[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2488 Introduced in House (IH)]






109th CONGRESS
  1st Session
                                H. R. 2488

                 To promote State historic tax credits.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                              May 19, 2005

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

_______________________________________________________________________

                                 A BILL


 
                 To promote State historic tax credits.

    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 Enhancement 
Act of 2005''.

SEC. 2. SPECIAL RULES FOR DISPOSITIONS OF STATE HISTORIC TAX CREDITS.

    (a) Proceeds not Income; Reduction in Basis.--
            (1) In general.--In the case of a taxpayer who receives a 
        State historic tax credit and transfers or disposes of such 
        credit, or receives a refund of all or a portion of such 
        credit--
                    (A) no portion of the net proceeds of such transfer 
                or disposition or of such refund shall constitute 
                income to such taxpayer under section 61(a) of the 
                Internal Revenue Code of 1986, and
                    (B) the taxpayer's adjusted basis in the property 
                with respect to which the State historic tax credit is 
                allowed shall be reduced by an amount equal to such net 
                proceeds or refund received by such taxpayer,
        unless the taxpayer makes an election under subsection (b).
            (2) Determination of reduction in basis.--The reduction in 
        basis under paragraph (1) shall be applied--
                    (A) first, against the basis in the underlying real 
                property,
                    (B) second, against the adjusted cost of 
                acquisition, exclusive of land, as defined in section 
                47(c)(2)(B)(ii) of the Internal Revenue Code of 1986, 
                and
                    (C) third, against the remaining basis in the 
                property.
            (3) Adjustment in basis of interest in partnership or s 
        corporation.--The adjusted basis of--
                    (A) a partner's interest in a partnership, or
                    (B) stock in an S corporation (as defined in 
                section 1361(a)(1) of such Code),
        shall be appropriately adjusted to take into account 
        adjustments made under this subsection in the basis of property 
        held by the partnership or S corporation (if any).
    (b) Election to Include in Income.--
            (1) In general.--In the case of a taxpayer who elects to 
        have this subsection apply, the net proceeds of the transfer or 
        disposition or the refund described in subsection (a) received 
        by such taxpayer shall constitute income to such taxpayer under 
        section 61(a) of the Internal Revenue Code of 1986.
            (2) Making of election.--An election under this subsection 
        shall be made at such time and in such manner as the Secretary 
        of the Treasury may by regulation prescribe. Such election 
        shall apply for the taxable year for which it is made and for 
        all subsequent taxable years and may be revoked only with the 
        consent of the Secretary of the Treasury.
    (c) Effect on Qualified Rehabilitation Expenditures and 
Rehabilitation Credits.--For purposes of determining the rehabilitation 
credit allowable to a taxpayer under section 47 of the Internal Revenue 
Code of 1986, the transfer or disposition of State historic tax credits 
with respect to any property by a taxpayer shall not affect or reduce 
the amount of qualified rehabilitation expenditures (as defined in 
section 47(c)(2) of such Code) incurred in connection with such 
property, nor shall such transfer or disposition, nor any basis 
adjustments under subsection (a), be treated as an early disposition of 
investment credit property for purposes of the recapture provisions of 
section 50 of such Code.
    (d) State Historic Tax Credits Defined.--For purposes of this 
section, the term ``State historic tax credit'' means any credit 
against State or local tax liabilities which--
            (1) is allowable under the laws of any State or political 
        subdivision thereof to a taxpayer with respect to expenditures 
        made for the rehabilitation of property identified by such 
        laws, and
            (2) is transferable or refundable under such laws.
    (e) Effective Date.--This section shall apply to transfers or 
dispositions made, or refunds received, after the date of the enactment 
of this Act.
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