H. R. 2488—64 
A rule similar to the rule of paragraph (2)(B) shall apply 
for purposes of this paragraph. 
‘‘(4) QUALIFIED COMMUNITY BUSINESS PROPERTY.— 
‘‘(A) IN GENERAL.—The term ‘qualified community busi-
ness 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, 2000, and before January 1, 2008; 
‘‘(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 IMPROVEMENTS.— 
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, 2008; 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 community busi-
ness’ means any entity or proprietorship which would be a qualified 
business entity or qualified proprietorship under section 1397B 
if— 
‘‘(1) references to renewal communities were substituted 
for references to empowerment zones in such section; and 
‘‘(2) ‘80 percent’ were substituted for ‘50 percent’ in sub-
sections (b)(2) and (c)(1) of such section. 
‘‘PART III—FAMILY DEVELOPMENT ACCOUNTS 
‘‘Sec. 1400H. Family development accounts for renewal community EITC re-
cipients. 
‘‘Sec. 1400I. Designation of earned income tax credit payments for deposit 
to family development account. 
‘‘SEC. 1400H. FAMILY DEVELOPMENT ACCOUNTS FOR RENEWAL 
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 account for such individual’s ben-
efit; 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 family 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. 
‘‘(2) LIMITATION.— 
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H. R. 2488—65 
‘‘(A) IN GENERAL.—The amount allowable as a deduc-
tion to any individual for any taxable year by reason of 
paragraph (1)(A) shall not exceed the lesser of— 
‘‘(i) $2,000, or 
‘‘(ii) an amount equal to the compensation includ-
ible in the individual’s gross income for such taxable 
year. 
‘‘(B) PERSONS
DONATING
TO
FAMILY
DEVELOPMENT 
ACCOUNTS OF OTHERS.—The amount which may be des-
ignated under paragraph (1)(B) by any qualified individual 
for any taxable year of such individual shall not exceed 
$1,000. 
‘‘(3) SPECIAL RULES FOR CERTAIN MARRIED INDIVIDUALS.— 
Rules similar to rules of section 219(c) shall apply to the limita-
tion in paragraph (2)(A). 
‘‘(4) COORDINATION
WITH
IRAS.—No deduction shall be 
allowed under this section for any taxable year to any person 
by reason of a payment to an account for the benefit of a 
qualified individual if any amount is paid for such taxable 
year 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 contribution. 
‘‘(b) TAX TREATMENT OF DISTRIBUTIONS.— 
‘‘(1) INCLUSION OF AMOUNTS IN GROSS INCOME.—Except as 
otherwise provided in this subsection, any amount paid or 
distributed out of a family development account shall be 
included in gross income by the payee or distributee, as the 
case may be. 
‘‘(2) EXCLUSION OF QUALIFIED FAMILY DEVELOPMENT DIS-
TRIBUTIONS.—Paragraph (1) shall not apply to any qualified 
family development distribution. 
‘‘(c) QUALIFIED FAMILY DEVELOPMENT DISTRIBUTION.—For pur-
poses 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 includ-
ible in gross income, to the extent that such payment or dis-
tribution 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 EXPENSES.—The term 
‘qualified family development expenses’ means any of the fol-
lowing: 
‘‘(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 EXPENSES.— 
‘‘(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
EDUCATION 
SCHOOL.—The term ‘postsecondary vocational educational 
school’ means an area vocational education school (as 
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H. R. 2488—66 
defined in subparagraph (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
BENEFITS.—The 
amount of qualified higher education expenses for any tax-
able 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 acquisi-
tion 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 section 72(t)(8)). 
‘‘(5) QUALIFIED BUSINESS CAPITALIZATION COSTS.— 
‘‘(A) IN GENERAL.—The term ‘qualified business capital-
ization costs’ means qualified expenditures for the capital-
ization of a qualified business pursuant to a qualified plan. 
‘‘(B) QUALIFIED
EXPENDITURES.—The term ‘qualified 
expenditures’ means expenditures included in a qualified 
plan, including capital, plant, equipment, working capital, 
and inventory expenses. 
‘‘(C) QUALIFIED BUSINESS.—The term ‘qualified busi-
ness’ means any trade or business other than any trade 
or business— 
‘‘(i) which consists of the operation of any facility 
described in section 144(c)(6)(B), or 
‘‘(ii) which contravenes any law. 
‘‘(D) QUALIFIED PLAN.—The term ‘qualified 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 insurance or otherwise, for medical 
care (as defined in section 213(d)) of the taxpayer, his spouse, 
or his dependent (as defined in section 152). 
‘‘(7) QUALIFIED ROLLOVERS.—The term ‘qualified 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 
‘‘(ii) any dependent (as defined in section 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 account is 
exempt from taxation under this subtitle unless such account 
has ceased to be a family development account by reason of 
paragraph (2). Notwithstanding 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. 
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H. R. 2488—67 
‘‘(2) LOSS OF EXEMPTION IN CASE OF PROHIBITED TRANS-
ACTIONS.—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 exclusive benefit of a qualified 
individual or his beneficiaries, but only if the written governing 
instrument creating 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. 
‘‘(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 taxable year, an indi-
vidual— 
‘‘(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). 
‘‘(2) MARRIED
INDIVIDUALS.—The maximum deduction 
under subsection (a) shall be computed separately for each 
individual, and this section shall be applied without regard 
to any community property laws. 
‘‘(3) TIME WHEN CONTRIBUTIONS DEEMED MADE.—For pur-
poses 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
ACCOUNTS.—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 development account 
shall make such reports regarding such account to the Secretary 
and to the individual for whom the account is maintained 
with respect to contributions (and the years to which they 
relate), distributions, and such other matters as the Secretary 
may require under regulations. The reports required by this 
paragraph— 
‘‘(A) shall be filed at such time and in such manner 
as the Secretary prescribes in such regulations; 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 
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