Internal Revenue Code:Sec. 42. Low-income housing credit
From TaxAlmanac, A Free Online Resource for Tax Professionals
Note: You are using this website at your own risk, subject to our Disclaimer and Website Use and Contribution Terms.
From TaxAlmanac
Contents |
Location in Internal Revenue Code
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter A - Determination of Tax Liability
PART IV - CREDITS AGAINST TAX
Subpart D - Business Related Credits
Statute
Sec. 42. Low-income housing credit
(a) In general
For purposes of section 38, the amount of the low-income housing
credit determined under this section for any taxable year in the
credit period shall be an amount equal to -
(1) the applicable percentage of
(2) the qualified basis of each qualified low-income building.
(b) Applicable percentage: 70 percent present value credit for
certain new buildings; 30 percent present value credit for
certain other buildings
For purposes of this section -
(1) Building placed in service during 1987
In the case of any qualified low-income building placed in
service by the taxpayer during 1987, the term ''applicable
percentage'' means -
(A) 9 percent for new buildings which are not federally
subsidized for the taxable year, or
(B) 4 percent for -
(i) new buildings which are federally subsidized for the
taxable year, and
(ii) existing buildings.
(2) Buildings placed in service after 1987
(A) In general
In the case of any qualified low-income building placed in
service by the taxpayer after 1987, the term ''applicable
percentage'' means the appropriate percentage prescribed by the
Secretary for the earlier of -
(i) the month in which such building is placed in service,
or
(ii) at the election of the taxpayer -
(I) the month in which the taxpayer and the housing
credit agency enter into an agreement with respect to such
building (which is binding on such agency, the taxpayer,
and all successors in interest) as to the housing credit
dollar amount to be allocated to such building, or
(II) in the case of any building to which subsection
(h)(4)(B) applies, the month in which the tax-exempt
obligations are issued.
A month may be elected under clause (ii) only if the election
is made not later than the 5th day after the close of such
month. Such an election, once made, shall be irrevocable.
(B) Method of prescribing percentages
The percentages prescribed by the Secretary for any month
shall be percentages which will yield over a 10-year period
amounts of credit under subsection (a) which have a present
value equal to -
(i) 70 percent of the qualified basis of a building
described in paragraph (1)(A), and
(ii) 30 percent of the qualified basis of a building
described in paragraph (1)(B).
(C) Method of discounting
The present value under subparagraph (B) shall be determined
-
(i) as of the last day of the 1st year of the 10-year
period referred to in subparagraph (B),
(ii) by using a discount rate equal to 72 percent of the
average of the annual Federal mid-term rate and the annual
Federal long-term rate applicable under section 1274(d)(1) to
the month applicable under clause (i) or (ii) of subparagraph
(A) and compounded annually, and
(iii) by assuming that the credit allowable under this
section for any year is received on the last day of such
year.
(3) Cross references
(A) For treatment of certain rehabilitation expenditures as
separate new buildings, see subsection (e).
(B) For determination of applicable percentage for increases
in qualified basis after the 1st year of the credit period, see
subsection (f)(3).
(C) For authority of housing credit agency to limit
applicable percentage and qualified basis which may be taken
into account under this section with respect to any building,
see subsection (h)(7).
(c) Qualified basis; qualified low-income building
For purposes of this section -
(1) Qualified basis
(A) Determination
The qualified basis of any qualified low-income 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
subsection (d)(5)).
(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 low-income
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
low-income 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 supportive services for homeless
In the case of a qualified low-income building described in
subsection (i)(3)(B)(iii), 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 supportive services
designed to assist tenants in locating and retaining
permanent housing, or
(ii) 20 percent of the qualified basis of such building
(determined without regard to this subparagraph).
(2) Qualified low-income building
The term ''qualified low-income building'' means any building -
(A) which is part of a qualified low-income housing project
at all times during the period -
(i) beginning on the 1st day in the compliance period on
which such building is part of such a project, and
(ii) ending on the last day of the compliance period with
respect to such building, and
(B) to which the amendments made by section 201(a) of the Tax
Reform Act of 1986 apply.
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) (FOOTNOTE 1)
of the United States Housing Act of 1937 (other than assistance
under the McKinney-Vento Homeless Assistance Act (as in effect on
the date of the enactment of this sentence)).
(FOOTNOTE 1) See References in Text note below.
(d) Eligible basis
For purposes of this section -
(1) New buildings
The eligible basis of a new building is its adjusted basis as
of the close of the 1st taxable year of the credit period.
(2) Existing buildings
(A) In general
The eligible basis of an existing building is -
(i) in the case of a building which meets the requirements
of subparagraph (B), its adjusted basis as of the close of
the 1st taxable year of the credit period, and
(ii) zero in any other case.
(B) Requirements
A building meets the requirements of this subparagraph if -
(i) the building is acquired by purchase (as defined in
section 179(d)(2)),
(ii) there is a period of at least 10 years between the
date of its acquisition by the taxpayer and the later of -
(I) the date the building was last placed in service, or
(II) the date of the most recent nonqualified substantial
improvement of the building,
(iii) the building was not previously placed in service by
the taxpayer or by any person who was a related person with
respect to the taxpayer as of the time previously placed in
service, and
(iv) except as provided in subsection (f)(5), a credit is
allowable under subsection (a) by reason of subsection (e)
with respect to the building.
(C) Adjusted basis
For purposes of subparagraph (A), the adjusted basis of any
building shall not include so much of the basis of such
building as is determined by reference to the basis of other
property held at any time by the person acquiring the building.
(D) Special rules for subparagraph (B)
(i) Nonqualified substantial improvement
For purposes of subparagraph (B)(ii) -
(I) In general
The term ''nonqualified substantial improvement'' means
any substantial improvement if section 167(k) (as in effect
on the day before the date of the enactment of the Revenue
Reconciliation Act of 1990) was elected with respect to
such improvement or section 168 (as in effect on the day
before the date of the enactment of the Tax Reform Act of
1986) applied to such improvement.
(II) Date of substantial improvement
The date of a substantial improvement is the last day of
the 24-month period referred to in subclause (III).
(III) Substantial improvement
The term ''substantial improvement'' means the
improvements added to capital account with respect to the
building during any 24-month period, but only if the sum of
the amounts added to such account during such period equals
or exceeds 25 percent of the adjusted basis of the building
(determined without regard to paragraphs (2) and (3) of
section 1016(a)) as of the 1st day of such period.
(ii) Special rules for certain transfers
For purposes of determining under subparagraph (B)(ii) when
a building was last placed in service, there shall not be
taken into account any placement in service -
(I) in connection with the acquisition of the building in
a transaction in which the basis of the building in the
hands of the person acquiring it is determined in whole or
in part by reference to the adjusted basis of such building
in the hands of the person from whom acquired,
(II) by a person whose basis in such building is
determined under section 1014(a) (relating to property
acquired from a decedent),
(III) by any governmental unit or qualified nonprofit
organization (as defined in subsection (h)(5)) if the
requirements of subparagraph (B)(ii) are met with respect
to the placement in service by such unit or organization
and all the income from such property is exempt from
Federal income taxation,
(IV) by any person who acquired such building by
foreclosure (or by instrument in lieu of foreclosure) of
any purchase-money security interest held by such person if
the requirements of subparagraph (B)(ii) are met with
respect to the placement in service by such person and such
building is resold within 12 months after the date such
building is placed in service by such person after such
foreclosure, or
(V) of a single-family residence by any individual who
owned and used such residence for no other purpose than as
his principal residence.
(iii) Related person, etc.
(I) Application of section 179
For purposes of subparagraph (B)(i), section 179(d) shall
be applied by substituting ''10 percent'' for ''50
percent'' in section (FOOTNOTE 2) 267(b) and 707(b) and in
section 179(d)(7).
(FOOTNOTE 2) So in original. Probably should be ''sections''.
(II) Related person
For purposes of subparagraph (B)(iii), a person
(hereinafter in this subclause referred to as the ''related
person'') is related to any person if the related person
bears a relationship to such person specified in section
267(b) or 707(b)(1), or the related person and such person
are engaged in trades or businesses under common control
(within the meaning of subsections (a) and (b) of section
52). For purposes of the preceding sentence, in applying
section 267(b) or 707(b)(1), ''10 percent'' shall be
substituted for ''50 percent''.
(3) Eligible basis reduced where disproportionate standards for
units
(A) In general
Except as provided in subparagraph (B), the eligible basis of
any building shall be reduced by an amount equal to the portion
of the adjusted basis of the building which is attributable to
residential rental units in the building which are not
low-income units and which are above the average quality
standard of the low-income units in the building.
(B) Exception where taxpayer elects to exclude excess costs
(i) In general
Subparagraph (A) shall not apply with respect to a
residential rental unit in a building which is not a
low-income unit if -
(I) the excess described in clause (ii) with respect to
such unit is not greater than 15 percent of the cost
described in clause (ii)(II), and
(II) the taxpayer elects to exclude from the eligible
basis of such building the excess described in clause (ii)
with respect to such unit.
(ii) Excess
The excess described in this clause with respect to any
unit is the excess of -
(I) the cost of such unit, over
(II) the amount which would be the cost of such unit if
the average cost per square foot of low-income units in the
building were substituted for the cost per square foot of
such unit.
The Secretary may by regulation provide for the determination
of the excess under this clause on a basis other than square
foot costs.
(4) Special rules relating to determination of adjusted basis
For purposes of this subsection -
(A) In general
Except as provided in subparagraphs (B) and (C), the adjusted
basis of any building shall be determined without regard to the
adjusted basis of any property which is not residential rental
property.
(B) Basis of property in common areas, etc., included
The adjusted basis of any building shall be determined by
taking into account the adjusted basis of property (of a
character subject to the allowance for depreciation) used in
common areas or provided as comparable amenities to all
residential rental units in such building.
(C) Inclusion of basis of property used to provide services for
certain nontenants
(i) In general
The adjusted basis of any building located in a qualified
census tract (as defined in paragraph (5)(C)) shall be
determined by taking into account the adjusted basis of
property (of a character subject to the allowance for
depreciation and not otherwise taken into account) used
throughout the taxable year in providing any community
service facility.
(ii) Limitation
The increase in the adjusted basis of any building which is
taken into account by reason of clause (i) shall not exceed
10 percent of the eligible basis of the qualified low-income
housing project of which it is a part. For purposes of the
preceding sentence, all community service facilities which
are part of the same qualified low-income housing project
shall be treated as one facility.
(iii) Community service facility
For purposes of this subparagraph, the term ''community
service facility'' means any facility designed to serve
primarily individuals whose income is 60 percent or less of
area median income (within the meaning of subsection
(g)(1)(B)).
(D) No reduction for depreciation
The adjusted basis of any building shall be determined
without regard to paragraphs (2) and (3) of section 1016(a).
(5) Special rules for determining eligible basis
(A) Eligible basis reduced by Federal grants
If, during any taxable year of the compliance period, a grant
is made with respect to any building or the operation thereof
and any portion of such grant is funded with Federal funds
(whether or not includible in gross income), the eligible basis
of such building for such taxable year and all succeeding
taxable years shall be reduced by the portion of such grant
which is so funded.
(B) Eligible basis not to include expenditures where section
167(k) elected
The eligible basis of any building shall not include any
portion of its adjusted basis which is attributable to amounts
with respect to which an election is made under section 167(k)
(as in effect on the day before the date of the enactment of
the Revenue Reconciliation Act of 1990).
(C) Increase in credit for buildings in high cost areas
(i) In general
In the case of any building located in a qualified census
tract or difficult development area which is designated for
purposes of this subparagraph -
(I) in the case of a new building, the eligible basis of
such building shall be 130 percent of such basis determined
without regard to this subparagraph, and
(II) in the case of an existing building, the
rehabilitation expenditures taken into account under
subsection (e) shall be 130 percent of such expenditures
determined without regard to this subparagraph.
(ii) Qualified census tract
(I) In general
The term ''qualified census tract'' means any census
tract which is designated by the Secretary of Housing and
Urban Development and, for the most recent year for which
census data are available on household income in such
tract, either in which 50 percent or more of the households
have an income which is less than 60 percent of the area
median gross income for such year or which has a poverty
rate of at least 25 percent. If the Secretary of Housing
and Urban Development determines that sufficient data for
any period are not available to apply this clause on the
basis of census tracts, such Secretary shall apply this
clause for such period on the basis of enumeration
districts.
(II) Limit on MSA's designated
The portion of a metropolitan statistical area which may
be designated for purposes of this subparagraph shall not
exceed an area having 20 percent of the population of such
metropolitan statistical area.
(III) Determination of areas
For purposes of this clause, each metropolitan
statistical area shall be treated as a separate area and
all nonmetropolitan areas in a State shall be treated as 1
area.
(iii) Difficult development areas
(I) In general
The term ''difficult development areas'' means any area
designated by the Secretary of Housing and Urban
Development as an area which has high construction, land,
and utility costs relative to area median gross income.
(II) Limit on areas designated
The portions of metropolitan statistical areas which may
be designated for purposes of this subparagraph shall not
exceed an aggregate area having 20 percent of the
population of such metropolitan statistical areas. A
comparable rule shall apply to nonmetropolitan areas.
(iv) Special rules and definitions
For purposes of this subparagraph -
(I) population shall be determined on the basis of the
most recent decennial census for which data are available,
(II) area median gross income shall be determined in
accordance with subsection (g)(4),
(III) the term ''metropolitan statistical area'' has the
same meaning as when used in section 143(k)(2)(B), and
(IV) the term ''nonmetropolitan area'' means any county
(or portion thereof) which is not within a metropolitan
statistical area.
(6) Credit allowable for certain federally-assisted buildings
acquired during 10-year period described in paragraph
(2)(B)(ii)
(A) In general
On application by the taxpayer, the Secretary (after
consultation with the appropriate Federal official) may waive
paragraph (2)(B)(ii) with respect to any federally-assisted
building if the Secretary determines that such waiver is
necessary -
(i) to avert an assignment of the mortgage secured by
property in the project (of which such building is a part) to
the Department of Housing and Urban Development or the
Farmers Home Administration, or
(ii) to avert a claim against a Federal mortgage insurance
fund (or such Department or Administration) with respect to a
mortgage which is so secured.
The preceding sentence shall not apply to any building
described in paragraph (7)(B).
(B) Federally-assisted building
For purposes of subparagraph (A), the term
''federally-assisted building'' means any building which is
substantially assisted, financed, or operated under -
(i) section 8 of the United States Housing Act of 1937,
(ii) section 221(d)(3) or 236 of the National Housing Act,
or
(iii) section 515 of the Housing Act of 1949,
as such Acts are in effect on the date of the enactment of the
Tax Reform Act of 1986.
(C) Low-income buildings where mortgage may be prepaid
A waiver may be granted under subparagraph (A) (without
regard to any clause thereof) with respect to a
federally-assisted building described in clause (ii) or (iii)
of subparagraph (B) if -
(i) the mortgage on such building is eligible for
prepayment under subtitle B of the Emergency Low Income
Housing Preservation Act of 1987 or under section 502(c) of
the Housing Act of 1949 at any time within 1 year after the
date of the application for such a waiver,
(ii) the appropriate Federal official certifies to the
Secretary that it is reasonable to expect that, if the waiver
is not granted, such building will cease complying with its
low-income occupancy requirements, and
(iii) the eligibility to prepay such mortgage without the
approval of the appropriate Federal official is waived by all
persons who are so eligible and such waiver is binding on all
successors of such persons.
(D) Buildings acquired from insured depository institutions in
default
A waiver may be granted under subparagraph (A) (without
regard to any clause thereof) with respect to any building
acquired from an insured depository institution in default (as
defined in section 3 of the Federal Deposit Insurance Act) or
from a receiver or conservator of such an institution.
(E) Appropriate Federal official
For purposes of subparagraph (A), the term ''appropriate
Federal official'' means -
(i) the Secretary of Housing and Urban Development in the
case of any building described in subparagraph (B) by reason
of clause (i) or (ii) thereof, and
(ii) the Secretary of Agriculture in the case of any
building described in subparagraph (B) by reason of clause
(iii) thereof.
