I 111th CONGRESS 1st Session H. R. 3812 IN THE HOUSE OF REPRESENTATIVES October 14, 2009 Ms. Kosmas 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 encourage businesses to purchase commercial and residential property in distressed communities by providing an exclusion from tax on certain gains.

1.

Short title

This Act may be cited as the Distressed Communities Reinvestment Act of 2009.

2.

Exclusion of certain capital gains on commercial and residential property

(a)

In General

Part III of subchapter B of chapter 1 of the Internal Revenue Code of 1986 is amended by inserting after section 139C the following new section:

139D.

Capital gains on certain commercial and residential property

(a)

In General

Gross income shall not include gain from the sale of real property consisting predominantly of commercial and residential property if— (1)such property is located in a distressed community, (2)such property is acquired by the taxpayer by purchase (as defined in section 179(d)(2)) during the 24-month period beginning on the date of the enactment of this section, and (3)such property is held by the taxpayer continuously during the 5-year period ending on the date of the sale of such property. (b)

Distressed community

For purposes of this section— (1)

In general

The term distressed community means a county that the Secretary designates as— (A)having, for any month during the applicable period— (i)a residential mortgage foreclosure rate of 110 percent or more of the national average, (ii)a commercial mortgage foreclosure rate of 110 percent or more of the national average, (iii)a decline in the average fair market value of housing of at least 20 percent, or (iv)an unemployment rate of 110 percent or more of the national average, (B)being a county in which, for a calendar year during the applicable period, more than 50 percent of loans secured by housing had a loan-to-value ratio of greater than 80 percent, or (C)being in a disaster area (as defined in section 165(h)(3)(C)) as a result of a federally declared disaster that occurred during the applicable period. (2)

Applicable period

The term applicable period means— (A)in the case of subparagraphs (A) and (B) of paragraph (1), the period beginning on January 1, 2008, and ending on the date which is 2 years after the date of the enactment of the Distressed Communities Reinvestment Act of 2009, and (B)in the case of subparagraph (C) of paragraph (1), the 4-year period ending on the date which is 2 years after the date of the enactment of such Act.

. (b)

Conforming amendment

The table of sections for part III of subchapter B of chapter 1 of such Code is amended by inserting after the item relating to section 139C the following new item: 139D. Capital gains on certain commercial and residential property. . (c)

Effective Date

The amendments made by this section shall apply to property purchased after the date of the enactment of this section.