(3) The amendment made by subsection (b)(2)
shall apply to taxable years beginning after December
31, 1990.
SEC. 505. OTHER AMENDMENTS.
(a) AMENDMENTS RELATED TO SECTION 6103 OF 1986
CODE.—
(1) Subsection (j) of section 6103 of the 1986
Code is amended by adding at the end the following
new paragraph:
‘‘(5) DEPARTMENT OF AGRICULTURE.—Upon re-
quest in writing by the Secretary of Agriculture, the
Secretary shall furnish such returns, or return infor-
mation reflected thereon, as the Secretary may pre-
scribe by regulation to officers and employees of the
Department of Agriculture whose official duties re-
quire access to such returns or information for the
purpose of, but only to the extent necessary in, struc-
turing, preparing, and conducting the census of agri-
culture pursuant to the Census of Agriculture Act of
1997 (Public Law 105–113).’’.
(2) Paragraph (4) of section 6103(p) of the 1986
Code is amended by striking ‘‘(j)(1) or (2)’’ in the
material preceding subparagraph (A) and in sub-
paragraph (F) and inserting ‘‘(j)(1), (2), or (5)’’.
(3) The amendments made by this subsection
shall apply to requests made on or after the date of
the enactment of this Act.
(b) AMENDMENT RELATED
TO SECTION 9004 OF
TRANSPORTATION EQUITY ACT FOR THE 21ST CENTURY.—
(1) Paragraph (2) of section 9503(f) of the 1986
Code is amended to read as follows:
‘‘(2) notwithstanding section 9602(b), obligations
held by such Fund after September 30, 1998, shall be
obligations of the United States which are not inter-
est-bearing.’’
(2) The amendment made by paragraph (1) shall
take effect on October 1, 1998.
(c) CLERICAL AMENDMENTS.—
(1) Clause (i) of section 51(d)(6)(B) of the 1986
Code is amended by striking ‘‘rehabilitation plan’’
and inserting ‘‘plan for employment’’. The reference
to plan for employment in such clause shall be treated
as including a reference to the rehabilitation plans re-
ferred to in such clause as in effect before the amend-
ment made by the preceding sentence.
(2) Subparagraphs (C) and (D) of section
6693(a)(2) of the 1986 Code are each amended by
striking ‘‘Section’’ and inserting ‘‘section’’.
TITLE 
VI—AMERICAN 
COMMU-
NITY RENEWAL ACT OF 1998
SEC. 601. SHORT TITLE.
This title may be cited as the ‘‘American Community
Renewal Act of 1998’’.
SEC. 602. DESIGNATION OF AND TAX INCENTIVES FOR RE-
NEWAL COMMUNITIES.
(a) IN GENERAL.—Chapter 1 is amended by adding
at the end the following new subchapter:
‘‘Subchapter X—Renewal Communities
‘‘Part I.
Designation.
‘‘Part II.
Renewal community capital gain; renewal community
business.
‘‘Part III. Family development accounts.
‘‘Part IV.
Additional incentives.
‘‘PART I—DESIGNATION
‘‘Sec. 1400E. Designation of renewal communities.
‘‘SEC. 1400E. DESIGNATION OF RENEWAL COMMUNITIES.
‘‘(a) DESIGNATION.—
‘‘(1) DEFINITIONS.—For purposes of this title,
the term ‘renewal community’ means any area—
‘‘(A) which is nominated by one or more
local governments and the State or States in
which it is located for designation as a renewal
community (hereinafter in this section referred
to as a ‘nominated area’), and
‘‘(B) which the Secretary of Housing and
Urban Development designates as a renewal
community, after consultation with—
‘‘(i) the Secretaries of Agriculture,
Commerce, Labor, and the Treasury; the
Director of the Office of Management and
Budget; and the Administrator of the Small
Business Administration, and
‘‘(ii) in the case of an area on an In-
dian reservation, the Secretary of the Inte-
rior.
‘‘(2) NUMBER OF DESIGNATIONS.—
‘‘(A) IN GENERAL.—The Secretary of Hous-
ing and Urban Development may designate not
more than 20 nominated areas as renewal com-
munities.
‘‘(B) MINIMUM
DESIGNATION
IN
RURAL
AREAS.—Of the areas designated under para-
graph (1), at least 4 must be areas—
‘‘(i) which are within a local govern-
ment jurisdiction or jurisdictions with a
population of less than 50,000,
‘‘(ii) which are outside of a metropoli-
tan statistical area (within the meaning of
section 143(k)(2)(B)), or
‘‘(iii) which are determined by the Sec-
retary of Housing and Urban Development,
after consultation with the Secretary of
Commerce, to be rural areas.
‘‘(3) AREAS DESIGNATED BASED ON DEGREE OF
POVERTY, ETC.—
‘‘(A) IN
GENERAL.—Except as otherwise
provided in this section, the nominated areas
designated as renewal communities under this
subsection shall be those nominated areas with
the highest average ranking with respect to the
criteria described in subparagraphs (B), (C),
and (D) of subsection (c)(3). For purposes of the
preceding sentence, an area shall be ranked with-
in each such criterion on the basis of the amount
by which the area exceeds such criterion, with
the area which exceeds such criterion by the
greatest amount given the highest ranking.
‘‘(B) 
EXCEPTION
WHERE
INADEQUATE
COURSE OF ACTION, ETC.—An area shall not be
designated under subparagraph (A) if the Sec-
retary of Housing and Urban Development de-
termines that the course of action described in
subsection (d)(2) with respect to such area is in-
adequate.
‘‘(C) PRIORITY FOR EMPOWERMENT ZONES
AND ENTERPRISE COMMUNITIES WITH RESPECT
TO FIRST HALF OF DESIGNATIONS.—With respect
to the first 10 designations made under this sec-
tion—
‘‘(i) 10 shall be chosen from nominated
areas which are empowerment zones or en-
terprise communities (and are otherwise eli-
gible for designation under this section),
and
‘‘(ii) of such 10, 2 shall be areas de-
scribed in paragraph (2)(B).
‘‘(4) LIMITATION ON DESIGNATIONS.—
‘‘(A) PUBLICATION OF REGULATIONS.—The
Secretary of Housing and Urban Development
shall prescribe by regulation no later than 4
months after the date of the enactment of this
section, after consultation with the officials de-
scribed in paragraph (1)(B)—
‘‘(i) the procedures for nominating an
area under paragraph (1)(A),
‘‘(ii) the parameters relating to the size
and population characteristics of a renewal
community, and
‘‘(iii) the manner in which nominated
areas will be evaluated based on the criteria
specified in subsection (d).
‘‘(B) TIME LIMITATIONS.—The Secretary of
Housing and Urban Development may designate
nominated areas as renewal communities only
during the 24-month period beginning on the
first day of the first month following the month
in which the regulations described in subpara-
graph (A) are prescribed.
‘‘(C) PROCEDURAL RULES.—The Secretary
of Housing and Urban Development shall not
make any designation of a nominated area as a
renewal community under paragraph (2) un-
less—
‘‘(i) the local governments and the
States in which the nominated area is lo-
cated have the authority—
‘‘(I) to nominate such area for
designation as a renewal community,
‘‘(II) to make the State and local
commitments described in subsection
(d), and
‘‘(III) to provide assurances satis-
factory to the Secretary of Housing
and Urban Development that such
commitments will be fulfilled,
‘‘(ii) a nomination regarding such
area is submitted in such a manner and in
such form, and contains such information,
as the Secretary of Housing and Urban De-
velopment shall by regulation prescribe, and
‘‘(iii) the Secretary of Housing and
Urban Development determines that any in-
formation furnished is reasonably accurate.
