Historic Tax Credit Improvement Act of 2015

Summary: Historic Tax Credit Improvement Act of 2015  This bill amends the Internal Revenue Code, with respect to the tax credit for the rehabilitation of buildings and historic structures, to: (1) allow an increased 30% credit, up to $750,000, for projects with rehabilitation expenditures not exceeding $3.75 million, for which no credit was allowed in either of the two immediately preceding taxable years (small projects); (2) allow the transfer of tax credit amounts for small projects; (3) treat a building as substantially rehabilitated if rehabilitation expenditures exceed the greater of 50% of the adjusted basis of the building or $5,000 (currently, the greater of the adjusted basis of the building or $5,000); (4) exempt from tax the proceeds of a state historic tax; and (5) limit the application of disqualified lease rules to tax-exempt use property.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Historic Tax Credit Improvement Act 
of 2015''.

SEC. 2. INCREASE IN THE REHABILITATION CREDIT FOR CERTAIN SMALL 
              PROJECTS.

    (a) In General.--Section 47 of the Internal Revenue Code of 1986 is 
amended by adding at the end the following new subsection:
    ``(e) Special Rule Regarding Certain Small Projects.--
            ``(1) In general.--In the case of any qualified 
        rehabilitated building or portion thereof--
                    ``(A) which is placed in service after the date of 
                the enactment of this subsection, and
                    ``(B) which is a small project,
        subsection (a)(2) shall be applied by substituting `30 percent' 
        for `20 percent'.
            ``(2) Maximum credit.--The credit under this section (after 
        application of this subsection) with respect to any project for 
        all taxable years shall not exceed $750,000.
            ``(3) Small project.--
                    ``(A) In general.--For purposes of this subsection, 
                the term `small project' means any certified historic 
                structure or portion thereof if--
                            ``(i) the total qualified rehabilitation 
                        expenditures taken into account for purposes of 
                        this section with respect to the rehabilitation 
                        do not exceed $3,750,000, and
                            ``(ii) no credit was allowed under this 
                        section for either of the two immediately 
                        preceding taxable years with respect to such 
                        building.
                    ``(B) Progress expenditures.--Credit allowable by 
                reason of subsection (d) shall not be taken into 
                account under subparagraph (A)(ii).''.
    (b) Effective Date.--The amendment made by this section shall apply 
to periods after the date of the enactment of this Act, under rules 
similar to the rules of section 48(m) of the Internal Revenue Code of 
1986 (as in effect on the day before the date of the enactment of the 
Revenue Reconciliation Act of 1990).

SEC. 3. ALLOWANCE FOR THE TRANSFER OF CREDITS FOR CERTAIN SMALL 
              PROJECTS.

    (a) In General.--Section 47(e) of the Internal Revenue Code of 
1986, as added by section 2, is amended by adding at the end the 
following new paragraph:
            ``(4) Transfer of small project credit.--
                    ``(A) In general.--Subject to subparagraph (B) and 
                such regulations or other guidance as the Secretary may 
                provide, the taxpayer may transfer to any other 
                taxpayer all or a portion of the credit allowable to 
                the taxpayer under subsection (a) for a small project.
                    ``(B) Certification.--A transfer under subparagraph 
                (A) shall be accompanied by a certificate which 
                includes--
                            ``(i) the certification for the certified 
                        historic structure,
                            ``(ii) the taxpayer's name, address, and 
                        tax identification number,
                            ``(iii) the transferee's name, address, and 
                        tax identification number,
                            ``(iv) the date of project completion and 
                        the amount of credit being transferred, and
                            ``(v) such other information as may be 
                        required by the Secretary.
                    ``(C) Credit may only be transferred once.--A 
                credit transferred under subparagraph (A) is not 
                transferable by the transferee to any other taxpayer.
                    ``(D) Tax treatment of transfer.--
                            ``(i) Disallowance of deduction.--No 
                        deduction shall be allowed for any amount of 
                        consideration paid or incurred by the 
                        transferee in return for the transfer of any 
                        credit under this paragraph.
                            ``(ii) Allowance of credit.--The amount of 
                        credit transferred under subparagraph (A)--
                                    ``(I) shall not be allowed to the 
                                transferor for any taxable year, and
                                    ``(II) shall be allowable to the 
                                transferee as a credit under this 
                                section for the taxable year of the 
                                transferee in which such credit is 
                                transferred.
                    ``(E) Recapture and other special rules.--For 
                purposes of section 50, the transferee of a credit with 
                respect to a smaller project under this paragraph shall 
                be treated as the taxpayer with respect to the smaller 
                project.
                    ``(F) Information reporting.--The transferor and 
                the transferee shall each make such reports regarding 
                the transfer of an amount of credit under paragraph 
                (A), and containing such information, as the Secretary 
                may require. The reports required by this subparagraph 
                shall be filed at such time and in such manner as may 
                be required by the Secretary.''.
    (b) Effective Date.--The amendments made by this section shall 
apply to periods after December 31, 2015.

SEC. 4. INCREASING THE TYPE OF BUILDINGS ELIGIBLE FOR REHABILITATION.

    (a) In General.--Section 47(c)(1)(C)(i)(I) of the Internal Revenue 
Code of 1986 is amended by inserting ``50 percent of'' before ``the 
adjusted basis''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to taxable years beginning after December 31, 2015.

SEC. 5. REDUCTION OF BASIS ADJUSTMENT FOR REHABILITATION PROPERTY.

