1664 
‘‘(h) OTHER DEFINITIONS AND SPECIAL RULES.— 
For purposes of this section— 
‘‘(1) NEIGHBORHOOD
HOMES
CREDIT
AGEN-
CY.—The term ‘neighborhood homes credit agency’ 
means the agency designated by the governor of a 
State as the neighborhood homes credit agency of 
the State. 
‘‘(2) QUALIFIED PROJECT.—The term ‘qualified 
project’ means a project that a neighborhood homes 
credit agency certifies will build or substantially re-
habilitate one or more qualified residences. 
‘‘(3) DETERMINATIONS OF FAMILY INCOME.— 
Rules similar to the rules of section 143(f)(2) shall 
apply for purposes of this section. 
‘‘(4) POSSESSIONS TREATED AS STATES.—The 
term ‘State’ includes the District of Columbia and 
the possessions of the United States. 
‘‘(5) SPECIAL RULES RELATED TO CONDOMIN-
IUMS AND COOPERATIVE HOUSING CORPORATIONS.— 
‘‘(A) DETERMINATION OF DEVELOPMENT 
COSTS.—In the case of a qualified residence de-
scribed in clause (ii) or (iii) of subsection 
(c)(1)(A), the reasonable development costs and 
eligible development costs of such qualified resi-
dence shall be an amount equal to such costs, 
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respectively, of the entire condominium or coop-
erative housing property in which such qualified 
residence is located, multiplied by a fraction— 
‘‘(i) the numerator of which is the 
total floor space of such qualified resi-
dence, and 
‘‘(ii) the denominator of which is the 
total floor space of all residences within 
such property. 
‘‘(B) TENANT-STOCKHOLDERS OF COOPER-
ATIVE
HOUSING
CORPORATIONS
TREATED
AS 
OWNERS.—In the case of a cooperative housing 
corporation (as such term is defined in section 
216(b)), a tenant-stockholder shall be treated 
as owning the house or apartment which such 
person is entitled to occupy. 
‘‘(6) RELATED PARTY SALES NOT TREATED AS 
AFFORDABLE SALES.— 
‘‘(A) IN GENERAL.—A sale between related 
persons shall not be treated as an affordable 
sale. 
‘‘(B) RELATED
PERSONS.—For purposes 
of this paragraph, a person (in this subpara-
graph referred to as the ‘related person’) is re-
lated to any person if the related person bears 
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a relationship to such person specified in sec-
tion 267(b) or 707(b)(1), or the related person 
and such person are engaged in trades or busi-
nesses under common control (within the mean-
ing of subsections (a) and (b) of section 52). 
For purposes of the preceding sentence, in ap-
plying section 267(b) or 707(b)(1), ‘10 percent’ 
shall be substituted for ‘50 percent’. 
‘‘(7) INFLATION ADJUSTMENT.— 
‘‘(A) IN GENERAL.—In the case of a cal-
endar year after 2022, the dollar amounts in 
subsections 
(b)(3)(A), 
(e)(3)(A)(i)(I), 
(e)(3)(A)(i)(II), and (i)(2)(C) shall each be in-
creased by an amount equal to— 
‘‘(i) such dollar amount, multiplied by 
‘‘(ii) the cost-of-living adjustment de-
termined under section 1(f)(3) for such 
calendar year by substituting ‘calendar 
year 2021’ for ‘calendar year 2016’ in sub-
paragraph (A)(ii) thereof. 
‘‘(B) ROUNDING.— 
‘‘(i) In the case of the dollar amounts 
in subsection (b)(3)(A) and (i)(2)(C), any 
increase under paragraph (1) which is not 
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a multiple of $1,000 shall be rounded to 
the nearest multiple of $1,000. 
‘‘(ii) In the case of the dollar amount 
in subsection (e)(3)(A)(i)(I), any increase 
under paragraph (1) which is not a mul-
tiple of $0.01 shall be rounded to the near-
est multiple of $0.01. 
‘‘(iii) In the case of the dollar amount 
in subsection (e)(3)(A)(i)(II), any increase 
under paragraph (1) which is not a mul-
tiple of $100,000 shall be rounded to the 
nearest multiple of $100,000. 
‘‘(8) REPORT.— 
‘‘(A) IN
GENERAL.—The Secretary shall 
annually issue a report, to be made available to 
the public, which contains the information sub-
mitted pursuant to subsection (f)(1)(F). 
