133
being refunded to the taxpayer as of the last date pre-
scribed 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.
‘‘Sec. 1400M. Expensing of renewal community environmental re-
mediation costs.
‘‘SEC. 1400K. COMMERCIAL REVITALIZATION TAX CREDIT.
‘‘(a) GENERAL RULE.—For purposes of section 46,
except as provided in subsection (e), the commercial revi-
talization credit for any taxable year is an amount equal
to the applicable percentage of the qualified revitalization
expenditures 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.
134
The election under subparagraph (B), once made,
shall be irrevocable.
‘‘(2) CREDIT PERIOD.—
‘‘(A) IN GENERAL.—The term ‘credit pe-
riod’ 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.
‘‘(c) QUALIFIED REVITALIZATION BUILDINGS AND
EXPENDITURES.—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 the
designation of such renewal community under
section 1400E,
‘‘(B) a commercial revitalization credit
amount is allocated to the building under sub-
section (e), and
135
‘‘(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
revitalization 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
‘‘(II) an addition or improvement
to property described in subclause (I),
‘‘(ii) in connection with the construc-
tion or substantial rehabilitation or recon-
struction of a qualified revitalization build-
ing, or
‘‘(iii) for the acquisition of land in
connection with the qualified revitalization
building.
‘‘(B) DOLLAR
LIMITATION.—The aggre-
gate amount which may be treated as qualified
revitalization expenditures with respect to any
136
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—
‘‘(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
period 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 section 168(g) applies to such expendi-
ture by reason of subparagraph (B) or (C)
of section 168(g)(1).
‘‘(ii) ACQUISITION COSTS.—The costs
of acquiring any building or interest there-
137
in and any land in connection with such
building to the extent that such costs ex-
ceed 30 percent of the qualified revitaliza-
tion expenditures determined without re-
gard 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.
‘‘(5) SUBSTANTIAL
REHABILITATION
OR
RE-
CONSTRUCTION.—For purposes of this subsection, a
rehabilitation or reconstruction shall be treated as a
substantial rehabilitation or reconstruction only if
the qualified revitalization expenditures in connec-
tion with the rehabilitation or reconstruction exceed
25 percent of the fair market value of the building
(and its structural components) immediately before
the rehabilitation or reconstruction.
‘‘(d) WHEN
EXPENDITURES
TAKEN
INTO
AC-
COUNT.—
‘‘(1) IN GENERAL.—Qualified revitalization ex-
penditures with respect to any qualified revitaliza-
tion building shall be taken into account for the tax-
138
able year in which the qualified revitalization build-
ing is placed in service. For purposes of the preced-
ing sentence, a substantial rehabilitation or recon-
struction 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
determined under this section for any taxable year
with respect to any building shall not exceed the
commercial revitalization credit amount (in the case
of 
an 
amount 
determined 
under 
subsection
(b)(1)(B), the present value of such amount as de-
termined under the rules of section 42(b)(2)(C)) al-
located to such building under this subsection by the
commercial revitalization credit agency. Such alloca-
tion shall be made at the same time and in the same
manner as under paragraphs (1) and (7) of section
42(h).
139
‘‘(2) COMMERCIAL
REVITALIZATION
CREDIT
AMOUNT FOR AGENCIES.—
‘‘(A) IN GENERAL.—The aggregate com-
mercial revitalization credit amount which a
commercial revitalization credit agency may al-
locate for any calendar year is the amount of
the State commercial revitalization credit ceil-
ing determined under this paragraph for such
calendar year for such agency.
‘‘(B) STATE COMMERCIAL REVITALIZATION
CREDIT CEILING.—
‘‘(i) IN
GENERAL.—The State com-
mercial revitalization credit ceiling applica-
ble to any State for any calendar year is
$2,000,000 for each renewal community in
the State.
‘‘(ii) SPECIAL RULE WHERE COMMU-
NITY LOCATED IN MORE THAN 1 STATE.—
If a renewal community is located in more
than 1 State, a State’s share of the
amount specified in clause (i) with respect
to such community shall be an amount
that bears the same ratio to $2,000,000 as
the population in the State bears to the
140
population in all States in which such com-
munity is located.
‘‘(iii) OTHER SPECIAL RULES.—Rules
similar to the rules of subparagraphs (D),
(E), (F), and (G) of section 42(h)(3) shall
apply for purposes of this subsection.
‘‘(C) COMMERCIAL REVITALIZATION CRED-
IT AGENCY.—For purposes of this section, the
term ‘commercial revitalization credit agency’
means any agency authorized by a State to
carry out this section.
