II 

110TH CONGRESS 

1ST SESSION S. 584 

To amend the Internal Revenue Code of 1986 to modify the rehabilitation 

credit and the low-income housing credit. 

IN THE SENATE OF THE UNITED STATES 

FEBRUARY 14, 2007 

Mrs. LINCOLN (for herself, Mr. SMITH, and Ms. LANDRIEU) 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 modify 

the rehabilitation credit and the low-income housing credit. 

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 ‘‘Community Restora5 tion and Revitalization Act of 2007’’. 


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1 SEC. 2. MODIFICATIONS TO RULES FOR DETERMINING THE 

2 APPLICABLE PERCENTAGE FOR CERTAIN 

3 BUILDINGS ELIGIBLE FOR LOW-INCOME 

4 HOUSING CREDIT. 

5 (a) IN GENERAL.—Subparagraph (B) of section 

6 42(b)(2) of the Internal Revenue Code of 1986 (relating 

7 to the method of prescribing the applicable percentage) is 

8 amended by striking ‘‘and’’ at the end of clause (i), by 

9 striking the period at the end of clause (ii) and inserting 

10 a comma, and by adding at the end the following new 

11 clauses: 

12 ‘‘(iii) 87.5 percent of the qualified 

13 basis of a building described in paragraph 

14 (1)(A), if the basis of the building is sub15 ject to the basis adjustment for rehabilita16 tion credit property required under section 

17 50(c), and 

18 ‘‘(iv) 37.5 percent of the qualified 

19 basis of a building described in paragraph 

20 (1)(B), if the basis of the building is sub21 ject to the basis adjustment for rehabilita22 tion credit property required under section 

23 50(c).’’. 

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

25 this section shall apply to— 


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1 (1) housing credit dollar amounts allocated 

2 after December 31, 2006, and 

3 (2) buildings placed in service after such date 

4 to the extent paragraph (1) of section 42(h) of the 

5 Internal Revenue Code of 1986 does not apply to 

6 any building by reason of paragraph (4) thereof, but 

7 only with respect to bonds issued after such date. 

8 SEC. 3. MODIFICATION TO BASIS ADJUSTMENT RULE. 

9 (a) IN GENERAL.—Paragraph (3) of section 50(c) of 

10 the Internal Revenue Code of 1986 (relating to special 

11 rules for determining basis) is amended by inserting ‘‘or 

12 rehabilitation credit’’ after ‘‘energy credit’’. 

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

14 this section shall apply to taxable years beginning after 

15 December 31, 2006. 

16 SEC. 4. INCREASE IN THE REHABILITATION CREDIT FOR 

17 CERTAIN SMALLER PROJECTS. 

18 (a) IN GENERAL.—Section 47 of the Internal Rev19 enue Code of 1986 (relating to rehabilitation credit) is 

20 amended by adding at the end the following new sub21 section: 

22 ‘‘(e) SPECIAL RULE REGARDING CERTAIN SMALLER

23 PROJECTS.— 

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

25 rehabilitated building or portion thereof— 


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

2 date of the enactment of this subsection, and 

3 ‘‘(B) which is a smaller project, 

4 subsection (a)(2) shall be applied by substituting ‘40 

5 percent’ for ‘20 percent’ with respect to qualified re6 habilitation expenditures not over $1,000,000, and 

7 ‘20 percent’ with respect to qualified rehabilitation 

8 expenditures of over $1,000,000. 

9 ‘‘(2) SMALLER PROJECT DEFINED.—For pur10 poses of this section, the term ‘smaller project’ 

11 means any qualified rehabilitated building or portion 

12 thereof as to which— 

13 ‘‘(A) the qualified rehabilitation expendi14 tures reported by the taxpayer for purposes of 

15 calculating the credit under this section are not 

16 over $2,000,000, except that for purposes of 

17 making this determination, qualified rehabilita18 tion expenditures attributable to the provisions 

19 of subsection (c)(2)(E) shall be disregarded, 

20 and 

21 ‘‘(B) no credit was allowable under this 

22 section during any of the two prior taxable 

23 years, provided that this subparagraph shall not 

24 apply to any building as to which the election 


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1 provided for in subsection (d)(5) shall have 

2 been made. 

3 ‘‘(3) COORDINATION WITH SUBSECTION (d).— 

4 With respect to any building as to which the election 

5 provided for in subsection (d)(5) shall have been 

6 made, such building shall be deemed a smaller 

7 project only if the qualified rehabilitation expendi8 tures reported by the taxpayer for purposes of calcu9 lating the credit under this section with respect to 

10 the taxable years to which such election shall apply 

11 are, in the aggregate, not over $2,000,000.’’. 

