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[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1549 Introduced in House (IH)]

109th CONGRESS
  1st Session
                                H. R. 1549

   To amend the Internal Revenue Code of 1986 to allow an income tax 
 credit for the provision of homeownership and community development, 
                        and for other purposes.

_______________________________________________________________________

                    IN THE HOUSE OF REPRESENTATIVES

                             April 12, 2005

Mr. Reynolds (for himself, Mr. Cardin, Mr. Portman, Ms. Pryce of Ohio, 
 Mr. English of Pennsylvania, Mrs. Johnson of Connecticut, Mr. Herger, 
Mr. Ramstad, Mr. Hayworth, Mr. Lewis of Kentucky, Mr. Foley, Mr. Brady 
 of Texas, Mr. Cantor, Ms. Hart, Mr. Chocola, Mr. McDermott, Mr. Lewis 
 of Georgia, Mr. McNulty, Mr. Jefferson, Mr. Pomeroy, Mr. Thompson of 
 California, Mr. Larson of Connecticut, Mr. Emanuel, Mr. Boehner, Mr. 
 Fossella, Mr. Boustany, Mr. Kirk, Mr. Otter, Mr. Young of Alaska, Mr. 
Gary G. Miller of California, Mr. Shays, Mr. Cummings, Mr. Fortuno, Mr. 
    Towns, Mr. Simpson, Mr. Lynch, and Mr. Skelton) 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 allow an income tax 
 credit for the provision of homeownership and community development, 
                        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 ``Renewing the Dream Tax Credit Act''.

SEC. 2. COMMUNITY HOMEOWNERSHIP CREDIT.

    (a) In General.--Subpart D of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986 (relating to business related 
credits) is amended by inserting after section 42 the following new 
section:

``SEC. 42A. COMMUNITY HOMEOWNERSHIP CREDIT.

    ``(a) Allowance of Credit.--For purposes of section 38, the amount 
of the homeownership credit determined under this section for any 
taxable year in the credit period shall be an amount equal to the 
applicable percentage of the eligible basis of each qualified 
residence.
    ``(b) Applicable Percentage.--For purposes of this section--
            ``(1) In general.--The term `applicable percentage' means 
        the appropriate percentage prescribed by the Secretary for the 
        month in which the taxpayer and the homeownership credit agency 
        enter into an agreement with respect to such residence (which 
        is binding on such agency, the taxpayer, and all successors in 
        interest) as to the homeownership credit dollar amount to be 
        allocated to such residence.
            ``(2) Method of prescribing percentage.--The percentage 
        prescribed by the Secretary for any month shall be the 
        percentage which will yield over a 5-year period amounts of 
        credit under subsection (a) which have a present value equal to 
        50 percent of the eligible basis of a qualified residence.
            ``(3) Method of discounting.--The present value under 
        paragraph (2) shall be determined--
                    ``(A) as of the last day of the 1st year of the 5-
                year period referred to in paragraph (2),
                    ``(B) by using a discount rate equal to 72 percent 
                of the annual Federal mid-term rate applicable under 
                section 1274(d)(1) to the month applicable under 
                paragraph (1) and compounded annually, and
                    ``(C) by assuming that the credit allowable under 
                this section for any year is received on the last day 
                of such year.
    ``(c) Qualified Residence.--For purposes of this section--
            ``(1) In general.--The term `qualified residence' means any 
        residence--
                    ``(A) which is located--
                            ``(i) in a census tract which has a median 
                        gross income which does not exceed 80 percent 
                        of the greater of area or statewide median 
                        gross income,
                            ``(ii) in a rural area (as defined under 
                        section 520 of the Housing Act of 1949),
                            ``(iii) on a reservation for a federally 
                        recognized Indian tribe, or
                            ``(iv) in an area of chronic economic 
                        distress, and
                    ``(B) which is purchased by a qualified buyer.
