Title: CREATE Act of 2017
Policy area: Commerce

Summary:
Comprehensive Resources for Entrepreneurs in the Arts to Transform the Economy Act of 2017 or the CREATE Act of 2017
This bill amends the Internal Revenue Code to: (1) allow artists to claim tax deductions for qualified artistic charitable contributions based on the fair market value of a piece of artwork, rather than the value of the materials used to create it; and (2) revise income and gift tax requirements for charitable contributions of fractional gifts, the valuation of subsequent gifts, and recapture of the charitable deduction.
The Small Business Act is amended to require the Small Business Administration to develop loan criteria, evaluation procedures, and technical assistance programs for small business concerns owned and controlled by artists and concerns that support the creative economy.
The Public Works and Economic Development Act of 1965 and the Consolidated Farm and Rural Development Act are amended to require the Departments of Commerce and Agriculture to ensure that traditional economic development tools, such as business incubators and grant programs, support the arts industry and creative economy.
The Immigration and Nationality Act is amended to require the Department of Homeland Security to adjudicate petitions for nonimmigrant visas for aliens with extraordinary ability or achievement, and artists and entertainers within 14 days after receiving them.
The Federal Emergency Management Agency (FEMA) shall promulgate rules to ensure that expenses incurred, because of a major disaster or emergency, by specified artists, designers, or musicians to repair or replace needed tools are considered eligible for disaster assistance.
The National and Community Service Act of 1990 is amended to authorize the recipient of a national service program grant to carry out the program through an Artist Corps that identifies and meets unmet needs within communities through artistic activities, including technical assistance for grant writing, marketing, and financial planning.
The Department of the Treasury shall develop guidelines for the creation and operation of qualified community development entities focusing on investment in and the development and encouragement of the creative economy in low-income communities.
Commerce shall establish a demonstration program to promote creative and performing arts in the economic planning of local governments.

[Congressional Bills 115th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1649 Introduced in House (IH)]

<DOC>






115th CONGRESS
  1st Session
                                H. R. 1649

 To assist entrepreneurs, support development of the creative economy, 
 and encourage international cultural exchange, and for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             March 21, 2017

 Mrs. Dingell introduced the following bill; which was referred to the 
Committee on Ways and Means, and in addition to the Committees on Small 
 Business, Transportation and Infrastructure, the Judiciary, Education 
and the Workforce, Financial Services, and Agriculture, for a period to 
      be subsequently determined by the Speaker, in each case for 
consideration of such provisions as fall within the jurisdiction of the 
                          committee concerned

_______________________________________________________________________

                                 A BILL


 
 To assist entrepreneurs, support development of the creative economy, 
 and encourage international cultural exchange, 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; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Comprehensive 
Resources for Entrepreneurs in the Arts to Transform the Economy Act of 
2017'' or the ``CREATE Act of 2017''.
    (b) Table of Contents.--The table of contents for this Act is as 
follows:

Sec. 1. Short title; table of contents.
             TITLE I--SUPPORT FOR ARTISTS AND ENTREPRENEURS

Sec. 101. Charitable contributions of certain items created by the 
                            taxpayer.
Sec. 102. Microloan program expansion.
Sec. 103. SBA business loans for the creative economy.
Sec. 104. SBA technical assistance programs.
Sec. 105. Arts-focused economic development.
Sec. 106. Arts-focused rural development.
Sec. 107. International participation in the arts.
Sec. 108. Disaster support for artists through FEMA.
               TITLE II--SUPPORT FOR THE CREATIVE ECONOMY

Sec. 201. Modification of rules for charitable contributions of 
                            fractional gifts.
Sec. 202. Capital gains tax rate relating to art.
               TITLE III--CREATIVE COMMUNITY DEVELOPMENT

Sec. 301. Artist corps.
Sec. 302. Community development entities focused on the arts for 
                            purposes of the new markets tax credit.
Sec. 303. Demonstration program on support of local programs that 
                            promote creative and performance arts in 
                            local economic planning.

             TITLE I--SUPPORT FOR ARTISTS AND ENTREPRENEURS

SEC. 101. CHARITABLE CONTRIBUTIONS OF CERTAIN ITEMS CREATED BY THE 
              TAXPAYER.

