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[Congressional Bills 112th Congress]
[From the U.S. Government Publishing Office]
[S. 2074 Introduced in Senate (IS)]

112th CONGRESS
  2d Session
                                S. 2074

To amend the Internal Revenue Code of 1986 to expand the rehabilitation 
                    credit, and for other purposes.

_______________________________________________________________________

                   IN THE SENATE OF THE UNITED STATES

                            February 6, 2012

 Mr. Cardin (for himself and Ms. Snowe) introduced the following bill; 
     which was read twice and referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL

 
To amend the Internal Revenue Code of 1986 to expand the rehabilitation 
                    credit, and for other purposes.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Creating American Prosperity through 
Preservation Act of 2012''.

SEC. 2. INCREASE IN THE REHABILITATION CREDIT FOR CERTAIN SMALLER 
              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 $1,500,000.
            ``(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 $7,500,000, 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. ADDITION OF ENERGY EFFICIENCY SUPPLEMENT TO REHABILITATION 
              CREDIT.

    (a) In General.--Subsection (a) of section 47 of the Internal 
Revenue Code of 1986 is amended by striking ``and'' at the end of 
paragraph (1), by striking the period at the end of paragraph (2) and 
inserting ``, and'', and by adding at the end the following new 
paragraph:
            ``(3) 2 percent of the qualified rehabilitation 
        expenditures if the building is a qualified energy efficient 
        rehabilitated building.''.
    (b) Qualified Energy Efficient Rehabilitated Building.--Section 47 
of such Code, as amended by section 2, is amended by adding at the end 
the following new subsection:
    ``(f) Qualified Energy Efficient Rehabilitated Building.--
            ``(1) In general.--The term `qualified energy efficient 
        rehabilitated building' means any building (and its structural 
        components) if--
                    ``(A) the building is a qualified rehabilitated 
                building, and
                    ``(B)(i) the rehabilitation is certified (in 
                accordance with paragraph (4)) as being designed to 
                achieve at least a 30 percent energy use reduction in 
                the building's energy use, or
                    ``(ii) the building meets the requirements of 
                paragraph (2)(B)(ii) and is determined under paragraph 
                (2)(B) to achieve at least a 30 percent energy use 
                reduction after being rehabilitated.
            ``(2) Determination of energy use reduction.--For purposes 
        of paragraph (1)--
                    ``(A) Design-based standards.--
                            ``(i) Buildings within the scope of 
                        standard 90.1-2007.--If the building is within 
                        the scope of Standard 90.1-2007, the designed 
                        reduction in energy use shall be determined 
                        using methods of calculation under paragraph 
                        (3) in comparison to a reference building which 
                        meets the minimum requirements of such 
                        standard.
                            ``(ii) Resnet buildings.--If the building 
                        is within the scope of RESNET, the designed 
                        reduction in energy use shall be determined 
                        using methods prescribed by the Secretary which 
                        are based on the Residential Energy Services 
                        Network Technical Guidelines.
                            ``(iii) Other buildings.--If neither clause 
                        (i) or (ii) apply to the building, the designed 
                        reduction in energy use shall be determined 
                        using methods of calculation prescribed by the 
                        Secretary in a manner which is consistent with 
                        principles under paragraph (3).
                    ``(B) Measured reductions.--
                            ``(i) In general.--In the case of buildings 
                        which meet the requirements of clause (ii), the 
                        taxpayer may determine the reduction in energy 
                        usage by comparing the energy usage during the 
                        period selected by the taxpayer under clause 
                        (ii)(I) with the energy usage during the period 
                        selected by the taxpayer under clause (ii)(II).
                            ``(ii) Building requirements.--A building 
                        meets the requirements of this clause if--
                                    ``(I) the building is at least 75 
                                percent occupied during any period (but 
                                not less than 12 months) selected by 
                                the taxpayer which ends during the 5-
                                year period ending on the date that the 
                                rehabilitation begins, and
                                    ``(II) the building is at least 75 
                                percent occupied during the comparable 
                                period selected by the tax- payer which 
                                begins during the 5-year period 
                                beginning on the date that the 
                                rehabilitation is completed.
                            ``(iii) Energy star buildings.--The 
                        reduction in energy use for buildings within 
                        the scope of Energy Start Portfolio Manager may 
                        be determined for purposes of this subparagraph 
                        by using the Energy Star Portfolio Manager 
                        Buildings Benchmark Tool.
                            ``(iv) Special rules.--The Secretary shall 
                        prescribe regulations which preclude the use of 
                        this subparagraph, or modify the methods 
                        otherwise applicable under this subparagraph, 
                        in circumstance where vacancies, changes in 
                        use, and other factors which might otherwise 
                        yield in materially misleading results.
                            ``(v) Year credit allowable.--In the case 
                        of a building which is a qualified energy 
                        efficient rehabilitated building solely by 
                        reason of this subparagraph, the increase in 
                        the credit under subsection (a)(3) with respect 
                        to such building shall be taken into account 
                        for the taxable year which includes the end of 