‘‘(B) DE-IDENTIFICATION.—The Secretary 
shall ensure that any information made public 
pursuant to paragraph (1) excludes any infor-
mation that would allow for the identification of 
qualified homeowners. 
‘‘(9) LIST
OF
QUALIFIED
CENSUS
TRACTS.— 
The Secretary of Housing and Urban Development 
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shall, for each year, make publicly available a list of 
qualified census tracts under— 
‘‘(A) on a combined basis, clauses (i) and 
(ii) of subsection (c)(2)(A), 
‘‘(B) clause (iii) of such subsection, and 
‘‘(C) subsection (i)(5)(A). 
‘‘(i) APPLICATION OF CREDIT WITH RESPECT TO 
OWNER-OCCUPIED REHABILITATIONS.— 
‘‘(1) IN GENERAL.—In the case of a qualified 
rehabilitation by the taxpayer of any qualified resi-
dence which is owned (as of the date that the writ-
ten binding contract referred to in paragraph (3) is 
entered into) by a specified homeowner, the rules of 
paragraphs (2) through (7) shall apply. 
‘‘(2) ALTERNATIVE CREDIT DETERMINATION.— 
In the case of any qualified residence described in 
paragraph (1), the neighborhood homes credit deter-
mined under subsection (a) with respect to such res-
idence shall (in lieu of any credit otherwise deter-
mined under subsection (a) with respect to such res-
idence) be allowed in the taxable year during which 
the qualified rehabilitation is completed (as deter-
mined by the neighborhood homes credit agency) 
and shall be equal to the least of— 
‘‘(A) the excess (if any) of— 
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‘‘(i) the amounts paid or incurred by 
the taxpayer for the qualified rehabilitation 
of the qualified residence to the extent that 
such amounts are certified by the neigh-
borhood homes credit agency (at the time 
of the completion of such rehabilitation) as 
meeting the standards specified pursuant 
to subsection (f)(1)(C), over 
‘‘(ii) any amounts paid to such tax-
payer for such rehabilitation, 
‘‘(B) 50 percent of the amounts described 
in subparagraph (A)(i), or 
‘‘(C) $50,000. 
‘‘(3) QUALIFIED REHABILITATION.— 
‘‘(A) IN GENERAL.—For purposes of this 
subsection, the term ‘qualified rehabilitation’ 
means a rehabilitation or reconstruction per-
formed pursuant to a written binding contract 
between the taxpayer and the qualified home-
owner if the amount paid or incurred by the 
taxpayer in the performance of such rehabilita-
tion or reconstruction exceeds the dollar 
amount in effect under subsection (b)(3)(A). 
‘‘(B) APPLICATION OF LIMITATION TO EX-
PENSES
PAID
OR
INCURRED
AFTER
ALLOCA-
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TION.—A rule similar to the rule of section 
(b)(4) shall apply for purposes of this sub-
section. 
‘‘(4) SPECIFIED
HOMEOWNER.—For purposes 
of this subsection, the term ‘qualified homeowner’ 
means, with respect to a qualified residence, an indi-
vidual— 
‘‘(A) who owns and uses such qualified res-
idence as the principal residence of such indi-
vidual as of the date that the written binding 
contract referred to in paragraph (3) is entered 
into, and 
‘‘(B) whose family income (determined as 
of such date) does not exceed the median family 
income for the applicable area (with respect to 
the census tract in which the qualified residence 
is located). 
‘‘(5) ADDITIONAL CENSUS TRACTS IN WHICH 
OWNER-OCCUPIED RESIDENCES MAY BE LOCATED.— 
In the case of any qualified residence described in 
paragraph (1), the term ‘qualified census tract’ in-
cludes any census tract which— 
‘‘(A) meets the requirements of subsection 
(c)(2)(A)(i) without regard to subclause (III) 
thereof, and 
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‘‘(B) is designated by the neighborhood 
homes credit agency for purposes of this para-
graph. 
‘‘(6) MODIFICATION OF REPAYMENT REQUIRE-
MENT.—In the case of any qualified residence de-
scribed in paragraph (1), subsection (g) shall be ap-
plied by beginning the 5-year period otherwise de-
scribed therein on the date on which the qualified 
owner acquired the residence. 
‘‘(7) RELATED PARTIES.—Paragraph (1) shall 
not apply if the taxpayer is the owner of the quali-
fied residence described in paragraph (1) or is re-
lated (within the meaning of subsection (h)(6)(B)) 
to such owner. 