    (a) In General.--Subsection (e) of section 170 of the Internal 
Revenue Code of 1986 is amended by adding at the end the following new 
paragraph:
            ``(8) Special rule for certain contributions of literary, 
        musical, or artistic compositions.--
                    ``(A) In general.--In the case of a qualified 
                artistic charitable contribution--
                            ``(i) the amount of such contribution shall 
                        be the fair market value of the property 
                        contributed (determined at the time of such 
                        contribution), and
                            ``(ii) no reduction in the amount of such 
                        contribution shall be made under paragraph (1).
                    ``(B) Qualified artistic charitable contribution.--
                For purposes of this paragraph, the term `qualified 
                artistic charitable contribution' means a charitable 
                contribution of any literary, musical, artistic, or 
                scholarly composition, or similar property, or the 
                copyright thereon (or both), but only if--
                            ``(i) such property was created by the 
                        personal efforts of the taxpayer making such 
                        contribution no less than 18 months prior to 
                        such contribution,
                            ``(ii) the taxpayer--
                                    ``(I) has received a qualified 
                                appraisal of the fair market value of 
                                such property in accordance with the 
                                regulations under this section, and
                                    ``(II) attaches to the taxpayer's 
                                income tax return for the taxable year 
                                in which such contribution was made a 
                                copy of such appraisal,
                            ``(iii) the donee is an organization 
                        described in subsection (b)(1)(A),
                            ``(iv) the use of such property by the 
                        donee is related to the purpose or function 
                        constituting the basis for the donee's 
                        exemption under section 501 (or, in the case of 
                        a governmental unit, to any purpose or function 
                        described under subsection (c)),
                            ``(v) the taxpayer receives from the donee 
                        a written statement representing that the 
                        donee's use of the property will be in 
                        accordance with the provisions of clause (iv), 
                        and
                            ``(vi) the written appraisal referred to in 
                        clause (ii) includes evidence of the extent (if 
                        any) to which property created by the personal 
                        efforts of the taxpayer and of the same type as 
                        the donated property is or has been--
                                    ``(I) owned, maintained, and 
                                displayed by organizations described in 
                                subsection (b)(1)(A), and
                                    ``(II) sold to or exchanged by 
                                persons other than the taxpayer, donee, 
                                or any related person (as defined in 
                                section 465(b)(3)(C)).
                    ``(C) Maximum dollar limitation; no carryover of 
                increased deduction.--The increase in the deduction 
                under this section by reason of this paragraph for any 
                taxable year--
                            ``(i) shall not exceed the artistic 
                        adjusted gross income of the taxpayer for such 
                        taxable year, and
                            ``(ii) shall not be taken into account in 
                        determining the amount which may be carried 
                        from such taxable year under subsection (d).
                    ``(D) Artistic adjusted gross income.--For purposes 
                of this paragraph, the term `artistic adjusted gross 
                income' means that portion of the adjusted gross income 
                of the taxpayer for the taxable year attributable to--
                            ``(i) income from the sale or use of 
                        property created by the personal efforts of the 
                        taxpayer which is of the same type as the 
                        donated property, and
                            ``(ii) income from teaching, lecturing, 
                        performing, or similar activity with respect to 
                        property described in clause (i).
                    ``(E) Paragraph not to apply to certain 
                contributions.--Subparagraph (A) shall not apply to any 
                charitable contribution of any letter, memorandum, or 
                similar property which was written, prepared, or 
                produced by or for an individual while the individual 
                is an officer or employee of any person (including any 
                government agency or instrumentality) unless such 
                letter, memorandum, or similar property is entirely 
                personal.
                    ``(F) Copyright treated as separate property for 
                partial interest rule.--In the case of a qualified 
                artistic charitable contribution, the tangible 
                literary, musical, artistic, or scholarly composition, 
                or similar property and the copyright on such work 
                shall be treated as separate properties for purposes of 
                this paragraph and subsection (f)(3).''.
    (b) Effective Date.--The amendment made by this section shall apply 
to contributions made after the date of the enactment of this Act in 
taxable years ending after such date.

SEC. 102. MICROLOAN PROGRAM EXPANSION.

