‘‘(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 ‘40 
percent’ for ‘20 percent’ with respect to qualified re-
habilitation expenditures not over $1,000,000, and 
‘20 percent’ with respect to qualified rehabilitation 
expenditures of over $1,000,000. 
‘‘(2) SMALLER PROJECT DEFINED.—For pur-
poses of this section, the term ‘smaller project’ 
means any qualified rehabilitated building or portion 
thereof as to which— 
‘‘(A) the qualified rehabilitation expendi-
tures reported by the taxpayer for purposes of 
calculating the credit under this section are not 
over $2,000,000, except that for purposes of 
making this determination, qualified rehabilita-
tion expenditures attributable to the provisions 
of subsection (c)(2)(E) shall be disregarded, 
and 
‘‘(B) no credit was allowable under this 
section during any of the two prior taxable 
years, provided that this subparagraph shall not 
apply to any building as to which the election 
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provided for in subsection (d)(5) shall have 
been made. 
‘‘(3) COORDINATION WITH SUBSECTION (d).— 
With respect to any building as to which the election 
provided for in subsection (d)(5) shall have been 
made, such building shall be deemed a smaller 
project only if the qualified rehabilitation expendi-
tures reported by the taxpayer for purposes of calcu-
lating the credit under this section with respect to 
the taxable years to which such election shall apply 
are, in the aggregate, not over $2,000,000.’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to property placed in service after 
the date of the enactment of this Act. 
SEC. 5. USE FOR LODGING NOT TO DISQUALIFY FOR REHA-
BILITATION CREDIT PROPERTY WHICH IS 
NOT A CERTIFIED HISTORIC STRUCTURE. 
(a) IN GENERAL.—Subparagraph (C) of section 
50(b)(2) of the Internal Revenue Code of 1986 (relating 
to property eligible for the investment credit) is amended 
by striking ‘‘certified historic structure’’ and inserting 
‘‘qualified rehabilitated building’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to property placed in service after 
the date of the enactment of this Act. 
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SEC. 6. DATE BY WHICH BUILDING MUST BE FIRST PLACED 
IN SERVICE. 
(a) IN GENERAL.—Subparagraph (B) of section 
47(c)(1) of the Internal Revenue Code of 1986 (relating 
to the date by which building must be first placed in serv-
ice) is amended— 
(1) by striking ‘‘BUILDING
MUST
BE
FIRST 
PLACED IN SERVICE BEFORE 1936’’ and inserting 
‘‘DATE
BY
WHICH
BUILDING
MUST
FIRST
BE 
PLACED IN SERVICE’’, and 
(2) by striking ‘‘before 1936’’ at the end of the 
subparagraph and inserting ‘‘no less than 50 years 
prior to the year in which qualified rehabilitation ex-
penditures are taken into account under subsection 
(b)(1)’’. 
(b) EFFECTIVE DATE.—The amendments made by 
section shall apply to property placed in service after the 
date of the enactment of this Act. 
SEC. 7. MODIFICATIONS REGARDING CERTAIN TAX-EXEMPT 
USE PROPERTY. 
(a) 
IN
GENERAL.—Clause 
(I) 
of 
section 
47(c)(2)(B)(v) of the Internal Revenue Code of 1986 (re-
lating to tax-exempt use property) is amended by striking 
‘‘).’’ at the end and inserting ‘‘, except that for purposes 
of this clause, ‘50 percent’ shall be substituted for ‘35 per-
cent’ in applying section 168(h)(1)(B)(iii)).’’. 
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