        For purposes of subparagraph (A)(iv), an area is an area of 
        chronic economic distress if it is approved for designation as 
        such under section 143(j)(3); except that such designation 
        shall not require the approval of the Secretary, shall be 
        deemed to be approved by the Secretary of Housing and Urban 
        Development if not approved or disapproved by the Secretary of 
        Housing and Urban Development within 60 days after submission 
        for approval for purposes of section 143(j)(3)(A)(ii), and 
        shall cease to apply after the end of the 5th calendar year 
        after the calendar year in which the designation is made.
            ``(2) Residence.--For purposes of paragraph (1), the term 
        `residence' means--
                    ``(A) a single-family home containing 1 to 4 
                housing units,
                    ``(B) a condominium unit, or
                    ``(C) stock in a cooperative housing corporation 
                (as defined in section 216(b)).
        In the case of a single-family home described in subparagraph 
        (A) that contains more than one housing unit, the term 
        `residence' shall not include any new residence and shall 
        include only the portion of such home that is occupied by the 
        owner thereof (determined based on the percentage of the total 
        area of such home that is occupied by the owner). In the case 
        of subparagraphs (A), (B), and (C), factory-built homes shall 
        be included in the definition of residence.
            ``(3) Timing of determination.--For purposes of paragraph 
        (1), the determination of whether a residence is a qualified 
        residence shall be made at the time a binding commitment for an 
        allocation of credit is awarded by the homeownership credit 
        agency; except that the determination of whether a purchaser is 
        a qualified buyer shall be made at the time the residence is 
        sold.
            ``(4) Median gross income.--For purposes of this section, 
        median gross income shall be determined consistent with section 
        143(f)(2).
    ``(d) Eligible Basis.--For purposes of this section--
            ``(1) New qualified residences.--
                    ``(A) In general.--The eligible basis of a new 
                qualified residence is--
                            ``(i) in the case of a qualified residence 
                        which is sold in a transaction which meets the 
                        requirements of subparagraph (B), its adjusted 
                        basis (excluding land) immediately before such 
                        sale, and
                            ``(ii) zero in any other case.
                    ``(B) Requirements.--A sale of a qualified 
                residence meets the requirements of this subparagraph 
                if--
                            ``(i) the buyer acquires the qualified 
                        residence by purchase (as defined in section 
                        179(d)(2)),
                            ``(ii) the buyer of the qualified residence 
                        is not a related person with respect to the 
                        seller, and
                            ``(iii) in the case of a seller who 
                        materially participates in the development of 
                        the residence, the buyer's debt financing is 
                        originated by a third party who is not a 
                        related person with respect to such seller.
            ``(2) Existing qualified residences.--
                    ``(A) In general.--The eligible basis of an 
                existing qualified residence is--
                            ``(i) in the case of a qualified residence 
                        which is sold in a transaction which meets the 
                        requirements of subparagraph (B), its adjusted 
                        basis (excluding land) immediately before such 
                        sale, and
                            ``(ii) zero in any other case.
                    ``(B) Requirements.--A sale of a qualified 
                residence meets the requirements of this subparagraph 
                if--
                            ``(i) the buyer acquires the qualified 
                        residence by purchase (as defined in section 
                        179(d)(2)),
                            ``(ii) the qualified residence has 
                        undergone substantial rehabilitation in 
                        connection with the sale described in clause 
                        (i),
                            ``(iii) the buyer of the qualified 
                        residence is not a related person with respect 
                        to the seller, and
                            ``(iv) in the case of a seller who 
                        materially participates in the development of 
                        the residence, the buyer's debt financing is 
                        originated by a third party who is not a 
                        related person with respect to such seller.
                    ``(C) Substantial rehabilitation.--
                            ``(i) In general.--For purposes of 
                        subparagraph (B), substantial rehabilitation 
                        means rehabilitation expenditures paid or 
                        incurred with respect to a qualified residence 
                        that are at least $15,000.