    Section 7(m)(6) of the Small Business Act (15 U.S.C. 636(m)(6)) is 
amended by adding at the end the following:
                    ``(F) Loan criteria for artists and arts 
                entrepreneurs.--The Administration, in consultation 
                with eligible intermediaries, shall develop loan 
                criteria to ensure that small business concerns owned 
                and controlled by artists and small business concerns 
                that support the creative economy receive loan proceeds 
                under this subsection.''.

SEC. 103. SBA BUSINESS LOANS FOR THE CREATIVE ECONOMY.

    Section 7(a) of the Small Business Act (15 U.S.C. 636(a)) is 
amended by adding at the end the following:
            ``(35) Creative economy.--In providing assistance under 
        this subsection, the Administration shall develop procedures to 
        evaluate the business proposals and business plans of small 
        business concerns that focus on economic development, job 
        creation, and community growth with respect to the creative 
        economy.''.

SEC. 104. SBA TECHNICAL ASSISTANCE PROGRAMS.

    Section 21 of the Small Business Act (15 U.S.C. 648) is amended by 
adding at the end the following:
    ``(o) Technical Assistance Programs for Artists and Arts 
Entrepreneurs.--The Administration, in consultation with relevant 
stakeholders, shall develop technical assistance programs to be carried 
out by small business development centers under this subsection that 
target the specific needs of artists and arts entrepreneurs.''.

SEC. 105. ARTS-FOCUSED ECONOMIC DEVELOPMENT.

    Title II of the Public Works and Economic Development Act of 1965 
(42 U.S.C. 3141 et seq.) is amended by adding at the end the following:

``SEC. 219. ARTS-FOCUSED ECONOMIC DEVELOPMENT.

    ``(a) Definitions.--In this section:
            ``(1) Business incubation program.--The term `business 
        incubation program' means a program that--
                    ``(A) accelerates the successful development of 
                entrepreneurial businesses through business support 
                resources and services, developed or orchestrated by 
                incubator management;
                    ``(B) is designed to produce successful businesses; 
                and
                    ``(C) provides management guidance, technical 
                assistance, and consulting designed for young, growing 
                businesses, including by providing--
                            ``(i) rental space and flexible leases;
                            ``(ii) shared basic business services and 
                        equipment;
                            ``(iii) technology support services; and
                            ``(iv) assistance in obtaining financing 
                        necessary for growth of the business.
            ``(2) Incubator.--The term `incubator' means a multitenant 
        facility with on-site management that directs a business 
        incubation program.
    ``(b) Arts-Focused Economic Development.--In providing grants and 
assistance under this Act (including through the local technical 
assistance, partnership planning, and comprehensive economic 
development strategies programs of the Economic Development 
Administration), the Secretary shall provide to artists and the 
creative economy support through traditional economic development 
tools, including--
            ``(1) incubators; and
            ``(2) economic development planning and technical 
        assistance.''.

SEC. 106. ARTS-FOCUSED RURAL DEVELOPMENT.

    The Consolidated Farm and Rural Development Act (7 U.S.C. 1921 et 
seq.) is amended by adding at the end the following:

            ``Subtitle J--Arts-Focused Economic Development

``SEC. 386A. ARTS-FOCUSED ECONOMIC DEVELOPMENT.

    ``(a) Definitions.--In this section:
            ``(1) Business incubation program.--The term `business 
        incubation program' means a program that--
                    ``(A) accelerates the successful development of 
                entrepreneurial businesses through business support 
                resources and services, developed or orchestrated by 
                incubator management;
                    ``(B) is designed to produce successful businesses; 
                and
                    ``(C) provides management guidance, technical 
                assistance, and consulting designed for young, growing 
                businesses, including by providing--
                            ``(i) rental space and flexible leases;
                            ``(ii) shared basic business services and 
                        equipment;
                            ``(iii) technology support services; and
                            ``(iv) assistance in obtaining financing 
                        necessary for growth of the business.
            ``(2) Incubator.--The term `incubator' means a multitenant 
        facility with on-site management that directs a business 
        incubation program.
    ``(b) Arts-Focused Economic Development.--In providing grants and 
assistance under this Act (including through the local technical 
assistance, partnership planning, and comprehensive economic 
development strategies programs of the Office of Rural Development), 
the Secretary, acting through the Under Secretary for Rural 
Development, shall provide to artists and the creative economy support 
through traditional economic development tools, including--
            ``(1) incubators; and
            ``(2) economic development planning and technical 
        assistance.''.

