I 

111TH CONGRESS 

1ST SESSION H. R. 3812 

To amend the Internal Revenue Code of 1986 to encourage businesses to 

purchase commercial and residential property in distressed communities 

by providing an exclusion from tax on certain gains. 

IN THE HOUSE OF REPRESENTATIVES 

OCTOBER 14, 2009 

Ms. KOSMAS 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 encourage 

businesses to purchase commercial and residential property in distressed communities by providing an exclusion 

from tax on certain gains. 

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 ‘‘Distressed Commu5 nities Reinvestment Act of 2009’’. 


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1 SEC. 2. EXCLUSION OF CERTAIN CAPITAL GAINS ON COM2 MERCIAL AND RESIDENTIAL PROPERTY. 

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

5 by inserting after section 139C the following new section: 

6 ‘‘SEC. 139D. CAPITAL GAINS ON CERTAIN COMMERCIAL 

7 AND RESIDENTIAL PROPERTY. 

8 ‘‘(a) IN GENERAL.—Gross income shall not include 

9 gain from the sale of real property consisting predomi10 nantly of commercial and residential property if— 

11 ‘‘(1) such property is located in a distressed 

12 community, 

13 ‘‘(2) such property is acquired by the taxpayer 

14 by purchase (as defined in section 179(d)(2)) during 

15 the 24-month period beginning on the date of the 

16 enactment of this section, and 

17 ‘‘(3) such property is held by the taxpayer con18 tinuously during the 5-year period ending on the 

19 date of the sale of such property. 

20 ‘‘(b) DISTRESSED COMMUNITY.—For purposes of 

21 this section— 

22 ‘‘(1) IN GENERAL.—The term ‘distressed com23 munity’ means a county that the Secretary des24 ignates as— 

25 ‘‘(A) having, for any month during the ap26 plicable period— 


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1 ‘‘(i) a residential mortgage foreclosure 

2 rate of 110 percent or more of the national 

3 average, 

4 ‘‘(ii) a commercial mortgage fore5 closure rate of 110 percent or more of the 

6 national average, 

7 ‘‘(iii) a decline in the average fair 

8 market value of housing of at least 20 per9 cent, or 

10 ‘‘(iv) an unemployment rate of 110 

11 percent or more of the national average, 

12 ‘‘(B) being a county in which, for a cal13 endar year during the applicable period, more 

14 than 50 percent of loans secured by housing 

15 had a loan-to-value ratio of greater than 80 

16 percent, or 

17 ‘‘(C) being in a disaster area (as defined in 

18 section 165(h)(3)(C)) as a result of a federally 

19 declared disaster that occurred during the ap20 plicable period. 

21 ‘‘(2) APPLICABLE PERIOD.—The term ‘applica22 ble period’ means— 

23 ‘‘(A) in the case of subparagraphs (A) and 

24 (B) of paragraph (1), the period beginning on 

25 January 1, 2008, and ending on the date which 


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1 is 2 years after the date of the enactment of the 

2 Distressed Communities Reinvestment Act of 

3 2009, and 

4 ‘‘(B) in the case of subparagraph (C) of 

5 paragraph (1), the 4-year period ending on the 

6 date which is 2 years after the date of the en7 actment of such Act.’’. 

8 (b) CONFORMING AMENDMENT.—The table of sec9 tions for part III of subchapter B of chapter 1 of such 

10 Code is amended by inserting after the item relating to 

11 section 139C the following new item: 

‘‘139D. Capital gains on certain commercial and residential property.’’. 

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

13 this section shall apply to property purchased after the 

14 date of the enactment of this section. 

Æ 


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