‘‘(5) NOMINATION
PROCESS
FOR
INDIAN
RES-
ERVATIONS.—For purposes of this subchapter, in the
case of a nominated area on an Indian reservation,
the reservation governing body (as determined by the
Secretary of the Interior) shall be treated as being
both the State and local governments with respect to
such area.
‘‘(b) PERIOD FOR WHICH DESIGNATION IS IN EF-
FECT.—
‘‘(1) IN GENERAL.—Any designation of an area
as a renewal community shall remain in effect during
the period beginning on the date of the designation
and ending on the earliest of—
‘‘(A) December 31, 2006,
‘‘(B) the termination date designated by the
State and local governments in their nomina-
tion, or
‘‘(C) the date the Secretary of Housing and
Urban Development revokes such designation.
‘‘(2) REVOCATION OF DESIGNATION.—The Sec-
retary of Housing and Urban Development may re-
voke the designation under this section of an area if
such Secretary determines that the local government
or the State in which the area is located—
‘‘(A) has modified the boundaries of the
area, or
‘‘(B) is not complying substantially with, or
fails to make progress in achieving, the State or
local commitments, respectively, described in
subsection (d).
‘‘(c) AREA AND ELIGIBILITY REQUIREMENTS.—
‘‘(1) IN GENERAL.—The Secretary of Housing
and Urban Development may designate a nominated
area as a renewal community under subsection (a)
only if the area meets the requirements of paragraphs
(2) and (3) of this subsection.
‘‘(2) AREA REQUIREMENTS.—A nominated area
meets the requirements of this paragraph if—
‘‘(A) the area is within the jurisdiction of
one or more local governments,
‘‘(B) the boundary of the area is continu-
ous, and
‘‘(C) the area—
‘‘(i) has a population, of at least—
‘‘(I) 4,000 if any portion of such
area (other than a rural area described
in subsection (a)(2)(B)(i)) is located
within a metropolitan statistical area
(within 
the 
meaning 
of 
section
143(k)(2)(B)) which has a population
of 50,000 or greater, or
‘‘(II) 1,000 in any other case, or
‘‘(ii) is entirely within an Indian res-
ervation (as determined by the Secretary of
the Interior).
‘‘(3) ELIGIBILITY
REQUIREMENTS.—A nomi-
nated area meets the requirements of this paragraph
if the State and the local governments in which it is
located certify (and the Secretary of Housing and
Urban Development, after such review of supporting
data as he deems appropriate, accepts such certifi-
cation) that—
‘‘(A) the area is one of pervasive poverty,
unemployment, and general distress,
‘‘(B) the unemployment rate in the area, as
determined by the most recent available data,
was at least 11⁄2 times the national unemploy-
ment rate for the period to which such data re-
late,
‘‘(C) the poverty rate for each population
census tract within the nominated area is at
least 20 percent, and
‘‘(D) in the case of an urban area, at least
70 percent of the households living in the area
have incomes below 80 percent of the median in-
come of households within the jurisdiction of the
local government (determined in the same man-
ner as under section 119(b)(2) of the Housing
and Community Development Act of 1974).
‘‘(4) CONSIDERATION
OF
HIGH
INCIDENCE
OF
CRIME.—The Secretary of Housing and Urban Devel-
opment shall take into account, in selecting nomi-
nated areas for designation as renewal communities
under this section, the extent to which such areas have
a high incidence of crime.
‘‘(5) CONSIDERATION OF COMMUNITIES IDENTI-
FIED IN GAO STUDY.—The Secretary of Housing and
Urban Development shall take into account, in select-
ing nominated areas for designation as renewal com-
munities under this section, if the area has census
tracts identified in the May 12, 1998, report of the
Government Accounting Office regarding the identi-
fication of economically distressed areas.
‘‘(d) REQUIRED STATE AND LOCAL COMMITMENTS.—
‘‘(1) IN GENERAL.—The Secretary of Housing
and Urban Development may designate any nomi-
nated area as a renewal community under subsection
(a) only if—
‘‘(A) the local government and the State in
which the area is located agree in writing that,
during any period during which the area is a re-
newal community, such governments will follow
a specified course of action which meets the re-
quirements of paragraph (2) and is designed to
reduce the various burdens borne by employers or
employees in such area, and
‘‘(B) the economic growth promotion re-
quirements of paragraph (3) are met.
‘‘(2) COURSE OF ACTION.—
‘‘(A) IN
GENERAL.—A course of action
meets the requirements of this paragraph if such
course of action is a written document, signed by
entities to provide jobs and job training for,
and technical, financial, or other assistance
to, employers, employees, and residents from
the renewal community.
‘‘(vi) State or local income tax benefits
for fees paid for services performed by a
nongovernmental entity which were for-
merly performed by a governmental entity.
‘‘(vii) The gift (or sale at below fair
market value) of surplus real property (such
as land, homes, and commercial or indus-
trial structures) in the renewal community
to neighborhood organizations, community
development corporations, or private com-
panies.
‘‘(B) RECOGNITION OF PAST EFFORTS.—For
purposes of this section, in evaluating the course
of action agreed to by any State or local govern-
ment, the Secretary of Housing and Urban De-
velopment shall take into account the past efforts
of such State or local government in reducing the
various burdens borne by employers and employ-
ees in the area involved.
‘‘(3) ECONOMIC GROWTH PROMOTION REQUIRE-
MENTS.—The economic growth promotion require-
ments of this paragraph are met with respect to a
nominated area if the local government and the State
in which such area is located certify in writing that
such government and State, respectively, have re-
pealed or otherwise will not enforce within the area,
if such area is designated as a renewal community—
‘‘(A) licensing requirements for occupations
that do not ordinarily require a professional de-
gree,
‘‘(B) zoning restrictions on home-based
businesses which do not create a public nuisance,
‘‘(C) permit requirements for street vendors
who do not create a public nuisance,
‘‘(D) zoning or other restrictions that im-
pede the formation of schools or child care cen-
ters, and
‘‘(E) franchises or other restrictions on com-
petition for businesses providing public services,
including but not limited to taxicabs, jitneys,
cable television, or trash hauling,
except to the extent that such regulation of businesses
and occupations is necessary for and well-tailored to
the protection of health and safety.
‘‘(e) COORDINATION WITH TREATMENT OF EMPOWER-
MENT ZONES AND ENTERPRISE COMMUNITIES.—For pur-
poses of this title, if there are in effect with respect to the
same area both—
‘‘(1) a designation as a renewal community, and
‘‘(2) a designation as an empowerment zone or
enterprise community,
both of such designations shall be given full effect with re-
spect to such area.
‘‘(f) DEFINITIONS AND SPECIAL RULES.—For pur-
poses of this subchapter—
‘‘(1) GOVERNMENTS.—If more than one govern-
ment seeks to nominate an area as a renewal commu-
nity, any reference to, or requirement of, this section
shall apply to all such governments.
‘‘(2) STATE.—The term ‘State’ includes Puerto
Rico, the Virgin Islands of the United States, Guam,
American Samoa, the Northern Mariana Islands, and
any other possession of the United States.
‘‘(3) LOCAL GOVERNMENT.—The term ‘local gov-
ernment’ means—
‘‘(A) any county, city, town, township, par-
ish, village, or other general purpose political
subdivision of a State,
‘‘(B) any combination of political subdivi-
sions described in subparagraph (A) recognized
by the Secretary of Housing and Urban Develop-
ment, and
‘‘(C) the District of Columbia.
