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 2 prior taxable years (smaller projects); (2) allow the transfer of tax credit amounts for smaller 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) set forth special rules for the tax treatment of tax-exempt use property and functionally-related historic structures. 

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 
(relating to rehabilitation credit) is amended by adding at the end the 
following new subsection:
    ``(e) Special Rule Regarding Certain Smaller 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 smaller project,
        subsection (a)(2) shall be applied by substituting `30 percent' 
        for `20 percent'.
            ``(2) Maximum credit.--The credit determined under this 
        subsection with respect to any smaller project for all taxable 
        years shall not exceed $750,000.
            ``(3) Smaller project defined.--
                    ``(A) In general.--For purposes of this subsection, 
                the term `smaller project' means any qualified 
                rehabilitated building or portion thereof if--
                            ``(i) the qualified rehabilitation 
                        expenditures taken into account for purposes of 
                        this section (or would have been so taken into 
                        account if this subsection had been in effect 
                        for all prior periods) with respect to the 
                        rehabilitation are not over $3,750,000, and
                            ``(ii) no credit was allowed under this 
                        section for either of the 2 prior 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 amended by section 2, is amended by adding at the end the 
following new subsection:
            ``(4) Transfer of smaller project credit.--
                    ``(A) In general.--Subject to subparagraph (B) and 
                such regulations or other guidance as the Secretary may 
                provide, the taxpayer may transfer all or a portion of 
                the credit allowable to the taxpayer under subsection 
                (a) for a smaller project.
                    ``(B) Certification.--
                            ``(i) In general.--A transfer under 
                        subparagraph (A) shall be accompanied by a 
                        certificate which includes--
                                    ``(I) the certification for the 
                                certified historic structure referred 
                                to in subsection (c)(3),
                                    ``(II) the taxpayer's name, 
                                address, tax identification number, 
                                date of project completion, and the 
                                amount of credit being transferred,
                                    ``(III) the transferee's name, 
                                address, tax identification number, and 
                                the amount of credit being transferred, 
                                and
                                    ``(IV) such other information as 
                                may be required by the Secretary.
                            ``(ii) Transferability of certificate.--A 
                        certificate issued under this section to a 
                        taxpayer shall be transferable to any other 
                        taxpayer, except that a certificate may not be 
                        transferred more than once.
                    ``(C) Tax treatment relating to certificate.--
                            ``(i) Disallowance of deduction.--No 
                        deduction shall be allowed for the amount of 
                        consideration paid or incurred by the 
                        transferee.
                            ``(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.
                    ``(D) Recapture and other special rules.--The 
                taxpayer who claims a credit under this section by 
                reason of a transfer of an amount of credit under 
                subparagraph (A) with respect to a smaller project 
                shall be treated as the taxpayer with respect to the 
                smaller project for purposes of section 50.
                    ``(E) 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 subsection shall 
                be filed at such time and in such manner as may be 
                required by the Secretary.
                    ``(F) Regulations.--The Secretary shall prescribe 
                regulations or other guidance to carry out this 
                paragraph.''.
    (b) Effective Date.--The amendments made by this section shall 
apply to periods after the date of the enactment of this Act.

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 the date of the enactment of 
this Act.

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.--Section 50 of such Code is 
amended by adding at the end the following:
    ``(e) Coordination With Basis Adjustment.--In applying the 
provisions of former section 48(d)(5)(B) pursuant to subsection (d)(5) 
to a lease of property eligible for the rehabilitation tax credit, the 
lessee of such property shall include ratably in gross income over the 
shortest recovery period that could be applicable under section 168 
with respect to such property an amount equal to 50 percent of the 
amount of the credit allowable under section 38 to the lessee with 
respect to such property.''.

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 (relating to items specifically excluded 
from gross income) is amended by inserting after section 139E the 
following new section:

``SEC. 139F. 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 in the property with 
                respect to which the State historic tax credit is 
                allowed shall be reduced as determined under paragraph 
                (2).
            ``(2) Determination of reduction in basis.--The reduction 
        in basis under paragraph (1) shall be applied--
                    ``(A) first, against the basis in the land,
                    ``(B) 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
                    ``(C) third, against the remaining basis in the 
                property.
                    ``(D) 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 subsection in the 
                        basis of property held by the partnership or S 
                        corporation (if any).
    ``(b) Election To Include in Income.--
            ``(1) In general.--In the case of a taxpayer who elects to 
        have this subsection apply--
                    ``(A) the net proceeds of the allocation, 
                disposition, or refund described in subsection (a) 
                received by such taxpayer shall constitute income to 
                such 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)) incurred 
in connection with such property, nor shall such transfer or 
disposition, nor any basis adjustments under subsection (a), be treated 
as an early disposition of investment credit property for purposes of 
the recapture provisions of section 50, notwithstanding any reduction 
in basis pursuant to paragraph (a)(2)(C).
    ``(d) State Historic Tax Credits Defined.--For purposes of this 
section, the term `State historic tax credit' means any credit against 
State or local tax liabilities which--
            ``(1) is allowable under the laws of any State or political 
        subdivision thereof to a taxpayer with respect to expenditures 
        made for the rehabilitation of property identified by such 
        laws, and
            ``(2) can be allocated, disposed, or refunded under such 
        laws.''.
    (b) Clerical Amendment.--The table of sections for such part III is 
amended by inserting after the item relating to section 139E the 
following new item:

``Sec. 139F. 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 (relating to tax-exempt use property) 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.

SEC. 8. ELIMINATING FUNCTIONALLY RELATED PROPERTIES.

    (a) In General.--Section 47 of the Internal Revenue Code of 1986 
(relating to rehabilitation credit), as amended by sections 2 and 3, is 
amended by adding at the end the following new subsection:
    ``(g) Related Buildings.--Buildings that are functionally related ( 
as defined in Part 67.6(b)(4) of title 36, Code of Federal Regulations) 
shall be treated as separate certified historic structures for purposes 
of the credit allowed under this section.''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to any application to the National Park Service received after 
the date of the enactment of this Act.