                        the period selected by the taxpayer under 
                        clause (ii)(II) in lieu of the taxable year in 
                        which the rehabilitated building is placed in 
                        service.
            ``(3) Methods of calculations.--
                    ``(A) In general.--The Secretary, after 
                consultation with the Secretary of Energy, shall 
                promulgate regulations which describe in detail methods 
                for calculating and verifying energy and power 
                consumption and cost, based on Appendix G of Standard 
                90.1-2007 (or any subsequent version of such Appendix 
                which is in effect at the time of the certification).
                    ``(B) Computer software.--
                            ``(i) In general.--Any calculation under 
                        subparagraph (A) shall be prepared by qualified 
                        computer software.
                            ``(ii) Qualified computer software.--For 
                        purposes of subparagraph (A), the term 
                        `qualified computer software' means software--
                                    ``(I) which is included (at the 
                                time of the certification) on the 
                                published list of qualified software by 
                                the Department of Energy, and
                                    ``(II) which provides such 
                                information as the Secretary may 
                                require, including information that 
                                allows the user to document the energy 
                                efficiency features of the building and 
                                its projected annual energy costs, and
                                    ``(III) which provides standardized 
                                outputs for building energy performance 
                                and, to the maximum extent practicable, 
                                relies on industry best practices and 
                                existing guidelines.
            ``(4) Certifications.--
                    ``(A) In general.--The Secretary shall prescribe 
                the manner and method for the making of certifications 
                under this subsection.
                    ``(B) Procedures.--The Secretary shall include as 
                part of the certification process procedures for 
                inspection and testing by qualified individuals 
                described in subparagraph (C) to ensure compliance of 
                buildings with energy-savings plans and targets. Such 
                procedures shall be comparable, given the difference 
                between commercial and residential buildings, to the 
                requirements in the Mortgage Industry National 
                Accreditation Procedures for Home Energy Rating 
                Systems.
                    ``(C) Qualified individuals.--Individuals qualified 
                to determine compliance shall be only those individuals 
                who are recognized by an organization certified by the 
                Secretary for such purposes. For purposes of the 
                preceding sentence, an individual shall not be 
                qualified with respect to a building unless the 
                individual is--
                            ``(i) a registered professional engineer,
                            ``(ii) not a direct employee of the owner 
                        of the commercial building or multifamily 
                        building, and
                            ``(iii) licensed in the State in which such 
                        building is located.
            ``(5) Standard 90.1-2007.--For purposes of this subsection, 
        the term `Standard 90.1-2007' means Standard 90.1-2007 of the 
        American Society of Heating, Refrigerating, and Air 
        Conditioning Engineers and the Illuminating Engineering Society 
        of North America (or any subsequent version of such Standard 
        which is in effect at the time of the certification).
            ``(6) Allocation of credit for tax-exempt property.--
        Paragraphs (3) and (4) of section 50(b), and clause (v) of 
        subsection (c)(2)(B), shall not apply to those qualified 
        rehabilitation expenditures that are taken into account for 
        purposes of certifying a building as a qualified energy 
        efficient rehabilitated building under this subsection. Any 
        rehabilitation credit which is allowable by reason of the 
        preceding sentence may be assigned to any other person, and 
        such other person shall be treated as the taxpayer with respect 
        thereto.
            ``(7) Coordination.--The Secretary shall designate 
        processes for tracking the numbers and locations of buildings 
        claiming the rehabilitation by reason of this subsection, as 
        well as providing information on projected and actual savings 
        of energy and its value over time in coordination with the 
        Department of Energy.
            ``(8) Regulations.--The Secretary, after consultation with 
        the Administrator of the Environmental Protection Agency and 
        the Secretary of the Interior, shall promulgate such 
        regulations as may be necessary or appropriate to carry out the 
        purposes of this subsection, including regulations--
                    ``(A) to take into account new technologies 
                regarding energy efficiency and renewable energy for 
                purposes of determining energy efficiency and savings 
                under this subsection, and
                    ``(B) to provide for a recapture of the credit 
                determined under this subsection if the design referred 
                to in paragraph (1)(B) is not fully implemented.''.
    (c) Substantial Rehabilitation Requirement Not To Apply to Energy 
Efficiency Supplement.--Subparagraph (A) of section 47(c)(1) of such 
Code (defining qualified rehabilitated building) is amended by adding 
at the end the following new flush sentence:
                ``Clause (i) shall not apply to so much of the 
                rehabilitation credit as is determined under subsection 
                (a)(3).''.
    (d) Effective Dates.--
            (1) In general.--Except as provided in paragraph (2), the 
        amendments made by this section shall apply to property placed 
        in service after the date of the enactment of this Act.
            (2) Waiver of substantial rehabilitation requirement.--The 
        waiver of the requirement of section 47(c)(1)(A)(i) of the 
        Internal Revenue Code of 1986 made by section 47(f)(1)(A) of 
        such Code, as added by this Act, shall apply with respect to 
        rehabilitations the physical work on which begins after the 
        date of the enactment of this Act.

