I 

114TH CONGRESS 

1ST SESSION H. R. 3846 

To amend the Internal Revenue Code of 1986 to improve the Historic 

Rehabilitation Tax Credit, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

OCTOBER 28, 2015 

Mr. KELLY of Pennsylvania (for himself, Mr. BLUMENAUER, Mr. TIBERI, Mr. 

NEAL, Mr. BOUSTANY, Mr. LARSON of Connecticut, Mr. TURNER, Mr. 

KIND, Mr. RANGEL, and Mr. REED) introduced the following bill; which 

was referred to the Committee on Ways and Means 

A BILL 

To amend the Internal Revenue Code of 1986 to improve 

the Historic Rehabilitation Tax Credit, and for other 

purposes. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Historic Tax Credit 

5 Improvement Act of 2015’’. 

6 SEC. 2. INCREASE IN THE REHABILITATION CREDIT FOR 

7 CERTAIN SMALL PROJECTS. 

8 (a) IN GENERAL.—Section 47 of the Internal Rev9 enue Code of 1986 (relating to rehabilitation credit) is 


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1 amended by adding at the end the following new sub2 section: 

3 ‘‘(e) SPECIAL RULE REGARDING CERTAIN SMALLER

4 PROJECTS.— 

5 ‘‘(1) IN GENERAL.—In the case of any qualified 

6 rehabilitated building or portion thereof— 

7 ‘‘(A) which is placed in service after the 

8 date of the enactment of this subsection, and 

9 ‘‘(B) which is a smaller project, 

10 subsection (a)(2) shall be applied by substituting ‘30 

11 percent’ for ‘20 percent’. 

12 ‘‘(2) MAXIMUM CREDIT.—The credit deter13 mined under this subsection with respect to any 

14 smaller project for all taxable years shall not exceed 

15 $750,000. 

16 ‘‘(3) SMALLER PROJECT DEFINED.— 

17 ‘‘(A) IN GENERAL.—For purposes of this 

18 subsection, the term ‘smaller project’ means 

19 any qualified rehabilitated building or portion 

20 thereof if— 

21 ‘‘(i) the qualified rehabilitation ex22 penditures taken into account for purposes 

23 of this section (or would have been so 

24 taken into account if this subsection had 

25 been in effect for all prior periods) with reVerDate Sep 11 2014 02:04 Oct 29, 2015 Jkt 059200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H3846.IH H3846

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1 spect to the rehabilitation are not over 

2 $3,750,000, and 

3 ‘‘(ii) no credit was allowed under this 

4 section for either of the 2 prior taxable 

5 years with respect to such building. 

6 ‘‘(B) PROGRESS EXPENDITURES.—Credit 

7 allowable by reason of subsection (d) shall not 

8 be taken into account under subparagraph 

9 (A)(ii).’’. 

10 (b) EFFECTIVE DATE.—The amendment made by 

11 this section shall apply to periods after the date of the 

12 enactment of this Act, under rules similar to the rules of 

13 section 48(m) of the Internal Revenue Code of 1986 (as 

14 in effect on the day before the date of the enactment of 

15 the Revenue Reconciliation Act of 1990). 

16 SEC. 3. ALLOWANCE FOR THE TRANSFER OF CREDITS FOR 

17 CERTAIN SMALL PROJECTS. 

18 (a) IN GENERAL.—Section 47(e) of the Internal Rev19 enue Code of 1986, as amended by section 2, is amended 

20 by adding at the end the following new subsection: 

21 ‘‘(4) TRANSFER OF SMALLER PROJECT CRED22 IT.— 

23 ‘‘(A) IN GENERAL.—Subject to subpara24 graph (B) and such regulations or other guid25 ance as the Secretary may provide, the taxpayer 


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1 may transfer all or a portion of the credit allow2 able to the taxpayer under subsection (a) for a 

3 smaller project. 

4 ‘‘(B) CERTIFICATION.— 

5 ‘‘(i) IN GENERAL.—A transfer under 

6 subparagraph (A) shall be accompanied by 

7 a certificate which includes— 

8 ‘‘(I) the certification for the cer9 tified historic structure referred to in 

10 subsection (c)(3), 

11 ‘‘(II) the taxpayer’s name, ad12 dress, tax identification number, date 

13 of project completion, and the amount 

14 of credit being transferred, 

15 ‘‘(III) the transferee’s name, ad16 dress, tax identification number, and 

17 the amount of credit being trans18 ferred, and 

19 ‘‘(IV) such other information as 

20 may be required by the Secretary. 

21 ‘‘(ii) TRANSFERABILITY OF CERTIFI22 CATE.—A certificate issued under this sec23 tion to a taxpayer shall be transferable to 

24 any other taxpayer, except that a certifiVerDate Sep 11 2014 02:04 Oct 29, 2015 Jkt 059200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H3846.IH H3846

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1 cate may not be transferred more than 

2 once. 

