Section 1 Short title
This Act may be cited as the “Historic Tax Credit Improvement Act of 2015”.
Historic Tax Credit Improvement Act of 2015
A BILL
To amend the Internal Revenue Code of 1986 to improve the historic rehabilitation tax credit, and for other purposes.
Sec. 2 Increase in the rehabilitation credit for certain small projects
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,
“(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).”
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
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 paragraph (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.”
Effective date— The amendments made by this section shall apply to periods after December 31, 2015.
Sec. 4 Increasing the type of buildings eligible for rehabilitation
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”.
Effective date— The amendment made by subsection (a) shall apply to taxable years beginning after December 31, 2015.
Sec. 5 Reduction of basis adjustment for rehabilitation property
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).”
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.”.
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 Special rules for dispositions of state historic tax credits
In general— Part III of subchapter B of chapter 1 of the Internal Revenue Code of 1986 is amended by inserting after section 139F the following new section:
“139G. Dispositions of State historic tax credits
“(a) Exclusion from income; basis reduction
“(1) In general—In the case of a taxpayer who receives a State historic tax credit and transfers such credit by sale, allocation, or otherwise, or receives a refund of all or a portion of such credit—
“(A) no portion of the net proceeds of such allocation, disposition, or refund of such credit shall constitute income to such taxpayer under section 61(a), and
“(B) the taxpayer’s basis for purposes of this title in the property with respect to which the State historic tax credit is allowed shall be reduced by the net proceeds of such sale, allocation, disposition, or refund under the rules of paragraph (2).
“(2) Application of reduction in basis
“(A) In general—The reduction in basis under paragraph (1)(b) shall be applied—
“(i) first, against the basis in the land,
“(ii) second, against so much of the basis of any building or interest therein as was not treated as a qualified rehabilitation expenditure by reason of clause (ii) or (iii) of section 47(c)(2)(B), and
“(iii) third, against the remaining basis in the property.
“(B) Adjustment in basis of interest in partnership or S corporation—The adjusted basis of—
“(i) a partner’s interest in a partnership, or
“(ii) stock in an S corporation (as defined in section 1361(a)(1)), shall be appropriately adjusted to take into account adjustments made under this paragraph in the basis of property held by the partnership or S corporation (if any).
“(b) Election To include in income
“(1) In general—In the case of a taxpayer who elects to have this subsection apply in lieu of subsection (a)—
“(A) the net proceeds of the allocation, disposition, or refund described in subsection (a)(1) shall constitute income to the taxpayer under section 61(a), and
“(B) subsection (a)(1)(B) shall not apply.
“(2) Making of election—An election under this subsection shall be made at such time and in such manner as the Secretary may by regulation prescribe. Such election shall apply for the taxable year for which it is made and for all subsequent taxable years and may be revoked only with the consent of the Secretary of the Treasury.
“(c) Effect on qualified rehabilitation expenditures and rehabilitation credits—For purposes of determining the rehabilitation credit allowable to a taxpayer under section 47, the transfer or allocation of State historic tax credits with respect to any property by a taxpayer shall not affect or reduce the amount of qualified rehabilitation expenditures (as defined in section 47(c)(2)) taken into account with such property, nor shall such transfer or disposition, or any basis adjustment under subsection (a), be treated as an early disposition of investment credit property for purposes of the recapture provisions of section 50.
“(d) State historic tax credit—For purposes of this section, the term State historic tax credit means any credit against State or local tax liabilities which—
“(1) is allowable under the laws of any State or political subdivision thereof to a taxpayer with respect to expenditures made for the rehabilitation of property identified by such laws, and
“(2) can be allocated, disposed, or refunded under such laws.”
Clerical amendment— The table of sections for part III of subchapter B of chapter 1 of the Internal Revenue Code of 1986 is amended by inserting after the item relating to section 139F the following new item:
Effective date— This section shall apply to transfers or dispositions made, or refunds received, after the date of the enactment of this Act.
Sec. 7 Modifications regarding certain tax-exempt use property
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”.
Effective date— The amendments made by this section shall apply to property placed in service after the date of the enactment of this Act.