(7) Acquisition of building before end of prior compliance period
(A) In general
Under regulations prescribed by the Secretary, in the case of
a building described in subparagraph (B) (or interest therein)
which is acquired by the taxpayer -
(i) paragraph (2)(B) shall not apply, but
(ii) the credit allowable by reason of subsection (a) to
the taxpayer for any period after such acquisition shall be
equal to the amount of credit which would have been allowable
under subsection (a) for such period to the prior owner
referred to in subparagraph (B) had such owner not disposed
of the building.
(B) Description of building
A building is described in this subparagraph if -
(i) a credit was allowed by reason of subsection (a) to any
prior owner of such building, and
(ii) the taxpayer acquired such building before the end of
the compliance period for such building with respect to such
prior owner (determined without regard to any disposition by
such prior owner).
(e) Rehabilitation expenditures treated as separate new building
(1) In general
Rehabilitation expenditures paid or incurred by the taxpayer
with respect to any building shall be treated for purposes of
this section as a separate new building.
(2) Rehabilitation expenditures
For purposes of paragraph (1) -
(A) In general
The term ''rehabilitation expenditures'' means amounts
chargeable to capital account and incurred for property (or
additions or improvements to property) of a character subject
to the allowance for depreciation in connection with the
rehabilitation of a building.
(B) Cost of acquisition, etc, (FOOTNOTE 3) not included
(FOOTNOTE 3) So in original. Probably should be ''etc.,''.
Such term does not include the cost of acquiring any building
(or interest therein) or any amount not permitted to be taken
into account under paragraph (3) or (4) of subsection (d).
(3) Minimum expenditures to qualify
(A) In general
Paragraph (1) shall apply to rehabilitation expenditures with
respect to any building only if -
(i) the expenditures are allocable to 1 or more low-income
units or substantially benefit such units, and
(ii) the amount of such expenditures during any 24-month
period meets the requirements of whichever of the following
subclauses requires the greater amount of such expenditures:
(I) The requirement of this subclause is met if such
amount is not less than 10 percent of the adjusted basis of
the building (determined as of the 1st day of such period
and without regard to paragraphs (2) and (3) of section
1016(a)).
(II) The requirement of this subclause is met if the
qualified basis attributable to such amount, when divided
by the number of low-income units in the building, is
$3,000 or more.
(B) Exception from 10 percent rehabilitation
In the case of a building acquired by the taxpayer from a
governmental unit, at the election of the taxpayer,
subparagraph (A)(ii)(I) shall not apply and the credit under
this section for such rehabilitation expenditures shall be
determined using the percentage applicable under subsection
(b)(2)(B)(ii).
(C) Date of determination
The determination under subparagraph (A) shall be made as of
the close of the 1st taxable year in the credit period with
respect to such expenditures.
(4) Special rules
For purposes of applying this section with respect to
expenditures which are treated as a separate building by reason
of this subsection -
(A) such expenditures shall be treated as placed in service
at the close of the 24-month period referred to in paragraph
(3)(A), and
(B) the applicable fraction under subsection (c)(1) shall be
the applicable fraction for the building (without regard to
paragraph (1)) with respect to which the expenditures were
incurred.
Nothing in subsection (d)(2) shall prevent a credit from being
allowed by reason of this subsection.
(5) No double counting
Rehabilitation expenditures may, at the election of the
taxpayer, be taken into account under this subsection or
subsection (d)(2)(A)(i) but not under both such subsections.
(6) Regulations to apply subsection with respect to group of
units in building
The Secretary may prescribe regulations, consistent with the
purposes of this subsection, treating a group of units with
respect to which rehabilitation expenditures are incurred as a
separate new building.
(f) Definition and special rules relating to credit period
(1) Credit period defined
For purposes of this section, 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 low-income building as of
the close of the 1st year of such period. The election under
subparagraph (B), once made, shall be irrevocable.
(2) Special rule for 1st year of credit period
(A) In general
The credit allowable under subsection (a) with respect to any
building for the 1st taxable year of the credit period shall be
determined by substituting for the applicable fraction under
subsection (c)(1) the fraction -
(i) the numerator of which is the sum of the applicable
fractions determined under subsection (c)(1) as of the close
of each full month of such year during which such building
was in service, and
(ii) the denominator of which is 12.
(B) Disallowed 1st year credit allowed in 11th year
Any reduction by reason of subparagraph (A) in the credit
allowable (without regard to subparagraph (A)) for the 1st
taxable year of the credit period shall be allowable under
subsection (a) for the 1st taxable year following the credit
period.
(3) Determination of applicable percentage with respect to
increases in qualified basis after 1st year of credit period
(A) In general
In the case of any building which was a qualified low-income
building as of the close of the 1st year of the credit period,
if -
(i) as of the close of any taxable year in the compliance
period (after the 1st year of the credit period) the
qualified basis of such building exceeds
(ii) the qualified basis of such building as of the close
of the 1st year of the credit period,
the applicable percentage which shall apply under subsection
(a) for the taxable year to such excess shall be the percentage
equal to 2/3 of the applicable percentage which (after the
application of subsection (h)) would but for this paragraph
apply to such basis.
(B) 1st year computation applies
A rule similar to the rule of paragraph (2)(A) shall apply to
any increase in qualified basis to which subparagraph (A)
applies for the 1st year of such increase.
(4) Dispositions of property
If a building (or an interest therein) is disposed of during
any year for which credit is allowable under subsection (a), such
credit shall be allocated between the parties on the basis of the
number of days during such year the building (or interest) was
held by each. In any such case, proper adjustments shall be made
in the application of subsection (j).
(5) Credit period for existing buildings not to begin before
rehabilitation credit allowed
(A) In general
The credit period for an existing building shall not begin
before the 1st taxable year of the credit period for
rehabilitation expenditures with respect to the building.
(B) Acquisition credit allowed for certain buildings not
allowed a rehabilitation credit
(i) In general
In the case of a building described in clause (ii) -
(I) subsection (d)(2)(B)(iv) shall not apply, and
(II) the credit period for such building shall not begin
before the taxable year which would be the 1st taxable year
of the credit period for rehabilitation expenditures with
respect to the building under the modifications described
in clause (ii)(II).
(ii) Building described
A building is described in this clause if -
(I) a waiver is granted under subsection (d)(6)(C) with
respect to the acquisition of the building, and
(II) a credit would be allowed for rehabilitation
expenditures with respect to such building if subsection
(e)(3)(A)(ii)(I) did not apply and if subsection
(e)(3)(A)(ii)(II) were applied by substituting ''$2,000''
for ''$3,000''.
(g) Qualified low-income housing project
For purposes of this section -
(1) In general
The term ''qualified low-income 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) 40-60 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 60 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 30 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 low-income housing project.
(B) Gross rent
For purposes of subparagraph (A), gross rent -
(i) 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),
(ii) 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,
(iii) does not include any fee for a supportive service
which is paid to the owner of the unit (on the basis of the
low-income 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, 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.
For purposes of clause (iii), the term ''supportive 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 (i)(3)(B)(iii), such
term includes any service provided to assist tenants in
locating and retaining permanent housing.
(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 low-income unit
above the income limitation applicable under paragraph (1),
such unit shall continue to be treated as a low-income 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 low-income 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
low-income 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) Date for meeting requirements
(A) In general
Except as otherwise provided in this paragraph, a building
shall be treated as a qualified low-income 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 (hereinafter in this
subparagraph referred to as the ''prior building'') is a
qualified low-income 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
low-income building,
shall in no event be treated as a qualified low-income building
unless the project is a qualified low-income 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 (h)(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.
(4) 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 low-income housing project and whether any unit is a
low-income 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.
(5) 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 low-income housing
project for any period beginning after the compliance period for
such building.
(6) 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.
(7) 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.
(8) Waiver of certain de minimis errors and recertifications
On application by the taxpayer, the Secretary may waive -
(A) any recapture under subsection (j) 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
low-income tenants.
(h) Limitation on aggregate credit allowable with respect to
projects located in a State
(1) Credit may not exceed credit amount allocated to building
(A) In general
The amount of the credit determined under this section for
any taxable year with respect to any building shall not exceed
the housing credit dollar amount allocated to such building
under this subsection.
(B) Time for making allocation
Except in the case of an allocation which meets the
requirements of subparagraph (C), (D), (E), or (F), an
allocation shall be taken into account under subparagraph (A)
only if it is made not later than the close of the calendar
year in which the building is placed in service.
(C) Exception where binding commitment
An allocation meets the requirements of this subparagraph if
there is a binding commitment (not later than the close of the
calendar year in which the building is placed in service) by
the housing credit agency to allocate a specified housing
credit dollar amount to such building beginning in a specified
later taxable year.
(D) Exception where increase in qualified basis
(i) In general
An allocation meets the requirements of this subparagraph
if such allocation is made not later than the close of the
calendar year in which ends the taxable year to which it will
1st apply but only to the extent the amount of such
allocation does not exceed the limitation under clause (ii).
(ii) Limitation
The limitation under this clause is the amount of credit
allowable under this section (without regard to this
subsection) for a taxable year with respect to an increase in
the qualified basis of the building equal to the excess of -
(I) the qualified basis of such building as of the close
of the 1st taxable year to which such allocation will
apply, over
(II) the qualified basis of such building as of the close
of the 1st taxable year to which the most recent prior
housing credit allocation with respect to such building
applied.
(iii) Housing credit dollar amount reduced by full allocation
Notwithstanding clause (i), the full amount of the
allocation shall be taken into account under paragraph (2).
(E) Exception where 10 percent of cost incurred
(i) In general
An allocation meets the requirements of this subparagraph
if such allocation is made with respect to a qualified
building which is placed in service not later than the close
of the second calendar year following the calendar year in
which the allocation is made.
(ii) Qualified building
For purposes of clause (i), the term ''qualified building''
means any building which is part of a project if the
taxpayer's basis in such project (as of the later of the date
which is 6 months after the date that the allocation was made
or the close of the calendar year in which the allocation is
made) is more than 10 percent of the taxpayer's reasonably
expected basis in such project (as of the close of the second
calendar year referred to in clause (i)). Such term does not
include any existing building unless a credit is allowable
under subsection (e) for rehabilitation expenditures paid or
incurred by the taxpayer with respect to such building for a
taxable year ending during the second calendar year referred
to in clause (i) or the prior taxable year.
(F) Allocation of credit on a project basis
(i) In general
In the case of a project which includes (or will include)
more than 1 building, an allocation meets the requirements of
this subparagraph if -
(I) the allocation is made to the project for a calendar
year during the project period,
(II) the allocation only applies to buildings placed in
service during or after the calendar year for which the
allocation is made, and
(III) the portion of such allocation which is allocated
to any building in such project is specified not later than
the close of the calendar year in which the building is
placed in service.
(ii) Project period
For purposes of clause (i), the term ''project period''
means the period -
(I) beginning with the 1st calendar year for which an
allocation may be made for the 1st building placed in
service as part of such project, and
(II) ending with the calendar year the last building is
placed in service as part of such project.
(2) Allocated credit amount to apply to all taxable years ending
during or after credit allocation year
Any 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 housing credit dollar amount
of the allocating agency only for such calendar year.
(3) Housing credit dollar amount for agencies
(A) In general
The aggregate housing credit dollar amount which a housing
credit agency may allocate for any calendar year is the portion
of the State housing credit ceiling allocated under this
paragraph for such calendar year to such agency.
(B) State ceiling initially allocated to State housing credit
agencies
Except as provided in subparagraphs (D) and (E), the State
housing credit ceiling for each calendar year shall be
allocated to the housing credit agency of such State. If there
is more than 1 housing credit agency of a State, all such
agencies shall be treated as a single agency.
(C) State housing credit ceiling
The State housing credit ceiling applicable to any State for
any calendar year shall be an amount equal to the sum of -
(i) the unused State housing credit ceiling (if any) of
such State for the preceding calendar year,
(ii) the greater of -
(I) $1.75 ($1.50 for 2001) multiplied by the State
population, or
(II) $2,000,000,
(iii) the amount of State 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 housing credit
ceiling for any calendar year is the excess (if any) of the sum
of the amounts described in clauses (ii) through (iv) over the
aggregate housing credit dollar amount allocated for such
year. For purposes of clause (iii), the amount of State
housing credit ceiling returned in the calendar year equals the
housing credit dollar amount previously allocated within the
State to any project which fails to meet the 10 percent test
under paragraph (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 low-income 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
cancelled by mutual consent of the housing credit agency and
the allocation recipient.
(D) Unused housing credit carryovers allocated among certain
States
(i) In general
The unused 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 housing credit carryover
For purposes of this subparagraph, the unused housing
credit carryover of a State for any calendar year is the
excess (if any) of -
(I) the unused State housing credit ceiling for the year
preceding such year, over
(II) the aggregate housing credit dollar amount allocated
for such year.
(iii) Formula for allocation of unused 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
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 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 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 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 housing credit agencies in
such State other than constitutional home rule cities, the
State housing credit ceiling for any calendar year shall be
reduced by the aggregate 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).
(H) Cost-of-living adjustment
(i) In general
In the case of a calendar year after 2002, the $2,000,000
and $1.75 amounts in subparagraph (C) shall each be increased
by an amount equal to -
(I) such dollar amount, multiplied by
(II) the cost-of-living adjustment determined under
section 1(f)(3) for such calendar year by substituting
''calendar year 2001'' for ''calendar year 1992'' in
subparagraph (B) thereof.
(ii) Rounding
(I) In the case of the $2,000,000 amount, any increase
under clause (i) which is not a multiple of $5,000 shall be
rounded to the next lowest multiple of $5,000.
(II) In the case of the $1.75 amount, any increase under
clause (i) which is not a multiple of 5 cents shall be
rounded to the next lowest multiple of 5 cents.
(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 housing credit ceiling
for any State for any calendar year shall be allocated to
projects other than qualified low-income housing projects
described in subparagraph (B).
(B) Projects involving qualified nonprofit organizations
For purposes of subparagraph (A), a qualified low-income
housing project is described in this subparagraph if a
qualified nonprofit organization is to own an interest in the
project (directly or through a partnership) and 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 housing
credit agency not to be affiliated with or controlled by a
for-profit organization; (FOOTNOTE 4) and
(FOOTNOTE 4) So in original. The semicolon probably should be a
comma.
(iii) 1 of the exempt purposes of such organization
includes the fostering of low-income 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 low-income housing
(A) In general
No credit shall be allowed by reason of this section with
respect to any building for the taxable year unless an extended
low-income housing commitment is in effect as of the end of
such taxable year.
(B) Extended low-income housing commitment
For purposes of this paragraph, the term ''extended
low-income housing commitment'' means any agreement between the
taxpayer and the housing credit agency -
(i) which requires that the applicable fraction (as defined
in subsection (c)(1)) for the building for each taxable year
in the extended use period will not be less than the
applicable fraction specified in such agreement and which
prohibits the actions described in subclauses (I) and (II) of
subparagraph (E)(ii),
(ii) which allows individuals who meet the income
limitation applicable to the building under subsection (g)
(whether prospective, present, or former occupants of the
building) the right to enforce in any State court the
requirement and prohibitions of clause (i),
(iii) which prohibits the disposition to any person of any
portion of the building to which such agreement applies
unless all of the building to which such agreement applies is
disposed of to such person,
(iv) which prohibits the refusal to lease to a holder of a
voucher or certificate of eligibility under section 8 of the
United States Housing Act of 1937 because of the status of
the prospective tenant as such a holder,
(v) which is binding on all successors of the taxpayer, and
(vi) which, with respect to the property, is recorded
pursuant to State law as a restrictive covenant.
(C) Allocation of credit may not exceed amount necessary to
support commitment
(i) In general
The housing credit dollar amount allocated to any building
may not exceed the amount necessary to support the applicable
fraction specified in the extended low-income housing
commitment for such building, including any increase in such
fraction pursuant to the application of subsection (f)(3) if
such increase is reflected in an amended low-income housing
commitment.
(ii) Buildings financed by tax-exempt bonds
If paragraph (4) applies to any building the amount of
credit allowed in any taxable year may not exceed the amount
necessary to support the applicable fraction specified in the
extended low-income housing commitment for such building.
Such commitment may be amended to increase such fraction.