‘‘(f) RESPONSIBILITIES OF COMMERCIAL REVITAL-
IZATION CREDIT AGENCIES.—
‘‘(1) PLANS FOR ALLOCATION.—Notwithstand-
ing any other provision of this section, the commer-
cial revitalization credit amount with respect to any
building 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
141
‘‘(B) such agency notifies the chief execu-
tive officer (or its equivalent) of the local juris-
diction within which the building is located of
such allocation and provides such individual a
reasonable opportunity to comment on the allo-
cation.
‘‘(2) QUALIFIED ALLOCATION PLAN.—For pur-
poses of this subsection, the term ‘qualified alloca-
tion plan’ means any plan—
‘‘(A) which sets forth selection criteria to
be used to determine priorities of the commer-
cial revitalization credit agency which are ap-
propriate to local conditions,
‘‘(B) which considers—
‘‘(i) the degree to which a project con-
tributes to the implementation of a strate-
gic plan that is devised for a renewal com-
munity 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
142
‘‘(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, 2002.
‘‘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 pur-
poses of section 179—
‘‘(1) the limitation under section 179(b)(1)
shall be increased by the lesser of—
‘‘(A) $35,000, or
‘‘(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 quali-
fied renewal property which ceases to be used in a renewal
community by a renewal community business.
‘‘(c) QUALIFIED RENEWAL PROPERTY.—
143
‘‘(1) GENERAL
RULE.—For purposes of this
section—
‘‘(A) IN
GENERAL.—The term ‘qualified
renewal property’ means any property to which
section 168 applies (or would apply but for sec-
tion 179) if—
‘‘(i) such property was acquired by
the taxpayer by purchase (as defined in
section 179(d)(2)) after December 31,
1999, and before January 1, 2007,
‘‘(ii) the original use of which in a re-
newal community commences with the tax-
payer, and
‘‘(iii) substantially all of the use of
which is in a renewal community and is in
the active conduct of a qualified business
(as defined in section 1400G(d)) by the
taxpayer in such renewal community.
‘‘(B) SPECIAL
RULE
FOR
SUBSTANTIAL
RENOVATIONS.—In the case of any property
which is substantially renovated by the tax-
payer, the requirements of clauses (i) and (ii)
of subparagraph (A) shall be treated as satis-
fied. For purposes of the preceding sentence,
property shall be treated as substantially ren-
144
ovated by the taxpayer only if, during any 24-
month period beginning after the date on which
the designation of the renewal community took
effect, additions to basis with respect to such
property in the hands of the taxpayer exceed
the greater of (i) an amount equal to the ad-
justed basis at the beginning of such 24-month
period in the hands of the taxpayer, or (ii)
$5,000.
‘‘(2) SPECIAL RULES FOR SALE-LEASEBACKS.—
For purposes of paragraph (1)(A)(ii), if property is
sold and leased back by the taxpayer within 3
months after the date such property was originally
placed in service, such property shall be treated as
originally placed in service not earlier than the date
on which such property is used under the leaseback.
‘‘SEC. 1400M. EXPENSING OF RENEWAL COMMUNITY ENVI-
RONMENTAL REMEDIATION COSTS.
‘‘(a) TREATMENT AS EXPENSE.—A taxpayer may
elect to treat any renewal community environmental reme-
diation cost as an expense which is not chargeable to cap-
ital account. Any cost so treated shall be allowable as a
deduction for the taxable year in which the cost is paid
or incurred.
145
‘‘(b) RENEWAL COMMUNITY ENVIRONMENTAL RE-
MEDIATION COST.—For purposes of this section—
‘‘(1) IN GENERAL.—The term ‘renewal commu-
nity environmental remediation cost’ means any cost
which—
‘‘(A) is chargeable to capital account (de-
termined without regard to this section),
‘‘(B) is paid or incurred in connection with
the abatement or control of environmental con-
taminants at a site located within a renewal
community, and
‘‘(C) is certified by the applicable Federal
or State authority as being required by, and in
compliance with, applicable Federal and State
laws governing abatement and control of envi-
ronmental contaminants.
‘‘(2) EXCEPTIONS.—Such term shall not in-
clude any amount paid or incurred—
‘‘(A) for equipment which is used in the
environmental remediation and which is of a
character subject to an allowance for deprecia-
tion or amortization, or
‘‘(B) in connection with a site which is on
the national priorities list under section
105(a)(8)(B) of the Comprehensive Environ-
146
mental Response, Compensation, and Liability
Act of 1980 (42 U.S.C. 9605(a)(8)(B)).
No deduction shall be allowed under this section for
any amount which is allowed as a deduction under
any other provision of this subtitle.