                            ``(ii) Inflation adjustment.--In the case 
                        of a calendar year after 2005, the dollar 
                        amount contained in clause (i) shall be 
                        increased by an amount equal to--
                                    ``(I) such dollar amount, 
                                multiplied by
                                    ``(II) the cost-of-living 
                                adjustment determined under section 
                                1(f)(3) for such calendar year by 
                                substituting `calendar year 2004' for 
                                `calendar year 1992' in subparagraph 
                                (B) thereof.
                        Any increase under clause (ii) which is not a 
                        multiple of $1,000 shall be rounded to the next 
                        lowest multiple of $1,000.
                    ``(D) Limitation on acquisition basis.--The 
                eligible basis of an existing qualified residence may 
                not exceed 150 percent of the qualified rehabilitation 
                expenditures.
            ``(3) Effect of subsequent sale, etc.--A subsequent sale, 
        assignment, rental, or refinancing of the qualified residence 
        by the buyer or the subsequent sale, assignment, or pooling of 
        the buyer's financing by the originator shall not be considered 
        in determining whether or not the prior sales transaction 
        satisfied the requirements of subparagraph (B) of paragraph (1) 
        or (2).
            ``(4) Special rules relating to determination of adjusted 
        basis.--For purposes of this subsection--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), the adjusted basis of any qualified 
                residence--
                            ``(i) shall not include so much of the 
                        basis of such qualified residence as is 
                        determined by reference to the basis of other 
                        property held at any time by the person 
                        acquiring the residence, and
                            ``(ii) shall be determined without regard 
                        to the adjusted basis of any property which is 
                        not part of such qualified residence.
                    ``(B) Basis of property in common areas, etc., 
                included.--The adjusted basis of any qualified 
                residence shall be determined by taking into account 
                (on a pro rata basis) the adjusted basis of property 
                (other than land) used in common areas or provided as 
                comparable amenities to all residences within a 
                project.
            ``(5) Special rules for determining eligible basis.--
                    ``(A) Related person, etc.--For purposes of this 
                section, a person (in this clause referred to as the 
                `related person') is related to any person if the 
                related person bears a relationship to such person 
                specified in section 267(b) or 707(b)(1), or the 
                related person and such person are engaged in trades or 
                businesses under common control (within the meaning of 
                subsections (a) and (b) of section 52). For purposes of 
                the preceding sentence, in applying section 267(b) or 
                707(b)(1), `10 percent' shall be substituted for `50 
                percent'.
                    ``(B) Nonresidential space excluded.--No portion of 
                the eligible basis of a qualified residence shall 
                include costs attributable to nonresidential space.
                    ``(C) Limitation.--The eligible basis of any 
                residence may not exceed the mortgage limit for Federal 
                Housing Administration insured mortgages for single 
                family homes in the area in which such residence is 
                located.
    ``(e) Definition and Special Rules Relating to Credit Period.--
            ``(1) Credit period defined.--For purposes of this section, 
        the term `credit period' means, with respect to any qualified 
        residence, the period of 5 taxable years beginning with the 
        taxable year in which the sale of the qualified residence 
        occurs satisfying the requirements of subsection (d)(1)(B) or 
        (d)(2)(B).
            ``(2) Special rule for 1st year of credit period.--
                    ``(A) In general.--The credit allowable under 
                subsection (a) with respect to any qualified residence 
                for the 1st taxable year of the credit period shall be 
                determined by multiplying the eligible basis under 
                subsection (d) by the fraction--
                            ``(i) the numerator of which is the sum of 
                        the number of remaining whole months in such 
                        1st taxable year after the sale of the 
                        qualified residence, and
                            ``(ii) the denominator of which is 12.
                    ``(B) Disallowed 1st year credit allowed in 6th 
                year.--Any reduction by reason of subparagraph (A) in 
                the credit allowable (without regard to subparagraph 
                (A)) for the 1st taxable year of the credit period 
                shall be allowable under subsection (a) for the 1st 
                taxable year following the credit period.