SEC. 107. INTERNATIONAL PARTICIPATION IN THE ARTS.

    Section 214(c)(6)(D) of the Immigration and Nationality Act (8 
U.S.C. 1184(c)(6)(D)) is amended--
            (1) in the first sentence, by inserting ``(i)'' before 
        ``Any person'';
            (2) in the second sentence--
                    (A) by striking ``Once'' and inserting ``Except as 
                provided in clause (ii), once''; and
                    (B) by striking ``Attorney General shall'' and 
                inserting ``Secretary of Homeland Security shall'';
            (3) in the third sentence, by striking ``The Attorney 
        General'' and inserting ``The Secretary''; and
            (4) by adding at the end the following:
    ``(ii) The Secretary of Homeland Security shall adjudicate each 
petition for an alien with extraordinary ability in the arts (as 
described in section 101(a)(15)(O)(i)), an alien accompanying such an 
alien (as described in section 101(a)(15)(O)(ii)), or an alien 
described in section 101(a)(15)(P) (other than an alien described in 
section 214(c)(4)(A) (relating to athletes)) not later than 14 days 
after--
            ``(I) the date on which the petitioner submits the petition 
        with a written advisory opinion, letter of no objection, or 
        request for a waiver; or
            ``(II) the date on which the 15-day period described in 
        clause (i) has expired, if the petitioner has had an 
        opportunity to supply rebuttal evidence.
    ``(iii) If a petition described in clause (ii) is not adjudicated 
by the end of the 14-day period described in clause (ii) and the 
petitioner is an arts organization described in paragraph (3), (5), or 
(6) of section 501(c) of the Internal Revenue Code of 1986 and exempt 
from tax under section 501(a) of such Code for the taxable year 
preceding the calendar year in which the petition is submitted, or an 
individual or entity petitioning primarily on behalf of such an 
organization, the Secretary of Homeland Security shall provide the 
petitioner with the premium-processing services referred to in section 
286(u), without a fee.''.

SEC. 108. DISASTER SUPPORT FOR ARTISTS THROUGH FEMA.

    (a) In General.--The President, acting through the Administrator of 
the Federal Emergency Management Agency, shall promulgate rules to 
ensure that expenses incurred, as a result of a major disaster or 
emergency, by a self-employed or freelance worker, including a craft 
artist, fine artist, designer, literary artist, performing artist, or 
musician, to repair or replace tools needed by the self-employed or 
freelance worker are considered eligible expenses for assistance under 
section 408 of the Robert T. Stafford Disaster Relief and Emergency 
Assistance Act (42 U.S.C. 5174).
    (b) Requirement.--The rules promulgated under subsection (a) may 
not require, as a condition of receiving such assistance under section 
408 of the Robert T. Stafford Disaster Relief and Emergency Assistance 
Act (42 U.S.C. 5174), an applicant--
            (1) to apply or be declined for assistance from the Small 
        Business Administration; or
            (2) to demonstrate that assistance received from the Small 
        Business Administration does not satisfy the total necessary 
        expenses or serious needs arising out of a major disaster or 
        emergency.

               TITLE II--SUPPORT FOR THE CREATIVE ECONOMY

SEC. 201. MODIFICATION OF RULES FOR CHARITABLE CONTRIBUTIONS OF 
              FRACTIONAL GIFTS.

