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.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. 15-YEAR RECOVERY PERIOD FOR DEPRECIA-
TION OF DESIGNATED LOW-INCOME BUILD-
INGS. 
(a) IN GENERAL.—Subparagraph (E) of section 
168(e)(3) of the Internal Revenue Code of 1986 (relating 
to 15-year property) is amended by striking ‘‘and’’ at the
end of clause (ii), by striking the period at the end of 
clause (iii) and inserting ‘‘, and’’, and by adding at the 
end the following new clause: 
‘‘(iv) any designated low-income build-
ing.’’
(b) DESIGNATED
LOW-INCOME
BUILDING.—Sub-
section (e) of section 168 of such Code (relating to classi-
fication of property) is amended by adding at the end the 
following new paragraph: 
‘‘(6) DESIGNATED LOW-INCOME BUILDING.—
‘‘(A) IN GENERAL.—The term ‘designated 
low-income building’ means any building which 
is a qualified low-income building (as defined in 
section 42(c)(2)) if—
‘‘(i) no housing credit dollar amount 
has been allocated to such building under 
section 42(h), and 
‘‘(ii) the taxpayer has made the elec-
tion described in subparagraph (B) with 
respect to such building. 
‘‘(B) ELECTION.—An election is described 
in this subparagraph if made by the taxpayer at 
such time and in such manner as the Secretary 
may prescribe. Any election under the preceding 
sentence, once made, shall be irrevocable.
‘‘(C) COORDINATION
WITH
LOW-INCOME 
HOUSING CREDIT.—No credit shall be allowed 
under section 42 with respect to any designated 
low-income building. 
‘‘(D) RECAPTURE OF ACCELERATED DE-
PRECIATION.—A designated low-income build-
ing which ceases to be a qualified low-income 
building (as defined in section 42(c)(2)) at any 
time during the recapture period shall, under 
regulations prescribed by the Secretary, be 
treated as though paragraph (3)(E)(iv) were 
never enacted. The statutory period for the as-
sessment of any deficiency attributable to this 
subparagraph shall not expire before the expira-
tion of the 1-year period beginning on the date 
the Secretary is notified by the taxpayer (in 
such manner as the Secretary may prescribe) of 
the change in status of such building. For pur-
poses of this subparagraph, the term ‘recapture 
period’ has the meaning given the term ‘compli-
ance period’ under section 42(i)(1) except ‘20 
taxable years’ shall be substituted for ‘15 tax-
able years’.’’. 
(c) ALTERNATIVE
DEPRECIATION
SYSTEM.—The 
table contained in section 168(g)(3)(B) of such Code is
amended by inserting after the item relating to subpara-
graph (E)(iii) the following:
‘‘(E)(iv) ......................................................................................................
20’’.
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to property placed in service after 
the date of the enactment of this Act. 
SEC. 2. QUALIFIED LOW-INCOME BUILDINGS NOT SUBJECT 
TO 
LIMITATION 
ON 
PASSIVE 
ACTIVITY 
LOSSES AND CREDITS. 
(a) IN GENERAL.—Section 469 of the Internal Rev-
enue Code of 1986 (relating to passive activity losses and 
credits limited) is amended by redesignating subsections 
(l) and (m) as subsections (m) and (n), respectively, and 
by inserting after subsection (k) the following new sub-
section: 
‘‘(l) SPECIAL RULE FOR QUALIFIED LOW-INCOME 
BUILDINGS.—Subsection (a) shall not apply to that por-
tion of the passive activity loss and passive activity credit 
for any taxable year which is attributable to any qualified 
low-income building (as defined in section 42(c)(2)).’’. 
(b) CONFORMING AMENDMENTS.—
(1) Paragraph (3) of section 469(i) of such 
Code is amended by striking subparagraph (D) and 
by redesignating subparagraphs (E) and (F) as sub-
paragraphs (D) and (E), respectively.
(2) Subparagraph (D) of section 469(i) of such 
Code (as so redesignated) is amended to read as fol-
lows: 
‘‘(D) ORDERING RULES TO REFLECT EX-
CEPTIONS
AND
SEPARATE
PHASE-OUTS.—If 
subparagraph (B) or (C) applies for a taxable 
year, paragraph (1) shall be applied—
‘‘(i) first to the portion of the passive 
activity loss to which subparagraph (C) 
does not apply, 
‘‘(ii) second to the portion of such loss 
to which subparagraph (C) applies, 
‘‘(iii) third to the portion of the pas-
sive activity credit to which subparagraph 
(B) does not apply, and 
‘‘(iv) fourth to the portion of such 
credit to which subparagraph (B) ap-
plies.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to property placed in service after 
the date of the enactment of this Act.
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