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

13 this section shall apply to property placed in service after 

14 the date of the enactment of this Act. 

15 SEC. 5. USE FOR LODGING NOT TO DISQUALIFY FOR REHA16 BILITATION CREDIT PROPERTY WHICH IS 

17 NOT A CERTIFIED HISTORIC STRUCTURE. 

18 (a) IN GENERAL.—Subparagraph (C) of section 

19 50(b)(2) of the Internal Revenue Code of 1986 (relating 

20 to property eligible for the investment credit) is amended 

21 by striking ‘‘certified historic structure’’ and inserting 

22 ‘‘qualified rehabilitated building’’. 

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

24 this section shall apply to property placed in service after 

25 the date of the enactment of this Act. 


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1 SEC. 6. DATE BY WHICH BUILDING MUST BE FIRST PLACED 

2 IN SERVICE. 

3 (a) IN GENERAL.—Subparagraph (B) of section 

4 47(c)(1) of the Internal Revenue Code of 1986 (relating 

5 to the date by which building must be first placed in serv6 ice) is amended— 

7 (1) by striking ‘‘BUILDING MUST BE FIRST

8 PLACED IN SERVICE BEFORE 1936’’ in the heading 

9 and inserting ‘‘DATE BY WHICH BUILDING MUST

10 FIRST BE PLACED IN SERVICE’’, and 

11 (2) by striking ‘‘before 1936’’ in the text and 

12 inserting ‘‘no less than 50 years prior to the year in 

13 which qualified rehabilitation expenditures are taken 

14 into account under subsection (b)(1)’’. 

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

16 this section shall apply to property placed in service after 

17 the date of the enactment of this Act. 

18 SEC. 7. MODIFICATIONS REGARDING CERTAIN TAX-EXEMPT 

19 USE PROPERTY. 

20 (a) IN GENERAL.—Subclause (I) of section 

21 47(c)(2)(B)(v) of the Internal Revenue Code of 1986 (re22 lating to tax-exempt use property) is amended by inserting 

23 ‘‘, except that for purposes of this clause, ‘50 percent’ 

24 shall be substituted for ‘35 percent’ in applying section 

25 168(h)(1)(B)(iii))’’ before the period at the end. 


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

2 this section shall apply to property placed in service after 

3 the date of the enactment of this Act. 

4 SEC. 8. INCREASE IN REHABILITATION CREDIT FOR BUILD5 INGS IN HIGH COST AREAS. 

6 (a) IN GENERAL.—Paragraph (2) of section 47(c) of 

7 the Internal Revenue Code of 1986 (relating to the defini8 tion of qualified rehabilitation expenditures) is amended 

9 by adding at the end the following new subparagraph: 

10 ‘‘(E) INCREASE IN CREDIT FOR BUILDINGS

11 IN HIGH COST AREAS.— 

12 ‘‘(i) IN GENERAL.—In the case of any 

13 qualified rehabilitated building located in a 

14 qualified census tract or difficult develop15 ment area which is designated for purposes 

16 of this subparagraph, the qualified reha17 bilitation expenditures for purposes of this 

18 section shall be 130 percent of such ex19 penditures determined without regard to 

20 this subparagraph. 

21 ‘‘(ii) RULES.—For purposes of clause 

22 (i), rules similar to the rules of section 

23 42(d)(5)(C) (excluding clause (i) thereof) 

24 shall be applied.’’. 


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

2 this section shall apply to property placed in service after 

3 the date of the enactment of this Act. 

4 SEC. 9. RECAPTURE OF REHABILITATION CREDIT FOR CER5 TIFIED HISTORIC STRUCTURE NOT TRIG6 GERED BY CONDOMINIUM TRANSACTION. 

7 (a) IN GENERAL.—Subsection (a) of section 50 of the 

8 Internal Revenue Code of 1986 (relating to recapture of 

9 credits upon disposition of property) is amended by adding 

10 at the end thereof the following new paragraph: 

11 ‘‘(6) SPECIAL RULE FOR CERTIFIED HISTORIC

12 STRUCTURES.—In the case of the rehabilitation 

13 credit determined under section 47(a)(2), para14 graphs (1) and (2) shall not apply to a transaction 

15 in which a portion of the building is transferred as 

16 a condominium unit.’’. 

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

18 this section shall apply to transfers after the date of enact19 ment of this Act. 

Æ 


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