3 ‘‘(C) TAX TREATMENT RELATING TO CER4 TIFICATE.— 

5 ‘‘(i) DISALLOWANCE OF DEDUC6 TION.—No deduction shall be allowed for 

7 the amount of consideration paid or in8 curred by the transferee. 

9 ‘‘(ii) ALLOWANCE OF CREDIT.—The 

10 amount of credit transferred under sub11 paragraph (A)— 

12 ‘‘(I) shall not be allowed to the 

13 transferor for any taxable year, and 

14 ‘‘(II) shall be allowable to the 

15 transferee as a credit under this sec16 tion for the taxable year of the trans17 feree in which such credit is trans18 ferred. 

19 ‘‘(D) RECAPTURE AND OTHER SPECIAL

20 RULES.—The taxpayer who claims a credit 

21 under this section by reason of a transfer of an 

22 amount of credit under subparagraph (A) with 

23 respect to a smaller project shall be treated as 

24 the taxpayer with respect to the smaller project 

25 for purposes of section 50. 


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1 ‘‘(E) INFORMATION REPORTING.—The 

2 transferor and the transferee shall each make 

3 such reports regarding the transfer of an 

4 amount of credit under paragraph (A) and con5 taining such information as the Secretary may 

6 require. The reports required by this subsection 

7 shall be filed at such time and in such manner 

8 as may be required by the Secretary. 

9 ‘‘(F) REGULATIONS.—The Secretary shall 

10 prescribe regulations or other guidance to carry 

11 out this paragraph.’’. 

12 (b) EFFECTIVE DATE.—The amendments made by 

13 this section shall apply to periods after the date of the 

14 enactment of this Act. 

15 SEC. 4. INCREASING THE TYPE OF BUILDINGS ELIGIBLE 

16 FOR REHABILITATION. 

17 (a) IN GENERAL.—Section 47(c)(1)(C)(i)(I) of the 

18 Internal Revenue Code of 1986 is amended by inserting 

19 ‘‘50 percent of’’ before ‘‘the adjusted basis’’. 

20 (b) EFFECTIVE DATE.—The amendment made by 

21 subsection (a) shall apply to taxable years beginning after 

22 the date of the enactment of this Act. 


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1 SEC. 5. REDUCTION OF BASIS ADJUSTMENT FOR REHABILI2 TATION PROPERTY. 

3 (a) IN GENERAL.—Section 50(c) of the Internal Rev4 enue Code of 1986 is amended by adding at the end the 

5 following: 

6 ‘‘(6) SPECIAL RULE RELATING TO THE REHA7 BILITATION CREDIT.—In the case of any rehabilita8 tion credit— 

9 ‘‘(A) only 50 percent of such credit shall 

10 be taken into account under paragraph (1), and 

11 ‘‘(B) only 50 percent of any recapture 

12 amount attributable to such credit shall be 

13 taken into account under paragraph (2).’’. 

14 (b) COORDINATION WITH BASIS ADJUSTMENT.— 

15 Section 50 of such Code is amended by adding at the end 

16 the following: 

17 ‘‘(e) COORDINATION WITH BASIS ADJUSTMENT.—In 

18 applying the provisions of former section 48(d)(5)(B) pur19 suant to subsection (d)(5) to a lease of property eligible 

20 for the rehabilitation tax credit, the lessee of such property 

21 shall include ratably in gross income over the shortest re22 covery period that could be applicable under section 168 

23 with respect to such property an amount equal to 50 per24 cent of the amount of the credit allowable under section 

25 38 to the lessee with respect to such property.’’. 


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1 SEC. 6. SPECIAL RULES FOR DISPOSITIONS OF STATE HIS2 TORIC TAX CREDITS. 

3 (a) IN GENERAL.—Part III of subchapter B of chap4 ter 1 of the Internal Revenue Code of 1986 (relating to 

5 items specifically excluded from gross income) is amended 

6 by inserting after section 139E the following new section: 

7 ‘‘SEC. 139F. DISPOSITIONS OF STATE HISTORIC TAX CRED8 ITS. 

9 ‘‘(a) EXCLUSION FROM INCOME; BASIS REDUC10 TION.— 

11 ‘‘(1) IN GENERAL.—In the case of a taxpayer 

12 who receives a State historic tax credit and transfers 

13 such credit by sale, allocation, or otherwise, or re14 ceives a refund of all or a portion of such credit— 

15 ‘‘(A) no portion of the net proceeds of such 

16 allocation, disposition, or refund of such credit 

17 shall constitute income to such taxpayer under 

18 section 61(a), and 

19 ‘‘(B) the taxpayer’s basis in the property 

20 with respect to which the State historic tax 

21 credit is allowed shall be reduced as determined 

22 under paragraph (2). 