    (a) In General.--Section 50(c) of the Internal Revenue Code of 1986 
is amended by adding at the end the following:
            ``(6) Special rule relating to the rehabilitation credit.--
        In the case of any rehabilitation credit--
                    ``(A) only 50 percent of such credit shall be taken 
                into account under paragraph (1), and
                    ``(B) only 50 percent of any recapture amount 
                attributable to such credit shall be taken into account 
                under paragraph (2).''.
    (b) Coordination With Basis Adjustment.--Subsection (d) of section 
50 of the Internal Revenue Code of 1986 is amended by adding at the end 
the following new sentence: ``For purposes of paragraph (5), in 
applying the provisions of section 48(d)(5)(B) (as so in effect) to a 
lease of property eligible for the credit under section 47, gross 
income of the lessee of such property shall include, ratably over the 
shortest recovery period applicable to such property under section 168, 
an amount equal to 50 percent of the amount of the credit allowable 
under section 38 to such lessee with respect to such property.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after the date of the enactment of 
this Act.

SEC. 6. SPECIAL RULES FOR DISPOSITIONS OF STATE HISTORIC TAX CREDITS.

    (a) In General.--Part III of subchapter B of chapter 1 of the 
Internal Revenue Code of 1986 is amended by inserting after section 
139F the following new section:

``SEC. 139G. DISPOSITIONS OF STATE HISTORIC TAX CREDITS.

    ``(a) Exclusion From Income; Basis Reduction.--
            ``(1) In general.--In the case of a taxpayer who receives a 
        State historic tax credit and transfers such credit by sale, 
        allocation, or otherwise, or receives a refund of all or a 
        portion of such credit--
                    ``(A) no portion of the net proceeds of such 
                allocation, disposition, or refund of such credit shall 
                constitute income to such taxpayer under section 61(a), 
                and
                    ``(B) the taxpayer's basis for purposes of this 
                title in the property with respect to which the State 
                historic tax credit is allowed shall be reduced by the 
                net proceeds of such sale, allocation, disposition, or 
                refund under the rules of paragraph (2).
            ``(2) Application of reduction in basis.--
                    ``(A) In general.--The reduction in basis under 
                paragraph (1)(b) shall be applied--
                            ``(i) first, against the basis in the land,
                            ``(ii) second, against so much of the basis 
                        of any building or interest therein as was not 
                        treated as a qualified rehabilitation 
                        expenditure by reason of clause (ii) or (iii) 
                        of section 47(c)(2)(B), and
                            ``(iii) third, against the remaining basis 
                        in the property.
                    ``(B) Adjustment in basis of interest in 
                partnership or s corporation.--The adjusted basis of--
                            ``(i) a partner's interest in a 
                        partnership, or
                            ``(ii) stock in an S corporation (as 
                        defined in section 1361(a)(1)), shall be 
                        appropriately adjusted to take into account 
                        adjustments made under this paragraph in the 
                        basis of property held by the partnership or S 
                        corporation (if any).
    ``(b) Election To Include in Income.--
            ``(1) In general.--In the case of a taxpayer who elects to 
        have this subsection apply in lieu of subsection (a)--
                    ``(A) the net proceeds of the allocation, 
                disposition, or refund described in subsection (a)(1) 
                shall constitute income to the taxpayer under section 
                61(a), and
                    ``(B) subsection (a)(1)(B) shall not apply.
            ``(2) Making of election.--An election under this 
        subsection shall be made at such time and in such manner as the 
        Secretary may by regulation prescribe. Such election shall 
        apply for the taxable year for which it is made and for all 
        subsequent taxable years and may be revoked only with the 
        consent of the Secretary of the Treasury.
    ``(c) Effect on Qualified Rehabilitation Expenditures and 
Rehabilitation Credits.--For purposes of determining the rehabilitation 
credit allowable to a taxpayer under section 47, the transfer or 
allocation of State historic tax credits with respect to any property 
by a taxpayer shall not affect or reduce the amount of qualified 
rehabilitation expenditures (as defined in section 47(c)(2)) taken into 
account with such property, nor shall such transfer or disposition, or 
any basis adjustment under subsection (a), be treated as an early 
disposition of investment credit property for purposes of the recapture 
provisions of section 50.
    ``(d) State Historic Tax Credit.--For purposes of this section, the 
term `State historic tax credit' means any credit against State or 
local tax liabilities which--
            ``(1) is allowable under the laws of any State or political 
        subdivision thereof to a taxpayer with respect to expenditures 
        made for the rehabilitation of property identified by such 
        laws, and
            ``(2) can be allocated, disposed, or refunded under such 
        laws.''.
    (b) Clerical Amendment.--The table of sections for part III of 
subchapter B of chapter 1 of the Internal Revenue Code of 1986 is 
amended by inserting after the item relating to section 139F the 
following new item:

``Sec. 139G. Dispositions of State historic tax credits.''.
    (c) Effective Date.--This section shall apply to transfers or 
dispositions made, or refunds received, after the date of the enactment 
of this Act.

SEC. 7. MODIFICATIONS REGARDING CERTAIN TAX-EXEMPT USE PROPERTY.

    (a) In General.--Section 47(c)(2)(B)(v)(I) of the Internal Revenue 
Code of 1986 is amended by inserting ``, and subclauses (I), (II), and 
(III) of section 168(h)(1)(B)(ii) shall not apply'' after ``thereof''.
    (b) Effective Date.--The amendments made by this section shall 
apply to property placed in service after the date of the enactment of 
this Act.