QUALIFIED MORTGAGE BONDS.

SEC. 11408. QUALIFIED MORTGAGE BONDS. (a) In General.— Subparagraph (B) of section 143(a)(1) (defining qualified mortgage bond) is amended by striking “September 30, 1990” each place it appears and inserting “December 31, 1991”. (b) Mortgage Credit Certificates.— Subsection (h) of section 25 (relating to interest on certain home mortgages) is amended by striking “September 30, 1990” and inserting “December 31, 1991”. (c) Modification and Simplification of Recapture Rules.— (1) Modification of holding period percentage.— (A) Clause (i) of section 143(m)(4)(C) is amended to read as follows: “(i) In general.— The term ‘holding period percent-age’ means the percentage determined in accordance with the following table: “If the disposition occurs during a year after the testing date which is: The holding period percentage is: The 1st such year 20 The 2d such year. 40 The 3d such year. 60 The 4th such year 80 The 5th such year 100 The 6th such year 80 The 7th such year 60 The 8th such year 40 The 9th such year 20.” (B) Subparagraph (C) of section 143(m)(4) is amended by striking clause (ii) and by redesignating clause (iii) as clause (ii). (C) Subparagraph (B) of section 143(m)(2) is amended by striking “10 years” and inserting “9 years”. (2) Modification of recapture amount based on taxpayer’s income.— (A) Subparagraph (A) of section 143(m)(4) 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 new clause: “(iii) the income percentage.” (B) Paragraph (4) of section 143(m) is amended by adding at the end thereof the following new subparagraph: “(E) Income percentage.— The term ‘income percentage’ means the percentage (but not greater than 100 percent) which— “(i) the excess of— “(I) the modified adjusted gross income of the taxpayer for the taxable year in which the disposition occurs, over “(II) the adjusted qualifying income for such taxable year, bears to “(ii) $5,000. The percentage determined under the preceding sentence shall be rounded to the nearest whole percentage point (or, if it includes a half of a percentage point, shall be increased to the nearest whole percentage point).” (C) (i) Paragraph (5) of section 143(m) is amended by striking all that precedes subparagraph (C) and inserting the following: 104 STAT. 1388–478 “(5) Adjusted qualifying income; modified adjusted gross income.— “(A) Adjusted qualifying income.— For purposes of paragraph (4), the term ‘adjusted qualifying income’ means the product of— “(i) the highest family income which (as of the date the financing was provided) would have met the requirements of subsection (f) with respect to the residents, and “(ii) 1.05 to the nth power where ’n’ equals the number of full years during the period beginning on the date the financing was provided and ending on the date of the disposition. For purposes of clause (i), highest family income shall be determined without regard to subsection (f)(3)(A) and on the basis of the number of members of the taxpayer’s family as of the date of the disposition.” (ii) Subparagraph (C) of section 143(m)(5) is redesignated as subparagraph (B) and is amended by striking “this paragraph” and inserting “paragraph (4)”. (3) Other changes.— (A) Paragraph (1) of section 143(m) is amended by striking “increased” by and all that follows and inserting: “increased by the lesser of— “(A) the recapture amount with respect to such indebtedness, or “(B) 50 percent of the gain (if any) on the disposition of such interest.” (B) Paragraph (6) of section 143(m) is amended— (i) by striking “Limitation” in the heading and inserting “Special rules relating to limitation”, (ii) by striking the first sentence of subparagraph (A), and (iii) by striking “the preceding sentence” in subparagraph (A) and inserting “paragraph (1)”. (C) Clause (ii) of section 143(m)(7)(B) is amended to read as follows: “(ii) the adjusted qualifying income (as defined in paragraph (5)) for each category of family size for each year of the 9-year period beginning on the date the financing was provided.” (d) Effective Dates.— (1) Bonds.— The amendment made by subsection (a) shall apply to bonds issued after September 30, 1990. (2) Certificates.— The amendment made by subsection (b) shall apply to elections for periods after September 30, 1990. (3) Simplification.— The amendment made by subsection (c) shall take effect as if included in the amendments made by section 4005 of the Technical and Miscellaneous Revenue Act of 1988.