‘‘(4) APPLICATION OF RULES RELATING TO CEN-
SUS TRACTS AND CENSUS DATA.—The rules of sections
1392(b)(4) and 1393(a)(9) shall apply.
‘‘PART II—RENEWAL COMMUNITY CAPITAL GAIN;
RENEWAL COMMUNITY BUSINESS
‘‘Sec. 1400F. Renewal community capital gain.
‘‘Sec. 1400G. Renewal community business defined.
‘‘SEC. 1400F. RENEWAL COMMUNITY CAPITAL GAIN.
‘‘(a) GENERAL RULE.—Gross income does not include
any qualified capital gain recognized on the sale or ex-
change of a qualified community asset held for more than
5 years.
‘‘(b) QUALIFIED COMMUNITY ASSET.—For purposes of
this section—
‘‘(1) IN GENERAL.—The term ‘qualified commu-
nity asset’ means—
‘‘(A) any qualified community stock,
‘‘(B) any qualified community partnership
interest, and
‘‘(C) any qualified community business
property.
‘‘(2) QUALIFIED COMMUNITY STOCK.—
‘‘(A) IN GENERAL.—Except as provided in
subparagraph (B), the term ‘qualified commu-
nity stock’ means any stock in a domestic cor-
poration if—
‘‘(i) such stock is acquired by the tax-
payer after December 31, 1999, and before
January 1, 2007, at its original issue (di-
rectly or through an underwriter) from the
corporation solely in exchange for cash,
‘‘(ii) as of the time such stock was
issued, such corporation was a renewal
community business (or, in the case of a
new corporation, such corporation was
being organized for purposes of being a re-
newal community business), and
‘‘(iii) during substantially all of the
taxpayer’s holding period for such stock,
such corporation qualified as a renewal
community business.
‘‘(B) REDEMPTIONS.—A rule similar to the
rule of section 1202(c)(3) shall apply for pur-
poses of this paragraph.
‘‘(3) QUALIFIED COMMUNITY PARTNERSHIP IN-
TEREST.—The term ‘qualified community partner-
ship interest’ means any interest in a partnership
if—
‘‘(A) such interest is acquired by the tax-
payer after December 31, 1999, and before Janu-
ary 1, 2007,
‘‘(B) as of the time such interest was ac-
quired, such partnership was a renewal commu-
nity business (or, in the case of a new partner-
ship, such partnership was being organized for
purposes of being a renewal community busi-
ness), and
‘‘(C) during substantially all of the tax-
payer’s holding period for such interest, such
partnership qualified as a renewal community
business.
A rule similar to the rule of paragraph (2)(B) shall
apply for purposes of this paragraph.
‘‘(4) QUALIFIED
COMMUNITY
BUSINESS
PROP-
ERTY.—
‘‘(A) IN
GENERAL.—The term ‘qualified
community business property’ means tangible
property if—
‘‘(i) such property was acquired by the
taxpayer by purchase (as defined in section
179(d)(2)) after December 31, 1999, and be-
fore January 1, 2007,
‘‘(ii) the original use of such property
in the renewal community commences with
the taxpayer, and
‘‘(iii) during substantially all of the
taxpayer’s holding period for such property,
substantially all of the use of such property
was in a renewal community business of the
taxpayer.
‘‘(B) SPECIAL RULE FOR SUBSTANTIAL IM-
PROVEMENTS.—The requirements of clauses (i)
and (ii) of subparagraph (A) shall be treated as
satisfied with respect to—
‘‘(i) property which is substantially
improved (within the meaning of section
1400B(b)(4)(B)(ii)) by the taxpayer before
January 1, 2007, and
‘‘(ii) any land on which such property
is located.
‘‘(c) CERTAIN RULES TO APPLY.—Rules similar to the
rules of paragraphs (5), (6), and (7) of subsection (b), and
subsections (e), (f), and (g), of section 1400B shall apply
for purposes of this section.
‘‘SEC. 1400G. RENEWAL COMMUNITY BUSINESS DEFINED.
‘‘For purposes of this part, the term ‘renewal commu-
nity business’ means any entity or proprietorship which
would be a qualified business entity or qualified proprietor-
ship under section 1397B if—
‘‘(1) references to renewal communities were sub-
stituted for references to empowerment zones in such
section; and
‘‘(2) ‘80 percent’ were substituted for ‘50 percent’
in subsections (b)(2) and (c)(1) of such section.
‘‘PART III—FAMILY DEVELOPMENT ACCOUNTS
‘‘Sec. 1400H. Family development accounts for renewal community
EITC recipients.
‘‘Sec. 1400I. Demonstration program to provide matching contribu-
tions to family development accounts in certain re-
newal communities.
‘‘Sec. 1400J. Designation of earned income tax credit payments for
deposit to family development account.
‘‘SEC. 1400H. FAMILY DEVELOPMENT ACCOUNTS FOR RE-
NEWAL COMMUNITY EITC RECIPIENTS.
‘‘(a) ALLOWANCE OF DEDUCTION.—
‘‘(1) IN GENERAL.—There shall be allowed as a
deduction—
‘‘(A) in the case of a qualified individual,
the amount paid in cash for the taxable year by
such individual to any family development ac-
count for such individual’s benefit, and
‘‘(B) in the case of any person other than
a qualified individual, the amount paid in cash
for the taxable year by such person to any fam-
ily development account for the benefit of a
qualified individual but only if the amount so
paid is designated for purposes of this section by
such individual.
No deduction shall be allowed under this paragraph
for any amount deposited in a family development
account under section 1400I (relating to demonstra-
tion program to provide matching amounts in re-
newal communities).
‘‘(2) LIMITATION.—
‘‘(A) IN GENERAL.—The amount allowable
as a deduction to any individual for any taxable
year by reason of paragraph (1)(A) shall not ex-
ceed the lesser of—
‘‘(i) $2,000, or
‘‘(ii) an amount equal to the com-
pensation includible in the individual’s
gross income for such taxable year.
‘‘(B) PERSONS DONATING TO FAMILY DE-
VELOPMENT
ACCOUNTS
OF
OTHERS.—The
amount which may be designated under para-
graph (1)(B) by any qualified individual for
any taxable year of such individual shall not ex-
ceed $1,000.
‘‘(3) SPECIAL RULES FOR CERTAIN MARRIED IN-
DIVIDUALS.—Rules similar to rules of section 219(c)
shall apply to the limitation in paragraph (2)(A).
‘‘(4) COORDINATION WITH IRA’S.—No deduction
shall be allowed under this section to any person by
reason of a payment to an account for the benefit of
a qualified individual if any amount is paid into an
individual retirement account (including a Roth
IRA) for the benefit of such individual.
‘‘(5) ROLLOVERS.—No deduction shall be allowed
under this section with respect to any rollover con-
tribution.
‘‘(b) TAX TREATMENT OF DISTRIBUTIONS.—
‘‘(1) INCLUSION
OF
AMOUNTS
IN
GROSS
IN-
COME.—Except as otherwise provided in this sub-
section, any amount paid or distributed out of a fam-
ily development account shall be included in gross in-
come by the payee or distributee, as the case may be.
‘‘(2) EXCLUSION OF QUALIFIED FAMILY DEVEL-
OPMENT
DISTRIBUTIONS.—Paragraph (1) shall not
apply to any qualified family development distribu-
tion.
