< Back to H.R. 2163 (104th Congress, 1995–1996)

Text of the Commercial Revitalization Tax Act of 1995

This bill was introduced on August 2, 1995, in a previous session of Congress, but was not enacted. The text of the bill below is as of Aug 2, 1995 (Introduced).

Source: GPO

HR 2163 IH

104th CONGRESS

1st Session

H.R. 2163

To amend the Internal Revenue Code of 1986 to provide a tax credit for investment necessary to revitalize communities within the United States, and for other purposes.

IN THE HOUSE OF REPRESENTATIVES

August 2, 1995

Mr. DE LA GARZA 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 provide a tax credit for investment necessary to revitalize communities within the United States, 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 ‘Commercial Revitalization Tax Act of 1995’.

SEC. 2. COMMERCIAL REVITALIZATION TAX CREDIT.

    (a) ALLOWANCE OF CREDIT- Section 46 of the Internal Revenue Code of 1986 (relating to investment credit) is amended by striking ‘and’ at the end of paragraph (2), by striking the period at the end of paragraph (3) and inserting ‘, and’, and by adding at the end the following new paragraph:

      ‘(4) the commercial revitalization credit.’

    (b) COMMERCIAL REVITALIZATION CREDIT- Subpart E of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 (relating to rules for computing investment credit) is amended by inserting after section 48 the following new section:

‘SEC. 48A. COMMERCIAL REVITALIZATION CREDIT.

    ‘(a) GENERAL RULE- For purposes of section 46, except as provided in subsection (e), the commercial revitalization credit for any taxable year is an amount equal to the applicable percentage of the qualified revitalization expenditures with respect to any qualified revitalization building.

    ‘(b) APPLICABLE PERCENTAGE- For purposes of this section--

      ‘(1) IN GENERAL- The term ‘applicable percentage’ means--

        ‘(A) 20 percent, or

        ‘(B) at the election of the taxpayer, 5 percent for each taxable year in the credit period.

    The election under subparagraph (B), once made, shall be irrevocable.

      ‘(2) Credit period-

        ‘(A) IN GENERAL- The term ‘credit period’ means, with respect to any building, the period of 10 taxable years beginning with the taxable year in which the building is placed in service.

        ‘(B) APPLICABLE RULES- Rules similar to the rules under paragraphs (2) and (4) of section 42(f) shall apply.

    ‘(c) QUALIFIED REVITALIZATION BUILDINGS AND EXPENDITURES- For purposes of this section--

      ‘(1) QUALIFIED REVITALIZATION BUILDING- The term ‘qualified revitalization building’ means any building (and its structural components) if--

        ‘(A) such building is located in an eligible commercial revitalization area,

        ‘(B) a commercial revitalization credit amount is allocated to the building under subsection (e), and

        ‘(C) depreciation (or amortization in lieu of depreciation) is allowable with respect to the building.

      ‘(2) Qualified rehabilitation expenditure-

        ‘(A) IN GENERAL- The term ‘qualified rehabilitation expenditure’ means any amount properly chargeable to capital account--

          ‘(i) for properly for which depreciation is allowable under section 168 and which is--

            ‘(I) nonresidential real property, or

            ‘(II) an addition or improvement to property described in subclause (I),

          ‘(ii) in connection with the construction or substantial rehabilitation or reconstruction of a qualified revitalization building, and

          ‘(iii) for the acquisition of land in connection with the qualified revitalization building.

        ‘(B) DOLLAR LIMITATION- The aggregate amount which may be treated as qualified revitalization expenditures with respect to any qualified revitalization building for any taxable year shall not exceed $10,000,000, reduced by any such expenditures with respect to the building taken into account by the taxpayer or any predecessor in determining the amount of the credit under this section for all preceding taxable years.

        ‘(C) CERTAIN EXPENDITURES NOT INCLUDED- The term ‘qualified revitalization expenditure’ does not include--

          ‘(i) STRAIGHT LINE DEPRECIATION MUST BE USED- Any expenditure (other than with respect to land acquisitions) with respect to which the taxpayer does not use the straight line method over a recovery period determined under subsection (c) or (g) of section 168. The preceding sentence shall not apply to any expenditure to the extent the alternative depreciation system of section 168(g) applies to such expenditure by reason of subparagraph (B) or (C) of section 168(g)(1).