‘‘(c) SPECIAL RULES.—For purposes of this sec-
tion—
‘‘(1) LIMITATION
BASED
ON
INCOME
FROM
TRADE OR BUSINESS.—The amount allowed as a de-
duction under subsection (a) for any taxable year
shall not exceed the aggregate amount of taxable in-
come of the taxpayer for such taxable year which is
derived from the active conduct by the taxpayer of
any trade or business during such taxable year. For
purposes of this paragraph, rules similar to the rules
of subparagraphs (B) and (C) of section 179(b)(3)
shall apply. In the case of a partnership, S corpora-
tion, trust or other passthru entity, this paragraph
shall be applied at both the entity and owner levels.
‘‘(2) RECAPTURE RULES.—
‘‘(A) PROPERTY NOT USED IN TRADE OR
BUSINESS.—The Secretary shall, by regulations,
provide for recapturing the benefit of any de-
duction allowable under subsection (a) with re-
147
spect to any property not used predominantly in
a trade or business at any time.
‘‘(B) TREATMENT OF GAIN AS ORDINARY
INCOME.—For purposes of section 1245—
‘‘(i) the deduction allowable under
subsection (a) shall be treated as a deduc-
tion allowable to the taxpayer for deprecia-
tion or amortization; and
‘‘(ii) property (other than section
1245 property) to which the deduction
would otherwise have been chargeable shall
be treated as section 1245 property solely
for purposes of applying section 1245 to
such deduction.
‘‘(d) TERMINATION.—This section shall not apply to
any cost paid or incurred after December 31, 2006.’’
SEC. 622. EXTENSION OF WORK OPPORTUNITY TAX CREDIT
FOR RENEWAL COMMUNITIES
(a) EXTENSION.—Subsection (c) of section 51 (relat-
ing to termination) is amended by adding at the end the
following new paragraph:
‘‘(5) EXTENSION
OF
CREDIT
FOR
RENEWAL
COMMUNITIES.—
‘‘(A) IN GENERAL.—In the case of an indi-
vidual who begins work for the employer after
148
the date contained in paragraph (4)(B), for
purposes 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.
‘‘(B) QUALIFIED FIRST AND SECOND-YEAR
WAGES.—For purposes of subparagraph (A)—
‘‘(i) IN GENERAL.—The term ‘quali-
fied wages’ means, with respect to each 1-
year period referred to in clause (ii) or
149
(iii), as the case may be, the wages paid or
incurred by the employer during the tax-
able year to any individual but only if—
‘‘(I) the employer is engaged in a
trade or business in a renewal com-
munity throughout such 1-year period,
‘‘(II) the individual is a resident
of such renewal community through-
out such 1-year period, and
‘‘(III) substantially all of the
services which such individual per-
forms for the employer during such 1-
year period are performed in such re-
newal community.
‘‘(ii) 
QUALIFIED
FIRST-YEAR
WAGES.—The term ‘qualified first-year
wages’ means, with respect to any individ-
ual, qualified wages attributable to service
rendered during the 1-year period begin-
ning with the day the individual begins
work for the employer.
‘‘(iii) 
QUALIFIED
SECOND-YEAR
WAGES.—The term ‘qualified second-year
wages’ means, with respect to any individ-
ual, qualified wages attributable to service
150
rendered during the 1-year period begin-
ning on the day after the last day of the
1-year period with respect to such individ-
ual determined 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’’.
(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. 623. CONFORMING AND CLERICAL AMENDMENTS.
(a) DEDUCTION FOR CONTRIBUTIONS TO FAMILY
DEVELOPMENT ACCOUNTS ALLOWABLE WHETHER
OR
NOT TAXPAYER ITEMIZES.—Subsection (a) of section 62
(relating to adjusted gross income defined) is amended by
151
inserting after paragraph (17) the following new para-
graph:
‘‘(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
paragraph (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
subsection:
‘‘(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—
‘‘(1) the excess (if any) of—
‘‘(A) the amount contributed for the tax-
able year to the account (other than a qualified
rollover, as defined in section 1400H(c)(7), or
a contribution under section 1400I), over
152
‘‘(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 section 1400H(b)(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
contributed 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
distribution to which rules similar to the rules of section
408(d)(4) apply by reason of section 1400H(b)(3) shall
be treated as an amount not contributed.’’
153
(c) TAX ON PROHIBITED TRANSACTIONS.—Section
4975 is amended—
(1) by adding at the end of subsection (c) the
following new paragraph:
‘‘(6) SPECIAL
RULE
FOR
FAMILY
DEVELOP-
MENT ACCOUNTS.—An individual for whose benefit a
family development account is established and any
contributor to such account shall be exempt from the
tax imposed by this section with respect to any
transaction concerning such account (which would
otherwise be taxable under this section) if, with re-
spect to such transaction, the account ceases to be
a family development account by reason of the appli-
cation 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’’.