(D) Extended use period
For purposes of this paragraph, the term ''extended use
period'' means the period -
(i) beginning on the 1st day in the compliance period on
which such building is part of a qualified low-income housing
project, and
(ii) ending on the later of -
(I) the date specified by such agency in such agreement,
or
(II) the date which is 15 years after the close of the
compliance period.
(E) Exceptions if foreclosure or if no buyer willing to
maintain low-income status
(i) In general
The extended use period for any building shall terminate -
(I) on the date the building is acquired by foreclosure
(or instrument in lieu of foreclosure) unless the Secretary
determines that such acquisition is part of an arrangement
with the taxpayer a purpose of which is to terminate such
period, or
(II) on the last day of the period specified in
subparagraph (I) if the housing credit agency is unable to
present during such period a qualified contract for the
acquisition of the low-income portion of the building by
any person who will continue to operate such portion as a
qualified low-income building.
Subclause (II) shall not apply to the extent more stringent
requirements are provided in the agreement or in State law.
(ii) Eviction, etc. of existing low-income tenants not
permitted
The termination of an extended use period under clause (i)
shall not be construed to permit before the close of the
3-year period following such termination -
(I) the eviction or the termination of tenancy (other
than for good cause) of an existing tenant of any
low-income unit, or
(II) any increase in the gross rent with respect to such
unit not otherwise permitted under this section.
(F) Qualified contract
For purposes of subparagraph (E), the term ''qualified
contract'' means a bona fide contract to acquire (within a
reasonable period after the contract is entered into) the
nonlow-income portion of the building for fair market value and
the low-income portion of the building for an amount not less
than the applicable fraction (specified in the extended
low-income housing commitment) of -
(i) the sum of -
(I) the outstanding indebtedness secured by, or with
respect to, the building,
(II) the adjusted investor equity in the building, plus
(III) other capital contributions not reflected in the
amounts described in subclause (I) or (II), reduced by
(ii) cash distributions from (or available for distribution
from) the project.
The Secretary shall prescribe such regulations as may be
necessary or appropriate to carry out this paragraph, including
regulations to prevent the manipulation of the amount
determined under the preceding sentence.
(G) Adjusted investor equity
(i) In general
For purposes of subparagraph (E), the term ''adjusted
investor equity'' means, with respect to any calendar year,
the aggregate amount of cash taxpayers invested with respect
to the project increased by the amount equal to -
(I) such amount, multiplied by
(II) the cost-of-living adjustment for such calendar
year, determined under section 1(f)(3) by substituting the
base calendar year for ''calendar year 1987''.
An amount shall be taken into account as an investment in the
project only to the extent there was an obligation to invest
such amount as of the beginning of the credit period and to
the extent such amount is reflected in the adjusted basis of
the project.
(ii) Cost-of-living increases in excess of 5 percent not
taken into account
Under regulations prescribed by the Secretary, if the CPI
for any calendar year (as defined in section 1(f)(4)) exceeds
the CPI for the preceding calendar year by more than 5
percent, the CPI for the base calendar year shall be
increased such that such excess shall never be taken into
account under clause (i).
(iii) Base calendar year
For purposes of this subparagraph, the term ''base calendar
year'' means the calendar year with or within which the 1st
taxable year of the credit period ends.
(H) Low-income portion
For purposes of this paragraph, the low-income portion of a
building is the portion of such building equal to the
applicable fraction specified in the extended low-income
housing commitment for the building.
(I) Period for finding buyer
The period referred to in this subparagraph is the 1-year
period beginning on the date (after the 14th year of the
compliance period) the taxpayer submits a written request to
the housing credit agency to find a person to acquire the
taxpayer's interest in the low-income portion of the building.
(J) Effect of noncompliance
If, during a taxable year, there is a determination that an
extended low-income housing agreement was not in effect as of
the beginning of such year, such determination shall not apply
to any period before such year and subparagraph (A) shall be
applied without regard to such determination if the failure is
corrected within 1 year from the date of the determination.
(K) Projects which consist of more than 1 building
The application of this paragraph to projects which consist
of more than 1 building shall be made under regulations
prescribed by the Secretary.
(7) Special rules
(A) Building must be located within jurisdiction of credit
agency
A housing credit agency may allocate its aggregate housing
credit dollar amount only to buildings located in the
jurisdiction of the governmental unit of which such agency is a
part.
(B) Agency allocations in excess of limit
If the aggregate housing credit dollar amounts allocated by a
housing credit agency for any calendar year exceed the portion
of the State housing credit ceiling allocated to such agency
for such calendar year, the housing credit dollar amounts so
allocated shall be reduced (to the extent of such excess) for
buildings in the reverse of the order in which the allocations
of such amounts were made.
(C) Credit reduced if allocated credit dollar amount is less
than credit which would be allowable without regard to
placed in service convention, etc.
(i) In general
The amount of the credit determined under this section with
respect to any building shall not exceed the clause (ii)
percentage of the amount of the credit which would (but for
this subparagraph) be determined under this section with
respect to such building.
(ii) Determination of percentage
For purposes of clause (i), the clause (ii) percentage with
respect to any building is the percentage which -
(I) the housing credit dollar amount allocated to such
building bears to
(II) the credit amount determined in accordance with
clause (iii).
(iii) Determination of credit amount
The credit amount determined in accordance with this clause
is the amount of the credit which would (but for this
subparagraph) be determined under this section with respect
to the building if -
(I) this section were applied without regard to
paragraphs (2)(A) and (3)(B) of subsection (f), and
(II) subsection (f)(3)(A) were applied without regard to
''the percentage equal to 2/3 of''.
(D) Housing credit agency to specify applicable percentage and
maximum qualified basis
In allocating a housing credit dollar amount to any building,
the housing credit agency shall specify the applicable
percentage and the maximum qualified basis which may be taken
into account under this section with respect to such building.
The applicable percentage and maximum qualified basis so
specified shall not exceed the applicable percentage and
qualified basis determined under this section without regard to
this subsection.
(8) Other definitions
For purposes of this subsection -
(A) Housing credit agency
The term ''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.
(i) 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) Determination of whether building is federally subsidized
(A) In general
Except as otherwise provided in this paragraph, for purposes
of subsection (b)(1), a new building shall be treated as
federally subsidized for any taxable year if, at any time
during such taxable year or any prior taxable year, there is or
was outstanding any obligation the interest on which is exempt
from tax under section 103, or any below market Federal loan,
the proceeds of which are or were used (directly or indirectly)
with respect to such building or the operation thereof.
(B) Election to reduce eligible basis by balance of loan or
proceeds of obligations
A loan or tax-exempt obligation shall not be taken into
account under subparagraph (A) if the taxpayer elects to
exclude from the eligible basis of the building for purposes of
subsection (d) -
(i) in the case of a loan, the principal amount of such
loan, and
(ii) in the case of a tax-exempt obligation, the proceeds
of such obligation.
(C) Special rule for subsidized construction financing
Subparagraph (A) shall not apply to any tax-exempt obligation
or below market Federal loan used to provide construction
financing for any building if -
(i) such obligation or loan (when issued or made)
identified the building for which the proceeds of such
obligation or loan would be used, and
(ii) such obligation is redeemed, and such loan is repaid,
before such building is placed in service.
(D) Below market Federal loan
For purposes of this paragraph, the term ''below market
Federal loan'' means any loan funded in whole or in part with
Federal funds if the interest rate payable on such loan is less
than the applicable Federal rate in effect under section
1274(d)(1) (as of the date on which the loan was made). Such
term shall not include any loan which would be a below market
Federal loan solely by reason of assistance provided under
section 106, 107, or 108 of the Housing and Community
Development Act of 1974 (as in effect on the date of the
enactment of this sentence).
(E) Buildings receiving HOME assistance or Native American
housing assistance
(i) In general
Assistance provided under the HOME Investment Partnerships
Act (as in effect on the date of the enactment of this
subparagraph) or the Native American Housing Assistance and
Self-Determination Act of 1996 (25 U.S.C. 4101 et seq.) (as
in effect on October 1, 1997) with respect to any building
shall not be taken into account under subparagraph (D) if 40
percent or more of the residential units in the building are
occupied by individuals whose income is 50 percent or less of
area median gross income. Subsection (d)(5)(C) shall not
apply to any building to which the preceding sentence
applies.
(ii) Special rule for certain high-cost housing areas
In the case of a building located in a city described in
section 142(d)(6), clause (i) shall be applied by
substituting ''25 percent'' for ''40 percent''.
(3) Low-income unit
(A) In general
The term ''low-income unit'' means any unit in a building if
-
(i) such unit is rent-restricted (as defined in subsection
(g)(2)), and
(ii) the individuals occupying such unit meet the income
limitation applicable under subsection (g)(1) to the project
of which such building is a part.
(B) Exceptions
(i) In general
A unit shall not be treated as a low-income 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 McKinney-Vento 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 (h)(5))
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
low-income 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 (as defined in subsection
(d)(2)(D)(iii)) to such individual.
(D) Certain students not to disqualify unit
A unit shall not fail to be treated as a low-income unit
merely because it is occupied -
(i) by an individual who is -
(I) single parents and their
children and such parents are not
dependents (as defined in section 152,
determined without regard to subsections
(b)(1), (b)(2), and (d)(1)(B) thereof)
of another individual and such children
are not dependents (as so defined) of
another individual other than a parent
of such children, or
(II) enrolled in a job training program receiving
assistance under the Job Training Partnership Act or under
other similar Federal, State, or local laws, or
(ii) entirely by full-time students if such students are -
(I) single parents and their children and such parents
and children are not dependents (as defined in section 152,
determined without regard to subsections (b)(1), (b)(2), and
(d)(1)(B) thereof) of another individual, or
(II) married and file a joint return.
(E) Owner-occupied buildings 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
(h)(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.
(4) New building
The term ''new building'' means a building the original use of
which begins with the taxpayer.
(5) Existing building
The term ''existing building'' means any building which is not
a new building.
(6) 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 (j) 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.
(7) Impact of tenant's 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 low-income 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 (h)(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).
(j) 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.
(2) Credit recapture amount
For purposes of paragraph (1), the credit recapture amount is
an amount equal to the sum of -
(A) the aggregate decrease in the credits allowed to the
taxpayer under section 38 for all prior taxable years which
would have resulted if the accelerated portion of the credit
allowable by reason of this section were not allowed for all
prior taxable years with respect to the excess of the amount
described in paragraph (1)(B) over the amount described in
paragraph (1)(A), plus
(B) interest at the overpayment rate established under
section 6621 on the amount determined under subparagraph (A)
for each prior taxable year for the period beginning on the due
date for filing the return for the prior taxable year involved.
No deduction shall be allowed under this chapter for interest
described in subparagraph (B).
(3) Accelerated portion of credit
For purposes of paragraph (2), the accelerated portion of the
credit for the prior taxable years with respect to any amount of
basis is the excess of -
(A) the aggregate credit allowed by reason of this section
(without regard to this subsection) for such years with respect
to such basis, over
(B) the aggregate credit which would be allowable by reason
of this section for such years with respect to such basis if
the aggregate credit which would (but for this subsection) have
been allowable for the entire compliance period were allowable
ratably over 15 years.
(4) Special rules
(A) Tax benefit rule
The tax for the taxable year shall be increased under
paragraph (1) only with respect to credits allowed by reason of
this section which were used to reduce tax liability. In the
case of credits not so used to reduce tax liability, the
carryforwards and carrybacks under section 39 shall be
appropriately adjusted.
(B) Only basis for which credit allowed taken into account
Qualified basis shall be taken into account under paragraph
(1)(B) only to the extent such basis was taken into account in
determining the credit under subsection (a) for the preceding
taxable year referred to in such paragraph.
(C) No recapture of additional credit allowable by reason of
subsection (f)(3)
Paragraph (1) shall apply to a decrease in qualified basis
only to the extent such decrease exceeds the amount of
qualified basis with respect to which a credit was allowable
for the taxable year referred to in paragraph (1)(B) by reason
of subsection (f)(3).
(D) No credits against tax
Any increase in tax under this subsection shall not be
treated as a tax imposed by this chapter for purposes of
determining the amount of any credit under this chapter.
(E) No recapture by reason of casualty loss
The increase in tax under this subsection shall not apply to
a reduction in qualified basis by reason of a casualty loss to
the extent such loss is restored by reconstruction or
replacement within a reasonable period established by the
Secretary.
(F) No recapture where de minimis changes in floor space
The Secretary may provide that the increase in tax under this
subsection shall not apply with respect to any building if -
(i) such increase results from a de minimis change in the
floor space fraction under subsection (c)(1), and
(ii) the building is a qualified low-income building after
such change.
(5) Certain partnerships treated as the taxpayer
(A) In general
For purposes of applying this subsection to a partnership to
which this paragraph applies -
(i) such partnership shall be treated as the taxpayer to
which the credit allowable under subsection (a) was allowed,
(ii) the amount of such credit allowed shall be treated as
the amount which would have been allowed to the partnership
were such credit allowable to such partnership,
(iii) paragraph (4)(A) shall not apply, and
(iv) the amount of the increase in tax under this
subsection for any taxable year shall be allocated among the
partners of such partnership in the same manner as such
partnership's taxable income for such year is allocated among
such partners.
(B) Partnerships to which paragraph applies
This paragraph shall apply to any partnership which has 35 or
more partners unless the partnership elects not to have this
paragraph apply.
(C) Special rules
(i) Husband and wife treated as 1 partner
For purposes of subparagraph (B)(i), a husband and wife
(and their estates) shall be treated as 1 partner.
(ii) Election irrevocable
Any election under subparagraph (B), once made, shall be
irrevocable.
(6) No recapture on disposition of building (or interest therein)
where bond posted
In the case of a disposition of a building or an interest
therein, the taxpayer shall be discharged from liability for any
additional tax under this subsection by reason of such
disposition if -
(A) the taxpayer furnishes to the Secretary a bond in an
amount satifactory (FOOTNOTE 5) to the Secretary and for the
period required by the Secretary, and
(FOOTNOTE 5) So in original. Probably should be
''satisfactory''.
(B) it is reasonably expected that such building will
continue to be operated as a qualified low-income building for
the remaining compliance period with respect to such building.
(k) Application of at-risk rules
For purposes of this section -
(1) In general
Except as otherwise provided in this subsection, rules similar
to the rules of section 49(a)(1) (other than subparagraphs
(D)(ii)(II) and (D)(iv)(I) thereof), section 49(a)(2), and
section 49(b)(1) shall apply in determining the qualified basis
of any building in the same manner as such sections apply in
determining the credit base of property.
(2) Special rules for determining qualified person
For purposes of paragraph (1) -
(A) In general
If the requirements of subparagraphs (B), (C), and (D) are
met with respect to any financing borrowed from a qualified
nonprofit organization (as defined in subsection (h)(5)), the
determination of whether such financing is qualified commercial
financing with respect to any qualified low-income building
shall be made without regard to whether such organization -
(i) is actively and regularly engaged in the business of
lending money, or
(ii) is a person described in section 49(a)(1)(D)(iv)(II).
(B) Financing secured by property
The requirements of this subparagraph are met with respect to
any financing if such financing is secured by the qualified
low-income building, except that this subparagraph shall not
apply in the case of a federally assisted building described in
subsection (d)(6)(B) if -
(i) a security interest in such building is not permitted
by a Federal agency holding or insuring the mortgage secured
by such building, and
(ii) the proceeds from the financing (if any) are applied
to acquire or improve such building.. (FOOTNOTE 6)
(FOOTNOTE 6) So in original.
(C) Portion of building attributable to financing
The requirements of this subparagraph are met with respect to
any financing for any taxable year in the compliance period if,
as of the close of such taxable year, not more than 60 percent
of the eligible basis of the qualified low-income building is
attributable to such financing (reduced by the principal and
interest of any governmental financing which is part of a
wrap-around mortgage involving such financing).
(D) Repayment of principal and interest
The requirements of this subparagraph are met with respect to
any financing if such financing is fully repaid on or before
the earliest of -
(i) the date on which such financing matures,
(ii) the 90th day after the close of the compliance period
with respect to the qualified low-income building, or
(iii) the date of its refinancing or the sale of the
building to which such financing relates.