    ``(f) Limitation on Aggregate Credit Allowable With Respect to 
Qualified Residences Located in a State.--
            ``(1) Credit may not exceed credit dollar amount allocated 
        to qualified residence.--
                    ``(A) In general.--The amount of the credit 
                determined under this section for any taxable year with 
                respect to any qualified residence shall not exceed the 
                homeownership credit dollar amount allocated to such 
                qualified residence under this subsection.
                    ``(B) Time for making allocation.--
                            ``(i) An allocation shall be taken into 
                        account under subparagraph (A) only if it is 
                        made not later than the close of the calendar 
                        year in which the qualified residence is sold.
                            ``(ii) A homeownership credit agency may 
                        allocate available homeownership credit dollar 
                        amounts to a qualified residence prior to the 
                        year of sale of such qualified residence if--
                                    ``(I) the taxpayer owns fee title 
                                or a leasehold interest of not less 
                                than 50 years in the site of the 
                                qualified residence as of the later of 
                                the date which is 6 months after the 
                                date that the allocation was made or 
                                the close of the calendar year in which 
                                the allocation is made, and
                                    ``(II) such qualified residence is 
                                completed not later than the close of 
                                the second calendar year following the 
                                calendar year in which the allocation 
                                was made.
                    ``(C) Vested right to credit dollar amount.--Once a 
                homeownership credit allocation is received by a 
                taxpayer, the right to such credit is vested in such 
                taxpayer and is not subject to recapture, except as 
                provided in paragraph (5)(B).
            ``(2) Homeownership credit dollar amount for agencies.--
                    ``(A) In general.--The aggregate homeownership 
                credit dollar amount which a homeownership credit 
                agency may allocate for any calendar year is the 
                portion of the State homeownership credit ceiling 
                allocated under this paragraph for such calendar year 
                to such agency.
                    ``(B) State ceiling initially allocated to state 
                homeownership credit agencies.--Except as provided in 
                subparagraphs (D) and (E), the State homeownership 
                credit ceiling for each calendar year shall be 
                allocated to the homeownership credit agency of such 
                State. If there is more than 1 homeownership credit 
                agency of a State, all such agencies shall be treated 
                as a single agency.
                    ``(C) State homeownership credit ceiling.--The 
                State homeownership credit ceiling applicable to any 
                State for any calendar year shall be an amount equal to 
                the sum of--
                            ``(i) the unused State homeownership credit 
                        ceiling (if any) of such State for the 
                        preceding calendar year,
                            ``(ii) the greater of--
                                    ``(I) $1.80 multiplied by the State 
                                population, or
                                    ``(II) $2,000,000,
                            ``(iii) the amount of State homeownership 
                        credit ceiling returned in the calendar year, 
                        plus
                            ``(iv) the amount (if any) allocated under 
                        subparagraph (D) to such State by the 
                        Secretary.
                For purposes of clause (i), the unused State 
                homeownership credit ceiling for any calendar year is 
                the excess (if any) of the sum of the amounts described 
                in clauses (ii) through (iv) over the aggregate 
                homeownership credit dollar amount allocated for such 
                year. For purposes of clause (iii), the amount of State 
                homeownership credit ceiling returned in the calendar 
                year equals the homeownership credit dollar amount 
                previously allocated within the State to any qualified 
                residence with respect to which an allocation is 
                canceled by mutual consent of the homeownership credit 
                agency and the allocation recipient.
                    ``(D) Unused homeownership credit carryovers 
                allocated among certain states.--
                            ``(i) In general.--The unused homeownership 
                        credit carryover of a State for any calendar 
                        year shall be assigned to the Secretary for 
                        allocation among qualified States for the 
                        succeeding calendar year.