‘‘(c) QUALIFIED FAMILY DEVELOPMENT DISTRIBU-
TION.—For purposes of this section—
‘‘(1) IN GENERAL.—The term ‘qualified family
development distribution’ means any amount paid or
distributed out of a family development account
which would otherwise be includible in gross income,
to the extent that such payment or distribution is
used exclusively to pay qualified family development
expenses for the holder of the account or the spouse or
dependent (as defined in section 152) of such holder.
‘‘(2) QUALIFIED
FAMILY
DEVELOPMENT
EX-
PENSES.—The term ‘qualified family development ex-
penses’ means any of the following:
‘‘(A) Qualified higher education expenses.
‘‘(B) Qualified first-time homebuyer costs.
‘‘(C) Qualified business capitalization costs.
‘‘(D) Qualified medical expenses.
‘‘(E) Qualified rollovers.
‘‘(3) 
QUALIFIED
HIGHER
EDUCATION
EX-
PENSES.—
‘‘(A) IN
GENERAL.—The term ‘qualified
higher education expenses’ has the meaning given
such term by section 72(t)(7), determined by
treating postsecondary vocational educational
schools as eligible educational institutions.
‘‘(B) POSTSECONDARY
VOCATIONAL
EDU-
CATION SCHOOL.—The term ‘postsecondary voca-
tional educational school’ means an area voca-
tional education school (as defined in subpara-
graph (C) or (D) of section 521(4) of the Carl D.
Perkins Vocational and Applied Technology
Education Act (20 U.S.C. 2471(4))) which is in
any State (as defined in section 521(33) of such
Act), as such sections are in effect on the date of
the enactment of this section.
‘‘(C) COORDINATION
WITH
OTHER
BENE-
FITS.—The amount of qualified higher education
expenses for any taxable year shall be reduced as
provided in section 25A(g)(2).
‘‘(4) 
QUALIFIED
FIRST-TIME
HOMEBUYER
COSTS.—The term ‘qualified first-time homebuyer
costs’ means qualified acquisition costs (as defined in
section 72(t)(8) without regard to subparagraph (B)
thereof) with respect to a principal residence (within
the meaning of section 121) for a qualified first-time
homebuyer (as defined in such section).
‘‘(5) 
QUALIFIED
BUSINESS
CAPITALIZATION
COSTS.—
‘‘(A) IN
GENERAL.—The term ‘qualified
business capitalization costs’ means qualified ex-
penditures for the capitalization of a qualified
business pursuant to a qualified plan.
100
‘‘(B) 
QUALIFIED
EXPENDITURES.—The
term ‘qualified expenditures’ means expenditures
included in a qualified plan, including capital,
plant, equipment, working capital, and inven-
tory expenses.
‘‘(C) 
QUALIFIED
BUSINESS.—The 
term
‘qualified business’ means any business that does
not contravene any law.
‘‘(D) QUALIFIED PLAN.—The term ‘quali-
fied plan’ means a business plan which meets
such requirements as the Secretary may specify.
‘‘(6) QUALIFIED MEDICAL EXPENSES.—The term
‘qualified medical expenses’ means any amount paid
during the taxable year, not compensated for by in-
surance or otherwise, for medical care (as defined in
section 213(d)) of the taxpayer, his spouse, or his de-
pendent (as defined in section 152).
‘‘(7) QUALIFIED ROLLOVERS.—The term ‘quali-
fied rollover’ means any amount paid from a family
development account of a taxpayer into another such
account established for the benefit of—
‘‘(A) such taxpayer, or
‘‘(B) any qualified individual who is—
‘‘(i) the spouse of such taxpayer, or
101
‘‘(ii) any dependent (as defined in sec-
tion 152) of the taxpayer.
Rules similar to the rules of section 408(d)(3) shall
apply for purposes of this paragraph.
‘‘(d) TAX TREATMENT OF ACCOUNTS.—
‘‘(1) IN GENERAL.—Any family development ac-
count is exempt from taxation under this subtitle un-
less such account has ceased to be a family develop-
ment account by reason of paragraph (2). Notwith-
standing the preceding sentence, any such account is
subject to the taxes imposed by section 511 (relating
to imposition of tax on unrelated business income of
charitable, etc., organizations). Notwithstanding any
other provision of this title (including chapters 11
and 12), the basis of any person in such an account
is zero.
‘‘(2) LOSS OF EXEMPTION IN CASE OF PROHIB-
ITED TRANSACTIONS.—For purposes of this section,
rules similar to the rules of section 408(e) shall apply.
‘‘(3) OTHER RULES TO APPLY.—Rules similar to
the rules of paragraphs (4), (5), and (6) of section
408(d) shall apply for purposes of this section.
‘‘(e) FAMILY DEVELOPMENT ACCOUNT.—For purposes
of this title, the term ‘family development account’ means
a trust created or organized in the United States for the
102
exclusive benefit of a qualified individual or his bene-
ficiaries, but only if the written governing instrument cre-
ating the trust meets the following requirements:
‘‘(1) Except in the case of a qualified rollover (as
defined in subsection (c)(7))—
‘‘(A) no contribution will be accepted unless
it is in cash, and
‘‘(B) contributions will not be accepted for
the taxable year in excess of $3,000 (determined
without regard to any contribution made under
section 1400I (relating to demonstration pro-
gram to provide matching amounts in renewal
communities)).
‘‘(2) The requirements of paragraphs (2) through
(6) of section 408(a) are met.
‘‘(f) QUALIFIED INDIVIDUAL.—For purposes of this
section, the term ‘qualified individual’ means, for any tax-
able year, an individual—
‘‘(1) who is a bona fide resident of a renewal
community throughout the taxable year, and
‘‘(2) to whom a credit was allowed under section
32 for the preceding taxable year.
‘‘(g) OTHER DEFINITIONS AND SPECIAL RULES.—
‘‘(1) COMPENSATION.—The term ‘compensation’
has the meaning given such term by section 219(f)(1).
103
‘‘(2) MARRIED INDIVIDUALS.—The maximum de-
duction under subsection (a) shall be computed sepa-
rately for each individual, and this section shall be
applied without regard to any community property
laws.
‘‘(3) TIME
WHEN
CONTRIBUTIONS
DEEMED
MADE.—For purposes of this section, a taxpayer shall
be deemed to have made a contribution to a family
development account on the last day of the preceding
taxable year if the contribution is made on account
of such taxable year and is made not later than the
time prescribed by law for filing the return for such
taxable year (not including extensions thereof).
‘‘(4) EMPLOYER
PAYMENTS; 
CUSTODIAL
AC-
COUNTS.—Rules similar to the rules of sections
219(f)(5) and 408(h) shall apply for purposes of this
section.
‘‘(5) REPORTS.—The trustee of a family develop-
ment account shall make such reports regarding such
account to the Secretary and to the individual for
whom the account is maintained with respect to con-
tributions (and the years to which they relate), dis-
tributions, and such other matters as the Secretary
may require under regulations. The reports required
by this paragraph—
104
‘‘(A) shall be filed at such time and in such
manner as the Secretary prescribes in such regu-
lations, and
‘‘(B) shall be furnished to individuals—
‘‘(i) not later than January 31 of the
calendar year following the calendar year to
which such reports relate, and
‘‘(ii) in such manner as the Secretary
prescribes in such regulations.
‘‘(6) INVESTMENT IN COLLECTIBLES TREATED AS
DISTRIBUTIONS.—Rules similar to the rules of section
408(m) shall apply for purposes of this section.