In the case of a qualified nonprofit organization which is not
described in section 49(a)(1)(D)(iv)(II) with respect to a
building, clause (ii) of this subparagraph shall be applied as
if the date described therein were the 90th day after the
earlier of the date the building ceases to be a qualified
low-income building or the date which is 15 years after the
close of a compliance period with respect thereto.
(3) Present value of financing
If the rate of interest on any financing described in paragraph
(2)(A) is less than the rate which is 1 percentage point below
the applicable Federal rate as of the time such financing is
incurred, then the qualified basis (to which such financing
relates) of the qualified low-income building shall be the
present value of the amount of such financing, using as the
discount rate such applicable Federal rate. For purposes of the
preceding sentence, the rate of interest on any financing shall
be determined by treating interest to the extent of government
subsidies as not payable.
(4) Failure to fully repay
(A) In general
To the extent that the requirements of paragraph (2)(D) are
not met, then the taxpayer's tax under this chapter for the
taxable year in which such failure occurs shall be increased by
an amount equal to the applicable portion of the credit under
this section with respect to such building, increased by an
amount of interest for the period -
(i) beginning with the due date for the filing of the
return of tax imposed by chapter 1 for the 1st taxable year
for which such credit was allowable, and
(ii) ending with the due date for the taxable year in which
such failure occurs,
determined by using the underpayment rate and method under
section 6621.
(B) Applicable portion
For purposes of subparagraph (A), the term ''applicable
portion'' means the aggregate decrease in the credits allowed
to a taxpayer under section 38 for all prior taxable years
which would have resulted if the eligible basis of the building
were reduced by the amount of financing which does not meet
requirements of paragraph (2)(D).
(C) Certain rules to apply
Rules similar to the rules of subparagraphs (A) and (D) of
subsection (j)(4) shall apply for purposes of this subsection.
(l) Certifications and other reports to Secretary
(1) Certification with respect to 1st year of credit period
Following the close of the 1st taxable year in the credit
period with respect to any qualified low-income building, the
taxpayer shall certify to the Secretary (at such time and in such
form and in such manner as the Secretary prescribes) -
(A) the taxable year, and calendar year, in which such
building was placed in service,
(B) the adjusted basis and eligible basis of such building as
of the close of the 1st year of the credit period,
(C) the maximum applicable percentage and qualified basis
permitted to be taken into account by the appropriate housing
credit agency under subsection (h),
(D) the election made under subsection (g) with respect to
the qualified low-income housing project of which such building
is a part, and
(E) such other information as the Secretary may require.
In the case of a failure to make the certification required by
the preceding sentence on the date prescribed therefor, unless it
is shown that such failure is due to reasonable cause and not to
willful neglect, no credit shall be allowable by reason of
subsection (a) with respect to such building for any taxable year
ending before such certification is made.
(2) Annual reports to the Secretary
The Secretary may require taxpayers to submit an information
return (at such time and in such form and manner as the Secretary
prescribes) for each taxable year setting forth -
(A) the qualified basis for the taxable year of each
qualified low-income building of the taxpayer,
(B) the information described in paragraph (1)(C) for the
taxable year, and
(C) such other information as the Secretary may require.
The penalty under section 6652(j) shall apply to any failure to
submit the return required by the Secretary under the preceding
sentence on the date prescribed therefor.
(3) Annual reports from housing credit agencies
Each agency which allocates any housing credit amount to any
building for any calendar year shall submit to the Secretary (at
such time and in such manner as the Secretary shall prescribe) an
annual report specifying -
(A) the amount of housing credit amount allocated to each
building for such year,
(B) sufficient information to identify each such building and
the taxpayer with respect thereto, and
(C) such other information as the Secretary may require.
The penalty under section 6652(j) shall apply to any failure to
submit the report required by the preceding sentence on the date
prescribed therefor.
(m) Responsibilities of housing credit agencies
(1) Plans for allocation of credit among projects
(A) In general
Notwithstanding any other provision of this section, the
housing credit dollar amount with respect to any building shall
be zero unless -
(i) such amount was allocated pursuant to a qualified
allocation plan of the housing credit agency which is
approved by the governmental unit (in accordance with rules
similar to the rules of section 147(f)(2) (other than
subparagraph (B)(ii) thereof)) of which such agency is a
part,
(ii) such agency notifies the chief executive officer (or
the equivalent) of the local jurisdiction within which the
building is located of such project and provides such
individual a reasonable opportunity to comment on the
project,
(iii) a comprehensive market study of the housing needs of
low-income individuals in the area to be served by the
project is conducted before the credit allocation is made and
at the developer's expense by a disinterested party who is
approved by such agency, and
(iv) a written explanation is available to the general
public for any allocation of a housing credit dollar amount
which is not made in accordance with established priorities
and selection criteria of the housing credit agency.
(B) Qualified allocation plan
For purposes of this paragraph, the term ''qualified
allocation plan'' means any plan -
(i) which sets forth selection criteria to be used to
determine housing priorities of the housing credit agency
which are appropriate to local conditions,
(ii) which also gives preference in allocating housing
credit dollar amounts among selected projects to -
(I) projects serving the lowest income tenants,
(II) projects obligated to serve qualified tenants for
the longest periods, and (FOOTNOTE 7)
(FOOTNOTE 7) So in original.
(III) projects which are located in qualified census
tracts (as defined in subsection (d)(5)(C)) and the
development of which contributes to a concerted community
revitalization plan, and (FOOTNOTE 8)
(FOOTNOTE 8) So in original. Probably should be followed by
''and''.
(iii) which provides a procedure that the agency (or an
agent or other private contractor of such agency) will follow
in monitoring for noncompliance with the provisions of this
section and in notifying the Internal Revenue Service of such
noncompliance which such agency becomes aware of and in
monitoring for noncompliance with habitability standards
through regular site visits.
(C) Certain selection criteria must be used
The selection criteria set forth in a qualified allocation
plan must include
(i) project location,
(ii) housing needs characteristics,
(iii) project characteristics, including whether the
project includes the use of existing housing as part of a
community revitalization plan,
(iv) sponsor characteristics,
(v) tenant populations with special housing needs,
(vi) public housing waiting lists,
(vii) tenant populations of individuals with children, and
(viii) projects intended for eventual tenant ownership.
(D) Application to bond financed projects
Subsection (h)(4) shall not apply to any project unless the
project satisfies the requirements for allocation of a housing
credit dollar amount under the qualified allocation plan
applicable to the area in which the project is located.
(2) Credit allocated to building not to exceed amount necessary
to assure project feasibility
(A) In general
The housing credit dollar amount allocated to a project shall
not exceed the amount the housing credit agency determines is
necessary for the financial feasibility of the project and its
viability as a qualified low-income housing project throughout
the credit period.
(B) Agency evaluation
In making the determination under subparagraph (A), the
housing credit agency shall consider -
(i) the sources and uses of funds and the total financing
planned for the project,
(ii) any proceeds or receipts expected to be generated by
reason of tax benefits,
(iii) the percentage of the housing credit dollar amount
used for project costs other than the cost of intermediaries,
and
(iv) the reasonableness of the developmental and
operational costs of the project.
Clause (iii) shall not be applied so as to impede the
development of projects in hard-to-develop areas. Such a
determination shall not be construed to be a representation or
warranty as to the feasibility or viability of the project.
(C) Determination made when credit amount applied for and when
building placed in service
(i) In general
A determination under subparagraph (A) shall be made as of
each of the following times:
(I) The application for the housing credit dollar amount.
(II) The allocation of the housing credit dollar amount.
(III) The date the building is placed in service.
(ii) Certification as to amount of other subsidies
Prior to each determination under clause (i), the taxpayer
shall certify to the housing credit agency the full extent of
all Federal, State, and local subsidies which apply (or which
the taxpayer expects to apply) with respect to the building.
(D) Application to bond financed projects
Subsection (h)(4) shall not apply to any project unless the
governmental unit which issued the bonds (or on behalf of which
the bonds were issued) makes a determination under rules
similar to the rules of subparagraphs (A) and (B).
(n) 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 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.
Sources
(Added Pub. L. 99-514, title II, Sec. 252(a), Oct. 22, 1986, 100
Stat. 2189; amended Pub. L. 99-509, title VIII, Sec. 8072(a), Oct.
21, 1986, 100 Stat. 1964; Pub. L. 100-647, title I, Sec.
1002(l)(1)-(25), (32), 1007(g)(3)(B), title IV, Sec. 4003(a),
(b)(1), (3), 4004(a), Nov. 10, 1988, 102 Stat. 3373-3381, 3435,
3643, 3644; Pub. L. 101-239, title VII, Sec. 7108(a)(1),
(b)-(e)(2), (f)-(m), (n)(2)-(q), 7811(a), 7831(c),
7841(d)(13)-(15), Dec. 19, 1989, 103 Stat. 2306-2321, 2406, 2426,
2429; Pub. L. 101-508, title XI, Sec. 11407(a)(1), (b)(1)-(9),
11701(a)(1)-(3)(A), (4), (5)(A), (6)-(10), 11812(b)(3),
11813(b)(3), Nov. 5, 1990, 104 Stat. 1388-474, 1388-475, 1388-505
to 1388-507, 1388-535, 1388-551; Pub. L. 102-227, title I, Sec.
107(a), Dec. 11, 1991, 105 Stat. 1687; Pub. L. 103-66, title XIII,
Sec. 13142(a)(1), (b)(1)-(5), Aug. 10, 1993, 107 Stat. 437-439;
Pub. L. 104-188, title I, Sec. 1704(t)(53), (64), Aug. 20, 1996,
110 Stat. 1890; Pub. L. 105-206, title VI, Sec. 6004(g)(5), July
22, 1998, 112 Stat. 796; Pub. L. 106-400, Sec. 2, Oct. 30, 2000,
114 Stat. 1675; Pub. L. 106-554, Sec. 1(a)(7) (title I, Sec.
131(a)-(c), 132-136), Dec. 21, 2000, 114 Stat. 2763, 2763A-610 to
2763A-613.)
References in Text
REFERENCES IN TEXT
Section 8 of the United States Housing Act of 1937, referred to
in subsecs. (c)(2), (d)(6)(B)(i), (g)(2)(B), and (h)(6)(B)(iv), is
classified to section 1437f of Title 42, The Public Health and
Welfare. Section 8(e)(2) of the Act was repealed by Pub. L.
101-625, title II, Sec. 289(b)(1), Nov. 28, 1990, 104 Stat. 4128,
effective Oct. 1, 1991, but to remain in effect with respect to
single room occupancy dwellings as authorized by subchapter IV
(Sec. 11361 et seq.) of chapter 119 of Title 42. See section
12839(b) of Title 42.
The McKinney-Vento Homeless Assistance Act, referred to in
subsec. (c)(2), is Pub. L. 100-77, July 22, 1987, 101 Stat. 482, as
amended, which is classified principally to chapter 119 (Sec. 11301
et seq.) of Title 42, The Public Health and Welfare. For complete
classification of this Act to the Code, see Short Title note set
out under section 11301 of Title 42 and Tables.
The date of the enactment of this sentence, referred to in
subsec. (c)(2), is the date of the enactment of Pub. L. 101-508,
which was approved Nov. 5, 1990.
Section 201(a) of the Tax Reform Act of 1986, referred to in
subsec. (c)(2)(B), is section 201(a) of Pub. L. 99-514, which
amended section 168 of this title generally.
The date of the enactment of the Tax Reform Act of 1986, referred
to in subsec. (d)(2)(D)(i)(I), (6)(B), is the date of enactment of
Pub. L. 99-514, which was approved Oct. 22, 1986.
The date of the enactment of the Revenue Reconciliation Act of
1990, referred to in subsec. (d)(2)(D)(i)(I), (5)(B), is the date
of the enactment of Pub. L. 101-508, which was approved Nov. 5,
1990.
Sections 221(d)(3) and 236 of the National Housing Act, referred
to in subsec. (d)(6)(B)(ii), are classified to sections 1715l(d)(3)
and 1715z-1, respectively, of Title 12, Banks and Banking.
Sections 515 and 502(c) of the Housing Act of 1949, referred to
in subsecs. (d)(6)(B)(iii), (C)(i) and (g)(2)(B)(iv), are
classified to sections 1485 and 1472(c), respectively, of Title 42,
The Public Health and Welfare.
The Emergency Low Income Housing Preservation Act of 1987,
referred to in subsec. (d)(6)(C)(i), now the Low-Income Housing
Preservation and Resident Homeownership Act of 1990, is title II of
Pub. L. 100-242, Feb. 5, 1988, 101 Stat. 1877, as amended.
Subtitle B of title II, which was formerly set out as a note under
section 1715l of Title 12, Banks and Banking, and which amended
section 1715z-6 of Title 12, was amended generally by Pub. L.
101-625 and is classified to chapter 42 (Sec. 4101 et seq.) of
Title 12. For complete classification of this Act to the Code, see
Short Title note set out under section 4101 of Title 12 and Tables.
Section 3 of the Federal Deposit Insurance Act, referred to in
subsec. (d)(6)(D), is classified to section 1813 of Title 12.
The date of the enactment of this subparagraph, referred to in
subsec. (g)(2)(E), is the date of enactment of Pub. L. 100-647,
which was approved Nov. 10, 1988.
Sections 106, 107, and 108 of the Housing and Community
Development Act of 1974 (as in effect on the date of the enactment
of this sentence), referred to in subsec. (i)(2)(D), are classified
to sections 5306, 5307, and 5308 of Title 42, The Public Health and
Welfare, as in effect on the date of enactment of Pub. L. 101-239,
which was approved Dec. 19, 1989.
The HOME Investment Partnerships Act (as in effect on the date of
the enactment of this subparagraph), referred to in subsec.
(i)(2)(E)(i), is title II of Pub. L. 101-625, Nov. 28, 1990, 104
Stat. 4094, as in effect on the date of enactment of Pub. L.
103-66, which was approved Aug. 10, 1993. Title II of Pub. L.
101-625 is classified principally to subchapter II (Sec. 12721 et
seq.) of chapter 130 of Title 42. For complete classification of
this Act to the Code, see Short Title note set out under section
12701 of Title 42 and Tables.
The Native American Housing Assistance and Self-Determination Act
of 1996, referred to in subsec. (i)(2)(E)(i), is Pub. L. 104-330,
Oct. 26, 1996, 110 Stat. 4016, as amended, which is classified
principally to chapter 43 (Sec. 4101 et seq.) of Title 25, Indians.
For complete classification of this Act to the Code, see Short
Title note set out under section 4101 of Title 25 and Tables.
The date of the enactment of this clause, referred to in subsec.
(i)(3)(B)(iii)(I), is date of enactment of Pub. L. 101-239, which
was approved Dec. 19, 1989.
The Social Security Act, referred to in subsec. (i)(3)(D)(i)(I),
is act Aug. 14, 1935, ch. 531, 49 Stat. 620, as amended. Title IV
of the Act is classified generally to subchapter IV (Sec. 601 et
seq.) of chapter 7 of Title 42, The Public Health and Welfare. For
complete classification of this Act to the Code, see section 1305
of Title 42 and Tables.
The Job Training Partnership Act, referred to in subsec.
(i)(3)(D)(i)(II), is Pub. L. 97-300, Oct. 13, 1982, 96 Stat. 1322,
which was classified generally to chapter 19 (Sec. 1501 et seq.) of
Title 29, Labor, and was repealed by Pub. L. 105-220, title I, Sec.
199(b)(2), (c)(2)(B), Aug. 7, 1998, 112 Stat. 1059, effective July
1, 2000. Pursuant to section 2940(b) of Title 29, references to a
provision of the Job Training Partnership Act, effective Aug. 7,
1998, are deemed to refer to that provision or the corresponding
provision of the Workforce Investment Act of 1998, Pub. L. 105-220,
Aug. 7, 1998, 112 Stat. 936, and effective July 1, 2000, are deemed
to refer to the corresponding provision of the Workforce Investment
Act of 1998. For complete classification of the Job Training
Partnership Act to the Code, see Tables. For complete
classification of the Workforce Investment Act of 1998 to the Code,
see Short Title note set out under section 9201 of Title 20,
Education, and Tables.
Miscellaneous
PRIOR PROVISIONS
A prior section 42, added Pub. L. 94-12, title II, Sec. 203(a),
Mar. 29, 1975, 89 Stat. 29; amended Pub. L. 94-164, Sec. 3(a)(1),
Dec. 23, 1975, 89 Stat. 972; Pub. L. 94-455, title IV, Sec.