                            ``(ii) Unused homeownership credit 
                        carryover.--For purposes of this subparagraph, 
                        the unused homeownership credit carryover of a 
                        State for any calendar year is the excess (if 
                        any) of--
                                    ``(I) the unused State 
                                homeownership credit ceiling for the 
                                year preceding such year, over
                                    ``(II) the aggregate homeownership 
                                credit dollar amount allocated for such 
                                year.
                            ``(iii) Formula for allocation of unused 
                        homeownership credit carryovers among qualified 
                        states.--The amount allocated under this 
                        subparagraph to a qualified State for any 
                        calendar year shall be the amount determined by 
                        the Secretary to bear the same ratio to the 
                        aggregate unused homeownership credit 
                        carryovers of all States for the preceding 
                        calendar year as such State's population for 
                        the calendar year bears to the population of 
                        all qualified States for the calendar year.
                            ``(iv) Qualified state.--For purposes of 
                        this subparagraph, the term `qualified State' 
                        means, with respect to a calendar year, any 
                        State--
                                    ``(I) which allocated its entire 
                                State homeownership credit ceiling for 
                                the preceding calendar year, and
                                    ``(II) for which a request is made 
                                (not later than May 1 of the calendar 
                                year) to receive an allocation under 
                                clause (iii).
                    ``(E) State may provide for different allocation.--
                Rules similar to the rules of section 146(e) (other 
                than paragraph (2)(B) thereof) shall apply for purposes 
                of this paragraph.
                    ``(F) Population.--For purposes of this paragraph, 
                population shall be determined in accordance with 
                section 146(j).
                    ``(G) Cost-of-living adjustment.--
                            ``(i) In general.--In the case of a 
                        calendar year after 2005, the $2,000,000 and 
                        $1.80 amounts in subparagraph (C) shall each be 
                        increased by an amount equal to--
                                    ``(I) such dollar amount, 
                                multiplied by
                                    ``(II) the cost-of-living 
                                adjustment determined under section 
                                1(f)(3) for such calendar year by 
                                substituting `calendar year 2004' for 
                                `calendar year 1992' in subparagraph 
                                (B) thereof.
                            ``(ii) Rounding.--
                                    ``(I) In the case of the $2,000,000 
                                amount, any increase under clause (i) 
                                which is not a multiple of $5,000 shall 
                                be rounded to the next lowest multiple 
                                of $5,000.
                                    ``(II) In the case of the $1.80 
                                amount, any increase under clause (i) 
                                which is not a multiple of 5 cents 
                                shall be rounded to the next lowest 
                                multiple of 5 cents.
            ``(3) Portion of state ceiling set-aside for certain 
        projects involving qualified nonprofit organizations.--
                    ``(A) In general.--Not more than 90 percent of the 
                State homeownership credit ceiling for any State for 
                any calendar year shall be allocated to projects other 
                than qualified nonprofit housing projects described in 
                subparagraph (B).
                    ``(B) Projects involving qualified nonprofit 
                organizations.--For purposes of subparagraph (A), a 
                qualified nonprofit housing project is described in 
                this subparagraph if a qualified nonprofit organization 
                is to own an interest in the project (directly or 
                through a partnership) and materially participate 
                (within the meaning of section 469(h)) in the 
                development and operation of the project throughout the 
                credit period.
                    ``(C) Qualified nonprofit organization.--For 
                purposes of this paragraph, the term `qualified 
                nonprofit organization' means any organization if--
                            ``(i) such organization is described in 
                        paragraph (3) or (4) of section 501(c) and is 
                        exempt from tax under section 501(a),
                            ``(ii) such organization is determined by 
                        the State homeownership credit agency not to be 
                        affiliated with or controlled by a for-profit 
                        organization, and
                            ``(iii) 1 of the exempt purposes of such 
                        organization includes the fostering of low-
                        income housing.
                    ``(D) Treatment of certain subsidiaries.--
                            ``(i) In general.--For purposes of this 
                        paragraph, a qualified nonprofit organization 
                        shall be treated as satisfying the ownership 
                        and material participation test of subparagraph 
                        (B) if any qualified corporation in which such 
                        organization holds stock satisfies such test.