‘‘(8) PYRRHOTITE REMEDIATION.—The require-
ment of subsection (c)(1)(C) shall not apply to a 
qualified rehabilitation under this subsection of a 
qualified residence that is documented by an engi-
neer’s report and core testing to have a foundation 
that is adversely impacted by pyrrhotite or other 
iron sulfide minerals. 
‘‘(j) REGULATIONS.—The Secretary shall prescribe 
such regulations as may be necessary or appropriate to 
carry out the purposes of this section, including regula-
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tions that prevent avoidance of the rules, and abuse of 
the purposes, of this section.’’. 
(b) CREDIT ALLOWED AS PART OF GENERAL BUSI-
NESS CREDIT.—Section 38(b), as amended by the pre-
ceding provisions of this Act, is amended by striking 
‘‘plus’’ at the end of paragraph (34), by striking the period 
at the end of paragraph (35) and inserting ‘‘, plus’’, and 
by adding at the end the following new paragraph: 
‘‘(36) the neighborhood homes credit deter-
mined under section 42A(a),’’. 
(c) CREDIT ALLOWED AGAINST ALTERNATIVE MIN-
IMUM TAX.—Section 38(c)(4)(B), as amended by the pre-
ceding provisions of this Act, is amended by redesginating 
clauses (iv) through (xiii) as clauses (v) through (xiv), re-
spectively, and by inserting after clause (iii) the following 
new clause: 
‘‘(iv) the credit determined under sec-
tion 42A,’’. 
(d) CONFORMING AMENDMENTS.— 
(1) Subsections (i)(3)(C), (i)(6)(B)(i), and 
(k)(1) of section 469 are each amended by inserting 
‘‘or 42A’’ after ‘‘section 42’’. 
(2) The table of sections for subpart D of part 
IV of subchapter A of chapter 1 is amended by in-
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serting after the item relating to section 42 the fol-
lowing new item: 
‘‘Sec. 42A. Neighborhood homes credit.’’. 
(e) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2021. 
PART 6—INVESTMENTS IN TRIBAL 
INFRASTRUCTURE 
SEC. 135601. TREATMENT OF INDIAN TRIBES AS STATES 
WITH RESPECT TO BOND ISSUANCE. 
(a) IN GENERAL.—Section 7871(c) is amended to 
read as follows: 
‘‘(c) SPECIAL RULES FOR TAX-EXEMPT BONDS.— 
‘‘(1) IN GENERAL.—In applying section 146 to 
bonds issued by Indian Tribal Governments the Sec-
retary shall annually— 
‘‘(A) establish a national bond volume cap 
based on the greater of— 
‘‘(i) the State population formula ap-
proach in section 146(d)(1)(A) (using na-
tional Tribal population estimates supplied 
annually by the Department of the Interior 
in consultation with the Census Bureau), 
and 
‘‘(ii) 
the 
minimum 
State 
ceiling 
amount in section 146(d)(1)(B) (as ad-
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justed in accordance with the cost of living 
provision in section 146(d)(2)), 
‘‘(B) allocate such national bond volume 
cap among all Indian Tribal Governments seek-
ing such an allocation in a particular year 
under regulations prescribed by the Secretary. 
‘‘(2) APPLICATION
OF
GEOGRAPHIC
RESTRIC-
TION.—In the case of national bond volume cap allo-
cated under paragraph (1), section 146(k)(1) shall 
not apply to the extent that such cap is used with 
respect to financing for a facility located on qualified 
Indian lands. 
‘‘(3) RESTRICTION ON FINANCING OF CERTAIN 
GAMING FACILITIES.—No portion of the volume cap 
allocated under this subsection may be used with re-
spect to the financing of any portion of a building 
in which class II or class III gaming (as defined in 
section 4 of the Indian Gaming Regulatory Act) is 
conducted or housed or any property actually used 
in the conduct of such gaming. 
‘‘(4) DEFINITIONS AND SPECIAL RULES.—For 
purposes of this subsection— 
‘‘(A) INDIAN TRIBAL GOVERNMENT.—The 
term ‘Indian Tribal Government’ means the 
governing body of an Indian Tribe, band, na-
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tion, or other organized group or community, or 
of Alaska Natives, which is recognized as eligi-
ble for the special programs and services pro-
vided by the United States to Indians because 
of their status as Indians, and also includes any 
agencies, instrumentalities or political subdivi-
sions thereof. 
