Title: Historic Tax Credit Improvement Act of 2017
Policy area: Taxation

Summary:
Historic Tax Credit Improvement Act of 2017
This bill amends the Internal Revenue Code, with respect to the tax credit for the rehabilitation of buildings and historic structures, to: (1) allow an increased 30% credit, up to $750,000, for projects with rehabilitation expenditures not exceeding $3.75 million, for which no credit was allowed in either of the two immediately preceding taxable years (small projects); (2) allow the transfer of tax credit amounts for small projects; (3) treat a building as substantially rehabilitated if rehabilitation expenditures exceed the greater of 50% of the adjusted basis of the building or $5,000 (currently, the greater of the adjusted basis of the building or $5,000); (4) reduce the required basis adjustment from 100% of the credit to 50% of the amount of the credit; and (5) limit the application of disqualified lease rules to tax-exempt use property.

[Congressional Bills 115th Congress]
[From the U.S. Government Publishing Office]
[S. 425 Introduced in Senate (IS)]

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115th CONGRESS
  1st Session
                                 S. 425

  To amend the Internal Revenue Code of 1986 to improve the historic 
           rehabilitation tax credit, and for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                           February 16, 2017

Mr. Cardin (for himself, Ms. Collins, Mr. Cochran, Mrs. Gillibrand, Mr. 
 Wicker, and Mr. Leahy) introduced the following bill; which was read 
             twice and referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL


 
  To amend the Internal Revenue Code of 1986 to improve the historic 
           rehabilitation tax credit, and for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Historic Tax Credit Improvement Act 
of 2017''.

SEC. 2. INCREASE IN THE REHABILITATION CREDIT FOR CERTAIN SMALL 
              PROJECTS.

    (a) In General.--Section 47 of the Internal Revenue Code of 1986 is 
amended by adding at the end the following new subsection:
    ``(e) Special Rule Regarding Certain Small Projects.--
            ``(1) In general.--In the case of any qualified 
        rehabilitated building or portion thereof--
                    ``(A) which is placed in service after the date of 
                the enactment of this subsection, and
                    ``(B) which is a small project,
        subsection (a)(2) shall be applied by substituting `30 percent' 
        for `20 percent'.
            ``(2) Maximum credit.--The credit under this section (after 
        application of this subsection) with respect to any project for 
        all taxable years shall not exceed $750,000.
            ``(3) Small project.--
                    ``(A) In general.--For purposes of this subsection, 
                the term `small project' means any certified historic 
                structure or portion thereof if--
                            ``(i) the total qualified rehabilitation 
                        expenditures taken into account for purposes of 
                        this section with respect to the rehabilitation 
                        do not exceed $3,750,000, and
                            ``(ii) no credit was allowed under this 
                        section for either of the two immediately 
                        preceding taxable years with respect to such 
                        building.
                    ``(B) Progress expenditures.--Credit allowable by 
                reason of subsection (d) shall not be taken into 
                account under subparagraph (A)(ii).''.
    (b) Effective Date.--The amendment made by this section shall apply 
to periods after the date of the enactment of this Act, under rules 
similar to the rules of section 48(m) of the Internal Revenue Code of 
1986 (as in effect on the day before the date of the enactment of the 
Revenue Reconciliation Act of 1990).

SEC. 3. ALLOWANCE FOR THE TRANSFER OF CREDITS FOR CERTAIN SMALL 
              PROJECTS.

    (a) In General.--Section 47(e) of the Internal Revenue Code of 
1986, as added by section 2, is amended by adding at the end the 
following new paragraph:
            ``(4) Transfer of small project credit.--
                    ``(A) In general.--Subject to subparagraph (B) and 
                such regulations or other guidance as the Secretary may 
                provide, the taxpayer may transfer to any other 
                taxpayer all or a portion of the credit allowable to 
                the taxpayer under subsection (a) for a small project.
                    ``(B) Certification.--A transfer under subparagraph 
                (A) shall be accompanied by a certificate which 
                includes--
                            ``(i) the certification for the certified 
                        historic structure,
                            ``(ii) the taxpayer's name, address, and 
                        tax identification number,
                            ``(iii) the transferee's name, address, and 
                        tax identification number,
                            ``(iv) the date of project completion and 
                        the amount of credit being transferred, and
                            ``(v) such other information as may be 
                        required by the Secretary.
                    ``(C) Credit may only be transferred once.--A 
                credit transferred under subparagraph (A) is not 
                transferable by the transferee to any other taxpayer.
                    ``(D) Tax treatment of transfer.--
                            ``(i) Disallowance of deduction.--No 
                        deduction shall be allowed for any amount of 
                        consideration paid or incurred by the 
                        transferee in return for the transfer of any 
                        credit under this paragraph.
                            ``(ii) Allowance of credit.--The amount of 
                        credit transferred under subparagraph (A)--
                                    ``(I) shall not be allowed to the 
                                transferor for any taxable year, and
                                    ``(II) shall be allowable to the 
                                transferee as a credit under this 
                                section for the taxable year of the 
                                transferee in which such credit is 
                                transferred.
                    ``(E) Recapture and other special rules.--For 
                purposes of section 50, the transferee of a credit with 
                respect to a smaller project under this paragraph shall 
                be treated as the taxpayer with respect to the smaller 
                project.
                    ``(F) Information reporting.--The transferor and 
                the transferee shall each make such reports regarding 
                the transfer of an amount of credit under subparagraph 
                (A), and containing such information, as the Secretary 
                may require. The reports required by this subparagraph 
                shall be filed at such time and in such manner as may 
                be required by the Secretary.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to periods after December 31, 2016.

SEC. 4. INCREASING THE TYPE OF BUILDINGS ELIGIBLE FOR REHABILITATION.

    (a) In General.--Section 47(c)(1)(C)(i)(I) of the Internal Revenue 
Code of 1986 is amended by inserting ``50 percent of'' before ``the 
adjusted basis''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to taxable years beginning after December 31, 2016.

SEC. 5. REDUCTION OF BASIS ADJUSTMENT FOR REHABILITATION PROPERTY.

    (a) In General.--Section 50(c) of the Internal Revenue Code of 1986 
is amended by adding at the end the following:
            ``(6) Special rule relating to the rehabilitation credit.--
        In the case of any rehabilitation credit--
                    ``(A) only 50 percent of such credit shall be taken 
                into account under paragraph (1), and
                    ``(B) only 50 percent of any recapture amount 
                attributable to such credit shall be taken into account 
                under paragraph (2).''.
    (b) Coordination With Basis Adjustment.--Subsection (d) of section 
50 of the Internal Revenue Code of 1986 is amended by adding at the end 
the following new sentence: ``For purposes of paragraph (5), in 
applying the provisions of section 48(d)(5)(B) (as so in effect) to a 
lease of property eligible for the credit under section 47, gross 
income of the lessee of such property shall include, ratably over the 
shortest recovery period applicable to such property under section 168, 
an amount equal to 50 percent of the amount of the credit allowable 
under section 38 to such lessee with respect to such property.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after the date of the enactment of 
this Act.

SEC. 6. MODIFICATIONS REGARDING CERTAIN TAX-EXEMPT USE PROPERTY.

    (a) In General.--Section 47(c)(2)(B)(v)(I) of the Internal Revenue 
Code of 1986 is amended by inserting ``, and subclauses (I), (II), and 
(III) of section 168(h)(1)(B)(ii) shall not apply'' after ``thereof''.
    (b) Effective Date.--The amendments made by this section shall 
apply to property placed in service after the date of the enactment of 
this Act.
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