    (a) Income Tax.--
            (1) Additional requirements for deduction.--Paragraph (1) 
        of section 170(o) of the Internal Revenue Code of 1986 is 
        amended to read as follows:
            ``(1) Denial of deduction in certain cases.--
                    ``(A) In general.--No deduction shall be allowed 
                for a contribution of an undivided portion of a 
                taxpayer's entire interest in tangible personal 
                property unless--
                            ``(i) all interests in the property are 
                        held immediately before such contribution by--
                                    ``(I) the taxpayer, or
                                    ``(II) the taxpayer and the donee,
                            ``(ii) in the case of an initial fractional 
                        contribution, such contribution is an undivided 
                        portion of not less than 10 percent of all 
                        interests in the property,
                            ``(iii) in the case of an initial 
                        fractional contribution, the contribution is 
                        made pursuant to a written binding contract 
                        which requires the donor--
                                    ``(I) to contribute not less than 
                                20 percent of all interests in the 
                                property on or before the date that is 
                                11 years after the date of the initial 
                                fractional contribution, and
                                    ``(II) to contribute all of the 
                                interests in such property to the donee 
                                (or if such donee is no longer in 
                                existence, to any person described in 
                                subsection (c)) on or before the 
                                earlier of the date of the death of the 
                                donor or the date which is 20 years 
                                after the date of the initial 
                                fractional contribution, and
                            ``(iv) if the value of the tangible 
                        personal property with respect to which the 
                        undivided portion of the taxpayer's entire 
                        interest relates is greater than $1,000,000 (or 
                        such greater amount as determined by the 
                        Secretary), the taxpayer attaches to the return 
                        for the taxable year in which such contribution 
                        is made a statement of value obtained from the 
                        Internal Revenue Service.
                In the case of a donor who dies before the date which 
                is 20 years after the date of the initial fractional 
                contribution, clause (iii)(II) is satisfied with 
                respect to such initial fractional contribution if the 
                donor's will specifies that all of the interests in 
                such property will be contributed to the donee before 
                such date.
                    ``(B) Exceptions.--The Secretary may, by 
                regulation, provide for exceptions to subparagraph 
                (A)(i) in cases where all persons who hold an interest 
                in the property make proportional contributions of an 
                undivided portion of the entire interest held by such 
                persons. Such regulations may modify the requirements 
                of clauses (ii) and (iii) of subparagraph (A) to the 
                extent necessary to carry out the purposes of this 
                subparagraph.''.
            (2) Valuation of subsequent gifts.--Paragraph (2) of 
        section 170(o) of such Code is amended to read as follows:
            ``(2) Valuation of subsequent gifts.--In the case of any 
        additional contribution, the fair market value of such 
        contribution shall be determined by using a certified appraisal 
        from the Art Advisory Panel of the Commissioner of Internal 
        Revenue.''.
            (3) Recapture of deduction.--Paragraph (3) of section 
        170(o) of such Code is amended--
                    (A) by redesignating subparagraph (B) as 
                subparagraph (C), and
                    (B) by striking subparagraph (A) and inserting the 
                following:
                    ``(A) Recapture.--The Secretary shall provide for 
                the recapture of the amount of any deduction allowed 
                under this section (plus interest) with respect to any 
                contribution of an undivided portion of a taxpayer's 
                entire interest in tangible personal property--
                            ``(i) in any case in which the donor fails 
                        to meet the requirements described in paragraph 
                        (1)(A)(iii), and
                            ``(ii) in any case where such property is 
                        not in the physical possession of the donee 
                        (other than in the case of art which is fragile 
                        or unwieldy) and used in a use which is related 
                        to a purpose or function constituting the basis 
                        for the donee organization's exemption under 
                        section 501 during any applicable period for a 
                        period of time which bears substantially the 
                        same ratio to 5 years as--
                                    ``(I) the percentage of the 
                                undivided interest of the donee in the 
                                property (determined on the day after 
                                such contribution was made), bears to
                                    ``(II) 100 percent.
                    ``(B) Applicable period.--For purposes of 
                subparagraph (A), the applicable period means--
                            ``(i) the 5-year period beginning on the 
                        date of the later of the initial fractional 
                        contribution, and
                            ``(ii) each subsequent 5-year period 
                        occurring during the 20-year period described 
                        in paragraph (1)(A)(iii)(II).''.
    (b) Gift Tax.--
            (1) Additional requirements for deduction.--Paragraph (1) 
        of section 2522(e) of the Internal Revenue Code of 1986 is 
        amended to read as follows:
            ``(1) Denial of deduction in certain cases.--
                    ``(A) In general.--No deduction shall be allowed 
                for a contribution of an undivided portion of a 
