LOW-INCOME HOUSING CREDIT.

SEC. 11407. LOW-INCOME HOUSING CREDIT. (a) Extension.— (1) In general.— Subsection (o) of section 42 (relating to low-income housing credit) is amended— (A) by striking “1990” each place it appears in paragraph (1) and inserting “1991”, and (B) by striking paragraph (2) and inserting the following new paragraph: “(2) Exception for bond-financed buildings in progress.— For purposes of paragraph (1)(B), a building shall be treated as placed in service before 1992 if— “(A) the bonds with respect to such building are issued before 1992, “(B) the taxpayer’s basis in the project (of which the building is a part) as of December 31, 1991, is more than 10 percent of the taxpayer’s reasonably expected basis in such project as of December 31, 1993, and “(C) such building is placed in service before January 1, 1994.” (2) Conforming amendment.— Subsection (a) of section 7108 of the Revenue Reconciliation Act of 1989 is amended by striking paragraph (2). (3) Effective date.— The amendments made by this subsection shall apply to calendar years after 1989. (b) Additional Amendments.— (1) Clarification of tenant rights of 1st refusal.— paragraph (7) of section 42(i), as redesignated by subtitle G of this title, is amended by striking “the tenants of such building” and inserting “the tenants (in cooperative form or otherwise) or resident management corporation of such building or by a qualified nonprofit organization (as defined in subsection (n)(5)(C)) or government agency”. (2) Monitoring noncompliance.— Clause (iv) of section 42(m)(l)(B) is amended to read as follows: “(iv) which provides a procedure that the agency (or an agent or other private contractor of such agency) will follow in monitoring for noncompliance with the provisions of this section and in notifying the Internal Revenue Service of such noncompliance which such agency becomes aware of.” (3) Treatment of section 515 rents.— Subparagraph (B) of section 42(g)(2) 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 inserting after clause (iii) the following new clause: “(iv) does not include any rental payment to the owner of the unit to the extent such owner pays an equivalent amount to the Farmers’ Home Administration under section 515 of the Housing Act of 1949.” (4) Qualified census tract determinations where data not available.— Subclause (I) of section 42(d)(5)(C)(ii) is amended by 104 STAT. 1388–475adding at the end thereof the following new sentence: “If the Secretary of Housing and Urban Development determines that sufficient data for any period are not available to apply this clause on the basis of census tracts, such Secretary shall apply this clause for such period on the basis of enumeration districts.” (5) Exception to credit denial for moderate rehabilitation assistance.— (A) In general.— The last sentence of paragraph (2) of section 42(c), as added by subtitle G of this title, is amended by inserting before the period “(other than assistance under the Stewart B. McKinney Homeless Assistance Act of 1988 (as in effect on the date of the enactment of this sentence))”. (6) AFDC recipient students not to disqualify unit.— Subparagraph (D) of section 42(i)(3) is amended to read as follows: “(D) Certain students not to disqualify unit.— A unit shall not fail to be treated as a low-income unit merely because it is occupied by an individual who is— “(i) a student and receiving assistance under title IV of the Social Security Act, or “(ii) enrolled in a job training program receiving assistance under the Job Training Partnership Act or under other similar Federal, State, or local laws.” (7) Intermediary costs considered at evaluation stage.— (A) In general.— Subparagraph (B) of section 42(m)(2) is amended by striking “and” at the end of clause (i), by striking the period at the end of clause (ii) and inserting “, and”, and by adding at the end thereof the following: “(iii) the percentage of the housing credit dollar amount used for project costs other than the cost of in termitaries. Clause (iii) shall not be applied so as to impede the development of projects in hard-to-develop areas.” (B) Conforming amendment.— Subparagraph (B) of section 42(m)(1) is amended by striking clause (ii) and by redesignating clauses (iii) and (iv) as clauses (ii) and (iii), respectively. (8) 10-year rule not to apply to acquisition of certain single-family residences.— Clause (ii) of section 42(d)(2)(D) is amended by striking “or” at the end of subclause (III), by striking the period at the end of subclause (IV) and inserting “, or”, and by adding at the end thereof the following: “(V) of a single-family residence by any individual who owned and used such residence for no other purpose than as his principal residence.” (9) Application of nonprofit set-aside.— Section 42(h)(5) is amended— (A) by inserting “own an interest in the project (directly or through a partnership) and” after “nonprofit organization is to” in subparagraph (B), (B) by striking “and” at the end of clause (i) of subparagraph (O, by redesignating clause (ii) of such subparagraph as clause (iii), and by inserting after clause (i) of such subparagraph the following new clause: 104 STAT. 1388–476 “(ii) such organization is determined by the State housing credit agency not to be affiliated with or controlled by a for-profit organization; and”, and (C) by inserting “ownership and” before “material participation” in subparagraph (D). (10) Effective dates.— (A) In general.— Except as otherwise provided in this paragraph, the amendments made by this subsection shall apply to— (i) determinations under section 42 of the Internal Revenue Code of 1986 with respect to housing credit dollar amounts allocated from State housing credit ceilings for calendar years after 1990, or (ii) buildings placed in service after December 31, 1990, to the extent paragraph (1) of section 42(h) of such Code does not apply to any building by reason of paragraph (4) thereof, but only with respect to bonds issued after such date. (B) Tenant rights, etc.— The amendments made by paragraphs (1), (6), (8), and (9) shall take effect on the date of the enactment of this Act. (C) Monitoring.— The amendment made by paragraph (2) shall take effect on January 1, 1992, and shall apply to buildings placed in service before, on, or after such date. (D) Study.— The Inspector General of the Department of Housing and Urban Development and the Secretary of the Treasury shall jointly conduct a study of the effectiveness of the amendment made by paragraph (5) in carrying out the purposes of section 42 of the Internal Revenue Code of 1986. The report of such study shall be submitted not later than January 1, 1993, to the Committee on Ways and Means of the House of Representatives and the Committee on Finance of the Senate. (c) Election To Accelerate Credit Into 1990.— (1) In general.— At the election of an individual, the credit determined under section 42 of the Internal Revenue Code of 1986 for the taxpayer’s first taxable year ending on or after October 25, 1990, shall be 150 percent of the amount which would (but for this paragraph) be so allowable with respect to investments held by such individual on or before October 25, 1990. (2) Reduction in aggregate credit to reflect increased 1990 credit.— The aggregate credit allowable to any person under section 42 of such Code with respect to any investment for taxable years after the first taxable year referred to in paragraph (1) shall be reduced on a pro rata basis by the amount of the increased credit allowable by reason of paragraph (1) with respect to such first taxable year. The preceding sentence shall not be construed to affect whether any taxable year is part of the credit, compliance, or extended use periods. (3) Election.— The election under paragraph (1) shall be made at the time and in the manner prescribed by the Secretary of the Treasury or his delegate, and, once made, shall be irrevocable. In the case of a partnership, such election shall be made by the partnership.