‘‘(B) INTERTRIBAL CONSORTIUMS, ETC.— 
In any case in which an Indian Tribal Govern-
ment has authorized an intertribal consortium, 
a Tribal organization, or an Alaska Native re-
gional or village corporation, as defined in, or 
established pursuant to, the Alaska Native 
Claims Settlement Act, to plan for, coordinate 
or otherwise administer services, finances, func-
tions, or activities on its behalf under this sub-
section, the authorized entity shall have the 
rights and responsibilities of the authorizing In-
dian Tribal Government only to the extent pro-
vided in the Authorizing resolution. 
‘‘(C) QUALIFIED
INDIAN
LANDS.—The 
term ‘qualified Indian lands’ shall mean an In-
dian reservation as defined in section 3(d) of 
the Indian Financing Act of 1974 (25 U.S.C. 
1452(d)), including lands which are within the 
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jurisdictional area of an Oklahoma Indian Tribe 
(as determined by the Secretary of the Interior) 
and shall include lands outside a reservation 
where the facility is to be placed in service in 
connection with— 
‘‘(i) the active conduct of a trade or 
business by an Indian Tribe on, contiguous 
to, within reasonable proximity of, or with 
a substantial connection to, an Indian res-
ervation or Alaska Native village, or 
‘‘(ii) infrastructure (including roads, 
power lines, water systems, railroad spurs, 
and communication facilities) serving an 
Indian reservation or Alaska Native vil-
lage.’’. 
(b) CONFORMING AMENDMENT.—Subparagraph (B) 
of section 45(c)(9) is amended to read as follows: 
‘‘(B) INDIAN TRIBE.—For purposes of this 
paragraph, the term ‘Indian tribe’ has the 
meaning given the term ‘Indian Tribal Govern-
ment’ by section 7871(c)(3)(A).’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to obligations issued in calendar 
years beginning after the date of the enactment of this 
Act. 
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SEC. 135602. NEW MARKETS TAX CREDIT FOR TRIBAL STA-
TISTICAL AREAS. 
(a) ADDITIONAL ALLOCATIONS FOR TRIBAL STATIS-
TICAL AREAS.—Section 45D(f), as amended by the pre-
ceding provisions of this Act, is amended by adding at the 
end the following new paragraph: 
‘‘(5) ADDITIONAL
ALLOCATIONS
FOR
TRIBAL 
STATISTICAL AREAS.— 
‘‘(A) IN GENERAL.—In the case of each 
calendar year after 2021, there is (in addition 
to any limitation under any other paragraph of 
this subsection) a new markets tax credit limi-
tation of $175,000,000 which shall be allocated 
by the Secretary as provided in paragraph (2) 
except that such limitation may only be allo-
cated with respect to Tribal Statistical Areas. 
‘‘(B) CARRYOVER OF UNUSED TRIBAL STA-
TISTICAL AREA LIMITATION.— 
‘‘(i) IN GENERAL.—If the credit limi-
tation under subparagraph (A) for any cal-
endar year exceeds the amount of such 
limitation allocated by the Secretary for 
such calendar year, such limitation for the 
succeeding calendar year shall be increased 
by the amount of such excess. 
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‘‘(ii) LIMITATION
ON
CARRYOVER.— 
No amount of credit limitation may be car-
ried under clause (i) past the 5th calendar 
year following the calendar year in which 
such amount of credit limitation arose. 
‘‘(iii) TRANSFER OF EXPIRED TRIBAL 
STATISTICAL
AREA
LIMITATION
TO
GEN-
ERAL
LIMITATION.—In the case of any 
amount of credit limitation which would 
(but for clause (ii)) be carried under clause 
(i) to the 6th calendar year following the 
calendar year in which such amount of 
credit limitation arose, the new market tax 
credit limitation under paragraph (1) for 
such 6th calendar year shall be increased 
by the amount of such credit limitation. 
‘‘(C) TRIBAL
STATISTICAL
AREA.—For 
purposes of this paragraph, the term ‘Tribal 
Statistical Area’ means— 
‘‘(i) any low-income community which 
is located in any Tribal Census Tract, 
Oklahoma Tribal Statistical Area, Tribal- 
Designated Statistical Area, Alaska Native 
Village Statistical Area, or Hawaiian 
Home Land, and 
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‘‘(ii) any low-income community de-
scribed in subsection (e)(1)(B).’’. 