23 ‘‘(2) DETERMINATION OF REDUCTION IN

24 BASIS.—The reduction in basis under paragraph (1) 

25 shall be applied— 

26 ‘‘(A) first, against the basis in the land, 


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1 ‘‘(B) second, against so much of the basis 

2 of any building or interest therein as was not 

3 treated as a qualified rehabilitation expenditure 

4 by reason of clause (ii) or (iii) of section 

5 47(c)(2)(B), and 

6 ‘‘(C) third, against the remaining basis in 

7 the property. 

8 ‘‘(D) ADJUSTMENT IN BASIS OF INTEREST

9 IN PARTNERSHIP OR S CORPORATION.—The ad10 justed basis of— 

11 ‘‘(i) a partner’s interest in a partner12 ship, or 

13 ‘‘(ii) stock in an S corporation (as de14 fined in section 1361(a)(1)), shall be ap15 propriately adjusted to take into account 

16 adjustments made under this subsection in 

17 the basis of property held by the partner18 ship or S corporation (if any). 

19 ‘‘(b) ELECTION TO INCLUDE IN INCOME.— 

20 ‘‘(1) IN GENERAL.—In the case of a taxpayer 

21 who elects to have this subsection apply— 

22 ‘‘(A) the net proceeds of the allocation, dis23 position, or refund described in subsection (a) 

24 received by such taxpayer shall constitute in25 come to such taxpayer under section 61(a), and 


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1 ‘‘(B) subsection (a)(1)(B) shall not apply. 

2 ‘‘(2) MAKING OF ELECTION.—An election under 

3 this subsection shall be made at such time and in 

4 such manner as the Secretary may by regulation 

5 prescribe. Such election shall apply for the taxable 

6 year for which it is made and for all subsequent tax7 able years and may be revoked only with the consent 

8 of the Secretary of the Treasury. 

9 ‘‘(c) EFFECT ON QUALIFIED REHABILITATION EX10 PENDITURES AND REHABILITATION CREDITS.—For pur11 poses of determining the rehabilitation credit allowable to 

12 a taxpayer under section 47, the transfer or allocation of 

13 State historic tax credits with respect to any property by 

14 a taxpayer shall not affect or reduce the amount of quali15 fied rehabilitation expenditures (as defined in section 

16 47(c)(2)) incurred in connection with such property, nor 

17 shall such transfer or disposition, nor any basis adjust18 ments under subsection (a), be treated as an early disposi19 tion of investment credit property for purposes of the re20 capture provisions of section 50, notwithstanding any re21 duction in basis pursuant to paragraph (a)(2)(C). 

22 ‘‘(d) STATE HISTORIC TAX CREDITS DEFINED.—For 

23 purposes of this section, the term ‘State historic tax credit’ 

24 means any credit against State or local tax liabilities 

25 which— 


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1 ‘‘(1) is allowable under the laws of any State or 

2 political subdivision thereof to a taxpayer with re3 spect to expenditures made for the rehabilitation of 

4 property identified by such laws, and 

5 ‘‘(2) can be allocated, disposed, or refunded 

6 under such laws.’’. 

7 (b) CLERICAL AMENDMENT.—The table of sections 

8 for such part III is amended by inserting after the item 

9 relating to section 139E the following new item: 

‘‘Sec. 139F. Dispositions of State historic tax credits.’’. 

10 (c) EFFECTIVE DATE.—This section shall apply to 

11 transfers or dispositions made, or refunds received, after 

12 the date of the enactment of this Act. 

13 SEC. 7. MODIFICATIONS REGARDING CERTAIN TAX-EXEMPT 

14 USE PROPERTY. 

15 (a) IN GENERAL.—Section 47(c)(2)(B)(v)(I) of the 

16 Internal Revenue Code of 1986 (relating to tax-exempt 

17 use property) is amended by inserting ‘‘and subclauses (I), 

18 (II), and (III) of section 168(h)(1)(B)(ii) shall not apply’’ 

19 after ‘‘thereof’’. 

20 (b) EFFECTIVE DATE.—The amendments made by 

21 this section shall apply to property placed in service after 

22 the date of the enactment of this Act. 


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1 SEC. 8. ELIMINATING FUNCTIONALLY RELATED PROP2 ERTIES. 

3 (a) IN GENERAL.—Section 47 of the Internal Rev4 enue Code of 1986 (relating to rehabilitation credit), as 

5 amended by sections 2 and 3, is amended by adding at 

6 the end the following new subsection: 

7 ‘‘(g) RELATED BUILDINGS.—Buildings that are func8 tionally related ( as defined in Part 67.6(b)(4) of title 36, 

9 Code of Federal Regulations) shall be treated as separate 

10 certified historic structures for purposes of the credit al11 lowed under this section.’’. 

12 (b) EFFECTIVE DATE.—The amendment made by 

13 subsection (a) shall apply to any application to the Na14 tional Park Service received after the date of the enact15 ment of this Act. 

Æ 


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