          ‘(ii) ACQUISITION COSTS- The costs of acquiring any building or interest therein and any land in connection with such building to the extent that such costs exceed 30 percent of the qualified revitalization expenditures determined without regard to this clause.

          ‘(iii) OTHER CREDITS- Any expenditure which the taxpayer may take into account in computing any other credit allowable under this part unless the taxpayer elects to take the expenditure into account only for purposes of this section.

      ‘(3) ELIGIBLE COMMERCIAL REVITALIZATION AREA- The term ‘eligible commercial revitalization area’ means--

        ‘(A) an empowerment zone or enterprise community designated under subchapter U,

        ‘(B) any area established pursuant to any consolidated planning process for the use of Federal housing and community development funds, and

        ‘(C) any other specially designated commercial revitalization district established by any State or local government, which is a low-income census tract or low-income nonmetropolitan area (as defined in subsection (e)(2)(C) and is not primarily a nonresidential central business district.

      ‘(4) SUBSTANTIAL REHABILITATION OR RECONSTRUCTION- For purposes of this subsection, a rehabilitation or reconstruction shall be treated as a substantial rehabilitation or reconstruction only if the qualified revitalization expenditures in connection with the rehabilitation or reconstruction exceed 25 percent of the fair market value of the building (and its structural components) immediately before the rehabilitation or reconstruction.

    ‘(d) WHEN EXPENDITURES TAKEN INTO ACCOUNT-

      ‘(1) IN GENERAL- Qualified revitalization expenditures with respect to any qualified revitalization building shall be taken into account for the taxable year in which the qualified rehabilitated building is placed in service. For purposes of the preceding sentence, a substantial rehabilitation or reconstruction of a building shall be treated as a separate building.

      ‘(2) PROGRESS EXPENDITURE PAYMENTS- Rules similar to the rules of subsections (b)(2) and (d) of section 47 shall apply for purposes of this section.

    ‘(e) Limitation on Aggregate Credits Allowable With Respect to Buildings Located in a State-

      ‘(1) IN GENERAL- The amount of the credit determined under this section for any taxable year with respect to any building shall not exceed the commercial revitalization credit amount (in the case of an amount determined under subsection (b)(1)(B), the present value of such amount as determined under the rules of section 42(b)(2)(C)) allocated to such building under this subsection by the commercial revitalization credit agency. Such allocation shall be made at the same time and in the same manner as under paragraphs (1) and (7) of section 42(h).

      ‘(2) Commercial revitalization credit amount for agencies-

        ‘(A) IN GENERAL- The aggregate commercial revitalization credit amount which a commercial revitalization credit agency may allocate for any calendar year is the portion of the State commercial revitalization credit ceiling allocated under this paragraph for such calendar year for such agency.

        ‘(B) State commercial revitalization credit ceiling-

          ‘(i) IN GENERAL- The State commercial revitalization credit ceiling applicable to any State for any calendar year is an amount which bears the same ratio to the national ceiling for the calendar year as the population of low-income census tracts and low-income nonmetropolitan areas within the State bears to the population of such tracts and areas within all States.

          ‘(ii) NATIONAL CEILING- For purposes of clause (i), the national ceiling is $100,000,000 for 1996, $200,000,000 for 1997, and $400,000,000 for calendar years after 1997.

          ‘(iii) OTHER SPECIAL RULES- Rules similar to the rules of subparagraphs (D), (E), (F), and (G) of section 42(h)(3) shall apply for purposes of this subsection.

        ‘(C) LOW-INCOME AREAS- For purposes of subparagraph (B), the terms ‘low-income census tract’ and low-income nonmetropolitan area’ mean a tract or area in which, according to the most recent census data available, at least 50 percent of residents earned no more than 60 percent of the median household income for the applicable Metropolitan Standard Area, Consolidated Metropolitan Standard Area, or all nonmetropolitan areas in the State.