(b) ELIGIBILITY OF CERTAIN PROJECTS SERVING 
TRIBAL MEMBERS.—Section 45D(e)(1) is amended to 
read as follows: 
‘‘(1) IN GENERAL.—The term ‘low-income com-
munity’ means any area— 
‘‘(A) comprising a population census tract 
if— 
‘‘(i) the poverty rate for such tract is 
at least 20 percent, or 
‘‘(ii)(I) in the case of a tract not lo-
cated within a metropolitan area, the me-
dian family income for such tract does not 
exceed 80 percent of statewide median 
family income, or 
‘‘(II) in the case of a tract located 
within a metropolitan area, the median 
family income for such tract does not ex-
ceed 80 percent of the greater of statewide 
median family income or the metropolitan 
area median family income, 
‘‘(B) which is used for a qualified active 
low-income community business which— 
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‘‘(i) services a significant population 
of Tribal or Alaska Native Village mem-
bers who are residents of a low-income 
community 
described 
in 
subsection 
(f)(5)(C)(i), and 
‘‘(ii) obtains a written statement from 
the relevant Indian Tribal Government 
(within the meaning of section 7871(c)) 
that documents the eligibility such project 
with respect to the requirement of clause 
(i). 
Subparagraph (A)(ii) shall be applied using posses-
sion wide median family income in the case of cen-
sus tracts located within a possession of the United 
States.’’. 
(c) APPLICATION
OF INFLATION ADJUSTMENT.— 
Section 45D(f)(4), as added by the preceding provisions 
of this Act, is amended by striking ‘‘the dollar amount 
paragraph (1)(H) shall be increased’’ and inserting ‘‘the 
dollar amounts in paragraphs (1)(H) and (5)(A) shall 
each be increased’’. 
(d) COORDINATION WITH EXISTING CARRYOVER.— 
Section 45D(f)(3), as amended by the preceding provisions 
of this Act, is amended to read as follows: 
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‘‘(3) CARRYOVER OF UNUSED LIMITATION.—If 
the new markets tax credit limitation under para-
graph (1) for any calendar year exceeds the amount 
of such limitation allocated by the Secretary under 
paragraph (2) for such year, such limitation for the 
succeeding calendar year shall be increased by the 
amount of such excess.’’. 
(e) REGULATORY AUTHORITY.—Section 45D(i) is 
amended by striking ‘‘and’’ at the end of paragraph (5), 
by striking the period at the end of paragraph (6) and 
inserting ‘‘, and’’, and by adding at the end the following 
new paragraph: 
‘‘(7) which provide documentation requirements 
for the written statement required under subsection 
(e)(1)(B)(ii), and 
‘‘(8) which provide procedures for determining 
which projects under subsection (e)(1)(B) are quali-
fied active low-income community businesses with re-
spect to the populations described in such sub-
section. Such procedures shall take into account the 
location needs of such projects, especially with re-
spect to projects that serve multiple tribal or Alaska 
Native Village communities.’’. 
(f) EFFECTIVE DATE.—The amendments made by 
this section shall apply to new markets tax credit limita-
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tion determined for calendar years after December 31, 
2021. 
SEC. 135603. INCLUSION OF INDIAN AREAS AS DIFFICULT 
DEVELOPMENT AREAS FOR PURPOSES OF 
CERTAIN BUILDINGS. 
(a) 
IN
GENERAL.—Subclause 
(I) 
of 
section 
42(d)(5)(B)(iii), as amended by the preceding provisions 
of this Act, is amended by inserting ‘‘, any Indian area’’ 
after ‘‘median gross income’’. 
(b) 
INDIAN
AREA.—Clause 
(iii) 
of 
section 
42(d)(5)(B), as amended by the preceding provisions of 
this Act is amended by redesignating subclause (III) as 
subclause (V) and by inserting after subclause (II) the fol-
lowing new subclauses: 
‘‘(III) INDIAN
AREA.—For pur-
poses of subclause (I), the term ‘In-
dian area’ means any Indian area (as 
defined in section 4(11) of the Native 
American Housing Assistance and 
Self Determination Act of 1996 (25 
U.S.C. 4103(11))). 
