I 
114TH CONGRESS 
1ST SESSION H. R. 3846 
To amend the Internal Revenue Code of 1986 to improve the Historic 
Rehabilitation Tax Credit, and for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
OCTOBER 28, 2015 
Mr. KELLY of Pennsylvania (for himself, Mr. BLUMENAUER, Mr. TIBERI, Mr. 
NEAL, Mr. BOUSTANY, Mr. LARSON of Connecticut, Mr. TURNER, Mr. 
KIND, Mr. RANGEL, and Mr. REED) 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 improve 
the Historic Rehabilitation Tax Credit, and for other 
purposes. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Historic Tax Credit 
Improvement Act of 2015’’. 
SEC. 2. INCREASE IN THE REHABILITATION CREDIT FOR 
CERTAIN SMALL PROJECTS. 
(a) IN GENERAL.—Section 47 of the Internal Rev-
enue Code of 1986 (relating to rehabilitation credit) is 
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amended by adding at the end the following new sub-
section: 
‘‘(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’ for ‘20 percent’. 
‘‘(2) MAXIMUM
CREDIT.—The credit deter-
mined 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’ means 
any qualified rehabilitated building or portion 
thereof if— 
‘‘(i) the qualified rehabilitation ex-
penditures 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 re-
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spect 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) of the Internal Revenue Code of 1986 (as 
in effect on the day before the date of the enactment of 
the Revenue Reconciliation Act of 1990). 
SEC. 3. ALLOWANCE FOR THE TRANSFER OF CREDITS FOR 
CERTAIN SMALL PROJECTS. 
(a) IN GENERAL.—Section 47(e) of the Internal Rev-
enue Code of 1986, as amended by section 2, is amended 
by adding at the end the following new subsection: 
‘‘(4) TRANSFER OF SMALLER PROJECT CRED-
IT.— 
‘‘(A) IN
GENERAL.—Subject to subpara-
graph (B) and such regulations or other guid-
ance as the Secretary may provide, the taxpayer 
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may transfer all or a portion of the credit allow-
able 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 cer-
tified historic structure referred to in 
subsection (c)(3), 
‘‘(II) the taxpayer’s name, ad-
dress, tax identification number, date 
of project completion, and the amount 
of credit being transferred, 
‘‘(III) the transferee’s name, ad-
dress, tax identification number, and 
the amount of credit being trans-
ferred, and 
‘‘(IV) such other information as 
may be required by the Secretary. 
‘‘(ii) TRANSFERABILITY OF CERTIFI-
CATE.—A certificate issued under this sec-
tion to a taxpayer shall be transferable to 
any other taxpayer, except that a certifi-
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cate may not be transferred more than 
once. 
‘‘(C) TAX TREATMENT RELATING TO CER-
TIFICATE.— 
‘‘(i) 
DISALLOWANCE
OF
DEDUC-
TION.—No deduction shall be allowed for 
the amount of consideration paid or in-
curred by the transferee. 
‘‘(ii) ALLOWANCE
OF
CREDIT.—The 
amount of credit transferred under sub-
paragraph (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 sec-
tion for the taxable year of the trans-
feree in which such credit is trans-
ferred. 
‘‘(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. 
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‘‘(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 con-
taining 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. 
SEC. 4. INCREASING THE TYPE OF BUILDINGS ELIGIBLE 
FOR REHABILITATION. 
(a) IN GENERAL.—Section 47(c)(1)(C)(i)(I) of the 
Internal Revenue Code of 1986 is amended by inserting 
‘‘50 percent of’’ before ‘‘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. 
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SEC. 5. REDUCTION OF BASIS ADJUSTMENT FOR REHABILI-
TATION PROPERTY. 
(a) IN GENERAL.—Section 50(c) of the Internal Rev-
enue Code of 1986 is amended by adding at the end the 
following: 
‘‘(6) SPECIAL RULE RELATING TO THE REHA-
BILITATION CREDIT.—In the case of any rehabilita-
tion 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) pur-
suant 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 re-
covery period that could be applicable under section 168 
with respect to such property an amount equal to 50 per-
cent of the amount of the credit allowable under section 
38 to the lessee with respect to such property.’’. 
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SEC. 6. SPECIAL RULES FOR DISPOSITIONS OF STATE HIS-
TORIC TAX CREDITS. 
(a) IN GENERAL.—Part III of subchapter B of chap-
ter 1 of the Internal Revenue Code of 1986 (relating to 
items specifically excluded from gross income) is amended 
by inserting after section 139E the following new section: 
‘‘SEC. 139F. DISPOSITIONS OF STATE HISTORIC TAX CRED-
ITS. 
‘‘(a) EXCLUSION FROM INCOME; BASIS REDUC-
TION.— 
‘‘(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 re-
ceives 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, 
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‘‘(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 ad-
justed basis of— 
‘‘(i) a partner’s interest in a partner-
ship, or 
‘‘(ii) stock in an S corporation (as de-
fined in section 1361(a)(1)), shall be ap-
propriately adjusted to take into account 
adjustments made under this subsection in 
the basis of property held by the partner-
ship 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, dis-
position, or refund described in subsection (a) 
received by such taxpayer shall constitute in-
come to such taxpayer under section 61(a), and 
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‘‘(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 tax-
able years and may be revoked only with the consent 
of the Secretary of the Treasury. 
‘‘(c) EFFECT ON QUALIFIED REHABILITATION EX-
PENDITURES AND REHABILITATION CREDITS.—For pur-
poses 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 quali-
fied rehabilitation expenditures (as defined in section 
47(c)(2)) incurred in connection with such property, nor 
shall such transfer or disposition, nor any basis adjust-
ments under subsection (a), be treated as an early disposi-
tion of investment credit property for purposes of the re-
capture provisions of section 50, notwithstanding any re-
duction 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’ 
means any credit against State or local tax liabilities 
which— 
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