401(a)(2)(A), (B), title V, Sec. 503(b)(4), title XIX, Sec.
1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1555, 1562, 1834; Pub. L.
95-30, title I, Sec. 101(c), May 23, 1977, 91 Stat. 132, which
related to general tax credit allowed to individuals in an amount
equal to the greater of (1) 2% of taxable income not exceeding
$9,000 or (2) $35 multiplied by each exemption the taxpayer was
entitled to, expired Dec. 31, 1978, pursuant to the terms of: (1)
Pub. L. 94-12, Sec. 209(a) as amended by Pub. L. 94-164, Sec. 2(e),
set out as an Effective and Termination Dates of 1975 Amendment
note under section 56 of this title; (2) Pub. L. 94-164, Sec. 3(b),
as amended by Pub. L. 94-455, Sec. 401(a)(1) and Pub. L. 95-30,
Sec. 103(a); and (3) Pub. L. 94-455, Sec. 401(e), as amended by
Pub. L. 95-30, Sec. 103(c) and Pub. L. 95-600, title I, Sec.
103(b), Nov. 6, 1978, 92 Stat. 2771, set out as an Effective and
Termination Dates of 1976 Amendment note under section 32 of this
title.
Another prior section 42 was renumbered section 35 of this title.
AMENDMENTS
2007 - PL 110-142
SEC. 6. CLARIFICATION OF STUDENT HOUSING ELIGIBLE FOR LOW-INCOME HOUSING
CREDIT.
(a) In General.--Subclause (I) of section 42(i)(3)(D)(ii) of the
Internal Revenue Code of <<NOTE: 26 USC 42.>> 1986 (relating to certain
students not to disqualify unit) is amended to read as follows:
``(I) single parents and their
children and such parents are not
dependents (as defined in section 152,
determined without regard to subsections
(b)(1), (b)(2), and (d)(1)(B) thereof)
of another individual and such children
are not dependents (as so defined) of
another individual other than a parent
of such children, or.''.
2004 - Pub.L.108-311,Sec.408(a)(3) made clerical amendments
to Sec.42(d)(2)(D)(iii)(I) by striking "section 179(b)(7)"
and inserting "section 179(d)(7)".
2004 - Pub. L. 108-311 Sec 207(8), amends Section 42(i)(3)(D)(ii)(I)
by inserting ``, determined without regard to subsections (b)(1),
(b)(2), and (d)(1)(B) thereof'' after ``section 152''
2000 - Subsec. (c)(2). Pub. L. 106-400 substituted
''McKinney-Vento Homeless Assistance Act'' for ''Stewart B.
McKinney Homeless Assistance Act'' in concluding provisions.
Subsec. (d)(4)(A). Pub. L. 106-554, Sec. 1(a)(7) (title I, Sec.
134(a)(1)), substituted ''subparagraphs (B) and (C)'' for
''subparagraph (B)''.
Subsec. (d)(4)(C), (D). Pub. L. 106-554, Sec. 1(a)(7) (title I,
Sec. 134(a)(2), (3)), added subpar. (C) and redesignated former
subpar. (C) as (D).
Subsec. (d)(5)(C)(ii)(I). Pub. L. 106-554, Sec. 1(a)(7) (title I,
Sec. 135(b)), in first sentence, inserted ''either'' before ''in
which 50 percent'' and ''or which has a poverty rate of at least 25
percent'' before period at end.
Subsec. (h)(1)(E)(ii). Pub. L. 106-554, Sec. 1(a)(7) (title I,
Sec. 135(a)(1)), in first sentence, substituted ''(as of the later
of the date which is 6 months after the date that the allocation
was made or the close of the calendar year in which the
allocation'' for ''(as of the close of the calendar year in which
the allocation''.
Subsec. (h)(3)(C). Pub. L. 106-554, Sec. 1(a)(7) (title I, Sec.
136(b)), which directed the substitution of ''clauses (i) through
(iv)'' for ''clauses (i) and (iii)'' in the first sentence of
concluding provisions, could not be executed because the words
''clauses (i) and (iii)'' did not appear subsequent to the
amendment by Pub. L. 106-554, Sec. 1(a)(7) (title I, Sec.
131(c)(1)(B)). See below.
Pub. L. 106-554, Sec. 1(a)(7) (title I, Sec. 135(a)(2)), in last
sentence of concluding provisions, substituted ''project which
fails to meet the 10 percent test under paragraph (1)(E)(ii) on a
date after the close of the calendar year in which the allocation
was made or which'' for ''project which''.
Pub. L. 106-554, Sec. 1(a)(7) (title I, Sec. 131(c)(1)), in first
sentence of concluding provisions, substituted ''clause (i)'' for
''clause (ii)'' and ''clauses (ii)'' for ''clauses (i)''.
Subsec. (h)(3)(C)(i), (ii). Pub. L. 106-554, Sec. 1(a)(7) (title
I, Sec. 131(a)), amended cls. (i) and (ii) generally. Prior to
amendment, cls. (i) and (ii) read as follows:
''(i) $1.25 multiplied by the State population,
''(ii) the unused State housing credit ceiling (if any) of such
State for the preceding calendar year,''.
Subsec. (h)(3)(D)(ii). Pub. L. 106-554, Sec. 1(a)(7) (title I,
Sec. 136(a)), substituted ''the excess (if any) of - '' for ''the
excess (if any) of the unused State housing credit ceiling for such
year (as defined in subparagraph (C)(i)) over the excess (if any)
of - '' in introductory provisions, added subcls. (I) and (II), and
struck out former subcls. (I) and (II) which read as follows:
''(I) the aggregate housing credit dollar amount allocated for
such year, over
''(II) the sum of the amounts described in clauses (ii) and (iii)
of subparagraph (C).''
Pub. L. 106-554, Sec. 1(a)(7) (title I, Sec. 131(c)(2)),
substituted ''subparagraph (C)(i)'' for ''subparagraph (C)(ii)'' in
introductory provisions and ''clauses (ii)'' for ''clauses (i)'' in
subcl. (II).
Subsec. (h)(3)(H). Pub. L. 106-554, Sec. 1(a)(7) (title I, Sec.
131(b)), added subpar. (H).
Subsec. (i)(2)(E). Pub. L. 106-554, Sec. 1(a)(7) (title I, Sec.
134(b)(2)), inserted ''or Native American housing assistance''
after ''HOME assistance'' in heading.
Subsec. (i)(2)(E)(i). Pub. L. 106-554, Sec. 1(a)(7) (title I,
Sec. 134(b)(1)), inserted ''or the Native American Housing
Assistance and Self-Determination Act of 1996 (25 U.S.C. 4101 et
seq.) (as in effect on October 1, 1997)'' after ''this
subparagraph)''.
Subsec. (i)(3)(B)(iii)(I). Pub. L. 106-400 substituted
''McKinney-Vento Homeless Assistance Act'' for ''Stewart B.
McKinney Homeless Assistance Act''.
Subsec. (m)(1)(A)(iii), (iv). Pub. L. 106-554, Sec. 1(a)(7)
(title I, Sec. 133(a)), added cls. (iii) and (iv).
Subsec. (m)(1)(B)(ii)(III). Pub. L. 106-554, Sec. 1(a)(7) (title
I, Sec. 132(b)), added subcl. (III).
Subsec. (m)(1)(B)(iii). Pub. L. 106-554, Sec. 1(a)(7) (title I,
Sec. 133(b)), inserted ''and in monitoring for noncompliance with
habitability standards through regular site visits'' before period
at end.
Subsec. (m)(1)(C)(iii). Pub. L. 106-554, Sec. 1(a)(7) (title I,
Sec. 132(a)(1)), inserted '', including whether the project
includes the use of existing housing as part of a community
revitalization plan'' before comma at end.
Subsec. (m)(1)(C)(v) to (viii). Pub. L. 106-554, Sec. 1(a)(7)
(title I, Sec. 132(a)(2)), added cls. (v) to (viii) and struck out
former cls. (v) to (vii) which read as follows:
''(v) participation of local tax-exempt organizations,
''(vi) tenant populations with special housing needs, and
''(vii) public housing waiting lists.''
1998 - Subsec. (j)(4)(D). Pub. L. 105-206 substituted ''this
chapter'' for ''subpart A, B, D, or G of this part''.
1996 - Subsec. (c)(2). Pub. L. 104-188, Sec. 1704(t)(64), struck
out ''of 1988'' after ''Homeless Assistance Act''.
Subsec. (d)(5)(B). Pub. L. 104-188, Sec. 1704(t)(53), provided
that section 11812(b)(3) of Pub. L. 101-508 shall be applied by not
executing the amendment therein to the heading of subsec. (d)(5)(B)
of this section. See 1990 Amendment note below.
1993 - Subsec. (g)(8). Pub. L. 103-66, Sec. 13142(b)(3), added
par. (8).
Subsec. (h)(6)(B)(iv) to (vi). Pub. L. 103-66, Sec. 13142(b)(4),
added cl. (iv) and redesignated former cls. (iv) and (v) as (v) and
(vi), respectively.
Subsec. (i)(2)(E). Pub. L. 103-66, Sec. 13142(b)(5), added
subpar. (E).
Subsec. (i)(3)(D). Pub. L. 103-66, Sec. 13142(b)(2), amended
heading and text of subpar. (D) generally. Prior to amendment,
text read as follows: ''A unit shall not fail to be treated as a
low-income unit merely because it is occupied by an individual who
is -
''(i) a student and receiving assistance under title IV of the
Social Security Act, or
''(ii) enrolled in a job training program receiving assistance
under the Job Training Partnership Act or under other similar
Federal, State, or local laws.''
Subsec. (m)(2)(B)(iv). Pub. L. 103-66, Sec. 13142(b)(1), added
cl. (iv).
Subsec. (o). Pub. L. 103-66, Sec. 13142(a)(1), struck out subsec.
(o) which provided that subsec. (h)(3)(C)(i) would not apply to any
amount allocated after June 30, 1992, and that subsec. (h)(4) would
not apply to any building placed in service after June 30, 1992,
with an exception for bond-financed buildings in progress.
1991 - Subsec. (o)(1). Pub. L. 102-227, Sec. 107(a)(1), struck
out '', for any calendar year after 1991'' after ''paragraph (2)''
in introductory provisions, inserted ''to any amount allocated
after June 30, 1992'' before comma at end of subpar. (A), and
substituted ''June 30, 1992'' for ''1991'' in subpar. (B).
Subsec. (o)(2). Pub. L. 102-227, Sec. 107(a)(2), substituted
''July 1, 1992'' for ''1992'' in introductory provisions and
subpar. (A), ''June 30, 1992'' for ''December 31, 1991'' and ''June
30, 1994'' for ''December 31, 1993'' in subpar. (B), and ''July 1,
1994'' for ''January 1, 1994'' in subpar. (C).
1990 - Subsec. (b)(1). Pub. L. 101-508, Sec. 11701(a)(1)(B),
struck out at end ''A building shall not be treated as described in
subparagraph (B) if, at any time during the credit period, moderate
rehabilitation assistance is provided with respect to such building
under section 8(e)(2) of the United States Housing Act of 1937.''
Subsec. (c)(2). Pub. L. 101-508, Sec. 11701(a)(1)(A), inserted at
end ''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.''
Pub. L. 101-508, Sec. 11407(b)(5)(A), inserted before period at
end of last sentence ''(other than assistance under the Stewart B.
McKinney Homeless Assistance Act of 1988 (as in effect on the date
of the enactment of this sentence))''.
Subsec. (d)(2)(D)(i)(I). Pub. L. 101-508, Sec. 11812(b)(3),
inserted ''(as in effect on the day before the date of the
enactment of the Revenue Reconciliation Act of 1990)'' after
''section 167(k).''
Subsec. (d)(2)(D)(ii)(V). Pub. L. 101-508, Sec. 11407(b)(8),
added subcl. (V).
Subsec. (d)(5)(B). Pub. L. 101-508, Sec. 11812(b)(3), which
directed the insertion of ''(as in effect on the day before the
date of the enactment of the Revenue Reconciliation Act of 1990)''
after ''section 167(k)'', was executed to the text, and not the
heading, of subpar. (B). See 1996 Amendment note above.
Subsec. (d)(5)(C)(ii)(I). Pub. L. 101-508, Sec. 11407(b)(4),
inserted at end ''If the Secretary of Housing and Urban Development
determines that sufficient data for any period are not available to
apply this clause on the basis of census tracts, such Secretary
shall apply this clause for such period on the basis of enumeration
districts.''
Pub. L. 101-508, Sec. 11701(a)(2)(B), inserted before period at
end ''for such year''.
Pub. L. 101-508, Sec. 11701(a)(2)(A), which directed the
insertion of ''which is designated by the Secretary of Housing and
Urban Development and, for the most recent year for which census
data are available on household income in such tract,'' after
''census tract'', was executed by making the insertion after ''any
census tract'' to reflect the probable intent of Congress.
Subsec. (g)(2)(B)(iv). Pub. L. 101-508, Sec. 11407(b)(3), added
cl. (iv).
Subsec. (g)(2)(D)(i). Pub. L. 101-508, Sec. 11701(a)(3)(A),
inserted before period at end ''and such unit continues to be
rent-restricted''.
Subsec. (g)(2)(D)(ii). Pub. L. 101-508, Sec. 11701(a)(4),
inserted at end ''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 low-income 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'.''
Subsec. (g)(3)(A). Pub. L. 101-508, Sec. 11701(a)(5)(A),
substituted ''the 1st year of the credit period for such building''
for ''the 12-month period beginning on the date the building is
placed in service''.
Subsec. (h)(3)(C). Pub. L. 101-508, Sec. 11701(a)(6)(A),
substituted ''the sum of the amounts described in clauses (i) and
(iii)'' for ''the amount described in clause (i)'' in second
sentence.
Subsec. (h)(3)(D)(ii)(II). Pub. L. 101-508, Sec. 11701(a)(6)(B),
substituted ''the sum of the amounts described in clauses (i) and
(iii)'' for ''the amount described in clause (i)''.
Subsec. (h)(5)(B). Pub. L. 101-508, Sec. 11407(b)(9)(A), inserted
''own an interest in the project (directly or through a
partnership) and'' after ''nonprofit organization is to''.
Subsec. (h)(5)(C)(i) to (iii). Pub. L. 101-508, Sec.
11407(b)(9)(B), added cl. (ii) and redesignated former cl. (ii) as
(iii).
Subsec. (h)(5)(D)(i). Pub. L. 101-508, Sec. 11407(b)(9)(C),
inserted ''ownership and'' before ''material participation''.
Subsec. (h)(6)(B)(i). Pub. L. 101-508, Sec. 11701(a)(7)(A),
inserted before comma at end ''and which prohibits the actions
described in subclauses (I) and (II) of subparagraph (E)(ii)''.
Subsec. (h)(6)(B)(ii). Pub. L. 101-508, Sec. 11701(a)(7)(B),
substituted ''requirement and prohibitions'' for ''requirement''.
Subsec. (h)(6)(B)(iii) to (v). Pub. L. 101-508, Sec.
11701(a)(8)(A), added cl. (iii) and redesignated former cls. (iii)
and (iv) as (iv) and (v), respectively.
Subsec. (h)(6)(E)(i)(I). Pub. L. 101-508, Sec. 11701(a)(9),
inserted before comma ''unless the Secretary determines that such
acquisition is part of an arrangement with the taxpayer a purpose
of which is to terminate such period''.
Subsec. (h)(6)(E)(ii)(II). Pub. L. 101-508, Sec. 11701(a)(8)(C),
inserted before period at end ''not otherwise permitted under this
section''.
Subsec. (h)(6)(F). Pub. L. 101-508, Sec. 11701(a)(8)(D), inserted
''the nonlow-income portion of the building for fair market value
and'' before ''the low-income portion'' in introductory provisions.
Subsec. (h)(6)(J) to (L). Pub. L. 101-508, Sec. 11701(a)(8)(B),
redesignated subpars. (K) and (L) as (J) and (K), respectively, and
struck out former subpar. (J) which related to sales of less than
the low-income portions of a building.