‘‘(IV) SPECIAL RULE FOR BUILD-
INGS IN INDIAN AREAS.—In the case 
of an area which is a difficult develop-
ment area solely because it is an In-
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dian area, a building shall not be 
treated as located in such area unless 
such building is assisted or financed 
under the Native American Housing 
Assistance and Self Determination 
Act of 1996 (25 U.S.C. 4101 et seq.) 
or the project sponsor is an Indian 
tribe 
(as 
defined 
in 
section 
45A(c)(6)), a tribally designated hous-
ing entity (as defined in section 4(22) 
of such Act (25 U.S.C. 4103(22))), or 
wholly owned or controlled by such an 
Indian tribe or tribally designated 
housing entity.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to buildings placed in service after 
December 31, 2021. 
PART 7—INVESTMENTS IN THE TERRITORIES 
SEC. 135701. POSSESSIONS ECONOMIC ACTIVITY CREDIT. 
(a) IN GENERAL.—Subpart D of part IV of sub-
chapter A of chapter 1, as amended by the preceding pro-
visions of this Act, is amended by adding at the end the 
following new section: 
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‘‘SEC. 45V. POSSESSIONS ECONOMIC ACTIVITY CREDIT. 
‘‘(a) ALLOWANCE OF CREDIT.—For purposes of sec-
tion 38, in the case of a qualified domestic corporation 
the possessions economic activity credit determined under 
this section for a taxable year is an amount equal to 20 
percent of the sum of the qualified possession wages and 
allocable employee fringe benefit expenses paid or incurred 
by the taxpayer for the taxable year. 
‘‘(b) QUALIFIED DOMESTIC CORPORATION; QUALI-
FIED CORPORATION.—For purposes of this section— 
‘‘(1) IN GENERAL.—The term ‘qualified domes-
tic corporation’ means any domestic corporation 
which is— 
‘‘(A) a qualified corporation, or 
‘‘(B) a United States shareholder of a for-
eign corporation which— 
‘‘(i) is a qualified corporation, and 
‘‘(ii) is wholly owned by the United 
States shareholder together with any cor-
porations which are members of the same 
affiliated group (within the meaning of sec-
tion 1504(a)) as such United States share-
holder. 
‘‘(2) QUALIFIED
CORPORATION.—The term 
‘qualified corporation’ means any corporation if such 
corporation meets the following requirements: 
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‘‘(A) SOURCE QUALIFICATION.—80 percent 
or more of the gross income of the corporation 
for the 3-year period immediately preceding the 
close of the taxable year (or for such part of 
such period immediately preceding the close of 
such taxable year as may be applicable) was de-
rived from sources within a possession of the 
United States (determined without regard to 
section 904(f)). 
‘‘(B) TRADE
OR
BUSINESS
QUALIFICA-
TION.—75 percent or more of the gross income 
of the corporation for such period or such part 
thereof was derived from the active conduct of 
a trade or business within a possession of the 
United States. 
‘‘(3) SPECIAL
RULE
FOR
SEPARATE
AND 
CLEARLY IDENTIFIED UNITS OF FOREIGN CORPORA-
TIONS.— 
‘‘(A) IN
GENERAL.—In the case of a 
United States shareholder of a foreign corpora-
tion which— 
‘‘(i) is not a qualified corporation but 
with respect to which the ownership re-
quirements of paragraph (1)(B)(ii) are 
met, and 
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‘‘(ii) has an eligible foreign business 
unit which, if such unit were a corporation, 
would be a qualified corporation with re-
spect to which such ownership require-
ments would be met, 
then, for purposes of this section, the United 
States shareholder may elect to treat such unit 
as a separate foreign corporation which meets 
the requirements of paragraph (1)(B) and with 
respect to which such shareholder is a United 
States shareholder. 
‘‘(B) 
ELIGIBLE
FOREIGN
BUSINESS 
UNIT.—For purposes of this paragraph, the 
term ‘eligible foreign business unit’ means a 
separate and clearly identified foreign unit of a 
trade or business, including a partnership or an 
entity treated as disregarded as a separate enti-
ty from its owner (under section 7701 or other 
provision under this title), which maintains sep-
arate books and records. 
‘‘(C) SPECIAL ELECTION FOR AFFILIATED 
GROUPS.—In the case of an affiliated group de-
scribed in paragraph (1)(B)(ii), the election 
under subparagraph (A) with respect to any eli-
gible foreign business unit shall be made by the 
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common parent of such group and shall apply 
uniformly to all members of such group which 
are United States shareholders with respect to 
the foreign corporation which has such unit. 
