I 

108TH CONGRESS 

2D SESSION H. R. 4029

To amend the Internal Revenue Code of 1986 to establish a 15-year recovery 

period for depreciation of designated low-income buildings and to allow 

passive losses and credits attributable to qualified low-income buildings. 

IN THE HOUSE OF REPRESENTATIVES 

MARCH 24, 2004

Mr. WYNN 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 establish 

a 15-year recovery period for depreciation of designated 

low-income buildings and to allow passive losses and 

credits attributable to qualified low-income buildings.

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

3 SECTION 1. 15-YEAR RECOVERY PERIOD FOR DEPRECIA4 TION OF DESIGNATED LOW-INCOME BUILD5 INGS. 

6 (a) IN GENERAL.—Subparagraph (E) of section 

7 168(e)(3) of the Internal Revenue Code of 1986 (relating 

8 to 15-year property) is amended by striking ‘‘and’’ at the 
2

•HR 4029 IH 

1 end of clause (ii), by striking the period at the end of 

2 clause (iii) and inserting ‘‘, and’’, and by adding at the 

3 end the following new clause: 

4 ‘‘(iv) any designated low-income build5 ing.’’

6 (b) DESIGNATED LOW-INCOME BUILDING.—Sub7 section (e) of section 168 of such Code (relating to classi8 fication of property) is amended by adding at the end the 

9 following new paragraph: 

10 ‘‘(6) DESIGNATED LOW-INCOME BUILDING.—

11 ‘‘(A) IN GENERAL.—The term ‘designated 

12 low-income building’ means any building which 

13 is a qualified low-income building (as defined in 

14 section 42(c)(2)) if—

15 ‘‘(i) no housing credit dollar amount 

16 has been allocated to such building under 

17 section 42(h), and 

18 ‘‘(ii) the taxpayer has made the elec19 tion described in subparagraph (B) with 

20 respect to such building. 

21 ‘‘(B) ELECTION.—An election is described 

22 in this subparagraph if made by the taxpayer at 

23 such time and in such manner as the Secretary 

24 may prescribe. Any election under the preceding 

25 sentence, once made, shall be irrevocable. 
3

•HR 4029 IH 

1 ‘‘(C) COORDINATION WITH LOW-INCOME

2 HOUSING CREDIT.—No credit shall be allowed 

3 under section 42 with respect to any designated 

4 low-income building. 

5 ‘‘(D) RECAPTURE OF ACCELERATED DE6 PRECIATION.—A designated low-income build7 ing which ceases to be a qualified low-income 

8 building (as defined in section 42(c)(2)) at any 

9 time during the recapture period shall, under 

10 regulations prescribed by the Secretary, be 

11 treated as though paragraph (3)(E)(iv) were 

12 never enacted. The statutory period for the as13 sessment of any deficiency attributable to this 

14 subparagraph shall not expire before the expira15 tion of the 1-year period beginning on the date 

16 the Secretary is notified by the taxpayer (in 

17 such manner as the Secretary may prescribe) of 

18 the change in status of such building. For pur19 poses of this subparagraph, the term ‘recapture 

20 period’ has the meaning given the term ‘compli21 ance period’ under section 42(i)(1) except ‘20 

22 taxable years’ shall be substituted for ‘15 tax23 able years’.’’. 

24 (c) ALTERNATIVE DEPRECIATION SYSTEM.—The 

25 table contained in section 168(g)(3)(B) of such Code is 
4

•HR 4029 IH 

1 amended by inserting after the item relating to subpara2 graph (E)(iii) the following:

‘‘(E)(iv) ...................................................................................................... 20’’.

3 (d) EFFECTIVE DATE.—The amendments made by 

4 this section shall apply to property placed in service after 

5 the date of the enactment of this Act. 

6 SEC. 2. QUALIFIED LOW-INCOME BUILDINGS NOT SUBJECT 

7 TO LIMITATION ON PASSIVE ACTIVITY 

8 LOSSES AND CREDITS. 

9 (a) IN GENERAL.—Section 469 of the Internal Rev10 enue Code of 1986 (relating to passive activity losses and 

11 credits limited) is amended by redesignating subsections 

12 (l) and (m) as subsections (m) and (n), respectively, and 

13 by inserting after subsection (k) the following new sub14 section: 

15 ‘‘(l) SPECIAL RULE FOR QUALIFIED LOW-INCOME

16 BUILDINGS.—Subsection (a) shall not apply to that por17 tion of the passive activity loss and passive activity credit 

18 for any taxable year which is attributable to any qualified 

19 low-income building (as defined in section 42(c)(2)).’’. 

20 (b) CONFORMING AMENDMENTS.—

21 (1) Paragraph (3) of section 469(i) of such 

22 Code is amended by striking subparagraph (D) and 

23 by redesignating subparagraphs (E) and (F) as sub24 paragraphs (D) and (E), respectively. 
5

•HR 4029 IH 

1 (2) Subparagraph (D) of section 469(i) of such 

2 Code (as so redesignated) is amended to read as fol3 lows: 

4 ‘‘(D) ORDERING RULES TO REFLECT EX5 CEPTIONS AND SEPARATE PHASE-OUTS.—If 

6 subparagraph (B) or (C) applies for a taxable 

7 year, paragraph (1) shall be applied—

8 ‘‘(i) first to the portion of the passive 

9 activity loss to which subparagraph (C) 

10 does not apply, 

11 ‘‘(ii) second to the portion of such loss 

12 to which subparagraph (C) applies, 

13 ‘‘(iii) third to the portion of the pas14 sive activity credit to which subparagraph 

15 (B) does not apply, and 

16 ‘‘(iv) fourth to the portion of such 

17 credit to which subparagraph (B) ap18 plies.’’. 

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

20 this section shall apply to property placed in service after 

21 the date of the enactment of this Act.

Æ