SEC. 4. MODIFICATION TO DEFINITION OF QUALIFIED REHABILITATION 
              EXPENDITURE.

    (a) In General.--Clause (i) of section 47(c)(2)(A) of the Internal 
Revenue Code of 1986 (relating to the definition of qualified 
rehabilitation expenditures) is amended by striking ``or'' at the end 
of subclause (III), by striking subclause (IV), and by inserting after 
subclause (III) the following new subclauses:
                                    ``(IV) rehabilitated building 
                                energy efficiency property, or
                                    ``(V) an addition or improvement to 
                                property described in subclause (I), 
                                (II), (III), or (IV), and''.
    (b) Rehabilitated Building Energy Efficiency Property.--Section 
47(c)(2) of such Code is amended by adding at the end the following new 
subparagraph:
                    ``(E) Rehabilitated building energy efficiency 
                property.--
                            ``(i) In general.--For purposes of 
                        subparagraph (A), the term `rehabilitated 
                        building energy efficiency property' means 
                        property which is certified as being--
                                    ``(I) affixed to, adjacent to, or 
                                integral to the provision of renewable 
                                energy to a qualified rehabilitated 
                                building, or
                                    ``(II) installed as part of a plan 
                                designed to achieve any energy use 
                                reduction (within the meaning of 
                                subsection (f)).
                        Subparagraph (B)(i) shall not apply to 
                        rehabilitated building energy efficiency 
                        property.
                            ``(ii) Certification.--The Secretary shall 
                        prescribe the manner and method for the making 
                        of certifications under clause (i).''.
    (c) Enlargements.--Clause (iii) of section 47(c)(2)(B) of such Code 
is amended by adding at the end the following new sentence: ``The 
preceding sentence shall not apply to any rehabilitated building energy 
efficiency property which is an addition or improvement to a 
building.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to qualified rehabilitated buildings placed in service after the 
date of the enactment of this Act.

SEC. 5. COORDINATION OF ENERGY CREDIT WITH REHABILITATION CREDIT.

    (a) In General.--Paragraph (2) of section 48(a) of the Internal 
Revenue Code of 1986 is amended by striking subparagraph (B).
    (b) Conforming Amendments.--Paragraph (2) of section 48(a) of such 
Code is amended--
            (1) by redesignating subparagraph (A)(ii) as subparagraph 
        (B) and moving such subparagraph 2 ems to the left,
            (2) by redesignating subclauses (I) through (IV) of 
        subparagraph (A)(i) as clauses (i) through (iv), respectively, 
        and by moving such clauses 2 ems to the left, and
            (3) by striking so much of such paragraph as precedes ``30 
        percent in the case of--'' and inserting the following:
            ``(2) Energy percentage.--The energy percentage is--
                    ``(A) 30 percent in the case of--''.
    (c) Basis Reduction.--Paragraph (3) of section 50(c) of such Code 
is amended by adding at the end the following new flush sentence: ``In 
the case of property that qualifies for both the energy credit and the 
rehabilitation credit, the preceding sentence shall be applied by 
substituting `none' for `only 50 percent' each place it appears.''.
    (d) 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. 6. DATE BY WHICH BUILDING MUST BE FIRST PLACED IN SERVICE.

    (a) In General.--Subparagraph (B) of section 47(c)(1) of the 
Internal Revenue Code of 1986 (relating to the date by which building 
must be first placed in service) is amended--
            (1) by striking ``Building must be first placed in service 
        before 1936'' and inserting ``Date by which building must first 
        be placed in service'', and
            (2) by striking ``before 1936'' and inserting ``no less 
        than 50 years prior to the year in which qualified 
        rehabilitation expenditures are taken into account under 
        subsection (b)(1)''.
    (b) Effective Date.--The amendment made by this section shall apply 
to property placed in service after the date of the enactment of this 
Act.

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

    (a) In General.--Clause (I) of section 47(c)(2)(B)(v) 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. 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 139D the 
following new section:

``SEC. 139E. 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 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 of the Treasury 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.
    ``(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 139D the 
following new item:

``Sec. 139E. 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.
                                 <all>
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