1.15-year recovery period for depreciation of designated low-income buildings
(a)Subparagraph (E) of section 168(e)(3) of the Internal Revenue Code of 1986 (relating to 15-year property) is amended by striking and
at the end of clause (ii), by striking the period at the end of clause (iii) and inserting , and
, and by adding at the end the following new clause:
(iv)any designated low-income building.
(b)Designated low-income buildingSubsection (e) of section 168 of such Code (relating to classification of property) is amended by adding at the end the following new paragraph:
(6)Designated low-income building
(A)The term designated low-income building means any building which is a qualified low-income building (as defined in section 42(c)(2)) if—
(i)no housing credit dollar amount has been allocated to such building under section 42(h), and
(ii)the taxpayer has made the election described in subparagraph (B) with respect to such building.
(B)An election is described in this subparagraph if made by the taxpayer at such time and in such manner as the Secretary may prescribe. Any election under the preceding sentence, once made, shall be irrevocable.
(C)Coordination with low-income housing creditNo credit shall be allowed under section 42 with respect to any designated low-income building.
(D)Recapture of accelerated depreciationA designated low-income building which ceases to be a qualified low-income building (as defined in section 42(c)(2)) at any time during the recapture period shall, under regulations prescribed by the Secretary, be treated as though paragraph (3)(E)(iv) were never enacted. The statutory period for the assessment of any deficiency attributable to this subparagraph shall not expire before the expiration of the 1-year period beginning on the date the Secretary is notified by the taxpayer (in such manner as the Secretary may prescribe) of the change in status of such building. For purposes of this subparagraph, the term recapture period has the meaning given the term compliance period under section 42(i)(1) except 20 taxable years
shall be substituted for 15 taxable years
..
(c)Alternative depreciation systemThe table contained in section 168(g)(3)(B) of such Code is amended by inserting after the item relating to subparagraph (E)(iii) the following:
(d)The amendments made by this section shall apply to property placed in service after the date of the enactment of this Act.
2.Qualified low-income buildings not subject to limitation on passive activity losses and credits
(a)Section 469 of the Internal Revenue Code of 1986 (relating to passive activity losses and credits limited) is amended by redesignating subsections (l) and (m) as subsections (m) and (n), respectively, and by inserting after subsection (k) the following new subsection:
(l)Special rule for qualified low-income buildingsSubsection (a) shall not apply to that portion of the passive activity loss and passive activity credit for any taxable year which is attributable to any qualified low-income building (as defined in section 42(c)(2))..
(b)
(1)Paragraph (3) of section 469(i) of such Code is amended by striking subparagraph (D) and by redesignating subparagraphs (E) and (F) as subparagraphs (D) and (E), respectively.
(2)Subparagraph (D) of section 469(i) of such Code (as so redesignated) is amended to read as follows:
(D)Ordering rules to reflect exceptions and separate phase-outsIf subparagraph (B) or (C) applies for a taxable year, paragraph (1) shall be applied—
(i)first to the portion of the passive activity loss to which subparagraph (C) does not apply,
(ii)second to the portion of such loss to which subparagraph (C) applies,
(iii)third to the portion of the passive activity credit to which subparagraph (B) does not apply, and
(iv)fourth to the portion of such credit to which subparagraph (B) applies..
(c)The amendments made by this section shall apply to property placed in service after the date of the enactment of this Act.