‘‘(h) PENALTY FOR DISTRIBUTIONS NOT USED FOR
QUALIFIED FAMILY DEVELOPMENT EXPENSES.—
‘‘(1) IN GENERAL.—If any amount is distributed
from a family development account and is not used
exclusively to pay qualified family development ex-
penses for the holder of the account or the spouse or
dependent (as defined in section 152) of such holder,
the tax imposed by this chapter for the taxable year
of such distribution shall be increased by the sum
of—
‘‘(A) 100 percent of the portion of such
amount which is includible in gross income and
is attributable to amounts contributed under sec-
105
tion 1400I (relating to demonstration program
to provide matching amounts in renewal com-
munities), and
‘‘(B) 10 percent of the portion of such
amount which is includible in gross income and
is not described in subparagraph (A).
For purposes of this subsection, distributions which
are includable in gross income shall be treated as at-
tributable to amounts contributed under section 1400I
to the extent thereof. For purposes of the preceding
sentence, all family development accounts of an indi-
vidual shall be treated as one account.
‘‘(2) EXCEPTION FOR CERTAIN DISTRIBUTIONS.—
Paragraph (1) shall not apply to distributions which
are—
‘‘(A) made on or after the date on which the
account holder attains age 591⁄2,
‘‘(B) made to a beneficiary (or the estate of
the account holder) on or after the death of the
account holder, or
‘‘(C) attributable to the account holder’s
being disabled within the meaning of section
72(m)(7).
‘‘(i) TERMINATION.—No deduction shall be allowed
under this section for any amount paid to a family develop-
106
ment account for any taxable year beginning after Decem-
ber 31, 2006.
‘‘SEC. 1400I. DEMONSTRATION PROGRAM TO PROVIDE
MATCHING CONTRIBUTIONS TO FAMILY DE-
VELOPMENT 
ACCOUNTS 
IN 
CERTAIN 
RE-
NEWAL COMMUNITIES.
‘‘(a) DESIGNATION.—
‘‘(1) DEFINITIONS.—For purposes of this section,
the term ‘FDA matching demonstration area’ means
any renewal community—
‘‘(A) which is nominated under this section
by each of the local governments and States
which nominated such community for designa-
tion as a renewal community under section
1400E(a)(1)(A), and
‘‘(B) which the Secretary of Housing and
Urban Development designates as an FDA
matching demonstration area after consultation
with—
‘‘(i) the Secretaries of Agriculture,
Commerce, Labor, and the Treasury, the
Director of the Office of Management and
Budget, and the Administrator of the Small
Business Administration, and
107
‘‘(ii) in the case of a community on an
Indian reservation, the Secretary of the In-
terior.
‘‘(2) NUMBER OF DESIGNATIONS.—
‘‘(A) IN GENERAL.—The Secretary of Hous-
ing and Urban Development may designate not
more than 5 communities as FDA matching
demonstration areas.
‘‘(B) MINIMUM
DESIGNATION
IN
RURAL
AREAS.—Of the areas designated under subpara-
graph (A), at least 2 must be areas described in
section 1400E(a)(2)(B).
‘‘(3) LIMITATIONS ON DESIGNATIONS.—
‘‘(A) PUBLICATION OF REGULATIONS.—The
Secretary of Housing and Urban Development
shall prescribe by regulation no later than 4
months after the date of the enactment of this
section, after consultation with the officials de-
scribed in paragraph (1)(B)—
‘‘(i) the procedures for nominating a
renewal 
community 
under 
paragraph
(1)(A) (including procedures for coordinat-
ing such nomination with the nomination
of an area for designation as a renewal
community under section 1400E), and
108
‘‘(ii) the manner in which nominated
renewal communities will be evaluated for
purposes of this section.
‘‘(B) TIME LIMITATIONS.—The Secretary of
Housing and Urban Development may designate
renewal communities as FDA matching dem-
onstration areas only during the 24-month pe-
riod beginning on the first day of the first month
following the month in which the regulations de-
scribed in subparagraph (A) are prescribed.
‘‘(4) DESIGNATION BASED ON DEGREE OF POV-
ERTY, ETC.—The rules of section 1400E(a)(3) shall
apply for purposes of designations of FDA matching
demonstration areas under this section.
‘‘(b) PERIOD FOR WHICH DESIGNATION IS IN EF-
FECT.—Any designation of a renewal community as an
FDA matching demonstration area shall remain in effect
during the period beginning on the date of such designation
and ending on the date on which such area ceases to be
a renewal community.
‘‘(c) MATCHING CONTRIBUTIONS TO FAMILY DEVELOP-
MENT ACCOUNTS.—
‘‘(1) IN GENERAL.—Not less than once each tax-
able year, the Secretary shall deposit (to the extent
provided in appropriation Acts) into a family devel-
109
opment account of each qualified individual (as de-
fined in section 1400H(f))—
‘‘(A) who is a resident throughout the tax-
able year of an FDA matching demonstration
area, and
‘‘(B) who requests (in such form and man-
ner as the Secretary prescribes) such deposit for
the taxable year,
an amount equal to the sum of the amounts deposited
into all of the family development accounts of such
individual during such taxable year (determined
without regard to any amount contributed under this
section).
‘‘(2) LIMITATIONS.—
‘‘(A) ANNUAL LIMIT.—The Secretary shall
not deposit more than $1000 under paragraph
(1) with respect to any individual for any tax-
able year.
‘‘(B) AGGREGATE
LIMIT.—The Secretary
shall not deposit more than $2000 under para-
graph (1) with respect to any individual for all
taxable years.
‘‘(3) EXCLUSION FROM INCOME.—Except as pro-
vided in section 1400H, gross income shall not in-
110
clude any amount deposited into a family develop-
ment account under paragraph (1).
‘‘(d) NOTICE OF PROGRAM.—The Secretary shall pro-
vide appropriate notice to residents of FDA matching dem-
onstration areas of the availability of the benefits under this
section.
‘‘(e) TERMINATION.—No amount may be deposited
under this section for any taxable year beginning after De-
cember 31, 2006.
‘‘SEC. 1400J. DESIGNATION OF EARNED INCOME TAX CRED-
IT PAYMENTS FOR DEPOSIT TO FAMILY DE-
VELOPMENT ACCOUNT.
‘‘(a) IN GENERAL.—With respect to the return of any
qualified individual (as defined in section 1400H(f)) for the
taxable year of the tax imposed by this chapter, such indi-
vidual may designate that a specified portion (not less than
$1) of any overpayment of tax for such taxable year which
is attributable to the earned income tax credit shall be de-
posited by the Secretary into a family development account
of such individual. The Secretary shall so deposit such por-
tion designated under this subsection.
‘‘(b) MANNER AND TIME OF DESIGNATION.—A des-
ignation under subsection (a) may be made with respect
to any taxable year—
111
‘‘(1) at the time of filing the return of the tax
imposed by this chapter for such taxable year, or
‘‘(2) at any other time (after the time of filing
the return of the tax imposed by this chapter for such
taxable year) specified in regulations prescribed by
the Secretary.
Such designation shall be made in such manner as the Sec-
retary prescribes by regulations.
‘‘(c) PORTION ATTRIBUTABLE
TO EARNED INCOME
TAX CREDIT.—For purposes of subsection (a), an overpay-
ment for any taxable year shall be treated as attributable
to the earned income tax credit to the extent that such over-
payment does not exceed the credit allowed to the taxpayer
under section 32 for such taxable year.