Subsec. (i)(3)(D). Pub. L. 101-508, Sec. 11407(b)(6), substituted
''Certain students'' for ''Students in government-supported job
training programs'' in heading and amended text generally. Prior
to amendment, text read as follows: ''A unit shall not fail to be
treated as a low-income unit merely because it is occupied by an
individual who is enrolled in a job training program receiving
assistance under the Job Training Partnership Act or under other
similar Federal, State, or local laws.''
Subsec. (i)(7). Pub. L. 101-508, Sec. 11701(a)(10), redesignated
par. (8) as (7).
Subsec. (i)(7)(A). Pub. L. 101-508, Sec. 11407(b)(1), substituted
''the tenants (in cooperative form or otherwise) or resident
management corporation of such building or by a qualified nonprofit
organization (as defined in subsection (h)(5)(C)) or government
agency'' for ''the tenants of such building''.
Subsec. (i)(8). Pub. L. 101-508, Sec. 11701(a)(10), redesignated
par. (8) as (7).
Subsec. (k)(1). Pub. L. 101-508, Sec. 11813(b)(3)(A), substituted
''49(a)(1)'' for ''46(c)(8)'', ''49(a)(2)'' for ''46(c)(9)'', and
''49(b)(1)'' for ''47(d)(1)''.
Subsec. (k)(2)(A)(ii), (D). Pub. L. 101-508, Sec. 11813(b)(3)(B),
substituted ''49(a)(1)(D)(iv)(II)'' for ''46(c)(8)(D)(iv)(II)''.
Subsec. (m)(1)(B)(ii) to (iv). Pub. L. 101-508, Sec.
11407(b)(7)(B), redesignated cls. (iii) and (iv) as (ii) and (iii),
respectively, and struck out former cl. (ii) which read as follows:
''which gives the highest priority to those projects as to which
the highest percentage of the housing credit dollar amount is to be
used for project costs other than the cost of intermediaries unless
granting such priority would impede the development of projects in
hard-to-develop areas,''.
Pub. L. 101-508, Sec. 11407(b)(2), amended cl. (iv) generally.
Prior to amendment, cl. (iv) read as follows: ''which provides a
procedure that the agency will follow in notifying the Internal
Revenue Service of noncompliance with the provisions of this
section which such agency becomes aware of.''
Subsec. (m)(2)(B). Pub. L. 101-508, Sec. 11407(b)(7)(A), added
cl. (iii) and inserted provision that cl. (iii) not be applied so
as to impede the development of projects in hard-to-develop areas.
Subsec. (o)(1). Pub. L. 101-508, Sec. 11407(a)(1)(A), substituted
''1991'' for ''1990'' wherever appearing.
Subsec. (o)(2). Pub. L. 101-508, Sec. 11407(a)(1)(B), added par.
(2) and struck out former par. (2) which read as follows: ''For
purposes of paragraph (1)(B), a building shall be treated as placed
in service before 1990 if -
''(A) the bonds with respect to such building are issued before
1990,
''(B) such building is constructed, reconstructed, or
rehabilitated by the taxpayer,
''(C) more than 10 percent of the reasonably anticipated cost
of such construction, reconstruction, or rehabilitation has been
incurred as of January 1, 1990, and some of such cost is incurred
on or after such date, and
''(D) such building is placed in service before January 1,
1992.''
1989 - Subsec. (b)(1). Pub. L. 101-239, Sec. 7108(h)(5), inserted
at end ''A building shall not be treated as described in
subparagraph (B) if, at any time during the credit period, moderate
rehabilitation assistance is provided with respect to such building
under section 8(e)(2) of the United States Housing Act of 1937.''
Subsec. (b)(3)(C). Pub. L. 101-239, Sec. 7108(c)(2), which
directed amendment of subpar. (C) by substituting ''subsection
(h)(7)'' for ''subsection (h)(6))'', was executed by substituting
''subsection (h)(7)'' for ''subsection (h)(6)'', as the probable
intent of Congress.
Subsec. (c)(1)(E). Pub. L. 101-239, Sec. 7108(i)(2), added
subpar. (E).
Subsec. (d)(1). Pub. L. 101-239, Sec. 7108(l)(1), inserted ''as
of the close of the 1st taxable year of the credit period'' before
period at end.
Subsec. (d)(2)(A). Pub. L. 101-239, Sec. 7108(l)(2), substituted
''subparagraph (B), its adjusted basis as of the close of the 1st
taxable year of the credit period, and'' for ''subparagraph (B),
the sum of -
''(I) the portion of its adjusted basis attributable to its
acquisition cost, plus
''(II) amounts chargeable to capital account and incurred by
the taxpayer (before the close of the 1st taxable year of the
credit period for such building) for property (or additions or
improvements to property) of a character subject to the allowance
for depreciation, and''.
Subsec. (d)(2)(B)(iv). Pub. L. 101-239, Sec. 7108(d)(1), added
cl. (iv).
Subsec. (d)(2)(C). Pub. L. 101-239, Sec. 7108(l)(3)(A),
substituted ''Adjusted basis'' for ''Acquisition cost'' in heading
and ''adjusted basis'' for ''cost'' in text.
Subsec. (d)(5). Pub. L. 101-239, Sec. 7108(l)(3)(B), substituted
''Special rules for determining eligible basis'' for ''Eligible
basis determined when building placed in service'' in heading.
Subsec. (d)(5)(A). Pub. L. 101-239, Sec. 7108(l)(3)(B),
redesignated subpar. (B) as (A) and struck out former subpar. (A)
which read as follows: ''Except as provided in subparagraphs (B)
and (C), the eligible basis of any building for the entire
compliance period for such building shall be its eligible basis on
the date such building is placed in service (increased, in the case
of an existing building which meets the requirements of paragraph
(2)(B), by the amounts described in paragraph (2)(A)(i)(II)).''
Subsec. (d)(5)(B). Pub. L. 101-239, Sec. 7108(l)(3)(B),
redesignated subpar. (C) as (B). Former subpar. (B) redesignated
(A).
Subsec. (d)(5)(C). Pub. L. 101-239, Sec. 7108(l)(3)(B),
redesignated subpar. (D) as (C). Former subpar. (C) redesignated
(B).
Pub. L. 101-239, Sec. 7811(a)(1), inserted ''section'' before
''167(k)'' in heading.
Subsec. (d)(5)(D). Pub. L. 101-239, Sec. 7108(l)(3)(B),
redesignated subpar. (D) as (C).
Pub. L. 101-239, Sec. 7108(g), added subpar. (D).
Subsec. (d)(6)(A)(i). Pub. L. 101-239, Sec. 7841(d)(13),
substituted ''Farmers Home Administration'' for ''Farmers' Home
Administration''.
Subsec. (d)(6)(C) to (E). Pub. L. 101-239, Sec. 7108(f), added
subpars. (C) and (D) and redesignated former subpar. (C) as (E).
Subsec. (d)(7)(A). Pub. L. 101-239, Sec. 7831(c)(6), inserted
''(or interest therein)'' after ''subparagraph (B)'' in
introductory provisions.
Subsec. (d)(7)(A)(ii). Pub. L. 101-239, Sec. 7841(d)(14),
substituted ''under subsection (a)'' for ''under sebsection (a)''.
Subsec. (e)(2)(A). Pub. L. 101-239, Sec. 7841(d)(15), substituted
''to capital account'' for ''to captial account''.
Subsec. (e)(3). Pub. L. 101-239, Sec. 7108(d)(3), substituted
''Minimum expenditures to qualify'' for ''Average of rehabilitation
expenditures must be $2,000 or more'' in heading, added subpars.
(A) and (B), redesignated former subpar. (B) as (C), and struck out
former subpar. (A) which read as follows: ''Paragraph (1) shall
apply to rehabilitation expenditures with respect to any building
only if the qualified basis attributable to such expenditures
incurred during any 24-month period, when divided by the low-income
units in the building, is $2,000 or more.''
Subsec. (e)(5). Pub. L. 101-239, Sec. 7108(l)(3)(C), substituted
''subsection (d)(2)(A)(i)'' for ''subsection (d)(2)(A)(i)(II)''.
Subsec. (f)(4). Pub. L. 101-239, Sec. 7831(c)(4), added par. (4).
Subsec. (f)(5). Pub. L. 101-239, Sec. 7108(d)(2), added par. (5).
Subsec. (g)(2)(A). Pub. L. 101-239, Sec. 7108(e)(2), inserted at
end ''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 low-income
housing project.''
Pub. L. 101-239, Sec. 7108(e)(1)(B), substituted ''the imputed
income limitation applicable to such unit'' for ''the income
limitation under paragraph (1) applicable to individuals occupying
such unit''.
Subsec. (g)(2)(B). Pub. L. 101-239, Sec. 7108(h)(2), added cl.
(iii) and concluding provisions which defined ''supportive
service''.
Subsec. (g)(2)(C) to (E). Pub. L. 101-239, Sec. 7108(e)(1)(A),
added subpars. (C) and (D) and redesignated former subpar. (C) as
(E).
Subsec. (g)(3)(D). Pub. L. 101-239, Sec. 7108(m)(3), added
subpar. (D).
Subsec. (g)(4). Pub. L. 101-239, Sec. 7108(n)(2), struck out
''(other than section 142(d)(4)(B)(iii))'' after ''in applying such
provisions''.
Subsec. (g)(7). Pub. L. 101-239, Sec. 7108(h)(3), added par. (7).
Subsec. (h)(1)(B). Pub. L. 101-239, Sec. 7108(m)(2), substituted
''(E), or (F)'' for ''or (E)''.
Subsec. (h)(1)(F). Pub. L. 101-239, Sec. 7108(m)(1), added
subpar. (F).
Subsec. (h)(3)(C) to (G). Pub. L. 101-239, Sec. 7108(b)(1), added
subpars. (C) and (D), redesignated former subpars. (D) to (F) as
(E) to (G), respectively, and struck out former subpar. (C) which
read as follows: ''The State housing credit ceiling applicable to
any State for any calendar year shall be an amount equal to $1.25
multiplied by the State population.''
Subsec. (h)(4)(B). Pub. L. 101-239, Sec. 7108(j), substituted
''50 percent'' for ''70 percent'' in heading and in text.
Subsec. (h)(5)(D)(ii). Pub. L. 101-239, Sec. 7811(a)(2),
substituted ''clause (i)'' for ''clause (ii)''.
Subsec. (h)(5)(E). Pub. L. 101-239, Sec. 7108(b)(2)(A),
substituted ''subparagraph (F)'' for ''subparagraph (E)''.
Subsec. (h)(6). Pub. L. 101-239, Sec. 7108(c)(1), added par. (6).
Former par. (6) redesignated (7).
Subsec. (h)(6)(B) to (E). Pub. L. 101-239, Sec. 7108(b)(2)(B),
redesignated subpars. (C) to (E) as (B) to (D), respectively, and
struck out former subpar. (B) which provided that the housing
credit dollar amount could not be carried over to any other
calendar year.
Subsec. (h)(7), (8). Pub. L. 101-239, Sec. 7108(c)(1),
redesignated pars. (6) and (7) as (7) and (8), respectively.
Subsec. (i)(2)(D). Pub. L. 101-239, Sec. 7108(k), inserted at end
''Such term shall not include any loan which would be a below
market Federal loan solely by reason of assistance provided under
section 106, 107, or 108 of the Housing and Community Development
Act of 1974 (as in effect on the date of the enactment of this
sentence).''
Subsec. (i)(3)(B). Pub. L. 101-239, Sec. 7108(i)(1), amended
subpar. (B) generally. Prior to amendment, subpar. (B) read as
follows: ''A unit shall not be treated as a low-income unit unless
the unit is suitable for occupancy (as determined under regulations
prescribed by the Secretary taking into account local health,
safety, and building codes) and used other than on a transient
basis. For purposes of the preceding sentence, 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.''
Pub. L. 101-239, Sec. 7831(c)(1), inserted ''(as determined under
regulations prescribed by the Secretary taking into account local
health, safety, and building codes)'' after ''suitable for
occupancy''.
Pub. L. 101-239, Sec. 7108(h)(1), inserted at end ''For purposes
of the preceding sentence, 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.''
Subsec. (i)(3)(D). Pub. L. 101-239, Sec. 7831(c)(2), added
subpar. (D).
Subsec. (i)(3)(E). Pub. L. 101-239, Sec. 7108(h)(4), added
subpar. (E).
Subsec. (i)(6). Pub. L. 101-239, Sec. 7831(c)(3), added par. (6).
Subsec. (i)(8). Pub. L. 101-239, Sec. 7108(q), added par. (8).
Subsec. (k)(2)(D). Pub. L. 101-239, Sec. 7108(o), added provision
at end relating to the applicability of cl. (ii) to qualified
nonprofit organizations not described in section
46(c)(8)(D)(iv)(II) with respect to a building.
Subsec. (l)(1). Pub. L. 101-239, Sec. 7108(p), in introductory
provisions, substituted ''Following'' for ''Not later than the 90th
day following'' and inserted ''at such time and'' before ''in such
form''.
Subsec. (m). Pub. L. 101-239, Sec. 7108(o), added subsec. (m).
Former subsec. (m) redesignated (n).
Subsec. (m)(4). Pub. L. 101-239, Sec. 7831(c)(5), added par. (4).
Subsec. (n). Pub. L. 101-239, Sec. 7108(o), redesignated subsec.
(m) as (n). Former subsec. (n) redesignated (o).
Pub. L. 101-239, Sec. 7108(a)(1), amended subsec. (n) generally.
Prior to amendment, subsec. (n) read as follows: ''The State
housing credit ceiling under subsection (h) shall be zero for any
calendar year after 1989 and subsection (h)(4) shall not apply to
any building placed in service after 1989.''
Subsec. (o). Pub. L. 101-239, Sec. 7108(o), redesignated subsec.
(n) as (o).
1988 - Subsec. (b)(2)(A). Pub. L. 100-647, Sec. 1002(l)(1)(A),
substituted ''for the earlier of - '' for ''for the month in which
such building is placed in service'' and added cls. (i) and (ii)
and concluding provisions.
Subsec. (b)(2)(C)(ii). Pub. L. 100-647, Sec. 1002(l)(1)(B),
substituted ''the month applicable under clause (i) or (ii) of
subparagraph (A)'' for ''the month in which the building was placed
in service''.
Subsec. (b)(3). Pub. L. 100-647, Sec. 1002(l)(9)(B), amended par.
(3) generally. Prior to amendment, par. (3) read as follows: ''For
treatment of certain rehabilitation expenditures as separate new
buildings, see subsection (e).''
Subsec. (c)(2)(A). Pub. L. 100-647, Sec. 1002(l)(2)(A), amended
subpar. (A) generally. Prior to amendment, subpar. (A) read as
follows: ''which at all times during the compliance period with
respect to such building is part of a qualified low-income housing
project, and''.
Subsec. (d)(2)(D)(ii). Pub. L. 100-647, Sec. 1002(l)(3),
substituted ''Special rules for certain transfers'' for ''Special
rule for nontaxable exchanges'' in heading and amended text
generally. Prior to amendment, text read as follows: ''For
purposes of determining under subparagraph (B)(ii) when a building
was last placed in service, there shall not be taken into account
any placement in service in connection with the acquisition of the
building in a transaction in which the basis of the building in the
hands of the person acquiring it is determined in whole or in part
by reference to the adjusted basis of such building in the hands of
the person from whom aquired (sic).''
Subsec. (d)(3). Pub. L. 100-647, Sec. 1002(l)(4), amended par.
(3) generally. Prior to amendment, par. (3) read as follows: ''The
eligible basis of any building shall be reduced by an amount equal
to the portion of the adjusted basis of the building which is
attributable to residential rental units in the building which are
not low-income units and which are above the average quality
standard of the low-income units in the building.''
Subsec. (d)(5)(A). Pub. L. 100-647, Sec. 1002(l)(6)(B),
substituted ''subparagraphs (B) and (C)'' for ''subparagraph (B)''.
Pub. L. 100-647, Sec. 1002(l)(5), inserted ''(increased, in the
case of an existing building which meets the requirements of
paragraph (2)(B), by the amounts described in paragraph
(2)(A)(i)(II))'' before period at end.