(d) INFORMATION RELATING TO CERTAIN TRUSTS
AND ANNUITY PLANS.—Subsection (c) of section 6047 is
amended—
154
(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 sub-
paragraph (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)(7) (relating to fam-
ily development accounts).’’
(g) CONFORMING AMENDMENTS REGARDING COM-
MERCIAL 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) and inserting ‘‘, and’’, and by adding at the end
the following new paragraph:
155
‘‘(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
unused business credit for any taxable year which is
attributable to any commercial revitalization credit
determined 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.’’
156
(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(b)(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
sentence: ‘‘A similar rule shall apply for purposes of
section 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) Subparagraph (C) of section 50(b)(4) is
amended—
157
(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’’.
(10) 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.—
(1) The table of subchapters for chapter 1 is
amended by adding at the end the following new
item:
‘‘Subchapter X. Renewal Communities.’’
(2) The table of parts for subchapter X of
chapter 1 (as added by subtitle A) is amended by
adding at the end the following new items:
‘‘Part II.
Renewal community capital gain and stock.
‘‘Part III. Family development accounts.
‘‘Part IV.
Additional Incentives.’’
158
TITLE 
VII—TAX 
REDUCTIONS
CONTINGENT ON SAVING SO-
CIAL SECURITY
SEC. 701. TAX REDUCTIONS CONTINGENT ON SAVING SO-
CIAL SECURITY.
(a) REQUIREMENT FOR BALANCED BUDGET AND SO-
CIAL SECURITY SOLVENCY.—Notwithstanding any other
provision of this Act, no provision of this Act (or amend-
ment made thereby) shall take effect before the first Janu-
ary 1 after the date of the enactment of this Act that fol-
lows a calendar year for which there is a social security
solvency certification.
(b) EXEMPTION OF FUNDED PROVISIONS .—The fol-
lowing provisions shall take effect without regard to sub-
section (a):
(1) Subtitle C of title I (relating to increase in
social security earnings limit and recomputation of
benefits).
(2) Section 213 (relating to production flexibil-
ity contract payments).
(3) Title III (relating to extension and modi-
fication of certain expiring provisions).
(4) Title IV (relating to revenue offset).
(5) Title V (relating to technical corrections).
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(c) SOCIAL SECURITY SOLVENCY CERTIFICATION.—
For purposes of subsection (a), there is a social security
solvency certification for a calendar year if, during such
year, the Board of Trustees of the Social Security Trust
Funds certifies that the Federal Old-Age and Survivors
Insurance Trust Fund and the Federal Disability Insur-
ance Trust Fund are in actuarial balance for the 75-year
period utilized in the most recent annual report of such
Board of Trustees pursuant to section 201(c)(2) of the
Social Security Act (42 U.S.C. 401(c)(2)).
SEC. 702. RESERVATION OF SOCIAL SECURITY SURPLUSES
SOLELY FOR SOCIAL SECURITY SYSTEM.
(a) IN GENERAL.—Section 201 of the Social Security
Act (42 U.S.C. 401) is amended by adding at the end the
following new subsection:
‘‘(n)(1) The Secretary of the Treasury, before the be-
ginning of each fiscal year, shall estimate the amount of
the Social Security surplus for such year. For purposes
of this subsection, the term ‘Social Security surplus’
means the excess of the receipts in the Trust Funds dur-
ing the fiscal year (including interest on obligations held
in such funds) over the outlays from such funds during
such year.
‘‘(2) If the Secretary of the Treasury determines that
there is a Social Security surplus for any fiscal year, such
160
Secretary shall transfer during such year from the general
fund of the Treasury an amount equal to the amount of
the surplus to the Federal Reserve Bank of New York.
Such transfer shall be made monthly on the basis of esti-
mates by the Secretary of the Treasury of the portion of
the surplus attributable to the month, and proper adjust-
ments shall be made in amounts subsequently transferred
to the extent prior estimates were in excess of or less than
amounts required to be transferred. Amounts transferred
under this paragraph shall substitute for (and be in lieu
of) equivalent amounts otherwise required to be trans-
ferred to the Trust Funds.
‘‘(3) The Federal Reserve Bank of New York shall
hold the amounts transferred under paragraph (2), and
all income from investment thereof, in trust for the benefit
of the Trust Funds. Amounts so held shall be invested
in marketable obligations of the United States with matu-
rities that the Managing Trustee determines are consist-
ent with the requirements of the Trust Funds. Amounts
held in trust under this paragraph (and earnings thereon)
shall be treated as part of the balance of the Trust Funds.
‘‘(4) If, at any time, any obligation acquired under
paragraph (2) has a market value less than its acquisition
cost by reason of a change in interest rates, the Federal
Reserve Bank of New York may, at any time, present such