‘‘(d) OVERPAYMENTS TREATED AS REFUNDED.—For
purposes of this title, any portion of an overpayment of tax
designated under subsection (a) shall be treated as being
refunded to the taxpayer as of the last date prescribed for
filing the return of tax imposed by this chapter (determined
without regard to extensions) or, if later, the date the return
is filed.
‘‘(e) TERMINATION.—This section shall not apply to
any taxable year beginning after December 31, 2006.
‘‘PART IV—ADDITIONAL INCENTIVES
‘‘Sec. 1400K. Commercial revitalization credit.
‘‘Sec. 1400L. Increase in expensing under section 179.
112
‘‘SEC. 1400K. COMMERCIAL REVITALIZATION CREDIT.
‘‘(a) GENERAL RULE.—For purposes of section 46, ex-
cept as provided in subsection (e), the commercial revital-
ization credit for any taxable year is an amount equal to
the applicable percentage of the qualified revitalization ex-
penditures with respect to any qualified revitalization
building.
‘‘(b) APPLICABLE PERCENTAGE.—For purposes of this
section—
‘‘(1) IN
GENERAL.—The term ‘applicable per-
centage’ means—
‘‘(A) 20 percent for the taxable year in
which a qualified revitalization building is
placed in service, or
‘‘(B) at the election of the taxpayer, 5 per-
cent for each taxable year in the credit period.
The election under subparagraph (B), once made,
shall be irrevocable.
‘‘(2) CREDIT PERIOD.—
‘‘(A) IN GENERAL.—The term ‘credit period’
means, with respect to any building, the period
of 10 taxable years beginning with the taxable
year in which the building is placed in service.
‘‘(B) APPLICABLE RULES.—Rules similar to
the rules under paragraphs (2) and (4) of section
42(f) shall apply.
113
‘‘(c) QUALIFIED REVITALIZATION BUILDINGS AND EX-
PENDITURES.—For purposes of this section—
‘‘(1) QUALIFIED
REVITALIZATION
BUILDING.—
The term ‘qualified revitalization building’ means
any building (and its structural components) if—
‘‘(A) such building is located in a renewal
community and is placed in service after Decem-
ber 31, 1999,
‘‘(B) a commercial revitalization credit
amount is allocated to the building under sub-
section (e), and
‘‘(C) depreciation (or amortization in lieu
of depreciation) is allowable with respect to the
building.
‘‘(2) 
QUALIFIED
REVITALIZATION
EXPENDI-
TURE.—
‘‘(A) IN GENERAL.—The term ‘qualified re-
vitalization expenditure’ means any amount
properly chargeable to capital account—
‘‘(i) for property for which deprecia-
tion is allowable under section 168 and
which is—
‘‘(I) nonresidential real property,
or
114
‘‘(II) an addition or improvement
to property described in subclause (I),
and
‘‘(ii) in connection with the construc-
tion of any qualified revitalization building
which was not previously placed in service
or in connection with the substantial reha-
bilitation (within the meaning of section
47(c)(1)(C)) of a building which was placed
in service before the beginning of such reha-
bilitation.
‘‘(B) DOLLAR LIMITATION.—The aggregate
amount which may be treated as qualified revi-
talization expenditures with respect to any
qualified revitalization building for any taxable
year shall not exceed the excess of—
‘‘(i) $10,000,000, reduced by
‘‘(ii) any such expenditures with re-
spect to the building taken into account by
the taxpayer or any predecessor in deter-
mining the amount of the credit under this
section for all preceding taxable years.
‘‘(C) CERTAIN
EXPENDITURES
NOT
IN-
CLUDED.—The term ‘qualified revitalization ex-
penditure’ does not include—
115
‘‘(i) STRAIGHT
LINE
DEPRECIATION
MUST
BE
USED.—Any expenditure (other
than with respect to land acquisitions) with
respect to which the taxpayer does not use
the straight line method over a recovery pe-
riod determined under subsection (c) or (g)
of section 168. The preceding sentence shall
not apply to any expenditure to the extent
the alternative depreciation system of sec-
tion 168(g) applies to such expenditure by
reason of subparagraph (B) or (C) of sec-
tion 168(g)(1).
‘‘(ii) ACQUISITION
COSTS.—The costs
of acquiring any building or interest there-
in and any land in connection with such
building to the extent that such costs exceed
30 percent of the qualified revitalization ex-
penditures determined without regard to
this clause.
‘‘(iii) OTHER CREDITS.—Any expendi-
ture which the taxpayer may take into ac-
count in computing any other credit allow-
able under this title unless the taxpayer
elects to take the expenditure into account
only for purposes of this section.
116
‘‘(d) WHEN EXPENDITURES TAKEN INTO ACCOUNT.—
‘‘(1) IN GENERAL.—Qualified revitalization ex-
penditures with respect to any qualified revitalization
building shall be taken into account for the taxable
year in which the qualified revitalization building is
placed in service. For purposes of the preceding sen-
tence, a substantial rehabilitation of a building shall
be treated as a separate building.
‘‘(2) PROGRESS
EXPENDITURE
PAYMENTS.—
Rules similar to the rules of subsections (b)(2) and
(d) of section 47 shall apply for purposes of this sec-
tion.
‘‘(e) LIMITATION ON AGGREGATE CREDITS ALLOW-
ABLE WITH RESPECT
TO BUILDINGS LOCATED
IN
A
STATE.—
‘‘(1) IN GENERAL.—The amount of the credit de-
termined under this section for any taxable year with
respect to any building shall not exceed the commer-
cial revitalization credit amount (in the case of an
amount determined under subsection (b)(1)(B), the
present value of such amount as determined under the
rules of section 42(b)(2)(C)) allocated to such building
under this subsection by the commercial revitalization
credit agency. Such allocation shall be made at the
117
same time and in the same manner as under para-
graphs (1) and (7) of section 42(h).
‘‘(2) 
COMMERCIAL
REVITALIZATION
CREDIT
AMOUNT FOR AGENCIES.—
‘‘(A) IN GENERAL.—The aggregate commer-
cial revitalization credit amount which a com-
mercial revitalization credit agency may allocate
for any calendar year is the amount of the State
commercial revitalization credit ceiling deter-
mined under this paragraph for such calendar
year for such agency.
‘‘(B) STATE COMMERCIAL REVITALIZATION
CREDIT CEILING.—The State commercial revital-
ization credit ceiling applicable to any State—
‘‘(i) for each calendar year after 1999
and before 2007 is $2,000,000 for each re-
newal community in the State, and
‘‘(ii) zero for each calendar year there-
after.
‘‘(C) COMMERCIAL REVITALIZATION CREDIT
AGENCY.—For purposes of this section, the term
‘commercial revitalization credit agency’ means
any agency authorized by a State to carry out
this section.
118
‘‘(f) RESPONSIBILITIES OF COMMERCIAL REVITALIZA-
TION CREDIT AGENCIES.—
‘‘(1) PLANS FOR ALLOCATION.—Notwithstanding
any other provision of this section, the commercial re-
vitalization credit amount with respect to any build-
ing shall be zero unless—
‘‘(A) such amount was allocated pursuant
to a qualified allocation plan of the commercial
revitalization credit agency which is approved
(in accordance with rules similar to the rules of
section 147(f)(2) (other than subparagraph
(B)(ii) thereof)) by the governmental unit of
which such agency is a part, and
‘‘(B) such agency notifies the chief executive
officer (or its equivalent) of the local jurisdiction
within which the building is located of such allo-
cation and provides such individual a reasonable
opportunity to comment on the allocation.