                taxpayer's entire interest in tangible personal 
                property unless--
                            ``(i) all interests in the property are 
                        held immediately before such contribution by--
                                    ``(I) the taxpayer, or
                                    ``(II) the taxpayer and the donee,
                            ``(ii) in the case of an initial fractional 
                        contribution, such contribution is an undivided 
                        portion of not less than 10 percent of all 
                        interests in the property,
                            ``(iii) in the case of an initial 
                        fractional contribution, the contribution is 
                        made pursuant to a written binding contract 
                        which requires the donor--
                                    ``(I) to contribute not less than 
                                20 percent of all interests in the 
                                property on or before the date that is 
                                11 years after the date of the initial 
                                fractional contribution, and
                                    ``(II) to contribute all of the 
                                interests in such property to the donee 
                                (or if such donee is no longer in 
                                existence, to any person described in 
                                subsection (c)) on or before the 
                                earlier of the date of the death of the 
                                donor or the date which is 20 years 
                                after the date of the initial 
                                fractional contribution, and
                            ``(iv) if the value of the tangible 
                        personal property with respect to which the 
                        undivided portion of the taxpayer's entire 
                        interest relates is greater than $1,000,000 (or 
                        such greater amount as determined by the 
                        Secretary), the taxpayer attaches to the return 
                        for the taxable year in which such contribution 
                        is made a statement of value obtained from the 
                        Internal Revenue Service.
                In the case of a donor who dies before the date which 
                is 20 years after the date of the initial fractional 
                contribution, clause (iii)(II) is satisfied with 
                respect to such initial fractional contribution if the 
                donor's will specifies that all of the interests in 
                such property will be contributed to the donee before 
                such date.
                    ``(B) Exceptions.--The Secretary may, by 
                regulation, provide for exceptions to subparagraph 
                (A)(i) in cases where all persons who hold an interest 
                in the property make proportional contributions of an 
                undivided portion of the entire interest held by such 
                persons. Such regulations may modify the requirements 
                of clauses (ii) and (iii) of subparagraph (A) to the 
                extent necessary to carry out the purposes of this 
                subparagraph.''.
            (2) Recapture of deduction.--Paragraph (2) of section 
        2522(e) of such Code is amended--
                    (A) by redesignating subparagraphs (B) and (C) as 
                subparagraphs (C) and (D), respectively, and
                    (B) by striking subparagraph (A) and inserting the 
                following:
                    ``(A) Recapture.--The Secretary shall provide for 
                the recapture of the amount of any deduction allowed 
                under this section (plus interest) with respect to any 
                contribution of an undivided portion of a taxpayer's 
                entire interest in tangible personal property--
                            ``(i) in any case in which the donor fails 
                        to meet the requirements described in paragraph 
                        (1)(A)(iii), and
                            ``(ii) in any case where such property is 
                        not in the physical possession of the donee 
                        (other than in the case of art which is fragile 
                        or unwieldy) and used in a use which is related 
                        to a purpose or function constituting the basis 
                        for the donee organization's exemption under 
                        section 501 during any applicable period for a 
                        period of time which bears substantially the 
                        same ratio to 5 years as--
                                    ``(I) the percentage of the 
                                undivided interest of the donee in the 
                                property (determined on the day after 
                                such contribution was made), bears to
                                    ``(II) 100 percent.
                    ``(B) Applicable period.--For purposes of 
                subparagraph (A), the applicable period means--
                            ``(i) the 5-year period beginning on the 
                        date of the later of the initial fractional 
                        contribution, and
                            ``(ii) each subsequent 5-year period 
                        occurring during the 20-year period described 
                        in paragraph (1)(A)(iii)(II).''.
    (c) Effective Date.--The amendments made by this section shall 
apply to contributions and gifts made after the date of the enactment 
of this Act.
    (d) Transition Rule.--In the case of any additional contribution 
(as defined in section 170(o)(4) of the Internal Revenue Code of 1986) 
with respect to an initial fractional contribution (as defined in such 
section) made after August 17, 2006, and before the date of the 
enactment of this Act--
            (1) except for purposes of determining the fair market 
        value of such contribution under section 170(o)(2) of the 
        Internal Revenue Code of 1986 (as amended by this Act), such 
        contribution shall be treated as an initial fractional 
        contribution (as so defined) subject to the amendments made by 
        this section, and
            (2) sections 170(o)(3)(A)(i) and 2522(e)(3)(A)(i) of such 
        Code (as in effect before the date of the enactment of this 
        Act) shall not apply with respect to any prior contribution of 
        an undivided portion of the taxpayer's interest in the 
        property.