                            ``(ii) Qualified corporation.--For purposes 
                        of clause (i), the term `qualified corporation' 
                        means any corporation if 100 percent of the 
                        stock of such corporation is held by 1 or more 
                        qualified nonprofit organizations at all times 
                        during the period such corporation is in 
                        existence.
                    ``(E) State may not override set-aside.--Nothing in 
                subparagraph (E) of paragraph (2) shall be construed to 
                permit a State not to comply with subparagraph (A) of 
                this paragraph.
            ``(4) Limitation on allocations to areas of chronic 
        economic distress.--No more than 50 percent of a homeownership 
        credit agency's portion of the State homeownership credit 
        ceiling for a calendar year may be allocated to residences 
        located in areas that--
                    ``(A) are designated as areas of chronic economic 
                distress in accordance with paragraph (1) of subsection 
                (c), and
                    ``(B) that do not meet the requirements of clause 
                (i), (ii), or (iii) of subsection (c)(1)(A).
            ``(5) Special rules.--
                    ``(A) Residence must be located within jurisdiction 
                of credit agency.--A homeownership credit agency may 
                allocate its aggregate homeownership credit dollar 
                amount only to qualified residences located in the 
                jurisdiction of the governmental unit of which such 
                agency is a part.
                    ``(B) Agency allocations in excess of limit.--If 
                the aggregate homeownership credit dollar amounts 
                allocated by a homeownership credit agency for any 
                calendar year exceed the portion of the State 
                homeownership credit ceiling allocated to such agency 
                for such calendar year, the homeownership credit dollar 
                amounts so allocated shall be reduced (to the extent of 
                such excess) for residences in the reverse of the order 
                in which the allocations of such amounts were made.
    ``(g) Definitions and Special Rules.--For purposes of this 
section--
            ``(1) Completed.--The term `completed' means the point in 
        time where a qualified residence is first placed in a condition 
        or state of readiness and availability for occupancy.
            ``(2) Project.--The term `project' means 1 or more 
        residences together with functionally related and subordinate 
        facilities developed and made available to inhabitants of such 
        residences, including recreational facilities and parking 
        areas. To constitute a project, each residence must--
                    ``(A) be developed by the same taxpayer pursuant to 
                common planning and feasibility studies,
                    ``(B) be financed through a common plan of 
                construction financing, and
                    ``(C) have common ownership prior to sale.
        For purposes of this paragraph, it is not necessary that all 
        residences within a project be contiguous or that all 
        residences consist only of either new residences or existing 
        residences and it is not necessary that each residence within a 
        project be a qualified residence.
            ``(3) Qualified buyer.--
                    ``(A) In general.--The term `qualified buyer' means 
                a buyer if at the time of the acquisition of the 
                qualified residence, the buyer--
                            ``(i) is 1 or more individuals whose income 
                        does not exceed 80 percent of the area median 
                        gross income (70 percent for families of less 
                        than 3 members), and
                            ``(ii) intends to occupy the residence as 
                        the buyer's principal residence (within the 
                        meaning of section 121).
                    ``(B) Special rules in qualified census tracts.--
                With respect to residences located in qualified census 
                tracts (as defined in section 42), subparagraph (A) 
                shall be applied by substituting `100 percent' for `80 
                percent' and `90 percent' for `70 percent'.
                    ``(C) Determination of income.--For purposes of 
                this paragraph, a buyer's income shall be determined in 
                accordance with section 143(f)(4).
            ``(4) New qualified residence.--The term `new qualified 
        residence' means a qualified residence the original ownership 
        of which begins with the taxpayer.
            ``(5) Existing qualified residence.--The term `existing 
        qualified residence' means any qualified residence which is not 
        a new qualified residence.
            ``(6) Homeownership credit agency.--The term `homeownership 
        credit agency' means any agency authorized to carry out this 
        section.