‘‘(2) QUALIFIED ALLOCATION PLAN.—For pur-
poses of this subsection, the term ‘qualified allocation
plan’ means any plan—
‘‘(A) which sets forth selection criteria to be
used to determine priorities of the commercial
revitalization credit agency which are appro-
priate to local conditions,
119
‘‘(B) which considers—
‘‘(i) the degree to which a project con-
tributes to the implementation of a strategic
plan that is devised for a renewal commu-
nity through a citizen participation process,
‘‘(ii) the amount of any increase in
permanent, full-time employment by reason
of any project, and
‘‘(iii) the active involvement of resi-
dents and nonprofit groups within the re-
newal community, and
‘‘(C) which provides a procedure that the
agency (or its agent) will follow in monitoring
compliance with this section.
‘‘(g) TERMINATION.—This section shall not apply to
any building placed in service after December 31, 2006.
‘‘SEC. 1400L. INCREASE IN EXPENSING UNDER SECTION 179.
‘‘(a) GENERAL RULE.—In the case of a renewal com-
munity business (as defined in section 1400G), for purposes
of section 179—
‘‘(1) the limitation under section 179(b)(1) shall
be increased by the lesser of—
‘‘(A) $35,000, or
120
‘‘(B) the cost of section 179 property which
is qualified renewal property placed in service
during the taxable year, and
‘‘(2) the amount taken into account under sec-
tion 179(b)(2) with respect to any section 179 prop-
erty which is qualified renewal property shall be 50
percent of the cost thereof.
‘‘(b) RECAPTURE.—Rules similar to the rules under
section 179(d)(10) shall apply with respect to any qualified
renewal property which ceases to be used in a renewal com-
munity by a renewal community business.
‘‘(c) QUALIFIED RENEWAL PROPERTY.—For purposes
of this section—
‘‘(1) IN GENERAL.—The term ‘qualified renewal
property’ means any property to which section 168
applies (or would apply but for section 179) if—
‘‘(A) such property was acquired by the tax-
payer by purchase (as defined in section
179(d)(2)) after December 31, 1999, and before
January 1, 2007, and
‘‘(B) such property would be qualified zone
property (as defined in section 1397C) if ref-
erences to renewal communities were substituted
for references to empowerment zones in section
1397C.
121
‘‘(2) CERTAIN RULES TO APPLY.—The rules of
subsections (a)(2) and (b) of section 1397C shall
apply for purposes of this section.’’
SEC. 603. EXTENSION OF EXPENSING OF ENVIRONMENTAL
REMEDIATION COSTS TO RENEWAL COMMU-
NITIES.
(a) EXTENSION.—Paragraph (2) of section 198(c) (de-
fining targeted area) is amended by redesignating subpara-
graph (C) as subparagraph (D) and by inserting after sub-
paragraph (B) the following new subparagraph:
‘‘(C) RENEWAL COMMUNITIES INCLUDED.—
Except as provided in subparagraph (B), such
term shall include a renewal community (as de-
fined in section 1400E).’’
(b) EXTENSION OF TERMINATION DATE FOR RENEWAL
COMMUNITIES.—Subsection (h) of section 198 is amended
by inserting before the period ‘‘(December 31, 2006, in the
case of a renewal community, as defined in section
1400E).’’
SEC. 604. EXTENSION OF WORK OPPORTUNITY TAX CREDIT
FOR RENEWAL COMMUNITIES
(a) EXTENSION.—Subsection (c) of section 51 (relating
to termination) is amended by adding at the end the follow-
ing new paragraph:
122
‘‘(5) EXTENSION OF CREDIT FOR RENEWAL COM-
MUNITIES.—
‘‘(A) IN GENERAL.—In the case of an indi-
vidual who begins work for the employer after
the date contained in paragraph (4)(B), for pur-
poses of section 38—
‘‘(i) in lieu of applying subsection (a),
the amount of the work opportunity credit
determined under this section for the tax-
able year shall be equal to—
‘‘(I) 15 percent of the qualified
first-year wages for such year, and
‘‘(II) 30 percent of the qualified
second-year wages for such year,
‘‘(ii) subsection (b)(3) shall be applied
by substituting ‘$10,000’ for ‘$6,000’,
‘‘(iii) paragraph (4)(B) shall be ap-
plied by substituting for the date contained
therein the last day for which the designa-
tion under section 1400E of the renewal
community referred to in subparagraph
(B)(i) is in effect, and
‘‘(iv) rules similar to the rules of sec-
tion 51A(b)(5)(C) shall apply.
123
‘‘(B) QUALIFIED FIRST- AND SECOND-YEAR
WAGES.—For purposes of subparagraph (A)—
‘‘(i) IN GENERAL.—The term ‘qualified
wages’ means, with respect to each 1-year
period referred to in clause (ii) or (iii), as
the case may be, the wages paid or incurred
by the employer during the taxable year to
any individual but only if—
‘‘(I) the employer is engaged in a
trade or business in a renewal commu-
nity throughout such 1-year period,
‘‘(II) the principal place of abode
of such individual is in such renewal
community throughout such 1-year pe-
riod, and
‘‘(III) substantially all of the serv-
ices which such individual performs for
the employer during such 1-year period
are performed in such renewal commu-
nity.
‘‘(ii) QUALIFIED FIRST-YEAR WAGES.—
The term ‘qualified first-year wages’ means,
with respect to any individual, qualified
wages attributable to service rendered dur-
ing the 1-year period beginning with the
124
day the individual begins work for the em-
ployer.
‘‘(iii) 
QUALIFIED
SECOND-YEAR
WAGES.—The term ‘qualified second-year
wages’ means, with respect to any individ-
ual, qualified wages attributable to service
rendered during the 1-year period beginning
on the day after the last day of the 1-year
period with respect to such individual deter-
mined under clause (ii).’’
(b) CONGRUENT TREATMENT OF RENEWAL COMMU-
NITIES AND ENTERPRISE ZONES FOR PURPOSES OF YOUTH
RESIDENCE REQUIREMENTS.—
(1) HIGH-RISK YOUTH.—Subparagraphs (A)(ii)
and (B) of section 51(d)(5) are each amended by
striking ‘‘empowerment zone or enterprise commu-
nity’’ and inserting ‘‘empowerment zone, enterprise
community, or renewal community’’.
(2) QUALIFIED
SUMMER
YOUTH
EMPLOYEE.—
Clause (iv) of section 51(d)(7)(A) is amended by
striking ‘‘empowerment zone or enterprise commu-
nity’’ and inserting ‘‘empowerment zone, enterprise
community, or renewal community’’.
125
(3) HEADINGS.—Paragraphs (5)(B) and (7)(C)
of section 51(d) are each amended by inserting ‘‘OR
COMMUNITY’’ in the heading after ‘‘ZONE’’.
SEC. 605. CONFORMING AND CLERICAL AMENDMENTS.
(a) DEDUCTION FOR CONTRIBUTIONS TO FAMILY DE-
VELOPMENT ACCOUNTS ALLOWABLE WHETHER OR NOT
TAXPAYER ITEMIZES.—Subsection (a) of section 62 (relat-
ing to adjusted gross income defined) is amended by insert-
ing after paragraph (17) the following new paragraph:
‘‘(18) FAMILY
DEVELOPMENT
ACCOUNTS.—The
deduction allowed by section 1400H(a)(1)(A).’’
(b) TAX ON EXCESS CONTRIBUTIONS.—
(1) TAX
IMPOSED.—Subsection (a) of section
4973 is amended by striking ‘‘or’’ at the end of para-
graph (3), adding ‘‘or’’ at the end of paragraph (4),
and inserting after paragraph (4) the following new
paragraph:
‘‘(5) a family development account (within the
meaning of section 1400H(e)),’’.