        ‘(D) COMMERCIAL REVITALIZATION CREDIT AGENCY- For purposes of this section, the term ‘commercial revitalization credit agency’ means any agency authorized by a State to carry out this section.

        ‘(E) STATE- For purposes of this section, the term ‘State’ includes a possession of the United States.

    ‘(f) RESPONSIBILITIES OF COMMERCIAL REVITALIZATION CREDIT AGENCIES-

      ‘(1) PLANS FOR ALLOCATION- Notwithstanding any other provision of this section, the commercial revitalization credit dollar amount with respect to any building shall be zero unless--

        ‘(A) such amount was allocated pursuant to a qualified allocation plan of the commercial revitalization credit agency which is approved by the governmental unit (in accordance with rules similar to the rules of section 147(f)(2) (other than subparagraph (B)(ii) thereof)) of which such agency is a part, and

        ‘(B) such agency notifies the chief executive officer (or its equivalent) of the local jurisdiction within which the building is located of such project and provides such individual a reasonable opportunity to comment on the project.

      ‘(2) QUALIFIED ALLOCATION PLAN- For purposes of this subsection, the term ‘qualified allocation plan’ means any plan--

        ‘(A) which sets forth selection criteria to be used to determine priorities of the commercial revitalization credit agency which are appropriate to local conditions,

        ‘(B) which considers--

          ‘(i) the degree to which a project contributes to the implementation of a strategic plan that is devised for an eligible commercial revitalization area through a citizen participation process,

          ‘(ii) the amount of any increase in permanent, full-time employment by reason of any project, and

          ‘(iii) the active involvement of residents and nonprofit groups within the eligible commercial revitalization area, and

        ‘(C) which provides a procedure that the agency (or its agent) will follow in monitoring for compliance with this section.

    ‘(g) TERMINATION- This section shall not apply to any building placed in service after December 31, 2000.’

    (b) CONFORMING AMENDMENTS-

      (1) Section 39(d) of the Internal Revenue Code of 1986 is amended by adding at the end the following new paragraph:

      ‘(7) NO CARRYBACK OF SECTION 48A CREDIT BEFORE ENACTMENT- No portion of the unused business credit for any taxable year which is attributable to any commercial revitalization credit determined under section 48A may be carried back to a taxable year ending before the date of the enactment of section 48A.’

      (2) Subparagraph (B) of section 48(a)(2) of such Code is amended by inserting ‘or commercial revitalization’ after ‘rehabilitation’ each place it appears in the text and heading thereof.

      (3) Subparagraph (C) of section 49(a)(1) of such Code is amended by striking ‘and’ at the end of clause (ii), by striking the period at the end of clause (iii) and inserting ‘, and’, and by adding at the end the following new clause:

          ‘(iv) the basis of any qualified revitalization building attributable to qualified revitalization expenditures.’

      (4) Paragraph (2) of section 50(a) of such Code is amended by inserting ‘or 48A(d)(2)’ after ‘section 47(d)’ each place it appears.

      (5) Subparagraph (B) of section 50(a)(2) of such Code is amended by adding at the end the following new sentence: ‘A similar rule shall apply for purposes of section 48A.’

      (6) Paragraph (2) of section 50(b) of such Code is amended by striking ‘and’ at the end of subparagraph (C), by striking the period at the end of subparagraph (D) and inserting ‘, and’, and by adding at the end the following new subparagraph:

        ‘(E) a qualified revitalization building to the extent of the portion of the basis which is attributable to qualified revitalization expenditures.’

      (7) Subparagraph (C) of section 50(b)(4) of such Code is amended by inserting ‘or commercial revitalization’ after ‘rehabilitated’ each place it appears in the text or heading thereof.

      (8) Subparagraph (C) of section 469(i)(3) is amended--

        (A) by inserting ‘or section 48A’ after ‘section 42’, and

        (B) by striking ‘CREDIT’ in the heading and inserting ‘AND COMMERCIAL REVITALIZATION CREDITS’.

    (c) EFFECTIVE DATE- The amendments made by this section shall apply to property placed in service after December 31, 1995.