Historic Tax Credit Improvement Act of 2015

To amend the Internal Revenue Code of 1986 to improve the Historic Rehabilitation Tax Credit, and for other purposes. 1. Short title This Act may be cited as the Historic Tax Credit Improvement Act of 2015 2. Increase in the rehabilitation credit for certain small projects (a) In general Section 47 (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 20 percent (2) Maximum credit The credit determined under this subsection with respect to any smaller project for all taxable years shall not exceed $750,000. (3) Smaller project defined (A) In general For purposes of this subsection, the term smaller project (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 $3,750,000, 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) 3. Allowance for the transfer of credits for certain small projects (a) In general Section 47(e) (4) Transfer of smaller project credit (A) In general Subject to subparagraph (B) and such regulations or other guidance as the Secretary may provide, the taxpayer may transfer all or a portion of the credit allowable to the taxpayer under subsection (a) for a smaller project. (B) Certification (i) In general A transfer under subparagraph (A) shall be accompanied by a certificate which includes— (I) the certification for the certified historic structure referred to in subsection (c)(3), (II) the taxpayer’s name, address, tax identification number, date of project completion, and the amount of credit being transferred, (III) the transferee’s name, address, tax identification number, and the amount of credit being transferred, and (IV) such other information as may be required by the Secretary. (ii) Transferability of certificate A certificate issued under this section to a taxpayer shall be transferable to any other taxpayer, except that a certificate may not be transferred more than once. (C) Tax treatment relating to certificate (i) Disallowance of deduction No deduction shall be allowed for the amount of consideration paid or incurred by the transferee. (ii) Allowance of credit The amount of credit transferred under subparagraph (A)— (I) shall not be allowed to the transferor for any taxable year, and (II) shall be allowable to the transferee as a credit under this section for the taxable year of the transferee in which such credit is transferred. (D) Recapture and other special rules The taxpayer who claims a credit under this section by reason of a transfer of an amount of credit under subparagraph (A) with respect to a smaller project shall be treated as the taxpayer with respect to the smaller project for purposes of section 50. (E) Information reporting The transferor and the transferee shall each make such reports regarding the transfer of an amount of credit under paragraph (A) and containing such information as the Secretary may require. The reports required by this subsection shall be filed at such time and in such manner as may be required by the Secretary. (F) Regulations The Secretary shall prescribe regulations or other guidance to carry out this paragraph. . (b) Effective date The amendments made by this section shall apply to periods after the date of the enactment of this Act. 4. Increasing the type of buildings eligible for rehabilitation (a) In general Section 47(c)(1)(C)(i)(I) 50 percent of the adjusted basis (b) Effective date The amendment made by subsection (a) shall apply to taxable years beginning after the date of the enactment of this Act. 5. Reduction of basis adjustment for rehabilitation property (a) In general Section 50(c) (6) Special rule relating to the rehabilitation credit In the case of any rehabilitation credit— (A) only 50 percent of such credit shall be taken into account under paragraph (1), and (B) only 50 percent of any recapture amount attributable to such credit shall be taken into account under paragraph (2). . (b) Coordination with basis adjustment Section 50 of such Code is amended by adding at the end the following: (e) Coordination with basis adjustment In applying the provisions of former section 48(d)(5)(B) pursuant to subsection (d)(5) to a lease of property eligible for the rehabilitation tax credit, the lessee of such property shall include ratably in gross income over the shortest recovery period that could be applicable under section 168 with respect to such property an amount equal to 50 percent of the amount of the credit allowable under section 38 to the lessee with respect to such property. . 6. Special rules for dispositions of state historic tax credits (a) In general Part III of subchapter B of chapter 1 139F. 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 who 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 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, notwithstanding any reduction in basis pursuant to paragraph (a)(2)(C). (d) State historic tax credits defined For purposes of this section, the term State historic tax credit (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 139E the following new item: Sec. 139F. 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. 7. Modifications regarding certain tax-exempt use property (a) In general Section 47(c)(2)(B)(v)(I) and subclauses (I), (II), and (III) of section 168(h)(1)(B)(ii) shall not apply 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. 8. Eliminating functionally related properties (a) In general Section 47 (g) Related buildings Buildings that are functionally related ( as defined in Part 67.6(b)(4) of title 36, Code of Federal Regulations) shall be treated as separate certified historic structures for purposes of the credit allowed under this section. . (b) Effective date The amendment made by subsection (a) shall apply to any application to the National Park Service received after the date of the enactment of this Act.

Summary: Historic Tax Credit Improvement Act of 2015 This bill amends the Internal Revenue Code, with respect to the tax credit for the rehabilitation of buildings and historic structures, to: (1) allow an increased 30% credit, up to $750,000, for projects with rehabilitation expenditures not exceeding $3.75 million, for which no credit was allowed in either of the 2 prior taxable years (smaller projects); (2) allow the transfer of tax credit amounts for smaller projects; (3) treat a building as substantially rehabilitated if rehabilitation expenditures exceed the greater of 50% of the adjusted basis of the building or $5,000 (currently, the greater of the adjusted basis of the building or $5,000); (4) exempt from tax the proceeds of a state historic tax; and (5) set forth special rules for the tax treatment of tax-exempt use property and functionally-related historic structures.