            ``(7) Possessions treated as states.--The term `State' 
        includes the District of Columbia and a possession of the 
        United States.
            ``(8) Application to estates and trusts.--In the case of an 
        estate or trust, the amount of the credit determined under 
        subsection (a) shall be apportioned between the estate or trust 
        and the beneficiaries on the basis of the income of the estate 
        or trust allocable to each.
    ``(h) Reduction in Tax Benefits.--
            ``(1) Recapture of credit.--If within the 5-year period 
        beginning on the date of the original purchase of a qualified 
        residence, the residence is sold, the qualified buyer--
                    ``(A) shall deduct and withhold an amount equal to 
                the recapture amount from the amount realized on such 
                sale, and
                    ``(B) shall transfer such amount to the 
                homeownership credit agency which allocated the 
                homeownership credit dollar amount to such residence.
            ``(2) Recapture amount.--For purposes of paragraph (1), the 
        recapture amount is an amount equal to the lesser of--
                    ``(A) 50 percent of the gain from such resale, or
                    ``(B) the homeownership credit dollar amount 
                allocated to such residence, reduced by 1/36th of such 
                amount for each month after the first 2 years of the 5-
                year period referred to in paragraph (1) which is 
                before the date of the sale referred to in paragraph 
                (1).
            ``(3) Denial of deductions if converted to rental 
        housing.--If a qualified residence is converted to rental 
        housing within the 5-year period beginning on the date of the 
        original purchase of the qualified residence, no deduction 
        under this chapter shall be permitted to offset rental income 
        with respect to such residence during such period.
    ``(i) Application of At-Risk Rules.--For purposes of this section, 
rules of section 465 shall not apply in determining the eligible basis 
of any qualified residence.
    ``(j) Reports to the Secretary.--
            ``(1) From the taxpayer.--The Secretary may require 
        taxpayers to submit an information return (at such time and in 
        such form and manner as the Secretary prescribes) for each 
        taxable year setting forth--
                    ``(A) the eligible basis for the taxable year of 
                each qualified residence with respect to which the 
                taxpayer is claiming a credit under this section,
                    ``(B) the amount of all homeownership credit 
                allocations received by the taxpayer from any and all 
                State homeownership credit agencies, and
                    ``(C) such other information as the Secretary may 
                require.
        The penalty under section 6652(j) shall apply to any failure to 
        submit the return required by the Secretary under the preceding 
        sentence on the date prescribed therefor.
            ``(2) From homeownership credit agencies.--Each agency 
        which allocates any homeownership credit dollar amount to any 
        residence for any calendar year shall submit to the Secretary 
        (at such time and in such form and manner as the Secretary 
        shall prescribe) an annual report specifying--
                    ``(A) the amount of the homeownership credit dollar 
                amount allocated to each residence for such year,
                    ``(B) sufficient information to identify each such 
                residence and the taxpayer initially entitled to claim 
                the credit under this section with respect thereto, and
                    ``(C) such other information as the Secretary may 
                require.
    ``(k) Responsibilities of Homeownership Credit Agencies.--
            ``(1) Plans for allocation of credit among residences.--
                    ``(A) In general.--Notwithstanding any other 
                provision of this section, the homeownership credit 
                dollar amount with respect to any qualified residence 
                shall be zero unless such amount was allocated pursuant 
                to a qualified allocation plan of the homeownership 
                credit agency which is approved by the governmental 
                unit (in accordance with rules similar to the rules of 
                section 147(f)(2) (other than subparagraph (B)(ii) 
                thereof)) of which such agency is a part.
                    ``(B) Qualified allocation plan.--For purposes of 
                this paragraph, the term `qualified allocation plan' 
                means any plan which sets forth selection criteria to 
                be used to determine the homeownership development 
                priorities of the homeownership credit agency which are 
                appropriate to local conditions.
