly
housing credit agency may allocate for any calendar
year is the portion of the State supported elderly
housing credit ceiling allocated under this paragraph
for such calendar year to such agency.
``(B) State ceiling initially allocated to state
supported elderly housing credit agencies.--Except as
provided in subparagraphs (D) and (E), the State
supported elderly housing credit ceiling for each
calendar year shall be allocated to the supported
elderly housing credit agency of such State. If there
is more than 1 supported elderly housing credit agency
of a State, all such agencies shall be treated as a
single agency.
``(C) State supported elderly housing credit
ceiling.--The State supported elderly housing credit
ceiling applicable to any State and any calendar year
shall be an amount equal to the sum of--
``(i) the unused State supported elderly
housing credit ceiling (if any) of such State
for the preceding calendar year,
``(ii) $1.25 multiplied by the State
population,
``(iii) the amount of State supported
elderly 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 supported
elderly housing credit ceiling for any calendar year is
the excess (if any) of the sum of the amounts described
in clauses (i) through (iv) over the aggregate
supported elderly housing credit dollar amount
allocated for such year. For purposes of clause (iii),
the amount of State supported elderly housing credit
ceiling returned in the calendar year equals the
supported elderly housing credit dollar amount
previously allocated within the State to any 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 supported elderly housing
project within the period required by this section or
the terms of the allocation or to any project with
respect to which an allocation is canceled by mutual
consent of the supported elderly housing credit agency
and the allocation recipient.
``(D) Unused supported elderly housing credit
carryovers allocated among certain states.--
``(i) In general.--The unused supported
elderly 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 supported elderly housing
credit carryover.--For purposes of this
subparagraph, the unused supported elderly
housing credit carryover of a State for any
calendar year is the excess (if any) of--
``(I) the unused State supported
elderly housing credit ceiling for the
year preceding such year, over
``(II) the aggregate supported
elderly housing credit dollar amount
allocated for such year.
``(iii) Formula for allocation of unused
supported elderly 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 supported elderly
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 supported elderly 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 supported
elderly 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 supported elderly 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 supported elderly housing
credit agencies in such State other than
constitutional home rule cities, the State
supported elderly housing credit ceiling for any calendar year shall be
reduced by the aggregate supported elderly 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).
``(4) Credit for buildings financed by tax-exempt bonds
subject to volume cap not taken into account.--
``(A) In general.--Paragraph (1) shall not apply to
the portion of any credit allowable under subsection
(a) which is attributable to eligible basis financed by
any obligation the interest on which is exempt from tax
under section 103 if--
``(i) such obligation is taken into account
under section 146, and
``(ii) principal payments on such financing
are applied within a reasonable period to
redeem obligations the proceeds of which were
used to provide such financing.
``(B) Special rule where 50 percent or more of
building is financed with tax-exempt bonds subject to
volume cap.--For purposes of subparagraph (A), if 50
percent or more of the aggregate basis of any building
and the land on which the building is located is
financed by any obligation described in subparagraph
(A), paragraph (1) shall not apply to any portion of
the credit allowable under subsection (a) with respect
to such building.
``(5) Portion of state ceiling set-aside for certain
projects involving qualified nonprofit organizations.--
``(A) In general.--Not more than 90 percent of the
State supported elderly housing credit ceiling for any
State for any calendar year shall be allocated to
projects other than qualified supported elderly housing
projects described in subparagraph (B).
``(B) Projects involving qualified nonprofit
organizations.--For purposes of subparagraph (A), a
qualified supported elderly housing 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 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 supported elderly 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
supported elderly 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.
``(6) Buildings eligible for credit only if minimum long-
term commitment to supported elderly housing.--
``(A) In general.--Under rules similar to the rules
under section 42(h)(6), no credit shall be allowed by
reason of this section with respect to any building for
the taxable year unless an extended supported elderly
housing commitment is in effect as of the end of such
taxable year.
``(B) Extended supported elderly housing
commitment.--For purposes of this paragraph, the term
`extended supported elderly housing commitment' has the
meaning given the term `extended low-income housing
commitment' under section 42(h)(6).
``(7) Application of certain rules.--For purposes of this
section, rules similar to the rules of section 42(h)(7) shall
apply.
``(8) Other definitions.--For purposes of this subsection--
``(A) Supported elderly housing credit agency.--The
term `supported elderly 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.
``(e) 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 15 taxable
years beginning with the 1st taxable year of the credit period
with respect thereto.
