1470
‘‘(A) IN
GENERAL.—In the case of the
empowerment zone credits—
‘‘(i) this section and section 39 shall
be applied separately with respect to such
credits, and
‘‘(ii) for purposes of applying para-
graph (1) to such credits—
‘‘(I) 75 percent of the tentative
minimum tax shall be substituted for
the tentative minimum tax under sub-
paragraph (A) thereof, and
‘‘(II) the limitation under para-
graph (1) (as modified by subclause
(I)) shall be reduced by the credit al-
lowed under subsection (a) for the
taxable 
year 
(other 
than 
the
empowerment zone credits).
‘‘(B) EMPOWERMENT
ZONE
CREDITS.—
For purposes of this paragraph, the term
‘empowerment zone credits’ means the portion
of the credit under subsection (a) which is at-
tributable to the credits determined under sec-
tion 1396 (relating to empowerment zone em-
ployment credit) and section 1397A (relating to
zone resident empowerment savings credit).’’
1471
(d) C HANGES RELATING TO EMPOWERMENT ZONE
RESIDENT EMPOWERMENT SAVINGS CREDIT.—
(1) DISALLOWANCE
OF
DEDUCTION.—Section
404 (relating to deduction for certain employer con-
tributions) is amended by adding at the end the fol-
lowing new subsection:
‘‘(m) COORDINATION WITH EMPOWERMENT ZONE
CREDIT.—No deduction shall be allowed under this sec-
tion for any qualified employer contribution taken into ac-
count in computing the credit determined under section
1397A.’’
(2) PENALTY-FREE DISTRIBUTIONS.—
(A) I N GENERAL.—Paragraph (2) of sec-
tion 72(t) (relating to exceptions to 10-percent
additional tax on early distributions from quali-
fied retirement plans) is amended by adding at
the end thereof the following new subpara-
graph:
‘‘(D) 
DISTRIBUTIONS
FROM
CERTAIN
PLANS FOR FIRST HOME PURCHASES OR EDU-
CATIONAL EXPENSES.—
‘‘(i) IN
GENERAL.—Distributions to
an individual from a qualified retirement
plan—
1472
‘‘(I) which are qualified first-time
homebuyer distributions (as defined in
paragraph (6)),
‘‘(II) to the extent such distribu-
tions do not exceed the qualified high-
er education expenses (as defined in
paragraph (7)) of the taxpayer for the
taxable year, or
‘‘(III) to the extent such distribu-
tions do not exceed an amount equal
to the aggregate investment made by
the taxpayer during the taxable year
in any enterprise zone business (as
defined in section 1397D) that meets
the ownership requirements of section
1397C(b).
‘‘(ii) LIMITATION.—Clause (i) shall
not apply to the extent that the aggregate
amount of the distributions described in
clause (i) is greater than the excess of—
‘‘(I) the qualified savings con-
tributions (as defined in section
1397A(b)) of the taxpayer, and any
earnings thereon, over
1473
‘‘(II) the aggregate amounts to
which clause (i) and the last sentence
of paragraph (3)(A) applied for pre-
ceding taxable years.’’
(B) 
DEFINITIONS.—Section 
72(t) 
is
amended by adding at the end thereof the fol-
lowing new paragraphs:
‘‘(6) Q UALIFIED FIRST-TIME HOMEBUYER DIS-
TRIBUTIONS.—For 
purposes 
of 
paragraph
(2)(D)(i)(I)—
‘‘(A) IN
GENERAL.—The term ‘qualified
first-time homebuyer distribution’ means any
payment or distribution received by an individ-
ual to the extent such payment or distribution
is used by the individual before the close of the
60th day after the day on which such payment
or distribution is received to pay qualified ac-
quisition costs with respect to a principal resi-
dence of a first-time homebuyer who is such in-
dividual or the spouse of such individual.
‘‘(B) QUALIFIED
ACQUISITION
COSTS.—
For purposes of this paragraph, the term
‘qualified acquisition costs’ means the costs of
acquiring, constructing, or reconstructing a res-
idence. Such term includes any usual or reason-
1474
able settlement, financing, or other closing
costs.
‘‘(C) FIRST-TIME
HOMEBUYER; 
OTHER
DEFINITIONS.—For purposes of this para-
graph—
‘‘(i) FIRST-TIME
HOMEBUYER.—The
term ‘first-time homebuyer’ means any in-
dividual if—
‘‘(I) such individual (and if mar-
ried, such individual’s spouse) had no
present ownership interest in a prin-
cipal residence during the 3-year pe-
riod ending on the date of acquisition
of the principal residence to which
this paragraph applies, and
‘‘(II) subsection (a)(6), (h), or
(k) of section 1034 did not suspend
the running of any period of time
specified in section 1034 with respect
to such individual on the day before
the date the distribution is applied
pursuant to subparagraph (A)(ii).
‘‘(ii) 
PRINCIPAL
RESIDENCE.—The
term ‘principal residence’ has the same
meaning as when used in section 1034.
1475
‘‘(iii) DATE
OF
ACQUISITION.—The
term ‘date of acquisition’ means the date—
‘‘(I) on which a binding contract
to acquire the principal residence to
which subparagraph (A) applies is en-
tered into, or
‘‘(II) on which construction or re-
construction of such a principal resi-
dence is commenced.
‘‘(D) SPECIAL RULE WHERE DELAY IN AC-
QUISITION.—If any distribution from any quali-
fied retirement plan fails to meet the require-
ments of subparagraph (A) solely by reason of
a delay or cancellation of the purchase or con-
struction of the residence, the amount of the
distribution may be recontributed to the plan
from which it was distributed within 120 days
after the date of such distribution.