‘‘(c) QUALIFIED POSSESSION WAGES.—For purposes 
of this section— 
‘‘(1) IN GENERAL.—The term ‘qualified posses-
sion wages’ means wages paid or incurred by the 
qualified corporation during the taxable year in con-
nection with the active conduct of a trade or busi-
ness within a possession of the United States to any 
employee for services performed in such possession, 
but only if such services are performed while the 
principal place of employment of such employee is 
within such possession. 
‘‘(2) LIMITATION
ON
AMOUNT
OF
WAGES 
TAKEN INTO ACCOUNT.— 
‘‘(A) IN GENERAL.—The amount of wages 
which may be taken into account under para-
graph (1) with respect to any employee for any 
taxable year shall not exceed $50,000. 
‘‘(B) TREATMENT OF PART-TIME EMPLOY-
EES, ETC.—If— 
‘‘(i) any employee is not employed by 
the qualified corporation on a substantially 
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full-time basis at all times during the tax-
able year, or 
‘‘(ii) the principal place of employ-
ment of any employee with the qualified 
corporation is not within a possession at 
all times during the taxable year, 
the limitation applicable under paragraph (1) 
with respect to such employee shall be the ap-
propriate portion (as determined by the Sec-
retary) of the limitation which would otherwise 
be in effect under paragraph (1). 
‘‘(C) WAGES.— 
‘‘(i) IN
GENERAL.—Except as pro-
vided in clause (ii), the term ‘wages’ has 
the meaning given to such term by sub-
section (b) of section 3306 (determined 
without regard to any dollar limitation 
contained in such section). For purposes of 
the preceding sentence, such subsection (b) 
shall be applied as if the term ‘United 
States’ included all possessions of the 
United States. 
‘‘(ii) SPECIAL
RULE
FOR
AGRICUL-
TURAL LABOR AND RAILWAY LABOR.—In 
any case to which subparagraph (A) or (B) 
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of paragraph (1) of section 51(h) applies, 
the term ‘wages’ has the meaning given to 
such term by section 51(h)(2). 
‘‘(3) ALLOCABLE EMPLOYEE FRINGE BENEFIT 
EXPENSES.— 
‘‘(A) IN
GENERAL.—The allocable em-
ployee fringe benefit expenses of any qualified 
corporation for any taxable year is an amount 
which bears the same ratio to the amount de-
termined under subparagraph (B) for such tax-
able year as— 
‘‘(i) the aggregate amount of the 
qualified corporation’s qualified possession 
wages for such taxable year, bears to 
‘‘(ii) the aggregate amount of the 
wages paid or incurred by such qualified 
corporation during such taxable year. 
In no event shall the amount determined under 
the preceding sentence exceed 15 percent of the 
amount referred to in clause (i). 
‘‘(B) EXPENSES TAKEN INTO ACCOUNT.— 
For purposes of subparagraph (A), the amount 
determined under this subparagraph for any 
taxable year is the aggregate amount allowable 
(or, in the case of a foreign corporation, which 
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would be allowable if such foreign corporation 
were a domestic corporation) as a deduction 
under this chapter to the qualified corporation 
for such taxable year with respect to— 
‘‘(i) employer contributions under a 
stock bonus, pension, profit-sharing, or an-
nuity plan, 
‘‘(ii) 
employer-provided 
coverage 
under any accident or health plan for em-
ployees, and 
‘‘(iii) the cost of life or disability in-
surance provided to employees. 
Any amount treated as wages under paragraph 
(2)(C) shall not be taken into account under 
this subparagraph. 
‘‘(d) SPECIAL RULE FOR QUALIFIED SMALL DOMES-
TIC CORPORATION.—For purposes of this section— 
‘‘(1) INCREASED CREDIT PERCENTAGE.—In the 
case of a qualified small domestic corporation, sub-
section (a) shall be applied by substituting ‘50 per-
cent’ for ‘20 percent’. 
‘‘(2) QUALIFIED
SMALL
DOMESTIC
CORPORA-
TION.— 
‘‘(A) IN
GENERAL.—The term ‘qualified 
small domestic corporation’ means a qualified 
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domestic corporation that meets the require-
ments of subparagraphs (B) and (C). 