Subsec. (d)(5)(C). Pub. L. 100-647, Sec. 1002(l)(6)(A), added
subpar. (C).
Subsec. (d)(6)(A)(iii). Pub. L. 100-647, Sec. 1002(l)(7), struck
out cl. (iii) which related to other circumstances of financial
distress.
Subsec. (d)(6)(B)(ii). Pub. L. 100-647, Sec. 1002(l)(8), struck
out ''of 1934'' after ''Act''.
Subsec. (f)(1). Pub. L. 100-647, Sec. 1002(l)(2)(B), substituted
''beginning with - '' for ''beginning with'' and subpars. (A) and
(B) and concluding provisions for ''the taxable year in which the
building is placed in service or, at the election of the taxpayer,
the succeeding taxable year. Such an election, once made, shall be
irrevocable.''
Subsec. (f)(3). Pub. L. 100-647, Sec. 1002(l)(9)(A), amended par.
(3) generally. Prior to amendment, par. (3) ''Special rule where
increase in qualified basis after 1st year of credit period'' read
as follows:
''(A) Credit increased. - If -
''(i) as of the close of any taxable year in the compliance
period (after the 1st year of the credit period) the qualified
basis of any building exceeds
''(ii) the qualified basis of such building as of the close of
the 1st year of the credit period,
the credit allowable under subsection (a) for the taxable year
(determined without regard to this paragraph) shall be increased by
an amount equal to the product of such excess and the percentage
equal to 2/3 of the applicable percentage for such building.
''(B) 1st year computation applies. - A rule similar to the rule
of paragraph (2)(A) shall apply to the additional credit allowable
by reason of this paragraph for the 1st year in which such
additional credit is allowable.''
Subsec. (g)(2)(B)(i). Pub. L. 100-647, Sec. 1002(l)(10), struck
out ''Federal'' after ''comparable''.
Subsec. (g)(2)(C). Pub. L. 100-647, Sec. 1002(l)(11), added
subpar. (C).
Subsec. (g)(3). Pub. L. 100-647, Sec. 1002(l)(12), amended par.
(3) generally, substituting subpars. (A) to (C) for former subpars.
(A) and (B).
Subsec. (g)(4). Pub. L. 100-647, Sec. 1002(l)(13), inserted '';
except that, in applying such provisions (other than section
142(d)(4)(B)(iii)) for such purposes, the term 'gross rent' shall
have the meaning given such term by paragraph (2)(B) of this
subsection'' before period at end.
Subsec. (g)(6). Pub. L. 100-647, Sec. 1002(l)(32), added par.
(6).
Subsec. (h)(1). Pub. L. 100-647, Sec. 1002(l)(14)(A), amended
par. (1) generally. Prior to amendment, par. (1) read as follows:
''No credit shall be allowed by reason of this section for any
taxable year with respect to any building in excess of the housing
credit dollar amount allocated to such building under this
subsection. An allocation shall be taken into account under the
preceding sentence only if it occurs not later than the earlier of
-
''(A) the 60th day after the close of the taxable year, or
''(B) the close of the calendar year in which such taxable year
ends.''
Subsec. (h)(1)(B). Pub. L. 100-647, Sec. 4003(b)(1), substituted
''(C), (D), or (E)'' for ''(C) or (D)''.
Subsec. (h)(1)(E). Pub. L. 100-647, Sec. 4003(a), added subpar.
(E).
Subsec. (h)(4)(A). Pub. L. 100-647, Sec. 1002(l)(15), substituted
''if - '' for ''and which is taken into account under section 146''
and added cls. (i) and (ii).
Subsec. (h)(5)(D), (E). Pub. L. 100-647, Sec. 1002(l)(16), added
subpar. (D) and redesignated former subpar. (D) as (E).
Subsec. (h)(6)(B)(ii). Pub. L. 100-647, Sec. 1002(l)(14)(B),
struck out cl. (ii) which read as follows:
''(ii) Allocation may not be earlier than year in which building
placed in service. - A housing credit agency may allocate its
housing credit dollar amount for any calendar year only to
buildings placed in service before the close of such calendar
year.''
Subsec. (h)(6)(D). Pub. L. 100-647, Sec. 1002(l)(17), amended
subpar. (D) generally. Prior to amendment, subpar. (D) ''Credit
allowable determined without regard to averaging convention, etc.''
read as follows: ''For purposes of this subsection, the credit
allowable under subsection (a) with respect to any building shall
be determined -
''(i) without regard to paragraphs (2)(A) and (3)(B) of
subsection (f), and
''(ii) by applying subsection (f)(3)(A) without regard to 'the
percentage equal to 2/3 of'.''
Subsec. (h)(6)(E). Pub. L. 100-647, Sec. 1002(l)(18), added
subpar. (E).
Subsec. (i)(2)(A). Pub. L. 100-647, Sec. 1002(l)(19)(A), inserted
''or any prior taxable year'' after ''such taxable year'' and
substituted ''is or was outstanding'' for ''is outstanding'' and
''are or were used'' for ''are used''.
Subsec. (i)(2)(B). Pub. L. 100-647, Sec. 1002(l)(19)(B),
substituted ''balance of loan or proceeds of obligations'' for
''outstanding balance of loan'' in heading and amended text
generally. Prior to amendment, text read as follows: ''A loan
shall not be taken into account under subparagraph (A) if the
taxpayer elects to exclude an amount equal to the outstanding
balance of such loan from the eligible basis of the building for
purposes of subsection (d).''
Subsec. (i)(2)(C). Pub. L. 100-647, Sec. 1002(l)(19)(C), added
subpar. (C). Former subpar. (C) redesignated (D).
Subsec. (i)(2)(D). Pub. L. 100-647, Sec. 1002(l)(19)(C), (D),
redesignated former subpar. (C) as (D) and substituted ''this
paragraph'' for ''subparagraph (A)''.
Subsec. (j)(4)(D). Pub. L. 100-647, Sec. 1007(g)(3)(B),
substituted ''D, or G'' for ''or D''.
Subsec. (j)(4)(F). Pub. L. 100-647, Sec. 1002(l)(20), added
subpar. (F).
Subsec. (j)(5)(B). Pub. L. 100-647, Sec. 4004(a), amended subpar.
(B) generally. Prior to amendment, subpar. (B) read as follows:
''This paragraph shall apply to any partnership -
''(i) more than 1/2 the capital interests, and more than 1/2
the profit interests, in which are owned by a group of 35 or more
partners each of whom is a natural person or an estate, and
''(ii) which elects the application of this paragraph.''
Subsec. (j)(5)(B)(i). Pub. L. 100-647, Sec. 1002(l)(21), amended
cl. (i) generally. Prior to amendment, cl. (i) read as follows:
''which has 35 or more partners each of whom is a natural person or
an estate, and''.
Subsec. (j)(6). Pub. L. 100-647, Sec. 1002(l)(22), inserted ''(or
interest therein)'' after ''disposition of building'' in heading,
and in text inserted ''or an interest therein'' after ''of a
building''.
Subsec. (k)(2)(B). Pub. L. 100-647, Sec. 1002(l)(23), inserted
before period at end '', except that this subparagraph shall not
apply in the case of a federally assisted building described in
subsection (d)(6)(B) if - '' and cls. (i) and (ii).
Subsec. (l). Pub. L. 100-647, Sec. 1002(l)(24)(B), substituted
''Certifications and other reports to Secretary'' for
''Certifications to Secretary'' in heading.
Subsec. (l)(2), (3). Pub. L. 100-647, Sec. 1002(l)(24)(A), added
par. (2) and redesignated former par. (2) as (3).
Subsec. (n). Pub. L. 100-647, Sec. 4003(b)(3), amended subsec.
(n) generally, substituting a single par. for former pars. (1) and
(2).
Subsec. (n)(1). Pub. L. 100-647, Sec. 1002(l)(25), inserted '',
and, except for any building described in paragraph (2)(B),
subsection (h)(4) shall not apply to any building placed in service
after 1989'' after ''year after 1989''.
1986 - Subsec. (k)(1). Pub. L. 99-509 substituted ''subparagraphs
(D)(ii)(II) and (D)(iv)(I)'' for ''subparagraph (D)(iv)(I)''.
EFFECTIVE DATE OF 2007 AMENDMENT
2007 - PL 110-142
SEC. 6. CLARIFICATION OF STUDENT HOUSING ELIGIBLE FOR LOW-INCOME HOUSING
CREDIT.
(b) Effective Date.--The <<NOTE: 26 USC 42 note.>> amendment made by
this section shall apply to--
(1) housing credit amounts allocated before, on, or after
the date of the enactment of this Act, and
(2) buildings placed in service before, on, or after such
date to the extent paragraph (1) of section 42(h) of the
Internal Revenue Code of 1986 does not apply to any building by
reason of paragraph (4) thereof.
EFFECTIVE DATE OF 2000 AMENDMENT
Pub. L. 106-554, Sec. 1(a)(7) (title I, subtitle D, Sec. 131(d)),
Dec. 21, 2000, 114 Stat. 2763, 2763A-611, provided that: ''The
amendments made by this section (amending this section) shall apply
to calendar years after 2000.''
Pub. L. 106-554, Sec. 1(a)(7) (title I, subtitle D, Sec. 137),
Dec. 21, 2000, 114 Stat. 2763, 2763A-613, provided that: ''Except
as otherwise provided in this subtitle (amending this section and
enacting provisions set out above), the amendments made by this
subtitle shall apply to -
''(1) housing credit dollar amounts allocated after December
31, 2000; and
''(2) buildings placed in service after such date to the extent
paragraph (1) of section 42(h) of the Internal Revenue Code of
1986 does not apply to any building by reason of paragraph (4)
thereof, but only with respect to bonds issued after such date.''
EFFECTIVE DATE OF 1998 AMENDMENT
Amendment by Pub. L. 105-206 effective, except as otherwise
provided, as if included in the provisions of the Taxpayer Relief
Act of 1997, Pub. L. 105-34, to which such amendment relates, see
section 6024 of Pub. L. 105-206, set out as a note under section 1
of this title.
EFFECTIVE DATE OF 1993 AMENDMENT
Section 13142(a)(2) of Pub. L. 103-66 provided that: ''The
amendment made by paragraph (1) (amending this section) shall apply
to periods ending after June 30, 1992.''
Section 13142(b)(6) of Pub. L. 103-66, as amended by Pub. L.
104-188, title I, Sec. 1703(b), Aug. 20, 1996, 110 Stat. 1875,
provided that:
''(A) In general. - Except as provided in subparagraphs (B) and
(C), the amendments made by this subsection (amending this section)
shall apply to -
''(i) determinations under section 42 of the Internal Revenue
Code of 1986 with respect to housing credit dollar amounts
allocated from State housing credit ceilings after June 30, 1992,
or
''(ii) buildings placed in service after June 30, 1992, to the
extent paragraph (1) of section 42(h) of such Code does not apply
to any building by reason of paragraph (4) thereof, but only with
respect to bonds issued after such date.
''(B) Full-time students, waiver authority, and prohibited
discrimination. - The amendments made by paragraphs (2), (3), and
(4) (amending this section) shall take effect on the date of the
enactment of this Act (Aug. 10, 1993).
''(C) HOME assistance. - The amendment made by paragraph (5)
(amending this section) shall apply to periods after the date of
the enactment of this Act.''
EFFECTIVE DATE OF 1991 AMENDMENT
Section 107(b) of Pub. L. 102-227 provided that: ''The amendments
made by this section (amending this section) shall apply to
calendar years after 1991.''
EFFECTIVE DATE OF 1990 AMENDMENT
Section 11407(a)(3) of Pub. L. 101-508 provided that: ''The
amendments made by this subsection (amending this section and
repealing provisions set out below) shall apply to calendar years
after 1989.''
Section 11407(b)(10) of Pub. L. 101-508 provided that:
''(A) In general. - Except as otherwise provided in this
paragraph, the amendments made by this subsection (amending this
section) shall apply to -
''(i) determinations under section 42 of the Internal Revenue
Code of 1986 with respect to housing credit dollar amounts
allocated from State housing credit ceilings for calendar years
after 1990, or
''(ii) buildings placed in service after December 31, 1990, to
the extent paragraph (1) of section 42(h) of such Code does not
apply to any building by reason of paragraph (4) thereof, but
only with respect to bonds issued after such date.
''(B) Tenant rights, etc. - The amendments made by paragraphs
(1), (6), (8), and (9) (amending this section) shall take effect on
the date of the enactment of this Act (Nov. 5, 1990).
''(C) Monitoring. - The amendment made by paragraph (2) (amending
this section) shall take effect on January 1, 1992, and shall apply
to buildings placed in service before, on, or after such date.
''(D) Study. - The Inspector General of the Department of Housing
and Urban Development and the Secretary of the Treasury shall
jointly conduct a study of the effectiveness of the amendment made
by paragraph (5) (amending this section) in carrying out the
purposes of section 42 of the Internal Revenue Code of 1986. The
report of such study shall be submitted not later than January 1,
1993, to the Committee on Ways and Means of the House of
Representatives and the Committee on Finance of the Senate.''
Section 11701(a)(3)(B) of Pub. L. 101-508 provided that: ''In the
case of a building to which (but for this subparagraph) the
amendment made by subparagraph (A) (amending this section) does not
apply, such amendment shall apply to -
''(i) determinations of qualified basis for taxable years
beginning after the date of the enactment of this Act (Nov. 5,
1990), and
''(ii) determinations of qualified basis for taxable years
beginning on or before such date except that determinations for
such taxable years shall be made without regard to any reduction
in gross rent after August 3, 1990, for any period before August
4, 1990.''
Section 11701(n) of Pub. L. 101-508 provided that: ''Except as
otherwise provided in this section, any amendment made by this
section (amending this section and sections 148, 163, 172, 403,
1031, 1253, 2056, 4682, 4975, 4978B and 6038 of this title, and
provisions set out as notes under this section and section 2040 of
this title) shall take effect as if included in the provision of
the Revenue Reconciliation Act of 1989 (Pub. L. 101-239, title VII)
to which such amendment relates.''
Section 11812(c) of Pub. L. 101-508 provided that:
''(1) In general. - Except as provided in paragraph (2), the
amendments made by this section (amending this section and sections
56, 167, 168, 312, 381, 404, 460, 642, 1016, 1250, and 7701 of this
title) shall apply to property placed in service after the date of
the enactment of this Act (Nov. 5, 1990).
''(2) Exception. - The amendments made by this section shall not
apply to any property to which section 168 of the Internal Revenue
Code of 1986 does not apply by reason of subsection (f)(5) thereof.
''(3) Exception for previously grandfather expenditures. - The
amendments made by this section shall not apply to rehabilitation
expenditures described in section 252(f)(5) of the Tax Reform Act
of 1986 (Pub. L. 99-514) (as added by section 1002(l)(31) of the
Technical and Miscellaneous Revenue Act of 1988 (see Transitional
Rules note below)).''
Amendment by section 11813(b)(3) of Pub. L. 101-508 applicable to
property placed in service after Dec. 31, 1990, but not applicable
to any transition property (as defined in section 49(e) of this
title), any property with respect to which qualified progress
expenditures were previously taken into account under section 46(d)
of this title, and any property described in section 46(b)(2)(C) of
this title, as such sections were in effect on Nov. 4, 1990, see
section 11813(c) of Pub. L. 101-508, set out as a note under
section 29 of this title.
EFFECTIVE DATE OF 1989 AMENDMENT
Section 7108(r) of Pub. L. 101-239, as amended by Pub. L.
101-508, title XI, Sec. 11701(a)(11), (12), Nov. 5, 1990, 104 Stat.
1388-507; Pub. L. 104-188, title I, Sec. 1702(g)(5)(A), Aug. 20,
1996, 110 Stat. 1873, provided that:
''(1) In general. - Except as otherwise provided in this
subsection, the amendments made by this section (amending this
section and section 142 of this title) shall apply to
determinations under section 42 of the Internal Revenue Code of
1986 with respect to housing credit dollar amounts allocated from
State housing credit ceilings for calendar years after 1989.
''(2) Buildings not subject to allocation limits. - Except as
otherwise provided in this subsection, to the extent paragraph (1)
of section 42(h) of such Code does not apply to any building by
reason of paragraph (4) thereof, the amendments made by this
section shall apply to buildings placed in service after December
31, 1989.