SEC. 202. CAPITAL GAINS TAX RATE RELATING TO ART.

    (a) Exclusion From 28-Percent Rate Gain.--Subparagraph (A) of 
section 1(h)(5) of the Internal Revenue Code of 1986 is amended by 
striking ``paragraph (3)'' and inserting ``paragraph (2)(A) or (3)''.
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after the date of the enactment of this Act.

               TITLE III--CREATIVE COMMUNITY DEVELOPMENT

SEC. 301. ARTIST CORPS.

    (a) Corps.--Section 122(a) of the National and Community Service 
Act of 1990 (42 U.S.C. 12572(a)) is amended by adding at the end the 
following:
            ``(6) Artist corps.--
                    ``(A) In general.--The recipient may carry out 
                national service programs through an Artist Corps that 
                identifies and meets unmet needs within communities 
                through artistic activities such as those described in 
                subparagraph (B) and improves performance on the 
                indicators described in subparagraph (C).
                    ``(B) Activities.--An Artist Corps described in 
                this paragraph may carry out activities such as--
                            ``(i) providing skilled visual and 
                        performance artists to address community needs 
                        through artistic activities in education, 
                        health care, and therapeutic settings, and in 
                        other settings in the community; or
                            ``(ii) providing other artistic activities, 
                        addressing unmet community needs, that the 
                        Corporation may designate, such as technical 
                        assistance for grant writing, marketing, and 
                        financial planning.
                    ``(C) Artist corps indicators.--The indicators for 
                a corps program described in this paragraph are--
                            ``(i) any indicator relating to meeting 
                        critical needs that the Corporation 
                        establishes; or
                            ``(ii) any local indicator (applicable to a 
                        particular recipient or community and on which 
                        an improvement in performance is needed) 
                        relating to meeting critical needs, that is 
                        approved by the Corporation or a State 
                        Commission.''.
    (b) Conforming Amendments.--Section 122 of such Act is amended--
            (1) in subsection (b)(3), by striking ``or (5)'' and 
        inserting ``(5), or (6)''; and
            (2) in subsection (c)(1), in the matter preceding 
        subparagraph (A), by striking ``through (5)'' and inserting 
        ``through (6)''.

SEC. 302. COMMUNITY DEVELOPMENT ENTITIES FOCUSED ON THE ARTS FOR 
              PURPOSES OF THE NEW MARKETS TAX CREDIT.

    (a) In General.--Not later than 1 year after the date of the 
enactment of this Act, the Secretary of the Treasury shall develop and 
promulgate guidelines for the creation and operation of qualified 
community development entities--
            (1) which will be eligible to be certified as such by the 
        Secretary of the Treasury under section 45D(c)(1)(C) of the 
        Internal Revenue Code of 1986;
            (2) a qualified equity investment in which will, subject to 
        allocation under section 45D(f) of such Code, be eligible for 
        the credit under such section 45D; and
            (3) which will focus on investment in and the development 
        and encouragement of the creative economy in low-income 
        communities.
    (b) Definitions.--For purposes of this section, any term used in 
subsection (a) which is also used in section 45D of the Internal 
Revenue Code of 1986 has the same meaning as when used in such section.

SEC. 303. DEMONSTRATION PROGRAM ON SUPPORT OF LOCAL PROGRAMS THAT 
              PROMOTE CREATIVE AND PERFORMANCE ARTS IN LOCAL ECONOMIC 
              PLANNING.

    (a) Demonstration Program Required.--The Secretary of Commerce 
shall establish a demonstration program to assess the feasibility and 
advisability of providing support to covered programs to promote 
creative and performing arts in the economic planning of local 
governments.
    (b) Covered Programs.--For purposes of the demonstration program 
required by subsection (a), a covered program is any program that--
            (1) was in effect on the day before the date of the 
        enactment of this Act; and
            (2) the Secretary considers part of an art community.
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