``(2) Supported elderly unit.--
``(A) In general.--The term `supported elderly
unit' means any unit in a building if--
``(i) such unit is rent-restricted (as
defined in subsection (c)(2)), and
``(ii) the individuals occupying such unit
meet the income limitation applicable under
subsection (c)(1) to the project of which such
building is a part.
``(B) Exceptions.--
``(i) In general.--A unit shall not be
treated as a supported elderly unit unless the
unit is suitable for occupancy and used other
than on a transient basis.
``(ii) Suitability for occupancy.--For
purposes of clause (i), the suitability of a
unit for occupancy shall be determined under
regulations prescribed by the Secretary taking
into account local health, safety, and building
codes.
``(iii) Transitional housing for
homeless.--For purposes of clause (i), a unit
shall be considered to be used other than on a
transient basis if the unit contains sleeping
accommodations and kitchen and bathroom
facilities and is located in a building--
``(I) which is used exclusively to
facilitate the transition of homeless
individuals (within the meaning of
section 103 of the Stewart B. McKinney
Homeless Assistance Act (42 U.S.C.
11302), as in effect on the date of the
enactment of this clause) to
independent living within 24 months,
and
``(II) in which a governmental
entity or qualified nonprofit
organization (as defined in subsection
(d)(5)(C)) provides such individuals
with temporary housing and supportive
services designed to assist such
individuals in locating and retaining
permanent housing.
``(iv) Single-room occupancy units.--For
purposes of clause (i), a single-room occupancy
unit shall not be treated as used on a
transient basis merely because it is rented on
a month-by-month basis.
``(C) Special rule for buildings having 4 or fewer
units.--In the case of any building which has 4 or
fewer residential rental units, no unit in such
building shall be treated as a supported elderly unit
if the units in such building are owned by--
``(i) any individual who occupies a
residential unit in such building, or
``(ii) any person who is related (within
the meaning of section 42(d)(2)(D)(iii)) to
such individual.
``(D) Owner-occupied building having 4 or fewer
units eligible for credit where development plan.--
``(i) In general.--Subparagraph (C) shall
not apply to the acquisition or rehabilitation
of a building pursuant to a development plan of
action sponsored by a State or local government
or a qualified nonprofit organization (as
defined in subsection (d)(5)(C)).
``(ii) Limitation on credit.--In the case
of a building to which clause (i) applies, the
applicable fraction shall not exceed 80 percent
of the unit fraction.
``(iii) Certain unrented units treated as
owner-occupied.--In the case of a building to
which clause (i) applies, any unit which is not
rented for 90 days or more shall be treated as
occupied by the owner of the building as of the
1st day it is not rented.
``(3) 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 (i)
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.
``(4) Impact of tenants right of 1st refusal to acquire
property.--
``(A) In general.--No Federal income tax benefit
shall fail to be allowable to the taxpayer with respect
to any qualified supported elderly building merely by
reason of a right of 1st refusal held by the tenants
(in cooperative form or otherwise) or resident
management corporation of such building or by a
qualified nonprofit organization (as defined in
subsection (d)(5)(C)) or government agency to purchase
the property after the close of the compliance period
for a price which is not less than the minimum purchase
price determined under subparagraph (B).
``(B) Minimum purchase price.--For purposes of
subparagraph (A), the minimum purchase price under this
subparagraph is an amount equal to the sum of--
``(i) the principal amount of outstanding
indebtedness secured by the building (other
than indebtedness incurred within the 5-year
period ending on the date of the sale to the
tenants), and
``(ii) all Federal, State, and local taxes
attributable to such sale.
Except in the case of Federal income taxes, there shall
not be taken into account under clause (ii) any
additional tax attributable to the application of
clause (ii).
``(f) Recapture of Credit.--
``(1) In general.--If--
``(A) 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
``(B) 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).
``(g) Application of At-Risk Rules.--For purposes of this section,
rules similar to the rules of section 42(k) shall apply.
``(h) Responsibilities of Taxpayers and Supported Elderly Housing
Credit Agencies.--For purposes of this section, subsections (l) and (m)
of section 42 shall apply.
``(i) 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) projects which include more than 1 building
or only a portion of a building,
``(B) buildings which are placed in service 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 supported elderly
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.''.
(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 supported elderly housing 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 supported elderly housing 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 (f) or (g) 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 supported elderly housing credit determined
under section 42A, and''.
(4) Section 774(b)(4) of such Code is amended by inserting
``, 42A(f),'' 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. Supported elderly housing
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.
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