‘‘(7) QUALIFIED
HIGHER
EDUCATION
EX-
PENSES.—For 
purposes 
of 
paragraph
(2)(D)(ii)(II)—
‘‘(A) IN
GENERAL.—The term ‘qualified
higher education expenses’ means tuition, fees,
books, supplies, and equipment required for the
enrollment or attendance of—
1476
‘‘(i) the taxpayer,
‘‘(ii) the taxpayer’s spouse, or
‘‘(iii) the taxpayer’s child (as defined
in section 151(c)(3)) or grandchild,
at an eligible educational institution (as defined
in section 135(c)(3)).
‘‘(B) C OORDINATION WITH SAVINGS BOND
PROVISIONS.—The amount of qualified higher
education expenses for any taxable year shall be
reduced by any amount excludable from gross
income under section 135.’’
(C) CONFORMING AMENDMENTS.—
(i) Subparagraph (B) of section
72(t)(2) is amended by striking ‘‘or (C)’’
and inserting ‘‘, (C), or (D)’’.
(ii) Section 401(k)(2)(B)(i) is amend-
ed by striking ‘‘or’’ at the end of subclause
(III), by striking ‘‘and’’ at the end of
subclause (IV) and inserting ‘‘or’’, and by
inserting after subclause (IV) the following
new subclause:
‘‘(V) subject to the limitation of
section 72(t)(2)(D)(ii), the date on
which qualified first-time homebuyer
distributions (as defined in section
1477
72(t)(6)), distributions for qualified
higher education expenses (as defined
in section 72(t)(7)), or distributions
for investments described in section
72(t)(2)(D)(i)(III) are made, and’’.
(e) AMENDMENT OF TARGETED JOBS CREDIT.—
Subparagraph (A) of section 51(i)(1) is amended by in-
serting ‘‘, or, if the taxpayer is an entity other than a
corporation, to any individual who owns, directly or indi-
rectly, more than 50 percent of the capital and profits in-
terests in the entity,’’ after ‘‘of the corporation’’.
(f) CARRYOVERS.—Subsection (c) of section 381 (re-
lating to carryovers in certain corporate acquisitions) is
amended by adding at the end the following new para-
graph:
‘‘(26) ENTERPRISE
ZONE
PROVISIONS.—The
acquiring corporation shall take into account (to the
extent proper to carry out the purposes of this sec-
tion and subchapter U, and under such regulations
as may be prescribed by the Secretary) the items re-
quired to be taken into account for purposes of sub-
chapter U in respect of the distributor or transferor
corporation.’’
1478
SEC. 14304. EFFECTIVE DATE.
The amendments made by this part shall take effect
on the date of the enactment of this Act.
PART II—CREDIT FOR CONTRIBUTIONS TO CER-
TAIN COMMUNITY DEVELOPMENT CORPORA-
TIONS
SEC. 14311. CREDIT FOR CONTRIBUTIONS TO CERTAIN
COMMUNITY DEVELOPMENT CORPORATIONS.
(a) IN GENERAL.—For purposes of section 38 of the
Internal Revenue Code of 1986, the current year business
credit shall include the credit determined under this sec-
tion.
(b) DETERMINATION OF CREDIT.—The credit deter-
mined under this section for each taxable year in the credit
period with respect to any qualified CDC contribution
made by the taxpayer is an amount equal to 5 percent
of such contribution.
(c) C REDIT PERIOD.—For purposes of this section,
the credit period with respect to any qualified CDC con-
tribution is the period of 10 taxable years beginning with
the taxable year during which such contribution was made.
(d) QUALIFIED CDC CONTRIBUTION.—For purposes
of this section—
(1) I N GENERAL.—The term ‘‘qualified CDC
contribution’’ means any transfer of cash—
1479
(A) which is made to a selected community
development corporation during the 5-year pe-
riod beginning on the date such corporation was
selected for purposes of this section,
(B) the amount of which is available for
use by such corporation for at least 10 years,
(C) which is to be used by such corpora-
tion for qualified low-income assistance within
its operational area, and
(D) which is designated by such corpora-
tion for purposes of this section.
(2) L IMITATIONS ON AMOUNT DESIGNATED.—
The aggregate amount of contributions to a selected
community development corporation which may be
designated by such corporation shall not exceed
$4,000,000.
(e) SELECTED COMMUNITY DEVELOPMENT COR-
PORATIONS.—
(1) IN GENERAL.—For purposes of this section,
the term ‘‘selected community development corpora-
tion’’ means any corporation—
(A) which is described in section 501(c)(3)
of such Code and exempt from tax under sec-
tion 501(a) of such Code,
1480
(B) the principal purposes of which include
promoting employment of, and business oppor-
tunities for, low-income individuals who are
residents of the operational area, and
(C) which is selected by the Secretary of
Housing and Urban Development for purposes
of this section.
(2) ONLY
CORPORATIONS
MAY
BE
SE-
LECTED.—
(A) IN GENERAL.—The Secretary of Hous-
ing and Urban Development may select 10 cor-
porations for purposes of this section, subject to
the availability of eligible corporations. Such se-
lections may be made only before July 1, 1994.
At least 4 of the operational areas of the cor-
porations selected must be rural areas (as de-
fined by section 1393(a)(3) of such Code).
(B) P RIORITY OF DESIGNATIONS.—In se-
lecting corporations for purposes of this section,
such Secretary shall give priority to corpora-
tions with a demonstrated record of perform-
ance in administering community development
programs which target at least 75 percent of
the jobs emanating from their investment funds
to low income or unemployed individuals.