''(3) One-year carryover of unused credit authority, etc. - The
amendments made by subsection (b) (amending this section) shall
apply to calendar years after 1989, but clauses (ii), (iii), and
(iv) of section 42(h)(3)(C) of such Code (as added by this section)
shall be applied without regard to allocations for 1989 or any
preceding year.
''(4) Additional buildings eligible for waiver of 10-year rule. -
The amendments made by subsection (f) (amending this section) shall
take effect on the date of the enactment of this Act (Dec. 19,
1989).
''(5) Certifications with respect to 1st year of credit period. -
The amendment made by subsection (p) (amending this section) shall
apply to taxable years ending on or after December 31, 1989.
''(6) Certain rules which apply to bonds. - Paragraphs (1)(D) and
(2)(D) of section 42(m) of such Code, as added by this section,
shall apply to obligations issued after December 31, 1989.
''(7) Clarifications. - The amendments made by the following
provisions of this section shall apply as if included in the
amendments made by section 252 of the Tax Reform Act of 1986 (Pub.
L. 99-514, enacting this section and amending sections 38 and 55 of
this title):
''(A) Paragraph (1) of subsection (h) (relating to units rented
on a monthly basis) (amending this section).
''(B) Subsection (l) (relating to eligible basis for new
buildings to include expenditures before close of 1st year of
credit period) (amending this section).
''(8) Guidance on difficult development areas and posting of bond
to avoid recapture. - Not later than 180 days after the date of the
enactment of this Act (Dec. 19, 1989) -
''(A) the Secretary of Housing and Urban Development shall
publish initial guidance on the designation of difficult
development areas under section 42(d)(5)(C) of such Code, as
added by this section, and
''(B) the Secretary of the Treasury shall publish initial
guidance under section 42(j)(6) of such Code (relating to no
recapture on disposition of building (or interest therein) where
bond posted).''
(Pub. L. 104-188, title I, Sec. 1702(g)(5), Aug. 20, 1996, 110
Stat. 1873, provided that:
(''(A) Paragraph (11) of section 11701(a) of the Revenue
Reconciliation Act of 1990 (and the amendment made by such
paragraph) (Pub. L. 101-508, which amended section 7108(r)(2) of
Pub. L. 101-239, set out above, by inserting ''but only with
respect to bonds issued after such date'' before the period at the
end of such section 7108(r)(2)) are hereby repealed, and section
7108(r)(2) of the Revenue Reconciliation Act of 1989 (Pub. L.
101-239) shall be applied as if such paragraph (and amendment) had
never been enacted.
(''(B) Subparagraph (A) shall not apply to any building if the
owner of such building establishes to the satisfaction of the
Secretary of the Treasury or his delegate that such owner
reasonably relied on the amendment made by such paragraph (11).'')
Amendment by section 7811(a) of Pub. L. 101-239 effective, except
as otherwise provided, as if included in the provision of the
Technical and Miscellaneous Revenue Act of 1988, Pub. L. 100-647,
to which such amendment relates, see section 7817 of Pub. L.
101-239, set out as a note under section 1 of this title.
Amendment by section 7831(c) of Pub. L. 101-239 effective as if
included in the provision of the Tax Reform Act of 1986, Pub. L.
99-514, to which such amendment relates, see section 7831(g) of
Pub. L. 101-239, set out as a note under section 1 of this title.
EFFECTIVE DATE OF 1988 AMENDMENT
Amendment by sections 1002(l)(1)-(25), (32) and 1007(g)(3)(B) of
Pub. L. 100-647 effective, except as otherwise provided, as if
included in the provision of the Tax Reform Act of 1986, Pub. L.
99-514, to which such amendment relates, see section 1019(a) of
Pub. L. 100-647, set out as a note under section 1 of this title.
Section 4003(c) of Pub. L. 100-647 provided that: ''The
amendments made by this section (amending this section and
provisions set out as a note under section 469 of this title) shall
apply to amounts allocated in calendar years after 1987.''
Section 4004(b) of Pub. L. 100-647 provided that:
''(1) In general. - The amendment made by subsection (a)
(amending this section) shall take effect as if included in the
amendments made by section 252 of the Reform Act (section 252 of
Pub. L. 99-514, enacting this section and amending sections 38 and
55 of this title).
''(2) Period for election. - The period for electing not to have
section 42(j)(5) of the 1986 Code apply to any partnership shall
not expire before the date which is 6 months after the date of the
enactment of this Act (Nov. 10, 1988).''
EFFECTIVE DATE OF 1986 AMENDMENT
Section 8072(b) of Pub. L. 99-509 provided that: ''The amendment
made by subsection (a) (amending this section) shall take effect as
if included in the amendment made by section 252(a) of the Tax
Reform Act of 1986 (enacting this section).''
EFFECTIVE DATE
Section 252(e) of Pub. L. 99-514 provided that:
''(1) In general. - The amendments made by this section (enacting
this section and amending sections 38 and 55 of this title) shall
apply to buildings placed in service after December 31, 1986, in
taxable years ending after such date.
''(2) Special rule for rehabilitation expenditures. - Subsection
(e) of section 42 of the Internal Revenue Code of 1986 (as added by
this section) shall apply for purposes of paragraph (1).''
SAVINGS PROVISION
For provisions that nothing in amendment by sections 11812(b)(3)
and 11813(b)(3) of Pub. L. 101-508 be construed to affect treatment
of certain transactions occurring, property acquired, or items of
income, loss, deduction, or credit taken into account prior to Nov.
5, 1990, for purposes of determining liability for tax for periods
ending after Nov. 5, 1990, see section 11821(b) of Pub. L. 101-508,
set out as a note under section 29 of this title.
ELECTION TO DETERMINE RENT LIMITATION BASED ON NUMBER OF BEDROOMS
AND DEEP RENT SKEWING
Section 13142(c) of Pub. L. 103-66 provided that:
''(1) In the case of a building to which the amendments made by
subsection (e)(1) or (n)(2) of section 7108 of the Revenue
Reconciliation Act of 1989 (Pub. L. 101-239, amending this section)
did not apply, the taxpayer may elect to have such amendments apply
to such building if the taxpayer has met the requirements of the
procedures described in section 42(m)(1)(B)(iii) of the Internal
Revenue Code of 1986.
''(2) In the case of the amendment made by such subsection
(e)(1), such election shall apply only with respect to tenants
first occupying any unit in the building after the date of the
election.
''(3) In the case of the amendment made by such subsection
(n)(2), such election shall apply only if rents of low-income
tenants in such building do not increase as a result of such
election.
''(4) An election under this subsection may be made only during
the 180-day period beginning on the date of the enactment of this
Act (Aug. 10, 1993) and, once made, shall be irrevocable.''
ELECTION TO ACCELERATE CREDIT INTO 1990
Section 11407(c) of Pub. L. 101-508 provided that:
''(1) In general. - At the election of an individual, the credit
determined under section 42 of the Internal Revenue Code of 1986
for the taxpayer's first taxable year ending on or after October
25, 1990, shall be 150 percent of the amount which would (but for
this paragraph) be so allowable with respect to investments held by
such individual on or before October 25, 1990.
''(2) Reduction in aggregate credit to reflect increased 1990
credit. - The aggregate credit allowable to any person under
section 42 of such Code with respect to any investment for taxable
years after the first taxable year referred to in paragraph (1)
shall be reduced on a pro rata basis by the amount of the increased
credit allowable by reason of paragraph (1) with respect to such
first taxable year. The preceding sentence shall not be construed
to affect whether any taxable year is part of the credit,
compliance, or extended use periods.
''(3) Election. - The election under paragraph (1) shall be made
at the time and in the manner prescribed by the Secretary of the
Treasury or his delegate, and, once made, shall be irrevocable. In
the case of a partnership, such election shall be made by the
partnership.''
EXCEPTION TO TIME PERIOD FOR MEETING PROJECT REQUIREMENTS IN ORDER
TO QUALIFY AS LOW-INCOME HOUSING
Section 11701(a)(5)(B) of Pub. L. 101-508 provided that: ''In the
case of a building to which the amendment made by subparagraph (A)
(amending this section) does not apply, the period specified in
section 42(g)(3)(A) of the Internal Revenue Code of 1986 (as in
effect before the amendment made by subparagraph (A)) shall not
expire before the close of the taxable year following the taxable
year in which the building is placed in service.''
STATE HOUSING CREDIT CEILING FOR CALENDAR YEAR 1990
Section 7108(a)(2) of Pub. L. 101-239 provided that in the case
of calendar year 1990, section 42(h)(3)(C)(i) of the Internal
Revenue Code of 1986 be applied by substituting ''$.9375'' for
''$1.25'', prior to repeal by Pub. L. 101-508, title XI, Sec.
11407(a)(2), (3), Nov. 5, 1990, 104 Stat. 1388-474, applicable to
calendar years after 1989.
TRANSITIONAL RULES
Section 252(f) of Pub. L. 99-514, as amended by Pub. L. 100-647,
title I, Sec. 1002(l)(28)-(31), Nov. 10, 1988, 102 Stat. 3381,
provided that:
''(1) Limitation to non-acrs buildings not to apply to certain
buildings, etc. -
''(A) In general. - In the case of a building which is part of
a project described in subparagraph (B) -
''(i) section 42(c)(2)(B) of the Internal Revenue Code of
1986 (as added by this section) shall not apply,
''(ii) such building shall be treated as not federally
subsidized for purposes of section 42(b)(1)(A) of such Code,
''(iii) the eligible basis of such building shall be treated,
for purposes of section 42(h)(4)(A) of such Code, as if it were
financed by an obligation the interest on which is exempt from
tax under section 103 of such Code and which is taken into
account under section 146 of such Code, and
''(iv) the amendments made by section 803 (enacting section
263A of this title, amending sections 48, 267, 312, 447, 464,
and 471 of this title, and repealing sections 189, 278, and 280
of this title) shall not apply.
''(B) Project described. - A project is described in this
subparagraph if -
''(i) an urban development action grant application with
respect to such project was submitted on September 13, 1984,
''(ii) a zoning commission map amendment related to such
project was granted on July 17, 1985, and
''(iii) the number assigned to such project by the Federal
Housing Administration is 023-36602.
''(C) Additional units eligible for credit. - In the case of a
building to which subparagraph (A) applies and which is part of a
project which meets the requirements of subparagraph (D), for
each low-income unit in such building which is occupied by
individuals whose income is 30 percent or less of area median
gross income, one additional unit (not otherwise a low-income
unit) in such building shall be treated as a low-income unit for
purposes of such section 42.
''(D) Project described. - A project is described in this
subparagraph if -
''(i) rents charged for units in such project are restricted
by State regulations,
''(ii) the annual cash flow of such project is restricted by
State law,
''(iii) the project is located on land owned by or ground
leased from a public housing authority,
''(iv) construction of such project begins on or before
December 31, 1986, and units within such project are placed in
service on or before June 1, 1990, and
''(v) for a 20-year period, 20 percent or more of the
residential units in such project are occupied by individuals
whose income is 50 percent or less of area median gross income.
''(E) Maximum additional credit. - The maximum present value of
additional credits allowable under section 42 of such Code by
reason of subparagraph (C) shall not exceed 25 percent of the
eligible basis of the building.
''(2) Additional allocation of housing credit ceiling. -
''(A) In general. - There is hereby allocated to each housing
credit agency described in subparagraph (B) an additional housing
credit dollar amount determined in accordance with the following
table:
---------------------------------------------------------------------
---------------------------------------------------------------------
The additional
''For calendar year: allocation is:
1987 $3,900,000
1988 $7,600,000
1989 $1,300,000.
-------------------------------
''(B) Housing credit agencies described. - The housing credit
agencies described in this subparagraph are:
''(i) A corporate governmental agency constituted as a public
benefit corporation and established in 1971 under the
provisions of Article XII of the Private Housing Finance Law of
the State.
''(ii) A city department established on December 20, 1979,
pursuant to chapter XVIII of a municipal code of such city for
the purpose of supervising and coordinating the formation and
execution of projects and programs affecting housing within
such city.
''(iii) The State housing finance agency referred to in
subparagraph (C), but only with respect to projects described
in subparagraph (C).
''(C) Project described. - A project is described in this
subparagraph if such project is a qualified low-income housing
project which -
''(i) receives financing from a State housing finance agency
from the proceeds of bonds issued pursuant to chapter 708 of
the Acts of 1966 of such State pursuant to loan commitments
from such agency made between May 8, 1984, and July 8, 1986,
and
''(ii) is subject to subsidy commitments issued pursuant to a
program established under chapter 574 of the Acts of 1983 of
such State having award dates from such agency between May 31,
1984, and June 11, 1985.
''(D) Special rules. -
''(i) Any building -
''(I) which is allocated any housing credit dollar amount
by a housing credit agency described in clause (iii) of
subparagraph (B), and
''(II) which is placed in service after June 30, 1986, and
before January 1, 1987,
shall be treated for purposes of the amendments made by this
section as placed in service on January 1, 1987.
''(ii) Section 42(c)(2)(B) of the Internal Revenue Code of
1986 shall not apply to any building which is allocated any
housing credit dollar amount by any agency described in
subparagraph (B).
''(E) All units treated as low income units in certain cases. -
In the case of any building -
''(i) which is allocated any housing credit dollar amount by
any agency described in subparagraph (B), and
''(ii) which after the application of subparagraph (D)(ii) is
a qualified low-income building at all times during any taxable
year,
such building shall be treated as described in section
42(b)(1)(B) of such Code and having an applicable fraction for
such year of 1. The preceding sentence shall apply to any
building only to the extent of the portion of the additional
housing credit dollar amount (allocated to such agency under
subparagraph (A)) allocated to such building.
''(3) Certain projects placed in service before 1987. -
''(A) In general. - In the case of a building which is part of
a project described in subparagraph (B) -
''(i) section 42(c)(2)(B) of such Code shall not apply,
''(ii) such building shall be treated as placed in service
during the first calendar year after 1986 and before 1990 in
which such building is a qualified low-income building
(determined after the application of clause (i)), and
''(iii) for purposes of section 42(h) of such Code, such
building shall be treated as having allocated to it a housing
credit dollar amount equal to the dollar amount appearing in
the clause of subparagraph (B) in which such building is
described.
''(B) Project described. - A project is described in this
subparagraph if the code number assigned to such project by the
Farmers' Home Administration appears in the following table:
---------------------------------------------------------------------
---------------------------------------------------------------------
The housing credit
''The code number is: dollar amount is:
(i) 49284553664 $16,000
(ii) 4927742022446 $22,000
(iii) 49270742276087 $64,000
(iv) 490270742387293 $48,000
(v) 4927074218234 $32,000
(vi) 49270742274019 $36,000
(vii) 51460742345074 $53,000.
-------------------------------
''(C) Determination of adjusted basis. - The adjusted basis of
any building to which this paragraph applies for purposes of
section 42 of such Code shall be its adjusted basis as of the
close of the taxable year ending before the first taxable year of
the credit period for such building.
''(D) Certain rules to apply. - Rules similar to the rules of
subparagraph (E) of paragraph (2) shall apply for purposes of
this paragraph.
''(4) Definitions. - For purposes of this subsection, terms used
in such subsection which are also used in section 42 of the
Internal Revenue Code of 1986 (as added by this section) shall have
the meanings given such terms by such section 42.
''(5) Transitional rule. - In the case of any rehabilitation
expenditures incurred with respect to units located in the
neighborhood strategy area within the community development block
grant program in Ft. Wayne, Indiana -
''(A) the amendments made by this section (enacting this
section and amending sections 38 and 55 of this title) shall not
apply, and
''(B) paragraph (1) of section 167(k) of the Internal Revenue
Code of 1986, shall be applied as if it did not contain the
phrase 'and before January 1, 1987'.
The number of units to which the preceding sentence applies shall
not exceed 150.''
References
SECTION REFERRED TO IN OTHER SECTIONS
This section is referred to in sections 38, 39, 45D, 55, 469,
772, 774, 1400I of this title; title 12 section 1715z-22; title 15
sections 632, 657d; title 42 sections 1437, 1437f, 1437z-7, 1485,
1490p-2, 12745.