(2) EXCESS
CONTRIBUTIONS.—Section 4973 is
amended by adding at the end the following new sub-
section:
‘‘(g) FAMILY DEVELOPMENT ACCOUNTS.—For pur-
poses of this section, in the case of a family development
account, the term ‘excess contributions’ means the sum of—
126
‘‘(1) the excess (if any) of—
‘‘(A) the amount contributed for the taxable
year to the account (other than a qualified roll-
over, as defined in section 1400H(c)(7), or a con-
tribution under section 1400I), over
‘‘(B) the amount allowable as a deduction
under section 1400H for such contributions, and
‘‘(2) the amount determined under this sub-
section for the preceding taxable year reduced by the
sum of—
‘‘(A) the distributions out of the account for
the taxable year which were included in the gross
income of the payee under section 1400H(b)(1),
‘‘(B) the distributions out of the account for
the taxable year to which rules similar to the
rules of section 408(d)(5) apply by reason of sec-
tion 1400H(d)(3), and
‘‘(C) the excess (if any) of the maximum
amount allowable as a deduction under section
1400H for the taxable year over the amount con-
tributed to the account for the taxable year (other
than a contribution under section 1400I).
For purposes of this subsection, any contribution which is
distributed from the family development account in a dis-
tribution to which rules similar to the rules of section
127
408(d)(4) apply by reason of section 1400H(d)(3) shall be
treated as an amount not contributed.’’
(c) TAX
ON PROHIBITED TRANSACTIONS.—Section
4975 is amended—
(1) by adding at the end of subsection (c) the fol-
lowing new paragraph:
‘‘(6) SPECIAL RULE FOR FAMILY DEVELOPMENT
ACCOUNTS.—An individual for whose benefit a family
development account is established and any contribu-
tor to such account shall be exempt from the tax im-
posed by this section with respect to any transaction
concerning such account (which would otherwise be
taxable under this section) if, with respect to such
transaction, the account ceases to be a family develop-
ment account by reason of the application of section
1400H(d)(2) to such account.’’, and
(2) in subsection (e)(1), by striking ‘‘or’’ at the
end of subparagraph (E), by redesignating subpara-
graph (F) as subparagraph (G), and by inserting
after subparagraph (E) the following new subpara-
graph:
‘‘(F) a family development account de-
scribed in section 1400H(e), or’’.
128
(d) INFORMATION RELATING TO CERTAIN TRUSTS AND
ANNUITY PLANS.—Subsection (c) of section 6047 is amend-
ed—
(1) by inserting ‘‘or section 1400H’’ after ‘‘sec-
tion 219’’, and
(2) by inserting ‘‘, of any family development
account described in section 1400H(e),’’, after ‘‘sec-
tion 408(a)’’.
(e) INSPECTION OF APPLICATIONS FOR TAX EXEMP-
TION.—Clause (i) of section 6104(a)(1)(B) is amended by
inserting ‘‘a family development account described in sec-
tion 1400H(e),’’ after ‘‘section 408(a),’’.
(f) FAILURE TO PROVIDE REPORTS ON FAMILY DE-
VELOPMENT ACCOUNTS.—Paragraph (2) of section 6693(a)
is amended by striking ‘‘and’’ at the end of subparagraph
(C), by striking the period and inserting ‘‘, and’’ at the
end of subparagraph (D), and by adding at the end the
following new subparagraph:
‘‘(E) section 1400H(g)(6) (relating to fam-
ily development accounts).’’
(g) CONFORMING AMENDMENTS REGARDING COMMER-
CIAL REVITALIZATION CREDIT.—
(1) Section 46 (relating to investment credit) is
amended by striking ‘‘and’’ at the end of paragraph
(2), by striking the period at the end of paragraph (3)
129
and inserting ‘‘, and’’, and by adding at the end the
following new paragraph:
‘‘(4) the commercial revitalization credit pro-
vided under section 1400K.’’
(2) Section 39(d) is amended by adding at the
end the following new paragraph:
‘‘(9) NO CARRYBACK OF SECTION 1400K CREDIT
BEFORE DATE OF ENACTMENT.—No portion of the un-
used business credit for any taxable year which is at-
tributable to any commercial revitalization credit de-
termined under section 1400K may be carried back to
a taxable year ending before the date of the enactment
of section 1400K.’’
(3) Subparagraph (B) of section 48(a)(2) is
amended by inserting ‘‘or commercial revitalization’’
after ‘‘rehabilitation’’ each place it appears in the
text and heading.
(4) Subparagraph (C) of section 49(a)(1) 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 fol-
lowing new clause:
‘‘(iv) the portion of the basis of any
qualified revitalization building attributable
to qualified revitalization expenditures.’’
130
(5) Paragraph (2) of section 50(a) is amended
by inserting ‘‘or 1400K(d)(2)’’ after ‘‘section 47(d)’’
each place it appears.
(6) Subparagraph (A) of section 50(a)(2) is
amended by inserting ‘‘or qualified revitalization
building (respectively)’’ after ‘‘qualified rehabilitated
building’’.
(7) Subparagraph (B) of section 50(a)(2) is
amended by adding at the end the following new sen-
tence: ‘‘A similar rule shall apply for purposes of sec-
tion 1400K.’’
(8) Paragraph (2) of section 50(b) is amended by
striking ‘‘and’’ at the end of subparagraph (C), by
striking the period at the end of subparagraph (D)
and inserting ‘‘; and’’, and by adding at the end the
following new subparagraph:
‘‘(E) a qualified revitalization building (as
defined in section 1400K) to the extent of the
portion of the basis which is attributable to
qualified revitalization expenditures (as defined
in section 1400K).’’
(9) The last sentence of section 50(b)(3) is
amended to read as follows: ‘‘If any qualified reha-
bilitated building or qualified revitalization building
is used by the tax-exempt organization pursuant to a
131
lease, this paragraph shall not apply for purposes of
determining the amount of the rehabilitation credit or
the commercial revitalization credit.’’
(10) Subparagraph (C) of section 50(b)(4) is
amended—
(A) by inserting ‘‘or commercial revitaliza-
tion’’ after ‘‘rehabilitated’’ in the text and head-
ing, and
(B) by inserting ‘‘or commercial revitaliza-
tion’’ after ‘‘rehabilitation’’.
(11) Subparagraph (C) of section 469(i)(3) is
amended—
(A) by inserting ‘‘or section 1400K’’ after
‘‘section 42’’; and
(B) by striking ‘‘CREDIT’’ in the heading
and inserting ‘‘AND
COMMERCIAL
REVITALIZA-
TION CREDITS’’.
(h) CLERICAL
AMENDMENTS.—The table of sub-
chapters for chapter 1 is amended by adding at the end
the following new item:
‘‘Subchapter X. Renewal Communities.’’
SEC. 606. EVALUATION AND REPORTING REQUIREMENTS.
Not later than the close of the fourth calendar year
after the year in which the Secretary of Housing and Urban
Development first designates an area as a renewal commu-
nity under section 1400E of the Internal Revenue Code of
132
1986, and at the close of each fourth calendar year there-
after, such Secretary shall prepare and submit to the Con-
gress a report on the effects of such designations in stimulat-
ing the creation of new jobs, particularly for disadvantaged
workers and long-term unemployed individuals, and pro-
moting the revitalization of economically distressed areas.