‘‘(B) FULL-TIME EMPLOYMENT.—A quali-
fied domestic corporation meets the require-
ments of this subparagraph if the qualified cor-
poration which is the qualified domestic cor-
poration under subsection (b)(1)(A) or the for-
eign 
corporation 
under 
subsection 
(b)(1)(B)(i)— 
‘‘(i) has at least 5 full-time employees 
in a possession of the United States for 
each year in the 3-year period immediately 
preceding the close of the taxable year (or 
for such part of such period immediately 
preceding the close of such taxable year as 
may be applicable), and 
‘‘(ii) has not more than a total of 30 
full-time employees for each year in such 
3-year period. 
‘‘(C) GROSS
RECEIPTS.—A qualified do-
mestic corporation meets the requirements of 
this subparagraph if the annual gross receipts 
of the qualified domestic corporation (and all 
persons related thereto) for each year in such 
3-year period is not more than $50,000,000. 
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‘‘(3) 
RELATED
PERSONS.—In 
determining 
whether the limitations under subparagraphs (B)(ii) 
and (C) of paragraph (2) are met, all persons who 
are treated as related to the qualified domestic cor-
poration for purposes of subsection (a) or (b) of sec-
tion 52 shall be taken into account. 
‘‘(4) AMOUNT
OF
WAGES
TAKEN
INTO
AC-
COUNT.—Subsection (c)(2)(A) shall be applied by 
substituting ‘$139,500’ for ‘$50,000’. 
‘‘(e) POSSESSION OF THE UNITED STATES.— 
‘‘(1) IN GENERAL.—The term ‘possession of the 
United States’ means American Samoa, the Com-
monwealth of the Northern Mariana Islands, the 
Commonwealth of Puerto Rico, Guam, and the Vir-
gin Islands. 
‘‘(2) MIRROR CODE POSSESSIONS.—In the case 
of any possession of the United States with a mirror 
code tax system (as defined in section 24(k)), this 
section shall not be treated as part of the income tax 
laws of the United States for purposes of deter-
mining the income tax law of such possession unless 
such possession elects to have this section be so 
treated. 
‘‘(f) SEPARATE APPLICATION
TO EACH POSSES-
SION.—For purposes of determining the amount of the 
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credit allowed under this section, this section shall be ap-
plied separately with respect to each possession of the 
United States. 
‘‘(g) TERMINATION.—No credit shall be allowed 
under this section for any taxable year beginning after De-
cember 31, 2031.’’. 
(b) CREDIT MADE PART OF GENERAL BUSINESS 
CREDIT.—Subsection (b) of section 38, as amended by the 
preceding provisions of this Act, is amended by striking 
‘‘plus’’ at the end of paragraph (35), by striking the period 
at the end of paragraph (36) and inserting ‘‘, plus’’, and 
by adding at the end the following new paragraph: 
‘‘(37) the possessions economic activity credit 
determined under section 45V.’’. 
(c) CLERICAL AMENDMENT.—The table of sections 
for subpart B of part IV of subchapter A of chapter 1 
is amended by adding at the end the following: 
‘‘Sec. 45V. Possessions Economic Activity Credit.’’. 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
the date of the enactment of this Act, and in the case 
of a qualified corporation that is a foreign corporation, 
to taxable years beginning after the date of enactment and 
to taxable years of United States shareholders in which 
or with which such taxable years of foreign corporations 
end. 
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SEC. 135702. ADDITIONAL NEW MARKETS TAX CREDIT AL-
LOCATIONS FOR THE TERRITORIES. 
(a) IN GENERAL.—Section 45D(f), as amended by 
the preceding provisions of this Act, is amended by adding 
at the end the following new paragraph: 
‘‘(6) ADDITIONAL ALLOCATIONS FOR POSSES-
SIONS OF THE UNITED STATES.— 
‘‘(A) IN GENERAL.—In the case of each 
calendar year after 2021, there is (in addition 
to the limitation under paragraph (1)— 
‘‘(i) a new markets tax credit limita-
tion of $80,000,000 which shall be allo-
cated by the Secretary as provided in para-
graph (2) except that such limitation may 
only be allocated with respect to low-in-
come communities located in Puerto Rico, 
and 
‘‘(ii) a new markets tax credit limita-
tion of $20,000,000 which shall be allo-
cated by the Secretary as provided in para-
graph (2) except that such limitation may 
only be allocated with respect to low-in-
come communities located in possessions of 
the United States other than Puerto Rico. 
‘‘(B) CARRYOVER
OF
UNUSED
LIMITA-
TION.— 
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