                    ``(C) Certain homeownership development criteria 
                must be used.--The development criteria set forth in a 
                qualified allocation plan must include--
                            ``(i) contribution of the development to 
                        community stability and revitalization,
                            ``(ii) community and local government 
                        support for the development,
                            ``(iii) need for homeownership development 
                        within the area,
                            ``(iv) sponsor capability, and
                            ``(v) long-term sustainability of the 
                        project as owner-occupied residences.
            ``(2) Credit allocated to residence not to exceed amount 
        necessary to assure feasibility.--
                    ``(A) In general.--The homeownership credit dollar 
                amount allocated to a residence shall not exceed the 
                amount the homeownership credit agency determines is 
                necessary for the feasibility of the residence.
                    ``(B) Agency evaluation.--In making the 
                determination under subparagraph (A), the homeownership 
                credit agency shall consider--
                            ``(i) the sources and uses of funds and the 
                        total financing planned for the residence,
                            ``(ii) any proceeds or receipts expected to 
                        be generated by reason of tax benefits,
                            ``(iii) the anticipated appraised value of 
                        the residence,
                            ``(iv) the reasonableness of the 
                        developmental costs of the residence, and
                            ``(v) the affordability to a reasonable 
                        range of prospective qualified buyers.
                    ``(C) Determination made when credit dollar amount 
                applied for.--A determination under subparagraph (A) 
                shall be made as of each of the following times:
                            ``(i) The application for the homeownership 
                        credit dollar amount.
                            ``(ii) The allocation of the homeownership 
                        credit dollar amount.
            ``(3) Lien for recapture amount.--A homeownership credit 
        dollar amount may be allocated by a homeownership credit agency 
        to a residence only if such agency has a lien on such residence 
        for the payment of any amount potentially required to be paid 
        under subsection (h) to such agency.
    ``(l) Regulations.--The Secretary shall prescribe such regulations 
as may be necessary or appropriate to carry out the purposes of this 
section, including regulations--
            ``(1) dealing with--
                    ``(A) projects which include more than 1 residence 
                or only a portion of a residence, and
                    ``(B) buildings which are completed in portions,
            ``(2) providing for the application of this section to 
        short taxable years,
            ``(3) preventing the avoidance of the rules of this 
        section, and
            ``(4) providing the opportunity for homeownership credit 
        agencies to correct administrative errors and omissions with 
        respect to allocations and recordkeeping within a reasonable 
        period after their discovery, taking into account the 
        availability of regulations and other administrative guidance 
        from the Secretary.''.
    (b) Current Year Business Credit Calculation.--Section 38(b) of 
such Code (relating to current year business credit) is amended by 
striking ``plus'' at the end of paragraph (18), by striking the period 
at the end of paragraph (19) and inserting ``, plus'', and by adding at 
the end the following new paragraph:
            ``(20) the homeownership credit determined under section 
        42A(a).''.
    (c) Conforming Amendments.--
            (1) Section 55(c)(1) of such Code is amended by inserting 
        ``or subsection (h) or (i) of section 42A'' after ``section 
        42''.
            (2) Subsections (i)(3)(D), (i)(6)(B)(i), and (k)(1) of 
        section 469 of such Code are each amended by inserting ``or 
        42A'' after ``section 42''.
            (3) Section 772(a) of such Code is amended by striking 
        ``and'' at the end of paragraph (10), by redesignating 
        paragraph (11) as paragraph (12), and by inserting after 
        paragraph (10) the following:
            ``(11) the homeownership credit determined under section 
        42A, and''.
            (4) Section 774(b)(4) of such Code is amended by inserting 
        ``, 42A(h),'' after ``section 42(j)''.
    (d) Clerical Amendment.--The table of sections for subpart D of 
part IV of subchapter A of chapter 1 of such Code is amended by 
inserting after the item relating to section 42 the following:

``Sec. 42A. Community homeownership credit.''.
    (e) Effective Date.--The amendments made by this section shall 
apply to qualified residences sold after the date of the enactment of 
this Act.
                                 <all>
```