Title: New Markets Stabilization Act
Policy area: Taxation

Summary:
New Markets Stabilization Act
This bill modifies provisions of the new markets tax credit (NMTC). Specifically, it increases and extends the NMTC limitation through 2022 and allows a carryback of the credit for five years. The bill also exempts the NMTC from the 75% general business credit limitation, revises debt modification rules for NMTC issuers and borrowers, and permanently exempts the NMTC from the alternative minimum tax.

[Congressional Bills 116th Congress]
[From the U.S. Government Publishing Office]
[H.R. 8965 Introduced in House (IH)]

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116th CONGRESS
  2d Session
                                H. R. 8965

To amend the Internal Revenue Code of 1986 to make certain improvements 
         to the new markets tax credit, and for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                           December 14, 2020

    Ms. Sewell of Alabama (for herself and Mr. Reed) introduced the 
 following bill; which was referred to the Committee on Ways and Means

_______________________________________________________________________

                                 A BILL


 
To amend the Internal Revenue Code of 1986 to make certain improvements 
         to the new markets 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 ``New Markets Stabilization Act''.

SEC. 2. IMPROVEMENTS TO NEW MARKETS TAX CREDIT.

    (a) Additional Allocations.--
            (1) In general.--Section 45D(f)(1) of the Internal Revenue 
        Code of 1986 is amended by striking subparagraphs (G) and (H) 
        and inserting the following new subparagraphs:
                    ``(G) $3,500,000,000 for each of calendar years 
                2010 through 2018,
                    ``(H) $4,000,000,000 for calendar year 2019,
                    ``(I) $7,000,000,000 for calendar year 2020,
                    ``(J) $6,500,000,000 for calendar year 2021, and
                    ``(K) $5,500,000,000 for calendar year 2022.''.
            (2) Conforming amendment.--Section 45D(f)(3) of such Code 
        is amended by striking ``2025'' and inserting ``2027''.
            (3) Special rule for allocations of increased 2019 and 2020 
        limitation.--The amount of the increase by reason of the 
        amendments made by paragraph (1) in the new markets tax credit 
        limitation for calendar year 2019 and the amount of such 
        increase for calendar year 2020 shall each be allocated in 
        accordance with section 45D(f)(2) of the Internal Revenue Code 
        of 1986 to qualified community development entities (as defined 
        in section 45D(c) of such Code) which--
                    (A) submitted an allocation application with 
                respect to the calendar year to which such increase 
                relates, and
                    (B)(i) did not receive an allocation with respect 
                to such calendar year, or
                    (ii) received an allocation for such calendar year 
                in an amount less than the amount requested in the 
                allocation application.
    (b) Permanent Allowance of Credit Against Alternative Minimum 
Tax.--
            (1) In general.--Section 38(c)(4)(B) of the Internal 
        Revenue Code of 1986 is amended clauses (vii) through (xii) as 
        clauses (viii) through (xiii), respectively, and by inserting 
        after clause (vi) the following new clause:
                            ``(vii) the credit determined under section 
                        45D to the extent attributable to qualified 
                        equity investments originally issued after the 
                        date of the enactment of this clause,''.
            (2) Effective date.--The amendments made by this subsection 
        shall apply to taxable years ending after the date of the 
        enactment of this Act.
    (c) Credit Allowed To Be Carried Back 5 Years and To Offset Entire 
Tax Liability as Temporary Incentive for Making Investments in 
Qualified Community Development Entities.--
            (1) In general.--In the case of the portion of the new 
        markets tax credit determined under section 45D of the Internal 
        Revenue Code of 1986 which is attributable to qualified equity 
        investments originally issued after the date of the enactment 
        of this Act and before January 1, 2023--
                    (A) sections 38 and 39 of such Code shall be 
                applied separately with respect to such portion,
                    (B) notwithstanding section 39(d) of such Code, 
                section 39(a) of such Code shall be applied--
                            (i) by substituting ``each of the 5 taxable 
                        years'' for ``the taxable year'' in paragraph 
                        (1)(A) thereof,
                            (ii) by substituting ``25 taxable years'' 
                        for ``21 taxable years'' in paragraph (2)(A) 
                        thereof, and
                            (iii) by substituting ``24 taxable years'' 
                        for ``20 taxable years'' in subparagraph (2)(B) 
                        thereof,
                    (C) the amounts described in subparagraphs (A) and 
                (B) of section 38(c)(1) of such Code shall each be 
                treated as being zero, and
                    (D) the limitation under section 38(c)(1) of such 
                Code (as modified by subparagraph (C)) shall be reduced 
                by the credit allowed under section 38(a) for the 
                taxable year (other than the portion of qualified new 
                markets tax credit to which this paragraph applies).
            (2) Coordination with other limitations.--The portion of 
        the new markets tax credit to which paragraph (1) applies--
                    (A) shall not be taken into account as a credit 
                allowed under section 38(a) of such Code for purposes 
                of paragraphs (2)(A)(ii)(II) and (4)(A)(ii)(II) of 
                section 38(c) of such Code, and
                    (B) shall not be treated as described in section 
                38(c)(4)(B)(vii) of such Code, as amended by this Act.
    (d) Temporary Override of Certain Regulations Treating Debt 
Modifications as Exchanges.--
            (1) In general.--For purposes of the Internal Revenue Code 
        of 1986, any modification of a QCDE loan which occurs during 
        the period beginning on March 12, 2020, and ending on December 
        31, 2022, shall not be treated an exchange of an existing debt 
        instrument for a new debt instrument.
            (2) QCDE loan.--For purposes of this subsection, the term 
        ``QCDE loan'' means any debt instrument held by a qualified 
        community development entity (as defined in section 45D(c) of 
        the Internal Revenue Code of 1986) to the extent that the 
        borrower is a qualified active low-income community business 
        (as defined in section 45D(d)(2) of such Code).
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